*1
JACOBSEN,
ROBERT
Cross-Appellant,
Appellee and
Plaintiff,
COMPANY,
ALLSTATE INSURANCE
Appellant.
Defendant
DA 07-0170.
No.
Argued September
2008.
November
2008.
Submitted
July
2009.
Decided
Rehearing
September
Denied
2009.
FACTUAL AND injuries in an auto accident caused Jacobsen sustained claim, began accepted liability for and Allstate’s insured. Allstate adjuster negotiating a with Jacobsen. Allstate’s claims settlement Claim Core Process pursuant claim Allstate’s processed Jacobsen’s guidelines (‘CCPR’), implemented policies certain Redesign which claimants. quick unrepresented settlements with designed promote accident, $3,500 for settled with Allstate days Six after the Jacobsen medicals”1, Nearly signed a written release. days “open and 45 the release because later, Jacobsen asked Allstate rescind month mowing his lawn. Allstate experienced pain he shoulder while had release, Falls retained Great to rescind and Jacobsen refused evidently have been “open means that Jacobsen would The term medicals” days following injuries permitted caused the accident for 45 to seek medical care for settlement. attorney retained, Richard Martin to assist him. After Martin was release, approximately Allstate rescinded the and settled the claim for $200,000. counsel, Jacobsen new and filed a subsequently retained
complaint against seeking compensatory damages for, inter alia, (“UTPA”), violation the Montana Unfair Trade Practices Act common faith, negligent law bad intentional and infliction emotional distress, and actual malice. trial, summary Prior to Allstate moved the District Court
judgment on Jacobsen’s negligent and intentional emotional distress
granted
grounds
claims. The court
on the
Allstate’s motion
that
Jacobsen failed to
serious
severe
prove
emotional distress as
required by this
v.High Country Independent
Court’s decision in Sacco
Press,
trial,
Mont.
recoverable as damages under the UTPA. Allstate moved the District Court to reconsider its prior ruling that Jacobsen could claim compensatory damages. fees as In denying motion, recognized District Court that our decision in Sampson generally preclude would recovering attorney Jacobsen from fees under the UTPA. the court determined that Jacobsen’s for attorney equitable exception fees fell within an generally applicable American Rule applied Sampson. The District case, Court’s decision was crucial because Jacobsen *4 sought only types two of compensatory damages-emotional distress attorney and already fees-and the court had concluded that Jacobsen damages could not recover for emotional distress. Had determined that attorney Jacobsen’s compensatory fees were not recoverable as damages, he a predicate upon would have lacked offense which base have his would been damages, and lawsuit punitive for his claim damages. for lack of subject to dismissal Jacobsen, finding that favor of a verdict in jury returned The faith, statutory bad common law and for both Allstate was liable attorney and costs the fees damages awarding compensatory jury also settling underlying claim. the incurred Jacobsen finding that $350,000 upon based punitive awarded claim. settling Jacobsen’s actual malice in Allstate acted with trial, District Court made jury the the during to and prior Both 1) granting Jacobsen’s appeal: now on discretionary rulings several initially settling he signed release motion to exclude evidence regarding instruction claim, refusing proposed jury and Allstate’s 2) to exclude release; denying Allstate’s motion effect of a legal could have “advance testimony that Allstate should or argument 3) industry standards; with wages in accordance paid” Jacobsen’s as a matter of law on judgment motion for denying Allstate’s malice evidence of actual presented that Jacobsen sufficient grounds 4) punitive damages; denying and Jacobsen’s support award ‘McKinsey In compel documents.” discovery motions to various set brevity, to those issues are forth the interest of facts relevant necessary where below.
ISSUES appeal: restate the We issues against an of a common law bad faith claim
1. In context incurred in insurer, third-party are a fees costs plaintiffs damages? an element of settling underlying claim recoverable as allowing err in introduce 2. Did District Court lost testimony regarding pay” Allstate’s to “advance Jacobsen’s refusal regarding wages, disallowing proposed jury Allstate’s instruction wages? lost liability refusing pay to advance concluding err there was sufficient 3. Did District Court support punitive damages? malice to an award of evidence of actual verdict form misstate the law 4. Did instructions and unfairly prejudice Allstate? granting err in motion 5. Did District Court Jacobsen’s refusing legal effect of the release and exclude evidence of the the release? proposed jury regarding instruction denying various Did the District Court err documents?” discovery McKinsey compel motions Jacobsen was required Court err in 7. Did District *5 prove or emotional serious severe distress order to recover arising damages underlying emotional distress out of the faith bad claim?
