author: JUSTICE REGNIER

text:
    STEVE FILLINGER and RHONDA FILLINGER, STEVE FILLINGER OUTFITTER & GUIDE SERVICE, INC., a/k/a STEVEN FILLINGER OUTFITTERS, INC., a/k/a STEVE FILLINGER OUTFITTERS, a/k/a FILLINGER OUTFITTERS, Plaintiffs, Respondents and Cross Appellants, v. NORTHWESTERN AGENCY, INC., OF GREAT FALLS, Defendant and Appellant.
    No. 96-255.
    Submitted on Briefs April 17, 1997.
    Decided June 3, 1997.
    54 St.Rep. 500.
    283 Mont. 71.
    938 P.2d 1347.

      For Appellant: Charles R. Johnson and Kirk D. Evenson; Marra, Wenz, Johnson & Hopkins; Great Falls.
    For Respondents: Robert B. Pfennigs and Jack L. Lewis; Jardine, Stephenson, Blewett & Weaver; Great Falls.
   JUSTICE REGNIER

delivered the Opinion of the Court.

Northwestern Agency, Inc., hereinafter “Northwestern,” appeals from the judgment and jury verdict of the Eighth Judicial District Court, Cascade County. The Respondents, collectively referred to herein as the “Fillingers,” filed a cross-appeal but have elected only to respond to the issues raised by Northwestern and do not pursue their cross-appeal. The Fillingers filed a complaint against Northwestern seeking to recover alleged economic losses incurred as a consequence of Northwestern’s procurement of an insurance policy which did not afford the coverage allegedly requested by the Fillingers, and which coverage they believed Northwestern had procured for them. Western Heritage, the insurer, was originally joined as a defendant in this action, but settled with the Fillingers prior to trial. The Fillingers dropped their separate individual claims. The case was submitted to the jury on a Special Verdict with eighteen questions pertaining to five separate legal theories including: negligent failure to procure the insurance coverage requested; negligent failure to inform the Fillingers that the requested coverage was not procured; negligent misrepresentation; breach of oral contract; and breach of §§ 33-18-201, MCA, et. seq. The jury returned a verdict which found Northwestern liable on all five theories and assessed $125,000 in damages. We affirm.

The issues on appeal are:

1. Did the District Court err in instructing the jury that an insurance policyholder has no duty to read the policy unless under the circumstances it is unreasonable not to read it?

2. Did the District Court err by allowing evidence of the oral negotiations between the Fillingers and Northwestern regarding their agreement to procure a specified insurance coverage?

3. Did the District Court err in failing to instruct the jury on the applicable law in regard to the necessity of expert testimony to establish the standard of care of an insurance agent in a negligence action by a client for failure to procure the coverage requested by the client?

4. Did the District Court err in submitting the Fillingers’ claim to the jury under an Unfair Trade Practices Act theory, specifically § 33-18-201(1), MCA, as it applied to Northwestern?

FACTUAL BACKGROUND

The Fillingers own and operate a guide and outfitting business near Stockett, Montana. From 1983 to 1994, with the exception of one year, the Fillingers contracted with Burlington Northern Railroad (“BN”) to provide outfitting services, including guided hunting and floating trips, for customers and employees of BN. During the negotiations for the contract, the BN representative made it clear that a prerequisite for the Fillingers being awarded the contract was that they obtain insurance which would cover the outfitting business for any accident, including an accident involving ahorse. Steve Fillinger, therefore, contacted Joyce Jenkins, the president of Northwestern, concerning his insurance requirements. An insurance policy was procured by Jenkins and renewed annually by the Fillingers.

In November 1989, during a hunting trip sponsored by BN and guided by the Fillingers, a BN employee, Mike O’Shaughnessy, was injured in a horse-related accident. The medical expenses were submitted by the Fillingers to Northwestern; however, the payment of the medical expenses was not immediately rendered. On July 25, 1990, prior to a planned BN float trip, BN held a meeting with Steve Fillinger and Jenkins to discuss the O’Shaughnessy claim. BN was placated by the outcome of the meeting and did not cancel its float trip with the Fillingers.

In 1991, the O’Shaughnessy claim still had not been paid, inducing BN to cancel its 1991 contract with the Fillingers. In 1992, BN and the Fillingers renewed their contract negotiations. A new contract was agreed upon which reduced the amount BN would pay to the Fillingers for outfitting services. The new contract also eliminated the use of horses and required only “liability insurance as required by the State of Montana for outfitters.”

At trial, the parties presented conflicting factual accounts surrounding the procurement of the policy, the representations made by Jenkins, and the coverage the policy entailed. Steve Fillinger testified he told Jenkins he “needed insurance that would cover everything, especially if anybody got hurt on a horse.” Jenkins procured an insurance policy for the Fillingers. Steve testified that she assured him that the policy would cover anything that happens, especially on a horse. Steve explained that he did not read the policies word for word, but confirmed with Jenkins that the policies contained the coverage he had requested. Steve testified Jenkins represented that a specific clause in the policy covered his concerns regarding the horses and referred to this clause as the “horse rider.” Steve stated that he looked through the policy each year to see if the “horse rider” clause was attached because that was where BN’s concerns seemed to be focused.

In 1991, the Fillingers continued to use Jenkins to procure their insurance, even though BN was not one of their clients that year. Without BN as a client, Steve no longer needed the special insurance coverage and all he requested from Jenkins was a “regular outfitter’s policy.” Jenkins maintained throughout the trial that this regular outfitter’s policy was all that Steve ever requested. Steve testified, however, that Jenkins explained to him in 1991 for the first time that she could not provide the type of policy he had previously requested which would cover any accident, and that his current insurance policy was only a liability policy which provides coverage only for negligent acts. Dining the trial, Steve asserted that if Jenkins had informed him of this fact earlier there would have been a number of options available to the Fillingers to satisfy BN’s insurance concerns, including elimination of the risk itself by discontinuing the use of horses.

At trial, the Fillingers sought recovery of damages for the concessions made for the 1992 contract which were allegedly necessary in order to get BN back as a client and for the loss of income during 1991 in which year BN did not renew its contract with the Fillingers. The jury found Northwestern liable on all five theories and assessed $125,000 in damages. Northwestern appeals.

ISSUE 1

Did the District Court err in instructing the jury that an insurance policyholder has no duty to read the policy unless under the circumstances it is unreasonable not to read it?

It is well within the district court’s discretion to decide how to instruct a jury, taking into account theories of contending parties, and this Court will not overturn the district court except for abuse of discretion. Hall v. Big Sky Lumber & Supply, Inc. (1993), 261 Mont. 328, 863 P.2d 389; Cline v. Durden (1990), 246 Mont. 154, 803 P.2d 1077. In Hall, we explained that on review by this Court

all jury instructions must be read as a whole and the party assigning error to the court’s instructions must show prejudice in order to prevail. Walden v. State (1991), 250 Mont. 132, 818 P.2d 1190. Such prejudice will not be found if the jury instructions in their entirety state the applicable law of the case. Walden, 250 Mont. at 137, 818 P.2d at 1193.

Hall, 863 P.2d at 392.

Northwestern argues that the District Court erred in giving its Instruction No. 24 which provides:

In connection with your deliberations as to whether any reliance on Joyce Jenkins was justified, I instruct you that, an insurance policyholder has no duty to read the policy unless under the circumstances it is unreasonable not to read it.
Nor does it mean that an officer or employee of Fillinger Outfitters had a duty to read the policy every time a new policy was issued.
You should, therefore, consider whether the officers and employees of Fillinger Outfitters acted reasonably in relying upon any representations made by Joyce Jenkins or any other officer or employee of Northwestern Agency rather than reading the policy. This will depend upon the Plaintiff’s relationship with Joyce Jenkins and the officers and employees of Northwestern Agency and the nature of the situation. You should consider whether the representations of Joyce Jenkins, as an insurance agent and given her expertise, as well as the representations of the other Northwestern Agency officers and employees, naturally tended to induce Fillinger Outfitters to reasonably believe that reading the policy would be superfluous.

(Emphasis added.) This instruction was derived essentially verbatim from Fiorentino v. Travelers Ins. Co. (E.D. Pa. 1978), 448 F. Supp. 1364. The court in Fiorentino held that this instruction accurately reflected Pennsylvania law on the subject of negligent misrepresentation and therefore determined that the lower court was correct in giving such instruction.

The issue which Northwestern raises in regard to Instruction No. 24 is whether an insured has an absolute duty to read their insurance policy. This Court has not previously addressed the issue of whether an insured has an absolute duty to read their insurance policy.

Northwestern asserts that the line of authority, including Fiorentino, which holds that an insured does not have an absolute duty to read their policy, but rather only a duty to act reasonably under the circumstances, is not good law nor is it the majority view on this subject. Northwestern urges this Court to adopt a rule holding that because an insured has entered into a contract he or she has an obligation to read and understand all of the policy’s terms notwithstanding any reasonable reliance on assurances by the agent who procured the insurance policy.

This Court has previously stated that an insurance policy is a contract subject to the applicable contract law of Montana. Universal Underwriters Ins. Co. v. State Farm Mut. Auto. Ins. Co. (1975), 166 Mont. 128, 135, 531 P.2d 668, 673. We have acknowledged that one who executes a written contract is presumed to know its contents and assent to them. Johnson v. Estate of Shelton (1988), 232 Mont. 85, 89-90, 754 P.2d 828, 830. Instruction No. 24, however, does not provide absolute relief for an insurance policyholder from the obligation to read their insurance policy, it merely provides that the extent of the obligation depends upon what is reasonable under the facts and circumstances of each case.

To properly consider the issue of what is an insured’s duty to read their insurance contract, the relationship of the parties must be considered. In an insurance coverage dispute there are typically two types of relationships. First, there is the relationship between the parties to the contract, i.e., the insured and the insurer; and second, there is the relationship between the insured and the agent. The relationship we are concerned with here is that between the insured, the Fillingers, and their agent, Jenkins/Northwestern. In order to prevail on their claim, the Fillingers were required to prove that their agent negligently performed her duty to procure a specified policy.

