text:
    CITY OF HELENA, Plaintiff and Respondent, v. CONNIE LYNN KRAUTTER, Defendant and Appellant.
    No. 92-500.
    Submitted on Briefs April 8, 1993.
    Decided May 18, 1993.
    50 St.Rep. 566.
    852 P.2d 636.
    258 Mont. 361.
    See C.J.S. Constitutional Law § 559.

      For Appellant: Connie L. Krautter, Pro Se, Helena.
    For Plaintiff and Respondent: Joseph P. Mazurek, Attorney General, Patricia J. Jordan, Assistant Attorney General, Helena.
   JUSTICE HARRISON

delivered the Opinion of the Court.

Connie Lynn Krautter (Krautter) was convicted of criminal trespass, a misdemeanor, in Helena Municipal Court. She appeals an order of the First Judicial District Court, Lewis and Clark County, affirming the Municipal Court conviction and denying her motion to dismiss. We affirm.

Krautter was arrested at the Intermountain Planned Parenthood Clinic in Helena, Montana, on December 6, 1991, for violating § 45-6-203, MCA. This statute makes it a crime to enter or remain unlawfully on the premises of another. The primary issue on appeal is whether Krautter had a constitutional right of access to private property for the purpose of exercising her right of free speech.

At the time of her arrest, Krautter was sitting on a concrete step at the west door of the clinic. She was part of an anti-abortion demonstration that included approximately forty people. With Krautter at the west door was a group of three people who had locked themselves together with bicycle locks. Krautter had not locked herself to this group.

"No trespassing" signs were posted around the perimeter of the clinic property. Like most of the other people at the demonstration, Krautter had stationed herself within the area defined by those signs. Shortly after the demonstration began, and before any patients had arrived at the clinic, the clinic manager and a police officer asked everyone to leave. About twenty-five people moved from the clinic property to the sidewalk or street. The remaining demonstrators, including Krautter, were arrested and charged with trespass and disorderly conduct.

The Helena Municipal Court found that Krautter was not guilty of disorderly conduct but guilty of criminal trespass, for which she was fined $240. Krautter appealed to the District Court, which heard the case on August 3, 1992. Shortly after the hearing, Krautter moved to dismiss the charge against her on the grounds that she was on the clinic property to exercise her constitutional right of free speech by discussing “physical, emotional, and psychological injuries that have occurred to other women at women’s health clinics” with any interested women entering the clinic that day, and that she had no other reasonable opportunity to convey her message to her intended audience.

On August 21, 1992, the District Court issued its decision, denying Krautter’s motion and finding her guilty of trespass. Krautter appealed.

The trespass charge and conviction clearly are correct. Under § 45-6-203, MCA, a person “commits the offense of criminal trespass to property if he knowingly enters or remains unlawfully in or upon the premises of another.” “Enter or remain unlawfully,” as defined in § 45-6-201, MCA, means to enter or remain without the permission of the landowner or other authorized person. Here, Krautter entered an area marked by “no trespassing” signs and remained there after an “authorized person” — the clinic manager — had asked her to leave.

Krautter admits that she trespassed but contends that the fine was improper because she entered and remained on the clinic property to exercise the right of freedom of speech guaranteed by the First Amendment and by the Montana Constitution, Art. II, § 7. She argues that § 45-6-203, MCA, is unconstitutional because it does not allow for protected speech on private property.

The City of Helena, represented here by the Montana Attorney General’s office, argues that we should not address the state constitutional issue because it was not raised in the District Court. See State v. Blalock (1988), 232 Mont. 223,756 P.2d 454 (defendantbarred from raising issue of trespass statute’s constitutionality because he did not raise it at trial).

It is true that at the District Court hearing Krautter, representing herself, relied solely on United States Supreme Court cases that balance First Amendment rights against private property rights. Although no Montana case addresses the relation between property rights and freedom of speech, we concluded in City of Billings v. Laedeke (1991), 247 Mont. 151, 158, 805 P.2d 1348, 1352, that Art. II, § 7 provides no greater protection for free expression than does the United States Constitution. Thus, if the trespass statute is constitutional under the First Amendment, it is also constitutional under Art. II, § 7, Mont.Const., which provides in pertinent part that:

No law shall be passed impairing the freedom of speech or expression. Every person shall be free to speak or publish whatever he will on any subject, being responsible for all abuse of that liberty.

The constitutionality of a statute is presumed; the party challenging it must prove beyond a reasonable doubt that it is unconstitutional. Laedeke, 805 P.2d at 1349, citing Fallon County v. State (1988), 231 Mont. 443, 445, 753 P.2d 338, 339. The United States Supreme Court has held that “[i]t would be an unwarranted infringement of property rights to require them to yield to the exercise of First Amendment rights ... where adequate alternative avenues of communication exist." Lloyd Corp., Ltd. v. Tanner (1972), 407 U.S. 551, 567, 92 S.Ct. 2219, 2228, 33 L.Ed.2d 131, 141. Here, the District Court found that Krautter did have alternative avenues of communication. We conclude that Krautter has not proved that she had no alternative avenue of communication and that the Montana trespass statute does not violate the First Amendment.

The question remains as to whether Krautter has a constitutional right of access to private property for the purpose of exercising her right of free speech.

Krautter relies on United States Supreme Court cases, particularly Amalgamated Food Employees Union Local 590 v. Logan Valley Plaza, Inc. (1968), 391 U.S. 308, 88 S.Ct. 1601, 20 L.Ed.2d 603; and Lloyd. In both cases the Supreme Court recognized that a privately-owned shopping center has many of the attributes of a public forum. In Logan Valley, it held that “the State may not delegate the power, through the use of its trespass laws, wholly to exclude those members of the public wishing to exercise their First Amendment rights on the premises in a manner and for a purpose generally consonant with the use to which the property is actually put.” 391 U.S. at 319-320, 88 S.Ct. at 1608-09. But in Lloyd the Court effectively overruled Logan Valley.

Lloyd held that shopping center management could enforce a policy prohibiting the distribution of handbills in the shopping center, where the handbills “had no relation to any purpose for which the center was built and being used,” and people had ample opportunity to distribute handbills in public areas. 407 U.S. at 564-567, 92 S.Ct. at 2226-28. The Supreme Court concluded in Lloyd, and reiterated in Hudgens v. National Labor Relations Board (1976), 424 U.S. 507, 519, 96 S.Ct. 1029, 1036, 47 L.Ed.2d 196, 206, that

the First and Fourteenth Amendments safeguard the rights of free speech and assembly by limitations on state action, not on action by the owner of private property used nondiscriminatorily for private purposes only.

Unless a shopping center has assumed “all of the attributes of a state-created municipality, ... performing the full spectrum of municipal powers,” the Court held, members of the public do not have the same right of free speech in the streets and sidewalks of a shopping center as they would have in similar public facilities in the streets of a city or town. Lloyd, 407 U.S. at 569, 92 S.Ct at 2229 (distinguishing Marsh v. Alabama (1945), 326 U.S. 501, 66 S.Ct. 276, 90 L.Ed. 265, which held that a state could not enforce a prohibition of expressive activity in a shopping center or “company town” with attributes of a municipality).

Here, Krautter has not shown or even argued that the Intermountain Planned Parenthood Center is a public facility. It is not even the type of quasi-public facility that figured in Logan Valley and Lloyd. Even if it were, Krautter still would have to show that no reasonable alternative to convey her message existed. She asserts that “the only way for her to communicate her information to the target audience who could most benefit from her information was to be on the property of the Planned Parenthood clinic.” As the District Court pointed out, however, “nothing ... has been shown to this court that persons driving up to the clinic could not see her picketing in the street and would not have been able to stop and talk with her if they so desired.”

Since 1976, when Hudgens was decided, courts have protected speech on private property under very limited circumstances. The United States Supreme Court held, in Pruneyard Shopping Center v. Robins (1980), 447 U.S. 74, 81, 100 S.Ct. 2035, 2040, 64 L.Ed.2d 741, 752, that a state could adopt in its own constitution “individual liberties more expansive than those conferred by the Federal Constitution,” and affirmed a California Supreme Court decision holding that a privately owned shopping center could not prevent speech and petitioning, reasonably exercised, within the shopping center. The Court clearly distinguished Lloyd, where the state constitution did not create “rights to the use of private property by strangers, comparable to those found to exist by the California Supreme Court.” 447 U.S. at 81, 100 S.Ct at 2041.

We do not find in Art. II, § 7 of the Montana Constitution any right to “the use of private property by strangers” that would entitle Krautter to access to clinic property for purposes of conveying a message to the clinic’s invitees.

