author: JUSTICE HARRISON JUSTICE GRAY

text:
    RUSSELL ERIC MAULDING, Plaintiff and Respondent, v. ROBERT HARDMAN, Defendant and Appellant.
    No. 92-409.
    Submitted on Briefs December 3, 1992.
    Decided February 11, 1993.
    50 St.Rep. 141.
    257 Mont. 18.
    847 P.2d 292.

      For Defendant and Appellant: Joe Seifert, Gough, Shanahan, Johnson & Waterman, Helena.
    For Plaintiff and Respondent: John C. Doubek, Small, Hatch, Doubek & Pyfer, Helena.
   JUSTICE HARRISON

delivered the Opinion of the Court.

This is an appeal from the District Court of the First Judicial District, Lewis and Clark County, the Honorable Jeffrey M. Sherlock presiding. Appellant Robert Hardman (Hardman) appeals from the denial of his Motion to Set Aside Default Judgment which was deemed denied under Rule 60(c), M.R.Civ.P, because the District Court failed to rule on it within 45 days of its filing. We set aside the default judgment and remand for a trial on the merits.

The sole issue is whether Hardman is entitled to have the default judgment set aside in favor of a trial on the merits.

In the early morning hours of September 5, 1989, Hardman, respondent Russell Maulding (Maulding), Dan Forsina, and Crickett Martin were driving in the Sieben Ranch area near Helena. Hardman was driving his mother’s car. According to Hardman’s testimony at the hearing on the motion, while rounding a curve the car slid off the road due to loose gravel. The car came to a stop in the ditch without hitting any obstructions. While Maulding drove, the other three pushed the car out of the ditch, scraping a fence and knocking out a post along the way. After getting out of the ditch they drove home. No one appeared injured or complained of being injured at the time, but when a highway patrolman cited Hardman around 5:00 p.m. the next day for not reporting an accident, he learned that Maulding had visited the hospital. Hardman later pled guilty to the charge of not reporting an accident and paid a fine.

On September 13,1989, John Doubek, Maulding’s attorney, sent a letter to The Farmers Insurance Group of Companies demanding payment of Maulding’s medical expenses. On September 20, James Higgins, a claims representative with Farmers, spoke with Doubek and took Hardman’s statement regarding the accident. Given Hardman’s version of the incident, Higgins questioned liability and denied payment at that time. According to Higgins, Dan Forsina’s statement, which he took on January 3, 1990, corroborated Hardman’s description of the incident, and he conveyed this to Doubek that day.

The only documents presented to Higgins to substantiate the claimed injury were the emergency room record, which indicated only that Maulding was to rest his back, and a copy of a prescription. He received no other documents substantiating Maulding’s claim. Nor did he receive a copy of the Montana Highway Patrol report from Doubek as he expected. Higgins also tried to contact Doubek regarding the case, but Doubek did not return his calls. He had no further contact with Doubek on this matter until Doubek sent a letter in May 1992 requesting payment of the judgment.

Maulding filed suit against Hardman on May 19, 1991, alleging a much different version of the accident than given by Hardman. Maulding alleged that Hardman was under the influence of alcohol, driving carelessly and recklessly and at excessive speed, and that they went over an embankment resulting in serious bodily injury to Maulding. The complaint was served on Hardman on May 1, 1991. Because Hardman was convinced that nothing had happened, he put the documents in a drawer, took no action, and told no one of them.

On June 24, Doubek requested that the clerk enter Hardman’s default for failing to answer or otherwise appear. On November 8, 1991, the District Court entered default judgment on the issue of liability with damages to be determined later upon the proper showing. The court held a hearing on damages on March 17,1992, and on March 19 entered judgment in the amount of $81,306.31. On May 19, Doubek requested that the clerk issue an execution writ against Hardman. On the previous day Higgins received a letter from Doubek informing him of the proceedings and offering to settle the matter for $75,000 if paid immediately.

The insurer responded by providing counsel for Hardman, who moved to set aside the default judgment on May 22. The court set a hearing on the motion for July 16, 1992. At the hearing, Doubek raised the issue of whether the hearing was timely, citing Rule 60(c), M.R.Civ.R, which in conjunction with Rules 59(d) and (g) requires the court to rule on the motion within 45 days of filing or it is deemed denied and the court loses jurisdiction to decide the matter. The court took that issue under advisement and heard the testimony regarding the motion to set aside the default judgment. The judge required the parties to brief the timeliness issue.

After reading Maulding’s brief, Hardman conceded that the District Court lost jurisdiction to decide the motion on July 7,1992, the date on which it was deemed denied. Hardman filed his Notice of Appeal on July 24, 1992.

The issue before this Court is whether Hardman is entitled to have the default judgment set aside in favor of a trial on the merits.

Maulding argues that there simply is no evidence in the record upon which Hardman or this Court may rely in deciding this issue. He points out that Hardman’s attorney did not present any affidavits in support of his motion. However, an affidavit of merit is no longer required under our Rules of Civil Procedure. Blume v. Metropolitan Life Ins. Co. (1990), 242 Mont. 465, 470, 791 P.2d 784, 787; Keller v. Hanson (1971), 157 Mont. 307, 309, 485 P.2d 705,707; see also Rule 11 and Rule 60(b), M.R.Civ.P. In this case, Hardman’s brief in support of his motion set forth the facts and the evidence he intended to show at the hearing on the motion. That is all that was required at that point.

Maulding next argues that because the District Court lost jurisdiction to entertain the motion, the evidence presented at the hearing is not part of the record and may not be cited by Hardman or relied on by this Court. Under Rule 60(c), M.R.Civ.P, the motion was deemed denied because the 45-day time limit had expired. Therefore, the District Court lost jurisdiction to entertain the motion. In re the Marriage of McKinnon (1992), 251 Mont. 347, 350, 825 P.2d 551, 553; In re the Marriage of Miller (1989), 238 Mont. 108, 112, 776 P.2d 1218, 1220.

However, it is within this Court’s power under Section 3-2-204, MCA, to consider any trial court proceedings that affect the parties’ substantial rights, and we may for good cause remand this case for further proceedings. United Farm Agency v. Blome (1982), 198 Mont. 435, 438, 646 P.2d 1205, 1207. See also Cabalceta v. Standard Fruit Co. (11th Cir. 1989), 883 F.2d 1553, 1555 (in determining whether to exercise its inherent equitable power to supplement the record, appellate court should evaluate all factors, issues, and circumstances including whether accepting the material into the record would establish beyond a doubt the proper resolution of the pending issue and whether remand would be contrary to the interests of justice and judicial economy); and Turk v. United States (8th Cir. 1970), 429 F.2d 1327, 1329 (in the interest of justice the appellate court may order record enlarged in order to review testimony in transcript of preliminary hearing).

In this case, Maulding had full opportunity to prepare for the hearing, to cross-examine Hardman’s witnesses, and to present his own evidence. There is no claim of an evidentiary error at the proceeding, and we see none in the transcript. Further, that evidence was necessary for Hardman to support his motion. More importantly, that evidence is necessary for this Court to make an informed decision on this matter. Therefore, in the interest of justice and judicial economy, this Court will consider the evidence presented at the July 16 hearing. To remand this case to the District Court for a second hearing on the motion would be nonsensical.

We now turn to Hardman’s motion to set aside the default judgment. That motion is governed by Rule 60(b), M.R.Civ.P. As a general rule, cases are to be tried on the merits and judgments by default are not favored. Lords v. Newman (1984), 212 Mont. 359, 363, 688 P.2d 290, 293; Little Horn State Bank v. Real Bird (1979), 183 Mont. 208, 210, 598 P.2d 1109, 1110. Where the motion is made and “supported by a showing that leaves responsible minds in doubt, courts tend to resolve [those] doubts in favor of the motion, since courts favor a trial on the issues over a default judgment.” Twenty-Seventh Street, Inc. v. Johnson (1986), 220 Mont. 469, 471, 716 P.2d 210, 211. Furthermore, if the District Court had denied the motion, rather than allowing it to be deemed denied, we would only be required to find a slight abuse of discretion in order to reverse the denial. Twenty-Seventh Street, Inc., 716 P.2d at 210.

However, a party seeking to set aside a default judgment must show both a good cause for doing so under Rule 60(b) and the existence of a meritorious defense. First Nat’l Bank of Cut Bank v. Springs (1987), 225 Mont. 62, 67, 731 P.2d 332, 335. We will discuss the good cause requirement shortly. As for a meritorious defense, Hardman testified at the hearing that the car simply slid off the road due to loose gravel and that no one was injured, and Higgins testified that the statement he took from Dan Forsina, a non-party, corroborated Hardman’s version of the accident. Although the merits are to be finally decided at trial, Hardman has met his burden at this point.

Turning now to the justification under Rule 60(b), Hardman specifically cited subsections (1), (3), and (6) of that rule which provide:

Rule 60(b). Mistakes - inadvertence - excusable neglect - newly discovered evidence - fraud, etc. On motion and upon such terms as are just, the court may relieve a party or a party’s legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; ... (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party;... (6) any other reason justifying relief from the operation of the judgment.

Rule 60(b) further provides that “[t]he motion shall be made within a reasonable time, and for reasons (1), (2), and (3) when a defendant has been personally served, ... not more than 60 days after the judgment, order or proceeding was entered ....”

Maulding cites Libby Rod & Gun Club v. Moraski (D.C. Mont. 1981) 519 F.Supp. 643, 647, where the court said, “[I]t is generally held that if a party seeks relief under any other subsection of Rule 60(b), it cannot also claim relief under 60(b)(6)” to support his argument that Hardman is precluded from claiming relief under subsection (6). And because relief under subsections (1) and (3) is time barred, he argues, Hardman is not entitled to any relief at all under Rule 60(b). However, the above quote from Libby Rod & Gun Club is not a full or fair statement of the law as this Court views it. We stated our interpretation in Springs:

Wright and Miller cite several federal cases construing Federal Rule 60(b), which is almost identical to the Montana Rule, and state:
These cases certainly seemed to establish that clause (6) and the first five clauses are mutually exclusive and that relief cannot be had under clause (6) if it would have been available under the earlier clauses. This reading seems required also by the language of the rule.
We agree with Wright and Miller’s interpretation that relief cannot be obtained under Rule 60(b)(6), M.R.Civ.P., if that relief is available under Rule 60(b)(1) to (5), M.R.Civ.P.

