United States District Court, D. Montana, Great Falls Division
Morris United States District Court Judge
Court has a No. of motions in this litigation currently
pending before it. This order addresses the motion of
Draggin' Y Cattle Company (“Draggin' Y”),
Roger and Carrie Peters (“the Peterses”) and
Junkermier, Clark, Campanella, Stevens, P.C.'s
(“JCCS”) to request entry of judgment pursuant to
the reasonableness order (Doc. 392). It also addresses New
York Marine and General Insurance Company's
(“NYM”) Motion to Dismiss (Doc. 377). The order
also addresses the motion of Draggin' Y and the Peterses
to join and/or substitute as third-party plaintiffs, and for
leave to assert third-party bad faith claims against NYM
for Entry of Judgment Pursuant to the Reasonableness Order
Y, the Peterses, and JCCS filed a motion asking this Court to
enter the stipulated judgment that the Montana district court
approved as fair and reasonable. (Doc. 392.) The parties
dedicate most of their briefing to the topic of whether this
Court has the authority to enter the state court judgment.
They dedicate little time explaining why the Court should
enter the judgment now rather than at the end of this case or
some other time. The arguments about entering the judgment
now rather than later are best summarized as follows:
“No judgment, no settlement. And if there is no
settlement, then there is no case here.” (Doc. 407 at
Court will deny the parties' motion for now because the
settlement does not require an entry of the stipulated
judgment to bind the parties. The settlement contemplates the
approval of the settlement as fair and reasonable and the
entry of judgment as two separate events. and requires only
approval to bind the parties. The settlement agreement states
that the parties agree to “request . . . a hearing to
approve the stipulated judgment as fair and reasonable and to
enter judgment for the amount of that stipulated
judgment.” (Doc. 340-3 at 5.) The settlement agreement
then says in the very next sentence that if “the Court
does not approve the Stipulation for Entry of Judgment, then
the parties stipulate that they will jointly move to have the
Lawsuit rescheduled for trial.” (Id. at 6
(emphasis added).); see Draggin' Y Cattle Co., Inc.
v. Junkermier, Clark, Campanella, Stevens, P.C., 439
P.3d 935, 946 (Mont. 2019) (“The parties . . .
stipulated that the settlement would not bind them unless the
District Court approved it as ‘fair and
reasonable.'” (emphasis added)).
Montana district court that approved the settlement as fair
and reasonable read the settlement agreement in the same way
as this Court. The Montana district court issued three
orders, two of which are relevant here. First, the district
court approved the settlement as fair and reasonable. (Doc.
340-14 at 17.) As a part of this order, the Montana district
court determined that the Peterses, Draggin' Y, and JCCS
were “bound by the terms of their settlement.”
(Id.) Second, the district court ordered that a
separate judgment would be entered against JCCS.
(Id.) These separate orders contemplate approval and
entry as distinct events and bind the parties to the
settlement agreement upon approval of the settlement amount
as fair and reasonable.
the same counsel who filed the motion claiming “[n]o
judgment, no settlement” have their names listed on the
very same page in which the Montana district court determined
that the parties were bound by the settlement agreement
before that district court entered the stipulated judgment.
(Doc. 340-14 at 17.) It seems reasonable to expect counsel to
keep track of what happened in state court. This
representation proves particularly troubling when counsel
first made their “no judgment, no settlement”
argument in their reply brief. At that point, counsel had
read and reviewed the response brief filed by NYM. NYM had
not disclosed the state court decision stating that the
parties were bound by the settlement. This failure by NYM
likely triggered the obligation of counsel to disclose the
adverse state court decision or at minimum prohibited counsel
from making the “no judgment, no settlement”
argument. See Mont. Rules of Prof'l Conduct Rule
3.3(a)(2) (“A lawyer shall not knowingly . . . fail to
disclose to the tribunal legal authority in the controlling
jurisdiction known to the lawyer to be directly adverse to
the position of the client and not disclosed by opposing
counsel.”) The Court does not suggest that the parties
committed a violation of Montana's Rules of Professional
Conduct, but counsel must do better moving forward.
parties make other arguments related to the Federal Rules of
Civil Procedure, claiming that certain rules require entry of
the state court judgment. None of those rules require the
Court to enter the state court judgment now. For this reason
and because the settlement agreement binds the parties even
without entry of the judgment, the Court denies for now the
parties motion to enter the state court stipulated judgment.
