author: JUSTICE NELSON

text:
    SISTER MARY JO McDONALD, REVEREND JOHN M. KADING, JOSEPHINE E. McDonald, HELEN WHERRY, ORABELLE EVANS, B. MADDEN, DALE and SUE RAWLINGS, VIRGINIA WALKER, PHILOMENA MICHALSKY, MAURICE H. ROTH, JAMES McDONALD, JANET R. LINDH, GERALDINE CHRISTIAENS, JAMES and SHARON WILLIAMS, JOHN and J.C. McELHENNY, R.A. and IRENE BOKSICH, JAMES SHEA, BETTY L. BORCHERT, PRISCILLA BORCHERT, RONALD and RANAE BORCHERT, FRANCES ALTMAN, BOB MOODRY, CHARLES E. REED, JUANITA and DAVID MONGER, SHARON VINGOM, RICHARD ALCORN, DAN DOLAN, LYNN RECKAS, RANDY and SHIRLEY WINSTEAD, TOM TRACY, JOE VAN MEEL, and all others similarly situated, Plaintiffs/Appellants, v. DENNIS R. WASHINGTON; and THE BUTTE WATER COMPANY, a New Jersey Corporation, Defendants/Respondents.
    No. 92-547.
    Submitted on September 9, 1993.
    Decided November 4, 1993.
    50 St.Rep. 1374.
    261 Mont. 392.
    862 P.2d 1150.

      For Plaintiffs-Appellants: James H. Goetz, Goetz, Madden & Dunn, Bozeman; and Martin R. Studer, Bozeman.
    For Respondent: Ronald B. MacDonald, Datsopoulos, MacDonald & Lind, Missoula.
   JUSTICE NELSON

delivered the Opinion of the Court.

This is an interlocutory appeal in a class action lawsuit from the Second Judicial District Court, Silver Bow County. We affirm in part and reverse in part.

The appellants are past and present “consumers” of water provided by the Butte Water Company (BWC). The respondents are Dennis Washington, who became the sole shareholder of BWC in 1985, and the former owners of the BWC.

We restate the issues on appeal and cross-appeal:

1. Did the District Court err in defining the class to include water consumers who were billed for water service but exclude those who were not?

2. Did the District Court err in designating this lawsuit as a class action?

3. If this matter is classified as a class action, did the District Court err in the construct of the Notice?

The complaint states that appellants in the present action are residents of Butte, Montana, who rely on water from the BWC for their residential, commercial, institutional and public usage. Appellants claim injury from BWC’s failure to provide adequate water and service to their various locations. Such injuries include alleged health problems associated with drinking BWC tap water and rate increases for water which is neither clean nor drinkable. Appellants also assert that they have increased expenses for purchasing bottled water in lieu of drinking tap water, increased energy bills from boiling water before use and increased costs for purchasing juice, soda and other beverages as an alternative to tap water. Additionally, increased expenses for plumbing problems and appliance maintenance and repair due to the high concentration of sediment in the water allegedly plague BWC’s consumers.

The respondents, according to the complaint, are a New Jersey Corporation with its principal place of business in Butte, Montana, engaged in the business of collecting, storing, purifying and transporting water to businesses, individuals, and public and private organizations in the City of Butte, Montana and elsewhere. BWC is a supplier of water and operates a public water system as defined in the Montana Public Water Supply Act, MCA Title 75, Chapter 6, and associated rules....
Defendant Dennis Washington is a resident of Montana, and is, and was at all times relevant to this complaint, a Director of the Butte Water Company, and its sole shareholder.

The named appellants filed a complaint on March 5,1990, alleging breaches of various duties of the respondents in their provision of water service to the appellants. Additionally, they sought to have their lawsuit certified as a class action to include others similarly situated. Ahearing was held in the Second District Court on February 12 and 13,1991, and the court issued its Findings of Fact, Conclusions of Law and Memorandum on April 19,1991.

In its memo, the trial court concluded that the appellants’ action met the test for certification of a class action under Rule 23, M.R.Civ.P. The memo states that the appellants provided the following definition as the class it sought to certify:

All persons or entities who have been billed for water service in Silver Bow County, Montana by the Butte Water Company for at least three consecutive months at any time subsequent to March 5, 1987 and prior to the final resolution of this action, and all persons residing at an address in Silver Bow County, as of the date of this motion [August 31,1990], who receive Butte Water Company service.

Following issuance of the court’s order, the appellants filed a motion to redefine the class on May 20,1991. On August 3,1992, subsequent to oral argument on the motion, the trial court issued its order denying the motion to redefine the class. The trial court stated in its order:

The court has previously indicated that the class would be all persons or entities who have been billed for water services in Silver Bow County, Montana. To expand the class to include individual members of households rather than the person purchasing the water service is unnecessaiy, overly broad, and will lead to confusion and delay in this matter.

In the Notice of Class Action Lawsuit, dated October 13,1992, the trial court identified the class in the action as:

All persons or entities who have been billed for water service in Silver Bow County, Montana, by the Butte Water Company for at least three consecutive months at any time after March 5, 1987, and before December 31,1991.

Upon motion of all parties, the trial court certified the Notice as a final order adjudicating: (1) the rights of the named plaintiffs, and the class they sought to represent, to participate in this class action lawsuit; and (2) all of the issues raised by the parties in motions and briefs regarding the notice to the class. Appellants filed an appeal on October 23,1992, and respondents filed a cross-appeal November 6,1992.

