author: CHIEF JUSTICE TURNAGE

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. ARNOLD BRADY, SR., Defendant and Appellant.
    No. 88-442.
    Submitted on briefs June 18, 1991.
    Decided July 23, 1991.
    249 Mont. 290.
    816 P.2d 413.

      Arnold Brady, Sr., pro se.
    Marc Racicot, Atty. Gen., Deanne L. Sandholm, Asst. Atty. Gen., Helena, Dennis Paxinos, County Atty., Russell C. Fagg, Deputy County Atty., Billings, for plaintiff and respondent.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

Arnold Brady, Sr., was convicted of aggravated kidnapping, aggravated assault, felony assault, and resisting arrest in a jury trial in the District Court of the Thirteenth Judicial District, Yellowstone County. Appearing pro se, he appeals. We affirm.

The issues are:

1. Does the dangerous offender designation violate the Eighth Amendment because it is disproportionate to the severity of the crime?

2. Was it error to charge Brady with aggravated kidnapping instead of domestic abuse?

3. Was Brady denied due process because the court did not hold a pretrial evidentiary hearing on his claim of ineffective assistance of counsel?

4. Did this Court deny Brady his right to counsel on appeal?

5. Did the District Court err in not allowing a “failure to agree” instruction?

6. Was Brady denied effective assistance of counsel?

This case arose out of a December 3, 1987, beating of Francine Burgess. Brady testified at trial that he and Francine had been living together for “quite a while.” On that morning, Francine had been driving around Billings, Montana, with two other persons. She testified that they had been drinking and had used some “speed.” Brady was driving around in another car with several passengers.

The car in which Francine was riding stopped near Colonial Apartments, where the driver got out to talk with a friend. According to Francine’s testimony and the testimony of others present, Brady pulled up in bis car, ran up behind the car in which Francine was still seated, jumped into the car, and began yelling at Francine, hitting her in the face, and pounding her head against the steering wheel. He dragged Francine from the car by her hair and threw her into the back seat of the car he had been driving.

Brady continued to punch Francine as his brother drove to Coulson Park near the Yellowstone River. At the park, Brady dragged Francine from the car, punched her in the stomach, and dragged her down to the river’s edge.

The others in the car eventually joined Brady and Francine on the river bank. One of them testified at trial that as they sat joking and laughing, Brady occasionally hit Francine. He also kicked her in the mouth, dislodging two of her teeth. Finally, everyone except Brady and Francine left the park.

Francine testified that she feared that Brady would kill her after the others left. However, a kayaker who had been passing in the river seemed to notice them, and stayed in one spot watching Brady and Francine on the shore.

One of the people who had been with Brady called a police detective after she left the park. She took him to find Brady and Francine, who were then walking together. The detective described Francine’s condition at that time as follows:

“Well, the woman was severely beaten when I observed her. Her face was swelling to the point where it reminded me of a pumpkin with two slits in her eyes — where the eyes should be, there were two slits. Her face was perfectly round and she had blood coming from her nose and from her mouth.”

Francine was taken by ambulance to a hospital, where she remained for several days. Although doctors initially believed she might have life-threatening intracranial bleeding, a CAT scan later revealed no broken bones or brain injury. She did lose two teeth, one of which had to be surgically extracted from where it had lodged in her gum.

During his arrest, Brady punched one officer in the face and fought with others. He had abrasions on his knuckles, which were photographed, and about which he stated, “I don’t know how I did it, whether I did it hitting my girlfriend or fighting with the police.”

At trial, Brady denied beating Francine. He testified that he believed she had been beaten by someone else before he joined her that morning, and that she further injured herself in several falls due to her intoxicated condition.

Brady’s family retained Gary Wilcox to represent him. Prior to trial, Brady complained to the District Court that he was receiving ineffective assistance of counsel from Wilcox. The court appointed Allen Beck as co-counsel for the defense.

After a three-day jury trial, Brady was found guilty of aggravated kidnapping of and aggravated assault upon Francine, felony assault on the police officer he punched in the face, and resisting arrest. Brady was sentenced to forty years in prison and was designated a dangerous offender.

Arthur Thompson was appointed to represent Brady on appeal Brady filed a pro se motion in District Court asking that Thompson be removed as counsel and that Allen Beck be appointed as his counsel on appeal. That motion was denied. Subsequently, Brady requested that new counsel be appointed and this Court granted Thompson leave to withdraw. This Court ordered that new counsel be appointed to represent Brady on appeal.

Vernon Woodward, Brady’s new appellate counsel, concluded that there were no nonfrivolous issues which could be raised on appeal. He was granted leave to withdraw after he filed a brief and this Court reviewed the record pursuant to Anders v. California (1967), 386 U.S. 738, 87 S.Ct. 1396, 18 L.Ed. 2d 493. The Court has allowed Brady to proceed with the appeal pro se.

I.

Does the dangerous offender designation violate the Eight Amendment because it is disproportionate to the severity of the crime?

Brady argues that his designation as a dangerous offender violates the prohibition against cruel and unusual punishment because it is grossly disproportionate to the severity of his crime. He states that

“[t]he Defendant in this case was convicted of Kidnapping his wife after she had deliberately caused in the past the Defendant to be locked up on charges of domestic abuse and over the past two years that she and the Defendant were living together it had became a power struggle in which she used to control the Defendant and because of this principle of proportionate should apply because the constitutional language itself suggests no exception for imprisonment.”

A sentence which falls within the maximum authorized by statute is not cruel and unusual punishment unless the sentence is so greatly disproportionate to the crime that it shocks the conscience and outrages the moral sense of the community or of justice. State v. Bruns (1984), 213 Mont. 372, 377, 691 P.2d 817, 820. The maximum penalty for aggravated kidnapping is 100 years, § 45-5-303(2), MCA; for aggravated assault 20 years, § 45-5-202 (3), MCA; and for felony assault 10 years, § 45-5-202(3), MCA. Brady’s sentence is well within the maximum allowed by law. Brady is informed by this Court that the criminality of his senseless and brutal beating of Francine is in no way lessened because she may have been his common-law wife. The District Court stated

“[t]his kidnapping and assault was one of the most brutal this Court has had related before it, involving the merciless beating and kicking of a defenseless woman over a period of at least two hours ... The Court believes that but for the presence of a kayaker, the defendant might very well have been before the Court for a homicide ... The defendant has a previous felony conviction for a crime of violence against a woman involving throat cutting and stabbing ... There is no place in civilized society for such behavior.”

Under § 46-18-404, MCA, an offender may be designated non-dangerous only if the sentencing court determines that the offender does not represent a substantial danger to other persons or society. We conclude that Brady’s designation as a dangerous offender does not constitute error.

II.

Was it error to charge Brady with aggravated kidnapping instead of domestic abuse?

Brady argues that he should have been prosecuted under the domestic abuse statute, § 45-5-206, MCA, instead of the aggravated kidnapping statute, § 45-5-303, MCA, because the domestic abuse statute is specifically tailored to the offense involved here. He cites Preiser v. Rodriguez (1973), 411 U.S. 475, 93 S.Ct. 1827, 3 L.Ed.2d 439, in support of the proposition that a more specific statute will be given precedence over a more general one. This claim was not raised at the District Court level, but in light of Brady’s claim of ineffective assistance of counsel, we will treat it as if it was raised below. Preiser concerned application of the more specific rules for petitions for habeas corpus under the federal habeas corpus statute as opposed to the broad language of rules for petitions filed under 42 U.S.C. § 1983. That case is not applicable here.

Aggravated kidnapping and domestic abuse each contain elements not common to the other offense. Aggravated kidnapping requires that the defendant restrained another person by secreting that person in a place of isolation or by using or threatening to use physical force. That element is not required in the offense of domestic abuse. Domestic abuse requires that the victim be a family member or household member. That element is not required for aggravated kidnapping. Where each offense contains an element not common to the other, a defendant may be charged with both. State v. Thornton (1985), 218 Mont. 317, 708 P.2d 273. Brady does not dispute that all of the elements of aggravated kidnapping were present in the case presented by the State. We farther note that the jury was instructed on the lesser included offenses of kidnapping and misdemeanor unlawful restraint. We hold that there was no error in the State’s choice to prosecute Brady for aggravated kidnapping and not to prosecute him for domestic abuse.

III.

Was Brady denied due process because the court did not hold a pretrial evidentiary hearing on his claim of ineffective assistance of counsel?

Brady was granted the relief he requested in his pretrial claim of ineffective assistance of counsel. New counsel, Allen Beck, was appointed to represent him. It was up to Brady, not the court, to release the attorney who had been privately retained. We hold that there was no denial of due process as to this matter.

IV.

Did this Court deny Brady his right to counsel on appeal?

Brady argues that because the Court allows him to continue pro se on appeal after allowing his attorney to withdraw on the grounds that there are no meritorious appealable issues, the court implies that there are arguable legal points for appeal. He states that new counsel should be appointed to help him raise those points.

In Anders, the United States Supreme Court stated that, after granting the request to withdraw of appellate counsel for an indigent criminal defendant, the court may “dismiss the appeal insofar as federal requirements are concerned, or proceed to a decision on the merits, if state law so requires.” Anders, 386 U.S. at 744, 87 S.Ct. at 1400. It is not required that new counsel be appointed at this point. We hold that Brady has not been denied his right to counsel on appeal.

V.

Did the District Court err in not allowing a “failure to agree” instruction?

This issue has no merit because the trial court did give a “failure to agree” instruction, at Instruction No. 28.

VI.

Was Brady denied effective assistance of counsel?

Brady argues that he received ineffective assistance of counsel because, at trial, his attorney failed to offer a jury instruction on the “lesser included offense” of domestic abuse and to present evidence that he and Francine were married at common law, in support of such an instruction. But, as discussed above, domestic abuse is not a lesser included offense of aggravated kidnapping. Any testimony about a marital relationship between Brady and Francine was irrelevant to the crimes of which Brady was found guilty.

