text:
    STATE OF MONTANA, Plaintiff and Respondent, v. LEONARD LOWELL MARTIN a/k/a LEN MARTIN, Defendant and Appellant.
    No. 95-424.
    Submitted on Briefs August 8, 1996.
    Decided November 14, 1996.
    53 St.Rep. 1109.
    279 Mont. 185.
    926 P.2d 1380.

      For Appellant: Stephen J. Nardi; Sherlock & Nardi, Kalispell.
    For Respondent: Hon. Joseph P. Mazurek, Attorney General, John Paulson, Ass’t Attorney General, Helena; Thomas Esch, Flathead County Attorney; Valeria Wilson, Deputy County Attorney, Kalispell.
   JUSTICE GRAY

delivered the Opinion of the Court.

Len Martin (Martin) appeals from the judgment and sentence entered by the Eleventh Judicial District Court, Flathead County, on a jury verdict finding him guilty of three counts of sexual assault, two counts of sexual intercourse without consent and two counts of deviate sexual conduct, all felony offenses. We affirm.

Martin raises the following issues on appeal:

1. Did the District Court abuse its discretion in denying Martin’s motion to sever the charges against him?

2. Did the prosecutor engage in misconduct which deprived Martin of his right to a fair trial?

3. Did the District Court abuse its discretion in allowing the State to cross-examine a defense witness with regard to whether that witness provided false information in an unrelated criminal proceeding?

The State of Montana (State) filed two separate informations against Martin. All of the charges against Martin contained in the informations were sexual offenses by Martin against minor children. In Cause No. DC-94-197(B), the State charged Martin with one count of sexual intercourse without consent, two counts of sexual assault and three counts of deviate sexual conduct. In Cause No. DC-94-201(B), it charged Martin with two counts of sexual intercourse without consent and two counts of sexual assault. Martin pled not guilty to all of the charges.

The State moved to consolidate, contending that the cases were related; that the offenses in both occurred in the same time frame; and that consolidation would be in the interests of judicial economy. The District Court granted the State’s motion without input from Martin and without holding a hearing. Thereafter, Martin moved to sever the counts against him into five separate cases for trial purposes. After conducting a hearing, the District Court concluded that Martin had not met his burden of proving that prejudice would result from joinder of all of the counts and denied Martin’s motion to sever.

Prior to trial, Martin moved to dismiss three counts of deviate sexual conduct as multiplicitous, and one count of sexual assault based on a lack of evidence. The District Court denied his motion with regard to the deviate sexual conduct charges, but dismissed the sexual assault charge. Subsequently, pursuant to a motion by the State, the court dismissed one count of deviate sexual conduct.

All of the incidents forming the basis of the charges against Martin occurred at his cabin on the North Fork of the Flathead River. K.T. testified that she was alone with Martin at his cabin on several occasions when she was between the ages of seven and nine and, on such occasions, the following events occurred. Martin asked her to haul wood at his cabin and offered her a glass of water to drink before she did so. K.T. stated that the water smelled like alcohol. Later, Martin sat next to K.T. on the couch and put his hands on her legs and moved his hands beneath her underwear. K.T. asked Martin to remove his hands, but he refused. On another occasion, Martin laid on top of K.T. in his night clothes and moved his body around. K.T. would attempt to hide from Martin in the loft of the cabin. She did not tell anyone about what Martin had done to her because he had threatened to hurt her and her family.

C.H.’s grandparents owned a cabin near Martin’s cabin. C.H. and Martin’s stepson, Cody, were friends and C.H. went over to Martin’s cabin on numerous occasions to see Cody. When C.H. was ten years old and visiting Martin’s cabin in 1992, Martin asked Cody and C.H. if they would like to go outside and roast marshmallows. Martin built a fire and sent Cody to C.H.’s grandparents’ cabin for marshmallows. Martin fondled C.H. and then led C.H. to some brush off of a trail near the cabin, where he continued to fondle C.H.’s penis, made C.H. rub his penis and had anal intercourse with C.H. C.H. did not tell anyone about the incident with Martin because Martin threatened to kill him and his family.

M.G. lived near Martin in Kalispell, Montana. When M.G. was thirteen years old, Martin asked M.G. if M.G. would go to his cabin and help him burn some brush. Martin bought M.G. a six-pack of beer on the way to the cabin and, after arriving there, gave M.G. several shots of whiskey. M.G. became very drunk and felt sick to his stomach. M.G. laid down on the floor and Martin rubbed his stomach; Martin told M.G. that he learned in alcohol classes that rubbing the stomach in different directions “makefs] the sickness go away.” Martin began rubbing M.G.’s penis. M.G. passed out and, when he woke up, Martin was on top of him having anal intercourse with him. M.G. became sick and threw up.

K.G. is M.G.’s younger brother. When K.G. was eleven years old, Martin asked K.G. to help him fill in a ditch at the cabin. On the way to the cabin, Martin stopped and bought K.G. some Mad Dog wine. At the cabin, Martin suggested that K.G. lie down so he could rub K.G.’s stomach and make K.G. sober. Martin moved his hand down K.G.’s pants and fondled KG.’s penis. K.G. became sick and threw up on his shirt.

At the close of the State’s case-in-chief, the District Court dismissed one count of sexual intercourse without consent, allegedly committed against K.T., due to a lack of evidence. Ajury found Martin guilty of the remaining seven charges, which included two counts of sexual intercourse without consent, three counts of sexual assault and two counts of deviate sexual conduct. Martin appeals.

1. Did the District Court abuse its discretion in denying Martin’s motion to sever the charges against him?

Section 46-13-211(1), MCA, provides:

If it appears that a defendant or the prosecution is prejudiced by a joinder of charges or defendants in an indictment, information, or complaint or by a joinder for trial together, the court may order separate trials, grant a severance of defendants, or provide whatever other relief justice requires.

In determining whether to grant a motion to sever, trial courts must balance the possibility of prejudice to the defendant against the judicial economy resulting from a joint trial. State v. Richards (1995), 274 Mont. 180, 188, 906 P.2d 222, 226-27 (citing State v. Campbell (1980), 189 Mont. 107, 120, 615 P.2d 190, 198). This balancing process is within the discretion of the trial comet and, absent an abuse of discretion, we will not substitute our judgment for that of the trial court. Richards, 906 P.2d at 227.

Judicial economy weighs heavily in the court’s balancing process. Richards, 906 P.2d at 227 (citing Campbell, 615 P.2d at 198). Factors providing the basis for the predisposition for joint trials include expediting the administration of justice, reducing congestion in trial dockets, conserving judicial time, reducing the burden on jurors in terms of time and money sacrificed, and avoiding recalling witnesses who otherwise would only have to testify once. Richards, 906 P.2d at 227; Campbell, 615 P.2d at 198.

A criminal defendant moving for severance under § 46-13-211(1), MCA, bears the burden of proving that joinder of the charges is prejudicial. See State v. Slice (1988), 231 Mont. 448, 451, 753 P.2d 1309, 1311. It is not sufficient that the defendant prove some prejudice or that he or she stands a better chance of acquittal if separate trials are held. Richards, 906 P.2d at 227. To satisfy this burden, the defendant must prove that the prejudice was so great as to prevent a fair trial. Richards, 906 P.2d at 227 (citations omitted). As a result of the defendant’s burden of proof, the strong pressure in favor of joinder of charges exerted by considerations of judicial economy and the deference afforded trial courts, we seldom reverse a trial court’s denial of a criminal defendant’s motion to sever. See Campbell, 615 P.2d at 198 (citations omitted).