DISCUSSION
In the
a
1.
context of
common law bad faith
an
against
¶16
insurer, are a third-party plaintiffs attorney fees and
costs incurred
settling the underlying
damages?
claim recoverable as an element of
Generally, we review a
regarding
¶17
district court’s decision
an
attorney
G.M.,
59,
award
fees for abuse of
In
discretion.
re
2009 MT
10,
320,
However, judicial
349 Mont.
203 P.3d
¶
discretion must
be guided by
law;
the rules and principals of
thus the appellate
standard of review is
a
plenary
discretionary ruling
to the extent
is
upon
based
Mackrill,
297, 37,
conclusion of law. State v.
¶
345 Mont.
attorney claim, fees in settling underlying an and claimed those fees damages costs as an element of in a subsequent action for insurance bad faith. apparently concedes, agree, and we pursuant Sampson, attorney his claim for subject fees is American Rule. he argues the correctly District Court attorney awarded fees exception under an American Rule. Our analysis of this issue is premised following: therefore attorney fees are not a damages recoverable element of in a claim for insurance faith, bad brought law, whether under the UTPA or the common absent exception the American Rule. The District Court relied on exceptions two to the American Rule attorney were recoverable: determining fees that Jacobsen’s “equitable exception.” and the exception,”
‘insurance
case,
is
and there
exceptions is
applicable
that neither
their rationale
inclination to extend
legislative
nor
‘judicial
neither
contends the
faith claims.” Jacobsen
bad
party
third
insurance
asserting
fees as
the party
are
where
exceptions
applicable
without such an award.
cannot made whole
be
rule is available
[American]
equitable exception
‘The
forced into
party
in which a
unique
those
factual situations
the claim.”
attorney’s
incur
fees to dismiss
lawsuit and must
frivolous
765, 775
Inc.,
Lindeys,
Goodover
construed,
narrowly
application
and its
been
exception
This
has
*6
claiming fees
to
in
the individual
has been
is confined situations which
Anderson,
Foy
his
See
v.
litigation through no fault of
own.
forced into
(1978) (the
507,
a
in
passenger
P.2d 114
defendant was
176 Mont.
580
sought
join
to
her as a
the individual at fault
an auto accident where
case, asserting
against
in
that she had filed a
party
third
the
Hunter,
him,
not);
Land
v.
182
in fact she had
Holmstrom
Co.
when
(1979) (the
43, 595
defendant water commissioner was
Mont.
P.2d 360
order,
when,
to
court
he
pursuant
a district
by
sued
landowner
fees); Stickney
to
headgate
pay
the
for failure
landowner’s
padlocked
(the
(1981)
State,
415,
Cnty. Missoula, 195 Mont.
to the American legislative preemption (Brewer, Rule the absence of 24) we decline to extend the exceptions to allow as an fees element of in the party context of third insurance bad faith claim. The American Rule is foundation of jurisprudence, our and we narrowly must exceptions they construe the lest swallow the rule. argument that attorney fees be recovery must added truly if award is to contrary make him whole is generally applicable American Son, Rule. v. A. T. Klemens & Schuff 357, 97, 1002; citing P.3d & Ry. Western Norfolk Co. v. Liepelt, 440 U.S. S. 100 Ct. In context of bad brought UTPA, faith claims under legislature the appropriate rectify forum to what we continue recognize as a *7 potentially gap in existing Sampson, unfair See law. 22. that Given ¶ legislature has deemed an of attorney appropriate award fees UTPA, under the it would be inconsistent to allow such to a party third claimant under the common Ultimately, law. we donot find arguments Jacobsen’s favor a new exception the American Rule sufficiently compelling to create an inconsistency. such Moreover, agree with ¶24 Allstate that costs incurred Jacobsen’s attorney settling the underlying claim are not recoverable compensatory damages. argues Jacobsen first that any Allstate waived objection to appeal specifically costs on object because failed to to the language regarding jury instruction, costs in the citing Seltzer v. Morton, 62, 225, 154 2007 MT 336 Mont. merely P.3d 561. Seltzer sets any forth proposition the familiar a litigant that who fails to lodge objection to jury instruction any subsequent objection waives on Here, object jury instruction Seltzer, Allstate did 54.
appeal.
¶
To
that
say
were not recoverable.
that
fees
contending
costs”in order
required to utter the words “and
counsel was
Allstate’s
an
represent
instruction would
objection
its
preserve
e.g.
Corp.
Centech
over
See
of form
substance.
unreasonable elevation
481,
20,
P.3d 503. We Knudson, Rohrer proposed jury instruction for abuse discretion. 197, 203 35, 14, Mont. to the extent P.3d discretionary ruling upon is based conclusion the district court’s law, Mackrill, plenary. our review is granted judgment in favor Allstate summary The District Court liability refusing to “advance
regarding Allstate’s under UTPA wages, ruling regarding conduct pay” Jacobsen’s lost that Allstate’s “leverage wages attempt lost could not be considered an to Allstate.” Allstate immediate settlement terms favorable any testimony seeking motion limine to exclude subsequently filed a wages. granted Court regarding pay the advance of lost District testimony motion, barring introducing from lost duty pay wages, had a to advance but suggesting legal Allstate presenting “preclude did not Plaintiff from stated that Jacobsen, wages have testimony that Allstate could advanced lost have, with or standard or that it should in accordance common industry practices.” summary District argues judgment, granting of the case Allstate’s refusal
Court established as law ‘leverage an wages attempt lost was not an immediate pay advance of the UTPA. on terms to Allstate” violation settlement favorable Therefore, they allowing any testimony regarding argue, pay decision not to advance appropriateness of Allstate’s of the case and constituted reversible wages lost contravened law testimony oflost regarding pay the advance error. Jacobsen
473 wages merely provided jury regarding factual context for the surrounding settlement, circumstances the initial claim and the properly agree. District Court allowed the on that testimony basis. We The law of the case expresses generally doctrine the courts’ reopen reluctance to that during issues have been settled the course of litigation. 195, 38, 338 370, 169 Brevig, McCormick v. 2007 MT Mont. 352; Snyder, 146, 27, P.3d In re Estate jurisprudence P.3d 87. Our applying generally the doctrine has binding arisen in the context of both the and the parties district court any proceedings, the decisions ofthis Court in subsequent concept properly Wright, referred as the Mandate Rule. Charles Alan Arthur Kane, Kay R. Miller & Mary 18B, Federal Practice and Procedure vol. (3d 2005). §4478.3, ed., West We also principal have held this applicable prior rulings trial court the same case. See Carden, State The District order summary judgment Court’s on addressed
sufficiency of alleged Jacobsen’s Count which a violation by UTPA Allstate’s failure to pay wages advance Jacobsen’s when their liability insured’s reasonably clear. argued summary judgment, agreed, and the District Court pursuant to 33-18- § 242(5), MCA, Allstate had reasonable basis in for not law advance paying wages, Jacobsen’s therefore it could not held be liable for violating the UTPA on that basis. The District ruling Court’s established as the law ofthe case that Allstate’s pay refusal advance wages could be considered an attempt leverage settlements on the other portions of UTPA, Jacobsen’s in violation of the because Allstate had a refusing reasonable basis in law for to do so. not, the District Court’s did as Allstate suggests, have the effect barring any testimony regarding the appropriateness ofAllstate’s pay wages. Rather, decision not to advance Jacobsen’s law of the case as established on summary judgment was that Allstate legal duty had no under the UTPA to pay advance wages, Jacobsen’s not that its pay refusal advance the wages could not be considered any context. The District Court’s order on Allstate’s motion limine reflected this by barring expert distinction from testifying duty that Allstate a legal pay had to advance wages, Jacobsen’s lost allowing testimony suggesting but that it could or should paid wages have advance in accordance with standard or practices. common industry may While Allstate be correct distinction was lost on jury, that fact does not us compel conclude that the District Court erred in allowing testimony. expert’s any misconception caused
Ultimately, if there was correct it on cross- had testimony, opportunity counsel *9 by its Court did not abuse discretion The District examination. the opinion on testify expert to as to his allowing witness advancing lost to industry practices respect with or common standard wages to the had effect refusal advance wages, or to the Allstate’s to Jacobsen’s decision settle. refusing jury proposed err in Allstate’s Nor did the District Court
¶32
following
that it offered the
argues
Allstate
instruction Number 25.
effect
the District Court’s
mitigate
order
the
instruction in
to
law
6,2001, Montana
evidentiary ruling: “BeforeDecember
erroneous
to
legal duty
pay
wages
to advance
lost
not
on Allstate a
impose
did
not,
final
or
Jacobsen,
payment
whether he demanded
before
Mr.
date,
injury
Up until that
Allstate
personal
of his
claim.
settlement
wages,
advancing payment
so not
pay
not
to advance
lost
required
was
grounds
liability against
for
Allstate.”
is
to refuse
District Court acted within its discretion
The
¶33
evidentiary
instruction,
for the same reason
proposed
Allstate’s
While Allstate’s
pay
on the issue of advance
was
in error.
respect
law
a correct statement of the
with
proposed instruction was
liability
UTPA,
the UTPA based on
to
under
violation of
Allstate’s
longer
grant
facts
no
at issue. The District Court’s earlier
those
summary
in favor of Allstate on Jacobsen’s Count
judgment
(violation
wages)
by
pay
UTPA refusal
advance
lost
rendered
irrelevant.
proposed
instruction
concluding
Court err in
there was sufficient
Did the District
¶34
damages?
support
punitive
evidence of actual malice to
award of
a
for
deny
a
decision
motion
We review district court’s
Enterprises,
matter
de
judgment as a
of law novo. Vader Fleetwood
Inc.,
judgment as malice convincing clear and evidence of actual fraud actual present denied support punitive damages. his claim for The District Court law, a motion, ultimately finding that as matter punitive damages sufficient evidence allow presented ultimately punitive jury. submitted to awarded be inaccurately a than the term “motion for directed verdict” rather Allstate uses evidently judgment describing under law” in the motion made “motion for M.R.Civ.P. as matter of 50(b). damages based on its conclusion that Allstate acted with actual malice settling Jacobsen’s claim. Allstate on appeal failing that the District Court erred for grant judgment its motion as a matter of law respect with punitive malice claim which supported damage award. Allstate’s argument premised on the assumption is erroneous that the District required Court was to apply evidentiary standards set forth punitive damage reviewing essence, statutes Allstate’s motion. In suggests the District Court should have acted as the fact, preliminary weighing finder of the quality of the evidence of if malice determine find it convincing” could “clear and beyond 27-1-221(5), “serious and substantial doubt.” Section MCA. fundamentally miscomprehends This view the standard which a judgment district court must review motion as matter of law. A judgment motion for as a matter law not a device which the party bringing the motion can a reviewing power ‘invoke court’s reexamine reweigh rather, jury,” evidence before the it must *10 a complete demonstrate of any absence evidence which justify would Vader, submitting jury. Moreover, an issue to a 32. considering ¶ when motion, such a any all legitimate evidence and might inference which be drawn from that evidence must light be considered most favorable to the party opposing Vader, the motion. 32. We have noted that district greatest courts must “exercise the self-restraint interfering with constitutionally processes mandated of jury decision.” Wholesale, Johnson Costco
105,
(2) A guilty defendant is of actual malice if the defendant has knowledge of facts or intentionally disregards facts that create a high probability injury of the plaintiff and:
(a) deliberately proceeds act in conscious or intentional disregard high probability injury of the plaintiff; (b) deliberately Indifference proceeds to act with high to the probability injury plaintiff. to the not, The suggests, District Court was as required Allstate to find that Jacobsen established by the elements of malice “clear and §27-1-221(5), MCA. Whether required
convincing evidence” as liability was convincing clear and to establish sufficiently evidence was fact, the District Court. Section for the trier of not an issue reserved 27-1-221(6), MCA. any presented whether Jacobsen therefore determine We must alleged submitting the issue of justify would
evidence which presented evidence record indicates Jacobsen jury. malice to the used knowledge had that the CCPR method to settle that Allstate substantially receiving in his probably result Jacobsen’s would receive if he was injuries his than he would compensation less for receiving attorney. that dispute an Allstate does represented ‘high have created a injuries less would compensation Jacobsen, suggest it that Allstate was injury” nor does probability unrepresented that high probability to” the not ‘indifferent claimant. Section 27-1- represented claimant receive less than a would (b), in fact of the CCPR. 221(2)(a), purpose MCA. That was the stated presented was introduced for the Essentially, the evidence Jacobsen by promoting the of claims showing quick settlement purpose Jacobsen) (including brought by unrepresented claimants without Jacobsen, investigation, itself, adequate applied CCPR and claimants, a high probability injury unrepresented created disregarding. also intentionally that Allstate was probability designed injuries knew Jacobsen’s presented evidence to show Allstate assumed, potentially originally than either party were more severe deliberately proceeded to act with indifference to this The District Court refusingto reopen information in Jacobsen’s claim. submitting jury. malice claim to the did err complete any failed demonstrate a absence of evidence that would Vader, justify submitting jury. Jacobsen’s malice claim convincing to the District Court Whether the evidence was clear ultimately irrelevant. form misstate the law Did the instructions and verdict unfairly prejudice Allstate? *11 of jury We review a district court’s instructions abuse ¶43 Contractors, Trucking Excavating Olson Shumaker and discretion. v. Inc., 378, 22, 1, Mont. 196 must 2008 MT 347 P.3d We instructions, whole, fully fairly as a determine whether Bullman, law the case. State v. jury applicable instruct the on the to 37, 228, undertaking 15, 2009 MT 349 Mont. 203 P.3d In entirety, as well as in review, jury consider the instruction in its given other and with evidence connection with the instructions
477
Homes,
74,
Muller,
140,
Murphy
introduced at trial.
