JEFFREY R. FOLSOM, Plaintiff, Appellee, and Cross-Appellant,
MONTANA PUBLIC EMPLOYEES' ASSOCIATION, INC., a Montana non-profit Corporation, Defendant, Appellant and Cross-Appellee.
Submitted on Briefs: March 8, 2017
FROM: District Court of the Eleventh Judicial District, In
and For the County of Flathead, Cause No. DV 14-832(C)
Honorable Heidi Ulbricht, Presiding Judge
Appellant: James P. Molloy, Gallik, Bremer & Molloy,
P.C., Bozeman, Montana
Appellee: Kim T. Christopherson, Attorney at Law,
Christopherson Law Office, P.C., Kalispell, Montana
M. SANDEFUR, JUDGE
Montana Public Employees' Association (MPEA) appeals
judgments of the Montana Eleventh Judicial District Court,
Flathead County: (1) decreeing that MPEA breached its duty of
fair representation (DFR) to Jeffrey R. Folsom (Folsom) and
engaged in related common law fraud; (2) awarding Folsom $47,
550 in attorney fees as an element of compensatory damages on
his DFR claim; and (3) awarding $50, 000 in punitive damages
on his related common law fraud claim. MPEA further appeals
the court's denial of MPEA's subsequent M. R. Civ. P.
59(e) and 60(b)(6) motions for post-judgment relief.
Folsom cross-appeals the District Court's denial of his
request for compensatory lost wages on the DFR claim and his
subsequent motion for post-judgment relief under M. R. Civ.
P. 59(a)(2) and 60(b)(1) and § 25-11-102(3),
MCA. We reverse the District Court's judgments
and remand for further proceedings on Folsom's DFR claim.
We restate the issues on appeal as:
1. Is Folsom's common law fraud claim independently
cognizable distinct from his DFR claim on the record in this
2. Did the District Court erroneously conclude that
insufficient evidence of causation precluded Folsom's
recovery of lost wages and benefits as compensatory damages
on his DFR claim?
3. Did the District Court erroneously award attorney fees
to Folsom as an element of compensatory damages on his DFR
4. Are punitive damages recoverable absent a compensatory
damages award on a predicate claim for relief?
5. Are punitive damages recoverable against a union
predicated on a Montana DFR claim?
6. Did the District Court erroneously deny MPEA's
motions for post-judgment relief under M. R. Civ. P. 59(e)
AND PROCEDURAL BACKGROUND
Folsom was a non-probationary police officer employed by the
City of Whitefish (City). In 2012, Folsom was one of many
advocating that the Whitefish Police Protective Association
(WPPA), a union of officers of the Whitefish Police
Department, affiliate with MPEA. Following a contentious
process that resulted in WPPA affiliating with MPEA, the City
suspended Folsom on February 13, 2013, with notice of intent
to terminate his employment for cause under the
collective-bargaining agreement (CBA) between the City and
At the time of the termination notice, MPEA was the exclusive
bargaining agent for the WPPA under the CBA and the Montana
Public Employees' Collective Bargaining
Act.The CBA provided a four-step employee
grievance process. Either MPEA or the aggrieved employee
could initiate Steps 1 and 2 of the process but only MPEA
could initiate Steps 3 and 4. MPEA field representative Darcy
Dahle timely initiated Steps 1 and 2 on Folsom's behalf.
After the City denied Folsom's grievance at Steps 1 and
2, Dahle attempted to initiate Step 3 of the process by
correspondence to the City Manager dated April 2, 2013. The
City Manager rejected the Step 3 grievance as untimely
initiated beyond the ten-day deadline specified by the
On the condition that MPEA produce certain documentation, the
City nonetheless offered to participate in the Step 3 process
despite its assertion that it had no obligation to do so.
Dahle refused the City's document request and proposed
binding arbitration to resolve the Step 3 timeliness issue.
Upon the City's rejection of the arbitration proposal,
Dahle next proposed to resolve the issue by mediation through
the Board of Personnel Appeals. Standing on its assertion that
MPEA failed to timely initiate Step 3, the City refused and
declared Folsom's grievance rights exhausted pursuant to
the terms of the CBA.
MPEA ultimately referred the matter for further action to
in-house counsel, Carter Picotte, who was thereafter
exclusively responsible for handling Folsom's grievance
on behalf of MPEA. Picotte submitted a notice of appeal to
the City Police Commission pursuant to CBA Step 4 and §
7-32-4155(1), MCA. In response, the City reasserted that
Folsom and MPEA waived the police commission remedy under the
terms of the CBA by failing to timely initiate CBA Step 3.