Three types of prejudice may result from the consolidation of charges. Richards, 906 P.2d at 227. First, a jury may consider the criminal defendant facing multiple charges a “bad man” and accumulate evidence until it finds him guilty of something. Second, a jury may use proof of guilt on one count to convict the defendant of a second count even though the proof would be inadmissible at a separate trial on the second count. Third, prejudice may occur when the defendant wishes to testify on his or her own behalf on one charge but not another. Richards, 906 P.2d at 227 (citing State v. Orsborn (1976), 170 Mont. 480, 555 P.2d 509). We consider each type of prejudice below vis-a-vis Martin’s arguments and the evidence presented.

A. Accumulation of Evidence

The first type of prejudice occurs where the jury accumulates evidence to convict the defendant of something because he is a bad person. The cumulative effect of evidence is not sufficient, standing alone, to warrant severance. Richards, 906 P.2d at 227.

Martin argues that joinder of the multiple charges and the use of overlapping evidence invited the jury to convict him because he was a bad person. He does not establish that this type of prejudice occurred, however, and a bald assertion that the multiple charges and overlapping evidence “invited” the jury to convict him is insufficient to meet his burden of demonstrating the existence of this first type of prejudice.

B. Use of Inadmissible Evidence

The second type of prejudice occurs when the jury uses proof of guilt on one count to convict the defendant of another count even though the evidence would have been inadmissible at a separate trial on the second count. No prejudice of this type will be found where the evidence presented at the joint trial was simple and distinct. Richards, 906 P.2d at 227 (citations omitted). Moreover, when the charges are few and the evidence is straightforward, there is no reason to assume the jury was confused and unable to keep the relevant evidence separate. Campbell, 615 P.2d at 199 (citations omitted).

Martin contends that he was prejudiced by j oinder of the numerous charges involving K.T., C.H., M.G. and K.G. because evidence relating to the separate charges against him would not have been admissible in separate trials. He relies on Rule 404(b), M.R.Evid., and State v. Matt (1991), 249 Mont. 136, 814 P.2d 52.

In Matt, we modified the Just rule for the admission of evidence of other crimes, wrongs or acts as established in State v. Just (1979), 184 Mont. 262, 602 P.2d 957. The Modified Just Rule, which sets forth the bases for, and limitations on, admission of evidence described in Rules 404(b) and 403, M.R.Evid., provides:

(1) The other crimes, wrongs or acts must be similar.
(2) The other crimes, wrongs or acts must not be remote in time.
(3) The. evidence of other crimes, wrongs or acts is not admissible to prove the character of a person in order to show that he acted in conformity with such character; but may be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident.
(4) Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, misleading of the jury, considerations of undue delay, waste of time, or needless presentation of cumulative evidence.

Matt, 814 P.2d at 56. Although not at issue in this case, the Modified Just Rule also clarifies the procedural protections previously required under Just. See Matt, 814 P.2d at 56.

(1) Similarity

A separate act or crime need not be identical to the charged offense to be admissible as evidence, but there must be sufficient similarity between the prior act and the charged offense. State v. Romero (1993), 261 Mont. 221, 225, 861 P.2d 929, 932 (citing State v. Tecca (1986), 220 Mont. 168, 714 P.2d 136). Martin contends that the incidents involving K.T., C.H., M.G. and K.G. are not sufficiently similar under the Modified Just Rule.

Martin does not dispute that the incidents involving M.G. and K.G. are sufficiently similar to each other under the first prong of Modified Just, in both instances, he lured the boys to his cabin by requesting their help with work there, gave the boys alcohol and assaulted the boys after they became drunk. He argues, however, that the evidence regarding his alleged assaults of K.T. and C.H. was not sufficiently similar to have been admitted in a separate trial on the charges involving M.G. and K.G.

While we recognize that there are some differences between the incidents involving K.T. and C.H. when compared with each other and with the incidents involving M.G. and K.G., those differences do not negate the similarity of the incidents. All four children were minors between seven and thirteen years of age at the time of Martin’s acts. Each incident involved sexual contact by Martin with a minor while the minor was alone with Martin at his cabin. Martin asked K.T., M.G. and K.G. to help with work at his cabin; while he did not ask C.H. to do work at his cabin, he did send Cody away so that he could be alone with C.H. at the cabin.

Thus, the nature of the acts, the location of the incidents and the age of the victims were largely identical and, where not identical, were substantially similar. We conclude that the incidents involving the four children were sufficiently similar to be admissible pursuant to the first requirement of the Modified Just Rule.

(2) Remoteness

The incident involving K.T. occurred in 1987 and the incidents involving C.H., M.G. and K.G. occurred in 1992 and 1993. Martin argues that the passage of five years between the incidents rendered his sexual contact with K.T. an isolated incident too remote to be admissible, under the second Modified Just prong, in separate trials on the charges involving C.H., M.G. and K.G.

Remoteness goes to the credibility of the evidence rather than its admissibility, unless the remoteness is so great that the offered evidence has no value. Tecca, 714 P.2d at 139 (quoting State v. Doll (1985), 214 Mont. 390, 692 P.2d 473). Moreover, we consistently have declined to establish an arbitrary time limit for admitting other acts or crimes as evidence where such a cut-off would exclude probative evidence. See Tecca, 714 P.2d at 139. In addition, we have concluded that the remoteness problem is alleviated where there is a continuing pattern of similar conduct. See Tecca, 714 P.2d at 139 (citation omitted).

Here, the incidents at issue occurred within a five to six year time period. While the K.T. incident properly may have been given less weight because of the time lapse, it was not inadmissible as a matter of law on remoteness grounds. Furthermore, any remoteness concerns were alleviated by the pattern of similar conduct reflected in the later incidents. We conclude that the evidence relating to K.T. was not too remote in time to have been admissible, under the second prong of the Modified Just Rule, in separate trials on the charges involving C.H., M.G. and K.G.

(3) Purpose of Evidence

Martin argues that only the evidence relating to M.G. and K.G. would have been sufficiently similar to be relevant for establishing a common plan or scheme. On that basis, he contends that the testimony of K.T. and C.H. would have been inadmissible in separate trials to establish a common plan or scheme under the third prong of the Modified Just Rule.

We concluded above that the incidents involving K.T., C.H., M.G. and K.G. were sufficiently similar to be admissible under the first Modified Just Rule prong because, in each instance, Martin ensured that he would be alone at his cabin with the minor child. His argument on this third prong merely restates his earlier argument and does not go to the merits of the third Modified Just prong. We conclude that the evidence relating to K.T. and C.H. would have been admissible, under the third prong of the Modified Just Rule, as proof of a common scheme or plan and absence of mistake in separate trials.

(4) Probative Value vs. Prejudicial Effect

Martin argues that the prejudice to him of the evidence relating to his sexual acts against K.T., C.H., M.G. and K.G. outweighed its probative value and, therefore, that it would not have been admissible in separate trials. We disagree.

Probative evidence is often inherently prejudicial to a criminal defendant; mere prejudicial effect is not sufficient, however, to render such evidence inadmissible. State v. McKnight (1991), 250 Mont. 457, 465, 820 P.2d 1279, 1284 (citation omitted). The “prejudice” prong of the Modified Just Rule precludes the admission of relevant evidence only where its probity is “substantially outweighed by the danger of unfair prejudice. ...” Matt, 814 P.2d at 56 (emphasis added). Unfairly prejudicial evidence would

cause the fact finder to ground a decision on an emotional basis. Thus, evidence which tends to horrify, evoke sympathy or increase a desire to punish due to a prior act of a party and whose probative value is slight may be properly excluded.

McKnight, 820 P.2d at 1284 (quoting State v. Paulson (1991), 250 Mont. 32, 43, 817 P.2d 1137, 1143-44).

