IN THE SUPREME COURT OF THE STATE OF MONTANA 

BURKE A. ESCHLER, LORI I. ESCHLER and 

JAM1 G. ESCHLER, individually and as 

Co-Personal Representatives of the 

Estate of JAMES P. ESCHLER, Deceased, y-4 ,ha- FY . 8 i ~7 b" i" ."" !,$ ?$ 

and 6 I,.?,: ,,:,x. i .,,< :<A !?,~,<,& 

JANET ETHEL ESCHLER, LEO B. LAPITO, 

ROBERT SOLIE and HOFFMAN ASSOCIATES, 

INC., a Montana Corporation, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Honorable G. Todd Baugh, Judge presiding. 

COUNSEL OF RECORD: 

For Appellants: 

Allen D. Gunderson; Gunderson Law Firm, Billings, 

Montana 

Jerome J. Cate; Cate Law Firm, Whitefish, Montana 

For Respondents: 

Don M. Hayes; Herndon, Hartman, Sweeney & Halverson, 

Billings, Montana 

Submitted on Briefs: February 23, 1995 

Filed: 

Decided: March 30, 1995 
Justice Karla M. Gray delivered the Opinion of the Court. 

This is an appeal from a grant of summary judgment by the 

Thirteenth Judicial District Court, Yellowstone County. We affirm. 

The sole issue on appeal is whether the District Court erred 

in determining that no genuine issues of material fact exist with 

regard to appellants' claim and that respondents are entitled to 

judgment as a matter of law. 

This appeal is the second of two by these appellants, both of 

which relate generally to certain life insurance polices of 

decedent James Eschler (James). In the earlier case, appellants 

Burke Eschler, Lori Eschler, Jami Eschler and Sharon Ille--James1 

children and fiancee, respectively--appealed a grant of summary 

judgment in favor of James' former spouse Janet (Janet) regarding 

entitlement to proceeds of two life insurance policies issued by 

Minnesota Mutual Life Insurance Company and one policy issued by 

Mutual Benefit Life Insurance Company. We affirmed in Eschler v. 

Eschler (1993), 257 Mont. 360, 849 P.2d 196, which sets forth the 

basic factual underpinnings of both cases. We include herein only 

those facts necessary to resolve the issue now before us and note 

that Mutual Benefit Life Insurance Company has been dismissed as a 

party to this appeal. 

In March of 1990, appellants filed an action against Janet and 

Mutual Benefit Life Insurance Company (Mutual Benefit). They 

claimed entitlement to the proceeds of either of two Mutual Benefit 

life insurance policies, the first obtained during James and 
Janet's marriage ("first policy") and the second applied for by 

James in August of 1989 and effective in an increased amount in 

September of 1989 ("second policy"). Among other things, 

appellants' original complaint alleged that Leo Lapito (Lapito)-- 

from whom, as Mutual Benefit's agent, James purchased the second 

policy--knew or should have known that James intended the second 

policy to replace the first policy. 

In September of 1990, appellants were permitted to amend their 

complaint. The amended complaint added Lapito, Robert Solie 

(Solie) and Hoffman Associates, Inc. as named defendants. It 

alleged negligence relating to the second policy based on a breach 

of duty to inform James of certain information; the duties at issue 

are imposed by insurance regulations concerning replacement of 

existing life insurance. The thrust of the action was that the 

breach of duty should preclude reliance by Mutual Benefit on the 

suicide exclusion contained in the second policy, to the end that 

appellants would be entitled to the proceeds of that policy. 

On October 5, 1990, respondents moved to dismiss pursuant to 

Rules 12 and 56, M.R.Civ.P., contending that the amended complaint 

failed to state a cause of action for which relief could be 

granted, that no genuine issues of material fact existed, and that 

they were entitled to judgment as a matter of law. Appellants 

subsequently sent discovery requests to respondents Lapito and 

Solie. Respondents moved for a protective order. Both of 

respondents' motions were fully briefed and submitted to the 
District Court. 

On July 25, 1991, the District Court entered its Memorandum 

and Order granting respondents' motion for summary judgment and 

determining, on that basis, that the motion for a protective order 

was moot. On appeal, appellants contend that the court erred in 

determining that no genuine issues of material fact existed on the 

record before it and, furthermore, that their inability to conduct 

discovery prevented them from presenting all the factual issues to 

the court. 

