NO. 87-370
IN THE SUPREME COURT OF THE STATE OF MONTANA
1988
PHILLIP R. MORROW, d/b/a MORROW
MECHANICAL CONTRACTORS,
Plaintiff and Appellant,
-vs-
FBS INSURANCE MONTANA-HOINESS LABAR,
INC. ,
Defendants and Respondents.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable G. Todd Baugh, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Holland & Hart; James M. Ragain, Billings, Montana
For Respondent :
Moulton, Bellingham, Longo & Mather; Gerald B. Murphy,
Billings, Montana
Submitted on Briefs: Nov. 6, 1987
Decided: February 9, 1988
Mr. Justice R. C. McDonough delivered the Opinion of the
Court.
The Thirteenth Judicial District Court granted the
respondent's motion for summary judgment. The issue here is
whether the lower court, in granting summary judgment, erred
in finding that there were no material questions of fact. We
reverse on this issue and remand the cause for trial.
Appellant Morrow, a subcontractor, alleged that
respondent FBS Insurance Montana-Hoiness LaBar, Inc., (FBS),
a construction bonding agent, intentionally interfered with
Morrow's prospective economic advantage. The economic
advantage allegedly jeopardized by FBS's conduct was the
award of a subcontract offered by a general contractor,
Fisher Construction, Inc., (Fisher), for work on the
construction of a water plant. Morrow claims FBS used its
influence as Fisher's bonding agent to prevent Fisher from
accepting Morrow's subcontract bid.
Prior to bidding as the general contractor for
construction of the water plant, Fisher solicited bids from
several subcontractors for the mechanical portion of the
facility. Morrow and Star Service, Inc., (Star), bid lower
than the other mechanical subcontractors bidding the job.
After narrowing its selection to Morrow and Star, Fisher
met with the two subcontractors to discuss ways to cut costs
on the subcontract. Shortly after this meeting Fisher
awarded the subcontract to Star.
Dan Fisher, head of Fisher Construction, stated in his
deposition that Star received the contract because it bid
lower than Morrow. Alf Hulteng, the Fisher employee in
charge of analyzing the two bids, stated in his deposition
that Morrow's bid may have been lower than Star's bid because
it included portions of the subcontract not covered by Star.
Thus, the record fails to resolve which bid was initially
lower. Morrow alleges that after the meeting to cut costs on
the project, Star reduced its bid to match his bid.
The record also reveals a conflict as to a "back
bonding" requirement for the mechanical subcontractor on the
project. Deposition testimony by Fisher and FBS employees
shows that FBS contemplated a performance bond from the major
subcontractors back to the general contractor to guarantee
that the subcontracting work stayed within the amount bid.
The depositions also show that all the parties were aware
that Morrow would have difficulty obtaining a back bond, and
that FBS would not provide a back bond to Morrow. However,
the record does not resolve when Fisher actually communicated
to the subcontractors that a back bond would be required.
Star eventually did obtain a bond to guarantee its
subcontract work on the project, but the bond was executed in
June, long after the award of the subcontract to Star, and
the bond itself was back dated from the date of actual
execution.
Morrow alleges that but for the conduct of FBS, he would
have received the contract. To support this allegation,
Morrow stated that Fisher employees Dan Fisher and Alf
Hulteng told him that FBS pressure prevented Fisher from
awarding him the subcontract. Morrow also points to the
ambiguities concerning the back bonding requirement and the
question of the low bid to discredit Fisher's explanation
that Star received the subcontract because they bid lower
than Morrow.
According to Philip Morrow's wife and business
associate, Donna Morrow, FBS's apparent motive for allegedly
pressuring Fisher was a "soured business relationship"
between Morrow and FBS. Donna Morrow also stated in her
deposition that Alf Hulteng informed her that FBS employee
Kip Vandeventer disliked the Morrows.
The soured business relationship between FBS and Morrow
apparently resulted from a payment made by FBS as Morrow's
bonding agent on another job. This payment apparently
resulted in FBS1s inability to back bond Morrow's work on the
construction project at issue in this case. Deposition
statements also showed that a bonding agent such as FBS could
exert considerable pressure on a general contractor like
Fisher.
In its decision to grant summary judgment on the
intentional interference claim, the District Court found,
"Mostly this case is plaintiff's words against defendants1
words." Also in regard to words against words, the District
Court found that "all the testimonial evidence other than
that from plaintiff and his wife, deny plaintiff's version of
the pertinent occurrences." With the above stated facts and
findings in mind, we will proceed to analyze Morrow's
objection to the lower court's grant of summary judgment.
ISSUE
Whether the District Court properly found that no
material facts existed, and that FBS was entitled to summary
judgment as a matter of law.
According to this Court's interpretations of Rule 56(c),
M.R.Civ.P., l1 [t]he party moving for summary judgment has the
initial burden of showing that there is no genuine issue as
to any fact deemed material in light of the substantive
principles that entitled the movant to judgment as a matter
of law." Fleming v. Fleming Farms, Inc. (Mont. 1986), 717
P.2d 1103, 1105-06, 43 St.Rep. 776, 779. And, all
"reasonable inferences that may be drawn from the offered
proof are to be drawn in favor of the party opposing summary
judgment." Cereck v. Albertson's Inc. (1981), 195 Mont. 409,
411, 637 P.2d 509, 511.
Morrow asserts that in applying this rule, the lower
court ignored the material fact questions created by the
conflicting affidavits and depositions of the parties. In
support of this argument, Morrow cites 5 26-1-301, MCA, which
provides :
One witness sufficient to prove a fact. The
direct evidence of one witness who i ' entitled to
full credit is sufficient for proof of any fact,
except perjury and treason.
We agree with Morrow's argument.
