*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. 351 Mont. 464. P.3d *2 Haffeman; (argued), Paul R. Tighe J. Dennis Appellant: For P.C.; Tighe, Great Falls. Hatley, & Davis, Haffeman Foust; J. Buckley Lucas (argued), P. Appellee: Daniel For P.C.; Office, Bozeman. Buckley Law Foust Attorney (argued); Lawrence A. Anderson Amicus Curiae: For Association). (for Lawyers Law, Montana Trial at Great Falls of the Court. Opinion LEAPHART delivered JUSTICE (“Jacobsen’) against complaint filed Robert (“Allstate’) alia, statutory and alleging, inter Company Insurance faith, negligent infliction ofemotional law intentional and common bad in a trial on his distress, prevailed and actual malice. Jacobsen punitive claims, compensatory and was awarded both bad faith rulings Eighth appeals now from various damages. Allstate Court, cross-appeals from County. Jacobsen Judicial District Cascade compel discovery, and from Court’s decision the District sufficiently emotional distress was determination that Jacobsen’s *3 part, part, affirm in reverse legally compensable. severe to be We with this proceedings District Court for consistent and remand to the opinion. PROCEDURAL BACKGROUND

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 After Martin was release, approximately Allstate rescinded the and settled the claim for $200,000.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. 896 P.2d 411 court prior Just prohibited clarified that presenting also from evidence of damages arising alleged emotional distress out Allstate’s view, bad faith and actual malice. In the court’s our decision in Sacco imposed duty upon trial determine, court to as a threshold matter law, that a plaintiff proven has emotional distress serious or severe allowing any presented before evidence of jury, such be to the notwithstanding are parasitic claimed to the plaintiff s underlying cause of Acting gatekeeper, action. as the court concluded that Jacobsen had not met the serious or severe threshold. trial, On the eve of Jacobsen’s in Sampson issued our decision Co., Nat’l Farmers Union Property Casualty holding attorney fees were not compensatory

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. 191 P.3d 451. The District Court’s determination that attorney fees were recoverable an damages element of is a conclusion of law which we review for Liberty correctness. Ruhd v. Corp., Northwest Ins. ¶ P.3d 561. There is that dispute no Montana follows the well established Rule, provides American which a party that in a prevailing lawsuit is generally not attorney entitled to specific fees absent a contractual provision statutory grant. Sampson, 15. The UTPA does statutory contain a grant attorney fees insurance faith bad Sampson, actions. We held in Sampson pursuant Rule, American claimant third-party may attorney not recover fees incurred in settling a claim for bad faith as an element of damages under the Specifically, UTPA. Tt]he noted that Legislature did not construct the UTPA to provide recovery for the of attorney fees and therefore we cannot construe it to do so.” 22. inAs Sampson, Jacobsen is a third-party claimant who incurred

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. 636 P.2d 860 v. of capacity the was in her after justice peace personal defendant sued leave, them contempt ordering in and to finding spectators courtroom existed). As personal liability explained where no basis Goodover, litigation the will position plaintiff an individual’s as to the normally preclude application equitable exception as Goodover, position 255 at 447. Jacobsen’s American Rule. exception inapplicable. the plaintiff litigation equitable renders the applied equitable In contrast to the situations in which we have notwithstanding into exception, litigation, Jacobsen was not forced file suit a result of Allstate’s bad faith. compelled that he felt to policy sufficiently Ultimately, presents authority neither nor Jacobsen depart “narrowly from compelling practice for this Court to our construing” exception to the American Rule. equitable in the instant exception applicable do we find the insurance Nor where an insurer breaches exception case. The insurance arises “to duty party, forcing the insured indemnify to defend or insured legal action to obtain the full benefit of assume burden Bureau Mut. Ins. Co. insurance contract....” Mountain West Farm 231, This Brewer, exception 315 Mont. 69 P.3d 652. MT ¶ justified relationship is the contractual between the insurer and the insured, fiduciary obligation enhanced which arises therefrom. Brewer, exception 37. We refused to extend the insurance to third- ¶ claimants, it party as would undermine the fundamental ofthe precept exception and “drive a stake into the heart the American Rule.” Brewer, 40. limited holding that our in Brewer is theory-that preclude attorney contract party does fees a third proves who tortious conduct the insurer. our decision upon Brewer was based the lack fiduciary duty running from an insurer a third-party logic claimant. The same applies here: Allstate fiduciary duty Jacobsen, did not have party because he not a insurance contract. The underlying rationale the insurance exception to the American fiduciary duty, Rule is the existence of a duty no such exists here. While liberty modify this Court is at apply exceptions

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, 38 P.3d 812. 307 Mont. Sprow, 2001 MT v. ¶ any statutory discussion, Notwithstanding we are unaware settling a recovery claim. allowing of costs incurred authority to introduce allowing err in Jacobsen 2. Did the District Court lost “advance Jacobsen’s testimony regarding pay” Allstate’s refusal to regarding disallowing proposed instruction wages, and Allstate’s wages? refusing pay to advance the lost liability for admissibility of rulings on the Court’s standard of review of This court abused evidence, testimony, oral is whether district including Snell, 2004 its discretion. State v. refusal issue a similarly review a district court’s

