97-282
No. 97-282
IN THE SUPREME COURT OF THE STATE OF MONTANA
1998 MT 79
DANIEL J. SCHUMACKER and
MARIE B. SCHUMACKER,
Plaintiffs and Appellants,
v.
MERIDIAN OIL CO., SLAWSON OIL CO.,
COWRY ENTERPRISES, INC., PARAFFIN
SERVICES, INC., and KEN OLSEN,
Defendants and Respondents.
APPEAL FROM: District Court of the Seventh Judicial District,
In and for the County of Richland,
The Honorable Richard G. Phillips, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Robert L. Johnson, Attorney at Law, Lewistown, Montana
Richard W. Heineman, Attorney at Law, Wibaux, Montana
For Respondents:
John G. Crist; Crist Law Firm, Billings, Montana (for
Meridian Oil)
John D. Alexander; Ugrin, Alexander, Zadick & Higgins,
Great Falls, Montana (for Slawson Exploration)
Jacque W. Best; Habedank, Cumming, Best & Savage,
Sidney, Montana (for Cowry Enterprises, Inc.)
Calvin J. Stacey, Kevin M. Funyak; Stacey & Walen Law Firm,
Billings, Montana (for Paraffin Services and Ken Olsen)
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Submitted on Briefs: November 20, 1997
Decided: April 14, 1998
Filed:
__________________________________________
Clerk
Justice Karla M. Gray delivered the Opinion of the Court.
¶1 Daniel J. Schumacker and Marie B. Schumacker (the Schumackers)
appeal from the judgment entered by the Seventh Judicial District Court,
Richland County, on its order granting the summary judgment motions of
Meridian Oil Co., Slawson Oil Co., Cowry Enterprises, Inc., Paraffin Services,
Inc., and Ken Olsen (collectively, the Defendants). We affirm.
¶2 The Schumackers raise the following issues on appeal:
¶3 1. Did the District Court err in granting summary judgment to the
Defendants on the basis that the Schumackers failed to present any evidence
on an essential element of civil conspiracy?
¶4 2. Did the District Court err in granting summary judgment to Paraffin
Services, Inc. and Ken Olsen on the basis of the exclusivity provision
contained in the Workers' Compensation Act?
BACKGROUND
¶5 Daniel Schumacker (Daniel) worked as a mechanic for Paraffin
Services, Inc. (Paraffin) during the summer of 1994. Paraffin is a licensed
trucking company primarily engaged in transporting fluids from oil wells to
various disposal points. Production water, one of the fluids transported by
Paraffin, is water from wells that may be contaminated by hydrocarbons or
hydrogen sulfate gases; when the water is contaminated, it is highly
flammable. If contaminated production water has been transported in a tank,
the tank must be steamed or flushed with carbon monoxide to remove any
flammable contaminants before any welding can be done. If the tank is not
specially cleaned, welding on the tank can cause an explosion.
¶6 In June of 1994, the United States Department of Transportation
Federal Highway Administration ordered Paraffin to ensure that all hazardous
material be accompanied by a proper shipping paper and transported only in
cargo tanks authorized for the transport of hazardous material. Paraffin also
was required to determine the flash points of any hazardous materials it hauled
and to properly mark and placard the tanks carrying hazardous material.
¶7 On July 24, 1994, Paraffin's tank-trailer number 103 (Unit #103) was
used to transport fluids from wells owned by Cowry Enterprises, Inc. (Cowry),
Meridian Oil Co. (Meridian), and Slawson Oil Co. (Slawson). The next day,
Daniel checked the driver's log, which indicated that Unit #103 required
welding. Before beginning the repair, Daniel asked Ken Olsen (Olsen), his
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immediate supervisor and the president of Paraffin, what had been transported
in Unit #103 on the previous day. Olsen responded that only water had been
transported. Daniel began to weld and an explosion occurred. He was
seriously injured and received workers' compensation benefits for the injuries
he sustained in the explosion.
¶8 On July 24, 1995, Daniel filed a complaint against the Defendants
alleging that the Defendants conspired to illegally transport hazardous material
and that Paraffin and Olsen had wrongfully discharged him. Several of the
Defendants moved to dismiss and one moved, in the alternative, for a more
definite statement. The District Court denied the motions to dismiss, but
ordered Daniel to submit a more definite statement. In response, Daniel filed
his "More Definite Statement as to the Allegations of Conspiracy" in October
of 1996.
¶9 The District Court subsequently entered a scheduling order requiring
Daniel to file any amendments to his pleadings by December 1, 1996. The
order expressly provided that later amendments could be made only with the
court's permission.
¶10 The Schumackers filed an amended complaint adding Daniel's wife,
Marie Schumacker, as a plaintiff and a loss of consortium claim against all the
Defendants. The wrongful discharge claim was deleted. Slawson answered
the amended complaint and the remaining defendants again moved for a more
definite statement. The Schumackers responded that the Defendants were well
aware of their legal theory and the District Court did not rule on the motion for
a more definite statement.
