No. 91-589 IN THE SUPREME COURT OF THE STATE OF MONTANA

SIMMONS OIL CORPORATION and SIMMONS REFINING CORPORATION, Plaintiffs and Appellants,

HOLLY CORPORATION; NAVAJO REFINING COMPANY; NAVAJO NORTHERN, INC.; WELLS FARGO 

### BANK, N.A., Defendants and Respondents

APPEAL FROM: District Court of the Eighth Judicial District, In and for the County of Cascade, The Honorable Roy C. Rodeghiero, Judge presiding.

COUNSEL OF RECORD: For Appellants: H. Charles Stahmer, Bozeman, Montana; James Goetz,Goetz, Madden & Dunn, Bozeman, Montana; Charles 

### J. Wisch, Weissburg and Aronson, Inc., San Francisco, California For Respondents: StevenM. Perry,Munger, Tolles & Olson, Los Angeles, California; John D. Stephenson, Jr., Jardine,Stephenson, Blewett & Weaver, Great Falls, Montana, for Wells Fargo Bank, N.A.

Submitted: September 24, 1992 Decided: April 28, 1993Justice R. C. McDonough delivered the Opinion of the Court.

This is an appeal from an order of the Eighth Judicial District, Cascade County, granting respondent'smotion for summary judgment. We affirm in part and reverse in part. Appellant Simmons Oil Corporation (SOC) and Simmons Refining Corporation (SRC) (collectively referred to as ttSimmonslr) alleged claims against Wells Fargo Bank for breach of fiduciary duty, tortious breach of the implied covenant of good faith and fair dealing, and civil conspiracywith Holly corporation,resulting in Holly's breach of partnership fiduciary duty owed to Simmons. The central question on appeal is whether respondent established the complete absence of any genuine issues of material fact to justify a summary judgment ruling as a matter of law. Appellant requests this Court to reverse summary judgment 

### on the grounds that the District Court erred in granting this ruling in light of thematerial factual controversy that exists. ISSUES 1. Did 

### the District Court err 

### in granting summary judgment

as to the claims brought against respondent Wells Fargo 

### by appellant Simmons for breach of a fiduciary duty? 2. Did the District Court err in granting summary judgment

as to the claims brought against Wells Fargo for breach of the implied covenant of good faith and fair dealing?



### a. Did rights or did 

### of good faith Wells Fargo merely exercise its its actions constitute a breach 

### of and fair dealing 

### implied 

### in 

### every 2 contractual the covenant 

### contract?b. Did a IfspecialrelationshipBi exist between Simmons and Wells Fargo to support a tort claim for bad faith? 3. Did the District Court err in granting summary judgment

as to the claims against

### Wells Fargo alleging civil conspiracy with Holly to breach Hollyfsfiduciary duty to Simmons? On December 22, 1988, Simmons filed this action in District Court to recover damages from Wells Fargo Bank for breach of fiduciary duty, breach 

### of the implied covenant of good faith and fairdealing,and conspiracy. Simmons also suedHolly Corporation and two of its wholly owned subsidiaries, Navajo Refining Corporation and Nava jo Northern, Inc. (collectively BBHollyBB) 

## , on similar allegations. In February 1989,both Wells Fargo and Holly moved to dismiss for lack of personal jurisdiction and the court granted these motions on May 1, 1989. Simmons appealed this dismissal, and in July 1990 this Court reversed and remanded for further proceedings 

### in a published opinion, Simmons Oil Corp. v. Holly Corp. (1990), 244 Mont. 75, 796 P.2d 189. Upon remand to the DistrictCourt,Wells Fargo and 

### Holly filed motions 

### for summary judgment 

### which were 

### argued. On October 17, 1991, theDistrictCourt filed its orders granting summary judgment for all defendants, and Simmons appealed. Prior to the filing of opening briefs, Simmons settled its dispute with Holly, and in February 1992, appellants and Holly filed in this Court a joint stipulation forvoluntary dismissal of the appeal from the order granting summary judgment to 

### Holly. The only remaining respondent is Wells Fargo.Simmonst allegations against Wells Fargo focus on the

occurrence and interpretation of certain events during the eight year period of the loan relationship. The following basic chronology is not disputed by the parties: ~eginning

