author: JUSTICE HUNT

text:
    THE AWARENESS GROUP, an Association of Concerned Citizens of Park County, and K. A. Friedly, its Chairman, Plaintiffs and Appellants, v. BOARD OF TRUSTEES OF SCHOOL DISTRICT NO. 4, a School District existing in Park County duly organized under the Laws of the State of Montana, Defendant and Respondent.
    No. 90-004.
    Submitted on Briefs April 26, 1990.
    Decided July 12, 1990.
    795 P.2d 447.

      Robert Kolesar, Bozeman, for plaintiffs and appellants.
    Sol Lovas and Laurence R. Martin, of Felt, Martin, Frazier & Lovas, Billings, for defendant and respondent.
   JUSTICE HUNT

delivered the Opinion of the Court.

Appellant Awareness Group appeals from the order of the District Court, Sixth Judicial District, Park County, dismissing appellant’s petitions for preliminary injunction, writ of prohibition and writ of mandamus. We affirm.

The issues on appeal are:

1) Whether the appellant has standing to sue under § 27-19 104, MCA.

2) Whether the District Court erred in dismissing appellant’s applications for preliminary injunction, writ of prohibition, and writ of mandate on the basis of mootness because the remedy requested, that an election be held before respondent purchased certain land, could no longer be granted since the land had already been purchased.

3) Whether the District Court erred in denying appellant’s applications for preliminary injunction, writ of prohibition, and writ of mandate which requested that respondent be enjoined from spending the fire insurance monies on the development of the purchased land without first getting approval from the voters.

4) Whether the findings of the District Court are clearly erroneous.

Prior to 1965, Park County High School was located in Livingston, Montana, at 5th and Callender. In 1959, William C. McLeod transferred real property to “Park County High School District No. 1.” This real property consisted of land located in Livingston known as the McLeod Island site.

In 1965, Park County High School was unified with School District No. 4 of Park County, which assumed the operation of the high school. Subsequently, School District No. 4 decided to build a new high school on the McLeod Island site. The Board of Trustees of School District No. 4, acting as the “Board of Trustees of High School District No. 1”, submitted to the voters a bond issue to finance this new high school. The bond issue was approved.

After the new high school was built, the old Park County High School was converted into the Livingston Middle School.

In 1971, the school laws of Montana were recodified. As a result, the elementary and high school districts were separated into two legal entities consisting of Elementary School District No. 4 (School Board) and High School District No. 1. The members of the two school boards were the same except that the high school board had two additional trustees representing a geographical area beyond that of the School Board. These additional trustees were to vote with the School Board trustees on high school matters.

In 1985, the Livingston Middle School burned down. In 1987, the School Board proposed using the fire insurance proceeds to build a new middle school as an annex to the new high school located on the McLeod Island site. Site approval of the plan was submitted to the voters and was narrowly approved. The School Board subsequently decided to abandon the plan to build the middle school as an annex to the high school.

The School Board then proposed purchasing land owned by Edward Boehm and John C. Sheehy located directly across the county road from the Livingston High School, to build a kindergarten through eighth grade school. The building of this new school would have cost in excess of the available insurance proceeds from the fire and so, in February of 1989, the School Board held a bond issue election to provide for these additional funds. This bond issue was defeated.

The School Board then proposed building just a middle school on the Boehm-Sheehy land. This proposal was approved by the trustees and Buy-Sell Agreements with Boehm and Sheehy were executed on April 4, 1989.

On May 26, 1989, appellant filed a complaint alleging that respondent, Board of Trustees of School District No. 4, (School Board), had violated appellant’s civil right to vote by failing to hold an election on the purchase of a building site for a new middle school and subsequent construction as required by § 20-6-603 and -621, MCA. Additionally, appellant presented applications for a temporary restraining order and a preliminary injunction. Both applications requested the District Court to restrain the respondent from purchasing the Boehm-Sheehy land. The request for a temporary restraining order was denied on May 26, 1989.

On May 31, 1989, before respondent had filed an answer, appellant filed an amended complaint. Appellant also filed an application for a writ of prohibition requesting the court to enjoin respondent from purchasing the Boehm-Sheehy land because such a purchase, without an election, was outside respondent’s authority. The applications for preliminary injunction and writ of prohibition were supplemented on July 13, 1989. A show cause hearing was set for July 24, 1989.

Prior to the hearing, respondent closed the purchase on the properties: The Boehm land on June 2, 1989, and the Sheehy land on June 19, 1989.

The show cause hearing regarding the preliminary injunction and the writ of prohibition began on July 25, 1989, and was continued to and concluded on August 8, 1989. At the hearing, appellant also presented an application for a writ of mandamus requesting the court to compel the respondent to perform its statutory duty to hold an election to approve school site selection and building costs.

The District Court denied appellant any relief and entered its Finding of Facts and Conclusions of Law and subsequent order. Appellant appeals that order.

The first issue is whether appellant has standing to sue under § 27-19-104, MCA.

Section 27-19-104, MCA, discusses the standing of ‘a citizen’ [sic] group or other public interest association’ ’ to sue for injunctive relief when the individual members of the group allege in the complaint that an injury has occurred to their property or civil rights. Section 27-19-104, MCA, states that:

“Whenever an action for injunctive relief is initiated by a citizens’ [sic] group or other public interest association and it appears by the complaint that there is an injury to a property or civil right of individual members of the association, which injury is distinguishable from an injury to the public generally, the names and addresses of injured members and a statement of injury shall be provided in the complaint. An injunction may not be granted unless such information is provided in the complaint. ’ ’

In this case, appellant has standing to sue under the statute. Appellant has alleged that respondent has violated its civil right to vote by denying its individual members their right to vote. Therefore, as is required by § 27-19-104, MCA, in order to obtain injunctive relief, appellant must include the following within the complaint: (1) Some indication that the injury to its individual members is different than that of the general public and, (2) the names and addresses of those members who have been uniquely inured. Respondent alleges that appellant has failed to comply with these requirements.

The right to vote is an individual constitutional right. Wesberry v. Sanders, 376 U.S. 1, 84 S.Ct. 526, 11 L.Ed.2d 481 (1964). Although appellant is trying to get the issues of site and construction approval for the Livingston middle school on the general voting ballot, if respondent is statutorily required to submit these issues to the voters, failure to do so significantly effects the constitutionally protected right to vote of each individual member of appellant organization. As this Court has held in the application of § 27-19-104, MCA, when the “alleged injury [is] coextensive with the injury of the public generally,” standing is appropriate. Montana Wildlife Federation v. Sager, 190 Mont. 247, 255, 620 P.2d 1189, 1194 (1980). Although the general public right to vote is coextensive with that of appellant, appellant has standing to sue because the individual members have standing to sue based upon their individual right to vote.

Appellant is not required to provide the names, addresses and a statement c'’ the respective injuries of the individual members of appellant organization if “[n]o damages for individual injuries are sought in the complaint.” Sager, 620 P.2d at 1194. Because appellant has not asked for damages but only that the issues of site and construction approval for the Livingston middle school be submitted to the voters, appellant has complied with the statutory requirements of § 27-19-104, MCA, and, therefore, has standing to sue.

The second issue is whether the District Court erred in dismissing appellant’s applications for preliminary injunction, writ of prohibition and writ of mandate on the basis of mootness because the remedy requested, that an election be held before respondent purchased certain land, could no longer be granted since the land had already been purchased.

The District Court properly dismissed appellant’s initial applications for preliminary injunction and writ of prohibition, filed on May 26, 1989, and May 31, 1989, respectively, on the basis of mootness because the relief requested could not be granted. A portion of appellant’s application for writ of mandate, filed on August 8, 1989, was also properly dismissed on the basis of mootness. All applications requested that respondent be prevented from purchasing the Boehm-Sheehy land without submitting such purchase to the voters. At the time of hearing on July 25,1989, the land had already been purchased.