Brady also claims that he was denied effective assistance of counsel because of the cumulative effect of errors including failure to file a motion to suppress his statement to a police officer about the marks on his hands and failure to object to the admission into evidence of a photograph of Francine. As to the failure to file a motion to suppress Brady’s statement about the marks on his hands, there was overwhelming evidence against Brady even without this statement. Further, there is nothing to indicate that the statement was anything but voluntary or that it was given in response to any type of questioning. We conclude that counsel’s failure to object to the admission of the statement does not constitute ineffective assistance of counsel.

The photo of Francine was taken several days after the incident, and showed her teeth and gums. Brady argues that the photo was taken at a time too remote and when conditions had materially changed. However, the treating doctor testified that, due to her injuries, Francine was unable to open her mouth for several days after the beating. In light of that testimony, we conclude that counsel did not render ineffective assistance by failing to make the objections for which Brady argues.

Affirmed.

JUSTICES HARRISON, McDONOUGH, TRIEWEILER AND WEBER concur.


source: Caselaw Access Project

author: CHIEF JUSTICE TURNAGE JUSTICE TRIEWEILER,

license: Public Domain

text:
    In re the MARRIAGE OF MARY IRENE JOHNSTON, Petitioner and Appellant, v. JOHN RICHARD JOHNSTON, Respondent and Cross-Appellant.
    No. 90-526.
    Submitted on Briefs March 21, 1991.
    Decided July 25, 1991.
    249 Mont. 298.
    815 P.2d 1145.

      Stephen C. Moses, Moses Law Firm, Billings, for petitioner and appellant.
    Kenneth D. Tolliver and James C. Reuss, Wright, Tolliver & Guthals, Billings, for respondent and cross-appellant.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

Mary Irene Johnston appeals and John Richard Johnston cross-appeals from the division of marital property in the judgment dissolving their marriage, entered in the District Court of the Thirteenth Judicial District, Yellowstone County. We affirm.

Both parties raise the issue of whether the District Court erred in allocating the proceeds of certain stock in Coca-Cola Bottling Company of Bismarck, Inc. (Bismarck Bottling). John also raises the issue of whether the District Court erred in failing to take properly into consideration Mary’s expected inheritance.

Mary Irene Johnston married John Richard Johnston on October 30, 1980, in Bellingham, Washington. Following their marriage, the couple resided in Bellingham. John was employed at a local Coca-Cola bottling company and Mary was employed at Rainier Brewing. The couple adopted one child who is now an adult.

Mary’s father, Carl Boustead, resided in Bismarck, North Dakota, where he owned and operated Bismarck Bottling, a closely-held corporation. It was Carl’s desire to have his family close to him and he oftentimes expressed his wish that Mary and John move to Bismarck.

In February 1982, Carl offered John employment at Bismarck Bottling. John accepted this offer and in June 1982, the parties moved to Bismarck. John proved to be a hard-working and diligent employee of Bismarck Bottling. He continually assumed more responsibility within the company and was eventually promoted to operations manager in 1985.

In December 1982, Carl caused Bismarck Bottling to issue ten shares of its stock to John and Mary. A similar issue of ten shares was made to Mary’s brother, Hunt, and his wife. Two years later, in December 1984, Bismarck Bottling issued another ten shares of its stock to John and Mary, and also to Hunt and his wife. In October 1985, Bismarck Bottling issued twenty shares of its stock to John and Mary and twenty shares to Hunt and his wife. In total, John and Mary were issued forty shares of Bismarck Bottling stock, which amounted to 11.85% of the issued stock.

In 1982, the value of Bismarck Bottling was between $3.2 and $4 million. Carl sold Bismarck Bottling in 1986 for approximately $10 million. John and Mary’s 11.85% interest in Bismarck Bottling generated proceeds of $889,000 pre-tax and $689,000 after tax. The proceeds were placed in an investment account at First Bank in Bismarck. By way of additional deposits and reinvestment of earnings, the account grew in value to $866,071.

After Carl sold Bismarck Bottling in 1986, the new owners hired John as the plant manager. John remained as plant manager for approximately one year. Thereafter, John and Mary relocated to Billings, Montana. In August 1988 the couple separated, and in July 1989 the District Court dissolved their marriage.

In determining the property settlement, the court noted that Carl gave numerous gifts to the couple over a four-year period, and, at the time of the dissolution, the value of these gifts exceeded the net worth of the couple. In addition to the Bismarck Bottling stock, these gifts included 1) cash used for payments on the parties’ home in Bellingham; 2) the equity in a home in Bismarck owned by Carl, which the parties later sold, using the proceeds as a down-payment for another home; 3) automobiles; 4) cash used to purchase certificates of deposit; 5) cash used to build a garage; 6) cash used for home renovations; and 7) an educational trust for the parties’ son.

In its findings, conclusions, and order dissolving the parties’ marriage, the court awarded Mary, inter alia, all of the value of the Bismarck Bottling stock at the time the stock was sold and the proceeds invested. It awarded John half of the appreciation in the investment account which arose after the Bismarck Bottling stock was sold in 1986 and the proceeds thereof invested, totaling $82,581.29. The court later amended this property allocation and awarded John an additional $141,360 from the investment account “after consideration of the marital appreciation of the parties’ ownership interest in [Bismarck Bottling] and [John’s] marital contribution to that appreciation” from 1982 to 1986. From this order, Mary appeals and John cross-appeals.

I.

Did the District Court err in allocating the proceeds of the sale of the Bismarck Bottling stock?

In determining the division of assets in a marriage dissolution, each case must be examined individually, with an eye to the unique circumstances before the court. In re Marriage of Jorgensen (1979), 180 Mont. 294, 299, 590 P.2d 606, 610 (citation omitted). A court must also consider the statutory criteria under § 40-4-202(1), MCA, and equitably apportion the marital assets. It is not necessary that an equitable distribution be an equal division of the marital assets. E.g., In re Marriage of Myers (1984), 210 Mont. 173, 682 P.2d 718. Regarding marital assets traceable to gifts, § 40-4-202(1), MCA, provides:

“In dividing property... acquired by gift, bequest, devise, or descent ... the court shall consider those contributions of the other spouse to the marriage, including:
“(a) the nonmonetary contribution of a homemaker;
“(b) the extent to which such contributions have facilitated the maintenance of this property; and
“(c) whether or not the property division serves as an alternative to maintenance arrangements.”

Our standard of review is whether the District Court’s distribution is based on substantial credible evidence. In re Marriage of Johns (1989), 238 Mont. 256, 258, 776 P.2d 839, 840. This Court will only overturn the findings of a district court where they represent a clear abuse of discretion. Johns, 776 P.2d at 840.

Mary argues that the District Court erred when it awarded John an additional $141,360 based on marital appreciation of the Bismarck Bottling stock and John’s marital contribution to that appreciation from 1982 to 1986. She asserts that because the stock was a gift from her father, it should be considered as principally a gift to her. Furthermore, she argues that the appreciation in the value of the stock occurred in 1986 and was substantially due to the unique franchise agreement held by her father, and not to any contribution John made to Bismarck Bottling from 1982 to 1986. Accordingly, she maintains that John is not entitled to any marital appreciation of the Bismarck Bottling stock for these years.

Mary cites In re the Marriage of Herron (1980), 186 Mont. 396, 608 P.2d 97. In Herron, this Court reversed a district court, holding that it abused its discretion when it allocated a 50/50 property division where most of the property of the marital estate was traceable to gifts or bequests from the wife’s father. This Court further provided in Herron:

“George Robbins thus gifted or bequeathed over a quarter of a million dollars to the Herrons dining the course of their marriage. The property was given to the Herrons jointly, but Mr. Robbins certainly did so to provide for his only daughter. The property should be considered as principally gifts to Mrs. Herron.”

Herron, 608 P.2d at 100.

In the present case, there was a clear conflict in the evidence on the nature of the gifts of Bismarck Bottling stock from Carl to Mary and John. Carl testified that the stock was a gift intended for Mary’s comfort and to effectuate his own estate plan. However, John testified that the stock was given to him and Mary in recognition of his hard and diligent work in improving the financial position and the case sale position of Bismarck Bottling. The court initially agreed with Mary, as indicated in finding #22:

“[tjhese gifts from Carl and his wife to John and Mary were motivated by Carl’s desire to provide for his daughter’s comfort and to effectuate an estate plan. The gifts were given to them jointly, but Carl did so to provide for his only daughter. Carl’s gifts totaled more than the net worth of the parties. Accordingly, the marital estate should be considered as principally gifts to Mary ....”

There is substantial evidence in the record to support this finding. However, in its amended findings of fact and judgment, at additional finding #18, the court casts doubt on the continued vitality of its earlier finding by stating that John “was a joint recipient of the stock.” John argues that, as a joint recipient of the stock, he was an acquiring spouse and is entitled to one-half of all of the investment account traceable to the proceeds of the Bismarck Bottling stock, not just the appreciation of the stock.

There were clear conflicts in the evidence on the reasons for the increased value of Bismarck Bottling between 1982 and 1986. Mary’s expert testified that the increase in the value of the business occurred precipitously in 1986 due to the unique nature of the franchise agreement. In addition to his own testimony, John presented the testimony of the district manager for Coca Cola during the years 1983 to 1986, who testified that, in his opinion, Carl was essentially retired from the business during those years and that John worked very hard at Bismarck Bottling as “an integral part of what happened there.”

The District Court found, in its amended findings of fact and judgment at “additional finding of fact” #18, that

“[gliven the clear record as to respondent’s contribution to the preservation and appreciation of the parties’ stock in Coca-Cola Bottling of Bismark [sic], Inc., and the fact that the husband was a joint recipient of the stock, the Court finds it equitable to allocate one-half the appreciation to the husband, being $141,360.00.”

That finding is supported by substantial evidence presented by John and supports the court’s award to John of half of the marital appreciation of the parties’ ownership in Bismarck Bottling. However, the court also left standing its finding #22 that

“... John also asserts that he had contributed to the increase in value of the Carl’s [sic] Coca-Cola business in Bismarck and that he increased the annual case sale by over 300,000 cases between 1982 and 1985. However, this was only a 7.4 percent average annual case sale increase as compared to an average annual case sale increase of 11 percent for the period 1974 through 1982. The substantial increase in the value of the company was related to the unique franchise agreement held by Carl, as well as other market conditions prevailing at the time of the sale.”

