author: JUSTICE NELSON

text:
    MONTANA MINING PROPERTIES, INC., a Montana corporation, Plaintiff and Appellant, -vASARCO, INC., a New Jersey corporation, DENNIS R. WASHINGTON, MONTANA RESOURCES, INC., a Montana corporation, and MONTANA RESOURCES, a General Partnership, Defendants and Respondents.
    No. 94-394.
    Submitted on Briefs January 12, 1995.
    Decided April 11, 1995.
    52 St.Rep. 284.
    270 Mont. 458.
    893 P.2d 325.

      For Appellant: R.D. Corette, John T. Johnston, Corette, Pohlman, Allen, Black & Carlson, Butte.

      For Respondents: Ronald B. MacDonald, Darla J. Keck, Datsopoulos, MacDonald & Lind, Missoula.
   JUSTICE NELSON

delivered the Opinion of the Court.

Plaintiff and Appellant, Montana Mining Properties (hereinafter MMP), appeals from a decision and order of the Second Judicial District Court, Silver Bow County, granting Defendants’ and Respondents’ Dennis R. Washington, Montana Resources, Inc. and Montana Resources, a general partnership (hereinafter Washington), motion for summary judgment. We reverse and remand for trial.

MMP raises four issues on appeal, however, we shall only address one issue, as that issue is dispositive. We state the issue as follows:

1. Whether the District Court erred in granting Washington’s motion for summary judgment where genuine issues of material fact exist regarding MMP’s alleged breach of contract, and regarding Washington’s waiver of the claimed right to terminate the contract.

Washington and MMP entered into a contract dated January 27, 1987, which was executed in June 1987, wherein Washington agreed to sell, and MMP to buy two mining properties and equipment located in Butte, Montana. The first property, known as the “Main Butte Property,” was sold to MMP for three million dollars in cash. The parties agree that this sum has been paid. The second property, known as the “North Butte Property,” sold for $500,000, and the equipment on the property was sold for three million dollars. The contract provided that half of the price of the equipment (1.5 million dollars) was to be paid in cash, and there is no dispute that this part of the contract was performed.

The dispute arose from the agreement provisions concerning the $500,000 payment for the “North Butte Property’ and the 1.5 million dollar payment, which represents the balance for the price of the equipment. According to the agreement, these amounts were to be paid to Washington in:

[U]nrestrieted free trading common stock of a corporation or corporations, which have directly or indirectly through a subsidiary corporation, an interest in any part of the property referred to under this Agreement....

“Butte Mining PLC,” was the public company from which the stock was to be issued. Butte Mining PLC was organized and promoted in London by Clive J. Smith who was one of four joint venturers who controlled MMP. The joint venture used MMP as a vehicle to acquire mining properties that were then transferred to Butte Mining PLC. Shares in this company were then sold in public stock offerings.

Payment for the “North Butte Property” was to be made “in a timely fashion” but in no event was the purchase payment to exceed ten months from the date of the agreement. Payment for the equipment was to be made “on or before the 21st day of September, 1987.” The agreement expressly provided that time was of the essence with respect to the payments, and it contained an express termination clause, wherein Washington was entitled to terminate the contract in the event of default. The agreement granted to MMP a “first right of refusal to acquire an interest in any mineral property owned by Washington in the Butte Mining District.”

On October 8, 1987, Washington received a facsimile from Bryant & Company, an accounting firm located in Jersey, Channel Islands. The facsimile indicated that Bryant & Company had been instructed to release to Washington’s order, 1.5 million dollars worth of Butte Mining PLC shares, representing the balance due on the equipment. The facsimile further noted that Bryant & Company was awaiting Washington’s instructions with respect to the stock. On November 6, 1987, Bryant & Company sent Washington another facsimile advising Washington that it was holding $500,000 worth of Butte Mining PLC shares to Washington’s order. This stock represented the $500,000 due under the contract for the land.

Washington does not deny receiving these facsimiles, and in fact acknowledged by return correspondence that Bryant & Company was holding the stock until it received further instructions from Washington’s attorney. Washington maintains however, that he was surprised by this turn of events as he had never authorized Bryant & Company to hold his stock. Nevertheless, Washington alleges he was not initially concerned about Bryant & Company holding his stock, as he believed the stock certificates would be immediately forwarded to him for his disposition. MMP alleges that Washington, through his attorney, had agreed that MMP was to deliver the stock to Bryant & Company. MMP further argues that Washington did not object to the method and manner of the stock delivery between November 6,1987 and March 14, 1989. Washington, however, argues that his attorney contacted Bryant & Company and Mr. Smith and informed them to sell the stock. Washington points to a letter dated April 18, 1988, wherein Washington’s attorney sent a letter to Mr. Smith in care of Bryant & Company stating that Washington did want the shares of stock sold.

Washington maintains that he never gained possession, dominion or control over the stock. In addition to the above evidence, Washington testified that he was never sent any documents regularly disseminated to Butte Mining PLC shareholders, nor given dominion over the shares. Washington alleges that he was unable to sell the shares because Mr. Smith retained control over the escrow where the stock was held. Washington argues that this evidence taken together demonstrates that the shares held by Bryant & Company were not under his control, and accordingly he was not paid the monies due him under the terms of the contract. Accordingly, Washington concluded that MMP was in breach of the contract, and filed suit against MMP on March 15,1989. Washington also served MMP with a Notice of Default notifying MMP that unless it cured the alleged default within 30 days, Washington had the right to cancel the agreement. MMP answered Washington’s complaint and denied the allegations that it had breached the contract. MMP maintained that its deliveries of stock to the holding company constituted valid deliveries under the contract.

On April 25,1989, Washington publicly announced he had entered into a contract with ASARCO, Inc. for the sale of certain mining properties located in Butte to ASARCO. On or about April 26, 1989, Washington sent MMP a document entitled “Notice of Sale and First Right of Refusal.” This document noted the offer of purchase Washington had received from ASARCO, and indicated that MMP had thirty days to notify Washington whether MMP wished to exercise its first refusal right. In a letter accompanying the above offer, Washington requested that MMP “formally waive its first right of refusal in and to the copper mining properties.”

On May 10, 1989, MMP filed an action in the District Court alleging that Washington had breached the January 27,1987 agreement because Washington had entered into an agreement to sell mineral property in the Butte Mining District without providing MMP an opportunity to exercise its first right of refusal. MMP sought money damages and injunctive relief barring the closing of the contract between Washington and ASARCO. The District Court held a hearing regarding MMP’s request for an injunction to determine the primary issue of whether MMP had breached the contract. Washington argued that MMP had violated the terms of the contract, and therefore he was entitled to terminate the contract, and MMP was not entitled to enforce its first right of refusal. In a memorandum opinion and order dated May 26,1989, the District Court found MMP had not validly transferred the Butte Mining PLC shares to Washington, that Washington did not have dominion or control over the stock and therefore MMP had not validly made payments under the contract. The court therefore concluded that MMP had breached the contract, and denied MMP’s request for a preliminary injunction.

On June 22, 1989, MMP filed a motion to disqualify the District Court Judge, and moved to vacate the District Court’s memorandum opinion and order. We issued a decision concerning MMP’s motion to vacate the order denying injunctive relief in our order dated December 21,1989. In that order, we dismissed MMP’s appeal of the District Court’s order denying injunctive relief because MMP’s motion was not timely filed and the notice of appeal relative to the District Court’s order was also not timely filed. Our order of December 21,1989, was final as to any further issue concerning the District Court’s denial of injunctive relief.

Regarding MMP’s motion to disqualify the presiding judge, we issued a writ of supervisory control requiring that all further proceedings be assigned to another district judge who had not previously participated in the case. Washington v. Montana Min. Properties (1990), 243 Mont. 509, 795 P.2d 460.

Subsequently, another district court judge assumed jurisdiction, and on August 2, 1991, Washington filed a motion for summary judgment primarily asserting that MMP had breached the agreement because it failed to deliver the stock. After considering the parties’ briefs and arguments, the District Court granted Washington’s motion for summary judgment. MMP appeals from this order.

This court’s standard of review in appeals from a summary judgment is de novo. Therefore, we review a summary judgment utilizing the same criteria initially used by the District Court under Rule 56(c), M.R.Civ.P. Brinkman & Lenon v. P & D Land Enterprises (1994), 263 Mont. 238, 241, 867 P.2d 1112, 1114. According to Rule 56(c), M.R.Civ.P, summary judgment may only be rendered when there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law.

The moving party has the initial burden of demonstrating that there are no genuine issues of material fact. Morton v. M-W-M, Inc. (1994), 263 Mont. 245, 249, 868 P.2d 576, 579. If the movingparty is able to meet this burden of proof, the non-moving party must then demonstrate the existence of a genuine issue of material fact. Morton, 868 P.2d at 579. Under Rule 56(e), M.R.Civ.P., the non-moving party may not rest upon the mere allegations or denials of the adverse party’s pleading, but must demonstrate by its response, affidavits, or otherwise that there is a genuine issue for trial. Any factual evidence which can be drawn from the record must be resolved in favor of the non-moving party. D’Agostino v. Swanson (1990), 240 Mont. 435, 442, 784 P.2d 919, 924.

