author: MR. JUSTICE WEBER

text:
    RANDOLPH V. PETERSON, INC., Plaintiff and Appellant, v. J.R. SIMPLOT CO., a Nevada corporation; HARNISCHFEGER CORPORATION, a Delaware corporation; and GOLDEN SUNLIGHT MINES, INC., a California CORPORATION, DEFENDANTS AND RESPONDENTS.
    No. 89-070.
    Submitted on Briefs June 16, 1989.
    Decided Aug. 25, 1989.
    778 P.2d 879.

      Philip D. Tawney, Mullendore & Tawney, Missoula, Peter Michael Meloy, Helena, for plaintiff and appellant.

      Lawrence F. Daly, Garlington, Lohn & Robinson, Robert J. Sullivan, Boone, Karlberg & Haddon, Missoula, Alan L. Joscelyn, Gough, Shanahan, Johnson & Waterman, Helena, for defendants and respondents.
   MR. JUSTICE WEBER

delivered the Opinion of the Court.

This appeal arises from an order by the District Court, Fourth Judicial District, Missoula County, granting summary judgment in favor of defendants. Plaintiff appeals. We affirm.

We restate the issues as follows:

1. Did the District Court err in granting summary judgment in favor of defendant J.R. Simplot Co.?

2. Did the District Court err in granting summary judgment in favor of defendant Harnischfeger Corporation?

3. Did the District Court err in granting summary judgment in favor of defendant Golden Sunlight Mines, Inc.?

Randolph V. Peterson, Inc. (RVP) brought suit against J. R. Sim.plot Co. (Simplot), alleging breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment. RVP brought suit against Harnischfeger Corporation (Harnischfeger) and Golden Sunlight Mines, Inc., (Golden Sunlight) alleging, as to each defendant, tortious interference with contract and unjust enrichment.

The facts giving rise to these suits began in January 1987, when Simplot, a mining corporation operating a mine in Afton, Wyoming, began inquiries with various companies regarding the purchase of a new mining shovel. In 1979 Simplot had purchased a new electric mining shovel from Harnischfeger, a manufacturer and dealer in heavy equipment. Thus Simplot began discussions with Harnischfeger regarding the purchase of a new hydraulic shovel in January 1987. These discussions included the possibility of trading in the old shovel for credit on a new one.

Golden Sunlight is a mining company operating near Whitehall, Montana. It also began negotiations with Harnischfeger in January 1987 regarding the purchase of a new mining shovel. Golden Sunlight requested a quote on a new mining shovel and this information was sent to Golden Sunlight on February 2,1987. In early April 1987 Golden Sunlight indicated to Harnischfeger that the company might be interested in a used shovel, so on April 8 Harnischfeger sent Golden Sunlight information about three used shovels, including the one owned by Simplot.

RVP is a heavy equipment broker, based in Missoula, Montana. In March of 1987, RVP contacted Simplot with an offer to market Simplot’s used mining shovel. The original offer by RVP requested an exclusive marketing contract, whereby only RVP could market the shovel. Simplot, however, rejected the exclusive marketing arrangement. Instead, Simplot sent RVP a letter dated March 16, 1987, outlining the bases upon which RVP could market the shovel. The contract stated, inter alia, that RVP agrees to represent Simplot on a nonexclusive basis, that the sale of the shovel shall be a price of $725,000 cash to Simplot, that RVP would receive a 10% commission if sold for this amount, and that the sale would be subject to final approval by Simplot. Simplot reserved the right to refuse to sell to any party, and the right to withdraw the shovel at any time.

RVP signed the contract, returning it with a letter from RVP which stated:

“As mentioned above, we normally only take machinery listings on an exclusive basis. However, we are prepared to market your shovel on a nonexclusive basis as outlined in your letter of March 16th so long as we are in agreement that RVP will be the single marketing representative for you until such time as one of the following occurs:
“1. Simplot elects to withdraw the shovel for sale.
“2. Simplot trades the shovel in to the factory.
“3. Simplot no longer wishes RVP to sell the shovel. RVP would be paid its commission on any sale later consummated if RVP had solicited the Buyer.”

The parties agree that these two letters together formed the marketing agreement. Mr. Peterson, the owner of RVP testified by deposition that when he signed the contract he. was aware that Simplot was negotiating with Harnischfeger regarding a possible trade-in of the shovel.

Based upon the marketing agreement, RVP prepared brochures advertising the shovel and mailed them to possible purchasers. Golden Sunlight received a brochure on April 3, 1987, and on April 30, 1987 it contacted RVP. On May 14, 1987, an agent of RVP took two representatives of Golden Sunlight to Afton, Wyoming to inspect the shovel.

On March 10, 1987 Harnischfeger inspected Simplot’s used shovel, and discussed with Simplot its trade-in value and the purchase of a new shovel. In late April 1987 Harnischfeger learned through discussions with Golden Sunlight that a broker, RVP, was attempting to market the shovel. Harnischfeger inquired of Simplot whether it could still take the shovel on trade. Simplot assured the company that it could. Golden Sunlight also made inquires of Harnischfeger as to its ability to sell the shovel, since Golden Sunlight knew that RVP was also marketing it. Golden Sunlight received assurances from Harnischfeger that it would be able to resell the shovel should the trade-in occur.

Harnischfeger continued its negotiations with Simplot for the purchase of the new mining shovel. On May 19, 1987, Simplot received Harnischfeger’s written proposal for that sale. On May 27, Harnischfeger sent a proposal to Simplot offering a $650,000 credit on the new shovel, in exchange for a trade-in of the used shovel.

By letter dated May 27, 1987, Harnischfeger confirmed to Golden Sunlight its right to sell the used shovel, and quoted a price of $675,000. Earlier, on April 30, RVP had offered to sell the shovel to Golden Sunlight for a price of $725,000. On May 29, Golden Sunlight expressed an interest in purchasing the shovel from Harnischfeger, but Golden Sunlight requested that an additional $50,000 worth of spare parts for the shovel be included in the deal. Harnischfeger then negotiated with Simplot regarding the spare parts, and Simplot agreed to include $50,000 worth of spare parts in the trade-in of the shovel to Harnischfeger.

At some point between May 27 and June 2, Simplot made a verbal agreement with Harnischfeger to trade in the shovel, and purchase the new one, and on June 5, 1987, Simplot gave Harnischfeger a purchase order number. According to this agreement, Simplot would trade in the used shovel for a credit of $650,000 against the purchase price of a new shovel. Additionally, Simplot agreed to trade in $50,000 of spare parts to Harnischfeger.

On June 1, 1987, Golden Sunlight verbally agreed to purchase the used shovel from Harnischfeger. June 8, 1987, Golden Sunlight issued a written purchase order for the shovel.

Also on June 8th, RVP telephoned Golden Sunlight and learned that it had decided to purchase the shovel from Harnischfeger. RVP then sent a letter to Simplot that same day by Federal Express, stating that he had found a purchaser for the shovel. Enclosed with the letter was a check for a down payment of $72,500. Mr. Peterson later testified that the purchaser was himself. On June 11, Simplot returned the check to RVP, stating that the shovel had been taken in on trade by Harnischfeger on a new shovel. On July 10, 1987, RVP filed suit against Simplot, Harnischfeger, and Golden Sunlight. Following discovery, which included deposing all parties, the defendants moved for summary judgment. Oral argument was held on this motion on December 8, 1988. The court granted summary judgment in favor of all three defendants.

I

Did the District Court err in granting summary judgment in favor of J.R. Simplot Co.?

The standard of review, in determining whether summary judgment should have been granted has been stated as follows:

“The standard by which this Court reviews an appeal from a motion granting summary judgment is whether the record, when taken as a whole, shows no genuine issue of material fact. Kronen v. Richter (Mont. 1984), [211 Mont. 208,] 683 P.2d 1315, 1317, 41 St.Rep. 1312. Where critical testimony is taken by deposition, this Court will closely examine the District Court’s findings. When reviewing deposition testimony the reviewing court is in a like position to the District Court and is freely able to review such evidence. Kaiser v. Town of Whitehall (Mont. 1986), [221 Mont. 322,] 718 P.2d 1341. 1342, 43 St.Rep. 176.”

A party opposing a motion for summary judgment may not rest upon the allegations or denials of his pleadings. The party’s response must set forth specific facts showing there is a genuine issue for trial. National Gypsum Co. v. Johnson (1979), 182 Mont. 209, 595 P.2d 1188, 1189. Conclusory or speculative statements are insufficient to raise a genuine issue of material fact. Kronen, 683 P.2d at 1318.

Spadaro v. Midland Claims Service, Inc. (Mont. 1987), [227 Mont. 445,] 740 P.2d 1105, 1108, 44 St.Rep. 1221, 1224. Regarding summary judgment, this Court has also stated:

“It is true that the party moving for summary judgment has the burden of establishing the absence of any genuine issue of material fact, and the party opposing the motion must supply evidence supporting the existence of a genuine issue of material fact. Pretty on Top v. City of Hardin (1979), 182 Mont. 311, 315, 597 P.2d 58, 60. The general purpose of Rule 56, M.R.Civ.P., is to eliminate unnecessary trial, delay and expense. The purpose of the hearing on the motion is not to resolve factual issues, but to determine whether there is any genuine issue of material fact in dispute. The opposing party’s facts must be material and of a substantial nature, not fanciful, frivolous, gauzy nor merely suspicions. Silloway v. Jorgenson (1965), 146 Mont. 307, 310, 406 P.2d 167, 169.”

Westlake v. Osborne (1986), 220 Mont. 91, 713 P.2d 548, 550, 43 St.Rep. 200, 202-203.

RVP contends that Simplot breached its contract by authorizing Harnischfeger to sell the shovel to Golden Sunlight before the trade-in occurred. RVP alleges that the sale to Golden Sunlight was consummated before the trade-in and was really a direct sale from Simplot to Golden Sunlight. RVP contends that at a minimum these are genuine issues of material fact which are proper for jury determination, not summary judgment.

The contract between RVP and Simplot specifically allowed a trade-in to the factory, and RVP knew when it signed the contract that Simplot was negotiating with Harnischfeger regarding a possible trade-in of the used shovel. According to the express terms of the contract, the trade-in to Harnischfeger was allowed. RVP failed to present facts showing a contract breach as a result of the trade-in.

