Newman v. Lichfield

• Decision Date: 06 March 2012
• Docket Number: No. DA 10–0548.,DA 10–0548.
• Citation: 364 Mont. 243,272 P.3d 625,2012 MT 47
• Parties: Judith NEWMAN, as Personal Representative of the Estate of Karlye Newman, Plaintiff and Appellant, v. Robert LICHFIELD, and World Wide Association of Specialty Programs and Schools, Inc., Defendants and Appellees.
• Court: Montana Supreme Court

2012 MT 47

272 P.3d 625

364 Mont. 243

Judith NEWMAN, as Personal Representative of the Estate of Karlye Newman, Plaintiff and Appellant,

v.Robert LICHFIELD, and World Wide Association of Specialty Programs and Schools, Inc., Defendants and Appellees.

No. DA 10–0548.

Supreme Court of Montana.

Submitted on Briefs: Dec. 14, 2011.Decided: March 6, 2012.

For Appellant: Lawrence A. Anderson, Attorney at Law, Great Falls, Montana, James A. Manley, Ann L. Moderie, Manley Law Firm, Polson, Montana, Elizabeth A. Best, Best Law Offices, P.C., Great Falls, Montana, Thomas J. Beers, Beers Law Offices, Missoula, Montana.

For Appellees: Sue Ann Love, Jardine, Stephenson, Blewett & Weaver, P.C., Great Falls, Montana, William S. Kronenberg, Murphy, Pearson, Bradley & Feeney, San Francisco, California.

Justice Patricia O. Cotter delivered the Opinion of the Court.

[364 Mont. 244] ¶ 1 Judith Newman (Newman), mother of and personal representative of the estate of Karlye Newman, appeals from certain pretrial and trial rulings made in the Twentieth Judicial District Court of Sanders County, Montana, concerning the suicidal death of Karlye while at a boarding school for troubled teenagers. The District Court limited the scope of evidence regarding foreseeability, denied Newman's motion for partial summary judgment as to joint liability for the tortious conduct of the defendants, and excluded certain evidence of the history of the defendants' schools and programs. A jury found that defendants Robert Lichfield (Lichfield) and the World Wide Association of Specialty Programs and Schools, Inc. ¹ (WWASP), were not negligent, did not commit deceit or negligent misrepresentation, and were not liable for the possible wrongful acts of other defendants regarding Karlye's death.

¶ 2 We affirm in part, reverse in part, and remand for a new trial.

ISSUES

¶ 3 Newman raises three issues on appeal. A restatement of the issues is:

¶ 4 1. Did the District Court err in limiting the scope of evidence concerning foreseeability?

¶ 5 2. Did the District Court err in denying partial summary judgment as to joint tortious conduct by the defendants?

¶ 6 3. Did the District Court err in excluding certain evidence of the history of the defendants' programs and schools?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 7 After years of working at boarding schools designed to assist troubled teens, Lichfield and colleague Brent Facer (Facer) started similar specialty schools and related businesses that provided services to the schools. Around 1996, Lichfield and others formed Peacox Enterprises, LLC (Peacox), and purchased the property and facilities of a former boarding school in Thompson Falls, Montana. The group also formed Utah-based Spring Creek Lodge, LLC, to operate a specialty boarding school for trouble teenagers on the Thompson Falls property. Cameron Pullan (Cameron) was hired as director, and his twin brother Chaffin Pullan (Chaffin) was hired as associate director. Cameron had a high school education and previously worked as an electrician, YMCA counselor, and shift supervisor at Cross Creek Manor, a Utah-based facility for wayward youth, owned by Lichfield and Facer. Chaffin previously worked as a waiter, ran a handyman business, and was a residential manager of Cross Creek Manor.

¶ 8 Around 1997, Lichfield and Facer formed Teen Help, LLC (Teen Help); National Contract Services, LLC (National Contract); WWASP; and other entities. Teen Help dealt with admissions to specialty schools. Parents would contact Teen Help and select a school where they wished to place their child. Teen Help would then place the child at a school and receive a commission from the school. National Contract provided billing, collections, consulting, and budget services for the specialty schools in exchange for a percentage of each school's gross income. WWASP provided seminars, support groups, a web-based communication program, a magazine, a Policy and Procedure Manual listing its responsibilities and those of its member schools, and a combination of purchasing, public relations, and consulting services in exchange for an association fee of $75 per student per month from the schools. In addition, WWASP member schools were required to sign contracts with other companies owned by Lichfield and his relatives.

