405 P.3d 65
Mont.2017Background
- In 2007 Dana Rolan was seriously injured and incurred about $120,000 in medical expenses; her insurer was New West and the tortfeasor’s insurer (Unitrin) paid ~ $100,000.
- Rolan sued New West in state court (2010) asserting state-law claims including breach of contract, made‑whole rights, and unfair claims practices, and sought class certification under Rule 23(b)(2).
- During discovery a New West representative stated the plan was "not a properly constituted ERISA plan," and the district court certified a class based on state-law theories; the Montana Supreme Court affirmed certification on appeal.
- More than three years after filing suit, New West sought leave to amend its answer to assert ERISA preemption as an affirmative defense; the district court allowed the amendment and later granted summary judgment for New West on ERISA preemption grounds.
- The federal court briefly received the case by removal (which it later remanded as untimely) but held state court could adjudicate ERISA §502(a)(1) claims; on remand the Montana district court dismissed state claims as preempted and allowed Rolan to amend to assert ERISA claims.
- The Montana Supreme Court reversed, holding the district court abused its discretion by allowing New West to amend without adequately inquiring into prejudice, delay, and effect on the certified state-law class.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court abused discretion by allowing New West to amend its answer to assert ERISA preemption | Rolan: ERISA preemption is an affirmative defense under M. R. Civ. P. 8(c); New West waived it by failing to plead it timely and amendment at this late stage prejudices the class | New West: Rule 15(a) favors liberal amendment; no bad faith, dilatory motive, or undue prejudice, so leave should be freely given | Court: Reversed — district court abused its discretion by allowing amendment without proper inquiry into undue delay/prejudice, especially because amendment would destroy class certification based on state law and Rolan showed substantial prejudice |
Key Cases Cited
- Lindey’s v. Professional Consultants, 244 Mont. 238 (1990) (standard: abuse of discretion review for leave to amend)
- Bitterroot Int’l Sys. v. Western Star Trucks, Inc., 336 Mont. 145 (2007) (denial of leave justified by long delay, close to trial, and undue prejudice)
- Peuse v. Malkuch, 275 Mont. 221 (1996) (prolonged delay in asserting new legal theory after summary judgment motion can warrant denial)
- Keller v. Dooling, 248 Mont. 535 (1991) (Rule 8(c) affirmative defenses may be added by leave under Rule 15)
- Winslow v. Mont. Rail Link, Inc., 328 Mont. 260 (2005) (ERISA preemption is an affirmative defense and waivable if not timely pled)
- Eagle Ridge Ranch v. Park County, 283 Mont. 62 (1997) (undue prejudice exists where opposing party’s substantial effort and expense would be wasted)
- Kershaw v. Mont. Dept. of Transp., 361 Mont. 215 (2011) (abuse of discretion standard and limits on mandatory allowance of amendments)
- Meadow Lake Estates Homeowners Ass’n v. Shoemaker, 341 Mont. 345 (2008) (courts need not automatically grant leave to amend; consider prejudice and timing)