text:
    In the MATTER OF THE CLASSIFICATION APPEAL OF WARREN C. MEAD, et al. State Personnel Division of the Department of Administration, State of Montana, Petitioner and Respondent, v. BOARD OF PERSONNEL APPEALS, DIVISION OF THE DEPARTMENT OF LABOR AND INDUSTRY OF THE STATE OF MONTANA; and Warren C. Mead, Sergeant, Jack D. Westrope, Lieutenant; and Harvey E. Olson, Captain, as Representatives of classes of similarly situated individuals in the Montana Highway Patrol, Respondents and Appellants.
    No. 87-412.
    Submitted Oct. 18, 1988.
    Decided Dec. 22, 1988.
    766 P.2d 1300.

      Elizabeth L. Griffing argued, Helena, for Dept, of Labor and Industry.
    Barry L. Hjort argued, Helena, for Mead, et al.
    Kathleen F. Holden argued, Helena, for Dept, of Administration.
   MR. JUSTICE GULBRANDSON

delivered the Opinion of the Court.

This is an appeal from a reversal of a final order of the Board of Personnel Appeals and remand by the First Judicial District, Lewis and Clark County. We affirm the District Court’s reversal and remand to the Board of Personnel Appeals for further findings.

This case arose as an appeal of the classification process utilized by the Personnel Division (Division) of the Department of Administration in reallocating certain Montana Highway Patrol Officers’ positions to classes under the State pay classification system. Prior to 1979, the classification series for Highway Patrol Officers consisted of the following positions and assigned grades:

Officer I Grade 12
Officer II Grade 13
Sergeant Grade 14
Lieutenant Grade 15
Captain Grade 16

In 1979, Officers within the Officer I class appealed to have their grade raised from grade 12 to grade 13, pursuant to § 2-18-203, MCA. Such an appeal was permissible under the statute as it existed at that time. Officers II were automatically upgraded one grade when the Officers I were successful in their appeal, pursuant to a previous stipulation between the Personnel Division, the Highway Patrol and the union representing the Officer II class. No other officers in the classification series were affected by that appeal. The Highway Patrol Officer classification series thus consisted of the following classes and grades following this successful reclassification of Officers I and II:

Officer I Grade 13
Officer II Grade 14
Sergeant Grade 14
Lieutenant Grade 15
Captain Grade 16

Consequently, on June 27, 1983, three Montana Highway Patrol Officers (Officers), representing the ranks of Sergeant, Lieutenant and Captain, initiated this group grievance action before the Board of Personnel Appeals (Board) to achieve a reclassification of their positions and assigned grades pursuant to § 2-18-1011, MCA, and 24.26.513, ARM. The Officers sought to compel the Personnel Division to adopt new position descriptions, develop new class specifications and reclassify their respective positions.

The Highway Patrol submitted new position descriptions for the affected officers in the initial stages of this group grievance action. The Personnel Division audited those position descriptions and found them to be accurate. The Personnel Division then classified the positions using a “five factor” formula to assign the positions to proper classes. Neither party objects to the position descriptions or the class specifications as developed.

The same “five factors” were then applied to assign a grade to the class. The application of the “five factors” resulted in an assignment of the same grades as previously assigned to Sergeant, Lieutenant and Captain. The Officers appealed this reassignment to the Board of Personnel Appeals.

A subsequent hearing was conducted before a Board Hearings Examiner. After hearing testimony from the Officers and the Division and reading briefs submitted by both parties, the Examiner issued proposed findings of fact, a conclusion of law and a recommended order on May 17, 1985. The Hearing Examiner, after finding that the Officers “were aggrieved,” recommended that the Personnel Division reclassify the upper three classes of Officers by raising their respective grade levels one pay grade. The Personnel Division filed a timely exception to these findings and oral argument took place before the full Board on October 11, 1985.

On January 7, 1986, the Board issued its order affirming the Hearing Examiner’s findings of fact and conclusion of law. However, the Board amended the recommended order to require, within thirty days, “a recommendation for reclassifying those positions in accordance with Section 2-18-202(c), [sic] MCA, taking into consideration the various levels and grade heirarchies contained in the classification series . . .” Section 2-18-202(l)(c), MCA, requires that:

“(1) In providing for the classification plan, the department shall group all positions in the state service into defined classes based on similarity of duties performed, responsibilities assumed, and complexity of work so that:

“(c) similar pay may be provided under the same conditions with equity to each position within the class.”

The Division submitted its recommendation for classification on February 21, 1986. The Division found that the only difference between Officers I and II was that Officers II were required to have served six years, therefore the Division found only four distinguishable classes in the series really existed. It recommended that Officer I and II be lumped into the same class at grade 13, with the retention of the original grades for the remaining classes of Officers. After oral argument before the full Board on May 23, 1986, the Board issued its final order rejecting the Division’s recommendations for classification and adopting the Hearing Examiner’s findings of fact, conclusion of law and recommended order.

On June 27, 1986, the Division filed for judicial review before the District Court. The District Court heard the matter on February 6, 1987, took the matter under advisement, and issued its opinion and order on June 5, 1987. The District Court found: (1) That the Board’s final order did not comply with § 2-4-623, MCA; (2) that both the appeal and the final order of the Board violated § 2-18-203(2), MCA, which prohibits appeal of the grade assigned to a class; and (3) that the Board abused its discretion by not addressing each of the five factors in relation to the classification decision. Consequently, the District Court reversed the final order of the Board and remanded the case for further proceedings.

The Board appealed from the District Court’s opinion and order on August 19,1987. The Officers filed a similar appeal on August 20, 1987.

Issues

1. Did the District Court exceed its scope of review?

2. Did the District Court err in its conclusion that the Board of Personnel Appeals failed to comply with § 2-4-623, MCA?

3. Did the District Court err in holding that the Board of Personnel Appeals lacked the authority to order resolution of the grievance filed in this matter?

I.

Did the District Court exceed its scope of review?

This Court has recently held upon review of an agency decision that:

“[F]indings of fact will be upheld unless they are ‘clearly erroneous,’ . . . conclusions of law will be upheld unless they are an ‘abuse of discretion’ [and] [a]n abuse of discretion results if an agency’s interpretation of a statute is clearly contrary to the legislative intent behind that statute. (Citations omitted.)”

Swan Corp. v. Montana Dept. of Revenue (Mont. 1988), [232 Mont. 210,] 755 P.2d 1388, 1390, 45 St.Rep. 998, 1000. The Court in Swan noted that review of the district court’s holding in such matters will be governed by the same standards. This Court has further stated that”

“[A] finding is ‘clearly erroneous’ when, although there is evidence to support it, a review of the record leaves the court with the definite and firm conviction that a mistake has been committed. (Citations omitted.)”

Wage Appeal of Montana State Highway Patrol Officers v. Board of Personnel Appeals (1984), 208 Mont. 33, 40, 676 P.2d 194, 198. Having examined the record, this Court finds the District Court is correct in its conviction that a mistake has been committed.

The Division’s application of the five factors required by the rules and regulations governing the Division initially resulted in retention of the same classes and reassignment of the existing grades. The Board, however, ignored the Division’s grade assignment, instead upholding the “practice” of maintaining one grade difference between supervisors and those they supervise. This ruling of the Board ignores the rules and regulations governing the classification process.

Appellants cite this Court to Wilson v. Nord (1979), 23 Wash.App. 366, 597 P.2d 914. In Wilson, an employee was denied an opportunity to compete for a position which had been reclassified and upgraded, although existing administrative regulations required the state to allow eligible persons to compete against incumbents for those upgraded positions. The trial court upheld this denial of the right to compete although the incumbent had served only twenty-six months in the position, contrary to the general rule of thumb of only allowing incumbents with three years tenure in a reallocated position to automatically retain their positions. Upon appeal from the trial court’s decision, the Washington Court of Appeals stated that “[f]ailure to follow the rule of thumb is not an abuse of discretion.” Wilson, 597 P.2d at 918.

The instant case also involves a failure to follow a “practice” or “rule of thumb.” The Division’s original classification failed to follow the practice of maintaining one grade level between each class of officer. We hold that, as in the Wilson case, the failure to follow that practice was not an abuse of discretion on the part of the Division, because it properly applied the “five factors” provided in its rules and regulations and provided legitimate reasons for deviating from the “practice.” We further note that the Board’s findings of fact, conclusion of law and recommended order did not examine the Division’s use of the “five factors.” Yet, the purpose of the Board is to review the actions of the Division and to ensure that the Division properly adheres to its rules, regulations and practices. Such a review necessitates an examination of the classification process utilized by the Division. We hold that the District Court did not exceed its scope of review and correctly remanded the case to the Board given the lack of findings addressing the “five factors.”

II.

Did the District Court err in its conclusion that the Board of Personnel Appeals failed to comply with § 2-4-623, MCA?

The District Court remanded the action because of the Board’s failure to issue findings of fact addressing the Personnel Division’s recommendation. Section 2-4-623(4), MCA, requires a ruling upon each proposed finding submitted by a party. The court held that the Division’s recommendation amounted to proposed findings of fact and thus the Board erred in issuing findings of fact and conclusions of law addressing the issues raised in the parties’ briefs, but not the Division’s recommendation for classification. As stated by the District Court:

“[0]nce the recommendation for classification was submitted, the hearing examiner’s original findings of fact were no longer relevant because they were based on the original briefs. The board became obliged to issue findings of fact which addressed the recommendation. Therefore, its summary adoption of the hearing examiner’s original findings, conclusions and proposed order is insufficient. Furthermore, to simply ignore the reclassification recommendation of the division, particularly when it was invited, is arbitrary and capricious in the extreme.”

