text:
    IN THE MATTER OF THE MENTAL HEALTH OF L.C.B. Appellant.
    No. 91-275.
    Submitted on Briefs October 31, 1992.
    Decided April 3, 1992.
    49 St.Rep. 290.
    253 Mont. 1.
    830 P.2d 1299.

      For Appellant: Robert B. Allison, Kalispell.
    For Respondent: Marc Racicot, Atty. Gen., John Paulson, Asst. Atty. Gen., Helena, Ted O. Lympus, Flathead Co. Atty., Dennis J. Hester, Dep. Co. Atty., Kalispell.
   JUSTICE HUNT

delivered the Opinion of the Court.

This is an appeal from the Eleventh Judicial District Court, Flathead County. The Flathead County Attorney’s office filed with the District Court a petition for the involuntary commitment of L.B., pursuant to §§ 53-21-114 through -126, MCA, alleging that L.B. was seriously mentally ill. The District Court held a hearing on the matter and concluded that L.B. was seriously mentally ill and in need of treatment. The District Court ordered L.B. committed to the Montana State Hospital in Warm Springs for treatment. It is from this order that L.B. appeals. We affirm.

The following issues are presented for review by this Court:

1. Was the District Court’s finding that L.B. is seriously mentally ill clearly erroneous?

2. Did the District Court err in considering testimony concerning L.B.’s behavior while L.B. was detained following dismissal of a prior petition for involuntary commitment?

3. Did the District Court err in denying L.B.’s motion to dismiss the second petition for involuntary commitment on the basis of res judicata?

The appellant is a 30-year-old male who was arrested on April 26, 1991, in connection with an automobile accident. While in custody, the appellant appeared to be disoriented and confused. This behavior prompted law enforcement officials to request that appellant be examined by an individual in the mental health field. Amental health assessment was conducted by Dr. Barbara Louise Stone, a clinical therapist at the Western Montana Regional Community Mental Health Center in Kalispell. Dr. Stone is a certified “professional person” pursuant to § 53-21-102(12), MCA.

After visiting with the appellant in the Flathead County Jail, Dr. Stone concluded that appellant was seriously mentally ill. Specifically, Dr. Stone diagnosed the appellant as suffering from chronic paranoid schizophrenia. In Dr. Stone’s opinion, the appellant’s condition significantly impaired his ability to meet his own basic needs and protect his life and health. When the appellant refused to accept the services of the mental health center, Dr. Stone submitted an emergency report requesting his commitment to the Montana State Hospital. Pursuant to this emergency report, on May 1,1991, the Flathead County Attorney’s Office filed with the District Court a petition for involuntary commitment.

The District Corut found probable cause, appointed counsel for appellant, and scheduled a hearing on the matter, which was held on May 2, 1991. At the hearing, the State argued that appellant was seriously mentally ill and suffered from a mental disorder which had deprived the appellant of the ability to protect his own life or health in accordance with § 53-21-102(15), MCA. The only evidence received by the court was the testimony of Dr. Stone. Dr. Stone described the bizarre behavior of the appellant and gave her diagnosis of his illness. Dr. Stone also testified that in her opinion appellant’s condition made him unable to protect his own life or health. At the conclusion of Dr. Stone’s testimony, counsel for the appellant made a motion to dismiss the petition for involuntary commitment. Appellant’s counsel argued that there had not “been a sufficient showing of either endangerment or inability to protect his own life and provide for his own needs.” The District Court agreed and granted the motion to dismiss the petition. The District Court acknowledged that the appellant’s behavior was bizarre and that appellant appeared to be a very troubled young man. However, the court felt the testimony concerning appellant’s inability to protect his own life or health was simply too speculative.

Upon granting appellant’s motion to dismiss, the District Court ordered the appellant released. After the hearing had terminated, a deputy sheriff from the Flathead County Detention Center approached the District Court Judge and appellant’s counsel while they were visiting. The deputy sheriff requested permission to detain the appellant for approximately 30 minutes until another deputy sheriff returned from lunch. The second deputy upon whom they were waiting was the mental health liaison at the jail and also knew the appellant’s sister. It was hoped that arrangements could be made for his sister to come and get the appellant, as opposed to just sending him out into the street.

Upon returning to work from lunch, the deputy sheriff attempted to locate a place for the appellant, or at least someone to come and get him. An individual from the Crisis Response Team came to see the appellant. This individual determined that appellant was too ill to stay in the Crisis Response Team’s safe house for mentally ill persons. Appellant’s sister was contacted, but she refused to come get the appellant, indicating that she was afraid of him. Dan George, Director of the Lamplighter House which is a program of the Western Montana Regional Community Mental Health Center, then came to the jail to see the appellant. George is a certified “professional person” under Montana law. After interviewing the appellant, George determined that appellant should be committed involuntarily to the State Hospital for immediate treatment. Upon George’s recommendation, the Flathead County Attorney’s Office filed a second petition for involuntary commitment that same afternoon. The District Court Judge ordered an immediate hearing on the matter. Prior to the second hearing, counsel for the appellant made a motion to dismiss the State’s second petition. The District Court denied that motion. George, and the deputy who had been trying to locate a place for the appellant, both testified at the second hearing. At the conclusion of the hearing, appellant renewed the motion to dismiss. The District Court determined that the appellant was seriously mentally ill, that such mental illness had deprived the appellant of the ability to protect his life or health, and that commitment to the State Hospital at Warm Springs was the least restrictive environment available for treatment. The District Court’s order of May 2, 1991, provided that appellant would be transferred to the State Hospital at Warm Springs for a period of treatment not to exceed 90 days, unless extended as provided by law. The District Court reconsidered this decision and reaffirmed it in an order dated May 9, 1991.

I

Was the District Court’s finding that L.B. is seriously mentally ill clearly erroneous?

Appellant alleges that the testimony given at the second hearing was insufficient to support the District Court’s decision. Section 53-21-127, MCA, provides that prior to ordering the involuntarily commitment of a person to the State Hospital at Warm Springs, the District Court must first determine that the individual is seriously mentally ill. Section 53-21-102(15), MCA, defines the term seriously mentally ill and provides in part that:

“Seriously mentally ill’ means suffering from a mental disorder which has resulted in self-inflicted injury or injury to others or the imminent threat thereof or which has deprived the person afflicted of the ability to protect his life or health. [Emphasis added.]”

Section 53-21-127, MCA, also provides that the court shall choose the least restrictive environment available that will protect the individual, the public, and permit effective treatment.

The standard of proof for the District Court in involuntary commitment proceedings is set out at § 53-21-126(2), MCA, which reads in part:

The standard of proof in any hearing held pursuant to this section is proof beyond a reasonable doubt with respect to any physical facts or evidence and clear and convincing evidence as to all other matters, except that mental disorders shall be evidenced to a reasonable medical certainty.

Concerning this statute, we have stated that:

[P]roof of mental disorders to a reasonable degree of medical certainty is sufficient if, considered with all the other evidence in the case, the trier of fact is led to the conclusion that the mental disorder exists by clear and convincing proof.

In the Matter of G.P. (1990), 246 Mont. 195, 197, 806 P.2d 3, 5.

On appeal, this Court will not disturb the District Court’s findings of fact in a nonjury trial unless they are clearly erroneous.