The above findings of the District Court are internally inconsistent. However, the court did make findings which support its division of the marital estate. It found that the Bismarck Bottling stock should be considered as principally a gift to Mary. It also found that John contributed to the preservation and appreciation of the stock. The absence of a 50/50 property distribution and the finding that John contributed to the preservation and appreciation of the stock distinguish this case from Herron. Without approving of the court’s contradictory findings, we affirm the District Court’s allocation of the proceeds of the Bismarck Bottling stock.

II.

Did the District Court err in failing to take properly into consideration Mary’s expected inheritance?

Section 40-4-202(1), MCA, provides that the court shall consider, inter alia, “future acquisition of capital assets and income” when apportioning a marital estate in a dissolution proceeding. Here, John argues that the court failed to adequately consider Mary’s expected future inheritance upon Carl’s death. Carl testified that he gave all the generous gifts to Mary and John for Mary’s comfort and to effectuate an estate plan. He further testified that Mary could expect a “pittance” of any future inheritance following his death as he planned to devise his remaining estate, if any, to “some of my favorite charities and a fine hospital in Bismarck.” Basing Mary’s future acquisition on an inheritance to be received upon the death of her father is highly speculative and thus, inappropriate. We therefore hold that the District Court did not err regarding consideration of Mary’s expected inheritance.

Affirmed.

JUSTICES HARRISON, HUNT, GRAY, McDONOUGH and WEBER concur.

JUSTICE TRIEWEILER,

dissenting:

I respectfully dissent from the opinion of the majority. I would reverse the District Court’s failure to equally divide the proceeds from the sale of stock in the Bismarck Bottling Company, which was jointly owned by the parties.

The disposition of the disputed property is controlled by § 40-4-202(1), MCA, which requires that district courts “equitably apportion between the parties the property and assets belonging to either or both.” (Emphasis added.)

That portion of § 40-4-202, MCA, which relates to the interest “of the other spouse” in property acquired by gift is not applicable to this case because the District Court made a specific finding of fact that the parties were joint recipients of the stock. The proceeds from the sale of the stock were deposited in a joint account and at all times dealt with as a marital asset prior to the entry of the divorce decree. To deny John any interest in the proceeds from the sale of jointly owned stock which had an after-tax value of $689,000 at the time of sale, was not equitable and was a clear abuse of the trial court’s discretion.

The following facts illustrate the inequity of the property distribution in this case.

When John and Mary were married, John was employed by a Coca-Cola bottler in Bellingham, Washington. However, Carl Boustead preferred that his daughter return to Bismarck. Therefore, John and Mary were persuaded to return to Bismarck where John took a reduction in salary to take a position in top management of Bismarck Bottling.

John worked in the sales department, the delivery force, the production team, the management team, and in the warehouse. He eventually became operations supervisor, and by 1985 was promoted to the position of operations manager. For all practical purposes, the day-to-day operations were managed by John while Mary’s father spent more and more time relaxing at his winter home in Arizona.

From 1982 to 1985, John and Mary were jointly given 40 shares of stock in Bismarck Bottling which represented 11.85 percent of the total outstanding stock. In its Amended Findings of Fact, the court specifically found that the parties were j oint recipients. It did not find that the stock was given to Mary alone.

There is no question that John contributed to the appreciation of the stock. The District Court specifically found that the value of total outstanding stock in Bismarck Bottling increased from $4 million in 1982, when John went to work for the company, to $10 million in 1986, when the company was sold. In other words, the value of the company increased by 150 percent under John’s leadership.

There was no evidence, nor any specific findings by the District Court, that Mary did anything to contribute to the appreciation of Bismarck Bottling or the stock that was issued to the parties.

John was described by other employees at the plant as a hard worker who brought professionalism to the bottling business, while Mary’s father and brother were depicted as being superficially and irregularly involved in the business’s management.

After the Bismarck Bottling Company was sold in 1986, the new owners hired John as the plant manager. During the 12 months of operation prior to the sale, with Mary’s family members involved in its management, the company produced profits in the neighborhood of $700,000. However, during the 12 months after acquisition, under John’s sole management, the profits increased to $1.3 million.

When the bottling company was sold in 1986 for approximately $10 million, the parties’ 11.85 percent interest generated proceeds of $889,000, which netted them $689,000 after taxes. The proceeds were placed in an investment account at First Bank of Bismarck.

As part of the sale, John executed a non-compete agreement, as well as a consulting agreement. The total contributions to the sale proceeds from John’s consulting and non-compete agreements amounted to $112,157, which was also placed in the parties investment account. These proceeds had nothing to do with the stock gifted to Mary and John, and had nothing to do with any efforts on the part of Mary. Yet, the District Court’s decree totally deprives John of this income which resulted directly and exclusively from his efforts.

Less than two months ago in In re Marriage of Keedy (Mont. 1991), [249 Mont. 47,] 813 P.2d 442, 48 St.Rep. 572, we affirmed a District Court decree which awarded Carol Keedy 50 percent of the appreciated value of baseball cards acquired by her husband as an 11-year-old boy which, for the most part, had been stored in his mother’s garage in Nebraska during the couple’s marriage.

It has been said that consistency is the hobgoblin of small minds. However, it certainly has a place in jurisprudence. If so, it would not be apparent to the average lawyer in Montana who tries to reconcile our two most recent decisions on the division of marital property.

In the Keedy case, pre-acquired marital property was, for all practical purposes, divided equally between the parties, even though the non-acquiring spouse contributed nothing to its appreciation. In this case, property which was given jointly to both parties was distributed exclusively to the spouse who contributed nothing to its appreciation.

I believe the district courts of this state deserve better guidance than this regarding future disposition of marital and non-marital property.

For these reasons, I would reverse the District Corut’s disposition of the parties’joint investment account, and divide it equally between Mary and John.


author:
JUSTICE HUNT
      JUSTICE TRIEWEILER,

text:
    JOHN C. HOYT, Plaintiff and Respondent, v. RUSSELL G. EKLUND, d/b/a EKLUND ENTERPRISES, Defendant and Appellant.
    No. 91-011.
    Submitted on briefs April 18, 1991.
    Decided July 25, 1991.
    249 Mont. 307.
    815 P.2d 1140.

      John C. Doubek, Small, Hatch, Doubek & Pyfer, Helena, for defendant and appellant.
    John C. Hoyt, Hoyt & Blewett, Great Falls, for plaintiff and respondent.
   JUSTICE HUNT

delivered the opinion of the Court.

Defendant and appellant, Russell G. Eklund, doing business as Eklund Enterprises, appeals from an order of the District Court of the Eighth Judicial District, Cascade County, denying his motion to set aside a default and default judgment. We reverse and vacate the default and default judgment.

The issues raised on appeal are as follows:

1. Did the District Court err in refusing to set aside a default judgment entered by the clerk of court when the plaintiff’s claim was not for a sum certain or for a sum capable of being made certain by computation?

2. Did the District Court abuse its discretion in refusing to set aside the entry of default?

Plaintiff and respondent, John C. Hoyt, contracted with the defendant to construct a residence on property located in Cascade County. The facts surrounding the project are disputed and unclear from the record. The plaintiff alleges that the defendant did not complete construction and abandoned the project. The plaintiff claims that much of the work had to be redone. The defendant, on the other hand, asserts that the plaintiff made numerous changes and modifications in the plans, and that the plaintiff owes him $39,548 for materials and labor.

The defendant filed a mechanic’s lien against the home and retained the law firm of Small, Hatch, Doubek & Pyfer to represent him. In April and May 1989, the plaintiff and one of the partners in the firm exchanged a series of letters regarding the plaintiff’s problems with the construction. On May 16, 1989, the attorney inspected the house and asked the plaintiff for a list of specific complaints. On May 23, 1989, the plaintiff forwarded to the attorney a ten-page memo detailing defects in the house. On May 26,1989, the plaintiff sent another letter to the attorney, describing an additional problem with the dwelling. The attorney failed to reply to either letter, and on July 5, 1989, the plaintiff again wrote, asking the attorney to please respond. When the attorney still failed to reply, the plaintiff on July 18,1989, wrote directly to the defendant, threatening him with a lawsuit.

Neither party took further action in the matter until April 3,1990, when another partner in the firm representing the defendant filed a complaint to foreclose on the mechanic’s lien. The plaintiff was not served, however, as the attorney intended to undergo discovery on the matter before completing service.

On May 24,1990, the plaintiff wrote to the second attorney, stating that he understood that the lien foreclosure action had been commenced and suggesting that the attorney serve him so that he might appear with a counterclaim. In the letter, the plaintiff indicated that he would wait one week to determine the defendant’s intentions and that he would file a separate suit if he did not receive a reply. The following day, angry that yet another problem with the house had appeared, the plaintiff again wrote to the second attorney, stating that he was proceeding to file a complaint against the defendant and that he would consent to consolidate the action with the hen foreclosure suit. He received no reply to either letter.

On May 29, 1990, the plaintiff filed the complaint in this action. The defendant was personally served on the same day. The defendant forwarded a copy of the summons and complaint to the second attorney the following day. The second attorney, however, never received the complaint and therefore did not appear on behalf of the defendant.

On July 12,1990, the clerk of court entered the defendant’s default. On August 8, 1990, pursuant to the plaintiff’s affidavit, the clerk entered a default judgment against the defendant in the amount of $86,000.

The defendant learned of the default on September 17,1990. That day, he called the second attorney to inquire about the status of the action and discovered for the first time that the attorney had not received the summons and complaint by mail and that the attorney was unaware that an action had been started by the plaintiff.

On September 21, 1990, the defendant filed a motion to set aside the default judgment and consolidate the plaintiff’s complaint with the lien foreclosure action. Oral argument was held on the matter, after which the District Court denied the motion. This appeal followed.

