No. 14708
IN THE SUPREME COUKL' O THE STATE O MONTANA
F F
1979
EMILY K. IwTTms,
Plaintiff and Respondent,
-VS-
GLACIER GJiNWlL ASSURANCE CQMPANY,
Defendant and Appellant.
Appeal from: D i s t r i c t Court of the Second Judicial D i s t r i c t ,
Honorable James D. Freebourn, Judge presiding.
Counsel of Record:
For Appellant:
Henningsen, Purcell and Genzberger, Butte, Mntana
Mzk A. Vurcorvich argued and James Purcell appeared,
Butte, mntana
For Respondent :
Corette, Smith, Dean, Pohlman & Allen, Butte, mntana
Kendrick Srnith argued, Butte, Mntana
Maurice A. Maffei argued, Butte, Wntana
Filed:
q",' "
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--
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Suhitted:
mid&:
June 7, 1979
f\i 6\1 2 1979
Mr. Justice Daniel J. Shea delivered the Opinion of the Court.
Defendant, Glacier General Assurance Company,
appeals from an order of the Silver Bow County District
Court granting plaintiff's motions for judgment on the
pleadings, and alternatively, summary judgment, and
thereby awarding her $53,224 based on a fire insurance
policy covering the plaintiff's premises.
The primary question with which we are concerned
is whether the plaintiff as the moving party in summary
judgment carried the initial burden of proof to show
that a question of material fact did not exist in relation
to the defendant's pleading of an affirmative defense that
plaintiff had materially altered the premises thereby
materially affecting the insurance risk. There is, however,
the additional question of whether the District Court
properly granted judgment on the pleadings.
Because the District Court went beyond the pleadings
in granting the motion for judgment on the pleadings,
we conclude that his action cannot be sustained; rather,
the District Court should have treated the motion as one
solely for summary judgment. Moreover, because the District
Court imposed the initial burden on defendant to provide
proof of the affirmative defense alleged in its answer, in
a situation in which it was the plaintiff who was the moving
party for summary judgment, we conclude that the summary
judgment order must also be reversed.
In the briefs filed before this Court, neither party
has addressed the underlying pleadings and procedural
problems which are necessarily involved in a determination
of this case. The defendant has confined the issue to
whether a material fact question exists regarding as the
-2-
affirmative defense of material alteration. The question of
which party has the initial burden of proving the existence
or absence of a material question of fact in relation
to an affirmative defense, was not discussed. Plaintiff,
on the other hand, contends that she should prevail not
only on the issue of summary judgment but on the court
order granting judgment on the pleadings. Plaintiff did
not, however, discuss the fundamental question of whether
the plaintiff, as moving party for summary judgment, had
the initial burden of proving that no material question of
fact existed in relation to defendant's affirmative defense
of material alteration. Moreover, plaintiff provided no
rationale why judgment on the pleadings, in the context of
this case, can be harmonized with the applicable rules of
civil procedure.
A brief summary of the events leading up to the
filing of this lawsuit, and a rather detailed summary of
the pleadings is necessary for an understanding of the
procedural state of this case at the time the District
Court granted plaintiff's motions for judgment on the
pleadings and summary judgment.
The defendant issued a standard fire insurance policy
to the plaintiff on April 21, 1977, and later in 1977,
during the term of the policy, a fire or fires occurred
which severely damaged the premises. The defendant offered
to settle the fire loss claim for $18,316, plaintiff
refused the offer, and plaintiff then filed suit seeking
to recover $67,000, the face amount of the policy, alleging
that the amount of the loss actually exceeded the face
amount of the policy.
In her complaint, plaintiff alleged that she owned
the premises involved which were severely damaged by fire
-3-
on October 3, 1977, and that a fire insurance policy
issued by the defendant for the premises involved, was
then in effect. She further alleged that the total loss
exceeded the limits of the policy, that she had sent and
defendant had received a timely sworn statement of proof of
loss, and that defendant paid nothing on the loss, and
that $67,000 was then due and payable. She also prayed
for interest on the $67,000 from the date of the fire loss.
Defendant filed the customary motion to dismiss which
was denied, and then filed its answer, which, to say the
least, was not a model of clarity. Defendant admitted
that a fire loss occurred during the term of the policy
but denied that it occurred on October 3, 1977, and further
admitted that defendant had paid nothing to plaintiff as
a result of the fire loss. Defendant further alleged that
it had offered to pay plaintiff the sum of $27,592 less
depreciation of $9,336 and $100 deductible, but that
plaintiff had refused such offer. Defendant further admitted
receipt of a timely proof of loss statement sent by
plaintiff, but denied that $67,000 was due and payable to
plaintiff. The answer also denied any allegation not
specifically admitted.
In a portion of its answer denominated as an
affirmative defense, defendant alleged that plaintiff
or her agents, servants or employees, before the occurrence
of the fire, had caused the premises to be materially
altered so as to decrease the value of the property and
to materially affect the insurance risk assumed by defendant,
and that plaintiff had failed to report such alterations
to the defendant before the fire, as was required under
the terms of the policy. We cannot determine from this
alleged affirmative defense whether defendant was seeking
-4-
to avoid payment altogether as a result of the alleged
material alteration, or whether it was seeking merely
to reduce the amount owed to plaintiff under the policy.