Appellants contend the court erred in this determination as an express ruling on each finding is unnecessary, “[a]s long as the agency’s decision and order on such party’s proposed findings are clear.” Montana Consumer Counsel v. Public Service Commission (1975), 168 Mont. 180, 192-193, 541 P.2d 770, 777. They allege that, as in Consumer Counsel, the Board clearly rejected the Division’s proposed findings and the Board therefore did not need to respond to the Division’s recommendation with specific findings.

We hold, however, that the District Court correctly remanded the case for further findings expressly addressing the Division’s recommendation. The ruling in Consumer Counsel is inapposite to this case. In this case, unlike in Consumer Counsel, the Board specifically requested the Division to develop this recommendation, and therefore the Division is entitled to express findings of fact and conclusions of law.

III.

Did the District Court err in holding the Board of Personnel Appeals lacked the authority to order resolution of the grievance filed in this matter?

This issue will be broken into two parts: (1) Whether § 2-18-203(2), MCA, gives the Board the authority to order the change of the Officers’ grades; and (2) whether or not § 2-18-203(2), MCA, as amended in 1981, is unconstitutional.

Section 2-18-203(2), MCA, states:

“(2) Employees and employee organizations will be given the opportunity to appeal the allocation or reallocation of a position to a class. The grade assigned to a class is not an appealable subject under 2-18-1011 through 2-18-1013. (Emphasis added.)”

Once an employee appeals a classification of his or her position, the Board may then rule upon the appeal. As stated in § 2-18-1012, MCA:

“If upon the preponderance of the evidence taken at the hearing the board is of the opinion that the employee is aggrieved, it may issue an order to the appropriate agency or agencies of state government requiring such action as will resolve the employee’s grievance

Appellants contend that § 2-18-1012, MCA, gives the Board full authority to resolve any grievance brought by an employee, even if resolution of the classification appeal results in reallocation of the grade assigned to a class. In support of this contention, appellants cite to Hutchin v. State, Dept. of Fish, Wildlife & Parks (1984), 213 Mont. 15, 688 P.2d 1257, wherein this Court stated:

“It is apparent from Section 2-18-1012, MCA, that if the Board of Personnel Appeals determines that the employee is aggrieved, it has full discretion to resolve the employee’s grievance.”

Hutchin, 688 P.2d at 1260.

Contrary to appellants’ contention, the District Court found that the Board is limited in a classification appeal by § 2-18-203(2), MCA, to determining whether a position has been properly classified by the Division. The court held that the Board was without authority to create new classifications or to assign grades to classifications, and it distinguished Hutchin by stating:

“Hutchin involved the discharge of a state employee for personal use of state owned property. In Hutchin the board directed that the discharged employee ‘be reinstated as of the date of this final order to the position he held with the department’ at the time of his termination. That is the type of remedy that is uniquely within the discretion of the board. However, the board’s order here usurps a function that has been delegated exclusively to the division.”

We agree with the District Court’s holding that the board is limited to determining whether a position is properly classified. If a position is improperly classified, the Board may then order the Division to reclassify the position in accordance with its existing policy.

Appellants also contend a conflict exists as both §§ 2-18-203(2) and 2-18-1011(1), MCA, authorize employees to utilize the grievance procedure contained in §§ 2-18-1011 through -1013, MCA, but that these statutes do not contain any limitation on appealing the grade assigned to a class. Appellants thus contend the limitation contained in § 2-18-203(2), MCA, cannot be extended to the grievance procedure in §§ 2-18-1011 through -1013, since the Legislature did not expressly limit these statutes.

Section 2-18-1011(1), MCA, does not provide an additional cause of action, rather, it sets forth the procedure whereby an aggrieved employee may file an appeal as allowed in § 2-18-203(2), MCA. Section 2-18-1011(1), MCA, states:

“(1) An employee or his representative affected by the operation of parts 1 through 3 of this chapter is entitled to file a complaint with the board of personnel appeals provided for in 2-15-1705 and to be heard under the provisions of a grievance procedure to be prescribed by the board.”

Therefore, we hold that the specific limitation upon grade appeals as found in § 2-18-203(2), MCA, would control, and an employee may not put the grade assigned to their class before the Board as an issue. Additionally, although appellants properly phrased their appeal as a classification appeal, thus properly placing the appeal before the Board, the Board’s decision was based upon the grades assigned to the classes. The Board improperly found the Officers were aggrieved due to the grade assigned to their class and because the Division did not follow its practice of maintaining a one grade difference between supervisors and those they supervise.

As the District Court stated, the function of developing guidelines for classification is assigned to the Department of Administration. Section 2-18-202, MCA. “[T]he Board’s function is limited to determining whether a position is properly classified, it has not power to create classifications and assign them to grades.” The Board’s action in directing the Division to change the grades assigned is outside the scope of the Board’s authority.

We now turn to the question of whether § 2-18-203(2), MCA, deprives the Officers of equal protection under the law and of their fundamental right to due process. Appellant Officers contend that the statute, as upheld by the District Court, takes away their right to full legal redress as guaranteed under Article II, § 16 of the 1972 Montana Constitution. They contend §§ 2-18-1011 through 2-18-1013, MCA, gives state employees a property right that demands an administrative review of all Division actions which seek to take that right away.

When the constitutionality of a statute is questioned, the presumption is in favor of the constitutionality of the statute. McClanathan v. Smith (1980), 186 Mont. 56, 65, 606 P.2d 507, 512. This Court has previously stated that when the Legislature sets terms and conditions of public employment, contractual rights are not created by statute, rather the Legislature merely declares “a policy to be pursued until the Legislature declares otherwise.” Wage Appeal of Montana State Highway Patrol Officers v. Board of Personnel Appeals (1984), 208 Mont. 33, 41, 676 P.2d 194, 199. In the instant case, the Legislature had set forth a policy controlling a public employee’s right to appeal actions taken by the Personnel Division in performing the classification process. Under the pre-1981 statute, public employees had a right to appeal the grade assigned to their class, however, that right was not absolute. While the Legislature may not alter or eliminate an accrued or vested right, the Legislature may alter the terms and conditions of employment prospectively, where those rights have not accrued or vested.

Wage Appeal, 676 P.2d at 199-200.

We also note state employees are not a suspect class which come within the protections accorded by the Equal Protection Clause. Having determined that the challenged statute does not affect a fundamental interest or affect a suspect class, the question then becomes whether the statute rationally relates to a legitimate state interest. Pfost v. State (Mont. 1985), [219 Mont. 206,] 713 P.2d 495, 501, 42 St.Rep. 1957, 1964.

The amendment of § 2-18-203(2), MCA, involved the regulation of an economic policy of this State, i.e. the setting of public employment salary levels. The appeal of the assignment of a grade to a class would allow employees to have the grade of their class changed without an accompanying change in the position classification. The end result would be classes having similar specifications being assigned a wide range of grades, making the. comparison process utilized in classification unworkable. We hold the State has a legitimate interest in preserving the state pay classification system and that the amended statute rationally relates toward effectuating that objective.

The decision of the District Court reversing the Board’s ruling and remanding the case for further findings in regards to the Division’s classification recommendations is affirmed.

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


source: Caselaw Access Project

author: MR. JUSTICE HARRISON MR. JUSTICE SHEEHY,

license: Public Domain

text:
    THOMAS CHISHOLM and Donald Chisholm, Plaintiffs and Appellants, v. FIRST NATIONAL BANK OF GLASGOW, Defendant and Respondent.
    No. 88-195.
    Submitted on Briefs Oct. 13, 1988.
    Decided Dec. 22, 1988.
    Rehearing Denied Feb. 1, 1989.
    766 P.2d 868.

      Dennis Patrick Conner, Charles S. Lucero, Great Falls, for plaintiffs and appellants.
    Jacque W. Best, Habedank, Cumming, Best, Maltese and Savage, Sidney, for defendant and respondent.
   MR. JUSTICE HARRISON

delivered the Opinion of the Court.

This appeal comes from an amended order of the District Court of the Seventeenth Judicial District, Valley County, Montana, in which appellants’ action was dismissed and judgment was entered in favor of respondent. We affirm.

The District Court’s original order dismissed all claims dependent upon the appellants’ ownership of certain property which they alleged they were wrongfully deprived. The District Court ordered a later hearing to determine which issues in the complaint remained. By an amended order, from which this appeal arises, all of the appellants’ claims were dismissed and judgment was entered for the respondent.

Two issues are presented for our review:

1. Did the District Court abuse its discretion by dismissing any of the claims against the bank?

2. Even if the District Court’s dismissal under Rule 41(b) was proper, was it error to dismiss all claims in the complaint?

We begin by noting that dismissal under Rule 41(b), M.R.Civ.P. is a harsh remedy. Because the result is severe, courts should refrain from dismissing an action or claim unless there is no other adequate remedy available and where the facts sufficiently call for such a result. The facts of this case are numerous and the District Court file abundant. Yet, stripped from the morass are those facts which lead to our affirmance of the District Court order.

Appellants are the owners of a masonry business in Shelby, Montana. In 1979, the appellants started a new business venture in Glasgow, Montana, involving the manufacture of cement blocks. The respondent, First National Bank of Glasgow, made loans to the appellants in order for them to get the business started. The appellants were unable to make the Glasgow business survive, and in October, 1982, appellants turned the business over to Nelson Corscadden.

In 1983, appellants sought to recover certain equipment in Corscadden’s possession which appellants alleged belonged to their Shelby business and was not part of the transferred Glasgow business. Corscadden denied appellants’ allegations and refused to hand over the equipment. Appellants filed a complaint against Corscadden in September, 1983, alleging conversion of their property. In February, 1984, before the case came to trial, Corscadden filed a Chapter 11 Bankruptcy Petition, and the state court action against Corscadden was automatically stayed.