### in 1980,

### Wells Fargoprovided SOC a line of credit, which was increased to $18 million 

### in 1981when SOC's wholly owned subsidiary, SRC, purchased the Black Eagle oil ~efinery

### in Great Falls. The credit was to be used for working capital and acquisition of inventory and SOC and SRC ('$Simmonstt) agreed the line of credit would be reduced to $10million by May 1982. Simmons began experiencing financial difficulties in early 1982,was unable to reduce thedebt as agreed upon, and thereafter Wells Fargocloselymonitoredtherefinery's operatingperformance. AlthoughWells Fargoheld offexercising its undisputed foreclosure rights,throughout 1983 and 1984 thebankurged Simmons to initiate voluntary bankruptcy proceedings. During this time, Simmons attempted to sell assets and find equity partners or additional financing. In 1984, ~immons, Wells Fargo, and Holly entered into an agreement which authorized the formation of Montana Refining 

### Company (MRC)

### , a partnership, to run the refinery. MRC

some of Simmons' debt and a Holly subsidiary, Navajo Northern, Inc., became the sole general partner and took control of the refinery. Simmons1 subsidiary, SRC, the sole limited partner assumed a

### passive role 

### in the refinery's operation.The remaining Simmons debt was restructured in January 1985, 

### and Simmons 

### executed two 

### new notes totalling approximately $12.6 million. Mutual general releases were executedbetweenWells Fargo and all of Simmons1entities, except SRC. This included releasing Mr. and Mrs. ~immonsfrom their personal guarantees of the preexisting corporatedebt. (Mr. Simmons ispresident of both SRC and SOC.) Contacts between Wells Fargo and Simmons decreased substantiallyby late 1985,and Jerry Simmonshad no conversations with anyWells Fargo officer 

### or employee during the subsequent two years. The 1985 restructuring agreement allowed an assignment by Wells Fargo of its rights and duties under theagreement. OnApril 25, 1988, after several years of unfavorable refinery operations and minimal debt service, Wells Fargo sold Simmonstand the MRC notes to Holly. This sale resulted from Hollyfsassertions that the sale of the notes was Holly's "statedprice for continuing to support the refineryf1 and that it might tender its inventory to Wells Fargo and "walk awaygf if the sale was not forthcoming. Simmons had been negotiating with Wells Fargo directly regarding apurchase

### of thenotes,butnegotiations

### had broken down earlier in themonth and prior 

### to culmination of the salebetween Holly andWells Fargo,Wells Fargo rejected a proposal from Simmons for ~immons~ purchase 

### of the notes on exactly the same terms and conditions as offered 

### to Holly.Simmons then filed this suit alleging that Holly and Wells Fargo wrongfully refused 

### to allow 

### it to purchase the debt on the

same terms given toHolly and that the sale constituted abreach of fiduciary duty and bad faith. While the foregoing chronology is not in contention, both parties, in their briefs, provide specific details surrounding these events which 

### vary significantly. Simmons argues, and substantiates with documentation, that Wells Fargo exercised considerable control overthe refinery's operation between 1982and 1984; that it forced Simmons into the partnership with Holly on terms and conditions specified by the bank; that it secretly negotiated with Holly when it assigned the debt; and that 

### it knew that Holly planned to use the debt to force Simmons out of the partnership and avoid Holly's partnership fiduciary duty to Simmons. Simmonsl allegations of breach of duty and bad faithare premised 

### on thesepurported 

### facts. Wells Fargomaintains that the control exercised over Simmons

was an attempt 

### to work with Simmons to regulate costs and seek additional funding sources rather than exercising foreclosure rights on the assets. Wells Fargo notes that Simmons was free to reject Wells Fargo's advice, and did, such as advice concerning 

