Reidelbach v. BURLINGTON NORTHERN AND SANTA FE RY. CO.

• Decision Date: 10 December 2002
• Docket Number: No. 02-242.,02-242.
• Court: Montana Supreme Court
• Parties: Robert REIDELBACH, Plaintiff and Appellant, v. BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY, a Delaware corporation and Scott Jacobsen, Defendants and Respondents.

60 P.3d 418

312 Mont. 498

2002 MT 289

Robert REIDELBACH, Plaintiff and Appellant, v. BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY, a Delaware corporation and Scott Jacobsen, Defendants and Respondents.

No. 02-242.

Supreme Court of Montana.

Submitted on Briefs September 5, 2002.

Decided December 10, 2002.

For Appellant: Erik B. Thueson and Julianne C. Burkhardt, Thueson & Lamb, Helena, Montana.

For Respondents: Jon Moyers, Jeff Hedger, Hedger Moyers, Billings, Montana.

Justice PATRICIA O. COTTER delivered the Opinion of the Court.

¶ 1 Robert Reidelbach (Reidelbach) appeals the Order of the Montana Eighth Judicial District Court dismissing various counts of his complaint against Burlington Northern and Santa Fe Railway Company (BNSF) based upon the conclusion that the Federal Employers' Liability Act (FELA), 45 U.S.C. § 51 et seq., was the exclusive remedy available to Reidelbach. We reverse and remand.

ISSUE

¶ 2 The single issue in this case is whether BNSF's post-injury claims-handling practices are exempt from application of all state and federal law.

FACTUAL BACKGROUND

¶ 3 A short summary of the facts relevant to this case follows. More detailed facts will be presented as the issues are analyzed and discussed. As further explained below, because this matter was disposed of on a motion to dismiss, we will construe the facts in a light most favorable to Reidelbach.

¶ 4 Reidelbach worked for BNSF and its predecessor for approximately twenty years. During those years, Reidelbach was assigned numerous tasks involving frequent manual heavy lifting. The frequent strain of lifting or maneuvering loads of 200 to 300 pounds resulted in several back injuries to Reidelbach over the years. Ultimately in December 1998, Reidelbach was forced to stop working due to disabling cumulative spinal injuries. He underwent extensive and invasive spinal surgery in 1999.

¶ 5 Shortly thereafter, BNSF, through its claims' representative, Scott Jacobsen, offered Reidelbach an agreement under which Reidelbach would forego pursuing his legal rights under the FELA and in return BNSF would propose a "fair settlement" with him for his injury. As part of this agreement, Reidelbach would allow BNSF to oversee his medical treatment. Additionally, BNSF would pay him advance wages, even though he was unable to work. These advance wages would be deducted from Reidelbach's settlement when it was executed. Such a settlement would allow Reidelbach to escape the stress and expense associated with litigating his rights under the FELA and assure him wages with which to support his family in the interim.

¶ 6 Over the next two years, BNSF paid advance wages, oversaw Reidelbach's medical care and advised him on the value and merits of his claim against BNSF. Despite requests by Reidelbach, however, no settlement offer was made. Jacobsen ultimately advised Reidelbach, but without making an offer, that a fair settlement for his injury would be approximately $280,000.

¶ 7 As the months continued to pass, Reidelbach experienced increasing difficulty in reaching Jacobsen to discuss his case. Finally, in the fall of 2000, failing any firm settlement offer from BNSF, Reidelbach offered to settle his claim for $450,000. Jacobsen rejected the offer and, according to Reidelbach, stated that the railroad would never pay that amount. Reidelbach, believing that Jacobsen's previously-mentioned $280,000 figure was unreasonably low, and realizing that the three-year statute of limitations for his FELA claim was soon to expire, filed his lawsuit on December 1, 2000. In addition to stating a FELA injury claim, Reidelbach also brought several separate state law claims alleging that BNSF had engaged in unfair, dilatory and fraudulent claims practices. Upon being served with Reidelbach's Complaint, BNSF discontinued Reidelbach's wage advances, leaving Reidelbach with no means to support his family.

¶ 8 In his Complaint, Reidelbach alleged that BNSF, through Jacobsen, engaged in claims practices that were in violation of state law and that such practices constituted intentional and malicious misconduct. Reidelbach maintained that BNSF, as a sophisticated litigator with a sophisticated claims adjustment department, was in a superior claims negotiating position; that BNSF, through access to his medical records, was aware of the magnitude and severity of Reidelbach's injures; that BNSF was familiar with other similar claims in which BNSF was required to pay considerably higher awards than the amount suggested to Reidelbach; and that it was aware of the vulnerability of Reidelbach's economic position and his inability to support his family without BNSF's wage advances. Reidelbach also argued that BNSF provided inaccurate legal advice as to Reidelbach's likelihood of recovery under his FELA lawsuit.