The central issue in resolving a mootness question is whether “a change in the circumstances that prevailed at the beginning of litigation has forestalled the prospect for meaningful relief.” Zoning Board of Adjustment v. Devilbiss, 729 P.2d 353, 356 (Colo. 1986). See generally Billings Assoc. v. State Board of Plumbers, 184 Mont. 249, 602 P.2d 597 (1979); Dutton v. Rocky Mountain Phosphate, Inc., 152 Mont. 352, 450 P.2d 672 (1969). If there can be no meaningful relief, the issue before the court is moot. Since meaningful relief is determinable by a particular set of facts, a finding of mootness can only occur on a case-by-case basis.

Generally, the purpose of a preliminary injunction and a writ of prohibition is to direct a party to refrain from performing certain activities until further order of the court. Sections 27-19-101 and 27-27-103, MCA. More specifically, the purpose of an preliminary injunction is to “requirfe] a person to refrain from a particular act” until further action by the court. Section 27-19-101, MCA. The purpose of a writ of prohibition is to direct “and command [a] party [who is without jurisdiction or has exceeded its jurisdictional authority] to desist or refrain from further proceedings ... until further order of the court.” Section 27-27-103, MCA. See also § 27-27-101, MCA.

In this case, in its applications for preliminary injunction and writ of prohibition, appellant specifically asked that respondent be enjoined from purchasing the Boehm-Sheehy land. This land had been purchased prior to the show cause hearing on the applications. The court could not order respondent to refrain from an act that has already occurred. Billings Assoc. Plumbers, 184 Mont, at 254, 602 P.2d at 600. Therefore, no meaningful relief to appellant’s applications for preliminary injunction or writ of prohibition could be granted at the time of the show cause hearing.

A writ of mandate is the “counterpart” to the writ of prohibition. Section 27-27-101, MCA. See generally § 27-26-101, MCA. Since the purpose of a writ of prohibition is to refrain activity, the purpose of a writ of mandate is to compel activity. Section 27-26-102, MCA. More specifically, a writ of mandate “compel[s] the performance of an act which the law specially enjoins as a duty ... or ... compel[s] the admission of a party to the use and enjoyment of a right or office to which he is entitled and from which he is unlawfully precluded ...” Section 27-26-102, MCA.

Appellant requested the District Court to compel the respondent to seek approval of the purchase of the Boehm-Sheehy land from the voters of School District No. 4 through an election. Since the land had already been purchased, the District Court properly concluded, when it dismissed the applications, that approval of the purchase by the voters would be meaningless.

The third issue on appeal is whether the District Court erred in denying appellant’s applications for preliminary injunction, writ of prohibition, and writ of mandate which requested that respondent be enjoined from spending the fire insurance monies on the development of the purchased land without first getting approval from the voters.

Appellant’s applications and complaint for relief focus upon the argument that, based upon § 20-6-603, -621, MCA and § 20-9 508, MCA, respondent lacked the authority to construct a new middle school without first getting approval from the voters. We find that substantial, credible evidence exists to support the District Court’s conclusion that respondent has the authority to proceed with construction.

Section 20-6-603, MCA, grants school board trustees the authority to “acquire or dispose of [school] sites and buildings.” Generally, such action cannot be taken by the trustees “without the approval of the qualified electors of the district ...” Section 20-6-603, MCA. Exceptions exist to the this approval requirement. See § 20-6-603, MCA.

The relevant exception to the approval requirement states that if “the cost of constructing, purchasing, or acquiring the site or building is financed without exceeding the maximum-general-fund-budget-without-a-vote amount ...” an election is not required. Section 20-6-603(l)(c), MCA. The District Court correctly found that the construction of the middle school could be financed without exceeding the maximum-general-fund-budget-without-a-vote amount. These monies would come from the insurance proceeds acquired after the old middle school at 5th and Callender burned down.

Insurance proceeds can be used to credit the building fund of a school district. Section 20-9-508(l)(d), MCA. Section 20-9 508(l)(d), MCA, states:

“(1) The trustees of any district shall establish or credit the building fund whenever such district: ... (d) receives money as an insurance settlement for the destruction of any property or portion of property insured by the district ...”

Appellant argues that, even if there are sufficient insurance proceeds to finance construction, respondent is still required to hold a site approval election. We disagree. Section 20-6-621(1), MCA, generally requires that the “trustees of any district shall have the authority to select the sites for school buildings [and] such selection shall first be approved by the qualified electors of the district before any contract for the purchase of such site is entered into ....” Section 20-6-621, MCA, also contains an exception that is applicable to this case. This exception states that a site approval election is not required if the trustees “acquire property contiguous to an existing site that is in use for school purposes.” Section 20-6-621(1), MCA.

Respondent argues that the Boehm-Sheehy land is contiguous to the McLeod Island site. We agree. Although the only Montana case dealing with this issue held that “where two tracts of land corner with each other ... they are contiguous,” if the land involved would touch but for a public road, such land is also contiguous. Oregon Mtg. Co., Ltd. v. Dunbar et al., 87 Mont. 603 , 607, 289 P. 559, 560 (1930). Other states have held that a contiguous piece of land is one that either substantially touches the second piece of land or would substantially touch the second piece of land but for a public road. In the case of Town of Lyons v. City of Lake Geneva, 56 Wis.2d 331, 202 N.W.2d 228 (Wis. 1973), in holding that a gap of 23 feet caused by a public road was close enough to the city limits to be contiguous, the Wisconsin court defined contiguous as “[i]n close proximity; near, though not in contact; neighboring...” Similarly, the Nebraska court has held that “two tracts separated only by a public highway are contiguous ...” In re Thomas’ Estate, 178 Neb. 578, 134 N.W.2d 237 (1965).

The Boehm-Sheehy land, designated by Defendant’s Exhibit E as “Tract 1”, is located directly across the county road from the McLeod Island site, designated as the “High School Tract.” But for this road, the Boehm-Sheehy land and the McLeod Island site would touch for a distance of more than eight hundred feet. Under these set of facts we hold that the land is contiguous within the meaning of § 20-6-621(1), MCA.

The acquired land must also be “contiguous to an existing site that is in use for school purposes. ” Section 20-6-621(1), MCA. The building in which both the Livingston High School and the Livingston Elementary School are presently operating is located on the McLeod Island site and is “an existing site that is in use for school purposes.” Section 20-6-621(1), MCA.

Appellant argues that this exception only applies if the acquired land and the existing site are both owned by the same school district. Appellant argues that the existing site of McLeod Island is owned by High School District No. 1, therefore respondent should be unable to acquire the Boehm-Sheehy land without a site approval election. We disagree with appellant’s statutory interpretation.

Section 20-6-621(1), MCA, simply recognizes that obtaining additional land immediately adjacent, or contiguous, to sites previously approved by district electors is not necessary. The intent of this statute is obviously to promote the building of schools within the same general area of a city thereby easing both transportation within the remainder of the city and school administrative procedures. Title 20, MCA, the school code of which § 20-6-621(1), MCA, is a part, gives great attention to distinguishing between elementary and high school districts. Therefore, if the legislature had intended that contiguous sites be contiguous to the same district’s previously owned sites, it would have said so. Since the McLeod Island site was previously approved by the voters and the Boehm-Sheehy land is contiguous to such site, it is unnecessary for the voters to subsequently approve an adjacent site.

Appellant’s applications for preliminary injunction and writ of prohibition are premised upon a finding that respondent lacked authority to purchase the Boehm-Sheehy land and to construct a middle school thereon without direct approval from the electors. Based upon the above discussion, we conclude that respondent did have authority to purchase the land and does have authority to construct a middle school thereon. The District Court’s dismissal of appellant’s applications for preliminary injunction and writ of prohibition was proper.

Likewise, appellant’s application for writ of mandate was premised upon a finding that the law imposes a duty upon respondent to submit the purchase of the Boehm-Sheehy land and the construction of the middle school to the voters for approval. Again, based upon the above discussion, we conclude that such a duty does not exist. Therefore, the District Court’s dismissal of appellant’s application for writ of mandate was proper.

