No. 81-48 IN THE SUPREME COURT OF THE STATE OF MONTANA

DAN RING, BOB WOLTER, TIM WILLIAMS, LOUIS MERTZIG, DALE OLSEN, BOB MARTIN, ROBERT GOODY, JERRY THOMPSON,FRED BAUM, et al., Plaintiffs and Respondents,

JAMES HOSELTON, d/b/a HOSELTON FRAMING; M.D. O'CONNELL and DONALD BENNETT, d/b/a BENNETT BUILDERS, FIRST SECURITY BANK, AETNA INC., Defendants and Appellants.

Appeal from: District Court of the Third Judicial District, In and for the County of Deer Lodge Honorable Robert Boyd, Judgepresiding. Counsel of Record: For Appellants: Poore, Roth, Robischon & Robinson, Butte,Montana Douglas Buxbaum argued and and Urban Roth argued,

Butte,Montana Henningsen, Purcell & Genzberger,Butte,Montana James Purcell argued, Butte, Montana For Respondents: Knight,Dahood, McLean & Everett,Anaconda, Montana David McLean argued, Anaconda, Montana Johnson, Skakles and Kebe, Anaconda,Montana Greg Skakles argued, Anaconda, Montana

Submitted: December 

### 7, 1981 Decided: April 15, 1982 Filed:

# APR15

## 1982Mr. Justice Fred J. Weber delivered the Opinion of the Court. Plaintiff carpenters claimed penalties for late payment of wages due under a working agreement with James Hoselton, d/b/a Hoselton Framing (Hoselton),subcontractor,and W. D. OIConnell,and Donald Bennett,d/b/a Bennett Builders

(Bennett),the prime contractor. Bennett cross-claimed againstAetna Casualty & Surety Co. (Aetna) for failure to pay Bennett as required by a labor and materials bond issued to Hoselton as subcontractor,requesting punitive damages and attorney's fees because of Aetna's alleged bad faith. The District Court of Deer Lodge County awarded $4,176.48 to plaintiff carpenters,and $35,534.12 damages plus $100,000.00 in punitive damages to Bennett,plus attorney's fees, which

were not initially determined. There were extensive postjudgmentmotions to amend findings and judgment, for new trial, and for relief from findings,conclusions and judgment. Appeal follows denials of all of thesemotions. We affirm in part and reverse inpart.

The key findings of fact and conclusions of law of the District Court are described in this paragraph. Plaintiff carpenterswere members of Carpenters Union Local 88 which had a working agreement with Bennett, and Hoselton signed a compliance agreement with Local 88. Hoselton hired plaintiffs

as carpenters. Hoseltonposted a payment and performance bond with Bennett as Obligee and Aetna as Surety. Hoselton discharged plaintiffs but their severance checks were not postmarked for seven days after discharge, entitling plaintiffs to eight hours pay for each 24 hours which had expiredbefore payment was made, resulting in the Hoselton obligation to pay plaintiffs a total of $4,176.48. Hoselton walked off the project on February 11, 1979. Aetna did not pay the $4,176.48 under the bond. Written notice of default was sent to Aetna indicating Bennett was exercising his option under the bond to complete the Hoselton framing subcontract in his role as general contractor,and no responsewas ever received fromAetna. Bennett completed the framing; the balance owing to Bennett for completing the subcontract

was $35,534.12, and Aetna declined payment. Aetna's refusal to make payment was found to show bad faith. Because of the bad faith failure of Aetna to honor its obligation, Bennett had to pay the money necessary to complete the Hoselton subcontract,resulting in a heavy burden on Bennett, which caused him to lose his business and his home for which Aetna should respond in punitive damages. Reasonable attorney's fees were due to Bennett because of the failure of Aetna to honor its bond. As a result of these findings, the District Court concluded that the reasonable cost of completion of the Hoselton subcontractwas $35,534.12 and Aetna was liable to Bennett in that amount together with attorney's fees and costs; the refusal of Aetna to honor its obligations was wrongful, malicious, arbitrary and in bad faith; Bennett suffered severe financial losses as a result of the bad faith of Aetna, for which Aetna was liable in punitive damages in the amount of $100,000.00; and Aetna was liable to Bennett for attorney's fees as they shall become fixed after a hearing. Judgmentwas entered in accordancewith the findings and conclusions. Following is a calendar of the significant eventsstarting with the entry of judgment. November - 6, 

### - 1980. Judgment as previously described entered. November 

### -- 17, 1980. Aetna filed motion for new trial, to amend judgment,and for relief from the findings, conclusions and judgment under Rules 52, 59 and 60 of the Montana Rules of Civil Procedure. The Aetna affidavits in support of themotions are extensive. In substance they show that the counsel representingAetna up to the judgment on November 6, 1980,had severe depression and emotional problems which had extended over a period of years and were unknown to his associates and friends. Subsequent to the November 6, 1980, judgment, counsel was admitted to the stress center in the hospital at Butte. The affidavits show that in the present case, counsel was unable to communicate his problems to his associates,and failed to properly communicatewith Aetna. The affidavits set forth factswhich are claimed to be sufficient to constitute adequate defenses to the claims in issue; and otherwise set forth facts indicating that counsel had failed to properly representAetna in a competentmanner, resulting in the entry of the judgment againstAetna. To compound the confusion, the successor counsel forAetna overlooked noticing the consolidatedmotions as required under Rules 59 and 60. December 