In essence, we cannot determine if the answer was intended
to indicate that the changes in the structure had subjected the
insurance company to pay a potentially higher loss, which would
indicate an increase in risk, or whether the answer was intended
to show that the changes in the structure had increased the
chances that a fire would occur, an increase in the hazard.
Neither party addressed itself to these distinctions in either
the District Court or before this Court.
In its prayer for judgment, defendant simply asked
that judgment be entered in favor of plaintiff for the
amount of $18,316, which was the compromise offer originally
offered to plaintiff. Defendant also demanded a jury
trial. No additional pleadings exist in this case.
Within a week after filing its answer, defendant
wrote a letter to plaintiff asking for an appraisal of
the amount of the fire loss, there being a provision in
the policy providing for such appraisal. Plaintiff did
not respond by letter, but instead filed papers in District
Court agreeing to this appraisal but also asserting that
because the defendant had demanded the appraisal, such
appraisal was final and binding on defendant, and no
appeal was permitted. Plaintiff also alleged that all
proceedings in District Court were suspended by virtue
of defendant's demand for an appraisal.
Defendant filed papers in District Court asserting that
any such appraisal determination could be appealed and also
alleging that proceedings in District Court were not suspended
because other issues remained for determination. We cannot
determine from this whether defendant meant that factual
issues still remained for decision, or that legal issues
-5-
still remained for decision. In any event, each of the
parties proceeded to select its own appraiser as permitted
by the terms of the policy, an appraisal was made, and each
appraiser arrived at an identical loss, in the amount of
$53,844.
Upon receiving the results of the appraisal, plaintiff
made her next move in District Court. She moved for judgment
on the pleadings, and alternatively, for summary judgment.
The basis for her motion for judgment on the pleadings is
somewhat foggy, but it seems that plaintiff's essential
contention was that defendant, by demanding an appraisal,
had waived its right to go forward with any issues raised by
the pleadings. Plaintiff also asserted that depreciation of
the value of the premises in arriving at the amount of the
loss was not permitted by the terms of the policy itself,
nor was it permitted by applicable statutory and case law.
Plaintiff's motion for summary judgment was based on
her contention that defendant's answer, combined with
defendant's demand for an appraisal of the fire loss under
the terms of the insurance policy, had eliminated or waived
any factual controversy which might exist as to a material
alteration of the premises. Specifically, plaintiff alleged
that defendant was not entitled to assert the affirmative
defense of material alteration for the following reasons:
because defendant had alleged an offer to settle for $18,316.21
in its answer; that defendant had prayed in its answer for
entry of judgment in favor of plaintiff for $18,316.21; that
defendant had returned a substantial portion of the premium
on the fire policy after the fire loss; that defendant had
selected an appraiser-arbitrator to act with the appraiser-
arbitrator selected by plaintiff; and last, by the ultimate
determination of the appraiser-arbitrator assessing the
actual fire loss at $53,844. Plaintiff presented no evidence
by which it could be concluded that a material alteration
-6-
had not in fact taken place as was alleged in defendant's
affirmative defense.
Defendant filed no documents in opposition to the
motions, but responded only with a brief which confined
itself to the issue of summary judgment and the issue
of depreciation; that is, whether defendant was bound by the
appraisers' estimate of the amount of the fire loss.
Defendant ignored the issue of whether plaintiff was entitled
to judgment on the pleadings.
In its brief, defendant set forth the nature of the
alleged material alterations asserted in its affirmative
defense, which, defendant contended, raised a material
question of fact that would defeat plaintiff's motion for
summary judgment:
"During the term of said policy, the property
sustained damage as the result of fire on three
( 3 ) separate occasions--August 18th, 1977,
September 8th, 1977, and October 4 t h , 1977.
"Prior to the initial fire of August 18, 1977,
the insured premises were materially altered
by the Plaintiff or her agents, servants or
employees. These alterations substantially
decreased the value of the insured premises,
and depreciated the property to a point where
the established policy limits were not reflective
of the value of the property.
"The alterations consisted of, but are not
limited to, the removing of the second floor
of the building in question and tearing down
an adjacent building. These alterations were
commenced and completed without ever being
reported to the Defendant and materially
affected the insured's risk in the property."
The brief, however, is not at all clear as to whether defendant
was seeking to avoid payment altogether because of its
allegation of material alteration, or whether it was merely
seeking to pay the loss on the basis of the value of the
property after it had been materially altered by the plaintiff
before the occurrence of the fire loss in question.
Nor are the District Court briefs clear on the issue of
depreciation in relationship to material alteration. The
parties agree that the appraisers did not consider the
factor of depreciation in determining the amount of the fire
loss. Plaintiff contends that the insurance policy, statutes
and case law, do not allow depreciation to be considered.
Though not expressly admitting it, this argument is based on
the assumption that plaintiff had not materially altered the
premises before the fire loss. On the other hand, the
defendant does not approach the factor of depreciation with
an assumption that the premises had not been materially
altered before the fire. Rather, defendant contends, it
seems, that there was a material alteration before the fire
loss, and if the insurance coverage was not voided by such
fire loss, at least the decreased value of the premises
caused by the material alteration, must be a factor in
arriving at the amount of the fire loss. It thus appears
that the parties at the District Court level, and before
this Court are discussing depreciation in an entirely
different context.
