text:
    FARMERS PLANT AID, INC., a Montana corporation, Plaintiff and Appellant, v. MILLICENT HUGGANS, Defendant and Respondent.
    No. 94-057.
    Submitted on Briefs June 23, 1994.
    Decided August 30, 1994.
    51 St.Rep. 803.
    266 Mont. 249.
    879 P.2d 1173.

      For Appellant: John E. Bohyer, Phillips & Williams, P.C., Missoula.
    For Respondent: Michael G. Alterowitz and Larry Howell, Connell, Beers & Alterowitz, Missoula.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

Plaintiff Farmers Plant Aid, Inc. (FPA) filed an amended complaint in the Twenty-first Judicial District in Ravalli County against defendant Millicent Huggans. Counts I and II alleged tortious interference with contract and slander; Count III alleged tortious interference with access to FPA’s mining resource located on the Huggans-Foss ranch land. The District Court ordered partial summary judgment in favor of Huggans on Count III and dismissed the tortious interference with access to mining claim based on Huggans’ affirmative defense of collateral estoppel. The District Court further dismissed Counts I and II in a separate order. FPA appeals the District Court’s dismissal of Count III. We affirm the order of the District Court.

The issue on appeal is whether the District Court erred when it granted partial summary judgment and dismissed plaintiff’s tortious interference with mining access claim.

FACTUAL BACKGROUND

This appeal involves a parcel of land in the Bitterroot Valley that has been subject to a long-standing dispute between two families: the Smiths and their successors, Farmers Plant Aid, Inc., and the Huggans andFoss families. FPA owns the mineral rights to mine peat from the land, and the Hugganses and Fosses own and farm the surface. In State ex rel. Foss v. District Court (1968), 152 Mont. 73, 446 P.2d 707, this Court concluded that Sam T. Foss, as mortgagee and sheriff’s sale purchaser under foreclosure, was entitled to possess the land subject to the right of the mortgagors (lessors to FPA and its predecessor, the Smith family) to extract peat and use the surface of the land as reasonably necessary to extract peat. Foss, 446 P.2d at 709. This Court has considered the respective rights of these parties on two occasions since that decision. Smith v. Foss (1978), 177 Mont. 443, 582 P.2d 329; State ex rel. Foss v. District Court (1985), 216 Mont. 327, 701 P.2d 342.

Before filing this action, FPA filed a motion on November 8,1989, for a temporary restraining order and an application for order to show cause why Millicent Huggans, her mother, Alice I. Foss, and brother, John Foss, should not be held in contempt for violation of the District Court’s October 21,1985, order which enjoined them from interfering with FPA’s access to the peat resource.

The District Court heard testimony in support of and in opposition to this motion on November 29, 1989, and on March 1, 1990, and issued its order on March 9,1990. The District Court found John Foss to be in contempt of the court’s October 21, 1985, order because he “deliberately interfered with the access to the peat resource on the Foss property by plowing up a road and around the peat, by removing culverts that the Smiths had placed in the road, and by flooding the peat resource.” In the same order, the District Court found that Huggans had failed to prevent Foss’s conduct, but held that “[t]hese omissions are insufficient to hold ... Millicent Huggans in contempt of court for the acts of John Foss.”

On August 7, 1990, FPA filed a complaint against Huggans and alleged that she slandered FPA’s product and attempted to interfere with its contractual relationship with a buyer. FPA amended its complaint on November 20,1990, and added a claim for damages for intentional interference with the access to its peat resource. Huggans filed her answer and counterclaimed with a request for an accounting from FPA for the amount of material it removed from the property in its peat mining operation.

On November 19, 1992, Huggans1 moved to dismiss Count III on the grounds that there was no genuine issue of material fact and that as a matter of law the doctrine of collateral estoppel barred relitigation of the claim. The District Court granted Huggans’motion on June 15, 1993, and on November 5, 1993, denied FPA’s motion to reconsider. The District Court granted Huggans summary judgment and dismissed Counts I and II on October 13,1993. FPA appeals only the District Court’s dismissal of Count HI.

STANDARD OF REVIEW

When reviewing an order granting summary judgment, this Court applies the same standard of review applied by a district court. Holtman v. 4-G’s Plumbing & Heating (1994), [264 Mont. 432], 872 P.2d 318, 320, (citing Emery v. Federated Foods (1993), 262 Mont. 83, 90, 863 P.2d 426, 431). Summary judgment is proper when no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.P. We review the district court’s conclusions of law to determine whether they are correct. Holtman, 872 P.2d at 320 (citing Steer, Inc. v. Dep’t of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603).

On December 2, 1992, FPA, in its brief in opposition to Huggans’ motion for partial summary judgment, attached an affidavit from FPA’s counsel alleging that he received aphone call in the late summer of1990 from Foss. According to the affidavit, Foss stated that Huggans hired him to “plow up her field where the Smiths were digging peat.” FPA’s counsel asked Foss to put this statement in writing, which Foss did on November 9,1990. FPA suggests that this information, produced after the hearing, virtually proves Huggans’ culpability and renders the District Court’s decision not to hold her in contempt tainted by pequiy and fraud. FPA further suggests that Foss’s statement presents a “genuine issue of fact” with regard to Huggans’ culpability, and therefore, precludes dismissal by summary judgment. The District Court found this argument to be without merit:

Newly discovered evidence has never been sufficient to require relitigation unless it can be established that the evidence could not have been discovered with due diligence. Rule 60(b)(2), M.R.Civ.Proc. The Court notes that three months transpired between the time of the November 29, 1989, contempt hearing and the March 1,1990, continuation of that hearing allowing adequate time for [FPA] to discover the relevant facts regarding Huggans’ participation in the ... plowing of the road.

We agree that the statement of Foss, even if presented in proper affidavit form, at most would have constituted new evidence to be considered by the District Court pursuant to Rule 60(b)(2). We conclude that the District Court properly ruled on its admissibility. Foss appeared pro se and was available to testify at the contempt hearings, but FPA did not call him as a witness. Huggans testified that she simply hired Foss to plow her farm, which did not violate the District Court’s previous ruling, and that she was not aware of his efforts to interfere with FPA’s access. The District Court, after listening to the evidence presented by FPA in the contempt proceedings, found a failure of proof that Huggans had actively interfered with FPA’s peat milling operation.

Other than Foss’s statement, FPA produced no evidence to contradict the District Court’s previous finding. We conclude that the District Court correctly proceeded to consideration of the applicability of collateral estoppel.

We apply the following three-part test to decide when collateral estoppel will act as a bar to litigation:

1. The identical issue raised has been previously decided in a prior adjudication;
2. A final judgment on the merits was issued in the prior adjudication; and
3. The party against whom the plea is now asserted was a party or in privity with a party to the prior adjudication.

Boyd v. First Interstate Bank (1992), 253 Mont. 214, 218, 833 P.2d 149, 151 (citing In re Marriage of Stout (1985), 216 Mont. 342, 349, 701 P.2d 729, 733); Smith v. Schweigert (1990), 241 Mont. 54, 58, 785 P.2d 195, 197. See also Brault v. Smith (1984), 209 Mont. 21, 679 P.2d 236; Gessel v. Jones (1967), 149 Mont. 418, 427 P.2d 295.

FPA asserts that only two of three elements necessary to apply the doctrine are present, and that as a matter of law, its claim is not susceptible to dismissal.

FPA contends that the “identical issue” element of collateral estoppel is not met in this case because it did not have an opportunity to fully litigate Huggans’ tort liability for damages in the previous contempt proceeding. However, FPA confuses the distinction between issue preclusion by collateral estoppel and res judicata. We have previously held that:

“Collateral estoppel” ... may be considered as a branch of the doctrine of res judicata but is distinguishable from the bar to litigation normally called res judicata. The distinction is that res judicata bars the same parties from relitigating the same cause of action while collateral estoppel bars the same parties from relitigating issues which were decided with respect to a different cause of action. The bar that arises from collateral estoppel extends to all questions essential to the judgment and actually determined by prior valid judgment.

Boyd, 833 P.2d at 151 (quoting Gessell, 149 Mont. at 421, 427 P.2d at 296) (citations omitted).

The issue considered by the District Court and which we review is not whether FPA had an opportunity to litigate Huggans’ liability to it for civil damages, the issue is whether a fact issue, which is essential to FPA’s recovery in this action, has already been adversely resolved in a prior action.