Our scope of review is whether the trial court’s decision is an abuse of discretion. Murer v. State Fund (1993), 257 Mont. 434, 435, 849 P.2d 1036, 1037.

I. DEFINITION OF THE CLASS

Appellants argue that when they filed their motion for class certification, they proposed the following definition:

[A]ll persons or entities who have been billed for water service in Silver Bow County, Montana by the Butte Water Company for at least three (3) consecutive months at anytime subsequent to March 5,1987, and prior to final resolution of this action, and all persons residing at an address in Silver Bow County, as of the date of this motion, who receive Butte Water Company water service.

The appellants further argue that in their brief in support of their motion for class certification they described the class as consisting of “individuals, their dependents, and organizations identifiable through records” of BWC. (Emphasis added.) They continue, stating that in the District Court’s order of April 19, 1991, the trial court certified the class as defined by the appellants. It found that there were “between twelve and thirteen thousand individual hookups serving approximately 35,360 individuals as well as various public and private businesses and governmental agencies.” Although the respondents never challenged the appellants’ definition of the class nor requested that the definition be narrowed, the trial court defined the class in its Notice of Class Action Lawsuit to consist of only those water consumers billed for water service in Silver Bow County. The appellants contend that this classification narrows the definition the court approved in its order granting appellants’ motion to certify the class and thus is clearly inconsistent.

The appellants further contend that the antiquated water system, the poor water quality, and the many service interruptions have caused injuries which have been faced by billed and non-billed consumers alike. The named appellants include billed and non-billed consumers who suffered injuries typical of the entire class of consumers originally defined by the trial court.

The respondents counter appellants’ contention that the trial court changed the definition of the class in its order denying the appellants’ motion to redefine the class. They state that the orders are actually consistent because the court did not adopt the definition urged by the appellants in their motion for class certification. The court stated in its certification order that “[ijdentification of such members probably shall be found in customer fists held by defendants.” This definition, respondents argue, is consistent with the order denying the motion to redefine the class which stated that “[t]o expand the class to include individual members of households rather than the person purchasing the water service is unnecessary, overly broad and will lead to confusion and delay in this matter.”

Respondents further assert that the trial court refers to the appellants as “customers” and uses the term consumers in the sense that customers are the “consumers” in the business setting. Respondents also contend that only consumers who pay for the water can recover for monetary damages. One would have to be a bill-paying consumer, a customer, to have a basis to claim injuries because of interruptions in service, damage to plumbing and appliances and additional expenses incurred purchasing bottled water and for boiling water.

Finally, respondents argue that the appellants themselves defined the class as customers. In their motion for class certification, the appellants defined the class as “all persons ... who have been billed for water service ...and... who receive Butte Water Company service.” (Emphasis added.) Therefore, to be a member of the class, a person must meet two conditions: 1) must be billed for three consecutive months and 2) must reside in Silver Bow County as of the date of this motion. Additionally, respondents argue that the appellants also stated that the class members could be identified through BWC records, which would only consist of customers.

After a careful review of the record, we determine that the class definition used in the notice to class, which excludes non-billed customers, was arbitrarily changed. The complaint, the motion to certify the class and its supporting brief, and the transcript of the certification hearing, all allude to billed and non-billed customers or consumers (users). It makes no sense to exclude persons who allegedly drove to alternative water sources for drinkable water, bought alternative beverages for consumption, cleaned toilet bowls and tanks, suffered physical ailments and nursed others through physical ailments stemming from use of BWC water, from the class to be certified.

Sister Mary Jo McDonald testified at the hearing to certify the class that she spends $20 to $25 per month on juice and soda as alternatives to drinking tap water. Jim McDonald testified that he and his wife, Janet Lindh, travel to Springhill twice a month to obtain drinking water. The complaint states that the trip to Springhill is approximately 80 miles roundtrip. Further, Jim and Janet both suffer from rashes after bathing and showering in BWC water. These are all problems suffered by billed and non-billed customers alike.

In the appellants’ brief in support of its motion to certify the class, the appellants stated that “[t]he proposed class consists largely of individuals, their dependents, and organizations identifiable through records believed to be in the possession of Defendant Butte Water Company....” (Emphasis added.) Defendants did not contest the definition of the class as comprised of billed and non-billed users. In fact, their brief in opposition to the motion to certify the class stated that:

[T]he Butte Water Company has 13,400 water hookups in the vicinity of the City of Butte, servicing 35,000 individuals and 1200 organizational users. It would appear that the size of the class would then be 36,200 individual and organizational claims.

Ultimately, the trial court ruled that a class action could be maintained in the lawsuit in its April 19, 1991 order which stated that the plaintiffs sought to certify as a class:

All persons or entities who have been billed for water service in Silver Bow County, Montana by the Butte Water Company for at least three consecutive months at any time subsequent to March 5, 1987 and prior to the final resolution of this action, and all persons residing at an address in Silver Bow County, as of the date of this motion [August 31, 1990], who receive Butte Water Company service.

The court also stated that the class was so numerous that joinder of all members was impracticable. It described the class as “between twelve and thirteen thousand individual hookups serving approximately 35,360 individuals as well as various public and private businesses and governmental agencies....” The class contemplated by the appellants, respondents and the trial court throughout all preliminary proceedings included all consumers, customers or users of BWC water, including billed and non-billed individuals. It was an abuse of discretion for the trial court to change the definition, thereby excluding individuals who claim to have suffered injuries because of BWC’s allegedly inadequate service and poor water quality. No reasonable basis exists for excluding persons who claim to have suffered at the hands of BWC simply because one allegedly injured plaintiff is billed while another, suffering the same sort of injury, is not. Therefore, the trial court abused its discretion on this issue and we accordingly, reverse.