### - 8, 1980. Motion by plaintiffs and Bennett requesting hearing to determine reasonable attorney's fees provided for in judgment. Notice of hearing set for December

December -- 12, 1980. Additional Rule 60motion by Aetna requesting that Aetna be relieved from its omission tonotice the consolidated motions filed on November 17,with themotion based onmistake, inadvertence and excusable neglect. Motion noticed for December 17, 1980. December 17, 1980. Hearing onmotions noticed for this 

### -- date.December 22, 1980. Order awarding plaintiffs1attorneys 

### -- $2,055.00 and Bennett's attorneys $7,500.00 as attorneys' fees. Order denying post-trialmotions, finding that no notice of hearing was filed on the November 17motions under Rules 59 and 60,and no hearing held within the time limits; failure to comply with Rules 59 and 60 caused the December 17motions to be "deemed denied" and thereby denied the District Court any jurisdiction to deal with the motions; finding that the December 12motion pursuant to Rule 60was

a "bootstrap" motion asking the court to allow a hearing on the original motion, and was not appropriate;and with a determination that all of the post-trial motions of Aetna

were denied. December 

### -- 24, 1980. Renewal of Rule 59 and 60motions by Aetna. Motion noticed for hearing on December 31, 1980. December 

### -- 26, 1980. Conditional notice of appeal, in which Aetna contended that the judgment of November 6, 1980, did not become final until the District Court awarded attorney's fees,and in which the appeal was conditioned upon the event that the Supreme Court of Montanamight determineNovember 6, 1980,was the date of final judgment. December 

### - 31, 1980. Order of District Court denying all motions, including post-trial motions. 

### January

### - 9, 

### - 1981. Notice of appeal by Aetna appealing from the final judgment and order 

### of court awarding attorney's fees and from court's orders denying post-trial motions

### under Rules 52, 59 and 60 and also from the judgment dated November 6,1980. 11. The following issues are determinative:

(1) Was the November 6, 1980, judgment final prior to the December 22, 1980,order determining attorney's fees? (2) Should Aetna's post-judgmentmotions have been considered on their merits? (3) 

### Was the Bennett deposition admissible without a showing of unavailability for trial? (4) Did theAetna bond encompass the penalties awarded to the plaintiffs? As stated in the first issue, judgment was entered by the District Court onNovember 6,but the attorney's fee portion of the judgmentwas not completed until the entry of order on December 22. Our decision on this issue controls the further decision on the post-judgmentmotions. In this case, the claim of attorney's fees on the part of plaintiffs and Bennett is not based upon a statutory provision awarding attorney's fees, such as in the mechanics lienprovisions of

our codes. Here, the Aetna bond in substanceprovides that Bennett shallnot be liable for the payment of any costs or expenses of any suit for work or labor performed. It is under that contractprovision that the parties seek a recovery of their reasonableattorney's fees. Our question then becomes whether a judgment is final involving attorney's feesbased on an agreementwhich is the subject matter of the action until the actual determination of the attorney's fees. We find the reasoning persuasive in Aetna Casualty
& 

### Surety Company v. Giesow (2dCir. 1969), 412 F.2d 

### 468, 470, in which the Circuit Court stated:"Sincethe plaintiff would not be entitled to counsel fees if therewas no breach of the subordination agreement,we believe that the issues of damages and counsel fees are so inexorably interconnected as to make this a single claim (citesomitted). In Rieser 

### v. Baltimore and Ohio Railroad Co., 224 F.2d 198, 199 (2dCir. 1955), cert. denied, 350 U.S. 1006, 76 S.Ct. 651, 100 L.Ed. 868 (1956),we said that the test of multiple claims was 'whetherthe underlying factual bases for recovery state a number of different claims which could have been separately enforced.' Under this test it seems quite clear that the claim for counsel fees cannot be enforced apart from the claim for breach of the subordination agreement, and to this extentwe have only a single claim here. Cf. Schwartzv. Eaton, 264 F.2d 195

(2d Cir. 1959). There is also some question as to whether the judgment here can properly be said to be 'final,' since reasonable counsel fees are a contractually specified element of damages and plainly the amount of those fees has not yet been determined. SeeUnited States v. Burnett, 262 F.2d 55 (9thCir. 1958). Sincewe lack jurisdiction,we must dismiss this appeal." In Union Tank Car Company v. Isbrandtsen (2d Cir. 1969), 

### 416 F.2d 96, the Circuit Court followed the Giesow decision. The courtwas construing a note which among other provisions provided for the payment of reasonable attorney's fees, costs and expenses. Again, the trial courthad entered judgment and awarded costs and attorney's fees to be fixed by further order of the court. In holding that the appeal

was premature, the court stated: "Whereattorneys' fees are a mere incident of the litigation itself,particularly when measured in part by the creation of a fund in that litigation,they may often await the outcome of the litigation on trial and appeal. Sprague

### v. Ticonic National Bank, 307 U.S. 161. 59 S.Ct. 777, 83 L.Ed. 1184 (1938).

-. Where 

### --- they are dependent -- on a contract under construction 

### -- by the court 

### -- in the litigation, as here,

## the contractmay more usefully be 

### -- 

## -- completely construed 

### -- on one trialandappeal. 

### -

. 

## . 

# ." (Underscorinqadded.) Union Tank Car Company 'v. ~sbrandtsen, 416 

### F.2d at 97.The need for elimination of separate appeals is stressed by the same court in Cinerama, Inc. v. SweetMusic, S.A.

(2dCir. 1973), 482 F.2d 66, 70,where the court stated: "The final judgment rule is designed not merely to prevent an appeal on an issue concerningwhich the trial court has not yet made up itsmind beyond possibility of change but also to eliminate the need for separate appellate consideration of different elements of a single claim. The burgeoning loads of the courts of appeals mandate strict adherence to this salutarypolicy." (Court'semphasis.) While this Courthas not yet ruled on the precise issue, it has emphasized that a case should not be appealed until it is totally ready for review, stating in Roy v. Neibauer (1980)

### , Mont. 

## , 610 P.2d 1185, 1187, 37 St.Rep. 897, 899: "If the case is not ready for review, it should not be appealed 

# . . . This Court does not have the time and the resources to be compelled to independently search the record to determine if all essential issues have first been decided at the District Court level." In a similarmanner, this Court has consistently held that where all of the issues and claims have not been finally adjudicated, it will refuse to hear appeals. See Knight & Co. v. FortBelknap IndianAgency (1980), Mont. I 612P.2d 1290, 37 St.Rep. 1049;Weston v. Kuntz (1980)~ Mont. 

## , 610 P.2d 172, 37 St.Rep. 855. In the present case, the claims for attorney's fees on the part of both plaintiffs and Bennett are based on the Aetna bond. In turn, there is a dispute as to whether the Aetna bond requires payment to any or all of the parties under the facts of the case. We conclude that the Aetna bond under its terms does allow the award of attorney's fees to both the plaintiffs and Bennett. Under that circumstance,

we find that the judgmentwas not final on November 6,anddidnot become finaluntil the entry of judgment on December 22, determining the amount of fees.

The DistrictCourt entered its findings on November 6, 1980. Aetna moved under Rule 52(b) forthe amendment of such findings. In considering the Rule 52(b)motion, the DistrictCourt pointed outthat it was placed ina difficult position because it was not able toconsider matters outside of therecord made insupport of the Rule 59 and Rule 60 motions because a Rule 52 motion has tobe based on the record as it existed atthe timethe findingsweremade. The DistrictCourt concluded that itmust deny the Rule 52 motion. We affirm thatruling. On November 17, Aetna alsofiled itsmotion for a new trialunder Rule 59. Aetna failedto serve itsmotion for

new trialwithin the ten day period provided under Rule 59(b) as follows: "Time formotion. A motion for a new trial shallbe served not later than 10days after serviceof notice of the entry of thejudgment. I' Our holding that thejudgment didnot become final until the entry of judgment on December 22 isnot controlling asto thismotion. A Rule 59 motion may be made either before or after entry of judgment, subject tothe timeperiod of ten days as specified inRule 59(b). The rule isclearly stated in6A MOORE'S FEDERAL PRACTICE 71 59.09[1], at59-196 (2d ed. 1979) as follows: "Under the earlyEnglish common law 'themotion for a new trialpreceded the entry of judgment, which was not enteredupon the verdict asa matter of course, nor atalluntil after the firstfour days of the next 

### termafter trial.' Rule 59(b) requires thata motion for new trial be served 'not later than 10days after the entry of thejudgment.' This wording was designed tobe broad enough topermit themotiontobe made both before and after the entryof --- - -- --- thejudgment." (Underscoringadded.) Because themotion fornew trialwas not served within the ten day period required by Rule 59(b),themotion was therefore deemed denied under the provisions of the lastparagraph of Rule 59(d): "If themotion isnot noticed up forhearing and no hearing isheld thereon, it shall be deemed denied asof the expiration of the period of timewithin which hearing isrequired tobe held under this Rule 59." The District Court properly concluded that themotion for

new trialwas deemed denied and thatthe court could not consider thematter further. This follows the holdings of thisCourt tothe effect that the time and procedural limitations formotions under Rule 59, M.R.Civ.P. aremandatory. SeeArmstrong v. High CrestOil, Inc. (1974), 164 Mont. 187, 520 P.2d 1081, and cases therein cited. Wetherefore affirm theholding of theDistrictCourt in itsdenial of the Rule 59 motion fornew trial. Aetna alsomoved under Rule 60(b) forrelief from the finaljudgment entered againstAetna. The pertinentparts of Rule 60(b)are: "On motion and upon such terms as are just, the courtmay relieve a party orhis legal representative from a finaljudgment, order, orproceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; 

# . .

# . or (6) any other reason justifying relief from the operation of thejudgment.

### " Rule 60(c)provides that a motion under Rule 60(b) shallbe heard and determined within the timesprovided by Rule 59 in the case of motions fornew trial. The DistrictCourt concluded that the failuretonotice up the Rule 60 motion caused thatmotion tobe deemed denied inthe same manner as the failuretonotice up the Rule 59 motion. The District