The fact that the controlling issue in this claim for damages had already been litigated and resolved in the previous resolution of FPA’s motion to have Huggans held in contempt, is best illustrated by the District Court’s thoughtful and well-reasoned order dated November 4, 1993, in which it denied FPA’s motion for reconsideration. The District Court correctly pointed out that:

In order to determine whether the first prong requiring identity of issues has been met, these issues must be compared to the relevant issues which were presented between Farmers and Huggans before Judge McLean in the contempt proceedings in DV-84-355. The relevant issues as stated by Farmers in the contempt proceedings were as follows:
... [Farmers] request the court to issue an order to show cause ordering the plaintiffs Alice Foss, Millicent Huggans, and her [sic] John Foss to appear and show cause why they should not be held in contempt for plowing the road and interfering with [Farmers’] access to the peat harvesting area.
Farmers’ Motion for Temporary Restraining Order and Application for Order to Show Cause filed November 8, 1989, in Cause No. DV-84-355, p. 1-2.
Farmers contended that John Foss had interfered with its access to the peat resource by “constructing ditches and strips in front of the peat harvest area”; by “plowing the road below the gate to the meadow and digging up culverts”; by “plowing strips around the meadow to destroy the road”; and by “constructing dikes around the peat harvesting area, apparently in anticipation of flooding the peat resource.” Farmers’ Motion for Temporary Restraining Order and Application for Order to Show Cause, p. 3-4. Farmers further alleged that John Foss, Alice Foss, and Huggans had “already flooded the peat harvesting area” and that Farmers Aid had “already suffered significant damage by interference of the Fosses with access to the peat resources because of time lost in harvesting the peat and rendering the road access unusable. Farmers’ Motion for Temporary Restraining Order and Application for Order to Show Cause, p. 4.

The District Court also pointed out that the factual allegations which formed the basis for Count III of Farmers’ amended complaint in this case were as follows:

11. [Huggans] has repeatedly interfered with, obstructed and denied Farmers Plant Aid access to the peat resource. In the fall of 1989 [Huggans] hired her brother John Foss to destroy the access road to the peat resource by plowing it and removing culverts therefrom. In addition, John Foss constructed a dike around the peat mining area and flooded the peat with water to prevent Farmers Plant Aid from removing peat from the property. All of these actions took place at the direction and with the approval of [Huggans].
12. [Huggans’] actions in hiring John Foss to destroy the access road and otherwise interfering with obstructing and denying Farmers Plant Aid access to the peat resource were done maliciously, wantonly, recklessly and with intent to harm Farmers Plant Aid.

Based on these allegations, the District Court then concluded that:

In comparing the above cited excerpts from Farmers’ amended complaint in this case to excerpts from Farmers’ motion for temporary restraining order and application for order to show cause in Cause No. DV-84-355, it becomes apparent that, in order for Farmers to prevail against Huggans in both cases, Farmers must establish facts proving Farmers’ access to the peat resource was wrongfully interfered with and that the wrongful interference was due to the acts of Huggans personally, or that Huggans was legally accountable for the wrongful acts of others.

However, the District Court correctly observed that that issue was resolved in favor of Huggans and against FPA when the District Judge in the contempt proceeding found that:

The evidence also shows that Millicent Huggans and Alice I. Foss did nothing to prevent John Foss from violating the Court’s order or to report the violation of this Court’s order to proper authorities. These omissions are insufficient to hold Alice I. Foss and Millicent Huggans in contempt of court for the acts of John Foss.

Based on this order, which was reduced to final judgment, the District Court in this case concluded that:

The above cited portions of the pleadings and the court orders in this case and in DV-84-355 support the conclusion reached by this Court in its June 15, 1993, memorandum and partial summary judgment that the factual issues are identical regarding whether Huggans could be held legally accountable for willful interference with Farmers’ access.

We agree. Count III of FPA’s amended complaint alleges a tortious claim which depends for its success on a factual finding that in 1989 Huggans intentionally interfered with its peat mining operation by destroying access to the area where peat was being mined and by flooding the area. In the previous contempt proceedings, which were also initiated by FPA, and where FPA had an opportunity to present evidence, the District Court, after listening to the evidence, found an absence of proof that Huggans had intentionally interfered with FPA’s mining rights. Therefore, we conclude that the essential factual issue upon which FPA’s claim in Count III of its amended complaint depends has been previously litigated and resolved in favor of defendant Millicent Huggans and FPAis barred by the doctrine of collateral estoppel from relitigating that issue in this case.

FPA argues that a different result is dictated by our decision in Anderson v. State (1991), 250 Mont. 18, 817 P.2d 699. In that case, a Montana Highway Patrol Officer seized the defendant’s driver’s license pursuant to § 61-8-402, MCA, after concluding that he had refused to take a breathalyzer test. After district court review of the seizure pursuant to § 61-8-403, MCA, the district court found he had not refused to take a breathalyzer and ordered that his license be returned to him. He then filed a claim against the State claiming damages based on the wrongful seizure of his license. He moved for summary judgment in that proceeding based on collateral estoppel. His argument was that based on the District Court’s previous finding that he had not refused to take a breathalyzer, and therefore, that his license had been incorrectly seized, he was entitled to judgment on the issue of liability in the civil lawsuit. His motion was denied and his case was submitted to a jury on the theory of negligence. The jury found that the State was not negligent in originally seizing Anderson’s license, but was negligent in failing to return it when ordered to do so. However, they also found that that negligence was not the proximate cause of injuries to Anderson.

In Anderson, we concluded that the prior finding that Anderson had not refused to take a breathalyzer test, and therefore, that his license should not have been seized, did not equate to a finding that the State was negligent when it seized it. Therefore, we concluded that the same factual issue was not being litigated in two subsequent proceedings and that the doctrine of collateral estoppel did not require judgment for Anderson as a matter of law in his claim for damages.

The facts and our holding in Anderson are distinguishable from the facts and our holding in this case. In Anderson, it was possible for a jury to find that even though the plaintiff had not refused to take a breathalyzer, the arresting highway patrolman was not negligent when he interpreted his conduct as a refusal. In this case, the finding in the previous contempt proceeding that Huggans had not actively interfered with FPA’s mining rights, does eliminate any factual basis for FPA’s cause of action for intentional interference with those rights.

Contrary to FPA’s argument on appeal, Anderson does not stand for the proposition that because the remedy sought in two separate proceedings is different, factual issues common to those proceedings can be relitigated. We find the following rule of law persuasive and the basis for our decision:

The rule precluding the relitigation of facts or questions formerly in issue applies ... even though the subsequent action is a different form of proceedings, is upon a different cause of action, and involves a different subject matter, claim, or demand than the earlier action. In such cases it is likewise immaterial that the two actions have a different scope ... or are instituted for different purposes, and seek different relief.

46 Am. Jur. 2d Judgments § 415 (1969).

Since FPA cannot prove a cause of action without relitigation of factual issues previously resolved, we affirm the order of the District Court granting summary judgment to defendant Millicent Huggans and dismissing with prejudice Count III of FPA’s amended complaint.

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


source: Caselaw Access Project

author: JUSTICE TRIEWEILER

license: Public Domain

text:
    FARM CREDIT BANK OF SPOKANE, a corporation, successor by merger to The Federal Land Bank of Spokane, Plaintiff and Respondent, v. LEROY HILL and PEGGY L. HILL, husband and wife, individually and as Trustees under Hill Revocable Trust dated December 19, 1978, and under Peggy L. Hill Revocable Trust dated December 18, 1978, and ROBERT A. HILL, Defendants and Appellants.
    No. 92-370.
    Submitted on Briefs January 7, 1993.
    Rehearing Denied September 20, 1994.
    Decided June 23, 1993.
    50 St.Rep. 726.
    266 Mont. 258.
    879 P.2d 1158.

      For Appellant: Leroy & Peggy Hill, Pro Se, Geyser.
    For Respondent: Dennis Tighe, Cure, Borer & Davis, Great Falls.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

Farm Credit Bank of Spokane brought this action for foreclosure against Leroy and Peggy Hill. The Bank sought foreclosure of a mortgage on real property located in Judith Basin County, Montana. The District Court for the Tenth Judicial District, Judith Basin County, granted summary judgment to Farm Credit Bank. The Hills appeal. We affirm.

There are six issues on appeal.

1. Did the District Court err when it refused to dismiss Farm Credit Bank’s foreclosure action?

2. Did the District Court err when it granted summary judgment to Farm Credit Bank?

3. Did the District Court err when it concluded that Farm Credit Bank had the right to apply member stock to the Hills’ indebtedness?

4. Did the District Court err when it ordered that Farm Credit Bank was entitled to a deficiency judgment?

5. Did the District Court err when it determined that the Hills were not entitled to possession of the foreclosed property during the one year statutory redemption period?

6. Is Farm Credit Bank entitled to an award of costs and attorney fees on appeal?

In June 1980, Leroy and Peggy Hill (the Hills), and Robert Hill (who is not a party to this appeal), applied for a loan with the Federal Land Bank of Spokane (FLB) to purchase farm property in Judith Basin County, Montana. As a condition for obtaining the loan, the Hills were required to purchase $9800 worth of stock in the Federal Land Bank Association (FLBA). The FLBA then purchased a like amount of stock in FLB and the Hills pledged their stock to FLB in the event of default.

On August 1,1980, FLB loaned the Hills $196,000. As evidence of the loan, the Hills executed and delivered to FLB a promissory note for that amount. As security for repayment of the loan, the Hills executed and delivered a mortgage to FLB. The mortgage encumbered approximately 1330 acres of ranch property in Judith Basin County, but did not encumber the property where the Hills maintained their home.

