author: JUSTICE McDONOUGH

text:
    TOM and JODIE STEPHENS, Plaintiffs and Appellants, v. SAFECO INSURANCE COMPANY OF AMERICA, a Washington corporation, Defendant and Respondent.
    No. 92-105.
    Submitted on Briefs February 11, 1993.
    As Amended on Denial of Rehearing June 11, 1993.
    Decided May 4, 1993.
    50 St.Rep. 467.
    852 P.2d 565.
    258 Mont. 142.
    See C.J.S. Insurance § 1406.

      For Plaintiffs and Appellants: Richard M. Baskett, Datsopoulos, MacDonald & Lind, Missoula.
    For Defendant and Respondent: Shelton C. Williams, Williams & Ranney, Missoula.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

This is an appeal from a Fourth Judicial District Court, Ravalli County jury verdict in an insurance bad faith action. We reverse.

The issues include:

1. Did the District Court properly apply the law of Montana in holding that when two parties act in bad faith, the party at comparatively greater fault is denied recovery?
2. Did the District Court properly interpret the Special Verdict by holding that damages were 53% attributable to Appellants’bad faith and 47% attributable to Respondent’s bad faith?
3. If the Appellants are entitled to recovery for damages, is the amount of their recovery $38,333.33, or 47% of $38,333.33? Appellants Tom and Jodie Stephens (appellants) owned Buster’s

Body Shop in Hamilton, Montana. Respondent Safeco Insurance of America (respondent) was the insurer of their automobile body repair shop, covering the shop with a policy with limits on the structure of $80,000 and limits on the structure’s contents of 30,000.

An accidental fire occurred in the body shop around May 6, 1987. Appellants notified the respondent’s agent of the fire and an investigation by their agents followed.

Respondent and appellants encountered problems in settling the claim and this litigation resulted. The complaint in this action was filed on May 5,1989. Trial in this case was held on May 28,1991 by jury.

The scope of review for questions of law is whether the trial court’s interpretation of the law is correct. Steer Inc. v. Department of Revenue (1990), 245 Mont. 470, 474-475, 803 P.2d 601, 603.

At the close of trial in this action the jury was given a special verdict form. The questions on the special verdict form were as follows:

1. Did Safeco violate any duty of good faith and fair dealing owed to Plaintiffs? Yes: 8-4
2. Did the wrongful conduct found in question 1, if any, cause any damages to plaintiffs? Yes: 8-4
3. Did Safeco violate the Montana Unfair Claims Settlement Practices Act with such frequency as to indicate a general business practice? No: 12-0
4. Did the wrongful conduct found in Question 3, if any, cause any damages to Plaintiffs?
5. What is the total amount of pecuniary damages for emotional distress, if any, caused to Plaintiff Tom Stephens by the wrongful conduct found in your answers to Questions 1 through 4, if any? $38,333.33
6. Did plaintiffs violate any duty of good faith and fair dealing owed to Safeco? Yes: 11-1
7. Did the Plaintiffs fail to exercise ordinary care to mitigate their damages in this case? No: 11-1
8. Did Plaintiffs or their attorneys or agents interfere with Safeco’s performance of its duties under the policy? Yes: 11-1
9. Did the wrongful conduct of Plaintiffs found in answer to any of Questions 6-8 cause some of the Plaintiffs’ damages? Yes: 9-3
10. If, in your answers to Questions 1 through 9, you have determined that wrongful conduct on behalf of both Plaintiffs and Defendant have contributed to Plaintiffs’ damages, then, using 100% as the total combined wrongful conduct which has caused Plaintiffs’ damages, what proportion of the wrongful conduct do you determine is attributable to each of the parties, if any? Plaintiffs: 53% Defendants: 47%

The answers are as indicated.

The jury returned with a verdict stating the amount awarded for damages for emotional distress to Tom Stephens was $38,333.33. The jury also concluded that both parties violated the duty of good faith and fair dealing and the appellants interfered with respondent’s performance of its duties. The jury allocated the percentage of wrongful conduct as 53% for the appellants and 47% for respondent. It is noted that in answer to Question 9 the jury found that appellant’s wrongful conduct caused some of appellant’s damages, but the verdict does not indicate such damages were in any way the same as the damages found in answer to Question 5, which was caused by wrongful conduct of respondent.

The trial court subsequently ordered the parties to prepare briefs on the issue of the type of judgment which should be entered by the court considering the verdict of the jury. The trial court reviewed the briefs and upon further study, ordered that the appellants were precluded from recovering any award because the jury had determined that their fault was proportionally greater than the respondent.

The appellants contend on appeal that they should receive the entire jury award of $38,333.33 because their “fault” in this matter cannot be compared to the “fault” of the respondent and accordingly offset. The respondent, however, states “that the insured’s own wrongful conduct was the major cause his (sic) own damages, and that the insurer’s wrongful conduct was a lesser factor in causing these damages.” Therefore, the insured should not recover from the respondent for his damages.

It is noted this cause of action arose prior to the adoption of § 33-18-242, MCA (1987), and therefore the applicability of said section is not an issue in this case on appeal.

We conclude that the appellants should receive the $38,333.33 awarded by the jury. “[I]nsurance companies have a duty to act in good faith with their insureds, and this duty exists independent of the insurance contract and independent of statute.” Lipinski v. Title Ins. Co. (1983), 202 Mont. 1, 15, 655 P.2d 970, 977. If this duty is breached the cause of action of the insured against the insurer sounds in tort. First Sec. Bank of Bozeman v. Goddard (1979), 181 Mont. 407, 419, 593 P.2d 1040, 1047.

However, if the situation is reversed, and the insured breaches the covenant of good faith and fair dealing, the result is not a tort, but a breach of contract. In Story v. City of Bozeman (1990), 242 Mont. 436, 791 P.2d 767, this Court made clear “that the bad faith tort should be used only when the parties have a special relationship.” Story, 791 P.2d at 775. Story adopted five elements to be applied in determining whether the parties have a special relationship:

(1) the contract must be such that the parties are in inherently unequal bargaining positions; [and] (2) the motivation for entering the contract must be a non-profit motivation, i.e., to secure peace of mind, security, future protection; [and] (3) ordinary contract damages are not adequate because (a) they do not require the party in the superior position to account for its actions, and (b) they do not make the inferior party “whole”; [and] (4) one party is especially vulnerable because of the type of harm it may suffer and of necessity places trust in the other party to perform; and (5) the other party is aware of this vulnerability.

Story, 791 P.2d at 776.

When these five elements are applied to this case, the special relationship is established. First, in the insurance context, the insurer occupies the superior bargaining position and the insured in the inferior. This is because “in the insurance field the insured usually has no voice in the preparation of the insurance policy ...” Goddard, 593 P.2d at 1047. There is a “great disparity between the economic positions of the parties to a contract of insurance. ...” Goddard, 593 P.2d at 1047.

Second, the insured has a non-profit motive for entering into the insurance contract. “The insured seeks to purchase protection and security. This expectation is perhaps justified, if not entirely motivated, by insurers’ advertisements promising security and freedom from worry.” Graham and Luck, “The Continuing Development of the Tort of Bad Faith in Montana,” 45 Mont. L. Rev. 43, 46 (1984).

Third, ordinary contract damages would not make appellants whole. Appellant Tom Stephens suffered from severe mental distress due to the problems with the insurance claim. He incurred certain medical expenses in connection with that distress.

Fourth, “at the time an insured party makes a claim he may be in dire financial straits and therefore may be especially vulnerable to oppressive tactics by an insurer seeking a settlement of a release.” Goddard, 593 P.2d at 1047. Finally, the fifth element applies because the insurer is the author of the insurance contract and is aware of the insured’s vulnerability. “The special considerations existent in a consumer-held insurance contract do not apply to an ordinary contract between businessmen.” Goddard, 593 P.2d at 1047.

The insurer is certainly not in apprehension of the same concerns in its relationship with the insured. “The tort of bad faith... serves to discourage oppression in contracts which necessarily give one party a superior position.” Story, 791 P.2d at 776. The insurer, in the superior position, is therefore liable in tort whereas there is no fear that the insured will harm the insurer to such an extent.

The respondent argues that under Martel v. Montana Power Co. (1988), 231 Mont. 96, 752 P.2d 140, respondent’s bad faith and the appellants’ bad faith can be compared and the appellants’ bad faith can be used to offset the respondent’s bad faith in determining damages to appellant Tom Stephens. We disagree.

