Montana Law Week

The Weekly Digest of Montana Law

Archives for March 2009

Insurance, trucker’s disability, SSD condition

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INSURANCE: Alabama law applied to pre-enrollment tort/contract reformation claims in truck driver’s suit for continuing disability benefits which policy excludes for failure to qualify for SSD… fact issues as to whether trucking company office manager was apparent agent for insurer… fact issues as to claims for fraud, negligent misrepresentation, estoppel… fact issues as to fraud preclude policy reformation, acceptance [Read more…]

Credit card, “bill stuffer” arbitration notice

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CREDIT CARD: Insufficient notice in “bill stuffer” arbitration clause, amendment void… Lympus reversed.

Santana Kortum-Managhan opened a credit card account with Herbergers in 10/98 after an employee asked if she wanted to save 10% on her purchase by filling out an application. The application did not include terms, and Kortum-Managhan claims she never signed any agreement that included terms. She received her card issued by National Bank of the Great Lakes and a Revolving Credit Card Agreement which did not include an arbitration clause but provided that Herbergers could unilaterally change terms including the interest rate and that continued use of the card constituted agreement to a change. Kortum-Managhan sued Herbergers in 9/04 alleging violations of the FDCPA and UTP/CPA for inaccurately reporting to credit bureaus that she had several accounts with Herbergers and its affiliates which impacted her credit score and impeded her application to the Montana Bar. Herbergers moved to dismiss and compel arbitration, alleging that it had mailed a “bill stuffer” in 10/99 with changes in the agreement including a binding arbitration provision to which she agreed through continued use of her account. Kortum-Managhan contended that she either did not receive the change in terms or did not notice it “because Herbergers is continually stuffing her monthly billing statement with copious piles of junk mail” that she routinely tosses. Judge Lympus granted Herbergers’ motion to compel arbitration and dismissed, concluding that Kortum-Managhan’s continued use of her account after Herbergers notified her of the change constituted an agreement to arbitrate and jury waiver. Kortum-Managhan appeals.

Lympus erred in compelling arbitration and dismissing. The “bill stuffer” is ambiguous and misleading because it seeks to waive the cardholder’s constitutional rights with a clause blended into the end of a document when bold type, capital letters, and larger fonts are used to draw attention to other clauses. We agree with Kortum-Managhan that Herbergers attempted to lull her into waiving her rights and that attempting to change terms of a contract through a “bill stuffer” is “sneaky and unfair.” Badie (Cal. 1998) stated:

the language of the “bill stuffer,” as well as the method used to disseminate it, suggests that it was designed to downplay the true significance of the [arbitration provision], and to reduce the likelihood that customers would notice and object to the new provision.

Herbergers cites cases from other jurisdictions. However, only Marsh (ND Tex. 2000) is factually similar, and although the notice which included the arbitration agreement was sent as a “bill stuffer,” First USA submitted ample unrefuted evidence that there was very little chance the consumer would not have received the information or would not have noticed it.Herrington (SD Miss. 2000) states that the consumer was mailed a letter along with the revised agreement. In Goetsch (WDNC 2000), Hill (7th Cir. 1997), and Stiles (MD Ala. 1998) the consumers admitted receiving the arbitration change. Making a change in a credit agreement in a “bill stuffer” does not provide sufficient notice on which acceptance of the change can be expressly or implicitly found. Herbergers’ unilateral attempt to amend its cardholder agreement to include an arbitration clause was ineffective.

Nelson, Warner, Cotter, Leaphart, Morris.

Rice dissented: “This case serves as a reminder that people should read their mail — especially when it comes from their credit card companies.” Hutcherson (Ill. 2003).

Kortum-Managhan entered an agreement with a unilateral change procedure, Herbergers acted according to this provision, and Kortum-Managhan failed to read the notice and continued to accept benefits of the agreement by using the card. She did not establish that the change was beyond her expectations or unconscionable.

Kortum-Managhan v. Herbergers, DA 06-566, last brief 12/18/06, decided 3/17/09.

William Managhan (Managhan & Kortum-Managhan Law Firm), Kalispell, for Kortum-Managhan; Kimberly More, Kalispell, and Leonard Smith, Billings (Crowley Fleck), for Herbergers.