Judith Basin County was declared a drought disaster area in 1984 and 1985 by the Governor’s Office of the State of Montana. It was declared a drought disaster area again in 1988. The Hills made their last annual payment on the promissory note in 1985. They failed to make payments from 1986-89. On July 10, 1989, Farm Credit Bank of Spokane (FCB), which had become the successor by merger to FLB, declared all sums owed under the note and mortgage due and payable in full. On the same day, FCB retired the Hills’ stock and applied the par value of the stock to the Hills’ indebtedness.

On July 18,1989, the Hills submitted an application to restructure their loan. The Hills claimed that they were victims of the drought during the mid-80s. The loan agent for FCB denied the Hills’ request on October 12, 1989. The Hills then requested and received a review of that decision; however, on December 5, 1989, the Credit Review Committee affirmed the original denial of the restructure application.

Two weeks later, on December 19, 1989, FCB filed a complaint against the Hills in the Tenth Judicial District Court, Judith Basin County, to foreclose on the note and mortgage and to recover $339,785.75, plus accrued interest, attorney fees, and costs. On March 22,1990, the Hills filed a motion to dismiss FCB’s foreclosure action for failure to state a claim upon which relief could be granted. The Hills did not file a brief in support of their motion. On April 9, 1990, the District Court denied the Hills’ motion to dismiss.

On October 16,1991, FCB moved for summary judgment. On January 23, 1992, the District Court issued an order granting summary judgment in favor of FCB. On March 25, 1992, the court entered its Judgment and Decree of Foreclosure in favor of FCB and against the Hills for $437,406.78, plus interest, attorney fees, and costs for a total judgment of $451,125.20. The court’s Judgment and Decree ordered FCB to foreclose on the mortgage and to sell the subject property. The court also awarded FCB a deficiency judgment, in the event that one was necessary. Finally, the corut declared that the Hills were barred and foreclosed from all claim to the mortgaged real property, “including any right of possession and the equity of redemption except as such right of redemption is granted by law.” On May 19, 1992, the court denied the Hills’ motions for a new trial and to amend the judgment. The Hills filed a Notice of Appeal on June 18,1992.

I

Did the District Court err when it refused to dismiss Farm Credit Bank’s foreclosure action?

On March 22,1990, the Hills filed a motion with the District Court to dismiss FCB’s foreclosure action based upon a failure to state a claim upon which relief could be granted. The Hills did not file a brief in support of their motion to dismiss. On April 9, 1990, the District Court denied the Hills’ motion to dismiss because the Hills failed to file a supporting brief. The Hills appeal the court’s denial of their motion to dismiss.

The Hills assert on appeal that the District Court should have taken judicial notice of select portions of the Farm Credit Act (FCA) of 1971, as amended, 12 U.S.C. § 2001 to -2279bb-6 and, sua sponte, dismissed FCB’s foreclosure action based on FCB’s failure to comply with due process requirements in the FCA. Specifically, the Hills refer

the Court to 12 U.S.C. § 2201(b), 2202(a), 2202a - 2202d of the Farm Credit Act of 1971 (amended 1985, 1988). The Hills contend that the amendments to the FCA found in these sections guarantee due process to borrowers in the Farm Credit System and prohibit banks from foreclosing on defaulted loans until all loan restructuring efforts have been exhausted. The Hills assert that they were denied due process when FCB denied their application to restructure their loan.

The record reveals that the Hills made no argument to the District Court regarding the application of the FCA when they moved to dismiss the foreclosure action. Therefore, there is nothing in the record regarding the lower court’s action on this issue for this Court to review on appeal.

It is the settled rule in Montana that this Court will not review the proposed application of a statute raised for the first time on appeal. Hares v. Nelson (1981), 195 Mont. 463, 466, 637 P.2d 19, 21. When a party argues for the application of a statute for the first time on appeal, the party raises a new set of questions that were not presented to the district court; and this Court will not find the district court to have erred on an issue that was “not presented to or ruled on by the lower court.” Hanley v. Department of Revenue (1983), 207 Mont. 302, 307, 673 P.2d 1257, 1259. Accordingly, we decline to address on appeal the Hills’ argument concerning the application of the FCA.

II

Did the District Court err when it granted summary judgment to Farm Credit Bank?

The purpose of summary judgment is to encourage judicial economy through the elimination of any unnecessary trial. However, summary judgment is never to be a substitute for trial if there is an issue of material fact. Reaves v. Reinbold (1980), 189 Mont. 284, 288, 615 P.2d 896, 898. Summary judgment is proper only when no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.P.

The party seeking summary judgment has the burden of demonstrating a complete absence of any genuine factual issues. D’Agostino v. Swanson (1990), 240 Mont. 435, 442, 784 P.2d 919, 924; Cereck v. Albertson’s, Inc. (1981), 195 Mont. 409, 411, 637 P.2d 509, 511. The burden then shifts to the nonmoving party who must show the existence of a genuine issue in order to prevail. O’Bagy v. First Interstate Bank of Missoula (1990), 241 Mont. 44, 46, 785 P.2d 190, 191. To meet this burden, the nonmoving party must offer substantial evidence, not mere speculation and conclusory statements. First Sec. Bank of Bozeman v. Jones (1990), 243 Mont. 301, 303, 794 P.2d 679, 681.

The record reveals that FCB demonstrated in the summary judgment proceedings that there were no genuine issues of material fact regarding FCB’s right to foreclose on the subject property. To make a prima facie case for foreclosure, the bank is obligated to prove the following three elements: (1) the debt of defendants; (2) non-payment of the debt; and (3) present ownership of the debt by the complaining party. First Nat. Bank v. Quinta Land and Cattle Co. (1989), 238 Mont. 335, 339, 779 P.2d 48, 50.

Through the affidavit of Lee Signalness, an authorized agent for FCB, and the Hills’ depositions, FCB made its prima facie case for foreclosure to the District Court. Signalness testified by affidavit that the Hills borrowed $196,000 from FLB, signed a promissory note, and gave FLB a mortgage. Signalness also testified that the Hills defaulted on their loan. Finally, Signalness testified that FCB was the successor by merger to FLB, and that FCB was the owner and holder of the promissory note and mortgage.

By their own admissions, the Hills supported FCB’s prima facie case for foreclosure. Both of the Hills admitted in their depositions that they borrowed $196,000 from FLB. Leroy Hill admitted that he signed a promissory note and executed and delivered a mortgage to FLB. The Hills admitted that they defaulted on their loan. The Hills are bound by their pleadings and are estopped on appeal to controvert their admissions. Grimsley v. Estate of Spencer (1983) 206 Mont. 184, 199, 670 P.2d 85, 93. The Hills asserted that FCB was not a properly chartered instrumentality and denied that FCB was the owner and holder of the note and mortgage; however, they did not produce any factual foundation for these conclusory statements.

The Hills assert on appeal that the District Court erred when it granted summary judgment to FCB because factual issues exist regarding FCB’s compliance with all provisions of the Farm Credit Act of 1971 (FCA), and its amendments. The Hills delineate 15 items in their appeal brief which they claim are conditions precedent to foreclosure required by the FCA and its amendments. The Hills concede that FCB complied with some of the 15 conditions precedent; however, they assert that FCB failed to comply with all 15 of the provisions.

In particular, the Hills contend that FCB failed to satisfy the conditions precedent set forth at 12 U.S.C. § 2199 to 2202c of the Farm Credit Act of 1971 (amended 1985, 1988). They assert that § 2199 to 2202c provide due process guarantees to the borrower who is subject to a foreclosure action and that foreclosure is forbidden until all conditions precedent guaranteeing due process have been satisfied. It is the Hills’ contention that when FCB denied the Hills’ application for loan restructuring, FCB failed to comply with § 2199 to 2202c, and therefore, FCB should be barred from foreclosing on the mortgage.

We conclude that FCB produced sufficient evidence before the District Court to demonstrate that it complied with all provisions of the FCA when it denied the Hills’ application for loan restructuring. Furthermore, the Hills did not produce evidence to controvert FCB’s evidence of compliance. Accordingly, there are no genuine issues of fact regarding FCB’s compliance with the FCA.

The Hills also argue that FCB erred when it calculated the Hills’ debt. The Hills assert that when they denied, in their answer, the amount of debt calculated by FCB, the applications of certain variable interest rates were in issue; and summary judgment, therefore, was inappropriate.

The record reveals that at no time during the summary judgment proceedings did the Hills set forth any facts or substantial evidence which disputed FCB’s debt calculation. The Hills merely made conclusory statements that the amounts were incorrectly calculated. This Court has held that conclusory or speculative statements are insufficient to raise a genuine issue of material fact. Kronen v. Richter (1984), 211 Mont. 208, 212-13, 683 P.2d 1315, 1318.

We conclude that because there were no genuine issues of material fact regarding FCB’s compliance with the FCA and FCB’s calculation of the Hills’ debt, summary judgment was proper.

Ill

Did the District Court err when it concluded that Farm Credit Bank had the right to apply member stock to the Hills’ indebtedness?

The Hills assert that the court erred when it ordered the seizure of the Hills’ $9800 worth of stock in FLBA absent any allegation made by FCB in its complaint that it was entitled to the stock, and without showing in its motion or supporting documents why the Bank should receive it. The Hills contend that based on FCB’s failure to allege that it was entitled to the $9800, the Hills had no duty to rebut this allegation before the District Court.

