author: JUSTICE HARRISON JUSTICE GRAY JUSTICE TRIEWEILER

text:
    CREDIT ASSOCIATES, INC., Plaintiff and Respondent, v. DAVID C. MOGAN, Defendant and Appellant.
    No. 92-100.
    Submitted on Briefs July 30, 1992.
    Decided December 3, 1992.
    49 St.Rep. 1021.
    255 Mont. 307.
    843 P.2d 321.
    For Appellant: David C. Mogan, Pro Se, Hinsdale.

      For Plaintiff and Respondent: Dirk Larsen, Larsen and Neill, Great Falls.
   JUSTICE HARRISON

delivered the Opinion of the Court.

This is an appeal from the Seventeenth Judicial District, Valley County, the Honorable Leonard Langen presiding. The matter was tried without a jury and the appellant David C. Mogan (Mogan) appeals from the order and judgment. We affirm.

The issues presented for review are:

1. Whether the District Court erred when it struck out Mogan’s counterclaim and third party complaint and prevented Mogan from seeking relief thereon.

2. Whether the District Court erred when it awarded $5,198.99 pursuant to Rule 37(c), M.R.Civ.P., for the purported failure of Mogan to admit the genuineness of certain documents submitted by respondent Credit Associates, Inc.

The dispute herein lies in Mogan’s failure to pay certain charges made on credit cards that he obtained from two companies: the Sinclair Oil Company and Tandy Credit/Radio Shack. These cards were used to charge merchandise in the amount of $1,402.57 (Sinclair) and $5,102.86 (Tandy). No payment was made on either balance. These amounts were subsequently assigned to Credit Associates, Inc. for collection and this action was filed.

Thereafter, Mogan filed a motion to vacate service of process on the grounds that the sheriff failed to exhibit the original summons to Mogan personally and instead served him with a copy of the summons. Mogan failed to pay the required $40 filing fee, but the court clerk filed his motion without it. Electing not to strike the motion, as he was authorized to do, Judge Langen entered the following order on December 20,1989:

1. The Defendant’s Motion to Vacate Service is denied.
2. The Defendant shall pay the $40.00 filing fee.
3. The Defendant has 10 days within which to serve and file his Answer.
4. The Clerk of Court is ordered to accept no further papers from this Defendant, or for that matter from any party, without payment of filing fees as required under Section 25-10-403, MCA.

The court found Mogan’s Motion to Vacate Service “totally without merit” because Rule 4D(2), M.R.Civ.R, requires only that “a copy of the summons and of the complaint” be delivered to the defendant. The court reduced the time for filing an Answer from twenty days to ten as “a small penalty for this Defendant trying to escape the entry of a Default by nonpayment of the filing fee and through filing of a spurious pleading.”

On March 14, 1990, Mogan filed a “Motion to Reconsider and Memorandum in Support Thereof Concerning Defendant’s Motion to Vacate Service” and a “Motion for Reconsideration of Order dated 12-20-89 and Request for Oral Argument.” On July 2, 1991, Judge Langen responded in a “Memorandum Opinion and Order” from which we quote:

This is really a very simple case.... Credit Associates, Inc., Plaintiff [Respondent] has attempted to collect the sum of $6,743.36 from Mogan. Instead of complying with my order of December 20,1989, and filing his Answer, [Mogan] has barraged the Clerk of Court with a barrage of so-called legal documents, which included a Motion to Reconsider, a Motion for Oral Argument, a Motion for Partial Summary Judgment, and a few others .... Accompanying these Motions are so-called Briefs. In none of these Briefs does Mogan deny that he owes the amount. [Emphasis added.]

Judge Langen went on to say that he did not intend to spend any more time reviewing the “irrelevant, foolish and trivial pleadings” that Mogan had filed in this case, and that “either Mogan owes the $6,743.36 prayed for in the [Credit Associates’] Complaint, or he owes part of it, or he doesn’t owe any part of it.” The court then set the matter for a non-jury trial and ordered Mogan to file his answer in ten days or a default judgment would result. A copy of Judge Langen’s July 2, 1991 Order is attached as an Appendix to this Opinion.

On July 12,1991, Mogan filed an Answer, Counterclaim and Third Party Complaint, along with a demand for a jury trial (withdrawn by Mogan in December 1991). In his order dated September 3, 1991, setting the case for jury trial on October 25,1991, Judge Langen noted that Mogan had disobeyed his previous order by filing a counterclaim and third party complaint, raising “the same frivolous issues” referred to in the court’s Memorandum Opinion and Order of July 2, 1991. The September 3, 1991 Order also stated that “the attempt of the Defendant to raise these additional frivolous issues contrary to the Court’s Order dated July 2nd, shall subject the Defendant to Rule 11 Sanctions.”

The September 3, 1991 order struck Mogan’s counterclaim and third party complaint and limited the issues to be tried by jury as follows:

[Mogan’s] Answer constitutes a general denial of the Plaintiff’s Complaint and shall remain as a pleading. The Complaint and Answer frame the issues to be tried before the jury. No other issues shall be submitted to the jury. [Emphasis added.]

After numerous other actions filed by Mogan, including a demand for a twelve-person jury, which was denied pursuant to Section 3-15-106, MCA, and an unsuccessful attempt to disqualify or substitute the district judge, the matter was finally tried to the court sitting without a jury on December 19,1991, where Mogan appeared pro se. The court heard testimony and examined the proof offered by the respective parties. It found that Mogan owed Tandy/Radio Shack $5,072.85 and Sinclair Oil Corporation $1,402.57, plus interest computed from April 18, 1989 on both accounts, and that these claims had been assigned to Credit Associates, Inc. Finding that Credit Associates was entitled to a reasonable attorney’s fees under the terms of the credit card agreements and to attorney’s fees and expenses pursuant to Rule 37(c), M.R.Civ.P, the court directed that judgment be entered in favor of Credit Associates, Inc. in the amount of $13,181.78. This total includes $2,858.43 for attorney’s fees and attorney’s expenses; $2,040.56 for witness expenses, and $139.40 for costs and fees. The court reduced attorney’s fees by $300 because some of the copies of charge slips sent to Mogan were illegible.

We affirm this judgment and conclude that the District Court properly denied the counterclaim and third-party complaint because they were frivolous. Because Mogan failed to admit the genuineness of the documents supporting Credit Associates’ claims, which were later proved genuine, we also hold that the court properly awarded attorney’s fees and witness expenses pursuant to Rule 37(c).

CHIEF JUSTICE TURNAGE, JUSTICES WEBER and McDonough concur.

APPENDIX TO NO. 92-100

MONTANA SEVENTEENTH JUDICIAL DISTRICT COURT, VALLEY COUNTY

Valley County

Cause No. 16826

CREDIT ASSOCIATES, INC. Plaintiff, v. David C. Mogan, Defendant

DAVID C. MOGAN, Third Party Plaintiff, v. SINCLAIR OIL CO., COLLECTION CENTER OF WYOMING; CREDIT ASSOCIATES, INC., of GREAT FALLS; TANDY CREDIT/RADIO SHACK; LARSEN & NEILL and DIRK LARSEN, Third Party Defendants.