### filing for bankruptcy. Furthermore,Wells Fargo asserts that the 

### sale constituted 

### an exercise of 

### an express and unrestricted contractual right; that Simmons was aware of Holly's negotiations topurchase the debt fromWells Fargo and chosenot to contact the bank with an offer to purchase the debt until after a Holly/WellsFargo letter of intent was signed; and finally, that since the assignment right was unrestricted, a covenant of good faith and fairdealing should not be implied tovary the express, unambiguous terms of the contract. BREACH OF FIDUCIARY DUTY In Montana, "[tlhe relationship between a bank and its customer is generally described as that of debtor and creditor...and as such does not give rise to fiduciary responsibilities." (Citationomitted.) Diestv. Wachholz (1984), 208 Mont. 207, 216, 678 P.2d 188, 193. However, in certain circumstances,a fiduciarydutymay result from the development of

a special relationship akin to an 'ladvisor/advisee.ll This "special" relationship must exist before a fiduciary duty arises. Deist, 678 P.2d at 193. Appellant contends that respondent had a fiduciary duty to Simmons because it exercised substantial control over the operations of the corporation, thus providing the special relationship necessary to create a fiduciary duty. Respondent counters that Simmons' rejection of the bank's advice and subsequent retention of independent legal counsel terminated any fiduciary relationship there may have been. Also, respondent states that Wells Fargo made their decision to sell the Simmons' debts for "solid business reasons." Furthermore,Wells Fargo had a right to assign the notes per the 1985 RestructuringAgreement."This Court has recognized that no fiduciary duty arises 

### between a bank and 

### its borrower 

### where the bank did not offer financial advice, its advice was not always heeded, or where the borrower was advised by others, such as legal co~nsel.~~ Lachenmaier 

### v. First Bank Systems, Inc. (1990), 246 Mont. 26, 33, 803 P.2d 614, 619, Although Wells Fargo exerted considerable control over the business until 1984, appellants retained independent legal counsel in 1984 and 1985. Legal counsel advised Simmons concerning the 1984 Master Agreement and the 1985 RestructuringAgreement. This Court, however, concludes that the Master Agreement definitively terminated any fiduciary duty that Wells Fargo may have had to Simmons. In themaster agreement, SRC transferred all rights and assets of every kind and description, (with minor exceptions) to MRC, creating the Montana Refining Company limited partnership. SRC andNavajo Northern, Inc. filed a certificateof limited partnership with the Secretaryof the State of Montana for the purpose of acquiring the assets of SRC. Navajo Northern was the general partner of theMRC 

### and SRC

### was the limited partner. Although Wells Fargowas involved in day-to-day operationsof 

### therefinerybefore 1984 exercising control overnearly every facet of the business, that close relationship was not evident thereafter. After the master agreement forming the limited partnership of MRC, Navajo Northern took over the management and control 

### of MRC. There 

### is no evidencethatWells Fargo continued toexercise daily control over the refinery once it became a limited partnership. Wells Fargo1s direct contactwith Simmons also decreasedafter the master agreement. The following excerpt from Jerry Simmons' transcript reveals a drastic decline in communicationbetween the plaintiff and the defendant in 1985 through 1987.

Q. Subsequent to August of 1985, through the end of 1987, how frequently did executives of Simmons entities have contactwith personnel at Wells Fargo Bank? A. Would you give me the time frame again? Q. August of 1985 through the end of 1987 MR. WISCH: Well, he's already testified about the contact in November of '85. MS. HYMANSON: In November '85. MR. WISCH: So you want to start inAugust? Q. BYMS. HYMANSON: Other than the contacts aboutbuying the Simmons debt in November of 1985. A. Until the end of 1987. There was probably communicationbetween Wells Fargo and the SimmonsOil and Refining

## -- SimmonsOil Corporation and Simmons Refining offices that would pertain to just the normal filing of tax returns and the submittal of financial information. But 

### I believe that the only communication that 

### I personally had with Wells Fargo was a conversationwith Hardy Watford in November of 1987. Simmons simply have not proved a fiduciary relationship between Simmonstentities and the Wells Fargo Bank existed after the creation of MRC. See Pulse v. North American Land Title Co. (1985),218 Mont. 275, 283, 707 P.2d 1105, 1110;Diest v. Wachholz (1984), 208 Mont. 207, 678 P.2d 188; First Bank (N.A.) 

