RESERVATION OPERATIONS CENTER LLC, A Montana Limited Liability Company, d/b/a NATIONAL PARKS RESERVATIONS, Plaintiff and Appellee,
SCOTTSDALE INSURANCE COMPANY, a Foreign Corporation; PAYNE FINANCIAL GROUP, INC., a Montana Corporation; PAYNEWEST INSURANCE, INC., a Montana Corporation; and DOES 1-10, Defendants and Appellants.
Submitted on Briefs: March 28, 2018
FROM: District Court of the Eleventh Judicial District, In
and For the County of Flathead, Cause No. DV-15-1028
Honorable James A. Manley, Presiding Judge
Appellants: Dale R. Cockrell, Moore, Cockrell, Goicoechea
& Johnson, PC, Kalispell, Montana
Appellee: David C. Berkoff, Berkoff Law Firm, P.C., Missoula,
Scottsdale Insurance Company (Scottsdale) appeals from the
deemed denial of its motion to set aside the default judgment
entered against it by the Eleventh Judicial District Court,
Flathead County. We reverse the entry of the default judgment
and remand for further proceedings, addressing the following
the District Court err in denying, by operation of law,
Scottsdale's M. R. Civ. P. 60(b)(4) motion to set aside
the default judgment?
AND PROCEDURAL BACKGROUND
This action arises out of an insurance coverage dispute
between Scottsdale, the Payne Defendants (Payne) and
Reservation Operations Center, LLC, d/b/a National Parks
Reservations (NPR). In 2011, Payne served as NPR's
procuring agent to secure commercial insurance coverage from
Scottsdale. It is alleged that Payne also attempted to
procure for NPR an Employment Practices Liability Policy
(EPL) from Scottsdale. NPR believed Payne had obtained EPL
coverage from Scottsdale, but apparently it was not secured.
In 2015, NPR notified Scottsdale of a pregnancy
discrimination claim brought by an NPR employee and sought
coverage for the claim under the EPL policy, which Scottsdale
denied. NPR filed a grievance against Scottsdale with the
Office of the Montana State Auditor, Commissioner of
Securities and Insurance (Commissioner). Scottsdale offered
to provide retroactive EPL coverage upon several conditions,
but later withdrew the offer. On October 26, 2015, NPR
delivered a demand letter to Scottsdale, indicating that NPR
would initiate litigation for refusal to provide coverage and
including a courtesy copy of NPR's proposed complaint.
On November 6, NPR filed a Complaint and Demand for Jury
Trial (Complaint), naming Scottsdale and Payne. Because
Scottsdale is a foreign insurer,  NPR was statutorily required
to serve Scottsdale through the Commissioner's office by
providing the Commissioner duplicate copies of the Summons
and Complaint, along with a $10 filing fee. On April 5, 2016,
the Commissioner signed an acknowledgment of service of
documents received from NPR. In turn, the Commissioner was
statutorily required to forward the Complaint and Summons to
Scottsdale. Further facts regarding NPR's and the
Commissioner's compliance with the statutory requirements
governing the service of process will be discussed herein.
Scottsdale failed to appear and, upon NPR's request, the
clerk of court entered a default on May 18, 2016. On January
12, 2017, the District Court entered a partial default
judgment against Scottsdale, holding that Scottsdale breached
its duty to defend NPR in the pregnancy discrimination claim,
and was liable for all fees, costs, settlements, and
consequential damages. After an initial damages hearing, the
District Court concluded that NPR was entitled to $515,
758.02 in compensatory damages, and after a separate punitive
damages hearing, awarded NPR $4, 641, 822.18 in punitive
damages, with accruing interest at 10% per annum, entering a
final judgment on May 9, 2017.
On July 7, Scottsdale appeared and moved to set aside the
default judgment. Scottsdale argued that both NPR and the
Commissioner had failed to strictly comply with foreign
insurer service requirements under § 33-1-603(1), MCA,
and, thus, the default judgment was void pursuant to M. R.
Civ. P. 60(b)(4). Scottsdale asserted NPR failed to serve
duplicate copies of both the Summons and Complaint upon the
Commissioner, and that the Commissioner failed to include a
copy of the Complaint in its mailing to Scottsdale. In
support of its motion, Scottsdale submitted affidavits from
the employee who opened the mailing from the Commissioner, as
well as record retention employees. NPR opposed the motion
and countered with affidavits from NPR's attorney and the
Commissioner's Chief Legal Counsel.
After 60 days passed without a ruling on the motion by the
District Court, on September 7, 2017, Scottsdale's motion
to set aside the default judgment was deemed denied under M.
R. Civ. P. 60(c)(1). Scottsdale appeals.
"Our standard of review of a district court's ruling
on a motion pursuant to M. R. Civ. P. 60(b) depends on the
nature of the final judgment, order, or proceeding from which
relief is sought and the specific basis of the Rule 60(b)
motion." Essex Ins. Co. v. Moose's Saloon,
Inc., 2007 MT 202, ¶ 16, 338 Mont. 423, 166 P.3d
451. "Where the movant seeks relief under Rule 60(b)(4),
on the ground the judgment is void, we review the district
court's ruling de novo, as the determination that a
judgment is or is not void is a conclusion of law."