No. 89-114 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1990 

DALE KINNIBURGH, KEITH KISER, 

ROBERT J. WAGAR, and B.B. & K., INC., 

Plaintiffs and Appellants, 

DONALD A. GARRITY, and GARRITY, 

KEEGAN & BROWN, a law firm and 

partnership, 

Defendants and Respondents. 

APPEAL FROM: District Court of the First Judicial District, 

In and for the County of Lewis & Clark, 

The Honorable Thomas B. Olson, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Richard P. DeJana, Kalispell, Montana 

IilI 

C) r2 For 

0 cL-, 4" <., rl) I..: 

LJkJ 

-.I 2.; E c.J41.: 

Respondent: 

Cresap S. McCracken; Church, Harris, Johnson & 

Williams; Great Falls, Montana 

Submitted on Briefs: July 13, 1990 

Decided: September 6, 1990 

* 
Justice R. C. McDonough delivered the Opinion of the Court. 

The plaintiffs appeal the judgment of the Montana First 

Judicial ~istrict Court, Lewis and Clark County, sitting without 

a jury, entering judgment in favor of the defendants on the 

plaintiffs' claim of legal malpractice. The claim arises from 

their earlier suit against Burlington Northern (BN) that involved 

a series of timber contracts between the plaintiffs and BN in which 

the defendants here represented the plaintiffs. The District 

Court entered judgment in favor of the defendants on the grounds 

that plaintiffs1 underlying suit did not state a claim against BN 

and therefore the admitted negligence of Garrity did not 

proximately cause any damage to the plaintiffs. We affirm. 

The plaintiffs attempt to frame several issues as the basis 

of appeal. We consolidate these issues into the following: 

(1) Did the District Court err in holding that the 

plaintiffs1 original complaint against BN failed to state a claim 

for relief? 

Determination of this issue will enable us to dispose of the 

principal issue on appeal: 

(2) Did the District Court err in holding that the admitted 

negligence of Garrity and the alleged misrepresentations of Garrity 

concerning the plaintiffs1 chances of success were not the 

proximate cause of any damage claimed by the plaintiffs? 

The plaintiffs are independent businessmen who routinely 

entered into contracts with BN to harvest timber on BN lands, build 

roads to accommodate such harvest, and haul logs to lumber mills. 

2 
Contracts were for individual logging jobs or related operations. 

The contracts were let to bid or negotiated depending upon what BN 

thought was best for its interests on a particular job. 

In 1979, the plaintiffs were part of a group of independent 

logging contractors who, in apparent dissatisfaction with BN, 

formed an informal organization and attempted to pressure BN into 

changing some of its contracting procedures. The group met with 

BN to discuss these issues, however, nothing much happened. 

The plaintiffs contend that in retaliation for this 

organization effort they were not offered further contracts by BN. 

They hired the defendant Garrity to sue BN in federal court 

primarily on theories of breach of the implied covenant of good 

faith and fair dealing in the employment relationship, deprivation 

of civil rights under 42 U.S.C. 1983, and interference with 

contract. 

Garrity took the case on a contingent fee basis and filed suit 

on behalf of the plaintiffs on January 25, 1982. At the outset 

he thought that the civil rights claim had the best chance of 

success. After this Court's decision in Gates v. Life of Montana 

(1982), 638 P.2d 1063, giving at-will employees expanded employment 

protections, Garrity thought this theory might be expanded to cover 

the plaintiffs' situation, and this became his principal legal 

theory. 

Garrity told Kiser and the other plaintiffs that they had a 

good chance of success in their suit against BN, but that the "bad 

faith" aspects of the suit were dependent upon a favorable ruling 
from the trial judge. The findings indicate that if plaintiff 

Kiser had not been assured of a reasonable chance of success by 

Garrity, he would not have authorized the filing of the lawsuit and 

he would have gone back to work as he felt that a fruitless lawsuit 

endangered his employability with other timber operators. The 

United States ~istrict Court for the District of Montana, Great 

Falls Division, ultimately disposed of the case in its entirety by 

entering judgment in favor of BN on all claims on January 4, 1984. 