¶11 The Defendants subsequently moved for summary judgment on the
basis that the Schumackers had presented no evidence on the meeting of the
minds element of civil conspiracy. They relied on portions of Daniel's
deposition, which had been filed with the court, and on Daniel's responses to
interrogatories. In the alternative, Paraffin and Olsen also sought summary
judgment premised on the exclusivity provision of the Workers' Compensation
Act (WCA) and Olsen submitted an affidavit in support of that portion of his
and Paraffin's motion. The Schumackers filed briefs in opposition to the
motions for summary judgment and a supporting affidavit from Daniel.
¶12 The Schumackers also filed--and then formally withdrew--a conditional
motion to further amend their complaint. They subsequently filed a "more
definite statement" of their claim which, for the first time, mentioned
negligence with regard to the Defendants and which specifically asserted the
applicability of the doctrine of res ipsa loquitur. The Schumackers requested
the District Court to deem their amended complaint amended again in
accordance with their "more definite statement."
¶13 The District Court granted the Defendants' motions for summary
judgment and, in a separate order, denied the Schumackers' request to deem
their complaint amended. Judgment was entered accordingly and the
Schumackers appeal from the District Court's grant of summary judgment to
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the Defendants.
STANDARD OF REVIEW
¶14 "Summary judgment is proper when no genuine issues of material fact
exist and the moving party is entitled to judgment as a matter of law." Ash
Grove Cement Co. v. Jefferson County (1997), 283 Mont. 486, 491, 943 P.2d
85, 88; Rule 56(c), M.R.Civ.P. We review an order granting summary
judgment de novo, applying the same Rule 56(c), M.R.Civ.P., criteria applied
by the district court. Ash Grove Cement Co., 943 P.2d at 88 (citation omitted).
¶15 "[I]f the moving party establishes that one element of a cause of action
lacks any genuine issue of material fact and the non-moving party does not
come forward with proof that a genuine issue does exist, summary judgment
is proper." Wiley v. City of Glendive (1995), 272 Mont. 213, 216, 900 P.2d
310, 312 (citation omitted). The party opposing summary judgment cannot
rely on mere allegations in the pleadings, but must present its evidence raising
genuine issues of material fact in the form of affidavits or other sworn
testimony. Klock v. Town of Cascade (Mont. 1997), 943 P.2d 1262, 1266, 54
St.Rep. 829, 831(citation omitted). While we must resolve any inferences
drawn from the factual record in favor of the party opposing summary
judgment (Hatch v. State Dept. of Highways (1994), 269 Mont. 188, 193, 887
P.2d 729, 732 (citation omitted)), "mere denial, speculation, or conclusory
statements" are insufficient to raise a genuine issue of material fact. Klock,
943 P.2d at 1266 (citation omitted).
DISCUSSION
¶16 1. Did the District Court err in granting the Defendants'
motions for summary judgment on the basis that the Schumackers failed
to present any evidence on an essential element of civil conspiracy?
¶17 In granting the Defendants summary judgment on the Schumackers'
civil conspiracy claim, the District Court concluded that the Schumackers had
failed to produce any evidence on the meeting of the minds element of civil
conspiracy and, therefore, no genuine issue of material fact existed on that
necessary element of the conspiracy claim. The Schumackers argue that direct
evidence on the meeting of the minds element of conspiracy is not necessary
and that their circumstantial evidence on that element is sufficient to raise a
genuine issue of material fact.
¶18 The elements of a civil conspiracy are "(1) [t]wo 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."
Simmons Oil Corp. v. Holly Corp. (1993), 258 Mont. 79, 91, 852 P.2d 523,
530 (citation omitted). Moreover, it is not the conspiracy itself that gives rise
to the cause of action; it is the torts committed or the wrong done in
furtherance of a civil conspiracy that do so. Duffy v. Butte Teachers' Union
Number 332, AFL-CIO (1975), 168 Mont. 246, 251, 541 P.2d 1199, 1202(citation
omitted).
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¶19 The gist of the Schumackers' conspiracy claim is that the Defendants
conspired to maximize profits and undercut legitimate transportation by
knowingly causing hazardous substances to be transported in unsuitable
containers. Acknowledging that a meeting of the minds is an essential element
requiring proof, the Schumackers contend that there is direct evidence of a
meeting of the minds for "every act of transport." The meeting of the minds
element, however, requires a meeting of the minds on the unlawful object or
course of action (see Simmons Oil, 852 P.2d at 530) which, in this case, is the
unlawful transportation of hazardous substances in unsuitable containers. In
this regard, the Schumackers concede that they presented no direct evidence
of a meeting of the minds regarding the unlawful method of transportation, but
argue that strong circumstantial evidence supports an inference sufficient to
withstand summary judgment that there was a meeting of the minds as to the
method of transportation.
¶20 Circumstantial evidence is evidence which tends to establish one fact
by proving another and which, while not conclusively establishing the first
fact, affords an inference of its existence. Section 26-1-102(1), MCA. We
have not previously addressed whether circumstantial evidence may be used
to establish the meeting of the minds element of civil conspiracy. We
repeatedly have held, however, that circumstantial evidence may be used to
prove the agreement element of a criminal conspiracy. See, e.g., State v.