### Court therefore concluded that itno longer had any jurisdiction to deal with themotion. Thatdecision was based upon the District Court's conclusion that its November 6 judgmentwas final. Because of our holding that the judgment of the District Court did notbecome final until the determination of the attorney's fees on December 22, 1980, that conclusion

no longer is valid. Because the November 17motion under Rule 60was made before the judgment became final,themotion was premature and may be disregarded. As pointed out by Professor Moore, Rule 60(b) allows relief under circumstances where Rule 59 relief is not allowed because it is not timely. 7 MOORE'S FEDERAL PRACTICE 11 

### 60.18[8], at 216.1 (2ded. 1979), states: "Whenoperating within the intendment of the amended Rule, which carefully balances the competing principles of finality and relief from unjust judgments, the courts should and do give a liberal construction to 60(b). Nomenclature is unimportant 

# . .

# . a motion that is made under Rule 59, which is not timely and hencemay not properly be considered under that Rule,may, nevertheless,be considered as a motion under Rule 60 when it states grounds for relief under this latter rule." On December 24,Aetna by its renewal motion againmoved under the provisions of Rule 60 for relief from the court's findings of fact, conclusions of law and judgment. Believing it no longer had jurisdiction, the District Court denied the motion on December 31. We have concluded that the order denying such Rule 60motion should be set aside in order that the DistrictCourtmay determine the validity of the motion under Rule 60

### after an appropriatehearing. With regard to Rule 60(b) motions, ProfessorMoore has emphasized the liberal construction of the courts. 7 MOORE'S FEDERAL PRACTICE 11 

### 60.22[2], at 247 (2ded. 1979), states:"By 

### now,however, there is a considerable body of federaldecisions dealing with 'mistake, inadvertence, surprise,or excusable neglect'; and, speaking generally, these decisions have been inmarked harmony with the proposition that 60(b) is a remedial rule to be liberally construed. "On timely application, a party has been relieved from: an order taken againsthim as the result of an unauthorized stipulationby his attorney; a judgment of dismissalwhere the failure to file a bill of particularswas due to the oversight or inadvertence of the clerk of plaintiff's attorney; financial difficulty in procurement of counsel; and from a judgment of dismissal forwant of prosecution occasioned by the inadvertence of plaintiff or his counsel." We recognize that the District Courtmay have some difficulty concluding that the facts in this casewarrant relief under clause (1) of 

### Rule 60(b) with regard tomistake, inadvertence, surprise,or excusable neglect. It appears that cases can qualify under clause (1)or under clause (6) which is broader because it allows relief for "anyother reason justifying relief from the operation of the judgment." It is under clause (6) that ProfessorMoore discusses instances in which the courts have allowed relief from a judgment because of actions by attorney comparable to those set forth in the present case. 

### 7MOORE'S FEDERAL PRACTICE 11 

### 60.27[2], 

### at 357 (2ded. 1979), 

### states: "Similarly,in cases inwhich a plenary trial was held,but through extraordinary circumstances the movant's claim or defensewas not presented, or was presented in such a manner that the judgment entered againsthim was akin to a default judgment,relief has been granted onmotion under Rule 60(b)(6). 

### -- In re Estate of Cremidas, for example, themovant, a minor, was 

### represented at the trial (aproceeding to determine heirship) by an attorney who was so inebriated that in effectmovantlsclaimwas notpresented. The cause had been tried in a remote judicial division inAlaska and movant indicated that no other lawyerwas available in the division and shewas financiallyunable to obtain legal assistance from a 

### lawyer in one of the other divisions." (The court granted relief from judgment on the motion made some three years after its entry.)

### Following the above quotation, atpage 367, Professor Moore refers to the question of failure of counsel to properly handle a case and states: "InL. P. Steuart, - 

### Inc. 

### v. 

### - Matthews (329F2d. 234); pyaintiff's case was dismissed for failure to prosecute due to the neglect of counsel. Twoyears later, through different counsel,plaintiff filed a motion to vacate the judgment. In support of the motion were an affidavit from former counsel to the effect that he had been beset with personal problems, related to the illness of his wife and the death of his parents, and an affidavit of plaintiff to the effect that he had made

'numerous inquiries' of former counsel,but that he had 'refused to answer such inquiries,' and from time to time assured plaintiff that the 'casewas proceeding and that settlement of itwould be made "soon."' The district courtdenied themotion. The courtof appeals reversed,holding that under the circumstances the district courthad abused its discretion in denying relief under Rule 60(b)(6). Judge Edgerton observed: "'Clause (1)of Rule 60(b) is not and clause (6)isbroad enouqh to permit relief when as

. . 

### in this case ~ersonal ~;oblemsof counsel cause 

## - him grozly to n- 

# aclient's 

## -- case and mislead theclient.'" (Underscoringadded.) United States v. Cirami (1977), 563 F.2d 26 (2d. Cir.) quoted from

### - L. - 

### P. Steuart, 

### - Inc. and Professor Moore in reaching the conclusion that the attorney's mental disorder which induced him both to neglecthis duties and to assure his client that he was attending to them,was a sufficient basis for granting relief under clause (6)as "other reason justifying relief," This conclusion is consistent with Klapporttv. United States (1949), 335 U.S. 601, 69 S.Ct. 384, 

