No. 89-065
I N T H E SUPREME COURT O F T B E S T A T E O F MONTANA
1990
THELMA WALKER,
P l a i n t i f f and A p p e l l a n t ,
-vs-
S T . PAUL F I R E AND MARINE INSURANCE COMPANY,
D e f e n d a n t s and R e s p o n d e n t s .
APPEAL, FROM: D i s t r i c t C o u r t of t h e E i g h t h J u d i c i a l D i s t r i c t ,
I n and f o r t h e C o u n t y of C a s c a d e ,
T h e H o n o r a b l e R . D . M c P h i l l i p s , Judqe p r e s i d i n g .
COIJNSEL O F RECORD:
For A p p e l l a n t :
H o w a r d F. S t r a u s e argued, G r e a t F a l l s , M o n t a n a
For R e s p o n d e n t :
W i l l i a m D. Jacobsen argued; J a r d i n e , S t e p h e n s o n , R l e w e t t &
Weaver, G r e a t Falls, Montana
Submitted: O c t o b e r 17, 1 9 8 9
Decided: February 5, 1 9 9 0
Filed:
- P
Clerk
trade practices prohibited under S 33-18-201, MCA, of the
Montana Unfair Trade Practices Act.
An earlier appeal to this Court held that Walker's
malpractice claim against attorney Larson was made within the
effective period of his policy with St. Paul. Walker v.
Larson (1986), 223 Mont. 333, 727 P.2d 1321. Even though
Walker did not actually file a lawsuit within the policy
period, this Court found that by filing a complaint with the
Commission on Practice detailing IJarsonls actions and
advising both Larson and St. Paul that she had done so,
Walker had made a claim. This Court concluded there was
coverage as a matter of law. Walker, at 336, 727 P.2d at
1323.
Following the first Walker decision, the claims against
Mr. Larson were tried to a jury and a verdict was returned
against Mr. Larson. The judgment based upon that verdict has
been satisfied. The only remaining issue after that judgment
was the bad faith claim by Walker against St. Paul which
remained to be litigated.
St. Paul moved for summary judgment against Walker.
Following oral arguments, the District Court ruled that St.
Paul had reasonable grounds for denial of coverage for
Walker's claim against Larson and that the existence of
reasonable grounds for denial of coverage was established, as
a matter of law, by the oriqinal District Court summary
judgment in St. Paul's favor on the coverage question. The
District Court recognized that the Montana Supreme Court
reversed the District Court and upheld coverage.
Nonetheless, the District Court in the present summary
judgment concluded that a reasonably debatable issue
regarding coverage had been established by the opposing
rulings of the District Court and the Supreme Court, and
therefore concluded as a matter of law that summary judgment
was appropriate for St. Paul. We do not agree with that
conclusion because of the presence of issues of material
fact.
Summary judgment is proper only where there is no
genuine issue as to any material fact. Rule 56(c),
M.R.Civ.P. The purpose of summary judgment is to encourage
judicial economy by eliminating unnecessary trials, but it is
not to be substituted for trial if a factual controversy
exists. Dare v. Montana Petroleum Marketing Co. (1984), 212
Mont. 274, 280, 687 P.2d 1015, 1019. Furthermore, the party
moving for summary judgment has the burden of establishing
that no genuine issue of fact exists, and only when that
burden is met does the burden shift to the opposing party to
show there is a genuine issue as to some material fact.
Peschel v. Jones (Mont. 1988), 760 P.2d 51, 54, 45 St.Rep.
1244, 1248. Of course this Court will not reverse a district
court order unless such order is clearly erroneous resulting
Justice John Conway Harrison delivered the Opinion of the
Court.
Thelma Walker (Walker), plaintiff and appellant,
brought this action alleging lack of good faith and unfair
practices on the part of St. Paul Fire and Marine (St. Paul)
in the negotiation and settlement of a legal malpractice
claim against its insured. The District Court granted
summary judgment in favor of defendant St. Paul, holding that
St. Paul had reasonable grounds to deny coverage for Walker's
claim against its insured, and therefore St. Paul did not
lack good faith in its dealings with Walker. We reverse.
The issues presented by the appellant are:
1. Did the District Court err in granting St. Paul's
motion for summary judgment?
2. Did the District Court err in granting costs for
depositions which were not used as a basis for granting
summary judgment?
When her husband Dale died in 1979, Thelma Walker asked
B. Miles Larson, a Stanford, Montana, attorney to handle the
probate of Dale's estate, including the preparation of the
federal estate tax return. Due to an error by attorney
Larson, Mrs. Walker had to pay approximately $5,000 to the
Internal Revenue Service that she otherwise would not have
had to pay. Walker later sued Larson for legal malpractice
and St. Paul, Larson's insurer, for bad faith and unfair
in an abuse of discretion. Walker, at 335, 7'27 P.2d at
In summary, Walker contends that the actions of St.
Paul in connection with the investigation of the claim
constituted violations of S 33-18-201, MCA, Montana's Unfair
Trade Practices Act.
