text:
    Michael J. COVEY and Stacy D. Covey, Individually and as Trustees of the Amended and Restated Covey Family Trust U/D/T/ Dated October 23, 2006, Plaintiffs and Appellees, v. Alexander R. BRISHKA and Ilma Brishka, as Co-Trustees of the Brishka Trust Established March 20, 1999, Defendants and Appellants.
    DA 18-0498
    Supreme Court of Montana.
    Submitted on Briefs: February 13, 2019 Decided: July 23, 2019
    For Appellant: Paul R. Haffeman, Joseph M. Sullivan, Davis, Hatley, Haffeman & Tighe, P.C., Great Falls, Montana
    For Appellee: Sean S. Frampton, Laura J. Webb, Frampton Purdy Law Firm, Whitefish, Montana
   Justice James Jeremiah Shea delivered the Opinion of the Court.

¶1 Appellants Alexander and Ilma Brishka, as co-trustees of the Brishka Trust (collectively "Brishkas"), appeal the jury trial verdict and judgment of the Eleventh Judicial District, Flathead County, finding the Brishkas strictly liable for the breach of a pond on their property and awarding damages to Michael and Stacy Covey and the Covey Trust (collectively "Coveys"). We address the following issues on appeal:

Issue One: Whether the District Court erred in its application of strict liability.
Issue Two: Whether the District Court erred when it allowed the Coveys to claim the full amount of damages for the increased cost to the driveway project.
Issue Three: Whether the District Court erred by allowing evidence regarding the diminution of the Coveys' property value.
Issue Four: Whether the Coveys made improper closing arguments regarding the Brishkas' alleged negligence.
Issue Five: Whether the District Court erred when it excluded evidence of other causes of the pond breach.

¶2 We affirm.

PROCEDURAL AND FACTUAL BACKGROUND

¶3 In January of 2000, the Brishkas purchased property on Big Mountain Road in Whitefish. The Brishka property included a 4.5 million-gallon man-made fish pond built by a previous owner. In 2005, the Coveys purchased a plot of land on Whitefish Lake, downhill from the Brishka property.

¶4 In 2009, the Coveys commenced plans to construct a home on their property. They hired landscape architects, engineers, and excavators to design and build a driveway to access the property. Prior to beginning construction, and as part of their investigation, the engineers dug test pits, which revealed no water, and concluded the soils on the property were dry. The engineers noted a culvert existed uphill from a neighboring property, but the engineering investigation revealed water did not historically drain through it. The excavators similarly concluded the soil conditions were dry.

¶5 Due to the steep terrain, it was necessary for the driveway project to traverse the lots of adjacent property owners, Cora Belle and Patrick Montalban (the Montalbans). The initial driveway bid was $233,000. The Coveys contracted with all of the necessary parties and paid all of the upfront costs for the driveway construction. The Coveys testified that they had an informal agreement with the Montalbans to be reimbursed a pro rata share of the driveway project costs.

¶6 During a large storm on August 2-3, 2013, the Brishkas' pond breached its banks and water flowed downslope. The water carried boulders, trees, and other debris downhill and carved large channels into the hillside. Following the pond breach, the Coveys conducted additional surveys. The engineers and excavators concluded the ground was saturated, water was flowing through the culvert that historically was dry, and measurements revealed historical drainage patterns were greatly altered by the pond breach.

¶7 On July 28, 2016, the Coveys brought suit against the Brishkas for negligence, nuisance, strict liability, and trespass. On September 8, 2017, the Coveys filed an amended complaint. Following the Brishkas' pond breach, the Coveys alleged the driveway construction bid was increased to $498,000. The Brishkas responded that they were not responsible for the damage to the Coveys' property and, as one of their asserted defenses, contended that another party was the cause of the Coveys' damage.

¶8 In response to discovery requests, the Coveys described their damages as:

[The Coveys] suffered damages in the amount of $265,512.87. This is the cost of the road construction, drainage features, engineering and design to mitigate the groundwater and surface water flows resulting from the pond breach. The amount was calculated by subtracting the amount of the original competitive bid-awarded prior to the pond failure-from the final completed expense of the Project.
[The Coveys] also claim emotional distress damages for the interference with the use of their property. This is a claim for general damages that will be determined by a jury based on the evidence presented and thus no calculation has been made.

The Pretrial Order set forth the Coveys' damages as the increased cost of the driveway project and all damages "allowed by law including economic, tort damages, damages to property, and emotional distress."

¶9 Both parties filed several motions in limine . The Coveys moved to exclude, among other things, evidence at trial regarding road construction by the Montana Department of Transportation (DOT) that allegedly affected the drainage into the Brishkas' pond. The Brishkas moved to prohibit the Coveys from claiming the entire amount of $265,512.87 for the increased cost of the driveway project. The Coveys opposed that motion and sought to preclude the Brishkas from arguing at trial that the Coveys had not suffered the entire amount of $265,512.87 for the increased cost of the driveway project.

¶10 From April 2-4, 2018, the District Court presided over a three-day jury trial. Immediately prior to the start of the trial, the District Court orally ruled on the parties' motions in limine . The District Court granted the Coveys' request to exclude testimony that would apportion any liability to DOT. The District Court also determined the Brishkas could not introduce evidence that the Montalbans were sharing the increased cost of the driveway project with the Coveys.

¶11 At trial, Michael Covey, over objection, testified that he was solely responsible for paying the entire amount of the increased cost of the driveway project. Michael Covey also offered testimony, over objection, speculating as to a decrease in the property value following the pond breach. The Coveys presented expert testimony that an outlet culvert that drained from the Brishkas' pond was obstructed by a berm on one side of the pond, making a pond breach more likely.

¶12 At the close of trial, the Coveys withdrew their trespass, nuisance, and negligence claims, preserving only the strict liability claim. The District Court analyzed whether the Brishkas' pond was an abnormally dangerous activity or condition such that strict liability should apply based on two lines of case law:

It appears to me that there are two separate lines of cases that address the situation, one is embodied in Dutton [v. ] Rocky Mt. Phosphates ... [a case that held] that impoundment of material on your property the property owner can be strictly liable for.
Certainly in this case this was an impoundment of water on the property .... [Next,] the Montana Supreme Court in Matkovic [v. ] Shell Oil ... adopted the Restatement Second of Tort's [d]efinition of Strict Liability stating: 'One who carries on an abnormally dangerous activity is subject to liability for harm to the person, land or chattels of another resulting from the activity though he has exercised the utmost care to prevent the harm; two, the strict liability is limited to the kind of harm the possibility of which makes the activity abnormally dangerous.'
In Chambers [v. ] City of Helena , ... the [C]ourt articulated the factors for determining whether an abnormally dangerous condition exists, the same ones as adopted in Matkovic and Restatement Second...."

The District Court applied each factor from the Restatement (Second) of Torts to the condition of the Brishkas' pond and concluded that "maintenance of the pond constitute[d] an abnormally dangerous condition" warranting application of strict liability.

¶13 During closing argument, the Coveys' counsel discussed testimony regarding the blocked outlet culvert and the berm on the Brishkas' property and used this testimony to cast doubt on Alexander Brishka's credibility as a witness. The District Court overruled the Brishkas' objection that the evidence about the blocked culvert and berm were no longer relevant for the only remaining claim: strict liability.

¶14 The District Court instructed the jury that the Coveys brought a claim for strict liability, and that it had ruled that the Brishkas are strictly liable for any harm caused by the breach of their pond. The District Court then instructed the jury that it would be analyzing only the issues of causation and damages. The District Court instructed that if the jury found the Brishkas' pond caused the Coveys' harm, it "must determine the amount of damages that will reasonably and fairly compensate the [Coveys] for the harm caused by the [Brishkas]."

¶15 The District Court gave the following instruction regarding assessment of damages:

For claims involving damage to real property, you may award damages for:
(1) the difference between the value of the land before the harm and the value after the harm, or at [the Coveys'] election in an appropriate case, the cost of restoration that has been or may be reasonably incurred;
(2) the loss of use of the land; and (3) discomfort and annoyance to [the Coveys as occupants].

Neither party objected.

¶16 After instructing the jury, the District Court submitted the following special verdict form to the jury:

(1) The Court has found the Brishka Trust strictly liable for all harm caused by a breach of its pond.
(2) Did the Brishka Trust's liability cause damages to the Covey Trust?
...
(3) What is the amount of damages suffered by the Covey Trust?
...
(4) Did the Brishka Trust's liability cause damage to Mike and Stacey Covey?
...
(5) What is the amount of damages suffered by Mike and Stacey Covey?

¶17 The jury deliberated and reached a verdict in favor of the Coveys. The jury found that the Brishkas' liability caused the Coveys to suffer damages. The jury awarded damages of $211,563.40 to the Covey Trust and damages of $101,667 to Michael and Stacey Covey. On May 18, 2018, the District Court entered its written judgment setting out the jury award and, additionally, awarded the Coveys costs in the amount of $2,053.82. The Brishkas filed a Motion for a New Trial, along with a supporting brief and response. The Brishkas' Motion was deemed denied in August 2018.

STANDARDS OF REVIEW

¶18 A district court's determination of whether an activity or condition is abnormally dangerous such that strict liability should apply is a conclusion of law that we review for correctness. Chambers v. City of Helena , 2002 MT 142, ¶¶ 18-19, 310 Mont. 241, 49 P.3d 587, overruled on other grounds by Giambra v. Kelsey , 2007 MT 158, ¶¶ 24 n.2, 25-27, 338 Mont. 19, 162 P.3d 134.