### 93L.Ed. 266, inwhich the Supreme Court determined that the absence or unavailability of counsel which is unavoidable should support relief from a judgment. In addition, this Court has pointed out that the degree of prejudice resulting to other parties is a factor to beconsidered. Ming v. District Court (1970), 155 Mont. 84, 466 P.2d 907. Here, the facts set forth in the Aetna affidavits indicate a situation where counsel for Aetna, because of emotional problems, was unable to adequately defend the rights of his clients before and during trial. The affidavits indicate a failure to introduce factual evidence, to prepare and submit findings and conclusions,and to keep the client apprised of the status of the case. All of thesemay also have contributed to the facts upon which the DistrictCourt concluded that punitive damages were appropriate because of the action and lack of action on the part of Aetna. Under these circumstances,equity does require that the District Court hold a hearing and determine if under all the facts, it isproper to vacate the judgment and have a trial on the merits in order to allowAetna to have its day in court. Rule 60 relief is appropriate only where the party can demonstrate that it has a meritorious defense. Marshall v. Monroe & Sons, Inc. (6thCir. 1980), 615 F.2d 1156. Aetna's motions and affidavit set out a number of defenses which are claimed to be available and also facts sufficient to support such defenses. As trial counsel will recognize, in the interestof clarity,we have not referred to all of the motions and rulings, and have limited our reference to the essential elements. The procedure was further confused by the conditional notice of appeal filed by Aetna on December 24. This, of course, raised the question of the jurisdiction of the District Court to make any further orders. 

### By such conditionalnotices of appeal,Aetna attempted to take anappeal from the November 6 judgment should itbe determined to be final,and in part stated: 

# ".

.

# . files this conditional notice of appeal in the event the Supreme Court of Montana determines thatNovember 6, 1980, was indeed the date of final judgment entered by the aboveentitled court in this action." Because the notices of appeal were conditioned upon an action to be taken by this Court at some undetermined time in the future, the notices were ineffective. We hold that the stated conditional notices of appealwere totally ineffective and may be disregarded. As a result, the notice of appeal upon which the present appeal by Aetna is based is the January 9, 1981,notice of appeal which did cover the final judgment,order awarding attorney's fees, and order denying post-trial motions as well as the judgment of November 6, 1980. IV. Aetna contends that the Bennett deposition was not admissibleunder Rule 32(a)(3), M.R.Civ.P., in the absence of a showing that Bennett was not available. Aetna argues that because the deposition was wrongly admitted, there was no competent evidence to support a case in favor of Bennett againstAetna and requests that the Bennett complaint be dismissed. Bennett argues that Rule 32(a)(3)(D) provides that a trial judgemay admit a deposition if exceptional circumstances exist which make it desirable in the interests of justice to allow the deposition. We do not find it necessary to consider the numerous cases cited in support of both views. In this instance, the District Court concluded that because of themany hearings prior to trial and the many presentationsmade to the court that the case would 

### be

### submitted on deposition and agreed statements of facts, the objection to the introduction of the deposition was overruled. No facts are set forthwhich suggest that the District Court

was in error in reaching this decision. We affirm the court's decision to admit the Bennett deposition in evidence in its entirety. 

## v. Did theAetna bond encompass the penalties in the amount of $4,176.48 for which plaintiff carpenters sought recovery? Aetna contends that its bond did not specifically provide for penalties and therefore thatAetna can be required to pay only wages as distinguished from penalties for late payment of wages. In substance the bond provides that if Hoselton shallpromptly make payments to all claimants for all labor and material used then the obligation is to be void. Otherwise, as in this case,Aetna agrees with Bennett that every claimant "whohas not been paid in full" before the expiration of 90days after the date on which the labor was performed,may sue on this bond "for such sum or sums as may be justly due claimant." The District Court determined that the penalties were justly due to plaintiff carpenters under their written agreements. Such obligations come under the express provisions of the bond. There is no restriction in the bond which limits Aetna's liability in the manner suggested. We approve the holding of the District Court.

We affirm the judgment of the District Court as contained in its judgment of November 6, 1980,and its order determining fees of December 22, 

### 1980, subject to the following: The order of the DistrictCourt dated December 31, 1980,denying the Rule 60motion of Aetna is vacated and theDistrictCourt is instructed tohold such hearings and take such other steps as it finds tobe appropriate inorder to considerAetna's Rule moti .on on itsmerits.

WeConcur: 

# ad $c 

# &b,,reDO Chief Justice

JusticesMr. Justice Frank B. Morrison, Jr., dissenting: Judgment in this case was entered by the District Court

on November 6, 1980. The attorney's fee issue was not completed until December 22, 1980. Had an appeal been taken from the November 

### 6 judgment 

### Ihave no doubt that this Court would have overruled a motion to dismiss the appeal as premature. Our holding surely would have been that the judgment became finalNovember 6 and the notice of appeal filed from that judgmentwould be effective. Here, the majority attempts to fashion a rule to suit its purpose in

an attempt to fashion an equitable result at the expense of

an orderly and stable civil procedure. Themajority, knowing its position is weak, attempts to distinguishbetween Rule 60and Rule 59 motions. Themajority mistakenly relies upon 7 MOORE'S FEDERAL PRACTICE 11 60.18[81, at 216.1 (2ded. 1979). Rule 60(c) of the Montana Rules of Civil Procedureprovides that Rule 60motions shallbe heard and determined within the times provided by Rule 59. There is no federal counterpart to Rule 60(c). Therefore, MOORE'S is inapplicable. I have always felt that litigants should "have their day in court" and that liberal construction should be given to procedural rules in order that this end might be facilitated. However, to achieve the result here wrought by the majority, requires a rewriting of the rules. This Iwill not do. The District Court should be *

