Jimenez v. Liberty Northwest Insurance Corporation
ORDER denying 16 Motion to Compel, and setting May 15, 2015 deadline for Liberty Northwest to file summary judgment motion. Signed by Magistrate Judge Jeremiah C. Lynch on 5/4/2015. (TCL, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
JOSE “LEO” JIMENEZ,
LIBERTY NORTHWEST INSURANCE
Before the Court is Plaintiff Jose Jimenez’s (“Jimenez”) motion to compel
discovery responses from Defendant Liberty Northwest Insurance Corporation
(“Liberty Northwest”). For the reasons discussed, the motion is denied without
On December 10, 2003, Jimenez suffered a brain injury while working at his
place of employment in Dillon, Montana. Carlos Sullivan, M.D. assessed Jimenez
as having a whole person impairment rating of 74%. As a result of his injuries and
impairment, Jimenez successfully pursued a claim for workers’ compensation
benefits, which Liberty Northwest pays. Those benefits include 16 hours of
domiciliary care per day.
Liberty Northwest initially disputed, inter alia, the amount of domiciliary
care claimed by Jimenez in the Montana Workers’ Compensation Court. But on
August 16, 2006, the parties entered a Stipulation for Dismissal Without Prejudice
with respect to the referenced litigation. Liberty Northwest agreed to pay for 16
hours per day of domiciliary care to be provided Jimenez by family member and
non-family member care givers. The terms of the Stipulation require Liberty
Northwest to pay for the agreed domiciliary care “until medical information from
[Jimenez’s] treating physician establishes that [his] medical condition has
improved so that a lesser number of daily domiciliary care hours or none is
appropriate for [him].” (Doc. 1-2 at 1.)
Jimenez commenced this action on October 22, 2014, as a result of Liberty
Northwest’s alleged conduct relative to its coverage of his domiciliary care.
Jimenez asserts that after the parties’ entered the August 16, 2006 Stipulation,
Liberty Northwest engaged in “a course of conduct to undermine the
[Stipulation].” (Doc. 1 at 2.) Specifically, he contends Liberty Northwest
contacted Dr. Hansen and his medical staff in an attempt to convince Dr. Hansen
to reduce the number of hours of domiciliary care he believes Jimenez needs.
Additionally, Jimenez alleges Liberty Northwest has conducted surveillance of
Jimenez and his care givers thereby causing him emotional distress.
Jimenez invokes the Court’s diversity of citizenship jurisdiction under 28
U.S.C. § 1332(a). He advances claims against Liberty Northwest for breach of the
covenant of good faith and fair dealing, negligent or intentional infliction of
emotional distress, violations of his rights to privacy and personal dignity as
guaranteed him by the Montana Constitution. Jimenez seeks both compensatory
and punitive damages.
The discovery requests at issue seek to have Liberty Northwest produce its:
(1) records or insurance claims file concerning Jimenez, and (2) claims manuals
and guidance regarding claims management.1
Liberty Northwest opposes Jimenez’s motion to compel on three grounds:
(1) The documents requested are protected by the work product doctrine; (2) The
documents requested are protected by the attorney-client privilege; and (3)
Jimenez is not entitled to seek discovery of documents because his claims are
“premature” and not ripe for review. In a nutshell, Liberty Northwest argues that
under the unfair trade practices provisions of the Montana insurance code –
specifically Mont. Code Ann. § 33-18-242(6)(b) – Jimenez is precluded from
Jimenez’s motion to compel initially sought the production of Liberty
Northwest’s financial information. But Jimenez has withdrawn that aspect of his
prosecuting the claims he is advancing until after a final settlement or judgment is
entered in his favor with respect to his underlying workers’ compensation claim
for domiciliary care. Liberty Northwest further represents that it intends to file a
motion for summary judgment upon that issue.
As a threshold matter, it is necessary to note that the “prematurity” objection
voiced by Liberty Northwest has no basis in the Federal Rules of Civil Procedure.
Rather, Fed. R. Civ. P. 26 provides that after the parties have conferred as required
by Rule 26(f), each party may conduct whatever discovery a party chooses and in
any sequence the party desires. Fed. R. Civ. P. 26(d).
Liberty Northwest was free to raise the issue of a stay of discovery with the
Court at the Rule 16 scheduling conference but apparently chose not to. Liberty
Northwest could also have sought a Rule 26(c) protective order staying discovery
until the issue regarding the viability of Jimenez’s claims could be resolved by
way of a motion to dismiss or for summary judgment. The point to be made is that
Liberty Northwest is not entitled to unilaterally delay discovery until it decides to
file such a motion.
The foregoing point aside, the Court deems it appropriate under the
circumstances presented to construe Liberty Northwest’s legal argument as a
belated request for a protective order staying discovery. These parties have been
litigating Jimenez’s claim for workers’ compensation benefits for nearly a decade.
See Jimenez v. Liberty Northwest Insurance Company, CV 6-164-M-DWM (D.
Mont.). A legitimate question exists regarding which, if any, of the claims
advanced by Jimenez in this action may proceed under Montana law. The interests
of judicial economy will best be served by that question being resolved prior to
wholesale discovery being undertaken by the parties. A determination of what
claims may proceed will bear directly upon the proper scope of discovery.
Jimenez’s complaint arises from Liberty Northwest’s conduct in
investigating, adjusting, and handling his claim for workers’ compensation
benefits – his claim for domiciliary care. As a third-party claimant, Jimenez’s
claims are governed by the Montana Unfair Trade Practices Act (UTPA) at Mont.
Code Ann. § 33-18-101, et seq. See e.g., Brewington v. Employers Fire Insurance
Company, 992 P.2d 237, 239-40 (Mont. 1999); Grenz v. Orion Group, Inc., 795
P.2d 444, 446-47 (Mont. 1990). The UTPA provides a third-party claimant with a
cause of action for an insurer’s violation of specific provisions of the UTPA.
Mont. Code Ann. § 33-18-242(1). And the UTPA does not prohibit a third-party
claimant from also bringing an action for common law bad faith against the
insurer.2 Brewington, 992 P.2d at 240.
The Montana Supreme Court likens a third party claimant’s common law
claim for bad faith to a claim for breach of the duty of good faith and fair dealing.
The UTPA, however, imposes a procedural limitation on the timing of a
third-party’s UTPA claim, providing: “A third-party claimant may not file an
action under this section until after the underlying claim has been settled or a
judgment entered in favor of the claimant on the underlying claim.” Mont. Code
Ann. § 33-18-242(6)(b) (emphasis added). A similar limitation – recognized in
Montana decisional law – applies to a third-party common law bad faith claim.
O’Connor v. National Union Fire Insurance Company of Pittsburgh, PA, 87 P.3d
454, 459 (Mont. 2004). Those claims are subject to dismissal as premature unless
filed after an underlying final settlement or judgment has been entered as to the
specific workers’ compensation benefit dispute that gave rise to the claim of bad
faith. O’Connor, 87 P.3d at 456-57 (discussing Grenz, 795 P.2d at 446-47 and
Poteat v. St. Paul Mercury Insurance Company, 918 P.2d 677, 680 (Mont. 1996)).
Here, Jimenez’s complaint has its genesis in Liberty Northwest’s conduct in
investigating, adjusting, and handling of his workers’ compensation claim for
domiciliary care. And the parties apparently agree Jimenez’s domiciliary care
claim has not been finally resolved through settlement or judgment. Thus, to the
extent his claims for relief stated in his complaint are directly predicated upon
Brewington, 992 P.2d at 240. See also Thomas v. Northwestern National
Insurance Company, 973 P.2d 804, 810 (Mont. 1998) (equating a breach of the
implied covenant of good faith and fair dealing with “what was commonly known
as the tort of bad faith”).
Liberty Northwest’s conduct in evaluating Jimenez’s need for domiciliary care, his
causes of action advanced in this case would be subject to the limitation in Mont.
Code Ann. § 33-18-242(6)(b). But the same limitation may not apply to the claims
of Jimenez to the extent those claims are based upon alleged tortious conduct that
stands independent of, or unnecessary to Liberty Northwest’s investigation,
adjusting and handling of Jimenez’s workers’ compensation claim for domiciliary
care. At this stage of the litigation, however, there is not sufficient information
before the Court for it to assess the precise factual basis for Jimenez’s claims.
For the reasons discussed, IT IS ORDERED that Liberty Northwest’s
pleadings, construed as a Fed. R. Civ. P. 26(c) motion for a protective order, is
GRANTED. As a result, Jimenez’s motion to compel is DENIED without
prejudice to refiling after resolution of Liberty Northwest’s proposed summary
IT IS FURTHER ORDERED that Liberty Northwest shall file its proposed
summary judgment motion on or before May 15, 2015.
DATED this 4th day of May, 2015.
Jeremiah C. Lynch
United States Magistrate Judge
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