The defendant first argues that the District Court erred in failing to set aside the default judgment entered by the clerk of court when the plaintiff’s claim was not for a sum certain or a sum capable of being made certain by computation. We agree.

Rule 55(b), M.R.CiwR, delineates the procedure for obtaining a default judgment. It provides in pertinent part:

Judgment by default may be entered as follows:

“(1) By the clerk. When the plaintiff’s claim against a defendant is for a sum certain or for a sum which can by computation be made certain, the clerk upon request of the plaintiff and upon affidavit of the amount due shall enter judgment for that amount and costs against the defendant, if he has been defaulted for failure to appear and if he is not an infant or incompetent person, and has been personally served. No judgment by default shall be entered by the clerk when service has been by publication.
“(2) By the court. In all other cases the party entitled to a judgment by default shall apply to the court therefore .... If the party against whom judgment by default is sought has appeared in the action, he ... shall be served with written notice of the application for judgment at least 3 days prior to the hearing on such application. If, in order to enable the court to enter judgment or to carry it into effect, it is necessary to take an account or to determine the amount of damages or to establish the truth of any averment by evidence or to make an investigation of any other matter, the court may conduct such hearings or order such references as it deems necessary and proper and shall accord a right of trial by jury to the parties when and as required by any statute of the state of Montana. (Emphasis added.)” Rule 55(b), M.R.Civ.P.

Under the rule, the clerk of court may enter a default judgment against a party who has been served but who has failed to appear if the claim against the party is for a sum certain or a sum capable of being made certain by computation. Rule 55(b)(1), M.R.Civ.P. If the amount of the claim is not for a sum certain or a sum capable of being made certain by computation, the party seeking the default judgment must apply to the district court, which may hold a hearing on the matter. Rule 55(b)(2), M.R.Civ.P

In the complaint filed in the present case, the plaintiff failed to specify the numerical amount of his claim. Instead, he sought monies compensating him for an uninhabitable dwelling, rebuilding or completing the residence, and emotional distress. He also sought punitive damages, prejudgment interest, costs, and attorney's fees. In the affidavit accompanying his praecipe for default judgment, he stated:

“Plaintiff will have to expend the sum of at least $86,000.00 to correct the gross, shoddy workmanship performed by Defendant and re-do a substantial portion of the dwelling, including replacing all doors, painting, installing adequate heating and air conditioning, and replacing items improperly installed or built by Defendant as well as completing said dwelling. (Emphasis added.)”

The sum of $86,000 was merely an estimate of the amount of damages the plaintiff expected to incur in completing the house. The damages did not constitute a sum certain and were not capable of being made certain by computation. Therefore, the clerk of court did not have the authority to enter the default judgment. The District Court committed reversible error in refusing to vacate the default judgment.

The defendant next argues that the District Court abused its discretion in refusing to set aside the entry of default. Once again, we agree.

The policy of the law is to favor trial on the merits. Consequently, no great abuse of discretion need be shown to warrant a reversal of a district court order denying a motion to set aside a default. Lords v. Newman, 212 Mont. 359, 366, 688 P.2d 290, 294 (1984).

Rule 55(c), M.R.Civ.P, allows the district court to set aside an entry of default and a default judgment. It provides in pertinent part:

“For good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b).”

Rule 55(c), M.R.Civ.P.

In Cribb v. Matlock Communications, Inc., 236 Mont. 27, 30, 768 P.2d 337, 339 (1989), this Court distinguished the standard for setting aside an entry of default from the standard for vacating a default judgment. We noted that an entry of default may be set aside upon a showing of “good cause,” which is a more flexible and lenient standard than the requirements for vacating a default judgment under Rule 60(b), M.R.Civ.P. We held that the district court should consider the following factors when determining if the defendant has shown good cause for setting aside an entry of default:

“(1) [WJhether the default was willful, (2) whether the plaintiff would be prejudiced if the default should be set aside, and (3) whether the defendant has presented a meritorious defense to plaintiff’s claim.”

Cribb, 236 Mont. at 30, 768 P.2d at 339. We additionally held that the court must balance the interests of an adjudication of the claim on the merits against the interests of the “orderly and timely administration of justice.” Cribb, 236 Mont. at 30, 768 P.2d at 339.

The facts here do not establish willfulness by the defendant or his attorneys. At most, this situation presents a case of excusable neglect by the defendant for failing to follow-up on the status of the complaint and a possible mistake in delivery of the letter containing the summons and complaint. Admittedly, the defendant’s attorneys should have responded to the plaintiff’s correspondence. However, threats of lawsuits are common among disgruntled individuals, threats that are not always carried out. In fact, in this case the plaintiff had warned the defendant that he would file suit over ten months before he actually commenced the action. In addition, the plaintiff will not be prejudiced by setting aside the default. As soon as he discovered the default, the second attorney diligently pursued the lawsuit by promptly moving to set aside the judgment. Only a few months elapsed between filing the complaint and the motion to set aside. The plaintiff’s ability to prosecute the action was not impaired by this delay in defending the suit.

Finally, with the mechanics lien foreclosure suit, the defendant offered a defense to plaintiff’s complaint that, if proven, is meritorious. Although the plaintiff argues that the defendant is liable for damages arising out of the defendant’s shoddy construction effort, the defendant contends that the plaintiff owes him money for the work performed on the residence.

We conclude that in the present case the District Court abused its discretion in refusing to set aside the entry of default. Considering the fact that the defendant’s suit to foreclose the mechanic’s lien arises out of the same set of facts as the case at hand, the administration of justice may very well be aided by allowing an adjudication on the merits of both claims.

We reverse and vacate the default and the default judgment. The case is remanded for further proceedings consistent with this opinion.

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

JUSTICE TRIEWEILER,

concurring in part and dissenting in part:

I concur with that part of the majority opinion which sets aside the clerk of court’s entry of default judgment for the reason that plaintiff’s complaint was not for a sum certain or a sum which by computation could be made certain.

I dissent from that part of the majority opinion which finds that the District Court abused its discretion when it refused to set aside the entry of default against the defendant pursuant to Rule 55(c), M.R.Civ.P.

According to the terms of Rule 55(c), an entry of default can only be set aside for “good cause.” In Cribb v. Matlock Communications, Inc. (1989), 236 Mont. 27, 30, 768 P.2d 337, 339, we held that in addition to those factors cited by the majority, a District Court may consider “whether there was a good faith mistake,” by the defendant in deciding whether good cause exists for setting aside an entry of default. In this case, there was ample evidence upon which the District Court could have concluded that the defendant’s failure to appear was not based upon a good faith mistake.

From May 23, 1989, to May 25, 1990, plaintiff wrote to defendant or his attorneys on six different occasions in order to provide information regarding the inadequacy of the work done on his house and requesting information from the defendant. None of these letters were responded to by the defendant or his attorneys.

On May 29, 1990, defendant was served with a summons and complaint. His affidavit indicates that he mailed it to his attorney the next day. However, in spite of the fact that receipt by his attorney was never acknowledged, he did not bother checking with his attorney regarding the status of the complaint for nearly four months, or until after the default judgment was entered against him.

The District Court was justified in concluding that the defendant’s attitude about the plaintiff’s complaints was cavalier both before and after default was entered. It is apparent from the District Court’s order that defendant’s habitual non-responsiveness was a factor in the District Court’s conclusion that “good cause” did not exist for setting aside the entry of default.

As pointed out by the majority, we also held in Cribb, supra that to establish “good cause” for setting aside an entry of default, the defendant must establish a “meritorious defense to plaintiff’s claim.”

In this case, the defendant offered no meritorious defense to plaintiff’s complaint as part of his motion to set aside the entry of default. The defendant filed no proposed answer; he did not offer any evidence; he did not request oral argument; and he did not present any evidence of a meritorious defense at the time set for the oral argument which was requested by the plaintiff.

The defendant filed a motion to set aside default in which he stated that the motion was based “on the grounds and for the reasons set forth in the affidavits of Russell Eklund and John Doubek attached hereto.” The affidavit of Russell G. Eklund in essence stated that the day after he received the summons and complaint which had been served upon him, he sent it to his attorney and assumed that he had received it. Defendant also states that he authorized that same attorney to file a mechanic’s lien foreclosure action against the plaintiff previously, but provided no information about the nature of the action, nor the substance of his complaint in that action. Defendant’s affidavit did not even specify that the foreclosure action related to the same piece of property which was the subject of plaintiff’s complaint.

John Doubek’s affidavit simply states that on September 17,1990, he received a telephone call from his client asking why a default judgment had been entered against him and that he was surprised by the question because he had never previously been aware of the summons and complaint. He also mentioned having previously filed a foreclosure action against the plaintiff, but again, gave no particulars about the foreclosure action, and specifically, did not even relate the foreclosure to the same piece of property which was the subject of the plaintiff’s complaint.

There was no other evidence offered. In fact, the attorney who appeared at the time set for oral argument was not even the same attorney who filed an affidavit in support of the defendant’s motion to set aside the entry of default. He was unable to add anything to the information set forth in the affidavit.

The majority concludes that the defendant’s mechanic’s lien presented a meritorious defense to the plaintiff’s action. However, at no time prior to the District Court’s order denying the defendant’s motion to set aside the entry of default was the defendant’s mechanic’s lien or the action to foreclose that lien ever a matter of record in this action. Neither was there any explanation of the nature of that claim which would in any way enable the District Court to determine whether it constituted a meritorious defense to the plaintiff’s complaint in this case.

Finally, plaintiff was not even in a position to respond to any issue created by the foreclosure action because he had never been served with it.

Under these circumstances, it can hardly be argued that the District Court abused its discretion (even slightly) when it concluded that no meritorious defense had been presented by the defendant.

I strongly support the principle that most cases should be resolved on their merits. However, I also strongly believe that in exercising their discretion granted pursuant to Rule 55(c), District Judges should be entitled to rely on the record before them and should not have to speculate that some unknown set of facts might constitute a meritorious defense to the plaintiff’s complaint.

