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State v. Berdahl

Supreme Court of Montana

February 14, 2017

CHARLENE A. BERDAHL, Defendant, Counter-Claimant, Cross-Claimant, and Appellant.

          Submitted on Briefs: November 16, 2016

         APPEAL FROM: District Court of the First Judicial District, In and For the County of Lewis and Clark Cause No. BDV 14-894 Honorable Jeffrey M. Sherlock, Presiding Judge

          For Appellant: Jory C. Ruggiero, Domenic A. Cossi, Western Justice Associates, PLLC, Bozeman, Montana

          For Appellees: John G. Crist, Crist, Krogh, Butler & Nord, LLC, Billings, Montana (for George W. Huss),m W. Anderson Forsythe, Moulton Billingham, P.C., Billings, Montana, Katherine Orr, Assistant Attorney General, Helena, Montana

          For Amicus Curiae, Montana Trial Lawyers Association: Michael G. Eiselein, Eiselein Law Firm, PLLC, Billings, Montana



         ¶1 Charlene A. Berdahl (Berdahl) appeals the declaratory judgment entered by the First Judicial District Court, Lewis and Clark County, holding that the State of Montana owed no duty to defend or indemnify George Huss (Huss) against claims filed by Berdahl, and had no obligation to pay the stipulated settlement and confessed judgment between Huss and Berdahl. We affirm, and address the following issue:

         Did the District Court err by holding that the State bore no obligation to pay the stipulated settlement between Huss and Berdahl?


         ¶2 The facts found by the District Court for purposes of this declaratory action are as follows. In 1991, Berdahl began working as a court reporter for the Sixteenth Judicial District Court, in Forsyth. In November 2012, George Huss was elected as a district court judge in the Sixteenth Judicial District. Huss oversaw Department Two of the District and Berdahl worked directly for Huss as his primary court reporter. In this capacity, Berdahl worked closely with Huss and often traveled with him to locations within the District for official court business.

         ¶3 In February 2014, Berdahl filed a sexual harassment complaint against Huss with the Montana Human Rights Bureau (HRB). Berdahl alleged that Huss, during work time, had made various declarations of romantic interest, love, and undying devotion to her, which Berdahl resisted. Berdahl stated that Huss bought her gifts, offered to make her dinner while his wife was out of town, and expressed his desire to kiss and hug her. Berdahl alleged that Huss retaliated against her in the workplace when she resisted his overtures. Berdahl's detailed complaint set forth numerous further allegations about Huss's behavior, some of which was delineated by the District Court.

         ¶4 On February 24, 2014, Beth McLaughlin (McLaughlin), the State's Court Administrator, emailed Huss to advise that she had received Berdahl's human rights complaint, which had also named the State of Montana, and asked Huss to take no action until McLaughlin had obtained counsel for the judicial branch. In reply, Huss asked, "Will the State be providing me [with] counsel pursuant to [§] 2-9-305[,] MCA?" McLaughlin responded that she would not know until she received advice from counsel. Two days later, McLaughlin advised Huss by email that state counsel had been assigned for the HRB complaint, but that the assigned attorney was not immediately available due to scheduling conflicts.

         ¶5 On April 2, 2014, Huss's attorney, John Crist (Crist), wrote to McLaughlin requesting that the State "agree to defend and indemnify Judge George W. Huss" regarding Berdahl's HRB claims. Noting that Huss had previously contacted the State about the complaint, Crist explained that "this letter is intended to be a more formal notice as provided by statute. . . . [P]lease accept this letter as his formal tender of the defense of this action filed against him, and his request for indemnity as provided by Mont. Code Ann. § 2-9-305." On April 25, 2014, the Agency Legal Services Bureau, on behalf of the Court Administrator, wrote to Crist and affirmed that the State would underwrite the costs of Huss's defense, to be provided by Crist. The letter further explained that:

This tender of a defense is provided with a reservation of right not to provide payment for attorney services should it appear from the investigation by the Human Rights Bureau that Judge Huss was acting outside the course and scope of employment or if other elements of Mont. Code Ann. § 2-9-305(6) apply. In the case that any of these elements apply, Judge Huss will have to pay for his own defense.
Similarly the Court Administrator has not made a decision of whether it will provide indemnity with respect to the claims . . . but will do so at the completion of the HRB investigation and based upon the factors considered under Mont. Code Ann. § 2-9-305.

         ¶6 About four months later, on August 12, 2014, Crist again wrote to the State requesting that it "acknowledge its legal obligation to indemnify Judge Huss with respect to" the claims, and stating that "[t]he State does not need to await an investigator's report to make this determination." Crist's letter focused particularly on alleged actions taken by Huss to retaliate against Berdahl after she resisted his romantic overtures. Crist also requested that the State "meaningfully participate" in an HRB mediation on Berdahl's complaint, which had been scheduled for September 3, 2014. On August 26, 2014, the State responded to Crist, citing authority for the proposition that sexual harassment by a supervisor was not conduct within the scope of employment, and taking the position that Huss's alleged actions as stated in Berdahl's complaint "were not performed as part of Judge Huss' duties as a Montana District Court Judge. . . . As a result, the State concludes Judge ...

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