II. CROSS-APPEAL —CLASS ACTION DESIGNATION

The trial court ruled that the instant case should be designated as a class action. We agree with its determination of this issue on the basis of our review.

“[T]he judgment of the trial court should be given the greatest respect and the broadest discretion, particularly if ...he has canvassed the factual aspects of the litigation.” This is so because the district court is in the best position to consider the most fair and efficient procedure for conducting any given litigation. Such a determination by the court will not be disturbed on appeal unless the party challenging it can show an abuse of discretion.

Doninger v. Pacific Northwest Bell, Inc. (1977), 564 F.2d 1304, 1309. (Citations omitted.) We note that Rules 23(a) and (b), M.R.Civ.R, and the Federal Rules of Civil Procedure 23(a) and (b) are identical. We therefore find cases interpreting the federal rule to be instructive.

The respondents, however, argue that the trial court erred when it concluded that the present lawsuit should be adjudicated as a class action. They argue that the appellants cannot establish the elements necessary under Rule 23(a) and (b)(3), M.R.Civ.P., to certify a class action. The six elements include:

1. The class must be so numerous that joinder of all members is impractical.
2. There must be questions of fact or law common to the class.
3. The claims or defenses of the representative parties must be typical of the claims or defenses of the proposed class.
4. The representative parties will fairly and adequately protect the interest of the proposed class.
5. The questions of law or fact common to the members of the class predominate over questions of the individual members.
6. The class action is superior to other methods of adjudicating the controversy.

Rule 23(a) and (b)(3), M.R.Civ.P.

The appellants have the burden of establishing each of the six elements. Doninger, 564 F.2d at 1308. We conclude that the appellants did meet their burden of establishing the necessary elements to certify the present case. We discuss each of the elements in trun.

The first element requires that the class be so numerous that joinder of all members is impracticable. Rule 23(a)(1), M.R.Civ.P. In the instant case, there are 12,000 to 13,000 “hookups” serving about 35,360 persons. We agree with the trial court that “[p]laintiffs clearly meet the first requirement of Rule 23(a)(1) in that the class is so numerous that joinder of all members is impractical.”

The second element requires that there be questions of law or fact common to the class. Rule 23(a)(2), M.R.Civ.P. We agree that this element was also successfully established by the appellants. Respondents argue that there is not commonality because customers lived in different areas of Butte and their water sources may have been different from other class members. They also contend that customers suffered varying health effects from BWC water usage and that water was consumed for varying amounts of time with different reactions, so that the injuries suffered from one putative plaintiff to another are so different that there are not sufficient questions of law or fact common to the class. However:

Rule 23(a)(2) does not require that every question of law or fact be common to every member of the class. The commonality requirement is satisfied “where the question of law linhing the class members is substantially related to the resolution of the litigation even though the individuals are not identically situated.”... Courts that have analyzed Rule 23(a)(2) have generally given it a permissive application in a variety of substantive law areas so that the commonality requirement is usually found to be satisfied. (Citations omitted.)

Jordan v. County of Los Angeles (1982), 669 F.2d 1311, 1320.

In the instant case, all counts stem from the alleged failure of BWC to provide potable water and adequate service. We agree with the trial court which stated:

The primary cause and common theory of these claims is the same, i.e. an antiquated and poorly repaired water system. The court also notes that the claims of the twenty-four named plaintiffs, as well as the complaints of the consumers (Plaintiffs’ Exhibit No. 12) show a recurrent theme of monetary damages from the consumers having to find alternative water sources.

We note in passing, that the health advisory of August 14,1989, was appropriate evidence to consider in determining the commonality of questions of law or fact. The advisory was sent to all persons served by BWC and even though it was a strong recommendation and not a mandate, it was probative as to whether the class members shared common issues of law and fact. We note also, that Brown v. New Orleans Public Service, Inc. (La. 1987), 506 So.2d 621, 623, can be distinguished because a major issue in that case involved comparative negligence and an intervening cause — cold weather which exacerbated the problems encountered by the plaintiffs.

The third element requires that the claims or defenses of the representative parties are typical of the claims or defenses of the class. Rule 23(a)(3), M.R.Civ.P. We conclude that this requisite is established. The representative class is comprised of billed customers as well as non-billed customers as is the entire class. The claims of the representative class included the costs of alternative drinking supply or sources, increased power bills from having to boil water before consuming, increased expense to repair plumbing problems due to the particulate matter in the water, expenses for repair and maintenance of appliances (i.e. washing machine), and discolored and/or foul-smelling water emitted from the water faucets. These costs have been borne by the representative class as well as the class at large.

The typicality requirement is designed to assure that the named representative’s interests are aligned with those of the class. Where there is such an alignment of interests, a named plaintiff who vigorously pursues his or her own interests will necessarily advance the interests of the class. In this respect, the typicality prerequisite is closely related to both the 23(a)(2) requirement that there be common questions of law or fact and the 23(a)(4) requirement that the named plaintiff adequately protect the interests of the class.
The named plaintiff’s claim will be typical of the class where there is a nexus between the injury suffered by the plaintiff and the injury suffered by the class. Thus, a named plaintiff’s claim is typical ifit stems from the sam e event, practice, ox course of conduct that forms the basis of the class claims and is based upon the same legal or remedial theory. (Citations omitted.) (Emphasis added.)