Other Courts have emphasized the impropriety of granting
summary judgment where the credibility of an affiant may be
crucial to decision of a material fact. See Durant v.
Stahlin (Mich. 1965), 135 N.W.2d 392, 398; Arnstein v. Porter
(2d Cir. 1946), 154 F.2d 464, 469-70. In Arnstein, the
material question of fact depended on contradictory
allegations in the depositions of the parties. Arnstein, 154
F.2d at 469. In reviewing the lower court's grant of summary
judgment, the Court stated:
[W]here, as here, credibility, including that
of the defendant, is crucial, summary judgment
becomes improper and a trial indispensable. It
will not do, in such a case, to say that, since the
plaintiff, in the matter presented by his
affidavits, has offered nothing which discredits
the honesty of the defendant, the latter's
deposition must be accepted as true. We think that
Rule 56 was not designed thus to foreclose
plaintiff's privilege of examining defendant at a
trial, especially as to matters peculiarly within
defendant's knowledge.
Arnstein, 154 F.2d at 471.
Drawing all reasonable inferences in favor of Morrow's
offered proof, application of Arnstein's interpretation of
Rule 56 is appropriate here because the issues presented by
the offered proof generally involve witness credibility. For
example:
(1) Dan Fisher stated that Star received the
subcontract because they were the low bidder. Philip Morrow
stated that Dan Fisher told him Star received the subcontract
because of pressure by FBS. Morrow's version of events is
backed by Alf Hulteng's ambiguous statements as to who was
the low bidder.
(2) Alf Hulteng stated that pressure from FBS did not
influence Fisher's decision to select Star over Morrow.
Morrow stated that Hulteng told him that Star received the
contract because of pressure from FBS.
(3) Donna Morrow stated that a sour business
relationship existed between the parties. Kip Vandeventer,
the FBS employee working with Fisher at the time of the bids,
denied the existence of animosity between the parties.
Drawing all reasonable inferences in favor of the
statements made by the Morrows, we cannot say that there
exists no question of material fact. The question presented
by the contradictory statements goes to the heart of Morrow's
claim, i.e., did FBS pressure Fisher into awarding the
subcontract to Star? Dan Fisher's statement that Star was
the low bidder conflicts with statements made by Alf Hulteng,
the Fisher employee who actually analyzed the bids. Under
these circumstances, FBS has failed to carry the movant's
initial burden of showing the absence of material facts in
light of the substantive principles that entitled the movant
to judgment as a matter of law.
However, FBS argues that even if pressure existed,
Morrow failed to produce evidence sufficient to show:
(1) that FBS intended to harm Morrow by such pressure;
(2) that the pressure was improper;
(3) that but for the pressure Morrow would have
received the contract. FBS argues that Morrow must come
forward with proof creating a material question of fact on
these issues to maintain an action for intentional
interference with prospective economic advantage.
The lower court set out the elements for the intentional
interference with prospective economic advantage for this
case as follows:
(1) That FBS intentionally and willfully acted;
(2) In a manner calculated to cause damage to plaintiff
and plaintiff's business;
(3) Which acts were done with the unlawful purpose of
causing damage or loss to plaintiff without right or
justification and;
(4) From which acts plaintiff actually suffered damage
or loss. We agree with the lower court's analysis in this
regard. See Bolz v. Myers (1982), 200 Mont. 286, 295, 651
P.2d 606, 611. However, drawing all reasonable inferences in
favor of Morrow, Morrow's affidavits and deposition
statements raise a material question of fact under the
substantive principles of law involved.
First, as to whether or not FBS acted intentionally,
Morrow stated that FBS put pressure on Fisher. There is no
evidence in the record to indicate that the alleged pressure
was accidental. Morrow's statement, and the statements
allegedly made by Fisher employees as to why Star received
the contract, are allegations which by their very nature
implicate intentional conduct on the part of FBS.
Second, as to whether or not the interference was
"improper" under Montana law, an inference may be drawn from
Morrow's allegations that FBS pressured Fisher to award the
contract to Star to make sure that the subcontractor
r e c e i v i n g t h e b i d c o u l d b e back bonded w i t h FBS. W e cannot
say t h a t i n t e r f e r e n c e motivated t o gain business advantage
among the relationships between bonding agents, general
contractors, and s u b c o n t r a c t o r s i s n e c e s s a r i l y p r o p e r . And
when t h e r e i s
room f o r d i f f e r e n t v i e w s , t h e d e t e r m i n a t i o n of
w h e t h e r t h e i n t e r f e r e n c e was i m p r o p e r o r n o t i s
o r d i n a r i l y l e f t t o t h e j u r y , t o o b t a i n i t s common
f e e l f o r t h e s t a t e o f community mores and f o r t h e
manner i n which t h e y would o p e r a t e upon t h e f a c t s
i n question.
R e s t a t e m e n t (Second) o f T o r t s 5 767 a t 38-39 (1977).
F i n a l l y , i n r e g a r d t o whether o r n o t an i n f e r e n c e could
b e drawn t h a t t h e p r e s s u r e c a u s e d damage t o Morrow, w e need
only point out that Fisher narrowed its choice of
s u b c o n t r a c t o r s t o S t a r and Morrow. The a l l e g a t i o n made by
Morrow i s t h a t b u t f o r FBS's i m p r o p e r p r e s s u r e , h e would have
received the contract. Under these circumstances, an
i n f e r e n c e may c e r t a i n l y b e drawn t h a t F i s h e r ' s c h o i c e o f S t a r
o v e r Morrow damaged Morrow.
F o r t h e f o r e g o i n g r e a s o n s we o v e r t u r n t h e l o w e r c o u r t ' s
g r a n t o f summary judgment and remand.
W Concur:
e Justice
/Justices