In a document entitled Findings of Fact, Conclusions of
Law and Judgment, the District Court granted plaintiff's
motion for judgment on the pleadings and its motion for
summary judgment. It is difficult to determine the precise
basis for the District Court's rulings.
It appears that the order granting judgment on the
pleadings was based on a determination that defendant
had waived any right to claim an increase in the risk caused
by a material alteration of the premises. It appears that
the trial court also did not distinguish between an increase
in the risk as opposed to an increase in the hazard. This can
partly be attributed to the defendant's ambiguous answer and
the failure of the defendant to precisely set forth its con-
tentions in its brief filed with the trial court. The
finding of waiver was predicated upon defendant's requesting
in its answer that judgment be entered in the amount of
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defendant's compromise offer ($18,316), and by defendant's
letter to plaintiff demanding an appraisal under the terms
of the insurance policy.
The order granting summary judgment was based on a
determination that although plaintiff was the moving party,
defendant had the initial burden to show by affidavits or
other evidence, that a material question of fact existed in
relation to its affirmative defense of material alteration.
Because defendant did not do so, the court granted summary
judgment to plaintiff. It was error to impose this initial
burden on defendant, the nonmoving party, was in error.
First, however, we discuss the judgment on the pleadings
granted in this case.
Initially, we note that procedurally the court
could not grant judgment on the pleadings because in
doing so it considered matters beyond the pleadings to
reach its decision. Rule 12(c), M0nt.R.Civ.P. provides
in part:
"[I]£, on a motion for judgment on the
pleadings, matters outside the pleadings
are presented to and not excluded by the
court, the motion shall be treated as one
for summary judgment and disposed of as
provided in Rule 56 . . ."
See also Marsh v. Kitchen (1973), 480 F.2d 1270, 1272;
Reddix v. Lucky (1957), 148 F.Supp. 108, 110; Chapman v.
Pollock (1957), 148 F.Supp. 769, 771.
The complaint and answer were the only pleadings
which the District Court could consider in this case.
Rule 7(a), Mont.R.Civ.P., closes the pleadings upon the filing
of an answer if no counterclaim or crossclaim is included
in the answer and if a reply to an answer is not specifi-
cally ordered by the court. See also, Vol. 2A Moore's Federal
Practice S7.02. In the instant case, there was no counterclaim
no crossclaim, and the court did not order plaintiff to
-9-
reply to the answer. Judgment on the pleadings was based
not only on the complaint and answer, but also on defendant's
letter to plaintiff demanding an appraisal under the
terms of the insurance policy, and on plaintiff's
response to such demand.
In the briefs filed before this Court, defendant
did not mention the issue of judgment on the pleadings,
and plaintiff, although seeking affirmance of such
judgment, offered no sound explanation of how judgment
on the pleadings can be justified. To sustain plaintiff's
position we would clearly have to ignore Rule 12 (c) and
Rule 7(a), supra, and this we are not inclined to do.
Because the District Court should have treated plaintiff's
motion solely as one for summary judgment, we next discuss
the alternative order granting summary judgment.
Neither party in the briefs filed with this Court, has
discussed what we consider the main issue to be concerning
the order granting summary judgment--whether plaintiff as
the moving party must initially demonstrate the absence of a
material question of fact raised in defendant's affirmative
defense of material alteration, or whether defendant must
initially demonstrate the presence of a material question of
fact raised by its affirmative defense of material alteration.
At the hearing of this case on appeal, however, while responding
to specific questions from the bench, counsel for plaintiff
unequivocally stated that it was the duty of the defendant in
this case to initially come forward with evidence that a genuine
issue of material fact existed with relation to its alleged
affirmative defense of material alteration, even though
plaintiff was the moving party. But, we conclude that the
plaintiff as the moving party has the initial burden and it
failed to carry that burden. It was, therefore, error for
the District Court to impose the initial burden upon the
defendant and error to grant summary judgment to plaintiff.
-10-
In its order granting summary judgment, the District
Court stated:
The Court finds particularly that
"(a) Defendant has not by affidavit or
in any other manner supported its contention
that a genuine issue of material fact exists.
" (13) Defendant did not by affidavit or
otherwise produce any affidavit or
evidence in support of its assertion in its
Affirmative Defense that the premises had
been materially altered or that there had
been a decrease in the value of the property
and that no reports were made by Plaintiff.
Particularly, there was no showing of any
increase in hazard.. . ."
We note, however, that the matters considered by the
District Court in granting summary judgment, are devoid
of any evidence initially presented by the plaintiff
to justify a conclusion that a material question of fact did
not exist in the affirmative defense of material alteration.
Absent this showing, the defendant had no duty to come
forward with counterproof.
The pleadings framed the issues here. Though inartful
and imprecise, defendant did assert the affirmative defense
of material alteration. Plaintiff recognized this from the
very beginning and at no time contended that material
alteration, as a matter of law, was not a permissible
defense to plaintiff's complaint. But, as we previously
mentioned, it is not clear whether the allegation of material
alteration was intended to avoid payment altogether, or
whether it was intended simply to reduce the amount which
defendant should pay plaintiff for the fire loss. None-
theless, there is no question that material alteration had
been pleaded as an affirmative defense. If plaintiff had
evidence which would establish the absence of any material
fact in the allegation of material alteration, it was
incumbent to so demonstrate by her documents filed in
support of her motion for summary judgment. Plaintiff cannot,
as was done here, foist that initial burden upon the defendant,
for it would run contrary to the very purpose of Rule 56
which imposes the burden upon the moving party to show that
it is entitled to summary judgment.
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Summary judgment has as one of its primary goals that
of cutting off nonmeritorious litigation, not of frustrating
potentially meritorious litigation or defenses. In seeing
to it that the rule accomplishes its proper goal, trial
judges and lawyers must be reminded that:
"A summary judgment is neither a method
of avoiding the necessity of proving one's
case nor a clever procedural gambit whereby
a claimant can shift to his adversary his
burden of proof on one or more issues."
United States v. Dibble (9th Cir., 1970),
429 F.2d 598, 601.
Before summary judgment can be granted, the record
before the trial court must "show that there is no genuine
issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law. " Rule 56 (c),
M0nt.R.Civ.P. Regardless of which party has the burden,
if the record is barren of a basis upon which it can be
determined that a material fact question does not exist
in relation to a pleaded affirmative defense, there simply is
no basis for the granting of summary judgment. Such is
the situation existing in this case.
We have consistently held that the burden of proof is
on the moving party to show that he is entitled to summary
judgment. For example, see Audit Services, Inc. v. Haugen
(19791, Mont . -, 591 P.2d 1105, 36 St.Rep. 451; Harland
v. Anderson (1976), 169 Mont. 447, 548 P.2d 613; Kober &
Kyriss v. Billings Deaconess Hospital (1966), 148 Mont. 117,
122, 417 P.2d 476, 478. Moreover, this has always been the
rule under the federal court decisions interpreting Federal
Rule 56(c). The rule is set forth in 10 Wright and Miller,
Fed. Pract. and Proc. 52727, at 524-530:
"It is well settled that the party
moving for summary judgment has the
burden of demonstrating that the Rule
56(c) test--'no genuine issue as to any
material fact1--is satisfied and that he
is entitled to judgment as a matter of
law. The movant is held to a strinqent
standard. Before summary judgment will
be granted - - -be clear what the
- it must --
truth is and anv doubt as to the existence
of a genuine issue of material fact will be
resolved against the movant. . ."(Emphasis
added. )
To the same effect, see also 6 Moore's Federal Practice,
That burden is not shifted to the nonmoving defendant
simply because he has pleaded an affirmative defense in his
answerwhich he would be required to prove if the case went
to trial. In 6 Moore's Federal Practice, 556.15(3), at 56-
480-481, the rule is stated as follows:
". . . the burden to show that there is
no genuine issue of material fact rests
on the party moving for summary judgment,
whether he or his opponent would at trial
have the burden or proof on the issue
concerned; and rests on him'whether he
is by it required to show the existence
or nonexistence of facts." (Emphasis added.)
The footnoted cases to this textual statement are replete
with factual situations requiring the plaintiff as moving
party to initially demonstrate the nonexistence of a material
question of fact asserted in defendant's affirmative defense.
We illustrate the application of this rule by two cases
cited in the footnotes. The first case illustrates the
burden of the plaintiff as moving party to initially overcome
an affirmative defense pleaded by defendant; the second case
illustrates the burden of the defendant as moving party to
initially overcome allegations contained in plaintiff's
complaint.
I n P l a n k v. S c h i f t e r ( E . D . Pa. 1 9 4 9 ) , 85 F.Supp.
397, 1 3 F.R.Serv. 56c.41, c a s e 2 , p l a i n t i f f sued d e f e n d a n t
f o r s p e c i f i c performance on a c o n t r a c t and d e f e n d a n t
p l e a d e d t h e a f f i r m a t i v e d e f e n s e of p a r o l r e s c i s s i o n of
the contract. P l a i n t i f f moved f o r summary judgment, and
i n r e l a t i o n t o t h e r e l a t i v e burdens of t h e p a r t i e s , t h e
court stated:
"Upon t h e t r i a l of t h i s c a s e , t h e d e f e n d a n t ,
o f c o u r s e , w i l l have t h e burden o f e s t a b l i s h i n g
h i s d e f e n s e of a p a r 0 1 r e s c i s s i o n . But upon
a motion f o r summary judgment, t h e p l a i n t i f f ,
a s t h e moving p a r t y , h a s t h e burden o f showing
t h e a b s e n c e of a g e n u i n e i s s u e . .. With
r e s p e c t t o t h e e x i s t e n c e of t h e f a c t s grounding
a p a r o l r e s c i s s i o n , i t c a n n o t be s a i d t h a t t h e
p l a i n t i f f h a s m e t h i s burden." 85 F.Supp. a t
398.
Cir.
