author: JUSTICE HARRISON JUSTICE GRAY

text:
    RAE JEAN KOCH, as next friend of JOHN KOCH, a/k/a JOHN MINDT, a Minor, Plaintiffs and Appellants, v. BILLINGS SCHOOL DISTRICT NO. 2, Defendant and Respondent.
    No. 91-380.
    Submitted Apr. 29, 1992.
    Decided June 11, 1992.
    49 St.Rep. 517.
    253 Mont. 261.
    833 P.2d 181.

      For Appellants: Gary R. Thomas, Thomas Law Office, Red Lodge.
    For Respondent: Michael W. Tolstedt, Anderson, Brown, Ger-base, Cebull, Fulton, Harman & Ross, Billings.
   JUSTICE HARRISON

delivered the Opinion of the Court.

This is an appeal from an order of the Thirteenth Judicial District Court, Yellowstone County, Montana, which granted summary judgment to the respondent. The action arose from a negligence claim involving a student who was injured while attempting a teacher-supervised weight lifting maneuver at his junior high school. The District Court denied appellant’s motion for relief from judgment under Rule 60(b), M.R.Civ.R We reverse.

We restate the issues presented by the parties as follows:

I. Whether the District Court properly granted summary judgment to the School District on the basis of immunity.

II. Whether the District Court properly denied the plaintiff’s Motion for Relief from Judgment pursuant to Rule 60(b) of the Montana Rules of Civil Procedure.

In mid-October, 1985, John Koch (Koch), then fifteen years old, was injured while attending a physical education class at Castle Rock Junior High School. Koch’s teacher, Fred Brautigan (Brautigan), instructed Koch to squat-press weights totalling 360 pounds. Koch apparently protested but was instructed to try lifting the weight. After attempting to stand from a squatting position with the 360 pounds on his shoulders, Koch could not sustain the weight and collapsed. The weight pinned Koch for several seconds before Brautigan could remove it. Koch allegedly suffered a bulged disc, lumbar sprain, spinal nerve compression and other related injuries, including a mental condition of depression.

Koch initiated suit against three defendants: 1) The Board of Trustees (the Board); 2) the teacher Brautigan; and 3) School District No. 2 (School District).

On April 12, 1989, the District Court granted partial summary judgment to the Board and Brautigan pursuant to § 2-9-305, MCA. The School District, the only remaining defendant, moved for summary judgment based on § 2-9-111, MCA (1989). Koch opposed this motion for summary judgment and moved for reconsideration of the previous partial summary judgment. On February 7, 1990, the District Court granted summary judgment to the School District based on Eccleston v. Third Judicial Dist. Court (1990), 240 Mont. 44, 783 P.2d 363, [8 Ed.Law 146g]. Koch did not appeal from either summary judgment.

Subsequently, this Court decided various cases addressing § 2-9-111, MCA, including Crowell v. School Dist. No. 7 (1991), 247 Mont. 38, 805 P.2d 522 [,9 Ed.Law 76]; and Hedges v. Swan (Mont. 1991), [248 Mont. 365,] 812 P.2d 334, 48 St.Rep. 449 [.10 Ed. Law 113], On March 15, 1991, Koch filed a motion for relief from judgment, which was deemed denied since the District Court did not act on the motion within forty-five days. Koch appealed to this Court on June 25,1991, desiring relief from the order granting summary judgment, and a trial on the merits.

RELIEF UNDER RULE 60(b), M.R.Civ.P.

We first address the ability of a court to offer relief from judgment under Rule 60(b), M.R.Civ.P., which is nearly identical to the equivalent Federal rule, Rule 60(b), F.R.Civ.P.

The provisions of this rule must be carefully interpreted to preserve the delicate balance between the sanctity of final judgments, expressed in the doctrine of res judicata, and the incessant command of the court’s conscience that justice be done in light of all the facts.

Bankers Mortgage Co. v. United States (5th Cir. 1970), 423 F.2d 73, 77 (emphasis in original).

Rule 60(b), M.R.Civ.P, sets forth the reasons under which the “court may relieve a party or a party’s legal representative from a final judgment, order, or proceeding.”

Koch claims that subsections (5) and (6) of Rule 60(b) are applicable to the case at bar:

(5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment.

Rule 60(b), M.R.Civ.P. (emphasis added).

A careful reading of the statute discloses the word “or” at the end of subsection (5) which we have emphasized. “[I]t is generally held that if a party seeks relief under any other subsection of Rule 60(b), it cannot also claim relief under 60(b)(6).” Libby Rod & Gun Club v. Moraski (D. Mont. 1981), 519 F.Supp. 643, 647. Accordingly, Koch erroneously attempted to qualify under both subsections. Koch’s Rule 60(b) motion should have claimed that the motion could fall under either subsection (5) or (6), but not both, since the two are mutually exclusive.

APPLICABILITY OF RULE 60(b)(5)

Koch claims that subsection (5) of Rule 60(b) applies to the case at bar because of the change in law regarding immunity. This change is best explained by an overview of relevant case law and legislative amendments. In 1990, we held that a school district was immune from suit when a janitor failed to clear ice and snow from a gym stairway where a plaintiff slipped and sustained injuries. Eccleston v. Third Judicial Dist. Ct. (1989), 240 Mont. 44, 783 P.2d 363. The question of whether the School District had insurance was discussed in Eccleston, 240 Mont. at 61, 783 P.2d at 373, Justice John C. Sheehy, in his dissent, noted:

There is a sardonic element in this case. The real party in interest shouting “governmental immunity” is probably an insurer. It sold a policy to the school district, promising coverage for comprehensive liability. Because of this Court, the insurer was never at risk for any wrongful acts of the school district personnel outside of motor vehicles. Its premium is pure gravy ....

Then, In 1991, this Court held that a school district’s immunity was waived by the existence of Lability insurance, to the extent of such insurance. Crowell v. School Dist. No. 7, Gallatin Cty. (1991), 247 Mont. 38, 805 P.2d 522.

In the case at bar, the District Court relied on Eccleston when granting the School District’s motion for summary judgment. Due to the state of the law at that time, Koch did not appeal. After our holding in Crowell, Koch identified the change in the status of immunity and applied for relief from judgment under Rule 60(b)(5), M.R.Civ.P.

Koch is correct in observing that a change has taken place in the area of immunity law, however this is not a valid reason under which a Rule 60(b)(5) motion may be granted. We have previously said that a change in decisional law after final judgment, does not represent extraordinary circumstances under Rule 60(b) so as to allow reopening of that judgment. We have also held:

In Fiscus II [Fiscus v. Beartooth Elec. Cooperative, Inc.] (1979), 180 Mont. 434, 439, 591 P.2d 196, 199] this Court stated "... only in an extraordinary case should Rule 60(b) be granted. There is considerable authority holding that when a decision is later overruled by a court, that it is not ‘extraordinary*...” 591 P.2d at 199 (citing cases). We went on to note:
“ ‘... that while 60(b)(5) authorized relief from a judgment on the grounds that a prior judgment upon which it is based has been reversed or otherwise vacated, it does not authorize relief from a judgment on the ground that the law applied by the court in making its adjudication has been subsequently overruled or declared erroneous in another and unrelated proceeding.... (citations omitted) ... there is ample support in the federal courts ... that when a decisional law change occurs, subsequent to final judgment in a particular case ... final judgment should not be altered.” 591 P.2d at 200.

State ex rel. Rhodes v. Dist. Ct. (1979), 183 Mont. 394, 396, 600 P.2d 182, 183 (emphasis added).

At first blush the meaning of the term “prior judgment” in Rule 60(b)(5) could lead one to conclude that if any case relied upon later was reversed or otherwise vacated, the rule would permit relief from judgment. According to the above quotes from Fiscus II and Rhodes, this is not what is meant by “prior judgment.” “The ‘prior judgment’ clause is limited to cases in which the present judgment is based on the prior judgment in the sense of res judicata or collateral estoppel; it does not apply when... the prior judgment has been relied on merely as precedent.” 3 J. Moore, Moore’s Manual of Federal Practice and Procedure, Section 26.08, pp. 26-34, footnote 10 (1989).

Reliance on a judgment in an unrelated case ... does not make the original judgment vulnerable within the “prior judgment” clause of subsection 5. Lubben v. Selective Service System Local Board No. 27, supra, 453 F.2d at 650; see 11 C. Wright & A. Miller, supra § 2863, at 204 (“[t]his ground [subsection (5)] is limited to cases in which the present judgment is based on the prior judgment in the sense of res judicata or collateral estoppel. It does not apply merely because a case relied on as precedent... has since been reversed”); cf. Ackermann v. United States, supra, 340 U.S. at 197-99, 71 S.Ct. 209; Chicot County Drainage District v. Baxter State Bank, supra, 308 U.S. at 374-78, 60 S.Ct. 317.

Marshall v. Board of Ed., Bergenfield, N.J (3rd Cir. 1978), 575 F.2d 417, 424.

SineeEccleston and Crowell are unrelated to the case at bar, Koch’s claim under Rule 60(b)(5), M.R.Civ.P., which relies on the change of law in those cases, fails.

We also mention that Koch cannot prevail by arguing a change in the law under the last phrase of subsection (5) which states that “it is no longer equitable that the judgment should have prospective application.” In Libby Rod & Gun Club v. Moraski (D. Mont. 1981), 519 F.Supp. 643, 647, merely arguing that the law had changed did not result in relief from judgment under the last phrase of subsection (5), nor can it here.

APPLICABILITY OF RULE 60(b)(6)

Koch also claims that relief from judgment is possible under subsection (6) of Rule 60(b). Subsection (6), sometimes called the “other reason clause,” is a residual clause in which the court can use its equitable power to achieve justice under an appropriate set of circumstances.

[T]he language of the “other reason” clause, for all reasons except the five particularly specified, vests power in courts adequate to enable them to vacate judgments whenever such action is appropriate to accomplish justice.

Klapprott v. United States (1949), 335 U.S. 601, 614-615, 69 S.Ct. 384, 390, 93 L.Ed 266, 277.

