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: 

Steven M. 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, 1993 
Justice 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's motion 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 conspiracy with 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 the material 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 Ifspecial relationshipBi 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 Hollyfs fiduciary 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 

fair dealing, and conspiracy. Simmons also sued Holly Corporation 

and two of its wholly owned subsidiaries, Navajo Refining 

Corporation and Nava j o 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 District Court, Wells Fargo and Holly filed 

motions for summary judgment which were argued. On October 17, 

1991, the District Court 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 for voluntary 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 Fargo provided SOC a line of credit, 

which was increased to $18 million in 1981 when 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 $10 million by May 1982. 

Simmons began experiencing financial difficulties in early 

1982, was unable to reduce the debt as agreed upon, and thereafter 

Wells Fargo closely monitoredthe refinery's operating performance. 

Although Wells Fargo held off exercising its undisputed foreclosure 

rights, throughout 1983 and 1984 the bank urged 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 executed between Wells Fargo 

and all of Simmons1 entities, except SRC. This included releasing 

Mr. and Mrs. ~immons from their personal guarantees of the 

preexisting corporate debt. (Mr. Simmons is president of both SRC 

and SOC. ) 

Contacts between Wells Fargo and Simmons decreased 

substantially by late 1985, and Jerry Simmons had no conversations 

with any Wells 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 the agreement. On April 

25, 1988, after several years of unfavorable refinery operations 

and minimal debt service, Wells Fargo sold Simmonst and the MRC 

notes to Holly. This sale resulted from Hollyfs assertions that 

the sale of the notes was Holly's "stated price 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 a purchase of the notes, but negotiations had broken down 

earlier in the month and prior to culmination of the sale between 

Holly and Wells 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 to Holly and that the sale constituted a breach 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 over the refinery's operation between 1982 and 

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 faith are 

premised on these purported facts. 

Wells Fargo maintains 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 

to purchase the debt from Wells Fargo and chose not to contact the 

bank with an offer to purchase the debt until after a Holly/Wells 
Fargo letter of intent was signed; and finally, that since the 

assignment right was unrestricted, a covenant of good faith and 

fair dealing should not be implied to vary 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." (Citation omitted.) Diest v. Wachholz (1984), 

208 Mont. 207, 216, 678 P.2d 188, 193. However, in certain 

circumstances, a fiduciary duty may 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 Restructuring Agreement. 
"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 

Restructuring Agreement. 

This Court, however, concludes that the Master Agreement 

definitively terminated any fiduciary duty that Wells Fargo may 

have had to Simmons. In the master 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 and Navajo Northern, Inc. filed a certificate of 

limited partnership with the Secretary of the State of Montana for 

the purpose of acquiring the assets of SRC. Navajo Northern was 

the general partner of the MRC and SRC was the limited partner. 

Although Wells Fargo was involved in day-to-day operations of 

the refinery before 1984 exercising control over nearly 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 evidence that Wells Fargo continued to 
exercise daily control over the refinery once it became a limited 

partnership. 

Wells Fargo1s direct contact with Simmons also decreased after 

the master agreement. The following excerpt from Jerry Simmons' 

transcript reveals a drastic decline in communication between 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 contact with 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 in August? 

Q. BY MS. HYMANSON: Other than the contacts about buying 

the Simmons debt in November of 1985. 

A. Until the end of 1987. There was probably 

communication between Wells Fargo and the Simmons Oil and 

Refining -- Simmons Oil 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 conversation with 

Hardy Watford in November of 1987. 

Simmons simply have not proved a fiduciary relationship 

between Simmonst entities 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 conclude 
that Wells Fargo did not breach a fiduciary duty 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 Fargo merely 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 Fargo1s decision to assign it to Simmonst partner 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 to give 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 

contends this language gave them the right to assign Simmonsf notes 
to anyone, including Holly. "Every contract imposes upon 

each party a duty of good faith and fair dealing in its performance 

and its enforcement. . . . The covenant of good faith finds 

particular application in situations where one party is invested 

with a discretionary power 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 can be implied which forbids such acts 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 the principles 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 specifically provided that the landlord had 

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 

specifically provided the landlord may enter into a new lease for 

the premises with the intended assignee or sublessee or enter into 

a new lease with that person, and the tenant would not be entitled 

to any profit from the landlord due to termination of the lease and 

the reletting of the premises. The California Supreme Court 
concluded that the landlord's use of this recapture clause was 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. 

In the present case, the provision at issue is a general right 

to assign Wells Fargo's rights and duties under the 1985 

restructuring agreement. (See Farris 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 agreement must be read with another clause from the 

agreement. Clause 13.7 states that I' [t] he parties intend and agree 

that each of their respective rights, duties...shall be 

performed ... and exercised reasonably and in good faith." This 

clause, specifically placed in the contract at 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 applicable portion of the memorandum 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 losses and required capital improvements, while 

receiving only 50% of any future profits, Holly 

Corporation has stated that it would 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 to pay off 

the non-accrual loan. 

From a legal standpoint, this restructuring would 

take the form of WFB selling its entire creditor position 

in all the Simmons entities to Holly Corporation. 

Selling this position eliminates any need to approach 

Jerry Simmons or any of the Simmons entities for approval 

to modify the partnership agreement with respect to 

distributions, etc. 

Approval of this restructuring is recommended. 

A second memo reads in part: 

1 spoke with 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 next week and ask Mr. 