The Farm Credit Act of 1971, as amended in 1988, provides statutory authority for Federal Land Banks, now Farm Credit Banks, to retire and apply stock when a loan is in default. Section 2022 of 12 U.S.C. provides that FCB has a first lien on stock it issues. Section 2097 of 12 U.S.C. provides that the FLBAhas a first lien on stock it issues. Section 2094 of 12 U.S.C. provides that the retirement of stock is subject to Farm Credit Administration regulation. Section 2154a of 12 U.S.C. provides that stock may be retired by the holder on repayment of the holder’s loan or by application of the stock against the indebtedness after default. Farm Credit Administration regulations provide that FCB may retire the stock upon which it has a lien in total or partial satisfaction of the debt. 12 C.F.R. § 615.5280 (1988).

Courts in other jurisdictions have recognized the right of the Federal Land Banks, now Farm Credit Banks, to retire and apply stock to the indebtedness secured by the mortgage when a loan is in default. See In the Matter of Forester (9th Cir. 1976), 529 F.2d 310, 312; In re Stedman (Bankr. D.N.D. 1987), 72 B.R. 49, 52-53; see also, Blake v. Federal Land Bank of Springfield (N.Y. 1983), 469 N.Y.S.2d 908, 910, aff’d 483 N.Y.S.2d 500 (1984) (FLB had the absolute right, pursuant to the Farm Credit Act, to cancel the stock for application on the loan where the loan was in default).

The record reflects that the Hills authorized the purchase of stock at the time the loan was made, that they were put on notice that the stock would be retired, and that the stock was applied to the debt in accordance with the FCA and FCB’s own bylaws. The Hills have not provided evidence to show that the retirement of the stock was improper. We conclude, therefore, that the court did not err when it found that FCB properly forfeited and applied the stock.

IV

Did the District Court err when it ordered that Farm Credit Bank was entitled to a deficiency judgment?

The Hills contend that the District Court erred when it allowed FCB to recover a deficiency judgment because § 71-1-232, MCA, does not allow deficiency judgments where the loan involves a purchase money mortgage. The Hills contend that § 71-1-232, MCA, is not limited to vendors where the lender knows that the purpose of the loan is to purchase the property that is mortgaged. FCB maintains that the anti-deficiency statute does not apply to this foreclosure; and that the statute, by its language, clearly applies to vendors of real property. We agree with FCB.

Under the mortgage foreclosure laws of Montana, a deficiency judgment is not allowed on the foreclosure of a purchase money mortgage. Section 71-1-232, MCA. This Court has held that the anti-deficiency statute applies only to vendors of real property who take back a mortgage for part of the purchase price of real property. Aetna Life Ins. Co. v. Slack (1988), 232 Mont. 250, 756 P.2d 1140; Carpenters - Emp. Ret. Tr. v. Galleria Part. (1989), 239 Mont. 250, 780 P.2d 608. The FCB is not the vendor of the subject property here; it is a lender. The FCB loaned money to the Hills so that they could purchase the property from a third party. That third party is the vendor. Section 71-1-232, MCA, does not apply to the mortgage foreclosure here, and if the proceeds from the sheriff’s sale are insufficient to pay the judgment herein, FCB will be entitled to have a deficiency judgment entered for the balance.

V

Did the District Court err when it determined that the Hills were not entitled to possession of the foreclosed property during the one year statutory redemption period?

The Hills contend that they are entitled to possession of the foreclosed property during the one year redemption period, as provided by § 71-1-229, MCA. When the Hills made their loan application to FLB on June 24, 1980, they admitted that they did not reside on the tract of land encumbered by the mortgage. The mortgage in this case encumbers land that is part of the Hills’ general ranch operation.

The judgment debtor must personally occupy land covered by the mortgage as a home, to obtain possession of the foreclosed property after the foreclosure sale. Section 71-1-229, MCA; Interstate Production Credit v. DeSaye (1991), 250 Mont. 320, 820 P.2d 1285. This basic requirement is not met in this case. Since the Hills do not personally occupy the foreclosed land as a home, the possession statute does not apply to them.

This case is not analogous to this Court’s holding in Federal Land Bank of Spokane v. Snider (1991), 247 Mont. 508, 808 P.2d 475. In Snider, the debtor’s residence was situated on the property subject to the mortgage. The mortgage in Snider covered both the crop land and the debtor’s residence. This Court found that it was all one parcel. Here, the debtors’ residence is not on the foreclosed property. The single parcel subject to the foreclosure does not and never did include any of the Hills’ dwellings. Therefore, possession of the foreclosed property will pass to the purchaser at the sheriff’s sale.

VI

Is Farm Credit Bank entitled to an award of costs and attorney fees on appeal?

The FCB asserts that it has a contractual right to costs and attorney fees based on a provision in the promissory note. Attorney fees are allowed when they are provided for by statute or contractual provision. Hoven v. Amrine (1986), 224 Mont. 15, 17, 727 P.2d 533, 534. The promissory note signed by the Hills on August 1, 1980, provides that “[i]n case of suit hereon or foreclosure, the makers hereof agree to pay a reasonable attorney’s fee in addition to other costs.” An award of costs and attorney fees is proper on appeal when the fees are based on a contract. Poulsen’s, Inc. v. Wood (1988), 232 Mont. 411, 417, 756 P.2d 1162, 1166. Accordingly, FCB is entitled to costs and attorney fees on appeal. This case is remanded for a determination of FCB’s costs and attorney fees on appeal.

The Judgment of the District Court is affirmed.

JUSTICES HARRISON, GRAY, McDONOUGH, and WEBER concur.


author: JUSTICE HARRISON

text:
    IN RE THE MATTER OF THE ADOPTION OF S.P.M.
    No. 93-469.
    Submitted on Briefs July 12, 1994.
    Decided September 1, 1994.
    51 St.Rep. 808.
    266 Mont. 269.
    880 P.2d 297.

      For Appellant: Mark P. Yeshe, Attorney at Law, Helena.
    For Respondent: Deirdre Caughlan; Dunlap & Caughlan, Butte.
   JUSTICE HARRISON

delivered the Opinion of the Court.

Appellant J.M. appeals dismissal by the Third Judicial District Court, Powell County, of her petitidn for adoption of her husband’s natural child, S.P.M. We affirm.

The sole issue on appeal is whether the District Court erred when it held that a parent’s consent to adoption was required under a specific set of circumstances.

S.P.M. was born to R.M. and M.S.¡on July 21,1986. R.M. and M.S. divorced in April 1987, while living in Libby, Montana. The dissolution decree provided for joint custody, with each parent having physical custody of S.P.M. for one month, on an alternating monthly basis, and that R.M. would pay $125 per month in child support during the months M.S. had physical custody of S.P.M.

In the spring of 1988, R.M. moved to Aberdeen, Washington and the physical custody agreement continued. By mid-1988, R.M. was living with J.M. (Appellant) in Aberdeen and M.S. was living with J.S. When R.M. picked up S.P.M. in November, he alleges he observed bruises on S.P.M.’s arms and back which led him to believe S.P.M. had been abused by J.S. R.M. filed a petition and affidavit with the District Court, Powell County, Montana, claiming S.P.M. was abused and requested custody of S.P.M. On December 29,1988 Judge Arnold Olsen issued an ex parte order causing S.P.M.’s placement with R.M. until an investigation could be completed.

On January 17, 1989, Terri Waldorf of Montana Department of Family Services filed a report concluding that R.M.’s allegation that S.P.M. was abused by J.S. was true. Waldorf recommended that R.M. be granted sole custody of S.P.M. with M.S. given conditional visitation rights. No evidentiary hearing on the matter was held nor has there been any modification of the original decree’s joint custody and month-by-month schedule. M.S. had not seen S.P.M. since December 29, 1988.

When M.S. learned that R.M., Appellant, and S.P.M. moved from Aberdeen to Deer Lodge, Montana, she filed a petition for custody and visitation determination on July 2, 1992. Appellant petitioned to adopt S.P.M. on August 11, 1992. Both parties testified extensively about the contacts between the parties, family members, and friends between December 1988 and July 1992. In addition to Aberdeen, Washington, R.M. lived in Troy, Missoula, and Deer Lodge, Montana. R.M. left forwarding addresses whenever he moved.

M.S. was generally poor and required public assistance in various forms, and suffered from emotional or stress related problems (the causes of which were not determined). The District Court concluded that between December 1988 and July 1992, M.S.’s efforts to contact or visit S.P.M. were minimal and that R.M. made little or no effort to facilitate contact between S.P.M. and M.S.

The District Court dismissed, concluding that Appellant did not meet her burden of proving that M.S. abandoned S.P.M. by any of the three theories advanced: Appellant’s claims involved M.S.’s failure to support S.P.M., that M.S. was judicially deprived of S.P.M.’s custody because of neglect (as a result of the December 29, 1988 order), and that M.S. abandoned S.P.M.