RVP urges that a letter, dated May 27, 1987, from Harnischfeger to Simplot, demonstrates that Simplot authorized a sale by Harnischfeger to Golden Sunlight of the used shovel prior to the trade-in. In regard to the used shovel, the letter stated, “If we are able to sell the [used shovel] it will be traded in on a P & H Model 1200 ...” This letter, written by Harnischfeger to Simplot, demonstrates nothing in regard to Simplot’s actions. Deposition testimony by Simplot representatives demonstrates that Simplot was concerned only with the trade-in of the shovel and had no interest in or knowledge of Harnischfeger’s sale negotiations with Golden Sunlight. While there was testimony by Simplot that in late May it became aware that Harnischfeger was negotiating a sale of the used shovel with a third party, there are simply no facts suggesting that Simplot was involved in any sale of the shovel.

The District Court concluded that the trade-in and sale to Golden Sunlight were contemporaneous and RVP has demonstrated no material facts to refute this. At some point between May 27 and June 2, Simplot and Harnischfeger orally agreed to the purchase of a new shovel and the trade-in of the used shovel. Also on June 1, Golden Sunlight gave Harnischfeger a verbal order to purchase the used shovel. On June 5, Simplot gave Harnischfeger a purchase order number for the transaction, and on June 8, Golden Sunlight gave Harnischfeger a written purchase order. We conclude that RVP has failed to show any genuine issues of material fact regarding an alleged breach of contract by Simplot. RVP does not support his allegations with anything more than speculation and suspicion. This does not defeat a summary,judgment motion.

RVP contends that Simplot breached an implied covenant of good faith and fair dealing in its contractual relationship with RVP. The covenant of good faith and fair dealing is measured by the justifiable expectations of the parties. As we stated in Nicholson v. United Pacific Ins. Co. (1985), 219 Mont. 32, 710 P.2d 1342:

“The nature and extent of an implied covenant of good faith and fair dealing is measured in a particular contract by the justifiable expectations of the parties. Where one party acts arbitrarily, capriciously or unreasonably, that conduct exceeds the justifiable expectations of the second party.”

Nicholson, 710 P.2d at 1348.

In the present case RVP failed to present facts showing that Simplot’s conduct violated RVP’s justifiable expectations, or that it was arbitrary, capricious or unreasonable. The trade-in was allowed by the contract, and RVP was aware of the negotiations between Simplot and Harnischfeger prior to the trade-in. Also, RVP cannot reasonably contend that it did not expect Harnischfeger to resell the shovel. Harnischfeger is a dealer in heavy machinery which engages in the sale of used equipment. No material facts support RVP’s contention that his expectations were violated. We affirm the District Court in its holding that no genuine issue of material fact existed regarding an alleged breach of this covenant.

RVP contends that Simplot was unjustly enriched because Simplot did not have to pay the 10% brokerage commission. It contends that RVP solicited the buyer, Golden Sunlight, and was therefore due a commission. Unjust enrichment is an equitable doctrine wherein the plaintiff must show some element of misconduct or fault on the part of defendant, or that the defendant somehow took advantage of the plaintiff. Brown v. Thornton (1967), 150 Mont. 150, 156, 432 P.2d 386, 390.

In the present case, RVP’s contention that it was due a commission and that Simplot was unjustly enriched is without merit. No commission was due RVP since it did not consummate a sale to Golden Sunlight. Neither did RVP “solicit” Golden as a buyer, thereby earning a commission. The facts reveal that Harnischfeger had begun discussions with Golden Sunlight fully three months before Golden Sunlight was contacted by RVP. Additionally, no evidence suggests that Simplot obtained any advantage by trading the shovel in to Harnischfeger. In fact, RVP admitted that Simplot probably would have been better off financially to have sold the shovel through RVP. We conclude that RVP failed to demonstrate facts showing that Simplot was unjustly enriched.

We affirm the District Court in its grant of summary judgment in favor of defendant Simplot.

II

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

RVP contends that Harnischfeger tortiously interfered with RVP’s contract with Simplot and that Harnischfeger was unjustly enriched. The elements of tortious interference with contract were stated in Bolz v. Myers (1982), 200 Mont. 286, 295, 651 P.2d 606, 611, as follows:

“In order to establish a prima facie case of interference with contractual or business relations, it must be shown that the acts (1) were intentional and willful, (2) were calculated to cause damage to the plaintiff in his or her business, (3) were done with the unlawful purpose of causing damage or loss, without right or justifiable cause on the part of the actor, and (4) that actual damages and loss resulted. Bermil Corp. v. Sawyer (Fla.App. 3rd Cir. 1977), 353 So.2d 579.”

Bolz, 651 P.2d at 611.

Additionally, other authorities have noted that the tort of tortious interference with contract requires that defendant act for an improper purpose. W. Keeton, The Law of Torts, § 129, p. 982 (5th Ed. 1984).

RVP contends that Harnischfeger tortiously interfered with its contract with Simplot in that it intentionally and willfully acted to sell the shovel, knowing this would deprive RVP of its contractual rights, and with a purpose to provide unjustifiable gain to itself. The District Court found no genuine issues of material fact to support this allegation, and we agree.

When Harnischfeger learned of RVP’s efforts to market the shovel, it immediately inquired of Simplot whether the shovel could still be taken on trade. Receiving assurances from Simplot that the brokerage agreement with RVP allowed the trade-in, Harnischfeger then continued to negotiate with Golden Sunlight. The subsequent sale of the shovel was no more than a reasonable and legitimate business transaction. We conclude that RVP has failed to raise any genuine issues of fact which would suggest that Harnischfeger acted improperly, or that its acts were intentionally calculated to cause damage to RVP. We conclude that no genuine issues of material fact exist as to whether Harnischfeger tortiously interfered with the contract. RVP’s contention that Harnischfeger was unjustly enriched similarly fails, in that RVP points to no facts indicating misconduct by Harnischfeger. We affirm the District Court in its grant of summary judgment in favor of defendant Harnischfeger.

Ill

Did the District Court err in granting summary judgment in favor of defendant Golden Sunlight?

RVP also alleges tortious interference with contract and unjust enrichment as to the third defendant, Golden Sunlight. However, we conclude that no genuine issues of material fact support these allegations.

Golden Sunlight knew that both Harnischfeger and RVP were marketing the shovel. Golden Sunlight inquired of Harnischfeger whether it could rightfully sell the shovel. After Harnischfeger received assurance from Simplot that the marketing agreement with RVP allowed the trade-in to Harnischfeger, Harnischfeger responded to Golden Sunlight that it could sell the shovel in the event of a trade-in.

RVP contends that Golden Sunlight “had an affirmative obligation to investigate that this was the case.” RVP further argues that since Golden Sunlight did not do so, its actions amounted to tortious interference with contract. As noted previously, this tort requires an intentional act for an improper purpose. Bolz, 651 P.2d at 611; Keeton, § 129 at 982. RVP’s contention thus fails, as it merely alleges negligence on the part of Golden Sunlight. Finally, we conclude that RVP has failed to demonstrate any misconduct on the part of Golden Sunlight; thus the allegation of unjust enrichment must similarly fail. Brown, 432 P.2d at 390.

We conclude that there are no genuine issues of material fact regarding whether Golden Sunlight tortiously interfered with the contract in the present case, or whether Golden Sunlight was unjustly enriched. We therefore affirm the District Court’s grant of summary judgment in favor of Golden Sunlight.

Affirmed.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, McDONOUGH and GULBRANDSON concur.


source: Caselaw Access Project

license: Public Domain

text:
    In re the MARRIAGE OF ROBERT MARTIN MILLER, Petitioner and Respondent, and ELIZABETH ANN MILLER, Respondent and Appellant.
    No. 89-149.
    Submitted on Briefs July 20, 1989.
    Decided Aug. 25, 1989.
    Rehearing Denied Sept. 21, 1989.
    778 P.2d 888.

      Sherlock & Nardi, Patrick D. Sherlock, Kalispell, for respondent and appellant.
    Randall S. Ogle, Murray, Kaufman, Vidal, Gordon, and Ogle, Kalispell, for petitioner and respondent.
   MR. JUSTICE WEBER

delivered the Opinion of the Court.

The parties’ marriage was dissolved by decree dated October 28, 1988 in the District Court for the Eleventh Judicial District, Flathead County. Wife appeals various aspects of the decree and the findings of fact and conclusions of law contained therein. We reverse and remand for further proceedings consistent with this opinion.

We rephrase the issues as follows:

1. Whether the District Court erred in its valuation and distribution of the marital property? We conclude that there was sufficient error to require remand and consideration.

2. Is it appropriate that a different Judge of the District Court consider this case on remand? We conclude that it is.

Elizabeth Ann Miller (wife) and Robert Martin Miller (husband) married on January 31, 1959. Four children were born during the marriage, all of whom were adults at the time of trial. The parties separated in November of 1986, with the wife remaining in possession of the family home in Kalispell. Since the date of separation, husband has paid the monthly mortgage payment of $415 on the first mortgage on the residence. In addition, he paid $200 per month temporary maintenance from November 1986 to February 1988. By court order dated February 22, 1988, the maintenance was increased to $400 per month.

Husband is employed as an electrician for the Bonneville Power Administration earning approximately $43,000 per year with a regular monthly net income of $2,218.46. At the time of trial, husband had acquired retirement benefits valued at $34,401. The District Court found that husband occasionally worked overtime but that those hours were sporadic and that his overtime compensation was not regular income.

In addition to raising the parties’ four children and serving as homemaker, the District Court found that the wife worked as a cake baker, cake decorator, and a professional monogrammer. At the time of trial, she was an enrolled student at Flathead Valley Community College pursuing a degree in education.

In 1982, the parties mutually acquired the business presently known as Miller Monogramming for $13,000. The business was operated as the joint business of husband and wife through November of 1986, after which time the wife was the sole operator. The business has been operated out of the family residence since its acquisition. In conjunction with the business purchase, the parties received a list of business clients and a three-year covenant not to compete from the seller. Since 1982, the parties have invested in Miller Monogramming the additional sum of $21,682 which was secured by a second mortgage on the family residence. The District Court found the outstanding second mortgage obligation to be $15,654.38.

