School Dist. v. Seventeenth Jud. Dist.

97-214

IN THE SUPREME COURT OF THE STATE OF MONTANA

No. 97-214

________________

MALTA PUBLIC SCHOOL DISTRICT )
A AND 14, )
)
Petitioners, )
) O P I N I O N
v. ) A N D
) O R D E R
THE MONTANA SEVENTEENTH )
JUDICIAL DISTRICT COURT, )
PHILLIPS COUNTY, MONTANA, )
JUDGE JOHN WARNER, PRESIDING, )
)
Respondent. )

________________

The Malta Public School District A and 14 (School District), by counsel, has
filed
its application requesting that this Court issue a writ of supervisory control and
order in
the underlying case entitled Malta Public School District A and 14, Plaintiff v.
United
States Fidelity & Guaranty Company, a Maryland corporation, and the Phillips County
Insurance, Defendant, Cause No. DV-96-049, requiring the District Court to impanel
one
jury to hear both portions of the bifurcated case without any delay between trial of
the
bifurcated parts. The School District's request for this Court's intervention
results from
the District Court's April 15, 1997 Order denying the School District's motion to
impanel
one jury to hear both bifurcated claims, without delay between trial of each claim.
PROCEDURAL BACKGROUND
On December 24, 1995, fire damaged the Junior and Senior High School in Malta,
Montana. Having purchased an insurance policy from United States Fidelity & Guaranty
Company (USF&G) covering real and personal property, including the Malta Junior and
Senior High School, the School District contacted USF&G to receive payment under the
policy to finance rebuilding the school. The parties disputed the amounts available
under
the insurance policy and consequently, in May 1996, the School District filed suit
against
USF&G alleging breach of insurance contract.
On March 14, 1997, the District Court heard oral argument regarding numerous
motions raised by the parties. After the hearing, the District Court ruled on these

file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-214%20Opinion.htm (1 of 11)4/12/2007 12:23:20 PM
 97-214

motions in its March 24, 1997 Order. Specifically, the District Court granted the
School
District leave to file an amended complaint raising a claim under the Montana Unfair
Trade Practices Act, 33-18-242, MCA. Additionally, pursuant to USF&G's motion,
the District Court bifurcated the breach of contract and bad faith claims. On April
15,
1997, the District Court denied the School District's motion to try the bifurcated
case
before the same jury and to begin the bad faith trial immediately after the breach of
contract trial. In response to the April 15, 1997 Order, the School District filed
this
application for writ of supervisory control.
DISCUSSION
The School District argues that this Court should accept jurisdiction over
this
application for writ of supervisory control. The School District contends that
supervisory
control is necessary in this case because the District Court's April 15, 1997 Order
"constitutes such a mistake of law so as to cause gross injustice to the Malta School
District such that there is no remedy or appeal or relief that can be obtained or
granted.
. .." USF&G responds that the School District's application for writ of supervisory
control should be denied. USF&G argues that the District Court, in its April 15,
1997
Order, did not make a mistake of law, but rather properly exercised its broad
discretion
to order that the bifurcated claims be tried at separate times to separate juries.
In Plumb v. Fourth Jud. Dist. Court (Mont. 1996), 927 P.2d 1011, 53 St.Rep.
1187, we clarified the standard for our exercising supervisory control under Article
VII,
Section 2(2), of the Montana Constitution and under Rule 17, M.R.App.P. Citing State
ex rel. Whiteside v. Dist. Court (1900), 24 Mont. 539, 63 P. 395, we stated that,
without
trying to define its particular functions, supervisory control enables this Court
"to control
the course of litigation in the inferior courts where those courts are proceeding
within
their jurisdiction, but by a mistake of law, or willful disregard of it, are doing a
gross
injustice, and there is no appeal, or the remedy by appeal is inadequate." Plumb,
927
P.2d at 1014.
Having reviewed the relevant portions of the record and the briefs submitted
in
support of and in opposition to the School District's application, we conclude on
the facts
here that the School District has no adequate remedy by appeal from the District
Court's
order. Therefore, supervisory control is proper in this case. Accordingly, we
accept
jurisdiction to review the substantive issues raised in this case by writ of
supervisory

file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-214%20Opinion.htm (2 of 11)4/12/2007 12:23:20 PM
 97-214