A party moving for summary judgment must establish the absence 

of genuine issues of material fact and entitlement to judgment as 

a matter of law. Rule 56 (c) , M.R. Civ. P. Once the moving party has 

met its burden, the nonmoving party must come forward with evidence 

showing the existence of a genuine issue of material fact. Rule 

56 (c) , M.R.Civ.P. The facts presented must be of a substantial 

nature; conclusory or speculative statements are insufficient to 

raise genuine issues requiring trial. Nimmick v. Hart (1991), 248 

Mont. 1, 7-8, 808 P.2d 481, 485 (citation omitted). Because 

summary judgment is never to be used as a substitute for trial 

where genuine issues exist, however, all inferences from the 

evidence presented must be resolved in favor of the nonmoving 

party. See State Med. Oxygen v. American Med. Oxygen (Mont. 1994), 

883 P.2d 1241, 1243, 51 St.Rep. 1063, 1064 (citation omitted). 

This Court reviews the grant of a motion for summary judgment 

utilizing the same criteria as are initially applied by the trial 
court. Minnie v. City of Roundup (1993), 257 Mont. 429, 431, 849 

P.2d 212, 214. 

The dispute before us relates specifically to the second 

Mutual Benefit policy covering James' life. James purchased this 

policy, in the amount of $100,000, from Lapito on August 7, 1989. 

James signed the application for the policy, which indicated that 

the second policy would not replace or change any existing 

insurance. He executed an amendment to the application the 

following day, increasing the face amount of the policy to 

$250,000. The named beneficiaries were James' fiancee, Ille, and 

his children--appellants herein. The policy contained a suicide 

exclusion and, because James committed suicide within the 

exclusionary period, Mutual Benefit denied payment under the 

policy. 

Appellants' negligence action against respondents alleges that 

defendants Lapito and Solie were life insurance agents licensed 

pursuant to Montana law and, further, that they were agents of 

defendants Hoffman Associates and Mutual Benefit. Appellants 

assert that James' intent was to replace the first Mutual Benefit 

policy--and, indeed, the two Minnesota Mutual policies--with the 

second Mutual Benefit policy and to allow the earlier three 

policies to lapse. They allege that both Lapito and Solie knew or 

should have known of James' alleged intent and that both received 

commissions from the sale of the policy. As such, appellants 

allege that both individual defendants had an affirmative duty to 
comply with Montana law concerning replacement of existing life 

insurance coverage. The underlying premise is that the breach of 

that duty caused them injury. Hoffman Associates and Mutual 

Benefit are liable for the breach, according to appellants, under 

a theory of respondeat superior. 

It is hornbook law that liability in a negligence action is 

imposed where a plaintiff establishes breach of a duty which 

proximately causes injury or damage. The first essential element 

which must be established in a negligence action is the existence 

of a duty. Burk Ranches, Inc. v. State (IggO), 242 Mont. 300, 308- 

09, 790 P.2d 443, 448. Whether a duty exists is a legal question 

to be determined by the trial court. Buhr v. Flathead County 

(Mont. 1994), 886 P.2d 381, 388, 51 St.Rep. 1258, 1263 (citation 

omitted). Because we conclude that the specific duties for breach 

of which appellants seek recovery are not applicable here as a 

matter of law, we need not address the other elements of 

appellants' negligence action. 

In this case, the duties alleged to have been breached are 

contained in 5 6.6.305, ARM. Section 6.6.305, ARM, begins by 

requiring that applications for life insurance policies contain a 

"statement signed by the applicant as to whether or not such 

insurance will replace existing life insurance . . . ," as well as 

a signed statement by the agent "as to whether or not the agent 

knows replacement is or may be involved in the transaction." 

Section 6.6.305 (11, ARM. It is undisputed that these duties 
applied to James' application of August 7, 1989, for the second 

Mutual Benefit policy. 

With regard to these duties, however, the record is clear that 

the application contained a question regarding replacement, change, 

or borrowing against existing insurance, that the question was 

answered in the negative, and that both James and Lapito signed the 

application. In addition, Lapito's "Agent's Report" also indicated 

that no insurance had been replaced and that no such action was 

planned. Thus, respondents established that no genuine issue of 

material fact existed regarding the breach of these duties. 

