No. 89-065 INTHE SUPREME COURT OF TBE STATE OF MONTANA 1990

THELMA WALKER,Plaintiff and Appellant,-vsST. PAUL FIREAND MARINE INSURANCE COMPANY, Defendantsand Respondents.

APPEAL, FROM: DistrictCourtof the EighthJudicial District, In and for the Countyof Cascade, TheHonorable R. D. McPhillips, Judqe presiding. COIJNSEL OF RECORD: For Appellant: Howard F. Strause argued, GreatFalls, Montana For Respondent: WilliamD. Jacobsen argued; Jardine, Stephenson, Rlewett & Weaver, GreatFalls, Montana

Filed: Submitted: October 17, 1989 Decided: February 5, 1990

- P Clerktrade practices prohibited under S 33-18-201, MCA, of the Montana Unfair Trade PracticesAct. An earlier appeal to this Court held that Walker's malpractice claim against attorney Larson wasmade within the effective period of his policy with St. Paul. Walker v. Larson (1986), 223 Mont. 333, 727 P.2d 1321. Even though Walker did not actually file a lawsuit within the policy period, this Court found that by filing a complaint with the Commission on Practice detailing IJarsonls actions and advising both Larson and St. Paul that she had done so, Walker had made a claim. This Court concluded there was coverage as a matter of law. Walker, at 336, 727 P.2d at 1323. Following the first Walker decision, the claims against Mr. Larson were tried to a jury and a verdict was returned againstMr. Larson. The judgmentbased upon that verdict has been satisfied. The only remaining issue after that judgment

was the bad faith claim by Walker against St. Paul which remained to be litigated. St. Paul moved for summary judgment against Walker. Following oral arguments, the District Court ruled that St. Paul had reasonable grounds for denial of coverage for Walker's claim against Larson and that the existence of reasonable grounds fordenial of coverage was established,as

a matter of law, by the oriqinal District Court summaryjudgment in St. Paul's favor on the coverage question. The District Court recognized that the Montana Supreme Court reversed the District Court and upheld coverage. Nonetheless, the District Court in the present summary judgment concluded that a reasonably debatable issue regarding coverage had been established by the opposing rulings of the District Court and the Supreme Court, and therefore concluded as a matter of law that summary judgment was appropriate for St. Paul. We do not agree with that conclusion because of the presence of issues of material fact. Summary judgment is proper only where there is no genuine issue as to any material fact. Rule 56(c), M.R.Civ.P. The purpose of summary judgment is to encourage judicial economyby eliminating unnecessary trials, but it is not to be substituted for trial if a factual controversy exists. Dare v. Montana PetroleumMarketing Co. (1984),212 Mont. 274, 280, 687 P.2d 1015, 1019. Furthermore, the party moving for summary judgment has the burden of establishing that no genuine issue of fact exists, and only when that burden is met does the burden shift to the opposing party to show there is a genuine issue as to some material fact. Peschel v. Jones (Mont. 1988), 760 P.2d 51, 54, 45 St.Rep. 1244, 1248. Of course this Courtwill not reverse a district court order unless such order is clearly erroneous resultingJustice John Conway Harrison delivered the Opinion of the Court.

Thelma Walker (Walker), plaintiff and appellant, brought this action alleging lack of good faith and unfair practices on the part of St. Paul Fire and Marine (St. Paul) in the negotiation and settlement of a legal malpractice claim against its insured. The District Court granted summary judgment in favor of defendant St. Paul,holding that St. Paulhad reasonable grounds to deny coverage forWalker's claim against its insured, and therefore St. Paul did not lack good faith in its dealings with Walker. We reverse. The issues presented by the appellant are: 1. Did the District Court err in granting St. Paul's motion for summary judgment? 2. Did the District Court err in granting costs for depositions which were not used as a basis for granting summary judgment? When her husband Dale died in 1979,Thelma Walker asked B. Miles Larson, a Stanford, Montana, attorney to handle the probate of Dale's estate, including the preparation of the federal estate tax return. Due to an error by attorney Larson, Mrs. Walker had to pay approximately $5,000 to the Internal Revenue Service that she otherwise would not have had to pay. Walker later sued Larson for legal malpractice and St. Paul, Larson's insurer, for bad faith and unfairin an abuse of discretion. Walker, at 335, 7'27 P.2d at