Under similar circumstances involving the relationship between the insured and their agent, several jurisdictions have held that while the insured’s failure to read the policy may amount to contributory negligence, it does not operate as a bar to relief as a matter of law. Fiorentino (Dist. Pa. 1978), 448 F. Supp. 1364; Floral Consultants, Ltd. v. Hanover Ins. Co. (Ill. 1984), 470 N.E.2d 527; Kirk v. R. Stanford Web Agency, Inc. (N.C. App. 1985), 330 S.E.2d 262; Martini v. Beaverton Ins. Agency, Inc. (Or. 1992), 838 P.2d 1061, 1067. We are persuaded by the reasoning of this line of authority that an insured does not have an absolute duty to read their policy, but their failure to do so may amount to contributory negligence.

The Oregon Supreme Court succinctly explained its adoption of this view in Martini by explaining that:

Insureds and insurance policies are not all alike. Insureds range from unsophisticated individuals who know nothing about insurance, to experienced business persons knowledgeable about insurance, to large corporations with batteries of lawyers. The relevant provisions of the policy may be simple (the address of the insured premises, for example) or complex. A jury should be allowed to consider two questions: Under the relevant circumstances, was it unreasonable in the light of foreseeable risks for the insured not to read the policy? If so, did the insured’s unreasonable failure to read the policy contribute to the insured’s damages?

Martini, 838 P.2d at 1067. The court in Fiorentino explained how the reliance upon one’s agent affects the duty to read:

When the insured informs the agent of his insurance needs and the agent’s conduct permits a reasonable inference that he was highly skilled in this area, the insured’s reliance on the agent to obtain the coverage that he has represented that he will obtain is justifiable. The insured does not have an absolute duty to read the policy, but rather only the duty to act reasonably under the circumstances. The circumstances vary with the facts of each case, and depend on the relationship between the agent and the insured.

Fiorentino, 448 F. Supp. at 1369.

We agree with this line of reasoning as it applies to the facts before us. We note that the jury was properly instructed regarding the law that the failure to act reasonably can amount to contributory negligence. Therefore, we view the issue raised as not being whether the insureds had an absolute duty to read the policy, but rather was there evidence from which the jury could have found that, in the circumstances of this case, it was not unreasonable for the insureds not to read the policy and whether the insureds acted reasonably in relying upon any representations made by their agent.

We review a jury’s verdict to determine whether there is substantial credible evidence in the record to support it. Tanner v. Dream Island, Inc. (1996), 275 Mont. 414, 422, 913 P.2d 641, 646; Barthule v. Karman (1994), 268 Mont. 477, 485, 886 P.2d 971, 976. In Tanner, we further defined this standard of review by explaining that:

Substantial evidence is defined as that evidence that a reasonable mind might accept as adequate to support a conclusion. Head v. Central Reserve Life (1993), 256 Mont. 188, 201, 845 P.2d 735, 743. Evidence which is inherently weak and conflicting may still be considered substantial. Head, 845 P.2d at 743. When conflicting evidence exists, the weight and credibility given to it are within the province of the jury. Whiting v. State (1991), 248 Mont. 207, 213, 810 P.2d 1177, 1181. When determining if substantial evidence exists, this Court views the evidence in the light most favorable to the prevailing party. Whiting, 810 P.2d at 1181.

Tanner, 275 Mont. at 422, 913 P.2d at 646.

At trial, Steve Filfinger testified that he asked Jenkins to procure a policy which would cover everything, especially if anyone was hurt on a horse. He then testified thát Jenkins answered affirmatively when he asked her if the policy she procured covered anything that happens, especially on horses. Steve also testified that in each of the following years after the original policy was procured he confirmed with Jenkins that the policy contained the requested coverage. Jenkins and a former office manager testified that Steve frequently called to ask about coverage and was concerned about being covered properly and covered for any accidents while using horses. Furthermore, Steve testified that Jenkins represented that one specific page of the policy was a “horse rider” and provided the coverage he had requested. Steve checked the policy each year to ensure that it contained this rider. After the accident by BN employee, Mike O’Shaughnessy, while on a horse, Jenkins told Steve that there was no problem with the claim and that the bills would be paid.

Thus, after having reviewed this testimony and the further testimony and evidence introduced at trial we conclude that there is substantial credible evidence in the record to support the jury’s verdict on the issue of negligent misrepresentation. We will not overturn the jury’s decision on this issue as it is within their realm of duties to determine the weight and credibility to be given to evidence presented at trial.

ISSUE 2

Did the District Court err by allowing evidence of the oral negotiations between the Fillingers and Northwestern regarding their agreement to procure a specified insurance coverage?

Northwestern asserts that the District Court erred when it denied its motion for summary judgment, or in the alternative, motion in limine, regarding the exclusion of all extrinsic evidence of oral negotiations between the Fillingers and Northwestern prior to the Fillingers purchasing their insurance policy from Western Heritage. Northwestern argues that the parol evidence rule bars all evidence of these oral negotiations because it is a privy and not a stranger to the written contract between the Fillingers and Western Heritage. The Fillingers contend that this Court must reject Northwestern’s assertion that the parol evidence rule applies to the oral negotiations, as Northwestern is a stranger to the written contract.

This Court reviews the district court’s evidentiary rulings to determine whether there has been an abuse of discretion. Cartwright v. Equitable Life Assur. (1996), 276 Mont. 1, 19, 914 P.2d 976, 987.

Northwestern contends that the parol evidence rule is applicable because the oral negotiations resulted in a written contract between the Fillingers and Western Heritage to which Northwestern is a privy, and not a stranger. This Court has examined the application of the parol evidence rule in a dispute involving both a party or its privy and a stranger to the written contract. In Read v. Lewis & Clark County (1919), 55 Mont. 412, 178 P. 177, we held that:

In a controversy between parties to a written contract or their privies, parol evidence cannot be introduced to vary, enlarge or contradict its terms, except when a mistake or imperfection therein is put in issue by the pleadings or when the validity of the contract is the fact in dispute. (Rev. Codes sec. 7873.) In a controversy between a party to the contract and a stranger, however, the rule does not apply. As against him, a party may assert that the agreement was other or different in any respect from that which the writing expresses.

Read, 178 P. at 180. This rule was restated in In re Perry’s Estate (1948), 121 Mont. 280, 318-19, 192 P.2d 532, 551 (Gibson, J., dissenting):

But even if it might be said to add to the writing or to vary its terms, it is to be remembered that the rule, that the terms of a written contract cannot be altered or contradicted by parol evidence, cannot be invoked either by or against a stranger to a contract and it is not applicable in a controversy between a party to the contract on the one hand and a stranger to it on the other. Nissen v. Sabin, 202 Iowa 1362, 212 N.W. 125, 50 A.L.R. 1216. And our statute provides that the parol evidence rule is only applicable ‘between the parties and their representatives, or successors in interest.’Sec. 10517, Rev. Codes 1935; Greening v. Gazette Printing Co., 108 Mont. 158, 88 P.2d 862.

Neither this Court nor the Legislature have chosen to depart from this rule and its application to admission of parol evidence, and we agree, along with a majority of jurisdictions, that it is still good law today. See, e.g., Silvicraft, Inc. v. Southeast Timber Co. (Ark. App. 1991), 805 S.W.2d 84, 87; Neves v. Potter (Colo. 1989), 769 P.2d 1047; Smith v. Conn (Iowa 1968), 163 N.W.2d 407; Denha v. Jacob (Mich. App. 1989), 446 N.W.2d 303; Carolina Cas. Ins. Co. v. Oregon Auto. Ins. Co. (Or. 1965), 408 P.2d 198; Marr Scaffolding Co. v. Fairground Forms, Inc. (R.I. 1996), 682 A.2d 455, 459; First Sec. Federal Sav. Bank v. McQuilken (Va. 1997), 480 S.E.2d 485, 487.

Northwestern argues that as a sales agency it is in privity with Western Heritage and it fits the definition of a “privie” as set out in Read, 55 Mont. 412, 178 P. 177. Therefore, Northwestern submits that the parol evidence rule applies to bar the oral conversations between Northwestern and the Fillingers. Northwestern argues that this Court has previously concluded in Sherrod, Inc. v. Morrison-Knudsen Co. (1991), 249 Mont. 282, 815 P.2d 1135, that an independent third-party representative can be a privy to a written contract and that in Sherrod we held the parol evidence rule applied to a privy to the written contract.

In Sherrod, the dispute involved the amount of material which was to be removed from a construction site. Sherrod, as a subcontractor, entered into a written contract with COP Construction. COP Construction, in turn, entered into a written contract with the general contractor, Morrison-Knudsen. At trial, Sherrod attempted to introduce evidence that a Morrison-Knudsen representative made fraudulent statements to him regarding the amount of excavation to be performed upon which he relied when he submitted his bid to remove the material. This bid was accepted and a written contract was entered into. The written contract provided in its terms that Sherrod had, “by examination, satisfied himself as to the ... character, quantity and kind of materials to be encountered.” Sherrod, 815 P.2d at 1137. We held that any reliance on the alleged fraudulent statement of the Morrison-Knudsen representative was directly contradicted by the terms of the written agreement which superseded all previous oral agreements, and that therefore the parol evidence rule prohibited admission of any evidence of the oral statements made by the Morrison-Knudsen representative. In Sherrod, this Court did not state that the representative was a privy to the contract nor did we address the issue of whether misrepresentations were made by a stranger to the contract. We do not view Sherrod to be dispositive of the issue of whether one is a privy to a written contract which is the basis of Northwestern’s contentions.

In applying the rule as set forth in Read, we determine that Northwestern is not a privy to the written contract between Western Heritage and the Fillingers. Northwestern did not have a direct agency contract with Western Heritage. It had no binding authority from Western Heritage. Northwestern did not receive any commission from Western Heritage for procuring the insurance contract for the Fillingers. Furthermore, Northwestern did not have a written contract with the Fillingers. Thus, we fail to see any privity between Northwestern and the parties to the contract which would remove Northwestern from its role as a stranger to the written contract. Therefore, under this rule, the Fillingers may use parol evidence against Northwestern, as a stranger to the contract, to assert that the agreement was other or different in any respect from that which the writing expressed.

We hold that the District Court did not abuse its discretion by allowing the evidence of the oral negotiations, including the representations made by Northwestern, regarding the insurance contract as purchased by the Fillingers.

ISSUE 3

Did the District Court err in failing to instruct the jury on the applicable law in regard to the necessity of expert testimony to establish the standard of care of an insurance agent in a negligence action by a client for failure to procure the coverage requested by the client?

Again, we have held that a district court has discretion regarding the instructions it gives or refuses to give to a jury and that we will not reverse a district court on the basis of its instructions absent an abuse of discretion. Cartwright v. Equitable Life Assur. (1996), 276 Mont. 1, 26, 914 P.2d 976, 992; Cechovic v. Hardin & Assoc. (1995), 273 Mont. 104, 116, 902 P.2d 520, 527. When we examine whether jury instructions were properly given or refused, we consider the instructions in their entirety, as well as in connection with the other instructions given and the evidence at trial. Story v. City of Bozeman (1993), 259 Mont. 207, 222, 856 P.2d 202, 211.

Northwestern asserts that the District Court erred in instructing the jury because the Fillingers are pursuing a professional negligence claim and therefore they must have provided expert testimony as to the standard of care, duty of care, and breach of that duty by the insurance agent. This Court has previously addressed the legal standard of care for insurance agents with respect to insurance procurement. In Gay v. Lavina State Bank (1921), 61 Mont. 449, 202 P. 753, we explained:

[A]s between the insured and his own agent or broker authorized by him to procure insurance there is the usual obligation on the part of the latter to carry out the instructions given him and faithfully discharge the trust reposed in him, and he may become liable in damages for breach of duty. If he is instructed to procure specific insurance and fails to do so, he is liable to his principal for the damage suffered by reason of the want of such insurance.

Gay, 202 P. at 755, followed in Lee v. Andrews (1983), 204 Mont. 527, 667 P.2d 919.

Jenkins herself testified as an insurance agent to what the duties and responsibilities are of an insurance agent when asked to procure specific insurance coverage. No additional independent expert testimony is required to establish the standard of care.

Although we have not specifically addressed this issue, it is clear to this Court that the determination of whether an insurance agent reasonably fulfilled his or her duty and procured the coverage requested is easily within the common experience and knowledge of lay jurors. No expert testimony is required as there are no technical insurance issues beyond the understanding of the trier of fact. See, e.g., Shahrokhfar v. State Farm Mut. Auto. Ins. Co. (1981), 194 Mont. 76, 634 P.2d 653 (holding that the question whether the actions of an insurance agent and his attorney were negligent was well within the realm of knowledge of a layperson); Salt Lake City School Dist. v. Galbraith & Green, Inc. (Utah App. 1987), 740 P.2d 284 (applying the majority rule that “expert testimony is not required in matters involving insurance agents and brokers unless technical insurance issues beyond the understanding of the average trier of fact are involved”).

We have reached a similar conclusion in Durbin v. Ross (1996), 276 Mont. 463, 916 P.2d 758, where we held that “expert testimony ... [is] not required to establish a duty and a breach of that duty in [a] ... negligent misrepresentation claim.” Durbin, 916 at 765. In Durbin we held:

A determination of whether the Realtors made a representation and whether that representation was false is clearly within the common knowledge of a layperson. In the instant case, scientific, technical, or other specialized knowledge is not necessary to assist the jury to understand the evidence because the statute and the regulations establish the conduct to which the Realtors must conform regardless of whether other brokers conform to that same conduct. Accordingly, we conclude that the Durbins were not required to provide expert standard of care testimony to establish the relevant statutory violations.

Durbin, 916 P.2d at 766. Unlike Durbin, there are no statutes or regulations which establish the conduct to which an insurance agent must conform when requested to procure specific insurance. Regardless of this minor distinction, we have already addressed that issue in Gay, 202 P. at 755, where we stated that if the agent is “instructed to procure specific insurance and fails to do so, he is liable.”

Therefore, we hold that in the context of an insurance agent’s alleged failure to procure requested coverage, expert testimony is not required as the issue is not one which involves technical insurance issues outside the common experience and knowledge of lay jurors. The jury determined that Jenkins, through Northwestern, did make negligent representations and breached her duty to procure specific insurance coverage when she failed to procure the coverage requested by Steve Fillinger. This Court will not substitute its judgment for that of the trier of fact with regard to weighing the evidence and determining the credibility of the witnesses. Wunderlich v. Lumbermens Mut. Cas. Co. (1995), 270 Mont. 404, 408, 892 P.2d 563, 566. Thus, the District Court did not abuse its discretion in its instructions to the jury on the issue of expert testimony in a negligence action against an insurance agent.

ISSUE 4

Did the District Court err in submitting the Fillingers’ claim to the jury under an Unfair Trade Practices Act theory, specifically § 33-18-201(1), MCA, as it applied to Northwestern?

As we previously stated, this Court reviews discretionary trial court rulings, such as the giving of jury instructions, to determine whether the trial court abused its discretion. Busta v. Columbus Hosp. Corp. (1996), 276 Mont. 342, 916 P.2d 122; Hislop v. Cady (1993), 261 Mont. 243, 862 P.2d 388.

Northwestern asserts the District Court committed reversible error by instructing the jury that Northwestern, as a sales agency with no claims-handling authority, was subject to the provisions of the Unfair Trade Practices Act. The District Court’s Instruction No. 33 stated in part:

You are instructed that Fillinger Outfitters also claims that Northwestern Agency violated § 33-18-201(1) of the Montana Code Annotated. This statute, among other things, provides that no person may, with such frequency as to indicate a general business practice, misrepresent pertinent facts or insurance policy provisions relating to coverages at issue.

Northwestern contends that this is err, as this Court has not decided that § 33-18-201, MCA, is applicable to an insurance agency.

The language of the Unfair Trade Practices Act aids in resolving this argument. Section 33-18-101, MCA, states that the purpose of the UTPA“is to regulate trade practices in the business of insurance.” The Act further provides that “ [n] o person shall engage... in any trade practice which is defined ... to be an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.” Section 33-18-102, MCA. Furthermore, the Act does not exclude misrepresentations committed by an insurance agent in the sale of a policy. Section 33-18-201(1), MCA, provides specifically that “[n]o person may ... (1) misrepresent pertinent facts or insurance policy provisions relating to coverages at issue.”

The Fillingers correctly assert that the actions of Northwestern and Jenkins fall squarely within these prohibited practices. In O’Fallon v. Farmers Ins. Exch. (1993), 260 Mont. 233, 859 P.2d 1008, we considered the individual liability of the claims adjustor assigned to handle the claim and concluded that:

[individuals, as well as insurers, are prohibited from engaging in the unfair trade practices set forth in § 33-18-201, MCA, and that when an individual breaches the obligations imposed by that statute, the claimant who is damaged by that breach has a common law cause of action against that individual.

O’Fallon, 859 P.2d at 1015. Although O’Fallon specifically involved a claims adjustor and not an insurance agent or agency, we do not find this difference to be a true distinction.

It is clear that the relationship between Northwestern, as the insurance agent, and the Fillingers, as the client, involves the “business of insurance.” The misrepresentations as to the extent of coverage under the Fillingers’ policy, made by the individual insurance agent, Jenkins, through the insurance agency, Northwestern, are trade practices which are prohibited under §§ 33-18-201, and -202, MCA. We therefore conclude that the District Court did not abuse its discretion in giving the jury its Instruction No. 33.

We affirm.

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

      . We note that Jenkins/Northwestern was the Fillinger’s agent and not the agent of the insurer, as Northwestern did not have an agency agreement with the Western Heritage, and Jenkins testified that her “responsibility was to represent the Fillingers” not Western Heritage.


source: Caselaw Access Project

author: JUSTICE NELSON

license: Public Domain

text:
    CHOTEAU LIBRARY BOARD OF TRUSTEES, FAIRFIELD LIBRARY BOARD OF TRUSTEES, and DUTTON LIBRARY BOARD OF TRUSTEES, Petitioners and Appellants, v. TETON COUNTY BOARD OF COMMISSIONERS, Respondent and Respondent.
    No. 97-110.
    Submitted on Briefs May 22, 1997.
    Decided June 5, 1997.
    54 St.Rep. 507.
    283 Mont. 87.
    938 P.2d 1357.

      For Appellants: Kenneth R. Olson, Great Falls.
    For Respondent: Russell R. Andrews, Teton County Attorney, Choteau.
   JUSTICE NELSON

delivered the Opinion of the Court.

The Choteau, Fairfield and Dutton Library Boards of Trustees (the Boards) have appealed the Ninth Judicial District Court’s December 19, 1996 Order denying their petition for declaratory relief and mandamus. The Boards raise two issues on appeal:

1. Did the District Court err in denying the Boards’ petition for declaratory judgment?
2. Did the District Court err in refusing to issue a writ of mandamus requiring the Teton County Board of County Commissioners (the Commissioners) to fund the libraries in Teton County as required by § 7-6-2348, MCA, and Montana Attorney General Opinions Volume 41, No. 91 (1986) and Volume 44, No. 35 (1992)?

We affirm as to the first issue, and, therefore, do not address the second issue.

BACKGROUND

The Boards filed their petition for declaratory judgment, for writ of mandamus, for order to show cause and for preliminary injunction in June 1996, seeking court intervention to require the Commissioners to maintain funding for the libraries in the communities of Choteau, Fairfield and Dutton (the Communities). This followed the Commissioners’ announcement in the fall of 1995, that county funding for the libraries would cease as of the 1996-97 budget year because the Commissioners deemed the libraries to have no legal existence. Ultimately, this matter was submitted to the District Court for decision on the basis of evidence presented at the hearing for preliminary injunction and on the basis of the affidavits and briefs of the parties. The District Judge denied the relief requested by the Boards and this appeal followed. Because we agreed to decide this case on an expedited basis, we issued an order affirming the trial court on May 22,1997, indicating that our opinion would follow. The following sets out the rationale for our decision.

The history of how the libraries came into and maintained their existence dictates our decision in this case. Prior to 1968, the Communities each maintained libraries which had been developed through the efforts of local women’s clubs, charitable organizations, interested citizens and donations. In the summer of 1968, the Great Falls Library approached the Commissioners and the Communities with a proposal for expanding Community library services through the Great Falls Library under the auspices of the Pathfinder Library Federation. The Communities and the Commissioners responded by each separately contracting with the Great Falls Library under arrangements whereby the Communities each agreed to provide the buildings and utilities and to appoint library trustees and the Commissioners agreed to levy one mill and pay that money to the Great Falls Library. The Commissioners appointed a person to the Pathfinder Federation Board of Trustees, and it appears that at least one of the libraries has remained a member of that organization.

Importantly, however, a “Teton County Library,” as a legal entity, was not created in 1968, nor did the Commissioners appoint a board of county library trustees, although in the previous year, 1967, the Legislature had enacted a statutory scheme providing for the creation, maintenance and operation of public libraries in counties and cities and for the appointment of trustees. See 1967 Mont. Laws 260 (codified at §§ 44-218 to -228, RCM (1947); current version at §§ 22-1-301 to -314, MCA). Moreover, the record reflects that Teton County and the Communities have never entered into contracts for joint library services as authorized under legislation enacted in 1973. See 1973 Mont. Laws 273 (codified at §§ 44-219.1 and 44-219.2, RCM (1947); current version at §§ 22-1-316 and 22-1-317, MCA).

In 1979, the County began paying the wages of the individual Community librarians who had formerly been paid by the Great Falls Library. Nonetheless, in each year from 1968 until 1990, the Commissioners approved and signed a contract with the Great Falls Public Library for library services in the County. The Boards were each appointed by the respective mayors and city councils of the Communities and the Boards hired the librarians; that continues to the present. In 1990, the Commissioners terminated the County’s contract with the Great Falls Library but continued to levy taxes, and, from time to time, contributed revenue sharing funds to support the libraries. The library facilities are and have been since the 1970’s owned by the respective individual Communities.

DISCUSSION

The Boards contend that the facts are not in controversy, but, rather, that the issues involve questions of law. We agree, and, accordingly, review the legal conclusions reached by the District Court, de novo, to determine whether the trial judge’s interpretation of the law is correct. Carbon County v. Union Reserve Coal Co. (1995), 271 Mont. 459, 469, 898 P.2d 680, 686.

The Boards requested that the District Court declare the existing libraries to be legally constituted on either of two grounds: 1) the libraries exist as de facto public corporations or 2) the Commissioners should be estopped as a matter of public policy from challenging the existence of the libraries as county libraries. In support of both approaches, the Boards rely on our decisions in Hammermeister v. Northern Mont. Joint Refuse Disposal Dist. (1996), 278 Mont. 464, 925 P.2d 859; and Henderson v. School Dist. No. 44 (1926), 75 Mont. 154, 242 P. 979. We conclude that the Boards’ reliance on these cases is misplaced, however.

In Hammermeister, the boards of county commissioners adopted a resolution of intention to create a multi-county joint refuse disposal district. The resolution of intention described a land area larger than the district which was finally created because one of the participant counties ultimately did not pass a resolution to create the district. While notice of the original resolution of intention was properly given according to the governing statutes, no additional notice was given affirmatively apprising affected persons of the reduction in size of the district. Following its creation, the district developed a roll-off site and a landfill site, incurred bonded indebtedness, assessed and collected taxes for services from district residents and was utilized by citizens of the district and other entities on a contract basis. Some five years after its creation, certain disaffected residents of the district challenged its creation contending that the county commissioners did not create the district in accordance with the resolution of intention because the boundaries of the district were reduced from those set forth in the original notice. Hammermeister, 925 P.2d at 860. Citing Henderson, we affirmed the trial court’s conclusion that, given the public’s reliance on the district for five years, the Hammermeister plaintiffs were estopped from challenging the creation of the refuse disposal district. Hammermeister, 925 P.2d at 862.

In both Henderson and Hammermeister, we stated that since there had been a good faith attempt to comply with the existing laws at issue (Henderson involved the annexation of a small school district to a larger school district), it could be found that the respective districts were defacto corporations, and, thus, not subject to collateral attack. Henderson, 242 P. at 981; Hammermeister, 925 P.2d at 863.

Notwithstanding, rather than grounding our decisions in the de facto corporation theory, in each case we held that estoppel based on public policy grounds prevented challenge to the existence of the districts in question. We concluded that declaring the districts at issue void after years of operation would throw public and private rights into considerable confusion and would impair the security of taxes levied, bonds issued and contracts entered into by the districts. Henderson, 242 P. at 981-82; Hammermeister, 925 P.2d at 863.

As previously noted, the Boards requested that the District Court declare the existing libraries to be legally constituted on either of two grounds: 1) the libraries exist as de facto public corporations or 2) the Commissioners should be estopped as a matter of public policy from challenging the existence of the libraries as county libraries. We address each ground separately.

First, the Boards contend that the Commissioners established a free public library under the library laws of the State of Montana in 1968, citing §§ 44-211 to -215, -218 to -228, RCM (1947), and the agreement between Teton County and the Great Falls Library signed that year and renewed each year until 1990. The Boards concede, however, that the statutes were not precisely followed.

In both Henderson and Hammermeister, while not grounding our decisions on the de facto corporation theory, we did state that applicability of this doctrine was premised on an initial good faith attempt to comply with the governing statutory scheme. In each case, we concluded that there was a predicate good faith attempt to comply with the existing, applicable law. Henderson, 242 P. at 981; Hammermeister, 925 P.2d at 863. Thus, in order to determine whether the same predicate good faith attempt existed in the case at bar, it is necessary to examine the governing statutes in effect in 1968. Section 44-211, RCM (1947) (enacted 1915; Sec. 11, Ch. 45, L. 1915; current version at § 22-1-315, MCA), authorized the county commissioners to enter into a terminable contract with the board of trustees or governing authority of a free public library in another incorporated city or town for the purpose of having this other library assume the functions of a free public library in the county instead of establishing a separate county free library. The county commissioners were also authorized to fund this contract from the county free library fund under this section.

Two other statutory schemes relating to libraries were in existence in 1968. Sections 44-212 to -215, RCM (1947), provided for library systems including library federations or library networks. These statutes were originally enacted in 1939, and are collectively referred to hereafter as the “library system statutes.” See 1939 Mont. Laws 132. The remnants of these statutes are now included in Title 22, Chapter 1, part 4 of the Montana Code.

As pointed out above, the 1967 Legislature also enacted §§ 44-218 to -228, RCM (1947), which set up a statutory scheme by which counties and cities could establish public libraries within their respective jurisdictions by resolution, by petition or by petition and election. These statutes provided for the appointment of a library board and for levying of taxes by the governing body and addressed other matters regarding the operations of the libraries and boards so created. These statutes are now codified (with subsequent amendments) at §§ 22-1-301 to -314, MCA, and are collectively referred to hereafter as the “public library statutes.”

While the Boards cite to § 44-211, RCM (1947), and to the library system statutes in both their petition and in their briefs before the trial court and on appeal, it is clear that their argument is actually premised on the Commissioners’ alleged attempt to comply with the then newly enacted public library statutes in conjunction with the County’s execution of the 1968 Great Falls Library contract as the basis for their contention that the libraries were created as free public libraries in that year and were maintained as such thereafter. The fallacy of this argument, however, is that the record simply does not support a conclusion that what the Commissioners were attempting to do in 1968 was to comply with the public library statutory scheme. At a minimum, these statutes required that the Commissioners pass and enter upon the minutes a resolution to the effect that a free public library was established, § 44-219(1), RCM (1947) (enacted 1967; current version at § 22-1-303(1), MCA), and then that they appoint a five person board of trustees to govern the operations of the county library so created, § 44-221, RCM (1947) (enacted 1967; current version at § 22-1-308, MCA).

In the instant case, what the Commissioners actually did in 1968 was to meet with the Librarian for the Great Falls Library with a view to contracting for bookmobile, workshop and training services for the Community librarians to be provided by the Great Falls Library under auspices of the Pathfinder Library Federation. These meetings culminated in the passage of a motion by the Commissioners authorizing the County to enter into an Agreement for Library Services with the Board of Trustees of the Great Falls Public Library dated September 5, 1968, to the end that the Great Falls Public Library would “furnish library service also to the people of Teton County.” While this agreement (and subsequent renewal agreements) detailed various services that the Great Falls Library was obligated to furnish to the people of Teton County and to the individual Community libraries for a sum certain which the County agreed to pay, there is no indication whatsoever in either the minutes of the Commissioners’ meetings or in the initial or renewal agreements that the Commissioners were actually attempting to create a comity library under the public library statutes then in effect or as subsequently amended.

The Commissioners never adopted a resolution to that effect as required by § 44-219(1), RCM (1947) (enacted 1967; current version at § 22-1-303(1), MCA), nor did they ever appoint a five person county board of library trustees as required by § 44-221, RCM (1947) (enacted 1967; current version at § 22-1-308, MCA). Moreover, as mentioned above, each of the Community city councils entered into separate agreements with the Great Falls Library Board obligating their respective cities to provide quarters and utilities for their local library and to appoint a board of trustees in exchange for various delineated services to be provided by the Great Falls Library.