As stated earlier, the two parties occupy two very different positions in relation to each other. Because of their varying positions, the respondent’s conduct rises to the level of a tort while the appellants’ conduct is a breach of contract.

Under Martel, conduct rising to the level of a tort is compared to other conduct rising to a tort. Martel, 752 P.2d at 143. However, the appellants’ conduct here does not involve a tort so it cannot be compared to the respondent’s tortious conduct. Therefore, the respondent’s tort cannot be offset comparatively by the appellants’ contract breach. These are two distinctive legal concepts as to liability and damages. They are apples and oranges. The jury verdict to award the appellants $38,333.33 is reinstated.

The District Court was incorrect when it entered judgment concluding the appellants were precluded from recovering any portion of the jury’s award. REVERSED.

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


source: Caselaw Access Project

author: JUSTICE HARRISON JUSTICE TRIEWEILER

license: Public Domain

text:
    MICHAEL GURSKY, Plaintiff and Appellant, v. PARKSIDE PROFESSIONAL VILLAGE, Defendant and Respondent.
    No. 92-242.
    Submitted on Briefs December 29, 1992.
    Decided May 5, 1993.
    50 St.Rep. 470.
    852 P.2d 569.
    258 Mont. 148.
    See C.J.S. Pleading § 303.

      For Plaintiff and Appellant: J. Allen Bradshaw, Philip sburg, and Byron Boggs, Missoula.
    For Defendant and Respondent: Shelton C. Williams, Williams & Ranney, Missoula.
   JUSTICE HARRISON

delivered the Opinion of the Court.

This is an appeal from the Fourth Judicial District, County of Missoula, the Honorable John S. Henson presiding. Appellant Michael Gursky (Gursky) appeals a series of District Court orders denying his request to amend his complaint and add four defendants not named in his original complaint. We affirm.

Gursky was injured on January 4, 1989, when he attempted to enter the Parkside Professional Village building in Missoula, Montana, using a metal walker. The sliding glass door at the entrance of the building opened as he approached, but it closed before he could get through the opening. As it closed, the door struck Gursky’s walker and he fell backward onto the sidewalk, breaking his right hip.

At the time of the accident Gursky, then age 71, was on his way to an appointment with an ophthalmologist whose office was in the Park-side Professional Village building. He was using a walker because a stroke had weakened his right arm and leg in 1986. His wife and granddaughter drove him to the building from his home in Philipsburg, Montana, and were accompanying him to his appointment.

The two women entered the building just ahead of Gursky. They looked back when he fell, but neither of them saw him fall. Both testified in depositions that when they looked back the door was open and not moving.

Gursky filed a complaint in September 1989, naming Parkside Professional Village (Parkside) as defendant and seeking $500,000 in damages for medical expenses, lost ability to work, disability, pain and suffering. He testified at his pretrial deposition that he had been unable to walk since the accident and was confined to a wheel chair. At the time of the trial in January 1992 he was in the hospital and unable to participate.

Gursky alleged in his complaint that Parkside had breached its duty to maintain the door to the building in a condition suitable for its intended purpose; that the door was in an unreasonably dangerous defective condition; and that Gursky’s injuries were proximately caused by this breach of duty and the defective condition of the door.

In its answer, Parkside denied all of Gursky’s allegations. Among its affirmative defenses it alleged that the accident was caused by negligence, fault, strict liability, or breach of warranty on the part of others, including the manufacturer of the door, the general contractor responsible for remodelling the building, the vendor-installer, who also was responsible for maintenance, and the architect who designed the remodelling project.

The District Court set the pre-trial conference for February 20, 1990, and issued a scheduling order. The order required the parties to join other parties and file amended pleadings by June 1,1990, and to file all pre-trial motions by December 15, 1990.

In September 1990, Gursky’s attorney moved to extend this schedule. In his supporting affidavit he testified that during the summer he had twice undergone heart surgery and that he needed additional time to amend the pleadings, join other parties, and line up expert witnesses. He also stated that he had submitted a settlement offer to Parkside “some months ago” and had waited for a counteroffer before incurring additional costs in behalf of Gursky, whom he described as “essentially indigent.”

Parkside opposed the extension on the grounds that it would delay resolution of this matter and increase the cost of defense. Nevertheless, the court granted Gursky’s motion on December 18,1990, stating in its opinion and order that “the interests of justice” would be served by extending the times set in its previous scheduling order. In its revised scheduling order the court required that all parties be joined and all amended pleadings be filed by January 20,1991, and that all pretrial motions be filed by March 15,1991.

On January 9,1991, eleven days before the new deadline expired, Gursky filed an amended complaint adding the following defendants: Besam, Inc., the manufacturer of the door; Tandberg Construction, the contractor for the remodelling project; City Glass, the vendor-installer-maintainer; and Eric Hefty, the architect who designed the remodelling project. All of these entities were named in Parkside’s answer to the original complaint.

Parkside moved on March 12, 1991, to strike the amended complaint on the grounds that Gursky was required to obtain leave of court, or Parkside’s written consent, before filing an amended complaint, and he had failed to do so. Gursky immediately filed a motion to add additional defendants and to vacate the revised scheduling order. The District Court heard this motion on May 28, 1991.

At the May 28 hearing, Gursky’s attorney stated that he had interpreted the court’s revised scheduling order of December 18, 1990 as permission to join additional defendants. Parkside’s attorney objected to further extensions, pointing out that under the Comb’s revised scheduling order, Gursky had thirteen months to join additional defendants and conduct discovery. Judge Henson denied Gursky’s motion to add defendants and amend the complaint, commenting that “increasingly in the past six months, people are stipulating to revised scheduling orders, and so forth. And, once again, it seems that the attorneys are controlling the court’s calendar.”

On June 4, 1991, the District Court granted Parkside’s motion to strike Gursky’s amended complaint, based on two grounds: (1) under Rule 15(a), M.R.Civ.P., Gursky could amend his complaint only with the court’s permission or written consent of the other party, and Gursky had neither; and (2) under Uniform District Court Rule 2, Gursky was required to file an answer to Parkside’s motion to strike the amended complaint but had not done so.

Gursky appealed the District Court’s order of June 4, but on August 13,1991, this Court granted Parkside’s motion to dismiss the appeal. In September 1991, the District Court ruled on the motion for summary judgment that Parkside had filed in December 1990, granting summary judgment with respect to all theories of liability except negligence. Gursky then filed a new complaint, on November 15, 1991, naming Besam, Inc., City Glass, and Tandberg Construction as defendants.

A jury trial was held on the issue of Parkside’s negligence on January 2, 1992. After six days of testimony, the jury found that Parkside was not negligent. Gursky moved for a new trial, alleging as errors the court’s refusal to allow joinder of all defendants and its refusal to instruct the jury that absent parties could not be blamed for Gursky’s injuries. The District Court denied this motion on March 6, 1992, and Gursky appealed.

The only issue on appeal is whether the District Court abused its discretion in not allowing Gursky to join additional defendants. Gursky requests that we remand the case to the District Court for a new trial and that he be allowed to join the additional defendants.

The decision to grant or deny a motion to amend a pleading lies within the discretion of the district court, and we will reverse its decision only for an abuse of that discretion. Lindeys, Inc. v. Professional Consultants (1990), 244 Mont. 238, 797 P.2d 920. In certain cases we have concluded that the district court abused its discretion in denying a party leave to amend a pleading, because the court offered no valid reason for denying leave. See Hobble-Diamond Cattle Co. v. Triangle Irrigation Co. (1991), 249 Mont. 322, 815 P.2d 1153; Priest v. Taylor (1987), 227 Mont. 370, 740 P.2d 648; White v. Lobdell (1984), 208 Mont. 295, 678 P.2d 637. “[Ojutright refusal to grant the leave without any justifying reason appearing for the denial is not an exercise of discretion; it is merely abuse of that discretion and inconsistent with the spirit of the Federal Rules.” White, 678 P.2d at 642 (quoting Foman v. Davis (1962), 371 U.S. 178, 181-82, 83 S.Ct. 227, 229-30, 9 L.Ed.2d 222, 226).

Here, however, the District Court had a valid reason for denying leave to amend the complaint, though this was expressed in its order granting Parkside’s motion to strike the amended complaint and not in its order denying leave to amend. Under Rule 2, Uniform District Court Rules, failure to file an answer to a motion within ten days “shall be deemed an admission that the motion is well taken.” Gursky failed to answer Parkside’s motion to strike his amended complaint; therefore, the District Court had the authority to grant the motion and did not abuse its discretion in so doing.

