author: CHIEF JUSTICE TURNAGE

text:
    CLOVER LEAF DAIRY, a Montana corporation, Plaintiff and Appellant, v. THE STATE OF MONTANA and THE MONTANA DEPARTMENT OF HEALTH AND ENVIRONMENTAL SCIENCES, Defendants and Respondents.
    No. 96-682.
    Heard and Submitted September 11, 1997.
    Decided November 13, 1997.
    54 St.Rep. 1203. 948 P.2d 1164.
    285 Mont. 380.

      For Appellant: Brian M. Morris (argued), Goetz, Madden & Dunn, P.C., Bozeman.
    For Respondents: Ann Brodsky (argued), Department of Administration, Helena.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

Clover Leaf Dairy appeals from the orders of the First Judicial District Court, Lewis and Clark County, granting the State’s motions to dismiss and for summary judgment. We affirm. We restate the issues raised on appeal as follows:

1. Did the District Court err in granting the State’s motions for summary judgment?

2. Did the District Court err when it dismissed Clover Leaf’s claim for damages based on the State’s alleged denial of Clover Leaf’s due process rights?

BACKGROUND

In response to consumer complaints, the Montana Department of Health and Environmental Sciences (DHES), now the Montana Department of Public Health and Human Services, examined samples of Clover Leaf milk taken from grocery stores in Helena, Montana. The samples contained an unidentified black substance described as “sludge” or “sediment.” On June 3, 1994, DHES embargoed all of Clover Leaf’s fluid milk products with a “sell by” date of June 7 or later. The notice of embargo stated:

This is to certify that articles consisting of approximately all Grade A milk and milk products, including whole milk, 2% lowfat milk, 1% lowfat milk, skim milk, 2% lowfat chocolate milk, 2% lowfat acidophilus milk, 1% buttermilk, whipping cream, half & half, and eggnog, packaged in any net weight container including plastic bottles, cartons, and bulk containers identified with “Sell by” date of June 7 and every “Sell by” day after June 7 ... in your possession, returned to your possession, or processed/produced/manufactured/or bottled on or after the date of this embargo [are] suspected of being adulterated or contaminated pursuant to § 50-31-202 or 203, MCA, as follows: the products either have an unknown substance in them which appears as a dark sediment in the product, are suspected to contain this unknown substance, or are contaminated or adulterated or are suspected to be contaminated or adulterated with coliform or other contaminants.
Notice is hereby given of the embargo of the above described foods, and no removal, disposal, sale or movement of said foods, shall be made without permission given under § 50-31-509, MCA.

To the date of briefing this appeal, the State does not know the identity of the black substance. However, Edward McHugh, owner of Clover Leaf, claimed the substance was the result of protein burn caused during pasteurization and flakes and digestible materials worn from a gasket used during homogenization.

Clover Leaf executed a disposal agreement with the State pursuant to § 50-31-509(1), MCA. As a result, Clover Leaf destroyed approximately 15,000 gallons of milk. Clover Leaf filed a timely claim for damages with the Montana Department of Administration based on § 2-9-301, MCA. The claim was denied.

In February 1995, Clover Leaf and Edward McHugh filed a complaint challenging the June 3 embargo. Count I alleged the State deprived Clover Leaf of its property without due process of law as required by Article II, Section 17 of the Montana Constitution because the State embargoed Clover Leaf’s property without probable cause to believe that it was adulterated. Count II alleged that the State violated §§ 50-31-202(1) and -509(1), MCA, because the State did not have probable cause to believe Clover Leaf’s property was adulterated. Count III alleged that the actions of DHES were ultra vires because DHES did not have authority to embargo Clover Leaf’s property.

The State moved to dismiss the complaint, and if any counts survived the motion, to dismiss McHugh as a party. The District Court denied the State’s motion to dismiss Count II, dismissed Counts I and III, and dismissed McHugh as a party.

The State then moved for summary judgment on Count II, arguing it had probable cause to believe Clover Leaf’s fluid milk products were adulterated when it issued the June 3 embargo. On July 19,1996, the District Court granted the State’s first motion for summary judgment on Count II as it related to Clover Leaf’s skim, 2%, and whole milk. The court reasoned that a factual question existed as to whether it was reasonable for the embargo to cover other types of Clover Leaf milk products.

The State filed a second motion for summary judgment on the remaining issues following the court’s July 19 order. The District Court found, based on uncontradicted evidence, that all of Clover Leaf’s milk products were produced from the same raw milk source and went through the same processing techniques. The court concluded the State had probable cause to issue its June 3 embargo against all Clover Leaf milk products and granted the State’s second motion for summary judgment.

Clover Leaf appeals from the District Court’s orders granting summary judgment on Count II and dismissing Count I.

DISCUSSION

1. Did the District Court err in granting the State’s motions for summary judgment?

Summary judgment is proper when the pleadings, depositions, answers to interrogatories, admissions, and any affidavits on file show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law. Rule 56(c), M.R.Civ.P. We review a district court’s grant of a motion for summary judgment de novo and apply the same criteria under Rule 56, M.R.Civ.P., as did the district court. Minnie v. City of Roundup (1993), 257 Mont. 429, 431, 849 P.2d 212, 214.

Aparty moving for summary judgment bears the initial burden of establishing the absence of any genuine issue of material fact and its entitlement to judgment as a matter of law. Rule 56(c), M.R.Civ.P. The nonmoving party has no obligation to establish that genuine issues of fact exist until the moving party has shown an absence of such issues of fact; unless that initial burden is met by the moving party, the nonmoving party may rest on its pleading. Minnie, 849 P.2d at 214.

The Montana Food, Drug, and Cosmetic Act (Montana Act), located at Title 50, Chapter 31, MCA, regulates the manufacture, production, processing, packing, exposure, offer, possession, holding, dispensing, giving, supplying or applying, sale, and offer of sale of food, drugs, devices, or cosmetics. Section 50-31-102, MCA. When DHES issued the June 3 embargo, it relied on § 50-31-509, MCA, which provides, in relevant part:

Detainer of adulterated or misbranded articles. (1) If an agent of the department finds or has probable cause to believe that any food, drug, device, or cosmetic is adulterated or so misbranded as to be dangerous or fraudulent within the meaning of this chapter, he shall affix to the article a tag or other appropriate marking giving notice that the article is or is suspected of being adulterated or misbranded and has been detained or embargoed and warning all persons not to remove or dispose of the article by sale or otherwise until permission for removal or disposal is given by the agent or the court. It is unlawful for a person to remove or dispose of a detained or embargoed article by sale or otherwise without permission. The owner of an embargoed article or another authorized person and the department may enter into a disposal agreement providing for the disposal, reconditioning, or other disposition of the embargoed article. If such an agreement is executed or if the embargo is otherwise removed by the department or the court, neither the department nor the state may be held liable for damages caused by such embargo provided that probable cause existed for its imposition.

Food adulteration is defined at § 50-31-202, MCA. According to § 50-31-202(5), MCA, food is adulterated if it “consists in whole or in part of a diseased, contaminated, filthy, putrid, or decomposed substance or if it is otherwise unfit for food[.]” In defending its June 3 embargo, the State argued that the black sediment in Clover Leaf’s milk rendered it contaminated, thus making the milk adulterated pursuant to § 50-31-509, MCA, and subject to embargo.

The District Court explained in its order granting the State’s first motion for summary judgment that “contamination requires a condition of impurity that results from the mixture of the milk in question with a foreign substance.” The court reasoned because it was reviewing a probable cause determination, the State did not have to prove the exact identity of the black sediment. The court concluded since it is not usual to have black sediment of any nature in milk, the State had probable cause to believe the milk was adulterated or contaminated.

On appeal, Clover Leaf argues the District Court erred by applying a deferential, rather than a de novo, standard of review to the State’s probable cause determination. The State responds Clover Leaf raised this issue for the first time on appeal.

We will not consider on appeal a theory not raised at the trial court. Sherrodd, Inc. v. Morrison-Knudsen Co. (1991), 249 Mont. 282, 285, 815 P.2d 1135, 1137. The record reveals that in Clover Leaf’s brief in support of its motion to reconsider the order granting the State’s first motion for summary judgment, Clover Leaf did not challenge the court’s standard of review. This would normally preclude the issue from being raised on appeal.

However, because we review a district court’s grant of summary judgment de novo, such a review involves deciding whether the court applied a correct standard of review to its legal conclusions. Therefore, when reviewing the District Court’s probable cause analysis, we will consider whether the court erred when it purportedly applied a deferential, rather than a de novo, standard of review to the State’s probable cause determination.

Clover Leaf makes three arguments in support of its claim that the District Court erred in granting the State’s motions for summary judgment: (1) the court erred when it concluded that DHES had sufficient probable cause to issue the June 3 embargo; (2) the court improperly adopted a criminal probable cause standard to conclude that DHES had sufficient probable cause to embargo Clover Leaf’s milk products; and (3) the court ignored genuine issues of material fact regarding the scope of the embargo and the quantity and identity of the black substance in Clover Leaf’s milk products.

The State responds that the District Court correctly interpreted the Montana Act and properly held that probable cause existed to support the embargo. The State maintains that a deferential standard of review of an agency’s probable cause determination is proper because the same standard is used in the criminal context, and this Court defers to the interpretation given to statutes by agencies charged with their administration.

The State further argues that if this Court agrees the standard of review for the DHES probable cause determination should be de novo, then there is no basis for a reversal because the District Court applied a de novo standard of review to the DHES probable cause determination, and this Court uses its own de novo standard of review for summary judgments. Finally, the State argues no genuine issues of material fact exist as to the quantity and identity of the black substance in Clover Leaf’s milk because regardless of the identity of the black substance, the milk contained a foreign substance, rendering it contaminated.