In summary, Walker contends that the actions of St. Paul in connection with the investigation of the claim constituted violations of S 33-18-201, MCA, Montana's Unfair Trade Practices Act. Paragraph (2) of that Section refers to the failure of

an insurance company to acknowledge and act reasonably promptly upon comunications with respect to claims. Walker contends that St. Paul's failure to respond to letters addressed to it and the failure to investigate following the receipt of such letters constitutes a violation of the Act. Walker also contends that there was a failure to adopt and implement reasonable standards for the prompt investigation of claims as required under paragraph (3) of that Section. Various facts are set forth by Walker which could be construed as sufficient to establish such a failure. Walker also claims that there was a refusal to pay claims without conducting a reasonable investigation as required under paragraph (4) of that Section. Sufficient facts are set forth to establish an issue as to whether or not a reasonable investigationhad been made as so required. We do not find it necessary to discuss the factual contentions of both parties in detail. The record before the Dist?-TctCourt established that there were genuine issues ofmaterial fact which precluded summary judgment. The determination by the District Court that the difference in coverage determination by the District Court and Supreme Court established reasonable grounds as a matter of law does not address the issues of material fact which have been raised. We reverse the summary judgment on the part of the District Court. Because of the reversal on the first issue, it is not necessary that we address the second issue regarding costs for depositions. We reverse the summary judgment for St. Paul Fire and Marine Insurance Company and remand for further proceedings consistentwith this opinion.

We concur: -A-- 

## -7-l.-fla / ief JusticeJustice John C. Sheehy,concurring specially:

I have signed the foregoing opinion and concur in it. I want to clearup,however,my view of the appellant's standard of review of a motion granting a summary judgment under Rule 56, Montana Rules of Civil Procedure. It is stated in the foregoing opinion that "this Court will not reverse a district court's order unless such order is clearly erroneous resulting in an abuse of discretion. Walker, 727 P.2d at 1322-1323.'I The foregoing statement comes from our opinion in Walker v. Larson (1986), 223 Mont. 333, 727 P.2d 1321, there this Court stated: Summary judgment is granted onlywhen there is nogenuine issue ofmaterial fact. Rule 52(a),M.R.Civ.P. We will not reverse the order of a district court unless it is clearly erroneous resulting in the abuse of discretion. In this case the ruling was clearly erroneous.

The foregoing statementrelied on thewrong rule. Instead of Rule 52(a), it shouldhavereferredtoRule 56(c), M.R.Civ.P. This Court compoundedthemisapplication inWalkerby then referringto the "clearly erroneous1' standard and an abuse of discretion standard, neither of which has any application to the appellate standard of review of a summary judgment. The "unlessclearlyerroneous1' doctrine,discussedabove, applies only to appellate review of findings of fact. Itdoesnot apply to thedistrictcourt's conclusions of law. This is clear from both the context of the rule [Rule 52(a) ] and from long established principles that the appellate court is not bound by the trial court's view of the law. The requirement inRule 52(a) that, in addition to findings of facts,thedistrict court shall''state separately its conclusionsof law thereon1'is to furnish the causal link between the facts and the judgmentrendered. But inreviewingthe judgment,so far as questions or conclusions of law are concerned, the appellate court is not bound by the trial court's view of the law. 5AMoore's Federal Practice, 52-76, 52-77, § 52.03[2](Pub. 410). Rule 56(c) sets out the duty of a district court in determining a motion for summary judgment. It provides in pertinent part:



# . . . The judgment shall be rendered forthwithwith the pleadings,depositions, answers to interrogatories,and admissionson file,togetherwiththeaffidavits,ifany, show that there is no genuine issue as to any material fact and that themoving party is entitled to a judgment as amatter of law. 

# . . . We mustbe careful aboutusing theterm 'labuseofdiscretionI1l in reviewing a district court's grant of a summary judgment. The District Court hasno 'ldiscretionlif there is no genuine issue of material fact; it llshallll render summary judgment if there is no fact issue as a matter of law. Rule 56(c). It is possible, however, that thetrial courtmay exercise discretionastowhether the opposing party has not acted properly to establish a genuine issue ofmaterial fact. Thus, fromMoore, we learn: Thetrial court cannot draw upon anydiscretionarypower to grant summary judgmentwhen that adjudication of law involves any genuine disputed issue of fact. It may however exercise a sounddiscretion in denying amotion for summary judgment although the moving party may be technically entitled thereto. And, where the opposing party has filed an affidavit under Rule 56(f) the trial courtmay exercisea sound discretion indetermining the adequacy of the opposing party's stated reasons why he is then presently unable to present by affidavit facts essentialto justifyhisopposition. And, if thereasons are inadequate, what disposition should be made of the pending motion for summary judgment? Where the trial court determines that the opposing party has not shown some sufficient reason for a continuance to present opposingevidentiaryaffidavits,to take depositions,orotherwise obtain the opposing evidence, and proceeds to grant summary judgment in 

### favor of a party otherwise entitled thereto,thisexercise of discretion indealing with the opposing party will not be interfered with by an appellatecourtexcept where there hasbeen an abuse.



# . . . 6Moore's Federal Practice, 56-1559, 5 56.27[1](1976). With that clarification of the standard of appellate review to be applied in this cause, I have concurred in the foregoing opinion.