I n Dyer v. MacDougall (2ncK 1952) , 2 0 1 F. 2d 265, 18
Fed.R.Serv. 56c.41, c a s e 2 , t h e p l a i n t i f f sued defendant
f o r s l a n d e r and d e f e n d a n t moved f o r summary judgment on
t h e ground t h a t he d i d n o t make t h e u t t e r a n c e a l l e g e d by
plaintiff. Defendant p r o p e r l y s u p p o r t e d h i s motion w i t h
proof t h a t he d i d n o t make t h e u t t e r a n c e i n v o l v e d , and
p l a i n t i f f was u n a b l e t o overcome t h i s p r o o f . The C o u r t ,
t h r o u g h J u s t i c e Hand, s t a t e d :
"The d e f e n d a n t s had t h e burden of p r o v i n g
t h a t t h e r e was no s u c h i s s u e ; on t h e o t h e r
hand, a t a t r i a l t h e p l a i n t i f f would have
t h e burden of p r o v i n g t h e u t t e r a n c e s ; and
t h e r e f o r e , i f t h e d e f e n d a n t s on t h e motion
succeeded i n p r o v i n g t h a t t h e p l a i n t i f f
would n o t have enough e v i d e n c e t o go t o
t h e j u r y on t h e i s s u e , t h e judgment was
right. "
I n S h e r i d a n v. G a r r i s o n (C.A. 5 t h 1 9 6 9 ) , 4 1 5 F.2d 699,
t h i s Court s t a t e d :
" I t i s a l m o s t a x i o m a t i c t h a t on motion f o r
summary judgment t h e moving p a r t y h a s t h e
burden of p r o v i n g t h a t no g e n u i n e i s s u e of
fact exists ... even though h i s opponent
--
m a y have t h e burden of p r o v i n g t h e f a c t s
a t trial. " ( ~ m p h a s i s a d d e d) . 415 F. 2d
This rule, as we have shown, is applicable to an
affirmative defense. Indeed, imposing the burden on
plaintiff to initially demonstrate the absence of a
material question of fact in defendant's affirmative
defense, is nothing more than a logical application of
Rule 56 (c).
It is clear in this case that because plaintiff
did not initially demonstrate with appropriate proof,
an absence of material fact with regard to the affirmative
defense of material alteration, the defendant was not
compelled to produce counterproof to avoid a grant of
summary judgment. As the record stood before the District
Court, there was no basis to grant summary judgment.
That the burden is on the moving party, is also
supported by Rule 56(e), M0nt.R.Civ.P. This rule is patterned
after the federal amendment adopted in 1963, and provides
as follows:
"Supporting and opposing affidavits shall
be made on personal knowledge, shall set
forth such facts as would be admissible in
evidence, and shall show affirmatively that
the affiant is competent to testify to the
matters stated therein. Sworn or certified
copies of all papers or parts thereof referred
to-in an affidavit shall-be attached thereto
or served therewith. The court may permit
affidavits to be supplemented or opposed by
depositions, answersto interrogatories, or
--
further affidavits. When a motion for
summary judgment - - -and supported -
is made as
provided --- rule, an adverse party may
in this
not rest upon the mere xleqation - denials
----- or
- his
on - pleading, but his response, by affidavits
or as otherwise provided in this rule, must
set forth specific facts showing that there
is a genuine issue for trial. If he does not
so respond, summary judgment, if appropriate,
shall be entered against him." Rule 56 (e),
M0nt.R.Civ.P. (Emphasis added.)
The emphasized language clearly sets forth the requirement
that the moving party first support his contentions with an
appropriate evidentiary basis before the opposing party must
do more than simply rest upon the allegations contained in
his pleadings. It is only when the moving party has properly
supported its motion that the burden is shifted to the
opposing party to provide counterproof rather than being
permitted to rest solely on the allegation contained in its
pleadings.
The reason for adopting Rule 56(e) is to prevent a
party opposing a motion for summary judgment from simply
relying on its complaint or answer which is loaded with factual
detail. 10 Wright & Miller, -
Federal Practice - Procedure,
&
52739, at 710-714. The authors warn, however, that this rule
was not designed to shift the burden of proof from the movant
to the party opposing the motion, where the moving party has
not first laid in the record a factual basis to do so. They
state:
"The 1963 amendment [Rule 56 (e)] implicitly
recognizes that there are situations in which
no defense will be required; in some situations
this is true even though a motion for summary
judgment has been supported by affidavits or
other evidentiary material. Rule 56(e) states
that a defense is required only if the motion
for summary judgment is 'supported as provided
in this rule' and that even if the opposing
party fails to submit counterevidence, summary
judgment shall be entered only 'if appropriate.'
Furthermore, the Advisory Committee states in
its Note: 'Where the evidentiary matter in
support of the motion does not establish the
absence of a genuine issue, summary judgment
must be denied - -if no opposing evidentiary
even -
matter - presented.'" 10 Wright & Miller,
is
at 716.
In analyzing an opinion of the United States Supreme
Court, Adickes v. S. H. Kress & Company (1970), 90 S.Ct.
1598, 398 U.S. 144, 26 L.Ed.2d 142, Wright and Miller relate
its importance to Rule 56 (e):
". .
. the opinion highlights the principle,
upheld in many decisions since the 1963 amendment
became effective, that no defense is required by
Rule 56 (e) if the movant fails to meet his burden
of showing the absence of any genuine issue of
material fact." 10 Wright and Miller, at 717-719.
Also, Wright and Miller rely on the analysis of Rule 56(e)
by Kaplan, Amendments of - Federal Rules of Civil
- the -
Procedure, 1961-1963 (11) (1964), 77 ~arvardLaw ~ e v i e w
801, where Kaplan states at page 827:
"A party opposing summary judgment need not
come forward in any way if the moving party
has not supported his motion to the point of
showing that the issue is sham. The [I963
amendment] [to Rule 56 (e)1 introduces no
change here. " 10 Wright & Miller, at 718-719.
It is clear therefore, that if the moving party has
not by his own evidence properly supported his motion for
summary judgment, which means in effect that he has not
presented a case valid on its face to permit entry of
a summary judgment ruling, the opposing party has no duty
to present his own counterproof in opposition to the
motion. He can, if he elects, stand on his pleading. Here,
the defendant was entitled to stand solely on the affirmative
defense of material alteration pleaded in its answer because
plaintiff presented no evidence in her motion for summary
judgment that she had not materially altered the premises.
This being so, defendant was not required to present proof in
opposition to plaintiff's motion.
Though we determine here that defendant was technically
correct in relying solely on its answer because plaintiff
did not meet her initial burden, this is not to say that we
recommend this procedure. Obviously, defendant could have
prevented an appeal, at least on the summary judgment question,
if it had taken the time to place affidavits or other evidence
in the record demonstrating that a genuine fact issue of
material alteration remained for resolution.
In addition to determining that judgment on the
pleadings and summary judgment granted in this case were
clearly in error, we suggest that a proper consideration
and application of pleading rules would have gone a long
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way in putting the case in its proper context before it
reached this Court. We have in mind alternative pleadings
permitted by Rule 8(e) (2), Mont.R.Civ.P., and amendment
of pleadings permitted by Rule 15, M0nt.R.Civ.P.
The basic rule governing all pleadings is Rule 8(f),
Mont.R.Civ.P., which provides that "[all1 pleadings shall be so
construed as to do substantial justice." The courts must
breathe life and spirit into this rule by properly considering
its application to the other rules of civil procedure.
Here, the parties and the trial court should have considered
Rule 8(e) (2) and Rule 15.
Without explanation, it seems that the trial court
held that defendant had waived its affirmative defense of
material alteration. As we previously mentioned, defendant's
answer contained allegations which were indeed ambiguous.
Furthermore, the legal theories were possibly inconsistent.
Defendant prayed that judgment be entered for plaintiff in
the amount of $18,316. The legal theory upon which defendant
wanted to achieve this result was never made clear by the
pleadings. But this approach was apparently based on defendant's
contention that the alleged material alteration of the premises
by the plaintiff caused the property to lose value, and therefore
that any payment by the insurance company should be based on
that reduced value. On the other hand, defendant alleged
material alteration increasing the risk as an affirmative
defense, although it is not clear whether defendant desired
to avoid any payment on the policy as a result of the material
alteration, or whether defendant merely wanted to pay according
to the reduced value of the premises caused by the alleged
material alteration. It thus appears that defendant plead
alternative defenses even though they were not so expressly
denominated.
The rules of civil procedure expressly permit alternative
pleadings, both in a complaint, and in an answer. Rule 8(e) ( 2 1 ,
Mont.R.Civ.P., provides:
"A party may set forth two or more statements
of a claim or defense alternatively or hypo-
thetically, either in one count or defense or
in separate counts or defenses. When two or
more statements are made in the alternative
and one of them if made independently would
be sufficient, the pleading is not made
insufficient by the insufficiency of one or
more of the alternative statements. A party
may also state as many separate claims or
defenses as he has regardless of consistency
and whether based on legal or on equitable
grounds or on both. All statements shall be
made subject to the obligations set forth
in Rule 11. "
As the rule states, multiple defenses are valid, and if any
of them is sustained, plaintiff's cause of action must fail.
Little v. Texaco, Inc. (10th Cir. 1972), 456 F.2d 219
(interpreting Federal rule 8 (e)(2)) ; Abbey v. State (N.D.
1972), 202 N.W.2d 844 (interpreting Rule 8(e) (2) of the ~ o r t h
Dakota rules of civil procedure which is worded the same as
the Federal rule); and Jessen v. Aetna Life Ins. Co. (7th
Cir. 1954), 209 F.2d 453, 468 (interpreting Federal Rule
We note moreover, that plaintiff at no time moved under
Rule 12(f), Mont.R.Civ.P., to strike the defense of material
alteration as being an invalid defense. The reason perhaps
is that such motion would have had no merit. Jessen v.
Aetna Life Ins. Co., supra. It seems clear therefore, that
plaintiff was implicitly recognizing that a defense of material
alteration, if proven, was valid.
It is the policy of the law to avoid games of pleading
skill and to submit cases on the merits, and to avoid judgments
based solely upon the pleadings unless the parties agree on
the facts and desire a decision on the law alone. 2A Moore's
Federal Practice 88.02, at 8-18; Giannone v. United States
Steel Corporation (3rd Cir. 1956), 238 F.2d 544. Because
discovery is available to all parties to expose the underlying
facts of the parties' contentions, the contention that imprecise
or alternative pleadings result in surprise, is no longer valid.
Here the record is devoid of any indication that either party
-19-
had undertaken discovery before plaintiff filed and obtained
the summary judgment ruling as well as the ill-founded
judgment on the pleadings.
Here the defendant's depreciation defense is not
entirely consistent with its defense based on increased
risk. By the depreciation argument defendant would acknowledge
the duty to pay something to plaintiff, but would pay only
the amount represented by the decreased value of the premises
caused by plaintiff's alleged material alteration of the
premises. By this argument defendant alleges that it owes
$18,316 to the plaintiff. On the other hand, its defense of
material alteration in relation to a claim of increasing the
risk, is apparently an attempt to avoid entirely a duty to
pay for the fire loss. We cannot, however, treat the defendant's
pleading as a waiver as the trial court did, for to do so
would negate the right of a defendant to plead alternative
or inconsistent defenses under Rule 8(e)(2). See Giannone
v. United States Steel Corporation, supra, 238 F.2d at 544.
We believe also that a proper consideration and application
of the liberal amendment of pleadings permitted by Rule 15,
Mont.R.Civ.P., would have helped considerably in putting the
pleadings in their proper form before the trial court ruled
upon the plaintiff's motions.
If the District Court believed that the defendant's
answer was so vague that it should not be allowed to stand
without amendment, it was within the prerogative of the
court under Rule 15 to order defendant to amend its answer
to more clearly state its position. Moreover, the defendant's
brief filed in opposition to plaintiff's motion for
summary judgment clearly set forth the factual basis for
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its contention that plaintiff had materially altered
the premises, and this being so, it was surely within
the spirit of Rule 15 that the Court (assuming, of
course, that plaintiff had properly carried her initial
burden) to give the defendant an opportunity to place
affidavits or other evidence in the record setting forth the
factual basis for its allegation of material alteration.
In Rossiter v. Vogel (Cal.App.2d 1943), 134 F.2d 908,
7MR-~erv.
56c.312, case 1, the defendant failed to allege
an affirmative defense in his answer, but in opposing
the plaintiff's motion for summary judgment, filed affidavits
containing facts that would support an affirmative defense.
Rather than granting summary judgment, the court in the
interests of justice, under Rule 15, permitted defendant
to amend his answer setting forth his affirmative defense.
In the case at hand, the factual assertions as to the
nature of the alleged material alterations were precisely
set forth in the defendant's brief. Although we realize
that factual recitations contained in a brief do not
rise to the dignity of factual recitations contained in
an affidavit, nonetheless, the trial court was put on notice
that defendant was serious in its contention that a material
alteration of the premises had in fact occurred before the
fire in question. If nothing else, the statements in defendant's
brief run counter to the trial court's determination that
nothing "in any other manner" was presented to the court
which would give any support whatsoever for a material
question of fact to exist in relation to the affirmative
defense of material alteration.
With the trial court and plaintiff being put on notice
of the material alteration contentions set forth in defendant's
brief, the trial court could have notified defendant that
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s u c h f a c t u a l a s s e r t i o n s i n a b r i e f do n o t comply w i t h
Rule 5 6 , b u t t h a t d e f e n d a n t would b e g i v e n a chance t o
comply w i t h Rule 5 6 ( e ) by f i l i n g a f f i d a v i t s o r o t h e r
e v i d e n t i a r y m a t e r i a l b e f o r e t h e t r i a l c o u r t would r u l e on
t h e motion f o r summary judgment. T h i s p r o c e d u r e would have
been w i t h i n t h e s p i r i t of Rule 8 ( f ) , s u p r a , t o c o n s t r u e
pleadings t o a r r i v e a t "substantial justice."
Although w e would s o c o n s t r u e Rule 1 5 i n o r d e r t o d o
" s u b s t a n t i a l j u s t i c e " u n d e r Rule 8 ( f ) , w e stress t h a t o u r
d i s c u s s i o n of Rule 1 5 , i n t h e c o n t e x t o f t h i s c a s e i s a c a d e m i c ,
f o r , a s w e have a l r e a d y d e t e r m i n e d , p l a i n t i f f f a i l e d i n h e r
i n i t i a l b u r d e n as moving p a r t y , t o show t h a t s h e was e n t i t l e d
t o summary judgment. T h i s b e i n g s o , d e f e n d a n t was e n t i t l e d
t o s t a n d on i t s a f f i r m a t i v e d e f e n s e p l e a d e d i n i t s answer.
For t h e f o r e g o i n g r e a s o n s , t h e o r d e r of t h e D i s t r i c t
C o u r t g r a n t i n g judgment on t h e p l e a d i n g s and summary judgment
i s reversed. T h i s c a s e i s remanded t o t h e D i s t r i c t C o u r t
f o r f u r t h e r proceedings c o n s i s t e n t w i t h t h i s Opinion.
W e Concur:
/ ' Chief J u s t i c e
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................................
Justices
Mr. Justice John C. Sheehy dissenting:
When this cause is returned for further proceedings,
the District Court will have no alternative but to render
judgment again in favor of the plaintiff in the amount of
the appraisers' award. There are no further factual issues
to determine, and the case presents only legal questions,
which the lower court correctly decided, and to which we should
agree.
Whether we regard the judgment as one based on a motion
for judgment on the pleadings, or as a summary judgment,
the result is the same.
With respect to the pleadings, the plaintiffs complaint
alleges the issuance of an insurance policy by the defendant,
a fire within the term of the policy, and a loss, the amount
of which remains unpaid after proof of loss has been filed
with the defendant.
The defendant has filed an answer, admitting the
issuance of the policy, that it was in effect, and that a
loss occurred during the term of the policy. It denies any
loss in excess of $18,316.21 for which it asks the Court
in its prayer to enter judgment.
As a first affirmative defense, the defendant alleges
that there were fires on three separate occasions, and goes
on to contend, "that the plaintiff ... caused the premises
insured .. . to be materially altered so as to decrease the
value of said property; that plaintiff did not report said
alterations to defendant; that said alterations materially
affected the insurance risk of the defendant."
Later, when a motion for summary judgment was pending,
the insurance company, in its brief, stated that the alterations
consisted of but are not limited to removal of the second story
on the main building and removal of an adjacent building. They
do not allege or contend that the alterations increased the
insurer's risk in the property.
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The policy provision upon which Glacier relies in
its first affirmative defense is this:
"Unless otherwise provided in writing hereto,
this company shall not be liable for loss
occurring:
" (a) While the hazard is increased by any
means within the control or knowledge of
the insured ..
."
No matter how one slices it, a material alteration
which serves to "decrease the value of said property"
cannot be converted into an increase of the hazard insured
against.
The cases are unanimous that the increase of hazard
clause refers to physical conditions. West v. Green
(1969), 284 Ala. 517, 226 So.2d 302; Grace v. Westchester
Fire Ins. Co. (1964), 7 Ohio App.2d 156, 219 N.E.2d 227.
"Increase of hazard" is synonomous with "increase of risk of
loss." Brooks Upholstering Co. v. Aetna Insurance Co.
(1967), 276 Minn. 257, 149 N.W.2d 502.
"Since the term 'increase of hazard' denotes
a change in the circumstances existing at the
inception of the policy, it is evident that a
provision in an insurance policy against increase of
risk or hazard relates to a new use which would
increase the risk or hazard insured against,
and not to a continuation of a former or
customary use, - - - change - -
or to a in risk without
increase of hazard. It contemplates an alteration
in the situation or circumstances affecting the
risk which would materially and substantially
enhance the hazard, as viewed by-a person of
- -
ordinary intelligence, -- diligence. Thus,
care and
not all changes in the purposes for which premises
are occupied or used will be such hazard-increasing
activities as will void insurance coverage . .".
43 Am.Jur.2d 879, 880, Insurance, S927.
It is Glacier's theory that the alterations in the
property, which decreased its value "materially affected the
risk." Perhaps so; but what is prohibited under the policy
clause is enhancement or increase in the risk against fire.
Glacier's theory is so ethereal as to have no weight.
If we determine therefore, that the affirmative defense
presents nothing for the District Court or this Court to
determine, and is legally ineffective, what remains for us
or the District Court to decide? We must turn then to the
effect of the uncontrovertible fact that Glacier sought and
received the consent of the insured to an appraisal under
the terms of the policy and that an appraisal of the loss
under the terms of the policy has been made and rendered.
The fact that Glacier has requested and gone ahead with
the arbitration is an admission of liability under the policy.
Carr v. American Insurance Company (U.S.D.C. Tenn. 19571,
152 F.Supp. 700. This was an act affirming the validity of
the policy, which act negated Glacier's contention that the
policy was void.
The policy provision for appraisal or arbitration is
this, in pertinent terms:
"In case the insured and this company
shall fail to agree as to actual cash
value or the amount of the loss, then,
on the written demand of either, each
shall select a competent and disinterested
appraiser . . . The appraiser shall then
appraise the loss, stating separately actual
cash value and loss to each item, and, failing
to agree, shall submit their difference only
to the umpire an award in writing so itemized
of any two when filed with this company shall
determine the amount of actual cash value and
loss . . ."
The appraisers undertook the appraisal, item by
item. They found a total cost to reconstruct the building
of $80,000. Nevertheless, they agreed to reduce the loss on
the building as far as the actual cash value and loss to
each item was concerned to $48,524. They found a further
loss to the equipment in the bar in the sum of $5,320.
Since the appraisers made their award, including the cost
of reproduction less depreciation, the award is not subject to
judicial review where the policy states that the award when
filed "'shall determine the amount of actual cash value and
loss. ' " Schreiber v. Pacific Coast F. Ins. Co. (1950), 195
Md. 639, 75 Atl.2d 108, 111, 20 A.L.R.2d 951, 956.
The report of the appraisers indicated that they had
"found the actual cash value and loss to each item" in their
report. Their award therefore is in accordance with the
terms of the policy and may not now be attacked by Glacier,
especially when Glacier requested the appraisal.
The case therefore, is clear, at least to me: there
was a policy of insurance in effect at the time of the fire;
there was a material alteration of the premises while the
policy was in effect which reduced the value of the property
insured but did not enhance the fire risk; there was a
resort by Glacier to appraisers under the terms of the
policy, and the appraisers have returned the amount of
their award in accordance with the terms of the policy. The
insured is entitled to a judgment in the amount of the
appraiser's award plus interest from the date of the fire.
Therefore, the insured was entitled to judgment on the
pleadings or to a summary judgment, whether further affidavits
were filed or not. I would so hold.
Justice
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