An attempted appeal of this judgment was never decided on its 

merits. Garrity mistakenly counted the 30 day appeal period as 

ending on February 4, 1984, a Saturday, when the time deadline was 

actually February 3, 1984, a Friday. As a result, Garrity filed the 

required Notice of Appeal one day late. 

The plaintiffs filed a malpractice suit against Garrity 

alleging negligence and misrepresentation on February 14, 1985. 

The action was tried without a jury and judgment was entered in 

favor of the defendants. A motion to amend the findings of fact 

and conclusions of law was filed and the court issued an order 

granting a portion of the amendments. The District Court concluded 

that there were no claims under the Civil Rights Act or under the 

theory of contractual interference, and that the claims of breach 

of the implied covenant of good faith and fair dealing were barred 

under Nordlund v. School District No. 14 (1987), 227 Mont. 402, 738 

P.2d 1299. The plaintiffs now appeal the judgment in favor of the 

defendants raising the aforementioned issues. 
On appeal the plaintiffs do not contest the invalidity of the 

civil rights claims in their case against BN. However, they do 

argue that the District Court erred in its interpretation of 

Nordlund as precluding recovery on their claims for breach of the 

implied covenant of good faith and fair dealing. They also argue 

that our recent decision clarifying causes of action for breach of 

the implied covenant, Story v. City of Bozeman (1990), - Mont . 

, 791 P.2d 767, 47 St.Rep. 850, would afford them a cause of 

action under this theory if we would allow the parties to argue the 

present facts under the criteria adopted in Story. 

Nordlund is clearly dispositive of the underlying claim 

against BN for breach of the implied covenant. In Nordlund the 

plaintiff schoolteacher alleged that the defendant school district 

breached the implied covenant of good faith and fair dealing by 

arbitrarily and capriciously not renewing his employment contract. 

After being given a series of two year contracts, the school board 

voted to give superintendent Nordlund a one year employment 

contract. Under the law applicable at the time, Itthe nature and 

extent of an implied covenant of good faith and fair dealing is 

measured in a particular contract by the justifiable expectations 

of the parties. Nicholson v. United Pacific Insurance (1985) , 219 

Mont. 32, 41, 710P.2d1342, 1348. WeheldinNordlundthatunder 

the express, clear, and unambiguous language of the contract, the 

plaintiff could have no justifiable expectation of continued 

employment. Nordlund, 738 P.2d at 1302, citing Maxwell v. Sisters 

of charity of Providence (D.Mor1t.1986)~ 645 F.Supp. 937, 939. 
Here, BN offered the plaintiffs, independent contractors, 

contracts for discrete logging jobs or related tasks, by taking 

bids or negotiating the contract terms. These contracts were for 

individual jobs and cannot be the basis for a continued expectation 

that BN would offer such contracts to an independent contractor in 

the future. BN1s conduct cannot be characterized as arbitrary, 

capricious, or unreasonable under the applicable law where 

plaintiffs are independent contractors with no express contract of 

employment, and were threatening to sue BN. 

Plaintiffs also allege that they would have a cause of action 

in tort against BN under the current law defining breach of the 

implied covenant as set forth in Story v. City of Bozeman, supra. 

Even if Story were applicable to this case, the plaintiffs did not 

have a case against BN. Under Story, the following Ifspecial 

relationshipI1 criteria must be met for a plaintiff to maintain a 

cause of action in tort for breach of the implied covenant: 

(1) the contract must be such that the parties are in 

inherently unequal bargaining positions; [and] (2) the 

motivation for entering the contract must be a nonprofit motivation, i.e., to secure peace of mind, 

security, future protection; [and] (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 

wwholell; [and] (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. 

791 P.2d at 776; citing Wallis v. Superior Court (1984), 160 

Cal.App.3d 1109, 207 Cal.Rptr. 123, 129. Substantial evidence of 

each and all of these essential elements must be presented to the 
court, or the court will direct that there is no special 

relationship. Story, 791 P.2d at 776. Here, the plaintiffs are 

independent businessmen dealing at arms-length in a commercial 

setting and negotiating contracts for profit on a job-by-job basis. 

No special relationship exists. 

