NO. 91-577
IN THE SUPREME COURT OF THE STATE OF MONTANA
ROBERT P. BARRETT,
Plaintiff and Appellant, UEC 2 c '1992
-vs-
HOLLAND & HART, a partnership,
Defendant and Respondent.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis & Clark,
The Honorable Jeffrey Sherlock, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
P. Keith Keller, Keller, Reynolds, Drake,
Sternhagen, & Johnson, Helena, Montana
Gene A. Picotte, Attorney at Law, Helena, Montana
For Respondent:
Stuart L. Kellner and Chris D. Tweeten, Hughes,
Kellner, Sullivan & Alke, Helena, Montana
Submitted on Briefs: May 14, 1992
~ ~ ~ i dDecember 29, 1992
~ d :
Filed:
i
Clerk
Justice Fred J. Weber delivered the Opinion of the Court.
Plaintiff, Robert P. Barrett, (Mr. Barrett) brought this
action against the law firm of Holland & Hart alleging fraud,
negligent misrepresentation and deceit by an attorney in violation
of 3 37-61-406, MCA; violation of Rule 11, M.R,Civ.P.; and legal
malpractice. The District Court for the First Judicial District,
Lewis and Clark County, granted Holland & Hart s motion to dismiss,
or in the alternative, summary judgment. Mr. Barrett appeals. We
affirm.
We restate the issues as follows:
1. Did the District Court properly grant Holland & Hart's
motion to dismiss, or in the alternative, summary judgment?
2. Were Mr. Barrettlsclaims for fraud and deceit barred by
the statute of limitations?
In May of 1985, Mr. Barrett filed a wrongful termination
action against his former employer, ASARCO, Inc. Barrett v.
ASARCO, Inc. (1988), 234 Mont. 229, 763 P.2d 27. (Barrett I). Mr.
Barrett's attorney was Gene Picotte. ASARCO retained the law firm
of Holland & Hart. After the close of discovery, but over one
month before the trial, ASARCO sought to amend its interrogatory
answers based on ''new1'information it had obtained. The "new1'
information is the subject of this action now before us.
Holland & Hart represented to the District Court that it had
found six witnesses that would testify about various incidents of
dishonesty by Mr. Barrett during the last three years of his
employment with ASARCO. These incidents included sleeping on the
2
job, abuse of sick pay, stealing tools and equipment from ASARCO,
and requesting one of his crew members to steal for him. Mr.
Barrett filed a motion in lirnine to exclude the testimony of these
witnesses. ASARCO then offered to allow Mr. Barrett to depose the
witnesses at its expense. Mr. Barrett chose not to depose the
witnesses but instead moved again to exclude their testimony.
The District Court granted Mr. Barrettvsmotion in limine and
the case went to trial on February 2, 1987. The jury returned a
verdict for Mr. Barrett in the amount of $413,500. B a r r e t t I.
ASARCO moved the District Court for a new trial contending
that it was deprived of a fair trial by the court's exclusion of
the testimony of the new witnesses. The District Court denied the
motion and ASARCO appealed to this Court. On appeal, ASARCO
contended that the District Court erred in excluding the testimony
of the new witnesses. This Court held that the lower court erred
in excluding the testimony and reversed and remanded the case for
a new trial.
Prior to the second trial, Mr. Barrett deposed five of the
witnesses in question. Subsequently, a second trial was held and
the jury again found for Mr. Barrett, this time however, awarding
him $230,000. ASARCO appealed to this Court and this Court
affirmed the jury's verdict. Barrett v. ASARCO, Inc. (1990), 245
Mont. 196, 799 P.2d 1078. (Barrett 11).
Mr. Barrett next filed this action alleging that Holland &
Hart acted improperly while representing its client, ASARCO,
before, during and after the first trial and during the appeal of
the first jury verdict. He alleged claims of fraud; negligent
misrepresentation; deceit by an attorney in violation of § 37-61-
406, MCA; conduct in violation of Rule 11, M.R.Civ.P.; and legal
malpractice. He also asked for punitive damages.
Holland & Hart moved to dismiss the complaint, or in the
alternative, for summary judgment. They maintained that on each
count of the complaint, Mr. Barrett failed to state a claim on
which relief could be granted, and secondly, even if there was an
actionable claim, such claim was barred by the statute of
limitations.
During the arguments on Holland & Hart's motion, Mr. Barrett
withdrew his claim of conduct in violation of Rule 11, M.R.Civ.P.
The District Court found that Mr. Barrett failed to state a claim
for which relief could be granted on his claims of fraud, negligent
misrepresentation and legal malpractice. It further found that Mr.
Barrettls deceit claim was barred by the statute of limitations.
The District Court granted Holland & Hart's motion to dismiss. Mr.
Barrett appeals.
Did the District Court properly grant Holland & Hart's motion
to dismiss, or in the alternative, summary judgment?
The District Court considered matters outside the pleadings in
this case, thereby properly treating ASARCO's motion to dismiss as
one for summary judgment.
If, on a motion asserting the defense numbered (6) to
dismiss for failure of the pleading to state a claim upon
which relief can be granted, matters outside the pleading
are presented to and not excluded by the court, the
motion shall be treated as one for summary judgment and
disposed of as provided in Rule 56, and all parties shall
be given reasonable opportunity to present all material
made pertinent to such motion by Rule 56.
Rule 12 (b), M.R.Civ.P. ; Boles v. Simonton (1990), 242 Mont. 394,
397, 791 P.2d 755, 757.
Summary judgment is only proper when there are no genuine
issues of material fact and the moving party is entitled to
judgment as a matter of law. Rule 56(c), M.R.Civ.P. Any
inferences to be drawn from the factual record must be resolved in
favor of the party opposing summary judgment. Boylan v. Van Dyke
(1991), 247 Mont. 259, 266, 806 P.2d 1024, 1028.
Mr. Barrett maintains that summary judgment was improper
because the complaint states a claim for fraud and negligent
misrepresentation, and because his deceit claim is not barred by
the statute of limitations. Mr. Barrett does not raise any issue
with regard to the dismissal of his legal malpractice claim and we
will not discuss it here.
The Fraud Claim
Mr. Barrett maintains that Holland & Hart defrauded the
District Court as well as this Court by obtaining a reversal of the
jury verdict in Barrett I by representing that the six named
witnesses, whose testimony had been excluded by the District Court
in Barrett I, would testify to specific acts of misconduct by Mr.
Barrett. He maintains that in proving fraud on the court he need
not prove all nine elements of fraud, particularly, that he had no
duty to investigate the truth of Holland & Hart's representations.
He further maintains that in their respective depositions, each
5
witness denied knowledge of the things Holland & Hart had
represented they would say. Therefore, Mr. Barrett maintains that
his jury verdict was reversed in Barrett I solely on the basis of
false representations by Holland & Hart and he was damaged as a
consequence.
Holland & Hart contend that Mr. Barrett failed to make a prima
facie showing of fraud.
The nine elements of fraud which must all be proven are:
a representation;
its falsity;
its materiality;
speaker's knowledge of the falsity or ignorance of
its truth;
speaker's intent that the representation be relied upon;
hearer's ignorance of the falsity;
hearer's reliance on the representation;
hearer's right to rely on the representation; and
hearer's consequent and proximate injury caused by
the reliance.
Batten v. Watts Cycle & Marine (l989), 240 Mont. 113, 117, 783 P.2d
378, 380-381. Mere suspicion of fraud is not sufficient, but
rather, fraud must be proved by a preponderance of the evidence.
Batten, 783 P.2d at 381.
The District Court held that Mr. Barrett failed to demonstrate
that he was "ignorant of the truth" because he had failed to
investigate the truth prior to trial. As a result he failed to
meet the requirements of the fourth element of fraud as above
described. In fact, he did not depose the witnesses until shortly
before the second trial.
We agree with the District Court that Mr. Barrett failed to
set forth facts demonstrating that he had met this element which
requires a showing of the speaker's knowledge of the falsity or
ignorance of its truth. As noted in Barrett I, 763 P.2d at 30,
ASARCO offered the witnesses for deposition by Mr. Barrett at
ASARCO's expense and Mr. Barrett refused. Mr. Barrett had the
means and opportunity to discover the truth or lack of truth of
Holland and Hart's representations, but refused. When a party
claims to have been deceived to his prejudice, and it appears that
he had the means at hand to ascertain the truth of representations
made to him, his reliance upon such representations, however false
they may have been, affords no grounds for relief. Spence v. Yocum
(1982), 201 Mont. 79, 84-85, 651 P.2d 1022, 1025.
We conclude that because Mr. Barrett chose not to use the
means available to him to investigate the truth of the
representations made to him, his claim for fraud must fail. We
note that Mr. Barrett attempts to argue that because he is
alleging "fraud on the court," he is not required to set forth
facts which are sufficient to prove the nine elements of tortious
fraud. Mr. Barrett cites no authority for that proposition.