The District Court accommodated Gursky by extending the time in which he could amend his complaint, despite Parkside’s objections. Having granted that extension, the court did not abuse its discretion in denying further extensions.

AFFIRMED.

JUSTICES GRAY, McDONOUGH and WEBER concur.

JUSTICE TRIEWEILER

dissenting.

I dissent from the majority opinion. I would hold that the District Court abused its discretion by denying plaintiff’s motion to amend his complaint and would reverse the District Court.

In its answer, defendant alleged in its second affirmative defense that if the incident which was the subject of plaintiff’s complaint occurred as alleged:

[T]he occurrence was caused by the negligence, fault, strict liability, or breach of warranty on the part of other parties or individuals, including but not limited to, plaintiff’s relatives who accompanied him, Margaret Gursky and Sheila Hartman; the manufacturer, Besam, Inc.; the general contractor on the remodeling project in which the door was installed, Tandberg Construction; the vendor, installer, and maintainer of the door, Michotte Distributors and City Glass; the architect who designed the remodeling project, Eric Hefty. Defendant asserts under MCA § 27-1-703 that the fault of all such individuals and entities may have contributed to the injury complained of and should be considered by the trier of fact in its apportionment of responsibility in this case.

Presumably, before making such an allegation, the defendant and its attorneys investigated the circumstances surrounding plaintiff’s complaint and had a factual basis for making the above allegation. Otherwise, the allegation would have violated Rule 11, M.R.Civ.P. It can also be presumed that since defendant sought to reduce the degree of its own responsibility by blaming other third parties, that it was prepared to prove at the time of trial the nature of the third parties’ conduct. Under these circumstances, it seems ironic that the same defendant objected so strenuously to naming these third parties as defendants so that they could appear at the time of trial and defend themselves.

Understanding that defendant sought to blame people for plaintiff’s injuries who would not be present to refute the allegation, plaintiff moved the District Court, on September 21,1990, to modify the scheduling order and allow additional time within which to join those other parties. In support of that motion, plaintiff’s attorney filed his affidavit showing that he was a sole practitioner and that he had undergone two surgical procedures for his heart during the year since the complaint had been filed. In spite of this obvious justification for extending the time within which to comply with the scheduling order, defendant opposed the motion on the grounds that it would be severely prejudiced if plaintiff were allowed additional time within which to amend his pleadings. Defendant alleged that any additional delay would have an adverse impact on defendant.

However, on December 18, 1990, the District Court overruled defendants’ questionable objection and correctly pointed out that:

[I]t is the clear policy of the Montana Rules of Civil Procedure that all persons materially interested should be joined so that in one suit the court may hear and make a complete disposition of all disputes arising from the same transaction. Rule 19(a), Advisory Committee Notes, Annotations, MCA, p. 457 (1990), Wheat v. Safeway Stores, Inc., 146 Mont. 105, 112, 404 P.2d 317, [321] (1965), Julian v. Mattson, 219 Mont. 145, 710 P.2d 707 (1985).
Furthermore, in the present case, defendant’s Second Affirmative Defense asserts that other persons have caused and are liable for plaintiff’s injuries, and defendant asks that any judgment against him be reduced accordingly.

For these reasons, the District Court granted plaintiff’s motion and extended the dates set by the court’s previous scheduling order. On the same date, the District Court entered a new scheduling order which provided that all additional parties must be joined by January 20, 1991.

While it is true that technical compliance with Rule 15(a), M.R.Civ.P., required that consent of the District Court be obtained before plaintiff filed his amended complaint, it is equally true that the spirit of that rule was complied with in every significant respect. Defendant was aware of the parties that plaintiff sought to join. The District Court understood why the parties were necessary to a resolution of all the issues raised in this action, and the District Court explained in its order why additional time should be granted within which to amend plaintiff’s complaint so that the additional parties could be joined. The trial court then set a deadline within which amended pleadings were to be filed. On January 9, 1991, eleven days before the expiration of the court’s deadline, plaintiff’s attorney filed an amended complaint in which he named as additional defendants only those parties to whom defendant sought to pass blame for plaintiff’s injuries. The pleadings in this case show that the amended complaint was served on defendant’s attorney on that same date.

At that point, the purpose and spirit of the rules of civil procedure had been fully complied with. However, what should have been a simple issue did not end there. On January 21, 1991, one day after the court-imposed deadline for amending the pleadings, defendant’s attorney filed a document entitled Brief in Opposition to Motion to Defer Response to Motion for Summary Judgment in which he, for the first time, suggested that plaintiff’s amended complaint had been filed without consent of court, and therefore, in violation of Rule 15(a).

On March 14,1991, plaintiff filed a formal motion to add additional defendants and supported it with an affidavit and brief. The District Court and the majority opinion make much of the fact that no brief was filed in response to defendant’s motion to strike the amended complaint. However, the issue raised in plaintiff’s motion to amend was the same issue resolved by defendant’s motion to strike and one brief should have been sufficient for both purposes.

In support of his motion, plaintiff correctly pointed out to the District Court that we have previously held in Wheat v. Safeway Stores, Inc. (1965), 146 Mont. 105, 112, 404 P.2d 317, 321, that the purpose of our rules of joinder found in Rules 19 and 20, M.R.Civ.P., is to promote trial convenience and prevent multiplicity of lawsuits. Furthermore, the rales are intended to expedite final resolution of litigation by including in one suit all parties directly interested in the same controversy.

Even though defendant was fully aware of plaintiff’s intention and the nature of his amended complaint prior to the deadline for filing the complaint, and could have in no way been prejudiced by the lack of formal District Court consent until a later date, defendant again opposed plaintiff’s motion on the grounds that to allow amendment would result in additional delay of the trial. For reasons which will be discussed later, defendant’s opposition to plaintiff’s motion was specious at best.

Plaintiff’s motion was set for oral argument on May 28, 1991. At the conclusion of oral argument, plaintiff’s motion was verbally denied in open court. However, instead of basing its denial on the merits of plaintiff’s motion, as opposed to any potential harm to defendant, the District Court gave the following explanation for its decision:

Well, the purpose in establishing these scheduling orders, which I established a number of years ago, is to try and properly manage these cases .... And I have noticed increasingly in the past six months that people are stipulating to revised scheduling orders, and so forth. And, once again, it seems that the attorneys are controlling the court’s calendar. So the motion for leave to add the parties and amend the complaint is denied.

On June 5, 1991, the District Court entered its written order denying plaintiff’s motion to amend his complaint so that he could name additional parties as defendants. On June 10, 1991, five days later, the attorney for defendant who had been so concerned about prejudice to his client from delay, signed and filed a stipulation regarding the trial date which included the following statement: “In this matter, the attorney representing the defendant had a busy and continuous trial schedule for the next several months.” On that basis, the trial date set for June 1991 was vacated without further date. This case finally went to trial on January 2, 1992, over a year after plaintiff moved to amend his complaint.

For the following reasons, I conclude that the District Court abused its discretion when it denied plaintiff’s motion to amend his complaint:

1. Rule 15(a), M.R.Civ.P, which requires District Court approval before an amendment to the complaint can be filed after defendant has answered the original complaint, also requires that approval “shall be freely given when justice so requires.”

2. Rules 19 and 20, M.R.Civ.P, favor joinder of all parties involved in the same dispute in one action in order to avoid multiplicity of claims and unnecessary litigation.

3. Prejudice to defendant would not have resulted from granting plaintiff’s motion to amend. Defendant was aware of the additional defendants from the time it filed its answer on January 15, 1990. In fact, defendant was sufficiently familiar with their role in this incident that it filed an answer blaming them for plaintiff’s injuries in order to reduce its own liability for plaintiff’s damages.

4. On December 18, 1990, the District Court agreed that because of the health problems experienced by plaintiff’s attorney, it would be reasonable to extend the deadline for adding additional parties until January 20, 1991. In all practical respects, plaintiff complied with that deadline when he filed an amended complaint and served it on defendant on January 9, 1991. The only defect in the amended complaint was a technical one which he sought to cure with his motion to amend on March 14,1991.

5. The District Court gave no basis for denying plaintiff’s motion on its merits. It gave some unrelated and irrelevant reason regarding stipulations to revise scheduling orders which were encroaching on the court’s effort to control its own trial calendar. This case did not involve a stipulation, and for all practical purposes, the court’s scheduling order had been fully complied with.