Stever (1987), 225 Mont. 336, 342, 732 P.2d 853, 857 (citations omitted);
State v. Fitzpatrick (1977), 174 Mont. 174, 184, 569 P.2d 383, 391 (citations
omitted); State v. Alton (1961), 139 Mont. 479, 503-04, 365 P.2d 527, 539
(citations omitted).
¶21 Moreover, other states have allowed the use of circumstantial evidence
to establish the meeting of the minds element of a civil conspiracy due to the
difficulty in obtaining direct evidence on that element. See, e.g., Four R Cattle
Co. v. Mullins (Neb. 1997), 570 N.W.2d 813, 818 (citation omitted); Adam
v. MT. Pleasant Bank & Trust Co. (Iowa 1986), 387 N.W.2d 771, 773
(citation omitted); Beverly v. McCullick (Kan. 1973), 505 P.2d 624, 633
(citation omitted); Shows v. Silver Shield Mining and Milling Company (Colo.
1962), 375 P.2d 522, 524. Because direct evidence of the meeting of the
minds is typically in the possession and control of the alleged conspirators
and, therefore, difficult--if not impossible--to obtain, we hold that
circumstantial evidence may be used to establish the meeting of the minds
element of a civil conspiracy.
¶22 The Schumackers argue that they raised a genuine issue of material fact
on the meeting of the minds element of civil conspiracy by circumstantial
evidence. Specifically, they contend that the following evidence supports an
inference that there was a meeting of the minds among the Defendants to
transport production fluid illegally: Paraffin transported production water in
Unit #103 from wells operated by Cowry, Meridian, and Slawson on the day
before the explosion; Unit #103 was unmarked and unsuitable for transporting
production fluid and, therefore, transporting production fluid in Unit #103 was
illegal; and, in addition, signs at wells operated by Cowry and Meridian warn
of the presence of flammable substances.
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¶23 This evidence does not support an inference that there was a meeting
of the minds to transport production fluid illegally. The evidence may be
sufficient to indicate that Paraffin unlawfully transported a hazardous
substance in an unsuitable container, but that is not the claim set forth against
the Defendants in the Schumackers' complaint. The fact that Paraffin
transported fluids from wells owned and operated by Cowry, Meridian, and
Slawson establishes only that they were customers of Paraffin; it is insufficient
to create an inference that they knew of, agreed to, or promoted any illegal
transportation of hazardous material by Paraffin. We conclude that the
Schumackers' circumstantial evidence is insufficient to raise a genuine issue
of material fact on the essential meeting of the minds element of their civil
conspiracy claim.
¶24 Perhaps anticipating our adverse decision on their conspiracy claim, the
Schumackers contend that, even if their civil conspiracy claim fails, they
should be permitted to proceed to trial on the issue of negligence. The
Defendants respond that the Schumackers did not plead negligence claims in
their initial or amended complaint and should not be permitted to add such a
claim now. We agree.
¶25 Although the Schumackers argue that they pleaded a negligence claim
from the outset, their initial complaint alleges only civil conspiracy and
wrongful discharge. The amended complaint alleges only civil conspiracy and
loss of consortium. The record does not reflect any effort by the Schumackers
to state a negligence-based claim until after the Defendants had moved for
summary judgment and the time for amendments of right had long since
passed.
¶26 We previously have held that "[l]itigants should be allowed to change
legal theories after a motion for summary judgment has been filed only in
extraordinary cases." Peuse v. Malkuch (1996), 275 Mont. 221, 228, 911 P.2d
1153, 1157. No extraordinary circumstances exist in this case that would
justify permitting the Schumackers to change their legal theory after the
motions for summary judgment had been filed. Moreover, the Schumackers
filed and then withdrew a motion to further amend their complaint and did not
raise as an issue on appeal the District Court's denial of their tardy and indirect
effort to "amend" via their "more definite statement." Therefore, we decline
to further address the Schumackers' contentions regarding negligence.
¶27 We hold that the District Court did not err in granting summary
judgment in favor of the Defendants on the basis that the Schumackers failed
to present any evidence on an essential element of civil conspiracy.
¶28 2. Did the District Court err in granting summary judgment to
Paraffin and Olsen on the basis of the exclusivity provision contained in
the WCA?
¶29 In addition to granting Paraffin and Olsen's motion for summary
judgment on the civil conspiracy claim, as discussed above, the District Court
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also granted their motion for summary judgment on the basis of the exclusivity
provision in the WCA. The Schumackers contend that the District Court erred
in determining facts, rather than merely determining whether genuine issues
of material fact existed in this regard.
¶30 Our conclusion above, that the District Court did not err in granting
summary judgment to the Defendants on the civil conspiracy claim, is
dispositive as to all Defendants. As a result, we need not address the District
Court's alternative basis for granting summary judgment to Paraffin and Olsen.
¶31 Affirmed.
/S/ KARLA M. GRAY
We concur:
/S/ WILLIAM E. HUNT, SR.
/S/ JIM REGNIER
/S/ TERRY N. TRIEWEILER
/S/ W. WILLIAM LEAPHART
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