731 P.2d at 334 (citation omitted).

A party is precluded from relief under subsection (6) when the facts or circumstances would bring the case under one of the first five subsections. In that instance, the party is not entitled to relief under subsection (6) based on the same facts or circumstances. Here, however, the fact that Hardman requested relief under subsections (1) and (3) and also under subsection (6) is not fatal. Our recent opinion in Koch v. Billings School Dist. No. 2 (1992), [253 Mont. 261], 833 P.2d 181, 49 St.Rep. 517, [11 Ed.Law 57,] where we said that the plaintiff should have chosen between subsection (5) and (6) because they are mutually exclusive, illustrates this. The plaintiff’s failure to make this choice did not prevent the District Court or this Court from determining which subsection was proper. We conclude that in this case Hardman’s motion should have been based on subsection (6), and we will analyze it under that subsection alone.

A motion under subsection (6) must be “made within a reasonable time.” Rule 60(b), M.R.Civ.P. In this case, Higgins received a letter from Doubek 60 days after entry of judgment informing him of the judgment, requesting payment, and offering to settle the case for $75,000 if paid immediately. We note that the timing of this letter prevented Hardman from claiming relief under the first three subsections of Rule 60(b) due to the 60-day requirement. The insurance company hired an attorney who filed the motion and supporting brief four days later. The motion was made within a reasonable time and with due diligence under these circumstances.

We conclude that Hardman is entitled to relief under Rule 60(b)(6) for two reasons. The first reason is the manner in which Doubek handled this case. The second reason is the manner in which damages were established and awarded.

This Court said in In re Marriage of Castor (1991), 249 Mont. 495, 500, 817 P.2d 665, 668, “Generally, relief is afforded under subsection (6) of Rule 60(b) in extraordinary situations when circumstances go beyond those covered by the first five subsections or when a party in whose favor judgment was entered has acted improperly.” In this case Doubek initially made a demand on the insurance company a week after the accident and requested a $75 payment a week after that. However, the only documents he sent the insurance adjuster were a copy of an emergency room report and a copy of a prescription. These documents did not give a history of the injury or any other information. Although Higgins requested a copy of the highway patrol report, Doubek did not send one or indicate why he could not. Nor did Doubek provide any further documentation to substantiate this claim. Further, he failed to return Higgins’ telephone calls regarding this matter. He then sought payment from the insurance company once he had obtained a judgment although he did not inform Higgins of any of the proceedings. We realize that as a general rule, Doubek was not required to inform the insurance company of the proceedings. However, he clearly knew of the insurance company’s interest in this lawsuit and proceeded at all times with an eye toward collecting from the insurance company once he obtained a judgment for Maulding. We have previously recognized that prejudice resulting to third parties is to be considered in a Rule 60(b) motion. See Ring v. Hoselton (1982), 197 Mont. 414, 643 P.2d 1165; John J. Ming, Inc. v. District Court (1970), 155 Mont. 84, 466 P.2d 907.

We are also mindful of Rule 3.3 of the Rules of Professional Conduct and our decision in Madson v. Petrie Tractor & Equipment Co. (1938), 106 Mont. 382, 77 P.2d 1038. Rule 3.3 requires a lawyer in ex parte proceedings to inform the court of all material facts known by the lawyer whether or not they are adverse. In Madson we vacated a default judgment partly because the plaintiff’s attorney did not speak up at a hearing and correct defendant’s attorney who stated there had been no service of process on his clients. Although plaintiff’s attorney knew that the defendant had been served because he had received the sheriff’s return of service, he waited until he moved for entry of default to acknowledge it.

In the present case, Doubek was aware that an insurance policy covered the claim, and he was informed by Higgins that Dan Forsina’s statement corroborated Hardman’s version of the accident. We believe Doubek should have informed the District Court of these facts.

We now turn to the manner in which the damages were established and awarded in this case. We first look at the award of punitive damages. At the close of the hearing, the District Court awarded $25,000 for punitive damages. This award is based on an allegation in the complaint that stated, “Plaintiff is uncertain as to whether defendant was operating his vehicle while under the influence of alcohol but, upon information and belief, alleges that said defendant had been drinking prior to driving his vehicle.”

“[N]o plaintiff is ever entitled to exemplary damages as a matter of right, regardless of the situation or the sufficiency of the facts.” Davis v. Sheriff (1988), 234 Mont. 126,133, 762 P.2d 221, 226. Section 27-1-221(5), MCA, requires that all elements of a claim for punitive damages be proven by clear and convincing evidence, and Section 27-1-221(7)(b), MCA, requires the judge to “clearly state his reasons for making the award in findings of fact and conclusions of law, demonstrating consideration of each of [nine enumerated factors].” The only evidence presented here is an unsubstantiated claim in the complaint. As to the second requirement, the only reasons stated consist of a statement in the Judgment prepared by Doubek that “the evidence showed that the damages sustained by the Plaintiff were for personal injury caused by Defendant Hardman’s operation of a motor vehicle while Defendant Hardman was intoxicated from using alcohol.” As we said above, there was no evidence. Further, this statement does not satisfy the requirements of Section 27-1-221(7)(b), MCA. See Ward v. Vibrasonic Laboratories, Inc. (1989), 236 Mont. 314, 769 P.2d 1229 (district court erred by not making findings pursuant to Section 27-1-221, MCA).

We next look at the way the medical evidence was presented in order to establish damages. Doubek was allowed to give an unqualified expert medical opinion regarding Hardman’s condition and prognosis for recovery. The District Court should not have accepted this testimony because, on these matters, it should depend on qualified expert testimony. See Rules 701 and 702, M.R.Evid.; Shahrokhfar v. State Farm Mut. Auto. Ins. Co. (1981), 194 Mont. 76, 634 P.2d 653; Hill v. Squibb & Sons, E.R. (1979), 181 Mont. 199, 592 P.2d 1383. We conclude that this hearing was conducted as a matter of form over substance and that justice would not be served by requiring Hardman or his insurer to answer for damages established in this manner.

Lastly, Maulding argues that he would be prejudiced if the default judgment were vacated. However, there is no indication in the record that any of the witnesses are unavailable or that Maulding will be unable to produce documentation of the accident and any treatment he underwent. Furthermore, any prejudice that might arise is attributable to Maulding. The incident giving rise to this lawsuit occurred on September 5, 1989. Although Doubek made demands on the insurance company a week later, he failed to substantiate the claim or to return Higgins’ calls regarding this matter. He then waited for a year and a half to file his complaint and another 40 days after that to serve Hardman. Then he waited nearly two months before requesting that Hardman’s default be entered. In January 1992 the court had to prompt him to request a hearing on damages. This hearing was finally held and the court granted judgment on March 17, 1992. Doubek then waited for two more months to pass before requesting an execution be issued and before contacting Higgins. Any prejudice that might result from delay is attributable only to Maulding.

Based on the foregoing, we vacate the default judgment and remand to the District Court for a trial on the merits.

CHIEF JUSTICE TURNAGE, JUSTICES HUNT and McDonough concur.

JUSTICE GRAY

dissenting.

I respectfully dissent from the opinion of the majority.

The majority opinion strongly implies, without quite saying in so many words, that respondent Maulding’s counsel engaged in “sharp practices” in his handling of this case. I do not disagree. It is my view, however, that in its concern over counsel’s actions and its determination to right a wrong, the majority fails to do an appropriate and precise Rule 60(b)(6), M.R.Civ.R, analysis. The result is a further clouding of a Rule already so murky as to be of little guidance to trial courts and counsel. For this reason, I cannot join in the majority opinion.

In my opinion, an appropriate Rule 60(b)(6) analysis supports setting aside the entry of default judgment on damages by the District Court. It does not allow the setting aside of the earlier default judgment on liability against appellant Hardman.

The critical difference lies in the fact that the challenge to the judgment on liability is grounded on actions of both Hardman himself and Maulding’s counsel which bring it squarely within subsections (1) and (3) of the Rule. The 60-day limitation for motions brought pursuant to those subsections expired on or about January 8, 1992 — 60 days after the default judgment on liability was entered November 8, 1991. The challenge to the default judgment on damages, on the other hand, is a legitimate “any other reason” motion pursuant to Rule 60(b)(6), premised as it is on significant irregularities at the hearing on damages. Therefore, that motion need not have been made within 60 days subsequent to the entry of default judgment on damages on March 19, 1992.

This analysis comports with the majority’s correct statement that a “party is precluded from relief under subsection (6) when the facts or circumstances would bring the case under one of the first five subsections.” Here, motions under subsections (1) and (3) were premised on events relating to the entry of judgment on liability; thus, they were not timely made due to the fact that more than 60 days had elapsed from the time of the liability judgment to the date the motions were made.

The subsection (6) motion, however, was based on different facts and circumstances — those surrounding the hearing on damages and the default judgment entered thereon. These facts and circumstances do not fall within one of the other subsections of the Rule; thus, Hardman is not precluded from relief under subsection (6). This portion of the motion — timely under the “reasonable time” limitation for Rule 60(b)(6) motions — properly can and should be granted.

In addition, the majority’s reliance on dicta from In re Marriage of Castor (1991), 249 Mont. 495, 817 P.2d 665, will haunt this Court and Rule 60(b) practice for a long time to come. In Castor, we stated correctly that relief is afforded under subsection (6) of Rule 60(b) “in extraordinary situations when circumstances go beyond those covered by the first five subsections ....” Unfortunately, we went on to say — both needlessly, under the facts of Castor, and erroneously, in my view — that relief was also available under subsection (6) “when a party in whose favor judgment was entered has acted improperly.” Castor, 817 P.2d at 668. That portion of our statement had no applicability to the case before us; nor, indeed, was it supported by the cases we cited therein.