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., 201 P.3d 139. case, moved court for At the close of Jacobsen’s Allstate failed to a matter of law2 on the basis that Jacobsen

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, 152 P.3d 727. In prevail motion, order to on its required Allstate was to “a show complete any absence justify of evidence” which would to submitting jury the issue of whether Allstate acted with actual malice settling words, Jacobsen’s claim. In other required Allstate was show that Jacobsen to present failed satisfy sufficient evidence to statutory of §27-1-221, elements malice set forth in MCA:

(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, 337 162 P.3d 106. Mont. jury The District Court instructed the Instructions

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, ¶¶ 182 P.3d 80. In determining jury, how instruct the the district court should take into consideration both the parties’ theories the evidence presented at Assoc., Inc., trial. Cechovic v. Hardin & Ultimately, a district court’s statutory modification of the language conformity should maintain law, with remaining while appropriate the factual context ofthe case. Essentially, court, contends through that the

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 198 P.3d 828. A district arbitrarily court abuses its discretion if it acts without conscientious judgment resulting exceeds bounds of reason in substantial injustice. Dunning, practices CCPR claims central to issues this case were

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 896 P.2d 411 High Country Independent 271 the Sacco applying that the court erred in appeal standard, asserting that Sacco does not set a for proving standard damages general, emotional for distress torts in but rather sets the independent maintaining standard for an action for intentional or negligent infliction of emotional distress. Allstate asserts that pursuant holding (N.A.)-Billings Clark, to our in First Bank v. (1989),

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 271 Mont. at 236. these torts as viable stand action, alone causes of we established a heightened proof, standard of requiring that a plaintiff claiming intentional or negligent infliction of emotional distress make a must threshold showing the court that their emotional distress “serious severe” in proceed order to Sacco, trial. at Mont. Later, in Fishing Systems, Foss, Vortex Inc. v. we held in the

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 38 P.3d 836. govern “the of the harm should amount, not the availability, recovery.” Vortex, in so holding, we did not discuss those pre-Sacco cases which set the then- applicable standard evaluating parasitic claims for emotional distress. Clark, In First Bank (N.A.)-Billings we held that absence

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, 686 P.2d 209 Mont. v. Supersave cited Johnson 329, 740 P.2d 631 Butte, 227 Mont. (1984), v. First Bank and Noonan showing of a mental or (1987), that absent a proposition for the if the tortious compensable only injury, emotional distress physical protected a interest legally invasion of a “substantial conduct results Bank, ....”First impact person significant [caused] and ... at of the First Bank line cases Nor we discuss the effect did (2007) 225, 154 P.3d 561 Morton, 2007 MT Seltzer (where erroneously instructed the that the District Court we noted to a claim for the Sacco or severe” standard apply “serious tort, parasitic underlying but damages emotional distress presented that the had evidence plaintiff nonetheless indicated physical “resultant emotional distress with “serious or severe” Co., 11; Lorang n. or in v. Fortis Ins. complications”) ¶ (where again we held 252, 190, 345 Mont. 192 P.3d 186 arising out damages for emotional distress of a claim parasitic context standard does that the Sacco “serious severe” of a UTPA violation state in Seltzer or explicitly this Court did apply). While what, evaluating parasitic if should Lorang any, apply standard damages, did cite to Montana Pattern for emotional distress 15.01-03, 25.02, “[the which states that law does Jury Instruction 2d for compensation which to calculate not set definite standard n. 29. The suffering Lorang, distress.] mental and emotional given it should be “where comments to instruction state that damages independent are allowed in absence of emotional distress tort claims ....” has confusion as to recognize that our case law created We

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 188 P.3d 1063. Accordingly, punitive damage reverse the We award. remand for a trial light new holding our that the court erred allowing in not to consider emotional distress as damages. an element of A compensatory award distress, could, for emotional in the jury, discretion of the serve as a predicate for an of punitive award damages. We further direct the District Court on remand to compel production of the McKinsey documents.

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), 988 P.2d 761 indicate that party party who initiates a suit-as to a opposed who is forced defend against one-normally cannot recover fees equitable under the exception Opinion, the American Rule. See agree I “normally” this consideration apply, should but it should apply every instance, it should not apply under the presented Rather, circumstances here. I would conclude that right counterpart to of a being to recover fees for forced defendant litigation into recognized similarly should be plaintiffs. situated equity Just as operate should on behalf of a defendant forced into litigation, operate frivolous should a plaintiff as well on’behalf of whom a fact-finder litigation concludes was forced to file due to the bad faith-er, described, otherwise opposing frivolous-conduct ofthe party. Here, Judge Sandefur found equitable such an exception to the Rule, American concluding that a plaintiff party third action against may an insurer recover fees if the insurer’s compelled actions plaintiff to file suit to recover what was due him liability under the policy, the fees were not incurred in relation to either UTPA or tort action, and the fees are not otherwise recoverable under the Uniform Declaratory Judgment that, Act. It goes saying without if there was no faith, bad then the fees from the prior action would not have been *18 recoverable. Finally, I do not believe exception

¶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. 203 P.3d 759. 5, regarding disagree analysis Court’s Issue I also with the challenge signed The Court dismisses

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.