In the instant case, after examining the record in a light most favorable to MMP, we conclude there is a genuine issue of material fact concerning whether the parties agreed to Bryant & Company holding the stock.

In granting Washington’s motion for summary judgment, the District Court concluded that MMP materially breached the contract by failing to deliver the stock to Washington. The court stated in its order:

The facts clearly show that Plaintiff materially breached the contract with the Washington defendants. The delivery by Plaintiff to the Washington defendants of shares of unrestricted free-trading stock in Butte Mining P.L.C. was the essence of the consideration. The facts are undisputed that Plaintiff issued the shares and had them held by Bryant & Company; that the Washington defendants and Plaintiffs sent correspondence back and forth over these shares; and that one of Plaintiff’s officers, Clive Smith had the shares held in a trust naming his daughters as beneficiaries. The facts are also undisputed that the Washington defendants were never issued stock certificates nor given any documents regularly disseminated to Butte Mining P.L.C. shareholders, and the Washington defendants’ orders to sell the shares were never complied with. The Washington defendants lacked dominion and control over these shares.
Overall, there is no dispute that the Washington defendants did not receive their shares of unrestricted free trading stock by the September-November, 1987 deadlines as required under the contract.

However, upon review of the record, we conclude that the facts concerning whether MMP’s delivery of the stock to Bryant & Company constituted a material breach are in dispute. The District Court ignored the conflicting testimony of the parties concerning whether the parties agreed to Bryant & Company holding the stock.

Mr. Smith argues that he fulfilled his obligations under the contract. He maintains that Washington, through his attorney Milton Datsopoulos, agreed that MMP was to deliver the stock to Bryant & Company. Mr. Smith also notes that the contract does not specify or define the manner or method in which the stock was to be delivered. Washington and his attorney, however, testified that neither had agreed that the stock would be delivered to Bryant & Company.

This dispute is in our view sufficient to establish an issue concerning whether MMP failed to deliver the stock. “It is not the function of summary judgment to decide that issue but simply to establish whether an issue exists that required determination and resolution at trial.” Baylor v. Jacobson (1976), 170 Mont. 234, 242, 552 P.2d 55, 59. Accordingly, after reviewing this evidence as we must in favor of MMP, the non-moving party, we conclude that a factual dispute exists concerning the delivery of the stock thereby precluding summary judgment under Rule 56(c), M.R.Civ.P.

MMP also argues that Washington is precluded from a summary judgment because a question of fact exists concerning whether Washington waived his right to terminate the contract. MMP suggests the following facts demonstrate the existence of a genuine issue of material fact. We agree.

On March 14, 1989, Washington sent MMP a “Notice of Default,” essentially asserting that MMP had defaulted under the terms of the contract because it had failed to deliver the unrestricted free trading stock. The notice granted MMP thirty days to correct the alleged default. The next day, Washington filed a complaint alleging that MMP had failed to deliver the payment of the unrestricted stock as required by the agreement. Washington requested relief in the alternative; either termination of the contract or damages in the amount due under the contract. On April 26, 1989, Washington served MMP with a Notice of Sale and First Right of Refusal, along with a letter requesting that MMP provide a formal written waiver. The letter stated:

Although I prefer that your client provide formal written waiver, I nevertheless felt an obligation to forward on to Montana Mining Properties, Inc. the Notice of Sale and First Right of Refusal for purposes of complying with Section 6 of the Agreement dated January 27, 1987 ...

Finally, on May 4, 1989, Washington informed MMP that he was terminating the contract and withdrawing the Notice of Sale and First Right of Refusal.

This sequence of events is not in dispute, however, it does raise the question of whether Washington waived his right to terminate the agreement. It is well established that waiver is the voluntary relinquishment of a known right. McGregor v. Mommer (1986), 220 Mont. 98, 110, 714 P.2d 536, 543. It is for the trier of fact to determine whether an act is voluntary and the actor’s intent. McGregor, 714 P.2d at 544. Consequently, we conclude that the sequence of events raise as an issue of fact Washington’s intent when he delivered the inconsistent documents, which, on the one hand, appear to maintain that the contract was terminated by breach, but on the other hand, appear to acknowledge the continuing existence of the contractual right of first refusal.

Upon review of the record, we conclude that there are material fact issues that cannot be disposed of by summary judgment. Accordingly, we reverse and remand for further proceedings.

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


source: Caselaw Access Project

license: Public Domain

text:
    PHILIP A. BIRD and CARA BIRD, Plaintiffs and Appellants, -v-M.B. “BUCK” HILLER, Defendant and Respondent.
    No. 94-450.
    Submitted on Briefs December 28, 1994.
    Decided April 11, 1995.
    52 St.Rep. 288.
    270 Mont. 467.
    892 P.2d 931.

      For Appellants: Dale F. Myers, Helena.
    For Respondent: Richard E. Gillespie, Keller, Reynolds, Drake, Johnson & Gillespie, Helena.
   JUSTICE NELSON

delivered the Opinion of the Court.

Appellants, Philip A. Bird and Cara Bird, appeal from a decision and order of the First Judicial District Court, Lewis and Clark County, dismissing their complaint against Respondent, M.B. “Buck” Hiller for lack of personal jurisdiction. We affirm.

The issue on appeal is whether Montana has personal jurisdiction over Mr. Hiller pursuant to Rule 4B(l)(b), M.R.Civ.P.

The underlying events leading up to this action commence in September 1989, when Carolyn Bird, Mr. Bird’s wife, and their adult daughter Cara Bird, were involved in an automobile accident in Idaho. The Birds were Montana residents at all times relevant to this action. After receiving a referral from an attorney in Helena, Montana, Mr. Bird contacted Mr. Hiller, an Idaho attorney, regarding Hiller’s potential representation of Mr. Bird, Carolyn and Cara in connection with the automobile accident. Mr. Bird travelled to Idaho and met with Mr. Hiller to discuss the claims arising out of the accident.

On or about May 16, 1991, Mr. Hiller sent a contingency fee agreement to Mr. Bird in Montana. Mr. Bird signed the contingency fee agreement in Montana, and it was sent to Mr. Hiller who received it at his Idaho office. Cara, however, did not sign the contingency fee agreement nor was her name mentioned in the agreement. Mr. Hiller then undertook representation of Mr. Bird, Carolyn and Cara regarding the automobile accident. Mr. Hiller filed a verified complaint which was signed by Mr. Bird, Carolyn and Cara in the United States District Court for the District of Idaho on June 28,1991. Prior to trial, Mr. Hiller negotiated settlements of the Birds’claims. Sometime after the settlements were executed, the Birds contacted Dale F. Myers, a Helena attorney, and a disagreement arose over the settlement. Subsequently, on July 7, 1992, Mr. Hiller moved to withdraw as counsel, and advised the defendants in the underlying automobile case that the Birds were reluctant to move forward with the settlement agreement.

Thereafter, the defendants in the underlying automobile case moved to enforce the settlement agreement. On July 10, 1992, Mr. Myers filed a motion for admission pro hac vice in the United States District Court for the District of Idaho. The case was called before the Idaho court, and the court issued a default judgment on May 5,1993, in favor of the defendants’ motion for enforcement of the settlement agreement, because the Birds failed to appear in person or through counsel. On February 3,1994, two settlement checks were issued, one for Cara and one for Carolyn. Mr. Hiller and Mr. Myers were included as payees on both of the checks, along with the names of the respective recipients.

Meanwhile, a dispute arose between the Birds and Mr. Hiller regarding his attorney’s fees. Mr. Hiller asserted that he was entitled to one-third of each settlement check, and the Birds asserted Mr. Hiller was only entitled to one-third of Carolyn’s settlement check. The Birds maintained that Mr. Hiller was not entitled to any portion of Cara’s settlement because Cara had never agreed to Mr. Hiller’s representation, and because she did not sign the contingency fee agreement.

In February, 1994, Mr. Myers sent Mr. Hiller the settlement checks asking him to sign and return the checks. In a letter dated February 25, 1994, Mr. Hiller acknowledged that he received the settlement checks and advised Mr. Myers that “[u]nless I receive express written authorization to negotiate these drafts, deduct our attorney’s fees and costs, and remit the balance to the Birds, I will file an action ... [in Idaho] requesting a court order permitting recovery of attorney’s fees and costs incurred.”

On March 2,1994, Cara and Mr. Bird filed a complaint against Mr. Hiller in the First Judicial District Court, Lewis and Clark County, charging him with theft and conversion, and fraud and deceit arising out of the dispute over the settlement money. On March 25,1994, Mr. Hiller filed a motion pursuant to Rule 12, M.R.Civ.P., requesting the court, among other things, to dismiss the complaint for lack of personal jurisdiction. After considering the parties’ briefs and numerous exhibits, the court, in a decision and order dated July 12, 1994, dismissed the Birds’ complaint for lack of personal jurisdiction over Mr. Hiller. The Birds appeal from this decision and order.