For these reasons, I would affirm the District Court’s denial of the defendant’s motion to set aside the clerk’s entry of default for the plaintiff.


author: JUSTICE TRIEWEILER

text:
    HAZEL HOWARD, Plaintiff and Respondent, v. MARIE DALIO, Defendant and Appellant.
    No. 90-631.
    Submitted on Briefs May 23, 1991.
    Decided Aug. 13, 1991.
    249 Mont. 316.
    815 P.2d 1150.

      J. David Penwell, Bozeman, for defendant and appellant.
    Mark A. Bryan, Bryan & Atkins, Bozeman, for plaintiff and respondent.
   JUSTICE TRIEWEILER

delivered the opinion of the Court.

Marie Dalio appeals the determination of the District Court of the Eighteenth Judicial District for Gallatin County, denying Dalio’s motion to set aside judgment entered in favor of Cecelia Prevost. We affirm the District Court.

The issue on appeal is whether the District Court had jurisdiction to establish a constructive trust for the benefit of Cecelia Prevost.

Hazel Howard, Cecelia Prevost, and Marie Dalio are sisters. Their oldest sister, May Ping Sellards, died on March 25,1987. Prior to her death, Sellards purchased six certificates of deposit, on which all four sisters were named as joint depositors. In her will, she also stated that her residual estate, which included the majority of her assets, was to go to her sisters in equal shares.

Sellards became ill in 1984. In June 1985 Marie Dalio and her husband moved to Montana to take care of Sellards and handle many of her affairs. Between September 30, 1985, and February 17, 1987, Dalio cashed four of the six CDs created by Sellards. The day following Sellards’s death, Dalio cashed the other two CDs. While portions of the proceeds were put into Sellards and Dalio’s joint account, a significant amount of the proceeds was put into Dalio’s own account or was unaccounted for. None of the sisters were informed of Dalio’s actions involving the CDs.

Hazel Howard spoke with bank officials after Sellards’s death and discovered that all six of the CDs, totaling $121,861.66, had been cashed. She then filed a complaint alleging fraud on the part of Marie Dalio. Howard also alleged a constructive trust had been created for the benefit of both Cecelia Prevost and herself, and that Marie Dalio had breached her duty as trustee by her actions. Cecelia Prevost was not joined as a plaintiff. However, the court was asked in both the complaint and in the final pretrial order to require that Dalio pay one-third of the trust corpus to plaintiff and one-third to Cecelia Prevost. In fact, Dalio framed as one of the issues:

“2. Are the other two surviving sisters, i.e. Howard and Prevost, entitled to any portion of the certificates of deposit on which their name appears ...?”

Following a bench trial, the District Court concluded that a constructive trust relating to the proceeds of the CDs was created with Marie Dalio as its trustee. The court found that Dalio owed one-third of the trust’s proceeds, or $40,620.55, plus interest, to Hazel Howard. The court then stated that “[t]he other third shall be paid to the remaining sister, Cealia [sic] Prevost.” On July 23, 1990, judgment was entered against Dalio in favor of Cecelia Prevost in the amount of $40,620.55. Dalio thereafter moved to set aside the judgment on grounds that Prevost had never been a party to the action, and that the court therefore lacked jurisdiction and could not enter judgment in her favor. The motion was denied, and Dalio filed this appeal. Dalio does not here contest the judgment entered against her in favor of Howard.

Dalio contends that the lower court erred by entering judgment in favor of Prevost because she was never a party to the action initiated by Howard. Dalio asserts that there was never a voluntary appearance by or legal service made upon Prevost. Dalio cites Holt v. Sather, 81 Mont. 44, 264 P. 108 (1928), and Deich v. Deich, 136 Mont. 566, 323 P.2d 35 (1958) for the proposition that there must be either an appearance or legal service upon an individual for the court to acquire jurisdiction of that person, and that without jurisdiction there cannot be a valid judgment in favor of that individual.

Both Holt and Deich relate to the absence of jurisdiction over a defendant in an action in law. Neither case stands for the proposition that a court may not impose a constructive trust in equity without having all of the trust’s beneficiaries before it.

Section 72-33-219, MCA, states that “[a] constructive trust arises when a person holding title to property is subject to an equitable duty to convey it to another on the ground that the person holding title would be unjustly enriched if he were permitted to retain it.” This Court, in Eckart v. Hubbard, 184 Mont. 320, 602 P.2d 988 (1979), held that creation of a constructive trust requires fraud, mistake, undue influence, violation of trust, or other wrongful acts. The District Court found Dalio guilty of fraud, undue influence and a breach of trust. Those acts were sufficient to create a constructive trust, and a constructive trust is subject to the provisions of Montana’s Trust Code.

For that reason, the District Court had subject matter jurisdiction over the corpus or assets of the trust. Section 72-35-101, MCA, provides that:

“(1) The district court having jurisdiction over the trust pursuant to chapters 33 through 36 has exclusive jurisdiction of proceedings concerning the internal affairs of trusts.
“(2) The district court having jurisdiction over the trust pursuant to chapters 33 through 36 has concurrent jurisdiction of the following:
“(a) actions and proceedings to determine the existence of trusts;
“(b) actions and proceedings by or against creditors or debtors of trusts; and
“(c) other actions and proceedings involving trustees and third persons.”

Dalio was properly served and subject to the jurisdiction of the court, allowing the imposition of a constructive trust in favor of all its beneficiaries. Jurisdiction over the person upon whom the trust is imposed is pivotal, but all potential beneficiaries need not be parties. Instructive on this issue is 76 Am.Jur. Trusts § 282. It states:

“A court of equity in the exercise of its jurisdiction and control of trusts and their administration may assume jurisdiction of a particular trust and direct that thereafter the trust is to be administered under its direction, and in many instances may make appropriate orders and decrees, without having all interested parties before it, so long as they are not prejudiced in any substantive rights.”

Cecelia Prevost was certainly not prejudiced by her absence as a party to this litigation. That is evident from the fact that she has appeared to oppose her sister’s appeal from the judgment entered in her favor.

Neither was Dalio prejudiced by her sister’s absence as a plaintiff in this action. She was aware from the complaint and from the plaintiff’s allegations in the pretrial order that plaintiff sought to impose a constructive trust for the benefit of both the plaintiff and Cecelia Prevost. She was aware that the plaintiff sought to have the corpus of the trust divided equally among the three surviving sisters. The same proof that established the trust for the benefit of Howard established a trust for the benefit of Prevost.

Dalio contends that she was denied the opportunity to prove her defense that an action by Prevost would have been barred by the statute of limitations. However, the plaintiff’s first cause of action was based upon fraud which did not accrue until the aggrieved party discovered the facts constituting the fraud. Section 27-2-203, MCA. The District Court found, as a matter of fact, that there was no evidence or testimony that Dalio ever informed any of her sisters that she was cashing in the CDs. That evidence could have been offered without Prevost’s presence. Furthermore, plaintiff’s second cause of action sought to create a constructive trust. The statute of limitations applicable to that cause of action was § 27-2-202(3), MCA, which allows commencement of the action within 3 years. The record in this case discloses that the first CD was converted to her own use by Dalio on September 30, 1985, and that this action was commenced on May 12, 1988, which was less than 3 years later. Therefore, we conclude that Dalio’s ability to present her defense, based upon the statute of limitations, was not impaired by the fact that Prevost was not named as a plaintiff. Neither has there been any reason offered by Dalio why Prevost’s deposition could not have been taken, had her testimony been necessaryinordertosupportanyofDalio’saffirmativedefenses. In fact, through much of the proceedings Prevost was listed by Dalio as a witness.

The Ninth Circuit has had opportunity to rule on a matter similar to the instant case. In In re Allustiarte, 786 F.2d 910 (9th Cir. 1986), the court ruled that the failure to join spouses of grantees of real property in an action to impose a constructive trust was not fatal to the action, even though that trust would have detracted from their interest in the property. The court stated:

“If the court determines that a judgment rendered in the person’s absence will be adequate to protect his interests, the person is not indispensable. Joinder is not required where the absent parties’ interests are adequately protected by those who are present. The record demonstrates that the interests of the absent spouses were adequately protected by the Allustiartes who were at trial. The absent spouses were not prejudiced by the failure to join them as parties since their interests were identical to their spouses who were named in the action.”

In re Allustiarte, 786 F.2d 910, 919 (9th Cir. 1986) (citations omitted).

We conclude that Prevost’s rights as a beneficiary were identical to Howard’s. Her interests were adequately protected, and Dalio’s interests were not adversely affected by the fact that she was not personally named as a plaintiff.

Accordingly, we affirm the judgment of the District Court.

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


author: JUSTICE McDONOUGH

text:
    HOBBLE-DIAMOND CATTLE COMPANY, a Montana Corporation, Plaintiff and Appellant, v. TRIANGLE IRRIGATION COMPANY, a Montana Corporation, Defendant and Respondent.
    No. 91-006.
    Submitted on briefs July 11, 1991.
    Decided August 15, 1991.
    249 Mont. 322.
    815 P.2d 1153.

      Charles A. Murray, Jr., and Christopher P. Thimsen, Billings, for plaintiff and appellant.
    James E. Aiken, Jardine, Stephenson, Blewett & Weaver, Great Falls, for defendant and respondent.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

The plaintiff Hobble-Diamond Cattle Company (Hobble-Diamond) appeals the order of the Sixth Judicial District Court, Sweet Grass County, denying Hobble-Diamond leave to amend its complaint in its lawsuit against the defendant Triangle Irrigation Company (Triangle). The District Court denied the motion on the grounds that it was untimely and it would impeach the plaintiff’s principal’s deposition testimony. The sole issue on appeal is whether the District Court abused its discretion in denying Hobble-Diamond’s motion to amend its complaint and the pretrial order, and, if so, whether such error was harmless. We reverse and remand.

On January 2, 1986, Hobble-Diamond filed a complaint against Triangle seeking damages allegedly sustained as the result of deficiencies in the design, installation, and repair of a pivot sprinkler system at the plaintiff’s ranch property. Trial was held on July 19, 1989, and the court entered its Findings of Fact and Conclusions of Law against Hobble-Diamond on all issues on November 16, 1990.