Appellants, on August 1, 1984, filed a complaint against the respondent (hereinafter referred to as bank) in Cascade County, alleging the bank had secretly conspired to deprive the appellants of the property rights to the equipment held by Corscadden. That suit was transferred to Valley County District Court on September 27, 1984.

The appellants filed a proof of claim against Corscadden in the Bankruptcy Court on August 14, 1984. At the same time, appellants moved the Bankruptcy Court to lift the automatic stay in order for them to proceed against Corscadden and the bank before a jury in the state district court. The Bankruptcy Court took no action on that motion.

In April, 1985, appellants renewed their motion before the Bankruptcy Court to lift the automatic stay. The Bankruptcy Court denied the motion and requested the appellants file an adversary complaint. The court added that this was a core issue and with a complaint filed, the issue would be resolved in June of that year. No adversary complaint was filed.

The bank moved the District Court for partial summary judgment on March 13, 1986. The bank requested the District Court to abstain from asserting jurisdiction over the property ownership dispute, claiming the Bankruptcy Court had exclusive jurisdiction. On March, 27, 1986, during the hearing on this motion, appellants’ previous attorney, Erik Thueson, resisted the motion to abstain, arguing the issue should be heard in state court before a jury because “[i]n a State Court, my clients are entitled to certain rights of due process ... In a Bankruptcy Court this is untrue.”

On April 18, 1986, District Court Judge R. C. McDonough, (who is now a member of this Court) entered an order in which he ruled the Bankruptcy Court had exclusive jurisdiction to decide the property dispute, and further noted that the Bankruptcy Court had specifically refused to allow the state court to decide the issue. The order stated that a determination in state District Court could well lead to inconsistent adjudication, and that no significant burden would result by having the issued adjudicated in Bankruptcy Court. Most importantly, however, the order read in pertinent part:

“IT IS THEREFORE ORDERED that the pre-trial and trial of this action are hereby VACATED in order to give the Plaintiffs the opportunity to have the issue of the ownership of this property be decided in Bankruptcy Court and make a report to this Court within sixty (60) days as to their progress. If the decision on this issue is not diligently pursued by the Plaintiffs, the Court will consider a renewal of the motion by the Defendant precluding this Court from asserting jurisdiction to decide the ownership of the property. (Emphasis added.)”

There was nothing uncertain or ambiguous about the order. Its clear purpose was to have the ownership issue settled, either by adjudication in the Bankruptcy Court, or through agreement with Corscadden that one of the parties was the rightful owner of the equipment.

Appellants, dissatisfied with this order, filed a petition for a writ of mandamus with this Court, seeking to have this order withdrawn and a trial rescheduled in the District Court. On December 30, 1986, we denied the petition, finding there was a plain, speedy and adequate remedy in the Bankruptcy Court. State ex rel. Chisholm v. District Court (Mont. 1986), [224 Mont. 441,] 731 P.2d 324, 43 St.Rep. 2317.

On February 6,1987, appellants filed what they denominated “Motion for Appropriate Action” in the Bankruptcy Court. By this motion, appellants requested the Bankruptcy Court to either proceed on the issue before a jury, or to lift the automatic stay of the state district court action. Although both requests were previously denied by the Bankruptcy Court, appellants renewed their requests under the guise of a motion for appropriate action. Quite clearly, attorney Thueson was not only dissatisfied with his position, but he refused to accept it.

On March 3, 1987, the bank filed a renewed motion for partial summary judgment and motion to abstain. In its memorandum in support, the bank give the District Court a chronology of events of the case. Further, the bank noted that appellants had not only failed to file an adversary proceeding in Bankruptcy Court, but had also failed to report their progress on the resolution of the ownership issue to the District Court as required by the April 18,1986, District Court order.

After a hearing before the District Court on March 17, 1987, the bank’s motion was denied as “premature.” However, Judge McDonough required appellants to make a report to the court within sixty days on the progress made in resolving this issue. On April 14, 1987, Thueson wrote a letter to Judge McDonough which stated little more than “[appellants] continue to run into snags that are slowing the disposition of the bankruptcy matter down.”

On July 7, 1987, the bank moved for involuntary dismissal of the appellants’ action. On August 17, 1987, the District Court heard arguments from counsel for both parties on the bank’s motion. Attorney Thueson assured the court that the ownership issue had been resolved and that a signed settlement agreement would be filed forthwith.

On September 25, 1987, the District Court, having no settlement agreement before it, issued an order in a final attempt to force resolution of the property ownership issue. That order read in pertinent part:

“Since there remains doubt as to whether the matter has been settled between the parties, and because this case cannot proceed until the bankruptcy decision has been rendered, or a settlement reached by the parties, IT IS ORDERED that plaintiffs have sixty (60) additional days within which to furnish this Court with proof that the bankruptcy issues have been settled and compromised. If no such compromise is reached within 60 days, plaintiffs must furnish this Court with proof that a timely request has been made by them to the bankruptcy court to schedule this matter for adversarial hearing at the earliest convenient time. If plaintiffs fail to furnish either (a) proof of settlement or (b) proof of diligent pursual of the adversarial hearing in bankruptcy court, this Court will then entertain a renewed Motion by defendant for involuntary dismissal of this action with prejudice.”

On November 30, 1987, the bank moved for involuntary dismissal under Rule 41(b), specifically noting that appellants had failed to furnish proof of settlement or pursual of an adjudication in Bankruptcy Court. A copy of the settlement agreement was ultimately filed with the District Court. Attached as an exhibit to appellants’ response brief to the bank’s motion was a so-called “Mutual Release Of All Claims,” dated July 31, 1987. Nonetheless, the District Court was not apprised of the settlement until December 14, 1987, and a stipulation for dismissal without prejudice of the Bankruptcy claim was not executed by the appellants’ attorney and Corscadden’s attorney until December 10, 1987.

In their second response brief to the bank’s motion for involuntary dismissal, appellants argued that a settlement was “sanctioned” by Judge McDonough, and the court should “finally set a trial date so this matter can be resolved.” Appellants further stated:

“Defendant next contends that the ‘Mutual Release’ does not resolve the issue of ownership. To the contrary, the Chisholms, through the Mutual Release, have given up and surrendered their legal claims against Corscadden.

“The defendant also argues that there can be no settlement where there is no resolution of ownership. This is untrue. By definition, settlement is entered into by the parties to resolve a conflict short of factual finding concerning the issues in the case. At any rate, the settlement resolves ownership.”

It is quite obvious that appellants are talking out of both sides of their mouth. They wanted to resolve the ownership issue, thereby complying with the various court orders, yet they did not want to be bound by that disposition of the issue as it affects their suit against the bank. By presenting the District Court with the late-filed “Mutual Release,” the appellants said to the court in essence: Here is the ownership issue right back in your lap, Judge, we are finally going to get a trial of this issue before a jury in state district court. As did the District Judge, we refuse to condone such a position.

On February 2, 1988, presiding District Judge B.W. Thomas entered a memorandum order granting the bank’s motion for involuntary dismissal. The court ordered dismissal of all claims which were dependent on appellants’ ownership of the disputed property. The court reasoned that either (1) the settlement will be accepted as being timely made and interpreted as fully conceding the ownership rights of Corscadden; (2) the appellants would be deemed as having refused to resolve the issue as required by Judge McDonough’s order of April 18, 1986; or (3) the appellants would have failed to . diligently prosecute the action against the bank by refusing to have the ownership issue resolved. The court held that on any basis, dismissal would result.

On February 9, 1988, the bank moved the District Court to modify its February 2, 1988 order to dismiss all claims in the appellants’ complaint because, they alleged, all claims were dependent on the ownership of the property. In an amended order and judgment for the bank dated March 25, 1988, the District Court ordered:

“1. The motion to dismiss is granted insofar as all claims of plaintiffs which are dependent on the issue of whether plaintiffs were wrongfully deprived of the ownership of their property are concerned.

“2. Since all claims of plaintiffs’ complaint are dependent upon the issue of whether plaintiffs were wrongfully deprived of the ownership of the disputed property, all claims (claims I-V) are hereby dismissed with prejudice because of plaintiffs’ failure to prosecute diligently, and their failure to comply with orders of this Court.”

Rule 41(b), M.R.Civ.P., provides:

“Involuntary dismissal — effect thereof. For failure of the plaintiff to prosecute or to comply with these rules or any order of court, a defendant may move for dismissal of an action or of any claim against him . . . Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction or failure to join a party under Rule 19, operates as an adjudication upon the merits.”

It is undisputed that it is within the sound discretion of the District Court to dismiss an action under Rule 41(b), M.R.Civ.P., Brymerski v. City of Great Falls (1981), 195 Mont. 428, 636 P.2d 846, and we encourage the cautious exercise of that discretion. As stated in Von Poppenheim v. Portland Boxing Comm. (9th Cir. 1971), 442 F.2d 1047, 1049, cert. denied 404 U.S. 1039, 92 S.Ct. 715, 30 L.Ed.2d 731:

“Because a dismissal under Rule 41(b) is such a harsh remedy, and because such dismissals are frequently occasioned by inattention of counsel rather than by plaintiff’s own wrongdoing, courts are rightfully reluctant to employ 41(b) sanctions for failure to comply with an order of the court ... It is equally clear, however, that aggravated circumstances may make dismissal under 41(b) appropriate ... In those cases the district judge will be reversed only if he had abused his discretion in dismissing the action.”