Furthermore, we agree with the District Court when it said:
It is not inconceivable that the witnesses might possibly
have changed their testimony since the time of the first
trial. This certainly does not prove that Defendant
intentionally acted to deceive the Court. We have no
idea, thanks in part to Plaintiff's inaction, what these
witnesses might or might not have testified to back in
1987.
We affirm the District Court's grant of summary judgment to ASARCO
on the fraud claim.
The Neqlicrent Misrepresentation C l a i m
Negligent misrepresentation has a lesser standard of proof
than fraud. Rather than requiring an intent to misrepresent, it
requires a showing of a failure to use reasonable care or
competence in obtaining or communicating the information. Batten,
783 P.2d at 381. A claim for negligent misrepresentation requires
proof of the following elements:
1. the defendant made a representation as to a past or
existinq material fact;
2. the representation must have been untrue;
3. regardless of its actual belief, the defendant must have
made the representation without any reasonable ground for
believing it to be true;
4. the representation must have been made with the intent to
induce the plaintiff to rely on it;
5. the plaintiff must have been unaware of the falsity of
the representation and he must have been justified in
relying upon the representation;
6. the plaintiff, as a result of his reliance, must sustain
damage.
Kitchen Krafters, Inc. v. Eastside Bank of Montana (1990), 242
Mont. 155, 165, 789 P.2d 567, 573 (emphasis in original).
8
The ~istrictCourt held:
First, Plaintiff has not pled, and cannot possibly
prove that the representations were made by Defendant
without any reasonable ground for believing that they
were true. This shortcoming can be laid entirely upon
plaintiff's shoulders because he did not take advantage
of ASARCO1s offer to allow him to depose the witnesses at
ASARCO's expense. As noted earlier, it is not
inconceivable that during the time since the first trial,
the witnesses might have, for whatever reason, changed
their testimony.
Second, Plaintiff has not pled, and cannot possibly
prove, that the representation was made with the intent
that he rely on it. As the Court understands Plaintiff ls
case, he did not rely on the representations. Indeed,
the record show that he proceeded in the face of them.
It does appear that the supreme court relied on the
Defendant's representations. However, the supreme court
is not the Plaintiff. The elements above do not make an
exception for false representations that deceive parties
other than the plaintiff.
We agree with the reasoning of the District Court. Under element
two, Mr. Barrett was required to demonstrate that the
representations by the defendant were untrue, As pointed out by
the District Court, the witnesses may have changed their testimony.
The responsibility to determine if the representations were untrue
must be charged to Mr. Barrett because he did not take advantage of
the opportunity to depose the witnesses and determining whether or
not the representations were untrue.
Under element four Mr. Barrett was required to prove that the
representations were made to him with the intent to induce him to
rely on the representations. As the District Court pointed out,
the representations were not made with that intent. He was given
the opportunity to depose the witnesses at ASARCO1s expense but
chose not to do so. That offer rebuts the contention that the
representations were made with the intention to induce Mr. Barrett
to rely upon the same. We conclude that the District Court
correctly entered summary judgment for ASARCO on the negligent
misrepresentation claim.
We hold that the District Court properly granted Holland and
Hart's summary judgment on the fraud and negligent
misrepresentation claims.
Were Mr. Barrett's claims for fraud and deceit barred by the
statute of limitations?
Because the fraud claim was disposed of in the first issue, we
need not address that claim here. The District Court held that Mr.
Barrett's deceit claim under 5 37-61-406, MCA, was barred by the
statute of limitations provisions of 5 27-2-211(1)(a), MCA.
The "deceit" section with which we are concerned is 5 37-61-
406, MCA, which provides:
Penalty for deceit. An attorney or counselor who is
guilty of any deceit or collusion or consents to any
deceit or collusion with intent to deceive the court or
a party forfeits to the party injured by his deceit or
collusion treble damages. He is guilty of a misdemeanor.
As pointed out by the District Court, the statute does not
prescribe a statute of limitation time period.
With regard to statutes of limitation in general, 5 25-1-
102(1), MCA, provides:
(1) Civil actions can only be commenced within the
periods prescribed in Title 27, chapter 2, after the
cause of action shall have accrued, except where, in
special cases, a different limitation is prescribed by
statute.
As referred to in the foregoing section, the general provision in
Title 27, chapter 2 regarding this aspect is 5 27-2-102, MCA, which
in pertinent part provides:
When action commenced. (1) For the purposes of statutes
relating to the time within which an action must be
commenced :
(a) a claim or cause of action accrues when all
elements of the claim or cause exist or have occurred,
the right to maintain an action on the claim or cause is
complete, and a court or other agency is authorized to
accept jurisdiction of the action;
...