The District Court valued Miller Monogramming at $22,800 based on the testimony of Thomas Wynne, C.P.A., who evaluated the tax returns and business schedules for 1983 through August 1988. The court awarded the business to the wife and ordered her to assume the second mortgage debt of $15,654.38.

The court also ordered the family home to be sold with the proceeds to be divided equally after payment of the first mortgage, which was $6,928.11 at the time of trial. The District Court did not value the family residence, but found that two appraisals were offered at trial, one of $118,442 and one of $90,000. The court ordered that the residence be appraised by a mutually agreeable appraiser and that the parties accept any offer to purchase within ten percent of the appraised value. The court ordered the second mortgage to be paid by the wife no later than the time of sale of Miller Monogramming or at the time of sale of the residence, whichever occurred first. Husband was awarded his $34,401 of retirement benefits, and the parties’ personal property was divided in accordance with a list prepared by the husband.

The District Court concluded that wife lacks sufficient property to provide for her reasonable needs and is unable to totally support herself through appropriate employment in the immediate future. The court ordered the husband to continue paying temporary maintenance of $400 per month directly to wife; In addition, the court required husband to pay the first mortgage payments of $415 until the residence was sold, at which time a hearing regarding further maintenance would be held. It is not clear from the court’s order whether maintenance payments of $400 per month shall continue after sale of the house.

On appeal, wife challenges the court’s valuation and distribution of the marital property. In particular, she challenges the valuation of the parties’ business, Miller Monogramming, and the court’s decision to award her the business in light of the court’s duty to equitably apportion the marital property. She also argues that the District Court Judge should have recused himself because of editorial comments made during the divorce proceedings which she contends may have affected his impartiality.

I.

Whether the District Court erred in its valuation and distribution of the marital property?

The District Court awarded property valued at $49,443.50, or 52% of the marital estate to the husband, and property valued at $45,041, or 48% of the marital estate to the wife. Wife contends that while this property division is approximately equal on its face, it is in no way an equitable apportionment of the marital property if the evidence presented is reconsidered by this Court.

The District Court has broad discretion in dividing the marital estate. In re Marriage of Luisi (Mont. 1988), [232 Mont. 243,] 756 P.2d 456, 459, 45 St.Rep. 1023, 1025. In doing so, it is the duty of the District Court to equitably apportion the property under § 40-4-202, MCA. In reviewing the lower court’s division of property, this Court will look to see if the judgment is based upon substantial credible evidence, and if so, this Court will not disturb the judgment unless a clear abuse of discretion is shown. In re Marriage of Stewart (Mont. 1988), [232 Mont. 40,] 757 P.2d 765, 767, 45 St.Rep. 850, 852. In this case, wife contends that the District Court’s findings of fact and conclusions of law are not consistent with the evidence presented, thereby constituting an abuse of the lower court’s discretion. Wife is particularly critical of the valuation of Miller Monogramming and of the earning capacity of that business as well as the distribution of the business to her.

The District Court found that, “Wife has the ability to earn in excess of $1,000 per month from Miller Monogramming.” This finding is apparently based on other findings relating to gross income and gross profits which are as follows:

“26. The gross income of Miller Monogramming in 1985 was approximately $16,240.00, or an average of $1,353.33 per month.
“27. The cost of goods sold from Miller Monogramming in 1985 was $3,175.00.
“28. The gross profit (i.e., gross income less cost of goods sold) of Miller Monogramming in 1985 was the sum of $13,064.71 or an average of $1,088.72 per month.
“29. The gross income of Miller Monogramming in 1986 was approximately $14,486.00, or an average of $1,207.00 per month.
“30. The cost of goods sold from Miller Monogramming in 1986 was $2,007.16.
“31. The gross profit (i.e., gross income less cost of goods sold) of Miller Monogramming in 1986 was the sum of $12,478.84, or an average of $1,039.90 per month.
“32. The gross income of Miller Monogramming in 1987 was approximately $11,578.00.
“33. The cost of goods sold from Miller Monogramming in 1987 was $1,689.00.
“34. The gross profit (i.e., gross income less cost of goods sold) of Miller Monogramming in 1987 was the sum of $9,889.00, or $824.08 per month.”

Despite these extensive findings on gross income and gross profit, the court made no findings which reflect the net earnings of that business for the years in question. The same tax returns which the lower court used to determine gross income also reflect the net income of the business, however, no explanation is given for the absence of these figures in the court’s decree. We have reviewed the tax returns received in evidence which set forth the following net earnings figures for the years 1983 to 1987:

1983 $ 487.87
1984. (3,361.19)
1985 421.35
1986 1,086.00
1987 622.00

The findings and conclusions do not address the contradiction between the net earnings as disclosed by the tax returns and the specific findings on gross income as contained in the court’s order, As a result, we conclude that there is no substantial credible evidence to support the findings of the District Court that the wife has the ability to earn in excess of $1,000 per month from Miller Monogramming.

At trial, wife requested that Miller Monogramming be sold and the proceeds, if any, be divided equally between the parties. She expressed her lack of interest in operating the business and her intent to pursue a degree in education. Instead, the District Court gave the business and the corresponding debt to the wife, which she now contends she neither wants nor can afford. The lower court did not state why it chose to award the business to the wife as opposed to honoring her request to have the business sold. The value of Miller Monogramming adopted by the lower court was the value offered by husband’s expert, who examined the parties’ tax returns for the years 1983 through August 1988. The expert admitted that his appraisal did not reflect the fair market value for selling purposes, nor did he consider the business’ goodwill or equipment, or the impact of similar businesses in the area upon the marketability of Miller Monogramming. In contrast, the testimony of the real estate broker testifying for the wife showed that it would be very difficult to sell Miller Monogramming because of the local competition in the area. As a result, we are unable to find substantial evidence to support the valuation of the business itself.

In addition, the findings and conclusions of the District Court do not address the request on the part of the wife to have the business sold and to allow her to continue to pursue her college education. It appears that the award of retirement benefits having a value of $34,000 to the husband was basically offset against the award of the business to the wife. We conclude that the record does not contain substantial evidence to support the evaluation of the Miller Monogramming business itself and its distribution to the wife. We therefore conclude that the valuation and distribution of the marital property should be set aside and returned to the District Court for redetermination.

Because the matter is being returned to the District Court for re-determination, we also direct the court to consider the question of maintenance of the wife.

II.

Is it appropriate that a different Judge of the District Court consider this case on remand?

Wife contends that the District Court Judge should have disqualified himself prior to the October, 1988 hearing on the merits due to a series of publications which appeared in the Kalispell Daily Interlake in October of 1987. Wife did not formally move to disqualify the Judge as set forth in § 3-1-805, MCA. However, she did express her concern as to the Judge’s possible prejudice at the October, 1988 hearing in a Motion for Rehearing dated November 11, 1988.

Included in her Motion for Rehearing was an affidavit which established that on October 1, 1987, a news article appeared in the Kalispell Daily Interlake which was critical of the District Judge who tried this cause. The article contained a reference to the wife’s pending divorce case in its news analysis of the Judge which stated in part:

“A couple files for divorce. A hearing on temporary support is held in May. No ruling is forthcoming. The husband, who makes $43,000 a year, voluntarily gives the wife $200 a month. The wife takes in sewing to make ends meet.
“A local attorney offers this example to back up his complaint that the 11th District Court — and in particular, the department presided over by Judge Michael Keedy — takes too long to resolve cases.”

In response to this article, the District Court Judge wrote a letter to the editor which appeared in the October 7, 1987 edition of the newspaper, which stated in part:

“. . . on the very day the hearing was conducted four months ago I ordered the husband to pay his estranged wife $615 per month pending further notice from the court. (She had been a self-employed seamstress for more than a year before the hearing).

On October 11,1987, the wife’s own letter to the editor appeared in the newspaper, which stated in part:

“I am the wife that is mentioned in both the article and letter . . . . My husband and I have been married for over 28 years. He left in October 1986 and filed for divorce a week later. He have (sic) four grown children and three grandchildren. In May my lawyer finally got a “show cause” hearing for more financial support. He was satisfied that Judge Keedy would be handling the case and assured me that he was a fair and just person and we would have a ruling shortly.
“A ruling was never made though! The $615 mentioned in the article was already being paid when we went to court. The $200 was to me for maintenance and the $415 was for the payment on the house that my husband and I own jointly ....
“I do not envy a judge having to make a decision in a divorce case. But courts are suppose (sic) to show mercy. If I had committed a felony, my case would have already gone to trial, a decision made and my fate decided. But my only crime was agreeing to a divorce. Now I wait.”

In her Motion for Rehearing, wife alleged that she was denied a fair hearing of her case due to the publications and that the Judge’s prejudice was reflected by the manner in which the hearing was conducted and also in the Judge’s final order. No ruling was issued on wife’s motion within 45 days, so it was deemed denied pursuant to Rule 59(g), M.R.Civ.P.

We do not find it necessary for this Court to make a ruling on the issue of disqualification raised by the wife. We do note that a judge’s official conduct is to be free from even the appearance of impropriety and that his personal behavior should be beyond reproach as set forth in Canon IV, Canons of Judicial Ethics. In order to eliminate any question, of impropriety or impartiality, we direct that on remand, this proceeding shall be assigned for consideration and redetermination by a District Judge other than the one who previously made the determination.

Reversed and remanded.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES McDON-OUGH, SHEEHY and HUNT concur.


author: MR. JUSTICE HARRISON

text:
    DAVID COOMBS, Plaintiff and Appellant, v. GAMER SHOE COMPANY, a Montana corporation, Defendant and Respondent.
    No. 89-169.
    Submitted on Briefs Aug. 3, 1989.
    Decided Aug. 25, 1989.
    778 P.2d 885.

      Ronald F. Waterman, Gough, Shanahan, Johnson and Waterman, Helena, for plaintiff and appellant.
    Gary M. Zadick and Mark F. Higgins, Ugrin, Alexander, Zadick & Slovak, Great Falls, for defendant and respondent.
   MR. JUSTICE HARRISON

delivered the Opinion of the Court.