The district court hearing testimony is in the best position to determine the outcome of the controversy and this Court will not disturb its findings unless there is a mistake of law or a finding of fact not supported by substantial, credible evidence. In re A.E. (1992), 255 Mont. 56, 59, 840 P.2d 572, 574-5. Petitioner has the burden of proof for theories of abandonment advanced. See Matter of Adoption of S.L.R. (1982), 196 Mont. 411, 640 P.2d 886. This Court has consistently held that “[p]arental rights involve a fundamental liberty interest, and a judicial decree terminating such rights must be supported by clear and convincing evidence.” See, e.g. Matter of Adoption of R.M. (1990), 241 Mont. 111, 115, 785 P.2d 709, 711.

Appellant argues that M.S.’s consent was not required because Montana’s adoption statute does not require consent under all circumstances. Appellant proposes three theories why M.S.’s consent is not required to adopt S.P.M.

First, Appellant argues consent is not required from a parent “who has been judicially deprived of the custody of the child on account of cruelty or neglect toward the child; ....” Section 40-8-lll(l)(a)(ii), MCA. There has not been a prior judicial proceeding concluding that M.S. was denied custody of her children or had her parental rights terminated for reasons of cruelty or neglect. The determination of neglect necessitates a proceeding separate from the consent for adoption hearing. We have held that “[t]he issues to be tried in a controversy over the termination of parental rights, i.e., the degree of unfitness of a parent, are quite different than the inquiry properly before the adoption court. The two should not be mixed. ...” Brost v. Glasgow (1982), 200 Mont. 194, 202, 651 P.2d 32, 36; citing Commissioners’Note for § 40-8-111, MCA. The Department of Family Services hearing in this case was not sufficient to constitute a proceeding determining cruelty, neglect, or termination of parental rights. Additionally, M.S.’s failure to pursue her legal remedies does not excuse the inadequate procedure used to take S.P.M. from her and does not support the necessary finding by clear and convincing evidence.

Second, Appellant argues consent is not required from a parent “who has ... willfully abandoned the child, as defined in 41-3-102(8)(d).” Section 40-8-lll(l)(a)(iii), MCA. Abandonment occurs when a parent:

abandons the child by leaving the child under circumstances that make reasonable the belief that the parent or other person does not intend to resume care of the child in the future or by willfully surrendering physical custody for a period of 6 months and during that period does not manifest to the child and the person having physical custody of the child a firm intention to resume physical custody or to make permanent legal arrangements for the care of the child ....

Section 41-3-102(8)(d), MCA. We have previously clarified that the six-month requirement applies only to the willful surrender of physical custody. In re A.E., 840 P.2d at 575. M.S. did not willfully surrender physical custody of S.P.M.; S.P.M. was removed by court order in December 1988. M.S.’s failure to pursue legal remedies to gain custody of S.P.M. after the 1988 court order does not clearly and convincingly fail to meet the statutory standard. M.S. manifested her intent to pursue S.P.M.’s custody as soon as she learned he was in Montana. We conclude that the number of contacts, or even attempted contacts, alone is not sufficient to establish abandonment. Specific circumstances must be viewed as a whole. The facts of this case do not support a finding that M.S. abandoned S.P.M.

Third, Appellant argues consent is not required from a parent if it is proven to the satisfaction of the court that the parent, if able, has not contributed to the support of the child during a period of one year before filing a petition for adoption. Section 40-8-lll(l)(a)(v), MCA. We have held that a parent with no physical or mental impairment and possessed of skills to earn an income, was capable of making child support payments. Adoption of S.L.R., 640 P.2d at 888. In contrast, here the District Court’s findings support that M.S. was not capable of financially contributing to S.P.M.’s support and care. Unlike Adoption of S.L.R., the District Court concluded that M.S.’s case is not one where M.S. had money but chose not to support her son. The record as presented does not adequately establish M.S.’s ability to provide support during the year prior to Appellant’s adoption petition. See Matter of Adoption of T.G.K. (1981), 193 Mont. 139, 142, 630 P.2d 740, 742. That M.S. was not in contact with S.P.M., and did not exercise every mechanism of pursuing contact with him is not material in this context.

We hold that Appellant did not meet her burden of proof on the three issues raised. Accordingly, we affirm the District Court’s order to dismiss.

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


text:
    IN THE MATTER OF J.J.G., A Youth In Need Of Care.
    No. 94-020.
    Submitted on Briefs June 23, 1994.
    Decided August 30, 1994.
    51 St.Rep. 793.
    266 Mont. 274.
    880 P.2d 808.

      For Appellant: David L. Irving, Attorney at Law, Glasgow.
    For Respondent: Jack Jenks, Deputy Phillips County Attorney, Malta.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

On January 21, 1993, the Phillips County Attorney, on behalf of the Department of Family Services (DFS), filed a petition in the District Court for the Seventeenth Judicial District in Phillips County in which the court was requested to terminate the parent-child relationship of Mary Ann G. and her natural child, J.J.G., and to grant the DFS permanent legal custody of J.J.G. with the right to consent to his adoption. On February 2, 1993, Rick and Colleen Thompson, the foster parents of J.J.G. from the time of his birth until he was 18 months old, filed a petition in which they sought permanent custody of J.J.G. The District Court granted the petition filed on behalf of the DFS, and dismissed the Thompsons’petition on the basis that the Thompsons were without legal authority to request permanent custody of J.J.G. upon the termination of parental rights. The Thompsons appeal the order of the District Court.

We reverse.

We rephrase the issues on appeal as follows:

1. Did the Thompsons file a timely notice of appeal?

2. Did the District Court err when it denied the Thompsons’ motion for medical and psychological evaluations of J.J.G.?

3. Did the District Court err by stating its intention to award permanent legal custody of J.J.G. to the DFS prior to the dispositional hearing?

4. Did the District Court err when it dismissed the Thompsons’ petition for permanent legal custody of J.J.G. and awarded the DFS permanent legal custody of J.J.G. with the right to consent to his adoption?

This litigation arises out of a dispute between the Phillips County DFS and Rick and Colleen Thompson concerning the welfare and proper placement of J.J.G., a youth in need of care with special needs.

J.J.G. was bom on June 29, 1990. His attending physician concluded that he suffered from fetal alcohol syndrome. On July 3,1990, based on this diagnosis and the DFS’s documented concerns about whether the child’s mother, Mary Ann G., could adequately care for him, J.J.G. was removed from the hospital and placed with foster parents, Rick and Colleen Thompson. The Thompsons are specially trained in special education and child development.

The Phillips County DFS petitioned the District Court for temporary investigative and protective services authority. This petition was granted on August 2, 1990, after the court found that there was probable cause to believe that J.J.G. was abused or neglected, or in danger of being abused or neglected, within the meaning of § 41-3-102, MCA.

The DFS prepared a social study in August 1990 in which it was noted that Mary Ann had failed to comply with treatment plans prior to J.J.G’s birth, suffered from serious alcohol problems, had an I.Q. of 60, and was illiterate. The report also disclosed that Mary Ann had checked into an inpatient treatment program after J.J.G.’s birth but, unable to finance treatment, was released after being in the detoxification unit for approximately one day. It was also noted that at eight weeks, J.J.G. was still experiencing alcohol withdrawal-like tremors and was at times inconsolable, frequently slept for only 10 to 15 minute intervals, and demanded constant physical attention from the Thompsons.

The report also noted that Mary Ann had an “adoptive brother and sister-in-law,” Martin and Loreen Scholler in Washington State, who were very “supportive” of Mary Ann and were approved foster parents in that state. The Schollers had volunteered to be the main caretakers of J.J.G. until Mary Ann was able to complete a treatment plan and assume parental responsibilities.

In an addendum to this report prepared in January 1991, the DFS noted that it believed it would be beneficial to eventually relocate Mary Ann, J.J.G., and Mary Ann’s two other children, who had also been placed in foster care in 1990, to Washington to live with the Schollers.

Through various stipulations and court orders, the DFS’s temporary investigative authority and protective services order was extended until October 15, 1991. In a stipulation dated July 31, 1991, the Phillips County Attorney, counsel for J.J.G., and counsel for Mary Ann, agreed that a hearing would be held on or before October 15, 1991, to determine if J.J.G. was a youth in need of care pursuant to § 41-3-404, MCA.

During the hearing on this matter on September 6, 1991, the parties stipulated that J.J.G. should be adjudged a youth in need of care. However, the court refused to approve the DFS’s proposed treatment plan because it included placement of the child in Washington which the court believed would be “a mistake.” In its order dated January 17, 1992, the court declared J.J.G. a youth in need of care and transferred legal custody of J.J.G. to the DFS pursuant to § 41-3-406(l)(c)(i), MCA.

Prior to the issuance of this order, the DFS made arrangements for J.J.G. and Mary Ann to reside with the Schollers in Washington. On January 8, 1992, counsel for J.J.G. requested a temporary restraining order to prevent the DFS or Mary Ann from taking J.J.G. to Washington. No action was taken on this motion, and on January 12, 1992, J.J.G. was removed from the Thompsons’ home and traveled to Washington with Mary Aim.