The parties do not dispute the material facts. Based upon the undisputed material facts, the District Court came to the legal conclusion that the Montana court did not have personal jurisdiction over Mr. Hiller. This Court reviews legal conclusions to determine whether the district court’s interpretation of the law is correct. Warnack v. Coneen Family Trust (1994), 266 Mont. 203, 207, 879 P.2d 715, 718.

This Court applies a two-part test to determine whether a Montana court can exercise personal jurisdiction over a nonresident defendant. First we must determine if personal jurisdiction exists either by way of the defendant being “found” within the state, or by way of the long-arm statutes. Second we must determine whether exercising jurisdiction comports with the defendant’s due process rights. Edsall Const. Co., Inc. v. Robinson (1991), 246 Mont. 378, 381, 804 P.2d 1039, 1041. If, after determining personal jurisdiction does not exist under the first step of the analysis, further analysis under the second step is unnecessary. Edsall, 804 P.2d at 1041.

The concept of personal jurisdiction is controlled by Rule 4B, M.R.Civ.P. The pertinent part of that rule for purposes of this case provides:

(1) Subject to jurisdiction. All persons found within the state of Montana are subject to the jurisdiction of the courts of this state. In addition, any person is subject to the jurisdiction of the courts of this state as to any claim for relief arising from the doing personally, through an employee, or through an agent, of any of the following acts: ...
(b) the commission of any act which results in accrual within this state of a tort action;...

The principles of both general and specific jurisdiction are codified in Rule 4B, M.R.Civ.R General juris diction concerns whether a party can be “found” within the state. Simmons Oil Corp. v. Holly Corp. (1990), 244 Mont. 75, 83, 796 P.2d 189, 194. A nonresident defendant can be “found” within the state for general jurisdiction purposes if the defendant’s activities within the state are “substantial” or “systematic and continuous.” Simmons Oil, 796 P.2d at 194. On the other hand, the principle of specific jurisdiction provides that:

[J]urisdiction may be established even though a defendant maintains minimum contacts with the forum as long as the plaintiff’s cause of action arises from any of the activities enumerated in Rule 4B(1), M.R.Civ.R and the exercise of jurisdiction does not offend due process.

Simmons Oil, 796 P.2d at 194.

In the instant case, the parties do not contend that Montana has general jurisdiction over Mr. Hiller. However, the Birds allege that specific long-arm jurisdiction exists over Mr. Hiller pursuant to Rule 4B(l)(b), M.R.Civ.R, because the torts of conversion, fraud, and deceit accrued in Montana.

The Birds maintain that the elements of the tort of conversion, accrued in Montana based on the following events. First, Mr. Hiller sent the attorney’s fee contract into Montana and it was executed in this state. The settlement agreement did not specifically mention that Cara Bird agreed to Mr. Hiller undertaking her representation, nor did the contract mention that Mr. Hiller would charge Cara for his representation. Second, Mr. Hiller sent a letter dated January 25,1994, to the Birds in Montana, wherein he advised the Birds that he was going to withhold the settlement checks until he received authorization to negotiate the checks and deduct attorney’s fees and costs.

The Birds argue that the tort of conversion did not accrue until they had knowledge that Mr. Hiller had allegedly exercised unauthorized dominion over the settlement checks. Accordingly, the Birds conclude the tort accrued when they received the January 25, 1994 letter notifying them that unless the Birds gave Mr. Hiller authorization to negotiate the drafts and deduct his claimed attorney’s fees and costs, he intended to keep the checks and file suit. The Birds contend that the tort accrued in Montana because that is where Mr. Hiller sent the January 25, 1994 letter.

The Birds rely on Lee v. United States (9th Cir. 1987), 809 F.2d 1406, in support of their argument that the tort of conversion accrued in Montana because that is where they learned of the alleged conversion. In Lee, the Ninth Circuit Court of Appeals noted that statutes of limitations are “triggered by [claimants’] knowledge of the transaction that constituted the alleged violation, not by their knowledge of the law.” Lee, 809 F.2d at 1410, quoting Blanton v. Anzalone (9th Cir. 1985), 760 F.2d 989, 992.

The Birds argument is unpersuasive. While in some cases it may be true that the statute of limitations does not begin to run until the injured party knows or should have known of the injury, § 27-2-102(3), MCA, this principle is not applicable in resolving the question of where the cause of action arose for purposes of jurisdiction. Conversion is defined as “a distinct act of dominion wrongfully exerted over one’s property in denial of, or inconsistent with, the owner’s right ....” Gebhardt v. D.A. Davidson & Co. (1983), 203 Mont. 384, 389, 661 P.2d 855, 858. (Citation omitted.) Therefore, the alleged tort of conversion in the instant case would have accrued in Idaho, as that is where Mr. Hiller came into possession of the checks, and allegedly asserted unauthorized control over the checks. Accordingly, we conclude that Mr. Hiller did not do any act which resulted in the accrual of the tort of conversion within Montana.

The Birds also allege that the torts of fraud and deceit occurred in Montana as a result of “a false, misleading and untrue contract which Hiller personally drafted and sent to Philip Bird in Lewis and Clark County.” The Birds contend that the fee agreement evidences Mr. Hiller’s intent to defraud and deceive them. They note that the fee agreement did not mention Mr. Hiller’s representation of Cara, or mention that Mr. Hiller would take a fee for any services he provided to Cara. The Birds conclude that Mr. Hiller had engaged in deceptive practices because he had always intended to represent Cara and take a fee for his services even though he had no agreement with her to do so. They allege that the torts of fraud and deceit accrued in Montana because Mr. Hiller sent the fee agreement to the Birds in Montana for one express purpose, but was intending to use it to secure fees for another unstated purpose. From the above allegations, we conclude that the Birds’ claims regarding fraud and deceit arise from Mr. Hiller’s initial agreement to represent the Birds.

The Birds acknowledge in their complaint that Mr. Bird hired Mr. Hiller to represent Mr. and Mrs. Bird “for claims arising out of an automobile accident which occurred in the State of Idaho.” Mr. Bird travelled to Idaho to seek out Mr. Hiller’s representation. All representation regarding the claims took place in Idaho, and Mr. Hiller negotiated the settlement in Idaho, before withdrawing as the Birds’ attorney. While it is true that Mr. Hiller did send the contingency fee agreement, and other letters to the Birds at Mr. Bird’s office in Helena, we have previously held that jurisdiction is not acquired through interstate communications pursuant to a contract to be performed in another state. Edsall, 804 P.2d at 1042, citing Simmons v. State (1983), 206 Mont. 264, 280, 670 P.2d 1372, 1380. We conclude that any alleged fraud or deceit that Mr. Hiller perpetrated on the Birds as a result of his unstated intentions regarding the representation of Cara would have accrued in Idaho.

Because we have determined that personal jurisdiction does not exist either as a result of Mr. Hiller being found in Montana or pursuant to our long-arm statute, further analysis is unnecessary. Edsall, 804 P.2d at 1041. We hold that the District Court was correct in concluding that Montana did not have personal jurisdiction over Mr. Hiller.

AFFIRMED.

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

      . The Birds alleged the torts of “theft and conversion” in their complaint. However, because theft is not a tort, we shall limit our discussion to the tort of conversion.


author: JUSTICE TRIEWEILER

text:
    SUSAN KORTES, Personal Representative on behalf of the Estate of RICHARD JON KORTES, on behalf of RAYMOND JON KORTES and CASSANDRA EILEEN KORTES, the minor children of RICHARD JON KORTES, Plaintiff and Appellant, v. POOL COMPANY and JOHN DOE MANUFACTURER A, and JOHN DOE MANUFACTURER B, jointly and severally, Defendants and Respondents.
    No. 94-558.
    Submitted on Briefs February 9, 1995.
    Decided April 11, 1995.
    52 St.Rep. 291.
    270 Mont. 474.
    893 P.2d 322.

      For Appellant: Jerrold L. Nye, Nye & Meyer Billings.
    For Respondents: Joe C. Maynard and Lori A. Harper, Crowley, Haughey, Hanson, Toole & Dietrich, Billings.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

Plaintiff Susan Kortes filed a complaint in the District Court for the Seventh Judicial District in Richland County in which she alleged that her son Richard’s death was caused by the negligence of his employer, Pool Company. Pool Company moved to dismiss Susan’s complaint pursuant to Rule 12(b)(6), M.R.Civ.P. The District Court granted Pool Company’s motion to dismiss based on its conclusion that the Workers’ Compensation Act provided Susan’s exclusive remedy. Susan appeals. We affirm the judgment of the District Court.

Susan raises the following issue on appeal:

Should an exception to the exclusivity provision in the Montana Workers’ Compensation Act be created when a worker is killed and the accident causing death is the result of the employer’s failure to install, or the removal of, a safety device which was designed to prevent the accident?

FACTUAL BACKGROUND

Because this is an appeal from an order of dismissal pursuant to Rule 12(b)(6), M.R.Civ.P, we accept the allegations in the complaint as true and limit our discussion to those facts. Willson v. Taylor (1981), 194 Mont. 123, 126, 634 P.2d 1180, 1182.

Richard Jon Kortes was killed on December 30, 1993, in an oil rig accident while working for Pool Company. The accident occurred when a traveling block fell on him as a result of Pool Company’s negligent removal of, or failure to install, the appropriate safety shut-off device. Pool Company carried workers’ compensation insurance and its carrier is paying benefits to Richard’s minor children. Susan Kortes is the personal representative of his estate.

On August 17, 1994, Susan filed a complaint in the District Court in Richland County to recover damages sustained by Richard prior to his death, and for his wrongful death. Susan’s complaint states that Pool Company’s neglect caused her son’s death. The nature of the conduct that she complained of is specifically set forth in the following paragraphs of her complaint:

1) Pool Company was the employer of Richard Jon Kortes and owned and operated the drill rig on which he was killed.
2) The facts which set in motion the events and cause of death was the absence of an appropriate safety shut off device at the crown of the drill rig to prevent the traveling block from hitting the crown.
3) Pool Company assembled the drill rig and failed to install the safety device or removed the existing safety device.
4) By negligently failing to install or by removing the safety device, Pool Company failed in its duty to provide a safe work place and subjected Richard Jon Kortes to an unreasonable and wrongful risk of harm in operating of the drilling equipment.
5) Pool Company allowed the drill rig to be operated by a person or persons not properly or fully trained and who allowed the traveling block to hit the crown of the drill rig, breaking the cable, and allowing the traveling block to hit Richard Jon Kortes.
6) Pool Company’s negligent conduct created a condition likely to cause serious bodily harm or death, making Richard Jon Kortes’ death or serious injury foreseeable and preventable by installing the proper maintenance safety device.

(Emphasis added.) Nowhere in Susan’s complaint does she allege that Richard’s injury or death was caused by intentional and malicious conduct on the part of Pool Company.

On September 15,1994, Pool Company filed a motion pursuant to Rule 12(b)(6), M.R.Civ.R, for an order dismissing Susan’s complaint. On November 4, 1994, the District Court granted Pool Company’s motion to dismiss. It held that § 39-71-411, MCA, limited Susan’s remedy to the provisions of the Workers’ Compensation Act. The District Court’s order was certified as final pursuant to Rule 54(b), M.R.Civ.R, and this appeal followed.

DISCUSSION

Should an exception to the exclusivity provision in the Montana Workers’ Compensation Act be created when a worker is killed and the accident causing death is the result of the employer’s failure to install, or the removal of, a safety device which was designed to prevent the accident?

Susan’s complaint was dismissed for failure to state a claim pursuant to Rule 12(b)(6), M.R.Civ.R We have previously held that:

A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. A motion to dismiss under Rule 12(b)(6), M.R.Civ.R, has the effect of admitting all well-pleaded allegations in the complaint. In considering the motion, the complaint is construed in the light most favorable to the plaintiff, and all allegations of fact contained therein are taken as true.

Willson, 634 P.2d at 1182 (citations omitted). Therefore, we treat the facts set forth in Susan’s complaint as true.

Susan acknowledges that § 39-71-411, MCA, provides that workers’ compensation is her exclusive remedy, but suggests that we carve out a judicial exception where: (1) a worker is killed (2) due to a failure to install or maintain a required safety device which is designed to prevent the accident which causes death. She suggests that an employer has duties pursuant to §§ 50-71-201 and -203, MCA, to maintain a safe work place and provide proper safety devices which would be circumvented if it was shielded by the exclusivity provision of the Act. Susan suggests that such a result is contrary to Montana statutes, as well as public policy.

Pool Company counters that allegations of negligence, or even gross negligence, are insufficient to eliminate the exclusive remedy provision found in § 39-71-411, MCA, which provides:

For all employments covered under the Workers’ Compensation Act or for which an election has been made for coverage under this chapter, the provisions of this chapter are exclusive. Except as provided in part 5 of this chapter for uninsured employers and except as otherwise provided in the Workers’ Compensation Act, an employer is not subject to any liability whatever for the death of or personal injury to an employee covered by the Workers’ Compensation Act or for any claims for contribution or indemnity asserted by a third person from whom damages are sought on account of such injuries or death. The Workers’ Compensation Act binds the employee himself, and in case of death binds his personal representative and all persons having any right or claim to compensation for his injury or death, as well as the employer and the servants and employees of such employer and those conducting his business during liquidation, bankruptcy, or insolvency.

The only exception created by the legislature to this exclusive remedy provision is found at § 39-71-413, MCA, which provides:

If an employee receives an injury while performing the duties of his employment and the injury or injuries so received by the employee are caused by the intentional and malicious act or omission of a servant or employee of his employer, then the employee or in case of his death his heirs or personal representatives shall, in addition to the right to receive compensation under the Workers’ Compensation Act, have a right to prosecute any cause of action he may have for damages against the servants or employees of his employer causing the injury.

In the past, this Court has been divided over the meaning of “intentional and malicious” as used in § 39-71-413, MCA, and the degree of culpability necessary to bring an employer’s conduct within its exception to the exclusive remedy provision found at § 39-71-411, MCA. See Blythe v. Radiometer America, Inc. (1993), 262 Mont. 464, 866 P.2d 218 (Trieweiler, J., Harrison, J., and Hunt, J., dissenting); and Noonan v. Spring Creek Forest Products (1985), 216 Mont. 221, 700 P.2d 623 (Sheehy J., Hunt, J., and Harrison, J., dissenting).

However, there is no disagreement that, based on the plain language of these provisions, something more than mere negligence must be alleged to avoid the exclusive remedy provision in § 39-71-411, MCA.

Susan’s complaint does not allege that Richard’s death was caused by an intentional and malicious act. Her complaint merely asserts that Richard’s death was caused by Pool Company’s neglect. Although Susan makes reasonable public policy arguments in support of her position, our role is not to substitute our judgment for that of the legislature on matters of public policy. We are bound by the legislative determination that absent intentional and malicious conduct employees cannot sue their employers for injuries sustained during the course of their employment which are covered by the Workers’ Compensation Act.

We conclude that Susan’s complaint fails to allege facts which would entitle her to relief under the laws of this state. Therefore, we affirm the judgment of the District Corut.

JUSTICES GRAY, HUNT, NELSON and LEAPHART concur.


text:
    IN THE MATTER OF THE MENTAL HEALTH OF D.H., Respondent and Appellant.
    No. 94-520.
    Submitted on Briefs March 2, 1995.
    Decided April 11, 1995.
    52 St.Rep. 294.
    270 Mont. 480.
    893 P.2d 330.
    For Appellant: Allen Smith, Jr., and Lonnie Olson, Mental Disabilities Board of Visitors, Montana Advocacy Program, Warm Springs.
    For Respondent: Hon. Joseph P. Mazurek, Attorney General, Jennifer Anders, Assistant Attorney General, Helena; Mike McGrath, Lewis and Clark Comity Attorney, Vicki Frazier, Deputy Comity Attorney, Helena.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

On September 13, 1994, the Lewis and Clark Comity Attorney’s Office filed a petition in the District Court for the First Judicial District in Lewis and Clark Comity, in which it alleged that D.H. was seriously mentally ill and requested that the District Court enter an appropriate treatment order pursuant to § 53-21-127, MCA. Later that day, the District Court ordered that D.H. be involuntarily committed to the custody of the Montana Department of Corrections and Human Services for placement in the Montana State Hospital at Warm Springs for a period not to exceed 90 days. D.H. appeals from the District Court’s order. We reverse the order of the District Court.

The following issue is dispositive on appeal:

Were the procedural safeguards imposed by statute followed prior to the District Court’s order which committed D.H. to the State Hospital?

FACTUAL BACKGROUND

On September 11,1994, D.H. voluntarily entered a support center at St. Peter’s Hospital in Helena, where he had sought treatment on prior occasions for symptoms of paranoid schizophrenia. The following day, while D.H. was at the hospital, a hospital employee, Carol Frazer, filed a mental evaluation report and requested that a petition be filed to commit D.H. to a mental health facility.

On September 13, 1994, the Lewis and Clark County Attorney’s Office filed a petition in District Court in which it requested a commitment order. Attached to the petition was Frazer’s evaluation of D.H. That same day, the District Court appointed an attorney to represent D.H., ordered that an initial appearance be made by D.H., and found that probable cause existed to believe that D.H. was seriously mentally ill.

At or immediately following the initial appearance, the court issued another order in which it related that D.H. had appeared and was advised of his constitutional rights, as well as the effect of the petition, and directed that a hearing be held at 2:35 p.m., five minutes after the initial appearance. In that order, the court also appointed a “friend” of the respondent, and ordered Robert E. Brown, a professional person of D.H.’s choice, to examine him. Finally, the court stated that Frazer’s report attached to the petition was sufficient to satisfy the requirements of § 53-21-123, MCA.

The hearing to consider the merits of the petition was held immediately following the initial appearance. Frazer was the only witness called to testify.

Following the hearing, the District Court ordered that D.H. be committed to the Montana State Hospital for a period not to exceed 90 days. This appeal is brought on D.H.’s behalf by attorneys for the Mental Disabilities Board of Visitors.

DISCUSSION

Were the procedural safeguards imposed by statute followed prior to the District Court’s order which committed D.H. to the State Hospital?

The issue in this case involves the application of Montana statutes to undisputed facts. We review a district court’s application of the law to determine whether the district court was correct. Barthule v. Karman (1994), [268 Mont. 477], 886 P.2d 971, 975.

D.H. contends that because the District Court ignored procedural requirements related to civil commitments, its commitment order should be reversed. The State concedes that the procedural issue raised by D.H. is controlled by our recent decision in Matter of R.M. (1995), [270 Mont. 40], 889 P.2d 1201. However, during the briefing stages of this case, the parties did not have the benefit of that result.

Montana has enacted specific procedural safeguards which must be complied with as part of any effort to involuntarily commit any person. See generally Title 53, Chapter 21, MCA. Pursuant to § 53-21-121, MCA, a county attorney may file a petition for commitment of a person alleged to be seriously mentally ill upon receipt of a written request from a person with direct knowledge of relevant facts. Once presented with a petition, a district court must first consider whether probable cause exists to support the petition. Section 53-21-122(2)(a), MCA. If probable cause exists, the court must immediately appoint counsel for the respondent and hold an initial hearing. At the initial hearing, the respondent must be advised of his or her constitutional rights and the substantive effect of the petition." Section 53-21-122(2)(b)(i), MCA. Finally, the court is required to appoint a professional person to examine the respondent, appoint a “friend” for the respondent, and set a date and time for a hearing on the petition. Section 53-21-122(2)(b)(ii), MCA.

Section 53-21-123(1), MCA, states that following an initial hearing, and without unreasonable delay, the respondent shall be examined by the appointed professional person who shall report to the county attorney and the court. If the appointed professional person recommends dismissal, the court should ordinarily dismiss the petition. Section 53-21-123(2)(a), MCA. If the professional person finds that commitment proceedings should continue, the scheduled hearing should be held. Section 53-21-123(2)(b), MCA.

As we recognized in Matter ofR.M., “ ‘Montana’s civil commitment laws are to be strictly followed.’ ” Matter of R.M., 889 P.2d at 1204 (quoting Matter of S.J. (1988), 231 Mont. 353, 355, 753 P.2d 319, 320 (citations omitted)). We also noted that these procedural safeguards are of critical importance because of the “ ‘calamitous effect of a commitment!,]’ including loss of liberty and damage to a person’s reputation.” Matter of R.M., 889 P.2d at 1204 (quoting Matter of Shennum (1984), 210 Mont. 442, 450-51, 684 P.2d 1073, 1078).

In this case, the District Court failed to strictly follow the statutory procedures for a civil commitment set forth at § 53-21-123, MCA, which require that, following the initial hearing, the respondent be examined by the professional person appointed at the initial hearing, and that that person immediately notify the county attorney of his or her findings and file a written report with the court. Contrary to § 53-21-123, MCA, the court relied on Frazer’s examination of D.H. which was performed before the commitment proceeding was initiated.

The State contends that D.H. waived his right to challenge procedural flaws on appeal because he did not object on that basis in the District Court. We rejected that argument in Matter of R.M., 889 P.2d at 1204-05, and held that because substantial rights of an individual are involved in a civil commitment proceeding, the general rule relied on by the State is inapplicable. Matter of R.M., 889 P.2d at 1205 (citing Matter of N.B. (1980), 190 Mont. 319, 323, 620 P.2d 1228, 1231).

We hold that the District Court erred when it failed to comply with the specific requirements of § 53-21-123, MCA, and for that reason reverse its order which committed D.H. to the State Hospital. Because of this holding, we conclude it is unnecessary to consider the remaining issues raised on appeal.

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


author: CHIEF JUSTICE TURNAGE JUSTICE LEAPHART,

text:
    IN RE THE PATERNITY OF W.L., a Minor: ELIZABETH LAMDIN, Petitioner and Appellant, v. ANGELO FERRARO, Respondent and Respondent.
    No. 94-470.
    Submitted on Briefs February 16, 1995.
    Decided April 12, 1995.
    52 St.Rep. 301.
    270 Mont. 484.
    893 P.2d 332.

      For Appellant: Donald L. Harris, Crowley, Haughey, Hanson, Toole and Dietrich, Billings.
    For Respondent: Mark D. Parker, Parker Law Firm, Billings.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

Elizabeth Lamdin appeals an order in which the District Court for the Thirteenth Judicial District, Yellowstone County, declined to order Angelo Ferraro to pay back child support in addition to amounts he has already paid. We affirm.

The issue is whether the court erred in waiving past child support under § 40-6-116(4)(c), MCA.

Elizabeth Lamdin, a registered nurse who lives in Billings, Montana, is W.L.’s mother and has raised him since his birth in January 1991. During that time, Angelo Ferraro, W.L.’s father, has practiced as a cardiologist in Billings and then in Oklahoma and Washington. He has visited W.L. about six times per year. Lamdin and Ferraro never married.

From W.L.’s birth until his first birthday, Ferraro contributed $2,000 per month to Lamdin for W.L.’s support. Lamdin stayed at home to raise W.L. during that time, because both parents believed it was best for their son. In February 1992, Ferraro reduced his support payment to $1,000 per month and Lamdin returned to work. Lamdin filed this paternity action shortly thereafter. Ferraro paid child support of $1,000 per month until the District Court set child support at $950 per month in October 1992. That judgment was appealed to this Court on several issues. See In re Paternity of W.L. (1993), 259 Mont. 187, 855 P.2d 521. We remanded for calculation of past and future child support.

On remand, Ferraro and Lamdin each presented their calculations of the amounts of past and future child support which should be ordered pursuant to the child support guidelines promulgated by the Montana Department of Social and Rehabilitation Services. Their calculations differed because of differences in their views of the proper income figures and variances, deductions, exemptions, and exceptions attributable and allowable to each of them under the guidelines.

For purposes of calculating back child support, both Ferraro and Lamdin divided the time from W.L.’s birth to the date of the hearing into several segments. This was necessary because of interim changes in the child support guidelines and in each of their incomes and expenses. Under Ferraro’s calculations, he was responsible for child support in monthly amounts ranging from $ 131 to $1,476 for the time since W.L.’s birth. Lamdin calculated that Ferraro was responsible for past child support ranging between $1,725 and $1,988 per month. Under Lamdin’s calculations, after considering what he had already paid, Ferraro still owed her $25,584 in back support. Under Ferraro’s calculations, he had overpaid by $20,774.

The District Court ordered Ferraro to pay Lamdin $1,341 per month in future child support. This amount was lower than the amount proposed by Lamdin but higher than that proposed by Ferraro. The court did not order Ferraro to pay any back child support. In its findings, the court stated:

The Court declines to award past child support in addition to the support previously paid by Ferraro. In this respect the Court has concluded that it should limit Ferraro’s liability for past support to the proportion of expenses which he has already paid in accordance with Section 40-6-116(c) [sic] M.C.A. To the extent that any amount for varying periods of time may deviate from the child support guidelines, the Court finds it would be unjust to Ferraro and inappropriate in this case to require additional past support under Section 40-6-116(6)(a) M.C.A. ...
The amounts paid by Ferraro have met or exceeded the actual living expenses of [W.L.]. Lamdin testified that the total living expenses attributed to [W.L.] is currently $1,092 per month. That amount seems liberal to the Court. Such amount should be greater than it was in the child’s early life. Of this amount day care consumed $330 per month. Therefore the previous amounts paid by Ferraro have substantially met or exceeded the actual living expenses attributed to [W.L.].
One of the goals of a child support calculation where parents have significant income, as here, is that the child should continue to maintain a standard of living as if his parents were living together. Here the parents never did live together. The Court is of the opinion that future child support should be paid for the purpose of maintaining for [WX.] a standard of living appropriate to the income of his parents. This is accomplished by assessing such support in accordance with the child support guidelines. However, for past years [W.L.] has lived very well on the support already paid by Ferraro. Lamdin has not accumulated debt by reason of any failure of Ferraro to pay a greater support.

Lamdin appeals only the portion of the District Court’s order waiving additional back child support.

Did the court err in waiving past child support under § 40-6-116(4)(c), MCA?

Section 40-6-116, MCA, provides, in relevant part:

Judgment or order. (1) The judgment or order of the court determining the existence or nonexistence of the parent and child relationship is determinative for all purposes.
(3) ...
(b) Except when the financial responsibility of a responsible parent is in the process of being determined pursuant to the administrative procedure provided in 40-5-225, the judgment or order must contain a provision concerning the duty of child support. ...
(4) (a) Support judgments or orders ordinarily must be for periodic payments, which may vary in amount.
(b) In the best interest of the child, a lump-sum payment or the purchase of an annuity may be ordered in lieu of periodic payments of support.
(c) The court may limit the father’s liability for past support of the child to the proportion of the expenses already incurred that the court considers just.
(5) In determining the amount to be paid by a parent for support of the child and the period during which the duty of support is owed, a court enforcing the obligation of support shall consider all relevant facts, including:
(a) the needs of the child, including medical needs;
(b) the standard of living and circumstances of the parents;
(c) the relative financial means of the parents;
(d) the earning ability of the parents;
(e) the need and capacity of the child for education, including higher education;
(f) the age of the child;
(g) the financial resources and the earning ability of the child;
(h) the responsibility of the parents for the support of others;
(i) the value of services contributed by the custodial parent;
(j) the cost of day care for the child; and
(k) any custody arrangement that is ordered or decided upon.
(6) (a) Whenever a court issues or modifies an order concerning child support, the court shall determine the child support obligation by applying the standards in this section and the uniform child support guidelines adopted by the department of social and rehabilitation services pursuant to 40-5-209. The guidelines must be used in all cases, including cases in which the order is entered upon the default of a party and those in which the parties have entered into an agreement regarding the support amount. A verified representation of a defaulting parent’s income, based on the best information available, may be used when a parent fails to provide financial information for use in applying the guidelines. The amount determined under the guidelines is presumed to be an adequate and reasonable support award, unless the court finds by clear and convincing evidence that the application of the standards and guidelines is unjust to the child or to any of the parties or is inappropriate in that particular case.
(b) If the court finds that the guideline amount is unjust or inappropriate in a particular case, it shall state its reasons for finding that the application of the standards and guidelines is unjust to the child or a party or is inappropriate in that particular case. Similar reasons must also be stated in a case in which the parties have agreed to a support amount that varies from the guideline amount. Findings that rebut and vary the guideline amount must include a statement of the amount of support that would have ordinarily been ordered under the guidelines.
(c) If the court does not order a parent owing a duty of support to a child to pay any amount for the child’s support, the court shall state its reasons for not ordering child support.

The formula for determining an appropriate amount of child support is further detailed in the child support guidelines adopted by the Department of Social and Rehabilitation Services pursuant to § 40-5-209, MCA. See 46.30.1501 through .1549, ARM. While the statute and guidelines attempt to be specific for every possible situation, the statute reserves some discretion to the district court. E.g., “[t]he court may limit the father’s liability for past support of the child to the proportion of the expenses already incurred that the court considers just” under subsection (4)(c); “[i]f the court finds that the guideline amount is unjust or inappropriate in a particular case ...” under subsection (6)(b); and “[i]f the court does not order a parent owing a duty of support to a child to pay any amount for the child’s support...” under subsection (6)(c).

Lamdin’s argument on appeal is based primarily upon the absence in the court’s order of a statement of the amounts of past child support which would have been due under the child support guidelines. Lamdin argues that this omission violates subsection (6)(b) above and the law of the case as established in this Court’s opinion in the first appeal. She also argues that the court’s order is fatally flawed because it fails to state that divergence from the guidelines was justified by clear and convincing evidence, as required under subsection (6)(a), above.

In this Court’s opinion on the first appeal of this case, we discussed the District Court’s failure to apply the child support guidelines as to future support. In then briefly discussing the issue of past support, we wrote:

As discussed under Issue I, departures from the guidelines must comply with § 40-6-116(6)(a) and (b), MCA. On remand, the District Court is directed to make such adjustments to its findings, conclusions, and order concerning past child support as are necessary as a result of this Opinion.

Paternity of W.L., 855 P.2d at 523.

Section 40-6-116(4)(c), MCA, which specifically addresses back child support, was not cited in the first appeal. The statute does not specify whether all of the provisions of subsections (6)(a) and (b) must still be met when the provisions of subsection (4)(c), specifically relating to past support, are applied. In view of the statement in subsection(6)(a) that child support obligations shall be determined “by applying the standards in this section,” which reference includes subsection (4)(c), it is arguable whether all of the provisions of subsections (6)(a) and (b) still apply. However, we conclude that even if Lamdin is correct as to the intent of the statute, that does not control the resolution of this appeal, for the following reasons.

No civil case shall be reversed by reason of error which would have no significant impact upon the result. Rule 14, M.R.App.R; In re Marriage of Cannon (1985), 215 Mont. 272, 275, 697 P.2d 901, 903. Where there is no showing of substantial injustice, the error is harmless and may not be used to defeat the judgment. In re Marriage of Green (1979), 181 Mont. 285, 289, 593 P.2d 446, 449.

We are not here presented with a case in which there was insufficient evidence as to the proper amount of past child support under the child support guidelines. The District Court was presented with abundant evidence on that point. The amount of additional back child support ordered (none) is within the range of the evidence presented at trial.

Further, had the District Court set forth in its order the amounts of back child support required under the child support guidelines, and stated that clear and convincing evidence supported a variance, the court would have retained the discretion under subsection (4)(c) to limit past support. The court’s order sets forth ample justification for its decision not to award additional past child support. As the court pointed out, the amounts actually paid by Ferraro in the past substantially met or exceeded W.L.’s actual past living expenses as described at trial, without the necessity of including any monetary contribution by Lamdin.

We conclude that there has been no showing of substantial injustice as a result of the court’s failure to set forth the guideline amounts for past child support. We similarly conclude that there has been no showing of substantial injustice as a result of the court’s failure to set forth the standard of clear and convincing evidence.

Lamdin also maintains that Montana’s statutory scheme violates W.L.’s right to equal protection. She contends Montana’s laws discriminate between legitimate and illegitimate children in that the statutes concerning child support following a dissolution of marriage do not include a provision equivalent to § 40-6-116(4)(c), MCA. This argument was first raised on appeal. Lamdin did not notify the Montana Attorney General of her challenge to the constitutionality of these statutes at the district court level, as required under § 27-8-301, MCA. Absent such notice, and absent development of the record on this issue at the trial court level, we will not consider the argument on appeal. See Femling v. Montana State University (1986), 220 Mont. 133, 139, 713 P.2d 996, 999.

No useful purpose would be served by remanding this case to require the District Court to insert into its order its calculations of the amounts of past child support due under the child support guidelines and to recite the clear and convincing evidence standard for variance from the guidelines. The court’s decision not to award additional past support is justified under the rationale set forth in the court’s findings, conclusions, and order.

We hold that the District Court did not err in waiving past child support under § 40-6-116(4)(c), MCA. Affirmed.

JUSTICES HUNT, GRAY, TRIEWEILER and WEBER concur.

JUSTICE LEAPHART,

dissenting.

I dissent. The majority has affirmed the District Court in waiving past child support under § 40-6-116(4)(c), MCA. Lamdin contends that the District Court erred by waiving past due child support without first calculating what those support payments would have been, as required by § 40-6-116(6)(b), MCA. I agree. Subsection (6)(a) very clearly requires that the guidelines must be used in all cases. Subsection (6)(b) requires that, “Findings that rebut and vary the guideline amount must include a statement of the amount of support that would have ordinarily been ordered under the guidelines.” Subsection (c) then requires that the court, if it does not order the parent owing a duty of support to pay any amount for support, “shall state its reasons for not ordering child support.” The obvious intent is to require the District Court to first establish what the guidelines require by way of child support before the court determines whether it is appropriate to vary or waive that amount. Without first knowing what the guidelines require, it is impossible for the District Court (in the first instance) or this Court (on appeal) to know whether a waiver or variance is “unjust or inappropriate” in a particular case. In the absence of guideline calculations, this Court is left with no reference point in determining whether the District Court’s waiver amounts to a “substantial injustice.”

The legislature has stated that the guidelines “must be used in all cases.” “Must” is mandatory and “all” means every. Neither concept leaves room for any exceptions.

JUSTICE NELSON joins in the foregoing dissent of Justice W. William Leaphart.


text:
    CHARLES RASMUSSEN, Petitioner and Appellant, v. HEEBS FOOD CENTER, Employer, and STATE COMPENSATION MUTUAL INSURANCE FUND, Insurer and Respondent.
    No. 94-423.
    Submitted on Briefs January 12, 1995.
    Decided April 20, 1995.
    52 St.Rep. 317.
    270 Mont. 492.
    893 P.2d 337.

      For Appellant: Ken H. Grenfell, Grenfell & Ogg, Missoula.
    For Respondent: Leo S. Ward, Browning, Kaleczc, Berry & Hoven, Helena.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

The appellant, Charles Rasmussen, filed a petition for permanent total disability benefits in the Workers’ Compensation Court, based on injuries he claimed were sustained during the course of his employment with Heebs Food Center in Bozeman on June 9, 1987. The respondent, State Compensation Mutual Insurance Fund, which insured Heebs against compensation claims at that time, denied that Rasmussen was totally disabled, and that his disability, if any, was caused by a work-related accident. After a two-day trial, the Workers’ Compensation Court found that Rasmussen was totally disabled from a work-related injury and awarded benefits to him. The State Fund petitioned for a new trial, and its petition was granted. Rasmussen appeals from the Workers’ Compensation Court’s order granting the State Fund a new trial. We reverse the Workers’ Compensation Court and reinstate its original judgment.

The following issue is dispositive on appeal:

Was it a manifest abuse of discretion for the Workers’ Compensation Court to grant the State Fund’s petition for a new trial?

FACTUAL BACKGROUND

Rasmussen filed a claim with the State Fund that he was injured on June 9, 1987, when he fell while working for Heebs Food Center in Bozeman. After investigating his claim, the State Fund accepted liability for Rasmussen’s injury and paid temporary total disability benefits until May 1993, when the benefits were converted to permanent partial disability benefits.