The fourth issue raised by appellant is whether certain District Court’s findings are clearly erroneous. The findings appellant protests are irrelevant to the ultimate decision of this Court and, therefore, will not be discussed.

Affirmed.

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


source: Caselaw Access Project

author: JUSTICE SHEEHY

license: Public Domain

text:
    GREG PONCELET, d/b/a Montana Ready Mix, Plaintiff and Appellant, v. SHARON A. ENGLISH; Whitecap International, Inc., Colonial Savings and Loan Associaton, and First American Title and Escrow of Polson, Defendants and Respondents.
    No. 90-040.
    Submitted May 3, 1990.
    Decided July 12, 1990.
    Rehearing Denied Aug. 21, 1990.
    795 P.2d 436.

      Richard J. Andriolo, Berg, Lilly, Stokes, Andriolo, Bozeman, for plaintiff and appellant.
    Marshall Murray, Murray, Kaufman, Vidal & Gordon, P.C., Kalispell, for defendants and respondents.
   JUSTICE SHEEHY

delivered the Opinion of the Court.

Appellant Greg Poncelet appeals from the determination of the District Court, Twentieth Judicial District, Lake County, granting summary judgment to Colonial Savings and Loan Association as to lien priority. We affirm the District Court.

Appellant raises the following issues:

1. Whether Colonial Savings and Loan and Whitecap International had notice of the appellant’s prior recorded mortgage despite the error in its legal description.

2. Whether the District Court erred in precluding priority designation to appellant’s prior recorded mortgage.

Respondent English executed a promissory note to appellant Poncelet, secured by a mortgage on real property in Poison, Lake County. The note and mortgage were recorded on June 2, 1986. The mortgage was drafted by Poncelet without benefit of any title insurance commitment. The description read:

“Lot ‘A’ of the Amended Plat of Lots 11 and 12 in Block 6, City of Poison, Lake County, Montana, according to the official plat thereof on file and of record in the office of the County Clerk and Recorder of Lake County, Montana.”

This legal description was in error since the appropriate description was:

“Lot ‘A’ of the Amended Plat of Lots 11 and 12 of Block 6 of Riverside Addition to the City of Poison, Lake County, Montana, according to the official plat thereof on file and of record in the office of the County Clerk and Recorder of Lake County, Montana.” (Emphasis added.)

On November 28, 1986, English executed and delivered a trust indenture to First American Title and Escrow of Poison as the trustee, and Whitecap International, Inc. as the beneficiary, to secure the payment of a loan of $79,926. The trust indenture was recorded on December 4, 1986, and later assigned to Colonial Savings and Loan Association.

Whitecap required the English loan to be secured by a mortgage on English’s real property in Poison. Whitecap had First American examine the title to the real property. The record discloses that First American was aware of an existing mortgage on property belonging to English. Despite that knowledge, First American made no follow-up inquiries regarding the English-Poncelet mortgage. There is no dispute that a simple search of the grantor/grantee index for Lake County would have revealed the English-Poncelet mortgage and its reference number.

Poncelet initiated the foreclosure on the note and mortgage given by English on November 17, 1987. In his complaint, Poncelet sought the $32,545.05 balance on the note plus interest, a reformation by the court of the legal description to include the omitted language “of Riverside Addition,” and all proceeds from the sale of the property, plus any deficiency which might remain.

Colonial Savings and Loan, a named defendant, answered, counterclaimed and cross-claimed on February 18, 1988. Colonial, which had been assigned the Whitecap note and trust indenture, raised as a counterclaim the inferior interest of Poncelet’s mortgage due to the error in legal description, and sought a judicial declaration that it be declared null and void. In its cross claim, Colonial sought judicial foreclosure on the trust indenture, claiming English to be in default. Default for failure to answer or otherwise plead as to the Poncelet claim was entered against English on April 7, 1988. Similar default as to the Colonial cross-claim against English was entered on June 29, 1988.

The District Court ordered foreclosure on the English-Whitecap-Colonial trust indenture, reserving the question as to validity and priority of the English-Poncelet mortgage. The court also reformed the English-Poncelet mortgage to add the missing language and decreed its foreclosure as against English only.

Colonial and Poncelet thereafter submitted briefs to the District Court, and both parties moved for summary judgment. The court determined that both the English-Whitecap-Colonial trust indenture and the English-Poncelet mortgage were valid, but that the latter was invalid, null, and void in relation to the former. The court granted Colonial’s motion for summary judgment and denied Poncelet’s motion. From this judgment, Poncelet appeals.

Poncelet maintains that Colonial and Whitecap had notice of the Poncelet mortgage through First American Title and Escrow of Poison, arguing that due to First American’s actual notice of the Poncelet mortgage, Whitecap and its successor Colonial are thereby charged with notice.

The record discloses no evidence of actual notice of the Poncelet mortgage on the parts of Whitecap or Colonial. Such notice is crucial. Montana case law is clear on this point. The form of recording of conveyance is paramount unless a party has actual notice of a prior claim. Hasting v. Wise (1931), 89 Mont. 325, 297 P. 482; Angus v. Mariner (1929), 85 Mont. 365, 278 P. 996; Baker v. Bartlett (1896), 18 Mont. 446, 45 P. 1084. While this rule may have an undeniably harsh effect where Poncelet is concerned, we cannot minimize the import of full compliance with proper legal descriptions for the purpose of constructive notice from recorded instruments. It was incumbent upon Poncelet to make certain that the recorded mortgage contained an accurate legal description of the property.

In Ely v. Hoida (1924), 70 Mont. 542, 226 P. 525, a case on all fours with the one at bar, this Court stated that in order to give a mortgage priority as against a subsequent mortgagee, the mortgage must describe the land covered by it with sufficient accuracy to enable one examining the record to identify the land. In the present case, as in Ely, the mortgage described land other than the land intended to be mortgaged. The subsequent mortgagee had no duty to inquire further when the mortgage appeared on its face to describe some property but not specific property. The Court in Ely stated:

“When Bateman took her mortgage, if she desired to protect herself against prior recorded conveyances or mortgages of the property embraced therein, it was, of course, her duty to examine the records. If she did so and discovered that the Ely mortgage covered lots 17 and 18 in block 1, Lenox addition, even though she actually read this instrument she was under no obligation to pursue her inquiry further. There is nothing upon the face of the Ely mortgage to indicate that there was any mistake or imperfection therein. It contains as plain, simple, and unambiguous a description as can be imagined, and one reading it would have a right to assume that it was correct, and would have no duty imposed upon him to go beyond the record for the purpose of ascertaining that the parties intended to cover land located entirely outside the Lenox addition.”

Ely, 70 Mont. 542 at 547-548, 226 P. 525.

The Court went on to state that “when the record of the instrument appears by it[s] description to relate to a certain and definite tract of land, it is not constructive notice as to other land which it was intended to, but did not, describe.”

Clearly, neither the title company nor Whitecap or Colonial had a duty to inquire further when the Poncelet mortgage appeared to describe property outside the Riverside Addition. Rather, the risk is and should be upon the first mortgagee to use care in correctly and properly describing the property to protect against subsequent purchasers or mortgagees. The District Court correctly held the Poncelet mortgage to be inferior in priority to the Whitecap-Colonial trust indenture.

Affirmed.

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


author: JUSTICE WEBER

text:
    SAMUEL J. GRENZ, Plaintiff and Appellant v. ORION GROUP, INC., the Fire and Casualty Insurance Company of Connecticut, Don MacMillan, Edward Eberly, E. Craig Daue, and the Law Firm of Garlington, Lohn and Robinson, Defendants and Respondents.
    No. 90-149.
    Submitted on Briefs May 24, 1990.
    Decided July 12, 1990.
    Rehearing Denied Aug. 16, 1990.
    795 P.2d 444.

      Samuel J. Grenz, Whitefish, pro se.
    Sherman V. Lohn, Missoula, G. Richard Dzivi, Susan J. Rebeck, Great Falls, for defendants and respondents.
   JUSTICE WEBER

delivered the Opinion of the Court.

