Schuff v. AT Klemens & Son, 99-053.

Citation16 P.3d 1002, 2000 MT 357
Case DateDecember 27, 2000
CourtUnited States State Supreme Court of Montana

16 P.3d 1002
2000 MT 357

Colleen Karen SCHUFF, individually and as personal representative of the Estate of William Schuff, Deceased, Adam Schuff, and Jacob Schuff, Plaintiffs, Respondents, and Cross-Appellants,
A.T. KLEMENS & SON, Defendant, Appellant and Cross-Respondent

No. 99-053.

Supreme Court of Montana.

Heard April 4, 2000.

Submitted June 28, 2000.

Decided December 27, 2000.

16 P.3d 1005
Kevin C. Meek, Tiffany B. Lonnevik, Davis, Hatley, Haffeman & Tighe, Great Falls, MT, For Appellant

Charles R. Johnson, Sara R. Sexe, Marra, Wenz & Johnson, Great Falls, MT, For Respondents.

16 P.3d 1006
Neil E. Ugrin, Roger T. Witt, Ugrin, Alexander, Zadick & Higgins, Great Falls, MT (James, Gray, Bronson & Swanberg, Attorneys at law); John Richardson, Beck & Richardson, Bozeman, MT (Montana Trial Lawyers Association), For Amici

Justice JAMES C. NELSON delivered the Opinion of the Court.

¶ 1 A.T. Klemens & Son (Klemens) appeals from a judgment resulting from a wrongful death claim entered in favor of Colleen Karen Schuff, and her sons, Adam and Jacob Schuff (Schuff), by the Eighth Judicial District Court, Cascade County. Schuff, both individually and as a personal representative of the estate of her deceased husband, cross-appeals the judgment, asserting that the court erred in reducing the judgment award and in calculating judgment interest.

¶ 2 We affirm in part, reverse in part, and remand for further proceedings.

¶ 3 Klemens raises the following issues:

1. Did the District Court abuse its discretion when it denied Klemens' motion to disqualify the Marra firm from representing Schuff?
2. Did the District Court abuse its discretion when it entered a default judgment against Klemens on the issue of liability as a sanction under Montana Rules of Civil Procedure 37(d) for alleged discovery abuses?
Subject to Schuff's cross-appeal as well as Klemens' appeal, we address the following issues:
3. Does Article II, Section 16, of the Montana Constitution create a fundamental right to recover attorney's fees and costs?
4. Did the District Court err when it reduced the jury verdict pro tanto based on Schuff's prior settlement with the other named defendants?
5. Did the District Court err in its collateral source reduction determinations regarding workers' compensation and Social Security benefits?
6. Did the District Court err when it limited Schuff's recovery of prejudgment interest?
7. Did the District Court err in determining the proper date for post-judgment interest?


¶ 4 Schuff initiated this action in 1991 to recover damages for the alleged wrongful death of her husband, William Schuff, who died as a result of burns sustained at the M & H Gas Station in Great Falls, Montana. The accident occurred on September 12, 1991, while Schuff's husband, an employee of Kenneco, Inc., was repairing a submersible pump in a manhole above an underground gasoline storage tank at the station. Accumulated gas fumes ignited, and engulfed Schuff in flames. He died from the resulting severe burn injuries on September 25, 1991.

¶ 5 Schuff's theory of negligence, in part, blamed the accident on either a mislabeled electrical relay switch and/or a mis-wired relay switch, which deceived William Schuff into turning off the wrong relay switch, and thereby providing an ignition source. Schuff alleged that the fumes accumulated due to a defective pump. On October 29, 1998, a jury returned a verdict in Schuff's favor in the amount of $1,303,000.

¶ 6 After filing her original complaint against M & H Gas Company and three John Does on October 4, 1991, Schuff filed an amended complaint naming Klemens as well as another electrical contractor and the manufacturer of the submersible pump as additional defendants on January 31, 1992. A.T. Klemens & Son, an electrical contractor, was one of several contractors that had performed electrical work for M & H at the gas station where the accident occurred.