One year later, on January 21, 1993, the DFS filed a petition in which it requested the court to terminate the parental rights of J.J.G.’s natural parents and to grant the DFS permanent legal custody of J.J.G. with the right to consent to his adoption. In a report attached to the petition, the DFS stated that Mary Ann had not followed the treatment plan prepared by the DFS, was no longer attending drug and alcohol counseling, had left the Scholler’s home, and was no longer trying to parent J.J.G. because, in Mary Ann’s words, parenting “feels overwhelming at this time.”

The Thompsons, thereafter, filed a petition in which they sought permanent custody of J.J.G. The DFS moved to dismiss this petition. Without ruling on this motion, the court, by order dated May 7,1993, ruled that the Thompsons and the Schollers could intervene in the proceedings on the DFS’s petition to terminate parental rights and to obtain permanent legal custody of J.J.G.

By affidavit signed on July 6, 1993, Mary Ann waived all of her parental rights and waived her right to consent to the adoption of J.J.G.

On August 9, 1993, J.J.G.’s court-appointed guardian ad litem, Barbara Anderson, filed a report which was prepared after she personally met with J.J.G., the Schollers, the Thompsons, and the various professionals who had been providing services to J.J.G. in Montana and Washington. The report included numerous concerns about J.J.G.’s mental and physical well-being, and recommended that J.J.G. be permanently placed with the Thompsons. Furthermore, when the guardian ad litem testified during the September 9, 1993, dispositional hearing, she recommended, prior to any decision regarding placement or adoption, that J.J.G. be immediately evaluated by specialists in Montana who had monitored his progress from birth until the time he was removed to Washington.

On August 25, 1993, the court dismissed the Thompsons’ petition for permanent custody of J.J.G. for the following reason:

Under MCA41-3-607 and 41-3-401, only the County Welfare Dept, or DFS can file a Petition for Termination of Parental Relationship. MCA 41-3-610 allows permanent placement of the child by DFS, and this is done subsequent to the Court Order terminating the parent-child relationship.

The court also amended its May 7, 1993, order and stated that the Thompsons and Schollers, as interested parties, could “appear to provide evidence” but that neither were allowed to seek permanent custody of J.J.G.:

In Montana, the right to seek permanent custody rests solely with those agencies/individuals who would have the right to give consent to adoption. Such position is consistent with §§ 41-3-607, MCA, et seq. and 41-3-401, MCA.

The court concluded that it could only review the placement actions of the DFS, but could not make the permanent placement itself and stated, with respect to the current action:

Should such Petition result in terminating the parental rights to the child, this Court must grant DFS, as Petitioner, the permanent custody with the right to consent to adoption.

Thus, prior to the dispositional hearing on the DFS’s petition, the court ruled that the Thompsons were without authority to request permanent custody of J.J.G., and that, upon terminating parental rights, it had no alternative other than to award permanent custody of J.J.G. to the DFS.

On September 2,1993, based on the guardian ad litem’s report, the Thompsons filed a motion requesting that J.J.G. be returned to Montana for farther medical and psychological evaluations by the Developmental Educational Assistance Program (DEAP). The DEAP, a private, nonprofit corporation based in Miles City, Montana, which does contract work for the State of Montana, had regularly tested and evaluated J.J.G.’s medical and psychological health while he was in the Thompsons’ care. In a report issued in 1990, the DEAP had recommended regular evaluations and long-term therapy in order to deal with J.J.G.’s physical and emotional problems.

The Thompsons’ motion was made pursuant to § 41-3-406(l)(d), MCA, which allows the court to order any party to the action to do what is necessary to give effect to the final disposition of a youth in need of care, “including undertaking medical and psychological evaluations, treatment and counseling.” The request for evaluations was made in order to acquire information on J.J.G.’s current condition for consideration at the dispositional hearing.

The dispositional hearing was held on September 9,1993. During the hearing, prior to the time that the Thompsons were allowed to submit evidence and present witnesses, the court stated:

I’m going to terminate the parental rights, I’m going to grant permanent custody to the Department of Family Services when all the rigmarole is completed. The only reason I’m going to let you introduce this evidence you’ve got here is so that it will be a part of the record so that it becomes something that the Department is going to have to decide.

At the conclusion of the dispositional hearing, the Thompsons again urged the court to grant their motion regarding medical and psychological evaluations of J.J.G. by the DEAP team in Montana. The presiding judge stated:

I think that should be done. I think if they’re [DFS] looking honestly out for the best interests of the child, they’ll bring him back and get an evaluation by the same team that evaluated him at the time that they originally saw him .... I think they should have that evaluation and I think they’re not doing their duty if they don’t do it, I’ll tell you that.

However, the court again concluded that it had no authority to order such an evaluation, stating, “I find nothing that’s been produced to me here today to feel that I have any authority in these proceedings to order Social Services to do anything.”

In its findings of fact, conclusions of law, and order issued subsequent to the hearing, the court found that the conduct of Mary Ann “renders her unfit and unable to give the youth adequate parental care,” and therefore, it was in J.J.G.’s best interest to terminate parental rights pursuant to § 41-3-609, MCA, and award permanent legal custody to “a qualified agency or individual having authority to develop a permanent placement plan for the youth.” The court also noted that the Thompsons and the guardian ad litem expressed concern over the existing physical and emotional condition of J.J.G., and it stated that it would be in J.J.G.’s best interest to have the testimony of the DEAP professionals, as well as medical reports submitted by the Thompsons, considered by the DFS in its determination of a permanent placement for J.J.G.

Therefore, on September 16, 1993, the court terminated Mary Ann’s parental rights and the natural father’s parental rights (whose identity was in dispute) subject to his failure to show cause and object after being served with notice. Furthermore, the court awarded the DFS permanent custody of J.J.G. with the authority to consent to adoption. The court also concluded:

This Court acts as a reviewing authority and does not have authority under sections 41-3-609 and 41-3-610, MCA, to order an evaluation of the youth in the preparation of the permanent placement plan for the youth. Any evaluation deemed necessary can be conducted by the agency vested with custody of the youth in preparation of a permanent placement plan.

On October 27, 1993, the natural father’s parental rights were terminated after he was served with summons and failed to appear. The Thompsons, thereafter, filed a notice of appeal and petition for writ of supervisory control with this Court, requesting that the District Court be ordered to hold a new dispositional hearing after a medical and psychological evaluation of J.J.G., and that they be allowed to seek custody of J.J.G. at this hearing. The petition for writ of supervisory control was denied on March 8,1994, on the basis that these issues should be resolved through the appeal process.

STANDARD OF REVIEW

In Matter of D.H. and F.H. (1994), 264 Mont. 521, _, 872 P.2d 803, 805, this Court clarified the standard of review to be used in cases involving a youth in need of care and the termination of parental rights. We concluded that the appropriate standard to be applied to purely factual findings in a proceeding to terminate parental rights is the clearly erroneous standard as set forth in Interstate Production Credit Association v. DeSaye (1991), 250 Mont. 320, 323, 820 P.2d 1285, 1287. Conclusions of law in a termination proceeding will be reviewed to determine if those conclusions are correct. Matter of D.H. and F.H., 872 P.2d at 805.

ISSUE 1

Did the Thompsons file a timely notice of appeal?

The DFS contends that the court’s denial of the Thompsons’ petition for custody should be affirmed because the Thompsons failed to file a timely notice of appeal. The DFS claims that the court’s denial of the Thompsons’ petition was mailed to all parties on August 25, 1993, and, pursuant to Rules 5(a)(1) and 21(c), M.R.App.R, the Thompsons’ opportunity to appeal expired on October 28, 1993. The DFS notes that the Thompsons did not file their notice ol appeal until November 26, 1993. !

We disagree with the contention that the Thompsons did not appeal in a timely manner. The record reveals that on September 3, 1993, the Thompsons filed an objection and motion to amend the court’s August 25, 1993, order pursuant to Rules 52(b) and 59(g), M.R.Civ.P. This motion was deemed denied 45 days later after the court failed to rule on the motion. Rule 59(d), M.R.Civ.P. Rule 5(a)(4), M.R.App.P., provides that when a motion is made to alter or amend a judgment pursuant to Rules 52 or 59, M.R.Civ.P, the time for filing a notice of appeal runs from the entry of an order in which the motion is denied, or from the time the motion is deemed denied at the expiration of the 45-day period. ■

Here, the time for appeal did not start until the Thompsons’motion was deemed denied in mid-October. The notice of appeal, filed on November 26,1993, was well within the 60-day time period provided for in Rule 5, M.R.App.P.

ISSUE 12

Did the District Court err when it denied the Thompsons’ motion for medical and psychological evaluations of J.J.G.?

The Thompsons contend the court erred when it concluded that it was without authority to order a medical and psychological evaluation of J.J.G. The Thompsons assert that sufficient evidence was presented to the court to demonstrate the need for such evaluations prior to the termination proceedings, but that the court refused to order evaluations based on its erroneous conclusion that it was without authority to do so.

Section 41-3-609(3), MCA, provides as follows:

[I]n terminating the parent-child relationship, the court shall give primary consideration to the physical, mental, and emotional conditions and the needs of the child. The court shall review and, if necessary, order an evaluation of the child’s or the parent’s physical, mental, and emotional conditions.