Simmons to sign an agreement that would 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, and would also avoid the tax problems 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 

"Wells Fargofs secret negotiations with Holly, Simmonst partner, as 

well as its desire to change the profit distribution from the 
refinery without Simmonst consent and to facilitate Hollyfs squeeze 

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 its performance or efficient breach. When one party uses 

discretion conferred by the contract to act dishonestly or to act 

outside of accepted commercial practices to deprive the other party 

of the benefit of the contract, the contract is breached." 

Marshall v. State (1992) 830 P.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 faith and fair dealing. 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 Ifspecial relationshipff exist between ~immons and 

Wells Fargo to support a tort claim for bad faith? 

Simmons appeals the court's decision to 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 adequate because; 

(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. superior Court (Kroehler Mfg. 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 
approach Jerry Simmons or any of the Simmons entities for approval 

to modify the partnership agreement with respect to distributions, 

etc." Moreover, Wells Fargo and Holly specifically discussed 

Holly's intent to use the notes to force Simmons to surrender their 

50% interest in the refinery. Finally, Simmons contends that the 

sale of the notes to Holly promoted breaches of Holly 's partnership 

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 can be no civil action for conspiracy. " If Holly 

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, Simmons and Holly entered into a settlement agreement. 

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, (including the 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 S immons claims against Holly, including the 

final judgment concerning the summary judgment motion. 

The final judgment at issue (between Holly and 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) a meeting of the minds on the object or course of 

action; (4) one or more unlawful overt acts; and (5) damages as the 

proximate result thereof. Grenz v. Medical Management Northwest 

(lggl), 250 Mont. 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 though damage may 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 in any unlawful acts, there can be no 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/Navaj o when it granted Wells Fargo s summary judgment motion. 

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 Simmons1 contract claim for breach of the covenant of 

good faith and fair dealing. I dissent from that part of the 

majorityts opinion dismissing Simmonsq tort claim for breach of the 

covenant of good faith for the reasons set forth in my dissenting 

opinion in McNeil 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. Superior Court (1984) , 207 Cal. Rptr. 

123, is not controlling, and as I have previously stated, I would 

not follow Sturyv. 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 Simmons1 claim 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 should never be substituted for trial 

if a material factual controversy exists. Beaverhead Bar Supply, Inc. v. 

Hanirzgton (lggl), 247 Mont. 117, 120, 805 P.2d 560, 562. Furthermore, 

all reasonable inferences that might be drawn from the offered 

evidence should be drawn in favor of Simmons, as the party opposing 

summary judgment in this case. Cereck v. Albertson's, Inc. (1981) , 195 

Mont. 409, 411, 637 P.2d 509, 511. 

19 
When 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 the proposition that a 

fiduciary duty can only arise between 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 fiduciary duty arises when there 

is a special relationship between the bank and its creditor and the 

relationship of advisor/advisee is only one of the relationships 

which can create a fiduciary duty on the part of the bank. 

The only thing consistent about this Court's prior decisions 

on this subject has been its holding 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 

relationship may arise if a creditor gains substantial control over 

the debtor's business affairs. Blue Line Coal Co., Inc. v. Equibank 

(E.D. Pa. 1988), 683 F. Supp. 493, 496. In NCNBNationalBankofNofi/z 
Carolina v. Tiller (4th Cir. 1987), 814 F.2d 931, 936, the kind of 

activity which 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 

transactions and continued to exert unusual control over Simmons by 

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 
expenditures greaterthan $200,000 could be made. Simmons Refining 

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 "SOC promissory notew for 

$2.5 million from Simmons Oil Company to the bank. The new SOC 

note had an interest rate of 20 percent per year, almost double the 

prime rate. Furthermore, Simmons Refining Company was prohibited 

from obtaining credit from any other lender without the bank's 

approval. Simmons was 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 Oil Corporation v. Hol& Corporation ( 19 9 0) , 2 4 4 Mont . 7 5, 7 9 6 P .2 d 

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 sums were destined for Montana. It 

protected its interests by exercising financial control 

over the refinery, retaining the authority to approve 

expenditures of the refinery and becoming the outright 

owner of Simmons1 profits 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 

"direct contact^^^ 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. I 
would 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 

Corporation which resolved the merits of that claim. Furthermore, 

settlement of claims is presumed to be in the best interests of the 

parties, the courts, and the Montana public. State ex rel. Deere v. 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 a plaintiff 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 that have been raised by the evidence that is already in the 

record. / 

Justice William E. Hunt, Sr., concurs in the foregoing 

concurrence and dissent of Justice Trieweiler. 
April 29, 1993 

CERTIFICATE OF SERVICE 

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

named: 

H.CHARLES STAHMER 

Attorney at Law 

502 S: 19th Ave., Suite 11 

Bozeman, MT 59715 

James Goetz 

Goetz, Madden & Dunn 

35 N. Grand 

Bozeman. MT 59715 

Charles J. Wisch 

WEISSBURG & ARONSON, INC. 

555 California st., Suite 2400 

San Francisco, CA 94104 

Steven M. Perry, Esq. 

MUNGER, TOLLES & OLSON 

355 S. Grand St., 35th Floor 

Los Angeles, CA 90071-1560 

Richard F. Gallagher, Esq. 

CHURCH, HARRIS, JOHNSON & WILLIAMS 

P.O. BOX 1645 ~7 

Great Falls, MT 59403 ' 

John D. Stephenson, Esq. 

JARDINE, STEPHENSON, BLEWETT & WEAVER 

P.O. Box 2269 

Great Falls, MT 59403 

ED SMITH 

CLERK OF THE SUPREME COURT 

STATE OF MONTANA