The evidence relating to Martin’s acts involving K.T., C.H., M.G. and K.G. was ineluctably prejudicial. It did not meet the McKnight standard for exclusion under the fourth prong of the Modified Just Rule, however. First, the probative value of the evidence was substantial, rather than slight. Second, while prejudicial, the evidence of other acts did not likely horrify, evoke sympathy or increase a desire to punish on the charges at issue. We conclude that the prejudicial effect of the evidence of Martin’s sexual acts against the children would not have substantially outweighed the probative value of that evidence so as to preclude its admissibility in separate trials under the fourth prong of the Modified Just Rule.

Martin has failed to establish that evidence which would have been inadmissible under the Modified Just Rule in separate trials was admitted during his trial as a result of joinder of the various charges against him. Therefore, we conclude that Martin did not establish the existence of the prejudice which occurs when a jury uses evidence of guilt relating to one charge to convict him on another charge even though the evidence would have been inadmissible in a trial on the second charge.

C. Self-Incrimination

Martin’s final argument relating to the District Court’s denial of his motion to sever relates to the third type of prejudice which may result from joinder of charges. He contends that he wanted to testify on his own behalf as to the charges involving K.T. and C.H., but did not want to testify as to the charges involving K.G. and M.G. He argues, therefore, that joinder was improper because it confounded the presentation of his defense.

We observe, at the outset, that Martin’s motion to sever addressed this type of prejudice only generally. He cited to cases involving the “confounding of a defense” prejudice, but his showing consisted of one sentence asserting that his privilege against self-incrimination would be severely compromised in a trial of numerous charges involving numerous victims. In responding to Martin’s motion to sever, the State pointed out this deficiency. Martin did not reply and the District Court subsequently denied the motion to sever. While Martin made an offer of proof at trial that he desired to testify on some, but not all, of the counts, the offer of proof came too late to impact on the court’s decision on his motion to sever.

Martin had the burden of proving joinder of the charges was prejudicial in confounding his defense by compromising his privilege against self-incrimination. See Slice, 753 P.2d at 1311. Martin’s one sentence assertion that his privilege against self-incrimination would be compromised is insufficient to prove the existence of this type of prejudice.

A criminal defendant attempting to sever charges bears the burden of establishing that prejudice resulted from joinder and, in addition, that the prejudice was so great as to prevent a fair trial. See Richards, 906 P.2d at 227. We conclude that Martin failed to prove the existence of any one of the kinds of prejudice resulting from j oinder which would have required the District Court to grant his motion to sever. Moreover, joinder in this case reduced the congestion of the District Court’s trial docket; avoided recalling the children as witnesses in separate trials, thereby reducing the trauma to the children; and conserved judicial time. Thus, joinder in this case promoted judicial economy, a factor which weighs heavily in a trial court’s balancing process in determining whether to grant a motion to sever. See Richards, 906 P.2d at 227; Campbell, 615 P.2d at 198. We hold, therefore, that the District Court did not abuse its discretion in denying Martin’s motion to sever.

2. Did the prosecutor engage in misconduct which deprived Martin of a fair trial?

Martin argues that he was deprived of his right to a fair trial by three instances of prosecutorial misconduct. Specifically, he contends that the State improperly appealed to the jury to act as protectors of the community; improperly gave its opinion on witness credibility during its closing argument; and improperly called a rebuttal witness to impeach one of Martin’s witnesses. The record before us demonstrates that Martin did not object at trial to any of the alleged instances of misconduct he now raises, and it is well established that we will not consider issues raised for the first time on appeal. See State v. Losson (1993), 262 Mont. 342, 351, 865 P.2d 255, 260; State v. Ogle (1992), 255 Mont. 246, 250-51, 841 P.2d 1133, 1135-36.

Moreover, § 46-20-104(2), MCA, provides:

Upon appeal from a judgment, the court may review the verdict or decision and any alleged error objected to which involves the merits or necessarily affects the judgment. Failure to make a timely objection during trial constitutes a waiver of the objection except as provided in 46-20-701(2).

(Emphasis added.) Section 46-20-701(2), provides an exception to the § 46-20-104(2), MCA, waiver of objections not timely made where the alleged error was prejudicial to the defendant’s guilt or punishment and:

(a) the right asserted in the claim did not exist at the time of the trial and has been determined to be retroactive in its application;
(b) the prosecutor, the judge, or a law enforcement agency suppressed evidence from the defendant [convicted person] or his attorney that prevented the claim from being raised and disposed of; or
(c) material and controlling facts upon which the claim is predicated were not known to the defendant [convicted person] or his attorney and could not have been ascertained by the exercise of reasonable diligence.

Here, Martin’s failure to object to the alleged instances of prosecutorial misconduct at trial constitutes a waiver of those objections pursuant to § 46-20-104(2), MCA. Martin does not argue that he is entitled to review of his arguments relating to prosecutorial misconduct under § 46-20-701(2), MCA. Accordingly, we decline to address the alleged instances of prosecutorial misconduct.

3. Did the District Court abuse its discretion in allowing the State to cross-examine a defense witness with regard to whether that witness provided false information in an unrelated criminal proceeding?

Martin’s wife, Jan Martin (Jan), testified at trial on his behalf. During cross-examination, the State inquired whether she was an alibi witness for Kenneth Coddell (Coddell) in a 1983 felony theft trial. Martin objected on relevancy grounds and the District Court heard arguments out of the presence of the jury.

According to the State, J an had perjured herself in Coddell’s felony theft trial in 1983 and subsequently was charged with perjury. She pled guilty to the misdemeanor offense of unsworn falsification to authorities. On that basis, the State argued that the facts surrounding Jan’s testimony as Coddell’s alibi witness in 1983 were relevant to her credibility as a witness on Martin’s behalf.

Martin relied on Rule 609, M.R.Evid., in support of his argument that the State could not impeach Jan’s credibility based on the facts surrounding her providing false information on behalf of Coddell in 1983. Rule 609 provides that “[f]or the purpose of attacking the credibility of a witness, evidence that the witness has been convicted of a crime is not admissible.” The State responded that it was not offering evidence of Jan’s conviction, but that it was entitled to impeach Jan’s credibility via “false information” evidence under Rule 608(b), M.R.Evid., which provides:

Specific instances of the conduct of a witness, for the purpose of attacking or supporting the witness’ credibility, may not be proved by extrinsic evidence. They may, however, in the discretion of the court, if probative of truthfulness or untruthfulness, be inquired into on cross-examination of the witness (1) concerning the witness’ character for truthfulness or untruthfulness. ...

The District Court ultimately agreed with the State, ruling that

[the State] cannot admit evidence that [Jan] was convicted of a crime. And [the State] can’t ask her if she was convicted of a crime. Under Rule 608(b), [the State] may inquire about specific instances of conduct of a witness that concerned the witness’ character for truthfulness or untruthfulness.

Martin argues on appeal that the District Court abused its discretion by allowing the State to cross-examine Jan regarding whether she supplied false alibi information on behalf of Coddell in 1983. The admissibility of evidence is within the discretion of the trial court and we review a trial court’s determination of the admissibility of evidence only for an abuse of discretion. State v. Graves (1995), 272 Mont. 451, 458, 901 P.2d 549, 554; State v. Henderson (1994), 265 Mont. 454, 459, 877 P.2d 1013, 1016.

Here, the District Court properly limited the State’s cross-examination of Jan regarding the false alibi information she had provided on Coddell’s behalf, allowing only questions relating to Jan having provided false alibi information to authorities. That evidence clearly was admissible pursuant to Rule 608(b), M.R.Evid., as probative of Jan’s veracity as a witness.

Martin contends that State v. Gollehon (1993), 262 Mont. 1, 864 P.2d 249, renders evidence regarding Jan providing false alibi information to authorities inadmissible under Rule 609, M.R.Evid. Gollehon is distinguishable from the present case.