(2) Unless otherwise provided by statute, the
period of limitation begins when the claim or cause of
action accrues. ...
( 3 ) The period of limitation does not begin on any
claim or cause of action for an injury to person or
property until the facts constituting the claim have been
discovered or, in the exercise of due diligence, should
have discovered by the injured party if:
(a) the facts constituting the claim are by their
nature concealed or self-concealing: .
. .
As the District Court noted, both parties agree that the
misrepresentation upon which the claim is based occurred in January
1987. Defendant argues that plaintiff's cause of action was
complete on October 11, 1988, the date of the reversal of the first
judgment. Plaintiff contends that his cause of action did not
begin to accrue until after the Supreme Court affirmed the second
verdict in Barrett 11.
In its analysis, the District Court pointed out that to
prevail on an action under 5 37-61-406, MCA, the plaintiff needs to
prove that an attorney is guilty of deceit and that he was damaged
by such deceit. The District Court then concluded that the
plaintiff's cause of action was complete when the defendant's acts
actually resulted in causing the Supreme Court to reverse the
verdict causing the plaintiff's damages which took place on October
11, 1988. The District Court then concluded that pursuant to the
provisions of 5 27-2-102, MCA, that the clock began ticking on this
claim on October 11, 1988. We agree with the conclusion of the
District Court that the cause of action for deceit on the part of
Mr. Barrett accrued on October 11, 1988, as all of the elements of
his claim then existed or had occurred, and his right to maintain
an action on the claim was complete.
Plaintiff contended before the District Court that the general
three-year statute applied, that being 5 27-2-204, MCA, which in
pertinent part provides:
Tort actions - general and personal property. (1) Except
as provided in 27-2-216, [not applicable to the facts of
this case] the period prescribed for the commencement of
an action upon a liability not founded upon an instrument
in writing is within 3 years. .. .
Defendant contended that the proper statute of limitations is
contained in 27-2-211(1) (a), MCA, which in pertinent part
provides :
Actions to enforce penalty or forfeiture or other
statutory liability. (1) Within 2 years is the period
prescribed for the commencement of an action upon:
(a) A statute for a penalty or forfeiture when the
action is given to an individual .. .
except when the
statute imposing it prescribes a different limitation;
...
(c) A liability created by statute other than:
(i) a penalty or forfeiture; ...
The District Court concluded that 5 37-61-406, MCA, clearly is a
penalty statute. The District Court then concluded that the above
quoted 5 27-2-211(1) (a), MCA, specifically applied to an action
upon a statute for a penalty or forfeiture when the action is given
to an individual. The District Court pointed out that this statute
contains specific provisions applying to this type of a cause of
action and therefore concluded that the two-year period of
limitation applied to the plaintiff's claim, rather than the three
year general tort statute advocated by the plaintiff. We agree
with the conclusion on the part of the District Court. We point
out that from the wording of 5 37-61-406, MCA, an attorney who is
guilty of any deceit forfeits to the party injured treble damages.
Clearly that is a forfeiture or penalty provision. As pointed out
by the District Court, the forfeiture or penalty comes within the
specific provision of § 27-2-211(a), MCA. In addition, we point
out that even if this were construed as a liability created by
statute other than a penalty or forfeiture, it still falls within
the two-year limitation period as above quoted in 5 27-2-211, MCA.
We therefore affirm the holding of the District Court that Mr.
Barrettls claims for deceit were barred by the statute of
limitations contained in 5 27-2-211, MCA.
Affirmed.
A--df! sitice
Justices
Justice Terry N. Trieweiler specially concurring and dissenting.
I concur with the majority's disposition of appellant's claims
based on common law fraud and negligent misrepresentation.
However, my concurrence is not based upon the reasoning found in
the majority opinion.
I would conclude as a matter of law that there was no claim
for fraud and no negligent misrepresentation because there was no
reliance by appellant on respondent's alleged misrepresentations.
In this case, respondent's representations were made to the
District Court and the Supreme Court, and were relied upon by the
Supreme Court when it reversed appellant's original jury verdict.
Therefore, it does not appear that the necessary elements of common
law fraud and negligent misrepresentation exist in this case and I
would not create a claim for damages based on "fraud upon the
court."
I dissent from that part of the majority opinion which
concludes that appellant's claim for damages pursuant to
5 37-61-406, MCA, is barred by the statute of limitations.