control.
While the School District does not challenge the District Court's March 24,
1997
Order bifurcating the breach of contract and bad faith claims, the School District
does
argue that the District Court, in its April 15, 1997 Order, abused its discretion by
denying the School District's motion to try both bifurcated claims before the same
jury
and to begin the bad faith trial immediately after the breach of contract trial.
Specifically, the School District argues that by impaneling two separate juries and
planning to allow approximately sixty days to lapse between the trial of both
claims, the
District Court has "severely prejudiced" the School District by denying the School
District "a speedy remedy, tantamount to a denial of justice." Furthermore, the
School
District contends that there is no adequate remedy by appeal from having to try this
case
twice.
Relying on Martin v. Bell Helicopter Co. (1980), 85 F.R.D. 654, the School
District asserts that the breach of contract and bad faith claims are "inextricably
intertwined and related factual matters" and should not be separated for
consideration by
two different juries. Furthermore, the School District contends that "putting the
Malta
School District through two lengthy trials, with the same witnesses, to two totally
separate jury panels, would do great violence to judicial economy, would be totally
unfair
and prejudicial to the Malta School District, would confuse rather than clarify the
issues,
and great inconvenience would accrue to Malta Schools. . .." Rather, the School
District
suggests that if both issues were tried before one jury, the bad faith claim would
only
require one to two days to complete, if immediately tried after the conclusion of the
breach of contract claim, and would thereby avoid any unfairness or prejudice to the
School District.
USF&G responds that the School District's argument that separate trials before
separate juries will be non-economical and inconvenient is unpersuasive. Rather,
USF&G
argues that interests involving economy and convenience "must yield to the right to
a fair
and impartial trial to all litigants." USF&G contends that to require an immediate
second
trial before the same jury defeats the bifurcation objective to eliminate any
prejudice to
USF&G. Accordingly, USF&G asserts that the District Court did not abuse its
discretion by ordering that each claim be tried at separate times to separate
juries.
Consequently, USF&G argues that this Court should deny the School District's
application for writ of supervisory control.
In its March 24, 1997 Order, the District Court granted the School District's
motion to amend its complaint to raise a claim under the Montana Unfair Trade

file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-214%20Opinion.htm (3 of 11)4/12/2007 12:23:20 PM
 97-214

Practices
Act and also granted USF&G's motion to bifurcate this bad faith claim from the
original
breach of contract claim as authorized by 33-18-242, MCA. Subsequently, in its
April
15, 1997 Order, the District Court denied the School District's motion to try both
bifurcated claims before the same jury and to begin the bad faith trial immediately
after
the breach of contract trial. Section 33-18-242, MCA states in pertinent part:
(1) An insured or a third-party claimant has an independent cause
of action against an insurer for actual damages caused by the insurer's
violation of subsection (1), (4), (5), (6), (9), or (13) of 33-18-201
[prohibiting unfair claim settlement practices].
. . ..

(6)(a)An insured may file an action under this section, together with
any other cause of action the insured has against the insurer. Actions may
be bifurcated for trial where justice so requires.
While 33-18-242(6)(a), MCA, authorizes bifurcation of actions for trial, it
provides no
guidance as to when bifurcation is proper, nor does the statute address the issue
here--i.e.
if the actions are bifurcated, should or may the cases be tried to different juries.
Consequently, we look to Rule 42(b), M.R.Civ.P., for guidance. See Britton v.
Farmers Ins. Group (1986), 221 Mont. 67, 721 P.2d 303. Rule 42(b), M.R.Civ.P.,
provides:
The court in furtherance of convenience or to avoid prejudice may order a
separate trial of any claim, cross-claim, counterclaim, or third-party claim,
or of any separate issue or of any number of claims, cross-claims,
counterclaims, third-party claims, or issues.
Under Rule 42(b), M.R.Civ.P., the decision as to whether to bifurcate a trial
is
a matter left to the "broad discretion" of the district court. State ex rel.
McGinnis v.
Dist. Court (Mont. 1983), 673 P.2d 1207, 1208. In State ex rel. Fitzgerald v. Dist.
Court of Eighth Jud. Dist. (1985), 217 Mont. 106, 703 P.2d 148, we explained that
Rule
42(b), M.R.Civ.P., is worded differently than Rule 42(b), Fed.R.Civ.P., because the
federal rule includes additional grounds for granting a separate trial and includes a
provision for the inviolate right of trial by jury. Fitzgerald, 703 P.2d at 155.
However,
we held that despite the lack of a provision for the right of trial by jury in
Montana's
rule, "there should be no difference in result under the Montana rule when an order
for
separate trial is considered [because] Art. II, Section 26, 1972 Montana Constitution
provides that 'the right of trial by jury is secured to all and shall remain
inviolate.'"
Fitzgerald, 703 P.2d at 155.
While we have previously addressed the issue of presenting for decision
bifurcated
issues to one jury seriatim, we have not considered the issue of presenting for