Many other state courts have been asked to reverse trespass convictions based on facts similar to those in the case before us; none have found that anti-abortion demonstrators have a right to trespass on private property to express their views. See, e.g., Fardig v. Municipality of Anchorage (Alaska App. 1990), 785 P.2d 911, modified, 803 P.2d 879 (1990) (affirming a trespass conviction; the defendant’s free speech claims failed because a small, privately owned and operated health service commercial enterprise for profit is “not even remotely similar to the company town in Marsh”); Brown v. Davis (N.J. Super.Ch. 1984), 495 A.2d 900, aff’d sub nom. State v. Brown (N. J. Super. A.D. 1986), 513 A.2d 974 (trespass conviction of a woman who refused a request to leave while placing handbills on cars in an abortion-clinic parking lot was sustained even though the court found that “the New Jersey State Constitution has been interpreted more broadly than the Federal Constitution to permit the exercise of expressional rights on private property”); Planned Parenthood League of Mass., Inc. v. Operation Rescue (Mass. 1990), 550 N.E.2d 1361 (preliminary injunction enjoining Operation Rescue members from engaging in trespass and other illegal activities was not over-broad and did not prohibit exercise of First Amendment rights); People v. Yutt (Ill. App. 1992), 597 N.E.2d 208, cert. denied, 606 N.Ed.2d 1234 (1992) (criminal trespass conviction did not violate the defendants’ free speech rights because the clinic, which leased a portion of a shopping center including the adjoining sidewalk and parking lot, had not opened its property as a public forum and had excluded all demonstrators regardless of their beliefs); and City of Sunnyside v. Lopez (Wash. App. 1988), 751 P.2d 313 (criminal trespass conviction upheld because the complex of professional offices in which the defendant was arrested was not sufficiently open to the public to lose its character as private property).

We hold that neither the First Amendment nor Art. II, § 7 of the Montana Constitution entitles Krautter to have access to Planned Parenthood’s property in order to exercise her right of free speech.

Affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES GRAY, WEBER, and HUNT concur.


source: Caselaw Access Project

author: JUSTICE HARRISON

license: Public Domain

text:
    HEARING AID INSTITUTE, Petitioner and Appellant, v. CAROLYN RASMUSSEN and THE MONTANA HUMAN RIGHTS COMMISSION, Respondents and Respondents.
    No. 92-504.
    Submitted on Briefs March 18, 1993.
    Decided May 18, 1993.
    50 St.Rep. 569.
    852 P.2d 628.
    258 Mont. 367.

      See C.J.S. Civil Rights § 212.

      For Petitioner and Appellant: James Arthur Spall, Helena; Robert J. Savage, Habedank, Cumming, Best & Savage, Sidney.
    For Respondents: John F. Lynch, Great Falls; David. Rusoff, Montana Human Rights Commission, Helena.
   JUSTICE HARRISON

delivered the Opinion of the Court.

This is an appeal from an order of the First Judicial District Court, Lewis and Clark County, the Honorable Jeffrey M. Sherlock presiding. The District Court affirmed a Montana Human Rights Commission order that required the appellant, Hearing Aid Institute of Great Falls, Montana (HAI), to pay respondent Carolyn Rasmussen (Rasmussen) $11,300 in front and back pay, plus interest. We affirm.

Rasmussen initiated this action by filing a formal complaint with respondent Human Rights Commission (the Commission) on June 13,1989. She alleged that HAI had refused to hire her for a telemarketing position because she is physically handicapped. The Commission certified her case for a hearing on April 26, 1990, based on an alleged violation of the Montana Human Rights Act at § 49-2-303(l)(a), MCA, and appointed a hearing examiner.

After a hearing on July 24, 1990, at which both parties were represented by counsel and HAI called several witnesses, the hearing examiner issued findings of fact, conclusions of law, and a proposed order. The proposed order required HAI to pay Rasmussen $12,400 as front and back pay and $5,000 in damages for emotional distress; to cease the discriminatory practice of refusing to hire qualified employees with physical handicaps; and to send a management-level employee to training on the federal Americans with Disabilities Act.

In August 1991, HAI filed exceptions to the hearing examiner’s findings of fact and conclusions of law. The Commission heard oral argument on these exceptions on January 23,1992, and issued a final order on March 6, 1992. The Commission determined that Rasmussen did not meet the legal standard for an award of damages for emotional distress and reduced her award accordingly. It also deducted Rasmussen’s interim earnings of $1,100 from the proposed back pay award. In all other respects the Commission adopted the proposed order. HAI petitioned for judicial review on April 3, 1992.

The Commission moved to intervene on May 4,1992, arguing that Rasmussen did not adequately represent its interest in eliminating employment discrimination. The District Court granted the motion on May 27, making the Commission a party to the action, and on September 4, 1992, it denied HAI’s petition and affirmed the Commission’s order. This appeal followed.

Rasmussen was born with cerebral palsy, which affects the muscles in her legs. Although she can walk with a cane, she uses a wheelchair in public. She cannot sit in a standard chair because she is only four feet eight inches tall.

At the time of the Commission hearing in July 1990, Rasmussen was twenty-eight years old and married. She was a high school graduate and had completed a one-year vocational course at Weber State College in Utah. Her work experience, before she applied to HAI in January 1989, included telemarketing for the Bon Marche in Ogden, Utah, for about a year; working as a receptionist at Hill Air Force Base in Clearfield, Utah, for a year; telemarketing for two different firms in Ogden, Utah, including eighteen months with Omni Hearing Aid in 1984-85; and telemarketing for Marketing America in Great Falls, Montana, for a few days.

On or about January 2,1989, Rasmussen applied for a telemarketing job with HAI in Great Falls, Montana. The work involved calling senior citizens and scheduling hearing test appointments for people with hearing problems. Rasmussen was interviewed by HAI’s telemarketing manager, Brian Thomas. Thomas testified at the hearing that he did not ask Rasmussen to complete an employment application, because no copies were available at the time, and that he did not ask her to provide a writing sample. He also testified that he did not ask her for the names and addresses of her previous employers.

At the conclusion of the interview, Thomas said, he decided but did not tell Rasmussen that “she would not be suitable due to the fact that her voice carryover when we talk to hearing impaired people would be inadequate.”

Rasmussen testified that Thomas told her she was hired and would start in about two weeks, after HAI installed a new telephone system. She waited two weeks, she said, then called HAI every other day trying to determine her starting date. She testified that she left messages for Thomas, who did not return her calls. Finally she spoke to Thomas, who told her the new telephones were not installed yet. Later, she spoke to him again. She testified that he told her then that HAI was not hiring anyone, but Thomas testified that he told Rasmussen “they didn’t have anything for her at this time.” Nevertheless, HAI continued to advertize for telemarketers throughout the first half of 1990.

The Commission concluded that Rasmussen had established a prima facie case of employment discrimination. Although HAI attempted to rebut Rasmussen’s prima facie case by articulating a legitimate, non-discriminatory reason for not hiring her, the Commission found that this reason — that Rasmussen’s voice was too soft — was merely a pretext for discrimination. The District Court agreed, and affirmed the Commission’s award of damages.

On appeal, HAI challenges the Commission’s conclusion that Rasmussen was qualified for the telemarketing position and raises numerous subsidiary issues, which we have compressed and rephrased as follows:

1. The District Court erred in concluding that Rasmussen was qualified for telemarketing and therefore erred in concluding that she had established a prima facie case of employment discrimination.
2. The District Court erred in concluding that an employer may not justify rejecting an applicant based on evidence obtained after it decided to reject the applicant.
3. The District Court erred in concluding that the Commission applied the correct test for employment discrimination and not the one used in Price Waterhouse v. Hopkins (1989), 490 U.S. 228,109 S.Ct. 1775, 104 L.Ed.2d 268.
4. The District Court erred in concluding that HAI had not shown that it would not have hired Rasmussen in the absence of discrimination.
5. The District Court erred in concluding that Rasmussen was entitled to front pay.
6. The District Court erred in concluding that evidence of other claims that Rasmussen pursued contemporaneously was not admissible as proof of motive and intent or failure to mitigate.

Judicial review of an administrative agency decision in a contested case is governed by § 2-4-704, MCA. Section 2-4-704(2) provides that an agency’s decision may not be reversed or modified unless substantial rights of the appellant have been prejudiced because the agency exceeded its authority, abused its discretion, made clearly erroneous findings of fact, or interpreted the law incorrectly. Although we applied an “abuse of discretion” standard to an agency’s conclusions of law in two recent Human Rights Commission cases — Johnson v. Bozeman School Dist. No. 7 (1987), 226 Mont. 134, 734 P.2d 209; P. W. Berry Co., Inc. v. Freese (1989), 239 Mont. 183, 779 P.2d 521 — we now apply the standard adopted in Steer, Inc. v. Dep’t of Revenue (1990), 245 Mont. 470, 474, 803 P.2d 601, 603: “In reviewing conclusions of law, our standard of review will be merely to determine if the agency’s interpretation of the law is correct, instead of applying the inappropriate abuse of discretion standard.”

All of the Commission rulings that HAI challenges on appeal, as confirmed by the District Court, are essentially conclusions of law. We review the challenged conclusions of law under the standard set forth in Steer, Inc.

As the framework for this review, we use the three-stage test for employment discrimination articulated by the United States Supreme Court in McDonnell-Douglas Corp. v. Green (1973), 411 U.S. 492, 93 S.Ct 1817, 36 L.Ed.2d 668, and adopted by this Court in Martinez v. Yellowstone County Welfare Dep’t (1981), 192 Mont. 42, 626 P.2d 242. Both the Commission and the District Court applied this test correctly in reaching their conclusions.