## - Billings

v. Clark (1989), 236 Mont. 195, 208, 771 P.2d 84, 92. We concludethat Wells Fargo did not breach a fiduciaryduty to ~immons because there was no fiduciary relationship between Wells Fargo and Simmons, after the 1984 Master Agreement. BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING

a. Did Wells Fargomerely exercise its contractual rights or did its actions constitute a breach of the covenant of good faith and fair dealing implied in every contract? Both parties agree that 

### California law applies to the promissory notes at issue although the analysis would be the same under Montana law. Simmons concedes that the 1985 restructuring agreement gave Wells Fargo the right 

### to assign the Simmons debt, but argues that Wells Fargo1sdecision to assign it to Simmonstpartner Holly,was subject to the implied covenant of good faith and fair dealing. Simmons contends that the sale of the notes to Holly was intentionally designed togive Holly leverage over Simmons and was not within the expectations of Simmons with respect to the 1984 master agreement or the 1985 restructuring agreement. Although Wells Fargo agrees that the implied covenant of good faith and fair dealing applies to every contract, the bank states it cannot be used to override explicit contractual terms. Canna Developers v. Marathon Dev. Cal. (1992), 2 Cal. 4th 342, 374, 6 Cal.Rptr.2d 467, 826 P.2d 710, 728. 

### The 1985 restructuring agreement contained language which stated: "WFB may assign this Agreement and 

### its rights and 

### duties hereunder." Wells Fargo contendsthis language gave them therighttoassign Simmonsfnotesto anyone, includingHolly. "Every contract imposes upon eachparty aduty of good faithand fairdealing in itsperformance and its enforcement. 

# . . . The covenant of good faith finds particular application in situations where one party is invested with a discretionarypower affecting the rights of another. Such power must be exercised in good faith." Canna, 826 P.2d at 726. However, "[als to acts and conduct authorized by the express provisions of the contract, no covenant of good faith and fair dealing canbe implied which forbids suchacts and conduct. And 

### if defendants were given the right to do what they did by the express provisions of the contract there can be no breach." Carma, 826 P.2d at 728. These are theprinciples by which we analyze whether Wells Fargo breached the implied covenant of good faith and fair dealing. The acts and conduct authorized by express provisions of the contract at issue in Carma, above, are distinguishable from the provision at issue in the present case. Carma concerned a commercial lease which specificallyprovided that the landlordhad the right to terminate the lease of the tenant at a fixed date after written notice from the tenant that tenant was going to assign the lease or sublease the rental premises. The lease also specificallyprovided the landlord may enter into a new lease for the premises with the intended assignee or sublesseeor enter into

a new leasewith that person, and the tenantwould not be entitled to anyprofit from the landlorddue to termination of the lease and the reletting of the premises. The California Supreme Courtconcluded that the landlord's use of this recapture clausewas not

a breach of the covenant of good faith since it was "expressly" permitted in the lease and was within the reasonable expectations of parties under the lease. Inthepresent case,theprovisionat issue is ageneral right to assign Wells Fargo's rights and duties under the 1985 restructuring agreement. 

### (SeeFarris v. Hutchinson (1992), 838 P.2d 374, for a case interpreting a specific express contract similar to the contract at issue in Carma.) Simmons does not dispute Wells Fargo's right to assign its rights and duties as expressly provided for in the lease. Simmons, however, believes that it was not within their reasonable expectations that Wells Fargo's discretionary right to assign would be used to assign the notes to Simmons' partner, Holly Corporation. This general right to assign Simmons' notes provided in the restructuring agreementmust be read with another clause from the agreement. Clause 13.7 states that I' [t] heparties intendand agree that each of their respective rights, duties...shall be performed

# ... and exercised reasonably and in good faith." This clause,specificallyplaced inthe contractat issue, provides that all rights under the contract, such as the right to assign the notes, will be conducted in good faith. This clause further supports Simmons' argument that Wells Fargo breached the covenant of good faith and fair dealing. Simmons contends that there is still further evidence that Wells Fargo breached the covenant of good faith and fair dealing.An interoffice memorandum requesting approval to sell the Simmons' notes to Holly casts doubt on Wells Fargof s intent in the sale. The applicableportion 

### of thememorandum discusses the alternative to selling the notes to Holly and it states:

The alternative to the above, based upon comments from Holly Corporation, would be the cessation of MRC's operation. Rather than continue funding 100% of both operating lossesandrequiredcapitalimprovements, while receiving only 50% of any future profits, Holly Corporationhas statedthat itwould tender its inventory guarantee to WFB and walk away. Depending upon the market value of the inventory at such time, it is questionable whether WFB would recover enough topay off the non-accrual loan. From a legal standpoint, this restructuring would take the formofWFB selling its entire creditor position in all the Simmons entities to Holly Corporation. Selling this position eliminates any need to approach Jerry Simmonsor any of the Simmons entities forapproval to modify the partnership agreement with respect to distributions, etc. Approval of this restructuring is recommended. A second memo reads in part:

1 spokewith 

### Ivy Parsons of Holly Corporation this morning to get an update on Hollyrs progress in purchasing the Simmons's entities notes,...Ivy plans to meet personally with Jerry Simmons nextweek and ask Mr. 

### Simmons to 

### sign an 

### agreement thatwould 

### waive any right of participation as a limited partner. In return for giving up any interest in the limited partnership, Mr. Simmons have (sic) his notes canceled and returned to him. This would would (sic) eliminate the risk that Holly could have a fiduciary responsibility to Jerry Simmons,andwould also avoid thetaxproblems associated with original issue discounts. Simmons insists that the meetings concerning the sale of the notes between Holly and Wells Fargo Bank were "secretu and that "WellsFargofssecret negotiations withHolly,Simmonstpartner, 

### as well as its desire to change the profit distribution from therefinery without Simmonstconsent and to facilitateHollyfssqueeze play against Simmons, all demonstrated a complete lack of honesty

or commercial reasonableness.If "Each party to a contract has a justified expectation that the other will act in a reasonable

manner in itsperformance or efficientbreach. When oneparty uses discretion conferred by the contract to act dishonestly or to act outside of accepted commercial practices todeprive theotherparty of the benefit of the contract, the contract is breached." Marshall

### v. State (1992) 830P.2d 1250, 1251, 49 St.Rep. 336; Story v, City of Bozeman (1990), 242 Mont. 436, 450, 791 P.2d 767, 775. The foregoing information leads the Court to believe that a genuine issue of material fact exists 

## - whether Wells Fargo breached the covenant of good faithand fairdealing. We conclude that summary judgement on this issue 

### was inappropriate and we reverse the District Court and remand for a proper determination. b. Did a Ifspecialrelationshipff exist between ~immons and Wells Fargo to support a tort claim for bad faith? Simmonsappeals thecourt'sdecisionto grant summary judgment to 

### the defendant on the issue of tortious breach of the implied covenant, claiming that Wells Fargo and Simmons have the flspecial relationshipgt necessary to support a tort claim. The essential elements of such a relationship are: (1) the contract must be such that the parties are in inherently unequal bargaining positions; (2) the motivation for entering the contract must be a non-profit motivation, i.e., to secure peace of mind, security, future protection; (3) ordinary contract damages are not adequatebecause; (a) they do not require the party in the superior position to account for its actions, and(b) they do not make the inferior party 8rwhole''; (4) one party is especially vulnerable because of the type of harm it may suffer and of necessity places trust in the other party to perform; and (5) the other party is aware of this vulnerability. wallis v. superiorCourt (KroehlerMfg. Co.) (1984),207 Cal.Rptr. 123, 129. "If substantial evidence is not presented in support of each and all of the above essential elements, the court shall direct there is no special relationship." Story, 791 P.2d at 776. In the instant case, there is at least one element which is not supported by substantial evidence and therefore, there is no "special relationship." The second element provides that the motive for entering the contract must be non-profit. The purpose for entering into this contract is business. It is a contract between two business entities whose goals are to make money. This is nothing like the "peace of mind" which motivates insureds in insurance contracts. The appellant has not presented any substantial evidence in support of the second element necessary to establish a "special relationship," therefore,the trial court is affirmed on this issue. CIVIL CONSPIRACY The final issue is whether the trial court erred in granting summary judgment as to the claims against Wells Fargo alleging civil conspiracy with Holly to breach Holly's fiduciary duty to Simmons. It is appellant's contention that during the bank's secret meetings with Holly, Wells Fargo purposefully agreed to structure the transaction in a way that "eliminates any need to

### approachJerry Simmons or any of the Simmonsentities for approval tomodify the partnership agreement with respect to distributions, etc." Moreover, Wells Fargo and Holly specifically discussed Holly's intent touse thenotes to forceSimmonsto surrender their 50% interest in the refinery. Finally, Simmons contends that the saleof thenotes toHolly promotedbreaches of Holly'spartnership fiduciary duty to Simmons and of Holly's obligations under the implied covenant of good faith and fair dealing. Respondent counters that the lower court ruled that "the Holly/Navajo defendants have not committed any wrongful act", therefore, "there canbe no civil action for conspiracy." 