¶ 9 Meanwhile, Cameron helped form a Montana-based Spring Creek Lodge, LLC, to own and operate the school in Thompson Falls. In 1999, while Peacox retained title to the property and buildings, the Utah-based Spring Creek Lodge, LLC, sold the school to the Montana-based Spring Creek Lodge, LLC. ² Under a lease requiring the land to be used for a WWASP member school, Peacox leased the property to the Montana-based Spring Creek Lodge, LLC. In 2000, the Montana-based Spring Creek Lodge, LLC, was dissolved and Spring Creek Lodge, Inc. (Spring Creek), a Montana close corporation, was formed. It was created to run an independent boarding facility and school for minor children and engage in business transactions. Cameron was the registered agent of Spring Creek and held forty percent of the ownership interest, while the remaining shares were held by four other shareholders, all family members of Lichfield. As director, Cameron was responsible for Spring Creek's operations, including treatment and education, policy implementation, and staff supervision. Chaffin became the assistant director of Spring Creek, though he never became a corporate officer or director.

¶ 10 Spring Creek utilized products and services from Teen Help, National Contract, and WWASP. Using the basic WWASP model, the Spring Creek staff drafted the 2004 policy and procedure manual, including numerous challenges the students could use to earn credits and privileges. As presented by the parties, the challenges included:

(1) carrying a bucket of rocks every step a student took for days or weeks;

(2) having groups of students stay up all night holding a log, with a loss of all points if it touched the ground;

(3) dressing male students as girls; and

(4) jumping blindfolded off a bridge into a pond during winter months.

¶ 11 Spring Creek charged parents a monthly fee of $2,990 per child, which later increased to $3,490 per month. An accounting of finances for Spring Creek in 2004 showed gross revenues of $17,385,403, a payment of management fees of $5,789,339, an occupancy expense of $495,134, and quality control services of $377,900. In addition, Cameron and Chaffin received a monthly salary, bonuses for every student that enrolled, and dividends, sometimes totaling close to $400,000 per year. Cameron and Chaffin both expressed concern in their pretrial depositions about the amount of money leaving Spring Creek to pay the other companies, which they believed made it difficult to properly run the school.

¶ 12 Just a few years after Spring Creek was formed, Newman's daughter Karlye was having behavioral problems as a high school freshman. In the fall of 2003, Newman sent Karlye to the Brush School, a boarding school in New Mexico. Karlye attended there until she was expelled in March 2004 for taking so much Benadryl she had to be hospitalized. Consulting Teen Help, Newman enrolled Karlye in Spring Creek on March 31, 2004, after seeing a brochure about Spring Creek. Though Newman only wished for Karlye to stay at Spring Creek through June 2004, the minimum contract length Spring Creek would accept was twelve months. Newman signed Spring Creek's required twelve-month enrollment contract, paid the requisite fees to Spring Creek, and Karlye entered the program.

¶ 13 The WWASP Manual, intended as a guideline for member programs with student populations, suggested that no students with suicidal behavior be admitted. However, the brochures advertising Spring Creek, which Newman reviewed, indicated the facility was suitable for suicidal youths. The evidence established that no formal assessments were done when students entered the program to determine if the students were suicidal upon admission, nor was the Spring Creek staff provided with specific suicide assessment training. As a result, the Spring Creek staff was largely unaware of Karlye's history of depression and suicidal behavior prior to her admission. One of the only alerts was a check mark for “Suicide Thoughts/Talk” placed on Teen Help's Admission Criteria form.

¶ 14 Throughout her time at Spring Creek, Karlye struggled with learning. She was emotional, injured herself, made suicidal threats, was placed on “high risk” status, and was put in solitary confinement on multiple occasions. Spring Creek documented numerous instances where Karlye was depressed, suicidal, wanted a therapist, or attempted suicide. Newman was never informed of these events, nor was she allowed to visit Karlye, and Karlye was not allowed to contact Newman.

[364 Mont. 248] ¶ 15 On October 7, 2004, Karlye was found unconscious with a sweatshirt tied around her neck, having hanged herself from a doorknob in the bathroom of the dormitory where she lived. She died after being airlifted to a hospital in Missoula. She was sixteen years old.

¶ 16 On October 23, 2006, Newman brought suit for the alleged negligent care and treatment that caused Karlye's death. She sued Spring Creek Lodge Academy; Spring Creek Lodge, LLC; Spring Creek Lodge, Inc.; Cameron Pullan; Chaffin Pullan; and John Does 1 through 20, as the parties responsible for or involved in the planning, supervision, management, operation, or profiting from Spring Creek. Newman alleged the defendants were liable for their independent tortious conduct, were vicariously liable for the acts of their fellow agents, employees, or others under their control under the theory of respondeat superior, and were jointly liable with the other defendants. In the complaint and the amended complaint, Newman stated claims for wrongful death, negligence, breach of contract, constructive fraud, breach of fiduciary duty, breach of duty of good faith...