Simmons Oil Corp. v. Holly Corp.

No. 91-589

IN THE SUPREME COURT OF THE STATE OF MONTANA

SIMMONS OIL CORPORATION and
SIMMONS REFINING CORPORATION,
Plaintiffs and Appellants,

HOLLY CORPORATION; NAVAJO REFINING
COMPANY; NAVAJO NORTHERN, INC.;
WELLS FARGO BANK, N.A.,
Defendants and Respondents

APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable Roy C. Rodeghiero, Judge presiding.

COUNSEL OF RECORD:
For Appellants:
H. Charles Stahmer, Bozeman, Montana;
James Goetz, Goetz, Madden & Dunn, Bozeman,
Montana; Charles J. Wisch, Weissburg and
Aronson, Inc., San Francisco, California
For Respondents:
Steven M. Perry, Munger, Tolles & Olson,
Los Angeles, California; John D. Stephenson, Jr.,
Jardine, Stephenson, Blewett & Weaver, Great Falls,
Montana, for Wells Fargo Bank, N.A.

Submitted: September 24, 1992

Decided: April 28, 1993
Justice R. C. McDonough delivered the Opinion of the Court.

This is an appeal from an order of the Eighth Judicial
District, Cascade County, granting respondent's motion for summary
judgment. We affirm in part and reverse in part.
Appellant Simmons Oil Corporation (SOC) and Simmons Refining
Corporation (SRC) (collectively referred to as ttSimmonslr)
alleged
claims against Wells Fargo Bank for breach of fiduciary duty,
tortious breach of the implied covenant of good faith and fair
dealing, and civil conspiracy with Holly corporation, resulting in
Holly's breach of partnership fiduciary duty owed to Simmons.
The central question on appeal is whether respondent
established the complete absence of any genuine issues of material
fact to justify a summary judgment ruling as a matter of law.
Appellant requests this Court to reverse summary judgment on the
grounds that the District Court erred in granting this ruling in
light of the material factual controversy that exists.
ISSUES
1. Did the District Court err in granting summary judgment
as to the claims brought against respondent Wells Fargo by
appellant Simmons for breach of a fiduciary duty?
2. Did the District Court err in granting summary judgment
as to the claims brought against Wells Fargo for breach of the
implied covenant of good faith and fair dealing?
a. Did Wells Fargo merely exercise its contractual
rights or did its actions constitute a breach of the covenant
of good faith and fair dealing implied in every contract?
2
 b. Did a IfspecialrelationshipBiexist between Simmons
and Wells Fargo to support a tort claim for bad faith?
3. Did the District Court err in granting summary judgment
as to the claims against Wells Fargo alleging civil conspiracy with
Holly to breach Hollyfs fiduciary duty to Simmons?
On December 22, 1988, Simmons filed this action in District
Court t o recover damages from Wells Fargo Bank for breach of
fiduciary duty, breach of the implied covenant of good faith and
fair dealing, and conspiracy. Simmons also sued Holly Corporation
and two of its wholly owned subsidiaries, Navajo Refining
, on
Corporation and Navaj o Northern, Inc. (collectively BBHollyBB)
similar allegations. In February 1989, both Wells Fargo and Holly
moved to dismiss for lack of personal jurisdiction and the court
granted these motions on May 1, 1989. Simmons appealed this
dismissal, and in July 1990 this Court reversed and remanded for
further proceedings in a published opinion, Simmons Oil Corp. v.
Holly Corp. (1990), 244 Mont. 75, 796 P.2d 189.
Upon remand to the District Court, Wells Fargo and Holly filed
motions for summary judgment which were argued. On October 17,
1991, the District Court filed its orders granting summary judgment
for all defendants, and Simmons appealed.
Prior to the filing of opening briefs, Simmons settled its
dispute with Holly, and in February 1992, appellants and Holly
filed in this Court a joint stipulation for voluntary dismissal of
the appeal from the order granting summary judgment to Holly. The
only remaining respondent is Wells Fargo.
 Simmonst allegations against Wells Fargo focus on the
occurrence and interpretation of certain events during the eight
year period of the loan relationship. The following basic
chronology is not disputed by the parties:
~eginningin 1980, Wells Fargo provided SOC a line of credit,
which was increased to $18 million in 1981 when SOC's wholly owned
subsidiary, SRC, purchased the Black Eagle oil ~efineryin Great
Falls. The credit was to be used for working capital and
acquisition of inventory and SOC and SRC ('$Simmonstt)
agreed the
line of credit would be reduced to $10 million by May 1982.
Simmons began experiencing financial difficulties in early
1982, was unable to reduce the debt as agreed upon, and thereafter

