Civil Litigation

Montana Supreme Court Affirms Sexual Harassment and Retaliation Findings

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Source: Montana Law Week

SEXUAL HARASSMENT: HRC correctly determined that electric co-op office manager was subjected to severe and/or pervasive sexual harassment by GM and not mere “flirting” and was retaliated against… HRC’s “front pay” of $505,957 improperly increased to $1,379,338 by Court, proper damages total is HRC’s $758,454.52… $519,837 fees properly awarded, enhancement properly rejected… Laird affirmed, reversed.

Shalaine Lawson, a CPA, began employment with NorVal Electric Cooperative in Glasgow in 12/10 and became office manager and CFO in 1/15. She received satisfactory evaluations and was given wage increases. In 5/17 GM Craig Herbert began personal interactions with her. During a work-related car ride in 5/17 he asked why she had begun wearing false eyelashes, stating that “when women go and try to improve their looks it’s because they’re looking to have an affair.” Lawson, disturbed by his insinuation, ceased wearing false eyelashes to work. In 6/17 when they were discussing an upcoming conference with NorVal’s bank Herbert asked if she had ever “fooled around” with a banker connected to the conference. Disturbed by the comment, she did not attend the conference. Later that month she mentioned taking her son to a football camp in Bozeman and having a massage while there. Later that day Herbert asked if her husband gave her massages, adding, “I just wanted you to know that given the opportunity I give a really good massage and if we’re ever given the opportunity I would like to get you relaxed.” She did not respond and left Herbert’s office feeling “degraded, dirty, and really uncomfortable.”

Soon thereafter Lawson was in Herbert’s office discussing NorVal’s annual audit and mentioned that her back hurt. He told her to turn around and cross her arms, closed the office door, and approached her from behind. He embraced her, lifted her up, and popped her back, smelling her hair in the process. She felt his actions were inappropriate. After not speaking in several days she was in his office to discuss a work matter. At the end of the conversation he requested a hug, “just for friends,” and then gave her a hug.

In 7/17 while Lawson was using the copy machine Herbert said “you are filling your pants out nicely.” She interpreted it as expressing interest in a sexual relationship and threw the pants away. During that summer he entered her office when she was alone and inquired about her sex life. In 8/17 during a time that NorVal was doing power shutoffs she entered his office and asked, “Are there things that turn you off?” He used the term “turn off” in a sexual manner several times throughout the day in her presence.

During NorVal’s 9/17 board meeting, without Lawson present, several members joked about a sexual relationship between her and Herbert. One had previously accused them of having an affair after her promotion to office manager. She learned of the accusation through Herbert and was upset by it and NorVal’s failure to investigate or allow her to respond. In 10/17 Lawson and Herbert were at a conference in Great Falls. They had arranged to have a work meeting. He asked her to meet him in his hotel room for the meeting and had a key for her. The Hearing Officer found that his purpose was to allow her to enter his room separately to avoid raising suspicions and to engage in sex. She refused and became upset. He texted her later and asked to have the meeting beside the hotel pool, which they completed without incident.

On 10/6, back in NorVal’s offices, Lawson felt that she needed to tell Herbert that she needed to report the hotel incident or find another job. Although she suspected that he would fire her, she informed him that she had documented it. She considered this her initial complaint of sexual harassment because of NorVal’s policy requiring discrimination and harassment to be reported to the supervisor or GM. The HO concluded that Lawson’s actions during the meeting constituted the oral making of a harassment complaint. On 10/9 Herbert and Lawson again met and, despite her request for a Board member to attend, none was present. Herbert informed her that “they needed to work it out or she needed to go,” to which she requested guidance as to how to report her complaint in writing. He told her to speak only with him. When she questioned the propriety, he repeated it. He verbally notified the Board of her complaint. She asked him repeatedly how she could formally submit her complaint. He did not provide instructions and the Board did not meet with her despite her repeated requests.

On 10/10/17 Lawson received a letter from NorVal’s attorney Matthew Knierim notifying her that she was being formally reprimanded by Herbert for creating a toxic environment, failing to understand the chain of command, challenging his authority, criticizing the Board over tax issues, and complaining over a co-worker’s performance, and “this is not acceptable and if it occurs again, you will be immediately terminated for cause.” (Knierim wrote the letter at Herbert’s instance but he had no knowledge of Lawson’s sexual harassment concerns and complaint.) Herbert delivered the letter to Lawson in the office and texted her to call him that evening at which time he offered her a severance package if she would leave immediately. She declined the offer, asserted that she had done nothing wrong, and stated that she just wanted the sexual harassment to end.

The next day Herbert told Lawson that he did not want to sleep with her. He showed her a picture of a woman on his computer and told her that they had spent several months traveling for work, staying in the same room, lying on the same bed, and it was not “a big deal.” Over the following weeks Lawson continued to inquire of Herbert how to properly report her sexual harassment complaint, with no response. She attempted to communicate with Knierim, who said she would have to report to Herbert.

Herbert began treating Lawson in a way she felt degrading or belittling during their work conversations. He told her to notify him whenever she intended to leave the office and removed her from her role as minutes-taker for Board meetings without any job-related justification. She began showering less and stopped wearing nice clothes to “ward him off.” She began suffering a loss of self-worth and confided in her husband about Herbert’s behavior and its effect on her. Her husband began contacting attorneys for advice about recourse for sexual harassment.