In Gollehon, Gollehon attempted to cross-examine William Arnot (Arnot), a State witness, regarding thefts and burglaries he had committed. Gollehon also attempted to admit extrinsic evidence in this regard. Gollehon, 864 P.2d at 257-58. The district court relied on Rules 608 and 609, M.R.Evid., in refusing to allow Gollehon to cross-examine Arnot or present extrinsic evidence concerning Arnot’s prior acts of theft or burglary. Gollehon, 864 P.2d at 258.

Gollehon argued on appeal that the rules of evidence permit him to introduce evidence of a witness’ prior bad acts in order to prove the witness’ dishonesty. He contended that Arnot’s prior acts of theft and burglary demonstrate his “ ‘habit of doing things that impugned his ability to be credible and to tell the truth.’ ” Gollehon, 864 P.2d at 258.

We observed that adoption of Gollehon’s reasoning would render any criminal act admissible to disprove the veracity of a witness. Agreeing that certain criminal acts indicate dishonesty — such as suppression of evidence, false pretenses, cheating and embezzlement — we declined to broaden that list to include theft and burglary. See Gollehon, 864 P.2d at 259. With regard to Rule 609, we stated that

Gollehon’s thinly-veiled proposed questioning of Arnot’s prior convictions without mentioning the word “conviction” is not persuasive. Montana’s Rule 609, M.R.Evid., is unique; it specifically prohibits evidence of a witness’s prior convictions.

Gollehon, 864 P.2d at 259. We held that the district court had not abused its discretion in refusing to allow Gollehon to introduce evidence of this nature. Gollehon, 864 P.2d at 258-59.

Here, the State cross-examined Jan regarding false information she provided to authorities on Coddell’s behalf. Like the offenses listed in Gollehon which indicate dishonesty — namely, forgery, bribery, suppression of evidence, false pretenses and embezzlement — the misdemeanor offense of unsworn falsification to authorities is an act which indicates dishonesty. Thus, unlike in Gollehon, the facts surrounding Jan’s providing false alibi information bear directly on her truthfulness as a witness. Accordingly, Martin’s reliance on Gollehon is misplaced.

Finally, Martin argues on appeal that evidence regarding the 1983 false alibi information was too remote to be admissible under Rule 608(b), M.R.Evid. The record reflects, however, that Martin did not raise this argument in the District Court. There, Martin relied entirely on Rule 609, M.R.Evid., in arguing against the admissibility of that evidence. “It is axiomatic that a party may not change the theory on appeal from that advanced in the district court.” Henderson, 877 P.2d at 1016. Moreover, as already noted, we will not consider arguments raised for the first time on appeal. See Losson, 865 P.2d at 260.

We conclude that District Court properly limited the scope of the State’s cross-examination of Jan pursuant to Rules 608 and 609, M.R.Evid. We hold, therefore, that the District Court did not abuse its discretion in allowing the State to cross-examine Jan regarding her providing false information on Coddell’s behalf in 1983.

Affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES TRIEWEILER, ERDMANN and LEAPHART concur.


source: Caselaw Access Project

author: JUSTICE GRAY

license: Public Domain

text:
    MARTIN CARELLI, Plaintiff and Respondent, v. STANLEY E. HALL, GREGORY L. STIRES, and DALE P. STIRES, Defendants and Appellants.
    No. 95-465.
    Submitted on Briefs June 27, 1996.
    Decided November 14, 1996.
    53 St.Rep. 1116.
    279 Mont. 202.
    926 P.2d 756.

      For Appellants: Michael K. Rapkoch; Felt, Martin, Frazier & Nelson, Billings.
    For Respondent: Rienne H. McElyea; Berg, Lilly, Andriolo & Tollefsen, Bozeman.
   JUSTICE GRAY

delivered the Opinion of the Court.

Gregory and Dale Stires appeal from the judgment of the Eighteenth Judicial District Court, Gallatin County, awarding Martin Carelli $77,381.08 in damages, costs and attorney’s fees in his action on a promissory note and from the underlying order denying their motion for summary judgment. We reverse and remand.

The dispositive issue on appeal is whether the District Court erred in denying Gregory and Dale Stires’ motion for summary judgment.

Factual Background

Gregory and Dale Stires (collectively, Stires) and Stanley Hall (Hall) owned and operated the Elk Valley Game Ranch (Game Ranch) as partners beginning in 1986. The partnership originally was formed pursuant to an oral agreement; however, Stires and Hall executed a written partnership agreement with regard to the Game Ranch in 1987.

In June of 1986, Hall purchased thirty-eight head of elk from Martin Carelli (Carelli). He signed a promissory note agreeing to pay Carelli $36,000 by December 20, 1986, for the elk. The promissory note refers solely to Hall as the purchaser and contains no reference to Stires or the Game Ranch. Hall also signed a security agreement covering the elk purchased from Carelli. The security agreement names, and is signed by, Hall as the debtor; it reflects that the elk will be kept at the Game Ranch and will be used for business purposes. Finally, Carelli and Hall signed, and Carelli filed, a Uniform Commercial Code (UCC) financing statement identifying Hall as the debtor and the elk as the collateral.

Stires and Hall dissolved their partnership in 1988. Pursuant to the partnership dissolution agreement, Stires would continue to operate the Game Ranch. The dissolution agreement listed the partnership debt and divided it between Stires and Hall. The debt attributable to the promissory note executed by Hall in Carelli’s favor was not listed.

Procedural History

After Hall failed to pay Carelli pursuant to the promissory note, Carelli sued Hall for the principal and interest owing on the note, together with costs and attorney’s fees. Hall answered, denying liability on the promissory note. He also filed a third-party complaint against Stires alleging that, pursuant to the partnership dissolution agreement, Stires was obligated to pay Carelli the debt evidenced by the promissory note. In response to Hall’s third-party complaint, Stires denied liability for the debt, arguing that the debt evidenced by the promissory note was Hall’s personal obligation and, therefore, Stires could not be held liable for it.

Stires attempted to depose Hall on three occasions. The first two dates were rescheduled and Hall failed to appear for the third. Thereafter, Carelli moved for summary judgment against Hall pursuant to Rule 56(c), M.R.Civ.R, as well as for entry of judgment in his favor against Hall as a Rule 37 sanction for Hall’s failure to appear at the depositions. Stires also moved for Rule 37 sanctions against Hall, requesting the court to dismiss Hall’s third-party complaint.

The District Court concluded that no genuine issues of material fact existed regarding Hall’s liability on the promissory note and granted summary judgment in favor of Carelli. In addition, the court granted Rule 37 sanctions against Hall in favor of both Carelli and Stires and, accordingly, entered judgment against Hall in Carelli’s favor and dismissed Hall’s third-party complaint against Stires. The District Court then permitted Carelli to amend his complaint, pursuant to Rule 15, M.R.Civ.R, to assert a claim against Stires for liability on the debt evidenced by the promissory note Hall executed. Stires answered, denying liability on the note, and both Stires and Carelli conducted discovery.

Stires subsequently moved for summary judgment against Carelli, arguing that the promissory note, security agreement and financing statement clearly and unambiguously identified Hall as the sole debtor on the note. Thus, according to Stires, no genuine issues of material fact existed regarding whether Stires was a debtor liable on the note and Stires was entitled to judgment as a matter of law under UCC, contract and partnership principles.

Carelli opposed Stires’ motion. After oral argument on Stires’ summary judgment motion, the District Court determined that genuine issues of material fact existed and Stires was not entitled to judgment as a matter of law. It provided no further explanation or analysis of its denial of the motion.

