Justia Montana Supreme Court Opinion Summaries

David Kulko, Ilsa Kaye, and Michael Horn were the sole shareholders, directors, and officers of Davail, Inc. Kulko sued Kaye, Horn, and Davail for dissolution of Davail, shareholder oppression, fraudulent conduct, and breach of fiduciary duties. Eventually, the parties agreed to dissolution of Davail. The district court entered an order granting dissolution and appointed a receiver. The court then dismissed Kulko’s claims for lack of subject matter jurisdiction, concluding that dissolution is an exclusive remedy and that dissolution of Davail eliminated the case or controversy. The Supreme Court reversed and remanded for reinstatement of the case, holding that the district court (1) erred when it concluded that Kulko could not pursue punitive or compensatory damage claims against Davail’s other shareholders because he already sought and obtained dissolution of Davail; and (2) erred in dismissing Kulko’s claim because the court did not lose subject matter jurisdiction over the case upon entering the dissolution order. View "Kulko v. Davail" on Justia Law

Fay Posnien, an exclusive agent for Allstate incorporated as Posnien Inc. sold the agency to Baird 7. Baird 7 subsequently executed an exclusive agency agreement with Allstate. The agency was successful following the transfer until Baird’s termination as an agent. Baird 7 chose to receive a termination payment from Allstate rather than transfer its economic interest to an approved buyer. Allstate withheld its disbursement of the funds and filed a complaint in interpleader to determine whose lien had priority to the termination payment. Posnien counterclaimed against Allstate, alleging conversion. At issue in this case was the scope of the security interest that Posnien was granted when it sold its economic interest in the agency book of business to Baird 7. The district court concluded that Posnien lacked rights in the collateral of the economic interest in the Allstate agency sold to Baird 7 and therefore could not sustain a claim for conversion against Allstate. The Supreme Court reversed the entry of judgment in favor of Allstate and remanded for entry of partial summary judgment on liability in favor of Posnien, holding that Posnien held an economic interest in the book of business, which satisfied the liability elements of conversion. View "Allstate v. Posnien" on Justia Law

The Bixby family owned approximately one-third of Wyo-Ben’s class A stock. In 2011, Wyo-Ben’s shareholders voted to reclassify the shares to give class B shares the right to vote, which resulted in an overall decrease to the Bixby voting rights. The Bixby family dissented and, after the vote, sent a payment demand for all of their shares. Wyo-Ben, Inc. filed a petition seeking a declaration that the dissenters were not entitled to any payment for their class B shares and contesting the dissenters’ demand for a high value of the class A shares. The Bixbys, in turn, sought a declaration that they were entitled to payment for both classes of shares at the higher value. The Bixbys also counterclaimed, asserting that Wyo-Ben’s decision to dilute their voting rights constituted oppressive conduct. The district court dismissed the oppression claim and ruled that the Bixbys were not entitled to be paid for their class B shares under Montana’s dissenters’ right statute. The Supreme Court primarily affirmed, holding that the district court did not err in (1) dismissing the Bixbys oppression claim; (2) denying class B payments to all but one of the Bixby appellants; and (3) valuing the class A shares. View "Wyo-Ben, Inc. v. Bixby" on Justia Law

In 2010, plaintiffs and Tidyman’s Management Services Inc. (TMSI) filed a complaint against Michael A. Davis and John Maxwell in their capacities as officers and directors of TMSI and/or its subsidiary, Tidyman’s LLC, alleging breach of corporate duties arising out of a merger between TMSI and SuperValu, which created Tidyman’s LLC. Plaintiffs requested punitive damages and attorney fees. The merger at issue occurred despite advice from a financial advisor TMSI had retained that the company should be sold, and the complaint alleged that the directors and officers had misrepresented the merit of the transaction. TMSI is a Washington corporation with its principal place of business in Montana, and was a member of Tidyman’s LLC; employee shareholders owned TMSI. A corporate liability insurance policy was in place that purported to insure Davis and Maxwell against liability incurred in their positions as officers and directors of Tidyman’s LLC. The Policy was to provide a legal defense for Davis and Maxwell throughout the federal ERISA litigation. The issues this case presented to the Montana Supreme Court were: (1) whether the District Court was correct in concluding Montana law, rather than Washington law, applied in this case; (2) whether the District Court erred in concluding that the corporate liability insurer breached its duty to defend without analyzing coverage under the policy; (3) whether the District Court erred in denying the insurer a hearing and discovery on reasonableness and collusion related to the stipulated settlements; and (4) whether the District Court erred by awarding pre-judgment interest, or in its determination of when the interest began accruing. The Montana Court concluded that genuine issues of material fact regarding reasonableness precluded summary judgment on the amount of the stipulated settlements. Accordingly,the Court reversed judgment on the stipulated settlements and remanded this case for further proceedings. The Court affirmed on all other issues. View "Tidyman s et al. v. Davis et al." on Justia Law

In 1988, Faith Lutheran Church of Great Falls, Inc., which held certain property in its own name, affiliated with the Evangelical Lutheran Church of America (ELCA) denomination. In 2010, seventy-one percent of members voted to terminate Faith Lutheran’s affiliation with ELCA. Thereafter, the majority continued as Faith Lutheran, and approximately half of the minority formed the group that would become New Hope Lutheran Ministry. New Hope subsequently filed an action seeking a declaration that the minority was the rightful owner of all church property, including property held by the Foundation for the Endowment of Faith Lutheran Church, Inc. The district court determined that New Hope was entitled to all Faith Lutheran property and all property held by the Foundation. The Supreme Court affirmed in part and reversed in part, holding that the district court (1) correctly determined that New Hope was entitled to property held by Faith Lutheran because the ninety percent super-majority necessary for Faith Lutheran to retain the property under its constitution was not obtained; but (2) erred in holding that New Hope was entitled to the Foundation’s property because New Hope failed to prove that an express trust existed over the Foundation’s property in favor of the church members. View "New Hope Lutheran Ministry v. Faith Lutheran Church of Great Falls, Inc." on Justia Law

