No. 94-394

IN THE SUPREME COURT OF THE STATE OF MONTANA

1995

MONTANA MINING PROPERTIES, INC.,

a Montana corporation,

Plaintiff and Appellant,

ASARCO, INC., a New Jersey

corporation, DENNIS R. WASHINGTON,

MONTANA RESOURCES, INC., a Montana

corporation, and MONTANA RESOURCES,

a General Partnership,

Defendants and Respondents.

APPEAL FROM: District Court of the Second Judicial District,

In and for the County of Silver Bow,

The Honorable Robert S. Keller, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

R.D. Corette, John T. Johnston, Corette, Pohlman,

Allen, Black & Carlson, Butte, Montana

For Respondents:

Ronald B. MacDonald, Darla J. Keck, Datsopoulos,

MacDonald & Lind, Missoula, Montana

Filed:

Submitted on Briefs: January 12, 1995

Decided: April 11, 1995
Justice James C. Nelson delivered the Opinion of the Court.

Plaintiff and Appellant, Montana Mining Properties

(hereinafter MMP), appeals from a decision and order of the Second

Judicial District Court, Silver Bow County, granting Defendants'

and Respondents' Dennis R. Washington, Montana Resources, Inc. and

Montana Resources, a general partnership (hereinafter Washington),

motion for summary judgment. We reverse and remand for trial.

MMP raises four issues on appeal, however, we shall only

address one issue, as that issue is dispositive. We state the

issue as follows:

1 . Whether the District Court erred in granting

Washington's motion for summary judgment where

genuine issues of material fact exist regarding

MMP's alleged breach of contract, and regarding

Washington's waiver of the claimed right to

terminate the contract.

Washington and MMP entered into a contract dated January 27,

1987, which was executed in June 1987, wherein Washington agreed to

sell, and MMP to buy two mining properties and equipment located in

Butte, Montana. The first property, known as the "Main Butte

Property," was sold to MMP for three million dollars in cash. The

parties agree that this sum has been paid. The second property,

known as the "North Butte Property," sold for $500,000, and the

equipment on the property was sold for three million dollars. The

contract provided that half of the price of the equipment (1.5

million dollars) was to be paid in cash, and there is no dispute

that this part of the contract was performed.

The dispute arose from the agreement provisions concerning the

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$500,000 payment for the "North Butte Property" and the 1.5 million

dollar payment, which represents the balance for the price of the

equipment. According to the agreement, these amounts were to be

paid to Washington in:

[Ul nrestricted free trading common stock of a corporation

Or corporations, which have directly or indirectly

through a subsidiary corporation, an interest in any part

of the property referred to under this Agreement. .

"Butte Mining PLC," was the public company from which the

stock was to be issued. Butte Mining PLC was organized and

promoted in London by Clive J. Smith who was one of four joint

venturers who controlled MMP. The joint venture used MMP as a

vehicle to acquire mining properties that were then transferred to

Butte Mining PLC. Shares in this company were then sold in public

stock offerings.

Payment for the "North Butte Property" was to be made "in a

timely fashion" but in no event was the purchase payment to exceed

ten months from the date of the agreement. Payment for the

equipment was to be made "on or before the 21st day of September,

1987. " The agreement expressly provided that time was of the

essence with respect to the payments, and it contained an express

termination clause, wherein Washington was entitled to terminate

the contract in the event of default. The agreement granted to MMP

a "first right of refusal to acquire an interest in any mineral

property owned by Washington in the Butte Mining District."

On October 8, 1987, Washington received a facsimile from

Bryant & Company, an accounting firm located in Jersey, Channel

islands. The facsimile indicated that Bryant & Company had been

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instructed to release to Washington's order, 1.5 million dollars

worth of Butte Mining PLC shares, representing the balance due on

the equipment. The facsimile further noted that Bryant & Company

was awaiting Washington's instructions with respect to the stock.

On November 6, 1987, Bryant & Company sent Washington another

facsimile advising Washington that it was holding $500,000 worth of

Butte Mining PLC shares to Washington's order. This stock

represented the $500,000 due under the contract for the land.

Washington does not deny receiving these facsimiles, and in

fact acknowledged by return correspondence that Bryant & Company

was holding the stock until it received further instructions from

Washington's attorney. Washington maintains however, that he was

surprised by this turn of events as he had never authorized Bryant

& Company to hold his stock. Nevertheless, Washington alleges he

was not initially concerned about Bryant & Company holding his

stock, as he believed the stock certificates would be immediately

forwarded to him for his disposition. MMP alleges that Washington,

through his attorney, had agreed that MMP was to deliver the stock

to Bryant & Company. MMP further argues that Washington did not

object to the method and manner of the stock delivery between

November 6, 1987 and March 14, 1989. Washington, however, argues

that his attorney contacted Bryant & Company and Mr. Smith and

informed them to sell the stock. Washington points to a letter

dated April 18, 1988, wherein Washington's attorney sent a letter

to Mr. Smith in care of Bryant & Company stating that Washington

did want the shares of stock sold.

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Washington maintains that he never gained possession, dominion

or control over the stock. In addition to the above evidence,

Washington testified that he was never sent any documents regularly

disseminated to Butte Mining PLC shareholders, nor given dominion

over the shares. Washington alleges that he was unable to sell the

shares because Mr. Smith retained control over the escrow where the

stock was held. Washington argues that this evidence taken

together demonstrates that the shares held by Bryant & Company were

not under his control, and accordingly he was not paid the monies

due him under the terms of the contract. Accordingly, Washington

concluded that MMP was in breach of the contract, and filed suit

against MMP on March 15, 1989. Washington also served MMP with a

Notice of Default notifying MMP that unless it cured the alleged

default within 30 days, Washington had the right to cancel the

agreement. MMP answered Washington's complaint and denied the

allegations that it had breached the contract. MMP maintained that

its deliveries of stock to the holding company constituted valid

deliveries under the contract.

On April 25, 1989, Washington publicly announced he had

entered into a contract with ASARCO, Inc. for the sale of certain

mining properties located in Butte to ASARCO. On or about April

26, 1989, Washington sent MMP a document entitled "Notice of Sale

and First Right of Refusal." This document noted the offer of

purchase Washington had received from ASARCO, and indicated that

MMP had thirty days to notify Washington whether MMP wished to

exercise its first refusal right. In a letter accompanying the

5
above offer, Washington requested that MMP "formally waive its

first right of refusal in and to the copper mining properties."

On May 10, 1989, MMP filed an action in the District Court

alleging that Washington had breached the January 27, 1987

agreement because Washington had entered into an agreement to sell

mineral property in the Butte Mining District without providing MMP

an opportunity to exercise its first right of refusal. MMP sought

money damages and injunctive relief barring the closing of the

contract between Washington and ASARCO. The District Court held a

hearing regarding MMP's request for an injunction to determine the

primary issue of whether MMP had breached the contract. Washington

argued that MMP had violated the terms of the contract, and

therefore he was entitled to terminate the contract, and MMP was

not entitled to enforce its first right of refusal. In a

memorandum opinion and order dated May 26, 1989, the District Court

found MMP had not validly transferred the Butte Mining PLC shares

to Washington, that Washington did not have dominion or control

over the stock and therefore MMP had not validly made payments

under the contract. The court therefore concluded that MMP had

breached the contract, and denied MMP's request for a preliminary

injunction.

On June 22, 1989, MMP filed a motion to disqualify the

District Court Judge, and moved to vacate the District Court's

memorandum opinion and order. We issued a decision concerning

MMP'S motion to vacate the order denying injunctive relief in our

order dated December 21, 1989. In that order, we dismissed MMP's

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appeal of the District Court's order denying injunctive relief

because MMP's motion was not timely filed and the notice of appeal

relative to the District Court's order was also not timely filed.

Our order of December 21, 1989, was final as to any further issue

concerning the District Court's denial of injunctive relief.

Regarding MMP's motion to disqualify the presiding judge, we

issued a writ of supervisory control requiring that all further

proceedings be assigned to another district judge who had not

previously participated in the case. Washington v. Montana Min.

Properties (1990), 243 Mont. 509, 795 P.2d 460.

Subsequently, another district court judge assumed

jurisdiction, and on August 2, 1991, Washington filed a motion for

summary judgment primarily asserting that MMP had breached the

agreement because it failed to deliver the stock. After

considering the parties' briefs and arguments, the District Court

granted Washington's motion for summary judgment. MMP appeals from

this order.

This court's standard of review in appeals from a summary

judgment is de nova. Therefore, we review a summary judgment

utilizing the same criteria initially used by the District Court

under Rule 56(c), M.R.Civ.P. Brinkman & Lenon v. P & D Land

Enterprises (1994), 263 Mont. 238, 241, 867 P.2d 1112, 1114.

According to Rule 56(c), M.R.Civ.P., summary judgment may only be

rendered when there is no genuine issue as to any material fact,

and the moving party is entitled to judgment as a matter of law.

The moving party has the initial burden of demonstrating that

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there are no genuine issues of material fact. Morton v. M-W-M,

Inc. (19941, 263 Mont. 245, 249, 868 P.2d 576, 579. If the moving

party is able to meet this burden of proof, the non-moving party

must then demonstrate the existence of a genuine issue of material

fact. Morton, 868 P.2d at 579. Under Rule 56(e), M.R.Civ.P., the

non-moving party may not rest upon the mere allegations or denials

of the adverse party's pleading, but must demonstrate by its

response, affidavits, or otherwise that there is a genuine issue

for trial. Any factual evidence which can be drawn from the record

must be resolved in favor of the non-moving party. D'Agostino v.

Swanson (1990), 240 Mont. 435, 442, 784 P.Zd 919, 924.

1n the instant case, after examining the record in a light

most favorable to MMP, we conclude there is a genuine issue of

material fact concerning whether the parties agreed to Bryant &

Company holding the stock.

In granting Washington's motion for summary judgment, the

District Court concluded that MMP materially breached the contract

by failing to deliver the stock to Washington. The court stated in

its order:

The facts clearly show that Plaintiff materially

breached the contract with the Washington defendants.