In this case, the dismissal grounds for failure to prosecute was the result of the appellants’ failure to comply with the court’s order to resolve the issue. The appellants were fully warned that their continuing failure to resolve the ownership issue would result in dismissal. The appellants’ noncompliance with the District Court’s order was a flagrant attempt to avoid resolution of the ownership issue in Bankruptcy Court. As a result, dismissal was proper.

For some tactical reason, appellants’ attorney willfully and deliberately chose to ignore the court orders. Now, nearly five years after the actions complained of took place, and some four and one-half years after the complaint against the bank was filed, the appellants argue that the issue should be resolved in the District Court. Had the appellants complied with the request of the Bankruptcy Court to file an adversary proceeding, or with the direct order of the District Court, this issue could have been resolved, one way or another, as early as June of 1985. We refuse to condone such contumacious and deliberate disobedience to reasonable and lawful court orders. We conclude that the District Court, with great patience, properly exercised its discretion, without abuse.

The appellants next claim that the District Court erred in dismissing all of the claims against the bank. They argue that even if the District Court correctly dismissed those claims dependent on whether the appellants were wrongfully deprived of the disputed property, it nonetheless erred in concluding that all claims in the complaint were dependent on that issue. We disagree.

Rule 41(b) clearly provides for the dismissal of a claim or an action. The District Court was not bound to dismiss only certain of appellants’ claims which were related to the court order with which they refused to comply. It was fully within the discretion of the District Court to dismiss the entire action against the bank. The amended order states:

“[A]ll claims (claims I-V) are hereby dismissed with prejudice because of plaintiffs’ failure to prosecute diligently, and their failure to comply with orders of this Court.”

We find the dismissal of the appellants’ action against the bank was not an abuse of discretion. The amended order and judgment are affirmed.

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

MR. JUSTICE SHEEHY,

specially concurring:

I concur with the result here. Since this Court and the District Court felt that the ownership of the property was a core issue in the state court action, it was proper to require Chisholm to proceed in bankruptcy court. But even the bankruptcy court seemed of the opinion that the bank case was outside the bankruptcy court’s dominion (see dissent, J. Morrison, Chisholm, 731 P.2d at 326). An attorney should not be castigated for representing his client in murky waters.


author: MR. JUSTICE HARRISON

text:
    In re the MARRIAGE OF KAREN GAUSTAD NELSON, Petitioner and Respondent and HOWARD HARRY NELSON, Respondent and Appellant.
    No. 88-278.
    Submitted on Briefs Nov. 3, 1988.
    Decided Dec. 22, 1988.
    766 P.2d 873.

      Douglas D. Harris, Lineberger & Harris, Bozeman, for respondent and appellant.
    Arnold Huppert, Huppert & Swindlehurst, Livingston, for petitioner and respondent.
   MR. JUSTICE HARRISON

delivered the Opinion of the Court.

This appeal comes from a judgment of the District Court of the Fifth Judicial District, Madison County, Montana. Respondent moved the District Court to enforce a maintenance provision in the settlement agreement incorporated into the parties’ dissolution decree. The District Court concluded the parties intended the monthly payments to be a division of marital property, not maintenance, and ordered the appellant to draft a promissory note payable to the respondent. This appeal arises from that order. We affirm in part, reverse in part, and remand.

In 1984, respondent Karen Nelson (Karen) filed a petition for dissolution of her marriage to Howard Nelson (Howard). On May 22, 1984, the District Court ordered the dissolution of the marriage and approved and incorporated into the decree the parties’ separation agreement. Contained in the agreement is a maintenance clause which provides in part as follows:

“Maintenance

“The husband shall pay to wife the sum of Twelve Thousand Dollars ($12,000.00) per year in equal annual payments for a period of ten (10) years with the first payment being due and payable to wife two (2) years from the date that the court approves this property settlement.

“Husband’s obligation to continue to pay maintenance to wife as herein described shall be terminated upon wife’s remarriage or husband’s physical or mental disability which renders him incapable of generating income through new business ventures.

“It is the intent of this provision that the total amount of maintenance that wife is to receive under this provision shall not exceed One Hundred Twenty Thousand Dollars ($120,000.00) regardless of the manner of payment.” (Emphasis added.)

The record shows that Karen did not have the benefit of her own counsel’s advice prior to the execution of the property settlement agreement. The initial payment under this clause was not made, and in December, 1986, Karen sought to enforce the terms of the agreement by moving the District Court for a show cause order. Howard responded to the motion by alleging that his obligations were terminated under the terms of the agreement because of his numerous physical and mental disabilities.

A trial of the issues was held before the court, without a jury, on February 2, 1988. The witnesses who testified at trial were John Atkins, the attorney who drafted the agreement; Bruce Gerlach, the vice president of the bank which handled Howard’s business loans; Joseph Rau, Howard’s personal friend; Debbie Nelson, the parties’ daughter; Howard; and Karen.

After hearing the witnesses, considering the exhibits and arguments of counsel, the District Court declined to cite Howard with contempt but concluded that the escape clause was vague, ambiguous, meaningless, and unenforceable. The court further found that enforcement of the clause in Howard’s favor would be unconscionable, because to do so would be “contrary to the clear intent of the parties as to a substantially equitable division of their marital property.” The court declared the maintenance provision to be null and void. Judgment was entered in favor of Karen for $24,000 for the two payments which by this time had been missed. The court also required Howard to execute and deliver to Karen a promissory note in the sum of $96,000. The judgment required the note “to be secured by a mortgage on all of Respondent’s real property, or such substitute security as will make the note reasonably secure.”

We conclude it was error for the District Court to completely remove the maintenance provision, recalculate the parties’ property distribution, class the payments as a part of the property distribution, and require Howard to execute a promissory note secured by a mortgage lien. Such a modification of the property settlement and maintenance provision could not be made without the parties’ consent. Taylor v. Taylor (1975), 167 Mont. 164, 537 P.2d 483. The entire agreement certainly raises questions as to whether it partakes more of the nature of a maintenance agreement than a property settlement agreement, and the provisions are clearly contradictory. As a result, the factual conclusions on the part of the District Court are certainly supported by the record. However, the District Court was without authority to modify the property disposition in the settlement agreement.

We have reviewed the transcript which demonstrates that counsel for both Howard and Karen agreed that the District Court should make an order clarifying the maintenance provisions of the contract so that it would not be necessary to burden the court with questions every year. Counsel for Howard stated that “[w]e are agreeing on the record that this proceeding may be used to read that agreement and interpret that agreement however the Court may choose to interpret it on whatever theory the Court chooses to interpret it. . .” We conclude that the consent of counsel for both parties to the modification of the maintenance agreement meets the requirements of 40-4-208(2)(b), MCA, which provides in pertinent part:

“Whenever the decree proposed for modification contains provisions relating to maintenance or support, modification under subsection (1) may only be made:

“(i) upon a showing of changed circumstances so substantial and continuing as to make the terms unconscionable; or

“(iii) upon written consent of the parties.”

We agree with the conclusions of the District Court that the so-called escape clause was vague, ambiguous and largely meaningless. We conclude that such an escape clause is unnecessary under the facts of this case because the above cited 40-4-208(2)(b), MCA, provides that if Howard shows changed circumstances so substantial and continuing as to make the terms of the maintenance agreement unconscionable, he may secure from the District Court an order changing such agreement. That statutory provision gives adequate protection for the theory urged by Howard.

We conclude that the District Court, by reason of the consent of the parties, was given the power to make a modification in the terms of the maintenance agreement. We conclude that the District Court should enter its judgment providing that the previously quoted maintenance agreement should now be changed to read as follows:

“Maintenance

“The husband shall pay to wife the sum of Twelve Thousand Dollars ($12,000.00) per year in equal annual payments for a period of ten (10) years with the first payment being due and payable to wife two (2) years from the date that the court approves this property settlement agreement. However, if husband should sell his interest in an certain tract of real property located in Gallatin County, State of Montana, and more particularly described as follows:

“ ‘That portion of Tract 38B of Certificate of Survey 897A presently used as a automobile repair facility, automobile show room and adjacent parking lots as appears on the plat on file in the office of the Clerk and Recorder, County of Gallatin, State of Montana.’

“within two (2) years of the date hereof, then husband shall pay to wife, in lieu of the above, as maintenance:

“(a) the sum of Twelve Thousand Dollars ($12,000.00) per year for ten (10) years beginning one year from the date of this agreement, if the above-described real property is sold within one year of the date of this agreement; or

“(b) the sum of Twenty-Four Thousand Dollars ($24,000.00) within two years of the date of this agreement if the above-described real property is sold within two years of the date of this agreement and the sum of Twelve Thousand Dollars (12,000) per year for eight years thereafter.

“Husband’s obligation to continue to pay maintenance to wife as herein described shall be terminated upon wife’s remarriage or otherwise modified as determined by the District Court having jurisdiction upon the application of either party for modification under the provisions of § 40-4-208(2)(b), MCA. All payments for wife’s maintenance shall be mailed directly to wife at her current mailing address, unless husband is otherwise notified in writing to-wit: P.O. Box 1201, Livingston, Montana 59047.

“It is the intent of this provision that the total amount of maintenance that wife is to receive under this provision shall not exceed One Hundred Twenty Thousand Dollars ($120,000.00) regardless of the manner of payment.”

Because the District Court concluded that the provision should be classed as a property settlement in its modification, we are not certain whether or not the court concluded that Howard had submitted sufficient proof under the provision of the statute to demonstrate a showing of changed circumstances so substantial and continuing as to make the payment unconscionable. It will be necessary that the District Court make that determination. If it finds that Howard has failed to submit sufficient evidence on that point, the District Court should enter its judgment for the payment of $24,000 at the present time.