Samuel J. Grenz (Mr. Grenz), pro se, appeals from the dismissal of his complaint by the District Court for the Eleventh Judicial District, Flathead County. We affirm.

The sole issue before us is whether the District Court erred in dismissing Mr. Grenz’ complaint.

On August 22, 1984, Mr. Grenz was injured while working for American Stud Company in Flathead County, Montana. The employer was enrolled under Workers’ Compensation Plan II. The insurer assumed liability for the injury and paid compensation and medical benefits to and for Mr. Grenz. Mr. Grenz received temporary total disability benefits. In June of 1987, the law firm of Garlington, Lohn and Robinson (GLR) was hired by the insurer to review Mr. Grenz’ claim. Mr. Daue, a partner in GLR, assumed responsibility for the file. Mr. Daue requested that Mr. Grenz and his claim be submitted to the Northwest Medical Evaluation Panel for an evaluation of his disability. Mr. Grenz did not contest the insurer’s right to require him to submit to such an evaluation. On the basis of extensive medical, psychological, and vocational data that had been received, Mr. Daue recommended to the insurer that Mr. Grenz’ benefits could be reduced from temporary total disability to permanent partial disability. Subsequently, on August 24, 1988, Mr. Grenz’ benefits were reduced as recommended.

Subsequent to the reduction in his benefits, Mr. Grenz proceeded pro se and requested a mediation of his claim. The mediation was held and ultimately Mr. Grenz’ temporary total disability benefits were reinstated on December 15, 1988, retroactive to August 24, 1988.

In December 1988, Mr. Grenz requested a lump sum advance of more than $70,000 of his benefits, attorney fees and a statutory penalty. A hearing was held in the Workers’ Compensation Court on February 7, 1989. It determined that Mr. Grenz was entitled to a lump sum advance to pay his real estate taxes that were due and owing. However, it denied a lump sum conversion of his future compensation benefits to pay off his existing loans which were current; to pay a balloon payment due in September, 1990; to purchase a hot tub for his home; or to restore his 1964 Pontiac. The penalty issue was not addressed.

In April 1989, Mr. Grenz filed a petition in which he renewed his request for a penalty. He based his claim for a 20% penalty on four grounds: (1) that the insurer wrongfully reduced his benefits from temporary total to permanent partial during the period from August 24, 1988, to December 16, 1988; (2) that the insurer unreasonably used the Northwest Panel Medical Evaluation to justify the reduction in benefits; (3) that the insurer unreasonably delayed payment of a lump sum advance; and (4) that the insurer unreasonably delayed payment of benefits from September 12, 1988, through October 28, 1988.

The insurer moved to dismiss the petition and to stay discovery. The motion to stay was granted but the court specifically declined the motion to dismiss in an effort to provide some leniency to Mr. Grenz who was appearing pro se.

Finally, on September 7, 1989, the Workers’ Compensation Court dismissed the petition without prejudice, stating:

“[Mr. Grenz] wrote to the Court on his own behalf advising that he wished to ‘withdraw’ his petition and amended petitions relative to the issues now before the Court in this proceeding.
“Since both the insurer and [Mr. Grenz] have essentially moved the Court for dismissal of these proceedings ... the petition and amended petition in the above entitled matter are DISMISSED.”

There never was any determination by the Workers’ Compensation Court that the insurer had acted unreasonably in the reduction of benefits from total to partial and Mr. Grenz has continued to receive temporary total disability benefits. As a result, on May 2, 1990, Mr. Grenz again petitioned the Workers’ Compensation Division for an advancement of lump sum benefits based on permanent total disability calculated throughout his future work life expectancy. Mr. Grenz also alleged bad faith, entitlement to lump sum benefits and entitlement to a penalty. That petition was not yet resolved at the time of this appeal.

In September 1989, Mr. Grenz filed a pro se complaint in the District Court alleging bad faith resulting from intentional torts and abuse of the workers’ compensation system in delaying the payment of his benefits. He further alleged he was entitled to a penalty for the insurer’s wrongful refusal to pay benefits in a lump sum. The District Court accepted an amended complaint and a second amended complaint, but denied a third amended complaint. Defendants filed a motion to dismiss, contending that there is a statutory remedy which a workers’ compensation claimant must follow if he believes the workers’ compensation insurer acted unfairly. In short, defendants argued that Mr. Grenz’ claim was premature because Mr. Grenz must first file his complaint with the Workers’ Compensation Court to determine if defendants acted unfairly pursuant to § 39-71-2907, MCA, and there must be a determination prior to an action in District Court.

Agreeing, the District Court stated:

“[Mr. Grenz] is now receiving compensation benefits at the level of temporary total disability, retroactive to the date of reduction; and, his disability rating has not been finalized. There has been no determination from the Worker’s Compensation Court or any other court that the disability rating from the Northwest Panel and the subsequent (temporary) reduction in benefits was improper.
“[w]hen Plaintiff contends that the Defendants failed to pay benefits at the temporary total disability level ‘without conducting a reasonable investigation based upon all available information,’ and that they ‘neglected to attempt in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear,’ the statutory bar of § 33-18242(6)(b), MCA. is triggered. There, the legislature has seen fit to bar even the filing of a bad faith claim in the adjustment of insurance coverage until the underlying claim has been settled or a judgment entered in the claimant’s favor.”

In the absence of a determination by the Workers’ Compensation Court as to whether the disability rating and subsequent temporary reduction in benefits was improper, the District Court dismissed Mr. Grenz’ complaint. Mr. Grenz appeals the dismissal of his complaint.

Did the District Court err in dismissing Mr. Grenz’ complaint?

Relying on Vigue v. Evans Prod. Co. (1980), 187 Mont. 1, 608 P.2d 488 and Hayes v, Aetna Fire Underwriters (1980), 187 Mont. 148, 609 P.2d 257, Mr. Grenz contends that this action should not be barred from the District Court. He urges under these cases he may maintain an action against the insurer based on intentional torts because it as an independent action which does not arise out of an employment relationship.

The insurer relies on Fode v. Farmers Ins. Exch. (1986), 221 Mont. 282, 719 P.2d 414, for the proposition that a bad faith claim cannot be pursued until the resolution of the underlying claim. Mr. Daue and GLR make the same argument and also assert that Mr. Grenz has no legal authority to make a third-party claim against them, as the defense counsel of the insurer. They assert that Sec. 33-18-242(1), MCA, specifies that the independent action arises only against “an insurer”. Thus, Mr. Daue and GLR ask this Court to affirm the dismissal against them with prejudice. They contend that not only must this action await resolution in the Workers’ Compensation Court, but that § 33-18-242(1), MCA, does not create a cause of action against an insurer’s defense counsel.

A complaint should not be dismissed for failure to state a claim upon which relief may be granted unless it appears certain that the plaintiff is entitled to no relief under any set of facts which could be proved in support of his claim. Larson v. First Interstate Bank of Kalispell (Mont. 1990), [241 Mont. 350,] 786 P.2d 1176, 47 St.Rep. 344. However, as the District Court correctly pointed out, in the light of a specific statute relating to the claim, dismissal may be appropriate. See Hasbrouck v. Krsul (1975), [241 Mont. 350,] 168 Mont. 270, 541 P.2d 1197.

The District Court further stated:

“Plaintiff’s complaints all sound in bad faith in the ‘adjusting’ or handling of his claim that he is temporarily totally disabled. There is nothing in either the Worker’s Compensation Act or the Unfair Trade Practices Act barring the application of § 33-18-201, MCA. et seq. to worker’s compensation claims.”

Inferentially referring to Vique and Hayes, the District Court stated:

“The Supreme Court, in holding that an injured worker has a separate cause of action for the commission of torts occurring during the settlement of his claim, based the right on the fact that the action does not arise out of an employment situation. In this way the worker’s compensation claimant is in no different position than the injured third-party claimant in an automobile insurance case.”

