The Anackers entered into a verbal contract with Sudan to drill a well.  Sudan began drilling the well where Anacker’s subcontractor had prepared a flat pad for the equipment.  After drilling was partially complete, Anacker noticed the well was too close to the neighbor’s drain field.  Sudan was notified and directed to abandon the first well and drill a second, which he did.

Sudan filed a complaint to foreclose on a construction lien for the amount of drilling the first well: $3,970.  After depositions, the District Court granted summary judgment for Anacker based on two grounds: 1) failure by Sudan to complete the first well defeated his lien; and 2) Sudan breached the contract by not drilling the well in a workmanlike manner.

Because the parties had entered a contract to drill a well.  A well was completed, the second well, and thus the contract work was substantially performed.  As such, Justice Nelson ruled that the district court’s first rational was unfounded.

Regarding the second issue, some deposition testimony supported the assertion that Sudan drilled in the wrong location, while some indicated that the location of the first well was Anacker’s mistake.  Therefore, a genuine issue of material fact exists as to whether the abandonment of the first well was a change order or a breach, rendering summary judgment improper.

Justice Cotter wrote a concurring opinion stating she agreed that the decision was in keeping with SCOMONT’s precedents on construction lien disputes, but wrote to express her belief that cases such as this “confound the purpose underlying the construction lien statutes.” Sudan, ¶ 18.

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Rohrer bought a lot from Knudson and built a house where he experienced significant settling of the land underneath the building causing cracked walls, broken tile floors, and sticking doors.  After investigating the history of the area, Rohrer found that a ditch and steep railroad embankment existed there and that major earth moving activities filled in the ditch and eliminated the embankment sometime before 1964.  Claiming that Knudson should have been aware of and disclosed the fill conditions, Rohrer filed suit alleging negligence, negligent misrepresentation, and violations of the Montana Consumer Protection Act.

Issue 1: Whether the District Court abused its discretion in prohibiting the Rohrers from presenting evidence of differential settlement damage to other residences in Bel View Palisades.

At trial, Knudson claimed that the settlement problems resulted from Rohrer’s own negligence and submitted expert testimony stating that the cause of the settlement was invariably a water problem resulting from irrigation next to the foundation, poor site grading, and the failure to install drains around the foundation footings.

Before trial began, Knudson moved to preclude Rohrer from presenting evidence of differential settlement damage to neighboring residences claiming that such evidence was irrelevant and prejudicial.  Despite Knudson’s counsel stating that he did not intend to argue that Roher’s house was a unique anomalous occurrence, SCOMONT found that they presented evidence calculated to imply that damage to other homes did not exist.  By “eliciting testimony of the reputation for settlement in the area and suggesting that no extraordinary foundations were required for other houses in the area,” Knudson’s counsel opened the door to rebuttal.  The District Court abused its discretion by excluding the evidence of settling in neighboring homes after such insinuations.  The “exclusion of such rebuttal testimony affected the result since any change in the apportionment of negligence would alter the Rohrers’ recovery.”  Reversed and remanded for retrial where Rohrer should be allowed to present evidence of settlement of other houses in the area to rebut any contention that there is no reputation for settlement in the area or that neighboring houses do not require extraordinary foundations because they are not built on fill.

Issue Two:  Whether the District Court’s instruction defining “unfair practice” under the Montana Consumer Protection Act was a correct statement of the law.

Rohrer’s counsel offered a jury instruction defining an “unfair” act or practice as “one which offends established public policy and which is either immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.”  Ultimately though, the court agreed with Knudson’s counsel and struck “substantially injurious” from the jury instruction defining an “unfair” act or practice.

As a matter of first impression, SCOMONT joined at least a dozen other states and adopted a version of the U.S. Supreme Court’s standard from FTC v. Sperry & Hutchinson Co. (S&H), which used the following criteria to determine whether a practice is unfair:

(1) whether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise – whether, in other words, it is within at least the penumbra of some common-law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers (or competitors or other businessmen).

FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 244, n. 5 (1972).  SCOMONT held as a matter of law that under the Montana Consumer Protection Act,  an unfair practice is “one which offends established public oplicy and which is either immoral, unethical, oppresssive, unscrupulous or substantially injurious to consumers.” Rohrer, ¶ 31.