It is obvious that defendant’s concern was not with potential delay to his client or the prejudice that would result therefrom. Neither was defendant concerned about surprise from an unexpected amendment for which it could not prepare. Defendant went to great lengths to prevent plaintiff from joining additional defendants because it would be easier for defendant to blame others if they were not there to defend themselves. The District Court’s arbitrary denial of plaintiff’s motion to amend his complaint reinforced use of procedural technicality as a litigation strategy and diminished the likelihood that this case would be resolved on its merits.

For these reasons, I would reverse the order of the District Court and remand this case to the District Court for trial of plaintiff’s claim against all the defendants that he sought to join, including Parkside Professional Village.


author: JUSTICE GRAY JUSTICE TRIEWEILER

text:
    LOIS Y. KEELE and FRANK S. KEELE, individually, and as next friends of their minor child, LISA KEELE, Plaintiffs and Appellants, v. ST. VINCENT HOSPITAL AND HEALTH CARE CENTER, and DR. JAMES R. HARRIS, M.D., Defendants and Respondents.
    No. 92-121.
    Submitted February 4, 1993.
    Decided May 6, 1993.
    50 St.Rep. 475.
    852 P.2d 574.
    258 Mont. 158.
    See C.J.S. Parent and Child § 136.

      For Plaintiffs and Appellants: William P. Fitzgerald (argued for appellant), Lynaugh, Fitzgerald, Eiselein & Eakin, Billings.
    For Defendants and Respondents: Richard F.Cebull (argued for respondent Dr. Harris); and John J. Russell, Brown, Gerbase, Cebull, Fulton, Harman & Ross, Billings; Robert C. Brown, (argued for respondent St. Vincent) Poore, Roth & Robinson, Butte.
    For Amicus: W. William Leaphart (argued on behalf of Trial Lawyers Association), Leaphart Law Firm, Helena; Randy J. Cox (filed brief on behalf of Montana Defense Trial Lawyers), Boone, Karlberg & Haddon, Missoula.
   JUSTICE GRAY

delivered the Opinion of the Court.

Appellant Lisa Keele appeals from an order of the Thirteenth Judicial District Court, Yellowstone County, dismissing her claim for loss of parental consortium. We reverse and remand.

The sole issue on appeal is whether a minor child’s cause of action for loss of parental consortium requires the parent to have suffered an injury rendering him or her a quadriplegic.

Because this appeal is before us following the grant of a motion to dismiss under Rule 12(b)(6), M.R.Civ.P, the well-pleaded allegations in the complaint are considered true. Mogan v. City of Harlem (1987), 227 Mont. 435, 437, 739 P.2d 491, 493. Therefore, we distill the facts relevant to our discussion from the complaint.

Lois Keele (Lois), accompanied by her husband, Frank Keele (Frank), was admitted to St. Vincent Hospital and Health Center (St. Vincent’s) on December 15,1985. She was 38 weeks pregnant and in active labor. The obstetrical ward nurses examined Lois and immediately determined that the fetus was in the “transverse lie position.” This condition results in a high likelihood of a cesarean section delivery. Dr. James Harris, an obstetrician at St. Vincent’s, began treating Lois according to established procedure.

Anesthesiologists were available on an “on-call” basis only at St. Vincent’s. Hospital procedure required the staff to allow the anesthesiologists thirty minutes to arrive at the operating room after the initial call. Dr. Harris did not call an anesthesiologist when he became aware of the fetal position.

Lois’ water broke, and an immediate Code I cesarean section was required to preserve the health of the fetus. Fetal distress required immediate action, notwithstanding the fact that an anesthesiologist had not been called to prepare Lois for surgery. Dr. Harris administered a local anesthesia before surgical cutting began, but the abdominal surgery proceeded without a spinal block or general anesthesia.

In November of 1988, Lois and Frank Keele filed a medical malpractice action against St. Vincent’s; in April, 1989, they filed a separate action against Dr. James Harris. On September 27, 1991, Lois and Frank amended their complaint, consolidating the cases against Dr. Harris and St. Vincent’s and adding their minor daughter Lisa Keele, the child born during the traumatic delivery, as a plaintiff. The amended complaint alleged injury to all three plaintiffs due to the negligence of the defendants in failing to obtain timely anesthesia services before performing the cesarean section on Lois Keele. Lisa Keele claimed loss of parental consortium.

In October, 1991, Dr. Harris and St. Vincent’s moved to dismiss Lisa’s claim for loss of parental consortium pursuant to Rule 12(b)(6), M.R.Civ.P. After briefing and oral argument, the District Court ordered entry of judgment against Lisa Keele. Lisa Keele appeals.

Does a minor child’s cause of action for loss of parental consortium require the parent to have suffered an injury rendering him or her a quadriplegic?

Appellant Lisa Keele (Lisa) bases her argument that she has a claim for loss of parental consortium on Pence v. Fox (1991), 248 Mont. 521, 813 P.2d 429. In Pence, a case of first impression, we recognized a child’s cause of action for loss of parental consortium against a tortfeasor who had rendered the father a quadriplegic. Pence, 813 P.2d at 433. In that case we held:

[M]inor children who have been deprived of these rights have a separate cause of action for loss of parental consortium when a parent is tortiously injured by a third party and rendered a quadriplegic.

Pence, 813 P.2d at 433.

Respondents Dr. Harris and St. Vincent’s contend that the Pence decision must be strictly interpreted, and that this Court intended to set a reasonable, enforceable boundary for loss of consortium claims. They urge this Court to limit loss of parental consortium claims to cases in which the parent suffers a severe, permanent and disabling physical injury, similar to quadriplegia.

Lisa argues that in Pence, this Court established a policy to protect, support and foster the parent-child relationship in Montana. She contends that this broad policy of enforcing the familial emit espoused in Pence covers the cause of action in this case, even though the specific holding in Pence was limited to cases involving quadriplegia. Lisa asserts that the respondents improperly focus on the nature of the injury to the parent; instead, the court should focus on the damage to the parent-child relationship caused by the tortfeasor.

The District Court correctly recognized the limited nature of our holding in Pence, and based its decision to dismiss Lisa’s claim on the specific language therein. However, we have recognized repeatedly our authority and responsibility for the continued development of the common law. See Pence, 813 P.2d at 431. We see no rational basis for limiting the cause of action for loss of parental consortium to children whose parents are rendered quadriplegic; such a result arbitrarily would exclude children whose parents suffered, for example, a severe brain injury resulting in a lifelong coma which totally eliminated parental consortium. Therefore, further development of the cause of action for loss of parental consortium in Montana is appropriate.

We noted in Pence the growing trend to recognize loss of parental consortium actions. At the time of that decision, at least ten states had recognized the claim: Arizona, Alaska, Vermont, Washington, Wisconsin, Iowa, Michigan, Massachusetts, Oklahoma and Texas. Pence, 813 P.2d at 431. Additional jurisdictions now recognizing the cause of action include West Virginia and Wyoming. See Belcher v. Goins (W.Va. 1990), 400 S.E.2d 830 and Nulle v. Gillette-Campbell County Joint Powers Fire Board (Wyo. 1990), 797 P.2d 1171.

We have surveyed the approaches employed in these jurisdictions and discovered a wide range of standards. For example, in Michigan, a child can recover for loss of the parent’s society and companionship when the parent is tortiously injured. Berger v. Weber (Mich. 1981), 303 N.W.2d 424, 427. In Berger, the Michigan Supreme Court expressly refused to limit the cause of action to instances of “severely” injured parents of a minor child. Berger, 303 N.W.2d at 427. At the other end of the spectrum, the Vermont Supreme Court has limited the cause of action to cases in which the parent has been rendered permanently comatose. Hay v. Medical Center Hosp. of Vermont (Vt. 1985), 496 A.2d 939, 946.

We also have revisited the important public policies relating to, and competing interests inherent in, this cause of action, as expressed by our sister jurisdictions and our opinion in Pence. In crafting the standard to be applied to loss of parental consortium claims in Montana, we borrow heavily from the Arizona Supreme Court’s rationale in Villareal v. State Dept. of Transp. (Ariz. 1989), 774 P.2d 213. We note that the facts of Villareal do not necessarily reflect the facts before us nor the facts required for a cause of action for loss of parental consortium. Instead, we rely on the legal analysis of the Arizona Supreme Court to guide our definition of the cause of action in Montana.

In Montana, the elements necessary for a minor child to establish a claim for loss of parental consortium are:

1) a third party tortiously causes the parent to suffer a serious, permanent and disabling mental or physical injury compensable under Montana law; and
2) the parent’s ultimate condition of mental or physical impairment must be so overwhelming and severe that it causes the parent-child relationship to be destroyed or nearly destroyed.