Inc. v.
411,
337
respectively, that it should find Allstate liable for bad faith under the or UTPA the common law if it found that Allstate “misrepresent[ed]
pertinent regarding facts an insurance claim... .’’Theinstructions were §33-18-201, presumably upon based the codification of the UTPA in MCA, may, which states: ‘No with person frequency such as indicate (1) general any following: business practice, misrepresent do coverages pertinent or policy provisions relating facts insurance at by substituting issue.” Allstate the word “claims” for “coverages” changed the District Court the fundamental meaning the statute. outset, theAt we note argument applied that Allstate’s 9, claim,
Instruction which addresses Jacobsen’s common law bad faith is illogical. presents no authority Allstate support its contention that the District Court required language to use from UTPA jury instruct on law common bad faith. We therefore turn whether the District statutory Court’s modification language Instruction 8 was an abuse of discretion. There no requirement is that a district court adopt verbatim
the applicable statutory language
instructing
when
jury,
long
“so
as the modification does not alter the meaning of the statute.”
State
Anderson,
116,
485,
¶¶
instruction, §33-18-201(1),MCA, erred in interpreting as prohibiting the misrepresentation only of facts as “claims”when the statute “coverages.” mentions We reiterate that the require law does not statute, wording rather, instruction reflect the exact of the requires that the court refrain from changing meaning Anderson, statute. 24. The District Court’s instruction did not ¶¶ change meaning of the statute. It would make little sense to limit statutory prohibition misrepresentation “coverages,” factual when coverage essentially the issue insurance a contractual *12 than on factual focusing policy provisions rather issue on the
legal processing the from insurer. Since submission an representations than the issue of process more claims is a fact-driven of insurance including did not err in conclude that the court coverage, we insurance statutory prohibition. of the purview within the “claims” motion to granting Jacobsen’s District Court err 5. Did the ¶48 refusing of release and legal effect the exclude evidence regarding instruction the release? proposed jury Allstate’s motion, barred Allstate from the District Court Upon Jacobsen’s ¶49 any legal assertion as the effect any making evidence or “presenting ruling, the signed Consistent with this by the Jacobsen. of release” that a release stating instruction proposed court refused Allstate’s under certain circumstances. which can be rescinded is contract the its upon it relied release that because Jacobsen, had a in law for dealings it reasonable basis subsequent with demands, it have been allowed to contesting therefore should argument is of that defense. Allstate’s support evidence present law, that, it entitled a matter of was on its contention as premised up it was rescinded. rely on the release until date is ruling motion ira limine an The Court’s on Jacobsen’s District ¶50 Snell, ruling we review for an abuse discretion. evidentiary which not to 17. We review the District Court’s decision issue also ¶ Rohrer, 14. To the jury instruction for abuse of discretion. proposed ¶ instruction was a proposed jury the court’s on the extent Mackrill, law, plenary. our review 37. conclusion of contract, v. governed A release is a contract law. Westfall (1962). 98-99 A Corp., Motors Ins. contract, undoing “amounts or it unmaking an rescission 17B To rescind beginning from ....” C.J.S. Contracts §422 end inception put it “void in its to it a contract is to declare (6th ed. though Dictionary never Law West it were.” Black’s 1990). effectively Because Allstate’s rescission of Jacobsen’s release not, law, beginning, it as a matter of release from the voided legal prior of the release its rely upon entitled to effect release, had no Essentially, rescission. once Allstate rescinded so legal The District Court did abuse discretion effect. jury. instructing
CROSS-APPEAL
various
denying
Court err
Did
District
documents?”