### Mr. Justice John C. 

### Sheehy, concurring and dissenting:

I concur in the affirmance of the judgmentof the District Court. I

### dissent respectfully from the remand for reconsideration of the Rule 60motions. Principally, I see no reason to hold the District Court in error where the problems surrounding the Rule 60motions

were created through the disregard by Aetna's counsel of the rudimentary rules of civilprocedure in post-trial proceedings,

as governed by the Montana practice. It is correctly stated in the majority opinion that

onceAetna's counsel failed to notice up his Rule 59 motions for new trial or amendment of judgmentwithin 10 

### days (Rule 59(d)) the "courtcould not consider the matter further." The reason is set out in our earlier case of Leitheiser

### v. Montana State Prison (1973),161Mont. 343, 348, 505 P.2d 1203, 1206,where we said: "Thedistrict court was without jurisdiction to grant 

### - or deny a motion for a new trial on March 2, 1972. By operation of the selfexecuting provision of Rule 59(d),M.R.Civ.P., the motion for a new trialwas 'deemeddenied'

('deemed'in this constructionhas been held to be synonymouswith 'considered', 'determined', or 'adjudged')on February 18, 1972." And further: 

# ".

. . However, once the self-executing denial of a motion under Rule 59(d)becomes effective, any subsequent order by the district court concerning that motion is outside the district court's jurisdiction and, consequently, null, void, and without effect." 161Mont. at 348. The

### majority opinion ignores, however, the provision of Rule 60(c) that is equally as mandatory and compelling as Rule 59(d) 

# . Rule 60(c)provides: 

### "Rule



# -- 60(c). 

## -- Time for hearing and determining motions. Motions provided by subdivisions (a)

### and (b)of this rule shallbe heard and determined within the times provided by Rule 59 in the case of motions for new trials and amendment of judgment.

### " The overbearing force of Rule 60(c)which is unique to Montana rules (thereis no federal counterpart in Rule 60, F.R.Civ.P.) is that motions under Rule 60, such as this case features,are subject to the same limitations under our practice as motions under Rule 59 (thereis no federal counterpart to the notice and hearing provisions in our Rule 59, in Rule 59, F.R.Civ.P.). Since this is true, the District Court here properly decided under Leitheiser that ithad lost jurisdiction to hear the first Rule 60(b)motion filed by Aetna's counsel. The first motion was "deemed denied," and so the motion had been "determined"in the legal sense. Time and again, in opinions, in seminars, in speeches by members of this Courtbefore meetings of the State Bar,

we have stressed the jurisdictional traps that lie in the post-trial motions, and have urged counselpracticing in the trial courts of this state to know and observe the same. It

was not any act,bent or proclivity of the district judge that created Aetna's problem about its Rule 60(b)motion. It was the failure of Aetna's counsel to follow the plain provisions of Rules 59 and 60. I am unable to explain to Leitheiser, to Armstrong (c.f. 164Mont. 187, 196, 520 P.2d 1081, 1086), to Marvel Brute Steel Bldg. ((1980),c.f. Mont. - 

### , 616 

### P.2d 380, 382, 37 

### St.Rep. 1670), and to a host of 

### other litigantswhy Rule 59 deprived their district courts of jurisdiction to act,but Rule 60 does not operate in the same way 

### here. I 

### find no satisfactory explanation in themajority opinion.

### In a recentnewspaper poll among the statebar members,

we learned that the divagations of this Court from established precedent raised a problem for state lawyers. They reported that every District Court decision should be appealed to avoid malpractice claims,because the loser in the District Courtmay benefit from the planetary decisions of this Court. We have here,perhaps, an example. Themajority opinion does not distinguish between the firstRule 60(b)motion ofAetna's counsel and the second Rule 60(b) motion, again filed before final judgment, that the District Court labelled a "bootstrapmotion." The second Rule 60motion was filed by Aetna's counsel

on December 12, 1980. It is not 

### -a motion addressed to the judgment, final orpartial. It is titled "Rule 60Motion for Relief from Final Order or Proceeding." Itmoves the District Court for an order "relieving the defendant,Aetna Casualty Company, from its omission to notice the hearing of defendant's consolidated motions for a new trial, to alter

or amend judgment and for relief from the court's findings of fact, conclusions of law, and judgment,and othermotions filed onNovember 17, 1980, within ten (10) days after the motion had been served

# . . ."upon the grounds that ~etna's counsel had failed to notice the motions due to "mistake, inadvertence, excusable neglect or for other reasons justifying relief or through an error arising from oversight or omission." The second Rule 60

### motion depends entirely upon the omissionofAetna's counsel to notice up his post-trial motions for hearing. His affidavit in supportdoes not constitute a sufficient excuse, inmy judgment, to support the grant of his motion. (Iwill advert to his affidavit later). It is insufficient in view of the numerous cases

### that have come out of this Court that place a strict duty on counsel to follow the notice and hearing provisions of Rule 59. 