As a part of this remand, we further conclude that under the circumstances of this case it is not appropriate to use a real estate mortgage and therefore direct the District Court that neither a note or mortgage shall be used. We do, however, agree that it would be appropriate for the District Court to order that the obligation to pay the maintenance shall become a lien upon the property of Howard, in the same manner as a judgment lien, should the District Court conclude that it remains to be an appropriate protection required for the benefit of Karen.

Reversed and remanded to the District Court for appropriate action consistent with this Opinion.

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


author: MR. JUSTICE WEBER MR. JUSTICE McDONOUGH,

text:
    ROBERT A. MYERS, Plaintiff and Respondent, v. ALL WEST TRANSPORT, Defendant and Appellant.
    No. 88-375.
    Submitted on Briefs Nov. 17, 1988.
    Decided Dec. 22, 1988.
    766 P.2d 864.

      Stewart A. Pearce, II, Missoula, for defendant and appellant.
    Don Vernay, Bigfork, for plaintiff and respondent.
   MR. JUSTICE WEBER

delivered the Opinion of the Court.

All West Transport (All West) appeals from an order refusing to set aside a default judgment against it. The District Court for the Twentieth Judicial District, Lake County, ruled that All West had failed to satisfy any of the requirements of Rule 60(b), M.R.Civ.P. We affirm.

The issue is whether the District Court abused its discretion in refusing to aside the default judgment.

On January 14, 1988, plaintiff Mr. Myers filed his complaint against All West for wrongful delivery of lumber to a consignee in Denver, Colorado. The complaint alleges that while the shipment was in transit Mr. Myers contacted All West to order that the shipment be stopped and rerouted, but that All West intentionally and wrongfully delivered the lumber as originally instructed. Damages of $6,800, for the value of the lumber, plus interest, attorney fees, and costs, were claimed. All West was served with the complaint on January 15, 1988. On February 9, 1988, the clerk of court entered default judgment against All West.

On March 14, 1988, All West filed its affidavit and motion to set aside the default judgment. The motion was orally argued and on May 2, 1988, the court entered its order refusing to set aside the default judgment.

Did the District Court abuse its discretion in refusing to set aside the default judgment?

Rule 60(b), M.R.Civ.P., allows a court to relieve a party from a final judgment if, within a reasonable time, not more than 60 days after the judgment was entered, a showing is made of mistake, inadvertence, surprise, or excusable neglect. All West argues that it has made such a showing. This Court has stated that if a district court slightly abused its discretion in refusing to set aside a default judgment, its refusal is reversible. Griffin v. Scott (Mont. 1985), [218 Mont. 410,] 710 P2d 1337, 1338, 42 St.Rep. 1695, 1697. The party seeking to set aside the default has the burden of proof. Siewing v. Pearson Co., (Mont. 1987), [226 Mont. 458,] 736 P.2d 120, 122, 44 St.Rep. 800, 802.

The affidavit submitted with the motion to set aside the default sets forth the following statement of facts. The complaint was served upon Betty Edwards at the offices of All West. (Betty Edwards and her husband do business as All West.) She delivered the complaint and summons to the office of All West’s attorney about two weeks later, on January 29, 1988. The attorney was out of town at that time and did not return until February 3,1988. On that date, the attorney phoned Betty Edwards and told her that, to represent All West, he would require all supporting documentation underlying this claim, a retainer fee, and filing fees. On February 8, 1988, All West’s truck suffered transmission failure, requiring immediate repair. That depleted All West’s cash reserves, and All West was unable to forward the required money to the attorney. The default judgment was entered with no further notice to All West and the judgment was executed upon on February 23, 1988. All West then filed its notice to set aside the default.

In its brief, All West argues that its motion to set aside the default judgment should have been granted. It stated that the motion was filed promptly, there is a good possibility that a trial on the merits would have produced a different result, and any reasonable doubt as to whether to set aside a default judgment is to be resolved by setting aside the default. This Court stated the standard of review to which All West refers in Kootenai Corp. v. Dayton (1979), 184 Mont. 19, 26, 601 P2d 47, 51: the party moving to set aside the default must show that it proceeded with diligence, that its excusable neglect caused the default to be entered against it, and that there is evidence of a meritorious defense.

In discussing the arguments of All West for setting aside the default, the District Court stated:

“The affidavit of Mrs. Edwards and her testimony introduced at oral argument upon Defendant’s motion establish a factual situation of financial hardship on the part of the Defendant. As a practical matter, Defendant applied its limited funds to the unexpected repairs needed for one of its trucks rather than pay the costs and fee retainer requested by its counsel.

“Failure by a client to pay its attorney does not constitute excusable neglect by a party within the meaning of Rule 60(b). Neither does failure of an attorney to file an appearance because he has not been paid constitute excusable neglect by an attorney within said rule if, in fact, the attorney agreed to timely file an appearance.

“In either event, the Defendant has presented the Court no authority to support a finding of excusable neglect sufficient to set aside the Default Judgment merely because the Defendant failed to pay the advance costs and fee retainer requested by the attorney as a consequence of which no appearance was filed before default was entered.

“The Court suggests that the Defendant has not cited any such authority in support of its motion because there is no such authority nor should there be any. The Defendant has wholly failed to satisfy any of the requirements of Rule 60(b), and its motion to set aside the Default Judgment of February 9, 1988 is denied.”

The above discussion indicates that the District Court was not convinced that there was excusable neglect.

The test to determine whether the neglect is excusable and sufficient to set aside a default is:

“. . . whether the reasons given for the neglect are such that reasonable minds might differ in their conclusions concerning excusable neglect. If so, doubt should be resolved in favor of a trial on the merits.”

United States Rubber Co. v. Community Gas & Oil Co. (1961), 139 Mont. 36, 39, 359 P2d 375, 376.

Griffin, 710 P.2d at 1338.

Here, the actions of both Betty Edwards and her attorney may be said to have contributed to the entry of the default. All West’s attorney should have been aware of the need to act quickly, as there were only a few days left to answer the complaint when he first saw it in his office. The general rule is that neglect of an attorney is attributable to the client. Lords v. Newman (1984), 212 Mont. 359, 367-68, 688 P.2d 290, 295. In Lords, an exception to that general rule was recognized for cases in which the defaulting party experienced total abandonment by its attorney. That is not the case here.

This Court has held that failure to appear to defend an action due to forgetfulness, the press of other business, or inattention to mail do not establish excusable neglect. Siewing, 736 P.2d at 122. All West’s reasons for failing to respond are similar to the reasons listed in Slewing. The situation in this case is a far cry from Kootenai, in which excusable neglect was found when there were six days between service of process and entry of the default judgment, and where the defaulting party submitted an affidavit stating that he mistakenly believed that he needn’t appear in the action until another party was served. Here, 25 days elapsed between the time Betty Edwards was served with process and the entry of default judgment. The summons served upon her stated that if the complaint was not answered within 20 days, judgment would be taken against All West by default. All West chose to apply its limited fund to the repair of a truck rather than to defense of this action. All West made no further attempt to get legal representation or otherwise respond to the summons. We conclude that the District Court did not abuse its discretion in refusing to find that the reasons given for All West’s failure to act constituted excusable neglect.

Affirmed.

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

MR. JUSTICE McDONOUGH,

dissenting:

I dissent. The majority cites the correct rules but fails to apply them. Generally, decisions denying motions to set aside default judgments under Rule 60(b), M.R.Civ.P., should be reversed on a showing of slight abuse of discretion, doubts should be resolved in favor of the moving party, and each decision should be reviewed on a case by case basis. The majority in applying these rules misreads Slewing and Lords to hold against All West.

In Slewing, this Court affirmed the decision of the lower court to deny a motion to set aside a default judgment because:

“a failure to appear caused by inattention to pertinent documents, the resignation of a company officer and the the taking of a summer vacation by another officer do not establish excusable neglect.” Siewing, 736 P.2d at 122. In this case the excuses discussed are financial hardship and neglect of counsel. These complaints differ from the unexplained neglect in Slewing, and they create doubts on whether to find excusable neglect.

In Lords this Court stated that generally, courts impute counsel’s neglect to clients, but when on to state:

“ ‘This court has been hesitant to impute the neglect of an attorney to his client; and has been loathe to permit this neglect to bar a hearing on the merits. Whether or not the varying shades of excusable neglect [neglect by counsel] previously remarked on can be distinguished, we choose to think that where reasonable minds might differ in their conclusions of excusable neglect, the doubt should be resolved on the merits.’ ”

Lords, 688 P.2d at 295 (Emphasis added.). The exception, that is, finding excusable neglect for counsel’s neglect, appears to have swallowed the general rule that courts impute to the client the neglect of counsel. See 6 J. Moore, Moores Federal Practice paragraph 55.10, at 55-66 (2d ed. 1988). And this Court has further recognized that under the principles governing the decision to set aside default judgments, Montana has moved away from the rule that the client is “absolutely responsible for her attorney’s neglect.” Graham v. Mack (Mont. 1984), [216 Mont. 165,] 699 P.2d 590, 594. The failure of counsel to act quickly here weighs for finding excusable neglect.

The majority also holds that All West’s temporary inability to provide a retainer for counsel provides no excuse for failing to respond. According to the majority, All West chose to apply its limited funds for truck repair rather than for defense of the action. This reasoning does not reflect resolution of doubt in favor of setting aside a default judgment. Choosing to provide funds for one’s business instead of paying for a response to a complaint may constitute willful disregard for the legal process. However, where the repairs are essential to the day to day operations of the business, the failure to respond due to an unexpected happening may be reasonably excused. Both the temporary lack of funds and counsel’s neglect in acting quickly weigh for granting the motion to set aside the default judgment.

The majority and the District Court err in their reliance on distinguishable case law. The Court cites the rule that each case must be reviewed individually, but the result arrived at here fails to judge the motion to set aside on the merits of the unique facts presented.

MR. JUSTICES SHEEHY and HUNT concur.


text:
    STATE OF MONTANA, Plaintiff and Respondent, v. TAB SCOTT STEWART, Defendant and Appellant.
    No. 88-341.
    Submitted on Briefs Dec. 2, 1988.
    Decided Dec. 28, 1988.
    767 P.2d 296.
    John Keith, Great Falls, for defendant and appellant.
    Mike Greely, Atty. Gen., Joe R. Roberts, Asst. Atty. Gen., Helena, Patrick L. Paul, County Atty., Brant S. Light, Deputy County Atty., Great Falls, for plaintiff and respondent.
   MR. JUSTICE HARRISON

delivered the Opinion of the Court.

Appellant, Tab Scott Stewart, appeals his conviction of burglary and aggravated burglary, both felonies, and misdemeanor theft, in the Eighth Judicial District, Cascade County, Montana. Appellant’s only claim on appeal is that he was denied effective assistance of counsel. We affirm the conviction.

On September 11, 1987, Pat Maag reported a burglary at his home in Great Falls, Montana. Mr. Maag occupied the basement apartment in a large, two story building. Various miscellaneous items were taken, including a gold-tone Timex watch. Mr. Maag did not see anyone enter his apartment. However, Brian Collins, a neighbor, saw the appellant in the alley behind Mr. Maag’s residence on the previous night. Prior to the burglary, the appellant had moved from the apartment complex because he had problems with the landlord.

Appellant was also charged in a second, unrelated crime. On October 1, 1987, at approximately 2:30 a.m., Mary Skinner was asleep at home with her six-year-old daughter, Meaghan. She was awakened by someone in her closet. Mrs. Skinner spoke to the person, assuming the person was one of her other children. Startled by her question, the intruder moved toward the bed and grabbed Mrs. Skinner around the throat and began to choke her and strike her face. Mrs. Skinner screamed for her other daughter, Maile, who was asleep in the next room. Meaghan awoke and attempted to flee the room. The defendant grabbed Meaghan around the throat and threw her onto the bed. Meanwhile, Maile telephoned the police from the kitchen. There she confronted the assailant, and told him she had contacted the police. Mrs. Skinner chased the assailant into the living room area where she hit him with a waterbed railing. Finally, the assailant fled the home.

When the police arrived, Mrs. Skinner gave them a description of the assailant. She stated he had short wavy blond hair and wore a gray, fleece-like jacket and blue jeans. Mrs. Skinner thought the assailant seemed familiar to her, but she was unable to identify him, On October 5, 1987, Maile gave Mrs. Skinner a picture of a friend who fit the description of the assailant. The person in the photo was the appellant, Tab Stewart.

Appellant was arrested and charged on November 4, 1987. After a jury trial on February 24, 1988, the appellant was found guilty of all charges. Appellant claims he was denied effective assistance of counsel. We disagree.

Much of this appeal focuses on the testimony of Keith Zigan, the appellant’s roommate and the State’s key witness. Initially, Mr. Zigan told the police that he had been with the appellant all evening on the night of the Skinner burglary, substantiating the appellant’s alibi defense. However, Zigan’s testimony at trial contradicted his earlier statements. Zigan testified that although he and the appellant had been together for a few hours on the night of the burglary, they parted company around 9:00 p.m. He also stated that on the morning of October 1, 1987, he saw fresh scratches on the appellant’s chest. Zigan testified the appellant told him about the Skinner burglary, and admitted he hit a woman and he may have also hit a child. Zigan also identified a gray jacket as belonging to the appellant which was similar to the jacket Mrs. Skinner described as being worn by has assailant.

Additionally, Zigan aided the police in the recovery of the stolen watch. He testified that he saw the appellant go behind their residence and throw a gold colored watch into the field. The watch was later recovered by Great Falls police officers and identified by Mr. Maag as belonging to him.

Although appellant alleges a number of errors by trial counsel, only one such allegation merits this Court’s discussion. Appellant contends his counsel’s performance was deficient because he failed to adequately present evidence to impeach the testimony of Keith Zigan. Zigan testified that, through the kitchen window of their daylight basement apartment, he saw the defendant throw a gold colored watch into a field. Appellant contends Zigan could not have seen the purported incident from that specific window, because stacked wood obstructed the view. Appellant claims counsel’s failure to call additional witnesses or present photographs to impeach Zigan’s testimony resulted in substantial prejudice. From our review of the record, we see no error.

Ineffective assistance of counsel requires specific acts or omissions which prejudice defendant’s case and result in the denial of a fair trial. State v. Grant (Mont. 1985), [217 Mont. 357,] 704 P.2d 1064, 1065, 42 St.Rep. 1248, 1250. This Court has long recognized and consistently followed the test adopted by the United States Supreme Court for determining when ineffective assistance of counsel has occurred:

“First, the defendant must show that counsel’s performance was deficient. This requires showing that counsel made errors so serious that counsel was not functioning as the “counsel” guaranteed the defendant by the Sixth Amendment. Second, the defendant must show that the deficient performance prejudiced the defense.”

Strickland v. Washington (1984), 466 U.S. 668, 687, 104 S.Ct. 2052, 2064, 80 L.Ed.2d 674, 693. To show prejudice, a defendant must show that, but for counsel’s unprofessional errors, there was reasonable probability that the result of the proceeding would have been different. State v. Stranberg (Mont. 1986), [223 Mont. 132,] 724 P.2d 710, 713, 43 St.Rep. 1591, 1594. A reasonable probability is a probability sufficient to undermine confidence in the outcome of the trial. State v. Robbins (Mont. 1985), [218 Mont. 107,] 708 P.2d 227, 232, 42 St.Rep. 1440, 1444, citing Strickland, supra.

“It will generally be appropriate for a reviewing court to assess counsel’s overall performance throughout the case in order to determine whether the “identified acts of omissions” overcome the presumption that a counsel rendered reasonable professional assistance. Since “p[t]here are countless ways to provide effective assistance in any given case,” . . . unless consideration is given to counsel’s overall performance, before and at trial, it will be “all too easy for a court, examining counsel’s defense after it has proved unsuccessful, to conclude that a particular act or omission of counsel was unreasonable . . . .” (Citations omitted.)

State v. Leavens (Mont. 1986), [222 Mont. 473,] 723 P.2d 236, 237, 43 St.Rep. 1431, 1433, citing Kimmelman v. Morrison (1986), 477 U.S. 365, 386, 106 S.Ct. 2574, 2589, 91 L.Ed.2D 305, 326, and Strickland, supra.

Appellant’s allegation of Zigan’s obstructed view was addressed extensively during trial. It was initially raised in counsel’s opening statement and strongly reiterated during closing remarks as one of many inconsistencies in Zigan’s testimony. More importantly, counsel sought to impeach Zigan’s testimony through the use of a diagram of the apartment which illustrated how the wood pile obstructed Zigan’s view of the field. It is notable that even the appellant testified that it is possible to see someone outside the window from inside the apartment.

Appellant’s alleged error amounts to an attempt to second guess counsel’s trial tactics and strategies. Where no prejudice is shown, we will not question counsel’s professional deliberations. State v. Henricks (1983), 206 Mont. 469, 672 P.2d 20.

Defendant fails to point to any evidence to substantiate his allegation of ineffective assistance of counsel or prove his counsel’s actions deprived him of a fair trial. We find no merit in the appellant’s contentions.

Affirmed.

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


author: MR. JUSTICE WEBER MR. JUSTICE SHEEHY,

text:
    MONTANA BANK OF LIVINGSTON, Plaintiff and Respondent, v. OLD SALOON, INC., a Montana corporation, Vernice Ann Salyer, an individual, Charles R. Peavey, an individual, and Melvin A. Barber, an individual, Defendants and Respondents. MELVIN A. BARBER, Third-Party Plaintiff and Appellant, v. DAVID BECK and Diane Beck, Third-Party Defendants and Respondents.
    No. 88-334.
    Submitted on Briefs Oct. 27, 1988.
    Decided Dec. 29, 1988.
    766 P.2d 878.

      Knuchel & McGregor, Karl Knuchel, Livingston, for third-party plaintiff and appellant.
    Swandal & Douglass Law Firm, Kent R. Douglass, Livingston, for plaintiff and respondent.
   MR. JUSTICE WEBER

delivered the Opinion of the Court.

This appeal involves the portion of this action in which Melvin A. Barber was held liable to the Montana Bank of Livingston (Bank) as a surety on a note. The District Court for the Sixth Judicial District, Park County, granted summary judgment to the Bank. Mr. Barber appeals but we affirm.

We restate the issues as:

1. Is Mr. Barber entitled to be discharged from his surety agreement as a matter of law or equity?

2. Was summary judgment improper because genuine issues of material fact remain?

3. Was summary judgment improper as to Mr. Barber’s counterclaim for breach of an implied covenant of good faith and fair dealing?

In November 1983, Vernice Salyer and Charles Peavey, on behalf of the Old Saloon, Inc. (Old Saloon), signed a $35,020 note to the Bank. At the same time, Ms. Salyer, Mr. Peavey, and Mr. Barber each individually signed surety agreements for $35,020 on the same loan. Old Saloon defaulted in payment and the Bank brought this suit for the amount owing. In answering the complaint, Mr. Barber pled accord and satisfaction based on the Bank’s security interest in the Old Saloon’s liquor license. Mr. Barber also crossclaimed against the other defendants Mr. Peavey, Ms. Salyer, and the Old Saloon, counterclaimed against the Bank, and made a third-party claim against the Becks. The Becks were the registered owners of the liquor license. They sold the Old Saloon to Mr. Peavey and Ms. Salyer and resumed operating it when Mr. Peavey and Ms. Salyer defaulted on their contract to purchase the establishment.

Defaults have been entered against defendants Mr. Peavey, Ms. Salyer, and the Old Saloon. The Becks have been dismissed by stipulation. The remaining parties, then, are Mr. Barber and the Bank. Both filed motions for summary judgment. The court denied Mr. Barber’s motion for summary judgment after briefing and a hearing. After briefing and a hearing on the Bank’s motion for summary judgment, the court granted the motion and entered judgment in favor of the Bank. The court based its judgment on language in the surety agreement which Mr. Barber signed. The court stated:

“the surety agreement was one that rendered defendant Barber ‘liable as an original obligor’, and under its terms the bank could look directly to him for payment without first proceeding against the borrowers . . . [A]s Barber has no valid defense to the bank’s action, his counterclaim against the bank has no merit and no trial thereon is necessary.”

Mr. Barber appeals.

The Bank has moved to strike certain portions of Mr. Barber’s reply brief as not within the record. In reaching its decision, the Court has ignored those portions of the brief which are not within the record.

I.

Is Mr. Barber entitled to be discharged from his surety agreement as a matter of law or equity?

Mr. Barber claims that he is protected as a surety under Montana statutes on the remedies and rights of a surety. He states that the unconsented release of collateral by a creditor which exposes a surety to increased liability discharges the surety from the surety agreement. The Bank relinquished its security interest in the Old Saloon’s liquor license to the Becks for $6,000. Mr. Barber estimated the value of the license at $60,000 to $70,000 and viewed his liability as a surety as secondary to that collateral. He admits there is no written agreement to that effect, however. Mr. Barber further maintains that the Bank’s failure to inform him of additional loans extended to the Old Saloon justifies his discharge from his security agreement. He cites as authority this Court’s opinion in Security Bank, N.A. v. Mudd (1985), 215 Mont. 242, 696 P.2d 458, 42 St.Rep. 323.

In Security Bank, defendant Mr. Mudd had guaranteed a note issued by Security Bank (Security) to a borrower. The note was secured with the borrower’s contract receivable and stock certificates. The borrower’s contract was paid. It would have covered the entire amount of the note. However, Security applied $13,500 of the contract receipts to the $16,000 note and released the rest to the borrower. The borrower later defaulted on a note advanced as a renewal of the original note. This Court affirmed the District Court’s judgment dismissing the action against Mr. Mudd because Security had failed to notify Mr. Mudd that it had not used the money from the contract receivable to satisfy the note. The Court cited the finding that the contract receivable was inextricably linked with the guaranty. The Court approved application of a test from the Restatement of Security as to the duty of the creditor to disclose to the surety facts it knows about the debtor.

The surety agreement in the present case contained a provision in boldface type which read as follows:

“Surety has entered into this surety agreement at the request of Borrower, and for the purpose of securing to Borrower, Bank’s agreement to loan money to Borrower. Surety hereby makes himself responsible for Borrower’s performance of the original contract and any additional consideration. Surety agrees that Surety is liable as an original obligor, and that Surety’s obligation to pay Bank under the terms of this agreement is not dependent on any default of Borrower or on any intervening contract or event of any nature whatsoever.”

The security agreement also contained a provision waiving notice to and consent from the surety for “[a]ny deviations from, additions to, or modifications in the obligations of the original contract.” Further, the agreement provided that, “Bank may . . . realize or neglect to realize upon any collateral held in connection therewith . . . without the necessity of any notice to or consent from Surety and all without affecting Surety’s liability hereunder.”

Mr. Barber asks us to elevate general principles of the law on sureties above the specific and clear provisions of the surety agreement he signed. Security Bank does not apply because Mr. Barber’s surety agreement contained the clauses providing that the bank could release or substitute collateral without his consent. No such clause was present in the surety agreement in Security Bank. The Restatement test includes an element of increased risk to the surety. Because of the clauses set forth above, Mr. Barber took on liability for the entire amount of $35,020 from the time he signed the surety agreement. The surety agreement makes no reference to Mr. Barber’s liability being secondary to the liquor license. There is no increased risk. Additionally, Mr. Barber has not provided satisfactory evidence supporting his valuation of the Old Saloon liquor license. We hold that Mr. Barber is not entitled to be discharged from his liability as an original obligor under the clear languages of the surety agreement.

II

Was summary judgment improper because genuine issues of material fact remain?

Mr. Barber asserts that several issues of material fact preclude summary judgment. These factual issues include whether he loaned money to the Old Saloon or was making an investment in it, whether he was a gratuitous surety or a principal for the Old Saloon, whether his liability was as a primary or other surety, and whether he was discharged as a matter of law from the surety agreement.

These factual questions are irrelevant as a result of the surety agreement clauses discussed under Issue I. Mr. Barber agreed to be liable as the original obligor on the note and to forego notice and consent to release of collateral. We hold that there is no issue of material fact which precludes summary judgment.

III

Was summary judgment improper as to Mr. Barber’s counterclaim for breach of implied covenant of good faith and fair dealing?

Mr. Barber asserts that his counterclaim’s allegation of breach of covenant of good faith and fair dealing is not susceptible to summary judgment. He cites Weinberg v. Farmers State Bank of Worden (Mont. 1988), [231 Mont. 10,] 752 P.2d 719, 45 St.Rep. 391, as authority that banks have a fiduciary duty toward their customers. But the only connection between Mr. Barber and the Bank is the surety agreement. Weinberg does not state that there is a fiduciary duty in such a relationship. We hold that summary judgment as to the counterclaim was proper.

Affirmed.

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

MR. JUSTICE SHEEHY,

concurring:

Melvin A. Barber is due a more extended discussion in this case, because the statutes applying to suretyship in this state seem to require a result in his favor. That he does not recover requires a deeper look at the law.

The statutes upon which Barber relies are these:

“28-11-401. Surety defined. A surety is one who, at the request of another for the purpose of securing to him a benefit, becomes responsible for the performance by the latter of some act in favor of a third person or hypothecates property as security therefore.

“28-11-412. Exoneration of surety. A surety is exonerated:

(t

“(2) To the extent to which he is prejudiced by any act of the creditor which will naturally prove injurious to the remedies of the surety or inconsistent with his rights or which lessens his security;

“28-11-418. Surety entitled to benefit of security held by creditor or ‘cosurety.’ A surety is entitled to the benefit of every security for the performance of the principal obligation held by the creditor or by a cosurety at the time of entering into the contract of suretyship or acquired by him afterwards, whether the surety was aware of the security or not.”

Under the facts of this case, the security agreement signed by Barber to secure the promissory note to the Bank of Old Saloon, Inc., was secured by a liquor license under which Old Saloon, Inc., operated. It appears from the facts that the liquor license was actually owned by the Becks and that the Becks had a lien upon the liquor license, even though held by the Bank as security for the principal debt. Thus when the default of Old Saloon occurred, the Bank returned the liquor license to the Becks for a payment by them to the Bank of $6,000, which was applied to Old Saloon’s debt. It is Barber’s contention that the liquor license was actually worth $60,000 to $70,000 which, if applicable to his surety agreement, would completely exonerate him under the statutes above recited.

The Restatement, Security, treats of the liability of the surety where the creditor has security from the principal obligor. Section 132 states:

“Where a creditor has security from the principal and knows of the surety’s obligation, the surety’s obligation is reduced pro tanto if the creditor:

“(a) Surrenders or releases the security or

“(b) Willfully or negligently harms it, or

“(c) Fails to take reasonable action to preserve its value at a time when the surety does not have an opportunity to take such action.”

The Restatement sets out the ordinary law that applies to the duty of a creditor to protect security given by the obligor in favor of a surety. This facet of the law is not singular. The same idea is expressed in the Uniform Commercial Code. If one party to an instrument under the U.C.C. has a right of recourse against another party to the same instrument, the holder of the instrument has a duty with respect to collateral given by the principal obligor on the instrument. Thus 30-3-606 provides:

“30-3-606. Impairment of recourse or of collateral.

“(1) The holder discharges any party into the instrument to the extent that without such party’s consent the holder:

“(b) Unjustifiably impairs any collateral for the instrument given by or on behalf of the party or any person against whom he has a right of recourse . . .”

However, the party entitled to rely on the preservation of collateral under the U.C.C. can also waive his right thereto under § 30-3-606 (2), MCA:

“(2) By express reservation of rights against the party with a right of recourse the holder preserves:

“(a) All his rights against such party as of the time when the instrument was originally due; and

“(b) The right of the party to pay the instrument as of that time; and

“(c) All rights of such party to recourse against others.”

Thus a party to commercial paper under the Uniform Commercial Code can expressly waive his rights to the preservation of collateral which would otherwise favor him. Courts have extended the same waiver possibility to the case of sureties. For example, it was held in American Bank of Commerce v. Covolo (1975), 88 N.M. 405, 540 P.2d 1294 that where a grantor or surety expressly and unequivocally consents to a waiver or release of his rights in the collateral, he will not be heard to complain of the failure of the creditor to perfect the security interest therein in the first instance. In Idaho, in a case where the creditor modified a sales contract by agreement with the principal debtor without the consent of the surety, it was held that the surety remained liable on his obligation of suretyship where the creditor had expressly reserved his rights:

“Plaintiffs’ final assertion, as a basis entitling them to summary judgment, is that its letter to A.M.R. dated October 31,1974, acts as an ‘express reservation of rights’ under the Uniform Commercial Code — Commercial Paper, I.C. § 28-3-606(2). That section allows the holder of a negotiable instrument to modify the obligation of the principal debtor, without releasing a co-signor as guarantor of the instrument, by an ‘express reservation of rights’ against the guarantor. As stated above, the Uniform Commercial Code — Commercial Paper is not applicable to the guarantee contract between A.M.R. and Heidemann. However, it appears that the ‘reservation of rights’ doctrine contained in I.C. § 28-3-606(2) is a codification of the common law of suretyship and guaranty. ‘Whether the creditor releases the principal or grants him an extension of time, an expressed reservation will preserve his claim against the surety.’ Williston on Contracts, Contracts of Suretyship and Guaranty, § 1230, pp. 738-39 (1967). ‘The surety is not discharged by a purported release of or extension of time to the principal debtor if the creditor has reserved his remedies against the surety’. . .”

Gebrueder Heidemann, K.P. v. A.M.R. Corporation (1984), 107 Idaho 275, 688 P.2d 1180, 1185, 1186.

In Montana, it is the law that the measure of a surety’s obligation to the creditor is that of the principal obligor. This Court stated in Gary Hay and Greg Company Inc. v. Carlson (1927), 79 Mont. 111, 123, 255 P.2d 722:

“ ‘A surety is one who at the request of another for the purpose of securing to him a benefit, becomes responsible for the performance by the latter of some acts in favor of the third person,’ etc. (Section 8195, revised 1921.) Such third person may enforce the obligation at any time before the contract is rescinded (Sections 74, 72, above.) Where the bond is given for the performance of a contract, the bond is made with relation to the contract and as part of it. [Citing cases.] The two are to be construed together. [Citing cases.] The obligation of the surety is, therefore, coextensive with and measured by the promises of the principal (the contractor here) to the obligee (the state) appearing in the contract, provided proper expressions are used in the bond, and the surety by the bond binds himself only to the performance of those acts which the principal promises to perform as part of the contract. [Citing cases.]”

In this case, in the Commercial Surety Agreement which Barber signed, he agreed that his obligation as surety to the Bank “is not dependent on any default of the borrower or on any intervening contract or event of any nature whatsoever,” and that the “Bank may release any collateral given to Bank by borrower, with or without the substitution of new collateral.” By that body language Barber expressly agreed that the Bank could deal with the collateral offered by the principal obligor as the Bank saw fit and by that language he further waived his right against impairment of collateral held by the creditor. The District Court here was constrained to interpret the Commercial Surety Agreement as it would any other contract:

“28-11-403. Interpretation of contract suretyship. In interpreting the terms of a contract in suretyship, the same rules are to be observed as in the case of other contracts.”

In this case, Barber has contended he was a gratuitous surety, and as such was entitled to the benefit of the doctrine of strictissimi juris, that is, that as a gratuitous surety, the Commercial Surety Agreement would be construed in his favor. There appears some doubt here as to whether Barber was indeed a gratuitous surety, but even if he were, his express waiver militates against him.

“. . . [I]n the instant case, we need not adopt a rule of construction weighted against [the creditor]. In this case the suretyship agreement was drafted by the Bank . . . Viewing the language of the Guarantee Agreement most strongly for the [surety] still compels the conclusion that they assumed the risk that there could be a failure, neglect or omission to realize upon . . . the security.

“The import of that language is clear and there is simply no rule of construction that can ascribe a different meaning to those words.” National Bank of Washington v. Equity Investors (1976), 86 Wash.2d 545, 546 P.2d 440, 446-447.

For the foregoing reasons therefore I concur with the majority that upholds the summary judgment in this case.


author: MR. JUSTICE HUNT

text:
    In the Matter of INQUIRY OF BABY BOY SCOTT, Youth in Need of Care.
    No. 88-372.
    Submitted on Briefs Nov. 17, 1988.
    Decided Dec. 29, 1988.
    767 P.2d 298.

      W.M. Hennessey, Butte, for appellant.
    Ross Richardson, Patrick McGee, Butte, for respondent.
   MR. JUSTICE HUNT

delivered the Opinion of the Court.

The natural mother of Baby Boy Scott appeals an order of the Second Judicial District Court, Silver Bow County, terminating her parental rights. We affirm.

The issues raised are as follows:

1. Did the District Court err in terminating the mother’s parental rights without establishing a court-approved treatment plan?

2. Did the District Court err in refusing to grant the mother visitation rights with the child after her parental rights were terminated?

Baby Boy Scott was born on October 28, 1986. At the time of his birth, the mother was a patient at Warm Springs State Hospital. Her admission to Warm Springs in August, 1986 was her third. She had also been a frequent patient at Billings Deaconess Hospital Psychiatric Unit.

Shortly after the child’s birth, the Butte-Silver Bow County Office of Human Services, a division of the Montana Department of Social and Rehabilitative Services (SRS), obtained an order for temporary investigative authority and protective services. The child was placed with a foster home in Butte.

On January 14, 1987, the District Court terminated the rights of the putative father and extended the October protective order. The child was moved to a pre-adoptive home where he resided at the time of the hearing that is the subject of this appeal.

The mother was released from Warm Springs in February, 1987. She was readmitted in August, 1987 and was released again in late December, 1987. She has never seen the child.

On March 30, 1988, the mother filed a motion to dismiss the temporary order of January, 1987, on the grounds that she was no longer incapacitated and was residing at home in Billings where she had family support. She additionally based her motion on the fact that the case had been inactive for over one year. In response, SRS filed a petition for permanent legal custody and termination of parental rights. After a hearing on April 27, 1988, the District Court issued an order denying the mother’s motion to dismiss and granting SRS’s petition. The mother filed this appeal.

The mother first argues that the District Court improperly terminated her parental rights. She maintains that, when a treatment plan has never been established by a district court, the court may not terminate parental rights unless SRS makes a showing that clearly proves the impossibility of a workable plan.

This Court established the “clear impossibility” standard referred to by the mother in In Re C.L.R. (1984), 211 Mont. 381, 386, 685 P.2d 926, 928. At the time of our decision in that case, the pertinent statute provided that a parent’s rights could not be extinguished without a finding that the parent had not complied with a court-approved treatment plan or that such a plan has been unsuccessful. Section 41-3-609(1)(c)(i), MCA (1981).

After C.L.R., the legislature amended the statute, adding exceptions to the treatment plan requirement. The exceptions abrogate the need for the court-made clear impossibility standard with regard to parents who suffer from mental disease. The statute now makes it possible to extinguish the parental rights of a mentally ill individual without establishing a court-approved treatment plan as long as two medical doctors testify that the individual is so severely mentally ill that he or she cannot assume the role of parent. Section 41-3-609(4)(a), MCA. The doctors must also testify that the mental condition of the parent is unlikely to change within a reasonable time. Section 41-3-609(1) (c) (ii).

In the instant case, three psychiatrists testified that the mother suffered from chronic schizophrenia. All agreed that, considering her history of mental illness, there was little hope that she would be able to assume her parental role. They concurred that her condition was unlikely to change within a reasonable time.

We note that one of the doctors had not had contact with the mother for over one year. The other two psychiatrists had evaluated her within four months of the hearing. The testimony of these latter two doctors sufficed to establish the statutory basis for terminating the mother’s rights.

In addition to the testimony of the medical doctors, the residential clinical coordinator at the Mental Health Center in Billings testified that he had counseled the mother during the past five years. He agreed with the doctors that her prognosis was not good.

We will not overturn a district court order terminating parental rights as long as the findings of fact are supported by substantial credible evidence and the conclusions of law do not amount to a clear abuse of discretion. In Re V.B. (Mont. 1987), [229 Mont. 133,] 744 P.2d 1248, 1249, 44 St.Rep. 1838, 1840. In light of the above facts, substantial credible evidence exists to support the District Court findings that the mother was so severely mentally ill that she could not assume the role of parent and that her condition was unlikely to change within a reasonable time. The District Court did not abuse its discretion by terminating the mother’s parental rights.

The mother next argues that the District Court erred by failing to grant her request for visitation rights with the child. She maintains that visitation should have been allowed because there is nothing in the record that demonstrates that such an arrangement would be harmful to the child.

Although we have expressly disapproved the practice of allowing visitation “rights” once parental rights have been extinguished, In Re C.P. (Mont. 1986), [221 Mont. 180,] 717 P.2d 1093, 1095, 43 St.Rep. 728, 731, we have allowed a natural mother to maintain “contact” with her child at the discretion of the SRS. V.B., 744 P.2d at 1250, 44 St.Rep. at 1841-42. Contact is permissible only upon a showing that such an arrangement is in the child’s best interest. V.B., 744 P.2d at 1250, 44 St.Rep. at 1841.

In the present case, even though the mother requested visitation rights, the District Court could properly have considered her request as one for discretionary contact had there been evidence showing that such a plan would be beneficial to the child. However, no such showing was made. The mother failed to elicit testimony from any of the witnesses regarding the effect contact would have on the child. Furthermore, the record as it stands clearly demonstrates that it would not be in the child’s best interest to allow the mother to maintain contact with him. The District Court did not abuse its discretion in failing to allow such an arrangement.

The mother also argues that the District Court erred in denying her motion to dismiss for failure to prosecute. The decision to grant such a motion is within the discretion of a district court. Cremer v. Braaten (1968), 151 Mont. 18, 19-20, 438 P.2d 553, 554. The mother has made no showing that the District Court abused its discretion by denying her motion to dismiss.

We affirm the District Court.

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