Wells Fargo closely monitoredthe refinery's operating performance.
Although Wells Fargo held off exercising its undisputed foreclosure
rights, throughout 1983 and 1984 the bank urged Simmons to initiate
voluntary bankruptcy proceedings. During this time, Simmons
attempted to sell assets and find equity partners or additional
financing.
In 1984, ~immons,Wells Fargo, and Holly entered into an
agreement which authorized the formation of Montana Refining
Company (MRC), a partnership, to run the refinery. MRC
some of Simmons' debt and a Holly subsidiary, Navajo Northern,
Inc., became the sole general partner and took control of the
refinery. Simmons1 subsidiary, SRC, the sole limited partner
assumed a passive role in the refinery's operation.
 The remaining Simmons debt was restructured in January 1985,
and Simmons executed two new notes totalling approximately $12.6

million. Mutual general releases were executed between Wells Fargo
and all of Simmons1 entities, except SRC. This included releasing
Mr. and Mrs. ~immons from their personal guarantees of the
preexisting corporate debt. (Mr. Simmons is president of both SRC
and SOC. )
Contacts between Wells Fargo and Simmons decreased
substantially by late 1985, and Jerry Simmons had no conversations
with any Wells Fargo officer or employee during the subsequent two
years.
The 1985 restructuring agreement allowed an assignment by
Wells Fargo of its rights and duties under the agreement. On April
25, 1988, after several years of unfavorable refinery operations

and minimal debt service, Wells Fargo sold Simmonst and the MRC
notes to Holly. This sale resulted from Hollyfs assertions that
the sale of the notes was Holly's "stated price for continuing to
support the refineryf1and that it might tender its inventory to
Wells Fargo and "walk awaygf the sale was not forthcoming.
if
Simmons had been negotiating with Wells Fargo directly
regarding a purchase of the notes, but negotiations had broken down
earlier in the month and prior to culmination of the sale between
Holly and Wells Fargo, Wells Fargo rejected a proposal from Simmons
for ~ i m m o n spurchase of the notes on exactly the same terms and
~
conditions as offered to Holly.
 Simmons then filed this suit alleging t h a t Holly and W e l l s
Fargo wrongfully refused to allow it to purchase the debt on the
same terms given to Holly and that the sale constituted a breach of
fiduciary duty and bad faith.
While the foregoing chronology is not in contention, both
parties, in their briefs, provide specific details surrounding
these events which vary significantly. Simmons argues, and
substantiates w i t h documentation, that Wells Fargo exercised
considerable control over the refinery's operation between 1982 and
1984; that it forced Simmons into the partnership with Holly on

terms and conditions specified by the bank; that it secretly
negotiated with Holly when it assigned the debt; and that it knew
that Holly planned to use the debt to force Simmons out of the
partnership and avoid Holly's partnership fiduciary duty to
Simmons. Simmonsl allegations of breach of duty and bad faith are
premised on these purported facts.
Wells Fargo maintains that the control exercised over Simmons
w a s an attempt to work with Simmons to regulate costs and seek