Hobble-Diamond’s complaint alleges damages resulting from the malfunction of two main components in the irrigation system installed by Triangle, namely irrigation pivot Nos. 3 and 6. The complaint does not allege any damages arising from the malfunction of pivot No. 5. In his deposition taken February 13, 1987, Hobble-Diamond’s principal, “Monty” Kimble gave the following testimony regarding pivot No. 5:

“Q. Mr. Kimble, directing your attention to pivot No. 5. Are you claiming to have had some problems with surging and with the pump on Pivot No. 5?
“A. That was a problem that we had for some time, yes. It was — I’m going to say it probably went on for almost the full season of’84.
“Q. Describe for me those problems.
“A. Well, I’m not an engineer, so — hydraulic engineer, so I don’t really know the cause of it.
“Q. I just want to know what you perceive the problem to have been.
“A. The water would surge, and the pump — The pivots would stop. We had a surge, and I understand the surge was because the pump wasn’t adequate.
“Q. And according to the contract, Pump No. 5 was rated a thousand gallons per minutes; is that correct?
“A. I believe so.
“Q. Has that pump ever been changed?
“A. Pump has not been changed, but the nozzles, unbenounced [sic] to me, with one of Triangle’s or whatever the case may be, employees. His name is Blain — I don’t know his last name.
“Q. Leninger [sic].
“A. He stated to me that in order to stop the pump from surging, that they lowered the capacity of the nozzles.
“Q. And did that take care of the problem?
“A. Yeah, I haven’t had any problem since that has been done, and I really don’t know when it was done. It was done unbenounced [sic] to me.
“Q. But it was done by Triangle personnel, to the best of your recollection, —
“A. Yes.
“Q. or their predecessor.
“A. Yes.
“Q. Are you claiming to sustain any crop loss of any sort with respect to the surge in the season of 1985?
“A. No, my claim is, we had to spend a lot of time there.
“Q. My inquiry must be directed to what, if any, amount of money damages are you claiming as a result of—
“A. I don’t think I am
“Q. You’re not claiming anything ...”

Prior to trial, Hobble-Diamond filed two motions to amend its pleadings. On January 11, 1989, some twenty-three months after Kimble was deposed and one week prior to the original trial date, Hobble-Diamond moved to amend its complaint to include crop loss under pivot No. 5. Hobble-Diamond alleges that at this time it became aware of damages resulting from problems with this system. That month Hobble-Diamond received two reports — the first prepared by Triangle’s employee, Mr. Lininger, the second prepared by an independent engineering consultant — discussing the inadequacies associated with pivot No. 5 of the system. On January 19, 1989 the District Court denied this first motion and continued the trial date to July 19,1989. On March 3,1989, Hobble-Diamond again moved to amend its complaint to allege crop loss due to pivot No. 5. Along with this motion, Hobble-Diamond filed the affidavit of Kimble, alleging that he had believed low crop yields in the vicinity of pivot No. 5 had been due to factors other than inadequate watering but now believed — based on the reports — that the reduced yields were directly a result of the inadequate system. The reports were filed as exhibits to the affidavit. The District Court denied the motion on the grounds that it was (1) untimely and (2) it would impeach Kimble’s deposition testimony. Hobble-Diamond only appeals the order of the District Court denying its second motion to amend.

Rule 15(a), M.R.Civ.R controls amendments to pleadings. It provides in pertinent part:

“Rule 15(a). Amendments. A party may amend his pleadings once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, he may so amend it at any time within 20 days after it is served. Otherwise a party may amend his pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires ... (Emphasis added.)”

We have interpreted the Rule liberally, allowing amendment of pleadings as the general rule and denying leave to amend as the exception. Priest v. Taylor (1987), 227 Mont. 370, 377-78, 740 P.2d 648, 653.

Although leave to amend is properly denied when the amendment is futile or legally insufficient to support the requested relief, it is an abuse of discretion to deny leave to amend where it cannot be said that the pleader can develop no set of facts under its proposed amendment that would entitle the pleader to the relief sought. Letizia v. Prudential Bache Securities, Inc. (9th Cir. 1986), 802 F.2d 1185, 1189 (construing the nearly identical Federal Rule). Here, Hobble-Diamond supported its motion to amend with evidence that it had new information available to it regarding possible crop loss due to an inadequate pivot No. 5. To what extent the proposed amendment would impeach Kimble’s prior deposition testimony is relevant to his credibility as a witness rather than the merits of the amendment. Generally, the merits of a proposed amended claim are not to be considered, unless the claim is frivolous, meritless, or futile. Davis v. Coler (N.D. Ill. 1984), 601 F. Supp. 444, 447. Hobble-Diamond was precluded from introducing evidence — including the engineering reports — at trial regarding pivot No. 5. We cannot determine, based on the record developed at trial, whether the amendment was frivolous, meritless, or futile.

Furthermore, “[l]eave of court to amend a complaint in order to correct a mistake should be freely given when the amendment will not mislead defendants to their prejudice.” Haugen Trust v. Warner (1983), 204 Mont. 508, 512, 665 P.2d 1132, 1135. In Haugen Trust, the defendants inadvertently failed to allege damages for a particular year in their third party complaint. The District Court denied the defendants leave to amend, and this Court reversed holding that such denial was an abuse of discretion. Haugen Trust, 665 P.2d at 1135. While in this case the mistake was not inadvertent, it appears to have been based on a lack of information that later became available to Hobble-Diamond regarding the specific inadequacies of pivot No. 5. The District Court denied the first motion on January 19, 1989, and in the same order continued the trial date until July 19. Hobble-Diamond filed its second motion on March 3, some four months prior to the rescheduled trial date. If the amendment were granted, defendants would have had sufficient time to conduct additional discovery, and would not have been prejudiced by the amendment.

“Refusal to permit an amendment to a complaint which should be made in the furtherance of justice is an abuse of discretion.” Haugen Trust, 665 P.2d at 1135. We hold that the District Court abused its discretion in denying Hobble-Diamond leave to amend its complaint. Furthermore, we see no merit in Triangle’s contention that the error was harmless. Hobble-Diamond was precluded from asserting a cause of action based on inadequacies in pivot No. 5, and suffered obvious prejudice due to the District Court’s order.

The order of the District Court is REVERSED and the cause REMANDED for further proceedings consistent with this opinion.

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


text:
    JOEL V. BALLENGER, Plaintiff, Counter-Defendant, and Appellant, v. NORTHERN LIGHTS, INC., Defendant, Counter-Claimant and Respondent.
    No. 91-126.
    Submitted on briefs July 16, 1991.
    Decided August 15, 1991.
    249 Mont. 327.
    815 P.2d 1156.

      Claude I. Burlingame, Thompson Falls, John D. Greef, Hamilton, for plaintiff, counter-defendant, and appellant.
    Gary R. Christiansen, Warden, Christiansen, Johnson & Berg, Kalispell, for defendant, counter-claimant and respondent.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

Joel Ballenger appeals from an order of summary judgment granted by the District Court of the Twentieth Judicial District, Sanders County, in favor of defendant, Northern Lights, Inc. The District Court held that Northern Lights owed no duty to Ballenger to provide electricity for his irrigation pumps. We affirm.

The sole issue on appeal is:

Whether the District Court erred in determining that Northern Lights had no duty to provide electricity for Ballenger’s irrigation pumps.

Joel Ballenger has been a farmer-rancher in Sanders County, Montana, for over 30 years. The area where Ballenger lives is provided electricity solely by Northern Lights, an electric cooperative. Northern Lights has its office in Sandpoint, Idaho, and it serves an area comprising portions of western Montana and northern Idaho.

Ballenger has four separate accounts with Northern Lights. Two accounts represent his residential electricity consumption and the other two involve electricity utilized by his irrigation pumps.

When Ballenger set up the accounts for his irrigation pumps, he entered into a “Service Order and Membership Application” that stated that no electricity would be provided until he paid all past due balances. At the end of the 1984 irrigation season, Ballenger owed $3,737.50 for services rendered in 1982,1983, and 1984 by Northern Lights. Although he obtained an operating loan, he chose not to use any of these funds to pay the past due balance.

In 1985, Montana experienced a severe drought. On July 8, 1985, Ballenger contacted Northern Lights and informed them that he needed power immediately so that he could irrigate his crops. When Northern Lights refused, he offered a partial cash payment of $2,000 and a lien on his crops. Northern Lights continued in its refusal to provide power, and Ballenger’s crops failed for lack of water.

Ballenger filed a lawsuit alleging that Northern Lights unreasonably refused to energize his irrigation pumps and sought damages for his lost crop. Northern Lights counterclaimed, seeking payment on the balance due on Ballenger’s account. On December 17, 1990, the District Court granted summary judgment in favor of Northern Lights. Ballenger appeals that portion of the court’s order which dismissed his claim for damages to his crops.

Ballenger maintains that the District Court erred in granting summary judgment. We disagree.

Summary judgment is proper -under Rule 56(c), M.R.Civ.R, when the movant shows that there is no genuine issue as to any fact deemed material in light of the substantive legal principles entitling the movant to judgment as a matter of law. All reasonable inferences must be drawn in favor of the party opposing the motion. In making its determination on whether to grant a motion for summary judgment, the court must consider the entire record. Smith v. Barrett (1990), 242 Mont. 37, 40, 788 P.2d 324, 326. There are no issues of material fact involved here.

As stated above, Ballenger entered into a “Service Order and Membership Application” when he set up the accounts for his irrigation pumps. This contractual instrument provided, and Ballenger agreed, that the Cooperative would not provide electricity if he had balances owing on his irrigation accounts. Ballenger maintains that this explicit provision was modified by a separate document which is referred to as Member Service Policy No. 402. This document provided that Northern Lights may allow time to pay bills in installments when special circumstances arise “such as; death in the family, serious illness, life sustaining equipment, the elderly and the handicapped.” This provision, according to Ballenger, should have been applied to his case and he should have been allowed to pay his balance in installments.