### IfHolly committed no wrong, then there can be no conspiracy between Wells Fargo and Holly because no conspiracy claim can exist if there is not an underlying unlawful act. Duffy v. Butte Teachers' Union, Number 332, AFL-CIO (1975), 168 

### Mont. 246, 251, 541 P.2d 1199, 1202. 

### We find respondent's argument persuasive. After the lower court granted summary judgment to all defendants on all issues, Simmons appealed these decisions to the Supreme Court. Shortly thereafter, Simmonsand Holly entered into a settlementagreement. Then Simmons filed a motion for voluntary dismissal of the appeal from the order of the District Court granting summary judgment 

### for defendants Holly/Navajo. In the motion, Simmons stipulated that the judgment of the District Court, granting summary judgment to Holly, (includingthe civil conspiracy claim), was final and nonappealable. In a Supreme Court order dated February 25, 1992,Simmons' appeal was dismissed with prejudice as to any and all further appeals of Simmons claims against Holly, including the final judgment concerning the summary judgment motion. The final judgmentat issue (between Hollyand Simmons) states that Holly committed 

### no wrongful act. However, the 

### necessary elements of a conspiracy include: (1)Two or more persons, and for this purpose, a corporation is a person; (2) an object to be accomplished; (3)ameeting of theminds on the object or course of action; (4)one ormore unlawful overt acts;and (5)damages as the proximate result thereof. Grenz v. Medical Management Northwest

(lggl), 250Mont. 58, 62, 817 P.2d 1151, 1154. Ii[I]f the object of

an alleged \conspiracy1

### is lawful, and the means used to attain that object are lawful, there can be no civil action for conspiracy. The foregoing is true even thoughdamagemay result to the plaintiffs and even though defendants may have acted with a malicious motive.I9 Duffy, 541 P.2d at 1202. If Holly 

### was not involved inany unlawful acts, there canbeno conspiracy involving Wells Fargo either. Accordingly, the trial court did not 

### err on the issue of Wells Fargo's involvement in a civil conspiracy with Holly/Navajowhen itgrantedWells Fargo s summary judgmentmotion. Affirmed in part and reversed in part.

We Concur: I

### Justice Terry 

### N. Trieweiler specially concurring in part and dissenting in 

### part. I 

### concur with the conclusion in the majority opinion that there was an issue of fact which precluded summary judgment dismissing Simmons1contract claim for breach of the covenant of good faith and fair 

### dealing. I 

### dissent from that part of the majoritytsopinion dismissingSimmonsqtort claim forbreach of the covenant of good faith for the reasons set forth inmy dissenting opinion 

### inMcNeil

### v. Cun-z'e 

### (1992), 253 

### Mont. 9, 830 P.2d 

### 1241. The 

### right to tort damages arose because of activity in Montana--not California, therefore, walh

### v. SuperiorCourt 

### (1984)

## , 207 Cal. Rptr. 123, 

### is not controlling, and as I

### have previously stated, Iwould 

### not followSturyv.CityofBozernan 

### (1990), 242 Mont. 436, 

### 791 P.2d 767. I 

### also dissent from that part of the majority opinion which affirms the District Court's order dismissing Simmons1claim for breach of 