Moreover, for a plaintiff to maintain a cause of action for 

breach of the implied covenant, whether it is based in contract or 

based on the special relationship criteria giving rise to a tort, 

he must first show breach of the "honesty in factw standard: 

The conduct required by the implied covenant of good 

faith and fair dealing is honesty in fact and the 

observance of reasonable commercial standards of fair 

dealing in the trade. 

Section 28-1-211, MCA. Story, 791 P.2d at 775. There is no 

evidence in the original suit that BN was not honest in fact or 

failed to observe reasonable commercial standards as a means of 

depriving the plaintiffs of the benefit of their contracts. See 

Story, 791 P.2d at 775. 

The plaintiffs also contend that the District Court erred in 

concluding that the missed appeal caused no actual damage to the 

plaintiffs, because the court deemed the contractual interference 

claim to be a valid claim. A close examination of the record 

demonstrates that this contention is without merit. In finding of 

fact no. 108 the court found that Garrity, not the court, 

subjectively deemed the contractual interference claim to be valid. 

The court later concluded that regardless of Garrity's subjective 

belief in the claim's validity the plaintiffs had failed to state 

7 
anv valid claims for relief against BN, and thus had no claim for 

relief against Garrity. 

We agree. To establish a professional negligence action the 

plaintiffs must prove that Garrity breached a duty and that "but 

forw such negligence they would have been successful in the 

prosecution of their claims. Lorash v. Epstein (1989), 236 Mont. 

21, 24, 767 P.2d 1335, 1337; Carlson v. Morton (1987), 229 Mont. 

234, 238, 745 P.2d 1133, 1136. Because the plaintiffs had no legal 

claim for relief against BN they experienced no damage as the 

result of the admitted negligence of Garrity in missing the appeal 

date. Lack of any damages and direct causation is fatal to their 

malpractice claim. 

Finally, plaintiffs allege that Garrity misrepresented their 

chances of success in winning the lawsuit. By stipulation, the 

parties agreed that 

It is a breach of accepted standards of the Montana legal 

profession for an attorney to misrepresent to a client 

or potential client the attornevls evaluation of the 

chances of success or failure of a proposed lawsuit if 

the attorney knows that such misrepresented evaluation 

will be the deciding factor in the mind of the client in 

deciding to pursue or abandon the proposed litigation. 

Transcript, p. 253. While plaintiffs contend that Garrity should 

have known that the chances for success were poor and therefore 

misrepresented such chances, the stipulation clearly applies only 

if the attorney forms one opinion regarding the chances of success 

or failure and communicates another one to the client. The 

District Court made extensive factual findings describing Garrityls 

evaluation of the plaintiffs1 claims. The Court specifically noted 
that "~arrity believed in the case to the point of risking his time 

and effort for the chance of a contingent fee." Nowhere did the 

District Court find or conclude that Garrity misrepresented 

evaluations to the plaintiffs. Plaintiffs failed to meet their 

burden of proof on this matter. 

Plaintiffs suffered no damage as the result of Garrity's 

admitted negligence nor did Garrity misrepresent to plaintiffs his 

evaluation of their chances for success. The judgment of the 

District Court is 

AFFIRMED. 

We Concur: lf 

Justices 

&/-&&H+f/ -/ Justice 

Justice William E. Hunt, Sr., did not participate. 
Justice John C. Sheehy concurs specially: 

I concur in the result here and especially concur that in 

order to state a claim against an attorney for malpractice, the 

client must show that except for the alleged malpractice, the 

result of the suit would have been in favor of the client. This 

is the holding in Brosil v. Stockton (1970), 105 Ariz. 574, 468 

P.2d 933, 936, and my dissent in R. H. Schwartz v. Hanrahan (1983), 

207 Mont. 105, 672 P.2d 1116, 1118. 

I would hold that the claims of the plaintiffs were barred 

under our decision in Nordlund v. School District No. 14 (1987), 

227 Mont. 402, 738 P.2d 1299, as the opinion here states. Since 

I dissented in Story v. City of Bozeman (1990), - Mont. , 791 

P.2d 767, I see no application of that case to the present case.