In the first stage of this test, the plaintiff must establish a prima facie case of discrimination, by proving that she is a member of a protected class; that she applied for and was qualified for a position; that she was rejected despite her qualifications; and that the position had remained open and the employer had continued to accept applications from persons with comparable qualifications. Establishing the prima facie case creates a presumption that the employer unlawfully discriminated against the plaintiff. Texas Dep’t of Community Affairs v. Burdine (1980), 450 U.S. 248, 254, 101 S.Ct. 1089, 1094, 67 L.Ed.2d 207, 216.

In the second stage of the McDonnell-Douglas test, if the plaintiff has established a prima facie case, the burden shifts to the employer to rebut the presumption of discrimination by producing a legitimate, non-discriminatory reason for the employee’s rejection. If the employer clearly sets forth non-discriminatory reasons for rejection, through admissible evidence, the plaintiff’s case is rebutted. Burdine, 450 U.S. at 254-255, 101 S.Ct at 1094-95.

After the employer has produced a legitimate, non-discriminatory reason for the rejection, the plaintiff has an opportunity to prove that this reason is only a pretext for discrimination. Pretext may be proved directly, by persuading the court that a discriminatory reason more likely motivated the employer, or indirectly, by showing that the employer’s proffered explanation is unworthy of credence. Burdine, 450 U.S. at 256. 101 S.Ct at 1095.

I

Did the District Court err in concluding that Rasmussen was qualified for telemarketing and therefore that she had established a prima facie case of employment discrimination?

Under McDonnell-Douglas, Rasmussen must show that she was qualified for the job for which she was rejected. On the basis of her testimony concerning her previous telemarketing experience, the Commission concluded that she was qualified for the telemarketing opening at the Hearing Aid Institute, stating that:

The uncontroverted testimony of Rasmussen that she previously had been employed as a telemarketer on several occasions establishes that she was “qualified” when she applied for a similar position with HAI.

The Commission correctly distinguished Johnson, in which the Bozeman School District defeated an employment discrimination claim by showing that the claimant was not qualified for a teaching position. Unlike the school district, HAI had not established minimum hiring standards or developed any screening procedures when Rasmussen applied for the job and therefore cannot show that Rasmussen did not meet minimum qualifications.

HAI argues that Rasmussen’s performance in an impromptu writing exercise during her hearing demonstrates her lack of qualifications. Rasmussen’s lawyer asked her to “do a little writing” to illustrate what she had done in previous telemarketing jobs. Rasmussen suggested that she write her name, address and telephone number, as these were items she was required to write as a telemarketer, but HAI’s lawyer suggested that she write, instead, “A quick brown fox jumped over the lazy brown dog.” Rasmussen asked to have the sentence repeated several times before she completed the demonstration. The Commission adopted the hearing examiner’s assessment of this exercise in its findings of fact, as follows:

Her final product omits articles and appropriate verb tense, but in other respects, is accurate and legible. ... Although it took Rasmussen a minute or more to complete the demonstration, little weight was afforded to the time lapse or precision of her transcription. Thomas did not observe Rasmussen’s writing ability during her interview, nor did he ask her to demonstrate how efficiently she could record information by hand. Furthermore, the writing exercise was not representative of the type of information a telemarketer usually records.

The District Court determined that “when one considers the tense atmosphere that often times accompanies hearings,” the Commission’s finding that Rasmussen was qualified as a telemarketer was not clearly erroneous. We agree. The record contains substantial credible evidence that Rasmussen was qualified to schedule hearing test appointments.

II

Did the District Court err in concluding that an employer may not justify rejecting an applicant based on evidence obtained after it decided to reject the applicant?

At the hearing on July 24, 1990, HAI attempted to introduce, as evidence that Rasmussen was not qualified for employment as a telemarketer, testimony by Maria Roberts, who was office manager of Marketing America when Rasmussen worked there briefly in 1986. Roberts testified that Rasmussen’s supervisor at Marketing America let her go because “she could not dial the telephone. It took her quite a long time to dial one number. She also had trouble ... writing that quickly — the way the customer talked — and writing it legibly.”

When Rasmussen’s supervisor terminated her employment, she went to the owner, who offered to give her another chance. After another week, Roberts testified, Rasmussen quit because she “could not handle the position.”

Rasmussen herself testified that she found the atmosphere at Marketing America very stressful: “Nobody would talk to me.... They were very rude with me. So I quit.” She also said that her supervisor let her go initially because he had not been authorized to hire her.

As HAI had not asked Rasmussen for names and addresses of previous employers, and had not checked her previous employment record before deciding not to hire her, the hearing examiner ruled that Roberts’ testimony was admissible only for the purpose of impeaching Rasmussen’s own testimony regarding her qualifications, and not for the purpose of proving that Rasmussen was not qualified when HAI rejected her.

The Commission relied on Mantolete v. Bolger (9th Cir. 1985), 767 F.2d 1416,1424, to support the statement that “an employer may not rely upon evidence obtained after its decision to reject an applicant to justify rejection of the applicant.” HAI argues that Mantolete allows a defendant to rely on such evidence to rebut the plaintiff’s prima facie case of discrimination, and that in excluding Roberts’ testimony that Rasmussen was not qualified, the Commission denied HAI the right to a valid defense.

The relevant holding in Mantelete follows:

Although it is questionable whether the Postal Service could justify its refusal to hire Mantolete based on evidence obtained after its decision to reject her application, the admissibility of post-decision evidence is not necessarily forbidden for all purposes. ... Thus, the evidence was admissible to rebut the appellant’s claim that she was qualified for the position, but was not admissible to enlarge the basis upon which the employer relied to reject the appellant at the time that decision was made. Consequently, if the evidence is admitted to rebut the prima facie showing of qualification for the position, and such evidence is determined by the trier of fact to be insufficient to rebut this aspect of the plaintiff’s prima facie case, the evidence cannot further be used to justify the plaintiff’s rejection.

767 F.2d at 1424 (citation omitted; emphasis added).

Roberts’ testimony was admitted to impeach Rasmussen’s testimony rather than to rebut her prima facie case, but the hearing examiner treated it as though it were rebuttal testimony. She concluded that Roberts’ testimony should be “afforded little weight” because she was not present when Rasmussen’s supervisor fired her, or when Rasmussen quit later.

In effect, this is a determination that Roberts’ testimony was insufficient to rebut Rasmussen’s prima facie case of discrimination. Having failed to rebut Rasmussen’s prima facie case with Roberts’ testimony, HAI could not use the same testimony as evidence of a legitimate, non-discriminatory reason for rejecting Rasmussen. Mantolete, 767 F.2d at 1424.

Ill

Did the District Court err in concluding that the Commission applied the McDonnell-Douglas test for employment discrimination and not the one used in Price Waterhouse v. Hopkins?

HAI argues that under Johnson it need not prove that Rasmussen’s lack of qualifications — a legitimate, non-discriminatory reason for refusing to hire her — was the actual reason for rejection, and that the Commission therefore should have found that Roberts’ testimony did rebut Rasmussen’s prima facie case of discrimination.

In Johnson we said:

If the employer is able to demonstrate a legitimate, nondiscriminatory reason for not hiring the complainant, even though that may not have been the actual reason for the rejection, then the plaintiff’s prima facie case of discrimination is rebutted.

734 P.2d at 212, citing Burdine, 450 U.S. at 254, 101 S.Ct. at 1094. In a footnote to its conclusions of law, the Commission described this language as “misleading in light of the more recent U.S. Supreme Court decision in Price Waterhouse v. Hopkins.” Price Waterhouse, the Commission wrote, “illustrates that even in a mixed motive case the asserted legitimate reason for an employment decision must be present at the time the decision is made, i.e., the reason given for not hiring the complainant must have been one of the actual reasons for the rejection.”

HAI contends that in this footnote the Commission “adopted” Price Waterhouse “in derogation of Montana law,” Montana law being the McDonnell-Douglas test as adopted in Martinez and applied in Johnson. HAI is incorrect. As the District Court pointed out, the Commission in fact applied the McDonnell-Douglas test rigorously, though not to the issue of Roberts’ testimony. Instead, the Commission found that HAI’s “legitimate, non-discriminatory reason” was Brian Thomas’ concern with the quality of Rasmussen’s voice, which Thomas offered as the reason for not hiring her.

Because HAI did meet its burden in the second stage of the McDonnell-Douglas test by producing a non-discriminatory reason for rejecting Rasmussen, the Commission moved to the third stage of the test. At this stage, Rasmussen had to prove by a preponderance of the evidence that this reason was only a pretext for discrimination. Johnson, 734 P.2d at 213; Crockett v. City of Billings (1988), 234 Mont. 87, 95, 761 P.2d 813, 818. Pretext may be proved indirectly, by showing that the employer’s explanation is unworthy of belief. Burdine, 450 U.S. at 256, 101 S.Ct. at 1095. The Commission found that Thomas’ alleged concern was not worthy of belief and concluded that Rasmussen had met her burden of proof at this stage of the test; that is, it concluded that voice quality was a pretext for not hiring her. “If Thomas, in fact, believed that Rasmussen’s voice was too soft to be a telemarketer,” the Commission wrote, “he could have told her that and avoided guises such as ‘the phones haven’t been installed yet. ...’ ” The District Court affirmed this conclusion, noting that it could not properly re-weigh evidence given by witnesses.

We hold that substantial credible evidence supports the Commission’s finding that a discriminatory motive was more likely to have motivated HAI’s rejection of Rasmussen, and that its conclusion that the proffered nondiscriminatory reason was merely a pretext is not incorrect.

IV

Did the District Court err in concluding that HAI did not show that it would not have hired Rasmussen in the absence of discrimination?

HAI argues that it would not have hired Rasmussen even in the absence of discrimination, and that Rasmussen therefore is not entitled to damages. HAI relies on Nanty v. Barrows Co. (9th Cir. 1981), 660 F.2d 1327, in which the Ninth Circuit held that:

Where a job applicant has proved unlawful discrimination in the employment process, he must be awarded full relief, i.e., the position retroactively, unless the “defendant shows by clear and convincing evidence that even in the absence of discrimination the rejected applicant would not have been selected for the open position.”

660 F.2d at 1333, quoting Marotta v. Usury (9th Cir. 1980), 629 F.2d 615, 618.

The District Court found no evidence in the record to support HAI’s contention that it would not have hired Rasmussen in the absence of discrimination. The testimony of HAI’s telemarketing manager, Thomas, established that when he interviewed Rasmussen he made no effort to check her references, evaluate her skills, or otherwise determine whether she was qualified for the job. In the absence of any evidence, let alone clear and convincing evidence on this point, the District Court concluded correctly that Rasmussen is entitled to full relief, i.e., back pay. HAI does not dispute the amount of back pay awarded.

V

Did the District Court err in concluding that Rasmussen was entitled to front pay?

The Commission awarded Rasmussen one year of “front pay,” based on its finding that “Rasmussen felt very uncomfortable about HAI as a consequence of these proceedings and its demonstrated treatment, and attitude toward, her” and was “not interested in reinstatement.” Citing Thorne v. City of El Segundo (9th Cir. 1986), 802 F.2d 1131, 1137, the Commission stated in its conclusions of law that “front pay is an appropriate remedy when it would be inappropriate to order reinstatement of the charging party due to hostility or antagonism between the parties.”

HAI correctly points out that in Thorne the Ninth Circuit actually held that front pay is appropriate only when “excessive hostility or antagonism” exists; it remanded the case to the district court to make specific findings on whether the plaintiff, Thorne, would encounter excessive hostility if the City of El Segundo reinstated her as a police officer in the department where she had previously worked as a clerk-typist. Here, the Commission made no specific findings as to whether Rasmussen would encounter “excessive hostility” if she became a telemarketer at the Hearing Aid Institute but it did conclude that one year of front pay was reasonable “considering the antagonism between the parties.”

The District Court concluded that substantial credible evidence supported the Commission’s award of front pay and that “[u]nder these circumstances, it cannot be said that it would be appropriate for Rasmussen to obtain reinstatement with HAI.”

In Fadhl v. City & County of San Francisco (9th Cir. 1984), 741 F.2d 1163, 1167 (cited as authority for the definition of front pay in Thorne), the Ninth Circuit did not insist on “excessive hostility” but instead held that “[a]n award of front pay is made in lieu of reinstatement when the antagonism between employer and employee is so great that reinstatement is not appropriate.” The District Court’s finding in the case before us is consistent with this holding. We conclude that Rasmussen was entitled to front pay.

VI

Did the District Court err in concluding that evidence of other claims that Rasmussen pursued contemporaneously was not admissible as proof of motive and intent or failure to mitigate?

The hearing officer refused to allow HAI to show that Rasmussen had filed other discrimination claims. HAI argued that this evidence would go to show motive, intent, or preparation, but the District Court found that it would be irrelevant to the question of whether HAI discriminated against Rasmussen. We agree. Relevant evidence is “evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.” Rule 401, M.R.Evid. Evidence that Rasmussen filed other discrimination claims does not make more or less probable any material fact concerning HAI’s motive for rejecting her for employment.

The hearing officer also refused to hear testimony by Rich Pavlonis, owner of Omni Marketing, Inc., which was the object of a separate discrimination complaint by Rasmussen. As part of the conciliation process for that complaint, Omni had offered Rasmussen a job in November 1989. The hearing officer excluded Pavlonis’ testimony on the basis of 24.9.226, ARM, which makes statements made in the course of a conciliation offer inadmissible in any hearing concerning the complaint. The District Court concluded that this rule does not prevent admission of testimony about a conciliation offer made in a different case. It upheld the exclusion, however, based on our holding in Tribby v. Northwestern Bank of Great Falls (1985), 217 Mont. 196, 704 P.2d 409. There, we held that:

An offer to compromise is not admissible when made in an attempt to effect a settlement. [The defendant bank] argues the offer is admissible to show that Tribby failed to mitigate damages .... We are not persuaded by the contention that refusing an offer to settle is a failure to mitigate damages .... Admitting this evidence would go against the basic policy of Rule 408, M.R.Evid., which is to encourage compromises and settlement of disputes.

704 P.2d at 417-418 (citation omitted).

Admitting or excluding evidence is within the discretion of the trial court or, in this case, the Commission. Weber v. State (1992), 253 Mont. 148, 151, 831 P.2d 1359, 1363. HAI alleged error on the part of the hearing officer, but it offered the District Court no evidence that she abused her discretion, nor did it present any authority showing that Omni’s offer of employment should be admissible to prove failure to mitigate damages.

Affirmed on all issues.

JUSTICES GRAY, HUNT, TRIEWEILER and WEBER concur.


text:
    IN RE THE MARRIAGE OF CANDIS K. FESOLOWITZ n/k/a CANDIS DECHAINE, Petitioner and Appellant, and VICTOR M. FESOLOWITZ, Respondent and Respondent.
    No. 92-553.
    Submitted on Briefs April 16, 1993.
    Decided May 18, 1993.
    50 St.Rep. 575.
    852 P.2d 658.
    258 Mont. 380.

      See C.J.S. Divorce § 631.
    For Respondent: Edmund P. Sedivy, Jr.; Morrow, Sedivy & Bennett, Bozeman.
   JUSTICE HARRISON

delivered the Opinion of the Court.

Candis DeChaine, formerly Candis Fesolowitz (Candy), appeals from an order modifying child custody, visitation, and support entered by the Eighteenth Judicial District Court, Gallatin County, the Honorable Larry W. Moran presiding. We affirm.

Candy and her former husband, Victor Fesolowitz (Victor) were married in 1976 in Sioux City, Iowa. They had two children, both girls, born on July 8, 1979, and October 1, 1984. Candy petitioned for dissolution of the marriage in February 1986. She was then, and still is, a flight attendant for Northwest Airlines, living in Bozeman, Montana but flying out of Minneapolis, Minnesota. Victor was and still is a pilot for Northwest Airlines, living in Bozeman and Big Sky, Montana, but flying out of Detroit, Michigan.

The August 1988 Order

A decree of dissolution was entered by Judge Gary on October 30, 1987, “reserving until later all other issues which have to be considered in this matter.” The findings of fact, conclusions of law and order that accompanied the decree followed a five-day hearing which in turn concluded eighteen months of litigation over property, child support, child custody and visitation. Conflict over these issues continued until Judge Gary issued a second order on August 9,1988, granting the parties joint custody with primary physical custody to Candy for ten months of each year, and to Victor for July and August of each year, until the younger child reached the age of seven. Visitation was ordered as follows:

[Djuring these nine months of the school year, Victor is granted visitation of no less than ten days during each month. The ten days shall be agreed upon between the parties by the 25th of the preceding month and adjusted to both parties’ schedules. If the parties cannot peaceably agree upon a schedule, the aggrieved party may seek an absolute order dictating times by the court, and the party causing a return to court shall be responsible for both attorney fees incurred. ...
[DJuring the two months that Victor is the primary custodian the reverse procedures for Candy shall apply. ...
[Wjhile Candy is remarried and has a number of relatives in the western United States, Victor has no relatives in the United States except these two children, and the court deems it important... that Victor has as much visitation and custody as possible. Victor shall have the right to have custody of the children any day the children are in town and Candy is out of town, and will not count against Victor’s ten days.

Judge Gary’s August 1988 order also divided the parties’ extensive real estate holdings, investments, and personal property and required Victor to pay Candy $800 a month as child support during the months when the children lived with her, and $400 a month in July and August, retroactive to January 15, 1988. Child support was to increase at a rate equivalent to the annual increase in Victor’s salary.

Candy moved to amend the order, pointing out that no provision had been made for custody after the younger child reached the age of seven. Victor responded, asserting that “it is apparent from the Court’s order” that the parties would have “equal time with the two children,” after the younger child reached the age of seven. Neither party contested the court’s finding that Victor’s annual salary was $98,000 and Candy’s, $22,000, or its finding that the cost of caring for the two children was $1,000 per month.

In September 1988, the parties signed a “settlement agreement” amending the court’s division of the marital estate. This agreement did not address child support, child custody, or visitation. On October 4, 1988, Judge Gary entered an amended order incorporating the settlement agreement.

The August 1992 Order

Judge Gary’s August 1988 order, as amended in October 1988, did not explicitly provide for custody and visitation after the younger child’s seventh birthday. In June 1991, four months before that birthday, Candy filed a motion to review custody and child support. Victor filed a cross-motion requesting that child support be reviewed under the Child Support Guidelines that had been implemented after Judge Gary’s last order. A hearing was held before Judge Moran on January 31,1992. By then, Victor was paying $1,054 a month as child support for the ten months each year that Candy had physical custody of the children.

After testimony on the parties’ experience with the physical custody and visitation arrangements Ordered by Judge Gary in August 1988, the court recessed while Candy and Victor met with their lawyers. On returning three hours later, Victor’s lawyer told the court that the parties had “come to an agreement with the exception of two points” on the subject of custody and visitation, and that the parties had agreed to submit their agreement to the court in writing, with position papers on the two unresolved issues. Child support issues were to be resolved through further negotiation or at a later hearing.

In March 1992, Candy asked the court to make the position papers confidential. In her motion she said that she and Victor had not been able to agree on “several primary issues.” She asked that the position papers be confidential so that Victor would not keep challenging her position in “numerous and lengthy counter-position papers.” The court granted this motion, and both parties filed confidential position papers in May 1992.

Victor filed an objection three days later, saying that Candy had refused to sign a stipulation based on their agreement at the January 31 hearing. A letter from Candy’s lawyer was attached, listing seven “contested” issues. Chief among these were the months during which each party controlled the scheduling of visitation for the following month; the number of visitation days for Victor (ten or eleven, during the ten months Candy had physical custody); and the number of months during the school year during which Victor would have visitation for two weekends rather than one. The parties did not contest Candy’s ten months of physical custody or her control of scheduling for seven months of the year.

Judge Moran held a two-day hearing on child support modification in late May, and on August 14, 1992, he entered judgment awarding child support to Candy at $588.97 a month and specifying the following physical custody and visitation arrangements:

Father shall have the children two complete weekends each month of the year, a weekend being defined as Saturday and Sunday. Father shall have the children a minimum of 12 days per month, except July and August when Mother shall have the children a minimum of twelve days per month.
Father shall be the primary custodial parent six months of the year, being January, February, March, July, August, and September. During the six months that Father is the custodial parent, he will notify Mother by the 14th of each month regarding which days he will have the children for the following month. It will be his obligation to get those days off and it will be Mother’s obligation to bid her job responsibilities around Father’s days with the children.

Parallel provisions followed, covering the six months that Mother is the custodial parent.

As for child support, the court found that the parties had combined net annual resources of $96,985, of which Victor’s share was 72.85 per cent, and that under the child support guidelines for two children ages seven and twelve, an “appropriate percentage” for child support was 23.6 per cent, or $22,664. Victor’s share was $16,511 annually, or $1,375.92 per month. The order reduced Victor’s share to $588.97 per month based on the court’s expectation that the children would live with him 150 days, or approximately five months, each year. Candy appealed from this judgment, raising the following issues:

1. Whether the District Court erred in modifying a stipulation without notifying the parties;

2. Whether the District Court failed to provide for the best interests of the children in its custody decree; and

3. Whether the District Court erred in modifying child support.

I

Did the District Court err in modifying a stipulation without notifying the parties?

In her motion for a new trial, filed in September 1992, Candy stated that she and Victor had agreed, in an oral stipulation at the January 31, 1992 hearing, that she would have physical custody for ten months; that Victor’s visitation would include one weekend per month; and that she would schedule the visitation for seven months each year. Victor’s lawyer told the court:

We’ve agreed that we would submit in writing to the court the agreed portion of our stipulation, and that we will submit ... position papers on the two additional points yet to be resolved. Based upon receipt of the position papers from both parties and review of the agreed stipulation, the court will then be requested to make a decision on the two remaining points and approve the agreed-to stipulation.

No written stipulation was submitted to the court, however, and it appears that more than two points remained unresolved at the time of the hearing on child support in May 1992. Having before it statements from Candy and her lawyer to the effect that several issues were unresolved, and having no evidence that the parties had reached an agreement on those issues, the court decided all the outstanding custody and visitation issues based on the position papers, as it had agreed to do at the January 31, 1992 hearing.

We have held that in matters relating to children, the best interests of the children control; therefore, child custody, visitation and support cannot be left to contract between the parties. In re Marriage of Carlson (1984), 214 Mont. 209, 693 P.2d 496; In re Marriage of Neiss (1987), 228 Mont. 479, 743 P.2d 1022. Whether the stipulation is written or oral is unimportant, and even if both parties stipulate to custody, the court is not bound by that stipulation but may instead order a different custody arrangement in accord with the best interests of the children. In re Marriage of Mager (1990), 241 Mont. 78, 785 P.2d 198; In re Marriage of Converse (1992), 252 Mont. 67, 826 P.2d 937.

Here, the parties’ stipulation as to custody and visitation would not have been binding on the District Court even if it had been in writing. Therefore, the court was under no obligation to notify the parties that it intended to depart from their alleged oral agreement.

II

Did the District Court fail to provide for the best interests of the children in its custody decree?

Judge Moran’s order of August 1992 actually included both a “custody decree” and a modification of the visitation arrangements in Judge Gary’s joint custody award of August 1988.

The 1992 order departed from the 1988 order primarily in specifying the months in which each parent could designate the other’s visitation days during the following month. It also gave Victor more weekend time with the children during the months that Candy was the physical custodian.

Lacking clarification in the 1992 order itself, we infer that the provision that “Father shall be the primary custodial parent six months of the year” merely refers to control over scheduling of visitation and does not mean that Father is to have physical custody. We base this inference on Judge Moran’s findings of fact, in which he stated that the parties have shared custody for the past two years “so that Mother has the children for approximately 215 days per year and Father has the children approximately 150 days per year.” He found that “the children have adapted successfully to this amount of shared custody and have prospered by being with each parent a substantial amount of time each month.”

These findings indicate that Judge Moran found the previous custodial arrangement to be in the best interests of the children, and that he intended to preserve that arrangement while altering visitation so that Victor had more weekend visitation and more control over the scheduling of visitation. In short, we infer that in the order of August 1992, the phrase “custodial parent” refers merely to control over scheduling of visitation and not to physical custody.

The court’s child support order also indicates that it intended its custody order to preserve the ten-month/two-month division of physical custody, as it is based explicitly on the court’s expectation that the children would live with Victor five months, not six, each year.

Our standard of review in this case is whether substantial credible evidence supports the court’s determination. In re Marriage of Clingingsmith (1992), 254 Mont. 399, 404-405, 838 P.2d 417, 420-421; In re Marriage of Nash (1992), 254 Mont. 231, 234, 836 P.2d 598, 600. Joint custody is presumed to be in the best interests of the child and is awarded to assure the child frequent and continuing contact with both parents. Section 40-4-224, MCA. Physical custody should be arranged as equally as possible between the parents to comply with the express purpose of a joint custody award, with the child’s best interest as the primary consideration. In re Marriage of Ulland (1991), 251 Mont. 160, 823 P.2d 864.

The District Court must consider the factors set forth in § 40-4-212, MCA, in determining whether modification of physical custody is in the child’s best interest. Ulland, 823 P.2d at 869; Clingingsmith, 838 P.2d at 421. Candy argues that the court erred in failing to address these factors in its findings of fact and conclusions of law. We disagree. All the statute requires is that the court consider the factors listed. It is not required to make specific findings concerning each element, though it must express “the essential and determining facts upon which its conclusions rest.” Ulland, 823 P.2d at 869; Clingingsmith, 838 P.2d at 421.

Here, the essential and determining fact was the court’s finding that the Fesolowitz children “have successfully adapted” to shared custody and “have prospered by being with each parent a substantial amount of time each month.” The court therefore did not materially alter the amount of time the children would live with each parent — both parents testified that the children had been living with Victor an average of twelve days a month — but instead specified that their time with Victor would include two weekends each month, rather than one.

Candy did not object to the court’s findings with regard to the children’s successful adaptation, or to the number of days allotted to each parent’s visitation or physical custody. Instead, she appears to object primarily to the court’s designation of the party who was to control the scheduling of visitation, unfortunately termed the “primary custodial parent” in Judge Moran’s order. In her confidential position paper, she requested that she have control over scheduling for seven months, rather than six, and that Victor’s visitation include two weekends only in September, October and January.

The court evidently was persuaded by Victor’s argument, in his position paper, listing numerous activities that he could not share with his children because they were not with him on most weekends. It found that Candy had used the job-bidding process at Northwest Airlines to confine Victor to one weekend with the children each month, and that this arrangement is “contrary to the best interests of the children, because of their age and good relationship with their father.” The court amended the parties’ visitation arrangements accordingly.

Section 40-4-224(2), MCA, states that in a joint custody situation, “[t]he allotment of time between the parents must be as equal as possible; however ... each case shall be determined according to its own practicalities, with the best interest of the child as the primary consideration. ...” See In re Marriage of Ward (1986), 223 Mont. 401, 725 P.2d 1211 (district court’s visitation order, giving the father in a joint custody situation only 75 days of visitation out of a total of approximately 170 non-school days available, was affirmed as a practical method of providing for the child’s best interests).

Here, the court produced an order, based on its perception of the Fesolowitz children’s best interests, that was adapted to the exigencies of the parents’ airline work schedules. We conclude that substantial credible evidence supports the District Court’s allocation of visitation time and control over visitation days.

Ill

Did the District Court err in modifying child support?

Both parents requested in 1991 that the court review Judge Gary’s 1988 child support order, applying the guidelines. After extensive testimony by the parties and their accountants, the court found that under the guidelines, 23.6 percent of the parents’ total combined net resources was to be allocated for child support. Finding that the parents’ total combined resources, less reasonable deductions, were $96,036 annually, it arrived at a figure of $22,664 per year for child support.

Candy objects to the court’s assessment of Victor’s net resources. In particular, she objects to the court’s deduction of $27,205 from Victor’s income and assets, reflecting losses Victor incurred on his Big Sky condominium and an apartment house in Madison, Wisconsin, and his $7,171 disability insurance premium.

In reviewing an award of child support, we presume that the judgment of the district court is correct, and we will reverse the district court only if it has abused its discretion. In re Marriage of Saery (1992), 253 Mont. 378, 833 P.2d 1035; In re Marriage of Smith (1990), 242 Mont. 495, 791 P.2d 1373. Here, the District Court heard exhaustive testimony about Victor’s rental property and concluded that he had in fact sustained a net loss on that property. Losses of this kind are legitimate business deductions, allowed by the guidelines. Smith, 791 P.2d at 1377.

Disability insurance premiums are not specified as a deduction under the guidelines. In Smith, however, we concluded that the obligor in that case “should be encouraged, as a matter of public policy, to carry disability insurance. ... Consequently, the Court concludes that the disability insurance premium is a legitimate expense deduction under the guidelines, and is at least partially for the benefit of the minor child.” 791 P.2d at 1377.

Candy urges us to distinguish Smith on the grounds that the obligor was a self-employed doctor, while Victor has an employer and “would be covered under Workmen’s [sic] Compensation provisions in the event he was injured on the job.” We are not persuaded by this argument. Workers’ Compensation benefits would be available only if Victor were injured on the job, while his disability insurance covers injuries he might sustain while commuting, driving, skiing, and so on. We conclude that disability insurance benefits the children and that the District Court did not err in allowing Victor to deduct his disability insurance premiums.

Candy argues that in reducing Victor’s monthly child support obligation by over $500 a month the court ignored the standard of living the children would have enjoyed had the marriage not been dissolved. This is one of the factors the District Court must consider in awarding child support, under § 40-4-204(2), MCA. See In re Marriage of Anderson (1988), 230 Mont. 89, 748 P.2d 469 (pre-guidelines child support award remanded because it was not commensurate with the father’s financial resources and the children’s pre-dissolution standard of living).

Here, the total child support award in the 1988 order, adjusted for increases in Victor’s salary, was $16,200 per year at the beginning of 1992. In the 1992 order this was increased to $22,664 per year, taking into account increases in Candy’s salary as well as Victor’s. Victor’s monthly payment was reduced partly because Candy’s obligation was increased, pursuant to the guidelines, and partly because Victor is, as he testified, providing a fully-equipped home for the children five months out of every twelve.

The District Court found that the total child support award of $22,664 per year was “ample to maintain the children in a lifestyle to which they have become accustomed.” We hold that substantial credible evidence supports this conclusion, and that the District Court did not abuse its discretion in determining Victor’s child support payments.

Affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES GRAY, TRIEWEILER and HUNT concur.


author: JUSTICE McDONOUGH JUSTICE WEBER

text:
    D. BARRY SCHRAMMECK Plaintiff, Counter-Defendant and Appellant, v. FEDERAL SAVINGS & LOAN INSURANCE CORP. et. al. Defendants, Counter-Claimants and Respondents.
    No. 92-208.
    Submitted January 12, 1993.
    Decided May 19, 1993.
    50 St.Rep. 580.
    853 P.2d 702.
    258 Mont. 391.
    See C.J.S. Partnership § 160.

      For Plaintiff, Counter-defendant and Appellant: Alan J. Lerner (argued), Law Offices of Alan J. Lerner, Kalispell.
    For Defendants, Counter-claimants and Respondents: Mark L. Stermitz (argued for Fidelity Savings & Loan), Warden, Christian-sen, Johnson & Berg, Kalispell; Colleen E. Ambrose (argued for FSLIC), Sullivan & Tabaracci, Missoula.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

Schrammeck appeals two summary judgment orders of the Twentieth Judicial District Court, Lake County, certified as final pursuant to Rule 54(b), M.R.Civ.P. Reversed and remanded.

This case originated with a partnership dispute concerning the ownership of Woods Bay Marina on Flathead Lake and loans made using the property as collateral. Alton and Lee Ann Bowers (the Bowers) and Clark and Roxann Post (the Posts) were the record title owners of property consisting of Woods Bay Marina. In the original cause, filed in June of 1982, Schrammeck contended that he was a partner with Alton W. Bowers (Bowers) and Clark G. Post (Post), that the Marina was partnership property, and that his former partners excluded him from the partnership. A prior judgment by Judge Henson in the Fourth Judicial District Court, described below, settled this controversy among the partners. The dispute now centers on a loan transaction that the Bowers and the Posts made using Woods Bay Marina as collateral.

The pertinent issues on appeal are:

1. Whether the District Court erred by concluding that the Woods Bay Marina property did not belong to a partnership consisting of Schrammeck, Bowers and Post.

2. Whether the District Court erred by concluding that the Bowers and the Posts could encumber any portion of Woods Bay Marina without Schrammeck’s consent.

3. Whether the District Court abused its discretion by denying Schrammeck leave to file a second amended complaint and supplemental pleading.

4. Whether the District Court erred by declining to award attorney fees to Schrammeck for successfully defending against the foreclosure of the trust indenture.

In Schrammeck’s June 1982 complaint, he alleged that he entered an oral agreement with Bowers and Post in July 1980 to purchase, restore, and operate Woods Bay Marina as a partnership. Schrammeck further alleged that he worked at and managed the Marina from July 1980 until he was excluded from the partnership in late October 1980. Schrammeck filed and recorded a lis pendens in connection with that suit on June 17, 1982.

About a year after Schrammeck recorded the lis pendens, Bowers approached the Montana Savings & Loan Association of Kalispell (the S & L) for a loan, using the Woods Bay Marina as collateral. Representatives of the S & L knew about the lis pendens, and loan officer John Prather recommended disapproval of the loan because ownership of the property was in dispute.

Prather informed Bowers that the loan request had not been approved because of the lis pendens. Bowers then told Prather that Schrammeck was not a partner or owner of Woods Bay Marina. Bowers insisted that Schrammeck’s suit was a nuisance suit, and that Bowers and his wife owned the property along with the Posts. Prather replied that the S & L still would not make the loan because of the Us pendens.

Bowers then went to Fidelity National Title Insurance Company (Fidelity) and convinced it to insure the loan on the condition that the Bowers and the Posts hold Fidelity harmless and indemnify it for any losses it might incur due to Schrammeck’s claim underlying the Us pendens.

Based on Fidelity’s insurance policy, the S & L agreed to loan the Bowers and the Posts $295,000 with the Marina as collateral. On June 15, 1983, the Bowers and the Posts executed a financing statement, evidencing S & L’s security interest in the personal property of Woods Bay Marina. They signed a promissory note for $295,000 at the same time. They also executed and recorded a “deed of trust” purporting to assign the Woods Bay Marina real property to the S & L as security for the loan.

We have examined this “deed of trust” and determined that it is a trust indenture as defined in § 71-1-303(4), MCA; therefore, this opinion will refer to it as a trust indenture. This opinion will refer to the financing statement, the note, and the trust indenture collectively as the loan documents.

On November 21, 1983, Judge Henson, in the Fourth Judicial District, entered an order and judgment (hereafter Judge Henson’s order) on the merits of Schrammeck’s cause against Bowers and Post. Judge Henson’s order declared Schrammeck the owner of an undivided one-third interest in the business, personal property and real property known as Woods Bay Marina.

Judge Henson’s order also gave Bowers and Post the right to discharge and void Schrammeck’s interest by making payments before specified dates. If the payments were not made, the order judicially recognized Schrammeck’s one-third partnership interest in the property and business. Schrammeck did not receive any payments and Judge Henson’s order is not on appeal.

On June 14, 1984, Schrammeck filed suit against Bowers, Post, and the S & L. Among other things, Schrammeck alleged several torts and sought to dissolve and wind-up the partnership.

The Bowers and the Posts quitclaimed their interests in the Woods Bay Marina real property to Schrammeck on July 25, 1984, and also signed all of the Marina’s personal property over to Schrammeck. Two days later, pursuant to a motion by Schrammeck, the court dismissed Bowers and Post from the suit.

In October 1984, Schrammeck filed an amended complaint against Fidelity and the S & L, seeking a court order declaring the trust indenture and the S & L’s security interest in the personal property invalid. The complaint also alleged that the S & L and Fidelity committed several torts against him.

In August of 1985, the Federal Home Loan Bank Board declared the S & L insolvent and appointed Federal Savings & Loan Insurance Corporation (FSLIC) as receiver. The defendants in this case are, therefore, FSLIC and Fidelity.

FSLIC and Fidelity filed third-party complaints and counterclaimed against Schrammeck, the Woods Bay Marina Partnership, and its individual partners, Schrammeck, Bowers and Post to foreclose on the trust indenture.

The parties filed several motions for summary judgment and the District Court entered two separate orders on the motions. The court certified these orders as final and they are before this Court on appeal.

In the summary judgment order dated August 30, 1991, the District Court acknowledged that Bowers, Post, and Schrammeck were partners in Woods Bay Marina. The court determined that each of the partners had the authority to bind the Woods Bay Marina Partnership in the usual course of business. The court ruled that the Bowers and the Posts did not exercise their authority as partners, and thus did not bind the partnership to the promissory note. The court also ruled that neither Schrammeck nor the partnership were debtors under the security agreement or grantors under the trust indenture.

In the summary judgment order dated January 7, 1992, the District Court ruled that Woods Bay Marina was not partnership property, but rather, Bowers, Post, and Schrammeck had individual interests in the property. The court also acknowledged its previous determination that the Bowers and the Posts had authority to bind the Woods Bay Marina Partnership, but determined they had not exercised their authority.

This opinion will refer to more detailed facts as they are pertinent to the discussion.

Our review of the District Court’s conclusions of law is plenary; we determine whether the court’s conclusions are correct. Steer Inc. v. Dept. of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603.

I.

Did the District Court err by concluding that the Woods Bay Marina property did not belong to a partnership consisting of Schrammeck, Bowers and Post?

Judge Henson’s order disposes of this issue. In November of 1983, Judge Henson ruled that:

2. The Plaintiff [Schrammeck] is the owner of an undivided one-third interest in the business and property known as Woods Bay Marina, Woods Bay, Lake County, Montana.
3. Defendants [Bowers and Post] may discharge and void Plaintiff’s ownership interest and claims ... by paying to the Plaintiff [certain sums by certain dates].
In the event the Defendants fail to perform in the above-described fashion in a timely manner ... paragraph 4 of this Order and Judgment shall become effective and controlling.
4. In the event the Defendants fail to make payment as stated in paragraph 3 in a timely fashion, in addition to his one-third ownership interest as stated in paragraph 2 of this Order and Judgment, the Plaintiff shall be deemed a one-third partner in the property and business described in paragraph 2. The partnership shall be deemed dissolved as of November 21, 1983; the Plaintiff shall be deemed to have been excluded from the partnership and enjoyment of the partnership property ... and, the Defendants and parties acting in privity with them shall be deemed to have had exclusive control, enjoyment and possession of the entire partnership property and have continued the business without winding the same up or liquidating the same, to the exclusion of the Plaintiff since October 16, 1980. In the event this paragraph becomes effective, the Plaintiff shall have all rights, causes of action and remedies regarding dissolution, accounting, liquidation and duties owed him as a partner pursuant to the laws of the State of Montana. In the event this paragraph comes into effect, the Plaintiff’s one-third partnership interest in the property and business identified herein is hereby judicially declared, (emphasis added).

Bowers and Post did not make the required payments to Schrammeck, therefore paragraph 4 of Judge Henson’s order and judgment became effective. The effect of the order was to judicially declare Schrammeck’s partnership interest in the Woods Bay Marina, including both the realty and personalty. The order also declared that he had been excluded from the partnership since October 16, 1980 and alluded to his right to wind up the partnership after the dissolution. See § 35-10-601, MCA, et seq. (explaining the rights and duties associated with dissolution and winding up of a partnership). Thus, according to Judge Henson’s order, the Woods Bay Marina real and personal property belonged to a partnership consisting of Bowers, Post, and Schrammeck. Judge Henson’s order was not appealed; therefore, we conclude that the District Court erred by determining that the Woods Bay Marina was not partnership property.

II.

Did the District Court err by concluding that the Bowers and the Posts could encumber any portion of the Woods Bay Marina property without Schrammeck’s consent?

As stated above, the Bowers and the Posts were the record owners of the Woods Bay Marina which was partnership property. They executed a trust indenture purporting to assign the property to the S & L as security for a loan. The District Court ruled that the Bowers and the Posts had authority to bind the partnership, but they did not exercise it when encumbering the Woods Bay Marina property. The court determined that the Bowers and the Posts, respectively, encumbered their individual one-third interests in the property.

Because the Woods Bay Marina was partnership property, however, the Bowers and the Posts could not assign any individual interests in the property. “A partner is co-owner with the other partners of specific partnership property holding as a tenant in partnership.” Section 35-10-502(1), MCA. “The incidents of tenancy in partnership are such that a partner’s right in specific partnership property is not assignable except in connection with the assignment of rights of all the partners in the same property.” Section 35-10-502(2)(b), MCA. This rule applies regardless of the formal legal manner in which the property is held. See Matter of Estate of Palmer (1985), 218 Mont. 285, 290-93, 708 P.2d 242, 245-47.

Woods Bay Marina, including both the realty and the personalty, was partnership property. Therefore, even though the Bowers and the Posts were the record title holders, they could not assign their individual interests in it, except in connection with the assignment of all of the partners’ rights in the property. Thus, the District Court erred in determining that the Bowers and the Posts had authority to bind the partnership but encumbered only their individual one-third interests.

FSLIC and Fidelity argue that even if the Bowers and the Posts did not encumber their individual interests, they encumbered the partnership’s interest in the property. Schrammeck argues that the Bowers and the Posts did not have authority to encumber the partnership’s property without consent of all the partners, and therefore, the purported encumbrances had no effect. The District Court ruled in its August 1991 summary judgment order that the loan documents did not bind either Schrammeck or the Woods Bay Marina Partnership consisting of Bowers, Post, and Schrammeck.

The first step in analyzing whether the loan documents bound the partnership is to determine whether on their face they purport to bind the partnership. FSLIC argues that the language of the loan documents is ambiguous and gives rise to a reasonable inference that the obligation was a partnership debt. FSLIC contends that the ambiguities should have been clarified by parol evidence. We conclude that parol evidence was unnecessary for that purpose, however, because the loan documents are not ambiguous and on their face purport to finance the Woods Bay Marina project and bind the Woods Bay Marina Partnership.

The trust indenture incorporates by reference the note and the financing statement. The note names the debtors as follows: “Alton W. Bowers, Lee Ann Bowers, husband and wife (50%); and Clark G. Post, Roxann Post, husband and wife (50%); Partners hereinafter referred to as obligors.” The financing statement identifies the debtors as “Alton W. Bowers and Lee Ann Bowers, his wife and Clark G. Post and Roxann Post, his wife, dba: Woods Bay Marina.”

The trust indenture identifies the grantors as follows: “Alton W. Bowers & Lee Ann Bowers, husband and wife, and Clark G. Post & Roxann Post, husband and wife, jointly and individually, of Woods Bay Marina, Bigfork, Montana.” The trust indenture also states: “The indebtedness evidenced by the Note is intended to finance the project known as Woods Bay Marina.” Thus the loan documents, read as a whole, purport to bind the Woods Bay Marina Partnership, which Bowers represented to the Bank as consisting of only the Bowers and the Posts.

We note that the Bowers executed the promissory note, the financing statement, and the trust indenture granting the Woods Bay Marina real property to the S & L. Alton Bowers signed these loan documents as attorney in fact for Clark and Roxann Post.

The next step in analyzing whether the loan documents bound the partnership is to determine whether Bowers had authority under § 35-10-301(1), MCA, to enter the loan transactions.

Although the Bowers and the Posts were the record title holders of the Woods Bay Marina, it was partnership property of the Woods Bay Marina Partnership, which consisted of the three partners — Bowers, Post, and Schrammeck.

Where title to real property is in the name of one or more or all the partners ... a conveyance executed by a partner in the partnership name or in his own name passes the equitable interest of the partnership, provided the act is one within the authority of the partner under the provisions of35-10-301(1).

Section 35-10-302(4), MCA. Therefore, the trust indenture is a valid assignment of the partnership’s interest in the property only if it was executed within Bowers’ authority under the provisions of § 35-10-301(1), MCA. That statute states:

Every partner is an agent of the partnership for the purposes of its business, and the act of every partner, including the execution in the partnership name of any instrument, for apparently carrying on in the usual way the business of the partnership of which he is a member binds the partnership unless the partner so acting has in fact no authority to act for the partnership in the particular matter and the person with whom he is dealing has knowledge of the fact that he has no such authority.

Section 35-10-301(1), MCA (emphasis added).

The first step in analyzing whether Bowers acted within the authority of that statute is to determine whether he was apparently carrying on partnership business in the usual way when he executed the loan documents to obtain a loan to pay partnership debts. We need not determine whether using partnership property as collateral without the permission of all of the alleged owners of the property is appropriate when the ownership of the property is in dispute and a notice of lis pendens has been recorded. Because, as discussed below, Bowers had no authority to enter the loan transactions on the partnership’s behalf and the S & L knew it.

The second step is to determine whether Bowers in fact had no authority to execute the loan documents on behalf of the partnership. Bowers signed as attorney in fact for the Posts. However, he did not have Schrammeck’s permission to execute the loan documents.

Indeed, Bowers represented to the S & L that Schrammeck was not a partner and Schrammeck therefore, was not included as a party to the loan transaction documents. Schrammeck by then had filed suit alleging that Bowers and Post had excluded him from the partnership and disputing the ownership of Woods Bay Marina. Schrammeck had also recorded a lis pendens providing notice of the pending suit. Under these circumstances, Bowers had no authority to execute documents to obtain a loan, for a partnership including Schrammeck, using the disputed property as collateral. Thus, the execution of the loan documents was unauthorized.

A partner can still bind the partnership to an unauthorized transaction if all of the other partners ratified the loan either explicitly or by knowingly receiving or retaining the benefits of the unauthorized loan transaction. See Restatement of Agency (Second) §§ 98-99. However, the respondents did not argue that Schrammeck ratified the loan transaction. Furthermore, although the record shows the purposes for which the S & L disbursed the loan, it does not indicate what actually became of the money, and there is insufficient evidence in the record to determine whether Schrammeck knowingly retained the benefits of the loan.

The third step is to determine whether the S & L knew that Bowers did not have authority to enter the loan transactions when it issued the loan. See § 35-10-301(1), MCA. As the following discussion reveals, the S & L did know that Bowers acted without authority when it executed the loan documents and issued the loan.

Schrammeck’s lis pendens gave notice that he had filed an action against Bowers and Post to dissolve and wind up a partnership dealing with the Woods Bay Marina real property, to enforce certain contract rights, and to secure a judgment on the dissolution and contract. Schrammeck prevailed in the suit underlying the lis pen-dens', therefore, the parties are bound by Judge Henson’s order declaring Schrammeck’s partnership rights. See Fox v. Clarys (1987), 227 Mont. 194, 196, 738 P.2d 104, 105.

In Fox we stated: “The doctrine of lis pendens was created to hold the subject matter of litigation within the jurisdiction and control of the court during the pendency of an action so that any final relief granted by the court would be at once binding and effective, [citation omitted] This doctrine generally renders third persons who subsequently purchase or encumber an interest in the subject property bound by the final disposition of the action.” Fox, 738 P.2d at 105. Thus FSLIC, as the S & L’s successor in interest, is bound by Judge Henson’s declaration that Woods Bay Marina was partnership property and that Schrammeck was a partner who was excluded from the partnership in October of 1980.

In addition, the S & L’s loan officer who handled the loan in question, John Prather, acknowledged that the S & L actually knew Bowers did not have authority to execute the loan documents. Prather stated that “[i]f D. Barry Schrammeck was a partner, his express consent to this particular transaction would have been required and his signature would have been required on the loan papers, trust deed and, note.” After Prather denied Bower’s loan request, Bowers represented that Schrammeck had filed a nuisance suit. Prather responded that the S & L “still would not make the loan because of the lis pendens.” Thus, the S & L knew that Bowers did not have authority to execute the loan documents on behalf of the partnership.

Because the S & L knew that Bowers did not have authority to execute the loan documents, the trust indenture did not pass any interest in the Woods Bay Marina realty to the S & L. See § 35-10-302(4), MCA. In addition, neither the financing statement nor the note bound the partnership, because Bowers did not have authority to act for the partnership in executing them and the S & L knew that he lacked such authority. See § 35-10-301(1), MCA. The trust indenture, financing statement, and note were invalid as to the Woods Bay Marina Partnership and the District Court erred in concluding that these loan documents had any effect.

Schrammeck alleged that Fidelity and FSLIC committed several tortious acts against him. He alleged slander of title, negligence, conspiracy, and constructive fraud. The District Court dismissed these counts on summary judgment partly based on its erroneous conclusion that the loan documents bound the Bowers’ and the Posts’ individual interests. We conclude that the court should reconsider these issues if Schrammeck presents them on remand.

III.

Did the District Court abuse its discretion by denying Schrammeck leave to file a second amended complaint and supplemental pleading?

The District Court certified two specific partial summary judgment orders for appeal as allowed by Rule 54(b), M.R.Civ.P. Neither these orders nor Schrammeck’s notice of appeal mentions the District Court’s order denying Schrammeck’s motion for leave to file supplemental pleadings or a second amended complaint. Therefore, the issue is not properly before this Court and we decline to rule on it.

IV.

Did the District Court err by declining to award attorney fees to Schrammeck for successfully defending against the foreclosure on the trust indenture?

The District Court denied Schrammeck’s motion for summary judgment on the issue of attorney fees, reasoning that Schrammeck was “not a party to any of the written instruments which contain provisions for the payment of attorney fees, and there exists no statutory authority for the payment of attorney fees to either party.” We note that in the answer to Schrammeck’s October 1984 amended complaint, the S & L and Fidelity counterclaimed against the Bowers, the Posts, and Schrammeck as a partnership to judicially foreclose on the trust indenture. We direct the court on remand to follow § 71-1-233, MCA, which requires the court to allow attorney fees in an action to foreclose a mortgage of real property, and to the case law interpreting that statute as reciprocal. See Bermes v. Sylling (1978), 179 Mont. 448, 464, 587 P.2d 377, 387.

In summary, the loan transaction documents were invalid. We reverse and remand for further proceedings.

CHIEF JUSTICE TURNAGE, JUSTICES HARRISON, GRAY, TRIEWEILER and HUNT concur.

JUSTICE WEBER

concurs and dissents as follows:

I agree with the analysis of the majority up to the point of its application of § 35-10-301(1), MCA, which provides in pertinent part:

Every partner is an agent of the partnership for the purpose of its business, and the act of every partner, including the execution in the partnership name of any instrument... binds the partnership unless the partner so acting has in fact no authority to act... and the person with whom he is dealing has knowledge of the fact that he has no such authority. (Emphasis supplied.)

While I agree with the District Court determination that Bowers in fact had no authority to enter the loan transaction on the partnership’s behalf, I do not find a factual basis to conclude that the S & L knew of that lack of authority. Even though Bowers did not have authority to execute the documents, his action could bind the partnership if the S & L did not know of his lack of authority. As stated in the majority opinion:

A partner can still bind the partnership to an unauthorized transaction if all of the other partners ratified the loan either explicitly or by knowingly receiving or retaining benefits of the unauthorized loan transaction. ...

There are no facts in the summary judgment record before us to demonstrate whether or not Schrammeck knowingly received and retained the benefits of this unauthorized loan transaction.

The majority points out that the record does not indicate what became of the money and concludes there is not sufficient evidence to determine whether Schrammeck did knowingly retain the benefits of the loan. This appeal is from a summary judgment determination by the District Court. I conclude there is an issue of material fact on whether or not Schrammeck knowingly received or retained the benefits of the unauthorized loan transaction. I therefore conclude that summary judgment is inappropriate and that this matter should be remanded for determination of that issue of material fact.

The majority points out that Schrammeck became the successor in interest of both the other partners by reason of their conveyance to him of all of their interest. As a result, Schrammeck became the record owner of the property subject to the loan transaction. It then becomes essential to determine if Schrammeck knowingly retained the benefits of the loan transaction.

The next issue of fact is whether or not the S & L actually knew that Bowers did not have authority to enter into the loan transaction. This issue is raised by the last sentence of § 35-10-301(1), MCA, as above quoted. The majority points out that Schrammeck’s lis pendens gave notice that he had filed an action to dissolve and wind up the partnership, and points out that he subsequently prevailed in that action. While all parties are bound by the ultimate determination in the action in which the lis pendens was given, that determination does not establish that the S & L had knowledge of any lack of authority at the time the instruments were executed.

The majority concludes that the S & L actually “knew Bowers did not have authority to execute the loan documents.” This conclusion is based upon Prather’s statements that if Schrammeck was a partner, his express consent would have been required and his signature on the various loan documents would have been required, as well as the further statement by Prather that the S & L would not make the loan because of the lis pendens. However, those statements by Prather are not an adequate basis for the following conclusion of the majority:

Thus, the S & L knew that Bowers did not have authority to execute the loan documents on behalf of the partnership.

The statements by loan officer Prather only demonstrate that as a matter of loan policy, Schrammeck would have been required to execute the documents if, in fact, he were a partner.

The majority next concludes the S & L knew that Bowers did not have authority to execute the loan documents, and as a result, the trust indenture failed to pass any interest in the described property. There is no evidence in the summary judgment record which demonstrates the S & L actually knew Bowers did not have authority at the time of the execution of the loan documents. As a result, there is no factual basis from which a court may conclude whether or not Bowers could bind the partnership to the unauthorized transaction because other partners ratified by knowingly receiving or retaining benefits of the loan transaction.

For the foregoing reasons, I conclude it was improper to affirm the summary judgment decision. Justice requires a remand for determination of the material facts. Upon remand, after a factual determination as to whether Schrammeck knowingly received and retained the benefits of the entire loan transaction, the District Court could properly decide if Schrammeck is bound by the provisions of § 35-10-301(1), MCA.

I would remand for determination by the District Court of the issues of material fact.