See Villareal, 774 P.2d at 219.

The first element describes the extent of injury to the parent which must be present to form the basis for a loss of parental consortium claim, as well as the source of that injury. Thereafter, the element contains a limitation: the described injury to the parent must be “compensable under Montana law.” The limitation reflects the derivative nature of the minor child’s claim for loss of parental consortium. That claim is wholly derivative of the parent’s claim against the tortfeasor for personal injuries; if the tortfeasor is not subject to liability to the parent under tort principles, the child cannot sustain a cause of action against the tortfeasor for loss of parental consortium. Villareal, 774 P.2d at 220.

For example, recovery for severe mental injury absent physical manifestations is limited to a few specific instances in Montana. See discussion in Nay v. Montana Power Co. (1990), 242 Mont. 195, 199, 789 P.2d 1224, 1226-7; Versland v. Caron Transport (1983), 206 Mont. 313, 671 P.2d 583; and Johnson v. Supersave Markets, Inc. (1984), 211 Mont. 465, 686 P.2d 209. Consequently, if the parent could not recover from the tortfeasor for his or her purely mental or emotional injury absent a physical component, the child cannot bring an action for loss of parental consortium resulting from that injury to the parent.

We find support for this conclusion in Priest v. Taylor (1987), 227 Mont. 370,740 P.2d 648. In Priest, we discussed the derivative nature of a spouse’s claim for loss of consortium. We stated that although the cause of action is separate and distinct, the loss of spousal consortium claim is completely derivative of the injured spouse’s claim. Priest, 740 P.2d at 653. In Pence, we relied heavily on our recognition of spousal consortium to support our decision to recognize the cause of action for a child’s loss of parental consortium. Pence, 813 P.2d at 431-2. As such, we conclude that this limitation on a minor child’s claim for loss of parental consortium is both necessary and grounded in Montana case law.

With regard to the second element of the claim for loss of parental consortium, we emphasize that the destruction or near destruction of the parent-child relationship as a result of the parent’s impairment is a necessary element in establishing the cause of action itself, not merely a factor in computing damages. See Belcher, 400 S.E.2d at 841, and Villareal, 774 P.2d at 219-20.

Returning to the case before us, we express no opinion as to whether Lisa can appropriately allege and sustain a claim for loss of parental consortium under the standard set forth in this opinion. We conclude, however, that the District Court erred in dismissing her complaint for failure to state a claim upon which relief can be granted.

Reversed and remanded for further proceedings consistent with this opinion.

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

JUSTICE TRIEWEILER

specially concurring.

I concur with the result of the majority opinion, but disagree with the standard established by the majority for determining whether a child has a cause of action for loss of his or her parent’s consortium.

The nature of the loss for which a consortium action is brought is damage to the relationship between the parent and the child. When we recognized the right of a child to make a claim for loss of a parent’s consortium, we pointed out that:

[T]he rights of the child to support, aid, protection, affection and society of the parent derive from both statute and case law. Sections 40-6-211, 40-6-214, 41-3-102(3)(c)[, MCA]; In re Krug (1988), 231 Mont. 78, 751 P.2d 171. In addition, the child has the right to parental discipline, guidance and training....
We conclude that under the Montana case law and statutes as developed, minor children are entitled to the support, aid, protection, affection, society, discipline, guidance and training of their parent. This policy underlies the “best interests of the child test” in custody determinations under § 40-4-212, MCA, and the right of the child to seek damages under Montana’s Wrongful Death Statute. See §§ 27-1-512 and 513, MCA, and Ewalt [v. Scott (1983)], 206 Mont. 503, 675 P.2d 77.

Pence v. Fox (1991), 248 Mont. 521, 526-27, 813 P.2d 429, 432-33.

If the nature of the loss for which a child is to be compensated is damage to the relationship between the child and his or her parent, it makes no sense to me that the cause of action is arbitrarily limited by the nature of the parent’s injury. The standard which gives rise to the cause of action should logically be based on the nature and extent of the damage to the parent-child relationship.

It is interesting that in Montana there is no similar limitation on the right of one spouse to recover lost consortium when it results from physical or mental injury to another spouse. See Duffy v. Lipsman-Fulkerson & Co. (D. Mont. 1961), 200 F. Supp. 71;Dutton v. Hightower and Lubrecht Construction Co. (D. Mont. 1963), 214 F. Supp. 298; Hall v. United States (D. Mont. 1967), 266 F. Supp. 671; Bain v. Gleason (1986), 223 Mont. 442, 726 P.2d 1153. And yet, there should be no dispute that disruption of the parent-child relationship will in most cases have much greater consequences than damage to the relationship between two adults. I agree with the following observation from The Child’s Right to Sue for Loss of a Parent’s Love, Care and Companionship Caused by Tortious Injury to the Parent, 56 B.U.L. Rev. 722, 742 (1976), and quoted by the Iowa Supreme Court in Weitl v. Moes (Iowa 1981), 311 N.W.2d 259, 269, overruled in part by Audubon-Exira Ready Mix, Inc. v. Illinois Central Gulf Railroad Co. (Iowa 1983), 335 N.W.2d 148:

Since the child in his formative years requires emotional nurture to develop properly, the' loss of love, care and companionship is likely to have a more severe effect on him than on an adult; and society has a strong interest in seeing that the child’s emotional development proceeds along healthy lines. Moreover, an adult is in a better position than a child to adjust to the loss of a family member’s love, care and companionship through his own resources. He is capable of developing new relationships in the hope of replacing some of the emotional warmth of which he has been deprived. A child, however, is relatively powerless to initiate new relationships that might mitigate the effect of his deprivation. Legal redress may be the child’s only means of mitigating the effect of his loss.

Because the cause of action recognized by the majority is for the purpose of compensating a child for damage to the child’s relationship with his or her parent, and because there is no comparable limitation on a cause of action brought by an adult for loss of a spouse’s consortium, I would not arbitrarily limit a child’s claim for loss of parental consortium based on the nature of the parent’s physical or mental injury. I would follow the test established by the Iowa Supreme Court when it held that in that state “a minor has an independent cause of action for loss of the society and companionship of a parent who is tortiously injured by a third party so as to cause a significant disruption or diminution of the parent-child relationship.” Weitl, 311 N.W.2d at 270, overruled in part by Audubon-Exira Ready Mix, Inc. v. Illinois Central Gulf Railroad Co. (Iowa 1983), 335 N.W.2d 148.

Therefore, I concur in the result of the majority opinion, but for reasons other than those set forth in that opinion.

JUSTICE HUNT joins in the foregoing special concurrence.


author: JUSTICE McDONOUGH JUSTICE TRIEWEILER

text:
    JOSEPH MARTELLI, Petitioner and Appellant, v. ANACONDA-DEER LODGE COUNTY, Defendant/Employer and Respondent.
    No. 92-274.
    Submitted on Briefs December 17, 1992.
    Decided May 6, 1993.
    50 St.Rep. 479.
    852 P.2d 579.
    258 Mont. 166.
    See C. J.S. Workmen’s Compensation § 657.

      For Petitioner and Appellant: Bernard J. “Ben” Everett, Knight, Dahood, McLean, Everett & Dayton, Anaconda.
    For Defendant/Employer and Respondent: Leo S. Ward, Browning, Kaleczyc, Berry & Hoven, Helena.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

This is an appeal from an order of the Workers’ Compensation Court, dismissing Martelli’s claim for permanent total disability benefits. We affirm.

The dispositive issue is whether the Workers’ Compensation Court correctly refused jurisdiction of Martelli’s claim. The court dismissed his claim because he had failed to appeal a previous order of the Employment Relations Division of the Department of Labor and Industry (the Division), which concluded that he could return to work in a suitable related occupation.

On August 10, 1988, Martelli suffered a soft tissue injury to his neck when another vehicle struck his vehicle from the rear. The injury occurred in the course and scope of his employment as a law enforcement officer for Anaconda Deer-Lodge County.

The insurer designated a rehabilitation provider pursuant to § 39-71-1015, MCA (1987). The rehabilitation provider determined that eight full-time occupations were suited to Martelli’s education and skills. Later, she determined that Martelli could return to his previous occupation.

When Martelli did not return to work, the insurer notified the Division, which had jurisdiction of the matter pursuant to § 39-71-1033, MCA (1987), § 39-71-1018, MCA (1987) and 24.29.207 ARM. After the parties completed all of the administrative steps within the Division, the Division granted Martelli’s request for a hearing.

