United States District Court, D. Montana, Great Falls Division
MORRIS UNITED STATES DISTRICT COURT JUDGE
five-years, two different courts, twice as many judges, and a
number of summary judgment motions, this Court and the
parties remain well-acquainted with the facts of this case.
Here's a brief recap: Junkermier, Clark, Campanella,
Stevens, P.C. (“JCCS”) took out an insurance
policy with New York Marine and General Insurance Company
(“NYM”). (Doc. 366 ¶ 5; Doc. 372 ¶ 1.)
Draggin' Y Cattle Company, Inc. sued Larry Addink and
JCCS in Montana state court. (See Doc. 389 ¶ 4.) NYM
defended JCCS in that action. (Id. ¶ 5.)
parties disagreed over the best way to proceed on that
action. Draggin' Y and JCCS, without NYM's consent,
agreed to a stipulated settlement for $10 million.
Draggin'Y signed a covenant not to execute, and, JCCS, in
turn, assigned its rights under its insurance policy with NYM
to Draggin' Y. In response, NYM filed a declaratory
action and breach of contract claim against JCCS in this
Court. (Doc. 1).
asked this Court (1) for a declaratory judgment that NYM
would not be liable for the stipulated judgment; (2) for a
declaratory judgment that NYM did not owe any continuing
duties to JCCS under the insurance contract; and (3) damages
that arose from JCCS's breach of its contractual duties.
(Doc. 1 at 11-15.) JCCS filed a number of counterclaims, and
after four years of litigating those counterclaims in this
Court, voluntarily dismissed them on May 16, 2019. (Doc.
with this litigation, the state court proceeding moved
forward with JCCS and Draggin' Y as plaintiff and
defendants. NYM intervened initially to contest whether the
$10 million stipulated settlement proved reasonable. After
JCCS voluntarily had dismissed its claims in this Court, it
filed nearly identical claims against NYM in the state court
proceeding. (Compare Doc. 48 at 15-19 with Doc. 340-15 at
2-5.) JCCS's action in bringing claims in the state court
case transformed NYM from intervenor to a party. NYM used
this new-found party status to remove the state court
proceeding to federal court. (Doc. 340-17, 18, 19.) This
Court consolidated the removed action with NYM's
declaratory judgment and breach of contract action. (Doc.
376.) Both parties have moved for summary judgment. (Doc. 364
(JCCS) and Doc. 370 (NYM).) The parties fully briefed the
motions and the claims stand ripe for review.
MOTION FOR SUMMARY JUDGMENT
JCCS, Draggin' Y, and Roger and Carrie Peters
(collectively “Defendants”) have moved for
summary judgment on the issue of collusion. (Doc. 365 at 3.)
They argue that the doctrines of collateral estoppel and res
judicata preclude NYM from arguing whether JCCS and
Draggin' Y improperly colluded in deciding to enter the
stipulated judgment. Defendants argue that NYM could have
raised alleged collusion in the state court's
reasonableness hearings. (Id.)
points out, however, collusion does not stand alone as an
issue or claim of defense made by any party. Neither of
NYM's claims for relief require it to prove collusion.
(See Doc. 1.) None of Defendants' affirmative defenses
require them to prove that collusion did not exist. (See Doc.
258.) It appears that Defendants move for summary judgment to
prevent NYM from presenting evidence of collusion. Defendants
more properly should raise that issue in a motion in limine,
rather than in a motion for summary judgment. Defendants'
motion for summary judgment regarding alleged collusion is
of Contract Claim
also move for summary judgment on the issue of damages that
NYM alleges may have arisen from the breach of contract
claim. NYM's Chief Claims Officer Paul Kush explained at
a deposition that NYM seeks damages only for expenses that
stem from NYM's defense of JCCS. Defendants argue that
NYM cannot recoup those costs as damages in light of
NYM's duty to defend and incur those costs. Defendants
contend that allowing NYM to recoup those costs as damages
would “retroactively eliminate or nullify [NYM's]
duty to defend” JCCS. (Doc. 365 at 12.) And generally,
under Montana law, insurers cannot recoup defense costs
except in limited circumstances, none of which Defendants
argue are present here. (Id. at 13-14.)
arguments attempt to cast a standard breach of contract claim
for damages into something it is not. NYM has not made a
claim to recoup attorney's fees. It instead asserts a
claim for damages suffered from a breach of contract. Montana
Code Ann. § 27-1-311 governs damages under a breach of
contract claim. Section 27-1-311 provides that “the
amount which will compensate the party aggrieved for all the
detriment which was proximately caused” generally will
represent the measure of damage for a breach of contract.
Id. NYM's claim falls squarely within this
framework and § 27-1-311 entitles NYM to bring a claim
make one counterargument. Defendants contend that NYM's
damages claim falls outside the statute because the
stipulated judgment did not “proximately cause”
the damages. (Doc. 391 at 8-9.) Defendants claim that NYM
would have incurred costs ...