The delivery by Plaintiff to the Washington defendants of

shares of unrestricted free-trading stock in Butte Mining

P.L.C. was the essence of the consideration. The facts

are undisputed that Plaintiff issued the shares and had

them held by Bryant & Company; that the Washington

defendants and Plaintiffs sent correspondence back and

forth over these shares; and that one of Plaintiff's

officers, Clive Smith had the shares held in a trust

naming his daughters as beneficiaries. The facts are

also undisputed that the Washington defendants were never

issued stock certificates nor given any documents

regularly disseminated to Butte Mining P.L.C.

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shareholders, and the Washington defendants' orders to

sell the shares were never complied with. The Washington

defendants lacked dominion and control over these shares.

Overall, there is no dispute that the Washington

defendants did not receive their shares of unrestricted

free trading stock by the September-November, 1987

deadlines as required under the contract.

However, upon review of the record, we conclude that the facts

concerning whether MMP's delivery of the stock to Bryant & Company

constituted a material breach are in dispute. The District Court

ignored the conflicting testimony of the parties concerning whether

the parties agreed to Bryant & Company holding the stock.

Mr. Smith argues that he fulfilled his obligations under the

contract. He maintains that Washington, through his attorney

Milton Datsopoulos, agreed that MMP was to deliver the stock to

Bryant & Company. Mr. Smith also notes that the contract does not

specify or define the manner or method in which the stock was to be

delivered. Washington and his attorney, however, testified that

neither had agreed that the stock would be delivered to Bryant &

Company.

This dispute is in our view sufficient to establish an issue

concerning whether MMP failed to deliver the stock. "It is not the

function of summary judgment to decide that issue but simply to

establish whether an issue exists that required determination and

resolution at trial." Baylor v. Jacobson 119761, 170 Mont. 234,

242, 552 P.2d 55, 59. Accordingly, after reviewing this evidence

as we must in favor of MMP, the non-moving party, we conclude that

a factual dispute exists concerning the delivery of the stock

thereby precluding summary judgment under Rule 56(c), M.R.Civ.P.

9
MMP also argues that Washington is precluded from a summary

judgment because a question of fact exists concerning whether

Washington waived his right to terminate the contract. MMP

suggests the following facts demonstrate the existence of a genuine

issue of material fact. We agree.

On March 14, 1989, Washington sent MMP a "Notice of Default,"

essentially asserting that MMP had defaulted under the terms of the

contract because it had failed to deliver the unrestricted free

trading stock. The notice granted MMP thirty days to correct the

alleged default. The next day, Washington filed a complaint

alleging that MMP had failed to deliver the payment of the

unrestricted stock as required by the agreement. Washington

requested relief in the alternative; either termination of the

contract or damages in the amount due under the contract. On April

26, 1989, Washington served MMP with a Notice of Sale and First

Right of Refusal, along with a letter requesting that MMP provide

a formal written waiver. The letter stated:

Although I prefer that your client provide formal written

waiver, I nevertheless felt an obligation to forward on

to Montana Mining Properties, Inc. the Notice of Sale and

First Right of Refusal for purposes of complying with

Section 6 of the Agreement dated January 21, 1987 .

Finally, on May 4, 1989, Washington informed MMP that he was

terminating the contract and withdrawing the Notice of Sale and

First Right of Refusal.

This sequence of events is not in dispute, however, it does

raise the question of whether Washington waived his right to

terminate the agreement. It is well established that waiver is the

1 0
voluntary relinquishment of a known right. McGregor v. Mommer

(1986), 220 Mont. 98, 110, 714 P.2d 536, 543. It is for the trier

of fact to determine whether an act is voluntary and the actor's

intent. McGresor, 714 P.2d at 544. Consequently, we conclude that

the sequence of events raise as an issue of fact Washington's

intent when he delivered the inconsistent documents, which, on the

one hand, appear to maintain that the contract was terminated by

breach, but on the other hand, appear to acknowledge the continuing

existence of the contractual right of first refusal.

upon review of the record, we conclude that there are material

fact issues that cannot be disposed of by summary judgment.

Accordinalv. we reverse and remand for further,01

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April 11, 1995

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

following named:

R. D. Corette, Esq. and Robert M. Carlson, Esq.

and John T. Johnston, Esq.

Corette, Pohlman, Allen, Black & Carlson

P.O. Box 509

Butte, MT 59703

Anthony F. Phillips, Esq.

Willkie, Farr & Gallagher

One Citicorp Center

153 E. 53rd St.

New York, NY 10022

Ronald B. MacDonald, Esq.

prepaid, to the

Datsopoulos, MacDonald & Lind, P.C.

201 W. Main, Central Square Bldg.

Missoula, MT 59802

Ross Richardson, Esq.

Henningsen, Vucurovich & Richardson

P.O. Box 399

Butte, MT 59071

Laura Hoguet, Esq.

White & Case

1155 Avenue of the Americas

New York, NY 10036

ED SMITH

CLERK OF THE SUPREME COURT

STATE OF MONTANA