PETER R. SHERNER and DEBORAH SHERNER v. NATIONAL LOSS CONTROL SERVICES CORPORATION, CONOCO, INC., CRAWFORD & COMPANY, CATHY ANDERSEN and JOHN DOES I-V
No. 04-118
IN THE SUPREME COURT OF THE STATE OF MONTANA
November 15, 2005
2005 MT 284
APPEAL FROM: District Court of the Thirteenth Judicial District, In and For the County of Yellowstone, Cause No. DV-02-0009 Honorable G. Todd Baugh, Presiding Judge
COUNSEL OF RECORD:
For
Gene R. Jarussi; Jarussi & Bishop, Billings, Montana Jeremiah C. Lynch, Attorney at Law, Great Falls, Montana
For Respondents:
Robert M. Carlson; Corette, Pohlman & Kebe, Butte, Montana (For National Loss Control Service Corporation)
David A. Veeder, Jolane D. Veeder; Veeder Law Firm, Billings, Montana (For ConocoPhillips)
Ian McIntosh; Crowley, Haughey, Hanson, Toole & Dietrich, Bozeman Montana (For Crawford & Company and Cathy Andersen)
Submitted on Briefs: August 18, 2005
Decided: November 15, 2005
Filed:
Clerk
Chief Justice Karla M. Gray delivered the Opinion of the Court.
¶1 Peter R. Sherner (Peter) and Deborah Sherner (collectively, the Sherners) appeal from an order of the Thirteenth Judicial District Court, Yellowstone County, granting summary judgment dismissing all their claims and awarding costs to the defendants. We affirm in part, reverse in part and remand.
¶2 We restate the issues on appeal as follows:
¶3 1. Did the District Court err in granting summary judgment to Cathy Andersen on the basis that she acted within the course and scope of her employment?
¶5 3. Did the District Court err in granting summary judgment to all defendants on the malicious prosecution claim?
¶6 4. Did the District Court err in setting the amount of costs awarded to three defendants?
¶7 The Sherners also challenge the District Court‘s conclusions that the Workers’ Compensation Court has exclusive jurisdiction over this case and that the claims against Conoco must fail based on res judicata, and argue that the District Court erred in dismissing their claims based on negligence, negligent and intentional infliction of emotional distress and violation of statutory and constitutional rights. Based on our decision on the merits of Issues One and Two, it is unnecessary to further consider these claims.
FACTUAL AND PROCEDURAL BACKGROUND
¶8 Peter was seriously injured in August of 1995 as a result of exposure to hydrogen sulfide gas while working at the Conoco refinery in Billings, Montana. Conoco is a self-insured employer under the
¶9 The Sherners brought suit against Conoco and its employees, alleging their intentional and negligent acts resulted in Peter‘s injuries. See Sherner v. Conoco, Inc., 2000 MT 50, 298 Mont. 401, 995 P.2d 990 (Sherner I). The Sherners eventually obtained a $1.9 million judgment in that lawsuit, which Conoco paid in September 2001.
¶10 In January of 2002, the Sherners filed their complaint in the present case against Conoco, National Loss Control Services Corporation (National), Crawford & Company (Crawford) and Cathy Andersen (Andersen), a Crawford claims adjuster. They allege the defendants acted with malice in encouraging the State Auditor to investigate Peter for allegedly defrauding his insurer, which resulted in criminal charges against him. The Sherners sought damages for intentional infliction of emotional distress, negligent infliction of emotional distress, and violation of their statutory and constitutional rights. The complaint also sought damages for malicious prosecution. The Sherners’ complaint in the action underlying this appeal was based on the following facts and events after Peter‘s injury.
¶11 National has been the adjuster for Peter‘s claims since his injury. Intermountain Claims (Intermountain) served as National‘s local claims adjuster in Montana until January of 1998, at which time Crawford took over its duties. In June of 1996, Peter requested home health care assistance. After receiving confirmation from Peter‘s treating physicians that home health care was medically necessary, Intermountain authorized a home health care attendant for Peter for nine hours a day, seven days a week, subject to periodic review. The home health care attendant was to provide light housekeeping and personal care assistance.
¶12 Tracey Sherner (Tracey), the Sherners’ daughter-in-law, initially provided the care. She submitted time sheets and a bill totaling $9,000 for services in 1996. However, an investigator for Intermountain conducted surveillance and found that Tracey was not actually with Peter at all times for which she billed. Intermountain filed a workers’ compensation petition against Tracey alleging fraud. The dispute was settled in May of 1997, and Intermountain informed the Sherners, through their attorney, that Peter‘s home health care must be provided by a properly certified and licensed home health care aide and not by a family member.
¶13 In November of 1996, the Sherners chose their neighbor Bernice Corcoran (Bernice) to provide home health care services. Bernice was not a certified home health care aide when she started, but attended classes at a local nursing home and earned her certification while providing services for Peter.
¶14 On November 28, 1997, the Governor‘s Fraud Hot Line received an anonymous call that Bernice had been submitting time sheets
¶15 In January of 1998, Crawford replaced Intermountain as National‘s local claims adjuster. In January of 1999, Crawford adjuster Andersen noted discrepancies in Bernice‘s billing statements. Crawford requested evaluation of Peter by his treating physician, who verified that Peter‘s maximum of nine hours a day of home health care was necessary and appropriate.
¶16 Crawford then hired a private investigator from BCI, Inc., to observe Bernice and determine if she was actually providing care to Peter at the times claimed. BCI‘s surveillance revealed that Bernice was not with Peter on some days for which she billed. Crawford also interviewed both Peter and Bernice, and confirmed that Bernice was not providing all the services for which she billed. Accordingly, Bernice‘s services were terminated on November 17, 1999.
¶17 National then referred its concerns regarding Bernice‘s services to the State Auditor--the ex officio insurance commissioner in Montana--whose office conducted its own investigation into the matter. In response to a written request, National and Crawford each provided the State Auditor with copies of all of the documents each possessed relating to Peter‘s workers’ compensation claims, and otherwise cooperated with the State Auditor‘s investigation. The State Auditor also obtained payroll records from Saint Vincent Hospital, where Bernice worked part-time, and discovered that Bernice was working there during some of the times she claimed to have been providing home care to Peter. Bernice later admitted to having “double billed” her time.
¶18 On January 29, 2001, with the State Auditor‘s attorney--who had been specially deputized as a deputy county attorney--serving as the prosecutor, the Yellowstone County Attorney filed criminal charges against Peter and Bernice. The Information filed on behalf of the State of Montana charged Peter with felony theft by common scheme because he signed the fraudulent bills Bernice submitted.
¶19 During discovery, Bernice admitted she had “subcontracted” with the Sherners’ son, Trevor, to pay him $400 a month to provide some of his father‘s home health care. Neither Bernice nor the Sherners ever reported this arrangement to anyone at Conoco, Intermountain or Crawford. Trevor kept no records of when he provided services, and he was not a certified home health care provider. Deborah Sherner admitted that, despite her knowledge that family members were prohibited from providing Peter‘s home health care, she arranged the subcontract between Bernice and Trevor.
¶20 The State later moved to dismiss the criminal charge against Peter, and the charge was dismissed on March 1, 2001. Bernice ultimately pled guilty to felony theft by common scheme.
¶21 The Sherners filed the complaint in the present case on January 4, 2002. They sought damages on the basis of allegations that Conoco, National, Crawford, and Andersen instigated the criminal proceedings against Peter and withheld information from the State Auditor that negated the allegations of wrongdoing against him. Andersen moved for summary judgment and the District Court granted her motion in March of 2003. The remaining defendants also moved for summary judgment and, after a hearing, the District Court granted all defendants’ motions on December 9, 2003, stating the defendants would be awarded their costs.
¶22 Conoco, Crawford and National submitted bills of costs on December 16, 2003. On December 17, 2003, the District Court entered judgment against the Sherners and assessed costs in the full amount sought by these defendants. On January 6, 2004, the court filed an order entitled “Notice,” apparently entered sua sponte, in which it stated it had taxed costs on December 31, 2003, as requested by defendants after noting no objections by the Sherners. Attached to the court‘s order was a copy of the December 17, 2003 judgment. This appeal followed.
¶23 This Court‘s review of a district court‘s grant of summary judgment is de novo and we apply the criteria contained in Rule 56, M.R.Civ.P. The party moving for summary judgment bears the initial burden of establishing both the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. If this burden is met, the burden shifts to the nonmoving party to prove, by more than mere denial and speculation, that a genuine issue of material fact exists which precludes summary judgment. We review a district court‘s legal determinations to determine whether the conclusions are correct. Farmers Union Mut. Ins. Co. v. Staples, 2004 MT 108, ¶ 18, 321 Mont. 99, ¶ 18, 90 P.3d 381, ¶ 18 (citations omitted).
ISSUE ONE
¶24 Did the District Court err in granting summary judgment to Andersen on the basis that she acted within the course and scope of her employment?
¶25 The Sherners first argue that the District Court erred when it concluded Andersen‘s conduct fell within the scope of her employment as an adjuster for Crawford and, therefore, she was not subject to personal liability for her actions. Generally, employees and agents of a corporation are shielded from personal liability for acts taken on behalf of the corporation. Phillips v. Montana Ed. Ass‘n (1980), 187 Mont. 419, 424-25, 610 P.2d 154, 157-58. The Sherners argue that a reasonable jury could have concluded that Andersen was personally liable under
¶26 We have interpreted
¶27 Conclusory statements are not sufficient to defeat a motion for summary judgment. Bruner v. Yellowstone County (1995), 272 Mont. 261, 264, 900 P.2d 901, 903 (citation omitted). Here, the record contains no evidence that would show Andersen did anything more than simply report what she found in her employer‘s records or learned after investigation to further her employer‘s interests. Other than the Sherners’ unsupported conclusions, there is no indiction that Andersen acted negligently or other than within the course and scope of her employment in handling Peter‘s case, or when she noted and reported the discrepancies she found in Peter‘s claims.
¶28 We hold that the District Court did not err when it concluded Andersen acted within the scope of her employment and, thus, was immune from personal liability.
ISSUE TWO
¶29 Did the District Court err in granting summary judgment to all defendants based on
¶30 The Sherners argue the District Court erred in concluding that Conoco, National and Crawford were immune from all civil liability under
¶31
In the absence of malice, an insurer, an officer, employee, or producer of the insurer, an independent adjuster, an administrator, a consultant, or any private person is not subject to civil liability for filing reports, providing information, or otherwise cooperating with an investigation or examination of insurance fraud conducted by the commissioner.
(Emphasis added.) Malice is not defined in Title 33 of the Montana Code Annotated, but
¶32
¶33 The present issue relates to the tort claims of negligence, intentional and negligent infliction of emotional distress and defamation, and to the claims of violation of statutory and constitutional rights. The Sherners suggest that the
¶34 The Sherners base their claim of malicious prosecution on their perception that National and Crawford, as agents of Conoco in its role as the insurer, maliciously targeted Peter because he was performing physical activities that led them to believe he did not require domiciliary care. The Sherners then argue that since Peter‘s treating physician authorized him to engage in such activities, National and Crawford acted with malice when they investigated him. They further allege these defendants withheld information from the State Auditor regarding Peter‘s physical condition that would absolve him of wrongdoing.
¶35 The Sherners’ arguments miss the point. Peter was charged with felony theft by common scheme because he signed the fraudulent bills submitted by Bernice. The charges did not relate to whether he was physically impaired so as to warrant domiciliary care. Thus, information concerning his physical condition, whether National and Crawford provided it to the State Auditor or not, was not relevant to the charge which underlies the malicious prosecution claim. Nothing in the record indicates that Crawford or National acted with malice in investigating Peter‘s claim.
¶36 On the contrary, the facts clearly indicate Crawford and National were simply doing their jobs when they investigated Peter‘s claim. On November 28, 1997, the Governor‘s Fraud Hot Line received an anonymous call that Bernice had submitted time sheets fraudulently claiming to have provided services to Peter. Based on this information, Crawford, which had recently taken over as the local adjuster from Intermountain, initiated an investigation of Bernice. The investigation revealed that Bernice was not, in fact, with Peter at many of the times she claimed to be providing him with care. Pursuant to
¶37 National and Crawford met their statutory duty by providing the results of their investigation to the State Auditor. The State Auditor then performed an independent investigation, gathered additional information and independently concluded that charges should be filed against Bernice and Peter. Finally, the prosecuting attorney testified by deposition that he was solely responsible for making the decision to file charges against Peter, and that he was not pressured by the defendants to prosecute the case. Under these circumstances, it is clear that the defendants
¶38 We conclude that the Sherners have failed to present evidence creating a genuine issue of material fact as to whether the defendants acted with malice. They simply made no showing that the defendants’ conduct indicated “a wish to vex, annoy, or injure” them or any “intent to do a wrongful act.” See
ISSUE THREE
¶39 Did the District Court err in granting summary judgment to all defendants on the malicious prosecution claim?