Motion to Dismiss (Doc. 377)
moved to dismiss JCCS's claims against NYM in the removed
action under Federal Rules of Civil Procedure 12(b)(1) and
(6). NYM makes two arguments in support of its motion. First,
they argue that JCCS lacks “standing” to bring
claims against NYM because they have assigned all rights to
these claims to Draggin' Y and the Peterses. Second, they
argue that the statute of limitations bars JCCS's UTPA
can bring a Rule 12(b)(1) defense in two separate ways.
Defendants can make a “factual” attack, which
contests the truth of plaintiff's factual allegations.
See Leite v. Crane Co., 749 F.3d 1117, 1121 (9th
Cir. 2014). Alternatively, defendants can make a
“facial” attack, which contests whether
plaintiff's allegations are sufficient on their face to
invoke federal jurisdiction. See Id. Here, we have a
facial attack. Under a facial attack, the Court acts just as
it would under a motion to dismiss under Rule 12(b)(6). The
Court must accept plaintiff's allegations as true and
draw all reasonable inferences in plaintiff's favor.
See id.; Snyder & Assocs. Acquisitions LLC v. United
States, 859 F.3d 1152, 1156 (9th Cir. 2017) (same).
Standing to Bring Claims
claims that JCCS cannot bring its breach of contract claim
and UTPA claim because it assigned all rights to bring these
claims to Draggin' Y and the Peterses. (Doc. 377 at
19-21.) JCCS does not dispute that it assigned all rights to
bring these claims to Draggin' Y and the Peterses. JCCS
instead argues that Federal Rule of Civil Procedure 17(a)(3)
(“Rule 17”) allows the case to move forward as
long as Draggin' Y and the Peterses have joined or are
substituted into JCCS claims. (Doc. 397 at 10-11.)
Rule of Civil Procedure 17(a)(3) states that a court cannot
dismiss a case “for failure to prosecute in the name of
the real party in interest until, after an objection, a
reasonable time has been allowed for the real party in
interest to ratify, join, or be substituted into the
action.” At minimum, Rule 17 applies when parties have
made a an “understandable” error in naming the
real party in interest. Jones v. Las Vegas Metro. Police
Dep't, 873 F.3d 1123, 1128 (9th Cir. 2017) (quoting
Goodman v. United States, 298 F.3d 1048, 1053-54
(9th Cir. 2002)). Parties must “hardly [provide] the
best excuse” for their error in naming the proper party
to receive relief under Rule 17, but the excuse must
nonetheless be reasonable. Id.
the Court will grant JCCS relief under Rule 17 because its
error proves reasonable. As NYM explained in its own motion
to dismiss, JCCS attempted to bring its breach of contract
claims and UTPA claims on May 10, 2019, in the state court
action, later removed and consolidated with the federal
action. (Doc. 378 at 16.) The Montana district court did not
approve the stipulated judgment-which as discussed in more
detail below acts as the date that the parties'
settlement agreement went into effect and thus the date that
JCCS assigned its rights to Draggin' Y and the
Peterses-until June 17, 2019. (Id.) Thus, at the
time that JCCS filed its motion to bring claims in the
removed action, JCCS remained the real party in interest.
“without any notice” to either party, the Montana
district court granted JCCS motion to bring its breach of
contract claims and UTPA claims in that court. (Id.
at 17.) The district court did not consult JCCS or any of the
parties on whether JCCS remained the real party in interest
now that the stipulated judgment had been approved. (See id.)
This Court will not punish JCCS because the Montana ...