He also contacted LCPA Elizabeth Drydahl who strongly recommended Lawson’s hospitalization on account of her severe depression and “plan to harm herself” resulting from “very inappropriate attention from a coworker.” Lawson’s husband took her to the ER where she was diagnosed with “depression and suicidal ideation” and referred to psychiatric NP Jennifer Durward who issued multiple letters forbidding her return to work until conclusion of the sexual harassment investigation. Her eventual report noted that Lawson suffered from a “stress reaction” stemming from “sexual harassment on the job.” Lawson also sought a no-contact order against Herbert from the PD,citing his anger over her accusations.

Lawson contacted the HRB and scheduled an appointment for 11/2/17. She called out of work beginning 11/3/17 for the “extreme stress and anxiety caused by your continued harassment and retaliation and threats.” On 11/10/17 she received a letter from Herbert dated 11/6 notifying her that she was banned from NorVal’s property, her work email and credit card had been revoked, and there would be a meeting to determine her employment. She then received a letter from Knierim dated 11/7 stating that she would be terminated immediately if she pursued a nocontact order. (Knierim testified that he was unaware of her sexual harassment complaint when he drafted this letter.) On 11/21, in response to a request from Lawson to extend her sick leave, Herbert wrote her stating that it would soon expire, reaffirming that he was the sole means of communication with NorVal, and that “all of your previous complaints lodged with NorVal have been investigated.”

Lawson formally filed a complaint with the HRB 11/24/17. Herbert withdrew the severance offer. He disputed her request for extended medical leave because it was based on Durward’s notes, who he stated was “not a physician.” On 1/2/18 Lawson received a payout of her accrued vacation & sick leave but Herbert informed her that she would continue to be listed as an employee until NorVal’s attorneys decided otherwise or she accepted employment elsewhere. She made several attempts to communicate with Herbert and the Board to obtain the results of the asserted investigation but received no response. On 2/5/18 Herbert wrote her that NorVal had filed its Answer with HRB. According to NorVal, she had falsely alleged sexual harassment to cover up “serious deficiencies in your job performance” including a backlog in her work. He told other employees that she was being investigated for possible fraud. No evidence to support such a claim was produced and neither of the 2 accountants hired to fill in for Lawson were asked to investigate such a claim.

On 2/27/18 Lawson amended her complaint to include retaliation. In 4/18 NorVal’s counsel asked her to provide a statement from a “qualified physician” verifying that she was unable to perform her duties. She conferred with Dr. Chris Laviola, PhD, who recommended that she remain off work due to her depression and suicidal ideations. Lawson provided this information to NorVal but received no response. Durward also treated Lawson through 2019, during which she observed a significant reduction in her well-being and connection to the Glasgow community. At the time of Lawson’s suspension her salary was $84,567/yr with 1,184.91/mo benefits. The HRB issued an initial report in 5/18 concluding that no harassment or retaliation had occurred. Lawson filed an objection with the HRC which concluded that the HRB’s initial report was erroneously based on incomplete information or misapprehension of the law and remanded for a hearing. After extensive discovery a contested case hearing was held and Hearing Officer Caroline Holien concluded that she had been subjected to sexual harassment and retaliation and awarded $192,384.89 back pay, $13,635.51 interest on lost wages, $50,000 for emotional distress, and attorney fees. Finding reinstatement not feasible, she found that Lawson was entitled to front pay. Citing Duke (4th Cir. 1991) for the principle that “because of the potential for windfall, [front pay’s] use must be tempered,” she noted that OHA has historically followed the WDEA which allows for lost wages for a maximum of 4 years, and thus awarded $415,786.06 (present value $378,215.59 if paid in a lump sum), reasoning that Lawson worked for NorVal for 7 years prior to going on medical leave and 4 years of front pay would not be unreasonable or an unjust windfall. Both parties appealed to the HRC. NorVal challenged Holien’s finding of discrimination and Lawson argued that she erred by citing the WDEA. The HRC affirmed the finding of discrimination and concluded that use of the WDEA as guidance for calculation of Lawson’s front pay award and the amount of the award were not clearly erroneous. Its final decision slightly altered Holien’s calculations resulting in a small increase in the award: $189,094.30 back pay, $13,402.30 interest on lost wages, $50,000 for emotional distress, and $505,957.92 for a total of $758,454.52 plus attorney fees.

Both parties petitioned for judicial review. Judge Laird upheld the finding of discrimination but concluded that use of the 4-year cap for front pay was arbitrary & capricious and, utilizing Lawson’s expert Ann Adair’s “conservative calculation,” increased Lawson’s front-pay award to $1,379,338, for a total award of $1,631,834.60 plus attorney fees. She conducted a “lodestar” analysis and awarded $519,837 fees and $48,258.88 costs. She declined to apply a multiplier, reasoning that she had already considered Todd Shea’s contingency risk and that the circumstances of his representation did not necessitate a multiplier. NorVal appeals. Lawson cross-appeals Laird’s fee calculation. NorVal argues that the incidents between Herbert and Lawson and its responses do not rise to “severe and/or pervasive” harassment necessary to constitute sexual discrimination as defined in the HRA. It contends that the context of Herbert’s actions was not adequately considered and therefore Laird erred by affirming Holien’s determination that Lawson was subjected to sexual discrimination. However, Holien’s findings are supported by substantial evidence that Herbert subjected Lawson to unwelcome verbal and/or physical conduct of a sexual nature in her work environment. And in consideration of the totality of the circumstances we have little difficulty affirming Holien’s conclusion that a reasonable person would find NorVal’s workplace hostile & abusive. Herbert’s behavior does not constitute “mere intersexual flirtation” as NorVal describes it. NorVal contests Holien’s determination that Lawson was retaliated against by arguing that none of the “constellation” of occurrences fell within the actions listed in ARM 24.9.603(2) and in any event were not materially adverse. However, while not all of the actions constituted material adverse actions, collectively there can be no doubt. There was likewise substantial evidence that NorVal took the actions in retaliation for engaging in protected activities and not for a non-discriminatory purpose such as those offered by NorVal that were merely pretextual. Laird did not err in affirming Holien’s decision that Lawson was subject to retaliation.

