Title: ABELL v TRAVELERS INS CO

State: montana

Issuer: Montana Supreme Court

Document:

N O . 8 2 - 3 6 0 I N THE SUPREME COURT OF THE STATE OF MONTANA 19 8 3 D I A N A ABELL a n d JESSE ABELL, P l a i n t i f f s a n d A p p e l l a n t s , V S . TRAVELERS INSURANCE C O . , C r o s s - C l a i m a n t i n I n t e r v e n t i o n and R e s p o n d e n t , vs. JAMES A . RENO, D e f e n d a n t . A p p e a l f r o m : D i s t r i c t C o u r t o f t h e T h i r t e e n t h J u d i c i a l D i s t r i c t , I n a n d f o r t h e C o u n t y o f Y e l l o w s t o n e H o n o r a b l e D i a n e B a r z , J u d g e p r e s i d i n g . C o u n s e l o f R e c o r d : F o r A p p e l l a n t : Gene H u n t l e y a r g u e d , B a k e r , Montana F o r R e s p o n d e n t : McNamer, Thompson & C a s h m o r e , B i l l i n g s , Montana C h a r l e s Cashmore a r g u e d , B i l l i n g s , Montana S u b m i t t e d : A p r i l 21, 1 9 8 3 D e c i d e d : May 19, 1 9 8 3 F i l e d : MAY 1 9 1983 C l e r k Mr. J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e Opinion of t h e C o u r t . T h i s a p p e a l is from t h e District C o u r t of t h e T h i r t e e n t h J u d i c i a l D i s t r i c t , County of Yellowstone. W e a r e asked t o review a n o r d e r g r a n t i n g summary judgment i n f a v o r of T r a v e l e r s I n s u r a n c e Company. W e f i n d t h a t a f a c t u a l q u e s t i o n e x i s t s , t h e r e f o r e , summary judgment was improper. I n 1974, Diana A b e l l was i n j u r e d i n an automobile a c c i d e n t . A b e l l r e t a i n e d James Reno a s her a t t o r n e y . I n 1976, Reno nego- t i a t e d a s e t t l e m e n t with P i e r c e Manufacturing and its i n s u r e r f o r $300,000; s u c h sum as compensation t o A b e l l f o r i n j u r i e s r e c e i v e d i n t h e a c c i d e n t . Of t h e $300,000, $100,000 was t a k e n by Reno f o r a t t o r n e y f e e s , $25,000 was t o f i n a n c e a r e l a t e d and contemplated a c t i o n a g a i n s t Ford Motor Company, and $50,000 was set a s i d e f o r T r a v e l e r s I n s u r a n c e t o s a t i s f y t h e i r s u b r o g a t i o n i n t e r e s t . T r a v e l e r s had p a i d sums i n e x c e s s of $50,000 t o A b e l l p u r s u a n t t o its o b l i g a t i o n as a c a r r i e r of workers' compensation i n s u r a n c e . P r i o r t o r e a c h i n g t h e s e t t l e m e n t w i t h P i e r c e , Reno wrote a l e t t e r t o Mr. Luoma of T r a v e l e r s I n s u r a n c e Company. The l e t t e r , which was d a t e d F e b r u a r y 3 , 1976, i n d i c a t e s t h e a n t i c i p a t e d s e t t l e m e n t of $300,000 and t h e proposed use of p a r t of t h o s e f u n d s . I n p e r t i n e n t p a r t t h e l e t t e r r e a d s : " T h i s l e t t e r w i l l confirm our t e l e p h o n e con- v e r s a t i o n of F r i d a y , t h e 3 0 t h day of J a n u a r y , 1976, c o n c e r n i n g my proposed a c t i o n on t h e Diana A b e l l f i l e . "I a m a n t i c i p a t i n g r e a c h i n g a s e t t l e m e n t w i t h t h e i n s u r a n c e c a r r i e r of t h e d r i v e r who s t r u c k t h e A b e l l c a r . I have n e g o t i a t e d a s e t t l e m e n t f i g u r e i n t h e amount of a p p r o x i m a t e l y $300,000.00, and s h o u l d r e c e i v e t h i s amount i n t h e v e r y n e a r f u t u r e . "I p r o p o s e t o p u t $25,000.00 i n a s p e c i a l - t r u s t a c c o u n t f o r t h e payment o f t h e - e x p e n s e s - - o f l i t i q a t i o n . I would a l s o p r o p o s e a n a d d i - - ---- t i o n a l $50,000.00 - be p u t i n t o a s p e c i a l t r u s t account-for t h e payment o f your f i r m ' s - subro- q a t i o n claim. I a n t i c i p a t e t h a t t h a t amount w i l l c e r t a i n l y be s u f f i c i e n t i n view of t h e f a c t t h a t it will be n e c e s s a r y t o d e d u c t t h e a p p r o p r i a t e p e r c e n t of t h e expenses, c o s t , etc. I am n o t e x a c t l y s u r e of t h e formula t o be used i n t h a t , b u t I imagine t h a t we can a r r i v e a t an agreement i n t h a t r e g a r d . (emphasis added.) "I do d e s i r e Mrs. Abell t o c o n t i n u e under her compensation coverage u n t i l r e l e a s e d by t h e d o c t o r , which I a n t i c i p a t e w i l l be J u n e o r J u l y of t h i s y e a r . " P l e a s e review t h i s m a t t e r w i t h your super- v i s o r s and l e t m e have t h e b e n e f i t of your t h i n k i n g . " On March 1, 1976, a f t e r r e c e i v i n g t h e s e t t l e m e n t , Reno e s t a b l i s h e d a t r u s t a c c o u n t i n t h e amount of $50,000. Presumably, t h i s money was earmarked f o r T r a v e l e r s I n s u r a n c e Company. The t r u s t document was signed by Reno and t h e A b e l l s . Reno was d e s i g n a t e d t r u s t e e and t h e A b e l l s were both t h e g r a n t o r s and t h e b e n e f i c i a r i e s . T r a v e l e r s never r e c e i v e d any of t h e s e f u n d s . The bulk of t h i s account was e v e n t u a l l y t r a n s f e r r e d i n t o a second t r u s t a c c o u n t . Reno was a l s o d e s i g n a t e d a s t h e t r u s t e e of t h e second account and t h e A b e l l s were d e s i g n a t e d a s benefi- c i a r i e s , however, t h e A b e l l s d i d n o t s i g n t h e second t r u s t a c c o u n t document. Reno made numerous m i s a p p r o p r i a t i o n s from t h e second a c c o u n t . The evidence shows t h a t about one-half of t h e $50,000 was w r o n g f u l l y converted by Reno. The name of T r a v e l e r s d i d n o t appear on any of t h e documents r e l a t e d t o t h e two a c c o u n t s . The A b e l l s commenced t h i s a c t i o n a g a i n s t Reno t o account f o r t h e $25,000 which was meant t o f i n a n c e a s u i t a g a i n s t Ford Motor Company. Concerning t h e $50,000, earmarked f o r T r a v e l e r s , t h e c o m p l a i n t a l l e g e d t h a t any use o r d i s p o s i t i o n of t h o s e funds was a m a t t e r between Reno and T r a v e l e r s . I n o t h e r words, t h e A b e l l s claimed t h a t i f T r a v e l e r s was n o t p a i d f o r its s u b r o g a t i o n i n t e r e s t , t h e y would be r e q u i r e d t o seek r e l i e f a g a i n s t Reno. T r a v e l e r s i n t e r v e n e d and argued t h a t it never r e c e i v e d any of t h e funds which Reno set a s i d e i n t r u s t , and it r e t a i n s its f u l l s u b r o g a t i o n i n t e r e s t i n t h e A b e l l ' s claims. E s s e n t i a l l y , T r a v e l e r s a s s e r t s t h a t any l o s s due t o m i s a p p r o p r i a t i o n of funds by Reno must be borne by t h e A b e l l s . T r a v e l e r s moved f o r summary judgment; t h e motion was g r a n t e d . The A b e l l s t h e n appealed. T h i s c o u r t h a s o f t e n s t a t e d t h e r u l e s i n regard t o summary judgment . "'Under Rule 5 6 ( c ) , M.R.Civ.P., a summary judgment is proper o n l y i f t h e record d i s c l o - s e s no genuine i s s u e of m a t e r i a l f a c t and t h a t t h e movant is e n t i t l e d t o judgment a s a m a t t e r of l a w . ( c i t a t i o n s o m i t t e d . ) The p a r t y moving f o r summary judgment has t h e burden of showing t h e complete absence of any genuine i s s u e a s t o a l l f a c t s which a r e deemed m a t e r i a l i n l i g h t of t h o s e s u b s t a n t i v e p r i n c i p l e s which e n t i t l e him t o a judgment a s a m a t t e r of law. ( c i t a t i o n s o m i t t e d . ) Once t h e movant h a s e s t a b l i s h e d t h a t no m a t e r i a l i s s u e s of f a c t e x i s t , t h e burden s h i f t s t o t h e opposing p a r t y t o r a i s e an i s s u e of f a c t .' ( c i t a t i o n o m i t t e d . ) " ' I t is w e l l e s t a b l i s h e d i n Montana t h a t a l l r e a s o n a b l e i n f e r e n c e s t h a t may be drawn from t h e o f f e r e d proof a r e t o be drawn i n f a v o r of t h e p a r t y who opposes summary judgment." ( c i t a t i o n s omitted .) Downs v. Smyk (1982) I Mont . 