The court then dismissed Mr. Grenz’ action “pending determination by the Worker’s Compensation Court whether the disability rating and subsequent temporary reduction in benefits was improper.”

Section 33-18-242, MCA, provides for an independent action by a third-party claimant against an insurer for actual damages caused by the insurer. However § 33-18-242(6)(b) states:

“A third-party claimant MAY NOT FILE an action under this section Until after the underlying claim has been settled or a judgment entered in favor of the claimant on the underlying claim. ’ ’ (Emphasis added.)

We conclude that the District Court properly dismissed Mr. Grenz’ complaint based upon the foregoing statute. As stated in Vigue and Hayes an independent action may lie after the underlying claim has been settled or a judgment entered in Mr. Grenz’ favor. We therefore hold that the District Court did not err in dismissing Mr. Grenz’ complaint.

Section 33-18-242, MCA, creates a cause of action against an “insurer”. An “insurer” includes a person, firm, or corporation utilizing self-insurance to pay claims made against them. Section 33-18-242(8), MCA. The law firm and its attorneys defending the insurer do not fall under this definition. Therefore, we hold that the dismissal of the complaint was proper. We further hold that the dismissal shall be with prejudice as against Mr. Daue and Garlington, Lohn and Robinson as to a claim under § 33-18-242(6), MCA.

Affirmed.

CHIEF JUSTICE TURNAGE and JUSTICES HARRISON, SHEEHY and McDONOUGH concur.


author: JUSTICE McDONOUGH JUSTICE WEBER,

text:
    MONTANA DAKOTA UTILITIES CO., A Division of MDU Resources Group, Inc., a Delaware corporation, Plaintiff and Appellant, v. MONTANA DEPARTMENT OF PUBLIC SERVICE REGULATION, Montana Public Service Commission, and Montana Consumer Counsel, Defendants and Respondents.
    No. 89-028.
    Submitted April 10, 1990.
    Decided July 13, 1990.
    As Corrected on Denial of Rehearing Aug. 22, 1990.
    795 P.2d 473.

      John Alke, Hughes, Kellner, Sullivan & Alke, Helena, Lester H. Loble, n, Montana-Dakota Utilities, Bismarck, N.D., for plaintiff and appellant.
    Mary Wright, Montana Consumer Counsel, Denise Peterson, Public Service Commission, Helena, for defendants and respondents.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

Montana Dakota Utilities Co. (MDU) appeals an order of the Fifteenth Judicial District, Roosevelt County, which affirmed an administrative rate order of the Public Service Commission (PSC). In that order, the PSC denied full recovery of costs incurred by MDU, through a purchase of firm power from the Antelope Valley Station II (AVS IT) power plant. We affirm.

The sole issue on appeal is:

Was the District Court correct in affirming the PSC’s decision to reprice, for ratemaking purposes, the amount of the expense that MDU could recover from its Montana ratepayers for power purchased from AVS n?

MDU is a regulated public utility providing natural gas and electric service in Montana, South Dakota and Wyoming. To meet its customers’ demand for electric service, MDU owns, either individually or in partnership with other utilities, a number of generating stations located in or near its service territory. It is also a member of the Mid-Continent Area Power Pool (MAPP) from which it can acquire power under certain limited circumstances. MDU’s membership in MAPP is contractual, and it is conditioned upon MDU having its own generating capacity equal to customer demand plus a reserve of fifteen percent.

MDU is experiencing a steadily increasing demand for electricity. To meet that demand, MDU has been acquiring modest amounts of generating capacity as it becomes available. In 1986, pursuant to a contract made in 1981, it purchased forty-one megawatts of firm power from AVS II, a power plant which is owned by Basin Electric. Firm power is power which the seller is obligated to provide for a fixed number of years. Correspondingly, the buyer is obligated to make the purchase. The contract between MDU and Basin Electric provided the firm power purchases would be made over a ten year period. In addition to the AVS II purchase, MDU acquired additional power through purchases of additional generating resources.

In order to recover costs associated with these acquisitions, MDU filed an application with the PSC seeking authority to increase its electric rates. In the application, the company prepared a cost of service which was based upon an historic test year, in this case 1985. The application also reflected the actual costs MDU incurred in purchasing forty-one megawatts of firm power from AVS II.

Following MDU’s filing, the Montana Consumer Counsel (MCC) intervened on behalf of Montana Ratepaying Consumers. At a public hearing, the MCC presented testimony from its expert, Albert Clark. Mr. Clark testified as to the effect of the AVS II purchase. In his testimony, he stated that MDU, through its purchase from AVS II, effectively replaced cheap power which could be generated at its existing plants with very expensive AVS II power. He noted, in this regard, that the average cost of energy produce at MDU’s existing plants ranged between $13.52 to $24.74 per megawatt hour (mwh). The cost of AVS II power, meanwhile, equaled $48.84 per mwh.

Mr. Clark further testified, that most of the energy produced by AVS II could have been generated internally at MDU’s existing plants. Relying upon this testimony, the PSC found that although AVS II was not purchased for the purpose of replacing existing facilities, that is in fact what happened because 77 % of the newly acquired energy could have been generated at existing facilities.

He said the net effect of this acquisition was to replace 88,750 mwh of existing energy production with more expensive AVS II power. The purchase also allowed MDU to increase off system sales to other utilities by 45,172 mwh. And finally, the AVS II acquisition replaced 64,638 mwh of Schedule E energy, which is purchased from MAPP.

Schedule E is cheap energy which is generally purchased in order to replace more expensive energy produced by an individual power company. It is not a reliable source of power, however, because the seller can cancel the sale with a one day notice. In order to be eligible to purchase Schedule E, an individual power company must be capable of meeting its baseload requirements and have a fifteen percent surplus to meet peak demand.

Clark stated that the AVS II acquisition actually replaced existing power sources with very expensive energy. He therefore maintained that it was unfair to saddle the consumer with the full cost of AVS II. He, therefore, sought to “remix” the company’s power supply figures in order to come up with a rate that was fairer to the consumer.

Mr. Clark accomplished this task by repricing the AVS II power according to an alternative energy scenario. In his proposal, the electric rates were figured as if:

“(1) Base load energy generation at MDU’s existing facilities were increased to pre-AVS II levels. This course of action, he maintained, prevented the replacement of inexpensive power with very expensive AVS II power;
“(2) The increased off-system sales were not imputed to the consumers;
“(3) MAPP Schedule H energy was purchased in order to replace some of the energy produced by AVS II. Schedule H energy is relatively inexpensive energy which could be used by MDU well into the future, because there is a substantial surplus; and
“(4) Remaining energy needs were satisfied through purchases of Schedule E energy from MAPP.”

Initially, the PSC rejected Clark’s proposal and granted a rate increase, but at a level lower than MDU requested. The PSC based its action partly upon Clark’s suggested use of Schedule E energy. As stated above, Schedule E is not a dependable energy source because it can be canceled on one day’s notice. Therefore, in order to avail itself of the power, a utility company must have energy to forgo. The PSC, upon reviewing Clark’s proposal, determined that he was treating Schedule E as a long-term source of energy. Due to its limitations, Schedule E cannot be used as a dependable source of power, and therefore it concluded that Clark’s proposal was not feasible.

Following this decision, both the MCC and MDU submitted motions for reconsideration. In its motion, the MCC argued that the PSC misinterpreted Clark’s testimony. It maintained that MDU’s own power supply figures indicated that MDU could utilize 139,288 mwh of Schedule E energy. The MCC maintained that these figures indicated that MDU had energy to forgo prior to the AVS II purchase and therefore was able to avail itself of the cheaper energy. Obviously, if MDU had excess energy before the AVS II acquisition, it had to have extra energy following its purchase. The MCC therefore maintained that it was not treating Schedule E as a long-term energy source, but was instead, treating it exactly as it is supposed to be, namely a source of low cost energy which is purchased to displace higher cost energy.