Laird erred in increasing Lawson’s front-pay award. Damages are a factual determination for which a court may not substitute its judgment for the agency’s, and may reverse on only narrow grounds including that the agency’s decision is arbitrary & capricious, which Laird determined. §2-4-704(2)(a); MSU-N (Mont. 2021). It is clear that neither Holien nor the HRC applied the WDEA as binding authority. The HRC explained that Holien used it only for guidance. More significantly, Laird’s reasoning that the agency’s reference to the WDEA for a 4-year award was not supported by the findings overlooks that the HRC alternatively determined that Holien’s 4-year award was not clearly erroneous, but rather a correct determination of front pay. Holien premised the 4-year award on Lawson’s 7 years of employment, her likely future difficulties finding similar work, and that this amount would not be unduly speculative, unsupported by the record, or an unjust windfall. The WDEA was no more than a reference point for an award that was otherwise justified by the record. Whether the record may also support a higher award, as Lawson advocates, is not the standard. Board of Oil & Gas Conservation (Mont. 2012) (“A review under the arbitrary and capricious standard ‘does not permit a reversal merely because the record contains inconsistent evidence or evidence which might support a different result. Rather, the decision being challenged must appear to be random, unreasonable or seemingly unmotivated based on the existing record.'”) Under these circumstances, we are hard pressed to conclude that the award was arbitrary & capricious. We conclude that Laird erred in reversing HRC’s front-pay award and therefore reinstate HRC’s determination of front pay.

The record indicates that Shea has practiced law for more than 30 years and attained a good reputation. He initially agreed to charge Lawson $250/hr for his services and $110/hr for paralegal services, but switched to a contingency when it became clear that she would not be able to maintain his fees during the litigation. From 2017 to 2022 he participated in the investigative process before the HRB, appeals to the HRC leading to a contested case hearing, a favorable decision from Holien, and favorable proceedings before the HRC and Court and has handled the appellate proceedings before this Court.

In the District Court he sought compensation at $325/hr and offered expert testimony that this was reasonable given his skills and experience. Laird took guidance from the Kerr (9th Cir. 1975) “lodestar/multiplier test.” She calculated the hours reasonably expended, considered Shea’s skill and performance, the quality of his performance, and the result he obtained, and assessed the difficulty of the case, and concluded that $325/hr and his hours were reasonable and awarded $519,837 fees. She reasoned that the award should not be further enhanced by a “multiplier” because she had considered within her initial lodestar analysis factors that may support a multiplier such as quality of the result, extent of delay, and the economic undesirability of representing the particular class of claims. She reasoned that the increase to $325 reflected “the contingency risk that Shea undertook to represent his client as well as the resulting four-year delay in payment for his services” and “the excellent results obtained and delays in payment.”

Lawson argues that it was inconsistent for Laird to find that Shea charged a reasonable rate of $325 while also finding that $325 reflected the risks & burdens of the litigation, because the $325 is specifically reasonable only for “non-contingency cases.” NorVal notes that the US Supreme Court and this Court have held that a lodestar calculation cannot be enhanced merely based on the risk of contingency representation. Ihler (Mont. 2000) (citing Dague (US 1992)) (“Dague prohibits an enhancement based on contingent risks”).

A “lodestar” amount is calculated by “multiplying the number of hours reasonably spent on the case by an appropriate hourly rate in the community for such work.” Gendron (Mont. 2020) (quoting Tacke (Mont. 2010)). These reasonableness determinations are based on an initial list of factors:

(1) the amount and character of the services rendered;
(2) the labor, time and trouble involved;
(3) the character and importance of the litigation in which the services were rendered;
(4) the amount of money or the value of the property to be affected;
(5) the professional skill and experience called for;
(6) the attorneys’ character and standing in their profession; and
(7) the results secured by the services of the attorneys.

“These factors are nonexclusive, and a district court may rely on other considerations in determining reasonableness.” Id. There is a “strong presumption that the lodestar figure represents a reasonable fee.” Ihler. While a case may justify a multiplier or enhancement, the claimant “has the burden of proving that the requested enhancement is ‘necessary to the determination of a reasonable fee.'” Ihler (citing Dague). To avoid double consideration a multiplier must be determined based on further factors not already considered in the lodestar calculation such as the extent of delay and economic undesirability of representing the class of claims. Audit Services (Mont. 1992); Ihler.

Lawson contends that Laird’s analysis based on the Kerr framework shortchanged consideration of factors such as novelty and difficulty of the questions, her attorney’s preclusion from other employment, time limitations imposed by the circumstances, and awards in other cases. However, while the Kerr factors are not stated identically with the factors of the Montana test, there is considerable overlap and most of the Kerr factors were at least touched upon in Laird’s lodestar analysis. (Notably, her assessment of hours indicated that the case “should have been a simple routine sexual harassment case” were it not for the complications attributed to NorVal’s conduct throughout and the HRB’s initial dismissal.) She stated that she considered additional factors in coming to her lodestar determination, which was her prerogative. Gendron (“A district court may rely on other considerations in determining reasonableness.”). Further, she had wide discretion in determining a reasonable fee award. Id. Thus while the Kerr framework is somewhat different than Montana’s stated framework, and Laird may not have considered all Kerr factors, she had considerable latitude and the award is presumed to be reasonable. We are persuaded that she properly concluded that the award was reasonable and that Lawson has not demonstrated that a multiplier or enhancement was necessary to achieve reasonableness.

Shea Law Firm Defends Stalking Charge Getting it Dismissed.

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Gallatin County Sheriff’s Office Deputy filed a stalking charge against a fellow deputy, who was represented by the Shea Law Firm. The deputy charged with stalking was terminated from Gallatin County Sheriff’s Office but then successfully sued and obtained reinstatement of his position and settled with Gallatin County.

The Shea Law Firm defended the stalking charge and the Court dismissed the charge finding the charges “stupid.”

Case Unripe for Summary Judgment

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Source: Montana Law Week

INSURANCE: Uncertainty and unresolved facts & claims in sewer line easements suit make this declaratory action as to defend/indemnify duties unripe for summary
judgment… Gilbert.

Gardiner-Park Co. Water & Sewer Dist. claims that Donald & Gina Knight constructed 2 homes on their property that improperly overlay and endanger its sewer line. It claims that they constructed a house for their son Landon in 2014 over its sewer lines despite its objections. It claims that this house could crush the old clay tile line, causing disruption or leakage into the Yellowstone River. It claims that they constructed a 2nd
house over the line subsequent to and in violation of a 2015 easement signed by Donald Knight. Knights contest validity of his signature, claiming that he signed following surgery and while under the influence of medication. The District alleges that prior to construction it agreed to pay for and construct a new manhole to reroute the line and accommodate the 2nd house.

This rerouting allegedly involved obtaining another easement from Knights’ neighbors, Obers. Both easements prohibited construction within 5 feet of the line without the District’s permission. However, the District’s underlying suit claims that Knights constructed the 2nd house over the line in violation of both easements. A survey prepared for the District concluded that parts of both homes were within the easements. The District also alleges that Knights caused a retaining wall to collapse, threatening support for part of the line above the river. Its underlying suit accordingly brought claims of intentional trespass, intangible trespass, public & private nuisance, negligence/strict liability, and breach of contract against Knights. Its underlying
suit seeks a declaration that Knights violated the easements, an award of damages, costs, and attorney fees, and an order directing removal of structures threatening the line and violating the easements (both homes and a shed) at Knights’ expense.

Knights counterclaimed against the District alleging that it was aware of placement of the homes and improperly waited to raise concerns until 4/16. They dispute validity of the 2015 easements, claiming that Donald Knight was taking strong pain killers at
the time of signing. They claim that the District improperly forced them to remove parts of the 2nd home’s roof & porch, causing damage to their property. They request damages, attorney  fees & costs, denials of the District’s claims, and injunctive orders prohibiting removal of any structures and directing that the homes “remain in place.”

MACo Joint Powers Insurance Authority filed a declaratory action asking the Court to declare that it has no duty to defend or indemnify the District based on “clear exclusions” in the policy. MACo and the District request summary judgment. The Court heard argument 2/11/19. A notice and affidavit of Todd Shea filed 2/8/19 indicate that the District has filed a contribution & indemnification claim against Standish Excavation as a 3rdparty Defendant in the underlying suit. Further, there are expected amendments to the pleadings by some or all of the parties as a result of this and further discovery is anticipated.

The District raises the issue of ripeness, relying on cases holding that “where there remain unresolved relevant issues in the underlying case, inseparable from the issues presented in the declaratory judgment action, the duty to indemnify is not ripe for resolution.” American Reliable (D.Mont. 2018); Skinner (Mont. 2005). The concern is that ruling on the duty to indemnify before allowing the facts to be determined in an underlying action fails to be a final adjudication on the indemnification issue. Such
a ruling may be subject to amendment or nullification when the underlying case is finally resolved. Northfield v. MACo (Mont. 2000).