In the Matter of the Mental Health of E.P. (1990), 241 Mont. 316, 787 P.2d 322;

Rule 52(a), M.R.Civ.P. This Court will also give due regard to the opportunity of the District Court to judge the credibility of the witnesses. In the Matter of the Mental Health of R.J.W. (1987), 226 Mont. 419, 736 P.2d 110. Upon reviewing conclusions of law reached by the District Court, this Court will merely determine if the decision below was correct or not. In The Matter of J.L.S. and A.D.S. (1988), 234 Mont. 201, 761 P.2d 838. In the present case, the District Court limited the testimony at the second hearing to only those events occurring subsequent to the first hearing. This Court will only review the evidence presented at the second hearing.

As previously mentioned, the District Court must find by clear and convincing evidence that an individual is seriously mentally ill prior to ordering the involuntary commitment of that individual. We will not disturb such a finding unless it is clearly erroneous. This Court has recently adopted a three-part test for determining if a finding is clearly erroneous. Interstate Production Credit Assn v. DeSaye (Mont. 1991), 820 P.2d 1285, 48 St.Rep. 986. In DeSaye, we explained this three-part test stating that:

First, the Court will review the record to see if the findings are supported by substantial evidence. Second, if the findings are supported by substantial evidence, we will determine if the trial court has misapprehended the effect of evidence. [Citations omitted.] Third, if substantial evidence exists and the effect of the evidence has not been misapprehended, the Court may still find that “[a] finding is ‘clearly erroneous’ when, although there is evidence to support it, a review of the record leaves the court with the definite and firm conviction that a mistake has been committed.” [Citation omitted.]

DeSaye, 820 P.2d at 1287.

In the present case, the District Court determined that appellant was seriously mentally ill. He was unable to protect his life or health and the least restrictive environment in which to receive treatment was at the State Hospital at Warm Springs. We agree. There was substantial evidence presented at the hearing to support the District Court’s finding. The uncontradicted testimony indicated that the appellant suffered from chronic paranoid schizophrenia, which without treatment and medication would continue to impair his ability to meet his most basic needs. The appellant demonstrated an inability to take care of or assess his basic health needs. Although food was provided for him at the detention center, he was not eating, even though he complained of hunger. The appellant was not oriented to person, place, and time. Appellant appeared to be suffering from auditory hallucinations which additionally impaired his ability to process information and respond to even the simplest of tasks.

The substantial evidence supports the District Court’s decision in this instance. The District Court did not misapprehend the effect of the evidence, nor does a review of the record leave this Court with a definite and firm conviction that a mistake has been committed. The finding by the District Court that L.B. is seriously mentally ill was not clearly erroneous.

II

Did the District Court err in considering testimony concerning L.B.’s behavior while L.B. was detained following dismissal of the first petition for involuntary commitment?

The testimony given at the second hearing, which resulted in L.B.’s involuntary commitment, was based on information obtained on the afternoon of May 2, 1991, after the District Court had ordered the appellant released. On appeal, it is argued by appellant that all evidence obtained after the District Court’s order to release the appellant should be excluded. Appellant requests that this Court apply, for the first time, the criminal law exclusionary rule to the present situation.

Both parties in this case recognize that involuntary commitment hearing proceedings are civil in nature. In the Matter of the Mental Health of G.S. (1985), 215 Mont. 384, 698 P.2d 406; § 53-21-115(7), MCA. Despite the fact that this was not a criminal proceeding, appellant’s argument that the exclusionary rule should apply is not altogether unpersuasive. Appellant correctly points out that such proceedings may result in a massive curtailment of liberty for the person committed. Therefore, involuntary commitment proceedings must carefully follow the mandatory statutory guidelines and the courts must safeguard the due process rights of the individual involved at every stage of the proceeding. Matter of E.P., 787 P.2d at 322.

This Court has previously explained the objectives of commitment hearings as follows:

The core purpose of our statutory scheme in addressing those unfortunate persons who suffer a mental disorder is to secure for them such care and treatment, skillfully and humanely administered, as may be in their best interest. This purpose is codified in § 53-21-101(1), MCA.

In the Matter of J.B. (1985), 217 Mont. 504, 510, 705 P.2d 598, 602. Suppressing relevant evidence in commitment proceedings would defeat the purpose of the proceeding, which is to secure the appropriate treatment for those who need it and are unable, due to their mental condition, to obtain this treatment for themselves. We decline to apply the criminal law exclusionary rule to this involuntary commitment hearing. The District Court did not err in considering testimony concerning L.B.’s behavior while L.B. was detained following the dismissal of the first petition for involuntary commitment.

III

Did the District Court err in denying L.B.’s motion to dismiss the second petition for involuntary commitment on the basis of res judicata?

Prior to the start of the second hearing the appellant made a motion to dismiss the second petition on the grounds that the doctrine of res judicata barred the District Court from reconsidering this matter. This Court has stated that four criteria must be met before an issue is barred by res judicata: (1) the parties or their privies must be the same; (2) the subject matter of the action must be the same; (3) the issues must be the same and relate to the same subject matter; and (4) the capacities of the persons must be the same in reference to the subject matter and to the issues between them. Phelan v. Lee Blaine Enterprises (1986), 220 Mont. 296, 716 P.2d 601. In this case, the District Court expressly prohibited the introduction of evidence relating to the appellant and the time period prior to the first hearing. Only testimony of evidence obtained subsequent to the first hearing was allowed. Therefore, the issues were not the same in the second hearing. Additionally, the doctrine of res judicata only applies to orders that are final or by their nature are intended to be final. Peterson v. Montana Bank of Bozeman, N.A. (1984), 212 Mont. 37, 687 P.2d 673. The doctrine of res judicata is intended to protect litigants from repeated suits over the same issues and subject matter and to provide a final resolution of the controversy. Brault v. Smith (1984), 209 Mont. 21, 679 P.2d 236. However, a commitment hearing is different than most other civil suits. A finding at one time that an individual does not suffer from a serious mental illness is not intended to be a final and irrevocable decision on the individual’s mental health. The statutes contemplate that the question of whether an individual is seriously mentally ill may be brought at any time as long as the necessary statutory criteria are met. The District Court did not err in denying appellant’s motion to dismiss the second petition for involuntary commitment on the basis of res judicata.

We affirm.

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


source: Caselaw Access Project

author: JUSTICE McDONOUGH JUSTICE TRIEWEILER

license: Public Domain

text:
    LINDA McNEIL, Plaintiff & Appellant, v. THOMAS CURRIE and FARMERS INSURANCE GROUP, FARMERS INSURANCE GROUP OF COMPANIES, and THE TRUCK INSURANCE EXCHANGE, Defendants and Respondents.
    No. 90-436.
    Submitted on Briefs September 24, 1991.
    Decided April 9, 1992.
    49 St.Rep. 312.
    253 Mont. 9.
    830 P.2d 1241.

      For Appellant: Michael J. McKeon, Attorney at Law, Anaconda.
    For Respondent: Steven S. Carey, Garlington, Lohn & Robinson, Missoula; Robert C. Brown, Poore, Roth & Robinson, Butte.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

Linda McNeil appeals from an order of summary judgment granted by the District Court of the Third Judicial District, Deer Lodge County, in favor of defendants Thomas Currie, Farmers Insurance Group, Farmers Insurance Group of Companies and The Truck Insurance Exchange. The District Court held that there were no genuine issues of material fact and the applicable law supported defendants’ motions for summary judgment. We affirm in part and reverse in part.