additional funding sources rather than exercising foreclosure
rights on the assets. Wells Fargo notes that Simmons was free to
reject Wells Fargo's advice, and did, such as advice concerning
filing for bankruptcy. Furthermore, Wells Fargo asserts that the
sale constituted an exercise of an express and unrestricted
contractual right; that Simmons was aware of Holly's negotiations
to purchase the debt from Wells Fargo and chose not to contact the
bank with an offer to purchase the debt until after a Holly/Wells
Fargo letter of intent was signed; and finally, that since the
assignment right was unrestricted, a covenant of good faith and
fair dealing should not be implied to vary the express, unambiguous
terms of the contract.
BREACH OF FIDUCIARY DUTY
In Montana, "[tlhe relationship between a bank and its
customer is generally described as that of debtor and
creditor...and as such does not give rise to fiduciary
responsibilities." (Citation omitted.) Diest v. Wachholz (1984),
208 Mont. 207, 216, 678 P.2d 188, 193. However, in certain
circumstances, a fiduciary duty may result from the development of
a special relationship akin to an 'ladvisor/advisee.ll This
"special" relationship must exist before a fiduciary duty arises.
Deist, 678 P.2d at 193.
Appellant contends that respondent had a fiduciary duty to
Simmons because it exercised substantial control over the
operations of the corporation, thus providing the special
relationship necessary to create a fiduciary duty. Respondent
counters that Simmons' rejection of the bank's advice and
subsequent retention of independent legal counsel terminated any
fiduciary relationship there may have been.
Also, respondent states that Wells Fargo made their decision
to sell the Simmons' debts for "solid business reasons."
Furthermore, Wells Fargo had a right to assign the notes per the
1985 Restructuring Agreement.
 "This Court has recognized that no fiduciary duty arises
between a bank and its borrower where the bank did not offer
financial advice, its advice was not always heeded, or where the
borrower was advised by others, such as legal co~nsel.~~
Lachenmaier v. First Bank Systems, Inc. (1990), 246 Mont. 26, 33,
803 P.2d 614, 619, Although Wells Fargo exerted considerable
control over the business until 1984, appellants retained
independent legal counsel in 1984 and 1985. Legal counsel advised
Simmons concerning the 1984 Master Agreement and the 1985

Restructuring Agreement.
This Court, however, concludes that the Master Agreement
definitively terminated any fiduciary duty that Wells Fargo may
have had to Simmons. In the master agreement, SRC transferred all
rights and assets of every kind and description, (with minor
exceptions) to MRC, creating the Montana Refining Company limited
partnership. SRC and Navajo Northern, Inc. filed a certificate of

limited partnership with the Secretary of the State of Montana for
the purpose of acquiring the assets of SRC. Navajo Northern was
the general partner of the MRC and SRC was the limited partner.
Although Wells Fargo was involved in day-to-day operations of
the refinery before 1984 exercising control over nearly every facet
of the business, that close relationship was not evident
thereafter. After the master agreement forming the limited
partnership of MRC, Navajo Northern took over the management and
control of MRC. There is no evidence that Wells Fargo continued to
exercise daily control over the refinery once it became a limited
partnership.
Wells Fargo1sdirect contact with Simmons also decreased after
the master agreement. The following excerpt from Jerry Simmons'
transcript reveals a drastic decline in communication between the
plaintiff and the defendant in 1985 through 1987.

Q. Subsequent to August of 1985, through the end of
1987, how frequently did executives of Simmons entities
have contact with personnel at Wells Fargo Bank?
A. Would you give me the time frame again?
Q. August of 1985 through the end of 1987
MR. WISCH: Well, he's already testified about the
contact in November of '85.
MS. HYMANSON: In November '85.
MR. WISCH: So you want to start in August?
Q . BY MS. HYMANSON: Other than the contacts about buying
the Simmons debt in November of 1985.
A. Until the end of 1987. There was probably
communication between Wells Fargo and the Simmons Oil and
Refining -- Simmons Oil Corporation and Simmons Refining
offices that would pertain to just the normal filing of
tax returns and the submittal of financial information.
But I believe that the only communication that I
personally had with Wells Fargo was a conversation with
Hardy Watford in November of 1987.
Simmons simply have not proved a fiduciary relationship
between Simmonst entities and the Wells Fargo Bank existed after
the creation of MRC. See Pulse v. North American Land Title Co.
(1985), 218 Mont. 275, 283, 707 P.2d 1105, 1110; Diest v. Wachholz
(1984), 208 Mont. 207, 678 P.2d 188; First Bank (N.A.) - Billings
v. Clark (1989), 236 Mont. 195, 208, 771 P.2d 84, 92. We conclude
that Wells Fargo did not breach a fiduciary duty to ~immons
because
there was no fiduciary relationship between Wells Fargo and
Simmons, after the 1984 Master Agreement.
BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING

a. Did Wells Fargo merely exercise its contractual rights or
did its actions constitute a breach of the covenant of good faith
and fair dealing implied in every contract?
Both parties agree that California law applies to the
promissory notes at issue although the analysis would be the same
under Montana law.
Simmons concedes that the 1985 restructuring agreement gave
Wells Fargo the right to assign the Simmons debt, but argues that
Wells Fargo1sdecision to assign it to Simmonst partner Holly, was
subject to the implied covenant of good faith and fair dealing.
Simmons contends that the sale of the notes to Holly was
intentionally designed to give Holly leverage over Simmons and was
not within the expectations of Simmons with respect to the 1984
master agreement or the 1985 restructuring agreement.
Although Wells Fargo agrees that the implied covenant of good
faith and fair dealing applies to every contract, the bank states
it cannot be used to override explicit contractual terms. Canna
Developers v. Marathon Dev. Cal. (1992), 2 Cal. 4th 342, 374, 6
Cal.Rptr.2d 467, 826 P.2d 710, 728. The 1985 restructuring
agreement contained language which stated: "WFB may assign this
Agreement and its rights and duties hereunder." Wells Fargo
contends this language gave them the right to assign Simmonsf notes
to anyone, including Holly. "Every contract imposes upon
each party a duty of good faith and fair dealing in its performance
and its enforcement. . . . The covenant of good faith finds
particular application in situations where one party is invested
with a discretionary power affecting the rights of another. Such
power must be exercised in good faith." Canna, 826 P.2d at 726.
However, "[als to acts and conduct authorized by the express
provisions of the contract, no covenant of good faith and fair
dealing can be implied which forbids such acts and conduct. And if
defendants were given the right to do what they did by the express
provisions of the contract there can be no breach." Carma, 826
P.2d at 728. These are the principles by which we analyze whether
Wells Fargo breached the implied covenant of good faith and fair
dealing.
The acts and conduct authorized by express provisions of the
contract at issue in Carma, above, are distinguishable from the
provision at issue in the present case. Carma concerned a
commercial lease which specifically provided that the landlord had
the right to terminate the lease of the tenant at a fixed date
after written notice from the tenant that tenant was going to
assign the lease or sublease the rental premises. The lease also
specifically provided the landlord may enter into a new lease for
the premises with the intended assignee or sublessee or enter into
a new lease with that person, and the tenant would not be entitled
to any profit from the landlord due to termination of the lease and
the reletting of the premises. The California Supreme Court
concluded that the landlord's use of this recapture clause was not
a breach of the covenant of good faith since it was "expressly"

permitted in the lease and was within the reasonable expectations
of parties under the lease.
In the present case, the provision at issue is a general right
to assign Wells Fargo's rights and duties under the 1985

restructuring agreement. (See Farris v. Hutchinson (1992), 838
P.2d 374, for a case interpreting a specific express contract
similar to the contract at issue in Carma.) Simmons does not
dispute Wells Fargo's right to assign its rights and duties as
expressly provided for in the lease. Simmons, however, believes
that it was not within their reasonable expectations that Wells
Fargo's discretionary right to assign would be used to assign the
notes to Simmons' partner, Holly Corporation.
This general right to assign Simmons' notes provided in the
restructuring agreement must be read with another clause from the
agreement. Clause 13.7 states that I' [t]he parties intend and agree
that each of their respective rights, duties...shall be
performed ...and exercised reasonably and in good faith." This
clause, specifically placed in the contract at issue, provides that
all rights under the contract, such as the right to assign the
notes, will be conducted in good faith. This clause further
supports Simmons' argument that Wells Fargo breached the covenant
of good faith and fair dealing.
Simmons contends that there is still further evidence that
Wells Fargo breached the covenant of good faith and fair dealing.
An interoffice memorandum requesting approval to sell the Simmons'
notes to Holly casts doubt on Wells Fargof intent in the sale.
s
The applicable portion of the memorandum discusses the alternative
to selling the notes to Holly and it states:

