Judge denies sanctions against Stinger

Judge Douglas Harkin issued a ruling last week in the ongoing legal battle between the Lincoln County Port Authority and Stinger Welding, denying the port’s motion for sanctions against Stinger’s counsel but also denying Stinger’s cross-motion for costs and fees associated with the complaint.

The port authority’s attorney, R. Allan Payne filed the motion Sept. 21 claiming Stinger’s attorneys have made unsubstantiated allegations for the purpose of delaying the litigation and requesting sanctions as allowed under Montana’s Rules of Civil Procedure.

“By the port’s count, Stinger Welding Montana Inc. (“Stinger”) is now represented by its fourth and fifth successive law firms in this litigation, and its sixth through 10th attorneys,” Payne wrote. “Unfortunately, Stinger’s most recent counsel have resorted to making baseless allegations and claims. And, Stinger’s recent document dump has amply demonstrated that these allegations and claims are not based upon a reasonable inquiry into the underlying facts, and are not warranted by existing law. Instead, it appears that Stinger’s latest counsel has made numerous accusations and filings for an improper purpose of delaying this litigation, increasing the cost of this litigation by doing so, and for the purpose of harassing the port and its employees and management. Because of this, the port brings its motion for Rule 11 sanctions.”

Payne argues in the filing that Stinger’s claim of fraud by port authority representatives Jim Mayo and Paul Rumelhart in unfounded because Stinger was and should have been aware of the rules for public entity sales requirements. The evidence, he wrote, is contained within several documents delivered to his office as a result of a discovery motion filed earlier this year.

“Yet, Stinger and its counsel were aware of public sales requirements for such a purchase in August of 2010 – almost a year prior to the transaction,” Payne wrote. “As such, Stinger cannot claim in good faith, based on the facts available to it, that the port’s attempted sale of property to Stinger was based upon negligent misrepresentations, constructive fraud, or actual fraud/malice as to the port’s ability to sell the property to Stinger. Instead, Stinger took the property from the port knowing full and well that these public sales requirements existed and could serve to limit sales. With such knowledge, Stinger and its counsel had no objective basis in fact to claim that the port, Mr. Rumelhart or Mr. Mayo made negligent misrepresentations, or took actions constituting constructive or actual fraud, in relation to the sale of real property to Stinger. As such, Rull 11 sanctions against Stinger and its counsel are warranted on this basis.”

What is also included in those documents, Payne argued, is proof that Stinger not only never had an ownership claim to the disputed cranes, but also that Stinger’s previous attorney, Tom Budewitz, understood the cranes would be owned by Lincoln County and leased to Stinger.

“With this information, it is clear that Stinger’s claim of ownership of the cranes is wholly unsupported by the facts – facts available to Stinger from Stinger’s own documents – before it filed any responses or motions related to crane ownership. As such, all filings made by Stinger’s counsel claiming ownership of the cranes that are contrary to the conclusions of its own counsel, contrary to the conclusions of Stinger’s principal and contrary to the very documents relied upon by Stinger, are unsupported by fact, and it is clear that the documents were submitted for the improper purpose of delaying the port’s claim of rightful dominion over its cranes, and delaying resolution of this litigation. As such, Rule 11, M.R. Civ. P., sanctions are also appropriate against both Stinger and its counsel on this basis.”

Stinger’s attorney, David Cotner of the Missoula firm of Datsopoulos, MacDonald & Lind P.C., denied the allegations in a filing Oct. 5. He characterized Payne’s motion as a waste of the court’s time and failing to follow proper procedure.

“Lincoln County Port Authority’s motion for sanctions is a waste of the parties’ and this court’s time and resources,” Cotner wrote. “Rather than accept this court’s invitation to file supplemental summary judgment briefing upon reviewing the documents produced by Stinger in April, L.C.P.A. has sought sanctions against Stinger’s counsel for purportedly making frivolous legal arguments. The documents relied upon by L.C.P.A. are not the ‘smoking guns’ L.C.P.A. makes them out to be, and regardless, they certainly do not warrant L.C.P.A.’s motion for sanctions. L.C.P.A.’s motion for sanctions is unreasonable and baseless, and Stinger is entitled to fees for the time its counsel have spent responding to it. Stinger’s counsel takes sanctions very seriously, and L.C.P.A.’s attempt to utilize them in this circumstance is wholly inappropriate.”

Cotner argues the port’s counsel failed to provide evidence of any wrongdoing and, instead of attempting to resolve the issues in court, resorted to sanctions motions to confuse and delay the proceedings.

“L.C.P.A.’s introductory section of its sanction brief makes unsupported allegations that Stinger’s counsel ‘has made numerous accusations and filings for an improper purpose of delaying this litigation, increasing the cost of this litigation by doing so, and for the purpose of harassing the port and its employees and management,’” Cotner wrote. “Importantly, L.C.P.A. does not provide a shred of support for these allegations. Rather, it is L.C.P.A.’s continued ‘side shows’ and requests for delay that are the sole cause for any delay in this case to date. Indeed, L.C.P.A.’s repeated filings of specious motions – like its sanction motion – and Mr. Payne’s conduct relating to subpoenas on the city and county have resulted in increased costs incurred by Stinger’s counsel. By its summary judgment motions, Stinger seeks to reach the merits of this case because it believes in good faith that no question of fact exists that Stinger owns the cranes and the real estate, that Stinger is entitled to an easement and that dismissal of L.C.P.A.’s remaining claims is warranted.”

Judge Harkin ruled that while the documents, as interpreted by the port’s counsel, could provide evidence of understanding on the part of Stinger, the exact nature of the understanding is a matter best left for determination at trial.

“Much disagreement will result from the detailed examination and interpretations of the consequences of the many documents and interactions between the parties which were generated over the life of this case,” Harkin wrote. “And therein lies the problem with the motion for sanctions.

“The court finds that the documents referenced by the port do suggest that Stinger had, or should have had, some minimal understanding of the public entity sales requirement of Montana law. The court also finds that exactly what that understanding was, or should have been, is open to speculation depending on the persons involved and the context of the discussions. The conclusion from those alternative ends of the spectrum of knowledge by Stinger is that it is a matter best left for full examination at the time of trial.”

While denying Payne’s motion for sanctions, he also denied Stinger’s cross-motion for costs and fees, ruling the motion was not without merit.

“Although the port has not prevailed on its motion for sanctions, the court finds that the port’s motion for sanctions was not frivolous or unreasonable,” he wrote. “The port raised legitimate questions about the effect of language contained in the documents provided by Stinger.”