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Deist argued that because the tort (malicious prosecution) was committed in Missoula County, it was the proper venue.  Despite Thornton’s argument that she was required to file suit in Missoula because it was the location of the federal court, SCOMONT ruled that the:

purported breach of duty occurred when she intentionally and with alleged malice filed and prosecuted an unsupportable federal cause of action against Deist.  To do so, she willingly traveled to Missoula County where, for approximately two years, the federal court prosecuted this matter before terminating it in favor of Deist.  Moreover, substantial evidence supports Deist’s claim that he suffered damages in Missoula County as a result of Thornton’s suit.  The concurrence of breach and damages in Missoula County support the District Court’s conclusion that Missoula County was a proper venue for Deist’s malicious prosecution claim.

Deist, ¶ 15.

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Download Matter of Trust Est. by Baird

In October of 1999, Herbergers’ mailed a notice of change in terms to Kortum-Managhan along with her monthly statement.  The change included the following arbitration clause:

Arbitration for Disputes—No Jury Trials or Class Actions:  This 
paragraph 18 describes how all Claims . . . will be arbitrated instead of 
litigated in court.

B.  We OR you have the right to require that each Claim be resolved by 
arbitration.  A Claim will be arbitrated if (a) both we and you or (b) either 
we or you, exercise the right to require that a Claim be arbitrated.  If, for 
example, we exercise our right to require that a Claim be resolved by 
arbitration but you do not also exercise your right to require that the Claim 
be arbitrated, the Claim will be resolved by arbitration. . . . 

C.  If we or you request arbitration of a Claim, we and you will not have the 
right to litigate the Claim in court.  This means (1) there will be no jury trial 
on the Claim, (2) no pre-arbitration discovery except as the Rules permit, 
and (3) no Claim may be arbitrated on a class-action basis, and neither we 
nor you will have the right to participate as a representative or member of 
any class of claimants pertaining to any Claim subject to arbitration.  
Generally, the arbitrator’s decision will be final and binding.  There are 
other rights that you would have if you went to court that also may not be 
available in arbitration.

In the underlying suit to this action, Herbergers’ filed a Motion to Compel Arbitration which was granted by the District Court. Kortum-Managhan argued that she was never advised, in any meaningful way, that she was waiving her fundamental constitutional rights to a jury trial and to access to the courts by her continued use of her Herbergers’ credit card.

Because the rights to trial by jury and access to the courts are fundamental constitutional rights, and deserve the highest level of court scrutiny and protection, their waiver must be proved to have been made voluntarily, knowingly, and intelligently.  In order for a fundamental right to be effectively waived, a consumer must be informed of the consequences before personally consenting to the waiver.  Kortum-Managhan, ¶ 26 (citing Kloss v. Edward D. Jones & Co., 2002 MT 129, ¶ 64).

The test to determine whether an individual deliberately, understandingly, and intelligently waived their fundamental constitutional rights to trial by jury and access to the courts is to consider the totality of a series of factors laid out in Kloss, ¶ 65. Under those factors, SCOMONT concluded that Kortum-Managhan’s right to a jury trial was not sufficiently waived. In fact, the Court said “that Herbergers, through the use of the ‘bill stuffer,’ attempted to lull [Kortum-Managhan] into agreeing to waive her constitutional rights and that attempting to change the terms of a contract through the use of a ‘bill stuffer’ is ‘sneaky and unfair.’” Kortum-Managhan, ¶ 31.

In closing, SCOMONT held that:

Based on the foregoing, we conclude that making a change in a credit agreement by way of a “bill stuffer” does not provide sufficient notice to the consumer on which acceptance of the unilateral change to a contract can be expressly or implicitly found. Consequently, Herbergers’ unilateral attempt to amend its original cardholder agreement to include an arbitration clause was ineffective.

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The Court went on to distinguish a large number of cases cited by the appellant for a variety of reasons.  The discussion is detailed, lengthy, and probably required reading for anyone dealing with the issue.  A brief overview follows:

For a Montana court to exercise jurisdiction over a nonresident defendant, two questions must be considered.  (1) Does the nonresident defendant come within the provisions of Montana’s long-arm jurisdiction statute; and (2) would exercise of long-arm jurisdiction over the nonresident comport with traditional notions of fair play and substantial justice?

B.T. Metal Works v. United Die & Mfg. Co., 2004 MT 286, ¶ 16.

In Simmons, we explained that the Due Process Clause of the Fourteenth Amendment to the United States Constitution limits the power of a state court to render a valid personal judgment against a non-resident defendant, and that a state may exercise personal jurisdiction over a nonresident only if minimum contacts between the defendant and the forum state exist. Simmons, 206 Mont. at 272-73, 670 P.2d at 1376-77 (citations omitted). We adopted the Ninth Circuit test for determining whether the exercise of jurisdiction comports with due process:

(1) The nonresident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking its laws.