1 - , 651 P.2d 1238, 1243, 39 St.Rep. 1786, 1792-93. The purpose of summary judgment is t o encourage j u d i c i a l economy by avoiding unnecessary t r i a l s . Cereck v. A l b e r t s o n ' s I n c . ( 1 9 8 1 ) , Mont. , 637 P.2d 509, 38 St.Rep. 1986. However, t h e r u l e cannot be used a s a s u b s t i t u t e f o r t r i a l . The c o u r t cannot d e c i d e f a c t u a l i s s u e s ; r a t h e r , it can o n l y d e t e r m i n e whether a f a c t u a l i s s u e e x i s t s . Small v. McRae ( 1 9 8 2 ) , Mont . , 651 P.2d 982, 39 St.Rep. 1896. I n t h i s c a s e t h e c o u r t r e s o l v e d a f a c t u a l i s s u e . The c o u r t determined t h a t t h e evidence d i d not s u p p o r t a r e l a t i o n s h i p bet- ween Reno and T r a v e l e r s . I n response t o a p p e l l a n t ' s a s s e r t i o n t h a t t h e Reno l e t t e r i n d i c a t e d a t r u s t r e l a t i o n s h i p between Reno and T r a v e l e r s , t h e c o u r t s t a t e d : " [ a ] t r u s t must be founded on evidence which is unmistakable, c l e a r , s a t i s f a c t o r y and con- v i n c i n g . ( c i t a t i o n o m i t t e d . ) . . . I n t h e i n s t a n t s i t u a t i o n t h e o n l y evidence r e l i e d on by t h e A b e l l s t h a t Reno had e s t a b l i s h e d a t r u s t f o r T r a v e l e r s is c e r t a i n language con- t a i n e d i n Reno's l e t t e r of February 3. . . . T h i s is n o t t h e type of evidence which is unmistakable and convincing . " I t is obvious t h a t t h e c o u r t was judging t h e e v i d e n c e . W e reverse the order granting summary judgment and remand for further proceedings. I Justice / We concur: &. Chief 7ustiEe Justices Mr. Justice Frank B. Morrison, Jr.; I concur in the result. Mr. J u s t i c e L , C . Gulbrandson d i s s e n t i n g . I r e s p e c t f u l l y d i s s e n t : T r a v e l e r s , i n its cross-claim i n i n t e r v e n t i o n , s o u g h t a c o u r t d e t e r m i n a t i o n t h a t its subrogated i n t e r e s t was not p a r t i a l l y s a t i s f i e d by v i r t u e of t h e t r a n s a c t i o n s r e l a t i n g t o t h e $50,000 sum. A f t e r t h e Reno l e t t e r of February 3 , 1976, t h e A b e l l s , on March 1, 1976, a s g r a n t o r s , executed a D i s c r e t i o n a r y Revocable T r u s t Agreement a t t h e F i r s t F e d e r a l S a v i n g s and Loan A s s o c i a t i o n , B i l l i n g s , Montana, naming James A. Reno, a s t r u s t e e , and themselves a s b e n e f i c i a r i e s , and s p e c i f i c a l l y r e s e r v e d t o themselves t h e power t o revoke s a i d t r u s t a t any time. On t h e same d a t e , t h e $50,000 sum was i n v e s t e d i n S a v i n g s C e r t i f i c a t e #41105340, i s s u e d t o James A. Reno, t r u s t e e f o r Diana M. Abell and J e s s e A b e l l . On May 21, 1981, t h e A b e l l s , i n answers t o i n t e r r o g a t o r i e s , s t a t e d : "I a l s o d i d see t h i s c e r t i f i c a t e when he f i r s t purchased it, s o I know it was f o r real-----." Reno o b v i o u s l y considered himself a s t r u s t e e f o r t h e A b e l l s w i t h regard t o s a i d a c c o u n t . By l e t t e r , d a t e d March 3 , 1980, Reno s t a t e d : "I am c u r r e n t l y holder of S a v i n g s C e r t i f i c a t e 0411-05340, a s t r u s t e e f o r Diana M. Abell and Jesse A b e l l . " I n m y view, t h e p a r t y r e s i s t i n g t h e motion had a d u t y t o p r e s e n t e v i d e n c e t h a t a f a c t u a l d i s p u t e d i d e x i s t and d i d not do so. The D i s t r i c t Court p r o p e r l y determined t h a t Reno a c t e d a s t r u s t e e f o r t h e A b e l l s , and t h a t any a c t i o n Reno took w i t h r e s p e c t t o t h e funds c o u l d not be considered a s payment t o T r a v e l e r s . I would a f f i r m .