It is my view that the “when a party in whose favor judgment was entered has acted improperly” criterion for Rule 60(b)(6) applicability is entirely inappropriate. Such considerations clearly come within subsection (3)’s “fraud..., misrepresentation, or other misconduct of an adverse party” language. As such, motions on that basis would be untimely unless brought within 60 days of the judgment. By erroneously including that language within the applicability of subsection (6) of the Rule in Castor, we departed from the fundamental requirement that subsection (6) relief is not available when the facts or circumstances would bring the case under one of the first five subsections and from our appropriate reliance on Wright and Miller. That fundamental requirement will be impossible for us to apply in the future so long as we refuse to say in a straightforward manner that the quoted Castor language was erroneous dicta. Having joined in the Castor opinion, I am willing to admit my error; I wish that the majority would see fit to do the same in order that the salutary purposes of Rule 60(b) can continue to be met.

Finally, the majority appears to “believe” that Maulding’s counsel violated Rule 3.3 of the Rules of Professional Conduct. If the majority is sincere in this belief, it appears to me that the Canons of Judicial Ethics may require it to refer the matter to the Commission on Practice. Absent such a referral, I question whether statements about violations of the Rules of Professional Conduct have an appropriate place in our decisions.

I would reverse only the denial of Hardman’s Rule 60(b)(6) motion and remand for further proceedings on damages. While this result might not be entirely “fair” to Hardman’s insurer, it would preserve the integrity of Rule 60(b) and provide appropriate and necessary guidance to practitioners and trial courts.


source: Caselaw Access Project

author: JUSTICE TRIEWEILER

license: Public Domain

text:
    THE STATE OF MONTANA, Plaintiff and Respondent, v. BRIAN E. BARKER, Defendant and Appellant.
    No. 91-596.
    Submitted on Briefs August 13, 1992.
    Decided February 18, 1993.
    50 St.Rep. 147.
    257 Mont. 31.
    847 P.2d 300.

      For Appellant: Brian E. Barker, Pro Se, Deer Lodge.
    For Plaintiff and Respondent: Marc Racicot, Attorney General, Elizabeth L. Griffing, Assistant Attorney General, Helena; Dennis Paxinos, Yellowstone County Attorney, Shelley Briney, Deputy County Attorney, Billings.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

Defendant Brian Barker entered a plea of guilty to two counts of possession of dangerous drugs and misdemeanor domestic abuse. On October 18, 1991, his motion to withdraw his guilty plea and his petition for post-conviction relief were denied by order of the Thirteenth Judicial District Court in Yellowstone County. He appeals that order. We affirm.

The issues before this Court are restated as follows:

1. Did the District Court abuse its discretion when it denied defendant’s motion to allow withdrawal of the plea agreement?

2. Did the District Court err when it denied defendant’s petition for post-conviction relief which claimed that methamphetamine was improperly classified as a controlled substance under Montana law?

Brian Barker was a passenger in a vehicle which was stopped on the morning of March 26, 1989, after a registration check indicated that there was an outstanding arrest warrant for the vehicle’s registered owner. When the police officers approached the car, they observed Barker apparently placing items under the car seat. After a search of the vehicle, officers discovered a marijuana cigarette and a pouch containing methamphetamine under the seat where Barker had been sitting. Barker was subsequently charged by information with felony and misdemeanor counts of criminal possession of dangerous drugs for possession of the methamphetamine and marijuana, respectively. The affidavit accompanying the information inaccurately described methamphetamine as a Schedule I drug, when in fact, it is designated as a Schedule II drug under § 50-32-224, MCA.

On April 6,1989, the State’s motion to consolidate the drug charges with three other pending cases in which Barker was charged with theft was granted after a hearing, and without Barker’s objection. In addition, there were several misdemeanor charges pending against Barker in justice court, including a charge of domestic abuse, four traffic violations, and a drug paraphernalia charge.

Following hearings on April 20 and 23, 1990, Barker entered into a plea agreement with the State in which Barker agreed to plead guilty to the two counts of possession of dangerous drugs and the misdemeanor domestic abuse charge, and the State agreed to dismiss all remaining charges pending against Barker. According to the plea hearing transcript, this plea bargain was proposed by Barker and accepted by the State. Barker received a five-year suspended sentence for his felony conviction of possession of dangerous drugs, and for the two misdemeanor convictions of domestic abuse and possession of dangerous drugs, he was sentenced to the amount of time he had already served in the Yellowstone County Detention Facility.

The State filed petitions seeking revocation of Barker’s suspended sentence on October31,1990,andMay 1,1991, due to repeated parole violations, and Barker was subsequently arrested and incarcerated. The District Court later revoked the suspended sentence and the original five-year prison sentence was imposed. Following his arrest, Barker filed a petition for post-conviction relief and a motion to withdraw his guilty plea. On October 18, 1991, the District Court denied both of these requests. From this order, Barker appeals.

I

Did the District Court abuse its discretion when it denied Barker’s motion to allow withdrawal of the plea agreement?

Section 46-16-105(2), MCA, allows the district court to permit the withdrawal of a guilty plea and substitute in its place a plea of not guilty upon a showing of good cause. The determination of good cause is a matter of discretion for the district court, and absent an abuse of that discretion, this Court will uphold the district court’s refusal to permit the withdrawal of a guilty plea. State v. Reynolds (1992), 253 Mont. 386, 389-90,833 P.2d 153, 155, 49 St. Rep. 463, 465; State v. Cameron (1992), 253 Mont. 95, 100-02, 830 P.2d 1284, 1288, 49 St. Rep. 150, 152.

After reviewing the record and considering Barker’s arguments, we conclude that the District Court did not abuse its discretion when it denied Barker’s motion. There is adequate evidence to justify the District Court’s finding that the plea was entered knowingly and voluntarily, and that Barker fully understood the consequences of, and the benefits he would receive, under the plea. Furthermore, the record clearly supports the court’s determination that Barker was not prejudiced nor misled by the erroneous description of methamphetamine as a Schedule I controlled substance.

Barker contends on appeal that his plea was not entered knowingly or voluntarily and sets forth several arguments in support of this claim. Barker raises such issues as the failure of the court to rule on his earlier motions concerning suppression of evidence and severing the charges; an allegation that the court established no factual basis for the plea; and the State’s filing of a notice of persistent felony offender after the plea was entered. We find no merit in these arguments and note that some of these claims are raised for the first time on appeal and are, therefore, not properly before this Court.

A review of the record demonstrates that the court went through a very careful and thorough process to assure that Barker understood the nature and consequences of his plea, and was not acting under coercion or duress when the plea was entered. The court did not accept Barker’s guilty plea at the first hearing held on April 20, 1990, because it wanted to have the terms of the plea agreement set down in writing and signed by all parties. At the second plea hearing, there was considerable discussion of the consequences of the plea bargain and Barker’s understanding of the rights he waived by entering a plea of guilty. The voluntary nature of the plea is apparent from the discussion that took place, and we find nothing in the record to suggest that Barker was unwilling to enter into the agreement, or did not understand the disadvantages of pleading guilty.

Barker next contends that he was laboring under a fundamental mistake when the plea was entered because the affidavit accompanying the information described methamphetamine as a Schedule I rather than Schedule II drug. We have clearly stated in the past that when a guilty plea is based upon a fundamental mistake or misunderstanding, a court may allow the defendant to withdraw the plea. State v. Miller (1991), 248 Mont. 194, 810 P.2d 308; Benjamin v. McCormick (1990), 243 Mont. 252, 792 P.2d 7. However, in this case, we do not find that the mistake affected Barker’s plea agreement, and therefore, does not provide grounds for withdrawal of the plea.

The information charged Barker with one count of “Criminal Possession of Dangerous Drugs (felony)” for possession of “methamphetamine, a controlled substance,” pursuant to Section 45-9-102, MCA, and Sections 50-32-101 through -232, MCA. Methamphetamine is listed as a proscribed drug under Schedule II in Section 50-32-224(3)(c), MCA. Thus, there was no error in the information charging Barker with a felony. The only place where Schedule I was ever referred to was in the affidavit; Barker’s plea referred only to “criminal possession of dangerous drugs,” as did the sentencing order.

The statute Barker was charged under, Section 45-9-102(1), MCA states: “[a] person commits the offense of criminal possession of dangerous drugs if he possesses any dangerous drug, as defined in 50-32-101.” Section 50-32-101, MCA, defines dangerous drug as “a drug, substance, or immediate precursor in Schedules I through V hereinafter set forth.” Whether methamphetamine was described as a Schedule I or II drug was not the dispositive factor; the crime Barker was charged with, pled guilty to, and was sentenced for was the criminal possession of methamphetamine, a dangerous drug. Had methamphetamine been properly described as a Schedule II substance, the criminal charge would have been exactly the same. We fail to see how Barker was prejudiced by this error or entered his plea under a fundamental mistake or misapprehension as to the charges.

Barker finally argues that he should have been allowed to withdraw the plea because it contained an unlawful provision which required him to permanently leave the State of Montana when he was released from prison. We hold that because this provision was not part of the sentence, it is not enforceable against Barker. As such, that provision does not invalidate the plea nor give cause to withdraw it.

After reviewing the record in this case, we conclude that there was no abuse of discretion when Barker’s motion to withdraw his guilty plea was denied.

II

Did the District Court err when it denied Barker’s petition for post-conviction relief which claimed that methamphetamine was improperly classified as a controlled substance under Montana law?

Barker contends that methamphetamine was improperly classified as a controlled substance because two products containing methamphetamine, a Vick’s brand inhaler and a Rynal brand nasal spray, were available over the counter at the time of the offense. Under Montana law, Barker argues that the State is barred from prosecuting him for possession of a drug if a product containing the drug is legal to sell and possess without a prescription. His claim for relief is premised on the assertion that he was convicted of something which was not a crime.

We reject this argument for two reasons. First, Barker misconstrues the pertinent statute. Section 50-32-205, MCA provides:

The board [of pharmacy] shall exclude any nonnarcotic drug from a schedule if the drug may, under the Federal Food, Drug, and Cosmetic Act and 50-31-307(2)(b) of the Montana Food, Drug, and Cosmetic Act, be lawfully sold over the counter without a prescription. [Emphasis added.]

Contrary to Barker’s assertion, this explicit statutory condition has not been satisfied with respect to the drug methamphetamine. Although the two nasal products Barker refers to do contain minuscule amounts of methamphetamine and are available without a prescription, Barker cannot demonstrate that either state or federal law allows over the counter sale of the drug itself.