On December 4, 1992, Rasmussen filed a petition for a hearing before the Workers’ Compensation Court in which he alleged that he was permanently totally disabled from his job-related injury. On December 28, 1992, the State Fund filed a response in which it set forth three contentions: (1) that Rasmussen was not permanently totally disabled; (2) that Rasmussen’s disability, if any, was not caused by a work-related injury; and (3) that Rasmussen was not entitled to any relief or attorney fees.

Before trial on September 20, 1993, the parties filed a pretrial order which was approved by the Workers’ Compensation Court. The pretrial order stipulated that the issues to be decided were as follows: (1) whether Rasmussen is permanently totally disabled; (2) whether Rasmussen is entitled, in the alternative, to permanent partial disability benefits under § 39-71-703, MCA; and (3) whether Rasmussen is entitled to attorney fees and costs. The pretrial order specifically set forth the State Fund’s contentions as follows: (1) Rasmussen is not permanently totally disabled; (2) Rasmussen’s disability, if any, was not caused by an industrial injury; (3) Rasmussen is not entitled to attorney fees and costs; and (4) Rasmussen is not entitled to additional relief.

Trial commenced on September 20, 1993, in Missoula. During its opening statement, the State Fund repeatedly referred to Rasmussen’s injury as an “alleged injury.” Rasmussen objected and argued that the State Fund had accepted liability and that the issue was to what extent Rasmussen’s disability was related to the injury. The court allowed the State Fund to continue, but later engaged in the following colloquy with its counsel:

THE COURT: I’m trying to unravel that, if you are trying to unaccept the claim in this proceeding.
MR. WARD: No, this trial is about the credibility issue, Your Honor.
THE COURT: Okay. But is this proceeding, you’re arguingthatthe injury did not occur, or the accident did not occur?
MR. WARD: We are arguing that evidence that the accident did not occur which affects the credibility of this Claimant, Your Honor, that’s what we are arguing. We’re not arguing that we should be able to unravel and go back. And you know, the claim, we paid the claim. We’ve paid a bunch of the total disability benefits, a whole bunch of medical benefits, and reflected by that stack of records right there. We’re not claiming that we’re owed that money.
I’m not sitting right now and saying this is the Donald Chatlin [sic] case and it’s a fraud case at this point. I am saying, though, most total disability cases in my experience that go to court, that go to hearing, are credibility cases, and that affects credibility.

(Emphasis added.)

Later in the trial, Rasmussen testified that he was injured while working at Heebs on June 9, 1987. During cross-examination-, his counsel objected to questions that pertained to whether Rasmussen was injured while working for Heebs on the basis that the State Fund had accepted liability for the injury and that the State Fund did not intend to pursue fraud. The State Fund again responded that the questions were related to the issue of credibility. No mention was made of fraud; and the court clarified that the State Fund was not attempting to rescind its original acceptance of liability.

As part of its case, the State Fund called Cindy Kern, Rasmussen’s ex-wife, to testify that Rasmussen submitted a false claim. Following her testimony, the court again expressed concern about evidence of fraud which had not been previously alleged. Again, the State Fund asserted that credibility was the issue.

On May 18, 1994, the Workers’ Compensation Court entered its findings of fact, conclusions of law, and judgment. The court held that a fraud defense had not been properly raised, and found that the accident occurred as alleged by Rasmussen. It also found that he was permanently totally disabled from his job-related injury, and awarded benefits accordingly.

On June 8, 1994, the State Fund petitioned for a new trial on the basis that it had no notice that fraud needed to be specifically pled and was surprised by that requirement. On July 28,1994, the Workers’ Compensation Court granted the State Fund’s petition for a new trial. The court reasoned that because its rules were unclear regarding the need to specially plead affirmative defenses, such as fraud, the State Fund had not had adequate notice of the need to amend its pretrial contentions and that it should be given an opportunity to do so. It also held that because it had not been pled as a defense, the court had not adequately considered the State Fund’s evidence of fraud. Therefore, the Workers’ Compensation Court concluded that a new trial was appropriate pursuant to § 25-11-102, MCA. It also held that it would consider evidence of fraud at the new trial.

DISCUSSION

Was it a manifest abuse of discretion for the Workers’ Compensation Court to grant the State Fund’s petition for a new trial?

We review a trial court’s order granting a new trial for manifest abuse of discretion. Jim’s Excavating Service v. HKM Assoc. (1994), 265 Mont. 494, 512, 878 P.2d 248, 259 (citing Nelson v. Flathead Valley Transit (1992), 251 Mont. 269, 274, 824 P.2d 263, 266.)

Rasmussen argues that the State Fund failed to allege fraud in any of its pretrial claims, failed to ask that the pretrial order be amended prior to the Workers’ Compensation Court’s judgment, and indicated by its attorney’s representations during trial that it was not attempting to revoke its original acceptance of his claim. He contends that the State Fund should not be allowed to amend its pleadings after an entire trial and the court’s unfavorable decision. The State Fund responds that it was unfair to bind it to requirements of the Rules of Civil Procedure which were not applicable to the Workers’ Compensation Court and were not recognized by the Workers’ Compensation Court until after the trial in this case commenced.

Based on principles of estoppel and judicial admissions, we conclude that the Workers’ Compensation Court manifestly abused its discretion when it granted the State Fund a new trial.

We have previously held that a party may not benefit from asserting one position during pretrial discovery and later assert a contrary position to the detriment of its opponent at trial or on appeal. Plouffe v. Burlington Northern, Inc. (1986), 224 Mont. 467, 474, 730 P.2d 1148, 1153. In Plouffe, we relied on § 26-1-601, MCA, for the following conclusive presumption:

[T]he truth of a declaration, act, or omission of a party, as against that party in any litigation arising out of such declaration, act, or omission, whenever he has, by such declaration, act, or omission, intentionally led another to believe a particular thing true and to act upon such belief.

Section 26-1-601, MCA; Plouffe, 730 P.2d at 1153.

We have also previously held that a counsel's admissions in court proceedings bind the client to those statements. Kohne v. Yost (1991), 250 Mont. 109, 818 P.2d 360. In Kohne, defense counsel admitted in closing argument that both parties in that case were negligent. However, the jury found that neither the defendant nor the plaintiff was negligent. The plaintiff moved for a judgment notwithstanding the verdict, and for a new trial. The basis of the motions was that the jury’s decision was based on insufficient evidence, in part, because defense counsel admitted in closing argument that the defendant was negligent. Kohne, 818 P.2d at 361.

Discussing defense counsel’s statement, we recognized that a counsel’s admissions bind his or her client. Kohne, 818 P.2d at 361-62. A judicial admission is an express waiver made in court by a party or his attorney conceding the truth of an alleged fact. It has a conclusive effect upon the party who makes the admission and no further evidence can be introduced to prove, disprove, or contradict the admitted fact. Kohne, 818 P.2d at 362 (citing 9 Wigmore, Evidence, §§ 2588, 2590 (Chadbourn rev. 1981)). We also held that such admissions may occur at any point during litigation. Kohne, 818 P.2d at 362.

Based on principles of estoppel and judicial admissions, we conclude that the State Fund is bound by its counsel’s statements during trial that it was not relying on the defense of fraud, and that it cannot, after an adverse result, move for a new trial so that it can allege the affirmative defense of fraud. The State Fund led Rasmussen to believe that it was not asserting fraud as a defense. It repeatedly skirted the court’s questions on this issue and, on at least one occasion, stated that it was not asserting fraud. Therefore, counsel conceded for purposes of trial that fraud was not an issue. Rasmussen should not have to spend the time and assume the expense of trial on the assumption that the State Fund’s position is as represented by its attorney, only to find out after the result that the whole proceeding must be repeated based on a different theory.

For these reasons, we hold that the Workers’ Compensation Court abused its discretion when it granted a new trial to consider evidence of fraud. We reverse the Workers’ Compensation Corut’s order and reinstate the original judgment of the Workers’ Compensation Court.

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


text:
    WRB-WEST ASSOCIATES, INC., a Texas Corporation; and WRB-WEST ASSOCIATES, JOINT VENTURE, a Texas Joint Venture, Plaintiffs and Appellants, v. MADISON ADDITION INVESTMENTS LIMITED PARTNERSHIP, an Idaho Limited Partnership; JOHN COSTELLO; JERALD S. SCHMIER; FRED J. HAHN; RICHARD G. HAHN; ROCCO P. CIFRESE, M.D.; SARA ASHMAN CIFRESE, M.D.; P.A. PENSION TRUST; ROBERT E. FARNAM; WILLIAM D. FALER; CHARLES A. HOMER; BRUCE SOELBERG; FRANK GUSTIN; GAYLORD V. SMITH; KEVIN T. SULLIVAN; TONY MARCON; and CHUCK BECK, Defendants, Respondents, and Cross-Appellants.
    No. 94-355.
    Submitted on Briefs December 22, 1994.
    Decided April 25, 1995.
    52 St.Rep. 329.
    270 Mont. 498.
    893 P.2d 340.

