NO. 89-329
IN THE SUPREME COURT OF THE STATE OF MONTANA
1989
FINN and VIRGINIA WALSTAD;
and NORDAK INDUSTRIES, U.S.A., INC.,
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Plaintiffs and Appellants, r',m
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NORWEST RANK OF GREAT FALLS OR NORTHWESTERN - , --
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BANK OF GREAT FALLS; THE ECONOMIC GROWTH COUNCIL
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Defendants and Respondents. --_
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APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable R. D . McPhillips, Judge presidinq.
COUNSEL OF RECORD:
For Appellant:
Terry W. Mackey, Cheyenne, Wyoming
Howard F. Strause, Great Falls, Montana
For Respondent:
Robert S. Vermillion; Smith, Baillie & Walsh, Great
Falls, Montana (~conomic Growth Council, Cross-Appellant)
James #, Poore, 111; Poore, Roth & Robinson, Butte,
Montana (Norwest, etc)
David L. Hashmall; Popham, Haik, Schnnbrich & Kaufman,
Minneapolis, Minnesota (Norwest, etc)
Submitted on Briefs: Oct. 20, 1989
Filed:
Clerk
Justice Diane G. Barz delivered the Opinion of the Court.
This is an appeal and cross-appeal from an order of the
District Court of the Eighth Judicial District granting
Norwest Bank of Great Falls' motion for summary judgment and
Finn and Virginia Walstads' motion to amend their complaint
allowing the addition of Nordak Industries, Inc. as a party
plaintiff against the Economic Growth Council. We affirm in
part and reverse in part.
Appellants Finn and Virginia Walstad are the sole
shareholders and directors of Nordak Industries, USA, Inc., a
Montana corporation. As part of an expansion program, Nordak
borrowed funds from Norwest Bank of Great Falls (Norwest) and
the Economic Growth Council (EGC). Walstads were guarantors
of these loans which were also secured by Nordak's assets.
Subsequent to borrowing these funds, Nordak underwent a
period of financial difficulty. Walstads allege that EGC's
failure to qualify for a Small Business Administration
program that would have lowered Nordak's interest rate
coupled with both defendants' mismanagement of Nordak's
business affairs culminated in the forced transfer of
Nordak's assets pursuant to an assignment executed by Nordak
in favor of Norwest.
The Walstads' complaint, filed January 6, 1986,
included counts of breach of loan agreements, fraud and
negligent misrepresentation, negligence, tortious
interference with business and alleged vicarious liability on
the part of Norwest, Incorporated (Norwest, Inc.). Both
Norwest and EGC counterclaimed for the remainder of the
loans to Nordak due under the Walstads' guaranty. Walstads
moved to amend their complaint to add Nordak as a party
plaintiff on August 11, 1987. The District Court permitted
the amendment as to EGC but denied the amendment as to
Norwest.
Walstads appeal from the District Court's denial of
their motion to amend as to Norwest while EGC cross appeals
the District Court's grant of the motion to amend as to EGC.
Both Norwest and EGC filed motions for summary judgment which
the District Court granted as to the Walstads, based on the
absence of genuine issues of material fact and the propriety
of judgment in favor of respondents as a matter of law.
Walstads' first contention on appeal is that the
District Court improperly refused to permit amendment adding
Nordak as a party plaintiff as against Norwest. We affirm.
The Montana Rules of Civil Procedure allow amendment of
pleadings with the district court's permission or the consent
of the adverse party if such amendment would further the ends
of justice. Rule 15(a), M.R.Civ.P. Rule 15(a) has been
interpreted liberally, allowing amendment of pleadings as the
rule and denying leave to amend as the exception. Priest v.
Taylor (1987), 227 Mont. 370, 378, 740 P.2d 648, 653. One
exception to the general rule arises when the amendment would
be subject to dismissal. Halpert v. Wertheim & Co. , Inc.
(S.D.N.Y. 1979), 81 F.R.D. 734.
The District Court correctly found that Nordak's claims
against Norwest are barred because Nordak expressly and
voluntarily transferred and assigned to Norwest all its
assets including its legal claims on August 25, 1983.
The Agreement assigning Nordak ' s claims to Norwest is
clear and unambiguous. The Agreement provided:
3. Concurrent with the execution of this
Agreement, NORDAK will execute and
deliver such bills of sale and other
documents reasonably necessary to vest in
NORWEST all of NORDAK'S . .. d) All
contract rights, and all other rights to
payment of every type and description,
excluding only that certain claim of
NORDAK against Dyecraftsman, Inc.
currently being prosecuted in Cause No.
BDV-82-015 in the District Court of the
Eighth Judicial District of the State of
Montana; and any rights of action or
claim against Great Falls Economic Growth
Council . . .
Montana law is clear that where the language of a
written contract is clear and unambiguous, the court is to
apply the contractual language as written. Kartes v. Kartes
(1981), 195 Mont. 383, 387, 636 P.2d 272, 274.
[Ilntent of the parties is only looked to
when the agreement in issue is not clear
on its face. (Citation omitted.) Where
the contractual language is clear and
unambiguous on its face, it is this
Court's duty to enforce the contract as
drafted and executed by the parties.
(Citation omitted.)
Monte Vista Co. v. Anaconda Co. (Mont. 1988), 755 P.2d 1358,
1362, 45 St.Rep. 809, 814. The Walstads attempt to
characterize the August 25, 1983 Agreement as a release in
order to argue that there is a dispute regarding the intent
of the parties to release Norwest. Citing Tribby v.