Over the next year, Picotte scheduled several meetings with
Folsom to discuss the status and future course of his
grievance but ultimately cancelled each meeting. Picotte
nonetheless repeatedly assured Folsom that he was taking
appropriate action to enforce his grievance rights. On or
about October 25, 2013, Picotte specifically told Folsom that
he had filed and would aggressively prosecute a district
court action against the City to enforce Folsom's CBA
grievance rights. Picotte contemporaneously made a similar
representation to MPEA's executive director, Quint Nyman.
On at least one occasion, Nyman directed Picotte to proceed
on Folsom's grievance without delay.
However, at some point in mid-2014, Folsom discovered that,
contrary to earlier representations, Picotte had taken no
action on his behalf. Upon this discovery, Folsom retained
separate counsel and, on August 6, 2014, filed a district
court complaint asserting a wrongful discharge claim against
the City and DFR and common law fraud claims against MPEA. In
essence, the claims alleged that: (1) the City wrongfully
terminated him in violation of the CBA; (2) MPEA breached its
duty to fairly represent him; and (3) MPEA, through Picotte,
fraudulently induced Folsom to effectively waive his
grievance rights through inaction. As compensatory damages on
his claims against the union, Folsom prayed for lost wages
and benefits as well as attorney fees incurred in prosecuting
the action. Folsom also prayed for punitive damages on the
fraud claim. Upon learning of the complaint from an MPEA
field representative, Nyman spoke with Picotte, who assured
Nyman that he would be taking appropriate action in defense
of MPEA and in furtherance of Folsom's grievance rights.
Picotte made a similar representation to Nyman on at least
one occasion thereafter.
Upon service of the district court complaint, Picotte timely
appeared and answered Folsom's claims against MPEA. On
September 19, 2014, Folsom served comprehensive discovery
requests on Picotte that included sixty-nine M. R. Civ. P. 36
(Rule 36) requests for admission of pertinent facts.
Inexplicably, Picotte did not respond. Based on MPEA's
Rule 36 deemed admissions by default and a supplemental
affidavit showing, Folsom subsequently moved for M. R. Civ.
P. 56 (Rule 56) summary judgment that MPEA was liable on his
DFR and common law fraud claims. Folsom did not seek summary
judgment on his wrongful discharge claim against the City or
on the causation and damages elements of his claims against
the union. The City separately moved for summary judgment on
Folsom's wrongful discharge claim.
Without seeking relief from the Rule 36 deemed admissions,
Picotte filed a response opposing Folsom's motion for
summary judgment on the asserted grounds that: (1) the fraud
claim failed to state a claim against MPEA; (2) MPEA's
general pleading denials raised genuine issues of material
fact precluding summary judgment; (3) as a non-party to the
agreement, Folsom had no standing to enforce the CBA; and (4)
Folsom failed to exhaust his contract grievance remedies,
i.e., CBA Step 4 (police commission appeal). Picotte
attempted no responsive factual showing to preclude summary
judgment and inexplicably failed to appear and represent MPEA
at the summary judgment hearing on May 26, 2015.
On June 17, 2015, while the summary judgment ruling was still
pending after hearing, Folsom entered into a settlement
agreement with the City wherein he resigned his employment
and released all claims against the City without
compensation. The agreement included an express disclaimer of
any City liability related to Folsom's claims. The
agreement barred the City from "actively
challeng[ing]" Folsom's claims against MPEA but
recognized that City witnesses could "testify truthfully
in any proceeding if called to testify." The District
Court ultimately dismissed the City from the action with
prejudice pursuant to the agreement.
On July 15, 2015, based on MPEA's Rule 36 deemed
admissions, Folsom's supplemental affidavit showing, and
no responsive factual showing from MPEA, the District Court
granted summary judgment against MPEA on Folsom's DFR and
common law fraud claims. On the DFR claim, the court decreed,
inter alia, that the record facts showed that
"MPEA arbitrarily ignored Folsom's grievance or
processed it in a perfunctory manner, " thereby
effectively extinguishing his CBA grievance rights.
Concluding that Picotte's misrepresentations to Folsom on
or about October 25, 2013, regarding the fictitious district
court action against the City constituted both common law
fraud and actual fraud, as defined by § 27-1-221(3) and
(4), MCA, the District Court further granted summary judgment
that MPEA was liable for punitive damages on Folsom's
common law fraud claim.
On September 1, 2015, the District Court conducted a
post-summary judgment evidentiary hearing to determine
compensatory damages on Folsom's DFR claim and punitive
damages on the fraud claim. Appearing on MPEA's behalf,
Picotte acknowledged that he had "made some
misrepresentations of scheduling and that sort of thing to
Mr. Folsom because I got busy and I didn't have the
courage to tell him that I just hadn't gotten it
done." However, Picotte asserted that his false
statements caused "no real damages" because Folsom
"won't have lost his job until the grievance
procedure and litigation fomented by it are concluded."
Picotte further asserted that the City, not MPEA, was
exclusively responsible for Folsom's discharge and any
resulting wage loss. Based on the assertion that
Picotte's failure to act after the City refused to
participate in the Step 3 process in April of 2013 effected a
waiver of his CBA grievance rights and caused him to have to
sue the City and MPEA, Folsom requested compensatory damages
for wages and benefits lost after April 1, 2013,
emotional distress, and attorney fees incurred in prosecuting
the action. Folsom also requested $50, 000 in punitive
On March 14, 2016, prior to issuance of the District
Court's ruling on the damages, MPEA appeared through new
counsel and filed a motion pursuant to M. R. Civ. P. 60(b)
(Rule 60(b)) requesting that the court delay its damages
ruling to allow MPEA to file an appropriate motion for relief
from the prior summary judgment rulings based on alleged
gross neglect and misconduct by Picotte in his representation
of MPEA. On March 16, 2016, without reference to MPEA's
motion, the District Court issued findings of fact,
conclusions of law, and judgment on Folsom's DFR and
common law fraud claims based on the court's prior grant
of summary judgment and the post-summary judgment hearing
On the ground that he failed to meet his threshold burden of
proving that the City wrongfully terminated his employment in
violation of the CBA, the District Court denied Folsom's
claim for lost wages and benefits. The court also denied
Folsom's claim for emotional distress damages due to lack
of proof of related emotional distress. However, on the
ground that MPEA's failure to fairly represent him in the
grievance process "forced [him] to hire a lawyer in
order to obtain representation that the MPEA should have
provided in the first place, " the court awarded Folsom
$47, 550 in compensatory damages for attorney fees incurred
in prosecuting the district court action. The court also
awarded him $50, 000 in punitive damages on his common law
Folsom and MPEA respectively filed alternative M. R. Civ. P.
59 and 60(b) motions for post-judgment relief. On the
asserted grounds of unfair surprise and that the District
Court erroneously interjected lack of evidence as an
affirmative defense sua sponte, Folsom requested a
new trial to allow him to present evidence proving that the
City discharged him in violation of the CBA. MPEA sought
relief on the asserted ground of prejudicial gross neglect
and misconduct by Picotte in the representation of MPEA. MPEA
supported its motion with exhibits and affidavits showing its
reliance on Picotte and its belated discovery of his alleged
gross neglect and misconduct.
The District Court effectively denied the parties'
cross-motions by allowing them to time-out without action
pursuant to M. R. Civ. P. 59(f) and 60(c)(1). Upon entry of
final judgment on June 15, 2016, both parties timely
appealed. MPEA asserts that the District erroneously awarded
Folsom attorney fees and punitive damages and erroneously
denied its alternative motions for post-judgment relief.
Folsom asserts that the District Court erroneously denied his
claim for lost wages and benefits as compensatory damages on
his DFR claim and erroneously denied his alternative motion
for related post-judgment relief.
The standard of review of district court findings of fact is
whether they are clearly erroneous on the pertinent
evidentiary record. We review conclusions of law de novo for
correctness. The standard of review of district court rulings
on motions for post-judgment relief under M. R. Civ. P. 59
and 60(b) is an abuse of discretion. Lee v. USAA Cas.
Ins. Co., 2001 MT 59, ¶ 27, 304 Mont. 356, 22 P.3d
631 (Rule 59); Essex Ins. Co. v. Moose's Saloon,
Inc., 2007 MT 202, ¶ 16, 338 Mont. 423, 166 P.3d
451 (Rule 60(b)).
1. Is Folsom's common law fraud claim independently
cognizable distinct from his DFR ...