¶40 The Sherners claim the defendants were responsible for instigating the criminal charges against Peter, and that they did so with malice. They argue that the District Court erred in granting summary judgment to the defendants because there are facts in the record sufficient to sustain a civil claim for malicious prosecution.
¶41 In an action for malicious prosecution, the plaintiff must establish each of the following elements:
(1) a judicial proceeding was commenced and prosecuted against the plaintiff;
(2) the defendant was responsible for instigating, prosecuting or continuing such proceeding;
(3) there was a lack of probable cause for the defendant‘s acts;
(4) the defendant was actuated by malice;
(5) the judicial proceeding terminated favorably for plaintiff; and
(6) the plaintiff suffered damage.
Plouffe v. Montana Dept. of Public Health and Human Services, 2002 MT 64, ¶ 16, 309 Mont. 184, ¶ 16, 45 P.3d 10, ¶ 16 (citations omitted). If the plaintiff fails to offer proof of any one of these elements, the action fails, and summary judgment in favor of the defendant is proper. See White v. Murdock (1994), 265 Mont. 386, 389-90, 877 P.2d 474, 476 (citation omitted). The District Court concluded the Sherners had not offered evidence to support the elements of malicious prosecution, and granted summary judgment for the defendants.
¶42 There is no question that the first element necessary to establish malicious prosecution is present in this case. A criminal case was commenced against Peter.
¶43 We have already discussed the facts of this case relating to the second element of malicious prosecution. The State Auditor and prosecutor acted independently on the basis of their investigations and the defendants were not responsible for instigating, prosecuting or continuing the criminal proceeding.
¶44 Similarly, with regard to the fourth element required for a malicious prosecution action, we have discussed the absence of malice in resolving the immunity statute issue, above. We concluded the Sherners failed to present evidence that the defendants acted with malice.
¶45 Because the Sherners have not come forward with sufficient evidence to raise issues of material fact concerning whether the defendants were responsible for instigating, prosecuting or continuing the prosecution of Peter, or whether the defendants were actuated by malice, we need not consider the other elements of malicious prosecution.
¶46 We hold that the District Court did not err in granting summary judgment to all defendants on the malicious prosecution claim.
ISSUE FOUR
¶47 Did the District Court err in setting the amount of costs awarded to three defendants?
¶48 On December 9, 2003, the District Court entered its order granting summary judgment in favor of the defendants, with the defendants awarded their costs. The Clerk of the District Court mailed copies of this order to all parties that same day and, pursuant
¶49 The Sherners argue that by entering a Judgment on December 17, 2003, which included the costs requested by the three defendants, the District Court deprived them of the opportunity to object to the bills of costs as permitted by
¶50
¶51 Girson v. Girson (1941), 112 Mont. 183, 114 P.2d 274, our only decision on this issue, supports this interpretation of the plain language of the statute. There, we briefly addressed a defendant‘s contention that the trial court erred in entering judgment for costs--that is, the amount of the costs--without allowing him the 5-day period within which to object. Addressing § 9803, RCM (1921)--the predecessor to
¶52 Conoco and Crawford assert, however, that the Sherners waived their right to appeal this issue by failing to object to the costs below. In a similar vein, National points out that the Sherners did not ask the District Court to amend the Judgment pursuant to Rule 59, M.R.Civ.P.
¶53 The District Court having failed to give the Sherners the 5-day period in which to timely object to the costs sought as required by
¶54 National also contends the Sherners do not identify on appeal any argument that its cost bill was inappropriate or unsupported by Montana law. National is correct. We observe, however, that the Sherners properly did not request this Court to make determinations required by Montana law to be made by the trial court in the first instance.