Second, this same argument has been soundly rejected in other jurisdictions, and we find the reasoning adopted by these courts persuasive. In United States v. Caperell (9th Cir. 1991), 938 F.2d 975, the Court of Appeals, unpersuaded by the “Vick’s/Rynal” defense, stated:

[M]ethamphetamine is only one ingredient of the substances in question. It is ludicrous to believe that authorization for sale over the counter of a product containing a small amount of a controlled substance renders that controlled substance lawful and exempt from the schedule in all forms.

Caperell, 938 F.2d at 979 (quoting United States v. Housley (D. Nev. 1990), 751 F. Supp. 1446, 1447, aff’d 955 F.2d 622 (9th Cir. 1992)). See also United States v. Coyote (10th Cir. 1992), 963 F.2d 1328; United States v. Youngblood (10th Cir. 1991), 949 F.2d 1065; United States v. Roark (8th Cir. 1991), 924 F.2d 1426.

We hold that the District Court properly concluded that methamphetamine is not barred from classification as a controlled substance pursuant to Section 50-32-205, MCA, and did not err when it denied Barker’s petition for post-conviction relief.

The decision of the District Court is affirmed.

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


text:
    PAT M. GOODOVER, Plaintiff and Respondent, v. LINDEY’S INC. Defendant and Petitioner.
    No. 92-011.
    Dated February 18, 1993.
    50 St.Rep. 150.
    257 Mont. 38.
    847 P.2d 699.
   ORDER AND OPINION

Lindey’s has filed an application for a writ of review together with a memorandum requesting this Court to dismiss an order finding Lindey’s in contempt. The order fined Lindey’s $500 and imprisoned its chief executive officer for five days. The imprisonment was suspended to give Lindey’s an opportunity to purge itself of contempt. Goodover has filed a response to the petition and Lindey’s has filed a reply to the response. We issue the writ and vacate the order of contempt.

The issues are:

1. Did the District Court have authority to find Lindey’s in contempt?

2. Did the District Court err in awarding Goodover attorney fees?

The court based the contempt order on its decree entered in the previous case of Goodover v. Lindey’s Inc. (1988), 232 Mont. 302, 757 P.2d 1290 (Goodover I). That case involved the placement or staking of a monument which is the Northwest comer of Lot 1 and the Northeast corner of Lot 2 of Seeley Lake Shore Sites. The court found that the trae and correct boundary between Lots 1 and 2 had been reasonably retraced by Goodover’s Exhibits No. 31 and 34. Certificate of survey No. 2351, Missoula County, therefore, should be amended to conform to such findings and conclusions and should reflect the corners and boundary line of Lots 1 and 2, as established by Goodover’s Exhibit No. 34.

The judgment and decree reads as follows:

JUDGMENT AND DECREE
IT IS THEREFORE ORDERED AND DECREED and this does order that Judgment and Decree be herein entered in favor of the Plaintiff, Pat M. Goodover, and against the Defendants, Lindey’s, Inc., and Estate of William C. Forest, as follows:
I
The North-South boundary between Lot 1 and Lot 2, Seeley Lake Shore Sites, is established by Plaintiff’s Exhibits 31 and 34, Martinson Survey - the northeast corner of Lot 2 is an inch and one-half pipe located approximately 5.5 feet east of Plaintiff’s boathouse as shown on Plaintiff’s Exhibits 31 and 34.
II
The Plaintiff was and now is the lawful owner in fee simple of Lot 2, Seeley Lake Shore Sites, Missoula County, Montana.
III
COS 2351 is amended to reflect the boundary lines and northeast corner of Lot 2, Seeley Lake Shore Sites, and lake frontage for Lot 2, Seeley Lake Shore Sites, consistent with Plaintiff’s Exhibits 31 and 34.
IV
Plaintiff’s damages are to be determined following the submission of evidence at hearing to be scheduled later for that purpose.

V

Plaintiff is awarded his costs of suit.

After the court issued this decree, there were supplemental proceedings concerning the removal of encroachments which is Goodover v. Lindey’s Inc. (1990), 246 Mont. 80, 802 P.2d 1258 (Goodover II). This Court affirmed both Goodover I and Goodover II.

In Goodover II we rejected Lindey’s assertions as an attempted relitigation of the boundaries established in Goodover I. When the second appeal was underway, a surveyor hired by Lindey’s retraced the boundary lines of Lots 1, 3 and 5. The surveyor used as a monument location for the Northeast corner of Lot 2 or Northwest corner of Lot 1, a different corner than that found to be the true corner in Goodover I. The surveyor proposed and filed certificate of survey No. 3861 containing these erroneous corners and lines. The certificate of survey portrayed deviations from the retracement survey which this Court found to be true and correct in Goodover I.

Lindey’s was cited for contempt for the filing of this certificate of survey. In answer to the contempt citation, Lindey’s asked that the order to show cause be dismissed on the grounds that the decree did not order Lindey’s to do or not to do any specific act, and therefore the filing of the certificate of survey was not a contemptuous act on its face. They also alleged that the surveyor, an independent contractor, filed the certificate of survey, and Lindey’s could not be held liable or in contempt for the surveyor’s acts.

Goodover contends that it is reasonable to inquire into the underlying dispute and issues to determine if the court’s judgment is unclear or ambiguous. Goodover further contends that this can be done by reviewing the findings of fact, conclusions of law and decree.

There are two purposes of a contempt order — to vindicate the dignity of the court’s authority and to persuade the contemptor to do what the law requires. Dunlavey v. Doggett (1909), 38 Mont. 204,208, 99 P. 436, 437; 17 Am. Jur.2d Contempt § 130. “[Disobedience of any lawful judgement, order, or process of the court” constitutes the only possible contemptuous behavior in this case. See § 3-1-501(e), MCA.

The pertinent part of the decree by order establishes the boundary line between the lots and also the monument of the Northeast corner of Lot 2. The decree further states that Goodover was the owner of Lot 2 and the plat was amended to be consistent with Goodover’s Exhibits 31 and 34. Such decree established the boundaries, monuments and rights of ownership.

“Contempt proceedings ... have most, if not all, of the characteristics of a criminal case and few, if any, of a civil action.” Dunlavey, 38 Mont. at 208, 99 P at 437. Normally violations of rights of ownership do not constitute contempt of court even though such rights have been ascertained and declared by judgment, unless such violations consist of doing something which was prohibited, or of failing to do something which was required, by the judgment. 17 Am.Jur.2d Contempt, § 130.

Goodover cites Walker v. Warner (1987), 228 Mont. 162, 740 P.2d 1147, to support his position that Lindey’s filing of the certificate of survey constituted contempt. However, the case is not applicable to the present case. In that case, the district court’s final judgment specifically ordered the parties to comply with the provisions of their agreement, whereas in this case the decree did not order the parties to do anything or not to do anything.

In another case, a water decree determined the relative water rights of parties of which the defendant was one. The defendant violated the decree by opening a headgate and using water needed by prior appropriators, and did so in direct violation of orders from the water commissioner. Zosel v. District Court (1919), 56 Mont 578, 580, 185 P. 1112, 1113. The court held such act constituted a prima facie violation of the decree and contempt of court. Zosel, 185 P. at 1113. This case, however, does not support Goodover because the water commissioner is an agent of the court. The defendant violated a direct mandate of the water commissioner and therefore was properly found in contempt. See Section 85-5-406, MCA.

As stated above, the decree in the present case does not direct Lindey’s to do or refrain from doing anything that is required by the judgment; it determines property rights. If there is no command, there is no disobedience. A person may not be held in contempt of court for violating an order, unless the terms of the order are definite, certain, and specific. See Mr. Steak, Inc. v. Sanquist Steaks, Inc. (Minn. 1976), 245 N.W.2d 837, 838; Sellman v. Sellman (Md. 1965), 209 A.2d 61, 62. In this case, supplemental orders would be necessary to form a basis for contempt.

We conclude that Lindey’s did not violate a court order that would serve as a foundation for contempt. Therefore, the court did not have the authority to find Lindey’s in contempt.

If attorney fees were allowable in this case, it would not be proper to allow them here because Goodover was not the prevailing party. The order finding Lindey’s in contempt is vacated and set aside. The action is dismissed and the award of attorney fees is reversed.

DATED this 18th day of February, 1993.

/S/ TERRY N. TRIEWEILER

/S/ WILLIAM E. HUNT, SR.

/S/ JOHN CONWAY HARRISON

/S/ R.C. McDONOUGH

/S/ FRED J. WEBER


author: CHIEF JUSTICE TURNAGE

text:
    MONTANA RANCH PROPERTIES, INC., a Montana corporation, Plaintiff and Appellant, v. DONALD EASTEP, JOHN DOES 1 THROUGH 10, AND OTHER PERSONS CLAIMING ANY INTEREST IN CERTAIN LANDS IDENTIFIED IN THIS COMPLAINT, Defendants and Respondents.
    No. 92-473.
    Submitted on Briefs January 22, 1993.
    Decided February 18, 1993.
    50 St.Rep. 152.
    257 Mont. 43.
    847 P.2d 304.

      For Plaintiff and Appellant: Karl Knuchel, Livingston.
    For Defendants and Respondents: Kenneth D. Tolliver and Jeffrey A. Hunnes, Wright, Tolliver & Guthals, P.C., Billings.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

The District Court for the Sixth Judicial District, Park County, decided this quiet title action in favor of defendant Donald Eastep. Plaintiff Montana Ranch Properties, Inc., appeals. We affirm.

The issue is whether the court erred in concluding that Donald Eastep held the redemptive rights to certain real property in Park County, Montana.

On February 22, 1990, J. Ranee Smith filed a petition for bankruptcy under Chapter 7 of the United States Bankruptcy Code. At that time, he was the owner of real property in Park County, Montana, upon which Frances and Marion Moreland held a mortgage. The day after Smith filed his bankruptcy petition, the Morelands filed, in the District Court for Park County, a complaint to foreclose their mortgage.

Pursuant to 11 U.S.C. § 362, the foreclosure action was stayed pending the bankruptcy proceeding. On August 27,1991, however, at the Morelands’ request, the Bankruptcy Court entered an order lifting the stay as to the Park County property. The order stated:

IT IS ORDERED vacating [sic] the stay against lien enforcement of Frances and Marion Moreland respecting the above-described property.