Jordan, 669 F.2d at 1321. Here, the typicality requirement is met because the injury claimed to be suffered by the named plaintiffs is the same as that suffered by the class and all injuries stem from the same course of conduct allegedly displayed by the defendants; that is, negligence in its duty to provide adequate water and service.

The respondents make an argument that a survey they conducted indicated that the representative plaintiffs’ interests were not typical of those of the class because the majority of class members surveyed did not wish to participate in the lawsuit. The trial court dispensed with this argument by stating that it was skeptical of the ability of a survey to accurately determine matters of public opinion. It also concluded that the survey could be intimidating to some people and may have been phrased to persuade those surveyed to respond in a negative manner to the lawsuit. We agree with the trial court and with the district court in Koger v. Guarino (1976), 412 F. Supp. 1375, 1379, which stated:

We therefore find that the fact that the class may contain individuals who are indifferent or even opposed to the class relief sought by the named plaintiffs does not mean that the claims of the named plaintiffs are not typical of those of the class or that they will not fairly and adequately protect the interests of the class. (Citation omitted.)

The fourth element necessary to establish a class action is whether the representative class will fairly and adequately protect the interest of the proposed class. Rule 23(a)(4), M.R.Civ.P.

Under Rule 23(a)(4), the named representative must “fairly and adequately protect the interests of the class.” This requires that the named representative’s attorney be qualified, experienced, and generally capable to conduct the litigation, and that the named representative’s interests not be antagonistic to the interests of the class. (Citations omitted.)

Jordan, 669 F.2d at 1323. There is no dispute concerning the expertise and qualifications of the representatives’ attorneys in this case. The question of whether the representatives’ interests were antagonistic to the interests of the class was resolved in the discussion of Rule 23(a)(3), M.R.Civ.P., wherein we agreed with the trial court that the survey was unreliable insofar as it attempted to prove that most putative plaintiffs were against the lawsuit. The representatives’ interests in potable water and adequate water service are coextensive with those of the remaining class members and therefore we conclude that the representative plaintiffs would fairly and adequately protect the interests of the class. Jordan, 669 F.2d at 1323.

The fifth requirement to establish certification as a class action is whether questions of law or fact common to the members of the class predominate over questions of the individual members. Rule 23(b)(3), M.R.Civ.P. The respondents contend that the countless differences in damages for customers make the certification of a class “impractical.” The appellants, however, counter that this determination revolves around issues of liability. Damages may always differ for the members but the issue of damages is not dispositive. Liability to all consumers is premised on BWC’s failure to provide adequate service and quality water. The appellants further argue that this primary issue of liability for the entire class predominates over the individual issues of causation and damages for class members.

With respect to the calculation of the amounts of damages, it would be necessary for each member of the class individually to prove the quantity of gasoline purchased at supracompetitive prices and the prices paid. Nevertheless, it has been commonly recognized that the necessity for calculation of damages on an individual basis should not preclude class determination when the common issues which determine liability predominate. (Emphasis added.) (Citations omitted.)

Bogosian v. Gulf Oil Corp. (1977), 561 F.2d 434, 456. Similarly, the primary issue of liability here stems from BWC’s failure to provide adequate water and service to its customers, although individual damages may vary. Therefore, the individual issues of causation and damages should not preclude certification as a class action. The trial court correctly determined that this necessary element is established.

The sixth, and final element necessary to certify a class action is whether a class action is superior to other methods of adjudicating the controversy. Rule 23(b)(3), M.R.Civ.P. To determine whether a class action is superior to other methods of adjudication, Rule 23(b)(3) requires a consideration of four factors, namely:

A. the interest of members of the class in individually controlling the prosecution or defense of separate actions;
B. the extent and nature of any litigation concerning the controversy already commenced by or against members of the class;
C. the desirability or undesirability of concentrating the litigation of the claims in the particular forum;
D. the difficulties likely to be encountered in the management of a class action.

Rule 23(b)(3)(A) through (D).

The respondents contend that the individual questions in this case will consume an extensive amount of time, energy and expense yet still not give each member of the class its “day in court” because this case is actually many little cases which should be brought in small claims court. The appellants counter that there is no real alternative to a class action in this case. The individual members could not find an attorney who would take their individual cases because they are so minuscule as individual actions.

We hold that a class action is the superior method of adjudicating this controversy. As for the first factor, any member who wants more control in the action can enter an appearance through their own counsel under Rule 23(c)(2), M.R.Civ.P, or opt out of the class and intervene in the case. The second factor does not apply because there is no evidence of any other litigation involving members of the class although BWC has been involved in litigation with the state and federal governments regarding water quality. The third factor does not apply because there is no other forum which class members have sought out in order to bring an action against BWC.

Finally, the trial court determined that “a class action is superior in this instance” because numerous plaintiffs have allegedly been harmed but no one person may have been damaged to such a degree that he may have sought to institute litigation on his own behalf. See Green v. Wolf Corporation (1968), 406 F.2d 291, 296. We reiterate that the trial court is in the best position to determine if the case is properly litigated as a class action. Doninger, 564 F.2d at 1309.

