The facts at issue in Draggin’ Y Cattle Company v. Addink, No. DA15-0354 (Mont. May 3, 2016) are really bizarre. And the chances of them being repeated are about one in -- never. But, even so, I couldn’t help myself and selected it for CO.

The story, with some steps omitted because not relevant here, goes like this. In January 2011, Peters filed a complaint against Junkermier, alleging multiple counts stemming from tax services Junkermier performed for Peters. Junkermier tendered his defense to New York Marine under a professional liability policy. New York Marine undertook Junkermier’s defense under a reservation of rights. In December 2013, following some litigation between Peters and Junkermier, concerning statute of limitations, a Judge Huss assumed jurisdiction of the case. In November 2014, Peters and Junkermier entered into a settlement agreement --10 million bucks -- and stipulation for entry of judgment without New York Marine’s participation. The District Court issued an order scheduling a hearing on the stipulated settlement’s reasonableness.

[If the hows and whys of a $10 million settlement, by a party being defended under a ROR, and without its insurer’s participation, was an issue, it was not discussed in the opinion.]

Getting back to our story… New York Marine filed a motion to intervene in the reasonableness hearing. It was granted. In March 2015, the trial court entered findings of fact, conclusions of law and an order finding that the stipulated settlement amount of $10,000,000 was reasonable. Junkermier was not liable for the stipulated settlement.

New York Marine then asserted -- for the first time -- that Judge Huss erred by not disclosing an apparent conflict of interest. “New York Marine claims that the alleged conflict stems from a complaint that a former court reporter filed against Judge Huss in February 2014. In October 2014—during the pendency of this case—Judge Huss individually entered into a stipulation and confession of judgment. The Office of the Court Administrator (OCA) had been paying for Judge Huss’s defense and Judge Huss allegedly entered into the stipulated settlement without the OCA’s participation or knowledge. On November 17, 2014—four days after Peters and Junkermier entered into their stipulated settlement—the OCA filed a complaint against Judge Huss in a Helena district court seeking a declaration that it had no duty to defend or indemnify him. In its complaint, the OCA specifically contested the stipulated settlement amount’s reasonableness. Judge Huss did not disclose the stipulated settlement or his dispute with the OCA to the parties in the case at issue. Judge Huss resigned effective January 1, 2016.”

OK, let’s review this -- New York Marine is fighting the reasonableness of a settlement entered into by an insured without consent. And the judge hearing that case, and who decided that New York Marine’s insured’s $10,000,000 non-consent settlement was reasonable, was, himself, at the same time, arguing that his own settlement, undertaken without his insurer’s consent, was reasonable. Do you know why this is all true? Because you couldn’t make it up.

New York Marine’s argument went like this: “Judge Huss’s potential conflict of interest raises reasonable questions regarding his impartiality. New York Marine contends that the ‘undeniable parallels between Judge Huss’ interests in the litigation he was (and still is) defending in his personal capacity and [Peters’s] interests in not permitting [New York Marine] to meaningfully challenge the stipulated settlement’ create ‘an apparent and significant conflict of interest.’ As such, New York Marine claims that Judge Huss was required, at a minimum, to disclose his apparent conflict of interest to the parties under the Montana Code of Judicial Conduct.”

After concluding that New York Marine had the right to raise the disqualification issue for the first time on appeal, the Montana Supreme Court turned to whether Judge Huss should have disclosed his own situation to the parties.

The court was not persuaded by Peters’s argument against disqualification – that it would be like requiring disqualification, from a car accident case, of every judge who had himself ever been involved a car accident. The court saw it differently: “A judge’s average personal experiences—including being involved in a car accident—undoubtedly shape the judge’s perspective. This does not mean, however, that such experiences necessarily preclude a judge from maintaining an ‘open mind in considering issues that may come before a judge.’ . . . As such, a judge’s average personal experiences do not generally lead to reasonable questions about the judge’s impartiality and subsequent disqualification under Rule 2.12.”

But this, the court concluded, was not an “average personal experience.” “Judge Huss presided over a hearing in which an insurer questioned the reasonableness of a stipulated settlement while the reasonableness of his own personal stipulated settlement was being questioned by his insurer. The timing and nature of the circumstances reasonably raise concerns regarding Judge Huss’s ability to maintain ‘an open mind in considering’ the reasonableness of the stipulated settlement at issue here.”

Thus, the Montana Supreme Court held that, under the circumstances, Judge Huss was required to disclose to the parties his participation in his personal stipulated settlement.

The odds of a judge hearing a case, concerning the reasonableness of a stipulated settlement without insurer consent, when the judge, at that very same time, was personally litigating that same issue are Powerball-like.