State ex rel. Fitzgerald v. District Court of Eighth Judicial Dist. In and For Cascade County

• Decision Date: 23 July 1985
• Docket Number: No. 85-16,85-16
• Citation: 703 P.2d 148,42 St.Rep. 1061,217 Mont. 106
• Parties: The STATE of Montana, ex rel., Donna S. FITZGERALD, individually and as Administratrix of the Estate of Ronald E. Fitzgerald, Relator, v. DISTRICT COURT OF the EIGHTH JUDICIAL DISTRICT, In and For the COUNTY OF CASCADE, Hon. Peter L. Rapkoch & Aetna Insurance Co., Respondents.
• Court: Montana Supreme Court

Page 148

703 P.2d 148

217 Mont. 106

The STATE of Montana, ex rel., Donna S. FITZGERALD individually and as Administratrix of the Estate of Ronald E. Fitzgerald, Relator, v. DISTRICT COURT OF the EIGHTH JUDICIAL DISTRICT, In and For the COUNTY OF CASCADE, Hon. Peter L. Rapkoch &amp Aetna Insurance Co., Respondents.

No. 85-16.

Supreme Court of Montana.

Submitted May 15, 1985.

Decided July 23, 1985.

Marra, Wenz, Johnson & Hopkins, P.C., Joseph R. Marra argued, John F. Iwen, Dola N. Wilson, Jr., Great Falls, for relator.

James, Gray & McCafferty, Robert J. James argued, Great Falls, for respondents.

SHEEHY, Justice.

We accept jurisdiction as petitioned for by Donna S. Fitzgerald the relator, by way of supervisory control to the extent outlined in this opinion. A copy of this opinion, when served upon the District Court of the Eighth Judicial District, Cascade County, the Honorable Peter L. Rapkoch, judge presiding, shall be, constitute and serve the office of a writ of supervisory control over the District Court in cause no. 79977C pending in said District Court, entitled Donna S. Fitzgerald, individually and as the administratrix of the Estate of Ronald E. Fitzgerald, Deceased, Plaintiff vs. Aetna Insurance Company, defendant.

Further proceedings in said District Court cause shall be in accordance with this opinion.

Relator, Donna S. Fitzgerald (Fitzgerald) filed a petition in this Court for a writ of supervisory control on January 10, 1985. We deferred taking jurisdiction until response was obtained from the respondents, and oral argument had on May 15, 1985. We will set forth here a general statement of the facts in the underlying action, and later add such facts as may be necessary for a full discussion of the issues presented and determined by us.

On November 23, 1973, Ronald E. Fitzgerald was killed when the tractor-trailer rig he was driving collided with another tractor-trailer driven by Rudolph Collicott, who was employed by Turner Valley Transport Company (TVT), a Canadian corporation. The collision occurred outside of Lewistown, Montana, in Fergus County. On December 6, 1973, Rudolph Collicott pleaded guilty to drunk driving and manslaughter. He was sentenced to a term of five years in the Montana State Penitentiary. The widow, Donna S. Fitzgerald, individually and as administratrix of the Estate of Ronald E. Fitzgerald filed suit in state court naming Collicott, TVT, and Emanual St. Louis as defendants. St. Louis owned the tractor that Collicott was using while hauling pipe for TVT at the time of the collision. The defendants, Canadians all, removed the case to Federal District Court in Great Falls, Montana, on the basis of diversity of citizenship. After extensive pretrial discovery, a bench trial was held in Federal District Court. On April 17, 1975, the Federal District Court rendered a judgment in favor of Fitzgerald and against Collicott and TVT for $190,739.00. This amount was within the coverage of the Aetna policy. No judgment against St. Louis was entered; the Court denied TVT's cross-claim for indemnification. Fitzgerald's judgment was not paid by Aetna nor by the two Canadian insurers who had issued policies to TVT.

This state court action was filed by Donna Fitzgerald on July 30, 1975 to force Aetna and the two Canadian insurance companies, Markel Insurance Company and Canadian Surety Company, to pay the judgment of $190,739.00 obtained by Fitzgerald against their insured, TVT. Fitzgerald contended that Aetna was liable to pay the judgment under a policy of insurance issued to TVT by Aetna. Her complaint also alleged that Aetna acted in bad faith by refusing to pay the judgment against its insured, by causing Fitzgerald unnecessary time and expense in prosecuting the underlying action against TVT, by acting in bad faith in offering ridiculously low settlements before and after the judgment against TVT, and by maliciously, oppressively and fraudulently depriving plaintiff of the proceeds of her judgment, causing her extreme emotional distress.

Aetna twice attempted to remove the state court suit to federal court but was unsuccessful. Aetna's first removal petition was remanded to state court because all of the defendants in the action did not join the petition for removal. Thereafter, on July 12, 1976, both Canadian insurance companies were dismissed from the state court action for lack of personal jurisdiction. Service against both companies was quashed.