The Green court also put into perspective the need for class actions and the type of case which is best litigated as a class action:

Equity has long recognized that there is need for a course which would redress wrongs otherwise unremediable because the individual claims involved were too small, or the claimants too widely dispersed. Moreover, early in the development of our civil procedures it became apparent that judicial efficiency demanded the elimination of multiple suits arising from the same facts and questions of law. Hence, the wise and necessary procedure was created by which a few representatives of a class could sue on behalf of others similarly situated, and be granted a judgment that would bind all. (Citation omitted.)

Green, 406 F.2d at 297. In the instant case, the claims involved would be unremediable without class action status because most are minor in and of themselves. In addition, the many claims arise from the same facts and questions of law. We conclude that this is a proper case for class action certification, and we affirm the trial court on this issue.

III. PROPER NOTICE

As a final issue on cross-appeal, the respondents assert that the notice given by the trial court to the class is improper. They contend that one element of the notice is erroneous and another essential element is entirely omitted from the notice.

First, the notice states that the members “will not be required to pay any attorneys’ fees or costs in the absence of a monetary recovery.” However, respondents assert that class members may be hable for a portion of respondents’ attorneys’ fees in the event of a loss for appellants. The respondents further contend that since this is a contract action and the appellants have requested attorneys’ fees, the respondents, as the other party, have the same right to recover attorneys’ fees. Finally, they state that the potential members of the class should have this information before they decide whether they wish to participate in the class action.

The second error in the notice, insist the respondents, is that the District Court should have advised the potential class members that they have the option ofnot participating in the class action. Additionally, they do not have to bring their own action against the BWC. They assert that to omit this information is almost tantamount to encouraging the potential members of the class to initiate an action against BWC.

Appellants counter that there was no reason to advise the class members that they may be liable for attorneys’ fees in the event of a loss by appellants nor that they may choose to forego participation in the class action if they so desire. Also, appellants argue that respondents’ position that it can recover attorneys’ fees because the parties have a contract relationship which provides for reciprocal attorneys’ fees is erroneous. The respondents base their argument on § 28-3-704, MCA, which gives both parties the right to recover attorneys’ fees if there is an express statement in the contract which gives the parties the right to recover attorneys’ fees.

Wright v. Schock (9th Cir. 1984), 742 F.2d 541, 545, is instructive and supports the appellants’ position that members who remain in the class are not hable for the respondents’ attorneys’fees, stating that “[a]bsent class members have no obligation to pay attorneys’ fees and litigation costs, except when they elect to accept the benefit of the litigation.” Lamb v. United Security Life Company (S.D. Iowa 1973), 59 F.R.D. 44, 48-49, expands on this proposition, concluding:

Upon reconsideration, this Court is of the opinion that members of the class who do not opt out and do not appear especially by counsel of their own selection are not “parties” to the action. Accordingly, they would not be hable for any costs or expenses assessed against the representative parties plaintiff.
Accordingly, the Court will order that the Notice to the class contain a provision so informing all members of the class. The Notice shall also advise all members of the class that if any recovery should be effected for the class, the Court may allow from such recovery reimbursement of plaintiffs’ expenses and counsel fees....

Furthermore, the respondents’ argument that under § 28-3-704, MCA, the members of the class could be liable for the respondents’ attorneys’ fees because this is a contract action is misplaced. Section 28-3-704, MCA, requires that the losing party pay reasonable attorneys’ fees if there is an express right to recover attorneys’ fees in the contract. No evidence of an express right in a contract was presented here. Therefore, the trial court did not err in stating that the members “will not be required to pay any attorneys’ fees or costs in the absence of a monetary recovery.”

Moreover, the trial court did not err in not including a statement that members of the class could “simply choose not to participate in any lawsuit against the Defendants.” The Notice of Class Action Lawsuit stated that:

If you opt out of the class, you will not be entitled to share in any monetary compensation which may ultimately be obtained. However, you may file a separate lawsuit against the Defendants, or you may retain our (sic) own attorney and intervene in this lawsuit. (Emphasis added.)

The Notice also provided a form to fill out if a person wanted to be excluded from the class. The use of the permissive word “may,” and the use of the form are enough to inform potential members of the class that they may opt out entirely if they prefer. The Notice provided was adequate in its notification to the class as to the rights and responsibilities of the members of the class. Accordingly, the trial court is affirmed as to this issue.

AFFIRMED IN PART AND REVERSED IN PART.

CHIEF JUSTICE TURNAGE, JUSTICES HARRISON, HUNT, TRIEWEILER, WEBER and DISTRICT JUDGE HONZEL sitting in place of JUSTICE GRAY, concur.


source: Caselaw Access Project

author: JUSTICE WEBER JUSTICE TRIEWEILER

license: Public Domain

text:
    IN THE MATTER OF THE ESTATE OF ROBERT E. MELVIN, Deceased.
    No. 93-109.
    Submitted on Briefs July 15, 1993.
    Decided November 8, 1993.
    50 St.Rep. 1382.
    261 Mont. 408.
    862 P.2d 1159.

      For Appellant: Jo Antonioli, Worden, Thane & Haines, Missoula.
    For Respondent: Robert T. O’Leary, Butte.
   JUSTICE WEBER

delivered the Opinion of the Court.

This is an appeal from a Decree of Distribution settling the estate of Robert E. Melvin. Carol A. Reeves, one of three heirs to the estate of Robert E. Melvin, appeals the order allowing and settling the First and Final Account of the Personal Representative. We reverse.