Following a bench trial, the District Court entered findings of fact and conclusions of law determining that Hall was authorized to — and did, in fact — purchase the elk on behalf of the partnership and, therefore, that Stires was liable on the promissory note. The court entered judgment accordingly and Stires appeals.

Did the District Court err in denying Stires’ motion for summary judgment?

Summary judgment is proper when no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.P. We review a district court’s grant or denial of a motion for summary judgment de novo, applying the same Rule 56(c), M.R.Civ.P, criteria used by that court. Johnson v. Nyhart (1995), 269 Mont. 379, 384, 889 P.2d 1170, 1173 (citation omitted).

The moving party has the initial burden of establishing the absence of genuine issues of material fact and entitlement to judgment as a matter of law. Brinkman & Lenon v. P & D Land Enters. (1994), 263 Mont. 238, 241, 867 P.2d 1112, 1115. Only where the moving party satisfies its initial burden does the burden shift to the party opposing summary judgment to present evidence raising a genuine issue of material fact. Matter of Estate of Lien (1995), 270 Mont. 295, 298, 892 P.2d 530, 532 (citing Owen v. Ostrum (1993), 259 Mont. 249, 255-56, 855 P.2d 1015, 1019). The nonmoving party may not rest upon the allegations in the pleadings or on speculative or conclusory statements. Estate of Lien, 892 P.2d at 532 (citing Simmons v. Jenkins (1988), 230 Mont. 429, 432, 750 P.2d 1067, 1069). Moreover, only admissible evidence can be considered in determining whether genuine issues of material fact exist. See Treutel v. Jacobs (1990), 240 Mont. 405, 408, 784 P.2d 915, 917.

“Material issues of fact are identified by looking to the substantive law governing the proceedings.” Estate of Lien, 892 P.2d at 532 (citation omitted). Here, Carelli and Stires agree that the UCC is the primary source of law applicable in this case because the sale of elk at issue here is a sale of “goods” under § 30-2-105(1), MCA (1985), and, additionally, that the promissory note is an “instrument” as defined in §§ 30-3-102 and 30-3-104, MCA (1985). They also agree that contract and partnership principles apply only secondarily.

The central issue in this case is whether Stires is liable on the debt evidenced by the promissory note and security agreement for the purchase of the elk executed by Hall in Carelli’s favor. Stated differently, the issue is whether Hall bound the Game Ranch partnership and, as a result, Stires, when he executed the note and security agreement. In support of his motion for summary judgment, Stires relies on the promissory note and the related security agreement, both executed solely by Hall and identifying only Hall as the debtor. Stires contends that they clearly and unambiguously establish, via their express terms, that Hall is the sole person liable for the debt evidenced by the promissory note.

The note specifically provides that “the undersigned promises to pay ... MARTIN CARELLI ... the sum of Thirty-six Thousand and no/100 ($36,000.00) Dollars on or before the 20th day of December, 1986. ...” for the thirty-eight head of elk. Hall is the sole signatory of the note and neither the Game Ranch nor Stires is referenced in any way. Thus, the promissory note clearly establishes that Hall is the person liable for the promise to pay contained therein.

In addition, § 30-3-401(1), MCA (1985), expressly provides that “[n]o person is liable on an instrument unless his signature appears thereon.” Because neither Stires nor the Game Ranch is identified in the note and Stires’ signature is not contained therein, Stires is not liable on the instrument.

We conclude that, as the party moving for summary judgment, Stires met the initial burden of establishing the absence of genuine issues of material fact regarding Stires’ liability on the promissory note executed by Hall and entitlement to judgment as a matter of law. The burden then shifted to Carelli to present affirmative evidence of a material and substantial nature raising genuine issues of material fact regarding Stires’ liability; he could not rest on the allegations in his pleadings or on conclusory or speculative statements. See Estate of Lien, 892 P.2d at 532.

Carelli’s argument that Stires is liable for the debt evidenced by the promissory note executed by Hall is based on the UCC and contract and partnership law. Conceding that the promissory note is clear and identifies Hall as the sole debtor, Carelli nonetheless argues that his deposition establishes the existence of a genuine issue of material fact regarding whether Hall signed the promissory note on behalf of the Game Ranch and that the District Court properly determined that this factual issue precluded summary judgment. Specifically, he relies on his deposition testimony that, in negotiating for the purchase of the elk, Hall represented to him that Hall was purchasing the elk on behalf of the Game Ranch and that the partnership and, more specifically, Stires, would pay the debt.

Carelli concedes that parol evidence is inadmissible to alter the express and unambiguous terms of a written agreement. He also implicitly recognizes that Hall’s alleged representations could be considered in the summary judgment context only if they would be admissible into evidence at trial. See Treutel, 784 P.2d at 917. Carelli advances alternative arguments under which Hall’s alleged representations that he signed the promissory note in a representative capacity — that is, on behalf of the Game Ranch — constitute admissible evidence properly considered by the District Court in denying Stires’ motion for summary judgment. His arguments in this regard are premised on his contention that reference to the Game Ranch in the security agreement creates an ambiguity as to the identity of the debtor on the promissory note.

Extrinsic evidence of contemporaneous or prior oral agreements which contradicts the express terms of a written agreement is admissible where the written agreement is ambiguous. See Haggerty v. Gallatin County (1986), 221 Mont. 109, 117, 717 P.2d 550, 555. Whether an ambiguity exists is a question of law. See Klawitter v. Dettmann (1994), 268 Mont. 275, 281, 886 P.2d 416, 420; Weldon v. Montana Bank (1994), 268 Mont. 88, 93, 885 P.2d 511, 514. Where the language of an agreement is clear and unambiguous and, as a result, susceptible to only one interpretation, the duty of the court is to apply the language as written. Audit Services, Inc. v. Systad (1992), 252 Mont. 62, 65, 826 P.2d 549, 551 (citation omitted). An ambiguity exists, however, when a contract is subject to two different interpretations; under such a circumstance, parol evidence can be used to determine the parties’ intent. Audit Services, 826 P.2d at 551; see also Morning Star Enters. v. R.H. Grover (1991), 247 Mont. 105, 111, 805 P.2d 553, 557.

As discussed above, the promissory note identifies Hall as the sole debtor. It also states that “[t]his note is in conjunction with that certain Security Agreement bearing date of June 30, 1986, covering 38 head of elk.” The security agreement, like the promissory note, designates Hall as the debtor and is signed only by Hall. It further provides that the elk will be used for business purposes and kept at the Game Ranch. The security agreement does not refer to Stires or indicate in any manner that Hall signed in a representative capacity on behalf of the Game Ranch.

The promissory note and security agreement are susceptible to only one interpretation with regard to the identity of the debtor liable on the note. The promissory note expressly states that Hall is the person responsible for paying the obligation owed for the sale of the elk. Moreover, the security agreement expressly designates Hall as the debtor. Thus, because Hall is “the person who owes payment... of the obligation secured,” he is the “debtor” as that term is used in the Secured Transactions chapter of the UCC. See § 30-9-105(l)(d), MCA (1985). The reference to the Game Ranch in the security agreement does not render ambiguous the plain language of the note and the security agreement identifying Hall as the debtor.

Carelli also argues that § 30-3-403(1), MCA (1991), permits extrinsic evidence that Hall was acting on behalf of the Game Ranch in signing the promissory note. Recognizing that the 1985 version of § 30-3-403(1), MCA, was in effect at the time of the transaction at issue, Carelli argues that the 1991 amendment to § 30-3-403, MCA, was merely procedural and, as a result, properly can be applied retroactively. Stires contends, on the other hand, that the 1991 amendment was substantive and cannot be applied retroactively.