      For Appellants: Michael J. Lilly, Berg, Lilly, Andriolo & Tollefsen, Bozeman.
    For Respondents: John G. Crist, Dorsey & Whitney, Billings (for Madison Addition Investments and John Costello); James M. Kommers, Kommers, Kasting & Roth, Bozeman (for Individual Limited Partners).
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

Plaintiffs WRB-West Associates, Inc., and WRB-West Associates, Joint Ventare, filed this complaint in the District Court for the Eighteenth Judicial District in Gallatin County to recover damages from the defendant, John Costello, which it alleged were caused by breach of Costello’s fiduciary duty. Following a nonjury trial, the District Court found that Costello had no fiduciary duty to the plaintiffs and entered judgment for the defendants. Plaintiffs appeal from the District Court’s findings of fact, conclusions of law, and judgment. We affirm the District Court.

The dispositive issue on appeal is:

Did the District Court err when it concluded that John Costello did not have a realtor/client relationship with the plaintiffs in 1989?

FACTUAL BACKGROUND

In the early 1980s, Lewis Robinson and Robert Russell formed West Associates Limited Partnership to develop the Madison Addition property. The Madison Addition is a subdivision of single family and duplex lots, and planned unit developments located in West Yellowstone. West Associates sold the Madison Addition property to WRB, Inc., and WRB-JV in 1984. Lewis Robinson and Albert Walker were initially the principal shareholders in WRB, Inc., and the principal partners in WRB-JV. As a result of the sale in 1984, WRB, Inc., owned the single family and duplex lots in the Madison Addition, and WRB-JV owned the planned unit development (PUD) property located in that subdivision.

Costello was a licensed real estate broker in West Yellowstone with whom WRB, Inc., executed a written listing agreement in 1985. It consisted of three pages. The first page was prepared by Robinson and provided that the term for the agreement would be from May 1, 1985, to November 1, 1985. Costello prepared an addendum to the agreement which specifically limited his obligations to the term of the listing agreement. After the agreement expired, no additional agreement was executed and Costello sold no real estate for WRB, Inc.

On January 16, 1985, WRB-JV and Costello executed an agreement which authorized Costello to act as a broker for one of the four PUDs owned by WRB-JV. That agreement expired, by its terms, on January 14, 1986. No further agreement was executed by those parties after it expired.

In October 1984, WRB, Inc., and WRB-JV (referred to collectively as WRB) had borrowed $4,200,000 from Deseret Federal Savings and Loan to finance development in the Madison Addition. Repayment was secured by a mortgage interest in the Madison Addition property.

In 1988, WRB failed to make the loan payments agreed upon and Deseret filed an action to foreclose on the secured property. At the time of the initial foreclosure action, WRB still owed over $2,000,000 to Deseret. In addition, WRB was substantially indebted to other creditors whose loans were also secured by the same property. In 1988, an appraisal of the Madison Addition property indicated a value of only $1,057,000.

In 1989, Costello learned that Deseret was selling its note and mortgage on the Madison Addition property for the amount of the 1988 appraisal. Costello contacted others and suggested that they purchase the note and mortgage. Together they formed a limited partnership known as Madison Addition Investments Limited Partnership (MAILP), which ultimately purchased the note and mortgage for $1,057,000. The purchase and sale was completed on September 11, 1989.

On September 7, 1989, the WRB entities filed a petition for Chapter 11 bankruptcy protection. However, the Chapter 11 plan failed when WRB was unable to sell the necessary number of lots to fund it. Therefore, the bankruptcy proceeding was dismissed and the stay of foreclosure proceedings vacated. MAILP concluded Deseret’s foreclosure action; obtained a judgment against WRB; purchased the Madison Addition property at foreclosure sale; and, after selling individual lots, obtained a deficiency judgment.

In this suit, the WRB entities alleged that their broker/ seller relationship with Costello extended to 1989, and therefore, that he had a fiduciary relationship which was breached when he negotiated the purchase of their note from Deseret. Although no written agreement was in effect at that time, WRB alleged that the previous agreements were extended based on the fact that Costello continued to act as WRB’s broker. They alleged that because of Costello’s breach of his fiduciary duty, they were denied the opportunity to purchase their own note for the amount paid by MAILP, and thereby, lost the opportunity to reduce their liability by $2,000,000. However, the District Court held that based on the statute of frauds there could be no real estate brokerage relationship, and found that the last agreement between the parties expired by its own terms in 1986. The District Court also held that Costello’s conduct was not sufficient to establish a broker/ seller relationship. WRB appeals from the District Court’s findings of fact, conclusions of law, and judgment.

DISCUSSION

Did the District Court err when it concluded that John Costello did not have a realtor/client relationship with the plaintiffs in 1989?

We review a district court’s findings of fact to determine whether they are clearly erroneous. Interstate Prod. Credit Ass’n v. DeSaye (1991), 250 Mont. 320, 322, 820 P.2d 1285, 1287. In doing so, we first consider whether the findings are supported by substantial evidence. If the findings are supported by substantial evidence, we determine if the district court misapprehended the evidence. Finally, if the findings are supported by substantial evidence, and that evidence has not been misunderstood, we may still conclude that a finding is clearly erroneous if a review of the record leaves this Court with a definite and firm conviction that a mistake has been made. DeSaye, 820 P.2d at 1287.

We review conclusions of law to determine whether they are correct. In re Marriage of Barnard (1994), 264 Mont. 103, 106, 870 P.2d 91, 93 (citing In re Marriage of Burris (1993), 258 Mont. 265, 269, 852 P.2d 616, 619).

WRB contends that the District Court erred by concluding that Costello was not their realtor in 1989, and therefore, had no fiduciary duty that could be breached.

The court found that no written agreement existed in 1989, as required by § 28-2-903(1), MCA, and that the previous written agreements were not extended because the parties had not satisfied the requirements of § 28-2-1602, MCA, for altering a contract by extending its term. The court concluded that the parties could not have created an employment agreement by conduct because the statute of frauds prohibits such a result. Furthermore, the court found that even if a contract could be extended or created by conduct, the evidence was not sufficient to prove the parties consented to do so. We agree with the District Court’s findings and conclusions.

Section 28-2-903, MCA, provides in relevant part that:

(1) The following agreements are invalid unless the same or some note or memorandum thereof is in writing and subscribed by the party to be charged or his agent:
(e) An agreement authorizing or employing an agent or broker to purchase or sell real estate for compensation or a commission.

Section 28-2-1602, MCA, provides that “[a] contract in writing may be altered by a contract in writing or by an executed oral agreement, and not otherwise.” The District Court correctly found that there was no written listing agreement, nor a written modification of the previous agreement in effect between the parties in 1989.

We have previously held that a listing agreement must be in writing and cannot be orally extended. Kraft v. Hodson (1992), 254 Mont. 262, 264, 836 P.2d 1234, 1236. In order to be enforceable, a listing agreement, and any subsequent modification of that agreement’s terms, must be reduced to writing and signed by the party to be bound thereby. Carnell v. Watson (1978), 176 Mont. 344, 347-48, 578 P.2d 308, 310. We have also recognized that a real estate broker does not obtain general authority, but has only that authority specifically authorized by a contract. Martin v. Vincent (1979), 181 Mont. 247, 251, 593 P.2d 45, 47.

WRB contends that based on dicta in Property Brokers, Inc. v. Loyning (1982), 201 Mont. 309, 312, 654 P.2d 521, 523, an exception to the general rule may apply if the surrounding circumstances indicate that the parties waived the expiration provision in a listing agreement. We cited Snyder v. Schram (Or. 1976), 547 P.2d 102, for that rule.

However, Snyder is factually distinguishable. In Snyder, the plaintiff broker sued to recover a commission for a sale based on negotiations which commenced during the term of the agreement and continued beyond its expiration date. That court recognized that the defendants encouraged the plaintiff to continue negotiations, that the plaintiff kept them informed, and that the defendants eventually sold the property for substantially the same terms negotiated by the broker. These facts were sufficient to establish that the defendants waived the original termination date. Snyder, 547 P.2d at 104.

Substantial evidence supports the District Court’s findings that this exception does not apply to the facts of this case.

Costello did not offer to act as WRB’s broker in writing or orally in 1988 or 1989. He did no advertising of WRB property during either year, and the only written communication between the parties during that time was Robinson’s January 12, 1988, memorandum advising that single family and duplex lots were being withdrawn from the market. Costello sold no property during that period; no one offered to buy any of WRB’s property from Costello during that time; and he had little communication of substance with any of WRB’s principals during those two years. The District Court’s finding that the contractual relationship between Costello and WRB was not extended to 1989 by Costello’s conduct was supported by substantial evidence and is not clearly erroneous.

Because the District Court’s conclusion that Costello had no brokerage relationship with plaintiffs during 1989 is dispositive of plaintiffs’ claims, and because we affirm that conclusion, we will not address the remaining issues raised on appeal, and by cross-appeal. The judgment of the District Court is affirmed.

JUSTICES GRAY, HUNT, NELSON and WEBER concur.