Ballenger relies upon Howe v. Big Horn Electric Cooperative (1983), 206 Mont. 297, 670 P.2d 936, to support this argument. The adoption and implementation of all rules must be done fairly and in a reasonable manner with proper regard for the rights of the member and his property. Howe, 670 P.2d at 938.

Relying on this case, Ballenger argues that Northern Lights unreasonably refused to apply Member Service Policy No. 402 to his special circumstances. He maintains that the Cooperative, in accordance with its duty to act reasonably, should have accepted his offer of partial payment and a lien on his crops.

We disagree. From the depositions it is clear that Member Service Policy No. 402 applied only to residential accounts and never to irrigation accounts.

Second, as the District Court found, and as is clearly stated in Howe, the policy of Northern Lights allowing disconnection of service for nonpayment of fees was reasonable. See, Howe, 670 P.2d at 938. Moreover, N orthem Lights’ implementation of this policy under these circumstances was reasonable. Ballenger was over three years overdue on his account. Despite opportunities to pay off the balance, Ballenger chose not to do so. Instead, he chose to gamble on the fact that he would not need to irrigate in 1985. When it became clear that he would have to irrigate, he attempted to enter into a deal with Northern Lights, offering them a lien on his crops. He has presented no authority that requires a cooperative to accept a crop lien as security. Under these agreed facts, Northern Lights simply had no duty to extend further credit to an overdue delinquent account.

Finally, Ballenger argues that at the time he asked the Cooperative to supply electricity to his accounts, he had $1,914.90 worth of capital credits. There is no evidence, however, that he offered those credits at that time or that they were discussed. Therefore, we do not consider the existence of those credits in our determination.

In short, we find the only substantive legal issue provided by this case is whether Northern Lights reasonably refused to provide power to Ballenger’s pumps. In light of the clear contractual language contained in the Service Order and Membership Application, and the agreed facts, the only conclusion which can be reached is that such action was reasonable. Summary judgment under Rule 56(c), M.R.Civ.P, was properly granted.

Affirmed.

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


author: JUSTICE GRAY

text:
    KEESUN PARTNERS, a Wyoming general partnership, Plaintiff and Respondent, v. FERDIG OIL COMPANY, INC., a corporation; and SOMONT OIL CO., INC., a corporation, Defendants, Counter claimants and Appellants, v. KEESUN PARTNERS, a Wyoming general partnership, consisting of V. C. Knight, J. Kenneth Finstad, Ronald Vanderhoef, individually, and as partners; and JOHN DOES 1, 2, 3, 4, and 5 and DOE COMPANIES 1 and 2, corporations, individually, and as partners of Keesun partnership, Counterdefendants.
    No. 90-517.
    Submitted on briefs May 24, 1991.
    Decided August 1, 1991.
    249 Mont. 331.
    816 P.2d 417.

      Gregory H. Warner and George R. Crotty, Jr., Graybill, Ostrem, Warner & Crotty, Great Falls, for defendants, counterclaimants and appellants.
    Carolyn Ostby, Crowley, Haughey Hanson, Toole & Dietrich, Billings, for plaintiff and respondent.
   JUSTICE GRAY

delivered the Opinion of the court.

The appellants, Ferdig Oil Company, Inc. and Somont Oil Co., Inc. (referred to collectively as Ferdig/Somont), appeal from an order of the District Court of the Ninth Judicial District, Toole County, granting partial summary judgment in favor of the respondent, Keesun Partners. We affirm.

Ferdig/Somont raises the following issues on appeal:

1. Did the District Court err in determining that there are no genuine issues of material fact as to the absence of a contract between the parties?

2. Did the District Court err in holding that even if a contract did exist between the parties, its enforcement is barred by the statute of frauds?

3. Did the District Court err in refusing to consider remedies of rescission or restitution and the return of the parties to the status quo in granting quiet title relief?

The appellants, Ferdig Oil Company, Inc. and Somont Oil Co., Inc., are Montana corporations in oil and gas production and processing. Both corporations have the same ownership and same management. Charles Jansky is an officer of both corporations. Ferdig is involved primarily in the gathering and processing of natural gas. Somont is involved primarily in the production of oil and natural gas. The respondent, Keesun Partners, is a Wyoming oil and gas producing partnership which was formed in October of 1987. J. Kenneth Finstad is a partner in Keesun and acts as operations manager.

Ferdig/Somont constructed and operates a gas processing plant located in Section 28 of Township 35 North, Range 4 West, Toole County, Montana. The original intent of Ferdig/Somont in constructing the plant was to process both sweet and sour gas from its own wells located adjacent to the plant. In the summer of 1987, Fer-dig/Somont presented its lenders with proposals which called for extending its gas gathering pipeline system through the northern part of Township 35 North, Range 4 West into the southern part of Township 36 North, Range 4 West. Ferdig/Somont determined that its own well in Section 34 of Township 36 North, Range 4 West, along with another well in that section, justified the installation of that pipeline.

Shortly thereafter, Mr. Jansky and Mr. Finstad discussed the possibility of a market for gas from additional wells drilled in Section 34. On September 16, 1987, Mr. Jansky sent a letter to Mr. Finstad and Don Lee, a Shelby attorney who represented both Fer-dig/Somont and Finstad. The stated purpose of the letter was to “summarize the deal we [Ferdig/Somont] are proposing to enter into with Mr. Finstad, et al.” for the purchase of wellhead gas on a long-term basis. Neither Mr. Finstad nor Keesun, after its formation in October of 1987, responded in writing to Mr. Jansky’s letter.

Keesun pursued its drilling activities on acreage controlled by Keesun and on acreage acquired from Ferdig/Somont and others through farmout agreements or outright assignments. Although no written gas purchase contract was in place, Ferdig/Somont took deliveries of gas from Keesun on a month to month basis. The parties apparently were hopeful that an acceptable gas purchase contract would eventually be agreed upon and executed.

Contemporaneous with Keesun’s drilling activities, Mr. Jansky sent a number of letters to Keesun setting forth his understanding of the state of the negotiations, summarizing proposals and making new offers. Keesun did not respond in writing to any of this correspondence; it does appear from the record that ongoing negotiations occurred, either directly or through attorney Don Lee.

Eventually, a meeting between Keesun and Ferdig/Somont was held on March 3, 1988, at Don Lee’s office in an attempt to finalize a wellhead gas purchase contract between the parties. The following day, Mr. Jansky wrote Keesun another letter in which he summarized those terms he believed had been agreed upon and, in addition, listed eighteen proposed terms “still pending agreement.” Mr. Jansky wrote: “Those things still pending agreement are summarized in our offer presented below, for you to either accept or reject.” Fer-dig/Somont thereafter instructed Don Lee to prepare a draft wellhead gas purchase contract which was then forwarded to Keesun for review.

On May 18, 1988, Keesun communicated its dissatisfaction with the draft contract to Don Lee who, in turn, informed Ferdig/Somont that Keesun did not agree with the proposed gas purchase contract. That same day, Mr. Jansky wrote Keesun a letter alleging that Keesun had breached “its contractual obligations.” He stated that Ferdig/Somont would release Keesun from those obligations on the condition that Keesun relinquish title to four producing wells and the leases upon which those wells were located in Section 27 of Township 36 North, Range 4 West, and Section 19 of Township 36 North, Range 3 West. In his letter, Mr. Jansky stated that Ferdig/Somont had assigned this acreage to Keesun “in reliance on the fact that Keesun represented it would enter into a long term gas sales contract” with Ferdig/Somont. He also stated that since all the “acreage ... was acquired from or via [Ferdig/Somont] in accordance with the agreement since breached by Keesun, [Ferdig/Somont] wants all this land back.” In another letter dated May 24, 1988, Mr. Jansky informed Keesun that Ferdig/Somont intended to proceed as “equitable owner” of the disputed wells, and that a “Notice of Interest” to that effect had been recorded in Toole county.

On June 21, 1988, Keesun filed a complaint in the District Court of the Ninth Judicial District, Toole County, seeking relief against Ferdig/Somont on four counts. Count I sought quiet title relief for the disputed oil and gas leasehold interests held by Keesun; Count II sought declaratory relief that Ferdig/Somont had no right to operate or control the four producing gas wells drilled by Keesun on the leases described in Count I; Count III sought declaratory relief that Fer-dig/Somont had no rights to leases acquired by Keesun in the future; and Count TV sought an accounting and payment for deliveries by Keesun to Ferdig/Somont of gas from the disputed wells.

Ferdig/Somont filed a motion to dismiss which was briefed by the parties. Prior to a ruling on the motion to dismiss, Keesun filed a motion for partial summary judgment as to Counts I, II and IV of its complaint. This motion was briefed by the parties and, on January 25, 1990, argued to the District Court.

Ferdig/Somont’s motion to dismiss was subsequently denied. Thereafter Ferdig/Somont filed its “Answer, Affirmative Defenses and Counterclaims.” This pleading set forth numerous affirmative defenses and counterclaims most of which were premised upon an alleged contractual relationship between Keesun and Ferdig/Somont for the purchase of wellhead gas.

The parties then commenced discovery. Shortly before the discovery deadline, the District Court granted partial summary judgment to Keesun on July 23,1990. The court stated that its reason for granting partial summary judgment was that:

“There is nothing before the Court to suggest there is a contract between the parties. There is nothing before the Court that would take the contract between the parties, if there were one, out of the statute of frauds.”

The District Court’s judgment quieted title to the disputed leases and wells in Keesun and ordered payment to Keesun for all gas delivered to Ferdig/Somont from the disputed wells. The court certified its judgment as final pursuant to Rule 54(b), M.R.Civ.P.

Ferdig/Somont then moved the District Court to alter or amend its order granting Keesun partial summary judgment. The court did not rule on this motion within 45 days and, therefore, the motion was deemed denied pursuant to Rule 59(g), M.R.Civ.P. This appeal followed.