### fiduciary duty. Summary judgment 

### is an extreme remedy which should not be 

### granted when there 

### is any genuine issue of material fact;the

### procedure shouldnever be substituted for trial if a material factual controversy exists. Beaverhead Bar

### Supply,Inc.v. Hanirzgton 

### (lggl),247 Mont. 117, 

### 120, 805P.2d 560, 562. 

### Furthermore, all reasonable inferences that 

### might be drawn from the offered evidence shouldbe drawn in favorof Simmons,as theparty opposing summary judgment 

### in this case. Cereck

### v.Albertson's, Inc. (1981)

### , 195 

### Mont. 409, 411, 637 P.2d 509, 511. 19When our previous decisions which discuss the circumstances under which a fiduciary duty is established are applied to 

### the facts in this case, I conclude that whether there was a fiduciary duty and a breach by the defendant were issues of fact to be decided by the jury. The majority opinion cites Deist v. Wachholz (1984), 208 Mont. 207, 678 P.2d 188, and

### Lachenmaierv.FirstBankSysterns, Inc. (1990), 246 Mont. 26, 803 P.2d 614, for theproposition that a fiduciaryduty can only arisebetween a bank and its creditor when the bank fills the role of advisor to its creditor. However, it is clear from those opinions that a fiduciaryduty arises when there is a special relationship between thebank and its creditorand the relationship of advisor/advisee is only one of the relationships which can create a fiduciaryduty on the part of the bank. The only thing consistent about this Court's prior decisions

on this subject hasbeen itsholding that the existence of "special circumstances'~ may result in an exception to the general rule that

a bank's relationship with its customers is not a fiduciary one. Whether or not there were special circumstances which should give rise to a fiduciary duty is a classic question of fact. In this case,Simmons contends that the degree of control exerted by Wells Fargo Bank amounts to "special circumstances." A fiduciary relationshipmay arise if a creditorgains substantial controlover the debtor's business affairs. Blue Line Coal Co., Inc. v. Equibank

(E.D. Pa. 1988), 683 F. Supp. 493, 496. InNCNBNationalBankofNofi/z

### Carolina

### v. Tiller (4th Cir. 1987), 814 F.2d 931, 936, the kind of activitywhich establishes a lending institution's control over a borrower was defined as "actual day-to-day involvement in management and operations of the borrower or the ability to compel the borrower to engage in unusual 

### transaction^.^ The majority has concluded as a matter of law that there are

no special circumstances, and therefore, no fiduciary obligation due to the fact that once the 1984 master agreement and the 1985 restructuring agreement were entered into, the bank no longer exerted daily control over Simmons1 operations and direct communications between the two entities declined significantly. The majority concedes that before 1984 the bank exercised day-to-day control over nearly every facet of the refinery's operations, but seizes upon the fact that this close relationship

was not evidenced thereafter. However, the following facts,which

were in evidence, establish that even after the restructuring agreement and formation of the Montana Refining Company, the bank retained the ability to compel Simmons to engage in unusual transactionsand continued to exert unusual control over Simmonsby virtue of the terms of the agreements: 1. The 1984 master agreement (which formed the Montana Refining Company) required the bank's approval of the refinery's annual budget, and express written approval before any capital

### expendituresgreaterthan $200,000 

### couldbemade. SimmonsRefining Corporation remained a limited partner in the new company. 2. 

### Even though Simmons was a partner in the new refining company pursuant to the 1984 

### master agreement, and was a party to the agreement establishing the distribution of refinery cash flow, the bank could change that distribution without Simmons' consent. 3. 

### The 1985 

### agreement restructured Simmons' debt through a
new "carry-back promissory note" for $10 

### million from Simmons Refining Company to the bank, and a new "SOCpromissory notew for $2.5 

### million from Simmons Oil Company to the bank. The new SOC notehad an interest rate of 20

### percent peryear,almost double the prime rate. Furthermore, Simmons Refining Company was prohibited from obtaining credit from any other lender without the bank's approval. Simmonswas locked into the notes and could not prepay, and was powerless to 

### get other financing. 4. 

### Under the terms of the 1985 

### agreement, the bank took complete control of Simmons Refining Company's business 

### by prohibiting Simmons from incurring any indebtedness, liabilities, lease payments, guarantees, security interests, or any other obligations without the bank's prior written consent. 5. 