¶56 The two statutes, read together, give the prevailing party 5 days to file a bill of costs and the opposing party 5 days to file a notice of a motion to have the trial court tax the costs. By simple logic, the amount of the costs cannot be determined unless and until the 5 days permitted to the opposing party have passed. If the opposing party timely objects, the trial court must tax the costs. If the opposing party does not object timely,
¶57 The dissent‘s view that somehow our determination of the costs issue here changes law in effect since 1895 is puzzling, since the dissent advances no authority for this view. Indeed, Gahagan, on which the dissent relies, supports the result in this case rather than the dissent‘s view. There, the prevailing plaintiff filed his memorandum of costs and, two days later, the defendant timely filed a notice of motion to tax costs, advised of objections to certain items and requested a hearing before the court to present its objections and then request the court to tax costs. Thereafter, the trial court struck certain items of claimed costs and entered judgment. Gahagan, 100 Mont. at 601-02, 52 P.2d at 151-52. We affirmed the trial court‘s action on appeal. Gahagan, 100 Mont. at 612, 52 P.2d at 156. This is precisely the type of procedure which we require in the present case.
¶58 In advancing Gahagan, the dissent seems to miss the very point at issue here, which is that the party opposing the bill of costs has a statutory time frame in which to object. Thereafter, the trial court can proceed to tax costs appropriately. Here, unlike in Gahagan, the Sherners were denied their statutorily-authorized time to object to the bills of costs.
¶59 Finally, the dissent closes with the thought that trial courts will be involved in every costs proceeding, regardless of whether objection is made. This statement reflects the dissent‘s basic misunderstanding of our decision here: a losing party must be allowed the 5-day period to object and, if timely objection is made, the court is required to tax costs thereafter. If no timely objection is made,
¶60 We hold that the District Court erred in setting the amount of costs awarded to three defendants.
CONCLUSION
¶61 The District Court‘s summary judgment in favor of the defendants and dismissal of the Sherners’ claims are affirmed. The District Court‘s January 6, 2004 “Notice” and that portion of its December 17, 2003 Judgment specifying costs are vacated. This matter is remanded to the District Court for further proceedings on costs consistent with this Opinion.
/S/ KARLA M. GRAY
We concur:
/S/ W. WILLIAM LEAPHART
Justice Patricia O. Cotter concurs and dissents.
¶62 I join in the Court‘s disposition of Issue Four. I dissent from the Court‘s Opinion on the remainder of the issues.
¶63 The Court‘s recitation of facts, while correct as far as it goes, is far too cursory. In fact, the Court sets out basically those facts which support its decision. For the most part, it ignores many allegations made by the Plaintiffs--most of which are not in dispute--which raise genuine issues of material fact regarding the motivations of the Defendants in referring Sherner for fraud investigation, and which are deserving of resolution
¶64 While it is true that the actual complaint filed by the Auditor addressed only the alleged billing fraud, the fact remains that the initial referral and investigation did not start that way. It is that referral, based upon a knowingly misleading set of facts, which is the subject of Sherner‘s allegations. It is against this full backdrop that the Plaintiffs’ claims of tortious misconduct and malicious prosecution should have been--but were not--analyzed by the Court.
¶65 Turning to the Court‘s legal conclusions, I find error there as well, for two reasons. First, the legal conclusions are reached on the basis of an abbreviated and incomplete statement of facts, as noted above. Second, the Court in my judgment failed to apply the correct statutory analysis to the facts before it.
¶66 In resolving Issue One with respect to the entry of summary judgment in favor of Andersen, the Court declined to consider the provisions of
¶67 Turning to Issue Two, under which the Court granted summary judgment to the remaining Defendants based upon immunity under
¶68 For the foregoing reasons, I would reverse the entry of summary judgment on Issues One through Three, and remand for trial on the merits. I dissent from our refusal to do so.
/S/ PATRICIA O. COTTER
Justice James C. Nelson joins in the concurrence and dissent of Justice Patricia O. Cotter.
/S/ JAMES C. NELSON
Justice John Warner dissenting.
¶69 I agree with the Court‘s decision that the Sherners’ claims for relief must fail and this action be dismissed. I strenuously dissent from the Court‘s remand of this case to re-tax costs.
¶70 In two brief paragraphs for no logical reason, and with no citation to authority, the Sherners state that the judgment of December 17, 2003, was signed in violation of
¶71
A party dissatisfied with the costs claimed may, within 5 days after notice of filing of the bill of costs, file and serve a notice of a motion to have the same taxed by the court in which the judgment was rendered or by the judge thereof at chambers.