¶ 7 Klemens was served with a copy of the amended complaint on February 3, 1992. The District Court would find, in its Order granting Schuff's motion for default judgment, that Klemens "denied ever doing any work involving wiring of the submersible pump and relay system." Klemens claimed that it had not performed any of the alleged negligent work, including installing faulty wiring or mislabeling the electrical system related to the submersible pump. In its

16 P.3d 1007
December 14, 1994 motion for summary judgment, Klemens asserted that
It is uncontroverted that Kenneco and other electrical contractors did all design, installation and maintenance work on the M & H gasoline pumping system as it was configured at the time of the accident. A.T. Klemens did nothing more [than] connect the gasoline pumping system as wired to a new electrical service panel for the building. There was nothing wrong with the electrical service panel and it had no involvement in the accident because Mr. Schuff intentionally did not use the breaker panel to cut power to the west pump.

¶ 8 This blanket denial was substantiated by Klemens' discovery responses as well as the depositions of its employees who had performed the work at the gas station. Although claiming that a thorough disclosure of the resulting paper trail for the work performed was irrelevant and burdensome, Klemens nevertheless offered that all records could be examined at its counsel's office.

¶ 9 Needless to say, the litigation of the matter, now approaching its tenth year, was less than tractable.

¶ 10 One focal point of the dispute arose in 1993 when counsel for Klemens filed a motion to disqualify the Great Falls law firm of Marra, Wenz, Johnson & Hopkins (hereinafter the Marra firm) from continuing to represent Schuff. The basis for the motion to disqualify stemmed from the Marra firm's existing representation of Klemens, an ongoing relationship that had formed in 1984. At the time the Marra firm served Klemens with Schuff's amended answer, Klemens claims it had pending legal matters that were being addressed by the Marra firm on its behalf, including the monitoring of another lawsuit against Klemens. These legal matters allegedly provided the Marra firm with access to Klemens' financial information, which apparently included knowledge of a $1 million liability insurance policy.

¶ 11 Prior to filing the motion, Klemens claims that it requested that the Marra firm either withdraw as Schuff's counsel or agree to dismiss Klemens with prejudice based upon ethical considerations. These overtures were refused by the Marra firm, which informed Klemens' new counsel that "We discussed whether or not there was any conflict of interest, and concluded that there was none."

¶ 12 The Marra firm asserted to the court that there was "no substantial possibility that any information they have previously acquired or may acquire in the future relative to Klemens corporation could have any adverse influence on Klemens in this lawsuit," and dismissed Klemens' motion to disqualify as "frivolous." Primarily, the firm asserted that there was no substantial relationship between the work performed over the years for Klemens and Schuff's wrongful death claim, which could conceivably cast fault on Klemens for its electrical work at M & H. Nevertheless, the Marra firm terminated its relationship with Klemens prior to the court's ruling on the motion to disqualify "to prevent the possibility of any acquisition of information which could be used to the detriment of Klemens in the litigation."

¶ 13 The District Court denied Klemens' motion in an order entered September 3, 1993, applying a "substantial relationship" analysis to the Marra firm's representation of Schuff and Klemens.

¶ 14 Also in dispute here is the liability default judgment entered against Klemens resulting from its conduct during discovery.

¶ 15 In earlier 1993, Klemens was served with interrogatories and requests for production from co-defendant M & H Gas Company. Klemens objected to much of the requests as either irrelevant or unduly burdensome. Nevertheless, Klemens claims that it provided the records up to the date of the accident by making them available for inspection at its counsel's office. Klemens responded to an interrogatory request for work performed at the gas station with:

Copies of records for work done by Klemens at M & H up to the date of the accident are available for inspection at the office of James, Gray and McCafferty. Generally, what is known about the work described in the records, with regard to the questions asked above, is contained in these records.
16 P.3d 1008
In response to an interrogatory request for information regarding "any electrical wiring installation or hookup, including that for any submersible fuel pumps," Klemens replied that: "Klemens' only work was to refeed wiring through conduit and no designing or engineer was required." Further, in response to a request for production of "every contract, subcontract, plan, specifications, drawing, work order, invoice, building permit, inspection report, or other documents, including correspondence, which pertain to work of any kind or nature performed on the premises of the M & H Gas Station," Klemens replied by referring back to its response that such records were available for inspection at the office of James, Gray and McCafferty. Klemens again referred to this particular response in reply to a request for "all sales documents, invoices, shipping slips, or other documents" that related to the "manufacture, inspection, sale, or delivery of materials and equipment furnished for work at the M & H Gas Station."

¶ 16 The District Court found that Klemens' response to the foregoing interrogatories and requests for production clearly indicated that Klemens did not do any of the alleged negligent electrical work as set forth by Schuff's theory of the case. The court then observed that Klemens' employee, Wayne Anderson, failed to...

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