### Also instructive is this Court's previous observation in ~immons OilCorporation

### v.Hol&Corporation (1990)

## , 2 44 

### Mont

# . 7 5, 796 P.2d 189, 

### to the effect that Wells Fargo's affiliation with Simmons extended far beyond that of the simple creditor-debtor relationship. Wells Fargo loaned Simmons large sums of

### money, knowing 

### these 

### sumswere 

### destined for

### Montana. It protected its interestsby exercising financial control over the refinery, retaining the authority to approve expenditures of 

### the refinery and becoming the outright owner of Simmons1profits from the 

### refinery.



# . . 

# . The sale of debt, the act that constituted Wells Fargo's alleged breach of duty, was merely the final act in the chain. 

### Simmons, 796 P.2d at 196. 

### These examples demonstrate that the bank actively assumed 

### a relationship far beyond the usual debtor-creditor relationship. During the 

### period of time that the majority states there were 

### no "directcontact^^^ 

### between Simmons and bank 

### personnel, the evidence establishes that the 

### bank still exerted control over Simmons, Simmons was powerless 

### to get other financing without the bank's approval; 

### it was 

### locked into a 

### note that could not be prepaid; and the 

### bank continued to control the annual budget and expenditures for the refining company in which Simmons was a limited 

### partner. A 

### jury could properly find a type of "special relationship1'which gave rise to a fiduciary obligation from the bank to Simmons. Based on these 

### facts, this issue cannot be resolved by summary judgment. For the 

### same reasons that the majority concluded there was evidence sufficient to support a 

### claim for breach of the covenant 

### of good faith, I 

### conclude there was also evidence to support a 

### claim that the bank breached its fiduciary duty to Simmons. Iwould remand to the District Court for a jury trial on Simmons' claim that the bank breached its fiduciary duty. I also dissent from the majority's conclusion that because Simmons settled its claim against Holly Corporation and dismissed its appeal against that defendant, Simmons is precluded from pursuing its claim for civil conspiracy against the bank. There was nothing about Simmons' settlement with Holly Corporationwhich resolved themerits of that claim. Furthermore, settlementof claims ispresumed tobe in thebest interestsof the parties, the courts,and the Montana public. Stateexrel.Deerev.District Court (l986), 224 Mont. 384, 730 P.2d 396. Settlement of claims should be encouraged by this Court, not discouraged. Yet, the majority opinion will make it impossible for aplaintiff to settle with one of two tort feasors under similar circumstances in the future. Based on this decision, future defendants like Holly Corporation will simply have to continue to be involved in the litigation and incur the attendant expenses so long as Simmons is unable to resolve its differences with some other alleged co-conspirator. Defendants like Holly Corporation will have absolutely no control over their own destiny because no future plaintiff will be able to settle a claim with one defendant until the case has been resolved against all defendants. This is bad

### public policy and serves 

### no rational purpose under the circumstances 

### in this case. For these reasons, 

### I dissent from the majority opinion. 

### I would 

### remand the 

### issues of breach of fiduciary 

### duty and 

### civil conspiracy to the 

### District Court for resolution of the factual issues 

### thathave been raisedby the 

### evidence that 

### is already in the 

### record. /



### Justice William E. 

### Hunt, Sr., concurs in the foregoing



### concurrence and dissent of Justice Trieweiler.April29, 1993 CERTIFICATEOFSERVICE IherebycertifythatthefollowingorderwassentbyUnitedStates mail,prepaid,to thefollowing named:

H.CHARLESSTAHMER AttorneyatLaw 502S: 19thAve., Suite11 Bozeman,MT 59715 James Goetz Goetz,Madden&Dunn 35N. Grand Bozeman.MT 59715

CharlesJ.Wisch WEISSBURG&ARONSON,INC. 555Californiast.,Suite2400 SanFrancisco,CA 94104 StevenM. Perry, Esq. MUNGER, TOLLES&OLSON 355S.GrandSt., 35thFloor LosAngeles,CA 90071-1560 RichardF. Gallagher,Esq. CHURCH,HARRIS,JOHNSON&WILLIAMS P.O.BOX 1645 ~7 GreatFalls,MT 59403 ' JohnD. Stephenson, Esq. JARDINE,STEPHENSON,BLEWETT&WEAVER P.O. Box2269 GreatFalls,MT 59403 EDSMITH CLERKOFTHESUPREMECOURT STATEOFMONTANA