This case originated as a wrongful discharge action in the First Judicial District Court, Lewis and Clark County. Appellant asserted that his termination breached the implied covenant of good faith and fair dealing. The District Court granted respondent Gamer Shoe Company’s (Gamers) motion for summary judgment and appellant Coombs appeals that decision. We affirm.

Coombs presents essentially one issue for review. Did the District Court err in holding that no genuine issue of material fact existed regarding respondent’s claim that Coombs lost his job as part of a legitimate reduction in work force.

David Coombs began working for Gamers in 1977 at the Carlson’s store in Great Falls. Gamers had previously purchased Carlson’s. Within a month Coombs was promoted to store manager. He worked as the manager of Carlson’s until the fall of 1983 when he was promoted to the position of buyer of children’s and men’s shoes. Another Gamers employee, Roger Howell, transferred to Carlson’s from a recently closed Gamers store to fill the position of store manager. As Coombs’ buying position was not full time, he continued to work as a floor salesperson when not engaged in his buying duties. Coombs held this position until he left Gamers.

In August of 1986, Loren Miles, Coombs’ supervisor, informed him that because of poor economic conditions, Gamers might close Carlson’s at the end of its lease period in 1987. At that time, Carlson’s personnel also suffered a wage reduction. Prior to this, Coombs had written a memo detailing the poor economic conditions facing the Carlson’s store. Also, after August of 1986, Coombs and other Gamers’ employees shared their concerns about the company’s general economic viability. At that time appellant was aware specifically that the future of both the Carlson’s store and his position were uncertain. Loren Miles did tell Coombs that Gamers would do what it could to find him a position. However, Gamers did not guarantee, either verbally or in writing, that Coombs would still have a position with Gamers if the Carlson’s store closed,

In mid-April of 1987, Miles informed Coombs that Gamers had decided to close Carlson’s at the end of Summer. Coombs’ position, along with the two other Carlson’s employees, both seniors in date of hire, would be eliminated. Management would assume Coombs’ buying duties. Gamers gave Coombs the opportunity to continue working part-time as a salesperson until the store actually closed. Coombs declined the offer. The store did close and none of the Carlson’s employees were retained as Gamers’ employees. No one was hired to replace Coombs as a buyer. Coombs does not contend that Gamers terminated him for cause. He does contend that Gamers should have found, a place for him even though he testified that Gamers did not guarantee him a job. Gamers’ management testified that Coombs was a loyal and satisfactory employee,

Relying on facts from appellant’s deposition, the District Court concluded that respondent was entitled to summary judgment. summary judgment is proper when no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. The movant has the burden of showing a complete absence of any genuine issue as to all facts considered material in light of the substantive principles that entitle the movant to a judgment as a matter of law, and all reasonable inferences that may be drawn from the offer of proof are to be drawn in favor of the opposing party. Cereck v. Albertson’s, Inc. (1981), 195 Mont. 409, 637 P.2d 509. If the moving party makes the necessary showing, the burden of proof shifts to the party opposing the summary judgment motion to present evidence of a material and substantial nature raising a genuine issue of fact. Mayer Bros. v. Daniel Richard Jewelers, Inc. (1986), 223 Mont. 397, 726 P.2d 815.

Appellant argues that the District Court erred because it overlooked issues of material fact raised by the record. Basically, Coombs urges this Court to recognize that two fact questions exist regarding his claim of breach of the implied covenant of good faith and fair dealing. Appellant contends that the record reveals a factual issue on whether Gamers’ reason for eliminating Coombs’ position was a pretext. Further, Coombs claims that a conflict exists on whether Gamers’ actions breached the implied covenant of good faith and fair dealing because those actions led Coombs to reasonably believe that Gamers would find a job for him. We disagree.

Even if the implied covenant of good faith and fair dealing governs the employment relationship, an employer may still terminate an employee as long as the employer gives a fair and honest reason. Hobbs v. Pacific Hide and Fur Depot (Mont. 1989), [236 Mont. 503,] 771 P.2d 125, 130, 46 St.Rep. 544, 550. The implied covenant of good faith and fair dealing does not prevent an employer from making legitimate reductions in workforce necessary to maintain business viability. Flanigan v. Prudential Savings and Loan (1986), 221 Mont. 419, 426, 720 P.2d 257, 261. Further, a employer “is entitled to be motivated by and serve its own legitimate business interest and must be given discretion in determining who it will employ and retain in employment.” Hobbs, 771 P.2d at 130.

In the instant case, it is undisputed that Gamers had for some period of time experienced financial difficulties that necessitated closing several stores including the Great Falls Carlson’s store. Although appellant argues that respondent should have made a more particularized proof regarding economic necessity, facts and figures certainly are not required when all parties admit that the business was in trouble and the business actually closed. Coombs knew of the economic difficulties of Gamers in general and of the Great Falls Carlson’s store in particular. For some time prior to his termination, he knew that the Carlson’s store might close and that his job was in jeopardy. None of the Carlson’s store employees from Great Falls were given other positions in the company.

Although Gamers did tell Coombs that it would try to find a place for him, Coombs testified that these assurances were not promises and did not guarantee him continuing employment with Gamers. Coombs also concedes that he had no right to continued employment based on seniority. As well, Coombs testified that Gamers did not terminate him for cause. In short, the record establishes that Gamers discharged Coombs for legitimate economic reasons. Therefore; Gamers did not violate the covenant of good faith and fair dealing implied in its employment relationship with Coombs.

As appellant points out, the record does disclose some conflict between his deposition testimony and that of Loren Miles regarding Coombs seeking manager positions in other Gamers stores. However, given the equivocal nature of Coombs’ testimony on his efforts to transfer out of Great Falls, this conflict does not appear genuine. Even if the conflict raised a genuine issue of fact, the issue is not material to the substantive law in this case. Gamers admittedly did not have any obligation to find Coombs another position within the company, by either express personnel policy or any verbal or written promises of management.

Further, this Court recognizes that employers must have discretion in making personnel decisions. Hobbs, 771 P.2d at 130. Thus, absent any evidence of dishonesty or pretext, even if Coombs had been passed over for manager positions, Gamers’ actions would be appropriate given an employer’s discretion to make personnel decisions it feels are in its best interests. No evidence of pretext exists in the record. Therefore, any issue that does exist on whether Coombs actively sought transfers is not a material issue and thus does not preclude summary judgment.

Appellant also argues that Gamers constructively discharged him. The record does not support this theory.

We affirm the District Court.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES WEBER, SHEEHY and McDONOUGH concur.


text:
    RAY T. SPERRY, Plaintiff and Appellant, v. MONTANA STATE UNIVERSITY, Defendant and Respondent.
    No. 89-157.
    Submitted on Briefs Aug. 3, 1989.
    Decided Aug. 30, 1989.
    778 P.2d 895.

      Lineberger & Harris, Douglas D. Harris, Bozeman, for plaintiff and appellant.
    Dorothy L. Brownlow, Moore, O’Connell, Refling and Moon, Bozeman, for defendant and respondent.
   MR. JUSTICE WEBER

delivered the Opinion of the Court.

The plaintiff, Ray V. Sperry, brought this action to recover “conversion compensation” allegedly due him as a result of a contract conversion that took place in 1967 at Montana State University. After a bench trial, the District Court for the Eighteenth Judicial District, Gallatin County, entered judgment for Montana State University. From this judgment, Mr. Sperry appeals. We affirm.

The issues are:

1. Did the District Court err in concluding that the retirement agreement entered into between MSU and Mr. Sperry constituted a complete waiver and release of all claims he is now asserting?

2. Is Mr. Sperry’s claim barred by the doctrine of laches?

Mr. Sperry was employed at Montana State University (MSU) from 1965 through March 31, 1986, retiring as Director of Continuing Education. At the commencement of his employment with MSU, and for the next two years, the terms of a written contract known as the “Montana 12 Contract” governed his employment. The Montana 12 Contracts allowed employees to take an eighth quarter leave with pay for research, travel or any other reason approved by the Board of Regents. Employees were required to work seven quarters before eligibility for eighth quarter leave accrued. They were also allowed to accumulate two quarters, a total of six months.

In 1967, the Board of Regents ordered MSU to terminate the Montana 12 Contract and convert to a one-year contract. Mr. Sperry’s contract was converted to a fiscal year contract. At that time his annual salary was increased by $1000, from $7800 to $8800, which constituted a 13% increase in pay. Mr. Sperry signed an agreement acknowledging and accepting the change from a Montana 12 Contract to a fiscal contract which stated that “all accumulated eighth quarter leave” had been taken, and he waived claim to any future eighth quarter leave.

From 1967 until retirement in 1986, Mr. Sperry signed nineteen individual annual employment contracts with MSU, all of which stated the term of the employment and the agreed salary for that year. None of these contracts mentioned any conversion compensation due. Conversion compensation arose from the replacement of Montana 12 Contracts with the annual contracts as compensation for the additional time worked without leave. Mr. Sperry now contends he reached an oral agreement with MSU entitling him to conversion compensation amounting to an additional 10% increase in pay.

In April, 1983, Mr. Sperry wrote a letter to Michael F. Malone, Dean of Graduate Studies, to discuss possibilities of early retirement and requesting a salary adjustment for the last three years. The essence of his proposal stated:

“Before seriously considering an early retirement, it is imperative that my final average three year salary be increased significantly. As you-know, according to Regents guidelines, my current salary is below their guidelines . . .
“[T]he total cost to the University for my proposal would be insignificant. The first year savings to MSU would be $7,708.00. Reflecting a total cost of between $5,000.00 and $6,000.00 for the three contract periods . . .
“[I] propose the following salary schedule:
“1983-84 — $37,000.00 (actual cost to MSU — $29,393.00)
“1984-85 — $40,000.00
“1985-86 — $43,000.00 (9 month contract, July 1,1985 - March 30, 1986)”

He wrote a follow-up letter in December, 1986 which stated:

“My original correspondence requested a three year salary adjustment beginning the current academic year. The primary reason was to increase my last three years salary for early retirement purposes.” MSU rejected his original offer, so Mr. Sperry submitted the following request and schedule in his letter:
“1) Fiscal year 84-85, I receive a Regents contract with my raise equal to the average MSU faculty raise for this period.
“2) Beginning July 1, 1985, I receive a Regents contract to the end of March 30, 1986 (9 months). During this period the contract would include an average faculty increase. I also receive an additional Vi years contract salary based upon the current contract. Succinctly, I receive VA times my contracted salary paid to me in 9 months instead of 12 months. During this period, I would continue to earn sick leave and vacation time.
“3) In the event a universally applied incentive is offered, all MSU employees opting for early retirement, the above agreement would not prejudice me.”