¶19 We review a district court's decision to admit or exclude evidence for an abuse of discretion. Cleveland v. Ward , 2016 MT 10, ¶ 9, 382 Mont. 118, 364 P.2d 1250 ; Larchick v. Diocese of Great Falls-Billings , 2009 MT 175, ¶ 52, 350 Mont. 538, 208 P.3d 836 (reviewing a district court's grant of a motion in limine for an abuse of discretion). A district court abuses its discretion only if it acts arbitrarily without employment of conscientious judgment or exceeds the bounds of reason resulting in substantial injustice. Larchick , ¶ 52 ; Faulconbridge v. State , 2006 MT 198, ¶ 22, 333 Mont. 186, 142 P.3d 777. A district court has broad discretion in its rulings on questionable testimony that may amount to prejudicial evidence. State v. Long , 2005 MT 130, ¶ 27, 327 Mont. 238, 113 P.3d 290 ; see also Evans v. Scanson , 2017 MT 157, ¶ 26, 388 Mont. 69, 396 P.3d 1284.

¶20 This Court reviews a jury verdict to determine whether substantial evidence exists to support the jury's findings. Wise v. Ford Motor Co. , 284 Mont. 336, 339, 943 P.2d 1310, 1312 (1997). Substantial evidence is "evidence that a reasonable mind might accept as adequate to support a conclusion." Seltzer v. Morton , 2007 MT 62, ¶ 94, 336 Mont. 225, 154 P.3d 561.

DISCUSSION

¶21 Issue One: Whether the District Court erred in its application of strict liability.

¶22 We impose the obligation on a property owner to use " 'his own rights [so] as not to infringe upon the rights of another.' " Dutton v. Rocky Mt. Phosphates , 151 Mont. 54, 67, 438 P.2d 674, 681 (1968) (quoting Fleming v. Lockwood , 36 Mont. 384, 388, 92 P. 962, 963 (1907) ). A property owner " 'who maintains a condition, or engages in an activity, which involves a high degree of risk of harm to others and is abnormal in the community and inappropriate to its surroundings is strictly liable for the harm which it causes.' " Dutton , 151 Mont. at 66-67, 438 P.2d at 680-81 (quoting Prosser on Torts, 2d. Ed. 1955, p. 329, Chapter 11, Strict Liability, § 59, Abnormal Things and Activities). The property owner is liable even if he acted with reasonable care. Christian v. Atl. Richfield Co. , 2015 MT 255, ¶ 49, 380 Mont. 495, 358 P.3d 131 (citing Matkovic v. Shell Oil Co. , 218 Mont. 156, 159-60, 707 P.2d 2, 3-5 (1985) (adopting and quoting Restatement (Second) of Torts §§ 519 - 20 (1976) )); Chambers , ¶ 16.

¶23 While strict liability is limited to instances of harm that made the activity or condition abnormally dangerous, Chambers , ¶ 16 (citing Restatement (Second) of Torts § 519 ), a tortfeaser is "answerable for all the damage which is a natural consequence" of the abnormally dangerous activity, Dutton , 151 Mont. at 65, 438 P.2d at 680. Whether an activity or condition is "abnormally dangerous" is a determination for the district court, and it must weigh the following factors in making its determination:

(a) existence of a high degree of risk of some harm to the person, land or chattels of others;
(b) likelihood that the harm that results from it will be great;
(c) inability to eliminate the risk by the exercise of reasonable care;
(d) extent to which the activity is not a matter of common usage;
(e) inappropriateness of the activity to the place where it is carried on; and
(f) extent to which its value to the community is outweighed by its dangerous attributes.

Chambers , ¶¶ 16, 18 (quoting Restatement (Second) of Torts § 520 ); Matkovic , 218 Mont. at 159-60, 707 P.2d at 5. To make a determination that an activity is abnormally dangerous, all factors need not be present, but a district court must nonetheless consider all the factors. Chambers , ¶ 21 ; see also Dutton , 151 Mont. at 66-67, 438 P.2d at 681 (analyzing factors to be considered for strict liability prior to the adoption of the Restatement (Second) of Torts § 520 ).

¶24 Prior to the adoption of the Restatement (Second) of Torts factors for assessing strict liability for water escape or improper impoundment of substances, this Court has focused on abnormal and inappropriate retention. Dutton , 151 Mont. at 66, 438 P.2d at 681. In Dutton v. Rocky Mt. Phosphates , this Court upheld a finding of strict liability against a plant that released toxic fumes into the air and caused harm to local livestock. Dutton , 151 Mont. at 61, 68-69, 72, 438 P.2d at 678, 681-83. Despite the upgrades and improvements on the plant's filtering equipment made contemporaneously with litigation, the district court evaluated the activity as it currently was and concluded it posed such a threat that application of strict liability was appropriate. Dutton , 151 Mont. at 68, 71-72, 438 P.2d at 681-83.

¶25 After the close of evidence, the District Court concluded it was appropriate to apply strict liability to the condition of the Brishkas' pond. The District Court analyzed the application of strict liability to the pond under Dutton , Matkovic , and Chambers .

¶26 The Brishkas argue the District Court erred by failing to apply the correct standard to strict liability for abnormally dangerous activities when it found that the Brishkas' negligence created an abnormally dangerous condition. The Brishkas also argue the District Court erred by failing to limit the scope of strict liability to the kind of harm which makes the activity abnormally dangerous. The Brishkas contend that the danger associated with having a fish pond on the side of a mountain is the potential that a "swale of water" will impact downhill property owners should the pond breach. Instead, the harm caused-a change in historical drainage patterns on the mountain-was not the type of harm strict liability for this abnormally dangerous activity was intended to protect against. Finally, the Brishkas argue that the District Court erred by failing to recognize and apply the Common Enemy Doctrine.

¶27 The Coveys respond that the District Court correctly found the condition of the Brishkas' pond was an abnormally dangerous condition subject to strict liability. We agree.

¶28 The District Court appropriately analyzed the Brishkas' liability under each Restatement factor as it was required to do. See Chambers , ¶ 21. The District Court correctly concluded: factor (a), "existence of a high degree of risk" to persons, property, or chattel of others weighed in favor of constituting an abnormally dangerous activity, as testified to by the Brishkas and other expert witnesses; factor (b), "likelihood that harm results from it will be great," weighed in favor of finding an abnormally dangerous activity, as evinced by testimony at trial and the damage to the Coveys' and the Montalbans' properties; factor (c), "inability to eliminate the risk by exercise of care" was held in balance because "through the exercise of care had the culvert not been obstructed ... or a spillway been installed, as was advised, the risk [of a breach] could have been eliminated at least to some extent"; factor (d), whether the activity or condition was a matter of "common usage" or not, weighed in favor of finding an abnormally dangerous condition because retention and maintenance of a pond of this size was not of common usage; factor (e), "inappropriateness of the activity to the place where it was carried on," was held in balance-although evidence regarding this factor was not presented, the primary purpose of the pond was for personal fishing by the Brishkas; and factor (f), "value to the community," weighed in favor of finding an abnormally dangerous condition because the pond offered little, if any, community value and any value was outweighed by the dangerous attributes. See Chambers , ¶¶ 16, 18 (citing Restatement (Second) of Torts § 519 ).

¶29 The Brishkas take particular issue with the District Court's analysis of factor (c): inability to eliminate the risk by the exercise of care. However, in pointing out the culvert or spillway options, the District Court was merely stating that the risk from a pond-bank breach could be mitigated by the installation of such features. Regardless of any hypothetical mitigation, it is clear such care was not exercised. After weighing all of the factors and the risks of having a 4.5-million-gallon man-made pond on the side of a mountain, uphill from others' personal property, that had the potential to cause catastrophic damage if the walls were breached, the District Court concluded the pond was abnormally dangerous and presented a great risk of harm. See Chambers , ¶ 21. Accordingly, the District Court applied the correct standard.

¶30 Additionally, the discharge of water from an uphill pond breach that damages the downhill property owner's land is exactly the type of harm that makes owning a fish pond on the side of a mountain a potentially abnormally dangerous activity or condition. See Chambers , ¶ 16 ;

Dutton , 151 Mont. at 65, 438 P.2d at 680 ; Restatement (Second) of Torts, § 519. The Brishkas' contention that the damage caused by the pond breach is not the type of harm that falls within the scope of strict liability is unpersuasive.

¶31 The Brishkas' argument that the District Court should have analyzed and applied the Common Enemy Doctrine is similarly unavailing. Under the Common Enemy Doctrine, a landowner is not liable "for vagrant surface waters which cross his land and go onto his neighbor's land." State Dep't of Highways v. Feenan , 231 Mont. 255, 258, 752 P.2d 182, 184 (1988) (citing Roope v. Anaconda , 159 Mont. 28, 32-33, 494 P.2d 922, 924 (1972) (an uphill property owner does not owe a duty to his neighbors to prevent surface water from entering the neighbor's property)). In diverting surface waters, the landowner should exercise reasonable care to avoid damage to adjoining properties. Feenan , 231 Mont. at 258, 752 P.2d at 184 (citing O'Hare v. Johnson , 116 Mont. 410, 418, 153 P.2d 888, 891 (1944) ). The District Court considered the Common Enemy Doctrine after the Brishkas moved for a directed verdict on that theory at the close of evidence. The District Court denied the motion. Vagrant surface waters were not the cause of the Coveys' damages-the Brishkas' pond was. The District Court was not obligated to analyze and apply a legal theory not grounded in the facts and inapposite to the case.

¶32 The District Court did not err when it determined the Brishkas were strictly liable for any damage their pond might cause because it constituted an abnormally dangerous condition. See Chambers , ¶¶ 16, 18.

¶33 Issue Two: Whether the District Court erred when it allowed the Coveys to claim the full amount of damages for the increased cost to the driveway project.

