Montana Lawyer State Bar of Montana
March 2013 | Vol. 38, No. 5
Bar Awards and elections > Do you know of a peer who deserves recognition? It’s time to work on nominations. Forms are inside and online. > It’s also State Bar elections season. Three trustee positions, president-elect, and secretary-treasurer will be on the ballot. Nomination petition inside and online.
Also inside > Elder law series: Medicaid long-term care > Montana Supreme Court case summaries > American Taxpayer Relief Act analysis > Evidence Corner: Mediation and avoiding trial > Travels to South Africa > President’s Message: Enrollment decline in law schools > Blast From the Past: Challenges facing new lawyers
Montana Lawyer The official magazine of the State Bar of Montana published every month except January and July by the State Bar of Montana, 7 W. Sixth Ave., Suite 2B, P.O. Box 577, Helena MT 59624. (406) 442-7660; Fax (406) 442-7763. E-mail: mailbox@montanabar.org State Bar Officers President Pamela Bailey, Billings President-Elect Randall Snyder, Bigfork
1
INDEX
February 2013 Feature Stories
Secretary-Treasurer Mark Parker, Billings
Travel: Refelctions on South Africa...................................................... 26
Immediate Past President Shane Vannatta, Missoula
ATRA: Permanence in Transfer Tax System...................................... 29
Chair of the Board Matthew Thiel, Missoula Board of Trustees Marybeth Sampsel, Kalispell Leslie Halligan, Missoula Tammy Wyatt-Shaw, Missoula Ellen Donohue, Anaconda Jason Holden, Great Falls Mike Talia, Great Falls Kent Sipe, Roundup Luke Berger, Helena Tom Keegan, Helena Monica Tranel, Helena Jane Mersen, Bozeman Lynda White, Bozeman Vicki Dunaway, Billings Ross McLinden, Billings Monique Stafford, Billings
Commentary President’s Message.....................................................................................4
Regular Features Member News................................................................................................5 State Bar News................................................................................................6 Court orders....................................................................................................7 Supreme Court Case Summaries.......................................................... 12 Continuing Legal Education................................................................... 40
ABA Delegates Damon L. Gannett, Billings Shane Vannatta, Missoula
Elder Law Series.......................................................................................... 38
Montana Lawyer Staff Publisher | Christopher L. Manos Editor | Peter Nowakowski (406) 447-2200; fax: 442-7763 e-mail: pnowakowski@montanabar.org
Job postings/Classifieds.......................................................................... 44
Subscriptions are a benefit of State Bar membership. Advertising rates are available upon request. Statements and expressions of opinion appearing herein are those of the advertisers or authors and do not necessarily reflect the views of the State Bar of Montana. Postmaster: Send address changes to Montana Lawyer, P.O. Box 577, Helena MT 59624.
Evidence Corner.......................................................................................... 32 Blast from the Past..................................................................................... 46
President’s Message | Pam Bailey
Nation’s law schools are facing an enrollment crisis There is a nationwide crisis at the law schools in our Country. Enrollment is down dramatically and there is no indication that this will change in the near future. The New York Times reports that in 2004, 100,000 people applied to law school. In 2013, the number of applications expected is between 53,000 and 54,000. The causes are obvious – high tuition and fewer jobs. How this will impact law schools is also obvious – faculty layoffs and closures. Is this another nationwide problem that we in Montana can say does not affect us? The answer is NO! The University of Montana School of Law is also seeing a significant drop in applications. Law school applications are down about 36% from this time in 2010. In early January 2013, less than 60 applications had been received. Typically, over 100 applications would be received by that time. In the past two months, applications are up over last year, but still not at a desired level. The University of Montana School of Law has low tuition compared to other law schools, good job placement statistics, and a very high bar passage rate. So what is the problem? Competition is one factor. Out-of-state law schools are “poaching” our top students. They are offering better scholarships and making earlier offers. Sadly, the huge debt these students will incur at out-of-state schools, even with scholarships, will make their return to Montana unlikely. Marie Connolly, the State Bar admissions coordinator, reports that many applicants for the 2013 bar exam have $150,000 or more in student loan debt. Many jobs right out of law school in Montana are offering salaries in the $40,000 $50,000 range. It is mind blowing to imagine repaying this debt, especially the first few years out of law school, let alone buying a new car, a home, starting a family, etc... The University of Wyoming School of Law is facing the prospect of reducing their class size this year due to a reduction in applications. The University of Montana School of Law plans to admit a class that is substantially similar in terms of
qualifications; however, the number of students enrolled may be lower than last year if necessary to maintain the qualifications. So far, the quality of students has been maintained. The concern is quantity. Many of you may say that we have too many attorneys not only nationwide, but in Montana. As I have informed you in an earlier President’s message – over 50% of the Montana bar is over 50 years of age. When we baby boomers start to retire in large numbers, will there be enough lawyers to take our place? What about eastern Montana? There is already a serious shortage of attorneys in that area. The Bakken boom has significantly impacted the 7th and 15th Judicial Districts. Guess how many attorneys practice in those areas? In the 7th Judicial District there are 30 active attorneys and in the 15th Judicial District there are 16 active attorneys. Not enough to meet the present legal needs, let alone in the upcoming years when the population will explode. How do we attract new attorneys to move to rural eastern Montana? The lack of affordable housing in that area is enough of a deterrent in and of itself. What are the solutions? This is not just the law school’s problem, this is our problem. Members of the Executive Committee of the State Bar have met with Dean Irma Russell, Lori Freeman (Director of Admissions and Career Services), and John Mudd (Director of Development and Alumni Relations). They are doing their best to reach out to prospective students in Montana and nationwide; however, they need our help. Members of the State Bar can encourage bright young students to stay in Montana for their legal education. We can also reach out to our local high schools and colleges and educate students about the opportunities in the law. Scholarship money is always needed. The University of Montana Law School has never offered full ride scholarships. Funding is needed for ad campaigns and to pay for travel to bring prospective students to Montana. What solutions can you offer? The law school and State Bar want to hear from you.
“What about eastern Montana? There is already a serious shortage of attorneys in that area. The Bakken boom has significantly impacted the 7th and 15th Judicial Districts. Guess how many attorneys practice in those areas? In the 7th Judicial District there are 30 active attorneys and in the 15th Judicial District there are 16 active attorneys. Not enough to meet the present legal needs ...” Page 4
March 2013
Montana /Member News Wilson a new shareholder in Brown Law Firm
established in 1932 which focuses on tort and commercial litigation. Hall & Evans has offices in Billings, MT, Cheyenne, WY and Denver, CO. Contact Taylor at taylorb@hallevans.com
Brown Law Firm, P.C., Billings, Montana, is proud to announce that Jon A. Wilson has become a shareholder in the firm. Jon graduated from the Orr reopens Missoula Law office University of Montana School of Law with high Thomas C. Orr is proud to announce the re-opening of his honors in 2005. He served as a law clerk for Justice law office in Missoula, MT at 523 South Orange. John Warner of the Montana Supreme Court Tom has practiced law for over 22 years in the areas before joining Brown Law Firm in September 2006. Wilson of Family Law, Real Estate Transactions, Landlord/ His principal areas of practice are insurance coverTenant, Personal Injury and Criminal Defense. age and civil defense litigation. He is admitted to practice in He spent 8 years with the City Attorney’s office in the state and federal courts of Montana and the Ninth Circuit Missoula before opening his own office in 2000. Court of Appeals. Mr. Wilson is a member of DRI and the Before reopening his office, he was with the P. Mars Montana Defense Trial Lawyers Association. Orr Scott Law Firm since 2010. Tom is looking forward to serving the legal needs of businesses and families in the Missoula area and can be reached at (406) 543-0999 or Taylor the new coordinator at tom@tcorrlaw.com.
Missoula Family Law Self-Help Center
The Missoula Family Law Self-Help Center welcomes Sheri Taylor as its new coordinator. Sheri was heavily involved in the Self-Help Law Program (formerly known as the Family Law Advice Clinic) at Montana Legal Services Association. In large part, Sheri’s work at the Missoula Family Law Taylor Self-Help Center will be much the same as in her prior position where she helped pro se litigants draft family law documents and coordinated volunteer attorneys to provide legal advice to those individuals. At the time the program was cut in 2011 when Montana Legal Services Association lost funding, Sheri was assisting 284 pro se litigants across the state. Sheri is passionate about helping people in difficult situations and brings to the position her education in paralegal studies and non-profit management, in particular, as well as her experience recruiting, training, and managing over 100 disaster service volunteers at the American Red Cross.
Hall & Evans welcomes Taylor to Billings office Brian Taylor is a litigation attorney with a historically diverse practice. His practice primarily focuses on civil defense where he has represented clients in a wide variety of cases including bad faith and product liability. He also represents a number of insurance carriers in traditional insurance defense matters. Brian’s experience in the product Taylor liability field has covered a wide spectrum of selfinsured automobile manufacturers and component part manufacturers. A graduate of Gonzaga University, Brian has participated in numerous trials in both state and federal courts throughout Montana. His practice focus is in the field of transportation defense, insurance defense, and product liability defense. Before joining Hall & Evans in 2013, Brian was a partner at Jardine Stephenson, Blewett & Weaver in Great Falls, Montana. Hall & Evans is a Rocky Mountain regional law firm www.montanabar.org
Call us today for your Legal Document Services • Digital file output • Scanning • Bates numbering • CD duplication
QUICK TURNAROUND
• 3-hole drill Free local pickup & delivery
406.256.4999 • agultra.com 3413 Gabel Road • Billings, MT 59102 Page 5
State Bar News
State Bar of Montana elections begin
Meet your ethics requirement
Election season is under way for State Bar positions. Letters have been sent to those whose terms are expiring. A copy of the nominating petition is on page 11, and at www.montanabar.org. The deadline for original nominating petitions is April 8. Ballots will be mailed on May 5. Ballots need to be postmarked or hand delivered by May 28. Ballots will be counted on June 7. The following positions are up for election: Area E, Area F, Area H, Secretary-Treasurer, President-Elect.
Most Montana attorneys will be required to obtain 5 Ethics credits, including 1 SAMI credit, by March 31, 2013. The SAMI (Substance Abuse/Mental Impairment) requirement is part of the 3-year Ethics cycle. If you were admitted to the Bar after 2001, you might have a different reporting cycle. Check the upper-right portion of your previous-year CLE affidavit to determine the end of your individual reporting cycle. Check the CLE section of www.montanabar.org for more information.
Bar seeks award nominations
Legislature bill watch list update
Print nomination forms for the William J. Jameson Award and George L. Bousliman Professionalism Award are on pages 8-9. The deadline for these two awards is May 15. The Karla M. Gray Equal Justice, and the Neil Haight Pro Bono awards forms will be printed in the April Montana Lawyer. Copies of the nomination forms for all awards are available online at montanabar.org. Information and criteria are listed on the individual awards.
This is the most current list (as of print time) of the bills that the State Bar is actively following in the Legislature. The State Bar Executive Committee meets weekly to go over the list and may oppose or support bills. The committee will also discuss which bills to monitor. • HB 2 General Appropriations Act; Support (judiciary budget) • HB 172 Allow Montana state bar attorney member to serve as a judge pro tem. Discussed: monitor • HB 186 Require losing party in litigation to pay litigation costs in certain lawsuits. Discussed: monitor. Bill tabled in committee. • HB 206 Increase justice court filing fees. Discussed: monitor • HB 252 Revise notary public journal storage to secretary of
Dues mailed March 1 The State Bar of Montana mailed annual dues statements to attorneys on March 1. Payments for all fees are due April 1 and can be made by check or online with a credit card. CLE affidavits will be mailed separately in April with a filing deadline of May 15. Page 6
Member News, next page
March 2013
Supreme Court Orders In RE adding to the Montana Rules of Appellate Procedure a rule on judicial waiver appeals
Montana bar examination, elimination of four Montana essay questions, and the increased passing score. The Board’s proposed amended rules also include some clean-up of language in Summarized from a Jan. 30 order (No. AF 07-0016) existing provisions. In November of 20 12, the People of the State of Montana The Court having reviewed the changes to the Rules for approved by referendum the Parental Notice of Abortion Act of Admission to the Bar of Montana as proposed by the Board, 2011. That Act provides, in pertinent part, that this Court may IT IS HEREBY ORDERED that the rule changes proposed adopt rules providing for an expedited confidential appeal by a by the Board are ADOPTED. The Rules for Admission to petitioner if the youth court denies a petition for a waiver of the the Bar of Montana are amended to read as shown in the parental notification requirement. attachment to this order. Read the attachment in full at The Office of the Appellate Defender (OAD) has proposed a supremecourtdocket.mt.gov and search for case No. AF11-0244. rule to be added to the Montana Rules of Appellate Procedure to address expedited confidential appeals in such matters. In RE petition to adopt amended IT IS ORDERED that, for 60 days following the date of this Board of Bar Examiners’ Rules Order, public comments will be accepted on the attached proSummarized from a Jan. 30 order (No. AF 11-0244) posed rule on judicial waiver appeals. Persons wishing to make Pursuant to Article VII, section 2 of the Montana such comments shall file their comments, in writing, with the Constitution, the Montana Supreme Court holds the authority Clerk of this Court. to establish rules for admission to the State Bar of Montana. Following the expiration of the public comment period, the Court will take such further action as it deems appropriate. To fully implement the Uniform Bar Examination (UBE) as adopted by the Court in its Order dated July 3, 2012, two sets of Read the attachment in full at supremecourtdocket.mt.gov and rules require modification -- the Rules for Admission to the Bar search for case No. AF 07-0016. of Montana and the Montana Board of Bar Examiners’ Rules. At the Court’s request, the Montana Board of Bar Examiners In RE petition to adopt amended rules for has filed proposed amendments to both of those sets of rules. admission to the State Bar of Montana The proposed amendments to the Board of Bar Examiners’ Summarized from a Jan. 30 order (No. AF 11-0244) Rules relate principally to the creation and implementation of Pursuant to Article VII, section 2 of the Montana a Montana law educational component as part of the Montana Constitution, the Montana Supreme Court holds the authorBar Examination, elimination of four Montana essay questions, ity to establish rules for admission to the Bar of the State of and the increased passing score. They also include some cleanMontana. To fully implement the Uniform Bar Examination up of language in existing rules. (UBE) as adopted by the Court in its Order dated July 3, In addition, the Board has proposed new provisions regard2012, two sets of rules require modification-- the Rules for ing cheating, necessitated by recent advances in electronic Admission to the Bar of Montana and the Montana Board of devices. The Court having reviewed the changes to the Montana Bar Examiners’ Rules. Board of Bar Examiners’ Rules as proposed by the Board, At the Court’s request, the Board of Bar Examiners has subIT IS HEREBY ORDERED that the rule changes proposed mitted proposed changes to both of those sets of rules. by the Board are ADOPTED. The Montana Board of Bar The changes proposed to the Rules for Admission to the Bar Examiners’ Rules are amended to read as shown in the of Montana relate principally to the creation and implementaattachment to this order. Read the attachment in full at tion of a Montana law educational component as part of the supremecourtdocket.mt.gov and search for case No. AF11-0244.
Member News., from previous page
state’s office. Oppose • HB 290 Provide that jury may judge facts and application of law to the facts. Oppose. Bill not passed on second reading. • HB 330 Limit the collection of personal identification information in Montana courts. Discussed: monitor • HB 352 Revise justice court laws. Discussed: monitor • HB 369 Revise laws for courts of limited jurisdiction. Discussed: monitor • HB 374 Authorize individual legislator standing to intervene in certain civil actions. Discussed: monitor • HB 400 Revise laws related to personal information privacy. Discussed: monitor. Bill tabled in committee. • HB 403 Revising fees collected by district court clerks. www.montanabar.org
Discussed: monitor • HB 432 Generally revise laws related to child abuse and neglect cases; Oppose. Bill tabled in committee • HB 467 Require qualifications when justice of the peace is the court of record. Discussed: monitor. Bill tabled in committee. • SB 50 Eliminate report on expenditures of attorney license tax. Discussed: monitor • SB 85 Revise laws related to judge disqualification. Oppose. Bill tabled in committee. • SB 119 Establish a cabinet-level position for veteran and intergovernmental issues. Discussed: monitor. Bill tabled in committee. • SB 152 Constitutional amendment revising qualifications for Supreme Court justices. Oppose. Bill tabled in committee. Page 7
George L. Bousliman Professionalism Award The award will recognize lawyers or law firms who have: 1 | Established a reputation for and a tradition of professionalism as defined by Dean Roscoe Pound: pursuit of a learned art as a common calling in the spirit of public service; and 2 | Within two years prior to the nomination, demonstrated extraordinary professionalism in a least one of the following ways: •
Contributing time and resources to public service, public education, charitable or pro bono activities.
•
Encouraging respect for the law and our legal system, especially by making the legal system more accessible and responsive, resolving matters expeditiously and without unnecessary expense, and being courteous to the court, clients, opposing counsel, and other parties.
•
Maintaining and developing, and encouraging other lawyers to maintain and develop, their knowledge of the law and proficiency in their practice.
•
Subordinating business concerns to professional concerns.
Nominee/individual or firm ___________________________________________________________ Address ___________________________________________________________________________ On a separate sheet of paper, please describe the nominee’s activity in your community or in the state, which you believe brings great credit to the legal profession. Please attach additional pages as needed, and other supporting documents.
Your signature _____________________________Print your name ________________________ Your address ______________________________________________Phone _________________ Nominations and supporting documents will not be returned. Send them no later than May 15 to: Bousliman Professionalism Award P.O. Box 577 Helena MT 59624 or e-mail to mailbox@montanabar org
William J. Jameson Award This is the highest honor bestowed by the State Bar of Montana. The Past Presidents Committee will be guided in its selection by the extent to which, in its judgment, the candidate: 1 | Shows ethical and personal conduct, commitment and activities that exemplify the essence of professionalism. 2 | Works in the profession without losing sight of the essential element of public service and the devotion to the public good.
3 | Possesses an unwavering regard for the Rules of Professional Conduct, the Creed of Professionalism, the State Bar’s
Guidelines for Relations Between and Among Lawyers, and the State Bar’s Guidelines for Relations Between Lawyers and Clients.
4 | Assists other attorneys and judges in facing practical and ethical issues. 5 | Participates in programs designed to promote and ensure competence of lawyers and judges. 6 | Supports programs designed to improve the discipline process for judges and attorneys. 7 | Participates in programs that aid the courts in ensuring that the legal system works properly, and continually strives for improvements in the administration of justice.
8 | Is actively involved with public and governmental entities to promote and support activities in the public interest. 9 | Actively participates in pro bono activities and other programs to simplify and make less expensive the rendering of legal services.
10 | Actively participates in programs designed to educate the public about the legal system. On a separate sheet of paper, please describe activities you believe qualify your nominee for the Jameson Award. Please attach additional pages as needed, and other supporting documents. Also, attach the nominee’s resume. Note: Awards will not be made posthumously and may be given to more than one person. Nominee: ________________________________________________________________________ Address: _________________________________________________________________________ Your signature:_____________________________ Print your name:_________________________ Your address:______________________________________________ Phone:________________ Nominations must be postmarked no later than May 15. Send them to: Jameson Award State Bar Past Presidents Committee P.O. Box 577 Helena MT 59624 or e-mail mailbox@montanabar.org
Special Discount for Bar Association Members! Get the best technology in law practice with a discount on registration to STATE BAR OF MONTANA ABA TECHSHOW for the members of the ___________________________. Register for ABA TECHSHOW under the Event Promoter rate and enter 1312 your Association’s unique code, EP _________________.
www.techshow.com #ABATECHSHOW
2013 Nomination Petition State Bar Officer, Secretary-Treasurer, and Trustee Election I, ___________________________________, residing at ___________________________________________________, am a candidate for the office of ( ) President-Elect; ( ) Area E Trustee; ( ) Area F Trustee; ( ) Area H Trustee; ( ) Secretary-Tresurer at the election to be held on June 7, 2013. I am a resident of Montana and an active member of the State Bar of Montana. I request my name be placed on the ballot. The term of office of the President-Elect is one year. The term of office of the Secretary/Tresurer and of Trustee is two years. Signature _____________________________________ The following are signatures of active members of the State Bar of Montana supporting my candidacy. Trustee candidates include the area of residence. No fewer than 10 signatures must be provided for a Trustee; and no fewer than 25 signatures for a President-Elect candidate or Secretery Treasurer. NAME
ADDRESS
1. _______________________________________________________________________________________________ 2. _______________________________________________________________________________________________ 3. _______________________________________________________________________________________________ 4. _______________________________________________________________________________________________ 5. _______________________________________________________________________________________________ 6. _______________________________________________________________________________________________ 7. _______________________________________________________________________________________________ 8. _______________________________________________________________________________________________ 9. _______________________________________________________________________________________________ 10. ______________________________________________________________________________________________ 11. ______________________________________________________________________________________________ 12. ______________________________________________________________________________________________ 13. ______________________________________________________________________________________________ 14. ______________________________________________________________________________________________ 15. ______________________________________________________________________________________________ 16. ______________________________________________________________________________________________ 17. ______________________________________________________________________________________________ 18. ______________________________________________________________________________________________ 19. ______________________________________________________________________________________________ 20. ______________________________________________________________________________________________ 21. ______________________________________________________________________________________________ 22. ______________________________________________________________________________________________ 23. ______________________________________________________________________________________________ 24. ______________________________________________________________________________________________ 25. ______________________________________________________________________________________________ Return this petition to State Bar of Montana, PO Box 577, Helena MT 59624, postmarked no later than April 8, 2013. Ballots will be mailed to Bar members on May 8, 2013 and must be returned to the Bar by May 28, 2013.
