No. 89-065 

IN THE SUPREME COURT OF TBE STATE OF MONTANA 

1990 

THELMA WALKER, 

Plaintiff and Appellant, 

-vsST. PAUL FIRE AND MARINE INSURANCE COMPANY, 

Defendants and Respondents. 

APPEAL, FROM: District Court of the Eighth Judicial District, 

In and for the County of Cascade, 

The Honorable R. D. McPhillips, Judqe presiding. 

COIJNSEL OF RECORD: 

For Appellant: 

Howard F. Strause argued, Great Falls, Montana 

For Respondent: 

William D. Jacobsen argued; Jardine, Stephenson, Rlewett & 

Weaver, Great Falls, Montana 

Filed: 

Submitted: October 17, 1989 

Decided: February 5, 1990 

- P 

Clerk 
trade practices prohibited under S 33-18-201, MCA, of the 

Montana Unfair Trade Practices Act. 

An earlier appeal to this Court held that Walker's 

malpractice claim against attorney Larson was made 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 

against Mr. Larson. The judgment based 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 for denial of coverage was established, as 

a matter of law, by the oriqinal District Court summary 
judgment 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 economy by eliminating unnecessary trials, but it is 

not to be substituted for trial if a factual controversy 

exists. Dare v. Montana Petroleum Marketing 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 Court will not reverse a district 

court order unless such order is clearly erroneous resulting 
Justice 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. Paul had reasonable grounds to deny coverage for Walker'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 unfair 
in 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 

investigation had 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?-Tct Court established that there were genuine issues of 
material 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 

consistent with this opinion. 

We concur: -A-- 

-7-l.-fla / ief Justice 

Justice John C. Sheehy, concurring specially: 

I have signed the foregoing opinion and concur in it. I 

want to clear up, 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 only when there is no genuine 

issue of material 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 statement relied on the wrong rule. Instead of 

Rule 52(a), it should have referred to Rule 56(c), M.R.Civ.P. This 

Court compounded the misapplication in Walker by then referring to 

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 "unless clearly erroneous1' doctrine, discussed above, 

applies only to appellate review of findings of fact. 

It does not apply to the district court'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 in Rule 52(a) that, in 

addition to findings of facts, the district court shall 
''state separately its conclusions of law thereon1' is to 

furnish the causal link between the facts and the 

judgment rendered. But in reviewing the 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. 

5A Moore'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 forthwith with the 

pleadings, depositions, answers to interrogatories, and 

admissions on file, together with the affidavits, if any, 

show that there is no genuine issue as to any material 

fact and that the moving party is entitled to a judgment 

as a matter of law. . . . 

We must be careful about using the term 'labuse of discretionI1l 

in reviewing a district court's grant of a summary judgment. The 

District Court has no 'ldiscretionl if 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 the trial court may exercise discretion as to whether 

the opposing party has not acted properly to establish a genuine 

issue of material fact. Thus, from Moore, we learn: 

The trial court cannot draw upon any discretionary power 

to grant summary judgment when that adjudication of law 

involves any genuine disputed issue of fact. It may 

however exercise a sound discretion in denying a motion 

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 

court may exercise a sound discretion in determining the 

adequacy of the opposing party's stated reasons why he 

is then presently unable to present by affidavit facts 

essential to justify his opposition. And, if the reasons 

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 

opposing evidentiary affidavits, to take depositions, or 
otherwise obtain the opposing evidence, and proceeds to 

grant summary judgment in favor of a party otherwise 

entitled thereto, this exercise of discretion in dealing 

with the opposing party will not be interfered with by 

an appellate court except where there has been an abuse. . . . 

6 Moore'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.