¶34 Generally, a party may not apportion fault or damages to a nonparty. See e.g., Truman v. Mont. Eleventh Jud. Dist. Ct ., 2003 MT 91, ¶¶ 19-20, 315 Mont. 165, 68 P.3d 654 ; see also Seltzer , ¶ 166 n.25. If a defendant believes a third party is liable for all or part of the damages claimed by a plaintiff, the defendant may seek contribution from the third party. See Plumb v. Fourth Jud. Dist. Ct. , 279 Mont. 363, 377-78, 927 P.2d 1011, 1019-20 (1996), superseded by statute on other grounds .

¶35 In Dew v. Dower , this Court held that a district court erred when it awarded damages that belonged to property owners who were not plaintiffs at the time of judgment. Dew v. Dower , 258 Mont. 114, 128, 852 P.2d 549, 557 (1993). There were initially six plaintiffs in the suit: three sets of husbands and wives, and each couple jointly owned their respective properties as co-tenants. Dew , 258 Mont. at 127-28, 852 P.2d at 557. At the close of evidence, the plaintiffs' counsel withdrew the claims of the three wives, and the district court ultimately awarded 100 percent of the damages related to the three sets of property to the husbands who remained as plaintiffs. Dew , 258 Mont. at 127, 852 P.2d at 557. This Court concluded the husbands were not entitled to be awarded damages to interests that belonged to their wives, who were no longer parties to the action. Dew , 258 Mont. at 128, 852 P.2d at 557. We held that allowing one co-tenant to sue for all damages could infringe on the rights of the other co-tenant and raised due process concerns. Dew , 258 Mont. at 128, 852 P.2d at 557. Further, we concluded that the district court lost jurisdiction because the wives were dismissed from the action. Dew , 258 Mont. at 128, 852 P.2d at 557.

¶36 The District Court excluded evidence of non-party damages and sustained the Coveys' objections to the Brishkas' questions to Michael Covey about whether the Montalbans had reimbursed the Coveys for costs associated with the driveway project.

¶37 The Brishkas argue that, in direct contravention to the precedent in Dew v. Dower , the District Court erred in allowing the jury to award the Coveys damages they did not suffer. The Brishkas argue that because the nonparty Montalbans incurred damages as well, they should have been party to this suit and/or the Coveys should not have been permitted to recover damages from the Brishkas that are properly owed to the Montalbans. The Brishkas further argue that because the District Court failed to recognize the necessity of including the Montalbans as parties to this suit, the District Court lost jurisdiction over the amount the Montalbans had paid the Coveys of the $265,512.87 requested in the case.

¶38 The Coveys respond that the District Court did not abuse its discretion when it allowed the Coveys to make a claim for increased construction costs when it was the Coveys who were contractually obligated to pay those increased costs and did, in fact, pay them. The Coveys maintain that their informal arrangement with neighboring property owners for reimbursement for a pro rata share of the initial driveway costs-which was not paid-did not divest the District Court of jurisdiction. The Coveys also argue the Brishkas failed to raise the jurisdictional argument before the District Court and cannot now raise that argument for the first time on appeal. We agree.

¶39 The record establishes that the Coveys alone entered into contracts with the engineers and excavators and were on the hook for all expenses associated with the driveway project. The Coveys testified that they alone bore the costs for the entire initial driveway construction costs and the entire increase in costs. Unlike the plaintiffs in Dew , the Montalbans were never party to the lawsuit, did not have a co-tenant or agency relationship with the Coveys, and were not in any danger of having their due process rights infringed upon when the Coveys sought recovery of the full increase in the cost of the driveway project. See Dew , 258 Mont. at 128, 852 P.2d at 557. Further, the Montalbans could not be parties to claim the increased contractual damages because they were not parties to the original construction contract. While the Coveys testified they had an "understanding" with the Montalbans that they would receive reimbursement for a share of the original driveway construction costs, the Coveys made it clear that they have not, as yet, received said reimbursement. Any informal agreement between the Coveys and Montalbans was not relevant for purposes of determining any damages the Coveys may have suffered.

¶40 The Coveys did not apportion liability to the Montalbans or collect damages on their behalf. See Truman , ¶¶ 19-20. Further, the Brishkas do not argue the Montalbans might be liable for part of the Coveys' damages. See Plumb , 279 Mont. at 377-78, 927 P.2d at 1019-20. The District Court did not abuse its discretion when it excluded evidence of an arrangement for payment of driveway costs between the Montalbans and Coveys and when it did not require the Montalbans to be joined as parties. See Ward , ¶ 9.

¶41 Issue Three: Whether the District Court erred by allowing evidence regarding the diminution of the Coveys' property value .

¶42 " 'The function of this Court is not to agree or disagree with the jury's verdict.' " Murray v. Whitcraft , 2012 MT 298, ¶ 26, 367 Mont. 364, 291 P.3d 587 (quoting Renville v. Taylor , 2000 MT 217, ¶ 14, 301 Mont. 99, 7 P.3d 400 ). In our review of jury verdicts in civil cases, the prevailing party "is entitled to any reasonable inference that can be drawn from the facts which are proven," and we will not reweigh evidence presented or disturb a jury verdict that is supported by substantial evidence. Sandman v. Farmers Ins. Exch. , 1998 MT 286, ¶ 41, 291 Mont. 456, 969 P.2d 277 (internal citations omitted); Weber v. State , 253 Mont. 148, 153, 831 P.2d 1359, 1362 (1992). Accordingly, where a jury form does not clearly apportion a plaintiff's damages, success on one claim should not force a new trial on damages where substantial evidence supports any ground for recovery. See Sunburst Sch. Dist. No. 2 v. Texaco, Inc. , 2007 MT 183, ¶¶ 66-67, 338 Mont. 259, 165 P.3d 1079.

¶43 Further, where a defendant does not object to a verdict form or seek to have damages apportioned based on each cause of action, claim, or category of damages, courts should not second-guess the jury's award. Ammondson v. Nw. Corp. , 2009 MT 331, ¶¶ 80-82, 353 Mont. 28, 220 P.3d 1 ; Sunburst , ¶¶ 66-67 ; Pac. Hide & Fur Depot v. Emineth Custom Homes, Inc. , 2016 MT 114, ¶ 20, 383 Mont. 373, 373 P.3d 829 ; Horn v. Bull River Country Store Props. , 2012 MT 245, ¶ 25, 366 Mont. 491, 288 P.3d 218 ; Whitcraft , ¶ 12 (this Court " 'will not speculate' when the verdict form does not explain the jury's thought process...."); Seltzer , ¶ 97.

¶44 Diminution in property value is a recognized measure of damages for injury to property. McEwen v. MCR, LLC , 2012 MT 319, ¶ 28, 368 Mont. 38, 291 P.3d 1253 (citing Sunburst , ¶ 30 ). The diminution of property value is the "difference between the value of the property before and after the injury...." Sunburst , ¶ 30. Montana law allows a property owner to testify as to the value of his personal property, Dutton , 151 Mont. at 69, 438 P.2d at 682, and how he arrived at that value for the property uses for which he is currently engaged, K & R P'ship v. City of Whitefish , 2008 MT 228, ¶¶ 43, 45, 344 Mont. 336, 189 P.3d 593.

¶45 In responses to interrogatories and in the Pretrial Order, the Coveys identified their damages as the increased cost of the road construction, drainage features, engineering, and design to mitigate the groundwater and surface water flows resulting from the pond breach in the amount of $265,512.87. The Coveys also asked for emotional distress damages for the interference with the use of their property. Additionally, the Coveys stated in briefing that their "property sustained damages due to increased storm water and ground water." Michael Covey was permitted to testify, over objection, to the estimated cost of his neighbor's property and to his estimation of the value per square foot of the Coveys' Property and how that property value had diminished following the Brishkas' pond breach. Later, the Brishkas attempted to strike the testimony from the record, but the District Court disagreed.

¶46 During closing arguments, the Coveys asked for the following damages: (1) damages for economic harm-the road construction: $265,512.87; (2) damages to the property, approximated to be $315,000; and (3) emotional distress damages to Michael and Stacy Covey. The jury instructions and verdict form all discussed general damages, and both parties in closing argument described "three kinds of damages," including diminution of property value or "damages to the property" generally. The jury awarded the Covey Trust $211,563.40 and awarded Michael and Stacey Covey $101,667.

¶47 The Brishkas argue the District Court erred by allowing the Coveys to recover damages for the diminution of value of their property even though the Coveys failed to plead or to disclose a claim for diminution. The Brishkas further argue it was error to allow Michael Covey to testify as to diminution in value of the property, as his testimony was neither reasonable nor based on intelligent and correct judgment beyond what the average person would know, and Michael Covey was not technically the landowner-the Covey Trust was.

¶48 The Coveys respond that the District Court did not abuse its discretion when it allowed the Coveys to make a claim for property damages when general damage to the Covey Property was an issue throughout the case.

¶49 In closing arguments, the Coveys asked for damage amounts that do not match the ultimate jury damage award. Despite the Coveys' representation that $119,480.40 of the jury award was for increased driveway construction costs and $92,083 was for general property damage, the verdict form did not break apart damages in that way, and neither the parties nor the courts can surmise what the breakdown of those figures meant. See Weber , 253 Mont. at 153, 831 P.2d at 1362. It is impossible to determine from the verdict form how the jury apportioned the damage award among the Coveys' various claims. See Sunburst , ¶¶ 66-67. The dispositive fact remains that that the line on the verdict form setting out damages to the Covey Trust listed $211,563.40.

¶50 The Brishkas correctly point out that the Coveys did not plead, respond to, or otherwise mention a diminution of the value of the Coveys' real property. However, here there is clearly sufficient evidence to support the jury's award of damages, exclusive of the diminution in property value. See Sunburst , ¶¶ 66-67. Assuming, for the sake of argument, that it was error to allow the jury to receive testimony regarding the diminution of property value, as long as the damages pled and evidence presented could substantially support the verdict, this Court will not disturb the jury's verdict. See Sandman , ¶ 41 ; Weber , 253 Mont. at 153, 831 P.2d at 1362. We conclude that substantial evidence supported the jury's award, and we will not second guess the verdict. See Whitcraft , ¶¶ 7, 26 ; Weber , 253 Mont. at 153, 831 P.2d at 1362.

¶51 Additionally, the Brishkas' failure to object to the jury instructions regarding damages for the "loss caused" by the Brishkas constitutes a waiver of the of the opportunity to later object. See Seltzer , ¶ 54. It was also incumbent on the Brishkas to object to the verdict form. See Ammondson , ¶¶ 80-82 ; Pac. Hide , ¶ 20 ; Whitcraft , ¶ 12 ; Horn , ¶ 25. We will not hold a district court in error where counsel did not object at the time of settling instructions or did not request a separate line for each category of damages on the verdict form. Horn , ¶ 25.

¶52 Issue Four: Whether the Coveys made improper closing arguments regarding the Brishkas' alleged negligence .

¶53 When assessing the content of a closing argument, we will reverse a jury verdict only where (1) improper argument occurred, and (2) the improper argument prejudiced a party such that it materially impaired the party's ability to receive a fair trial. Moralli v. Lake County , 255 Mont. 23, 32, 839 P.2d 1287, 1292-93 (1992) ; Harne v. Deadmond , 1998 MT 22, ¶¶ 5, 11, 287 Mont. 255, 954 P.3d 732.

¶54 A closing argument may be improper where counsel references evidence not admitted in the record or puts on a physical demonstration that constitutes introduction of new evidence. See Rieger v. Coldwell , 254 Mont. 507, 510, 839 P.2d 1257, 1258-59 (1992). Conversely, counsel may comment on properly admitted evidence during closing argument, and the jury may make inferences from such evidence. Moralli , 255 Mont. at 32, 839 P.2d at 1293.

¶55 At the close of evidence, the District Court ruled it would permit the strict liability claim to go to the jury. The Coveys then withdrew their negligence, nuisance, and trespass claims against the Brishkas. During closing argument, the Coveys acknowledged that questions of whether the outlet culvert was working or maintained, and whether or not there was or should have been a spillway were no longer before the jury. The Coveys then went on to impugn Alexander Brishka's credibility as a witness by attacking his testimony regarding his recollection of the blocked outlet culvert and berm. The Brishkas objected, and the Coveys responded, "there no limitation on what [members of the jury] can consider in their deliberations." The District Court overruled the objection.

¶56 The Brishkas argue the District Court erred by allowing the Coveys in closing arguments to address the Brishkas' alleged negligence, which was no longer an issue in the case. The Brishkas argue the sole purpose of addressing their alleged negligence was to inflame the jury with irrelevant information, and that the Coveys' reference to the now-irrelevant evidence prejudiced the Brishkas. The Coveys respond that the District Court did not abuse its discretion when it allowed the Coveys to make closing arguments based on admissible evidence. We agree.

¶57 Once evidence is admitted, a trial cannot be reverse-engineered. See Moralli , 255 Mont. at 32, 839 P.2d at 1292-93. Even if evidence admitted was only relevant to claims that ultimately were not submitted to the jury, if that evidence was properly admitted, counsel may comment on that evidence during closing. See Moralli , 255 Mont. at 32, 839 P.2d at 1293 ; see also State v. Gladue , 1999 MT 1, ¶ 15, 293 Mont. 1, 972 P.2d 827 ("it is proper for a prosecutor [in closing arguments] to comment on conflicts and contradictions in testimony, as well as to comment on the evidence presented and suggest to the jury inferences which may be drawn...."). However, unnecessary argument or improper comments regarding properly admitted evidence remain objectionable and inappropriate. See State v. Stewart , 253 Mont. 475, 482-83, 833 P.2d 1085, 1089-90 (1992).

¶58 Although the negligence claim was not submitted to the jury, the evidence admitted in support of this charge was nevertheless properly before the jury. The Coveys' counsel commented on the evidence in closing for the limited purpose of impugning Alexander Brishka's credibility as a witness and not as it pertained to a charge no longer before the jury. Accordingly, no improper argument occurred. See Moralli , 255 Mont. at 32, 839 P.2d at 1292-93 ; Rieger , 254 Mont. at 510, 839 P.2d at 1258-59. Because no improper argument occurred, we decline to analyze whether the Brishkas were prejudiced by the Coveys' closing arguments. The District Court was in the best position to assess whether the evidence was properly before the jury, see Evans , ¶ 26, and it did not abuse its discretion in overruling the Brishkas' objections, see Ward , ¶ 9

¶59 Issue Five: Whether the District Court erred when it excluded evidence of other causes of the pond breach.

¶60 Pursuant to M. R. Civ. P. 8(c), any matter " 'constituting an avoidance or affirmative defense' " must be pled, including evidence of a superseding intervening cause. Faulconbridge , ¶ 82. A "superseding intervening cause" is an unforeseeable event that occurs after a defendant's negligent act and will generally serve to cut off a defendant's liability. Faulconbridge , ¶ 81 (quoting Whiting v. State , 248 Mont. 207, 216, 810 P.2d 1177, 1183 (1991) ) (internal citations omitted). Foreseeable actions do not break the chain of causation. Faulconbridge , ¶ 85 (citing Cusenbary v. Mortensen , 1999 MT 221, ¶ 24, 296 Mont. 25, 987 P.2d 351 ("when an intervening cause is reasonably foreseeable, it does not absolve the defendant of liability....")).

¶61 Proximate cause is a necessary element of any plaintiff's recovery in a strict liability suit, and "a defendant's liability can be cut off by a superseding intervening force." Dvorak v. Matador Serv. Inc. , 223 Mont. 98, 106, 727 P.2d 1306, 1311 (1986). In direct cause cases, where no independent intervening forces are present, "proof of causation is satisfied by proof that the defendant's conduct was the cause in fact or actual cause of the damage alleged, and no consideration of the concept of foreseeability is required." Cusenbary , ¶ 28 (citing Busta v. Columbus Hosp. , 276 Mont. 342, 373, 916 P.2d 122, 140-41 (1996) ).

¶62 A defendant may introduce non-party conduct "only for the purpose of demonstrating that the non-party conduct was a superseding intervening cause of plaintiff's damages." Faulconbridge , ¶ 81 ; Larchick , ¶ 53. A defendant may not, however, introduce such non-party conduct "in an attempt to merely diminish [his] own responsibility, for this would constitute an attempt to apportion fault to a nonparty...." Faulconbridge , ¶ 81.

¶63 In the Brishkas' Answer and Jury Demand, filed August 31, 2017, they affirmatively pled that the Coveys' alleged damages "were caused or contributed to by persons or entities for whose actions [the Brishkas] are not legally responsible." This defense was again stated in the Brishkas' Answer to Amended Complaint and Jury Demand, filed September 18, 2017. At trial, the District Court excluded testimony about the increase in drainage into the pond due to DOT road construction, concluding such evidence "squarely place[d] responsibility on [DOT]...." The District Court limited the Brishkas' expert testimony to: describing the outflow culvert, generally; the structural integrity of the pond redesign; methods for measuring flow rates; current rates; and types of precipitation and increased flow to the pond due to the storm. The District Court disallowed testimony about who installed, maintained, or was responsible for the culvert.

¶64 The Brishkas argue the District Court erred when it precluded them from referencing, alluding to, mentioning, or implying that any changes in circumstances or other factors that contributed to the pond failure-aside from those alleged by the Coveys-may have caused or contributed to the pond failure. The Brishkas argue they affirmatively pled that other persons or entities caused the Coveys' damages. The Brishkas argue they should have been permitted to introduce evidence that DOT's alteration to Big Mountain Road increased drainage into their pond by 389 percent. The Brishkas argue the District Court erred by failing to recognize the distinction between the presentation of evidence to rebut causation and the apportionment of liability to nonparties under § 27-1-703, MCA.

¶65 The Coveys respond that the Brishkas waived these arguments by failing to include them in the pretrial orders and in jury instructions. The Coveys further respond that the District Court did not abuse its discretion when it excluded evidence of intervening and superseding causes because the Brishkas did not properly raise such theories as an affirmative defense and failed to properly disclose their experts.

¶66 It was well within the District Court's discretion to limit the scope of expert testimony based on a failure to disclose expert testimony. First Citizens Bank v. Sullivan , 2008 MT 428, ¶ 29, 347 Mont. 452, 200 P.3d 39 ; Nelson v. Nelson , 2005 MT 263, ¶¶ 31-32, 329 Mont. 85, 122 P.3d 1196. The District Court concluded that the Brishkas failed to disclose any expert to testify regarding the impact of the DOT construction until the Brishkas filed their rebuttal expert disclosure. The District Court did not abuse its discretion when it limited the scope of expert testimony to what the Brishkas included in their initial expert disclosure and granted the Coveys' Motion in Limine . See Nelson , ¶¶ 31-32, 34.

¶67 The Brishkas did not offer any jury instructions regarding superseding intervening causes and did not object to the proposed (and given) instructions regarding causation; the Brishkas cannot now claim they were harmed by the causation instructions. See Drilcon, Inc. v. Roil Energy Corp. , 230 Mont. 166, 174, 749 P.2d 1058, 1062 (1988) (a defendant's "failure to offer an instruction regarding superseding/intervening cause renders any alleged error harmless....").

¶68 We conclude the District Court did not err when it excluded evidence at trial that DOT was potentially at fault for the Coveys' damages. See Larchick , ¶¶ 52-53.

CONCLUSION

¶69 The District Court did not err when it concluded the Brishkas' pond constituted an abnormally dangerous condition that warranted the application of strict liability. The District Court also did not err when it allowed the Coveys to claim the full amount of damages for the increased cost of their shared driveway project. Regardless of whether the Coveys improperly presented evidence of the diminution of property value, the jury verdict form, unobjected to by either party, did not separate out damages, was supported by substantial evidence, and did not amount to reversible error. Additionally, the District Court did not err in allowing the Coveys to make arguments in closing that touched upon properly-admitted evidence. Finally, the District Court did not abuse its discretion when it refused to allow evidence of other potential causes of the pond breach. We affirm.

We Concur:

INGRID GUSTAFSON, J.

DIRK M. SANDEFUR, J.

BETH BAKER, J.

JIM RICE, J.

      A "swale" is a shallow depression or trench in the land through which water can flow. Ducham v. Tuma , 265 Mont. 436, 438, 877 P.2d 1002, 1004 (1994).

      The Coveys' conclusion is presumably premised on the visible notations in the margins of the verdict form. However, the verdict form did not differentiate between diminution damages/general property damage and increased driveway construction costs, and neither did the notations.


source: Caselaw Access Project

license: Public Domain

text:
    STATE of Montana, Plaintiff and Appellee, v. William John NORDHOLM, Defendant and Appellant.
    DA 17-0120
    Supreme Court of Montana.
    Submitted on Briefs: June 12, 2019 Decided: July 23, 2019
    For Appellant: Chad Wright, Appellate Defender, Kristen L. Peterson, Assistant Appellate Defender, Helena, Montana
    For Appellee: Timothy C. Fox, Montana Attorney General, Micheal S. Wellenstein, Assistant Attorney General, Helena, Montana, Ben Krakowka, Deer Lodge County Attorney, Ellen Donohue, Deputy County Attorney, Anaconda, Montana
   Justice Ingrid Gustafson delivered the Opinion of the Court.

¶1 William John Nordholm (Nordholm) appeals following his convictions for felony aggravated kidnapping and misdemeanor partner family member assault (PFMA), after a jury trial in the Third Judicial District Court, Anaconda-Deer Lodge County, in October 2016. We reverse and remand for a new trial.

¶2 We restate the issue on appeal as follows:

Did the District Court commit reversible error by allowing the jury unrestricted access to view testimonial videos during its deliberations?

FACTUAL AND PROCEDURAL BACKGROUND

¶3 Late in the evening on December 19, 2015, and into the early morning hours of December 20, 2015, Nordholm and his girlfriend, Melinda Archuleta (Archuleta), went for a drive, stopping at various bars to drink. Around 2:00 a.m., the pair stopped at the Town Pump on the east side of Anaconda to get something to eat. Nordholm was driving, and both parties were intoxicated. Archuleta entered the Town Pump and purchased snacks. When Archuleta returned to the vehicle, the pair got into an argument over who would drive next. Nordholm was in the driver's seat, and Archuleta attempted to sit down in the driver's seat and have Nordholm move over, so she could drive. The two got in a brief fight, during which Nordholm pulled Archuleta's hair.

¶4 Archuleta briefly reentered the Town Pump to get away from Nordholm. Archuleta then returned to the vehicle and the fighting began again. Nordholm hit Archuleta and dragged her on the ground outside the vehicle. During this altercation, Archuleta lost her jacket. Archuleta then entered the Town Pump for a third time. Archuleta informed the convenience store clerk working at the time, Cindy Scheck (Scheck), that she had just been assaulted in the parking lot. While Archuleta was speaking with Scheck, Brenda Krattiter (Krattiter), who was working at the casino in the Town Pump, came over because she heard the commotion outside. Archuleta again stated that she had been assaulted outside. Nordholm then entered the Town Pump and attempted to get Archuleta to leave with him. Krattiter asked Nordholm to leave the store, but he refused. Krattiter went back to the casino and called 911.

¶5 Nordholm grabbed Archuleta and walked her backwards out of the Town Pump. Outside, Nordholm again dragged Archuleta on the ground towards the vehicle. Nordholm left Archuleta on the ground and attempted to walk behind the vehicle but slipped on a patch of ice. After Nordholm slipped on the ice, Archuleta got in the vehicle, locked the doors, and drove away. Nordholm then reentered the Town Pump and went to the bathroom. Police officer Kyle Staley (Officer Staley) arrived at the Town Pump shortly after and began speaking to Scheck about the incident. Nordholm walked behind Officer Staley, exited the store, and then tried to climb a fence behind the Town Pump. Police caught Nordholm as he was attempting to climb the fence and detained him. Nordholm was arrested for PFMA that night. Officer Staley spoke with Archuleta about the incident later, and Nordholm was ultimately charged with both aggravated kidnapping and PFMA.

¶6 In October 2016, Nordholm was tried before a jury in the District Court. Nordholm admitted guilt to the PFMA charge at trial. After the jury retired for deliberations on October 26, 2016, the District Court held a discussion with counsel for Nordholm and the State regarding what exhibits would be given to the jury. Specifically, the District Court and the parties discussed the playing of videos admitted as exhibits during trial. A total of eight videos were admitted during trial: State's Exhibit 2, a security video from the Town Pump cash register; State's Exhibit 3, a security video from the Town Pump's entrance; State's Exhibit 4, a security video from the Town Pump's parking lot; State's Exhibit 6, Officer Cody Hanson's body camera video of himself speaking with Nordholm; State's Exhibit 7, Officer Staley's body camera video of himself speaking with Nordholm, Scheck, and Krattiter; State's Exhibit 8, Officer Staley's body camera video of himself speaking with Scheck; State's Exhibit 9, Officer Staley's body camera video of himself speaking with Archuleta; and Defense Exhibit A, a body camera video of Archuleta being interviewed after a different incident.

¶7 Counsel for Nordholm suggested that if the jury did make a request to watch any of the videos during their deliberations, that the videos should then be watched in open court. The District Court stated that "I understand your concern, but I'll just, I'm tired so I'll just say all things considered, denied." All the videos were then given to the jury for their deliberations. The jury convicted Nordholm of both aggravated kidnapping and PFMA. Nordholm appeals.

STANDARD OF REVIEW

¶8 We review a district court's decision on the evidence that may be taken into the jury room during deliberations for an abuse of discretion. State v. Stout , 2010 MT 137, ¶ 29, 356 Mont. 468, 237 P.3d 37 (citing State v. Bales , 1999 MT 334, ¶ 24, 297 Mont. 402, 994 P.2d 17 ). A district court abuses its discretion if it acts arbitrarily, unreasonably, or without employing conscientious judgment, resulting in substantial injustice. State v. Hart , 2009 MT 268, ¶ 9, 352 Mont. 92, 214 P.3d 1273.

DISCUSSION

¶9 Did the District Court commit reversible error by allowing the jury unrestricted access to view testimonial videos during its deliberations?

¶10 "Upon retiring for deliberation, the jurors may take with them ... all exhibits that have been received as evidence in the cause that in the opinion of the court will be necessary." Section 46-16-504, MCA. We have further "recognized the common law rule against submission of testimonial materials to the jury for unsupervised and unrestricted review." Stout , ¶ 29 (internal quotations and citation omitted). The common law rule applies to both materials sent with the jury at the start of deliberations and requests from the jury to re-hear testimony as provided in § 46-16-503(2), MCA. Stout , ¶ 29 (citing Bales , ¶ 23). "Adherence to this rule prevents the jury from giving undue weight to one witness's statements to the exclusion of the evidence presented by other witnesses." Hart , ¶ 34 (citing Bales , ¶¶ 19-20).

¶11 In this case, the jury made no requests to view testimonial materials. The videos admitted into evidence during trial were simply given to the jury by the District Court for unsupervised and unrestricted review at the start of their deliberations. Nordholm contends that State's Exhibits 6, 7, 8, and 9 all contain testimonial evidence and therefore the District Court abused its discretion by allowing the jury unsupervised review of these videos. The State argues that Exhibit 6 does not contain testimonial evidence, but concedes that Exhibits 7, 8, and 9 all contain testimonial evidence and therefore the District Court abused its discretion by allowing the jury unsupervised review of these videos. The State argues that allowing the jury unsupervised access to these videos was "harmless error," and reversal is not warranted.

¶12 The District Court allowing the jury unsupervised access to view the videos at issue in this case during its deliberations was "trial error." Hart , ¶ 35. In order to prove that this error was harmless, the State must demonstrate that there is "no reasonable possibility" that the unsupervised review of testimonial videos might have contributed to Nordholm's conviction. State v. Van Kirk , 2001 MT 184, ¶ 47, 306 Mont. 215, 32 P.3d 735.

¶13 The State argues that the evidence on the videos "did not unduly contribute to the aggravated kidnapping conviction because other evidence that was introduced at trial proved the same facts as in the videos." We are not persuaded by this argument, because the purpose of the common law prohibition on submission of testimonial material to a jury during its deliberations is to prevent the jury from "giving undue weight" to such testimonial evidence. Hart , ¶ 34. Unsupervised, the jury could repeatedly view the statements made by Nordholm, Scheck, Krattiter, and Archuleta on the videos. The testimony given at trial, including statements made during cross-examination, was limited to what the jury remembered. The State's harmless error arguments regarding the qualitative effect of the videos ultimately does not reach the true issue in this case-the unsupervised review of the videos. It may well be true that other evidence presented at trial proved at least some of the same facts as those in the videos, but the qualitative effect of the jury's review of the videos is both unknown and unknowable because they were given unsupervised access to view the videos as many times as they wished. Indeed, it can never be known if the jury would have even asked to view the videos during deliberations in this case as the District Court simply gave them to the jury without being asked.

¶14 The common law rule regarding the submission of testimonial evidence to juries during deliberation is in place to prevent a jury from placing undue emphasis on that evidence to the exclusion of other evidence. In this case, as the State concedes, the District Court abused its discretion by allowing the jury unsupervised access to review testimonial evidence. The State cannot prove that there is "no reasonable possibility" that the jury's review of these testimonial videos contributed to Nordholm's aggravated kidnapping conviction because the jury had unsupervised access to them. Van Kirk , ¶ 47. The jury could repeatedly play the videos at issue and therefore give them "undue emphasis." Hart , ¶ 34. At trial, a jury hears testimony from witnesses on the stand. During deliberations, a jury must rely on its collective memory to assess the testimony of those witnesses-a transcript of witness testimony is not provided. It would create a fundamental imbalance to allow juries to review testimonial video evidence during deliberations when a transcript of the testimony given by witnesses at trial is not, and should not, be given to the jury to review during deliberations. On rare occasions, it may be appropriate for a jury to review testimonial video evidence during their deliberations based on an unusual or unique circumstance. Such a review, however, must be supervised by the district court, to prevent the very problems at issue here. Because we cannot find that the District Court's error in this case was harmless, it is appropriate to remand this case to the District Court for a new trial.

CONCLUSION

¶15 The District Court abused its discretion when it allowed the jury unrestricted access to view testimonial videos during its deliberations. The District Court's error was not harmless.

¶16 Reversed and remanded for a new trial.

We concur:

MIKE McGRATH, C.J.

JIM RICE, J.

LAURIE McKINNON, J.

JAMES JEREMIAH SHEA, J.

      Nordholm also concedes that Defendant's Exhibit A also contains testimonial evidence, but he does not appeal on this issue.

      It is not necessary to determine whether Exhibit 6 ultimately contained testimonial evidence because reversal is warranted due to the jury's unsupervised access to Exhibits 7, 8, and 9-which the State concedes contain testimonial evidence.


author: Chief Justice Mike McGrath delivered the Opinion of the Court. Justice Laurie McKinnon, dissenting. Justice Beth Baker, dissenting.

text:
    Lisa STRAUSER, Petitioner and Appellant, v. RJC INVESTMENT, INC., Defendant and Appellee.
    DA 18-0480
    Supreme Court of Montana.
    Submitted on Briefs: July 3, 2019 Decided: July 23, 2019
    For Appellant: D. Michael Eakin, Eakin, Berry & Grygiel, PLLC, Billings, Montana
    For Appellee: Christopher T. Sweeney, Peter M. Damrow, Moulton Bellingham PC, Billings, Montana
   Chief Justice Mike McGrath delivered the Opinion of the Court.

¶1 Plaintiff Lisa Strauser appeals from an order of the Thirteenth Judicial District Court, Yellowstone County, granting a motion to dismiss in favor of Defendant RJC Investment, Inc. We affirm in part and reverse in part.

¶2 We restate the issues on appeal as follows:

1. Whether consumers have a private right of action under the 2007 version of the Montana Retail Installment Sales Act.
2. Whether the statutory provisions contained in the Montana Retail Installment Sales Act apply to a retail installment contract not enforced by the Department of Administration.

FACTUAL AND PROCEDURAL BACKGROUND

¶3 On January 15, 2009, Strauser purchased a mobile home for $50,000 from Cherry Creek Development, Inc. (Cherry Creek) in Billings, Montana. Strauser paid $2,500 down and financed the remainder through an Installment Sales Contract and Security Agreement (Agreement), which Cherry Creek later assigned to RJC Investment, Inc. (RJC Investment). The Agreement required Strauser to make monthly payments of $482 with a variable interest rate over a fifteen-year period and to pay a $50 late fee for any late payments. Between 2009 and 2016, Strauser alleges that RJC Investment assessed $3,300 in late fees against her and failed to disclose the amount of the finance charge.

¶4 Strauser filed an action in District Court seeking a declaratory judgment pursuant to the Uniform Declaratory Judgment Act (UDJA), Title 27, chapter 8, MCA, clarifying her rights and obligations under the Agreement. Strauser further asserted that provisions of the Montana Retail Installment Sales Act (RISA), Title 31, chapter 1, part 2, MCA, (2007), barred RJC Investment from collecting fees under the Agreement because Cherry Creek and RJC Investment had violated RISA by failing to disclose the finance charge and collecting excessive late fees. RJC Investment moved to dismiss Strauser's complaint for failure to state a claim pursuant to M. R. Civ. P. 12(b)(6). On March 29, 2018, the District Court granted RJC Investment's M. R. Civ. P. 12(b)(6) motion on the basis that the 2009 version of RISA did not confer a private cause of action. Strauser appeals.

STANDARD OF REVIEW

¶5 This Court reviews a district court's grant or denial of a motion to dismiss pursuant to M. R. Civ. P. 12(b)(6) de novo. Meagher v. Butte-Silver Bow City-Cty. , 2007 MT 129, ¶ 13, 337 Mont. 339, 160 P.3d 552. "A district court's determination that a complaint failed to state a claim presents a conclusion of law," which this Court reviews for correctness. Renenger v. State , 2018 MT 228, ¶ 5, 392 Mont. 495, 426 P.3d 559. This Court views the complaint in the light most favorable to the non-moving party, and affirms a District Court's dismissal only where the "non-moving party would not be entitled to relief based on any set of facts that could be proven to support the claim." Renenger, ¶ 5 .

DISCUSSION

¶6 1. Whether consumers have a private right of action under the 2007 version of the Montana Retail Installment Sales Act.

¶7 On appeal, Strauser asserts six violations of RISA including that Cherry Creek and RJC Investment: (1) failed to disclose the finance charge; (2) failed to disclose the total amount of the time balance, stated as one sum in dollars and cents; (3) prematurely assessed late fees; (4) charged excessive late fees; (5) failed to disclose the number of payments; and (6) did not contain the required notice in the Agreement. Strauser argues that she has a private cause of action pursuant to RISA, § 31-1-203(2), MCA (2007), which states: "Any person violating 31-1-231 through 31-1-243, except as the result of an isolated accidental and bona fide error of computation, shall be barred from recovery of any finance, delinquency, or collection charge on the contract." We disagree. In Somers v. Cherry Creek Dev., Inc. , 2019 MT 101, 395 Mont. 389, 439 P.3d 1281, this Court held that the 2009 version of RISA did not confer a private right of action. While the 2007 version of RISA controls in this case, the same analysis applies.

¶8 "[A] party is not entitled to obtain private enforcement of a regulatory statute that is not intended by the legislature to be enforceable by private parties." Mark Ibsen, Inc. v. Caring for Montanans, Inc. , 2016 MT 111, ¶ 41, 383 Mont. 346, 371 P.3d 446. In Wombold v. Assocs. Fin. Servs. Co. of Mont., Inc. , 2004 MT 397, ¶ 36, 325 Mont. 290, 104 P.3d 1080, this Court developed a four-factor test ( Wombold test) to determine whether a statutory scheme confers a private cause of action. Somers , ¶ 11. Consistent with this Court's analysis and application of the Wombold test in Somers , the Legislature did not intend the 2007 version of RISA to confer a private cause of action. Somers , ¶ 19. "RISA is an administrative statute authorizing the Department to enforce its provisions," not private parties. Somers , ¶ 15.

¶9 2. Whether the statutory provisions contained in the Montana Retail Installment Sales Act apply to a retail installment contract not enforced by the Department of Administration.

¶10 This Court has recently reviewed several installment contracts governing the relationship between mobile home purchasers and RJC Investment. See Kapor v. R.J.C. Inv., Inc. , 2019 MT 41, 394 Mont. 311, 434 P.3d 869 ; Hutzenbiler v. R.J.C. Inv., Inc. , 2019 MT 80, 395 Mont. 250, 439 P.3d 378 ; Christman v. Clause , 2019 MT 132, 396 Mont. 142, 443 P.3d 472 ; Somers . While each case presented nuanced issues, this Court has uniformly held that Article 9A of Montana's adopted version of the Uniform Commercial Code (U.C.C.) governs contracts involving secured transactions, including the present Agreement, subjecting "both the debtor and creditor parties to additional obligations and rights." Christman , ¶¶ 12-13. While the statutory provisions of the U.C.C. are not presently at issue, this Court wishes to contextualize our prior holdings in Kapor , Hutzenbiler , Christman , and Somers , with the present facts.

¶11 Title 30, chapter 9A, part 6, MCA, governs default in secured transactions, and is triggered by the debtor's default. Kapor , ¶ 11 ; Hutzenbiler , ¶ 14 (citing § 30-9A-601, MCA ). In the event of Strauser's default and RJC Investment's repossession and disposition of the mobile home, our holdings in Kapor , Hutzenbiler , and Christman , make clear that "termination of the security interest does not do away with the obligations of a creditor under Title 30, Chapter 9A," including the debtor's right to an accounting for or payment of surplus proceeds of collateral. Christman , ¶ 15.

¶12 However, it is unclear from the record and the briefing whether Strauser is currently in default. This Court declines to conduct an independent review of the District Court record to decide sua sponte whether Strauser is in default, triggering the statutory provisions of Title 30, chapter 9A, part 6, MCA. See Hutzenbiler , ¶ 14. Therefore, this Court takes the case in the procedural posture presented.

¶13 Strauser asserts she is uncertain whether RJC Investment can lawfully collect the finance charges and late fees under the Agreement and that a declaratory judgment pursuant to UDJA would relieve the parties from uncertainty. Specifically, Strauser alleges that RJC Investment has already unlawfully assessed $3,300 in late fees against her and refused to disclose the finance charge. She seeks a declaratory judgment to determine whether the Agreement lawfully requires her to continue to pay the fees in question. Strauser presents an existing and genuine dispute. Because Strauser and RJC Investment have existing rights and interests under the Agreement, and the District Court's judgment will clarify those legal rights and obligations, Strauser presents a justiciable controversy. See Marshall v. Safeco Ins. Co. , 2018 MT 45, ¶ 10, 390 Mont. 358, 413 P.3d 828.