Case Briefs | Montana Supreme Court
Selected court cases from Dec. 2012-Feb. 2013 Editor’s note: The stats for December cases are in the February Montana Lawyer. Because of space limitations, the print version only runs through Jan. 15. To read the full version through February 15, check the Montana Lawyer section at www.montanabar.org. By Beth Brennan The Montana Supreme Court issued 26 published decisions between Jan. 1, 2013 and Feb. 15, 2013 – 16 in January, and 10 in the first two weeks of February. Justice McKinnon wrote her first opinion on Feb. 12, 2013, a 5-0 decision in In the Matter of JSW. For the rest of the Court: Chief Justice McGrath wrote four majority opinions and one concurrence/dissent (Green v. Gerber). Justice Cotter wrote five majority opinions and one dissent (Simpson v. Simpson). Justice Rice wrote four majority opinions, one concurrence, and one dissent (Steichen v. Talcott Properties, LLC). Justice Morris wrote three majority opinions. Justice Wheat wrote four majority opinions. Justice Baker wrote five majority opinions. The beginning of the year presented fewer issues that split the Court than did the end of 2012; almost all were decided by fivejudge panels. Two decisions were 4-1, one was 6-1, and the remaining 23 were 5-0. The issues that caused justices to dissent or write separately were: A property owner’s duty of care to an independent contractor who works for the lessee (Steichen v. Talcott Properties, LLC) (4-1) (McGrath, C.J. for the majority; Rice, J., dissenting) The proof needed to modify a child support order (Simpson v. Simpson) (4-1) (Wheat, J., for the majority; Cotter, J, concurring and dissenting) The proper standard for setting aside a default judgment (Green v. Gerber) (6-1) (Cotter, J., for the majority; McGrath, C.J. concurring and dissenting) The Court also issued 11 unpublished decisions during this period: 6 in January, and 5 in the first two weeks of February. Estate of Afrank, 2012 MT 289 (Dec. 18, 2012) (7-0) (McGrath, C.J.) Issue: Whether the district Facts: Dennis Afrank died court properly allowed a suddenly, and is survived by his claim by the decedent’s spouse, Deborah, and his three wife against the estate for sons from a prior marriage, one one half of the debt on a motor home owned with of whom is the PR. The will divided the estate among Deborah the decedent as joint tenants with rights of survivorand the sons, directing the PR ship. to pay his debts, and leaving to Short Answer: No. Deborah their jointly owned property. Deborah and Dennis owned a motor home as joint tenants with rights of survivorship, with an outstanding purchase money security interest of $124,000. Dennis and Deborah both signed the loan, which provided that each was independently obligated for the full debt. Deborah filed a claim with the estate for $62,000 or half of the motor home debt, and the PR denied her claim. Procedural Posture & Holding: Finding no Montana authority, the district court applied the common law rule that the decedent’s estate has an equitable duty to pay its share of debts on jointly held property, and allowed Deborah’s claim against Page 12
the estate. The PR appeals, the Supreme Court reverses. Reasoning: Deborah acquired sole interest in the motor home immediately upon Dennis’s death, and not through any devise in his will. If it had passed through his will, it would have passed with the entire security debt. § 72-2-617, MCA. The nonexoneration statute evidences the public policy adopted by the legislature. In the Matter of HR and DR, 2012 MT 290 (Dec. 18, 2012) (5-0) (McGrath, C.J.) Facts: TR has been diagnosed with schizoaffective disorder, Issue: Whether the district bipolar type. Without medicacourt erred in terminating TR’s parental rights. tion, the schizophrenia causes Short Answer: No. her to have delusions, and the bipolar disease causes mania. She has received treatment from a number of facilities, and takes three medications to control her symptoms. At the time of the termination hearing, she was in a lock-down in-patient treatment program in Missouri. Her BRIEFS, next page
March 2013
Reasoning: (1) The district court held that the statutes and regulations applicable to the coal tax require the tax to be apportioned among counties where the coal is located and severed court-appointed guardian testified it was unlikely she would be from the underground vein. The Court reviews several statutes discharged within a year. After discharge, she will be placed in a and concludes the district court was correct based on the plain residential care facility with 24-hour staff. If successful, she will statutory language. (2) Musselshell argues the DOR must adopt move to a semi-independent apartment, and eventually, a private rules prior to apportionment, as the statute says the department apartment. “may adopt such other method or basis of apportionment as may In May 2010, the state petitioned to adjudicate HR, who be just or proper.” § 15-23-105, MCA. The district court properly was 3, and DR, who was 4, as youths in need of care. The petiheld apportionment was just and proper because it followed the tion sought emergency protective services and temporary legal plain language of the statutes, and administrative rules are not custody of the children. The court approved a treatment plan required when the statute is clear. for TR in Sept. 2010 and served it on her. TR did not object. A year later, the state petitioned to terminate TR’s parental rights. Siebken v. Voderberg, 2012 The district court held a termination hearing in February 2012, MT 291 (Dec. 18, 2012) (6-0) Issue: Whether the district at which the child protection specialist testified that TR had (Cotter, J.) court properly granted failed to keep in contact with her or the children, and that she summary judgment to the Facts: In December 2004, did not complete an anger assessment. She also reported that TR Henry Voderberg trespassed on defendant on the grounds had threatened to kill her, which led to TR being told she had to Federal Reserve Bank property in that the statute of limitations had run. communicate via letters. TR did not send any letters. Although Helena while intoxicated. He got Short Answer: No. she sent a few cards and letters to the children, TR testified via into an altercation with Richard phone that she stopped sending them because she wasn’t sure Siebken, an on-duty law enforcewhat was appropriate. ment officer at the bank. Siebken had a mild headache that night, Procedural Posture & Holding: The district court found an but did not know he’d suffered a neck injury. For more than a appropriate treatment plan had been prepared and approved, year, Siebken sought treatment for neck and back pain, thinkand TR had not complied with it. The court also found that TR’s ing it was caused by his 12-lb. gun belt. Eventually, his doctors ongoing mental health issues made it unlikely she would be fit to and he realized the injury was caused by his altercation with parent in a reasonable time. After concluding termination was in Voderberg. the children’s best interests, the court terminated birth mother Procedural Posture & Holding: On March 18, 2009, Siebken TR’s parental rights to her two children, HR and DR. TR appeals, sued Voderberg for negligence. Voderberg moved for summary and the Supreme Court affirms. judgment on the grounds that the 3-year statute of limitations Reasoning: Because TR did not object to the treatment plan had run. The district court found that Siebken discovered his when it was served on her or at the district court, her arguinjury was caused by Voderberg in September 2005 and granted ment that it was not appropriate is waived. Nonetheless, it was judgment for Voderberg. Siebken appeals, and the Supreme appropriate for TR. The district court’s finding that she had not Court reverses and remands for trial. complied with the plan was supported by substantial evidence. Reasoning: (1) According to the discovery rule, the period of BRIEFS, from previous page
Musselshell County v. Yellowstone County, 2012 MT 292 (Dec. 18, 2012) (5-0) (McGrath, Issue: (1) Whether the coal C.J.) Facts: Bull Mountains Mine is tax proceeds were properly split between two counties, the only underground coal mine or whether all of the proin Montana. Its surface faciliceeds should have gone to ties are in Musselshell County. the county where the coal In 2009, the mine extracted coal is brought to the surface and prepared for shipment; from Yellowstone County as and (2) whether the Dept. well as Musselshell County. The of Revenue was required Dept. of Revenue split the coal to make rules for allocating tax proceeds, giving Musselshell coal tax proceeds. $328,617 and Yellowstone Short Answer: (1) The pro$126,909. ceeds were properly split, Procedural Posture & and (2) no. Holding: Musselshell County sued Yellowstone County and the DOR, seeking a declaratory judgment that the department wrongfully allocated proceeds to Yellowstone County. All parties moved for summary judgment, and the district court granted judgment to Yellowstone County and the DOR. Musselshell County appeals, and the Supreme Court affirms. www.montanabar.org
limitation does not begin to run until the facts constituting the claim have been discovered or should have been discovered if the facts are concealed or self-concealing. § 27-2-102(3), MCA. The parties agree Siebken’s injury was self-concealing for a period of time. Siebken argues he discovered Voderberg was the cause of his injury on May 26, 2006. Because genuine issues of material fact exist regarding the date Siebken made this discovery, summary judgment was improper. State v. McCoy, 2012 MT 293 Issue: Whether the district court properly admitted (Dec. 18, 2012) (5-0) (Wheat, J.) fingerprint cards into eviFacts: Officer Johnson lifted a dence when the defendant latent fingerprint from a safe that raised questions about the someone tried to steal from the St. chain of custody. Regis Travel Center. He dated one Short Answer: Yes. of the cards Aug. 6, 2010, which he testified was a mistake, as he lifted the print on Aug. 4. He then placed the cards in his briefcase, which stayed in his patrol car for several weeks. He testified he is “pretty religious” about locking the car. He logged the cards into evidence on Aug. 20, 2010, then immediately logged them out BRIEFS, next page
Page 13
CASES, from previous page
to send to the crime lab. He placed them on a shelf in his office, the door to which automatically locks, and eventually took them to the crime lab on Sept. 22 or 23. He testified the cards were in the same condition when he delivered them as when he collected them on Aug. 4. The lab matched the prints to the defendant’s. Procedural Posture & Holding: The state charged McCoy with attempted theft. McCoy objected to the admission of the prints, arguing the state had failed to establish a secure chain of custody for the print cards. The district court found sufficient foundation and admitted the print cards into evidence. McCoy was convicted and sentenced to ten years in prison. He appeals, and the Supreme Court affirms. Reasoning: The state has the burden of showing a continuous chain of possession, and no substantial change to the evidence while in its possession. The state need not show that it was impossible to tamper with the evidence, only that there was no substantial change. Once the state makes that prima facie showing, the burden shifts to the defendant to show the evidence has been tampered with. The state met its prima facie burden, which shifted the burden to McCoy, who failed to offer any proof the cards had been tampered with.
has gone to more than 150 medical and therapy appointments, and has constant pain. He testified to his pain and suffering, and Whitcraft did not impeach this testimony. Even though the verdict form does not itemize damages, it is clear the jury did not award uncontested medical expenses and damages for pain, suffering, emotional distress, and loss of established course of life. Renville is not distinguishable, and compels a new trial.
Alexander v. Bozeman Motors, Inc., 2012 MT 301 (Dec. 20, 2012) (5-0) (Cotter, J.) Issue: (1) Whether § 39Facts: Alexander and 71-413 is unconstitutional Ostermiller worked at Bozeman as applied to deliberately Motors’ Four Corners office in 2003 and 2004. Both became sick, injured employees of corporations, and (2) whether allegedly from a leaking propane the district court properly stove. allowed evidence of AlexAlexander and Ostermiller ander’s cause of death. filed suit against Bozeman Motors Short Answer: (1) This issue is moot because the in 2005, alleging negligence, batjury found Alexander was tery, and infliction of emotional not deliberately injured, distress. Alexander died in 2006, and (2) yes. and his daughter joined as PR of his estate. His mother also joined as a party after her son’s death. In 2007, Bozeman Motors moved for summary judgment on work comp exclusivity. Plaintiffs reMurray v. Whitcraft, 2012 MT 298 (Dec. 19, 2012) (4-1) sponded they had been intentionally injured, and so their claims (Baker J., for the majority; Cotter, J. dissenting) fell outside the exclusive remedy provision. They also argued that Facts: Murray and Whitcraft § 39-171-413’s exclusion of vicarious liability for the intentional were driving back to college when Issue: Whether the district acts of an employee violates the equal protection guarantee of the court properly denied the Whitcraft lost control of the car, Montana Constitution, unconstitutionally grants special priviplaintiff’s motion for a new sliding into the guardrail several leges and immunities, and is special legislation. The district court trial after the jury found the times and totaling Whitcraft’s car. defendant negligent but granted summary judgment to Bozeman Motors, holding the Murray was diagnosed with neck awarded only $27,000 in conduct of Bozeman Motors and its employees did not rise to and shoulder strain or contudamages. the level of deliberate intent to cause specific harm, and the statShort Answer: Yes. sion, and released from the ER. ute does not violate the constitution. Plaintiffs appealed, and this He withdrew from college a few Court affirmed as to Ostermiller, but reversed as to Alexander, months later, unable to play baseholding that actual knowledge of the earlier harm to Ostermiller ball, for which he had a small scholarship. He was discharged created a genuine issue of material fact for Alexander. Alexander from medical care 18 months later. Nine months after that, I, 2010 MT 135. The Court also affirmed summary judgment on Murray went bow hunting and the pain in his shoulder returned. the constitutional claims. He filed a complaint against Whitcraft a year later. Procedural Posture & Holding: On remand, after a 10-day Procedural Posture & Holding: The jury found that trial, the jury returned a verdict for all defendants on all claims. Whitcraft was liable for Murray’s damages, awarding him Alexanders appeal, and the Supreme Court affirms. $27,000 when he had asked for $250,000. Murray appeals, and Reasoning: (1) Alexander had to prove at trial that he was the Supreme Court affirms. intentionally injured by an intentional and deliberate act of Reasoning: Whitcraft raised doubts about whether the Bozeman Motors or its employees. Section 39-71-413, MCA was Murray’s shoulder problems were caused solely by the accident. amended in 2001 to provide that “[a]n employer is not vicariousThe verdict form did not ask the jury to itemize the damages they ly liable under this section for the intentional and deliberate acts awarded. The Court distinguishes three cases in which a new of an employee.” Alexander argues this statute violates his right trial was granted due to the jury’s failure to award damages and to equal protection by creating two classes of employees – those finds that in this case, substantial evidence supports the jury’s who work for sole proprietorships and partnerships, and those conclusion. who work for corporations. The only way to hold a corporation Justice Cotter’s Dissent: The jury was instructed that, liable for the intentional acts of its employees is through vicariprovided the evidence shows they exist, it should award damous liability. Bozeman Motors and the state of Montana counter ages for past and future medical expenses, past and future pain that this issue is moot, and governed by the law of the case. The and suffering, past and future emotional distress, and alteration Court agrees that once the jury found that defendants did not inof established course of life. The evidence showed that Murray tentionally injure Alexander, the constitutional question became had no prior injury to his shoulder, and that the accident likely caused his injury. The uncontroverted evidence was that Murray CASES, next page
Page 14
March 2013
CASES, from previous page
moot. Similarly, plaintiffs’ challenges to jury instructions are also moot. (2) Plaintiffs also appeal the lower court’s denial of their motion in limine, prohibiting evidence of Alexander’s cause of death. Defendants contended Alexander’s symptoms were related to alcoholism rather than carbon monoxide poisoning. Several medical experts testified about Alexander’s prolonged drinking problem and extensive liver damage, which ultimately caused his death. The Court holds that evidence of Alexander’s cause of death and health problems was highly probative and not substantially outweighed by its prejudicial effect. State v. Fitzpatrick, 2012 MT 300 (Dec. 20, 2012) (7-0) (Rice, J.) Issue: Whether the district Facts: Several informants court properly granted deindependently told a drug task fendants’ motion to dismiss force agent that the Fitzpatrick for outrageous government sisters were using their medical conduct. marijuana business as a front Short Answer: No. to sell more marijuana than allowed by law. Agent Federspiel obtained a search warrant to set up undercover marijuana buys and electronically monitor and record the transactions. An agent with a fictitious Montana driver’s license attended a medical marijuana seminar in Missoula, and completed a form indicating he needed medical marijuana for a debilitating medical condition. He went to a Missoula doctor without advising the doctor he was applying for a patient card as an undercover agent. He applied to the state for a medical marijuana card without indicating he was acting in his undercover capacity. The Department issued the agent a card in his fictitious name. The agent then contacted the Fitzpatricks, who sold him a small amount of marijuana after seeing his ID and patient card. Over the next two weeks, the Fitzpatricks sold the agent 8 oz. of marijuana, and arranged a meeting to sell him more. The Fitzpatricks were arrested on their way to this meeting. Search warrants led to the seizure of 211.5 oz. of marijuana, four times more than allowed under the medical marijuana law. Delaine was charged with two counts of criminal distribution of dangerous drugs and one count of possession with intent to distribute. Malisa was charged with two counts of criminal distribution of dangerous drugs, one count of distribution by accountability, and one count of possession with intent to distribute. The sisters stipulated to consolidating their cases. Procedural Posture & Holding: The Fitzpatricks filed a joint motion to suppress and dismiss, arguing that the state engaged in outrageous government conduct by lying to the physician, providing a fake driver’s license, lying about the agent’s need for medical marijuana, and lying to the state in his application for a patient card. Because these acts would be illegal if committed by an ordinary citizen, the Fitzpatricks argued it was outrageous and violated their federal due process rights. The district court held a hearing and granted the defendants’ motion. The state appeals, and the Supreme Court reverses. Reasoning: Outrageous government conduct is analogous to entrapment; the defenses are often discussed together in case www.montanabar.org
law. After reviewing the case law, the Court looks to the Ninth Circuit for the requirement that the government conduct be either malum in se or “amount to the engineering and direction of the criminal enterprise from start to finish.” ¶ 21. Malum in se is an act that is inherently amoral, such as murder, arson, or rape. Malum prohibitum is act that is a crime because it prohibited by statute. Here, the agent’s acts were malum prohibitum; thus, the outrageous government conduct defense is not implicated. His illegal conduct was necessary to infiltrate the criminal enterprise. The agent did not engineer and direct the criminal enterprise. Williamson v. PSC, 2012 MT 299 (Dec. 20, 2012) (5-0) (Baker, J.) Facts: Petitioners filed a Issue: (1) Whether the discomplaint with the PSC, allegtrict court properly denied Petitioners their costs for ing Northwestern Energy was their initial proceeding overcharging for street lightand first appeal, and (2) ing.. The PSC dismissed on the whether the district court grounds that Petitioners lacked properly denied Petitionstanding and were procedurally ers’ request for a temporary barred from amending their com- rate decrease. plaint. Petitioners sought judicial Short Answer: (1) Yes, and (2) yes. review, and their complaint was dismissed. They appealed to this Court, which affirmed as to four Petitioners but remanded for a redetermination by the PSC of whether to allow the complaint to be amended. Procedural Posture & Holding: Upon remand, Petitioners immediately filed a motion for costs and renewed their motion for a rate reduction. The PSC and Northwestern Energy opposed the motions. The district court denied the motions and remanded to the PSC. Petitioners appeal, and the Supreme Court affirms. Reasoning: (1) The Court first determines that the order being appealed constitutes a final, appealable order. It then affirms that Petitioners must have a judgment in their favor before costs will be allowed. A remand to the PSC is not a judgment in their favor. The district court is entitled to decide which party prevailed on appeal. Here, the district court did not abuse its discretion in effectively determining that Petitioners were not the prevailing party, although the court did not apply the correct rule. (2) The district court denied Petitioners’ motion for a temporary rate reduction because it was premature. The Supreme Court agrees. Petitioners argue § 69-3-304 allows judicial review of PSC rulings on temporary rate increases or reductions; however, the PSC has not yet considered the merits of Petitioners’ claim. Thus, there is nothing for the district court to judicially review. Gatlin-Johnson c. Miles City, 2012 MT 302 (Dec. 21, 2012) (5- Issue: Whether the district court properly applied the 0) (McGrath, C.J.) public duty doctrine to Facts: In 2002, Tiffany Gatlin grant summary judgment brought her 8-year-old daughter to the city. to play in Miles City’s Riverside Short Answer: No. Park. The child fell from a slide and suffered a severe head injury. Gatlin sued the city for failing to maintain a safe depth of CASES, next page
Page 15
CASES, from previous page
impact-absorbing material under the slide. Procedural Posture & Holding: The district court granted summary judgment to the city on the grounds that under the public duty doctrine, the city owed no duty to the child other than a duty owed to the public at large. The district court also determined that the recreational use statute did not apply. Gatlin appeals, and the Supreme Court reverses. Reasoning: The Court reviews its public-duty-doctrine jurisprudence, and holds it is error to conclude that the public duty doctrine applies to all tort claims against a public body. When the government has a specific duty, such as premises liability, rather than a general duty to the entire community, it can be held liable for breaching that duty. It is not necessary that the city have a special relationship with the plaintiff. Children who fall from playground equipment are foreseeable plaintiffs. The city was aware of the need for a “fall zone,” and expressly adopted standards for safe fall zones. When the city chose to establish a playground and install the equipment, it assumed the duty of acting with reasonable care. The Court looks at additional factors and concludes it is reasonable and proper to hold that the city had a duty of reasonable care in maintaining its parks, and that the public duty doctrine does not apply. Additionally, both parties agree the recreational use statute applies. § 70-16-302(1), MCA. The Court therefore assumes without deciding that an 8-year-old girl playing in a park is a recreational use under the statute. Gatlin must prove at trial that the city’s misconduct was willful and wanton. Justice Rice’s Concurrence: In several cases mentioned by the Court as not involving the public duty doctrine, the doctrine was not raised by the parties. Had it been, the results could have been different. It will be necessary to further refine the kinds of cases in which the public duty doctrine applies; it could even be applied in cases involving premises liability. State v. Lozon, 2012 MT 303 Issue: Whether the video (Dec. 21, 2012) (5-0) (Rice, J.) of the PAST, shown without Facts: Stuart Lozon, Jr. was sound, required testimony stopped after failing to stop at a by the state to establish stop sign in Hamilton. The officer reliability and accuracy. noticed labored movements, and Short Answer: Yes. glassy, bloodshot eyes. He asked Lozon if he had been drinking, and Lozon said he had a few beers. The officer performed several field sobriety tests, including the horizontal gaze nystagmus, which Lozon failed. Lozon agreed to the Preliminary Alcohol Screening Test (PAST), and registered a blood alcohol of .153. Lozon was arrested and taken to jail, where he refused additional field sobriety tests and would not provide an Intoxilyzer 8000 breath sample. Procedural Posture & Holding: Lozon was charged with DUI. A city court jury found him guilty, and he appealed to the district court. He filed a motion in limine seeking redaction of all portions of the in-car or field video in which the PAST or horizontal nystagmus test were administered or discussed, and a portion of the jail video in which Lozon referred to his PAST results. The district court granted the motion except for video footage of the officer administering the PAST, shown without Page 16
sound. During deliberations, the jury asked if they could know the results of the PAST. The court responded that the Supreme Court generally limits the use of PAST to establishing probable cause. The jury convicted Lozon, and he appeals. The Supreme Court reverses. Reasoning: PAST results are not admissible as substantive evidence unless the state’s testimony establishes the reliability and accuracy of the PAST. Lozon argues that the video of the PAST without sound was used as substantive evidence, because it proved that Lozon was under the influence and allowed the jury to infer that Lozon was above the legal limit when he was arrested. Because the state did not establish PAST reliability and accuracy, Lozon argues the district court erred in admitting the video. The Supreme Court agrees. The video raised a “compelling inference” that Lozon was over the legal blood alcohol limit, and was therefore used as substantive evidence of his intoxication. The potential for prejudice outweighed its probative value. The Court then concludes the error was not harmless. Justice Cotter’s Concurrence: Justice Cotter objects to the introduction of PAST results as substantive evidence of guilt under any circumstances. Fink v. Williams, 2012 Issue: Whether the district MT 304 (Dec. 24, 2012) (5-0) court erred in denying Wil(Cotter, J.) liams’ request for reimburseFacts: David Schraudner ment of mortgage and tax was the uncle of Dana Fink payments she made on and her brother, Dustin property allegedly conveyed Badgett. In 2000, Schraudner to her via quitclaim deed once the district court ruled the executed a will devising his quitclaim deed was void. estate to Fink and Badgett. In April 2009, about seven weeks Short Answer: No, as she failed to present any evidence before his death, Schraudner in support of reimbursement. aigned a quitclaim deed conveying 3,000 acres of real property to himself and Roberta Williams as joint tenants with right of survivorship. Procedural Posture & Holding: After Schraudner’s death, Fink challenged the validity of the quitclaim deed, arguing her uncle was not competent to execute it, and Williams exercised undue influence over him. The district court held a bench trial, at the end of which it concluded the quitclaim deed was void and had no legal effect. The court also denied Williams’ request for reimbursement for the mortgage and tax payments she had made on the subject property for the two years she held the property under the voided deed, determining she had presented no evidence to support her claim, and the payments should be treated as rent. Williams appeals the reimbursement ruling, and the Supreme Court affirms. Reasoning: Although Williams did not raise a counterclaim, the Pretrial Order included a contention that she should be reimbursed almost $45,000 in mortgage payments and about $1700 in taxes if the court ruled that the quitclaim deed was void. Because it was in the PT Order, this presented a legitimate issue for trial. Williams did not present any exhibits or witness testimony to support her reimbursement claim. She argues she was unable to because the district court refused to extend the two-day trial. The CASES, next page
March 2013
her, kissing her, and attempting to have oral and vaginal intercourse with her. Separate transactions can arise from criminal conduct occurring at the same place with the same victim. Court holds this decision was within the district court’s broad Finally, Geren argues that he had to have been arraigned after discretion in trial administration. The parties were notified in the the state amended the information during trial to change one PT Order that the trial was calendared for two days. Williams count of incest to a count of attempted incest. A defendant must twice declined to present evidence, opting to reserve her testibe arraigned on any substantive amendment to the information, mony for later in the trial. Her strategic choice cannot be used to but not on an amendment as to form. Here, the amendment put the district court in error. Because the district court had no was as to form. The essential elements were the same, and the evidence upon which to award reimbursement, it did not err in offenses carry the same sentence. denying Williams’ request. CASES, from previous page