DUI, officer “experience,” vehicle stop

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DUI: Requirement that officers have certain amount of “experience” to make investigatory stop abandoned… relatively inexperienced deputy had reasonable grounds to believe driver DUI… McKeon affirmed.

Hill Co. Dep. Martin saw a pickup “barely moving” at 2:51 a.m., then pull over, stop, and shut off its lights. He pulled in behind and approached it. (The State asserted the Community Caretaker Doctrine but Judge McKeon simply stated that Martin “had probable cause/ reasonable grounds” to believe the driver was DUI.) David Brown rolled down his window and Martin smelled alcohol. He asked Brown if he was having any problems and Brown stated that he and his son argued and his son got out and walked away. He admitted that he had been drinking and explained that he had pulled over to wait for his son to return. Martin saw a beer container in the cupholder and observed that Brown’s speech was slow and slurred. He asked him to perform field tests. Brown was slow in exiting and had to lean on the truck, explaining that he had back problems. Martin improperly administered the HGN. Brown refused a breath test. Martin arrested him for DUI. He again improperly administered the HGN at the jail. He then read Brown the implied consent advisory. Brown again refused to take a breath test and his license was suspended. He petitioned for reinstatement on grounds that Martin did not have reasonable grounds to believe that he was DUI. McKeon denied his petition. Brown appeals.

Brown contends that based on “plain, unmistakable language” in Gopher (Mont. 1981), only an “experienced” officer can make the proper inferences as to DUI. He contends that Martin was lacking the requisite experience because he had only 4 prior DUI investigations and had been on the job less than a year. He also contends that there was not sufficient objective data from which inferences of DUI could be drawn. The idea that an officer has to have a certain amount of experience to make an investigatory stop & frisk comes from this Court’s early interpretations — or misinterpretations — of Cortez (US 1981). While Cortezreferred several times to “trained” officers, it referred only once to “experienced” officers — in the context of what an “experienced” officer might infer. It did not establish any requirement that only “experienced” officers could make such inferences. There is no Montana statute that carves out a class of officers as the only ones capable of particularized suspicion for a stop. Rather than requiring that each officer have a certain amount of experience, the test for particularized suspicion simply requires that the information available to the officer — whether rookie or veteran — be sufficient to allow a hypothetical “experienced” officer to have either particularized suspicion for a stop or probable cause for an arrest. Henceforth, for an officer to have particularized suspicion or reasonable grounds for an investigatory stop, he must be possessed of (1) objective data and articulable facts from which he can make certain reasonable inferences and (2) a resulting suspicion that the person has, is, or is about to commit an offense. While experience & training may be a factor in determining what sort of reasonable inferences he is entitled to make from his observations, they will not necessarily be the defining element. For example, a rookie on his 1st patrol may well be entitled to stop at 2 a.m. a vehicle that is driving slowly without lights and weaving across the lines, but might not be entitled to make reasonable inferences resulting in particularized suspicion or reasonable grounds to stop under circumstances which are demonstrably beyond his training or experience. The courts will look to the facts and totality of the circumstances of each case.

McKeon correctly concluded that Martin had reasonable grounds to believe that Brown was DUI. Brown contends that “virtually all” the data that Martin utilized were subjective, including the alcohol odor, the early morning hour, the vehicle’s slow movement, the sudden stop, the slurred/slow speech, the slow/staggered exit, and the explanation of a recently absent passenger when no one else was in the vicinity. He claims that the only objective data from which Martin could make any inferences of wrongdoing were Brown’s turning off the lights, admitting that he had been drinking, and the beer cup. He contends that because there was nothing improper about the way his pickup was parked, there was no objective evidence of any illegal activity. However, Martin did not act on one isolated observation, but drew inferences from several observations that indicated possible criminal activity. Clark (Mont. 2005).

Nelson, Leaphart, Cotter, Warner, Morris.

Brown v. State, DA 07-700, last brief 8/13/08, decided 3/3/09.

Jeremy Yellin, Havre, for Brown; Asst. AG Mark Fowler; Dep. Hill Co. Atty. Lindsay Osborne.