MISSOULA — Before a jury in Lake County decided on May 13 that a manufacturing defect and “actual malice” on the part of Hyundai caused a 2011 car crash that killed two Missoula cousins and an Arlee woman, lawyers for the two sides engaged in a contentious legal battle over a $560,000 wrongful death insurance settlement that the family of passenger Tanner Olson received in early 2012.
That underinsured motorist claim was predicated on the basis that the driver of the car that suddenly swerved into the oncoming lane, Trevor Olson, was at fault.
The Olson families later filed a lawsuit against Hyundai alleging that a defective steering knuckle caused the car to swerve, and the jury sided with them and ordered Hyundai to pay $248.6 million in damages to the cousins’ families.
The fight over the insurance settlement played out behind the scenes in various back-and-forth legal motions. In the end, the Lake County jury never found out about the money received by Tanner Olson’s parents, Kathy Gratton and Jay Olson. That’s because a court-appointed Special Master decided that the insurance settlement didn’t preclude the family from suing Hyundai for the accident and that it also wasn’t relevant to the case, and the judge in the trial agreed.
The two sides engaged in a nasty, prolonged clash as they fought over whether the Olsons had to disclose the settlement in pre-trial discovery or during the trial.
In one motion to the trial’s presiding judge, Hyundai’s lawyers wrote: “It is impossible for Trevor and Hyundai to have caused the accident. Kathy Gratton and Jay Olson certainly understood that they were not entitled to compensation for both possibilities. The terrible loss they suffered does not – and indeed it cannot – justify their attempts to collect compensation to which they knew they were not entitled. Having chosen to take the large sum of money that was quickly and easily available from Farmers Insurance, and having obtained the blessing of the Missoula court for that action, this court should not allow them to present a contradictory story to a jury in Polson. Judicial estoppel is justified. If the court allows Kathy Gratton and Jay Olson to continue blaming Hyundai in this case, justice requires that the Polson jury know that they told a different story and that they did so for financial gain.”
Lawyers for the Olsons fired back a rebuttal: “Hyundai seeks a diversion from its own serious discovery violations in this matter. The court will recall that Hyundai previously attempted to avoid discovery into warranty claims that would show evidence of other defective steering knuckles. Hyundai, with knowledge that it possessed such critical documents, sought to hide them by way of claiming that it should not have to answer any further discovery.”
The Olsons’ lawyers also argued that the insurance settlement had no bearing on the Olsons’ right to sue Hyundai.
“Hyundai knows very well that Kathy and Jay are not experts in automotive crashes. They do not know what caused this accident. They can only rely on what the expert witnesses have stated. The fact that they received first party coverage has no bearing on whether Hyundai has any liability for strict products liability. Underinsured motorist coverage is only potentially relevant as a collateral source, and only in the event of a verdict against Hyundai.”
The Olsons’ attorneys ultimately concluded that “Hyundai is engaging in a fishing expedition and a smokescreen. This is a sideshow to increase the expense and cause further grief to these families.”
In essence, Hyundai’s attorneys unsuccessfully tried to apply the doctrine of “judicial estoppel,” which bars litigants from claiming money by blaming two wrongdoers who both can’t be responsible.
On July 2, 2011, 14-year-old Tanner Olson was a passenger in a 2005 Hyundai Tiburon driven by his cousin, Trevor Olson. The vehicle was traveling northbound on U.S. Highway 93 in Lake County when it suddenly swerved into the path of an oncoming vehicle, killing 21-year-old Stephanie Nicole Parker-Shepard in the other car and severely injuring her husband, Vincent Shepard, and their two young children.
According to court documents filed in both Missoula County District Court and Lake County District Court and obtained by the Missoulian, a tangled web of legal maneuverings followed the accident:
• On Oct. 21, 2011, the Shepard family filed a complaint alleging that Trevor and Tanner Olson caused the accident. Attorneys for Tanner’s parents, Kathy Gratton and Jay Olson, wrote in court documents filed in Lake County that the Shepard’s lawyer had improperly attempted to levy liens against fundraising donations and other personal assets. The Olsons’ lawyers also contended that the Shepards’ original attorney “also wrote personal and offensive letters, which was a source of great distress, particularly to Kathy.”
• On Dec. 21, 2011, a crash expert hired by the family of Tanner and Trevor Olson, retired University of Montana physics professor F. Denman Lee, filed an affidavit in Lake County District Court stating that due to his investigations, he concluded that “the most likely cause of the accident was a mechanical problem with the 2005 Hyundai Tiburon, which caused the vehicle to lose control.”
• On March 23, 2012, lawyers for Tanner’s estate denied his or Trevor’s negligence.
• On Nov. 29, 2012, lawyers for Tanner’s family sued Hyundai, alleging that a manufacturing defect in a steering knuckle caused the accident.
• On Dec. 19, 2012, the parents of Tanner Olson filed a petition in Missoula County District Court seeking the approval of the settlement of a wrongful death claim and a survivorship claim with Farmers Insurance Exchange. Kathy Gratton had an underinsured motorist policy with Farmers for $500,000 and Jay Olson had two policies with Farmers, each having $30,000 of underinsured coverage. A judge approved the settlement, and both parents received the maximum limit of their coverage.
• On Feb. 7, 2013, as part of the pre-trial discovery process, Hyundai submitted a list of questions to the lawyers for Tanner Olson’s estate. The 12th question on the list was: “If Tanner Olson had ever made a claim or filed a lawsuit against any person, company, corporation, association, partnership or unincorporated association, including but not limited to, claims for money damages associated with personal injury incurred by him, whether related to this incident or not, please state the nature of the claim ... and if he received any money from settlement or trial of the claim or lawsuit, please state the amount he received.”
The answer from Tanner Olson’s estate was as follows: “No prior claims for personal injury by Tanner Olson.”
• On May 13, 2013, lawyers for Tanner and Trevor Olson’s families sent a letter to the court stating that they each was not claiming that the other caused the accident.
• On Oct. 17, 2013, mediation resulted in a combined offer to settle all of the Shepards’ claims with contributions from Trevor Olson’s insurance company, State Farm; Tanner Olson’s insurance company, Farmers; and Hyundai. The terms of the settlement have never been disclosed publicly.
• On Oct. 21, 2013, the Shepards accepted the offer. That same day, Hyundai found out about the underinsured motorist claims made by Tanner Olson’s parents.
• On Nov. 19, 2013, Hyundai filed a motion asking the court to assess discovery sanctions on the Olsons. They also asked the judge to block the Olsons from being able to sue Hyundai because the insurance settlement was based on the fact that Trevor Olson was at fault. Hyundai also sought to compel the Olsons to inform the jury about the insurance settlement.
In the motion, Hyundai’s lawyers wrote: “If there is nothing wrong with making contradictory claims as they did, why weren’t they up front about it? Would Farmers have paid $560,000 for Trevor’s liability if – as the Olsons are telling this Court – ‘the swerve that occurred immediately prior to this accident could not have been the result of human conduct.’ Would the entire course of discovery, expert witness development and perhaps settlement in this case have been different if Kathy Gratton and Jay Olson were openly declaring that there is persuasive evidence Trevor caused the accident? These questions answer themselves. The Tanner Plaintiffs knew that their conflicting claims would have been disastrous had they been exposed to the light of day in a single court.”
Hyundai’s attorneys also claimed that Tanner Olson’s parents “knew they were asking the Missoula court to approve payments to them by claiming that their nephew Trevor caused their son’s death.”
• On Nov. 28, 2013, the Olsons’ attorneys accused Hyundai of showing contempt for the civil discovery process. In a separate motion for discovery sanctions against Hyundai, the Olsons’ attorneys wrote: “The record demonstrates that Hyundai sought to hide highly relevant evidence of other similar vehicle defects by forcing the Olsons to spend numerous hours responding to unfounded discovery motions. In fact, we have now learned that Hyundai sought to withhold more than 6,000 pages of warranty documents based on its unilateral refusal to answer further discovery.”
The Olsons’ lawyers cited the fact that the court-appointed Special Master had already warned Hyundai multiple times about its conduct in the case, because they had delayed providing documents to the Olsons’ attorneys during the discovery phase. The Olson’s attorneys wrote: “Hyundai knew it was sitting on highly relevant evidence and intentionally sought to hide it on the procedural grounds of being asked ‘too many questions.’ That attempt failed, and Hyundai has been caught withholding evidence yet again. Other courts have caught Hyundai in this exact same discovery behavior.”
• On Dec. 13, 2013, the Olsons’ lawyers fired back against Hyundai’s motion for sanctions and partial summary judgment, saying they should be exempt from judicial estoppel. In a brief, the Olsons’ attorneys wrote: “Kathy and Jay had first party coverage under their own auto insurance to protect them from injury or death to a family member. Their insurer paid them this first party coverage for the loss of their son. During the course of defending the estates of Tanner and Trevor, the defense counsel for the estates hired experts in accident reconstruction and metallurgy, who determined that a component of the steering mechanism, the steering knuckle, appeared to be defective and to have cracks that existed before the accident, and a final crack that is believed to have caused the accident.”
• On Jan. 13, 2014, court-appointed Special Master Michael Viscomi of Whitefish, hired by the trial’s presiding judge Deborah Kim Christopher to help review legal filings during the case, issued his order on Hyundai’s motion for discovery sanctions and partial summary judgement. Viscomi found that the Olsons had improperly failed to answer Hyundai’s interrogatory about any prior claims for personal injury during the discovery phase.
However, Viscomi found that Hyundai only was able to prove two of the four elements necessary to assert judicial estoppel. Viscomi decided that in his view, Hyundai’s desire for the Olsons to tell the jury about their wrongful death insurance claim against Trevor Olson was too harsh a punishment. Viscomi ruled only that Hyundai was entitled to attorney fees from the Olsons for the extra time that their failure to disclose the settlement took up. Viscomi also denied Hyundai’s request for partial summary judgement, meaning the Olsons’ lawsuit against Hyundai was allowed to proceed.
• On Jan. 27, Hyundai objected to Viscomi’s decision.
• On Feb. 8, the Olsons’ attorneys objected to Hyundai’s objection to Viscomi’s decision.
• On March 10, Hyundai filed an advisory to the court concerning their objections to Viscomi’s rulings and specifically requested that the court assert judicial estoppel.
• On March 11, the Olsons’ lawyers filed a motion to ban testimony about “collateral source evidence” – meaning any insurance money the Olsons received – from being heard by the jury. The Olsons’ attorneys cited a Supreme Court ruling from 40 years ago that affirmed that payments to a plaintiff from a source wholly independent to the wrongdoer cannot lessen the damages that the plaintiff can recover from the wrongdoer.
• On March 27, Viscomi met with Christopher and lawyers for both sides for more than three hours. Christopher listened to arguments on Hyundai’s motions during that time.
• On April 8, Christopher issued an order affirming Viscomi’s decisions. Her rationale was simply that Viscomi’s order was adopted by the court, meaning she agreed with everything he had found.
• On May 13, after a lengthy trial, a jury ruled that a defect caused the fatal crash and that Hyundai had acted with “actual malice.” The jury awarded the families of Tanner and Trevor Olson $240 million in punitive damages and $8.6 million in compensatory damages.
Lawyers for both Hyundai and the Olson families declined to comment on this case. Hyundai has said it will appeal the verdict.
Montana law requires everyone to carry $25,000 in liability coverage. An underinsured motorist policy gives the policy holder coverage if the other driver at fault either is uninsured or is underinsured, meaning they caused damages that exceed their liability coverage.
Greg Munro, a law professor at the University of Montana and an expert in insurance law, said that the bodily liability coverage paid by driver Trevor Olson’s insurance carrier, State Farm, probably paid its limits to Tanner Olson’s family carrier, Farmers. Farmers subsequently paid $560,000 to Tanner Olson’s parents to settle the wrongful death claim.
“The way I know that is because Farmers is willing to cough up their limits of underinsured motorist coverage,” Munro explained. “They believe they got all the limits from (State Farm). (State Farm) said yeah, it’s his fault or the damage is so bad, just pay the limit. They must have agreed that their driver has some fault here.”
However, Montana law allows people to file what are called alternative inconsistent pleadings, Munro explained.
“What you do is they say we think the driver caused the accident, but in the alternative they say the automaker was at fault,” Munro explained. “The people who settled the case, in this case Farmers, may have thought that it wasn’t his fault, but because there’s a chance it’s his fault, they may have decided to just settle the case. Farmers may have taken all things into consideration, litigation expenses, adjusters, into their decision to settle. It’s done all the time.”
Munro said that all 50 states allow what are called “alternative inconsistent pleadings.” In layman’s terms, it allows people to blame two different parties and sort it out later.