A. Did DHES have probable cause to issue the June 3 embargo?

The legal prerequisite for the DHES embargo was a finding of adulteration or probable cause to believe adulteration was present in Clover Leaf’s milk products. Section 50-31-509(1), MCA. In its order granting the State’s first motion for summary judgment, the court noted that no Montana court has defined contamination in the context of ah embargo case.

This Court has defined contamination as requiring the presence of a foreign substance. See Duensing v. Traveler’s Companies (1993), 257 Mont. 376, 381, 849 P.2d 203, 206-07. We relied on several federal cases to reach this decision. In Hi-G, Inc. v. St. Paul Fire & Marine Ins. Co. (1st Cir. 1968), 391 F.2d 924, 925, the First Circuit Court of Appeals defined contamination as the introduction of a foreign substance that injures the usefulness of the product. The Fifth Circuit defined contamination as a condition of impurity resulting from mixture or contact with a foreign substance. American Cas. Co. of Reading, Pa. v. Myrick (5th Cir. 1962), 304 F.2d 179, 183.

The District Court determined that contamination requires a condition of impurity that results from the mixture of the milk with a foreign substance and concluded that because it is not usual for milk to contain black sediment, the State had probable cause to believe the milk was adulterated or contaminated.

Clover Leaf argues the court mistakenly defined “contamination” rather than “contaminated substance.” Furthermore, Clover Leaf contends that in order for milk to be contaminated, and thus adulterated, it must be dangerous to human health. The State responds that Clover Leaf has raised the dangerous argument for the first time on appeal. We disagree.

The embargo statute and its application have been the focus of Clover Leaf’s case since its complaint was filed. We therefore address whether the District Court mistakenly defined “contamination,” and whether a food must be dangerous to human health before it can be embargoed under § 50-31-509, MCA.

a. Did the District Court err when it defined contamination?

Clover Leaf argues the District Court mistakenly defined “contamination” instead of “contaminated substance.” We reject this argument as illogical and contrary to the intent and a common-sense interpretation of the Montana Act. It is a well-established rule of statutory construction that a statute is to be read as a whole and construed so as to avoid absurd results. Dover Ranch v. County of Yellowstone (1980), 187 Mont. 276, 283, 609 P.2d 711, 715. We hold that the District Court did not err when it defined contamination as a condition of impurity that results from the mixture of the milk with a foreign substance.

b. Did the District Court improperly remove the dangerous requirement from its definition of adulteration?

We review a district court’s conclusions of law regarding the application of a statute to determine whether the court’s interpretation of the law is correct. State v. Henning (1993), 258 Mont. 488, 490-91, 853 P.2d 1223, 1225.

Clover Leaf argues the court erred in interpreting § 50-31-509(1), MCA, by concluding the statute contains no requirement that the adulterated food posed a danger to human health. Clover Leaf contends the term “as to be dangerous or fraudulent” qualifies both “adulterated” and “misbranded.” The State responds that a plain reading of the embargo statute supports the District Court’s conclusion.

Section 50-31-509(1), MCA, authorizes DHES to embargo food that is “adulterated or so misbranded as to be dangerous or fraudulent[.]” This Court’s function in construing and applying statutes is to effect legislative intent. United States v. Brooks (1995), 270 Mont. 136, 139, 890 P.2d 759, 761. To determine legislative intent, we first look to the plain meaning of the words used in the statute. Stansbury v. Lin (1993), 257 Mont. 245, 249, 848 P.2d 509, 511. If the legislative intent can be determined by the plain language of the words used, this Court may go no further and apply other means of interpretation. Matter of Kalfell Ranch, Inc. (1994), 269 Mont. 117, 124, 887 P.2d 241, 245-46.

The plain meaning of § 50-31-509(1), MCA, is clear. The word “so” qualifies the word “misbranded.” Thus, the statute explains that a food may be embargoed if it is “so misbranded as to be dangerous or ffaudulent[.]” If the statute referred to foods “so adulterated or so misbranded as to be dangerous or fraudulent” or “adulterated or misbranded so as to be dangerous or fraudulent,” then Clover Leaf’s argument could possibly have merit. We hold that § 50-31-509(1), MCA, contains no requirement that adulterated food be adulterated so as to be dangerous or fraudulent in order for it to be embargoed or detained; that the food is adulterated is sufficient under the statute.

B. Did the District Court err when it purportedly applied a deferential, rather than a de novo, standard of review to the State’s probable cause determination?

When the District Court granted the State’s first motion for summary judgment, the court did not expressly state which standard of review it was applying to the DHES probable cause determination. The court cited State v. Rinehart (1993), 262 Mont. 204, 210, 864 P.2d 1219, 1223, and stated, “The duty of the reviewing court is simply to ensure that DHES, in this case, had a substantial basis for concluding that probable cause for the embargo existed.”

In Rinehart, we explained that this Court reviews applications for a search warrant to insure that the magistrate or lower court “had a substantial basis for concluding that probable cause to issue the search warrant existed.” Rinehart, 864 P.2d at 1223. However, we do not review the magistrate’s determination de novo. Rinehart, 864 P.2d at 1223.

Although the District Court believed it was applying a deferential standard of review to the DHES probable cause determination, there is no evidence the court deferred to the agency. The court independently reviewed the evidence to determine if there was a probability that Clover Leaf’s milk products contained a black substance. In so doing, the court reached a correct result. We affirm decisions which are correct regardless of the court’s reasoning in reaching the decision. Clark v. Eagle Systems, Inc. (1996), 279 Mont. 279, 286, 927 P.2d 995, 999. Despite the court’s reliance an Rinehart, the standard of review used did not result in error.

C. Did the District Court err when it adopted a criminal standard of review for the DHES probable cause determination?

In its order granting the State’s first motion for summary judgment, the District Court noted that no Montana court has interpreted the probable cause requirement contained in Montana’s embargo statutes. The court, relying on Rinehart, 864 P.2d at 1222, adopted the following definition of probable cause which it applied to review the State’s embargo:

Probable cause does not require a prima facie showing of any particular activity. In determining whether probable cause exists, the Court is to consider the totality of the circumstances to see if there is a probability of the existence of the activity in question.

The court concluded by stating “[t]he duty of the reviewing court is simply to ensure that DHES, in this case, had a substantial basis for concluding that probable cause for the embargo existed.”

Clover Leaf submits the court erred when it employed the same deferential standard of review used by courts in criminal cases when it reviewed the DHES probable cause determination. This argument fails, however, because even under a de novo standard of review there was probable cause for DHES to issue the embargo.

D. Do genuine issues of material fact preclude the District Court from granting the State summary judgment?

Clover Leaf claims DHES did not present evidence that the black substance was contained in any of its milk products such as sour cream, eggnog, and chocolate milk, or in any of its products with “sell by” dates after June 12, 1994. The record does not support Clover Leaf’s argument. In its second motion for summary judgment, the State filed affidavits describing the process Clover Leaf used to make all of its milk products. Clover Leaf had one pasteurizer and one homogenizer. Thus, any of Clover Leafs milk used the same lines, valves, and pumps as it traveled through the pasteurizer and homogenizer.

The affidavits stated that Clover Leaf used the same basic equipment and skim milk base for all of its products, and explained how all Clover Leaf milk products were made by first removing the milk fat from the raw milk. Then, a common base of skim milk was added to various ingredients, such as milk fat, to make the milk products. Clover Leaf’s practice was typically to produce more than one type of its milk product on any given day. Clover Leaf presented no evidence to contradict the State’s affidavits.

The District Court was presented with uncontradicted facts that all of Clover Leaf’s milk products were produced from the same raw milk source, and they all went through the same milk processing techniques. It was reasonable for the court to deduce that the unknown black substance existed in all of Clover Leaf’s milk products with the relevant “sell by” dates, including its sour cream, eggnog, and chocolate milk. We conclude the District Court did not ignore genuine issues of material fact concerning the scope of the State’s embargo.

Clover Leaf contends that material issues of fact exist regarding the identity of the black substance in its milk products. We disagree. The State presented evidence that Clover Leaf’s milk contained a black substance which was visible on the bottom of milk containers. DHES employees visually observed the substance with their naked eyes and microscopically in the State’s laboratory. Grocery store customers observed the sediment on the bottom of milk containers.

When the State issued the June 3 embargo, it did not know the identity of the black substance. Regardless of its identity, a black sludge is not something a person expects to find in milk and is therefore a foreign substance. We conclude that any dispute concerning the identity of the black substance does not create a genuine issue of material fact which would preclude the District Court from granting the State’s motion for summary judgment.

Next, Clover Leaf argues the court erred and deprived it of a de minimis defense to the embargo because the court did not require DHES to quantify the amount of the black substance found in Clover Leaf’s milk products. The State responds de minimis is inapplicable.

The de minimis exception to enforcement of the federal Food, Drug, and Cosmetic Act (federal Act) allows a court to overlook small quantities of filth, “especially in circumstances where no applicable [industry guideline] is in effect and there is no evidence that that quantity found is avoidable through the use of good manufacturing practice, taking into account the state of the industry.” United States v. General Foods Corp. (N.D.N.Y. 1978), 446 F.Supp. 740, 746. The exception avoids the harsh effect that would result from strict enforcement of the federal Act, whereby “an expert, armed with the proper equipment, could detect filth in virtually every food marketed.” General Foods, 446 F.Supp. at 745.

Relying on Ewing v. Mytinger & Casselberry (1950), 339 U.S. 594, 600-01, 70 S.Ct. 870, 873-74, 94 L.Ed. 1088, 1094-95, the State argues that courts do not apply the de minimis exception under the federal Act to negate the government’s probable cause determination because such a determination is not subject to judicial review. Furthermore, the State contends, ample evidence exists in the record that the black substance was present in sufficient quantities so as to prohibit a court from applying the de minimis exception.

In Ewing, the government seized misbranded food supplements under the federal Act based on an administrative probable cause determination. A district court held the seizure violated the Fifth Amendment because the food producer was not afforded a hearing on probable cause. Ewing, 339 U.S. at 598, 70 S.Ct. at 872. The United States Supreme Court reversed, holding the lower court had no jurisdiction to review the administrative determination of probable cause because Congress had not made such a determination under the Act reviewable by the courts. Ewing, 339 U.S. at 600-01, 70 S.Ct. at 873.

Unlike Congress, in relation to the federal Act, the Montana Legislature has provided for judicial review of the DHES probable cause determination. Section 50-31-509(1), MCA, gives the State immunity from damages caused by an embargo if the parties execute a disposal agreement and probable cause existed for the embargo. Section 50-31-509(2), MCA, provides if a disposal agreement is not executed, then an agent of DHES must petition a court for an order of condemnation. If the court finds the embargoed article is adulterated, then the article must be destroyed. Section 50-31-509(3), MCA.

When § 50-31-509, MCA, is read as a whole, we conclude the actions of DHES, including its probable cause determination, are reviewable by the courts. We therefore reject the State’s argument that courts are prohibited from applying the de minimis exception to review the DHES probable cause determination.

We also disagree with Clover Leaf that the de minimis exception applies here. The black substance was visible to the naked eye of consumers and DHES officials. It was described as “black or gray residue,” “like soot or like the milk had mud in the bottom.” When a milk container was shaken, “it became muddy throughout.” The substance was present in such quantities so as to attract public attention. We hold the District Court did not err in declining to apply the de minimis exception.

The record contains no evidence raising genuine issues of material fact concerning the scope of the State’s embargo, or the quantity and identity of the substance in Clover Leaf’s milk products. The District Court did not err when it granted summary judgment to the State on these issues.

The District Court did not err when it determined that the black substance in Clover Leaf’s milk products rendered them contaminated. Based on this determination, the milk products were an adulterated food according to § 50-31-202(5), MCA, and DHES had probable cause to issue the June 3 embargo. We hold the court did not err when it granted the State’s motions for summary judgment on Count II.

2. Did the District Court err when it dismissed Clover Leaf’s claim for damages based on the State’s alleged denial of Clover Leaf’s due process rights?

Clover Leaf requests this Court to decide whether, in this instance, a party may bring a claim for monetary damages based on an alleged deprivation of a constitutional right. Clover Leaf claims it is entitled to monetary damages because the State deprived the corporation of its property interest and its right to operate a lawful business without having probable cause to believe that the black substance contained in Clover Leaf’s milk products threatened human health.

This Court may not address moot questions. Smith v. Electronic Parts, Inc. (1995) 274 Mont. 252, 258, 907 P.2d 958, 962. “A moot question is one which existed once but because of an event or happening, it has ceased to exist and no longer presents an actual controversy.” State ex rel. Miller v. Murray (1979), 183 Mont. 499, 503, 600 P.2d 1174, 1176.

Because we have ruled that the State had probable cause to believe that Clover Leaf’s milk products were adulterated, the issue of whether Clover Leaf was wrongfully deprived of its property interest and is entitled to damages is moot.

Affirmed.

JUSTICES HUNT, REGNIER and TRIEWEILER and DISTRICT JUDGE NEILL, sitting in place of JUSTICE GRAY, DISTRICT JUDGE FAGG, sitting in place of JUSTICE LEAPHART and DISTRICT JUDGE WHELAN, sitting in place of JUSTICE NELSON concur.


source: Caselaw Access Project

author: JUSTICE TRIEWEILER

license: Public Domain

text:
    DAVID RUCKDASCHEL, SR., and TAMI RUCKDASCHEL, Plaintiffs and Respondents, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Defendant and Appellant.
    No. 97-194.
    Submitted on Briefs September 17, 1997.
    Decided November 13, 1997.
    54 St.Rep. 1210. 948 P.2d 700.
    285 Mont. 395.
    For Appellant: Susan P. Roy; Garlington, Lohn & Robinson; Missoula.

      For Respondents: William P. Joyce; Burgess, Joyce, Starin & Whelan; Butte.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

The plaintiffs, Tami and David Ruckdaschel, brought this action against the defendant, State Farm Mutual Automobile Insurance Co., in the District Court for the Second Judicial District in Silver Bow County to obtain coverage for medical payments pursuant to their policies with State Farm. Both parties moved for summary judgment. The District Court granted the Ruckdaschels’ motion as it pertained to coverage issues, and held that genuine issues of material fact exist regarding other claims. State Farm appeals from the District Court’s order. We affirm the judgment of the District Court.

The issue on appeal is:

Does State Farm’s anti-stacking language in the medical payment portion of the Ruckdaschels’ policy violate Montana public policy?

FACTUAL BACKGROUND AND DISCUSSION

This appeal initially involved two separate automobile accidents. The first occurred on April 27, 1994. In that accident, Tami Ruckdaschel was injured while riding as a passenger in her husband’s 1993 Chevrolet truck when it was struck by a vehicle driven by Rod Timmer. She incurred medical expenses in the amount of $5,725.08 as a result of this accident. State Farm paid $5,000 toward those expenses. On appeal, Tami has moved this Court to dismiss her claim related to that accident, given the amount of money in controversy. Although State Farm objects to that motion, we grant Tami’s motion to dismiss. Therefore, State Farm’s appeal with regard to the issue of coverage for Tami’s April 27, 1994, accident is moot. In State v. Murray (1979), 183 Mont. 499, 503, 600 P.2d 1174, 1176, we held that “[a] moot question is one which existed once but because of an event or happening, it has ceased to exist and no longer presents an actual controversy.” This Court will not decide moot questions and therefore will not address State Farm’s appeal regarding Tami’s claim for medical payment benefits arising out of the April 27,1997, accident. See Murray, 183 Mont. at 503, 600 P.2d at 1176.

The second accident occurred on October 16,1994. In that accident, Tami was injured when struck as a pedestrian by a vehicle driven by Neil Gordon. She incurred medical expenses in excess of $15,000 as a result of those injuries.

Tami had three separate medical payment policies in effect with State Farm at the time of the accident. She paid a separate premium for each of those coverages. Each policy had a limit of $5,000 for medical payment coverage. However, State Farm refused to pay more than the single limit of $5,000. The District Court held that the coverages may be “stacked” and ordered State Farm to pay the additional $10,000.

Each of Tami’s three policies in effect at the time of the October 16, 1994, accident contained the following coverage language:

We will pay medical expenses for bodily injury sustained by:

1. a. the first person named; and
b. his or her relatives.

These persons have to sustain the bodily injury:

a. while they operate or occupy a vehicle covered under the liability section; or
b. through being struck as a pedestrian bv a motor vehicle or trailer.

(Underlining added.)

Although this language provides coverage pursuant to each of the three policies for the injuries Tami sustained in the October accident, State Farm added the following language in an amendatory endorsement to each policy:

2. Policies Issued by Us to You, Your Spouse or Relatives
If two ore [sic] more policies issued by us to you, your spouse or your relatives provide vehicle medical payments coverage and apply to the same bodily injury sustained;
a. while occupying a non-owned car, a temporary substitute car; or
b. as a pedestrian the total limits of liability under all such policies shall not exceed that of the policy with the highest limit of liability. On appeal, State Farm contends that the District Court erred

when it concluded that our decision in Bennett v. State Farm Ins. Co. (1993), 261 Mont. 386, 862 P.2d 1146, allowed stacking of medical payment coverage in spite of the cited language. It contends that because medical payment coverage is not required by law, the rationale from Bennett is inapplicable. It further contends that because other jurisdictions have upheld similar or identical language with regard to medical payment coverage, the District Court erred when it chose to follow our decision in Bennett. The Ruckdaschels contend, on the other hand, that our decision in Bennett controls the outcome of this case and that the District Court was correct to follow that decision.

Our standard of review in appeals from summary judgment rulings is de novo. See Motarie v. Northern Montana Joint Refuse Disposal Dist. (1995), 274 Mont. 239, 242, 907 P.2d 154, 156; Mead v. M.S.B., Inc. (1994), 264 Mont. 465, 470, 872 P.2d 782, 785. When we review a summary judgment, we apply the same criteria as the district court based on Rule 56, M.R.Civ.P. See Bruner v. Yellowstone County (1995), 272 Mont. 261, 264, 900 P.2d 901, 903.

The essential question presented by this appeal is whether State Farm may rely on the language of its amendatory endorsement to deny coverage under each policy when it received a separate premium for each policy. In Bennett, we addressed a nearly identical question. The only difference between the facts of this case and the facts of Bennett is that Bennett involved underinsurance coverage and this case involves medical payment coverage. All other facts are identical: Bennett dealt with a pedestrian/automobile accident as does this case; Bennett involved a plaintiff who had purchased multiple insurance policies with identical coverages, just as the Ruckdaschels had done in this case; in Bennett, as in this case, the insurance company charged and was paid a separate premium for each policy; and, finally, in Bennett, as in this case, State Farm sought to prohibit stacking of an optional coverage by relying on the following “anti-stacking” language: “The total limits of liability under all such coverages shall not exceed that of the coverage with the highest limit of liability.” Bennett, 261 Mont. at 388, 862 P.2d at 1148. Based on the facts in Bennett, we held that this “anti-stacking” provision is unenforceable as a violation of Montana’s public policy.

In Bennett, we articulated Montana’s public policy as follows: “[A]n insurer may not place in an insurance policy a provision that defeats coverage for which the insurer has received valuable consideration.” Bennett, 261 Mont. at 389, 862 P.2d at 1148. Although stated most recently in Bennett, this Court has consistently upheld and relied upon this public policy for the past twenty-five years. See, e.g., Grier v. Nationwide Ins. Co. (1991), 248 Mont. 457, 812 P.2d 347; Sayers v. Safeco Ins. Co. (1981), 192 Mont. 336, 628 P.2d 659; Chaffee v. U.S. Fidelity & Guaranty Co. (1979), 181 Mont. 1, 591 P.2d 1102; Sullivan v. Doe (1972), 159 Mont. 50, 495 P.2d 193. We agree with the Ruckdaschels that Bennett is applicable here and, therefore, apply that same public policy to the facts of this case.