The first issue on appeal is whether the District Court erred in determining that there are no genuine issues of material fact as to the absence of a contract between the parties. Summary judgment is properly granted where the record discloses no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.P. The party seeking summary judgment has the burden of demonstrating the absence of genuine factual issues. O’Bagy v. First Interstate Bank (1990), 241 Mont. 44, 46, 785 P.2d 190, 191. If the movant has met this burden, the burden then shifts to the non-moving party to demonstrate a genuine issue of material fact. O’Bagy, 241 Mont. at 46, 785 P.2d at 191. To meet this burden, the non-moving party must proffer substantial evidence, not mere speculation and conclusory statements. Hando v. PPG Indus., Inc. (1989), 236 Mont. 493, 497, 771 P.2d 956, 959; Frigon v. Morrison-Maierle, Inc. (1988), 233 Mont. 113, 117, 760 P.2d 57, 60.

No evidence exists in the record of a signed written contract between the parties. Therefore, the initial question with which we are faced is whether an oral contract existed between the parties for the purchase of wellhead gas. Ferdig/Somont contends that a valid oral contract was entered into by the parties or that, at a minimum, factual issues exist regarding the formation of a contract. According to Ferdig/Somont, an agreement was reached between the parties in which Keesun would sell its gas to Ferdig/Somont for a period of twenty years. Ferdig/Somont contends that the September 16, 1987 letter from Mr. Jansky to Mr. Finstad and attorney Don Lee set forth the terms of, and confirmed, that agreement. Ferdig/Somont further contends that Mr. Jansky’s correspondence with Keesun and Don Lee after the September 16th letter merely reflected negotiations between the parties regarding optional additions to and modifications of the basic agreement for the purchase of wellhead gas.

In support of its contention that a contract was entered into between the parties, Ferdig/Somont refers to a portion of Mr. Finstad’s deposition and argues that he testified that Keesun had accepted the proposed wellhead gas purchase contract as set forth in the September 16, 1987 letter:

“Q. [By Mr. Crotty] Is there anything in that letter that you did not agree with?
“MS. OSTBY: Objection. The question is too general.
“A. The essence of the proposed well head purchase contract we ... I agreed to.”

Ferdig/Somont also refers to a portion of Don Lee’s deposition with regard to the meeting he attended with the parties on March 3, 1988 as further support that the parties had reached an agreement.

“What I recall is when everybody left and went out the door that whatever had been discussed at that meeting was agreed upon, other than the quantum of overriding royalty that Somont would be entitled to on various leases.”

All contracts must contain four essential elements. These elements are: (1) identifiable parties capable of contracting; (2) their consent; (3) a lawful object; and (4) consideration. Section 28-2-102, MCA. The issue of whether or not there was a contract in this case relates to the requirement of consent.

There must be mutual assent or a meeting of the minds on all essential terms to form a binding contract. Chadwick v. Giberson (1980), 190 Mont. 88, 92, 618 P.2d 1213, 1215. Consent is established when there has been an offer and an acceptance of that offer. More specifically, this Court has stated that in order to effectuate a contract there must be not only a valid offer by one party, but also an unconditional acceptance, according to its terms, by the other. Kuchinski v. Security General Ins. Co. (1963), 141 Mont. 515, 519, 380 P.2d 889, 891. In this case, the purported contract fails for lack of consent.

The record indicates that, although some of the terms of the wellhead gas purchase contract may have been agreed upon, the parties were involved in an ongoing negotiation process regarding many essential terms of the contract and no finalized agreement was ever reached. At the January 25, 1990 hearing on partial summary judgment, Don Lee testified as follows:

“Q. [By Ms. Ostby] If the parties would have reached an agreement, you were to be the scribner [sic] of that agreement, were you not?
“A. Yes.
“Q. Were you ever aware an agreement was reached on all the essential terms of a contract, so you could draft such an agreement?”
“MR. WARNER: Objection, leading.
“THE COURT: It is somewhat, but I’ll let him answer.
“A. On everything?
“Q. Yes.
“A. No.”

Mr. Lee reaffirmed his belief that there was never any finalized agreement between the parties in his subsequent deposition.

“Q. [By Ms. Ostby] This letter [referring to the letter from Mr. Jansky to Keesun dated March 4,1988] indicates, toward the bottom third of the first page, that there were several things ‘still pending agreement;’ do you see that?
“A. Yes.
“Q. That accords with your understanding, doesn’t it, that there were still some things that were pending agreement at that time?
“A. Yes.”

In addition, Mr. Jansky’s own admissions in his letters to Keesun demonstrate that no finalized contract between the parties existed. In his March 4, 1988 letter to Keesun, Mr. Jansky, on behalf of Ferdig/Somont, stated that:

“Along with the latest version of the proposed gas purchase contract attached herewith, I want to confirm those things Ferdig believes already mutually agreed, which will be incorporated in a side agreement executed concurrently with the gas purchase contract, and those things Ferdig acknowledges as still pending agreement. Those things still pending agreement are summarized in our offer presented below, for you to either accept or reject. [Emphasis added.]”

Further, in a letter dated April 25, 1988, to the Montana Power Company with whom Ferdig/Somont had negotiated a delivered gas purchase contract, Mr. Jansky stated:

“[W]e do not yet have contracts finalized with Keesun or Berenergy.” The date that letter was written, April 25, 1988, was more than six months after the date upon which Ferdig/Somont now claims a contract was formed between the parties.

Mr. Jansky’s own statements in his letters to Keesun and Montana Power refute Ferdig/Somont’s contention that the correspondence subsequent to the September 16, 1987 letter merely reflected negotiations regarding optional additions to and modifications of a basic agreement between the parties. In our view, they also reflect recognition by Ferdig/Somont that the parties had not yet agreed upon all essential terms of a contract.

Ferdig/Somont also contends that this Court should find the existence of a contract between the parties based on the doctrine of promissory estoppel. The elements of promissory estoppel are: (1) a promise clear and unambiguous in its terms; (2) reliance on the promise by the party to whom the promise is made; (3) reasonableness and foreseeability of the reliance; and (4) the party asserting the reliance must be injured by the reliance. Tope v. Taylor (1986), 224 Mont. 131, 136-37, 728 P.2d 789, 793.

With respect to the first element, this Court stated in Keil v. Glacier Park, Inc. (1980), 188 Mont. 455, 462-63, 614 P.2d 502, 506, that promissory estoppel cannot be based on preliminary negotiations or an agreement to negotiate the terms of a contract. In the present case, the evidence before the District Court established nothing more than that the parties had engaged in prehminary negotiations and discussions of the terms of a wellhead gas purchase contract. Mr. Jansky’s letters to Keesun reflected that finalization of the terms of a contract would require further negotiations between the parties. This evidence does not constitute the clear and unambiguous promise necessary to satisfy the first element of promissory estoppel.

Additionally, Ferdig/Somont cannot establish facts sufficient to show reliance on any alleged promise by Keesun. In making the business decision to install the northern leg of its gas gathering pipeline system, Ferdig/Somont had previously determined that its own well in Section 34 of Township 36 North, Range 4 West, along with another well in that section, justified installation of the pipeline. This decision is reflected in Ferdig/Somont’s letters to its lenders during the summer of 1987, prior to the date of the alleged formation of the wellhead gas purchase contract.

Keesun, as the moving party, met its initial burden of showing that no evidence existed to prove the formation of a binding contract between the parties. The burden then shifted to Ferdig/Somont to show facts sufficient to raise a genuine issue. Ferdig/Somont has failed to meet this burden. The District Court correctly determined that the evidence proffered by Ferdig/Somont was insufficient to raise any genuine issue of material fact as to the existence of a gas purchase contract between the parties and, thus, properly granted partial summary judgment on this issue.

Having determined that the record reveals that no valid oral contract existed between the parties, it is unnecessary for us to address Ferdig/Somont’s second issue on appeal regarding the applicability of the statute of frauds.

The next issue on appeal is whether the District Court erred by not awarding Ferdig/Somont the remedies of rescission or restitution and return of the parties to the status quo when it granted Keesun quiet title relief. Ferdig/Somont contends that, as consideration for a long-term gas purchase contract with Keesun, it assigned various leasehold acreage interests to Keesun. It argues that to allow Keesun to retain the benefits of the contract in the form of acreage interests assigned to it, without enforcing the contract, results in unjust enrichment. Ferdig/Somont argues that it is entitled to rescission of those assignments, restitution, and the return of the parties to the status quo based on the theories of repudiation or breach of contract and fraud. We disagree.

Mr. Finstad’s affidavit and accompanying documents show that the lease assignments were separately executed written contracts for which consideration was received by Ferdig/Somont. For example, with respect to the “Spencer-Lohof’ lease assignment in Section 27 of Township 36 North, Range 4 West, Ferdig/Somont retained a 71/2% overriding royalty interest.

Mr. Jansky admitted that he considered the assignments to be separate land contracts. When questioned during the January 25, 1990 hearing on partial summary judgment about one of the disputed wells in Section 19 of Township 36 North, Range 3 West, Mr. Jansky testified as follows:

“Q. [By Ms. Ostby] And, it [the Section 19 acreage] was not part of that Contract, was it?
“A. No, ma’am.
“Q. And, despite the fact that it’s not part of the Contract that you’re contending was breached, you’re claiming ownership?
“A. Yes, ma’am.”

The record shows that Keesun drilled the well in Section 19 pursuant to a separate, written farmout agreement between Western Natural Gas Company (WNG) and Ferdig/Somont and, in turn, a separate, written assignment to Keesun of Ferdig/Somont’s rights under the WNG agreement. Again, Ferdig/Somont retained a 7V2% overriding royalty. Nowhere in these documents is there any language suggesting the assignments to be dependent upon some other agreement.

In addition, the record does not reveal any fraud on Keesun’s part. There is nothing to indicate that Keesun intended to mislead or deceive Ferdig/Somont by concealing material facts, or that somehow Ferdig/Somont was misled to its detriment. To the contrary, the record clearly establishes that Mr. Jansky was fully aware that negotiations were ongoing. We hold that the District Court did not err in rejecting Ferdig/Somont’s claims of rescission and restitution.

Affirmed.

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