(2) The claim must be one which arises out of or results from the defendant’s forum-related activities.

(3) Exercise of jurisdiction must be reasonable.

Simmons, 206 Mont. at 276, 670 P.2d at 1378 (citing Data Disc, Inc. v. Systems Tech. Assoc., Inc. (9th Cir.1977), 557 F.2d 1280, 1287).

B.T. Metal Works, ¶ 34.

In determining reasonability under factor three above, Montana Courts are to employ the test originally set forth in Simmons Oil Corp. v. Holly Corp., 244 Mont. 75.

(1) The extent of the defendant’s purposeful interjection into Montana;

(2) The burden on the defendant of defending in Montana;

(3) The extent of conflict with the sovereignty of the defendant’s state;

(4) Montana’s interest in adjudicating the dispute;

(5) The most efficient resolution of the controversy;

(6) The importance of Montana to the plaintiff’s interest in convenient and effective relief; and

(7) The existence of an alternative forum.

Further, we noted that “[t]he above factors are not mandatory tests, each of which the plaintiff must pass in order for the court to assume jurisdiction. Rather, the factors simply illustrate the concepts of fundamental fairness, which must be considered in each jurisdictional analysis.” Simmons [Oil Corp.], 244 Mont. at 88, 796 P.2d at 197.

Nasca v. Hull, 2004 MT 306, ¶ 32. 

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T&C  proposed to build six mini-stores each serving a different purpose (a pharmacy, a bakery, etc.) each under 5,000 square feet in size in order to meet the B-1 zoning requirements of the land which limits the size of buildings to 5,000 square feet.  Although the plan complied with the letter of the zoning regulations, and the office of the planning director planned on recommending approval, the city commission voted unanimously to reclaim T&C’s application.  Two months later the city commission voted 4-1 to deny the application, deciding that although each individual unit complied with the building size requirements, the overall aggregate impact of the proposal did not harmonize with the intent of the B-1 zone.

T&C  commenced this action, claiming a violation of its constitutional right to due process and making an equal protection claim.  The District Court granted summary judgement for the City, concluding that because the Zoning Ordinance granted the city commission broad authority and significant discretion in rendering its decision, T&C did not have a protected property interest in having its application granted.  T&C appealed, arguing the District Court relied on disputed facts to determine the Zoning Ordinance granted the city commission broad discretion and that the city commission acted arbitrarily and capriciously in reclaiming and denying its application. 

Issue 1: Did the Bozeman city commission violate T&C’s constitutional rights to substantive due process and equal protection of the law when it denied T&C’s application for approval of a site plan?

1.1 – Substantive Due Process Claim

 “Substantive due process primarily examines underlying substantive rights and remedies to determine whether restrictions are unreasonable or arbitrary when balanced against the purpose of a government body in enacting a statute, ordinance or regulation.” Town & Country, ¶ 17 (citing State v. Webb, 2005 MT 5, ¶ 21; State v. Egdorf, 2003 MT 264, ¶ 19).  “[T]he test of whether the government denied a party constitutional substantive due process concerns an examination of whether the government, by enacting a piece of legislation, acted in an unreasonable, arbitrary, or capricious fashion.” Town & Country, ¶ 17.  ”A constitutional due process analysis is applicable under the facts of this case because T&C does not allege Bozeman’s Zoning Ordinance is unconstitutional.”  Town & Country, ¶ 18.

1.2 – Equal Protection Claim

“To prevail on an equal protection challenge, the injured party must demonstrate that the law at isue discriminates by impermissibly classifying individuals or entities and treating them differently on the basis of that classification.” Town & Country, ¶ 19.  “T&C’s complaint challenges the city commission’s decision, rather than the Zoning Ordinance, and does not present a constitutional denial of equal protection claim.”  Town & Country, ¶ 20.

Issue 2: Was the Bozeman city commission’s decision to deny T&C’s application an abuse of discretion?

“We cannot conclude that the information relied on by the city commission to make its decision lacked foundation or that its decision was unreasonable.  The city commission addressed relevant criteria – vehicle and pedestrian traffic, parking wetlands, setbacks, and conformity with the neighborhood.  The city commission complied with its Zoning ordinance and gave reasons for its denial of T&C’s site plan.  The city commission did not abuse its discretion.”  Town & Country, ¶ 31.

Further, it was not an abuse of discretion for the city commission to reclaim T&C’s application because the Zoning Ordinance provides that it may make the final decision on an application–either on apeal from the planning director or after its own consideration.  Town & Country, ¶ 32.

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