In Montana, an insurer is not allowed to deny coverage for which it has received valuable consideration. See Bennett, 261 Mont. at 389, 862 P.2d at 1148. It is undisputed that the Ruckdaschels paid a premium for each of the three policies in effect at the time of Tami’s October 1994 accident. It is also undisputed that each of the Ruckdaschels’ policies provided for medical payment coverage for pedestrian accidents, such as the accident in which Tami was involved. Because State Farm received valuable consideration for each policy, we conclude that State Farm cannot now refuse to pay benefits due pursuant to each policy. To hold otherwise would deny State Farm’s insured the benefit of the coverage that she purchased.

In Bennett, State Farm argued that the cases which articulate Montana’s public policy apply only to coverage which insurance companies are required by statute to offer to all their customers, and not “optional” types of coverage such as medical payment and under-insured motorist coverage. We disagreed with State Farm in Bennett because the public policy of this state favors adequate compensation for accident victims when the tort-feasor does not provide adequate indemnification. See Bennett, 261 Mont. at 389, 862 P.2d at 1148. We further held, as we do here, that the absence of a statutory requirement for that type of coverage is irrelevant because the public policy considerations which invalidate contractual anti-stacking provisions in mandatory insurance coverage also support invalidating those provisions in an optional type of insurance coverage. See Bennett, 261 Mont. at 389, 862 P.2d at 1148. Therefore, we conclude that the District Court did not err when it held that the public policy concerns which apply in statutorily required insurance coverage contexts also apply to optional types of insurance coverage such as, in this case, medical payment coverage.

For these reasons, we affirm the judgment of the District Court related to coverage for injuries sustained by Tami Ruckdaschel on October 16, 1994, and dismiss her claim for additional coverage for injuries sustained on April 27, 1994.

We remand to the District Court for further proceedings consistent with this opinion.

CHIEF JUSTICE TURNAGE, JUSTICES LEAPHART, REGNIER and HUNT concur.


text:
    STATE OF MONTANA, Plaintiff and Respondent, v. RICHARD DEAN WHEELER, Defendant and Appellant.
    No. 97-322.
    Submitted on Briefs October 9, 1997.
    Decided November 13, 1997.
    54 St.Rep. 1213. 948 P.2d 698.
    285 Mont. 400.

      For Appellant: Dan Yardley, Law Office of Yardley & Yardley, Livingston.
    For Respondent: Honorable Joseph P. Mazurek, Attorney General; John Paulson, Assistant Attorney General, Helena; Tara DePuy, County Attorney, Livingston.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

Richard Dean Wheeler was convicted of driving under the influence of alcohol (DUI), fourth offense, in the Sixth Judicial District Court, Park County, after he pled guilty to the charge against him. He appeals. We affirm.

The dispositive issue is whether Wheeler’s guilty plea forecloses his argument that the District Court erred in denying his motion to exclude his three prior DUI convictions as a basis for designating the June 1996 charge as his fourth DUI offense.

Wheeler was charged with DUI, fifth offense, in Park County, Montana, in June 1996. The affidavit in support of the information alleged that Wheeler had four previous DUI convictions and that he did not have a driver’s license in his possession. Under § 61-8-714(4), MCA (1995), a conviction of a fourth or subsequent offense DUI is a felony.

Wheeler moved to dismiss the charge, arguing that the 1995 amendments to Montana’s DUI statutes violated constitutional ex post facto provisions and that a felony penalty was disproportionate to his offense. The motion to dismiss did not challenge either the number or the validity of his prior convictions. The District Court denied the motion to dismiss.

Wheeler subsequently pled guilty to DUI, fifth offense, pursuant to a plea agreement in which the State agreed to recommend that Wheeler be placed in an intensive supervision program rather than at the state prison or county jail. After the plea agreement was filed, the court ordered a presentence investigation.

The presentence investigation report documented that Wheeler had been convicted of DUI in Colorado once in 1988 and twice in 1989. The report also stated that Wheeler admitted that he had been convicted of DUI in 1991, but that the 1991 conviction did not appear in computer records of his criminal history.

After the presentence investigation report was filed, but before his sentencing hearing, Wheeler moved to expunge his Colorado DUI convictions, arguing that those convictions would have been expunged if they had occurred in Montana. He also argued that the Driver License Compact, §§ 61-5-401 through -406, MCA, requires Montana to treat out-of-state convictions as if they occurred in this state. The State responded by arguing that Colorado was Wheeler’s home state when he received his DUI convictions, that the Driver License Compact did not apply, and that Wheeler had no reasonable expectation that his Colorado convictions would be expunged. During the sentencing hearing, the District Court orally denied Wheeler’s motion to expunge, but the court did not file a separate written order setting forth its rationale. The court sentenced Wheeler according to the plea agreement, but the judgment provided that his sentence was for fourth, rather than fifth, offense DUI.

Discussion

Does Wheeler’s guilty plea foreclose his argument that the District Court erred in denying his motion to exclude his three prior DUI convictions as a basis for designating the June 1996 charge as his fourth DUI offense?

After a criminal defendant pleads guilty and thereby admits that he is guilty of the offense charged, he may only attack the voluntary and intelligent character of his plea and may not raise independent claims relating to prior deprivation of his constitutional rights. State v. Hilton (1979), 183 Mont. 13, 18, 597 P.2d 1171, 1174. A voluntary and intelligent plea of guilty constitutes a waiver of nonjurisdictional defects and defenses. Hagan v. State (1994), 265 Mont. 31, 35, 873 P.2d 1385, 1387.

Wheeler has not challenged the voluntary and intelligent nature of his plea, nor has he sought to withdraw the plea entered under the plea agreement. He did not reserve the right to appeal any pre-plea adverse rulings of the District Court. Thus, by pleading guilty, Wheeler has waived all nonjurisdictional claims for purposes of appellate review.

In Hagen, 873 P.2d at 1388, this Court adopted the description of jurisdictional claims in the context of waiver set forth in United States v. Cortez (9th Cir. 1992), 973 F.2d 764. Cortez limited jurisdictional claims to “those cases in which the district court could determine that the government lacked the power to bring the indictment at the time of accepting the guilty plea from the face of the indictment or from the record.” Cortez, 973 P.2d at 767, citing United States v. Broce (1989), 488 U.S. 563, 109 S.Ct. 757, 102 L.Ed.2d 927.

When the District Court accepted Wheeler’s plea of guilty, the State had the power to bring the charge against him, nothing to the contrary being evident from the face of the information or from the record. The State was authorized under § 61-8-714(4), MCA (1995), to charge Wheeler with felony DUI because the information alleged that he had four previous DUI convictions. Wheeler did not contest the number or validity of his prior convictions before entering his guilty plea, and he did not argue that the prior convictions should be expunged from his record. The presentence investigation was not then before the court, and the record did not contain sufficient information for the court to determine whether the government lacked the power to bring the charge based upon Wheeler’s present contention.

Wheeler attempts to argue that his Colorado DUI convictions were relevant only at his sentencing and did not affect his plea of guilty to the Montana charge, so that his motion to expunge was timely because it was made before he was sentenced. The record proves otherwise. Wheeler was specifically charged with fifth offense DUI, a felony. In pleading guilty, he acknowledged the felony nature of the charge against him and the maximum possible penalty of imprisonment for ten years and a $10,000 fine, both of which apply only to fourth or subsequent DUI offenses. The number of previous convictions clearly came into play both in the charge filed against Wheeler and in his plea agreement. It cannot correctly be said that the Colorado convictions were relevant only at sentencing.

We conclude that Wheeler’s expungement claim is a nonjurisdictional claim which was waived by the entry of his guilty plea. Wheeler’s argument on appeal having been waived by his entry of a guilty plea, we affirm the judgment of the District Court.

JUSTICES NELSON, GRAY, TRIEWEILER and LEAPHART concur.


text:
    RONALD U. LURIE, Plaintiff and Appellant, v. ROBERT J. BLACKWELL, individually and in his capacity as Liquidating Trustee of the Popkin & Stern Liquidating Trust, Defendant and Respondent.
    No. 97-493.
    Submitted on Briefs October 9, 1997.
    Decided November 13, 1997.
    54 St.Rep. 1215. 948 P.2d 1161.
    285 Mont. 404.

      For Appellant: Ronald U. Lurie, Pro Se, Bozeman.
    For Respondent: Michael F. McMahon; Harrison, Loendorf, Poston & Duncan; Helena.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

Ronald Lurie filed a complaint in the District Court for the Eighteenth Judicial District in Gallatin County in which he alleged abuse of process against Robert J. Blackwell, individually and in his capacity as liquidating trustee of the Popkin & Stern Liquidating Trust. Blackwell removed the case to the United States District Court for the District of Montana, but that court dismissed the complaint and remanded it to the Montana District Court in Gallatin County. Blackwell filed a motion to dismiss the claim. After oral argument, the District Court granted the motion to dismiss. Lurie appeals. We affirm the order of the District Court.

The sole issue on appeal is whether the District Court erred when it granted the motion to dismiss.

FACTUAL BACKGROUND

In October 1994, a judgment was entered against Ronald Lurie in the United States Bankruptcy Court for the Eastern District of Missouri. The judgment was in favor of Robert Blackwell, the liquidating trustee for the Popkin & Stern Liquidating Trust.

On November 9, 1994, Blackwell filed the foreign judgment in the District Court for Gallatin County and, pursuant to the judgment, a writ of execution was issued against Lurie. The notice of filing foreign judgment identified Blackwell as the plaintiff and foreign judgment creditor. He was not identified in his representative capacity. Pursuant to the writ of execution, the Gallatin County Sheriff seized property from the Lurie home.