The issues on appeal are:

1. Whether the District Court erred in determining that McNeil did not have a claim for a breach of the implied covenant of good faith and fair dealing.

2. Whether the District Court erred in determining that McNeil did not have a claim for fraud.

3. Whether the District Court erred in finding that McNeil did not have a claim under the Unfair Claim Settlement Practices Act.

4. Whether the District Court erred in determining McNeil did not have a claim for intentional infliction of emotional distress.

A review of the somewhat complex factual background is necessary. Appellant Linda McNeil (McNeil) has owned a clothing store, Calico & Company, in Anaconda, Montana, since 1983. Respondent, Thomas Currie (Currie), was an independent insurance agent during the time in question. Currie sold products of both Farmers Insurance Group (Farmers) and Truck Insurance Exchange (TIE), a member of Farmers Insurance Group. Currie’s business, “Thomas Currie Insurance” was located next door to McNeil’s clothing store in Anaconda.

In June of 1984, McNeil approached Currie about purchasing insurance coverage for her business. Currie filled out an application for a special Sentinel package policy from TIE. McNeil signed the application and gave Currie a check for $113.00 as a down payment. The balance of $113.00 was due within 60 days if TIE accepted the risk of insuring McNeil’s store.

On June 28,1984, Currie submitted the application along with the check to TIE. TIE sent Currie a notice on July 9, 1984, stating that Calico & Company was ineligible for a special Sentinel policy, but that TIE would consider the business for a regular Sentinel policy, and that a completed application should be sent. Currie testified he mistakenly thought TIE would consider Calico & Company for the regular Sentinel policy from the original application already submitted. Thus, no application for a regular Sentinel policy was submitted by Currie. Consequently, TIE did not issue McNeil a policy. TIE provided binder coverage to McNeil from July 1, 1984 through September 4,1984. Currie testified he led McNeil to believe she was going to receive a policy.

TIE did not accept the application for the special Sentinel policy because Calico & Company did not meet the policy requirements of being in business for at least three years and did not have the requisite Dun & Bradstreet(D & B) Credit Rating. On July 31,1984, TIE sent a notice of cancellation, along with a refund, to Linda McNeil’s correct address at her store in Anaconda. On August 1,1984, McNeil unaware of the cancellation, sent in the balance of $113.00 for the premium. McNeil testified she did not receive the notice of cancellation, but recalled seeing it in her files.

The refund check of $74.10 less $38.90 from the first $113.00 installment, covered the amount for the binder coverage provided between July 31, 1984 and September 4, 1984. TIE refunded the second check in September of 1984. This check went to Currie’s office payable to McNeil. McNeil testified that no discussions between herself and Currie regarding the insurance occurred again until after the first of the year. However, Currie testified he told McNeil to ignore a cancellation notice if she received one.

On December 24, 1984, William Jarvi, who is not a party to this lawsuit, drove his automobile into the building which housed Calico & Company and Thomas Currie Insurance, causing damage to both businesses. Jarvi was, coincidentally insured by Farmers. John Gillespie, a Farmers claim adjuster, adjusted and settled McNeil’s claim under Jarvi’s policy. McNeil did not submit a claim under her policy.

During the time the claim was being adjusted under Jarvi’s insurance, attorney Greg Skakles represented McNeil. Skakles settled the claim with Farmers on behalf of McNeil for $5,006.95 on April 19, 1985. The settlement included payment for emotional distress and lost profits for the two days the store was closed after Christmas.

McNeil testified she found out she didn’t have a policy sometime in February of 1985. McNeil testified on deposition that she repeatedly requested a copy of her insurance policy from Currie. Attorney Skakles also requested a copy of the policy from Currie. Currie testified that when he realized his mistake that an application for the regular Sentinel policy was necessary, he informed Skakles. Skakles demanded Currie obtain immediate insurance coverage for McNeil’s store.

Subsequently, on May 3, 1985, Currie sent an application with McNeil’s file signature, to TIE, this time for a regular Sentinel policy along with the two refund checks TIE had returned in August and September of 1984. Currie testified that he obtained the refund checks from McNeil. McNeil testified she was unaware of this second May 1985 application, even though her attorney demanded Currie obtain coverage for her. Representatives of TIE testified that McNeil received binder coverage from March 14,1985 to September 1,1985, and if McNeil had sustained a loss during that period, she would have been covered.

This second policy application was denied by TIE on May 24,1985. Currie notified Skakles of the denial. Farmers applied the two refund checks to the binder coverage for McNeil’s store from March 14,1985 until September 1, 1985. However, McNeil still owed $242.00 for the binder coverage. TIE sent notices for the premium to McNeil on July 1, 1985, and July 25, 1985. These documents advised McNeil to inform TIE if she had obtained other coverage for the same time period, and if so, the premium charge would be dropped. McNeil testified she did not receive these notices.

McNeil applied for business insurance with Yeoman Insurance of Anaconda and received a policy effective June 3, 1985. Neither McNeil or Skakles informed TIE she obtained this cover ageAfter two more premium notices were sent to McNeil, TIE turned the account over to D & B for collection. McNeil received a collection notice from D & B to which she replied on August 22, 1985, informing TIE that she never received a policy and did not owe them any money. After D & B failed to collect the amount from McNeil, they sent the account back to Farmers. Farmers halted any efforts to collect the amount.

McNeil filed a lawsuit alleging that the defendants breached the covenant of good faith and fair dealing, committed fraud, violated the Unfair Trade Practices Act, and the defendants’ conduct constituted an intentional infliction of emotional distress. The District Court granted summary judgment in favor of TIE. McNeil appeals.

The scope of review is the same as the trial court. Summary judgment under Rule 56(c), M.R.Civ.P., is proper only if the record discloses no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Beaverhead Bar Supply v. Harrington (1991), 247 Mont. 117, 120, 805 P.2d 560, 562.

I

Whether the District Court erred in determining that McNeil did not have a claim for breach of the implied covenant of good faith and fair dealing.

McNeil maintains that the District Court erred when it held that she failed to claim a breach of contract, and therefore, could not sustain a recovery under the breach of the implied covenant of good faith and fair dealing. However, a precedent breach of the underlying contract is no longer a requirement. Recently, we said: “In order to recover ... on a theory of breach of the implied covenant, there must be an enforceable contract to which the covenant attends.” Beaverhead Bar Supply v. Harrington, (1991), 247 Mont. 117, 124, 805 P.2d at 564, citing Story v. City of Bozeman (1990), 242 Mont. 436, 450, 791 P.2d 767, 775.

Story was decided on May 3,1990. The District Court rendered its opinion and order on June 27,1990. The general rule is that “Achange in the law between a nisi prius (here the ruling in the district court) and an appellate decision requires the appellate court to apply the changed law.” Thorpe v. Housing Authority of the City of Durham (1969), 393 U.S. 268, 281, 89 S.Ct. 518, 525-26, 21 L.Ed.2d 474 citing Ziffrin, Inc. v. United States (1943), 318 U.S. 73,78. This Court, citing Thorpe, has provided that “generally an appellate court must apply the law in effect at the time it renders its decision.” Lee v. Flathead County (1985), 217 Mont. 370, 373, 704 P.2d 1060, 1063. Story says in applying the covenant to a contract, the honesty in fact standard applies. Story v. City of Bozeman (1990), 242 Mont. 450, 791 P.2d 775.

The honesty in fact standard, therefore, must be met for a breach of the covenant of good faith and fair dealing, which results in the breach of the contract itself. That is,

Each party to the contract has a justified expectation that the other will act in a reasonable manner in its performance or efficient breach. When one party uses discretion conferred by the contract to act dishonestly or to act outside of accepted commercial practices to deprive the other party of the benefit of the contract, the contract is breached.

Story at 450, 791 P.2d 775.

Evidence existed that Currie received information from TIE in July of 1984 that they would not underwrite McNeil’s store. While Currie testified he made a mistake in interpreting the underwriting action, there is testimony of misinformation from Currie to McNeil and therefore the determination as to his credibility and honesty lies with the trier of fact. Thus, McNeil is entitled to prove that Currie acted dishonestly in handling her application. If McNeil can prove Currie acted dishonestly, thus sustaining a breach of contract under the implied covenant, only contract damages are due. McNeil has already been reimbursed for the cost of the policy plus interest. McNeil also pled costs as damages which may be awarded after the outcome of the proceedings.

Damages are sometimes available for the contract related tort of good faith and fair dealing. However, McNeil does not satisfy the requirements to sustain an action for tortious breach of the implied covenant as set forth in Story. In order for the tort of bad faith to apply, all the essential elements of the special relationship must be present. Story at 451, 791 P.2d at 776.

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

Story at 451, 791 P.2d at 776.

Cases determining that a special relationship exists between insured and insurer usually analyze fact situations in which insurance companies have the upper hand in settling claims, denying coverage and paying claims. See State Farm Fire & Cas. Co. v. Nichols (Alak. 1989), 777 P.2d 1152, 1155-57; Alaska Pacific Assur. Co. v. Collins (Alak. 1990), 794 P.2d 936. However, under the undisputed facts of this case, the parties are not in inherently unequal bargaining positions. McNeil, a businesswoman, approached Currie about obtaining insurance. The purchase of insurance was a business deal which she could have entered into with any other insurance agent. McNeil fails to satisfy an element of a special relationship and does not have abad faith claim in tort.

We therefore reverse the District Court as to the contract action, and affirm as to the bad faith action in tort.

II

Whether the District Court erred in determining that McNeil did not have a claim for fraud.

A prima facie case of actual fraud must include the following nine elements: 1) proof of a representation; 2) its falsity; 3) its materiality; 4) the speaker’s knowledge of its falsity or ignorance of its truth; 5) the speaker’s intent that it should be acted upon by the person and in the manner reasonably contemplated; 6) the hearer’s ignorance of its falsity; 7) the hearer’s reliance on its truth; 8) the right of the hearer to rely upon it; and 9) the hearer’s consequent and proximate injury or damage. Avco Financial Services v. ForemanDonovan (1989), 237 Mont. 260, 772 P.2d 862, 864. Although McNeil failed to plead the elements of fraud with particularity as required by Rule 9(b) M.R.Civ.R, evidence of fraud was presented in deposition, waiving any defense to the violation of Rule 9(b).

Here, McNeil admitted seeing the cancellation notice in her office files. Currie testified he advised her to ignore a cancellation notice if she received one, and also gave assurance of coverage. McNeil testified she never spoke to Currie about it. Thus, there is an issue here as to credibility and summary judgment is not proper. In addition, in viewing all inferences that may be drawn in favor of the non-moving party, there is evidence of proof of the first eight elements. Damages (No. 9) Eire a necessary element of fraud. The fraud damages McNeil claims are difficult to ascertain. A plaintiff may only recover for damages that are proximately caused by the defendant’s misrepresentations. § 27-1-317, MCA (1991). Montana cases on the subject only require a finding of damages. As we said in Miller v. Fox:

It is true, as plaintiff claims, that under § 17-208, R.C.M. 1947, “* * * there can be no recovery of exemplary or punitive damages unless the plaintiff is entitled to actual damages.” Smith v. Krutar (1969), 153 Mont. 325, 335, 457 P.2d 459, 464. Although the trier of fact, as a prerequisite for awarding exemplary damages, must find the claimant suffered actual damages, it is unnecessary that the trier of fact place a monetary value on the actual damages or make any award of actual damages. Fauver v. Wilkoske (1949), 123 Mont. 228, 239, 211 P.2d 420.

Miller v. Fox (1977), 174 Mont. 504, 510, 571 P.2d 804,808. If a finding of damages is made, the trier of fact could make an award for punitive damages if the requisite malice were proved. Miller at 510-511, 571 P.2d at 808; Butcher v. Petranek (1979), 181 Mont. 358, 364, 593 P.2d 743. Therefore, we conclude that the District Court erred in ruling McNeil failed to make a prima facie case for fraud.

Ill

Whether the District Court erred in finding that McNeil did not have a claim under the Unfair Trade Practices Act.

McNeil argues that §§ 33-18-201 and 33-18-212, MCA, apply to the facts. Title 33, MCA, governs insurance and insurance companies. Section 33-18-201, MCA, titled “Unfair claim settlement and practices prohibited”, governs situations in which claims have been made to insurance companies. Under the facts of this case, McNeil never submitted a claim to TIE. Accordingly, we hold that § 33-18-201, MCA, is not applicable.

Section 33-18-212, MCA, states in part:

“Illegal dealing in premiums — improper charges for insurance. (1) a person may not willfully collect any sum as premium or charge for insurance, which insurance is not then provided or is not in due course to be provided (subject to acceptance of risk by the insurer) by an insurance policy issued by an insurer as authorized by this code.”

Currie did collect a sum from McNeil as a premium which he submitted to Farmers. While it is true that McNeil did not receive a policy, she did receive binder coverage between July 1, 1984 and September 4, 1984, and March 14, 1985 and September 1, 1985. Farmers declined to accept the risk of insuring McNeil’s store based on the amount of time McNeil had been in business, and her low D&B rating. These facts do not support a violation of § 33-18-212, MCA.

We hold neither Currie nor Farmers violated §§ 33-18-212 or 33-12-201, MCA, therefore the District Court did not err in concluding that McNeil did not have a claim under the Unfair Trade Practices Act.

IV

Whether the District Court erred in determining McNeil did not have a claim for intentional infliction of emotional distress.

McNeil maintains that Currie constantly badgered her to reopen her business quickly after the Christmas Eve accident and that he pressured her to accept settlement under Jarvi’s policy. McNeil testified that she was embarrassed and humiliated to open her store while the windows were boarded with plywood. Further McNeil worried that the D&B collection attempt would affect her credit rating. As a result, McNeil contends she developed dermatological problems requiring medical treatment. In support of her position, McNeil relies on Niles v. Big Sky Eyewear (1989), 236 Mont. 455, 771 P.2d 114, for the proposition that Montana recognizes an independent cause of action for intentional infliction of emotional distress.

In Niles we affirmed the District Court’s refusal to issue a directed verdict in favor of the employer Big Sky Eyewear. Big Sky Eyewear falsely accused Niles of stealing and had her arrested and as a result she spent time in jail. In Niles we stated: “Where there is evidence of substantial invasion of a legally protected interest which causes a significant impact upon the person of the plaintiff, emotional distress is compensable without showing of physical or mental injury.” Niles at 465, 771 P.2d at 119, citing Johnson v. Supersave Markets, Inc. (1984), 211 Mont. 465, 475, 686 P.2d 209, 213. Under the facts, this Court held that Niles met this standard and declined to overturn the District Court’s denial of defendant’s directed verdict on the issue. In the case at bar McNeil can show no similar substantial invasion of a legally protected interest.

In Day v. Montana Power Co. (1990), 242 Mont. 195, 789 P.2d 1224, we said, ‘We have adopted only comment j to Restatement (Second) of Torts § 46 (1965), defining severe emotional distress. First Bank (N.A.) v. Clark (1989), 236 Mont. 195, 771 P.2d 84, 91. Section 46 concerns the tort of intentional infliction of emotional distress which we have not recognized as a cause of action.” Day at 200, 789 P.2d at 1227. See also Doohan v. Bigfork School Dist. No. 38 (1991), 247 Mont. 125, 143, 144, 805 P.2d 1354, 1362, 1365, in which this Court declined to find a prima facie case for intentional infliction of emotional distress under the facts.

Moreover, § 46 of the Restatement provides: “One who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another is subject to liability for such emotional distress and if bodily harm to the other results from it, such bodily harm.”

Neither the conduct of Currie nor Farmers rises to the level of extreme and outrageous. Further, the emotional distress suffered by McNeil does not rise to the level of severity called for in the Restatement. McNeil saw Dr. Neill, a dermatologist, on two occasions for treatment of what Dr. Neill labeled moderate acne. Dr. Neill testified that stress was one possible cause of the acne. Commentators to the Restatement note: "... The law intervenes only where the distress inflicted is so severe that no reasonable person could be expected to endure it.” Restatement (Second) of Torts § 46 (1965), comment j. We find that a reasonable person in our society should be expected to endure the problems McNeil suffered.

Additionally, although McNeil was worried about her credit rating, she testified that her credit rating was not affected by the D & B collection attempt. She has not been turned down for a loan, nor denied inventory credit for store purchases.

We conclude that the District Court did not err in granting defendants’ motions for summary judgment on McNeil’s intentional infliction of emotional distress claim.

Therefore, we affirm in part and reverse in part and remand to District Court for proceedings not inconsistent with this opinion.

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

JUSTICE TRIEWEILER

specially concurring in part and dissenting in part.

I concur with those parts of the majority opinion which affirm the District Court’s order dismissing plaintiff’s claims for violation of § 33-18-201, MCA, and for intentional infliction of emotional distress. I also concur with that part of the majority opinion which reverses the District Court’s dismissal of plaintiff’s claim which was based on fraud.

I

I dissent from that part of the majority opinion which affirms the District Court’s order dismissing plaintiff’s claim for tort damages based upon breach of the implied covenant of good faith and fair dealing.

As I stated in Haines Pipeline v. Montana Power Company (Mont. 1991), [251 Mont. 422,] 48 St.Rep. 1102, 1109,I would not follow Story v. City of Bozeman (1990), 242 Mont. 436, 791 P.2d 767.

Story represents a sorry chapter in Montana jurisprudence, which for all practical purposes eliminated the tort of bad faith. In doing so, this Supreme Court did no favor to the citizens of this State.

The tort law of bad faith evolved through careful reasoning and long experience to take the profit out of dishonest and oppressive business practices. Story returned that profit for those in superior bargaining positions.
Every consumer and small businessman and woman in Montana are worse off because of Story.

Haines Pipeline, 48 St.Rep. at 1109 (Trieweiler, J., dissenting).

The worst part of the Story decision is that the legal principle for which it stands was not even an issue raised and briefed by the parties on appeal. As pointed out by Justice Sheehy in his dissenting opinion:

When we read the second portion of the majority opinion, a light dawns as to the reason for the reversal on this thin record. The majority have a higher agenda, one beyond the appeal in this case: the implied reversal of Nicholson v. United Pacific Ins. Co. (1985), 219 Mont. 32, 710 P.2d 1342. They use the vehicle of this case, weak as it is, to work their purpose.
There is no issue raised in this case from the parties or the record as to the concept of implied covenant of good and fair dealing in contracts. The law applying to this subject used by the District Court was that supplied by the defendants. That application by the District Court has become the law of the case. Without briefs on the issues, and without notice to the Bar in general, the majority accomplishes the following results:

3. Where no special relationship exists, the only available damages are contract damages, regardless of how egregious the conduct of the wrongdoing party is and regardless of the tort involved.

What the majority have done in this case is to abrogate any remedy for arbitrary, capricious or egregious conduct by a contracting party, upon issues not raised in this file nor on the record and without notice to the Bar in general. The reversal of the hard-won verdict obtained by Mark Story in this case is a joke. Under the limitations of the majority opinion, he will never again be justly compensated by any jury.

Story, 791 P.2d at 780, 782 (Sheehy, J., dissenting).

I believe that the sounder public policy was articulated in Nicholson v. United States Pacific Insurance (1985), 219 Mont. 32, 710 P.2d 1342, where we stated that:

The nature and extent of an implied covenant of good faith and fair dealing is measured in a particular contract by the justifiable expectations of the parties. Where one party acts arbitrarily, capriciously, or unreasonably, that conduct exceeds the justifiable expectations of the second party. The second party then should be compensated for damages resulting from the other’s culpable conduct.

Nicholson, 710 P.2d at 1348.

I believe there was evidence in this case that Currie, and possibly his employer, acted arbitrarily and unreasonably. His conduct was certainly contrary to the justifiable expectations of the plaintiff. Under the Nicholson criteria, there was sufficient evidence of bad faith to overcome a motion for summary judgment by the defendant. I would allow the plaintiff to pursue her bad faith claim in tort and let a jury decide whether she is entitled to damages for that claim.

Even under this Court’s decision in Story, there was sufficient evidence of bad faith to require submission of this case to a jury. I conclude that the plaintiff satisfied all of the elements in Story which this Court held are necessary to support tort damages for bad faith. Specifically, I believe that: (1) a lay-person who is unsophisticated in the technicalities of insurance coverage who goes to a professional licensed agent and relies on representations made by that agent is in an inherently unequal bargaining position; (2) plaintiff had no basis for questioning any representation that was made to her by someone she presumed to have special knowledge and qualifications for the representations that he made; (3) her purpose for entering into the contract was certainly nonprofit; it was to obtain peace of mind by acquiring business property insurance; (4) ordinary contract damages in this case are not adequate to compensate plaintiff for the experience that has resulted from the defendants’ conduct and will not make plaintiff whole for the disruption to her life that has resulted in this case. (Contract damages will not even cover the legal expense that a person in plaintiff’s position would normally have incurred just to protect her credit rating); and (5) she was especially vulnerable when she placed her trust in Currie, and he certainly was aware of her vulnerability by the fact that she accepted every one of his misrepresentations at face value.

For these reasons I dissent from the majority’s disposition of plaintiff’s claim based on the tort of bad faith.

H. UNFAIR TRADE PRACTICES ACT

I also dissent from that part of the majority opinion which affirms the dismissal of plaintiff’s claim under § 33-18-212, MCA, of the Unfair Trade Practices Act.

Section 33-18-212, MCA, provides that:

(1) A person may not willfully collect any stun as premium or charge for insurance, which insurance is not then provided or is not in due course to be provided (subject to acceptance of risk by the insurer) by an insurance policy issued by an insurer as authorized by this code.

In this case, plaintiff paid Currie $226 for insurance coverage from July 1, 1984, until June 31, 1985. She did not receive insurance coverage during that period of time. The majority disposed of this claim by observing that according to Currie she was covered during portions of that time based on his authority to bind the company. However, providing her with coverage during a portion of the time that she paid for is not the same as providing her with the coverage that she paid for. Furthermore, there was no written policy ever issued upon which plaintiff could have relied to assert a claim for coverage, had one been necessary. All the record reflects is that in retrospect after a dispute arose regarding an additional premium which Truck Insurance Exchange claimed was due, it asserted that it was bound from July 1,1984, through September 4,1984, and again from March 14, 1984, through September 1, 1985.

I conclude that the facts proven in this case would support a cause of action based on a violation of § 33-18-212, MCA. Therefore, I would reverse the District Court’s order which dismissed plaintiff’s claim under that statute by summary judgment.

JUSTICE HUNT concurs in the foregoing concurrence and dissent.


text:
    LARRY MARSHALL, Plaintiff and Appellant, v. THE STATE OF MONTANA; THE DEPARTMENT OF NATURAL RESOURCES AND CONSERVATION; and THE DEPARTMENT OF ADMINISTRATION, Defendants and Respondents.
    No. 91-400.
    Submitted on Briefs January 16, 1992.
    Decided April 15, 1992.
    49 St.Rep. 336.
    253 Mont. 23.
    830 P.2d 1250.

      For Appellant: John Bobinski, Attorney at Law, Helena.
    For Respondent: Marc Racicot, Attorney General; James M. Scheier, Assistant Attorney General, Helena.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

Larry Marshall appeals from an order of the First Judicial District Court, Lewis and Clark County, granting the State’s motion to dismiss and denying Marshall’s motion to amend his complaint. We reverse.

The sole issue on appeal is whether the District Court erred in determining Marshall’s complaint failed to state a claim upon which relief can be granted.

On January 6,1987, the personnel officer for the State of Montana Department of Natural Resources (DNRC) requested a new position description for Marshall’s position. Marshall was employed by DNRC as a Program Officer II, grade 15. On April 21, 1987, Marshall submitted a new position description to the Water Resources Division, recommending his position be reclassified at grade 16. However, the position was reclassified to Civil Engineering Specialist IV, grade 15 by the Department of Administration (DOA) effective December 5, 1987. Marshall disagreed with the reclassification, contending that his position should be reclassified to Civil Engineering Specialist V, grade 16. Marshall initiated the formal appeals process on January 14, 1988. He received his requested upgrade on July 24, 1989.

Marshall contends that prior to formal appeal, DNRC told him that it was neither supporting or opposing his request, and DNRC led him to believe it would be objective and would not actively oppose his request. Instead, DNRC took steps with the DOA in secret to ensure that the requested upgrade would be denied. Marshall further argues the DNRC intentionally provided him with misleading information concerning certain job classification factors.

Marshall’s complaint alleged tortious breach of the implied covenant of good faith and fair dealing. Marshall’s amended complaint alleged contractual breach of the implied covenant of good faith and fair dealing. Marshall pled contract damages in the form of attorney fees in prosecuting his classification appeal and loss of back pay due to the delay in filing the appeal. Marshall contends that the filing delay was caused by the State’s bad faith during the informal process. (Section 2-18-203(3), MCA, specifically limits the amount of back pay to 30 days prior to the date the classification appeal was filed.)

In considering a Rule 12(b)(6) motion to dismiss, the allegations must be viewed in the light most favorable to the plaintiff, admitting and accepting as true all facts well-pleaded. Devoe v. Missoula County (1987), 226 Mont. 372, 374, 735 P.2d 1115; United States Nat'l Bank of Red Lodge v. DOR (1977), 175 Mont. 205, 207, 573 P.2d 188, 190. Further, a court should not dismiss a complaint for failing 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. Proto v. Missoula County (1988), 230 Mont. 351, 353, 749 P.2d 1094, 1095, quoting Conley v. Gibson (1957), 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80, 84. Therefore, we must determine whether under any set of facts, Marshall has a claim under the covenant of good faith and fair dealing.

We said in Story that dishonesty in fact is one required element for a breach of the implied covenant of good faith and fair dealing, which results in a breach of contract:

Each party to a contract has a justified expectation that the other will act in a reasonable manner in its performance or efficient breach. When one party uses discretion conferred by the contract to act dishonestly or to act outside of accepted commercial practices to deprive the other party of the benefit of the contract, the contract is breached.

Story v. City of Bozeman (1990), 242 Mont. 436, 450, 791 P.2d 767, 775-76. Good faith under the Uniform Commercial Code means honesty in fact in the conduct or transaction concerned, § 30-1-201 (19), MCA, and the observance of reasonable commercial standards of fair dealing in the trade. Section 30-2-103(l)(b), MCA.

In the case before us, Marshall contends that DNRC acted in secret to ensure his upgrade would be denied after leading him to believe otherwise, and that they gave him misinformation. He also contends that the State’s bad faith caused him to delay filing his formal appeal resulting in loss of back pay. Accepting these contentions to be true, he has properly pled a cause of action for a contract breach of the implied covenant of good faith and fair dealing in his proposed amended complaint. However, the tort of bad faith requires a special relationship and breach of the same honesty and reasonable commercial standards. Wise v. Sebena (1991), 248 Mont 32, 38, 808 P.2d 494, 498. In Story we set forth five requirements which must be met in order to meet such special relationship. The requirements are as follows:

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

Story at 451, 791 P.2d at 776.

Here, under undisputed facts, the parties are not in inherently unequal bargaining positions because by statute, an appeals process was provided Marshall which resulted in his position with DNRC being upgraded. See § 2-18-203, MCA (1991). Further, ordinary contract damages are adequate because Marshall received his requested upgrade and prevailed against DNRC and DOAin the appeal. Therefore the first and third requirements are not met.

In both the initial complaint and the amended complaint, Marshall pled attorney fees and loss of back pay as his damage. Attorney fees are not allowed as damages in contract unless they are provided for in the contract or by statute. Neither provision is present here. As we said in Ehly, “It is a well-settled rule that absent contractual or statutory grant, attorney fees are not allowable as costs or as an element of damages.” Ehly v. Cady (1984), 212 Mont. 82, 100, 687 P.2d 687, 696. However, the alleged loss of back pay can be contract damages.

For the reasons set forth above, we reverse the District Court, and remand for proceedings not inconsistent with this opinion.

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

JUSTICE TRIEWEILER

specially concurring in part and dissenting in part.

I concur in the majority’s conclusion that the District Court erred when it dismissed that part of plaintiff’s complaint which sought contract damages for breach of the covenant of good faith and fair dealing.

I dissent from that part of the majority’s opinion which concludes that, based upon Story v. City of Bozeman (1990), 242 Mont. 436, 791 P.2d 767, plaintiff has not satisfied all the elements necessary to recover tort damages for a breach of the covenant of good faith and fair dealing. Under the Story decision, it is virtually impossible to satisfy all five elements which are necessary to recover tort damages. For all practical purposes, the Story decision, without benefit of briefing or arguments by the parties, eliminated tort damages for bad faith conduct in Montana.

For these reasons, as more specifically set forth in my dissent in McNeil v. Currie (Mont. 1992), [253 Mont. 9,] 830 P.2d 1241, 49 St.Rep. 312, I would reverse the Story decision and remand this case to the District Court for consideration of plaintiff’s claim for tort damages based on defendants’ alleged breach of the covenant of good faith and fair dealing.

JUSTICE HUNT concurs in the foregoing concurrence and dissent of JUSTICE TRIEWEILER.


text:
    IN RE THE MARRIAGE OF JAMES WARREN MOSEMAN, Petitioner and Appellant, v. BERNICE LUCILLE MOSEMAN, Respondent and Respondent.
    No. 91-503.
    Submitted on Briefs January 23, 1992.
    Decided April 17, 1992.
    49 St.Rep. 349.
    253 Mont. 28.
    830 P.2d 1304.

      For Appellant: Robin A. Wolff, Calton, Hamman and Wolff, Billings.
    For Respondent: Victoria L. Frances, Hendrickson, Everson and Noennig, Billings.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

This is an appeal from an order of the Thirteenth Judicial District, Yellowstone County. The respondent, Bernice Lucille Moseman (Bernice) petitioned the court for modification of custody after learning the appellant, James Warren Moseman (James), intended to move the parties’ children out of state. The District Court terminated joint custody and awarded sole custody to Bernice. We remand for further factfinding.

The following issues are raised on appeal:

I. Did the District Court err in not considering the report and recommendations of Court Services after ordering Court Services to conduct an investigation?

II. Did the District Court err by terminating joint custody and awarding sole custody of the parties’ children to the respondent?

This case involves a petition for modification of an order for joint custody, originally issued December 15,1989. The December 15,1989 order found it to be in the best interest of the parties’ minor children, Cody (age 8) and Shane (age 6), to be placed in the joint care and custody of the parties. James was awarded primary physical custody and Bernice was awarded liberal visitation.

During the following year there were difficulties involving arrangements for visitations, especially surrounding holidays and vacations. The parties are in dispute regarding the nature and the cause of these difficulties.On January 17,1991, James, in compliance with § 40-4-217, MCA, sent Bernice notice of his intent to change the children’s residence to Richmond, Virginia. Bernice filed a petition to modify the original decree and to grant primary physical custody to her. Later, in a post-hearing brief to the District Court, Bernice asked the court to modify her petition to include a request for termination of joint custody and that she be awarded sole custody.

Following a hearing, held February 8, 1991, the court ordered Court Services to conduct a custody investigation and to submit a report containing recommendations. Court Services recommended that the children stay with Bernice for the summer and join James in Virginia for the school year. The trial court found that James had continually and willfully attempted to deny or frustrate visitation and despite James’ objection, terminated joint custody pursuant to § 40-4-219(l)(e)(ii), MCA, and awarded sole custody to Bernice. The court made no findings in regard to the Court Services investigation and recommendations.

Section 40-4-215, MCA, provides in part:

(1) In contested custody proceedings and in other custody proceedings if a parent or the child’s custodian so requests, the court may order an investigation and report concerning custodial arrangements for the child ....
(3) The Court shall mail the investigator’s report to counsel... at least 10 days prior to the hearing ....

James contends that the court abused its discretion by failing to provide a hearing where testimony regarding the investigation could be heard and by failing to note consideration of the report in its findings of fact and conclusions of law.

We have reviewed the requirements of § 40-4-215, MCA, on several occasions. In re Marriage of Maxwell (1991), 248 Mont. 189, 810 P.2d 311; In re Marriage of Bloom-Higham (1987), 227 Mont. 217, 738 P.2d 114; In re Marriage of Ziegler (1985), 215 Mont. 208, 696 P.2d 983. In Ziegler, after a custody investigation was ordered, the district court failed to distribute the report to counsel as mandated by the statute. In addition, the court entered its final order before it even received the report. We held that:

If the trial court found it appropriate to order the custody investigation, it abused its discretion by not considering the report in the process of reaching its final custody decision.

Ziegler, 215 Mont. at 212.

In Bloom-Higham, the trial court ordered an investigation and again there was no record of the court having received the report, the report was not mailed to counsel, and no testimony relative to the investigation was received at any hearing. Following Ziegler, we held, despite a stated reluctance to overturn custody decisions, this was an abuse of discretion.

We recently cited Bloom-Higham, with support, to find an abuse of discretion where a corut again failed to consider a social worker’s report and recommendations. In re Marriage of Maxwell (1991), 248 Mont. 189, 810 P.2d 311. In Maxwell, the court ordered a Home and Family Assessment and although the findings of fact and conclusions of law mentioned that the home study was ordered, it failed to specifically address it.

In the instant case, the order for the investigation was made after the hearing for modification of custody was held. The report was mailed to counsel and neither requested that an additional hearing be provided to take testimony relative to the investigation. The report was received prior to the District Court’s issue of findings of fact and conclusions of law. However, the District Court, in its findings and conclusions, failed to mention the investigation.

As a general rule, the district court is not required to make a specific finding as to each item of evidence, but only of the essential and determining factors upon which the court’s conclusions rest. In re Marriage of Keating (1984), 212 Mont. 462, 689 P.2d 249. However, Ziegler and its progeny require that a specific finding of fact is required regarding a custody investigation ordered by the court. The District Court is not bound by the investigation; however, we are not able to determine if the District Court even considered the report. Therefore, we conclude that the matter must be remanded to the District Court to make a finding that the Court Services investigation was considered.

We do not rule here that James was entitled to an additional hearing. In the instant case, there were no requests for additional hearings.

II

Section 40-4-219, MCA, governs the court’s decision to modify a prior custody decree. It provides:

40-4-219. Modification. (1) The court may in its discretion modify a prior custody decree if it finds, upon the basis of facts that have arisen since the prior decree or that were unknown to the court at the time of entry of the prior decree, that a change has occurred in the circumstances of the child or his custodian and that the modification is necessary to serve the best interest of the child and if it further finds that:
(a) the custodian agrees to the modification;
(b) the child has been integrated into the family of the petitioner with consent of the custodian;
(c) the child’s present environment endangers seriously his physical, mental, moral or emotional health and the harm likely to be caused by a change of environment is outweighed by its advantages to him;
(d) the child is 14 years of age or older and desires the modification;
(e) the custodian willfully and consistently:
(i) refuses to allow the child to have any contact with the non-custodial parent; or
(ii) attempts to frustrate or deny the noncustodial parent’s exercise of visitation rights; or
(f) the custodial parent has changed or intends to change the child’s residence to another state ....

When reviewing a district court’s findings regarding the modification of custody and whether a party has met the criteria of § 40-4-219, MCA, we will not reverse the findings unless they are clearly erroneous. In re Marriage of Johnson (1989), 238 Mont. 153, 777 P.2d 305. In Johnson, 238 Mont. at 156, 777 P.2d at 307, we held:

As stated in Rule 52(a), M.R.Civ.P.:

Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses.

The District Court’s decision to modify custody was based on evidence received from which it concluded that James “willfully and continuously attempted to frustrate or deny Bernice’s exercise of visitation right. §40-4-219(l)(e)(ii), MCA.” (Conclusion of Law No. 4.) There is substantial evidence that James denied visitation on consecutive Christmases requiring Bernice to contact the court and her attorney to receive her rightful visitation. Evidence was presented that supports the fact that James obstructed Bernice’s ability to have telephone contact with the children including an admission by James that he refused to give Bernice his telephone number. On another occasion, James failed to communicate to Bernice that Shane was being hospitalized for an operation requiring general anesthesia.

The record also provides additional examples of disagreement on scheduling visitation. James contends that while he and Bernice clearly had disagreements about visitation, disagreements of this sort do not entitle a parent to a change in custody. Furthermore, he contends that the record reflects that Bernice has never been consistently denied or frustrated visitation. There is evidence to support James’ contentions. This evidence and the custody report would provide substantial evidence to support a District Court finding to maintain joint custody and physical custody with James. However, regardless of the custody report, the record does provide substantial evidence for the court’s conclusion that James willfully and continuously attempted to frustrate or deny Bernice’s exercise of visitation rights within the meaning of § 40-4-219(l)(e)(ii), MCA.

In addition to meeting the jurisdictional requirements of § 40-4-219(a) - (f), MCA, the court must also find that a change in circumstances has occurred and that modification is necessary to serve the best interests of the child. Section 40-4-219(3), MCA, provides that:

The court shall presume the custodian is not acting in the child’s best interest if the custodian does any of the acts specified in subsection (l)(e)...

If, on remand, the District Court concludes that James willfully and continually frustrated Bernice’s exercise of visitation rights, it must, pursuant to § 40-4-219(3), MCA, presume that James is not acting in the children’s best interest. Therefore the requirement of § 40-4-219(1), MCA, that modification be allowed only when necessary to meet the best interest of the child, would be fulfilled.

The decision of the District Court to terminate joint custody is not clearly erroneous as it is supported by substantial evidence, adheres to and does not misapprehend the evidence relative to the guidelines of § 40-4-219, MCA, and does not leave us with a definite and firm conviction that a mistake has been committed. Interstate Production Credit Ass’n v. DeSaye (Mont. 1991), [250 Mont. 320,] 820 P.2d 1285, 48 St.Rep. 986.

However, the District Court is required to consider the custody investigation report it ordered and failed to do so. We remand to the District Court with instructions to make findings relative to such report, and amend the conclusions of law and the judgment, if so warranted.

CHIEF JUSTICE TURNAGE and JUSTICES HUNT and WEBER concur.

JUSTICE TRIEWEILER

specially concurring in part and dissenting in part.

I concur with the majority’s conclusion that the District Court abused its discretion by failing to consider the social worker’s report and recommendations. The impact of that failure is apparent from the District Court’s Finding of Fact No. 4 to the effect that the children stated no preference for whom they would like to have as the primary custodian. Sarah Seiler, the social worker, apparently discussed this question at length with both children. As a result of her conversations, she was able to state in her report the following finding:

Cody was interviewed twice and Shane once at Sandstone School. Both boys state that they want to continue to live with their father and are not concerned about changing schools. Cody and Shane love their mother and want to visit with her, but had criticism of her care for them. They both say that their mother sleeps a great deal while they visit and that she does not supervise them or set boundaries when they play outside. Cody even went so far as to say his mother was “acting weird lately”. Despite repeated attempts to play “devil’s advocate” with the boys, they were steadfast in their desire to stay with their father.

I dissent from that part of the majority opinion which concludes that the District Court’s decision to terminate joint custody was supported by substantial evidence.

Under § 40-4-219, MCA, the District Court’s prior custody decree could only be modified if it found that: (1) a change in the child’s or his custodian’s circumstances had occurred since the prior decree; (2) modification is necessary to serve the best interests of the child; and (3) the custodial parent willfully and consistently frustrated the noncustodial parent’s visitation rights; or the custodial parent intended to change residence to another state.

As pointed out by the majority, if the court finds that the custodial parent willfully and consistently attempted to frustrate the other parent’s visitation right, then there is a presumption that that parent is not acting in the child’s best interest under § 40-4-219(3), MCA.

I believe the District Court was clearly erroneous when it found that James “consistently” attempted to frustrate Bernice’s visitation rights.

James was awarded primary custody of the children on December 15, 1989. The District Court’s hearing on Bernice’s motion to modify custody was held on February 8,1991, some 14 months later. During that period, Bernice complained of three incidents where the parties had disagreements about visitation:

1. During Christmas of 1989 a dispute arose over visitation which was resolved when Bernice was allowed to have the children on Christmas Eve.

2. During Christmas of 1990, another dispute arose which was resolved when Bernice was allowed to have the children on December 24, 26, and 28. The evidence was that Bernice worked during the Christmas holiday that year and did not have time available for additional visitation.

3. A misunderstanding occurred regarding visitation during the Fourth of July holiday in 1989. Bernice was supposed to have the children. James misunderstood and scheduled a vacation with the children. After some discussion, Bernice exchanged visitation during that period for visitation later on in the summer.

The above three incidents are the only examples offered by Bernice where the parties had disagreements over visitation. The other examples relied upon by the court were James’ failure to notify Bernice of one of the children’s tonsillectomy, failure to communicate regarding the children’s progress in school, and the fact that James had an unlisted telephone number for a period of time. However, none of these additional examples constituted willful attempts to frustrate visitation, and the original three examples hardly amount to consistent frustration of Bernice’s visitation rights.

Without a finding that James willfully and consistently frustrated Bernice’s visitation rights, there was no substantial evidence to support the District Court’s finding that the children’s best interests would be served by modifying the prior custody arrangement.

This Court recently explained the application of the “clearly erroneous” test in the context of reviewing the findings of a trial court sitting without a jury:

We adopt the following three-part test to determine if a finding is clearly erroneous. First, the Court will review the record to see if the findings are supported by substantial evidence. Second, if the findings are supported by substantial evidence, we will determine if the trial court has misapprehended the effect of evidence. Western Cottonoil Co. v. Hodges (C.A. 5th 1954), 218 F.2d 158; Narragansett Improvement Company v. United States (C.A. 1st 1961), 290 F.2d 577. Third, if substantial evidence exists and the effect of the evidence has not been misapprehended, the Court may still find that ‘[A] finding is “clearly erroneous” when, although there is evidence to support it, a review of the record leaves the court with the definite and firm conviction that a mistake has been committed.’ U[nited] S[tates] v. U.S. Gypsum Co. (1948), 333 U.S. 364, 68 S.Ct. 525, 92 L.Ed. 746.

Interstate Production Credit Ass’n. v. DeSaye (Mont. 1991), [250 Mont. 320,] 820 P.2d 1285, 1987, 48 St.Rep. 986, 987.

According to the above standard, I conclude that the District Court’s finding that the children’s best interests were served by terminating joint custody and awarding sole custody of the parties’ children was clearly erroneous. I would, therefore, reverse the judgment of the District Court, reinstate joint custody, and return primary custody of the children to James with liberal visitation rights granted to Bernice.