As a general rule, statutes cannot be applied retroactively unless expressly so declared by the Montana legislature. Section 1-2-109, MCA. A statute does not operate retroactively merely because it is applied to conduct occurring prior to its enactment. Porter v. Galarneau (1996), 275 Mont. 174, 183, 911 P.2d 1143, 1148 (citation omitted). A retroactive law is

one which takes away or impairs vested rights acquired under existing laws or creates a new obligation, imposes a new duty, attaches a new disability in respect to transactions already passed, or gives a transaction a different legal effect from that which it had when it occurred.

Porter, 911 P.2d at 1150 (citations omitted).

In order to determine whether the 1991 amendments to § 30-3-403, MCA, were substantive, so as to constitute a retroactive law if applied to the promissory note at issue here, it is necessary to examine several related statutes from both the 1985 and 1991 versions of Montana’s UCC. As noted above, § 30-3-401(1), MCA (1985), expressly provides that “[n]o person is liable on an instrument unless his signature appears thereon.” A signature may be made by an agent or other representative, and the representative’s authority to make that signature may be established “as in other cases of representation.” Section 30-3-403(1), MCA (1985). Conversely, where an authorized representative signs his own name to an instrument, the representative — rather than the represented person — is personally obligated unless the instrument either names the person represented or shows that the representative signed in a representative capacity. Section 30-3-403(2)(a), MCA (1985).

Here, it is clear that neither Stires’nor the Game Ranch’s signature appears on the promissory note executed by Hall in Carelli’s favor. Thus, pursuant to § 30-3-401(1), MCA (1985), Stires is not liable on the note. Since Stires’ signature does not appear, subsection (1) of § 30-3-403, MCA (1985), cannot be used to establish that Hall had authority to make the signature. Moreover, even if Hall were authorized to sign instruments on behalf of Stires or the Game Ranch, he would remain personally — and solely — liable on the promissory note to Carelli under § 30-3-403(2)(a), MCA (1985), because the note neither names the person represented nor indicates that Hall signed in a representative capacity. Thus, under the 1985 versions of §§ 30-3-401 and 30-3-403, MCA, Stires is not liable on the promissory note as a matter of law.

The 1991 versions of these two statutes are significantly different. Under § 30-3-401, MCA (1991), a person can be hable on an instrument, even absent that person’s signature, if the person “is represented by an agent or representative who signed the instrument and the signature is binding on the represented person under 30-3-403.” Section 30-3-403(1), MCA (1991), provides that, “[i]f a person acting, or purporting to act, as a representative signs an instrument by signing... the name of the signer,” the represented person can be bound by — and liable under — the signature under certain circumstances, “whether or not identified in the instrument.” (Emphasis added.)

Thus, under the 1991 version of the UCC, if Hall acted or “purported to act” on behalf of the Game Ranch partnership and Stires in executing the promissory note to Carelli, Stires potentially could be liable for the debt underlying the note. Carelli argues that Hall’s alleged representations that he was acting on behalf of the Game Ranch and Stires in executing the note are admissible under § 30-3-403(1), MCA(1991), as evidence that Hall was so acting and purporting to act.

The 1991 amendment to § 30-3-403, MCA, provides for potential liability of represented persons which did not exist under the 1985 version of the statute. If applied here, § 30-3-403(1), MCA (1991), could impose a new obligation on Stires with regard to a transaction already passed. Thus, the 1991 amendment is substantive and cannot be applied retroactively unless expressly declared retroactive by the legislature. See § 1-2-109, MCA; Porter, 911 P.2d at 1150. Section 30-3-403, MCA (1991), does not contain an express declaration that the legislature intended it to apply to transactions already passed. Accordingly, we conclude that § 30-3-403(1), MCA (1991), is not applicable in this case and, as a result, Hall’s alleged representations to Carelli that he purchased the elk on behalf of the Game Ranch and that Stires would pay the debt are not admissible thereunder.

Notwithstanding his argument above that the 1991 version of § 30-3-403(1), MCA, applies in this case, Carelli relies on cases interpreting the 1983 and 1985 versions of § 30-3-403(2)(b), MCA, in support of his argument that parol evidence is admissible here to prove Hall signed the promissory note on behalf of the Game Ranch partnership. The 1983 and 1985 versions of § 30-3-403, MCA, are identical; accordingly, we refer only to § 30-3-403, MCA (1985), in discussing the cases on which Carelli relies.

Carelli argues that Clarks Fork Nat’l Bank v. Papp (1985), 215 Mont. 494, 698 P.2d 851, and Accounts Management Corp. v. Lyman Ranch (1987), 230 Mont. 35, 748 P.2d 919, are factually similar to the present case and support the admissibility of his deposition testimony regarding Hall’s alleged representations as evidence. In both Clarks Fork Nat’l Bank and Accounts Management Corp., we concluded that parol evidence was admissible to determine whether the promissory notes at issue were signed in a representative or individual capacity under § 30-3-403(2), MCA (1985), which provides in relevant part:

An authorized representative who signs his own name to an instrument:
(b) except as otherwise established between the immediate parties, is personally obligated if the instrument names the person represented but does not show that the representative signed in a representative capacity....

(Emphasis added). Under this statute, where an instrument names the represented party but the representative does not indicate that he or she signed in a representative capacity, parol evidence is admissible to determine the actual agreement between the immediate parties to the instrument regarding liability on the instrument. See Clarks Fork Nat’l Bank, 698 P.2d at 853; Accounts Management Corp., 748 P.2d at 922-23.

Clarks Fork Nat’l Bank involved a promissory note executed in favor of Clarks Fork National Bank (Clarks Fork) which identified the debtors as “’Papp, Ellak and Violet dba Papp Landscaping Co.’” The note was signed by Ellak and Violet Papp without any further reference to Papp Landscaping Co. Clarks Fork Nat’l Bank, 698 P.2d at 852. Clarks Fork sued Ellak and Violet Papp (the Papps) for the debt evidenced by the note, contending that the note was their personal obligation. The Papps asserted, however, that they had executed the note in their corporate capacities. The district court granted Clarks Fork’s motion for summary judgment, holding the Papps personally liable for the debt evidenced by the promissory note. Clarks Fork Nat’l Bank, 698 P.2d at 852.

On appeal, Clarks Fork argued that the promissory note was unambiguous and, as a result, evidence could not be presented to vary the terms of the note. We agreed that parol evidence generally is inadmissible unless the note is ambiguous or uncertain. Clarks Fork Nat’l Bank, 698 P.2d at 853. We concluded, however, that § 30-3-403(2)(b), MCA (1985), specifically allowed proof beyond the provisions of the note because the language of the note itself — -that is, the reference to both the Papps and Papp Landscaping as the borrowers — suggested that the Papps and Clarks Fork, as the immediate parties to the note, “may have ‘otherwise established’ as provided in [§ 30-3-403(2)(b), MCA (1985)].” Accordingly, we reversed the summary judgment against the Papps and remanded for the district court’s consideration of parol evidence to determine what the Papps and Clarks Fork intended. Clarks Fork Nat’l Bank, 698 P.2d at 853-54.

In Accounts Management Corp., Lyman Ranch had borrowed a considerable amount of money from Farmers Union Oil (Farmers), but failed to repay it. Howard Lyman (Lyman) executed a promissory note for the benefit of Farmers to cover the delinquent debt. Accounts Management Corp., 748 P.2d at 920-21. The top part of the promissory note commemorated the debt owed by Lyman Ranch to Farmers and was signed by Lyman on behalf of Lyman Ranch. The bottom part of the note contained an unconditional promise to repay the debt, did not identify the debtor and was signed by Lyman in his individual capacity. Accounts Management Corp., 748 P.2d at 921.