The parties to the bankruptcy proceeding eventually reached settlement agreements, which were approved by the Bankruptcy Court in October 1995. In January 1996, the Bankruptcy Court held as a matter of law that the Luries were unable to close the agreements on the scheduled dates. In April 1996, that court held that the agreements were unenforceable as releases. It also held that Lurie’s attempts to implement the agreements were tainted with bad faith.

Nonetheless, Lurie sought a release from the Bankruptcy Court judgment in the District Court in October 1996. Among other claims, Lurie alleged that the agreements operated to release the judgment, that the notice of filing foreign judgment was ineffective pursuant to § 25-9-504, MCA, because it incorrectly identified Blackwell in his individual capacity, rather than in his representative capacity, and that the judgment was unenforceable. Both the District Court and then this Court held that Blackwell did in fact comply with § 25-9-504, MCA, and that the judgment was effective. See Blackwell v. Lurie (1997), [284 Mont. 351], 943 P.2d 1318.

This appeal involves a complaint for abuse of process that Lurie filed on December 3, 1996, against Blackwell individually and in his representative capacity. The first count alleged that Blackwell’s failure to identify his representative capacity in the notice of filing foreign judgment constituted abuse of process and claimed over one million dollars in actual damages and ten million dollars in punitive damages. The second count sought to recover an additional eleven million dollars in damages for abuse of process based upon Blackwell’s alleged failure to file a sufficient bond pursuant to § 27-18-602, MCA, when the Sheriff seized the Lurie property. Although not at issue here, Lurie filed an additional abuse of process claim against Blackwell, based upon his assertion that the agreements had supposedly released the judgment and Blackwell continued to attempt to enforce it.

Blackwell removed the case to the United States District Court for the District of Montana and filed a motion to dismiss, based upon a lack of subject matter jurisdiction. The U.S. District Court dismissed and remanded to state court. It held that it lacked jurisdiction because Lurie failed to obtain leave of the Bankruptcy Court before he brought suit.

Once back in State District Court, Blackwell again filed a motion to dismiss for, among other reasons, a lack of subject matter jurisdiction. That motion was granted based on the same reasoning applied in Federal District Court.

DISCUSSION

Did the District Court err when it granted the motion to dismiss?

Whether to dismiss a claim based on lack of subject matter jurisdiction is a question of law. We review a district court’s conclusion of law to determine if it is correct. See Poteat v. St. Paul Mercury Ins. Co. (1996), 277 Mont. 117, 119, 918 P.2d 677, 679. See also Matter of Beneficial Water Use Permit Nos. 66459-76L, Ciotti; 64988-G76L, Starner (1996), 278 Mont. 50, 54, 923 P.2d 1073, 1076.

The basis for the District Court’s conclusion that it lacked subject matter jurisdiction over Lurie’s abuse of process claim is the Barton doctrine. The Barton doctrine provides that “leave of the appointing forum must be obtained by any party wishing to institute an action in a non-appointing forum against a trustee, for acts done in the trustee’s official capacity and within the trustee’s authority as an officer of the court.” In re DeLorean Motor Co. (6th Cir. 1993), 991 F.2d 1236, 1240 (applying Barton v. Barbour (1881), 104 U.S. 126, 26 L. Ed. 672). Without leave from the appointing court, no other court has jurisdiction to entertain suits against a trustee for acts done in an official capacity. See In re Kashani (B.A.P. 9th Cir. 1995), 190 B.R. 875, 884; In re Jacksen (B.A.P 9th Cir. 1989), 105 B.R. 542, 545.

Lurie contends that the Barton doctrine does not apply here because he maintains that Blackwell was not acting in an official capacity, and that even if he was acting in his representative capacity, his actions were ultra vires and unprotected. It is true that a trustee who exceeds his authority will not be protected by the Barton doctrine. See Leonard v. Vrooman (9th Cir. 1967), 383 F.2d 556, cert. denied (1968), 390 U.S. 925, 88 S. Ct. 856, 19 L. Ed. 2d 985. See also In re Markos Gurnee Partnership (Bankr. N.D. Ill. 1995), 182 B.R. 211, 222 (“ ‘ultra vires’ actions involve only the personal liability of trustees .... [and] generally implicate none ofthe bases for bankruptcy jurisdiction, and are properly determined in a nonbankruptcy forum with no input from the bankruptcy court”). However, we disagree with Lurie’s characterization of Blackwell’s conduct and conclude as a matter of law that Blackwell’s actions were within the scope of his authority.

In Markos Gurnee Partnership, the court noted that a trustee is “immune from suit for actions arising out of the operation of the estate,” and that only a breach of a fiduciary duty or “willful violations of applicable nonbankruptcy law” are sufficient bases for a court to find that a trustee has acted outside the operation of the estate and should therefore be personally liable. Markos Gurnee Partnership, 182 B.R. at 216-19. For example, it observed that “trustees have been most commonly found to have acted outside of their authority ... in seizing property which is found not to be property of the estate.” Markos Gurnee Partnership, 182 B.R. at 217 (citing Vrooman and Barton).

Lurie failed to submit any evidence that Blackwell acted in willful violation of the law or that he breached a fiduciary duty. Nor did he make any allegation that Blackwell improperly seized non-estate property. Rather, Lurie relies solely on the fact that Blackwell did not allege his representative capacity when he filed his foreign judgment. It is undisputed that the only conduct complained of was the fact that Blackwell filed the foreign judgment. In doing so, he clearly was performing his official duties as a trustee in the administration of the estate. Accordingly, we conclude that Blackwell did not act individually or outside his official capacity.

Lurie also alleges that even if Blackwell acted in his representative capacity, his actions were ultra vires and, therefore, beyond his authority as a trustee and not protected by the Barton doctrine. However, the doctrine of ultra vires applies when a trustee is without authority to perform an act in any circumstances or for any purpose. See Larry C. Iverson, Inc. v. Bouma (1981), 195 Mont. 351, 366, 639 P.2d 47, 55 (contrasting ultra vires acts with acts committed without proper agency authority); Sibert v. Community College of Flathead County (1978), 179 Mont. 188, 191, 587 P.2d 26, 28 (labeling a statutorily unauthorized act as ultra vires). Here, Blackwell’s actions were not ultra vires because they were neither unlawful nor beyond his authority.

We held in Blackwell v. Lurie (1997), [284 Mont. 351], 943 P.2d 1318, 1323, a previous attempt by Lurie to fault Blackwell for failing to identify himself in his representative capacity, that “[t]here is no requirement that the judgment creditor must acknowledge his representative capacity.” Accordingly, Blackwell did not exceed his authority as a trustee, substantively or procedurally, when he filed the notice of filing foreign judgment in his name. Therefore, we hold that the District Court was correct when it applied the Barton doctrine and dismissed Lurie’s claim for lack of subject matter jurisdiction.

Blackwell has asked this Court to decide that Lurie’s claim should be dismissed not only for lack of subject matter jurisdiction, but also on its merits based on collateral estoppel, and based on our holding in Blackwell v. Lurie (1997), [284 Mont. 351], 943 P.2d 1318. Once a court has determined that it lacks subject-matter jurisdiction, however, the only further action it can take is to dismiss the case. See In re Marriage of Miller (1993), 259 Mont. 424, 427, 856 P.2d 1378, 1380; Rule 12(h)(3), M.R.Civ.P. Thus, despite the fact that we rejected Lurie’s nearly identical allegations in that case, the Barton doctrine precludes the consideration of substantive defenses no matter how meritorious they might be.

We understand Blackwell’s frustration with Lurie’s repeated efforts to avoid satisfaction of the judgment against him; this is the fourth appeal to this Court by Lurie and his family in cases involving Blackwell in just the last seven months. However, despite our past holdings and the concomitant recognition of the dubious allegations put forth by Lurie in the present action, we lack jurisdiction to review the merits or to dismiss the claim as a matter of collateral estoppel. We affirm the District Court’s judgment.

CHIEF JUSTICE TURNAGE, JUSTICES LEAPHART, NELSON and GRAY concur.


author: JUSTICE TRIEWEILER JUSTICE GRAY,

text:
    ALLEN GEISSLER and KENNETH “VAL” GEISSLER, Plaintiffs and Appellants, v. FRANCIS “LYNN” SANEM and LINSCO/PRIVATE LEDGER CORPORATION, Defendants and Respondents.
    No. 97-098.
    Submitted on Briefs October 2, 1997.
    Decided November 18, 1997.
    54 St.Rep. 1218. 949 P.2d 234.
    285 Mont. 411.

      For Appellants: J. David Penwell, Attorney at Law, Bozeman.
    For Respondents: John Alke and Stephen M. Frankino; Hughes, Kellner, Sullivan & Alke; Helena (for Respondent Sanem); Robert M. Carlson; Corette Pohlman & Kebe; Butte (for Respondent Linsco/Private Ledger Corporation).
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

The plaintiffs, Allen and Kenneth “Val” Geissler, filed an appeal from arbitration in the District Court for the Eighteenth Judicial District in Gallatin County. The defendants, Francis “Lynn” Sanem and Linsco/Private Ledger Corp., both filed a motion to dismiss the appeal on the basis that it failed to state a claim for which relief could be granted. After the parties briefed the issue, the District Court granted the motions to dismiss. Geisslers appeal. We affirm the judgment of the District Court.

The sole issue on appeal is whether the District Court erred when it concluded that Geisslers had failed to state a claim for which relief could be granted.

FACTUAL BACKGROUND

In April and May 1990, Allen and Kenneth “Val” Geissler each invested $50,000 in a vermiculite mining operation in southwestern Montana. They did so based on the advice of Francis “Lynn” Sanem, who, prior to 1989, had served as Allen’s investment broker and counselor. Sanem was a licensed broker for Linsco/Private Ledger Corp. (“LPL”) and managed an LPL office in Bozeman. Sanem was also a board member of Mineral Products, Inc. (“MPI”), the company in which Geisslers invested. The parties dispute whether Sanem was acting as an agent of LPL when he recommended the investment.