MEMORANDUM OPINION AND ORDER

On July 1, 1991,1 spent several hours reviewing this file.

The last time I had completely reviewed this file was on December 20,1989. On that date I prepared a Memorandum Opinion and Order Denying Mogan’s Motion to Vacate Service of Process.

This Memorandum Opinion was prepared in connection with Mogan’s “SPECIAL MOTION TO VACATE SERVICE AND MEMORANDUM IN SUPPORT THEREOF.” Mogan had argued that I should make a Court Order vacating the service of process upon him on the grounds that the Sheriff had failed to personally exhibit to Mogan the original Summons, and instead had only served him with a copy of the Summons.

I denied this Motion, and Ordered as follows:

(1) Defendant’s Motion to Vacate Service is denied.

(2) Defendant shall pay his $40.00 filing fee forthwith.

(3) The Defendant has 10 days within which to serve and file his answer.

(4) The Clerk of this Court is Ordered to accept no further papers from the Defendant, or for that matter from any party, without the paying of filing fees as required under Sec. 25-10-403, M.C.A..

APPENDIX (Cont.)

This is really a very simple case. In this case, the Credit Associates, Inc., Plaintiff, has attempted to collect the sum of about $6,743.36 from Mogan.

Instead of complying with my Order of December 20, 1989, and filing his Answer, Defendant has barraged the Clerk of court with a barrage of so-called legal documents, which include a Motion to Reconsider, a Motion for Oral Argument, a Motion for partial Summary Judgment, and a few others that I can’t remember.

Accompanying this Motions are so-called Briefs. In none of these Briefs does Mogan deny that he owes the amount.

Instead, Defendant has long arguments claiming that the Plaintiff violated 15 U.S.C., Sec. 1692 (e) 9. He quotes from an ABA Decision, C-735/Informal Ethics Opinions (ABA) 323 (1975).

He wants me to take judicial notice of the fact that the Plaintiff’s Complaint was prepared by a “lay person” who was not authorized to practice law, and that this has been specifically prohibited by enactments of the Congress of the United States.

He goes into some detail about the legislative history of F.D.C.P.A., which was signed at a White House Ceremony on September 20,1977, and became law on March 20, 1978.

Mogan points out that Congressman Annunzio sheparded the original bill and its successors through several redrafts and through years of debate and negotiation.

This Defendant, David Mogan, is not new to the Montana Seventeenth Judicial District Court. Defendant has filed numerous lawsuits in the counties making up the Seventeenth Judicial District. Generally, he appears Pro Se.

His pleadings generally follow an established modus operandi consisting mainly of filing a barrage of irrelevant pleadings which can totally engulf the Court system. If the presiding Judge were to attempt to read all of these documents and attempt to answer them, it would engulf the system.

Most of Mogan’s cases are not of great consequence, and in the ordinary course of business, the above-entitled case should be handled quite quickly.

However, this is impossible in any case involving David Mogan. Judge Thomas, who has a very patient, kindly disposition, finally had enough. He placed Mogan in jail for more than a week in order to convince Mogan to stop his dilatory methods.

APPENDIX (Cont.)

Only time will tell whether Judge Thomas’ use of jail has induced Mogan to improve his conduct before this Court.

I have just spent several hours reviewing the above captioned case file - time which I should have been spending on other more important cases which are terribly delinquent because of my inability to find the time to handle them.

I do not intent to spend any more time on this case in the review of such irrelevant, foolish and trivial pleadings as Mogan has filed in this lawsuit.

When I reviewed this file on December 20,1989,1 anticipated that this file could conceivably triple in volume if I failed to take some action. I could have applied money sanctions on the Rule 11, M.R.C.P., or possibly found reason to use jail incarceration under the Contempt power of the Court. Instead, I exercised a simple procedure.

I told the Clerk not to file any more of Mogan’s documents in this file. She has been instructed to keep them in a separate file folder, unfiled, and labeled as Civil File No. 16826CR. I leave it to your imagination as to the origin of the letter CR.

This is a simple case. Either Defendant Mogan owes the $6,743.36 prayed for in Plaintiff’s Complaint, or he owes part of it, or he doesn’t owe any part of it.

I think we can solve this issue very simply.

THEREFORE IT IS ORDERED as follows:

(1) Defendant has 10 days within which to file his Answer, which shall admit or deny that he owes the sum or sums alleged in Plaintiff’s Complaint.

(2) If Mogan fails to file an Answer within this time, I shall Order that Defendant’s Default be entered.

(3) That this case be set for trial before the Court, without a jury, to commence at 9:00 A.M. on Tuesday, the 13th day of August, 1991, in the Courtroom of the Valley County Courthouse at Glasgow, Montana.

DATED this 2nd day of July, 1991.

/s/ Leonard H. Langen

Judge of the District Court

JUSTICE GRAY

concurring in part and dissenting in part.

I concur in the opinion of the majority on issue two. I dissent from that opinion, however, on issue one. As we recently stated in Grenz v. Fire and Cas. of Connecticut (Mont. 1992), [255 Mont. 121,] 841 P.2d 494, 496, 49 St.Rep. 917, 918:

We must be ever vigilant... in ensuring that human propensities to frustration over seemingly endless litigation do not result in less than the full and fair consideration on legal principles to which litigants are entitled in Montana’s courts.

Neither the District Court nor the majority of this Court offers any legal authority or support for the action taken with regard to Mogan’s pleadings. It appears that the dismissal of those pleadings was based on the District Court’s understandable frustration rather than on a full and fair consideration of applicable legal principles. I cannot agree.

JUSTICE TRIEWEILER

dissenting.

I dissent from the opinion of the majority.

The arbitrary manner in which the District Court dismissed the defendant’s counterclaim and third-party complaint violated Montana’s Rules of Civil Procedure and defendant’s constitutional right to due process. It was as clear an abuse of judicial authority as I have seen.

While the majority may approve of the result accomplished, that is no excuse for ignoring the law and the facts in this case.

Plaintiff filed its complaint on September 14,1989. In response to the complaint, defendant filed a motion to vacate service for the reason that defendant felt he had not been served correctly with the summons and complaint. That motion was denied on December 20, 1989. Defendant subsequently moved to reconsider the denial of his motion and filed several additional motions. Instead of simply granting or denying those motions on their merits, the District Judge entered a five page written tirade berating the defendant for taking up his time which could better be spent on other matters. In his opinion dated July 2, 1991, the District Judge stated:

I have just spent several hours reviewing the above-captioned case file — time which I should have been spending on other more important cases which are terribly delinquent because of my inability to find the time to handle them.
I do not intend to spend any more time on this case in the review of such irrelevant, foolish and trivial pleadings as Mogan has filed in this lawsuit.
This is a simple case. Either defendant Mogan owes the $6743.36 prayed for in Plaintiffs Complaint, or he owes part of it, or he doesn’t owe any part of it.
I think we can solve this issue very simply.
THEREFORE, IT IS ORDERED as follows:
(1) Defendant has 10 days within which to file his Answer, which shall admit or deny that he owes the sum or sums alleged in Plaintiff’s Complaint.