MACo responds that its summary judgment motion seeks a ruling that it is not obligated to defend or indemnify the District. It points out that there is a long line of Montana cases that have decided whether coverage exists by analyzing whether the allegations of the underlying complaint trigger the duty to defend. Further, since the duty to defend is broader than the duty to indemnify, if there is no duty to defend, the underlying claim
falls outside the scope of coverage. Twite (Mont. 2008). “Put another way, while an insurer’s duty to defend is triggered by allegations, an insurer’s duty to indemnify hinges not on the facts the claimant alleges and hopes to prove but instead on the facts, proven, stipulated or otherwise established that actually create the insured’s liability.” Freyer (2003). MACo further relies on Grindheim (D.Mont. 1995) (“An insurer’s duty to defend
its insured arises when the insurer, through reference to pleadings, discovery, or final issues declared ready for trial, has received notice of facts representing a risk covered by the terms of the policy.”). Thus, MACo argues, if a claim falls unequivocally outside the policy’s coverage, there is no basis for imposing a duty to defend. MACo contends that the District is attempting to eliminate the duty to defend analysis by merging it into the
narrower duty to indemnify analysis. It points to case law holding that an insurer “had no duty to defend [the insured] because the complaint cannot be construed to give rise to a claim under the terms of the policy.” Weitzel (Mont. 2016). It rejects the District’s argument that unresolved factual issues preclude a determination of coverage, since the Supreme Court has recognized that “factual disputes between the parties relevant to
coverage must be resolved in favor of coverage.” Id. It argues that Northfield and American Reliable are not on point because they addressed only the issue of indemnification and did not analyze the duty to defend.

The District counters that MACo misconstrues its ripeness argument. It relies on authority that where there are unresolved relevant issues in the underlying case that are inseparable from the issues in the declaratory action, the duty to indemnify is not ripe. It argues that there are unresolved issues here that are inseparable from MACo’s summary judgment motion seeking a ruling that it is not obligated to defend or indemnity the District for Knights’ claims. It takes issue with MACo’s effort to distinguish Northfield as only addressing indemnification since the opinion notes at the outset that MACo had already assumed the defense, so the duty to defend was not at issue. It reiterates
that it relies on Northfield for the holding denying Northfield’s request for a declaratory ruling on its potential indemnification obligations because there were unresolved factual issues in the underlying case. Northfield also relied on the DJA, which authorizes a court to refuse to enter a declaratory ruling if doing so “would not terminate the uncertainty or controversy giving rise to the proceeding.” §27-8-206. In Northfield, MACo successfully
defended against Northfield’s motion by contending that the plaintiffs in the underlying case could subsequently amend their complaint and therefore Northfield’s motion seeking declaratory relief on its indemnification obligation was premature. The District maintains that American Reliable ultimately determined that it could not rule on whether there was an occurrence under the policy because of ongoing factual issues in the underlying case. Given this decision, it determined that American Reliable’s duty to defend was ongoing.

There are not only unresolved factual issues in the underlying litigation here, but also claims that have not been filed. This case is not to the stage where there is sufficient finality of pleadings, discovery, or final issues declared ready for trial, such that the Court can determine MACo’s duty to indemnify or defend. If the Court ruled on the summary judgment motions at this juncture, such rulings may be subject to nullification or amendment after further amendment of the pleadings, further discovery, or further proceedings. The Court is cognizant of MACo’s desire to have a ruling based on the state of the pleadings at the time it filed its summary judgment motion. However, doing so “would not terminate the uncertainty or controversy giving rise to the proceeding.” There is sufficient basis to deny MACo’s motion in keeping with the DJA §27-8-206.

The parties are preparing amended pleadings, most significantly Knights’ assertion of a 3rd-party claim which, if filed, would be crucial to MACo’s assessment of its position and the Court’s determination of the matters presented by the summary judgment motions now before the Court. The District has just recently asserted a 3rd-party contribution & indemnification claim, bringing a new party into the underlying case. Discovery has already been extended into 5/19,  and the addition of a new party may give rise to further requests for amendment of the Scheduling Order. The procedural status
puts this case beyond the level of uncertainty and unresolved facts in Northfield or American Reliable.

MACo’s motion for summary judgment and the District’s cross-motion for summary judgment must be denied.

Appeal of Investment Accounts Interpleader Dismissed

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Source: Montana Law Week

APPEAL BOND: Appeal of investment accounts interpleader dismissed at request of Appellant for inability to post bond… order.

Dennis Bohnert has an investment account, a traditional IRA, and a Roth IRA with Edward Jones. His stepdaughter Lisa Copiskey filed a motion in Tribal Court in 9/15 contending that they belong to her. Tribal Court granted the motion and prohibited Bohnert from dissipating any funds. Copiskey requested that Jones not release any funds to Bohnert. He requested access to the accounts for living expenses and defense costs. Both appealed to Tribal Appeals Court in 5/16 contesting the orders. Jones placed a hold on the accounts and advised that it would release funds to Bohnert if the parties agreed on an amount. Because they continued making competing demands to the funds, Jones filed an interpleader in 9th Judicial Dist. Court. Bohnert opposed the interpleader and counterclaimed against Jones. Judge Best dismissed the counterclaim and awarded Jones $24,959 attorney fees & costs, 2/3 apportioned to Bohnert. (MLW 1/28/17). Bohnert appealed and moved for a stay and waiver of appeal bond, which Jones opposed. The motion was denied 4/18/17. Bohnert filed 2 motions in the Supreme Court seeking the same relief and both were also denied. He now moves to dismiss his appeal due to the fact that he has made “numerous attempts to obtain the funds to prosecute his appeal, i.e. the purchase of a Supersedeas Bond from a commercial surety,” by moving for a stay and waiver of bond in District Court and the Supreme Court in view of Jones withholding monies totaling $286,005.80 and he is unable to sell his home and cannot borrow against it due to Jones’ judgment lien.

For good cause shown, Bohnert’s appeal is dismissed.

Yellowstone National Park to replace sewer line related to arsenic lawsuit

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Source: Michael Wright, Bozeman Chronicle Staff Writer

Yellowstone National Park will replace a stretch of sewer line sometime over the next two years in an attempt to solve arsenic problems that led to a lawsuit against the park last year.

A U.S. Department of Interior attorney sent a letter to an attorney for the Gardiner-Park County Water and Sewer District that says Yellowstone plans to remove 2,700 feet of clay sewer line near Mammoth Hot Springs and replace it with PVC pipe.

The district sued the National Park Service in December 2016 because of heightened arsenic levels in its sludge ponds that it attributes to Yellowstone National Park.

The Interior attorney, Colleen Burnidge, wrote that the pipe project may take two years to complete, but they think it will help solve the problem.

“We believe that this project will address arsenic inflow and infiltration into the District’s sewage line,” she wrote.

Yellowstone National Park spokeswoman Morgan Warthin said in an email that the project has been funded and would begin either this year or next year. She couldn’t say how much the project would cost or whether it was a result of the lawsuit or a previously planned improvement.

She said they couldn’t give out further details because it’s part of a lawsuit.

Todd Shea, an attorney for the Gardiner-Park County Water and Sewer District, declined to comment.

The Gardiner-Park County Water and Sewer District sued Yellowstone in December 2016 over high levels of arsenic found in the district’s sewage treatment facilities. The district asked the court to force Yellowstone to give the district money, fix the leak and monitor its sewer lines in the future.

Sewage from Mammoth Hot Springs has gone to the district’s treatment facilities north of Gardiner for years. The district uses sludge ponds to treat wastewater, and the ponds need to be emptied periodically. Sludge removal is expensive, and high arsenic levels make it even more expensive.

According to the complaint, an engineer told the district in February 2015 that high levels of the odorless chemical were entering the treatment facility. The engineer also said that 95 percent of the arsenic was coming from Yellowstone, and testing showed the park’s sewage had arsenic levels nearly 40 times that of the Gardiner sewage.

The Montana Department of Environmental Quality had directed the district to empty the ponds, but the engineer recommended they wait to do so until the park fixed its arsenic problems, according to the complaint.

The district told the park in a 2015 letter that it couldn’t drain its sludge ponds until the arsenic problem from the park was solved. In 2016, the park finally responded, saying there likely wouldn’t be funding to fix the problem until 2020.

The district sued in December 2016, asking both for the park to fix the arsenic leak and to help pay for sludge removal — the cost of which was estimated at $2 million.

Funding has apparently come through for the project, according to the Interior Department letter, which was attached to a court filing that essentially puts the lawsuit on hold. The letter says the project will replace “deteriorated sewer lines” between the youth camp and Mammoth. The youth camp is south of the park headquarters and the Mammoth Terraces.

There is no mention of what the Park Service might contribute to the sludge removal — the other claim in the lawsuit — but Burnidge did write that they hope “the parties can work together to resolve any issues.”

Park County developers appealing water dispute to Montana Supreme Court

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Written by: Michael Wright,  Bozeman Daily Chronicle Staff Writer 

A pair of Park County developers are taking their spat with the local water district to the Montana Supreme Court after a district judge ruled against them.

Max and Sue Berg, represented by attorney Karl Kneuchel, have filed a notice of appeal with the state’s high court in their case against the Gardiner-Park County Water District over the abandonment of a water pipe that served their subdivision near Gardiner.
A Park County district judge earlier this year ruled against them and ordered them to pay the district more than $666,000 in damages.

Kneuchel, the Bergs’ attorney, did not return a call seeking comment before deadline. Todd Shea, the attorney representing the water district, declined to comment because of the appeal.

The Bergs are the developers of the Fort Yellowstone subdivision north of Gardiner along Highway 89. Court documents say they got designs for the subdivision and water and sewer lines approved by the Montana Department of Environmental Quality in 1993.

An existing sewer line that served Mammoth and Gardiner was going to serve the subdivision, but the water line needed to be extended. According to court documents, the Bergs built the extension on the slope between the highway and the Yellowstone River but never built a retaining wall, which was required by the DEQ to stabilize the hillside.
In 2007, an engineering firm warned the water district that the water line might rupture because of erosion caused by the lack of a retaining wall. Court documents say that the engineering firm warned the district that the pipe’s failure could bust the sewer line as well, and potentially result in “millions of gallons of raw sewage” being washed into the Yellowstone River.

Court documents say the water district decided to disconnect the Bergs’ water line and install a new one above the subdivision. Around the same time, DEQ asked the Bergs to confirm whether the water line was built according to the plans, which included a retaining wall. That led to DEQ revoking their permit for the subdivision in 2009.

The Bergs later sued the water district in Park County District Court, arguing that the district’s decision to abandon their water line was detrimental to their subdivision. They asked for upward of $2 million in damages.

The water district denied their claims and in turn countersued the Bergs. Park County District Judge David Cybulski ruled in their favor in late August.

The Bergs’ notice of appeal to the Supreme Court was filed in early October. Formal briefs that lay out their argument will follow.

$666,534.11 Judgment in Favor of Water District against Subdivision Developers

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Source: Montana Law Week

WATER EASEMENT TRESPASS/NUISANCE: $622,196.56 damages, $29,991 attorney fees, $14,346.55 costs to Water District against subdivision developers for failure to build retaining wall to prevent erosion of earth protecting water & sewer lines consequently requiring new water line to town… $278,521.81 damages to homeowners… Cybulski.
Max & Sue Berg own Fort Yellowstone subdivision in Gardiner. Max Berg owned Berg Excavation for 25 years and has experience building subdivisions, water lines, sewer lines, roads, and retaining walls. Bergs applied in 1992 for the subdivision with water & sewer to be supplied by what is now known as Gardiner-Park Co. Water & Sewer Dist. The sewer line was an existing line serving Gardiner and Mammoth, but a water line extension needed to be constructed by Bergs to serve the subdivision. The DEQ-approved plans provided that a water line would be on a steep slope between Hwy 89 and the Yellowstone River. A road would be built between the water line and river to provide access to condos along the river. A retaining wall was to be built between the road cut and water line to stabilize the slope. Max Berg installed the water line and road in 1995, but did not install a retaining wall. A year after activating the water line, the Water Dist. noticed that he had punched in a road under the line. The Manager explained that the road “destabilized the slope. The main was essentially along a cliff face.” Despite this, Bergs did not install a retaining wall. Bergs sued Gaston Engineering in 1999 alleging negligence in locating the water line and road below it which resulted in Bergs being “forced to import and place fill as well as build a retaining wall.” Bergs and Gaston settled in 11/00. Great West Engineering warned in 5/07 that the water line was in jeopardy of rupturing because of erosion due to lack of a retaining wall. The District advised Bergs that it planned to disconnect the line and install a new one in the highway right of way. DEQ issued Bergs a violation letter in 3/08 for failure to construct the retaining wall, followed by multiple communications. In 4/08 Bergs advised that they had retained an engineer to design & install gabion basket walls instead of a retaining wall. DEQ approved the substitution. As of 7/09, the gabion baskets had not been installed. DEQ issued a notice of revocation to Bergs pertaining to the subdivision in 10/09 for failure to install the retaining wall. Bergs appealed. Board of Environmental Review affirmed the revocation. Bergs sued the Water Dist. in 12/08 for inverse condemnation, trespass, and quiet title. The District counterclaimed alleging trespass and nuisance and requesting injunctive and declarative relief. The District requests summary judgment.
Bergs trespassed on the District’s easements by causing erosion of the earth cover below the water & sewer lines resulting in no longer having the cover required by its easements. The trespasses also include Berg performing excavation work within the easement areas without permission and leaving boulders on the sewer line easement. The trespass is continuing by virtue of the continued erosion.

Bergs’ conduct that caused erosion of the earth supporting the lines amounts to a public nuisance. The eroding condition of the slope continues to be “injurious to health” “so as to interfere with the comfortable enjoyment of life.” §27-30-101(1). The Gardiner community was “affected” by the eroding condition and installation of a new water line at a cost of $100,000. At the very least, a “neighborhood” of Gardiner was “affected” in that the line installed by Bergs had to be abandoned and a new line installed in the highway right of way. The ongoing threat to the existing sewer line and abandoned water line continues to “affect” at the very least a “neighborhood” of Gardiner. Subdivision lot owners McInerney and Hoffers previously sued Bergs for failing to install a retaining wall resulting in inability to build on any properties. The Court granted summary judgment for them. Bergs created a private nuisance to the Water District by diminishing and damaging its rights to the water and sewer lines. Judgment for the Water Dist. is granted on its public and private nuisance claims.

Bergs are enjoined from causing further erosion below the water and sewer lines. The District is granted access to the Ft. Yellowstone property to inspect and maintain its lines and remediate the erosion.

Following a damages hearing, the Court awarded the Water Dist. $622,196.56 against Bergs, $29,991 attorney fees, and $14,346.55 costs, with interest at 10%.
McInerney and Hoffers were awarded $278,521.81 damages against Bergs, and the District recovered $912.50 costs against McInerney and Hoffers.

Edward Jones Files Interpleader Over Disputed Investment Funds

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Source: Montana Law Week

INTERPLEADER: Investment entity granted interpleader in Tribal Court dispute over funds in account, awarded fees & costs… Best.

Edward D. Jones seeks an interpleader to join Lisa Copiskey and Dennis Bohnert because they have claims against each other which may expose Jones to double or multiple liability based on their competing claims for funds in a Jones account. Jones asserts the following, which neither Defendant disputes: Blackfeet Tribal Court issued an order prohibiting Jones from using, reducing, diminishing, transferring, disposing of, and/or in any respect dissipating any funds in Bohnert’s Jones account. Bohnert and Copiskey have appealed several Tribal Court orders relating to distribution of the funds and have disputed its jurisdiction at various times. In light of her appeals, Copiskey has asked Jones not to distribute funds to Bohnert until the appeals are resolved and all underlying claims are heard by Tribal Court. Bohnert has disputed Tribal Court jurisdiction, alleged procedural errors, and disputed Copiskey’s right to execute against the funds.

In Bohnert’s argument to this Court, most of which is inconsistent and difficult to follow logically, he seems to want to have his cake and eat it too: to require Jones to follow Tribal Court orders which favor him, but not follow Tribal Court orders which favor Copiskey. This is patently absurd and points up the problem Jones seeks to solve with this interpleader. None of Bohnert’s arguments, even were they logical, go to the questions this Court must answer. His counterclaim flies in the face of the policy reasons for Rule 22 and is unsupported by the law. There are no legal claims — nor do there appear to be any specific allegations — in support of his counterclaim. Bringing a valid interpleader shields a plaintiff from liability for counterclaims where they are based on a plaintiff bringing an interpleader rather than having to choose between competing claimants. Comyne (ED Wis. 2002).

The Court may in its discretion award attorney fees & costs in bringing the interpleader against the stake. Soha (Mont. 1981). Jones appears to be a disinterested stakeholder, which the parties concede. It is entitled to an award of fees & costs from the stake.
Jones and the parties agree that it has in its possession or control money which is the subject of litigation, held in trust for Bohnert. §25-8-101. The funds in the Bohnert account are ordered to be deposited with the Court. Jones is dismissed with prejudice following payment of the funds into the Court’s registry and determination of fees & costs following a hearing.

Bohnert and Copiskey are ordered to interplead and litigate among themselves their claims to the funds. Jones is discharged from any liability on account of Defendants’ claims in interpleader.

Gardiner Water and Sewer District Sues NPS Over Arsenic

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Source: Liz Kearney, Enterprise Staff Writer

The Gardiner Water and Sewer District has filed a lawsuit against the National Park Service over the amount of arsenic flowing into the District’s sewage treatment plant.
In the lawsuit, filed Dec. 21 in U.S. District Court in Billings, the Water and Sewer District alleges that wastewater coming from Mammoth Hot Springs is carrying such a large amount of naturally occurring arsenic that it will cost the district more than $2 million to remove arsenic-laden sludge from its sewage treatment ponds, per a requirement from the Montana Department of Environmental Quality.

The Gardiner Water and Sewer District has treated the sewage from Mammoth for many years, according to the complaint filed by the district’s attorney, Todd Shea, of Bozeman.
The district’s engineer believes the arsenic gets into the system through leaking pipes or manholes from within the park, “and that such conditions are likely prevalent along the route” from the park to the district’s sewage treatment plant, according to the complaint.

The complaint states that arsenic levels in drinking water in both Mammoth and Gardiner, as reported to the district by its engineer, test below the allowable limits.
The NPS needs to address the excess arsenic, the complaint states, because there’s no point in removing the sludge and replacing sewage ponds liners only to have more arsenic accumulate.

The complaint further states that the district wrote several letters to the NPS beginning in February of 2015 that went unanswered before the park agreed to contribute toward the sludge removal and lining replacement. But the park indicated it may not have any funds available until sometime in the year 2020, according to the complaint.

“Given that the District has been directed by the DEQ to dispose of the sludge and replace the liners in its treatment ponds and cannot wait for the Park Service’s responses any longer, it has been compelled to file suit,” the complaint states.

The complaint brings five charges against Yellowstone National Park:

• Breach of contract, for failing to follow through on addressing the high levels of arsenic and failing to contribute funds toward the repair process.
• Trespass. The complaint alleges the park is committing a “continuing trespass,” as the arsenic damage is ongoing and will continue until the park locates the areas of infiltration and repairs them.
• Public nuisance. The park “created a danger to public safety by permitting high levels of arsenic to flow into the District’s sewer treatment plant,” the complaint states.
• Private nuisance. The arsenic from the park forces the district to be responsible for removing and disposing of sludge with a high arsenic level.
• Negligence. The complaint alleges the park failed to monitor the condition of the pipes emptying sewage into the district’s plant, causing the district to suffer damages.

The Gardiner Water and Sewer District is asking the court to issue a mandatory injunction requiring the park to address and correct the high levels of arsenic; that the park contribute funds to the district’s sludge removal project “commensurate with their responsibility for the high levels of arsenic;” that the park pay financial damages and any other relief the court “deems to be just and proper;” and to pay attorneys’ fees and costs.

Representatives from the Water and Sewer District, Yellowstone National Park and the DEQ did not immediately return calls Monday seeking comment.

Morgan Stanley Smith Barney Recovers $258,983

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Source: Montana Law Week

Morgan Stanley recovered a $258,983.72 judgment against Paul Stafford in 8/15 in Billings Federal Court for a loan he had not repaid. Stafford requested a Hearing on Claimed Exemptions — $6,200.31 in an HSA at First Interstate Bank. The issue is whether an HSA is exempt from execution under §25-13-608(1)(f):
A judgment debtor is entitled to exemption from execution of the following:
(f) Benefits payable for medical, surgical, or hospital care to the extent they are                      used or will be used to pay for the care;

It is clear that this section does not specifically exempt HSAs. If the Legislature intended them to be exempt, it could have put them in the law. Further, while HSAs may be used for medical, surgical, or hospital care, they are not required to be used for those purposes; they may be used to pay for long-term care insurance or for health insurance if the person is receiving unemployment comp. 26 USC §223(d)(2)(C)(ii). Most importantly, they may be used for non-medical purposes, although subject to a 20% tax. 223(f)(4)(A). Primarily due to this last exemption, the Court does not find that 25-13-608(1)(f) exempts HSAs from execution. Although a penalty may be imposed, they may be used for non-medical purposes. This fact, coupled with the fact that the Legislature has not specifically exempted HSAs, leads to the conclusion that they are subject to execution. Morgan Stanley’s writ of execution on the $6,200.31 in Stafford’s HSA is allowed.