Our reversal of the original verdict for appellant was based
on the following representations by respondent:
On December 16, 1986, ASARCO learned the names of
six witnesses who allegedly had information about various
incidents of dishonesty by Barrett during his employment
and within three years of his termination date. These
incidents allegedly included lying to superiors about
sleeping on shift and about taking sick leave, stealing
several hundred dollars worth of tools and equipment from
ASARCO, and requesting one of his crew members to also
steal for him.
Barrettv.Asarco,Inc. (1988), 234 Mont. 229, 232, 763 P.2d 27, 29.
Based upon the District Court's exclusion of those six
witnesses, we vacated a verdict which had been returned in favor of
appellant for $413,500. However, we did not enter judgment for the
defendant; we remanded this case to the District Court for a new
trial.
After this case was remanded, and prior to the second trial,
appellant deposed five of the six witnesses whose proposed
testimony was the subject of respondent's first appeal. The sixth
witness was out of state and unavailable. None of the five
witnesses testified during their depositions as the respondent had
indicated they would in its representations to the District Court
and to this Court.
This case was not retried until November 13, 1989. During
that trial only one of the six proposed witnesses testified and his
testimony did not substantially conform to the representations
about his testimony which had been made by respondent. That jury
returned a verdict of $230,000 in favor of appellant. However, the
judgment was not final until we affirmed it on October 25, 1990.
The statute of limitations which pertained to this cause of
action provided for a period of two years within which to file a
complaint. Section 27-2-211(1) (a), MCA. The period of limitation
began to run when the claim accrued. However, the claim did not
accrue until all elements of the claim existed. Section 27-2-102,
HCA .
We previously held in Kitchen Krafters v EastsideBank of Montana (1990),
.
242 Mont. 155, 162, 789 P.2d 567, 571, that:
16
[Tlhe statute of limitations does not begin to run until
a11 elements of a cause of action are in existence. For
example, in a negligence action the plaintiff must prove
four elements:
1) Existence of a duty
2) Breach of the duty
3) Causation
4) Damages.
Thomock v State (1987), 229 Mont. 67, [72,] 745 P.2d 324,
.
[327]. If these elements are not in existence, the
plaintiff could not successfully bring a cause of action
based upon negligence. Therefore, although one may be
able to establish the existence and breach of a duty, he
cannot successfully assert his cause of action until he
has sustained an injury. Heckaman v. Northern Pacific
Railroad (1933), 93 Mont. 363, [375,] 20 P.2d 258, 12611.
It is necessary to prove these same elements in a cause of
action based upon a breach of 37-61-406, MCA (Penalty for
deceit). However, in this case there was no way that the element
of damages could be proven or even appreciated until the final
resolution of this case after it was remanded to the District
Court. Is there any doubt that if the second jury had found for
ASARCO on the issue of liability, or if the amount of the second
verdict had exceeded the amount of the first, that this same
respondent would be moving for summary judgment on the grounds that
no damages had been sustained?
Appellant has alleged that respondent misrepresented to the
District Court and to this Court the substance of the testimony
that would be offered from the six witnesses whose testimony was
excluded. There has been a good deal of speculation by the
District Court and by this Court about whether respondent did in
fact misrepresent what it was told by the witnesses. However, this
case comes before this Court based on a summary judgment, and
speculation about the merits of appellant's claim has no place in
our decision. Whether there was in fact a misrepresentation by
respondent is a question of fact. Drawing all reasonable
inferences from the record, there is certainly sufficient evidence
to submit that issue to a jury or fact finder.
The important fact, for purposes of this appeal, is that until
the final judgment entered pursuant to the second trial, there was
no basis upon which appellant could determine (1) his damages, or
(2) whether or not he had in fact incurred damages. That final
judgment date was October 25, 1990. Therefore, that is the date on
which this action accrued.
Appellant's complaint was filed on March 1, 1991--well within
the two year period provided for an action of this type.
For these reasons, I would reverse the judgment of the
District Court and remand this case for a trial on the merits of
appellant's claim that respondent violated 37-61-406, MCA, and as
a result damaged appellant.
Justice William E. Hunt, Sr., concurs in the foregoing
concurrence and dissent of Justice Trieweiler.
December 29, 1992
CERTIFICATE O F SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the
following named:
P. Keith Keller
Keller, Reynolds, Drake, Sternhagen 6 Johnson
(
38 So. Last Chance Gulch
Helena, MT 59601
Gene A. Picotte
Attorney at Law
1066 Helena Ave.
Helena, MT 59601
Stuart L. Kellner and Chris D. Tweeten
Hughes, Kellner, Sullivan & Alke
P.O. Box 1166
Helena, MT 59624-1166
ED SMITH
CLERK O F THE SUPREME COURT
STATE O F MONTANA