Paragraph (2) of that Section refers to the failure of
an insurance company to acknowledge and act reasonably
promptly upon comunications with respect to claims. Walker
contends that St. Paul's failure to respond to letters
addressed to it and the failure to investigate following the
receipt of such letters constitutes a violation of the Act.
Walker also contends that there was a failure to adopt and
implement reasonable standards for the prompt investigation
of claims as required under paragraph (3) of that Section.
Various facts are set forth by Walker which could be
construed as sufficient to establish such a failure. Walker
also claims that there was a refusal to pay claims without
conducting a reasonable investigation as required under
paragraph (4) of that Section. Sufficient facts are set
forth to establish an issue as to whether or not a reasonable
investigation had been made as so required.
We do not find it necessary to discuss the factual
contentions of both parties in detail. The record before the
Dist?-Tct Court established that there were genuine issues of
material fact which precluded summary judgment. The
determination by the District Court that the difference in
coverage determination by the District Court and Supreme
Court established reasonable grounds as a matter of law does
not address the issues of material fact which have been
raised.
We reverse the summary judgment on the part of the
District Court. Because of the reversal on the first issue,
it is not necessary that we address the second issue
regarding costs for depositions.
We reverse the summary judgment for St. Paul Fire and
Marine Insurance Company and remand for further proceedings
consistent with this opinion.
We concur: -A -
-
- 7 - l . - ief
fla /
Justice
Justice John C. Sheehy, concurring specially:
I have signed the foregoing opinion and concur in it. I
want to clear up, however, my view of the appellant's standard of
review of a motion granting a summary judgment under Rule 56,
Montana Rules of Civil Procedure.
It is stated in the foregoing opinion that "this Court will
not reverse a district court's order unless such order is clearly
erroneous resulting in an abuse of discretion. Walker, 727 P.2d
at 1322-1323.'I
The foregoing statement comes from our opinion in Walker v.
Larson (1986), 223 Mont. 333, 727 P.2d 1321, there this Court
stated:
Summary judgment is granted only when there is no genuine
issue of material fact. Rule 52 (a), M.R. Civ.P. We will
not reverse the order of a district court unless it is
clearly erroneous resulting in the abuse of discretion.
In this case the ruling was clearly erroneous.
The foregoing statement relied on the wrong rule. Instead of
Rule 52(a), it should have referred to Rule 56(c), M.R.Civ.P. This
Court compounded the misapplication in Walker by then referring to
the "clearly erroneous1' standard and an abuse of discretion
standard, neither of which has any application to the appellate
standard of review of a summary judgment.
The "unless clearly erroneous1'doctrine, discussed above,
applies only to appellate review of findings of fact.
It does not apply to the district court's conclusions of
law. This is clear from both the context of the rule
[Rule 52 (a)] and from long established principles that
the appellate court is not bound by the trial court's
view of the law. The requirement in Rule 52(a) that, in
addition to findings of facts, the district court shall
''state separately its conclusions of law thereon1'is to
furnish the causal link between the facts and the
judgment rendered. But in reviewing the judgment, so far
as questions or conclusions of law are concerned, the
appellate court is not bound by the trial court's view
of the law.
5A Moore's Federal Practice, 52-76, 52-77, § 52.03[2](Pub. 410).
Rule 56(c) sets out the duty of a district court in
determining a motion for summary judgment. It provides in
pertinent part:
. . . The judgment shall be rendered forthwith with the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any,
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. ...
We must be careful about using the term 'labuse of discretionI1l
in reviewing a district court's grant of a summary judgment. The
District Court has no 'ldiscretionl if there is no genuine issue of
material fact; it llshallll
render summary judgment if there is no
fact issue as a matter of law. Rule 56(c). It is possible,
however, that the trial court may exercise discretion as to whether
the opposing party has not acted properly to establish a genuine
issue of material fact. Thus, from Moore, we learn:
The trial court cannot draw upon any discretionary power
to grant summary judgment when that adjudication of law
involves any genuine disputed issue of fact. It may
however exercise a sound discretion in denying a motion
for summary judgment although the moving party may be
technically entitled thereto. And, where the opposing
party has filed an affidavit under Rule 56(f) the trial
court may exercise a sound discretion in determining the
adequacy of the opposing party's stated reasons why he
is then presently unable to present by affidavit facts
essential to justify his opposition. And, if the reasons
are inadequate, what disposition should be made of the
pending motion for summary judgment? Where the trial
court determines that the opposing party has not shown
some sufficient reason for a continuance to present
opposing evidentiary affidavits, to take depositions, or
otherwise obtain the opposing evidence, and proceeds to
grant summary judgment in favor of a party otherwise
entitled thereto, this exercise of discretion in dealing
with the opposing party will not be interfered with by
an appellate court except where there has been an abuse.
...
6 Moore's Federal Practice, 56-1559, 5 56.27[1](1976).
With that clarification of the standard of appellate review
to be applied in this cause, I have concurred in the foregoing
opinion.