Furthermore, when a petition for termination is filed pursuant to § 41-3-607(1), MCA, “[t]ermination of a parent-child legal relationship shall be considered at a dispositional hearing held pursuant to 41-3-406 ...” Section 41-3-406(1), MCA, which sets forth the dispositions a court may make to protect the welfare of a youth in need of care, clearly states that a court may:

(d) order any party to the action to do what is necessary to give effect to the final disposition, including undertaking medical and psychological evaluations, treatment, and counseling ....

(Emphasis added.)

We disagree with the court’s conclusion that it was without authority to order medical and psychological evaluations of J.J.G. by the DEAP professionals in Montana who had previously evaluated him. The relevant statutes clearly provide the court with the discretionary authority to order such evaluations.

In its responsive brief, the DFS acknowledges that it is within a court’s discretion whether or not to order specific evaluations of a child prior to a termination proceeding. However, the DFS urges this Court to affirm the District Court’s refusal to order an evaluation on the basis that there was substantial evidence to support the court’s decision to terminate parental rights without additional evaluations of J.J.G.

After reviewing the record and considering the evidence, however, we conclude otherwise. The court clearly stated that it believed an evaluation of J.J.G. was warranted and there is sufficient evidence in the record to support the court’s finding in this regard. Contrary to the DFS’s contention, the court’s refusal to order an evaluation was not a discretionary decision based on its review of the evidence. Rather, as is demonstrated in the record, the court’s decision was based on its erroneous conclusion of law.

The record reveals that evidence gathered by the guardian ad litem and reviewed by the DEAP professionals raised questions about the adequacy of care J.J.G. received after he was transferred to Washington. Also, the allegations contained in various reports or affidavits raised the question of whether J.J.G. suffered from abuse or neglect or from post-traumatic stress, depression, or other “flat affect” disorder. The court was presented with extensive testimony to the effect that the DEAP, which had conducted regular testing and evaluations of J.J.G. since his infancy, would be in the best position to evaluate J.J.G. and to make a comparative analysis of his condition since leaving the Thompsons’ care.

We have made clear that, in a termination proceeding, the rights of the child must be given paramount consideration and must take precedence over the parental rights. In the Matter of S.C. (1994), 264 Mont. 24, _, 869 P.2d 266, 270. Here, we conclude that the evidence supports the District Court’s expressed finding that an immediate evaluation of J.J.G. by the DEAP was in the child’s best interest.

We conclude that the District Court erred when it denied the Thompsons’ motion. For this reason, and others discussed below, this matter is remanded to the District Court for the purpose of ordering a mental and psychological evaluation to be done by appropriate professionals designated by the court prior to a new dispositional hearing.

ISSUE 3

Did the District Court err by stating its intention to award permanent legal custody of J.J.G. to the DFS prior to the dispositional hearing?

The Thompsons next contend that the court erred when it stated, on several occasions prior to the dispositional hearing, its intention to award the DFS permanent custody of J.J.G. upon termination of parental rights. The Thompsons cite Matter of M.L.H. (1986), 220 Mont. 288, 715 P.2d 32, as authority for the proposition that it is reversible error for a court to state its intention regarding an award of custody prior to the time that testimony is presented at the dispositional hearing.

We agree. As we stated in Matter of M.L.H., 715 P.2d at 36, the mandate of § 41-3-406, MCA, is clear:

A district court may make a dispositional order only after a dispositional hearing. We have cautioned previously that “[t]o insure that the minors involved received the full protection of [custody] laws, these procedures Should be ‘rigorously followed.’ ” In the Matter of Guardianship of Aschenbrenner (1979), 182 Mont. 540, 553, 597 P.2d 1156, 1164. Here, the record indicates the District Court stated its intention to transfer custody to the State three times, and before the parties had the opportunity to present any evidence at the dispositional hearing. This is error and we reverse.

In this instance, the District Court stated its intention to transfer permanent custody of J.J.G. to the DFS several times prior to the time that evidence was considered at the dispositional hearing. In its August 25, 1993, memorandum and order, the court stated that, should parental rights be terminated in this matter, “this Court must grant DFS, as Petitioner, the permanent custody with the right to consent to adoption.” Also, at the dispositional hearing, prior to the time that the Thompsons were allowed to submit evidence alleging that the DFS committed abuse and neglect by transferring J.J.G. to Washington, the court again announced that custody would be awarded to the DFS.

The record demonstrates that the court believed its only option upon terminating rights was to award custody to the DFS. Although this interpretation of the law may have prompted the court to make these statements regarding custody, this does not negate the error. Regardless of the court’s rationale, the result is the same: the evidence adduced at the dispositional hearing was essentially disregarded by the court and the hearing itself was a mere formality. As we held in Matter of M.L.H., this constitutes error and we reverse.

ISSUE 4

Did the District Court err when it dismissed the Thompsons’ petition for permanent legal custody of J.J.G. and awarded the DFS permanent legal custody of J.J.G. with the right to consent to his adoption?

The Thompsons contend that the District Court erred when it awarded the DFS permanent legal custody of J.J.G. in view of the evidence of abuse or neglect while J.J.G. was in the custody of the DFS and had been placed by the DFS with the Schollers in Washington. Furthermore, the Thompsons contend the court erred when it concluded that the Legislature made the DFS the exclusive party to whom custody could be given and denied them the right to seek custody of J.J.G. at the dispositional hearing.

A review of the record discloses several legal grounds which the District Court set forth as a basis for granting the DFS permanent legal custody to the exclusion of all other interested parties. In its August 25, 1993, order the court dismissed the Thompsons’ petition and ruled that only the DFS could have custody because it alone has the authority to petition for termination of parental rights pursuant to § 41-3-607, MCA, and to file abuse, neglect, and dependency petitions pursuant to § 41-3-401, MCA. During the dispositional hearing, the court reiterated its belief that the Legislature took away the court’s authority to award permanent custody to anyone other than the DFS and that it was constrained by this legislative mandate. Finally, in its order of September 16, 1993, the court concluded that the DFS was the proper party with which to vest custody of J.J.G. because it is the agency which has the authority to make a permanent placement plan pursuant to § 41-3-610, MCA, and has the authority to place him for adoption pursuant to § 40-8-108, MCA.

The DFS, relying on the language of § 40-8-108, MCA, which states that a child may be placed for adoption only by the DFS, a licensed child-placing agency, or the child’s parents, asserts that the court’s legal conclusions were correct and that the Thompsons could not have received permanent custody of J.J.G. with the right to consent to his adoption.

The Thompsons’ petition in which they sought permanent legal custody of J.J.G. was filed pursuant to § 41-3-406(l)(c)(iii), MCA, which allows a court, in order to protect the welfare of the child, to transfer legal custody of a youth in need of care, following a dispositional hearing, to an “individual who, after study by a social service agency designated by the court, is found by the court to be qualified to receive and care for the youth.” In their petition, the Thompsons requested the court to grant them the “care, custody and control” of J.J.G. after termination of parental rights, and to deny the DFS’s request for legal custody with the consent to adoption based on allegations that the DFS failed to properly provide for the best interests of J.J.G. when they placed him in out-of-state foster care.

After considering the pertinent statutes and reviewing the various petitions filed by the parties, we conclude that the court erred when it concluded that the Thompsons were without legal authority to seek custody of J.J.G. and that it had no option other than to grant custody to the DFS.

Upon the filing of a petition for termination of parental rights, § 41-3-607(1), MCA, mandates that such a petition “shall be considered at a dispositional hearing held pursuant to 41-3-406.” As set forth above, § 41-3-406, MCA, allows the court to transfer legal custody of a youth to several parties: the DFS, a child-placing agency, or an individual who, after study by a social service agency, is found to be qualified to receive and care for the youth.

This Court has made clear that a district court has discretionary authority to transfer legal custody to any qualified individual, including a non-relative, in order to protect the welfare of the youth. Matter of S.P. (1990), 241 Mont. 190, 786 P.2d 642. The paramount consideration in a court’s exercise of this discretionary authority is the best interests of the youth. Matter of S.P. 786 P.2d at 648; Matter of M.N. (1982), 199 Mont. 407, 410, 649 P.2d 749, 751. In order for an individual to obtain permanent legal custody under this provision, it is not necessary for that individual to have the authority to consent to adoption or to seek termination of parental rights.

Pursuant to § 41-3-406(l)(c)(iii), MCA, we conclude that the Thompsons were entitled to seek legal custody of J.J.G. and the court, if it determined it was in J.J.G.’s best interests, could award permanent legal custody to the Thompsons.

We note that at one point during the proceedings the court discussed the alternatives set forth in this provision, but indicated that awarding custody to the Thompsons was really not an option because the DFS would most likely find the Thompsons not qualified to care for J.J.G. due to the ongoing dispute between the Thompsons and the DFS. However, under this provision, it is the court which has the authority to determine if an individual is qualified to care for a youth after the individual is studied by “a social service” agency designated by the court. Contrary to the court’s apparent conclusion that it would be up to the DFS to determine if the Thompsons are qualified, the statute does not restrict the court to designate the DFS as the social service agency to evaluate the qualifications of an individual seeking custody.