After the dismissal of the Canadian insurance companies, Aetna filed another petition to remove the case to federal court. The Federal District Court again remanded the case to the state court holding the case was always removable but Aetna had failed to state in the first removal petition that the Canadian companies were not parties. During the oral hearing on the motion to remand the second removal, United States District Judge Russell Smith remarked:

"I think it's a shameful business when a plaintiff gets in a position where she has to straighten out defendants who wrote policies and who ought to be able to get together and interpret them themselves. Of course it's just this sort of thing that makes insurance companies the unpopular creatures that they are in the court."

Fitzgerald seeks to have admitted in the present state court action the quoted statement by Judge Smith when this case is eventually tried.

Meanwhile, in the state court action, Aetna filed various motions to dismiss the case. Judge Paul Hatfield, then a state court judge, briefly presided over the matter until he was disqualified by Aetna. On January 21, 1976, before the Canadian companies were dismissed from the lawsuit, Judge Hatfield issued an order that in substance was directed at the Canadian companies' motion to dismiss for lack of jurisdiction. In that order, he stated:

"[I]t appears to be another occasion for the justified criticism of the courts and lawyers who appear to lose sight of their true function, the administration of justice, while they joust with technicalities without substance resulting in delays, which is ultimately detrimental and expensive for all parties."

Fitzgerald seeks to introduce this statement at the upcoming trial.

Judge R.J. Nelson accepted jurisdiction after Judge Hatfield was disqualified by Aetna. On July 12, 1976, Judge Nelson issued an order dismissing the Canadian insurance companies from the case and denying Aetna's motion to strike counts II and III of plaintiff's complaint. (Count II essentially requests punitive damages and attorney fees on the grounds of fraudulent breach of contract, and count III seeks damages for mental and emotional distress for failure to pay the judgment.) Aetna was ordered to file an answer within 20 days. Fitzgerald commenced discovery and sought to inspect and copy certain correspondence between Aetna, its attorneys, agents, and employees relating to this lawsuit and also any written communication in Aetna's possession between the Canadian insurers, driver Collicott, and their attorneys and agents. Aetna refused to comply with the request. A hearing was held on December 13, 1976 on plaintiff's motion to produce.

Judge Truman Bradford issued an order directing Aetna to produce all documents except communications between Aetna and its counsel of record that pertained to this suit. In Judge Bradford's order and opinion, he wrote:

"This Court is also cognizant by taking judicial notice of its records and files herein, that suit was commenced by this Plaintiff on December 3, 1973, that it was removed to the Federal Court which rendered this judgment May 29, 1975; that this lawsuit was filed July 30, 1975; and it was twice removed and remanded from the Federal Court; that the Defendants have disqualified one of the District Judges originally presiding in this matter, and that the matter has continued to the point where the maxim, 'Justice delayed is justice denied' is particularly applicable herein."

Fitzgerald seeks to have this quotation admitted into evidence at the upcoming trial.

On February 8, 1977, Aetna moved in state court for summary judgment pursuant to Rule 56, M.R.Civ.P., contending that under the facts stipulated in this case it was not liable to pay the May 29, 1975 judgment entered against Collicott and TVT in federal court, and that plaintiff's claim alleging bad faith and intentional infliction of emotional distress should be dismissed as a matter of law. Fitzgerald filed a cross-motion for partial summary judgment seeking to find Aetna liable for the aforementioned judgment and compelling Aetna to pay. On April 19, 1977, after a hearing, Judge William Coder, who was then presiding over the case, denied Aetna's motion and granted plaintiff's motion for partial summary judgment. Aetna obtained a stay of execution and appealed to the Montana Supreme Court. In Fitzgerald v. Aetna Insurance Co. (1978), 176 Mont. 186, 577 P.2d 370, this Court affirmed the order of the District Court. This Court, however, declined to address Aetna's motion to strike counts II and III on the grounds that the denial of the motion by the District Court was not an appealable order under Rule 1, M.R.App.Civ.P. See 176 Mont. at 195, 577 P.2d at 375.

On April 28, 1978, Aetna paid Fitzgerald the total amount of the judgment obtained in 1975 against Rudolph Collicott and TVT.

On June 15, 1978, Judge Coder assessed $1,115.50 for attorney fees against Aetna because plaintiff was required to respond to Aetna's repeated motions to strike that raised no new grounds other than those contained in the earlier motions. The award was made pursuant to Rule 11, M.R.Civ.P. and the equitable power of the court. Aetna has not paid this assessment to date.

Plaintiff served a set of interrogatories on Aetna on June 20, 1978, and Aetna answered these on July 19, 1978. On May 6, 1980, plaintiff filed a notice of readiness for trial. No more documents were filed in this case until July 19, 1983, when pl...