file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-214%20Opinion.htm (4 of 11)4/12/2007 12:23:20 PM
 97-214

decision
bifurcated issues to separate juries. See Fitzgerald, 703 P.2d 148; Britton, 721
P.2d 303.
Consequently, we conclude that it is appropriate that we adopt the rule set forth in
Martin
concerning bifurcation of issues under one case and presentation of those issues to
separate juries:
A decision whether to use the same or separate juries must be made,
therefore, on an individual case basis. It must be considered whether the
issues are intertwined or are distinct; then (if distinct), the interests of
judicial economy, fairness to the parties, clarity of the issues, and
convenience must also be weighed.
Martin, 85 F.R.D. at 659-60. Under this analysis, the first factor to be considered
is
whether the issues in a case are intertwined or distinct. If the issues are
intertwined,
bifurcation of those issues under Rule 42(b), M.R.Civ.P., whether for decision by one
jury seriatim or by separate juries, would result in extended and needless
litigation, and,
therefore, would constitute an abuse of discretion by the district court. See
Fitzgerald,
703 P.2d at 156; Martin, 85 F.R.D. at 659-60. Consequently, only if the issues are
distinct is bifurcation proper under Rule 42(b), M.R.Civ.P. See Fitzgerald, 703
P.2d at
156. However, to next determine whether presentation of the bifurcated issues to
separate juries is proper, the second set of factors set forth in Martin must be
weighed--
i.e., the interests of judicial economy, fairness to the parties, clarity of the
issues, and
convenience. See Martin, 85 F.R.D. at 659-60.
Here, it is conceded that bifurcation of the breach of contract and bad faith
claims
is appropriate. Therefore, we will not address the issue of whether the issues are
intertwined or distinct. However, the issue remains whether the District Court
abused
its discretion by ordering that each bifurcated claim be tried before a separate
jury. As
discussed above, we must weigh certain factors--the interests of judicial economy,
fairness to the parties, clarity of the issues, and convenience--to resolve this
issue. See
Martin, 85 F.R.D. at 659-60. The School District points out that if one jury hears
both
bifurcated claims, the bad faith claim should only take one to two days to finish if
immediately tried after the conclusion of the breach of contract claim. In
contrast, the
School District suggests that to try the bad faith claim to a separate jury would
require
a much longer period of time because the second jury must be educated on the
underlying
contract claim to understand the bad faith claim. In other words, the parties would
have
to relitigate the entire case with virtually the same evidence and with virtually

file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-214%20Opinion.htm (5 of 11)4/12/2007 12:23:20 PM
 97-214

the same
witnesses who would be put to the inconvenience and hardship of a second trial.
Based upon the particular circumstances of this case, we conclude that the
District
Court abused its discretion by denying the School District's motion for the District
Court
to impanel one jury to hear both portions of the bifurcated case without any delay
between trial of the bifurcated parts. Upon consideration of the second set of
factors
under Martin, we conclude that none of the factors support a decision requiring two
separate juries. As the School District points out, only by trying the bad faith
claim
immediately after the breach of contract claim to the same jury will the parties
avoid
relitigating the entire matter. Such a result would further the interests of
judicial
economy, ensure fairness to the parties, maintain clarity of the issues and provide
convenience to both the court and the parties.
The Dissent concludes that supervisory control is not proper in this case
because
the first part of the Plumb two-part test for exercising supervisory control is not
met.
While we agree with the Dissent that the question before us involves a discretionary
ruling rather than a "mistake of law," we disagree that this ruling will not result
in a
gross injustice. In Plumb, after concluding that the district court was proceeding
based
on a mistake of law by allowing the Defendant to blame an unnamed third party for the
Plaintiff's injuries, we concentrated on the inadequacy of any remedy by appeal to
explain
our exercise of supervisory control. We explained that supervisory control was
proper
because the district court's mistake would cause a gross injustice to occur:
[T]he course of discovery will be affected, the cost of preparation and trial
will be affected, settlement by the parties will be rendered more difficult,
and the value of any verdict will be questionable, meaning additional time
and expense for a resolution of the issue by appeal and the inevitable
subsequent litigation. Therefore, we conclude that any remedy available to
the Plumbs by appeal is inadequate, and that the denial of a speedy remedy
by supervisory control would be a denial of justice.
Similarly here, the District Court's discretionary ruling denying the School
District's motion to try both bifurcated claims to one jury seriatim will result in
a gross
injustice which cannot be remedied on appeal. That is, by requiring that the
bifurcated
claims be tried to separate juries at separate times, the District Court is denying
the
School District a speedy remedy. Plainly, this Court's refusal to exercise
supervisory
control would force the School District to appeal this issue after trial of both
bifurcated
claims--i.e. after prejudice to the School District has occurred and for which no

file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-214%20Opinion.htm (6 of 11)4/12/2007 12:23:20 PM
 97-214

adequate
remedy by appeal exists. Consequently, we consider supervisory control proper in
this
case.
Additionally, we disagree with the Dissent's assertions that by accepting
supervisory control over discretionary rulings, such as the one at issue, "we simply
invite
a flood of applications for supervisory control over purely discretionary decisions
by trial
courts." We have previously exercised supervisory control over cases involving
discretionary rulings, such as those discretionary rulings pertaining to discovery
issues.
See e.g., Burlington Northern v. Dist. Court (1989), 239 Mont. 207, 779 P.2d 885;
Kuiper v. Dist. Court (1981), 193 Mont. 452, 632 P.2d 694 (Kuiper I); Jaap v. Dist.
Court (1981), 191 Mont. 319, 623 P.2d 1389. Our exercise of supervisory control over
this case, as well as previous cases involving discretionary rulings, in no way
obligates
us to accept jurisdiction over all cases involving discretionary rulings. Rather,
"[i]n
matters involving supervisory control, this Court has followed the practice of
proceeding
on a case-by-case basis though we are careful not to substitute the power of
supervisory
control for an appeal. Plumb, 927 P.2d at 1015 (quoting State ex rel. Deere & Co. v.
Dist. Court (1986), 224 Mont. 384, 399, 730 P.2d 396, 406).
Furthermore, despite the Dissent's assertions to the contrary, our conclusion
that
the District Court abused its discretion by denying the School District's motion to
try both
bifurcated claims before the same jury is based upon our consideration of the
totality of
the Martin standard. As stated in Martin:
While economy and convenience may properly be considered in the
decision to bifurcate, neither is the ultimate objective. "A paramount
consideration at all times in the administration of justice is a fair and
impartial trial to all litigants. Considerations of economy of time, money
and convenience of witnesses must yield thereto."
Martin, 85 F.R.D. at 658. As the Dissent points out, the District Court decided to
try
the bifurcated claims at separate times to separate juries based on its "sensitivity
to the
potential prejudice faced by the Defendants in trying both components of the case to
the
same jury. [Emphasis added.]" Yet, the District Court failed to further articulate
what
prejudice USF&G potentially faces. Rather, in an effort to avoid any potential
prejudice
against USF&G, the District Court instead created actual prejudice against the School
District and thereby abused its discretion.
That is, as discussed previously, to try the bad faith claim to a separate
jury would
necessarily require educating the second jury about the underlying breach of contract

file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-214%20Opinion.htm (7 of 11)4/12/2007 12:23:20 PM
 97-214

claim. To do this, the School District must relitigate and USF&G must again defend
the
entire case using essentially the same witnesses and the same evidence.
Effectively, the
District Court's decision prejudices both parties. Consequently, only by trying the
bad
faith claim immediately after the breach of contract claim to the same jury will the
parties
avoid relitigating the entire case. Furthermore, because the breach of contract and
bad
faith claims remain bifurcated, USF&G will continue to enjoy protection from any
potential prejudice associated with the bad faith claim. Only this course of action
will
further the interests of judicial economy, ensure fairness to the parties, maintain
clarity
of the issues and provide convenience to both the court and the parties. And, only
this
course of action will insure a "fair and impartial trial to all litigants."
Accordingly, in the underlying case, Malta Public School District A and 14,
Plaintiff v. United States Fidelity & Guaranty Company, a Maryland corporation, and
the Phillips County Insurance, Defendant, Cause No. DV-96-049, the District Court
shall
impanel one jury to hear both bifurcated claims seriatim. The trial of the breach of
contract claim shall commence as scheduled and the trial of the bad faith claim shall
follow immediately thereafter.
DATED this 2nd day of June, 1997.

/S/ J. A. TURNAGE
/S/ JAMES C. NELSON
/S/ JIM REGNIER
/S/ TERRY N. TRIEWEILER
/S/ W. WILLIAM LEAPHART
/S/ WILLIAM E. HUNT, SR.

Justice Karla M. Gray dissenting.