### No diligent counsel should now be able to claim he was
unaware of the required procedures. Diligence is required of counsel in the representation of clients. The second Rule 60motion asked the District Court to do something itwas powerless to do under our decisions. The court could not resurrect the Rule 59 or 60motions which

were dead, functus officio. The District Court had lost jurisdiction. Worse, now this Court has opened a way to undermine thewhole structure of our earlier decisions regarding Rule 59 or 60motions which are "deemeddenied." So a lawyer in the future does fail to notice up or procure


### a hearing within 10 days of his Rule 59 or 60motions. No matter, he can now file another motion under Rule 60, saying he forgot, or didn't know. He has a viable motion under this majority opinion. In addition, the majority has succeeded in circumventing Rule 6(b)

### of the Montana Rules of Civil Procedure, which provides that a courtmay not extend the time for taking action under Rule 60,except to the extent and under the conditions stated in the rule. Be that as itmay, the bootstrap Rule 60(b)motion should be denied as a matter of law,assuming it was otherwise timely. Its basis is the claimed excusable neglect of Aetna's counsel. His affidavit in support of his bootstrap motion recites that at the time he fashioned the first motions, he was heavily burdened with other matters, including the responsibility for 150 files in active litigation,

numerous pieces of correspondence,preparing and filing a 

### reply brief onbehalf of the state in United States v.Montana then on appeal in the United States Supreme Court, and a necessary trip to Washington, D.C. in connection with that case; and "numerousother matters which precluded his giving this matter the attention that it deserved." In Link v. Wabash Railroad Co. (1962),370 U.S. 626, 633-634, 82 S.Ct. 1386, 1390, 8 L.Ed.2d 734, 740, the high court imputed the neglect of the attorney to the party and refused Rule 60 relief because of counsel's unexcused conduct. The court declared that since the client voluntarily chose the attorney as his representative in the action, the party could not avoid the consequences of the acts and omissions of his freely selected agent. In Schwarz v. United States

(2dCir. 1967), 384 F.2d 833, 836, the court of appeals upheld the denial of a motion for relief where the attorney failed to prosecute his client's case, occasioned by the fact that the attorney had undertaken to handle more cases than he could manage and had neglected plaintiff's case. In Kostenbauder 

### v. Secretary of H.E.W. (U.S.D.C. Md. Pa.2 1976), 71 F.R.D. 449, 21 F.R.Serv.2d 1186, relief from summary judgmentwas denied where the previous attorney failed to file opposition briefs, and it was claimed that the attorney

was running for political office, had a large caseload and had lost a key employee. In essence, the courts are saying that a large and busy practice is the norm for trial attorneys and that such a business does not justify relief from ordinary neglect. In his affidavit supporting his bootstrap motion, Aetna's counsel does not accuse himself of gross negligence. If he could state gross negligence, perhaps his case would

come under Rule 60(b)(6), the residual clause of that rule.Clause 60(b)(l), covers excusable neglect;presumably clause 60(b)(6) covers inexcusable negligence, since the provisions of clause (b)(1)and (b)(6)are mutually exclusive. Since Aetna's counsel did not claim gross negligence,he cannot rely upon clause (b) (6)

# . It should be remembered that through all of this litigation, Aetna has been represented by two independent law firms, each respectively looking out for the interests of Aetna as against Donald Bennett and all of the plaintiffs. One law firm represented defendant M. D. O'Connell and Aetna Casualty Company where their interests coincided (Aetna claimed to have an indemnity right against M. D. O'Connell for any losses sustained in this litigation). A separate law firm representedAetna as a defendant against all of the plaintiffs, against defendantDonald Bennett, and also against

### M. D. O'Connell on the indemnity cross-claim. As to the issues involved here in the successful cross-claim of Donald Bennett, the interests of these two law firms coincided in their representation of Aetna. Each made Rule 59 motions. Each failed to notice up or to procure a hearing within the ten day period required by Rule 59(d). The majority opinion purports to have found an escape hatch as 

### to the first Rule 60motion of Aetna, the one based

on the illness of its attorney. The judgment for Bennett, the majority conclude, was not final until the award of attorneys feeswas decided by the District Court on December 22, 1980. On this basis, the majority resurrect the first Rule 60motion and send it back for reconsideration. Again the majority ignore the provisions of Rule 60(c), which provide that motions under the rule "shallbe heard and determined within the times provided by Rule 

### 59." Themajority concede that motions under Rule 59 may be made prior to final judgment. They apparently see no illogic in holding that under Rule 59 a motion for relief from a prejudgment order can be taken by a party while denying that

sameprocedure under Rule 60. The contention that the November 6, 1980 judgment of the District Court was not finalwas an afterthought by Aetnak counsel. Itwas never raised in the pretrial motions

or on the arguments thereon until after counsel for the successful parties moved the court to fix attorneys fees. Then a light turned on, and there came a flurry of new motions for reconsideration under Rules 59 and 60 on the grounds that the earliermotions, which -- - they - had filed,were "premature". Having once proceeded undiligently to deprive the District Court of the power to hear their Rule 59 and 60motions, they now proceeded diligently but unwittingly to deprive the District Court of jurisdiction to hear their Rule 60motion after the judgment became final on December 22, 1980. (Thecourt gave oral notice of its attorneys fees decision on December 17, 1980,but the order was not entered and served until December 22, 1980.) On December 22, 1980, one of Aetna's law firms filed a "conditional notice of appeal 