In Overbee v. Van Waters & Rogers (6th Cir. 1985), 765 F.2d 578, the Ohio Supreme Court essentially changed the effective date of a statutory change by the legislature regarding contributory and comparative negligence. The change took place close in time to the Overbee proceedings (judgment, first appeal and remand), which affected substantially the plaintiff’s claims. The court granted relief under Rule 60(b)(6), F.R.Civ.P, on the grounds that the circumstances constituted extraordinary circumstances and because without it substantial justice would not be served. Overbee, 765 F.2d at 580. The Overbee court held “that the mere showing of a change in the law is not enough to demonstrate such an extraordinary situation when the judgment has become final .... However, we are of the opinion that the unique facts of this case compel the granting of the motion ....” Overbee, 765 F.2d at 580.

Similarly, extraordinary circumstances were identified in Adams v. Merrill Lynch Pierce Fenner & Smith (10th Cir. 1989), 888 F.2d 696. In Adams, after a dispute over an arbitration issue the district court granted Lynch’s motion under Rule 60(b)(6). Adams, 888 F.2d at 702. The court said that “a change in relevant case law by the United States Supreme Court warrants relief under Rule 60(b)(6).” (Citing cases.) Adams, 888 F.2d at 702.

In Klapprott, a naturalization case, circumstances were such so as to justify granting a Rule 60(b)(6) motion since there would be a furtherance of justice. Klapprott v. United States (1949), 335 U.S. 601, 69 S.Ct. 384, 93 L.Ed 266.

These cases are germane to the case at bar because they are examples of “extraordinary circumstances” warranting relief from judgment via subsection (6) of Rule 60(b), M.R.Civ.R In addition to the relevancy of these cases, we also acknowledge and consider the insurance reference in Justice John C. Sheehy’s dissent in Eccleston which could be mistakenly interpreted. The mention of insurance in the dissent and no mention of it in the majority opinion could be misleading, inasmuch as such reference could be interpreted that insurance was a consideration in the case. It was not.

Therefore, with guidance from Overbee, Adams, and Klapprott, and after careful consideration of the facts and circumstances present in the case at bar, we hold that relief from judgment under subsection (6) of Rule 60(b) is warranted. In arriving at this conclusion, we point out the discretion of the court in granting relief under Rule 60(b) as evidenced by the use of the word may; the court may relieve a party from a final judgment, order or proceeding. Savarese v. Edrick Transfer & Storage, Inc. (9th Cir. 1975), 513 F.2d 140, 146. From the aforementioned cases, we conclude that due to facts and circumstances, and in the furtherance of justice, Koch’s motion was proper under Rule 60(b)(6) and the District Court erred in not granting it. We again carefully emphasize the limited nature of this decision and it does not establish a general rule for reopening a final judgment merely because there has been a subsequent change in the law upon which that judgment was based. Only when extraordinary circumstances are found to exist, as in the present case, may Rule 60(b)(6), M.R.Civ.P., be used to modify a final judgment.

TIMELINESS OF MOTION UNDER RULE 60(b)

Another important requirement of Rule 60(b), M.R.Civ.P., is that the motion must be timely made. Rule 60(b) indicates that a motion based on subsections (1), (2) or (3) must be made within a structured time frame. However, the Rule makes no specific provision for the timely filing of a motion under the remaining subsections. Instead, a motion -under the remaining subsections (4), (5) and (6) must be made “within a reasonable time.” A reasonable time can only be determined when considering the facts of each case. United States v. Holtzman (9th Cir. 1985), 762 F.2d 720, 725. We previously said that:

Any time limitations that may be involved in this case require that a balance be struck between the public interest in putting an end to litigation at some point and the public interest in keeping its judicial system free from corruption. For this reason the timeliness of the motion to vacate must ultimately depend upon equitable principles and placed within the sound discretion of the court.

Selway v. Burns, Estate of Burles (1967), 150 Mont. 1, 10, 429 P.2d 640, 645.

The School District argues that since Koch filed his Rule 60(b) motion over a year after summary judgment was granted, it was not filed within a reasonable time. Respondent’s argument is unpersuasive. Koch filed his Rule 60(b) motion on March 15, 1991, forty-eight days after our Crowell opinion, which changed the law in the immunity area particularly when liability insurance was involved. Under the circumstances, and in light of our discretion, we do not find the timing of Koch’s motion to be unreasonable. Accordingly, Koch’s motion was not only proper but also timely.

STATUTORY CHANGES IN THE AREA OF GOVERNMENTAL IMMUNITY

Absent from either the School District’s or Koch’s appellate briefs, but dispositive in this case, is the amended version of § 2-9-111, MCA. The amended statute essentially makes the parties’ immunity arguments moot. The legislature amended the statute soon after our opinions of Crowell and Hedges, which, in essence, responded to our interpretation of § 2-9-111, MCA, as it existed at that time. The 1991 changes in the statute clarified legislative intent and our interpretation changed accordingly as explained in Dagel v. City of Great Falls (Mont. 1991), 819 P.2d 186, 48 St.Rep. 919,. The legislature deemed the statute retroactive to all cases not final by May 24, 1991. Dagel, 819 P.2d at 191, 48 St.Rep. at 922.

In the case at bar, the summary judgment granted in favor of the School District became final when Koch did not appeal within thirty days from the judgment. This was prior to the retroactive effective date of the amended statute which was May 24, 1991. However, according to our previous discussion of Rule 60(b)(6) herein, we have reopened the judgment which makes the status not final. Accordingly, the current, newly amended statute is now applicable, as interpreted in Dagel.

Dagel is particularly germane since it deals with the amended statute which is the primary focus of the case at bar. We recite the purpose of the amended statute in Dagel as:

AN ACT CLARIFYING THAT STATUTORY LEGISLATIVE IMMUNITY EXTENDS ONLY TO LEGISLATIVE BODIES OF GOVERNMENTAL ENTITIES AND ONLY TO LEGISLATIVE ACTIONS TAKEN BY THOSE BODIES; CLARIFYING THAT GOVERNMENTAL ENTITIES ARE NOT IMMUNE UNDER THE LEGISLATIVE IMMUNITY STATUTE FOR NONLEGISLA-TIVE ACTIONS; CLARIFYING THAT THE ACQUISITION OF INSURANCE DOES NOT WAIVE IMMUNITY; AMENDING SECTION 2-9-111, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE AND A RETROACTIVE APPLICABILITY DATE.

Dagel, 819 P.2d at 191, 48 St.Rep. at 921.

Section 2-9-111, MCA(1991), significantly changed the statute and therefore modified the theories expressed in the various immunity cases as well as in Crowell with regard to insurance. First, under the new statute, a legislative body is not immune from the negligent acts of its employees. § 2-9-lll(l)(c), MCA (1991). Second, the purchase of insurance does not waive immunity. § 2-9-111(4), MCA (1991).

Dagel, 819 P.2d at 191, 48 St.Rep. at 922.

According to Dagel the School District (the legislative body) is not immune for the negligent acts of its employees. Whether the teacher’s acts amount to negligence in the case at bar is a question of fact which must be determined in a trial on the merits upon remand. Clearly, the teacher’s acts of instructing Koch to squat-press 360 pounds of weight are not legislative acts and are not immune under the meaning of the current version of § 2-9-111, MCA.

Both parties also make much out of the purchase of liability insurance because of our holding in Crowell where we said that the purchase of liability insurance should waive immunity to the extent of the insurance coverage. The new statute deals directly with the Crowell situation and states that “the acquisition of insurance coverage, including self-insurance or group self-insurance, by a governmental entity does not waive the immunity provided by this section.” Section 2-9-111(4) MCA (1991). This provision effectively overrules the Crowell line of cases regarding liability insurance, although the Crowell decision does give an excellent chronological history of governmental immunity that should not go unnoticed.

FAILURE TO APPEAL

The School District argues that Koch voluntarily chose not to appeal and now, a year after final judgment, should not be granted another bite at the apple. Generally, failure to appeal for almost any reason is fatal to a motion to reopen judgment under Rule 60(b). If allowed, it would in essence make a Rule 60(b) motion a substitute for appeal, which is an improper use of the motion. Donovan v. Graff (1991), 248 Mont. 21, 808 P.2d 491. In criticizing a party’s failure to appeal the United States Supreme Court said:

Petitioner made a considered choice not to appeal, apparently because he did not feel that an appeal would prove to be worth what he thought was a required sacrifice of his home. His choice was a risk, but calculated and deliberate and such as follows a free choice. Petitioner cannot be relieved of such a choice because hindsight seems to indicate to him that his decision not to appeal was probably wrong, considering the outcome of the Keilbar case. There must be an end to litigation someday, and free, calculated, deliberate choices are not to be relieved from.

Ackermann v. United States (1950), 340 U.S. 193, 198, 71 S.Ct. 209, 211-212, 95 L.Ed 208, 210-211.

Even so, failure to appeal may not be fatal. The United States Supreme Court acknowledged the importance of Ackermann but also said:

Despite the relevant and persuasive force of Ackermann, however, we need not go so far here as to decide that when an appeal has been abandoned or not taken because of a clearly applicable adverse rule of law, relief under Rule 60 (b) is inflexibly to be withheld when there has later been a clear and authoritative change in governing law ....
Polites v. United States (1960), 364 U.S. 426, 433, 81 S.Ct. 202, 206, 5 L.Ed.2d 173, 177. The Ninth Circuit Court recently held, after considering individual case facts and after meeting the standards for relief under Rule 60(b)(6), that a failure to appeal did not bar relief under the rule. United States v. Wyle (9th Cir. 1989), 889 F.2d 242. We also note that Rule 60(b) (6) is not inflexible.
[I]t ordinarily is not permissible to use this motion to remedy a failure to take an appeal. However this is not an inflexible rule and in unusual cases a party who has not taken an appeal may obtain relief on motion ... [Courts] have acted on the premise that cases of extreme hardship or injustice may be brought within a more liberal dispensation than a literal reading of the rule would allow

Wright and Miller, Federal Practice and Procedure, Vol. 11, § 2864, pp. 214-215, 219-220. Accordingly, we find that Koch’s failure to appeal is not fatal, and because of the non-final status of his case, due to our granting of his Rule 60(b)(6) motion, the current amended version of § 2-9-111, MCA, and law in Dagel is controlling.

CONCLUSION

Because of the amended immunity statute and our foregoing analysis reversal is proper.

Therefore, we remand to the District Court for a trial on the merits with instructions to take specific notice of the amended version of the immunity statute, § 2-9-111, MCA, and the Dagel case.