The alternative to the above, based upon comments from
Holly Corporation, would be the cessation of MRC's
operation. Rather than continue funding 100% of both
operating losses and required capital improvements, while
receiving only 50% of any future profits, Holly
Corporation has stated that it would tender its inventory
guarantee to WFB and walk away. Depending upon the
market value of the inventory at such time, it is
questionable whether WFB would recover enough to pay off
the non-accrual loan.
From a legal standpoint, this restructuring would
take the form of WFB selling its entire creditor position
in all the Simmons entities to Holly Corporation.
Selling this position eliminates any need to approach
Jerry Simmons or any of the Simmons entities for approval
to modify the partnership agreement with respect to
distributions, etc.
Approval of this restructuring is recommended.
A second memo reads in part:

1 spoke with Ivy Parsons of Holly Corporation this
morning to get an update on Hollyrs progress in
purchasing the Simmons's entities notes ,...Ivy plans to
meet personally with Jerry Simmons next week and ask Mr.
Simmons to sign an agreement that would waive any right
of participation as a limited partner. In return for
giving up any interest in the limited partnership, Mr.
Simmons have (sic) his notes canceled and returned to
him. This would would (sic) eliminate the risk that
Holly could have a fiduciary responsibility to Jerry
Simmons, and would also avoid the tax problems associated
with original issue discounts.
Simmons insists that the meetings concerning the sale of the
notes between Holly and Wells Fargo Bank were "secretu and that
"Wells Fargofssecret negotiations with Holly, Simmonst partner, as
well as its desire to change the profit distribution from the
refinery without Simmonst consent and to facilitate Hollyfssqueeze
play against Simmons, all demonstrated a complete lack of honesty
or commercial reasonableness.If "Each party to a contract has a
justified expectation that the other will act in a reasonable
manner in its performance or efficient breach. When one party uses
discretion conferred by the contract to act dishonestly or to act
outside of accepted commercial practices to deprive the other party
of the benefit of the contract, the contract is breached."
Marshall v. State (1992) 830 P.2d 1250, 1251, 49 St.Rep. 336; Story
v , City of Bozeman (1990), 242 Mont. 436, 450, 791 P.2d 767, 775.

The foregoing information leads the Court to believe that a
genuine issue of material fact exists - whether Wells Fargo
breached the covenant of good faith and fair dealing. We conclude
that summary judgement on this issue was inappropriate and we
reverse the District Court and remand for a proper determination.
b. Did a Ifspecial relationshipffexist between ~immonsand
Wells Fargo to support a tort claim for bad faith?
Simmons appeals the court's decision to grant summary judgment
to the defendant on the issue of tortious breach of the implied
covenant, claiming that Wells Fargo and Simmons have the flspecial
relationshipgt
necessary to support a tort claim. The essential
elements of such a relationship are:
(1) the contract must be such that the parties are in
inherently unequal bargaining positions;
(2) the motivation for entering the contract must be a
non-profit motivation, i.e., to secure peace of
mind, security, future protection;
(3) ordinary contract damages are not adequate because;
(a) they do not require the party in the superior
position to account for its actions, and
 (b) they do not make the inferior party 8rwhole'';
(4) one party is especially vulnerable because of the
type of harm it may suffer and of necessity places
trust in the other party to perform; and
(5) the other party is aware of this vulnerability.