State v. Geren, 2012 MT 307 (Dec. 26, 2012) (5-0) (Nelson, J.) Issue: (1) Whether Geren was subject to double jeopFacts: Geren sexually abused ardy when he was convicthis teenage daughter, steped of incest and attempted daughter, and sister-in-law over incest, and (2) whether Geren had to be arraigned a period of time by forcing them to have oral sex, intercourse, and on the amended information after the state moved kissing and touching them. The to change one count of sister of Geren’s wife told her sexual intercourse without parents and her twin sister what consent to a count of athad happened, and the twin sister tempted sexual intercourse convinced the daughter to talk without consent. Short Answer: (1) No, bewith the school counselor. After cause the convictions were the counselor heard the stories based on different transacfrom the girls, a detective from tions, and (2) no, because the sheriff’s department interthe amendment was only viewed Geren. Geren eventually as to form, not substance. admitted having sexual contact with all three girls, although testified at trial that his admission resulted from fear and a desire to end the interview. Procedural Posture & Holding: The jury convicted Geren of five counts of incest, one count of sexual intercourse without consent, one count of attempted sexual intercourse without consent, two counts of sexual assault, and one count of attempted incest. Geren moved for a new trial, arguing that his convictions for incest and attempted incest violated his right against double jeopardy because attempted incest is a lesser included offense of incest. He also argued a new trial was necessary because several jurors may have been sleeping during critical portions of the trial testimony. The district court denied his motion, noting it had not noticed any sleeping jurors, and holding that the convictions for attempted incest and incest did not violate double jeopardy. Geren was sentenced to 15 years, with five suspended, for each count, with the sentences to run consecutively. Geren appeals, and the Supreme Court affirms. Reasoning: On the contention that several jurors were sleeping, Geren fails to show that the district court acted arbitrarily without conscientious judgment, or exceeded the bounds of reason, or that the court’s abuse of discretion prejudiced Geren. Geren asserts that his convictions for incest and attempted incest arise from a single transaction, and therefore subject him to double jeopardy. Geren’s convictions were not based on the same transaction. He views the hunting trip he and his daughter went on as one transaction; however, the incest count was based on his fondling her breast while they were in the truck, while the attempted incest count was based on his repeated grabbing of www.montanabar.org
Labair v. Carey, 2012 MT 312 (Dec. 27, 2012) (7-0) (Cotter, J., Issue: Whether the district court properly granted for the majority; Nelson, J.; Rice, summary judgment to J., concurring; Baker, J., concur- Carey on Labairs’ legal ring in the judgment but dismalpractice claim. senting to part of the reasoning) Short Answer: No. Facts: Labairs’ newborn son died after an early delivery by C-Section on Oct. 3, 2003. Labairs signed a retainer with Carey in January 2004, and Carey associated Curt Drake as co-counsel. On Sept. 14, 2006 Carey filed a complaint against the OB/GYN and the hospital, alleging negligence and negligent infliction of emotional distress. Carey did not file an application with the Montana Medical Legal Panel. In May 2008, the district court dismissed Labairs’ medical malpractice claims with prejudice because they were time-barred. In March 2010, Labairs filed a complaint for legal malpractice against Carey and Drake. Labairs’ new counsel filed an untimely panel application, attempting to build evidence of the viability of the underlying med mal claims. The panel heard the claims and issued a decision. The Labairs moved to allow the decision to be introduced a trial, but the district court did not rule on the motion. In July 2011, Labairs moved for partial summary judgment on liability, on the grounds that Carey admitted missing the statute of limitations. Labairs’ legal expert opined that missing the statute damaged Labairs by causing the loss of their med mal claims. Carey responded that Labairs’ claim must fail for lack of expert testimony on causation and damages in both the underlying med mal case and the current legal malpractice action. Carey then moved for summary judgment. He admitted his failure to file the panel application before the statute ran was a breach of the standard of care, but argued his breach did not cause damages to Labairs. Carey’s expert, an experienced plaintiffs’ med mal attorney, opined that Labairs’ underlying medical malpractice claims could not be established because Carey could not develop the necessary expert testimony to prove the claims. Labairs settled with Drake in September 2011; the settlement agreement was filed under seal. Procedural Posture & Holding: The district court denied Labairs’ motion for partial summary judgment and granted Carey’s motion, concluding Labairs failed to establish a prima facie case of legal malpractice by failing to provide admissible expert evidence on medical causation and damages. The court found that Carey’s expert testimony established that the underlying med mal claim would have failed, and that Carey’s breach therefore did not cause the Labairs any damages. Labairs appeal, CASES, next page
Page 17
CASES, from previous page
and the Supreme Court reverses. Reasoning: The Court clarifies its legal malpractice jurisprudence and reconciles the causation analysis with Busta v. Columbus Hosp., 276 Mont. 342 (1996), which held that in cases not involving intervening cause, causation is proved by showing a party’s conduct was a cause-in-fact of the alleged damage. Proximate cause is not an element of negligence unless there are multiple causes, or an intervening cause. The Court holds that an attorney’s negligence is the cause of a plaintiff’s injury if there is an uninterrupted chain of events from the negligent act to the injury; proximate cause becomes part of the analysis only when the attorney alleges that the chain of causation has been severed. Here, there is no issue of proximate cause. The district court erred in considering a legal expert’s opinion on the merits of a med mal claim; failing to consider Labairs’ expert medical and legal testimony; defining Labairs’ injury too narrowly; concluding Carey was not the cause in fact of Labairs’ injury; and requiring Labairs to prove the success of their med mal claim at the summary judgment stage. The Court remands for trial, where Labairs must prove by a preponderance that they would have recovered a settlement or judgment in their med mal case but for Carey’s negligence, and the value of the lost settlement or judgment. The Court disagrees with the dissent’s suggestion that Carey, whose actions caused the loss of Labair’s med mal claims in the first place, should be allowed to argue that Labairs’ failure to invoke the savings statute, § 27-2-407, MCA, is a failure to mitigate damages. Justice Nelson’s Concurrence: Justice Nelson first questions whether the “suit within a suit” approach should ever be imposed on a legal malpractice plaintiff, as it allows the attorney to benefit from his own wrongdoing. Having botched the underlying case, the attorney should not be able to avoid paying damages by aligning himself with the opposing party in the underlying case and arguing that his client’s case would not have been successful. Justice Nelson believes the Court should jettison the doctrine of proximate cause and the concept of superseding intervening cause, as both unnecessarily complicate the law of negligence. Foreseeability is properly analyzed as a part of duty; duty and proximate cause should be conflated, as both limit a defendant’s liability to foreseeable plaintiffs and foreseeable harms. Justice Rice’s concurrence: Carey’s breach caused the loss of the opportunity to timely file and proceed with the med mal action, which then would have been subject to testing at the summary judgment stage. Until so tested, the claim may have been valueless. Justice Rice therefore would not conclude that the breach alone established causation as a matter of law. However, Labairs’ experts have sufficiently established that they would have survived summary judgment in their med mal case, and simultaneously established causation in their legal malpractice case by showing they lost the opportunity to try their med mal case to a verdict. Justice Baker’s Concurrence and Dissent: Justice Baker concurs in the judgment reversing summary judgment for Carey, but disagrees with the Court’s comments about Carey’s expert Page 18
affidavit. She would defer to the district court to consider and decide on expert testimony for trial. Second, she disagrees with the Court’s failure to address Carey’s argument that the Labairs are responsible for their own damages because they failed to refile their complaint after receiving a decision from the med mal panel. The savings statute, § 27-2-407, allows plaintiffs in certain circumstances to have their cases decided on the merits in spite of the statute of limitations having run. Justice Baker would allow this argument to be presented as a failure to mitigate damages. Mattson v. Montana Power Co., 2012 MT 318 (Dec. 27, 2012) Issue: Whether the district court properly denied class (5-2) (Nelson, J., for the majority; certification. Baker, J., dissenting) Short Answer: No. Facts: Plaintiffs are landowners or former landowners with property on the shores of Flathead Lake or part of the upper Flathead River. In 1930, the Federal Power Commission issued Rocky Mountain Power Co., a subsidiary of Montana Power Co., a 50year license to build and operate Kerr Dam. RMPC transferred the license to MPC in 1938. The dam was completed in 1938, and regulates the lake’s water level and generates electrical power for Montana customers. The new license was issued in 1985 to MPC and the Confederated Salish and Kootenai Tribes jointly, with MPC operating the dam until 2015, after which the Tribes have the option of taking it over. PPLM took over the dam operation in 1999. Landowners claim that MPC’s and PPLM’s practice of keeping the lake at full pool in the fall has caused and will continue to cause substantial damage to their properties due to the more frequent storms in the fall, which erode the shoreline and damage landowners’ properties. Before 2007, the average lake level on Nov. 1 was 2,892 feet. In 2007, PPLM voluntarily lowered the level by one foot to reduce shoreline erosion. Landowners’ properties are subject to flood easements, obtained by MPC and RMPC when the dam was first built. Landowners contend MPC and PPLM have exceeded the scope of those easements, resulting in trespass, nuisance, takings, and breach of the easements. This action was filed in 1999 against MPC and PPLM. In Mattson I, the Court upheld the district court’s denial of PPLM’s motion to substitute the district judge. In Mattson II, the Court reversed part of the district court’s summary judgment for defendants, vacated the class certification as to PPLM (the MPC class was not appealed) and remanded. This is the third appeal. Procedural Posture & Holding: On remand, the district court held an evidentiary hearing, denied the landowners’ renewed motion for class certification, and decertified the MPC class. Landowners appeal, and the Supreme Court reverses. Reasoning: In Mattson II, the Court held that Rule 23 does not require a district court to accept all of the complaint’s allegations as true in deciding class certification. Landowners seek certification under Rule 23(b)(3), and must meet Rule 23(a) as well as 23(b)(3). MPC and PPLM dispute commonality, predominance, and superiority. The district court held that landowners failed to meet these requirements because damage will vary CASES, next page
March 2013
conviction to support an enhanced punishment. A rebuttable presumption of regularity attaches to the prior conviction, and the defendant has the burden to overcome the presumption. A considerably from property to property, thereby basing its class defendant cannot merely point to a silent or ambiguous record certification decision on a factually and legally incorrect premise. to meet his burden. A defendant’s unequivocal, sworn statement Mattson II interpreted the flood easements as allowing reasonthat he did not waive his right to counsel rebuts the presumpable damages to properties through reasonable operation of the tion, and the burden shifts to the state to rebut the defendant’s dam and creating a duty on the part of the dam operator to avoid evidence. Here, Nixon’s affidavit was undermined by his testimounreasonable damage to properties or unreasonable interferny that he did not remember what the judge said to him during ence with their enjoyment. The key issues, then, are whether the the 1992 proceedings, and that he does not believe he waived erosion caused has been reasonably necessary and whether MPC his right to counsel. The docket statement says that Nixon was and PPLM have cause unreasonable damage to, or unreasonably advised of his rights, but does not specifically state that he was interfered with the enjoyment of, shoreline properties. The Court advised of his right to counsel, or that he waived that right. The did not say these questions had to be answered on a propertydistrict court’s factual finding is not clearly erroneous. by-property basis. The dam operator can select only one water level at the dam, which then applies to the entire lake. Although State v. Claasen, 2012 the easements were obtained property by property, their purpose Issue: Whether the district MT 313 (Dec. 27, 2012) (5-0) court exceeded its authoris the same: to enable the dam operator to regulate the lake up (Wheat, J.) ity when it increased to 2,893 feet at the dam, and flood or affect all shoreline properFacts: In 2004, Claasen was Claasen’s sexual offender ties simultaneously. Reasonableness cannot be determined on charged with sexual abuse of level designation upon rea property-by-property basis. Landowners therefore satisfy the vocation of his suspended children and pled guilty. Prior to commonality requirement. They also establish predominance sentence. sentencing, the district court orand superiority, as MPC or PPLM’s liability must be determined Short Answer: No. dered a psychosexual evaluation on a lakewide basis; if the dam operation is reasonable, some and a presentence investigation property owners’ damage may not be compensable. Individual report (PSI). Dr. Scolatti completed the psychosexual evaluadamages to not negate class certification as to liability. tion and determined Claasen was a Level 1 sex offender with low Justice Baker’s Dissent, joined by Rice, J.: The district risk to re-offend. The PSI indicated Claasen was an appropricourt did exactly what this Court directed it to do in Mattson II. ate candidate for outpatient treatment and recommended that Defendants’ liability turns on the fact-based evaluation of reaClaasen follow all of Dr. Scolatti’s recommendations, engage in sonableness with respect to each property. Moreover, adjudicatsexual offender treatment, and refrain from using or possessing ing the reasonableness of the dam does not necessarily dispose pornography. Claasen was sentenced to the DOC for seven years, of Defendants’ liability, as under Mattson II, even if a jury rules with two suspended, subject to terms and conditions. The court in favor of MPC and PPLM, Plaintiffs could still bring individual orally pronounced sentence, and designated Claasen a Level 1 actions challenging the effect of the lake level on their properoffender. The court did not include the level designation in its ties. The Court also disregards its application in Chipman of the written judgment. heightened commonality standard from Wal-Mart, making it Claasen was discharged to serve his two–year suspended unclear what prospective class plaintiffs must prove to establish sentence in July 2010. In December 2010, his probation officers commonality. The Court does not give proper deference to the conducted a routine home visit and found child pornography. district court’s determination that class certification will compliShortly after, Claasen was terminated from his community-based cate rather than economize resolution of the issues. sexual offender treatment, and the treatment provider stated that Claasen was a “danger” and “should be incarcerated.” The State v. Nixon, 2012 MT 316 provider recommended that Claasen be designated a Level 3 sex (Dec. 27, 2012) (5-0) (Wheat, J.) Issue: Whether the district offender. court properly determined Facts: Nixon was charged Procedural Posture & Holding: The state petitioned to rethat Nixon did not meet with DUI, fourth or subsequent his burden of proof in voke Claasen’s suspended sentence. Before any hearings, the fedoffense. The information stated establishing that his earlier eral government charged Claasen with receipt of child pornogthat Nixon had previously been conviction was constituraphy. Claasen pled guilty and was sentenced in December 2011 convicted of DUI in March 2009, tionally infirm. to a 20-year term in federal prison. The state court held a hearing Short Answer: Yes. April 1999, and December 1992. and found Claasen violated the conditions of his sentence. The Procedural Posture & court revoked Claasen’s suspended sentence and committed him Holding: Nixon moved to to the DOC for two years, to run consecutively to his federal dismiss due to invalidity of his prior DUI convictions. He chalsentence. It also ordered that Claasen be designated a Level 3 lenged the 1992 conviction on constitutional grounds, asserting sex offender. Claasen appeals the increase of his sexual offender the court failed to obtain a valid and express waiver of the right designation, and the Supreme Court affirms. to counsel prior to taking Nixon’s plea. The district court held Reasoning: The court’s oral pronouncement of Classen’s an evidentiary hearing at which the current justice court judge sentence is the valid, final judgment. Claasen claims the district testified, and denied Nixon’s motion. Nixon appeals, and the court exceeded its statutory authority by elevating him from a Supreme Court affirms. Reasoning: The state cannot use a constitutionally infirm CASES, from previous page
CASES, next page
www.montanabar.org
Page 19
any disputes over the agreement. The term of the agreement was from Nov. 8, 2010 – Dec. 31, 2012. Marsden worked for about one year before BCBSMT terminated her employment in Level 1 to a Level 3 offender without first ordering a new PSI and Dec. 2011. BCBSMT paid Marsden $328,478, the compensation psychosexual evaluation. The state argues that Claasen did not BCBSMT believed it owed Marsden for the remainder of her preserve this issue for appeal, but the Court finds that he did. The contract. Court next determines that the revocation statutes apply, not the BCBSMT contends it terminated Marsden for failing to subsentencing statutes. The statute provides that if an offender viomit a timely bid to a state request for proposals. Marsden conlates the terms of a suspended sentence, the judge can revoke and tends BCBSMT terminated her in retaliation for reported allegimpose a sentence “that does not include a longer imprisonment edly illegal practices related to rebates of insurance commissions. or commitment term than the original sentence.” § 46-18-203(7) Procedural Posture & Holding: Marsden filed suit alleging (a)(iii), MCA. A sexual offender designation implicates a liberty wrongful discharge under the WDEA. She concedes her claim is interest, but an increase in level designation does not increase dependent on her not having had a contract of employment for the imprisonment or commitment term. a specific term. She argued that the provision allowing BCBSMT to terminate her nullified the term and made her an employee Tonner v. Cirian, 2012 MT at will. BCSMT argued that whether the contract was for a term Issue: Whether a driver 314 (De. 27, 2012) (5-0) (Baker, should be resolved through arbitration. BCBS sought to compel who did not have the right J.) arbitration, and the district court granted its motion. Marsden of way in an uncontrolled Facts: Tonner and Cirian colappeals, and the Supreme Court affirms. intersection collision can lided in an uncontrolled intersecraise a genuine issue of maReasoning: Marsden’s contract allowed BCBSMT to termition, damaging both vehicles and terial fact about the favored nate her employment if the president and CEO believed it was injuring Tonner. Tonner sued driver’s failure to maintain a in the company’s best interest, or for cause. The parties agree Cirian, alleging Cirian failed to proper lookout. BCBSMT terminated Marsden under the best interest clause. Short Answer: Yes. maintain a proper lookout and Marsden argues this cause creates a “without cause” termination failed to operate her vehicle in a provision, rendering her an employee at will and allowing her to reasonable and prudent manner. pursue a WDEA claim. Marsden agreed to arbitrate any disEach driver testified she was driving at or under the speed putes arising out of the employment contract. The dispute over limit, unimpaired, and that neither saw the other’s car prior to whether Marsden was a set-term or at-will employee implicates entering the intersection. Tonner stated she slowed and looked the provisions of the contract, and should be decided by an to her right before entering the intersection but did not see arbitrator. Cirian’s car. Cirian testified she did not look to her left before entering the intersection, and that even if she had, bushes and Big Sky Colony, Inc. v. a fence obstructed her view. Tonner submitted photos showing Issue: Whether HB 199, Montana Dept. of Labor, 2012 that Cirian’s view was not obstructed. which amended the MT 320 (Dec. 31, 2012) (4-3) Procedural Posture & Holding: Cirian moved for summary work comp definitions of (Morris, J. for the majoremployer and employee to judgment on the undisputed fact that the approached the interity (joined by McGrath, C.J., include religious organisection to the right of Tonner and therefore had the right of way. Wheat, J., and Baker, J.); Rice, J., zations whose members Tonner opposed the motion, arguing that the right of way does dissenting (joined by Nelson, J. work in exchange for not absolve a driver from her duty to maintain a proper lookout. (writing separately) and Cotter, food, clothing, shelter and The district court granted summary judgment to Cirian, and medical care, violates the J.)) Tonner appeals. The Supreme Court reverses. Free Exercise or EstablishFacts: Big Sky Colony, Inc. is Reasoning: Even if Cirian had the right of way, she still had ment Clauses of the federal a Hutterite community, orgaconstitution, or the Equal the duty to drive in a careful manner and maintain a proper nized as a religious corporation Protection guarantee of the lookout. If the disputed facts suggest each party could have been under Montana law. All members federal and state constitunegligent, summary judgment is inappropriate. Judgment as a must belong to the church and tions. matter of law is affirmed only when the undisputed facts support must agree to follow the teaching Short Answer: No. but one conclusion. Cirian has not presented any evidence demand tenets of the church society. onstrating that her vehicle posed an immediate hazard to Tonner Members who work in commercial activities for the colony as Tonner entered the intersection; thus, the issue of whether receive food, clothing, shelter, and medical care, but are not paid Cirian maintained an adequate lookout is material. wages. The department initially determined that the work comp act did not apply to the colony because it did not pay wages, it Marsden v. Blue Cross and was not an “employer,” and its members were not “employees.” Issue: Whether the deBlue Shield of Montana, 2012 MT termination of Marsden’s The 2009 Legislature enacted HB 119, which amended the 306 (Dec. 28, 2012) (5-0) status as a term or at-will definition of employer to include religious organizations “receiv(Morris, J.) employee implicates the ing remuneration from nonmembers for agricultural producFacts: In 2010, BCBSMT arbitration provision of her tion, manufacturing, or a construction project conducted by its employment contract. and Marsden signed an employmembers on or off the property.” § 39-71-117(1)(d), MCA. The Short Answer: Yes. ment agreement that contained a clause to compel arbitration for CASES, from previous page
CASES, next page
Page 20
March 2013
CASES, from previous page
definition of employee was amended to include a member of a religious organization performing services described in 117(1) (d). Procedural Posture & Holding: The colony brought an action against the department in 2010, arguing the amendments violated their constitutional rights. The parties filed cross-motions for summary judgment. The district court granted the colony’s motion, concluding the statutes violated the free exercise and establishment clauses of the federal constitution, and the equal protection guarantee of the Montana and U.S. Constitutions. The state appeals, and the Supreme Court reverses. Reasoning: (1) The district court found that the Hutterite faith demands that its members engage in commercial activities with nonmembers for remuneration, and applying strict scrutiny, found that HB 199 violated the free exercise clause. The Supreme Court finds that the work comp requirement does not prohibit colony members from engaging in commercial activity; it simply means the colony will make less money because it will have to pay work comp premiums. Nor does it place the colony in a discriminatory position compared to other religious groups. The Court therefore rejects strict scrutiny, and finds that HB 119 is facially neutral, serves a secular purpose, and imposes only an incidental burden on religious conduct. (2) Applying the Lemon test, the Court finds that HB 119 has a secular purpose, does not have as its principal or primary effect the inhibition of religion, and does not foster excessive entanglement with religion, and therefore does not violate the establishment clause. (3) The Court concludes that the work comp act as amended through HB 119, does not treat religious employers differently than non-religious employers. Because the colony fails to make a threshold showing of a classification creating two similarly situated groups that are treated unequally, its equal protection claim must fail. Justice Rice’s Dissent: Justice Rice would affirm the district court’s holding that the colony’s right to free exercise was violated. The legislative record shows that the objective intent of the legislators was to target the Hutterites. Other religious employers do not satisfy HB 119’s definition of employer, as the text was narrowly written to apply to the Hutterites. HB 119 is not a generally applicable statute; it is a religious gerrymander that singles out one religion, and must sustain strict scrutiny review. The law is not justified by a compelling state interest, and the burden on the colony is not incidental. Kluver v. PPL Montana, Inc., Issue: (1) Whether the 2012 MT 321 (Dec. 31, 2012) district court properly (5-2) (Wheat, J., for the majoradmitted evidence of the ity; Nelson, J., and Cotter, J., mediation leading to the dissenting) settlement agreement, and (2) properly granted Facts: The Kluvers and McRaes are neighbors and ranch- the motion to enforce the settlement agreement. ers in Rosebud County. In 2007, Short Answer: (1) No, but the filed suit against the power the error was harmless, and companies alleging that Colstrip, (2) yes. which borders their land, contaminated groundwater under their property. All parties were represented. In 2010, the parties www.montanabar.org
met in a settlement conference. The McRaes did not attend, but authorized their counsel to proceed with the mediation and agree to a settlement on their behalf. The mediation lasted all day, and ended with a Memorandum of Understanding emailed from plaintiffs’ counsel to defense counsel, with all other counsel copied. That evening, one of the plaintiffs’ lawyers called McRaes to tell them a settlement had been reached. A few days later, Karson Kluver went to McRaes’ and expressed relief that the case was over, and sadness that he would have to give up part of his land in settlement. A few weeks later, Kluvers told Doug McRae that they’d met with their tax attorney and learned the settlement proceeds would not be as great as they’d thought, and they were having reservations about settling. Two months after the mediation, at the insistence of Kluvers, plaintiffs’ counsel filed a notice with the court saying that the settlement had failed. The power companies moved to enforce the settlement, and attached affidavits from their attorneys testifying to the mediation negotiations. Kluvers objected and moved to strike the affidavits, arguing the power companies could not rely on confidential and privileged settlement negotiations. McRaes agreed with the power companies that the agreement was enforceable; three plaintiffs’ attorneys filed affidavits describing the settlement negotiations. Procedural Posture & Holding: The district court held that Kluvers waived any right to confidentiality of the fact of a settlement, and admitted the affidavits describing the negotiations. It ordered the mediator to submit a report to the court indicating whether a settlement had been reached, and held an evidentiary hearing at which plaintiffs’ and defendants’ attorneys testified, and the McRaes, but not the Kluvers, testified. The testimony revealed details about the mediation process, including how the MOU was created and transmitted between the parties. The court issued FOF/COLs and granted the power companies’ and McRaes’ motion to enforce the agreement. Kluvers appeal, and the Supreme Court affirms. Reasoning: (1) Kluvers argue that because neither they nor their counsel signed the MOU, it does not satisfy the statute of frauds. The district court relied on the Uniform Electronic Transactions Act, enacted in 2001 to allow more business to be done electronically, and concludes the parties here agreed to memorialize the terms of their settlement by electronic means. Moreover, counsel Ruggiero provided the requisite electronic signature, and was an agent for Kluvers and McRaes. Although Ruggiero did not have written authorization to act on Kluvers’ behalf, he was in their physical presence during the mediation. When an agent and principal are in physical proximity, the principal can authorize the agent to sign a contract involving realty on the principal’s behalf without written authorization. Finally, because Karson Kluver acknowledged the settlement when he spoke with McRaes, he cannot now invoke the statute of frauds to deny the existence of the agreement. Kluvers maintain the MOU lacks consent and contains illegal objects. Although the lower court considered testimony as well as the MOU and map, the Supreme Court finds that the Kluvers assented to the terms of the agreement based solely on the MOU and map. The fact that there was not absolute certainty and completeness inn every detail does not render the MOU CASES, next page
Page 21
CASES, from previous page