### by Aetna Casualty and Surety Company, from the judgment entered on November 6, 1980, the summary denial of their motions for new trial or to amend the findingsof fact and conclusions of law dated November 28, 1980, and the court's awarding attorney fees on December 17, 1980." On December 24, 1980, the other of Aetna's law firms filed a conditional notice of appeal on behalf of Aetna Casualty and Surety Company, from the judgment of November

### 6, 1980, and supplementedby its award of attorney fees on December 17, 1980,on the ground that itwanted "to insure that its rights on appeal had been preserved and perfected" in the event that the Supreme Court determined thatNovember 6, 1980 was indeed the date of the final judgment. On December 26, 1980, the counselwho had filed the second conditional notice of appeal, having found that he had not referred to the denial of the post-trial motions in that notice, filed an "amended conditional notice of appeal" from the judgment entered on November 6, 

### 1980, supplemented by the award of attorneys fees on December 17, 1980,and the court orders denying their motions filed pursuant to Rules 52, 59 and 60. Again the notice stated that it was conditional upon whether this Court decided that the November 16, 1980 datewas indeed the date of final judgment but thatAetna wanted "to insure that its rights on appeal had been preserved and perfected." Each law firm subsequently filed,on January 5 and January 9, 1981, ordinary unconditional notices of appeal. The "conditional"notices of appealwhich were filed by - 

### Aetna prevented the District Court from considering further the Rule 60motion based on the illness of the attorney after the judgment became final on December 22, 1980. There is no such animal in our procedure as a "conditional" notice of appeal. Either the District Court has jurisdiction of the cause or the Supreme Court has jurisdiction of the

cause. Jurisdiction transfers to the SupremeCourt from a District Court upon the filing of a notice of appeal, and thereafter the DistrictCourt is powerless to take any substantiveactionwith respect to the cause. Churchhillv. Holly Sugar Corp. (1981), 

### -Mont. - 

## , 629 P.2d 753, 

### 760,

### 38 St.Rep. 860; State Etc. v. District Court, Etc. (1980),

-- 

### Mont

# . - 

### , 614P.2d 1050, 1051-52, 37 St.Rep. 1275; Northern Plains,Etc. v. Bd. of H. & 

### Envir. Sciences (1979),

-- 

### Mont

# . - 

## , 603 P.2d 684, 688, 36 St.Rep. 2174;McCormick

v. McCormick (1975), 168 Mont. 136, 138, 541 P.2d 765, 766. The "condition"laid down in the conditional notices of appeal, that iswhether the right of Aetna to consideration of its Rule 59 and 60motions depended onwhether the judgment was final onNovember 8, 1980, is no condition at all. Aetna's counsel had misread the law. They had lost the right to any considerationof the Rule 59 and 60motions by virtue of the time and notice provisions of Rule 59(d) and 60(c). The bootstrap motion under Rule 60 was insufficient

on its face. The intention of Aetna that the "conditional" notices of appealperfected and preserved its rights in this Court ismanifested from the instruments themselves. The majority opinion ignores thismanifest intention. An appeal is taken by filing a notice of appeal in the district court (Rule 4(a),M.R.App.Civ.P.). Itmust specify the party or parties taking the appeal, and designate the judgment or order appealed from. (Rule4(c),M.R.App.Civ.P.) And finally,by filing the "conditional"notices in compliance with the rules, Aetna fulfilled its desire "to insure that its rights on appeal have been preserved and perfected." A notice of appeal is just that, a notice of appeal. Any other label attached to it is unimportant. The District Court fromwhich the appeal had been taken was divested of jurisdiction under our case law. Before we leave this matter finally, it should be noted that the District Court was not entirely out in left field in stating that under Montana law, attorneys fees area matter of costs and not of special damages recoverable in themain action. In Kintner v. Harr (1965), 146 Mont. 461, 480, 408 P.2d 487, 498, this Court states broadly that counsel fees

are not "reasonableand necessary expenses as are taxable according to the course and practice of the court." (See section 25-10-201(9)

### ,MCA.) Yet we have never overruled Bovee v. Helland (1916), 52 Mont. 151, 155, 156 P. 416, 417, to the effect that if the parties by contract or stipulation intend that attorneys fees are to be paid to the prevailing party as part of the costs or "in addition to other costs," then such attorneys fees shall be assessed by the court as a part of the costs. In other words, under Bovee, the judgment is final before the costs are assessed, and the amount of costs to be awarded is not intrinsic to the finality of the judgment. (Suchfees canbe attacked in the manner provided for objections to items of costs. Section 25-10-502,MCA.) In this case, the language of the security agreement that gives right to attorneys fees for the successful parties is "Theobligee shall not be liable for the payment of any costs or expenses of any such suit." The problem of whether attorneys fees are costs or a part of the judgment depends, in my opinion, on whether they are of the nature of special damages recoverableupon pleadings and proof or part 

### of the incidental expenses of suit. This

seems to be the tenor of Bovee, supra. It is not an easy question to decide. It is certainly vexing the federal courts. See White v. New Hampshire Dept. of Empl. Sec.

(Decided March 2, 1382, slip opinion). For the reasons foregoing, therefore, Iwould affirm the ~istrict Court judgment.

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