NO. 81-44
I N THE SUPREME COURT O THE STATE O M N A A
F F O T N
1981
LARRY L. UNRUH, H . JAMES OLESON,
and ALFRED WALLNER, M . D . ,
P l a i n t i f f s and A p p e l l a n t s ,
-vs-
BUFFALO BUILDING COMPANY,
D e f e n d a n t and Respondent.
Appeal from: D i s t r i c t Court o f t h e Eleventh J u d i c i a l District,
I n and f o r t h e County o f F l a t h e a d , The H o n o r a b l e
R o b e r t C. S y k e s , J u d g e p r e s i d i n g .
Counsel o f Record:
For A p p e l l a n t s :
E. Eugene A t h e r t o n , K a l i s p e l l , Montana
F o r Respondent :
M e r r i t t N. Warden, K a l i s p e l l , Montana
S u b m i t t e d on B r i e f s : A p r i l 15, 1981
Decided : &A- 2 2 1981
Filed : N L . . 2 2 1981
Mr. Daniel J. Shea delivered the Opinion of the Court.
Plaintiffs Larry L. Unruh, H. James Oleson and Alfred
Wallner appeal from the order of summary judgment of the
Flathead County ~istrictCourt granting summary judgment to
the defendant Buffalo Building Company. In its order, the
court held that plaintiffs' claim was barred by the statute
of limitations applicable to tort actions. We hold that the
claims are governed by the contract statute of limitations
and therefore reverse.
Plaintiffs leased office space from defendant on the
second floor of the Buffalo Building, a renovated commercial
office building in Kalispell, Montana. In September 1976,
the Buffalo Building caught fire. This fire gutted the
building, destroying the plaintiffs' offices. In September
1980, almost four years later, plaintiffs Unruh and Oleson
brought this lawsuit against defendant by filing a complaint
claiming property and business loss damages. This complaint
was amended one month later to include plaintiff Wallner in
the lawsuit. The amended complaint alleged that defendant
breached an implied warranty of plaintiffs' lease agreements
providing for the peaceful and quiet enjoyment of their
office space leaseholds.
The plaintiffs alleged the breaches occurred because
the defendant leased another portion of the Buffalo ~uilding
to a tenant who stored highly flammable material on his
premises, and because, when the building was remodeled the
defendant failed to use fireproof building materials and to
install fire extinguishing equipment.
Defendant answered plaintiffs' amended complaint by
asserting that the claim was barred by the two-year statute
of limitations set out in section 27-2-207, MCA, and that
the complaint failed to state a legal claim. In its brief
supporting its motion for summary judgment, defendant argued
that because plaintiffs were seeking recovery for injury to
property, that the action must be covered by the two-year
statute of limitations. In making this argument, defendant
relied on language from Quitmeyer v. Theroux (1964), 144
Mont. 302, 395 P.2d 965, holding that "the statute of limitation
applicable must necessarily be in conformity with the basis
of the action," and that it must then be determined whether
the essence of the claimed breach arises from a breach of
contract or arises from the commission of a tort.
The District Court reasoned that the essence of the
action is based on a tort violation and therefore that the
two-year statute of limitations provided for in section 27-
2-207, MCA, applies. Accordingly, the District Court granted
summary judgment based on the affirmative defense of statute
of limitation, and entered judgment for defendant. From that
order, plaintiffs appeal.
The trial court's reliance on the rule in Quitmeyer,
supra, is misplaced, for we have specifically adopted a rule
to apply to situations falling within the "twilight zone" of
contract and tort law. In Garden City Floral Co. v. Hunt
(1953), 126 Mont. 537, 255 P.2d 352, this Court set out the
following rule to follow:
"Under certain circumstances, a ground of
liability in tort may coexist with a liability
in contract, giving the injured party the right
to elect which form of action he will pursue.
Ordinarily, where there is no duty except such as
the contract creates, the plaintiff's remedy
is for breach of contract, but when the breach
of duty alleged arises out a liability
independently of the personal obligation
undertaken by contract, it is a tort. (Citation
omitted.) 'As a general rule, there must be
some active negligence or misfeasance to support
tort. There must be some breach of duty distinct
from breach of contract.' (Citation omitted.)
". . . 'But even if the question be regarded as
a doubtful one, the doubt must be resolved in
favor of an action ex contractu.'
"When the facts warrant either form of action
plaintiff may elect as to which he will pursue.
(Citations omitted.)" 126 Mont. at 543, 544.
Here, the trial court specifically noted that the claim
does not contend that the defendant was guilty of active
negligence, and with this assessment, we must agree. In
applying Garden City Floral, however, we must reach the
conclusion that the eight-year statute of limitation applicable
to contract actions governs this action framed by plaintiffs
as a claim for breach of a covenant of quiet enjoyment,
implied from the term of the parties' lease agreements.
Plaintiffs' claim here is entirely different from the claim
presented in Quitmeyer, where we found that the claim "was
based strictly upon defendant's negligence." Plaintiffs had
a right to base their claim on breach of contract.
The judgment is vacated and this cause is remanded to
the District Court for further proceedings.
We concur:
v Chief4 L % 4
d Jnstice
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Justices