compel discovery
‘McKinsey
motions to
discretionary rulings,
We review a
including
district court’s
matters,
rulings
discovery
abuse
discretion. State
regarding
Dunning, 2008 MT
implemented pursuant to the so called ‘McKinsey documents.” The *13 McKinsey product documents are “the of pre- Allstate’s CCPR implementation study, the source from which the CCPR was At discovery condensed.” the time of Jacobsen’s initial request and CCPR, corresponding motion to compel he was unaware of the McKinsey existence of the documents. When Jacobsen became McKinsey documents, aware of the he 1)
sought leave of an court file amended complaint revising and 2) adding claims, individual against assert class new action claims 3) Allstate, and conduct discovery. additional The District Court denied Jacobsen leave to add class claims or to conduct discovery, additional finding that failed Jacobsen to establish due or diligence excusable neglect for his failure to timely conduct of the discovery McKinsey documents. The court’s order treated the denied motions as interdependent, finding that “the of proposed nature his class claims and the expansive scope of request discovery for additional will cause prejudice delay, burden, substantial and undue and expense by transforming essentially what is an individual bad faith action into a class action institutional bad require faith lawsuit that significant will discovery additional and substantially increase the amount and complexity pretrial of litigation.” subsequent Jacobsen filed two motions urging the court discovery to allow of the McKinsey documents, not in action, the context of an institutional bad faith but relevant Jacobsen’s individual claims. The court denied both motions. On appeal, denying court erred in his various
motions compelling directed at of discovery McKinsey documents. (albeit He asserts that the McKinsey were, documents unwittingly), squarely within both his initial discovery requests and the corresponding motion to compel, thus the District Court should have discovery allowed Allstate, hand, of documents. on the other engages procedural history exhaustive review of the of the discovery case, phase arguing of this correctly District Court granting determined that Jacobsen’s motions cause prejudice would diligence due failed to demonstrate delay, and that Jacobsen discovery. neglect re-open sufficient excusable discovery history phase procedural focus on the noted, candidly As the District Court misplaced. case is of this original squarely within Jacobsen’s McKinsey were documents Court, Importantly, briefing does discovery request. scope within the McKinsey documents were dispute request; dispute nor does it the relevance original discovery timing format and McKinsey documents. While both the McKinsey unduly documents were regarding Jacobsen’s motions re- Court not whether to confusing, before the District was the issue produce Allstate to documents discovery, compel but whether open discovery request. It original that were within Jacobsen’s unnecessary Jacobsen demonstrated therefore to determine whether to re- neglect, seeking he diligence due or excusable because was discovery. open courts must remain mindful of the Ultimately, district discovery-to oftruth purpose promote
fundamental ascertainment therewith.” disposition of the lawsuit in accordance ultimate State, Dept. Revenue, Menholdt v. S. 792; citing Taylor, 329 U.S. 67 Ct. Hickman mutual 385, 392 "Discovery purpose by assuring fulfills this gathered by knowledge parties relevant facts both which are of all Menholdt, McKinsey 10. The proper litigation.” essential *14 theory indeed critical to that Allstate’s documents were Jacobsen’s faith. The regarding unrepresented claimants constituted bad policies judgment denying acted District Court without conscientious McKinsey documents, compel motions passed. The District notwithstanding discovery deadline had injustice Jacobsen, thus ruling resulted in substantial Court’s court was in error. required 7. Did District err in that Jacobsen was Court
¶59 or emotional distress in order to recover prove serious severe underlying out of the bad faith damages arising emotional distress claim? Court determined that Jacobsen’s emotional distress District
¶60
he
damages
because
failed to make a threshold
compensable
were
In
showing
reaching
distress was serious or severe.
emotional
conclusion,
forth in Sacco v.
applied
the court
the standard set
Press,
Mont
Mont.
required
Jacobsen was
to demonstrate
physical
distress,
manifestation of his emotional
notwithstanding
that his
parasitic
underlying
claim was
tort.3
The District
Court’s determination that
required
Jacobsen was
make a
showing
threshold
of serious or severe emotional distress in
present
order to
damages
evidence
such
awas conclusion
of law. Our
plenary. Mackrill,
standard of review is therefore
37.
Sacco,
In
this court undertook an extensive
of our
review
jurisprudence governing
compensability
of emotional distress in
time,
Montana. We explicitly recognized, for the first
independent
negligent
torts of
or
Sacco,
intentional infliction of emotional distress.
Though
recognized
context of emotional
damages
distress
arising
rights
out of a human
claim that “the tort
proof
[Sacco]
standard
for
of independent actions
for emotional
312, 34, 308
distress does not apply ....”2001 MT
Rather,
severity
of a physical or injury, mental emotional distress damages arising out of an underlying tort compensable only are where the plaintiff can show the emotional Bank, distress suffered is “severe.”First Allstate also seems assert that emotional distress are not available third-party in the *15 context of UTPA This claim. assertion is without merit. Emotional damages faith, distress are brought available the context of insurance bad whether Co., under the UTPA or the common See Gibson v. law. Western Fire Ins. 210 Mont. 267, (1984); 725, Co., Lorang 252, 12, v. Fortis Ins. 2008 MT 345 Mont. P.3d 186. the Restatement j comment of holding, adopted
at
In so
we
indicating (1965),
language
includes
(Second),
which
of Torts §46
person
severe that no reasonable
must be “so
the distress inflicted
205, 206.
Bank, 236 Mont. at
We
it.” First
to endure
expected
could be
duty
of
district court has
unequivocally
“[a]
held that
also
any
such
proof of
question of whether
determining the threshold
fact for
question
a
exists sufficient
raise
distress
severe emotional
206,
Bank court also
Mont
207. The First
Bank, 236
at
jury.”
