Newman v. Farmers Alliance Mutual Insurance Company
ORDER denying 10 Motion to Disqualify Counsel. Signed by Magistrate Judge Timothy J. Cavan on 8/10/2017. (AEC)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
ROBERT NEWMAN, individually, as
Personal Representative on behalf of
THE ESTATE OF JACKIE ANN
NEWMAN, and on behalf of
STEPHANIE NEWMAN and MANDY
ATTORNEY JOSEPH P.
COOK AS TRIAL COUNSEL
FARMERS ALLIANCE MUTUAL
Plaintiff Robert Newman, individually, as Personal Representative on
behalf of the Estate of Jackie Ann Newman, and on behalf of Stephanie Newman
and Mandy Newman (“Plaintiffs” or the “Newman family”) brings this action
against Defendant Farmers Alliance Mutual Insurance Company (“Farmers
Alliance”) for bad faith breach of contract and unfair trade practices arising out of
Farmers Alliance’s investigation and denial of the Newman family’s claims
following the death of Jackie Ann Newman. (Doc. 1-3.)
Presently before the Court is Farmers Alliance’s Motion to Disqualify
Plaintiff’s Attorney Joseph P. Cook as Trial Counsel. (Doc. 10.) The motion is
fully briefed and ripe for the Court’s review. (Docs. 11, 18, 19.)
Having considered the parties’ submissions, the Court DENIES Farmers
Alliance’s Motion to Disqualify.
On October 15, 2015, a fatal collision occurred between a pickup truck and
trailer driven by James C. Crowley and an ATV operated by Jackie Ann Newman
on U.S. Highway 12 in Musselshell County, Montana. (Doc. 1-3 at ¶ 4.) Mrs.
Newman was killed in the accident. (Id. at ¶ 13.) The pickup truck was owned by
the Newmans and insured under a Farmers Alliance policy. (Id. at ¶ 2.) Robert
and Jackie Newman were named insureds under the policy. (Id.)
On November 2, 2015, Mr. Newman made a claim for insurance benefits.
(Id. at ¶ 20.) On December 16, 2015, Farmers Alliance denied Mr. Newman’s
first-party claim for medical payment benefits, and the Newman family’s thirdparty claims against Mr. Crowley. (Id. at ¶ 28.)
On February 1, 2016, Mr. Newman filed a Consumer Complaint with the
Montana Commissioner of Securities and Insurance. (Id. at ¶ 30; Doc. 18-3.) In
his complaint, Mr. Newman indicated he was not represented by an attorney.
(Doc. 18-3 at 1.) Farmers Alliance responded to the Insurance Commissioner by
letter on February 11, 2016, again denying coverage. (Doc. 18-4.) On February
18, 2016, the Insurance Commissioner’s office relayed Farmers Alliance’s
response to Mr. Newman. (Doc. 18-5.)
After Mr. Newman’s liability claims had been formally denied twice by
Farmers Alliance, he consulted with and retained attorney Joseph P. Cook on
March 2, 2016. (Doc. 18-2.) Mr. Newman had not consulted with Mr. Cook prior
to either the December 16, 2015 or the February 18, 2016 denials. (Id.)
On March 7, 2016, Mr. Cook wrote a letter to Farmers Alliance notifying the
insurer of his representation of Plaintiffs. (Doc. 11-1.) Mr. Cook wrote a
subsequent policy limits demand letter to Christopher C. Voigt on May 10, 2016.
(Doc. 11-2.) In the letters, Mr. Cook made several statements characterizing the
events surrounding the accident as supporting liability against Mr. Crowley. (Id.)
Farmers Alliance now moves the Court to disqualify Mr. Cook as trial
counsel under Montana Rule of Professional Conduct 3.7. Farmers Alliance
contends the statements Mr. Cook made in his letters are not supported by the
evidence in the record, and therefore, he has inserted himself as a necessary
witness in the case.
Plaintiffs respond that this case solely concerns the actions and inactions of
Farmers Alliance prior to denying the Newman family’s claims in December 2015
and February 2016. Plaintiffs argue Mr. Cook did not become involved in the case
until after the alleged bad faith conduct had occurred, and note that he was not a
witness to any of the contested issues in the underlying case. Plaintiffs also assert
Mr. Cook’s descriptions of the events in his letters are advocacy based upon
interpretation of the reported facts.
Rule 3.7 of the Montana Rules of Professional Conduct provides:
(a) A lawyer shall not act as advocate at a trial in which the lawyer is
likely to be a necessary witness unless:
(1) the testimony relates to an uncontested issue;
(2) the testimony relates to the nature and value of legal
services rendered in the case; or
(3) disqualification of the lawyer would work substantial
hardship on the client.
