State Ex Rel. Boyne USA, Inc. v. District Court

No. 87-213
IN THE SUPREME COURT OF THE STATE OF MONTANA
1987

STATE OF MONTANA, ex rel.,
BOYNE USA, INC.,
Relator,
-vs-
THE DISTRICT COURT OF THE FIFTH
JUDICIAL DISTRICT OF THE STATE
OF MONTANA, in and for the COUNTY
OF MADISON, and THE HON. JUDGE
THEREOF, FRANK M. DAVIS,
Respondents.

ORIGINAL PROCEEDING:

COUNSEL OF RECORD:
For Relator:
Worden, Thane & Haines; Patrick G. Frank, Missoula,
Montana
For Respondent :
Wellcome, Frost & Bartlett; Page Wellcome, Bozeman,
Montana
Schulz, Davis & Warren; John S. Warren, Dillon, Montana
Keller, Reynolds, Drake, Sternhagen & Johnson; Thomas
Q. Johnson, Helena, Montana
Boone, Karlberg & Haddon; Sam E. Haddon, Missoula
Montana

Submitted: August 18, 1987
Decided: September 10, 1987
~i led : SEP 1 0 1987

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2xL , & Clerk
Mr. Justice Fred J. Weber delivered the Opinion of the Court.

Boyne USA, Inc. (Boyne), has filed its application for a
writ of supervisory control in a civil action currently
pending in the District Court of Madison County, Cause No.
7457, entitled The Association of Unit Owners of the Deer
Lodge Condominium, Inc., et al., v. Big Sky of Montana Real-
ty, Inc., et al. The action relates to the construction of
the Deer Lodge Condominium located at Big Sky, Montana. We
grant the application for supervisory control as to certifi-
cation of the underlying suit as a class action.
The issue is whether supervisory control is both neces-
sary and appropriate.
While we do not have an official record before us, the
facts as contained in the various briefs and memoranda are
not in dispute. Boyne is a Michigan corporation which owns
and operates Big Sky Resort at Big Sky, Montana. Boyne is
one of the defendants in Cause No. 7457 brought by the The
Association of Unit Owners of the Deer Lodge Condominium,
Inc. (Association). The plaintiffs in that cause are the
Association and the Board of Directors of the Association.
The case arose out of the construction and reconstruction of
two buildings called Deer Lodge Condominium, located at Big
Sky Resort. The buildings were completed in 1975 by Inland
Construction Company. Defendant Lloyd W. Darg and Associates
was construction engineer, and defendant Douglas A. Moe,
Architects, Inc., was the architect. Big Sky of Montana,
Inc. (Big Sky) sold units in the buildings during 1974 and
1975. Big Sky itself was owned by Chrysler Realty Corpora-
tion (Chrysler) and a number of other shareholders. In May
1976, the shareholders of Big Sky formed Big Sky of Montana
Realty, Inc. (Realty), as a subsidiary of Big Sky. In June
1976, the shareholders sold the resort operations to Boyne.
Prior to closing that sale, Big Sky transferred the operating
assets, including various real estate condominiums and devel-
opments, to Realty, whose shares were then distributed to the
shareholders who in turn transferred the shares of Big Sky to
Boyne. After the sale, Realty owned the unsold interest in
the Deer Lodge Condominium and was the only entity that sold
inventory after that date.
In the summer of 1976, significant structural defects
were discovered in the buildings and Big Sky retained defen-
dants Morrison-Maierle, Inc., and Martell Construction to
repair them. In December 1976, after the repairs had been
completed, Boyne purchased 34 out of the 126 units in Deer
Lodge Condominium. In July 1978, Big Sky merged into Royne
and the surviving corporation was Boyne. The present lawsuit
was initiated in 1984. We are advised by the Association
that only Big Sky-Boyne, Chrysler, Realty, and
Morrison-Maierle, Inc., remain as defendants.
The amended complaint is very long. In pertinent part
it alleges that on or about April 1, 1976, Realty and Big Sky
informed the Association there were significant structural
and safety deficiencies in the Deer Lodge Condominium and
thereafter attempted to make the necessary corrections and
repairs. The complaint contains extensive general allega-
tions of defects in framing, supports, foundations, and other
essential elements of construction. The complaint alleges
that the engineer and architect for the Association deter-
mined that the condominium buildings were unsafe for habita-
tion. The buildings have been vacated and the Association
has been advised that the cost of making the buildings habit-
able would be $6,318,000 and alternatively that the reduction
in value is $10,000,000. They allege that the value of the
loss of use of the buildings was $3,500,000; the cost of
storage of various furnishings and equipment was $150,000;
and that emergency repairs of $50,000 were required. The
complaint then further alleges the right of recovery under
various theories. The theories include express warranty,
implied warranty, breach of contract, negligence, strict
liability, fraud and violation of the breach of the implied
covenant of good faith and fair dealing, deceptive business
practices, promissory estoppel, negligent supervision, breach
of the implied warranty of habitability, and a separate claim
against Morrision-Maierle, Inc. The damages sought are the
above described amounts together with punitive damages in the
amount of $25,000,000 and treble damages under 5 30-14-133,
MCA, together with reasonable attorney fees.
Plaintiffs did not take any action to certify the claim
as a class action suit under Rule 23, M.R.Civ.P. The Associ-
ation, which owns one of the 126 units, asserts the claims on
its own behalf and on the behalf of the owners of the remain-
ing 125 units. The Association contends that it has the
right to present the claims on behalf of the individual unit
owners, including Boyne. Boyne moved to segregate its claim
and align itself as a party plaintiff so it could prosecute
its claim in its own name. Boyne's motion was denied. All
of the defendants moved for summary judgment based in part
upon statutes of limitation. The motions of defendants Lloyd
W. Darg and Associates and Douglas A. Moe, Architects, Inc.,
were granted. The District Court ruled that the plaintiffs
had knowledge of the claims no later than September 1976.
Boyne sought to be dismissed on the same basis but that
motion was denied. Chrysler moved to dismiss for failure to
join necessary parties and lack of a real party in interest
and that motion was denied.
In its petition for supervisory control, Boyne requests
that its motion to segregate and align be granted. It also
asks that its motion for summary judgment be granted based
upon non-disparate application of the statute of limitations.

Is supervisory control both necessary and appropriate in
the underlying case?
This Court has stated that supervisory control is appro-
priate where there are procedural entanglements that may
prolong the litigation and appeal is an inadequate remedy, or
where it is apparent from the record that relator will be
deprived of a fundamental right unless supervisory control is
granted. State v. District Court of Eighth Jud. Dist. (Mont.
1985), 703 P.2d 148, 153-54, 42 St.Rep. 1061, 1065-66. In
the underlying case, there have been many depositions taken
as well as interrogatories and other types of discovery. As
pointed out by the District Court and the Association, the
litigation has been dragging on and it is essential for the
protection of all parties that the litigation move forward as
rapidly as is reasonably possible. Yet Boyne1s claim is that
it is being denied its right to an attorney by being forced
to accept the Association as its representative.
We note that the complaint seeks to recover damages
suffered by the Association itself as well as damages which
can be classed as personal to the individual unit owners.
The Association's claims cover repair and replacement of the
common elements. The individual owners1 claims include
expenses of moving and storage of personal property, loss of
use, diminution in value of units, loss of rent, and claims
for breach of the covenant of good faith resulting in puni-
tive damages.
As pointed out by the parties, Rule 17(a), M.R.Civ.P.,
provides that every action shall be prosecuted in the name of
the real party in interest. In addition, that Rule provides
that a party authorized by statute may sue in his own name
without joining the party for whose benefit the action is
brought. The Association was formed under the Unit Ownership
Act, S § 70-23-101 to 70-23-1002, MCA. The Association in
acting as plaintiff relied upon S 70-23-901, MCA, which in
pertinent part provides:

(1) Actions may be brought on behalf of two or
more of the unit owners, as their respective inter-
ests may appear, by the manager with respect to any
cause of action relating to the common elements or
more than one unit.
The Association contends that this statute is broad enough to
give it standing as the manager of the Association to bring
this action which concerns the common elements of the condo-
minium units and is brought on behalf of more than two of the
unit owners.
The Association relies upon Brickyard Homeowners' Ass'n.
v. Gibbons Realty (Utah 1983), 668 P.2d 535, in which the
Supreme Court of Utah applied a statute similar to our
5 70-23-901, MCA. The Utah Court concluded that the
statute-authorized management committee could bring suit on
behalf of unit owners without making it a class action or
joining the unit owners as necessary parties. While the Utah
statute was not identical to the Montana statute, it is
definitely comparable. The Utah case involved questions with
regard to fresh water ponds and glass installation in common
areas, and other negligent design and workmanship. The
defects were not alleged to have been sufficient to render
the Utah condominiums unusable. In holding that the manage-
ment committee could represent all of the unit owners, the
Utah Court also concluded that the holdings would be binding
upon the unit owners as a matter of res judicata. ~owerhill
Condo. Assoc. v. American Condo. (Ct.App.Ore. 1983), 675 P.2d
1051, was decided in a similar way although the Oregon
statute clearly gave the right to the Association to insti-
tute, defend, or intervene in behalf of two or more unit
owners.
We distinguish the present case from the cases cited.
The following significant factors present in this case were
not present in the Utah and Oregon cases. Twenty-seven
percent of the condominium units are owned by Boyne, a party
which does not wish to have the Association represent it.
Boyne is also a party defendant, which raises a further
difficulty. Next, the materials furnished to us demonstrate
that some but not all of the other unit owners have executed
postcard consents to be bound by the results of this litiga-
tion. Some of the postcards indicate that the unit owners
reserve the right to take further action on their own. Me
find a very confused position so far as individual unit
owners are concerned which was not present in the Utah or
Oregon cases.
The Unit Ownership Act of Montana provides no procedure
describing how a manager is to proceed where a difference of
opinion is present as in this case. Without ruling on the
obvious constitutional questions involved, we conclude that
it would be inappropriate to allow the action to proceed in
the absence of authority to represent so many of the unit
owners. We grant the petition for supervisory control.
Under Rule 19(a), M.R.Civ.P., a person who is subject to
service of process must be joined as a party if he claims an
interest relating to the subject of the action and is so
situated that the disposition of the action in his absence
may leave any of the persons already parties subject to
substantial risk of incurring double, multiple or otherwise
inconsistent obligations. Certainly that type of contention
may be made in the present case. Several of the defendants
have requested that this Court dismiss the action below for
lack of a real party in interest. Yet clearly, various
parties in the action are properly parties plaintiff. That,
of course, includes the Association. We conclude that it
would be inappropriate to dismiss the underlying action for
lack of real parties in interest.
On July 2, 1987, the District Court denied defendants'
motion to designate this case as a class action. Defendants
and the relator have asked this Court to direct that the
action be maintained as a class action. Rule 23, M.R.Civ.P.,
sets forth the class action requirements in Montana. In
substance, Rule 23(a) provides that parties may sue as a
class if the class is so numerous that joining all members is
impractical, there are questions of law or fact common to the
class, claims are typical of the claims of the class, and
representative parties will fairly and adequately protect the
interest of the class. Rule 23(b) and (c) describe in detail
when a class action may be maintained and the determinations
which are normally required by the court.
We note that in a class action maintained under Rule
23 (b)(3), M. R.Civ.P., the court shall direct to the members
of the class the best notice practicable under the circum-
stances, including individual notice to all members who can
be identified through reasonable effort. Rule 23 (c)(2),
M.R.Civ.P. The notice must advise each member that (A) the
court will exclude that member from the class if so requested
by a specified date; ( B ) the judgment, whether favorable or
not, will include all members who do not request exclusion;
and (C) any member who does not request exclusion may, if
desired, enter an appearance through counsel. Under the
facts of this case as presented to us, this type of procedure
appears to be most fair as to all parties. It will allow
Boyne to request exclusion and to appear through its own
counsel. It will also allow others of the unit owners to be
excluded if they choose to do so. Last, and important for
the plaintiffs, if a unit owner does not request exclusion,
then the judgment will be binding upon him. This appears to
be the appropriate result in the present case.
From the uncontradicted materials presented by both
relator and respondents, we conclude that the requirements of
Rule 23 (a), M. R.Civ.P., are met. We conclude that the class
of unit owners is so numerous that joinder of all members is
impractical, and that there are questions of law and fact
common to the class and that the claims of the plaintiffs are
typical of the claims of the class. We further conclude that
there is a sufficient identity to the types of claims made by
the various unit owners that the representative parties will
fairly and adequately protect the interests of the class. As
a result, no further findings are required by the District
Court on Rule 23 (a). As we analyze Rule 23 (b), M. R.Civ.P. ,
we conclude that the questions of law or fact common to the
members of the plaintiff class predominate over any questions
affecting only individual members and that a class action is
superior to other available methods for the fair and effi-
cient adjudication of the controversy.
We hold that the underlying action shall proceed as a
class action on the part of the unit owners as plaintiffs.
In doing so, we recognize that the District Court will be
required to make additional decisions and orders. In partic-
ular, the District Court shall order the unit owners be given
the best notice practicable under the circumstances, includ-
ing individual notice to all unit owners who can be identi-
fied through reasonable effort. The notice shall meet the
requirements of Rule 23 (c)(2), M. R.Civ. P. We specifically
recognize the continuing jurisdiction on the part of the
District Court under Rule 23(d), M.R.Civ.P., so that the
power of the District Court to make appropriate orders in the
course of this litigation is not in any way restricted, so
long as such orders are consistent with this opinion.
We decline to exercise supervisory control as to the
orders and motions on statutes of limitation. In a similar
manner, we do not address the other requests of the parties.
We conclude it would be premature to rule on these until the
final determination has been made as to the parties consti-
tuting both plaintiffs and defendants. All of such parties
should be given the opportunity to present their contentions
on such motions and requests.
The matter is remanded to the District Court for further
action consistent with this opinion.

We Concur*

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