In response to the DFS’s argument that the Thompsons, even if they were granted legal custody, could not consent to J.J.G.’s adoption, we note that the Thompsons did not seek this authority. The Thompsons requested permanent legal custody of J.J.G. and petitioned the court to deny the DFS’s request for custody with the right to consent to adoption. Furthermore, under § 40-8-lll(l)(d), MCA, once parental rights have been judicially terminated, any person having legal custody by court order qualifies for a consent to adopt by decree if the court having jurisdiction of the custody of the child also consents to adoption. Therefore, the fact that the Thompsons could not “place” J.J.G. for adoption under § 40-8-108, MCA, is not relevant to the question of whether the Thompsons have the right to seek permanent legal custody of J.J.G.

We conclude, based on the court’s erroneous interpretation of the law, that the court erred when it dismissed the Thompsons’ petition and granted permanent legal custody to the DFS. Because we are reversing on a question of law, we need not rule on the merits of whether the court’s grant of custody to the DFS was in J.J.G.’s best interests and was supported by substantial evidence.

The District Court’s order in which the DFS was awarded permanent legal custody is vacated and we remand for a new hearing to determine, based on J.J.G.’s best interests and a consideration of all relevant evidence, an award of permanent legal custody to any qualified agency or individual.

The District Court’s order is reversed and vacated. The court is instructed to order a mental and psychological evaluation of J.J.G. by appropriate professionals designated by the court prior to a new dispositional hearing at which the Thompsons are entitled to seek permanent legal custody of J.J.G.

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


author: JUSTICE GRAY

text:
    MICHAEL S. BOHMER, Petitioner and Appellant, v. UNINSURED EMPLOYERS’ FUND, Respondent/Insurer for RAY LYBECK, individually, and LYBECK’S DAIRY, a/k/a LYBECK FARM, Uninsured Employer and Respondent.
    No. 94-062.
    Submitted on Briefs May 12, 1994.
    Decided September 2, 1994.
    51 St.Rep. 824.
    266 Mont. 289.
    880 P.2d 816.

      For Appellant: Laurie Wallace; Bothe & Lauridsen, Columbia Falls.
    For Respondent: Richard DeJana, Attorney at Law, Kalispell.
   JUSTICE GRAY

delivered the Opinion of the Court.

Michael Bohmer (Bohmer) appeals from an order of the Workers’ Compensation Court dismissing for lack of jurisdiction his petition for determination of the extent of his injuries and calculation of the compensation to which he is entitled. We affirm.

Bohmer was injured in February, 1992, while employed by Lybeck’s Dairy (Lybeck’s). Lybeck’s was not covered by workers’ compensation insurance at the time of the injury.

Bohmer subsequently filed an independent cause of action in the Eleventh Judicial District Court, Flathead County, pursuant — insofar as is relevant here — to § 39-71-515, MCA, which provides for an action against an employer not enrolled in a workers’ compensation plan as required by law. In an amended order dated November 18, 1993, the District Court stayed its proceedings pending a determination by the Workers’ Compensation Court of the extent of Bohmer’s injuries and calculation of damages to which he would be entitled under § 39-71-515, MCA, or, in the alternative, that it did not have jurisdiction to act in the case.

Bohmer then petitioned the Workers’ Compensation Court for a hearing. Lybeck’s moved to dismiss the petition, asserting lack of jurisdiction in the Workers’ Compensation Court. The court granted the motion to dismiss and Bohmer appeals.

The issue before us is whether the Workers’ Compensation Court had jurisdiction to determine the compensation to which an employee is entitled from an uninsured employer pursuant to § 39-71-515(4), MCA. The court concluded that it did not. It reasoned that it did have jurisdiction over the action pursuant to § 39-71-2905, MCA, but that the District Court acquired jurisdiction first under § 39-71-516, MCA, and, therefore, retained jurisdiction to dispose of the entire áction.

The resolution of this issue hinges on the appropriate interpretation of §§ 39-71-2905 and 39-71-516, MCA. “[Wjhen several statutes may apply to a given situation, the construction adopted should be one which will harmonize the several statutes and, if possible, give effect to all.” Section 1-2-101, MCA; Montana Power Co. v. Fondren (1987), 226 Mont. 500, 506, 737 P.2d 1138, 1141. We review legal conclusions of the Workers’ Compensation Court to determine whether they are correct. Lund v. State Compensation Mut. Ins. Fund (1994), 263 Mont. 346, 348, 868 P.2d 611, 612.

While we disagree with the court’s interpretation of § 39-71-2905, MCA, insofar as it relates to § 39-71-516, MCA, we conclude that the court’s ultimate decision that it did not have jurisdiction is correct. We will affirm a court’s correct result regardless of its reasoning. Higham v. City of Red Lodge (1991), 247 Mont. 400, 402, 807 P.2d 195, 196.

Prior to 1985, the Workers’ Compensation Court’s statutory grant of jurisdiction gave it “exclusive jurisdiction to make determinations concerning disputes under chapter 71 [Montana’s Workers’ Compensation Act].” Section 39-71-2905, MCA (1983). In 1985, the Montana legislature passed House Bill 529. Section 6 of the bill — later codified as § 39-71-515, MCA — established “an independent cause of action [by an injured employee] against an uninsured employer for failure to be enrolled in a compensation plan as required by [chapter 71];” damages recoverable in the action are the amounts the employee would have received if the employer had been properly enrolled in a compensation plan. Chap. 601, 1985 Mont. Laws 1258. Section 7 of House Bill 529 — codified as § 39-71-516, MCA — provided for district court jurisdiction over the new cause of action by requiring that an employee “pursuing an independent cause of action pursuant to [39-71-515] must bring such action in the district court ....” Chap. 601, 1985 Mont. Laws 1258. Finally, Section 11 of House Bill 529 amended the Workers’ Compensation Court’s jurisdictional grant to read as follows:

39-71-2905 ... The workers’ compensation judge has exclusive jurisdiction to make determinations concerning disputes under chapter 71, except as provided in [39-71-516],

Chap. 601, 1985 Mont. Laws 1259 (emphasis added).

As stated above, a proper interpretation must give effect to both § 39-71-516, MCA, as enacted, and § 39-71-2905, MCA, as amended. The legislature first created the.§ 39-71-515, MCA, cause of action and then clearly and unequivocally vested jurisdiction over the action in the district courts. It finished by amending the Workers’ Compensation Court’s statutory jurisdictional grant to provide an exception for a cause of action filed in district court pursuant to § 39-71-516, MCA. The interpretation which harmonizes and gives effect to both § 39-71-516, MCA, and § 39-71-2905, MCA, is that, via these actions, the legislature intended to prevent the Workers’ Compensation Court from exercising jurisdiction over the new cause of action over which it specifically vested jurisdiction in the district courts. We conclude, therefore, that the exception contained in § 39-71-2905, MCA, excludes § 39-71-515, MCA, causes of action from the Workers’ Compensation Court’s jurisdiction.

The Workers’ Compensation Court’s interpretation of the two statutes does not give sufficient effect to the statutory requirement that an employee file a § 39-71-515, MCA, cause of action in the district court. Interpreting the exception in § 39-71-2905, MCA, as modifying the “exclusive” nature of the Workers’ Compensation Court’s jurisdiction results in shared, or concurrent, jurisdiction over § 39-71-515, MCA, actions in that court and district courts. Such an interpretation is inconsistent with the legislature’s clear grant of jurisdiction to district courts in § 39-71-516, MCA.

Bohmer’s argument that the jurisdiction vested in the district courts pursuant to § 39-71-516, MCA, is confined to the liability issues raised in § 39-71-515(2), MCA, is not persuasive. Such an interpretation would limit the District Court’s jurisdiction to questions relating to Lybeck’s failure to enroll in a compensation plan and would exclude the damages issue which is an integral element of the cause of action. Our function in interpreting statutes is to “ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted or to omit what has been inserted.” Section 1-2-101, MCA. Given the legislature’s clear intent to require the filing of § 39-71-515, MCA, actions in the district courts, we decline to insert a limitation into the statute where none exists.

We conclude that the Workers’ Compensation Court correctly determined that it lacked jurisdiction to calculate the extent of Bohmer’s injuries and the amount of compensation to which he was entitled. We hold, therefore, that the Workers’ Compensation Court did not err by dismissing Bohmer’s petition.

Bohmer makes an additional argument concerning whether the District Court should have determined Bohmer’s recoverable damages as a matter of law if it retained jurisdiction in the case. We decline to address this argument relating to proceedings which are not before us on appeal.

As a final matter, Lybeck’s requests the imposition of sanctions against Bohmer for arguing matters not properly before us and distorting and adding to the record. Sanctions on appeal, in the form of damages, are appropriate if this Court “is satisfied from the record and the presentation of the appeal... that the same was taken without substantial or reasonable grounds ....” Rule 32, M.R.App.P. After reviewing the record before us, we cannot conclude that Bohmer’s appeal was without reasonable grounds. We conclude that sanctions are not warranted.

Affirmed.

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