Mogan complied with the District Court’s order and filed his answer on July 12,1991. With his answer he filed a counterclaim and a third-party complaint. In his answer, he asserted the affirmative defense that the complaint failed to state a claim upon which relief could be granted, and also denied the allegations which were made in plaintiff’s complaint.

For his counterclaim, defendant alleged that plaintiff had violated the Fair Debt Collection Practices Act found at 15 U.S.C. Section 1692 (1977). That Act prohibits certain activities by collection agencies and provides a cause of action for violations of the Act. Pursuant to 15 U.S.C. Section 1692k(d) (1977), a claim for violation of the Act can be brought in either federal or district court. Pursuant to the Montana Rules of Civil Procedure, this claim, if related to the collection of this debt, was a compulsory counterclaim; and pursuant to the statute of limitations provided for in the Federal Act, it had to be brought within one year from the time that the violation occurred.

Defendant’s counterclaim also alleged that the merchandise which was the consideration for the debt plaintiff alleged was not merchantable; and that the merchants which the plaintiff represented had not acted in good faith.

Regardless of whether Mogan had a history of being involved in prior litigation, or whether he was considered a nuisance by this particular District Judge, he had a right under our rules of civil procedure and under Article II, Section 17, of the Montana Constitution, to due process of law. In the Seventeenth Judicial District Court, in Valley County, Montana, he received none.

Without the benefit of any discovery, or any motion to dismiss the counterclaim and third-party complaint, and without the benefit of any briefing or argument, the District Court acted sua sponte on September 3, 1991, to dismiss both the counterclaim and the third-party complaint. In its order, the District Court simply stated:

The Counterclaim and Third Party Complaint raised the same frivolous issues referred to in my Memorandum Opinion and Order dated July 2, 1991; and therefore, shall be stricken.
Furthermore, the attempt of the Defendant to raise these additional frivolous issues contrary to the Court’s Order dated July 2nd, shall subject the Defendant to Rule 11 Sanctions.

There is no authority for the District Judge’s conclusion that the counterclaim and third-party complaint are frivolous. There is no basis in the record for any conclusion that they are frivolous, and the District Judge did not bother to offer any rationale for arriving at his conclusion.

I have heard of frontier justice, but this is ridiculous. There is no basis in this record for affirming the actions of the District Court.

The majority finds it noteworthy that defendant’s counterclaim and third-party complaint were prohibited by the District Court’s memorandum opinion entered on July 2, 1991. However, there is no explanation for why the District Judge had any authority to preclude defendant from filing his counterclaim and third-party complaint in the earlier memorandum.

The majority simply repeats the District Court’s conclusion that the issues raised by the counterclaim were frivolous. However, nowhere in the majority opinion nor in the District Court orders is there any explanation of why the counterclaim and third-party complaint were frivolous. Apparently the theory is that if the court says it is frivolous, it is frivolous. However, it seems to me that the party whose claims have been dismissed has a right to some explanation of the manner in which his pleading is defective so that he can cure it, if possible. There is no explanation here because there was no record upon which a conclusion could be drawn that the pleadings were frivolous.

I suppose that our rules of civil procedure can be cumbersome and an imposition on district courts, and that justice would be more expeditious if we deferred completely in every case to the District Judge’s gut reaction. However, it appears to me that our rules of civil procedure have served us well in the past and should not be abandoned on this occasion simply because the Judge in the Seventeenth Judicial District has “other more important cases” with which to concern himself.

For these reasons, I dissent from the opinion of the majority.

JUSTICE HUNT concurs in the foregoing dissent of JUSTICE TRIEWEILER.


source: Caselaw Access Project

author: JUSTICE McDONOUGH JUSTICE HUNT, joined by JUSTICE TRIEWEILER, JUSTICE WEBER

license: Public Domain

text:
    THOMAS and DENISE BAIRD, Plaintiffs and Respondents, v. NORWEST BANK, Defendant and Appellant.
    No. 91-224.
    Submitted June 6, 1992.
    Rehearing Denied January 7, 1993.
    Decided December 4, 1992.
    49 St.Rep. 1026.
    255 Mont. 317.
    843 P.2d 327.

      For Defendant and Appellant: Terry B. Cosgrove and Tom K. Hopgood argued, Dale E. Reagor, Luxan & Murfitt, Helena; and Pierre L. Bacheller, Pierre L. Bacheller, Inc., Billings.
    For Plaintiffs and Respondents: Jonathan Motl argued, David K.W. Wilson, Jr., Reynolds, Motl, Sherwood & Wright, Helena.
    For Amicus Curiae: George T. Bennett, Helena.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

Plaintiffs, Thomas and Denise Baird, brought this action to recover damages from Norwest Bank for accelerating payment and repossessing their truck and van upon a default under an installment note. The complaint sought damages based on breach of contract; breach of the covenant of good faith and fair dealing; breach of the Montana Unfair Trade Practices and Consumer Protection Act; fraud; and intentional infliction of emotional distress. The jury returned a verdict for the Bairds and awarded them $5,200 for violation of the Montana Consumer Protection Act; $6,600 for breach of contract obligations; $27,000 for fraud; and $81,000 in punitive damages. Norwest appeals. We affirm in part and reverse in part.

The issues for our review are:

1. Was there sufficient evidence to support the jury’s verdict that Norwest Bank breached the contract?

2. Was there sufficient evidence to support the jury’s verdict that Norwest Bank committed fraud?

3. Was there sufficient evidence to support the jury’s award of emotional distress damages?

4. Did the District Court err in allowing the Bairds’ former attorney to testify as an expert witness?

5. Does the Montana Unfair Trade Practices and Consumer Protection Act apply to consumer loans by banks?

6. Did Norwest Bank waive the default provisions of the installment note by accepting late payments?

7. Should the Bairds be awarded attorney’s fees on appeal?

8. Did the District Court properly review the punitive damages award?

Plaintiffs, Thomas and Denise Baird, were the owners of a 1975 Dodge van and a 1979 4-wheel drive pickup truck. In early 1989, the front end of the truck failed and the Bairds borrowed $1,190.77 from Norwest Bank (Norwest) and used the money to fix the front end of the truck. The truck was put up as a security for the loan. The first payment on this loan was paid on time.

In April 1989, the engine on the truck failed and the Bairds borrowed additional money from Norwest to replace the truck engine. The second loan was for the amount of $2,904.81 and the money was used to repay the first Norwest loan and to purchase the new truck engine. Both the truck and the van were secured by a note and security agreement with monthly payments set at $140.68 beginning May 24, 1989.

The first payment on the second loan was eleven days late. The second payment was twenty-two days late. The delinquent account was assigned to a Norwest employee collector named Sarah Mosure (Ms. Mosure). When the third payment, due July 24th, became fifteen days overdue, Ms. Mosure initiated collection procedures on the Bairds’ account. Shortly thereafter, Ms. Mosure telephoned Mr. Baird.

The substance of that phone call was central to the issues decided by the jury. Ms. Mosure maintained that Mr. Baird and she agreed that the account would be brought up to date by September 1st. The Bairds maintained that Ms. Mosure agreed to give them until September 15th to make the payment. Ms. Mosure entered the September 1st date as the agreed date on the bank computer.