Upon reconsideration, the PSC agreed that it misinterpreted the information contained in Mr. Clark’s testimony. It concurred that his proposal treated Schedule E energy correctly and that this treatment made the AVS II adjustment acceptable. It therefore granted the MCC’s motion and further reduced the level of the rate increase.

MDU then appealed the matter to District Court. The District Court affirmed the PSC’s order and specifically found that it acted properly in “repricing” AVS II energy because MDU’s own numbers established that it did not need to incur the expense to meet present or future demand. It further found that a portion of the expense incurred through the AVS II acquisition was unreasonable and therefore should not be passed on to the consumer. This appeal followed.

In utility rate cases this Court has traditionally held itself bound by a very strict standard of review. In previous cases we have stated:

“... [T]his Court is always confronted in ratemaking cases with the question of how far the court can go in interfering with, or directing the exercise of power, by an equal department of government. We have repeatedly held that there will be no interference with the orders of the Commission unless:
“(1) they go beyond the power constitutionally given; or
“(2) beyond their statutory power; or
“(3) they are based on a mistake of law.
“Cascade County Consumers Ass’n v. Public Service Comm’n (1964), 144 Mont. 169, 192, 394 P.2d 856, 868; Mountain States Telephone and Telegraph v. Department of Public Service Regulation (1981), 191 Mont. 331, 339, 624 P.2d 481, 485.”

This strict standard of review is necessitated by the nature of controversies surrounding utility rate cases. These cases are generally very complicated and involve the review and interpretation of testimony given by experts in fields such as engineering and economics. The PSC, because of its expertise and familiarity with these types of cases, is best suited to review the evidence presented by such testimony and make the decisions. In light of this fact, this Court has traditionally refused invitations to substitute its judgment for that of the PSC.

In rate cases, the PSC is the judge of fact and this Court only determines questions of law. In deciding questions of law, our review only requires us to determine “whether the PSC acted arbitrarily and unreasonably without sufficient evidence to support its findings or exercised its authority unreasonably or set the rates so low that they are confiscatory and deprive the utility of its property without due process of law.” Montana-Dakota Utilities v. Department of Public Service Regulation (1988), 231 Mont. 118, 752 P.2d 155. This standard of review, which has been described in case law, has its origins in the Montana Administrative Procedure Act. Under this act, findings of fact are subject to a “clearly erroneous” standard of review, while conclusions of law are subject to an “abuse of discretion” standard of review. Section 2-4-101, MCA, et seq.

MDU maintains that the PSC acted unlawfully by limiting its determination of the need for AVS II power to the 1985 test year and by “repricing” the AVS II power without any determination that the company acted imprudently or unreasonably. As for the first assignment of error, MDU maintains that the AVS II purchase should be considered a long-term investment which should be included in the rate base. Usually, items which are considered to be rate base expenditures include new power plants, transmission lines, etc. If the utility can prove that such facilities are “used and useful” they are entitled to earn a rate of return on the associated investments.

Both the lower court and the PSCfc however, maintain that neither the test year question nor the associated rate base issue are relevant to the case now before us. They maintain that the only issue presented by MDU’s appeal is whether there is substantial evidence to support the PSC’s decision to disallow some of the costs associated with the AVS II purchase as unreasonable. We agree that this is a correct statement of the issue.

The legislature has endowed the PSC with full power of supervision, regulation, and control of public utilities in matters related to rates and service. See 69-3-101, et. seq. Under sec. 69-3-303, MCA, the legislature has mandated that before the PSC can approve any rate increase, it must hold a public administrative hearing. At this hearing, the MCC may become a party and following submission of all of the evidence, the PSC must issue a decision and order. Section 69-3-303, MCA. The PSC, in its order, may “fix and order substituted ... rates, tolls, charges or schedules as are just and reasonable” upon finding that previous or proposed rates are unreasonable. Section 69-3-330(1), MCA.

This statutory scheme is based upon and is often followed by policies which have been enunciated by commentators and the courts. Professor A.J.G. Priest in Principles of Public Utility Regulation (1969) states that:

“a regulatory agency cannot lawfully ignore the necessary, fair and Reasonable expenses of operation incurred in the rendition of service ... but must ... allow all such expenses constituting charges on income...” (Emphasis added.) Id. at 50.

Similarly, this Court has stated:

“A function of the PSC, in fulfilling its duty to supervise and regulate the operation of MDU, as an electric utility, is to see that MDU’s rates are just and nondiscriminatory (cites omitted). In complying with this obligation, it follows that the PSC must scrutinize and review the operating expenses of MDU to prevent unreasonable costs from being passed to the customer.” (Emphasis added.)

Montana-Dakota Utilities Co. v. Bollinger (1981), [_Mont. _,] 632 P.2d 1086, 1089, 38 St.Rep. 1221, 1224.

Both the PSC and the MCC argue that the actions taken in this case, i.e. disallowing a portion of the costs associated with AVS II, fully comply with the statutory mandate of sec. 69-3-330(1), MCA, and the reasoning of legal commentators and the Montana Supreme Court. We agree that the PSC has both the constitutional and statutory authority to review rates and to disallow rates which are proven unreasonable. Moreover, in accomplishing this task, the PSC need not determine that the company’s actions are unreasonable. Their task is only to review rates and determine whether they are reasonable to the consumer. We must, therefore, now review the evidence presented to the PSC in order “to determine whether it was justified in denying MDU’s proposed rate increase.

We have previously set out much of the evidence relied upon by the PSC in our statement of facts. However, for the sake of clarity, we will repeat much of this evidence and apply it to the standard of review which must be utilized in this case in order to determine whether there is substantial evidence to support the PSC’s order.

In its findings of fact and conclusions of law, the PSC summarized and analyzed the testimony given at the public hearing and the records submitted by MDU. This information led the Commission to conclude that MDU was, in point of fact, replacing inexpensive electricity which could be generated internally or acquired from MAPP with very expensive AVS II power. When the total operation and maintenance expenses of AVS II power were taken into account, it became apparent that it cost up to 261 percent more to operate than MDU’s existing plants. In the opinion of MCC’s expert, Mr. Clark, the ratepayers should not be saddled with such power supply costs.

His opinion, it was found, was bolstered by MDU’s own records which indicated that subsequent to the AVS II purchase, MDU had backed down production at its existing plants, decreased its use of purchased power from MAPP and increased its unregulated off system sales to other utilities.

In order to come up with a compromise that was fair to both the consumer and MDU, the PSC adopted Mr. Clark’s proposal that MDU’s energy resources be “remixed.” This proposal assumed that MDU could acquire Schedule E and Schedule H energy from MAPP and that it could utilize them as a cost reducing mechanism. Evidence was presented of abundant power and energy. In fact it was shown that there is a surplus in MAPP until at least 1995. Moreover, MDU’s own records suggested that it could utilize 139,288 mwh of Schedule E energy. This fact indicates that the company had this much power from its own units to forego, because in order to qualify for Schedule E purchases, a company must have excess energy to meet peak customer demand. Mr. Clark’s proposal, which actually reflects less Schedule E energy than MDU’s own records indicates it could acquire, is a feasible alternative to the dilemma.

In making its final decision it is obvious that the PSC chose to accept Mr. Clark’s suggested alternative. It based its conclusion upon evidence found within the record, which was presented by both sides to the controversy. Obviously in accepting this testimony, the PSC chose to reject expert testimony presented by MDU. However, such a decision was clearly within its discretion. As we stated in Dept of Public Service Regulation v. Montana Irrigators (1984), 209 Mont. 375, 381, 680 P.2d 963, 966:

“Rate structuring involves highly specialized theories of economics. The weighing and balancing of expert opinion pro and con is properly vested in the administrative agency in its field of expertise.”

In view of the facts presented and their application to the standard of review presented by utility rate cases, we hold that the PSC’s denial of a portion of the costs associated with the AVS II purchase was not beyond its constitutional or statutory power. Nor was the decision based upon a mistake of law. We also cannot say the decision of the PSC was arbitrary in this case. The order of the District Court upholding the PSC’s order is therefore affirmed.