Following a contested hearing, the Division issued a final order, stating that an appropriate rehabilitation option under § 39-71-1012, MCA (1987) was for Martelli to return to a related occupation suited to his education and skills. The Division’s order also stated that “[a]ny party in interest may appeal this order to the Workers’ Compensation Court within ten (10) working days after the mailing of this final order as provided in Section 39-71-1018, MCA.” Martelli failed to appeal the order. Instead, over a year later, he filed a petition with the Workers’ Compensation Court seeking permanent total disability benefits.

Acting on a motion by Anaconda-Deer Lodge, the Workers’ Compensation Court dismissed Martelli’s petition. The court concluded that Martelli’s failure to appeal the Division’s final order precluded him from raising the permanent total disability issue before the court. This appeal followed.

Our review of the Workers’ Compensation Court’s conclusions of law is plenary. We determine whether the court’s conclusions are correct. Steer Inc. v. Dept, of Revenue (1990), 245 Mont. 470, 474-75, 803 R2d 601, 603.

Martelli contends that the Workers’ Compensation Court erred in declining to exercise jurisdiction in this case. He argues that by dismissing his petition for a hearing, the court not only abandoned its exclusive jurisdiction over the issue of whether he was entitled to benefits under the Workers’ Compensation Act, but also gave the Division jurisdiction over the matter. See § 39-71-2905, MCA (1987) (giving the workers’ compensation judge exclusive jurisdiction over claims for benefits).

Anaconda-Deer Lodge contends that the doctrine of collateral estoppel bars Martelli from litigating in Workers’ Compensation Court the issue of whether he was permanently and totally disabled. Anaconda-Deer Lodge argues that because of the interplay between the issue before the Workers’ Compensation Court and the issue previously litigated before the Division, the court would have to relitigate the issue decided by the Division to determine whether Martelli was entitled to permanent total disability benefits. We agree.

The doctrine of collateral estoppel, also called issue preclusion, “precludes relitigation of issues actually litigated and determined in [a] prior suit regardless of whether it was based on the same cause of action as the second suit.” Lawlor v. National Screen Service (1955), 349 U.S. 322, 326, 75 S.Ct. 865, 867, 99 L.Ed. 1122, 1127; see also Smith v. Schweigert (1990), 241 Mont. 54, 58, 785 P.2d 195, 197. The three elements of collateral estoppel are:

1. The issue has been decided in a prior adjudication and is identical to the one presented.
2. A final judgment on the merits was issued.
3. The party against whom the plea is asserted was either a party or in privity with a party to the prior adjudication.

Schweigert, 785 P.2d at 197.

It is clear and undisputed that the present case meets the second and third elements of collateral estoppel. The Division issued an order of final determination which Martelli could have appealed to the Workers’ Compensation Court. See § 39-71-1018, MCA (1987). Martelli did not appeal the Division’s order so it became a final judgment. Thus, the second element of collateral estoppel is clearly-met. All parties to this cause were also parties to the litigation before the Division. The third element of collateral estoppel is therefore satisfied.

The first element, however, is in dispute. To meet the first element, the precise issue must have been litigated in a prior action. Marriage of Stout (1985), 216 Mont. 342, 350, 701 P.2d 729, 734.

Martelli contends that the issue before the Division was not the same as that before the Workers’ Compensation Court. He argues that the issue before the Workers’ Compensation Court was whether he was entitled to benefits for a permanent total disability as defined in § 39-71-116(15), MCA(1987), whereas the issue before the Division was to determine which rehabilitation option under § 39-71-1012, MCA (1987) would be appropriate for him.

Under the circumstances of this case, the two issues are so intertwined that to decide the issue before it, the Workers’ Compensation Court would have to rehear the precise issue previously decided by the Division. The definition of permanent total disability is “a condition resulting from injury as defined in this chapter after a worker reaches maximum healing, in which a worker is unable to return to work in the worker’s job pool after exhausting all options set forth in 39-71-1012, MCA.” One of the options set forth in that statute is the precise issue previously resolved by the Division — whether the worker could “return to a related occupation suited to the claimant’s education and marketable skills.” See § 39-71-1012(c), MCA (1987).

To rule that Martelli was permanently and totally disabled, the Workers’ Compensation Court would have to determine that Martelli could not return to a related occupation suited to his education and skills. See §§ 39-71-116(15), 39-71-1012(c), MCA (1987). As stated above, the Division had previously ruled that Martelli could return to work in a suitable related occupation and Martelli did not appeal the Division’s order. The doctrine of collateral estoppel, therefore, precluded the parties from relitigating the issue before the Workers’ Compensation Court. See Schweigert, 785 P.2d at 197.

Because the parties could not relitigate the issue, the Workers’ Compensation Court was bound by the Division’s determination that Martelli could return to a related occupation suited to his education and skills. Because he could work in a suitable occupation, the Workers’ Compensation Court could not possibly determine that Martelli was permanently and totally disabled. Thus, the court was correct in declining jurisdiction in this cause.

Affirmed.

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

JUSTICE TRIEWEILER

dissenting.

I dissent from the majority opinion.

The effect of the majority opinion is to amend the Workers’ Compensation Act by eliminating the role of the Workers’ Compensation Court in determining a claimant’s right to total disability benefits.

On January 29, 1992, claimant filed a petition for hearing before the Workers’ Compensation Court in which he asked that court to find that he was permanently totally disabled and entitled to permanent total disability benefits.

By statute, the Workers’ Compensation Court is given exclusive jurisdiction to determine the nature and extent of benefits to which an injured worker is entitled. Section 39-71-2905, MCA (1987), which was in effect on the date of claimant’s injury, provides as follows:

A claimant or an insurer who has a dispute concerning any benefits under chapter 71 of this title may petition the workers’ compensation judge for a determination of the dispute after satisfying dispute resolution requirements otherwise provided in this chapter. The judge, after a hearing, shall make a determination of the dispute in accordance with the law as set forth in chapter 71 of this title. If the dispute relates to benefits due a claimant under chapter 71, the judge shall fix and determine any benefits to be paid and specify the manner of payment. After parties have satisfied dispute resolution requirements provided elsewhere in this chapter, the workers’ compensation judge has exclusive jurisdiction to make determinations concerning disputes under chapter 71, except as provided in 39-71-317 and 39-71-516. [Emphasis added.]

The claimant in this case did comply with the dispute resolution requirements provided for in § 39-71-2401, MCA (1987), and §§ 39-71-317 and -516, MCA, are not applicable to this case.

It is our obligation to construe statutes in a way that gives effect to the substance of the statute, and if several statutes appear to conflict, to construe them in a way that gives effect to all of the statutes. Section 1-2-101, MCA (1987), provides:

In the construction of a statute, the office of the judge is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted or to omit what has been inserted. Where there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all.

The majority has concluded that when a hearing examiner for the Division of Workers’ Compensation decided claimant’s employment options under Part 10 of the Workers’ Compensation Act which relates to vocational rehabilitation, that hearing examiner effectively decided what disability benefits claimant was entitled to under the Workers’ Compensation Act. To construe the administrative procedures provided for in Part 10 of the Act in that manner does not satisfy this Court’s statutory obligation to give effect to all the provisions of the Workers’ Compensation Act. The only way to accomplish that obligation is to conclude that Part 10 of the Workers’ Compensation Act relates solely to eligibility for vocational rehabilitation benefits and Part 29 of the Workers’ Compensation Act relates to the procedure for determining disability benefits.

Although claimant had a right to appeal to the Workers’ Compensation Court from the final order of the Legal Services Division of the Department of Labor and Industry, the scope of review on that appeal would have been limited and would not have been the equivalent of a hearing before the Workers’ Compensation Court. In State Compensation Mutual Insurance Fund v. Lee Rost Logging (1992), 252 Mont. 97, 827 P.2d 85, we held that § 2-4-704(2)(a)(v), MCA, of the Administrative Procedure Act applied to the Workers’ Compensation Court’s review of an agency decision. Therefore, if claimant had appealed the decision of the Legal Services Division, the Workers’ Compensation Court could only have reversed that decision if it was “clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record.” That limited form of review is not the equivalent of the fact-finding responsibility given exclusively to the Workers’ Compensation Court by § 39-71-2905, MCA, when claimant’s disability benefits are at issue. For that reason, the right of appeal provided for in § 39-71-1018(4), MCA, was not the equivalent of the hearing guaranteed in Part 29 of the Act. The majority’s decision, therefore, effectively amends the Workers’ Compensation Act by eliminating the rights and jurisdiction provided for in Part 29.