The issues are restated as follows:

1. Did the District Court err in issuing the Decree of Distribution?

2. Did the District Court err in appointing Paul Melvin as personal representative of the estate?

3. Did the personal representative breach his fiduciary duty to the heirs of the estate?

Robert E. Melvin died on May 29, 1989. He was survived by his three children, Paul Melvin, Carol Reeves and John Melvin. On November 9, 1989, Paxil Melvin filed an Application for Informal Probate and Appointment of Personal Representative and was appointed as personal representative of the estate of Robert E. Melvin. Appellant, Carol A. Reeves (Reeves), claims that she was under the impression that her brother, Paul Melvin, had been appointed personal representative of the estate under a valid will. On numerous occasions from 1989 until the final account was presented in 1992, Reeves requested information from Paul Melvin about the administration of the estate.

On September 30, 1992, Paul Melvin filed the “First and Final Account and Petition for Distribution of Estate.” On October 1, 1992, Reeves filed a pro se motion objecting to the final accounting as being inadequate under § 72-3-1005, MCA, and as not providing the minimum of information required by Montana law. A hearing was held on October 30,1992, at which Reeves’ husband requested that Reeves be given an itemization and breakdown of the expenses of the estate and the detailed accounting that Reeves had requested since 1989. The District Court ordered that an accounting be furnished to Reeves. The personal representative provided a check register and bank statements to Reeves on January 25,1993, along with a copy of the Decree of Distribution entered by the District Court on January 21,1993.

Reeves then retained counsel who appeared on February 1,1993, objecting to the First and Final Account and also to the check register and bank statements as being an insufficient accounting. No hearing was scheduled in the District Court prior to the running of the time necessary for filing this appeal. Further facts will be provided throughout this opinion as necessary.

I.

Did the District Court err in approving the final accounting and issuing the Decree of Distribution?

Reeves contends that the personal representative did not comply with Montana law governing estate administration and closing and that the District Court erred in approving the incomplete final accounting and issuing the Decree of Distribution. Specifically, she claims that Paul Melvin did not provide intermediate accountings to her when she asked for them during the period of estate administration and that the final accounting provided by Paul Melvin did not provide minimum information about estate assets, income, expenses and the distribution of the assets.

Counsel representing the estate of Robert E. Melvin contends that Paul Melvin has properly accounted for the assets and expenses of the estate by preparing the Inventory and Appraisement and the INH-2 form for inheritance tax purposes. He further argues that the District Court verified that Reeves had received the Inventory and Appraisement, Application for Determination of Inheritance Tax and her share of the distribution of all assets except for her share of the amount remaining to be distributed after closing the estate.

From the information contained in the record, we are unable to determine what, if any, estate expenses were incurred or paid. The Inventory and Appraisement lists total estate assets as $33,268.00. A copy of the form INH-2 prepared by Paul Melvin detailing estate expenses is not a part of the record before us. The “final accounting” filed by the Personal Representative states that property remaining after the payment of debts, claims, taxes, costs and expenses should be distributed in accordance with the property as listed in the Inventory and Appraisement on file with the Clerk of the Court and the balance remaining is to be distributed to the three heirs as set forth in Exhibit “A” attached to the final account, which provides as follows:

ASSETS REMAINING:

1982 Mercury $2,400.00

Cash on Hand (plus garage sale) 1.439.00

U.S. West Refund 16.99

325.00 Transamerica Insurance

297.50 New Dimensions Distributors Refund

100 Shares of Prudential Federal Savings (Olympus Corporation) 575.00

$5,053.49

LIABILITIES:

Paul M. Melvin (1/3 Paid) 1.684.49

Carol A. Reeves (1/3 Unpaid) 1.684.50

John M. Melvin (1/3 Unpaid) 1.684.50

$ 5,053.49

Although Reeves was not present at the hearing, her husband appeared and was questioned by the District Court. Because Mr. Reeves advised the court that the personal representative had not fully informed Reeves of the estate expenses, the District Court ordered the personal representative to provide Reeves with “a copy of the check register or such other itemization detailing the expenses incurred on behalf of the estate.” The District Court also ordered that the personal representative be discharged upon payment of remaining amounts due the heirs as set forth in Exhibit “A” and as quoted above. Paul Melvin has made arrangements to pay the amount to John Melvin in monthly installments of $45.00. Reeves has refused to accept a similar payment plan for her share of the remaining estate.

The Decree of Distribution is dated January 21,1993. On January 25, 1993, Paul Melvin provided Reeves with a copy of the check register from one of the bank accounts he used as personal representative and some bank statements from other accounts. On February 1, 1993, Reeves formally objected to this accounting and to the Decree of Distribution as being improper and premature.

Section 72-3-1005, MCA, provides:

Final accounting required to close estate. (1) Before an estate may be finally closed and the personal representative relieved of his duties and obligations, he shall either file with the court or deliver to all interested persons an accounting under oath showing the amount of money received and expended by him, the amount of all claims presented against the estate, and the names of the claimants and all other matters necessary to show the state of its affairs.
(2) Any interested person at any time during the course of the administration of an estate may for good cause shown require further accountings.
(3) If the personal representative is the sole residual beneficiary of the estate, no accounting need be made.

This section provides that the personal representative must file an accounting with the court — or deliver the same to all interested persons — showing the amount of money received and expended by the personal representative, all claims presented against the estate and all other information necessary to show the state of its affairs. An exception to this requirement is permitted only when the personal representative is the “sole residual beneficiary” of the estate. Such is not the case here; Paul Melvin was required to provide a proper accounting before the estate of Robert E. Melvin could be closed.