CHIEF JUSTICE TURNAGE and HON. THOMAS McKITTRICK, District Judge, sitting for JUSTICE SHEEHY, and HON. C.B. McNEIL, District Judge, sitting for JUSTICE HUNT, concur.

JUSTICE WEBER,

dissenting:

I do not dissent from the legal principles cited and applied in the majority opinion. There is no conflict between the parties as to those legal principles.

My problem is with the required purchase by MDU of 41 megawatts of power in each year. In 1981 MDU entered into an agreement with Basin Electric which obligated MDU to purchase 41 megawatts of power from a particular generating plant in which Basin Electric had an interest, and which also obligated Basin Electric to furnish that 41 megawatts for each of ten years. It is important to note that the Basin Electric power plant did not become operational until June of 1986. Under its determination, the PSC denied MDU the recovery of $1,474,932 in costs it incurred in agreeing to purchase the 41 megawatts of power for one year.

All parties agree that the PSC has the power to disallow unreasonable expenses. My contention is that the PSC improperly used that power in the present case.

The PSC relied upon the expert testifying in behalf of the Montana Consumer Council (MCC). It is critical to keep in mind that the MCC expert conceded that MDU needed its generating resources including the 41 megawatts of power each year contracted for with Basin Electric. The expert conceded that the power was reasonably needed for the forecasted consumer demands of MDU. We may therefore conclude that both the MCC and the PSC agreed that it was both reasonable and necessary for the MDU to enter into the 1981 agreement for the obligated purchase of 41 megawatts each year starting at the completion of construction of the power plant in 1986. That aspect was not considered in the PSC determination nor in the majority opinion.

The MCC expert attacked only the amount which MDU was required to pay in one year for the 41 megawatts of power. The expert emphasized that MDU reduced some of its owned production of power which resulted in an increased cost to the consumer because the contracted price for the 41 megawatts exceeded the cost of production in certain of the MDU units. In addition, the expert testified that in 1985 MDU could have purchased cheaper power from a power pool at a rate substantially less than the price paid for the Basin Electric 41 megawatts. The substance of this testimony was that MDU could have generated power and purchased power at prices cheaper than paid to Basin Electric. As a result, the expert testified that it was proper to disallow $1,474,932 as an unreasonable expense — even though that amount was required by contract to be paid by MDU. That is a “catch-22” position of the worst sort so far as MDU is concerned. The result of this approach is that the PSC in substance commends MDU for obligating itself to purchase the 41 megawatts of power each year for 10 years — because that is a reasonable protection so far as consumer requirements are concerned. The “catch-22” result is that the PSC then says — however, as we review this case in hindsight, we find that in actual fact you didn’t need that power as you anticipated because you could have purchased the power from other sources at a cheaper rate, and we therefore will disallow your required payment as an unreasonable expense.

The ‘ ‘catch-22’ ’ situation is further emphasized by the very nature of the “Pool power.” MDU is a member of Mid-Continent Area Power Pool from which it can acquire power. Its membership in that Power Pool is conditioned upon a contractual arrangement which requires that MDU have its own generating capacity equal to its customers’ demands plus a reserve of 15%. By signing the contract with Basin Electric, MDU has helped to establish its capacity to purchase the pool power by establishing a reserve above projected customer demands of 15%. The penalty result of the PSC determination is that while MDU must have 15% more than is needed for its consumer demands to purchase power from the Power Pool; the PSC will use the cheap power purchased from the Power Pool as a means of eliminating the right of MDU to include the Basin Electric contract price, In addition, pool power is not guaranteed power as is the power which must be furnished by Basin Electric. It is easy to look back and state that pool power was available, but difficult, if not impossible, to look ahead and count upon its availability. Truly a “catch-22.”

As well stated in the majority opinion, the PSC may fix rates which are “just and reasonable. ” As stated by Professor A.J.G. Priest in the majority opinion, a regulatory agency cannot lawfully ignore necessary, fair and reasonable expenses of operation. In addition, as stated by this Court in Montana Dakota Util. Co. v. Bollinger (Mont. 1981), [_Mont__,] 632 P.2d 1086, 38 St.Rep. 1221, in complying with its duty to supervise and regulate, the PSC must scrutinize and review operating expenses to prevent unreasonable costs from being passed to the consumer. Both the majority opinion and the dissent agree that the foregoing standards control. My contention is that the result reached by the PSC is neither just, fair, nor reasonable.

The technique used by the MCC, and accepted by the PSC, has resulted in an artful bypass of a fair and reasonable determination. In order to obtain such a fair and reasonable determination, I believe it essential that the PSC determine whether or not it was fair and reasonable that MDU enter into its 1981 ten year contract with Basin Electric. Such a procedure would require that the PSC make a decision as to whether or not the contract was fair and reasonable before disallowing any of the payments required under the contract. That was not done here. Instead the technique used was to attack the payment required in one year as being an unreasonable expense because power could have been obtained from other sources at a lesser cost. That hindsight was applied five years after the contract had been signed. If that same technique were followed during each of the remaining nine contract years of the MDU-Basin Electric contract, it becomes possible that the PSC could disallow the entire contract purchase price as being an unreasonable expense. This allows an after-the-fact determination on the part of the PSC which is not either fair or reasonable. If the power supply during the ten year contract term is such that the 41 megawatts of power are needed for customers of MDU because power is in short supply, then MDU will be commended, and its purchase price of the 41 megawatts of power will be allowed as a reasonable expense. On the other hand, if power continues to be in surplus during the contract term as was true in 1985, then this would allow the PSC to disregard the required purchase price of the 41 megawatts of power in each year in which there was a surplus of power. Such procedure disregards the nature of the MDU-Basin Electric contract. That contract requires the furnishing of power and the purchase of power in a manner which is actually comparable to an investment by MDU in the construction of its own power generating facility. The payment under the contract should be treated in a manner comparable to the investment in plant, not by the devise used in the present case.

I conclude that the PSC has failed to fix rates that are just and reasonable because it ignored the necessary, fair and reasonable expenses of operation of MDU. I would remand for a redetermination of the rates here involved.

JUSTICES BARZ and HARRISON concur in the foregoing dissent.


author: JUSTICE McDONOUGH JUSTICE HUNT,

text:
    MICHAEL HAYWORTH, Judy Hayworth and Michael Hayworth, as Guardian Ad Litem for Matthew Hayworth, a minor, Plaintiffs and Appellants, v. SCHOOL DISTRICT NO. 19, ROSEBUD COUNTY, Montana, Defendant and Respondent.
    No. 89-548.
    Submitted on Briefs June 7, 1990.
    Decided July 13, 1990.
    As Corrected on Denial of Rehearing Aug. 23, 1990.
    795 P.2d 470.

      Richard J. Carstensen, Billings, for plaintiffs and appellants.
    Gary L. Day, Lucas & Monaghan, Miles City, for defendant and respondent.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

Michael and Judy Hayworth brought an action against School District No. 19 in Rosebud County, Montana, alleging that school officials failed to provide a safe environment for their two children, Matthew and Heidi. The School District moved for summary judgment and their motion was granted. From this judgment, the Hayworths appeal. We affirm.

The issues on appeal are:

1. Whether it was reversible error for a successor District Court Judge, who sat after retirement of the first judge, to rule on a motion for summary judgment previously denied by the first judge in light of a subsequent decision from the Montana Supreme Court applicable to the case at hand.

2. Whether the District Court erred by determining that the Hayworth’s claims for monetary damages were barred by sec. 2-9-111, MCA.

Matthew Hayworth was a student at Colstrip High School in Colstrip, Montana. Apparently, the relationship of other students with Matthew was difficult. As a result, he was involved in a number of verbal and physical altercations during the 1985-1986 and 1986-1987 school years.

Eventually, his relationship with some of the students was such that his parents felt forced to remove him and his sister Heidi from Colstrip High School. Matthew and Heidi transferred to a private school.