The May 1990 royalty agreement among MPI and Geisslers gave Geisslers a royalty interest of $1.00 per ton of ore mined from the operation. It stated that if Geisslers needed to bring suit to enforce the agreement, “the venue for such suit shall be in Gallatin County, Montana.” Geisslers also signed an investment agreement with LPL in March 1992 which required the parties to submit any claims to arbitration before the National Association of Securities Dealers, Inc. (“NASD”), where ‘laws of the State of New York govern.”

The mining operation never developed, and Geisslers’ only return from their investment was $162 which they received in December 1990. In June 1994, Geisslers filed a claim with the NASD against Sanem and LPL. The claim alleged that Sanem, while authorized by LPL, had made multiple false representations to Geisslers regarding MPI’s rights to the mining claims and the risk involved in the investment, and that Sanem failed to disclose any information to Kenneth Geissler, an inexperienced investor, prior to his investment.

Sanem and LPL filed motions to dismiss with the NASD arbitration panel in October 1994 and April 1995. Sanem asserted, among other things, that Geisslers had full knowledge of the investment risk, and that the claim was barred by the statute of limitations; LPL denied liability based upon its allegation that Sanem acted beyond his authority in the transaction and that Geisslers knew the investment was not an LPL-approved transaction. The panel delayed ruling on the motions until Geisslers presented their case at hearings conducted in September 1995 and January 1996. After the hearings, Sanem and LPL reasserted their motions to dismiss, and in February 1996 the panel dismissed the claim.

On May 10, 1996, Geisslers filed an appeal from arbitration in District Court for the Eighteenth Judicial District in Gallatin County. They alleged, pursuant to § 27-5-312(1)(b) and (c), MCA, evident partiality and misconduct by the NASD panel, and that the panel had exceeded its powers. Sanem and LPL filed motions to dismiss the appeal on the basis that it failed to state a claim for which relief could be granted. The District Court cited its limited scope of review of arbitration awards, and held that Geisslers had failed to state a claim pursuant to either § 27-5-312(1)(b) or (c), MCA. Therefore, the District Court granted the motions to dismiss.

DISCUSSION

Did the District Court err when it concluded that Geisslers had failed to state a claim for which relief could be granted?

When a district court considers a motion to dismiss, it must view the allegations in the light most favorable to the plaintiff, accepting as true all well-pleaded facts. Rule 12(b)(6), M.R.Civ.P. See also Farris v. Hutchinson (1992), 254 Mont. 334, 336, 838 P.2d 374, 375. The standard of review of a district court’s conclusions of law is whether the court’s interpretation of the law is correct. Carbon County v. Union Reserve Coal Co. (1995), 271 Mont. 459, 469, 898 P.2d 680, 686. See also Kreger v. Francis (1995), 271 Mont. 444, 447, 898 P.2d 672, 674; Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603-04. We will affirm a dismissal entered pursuant to Rule 12(b)(6), M.R.Civ.P., only if we conclude that the plaintiff is not entitled to relief based on any set of facts which could be proven in support of the claim. Kelman v. Losleben (1995), 271 Mont. 156, 158, 894 P.2d 955, 957.

Two of our recent cases discussed a district court’s scope of review of an arbitration award pursuant to § 27-5-312, MCA. We stated in both Duchscher v. Vaile (1994), 269 Mont. 1, 4, 887 P.2d 181, 183, and May v. First Nat’l Pawn Brokers, Ltd. (1994), 269 Mont. 19, 22, 887 P.2d 185, 187, that judicial review of an arbitration award is strictly limited by statute. See also Stockade Enters. v. Ahl (1995), 273 Mont. 520, 522-23, 905 P.2d 156, 157.

Section 27-5-312(1), MCA, states in relevant part that “the district court shall vacate an award if... there was evident partiality by an arbitrator appointed as a neutral or corruption in any of the arbitrators or misconduct prejudicing the rights of any party; [or] ... the arbitrators exceeded their powers.” We further limited review based on partiality as follows in May. “The partiality which will suffice to vacate an arbitration award must be certain, definite, and capable of demonstration; alleged partiality which is remote, uncertain or speculative is insufficient.” May, 269 Mont. at 25, 887 P.2d at 189. We have yet to address in Montana the nature of misconduct that would justify setting aside an award or what conduct by an arbitrator would permit a reviewing court to find that the arbitrator had exceeded its powers. Nonetheless, the role of a reviewing court when asked to vacate an arbitration award is clearly limited. As we stated in Duchscher, 269 Mont. at 5, 887 P.2d at 184, “[t]he Montana Uniform Arbitration Act clearly does not authorize judicial review of arbitration awards on the merits of the controversy.”

The majority in May considered but declined to allow review of arbitration awards for a manifest disregard of the law standard. Justice Trieweiler, however, in special concurrences to both Duchscher and May, asserted that review of arbitration awards for manifest disregard of the law is consistent with both the statutory bases for reviewing arbitration awards (i.e., that it would demonstrate both partiality and misconduct), and the case law from other jurisdictions and, therefore, that it should be a part of the arbitration award review. He asserted that, as a matter of public policy and based upon a court’s independent responsibility, a court cannot have such limited authority in its review that it is forced to ignore an arbitrator’s manifest disregard of Montana law.

Geisslers have asked this Court to apply a manifest disregard of the law standard consistent with the majority of other jurisdictions. See, e.g., Wilko v. Swan (1953), 346 U.S. 427, 436-37, 74 S. Ct. 182, 187-88, 98 L. Ed. 168, 176; Lee v. Chica (8th Cir. 1993), 983 F.2d 883, 885, cert. denied (1993), 510 U.S. 906-07, 114 S. Ct. 287, 126 L. Ed. 2d 237; Merrill Lynch, Pierce, Fencer & Smith, Inc. v. Bobker (2d Cir. 1986), 808 F.2d 930, 933-34; San Martine Compania de Navegacion, S.A. v. Saguenay Terminals, Ltd. (9th Cir. 1961), 293 F.2d 796, 801; Connecticut Ins. Guar. Assoc. v. Onolfo (Conn. Super. Ct. 1997), 1997 WL 325380 at 2; Wier v. Manerchia (Del. 1997), 700 A.2d 736; Amerispec Franchise v. Cross (Ga. Ct. App. 1994), 452 S.E.2d 188, 189; Hecla Mining Co. v. Bunker Hill Co. (Idaho 1980), 617 P.2d 861, 869-70; Welch v. A.G. Edwards & Sons, Inc. (La. Ct. App. 1996), 677 So. 2d 520, 524; Graber v. Comstock Bank (Nev. 1995), 905 P.2d 1112, 1115-16; Perini Corp. v. Greate Bay Hotel & Casino, Inc. (N. J. 1992), 610 A.2d 364, 372-73; Altieri v. Liberty Mut. Ins. Co. (R.I. 1997), 697 A.2d 1104, 1105; Buzas Baseball, Inc. v. Salt Lake Trappers, Inc. (Utah 1996), 925 P.2d 941, 951. But see Arnold v. Morgan Keenan & Co., Inc. (Tenn. 1996), 914 S.W.2d 445, 450-51.

We conclude that to do so is the better reasoned approach and more consistent with our responsibility to uphold the laws of this State. We also conclude that when an arbitrator is aware of a clearly governing principle of Montana law, and blatantly refuses to follow it, the statutory conditions of § 27-5-312(1)(b), MCA, have in fact been met. To the extent that our conclusion here conflicts with our prior decisions, we modify the holding in those cases and hold that this and future arbitration awards may be reviewed for a manifest disregard of the law pursuant to § 27-5-312(1)(b), MCA.

Geisslers first allege in their appeal from arbitration that the NASD arbitration panel was subject to evident partiality and misconduct because of the presence of an NASD representative at the final hearing in January 1996. In support of that claim, they allege only that before the hearing they wrote a letter of complaint to the SEC regarding the delay in their proceedings. Even if, for purposes of considering the motions to dismiss, the District Court accepted the very speculative nexus between Geisslers’ letter to the SEC and the presence of the NASD representative at the hearing, Geisslers still failed to demonstrate any facts that make certain or definite their allegations of partiality by the panel based simply on the representative’s presence. Likewise, their claim is insufficient to constitute actual overt misconduct. Accordingly, we conclude that the District Court did not err when it held that Geisslers’ allegations regarding the presence of the NASD representative did not state a claim for which relief could be granted pursuant to § 27-5-312(1)(b), MCA.

Geisslers’ allegations that the panel exceeded its powers are much broader and are based on the panel’s failure to provide findings or grounds for its decision, and on the assertion that all of Sanem’s and LPL’s defenses were either moot or unproven.

We note that none of the parties have asserted that any claim was improperly limited to arbitration and, therefore, they are bound by the rules pertaining to arbitration. The parties are generally free to contract regarding the procedural rules for arbitration. See Volt Info. Sciences, Inc. v. Board of Trustees of the Leland Stanford Jr. Univ. (1989), 489 U.S. 468, 476, 109 S. Ct. 1248, 1254, 103 L. Ed. 2d 488, 498 (“[t]he federal policy is simply to ensure the enforceability, according to their terms, of private agreements to arbitrate”) (applying the Federal Arbitration Act). Here, the agreement which the parties apparently rely upon to submit their claim to arbitration states that “[t]he arbitrators’ award is not required to include factual findings or legal reasoning and any party’s right to appeal or to seek modification of rulings is strictly limited.” Accordingly, we conclude that contrary to Geisslers’ assertion the panel acted entirely within its power when it made an award without including specific findings of fact or conclusions of law.