The District Court ordered as follows:

3. That the First and Final Account of the Personal Representative is allowed and settled and that distribution of the remaining as sets of the estate, as described in Exhibit “A” to the First and Final Account, be made by the Personal Representative.
4. That the Personal Representative shall provide Carol A. Reeves with a copy of the check register or such other itemization detailing the expenses incurred on behalf of the estate.

The “First and Final Account and Petition for Distribution of Estate” does not describe the monies received and expended by the personal representative, nor does it describe the claims presented and paid. It does not describe the manner of disposition of estate assets. While the transcript indicates that Reeves received copies of the Inventory and Appraisement and the INH-2, that information is not sufficient to constitute an accounting.

The check register and bank statements furnished to Reeves also are inadequate to constitute a final accounting of assets, income and expenses and claims. An estate may not be settled and a final distribution made until the final accounting is properly completed. Section 72-3-1005, MCA, requires the District Court to make a determination that the final account complies with the requirements of § 72-3-1005, MCA, before the estate may be finally closed and before the personal representative may be relieved of his duties.

When proceedings in the District Court are of a broad equitable nature and the issues raised on appeal are mixed questions of law and fact, this Court’s duty is to review all questions of fact arising upon the evidence presented in the record, whether the evidence is alleged to be insufficient or not, and to determine the same, as well as questions of law. Daniels v. Thomas, Dean & Hoskins, Inc. (1990), 246 Mont. 125, 134, 804 P.2d 359, 364 (citing § 3-2-204(5), MCA). In Daniels, 804 P.2d at 364, we stated:

[W]e will review both questions of law and questions of fact but will not reverse the trial court in an equity case on questions of fact unless there is a decided preponderance of the evidence against those findings.

We addressed the standard of review for a mixed question of fact and law in division of marital property cases in In Re the Marriage of Danelson (1992), 253 Mont. 310, 317, 833 P.2d 215, 220, and determined that the standard of review in such equity cases is whether the court abused its discretion.

Obtaining [an] equitable distribution will at times require the lower court to engage in discretionary action which cannot be accurately categorized as either a finding of fact or a conclusion of law. These discretionary judgments made by the trial court are presumed to be correct and will not be disturbed by this Court absent an abuse of discretion by the lower corut.

Danelson, 833 P.2d at 220. The issue before us requires us to review a determination made by the District Court which cannot be precisely classed as either a finding of fact or a conclusion of law.

The District Court failed to comply with § 72-3-1005, MCA, which requires the accounting filed with the court to include all money received and expended by the personal representative and the amount of all claims presented against the estate as well as the names of claimants and all other matters necessary to show the state of the affairs of the estate. The record contains substantial evidence of numerous items of income, expense and claims which should have been included in the final account according to § 72-3-1005, MCA. We conclude the District Court allowed the personal representative to settle and close the estate in this case without the accounting required by § 72-3-1005, MCA. We further conclude that the District Court abused its discretion by approving the First and Final Account in this estate and by entering the Decree of Distribution.

We hold the District Court erred and abused its discretion by approving the final accounting submitted by the personal representative in this case. We vacate the District Court’s order allowing and settling the final account and ordering distribution of the remaining assets of the estate as described in Exhibit “A” of the personal representative’s final account.

II.

Did the District Court err in appointing Paul Melvin as personal representative of the estate?

Reeves also appeals the informal appointment of Paul Melvin as personal representative in this proceeding. She claims that she was under the impression throughout the administration of the estate that Paul Melvin was appointed as personal representative in the will of Robert E. Melvin and that she was unaware that her father had not prepared a valid will.

An application for informal appointment of a personal representative must conform to the requirements of § 72-3-202, MCA, and, in the case of an intestacy proceeding, must also conform to the requirements of § 72-3-204, MCA. Paul Melvin’s Application for Informal Probate and Appointment of Personal Representative states:

The heirs designated herein have nominated the applicant to serve in their stead as personal representative and said nominations have been filed of record in this estate proceeding.

We find no nominations by John Melvin or Carol Reeves in the record for this estate proceeding. Section 72-3-504(3), MCA, provides:

When two or more persons share a priority, those of them who do not renounce must concur in nominating another to act for them or in applying for appointment. If they are unable to concur in nominating another to act for them or in applying for appointment, the court may appoint any qualified person.

It does not appear from the record that the proper procedure for appointment was followed in this proceeding. Nonetheless, we need not address this issue as § 72-3-503(1), MCA, provides that an objection to an appointment of a personal representative can be made only in formal proceedings.

Although an objection to the appointment of a personal representative is not allowed in informal proceedings, a person interested in the estate is allowed to petition for the termination of an appointment of a personal representative “for cause” at any time. Section 72-3-526, MCA.

The Official Comments to § 72-3-204, MCA, explain the rationale for not allowing objections to appointments of personal representatives in informal proceedings as follows:

Forcing one who seeks informal probate or informal appointment to make oath before a public official concerning the details required of applications should deter persons who might otherwise misuse the no-notice feature of informal proceedings. The application is available as a part of the public record. If deliberately false representation is made, remedies for fraud will be available to injured persons without specified time limit....

Clearly, an appeal from a Decree of Distribution in an informal estate proceeding is not the appropriate vehicle for an objection to irregularities in the appointment of the personal representative. Therefore, we decline to rule on the issue whether the District Court erred in appointing Paul Melvin as personal representative for the estate of Robert E. Melvin.

in.