In the conclusion of his letter, he stated:

“If a satisfactory arrangement is reached between the University and myself, I will offer a statement agreeing not to pursue a past wage greivance. [sic]” (Emphasis added.)

In a third letter, Mr. Sperry wrote a revised proposal, changing only the second provision’s term of “lA year” to “Vá” and “VA” to “VA”. He restated his agreement “not to pursue a past wage grievance” if “the [proposed] agreement is reached.”

After an agreement was reached, Mr. Sperry wrote a formal resignation letter on February 9, 1984, to be effective as of March 31, 1986. These letters of correspondence comprise the “retirement agreement,” which is central to this dispute.

One year after agreement on the terms of retirement, Mr. Sperry for the first time sought conversion compensation from MSU in a letter to the Vice President for Academic Affairs, Dr. Stuart Knapp. He contended that at the time of the 1967 conversion, he was offered a 23% salary increase, received a 13% increase, and 10% is still due and owing as conversion compensation. Applied retroactively, this amounts to nearly $30,000 of conversion compensation.

I

Did the District Court err in concluding that the retirement agreement entered into between MSU and Mr. Sperry constituted a complete waiver and release of all claims he is now asserting?

The District Court made the following pertinent findings of fact and conclusions of law:

“Finding of Fact:
“#7: On May 11, 1967, plaintiff signed an agreement by which he accepted the stated terms on the change of period of employment
“#8: Although alleged, no oral agreement with Robert McCall, plaintiff’s supervisor, was established with particularity.
“#9: Plaintiff accepted 19 subsequent post-conversion employment contracts.
“#10: In the subsequent 19 years after conversion, plaintiff failed to pursue defendant’s grievance procedures for any shortage in his salary since 1967.
“#11: In January and February 1984, plaintiff negotiated with defendant’s Michael P. Malone, then acting vice-president for academic affairs, for an early retirement.
“#12: On February 9, 1984, plaintiff confirmed in a memorandum that he found the financial considerations acceptable. In addition, he further stated that his was an official resignation from the university effective March 31, 1986.
“#13: As part of the consideration of his retirement, defendant increased plaintiff’s final pay to $45,370 for a nine-month period, and plaintiff agreed to ‘not pursue any past wage grievances’.
“#14: Defendant fully complied with all the terms and conditions of the retirement agreement.
“#15: At no time during plaintiff’s retirement negotiation discussions with defendant did he inform defendant he claimed additional compensation due him from his conversion in 1967, 13 years previously.
“Conclusion of Law:
“#2: Plaintiff accepted the terms set forth in the 1967-68 employment contract without written formal concern as to deferred compensation. The retirement agreement entered into between plaintiff and defendant constitutes a full waiver and release of any claims plaintiff may have had against defendant arising from salary or wages due to plaintiff as a result of his employment with defendant.
“#4: Plaintiff is not entitled to any additional compensation for his employment at MSU.” (Emphasis added.)

On appeal, Mr. Sperry contends his own oral testimony was sufficient to establish conversion compensation was due. He contends that his direct supervisor indicated his increase in pay did not in-elude the conversion compensation, but promised he would receive that additional salary increase at a later date. Mr. Sperry testified that the only person who would have known of the alleged oral contract was his direct supervisor, Robert McCall. Mr. McCall died in 1971. Mr. Sperry did not raise the issue of conversion compensation until February 1985, one year after signing the retirement agreement.

MSU contends there was no such agreement, and any such claim was waived when he accepted the terms. of the retirement agreement.

Waiver is an equitable doctrine, applicable when there is an intentional or voluntary relinquishment of a known right, claim or privilege, or such conduct as warrants an inference of the relinquishment of such right. State v. Statczar (Mont. 1987), [228 Mont. 446,] 743 P.2d 606, 44 St.Rep. 1668; Kelly v. Lovejoy (1977), 172 Mont. 516, 565 P.2d 321.

Release is defined as the abandonment of a claim to the party against whom it exists and may be gratuitous or for consideration.

“It is fundamental that an effective release can be consummated without resort to a particular form of words, for ‘all that is necessary is that the words show an intention to discharge.’ ” (Citations omitted.)

Melo v. National Fuse and Powder Co. (D.Colo. 1967), 267 F.Supp. 611. To be enforceable, a release must at a minimum be unambiguous, explicit, and unequivocal. Simonson v. Travis (Utah 1986), 728 P.2d 999, 1002. In Montana, the law of contracts governs releases. Westfall v. Motors Ins. Corp. (1962), 140 Mont. 564, 374 P.2d 96.

We conclude that Mr. Sperry’s signing of nineteen, one-year contracts and cashing paychecks over the past nineteen years without complaint of no conversion compensation, in combination with his acceptance of the retirement agreement and his promise not to pursue a past wage grievance, constitute a complete waiver and release.

An Alaskan Supreme Court holding is comparable to the case at bar. In that case, the note maker raised no objection to the credit union’s alleged failure to collect interest according to the terms of the loan agreement. This continued for a three-year period, when each lot subject to security agreement was sold, despite the fact he was required to sign the deed to complete the sale of each lot. For each sale, he had an opportunity to examine the ledger sheet that showed how the escrow company intended to disburse the proceeds of each sale. The court held he waived his right to assert that the credit union breached the loan agreement by failing to collect interest on the sale of each lot. Jackson v. Nangle (Alaska 1984), 677 P.2d 242, 249.

In the same way, Mr. Sperry signed his pay checks for nineteen years with knowledge of any increases and decreases, but without raising objection regarding the lack of any conversion compensation.

We conclude that there exists substantial credible evidence to support the District Court’s conclusion that Mr. Sperry’s signing of the retirement agreement waived and released his right to any wage claims. We affirm the District Court on this issue.

II

Is Mr. Sperry’s claim barred by the doctrine of laches?

On appeal, MSU contends Mr. Sperry’s claim is barred by laches. Although this was not a part of the findings of fact and conclusions of law of the District Court, the defense of laches was asserted in the Final Pre-Trial Order, so it is subject to review by this Court.

Mr. Sperry testified that his direct supervisor indicated his increase in pay did not include the conversion compensation, but promised he would receive that additional salary increase at a later date. MSU contends Mr. Sperry received a 13% increase, which included his conversion compensation, and there was no promise by anyone to pay him further increases.

The only person other than Mr. Sperry, who would have known of the alleged oral contract was his direct supervisor, Robert McCall. Mr. McCall died in 1971. Yet, the only time Mr. Sperry brought the issue of conversion compensation to the attention of anyone else at MSU was in his February 1985 letter to Michael F. Malone, long after Robert McCall’s death, and after completing the retirement agreement. He did not raise the issue again until after he retired.

MSU contends that Mr. Sperry’s claim for such conversion compensation is now barred by the equitable doctrine of laches. We agree. Laches exists where there has been an unexplainable delay of such duration or character as to render the enforcement of an asserted right inequitable. Brabender v. Kit Mfg. Co. (1977), 174 Mont. 63, 67-68, 568 P.2d 547, 549. Where a party is actually or presumptively aware of his rights but fails to act, laches is appropriate. Clayton by Murphy v. Atlantic Richfield Co. (1986), 221 Mont. 166, 170, 717 P.2d 558, 561, A party is held to be aware of their rights where the circumstances he or she knows of are such as to put an ordinarily prudent person on inquiry. Johnson v. Estate of Shelton (Mont. 1988), [232 Mont. 85,] 754 P.2d 828, 831, 45 St.Rep. 887, 891. Mr. Sperry asks for a retroactive wage increase for the last nineteen years of his employment. He does not allege that he was unaware of this claim during that time. We hold Mr. Sperry’s claim is barred by the doctrine of laches.

Although MSU argues that Mr. Sperry’s claim is also barred by the statute of limitations, we find it unnecessary to discuss that issue in light of our holding on laches. Furthermore, we will not address Mr. Sperry’s contentions that MSU breached the implied covenant of good faith and fair dealing. This Court will not address on appeal an issue not presented to the District Court. Wyman v. DuBray Land Realty (Mont. 1988), [231 Mont. 294,] 752 P.2d 196, 45 St.Rep. 621.

Affirmed;

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, SHEEHY and GULBRANDSON concur.


author: MR. JUSTICE McDONOUGH

text:
    In re the ADOPTION OF R.D.T., a/k/a R.D.E., a Minor.
    No. 89-267.
    Submitted on Briefs July 13, 1989.
    Decided Aug. 25, 1989.
    Rehearing Denied Sept. 14, 1989.
    778 P.2d 416.

      Leonard F. Thomas, Helena, pro se.
    J. Cort Harrington, Jr., Helena, for respondent.
   MR. JUSTICE McDONOUGH

delivered the Opinion of the Court.

This appeal involves a claim for sanctions pursuant to Rule 11, M.R.Civ.P. arising out of a petition for adoption. Respondent Leonard F. Thomas appeals from the judgment of the District Court of the First Judicial District, Lewis and Clark County, denying his motion to impose sanctions on petitioners Nancy J. Thomas, Mark A. Erler, and their attorney J. Cort Harrington, Jr. The court ruled that based on the law and the facts as presented at hearing, Rule 11 sanctions were not proper. We affirm.

Respondent Thomas raises only one issue on appeal: Did the District Court err by failing to impose such sanctions?

R.D.T. was born to Nancy J. Thomas and Leonard F. Thomas on October 16, 1978 in Fairbanks, Alaska. The Thomases moved to Montana in 1979. Shortly afterward, Nancy and Leonard separated. That same year, Nancy and R.D.T. began living with Mark A. Erler in Basin, Montana and Leonard returned to Alaska.