Appellants assert, however, that no proof exists that James 

actually filled out the application himself or that he read the 

application before signing it. They offer no authority for the 

proposition that an applicant for insurance is required to fill out 

the application himself or herself and, indeed, 5 6.6.305(1), ARM, 

mandates only that the application contain the statement regarding 

replacement and that it be signed. Moreover, the terms of the 

application itself state that by signing it, both James and Lapito 

represented that all of the statements in the application were true 

to the best of their knowledge and belief. The burden having 

shifted to appellants to show a genuine issue of material fact in 

this regard, appellants failed to come forward with any evidence 

that the duties imposed by § 6.6.305 (1) , ARM, were breached. Their 

speculative statements attempting to raise suspicions do not rise 

to the presentation of facts of a substantial nature. See Nimmick, 
808 P.2d at 485. Nor can any inferences be drawn from the evidence 

presented which, resolved in appellants' favor, tend to establish 

a genuine issue of material fact regarding breach of these duties, 

Appellants also argue that the duties contained in § 

6.6.305(2) (a) - tc) , ARM, apply here. It is undisputed that those 

duties were not met by respondents. Thus, if those duties apply, 

they have been breached by respondents. 

By its terms, § 6.6.305(2), ARM, applies [w] here a 

replacement [of existing insurance] is involved . . . . li AS 

defined in § 6.6.303 (7) (a) , ARM, llReplacement'' means a transaction 

in which new life insurance is being purchased and the agent knows, 

or should know, that existing life insurance is to be lapsed. 

Appellants' argument in this regard is that, because James 

permitted other policies to lapse via nonpayment of premiums after 

the second Mutual Benefit policy was applied for and obtained, 

replacement actually occurred and, thus, the § 6.6.3 05 (2 ) , ARM, 

duties were applicable as a matter of law. 

The problem with appellants' argument is that James attested 

in writing that no existing insurance was to be replaced on 

issuance of the second Mutual Benefit policy. By signing the 

application, he also attested that the statements made therein were 

true and complete to the best of his knowledge and belief. On that 

basis, we conclude that the duties imposed by § 6.6.305(2), ARM, 

l1 [wl here a replacement is involved . . ." were not applicable to 

respondents here regarding the second Mutual Benefit policy. 
Appellants raise a convoluted series of occurrences and 

circumstances which they contend raise a genuine issue of material 

fact regarding James' intent regarding lapse of the other life 

insurance policies at the time he applied for the second Mutual 

Benefit policy. We need not address these occurrences and 

circumstances individually; it is necessary to note only that most 

of them are totally unrelated to respondents herein and what 

respondents actually knew or should have known. James may or may 

not have intended--either at the time he applied for the second 

Mutual Benefit policy or at some later time--to allow other 

policies to lapse. As the District Court observed, we will never 

know James' true intent during a troubled period in his life. 

Whatever his secret intent may have been, it cannot be attributed 

to respondents herein, given documentary evidence of James' stated 

intent not to replace existing insurance and sworn affidavit 

evidence that James never indicated in any way that the second 

Mutual Benefit policy was intended to replace any existing policy 

or policies. While the circumstances cited by appellants might be 

pertinent in an action in which James' intent was the issue in 

dispute, it does not create an issue of material fact in this 

action concerning what respondents knew or should have known. 

Appellants' final argument regarding the existence of a duty 

is that the requirements of 5 6.6.305, ARM, were separately 

applicable to James' execution of an amendment to the August 7, 

1989, application the following day. The amendment increased the 
coverage under the second Mutual Benefit policy from $100,000 to 

$250,000. Appellants contend that the amendment constituted a new 

application llreplacingll the policy for which application was made 

one day earlier and, as a result, the duties of both subsection (1) 

and subsection (2) of § 6.6.305, ARM, were applicable. 

Appellants cite no authority for their position and a plain 

reading of the insurance regulations at issue does not support it. 

Indeed, the regulatory definition of "replacement I' references a 

transaction in which Itnewt' life insurance is tw be purchased and 

existing life insurance is to be lapsed or otherwise terminated. 