Did the personal representative breach his fiduciary duty to the heirs of the estate?

No claim for breach of fiduciary duty was before the District Court and we will not address the issue for the first time on appeal.

Reversed and remanded. The Decree of Distribution entered by the District Court on January 21,1993, is vacated and the District Court is instructed to require the personal representative for this estate to prepare a proper final accounting in accordance with § 72-3-1005, MCA, to settle the same and to consider any and all objections to such accounting and distribution in an appropriate manner.

CHIEF JUSTICE TURNAGE, JUSTICES HARRISON, HUNT, GRAY and NELSON concur.

JUSTICE TRIEWEILER

dissenting.

The majority opinion violates the rule that we will not place the District Court in error on the basis of objections raised for the first time on appeal. The theory behind the rule is that in fairness to the parties and the District Court, if one party has an objection to the procedure followed in the District Court, he or she has an obligation to bring it to the attention of the other party and to the District Court so that any error can be cured if possible without the necessary expense of an appeal and further delay. Because there was absolutely no timely objection by the appellant to any aspect of this estate’s administration prior to the entry of the Court’s final decree, I conclude that she waived any objection she may have had to the “First and Final Account and Petition for Distribution of Estate.”

Areview of the actual record in this case suggests just how unusual the majority’s decision is.

Robert E. Melvin died on May 29, 1989, and his son, Paul, was appointed personal representative of his estate on November 9,1989. On November 9, 1990, an inventory and appraisement, listing and describing all of the estate’s assets, was filed in the District Court. It is conceded for purposes of appeal that appellant received a copy of the inventory and appraisement, along with the list of estate expenses which was provided for purposes of determining whether inheritance tax was due.

On September 30,1992, nearly three and one-half years after he applied for informal appointment as personal representative, and nearly three years after his actual appointment, Paul Melvin filed a first and final account and petition for distribution of the estate. Prior to that time, his sister, Carol, had neither appeared in this action nor filed any objection to his appointment nor his handling of the estate.

On October 1,1992, Carol filed a pro se document entitled “Motion for an Order to Require an Accounting.” By that document, she sought “a full and complete accounting of all estate assets.” A list of the estate’s assets at the time of the final account are exactly what was provided in Exhibit A to the personal representative’s petition. Contrary to assertions in the majority opinion, there is no record that appellant ever filed an objection to the final accounting based on the requirements of § 72-3-1005, MCA. Neither is there any indication in the record of the District Court what Carol’s impressions were regarding the existence of a will or that she at any time requested information from Paul about his administration of the estate. After presenting no evidence in the District Court, Carol’s attorney sought to file a bunch of correspondence with the Supreme Court. However, that after-the-fact evidence was appropriately stricken from the record by order of this Court dated May 4,1993.

The District Court held a hearing to consider the personal representative’s petition on October 30,1992. The only witness who testified at the hearing was the personal representative. During the hearing, he was questioned at length by his attorney and the court regarding his disposition of the estate assets. After being provided with notice of the hearing, Carol did not bother to appear. John Melvin, who is Paul and Carol’s brother, did appear and had no objection to the disposition of the estate.

Neither did Carol appear by an attorney. Her husband did appear and advised the court that he obj ected to the approval of the personal representative’s petition on the basis that the income and disbursements of the estate had been inadequately accounted for. While he had no personal standing to assert an objection, was never under oath and subject to cross-examination, and was not authorized by law to represent his wife in this proceeding, this inadequate and 'untimely objection is the first indication of any kind in this record during the three and one-half years since Robert Melvin’s death, that there was any objection to the manner in which the estate was being handled.

Under these circumstances, it is not surprising that the District Corut expressed disapproval of the untimely objection. However, in spite of that fact, the personal representative was told to provide Carol with further information about income and expenses of the estate, and the court gave her ten days from the date of the hearing within which to file an objection.

At the time of the hearing, the District Court stated:

To me, there has never been a question of the accounting story.
You have an opportunity to object to the accounting. He has ten days. And that has to be by certified mail. And we will go from there.
If there is an objection in this regard, I will have a hearing on that objection.

No objection was lodged within the time provided by the corut and the decree was ultimately entered on January 21,1993, nearly three months later.

We do not know what information was provided to Carol, and we do not know when it was provided. There simply is no record of any occurrence after the court hearing until after the court’s decree was entered.

The court’s decree approving the final account of the personal representative was entered on January 21,1993, nearly three months after the hearing on the personal representative’s petition. No formal objection was filed by Carol during the intervening period of time.

On February 1, 1993, an attorney first appeared as counsel of record for Carol. On that same date, an objection to the personal representative’s account was first filed on her behalf. However, the certificate of mailing indicates that it was not mailed to the personal representative until February 18,1993, one day prior to Carol’s notice of appeal to this Court.

Contrary to the statement in the majority opinion, there is no evidence in this record that the personal representative first provided Carol with a copy of the check register and some bank statements on January 25,1993.

On this record, the majority has taken upon itself to first strike evidence offered for the first time on appeal, and then rely on it in its opinion. The majority has decided issues on appeal that were never raised in an appropriate nor timely fashion in the District Court.

At best, this case is precedent for approval of pretty sloppy and untimely legal work. At worst, no district court nor personal representative can close an estate in the future in reliance on the status of the record at the time the proposed decree is entered.

For these reasons, I dissent from that part of the majority opinion which sets aside the District Court’s decree of distribution.