First
Inc.,
Markets,
465,
what,
parasitic
any,
applies
evaluating
if
standard
when
gatekeeper
act as a
distress claims: must
court
emotional
of serious or
reject claims that do not meet the threshold standard
cases;
severity
First Bank line of
or does
suggested
severe as
availability
recovery for
amount, not
govern
the harm
*16
Vortex,Seltzer,
parasitic
suggested by
emotional distress claims as
and
Ultimately,
Lorang?
parasitic
to hold that the standard for
emotional
is
damages
meaningless
distress
“serious or severe” would render
‘heightened”
we
in
purported
standard
to establish
Sacco when we
recognized
viability
independent
ofan
cause ofaction for emotional
distress. We therefore hold that
the “serious
severe”
or
standard
only
in
independent
negligent
announced
Sacco
claims
applies
or
infliction of emotional
intentional
distress. To the extent our earlier
cases,
Johnson,
including
Bank,
Noonan, suggest
First
that a
plaintiff must
showing
make threshold
ofserious or severe emotional
for parasitic
damages
distress before a claim
emotional distress
go
jury,
allowed to
to the
we overrule those decisions.
forAs
emotional
damage
distress that is claimed
an element of
an underlying
tort
(parasitic
damages),
hereby
explicitly
emotional distress
we
adopt the standard set
in the
Jury
forth
Montana Pattern
Instruction
(M.P.I.2d 25.02, 15.01-03), cited in Lorang, and set forth above.
conclusion,
In
because the District
Court erred in allowing
damages,
fees and costs as
we
reverse
award of
compensatory damages
solely
which was based
on those fees and costs.
Further, without an
compensatory damages,
award of
there can be no
-
punitive damages. Stipe
award of
Polson,
v. First Interstate Bank
JUSTICES WARNERand MORRIS and DAY, DISTRICT JUDGE concur.
JUSTICE COTTER concurs and dissents. I fully concur in the Court’s Two, resolution of Issues Three and I Four. also Seven, concur the resolution of Issues Six and though uphold because I attorney fees, would the award of I would not reverse of compensatory awards punitive or remand for a new trial. I separately concur but write express my views with respect to Issue Five. I dissent from our resolution Issue One. First, I concur with this Court’s ultimate resolution of Issue Five-which addresses whether the District Court in granting erred Jacobsen’s motion to exclude legal release, evidence effect of the regard-but instruction proposed jury refusing circular. which I find rationale at ¶ the basis the Court’s
not on that there simple for the reason Rather, I affirm on this issue would to understand to enable presented evidence was sufficient presented. which was situation with of the release ramifications jury that a correctly instructed the Moreover, Court the District Allstate was binding no effect after rescission. has release underscoring from cross-examining point, from precluded circumstances, I argument. these closing in its Given this instruction District Court abused discretion that the would conclude questions. it ruled on these manner which As Court of Issue One. from the Court’s resolution I dissent equitable exception notes, our caselaw indicates situations in which an individual Rule is reserved for those American *17 fault litigation through into “no seeking attorney fees has been forced is, course, equitable 21. This consideration own.”Opinion, ¶ ofhis me a In this case it seems to circumstances before court. based on the through no was, fact, by into court Allstate that forced Jacobsen though was undeniably It clear that even Jacobsen fault ofhis own. Allstate, statutory duty to had a not a contract with Allstate party a to reasonably clear. See liability faith since was good settle faith, acted in bad §33-18-201(6), According jury, MCA. to the Allstate This tortious conduct statutory duty Jacobsen. and thus violated its a nothing seeking either position doing into the forced Jacobsen If had done rights his in a court of law. Jacobsen vindication of thereby profited by wrongful actions. nothing, have Allstate would done,” regards ought that as done which to have been “equity Since (1955), 519, 527, P.2d 754 Woodard, 129 Mont. Shook granting attorney fees weigh in favor of principles equity faith, compelled as to hire an as for Allstate’s bad he was good his claim in faith. attorney order to “convince”Allstate settle litigation, into states that “Jacobsen was forced Court compelled fact he felt to file suit a result notwithstanding the that the fine Opinion, respect, faith.” 21. With due Allstate’s bad ¶ being ‘feeling compelled” Torced”to defend distinction between instances, rights illusory. In both one’s is thin sue to vindicate actions taken respond no real choice but wronged party has Jacobsen, Here, rights. he wrongdoer, protect if wants to own, injured by no fault ofhis Allstate’s insured. through his claim. It properly when it refused to settle then acted in bad faith attorney hired an case it until Jacobsen is clear in this that wasn’t “compelled” duty Allstate felt to adhere to the it owed to Jacobsen to adjust good his claim in faith. recognized by Court, As the equitable exception
American Rule permits
attorney
party
an award of
fees to a
who is
attorney
forced into a
frivolous lawsuit
must incur
fees to defend
against
Opinion,
Inc.,
the claim.