The statutory scheme enacted by the Legislature in 1987 recognized the need for an independent court to decide the most important issue that could arise in disputes between injured workers and the insurer for their employer. For that reason, the Legislature gave the Workers’ Compensation Court exclusive jurisdiction to decide those issues. This Court, by this decision, has eliminated that procedural safeguard and placed all injured workers in this state at greater risk in the process. For these reasons, I dissent from the majority opinion. I would reverse the judgment of the Workers’ Compensation Court.

JUSTICE HUNT joins in the foregoing dissent.


author: JUSTICE WEBER JUSTICE TRIEWEILER

text:
    EDWARD NICHOLS, JR., JULIA A. BRUMMEL, NICHOLE A. BRUMMEL, a Minor Child, and JULIA A. BRUMMEL, as Mother and Natural Guardian of NICHOLE A. BRUMMEL, Plaintiffs and Appellants, v. DAVID CORNTASSEL and DAVID BALLOU, Defendants and Respondents.
    No. 92-303.
    Submitted March 4, 1993.
    Decided May 6, 1993.
    50 St.Rep. 483.
    852 P.2d 583.
    258 Mont. 173.
    See C.J.S. Judgments § 220.

      For Plaintiffs and Appellants: Arthur D. Agnellino, Missoula.
    For Respondent: Dan Spoon, Missoula, for David Ballou; Paul Meismer, Missoula, for David Corntassel.
   JUSTICE WEBER

delivered the Opinion of the Court.

Plaintiffs appeal the summary judgment order of the District Court of the Fourth Judicial District, Missoula County, which ruled in favor of defendant David Ballou based on the “accepted work” doctrine of contractor nonliability. We reverse and remand to the District Court for reconsideration.

The sole issue for review is whether the District Court erred in granting summary judgment to defendant Ballou.

Appellants Edward Nichols, Jr., Julia A. Brummel and Nichole A. Brummel, by Julia A. Brummel as her Mother and Natural Guardian (plaintiffs) filed complaints alleging that they suffered carbon monoxide poisoning while residing in a rental property located in Missoula, Montana. The amended complaint alleged numerous claims against several defendants. Plaintiffs have settled their claims with and stipulated to dismiss defendants John Schubert, Cole MacPherson, Don Beaver Heating and Air Conditioning and Thomas Plumbing and Heating. Claims against two defendants remain. Plaintiffs’ claim against defendant David Corntassel is rooted in the Montana Residential Landlord and Tenant Act and is not a part of this appeal. This appeal relates solely to the District Court’s summary judgment dismissal of plaintiffs’ claim against defendant David Ballou (Ballou), a Missoula heating and air conditioning contractor and owner of Ballou Heating and Air Conditioning.

In their Second Amended Complaint, plaintiffs alleged the following: In 1988, plaintiffs rented a residence located at 2120 South 14th Street in Missoula owned by David Corntassel. Corntassel had purchased the residence in 1986 from John Schubert. To meet FHA financing requirements, Schubert raised the foundation of the house approximately two feet. When this was done, the vent pipes from the furnace had to be modified accordingly. Schubert contracted with Ballou to perform the modifications to the furnace exhaust system. Ballou performed the work in July or August of 1986. In April 1988, shortly after plaintiffs moved into the house, the exhaust vent pipe leading from the furnace to the chimney separated because the vent had never been securely fastened by Ballou.

Plaintiffs alleged that when the vent pipe separated, carbon monoxide gas escaped, causing them to suffer carbon monoxide poisoning. They further alleged that Ballou negligently reconnected the furnace exhaust vent in the residence.

In his Answer, Ballou denied plaintiffs’ allegations except as follows: He admitted that Schubert was the owner of the premises at the time that Ballou Heating and Air Conditioning performed the work. He admitted that he was in the business of installing and repairing heating and air conditioning systems. He also admitted that there are city and county codes relating to the installation of furnaces.

Did the District Court err in granting summary judgment in favor of Ballou?

The District Court determined that sufficient facts were presented to grant summary judgment to Ballou on the basis of the “accepted work” doctrine as an affirmative defense. The “accepted work” doctrine is a rule of contractor nonliability most recently approved by this Court in Harrington v. LaBelle’s of Colo. Inc. (1988), 235 Mont. 80, 765 P.2d 732. See also Olson v. Kayser (1973), 161 Mont. 241, 505 P.2d 394; Hannifin v. Cahill-Mooney Constr. Co. (1972), 159 Mont. 413,498 P.2d 1214; and Ulmen v. Schwieger (1932), 92 Mont. 331, 12 P.2d 856.

Under the “accepted work” doctrine, the contractor owes no duty to a third party who is subsequently injured on the premises. The property owner (contractee) is substituted for the contractor as the responsible party when the work is accepted. Harrington, 765 P.2d at 734. The primary rationale is that the injured person is not in privity of contract with the contractor. Under the doctrine, Schubert, as the owner who employed Ballou, would become the responsible party after he accepted the work done by Ballou to reconnect the exhaust vent, if all five elements of the “accepted work” doctrine were met.

Contractor nonliability principles initially parallelled those of product liability. Product liability law, unlike its counterpart, has changed significantly over the years as exemplified by the landmark case MacPherson v. Buick Motor Co. (N.Y. App. 1916), 111 N.E. 1050. MacPherson initiated a shift in product liability law subjecting manufacturers or suppliers to liability for negligence. Annotation, Negligence ofbuilding or construction contractor as ground of liability upon his part for injury or damage to third person occurring after completion and acceptance of the work. 58 A.L.R.2d 865, 869-70. The general rule of nonliability for contractors did not experience a similar metamorphosis. However, a gradual trend away from nonliability for negligence developed around a group of exceptions to the general rule instead of an outright repudiation of the “accepted work” doctrine in those jurisdictions which had previously adopted the doctrine. Strakos v. Gehring (Tex. 1962), 360 S.W.2d 787, 790. One of the numerous exceptions which evolved is the “latent defect” exception which plaintiffs urge this Court to adopt.

Authors of the Restatement (Second) of Torts at § 385 recommended that contractors should be placed on the same footing as manufacturers for negligence liability. 58 A.L.R.2d at 871. In Strakos, the court completely overruled its prior ruling which had approved the “accepted work” doctrine, noting that the effect of the decision was to bring the defendant within general rules of tort litigation, restoring logic and simplicity to the law. Strakos, 360 S.W.2d at 790-91.

A number of courts have expressed dissatisfaction with the rule, favoring a more direct approach such as that of the Texas court in Strakos. 13 Am. Jur. 2d Building and Construction Contracts § 140 (1964). Instead of applying the nonliability rule, these courts have established a rule that a contractor is liable for injuries to or death of third persons after acceptance by the contractee where the work is reasonably certain to endanger third persons if negligently completed. Id. This view adopts a rationale that there are no sufficient grounds to differentiate between liability of a manufacturer of goods and that of a building or construction contractor. Id. The building contractor’s liability under this reasoning is not absolute, but predicated upon negligence. Thus, a contractor following plans or specifications given to him will not be liable if a reasonable person would have followed them. Id. See, e.g., Menendez v. Paddock Pool Constr. Co. (Ariz. App. 1991), 836 P.2d 968 (nonliability rule applies only when contractor has no discretion and is merely following plans and specifications provided by the employer); and Hanna v. Fletcher (D.C.Cir. 1956), 231 F.2d 469 (the leading case rejecting the “accepted work” doctrine).

In this appeal, plaintiffs have asked this Court to review the “accepted work” doctrine and consider whether it is appropriate to continue to blindly exempt contractors from liability when the elements of the doctrine are present. They do not argue that this Court should follow the example of the many jurisdictions which have completely abandoned the doctrine as this Court has already done for products liability actions against manufacturers and others previously exempt from liability. See Brandenburger v. Toyota Motor Sales, U. S. A., Inc. (1973), 162 Mont. 506, 513 P.2d 268. Instead, they urge us to adopt the “latent defect” exception to the doctrine and argue that the facts of this case clearly demonstrate that a latent defect existed when Ballou performed the work and turned it over to Schubert some twenty months prior to their injury.

Based on the arguments presented in the briefs, the court concluded that it was appropriate to consider the “accepted work” doctrine and the possible application of the “latent defect” exception to that doctrine. Both parties’ briefs before this Court indicated there were no genuine issues of fact relating to the five elements of the “accepted work” doctrine. Argument was presented on that theory.