¶72 The Court, as its thesis, states in ¶ 50 that by inserting in the judgment the amounts claimed by National, Conoco and Crawford, the District Court deprived the Sherners of their opportunity to object to such costs. No logical reason for this addition to the statutes is given. Nowhere in either
¶73 At the time the District Court made its decision that Defendants would be successful, it also determined that they would have their costs. The amount of costs claimed by the Defendants was at that time unknown to both the court and the Sherners. So, the amount of costs claimed had to be ascertained. The claiming parties are the only ones who have the information necessary to do this. According to the statutory scheme, the court would not become involved at all in assessing costs unless a timely notice of objection is filed pursuant to
¶74 After the bills of costs were filed, the Sherners had five days to file a simple, short document that, in effect, says: “You are given notice that we will file a motion to have the District Court tax costs.” If such notice had been filed, the Sherners could later have
¶75 Montana‘s statutory scheme for claiming costs, providing for an objection to the claim, and setting strict and short time limits for these actions, is simple, to the point, and designed to not delay the entry of judgment by wrangling over costs. Obviously, the judgment amount is determined, including costs, the judgment is filed, and the judgment creditor may have execution thereon, right away. Entry of judgment shall not be delayed for the taxing of costs. Rule 58, M.R.Civ.P. However,
¶76 There is no error in how costs were taxed. The Defendants in this case were entitled to costs by virtue of the summary judgment order entered in their favor on December 9, 2003. See Springer v. Becker (1997), 284 Mont. 267, 277, 949 P.2d 641, 646;
¶77 Once the amount of the costs claimed was ascertained by the filing of the bills of costs, the Clerk of Court had a statutory duty to include such costs in the judgment within two days.
¶78 The amounts of costs taxed, which were included in the judgment, were still subject to the Sherners’ right to have them taxed by the court. The way to invoke this right was to file a notice of intent to file a motion to have the court, not the claiming parties, determine the costs.
¶79 If they wanted to object to the amount of costs in the judgment, the Sherners had an affirmative duty to, within five days of the service of the bills of costs, file and serve notice of a motion to have the same taxed by the court.
¶80 From 1895 until today the procedure for taxing costs was rather simple. Section 1867, Mont. Code of Civil Procedure (1895). The parties that were awarded costs, or their lawyers, took the lead. Costs were taxed by claiming them in a sworn bill of costs.2 If
¶81 Until now the rules were also clear. If the successful parties wanted their costs, they had better get a bill of costs filed and served on time. If the unsuccessful parties were dissatisfied, they had better file and serve a timely notice that they wanted the court to tax costs, or they would have to pay the amount claimed.
¶82 On this day the rules change. Exactly what all of the rules are is difficult to determine from the Court‘s opinion. But, we now know that if the judge or the clerk is too quick in filling in the blanks the unsuccessful party no longer has to object – it is an automatic reversal on appeal. The courts are now involved in the process even if no objection is made. I have got enough to do and I dissent from the Court‘s remand to re-tax costs.
/S/ JOHN WARNER
Justice Jim Rice concurring in part and dissenting in part.
¶83 I concur with the Court‘s opinion with the exception of Issue 4, on the taxation of costs.
¶84 The Court‘s error is its attempt to force the assessment of costs and the filing of the judgment into a solitary procedure and timeline, when the statutes provide that these two matters can occur separately.
¶85 Indeed, there may well be cases in which an urgency requires a judgment to be immediately entered. The Court‘s decision today stalls the filing of a judgment until completion of the cost process. There is no authority for requiring such a delay in a judgment‘s entry, and a prevailing party should not have to choose between claiming costs and having the judgment entered immediately.
¶86
¶87 Substantially similar language is found in
Clerk to include interest in judgment. The clerk must include in the judgment entered up by him any interest on the verdict or decision of the court, from the time it was rendered or made.
Thus, interest, like costs, is an ancillary issue that does not interfere with the entering of the judgment itself.
¶88 Consequently, I believe the Court errs by holding that by “entering a Judgment” the District Court deprived the Sherners of the opportunity to object to the bills of costs as permitted by
/S/ JIM RICE