On September 12, 1989, when no payment had been made, Nor-west accelerated the note and repossessed the Bairds’ van. Norwest maintained that the Bairds were advised that they could obtain possession of their van by paying the accelerated loan balance. On September 13, the Bairds attempted to make the July and August payments by depositing a check in the Norwest night deposit. Nor-west returned those payments to the Bairds. The Bairds attempted to make timely September, October and November payments but those payments were also rejected by Norwest and were returned to them. On December 12, 1989, the pickup truck was also repossessed without notice to the Bairds.

The Bairds brought this action against Norwest and the case was tried before a jury. The jury returned a verdict for the Bairds, specifically finding that Norwest had breached a contract with the Bairds, committed fraud, and violated the Montana Unfair Trade Practice and Consumer Protection Act of 1973 (CPA). The jury awarded punitive damages. Norwest appeals the denial of its motion for directed verdict, the judgment entered on the jury verdict, and the denial of its motions for judgment NOV and new trial.

I

Was there sufficient evidence to support the jury’s verdict that Norwest breached the contract?

The jury was instructed with regard to the breach of contract claim as follows:

INSTRUCTION NO. 11

The issues to be determined by you in this case are these:
[D]id the Defendant breach its contractual obligations to Plaintiffs. If you find Defendant did not breach the contract, you will not consider the issue farther. If, however, you find such a breach occurred you will have a second question to consider, namely:
Was the breach the cause of any damage to Plaintiffs? If your answer to this question was “no” you will not consider the issue further. If your answer is “yes”, you will have a third question to consider, namely:
What actual damages arose from breach of the contract: (You may not award damages for emotional distress damages or punitive damages under this theory of recovery. You may not award damages already awarded under the Consumer Protection Act.)

The jury concluded that Norwest breached the contract and awarded damages of $6,600 to the Bairds.

Norwest contends there was a complete failure on the part of the Bairds to prove that Norwest agreed to give the Bairds until September 15th to bring their loan current. Bairds contend that Ms. Mosure had agreed to a payment date of September 15th.

The testimony of both Mr. and Mrs. Baird established that they told Ms. Mosure, the collector for Norwest, that they could make the payment “after the 10th.” Repossession took place on September 12. The testimony of Mr. Poston, at one time the attorney for Bairds, supports the Bairds’ contention that a September 15th date was agreed to and that Norwest breached the contract.

In addition, the testimony of Jean Fangsrud, also of Norwest, established that the Bairds had told her they had promised to pay by September 15:

Q. Can you describe for the jury what contact, if any, you had with either Tom or Denise Baird?

A. The only contact that I had with them was the day after the repossession. I first talked to Denise and then later that day I did talk to Tom in reference to the repossession.

Q. Would you describe for the jury the substance of the conversation that you had with Mrs. Baird?

A. Okay. When Denise did call me, she wanted to know why that Norwest Bank had repossessed the van. I explained to her because there was a broken promise to pay for two payments and then she had also indicated to me that Tom was going to make the two payments. I also told her at that time that Norwest Bank will not accept the two delinquent payments. The loan needed to be paid off in full, plus the expenses that Norwest Bank had incurred.

Q. You informed Denise at that time that the two payments, even if the Bairds were to attempt to make them that day, would not be accepted?

A. Correct.

Q. Did you have any further conversation with Mrs. Baird?

A. I don’t believe so.

Q. Would you describe for the jury the conversation you had with Mr. Baird later that day?

A. Mr. Baird had contacted me and also wanted to know why the repossession had taken place. I explained to him what had happened, the broken promise to pay the two payments. He had told me that he did not promise to pay on September 1 of ‘89. Because we had not received that it was assigned out to take possession.

Q. However, in reviewing the comments entered by Sarah Mosure, do you find information contrary to Mr. Baird’s assertion—

A. Yes.

Q. — that he did not promise to pay on September 1?

A. He had told Sarah that he would make payments on September 1. He said that the doctors paid by September 1.

Q. You also recognize, do you not, that in the course of your conversation Mr. Baird was in disagreement with Sarah’s position that he had promised by September 1st?

A. Yes, he informed me that he did not make a promise to pay for two payments on September 1st.

Q. He informed you he had promised to pay by September 15th? A. That’s what he informed me.

Q. And the only information you had that would dispute him was what Sarah had typed in?

A. Yes.

The jury concluded that Norwest breached the contract and assessed damages for such breach in the amount of $6,600.

The standard of review to be applied here was set forth in Barrett v. ASARCO (1990), 245 Mont. 196, 200, 799 P.2d 1078, 1080; and Miller v. Frasure (1991), 248 Mont. 132, 137, 809 P.2d 1257, 1261:

Substantial evidence is that evidence that a reasonable mind might accept as adequate to support a conclusion; it consists of more than a mere scintilla of evidence but may be somewhat less than a preponderance. Black’s Law Dictionary 1281 (5th Ed. 1979); Stanhope v. Lawrence (Mont. 1990), [241 Mont. 468], 787 P.2d 1226, 1228-1229, 47 St.Rep. 438, 440. Although it may be based on weak and conflicting evidence, in order to rise to the level of substantial evidence it must be greater than trifling or frivolous. Christensen v. Britton (Mont. 1990), [(1989), 140 Mont. 393,] 784 P.2d 908, 913, 46 St.Rep. 2223, 2230. [Emphasis added.]

Barrett, 245 Mont. 196, 799 P.2d 1078.

In Hash v. State (1991), 247 Mont. 497, 500, 807 P.2d 1363, 1365, this Court held “[t]his Court cannot reweigh the evidence or disturb the findings of a jury unless that evidence is so inherently impossible or improbable as not to be entitled to belief.” All of the parties agree that the payment date by agreement was extended. The contested fact is to what date. Although the Bairds failed to positively testify to an agreement with Norwest for a September 15th payment date, after considering all of the evidence, we conclude there was evidence which a reasonable mind might accept as adequate to support a conclusion of a September 15th payment date. We hold that there was sufficient evidence to support the jury’s verdict that Norwest breached the contract.

II

Was there sufficient evidence to support the jury’s verdict that Norwest committed fraud?

The jury was instructed on fraud as follows:

If you find that the parties agreed that the late payments were to be made by September 15,1989, then you may consider whether the Defendant committed fraud. If you find that the parties agreed that the late payments were to be made by September 1,1989, then you may not consider whether the Defendant committed fraud.

The jury was further instructed on the nine elements necessary to establish actual fraud. This Court recently described the same elements in Batten v. Watts Cycle and Marine (1989), 240 Mont. 113,117, 783 P.2d 378, 380-381. The elements and applicability to this case are:

1. Was there a representation?

The alleged representation in this case was that Norwest represented that it would allow the Bairds until September 15th to make their payment. Because in Issue I the jury found that the parties agreed to the payment date of the 15th, this element is satisfied.

2. Was the representation false?

Again, this element is disposed of under Issue I.

3. Was the false representation material?

From the facts it is clear that the payment date of September 15th was material.