I respectfully dissent from the Court's opinion and order. It is my view
that, in
accepting supervisory control over the District Court, we are departing from the
standard
for supervisory control we so recently clarified in Plumb and inappropriately
intruding
into the District Court's decisions regarding trial administration, decisions best
left to the
court nearest to--and most familiar with--the case. In addition, even assuming the
propriety of supervisory control here, I would conclude that the District Court did
not
abuse its discretion in denying the School District's motion to try the breach of

file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-214%20Opinion.htm (8 of 11)4/12/2007 12:23:20 PM
 97-214

contract
and UTPA claims to the same jury seriatim.
As the Court observes, the Plumb standard for supervisory control allows us to
step into matters at the trial level where trial courts "by a mistake of law, or
willful
disregard of it, are doing a gross injustice, and there is no appeal, or the remedy
by
appeal is inadequate." This is clearly a two-part test, requiring that a gross
injustice be
occurring via a legal mistake or disregard of the law and that there is no--or only
an
inadequate--remedy by appeal. In my opinion, the question before us does not involve
a "mistake of law;" indeed, the Court concedes as much. Nor, in my view, is there a
resulting gross injustice. Therefore, the first part of the Plumb test for
exercising
supervisory control is not met.
No one suggests that the District Court's decision at issue here is a purely
legal
question or that the District Court disregarded the law in making its decision to
have the
case tried to two separate juries. Rather, it is clear that this is a decision
within the trial
court's broad discretion in controlling matters relating to trial administration.
Since
discretionary trial court rulings encompass " 'the power of choice among several
courses
of action, each of which is considered permissible' " (Steer, Inc. v. Department of
Revenue (1990), 245 Mont. 470, 475, 803 P.2d 601, 603-04), it is my view that
discretionary rulings do not properly come within the Plumb standard.
In addition, even if an abuse of discretion constituted a "mistake of law" of
the
type envisioned in Plumb, it is simply not the case that every abuse of discretion
results
in a "gross injustice" requiring immediate review by this Court. It is my view
that, in
accepting such matters on supervisory control, we are unnecessarily intruding into
the
trial courts' domain. Furthermore, in doing so, we simply invite a flood of
applications
for supervisory control over purely discretionary decisions by trial courts. In
fairness to
the litigants who are before us in ever-increasing numbers of appeals, and to our
ability
to manage that appellate caseload well from both timeliness and quality
perspectives, we
can ill afford to exponentially expand the number of original jurisdiction
proceedings
requiring our attention.
Moreover, while I do not disagree with the Martin standard, it is my view
that,
in applying that standard, the Court does not establish an abuse of the District
Court's

file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-214%20Opinion.htm (9 of 11)4/12/2007 12:23:20 PM
 97-214

discretion, but merely substitutes its own discretion for that of the District
Court. Martin
is clear that considerations of economy of time and convenience of witnesses must
yield
to the " 'paramount consideration . . . [of] a fair and impartial trial to all
litigants.' "
Martin, 85 F.R.D. at 658. In this regard, the District Court assessed both partiesþ
interests and premised its order denying the School District's motion to try both the
breach of contract and UTPA actions to the same jury specifically on its
"sensitivity to
the potential prejudice faced by the Defendants in trying both components of the
case to
the same jury." In other words, the District Court weighed the potential for
prejudice
to the substance of the defendantþs case against the inconvenience to the School
District
and exercised its discretion in favor of the defendant. This Court converts the
School
Districtþs mere inconvenience into actual prejudice and weighs it more heavily than
the
defendantþs potential substantive prejudice. The Court then determines that the
District
Court--the court most familiar with the case--abused its discretion merely because
trying
the UTPA claim to a different jury would take more time and inconvenience witnesses
for the School District. I cannot agree.
In addition, the record reflects that the breach of contract case is
scheduled for trial
this month and that the UTPA claim, only amended into the School District's complaint
several months ago, is far from ready for trial. In any event, the District Court's
order
of April 15, 1997, makes it clear that the court's calendar will not accommodate
trial of
the UTPA claim immediately following the breach of contract claim. Thus, it appears
that the Court's conclusion that the trial on the UTPA claim must be to the same
jury and
must follow immediately after the trial on the breach of contract claim will result
in a
delay in trying the breach of contract claim. The Court does not address these
matters
and it escapes me how the School District's interests in resolving its underlying
claim
and recovering the insurance proceeds for which it bargained--whatever the jury may
determine them to be--are advanced by such a result.
In summary, I disagree that this case meets our recently clarified test for
accepting
a case on supervisory control. That test apparently exists no more. In addition, I
disagree that any abuse of discretion has been established under Martin. I would
deny
the School District's application for a writ of supervisory control.

/S/ KARLA M. GRAY

file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-214%20Opinion.htm (10 of 11)4/12/2007 12:23:20 PM
97-214

file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-214%20Opinion.htm (11 of 11)4/12/2007 12:23:20 PM