The Morelands pursued their foreclosure action in District Court and on December 17, 1991, obtained a decree establishing a total judgment of $ 147,756.26 and ordering sale of the mortgaged property.

On December 19, 1991, the bankruptcy trustee gave notice to all creditors and interested parties of his intent to sell Smith’s redemption rights in the Park County property. He sold those rights to defendant Eastep for $1,000 on January 17, 1992.

The sheriff’s sale following foreclosure took place on February 11, 1992. High bidder at the sale was Montana Ranch Properties, Inc., the plaintiff in this case. Montana Ranch then obtained a quitclaim deed from J. Ranee Smith dated February 24,1992, to set up a claim to the redemption rights.

On March 10, 1992, Eastep tendered $186,879.76 to the sheriff of Park County to exercise the redemptive rights he had acquired from the bankruptcy trustee. Shortly thereafter, Montana Ranch filed this quiet title action. The District Court granted summary judgment in favor of Eastep.

Did the District Court err in concluding that Donald Eastep held the redemptive rights to the Park County property?

Summary judgment is proper when the pleadings, depositions, answers to interrogatories, admissions, and any affidavits on file show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.P. Here, the arguments made by Montana Ranch are legal, not factual. Federal statutes and cases control as to the bankruptcy matters involved.

Montana Ranch claims that the trustee had no power to sell the right of redemption prior to the foreclosure sale. It asserts that the right did not exist prior to the foreclosure sale and therefore was not part of the bankruptcy estate under 11 U.S.C. § 541.

Federal case law disproves this claim of Montana Ranch:

[T]he courts have consistently said that options or contingent interests are property of the bankruptcy estate under section 541. “The term ‘property has been construed most generously and an interest is not outside its reach because it is novel or contingent or enjoyment must be postponed.” Segal v. Rochelle, 382 U.S. 375, 379, 86 S.Ct. 511, 515, 15 L.Ed.2d 428 (1966)[.]
We hold that a pre-foreclosure right to redeem is a property right under section 541[.]

In re Bialac (9th Cir. 1983), 712 F.2d 426, 431.

A trustee in bankruptcy has the power to sell property of the estate. 11 U.S.C. § 363(b). We conclude that the trustee had the power to sell the redemption rights prior to the foreclosure sale.

Montana Ranch also asserts that when the Bankruptcy Court lifted the automatic stay as to the Park County property, the bankruptcy trustee effectively abandoned the property. Montana Ranch claims this resulted in a revesting of title to the Park County property in J. Ranee Smith.

A lifting of a bankruptcy stay and abandonment of property by the bankruptcy estate are distinctly different. Relief from the automatic stay is governed by 11 U.S.C. § 362. Abandonment of property from a bankruptcy estate is governed by 11 U.S.C. § 554. For the protection of creditors, abandonment during the period of administration can only occur following notice, hearing, and order of the bankruptcy court. 11 U.S.C. § 554. Montana Ranch has presented no evidence that such proceedings took place. Contrary to the contentions of Montana Ranch, the order lifting the automatic stay as to the Morelands’ lien on the Park County property contains no language divesting the bankruptcy estate of its interest in the property. We conclude that Montana Ranch has failed to establish that the bankruptcy trustee abandoned the redemption rights to the Park County property.

Montana Ranch has not shown that the bankruptcy trustee’s sale to Eastep of the right of redemption of the Park County property was in any way invalid. We therefore affirm the summary judgment quieting title in Eastep.

JUSTICES HARRISON, HUNT, McDONOUGH, and TRIEWEILER concur.


text:
    ST. PAUL FIRE & MARINE INSURANCE COMPANY, Plaintiff and Appellant, v. ALLSTATE INSURANCE COMPANY and GARY GLASSING, Defendants and Respondents.
    No. 91-564.
    Submitted May 12, 1992.
    Decided February 19, 1993.
    50 St.Rep. 154.
    257 Mont. 47.
    847 P.2d 705.

      For Plaintiff and Appellant: Gary M. Zadick, Mark F. Higgins, Ugrin, Alexander, Zadick & Slovak, Great Falls.
    For Defendants and Respondents: Susan P. Roy, Garlington, Lohn and Robinson, Missoula.
   JUSTICE TRIEWEILER

Plaintiff St. Paul Fire and Marine Insurance Company filed its complaint in the District Court for the Eighth Judicial District in Cascade County to recover amounts paid to its insured pursuant to the underinsured motorist coverage provided by its policy. St. Paul’s claim against defendant Gary Glassing was dismissed by the District Court based on that court’s conclusion that it lacked personal jurisdiction over Glassing. St. Paul’s claim against Allstate Insurance Company was dismissed because of its failure to state an actionable claim against Allstate. From this judgment, St. Paul appeals. We reverse in part and affirm in part.

The issues are:

1. Did the District Court have personal jurisdiction over Gary Glassing pursuant to Rule 4B(l)(b), M.R.Civ.P.?

2. Is an insurer which provides underinsured motorist coverage a third party entitled to bring a direct claim under Sections 33-18-201 and 33-18-242, MCA, when a primary insurer fails to effectuate prompt and reasonable settlement?

FACTUAL BACKGROUND

St. Paul’s insured, Ellen Lynn, and Glassing were involved in a motor vehicle collision in Bozeman on June 12, 1985. A personal injury action was filed by Lynn against Glassing in Gallatin County District Court, and on November 17, 1989, judgment was entered in favor of Lynn in the net amount of $95,377.92.

At the time of the underlying motor vehicle collision, St. Paul insured Lynn with a policy which provided coverage in the event that Lynn was injured by an underinsured motorist. At the same time, Allstate insured Glassing against liability resulting from the operation of his motor vehicle. However, the limit of Glassing’s liability coverage was $50,000.

In the complaint which gave rise to this action, St. Paul alleged that pursuant to its policy of insurance with Lynn, it paid to her the amount of her judgment against Glassing that exceeded Allstate’s policy limits. It alleged that the amount of that payment was $51,461.16. St. Paul also alleged two separate claims based upon its payment to Lynn.

In its first cause of action, St. Paul alleged that by virtue of its payment to its insured, it became subrogated both by law and by the terms of its policy with Lynn to her claim against Glassing to the extent of its payment. It sought recovery from Glassing in that amount.

In its second cause of action, St. Paul alleged that on several occasions prior to entry of judgment in favor of Lynn, Allstate refused to settle her claim against Glassing by payment of its policy limits to her. St. Paul alleged that by refusal to pay the policy limits before judgment was entered against Glassing for a greater amount, Allstate breached its obligation to its own insured and to St. Paul, and that as a result, St. Paul was required to pay $51,461.16 to its insured. It sought recovery of that amount, plus interest, from Glassing and from Allstate.

Although the record is vague regarding dates and specific procedures, it appears that prior to the time this claim was filed in State District Court, a similar or identical claim was filed in the United States District Court for the District of Montana. Before that claim was removed to the State District Court, the Federal District Court dismissed St. Paul’s claim against Allstate for the reason that it did not state a claim for which relief could be granted. The parties subsequently stipulated in this case that the prior reding by the Federal District Court would be the law of the case for purposes of the State Court proceeding, and that dismissal of that case could be appealed to the Montana Supreme Court when final judgment was entered in the State District Court.

After being served with the State Court complaint, Glassing moved to dismiss the claim against him for the reason that the District Court lacked personal jurisdiction over him. In support of that motion, Glassing submitted an affidavit in which he stated that he moved to Minnesota on July 1, 1990, had been working and living there since, and had no plans to return to Montana.

On October 10,1991, the District Court entered its order granting the motion to dismiss Glassing based on lack of personal jurisdiction. The court noted that Glassing moved from Montana to Minnesota on about July 1, 1990, after graduating from Montana State University and that this action was not filed until June 17, 1991. The court concluded that St. Paul’s subrogation claim against Glassing arose from the terms of its insurance contract with Lynn and that the claim was not based on any act of the defendant which occurred in Montana. Therefore, the District Court concluded that since the defendant could not be found in Montana for the purpose of establishing general jurisdiction, and did not come within any of the subsections of Rule 4B(1), M.R.Civ.P., there was no basis for asserting personal jurisdiction over him.

St. Paul appeals the dismissal of Glassing in the State District Court and the dismissal of Allstate by the Federal District Court, which by stipulation became part of the final judgment entered in the State District Court.

I

Did the District Court have personal jurisdiction over Gary Glassing pursuant to Rule 4B(1)(b), M.R.Civ.P.?

On appeal, St. Paul contends that Montana courts have personal jurisdiction over Glassing pursuant to the Montana long-arm statute found in Rule 4B(l)(b), M.R.Civ.P, since its claim is based upon the defendant’s tortious conduct committed within this state.

Glassing denies that this state has personal jurisdiction over him for two reasons. First, he contends that St. Paul’s suit is not based on his tortious conduct, but is based upon a contractual relationship between St. Paul and its insured which permitted St. Paul to pursue a claim for subrogation. Second, Glassing contends that even if his conduct comes within Montana’s long-arm statute, it is unreasonable for this state’s courts to exercise jurisdiction over him, and plaintiff’s claim should be dismissed pursuant to our decision in Simmons v. State (1983), 206 Mont. 264, 670 P.2d 1372.

We conclude that St. Paul’s claim against Glassing is based solely upon defendant’s commission of acts within the State of Montana which resulted in the accrual of a tort action. While the defendant is correct that St. Paul has a contractual agreement with its insured allowing it to pursue subrogation, the contractual authorization is neither necessary nor the basis for St. Paul’s suit against Glassing.

We have previously held that:

Subrogation is a device of equity which is designed to compel the ultimate payment of a debt by the one who in justice, equity and good conscience should pay it. Bower v. Tebbs, 132 Mont. 146, 314 P.2d 731 .... The theory behind this principle is that absent repayment of the insurer the insured would be unjustly enriched by virtue of recovery from both the insurer and the wrongdoer, or in absence of such double recovery by the insured, the third party would go free despite his legal obligation in connection with [the] loss. [Emphasis added.]