¶14 In Somers , this Court declined to address whether the plaintiffs could seek a declaratory judgment clarifying the rights and obligations of the parties under a retail installment contract. Somers , ¶ 21. However, the plaintiffs in Somers filed a putative class action in district court seeking a declaratory judgment that RISA barred Cherry Creek and RJC Investment from recovery of any interest, finance charges, or late fees on the installment contract. While they asked for the same declaratory relief as Strauser on appeal, the issue was not properly raised in district court. Somers , ¶ 20. Here, Strauser sought a declaratory judgment pursuant to UDJA in District Court to clarify whether she owed illegally assessed money on the Agreement. Accordingly, this Court will now address the issue on appeal.

¶15 The purpose of UDJA is "to settle and to afford relief from uncertainty and insecurity as to rights, status, and other legal relations." Section 27-8-102, MCA ; Lee v. State , 195 Mont. 1, 6, 635 P.2d 1282, 1284 (1981). UDJA is remedial and "is to be liberally construed and administered." Section 27-8-102, MCA ; Lee , 195 Mont. at 6, 635 P.2d at 1284. Section 27-8-202, MCA, states:

Any person interested under a deed, will, written contract, or other writings constituting a contract or whose rights, status, or other legal relations are affected by a statute, municipal ordinance, contract, or franchise may have determined any question of construction or validity arising under the instrument, statute, ordinance, contract or franchise and obtain a declaration of rights, status, or other legal relations thereunder.

"Courts of record within their respective jurisdictions shall have power to declare rights, status, and other legal relations whether or not future relief is or could be claimed." Section 27-8-201, MCA.

¶16 The courts' statutory power under UDJA to answer questions of contractual construction does not conflict with the Department of Administration's statutory power under RISA to enforce the provisions of RISA. While UDJA "is primarily intended to determine the meaning of a law or a contract and to adjudicate the rights of the parties therein," it is clear that UDJA is not intended "to determine controversial issues of fact." Tarlton v. Kaufman , 2008 MT 462, ¶ 33, 348 Mont. 178, 199 P.3d 263 (quoting Raynes v. Great Falls , 215 Mont. 114, 120-21, 696 P.2d 423, 427 (1985) ).

¶17 Strauser sought from the District Court a construction of the Agreement she signed with Cherry Creek and a determination whether certain of the construed provisions violate state law. Her action fits squarely within UDJA's liberally constructed purpose to settle and afford relief from uncertainty and insecurity with respect to rights and obligations under a written contract. See United Nat'l Ins. Co. v. St. Paul Fire & Marine Ins. Co. , 2009 MT 269, ¶ 36, 352 Mont. 105, 214 P.3d 1260.

¶18 Strauser contends she should not have to wait for RJC Investment to file an eviction proceeding against her to clarify whether RJC Investment can legally collect the finance charge and late fees it has been charging. UDJA exists to remedy such uncertainty. Whether RJC Investment can lawfully collect these fees under the Agreement is a question of contractual construction, does not involve a controverted issue of fact, and is within the purview of the District Court to decide. Without such a remedy, the purchaser under a retail installment contract would be forced to pay the assessed fees even if the assessed fees violated Montana law, or default and risk the loss of his or her home. UDJA lawfully enables Strauser to determine whether she has a valid contractual defense for default under the Agreement "whether or not future relief is or could be claimed" at the time the action is filed. See § 27-8-201, MCA.

¶19 While the dissent argues that a declaratory judgment in this instance amounts to an advisory opinion because no justiciable controversy exists, the statutory language of § 27-8-201, MCA, is clear.

Courts of record within their respective jurisdictions shall have power to declare rights, status, and other legal relations whether or not further relief is or could be claimed. No action or proceeding shall be open to objection on the ground that a declaratory judgment or decree is prayed for. The declaration may be either affirmative or negative in form and effect, and such declarations shall have the force and effect of a final judgment or decree.

Section 27-8-201, MCA. While UDJA "does not license litigants to fish in judicial ponds for legal advice," under the narrow circumstances presented, Strauser was entitled to a declaratory judgment clarifying whether the Agreement lawfully obligates her to pay a finance charge and late fees assessed by RJC Investment. See Mont. Dep't of Nat. Res. & Conservation v. Intake Water Co. , 171 Mont. 416, 440, 558 P.2d 1110, 1123 (1976). The District Court erred in dismissing Strauser's motion for failure to state a claim, because Strauser properly asked the District Court for a declaratory judgment clarifying her "rights, status, or other legal relations" under the Agreement in light of the provisions of RISA. See § 27-8-102, MCA.

¶20 We reverse the District Court's decision to dismiss Strauser's complaint for failure to state a claim on this issue, and remand this proceeding to the District Court to clarify Strauser's rights and legal obligations under the Agreement. Accordingly, the District Court must decide whether Strauser's Agreement with Cherry Creek is a retail installment contract pursuant to § 31-1-202(n), MCA (2007). If the Agreement meets the definition of a retail installment contract pursuant to § 31-1-202(n), MCA (2007), the provisions of §§ 31-1-501 and -502, MCA (2007), do not apply. Rather, the provisions of RISA dictate the legal requirements for finance charges and late fees under a retail installment contract. See §§ 31-1-231, -235, -236, -241, MCA (2007). The District Court order should clarify whether the Agreement obligates Strauser to pay the finance charge and late fees assessed pursuant to the provisions of the Agreement, which Strauser may rely upon in the event of a default action filed against her.

CONCLUSION

¶21 The 2007 version of RISA controls in this case and does not confer a private cause of action. Strauser cannot privately sue to employ the enforcement provisions of RISA.

¶22 However, the District Court erred in dismissing Strauser's complaint for failure to state a claim. This Court remands this proceeding to the District Court to issue a declaratory judgment construing the legal rights and obligations of the parties under the Agreement.

¶23 Affirmed in part, reversed in part, and remanded for further proceedings consistent with this Opinion.

We Concur:

DIRK M. SANDEFUR, J.

INGRID GUSTAFSON, J.

JAMES JEREMIAH SHEA, J.

Justice Laurie McKinnon, dissenting.

¶24 I find the Court's reasoning contradictory and incomplete.

¶25 Strauser financed her purchase of a mobile home and failed to make timely payments on approximately 66 occasions. RJC took no legal action against Strauser pursuant to the Agreement, but Strauser nevertheless sued RJC for failure to comply with RISA. Strauser sought a declaratory judgment that RJC could not collect finance charges because RJC allegedly violated RISA; she wanted the court to determine what amount remained owing under the Agreement. Strauser's claims for relief arise solely from RISA's various administrative provisions. The Legislature set forth a remedy for alleged RISA violations in § 31-1-212(2), MCA, which provides, "A retail buyer having reason to believe that [RISA] has been violated may file with the [D]epartment a written complaint setting forth the details of the alleged violation ...." Strauser never filed a complaint with the Department. We clearly held in Somers , ¶ 19, that the Legislature did not provide a private cause of action to determine whether alleged RISA violations had occurred.

¶26 Nonetheless, following a misapplication of the UDJA and Somers , the Court orders the District Court to "clarify whether the Agreement obligates Strauser to pay the finance charge and late fees assessed pursuant to the provisions of the Agreement, which Strauser may rely upon in the event of a default action filed against her ." Opinion, ¶ 20 (emphasis added). The Court remands this case "to the District Court to issue a declaratory judgment construing the legal rights and obligations of the parties under the Agreement ." Opinion, ¶ 22. Not only is it the Department's legislatively delegated authority to decide whether the parties violated RISA, i.e., whether the parties adhered to their legal rights and obligations under the Agreement, but the Court ignores the fundamental prerequisite to invoking the authority of a court: a justiciable controversy.

¶27 To begin, we recognized in Somers that the purpose of RISA was to establish an administrative process which authorizes "the Department to enforce its provisions." Somers , ¶¶ 12, 15. We explained the Department, in order to carry out RISA's provisions, may: adopt rules necessary to implement RISA provisions; perform investigations it considers necessary to ensure compliance with RISA; require licensure to engage in the business of a sales finance company; and deny, suspend, or revoke licenses for failing to comply with RISA provisions, defrauding any retail buyer to the buyer's damage, or fraudulent misrepresentation. Thus, Strauser's claim that she may utilize a declaratory judgment to determine (1) her rights under RISA in the context of the Agreement, and (2) "the validity of a contract defense" pursuant to RISA, should be seen for what it is: an attempt to bypass the Department's statutory responsibilities for enforcement of RISA and obtain an advisory opinion from this Court.

¶28 Aside from the Court's flawed attempt to distinguish an action under the UDJA from a complaint resolving an alleged RISA violation, the Court commits another, perhaps more fundamental, error. Before a court may exercise jurisdiction under the UDJA, a justiciable controversy must exist. "Courts do not function, even under the [UDJA], to determine speculative matters, to enter anticipatory judgments, to declare social status, to give advisory opinions or to give abstract opinions." Houston Lakeshore Tract Owners Against Annexation, Inc. v. City of Whitefish , 2017 MT 62, ¶ 28, 387 Mont. 83, 391 P.3d 86. Indeed, this Court has "refused to entertain a declaratory judgment action on the ground that no controversy is pending which the judgment would affect." Northfield Ins. v. Mont. Ass'n of Ctys. , 2000 MT 256, ¶ 10, 301 Mont. 472, 10 P.3d 813 (citation omitted).