Leonard and Nancy dissolved their marriage on February 14, 1983. The decree of dissolution provided that Nancy would have custody of R.D.T. and Leonard would have visitation upon request. No child support was requested. Mark and Nancy were married on August 20 of the same year. In February of 1988, the marriage of Mark and Nancy was dissolved. Mark moved into a guest house on the same lot as the family home where Nancy, R.D.T and J.E. the daughter of Mark and Nancy, resided.

In August of 1988, Leonard began exercising his visitation rights with R.D.T. Shortly afterward, Nancy and Mark, now divorced, filed a joint petition for the adoption of R.D.T. by Mark. The proceeding was bifurcated into two issues. The first issue was whether Leonard’s parental rights should be terminated for non-support of R.D.T. The second issue involved a determination of whether the adoption by Mark A. Erler was in R.D.T.’s best interests. A hearing on the first issue was held on November 16, 1988 in the District Court of the Fifth Judicial District. The court took under advisement Leonard’s motion to dismiss for lack of jurisdiction and limited the hearing to the question of whether Leonard’s consent was required to complete the adoption. After submission of additional briefs on the jurisdictional question, the court granted Leonard’s motion to dismiss the petition.

On January 16, 1989, Leonard filed a motion to impose sanctions on the petitioners Mark and Nancy and their attorney J. Cort Harrington for violation of Rule 11 of the Montana Rules of Civil Procedure. Leonard’s motion alleged that a reasonable inquiry into the adoption statutes by a competent attorney would have resulted in the conclusion that the petition for adoption was not warranted by existing law and that the petition was filed for an improper purpose. Leonard’s motion was denied after a hearing and the propriety of that denial is now before this Court on appeal.

Rule 11, M.R.Civ.P., which is nearly identical to the federal rule, provides that:

“Every pleading, motion, or other paper of a party represented by an attorney shall be signed by at least one attorney of record .... The signature of an attorney or party constitutes a certificate by him that he has read the pleading, motion, or other paper; that to the best of his knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation. Rule 11, M.R.Civ.P. The Rule further provides for the imposition of sanctions on any party, the party’s attorney, or both if a pleading is signed in violation of the Rule. Rule 11, M.R.Civ.P. Appellant Leonard first contends that a reasonable inquiry into the adoption statute by the petitioners’ attorney, Mr. Harrington, would have indicated that the petition was not warranted by existing law. The applicable statute is § 40-8-109(1), MCA, which provides as follows:
“40-8-109 Placement for adoption by parents. (1) No parent may make a placement of a child for adoption with an individual who is not a stepparent or a member of the child’s extended family unless the parent files with the district court for the county in which the prospective adoptive parent or the parent making the placement resides:
“(a) a notice of parental placement; and
“(b) a relinquishment of parental rights to the prospective adoptive parents executed voluntarily and in accordance with 40-6-135(2) through (4).

As correctly noted in the District Court’s Memorandum and Order granting Leonard’s motion to dismiss the petition, Mark is neither the stepparent nor a member of R.D.T.’s extended family. Furthermore, Nancy did not relinquish her parental rights; rather, she specifically stated in the petition that she would retain her parental rights. The court dismissed the petition because the requirements of § 40-8-109, MCA, were not met.

Appellant argues that a reasonable inquiry into the meaning of § 40-8-109, MCA, by Mr. Harrington would have led to the conclusion that the adoption was not warranted by existing law, as evidenced by the ruling of the District Court on the motion to dismiss. However, to avoid sanctions under Rule 11 it is not necessary that a party be correct in their view of the law. The party need only make a good faith argument for their view of the law. Zalvidar v. City of Los Angeles (9th Cir. 1986) 780 F.2d 823, 830-831. Thus the granting of a motion to dismiss against the pleader is not dispositive of the issue of sanctions. Zalvidar, 780 F.2d at 830.

The petitioners’ attorney Mr. Harrington argued that § 40-8-109, MCA, did not apply because there had been no “placement for adoption.” “Placement for adoption” is defined as “the transfer of physical custody of a child with respect to whom all parental rights have been terminated and who is otherwise legally free for adoption to a person who intends to adopt the child.” Section 40-8-103(10), MCA. Petitioners argued that because there was no intent to transfer physical custody of the child and there was no attempt to terminate the parent/child relationship between Nancy and R.D.T. the petition did not constitute a “placement for adoption.” While the District Court did not agree with this argument, it held that the argument was made in good faith.

We agree. In judging the good faith argument the court must strive to avoid the wisdom of hindsight in determining whether a pleading was valid when signed, and any and all doubts must be resolved in favor of the signer. Eastway Construction Co. v. City of New York (2nd Cir. 1985), 762 F.2d 243, 254.

Leonard also relies on § 40-8-125, MCA, to support his argument that the petition was not based upon a reasonable inquiry into the adoption statutes. The statute provides that the effect of a final decree of adoption is to terminate the rights of the natural parents, unless they are the adoptive parents or a spouse of an adoptive parent, and to vest those rights in the adoptive parents. If the District Court had proceeded with the petition and terminated Leonard’s parental rights pursuant to the first portion of the bifurcated hearing, a final decree of adoption entered after the second portion would only have affected the parent/child relationship between Nancy and her daughter R.D.T. Thus, the appellant has no standing to raise the issue of the effect of § 40-8-125, MCA.

Finally, Leonard contends that the petition for adoption was file for an improper purpose, to delay and prevent visitation between Leonard and his daughter R.D.T. The petitioners contend that the purpose of the petition was to officially establish the parent/child relationship between Mark and R.D.T., a relationship petitioners argue had existed in fact for nine years. As noted in Schwarzer, Sanctions Under the New Federal Rule 11 (1985), 104 F.R.D. 181, when determining whether a pleading was filed for an improper purpose, the court, in its discretion, should objectively consider all the facts and circumstances in the case:

“In considering whether a paper was interposed for an improper purpose, the court need not delve into the attorney’s subjective intent. The record in the case and all of the surrounding circumstances should afford an adequate basis for determining whether particular papers or proceedings caused delay that was unnecessary, whether they caused increase in the cost of litigation that was needless, or whether they lacked any apparent legitimate purpose. Findings on these points would suffice to support an inference of an improper purpose. The court can make such findings guided by its experience in litigation, its knowledge of the standards of the bar of the court, and its familiarity with the case before it.”

Schwarzer (1985), 104 F.R.D. 181, 195. The record and surrounding circumstances in this case provided the District court with an adequate basis to determine if the petition was filed for an improper purpose. The District Court found that the petition was not filed for an improper purpose, and based on the record the District Court’s findings are not clearly erroneous.

The imposition of sanctions pursuant to Rule 11, lies within the discretion of the district court. Schmidt v. Colonial Terrace Assoc. (1986), 233 Mont. 8, 723 P.2d 954. We find no abuse of discretion in this case.

We affirm the District Court.

MR. JUSTICES HARRISON, SHEEHY, WEBER and GULBRANDSON concur.


text:
    JUDY THOMAS a/k/a/ Judy Beeman, Plaintiff and Appellant, v. STATE OF MONTANA, Department of Revenue, Defendant and Respondent.
    No. 89-047.
    Submitted on Briefs June 8, 1989.
    Decided Aug. 30, 1989.
    778 P.2d 900.
    Jerome J. Cate, Cate Law Firm, Billings, for plaintiff and appellant.
    Matthew F. Heffron, Agency Legal Services, David W. Woodgerd, Dept, of Revenue, John H. Maynard, Tort Claims Div., Helena, for defendant and respondent.
   MR. JUSTICE HARRISON

delivered the Opinion of the Court.

This is an appeal by plaintiff/appellant Judy Thomas a/k/a Judy Beeman (hereinafter referred to as the plaintiff) from the District Court of the Thirteenth Judicial District, Yellowstone County, Montana. Plaintiff appeals the District Court’s denial of her “Motion for Leave to File Amended Complaint.” We reverse.

This action was commenced on August 1, 1985, wherein the plaintiff sought to recover damages from the State of Montana, Department of Revenue (hereinafter referred to as the State). Plaintiff’s original complaint alleged that the State was liable, for passive negligence.

The original complaint filed on August 5, 1986, alleged the following facts. On or about November 8, 1983, the plaintiff was walking past a State Liquor Store retail outlet in Billings, Montana. On that day, an employee of the liquor store, while washing the store’s windows, negligently left window cleaning equipment, including a broomstick type device and pail, lying on the sidewalk. As she walked past the store, on a public walkway, she fell over the broomstick type device and pail, lost her balance, and fell to the ground injuring herself.

Paragraph III of the original complaint read:

“That on or about the 8th day of November, 1983, an employee of the Defendant, DEPARTMENT OF REVENUE, or someone on its behalf, was in the process of cleaning windows on the aforesaid premises and had negligently left some of the window cleaning equipment, including a broomstick type devise [sic] and pail laying [sic] across the sidewalk. The Plaintiff, in walking on the public walk way [sic], fell over the broomstick and pail and as a result thereof incurred personal injury, including injury to her face, head, right arm and knees with a result of cervical myofacitis [sic] and lumbosacral myalgia and neurological injuries.”

The original complaint further alleged that as a result of the State’s negligence, the plaintiff has incurred medical expenses, pain and suffering, and will continue to incur medical expenses as a direct result of her injuries from the incident. Plaintiff requested judgment against the State for special and general damages, costs and other relief the District Court deemed just and proper.

On June 2, 1988, the State filed its motion for summary judgment and brief in support thereof, based upon the following grounds:

“1. That there is no genuine issue as to any material fact upon the issue of the State’s liability in this action, and that the defendant State of Montana is entitled to judgment as a matter of law;
“2. The State of Montana breached no legal duty owed to plaintiff;
“3. Plaintiff’s own comparative negligence caused her fall[.]”

On June 27, 1988, plaintiff filed her brief in opposition to the State’s motion for summary judgment, to which the State on July 5, 1988, filed its reply brief in support of the motion for summary judgment.

