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New York Marine and General Insurance Co. v. Junkermier

United States District Court, D. Montana, Great Falls Division

July 24, 2019

NEW YORK MARINE AND GENERAL INSURANCE COMPANY, Plaintiff,
v.
JUNKERMIER, CLARK, CAMPANELLA, STEVENS, P.C., DRAGGIN' Y CATTLE COMPANY, INC., and ROGER and CARRIE PETERS, individuals, Defendants.

          AMENDED ORDER

          BRIAN MORRIS, UNITED STATES DISTRICT COURT JUDGE

         Defendants Junkermier, Clark, Campanella, Stevens P.C. (“JCCS”), Draggin' Y Cattle Company, Inc. (“Draggin' Y”), and Roger and Carrie Peters (“Peters”) (collectively “Defendants”) have filed a motion for judgment on the pleadings, or in the alternative, a motion to stay the proceedings pending the state court remand proceedings in accordance with Draggin' Y Cattle Co. v. Junkermier, Clark, Campanella, Stevens, P.C., 439 P.3d 935 (Mont. 2019) (“Draggin' Y IV”).

         I. Background

         Plaintiff New York Marine and General Insurance Company (“NYM”) filed this action for declaratory judgment and breach of contract regarding an insurance policy with its insured, JCCS. (Doc. 1.) JCCS executed a $10, 000, 000 stipulated judgment in favor of Defendants Draggin' Y and Peters to settle a professional malpractice lawsuit filed in state court. Id. NYM seeks a declaration that it remains not liable for the stipulated judgment. Id. at 12. NYM claims that it possesses no further duties to its insured, JCCS. Id. at 13. NYM alleges that it holds no obligation to pay the stipulated judgment based on JCCS's breach of the terms and conditions of its insurance policy. Id.

         Defendants filed a Rule 12(c) Motion for Judgment on the Pleadings and an Alternative Motion to Stay Proceedings on May 22, 2019. (Doc. 307.) Defendants ask the Court to take judicial notice of the recent Montana Supreme Court decision in Draggin' Y IV. (Doc. 301.) Defendants contend that Draggin' Y IV affirmatively controls the issues pending in this case. Id. at 2. NYM filed a Motion in Opposition to the Motion for Judgment on the Pleadings and requested that this Court grant emergency relief. (Doc. 321.)

         The Court conducted a hearing on these motions on June 11, 2019. (Doc. 307.) For the reasons discussed below, the Court denies Defendants' motion for judgment on the pleadings and similarly refuses to stay these proceedings.

         II. Legal Standard

         A court may issue a judgment on the pleadings after the pleadings have closed, but not within such time as to delay trial. Fed.R.Civ.P. 12(c). A court must assume as true the allegations contained in the nonmoving party's pleadings. Rubin v. United States, 904 F.3d 1081, 1083 (9th Cir. 2018). In order for a party to prevail on a 12(c) motion a complaint must lack a cognizable legal claim or fail to allege facts sufficient to support a cognizable legal theory. Dworkin v. Hustler Magazine Inc., 867 F.3d 1188, 1192 (9th Cir. 1989); Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988). A court must resolve all doubts in favor of the nonmoving party. Religious Tech Ctr. v. Netcom On-Line Comm. Svcs., Inc., 907 F.Supp 1361, 1381 (N.D. Cal. 1995) (citing Hal Roach Studios v Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 1990)).

         A court may stay its proceedings at its discretion. District courts possess the inherent power to control their dockets and promote the efficient use of their resources. Landis v. North American Co., 299 U.S. 248, 254 (1936). A party that seeks a stay “must make clear the hardship or inequity in being required to go forward.” Id. at 255. And “only in rare circumstances will a litigant in one cause be compelled to stand aside while a litigant in another settles the rule of law that will define the rights of both.” Id.

         The Ninth Circuit has refined the standards for granting a stay. Western Sec. Bank v. Schneider Ltd. P'ship, No. CV-15-10-BLG-SPW-CSO, 2015 WL 2127211 (D. Mont. May 6, 2015). “[S]tays should not be definite in nature and should not be granted unless it appears likely the other proceeding will be concluded within a reasonable time.” Id. at *8 (citing Dependable Highway Express, Inc. v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 2007)). A court may “appropriately enter stay orders where a party seeks only damages, does not allege continuing harm, and does not seek injunctive or declaratory relief since a stay would result only in delaying monetary recovery.” Western Sec. Bank at *8 (citing Lockyer v. Mirant Corp., 398 F.3d 1098, 1110 (9th Cir. 2005)). A stay remains appropriate if resolution of issues in the other proceeding may assist in resolving the proceeding sought to be stayed. Western Sec. Bank at *8 (citing Lockyer at 1110-1111). A stay proves appropriate “for courts' docket efficiency and fairness to the parties pending resolution of independent proceedings that bear upon the case.” Western Sec. Bank at *8-9 (citing Leyva v. Certified Grocers of California, Ltd., 593 F.2d 857, 864 (9th Cir.1979)).

         III. Discussion

         Defendants assert that the Montana Supreme Court decision in Draggin' Y IV somehow defeats NYM's declaratory judgment. (Doc. 308 at 14.) Defendants argue that the Court must dismiss NYM's breach of contract claim. Id. at 16. NYM intervened as party in Draggin' Y IV on appeal to challenge the state district court's reasonableness determination of the underlying stipulated judgment. Draggin' Y IV, 439 P.3d at 904. Defendants contend that NYM effectively rendered the issues presented in this declaratory judgment action in federal court interdependent and inseparable from the state court proceedings. (Doc. 308 at 14-16.) In particular, Defendants point to NYM's efforts to challenge the reasonableness and enforceability of the stipulated judgment in Draggin' Y IV. Id.

         NYM counters that Draggin' Y IV did not affect its declaratory judgment or breach of contract claims as these claims remain separate and independent from the state court proceedings. (Doc. 321 at 12-13.) NYM asserts that the Draggin' Y IV addressed a tort action between Draggin' Y and JCCS. Id. This federal case remains a declaratory judgment and breach of contract claim brought by NYM against Defendants. Id. NYM contends that Draggin' Y IV did not address any issues regarding its liability to JCCS or the other Defendants. Id. at 14.

         Montana law provides to an insured an independent cause of action against its insurer for violations of its duties. Mont. Code. Ann. § 33-18-242(1). Under Montana's Unfair Trade Practices Act (“UTPA”) an insurer cannot be liable “if the insurer had a reasonable basis in law or fact for contesting the claim or the amount of the claim.” Mont. Code. Ann. § 33-18-242(5). Such determinations remain a question of fact and the insured possesses the burden to prove a violation of the UTPA. Draggin' Y IV, 439 P.3d at 942 (citations omitted). In addition to providing a private cause of action for violations of certain duties ...


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