¶29 The test of whether a justiciable controversy exists contains three elements:

First, a justiciable controversy requires that parties have existing and genuine, as distinguished from theoretical, rights or interests. Second, the controversy must be one upon which the judgment of the court may effectively operate, as distinguished from a debate or argument invoking a purely political, administrative, philosophical or academic conclusion. Third, [it] must be a controversy the judicial determination of which will have the effect of a final judgment in law or decree in equity upon the rights, status or legal relationships of one or more of the real parties in interest, or lacking these qualities be of such overriding public moment as to constitute the legal equivalent of all of them.

Murray v. Motl , 2015 MT 216, ¶ 13, 380 Mont. 162, 354 P.3d 197 (citation omitted). We apply the justiciable controversy test to actions for declaratory judgments to prevent courts, as here, from determining speculative or anticipatory matters and rendering abstract or advisory opinions.

¶30 In Brisendine v. Mont. Dep't of Commerce, Bd. of Dentistry , 253 Mont. 361, 363, 833 P.2d 1019, 1020 (1992), for example, a denturist sought a judicial declaration that he was not prohibited from entering into a professional relationship with a dentist while the issue was still pending before the Board of Dentistry. We upheld the district court's determination that no justiciable controversy existed because the complaint lacked specificity regarding his proposed business association and because Brisendine had not exhausted his administrative remedies. Brisendine , 253 Mont. at 365-66, 833 P.2d at 1021-22. We determined that an action for declaratory judgment while the underlying controversy was pending before an administrative board was premature and would only serve as an impermissible advisory opinion. Brisendine , 253 Mont. at 365, 833 P.2d at 1021.

¶31 In Hardy v. Krutzfeldt , 206 Mont. 521, 523, 672 P.2d 274, 275 (1983), the plaintiffs sought a judicial declaration that several preemptive rights of first refusal pertaining to real property were unreasonable restraints of alienation. We held that no justiciable controversy existed because the record did not reflect an intent by any party to sell property outside the first refusal clause; nor was any party seeking relief from the clause. Hardy , 206 Mont. at 525, 672 P.2d at 276. We explained:

No litigant before us is in immediate danger of sustaining direct injury from the preemptive clause. Therefore we do not have a justiciable controversy over which the judicial power to determine real controversies may be exercised. Broad language in the [UDJA] ... may not be used as a platform for courts in this state to plunge into indefinite amorphous ponds of contract interpretation.

Hardy , 206 Mont. at 525, 672 P.2d at 276.

¶32 In Northfield , ¶ 14, this Court held there was no justiciable controversy where insurance companies sought a declaration as to their rights under a contract and whether they had a duty to indemnify. We explained that no request for indemnification had been made and any determination of whether the contract imposed a duty to indemnify would require speculation that indemnification would eventually be sought. Northfield , ¶ 16.

¶33 Here, applying the test for justiciable controversies, Strauser's claim must fail. First, there is no actual dispute because RJC never sued to recover outstanding amounts owed under the Agreement. As in Northfield , ¶¶ 12, 14, the parties may disagree as to the obligations under the Agreement, but this does not rise to an "existing and genuine" dispute. Second, Strauser's claim is premised upon alleged violations of an administrative statute which are to be determined only by the Department. See Somers , ¶¶ 9-21. The Department has not made any determination that there were RISA violations and, like in Brisendine , 253 Mont. at 365-66, 833 P.2d at 1021-22, the administrative process has been ignored. Finally, by ordering the trial court to render an opinion on the application of various RISA provisions to the instant facts and Agreement, Opinion, ¶ 22, the Court is ordering relief inconsistent with Somers and instructing the trial court to issue a speculative advisory opinion. Strauser is not entitled to a court's legal opinion of how RISA affects the enforceability of her contract. Strauser is entitled to bring a complaint against RJC to the Department.

¶34 I disagree that a party may file a lawsuit to determine the validity of a potential defense to an action that has not yet been filed. I disagree that a court should issue an advisory opinion regarding a potential dispute that the Legislature committed to an administrative agency for resolution. Lastly, I disagree that the UDJA applies and with this Court's advisory opinion under the guise that Strauser's rights are uncertain under the Agreement-Strauser has a remedy under RISA with the Department.

¶35 I dissent from the Court's decision holding otherwise.

Justice Beth Baker, dissenting.

¶36 For purposes of RJC's Rule 12(b)(6) motion to dismiss, and construing the factual allegations in a light most favorable to Strauser, Northfield , ¶ 8, I agree that her complaint alleges a justiciable controversy. The complaint alleges that she has paid $49,751.81 in principal and interest on the $47,500 initial balance and that RJC illegally has assessed late payments of $3,300 and continues to assess such fees unlawfully. Attached to her complaint is the Promissory Note she signed, which provides:

If default be made in the payment when due of any part or installment of interest, then the whole sum of principal and interest shall become immediately due and payable at the option of [RJC], without notice.

¶37 It also states that, in the event of default, the holder of the Note may recover necessary expenses incurred in collecting the balance, including reasonable attorney fees, "whether incurred through litigation or otherwise." Without notice or an opportunity to contest the legality of the alleged assessed late fees, Strauser could risk loss of her home and exposure to added fees and costs.

¶38 Strauser does, however, have the opportunity to contest the legality of the late fees through the administrative remedy provided by RISA. Under § 31-1-212(2), MCA (2007), "[a] retail buyer having reason to believe that this part relating to his retail installment contract has been violated may file with the department a written complaint setting forth the details of the alleged violation[.]" Section 31-1-203(2), MCA (2007), bars recovery of any finance, delinquency, or collection charge on the contract for violations of RISA prohibitions, "except as the result of an accidental and bona fide error of computation."

¶39 Construing identical provisions under the 2009 version of RISA, we held in Somers that "RISA is an administrative statute through which retail buyers may complain to the Department when holders of retail installment contracts violate [its] provisions." Somers , ¶ 17. We concluded that the statute made plain the Legislature's intent that RISA "be enforced administratively by the Department." Somers , ¶ 19.

¶40 The Court's Opinion does not cite or mention our long line of authority that a party must exhaust its administrative remedies before seeking declaratory relief in district court. We have applied this requirement even in cases where the underlying dispute is between private parties, as it is here. Mt. Water Co. v. Mont. Dep't of Pub. Serv. Reg. , 2005 MT 84, ¶ 14, 326 Mont. 416, 110 P.3d 20. The exhaustion doctrine does not apply when a party raises a bona fide constitutional issue ( Brisendine , 253 Mont. at 366, 833 P.2d at 1022 ; Mitchell v. Town of West Yellowstone , 235 Mont. 104, 109, 765 P.2d 745, 748 (1988) ); or when exhaustion would be a useless or futile act ( Mt. Water Co. , ¶ 15 (citing DeVoe v. Dep't of Revenue , 263 Mont. 100, 866 P.2d 228 (1993) )). But when the party "has neither attempted to exhaust its administrative remedies, nor ... alleged facts that if proven would show the futility of the available administrative remedies[,]" the party is not relieved from the exhaustion doctrine, and it may not resort to the courts before seeking administrative relief. Mt. Water Co. , ¶ 15. See also In re T.W. , 2005 MT 340, ¶ 31, 330 Mont. 84, 126 P.3d 491.

¶41 We emphasized in Brisendine that a party may seek a declaratory ruling from the agency under the Montana Administrative Procedure Act, which requires "[e]ach agency [to] provide for the filing and prompt disposition of petitions for declaratory rulings as to the applicability of any statutory provision[.]" Section 2-4-501, MCA. Declaratory rulings under this section are subject to judicial review "in the same manner as decisions or orders in contested cases." Section 2-4-501, MCA. We noted that by following this approach, Brisendine "would not subject his license to revocation or suspension" before having his legal issue adjudicated. Brisendine , 253 Mont. at 366, 833 P.2d at 1021.

¶42 In the same vein, Strauser would not be faced with losing her home by pursuing an administrative remedy, which admittedly she has not done. Ignoring them altogether, the Court does not distinguish or overrule any of the cases requiring administrative exhaustion, nor does it suggest how Strauser's complaint meets any articulated exception to the requirement or why its ruling will not permit other prospective declaratory judgment litigants "to skip the administrative process." Mt. Water Co. , ¶ 14. Consistent with our precedent, I would hold that Strauser cannot file a declaratory judgment action until she first seeks administrative relief under RISA. If the Department refuses or fails to act on her complaint, she may file a declaratory judgment action in District Court; if the Department issues a ruling adverse to her, she may petition for judicial review. She has the ability to pursue relief without jeopardizing her home or waiting for RJC to issue a notice of default or take other action against her.

¶43 On that basis, I would affirm.

Justice Jim Rice joins in the dissenting Opinion of Justice Baker.

      "It is well established that laws existing at the time a contract is formed become part of the contract." Earls v. Chase Bank of Tex., N.A. , 2002 MT 249, ¶ 12, 312 Mont. 147, 59 P.3d 364. Strauser entered the Agreement with Cherry Creek in January 2009 under the 2007 version of RISA. The 2007 version of RISA therefore controls. At the time of sale, installment sales of mobile homes were covered by the 2007 version of RISA. See § 31-1-102(1)(d), MCA.

      Conversely, if the Agreement is not a retail installment contract, and the property subject to the Agreement meets the definition of "goods" in § 31-1-202, MCA, then §§ 31-1-501 and -502, MCA, apply.

      This provision appears contrary to the default provision in the security agreement, which calls for a thirty-day cure period following the creditor's notice of default.

      It is also clear that Strauser has changed her theory on appeal from what she raised in District Court. In District Court, Strauser sought a determination of what amount was owing under the Agreement, thus pleading a private cause of action under RISA. On appeal, Strauser pursues a theory that she is entitled to know her rights under the contract and, accordingly, whether she has a legal defense based on RISA violations. The Court errs when it adopts Strauser's circular and misguided reasoning. Whether Strauser pursues her allegations offensively or defensively, resolution of Strauser's claims is first committed to the Department.