While the record does support a conclusion that the Commissioners intended to assist the Community libraries with funding for the provision of federation library services pursuant to § 44-211, RCM (1947), and/or pursuant to the library system statutes then in effect, there is no persuasive evidence in the record that the Commissioners intended to actually create a county library under the public library statutes. Indeed, the County’s contract with the Great Falls Library for the provision of library services, with the County providing funding from tax levies and appointing a trustee to the advisory Pathfinder Federation Board and with the local Community library boards appointed by the city councils retaining autonomy, budgetary and administrative control over their respective libraries fits neatly within the library system statutory scheme but not at all within the public library statutory scheme. Furthermore, there is nothing in the library system statutes that would lead to the conclusion that local governments utilizing that statutory scheme would, in so doing, thereby create a new county (or city) library as a legal entity where none existed before. In fact, if, as is stated in the 1968 contracts between the individual Communities and the Great Falls Public Library, § 44-211, RCM (1947), was the statutory basis for the Commissioners’ actions, this section unequivocally provides authority for the county to contract for library services “[ijnstead of establishing a separate county free library.” Section 44-211, RCM (1947) (emphasis added).

In short, we conclude that there was no attempt — good faith or otherwise — by the Commissioners to create a county library by complying with the public library statutes enacted in 1967, nor was there even an intent on the Commissioners’ part to utilize this statutory scheme for that purpose. Accordingly, the Boards’ argument that the existing libraries meet the requirements for creation of a de facto public corporation under either Henderson or Hammermeister must fail.

We turn, then to the Boards’ argument that, for public policy reasons, the Commissioners are estopped from denying the existence of a county library under the public library statutes. Again, the Boards rely on our decisions in Henderson and in Hammermeister. In the latter case, we cited with approval the following language from the former:

After a community has for years, as in the case at bar, exercised the functions of a public corporation, its legal existence cannot be questioned without causing disturbance more or less serious, and if the question of the regularity of its organization can be kept open to collateral inquiry indefinitely, no one can ever be secure in dealing with such entities, or be sure that taxes levied, bonds floated, or contracts necessarily entered into for the transaction of its business will be valid and enforceable. The transaction of public business might be locked at any time at the will or whim of a private individual and the credit of the corporation impaired or destroyed. For these and other cogent reasons it is held that:
“An individual may be estopped by his conduct to attack the validity of the incorporation of a municipality, even though, but for such estoppel, he might do so.” 28 Cyc. 175.
Thus acquiescence in the exercise of corporate functions, and dealing with the corporation as such over a period of years will estop all persons dealing with the corporation from assailing its legality. [Citations omitted.]

Hammermeister, 925 P.2d at 862 (quoting Henderson, 242 P. at 981-82) (alteration in original).

We also pointed out:

[T]he estoppel here invoked is not, therefore, strictly an estoppel by acceptance of benefits, but rather it is an estoppel based upon public policy, because of the confusion into which a judgment, at this late date, that the organization was void, would throw public and private rights and interests acquired through years of operation with the acquiescence of the inhabitants, and is therefore not dependent upon knowledge of the facts.

Hammermeister, 925 P.2d at 862-63 (quoting Henderson, 242 P. at 982) (alteration in original). Accord Scilley v. Red Lodge-Rosebud Irr. Dist. (1928), 83 Mont. 282, 272 P. 543 (cited in Hammermeister, 925 P.2d at 863).

Again, the inapplicability of this public policy estoppel theory is apparent from the facts of the case before us. While for a number of years the Commissioners funded library services to Teton County and assisted the Community libraries — for the most part via contract with the Great Falls Library — there never was created any sort of “county library” that exercised the functions of a public corporation or which had or which purported to have a legal existence independent of the County itself. No such professed organization or entity floated bonds, levied taxes, entered into contracts, purchased or owned property or transacted public business. Indeed, each of the Communities owned and maintained its own library facilities, appointed its own autonomous board of trustees, ran its own operations, transacted its own business and hired its own librarian. While the County provided the funding for these operations via a tax levy, and, from time to time, by providing revenue sharing, that, in an of itself, is a wholly insufficient basis on which to judicially estop the Commissioners from denying the existence of an alleged separate public corporation or legal entity with which no one dealt as such. The public policy reasons for application of the estoppel theory utilized in both Henderson and Hammermeister are absent in the case before us on appeal. In fact, it would be a dangerous, if not unlawful, precedent to effectively hold that a governing body could, by the passage of enough time, lose its ability to discontinue what was otherwise a discretionary tax levy, simply because the public had become accustomed to the non-mandated services that the tax levy funded. To apply the public policy estoppel theory in this case would be to create a county library from whole cloth. Estopping the Commissioners from denying the existence of an entity that, but for some technical irregularity in its formation, apparently exists as a separate legal organization and transacts business as such is one thing; using this theory to create the organization in the first instance is quite another. We hold that the public policy estoppel theory is not applicable in this case to preclude the Commissioners from denying the legal existence of the Community libraries as a county free public library.

We close with a final observation. Certainly no one can take comfort in witnessing the death of a public library, whether small or large. As members of a learned profession dependent upon the wisdom, the precedents and the laws reported in books maintained with care in libraries, we take no joy in rendering this decision. We acknowledge that, for many of our citizens, the library is their only source of news, information, knowledge, entertainment and social contact. Great civilizations have given birth to great libraries, and it may be said that, by no historical accident, the demise of libraries has preceded the decline of knowledge and literacy and has presaged the collapse of societies themselves.

The citizens of Teton County are not without a remedy, however. Title 22, Chapter 1, part 3 of the Montana Code specifies the manner in which a public library may be legally established and maintained in any county or city of this State. The citizens of Teton County and of each of the Communities may yet save their libraries by petition or by petition and election. Sections 22-1-303(2) and (3), MCA. While the courts may be powerless to save the libraries of Choteau, Fairfield and Dutton, the residents themselves of these communities are not. As the District Judge wisely noted in his decision, the court of public opinion may yet prevail.

Affirmed.

JUSTICES LEAPHART, REGNIER, TRIEWEILER and HUNT concur.


text:
    DORIS A. SCOTT, individually and as Personal Representative of the Estate of John William Scott, Deceased, Plaintiff and Appellant, v. JAMES L. HENRICH, DAVID J. FLAMAND, BUTTE-SILVER BOW LAW ENFORCEMENT AGENCY, CITY OF BUTTE, and COUNTY OF SILVER BOW, Defendants and Respondents.
    No. 96-667.
    Submitted on Briefs April 4, 1997.
    Decided June 10, 1997.
    54 St.Rep. 512.
    283 Mont. 97.
    938 P.2d 1363.

      For Appellant: Curtis G. Thompson and William D. Jacobsen; Thompson & Jacobsen; Great Falls.
    For Respondents: Brendon J. Rohan; Poore, Roth & Robinson; Butte (for Respondents Henrich, Flamand and Butte-Silver Bow Law Enforcement Agency); Marshal L. Mickelson; Corette, Pohlman & Kebe; Butte (for Respondents City of Butte and County of Silver Bow).
   JUSTICE REGNIER

delivered the Opinion of the Court.

Doris Scott appeals from the Silver Bow County, Second Judicial District Court’s entry of summary judgment against her in this negligence action for wrongful death and survivorship, arising from the shooting death of her husband by an officer of the Butte-Silver Bow Law Enforcement Agency. We reverse.

The sole issue before us is whether the District Court erred in granting summary judgment against Scott on her state law negligence claims for wrongful death and survivorship on the grounds of res judicata.

FACTUAL BACKGROUND

This case arises from the shooting death of John Scott by an officer of the Butte-Silver Bow Law Enforcement Agency. On August 4,1984, police officers James L. Henrich and David J. Flamand responded to a call reporting the discharge of firearms at 701 West Park Street in Butte. When they arrived at the scene, a resident informed them that an individual had fired a rifle and entered a nearby apartment. Officer Flamand then saw a man peer out of a second story window in the building.

Both officers, with weapons drawn, approached the door of the apartment. Officer Henrich banged and kicked on the door and identified himself and Officer Flamand as police officers. A few minutes later, Officer Henrich again banged on the door and identified himself as a police officer. According to the officers, Scott opened the door, holding a long gun pointed at them. Officer Henrich fired a shot that missed Scott. Officer Flamand, mistakenly believing that Scott had fired at them, fired four shots at Scott, one of which killed him.

John Scott’s wife, Doris Scott, brought an action in the United States District Court, alleging violations of John’s constitutional rights under 42 U.S.C. § 1983 (1982), as well as state law negligence claims for wrongful death and survivorship. After the initial discovery was completed, the defendants moved for summary judgement. United States District Judge Paul Hatfield took the motions for summary judgment under advisement, but allowed Scott sixty days to engage in further discovery limited to the issue of the reasonableness of the officers’ conduct. Subsequently, Judge Hatfield granted the defendants summary judgment on the § 1983 claims, but refused to exercise jurisdiction on the pendent state law negligence claims. Scott appealed and then filed this action in state court. The Second Judicial District Court, Silver Bow County, stayed the state court proceedings pending resolution of the § 1983 action in the federal court.

On November 2,1994, the Ninth Circuit Court of Appeals affirmed the summary judgment granted by Judge Hatfield. The Ninth Circuit’s opinion did not address Judge Hatfield’s disposition of the state law negligence claims. Scott appealed the Ninth Circuit’s decision to the United States Supreme Court, which denied certiorari on June 26, 1996.

After the federal claims were disposed of, the defendants next moved the state district court for summary judgment. The defendants argued that they were entitled to summary judgment on the theories of res judicata or collateral estoppel. Scott countered that the federal district court did not decide her state law negligence claims and therefore she should be allowed to proceed in state court. The District Court granted the defendants summary judgement, ruling that the issues raised before it in state court were identical to the issues decided in the federal court proceedings, so res judicata was appropriate. The court focused upon the Ninth Circuit Court’s opinion which affirmed the federal district court’s finding that the officers’ conduct was objectively reasonable. The District Court noted that the Ninth Circuit Court of Appeals decided that the defendants did not breach their duty to John Scott and their conduct was reasonable and proper. Without a breach of duty, plaintiff’s negligence claims fail and the defendants are entitled to summary judgment.

Scott appeals from the order and the judgement granting the defendants’ motion for summary judgment.

DISCUSSION

Did the District Court err in granting summary judgment against Doris Scott on her state law negligence claims for wrongful death and survivorship on the grounds of res judicata?

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.R We review a district court’s grant of summary judgment de novo, applying the same Rule 56(c), M.R.Civ.P., criteria used by that court. In re Estate of Lien (1995), 270 Mont. 295, 298, 892 P.2d 530, 532. Such a review requires that we first determine whether the moving party met its burden of establishing both the absence of genuine issues of material fact and entitlement to judgment as a matter of law. See Estate of Lien, 270 Mont. at 298, 892 P.2d at 532.

The doctrine of res judicata prevents a party from re-litigating a matter that the party has already had an opportunity to litigate. Hollister v. Forsythe (1996), 277 Mont. 23, 918 P.2d 665; Loney v. Milodragovich, Dale & Dye, P.C. (1995), 273 Mont. 506, 510, 905 P.2d 158, 161. It is based on the public policy that there must be some end to litigation. Wellman v. Wellman (1983), 205 Mont. 504, 508, 668 P.2d 1060, 1062. A claim is res judicata when four criteria are met — the parties or their privies are the same; the subject matter of the claim is the same; the issues are the same and relate to the same subject matter; and the capacities of the persons are the same in reference to the subject matter and the issues. Greenwood v. Steve Nelson Trucking, Inc. (1995), 270 Mont. 216, 219, 890 P.2d 765, 767.

Respondents contend that Scott’s state law negligence claims are barred by the doctrine of res judicata and the District Court’s grant of summary judgment was entirely proper. They offer the following analysis. First, the parties are the same in both actions. Second, the subject matter is also the same; both actions are based on the officers’ conduct that led to the shooting of John Scott. Third, the issue in Scott’s state court action is identical to the issue previously raised and decided by the federal court, the reasonableness of the officers’ conduct. Finally, the capacity of the parties involved has not changed in relation to the subject matter and the issues in litigation.

However, Scott argues that the issue litigated in the federal court is not identical to the issue in the state action, and therefore, the third requirement necessary for the application of res judicata has not been met. Scott points out that the federal courts only addressed whether the officers acted reasonably within the meaning of the Fourth Amendment of the United States Constitution in the context of Scott’s § 1983 claims and the officers’ claim of qualified immunity. Scott points out that the federal courts did not address whether the officers acted in a negligent fashion under Montana substantive law. Scott contends that she has not had the opportunity to litigate her state law negligence claims because those claims were severed from the federal proceedings at Judge Hatfield’s discretion on the basis of subject matter jurisdiction.

In granting summary judgment for the respondents, the District Court ruled as a matter of law that Scott’s state law negligence claims were barred by res judicata. The District Court framed the issue as whether or not the officers and the law enforcement agencies had breached their duty to John Scott. The District Court relied on the Ninth Circuit’s decision that the officers did not breach their duty and their conduct was reasonable and proper. The District Court evaluated Scott’s state law negligence claims and determined that the issue was decided by a final judgment in federal court. Because Scott was allowed to litigate the reasonableness of the officers’ conduct in federal court, the District Court ruled that it was bound by res judicata and adopted the federal court’s decision, finding that the officers’ conduct was reasonable.

At first glance this case may seem like a proper candidate for summary disposition on the basis of res judicata. The United States District Court’s opinions, as well as the Ninth Circuit’s subsequent opinion, repeatedly characterized the officers’ conduct as “objectively reasonable” under the circumstances. If the officers had been found to have acted in an “objectively reasonable” manner by the federal courts, how can this same conduct violate the standards of negligence required for a finding of liability in the state court? A closer analysis of the federal and state court actions, however, leads us to the conclusion that it would be improper to deny the plaintiff the opportunity to litigate her state court claims on the basis of res judicata.

Judge Hatfield first addressed Scott’s § 1983 claims in 1988. See Scott v. Henrich (D. Mont. 1988), 700 F. Supp. 498. Interestingly, the plaintiff had originally pled her civil rights action in the United States District Court under ordinary negligence standards. This prompted the defendants to move for summary judgment. In response to the defendants’ motion for summary judgement, the plaintiff sought leave of court to amend her complaint, substituting her allegations of ordinary negligence with gross negligence. Judge Hatfield allowed Scott to amend, noting that allegations of simple negligence would be insufficient to state a claim cognizable under 42 U.S.C. § 1983. In Daniels v. Williams (1986), 474 U.S. 327, 106 S. Ct. 662, 88 L. Ed. 2d 662, the United States Supreme Court held that a finding of mere negligence will not give rise to a claim for the deprivation of constitutional rights under 42 U.S.C. § 1983. Judge Hatfield noted that since the Daniels decision the Ninth Circuit has followed earlier case law holding that the Due Process Clause of the United States Constitution can be implicated by conduct of state officials amounting to “recklessness,” “gross negligence,” or “deliberate indifference.” See Wood v. Ostrander (9th Cir. 1988), 851 F.2d 1212, 1214; Bergquist v. County of Cochise (9th Cir. 1986), 806 F.2d 1364, 1370.

Therefore, it is clear that the conduct under scrutiny in the federal case was not evaluated under ordinary negligence principles, but rather under gross negligence standards which are required in order to sustain a claim under § 1983. What is confusing, however, is that claims such as this, where it is alleged that law enforcement officers used excessive force in an arrest, investigatory stop, or seizure, are analyzed under the Fourth Amendment and its “reasonableness” standard. Graham v. Connor (1989), 490 U.S. 386, 109 S. Ct. 1865, 104 L. Ed. 2d 443. Judge Hatfield and the Ninth Circuit ultimately exonerated the police officers from the § 1983 claims by concluding that their conduct when facing the exigent circumstances of having a rifle pointed at them was “objectively reasonable.” Yet it is important to note that the federal court never addressed or considered the simple negligence claims under Montana substantive law. Again, Judge Hatfield’s opinion is instructive on this issue:

Perhaps a more prudent course of procedure would have prevented the death of John Scott. Nonetheless, the fact a necessarily instantaneous decision by a police officer is not, in hindsight, the best, does not serve to elevate negligence to a constitutional plane. Any malfeasance that may be attributed to the conduct of Officers Henrich and Flamand does not rise to the level of “gross” negligence essential to a claim for deprivation of constitutional rights under 42 U.S.C. § 1983. Whether Officers Henrich and Flamand acted in a negligent fashion is, of course, an issue properly left to the trier of fact.

Scott v. Henrich (January 3, 1991), No. CV-87-003-BU at p. 10 (Memorandum and Order).

Judge Hatfield’s ruling was subsequently affirmed, in its entirety, by the Ninth Circuit Court of Appeals. Nowhere in its decision does the Ninth Circuit demonstrate an intention to reverse Judge Hatfield or direct a resolution of Scott’s negligence claims. In fact, at the time the Ninth Circuit ruled, Scott’s negligence claims were not even before that court. Judge Hatfield had dismissed the negligence claims, without prejudice, for lack of federal jurisdiction, and those claims had been refiled in Montana district court.

Thus, the Ninth Circuit’s decision only addressed Scott’s § 1983 claims. Both Judge Hatfield and the Ninth Circuit ruled that the officers acted reasonably, within the meaning of the Fourth Amendment, for the purposes of Scott’s § 1983 claims. As stated above, in finding that the officers acted reasonably, both federal courts ruled that the officers’ conduct did not rise to the level of gross negligence required for a finding of deprivation of John Scott’s constitutional rights under 42 U.S.C. § 1983. The federal courts did not decide whether the officers’ conduct was negligent under Montana substantive law.

As discussed above, the United States District Court ruled that the officers’ conduct did not rise to the level of gross negligence required for a finding of deprivation of constitutional rights under 42 U.S.C. § 1983. However, in her state court action, Scott is not required to prove that the officers’ conduct was grossly negligent to prevail on her claims. Scott must only prove that the officers’ conduct was negligent in her state court action. The traditional standard of negligence, as defined under Montana law, is “conduct of a reasonable and prudent person under the circumstances.” Abernathy v. Eline Oil Field Services, Inc. (1982), 200 Mont. 205, 211, 650 P.2d 772, 775. In this case, the federal court’s finding that the officers’ conduct was reasonable as to defeat Scott’s § 1983 claims may not act on the basis of res judicata to bar a finding in state district comb that the officers’ same conduct might be unreasonable in an action for a state law negligence claim.

Furthermore, although both the United States District Court and the Ninth Circuit concluded that the officers acted reasonably within the meaning of the Fourth Amendment, for purposes of Scott’s § 1983 claims, that ruling has no preclusive effect on Scott’s negligence claims because the federal courts had specifically ceded jurisdiction over the negligence claims to the state courts of Montana. If the federal court had intended by its ruling to bar litigation of Scott’s negligence claims, it could have granted summary judgment on those claims when it granted summary judgment on Scott’s § 1983 claims.

This Court concludes that Scott’s negligence claims for wrongful death and survivorship, based on Montana state law, are not barred by res judicata. Judge Hatfield’s decision granting summary judgment on Scott’s § 1983 claims, and the subsequent Ninth Circuit decision which affirmed his ruling in its entirety, do not operate to bar Scott’s negligence claims based on res judicata.

We reverse and remand to the District Court.