Skauge v. Mountain States Tel. & Tel. Co. (1977), 172 Mont. 521, 524-25, 565 P.2d 628, 630.

We have also held that a right to subrogation, such as the one exercised by the plaintiff in this case, is not dependent on the terms of a contract.

Subrogation in a legal sense arises upon the fact of payment by the insurer, rather than by contract between the parties. Skauge, 565 P.2d at 630. It is the substitution of another person in place of the creditor, so that the person substituted will succeed to the rights of the creditor in relation to the debt or claim. Skauge, 565 P.2d at 630.

McDonald v. Grassle (1987), 228 Mont. 25, 29, 740 P.2d 1122, 1125.

In this case, St. Paul became substituted for its insured as a matter of law when it paid Ellen Lynn pursuant to its insurance policy with her and is entitled to pursue her right to collect the amount of her judgment against the defendant. However, St. Paul’s right to subrogation arises from the judgment entered in favor of its insured against the defendant, and that judgment is a result of the defendant’s tortious conduct within the State of Montana.

Since the allegations in Count I of St. Paul’s complaint are based upon Glassing’s tortious conduct committed within the State of Montana, we hold that Rule 4B(l)(b), M.R.Civ.P., permits the exercise of personal jurisdiction over Glassing by the District Court for the conduct complained of in the plaintiff’s complaint.

In Simmons, we held that where a nonresident defendant is not “present” within the state for purposes of establishing general jurisdiction, each of the following criteria must be met before personal jurisdiction can be exercised without violating due process:

(1) The nonresident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking its laws. (2) The claim must be one which arises out of or results from the defendant’s forum-related activities. (3) Exercise of jurisdiction must be reasonable.

Simmons, 670 P.2d at 1378.

It is clear that the first two criteria are satisfied. Glassing committed a tort within Montana and St. Paul’s claim results from that tort.

We have held that the following factors should be considered to determine whether the exercise of personal jurisdiction is reasonable:

1. The extent of defendant’s purposeful interjection into Montana;
2. The burden on defendant of defending in Montana;
3. The extent of conflict with the sovereignty of defendant’s state;
4. Montana’s interest in adjudicating the dispute;
5. The most efficient resolution of the controversy;
6. The importance of Montana to plaintiff’s interest in convenient and effective relief; and
7. The existence of an alternative forum.

Jackson v. Kroll, Pomerantz and Cameron (1986), 223 Mont. 161, 166, 724 P.2d 717, 721. See Taubler v. Giraud (9th Cir. 1981), 655 F.2d 991, 994; Simmons, 670 P.2d at 1383-85.

We conclude that it is reasonable to exercise personal jurisdiction over Glassing under the circumstances present in this case for several reasons: There is no conflict with Glassing’s current state of residence; Montana has a strong interest in adjudicating liability based upon the operation of motor vehicles on its roadways; and the most efficient and convenient forum within which to resolve the issues raised by the plaintiff’s pleadings is the State of Montana where the witnesses to the underlying tort are most likely located and where the judgment in the underlying action has been entered.

For these reasons, we conclude that Montana’s long-arm statute provides a basis for exercising personal jurisdiction over Glassing and that the exercise of personal jurisdiction under the circumstances in this case is reasonable. The District Court’s judgment dismissing plaintiff’s complaint against Glassing based on lack of personal jurisdiction is, therefore, reversed.

II

Is an insurer which provides underinsured motorist coverage a third party entitled to bring a direct claim under Sections 33-18-201 and 33-18-242, MCA, when a primary insurer fails to effectuate prompt and reasonable settlement?

St. Paul next contends that its insured, Ellen Lynn, had a third-party claim against Allstate pursuant to Sections 33-18-201 and -242, MCA, because of Allstate’s repeated refusal to settle her claim for its policy limits prior to a jury trial and a verdict in her favor. St. Paul contends that just as it is subrogated by law to Lynn’s claim against Glassing, it is an equitable subrogee of Lynn with regard to her statutory third-party claim against Allstate.

In support of its argument, St. Paul cites this Court to numerous opinions from other jurisdictions which have held that where a primary insurance carrier negligently and in bad faith fails to settle a claim against its insured within the insured’s primary policy limits, and a judgment is then entered against its insured for an amount greater than the policy limit so that the insured’s excess liability carrier becomes responsible for payment of the excess amount, the excess carrier is equitably subrogated to the rights of the insured and entitled to maintain an action for bad faith against the primary carrier. See Continental Casualty Co. v. Reserve Ins. Co. (Minn. 1976), 238 N.W.2d 862; Valentine v. Aetna Ins. Co. (9th Cir. 1977), 564 F.2d 292; Centennial Ins. Co. v. Liberty Mutual Ins. Co. (Ohio 1980), 404 N.E.2d 759.

St. Paul contends that even though it is not an excess liability carrier, the issue is the same, the public policy is the same, and this Court should, therefore, allow equitable subrogation for an underinsurance carrier under the circumstances in this case.

There is merit to St. Paul’s argument, and under other circumstances, this Court would consider St. Paul’s argument. However, determinative of our holding in this case is the fact that even in the cases relied upon by St. Paul the primary insurer had no independent duty to the excess insurer. The courts which have allowed excess carriers to sue primary carriers for unreasonable refusal to settle claims have allowed them to do so by holding that the excess insurer is equitably subrogated to the rights of the insured against the primary insurer. See, Windt, Insurance Claims and Disputes at 411 and n. 92 (2d ed. 1988). Therefore, even if we were to allow equitable subrogation for an underinsurance carrier against a primary carrier who unreasonably refused to settle a claim within policy limits and thereby exposed the underinsurance carrier to liability for the excess amount of the judgment, the underinsurance carrier has no greater rights than can be asserted by its insured. As we held in McDonald, subrogation is:

[T]he substitution of another person in place of the creditor, so that the person substituted will succeed to the rights of the creditor in relation to the debt or claim.

McDonald, 740 P.2d at 1125.

Pursuant to Rule 202(b)(6), M.R.Evid., we take judicial notice that Lynn sued Allstate for unreasonable refusal to settle her claim against its insured in Cause No. CV-91-11-BU-PGH in the United States District Court for the District of Montana in the Butte Division. Although the particulars of that claim are unknown to this Court, the claim was resolved by stipulation between the parties and Lynn’s claim against Allstate was dismissed with prejudice on July 29, 1991. Pursuant to that dismissal, Lynn has no further claim against Allstate, and therefore, there is no claim to which St. Paul can be equitably subrogated.

Even though Lynn’s claim against Allstate had not been dismissed with prejudice at the time the Federal District Court dismissed St. Paul’s claim against Allstate, nor at the time St. Paul subsequently refiled its claim against Allstate in the State District Court, Lynn’s subsequent stipulation renders St. Paul’s appeal moot.

There is no indication that St. Paul’s claim against Allstate is based upon an assignment of any first-party claim that Glassing might have pursuant to Gibson v. Western Fire Insurance Company (1984), 210 Mont. 267, 682 P.2d 725. Therefore, by this decision, we do not determine the merits of any such claim.

For these reasons, we affirm the judgment of the District Court dismissing St. Paul’s claim against Allstate in Count II of the plaintiff’s complaint. We reverse the District Court’s judgment dismissing Count I of the plaintiff’s complaint and remand this case to the District Court for further proceedings consistent with this opinion.

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


author: JUSTICE HUNT

text:
    IN RE THE MARRIAGE OF DANIEL N. McLEAN, Petitioner and Respondent, and KATHLEEN M. FLEURY, Respondent and Appellant.
    No. 92-195.
    Submitted on Briefs September 24, 1992.
    Decided January 21, 1993.
    50 St.Rep. 35.
    257 Mont. 55.
    849 P.2d 1012.

      For Appellant: Kathleen M. Fleury, Pro Se, Helena.
    For Respondent: Mark D. Parker, Parker Law Firm, Billings.
   JUSTICE HUNT

delivered the Opinion of the Court.

Appellant Kathleen M. Fleury, appearing pro se, appeals the Findings of Fact, Conclusions of Law, and Decree of Dissolution of the Thirteenth Judicial District Court, Yellowstone County.

We affirm and remand.

Kathleen presents six issues to this Court for consideration.

1. Did the District Court err in awarding joint custody of the children to the parties?

2. Did the District Court abuse its discretion in the award of child support?

3. Was the District Court’s valuation and distribution of the marital estate clearly erroneous?

4. Did the District Court err in failing to award Kathleen maintenance?

5. Did the District Court abuse its discretion in denying Kathleen attorney fees?

6. Did the District Court Judge commit error when he failed to disqualify or recuse himself from the case due to his participation in pretrial settlement negotiations?

The parties were married on June 16,1979, in Missoula and have two children — Katharine F. McLean, bom March 23, 1986, and James B. McLean, born July 5, 1988. James has an asthmatic condition which requires a considerable amount of medical attention.

Kathleen and Daniel attended the University of Montana Law School and both obtained their Juris Doctorate from the school. Daniel clerked for a Federal District Court Judge for one year. He was then hired as an associate for a law firm located in Billings. Within a few years, Daniel was promoted to partner with the firm. In 1990, he earned $75,000 and it was projected that he will earn between $90,000 to $105,000 in 1991.

Kathleen is also an attorney and is employed as a coordinator for the Bureau of Indian Affairs of the State of Montana, earning $34,000 a year. The position is a political appointment, and therefore, is not a permanent occupation. Kathleen lives in Helena and Daniel lives in Billings.

The parties separated on September 8, 1990. Daniel filed the petition for dissolution on September 26, 1990. Prior to trial, several hearings and meetings with the District Court were held in an effort to form an agreement relating to maintenance, child support, and custody. During the dissolution proceedings, both parties were represented by counsel. Abench trial was held on August 6,1991. However, trial was recessed to allow Daniel to conduct additional discovery upon certain matters which were not disclosed to the court. Trial resumed on October 2, 1991. On December 2, 1991, the court issued its findings of fact, conclusions of law, and decree of dissolution. On February 3, 1992, the court amended its decree to reflect that an additional $10,000 of Keogh interest should have been listed as an asset to Kathleen, and to add specific provisions relating to child custody and support not included in the original decree. Kathleen appeals the findings of the District Court. Kathleen did attempt to submit a psychological exam on appeal. Upon Daniel’s motion, this Court ordered that the exhibit be stricken from the briefs and not be considered for this appeal.