Farmers sued Lyman in his individual capacity, as the signatory of the note, and Lyman Ranch. Lyman Ranch admitted liability for the debt, but Lyman denied personal liability. Prior to trial, Farmers assigned its rights against Lyman and Lyman Ranch to Accounts Management. The district court concluded that the bottom portion of the promissory note contained an unambiguous, unconditional promise by Lyman to repay the debt and, accordingly, entered judgment against Lyman individually. Accounts Management Corp., 748 P.2d at 922.

We determined on appeal that, as Farmers’ assignee, Accounts Management stepped into Farmers’ shoes and was considered an immediate party to the promissory note for purposes of the first requirement under § 30-3-403(2)(b), MCA (1985). See Accounts Management Corp., 748 P.2d at 922-23. Additionally, since the promissory note named Lyman Ranch as the debtor but failed to show that Lyman signed in a representative capacity, the second requirement of § 30-3-403(2)(b), MCA(1985), was satisfied. Accounts Management Corp., 748 P.2d at 923. We concluded, therefore, that “by statute, as between the immediate parties, the [promissory note] creates an ambiguity in regard to the second signature.” Accounts Management Corp., 748 P.2d at 922.

Under those circumstances, and relying on Clarks Fork Nat'l Bank, we concluded that the issue of who was obligated on the note was a question of fact for the trier of fact. Accounts Management Corp., 748 P.2d at 923. For purposes of resolving that issue, we concluded that § 30-3-403(2)(b), MCA (1985), allows parol evidence in litigation between the immediate parties to prove that the signature was, or was not, in a representative capacity. Accounts Management Corp., 748 P.2d at 923.

Thus, Clarks Fork Nat’l Bank and Accounts Management Corp. share the same dispositive facts with regard to the admissibility of parol evidence under § 30-3-403(2)(b), MCA (1985). First, the litigation in both cases was between the immediate parties to the promissory note. Second, in both cases the promissory note referenced the corporate entity in identifying the debtors, but contained a signature which did not indicate that the signatory signed in a representative capacity. Those facts fell squarely within the purview of § 30-3-403(2)(b), MCA (1985), and, therefore, we concluded that parol evidence was admissible to determine whether the notes were signed in an individual or representative capacity. See Clarks Fork Nat’l Bank, 698 P.2d at 853; Accounts Management Corp., 748 P.2d at 923.

The present case is factually distinguishable from both Clarks Fork Nat’l Bank and Accounts Management Corp.. Here, the litigation is not between the immediate parties to the promissory note. The promissory note was executed by Hall in Carelli’s favor and they were the immediate parties to the note; Stires was not a party to the transaction. Moreover, the promissory note does not refer to the Game Ranch or Stires in any way. Unlike in Clarks Fork Nat’l Bank and Accounts Management Corp., the facts in the present case do not fall within the purview of § 30-3-403(2)(b), MCA (1985). Thus, Clarks Fork Nat’l Bank and Accounts Management Corp. do not support Carelli’s argument that parol evidence is admissible here.

Finally, Carelli argues that Stires is liable for the debt evidenced by the promissory note executed by Hall in Carelli’s favor because Stires accepted the benefit of the transaction between himself and Hall. In other words, Carelli argues that Stires ratified Hall’s purchase of the elk on behalf of the Game Ranch, even if Hall did not have authority to bind the Game Ranch partnership, because Stires accepted the elk at issue and used them for business purposes. In this regard, he contends that the reference to the Game Ranch in the security agreement “created a strong, if not absolute, probability that the elk were kept on the partnership property and used for hunting purposes.” He argues that his deposition testimony regarding his visits to the Game Ranch created a genuine issue of material fact as to whether the Game Ranch had possession of the elk.

Review of Carelli’s deposition testimony reflects that Carelli did not offer any evidence establishing that Stires took possession of the elk. Carelli did not state with certainty that any of the elk purchased by Hall were located at the Game Ranch or received by Stires. In fact, Carelli testified that he had visited the Game Ranch, but that he did not get close enough to the elk to positively identify any of them as the elk he sold to Hall. Carelli’s argument that Stires is liable on the note due to possession of the elk is entirely speculative and, therefore, is insufficient to raise genuine issues of material fact precluding summary judgment. See Estate of Lien, 892 P.2d at 532.

We conclude that Carelli failed to meet his burden on summary judgment of presenting admissible evidence raising a genuine issue of material fact regarding Stires’ liability for the debt evidenced by the promissory note. On that basis, we further conclude that Stires was entitled to judgment as a matter of law. Accordingly, we hold that the District Court erred in denying Stires’ motion for summary judgment.

Reversed and remanded for entry of summary judgment in favor of Stires.

CHIEF JUSTICE TURNAGE, JUSTICES NELSON, HUNT and ERDMANN concur.


text:
    ADELINE EADUS, Plaintiff and Appellant, v. WHEATLAND MEMORIAL HOSPITAL & NURSING HOME, Defendant and Respondent.
    No. 96-306.
    Submitted on Briefs October 24, 1996.
    Decided November 14, 1996.
    53 St.Rep. 1122.
    279 Mont. 216.
    926 P.2d 752.

      For Appellant: Craig W. Holt; Holt Law Office, Billings.
    For Respondent: James D. Walen; Stacey & Walen, Billings.
   JUSTICE GRAY

delivered the Opinion of the Court.

Adeline Eadus (Eadus) appeals from the judgment entered on the order of the Fourteenth Judicial District Court, Wheatland County, granting Wheatland Memorial Hospital & Nursing Home’s (Wheatland) motion for summary judgment, and from the deemed denial of her Rule 59(g), M.R.Civ.R, motion to amend. We reverse.

The sole issue on appeal is whether the District Court erred in granting Wheatland’s motion for summary judgment on the basis that Eadus’ action was barred under § 39-2-911(2), MCA, because she failed to exhaust internal grievance procedures prior to filing a complaint.

Eadus began her employment with Wheatland in 1975. Diane Jones (Jones), Wheatland’s administrator, terminated Eadus’ employment on July 12, 1994. Eadus filed a complaint against Wheat-land in the District Court on March 13, 1995, alleging wrongful discharge under Montana’s Wrongful Discharge From Employment Act (WDEA). Both parties conducted discovery and the depositions of Eadus, Jones and Meridith Shelstead, Eadus’ supervisor at the time of the discharge, were taken. A pretrial order was entered.

A jury trial on Eadus’ complaint was scheduled for March 12,1996. Prior thereto, Wheatland raised the issue of whether Eadus’ action was barred by § 39-2-911(2), MCA, because Eadus failed to exhaust its internal procedures regarding appeal of a discharge from employment. Because Wheatland relied, in part, on Jones’ deposition testimony, the District Court converted the matter into a motion for summary judgment and properly notified the parties of its decision to do so. During a telephonic conference on the motion, the parties agreed that no genuine issue of material fact existed relating to § 39-2-911, MCA. The parties also agreed that the District Court properly could determine the summary judgment motion on the legal issue of whether § 39-2-911(3), MCA, required Wheatland to provide Eadus with a copy of its written internal procedures regarding appeal of the discharge where it was undisputed that Eadus had received a copy of those procedures in 1989.

The District Court subsequently entered its Memorandum and Order determining that no genuine issue of material fact existed and that Wheatland was entitled to judgment as a matter of law because it had substantially complied with the requirements imposed by § 39-2-911(3), MCA. The court relied primarily on Hoffman v. Town Pump, Inc. (1992), 255 Mont. 415, 843 P.2d 756. Judgment was entered dismissing Eadus’ complaint and notice of entry of judgment was served. Eadus filed a Rule 59(g), M.R.Civ.R, motion to amend which subsequently was deemed denied by operation of law. Eadus appeals.