4. Did the speaker have knowledge as to the falsity of the representation?

In other words, did Ms. Mosure, the speaker, know that she was falsely representing the agreed upon payment date when she entered September 1st into the computer? A review of the record demonstrates the total absence of evidence that Ms. Mosure knew of the falsity of the September 1 date. We therefore must conclude that the Bairds failed to satisfy this element of fraud.

5. Did the speaker intend that the false representation should be acted upon by the person and in the manner reasonably contemplated?

To restate, did Ms. Mosure, agent of Norwest, intend that the Bairds should act upon the false representation which Ms. Mosure had made as to the September 15th date? There is nothing in the record to demonstrate that Ms. Mosure intended that the Bairds act upon the September 15th date. Even the Bairds’ testimony fails to prove this point. Mr. Baird testified he told Ms. Mosure that he needed until after September 10th to make his payment. He did not testify that Ms. Mosure told him he could have until September 15th to make the payment. Ms. Mosure testified that Mr. Baird asked her if he could have until the 10th, but that she agreed to a payment date of the 1st. Even though we have affirmed the jury’s verdict under Issue I, that the parties agreed to a payment date of September 15th, there is absolutely no indication in the record that Ms. Mosure intentionally entered the wrong date into the computer.

In proving this element of fraud it is the speaker’s intent we are concerned with. That would be Ms. Mosure. It is true that the jury found there was an agreed upon date of September 15th, but the jury was able to consider all of the testimony and evidence and the surrounding circumstances in arriving at that conclusion. In satisfying this particular element of fraud only Ms. Mosure’s intent as the speaker may be considered. The record fails to reveal any such intent on Ms. Mosure’s part. Furthermore, no one testified that Bairds were intentionally given the wrong date or that Ms. Mosure intentionally entered the wrong date. Not even the Bairds so testified. In fact, the Bairds only maintain that Ms. Mosure mistakenly entered the wrong date. We conclude that the Bairds have failed to prove this essential element of fraud.

The Bairds failed to prove two of the essential elements required under the instruction in order to establish actual fraud. Therefore, we hold that there was not sufficient evidence to support the jury’s verdict that Norwest committed fraud and reverse on this issue.

We note that the jury awarded damages for fraud in the amount of $27,000. Because we reverse on this issue, the District Court shall vacate the damages awarded for fraud in the amount of $27,000.

Ill

Was there sufficient evidence to support the jury’s award of emotional distress damages?

The only damage award on the verdict form which might be construed to include emotional distress parasitic damages was for fraud. Such award is vacated by Issue II of this opinion. Therefore the issue is moot.

IV

Did the District Court err in allowing the Bairds’ former attorney to testify as an expert witness?

Mr. Poston, the Bairds’ first attorney, testified at trial about his involvement with the Bairds and about his contacts with Norwest and its attorney. Norwest maintains that he testified as an expert. It maintains that he testified to his legal opinion on the law of waiver, self-help repossession without notice, and acceleration of a note. Thus, Norwest maintains that all of these questions eliciting this testimony were improper.

Norwest states that as a general rule, an attorney cannot advise the jury as to the law of the case. Safeco Ins. Co. v. Ellinghouse (1986), 223 Mont, 239, 251, 725 P.2d 217, 224. Norwest maintains that Mr. Poston’s testimony pertained to ultimate legal issues in this case— whether Norwest acted fairly in the conduct of commerce under the CPA; whether Norwest had the right to repossess the vehicle absent notice; and whether Norwest had waived its right to accelerate the debt absent notice.

The Bairds urge that the only objection of Norwest’s counsel to the testimony of Mr. Poston was:

I object, your honor. I believe that the offer of an opinion may improperly invade the province of the jury in determining facts in this case. [Emphasis added.]

That objection was overruled and no objection was made that Mr. Poston was testifying to any legal opinions.

In view of the limited objection made by counsel for Norwest, we hold that there was no error in allowing Mr. Poston to testify.

V

Does the Montana Unfair Trade Practices and Consumer Protection Act apply to consumer loans by banks?

The CPA prohibits unfair trade practices by entities engaged in “trade or commerce.” “Trade or commerce” is defined as follows:

(6) “Trade” and “commerce” mean the advertising, offering for sale, sale, or distribution of any services and any property, tangible or intangible, real, personal, or mixed, and any other article, commodity, or thing of value, wherever situate, and shall include any trade or commerce directly or indirectly affecting the people of this state.

Section 30-14-102, MCA.

The first question is whether or not the loaning of money, taking security therefor, and the collection of money, are transactions within the above definition of trade or commerce. This Court has not previously decided this issue. Statutes prohibiting unfair trade practices have been interpreted to be broad in scope and flexible in application so as to respond to human inventiveness. See In re Smith (3rd. Cir. 1989), 866 F.2d 576. The business of mortgage lenders is the sale of a service within the scope of unfair practices acts; see In Re Smith, supra. In the case of Garland v. Mobile Oil Corporation (1972), 340 F.Supp 1095, in which Mobile argued the uniform act does not apply to debtor-creditor relations involving credit card transactions and collections, the court stated as follows:

Only an artificially narrow construction would hold that the statute applies broadly to practices utilized to effect a sale, but cannot reach the practice utilized in its financing.

Garland at 1099. Here the money loaned was used by the consumer at least in part for repairs and a new engine for a private motor vehicle.

Our statute does not in anyway define or limit the words “any services” as used in Section 30-14-102(6), MCA, supra, or as used in Section 30-14-133, MCA, which establishes the cause of action asserted here. Section 30-14-133, MCA, so far as pertinent is as follows:

(1) Any person who purchases or leases goods or services primarily for personal, family, or household purposes and thereby suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment by another person of a method, act, or practice declared unlawful by 30-14-103 may bring an individual but not a class action -under the rules of civil procedure in the district court of the county in which the seller or lessor resides or has his principal place of business or is doing business to recover actual damages or $200, whichever is greater. The court may, in its discretion, award up to three times the actual damages sustained and may provide such equitable relief as it considers neces- ■ sary or proper.

There is no reason why the word “services” as used in Section 30-14-102(6), MCA, be interpreted differently than as used in Section 30-14-133, MCA.

The approach to defining what is meant by the word “services” in the statute should be broad in scope. See In re Smith, supra. This statute being in derogation of the common law, should be liberally construed with a view to effect its object and to promote justice. See Section 1-2-103, MCA, 1991.

Norwest has cited the case of Riverside National Bank v. Lewis (Tex. 1980), 603 S.W.2d 169, which held that money (borrowing of money) is neither a “good” or a “service” and stated:

Money, as money, is quite obviously neither work nor labor. Seeking to acquire the use of money likewise is not a seeking of work or labor. Rather, it is an attempt to acquire an item of value. We hold that an attempt to borrow money is not an attempt to acquire either work or labor as contemplated in the DTPA.

Riverside at 174.

However, the Texas statute defined more restrictively what services are under the statute. We note that the Riverside case states that seeking to acquire the use of money is an attempt to acquire an item of value. The Riverside case, was later limited to its facts which were the extension of credit unrelated to a specific acquisition. Our Section 30-14-102, MCA, defines “trade” or “commerce” as the “[s]ale, or distribution of... [a] thing of value.”