This Court has now made a careful review of the entire record before the District Court. The record, as submitted to this Court, contains no affidavits of any kind, no depositions, no interrogatories, and no separate admissions which could be considered. The Clerk of the District Court verified that its entire record had been submitted to this Court for the appeal. As previously pointed out, the defendant Ballou has denied, generally and specifically, all of the allegations on the part of the plaintiff in the amended complaint with the exception only of an admission that Schubert owned the premises at the time when Ballou performed work, that Ballou was in the business of repairing heating and air conditioning systems and that there are city and county codes. As a result, the pleadings themselves fail to establish any facts pertinent to the issues before this Court.

As the party moving for summary judgment, Ballou was required to comply with the provisions of Rule 56(c), M.R.Civ.R, which in pertinent part provides:

Motion and proceedings thereon.... The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. ...

Rule 56(c) has been the subj ect of many cases decided by this Court. In the great majority of cases, the question raised is whether or not the party opposing summary judgment has properly submitted facts to demonstrate an issue of material fact. Parties continue to argue that facts alleged in the pleadings must be accepted as correct. In such cases, we have held as follows:

... Drug Fair argues that the facts alleged in its complaint must be accepted as correct. That is not correct. As pointed out in Mayer Brothers v. Daniel Richard Jewelers, Inc. (1986), [223 Mont. 397], 726 P.2d 815, a party opposing a motion for summary judgment may not rest upon the mere allegations of pleadings, and has an affirmative duty to respond by affidavits or sworn testimony with specific facts that show there is genuine issue of fact for trial. ...

Drug Fair Northwest v. Hooper Enters., Inc. (1987), 226 Mont. 31, 733 P.2d 1285, 1287.

The essential question here, however, is whether or not defendant Ballou has submitted sufficient facts to trigger the court’s consideration under Rule 56(c), M.R.Civ.P. In describing the cases where a summary judgment is proper, this Court stated in Gamble Robinson Co. v. Carousel Properties (1984), 212 Mont. 305, 688 P.2d 283, 286-87, as follows:

Summary judgment is not a substitute for trial. ... Rule 56(c), Mont.R.Civ.P. permits summary judgment to issue only when there is no genuine issue of material fact, and the moving party is entitled to the judgment as a matter of law. ... In Cereck v. Albertson’s, Inc. (1981), 195 Mont. 409, 637 P.2d 509, we stated the test for granting summary judgment:
“It is well established that a party moving for summary judgment has the burden of showing a complete absence of any genuine issue as to all facts deemed material in light of the substantive principles that entitle that party to a judgment as a matter of law. [Citations omitted.] All reasonable inferences that may be drawn from the offered proof are to be drawn in favor of the party opposing summary judgment.” [Citations omitted.]
The moving party’s initial burden is two-fold. First, it must show the absence of any genuine issue as to material fact. Second, that party must also show that this set of facts entitles it to the judgment as a matter of law. This necessarily implies the articulation of cogent legal grounds to which the facts apply. (Emphasis supplied.) (Citations omitted.)

The foregoing is the test which must be applied in the present case.

As pointed out above in Gamble Robinson, it was the burden of defendant Ballou here to first show the absence of any genuine issue of material fact, and second, to show that this set of facts entitled Ballou to judgment as a matter of law. Both defendant Ballou and plaintiffs have failed to establish facts which entitled any of them to judgment as a matter of law. As noted, the pleadings fail to establish as matters of fact the key facts regarding the furnace, furnace pipe, separation of the pipe, and resultant injury. The parties do make reference in their briefs to various depositions, but none of those depositions are a part of the record before us. We conclude that defendant Ballou has completely failed to set forth a set of facts which entitle him to judgment as a matter of law. We also emphasize that plaintiffs in turn have failed to set forth facts which entitle them to judgment as a matter of law. As a result, we hold that defendant Ballou as the moving party has failed to establish a set of facts which entitled him to judgment as a matter of law under Rule 56(c), M.R.Civ.P.

We, therefore, hold that the District Court erred in granting summary judgment to defendant Ballou. We remand this case for further consideration in a manner consistent with this opinion.

Reversed and remanded.

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

JUSTICE TRIEWEILER

concurring in part and dissenting in part.

I concur with the decision of the majority to reverse the judgment of the District Court. However, I would do so for reasons different from those of the majority.

I would reverse the judgment of the District Court because it was based on the “accepted work doctrine” which I conclude should no longer be followed in Montana.

I disagree that there is an inadequate record on which to base a decision whether to follow this antiquated theory, and believe that it is a disservice to the parties and to the District Court to require that they jump through further hoops before addressing the legal issue raised by this appeal.

In Harrington v. LaBelle’s of Colorado (1988), 235 Mont. 80, 765 P.2d 732, this Court held in a five to two decision that it would continue to follow the accepted work doctrine first adopted in Montana in Ulmen v. Schwieger (1932), 92 Mont. 331, 12 P.2d 856. However, two members of the five person majority are no longer members of this Court, and I did not participate in that decision. However, I agree with the dissenting opinion in that case which was authored by Mr. Justice Weber and concurred in by Mr. Justice Hunt.

The issue of whether the accepted work doctrine bars recovery by the plaintiff against the defendant Ballou has been squarely framed by the pleadings in this case, by the testimony of the parties, and by the stipulations of the parties, as presented in their appellate briefs. It makes no sense to consume further time and expense of the parties and waste valuable time and resources of the District Court to add unnecessary information to the record before indicating how the seventh member of this Court would vote on the issue of retaining the “accepted work doctrine.”

While it is correct that the record is inadequate for purposes of determining whether this is an appropriate case in which to apply a “latent defect” exception to the doctrine, it is unnecessary to consider the latent defect exception if this Court decides to no longer follow the accepted work doctrine.

I agree with the Circuit Court of Appeals for the District of Columbia when it held in Hanna v. Fletcher (D.C. Cir. 1956), 231 F.2d 469, that the antiquated reasons for the accepted work doctrine based on lack of privity have no place in modern theories of liability, as set forth in MacPherson v. Buick Motor Company (1916), 217 N.Y. 382, 111 N.E. 1050.

I agree with the Supreme Court for the State of Texas when it held in Strakos v. Gehring (Tex. 1962), 360 S.W.2d 787, 791, that elimination of the accepted work doctrine would restore logic and simplicity to the law of liability.

The accepted work doctrine can only accomplish one of two undesirable results. It either shifts liability from the negligent party to an innocent property owner who, in most cases, has insufficient expertise with which to discover defects, or eliminates liability on the part of anyone. In that event, it shifts the burden of a negligent party’s conduct to the innocent victim. Neither of these results are desirable in light of modern theories of liability, and this Court should say so.

The majority avoids discussing the legal issues raised in this appeal by concluding that both plaintiffs and defendant Ballou have failed to provide this Court with facts which would entitle them to judgment as a matter of law. However, I disagree. The parties have stipulated to an adequate factual record on which to review the issue of whether this Court will continue to follow the accepted work doctrine.

In Harrington, we indicated that five factors were critical in our application of the accepted work doctrine in that case. They were:

1. That the work had been turned over to the owner;

2. That the owner had accepted the work;

3. That upon completion the owner paid the contractor;

4. That the contractor completely removed itself from the premises prior to the accident; and

5. That there was no follow-up work or any complaints about the contractor’s work.

In his appellate brief, Ballou points out that there was deposition testimony from the defendant and from John Schubert, the former owner of the premises, establishing each of these five elements. He includes references to the pages in those depositions at which point those elements were established. While it is true that the depositions have not been filed with this Court on appeal, their absence is insignificant because in their reply brief, plaintiffs concede that all five elements have been established. They specifically state that:

Appellants do not dispute criteria 1 through 4, however, addressing separately criteria 5, Appellants state that although there was not follow up work performed by Respondent Ballou, there was no other person in the 20-month period from the time Respondent completed his work until the Appellants’ injuries occurred, who worked on the unit.

In other words, the parties stipulate that all five criteria which were found necessary in Harrington for the application of the accepted work doctrine are present in this case.

To remand this case to the District Court for further factual development and to supplement the record without indicating to the parties and to the District Court how the seventh member of this Court would vote on the issue of retaining the “accepted work doctrine” is a complete waste of everyone’s time and money. It is because of unnecessary academic exercises like this that people become frustrated with the judicial process. For these reasons, I dissent from that part of the majority opinion which suggests that further factual development is necessary before we can address the dispositive issue in this case. I would decline to follow the accepted work doctrine, and therefore, I would reverse the District Court’s summary judgment on that basis.

JUSTICE HUNT joins in the foregoing concurrence and dissent.