¶ 9 Reidelbach further alleged that BNSF's suggestion that his claim was worth approximately $280,000 intentionally misled him as to the value of his claim because Jacobsen had knowingly excluded legitimate damages for pain and suffering, loss of non-vocational activities, and loss of services and future medical care, and had not calculated his recovery using the higher present value of his future earning capacity.

¶ 10 Reidelbach claimed that BNSF's and Jacobsen's actions constituted (a) bad faith in claims practices which is prohibited by Brewington v. Employers Fire Ins. Co., 1999 MT 312, 297 Mont. 243, 992 P.2d 237; (b) a violation of the common law obligation of good faith and fair dealing inherent in every contract involving a special relationship as recognized in Story v. City of Bozeman (1990), 242 Mont. 436, 791 P.2d 767; (c) a violation of the obligation to refrain from malicious and fraudulent conduct as prohibited by § 27-1-221, MCA; and (d) a violation of Reidelbach's constitutional right to a "speedy remedy" for "all" injuries without "sale, denial, or delay," as provided by Article II, Section 16 of the Montana Constitution. Reidelbach sought damages for past and future emotional distress resulting from the railroad's claims-handling tactics, punitive damages to punish BNSF and deter it from engaging in similar bad faith tactics with other injured and vulnerable employees, and the imposition of sanctions for the violation of his constitutional right to a speedy remedy.

¶ 11 BNSF countered that the FELA is the exclusive remedy available to injured railroad workers employed in interstate commerce, and that as such, the FELA preempts state tort law. Moreover, BNSF argued that the FELA does not offer any remedy for Reidelbach's post-injury claims-handling complaints. It claimed that Reidelbach therefore had no remedy for his claims under either state tort law or federal FELA law. On these bases, BNSF moved to dismiss Reidelbach's claims-handling causes of action.

¶ 12 Reidelbach contested the motion to dismiss, claiming that his state tort actions are not preempted by the FELA because none of the elements necessary for a FELA claim are present: his state claims are for non-physical injuries received at a time when Reidelbach was not actively employed by the railroad and therefore was not performing work-related duties in furtherance of interstate commerce; the BNSF claims' agent was not engaged in an activity advancing interstate commerce; and his damages were not caused by BNSF's negligence but rather were intentionally inflicted.

¶ 13 The District Court concluded that all of Reidelbach's post-injury state claims were preempted by the FELA and dismissed them under Rule 12(b)(6), M.R.Civ.P. Reidelbach appeals. We reverse and remand for proceedings consistent with this Opinion.

STANDARD OF REVIEW

¶ 14 Our standard of review of district court rulings on motions to dismiss under Rule 12(b)(6), M.R.Civ.P., is:

A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. A motion to dismiss under Rule 12(b)(6), M.R.Civ.P., has the effect of admitting all well-pleaded allegations in the complaint. In considering the motion, the complaint is construed in the light most favorable to the plaintiff, and all allegations of fact contained therein are taken as true.

Finstad v. W.R. Grace & Co., 2000 MT 228, ¶ 24, 301 Mont. 240, ¶ 24, 8 P.3d 778, ¶ 24 (citation omitted). The District Court's determination that Reidelbach's state law claims failed to state a claim for which relief was available is a conclusion of law. Our standard of review of a court's conclusion of law is whether the tribunal's interpretation of the law is correct. Finstad, ¶ 24 (citation omitted).

DISCUSSION

¶ 15 The sole issue before this Court is whether BNSF's claims-handling practices are exempt from application of all state and federal law.

¶ 16 The parties do not dispute that the FELA provides the sole remedy for physical injuries sustained by a railroad employee, any part of whose duties further interstate commerce, who is injured on-the-job as a result of the negligence of an employer. What Reidelbach asserts here is that, in addition to the physical injuries he sustained while working for BNSF, he also sustained non-physical injuries three years after he had ceased performing work for BNSF. Because he was not performing work for the railroad at the time these injuries were inflicted, he argues, the injuries did not occur "during the scope of employment" nor at a time in which he was performing duties in furtherance of interstate commerce, and thus, the FELA has no application to these injuries. While the phrases "during the scope of employment" and "performing duties in furtherance of interstate commerce" have been broadly defined¹, Reidelbach in essence contends they cannot possibly be interpreted so as to apply to a person who has performed no work-related activities as an employee for the railroad for the three years preceding the...