Later Texas cases expanded the Texas Act to include services of a bank in connection with the extension of credit. See Security Bank v. Dalton (Tex.Ct.App. 1991), 803 S.W.2d 443, 452. This conclusion was arrived at even though the Texas Act defined “services” as follows:

(1) “Goods” means tangible chattels or real property purchased or leased for use.
(2) “Services” means work, labor, or service purchased or leased for use, including services furnished in connection with the sale or repair of goods....
(4) (Consumer) means an individual, partnership, corporation, this state, or a subdivision or agency of this state who seeks or acquires by purchase or lease, any goods or services, except that the term does not include a business customer that has assets of $25 million or more. . . .

In the case of Pa. Bankers Ass’n v. Com., Bureau of Consumer Protection (1981), 427 A.2d 730, the Commonwealth Court of Pennsylvania held that under the Unfair Trade Practices Act the activity of lending and collecting money is trade or commerce. The court had previously held in Pennsylvania Retailers, etc. v. Lazin (1981), 426 A.2d 712, 718, that lending and collecting money was within the definition of service.

We conclude therefore that the Unfair Trade Practices and Consumer Protection Act applies to consumer loans by banks in the lending and collecting of such loans.

VI

Did Norwest waive the default provisions of the installment note by accepting late payments?

In light of our holding under Issue I, it is not necessary to address this issue.

VII

Should the Bairds be awarded attorney’s fees on appeal?

Norwest maintains that upon reversal, the Court should direct the District Court to award Norwest its attorney’s fees for both the lower court proceedings and the appeal herein.

The Bairds maintain that the parties stipulated and agreed to the amount of attorney’s fees which should be awarded the plaintiffs as prevailing party in the District Court litigation. The Bairds ask this Court to grant them their attorney’s fees necessary to defend this appeal with the proper amount to be determined by stipulation of the parties, or if necessary, by the District Court.

The contract involved here provides for attorney’s fees to the prevailing party. Section 28-3-704, MCA, provides that a contractual right to attorney’s fees is reciprocal. In addition, the CPA, Section 30-14-133, MCA, allows the “prevailing party” to recover attorney’s fees.

The parties entered a stipulation as to attorney’s fees which provides:

COMES NOW the parties above named through their counsel of record and stipulate and agree that Plaintiffs, as prevailing parties in this matter under the contract and Montana Consumer Protection Act claims, are entitled to the sum of Nineteen Thousand Dollars ($19,000) as their reasonable attorney fees and further agree that the judgment entered herein may be amended nunc pro tunc to allow for the addition of that amount of attorney fees.
This agreement is based on Plaintiffs’ status as prevailing party and the amount specified in this agreement has no force and effect should an appeal result in a reversal of Plaintiffs verdict under one or both of the claims giving rise to Plaintiffs rights to attorneys’fees. The amount specified in this agreement applies only to attorney fees incurred through February 15, 1991, the last day of the jury trial in this matter, and does not apply to any attorney fees which may be incurred in post-trial matters, including appeal. The parties agree to deal with all such post-trial attorney fees issues at the appropriate time and before the appropriate court. [Emphasis added.]

Inasmuch as there has been no reversal of the claims under which the prevailing party is entitled to reasonable attorney’s fees, the plaintiffs are entitled to their fees to defend this appeal.

VIII

Did the District Court properly review the punitive damages award?

This Court having reversed the verdict on the tort of fraud, the award of punitive damages is to be vacated and the issue is moot. Due to the fact that the award for punitive damages is vacated and was included in the total award by the jury and the District Court having stated in its order on post-trial motions that it was taking the award into consideration in not awarding treble damages for violation of CPA, we hereby remand to the District Court for consideration in its discretion to award treble damages under Section 30-14-133( 1), MCA, and for such further action as may be necessary in conformance with this opinion.

CHIEF JUSTICE TURNAGE, JUSTICES HARRISON and GRAY concur.

JUSTICE HUNT, joined by JUSTICE TRIEWEILER,

concurring in part and dissenting in part.

I concur with the majority’s decision regarding Issues I, IV, V, and VI.

However, I dissent with the majority’s decision regarding Issues II, III, and VIII because I believe it disturbs the jury’s fact-finding process. This Court has continuously upheld the fundamental proposition that the jury is entrusted with the responsibility of seeking the truth. Because of our high regard for the jury deliberation process, we have established an exacting standard of review when examining a jury’s verdict.

Motions to set aside jury verdicts as not supported by the evidence are proper only when there is a complete absence of any credible evidence in support of the verdict. All evidence and all inferences drawn therefrom must be considered in a light most favorable to the adverse party. The courts will exercise the greatest self-restraint in interfering with the constitutionally mandated processes of jury decision.

Lackey v. Wilson (1983), 205 Mont. 476, 479, 668 P.2d 1051, 1053 (quoting Barmeyer v. Montana Power Co. (1983), 202 Mont. 185, 191, 657 P.2d 594, 597).

Evidence of fraud, by its very nature, will often be circumstantial. On numerous occasions, trivial, remote, and disconnected facts will be tied together by a jury to support a finding of fraud. Walker v. Mink (1945), 117 Mont. 351, 158 P.2d 630. When analyzing Instruction No. 19, the court indicated that the jury could only consider whether the bank committed fraud if they first found that the parties agreed that the late payments were due by September 15. After hearing much conflicting evidence, the jury concluded that the parties agreed the payments were due on September 15. With this finding, there was an implicit agreement by the bank not to repossess the vehicle prior to the agreed date of payment. However, the bank proceeded to repossess the vehicle within only a few days of making that agreement. In addition, it would not be difficult to infer from the facts that the time and working pressures of Ms. Mosure’s job forced her to type September 1 into the bank’s computer in order to clear her responsibility for collection of the Baird’s delinquent account. It is from the facts above that I believe there was substantial evidence to support the jury’s verdict.

Therefore, I would affirm the decision of the District Court and uphold the entire jury verdict.

JUSTICE WEBER

concurs and dissents as follows:

I dissent from the holding of the majority opinion on Issue V - Does the Montana Unfair Trade Practices and Consumer Protection Act (MCPA) apply to consumer loans by banks? I concur in the balance of the holdings of the majority opinion.

The majority concludes that the MCPA applies to consumer loans by banks in the lending and collecting of such loans. I will first summarize my reasons for disagreeing with that conclusion. The primary question is whether a bank consumer loan falls within the provisions of Section 30-14-133, MCA, which applies to any person who purchases or leases goods or services primarily for personal, family, or household purposes. The majority has failed to demonstrate how the borrowing of money by a consumer is the purchasing or leasing of goods or services.

Before discussing the specific statutory sections with which we are directly involved, I think it appropriate to make a few comments about the MCPA. That Act was adopted in 1973 with the aim of prohibiting unfair trade practices with provisions for investigation of such practices and penalties for violations. Title 30, Chapter 14, Parts 1-2. The Act has forty-two different sections which describe the means of protecting the consumer by action on the part of the Department of Commerce, the Attorney General, and the county attorneys of the fifty-six counties. These sections provide for injunctions, restraining orders, civil penalties up to $10,000, possible criminal convictions and criminal fines with imprisonment. The basic thrust of the Act is protection of the consumer by enforcement through various governmental agencies.