unenforceable. The use of the terms “draft” and “tentative settlement” in post-MOU communications is “inartful” but does not change the Court’s conclusion. Kluvers argue that parties failed to perform their duties within 60 days as required by the MOU. The Court concludes that the implied finding of the District Court was that the 60-day period was not met because Kluvers were firing counsel and attempting to rescind the agreement. (2) Kluvers contend the district court rewrote the MOU and converted an option to purchase into a right of first refusal. In the context of the MOU, the district court’s interpretation evidences the parties’ intent. Although the district court relied on testimony to come to this conclusion, the MOU alone supports this conclusion. (3) Kluvers argue the district court violated the mediation statute and attorney-client privilege by admitting evidence about the mediation. The statute prohibits disclosure of “all mediationrelated communications, verbal or written,” absent consent or a statutory exception. § 26-1-813(3), MCA. The district court concluded that Kluvers waived their right to mediation confidentiality by acknowledging the existence of the settlement to McRaes after the mediation. Because the statute requires a written waiver, Kluvers did not waive the confidentiality provided by the mediation statute. A written agreement created during mediation is admissible. § 26-1-813(3). Although the statute protects conversations that took place during the mediation, it does not protect conversations that took place afterwards. Mediators’ reports are confidential, however, and the lower court erred in requiring the mediator to file a report. All evidence of conversations and conduct at mediation are confidential other than information as to who was present, when it began and ended, and any other nonverbal conduct not intended as an assertion. Here, the admission of evidence from the mediation was error, but it was harmless error. The MOU and map as well as post-mediation conversations between Kluver and McRaes are sufficient to find the parties entered into a binding agreement. Kluvers also assert the mediation-related communications violated attorney-client privilege, but even if that were true, it too would be harmless error. Justice Nelson’s Dissent: Justice Nelson agrees that admitting the mediator’s report and testimony of conversations and conduct at the mediation was confidential, but disagrees that the error was harmless. Ruggiero’s email fails to satisfy the statute of frauds. The MOU lacked essential terms, and the parties failed to perform within 60 days. Justice Nelson disagrees with the court’s determination that pre- and post-mediation communications are not confidential. “The Court’s Opinion here does a serious disservice and damage to the mediation process.” Justice Cotter’s Dissent: The proceedings before the district court violated the express provisions of the § 26-1-813, MCA, and the error was not harmless. As Justice Nelson observes, the Court has built a house of cards. “It is simply impossible to reach the decision the Court reaches here without first assuming as Page 22
true matters the admission of which was error in the first place.” ¶ 121. McEwen v. MCR, LLC, 2012 Issue: (1) Whether a comMT 319 (Dec. 31, 2012) (7-0) pressor station required (Morris, J.; Nelson, J., and Cotter, for a natural gas pipeline is a public use for which J., concurring) a private party can conFacts: McEwens purchased demn private property, their ranch near the Sweet Grass and (2) whether landHills in 1992, subject to a lease of owners were entitled to two acres by Fulton Fuel Co., on restoration and punitive which sat a compressor station. damages. Short Answer: (1) Yes, MCR bought Fulton’s interest in although the Court the compressor station in 2004, remands for a determinaand entered into a five-year lease tion of necessity, and (2) with McEwens to continue operat- yes. ing the compressor station. MCR operated natural gas wells on McEwens’ property under its mineral rights. It needed a place to dump produced water form one of its well, and entered into a contract with McEwens to allow it to dump the water from one well into a pond on McEwens’ property. The contract required MCR to provide McEwens with water tests of the produced water every six weeks, as McEwens believed produced water from a different well had killed some of their sheep in 1996. MCR failed to test the water as required. McEwens alleged that MCR dumped produced water from two other wells, including the well that may have killed their sheep. MCR employees defecated and littered on McEwens’ property, disturbed McEwens’ property and did not reclaim it. McEwens and MCR could not reach agreement on renewing the lease for the two-acre parcel. MCR filed suit to condemn the property. McEwens counterclaimed for breach of contract, trespass, nuisance, and violation of the Surface Damages Act, seeking restoration costs and punitive damages. Procedural Posture & Holding: The district court denied MCR’s motion for a preliminary condemnation order, finding compressor stations are not an enumerated public use, granted McEwens’ motion for summary judgment for liability and the case proceeded to trail on damages. The jury awarded restoration costs and punitive damages to McEwens. MCR appeals, and the Supreme Court affirms in part, reverses in part, and remands. Reasoning: (1) Gas pipelines are an enumerated public use. § 70-30-102(4), MCA. The Court holds it would be absurd to allow a private party to exercise eminent domain to construct and operate a pipeline but not to construct and operate a compressor station necessary to make the pipeline work properly. Thus, the compressor station is a public use. However, MCR must also show that the taking of McEwens’ property is necessary to the public use. McEwens’ evidence that other property may be available raises a genuine issue of material fact precluding summary judgment. The district court may also address on remand whether MCR seeks to sue the land for ancillary purposes exceeding the scope of the public use, such as holding field meetings, parking contractor equipment, and storing a diesel and gas tank above ground. (2) To state a claim for restoration costs rather than CASES, next page
March 2013
CASES, from previous page
diminution in property value, a party must establish that the injury is temporary, i.e., that it can be restored. A party must also establish personal reasons for wanting restoration only when the restoration costs are disproportionately greater than diminution in value damages. Here, the McEwens’ contaminated property had an estimated value of $850-$2400. Restoring the property was estimated to cost $138,000-$2.2 million. Thus, McEwens must establish personal reasons for the restoration. Whether McEwens presented sufficient personal reasons is a question of fact; however, this case went to trial before the Court clarified this rule in Lampi v. Speed, 2011 MT 231. The Court determines that the district court’s decision that McEwens were entitled to restoration damages as a matter of law did not substantially prejudice MCR, and is harmless error. The Court declines to adopt an “objectively reasonable” requirement as a separate element of proof of entitlement to restoration damages. It also clarifies that a property owner who satisfies the personal reasons requirement may nonetheless seek restoration costs for a commercial family ranch from which the family earns its living. Each case must be decided on its own facts. (3) The contract between MCR and McEwens for dumping produced water in McEwens’ pond reflects the parties’ understanding that MCR’s failure to abide by the contract terms could contaminate the pond. Consequential damages for breach of contract are to make the injured party whole, but not to allow the party to realize a profit. In contract, as in tort, diminution in value may not always correspond with the extent of plaintiff’s injury. McEwens were entitled to restoration costs as damages for their breach of contract claim. (4) MCR argues that evidence that it jumped McEwens’ bid on trust lands was irrelevant. The Court disagrees, as this evidence is relevant toward showing MCR acted with malice toward McEwens, and supporting McEwens’ claim for punitives. Justice Nelson’s Concurrence (joined by Cotter, J.): Justice Nelson concurs in most of the majority’s decision, but disagrees that the lower court erred in ruling as a matter of law that restoration costs were the appropriate measure of damages. The proper measure of damages is a question of law, unless a genuine issue of material fact is raised. In deciding whether a party is entitled to restoration costs, the factual questions are whether the injury is temporary, and whether the party has personal reasons for restoring the property. Justice Nelson suggests particular procedures where the plaintiff seeks restoration costs, and would hold the district court did not err in deciding that McEwens were entitled to restoration damages. Boyne USA, Inc. v. Spanish Peaks Development, LLC, 2013 MT 1 (Jan. 2, 2013) (5-0) (Morris, J.) Facts: In the late 90s, the U.S. Forest Service entered into a land-exchange agreement with Blixseth and two entities owned by the McDougal brothers (the Blixseth Group). Part of the exchange included 15 acres of federal land at the top of Lone Peak. In 1998, the Blixseth Group contracted to sell this 15 acres to Boyne USA, which owns and operates Big Sky Resort. In consideration of this agreement (the Peak Agreement), Boyne had to exchange 25 acres of its property to the McDougal brothers www.montanabar.org
for half of the Lone Peak propIssue: (1) Whether the erty pursuant to the Southfork district court properly Agreement. The McDougal awarded specific perforbrothers owned 900 acres south mance of the Peak Agreeof Boyne’s property, which they ment to Boyne USA; (2) whether the jury’s finding planned to develop into Spanish that defendants abused the Peaks Resort. They wanted ski legal process and deceived in/ski out access to Big Sky, Boyne, and its award of and Boyne owned the property $300,000 each from SPD connecting Spanish Peaks to Big and LMH, was supported Sky’s chairlifts. McDougal and by the evidence; and (3) whether Boyne was propBoyne finalized the Southfork erly awarded attorneys’ Agreement in 1998. fees. In 2000, Spanish Peaks Short Answer: (1) Yes; (2) Development, LLC (SPD), manyes; and (3) yes, including aged by Tim Blixseth and James attorneys’ fees on appeal. Dolan, bought the Spanish Peaks property from McDougals, who assigned their rights under the Peak and Southfork Agreements to SPD. Blixseth Group also assigned its rights to SPD, leaving SPD as the sole beneficiary of the Peak and Southfork Agreements. Dolan and Blixseth then formed Spanish Peaks Holding (SPH) in 2002. SPD sold the Spanish Peaks property to SPH, and assigned its interest in the Southfork Agreement to SPH, but kept its interest in the Peak Agreement. In 2002, SPH, Boyne, and Blue Sky Ridge, LLC entered into a buy-sell under which SPH and Blue Sky Ridge bought about 1,700 acres from Boyne for $7 million. The buy-sell modified the Southfork Agreement and transferred the 25 acres from Boyne for ski in/ski out access to Spanish Peaks; the simultaneous transfer allowed SPH to evade subdivision review. The U.S. issued a patent to Blixseth Group for the 15-acre Lone Peak property on August 23, 2004. Blixseth conveyed the property to Yellowstone Mountain Club on Dec. 21, 2004. On Jan. 1, 2005, Blixseth told Boyne it would not transfer the property as agreed to in the Peak Agreement, saying Boyne had breached the Southfork Agreement. Blixseth also said that Boyne’s sale of the 25 acres to SPH in 2002 was a breach of the Southfork Agreement, saying Boyne should have transferred the property to SPD. Both SPD and SPH are owned and managed by Dolan and Blixseth. Blixseth demanded Boyne transfer 25 more acres to SPD before it would receive the Lone Peak property. Procedural Posture & Holding: In January 2008, Boyne sued Blixseth and Yellowstone Mountain Club, LLC, for breach of contract, seeking specific performance. A week later, Yellowstone conveyed the Lone Peak property to SPD. Boyne added SPD as a party. Nine months later, SPD conveyed the Lone Peak property to a new entity created by Dolan and his family, LMH; Boyne added LMH as a party, and sought damages for Defendants’ abuse of legal process. The district court dismissed Blixseth Group and Yellowstone Mountain Club in January 2010 due to Yellowstone Mountain Club’s bankruptcy. After a five-day trial in November 2010, the jury found SPD breached the Peak Agreement, and SPD and LMH abused legal process. It awarded Boyne $300,000 from each defendant, and $1 in punitives. The district court awarded Boyne specific performance of the Peak Agreement and attorney CASES, next page
Page 23
Procedural Posture & Holding: Steichen sued Bresnan and Talcott, and settled with Bresnan. The district court granted summary judgment to Talcott, and Steichen appeals. The Supreme fees under the contract. SPD and LMH appeal, and the Supreme Court reverses and remands for trial. Court affirms with one minor modification. Reasoning: The district court correctly determined Talcott Reasoning: (1) Appellants argue Boyne did not perform two owed a duty of care to maintain the building in a reasonably obligations under the Peak Agreement, and is therefore not ensafe condition. It erred in applying the construction industry titled to specific performance. The Court examines the contracstandard and in concluding that Talcott did not owe Steichen a tual language as well as the record and affirms the verdict, finding duty because he was an independent contractor. Independent that Boyne’s transfer of the 25 acres in 2002 to SPH instead of contractor status is irrelevant to premises liability. The lower SPD was proper, and fulfilled Boyne’s obligation under the Peak court also erred by concluding that the danger was open and Agreement. Appellants also argue Boyne is not entitled to specific obvious, and Talcott had responded to each of Bresnan’s repair performance because it has not paid for the property as required requests. A landowner is absolved from liability for open and by the Peak Agreement. The district court found that Boyne did obvious dangers only if he should not have anticipated the harm not have to pay before seeking specific performance because would occur. Richardson, 286 Mont. at 321. Whether Talcott SPD anticipatorily breached when it added a demand that Boyne should have anticipated harm is a jury question, as it depends on transfer an additional 25 acres. The Court affirms on the basis the degree of ordinary care a reasonable person would use under that paying would have been a useless act. Moreover, LMH may the circumstances. be ordered to convey the Lone Peak property, even though it was Justice Rice’s Dissent: Justice Rice would affirm and hold that not a party to the Peak Agreement, because the record supports landowners do not have a duty to protect independent contracthe district court’s finding that LMH was not a good faith buyer. tors from dangers inherent in the job they were hired to per(2) The Court reviews the evidence supporting the jury’s form. award of $300,000 each from SPD and LMH for abuse of the legal process and deceit under its tort jurisprudence. It finds substanState v. EMR, 2013 MT 3 (Jan. 8, 2013) (5-0) (Baker, J.) tial evidence in the record and refuses to disturb the award. The Facts: EMR’s mother died in Nov. 2010, when EMR was 17. district court offset Boyne’s damages award by $6,188 – the value The mother was a hoarder. Over the next six months, neighbors of the Lone Peak property under the Peak Agreement – and the complained about the treatment Supreme Court affirms, but agrees that the money should be paid Issue: (1) Whether the disof horses, dogs, and other animals only to SPD, not split between LMH and SPD. trict court’s instruction on at the property. Eventually, EMR (3) The district court awarded $176,834 in attorney fees to was cited for cruelty to animals and the legislative purpose of the Youth Court Act, given Boyne under a provision in the Peak Agreement. Appellants’ referred to the youth court. The to a deadlocked jury, was argument that Boyne did not file a separate motion for fees county attorney charged EMR with reversible error; whether “borders on the frivolous.” ¶ 106. Appellants waived their right being a delinquent youth for having the Youth Court’s refusal to to object to the amount because they failed to object or request committed two counts of animal dismiss five dog-at-large a hearing within 10 days of Boyne’s proposed FOF/COLs and under “4-2006-13, MCA” cruelty, a misdemeanor, as well as statement of fees. The agreement also entitles Boyne to attorney instead of county orditwo counts of aggravated animal fees on appeal, and the case is remanded to the district court for nance 4-2006-13 charges cruelty, a felony, and five “dog at was error. determination of those fees. large” offenses, a misdemeanor. The Short Answer: (1) Yes, and petition mistakenly said the dog(2) no. Steichen v. Talcott Properties, LLC, 2013 MT 2 (Jan. 8, 2013) at-large charges were violations of (4-1) (McGrath, C.J., for the majority: Rice, J., dissenting) 4-2006-13, MCA, rather than Lewis Facts: Talcott owned a building & Clark County ordinance § 4-2006-13. in which it leased space to Bresnan Issue: Whether a property Procedural Posture & Holding: The youth court held a jury Communications. Steichen worked owner owes a duty of care trial in August 2011. At the close of the state’ case, EMR moved to an independent contracas an independent contractor for tor working for the lessee for dismissal of the dog-at-large counts because they were imBresnan, cleaning the offices three of the building. properly charged. The district court denied the motion. The jury nights a week. Steichen slipped Short Answer: Yes. became deadlocked on the felony animal cruelty charges. The on water on a rest room floor one parties agreed to read an Allen instruction, and the state sugnight while he was working, and gested reading its proposed instruction on the legislative purpose was injured. The lease required Talcott to maintain the building of the youth court. Although the court previously refused the structurally, including roof, water, gas, sewage, electrical, heating instruction, it agreed to do so after the deadlock, over EMR’s and cooling systems, and the interior and exterior surfaces of the objection. The jury continued deliberating for several hours, ulbuilding. Bresnan was responsible for routine painting, cleantimately finding EMR guilty of the five dog-at-large offenses and ing and care of the interior premises, including interior lights. one felony of aggravated animal cruelty. It found EMR had not Bresnan periodically called Talcott to report a chronic problem committed one count of animal cruelty and was unable to reach a with water leaking from the plumbing onto the rest room floor. verdict on the remaining two. EMR appeals. The Supreme Court Steichen also alleged a chronic problem with lighting in the reverses the conviction for aggravated animal cruelty and affirms men’s rest room, and alleges that when he fell, the lighting in the the dog-at-large convictions. rest room was dim and there was a puddle of water on the floor. CASES, from previous page
CASES, next page
Page 24
March 2013
district court properly limited Goheen’s testimony to protect Karen’s confidences, and Goheen’s limited use of Karen’s information was permissible under Rule 1.6(b)(3). (3) The district Reasoning: (1) Instructing a jury on sentencing possibilicourt properly allowed Goheen to testify under Rule 3.7(a)(2), ties is error, as it invites the jury to consider matters beyond the permitting a lawyer to testify about the nature of legal services facts as proved by the evidence. Error is reversible if it prejudices rendered. (4) Karen argues that Goheen’s office memo, as well as a defendant. Here, the error was prejudicial because the jury her and her assistant’s handwritten notes about their conversawas deadlocked until it received this instruction, after which it tions with Karen, are privileged documents for which Karen did convicted EMR of a felony. (2) The state filed an affidavit with its not waive privilege. Karen’s motion to disqualify Goheen waived amended petition correctly citing to the county ordinance. EMR the evidentiary privilege. cannot claim she was surprised or prejudiced by the mistaken citation. Total Industrial Plant Services, Inc. v. Turner Industries Group, LLC, 2013 MT 5 (Jan. 15, 2013) (5-0) (Wheat, J.) In re the Marriage of Perry, 2013 MT 6 (Jan. 15, 2013) (5-0) Facts: Turner entered (Rice, J.) Issue: (1) Whether subcontractor into a written subconTIPS was entitled to additional Facts: Terance Perry, a Issue: Whether the district tract with TIPS to install compensation for work performed Missoula lawyer, filed for discourt properly denied insulation at a coker unit under a fixed-price contract; (2) wife’s motion to disqualify solution of his marriage to Karen at a Laurel refinery owned whether Turner wrongly withheld husband’s attorney. Perry in December 2009. He was by Cenex. Turner was the almost $375k from TIPS; (3) whether Short Answer: Yes. represented by three different general contractor for the TIPS was entitled to prejudgment attorneys before naming himself interest on the wrongly withheld coker project. The TIPScounsel of record. A month later, he filed a substitution of counmoney; and (4) whether Turner’s bill Turner contract was iniof costs was untimely filed. sel naming Gail Goheen his counsel. tially fixed-price, but after Short Answer: (1) No; (2) yes; (3) In January 2008, Karen had contacted Goheen’s office about weather and other delays, yes; and (4) yes. the potential filing of a dissolution. Karen spoke with Goheen’s the parties renegotiated assistant, and later with Goheen. Karen testified that she disto a time-and-materials cussed domestic abuse (which Terance denies), and that having contract. The scope and value of the work increased steadily Goheen represent Terance discredits Karen and is a betrayal of from $2.3 million to $13.25 million. The parties agree that TIPS her trust in Goheen. was paid that amount, as well as all time and material claims Goheen testified that she had one conversation of less than from February 2008 forward. The dispute arises from work TIPS 12 minutes with Karen. She testified that she will not represent performed in the first months of the contract. someone against an attorney in Ravalli or Missoula County if the Procedural Posture & Holding: TIPS filed a construction attorney is from a firm she regularly faces. Her records indicate lien in September 2008. It sued Turner in December 2009 for she made a short call to refuse the case and refer Karen to somebreach of contract, quantum meruit, breach of the covenant of one else. good faith and fair dealing, and sought foreclosure of the lien. Procedural Posture & Holding: Karen moved to disqualify The district court granted TIPS’ motion for partial summary Goheen. Terance filed documents from Goheen regarding her judgment, ordering Turner to return $374,226 it had withheld, conversations with Karen as part of his response. The court held and denied Turner’s motion to dismiss. After a bench trial it a hearing, prior to which Karen moved to strike the documents found for Turner on all of TIPS’s claims. TIPS appeals, and the because they would be harmful to her. The district court granted Supreme Court affirms. the parties’ motion to seal the documents, limited Goheen’s Reasoning: (1) The Court first affirms the dismissal of TIPS’s testimony, and did not permit Karen to cross-examine Goheen quantum meruit claim, as all work TIPS did was pursuant to an about the documents. The district court denied Karen’s motion express contract. It next affirms the lower court’s findings that to disqualify after finding no attorney-client relationship existed all of TIPS’ contract claims were refuted by the language of the between Karen and Goheen. The court reasoned that Karen’s contract. (2) The contract allowed Turner to withhold 10% of motion was designed to delay resolution of the case and force payments as retainage until TIPS provided a final release of lien. hardship and increased expenses on Terance. Karen appeals, and Turner filed a substitution bond that was 1.5x the lien amount, the Supreme Court affirms. which released the lien. Once it filed a substitution bond, Turner Reasoning: (1) The existence of an attorney-client relationhad no right to keep the retainage. (3) TIPS is entitled to intership is a question of fact. MRPC 1.20 prohibits representation est from the date the bond was filed until the date of the final of a party whose interests are materially adverse to a prospective order. The Court reverses this part of the ruling and remands client if the prospective client divulged information that could for determination of the interest owed to TIPS. (4) The contract be significantly harmful to the client in the matter. Karen is a allowed costs but did not specify any procedure; thus, the statuprospective client under Rule 1.20(a); thus, the issue is whether tory procedure applies. A bill of costs must be filed and served she conveyed information to Goheen that could be significantly within five days of the verdict or notice of decision of the court. § harmful to Karen in this dissolution. The district court found 25-10-501, MCA. The court entered judgment on Nov. 22, 2011; she did not, and did not abuse its discretion in denying Karen’s Turner filed notice of entry of judgment on Nov. 29, 2011; and motion to disqualify. (2) Karen claims Goheen violated her duty Turner filed a bill of costs on Dec. 2, 2011. The bill of costs was of loyalty under Rule 1.9; however, Karen did not establish an untimely. attorney- client relationship with Goheen, so Rule 1.9 does not apply. However, Rule 1.20 incorporates the duty in 1.9(c), and Case briefs courtesy of Beth Brennan, who practices in Missoula with Rule 1.6 also governs lawyers’ use of client information. The Brennan Law & Mediation, PLLC. CASES, from previous page
FeatureStory | Travel
Lions, tigers, and bears — OH MY! Montana attorney recalls adventurous trip to South Africa sanitation, water or electricity and most dwellings were just shacks. The largest township near Capetown is New Home or At the end of September, 2000, I retired from practicing Khayelitsha and it had about 400,000 residents in 1999. law in Great Falls with my all-time favorite legal munchkin, Now, this is where the fun part begins. On the flight from Channing Hartelius and flew to Capetown, South Africa with a Johannesburg to Capetown, I sat next to a black lady dressed group of 11 American lawyers and judges. We had been comtraditionally in an orange African outfit. I’m not known as a missioned through the ABA to work for one month with the “shrinking violet” so I struck up a conversation about how colSouth African Ministry of Justice to determine whether the ma- orful she looked. Once she determined I was a “yank” she projority black population understood and agreed with the changes ceeded to tell me about the wonderful conference she had just in human rights that had been instituted by the Mandela govattended in “JoBurg” where women had met to explore business ernment since 1994. opportunities. She told me that she The nine of us first met in wanted to start a Bed and Breakfast Capetown where we were briefed where she lived, in the Khayelitsha Our assignment was to interby staff members of the Ministry Township, just outside of Capetown. of Justice. Our assignment was to view black South Africans in as Of course, at that point, I didn’t interview black South Africans in know anything about the Khayelitsha many walks of life as possible, as many walks of life as possible, to Township but she seemed very determine how they viewed the huto determine how they viewed friendly and determined to start this man rights changes which had been business in what she described as her the human rights changes made since the fall of Apartheid and modest “two- bedroom” home. As we to elicit their opinions on whether which had been made since the landed in Capetown, she handed me such changes had been beneficial to a piece of paper that would eventufall of Apartheid and to elicit black South Africans. Americans had ally become her business card, with been chosen for this task since black their opinions on whether such her name, Thope Lekau and teleSouth Africans had a positive view phone number. She invited me to changes had been beneficial to of Americans, both black and white. stay with her and her family as her My colleagues were an inspiring and first customer. I thanked her, put the black South Africans. adventurous lot, a Superior Court paper in my wallet, took a photo of Judge from New York, two corporate her group and joined my colleges, lawyers from California and an assortBack to the division of work ment of white and black big law firm types who were obviously meeting. Aha, I thought to myself. None of these American enjoying the prospects of taking time off from ninety-hour lawyers wants to work in the townships and I already have a work-weeks. Apart from the Californians, I was the only lawyer contact! I immediately volunteered to work with residents of from west of the Mississippi. How I was chosen still baffles me. the townships in Capetown and Johannesburg. One of our After our day-long meeting with our hosts, we quickly set to “guides,” a South African who looked like he had recently been the task of dividing up the work, identifying target populations employed by Seal Team Six, took me aside and mentioned and determining who would work with which groups. Several politely that I might want to choose another target group since of my colleagues chose to work with civil servants while others it might not be safe for me to be wandering around in the chose small business owners, university students and domestic townships. It is true, he said, that enterprising souls are starting workers. Since we had been provided several guides (or were tours of the townships but those tours are in the daylight and they guards?), making contact didn’t seem too difficult. accompanied by “guides.” “But what about the townships,” I volunteered. We’ve just Well, as it happens, I had worked with Channing for twenty finished an hour-long discussion on township residents but years and therefore was pretty much immune to danger. we’re not going to get their opinions?” Townships had been Besides, I thought, that Thope was very nice and besides, she established during the Apartheid era as a means of controlling did invite me to stay with her and her family and I could probblacks by keeping them in “shanty towns” outside of major ably get her to help me find subjects to interview. urban areas. Residents could work in the adjoining cities durLater that night, after I figured out how to use the South ing the day but generally had to return to the townships before dark. Conditions in the townships were appalling with little By Lynn Baker
OH MY, next page
Page 26
March 2013
The group with officers of the South African Bar after a dinner in Johannesburg. Lynn Baker is in the back row, on the left.
I don’t have the space to discuss Thope’s B&B in greater length but suffice it to say that I enjoyed everything from her sumptuous African meals to the interesting discussions about African telephone system, I called Thope. The telephone numhuman rights, plans for her B&B, life in America and just ber she had given me turned out to be to a nearby store of some about everything else you can imagine. Her B&B has changed kind but the gentleman who answered promised to get a meslocations and expanded and you can view her website at: www. sage to her. Half an hour later I received a return phone call kopanong-township.co.za. and Thope and I worked out the details. She wanted one day After the deeply moving visit to Robben Island, where to get her house in order since she had never actually hosted Nelson Mandela was imprisoned for twenty-seven years, our anyone before. group moved on to Johannesburg. In Johannesburg, the largest The next afternoon Thope’s husband picked me up in a car township is Soweto with a then population of about one milthat might best be described as “well used.” Actually, it had lion. Joburg was a dangerous city at the time and I personally no interior door panels, no back seat and a generous pile of witnessed a bank robbery involving machine guns and two car blankets over the tattered passenger seat. Hummm, I thought, jackings. On the other hand, in Joburg we met with the presi“I hope this vehicle gets us there.” On the way to Khayelitsha we dent and officers of the Bar Association of South Africa who stopped briefly for about $2.00 worth of gas. hosted an exceptional dinner for us. We arrived in Khayelitsha about 5:00 p.m. and after driving After interviewing Soweto residents for several days, I ran down several miles of very dusty streets, we arrived at Thope’s into one fellow who told me about the growth of the “black house. I was quite surprised because it was made of mud and Mafia” since the fall of Apartheid. He told me that he knew a quite large given the surrounding shacks. It had a dirt floor man who would know lots about human rights changes and which was covered by bright rugs. My bedroom was small could hook me up with a large group of new “entrepreneurs” but clean. It had obviously been recently vacated by Thope’s who might be able to provide a unique perspective on human daughter. rights changes under the black government. My stay at Thope’s B&B was wonderful! First, we discussed Needless to say, I jumped at the opportunity and was told the reason for my stay and she and her husband assured me to expect a message at the front desk of my hotel setting forth that I would have no difficulty obtaining information since it the arrangements. After a couple of days of no message I had was very rare for a white American to be wandering the streets pretty much forgotten about my conversation. In fact, on the wanting to talk to residents. They also assured me that safety fifth night I had gone to bed and was watching the 11:00 news would not be an issue since the Township had its own “inforwhen my telephone rang. A strange voice asked me if I was still mal” justice system and anyone bothering me knew he would interested in meeting a “boss” in Soweto and if I was, I needed be severely punished by the other residents. In fact, during my to be outside the rear of the hotel in fifteen minutes where a car two days there, I met only friendly and kind residents who were would be waiting for me. anxious to help. Even when I wandered the dirt streets in the Now, I’ve watched all the Godfather movies and even dark (street lights were non-existent) I felt no fear. Overall, I known a nice Italian boy named Guido but this phone call was able to talk to thirty residents.
OH MY, from previous page
OH MY, next page
www.montanabar.org
Page 27
him for examples, he laughed and said way to breakfast. Since our “guides” were that gangsters now steal from blacks as in tow, I thought it might not be prudent made me a bit more than nervous. Here well as whites. Apparently James had a to mention my outing, at least until I had I was in one of the most dangerous cities business in which specific types of cars everything sorted out in my head. of the world, and someone I didn’t know were ordered by wealthy clients in the South Africa is a wonderful, beautiwanted me to go to the rear of the hotel, Middle East. James would get the orders ful county. From Joburg we ventured on alone and in the dark and get into a car! and contract out with third parties who to Pretoria where we met with members Was this really a good idea? would obtain the cars. In Joburg, that of the South African Supreme Court and Hell, yes! I quickly dressed and found could well mean by car jacking. Ministry of Justice. the rear entrance to the hotel. In a few James assured me, however that he I will never forget the smells and sight minutes a very nice black Mercedes personally had nothing to do with any il- of the purple leaves on the Jacaranda trees E-Class Sedan pulled up and a welllegal activities. He merely took the orders, when coming down the mountain into dressed black gentleman stepped out and gave them to third parties and ultimately Pretoria, South Africa’s capital. I will also asked for identification. After examining received the vehicles that were shipped, never forget the intimate Supreme Court my passport, which I always carried, he within five hours of receipt, to specific Chambers which greatly reminded me of invited me to take a seat in the rear “with locations in the Middle East. Buyers usu- our own small court in Helena. While in the other gentleman.” ally paid between one half and two-thirds Pretoria we worked on our findings and The “other gentleman” proceeded to of the retail price and all vehicles were ultimately presented them to officials in place a blindfold-like hood over my head. two years old at maximum. If anyone was the Ministry of Justice. When I asked him what he was doing, he injured while the vehicles were being “obWhat an adventure! This article could told me that the “boss” did not want me tained,” the vehicle was immediately disbe titled “Small town boy barely escapes to know exactly where he lived and this mantled and shipped overseas for parts. death in darkest Africa.” When I finally was just a precaution. Hummm, I thought to myself...I wonder told my comrades about my adventures OK, I’m game. Besides, it was a bit late if he could locate a C-Class Roadster in in the townships, they thought I was nuts for me to do anything about either the Red? to take such risks. But, to me, it was the hood or the trip since if felt like our driver At six a.m. breakfast was served in most fun I had experienced in years and I had just passed the speed of sound in less the small dining room. As I followed my would do it all again in a heartbeat. than a block. host down the hall, I saw what looked like I returned to Great Falls and repacked In what seemed like half an hour, the maids polishing the rich, dark woodwork. my bags. My wife, who had resigned from car stopped and my new friends helped This was definitely not the type of house I her teaching job at the business school at me out of the car, up several stairs and had seen before in Soweto or Khayelitsha MSU, and I were off to teach for a semesin through a door. Once inside, my hood and frankly I had no idea where I was. ter at the University of the Americas in was removed and I was escorted to a very Breakfast was surprisingly American style Puebla, Mexico, in the mountains south fancy living room, furnished with exwith both bacon and “bangers” as well as of Mexico City. The one semester turned pensive looking leather furniture, lots of waffles and fruit. out to be 5 semesters. But, that is another dark paneling, crystal chandeliers and two After breakfast I was again hooded story. of the most attractive and stylish young and returned to my hotel where I arrived ladies I had seen on my trip. The ladies just in time to meet my colleges on their offered me a brandy while my two friends left the room. As I sipped my drink, a tall, well-built black gentleman entered the room. Even IRS though it was now after midnight, he or was impeccably dressed with a black suit, THE MONTANA DEPARTMENT OF starched white shirt and a beautiful red and blue silk elephant-design tie. He sat REVENUE SENDING YOUR CLIENTS down, introduced himself as James and asked me what I wanted to discuss. I told NOTICES? him about my mission and what I had WE CONCENTRATE IN HANDLING TAX DISPUTES, LITIGATION, AND done so far. He wanted to know where I AUDITS. was from in the states and, oddly enough, told me about what a good time he had in Whitefish a few years earlier. When we finally got down to discussJoel E. Silverman, Master’s in Tax Law 34 W. 6th Ave., Suite 2F ing the changes in human rights, a few HELENA, MT 59601 comments will stay with me forever. (406) 449-‐4TAX (829) James agreed that human rights in South JOEL@MTTAXLAW.COM www.mttaxlaw.com had made great progress. When I asked OH MY, from previous page
Page 28
March 2013
Feature Story | American Taxpayer Relief Act (ATRA)
ATRA brings permanence to transfer tax system (Give Sen. Baucus credit where credit is due)
credit available to individuals that can be used to give property away during life, at death or both. The amount of the taxable The American Taxpayer Relief Act (the “2012 Act”) became gift reported on Form 709 is first applied to the donor’s lifetime law on January 2, 2013, and with its passage came much needed “unified credit”, also known as the “basic exclusion amount”, planning certainty for practitioners in the transfer tax arena. and the unified credit is reduced by that amount. Example: if For these purposes, we define “transfer taxes” as those imposed two spouses give $100,000 to their son in one year, they report by Congress and state governments on the privilege of giving a taxable gift of $72,000 ($100,000 - $28,000) on Form 709 and away one’s real, personal and intangible property during life each of the spouse’s unified credit is reduced by $36,000. The (gift tax), at death (estate and inheritance tax) or by skipping at IRS runs a tab and keeps track of each individual’s unified least one generation, either directly or in trust (generation-skip- credit using the Social Security Numbers of the donors. ping tax). All three federal transfer taxes apply to individuals Does the donee pay income tax on the gift? No, gifts and inowning property in the U.S., and some or all three of these taxes heritances are excluded from “gross income” under IRC § 102, have been adopted by the states, including Montana. and only donors are subject to gift tax. Does a spouse have to Transfer tax planning in 2012 was perilous, with drastic report gifts from a spouse? No, spouses can transfer any propchanges looming in virtually all key areas of the applicable tax erty to one another, in any amount, without reporting requirerules. Practitioners had to expect the worst and advise accord- ments or tax implications. This is called the “unlimited marital ingly. It was clear there would be no Congressional action until deduction” for gift tax purposes under IRC § 2523. after the November election, and that left less than sixty days for relief that all expected, but none could guarantee. Montana’s Estate Tax senior Senator, Max Baucus, as Chair of the Senate Finance All assets owned or controlled by decedent, including joint Committee, never relented on the position that the transfer tax property, must be valued as of the decedent’s date of death, and system, together with its available exclusions and rates, must the fair market value of the assets becomes the “gross estate” of progress, not regress. the decedent for estate tax purposes (IRC § 2001). If the gross Let us review some basics of the transfer tax system, how it generally works, who is affected, how one complies, where it has estate of the decedent exceeds the “basic exclusion amount” available to that decedent, the personal representative of the been the last few years, and where it is now based on the 2012 estate must file a U.S. Estate and Generation-Skipping Tax Act. Return, Form 706. The Form 706 is due nine months after death, with extensions to file available. In order to obtain IRS Gift Tax approval to extend the filing date for Form 706, IRS Form 4768 The Department of the Treasury (through the IRS) imposes must be filed within the nine month period. Any tax due must a tax on an individual when one gives away, during life, one’s be paid within nine months or interest will accrue and tax liens real, personal and intangible property. The tax is imposed if arise. The “basic exclusion amount” available to the decedent is the exclusions and exemptions do not apply. Under current equal to the “basic exclusion amount” available to all decedents law (IRC § 2503(b)), there is an “annual exclusion” for “presfor that calendar year less any taxable gifts that the decedent has ent interest gifts” of $14,000 per year, per person, regardless made, whether or not reported on Form 709 during life. of whether the donee is related to the donor. “Present interest For 706 filing purposes, the “gross estate” controls whether gifts” are those that allow the donee immediate use and enjoyit must be filed. For imposition of federal tax purposes, the ment of the property. Joint gifts from spouses are doubled to net taxable estate subject to tax controls. The allowable deduc$28,000 per person, per year in 2013. Gifts that are valued at or tions for an estate to reduce or eliminate federal estate tax are under the annual exclusion amount need not be reported to the set forth in the Internal Revenue Code starting at § 2051. Does IRS. Gifts in excess of the annual exclusion amount, otherwise the decedent’s estate pay tax on property given to the survivknown as “excess” or “taxable gifts”, must be reported on U.S. ing spouse? No, as long as the surviving spouse is a U.S. citizen Treasury Form 709. This return is due on April 15th of the and there are no disallowed restrictions on the transfer, such year following the year in which the taxable gift was made, with as transferring a life estate only. This is the “unlimited marital extensions available. deduction for estate tax purposes” under IRC § 2056. Only Does the donor pay a tax with Form 709? Generally not. ATRA, next page The gift and estate tax systems are unified, each sharing the total By John T. Jones
www.montanabar.org
Page 29
the basic exclusion amount, the top rates of tax, the unification of all three transfer tax areas, and the inflation indexes for the exclusion amounts. The passage of the 2012 Act also averted the transfers to the surviving spouse and a qualified charity are draconian regression to a $1 million per person basic exclusion deductible transfers at death for estate tax purposes; all others amount, and averted top rates of fifty-five percent (55%), both are subject to tax if the value exceeds the available exclusion of which would have been devastating for closely-held business amount to that decedent. The estate is liable for the tax, not the owners and the entire farm and ranch sectors in Montana and decedent’s heirs. The personal representative has the option elsewhere. to value the decedent’s property at death or six months later, Portability of Unused Exemption. Another key transfer known as the “alternate valuation date” under IRC § 2032. The tax break preserved by the 2012 Act is what tax practitioners election under IRC § 2032 is available if that election will reduce refer to as the “portability of the credit” of a decedent. The 2010 the tax. Act allowed the personal representative of a deceased spouse’s estate to transfer any unused exemption to the surviving spouse Generation-Skipping Tax for estates of decedents dying after December 31, 2010 and The generation-skipping tax is a transfer tax imposed on a before December 31, 2012. The 2012 Act makes permanent transfer that skips at least one generation younger than the dothis provision and is effective for estates of decedents dying nor or decedent. The tax is reported and paid on Form 706. A after December 31, 2012. This portability feature effectively generation skip can be “direct” (an inter vivos or testamentary creates a ‘family exclusion’ of $10.5 million for 2013, indexed direct gift to a grandchild, for example) or “indirect” (a skipping for inflation. Practice Tip: The portability is available only if distribution from a trust that terminated upon a designated the personal representative of the estate of the decedent spouse death). The generation-skipping tax is in addition to the estate timely files a Form 706 and identifies the transferred amount tax, and therefore is to be avoided if possible. The “basic exclu- to the surviving spouse. The transferred amount of the exclusion amount” for generation-skipping tax purposes is the same sion is available to the surviving spouse for inter vivos gifts and as for the state and gift taxes -- $5.250 million for calendar year transfers at death. The transferred amount is in addition to the 2013, indexed for inflation. surviving spouse’s own basic exclusion amount during life and at death.
ATRA, from previous page
Where We Are Now With Transfer-Tax and How We Got There
Permanent estate, gift and generation-skipping transfer tax relief. The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) phased out the estate and generationskipping transfer taxes so that they were fully repealed in 2010 (that is the year all tax lawyers advised their wealthy clients to die!) and lowered the gift tax rate to thirty-five percent (35%) and increased the gift tax exemption to $1 million for 2010. In 2010, the Tax Relief, Unemployment Insurance Reauthorization and Jobs Creation Act of 2010 (the “2010 Act”) set the basic exclusion amount at $5 million per person with a top tax rate of thirty-five percent (35%) for the estate, gift and generation skipping transfer taxes for two years through 2012, meaning the 2010 Act had a short two-year life. The exemption amount was indexed beginning in 2012. The 2012 Act makes permanent the indexed exclusion amount in the 2010 Act and indexes that amount for inflation going forward, but sets the top tax rate to forty percent (40%) for estates of decedents dying after December 31, 2012, up from thirty-five percent (35%). In Rev. Proc. 2013-15, the IRS announced that the “basic exclusion amount” for 2013 is $5.250 million per person, indexed for inflation. Unification. Prior to EGTRRA, the estate and gift taxes were unified, creating a single graduated rate schedule for both. That single lifetime exemption could be used for gifts and/or bequests, and created a reliable and stable estate planning platform. EGTRRA decoupled these systems, much to the chagrin of tax advisors. The 2012 Act reunified the estate and gift taxes, permanently extended unification, and is effective for gifts made after December 31, 2012. Perhaps the greatest feature of the 2012 Act is the permanency it mandates: permanency of Page 30
The 2012 Act and the Decedent Estate’s “Stepped-Up” Basis Income tax basis is a big deal. The 2012 Act preserved the full “stepped-up” basis rules for decedents dying after December 31, 2012. As stated above, a decedent’s assets are valued at death and the fair market value of the assets becomes the new income tax basis for the decedent’s heirs, regardless of whether a Form 706 is filed. “Marital property” enjoys a complete “stepup” even though one spouse survives. The personal representative of the estate for the decedent may elect to value decedent’s assets as of the date of death or as of an “alternate valuation date”, which under IRC § 2032 is “six months” after the date of death. Practitioners should also review IRC § 2032(A) regarding “special valuation” rules for certain closely-held business property. The “stepped-up basis” (codified at IRC § 1014) is to be contrasted with the “carry-over basis” (codified at IRC § 1015) which applies to inter vivos gifts. The income tax basis of the donor during life “carries over” to the donee, in theory preserving to the U.S. Treasury any built-in gain in the capital asset. If the donee sells the asset after receiving it during life as a gift, the donee must use the “carry-over basis” of the donor to calculate capital gain, if any. Practice Tip: Large gifts by client donors who are not expected to incur estate tax liability under then-current federal estate tax rules should be considered carefully under the basis rules. It may well make more sense to advise the client to retain all assets until death, receive a full step-up, then transfer the assets to the heirs through the estate.
Montana’s Transfer Tax Laws ATRA, next page
March 2013
ATRA, from previous page
Montana has no gift tax, but Montana does have an “estate tax” and a “generation-skipping tax”. Montana’s estate tax is codified at MCA § 72-16-901, et seq. The estate tax is commonly known as a “sponge tax”, as the amount of the tax is the amount of the state death tax credit allowed to the decedent on Federal Form 706. The legislative intent is that since the federal government assumes there will be a state death tax imposed by the decedent’s domicile, and the IRS therefore includes an interpolated credit amount into the Form 706 estate tax liability calculation, the state might as well take that credit as its tax. The personal representative of the estate of a decedent files Form 706 with the Montana Department of Revenue to comply with the estate tax filing and payment requirement (MCA § 72-16-906). The Montana estate tax return is due eighteen (18) months after the death (MCA § 72-16-909). The generation-skipping tax rules in Montana are codified at MCA § 72-16-1001, et seq. The key distinction between the federal generation-skipping tax statutes and rules and that of Montana is that Montana excludes a generation-skipping tax on “direct skips” and applies only when generation-skipping taxes
arise as a result of the death of the decedent. The Montana generation-skipping tax is also calculated as a “sponge tax” whereby the amount of the tax is the credit afforded to the estate on Form 706.
Conclusion The American Taxpayer Relief Act signed by the President on January 2, 2013 brought relief not only to the American taxpayer, but also to the American tax advisor. It truly launched a new era of wealth transfer tax planning, bringing with it clarity, inflation indexing rationality, and best of all, permanence. Having worked directly with Senator Baucus on a consistent basis over the last several years on these issues, this writer can attest to his role and that of his staff in providing this relief in the midst of the fiscal cliff, deficit reduction and other complexities. His role in providing this relief to Montana taxpayers cannot be underestimated. John Jones joined Moulton Bellingham PC in 1985 and is currently the firm’s senior tax shareholder. John focuses his practice on wealth transfer planning, tax, real estate and healthcare law.
Safety First.
Luxury First. and also
THE 2013 M-Class. THE 2013 M-Class Starting at
{
Mercedes-Benz takes every facet of the driving experience into consideration. That approach is clearly evident in the 2013 M-Class. Once inside, you and your family will be protected by innovative safety technologies like standard COLLISION PREVENTION-ASSIST, which can provide adaptive braking to help avoid accidents; indulged by a leather and wood-trimmed interior**
47,270
$
Performance First.
*
and thrilled by a ride supported by an AGILITY CONTROL® multilink suspension that adapts to changing road conditions. The 2013 M-Class, where every priority is a top priority.
CUSTOMER SATISFACTION & CONCIERGE SERVICE Mercedes-Benz of Billings delivers! ...Anywhere in Montana.
}
3045 King Ave. West Billings, MT 59102 1 877 440 7001 www.mbbillings.com
Yes, Mercedes-Benz of Billings Delivers. *MSRP for a 2013 ML350 excludes all options, taxes, title, registration, transportation charge and dealer prep. Options, model availability and actual dealer price may vary. 2013 ML350 shown at $50,790 with Iridium Silver metallic paint and driver assistance package. **Optional equipment described. See dealer for details. ©2013 authorized Mercedes-Benz Dealers.
www.montanabar.org
Page 31
EvidenceCorner | Mediation and avoiding trial
It was late; the printer was down How to complete a mediation, clarified: Kluver v. PPL Montana (December 31, 2012) IT WAS LATE, THE PRINTER WAS DOWN How to Complete a Mediation, Clarified: Kluver v. PPL Montana (December 31, 2012)
fix it. Instead, the drafter took his laptop into the defendant’s conference room and all of the lawyers looked at the MOU on his screen. When all the lawyers approved the MOU, the drafter emailed the document to all the lawyers and everyone went PREFACE: This month’s “Evidence Corner” is not about trial home thinking the war was over. evidence, but about the evidence necessary to avoid a trial. In In fact, the armistice lasted only a few weeks. One of the Kluver v. PPL, experienced lawyers thought they had settled an ranch families, the Kluvers, quickly regretted the night’s work, acrimonious case in a marathon mediation session and circulated and refused to go forward with the documents necessary to the Memorandum of Understanding by email that night. complete it. They instructed their lawyer to file a formal “Notice One client’s second thoughts resulted in almost three years of of Failure of Settlement Discussions.” In response, PPL moved to litigation and appeal about the validity of that agreement, before enforce the settlement, joined by the other family, the McRaes3. the Montana Supreme Court ruled on New Year’s Eve 2012. The war raged on for two and half more years, with battles at It was dark (but not stormy) at 9:56 p.m. on July 14, 2010 in both the trial court and Montana Supreme Court levels. The Billings. The sun had set, there was only a sliver of moon, the Court issued its decision on the very last day of 2012, as Kluver v. wind had dropped to just a whisper, and the temperature was PPL Montana, LLC, 2012 Mont. 321, 368 Mont. 101.4 1 a pleasant 71 degrees. The ranchers and the power company In the end, the settlement stood and the parties were ordered had been fighting in court for more than 3 years, and they had to execute it, but Justices Nelson5 and Cotter, in separate spent about 14 hours in that day’s mediation session. It appeared opinions, vehemently disagreed with the majority6 and would that they had settled the dispute and could end the case without have found no settlement. Even if the opinion is finally released trial, to everyone’s satisfaction. The lawyers were tired, and both without modification, it should stand as a very strong warning they and their clients were ready to go home. It was a good to all lawyers involved in mediation of civil disputes: beware of day’s work; the nasty2 war seemed to finally be over. Both sides the dragons at the end of the day! The lawyers who were left to had agreed that the whole deal would be put to bed, with the complete the paperwork at the end of the mediation followed exchange of cash, deeds and leases completed, within 60 days. standard protocol, but it wasn’t enough when, in the hot light The lawyers who had congregated on behalf of the ranchers of the next few days, one party got cold feet. Kluver’s best use and their opponent, PPL, were not rookies. Some were from may be as a primer in how to use that final hour before dawn7, to highly esteemed Montana firms; others were from well-known make the midnight agreement stick. big city firms outside Big Sky. They all knew the size of the 1. Make sure your agreement covers all the material details; dispute, the acrimony between the parties, and the large amount leave as little as possible to be “decided later.” of money and property involved in the settlement. That night, The Kluver majority reiterated the basic requirements for an they concurred about how to memorialize and preserve the enforceable settlement agreement: agreement before they left the hotel which had hosted the mediation session. EVIDENCE CORNER., next page One of the lawyers for the Kluvers and other plaintiffs “took a crack” at typing out the terms of the agreement on his laptop 3 These are the lead families in each camp; the unraveling of the settlement divided the community, with several ranchers on each side of the “get ‘er done” vs. computer. He did this in his party’s conference room, working “need better deal” divide. with his client to be sure the document on the screen accurately 4 According to WestlawNext, this case has not yet been released for publication, reflected their understanding of the agreement. Once the and may be revised or withdrawn until then; however, the Montana Supreme Court itself cited Kluver repeatedly in a released opinion on February 5. See, Olsen v. plaintiffs’ lawyers and their clients were satisfied, the drafter intended to print the “Memorandum of Understanding” (MOU) Johnston, 2013 MT 25. 5 This is Justice Nelson’s very last dissent before retirement, capping a career in the hotel’s business center. Unfortunately, the printer was not which spanned almost two decades on the Supreme Court. 6 Justice Wheat wrote the majority opinion, joined by Chief Justice McGrath and working and because it was so late, there was no one around to 1 http://weather.philly.com/auto/philly/history/airport/KBIL/2010/7/14/DailyHistory.html 2 “¶ 110 In closing, I would note that anyone reading the briefs and record in this case will recognize that the litigation and settlement attempt were nasty for any number of reasons.” Kluver v. PPL Montana, LLC, 2012 MT 321, Nelson, J. dissenting.
Page 32
Justices Rice, Baker and Morris. 7 My colleague, Prof. Eduardo Capulong, teaches the mediation courses at the law school. I am grateful to him for his review of this article, and have incorporated several of his suggestions. His biggest observation is that marathon mediation sessions like that in Kluver may be fundamentally flawed: the longer the process, and the later the hour, the less “voluntary” the agreement may be, and the more likely one party or the other may be to regret it the next day or week.
March 2013
EVIDENCE CORNER, from previous page
¶ 31 Settlement agreements are contracts, subject to the provisions of contract law. Murphy v. Home Depot, 2012 MT 23, ¶ 8, 364 Mont. 27, 270 P.3d 72. A contract requires (1) identifiable parties capable of contracting; (2) their consent; (3) a lawful object; and (4) a sufficient cause or consideration. Hurly, ¶ 17 (citing § 28–2–102, MCA). A contract must contain all its essential terms in order to be binding. Hurly, ¶ 17. Kluver v. PPL Montana, LLC, 2012 MT 321. You don’t need to write up the formal deed or lease8, but you should leave as little as possible to translate between those documents and your settlement agreement. If your opponent wants to weasel out, you can bet she will argue that an essential term is missing, and then you throw yourself on the mercy of the court to decide whether you have met the vague standard of “reasonable certainty.” ¶ 36…This Court has held that where parties intend to form a binding agreement, the fact that they plan to incorporate it into a more formal contract in the future does not render it unenforceable. Steen v. Rustad, 132 Mont. 96, 104, 313 P.2d 1014, 1019 (1957). “[A]bsolute certainty and completeness in every detail is not a prerequisite of specific performance, only reasonable certainty and completeness being required. Those matters which are merely subsidiary, collateral, or which go to the performance of the contract are not essential, and therefore need not be expressed in the informal agreement.” Steen, 132 Mont. at 106, 313 P.2d at 1020 (internal citations omitted). Kluver v. PPL Montana, LLC, 2012 MT 321. Justice Nelson’s dissent concludes that the Kluver MOU did not contain all of essential elements of the contract, and cites email correspondence between counsel the following day about “tweaks” as evidence that the deal was not complete: The Ruggiero email [the MOU written that night] did not include many of the practical details and terms needed for its execution. As noted, Ruggiero himself characterized his email as a “tentative” settlement agreement, and defense counsel likewise characterized it as a “draft.” Rogers stated in an email to Ruggiero the next day: “We have made a few modifications to the Settlement Memorandum of Understanding after you emailed us the draft late last night.” Kluver v. PPL Montana, LLC, 2012 MT 321. It may be late, and you may be tired, but it isn’t going to get any easier to figure out a detail in the morning, or next week, and postponement may become fatal. 2. Use, consistently, the phrase “Final Settlement Agreement.” 8 Indeed, those of us who are litigators and thus most likely to be present at the mediation sessions may not be competent to prepare formal real estate documents.
www.montanabar.org
One of the Kluvers’ arguments was that in fact there was no agreement, and one of the arrows in that quiver was the fact that, later, various parties described the M.O.U. as “tentative” and a “draft.” ¶ 39 The Kluvers also put much weight on the fact that the parties described the MOU as a “draft” and a “tentative settlement” in post-MOU communications, arguing this indicates there was no binding agreement. The District Court found that while the use of the word “tentative” in the Notice was “inartful and, in hindsight, imprecise, none of it constitutes an admission or supports an inference that the MOU and the map did not express a final, agreed-upon settlement, nor do any of these post-mediation statements constitute an agreement by the parties to, in any fashion, amend or change the material terms of settlement described in the map and the MOU.” We agree. Kluver v. PPL Montana, LLC, 2012 MT 321. Justice Nelson did not agree on this point, and found counsel’s description to be evidence that no agreement had actually occurred: [T]he terms “tentative” and “draft” constitute objective evidence that Ruggiero’s July 14 email was not the parties’ final agreement. Indeed, Rogers testified that “I used the word draft because we did it after 14 hours of mediation and we all got tired.” He admitted that “[w]e knew we had it to tweak, elaborate on a few issues....” In light of this testimony, it seems to me that the Ruggiero email was not the parties’ “signed, written agreement” but, rather, was a “mediation-related communication” made in the process of reaching a final “signed, written agreement.” Section 26–1–813(3), MCA. Kluver v. PPL Montana, LLC, 2012 MT 321. The majority of the Court sided with the enforcers but again, why run this risk? From the get-go, label the document “Final” and then use that adjective, not any lesser form, in every written and oral communication. Don’t let yourself, or your opponent, deviate. If your opponent starts to use “draft” or “tentative,” immediately correct her in writing: “This is a final settlement agreement, to which all parties are bound. This is neither a draft nor tentative.” 3. Have the actual parties physically sign an actual written agreement before the session ends, if at all possible. Some oral contracts may be enforceable, but without a writing, the parties may have very different accounts of whether they actually had an agreement and/or the terms they agreed to. Furthermore, the Montana Code requires several kinds of contracts, not just real estate transactions, to be in writing to be enforceable.9 In Kluver, the statute of frauds applied because the Kluvers agreed to deed a fee simple interest and PPL agreed to execute a renewable 99-year lease of the surface of the same land back to the Kluvers. Both factions of the Supreme Court
EVIDENCE CORNER, next page 9 See, e.g., M.C.A. 40-4-201 (family law settlement agreements must be in writing); M.C.A. 72-3-915 (probate distribution agreements must be in writing).
Page 33
draft the document, print it, and have all parties sign it. The reward for this extra time is that the statute of frauds argument will be a non-starter. 10 held that for this agreement to be enforceable, M.C.A. 28-2-903 The lawyers in Kluver did intend to print the document and 70-20-101 required a writing, “subscribed by the party to be that night, but were stymied by a common problem: the hotel charged…” Both statutes allow a party’s agent to sign for the party, printer was down. One way to surmount this obstacle is to carry but expressly state that the agent’s authority to do so must be in your own printer with you, which you have tested and know will writing. work. Even if the mediation occurs in your own office, you may A substantial part of Kluver centered on these requirements. have trouble with one printer, so be sure there is a backup AND 11 The Kluvers did not physically sign the MOU that night, or ever. someone who knows how to use them, if you do not. This may The majority sidestepped this fact, holding that the Kluvers’ require you to keep a staff person late, but “a stitch in time saves lawyer’s email transmission was sufficient: nine. ” We conclude that because Ruggiero attended the If printing is absolutely impossible, there are some other entire mediation with the Kluvers as their attorney, the electronic options—see below—but the very best solution MOU explicitly states that the parties reviewed and is old-school: pack a pad of paper and a pen, and handwrite approved it, and Karson Kluver later told the McRaes the document. (This solution obviously works best when the that a settlement had been reached, there is no clear transaction is fairly simple, and when the drafter has decent error in the District Court’s finding that the Kluvers handwriting). Then have each party read that handwritten paper authorized Ruggiero to agree to the MOU. and sign it. This may be a great time to break out that fountain Kluver v. PPL Montana, LLC, 2012 MT 321, ¶ 29. Justice pen your parents gave you for law school graduation, but a simple Nelson strongly disagreed, and would therefore have held the BIC will do just fine. (As long as we are being this detailed, I MOU unenforceable: prefer blue ink for signatures, so that it is clear that this is the Yet, since the email was not sent from the email “original” per the Best Evidence Rule.) The physical act of signing account of the party sought to be charged here (i.e., the should bring home to your client and your opponent that this is a Kluvers), the question arises whether Ruggiero had legal serious, binding agreement and there is no turning back. Either authority to bind the Kluvers to the terms of an email the case will be resolved finally or everyone would know that it that they themselves did not draft, did not sign, and isn’t. did not transmit. As will be seen, there is no admissible 4. Have the lawyers sign the agreement too. evidence that the Kluvers authorized Ruggiero to There is no legal authority requiring this, nor was it contractually bind them to the terms stated in his email. mentioned in Kluver. However, the lawyers’ signatures Kluver v. PPL Montana, LLC, 2012 MT 321, §67 (Nelson, J.). evidence the fact that the parties had legal counsel prior to the The best way to avoid this potential problem is to have parties’ signatures, and that the writing reflects the attorneys’ all parties, not just their lawyers, actually sign a physical written understanding of the terms of the agreement. Note, however, document which reflects all the essential terms of the agreement. Justice Nelson was right: the plain language of the statute 12 This will require the tired and perhaps unhappy parties to of frauds doesn’t allow the kind of bootstrapping the Kluver remain on the scene a little bit longer, while the attorneys actually majority used to hold that the Kluvers’ attorney’s “signature” bound the Kluvers. In this respect, Kluver should not be read as 10 Mont. Code Ann.28-2-903. What contracts must be in writing. any kind of assurance that it is normally all right to dispense with (1) The following agreements are invalid unless the agreement or some note or memorandum of the agreement is in writing and subscribed by the party to be the client’s signature if the lawyer is willing to sign on her behalf. charged or the party’s agent: The attorneys’ signatures should be in addition to, not instead of, (a) an agreement that by its terms is not to be performed within a year from the the clients’ signatures. making of the agreement; … (d) an agreement for the leasing for a longer period than 1 year or for the sale of real 5. If it is absolutely necessary to allow a lawyer to sign for property or of an interest in real property. The agreement, if made by an agent of the a client, obtain a separate document expressly granting the party sought to be charged, is invalid unless the authority of the agent is in writing lawyer that authority to do so. and subscribed by the party sought to be charged. (2) Evidence of an agreement described in subsections (1)(a) through (1)(d) is not If it is imperative that the clients leave before the written admissible without the writing or secondary evidence of the writing’s contents…. agreement is signed, at least have them sign a written authorization for their attorney to act as their agent in signing 70-20-101. Transfer to be in writing--statute of frauds An estate or interest in real property, other than an estate at will or for a term not the settlement agreement. The statute of frauds13 does allow a EVIDENCE CORNER, from previous page
exceeding 1 year, may not be created, granted, assigned, surrendered, or declared otherwise than by operation of law or a conveyance or other instrument in writing, subscribed by the party creating, granting, assigning, surrendering, or declaring it or by the party’s lawful agent authorized by writing.
11 Actually, neither did the McRaes, but they joined PPL in moving for enforcement of the agreement, so the fact that their lawyer signed the agreement without specific written authority never became an issue. The McRaes were willing to perform the agreement and sign the necessary deeds. 12 In my view, a perfect settlement is one where each side feels it has given up a little too much and the other side has gotten too much.
Page 34
EVIDENCE CORNER., next page 13 The other statutes requiring a party to sign certain agreements in writing do not have any corollary allowing an authorized agent’s signature to suffice. See also, MCA 37-61-401 37-61-401: “Authority of attorney. (1) An attorney has authority to: (a) bind the attorney’s client in any steps of an action or proceeding by agreement filed with the clerk or entered upon the minutes of the court and not otherwise…” (Emphasis added).
March 2013
EVIDENCE CORNER, from previous page
This makes clear that the client has to choose either to stay and sign off on the settlement agreement, or to entrust that seller or lessor to authorize an agent to sign transfer documents responsibility to the attorney and to live with the consequences. in her stead, but requires that authority itself to be in writing: Having a departing client sign something like this protects “The agreement, if made by an agent of the party sought to be both her own lawyer and the opponent, and prevents a 14-hour charged, is invalid unless the authority of the agent is in writing mediation from becoming a years-long debacle. and subscribed by the party sought to be charged.” M.C.A. 28-26. You can combine electronic transmission with a single 903(1)(d). physical signature page, with strict precautions. The Kluvers did not sign any such authorizing document. When the hotel’s printer refused to spit out a document The majority of the Court forgave this omission, holding that the which the parties could sign, the Kluvers’ lawyer’s solution was fact the Kluvers were in the mediation all day with the attorney email, and all the other lawyers present agreed with this format. who “signed” (see below) the email reciting the terms of the “The mediation lasted the entire day, concluding at approximately settlement, and Mr. Kluver’s later statement to his neighbor that 10:00 p.m. with the transmission of a Memorandum of the case had settled, was enough. Justice Nelson criticized the Understanding (MOU) as an email from Ruggiero to Rogers and Court for this sleight of hand: copied to other counsel. ” Kluver v. PPL Montana, LLC, 2012 MT I find it utterly implausible that a person’s (Karson’s) 321, ¶ 3. offhand expression of relief that a case seemingly has Email has become so ubiquitous in the practice of law, as settled is enough to remedy (1) the absence of an in every aspect of our lives, that it is understandable that no agreement to conduct transactions by electronic means, one seemed to give this choice a second thought. That road, as § 30–18–104(2), MCA, and (2) the absence of written Robert Frost said so famously, “made all the difference”14 and authorization for an agent to enter into an agreement literally nearly cost PPL the farm. It is possible to use email to to sell real property on behalf of his principal, § avoid having to hand-write a complex document, but the details 28–2–903(1)(d), MCA. If the sorts of remarks Karson of how you do this are critical. made are enough to satisfy these statutory writing Ideally, the electronic version of the document should be requirements, then these requirements are utterly emailed to the parties themselves as well as to their lawyers while meaningless. everyone is still present15 so you can gather actual signatures on Kluver v. PPL Montana, LLC, 2012 MT 321, ¶91. a physical signature page. I recommend that you include the If your case involves any hint of real estate, or an agreement to be performed over more than one year, or any other actual document in the body of the email, as well as attachments in common formats such as pdf and Word (see Justice Nelson’s type of agreement statutorily required to be in writing, it is not comment in the next section), to avoid any problem with the hard to avoid Justice Nelson’s criticism, and to comply with the recipient opening the document. You should show all the statute. The simple solution is to have the settlement document addressees in the “to” field, so it is clear everyone received either signed by the client himself, or to have the client sign a the same version. As suggested above, the subject should be written authorization document prior to leaving the venue, so something like “Final Memorandum of Understanding” without that the lawyer’s later signature on the settlement agreement any weaker adjectives like “draft” or “tentative.” Now you revert meets the statutory requirement. This authorization should to pen-and-ink handwriting, but of a single signature page contain language acknowledging the requirements of the statute rather than the entire complex document. You can hand-write and explicitly deputize the attorney to enter into the settlement something like agreement on behalf of the client. I hereby acknowledge that I received The following language should do the trick: an electronic version of the settlement agreement I, ________, am a party to [identify case]. I via email, sent to all parties at (date/time). My am a participant in mediation proceedings in that signature below indicates that I have reviewed the case, and have retained attorney __________ to email, and that I intend to be bound by the terms it represent me in those proceedings. I understand reflects. that resolution of this case may entail agreements Signed: ______________________ which the law requires to be written and signed by me. I hereby expressly authorize my attorney Date/Place: _______________________ __________ to act as my agent, and authorize her/ him to sign on my behalf any documents which are Each party should sign this page, and for additional security, necessary to reflect and accomplish the agreement each lawyer as well. Now you have achieved both detail in the reached in this case. I intend that this authorization satisfy the provisions of Montana law requirEVIDENCE CORNER., next page ing a writing, including but not limited to the 14 Robert Frost, “The Road Not Taken. ” statute of frauds relating to transfer and leasing of 15 This means that you will have to collect everyone’s email addresses. You usually real property interests. will have all of the lawyers’, but are unlikely to have the address for any client other than your own.
www.montanabar.org
Page 35
EVIDENCE CORNER, from previous page
agreement, best done through typing, and the physical signature which will bind the party who develops buyers’ remorse. Everyone can leave with assurance that the case is settled for good. 7. Before the mediation begins, circulate and obtain signatures on a physical agreement to electronic preparation and signature of any settlement agreement in accordance with the Uniform Electronic Transactions Act. The Kluver trial court and the majority of the Supreme Court held that the email sent by the Kluvers’ lawyer constituted the Kluvers’ electronic signature on the MOU, relying on the Uniform Electronic Transactions Act (“UETA”), enacted in Montana in 2001. M.C.A. § 30-18-106 provides: Legal recognition of electronic records, electronic signatures, and electronic contracts. (1) A record or signature may not be denied legal effect or enforceability solely because it is in electronic form. (2) A contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation. (3) If a law requires a record to be in writing, an electronic record satisfies the law. (4) If a law requires a signature, an electronic signature satisfies the law. The Kluver majority observed that the legislature meant to accommodate the transaction of business electronically, and to expand the definition of “writing” to electronic forms of memorialization; §30-18-105 explicitly states that the Act is to be applied to: “(1) to facilitate electronic transactions consistent with other applicable law; [and] (2) to be consistent with reasonable practices concerning electronic transactions and with the continued expansion of those practices…” The catch is that the Act only applies to a transaction where both parties have agreed to the electronic format: (2) This part applies only to transactions between parties each of which has agreed to conduct transactions by electronic means. Whether the parties agree to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the parties’ conduct. Mont. Code Ann. § 30-18-104. The Kluver factions disagreed on whether the parties had so agreed, and Justice Nelson also questioned, without resolving, whether the mediation there was a “transaction” within the definition provided in M.C.A. 30-18102(18).16 The opinion does not show any express agreement by the Kluvers to conduct this settlement by electronic means, but the majority used the last phrase of 30-18-104 to hold that the context and circumstances demonstrated the Kluvers’ agreement to electronically approve the MOU. Justice Nelson spent some ink on the problems he saw with the Kluver MOU process: 16 “(18) “transaction” means an action or set of actions occurring between two or more persons relating to the conduct of business, commercial, or governmental affairs.”
Page 36
¶ 65 Lest there be any confusion about what the “Memorandum of Understanding” actually is, it is not a tangible document detailing terms and conditions of a contractual agreement and containing pen-and-ink signatures at the bottom. Nor is it the record of an electronic transaction where a purchaser entered her credit card information into a merchant’s website and hit the “Submit Order” button. What we are dealing with here is an email—not a document attached to an email; rather, just an email. Naturally, this email does not contain a traditional pen-on-paper signature; the email itself is simply bytes retained in computer memory. That fact is not necessarily fatal, however, because the Uniform Electronic Transactions Act (Title 30, chapter 18, part 1, MCA) may give legal validity to an “electronic record” of this nature—provided that certain conditions are met. The problem is that there is no admissible evidence showing that the conditions were, in fact, met here. ¶ 66 For starters, the email purports to be “From” Jory Ruggiero, “To” Guy Rogers, with “Cc” to “breting engel; Thomas Stoever; McDowell, Heather A.” As we now know through parol evidence, Ruggiero drafted the email on his computer at the mediation site after a daylong mediation. According to the time stamp appearing on the printout of the email, the email was sent at 9:56 p.m. on July 14, 2010. Yet, since the email was not sent from the email account of the party sought to be charged here (i.e., the Kluvers), the question arises whether Ruggiero had legal authority to bind the Kluvers to the terms of an email that they themselves did not draft, did not sign, and did not transmit. As will be seen, there is no admissible evidence that the Kluvers authorized Ruggiero to contractually bind them to the terms stated in his email. [Emphasis supplied] Kluver v. PPL Montana, LLC, 2012 MT 321. A. Each party must expressly agree to conduct the settlement by electronic means. It is easy to avoid this problem and to comply with the UETA. At the outset of the mediation, if not before, the parties should sign a pen-and-ink document expressly referencing the UETA and stating that they intend to transact some or all of the conclusion of the mediation electronically, including electronic transmission and signature of any settlement agreement which results from the mediation. In fact, this small procedural agreement may serve as an auspicious beginning to a process when little else may seem agreeable. I recommend that each party (again, the clients themselves rather than the attorneys) sign and exchange a printed hard copy of a document entitled “Agreement to Conduct Settlement by Electronic Means.” Its text can be fairly simple: Agreement to Conduct Settlement by Electronic Means EVIDENCE CORNER., next page
March 2013
as designated in the initial form, and clearly instruct clients how to accomplish the electronic signature. “Please have your client review the agreement, and sign it electronically by replying to I, ________, am a party to [identify case]. I am this email as follows: ‘I agree with the terms of the agreement as a participant in mediation proceedings in that case. written and this transmission constitutes my electronic signature, I understand that resolution of this case may entail per the Montana Uniform Electronic Transactions Act, satisfying agreements which the law requires to be written and signed by me. I consider such agreements to all provisions of Montana law requiring a writing signed by me. be “transactions” within the meaning of M.C.A. 30Agreed to by ________________, on [date].’” 18-102(18), and I hereby expressly consent that any If all this is in place, everyone can head home except the such agreements may be accomplished by electronic scrivener, a modern-day Bob Cratchit bent over his screen in means as follows: the wee hours. The others can read and sign on their individual 1. Any draft of a settlement agreement shall be devices, wherever they are when the final document is produced. sent to me electronically (as well as to my counsel) Once every party and every lawyer has replied to the initial ___ via email to my email address, which is: transmission that he or she agrees and has signed electronically, __________________ OR you will have the functional equivalent of the written document. ___ via text message to my text number, which C. As an alternative to the “sign by reply” email process above, is: ___________________ OR investigate apps such as “DocuSign” which allow tablet and ___ via [identify other electronic means]. computer users to scan documents, physically sign them, and 2. That draft shall contain the following instrucsend their signatures back electronically. tions: “Please read this electronically-prepared I found 44 such programs on the Apple App Store today, settlement agreement to be sure that it incorporates designed for the iPad, and 34 for the iPhone. Many are free; the the terms to which you have agreed. If you do so highest price is $7.99. I am sure there are more out there for agree, please ‘reply all’ with the message: “I hereby other devices. I am currently using “DocuSign” because it allows sign this agreement electronically.” me to email a document to several people, with each of them 3. When I have received an agreement elecsigning and returning an electronic version of that signature. An tronically, and “reply all” with the message “I app like this obviates the need for the cumbersome email process hereby sign this agreement electronically,” I will I described above. Note, though, that the actual signature is be legally bound to the settlement agreement as if I still being returned electronically, so I think that the UETA still had signed it in writing, and I agree that my reply applies and the party should have executed an express consent to transmission constitutes my electronic signature, per the Montana Uniform Electronic Transactions transact business electronically. Act, in accordance with all provisions of Montana 8. The bottom line, per Kluver: Keep going until you have law requiring a writing signed by me.” crossed the finish line. Mediations can be like a marathon. After hours of hard work, B. Include in the final version of the agreement language you’ve finally given all you think you can give and gotten all you acknowledging that all parties previously have agreed to the think you can get. You can see the end: everyone in the room has electronic transmission and signature of the agreement, and said that he or she will accept the deal. If the world were a perfect that each intends his or her reply to serve as the electronic place, you could all adjourn for a well-deserved refreshment and signature. finish up in the morning, when you are rested. Sadly, “buyer’s The final step, of course, is to actually be sure that the above remorse” lurks in the heart of every settler, and allowing it any language is in the electronic transmission. I suggest that when time to flourish may doom the entire enterprise. You still have the agreement is written, it first be sent electronically to the to dig deeper and cross the finish line, which in our profession accounts of all of the lawyers in the case for approval. Once the means getting the terms into a permanent form (written or lawyers all agree to the wording in the settlement agreement, the electronic), signed by the parties themselves. The act of either final version of the agreement should be sent on to the clients putting pen to paper, or at least hitting the “reply” button from for their electronic signatures. This can be done by each lawyer their own devices, is legally significant to both the parties and the individually sending the agreement to his client, ccing all the courts who may be called on to decide whether a deal actually 17 other lawyers, so that all the lawyers receive the clients’ replies. occurred. If you use Kluver as a guide, you may be able to avoid The electronic message should be entitled “Settlement Agreement: the pain, not to mention the time and expense, those parties Clients’ Electronic Signatures Required.” It should clearly instruct 18 suffered. the lawyers to forward the electronic documents to their clients EVIDENCE CORNER, from previous page
17 Alternatively, the drafting lawyer should be sure to get the permission of all the other lawyers to send the completed document directly to their clients. MT Rules of Prof.Conduct Rule 4.2 (a): “In representing a client, a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer.” See, M.R.Prof.Conduct 4.2: “first global document authorizing electronic transmissions should contain an additional provision allowing the drafting attorney to make a single contact with opposing represented parties.
www.montanabar.org
Cynthia Ford is a professor at the University of Montana School of Law where she teaches Civil Procedure, Evidence, Family Law, and Remedies 18 The suffering may not even be at an end as I write. The Kluvers have moved the Supreme Court for reconsideration, which I predict they will not get. Unhappily compelled to deed over their property to PPL in exchange for the 99-year lease and option to purchase, they may look for some recourse from their original lawyer, which will again embroil all who participated in the original mediation.
Page 37
ElderLaw | Medicaid
Medicaid for long-term care: The basics Sol Lovas, CELA Many of our elderly clients fear the nursing home. They fear the loss of mental and physical function which creates the need for long-term care. They fear the loss of quality of life while living in an institution. They fear being kept alive longer than they want to live. And they fear what the cost of their long-term care will do to their family’s finances. According to Montana’s Department of Health and Human Services, the average cost of basic care in a skilled nursing facility in Montana is now $5,947.50 per month (2013). That is about $72,000 a year. Health insurance doesn’t pay for it. Medicare doesn’t pay for it (except for maybe part of the first 100 days). Only long-term care insurance will pay for it, and that is a separate policy that many people cannot afford. So most people have to pay for it themselves – until they qualify for Medicaid. But very few people - and very few attorneys – understand what is required to qualify for Medicaid. As a result, many people who could qualify for Medicaid don’t know it. Others may apply for eligibility, but don’t know enough about it to become eligible as quickly as they could. Both can end up spending far more of their savings than they have to. Attorneys, especially estate planning attorneys, need to learn enough about Medicaid so they can recognize people in this situation, and help them get the assistance they need. Medicaid is also widely misunderstood. What is generally “known” may not in fact be true. Why? First, because Medicaid is governed by both federal and state law. It is mostly federally funded, but it is always state administered. Second, federal law sets certain rules, but outside those rules, there is broad leeway for state interpretation. The various states all have very different interpretive rules. Third, it changes. There have been only two major federal changes in recent years - OBRA 1983 and DRA 2005. But there are little changes all the time in the state rules. Fourth, there are many exceptions to the general rules, and most are very fact-specific. One family’s experience with the Medicaid system may therefore be very different from another’s, because the law has changed, or the facts are different. So what are the current Montana rules?
The Very Basics of Medicaid Eligibility There are two Medicaid long-term care programs , and four basic requirements: Long-Term Care Programs: Institutional (or Nursing Home) Medicaid pays for long-term care provided to residents of skilled nursing facilities. Waiver (or Home and Community Based Services) Medicaid pays for in-home care in private homes and assisted living facilities, if that care is what is keeping you out of a nursing home. Institutional Medicaid is available as soon as you financially qualify. There is a waiting list for Waiver Medicaid. Page 38
Requirements: The four requirements are citizenship, medical need, limited income, and limited resources. (1) Citizenship: You must be a US citizen or a legally resident alien. You must also be a Montana resident for Montana Medicaid. (2) Medical Need: A medical report must verify that you need a nursing home level of care. (3) Income: Montana is a “spenddown” state. There is no specific income limit, except that for Institutional Medicaid, income cannot exceed the institution’s Medicaid pay rate. Your income above a specified amount (which varies depending on the program and the facts), must be spent on your care. However, for married couples, the income of the non-institutionalized spouse (the “community spouse” or “CS”) never has to be used for the care of the institutionalized spouse (the “IS”). Also, if the CS’s income is below a certain limit, he or she may be able to keep some of the IS’s income for the CS’s own use. (4) Resources (Assets): Single Individuals: An unmarried individual may retain certain assets and still be eligible for Medicaid. These are called “exempt” or “non-countable” assets. There are about 17 different categories of exempt assets, but the ones most commonly claimed are a car, prepaid funeral plans, household and personal property, and term life insurance. The home is usually exempt for Waiver Medicaid (but see below re trusts). The home is usually not exempt for Institutional Medicaid, since you no longer live there. All assets - other than those specified as exempt - are “countable”, and you are eligible for Medicaid when all you have left is exempt assets and $2,000 of countable assets. Married Couples: Married couples may retain the same “exempt” or “non-countable” assets as single individuals. In addition, as long as the CS is still living in the home, it will be deemed “exempt”. It is important to know that the “home” consists not only of the house you live in, but also all contiguous property (i.e. the entire ranch). If the CS is self-employed, the CS may also keep his or her selfemployment business assets. However, neither exemption is available if the home or business is in a trust, corporation, partnership, or LLC. If the CS is employed, the CS’s nonaccessible retirement accounts are also exempt. The IS may keep the same $2,000 in countable assets as a single person. For Institutional Medicaid, the CS may retain an amount of countable assets known as the “community spouse resource maintenance allowance” (“CSRMA”). This is basically half of all the countable assets the couple owned when the IS MEDICAID, next page
March 2013
MEDICAID, from previous page
became institutionalized, but there is a minimum allowance of $23,184, and the allowance cannot exceed a maximum of $115,920 (2013 figures). For Waiver Medicaid, the same rule applies, but due to timing issues, the full CSRMA is almost impossible to retain. Therefore the effective CSRMA for Waiver Medicaid is the minimum $23,184.
whether or not you fit their criteria. If you do, they pay the nursing home. If you don’t, that’s your problem. Until you satisfy their rules, they just don’t pay.
The Very Basics of Medicaid Asset Preservation Planning
Given all of these rules, an increasingly common question is “What can we legally do with our excess assets other than The couple is eligible when all they have left is exempt assets, just spend them down?” This is the field of Medicaid Asset Preservation Planning. The follow-up question often is “Is it the CS’s CSRMA, and the IS’s $2,000 of countable assets. legal to do this?” Yes, as long as you follow the rules, and the Conditional Assistance: If your assets in excess of the allow- basic rules are: The Basic Rule: The government cannot prevent you from able amount are non-liquid and will take time to sell, Medicaid giving away your property. However, Medicaid is a governcan provide “Conditional Assistance”: If you agree to sell the ment benefit, and the government writes the eligibility rules for property, Medicaid will pay for your care pending the sale. its benefits. For Medicaid, the basic rule is that if you give your Upon sale, Medicaid is paid back, and if there is anything left, property away too soon before you apply for Medicaid, you will you start over. simply be ineligible for Medicaid for a period of time. There are some transfers that are exempt from this rule, but they deal with The Medicaid Application Process very specific factual situations, such as gifts to a caretaker or For a single person, you file a Medicaid Application once disabled child, to a sibling under certain circumstances, or to a you have spent down to your allowable assets (exempt + Medicaid payback special needs trust or pooled fund. $2000 countable). What can you spend your excess assets on? Exempt transfers may be made at any time, without penalty. Allowable expenses fall into four very broad categories: For non-exempt transfers, there are two time periods involved: The lookback period, and the penalty period. 1. Pay your living costs and care expenses. Basically, Lookback Period: When you apply for Medicaid, the apuse your funds for whatever you want, as long as it is plication will ask if you have made any transfers of your property for your own use or benefit. within the last five years. This is the 5-year “lookback period”. 2. Pay off your debt. They “look back” for any gifts made within 5 years before your 3. Convert non-exempt assets into exempt assets. Take FIRST application for Medicaid. For planning purposes, this is a the home out of trust, buy a car, dissolve the LLC, do waiting period - a non-exempt transfer is not “safe” until 5 years work on the home or buy a new one, buy pre-paid have passed since the date of the gift. funeral plans, or transfer the family business to the Penalty Period: If there were any non-exempt transfers CS who will continue to run it. within the lookback period, then the government calculates the 4. Buy certain types of annuities which are treated as penalty period, which is the period of time during which you are income, not as a resource. simply ineligible for Medicaid no matter how little you have left. The penalty period is calculated by dividing the total value of the What can’t you do? Give it away or use it for someone else non-exempt transfers within the lookback period by $5,954.67 (unless you have a plan for covering the penalty period, as dis(the average monthly cost of nursing home care in Montana in cussed below). 2013 - this figure is adjusted annually). This gives you the numFor a married couple, there is a two-step process. When the ber of months you are ineligible. A non-exempt gift of $100,000 IS enters the institution, a “snapshot” is taken of the value of yields a penalty period of 16.8 months, which begins to run when the couple’s resources as of the first day of the month during you are in the nursing home and down to your allowable assets. which the IS enters the institution. This “snapshot” is called the This is called being “otherwise” eligible. How you pay for your Resource Assessment, and this is the figure on which the CS’s care during the penalty period is your problem. CSRMA is based. The couple files a Medicaid Application once Basic Planning Principles: Planning for Medicaid eligibility they have spent down to their allowable assets (exempt + CS’s always involves asset discovery and disclosure, asset valuation, CSRMA + IS’s $2000 countable). and a spenddown plan. It may also include gifting. Exempt gifts In both cases, it is your responsibility to prove to Medicaid may be made at any time without penalty. Non-exempt gifts that you fit within their eligibility criteria. The application is must be carefully planned, and fall into two categories: signed under penalty of perjury, and Medicaid makes no asPre-Planning: If you have enough other assets (or enough sumptions. The existence and value of every asset you own long-term care insurance, or an annuity, or helpful famhas to be proven by written documentation from a third party. ily members) to maintain yourself either outside or inside a Although they don’t often do it, Medicaid has the authority to nursing home for at least five years, you can make non-exempt ask for all of your financial information for the last five years. transfers of excess assets, and plan on outlasting the five year A common misconception is that Medicaid comes in and lookback/waiting period. If you cannot last the five years, you takes over your affairs when you apply for assistance. It doesn’t. All Medicaid does is look at your application and determine
MEDICAID, next page
www.montanabar.org
Page 39
generation. The family home, the family recreational cabin, and the family business (including the ranch), are all vulnerable to being liquidated to pay for the long-term care costs of the parent may need to get the property back and do crisis planning (see owners. And the vulnerability does not end with the death of the below). Therefore the gifted property needs to be kept safe in the parent, since Medicaid has a right of recovery against the parmeantime. Common gifting techniques include outright gifts, ent’s estate under some circumstances. gifts with retained interests, and gifts to Medicaid-planned irMedicaid eligibility is possible for more families than most revocable trusts. Expert assistance is advised. people realize. Asset preservation planning opportunities do Crisis Planning: If you need nursing home care now, but you exist, but many people who could be taking advantage of them have excess assets, there are still some gifting techniques availdon’t know about them. Attorneys – especially estate planning able, but they are complicated, and expert assistance is essential. attorneys – are the gate-keepers of this knowledge. The more atThey involve ways to make a gift of part of your excess assets, torneys know of these rules and options, the more likely it is that while using the other part of your excess assets to cover the cost families that could be eligible for Medicaid assistance will have of your care during the penalty period caused by the gift. This the opportunity to pursue it. also requires two sequential Medicaid applications. Sol Lovas has been practicing Family Wealth Law in the In both types of planning, you have to be very careful WHEN Billings area since 1980. After practicing with a general law firm you file the application for Medicaid, since the lookback period is for several years, she opened her own solo practice in 1992, in triggered by the FIRST application ever filed, even if it was filed order to specialize in Family Wealth Law. mistakenly, never completed, or denied. MEDICAID, from previous page
Conclusion The costs of nursing home care can destroy a family’s finances. While there is significant protection for the spouse of a nursing home resident, there is no protection for the next
Sol Lovas has been practicing Family Wealth Law in the Billings area since 1980. After practicing with a general law firm for several years, she opened her own solo practice in 1992, in order to specialize in Family Wealth Law. She is a VA-accredited veterans benefits counselor, and is the first and only Certified Elder Law Attorney (CELA)* in the state of Montana.
Continuing Legal Education For more information about upcoming State Bar CLE, please call Gino Dunfee at (406) 447-2206. You can also find more info and register at www.montanabar.org, just click the CLE link in the Member Tools box on the upper-right side of the home page. We do mail out fliers for all multi-credit CLE sessions, but not for 1-hour phone CLE or webinars. The best way to register for all CLE is online.
March March 8 — Secrets to a Successful Trial. Holiday Inn Grand Hotel, Billings. Sponsored by the Paralegal Section. 6.5 credits/1 ethics. March 15 — All Ethics, Nothing But Ethics CLE. Fairmont Hot Springs Resort. Annual St. Patrick’s CLE (formerly in Butte), sponsored by the CLE Institute. —6 Ethics/1 SAMI CLE credits. March 19 — Divorce Coaching: What is it and how can it help your clients? Sponsored by the Family Law Section. 1 credit/hour noon teleconference. March 22 — Natural Resource CLE. Great Northern Town Center, Helena. Sponsored by CLE Institute. At least 6 CLE credits (additional pending).
by popular demand, nationally recognized authors and speakers on internet legal research, Carole Levitt and Mark Rosch, return to Montana. This CLE, with updates, includes Strategies for Discovery, Trial Preparation and how to Successfully Complete Transactions, including Investigative Research Strategies for the Legal Professional. 6.00 CLE credits.
June June 14 — New Lawyers’ Workshop and Road Show. In Billings. Sponsored by the Professionalism Committee. Workshop free to new admitees. Approximately 3 ethics.
July
April
July 25-26 — Annual Bankruptcy Section CLE. Fairmont Hot Springs Resort. Sponsored by the State Bar’s Bankruptcy Section, approximately 10 CLE credits.
April 19 — Annual Bench-Bar Conference. Holiday Inn, Bozeman. Sponsored by the Judicial Relations Committee and CLE Institute.
September
April 23 — Child Abuse & Neglect Issues. Sponsored by Family Law Section. 1 credit/hour noon teleconference. April 26 — Bankruptcy 101. Hampton Inn, Great Falls. Sponsored by the CLE Institute. 7 CLE/1 Ethics.
May May 3 — Family Law Update. Holiday Inn, Missoula. Sponsored by the Family Law Section and CLE Institute. 6 CLE/1 Ethics.
Sept. 19-20 — State Bar’s Annual Meeting. Colonial Red Lion Hotel, Helena. Sponsored by the State Bar’s Professionalism Committee. Approximately 10 CLE credits.
October Oct. 4 — Women’s Law Section CLE. Chico Hot Springs Spa & Resort. Credits pending. Oct. 11 — Arbitration. Sponsored by the Dispute Resolution Committee. Credits pending.
May 10 — Cybersleuth’s Guide to the Internet. Bozeman. Back
Page 40
March 2013
On-Demand and Recorded CLE This is the most current list of 1-hour CLE available through the Bar’s on-demand catalog. Follow the CLE link in the Member Toolbox on the upper-right side of the home page at www.montanabar.org then go to “On-Demand Catalog.” You can also go there directly at this URL: http://montana.inreachce.com. The courses are $50 and you can listen or watch them at your computer. To order content on a disc, visit the bookstore at www.montanabar.org. • All Things Google for Lawyers • Appellate Practice Tips: Brief Writing and Oral Argument • Appellate Practice Tips: Ground Zero • Collaborative Tools and Virtual Offices • Contested Case Procedures Before the Department of Labor and Industry • Drafting Family Law Briefs to the Montana Supreme Court • Electronically Stored Information - Montana Rules of Civil Procedure • Ethics and Elder Law *new • Facilitating Co-Parent Communication with OurfamilyWizard.com • How NOT to Mess Up Children During a Divorce Proceeding • Income, Estate, & Gift Tax Consequences Of Divorce *new • Online Resources for Lawyers
Ethics credits info: Most MT attorneys will be required to obtain 5 Ethics credits, including 1 SAMI, by March 31, 2013. The SAMI (Substance Abuse/Mental Impairment) requirement is part of the 3-year Ethics cycle. If you were admitted to the Bar after 2001, you might have a different reporting cycle. For more information check the CLE section at www.montanabar.org. • Probate Update • Recurring Issues in the Defense of Cities and Counties • Rules Update - Bankruptcy Court Local Rules • Rules Update - Federal Rules of Civil Procedure • Rules Update - Montana Rules of Civil Procedure Revisions • Rules Update - New Federal Pleading Standard • Rules Update - Practicing Under Revised Montana Rules of Civil Procedure • Rules Update - Revisions to Rules for lawyer Disciplinary Enforcement
• Rules Update -Water Law Adjudication Update • Rules Update -Workers’ Comp Court • SAMI - Ethical Duties and the Problem of Attorney Impairment • SAMI - Dependency Warning Signs • SAMI - Is It Time to Retire? • SAMI Smorgasbord • SAMI - The Aging Lawyer *new • Settlement Conference Dos and Don’ts • Social Media Overview • Social Networking and Family Law
State Bar Legal Publications To order and pay by credit card, please visit the bookstore at www.montanabar.org. 2012 Annual Meeting Hot Topics 326 pages, limited number of spiral bound notebooks. $35. Updates on current legal hot topics: employment law, criminal law prosecution & defense, consumer law, SAMI, patent law and patent troll litigation, federal tax law, tribal law, Citizens United, technology issues, civil procedure and electronically stored information, appellate practice tips, immigration law, elder law and Medicaid for the nursing home, legal issues in and around the Bakken, MT Supreme Court summary, family law. Montana Real Estate Transactions • 2010, 360 pages, book plus 2011 supplement CD $205. • 2011 Supplement, 82 pages, $25 for CD. Montana Civil Pleading & Practice Formbook. 2012, 489 pages, book plus all forms in editable format on CD, $225 Civil Jury Instructions (MPI – MT Pattern Instructions) 1999 w/2003 Update, 400 pages Book plus CD $200 Montana Probate Forms 2006, 288 pages Book plus CD $150 Criminal Jury Instructions 2010 edition 650 pages, on editable CD only $130 Public Discipline Under MT Rules of Professional Conduct 2010, 192 pages annotated CD $35
www.montanabar.org
Serving Process in Montana
Largest Levying Firm in Montana!
Insured and Bonded to $150,000 Online Access to Obtain the Status of Your Process - Updated Daily Subpoenas, Summonses, Postings, Orders, Notices, Letters, Writs, Levies, Garnishments Call or Email for Quote P.O. Box 4906 | Missoula, MT 59806
TEL: 406-721-3337
FAX: 406-721-0372 | TOLL FREE: 888-721-3337 serve@equityprocess.com | www.equityprocess.com
Page 41
Obituaries Gary L. Day Gary L. Day, age 62, passed To members of the away due to a massive heart attack on February 12, 2013. He Montana Bench and Bar: was born on January 3, 1951, Thank you for the outin Park Rapids, Minnesota, to pouring of love, support Alva Pearl Knowles Day and and sympathy so generously given us when Gary Leslie John Day. Gary graduated passed away. from Menahga High School, MN, and earned a Bachelor of — The Family of Gary Day, Science degree in 1974 from Feb. 27, 2013 Moorhead State College. He earned a Masters of Science degree in wildlife biology from the University of Montana School of Forestry and in 1981 a juris doctorate degree from the University of Montana School of Law. Gary served as a Montana district court judge for the Sixteenth Judicial District from 1997 to the date of his death. Prior to serving as a judge, he joined the law firm of Lucas and Monaghan in Miles City, Montana, from 1981-1997. He also served as president of the Southeastern Montana Bar Association from 1981-1988, as trustee of the State Bar of Montana from 1987-1997 and as president of the State Bar of Montana from 1995-1996. He served on numerous Montana Supreme Court commissions, including the Judicial Standards Commission. He had just begun serving as treasurer of the Montana Judges Association. The greatest joy in Gary’s life were his three children, Justin, Catharine and Cole and his grandson William McIntosh Houstoun. He has a new grandson born the day he died, Carter Houstoun. He would have given anything to hold that little guy in his arms. The love of his life was his wife, Jo Ridgeway. Gary and Jo had a special closeness and enjoyed their days together in the field hunting birds behind their German Shorthaired Pointers, running Ridgeday Kennels of Montana, riding road bikes, reading, traveling in their EarthRoamer to field trials with their dogs and to Arizona to hunt quail. Life without you, my dear strong man, will never be the same. We love you and we cannot believe you have left us. Gary touched many lives during his time on Earth. He had a keen sense of humor, a zest for living large, an immense strength of character and body, boundless kindness and a striking intellect. He had an intense interest in wildlife biology, hunting dogs, philosophy, history, sports, and the wellness of our Earth. Those who appeared in his court found a compassionate individual who cared about justice and who believed justice delayed is justice denied; therefore, he was prepared before entering the courtroom and most often ruled from the bench. Gary was predeceased by his father, Leslie John Day and his son Cole John Mickelson. He is survived by his wife, Mary Jo Ridgeway of Miles City, MT; mother, Alva Day of Park Rapids, MN; son Justin John-Allen Day of Denver, CO; daughter
Catharine Day Houstoun (Justin) of Scottsbluff, NE; grandsons William and Carter Houstoun; sisters Sandra Etter (Robert) of Side Lake, MN and Susie Renner (Jim) of Molalla, OR; nephews Terry Etter (Peggy), Jason Etter (Camille), Carson and Eric Renner; and many friends and colleagues around the state. Condolences may be sent to the family by visiting: www. stevensonandsons.com. Should friends desire, memorials may be made to Montana Mental Health Trust, 2601 Broadway, Helena, MT 59601 or to the National Alliance of Mental Illness (NAMI), 616 Helena Ave. Suite 218, Helena, MT 59601.