Northwestern Bank of Great Falls (1985), 217 Mont. 196, 704
P.2d 409. Tribby did not involve a transfer and assignment
of rights or legal claims. The Agreement in this case is not
a settlement by one joint tortfeasor with a plaintiff. The
Agreement also does not bar Nordak's claims against Norwest
because Nordak "released" Norwest; it bars Nordak's claims
because Nordak transferred away its right to assert claims
except those specifically reserved by the Agreement.
The District Court also correctly found that any claim
Nordak may have had against Norwest is barred by the statute
of limitations, 5 27-2-204, MCA. All of the claims against
Norwest are essentially tort claims. The proposed amended
complaint was filed August 11, 1987. The cause of action
against Norwest accrued at the time of the Agreement, August
25, 1983, more than three years before the proposed
amendment.
Appellants argue that pursuant to Rule 15(c),
M.R.Civ.P., the amendment to add Nordak as a party plaintiff
relates back to the filing of the original complaint and thus
is not barred by the three-year statute of limitations on
tort actions. Section 27-2-204, MCA. We addressed for the
first time whether a second plaintiff's cause of action
related back to the filing of the original complaint in Tynes
v. Bankers Life Co. (1986), 224 Mont. 350, 730 P.2d 1115.
The decision in that case was founded in the policies
underlying the enactment of statutes of limitations, and,
when the defendant has "adequate notice of a claim against
it," has an opportunity to prepare a reasonable defense, and
is not subject to undue prejudice, the second plaintiff's
cause of action will relate hack. Tynes, 730 P.2d at
1120-21.
The first plaintiff in Tynes alleged the defendant
wrongfully refused to provide insurance coverage for
plaintiff's psychiatric treatment in violation of the policy
held by plaintiff's father. Tynes, 730 P.2d at 1119. The
first plaintiff's father, as second plaintiff, sought to
bring causes of action against the defendant for breach of
contract, promissory estoppel, and negligence. Tynes, 730
P.2d at 1121. We found in that case that:
Permitting [father's] claims against
[defendant] to relate back to the date of
[son's] original complaint did not
undermine [defendant's] ability to defend
itself. The claims of the two parties
are nearly identical. They arise from
the exact same "conduct, transaction, or
occurrence set forth... in the
original pleading" as required by Rule
15 ( c ) , M.R.Civ.P. The pleadings contain
the same causes of acti.on. Finally,
there is a "clear identity of interest"
between [son] and [father]. [Father] was
the original insured. He agreed .. . to
be responsible for [son's] medical bills
incurred at Wilson Center. The only
difference in the two pleadings is
damages. Under these circumstances, we
do not believe [defendant] was prejudiced
when the trial judge allowed [father's]
claims to relate back to the date of
[son's] original complaint.
Tynes, 730 P.2d at 1120-21.
Walstads, as directors of Nordak, neglected any claims
Nordak may have been entitled to assert against the
defendants for approximately four years. Nordak's alleged
injuries result from defendants' loan of money to it.
Walstads' alleged harm derived from their guarantee of
Nordak's loans. While collateral, these transactions are not
identical. Furthermore, Nordak and Walstads had no "clear
identity of interest." The claims of Nordak and Tynes as
well as the facts of both cases are distinguishable. The
District Court's denial of leave to amend as regards Norwest
and Norwest, Inc. is clearly an appropriate exception to Rule
.
15 (c)
The District Court's order did allow the Walstads to
amend the complaint which added Nordak as a party plaintiff
against EGC. EGC has filed a cross appeal. We reverse. The
District Court allowed the amended complaint to be filed
against EGC because the Agreement expressly reserved to
Nordak the right to assert legal claims against the Economic
Growth Council of Great Falls.
However, the amended complaint alleges that Nordak's
claims against EGC arose prior to September of 1983. The
claims against EGC included negligence, tortious interference
with business, and breach of fiduciary duty. Obviously,
S 27-2-204, MCA, applies to EGC based on the foregoing
discussion and EGC is also entitled to have the claims
against it dismissed.
Walstads further contend the District Court erred in
granting summary judgment in favor of both defendants based
on the lack of a separate duty owed by the defendants to
Walstads as shareholders and guarantors of Nordak. We
af firm.
A shareholder guaranteeing corporate loans may recover
individual damages from the lender provided that a duty
separate from that owed the corporation exists. Bottrell v.
American Bank (Mont. 1989), 773 P.2d 694, 710, 46 St.Rep.
561, 579.
We previously held that when corporate shareholders
personally guarantee corporate debts, the shareholders may
not recover as individuals for the lender's breach of the
covenant of good faith and fair dealing and negligent
misrepresentation absent a separate duty owed to the
shareholders. Bottrell, 773 P.2d at 709.
Walstads' alleged damages are substantially similar to
those suffered by the plaintiff in Bottrell. In neither case
did the guarantor/shareholders establish either a separate
duty owed them by the lender or damages distinct from those
suffered by the corporation. Bottrell, 773 P.2d at 710. We
find no abuse of discretion in the District Court's grant of
summary judgment.
We affirm the District Court's order denying Walstads
permission to add Nordak as a party plaintiff as against
Norwest and reverse its order permitting addition of the same
as against EGC. We affirm the District Court's grant of
respondents' motions for summary judgment.
We concur: