Morse v. Espeland

No. 84-207

IN THE SUPREME COURT OF THE STATE OF MONTANA
1984

WILLIAM R. MORSE,
Plaintiff and Respondent,
-vs-

MARY ANN ESPELAND,
Defendant and Appellant.

APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Carbon,
The Honorable Arnold Olsen, Judge presiding.

COUNSEL OF RECORD:
For Appellant:
Ayers & Alterowitz, Red Lodge, Montana

For Respondent :

Anderson, Brown, Gerbase, Cebull & Jones, Billings,
Montana
Bishop & Bishop, Billings, Montana
Overfelt Law Firm; Lee Overfelt, Billings, Montana

Submitted on Briefs: Dec. 13, 1984

Decided: February 2 2 , 1 9 8 s

--
Clerk
Mr. Justice Frank R. Morrison, Jr. delivered the Opinion of
the Court.
Respondent attorney brought an action in the District
Court to recover attorney fees from appellant client. Client
answered and counterclaimed, alleging breach of fiduciary
duty, constructive fraud, actual fraud, deceit and legal
malpractice. Attorney moved for summary judgment on client's
counterclaim. The District Court granted the motion on the
grounds that no cause of action upon which relief could be
granted was stated. Client now appeals. We reverse the
decision of the District Court and remand for trial.
The sole issue is whether the District Court erred in
granting attorney's motion for summary judgment based upon
client's failure to state a claim upon which relief could be
yranted.
During October 1979, client asked attorney to represent
her in a dissolution. Client testified that during their
initial meeting, attorney gave her the impression the
dissolution would cost $5,000. However, if the dissolution
got particularly involved or drawn out, the fee might be
slightly higher. Attorney testified that $5,000 was never
agreed upon as a final total fee. Rather, they had agreed on
a fee arrangement of sixty dollars per hour. In either
event, the agreement between the two was never red.uced to
writing, nor did the attorney keep careful or detailed
records of the work he performed on client's behalf.
Attorney began work for client and in February 1981
sent her a bil.1 for $2,015.98. This statement allegedly
reflected the work performed up to tha.t point. Client
promptly paid that bill in full. No other bills were sent to
client.
During the dissolution proceedings, client was offered
and rejected a settlement of between $100,000 and $125,000:
At the conclusion of trial, client received a judgment con-
sisting of property valued at $667,555.75. Attorney then
told client the suit was going to cost her a lot of money.
According to client's testimony, attorney asked her to agree
to ten percent. When client reminded him of the initial
$5,000 agreement, attorney allegedly responded: "I wouldn't
dig ditches for that."
Client refused to pay attorney, following which attor-
ney filed suit for not less than $50,000, expert witnesses
expenses, costs and interest. Client answered and
ccunterclaimed. Both parties filed motions for summary
judgment. Upon consideration of the pleadings, briefs and
depositions, the District Court denied client's motion and
granted attorney's motion for summary judgment. The judgment
was certified as final and this appeal followed.
Appellant pleads alternatively negligence (legal mal-
practice) , fraud, constructive fraud, deceit and breach of
fiducFa.ry duty. While the pleading is not artful, it is not
necessarily fatally defective.
Montana no longer requires strict compliance with terms
of art and legal phraseology when pleading a cause of action.
The archaic rules of code pleading have been replaced by our
new rules of civil procedure, which place the spirit of the
law above strict compliance with the letter of the law. The
liberal rules of pleading in Montana's courts are found in
Rule 8, M.R.Civ.P.:
"Rule 8 (a) .
Claims for relief. A plead-
ing which sets forth a claim for relief,
whether an original claim, counterclaim,
cross-claim or third-party claim, shall
contain (1) a short and plain statement
of the claim showing that the pleader is
entitled to relief, and (2) a demand for
judgment for the relief to which he deems
himself entitled. Relief in the alterna-
tive or of several different types may be
demanded.
 "Rule 8(e). Pleading to be concise and
direct--consistency. (1) Each averment
of a pleading shall be simple, concise
and direct. No technical forms of plead-
ing or motion are required."
These rules allow the pleader to state his or her claim
without fear of dismissal by the court for failure to state a
claim in specific, precise words. R. H. Schwartz
Construction Specialists, Inc. v. Hanrahan (1983), 672 P. 2d
1116, 40 St.Rep. 1926.
Assuming appellant's position to be true, which for
purposes of reviewing this summary judgment we must, we then
proceed to determine whether an action at law is cognizable.
We find the essence of a claim has been pleaded, though not
artfully described.
Unquestionably, an attorney has a fiduciary relation-
ship with a client on most matters pertaining to the repre-
sentation. In the Matter of Bretz (1975), 168 Mont. 23, 56,
542 P.2d 1227, 1245. However, with respect to the
negotiation of a fee, an attorney must necessarily deal at
arms length with a client. The rules applicable to fiduciary
d.uty cannot realistically be applied. Constructive fraud is
a breach of fiduciary duty. Ryckman v. Wildwood, Inc.
(1982), 197 Mont. 154, 162-163, 641 P.2d 467, 472. If there
is no fiduciary duty in the first place, constructive fraud
will not lie.
The facts now before this Court do not indicate a case
of fraud or deceit, as at least two of the nine essential
elements of fraud are not alleged. There is no claim by
client that attorney knowingly made a false representation to
her. Van Ettinger v. Pappin (1978), 180 Mont. 1, 9-10, 588
P. 2d 988, 993-994. Later development of the evidence may in
fact support those theories. At this point, we only find
facts sufficient to support a claim for bad faith on the part
of respondent.
 An employer is required to deal fairly and in good
faith with its employees. Gates v. Life of Montana Ins. Co.
(19831, 668 P.2d 213, 40 St.Rep. 1287. The rationale is
stated in Dare v. Montana Petroleum Marketing Co. (1984), 687
P.2d 1015, 41 St.Rep. 1735:
"Such an employee is protected from bad faith or
unfair treatment by the employer to which the
employee may be subject - - -
due to the inherent - in-
equality of bargaining power present in many em-
ployment relationships. The implied covenant seeks
to strike a balance between the interests of the
employer in controlling the work force and the
interests of the employee in job security. Gates,
638 P.2d at 1066-67, 39 St.Rep. at 20." (emphasis
supplied) Dare, 687 P.2d at 1020, 41 St.Rep. at
1740.
Likewise, as an attorney, respondent owed his client
the obi-igation to deal fairly and in good faith when negoti-
ating a fee and when ultimately charging and collecting the
fee. The inequality that exists between attorney and client
in bargaining over a fee is apparent. The attorney knows his
or her legal rights. The client probably does not.. In
negotiating and collecting the fee, the attorney is repre-
sented. The client is not. In negotiating and collecting
the fee, the attorney is in a vastly superior position to the
client and the rationale of Gates and Dare, supra, mandates
the application of the covenant to this relationship. If the
facts alleged by appellant are true, the fact-finder could
determine there was a breach of the obligation owed to deal
fairly and in good faith.
We reverse and remand this case for trial. The appel-
lant is given 1ea.ve to amend her counterclaim to specifically
describe a breach of the implied covenant to deal fairly and
in good faith.
F7e concur:

Justices

Mr. Justice John C. Sheehy and Mr. Justice William E. Hunt, Sr.,
deemed themselves disqualified and did not participate in this
decision.