wallis v. superior Court (Kroehler Mfg. Co.) (1984), 207 Cal.Rptr.
123, 129.
"If substantial evidence is not presented in support of each
and all of the above essential elements, the court shall direct
there is no special relationship." Story, 791 P.2d at 776.
In the instant case, there is at least one element which is
not supported by substantial evidence and therefore, there is no
"special relationship." The second element provides that the
motive for entering the contract must be non-profit. The purpose
for entering into this contract is business. It is a contract
between two business entities whose goals are to make money. This
is nothing like the "peace of mind" which motivates insureds in
insurance contracts. The appellant has not presented any
substantial evidence in support of the second element necessary to
establish a "special relationship," therefore, the trial court is
affirmed on this issue.
CIVIL CONSPIRACY
The final issue is whether the trial court erred in granting
summary judgment as to the claims against Wells Fargo alleging
civil conspiracy with Holly to breach Holly's fiduciary duty to
Simmons. It is appellant's contention that during the bank's
secret meetings with Holly, Wells Fargo purposefully agreed to
structure the transaction in a way that "eliminates any need to
approach Jerry Simmons or any of the Simmons entities for approval
to modify the partnership agreement with respect to distributions,
etc." Moreover, Wells Fargo and Holly specifically discussed
Holly's intent to use the notes to force Simmons to surrender their
50% interest in the refinery. Finally, Simmons contends that the
sale of the notes to Holly promoted breaches of Holly 's partnership
fiduciary duty to Simmons and of Holly's obligations under the
implied covenant of good faith and fair dealing.
Respondent counters that the lower court ruled that "the
Holly/Navajo defendants have not committed any wrongful act",
therefore, "there can be no civil action for conspiracy." If Holly
committed no wrong, then there can be no conspiracy between Wells
Fargo and Holly because no conspiracy claim can exist if there is
not an underlying unlawful act. Duffy v. Butte Teachers' Union,
Number 332, AFL-CIO (1975), 168 Mont. 246, 251, 541 P.2d 1199,
1202.
We find respondent's argument persuasive. After the lower
court granted summary judgment to all defendants on all issues,
Simmons appealed these decisions to the Supreme Court. Shortly
thereafter, Simmons and Holly entered into a settlement agreement.
Then Simmons filed a motion for voluntary dismissal of the appeal
from the order of the District Court granting summary judgment for
defendants Holly/Navajo. In the motion, Simmons stipulated that
the judgment of the District Court, granting summary judgment to
Holly, (including the civil conspiracy claim), was final and non-
appealable. In a Supreme Court order dated February 25, 1992,
Simmons' appeal was dismissed with prejudice as to any and all
further appeals of Simmons claims against Holly, including the
final judgment concerning the summary judgment motion.
The final judgment at issue (between Holly and Simmons) states
that Holly committed no wrongful act. However, the necessary
elements of a conspiracy include: (1) Two or more persons, and for
this purpose, a corporation is a person; (2) an object to be
accomplished; (3) a meeting of the minds on the object or course of
action; (4) one or more unlawful overt acts; and (5) damages as the
proximate result thereof. Grenz v. Medical Management Northwest
(lggl), 250 Mont. 58, 62, 817 P.2d 1151, 1154. I i [ I ] f the object of
an alleged \conspiracy1 is lawful, and the means used to attain
that object are lawful, there can be no civil action for
conspiracy. The foregoing is true even though damage may result to
the plaintiffs and even though defendants may have acted with a
malicious motive.I9 Duffy, 541 P.2d at 1202. If Holly was not
involved in any unlawful acts, there can be no conspiracy involving
Wells Fargo either. Accordingly, the trial court did not err on
the issue of Wells Fargo's involvement in a civil conspiracy with
Holly/Navaj o when it granted Wells Fargo s summary judgment motion.
Affirmed in part and reversed in part.

We Concur: I
Justice Terry N. Trieweiler specially concurring in part and
dissenting in part.
I concur with the conclusion in the majority opinion that
there was an issue of fact which precluded summary judgment
dismissing Simmons1 contract claim for breach of the covenant of
good faith and fair dealing. I dissent from that part of the
majoritytsopinion dismissing Simmonsq tort claim for breach of the
covenant of good faith for the reasons set forth in my dissenting
opinion in McNeil v Cun-z'e (1992), 2 5 3 Mont. 9, 830 P.2d 1241.
. The

right to tort damages arose because of activity in Montana--not
California, therefore, walh v. Superior Court (1984), 207 Cal. Rptr.

123, is not controlling, and as I have previously stated, I would

not follow Sturyv. CityofBozernan (1990), 242 Mont. 436, 791 P.2d 767.