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

JUSTICE GRAY

dissenting.

I respectfully dissent from the opinion of the majority. I do not feel less sympathy than the majority does for this plaintiff who has gone without a remedy as a result of this Court’s earlier immunity decisions. I, too, would like to “do justice” in this case, if it could be accomplished without upending the vital principle of finality of judgments. Unfortunately, I am unable to find, and the majority does not state, what “extraordinary circumstances” make Rule 60(b)(6)’s “other reason” clause applicable here under controlling precedent. As a result, I cannot agree with the majority’s analysis or result.

The facts pertinent to the issue before us are few. Plaintiff brought suit against three defendants. Summary judgment was granted to two of the defendants in 1989 and to the defendant School District on February 7, 1990. The grant of summary judgment to the School District was based on this Court’s 1990 Eccleston decision interpreting § 2-9-111, MCA. Plaintiff did not appeal.

On February 6, 1990, a summary judgment was entered in favor of another school district in a separate lawsuit, also on the basis of Eccleston. That case was appealed and resulted in this Court’s Crowell decision on January 25, 1991. While not a retreat from the earlier immunity interpretation, we held in Crowell that insurance coverage waived the statutory immunity to the extent of the coverage.

Koch filed a motion for relief from judgment pursuant to Rule 60(b)(5) and (6), M.R.Civ.P., in March 1991; the motion was based on the change in the law in Crowell. The motion was denied by operation of law and Koch appealed, seeking relief from the School District’s February, 1990, summary judgment.

On appeal, Koch first argues that relief from the summary judgment is available under Rule 60(b)(5). This argument is premised on the change in the law from Eccleston to Crowell, together with the assertion that under the Rule it is no longer equitable to give Eccleston prospective application to this case. The majority correctly rejects the Rule 60(b)(5) argument, relying on Libby Rod & Gun Club.

Koch also asserts the availability of relief from judgment under the “other reason” clause contained in Rule 60(b)(6). This argument is also premised on the change in the decisional law. It includes allegations of reliance on the dissent in Eccleston, in which Justice Sheehy noted the “probability” that the real party in interest in Eccleston was an insurer, in deciding not to appeal.

In concluding that the District Court erred in denying appellant’s Rule 60(b)(6) motion, the majority does not mention or address this Court’s seminal and controlling case on Rule 60(b)(6), In re Marriage of Waters (1986), 223 Mont. 183, 724 P.2d 726. Instead, it relies on three easily distinguishable federal cases. The result is a flawed legal analysis which will cause enormous difficulties to parties litigant, the bench, the bar and this Court in the future.

Waters was based on a unique set of facts which made Rule 60(b)(6) relief appropriate. At the time of the initial hearing on the dissolution of the Waters’ marriage, Montana treated military pensions as a marital asset subject to equitable distribution. Before the decree was entered, however, the United States Supreme Court held that federal law precluded state courts from dividing military retirement pay pursuant to state marital asset distribution laws. Bound by the Supreme Court’s decision, the district court concluded in the 1981 dissolution decree that Mr. Waters’ military pension was not a marital asset. No appeal was taken. In 1983, Congress responded to the Supreme Court’s decision by enacting the Uniformed Services Former Spouses’Protection Act (USFSPA); the USFSPA allowed state courts to treat military retirement pay as a marital asset in accordance with state law. The legislative history of the USFSPA indicated Congressional intent to remove the effects of the Supreme Court’s decision entirely, including via retroactive applicability of the Act to the date of that decision. Relying on the USFSPA, Ms. Waters filed a Rule 60(b)(6) motion for relief from judgment. The district court granted the motion and this Court affirmed.

Our decision in Waters was carefully drawn. We noted that the Ackermann test required a party to demonstrate “extraordinary circumstances” justifying relief and concluded that Ms. Waters had met that burden. We noted that it was not the fact that Congress had essentially overridden the Supreme Court in enacting the USFSPA that made the situation unique; rather, it was Congress’ specific intent to accomplish precisely what Ms. Waters was attempting to accomplish through her Rule 60(b)(6) motion that constituted sufficient “extraordinary circumstances.” In so concluding, we were careful to “emphasize the limited nature of this decision; it does not establish a general rule for reopening a final judgment merely because there has been a subsequent change in the law upon which that judgment was based.”

In the case before us, it is the change in decisional law from Eccleston to Crowell which is the real basis for appellant’s Rule 60(b)(6) motion and the majority’s result. As such, that result is in direct derogation of the rule in Waters. Further, while appellant’s asserted reliance on Justice Sheehy’s dissent in Eccleston provides a convenient means to reach the desired end here, it is not and should not be seriously delineated as the basis for the majority’s holding. Speculation as to various interpretations which could have been put on that dissent or on language in any opinion of this Court is an unending game, and should not be adopted by this Court as “good cause” for a party’s decision not to take an appeal and later attempt to seek relief from a judgment. This is particularly so where, as in this case, there was no suggestion whatsoever in the dissent that the “sardonic element” that ah insurer “probably” was the real party in interest was raised as an issue in the case. Finally, whatever interpretations may have been possible, one attorney did appeal an adverse summary judgment based on Eccleston, and that appeal resulted in our Crowell decision on which appellant now wishes to rely in breathing life back into a case long final. What we have here as a basis for relief from judgment, from a legal standpoint, is a change in decisional law. Under Waters, that is not enough.

In addition, while I agree entirely with the statements of law and, indeed, the results in the three federal cases relied on by the majority, those cases are easily distinguishable from the present case. The majority relies first on Overbee which it asserts is germane to the case before us as an example of “extraordinary circumstances” justifying Rule 60(b)(6) relief. I agree that Overbee was such a case and that the circumstances in that case justified relief from the judgment therein; however, Overbee is not germane to the instant case.

In Overbee, the plaintiff appealed several issues to the Ohio Supreme Court, including whether the jury should have been instructed on comparative negligence. During the pendency of that appeal, but before oral argument, the Ohio Court decided a separate case in which it reached a result directly opposite of Overbee’s argument on comparative negligence. As a result, Overbee conceded at oral argument that the court’s very recent decision settled that issue. The court affirmed in part in Overbee’s appeal, but reversed and remanded for an evidentiary hearing on another issue. During the period of remand, but before the evidentiary hearing ordered by the Ohio Supreme Court, that court reversed itself on the comparative negligence question; the reversal occurred within one year of the earlier decision. Plaintiff filed a Rule 60(b)(6) motion, the evidentiary hearing on remand was held, and the trial court then denied the motion for relief from the earlier judgment. The Sixth Circuit held that two factors established the “unique facts” on which it reversed the denial of the Rule 60(b)(6) motion: first, that the judgment in the case was not final at the point in time that plaintiff filed the motion; and second, that if the Ohio Supreme Court had reached its ultimate (second) decision on the comparative negligence question during the pendency of plaintiff’s first appeal, plaintiff clearly would have prevailed on the comparative negligence issue in the first appeal. Thus, extraordinary circumstances existed which, in the view of the Sixth Circuit, mandated Rule 60(b)(6) relief.

The facts in the case before us are not similar to those in Overbee which formed the specific basis for the Sixth Circuit’s decision. Here, the judgment from which relief is now sought was final many months before our Crowell decision; importantly, and unlike the situation in Overbee, no appeal was taken from that judgment. In addition, the Ohio Supreme Court actually reversed itself on the comparative negligence issue which had been raised by Overbee during his first appeal and did so within one year, at a time when Overbee’s case had not reached final judgment. In the case before us, this Court did not reverse Eccleston in deciding Crowell and Crowell was decided nearly a year after the judgment at issue became final.

The majority next quotes a portion of a statement by the Tenth Circuit in Adams for the proposition that “a change in relevant case law by the United States Supreme Court warrants relief under Rule 60(b)(6).” The majority’s failure to quote the entirety of that statement by the Tenth Circuit belies the application of that proposition to this case and makes clear how inapposite Adams is to the case at hand. The Tenth Circuit’s full statement in Adams is “In this circuit, a change in relevant case law by the United States Supreme Court warrants relief under Fed.R.Civ.R 60(b)(6).” (Emphasis added.) The test for Rule 60(b)(6) relief in the Circuit Courts of Appeal based on a change in decisional law by the United States Supreme Court is not related in any way to the issue before this Court. This Court’s test for applying that relief is contained in Waters, discussed above. That test is not met here and, as noted above, the majority does not even recognize the existence of Waters in its opinion.

The majority relies, finally, on Klapprott, a 1949 naturalization case. Again, the majority does not suggest that the facts in that case relate in any way to those before us; for that reason, I will not belabor the obvious. The majority uses Klapprott for the concept that Rule 60(b)(6) is available in the “furtherance of justice.” Again, the majority ignores its own Waters rule in order to “do justice” in this case.

It is my view that “extraordinary circumstances” do not exist in this case to invoke Rule 60(b)(6) relief. This case involves a change in decisional law which is not sufficient under Waters to support relief from judgment under the “other reason” clause of Rule 60(b)(6). The majority having opened the door in Montana to the premise that motions for relief from judgment under Rule 60(b)(6) are now available to “do justice,” with nothing more required, I do not look forward to the task of trying to keep that premise contained or limited. The days of finality of judgments in Montana are gone.

I will comment only briefly on the majority’s discussion of the statutory changes in the area of governmental immunity. The majority states that the 1991 amendments are “dispositive” and render the parties’ arguments on immunity moot. The majority’s statement is correct, but only because the majority itself has inappropriately breathed life back into a judgment which has been final for over two years. Absent that action, it is clear that the 1991 amendments would be inapplicable to this case by virtue of the legislature’s clear and stated intent to make the amendments applicable only to those cases which were not final by May 24, 1991.

JUSTICE WEBER joins in the foregoing dissent of JUSTICE GRAY.

       In Overbee, on June 20, 1980, the Ohio legislature changed relevant statutory provisions from contributory negligence to comparative negligence. After some confusion over whether the change applied to actions that accrued after June 20, 1980, orto actions that were actually tried after that date, the Ohio Supreme Court decided that the change only applied to causes of action accruing after June 20, 1980. Since the plaintiffs claim accrued prior to June 20,1980, even though trial was held in 1981, the change was unhelpful to the plaintiffs action. Subsequently, the Ohio Supreme Court reversed itself and held that the change from contributory to comparative negligence was applicable to any actions that came to trial after June 20,1980. These facts constituted “extraordinary circumstances.”


source: Caselaw Access Project

author: JUSTICE WEBER JUSTICE TRIEWEILER

license: Public Domain

text:
    CINDY JUEDEMAN, Individually, CINDY JUEDEMAN, Conservatrix of the Estate of ERICH BURKSTRAND and CHARLES MESSLER, Plaintiff and Appellant, v. NATIONAL FARMERS UNION PROPERTY AND CASUALTY COMPANY, an insurance corporation, Defendant and Respondent.
    No. 91-491.
    Submitted on briefs Jan. 16, 1992.
    Decided June 23, 1992.
    49 St.Rep. 544.
    253 Mont. 278.
    833 P.2d 191.

      For Appellant: Lawrence A. Anderson and Howard F. Strause, Great Falls.
    For Respondent: Dennis P. Clarke, Smith, Walsh, Clarke and Gregoire, Great Falls.
   JUSTICE WEBER

delivered the Opinion of the Court.

Plaintiff Cindy Juedeman, mother of Erich Burkstrand, brought suit individually, and as conservator of the estate of Erich Burkstrand against National Farmers Union Property and Casualty Company (Farmers Union) for bad faith under § 33-18-201, which prohibits unfair claims settlement practices. The Eighth Judicial District Court, Cascade County granted summary judgment in favor of the defendant, Farmers Union. Plaintiff appeals. We affirm.

The issues on appeal are restated as follows:

1. Did the District Court properly grant defendant’s motion for summary judgment on plaintiff’s claim of “leveraging” in violation of § 33-18-201(13), MCA?

2. Did the District Court properly grant defendant’s motion for summary judgment on plaintiffs claim for failure to settle in violation of § 33-18-201(6), MCA?

At age eleven, Erich Burkstrand, passenger in a truck involved in a one vehicle accident, was severely injured. The vehicle was driven by Robert Bennyhoff, deceased. Bennyhoff was insured by Farmers Union which provided liability coverage of $100,000 bodily injury per person and $300,000 per occurrence. Farmers Union does not dispute that Burkstrand’s bodily injury claim exceeded the $100,000 maximum amount payable under the policy.

I

Did the District Court properly grant defendant’s motion for summary judgment on plaintiff’s claim of “leveraging” in violation of § 33-18-201(13), MCA?

Plaintiff contends Farmers Union engaged in unfair claims settlement practices by conditioning its $100,000 settlement offer for Erich Burkstrand’s bodily injury claim upon Juedeman’s agreement to release Bennyhoff’s estate from a future claim of loss of consortium. Plaintiff contends this is leveraging and is prohibited under § 33-18-201(13), MCA, which provides:

No person may, with such frequency as to indicate a general business practice, do any of the following:
(13) Fail to promptly settle claims, if liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage....

Under Rule 56(c), M.R.Civ.P, summary judgment is appropriate where there exists no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Here, we conclude that the trial court properly granted summary judgment in favor of Farmers Union.

Juedeman presented no factual basis supporting her contention that Farmers Union engaged in leveraging. On the contrary, the record shows that Farmers Union was willing to settle for the maximum amount of policy coverage in exchange for a release of all claims which fell under that bodily injury coverage. Since the trial court previously declared that Juedeman’s loss of consortium claim arose out of Erich’s loss, her claim was limited to Erich’s $100,000 bodily injury coverage. While plaintiff does not contest this declaratory ruling, she insists Farmers Union violated § 33-18-201(13), MCA, by conditioning payment of Erich’s bodily injury upon a release of Juedeman’s individual claim for loss of consortium.

We disagree with plaintiff’s interpretation. Leveraging under § 33-18-201(13), MCA, requires an insurer’s manipulation of two coverages. The insurer must withhold prompt settlement of a reasonably clear liability claim under one coverage, in order to influence a claim arising out of another coverage. Here, Erich’s bodily injury claim and Juedeman’s claim for loss of consortium fall within the same policy coverage. Here, Farmers Union offered to settle both claims falling under that coverage for the maximum amount allowed under the policy. Thus, we hold the court properly found that Farmers Union did not violate § 33-18-201(13), MCA, and properly granted defendant’s motion for summary judgment.

II

Did the District Court properly grant defendant’s motion for summary judgment on plaintiff’s claim for failure to settle in violation of § 33-18-201(6), MCA?

Next, plaintiff contends Farmers Union failed to make a good faith attempt to effectuate a prompt fair settlement by insisting Juedeman release Bennyhoff’s estate. Section 33-18-201(6), MCA. provides:

No person may, with such frequency as to indicate a general business practice, do any of the following:
(6) Neglect to attempt in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear....

In this case, plaintiff refused to release Bennyhoff’s estate from liability in return for payment of the policy limits. In a letter dated July 16,1984, plaintiff’s attorney Richard Bottomly stated: ‘We have steadfastly refused to give a full release to any parties in exchange for the payment to Burkstrand, and we will not now do so.” This letter demonstrates plaintiff’s unwillingness to settle.

In substance, this Court has held that without an agreement to release, there is no offer for settlement. Thompson v. State Farm Mutual Automobile Ins. Co. (1973), 161 Mont. 207, 219-220, 505 P.2d 423, 430. Here, the plaintiff’s conduct prevented Farmers Union from effectuating a prompt, fair and equitable settlement.

Finally, this Court has previously rejected a claim of insurance bad faith where the plaintiff’s conduct caused the delay in payment. Spadaro v. Midland Claims, Inc. (1987), 227 Mont. 445, 451, 453, 740 P.2d 1105, 1109, 1110. Similarly, here, Juedeman’s refusal to release Bennyhoff’s estate delayed the insurer’s payment of claims owing to Erich. Accordingly, the plaintiff has no bad faith claim against Farmers Union.

We hold Farmers Union did not violate § 33-18-201(6), MCA, and the trial court properly granted defendant’s motion for summary judgment.

Affirm.

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

JUSTICE TRIEWEILER

dissenting.

I dissent from the opinion of the majority.

To understand why I disagree with the conclusions arrived at by the majority, it is necessary that a more complete recitation of the facts be set forth.

Cindy Juedeman is the mother and legal guardian of Erich Burkstrand and Charles Messier.

On September 5, 1983, Erich and Charles were passengers in a vehicle being driven by Robert Bennyhoff when, because of the extremely negligent manner in which the vehicle had been operated, it was driven off the road and was involved in a violent crash.

Bennyhoff was killed as a result of the crash. Erich and Charles were both seriously injured. Erich was so seriously injured that he was permanently paralyzed from the waist down and at all times since the accident has been confined to a wheelchair. His mother is responsible for his care and support.

The defendant in this case admitted that there was no question about Bennyhoff’s negligence or liability for the injuries to Erich, Charles, and a third individual who was also a passenger in the Bennyhoff vehicle.

National Farmers Union Property and Casualty Company insured Bennyhoff against liability for the operation of his vehicle. Coverage “A” of that policy required the insurer to pay on behalf of the insured all sums which became due as damages because of bodily injury sustained by any person as a result of Bennyhoff’s negligence. The declaration page indicated that the maximum coverage available for injuries to any individual trader that policy was $100,000, and that the maximum coverage for each occurrence insured trader that policy was $300,000.

In addition, under the same Coverage “A,” the policy requires the company to defend any suit alleging bodily injury, even if the allegations of the suit are groundless. However, the policy gives the defendant complete authority to settle any claims made against Bennyhoff if the company deems it expedient. There was no requirement that Bennyhoff approve any settlement.

The defendant in this case admitted that Burkstrand’s damages, and the damages incurred by a third passenger in Bennyhoff’s vehicle, exceeded the $100,000 of coverage available to each of them. There apparently was some question about whether Messier’s damages would have exhausted the remaining $100,000 of coverage available under the policy. In addition, Cindy claimed damages to herself personally as a result of injuries to her son Erich.

On December 15,1983, Burkstrand’s lawyer sent a letter demanding the defendant pay the policy limits that were available to Burkstrand ($100,000). At that time, the defendant and its attorney were aware that Erich had been rendered paraplegic and was confined to a wheelchair; they were aware that his job prospects were significantly reduced; and by that time, a little over three months following the accident, they knew that Erich had incurred medical bills in excess of $40,000. Liability was not contested and the defendant was well aware that Burkstrand’s damages exceeded the $100,000 of coverage that was available for him.

Whether or not the defendant responded to that letter is unclear. However, on February 3,1984, Burkstrand’s attorney again wrote to the defendant’s attorney and advised him that if the amount of coverage available was paid to his client he would release the defendant from further liability under the policy for Burkstrand’s injuries.

The defendant responded that it would pay the policy limits only if it received a release from Cindy of any claim she may have had under the policy, and a release from Erich and Cindy which released the Bennyhoff estate from any further liability for damages to either of them. At that time, Cindy contended that she might be entitled to recovery under Coverage “A” of the policy as a separate person in addition to the maximum amount that was available to Erich as “a person.” In other words, it was her contention that if Messier’s damages did not amount to $100,000, she was entitled to recover her damages under that part of Coverage “A.”

On February 9, 1984, when the defendant responded to the plaintiff’s settlement demand it was aware that unless it received a release which included Cindy’s claims and fully released the estate, the lawsuit would continue and it would incur the additional defense costs which were a separate obligation under the policy, even though it had paid the amount of coverage available.

The parties continued to exchange correspondence through the first half of 1984 in which the plaintiff’s attorney demanded unconditional payment of the coverage that was available and the defendant continued to insist on releases for the estate which included Cindy’s separate claim. During those exchanges, plaintiff’s attorney agreed to waive any claim by Cindy to the amount of coverage that was available to Erich, and to release the estate from any further liability to her son. However, the defendant continued to insist that Cindy relinquish any claim that she might have under Coverage “A” of the insurance policy in exchange for the payment of $100,000. It also continued to insist that she personally release the Bennyhoff estate from any further liability.

Through all of these exchanges, it was the position of defendant’s attorney that in addition to its obligation to pay damages and defend the Bennyhoff estate, the defendant had a duty to secure a release for the estate before paying the policy limits available for injuries to Erich. However, there was no such requirement in the policy and the defendant has failed to provide any authority from Montana or any other jurisdiction which would impose such an obligation.

At any rate, the defendant’s theory is suspect in light of the fact that on July 23,1984, after suit was filed, it tendered the full amount of coverage available to Erich into court without any release from Cindy and without any preconditions to the tender. That amount was subsequently distributed by the court to Erich, his attorney, and apparently other creditors who had an interest in it.

I

This is clearly a case where the defendant attempted to resolve Cindy’s personal claim against Coverage “A” under its insurance policy by withholding amounts that were undisputedly due to Erich ■under the same coverage. That is a violation of § 33-18-201(13), MCA, which provides as follows:

No person may, with such frequency as to indicate a general business practice, do any of the following:
(13) fail to promptly settle claims, if liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage .... [Emphasis added.]

The majority changes the plain language of subsection (13) when it states that:

The insurer must withhold prompt settlement of a reasonably clear liability claim under one coverage, in order to influence a claim arising out of another coverage. [Emphasis added.]

The majority then goes on to reason that because Erich’s claim and Cindy’s claim arose under the same coverage that leveraging did not occur under subsection (13). However, subsection (13) prohibits leveraging of a claim “under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.” (Emphasis added.) That is exactly what happened in this case. It was Coverage “A” that provided payment of damages for injury under the Bennyhoff policy. However, because there are at least three, and arguably four, persons who sustained damages as a result of this accident, there were three separate portions available under Coverage “A.” The maximum that could be paid under each portion was $ 100,000. Cindy conceded that she would waive any claim under the portion attributable to Erich’s injuries, but contended that she was entitled to payment as a separate person under a different portion of Coverage “A.” The insurance company denied payment of the undisputed amount due Erich under his portion because Cindy would not release her separate claim under the other portion. There could never be a clearer example of a violation of the literal terms of subsection (13) than exists in this case.

The majority goes on to reason that because the District Court subsequently issued a declaratory judgment to the effect that Cindy was not a separate person and had no claim under other portions of the policy for damages which were derived from Erich’s injury, she was not, therefore, making a separate claim. However, subsection (13) says nothing about the merits of Cindy’s claim under the separate portion of the policy. The merits were decided, as they should have been, in the declaratory judgment action. What subsection (13) prohibits is an arbitrary decision by the insurer about the merits of Cindy’s separate claim and an effort to impose that arbitrary decision by withholding amounts that are clearly due some other individual like Erich. A clear example of this point is our prior decision in Harris v. American General Life Insurance Co. (1983), 202 Mont. 393, 658 P.2d 1089.

In that case, the defendant insurer had issued a $10,000 life insurance policy to the plaintiffs son. An additional $10,000 of coverage was available if the son died by accident. Plaintiff’s son died under circumstances that suggested the possibility of suicide.

The defendant sent plaintiff a check for the amount due under the basic policy, but conditioned payment on a release of claims due under the accidental death portion of the policy. Plaintiff filed suit for payment under both portions and for punitive damages. After suit was filed (as in this case) defendant mailed the check back to the plaintiff without the restrictive endorsement. However, after a jury trial a verdict was returned denying recovery under the accidental benefits portion of the policy, but awarding $30,000 in punitive damages to the plaintiff. This Court sustained the punitive damage award under the same § 33-18-201(13), MCA, with which we are concerned in this case. We did so based on the defendant’s refusal to pay under an undisputed portion of the policy without a release from liability under the disputed portion. The fact that a jury subsequently found that the defendant had no liability under the disputed portion was not determinative. The controlling facts were that one claim, which was undisputed, was withheld to leverage resolution of another claim that was disputed. That is exactly what happened in this case. The only difference betweenUam's and this case is the personnel who participated in this Court’s decision. The author of this decision dissented from the Harris decision because of his disagreement that subsection (13) gave rise to an action in tort.

The plain language of § 33-18-201(13), MCA, and our decision in Harris, create a cause of action for the plaintiff under the undisputed facts in this case. I would reverse the District Court’s order granting summary judgment on the plaintiff’s claim of “leveraging” and I would remand this case to the District Court for a trial to determine the merits of that claim.

II

It is equally clear that the defendant violated the plain language of § 33-18-201(6), MCA, when it refused to pay the limits of coverage available to Erich for over seven months because of his refusal to release the Bennyhoff estate from further liability.

Liability was reasonably clear immediately after defendant completed its investigation of the accident. By December 15, 1983, when demand was first made for payment of the policy limits, the defendant was aware that Erich’s damages greatly exceeded the amount of coverage available. It had complete authority under the terms of the policy to pay the amounts of coverage available and there was no obligation in the language of the policy that it obtain a release of its insured in exchange for satisfying its undisputed obligation.

The insurance policy was entered into for the protection of Bennyhoff and his estate, but only to the extent that the terms of the policy provided such protection.

Section 33-18-201(6), MCA, on the other hand, was enacted for the protection of third persons like Erich, and he was entitled to its full protection.

Neither Bennyhoff’s insurance policy with the defendant, nor the statutory protection afforded to the plaintiff, provide that proceeds from a liability insurance policy which are undeniably due a third party, can be used to leverage that third party into releasing a tortfeasor from obligations which exceed the amount of coverage he has purchased. However, that is the result arrived at by the majority’s erosion of the protection provided for by the legislature.

The majority’s opinion depends on its interpretation of the word “settlement” used in subsection (6). The Unfair Trade Practices Act, itself, does not define the term “settlement.” However, settlement is defined in Webster’s New Collegiate Dictionary 1053 (1979) as “an act of bestowing or giving possession under legal sanction ....” If the defendant had an obligation to pay plaintiff pursuant to the terms of its policy with Bennyhoff, settling that obligation clearly should not require obtaining greater protection for Bennyhoff than he was entitled to, based on the amount of coverage he had purchased.

The majority relies on Thompson v. State Farm Mutual Insurance Co. (1973), 161 Mont. 207, 505 P.2d 423, for the proposition that settlement requires an agreement to release the settlor. However, using that case as precedent for the result arrived at in this case is an example of lifting language from one context and transposing it to a totally unrelated set of circumstances for a totally different purpose. That case had nothing to do with the issue in this case.

The issue in Thompson was whether or not an insurer had damaged its insured by failing to settle a claim against its insured within the policy limits. The evidence was that the third party making the claim against the insured had never offered to release the insured, even if the policy limits had been paid. Therefore, any damage to the insured was not a result of the insurer’s failure to settle.

A release was never discussed in Thompson in the context of what “settlement” means. A release was only discussed in Thompson in the context of whether the defendant’s conduct had in fact caused damage to its insured.

The discussion of settlement in that context has no relevance to defining the meaning of settlement under the statutory duty created in this case. Obviously the release was critical to the duty that the insured sought to impose on its insurer in Thompson. A release has nothing to do with the obligation imposed on the insurer to pay amounts of coverage available under § 33-18-201(6), MCA.

The only case cited to this Court by either party which appears to be remotely on point in determining the defendant’s obligation in the circumstances is Wooster v. Midcentury Insurance Co. (Cal. App. 4 Dist. 1990) 271 Cal. Rptr. 664. For some reason, this case is not even discussed in the majority opinion.

In Wooster, the plaintiff alleged that he had purchased an automobile liability insurance policy from the defendant which required that the defendant not only pay damages on his behalf, but also defend him. He alleged that while defending him, his insurance company entered into a settlement agreement to pay the policy limits without obtaining a release of all claims that the third party who had been injured had against him. He contended that this conduct breached the duty of good faith that the insurer was negligent. That claim was dismissed by summary judgment in the trial court and appealed to the California Comet of Appeals for the Fourth District. On appeal, it was the plaintiff’s contention that his insurer had an obligation to take advantage of the claimant’s position of financial distress and use the proceeds available under the insurance policy to extract a release from the claimant which would protect the insured from any further obligations he had to the claimant.

The California Court of Appeals remanded to the trial court because the insurer had failed to keep its insured informed of settlement negotiations which would have allowed the insured to resolve his personal liability at the same time that the insurer’s obligations were satisfied. That court held that:

An insurer’s failure to give an insured a chance to participate in negotiating a joint settlement of the policy limits and any amounts in excess of the policy limits which will have to be paid by the insured personally may constitute a breach of a duty owed to the insured.

Wooster, 271 Cal. Rptr. 668.

However, more importantly for purposes of this case, that court found when applying an identical provision of California’s own Unfair Trade Practices Act, that absence of a release would not excuse an insurer’s duty to pay policy proceeds which were indisputably due. In language relevant to this decision, that court stated:

Contrary to the implications of defendants’ concerns in this regard, we have not held that the insurer must withhold either partial or complete payment of policy limits from an injured claimant so as to allow the insured an unlimited amount of time to coerce the claimant into settlement of both the policy limits and in-excess-of-pohcy-limits amounts. Such a holding would fly in the face of statutory duties imposed upon insurers by the Insurance Code. Although claimants no longer have a private cause of action under Insurance Code section 790.03 (Moradi-Shalal v. Fireman’s Fund Ins. Companies (1988), 46 Cal.3d 287, 250 Cal. Rptr. 116, 758 P.2d 58), insurers still have a duty, under subdivision (h)(5) of that section, to “attempt[] in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.”
Instead we have merely held that an insurer, when it is faced with a claim for amounts over the policy limit, and when it is unable to obtain a general release of its insured even if it pays the policy limits, must let its insured know that it intends to pay the policy limits, or the final portion thereof, and must cooperate with the insured and give the insured a reasonable opportunity to participate in an attempt to make a joint settlement of the claim.

Wooster, 271 Cal. Rptr. 673-74.

I agree with the California court that to allow an insurer to withhold payment of policy limits to an injured claimant for the sole purpose of coercing a claimant into settlement of amounts that he may be entitled to over and above the policy limits, violates the spirit and the letter of § 33-18-201(6), MCA. However, that is exactly what the majority has accomplished with its opinion in this case.

Bennyhoff purchased insurance coverage that protected him against claims by Erich in the amount of $100,000. When he did that he assumed personal liability for any damages he might cause Erich in excess of that policy.

When the defendant sold the policy to Bennyhoff it assumed a responsibility under Montana law to pay the amounts due under that policy when liability was reasonably clear. It had no obligation, nor any right under either the policy nor Montana law to withhold those undisputed amounts in order to leverage an injured claimant into settlement or waiver of amounts that might be due from Bennyhoff over and above the policy proceeds.

As a result of this decision, the majority of this Court has again rewritten statutory law so that it accords with its own notions of public policy. Those notions, once again, afford greater protection to wrongdoers than to innocent victims.

For these reasons, I dissent from the opinion of the majority. I would remand this case to the District Court for trial on the merits of plaintiffs claims under §§ 33-18-201(6) and (13), MCA.

JUSTICE HUNT concurs in the foregoing dissent of JUSTICE TRIEWEILER.


author: JUSTICE TRIEWEILER

text:
    WATSON & ASSOCIATES, INC., an Arizona corporation, Plaintiff and Respondent, v. GREEN, MacDONALD & KIRSCHER, a Montana partnership; JACK L. GREEN, II, P.C., a Montana professional corporation; JACK L. GREEN, II; and RALPH B. KIRSCHER, Defendants and Appellants.
    No. 92-042.
    Submitted on briefs Apr. 23, 1992.
    Decided June 23, 1992.
    49 St.Rep. 550.
    253 Mont. 291.
    833 P.2d 199.

      For Appellant: Sherman V. Lohn and Susan P. Roy, Garlington, Lohn & Robinson, Missoula.
    For Respondent: Michael J. McKeon, McKeon & Anderson, Butte; C. Kathleen McBride and Greg J. Skakles, Johnson, Skakles & Kebe, Anaconda.
   JUSTICE TRIEWEILER

delivered the opinion of the Court.

This is an appeal from the order of the District Court of the Twentieth Judicial District, Lake County, denying defendants’ motion to dismiss plaintiff’s complaint. We affirm the District Court.

The sole issue is whether the District Court erred in its determination that filing of the complaint tolled the statute of limitations until the plaintiff was subsequently certified as a foreign corporation authorized to do business in Montana, pursuant to § 35-1-1004, MCA.

Watson & Associates, Inc., an Arizona corporation, filed an action alleging professional negligence, breach of fiduciary duty, and breach of the covenant of good faith by the defendants. The complaint was filed on January 13, 1988, and defendants were served with the summons in January 1989. On April 17, 1989, defendants moved to dismiss the complaint on the grounds that plaintiff was not a foreign corporation qualified to do business in Montana under § 35-1-1004, MCA (1989). Plaintiff received its certificate of authority to do business in Montana on March 21, 1983, but allowed the certificate to lapse on November 2, 1987. It contends that it did so because it was no longer transacting business in Montana.

Plaintiff reobtained its certificate on May 2, 1989. The motion to dismiss was argued on May 9, 1989. At that hearing, defendants stated additional grounds for their motion. They alleged that the statute of limitations had run prior to the time that plaintiff reobtained its certificate of authority. On August 9, 1991, the District Court issued an order denying defendants’ motion to dismiss. The order was certified for appeal pursuant to Rule 54(b), M.R.Civ.R Defendants appeal that certified order.

Defendants contend that the District Court erred in its conclusion that the statute of limitation for legal malpractice contained in § 27-2-206, MCA, was tolled when plaintiffs complaint was filed on January 13, 1988. Defendants assert that plaintiff had no authority to commence an action in Montana until it reacquired its certificate of authority to conduct business, pursuant to § 35-1-1004(1), MCA (1989). That statute states:

(1) No foreign corporation transacting business in this state without a certificate of authority shall be permitted to maintain any action, suit, or proceeding in any court in this state until such corporation shall have obtained a certificate of authority. Nor shall any action, suit, or proceeding be maintained in any court of this state by any successor or assignee of such corporation on any right, claim, or demand arising out of the transaction of business by such corporation in this state until a certificate of authority shall have been obtained by such corporation or by a corporation which has acquired all or substantially all of its assets.
(2) The failure of a foreign corporation to obtain a certificate of authority to transact business in this state shall not impair the validity of any contract or act of such corporation and shall not prevent such corporation from defending any action, suit, or proceeding in any court of this state. [Emphasis added.]

It is significant that § 35-1-1004(1), MCA, uses the term “maintain” in reference to actions or suits. The majority of courts having addressed the issue of the meaning of “maintain” have determined the term to be distinguishable from the terms “commence” or “institute.” These courts have concluded that “maintain” means to continue an action that has already begun, and not to prohibit an action from being initiated.

In Charles W. Smith and Sons Excavating, Inc. v. Lichtefeld-Massaro, Inc. (Ind. 1985), 477 N.E.2d 308, the Indiana Court of Appeals, faced with a statute similar to § 35-1-1004(1), MCA, stated:

Afundamental rule of statutory interpretation is that words and phrases should be given their plain, ordinary, and usual meaning. [Citation omitted.] Black’s Law Dictionary, 5th Ed. 1979 provides:
To “maintain” an action is to uphold, continue on foot, and keep from collapse a suit already begun, or to prosecute a suit with effect. George Moore Ice Cream Co. v. Rose, Ga., [1933,] 289 U.S. 373, 53 S.Ct. 620, 77 L.Ed. 1265. To maintain an action or suit may mean to commence or institute it; the term imports the existence of a cause of action. Maintain, however, is applied to actions already brought, but not yet reduced to judgment. Smallwood v. Gallardo, [1929,] 275 U.S. 56, 48 S.Ct. 23, 72 L.Ed. 152. In this connection it means to continue or preserve in or with; to carry on.
... Accordingly, attention must be given to those earlier cases interpreting “maintain” in the context of “to maintain any suit or action of law or in equity upon any claim, legal or equitable ...” Our review reveals that historically the appellate courts have held that the language of the statute is not to operate as a bar to action once commenced but merely means to suspend further legal proceedings until such time as the statutory provisions have been complied with. [Citations omitted.]
... Accordingly, we reverse the trial court’s order dismissing this cause of action. We hold that the failure of a plaintiff foreign corporation to obtain a Certificate under I. C. 23-1-11-14 by the date of the filing of its complaint in Indiana courts merely suspends rather than bars further legal proceedings until such time as the Certificate is obtained.

Smith, 477 N.E.2d at 309-10.

In Oxford Paper Co. v. S. M. Liquidation Co. (1965), 257 N.Y.2d 395, the court contrasted “maintain” and “commence.” The court stated:

Section 1312 of the New York Business Corporation Law does not provide that a foreign corporation doing business in this state without authority may not “commence” an action here, or that such an action, if instituted, shall be forthwith dismissed. The provision is that such a plaintiff may not “maintain” an action in this state, and that is so “unless and until such corporation has been [so] authorized * * * and it has paid to the state all fees, penalties and franchise taxes for the years or parts thereof during which it did business in this state without authority’. Thus, it would seem that, upon receipt of such authority and upon payment of such sums, an action previously commenced may be maintained.
If I am correct in my view that “maintain” should not be narrowly construed to mean “commence,” it is a fortiori obvious that, if it be shown, as here, that the foreign corporation doing business in this state had the requisite authority before the institution of suit, it may continue to maintain the action and invoke the remedies of the law provided for its prosecution or conclusion.

Oxford, 257 N.Y.S.2d at 399-400.

Section 35-1-1004, MCA, is taken from the Model Business Corporation Act, as proposed by the American Bar Association in 1960. In the Official Comments to the Act, § 117 states:

If suit has been instituted prior to qualification, the corporation may then qualify and continue its litigation without the necessity of refiling suit after qualification, which may be important if a statute of limitations is involved.

The weight of authority, along with comments from the authors of the section we are interpreting, supports the decision of the District Court. Section 27-2-206, MCA, prohibits the “commencement” of suit after three years from the date of occurrence. Had the Montana Legislature wished to prohibit the commencement of suits by non-authorized corporations, it would have expressly declared its intentions by statute. It did not do so. The District Court correctly interpreted the statute to allow the commencement of suit by Watson & Associates, which it did in a timely manner. The effect of § 35-1-1004(1), MCA, is to suspend the proceedings once suit has been filed until the statute has been complied with, and then allow the suit to go forward.

Accordingly, we affirm the District Court.

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


author: JUSTICE GRAY JUSTICE TRIEWEILER

text:
    STATE OF MONTANA, ex rel. PATRICIA D. NEUHAUSEN, Petitioner and Respondent, v. LAWRENCE P. NACHTSHEIM and THE DEPARTMENT OF ADMINISTRATION for the STATE OF MONTANA, Respondents and Appellants.
    No. 91-348.
    Submitted on briefs Nov. 21, 1991.
    Decided June 29, 1992.
    49 St.Rep. 559.
    253 Mont. 296.
    833 P.2d 201.

      For Appellants: Paul A. Smietanka, Department of Administration, Helena.
    For Respondent: Allan M. McGarvey, McGarvey, Heberling, Sullivan & McGarvey, Kalispell.
   JUSTICE GRAY

delivered the Opinion of the Court.

The appellants, Lawrence Nachtsheim and the Department of Administration, appeal from the Judgment and Peremptory Writ of Mandate entered by the District Court of the Eleventh Judicial District, Flathead County, which directed the appellants to divide Highway Patrol Retirement System (HPRS) benefits and pay one-half of those benefits directly to the respondent, Patricia Neuhausen, in accordance with a decree of dissolution of marriage. We reverse and remand.

The dispositive issue on appeal is whether the appellants have a clear legal duty to pay HPRS benefits directly to the respondent.

On August 14,1990, the marriage between HPRS member Martin Neuhausen and Patricia Neuhausen was dissolved by entry of a Final Decree of Dissolution in Flathead County Cause No. DR-88-533(A). Pursuant to the decree, HPRS administrators were directed to issue two checks each month in payment of Martin’s disability retirement benefits. One check, representing one-half of the benefits, was to be paid directly to Martin; the second check was to be issued directly to Patricia.

Subsequent to the August 14, 1990 dissolution decree, Patricia’s former attorney contacted the Public Employees’ Retirement Division (Division) of the Department of Administration to arrange for the issuance of two drafts on the HPRS pension fund account in accordance with the terms of the dissolution decree. The Division’s administrator, Lawrence Nachtsheim, refused to issue separate checks, asserting that the Division was statutorily prohibited from making such a disbursement.

On November 30, 1990, an Amended Final Decree of Dissolution was entered which also contained provisions to divide Martin’s disability retirement benefits and for the issuance of separate checks. On March 11, 1991, the Division received correspondence from Patricia’s present attorney demanding conformity with the Amended Final Decree of Dissolution. The Division refused, again asserting that it had no legal authority to make a divided distribution of a member’s HPRS disability retirement allowance.

On March 13, 1991, Patricia filed an application for writ of mandate in the District Court to compel the Division to make distributions of Martin’s disability retirement benefits in accordance with the dissolution decree. On April 9, 1991, the court held a show cause hearing in which the parties argued the propriety of the writ. That same day, the District Court issued its Judgment and Peremptory Writ of Mandate ordering Lawrence Nachtsheim and the Department of Administration, Public Employees’ Retirement Division, to immediately execute a draft upon the account of the HPRS pension fund for all amounts due Patricia since August 14, 1990 under the terms of the original dissolution decree and to issue subsequent drafts payable to her as the benefits periodically come due thereafter. The court also awarded the respondent $1,500 in attorney’s fees and $220 in costs.

On April 16, 1991, the Division paid to Patricia one-half of all benefits that accrued to Martin from August 14,1990 to that date in compliance with the writ of mandate. In addition, the Division has continued to pay one-half of the accrued benefits to Patricia as they come due. This appeal was filed on June 14,1991.

Do the appellants have a clear legal duty to pay HPRS benefits directly to the respondent?

The granting of a writ of mandate is a discretionary act which will be upheld absent a showing that the district court abused its discretion. Hovey v. Dep’t of Revenue (1983), 203 Mont. 27, 34, 659 P.2d 280, 284. The writ will lie where the party seeking to invoke it is entitled to the performance of a clear legal duty by the party against whom the writ is directed and there is no speedy and adequate remedy in the ordinary course of law. Section 27-26-102, MCA; State ex rel. Galloway v. City of Great Falls (1984), 211 Mont. 354, 358, 684 P.2d 495, 497. However, unless the performance is one which the law specifically enjoins upon a party as a duty of the office, trust or station, the writ does not lie. State ex rel. Swart v. Molitor (1981), 190 Mont. 515, 523, 621 P.2d 1100, 1105. Nor does the writ lie to compel the performance of an act which would be beyond the power of the party to which it is directed. State ex rel. Judith Basin County v. Poland, et al. (1921), 61 Mont. 600, 203 P. 352.

The appellants contend that they owe no clear legal duty to pay HPRS benefits directly to the respondent because of numerous statutory restrictions on the use of HPRS funds and the payment of benefits. They argue that, in light of the statutory restrictions, the direct payment of HPRS benefits to the respondent would be beyond their statutory power. The respondent, in turn, asserts that the HPRS statutes do not preclude the payment of benefits directly to her and that the appellants’ clear legal duty to make such payments arises from the directive contained in the dissolution decree.

The HPRS statutes are contained in Title 19, Chapter 6, MCA. Before discussing those statutes which are relevant to the issue at hand, we note that our function in construing and applying statutes is to effectuate the intention of the legislature. State ex rel. Roberts v. Public Service Comm’n (1990), 242 Mont. 242, 246, 790 P.2d 489, 492. If the legislature’s intent can be determined from the plain meaning of the words used in a statute, we will go no further. Phelps v. Hillhaven Corp. (1988), 231 Mont. 245, 251, 752 P.2d 737, 741. In addition, it is the function of the courts to ascertain and declare what in terms or substance is contained in a statute; it is not our function to insert what has been omitted. State v. Crane (1989), 240 Mont. 235, 238, 784 P.2d 901, 903.

We conclude that no clear legal duty requires the appellants to pay one-half of Martin’s disability retirement benefits directly to Patricia. Notwithstanding the dissolution decree, direct payment of benefits to anyone other than a statutorily recognized recipient is prohibited under the HPRS statutes.

The plain language of § 19-6-406, MCA, provides that HPRS assets cannot be used for any purpose other than the exclusive benefit of HPRS members and their beneficiaries and paying reasonable administrative expenses associated with the retirement system. Amember is defined as a person who has accumulated salary deductions standing to his or her credit in the HPRS pension trust fund. Section 19-6-101(9), MCA. A beneficiary is defined as a surviving spouse or a dependent child, or if there is no surviving spouse or dependent child, a person nominated to receive benefits under § 19-6-602, MCA. Section 19-6-101(4), MCA.

The respondent is not a member of the retirement system as defined in § 19-6-101(9), MCA. As a result of the dissolution decree, the respondent is not, and never can be, a surviving spouse beneficiary of HPRS member Martin Neuhausen as defined in § 19-6-101(15), MCA. Under these facts, the diversion of the HPRS assets to the respondent in the manner directed by the District Court is prohibited; the diversion would constitute a use of those assets other than for the purposes authorized by § 19-6-406, MCA.

In addition to the restrictions on the use of the HPRS assets discussed above, § 19-6-702, MCA, provides that HPRS benefit payments may not be modified in any way without legislative action.

19-6-702. Payments to be monthly and fixed. The retirement allowances granted under the provisions of this chapter shall be paid in equal monthly installments and may not be increased, decreased, revoked, or repealed unless by act of the legislature of the state of Montana.

The legislature’s intent to exercise exclusive control over the operation of the HPRS could not be stated more clearly. Thus, pursuant to this section, divided benefit payments payable directly to a former spouse of a HPRS member can be established only by an act of the legislature and not as part of a judicial decree.

Finally, § 19-6-705, MCA, exempts HPRS benefits from legal process.

19-6-705. Exemption from taxes and legal process. Any money received or to be paid as a member’s annuity, state annuity, or return of deductions or the right of any of these is:
(2) exempt from levy, sale, garnishment, attachment, or any other process ...

(Emphasis added.) By enacting this section, the legislature has insulated the retirement system assets from actions taken directly against a member’s benefits. The court’s action in ordering the direct payment of HPRS benefits to the respondent, in both the dissolution decree and writ of mandate, constitutes prohibited legal process against money to be paid by the retirement system.

The respondent cites several Montana dissolution cases as support for her argument that the appellants should pay her portion of Martin Neuhausen’s HPRS benefits directly to her. Her reliance on those cases is misplaced. The cases hold only that retirement benefits are a marital asset which must be considered by the corut when equitably distributing the marital estate; they do not hold that the public retirement systems in charge of administering the various retirement funds are obligated to make divided and separate distributions of benefits or any other distributions that are beyond the statutory parameters of those systems. See In re the Marriage of Keedy (Mont. 1991), 813 P.2d 442, 48 St.Rep. 572; In re the Marriage of Butler (1990), 243 Mont. 521, 795 P.2d 467; In re the Marriage of Sirucek (1985), 219 Mont. 334, 712 P.2d 769; In re the Marriage of Rolfs (1985), 216 Mont. 39, 699 P.2d 79; Sowell v. Teachers’ Retirement System (1984), 214 Mont. 200, 693 P.2d 1222.

In sum, the Department of Administration is not charged with and, indeed, is prohibited by statute from making direct, divided payments of HPRS benefits to former spouses of HPRS members. The Public Employees’ Retirement Board of the Department of Administration, as trustee of the HPRS funds, has a fiduciary duty to manage those funds strictly in accordance with the law. The HPRS statutes do not authorize payment of HPRS benefits to anyone other than a HPRS member or beneficiary and the Department cannot be compelled by a court to perform an act outside its statutory authority, which would be the effect of affirming the District Court. Having determined that the appellants owe no clear legal duty to pay HPRS benefits directly to the respondent, we need not address whether any speedy or adequate remedy exists in the ordinary course of law. We hold that the District Court abused its discretion by issuing the writ of mandate.

We note that direct benefit payments to former spouses pursuant to a dissolution decree could be created legislatively in Montana and, indeed, have been created in other states and under federal law. See, e.g., Tex. Gov’t Code Ann., Public Retirement Systems, § 801 et seq. (Vernon 1992); § 8345(j)(l) of the Civil Service Code, Chapter 83, 5 U.S.C. §§ 8331-8348 (1986). To date, however, the legislature of this state has not provided for direct benefit payments to former spouses within the HPRS statutory framework and we will not judicially amend the statutes to provide for such payments.

The District Court, pursuant to § 27-26-402, MCA, awarded the respondent $1,500 in attorney’s fees and $220 in costs incurred in seeming the writ of mandate. It is unfortunate that the respondent incurred the above expenses based on the terms of the dissolution decree, but given our holding that the writ is not a proper remedy in this case, we must vacate the award of attorney’s fees and costs. For the same reason, the respondent’s request for additional damages pursuant to § 27-26-402, MCA, for attorney’s fees and costs incurred on appeal must be denied.

As a final matter, the appellants request that the respondent be directed to return to the Division all HPRS benefits which have been paid to her in conformity with the writ of mandate issued by the District Court. The appellants cite no authority for the return of the benefits paid and do not specifically state how or to what extent the Division would be harmed if the benefits were not returned. It appears, however, although the record is not clear, that subsequent to the original dissolution decree and up until the time the Division complied with the writ of mandate, the Division paid to Martin Neuhausen his full and undivided disability retirement allowance. As a result of the writ being issued, it then paid to the respondent one-half of the benefits which accumulated from the time of the original dissolution decree (without any recourse against Martin N euhausen to cover the respondent’s share) as well as one-half of such benefits as subsequently have become due. Thus, the Division appears to have expended a greater amount of money because of the issuance of the writ than it would have otherwise. We conclude that it is necessary to remand to the District Court for a determination of whether the Division, in fact, has overpaid benefits and, if so, for a determination of such relief as may be appropriate under the circumstances.

Reversed and remanded for entry of judgment denying the writ of mandate, for determination of whether the Division is entitled to a return of benefits paid to the respondent, and for such further proceedings consistent with this opinion in Cause No. DR-88-533(A) as may be appropriate.

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

JUSTICE TRIEWEILER

dissenting:

I dissent from the majority opinion.

The Department of Administration had a clear legal duty to pay retirement benefits to Patricia Neuhausen, and the statutes relied upon by the majority in no way prohibited it from doing so.

The Department’s duty arose from the Amended Final Decree of Dissolution entered by the Flathead County District Court on November 28, 1990. That decree dissolved the marriage of Patricia Neuhausen and Martin Neuhausen, divided the Montana Highway Patrol Retirement benefits equally between the parties, and ordered the administrators of the retirement funds to issue separate checks to Patricia and Martin for their respective interests in those benefits.

The District Court clearly had jurisdiction to enter such an order. We have repeatedly recognized that pension funds are included in the marital estate. (See Sowell v. Teachers Retirement System (1984), 214 Mont. 200, 693 P.2d 1222; Marriage of Butler (1990), 243 Mont. 521, 795 P.2d 467.) By statute, the district court has the power and duty to:

[FJinally equitably apportion between the parties the property and assets belonging to either or both, however and whenever acquired and whether the title thereto is in the name of the husband or wife or both.

Section 40-4-202(1), MCA.

The District Court’s decree discharging its statutory duty to divide the marital estate created a legal duty on the part of Nachtsheim to pay those benefits according to the District Court’s decree. Neither of the statutes relied upon by the majority alter that legal obligation.

Section 19-6-406, MCA, simply prohibits use of retirement benefits or diversion to any purpose other than for the benefit of the member. In this case, the member was Martin Neuhausen and the administrator was ordered to pay the benefits for his benefit in discharging his obligation to divide his marital estate. It is interesting that at no time in these proceedings has Martin appeared or objected to the method by which the administrator was ordered to perform the administrative task that he would otherwise have to perform. Martin had an obligation to share his benefits with his former wife, and the administrator was ordered to assist him with the satisfaction of that obligation by issuing separate checks. Doing so was in no way adverse to Martin’s interests. Therefore, the District Court’s order was not precluded by § 19-6-406, MCA.

Likewise, the District Court’s order in no way violated § 19-6-702, MCA. The District Court’s order did not result in “increased, decreased, revoked or repealed” benefits to which Martin was entitled. It simply directed where they were to be paid. When it did so, they were assets of the marital estate over which the District Court had jurisdiction and which the District Court was authorized to divide pursuant to the previously stated authorities.

The majority opinion exalts form over substance. This Court has repeatedly held that pensions are to be included in marital estates and can be divided equitably. Yet, the majority now reverses the District Comb’s effort to do so in this case in a more administratively convenient manner by concluding that if the administrator writes two checks instead of one, the benefits have been modified.

The benefits are modified, if at all, when the District Comb divides them. The fact that the same total amount is distributed by the administrator in two checks instead of one does not in any substantive way modify the benefits.

The District Comb’s peremptory writ was a reasonable effort to accomplish a property division, which has been repeatedly authorized by this Comb, with the least amount of unnecessary interaction between the parties following the dissolution of their marriage. This Court’s reversal of that decision, based upon its rigid application of statutes which were never intended for the purpose to which they have been applied, simply reinforces the bureaucratic mind set that should have been discouraged by an additional award of attorney fees and costs on appeal.

I will not address the other issues raised on appeal because they were not the basis for the majority’s opinion. However, considering those issues, in addition to the one on which the opinion is based, I would completely affirm the judgment of the District Court.


author: CHIEF JUSTICE TURNAGE

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. JAMES ZACKUSE, Defendant and Appellant.
    No. 91-449.
    Submitted on briefs May 28, 1992.
    Decided June 30, 1992.
    49 St.Rep. 566.
    253 Mont. 305.
    833 P.2d 143.

      For Appellant: Benjamin R. Anciaux, Poison.
    For Respondent: Marc Racicot, Attorney General; John Paul-son, Assistant Attorney General, Helena; Larry J. Nistler, County Attorney, Mitchell A. Young, Deputy County Attorney, Poison.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

James Zackuse (Zackuse) appeals his five convictions for criminal sale of dangerous drugs following a jury trial in the Twentieth Judicial District, Lake County. We affirm.

We rephrase the issues presented on appeal as follows:

1. Did the District Court err by admitting State’s Exhibit No. 4 as evidence of the receipt of the dangerous drugs from the State Crime Lab?

2. Did the investigation of Zackuse’s drug activities by tribal police officers exceed the tribe’s authority and violate Zackuse’s constitutional rights?

On November 21,1990, Zackuse was charged by information with five counts of criminal sale of dangerous drugs in violation of § 45-9-101, MCA. He was accused of selling marijuana and psilocybin mushrooms to a confidential informant on five separate occasions from December 26,1989, to January 30,1990. Zackuse pled not guilty to all five counts on November 28, 1990.

On May 10, 1991, following a two-day trial, a jury found Zackuse guilty of all five counts. On May 29,1991, the District Court sentenced him to five concurrent terms of forty years imprisonment, with twenty years suspended on each count, and ordered him to pay a $2,500 fine to the Lake County Drug Fund. From these convictions, Zackuse now appeals.

1. Did the District Court err by admitting State’s Exhibit No. 4 as evidence of the receipt of the dangerous drugs from the State Crime Lab?

Zackuse argues that State’s Exhibit No. 4, a State Crime Lab form, contained inadmissible hearsay evidence regarding the chain of custody of the drug evidence between David Morigeau (Morigeau), the investigating officer, Lori Moffat (Moffat), a State Crime Lab employee, and Judith Hoffman (Hoffman), a State Crime Lab analyst. Zackuse further argues that State’s Exhibit No. 4 is not excepted under Montana Rule of Evidence 803(8), which excepts public records and reports from the hearsay rule. In order to analyze Zackuse’s arguments, an examination of the pre-trial record as well as the transcript of the trial is necessary.

On April 8, 1991, a deputy county attorney filed a notice of the State’s intention to introduce Hoffman’s written report on her analysis of the drug evidence in this case under Montana Rule of Evidence 803(8). At a April 17, 1991 hearing, Zackuse’s attorney indicated that he would object to the introduction of this report. The District Court ordered briefs on the matter.

On April 30, 1991, the deputy county attorney filed a motion and supporting brief to admit Hoffman’s report under Montana Rule of Evidence 104(a). The supporting brief stated: 1) the evidence in this case had been analyzed by Hoffman, 2) the deputy county attorney had notified the State Crime Lab as soon as the May 9 trial date had been set, and 3) the State Crime Lab had advised the deputy county attorney that Hoffman was on maternity leave and would be unavailable to testify on May 9. The State’s brief cited Montana Rule of Evidence 803(8), which brings written reports from the State Crime Lab within the public records exception to the hearsay rule when the State has notified the District Court and opposing parties in -writing of its intention to offer such a report as evidence at trial in sufficient time for an opposing party to obtain pre-trial depositions or to subpoena the attendance of the person responsible for compiling the report. Zackuse’s counsel did not obtain a pre-trial deposition of Hoffman, subpoena for Hoffman’s attendance, or file a response or a brief in opposition to this motion. This motion was not discussed at the pre-trial hearing on May 8, 1991.

At trial, the deputy county attorney attempted to introduce Hoffman’s report through the testimony of Morigeau. Morigeau testified that at the completion of the investigation, he hand-delivered all of the drug evidence to the State Crime Lab. He testified that he had given the drug evidence to Moffat at the State Crime Lab and that according to the chain of custody log, she in turn gave it to Hoffman. Zackuse’s counsel objected to this testimony on the basis of hearsay. The District Court sustained the objection.

Morigeau then testified that he had received Hoffman’s report from the State Crime Lab. The deputy county attorney then attempted to introduce Hoffman’s report into evidence. Zackuse’s counsel, however, objected on the basis that the chain of custody had not been established. The District Court sustained the objection.

The deputy county attorney laid further foundation for admission of Hoffman’s report by eliciting from Morigeau that he had delivered five sealed envelopes inside a larger envelope to the State Crime Lab containing drug evidence in this case and that he had received the evidence back from Hoffman of the State Crime Lab, along with a completed form, which included a chain of custody log of the drug evidence listing the names of the persons at the State Crime Lab who had handled the evidence. Morigeau testified that this form had the same lab case number that the drug evidence had been given at the time he delivered it to the State Crime Lab. The deputy county attorney moved for the admission of the form, marked as State’s Exhibit No. 4. Zackuse’s attorney objected to its admission on the grounds that it did not fall within the hearsay exception of Montana Rule of Evidence 803(8) and the State’s notice concerning its intention to introduce Hoffman’s report into evidence did not include the admission of this form. The District Court overruled Zackuse’s objection and allowed the admission of State’s Exhibit No. 4 into evidence. The District Court later allowed the admission of Hoffman’s report into evidence.

The determination of whether a proper foundation has been laid for the introduction of an exhibit into evidence rests within the discretion of the trial court. State v. Evans (1991), 247 Mont. 218, 227, 806 P.2d 512, 518 (citation omitted). In order to establish the chain of possession of the drug evidence, it is not necessary for the State to call as witnesses at trial each person who had handled the evidence. The foundation for admission of the drug evidence is sufficient if the State shows that the investigating officer obtained the evidence, sent it to the crime lab, received it back from the crime lab, and identified it as the same evidence sent to the lab. State v. Snider (1975), 168 Mont. 220, 227-28, 541 P.2d 1204, 1209. Here, Morigeau testified that he obtained the drug evidence during the investigation, hand-delivered it to the State Crime Lab, received it back from the State Crime Lab, and identified it as the same drug evidence he hand-delivered to the lab. The District Court then allowed the admission of State’s Exhibit No. 4, which included the chain of custody log of the drug evidence and lab case number. We hold that the District Court did not abuse its discretion by admitting State’s Exhibit No. 4 as it was evidence of Moiigeau’s receipt of the drug evidence from the State Crime Lab and was the final link in the chain of custody of the drugs.

2. Did the investigation of Zackuse’s drug activities by tribal police officers exceed the tribe’s authority and violate Zackuse’s constitutional rights?

Zackuse argues that the investigation of criminal sale of dangerous drugs is beyond the jurisdiction of tribal law and tribal enforcement agencies. He argues that a tribe has no criminal jurisdiction over non-tribal members, the actions of the tribal and State authorities denied him unspecified state and federal constitutional rights and subjected him, a non-tribal member, to tribal law.

Zackuse’s jurisdictional and constitutional arguments lack merit. The fact that this criminal investigation was conducted by a tribal law enforcement officer has no relevance in determining the jurisdiction of this case. Additionally, Zackuse failed to adequately brief his state and federal constitutional arguments. We therefore decline to further discuss these arguments.

In conclusion, we affirm James Zackuse’s five convictions for criminal sale of dangerous drugs.

JUSTICES HARRISON, HUNT, TRIEWEILER and WEBER concur.