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


author: JUSTICE LEAPHART

text:
    STATE OF MONTANA, Plaintiff and Appellant, v. ORVAL LEE HENDRICKSON, Defendant and Respondent.
    No. 96-140.
    Submitted on Briefs May 8, 1997.
    Decided June 10, 1997.
    54 St.Rep. 516.
    283 Mont. 105.
    939 P.2d 985.

      For Appellant: Susan L. Wordal, City Prosecutor, Bozeman.
    For Respondent: Allen Beck, Attorney at Law, Billings.
   JUSTICE LEAPHART

delivered the Opinion of the Court.

The State of Montana (State) appeals from the Eighteenth Judicial District Court’s order dismissing charges of Driving Under the Influence, a violation of § 61-8-401, MCA, against Orval Lee Hendrickson (Hendrickson). We reverse in part, affirm in part, and remand.

We address the following issue on appeal:

Did the District Court err in dismissing the charges because Officer John Woodland of the Belgrade Police Department did not have jurisdiction to arrest a suspect and continue investigation of the offense within the city limits of Bozeman?

BACKGROUND

Officer John Woodland (Woodland), a member of the Belgrade Police Department, was in Bozeman delivering a prisoner to the Gallatin County Detention Center. While traveling through Bozeman, he observed a motorcycle approaching his police vehicle while he was stopped at a stop light. Woodland observed the rider, later identified as Hendrickson, having difficulty controlling his motorcycle. Woodland followed Hendrickson down Main Street to Fifth Street, where Hendrickson stopped at a green light.

Woodland contacted the Bozeman Police Department and informed the dispatcher that he was following a motorcycle with a driver who possibly was intoxicated. After witnessing Hendrickson’s continued difficulty controlling his vehicle, Woodland advised the Bozeman Police Department dispatcher of the situation and asked the dispatcher for assistance. Woodland was given authorization by Ed Benz of the Bozeman Police Department to effect a traffic stop on Hendrickson. Woodland stopped Hendrickson and momentarily waited for assistance.

While waiting for assistance, Woodland approached the driver and asked a series of routine questions, including a request for registration, license and proof of insurance. Woodland observed a number of factors indicative of intoxication including slurred speech, a strong odor of alcohol, and bloodshot eyes. Shortly after Woodland made these initial observations, a Bozeman Police Department patrol car arrived on the scene with uniformed officers Steve Keim (Keim) and David McManis (McManis). While Keim exited the vehicle McManis set up the video camera in the Bozeman Police Department patrol car.

While McManis and Keim watched, Woodland had Hendrickson perform a series of field sobriety tests. After the tests were completed, Keim had Hendrickson perform the Horizontal Gaze Nystagmus test. Hendrickson was not cooperative and Keim abandoned the test. At the conclusion of these tests, Woodland placed Hendrickson under arrest while Keim secured the motorcycle. Woodland transported Hendrickson to the Gallatin County Detention Center. At the Detention Center, Woodland read Hendrickson the Implied Consent Law and asked him if he would submit to a breath test and Hendrickson refused. Woodland asked again about an hour later at which time Hendrickson agreed to take the test. Although Keim and McManis were present, Sergeant Mel McCarver authorized Woodland to write the citation charging Hendrickson with Driving Under the Influence in violation of § 61-8-401, MCA. Hendrickson was tried and convicted in City Court of Driving Under the Influence of Alcohol in violation of § 61-8-401, MCA. He appealed the matter to District Court where he filed a Motion to Dismiss the Complaint or, in the alternative, Suppress Evidence obtained as a result of the arrest. The District Court dismissed the charges and the State appealed.

DISCUSSION

The standard of review of a district court’s conclusions of law is whether the court’s interpretation of the law is correct. Carbon County v. Union Reserve Coal Co. (1995), 271 Mont. 459, 469, 898 P.2d 680, 686.

In Montana, police officers are given authority to arrest a person without an arrest warrant pursuant to § 46-6-311(1), MCA, which provides:

(1) A peace officer may arrest a person when a warrant has not been issued if the officer has probable cause to believe that the person is committing an offense or that the person has committed an offense and existing circumstances require immediate arrest.

An individual citizen may affect an arrest under the following circumstances:

(1) A private person may arrest another when there is probable cause to believe that the person is committing or has committed an offense and the existing circumstances require the person’s immediate arrest.
(2) A private person making an arrest shall immediately notify the nearest available law enforcement agency or peace officer and give custody of the person arrested to the officer or agency.

Section 46-6-502, MCA. In addition, this Court has held that peace officers do not lose their status as private citizens when they are outside of their jurisdiction. State v. McDole (1987), 226 Mont. 169, 172, 734 P.2d 683, 685. Section 46-6-502, MCA, authorizes arrest by private citizens when there is probable cause to believe that the person is committing an offense. We have held that a peace officer outside his or her jurisdiction can still perform an arrest as a private citizen. McDole, 734 P.2d at 685.

In the present case, the District Court concluded that Woodland was outside his jurisdiction as a peace officer and that he exceeded his authority as a private citizen. In granting Hendrickson’s motion to dismiss, the District Court stated:

It’s clear to me that Officer Woodland was not given any authority to arrest. The granting of the authority to make a traffic stop does not make the authority to arrest, necessarily. And yet he proceeded in the presence of Bozeman police officers to do several things, which would be incident to an arrest: First, he arrested the defendant. He did not turn him over to the Bozeman police authorities. He thence proceeded to act as a police officer in the sense that he went through the various and sundry DUI field sobriety maneuvers. Then he took the defendant down to the detention center and then issued a ticket based on Belgrade city forms.

Although the District Court was correct in concluding that Woodland over-stepped his authority when he failed to give custody of Hendrickson to the Bozeman City Police once Keim and McManis arrived, Woodland’s actions prior to their arrival were within his authority as a private citizen. Because § 46-6-502(2) required Woodland to relinquish custody to the Bozeman law enforcement authorities, his actions before the arrival of Keim and McManis and after their arrival will be analyzed separately.

Woodland’s authority as a private citizen

Under § 46-6-502(1), MCA, Woodland was within his authority as a private citizen to observe Hendrickson’s erratic driving, to perform the traffic stop as requested, and to relate his observations of Hendrickson’s slurred speech, odor of alcohol and bloodshot eyes. In McDole, a Eureka police department officer responded to a call based upon reports of possible DUI and leaving the scene of an accident by McDole in the city of Eureka. McDole, 734 P.2d at 684. After the officer arrived at McDole’s residence, outside the city of Eureka, McDole walked out of his house and said, “Take me! Take me!” This statement combined with the Eureka police officer’s own observations led him to believe that McDole may have been driving under the influence of alcohol. The Eureka police officer proceeded to arrest McDole, take him to the police department and give him a breath test. McDole, 734 P.2d at 684-85. In McDole, this Court held that a police officer outside his or her jurisdiction has not lost his or her status as a citizen. McDole, 734 P.2d at 685. This Court explained “if an arrest by a private citizen would be lawful under the existing circumstances, the arrest by an officer out of his jurisdiction would be lawful.” McDole, 734 P.2d at 685. As in McDole, Woodland was clearly outside his jurisdiction when he stopped Hendrickson. When Woodland stopped Hendrickson and observed behavior indicative of intoxication, he was acting as a private citizen under the authority of § 46-6-502, MCA.

Woodland’s actions following arrival of Officers Keim and McManis

Section 46-6-502(2), MCA, requires a private citizen to immediately notify local authorities and relinquish custody to the officer or agency with jurisdiction. In support of its argument that Woodland acted within his authority in conducting field sobriety tests, effecting an arrest and requesting a breathalyser, the State relies on our decision in Maney v. State (1992), 255 Mont. 270, 842 P.2d 704, in which we affirmed an arrest where a Chinook City police officer, after observing Maney driving erratically in town, followed him out of town (outside the officer’s jurisdiction) where he observed further erratic driving. He then stopped Maney and conducted field sobriety tests in the presence of a sheriff’s deputy who had arrived on the scene. Maney, 842 P.2d at 705. The Chinook city police officer then transported Maney to the Blaine County Sheriff’s Office in Chinook where he requested that Maney take a breathalyser. Maney refused. His license was suspended as a result. Maney, 842 P.2d at 705. On appeal, Maney relied on § 46-6-502(2), MCA, for his contention that the officer’s arrest and request for breathalyser were illegal due to failure of the police officer to relinquish custody of Maney to the sheriff’s deputy who had jurisdiction outside the city limits. Maney, 842 P.2d at 706. We determined that the officer making the arrest was still a peace officer for purposes of the implied consent statute even though he made the arrest as a private citizen. Maney, 842 P.2d at 707. We noted that the police officer immediately notified the Blaine County Sheriff’s Office and promptly transported Maney to the sheriff’s office for booking. “As soon as Officer Gomke entered the Chinook city limits he was within his jurisdiction and it would make no sense to require Officer Gomke to transfer his prisoner to another officer who also had jurisdiction.” Maney, 842 P.2d at 706.

The Maney decision does not specifically address the question of whether Officer Gomke’s authority as a private citizen ceased upon the arrival of the sheriff’s deputy, although the decision, by necessary implication, certainly suggests that his authority did not cease. Rather, Officer Gomke was allowed to continue with the field sobriety tests in the presence of the sheriff’s deputy, to then transport Maney to the City of Chinook where Gomke had jurisdiction, and then to request a breathalyser. Maney, 842 P.2d at 706. We now conclude that this Court’s holding in Maney is too broad in the scope of authority that it grants to a citizen’s arrest pursuant to § 46-6-502, MCA. Absent any exigent circumstances, when a citizen or out-of-jurisdiction peace officer, acting as a citizen, makes a stop or arrest, his or her authority to proceed ceases once a peace officer with jurisdiction arrives at the scene.