Before discussing the one specific code section in that Act which applies to the consumer, I emphasize the apparent result of the majority opinion. In view of the broad definition of “services” in the majority opinion, I assume that the majority would apply the Act to the following: 1) all activities of any kind of banks and loaning institutions, including all aspects of loan and mortgage and other security financing; 2) all types of services by hospitals, nursing homes, and retirement homes; 3) all types of services rendered by such people as medical doctors, dentists, accountants, architects, attorneys, and engineers. The list is almost unlimited in those “services” which might be included. Why is it important to consider such “services?” The answer is the treble damages and attorney fees provisions of Section 30-14-133, MCA, which are as follows:

(1)... The court may, in its discretion, award up to three times the actual damages sustained and may provide such equitable relief as it considers necessary or proper.
(3) In any action brought under this section, the court may award the prevailing party reasonable attorney fees incurred in prosecuting or defending the action.

In the past, very few actions have been brought by consumers under the Act. Because of the great benefit of both treble damages and attorney fees, I suggest that those having claims against any of the above listed parties will conclude that the best procedure is to seek to come under the Act. I conclude that such a striking change in the practice in Montana should be left to the legislature.

I will not discuss the particular sections of the Act which are directly pertinent. The key consumer section is Section 30-14-133, MCA, which provides in pertinent part:

Damages — notice to public agencies — attorney fees — prior judgment as evidence. (1) Any person who purchases or leases goods or services primarily for personal, family, or household purposes and thereby suffers any ascertainable loss of money ... as a result of the use ... by another person of a method, act, or practice declared unlawful by 30-14-103 may bring an individual... action ... in the district court of the county in which the seller or lessor resides . . .

This section applies to any person who purchases or leases goods or services primarily for personal, family, or household purposes. Clearly the making of a consumer loan from a bank does not constitute a purchase or lease of goods nor a lease of services. The remaining question is whether a consumer making a bank loan has made a purchase of services. As pointed out in the majority opinion, this issue has not been considered in Montana and very few other jurisdictions have considered the issue.

The majority relies upon Smith v. Commercial Banking Corp. (3rd.Cir. 1989), 866 F.2d 576, which involves the Pennsylvania consumer protection statutes. Smith points out that section 2 of the Pennsylvania act enumerates seventeen specific acts which constitute unfair or deceptive acts or practices and then points out that Smith contends that Fidelity’s conduct falls within the catch-all provisions which make unlawful engaging in any other fraudulent conduct which creates a likelihood of confusion or misunderstanding. See 73 Pa.Stat.Ann. Section 201-3 (Purdon Supp. 1992) We have no specific act provisions of that nature in our MCPA. The only definitional statute regarding unfair acts is Section 30-14-103, MCA, which provides:

Unlawful practices. Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are unlawful.

I do not find it appropriate to so generalize in accepting Pennsylvania cases, federal and state, as authority where the central provisions of the act are so strikingly different.

The majority points out that in Riverside Nat’l Bank v. Lewis (Tex. 1980), 603 S.W.2d 169, the Texas court concluded that the borrowing of money was neither a “good” or a “service” (both of which are used in Section 30-14-133, MCA), and stated:

Money, as money, is quite obviously neither work nor labor. Seeking to acquire the use of money likewise is not a seeking of work or labor. Rather, it is an attempt to acquire an item of value. We hold that an attempt to borrow money is not an attempt to acquire either work or labor as contemplated in the DTPA.

Riverside, 603 S.W.2d at 174. The majority concludes that the Texas statutes define more restrictively than ours. It also points out that Riverside was limited to its facts. I would point out that the above quote has nothing to do with the statute but does constitute an intelligent analysis of the nature of goods and services as compared to money and seeking to acquire the use of money. This analysis does contradict the holding of the majority.

Ultimately the majority refers to 1981 Pennsylvania cases which held that lending and collecting money was -within the definition of service and then proceeds to conclude that our Montana Act and its definition of services applies to consumer loans by banks. I strongly disagree with that conclusion.

In analyzing whether there has been a purchase of services where the bank makes a consumer loan, I point out Section 30-14-133, MCA, provides that the action is to be brought in the district court of the county in which the “seller or lessor” resides. Under common usage, I do not believe that the term seller or lessor would be considered as including a bank which makes consumer loans.

Before attempting to reach a conclusion regarding the extent of the purchase or leasing of goods and services as defined in Section 30-14-133, MCA, we should also consider that under such section, a consumer is entitled to recover against another person who uses a method, act, or practice which is declared unlawful under Section 30-14-103, MCA, quoted above. In order to determine what trade and commerce are meant to be under Section 30-14-133, MCA, we must consider Section 30-14-102, MCA, which contains the following definition:

(6) “Trade” and “commerce” mean the advertising, offering for sale, sale, or distribution of any services and any property, tangible or intangible, real, persona, or mixed, and any other article, commodity, or thing of value, wherever situate, and shall include any trade or commerce directly or indirectly affecting the people of this state.

From the statutory wording it is clear that unfair methods of competition and -unfair or deceptive acts are limited to those involved in the conduct of “trade” and “commerce” as defined in Section 30-14-102, MCA. This requires our consideration of that section in greater detail.

Section 30-14-102(6), MCA, defines trade and commerce as advertising, offering for sale, sale and distribution of services and property. On its face, the making of a consumer loan by a bank does not fit within the classification of advertising, offering for sale, sale, or distribution of services or other property. Because there is no clear stated intent to include bank loans or consumer loans or bank or consumer activities, I think it essential to consider the history of the MCPA during the approximate 20 years since it was enacted.

Since 1973 there has been no legislative revision indicating a specific intent that a bank loan should constitute a purchase of services within the definition of the MCPA. That conclusion is fortified by a consideration of the regulations adopted dining this 20-year period by the Department of Commerce of Montana. These regulations are set forth in 8.78.101-406, ARM. A number of these regulations specifically refer to various aspects of the sale of merchandise, including its advertising and representations with regard to the same. Next, there are a number of regulations which apply to motor vehicles and cover the sales, repairs, maintenance and service of motor vehicles. These regulations are limited to the services in connection with the sales, repairs and maintenance of such vehicles. There are also regulations covering reporting agencies and fees which are not directly applicable. A review of these Rules establishes that the enforcement on the part of the Department of Commerce has been quite limited. Clearly the Department has not concluded that the making of a consumer bank loan constitutes services under the MCPA, nor have they established any other regulations demonstrating that similar services are considered as coming under the MCPA.

As I again examine the definition of trade and commerce in Section 30-14-102(6), MCA, I would follow the lead of the Department of Commerce and limit the interpretation of the sale of services to services relating to property, tangible or intangible, real, personal or mixed, and other articles and commodities in commerce. If that approach is applied to Section 30-14-102(6), MCA, then the same approach properly would be applicable to Section 30-14-133, MCA. We properly could conclude that under Section 30-14-133, MCA, the borrowing of money from a bank on a consumer loan is not a purchase of goods or services. That conclusion is consistent with the reference to “seller” or “lessor” in the code section. In view of the history of the past twenty years, and the potential impact of the majority conclusion, I would leave to the legislature the determination of whether or not it is appropriate to extend the MCPA to consumer loans made by banks and to other types of services rendered within the state.

I would conclude that the MCPA does not apply to consumer loans by banks.


author: JUSTICE McDONOUGH

text:
    BARBARA R. WOLFE, Petitioner and Appellant, v. STATE OF MONTANA, DEPARTMENT OF LABOR AND INDUSTRY, BOARD OF PERSONNEL APPEALS, ex rel., HELENA EDUCATION ASSOCIATION, MEA, NEA, LABOR ORGANIZATION, and HELENA SCHOOL DISTRICT NO. 1, EMPLOYER, Respondents and Respondents.
    No. 92-194.
    Submitted on Briefs September 17, 1992.
    Decided December 8, 1992.
    49 St.Rep. 1042.
    255 Mont. 336.
    843 P.2d 338.

      For Petitioner and Appellant: Michael Donahoe, Helena.
    For Respondents: Emilie Loring, Hilley & Loring, Missoula (Helena Education Assn.); Melanie A. Symons, Dept. Labor & Industry, Helena (Board of Personnel Appeals)
   JUSTICE McDONOUGH

delivered the Opinion of the Corut.

This is an appeal from a First Judicial District Court, Lewis and Clark County, decision declaring Section 39-31-204, MCA, unconstitutional. We vacate the decision and remand to the Board of Personnel Appeals.

Barbara Wolfe is a teacher employed in School District No. 1. Her employment is subject to a collective bargaining agreement between the Helena Education Association (HEA) and the School District. The HEA is affiliated with two other teacher’s unions, the Montana Education Association (MEA) and the National Education Association (NEA).

The collective bargaining agreement allows teachers to pay an agency fee in lieu of joining the unions. School District employees must either join the unions or pay the agency fee. The agency fee is a payment for the union’s collective bargaining efforts. Like membership dues, the agency fee is divided among HEA, MEA and NEA.

Wolfe is a Roman Catholic. Because of her religious beliefs, she opposes both birth control and abortion. She objects to paying an agency fee to the teacher’s unions because the NEA publicly supports legalized abortion and birth control.

On November 21, 1988, Wolfe sent a letter to HEA, MEA and the Montana Department of Labor and Industry Board of Personnel Appeals. In the letter Wolfe stated, “joining the NEA or any of its affiliates would be a violation of my religious beliefs and I cannot in good conscience contribute money directly or indirectly to such an organization.”

In addition to freedom of religion, the letter mentioned possible religious accommodation under the non-association with labor unions statute, Section 39-31-204, MCA. That statute provides certain religious grounds for which public employees may have a right of non-association with and non-financial support of labor organizations. See Section 39-31-204, MCA. Persons who fall within the parameters of the statute may make periodic payments to a charity rather than pay money to a union. See Section 39-31-204, MCA.

The Board of Personnel Appeals treated the letter as a petition for non-association with a labor organization and appointed a special committee pursuant to the non-association statute. The committee met on February 15,1989. Two days later, it informed Wolfe that she did not qualify for non-association under the statute. The Board considered only the non-association statute in its decision. It ignored her right to free exercise of religion and did not consider any alternative accommodations.

On January 25,1991, after further correspondence between Wolfe and the Board of Personnel Appeals, the Board issued a final order adopting the dismissal issued in February of 1989. The final order stated, “the Board does not intend to take action on the petition.”

On February 22, 1991, Wolfe filed a petition for judicial review in District Court, alleging the Board of Personnel Appeals’ final order violated her right of non-association as set forth in Section 39-31-204, MCA. Wolfe’s petition also alleged that the Board’s decision denied her right to exercise her religious beliefs in violation of the Free Exercise Clause of both the United States Constitution and the Montana Constitution.

The District Court determined that, pursuant to the Montana Administrative Procedure Act, Section 2-4-702, MCA, it had jurisdiction over only the allegation that the Board denied Wolfe her rights under the non-association statute. The District Court, therefore, treated the petition as a declaratory judgment action. The court declared Section 39-31-204, MCA, unconstitutional on its face because it violates the Establishment Clause of the First Amendment— it grants a benefit to members of organized religion which is denied to persons with personal religious beliefs. The District Court decision did not resolve the dispute between the parties.

As a general rule, this Corut will consider only issues raised before the district court. Miller v. Catholic Diocese of Great Falls (1986), 224 Mont. 113, 116, 728 P.2d 794, 795. This Court, however, reserves the power to consider a question raised for the first time on appeal if it relates to a substantial or fundamental right of a litigant. Haldorson v. Haldorson (1977), 175 Mont. 170, 173, 573 P.2d 169, 171; Cottril v. Cottril Sodding Service (1987), 229 Mont. 40, 42, 744 P.2d 895, 896. The case presently before the Court involves freedom of religion which is clearly a fundamental right. See Art. II, Sec. 5 Mont.Const.; U.S. Const, amend. I.

Courts should avoid constitutional questions whenever possible. Ingraham v. Champion Int’l (1990), 243 Mont. 42, 46, 793 P.2d 769, 771. A court should not rule on the constitutionality of a legislative act if the court can decide the case before it without reaching constitutional considerations. Taylor v. Dept. of Fish, Wildlife & Parks (1983), 205 Mont. 85, 90, 666 P.2d 1228, 1231.

We can decide the present case without ruling on the constitutionality of the non-association with labor unions statute, Section 39-31-204, MCA. Both federal and Montana’s civil rights acts forbid religious discrimination by employers. See Title VII of Civil Rights Act of 1964,42 U.S.C. Section 2000e, et seq.; Section 49-2-101, MCA, et seq. Title VII of Civil Rights Act of 1964 “clearly imposes the same duty not to discriminate on a union as it does the employer.” Yott v. North American Rockwell Corp. (9th Cir. 1979), 602 F.2d 904, 909; see also 42 U.S.C. Section 2000e-2(c).

In the present case, the teachers’ unions must reasonably accommodate Wolfe’s religious beliefs, if they can do so without incurring undue hardship. See Yott, 602 F.2d at 908-09. Wolfe requested that the unions accommodate her religious beliefs by extending the perimeters of the non-association statute to include her situation. The unions, on the other hand, offered to accommodate Wolfe by splitting the NEA’s portion of the agency fee between the MEA and the HEA.

Under Title VII, a defendant that has several means of reasonably accommodating an employee is free to select the one that poses the least hardship to itself. See generally, Ansonia Board of Education v. Philbrook (1986), 479 U.S. 60, 68, 107 S.Ct. 367, 372; American Postal Workers Union v. Postmaster General (9th Cir. 1986), 781 F.2d 772, 775-77. “By its very terms [Title VII] directs that any reasonable accommodation by the employer is sufficient to meet its accommodation requirement.” Ansonia Bd. of Ed., 479 U.S. at 68.

In the present case, there has been no fact finding as to whether the unions offered a reasonable accommodation that would effectively remove the religious conflict facing Wolfe. We vacate the District Court decision of unconstitutionality and remand to the Board of Personnel Appeals to determine whether the unions offered a reasonable accommodation of Wolfe’s religious beliefs.

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