Did the District Court err in granting Wheatland’s motion for summary judgment on the basis that Eadus’ action was barred under § 39-2-911(2), MCA, because she failed to exhaust internal grievance procedures prior to filing a complaint?

Summary judgment is proper when no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.P. “Material issues of fact are identified by looking to the substantive law governing the proceeding.” Matter of Estate of Lien (1995), 270 Mont. 295, 299, 892 P.2d 530, 532 (citation omitted). We review a district court’s grant or denial of a motion for summary judgment de novo, applying the same Rule 56(c), M.R.Civ.P., criteria used by that court. Johnson v. Nyhart (1995), 269 Mont. 379, 384, 889 P.2d 1170, 1173 (citations omitted).

Section 39-2-911(1), MCA, contains a one-year statute of limitations for bringing a wrongful discharge action under the WDEA. Section 39-2-911(2), MCA, provides that, where an employer maintains written internal procedures for appealing a discharge, the limitation period generally is tolled until those procedures are exhausted.

Section 39-2-911, MCA, further provides, in pertinent part:

(2) If an employer maintains written internal procedures ... under which an employee may appeal a discharge within the organizational structure of the employer, the employee shall first exhaust those procedures prior to filing an action under this part. The employee’s failure to initiate or exhaust available internal procedures is a defense to an action brought under this part. ...
(3) If the employer maintains written internal procedures under which an employee may appeal a discharge within the organizational structure of the employer, the employer shall within 7 days of the date of the discharge notify the discharged employee of the existence of such procedures and shall supply the discharged employee with a copy of them. If the employer fails to comply with this subsection, the discharged employee need not comply with subsection (2).

(Emphasis added.) Thus, the legislature has mandated in § 39-2-911(2), MCA, that, where an employer has written internal procedures pursuant to which a discharged employee may appeal a discharge, the employee must exhaust those procedures prior to filing a wrongful discharge complaint in the district court. The penalty for an employee’s failure to do so is severe; such a failure “is a defense to an action brought under [the WDEA].” Section 39-2-911(2), MCA.

In order to facilitate the use of such procedures, however, and to ensure that an employee is not required to exhaust procedures of which he or she may be unaware or to which he or she does not have access, the legislature placed corresponding obligations on an employer which has such written internal procedures. Pursuant to § 39-2-911(3), MCA, the employer having written internal procedures must — within seven days of the discharge — notify the employee of the existence of such procedures and supply the discharged employee with a copy of them.

Applying the “material facts” standard from Estate of Lien to the terms of the statute at issue here, it is clear that the first two facts material to the availability of the employer defense contained in § 39-2-911(2), MCA, are whether the employer has written internal procedures for appealing a discharge and whether the discharged employee utilized those procedures. These facts are undisputed in this case. WTieatland has such internal procedures and Eadus neither initiated nor exhausted those procedures. As a result, Wheatland was entitled to summary judgment pursuant to the defense contained in § 39-2-911(2), MCA, provided it met the requirements of § 39-2-911(3), MCA.

The facts material to § 39-2-911(3), MCA, are whether, within seven days of the date of the discharge, the employer notified the employee of the existence of the internal procedures and supplied a copy of the procedures to the employee. Here, it is undisputed that Jones notified Eadus of the existence of the internal procedures at the time she discharged Eadus. It also is undisputed that Jones did not supply a copy of those procedures to Eadus at that time or within seven days of the discharge. Therefore, it is clear that WTieatland did not meet the second requirement contained in § 39-2-911(3), MCA.

Section 39-2-911(3), MCA, expressly provides that, if the employer fails to comply with the two requirements therein, the discharged employee need not comply with the exhaustion of internal procedures requirement set forth in § 39-2-911(2), MCA. Applying the plain language of the statute here, Eadus was not required to exhaust Wheatland’s internal procedures and, as a result, Wheatland was not entitled to judgment as a matter of law based on Eadus’ failure to do so.

Wheatland argues, however, that it was not required to give Eadus another copy of the internal procedures because she had received a copy in 1989. It relies, as did the District Court, onHoffman. Hoffman is inapplicable here.

In Hoffman, the employee resigned effective August 24,1989, and filed a wrongful discharge action, based on constructive discharge, against his former employer the same day. At the close of the employee’s case in chief at trial, the district court granted the employer’s motion for a directed verdict on the basis that the employee had not initiated or exhausted internal grievance procedures prior to bringing suit. Hoffman, 843 P.2d at 757-58.

The employee contended on appeal that, because the employer did not notify him of the existence of the grievance procedures or supply a copy of those procedures within seven days, as required by § 39-2-911(3), MCA, he was not required to initiate or exhaust the procedures. The employer contended, as Wheatland does here, that the employee previously had received a copy of the procedures; indeed, in Hoffman, the employee had utilized them during an earlier dispute. Thus, according to the employer, the employee had constructive notice of the procedures and was required to comply with them. Since he did not, the employer argued that § 39-2-911(2), MCA, provided it with a defense to the employee’s constructive discharge action. Hoffman, 843 P.2d at 758.

Under the circumstances before us, we declined to address the statutory arguments advanced by the parties. Hoffman, 843 P.2d at 758. Instead, we focused on the unique fact that the employee had filed his complaint on the same day he terminated his employment by resigning, thereby effectively precluding the employer from complying with its obligations under § 39-2-911(3), MCA. Hoffman, 843 P.2d at 758. Under that circumstance, we observed that ££[i]t would have been impossible for [the employer] to notify [the employee] of the written procedures within seven days of the discharge prior to the commencement of the action.” Hoffman, 843 P.2d at 758. On that basis, we concluded that the employee’s immediate filing of a complaint alleging constructive discharge rendered the employer unable to comply with § 39-2-911(3), MCA, and did not excuse the employee’s § 39-2-911(2), MCA, obligation to exhaust the available internal grievance procedures. Hoffman, 843 P.2d at 759.

Hoffman does not support Wheatland’s position here that Eadus’ 1989 receipt of its internal grievance procedures was sufficient to constitute compliance with its obligation under § 39-2-911(3), MCA, to provide a copy of such procedures within seven days of the discharge. In Hoffman, we specifically declined to address the “constructive notice” argument advanced by the employer as an alternative to actual compliance with § 39-2-911(3), MCA. Moreover, Hoff man is distinguishable on the dispositive fact upon which we premised our decision — namely, the employee’s filing of a wrongful discharge complaint on the very day his resignation based on an alleged constructive discharge occurred. That fact is not present here, where Eadus was discharged on July 12, 1994, and filed her complaint in March of 1995.

Section 39-2-911, MCA, establishes a quid pro quo under which an employee’s failure to exhaust written internal grievance procedures constitutes a defense against the action, but only when the employer has met its precedent obligations to notify the discharged employee of the internal procedures and to provide a copy of those procedures within seven days of the discharge. Allowing an employer to rely on “constructive notice” or “substantial compliance” with the requirements of § 39-2-911(3), MCA, would unbalance the statutory quid pro quo.

We conclude, therefore, that the requirements contained in § 39-2-911(3), MCA, must be met before an employer can avail itself of the defense set forth in § 39-2-911(2), MCA. We further conclude that Wheatland’s failure to comply with the second obligation imposed on it by § 39-2-911(3), MCA, precluded its reliance on the “employee’s failure to exhaust” defense contained in § 39-2-911(2), MCA. We hold, therefore, that the District Court erred in concluding that Wheatland was entitled to judgment as a matter of law under § 39-2-911(2), MCA, and in granting its motion for summary judgment onthatbasis.

Reversed and remanded.

CHIEF JUSTICE TURNAGE, JUSTICES NELSON, TRIEWEILER, HUNT, LEAPHART and ERDMANN concur.