(quoting
Lindey’s
Goodoverv.
(1993)).
430, 447,
fully recognize
I
that the
Court,
others,
cases cited
as well as
see e.g.
Grayheal,
Branch v.
(citing authorities),
¶74 that the for plaintiffs which I espouse here would swallow the American Rule. This is loser pays.” Rather, only it is the bad faith or pays. frivolous loser who It is only fair, it me, seems to to maligned plaintiff accord the the same equitable considerations that we historically have accorded the maligned defendant. Accordingly, I would conclude that the District Court did not err under these facts allowing in and fees costs damages. as I would affirm the ofattorney award fees and dissent from the Court’s failure to do so. joins
JUSTICE in NELSON the Concurrence and Dissent of JUSTICE COTTER. dissenting part. concurring part and RICE,
JUSTICE
3,
7,
6, but
of Issues
disposition
Court’s
agree
I
with the
in these
rulings
the
involved
and 5.1 believe
Issues
dissent from
a fair trial.
deprived Allstate of
issues
could
summarily that Allstate
ruled
Initially, the District Court
to
failing
pay
for
advance
under the UTPA
held liable
not be
evidence which
an intention to exclude
and indicated
wages,
his lost
trial, the court
at
to this conclusion.
contrary
be
would
which,
testimony
expert
Ramsey’s
to offer Mr.
permitted Jacobsen
order, clearly
contradictory
earlier
directly
court’s
while
duty. Perhaps realizing
under
that Allstate was
such
implied
issue,
jury:
the court told the
potential
over the
confusion
likely, in reference
some
Ramsey
going
testify,
most
Mr.
statues of
they
least that
exist under the
legal
various
rules or at
perhaps
general
with
reference
some
the State of Montana and
testify
cannot
will not be allowed to
law ... he
common
decision,
they
in this case and
apply
judicial
what
how
particular
case. At the end of
they
been violated
or not
have
whether
case,
you
applicable
I
law is.
will instruct
what
it
that would
Ramsey’s testimony
premise
proceeding
After
with
testimony
to use his
Allstate’s failure
jury
later instruct the
how
about
provide
do so. The court did not
the court failed to
pay,
advance
for
instructions,
request
court denied Allstate’s
promised
instead the
did not have
offering
jury
of a
instruction which clarified Allstate
duty
pay
wages.
lost
legal
advance
by2
argument
Allstate’s
under Issue
Court dismisses
only
did not have
concluding the law of the case was
UTPA,
pay the
duty under the
‘hot that its refusal to advance
legal
any
Opinion,
context.”
wages
could not be considered
mind,
does
clearly
the issue in the Court’s
may
23. While this
resolve
mind, of
question,
jury’s
in the
what use make
not resolve
instruction,
Ramsey’s testimony.
promised
Without the
testimony regarding
from the substantial
impression
left with
violated the
duty
pay wages
to advance
that Allstate had
Allstate’s
alone,
Court’s
essentially reversing
the District
UPTA that reason
I
that the
favor on the
would conclude
earlier
Allstate’s
issue.
Knudson,
Rohrer
District Court abused
discretion.
effect of the release. all about the release: evidence to the District Court’s exclusion *19 Tbjecause effectively Allstate’s rescission of Jacobsen’s release voided not, law, from beginning, release it was as a matter entitled upon legal rely effect of the release prior to its recession.” Opinion, issue, however, was not the ultimately void status Rather, of the release. upon focus ofthe trial was Allstate’s motives handling claim, in its including the actions it had taken prior to rescinding release. The truth about Allstate’s actions impact included the that the release had signed upon its decisions. bad, jury Good or should truth, have received that whole including enlightening evidence thought process about Allstate’s at the sought time Jacobsen help signed their after the release had been but before it highly was rescinded. It is relevant unfairly and its omission prejudices I Allstate. believe this was likewise abuse of discretion. Finally, regard with to Issue that the District Court erred altering language ofthe statute and using word “claim” “coverage” rather than in its instruction to the about §33- 18-201(1), MCA. particular question, On that I also agree with Allstate. In good the Court simply offers following reasons the statute. where the statute is declaring substantive liability law UTPA, under the I would follow it and require jury instructions to state the standards which the statute requires. I dissent on these issues.