Douglas P. Beighle Douglas Paul Beighle died peacefully on February 3, 2013 while traveling with his wife Kathleen Pierce in BurmaMyanmar. He was 80 years old. Doug was born in Deer Lodge, MT in 1932. Doug’s interest in business and law developed early. After his father died when Doug was eleven, he helped his mother run multiple family businesses while raising three rambunctious sons. After graduating from the University of Montana in 1954 with a B.S. in business administration, Doug married Gwendolen Dickson and entered the Air Force as a 2nd Lt., before returning to the University in 1956 to complete his law degree. He was a faculty fellow at Harvard Law School in 1959-60, receiving an LL.M. degree in 1960. Doug joined the Seattle law firm now known as Perkins Coie in June 1960, where he practiced for 20 years, specializing in corporate and utility law. In April 1980 he fulfilled a boyhood promise to himself to change careers before he was 50, joining The Boeing Company as Vice President Contracts. In 1981 he was asked to head Boeing’s legal department, where he served as chief contracting officer and General Counsel. In 1986 he was elected Senior Vice President, serving as Chief Administrative Officer of Boeing until his retirement in 1997. Until his second retirement in 2005, Doug served on a number of corporate boards, including Puget Sound Energy, where he was board chairman, Active Voice (acquired by Cisco), Peabody Coal, Simpson Investment Company and Washington Mutual. He also deepened and expanded his public service and community work, chairing the Washington Supreme Court’s Commission on Justice, Efficiency and Accountability and the Washington State Blue Ribbon Commission on Transportation, and working with many nonprofits including the Greater Seattle Chamber of Commerce, KCTS Television, Long Live the Kings, Junior Achievement, Arts Fund Foundation, Pacific Science Center, and Landesa. In 2001, Doug was honored as Citizen of the Year by the Seattle-King County Municipal League. In 1995 Doug and Gwen were each named Distinguished Alumnus of the University of Montana, the first couple to be so honored, and in 2011 Doug was honored for his outstanding career OBITUARIES, next page
Page 42
March 2013
Obituaries the family ranch north of town. He attended the University of Montana, graduating in 1953 with a bachelor of science in physical education. He was a walk-on for the Grizzly football team achievements by the University of Montana School of Business and was employed as a busboy at the original 4B’s Restaurant in Administration. Missoula. Doug’s kindness, generosity, and wisdom enriched the lives Upon graduation Dick entered the U.S. Air Force, where he of his family and friends, as well as his community. Doug was premet the love of his life, Marilyn “Mary” Carlisle, whom he marceded in death by his wife Gwen and brother Donald Beighle. He ried in 1955. Mary and Dick traveled around the country and is survived by his second wife, Kathleen who shared his passions overseas to Johnson Air Force Base, Japan, where Dick played for nature, travel, and philanthropy, and his four children: Cheryl on the Johnson Air Force Base football team when they won the Beighle and husband Steve Schroeder; Randy Beighle and wife Far East Championship. In 1957, he left the Air Force to return Stephanie; Kate Jacks; and Doug J. Beighle and wife Claire, all of to the University of Montana to attend law school, graduating in Seattle; two stepchildren: Kristina Montague and husband Tom, January 1962. of Chattanooga, Tennessee; and Serena Maurer and husband Sam He entered the Naval Judge Advocate General (JAG) Corps Skrivan, of Seattle; fifteen grandchildren and step-grandchildren: and proudly served until he retired in 1980. Duty stations inAndrea, Jessica, Chris, Molly, Reid, Brianna, Jack, Patrick, cluded Great Lakes Naval Station, Ill.; Naval Station Newport, Kendra, Chapin, Brecklyn, Ella, Max, Millie, and Jemma; and one R.I.; and Naval Station Roosevelt Roads, Puerto Rico. His final newly born great granddaughter, Halle. Doug is also survived by duty station was Sand Point Naval Base in Seattle. While proudly his brother Richard Beighle and wife Bernice and sister-in-law serving our military, he received two National Defense Service Louise Beighle, all of Polson, Montana. Medals, a Navy Commendation Medal and a Navy Expert Pistol Doug died doing what he loved best-learning, meeting new Shot Medal. friends, and sharing stories about his passions for fly fishing and After retiring, he returned to the family ranch outside of St. the cabin in Kodiak, Alaska, where he shared many adventures Ignatius, where he practiced law until 1992. He valued education with his brother, family, and good friends. – well-known for his daily admonition, “Another day to excel!” Visit www.dbmemorial.com to share words of comfort with – and served on the Mission School Board. He was also a devout his family. In lieu of flowers, memorial contributions may be Catholic and served on the Mission Catholic Church’s Property & made to the Pacific Science Center or Landesa. Finance Committee for many years. He was instrumental in the efforts to restore the frescoes and install an elevator in the church. During these years, he served two terms in the Montana Alden W. Pedersen Senate representing District 27. He was honored to serve as chairAlden “Pete” Pedersen, 85, passed away February 18, 2013, man of the Senate Judiciary in his final term. He loved to ride in Billings, MT. Pete graduated from high school in Richey, his tractor around the ranch and putter around the homestead. Montana in 1945. After his military service, he attended Western He taught all of his grandsons to drive, making numerous trips Montana College in Dillon, Montana. He transferred to the on the country roads to the dump for practice. He also became University of Montana, graduating in 1951. After pursuing a famous for his Fourth of July pig roasts, the games he invented for career in business, in 1963, he moved his family to Missoula to our family reunions and his homemade ice cream. attend law school. He graduated from the University of Montana, Dick is survived by his wife of 57 years; daughters Tammie School of Law in 1966. He returned to Billings to practice law. White of Navarre and Michelle (Don) Vipperman of Stevensville; He retired from the firm of Pedersen and Hardy in 2010. He sons Michael (Patricia) of Colorado Springs, Colo., and Thomas was preceded in death by his wife Lillian. He is survived by his (Brenda) of Missoula; and grandsons Kyle (Laura) Vipperman son and daughter in law, Lance and Tamiko Pedersen of Hardin, of Raleigh, N.C., Andrew Vipperman of Hamilton, Matthew Montana, his sister, Sylva Denney of Vancouver, Washington, his Pinsoneault of Colorado Springs and Gregory Pinsoneault of cousin Wesley (Heather) Van Hee of Chapel Hill, North Carolina Chicago. He is also survived by sisters Jean Johnson of Spokane his brother-in-law Irvin (Darlene) Nauman, of Billings, Montana, and Isabelle Seery of St. Ignatius; brother James (Madeline) sister-in-law Connie (Bill) Cummings of Bozeman, Montana, and Pinsoneault of Edmonds, Wash.; and a large extended family and his beloved nieces and nephews. circle of friends to whom he was fondly known as “Pop.” He was preceded in death by twin sons and a daughter who died in infancy; his parents; brothers Gustav Jr. and Harold (Jack) Richard “Dick” Pinsoneault Pinsoneault; and sister Thelma Sjostrom. In lieu of flowers, donations may be made to the St. Ignatius NAVARRE, Fla. – Richard “Dick” Pinsoneault, 83, passed Catholic Mission, Wounded Warriors or your local hospice away at his home in Navarre, Fla., of leukemia on Dec. 14, 2012, provider. A memorial service will be held in the summer of 2013 surrounded by his beloved family. He was born Oct. 15, 1929, in in St. Ignatius. St. Ignatius to the late Gustav Pinsoneault and Bertha (Dussault) Pinsoneault. He graduated from St. Ignatius High School, where he participated in all sports when he was not working on OBITUARIES, from previous page
www.montanabar.org
Page 43
Job Postings and Classified Advertisements CLASSIFIEDS POLICY All ads (up to 50 words) have a minimum charge of $60. Over 50 words, the ads are charged at $1.20 per word. Ads that are published at the charges above in The Montana Lawyer magazine run free of charge on this web site. Ads running only on the website will be charged at the magazine rate. The ads will run through one issue of the Montana Lawyer, unless we are notified that the ad should run for more issues. A billing address must accompany all ads. Email Pete Nowakowski at pnowakowski@montanabar.org or call him at (406) 447-2200 for more information.
ATTORNEY POSITIONS ASSOCIATE ATTORNEY: Tarlow Stonecipher & Steele, PLLC, a fivelawyer litigation and transactional firm in Bozeman, seeks attorney with ten or more years of experience. The optimal candidate will have excellent verbal and written communication skills and substantial experience in either transactional/real estate-related work or general litigation/trial work. Compensation will be dependent upon experience and includes a good benefit package. Please submit a letter of interest and current curriculum vitae to tstonecipher@lawmt. com. All applications will be held in confidence. CITY ATTORNEY: City of Great Falls, Montana. $90,000 - $105,000. For complete job description and to apply online, visit Prothman at http://www.prothman.com and click on “Current Searches.” For questions, please call 206-368-0050. LLB or JD from accredited law school and admission to practice law in the State of Montana required. Minimum of 5 years practical experience as licensed attorney. Municipal law, trial litigation, and risk management experience, and familiarity with local government preferred. Apply by March 17, 2013 (first review, open until filled). ASSOCIATE ATTORNEY: Small civil defense and business litigation firm in Missoula seeks attorney with 3-7 years’ experience in similar practice. Excellent verbal and written communication skills and effective, efficient analysis and research skills required. Salary (dependent upon experience) plus benefits package. Please submit cover letter, resume, writing sample, transcript and salary requirements to kbeal@beallawfirm.com. All applications strictly confidential.
ATTORNEY SUPPORT/RESEARCH/WRITING COMPLICATED CASE? I can help you sort through issues, design a strategy, and write excellent briefs, at either the trial or appellate level. 17+ years experience in state and federal courts, including 5 years teaching at UM Law School and 1 year clerking for Hon. D.W. Molloy. Let me help you help your clients. Beth Brennan, Brennan Law & Mediation, (406) 240-0145, babrennan@gmail.com. CONSERVE YOUR ENERGY for your clients and opposing counsel. I draft concise, convincing trial or appellate briefs, or edit your work. Well-versed in Montana tort law; two decades of experience in bankruptcy matters; a quick study in other disciplines. UM Journalism School (honors); Boston College Law School (high honors). Negotiable hourly or flat rates. Excellent local references.
Page 44
www.denevilegal.com. (406) 541-0416 BUSY PRACTICE? I can help. Former MSC law clerk and UM Law honors graduate available for all types of contract work, including legal/factual research, brief writing, court/depo appearances, pre/ post trial jury investigations, and document review. For more information, visit www.meguirelaw.com; e-mail robin@meguirelaw. com; or call (406) 442-8317.
PARALEGALS & OTHER PROFESSIONALS SELF-HELP LAW CENTER FACILITATOR: The 11th Judicial District, Kalispell, is looking for a full-time coordinator for the SelfHelp Law Center in Flathead County. This position is responsible for administering and coordinating the Self-Help Law Center in Flathead County. The successful candidate will coordinate the workstation, which will provide the public with designated hours to find legal information; download, print, and/or fill out legal forms; get referrals to and applications for appropriate legal services and/or pro bono programs; and get information about community agencies who may be able to assist with underlying non-legal issues. The facilitator will assist in the creation of the Center, staff regular hours at the Center, assist members of the public seeking information and referrals from the Center, and recruit volunteers to assist in the staffing of the Center. The Facilitator is also responsible for providing ADs, next page
Make an Impact! BIGGER IS BETTER
D N A T IN R P , E G R A L WE EN S R E T S O P IT IB H X E T N MOU Secure upload site for Quick Turnaround!
406.256.4999 • agultra.com March 2013
Job Postings and Classified Advertisements ADs, from previous page remote assistance- via phone, webcam, and/or online “chat” featuresto users of remote self-help workstations in other jurisdictions during designated hours. Experience with this type of technology is important. Excellent communication skills are required. • Salary grade15: $14.24 per hour • The successful applicant will be subject to a background check. • Newly hired Judicial Branch employees are subject to one year probationary period. • Continuation of the position is subject to receiving additional funding from Legislature. A full position description is available from Human Resources -shgrandy@mt.gov
OTHER SUPPORT SERVICES VIRTUAL BANKRUPTCY ASSISTANT: Virtual bankruptcy preparation can save you time and money. Your bankruptcy petitions will be processed in a skillful and timely manner. I have over 15 years bankruptcy petition preparation experience. Member of the National Association of Virtual Bankruptcy Assistants. Let me help you help your clients. AnnAdlerVBA@gmail.com www.AnnAdlerVBA.com
OFFICE SPACE/SHARE MISSOULA OFFICE : One professional office for lease on SW Higgins (Terrace West Building). Share use of reception/secretarial area, conference room, copy and fax machine. Off street parking. Contact Jamie or Kim Towe, Towe Law Office, (406) 829-1669 or kim@ towelawoffice.com MISSOULA OFFICE: One or two professional office for lease in historic building in downtown area. Share use of reception area; two conference rooms; copy and fax machines; library; secretarial space; basement storage; locker room with shower; and private yard. Call Mark Connell, Connell Law Firm at (406) 327-1517.
CONSULTANTS & EXPERTS BANKING EXPERT: 34 years banking experience. Expert banking services including documentation review, workout negotiation assistance, settlement assistance, credit restructure, expert witness, preparation and/or evaluation of borrowers’ and lenders’ positions. Expert testimony provided for depositions and trials. Attorney references provided upon request. Michael F. Richards, Bozeman MT (406) 581-8797; mike@mrichardsconsulting.com.
COMPUTER FORENSICS, DATA RECOVERY, E-DISCOVERY: Retrieval and examination of computer and electronically stored evidence by an internationally recognized computer forensics practitioner. Certified by the International Association of Computer Investigative Specialists (IACIS) as a Certified Forensic Computer Examiner. More than 15 years of experience. Qualified as an expert in Montana and United States District Courts. Practice limited to civil and administrative matters. Preliminary review, general advice, and technical questions are complimentary. Jimmy Weg, CFCE, Weg Computer Forensics LLC, 512 S. Roberts, Helena MT 59601; (406) 4490565 (evenings); jimmyweg@yahoo.com; www.wegcomputerforensics.com. FORENSIC DOCUMENT EXAMINER: Trained by the U.S. Secret Service and U.S. Postal Inspection Crime Lab. Retired from the Eugene, Ore., P.D. Qualified in state and federal courts. Certified by the American Board of forensic Document Examiners. Fullservice laboratory for handwriting, ink and paper comparisons. Contact Jim Green, Eugene, Ore.; (888) 485-0832. Web site at www. documentexaminer.info. BAD FAITH EXPERT WITNESS: David B. Huss, JD, CPCU & ARM. 30 years insurance claims and law experience. Former insurance adjuster and defense counsel. (425) 776-7386.
INVESTIGATORS INVESTIGATIONS & IMMIGRATION CONSULTING: 37 years investigative experience with the U.S. Immigration Service, INTERPOL, and as a privvate investigator. President of the Montana P.I. Association. Criminal fraud, background, loss prevention, domestic, worker’s compensation, discrimination/sexual harassment, asset location, real estate, surveillance, record searches, and immigration consulting. Donald M. Whitney, Orion International Corp., P.O. Box 9658, Helena MT 59604. (406) 458-8796 / 7.
EVICTIONS EVICTIONS LAWYER: We do hundreds of evictions statewide. Send your landlord clients to us. We’ll respect your “ownership” of their other business. Call for prices. Hess-Homeier Law Firm, (406) 5499611, ted@montanaevictions.com. See website at www.montanaevictions.com.
1-888-385-9119
Montana’s Lawyers Assistance Program Hotline Call if you or a judge or attorney you know needs help with stress and depression issues or drug or alcohol addiction .
BackPage | Blast From The Past
Reflections on challenges facing new lawyers today By Don Murray We keep trying to make it easier, but breaking into the profession as a new lawyer is probably harder than ever. The practice of law is fraught with conflicts; for the uninitiated traps and snares lurk around every corner. The conflicting roles and responsibilities we face as lawyers are many and varied, and new lawyers are often ill prepared to reconcile those conflicts. Experience of course helps, but experience can be a harsh and unforgiving teacher, inclined to punish both lawyer and client. The conflicts of which I speak are not just the conflicting interests between clients and prospective clients — those actually are among the more manageable ones we face and using the Rules of Professional Conduct as a lodestar, can be navigated safely for the most part. Rather, the conflicts of which I speak are the more internal and personal ones — the kind that present conflicts with our own interests, or that challenge us with difficult ethical and behavioral dilemmas. About these conflicts the preamble to the Model Rules of Professional Conduct makes this observation: “Virtually all difficult ethical problems arise from conflict between a lawyer’s responsibilities to clients, to the legal system, and to the lawyer’s own interest.” And those “difficult ethical problems” come at us from all directions. Litigation is of course a fertile crucible for conflicts that most of us will grapple with early in our careers. We are expected to win our cases and our worth as lawyers is often gauged by how well we do that. Litigation is a rough and tumble arena and the new lawyer can be left feeling that to be successful it must be approached like a no-holds-barred cage fight. Yet through the fog of battle we are expected to comport ourselves with a certain restraint, accommodating opposing counsel and observing loosely-worded standards of conduct toward opposing parties and the court, all the while mindful of our overarching duty to the system of justice. Outside the courtroom conflicts arise when our responsibility to make justice more accessible to the poor collides with demands that we bring more money into our firms or repay student loans. Simply trying to please our clients while fulfilling our obligations to treat opposing parties and counsel with courtesy and respect can confront us with a maze of behavioral challenges. Then there are the more subtle conflicts that arise between our own personal moral values and our larger role as lawyers in a society ordered around the rule of law and dependent on the quality of our justice system. Unfortunately, our legal education — as good as it is academically — does not equip us particularly well to manage these conflicts (or in some instances to even recognize them). Mentoring is thus crucial, but mentoring today is not what it was Page 46
a generation ago. To be sure, there is some excellent mentoring that goes on in this state, but I would submit that it happens much less frequently — that it is dispensed by fewer lawyers and that fewer new lawyers are the beneficiaries of it — than was the case twenty of thirty years ago. The reasons for the decline are varied, but to a large extent they are economic. They run the gamut from demands to bill more time, to the reality that job opportunities are limited and more new lawyers are going into practice in small firms with other inexperienced lawyers, or on their own. Once it was routine for an experienced lawyer to take a new lawyer along to court proceedings, meetings and depositions. That the time spent might not be billable was a minor concern; it was seen as an important investment in the development of a new lawyer. But things are different today. Clients won’t pay for this kind of “back-up,” and the new lawyer is often under pressure to meet a certain threshold of billable time. Observing experienced lawyers, once considered indispensable, has become a luxury that in many instances cannot be justified. Mentoring’s long-term dividends are too often overshadowed by its shortterm costs. For us seasoned lawyers — those upon whom mentoring depends — we have issues of our own. We’ve had “work-life balance” preached to us so our lives are not consumed, as were the lives of many who mentored us, by the “jealous mistress.” Work-life balance necessarily means something has to go, and unfortunately, one of the casualties has been mentoring. Nor are we immune to the demands of the billable hour — a yoke that can sap from us the time once devoted to mentoring new lawyers. The cumulative result is that more new lawyers are left to fend for themselves, often inadequately prepared to cope with the myriad conflicts that challenge us as professionals on an almost daily basis. The problems are serious and growing more so and the solutions aren’t easy. Bar associations all across the country regularly grapple with both the problems and the solutions — not to mention the fallout from too many of the former and not enough of the latter. I don’t have the answers, but I do want to commend to any new lawyer who might chance upon this article three works that have guided me and others in dealing with the conflicts all of us face. The first is the Ten Commandments for Trial Lawyers. The Commandments were penned by George Dalthorp, an outstanding lawyer and a wonderful person who served the State Bar of Montana as its President in 1985-1986. George’s Ten Commandments weren’t chiseled in stone, but they are CHALLENGES, next page
March 2013
Captured economically in its twenty-one paragraphs is the essence of the practice of law. It is at once instructive, illuminating, challenging and inspirational. One cannot read it without worthy of posterity. For me as a young lawyer they guided, and in feeling pride in one’s profession, and new lawyers and old alike some cases, liberated me to comport myself in my dealings with will find in it much upon which to reflect both personally and my adversaries the way I wanted to but wasn’t sure I could while professionally. The preamble and the Model Rules, which have still advocating the interests of my clients. The Commandments again recently been the object of review and revision by the ABA, are both instructive and empowering for a new lawyer. They are also found on the State Bar’s website and in its 2013 Lawyers’ had a big influence on me, and I highly recommend them to all Desk Book at page 259. lawyers, new and old alike. They are easy to find on the State Bar’s I close with a tribute to our friend and colleague Gary Day website and in the Lawyer’s Desk Book where they have appeared whom we suddenly and tragically lost this past month. Gary, for years, flanked by several other worthy documents; Standards who served this organization in many ways, including as its of Professional Courtesy to Clients, Standards of Professional president in 1995-1996, was a big, strong, handsome man with a Courtesy Among Attorneys, Standards of Professional Courtesy big, compassionate heart. All of us who served the State Bar with and Ethics Between the Judiciary and Attorneys, and the nine Gary admired his wonderful blend of wisdom and wit. Gary took point Montana Values statement. All of them should be re-visited his work seriously, but he never took himself too seriously. He periodically. was always kind and considerate, and never critical or demeaning The second writing I would recommend is University of others. Gary placed justice above winning and service above of Montana Philosophy Professor Tom Huff’s essay, The self. He was an outstanding lawyer and an excellent judge and Temptations of Creon: Philosophical Reflections on the Ethics an all around great guy. Gary exemplified the “public citizen” of the Lawyer’s Professional Role, 46 Mont. Law Rev. 47 (1985). extolled in the preamble to the Model Rules – always seeking Professor Huff’s essay is a compelling and insightful examina“improvement of the law, access to the legal system, the administion of the conflict that can arise between the lawyer’s institutration of justice, and the quality of service rendered by the legal tional role in a society dependent of the rule of law, and personal profession.” inclinations to cling unflinchingly to our own moral convictions. It is tempting for us older lawyers, as we pine for the way The conflict is presented brilliantly in the context of Sophocles’ things were, to lament that lawyers like Gary are a dying breed. ancient Greek tragedy Antigone. It is a scholarly and thoughtBut I don’t believe that to be the case. This next generation of provoking article and I highly recommend it. lawyers has tremendous potential and the capacity to produce The third, and perhaps most important work I would recom- many outstanding lawyers of exceptional skill and the highest mend is the preamble to the ABA Model Rules of Professional standards of moral character and professionalism. It is up to us to Conduct. The preamble was extensively rewritten as part of the help them fulfill that potential. ABA’s Ethics 2000 project and adopted (with some minor but Don Murray was State Bar President in 2001-2002 important changes) by the Montana Supreme Court in 2004. CHALLENGES, from previous page
Stand Out from the Crowd with ARAG®. As an ARAG Network Attorney, you'll gain increased visibility for your firm, the opportunity to build more client relationships, and the potential for future business referrals. ARAG partners with more than 6,400 attorneys nationally, to provide legal service to individuals in large organizations. Members choose an attorney from our knowledgeable network base and ARAG pays the attorney directly for covered matters.
See Your Benefits Multiply ❙ Increased clientele and enhanced referral opportunities from satisfied ARAG clients. ❙ Guaranteed payment directly to you.1 ❙ Greater visibility of your firm with no additional marketing expense. ❙ Ease of administration through various online resources and personal support. ❙ No participation fees allowing you to grow your business without additional overhead. ❙ Choose and revise your areas of law from more than 40 areas of practice. ❙ Network nationally with more than 6,400 attorneys. Learn More about ARAG 866-272-4529, ext 3 ❙ Attorneys@ARAGgroup.com ARAGgroup.com
www.montanabar.org
According to the ARAG Fee Schedule
1
Page 47
239710
Montana Lawyer State Bar of Montana
State Bar of Montana P.O. Box 577 Helena MT 59624