Next, Geisslers contend that the panel exceeded its power when it dismissed their claim in response to Sanem’s and LPL’s allegedly unproven and moot defenses. Despite their allegations, however, they failed to set forth facts in their complaint which would authorize the District Court to vacate the arbitration panel’s decision. Rather, they merely reassert to the District Court the original arguments that they made to the panel; they essentially asked the District Court, and now this Court, to “review the merits of the controversy and the extent to which the evidence supports the [panel’s] decision,” a task which is clearly not authorized pursuant to the limited procedural grounds for vacating an award in § 27-5-312, MCA. May, 269 Mont. at 26-27, 887 P.2d at 190. Instead of presenting evidence to the District Court that the panel exceeded its power, Geisslers’ appeal alleged only that the panel had arrived at the wrong result. Accordingly, we conclude that the District Court did not err when it dismissed Geisslers’ claims that the arbitration panel exceeded its powers.

Even when we consider whether the panel acted in manifest disregard of the law, Geisslers’ appeal from arbitration fails to state a claim upon which relief can be granted. To conclude that an arbitrator ruled in manifest disregard of the law requires more than simply a misapplication of the law by the arbitrator. May, 269 Mont. at 30, 887 P.2d at 192 (Trieweiler, J., concurring). The Second Circuit held in Merrill Lynch, Pierce, Fencer & Smith v. Bobker (2d. Cir. 1986), 808 F.2d 930, 933-34, that the test for manifest disregard of the law required that the “arbitrator appreciates the existence of a clearly governing legal principle but decides to ignore or pay no attention to it.”

Among Geisslers’ allegations, only their assertion that the panel might have dismissed the claim based on Sanem’s statute of limitations defense arguably relates to manifest disregard of the law. However, Geisslers do not state that the panel, in fact, dismissed their claim based upon the statute of limitations defense, or whether instead it dismissed the claim on one of several other bases for the defendants’ motions. Furthermore, it is not clear that the panel concluded that the New York statute of limitations relied on by the plaintiffs was actually applicable to this Montana transaction. Therefore, the District Court could not conclude, based on the allegations in Geisslers’ appeal, that the panel ignored clearly applicable law.

We conclude that the District Court correctly granted the defendants’ motions to dismiss, and we affirm the judgment of the District Court.

JUSTICES LEAPHART, REGNIER and HUNT concur.

JUSTICE GRAY,

specially concurring.

I concur in the Court’s opinion and write separately to clarify why it is appropriate to adopt the “manifest disregard” approach here, having declined to do so in May.

In May, which I authored, the appellant requested that we adopt the “manifest disregard of the law” approach to judicial review of arbitration awards. The bases asserted for adopting that approach were that we had already endorsed it in McIntosh v. Hartford Fire Ins. Co. (1938), 106 Mont. 434, 78 P.2d 82, and that certain federal court cases addressed the approach. Noting that McIntosh predated the legislature’s enactment of the Montana Uniform Arbitration Act (MUAA) by nearly fifty years, we concluded that that case could “hardly be said to have interpreted the statutes which now govern judicial review of arbitrations.” With regard to the cited federal cases, we observed that the appellant merely extracted and reiterated general statements from those cases and made “no effort to establish how or why the case before us fits within the factual context of the cases containing the [general] statements” relied on by the appellant. May, 887 P.2d at 190. Most importantly, we noted in May that the MUAA was a uniform act and that the appellant presented

no authority from sister states applying the manifest disregard standard under their respective Uniform Arbitration Acts. It is clear that the legislature intended us to be guided by such sister state decisions in interpreting the MUAA, rather than simply following blindly every federal approach to arbitration.

May, 887 P.2d at 191. Indeed, the very purpose of uniform acts is to produce uniformity in the law in those states adopting them.

In the present case, the Geisslers corrected the omission made by the appellant in May. They presented persuasive sister state authority applying the manifest disregard standard during judicial review of arbitration awards under the same statutes — that is, the Uniform Act statutes — that govern such judicial review in Montana. As a result, we properly adopt that interpretation here and, in that regard, conclude that the Geisslers failed to state a claim under the manifest disregard of the law standard on which relief could be granted.


author: JUSTICE LEAPHART

text:
    GLACIER PARK COMPANY, a Delaware corporation, Plaintiff and Respondent, v. MOUNTAIN, INC., a Tennessee corporation, Defendant and Appellant.
    No. 97-356.
    Submitted on Briefs October 9, 1997.
    Decided November 18, 1997.
    54 St.Rep. 1222. 949 P.2d 229.
    285 Mont. 420.

      For Appellant: George T. Radovich, Attorney at Law, Billings.
    For Respondent: Jeanne Matthews Bender; Holland & Hart, Billings.
   JUSTICE LEAPHART

delivered the Opinion of the Court.

Mountain, Inc., (Mountain) appeals from the decision of the Fourteenth Judicial District Court, Musselshell County, granting Glacier Park Company’s (Glacier’s) motion for summary judgment. At the District Court, Mountain asserted that Glacier’s motion should not be granted because genuine issues of material fact had not been resolved. Additionally, Mountain sought equitable relief, claiming it paid an exorbitant amount of money toward a coal lease with Glacier and made what it believes were diligent efforts to comply with the provisions of the coal lease. The District Court denied equitable relief finding that Mountain had not complied with § 28-1-104, MCA, which allows relief from forfeiture. The court also granted Glacier’s motion for summary judgment concluding that there were no genuine issues of material fact and that Glacier was entitled to judgment as a matter of law. We affirm.

Background

Glacier owns a coal estate and other real property in the Bull Mountains near Roundup, Montana. In 1995, Mountain contracted with Glacier to assume the operation of a coal mine located on that property. Mountain executed the relevant documents, including a coal lease and a promissory note. During the course of the transactions, Mountain was represented by counsel and by its president, John Paul Baugues, Jr., an experienced coal mine operator.

The coal lease provided for advance minimum royalty payments. The first payment of $600,000 was paid by Mountain at the time of contracting and covered its royalty obligations through July 1, 1996. The coal lease also provided that, beginning July 1, 1996, Mountain would pay additional royalty payments of $150,000 on the first day of each calendar quarter. The amount of the royalty payments was to gradually increase over the course of the ten-year lease. In addition, the promissory note required Mountain to make five interest payments and pay the entire $273,000 of principal with accrued interest on February 17, 1996.

Shortly after Mountain leased the interest in the coal estate, but before Mountain began operations, a fire destroyed the coal treatment plant. The record is unclear about who received the insurance proceeds, but Mountain asserts that it did not receive any money as a result of the fire. Mountain contends that it was forced to rebuild the plant at its own expense before it could begin operations. The plant was completed sometime during the winter of 1995-96; however, Mountain claims it was still unable to operate due to extraordinary weather delays resulting from excessive snowfall. As a result of these unexpected delays, Mountain was unable to meet its February 17,1996 payment obligation under the note.

Pursuant to Section 24.7 of the coal lease, Glacier served Mountain with a Notice of Default on February 22,1996. That section provides:

Notwithstanding anything contained in this Lease to the contrary, if Lessee shall fail to pay, when due, any payment of principal or interest due under that certain Promissory Note dated August 17, 1995, from Lessee, as Maker, to Lessor, as Lender, and such failure shall continue for a period of ten (10) days after Lessor shall have given written notice of such default to Lessee, then this Lease and the leasehold estate created hereby shall automatically terminate and Lessor shall hold and possess the Premises free and clear of all claims of Lessee therein. [Emphasis added.]

Mountain failed to cure the default within the time allowed. After the ten-day grace period prescribed by Section 24.7 had expired, Mountain attempted to make a partial payment on the note. The check tendered by Mountain was written on a closed account; the bank refused to honor the check.

Between Mountain’s February default on the note and July of 1996 (when the first royalty payment was due), Mountain attempted to negotiate alternative payment plans with Glacier. Glacier was accommodating, but Mountain still could not meet its payment obligations. On July 23, 1996, Glacier served Mountain with a three-day Notice to Quit maintaining that the lease was terminated pursuant to Section 24.7 of the coal lease and asserting its right to possession of the property. Mountain disregarded the notice and continued its mining operations. Glacier then filed an action for unlawful detainer in District Court seeking to regain possession of the coal estate and damages for Mountain’s wrongful occupation of the property. On January 10, 1997, Mountain made one final attempt to satisfy its obligations under the coal lease by tendering a check for $733,000 which it claimed was its “best estimate” of the amount due. Glacier rejected the check, again asserting that the coal lease had terminated under Section 24.7. Glacier deposited the check with the District Court pending the outcome of the case. The District Court entered summary judgment in favor of Glacier, and ordered Mountain to immediately vacate the premises and pay Glacier treble damages of $1,200,000 pursuant to § 70-27-205(2), MCA. Mountain appealed the decision of the District Court.

Issues Presented

1. Did the District Court err in granting summary judgment?

2. Did the District Court err in denying Mountain’s request for equitable relief under § 28-1-104, MCA?

Discussion

I.

We review a district court’s grant of summary judgment de novo and apply the same criteria as the district court pursuant to Rule 56, M.R.Civ.P. Singleton v. L.P. Anderson Supply Co., Inc. (1997), [284 Mont. 40], 943 P.2d 968, 970. Rule 56, M.R.Civ.P., allows the court to grant summary judgment when it finds there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. The initial burden of showing the absence of any genuine issue of material fact falls on the moving party. Singleton, 943 P.2d at 970. If the moving party satisfies its burden, the burden shifts to the party opposing the motion to establish the existence of a genuine issue of material fact. Singleton, 943 P.2d at 970. Glacier, as the moving party, had the initial burden of showing that no genuine issue of material fact existed.