On December 24, 1992, Kathleen filed a motion with this Court to clarify the amended decree of February 3, 1992, regarding the division of Daniel’s Keogh account. The motion provides for the parties’ social security numbers and bank account numbers, which were not included in the amended decree. We remand to the District Court for further consideration of this matter.

I.

Did the District Court err in awarding joint custody of the children to the parties?

Our standard of review in child custody matters is whether the district court abused its discretion. In re Marriage of Reininghaus (1991), 250 Mont. 86, 817 P.2d 1159. When determining child custody, the district court must take into consideration the best interests of the children. Section 40-4-212, MCA. The court shall consider, but is not limited to, the factors set out in Section 40-4-212(a)-(g), MCA. The rule in Montana is that joint custody is preferred absent “a finding that one parent physically abused the other parent or the child is a sufficient basis for finding that joint custody is not in the best interest of the child.” Section 40-4-224(1), MCA.

In its amended decree, the court awarded Daniel custody of the children during the summer months, with Kathleen having custody of the children for the rest of the year. Kathleen contends that this is error because the court based its decision on a joint custody plan which provided for a temporary stipulation between the parties pending the outcome of a court ordered independent evaluation which it did not admit into evidence or consider in its final decree.

We have recently discussed this issue in In re Marriage of Maxwell (1991), 248 Mont. 189, 810 P.2d 311. In that case, the District Court awarded joint custody, with primary custody to the mother. The court ordered a home study but did not address the home and family assessment or the social worker’s recommendations. We held that the District Court abused its discretion when it ordered an investigation and report concerning custodial arrangements pursuant to Section 40-4-215, MCA, but failed consider the report in its final custody decision. Maxwell, 810 P.2d at 313. See also In re Marriage of BloomHigham (1987), 227 Mont. 217, 738 P.2d 114.

In this instance, the parties stipulated that they would seek psychological evaluations. In the stipulation, they agreed that they were not bound by the results of the evaluation but either party could submit the report into evidence if so inclined. The court did not order the evaluations and the report was never offered into evidence by either party. There was a pretrial conference held on the morning of the trial. After the conference, the following exchange took place between Kathleen’s counsel and the District Court:

MRS. NYE: Your Honor, Marian Martin is only available until 11:00.
THE COURT: It is my understanding that Marian Martin is not necessary as a witness based upon what was told to me in chambers, and I don’t want it changed now.
MRS. NYE: Thank you, Your Honor. We have reached an agreement as to what the further interlineation is.

Thus, it appears that the court did not hear any further testimony regarding custody because there was an agreement between the parties regarding custody and the need for further testimony was not warranted. In addition, the record does not reflect that Marian Martin was offered as a witness after the above discussion. During trial, Daniel’s counsel submitted a joint custody plan, which was stipulated to by Kathleen’s attorney. Kathleen claims on appeal that her counsel stipulated to the plan without her knowledge or consent. The record shows that the joint custody plan was stipulated to in open court with both parties in attendance.

Section 40-4-201(1), MCA, allows the parties to enter into agreements regarding support, custody, and visitation of the children. We have held that parties are bound by the stipulations made by their counsel in open court. Daniels v. Dean (1992), 253 Mont. 465, 833 P.2d 1078, 1081, 49 St. Rep. 535, 537; Section 37-61-401, MCA. We hold that the District Court did not err in awarding joint custody to both parties.

II.

Did the District Court abuse its discretion in the award of child support?

Our standard of review of a district court’s findings relating to child support is that a presumption exists in favor of the district court and we will overturn the court’s findings only if it has abused its discretion. In re Marriage of Sacry (1992), 253 Mont. 378, 833 P.2d 1035, 49 St. Rep. 452. In this instance, both parties submitted their proposed child support based on the Social and Rehabilitative Services Guidelines for Child Support (SRS guidelines). Daniel’s worksheet proposed that he owed approximately $450 in child support, while Kathleen’s work-sheet claimed Daniel owed approximately $1600. The District Court found that $1000 was a reasonable level of child support. Both parties represented to the court that $1000 was consistent with the SRS guidelines. Kathleen contends that the $ 1000 figure was based upon Daniel’s 1989 earnings which were $75,000. The record shows that Kathleen’s work-sheet represented that Daniel’s income was $94,000. Daniel testified at trial that he earned between $90,000 to $105,000 and that his income will continue to increase as a partner in his law firm. The court considered both parties’ incomes for the determination of child support. We hold that the District Court did not abuse its discretion.

III.

Was the District Court’s valuation and distribution of the marital estate clearly erroneous?

Our standard of review relating to the division of marital property was recently clarified as whether the district court’s findings of fact are clearly erroneous. In re Marriage of Danelson (1992), 253 Mont. 310, 833 P.2d 215, 49 St. Rep. 597. Kathleen submits that the District Comet was in error when it failed to value the goodwill of Daniel’s partnership interest in the law firm and ignored the testimony of her expert witness regarding the valuation of the partnership. She claims that as a result, the value of the marital estate has been substantially under-valued to her detriment.

We have recognized that the goodwill of a professional practice may be part of a marital estate subject to property division in a marriage dissolution. In re Marriage of Hull (1986), 219 Mont. 480, 488, 712 P.2d 1317, 1321. In this instance, the District Court refused to consider the goodwill of Daniel’s law firm because of the partnership agreement signed by Daniel and the firm. The partnership agreement specifically provides that Daniel does not have any interest in the goodwill of the practice nor does he have any interest in the partnership’s tangible or intangible assets. The partnership agreement was an arms-length transaction. The testimony of Kathleen’s expert witness was irrelevant because the court ruled that the goodwill of the partnership was not a marital asset. The District Court did not abuse its discretion in finding that Daniel did not have an interest in the goodwill of the practice.

Following separation until trial, Kathleen incurred a credit card debt of $26,000 by obtaining cash advances and charging certain items to her account. At trial, Kathleen testified that most of the debt related to attorney fees and other expenses related to the dissolution. She offered into evidence a break down of the credit card transactions which indicated she had charged a considerable amount of items for personal and familial use. Kathleen did not produce receipts of the credit card transactions to the court, but did provide a list of charges. Even so, it is apparent from her exhibit list that she also received several cash advances amounting to several thousand dollars. The court concluded that Kathleen did not fully explain the charges to the account. In In re Marriage of Scott (1990), 246 Mont. 10, 803 P.2d 620, we refused to accept a district court’s determination that a post-separation credit card debt was a marital debt, even though the finding was supported by testimony. After examining the record, we conclude that it is unclear which credit card expenses were incurred for the children’s sake and which expenses were incurred by Kathleen alone. Kathleen’s own testimony is conflicting and confusing. We hold that the District Court did not err in awarding Kathleen the $26,000 marital debt.

Kathleen contends that the court erred in awarding her a $12,000 IRA account because these funds did not exist at the time of trial. Kathleen testified that she liquidated the parties’ $12,000 IRA account because she needed money for attorney fees and to pay family expenses.

We have stated that to ensure a proper distribution of the marital estate requires a valuation of the marital estate at or near the time of dissolution. In re Marriage of Halverson (1988), 230 Mont. 226, 749 P.2d 518. Kathleen contends that In re Marriage of Lippert (1981), 192 Mont. 222, 627 P.2d 1206, controls the facts of this case. In Lippert, the husband poured $96,000 into bad business ventures diming the marriage. The court held that the $96,000 was part of the marital estate and awarded the wife $48,000. We held that the court erred when it valued the marital estate in 1977 when the husband became entangled in the business ventures before the date of dissolution in 1979. Lippert, 627 P.2d at 1209. Instead, this case is more similar to In re Marriage of Rogers (1987), 226 Mont. 163, 734 P.2d 677, where the husband sold the family’s mobile home and liquidated an IDS account which the husband claimed was necessary to cover expenses for himself and his three children. We held that nothing in the record indicated that the husband’s earnings were insufficient to meet his own and his children’s expenses and that it was proper for the district court to award the wife $4500 to cover her share of the property. Rogers, 734 P.2d at 679.

In this instance, Kathleen was earning approximately $36,000 a year. In addition, she received $750 a month in child support which was later increased to $1000 per month. Kathleen has failed to demonstrate why she needed additional money to meet her and the children’s expenses. We hold that the District Court’s distribution of the marital estate was not clearly erroneous.

IV.

Did the District Court err in failing to award Kathleen maintenance?

Our standard of review in maintenance award cases is whether the district court’s findings of fact are clearly erroneous. In re Marriage of Eschenbacher and Crepeau (1992), 253 Mont. 139, 831 P.2d 1353, 49 St. Rep. 393. The district court may award maintenance after the marital property has been equitably distributed and the court has properly applied the criteria of Section 40-4-203, MCA. § 40-4-203(1), MCA, states that the district court may grant maintenance for either spouse only if it finds that the spouse requesting maintenance:

(a) lacks sufficient property to provide for his reasonable needs; and
(b) is unable to support himself through appropriate employment....

In its findings, the court concluded that with Kathleen’s earnings and child support, she can provide for her needs. Kathleen earns $36,000 a year and is an attorney. She also receives $1000 a month in child support. We hold that the District Court did not err in denying maintenance.

V.

Did the District Court abuse its discretion in denying Kathleen attorney fees?

Section 40-4-110, MCA, grants the district court the discretion to award reasonable attorney fees after considering the financial resources of both parties. Absent an abuse of discretion, this Court will not overturn the district court’s decision denying attorney fees. In re Marriage of Manus (1987), 225 Mont. 457, 733 P.2d 1275. This Court has stated that the awarding of attorney fees is clearly permissive under Section 40-4-110, MCA.

In this instance, Kathleen earns $36,000 a year. In addition, she was awarded $8,000 from a Merrill Lynch stock account, $55,000 from a Keogh Plan, which included the court’s consideration of Kathleen’s tax liability if she were to liquidate the Plan. Kathleen claims that she has incurred approximately $40,000 in attorney fees and that she is unable to meet this obligation. The record indicates the Court was cognizant of the financial resources and burdens of the parties as required under Section 40-4-110, MCA. The court concluded that she has enough assets from the distribution of the marital estate and earnings to meet this obligation. We hold that the District Court did not abuse its discretion in failing to award Kathleen attorney fees.