Section 6.6.303(7), ARM. No new insurance was being purchased by 

James on August 8; he merely sought to increase the face amount of 

the new insurance for which he had applied the day before. 

Similarly, the Itexisting life insurance" of August 7 was not being 

lapsed or otherwise terminated; the coverage was merely being 

increased. The regulations relied on by appellants do not require 

an entirely new application procedure and resulting reimposition of 

duties when an increase in the face amount of coverage under a life 

insurance policy is sought. Thus, we conclude that the duties 

contained in § 6.6.305, ARM, do not apply when an existing 

application for life insurance is amended to increase the face 

amount of the policy. 

The District Court did not err in concluding as a matter of 

law that respondents' duty to comply with the replacement 

provisions of § 6.6.305 (2) , ARM, did not arise unless a replacement 
was involved. The court also did not err in determining that, on 

the record before it, appellants did not raise a genuine issue of 

material fact regarding whether a replacement was involved in 

James' August 7, 1989, application for the second Mutual Benefit 

policy. We hold, therefore, that the District Court did not err in 

granting respondents' motion for summary judgment. 

Finally, we address briefly appellants' contention that they 

were precluded from raising genuine issues of material fact by 

their inability to conduct discovery. As noted above, the original 

complaint in this case was filed in March, 1990, and contained 

allegations that Lapito knew or should have known that the second 

Mutual Benefit policy was intended to replace the first policy. 

Appellants' amended complaint--adding Lapito, Solie and Hartmann 

Associates as named defendants under the same theory as was raised 

in the original complaint--was filed in September, 1990. On this 

record, we cannot conclude that appellants were "unable" to pursue 

discovery. Any llfault" arising from the decision not to do so 

until after respondents moved to dismiss or for summary judgment 

cannot be imposed on respondents or the District Court. 

Moreover, we have carefully scrutinized respondents' motions 

in the District Court and the briefs in support of, and opposition 

to, those motions. Appellants did not request the District Court 

to delay ruling on the motion to dismiss or for summary judgment in 

order that they could obtain sufficient discovery to raise genuine 

issues of material fact pertinent to respondents' motion. Such a 
procedure is authorized by Rule 56 (f), M.R.Civ.P., and, upon 

sufficient showing, may result in a continuance for discovery 

necessary to respond to a summary judgment action. Appellants not 

only did not avail themselves of this procedure, they argued in 

response to respondents' motion for protective order that they had 

raised genuine issues of material fact in their briefs and 

supporting documents. 

As a general rule, we will not consider an argument raised for 

the first time on appeal. w, 886 P.2d at 389. This rule is 

particularly appropriate in circumstances such as this, where a 

specific procedure was available by which appellants could have 

sought the relief they now seek from this Court and, indeed, where 

appellants now take a position inconsistent with that presented to 

the District Court. 

Finally, we observe that the discovery requested of 

respondents Lapito and Solie was largely unrelated to the 

allegations constituting appellants' negligence action against 

them. Many of the interrogatories sought information about the 

commission split on the second policy between Lapito and Solie; 

others inquired about James' payment of premiums for the first 

policy and the individual respondents' ongoing commissions under 

that policy; and others sought to delve into an entity called 

Business and Estate Planning with which Lapito apparently was 

connected. In short, the interrogatories were largely unrelated to 

appellants' allegations that respondents breached applicable duties 
under § 6.6.305, ARM. 

For these reasons, we conclude that appellants were not 

''unable" to conduct discovery. 

Affirmed. 

Pursuant to Section I, Paragraph 3(c), Montana Supreme Court 

1988 Internal Operating Rules, this decision shall not be cited as 

precedent and shall be published by its filing as a public document 

with the Clerk of the Supreme Court and by a report of its result 

to Montana Law Week, State Reporter and West Publishing Company. 

We concur: 
March 30, 1995 

CERTIFICATE OF SERVICE 

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

following named: 

Jerome J. Cate 

Cate Law Firm 

P.O. Box 1207 

Whitefish, MT 59937-1207 

Allen D. Gunderson 

ED SMITH 

CLERK OF THE SUPREME COURT 

STATE OF MONTANA 

BY 

Deputy 

0