The District Court, in its order filed October 31, 1988, granted the State’s motion for summary judgment and dismissed plaintiff’s action, subject to the filing of an amended complaint within ten days which would allege a new theory of negligence. In accordance with that order, plaintiff filed on November 4, 1988 her motion for leave to file an amended complaint. The State filed its brief in opposition to plaintiff’s motion on November 21, 1988. Plaintiff alleged in her affidavit, amended complaint, and now on appeal to this Court, that the employee who was washing the windows placed the handle of a squeegee mop between her legs and tripped her.

Paragraph III of plaintiff’s amended complaint reads as follows:

“On or about November 8, 1983, the Plaintiff was passing in front of Defendant’s store on a public walk way [sic] and was negligently tripped by an employee of Defendant causing the Plaintiff to fall incurring personal injury including injury to her face, head, right arm and knee resulting in cervical myofacitis [sic] and lumbosacral myalgia and neurological injuries.”

On November 30, 1988, the District Court denied the plaintiff’s motion for leave to file an amended complaint. The court denied the plaintiff’s motion because the amended complaint alleged new facts, i.e., that the State’s employee acted affirmatively rather than passively. The District Court in its memorandum which accompanied the November 30, 1988 order stated in part:

“Had Plaintiff’s new theory of negligence set forth in her amended complaint arisen out of the same conduct, transaction or occurrence as the claim set forth in her original complaint, justice would have required that the court grant Plaintiff’s motion for leave to file amended complaint . . . Plaintiff’s claim in her amended complaint is barred by the statute of limitations and her motion must be denied.”

Plaintiff’s sole issue on appeal is whether the District Court erred in denying plaintiff’s motion for leave to file an amended complaint.

Paragraph III of the original complaint and paragraph III of the amended complaint both allege the same time, same place, same persons, essentially the same activities, and essentially the same tort. The original complaint stated that the State had negligently left equipment on the sidewalk and the plaintiff fell over the equipment. In contrast, the amended complaint stated that the plaintiff was negligently tripped by an employee of the State. We conclude that is essentially the same conduct, transaction and occurrence and that the basis of the amended claim is the same as the previous claim.

We conclude that plaintiffs original complaint stated an adequate claim and the amended complaint clearly meets the requirement of Rule 8(a), M.R.Civ.P., that the averments of pleadings be simple, concise and direct. See, Brothers v. Surplus Tractor Parts Corporation (1973), 161 Mont. 412, 506 P.2d 1362; Butte Country Cl. v. Metropolitan San. & S. S. D. No. 1 (1974), 164 Mont. 74, 519 P.2d 408.

We hold that the District Court erred in denying leave to file the amended complaint and in granting summary judgment resulting therefrom. See, Flanigan v. Prudential Federal Sav. & Loan (1986), 221 Mont. 419, 720 P.2d 257; Sooy v. Petrolane Steel Gas, Inc. (1985), 218 Mont. 418, 708 P.2d 1014; Lien v. Murphy Corp. (1982), 201 Mont. 488, 656 P.2d 804; and Rozan v. Rosen (1967), 150 Mont. 121, 431 P.2d 870.

We reverse and direct the District Court to allow the plaintiff to file her amended complaint.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES SHEEHY, HUNT and WEBER concur.


author: MR. JUSTICE SHEEHY

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. BRENT KLIPPENSTEIN, Defendant and Appellant.
    No. 89-291.
    Submitted on Briefs Aug. 10, 1989.
    Decided Aug. 30, 1989.
    778 P.2d 892.
    Recht & Greef and Howard F. Recht, Hamilton, for defendant and appellant.
    Marc Racicot, Atty. Gen., Dorothy McCarter, Asst. Atty. Gen., Helena, and Robert L. Deschamps, III, County Atty., Missoula, for plaintiff and respondent.
   MR. JUSTICE SHEEHY

delivered the Opinion of the Court.

Brent Klippenstein, convicted upon his plea of guilty of the offense of felony theft in the District Court, Fourth Judicial District, Ravalli County, appeals from the judgment and sentence imposed upon him. On consideration, we affirm the sentence imposed with one modification.

The defendant was charged by information with one count of felony theft. The investigation revealed that he had embezzled approximately $396,000 from Washington Corporation over a four-year period. He embezzled the money by channeling false purchase orders through a nonexistent tire company he had set up. Some of the stolen funds were used as part of the start-up capital for an otherwise legitimate auto parts store.

The defendant entered a plea of guilty to the charge of theft on December 23, 1988, and sentencing occurred on March 2, 1989. After hearing the recommendations of the County Attorney, the defense counsel, and the Department of Institutions, the District Court sentenced the defendant, the pertinent part of which sentence follows;

“IT IS ADJUDGED AND DECREED that the Defendant is guilty of the offense charged.
“A Pre-sentence Investigation Report was ordered and being fully advised as to the facts of this case; IT IS THE JUDGMENT OF THE COURT that BRENT KLIPPENSTEIN be and BRENT KLIPPENSTEIN is hereby sentenced to a term of ten (10) years in the Montana State Prison.
“It is the recommendation of the Court that when the Defendant qualifies according to the Montana State Prison then he shall be released to a Pre-Release Center.
“IT IS FURTHER ORDERED that upon release from prison, to the best of his ability, the Defendant shall make restitution to Chubb, 6500 Wilshire, Los Angeles, CA (Attention: Frank Arenson) in the amount of Three Hundred Eighty-eight Thousand Eight Hundred Forty-nine and 31/100 Dollars ($388,849.31).
“IT IS FURTHER ORDERED that that Defendant’s business, NAPA Auto Parts, Lolo, Montana, is to be sold by the Defendant and the proceeds applied to the restitution, unless the Internal Revenue Service has not [sic] already seized it.”

The maximum sentence permissible for the offense of felony theft is a fine “not to exceed $50,000 or be imprisoned in the state prison for any term not to exceed ten years or both.” Section 45-6-301(6), MCA. On appeal the defendant contends that since he was given the maximum sentence of imprisonment allowed by law for the offense, no part of which was suspended or deferred, that the additional requirement that he pay restitution and that his auto parts business be sold exceeds the authority of the court. He contends that the authority of the District Court to order restitution extends only to cases where the court imposes restitution as a condition of a suspended or deferred sentence under § 46-18-201, MCA. In State v. Shaver (Mont. 1988), [233 Mont. 438,] 760 P.2d 1230, 1236, this Court said:

“Under § 46-18-201(l)(a), MCA, the District Court has authority to impose reasonable restrictions or conditions including restitution (subsection (iv)) and ‘any other reasonable conditions considered necessary for rehabilitation . . .’ (subsection (x)) The statute further states ‘[t]he sentencing judge may impose on the defendant any reasonable restrictions or conditions during the period of suspended sentence.’ Section 46-18-201(l)(b), MCA.”

The defendant has misinterpreted the sentence imposed by the District Court. The provision for restitution applies only if under the rules of the Montana State Prison he becomes eligible for parole and secures his release. If he never receives a parole, and serves the full term of ten years, then the condition of restitution does not apply, and the maximum imprisonment authorized by statute for the offense charged comes into play. In other words, the sentence imposed on him can never exceed the maximum allowed under the statutory authority of the court.

The defendant assumes that his sentence is imposed under the provisions of § 46-18-201, MCA. That statute does refer to imposing restitution as a condition for deferred imposition of sentence or a suspended sentence. In this case, however, the District Court did not utilize the provisions of § 46-18-201, MCA, to impose either a deferred imposition of sentence or a suspended sentence. Instead, the court imposed a condition on parole (rf the defendant under the general power granted to the court in § 46-18-202, MCA. The regulations of the Board of Pardons and Parole recognize that the sentencing court “may require other and additional special conditions to be placed upon the parolee.” § 20.7.1101(14), A.R.M.

The second issue raised by the defendant is his contention that the District Court sentenced him for crimes which he did not commit and for which he has not been charged and convicted.

In part, the sentencing court said:

“Now, I think you’ve got a break because you were only charged with one count. I think Gallatin County would have charged with 20 or 30 counts, which could have consecutively been 200, 300, 400 years in the prison. I don’t know how you got the break and so forth, but you did get a break.
“Therefore, based upon the fact that you have had these breaks and you committed more felonies than I have ever seen committed since I have been on the bench, it is the sentencing judgment of this court that [sentence follows].”

Again, the defendant has misinterpreted what the District Court did in imposing sentence. The information charging the defendant in a single count specified “on or between 1984 and 1988, the defendant purposely and knowingly asserted unauthorized control over monies and properties owned by Washington Incorporation etc.” Because the defendant was charged only with one count, a count which embraced all of the embezzlements by the defendant as a common scheme, the court was limited in imposing sentence to the maximum imposed for one felony theft offense. The comments of the District Court indicated only that the defendant had been treated leniently insofar as the charges were concerned.

In imposing sentence, the sentencing court may consider any relevant evidence relating to the nature and circumstances of the crime, the character of the defendant, his background history, mental and physical condition, and “any evidence the court considers to have probative force . . . .” Section 46-18-302, MCA. The District Court is given a wide scope of inquiry in sentencing. State v. D.B.S (1985), 216 Mont. 234, 247-48, 700 P.2d 630, 639-40. The information received by the sentencing court is not limited by the Rules of Evidence. Section 46-18-302, MCA; State v. Smith (Mont. 1988), [232 Mont. 156,] 755 P.2d 569, 571-72.

The defendant also contends that the District Court imposed the maximum sentence because of the District Court’s belief that defendant’s wife was also guilty by implication. In referring to the wife’s knowledge of the embezzlements, the District Court referred only to the statement of the defendant that the wife didn’t know of the ongoing embezzlements, and expressed a measure of disbelief in defendant’s statement. Nothing in the record indicates that the District Court imposed its sentence upon the defendant for the presumed misfeasance of the defendant’s wife.

Referring again to the order of the District Court relating to restitution, the court ordered that the defendant’s business, NAPA Auto Parts of Lolo, Montana, be sold and the proceeds applied to the restitution. At this juncture, the provision is not applicable, because as we stated above, restitution does not apply unless the defendant becomes eligible for parole. Since the possibility of parole may occur at some indeterminable time in the future, a present order to sell the auto parts business is not workable. We will therefore modify the sentencing judgment to remove that paragraph. In so holding, it is not necessary for us to consider the due process arguments raised by the defendant as to this provision.

Accordingly, the judgment and sentence is modified to remove therefrom the provision that the defendant’s business, NAPA Auto Parts of Lolo, Montana, is to be sold. As so modified, the sentence imposed by the District Court is affirmed and will stand.

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


author: MR. JUSTICE HUNT

text:
    CAROLINA GITTO, Plaintiff and Appellant, v. GUISEPPE GITTO and Karen Gitto, Defendants and Respondents.
    No. 88-617.
    Submitted on Briefs April 27, 1989.
    Decided Aug. 31, 1989.
    778 P.2d 906.

      Sol & Wolfe, Michael Sol, Missoula, for plaintiff and appellant.
    Tipp, Frizzell & Buley, Thomas W. Frizzell, Missoula, for defendants and respondents.
   MR. JUSTICE HUNT

delivered the Opinion of the Court.

Plaintiff, Carolina Gitto (Mother), filed a complaint in the District Court of the Fourth Judicial District, Missoula County, seeking to impose a trust upon the home of the defendants, Guiseppe (Joe) and Karen Gitto. The District Court, after a non-jury trial, granted judgment in favor of Karen. Mother appeals. We affirm.

The following issues are raised on appeal:

1. When a mother loans money to her son for the construction of the son’s family home, is the district court required to impose upon the home a resulting trust in favor of the mother?

2. Is a wife unjustly enriched when, in a dissolution action, she is awarded the family home that was constructed in whole or in part out of funds loaned to her husband by his mother, and, if so, does equity entitle the mother to a constructive trust upon the home?

On December 2, 1972, Joe and Karen Gitto were married in Floral Park, New York. In 1979, the couple moved to Montana, where they purchased a parcel of land on a contract for deed. Shortly thereafter, Joe contacted his mother, Carolina Gitto, who lived in New York, to borrow money for the construction of a home on the Montana property. Mother consented to lend Joe money, which he orally agreed to repay.

From 1979 through 1983, Joe continued to borrow money from Mother. The parties understood that Joe would repay the loans when he obtained steady employment. This understanding was never reduced to writing.

Karen was not a party to the loans. Although she knew that Joe received money from Mother, she herself did not request any money, nor was she sure how Joe spent the funds he received from Mother.

At one point, Mother sought to secure the loans by asking Joe to place her name on the title to the Montana property. Nothing in the record shows that Joe assented to, or otherwise indicated he would honor, Mother’s request. Needless to say, he did not add her name to the deed. Even so, she continued to loan him money.

All in all, Joe borrowed a total of $76,630. During the time he borrowed the money and continuing through the time of this action, Joe’s employment picture remained gloomy. He was only sporadically employed; the two heating businesses he attempted to set up ended in failure.

Joe’s home life was not much better. The record reflects a tumultuous marital relationship. Joe displayed a violent temper, which he occasionally exhibited by destroying household furnishings. Due in part to Joe’s destructive tendencies, the home in question had a value of only $45,000 at the time of this action.

Joe and Karen separated in 1981, then reconciled. In 1985, Karen petitioned to dissolve the marriage. Slightly over one month later, Mother filed a complaint against both Joe and Karen, alleging that the loans were due and owing and seeking to impose a trust on the family home. The District Court granted Mother’s motion to consolidate the two actions.

On December 15, 1986, the dissolution trial was held. Only Karen appeared at the hearing. The District Court awarded her the custody of the couple’s minor child. The court also granted her the family home, finding that she required the home as a residence for herself and the child. Karen was ordered to pay any debts she had incurred in the marriage, with the exception of any claim of debt on the family home, which the court found to be free of mortgage indebtedness. The court ordered Joe to pay “his own debts incurred by him.”

A non-jury trial on Mother’s complaint was held on July 20, 1987. On March 29, 1988, the court issued its findings of fact and conclusions of law, opinion and order. The court held that the $76,630 constituted loans, not gifts, from Mother to Joe, but that equity would not be served by requiring Karen to repay the loans. Consequently, the court refused to impose either a constructive or resulting trust on the property. From this order, Mother appeals.

The remedies of constructive and resulting trusts are equitable in nature. The standard of review governing proceedings in equity is codified at § 3-2-204(5), MCA, which directs the appellate court to review and determine questions of fact as well as questions of law. Although this statute appears to provide this Court with broad powers of review, we continue to defer to the trial court’s judgment in those cases presenting close questions of fact. We will not disturb the district court’s factual findings unless the record establishes a decided preponderance of the evidence against them. Rase v. Castle Mountain Ranch, Inc. (Mont. 1981), [_Mont. -,] 631 P.2d 680, 684, 38 St.Rep. 992, 996.

Before we begin our discussion regarding whether the District Court erred in failing to impose an involuntary trust on the home, we note that the present case involves a series of money transactions between a mother and son. Generally, transfers of property between close relatives are presumed to be gifts. Peterson v. Kabrich (1984), 213 Mont. 401, 407, 691 P.2d 1360, 1364; Platts v. Platts (1959), 134 Mont. 474, 480-81, 334 P.2d 722, 727. In this case, however, the District Court found that Mother successfully rebutted the gift presumption, a finding that the evidence in the record amply supports. The following discussion is therefore based on the conclusion that the transfers between Mother and Joe constituted loans, not gifts.

Montana law recognizes two general categories of trusts: voluntary and involuntary. Voluntary trusts arise by express agreement of the parties. Involuntary trusts, on the other hand, arise independently of any express contract. Lynch v. Herrig (1905), 32 Mont. 267, 274, 80 P. 240, 242. Because involuntary trusts are not dependent upon an express agreement, they may be proven by parol evidence. The Statute of Frauds plays no part in the finding of an involuntary trust. Campanello v. Mercer (1951), 124 Mont. 528, 531, 227 P.2d 312, 314; Feeley v. Feeley (1924), 72 Mont. 84, 92, 231 P. 908, 910.

Within the category of involuntary trusts, two subclasses exist: resulting trusts and constructive trusts. Mother argues that the District Court erred in failing to impose either one or the other of these trusts upon the home awarded to Karen in the dissolution decree.

A resulting trust, also known as a purchase-money trust, arises only in certain narrowly defined circumstances, which have been codified by statute as follows:

“When a transfer of real property is made to one person and the consideration thereof is paid by or for another, a trust is presumed to result in favor of the person by or for whom such payment is made.”

Section 72-24-104, MCA.

A resulting trust exists only when one party provides the consideration for the transfer of property. If A gives money to B for the purchase of real estate and B puts the title to the land in his name, presumably the parties intend that B will merely hold the title in trust for A, and A will retain the beneficial use of the property. See Meagher v. Harrington (1927) 78 Mont. 457, 469-70, 254 P. 432, 435-36; Lynch, 32 Mont. at 274, 80 P. at 242. Likewise, if A gives money to B for the purchase of personal property, and B takes title to the personal property in his name, B holds the title in trust for A. Meagher, 78 at 469-70, 254 P. at 435. However, if A gives money to B for the purpose of improving property owned by B, a resulting trust does not arise. As explained by a leading authority:

“If B has contracted for the purchase of land and entered into possession, and A thereafter, but before B gets a deed, pays for the construction of a house on the land, A has not paid the price of the equitable property interest which B then owns. A has merely added to the value of that interest, and the law does not infer an intent that B is to have an equitable interest by way of trust. A fortiori, if the improvement paid for by A comes after B has obtained a deed, there is no resulting trust presumed for A. The price of the land has ■ already been paid by B. A is merely adding to the value of realty which is owned by B in fee simple absolute.” G. Bogart, § 455, at 661-62 (rev. 2d ed. 1977).

In the present case, Joe and Karen purchased the underlying real property on a contract for deed from Joe’s aunt, Sally Travanto. The funds advanced by Mother were not intended to be, nor were they actually, used for the purchase of real property. Rather, Joe used the money to construct a house on the land. Because the parties applied the funds only to improve the underlying real property, the District Court did not err in refusing to impose a resulting trust on the home.

Unlike a resulting trust, a constructive trust may be imposed in a wide variety of circumstances. While a resulting trust is said to be “intent enforcing,” a constructive trust is “fraud rectifying.” Bogart, § 451 at 611. A constructive trust may be imposed regardless of the intent of the parties. It is a remedy created by operation of law to prevent the unjust enrichment of one party at the expense of another. Rust v. Kelly (Mont. 1987), [228 Mont. 220,] 741 P.2d 786, 787, 44 St.Rep. 1471, 1473; Meagher, 78 Mont. at 469-70, 254 P. at 435-36. As provided by statute:

“One who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act is, unless he has some other or better right thereto, an involuntary trustee of the thing gained for the benefit of the person who would otherwise have had it.”

Section 72-20-111, MCA.

Before a court may impose a constructive trust, it must determine whether the holder of the subject property has been unjustly enriched. Undoubtedly, in this case, Karen was enriched when the court awarded her the home built with funds furnished by Mother. But is Karen’s enrichment unjust? We think not.

Injustice results from the performance of a wrongful act. Mother argues that the wrongful act in this case was Joe’s breach of the trust she reposed in him. She contends that, by virtue of the fact that she was his mother, she stood in a confidential relationship with Joe, a relationship he violated when he failed to take steps to secure her interest in the property.

Even assuming thát Mother is correct in asserting that she maintained a confidential relationship with Joe, this fact in and of itself will not give rise to a constructive trust. Equity will not impose a constructive trust for the violation of a confidential relationship unless the party seeking to impose the trust shows by clear and convincing evidence the exercise of fraud or undue influence. Mahaffey v. DeLeeuw (1975), 168 Mont. 274, 280, 542 P.2d 103, 107.

Here, Mother failed to introduce any evidence of fraud or undue influence. Quite the contrary, the record indicates that Mother entered into the series of money transfers with her eyes wide' open. Joe represented only that he would repay the loans when he obtained steady employment. Although Mother knew his employment situation was shaky at best, she loaned him money. When he failed to honor her request to secure the loans, she continued to send him money.

A constructive trust arises in law to remedy a wrongful act. In this case, no wrongful act occurred.

We affirm the District Court.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, SHEEHY, WEBER, McDONOUGH and GULBRANDSON concur.