Glacier asserts that the uncontested facts show that Mountain was guilty of unlawful detainer as a matter of law. The law providing landowners relief from unlawful detainer is codified in § 70-27-108(3), MCA, as follows:

A tenant of real property or mining claim, for a term less than life, is guilty of unlawful detainer:
(3) when he continues in possession,... after a neglect or failure to perform other conditions or covenants of the lease or agreement under which the property is held ... than the one for the payment of rent, and 3 days’ notice in writing, requiring the performance of such conditions or covenants or the possession of the property, shall have been served upon him .... Within 3 days after the serving of the notice, the tenant... may perform the conditions or covenants of the lease ... and thereby save the lease from forfeiture. If the covenants and conditions of the lease violated by the lessee cannot afterward be performed, then no notice, as last prescribed herein need be given to said lessee ....

In this appeal, Mountain asserts that “numerous ... factual questions [exist] ... to preclude summary judgment.” What Mountain fails to assert, however, are genuine issues of material fact. Mountain concedes that under the coal lease, it was a tenant of real property for a term of ten years. Furthermore, Mountain does not dispute that it failed to make payment under the note as required. Mountain does, however, contend that it received insufficient notice under the unlawful detainer statute. In support of this contention, Mountain asserts that the statute requires that the notice provide the tenant with the option of either paying the rent or vacating the premises within three days. Mountain maintains that the notice from Glacier demanded only that Mountain vacate the premises and did not give Mountain the option of paying rent. Mountain claims that the failure of the notice to contain language giving them an option to pay rent should have prevented summary judgment.

Section 70-27-108, MCA, states that the notice of unlawful detainer must require performance of the conditions or covenants or possession of the property. However, it goes on to provide that “if the covenants or conditions of the lease violated by lessee cannot be performed, then no notice as last prescribed herein need be given to said lessee.” Section 70-27-108(3), MCA. Glacier contends that Mountain’s default (failure to make payment after notice of default and expiration of the grace period) resulted in automatic termination of the lease under Section 24.7. As of March 4, 1996 (ten days after receiving the February 22,1996 notice of default), when the contractual grace period expired, the lease, by its own terms, automatically terminated and Mountain no longer had the ability to perform. The unlawful detainer statute, § 70-27-108, MCA, which Glacier invoked some four months later, did not require that Glacier grant Mountain further time to cure the default. The statutory three-day period for performance of conditions only applies to situations where the defaulting party is still in a position to perform; it does not pertain to situations where the defaulting party has already been given notice of default and has failed to cure the default within the specified grace period. Under such circumstances, performance is no longer possible and § 70-27-108(3) merely requires that the defaulting party be given notice of demand to vacate the property. Glacier’s notice to vacate complied with the statute and was consistent with its position that the lease had terminated.

Mountain also asserts that the notice was deficient because it did not contain a reference to the amount due. Mountain makes that assertion based on the language of § 70-27-108(2), MCA. However, as we explained in Rasmussen v. Lee (1996), 276 Mont. 84, 91-92, 916 P.2d 98, 103:

Section 70-27-108, MCA, provides three situations where a tenant can be found liable for unlawful detainer. Subsection (1) provides for continued possession “after the expiration of the term for which it is let to him without permission of the landlord.” Subsection (2) provides for continued possession “after default in the payment of rent.” Subsection (3) provides for continued possession “after a neglect or failure to perform other conditions or covenants of the lease.”

The amount owing in this case was not rent. Rather, it was due to a failure to make payments on the promissory note. Therefore, subsection (2) does not apply to such a payment. Instead, subsection (3) pertaining to failure to perform conditions or covenants other than rental payments applies. That section does not require the notice to reference an amount due. Moreover, as stated above, the lease had terminated as of the time Mountain received notice to vacate; therefore, Mountain could no longer cure the default by paying the note. At that point in time, the amount due was irrelevant. Therefore, no genuine issue of material fact exists regarding the sufficiency of the notice.

Finally, Mountain argues that when Glacier rejected its check tendered January 10, 1997 for $733,000 it should have given notice of why it was rejecting the check and how Mountain could cure the defect. Since Glacier contended that the lease had terminated, it did not give notice of how to cure the defect. The check was defective simply because it was too late. Mountain’s belated attempt to cure its default was nearly one year after the payment was due and about one month before the summary judgment hearing on its unlawful detainer. At that juncture, Glacier had opted to cease dealing with Mountain, it simply wanted its property back.

Based on the statutory language and the uncontested facts, we conclude that Glacier satisfied its burden of showing no genuine issue of material fact and that Glacier was entitled to judgment as a matter of law.

II.

Mountain requests that this Court grant equitable relief from the forfeiture. Our standard of review in equity cases is set forth in § 3-2-204(5), MCA. Under that provision, we have “ ‘a duty to determine all of the issues of [the] case and to do complete justice.’ ” Blakely v. Kelstrup (1994), 267 Mont. 274, 276, 883 P.2d 814, 816 (quoting Peterson v. Montana Bank of Bozeman (1984), 212 Mont. 37, 49, 687 P.2d 673, 679). Section 24.7 of the coal lease provided that if after receiving notice of default Mountain failed to cure the default within the ten-day grace period, the lease would “automatically terminate.” Nonetheless, in Blakely, we explained that “[a] contract which requires forfeiture in case of default does not divest a court of equity of its power to relieve a party from the consequences of his default.” Blakely, 883 P.2d at 817. Accordingly, even though the parties agreed that forfeiture would result from Mountain’s default, this Court may, under appropriate circumstances, still grant equitable relief.

The party requesting equitable relief must set forth facts which appeal to the conscience of a court of equity. Parrott v. Heller (1976), 171 Mont. 212, 214, 557 P.2d 819, 820. In addition, we have repeatedly held that when requesting equitable relief under § 28-1-104, MCA, the party requesting such relief must attempt to make payment of the entire contract balance within a reasonable time after service of a notice of default. Only by making such full compensation can a party be relieved from the forfeiture. Blakely, 883 P.2d at 817 (“[b]efore a party will be granted relief from forfeiture under § 28-1-104, MCA, the party must offer to make full compensation under the contract”); Club Buffet Bar, Inc. v. Lilienthal (1994), 268 Mont. 164, 885 P.2d 526 (party requesting relief from forfeiture under § 28-1-104 must tender full compensation as a condition precedent to relief); Daugherty Cattle Co. v. General Const. Company (1992), 254 Mont. 479, 839 P.2d 562 (antiforfeiture statute did not prohibit seller from declaring forfeiture when purchaser tendered less than full compensation as contemplated by § 28-1-104); Schweigert v. Fowler (1990), 240 Mont. 424, 784 P.2d 405 (§ 28-1-104, MCA, is not helpful to Schweigerts because they did not offer to pay full consideration for the property).

Mountain insists that it acted in good faith throughout the time that it held Glacier’s property but contends that, because of “acts of God” (fire and excessive snowfall), it experienced severe financial distress and could not meet its obligations under the note. Mountain maintains that it made its best efforts to perform its obligations under the contract and did not act in a “grossly negligent, willful or fraudulent” manner that would prevent equitable relief from forfeiture under § 28-1-104, MCA.

Glacier, on the other hand, asserts that Mountain’s conduct was grossly negligent, willful and verged on fraudulent. Glacier contends, first, that Mountain knowingly tendered a check drawn on a closed account. In addition, Mountain, despite accommodations and notices from Glacier, continued to mine and sell coal while in default for over a year. Glacier further asserts that by failing to meet its financial obligations not only to Glacier, but to other creditors, Mountain placed the coal site permit in jeopardy. Finally, Glacier maintains that Mountain’s “eleventh hour” attempt to cure the default was not in accord with § 28-1-104, MCA, because Mountain did not tender “full compensation” under the contract. As a result of the foregoing, Glacier requests that this Court deny Mountain’s request for equitable relief.

This Court has .the equitable power to relieve a party from the harsh effect of a forfeiture. However, the circumstances warranting such relief must not only meet the statutory requirements of tendering full compensation, and not acting in a grossly negligent, willful or fraudulent manner, but also, the party must assert facts which appeal to the conscience of the court of equity.

Mountain’s request for equitable relief is deficient for two reasons. First, Mountain did not, at any time, attempt to tender full compensation under the coal lease. Mountain submitted two checks. The first check was written for a sum substantially less than the amount due and was written on a closed account. Mountain tendered the second check claiming it satisfied its “best estimate” of the amount due; however, the $733,000 check did not approach the full amount necessary to satisfy Mountain’s obligations under the terms of the ten-year lease as § 28-1-104, MCA, contemplates. In addition, the second check, tendered nearly one year after it was due, was not presented within a reasonable time after the default.

Second, Mountain has failed to appeal to the conscience of this Court. We have held that mere financial inability is not sufficient to appeal to the conscience of a court of equity. Kovacich v. Metals Bank & Trust Company (1961), 139 Mont. 449, 451, 365 P.2d 639, 640. Moreover, this Court will not “set aside the deliberate contracts of parties because time has demonstrated that the obligation of one of the parties was onerous or unprofitable.” Kovacich, 365 P.2d at 640.

Mountain asserts that the Court should grant equitable relief as it did in Parrott v. Heller (1976), 171 Mont. 212, 557 P.2d 819. Indeed, in Parrott, we concluded that the Hellers were entitled to equitable relief under § 17-102, RCM (1947) (now § 28-1-104, MCA) despite the fact that the Hellers’ forfeiture was caused solely by their inability to pay. The Hellers experienced financial hardship due to crop failures, much like Mountain experienced financial hardship due to fire and excessive snowfall. However, the Hellers’ situation differed in that they had made scheduled payments for four consecutive years before defaulting. The Hellers had accumulated substantial equity in the land. The Hellers, throughout the period of default, made several attempts to secure the necessary funds. In addition, the Hellers, unlike Mountain, paid the entire contract balance plus interest as soon as they acquired the funds. The facts of Parrott are distinguishable, and thus it does not control the resolution of this case.

Mountain’s request for equitable relief is deficient because it fails to meet the statutory and common law criteria. We conclude that the District Court did not err in denying equitable relief. Affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES NELSON, TRIEWEILER and GRAY concur.