I also dissent from that part of the majority opinion which
affirms the District Court's order dismissing Simmons1 claim for
breach of fiduciary duty. Summary judgment is an extreme remedy
which should not be granted when there is any genuine issue of
material fact; the procedure should never be substituted for trial
if a material factual controversy exists. Beaverhead Bar Supply,Inc. v.

Hanirzgton (lggl), 247 Mont. 117, 120, 805 P.2d 560, 562. Furthermore,

all reasonable inferences that might be drawn from the offered
evidence should be drawn in favor of Simmons, as the party opposing
summary judgment in this case. Cereck v Albertson's, Inc. ( 1 9 8 1 ) ,
. 195

Mont. 409, 411, 637 P.2d 509, 511.
19
 When our previous decisions which discuss the circumstances
under which a fiduciary duty is established are applied to the
facts in this case, I conclude that whether there was a fiduciary
duty and a breach by the defendant were issues of fact to be
decided by the jury. The majority opinion cites Deist v. Wachholz

(1984), 208 Mont. 207, 678 P.2d 188, and Lachenmaierv.FirstBankSysterns,

Inc. (1990), 246 Mont. 26, 803 P.2d 614, for the proposition that a

fiduciary duty can only arise between a bank and its creditor when
the bank fills the role of advisor to its creditor. However, it is
clear from those opinions that a fiduciary duty arises when there
is a special relationship between the bank and its creditor and the
relationship of advisor/advisee is only one of the relationships
which can create a fiduciary duty on the part of the bank.
The only thing consistent about this Court's prior decisions
on this subject has been its holding that the existence of "special
circumstances'~may result in an exception to the general rule that
a bank's relationship with its customers is not a fiduciary one.
Whether or not there were special circumstances which should give
rise to a fiduciary duty is a classic question of fact. In this
case, Simmons contends that the degree of control exerted by Wells
Fargo Bank amounts to "special circumstances." A fiduciary
relationship may arise if a creditor gains substantial control over
the debtor's business affairs. Blue Line Coal Co., Inc. v. Equibank

(E.D. Pa. 1988), 683 F. Supp. 493, 496. In NCNBNationalBankofNofi/z
Carolina v. Tiller (4th Cir. 1987), 814 F.2d 931, 936, the kind of

activity which establishes a lending institution's control over a
borrower was defined as "actual day-to-day involvement in
management and operations of the borrower or the ability to compel
the borrower to engage in unusual transaction^.^
The majority has concluded as a matter of law that there are
no special circumstances, and therefore, no fiduciary obligation
due to the fact that once the 1984 master agreement and the 1985
restructuring agreement were entered into, the bank no longer
exerted daily control over Simmons1 operations and direct
communications between the two entities declined significantly.
The majority concedes that before 1984 the bank exercised
day-to-day control over nearly every facet of the refinery's
operations, but seizes upon the fact that this close relationship
was not evidenced thereafter. However, the following facts, which
were in evidence, establish that even after the restructuring
agreement and formation of the Montana Refining Company, the bank
retained the ability to compel Simmons to engage in unusual
transactions and continued to exert unusual control over Simmons by
virtue of the terms of the agreements:
1. The 1984 master agreement (which formed the Montana
Refining Company) required the bank's approval of the refinery's
annual budget, and express written approval before any capital
expenditures greaterthan $200,000 could be made. Simmons Refining
Corporation remained a limited partner in the new company.
2. Even though Simmons was a partner in the new refining
company pursuant to the 1984 master agreement, and was a party to
the agreement establishing the distribution of refinery cash flow,
the bank could change that distribution without Simmons' consent.
3. The 1985 agreement restructured Simmons' debt through a
new "carry-back promissory note" for $10 million from Simmons
Refining Company to the bank, and a new "SOC promissory notew for
$2.5 million from Simmons Oil Company to the bank. The new SOC
note had an interest rate of 20 percent per year, almost double the
prime rate. Furthermore, Simmons Refining Company was prohibited
from obtaining credit from any other lender without the bank's
approval. Simmons was locked into the notes and could not prepay,
and was powerless to get other financing.
4. Under the terms of the 1985 agreement, the bank took
complete control of Simmons Refining Company's business by
prohibiting Simmons from incurring any indebtedness, liabilities,
lease payments, guarantees, security interests, or any other
obligations without the bank's prior written consent.
5. Also instructive is this Court's previous observation in
~immons Corporation v. Hol& Corporation
Oil ( 199 0) , 244 Mont . 75, 7 9 6 P.2 d

