Shimsky v. Valley Credit Union

No. 83-223
IN THE SUPREME COURT OF THE STATE OF MONTANA

1984

PATRICK F. SHIMSKY and EILEEN F.
SHIMSKY, husband and wife,
Plaintiffs and Appellants,

VALLEY CREDIT UNION, a credit union
organized under the laws of the State
of Montana,
Defendant and Respondent.

APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Diane G. Barz, Judge presiding.

COUNSEL OF =CORD:

For Appellants:
Howard F. Strause, Great Falls, Montana
Lawrence A. Anderson argued, Great Falls, Montana

For Respondent:
Herndon, Harper & Munro; Donald R. Herndon argued,
Billings, Montana

Submitted: October 26, 1983
Decided: February 16, 1984

Filed:
Mr. Justice John Conway Harrison delivered the Opinion of
the Court.

This case involves allegations of violations of the
Truth in Lending Act and breach of contract in relation to
an "open ended" financing arrangement. This appeal is
taken from the District Court order dismissing appellants'
complaint and granting respondent's motion for summary
judgment.
On January 10, 1979, appellant Patrick F. Shimsky
obtained a $5,500 loan from respondent (hereinafter Credit
Union) by means of an open ended revolving credit plan. The
annual percentage rate on the outstanding balance was 12%,
and the agreement provided for minimum monthly payments.
The language which gave rise to this dispute is found in
paragraphs two and thirteen of the agreement, which
provide:
"2. the credit union reserves the right
to amend or terminate this agreement or
refuse any request for an advance at any
time for any reason not prohibited by law
and such action shall not affect the
obligations of the undersigned or any
other obligor.

"13. Undersigned agrees that (a) the
credit union may retain this agreement to
comply with federal and/or state law and
(b) in compliance with applicable law,
regulation and this agreement the credit
union may change the terms of the plan
from time to time upon prior notice
mailed to the undersigned's last known
address as shown on the records of the
credit union."
Pursuant to these provisions, the Credit Union mailed
a "Notice of Amendment to Revolving Credit Plan" to
appellant in June of 1979, to be effective July 15, 1979.
The notice generally stated that the Credit Union was
raising the annual percentage rate from 12% to 15%, and gave
appellant a choice of adhering to the new provisions of the
contract or making payment in full on July 15, 1979.
Appellant made monthly payments of $165 from August 1979
through October 1981 reducing the outstanding balance to
less than $300. This action was filed on October 20, 1981.
Two causes of action were asserted in the complaint;
first, alleged violations of the Federal Truth in Lending
Act, and second, a breach of contract for unilaterally
raising the interest rate in contravention of the agreement.
The Credit Union generally denied both claims, and
affirmatively plead novation, estoppel, waiver, laches and
statute of limitations.
The Credit Union then moved for summary judgment on
the grounds that as a matter of law appellant's Truth in
Lending claim was barred by the statute of limitations.
Briefs were filed and oral arguments heard on the motion.
The Court dismissed the complaint on the ground that the
truth in lending claim was barred by the statute of
limitations. An extensive memorandum in support of its
order was filed by the court in which the Truth in Lending
statute of limitations was discussed in depth. However, the
breach of contract claim was not mentioned in the
memorandum. In any event the complaint was dismissed in its
entirety.
On appeal, appellant seeks review only of the District
Court's dismissal of the breach of contract claim, conceding
that the Truth in Lending claim is barred by the statute of
limitations. The issues raised deal with the propriety of
t h e summary j u d g m e n t i n two a s p e c t s . He f i r s t c o n t e n d s t h e

District Court improperly applied the Truth in Lending

s t a t u t e of l i m i t a t i o n s t o t h e b r e a c h o f c o n t r a c t claim, and

second, t h a t t h e r e were g e n u i n e i s s u e s o f m a t e r i a l f a c t s o

a s t o p r e c l u d e summary j u d g m e n t .

W e n o t e t h a t t h i s c a s e was d i s p o s e d o f b e l o w o n m o t i o n

f o r summary j u d g m e n t . The t r i a l judge s a t without a jury

and no testimony was taken, as the facts are relatively

uncontested. The s c o p e o f r e v i e w i n s u c h a case i s much

b r o a d e r t h a n i n o t h e r a p p e a l s , a s t h i s C o u r t i s f r e e t o make

its own examination of the entire case and to make a

determination i n accordance with its findings. Steadman v.

H a l l a n d ( N o n t . 1 9 8 2 ) , 6 4 1 P.2d 448, 39 S t . R e p . 343; citing

I n r e E s t a t e o f J e n s e n ( 1 9 6 9 ) , 1 5 2 Mont. 4 9 5 , 452 P.2d 418;

a n d K o s t b a d e v. M e t i e r ( 1 9 6 7 ) , 1 5 0 Mont. 1 3 9 , 432 P.2d 382.

We will a l s o uphold the result reached below if correct,

regardless of the reasons given for the conclusion.

Steadman, supra, c i t i n g S p a e t h v. Emmett ( 1 9 6 3 ) , 1 4 2 Mont.

231, 383 P.2d 812; and Johnstone v. Sanborn (1960), 138

Mont. 4 6 7 , 358 P.2d 399.

We further note that this case sounds in equity.

Traditionally, b r e a c h o f c o n t r a c t c l a i m s , which is t h e o n l y

c l a i m s t i l l pursued h e r e , have been c l a s s i f i e d a s a c t i o n s a t

law. See McClintock, Equity section 60 (2d Ed. 1948).

Specifically actions f o r breach of contract to l e n d money

have been classified as actions at law. See McClintock,

s u p r a , s e c t i o n 60 a t p. 156-7. However a p p e l l a n t ' s a r g u m e n t

b e l o w was t h a t t h e c o n t r a c t was i l l u s o r y and t h u s v o i d . On

a p p e a l he c o n t e n d s t h a t t h e c o n t r a c t w a s v o i d and i l l u s o r y

for lack of mutuality, and that the Credit Union's
interpretation of the contract renders the contract
unconscionable requiring it to be voided or reformed. These
claims are tied to the breach of contract theory by
appellant arguing that these problems have placed the Credit
Union in breach of the contract provisions which allow
amendment, "[Iln compliance with applicable law. . ." In
addition, the Credit Union raised the equitable defenses of
estoppel, waiver and laches. These requests are of an
equitable nature and invoke the Court's equity power.
When reviewing cases of an equitable nature,
"[Tlhe supreme court shall review all
questions of fact arising upon the
evidence presented in the record, whether
the same be presented by specifications
of particulars in which the evidence is
alleged to be insufficient or not, and
determine the same, as well as questions
of law, unless for good cause a new trial
or the taking of further evidence in the
court below be ordered." Section
3 - 2 - 2 0 4 ( 5 ) , MCA.

The peculiar circumstances of this appeal show the
need for such a broad standard; the legal theory primarily
relied on below by appellant has been conceded on appeal,
and the issues presented for review relate to a legal theory
which was barely touched by the District Court. In the
lower court appellant's main legal theory involved alleged
violations of the Truth in Lending Act. Appellant pursued
the Truth in Lending claim vigorously, filing numerous
briefs, discovery motions and seeking certification of the
lawsuit as a class action. When the Credit Union filed its
motion for summary judgment, appellant filed additional
briefs and argued orally against the motion. After the
hearing, appellant filed a post hearing memorandum further
arguing his position. However in his zeal pursuing the
T r u t h i n Lfending c l a i m , t h e b r e a c h o f c o n t r s c t c l a l m set?ms

t o have been p u t on t h e back b u r n e r .

'I'hroughout the various briefs and motions filed by

appellant, l i t t l e mention i s made o f t h e b r e a c h o f c o n t r a c t

claim. Some argument was made thst the contract was

illusory and thus void, but any connection between that

a r g u m e n t a n d t h e a l l . e q e d b r e a c h o f c o n t r a c t was n o t s t r o n g l y

pursued. I n any e v e n t , t h e T r u t h i n L e ~ d i n gc l a i m e m e r g e d

as the primary theory of recovery at the hearin? on the

C r e d i t Union's motion. T h i s is a p p a r e n t from a p e r u s a l o f

t h e D i s t r i c t C o u r t ' s memorandum i n s u p p o r t o f i t s d i s m i s s a l

o f t h e a c t i o n , i n w h i c h n o m e n t i o n of t h e b r e a c h o f c o n t r a c t

claim is made. The Credit Unlon opined that appellant

p r e s e n t e d h i s arquments on t h e b r e a c h o f c o n t r a c t i s s u e i n a

vague, ambiguous ana secondary manner, and n o t h l n g a p p e a r s

i n the record t o cause us t o disagree.

?.s a r e s u l t , w h e n t h e m o t i o n f o r summary j u d q m c n t w a s

granted, t h e D i s t r i c t C o u r t ' s memorandum d i d n o t m e n t i o n t h e

breach of contract claim. However, we are now asked to

review the t r i a l c o u r t ' s dismissal of t h e breach of c o n t r a c t

claim; thus it is imperative that the scope of review be

q u i t e broad.

?de f e e l appellant's claim is barred by laches and

a f f i r m t h e D i s t r i c t C o u r t r u l i n g on t h a t b a s i s .

"Laches means n e g l i g e n c e t o t h e a s s e r t i o n
of a r i g h t , and e x i s t s where t h e r e h a s
been 3 d e l a y of such d u r a t i o n a s t o
render enforcement of an a s s e r t e d r i g h t
inequitable. (citations omitted) A
complainant can be charged with l a c h ~ s
i f , b u t o n l y i f h e was e i t h e r a c t u a l l y o r
presumptively awarc of h i s r i g h t s . A
complainant is p r e s u m p t i v e l y aware of h i s
r i g h t s where t h e c i r c u m s t a n c e s o f which
h e i s c o g n i z a n t a r e s u c h a s t o p u t a man
of ordinary prudence on inquiry."
 Hereford v. Hereford (1979), 183 Mont.
104 at 108-9, 598 P.2d 600 at 602.
Here there were no necessary facts of which appellant
was cognizant at the time he brought the action that he was
unaware of at the time he received the notice of amendment.
The notice was clearly sufficient to bring the change in
terms to appellant's attention. "A complainant is
presumptively aware of his rights where the circumstances of
which he is cognizant are such as to put a man of ordinary
prudence on inquiry." Hereford, 183 Mont. at 108-9, 598
P.2d at 602. As the Credit Union felt it was within its
rights to raise the interest rate, it interpreted
appellant's silence as acquiescence. It would be
inequitable to allow pursuit of this claim when the Credit
Union relied on appellant's acquiescence for over two years
and the transaction is nearly complete.
Appellant points out that the statute of limitations
has not yet run, however the period of time necessary to
invoke laches is not measured by the statute of limitations.
Barrett v. Zenisek (1957), 132 Mont. 229, 315 P.2d 1001.
Since there is no prescibed period, each case is determined
according to its own particular circumstances. Montgomery
v. First National Bank of Dillon (1943), 114 Mont. 395, 136
P.2d 760. As noted above, appellant made twenty-seven
payments after receiving notice that the interest rate was
being raised. No objection was made until the balance had
been reduced to less than $300, and over two years had
passed. In the context of a two year transaction, it would
be inequitable to allow pursuit of a claim which arose at
the inception of the arrangement.
As previously set forth in the statement of facts this
was a case d e c i d e d b y t h e t r i a l c o u r t o n summary j u d g m e n t ,

as the f a c t s are u n c o n t e s t e d . One o f t h e i s s u e s r a i s e d by

a p p e l l a n t is d i r e c t e d a t t h e p r o p r i e t y o f summary j u d g m e n t

as he alleges there are genuine issues of material fact

outstanding.

This Court has often stated that under Rule 56(c)

M.R.Civ.P. summary judgment is p r o p e r only if the record

d i s c l o s e s no g e n u i n e i s s u e o f material f a c t , and t h e movant

is entitled to judgment as a matter of law. Reaves v.
Reinbold (Mont. 1 9 8 0 ) , 6 1 5 P.2d 896, 37 St.Rep. 1 5 0 0 ; Rumph

v. Dale E d w a r d s , Inc. ( 1 9 7 9 ) , 1 8 3 Mont. 3 5 9 , 600 P.2d 163.

The party moving for summary judgment has the burden of

s h o w i n g t h e c o m p l e t e a b s e n c e of a n y g e n u i n e i s s u e a s t o a l l

facts which are deemed material in light of those

substantive principles which e n t i t l e him t o judgment as a
m a t t e r o f law. B i g Man v . S t a t e (Mont. 1 9 8 1 ) , 626 P.2d 235,

38 S t . R e p . 362; Harland v. Anderson ( 1 9 7 6 ) , 1 6 9 Ivlont. 447,

548 P.2d 613. "Once the movant has established that no

material issues of fact exist, the burden shifts to the

opposing p a r t y t o raise an i s s u e of f a c t . " Krone v. McCann

(Mont. 1 9 8 2 ) , 638 P.2d 397, 399-400, 39 St.Rep. 1 0 , 13.

Here t h e a p p e l l a n t f a i l e d to accept t h a t burden and

present f a c t s involving the contract issue. Having f a i l e d

t o do so, the court's order g r a n t i n g summary j u d g m e n t was

proper.

Accordingly, the judgment of the District Court

d i s m i s s i n g t h e c o m p l a i n t i n i t s e n t i r e t y is a f f i r m e d .
W e concur:

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Chief J u s i c e

Justices

Mr. J u s t i c e J o h n C . Sheehy, s p e c i a l l y c o n c u r r i n g :

I concur o n l y because of l a c h e s . T h i s c o n t r a c t was

e n t i r e l y lacking i n mutuality.