Woodland exceeded his authority as a citizen when, after the arrival of the Bozeman police officers, instead of relinquishing custody to the officers, he conducted field sobriety tests, detained and arrested Hendrickson and requested that he submit to a breathalyser. We conclude that any evidence obtained by Woodland (including the initial refusal and/or results of the breathalyser test) after the police officers arrived was obtained illegally and must be suppressed as requested by Hendrickson. To the extent that Maney suggests a contrary result, it is overruled.

The State contends that Woodlandhad authority to assist peace officers from other jurisdictions. Section 46-6-402, MCA, provides that a peace officer making an arrest may command the aid of persons 18 years of age or older. In the present case, however, the Bozeman police officers did not command aid in “making a lawful arrest.” Rather, it was Woodland acting as a citizen who was seeking assistance. In State v. Williams (1995), 273 Mont. 459, 904 P.2d 1019, this Court held that a peace officer from one jurisdiction could assist a peace officer in another if his assistance were requested. Williams, 904 P.2d at 1022-23. However, unlike the facts before this Court in Williams, there were no exigent circumstances requiring Woodland to engage in investigating and charging Hendrickson. See Williams, 904 P.2d at 1022. The Bozeman police officers arrived on the scene a relatively short time after Woodland had stopped Hendrickson and had already commenced the field sobriety testing and arrest process. These officers were fully capable of conducting the investigation and arrest on their own. This is not a situation where officers within their jurisdiction were pursuing a suspect or investigating a crime and, due to exigent circumstances, called upon Officer Woodland’s assistance. Rather, this situation was initiated by Woodland as aresult of Woodland’s observations while outside his jurisdiction. Section 46-6-502(2), MCA, required Woodland to immediately notify the local authorities and relinquish custody of Hendrickson to Bozeman City Police. Indeed, beyond making the traffic stop, Woodland was not compelled to render assistance in this case. Once Keim and McManis of the Bozeman City Police Department arrived, they had the authority and duty to conduct any investigation and arrest.

We hold that Woodland acted outside the authority given to a private citizen under § 46-6-502, MCA, by failing to turn Hendrickson over to the Bozeman City Police once Officers Keim and McManis arrived on the scene. Woodland had no authority to conduct field sobriety tests, detain and arrest Hendrickson or request a breathalyser test once the Bozeman City Police were available to complete these tasks. Therefore, we affirm the District Court’s conclusion that “[t]he field sobriety tests and so forth were illegal and unlawful.” We hold that all evidence obtained by Woodland after Keim and McManis had arrived on the scene must be suppressed. However, the fact that Woodland’s arrest of Hendrickson was illegal and that evidence obtained incident to that arrest is inadmissable, does not mean that the charges against Hendrickson must be dismissed.

An illegal arrest has no impact on a subsequent prosecution based upon evidence not tainted by the illegality. The State can pursue a prosecution despite the manner of the arrest so long as the evidence remaining is otherwise admissible. State v. Sor-Lokken (1991), 247 Mont. 343, 348, 805 P.2d 1367, 1370-71; State v. Woods (1983), 203 Mont. 401, 662 P.2d 579. Woods cited United States v. Crews (1980), 445 U.S. 463, 100 S.Ct. 1244, 63 L.Ed.2d 537, in which the Court stated: “An illegal arrest, without more, has never been viewed as a bar to subsequent prosecution, nor as a defense to a valid conviction.” Crews, 445 U.S. at 474, 100 S.Ct. at 1251. The illegality of the detention does not deprive the government of the opportunity to prove guilt through the introduction of evidence wholly untainted by police misconduct. Crews, 445 U.S. at 475, 100 S.Ct. at 1252. The fact that Woodland exceeded his authority by not relinquishing custody to the Bozeman City Police does not mean that his observations prior to that time cannot form the basis for a charge against Hendrickson. Woodland’s Affidavit of Probable Cause sets forth in great detail his observations of Hendrickson’s difficulties while trying to maneuver his motorcycle in traffic, his slurred speech, red and watery eyes and the smell of alcohol on his breath. Even when the statement in the Affidavit that Hendrickson failed 5 of 5 field sobriety tests is excised, the balance of the Affidavit is sufficient to establish probable cause to charge Hendrickson with DUI.

Accordingly, we affirm the District Court’s conclusion that the tests conducted by Woodland were illegal and the results of those tests cannot be used against Hendrickson. However, we reverse the District Court’s dismissal of charges against Hendrickson and remand this matter to the District Court for trial on the merits.

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


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    MISSOULA RURAL FIRE DISTRICT, a political subdivision of the State of Montana; WILLIAM EVERINGHAM; CATHERINE E. EVERINGHAM; RICHARD T. DAILEY and ALICE M. DAILEY; DON HARBAUGH and DONNA M. HARBAUGH; THEODORE A. BRODOWY and SUSAN J. SACHSENMAIER; and DELOIT R. WOLFE and TWILA WOLFE, Plaintiffs and Respondents, v. CITY OF MISSOULA, a municipal corporation, Defendant and Appellant.
    No. 97-061.
    Submitted on Briefs May 8, 1997.
    Decided May 29, 1997.
    54 St.Rep. 480.
    283 Mont. 113.
    938 P.2d 1328.

      For Appellant: Jim Nugent, City Attorney; City of Missoula; Missoula.
    For Respondent: M. Richard Gebhardt; Attorney at Law; Missoula.
   JUSTICE REGNIER

delivered the Opinion of the Court.

The City of Missoula appeals from the order of summary judgment issued by the Fourth Judicial District Court, Missoula County. The District Court declared the City’s Resolution No. 5797, which purported to annex certain properties in Missoula County, to be void and of no further force and effect. We affirm.

The only issue before this Court for review is whether the District Court abused its discretion in determining that the properties purported to be annexed by the City of Missoula were not “wholly surrounded” by the city as set forth in § 7-2-4501, MCA.

FACTUAL BACKGROUND

The City of Missoula annexed approximately 215 residential parcels at the northern end of the Rattlesnake drainage. The properties were annexed pursuant to City of Missoula Resolution No. 5797, adopted on December 11, 1995. The Resolution declares that six separate areas in the drainage were annexed. None of these parcels are more than twenty-five percent contiguous to the City. Two of the parcels are not contiguous at all. Motor vehicle routes for ingress and egress to these residential properties require travel of at least three miles through Missoula city limits.

The appellants, herein referred to collectively as the Missoula Rural Fire District, applied to the Fourth Judicial District Court for a preliminary injunction, or in the alternative, for a writ of mandate. The Missoula Rural Fire District sought to maintain the status quo while the validity of the Resolution was determined. On January 18, 1996, after a show cause hearing was held, the application was denied by the District Court.

The case was then submitted to the court on summary judgment motions by the City of Missoula and the Missoula Rural Fire District. On October 10, 1996, the District Court granted summary judgment for the Missoula Rural Fire District. The court held that City of Missoula Resolution No. 5797 was void and of no further force and effect. The basis for this holding, as set forth in the court order, was that the annexed lands did not meet the threshold requirement under § 7-2-4501, MCA, as being wholly surrounded by the City of Missoula. The City of Missoula appeals this determination.

DISCUSSION

Did the District Court abuse its discretion in determining that the properties purported to be annexed by the City of Missoula were not “wholly surrounded” by the city, as set forth in § 7-2-4501, MCA?

This Court reviews a district court’s grant of a motion for summary judgment de novo. Clark v. Eagle Systems, Inc. (1996), [279 Mont. 279], 927 P.2d 995, 997; Heiat v. Eastern Montana College (1996), 275 Mont. 322, 327, 912 P.2d 787, 790. When we review an order of summary judgment we apply the same criteria as the district court and are guided by Rule 56, M.R.Civ.P. Chilberg v. Rose (1995), 273 Mont. 414, 416, 903 P.2d 1377, 1378. Our inquiry thus is whether a genuine issue of material fact exists and whether the moving party is entitled to judgment as a matter of law. Heiat, 912 P.2d at 791.

The City of Missoula has not raised any issue of material fact in this matter. Summary judgment is therefore appropriate as a matter of law. Western Industries, Inc. v. Chicago Mining Corp. (1996), [279 Mont. 105], 926 P.2d 737.

The City of Missoula adopted its Resolution No. 5797 under the provisions set forth in § 7-2-4501, MCA. This section provides in part that “[a] city may include as part of the city any platted or unplatted tract or parcel of land that is wholly surrounded by the city upon passing a resolution of intent, giving notice, and passing a resolution of annexation.” Section 7-2-4501, MCA. We interpreted this statute in Calvert v. City of Great Falls (1969), 154 Mont. 213, 462 P.2d 182, where we defined “wholly surrounded” as being “a tract of land where all lands on the side of the tract are within the city and where it is impossible to reach the tract without crossing such territory.” Calvert, 462 P.2d at 184.

In Calvert, we established a two-prong test for the process of annexing “wholly surrounded” parcels. First, the tract must lie in an area where all lands on the side of the tract are within the city; and second, it must be impossible to reach the tract without crossing such territory. The tracts annexed by the City of Missoula fail to meet the first prong of this test. The City only borders a small portion of some of the residential properties and on others it does not border the residential tract at all. Therefore, it is not necessary to reach the second prong of the Calvert test and determine whether the tracts are only accessible by crossing city territory.

Therefore, because the Rattlesnake properties annexed by the City of Missoula fail to meet the first prong of the Calvert test, as they are not wholly surrounded by the city pursuant to § 7-2-4501, MCA, the City of Missoula did not use the proper annexation method in annexing the properties in its Resolution No. 5797.

We note that the City of Missoula also raises the issue of whether the Missoula Rural Fire District has standing to challenge municipal annexation because it is not a property owner of land within the area to be annexed. The District Court did not rule upon this issue of standing and we decline to address this issue, as it is nonjusticiable.

The District Court’s order granting summary judgment to the Missoula Rural Fire District and declaring Missoula City Resolution No. 5797 void is therefore affirmed.

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