C.R. Weaver formed Mikart Transport, LLC in January 2011. At that time, the articles of organization named Weaver and Michael Smith as members or managers. In March 2011, Smith submitted a credit application with Tri-County Implement, Inc. After Smith failed to pay Tri-County for work it performed on two vehicles, including a Volvo semi-truck titled in Weaver's name, Tri-County refused to release the Volvo from its possession pursuant to its asserted agisters' lien on the vehicle. Weaver subsequently filed a complaint against Tri-County. In response, Tri-County filed a counterclaim against Weaver and a third-party complaint against Mikart. The district court entered judgment against Mikart, ordering it to pay for the work it performed, and awarded Tri-County attorney fees and costs. The court also held Mikart, Smith, and Weaver jointly and severally liable for these amounts. The Supreme Court reversed the portion of the district court's imposition of personal liability on Weaver for the work performed on the two vehicles, as there was no basis to hold Weaver individually liable for the obligations of Mikart to Tri-County. Remanded. View "Tri-County Implement, Inc. v. Weaver" on Justia Law

Bank and Lumber Company had business and financial relationships with Sawmill. A few years into its operation, Sawmill began experiencing serious financial difficulties. Sawmill defaulted on approximately $1.4 million in loan obligations to Bank and owed Lumber Company approximately $900,000. Proceedings were initiated in bankruptcy court and district court. While the cases were pending, Sawmill was destroyed by fire. Bank recovered approximately $980,000 from Sawmill's insurance proceeds. In a subsequent case between Bank and Lumber Company, the jury determined that neither Bank nor Lumber Company was entitled to recover damages from the other. The Supreme Court affirmed, holding that the district court did not abuse its discretion in refusing to admit into evidence a particular letter written by the Bank president. View "H.E. Simpson Lumber Co. v. Three Rivers Bank of Mont." on Justia Law

Pam, Allan, and Charles and Mary Lou Dees (the Dees) started a business, Great Falls Portables, Inc. (GFP), with Allan acting as sole manager of the business. Pam subsequently took over management. The Dees later filed a complaint against Pam, GFP, and others. A month later, Pam and Allan, who were married but separated, entered into a settlement agreement that provided that Pam would be responsible to the Dees for any obligation owed them in connection with their interest in GFP. In litigation with the Dees, Pam filed a third-party complaint against Allan, alleging (1) the Dees' complaint arose out of Allan's fraudulent activity (Count I), (2) Allan had fraudulently induced Pam to enter the agreement assigning responsibility for the Dees' interest (Count II), and (3) Allan must indemnify her from liability to the Dees (Count III). The district court granted summary judgment to Allan on all three counts. The Supreme Court affirmed, holding that the district court correctly determined that (1) Pam failed to plead fraud with sufficient particularity; (2) Pam failed to show reliance on Allan's representations; and (3) Count III of Pam's complaint was dependent on and related back to Counts I and II. View "Fossen v. Fossen" on Justia Law

This case arose out of several business transactions entered into by parties involved in the development of condominiums on Hauser Lake. Cherrad, Merritt & Marie, and Max & V (the Hale interests) were limited liability companies owned by Conrad and Cheryl Hale. Craig Kinnaman was sole proprietor of a business called CK Design. Merritt & Marie purchased the Hauser Lake property. Subsequently, the Hales and Kinnaman agreed to develop a portion of the property. Cherrad was the developer, and Mountain West Bank (MWB) made three loans to Cherrad to develop the project. CK Design suffered delays in the project and later left the project. In 2007, Kinnaman committed suicide, and the Estate recorded a $3.3 million construction lien on the condominiums. MWB brought this action 2008 against the Hale interests and the Estate seeking foreclosure on the three secured loans. The Hale interests and the Estate cross-claimed against each other. The district court (1) declared the Estate's construction lien invalid; and (2) determined Cherrad owed the Estate $76,278 for work that CK Design performed on the project. Finding no error, the Supreme Court affirmed. View "Mountain West Bank, N.A. v. Cherrad, LLC" on Justia Law

Employee was injured while working for Employer. Because Employer failed to retain current worker's compensation insurance, Employee filed a claim with the Uninsured Employer's Fund, which the Fund accepted. The Fund sought indemnity from Employer for Employee's damages, and the parties agreed to an interim payment plan. However, the Fund ultimately turned Employer over to collection. Employer responded by suing the Fund for breach of contract. The district court granted Employer's summary judgment motion on the issue of whether the Fund had breached the repayment agreement. The district court then awarded damages to Employer in the amount of $198,749. The damages awarded largely centered on the court's implicit conclusion that the Fund's actions had interfered with Employer's ability to obtain financing, which, in turn, hurt Employer's sales. The Supreme Court affirmed, holding that the district court properly (1) determined Employer was entitled to summary judgment on the question of whether the Fund had breached the payment plan agreement; (2) determined Employer could receive consequential damages for the Fund's breach of contract; (3) denied the Fund's motion for post-trial relief; (3) calculated damages; and (4) denied Employer's damage claim for ten years of lost profits. View "Elk Mountain Motor Sports, Inc. v. Dep't of Labor & Indus." on Justia Law