VI.

Did the District Court Judge commit error when it failed to disqualify or recuse himself from the case due to his participation in pretrial settlement negotiations?

On February 5, 1991, Kathleen, acting pro se, filed a motion for disqualification of the District Judge. Kathleen asserted that the judge was biased because her husband was an attorney of a prestigious law firm and that Judge Holmstrom is a former law partner of an attorney who had previously represented her. A hearing was held before a second District Judge, and the motion was denied.

On appeal, Kathleen declares that Judge Holmstrom should have been disqualified because he conducted pretrial negotiations prior to litigation. In his reply brief, Daniel failed to respond to the allegation. Because Kathleen’s basis for disqualification rests on different grounds than those stated at the trial level we hold that the District Court did not commit error in denying the motion for disqualification of Judge Holmstrom.

We affirm and remand to the District Court to consider Kathleen’s motion to clarify the amended decree.

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


text:
    PAMELA J. HOUTS, Claimant/Petitioner/Respondent, v. KARE-MOR, INC., d/b/a BUTTE PARK ROYAL CONVALESCENT CENTER, and HORIZON HEALTHCARE CORP., d/b/a BUTTE PARK ROYAL CONVALESCENT CENTER, and STATE COMPENSATION MUTUAL INSURANCE FUND, Employer/Defendant/Respondent, and HORIZON HEALTHCARE CORP., d/b/a BUTTE PARK ROYAL CONVALESCENT CENTER, and GENERAL INSURANCE COMPANY OF AMERICA, Employer/Defendant/Appellant.
    No. 92-140.
    Submitted on Briefs October 22, 1992.
    Decided February 19, 1993.
    50 St.Rep. 158.
    257 Mont. 65.
    847 P.2d 701.

      For Appellant: Geoffrey R. Keller, Matovich, Addy & Keller, Billings (General Insurance).
    For Respondent: R. Lewis Brown, Butte, (Houts); Michael McCarter, Hughes, Kellner, Sullivan & Alke, Helena (State Fund).
   JUSTICE HUNT

delivered the Opinion of the Court.

Appellant General Insurance Company of America appeals a decision of the Workers’ Compensation Court finding that respondent Pamela J. Houts’ current medical condition, resulting from surgery on April 11, 1988, stemmed from her April 4, 1988, industrial injury.

We affirm.

General Insurance presents two issues for review. Houts believes that the two issues can be combined into one. We will review the following issues:

1. Is there substantial evidence to support the Workers’ Compensation Court’s Findings of Fact and Conclusions of Law?

2. Did the Workers’ Compensation Court err in finding that General Insurance unconditionally accepted liability for Houts’April 4, 1988, claim?

Pamela J. Houts worked as a nurse’s aide at Butte Park Royal Convalescent Center from September 4,1984, until her employment was terminated on October 27,1988. During that period, she reported six workers’ compensation injuries. The insurer, the State Fund, accepted claims for four injuries occurring from 1985 through 1987. General Insurance was the insurer for two injuries that occurred in 1988.

Houts’ first industrial injury occurred on October 7, 1985. She suffered an inguinal hernia while lifting a patient. She filed a claim and received temporary total disability benefits from the State Fund. The hernia was repaired by surgery on November 11, 1986, after which she received temporary total disability benefits. On January 15,1987, she returned to work without restrictions as a nurses’ aide.

On March 22, 1986, Houts sprained her lower back while putting a patient to bed. She filed her claim and received temporary total disability benefits until April 4, 1986, when she returned to work.

On April 22, 1987, Houts injured her lower side abdomen while lifting patients. Her condition was diagnosed as nerve entrapment for which she had surgery on May 12, 1987. At the time of trial, the State Fund was still paying her temporary total disability benefits attributable to this injury.

Houts’ fourth industrial injury occurred on December 24, 1987, when she was lifting a patient into a wheelchair and she felt a pain on her left side. Houts reported the accident and filed a claim which was accepted by the State Fund, but no medical expenses or wage loss was reported.

On April 4,1988, Houts was injured when she was lifting a patient and felt a sharp pain in her left side. The insurer at this point was General Insurance. Houts was examined by Dr. John M. Gallus, her treating physician, who concluded that the problem was a continuation of her previous medical problems on her left side. Houts continued to experience discomfort and on April 7, 1988, Dr. Gallus referred her to Dr. R. E. Nehls in Butte who was board certified in obstetrics and gynecology. On April 11, 1988, Dr. Nehls performed a laparoscopic examination of her abdomen which revealed for the first time that her left tube and ovary were attached to her abdominal wall by dense adhesions. Dr. Nehls decided to perform general surgery and remove the abnormal condition of the tube and left ovary. Following the surgery, Houts’ abdominal pain was gone, however, she now had pain in the front area of her left thigh. She was then referred to Dr. W. T. Escober, a neurologist, for a neurological exam. Houts received temporary total disability benefits from April 18, 1988, through mid-August 1988, when she returned to work.

The last industrial injury Houts suffered occurred on October 26, 1988, when she was attempting to place a shirt on a patient and was punched in the stomach. No disability was alleged from the incident. Houts was terminated the following day when her supervisor told her that they had no light duty positions available for her.

Apetition for hearing was filed on January 16,1991, and was heard before the hearing examiner on September 4,1991. On February 28, 1992, the Workers’ Compensation Court adopted the hearing examiner’s findings of fact and conclusions of law which stated that Houts’ current symptoms arose from the April 11, 1988, surgery stemming from her April 4, 1988, claim. General Insurance appeals the decision of the Workers’ Compensation Court.

I.

Is there substantial evidence to support the Workers’ Compensation Court’s Findings of Fact and Conclusions of Law?

Our standard of review in a workers’ compensation case is that this Comb will not substitute its judgment for that of the Workers’ Compensation Court where there is substantial evidence to support the court’s findings of fact. Laber v. Skaggs Alpha Beta (1991), 247 Mont. 172, 805 P.2d 1375. Our responsibility is not to determine whether sufficient evidence supports a contrary finding. Hall v. Atlantic Richfield Co. (1991), 248 Mont. 484, 812 P.2d 1262. The claimant is required to prove by the preponderance of the evidence that her current disability was caused by an injury sustained on the job. Hall, 812 P.2d at 1264. Therefore, we will not overturn the Workers’ Compensation Court unless its findings are not supported by substantial evidence.

In its conclusions of law, the Workers’ Compensation Court determined that during the laparoscopic examination Dr. Nehls discovered that Houts’ left ovary was attached to the abdominal wall and covered with dense adhesions. This abnormal condition would be aggravated by lifting and ovulation.

General Insurance contends that with these conclusions it is impossible to reconcile the Workers’ Compensation Court’s conclusion that the April 11,1988, surgery to remove the adhesions, which were neither caused nor permanently aggravated by the April 4, 1988, lifting incident, was not a result of that injury. Houts counters that the cause of the adhesions is not the critical factor, but whether the lifting incident exacerbated the intermittently painful ovarian adhesions by producing the severe pain that caused her to seek medical assistance.

It is well established that an employer takes an employee as he finds him. Roadarmel v. Acme Concrete Co., (1989), 237 Mont. 163, 772 P.2d 1259, 1263. Although an employee may be suffering from a pre-existing disease or disability, the condition does not preclude compensation if the disease or disability is aggravated or accelerated by an industrial injury arising out of or in the course of employment. Roadarmel, 772 P.2d at 1263.

We have stated that:

[MJedical possibility evidence that an industrial accident or injury aggravated a pre-existing condition, may together with other evidence, establish a compensable disability. However, medical possibility evidence, in and of itself, does not necessarily extinguish claimant’s burden to prove her case by a preponderance of the evidence.

Laber, 805 P.2d at 1378.

In this case, Dr. Nehls testified that any strain, including lifting, could cause tension in the adhesive process and cause some discomfort. Dr. Gallus testified that Houts’ pain was exacerbated by her lifting at work. Dr. Gallus also stated that the adhesions can tear away with heavy lifting or exertion. He further stated that it was a real possibility that the adhesion tore away from the attachments and exacerbated Houts’ condition.

The medical testimony raised the possibility that Houts’ pre-existing condition was aggravated by the April 4,1988, lifting injury. The medical possibility must be corroborated by independent evidence. Houts’ testimony supports the doctors’ contention that lifting and ovulation would aggravate the injury. At the hearing, she testified to the following:

Q. Was that higher, as far as more towards your navel than the pain that you experienced in your groin area?
A. It was above the incision from the hernia, it was like up, moving up.
Q. So it was higher, more toward your navel?
A. Yes.
Q. Do you recall, if anything, what brought on that pain?
A. No, just from lifting and working, I’d be very painful down there. I mean it would be sore down there, but when I had my periods, it was worse.

The fact that Houts experienced pain in the exact location of the adhesion prior to, and on April 4, 1988, as well at the laparoscopic exam, further corroborates the doctors’ testimony.

Dr. Nehls performed surgery to remove the ovary which caused Houts’ pain. The surgery was successful but resulted in intermittent pain from Houts’ left thigh to her knee. Doctors Charles E. Beuler, an orthopedic surgeon, and neurologist Gary Cooney, testified that her leg pain resulted from the April 11, 1988, surgery. A preponderance of the medical evidence establishes a causal relationship between Houts’ present pain in her left thigh and the April 11 surgery resulting from the lifting injury. We hold that there is substantial evidence to support the Workers’ Compensation Court’s findings of fact and conclusions of law.

II.

Did the Workers’ Compensation Court err in finding that General Insurance unconditionally accepted liability for Houts’ April 4, 1988, claim?

As previously stated, Houts has met her burden of proof that she sustained a compensable injury arising out of and in the course of her employment for which her employer and insurer are liable. Whether General Insurance accepted liability is immaterial because liability attaches as a matter of law. We hold that the Workers’ Compensation Court did not err in finding that General Insurance accepted liability for Houts’ injury.

We affirm.

CHIEF JUSTICE TURNAGE, JUSTICES GRAY, TRIEWEILER, HARRISON, McDONOUGH and WEBER concur.