Mont. R. Prof. Conduct 3.7.
“Because Rule 3.7 can be ‘invoked for tactical advantage, delay or other
improper purposes,’ the movant must make the showing that an attorney is likely
to be a necessary witness ‘with specificity.’” Nelson v. Hartford Ins. Co. of the
Midwest, 2012 WL 761965, *4 (D. Mont. Mar. 8, 2012). The moving party bears
the burden of showing disqualification is necessary. Id. at *3. Courts within this
district have recognized that an attorney in a bad faith case may be subject to
disqualification if the attorney also represented the plaintiff in the underlying suit,
and is likely to be a necessary witness in the subsequent action. See e.g. Nelson,
2012 WL 761965 at *4; Northern Montana Hospital v. Continental Casualty
Company, CV-90-57-GF-GH, Doc. No. 32-1 (D. Mont. May 14, 1993); Pumphrey
v. Cincinnati Insurance Company, CV-05-14-BLG-CSO, Doc. No. 80 (D. Mont.
Mar. 9, 2007). However, “a categorical exclusion from bad faith actions of the
attorney who represented the plaintiff in the underlying action is too broad.”
Nelson, 2012 WL 761965 at *4.
In Northern Montana Hospital, the Court held Rule 3.7 prevented the
plaintiff’s counsel from representing the plaintiff in a third-party bad faith action.
Northern Montana Hospital, CV-90-57-GF-GH, Doc. No. 32-1 at 11-14. The
Court noted the attorneys represented the plaintiff “throughout the underlying
action,” and had directly participated and/or observed events giving rise to the facts
being disputed in the subsequent bad faith case. Id. at 11. The Court also noted
the insurer’s defense to the bad faith claim was that the plaintiff’s attorneys’
actions impacted their decisions in the underlying litigation. Id. The Court held
the plaintiff’s counsels’ testimony would be “without a doubt, material and
relevant, given the fact their strategy and decisions during the course of the
underlying litigation are in issue, having directly impacted on the litigation strategy
employed by [the defendant.]” Id. at 14.
Likewise, in Pumphrey, the Court disqualified the plaintiff’s attorney in a
bad faith case where she had directly participated in negotiations surrounding an
IME of the plaintiff, and in settlement negotiations with the defendant insurance
company in the underlying litigation. Pumphrey, CV-05-14-BLG-CSO, Doc. No.
80 at 3. The Court concluded the attorney was likely to be a necessary witness in
the subsequent bad faith action because the defendants indicated plaintiff’s
counsel’s “decisions and strategy in the underlying case directly impacted the
litigation strategy employed by Defendants’ insured.” Id.
In Nelson, the Court disqualified the plaintiff’s counsel in a bad faith
insurance case because she was the only first-hand witness to some of the
underlying facts, including conversations and interactions she had with insurance
agents during the underlying litigation. Nelson, 2012 WL 761965 at *5. The
attorney was deemed to be a material and relevant witness for both parties. Id.
This case is clearly distinguishable from Nelson, Northern, and Pumphrey
because Mr. Cook was simply not involved in the case during the time frame that
Farmers Alliance’s alleged bad faith occurred. The allegations in the Complaint
are limited to the conduct of Farmers Alliance prior to its denial of the Newman
family’s claims in December 2015 and February 2016. Farmers Alliance had
finished its investigation and twice denied the Newman family’s claims before Mr.
Newman ever consulted with Mr. Cook. Therefore, Mr. Cook did not participate
in, or observe first-hand, any of Farmers Alliance’s actions during the relevant
time period. Moreover, there is no indication Farmers Alliance’s claims handling
during that time was in any way impacted by Mr. Cook’s actions. In addition,
Plaintiffs do not allege bad faith based on Farmers Alliance’s response to Mr.
Cook’s demand letters. Nor are Plaintiffs attempting to re-litigate the underlying
liability case. Although Mr. Cook’s letters expressed his interpretation of the facts
surrounding the underlying accident, he was not a witness to any of the events
surrounding the accident, he has no personal knowledge of the accident, and would
not be qualified to testify regarding the accident in any event.
The Court finds, therefore, that Farmers Alliance has not met its burden to
show with specificity that Mr. Cook is a necessary witness to any of the contested
issues in this case. Accordingly, the motion to disqualify will be denied.
For the foregoing reasons, IT IS HEREBY ORDERED that Farmers
Alliance’s Motion to Disqualify Counsel Joseph P. Cook as Trial Counsel (Doc.
10) is DENIED.
DATED this 10th day of August, 2017.
TIMOTHY J. CAVAN
United States Magistrate Judge
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