Mr. and Mrs. Hayworth brought a lawsuit for damages against the School District, alleging that its employees failed to provide a safe educational environment for their children in violation of Article X, Section 1 of the Montana Constitution, which guarantees free quality elementary and secondary education for all citizens of the state. The School District, relying upon this Court’s decision in Bieber v. Broadwater County (1988), 232 Mont. 487, 759 P.2d 145, moved for summary judgment. In Bieber, we held that sec. 2-9-111, MCA, provides immunity to county commissioners who lawfully discharge an official duty of a legislative body. On December 22, 1988, the Honorable Alfred B. Coate denied the motion for summary judgment without providing any reasons for the denial. Judge Coate retired and was succeeded by the Honorable Joseph L. Hegel. In May of 1989, the School District renewed its motion for summary judgment and claimed that Peterson v. Great Falls School District No. 1 and A (1989), [8 Ed. Law 61,] 237 Mont. 376, 773 P.2d 316, [46 St.Rep. 880,] issued by this Court on May 12, 1989, mandated dismissal of the Hayworth’s claims. In Peterson, we held that sec. 2-9-111, MCA, provided immunity from suit for the Great Falls School District and its board, as a legislative body, for an action by an agent of the Board who performed an official duty.

The Hayworths argued that the lower court could not properly consider the School District’s motion. They maintained that Judge Coate had already decided this question of law and that his ruling had become the “law of the case.” The Hayworths further argued that Judge Hegel could not overrule his predecessor by granting the School District’s motion.

Judge Hegel disagreed with the Hayworths and granted summary judgment on August 7, 1989. In granting this motion, Judge Hegel relied heavily upon Peterson, 773 P.2d 316. This appeal followed.

As stated above, the Hayworths maintain that Judge Hegel exceeded his judicial powers in granting summary judgment for the School District. They maintain that through this action, the lower court judge exercised appellate jurisdiction over a decision of his predecessor and that he exceeded his jurisdiction. They maintain his decision should therefore be reversed.

We disagree. It is true that judges of coordinate jurisdictions sitting in the same court and in the same case may not ordinarily overrule the decisions of each other. State ex rel. State Highway Comm’n v. Kinman (1967), 150 Mont. 12, 430 P.2d 110. This rule articulates the sound policy that when an issue is once judicially determined, that should be the end of the matter as far as judges and courts of coordinate jurisdictions are concerned. However, this rule is not an imperative and it does not necessarily mandate that a court does not have discretion, in appropriate circumstances, to reconsider a ruling made by another judge in the same case. State v. Carden (1976), 170 Mont. 437, 555 P.2d 738.

We hold that under the facts presented in this case, Judge Hegel did not err in reconsidering the School District’s motion for summary judgment. Between the time of his reconsideration and Judge Coate’s original denial of the motion, a decision was issued by this Court. This decision, Peterson v. Great Falls School District No. 1 and A (1989), 237 Mont. 376, 773 P.2d 316, [46 St.Rep. 880,] further defined immunity under sec. 2-9-111, MCA, as it was originally found to exist in Bieber v. Broadwater County (1988), 232 Mont. 487, 759 P.2d 145.

The facts of Peterson substantially differ from those of Bieber. In Bieber, immunity was found to preclude lawsuits against a county for the actions of a member of the board of county commissioners, which is the legislative body of the county. Peterson, on the other hand, found immunity to exist when a school district was sued for alleged wrongful acts of an agent of the school board, which is the legislative body of the school district. We agree with Judge Hegel, that Peterson significantly clarified sec. 2-9-111, MCA, as it applies to the case at bar. In view of the changed circumstances, presented by the Peterson decision, Judge Hegel was justified in reconsidering the School District’s motion.

We must now determine whether the District Court erred in granting summary judgment on the issue of immunity granted by sec. 2-9-111, MCA. Initially, we note that summary judgment is properly granted only if there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Rule 56, M.R.Civ.P. The Hayworths have alleged that the School District negligently failed to provide a safe environment for their children. For purposes of this appeal we must take this allegation as true and determine whether Judge Hegel correctly determined that their claims are barred by sec. 2-9-111, MCA.

Section 2-9-111, MCA, states:

“2-9-111. Immunity from suit for legislative acts and omissions. (1) As used in this section:
“(a) the term ‘governmental entity’ includes the state, counties, municipalities, and school districts;
“(b) the term ‘legislative body’ includes the legislature vested with legislative power by Article V of The Constitution of the State of Montana and any local governmental entity given legislative powers by statute, including school boards.
“(2) A governmental entity is immune from suit for an act or omission of its legislative body or a member, officer, or agent thereof.
“(3) A member, officer, or agent of a legislative body is immune from suit for damages arising from the lawful discharge of an official duty associated with the introduction or consideration of legislation or action by the legislative body.
“(4) The immunity provided for in this section does not extend to any tort committed by the use of a motor vehicle, aircraft, or other means of transportation.” (Emphasis added.)

As stated earlier, in Peterson we found immunity to exist when the school district was sued for alleged wrongful discharge of an employee by the district’s administrative assistant. In that case, we noted that under sec. 2-9-111, MCA, the school district was immune from suit for acts or omissions of an agent of its legislative body, the school board.

The case now before us falls directly under this section. The Hayworths have not come forward with any fact which would remove their case from the purview of sec. 2-9-111, MCA. In short, they have not put forth any evidence which would support a contention that the agents or employees were not acting within the scope of their authority or that the school administrators involved in this dispute were not agents of the School Board.

The Hayworths additionally argue that because this case involves a breach of their children’s constitutional rights under Article X, Section 1 of the Montana Constitution, sec. 2-9-111, MCA, is inapplicable. In asserting this argument, the Hayworths rely upon Helena Elementary School District No. 1 v. State of Montana (1989), [8 Ed. Law 15,] 236 Mont. 44, 769 P.2d 684. Their reliance upon this case is misplaced. In Helena Elementary, the plaintiffs sought declaratory judgment in order to address ftmding inequities in the state school system. The' Hayworths are not seeking declaratory judgment, which is not precluded by sec. 2-9-111, MCA. Rather, they are seeking monetary damages which are expressly disallowed by the statute. Finally, the Hayworths cite B.M. v. State (1982), [1 Ed. Law 157,] 200 Mont. 58, 649 P.2d 425, for their proposition that immunity does not apply. In B.M. we held that the state could be held liable for negligently placing a child, who needed special education, in a class of retarded children. However, in B.M., the plain meaning of the actual language used in sec. 2-9-111, MCA, was not discussed. Moreover, since our decision in B.M., we have decided several immunity cases and in the process have arrived at the current construction of sec. 2-9-111, MCA. See State ex rel. Eccleston v. Montana Third Judicial District Court (1989), [8 Ed.Law 146g,] [240 Mont. 44, ] 783 P.2d 363, 46 St.Rep. 1929. This construction leads to the conclusion that the Hayworths’ claims are barred by the immunity found in sec. 2-9-111, MCA. The judgment of the lower court is therefore affirmed.

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

JUSTICE HUNT,

dissenting:

I dissent. Once again the majority chooses to hide behind the cloak of immunity to deny plaintiffs their day in court. Thanks to Peterson v. School Dist. No. 1 and A, [8 Ed.Law 61,] 237 Mont. 376, 773 P.2d 316 (1989) and State ex rel. Eccleston v. Montana Third Judicial Dist. Court, [8 Ed.Law 146g,] [240 Mont. 44,] 783 P.2d 363, 46 St.Rep. 1929 (1989), school districts and their employees are insulated from the consequences of their negligent acts, even if those acts do not bear the remotest resemblance to legislative acts. Perhaps, in Montana, the saying, “The King can do no wrong!” should be changed to “The School District can do no wrong!”

I would overrule Peterson and Eccleston and return this case to the District Court for trial.

JUSTICE SHEEHY concurs in the foregoing dissent of JUSTICE HUNT.