189, to the effect that Wells Fargo's affiliation with Simmons

extended far beyond that of the simple creditor-debtor
relationship. Wells Fargo loaned Simmons large sums of
 money, knowing these sums were destined f o r Montana. It
protected its interests by exercising financial control
over the refinery, retaining the authority to approve
expenditures of the refinery and becoming the outright
owner of Simmons1 profits from the refinery.

. . .
The sale of debt, the act that constituted
Wells Fargo's alleged breach of duty, was merely the
final act in the chain.
Simmons, 7 9 6 P.2d at 196.

These examples demonstrate that the bank actively assumed a
relationship far beyond the usual debtor-creditor relationship.
During the period of time that the majority states there were no
"direct contact^^^ between Simmons and bank personnel, the evidence
establishes that the bank still exerted control over Simmons,
Simmons was powerless to get other financing without the bank's
approval; it was locked into a note that could not be prepaid; and
the bank continued to control the annual budget and expenditures
for the refining company in which Simmons was a limited partner.
A jury could properly find a type of "special relationship1'which
gave rise to a fiduciary obligation from the bank to Simmons.
Based on these facts, this issue cannot be resolved by summary
judgment.
For the same reasons that the majority concluded there was
evidence sufficient to support a claim for breach of the covenant
of good faith, I conclude there was also evidence to support a
claim that the bank breached its fiduciary duty to Simmons. I
would remand to the District Court for a jury trial on Simmons'
claim that the bank breached its fiduciary duty.
I also dissent from the majority's conclusion that because
Simmons settled its claim against Holly Corporation and dismissed
its appeal against that defendant, Simmons is precluded from
pursuing its claim for civil conspiracy against the bank.
There was nothing about Simmons' settlement with Holly
Corporation which resolved the merits of that claim. Furthermore,
settlement of claims is presumed to be in the best interests of the
parties, the courts, and the Montana public. State ex rel. Deere v. District

Court (l986), 224 Mont. 384, 730 P.2d 396. Settlement of claims

should be encouraged by this Court, not discouraged. Yet, the
majority opinion will make it impossible for a plaintiff to settle
with one of two tort feasors under similar circumstances in the
future.
Based on this decision, future defendants like Holly
Corporation will simply have to continue to be involved in the
litigation and incur the attendant expenses so long as Simmons is
unable to resolve its differences with some other alleged
co-conspirator. Defendants like Holly Corporation will have
absolutely no control over their own destiny because no future
plaintiff will be able to settle a claim with one defendant until
the case has been resolved against all defendants. This is bad
public policy and serves no rational purpose under the
circumstances in this case.
For these reasons, I dissent from the majority opinion. I
would remand the issues of breach of fiduciary duty and civil
conspiracy to the District Court for resolution of the factual
issues that have been raised by the evidence that is already in the
record. /

Justice William E. Hunt, Sr., concurs in the foregoing
concurrence and dissent of Justice Trieweiler.
 April 29, 1993

CERTIFICATE OF SERVICE

I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:

H.CHARLES STAHMER
Attorney at Law
502 S: 19th Ave., Suite 11
Bozeman, MT 59715

James Goetz
Goetz, Madden & Dunn
35 N. Grand
Bozeman. MT 59715

Charles J. Wisch
WEISSBURG & ARONSON, INC.
555 California st., Suite 2400
San Francisco, CA 94104

Steven M. Perry, Esq.
MUNGER, TOLLES & OLSON
355 S. Grand St., 35th Floor
Los Angeles, CA 90071-1560

Richard F. Gallagher, Esq.
CHURCH, HARRIS, JOHNSON & WILLIAMS
P.O. BOX1645 ~7

Great Falls, MT 59403 '

John D. Stephenson, Esq.
JARDINE, STEPHENSON, BLEWETT & WEAVER
P.O. Box 2269
Great Falls, MT 59403

ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA