Ayotte v. American Economy Insurance Company

Filing 100

ORDER denying 96 Plaintiff's Motion to Vacate Order concerning Ridley Payments. Signed by Judge Richard F. Cebull on 12/21/2012. (EMA)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BILLINGS DIVISION
SCOTT AYOTTE,
CV 09-57-BLG-RFC
Plaintiff,
vs.

ORDER

AMERICAN ECONOMY
INSURANCE COMPANY,
Defendants.

INTRODUCTION
This matter comes before the Court upon Plaintiff Scott Ayotte’s
(“Plaintiff”) Motion to Vacate Order concerning the Court’s ruling that he was not
entitled to Ridley payments.1 Doc. 96. The underlying litigation in this case
involved a 2007 accident in which a windstorm caused an advertising sign to

1

The term “Ridley payments” refers to Ridley v. Guaranty National Insurance Co., 951
P.2d 987 (Mont. 1997), in which the Montana Supreme Court ruled that, prior to settlement or
judgment of a tort claim, an insurer has an obligation to pay medical expenses incurred by an
injured third-party tort victim when the liability of its insured is reasonably clear.
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injure Plaintiff. Plaintiff filed the present action seeking a declaratory judgment
and bad faith damages against Defendant American Economy Insurance Company
(“AEIC”). The issues were eventually winnowed down to whether AEIC had a
duty to make Ridley payments to Plaintiff and a bad faith claim that might arise for
failure to tender such payments.
On December 10, 2010, this Court adopted the September 23, 2010 findings
and recommendations of U.S. Magistrate Judge Ostby, which determined that the
AEIC owed no duty to provide Plaintiff with Ridley payments because the
insured’s underlying liability to the Plaintiff was not reasonably clear as a matter
of law. Doc. 88. This conclusion necessarily extinguished Plaintiff’s common
law bad faith claim. Id. at 3.
Plaintiff timely appealed this Court’s order to the Ninth Circuit Court of
Appeals. In the meantime, Plaintiff settled with the insured, moved to dismiss the
appeal as moot and requested that the Ninth Circuit vacate this Court’s summary
judgment order. The Ninth Circuit dismissed the appeal as moot but declined to
vacate and instead remanded the matter to this Court to consider whether vacatur
was appropriate.
Six months later, and absent a ruling from this Court, Plaintiff filed a bad
faith claim in state court against AEIC which was ultimately remanded to federal
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court before Judge Molloy. See Ayotte v. AEIC, CV-12-61-M-DWM.

That case

was stayed pending this Court’s decision on vacatur.
DISCUSSION
In the Ninth Circuit, “[m]ootness by happenstance provides sufficient
reason to vacate.” NASD Dispute Resolution, Inc. v. Jud. Council of State of Cal.,
488 F.3d 1065, 1068 (9th Cir.2007) (quoting U.S. Bancorp Mortg. Co. v. Bonner
Mall Pshp., 513 U.S. 18, 25 n. 3 (1994)). “[I]f the party who lost below did not
cause the case to become moot, that is, if happenstance or the actions of the
prevailing party ended the controversy, vacatur remains the standard form of
relief.” Native Ecosystems Council v. Weldon, 2012 WL 5986475
(D.Mont.,2012) (Weldon) (quoting N. Cal. Power Agency v. Nuclear Regulatory
Commn., 393 F.3d 223, 225 (D.C.Cir.2004). Furthermore, the United States
Supreme Court determined that vacatur is an “extraordinary remedy” which should
be buttressed with “equitable entitlement.” U.S. Bancorp Mortgage Co. v. Bonner
Mall Partnership, 513 U.S. 18, 26, (1994).
Plaintiff argues that the Ninth Circuit rendering the appeal before it moot
mandates vacatur of this Court’s Order denying Plaintiff’s Motion for Summary
Judgment seeking a declaration that he is entitled to Ridley payments. The Court
finds Plaintiff’s position unavailing. After a review of the salient facts, this Court
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is disinclined to vacate its order. Plaintiff presents no persuasive argument as to
why vacatur is necessary under the circumstances or compelled by equity.
Plaintiff’s argument that he is left with an unreviewable finding that liability
was not reasonably clear–is not persuasive. The facts and circumstances which
prompted this Court’s conclusion remain the same. This case was not rendered
moot through happenstance. As noted by Judge Molloy in Weldon, “[t]he typical
scenario where a losing party causes the case to become moot occurs when a
losing party settles the case while it is on appeal.” Weldon at *2 (citation omitted).
The cases cited by Plaintiff are distinguished because all contain an instance of
“happenstance” rendering the appeal moot. Indeed, it logically follows that in
instances where an appellate court is poised to rule, and happenstance extinguishes
the controversy, vacatur might well be necessary. In the present case, however,
there is no need to clear the path for future litigation. This matter has been
litigated. The mootness of Plainitff’s appeal is a direct consequence of his
willingly settling with the insured and moving to dismiss the appeal. Thus,
vacatur is inappropriate.
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CONCLUSION
For the foregoing reasons, Plaintiff’s Motion to Vacate Order ( Doc. 96) is
DENIED. The clerk of Court shall notify the parties of the making of this Order.
DATED this 21st day of December, 2012.

/s/ Richard F. Cebull
Richard F. Cebull
United States District Judge

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