DA 14-0458

IN THE SUPREME COURT OF THE STATE OF MONTANA

2015 MT 102

OMIMEX CANADA, LTD.,

 Plaintiff and Appellant,

 v.

STATE OF MONTANA,

DEPARTMENT OF REVENUE,

 Defendant and Appellee.

APPEAL FROM: District Court of the Second Judicial District,

In and For the County of Butte/Silver Bow, Cause No. DV-11-308

Honorable Brad Newman, Presiding Judge

COUNSEL OF RECORD:

For Appellant:

Jared M. Le Fevre, James P. Sites, Crowley Fleck PLLP, Billings,

Montana

For Appellee:

Courtney Jenkins, David R. Stewart, Special Assistant Attorneys General, 

State of Montana, Department of Revenue, Helena, Montana 

Submitted on Briefs: February 25, 2015

 Decided: April 14, 2015

Filed:

__________________________________________

Clerk

April 14 2015

Case Number: DA 14-0458
2

Justice Laurie McKinnon delivered the Opinion of the Court.

¶1 Omimex Canada, Ltd., (Omimex) appeals from an order of the Second Judicial 

District, Silver Bow County, granting partial summary judgment in favor of the State of 

Montana, Department of Revenue (DOR). We reverse.

¶2 The issue presented for review is whether the District Court erred when it 

concluded that a 2007 finding by the First Judicial District Court, Lewis and Clark 

County, precludes Omimex from litigating the issue of whether it operates “a single and 

continuous property.”

FACTUAL AND PROCEDURAL BACKGROUND

¶3 Omimex is an oil and gas exploration and production company which owns and 

operates oil and gas production property in Montana, including flow lines and gathering 

lines.1 Omimex presently contests DOR’s central assessment of its property for tax year 

2011. 

¶4 Pursuant to § 15-23-101(2), MCA, DOR centrally assesses “property owned by a 

corporation or other person operating a single and continuous property operated in more 

than one county or more than one state . . . .” Properties that are not centrally assessed 

are locally assessed on a county-by-county basis. Centrally assessed properties may be 

subject to classification as class nine property under § 15-6-141, MCA, and taxed at a 

rate of 12 percent of market value. Oil and gas production equipment is otherwise 

 

1 A description of Omimex’s property and operations may be found at Omimex Can., 

Ltd. v. State, 2008 MT 403, 347 Mont. 176, 201 P.3d 3 (Omimex I).
3

classified under § 15-6-138, MCA, as class eight property and subject to a tax rate of 1.5 

percent to 3 percent of market value.

¶5 For tax year 2004, DOR centrally assessed Omimex’s property and classified it 

under class nine. Omimex contested that assessment in the Lewis and Clark County 

District Court, claiming it did not operate “a single and continuous property,” and thus its 

properties should be locally assessed and subject to the lower tax rate under class eight. 

A bench trial was conducted before Judge Jeffrey Sherlock, who issued his Findings of 

Fact, Conclusions of Law, and Order on February 2, 2007. Judge Sherlock found that 

although Omimex’s properties were not physically connected, they operated as a single 

and continuous property because they were centrally managed by Omimex’s head office 

in Fort Worth, Texas. Judge Sherlock then addressed Omimex’s contention that its 

property should be classified under class eight, concluding that class eight “would apply 

only if the property were not centrally assessed. . . . Class eight property would be, in the 

view of the Court, all gas production equipment that was not centrally assessed.” Judge 

Sherlock concluded both central assessment and classification under class nine were 

proper. He then directed counsel for DOR to prepare a judgment incorporating his 

findings and conclusions. 

¶6 Omimex appealed. On appeal, this Court began by stating, “Regardless of 

whether Omimex’s property is centrally or locally assessed, its tax rate class is 

determined by the application of the physical attributes of Omimex’s Montana properties 

to the terms of the property classification statutes . . . .” Omimex I, ¶ 18. We looked to 

the definition of class nine property at § 15-6-141, MCA (2003), which included 
4

“centrally assessed natural gas companies having a major distribution system in this state 

. . . .” Omimex I, ¶ 20. We concluded that because Omimex did not have a major 

distribution system in the state, its property was not subject to classification under class 

nine, regardless of whether it was centrally assessed. Omimex I, ¶ 26. We therefore 

considered it unnecessary to address the District Court’s conclusion that central 

assessment was appropriate because Omimex operated a single and continuous property. 

Omimex I, ¶ 27. We reversed the judgment and remanded for entry of an amended 

judgment classifying the Omimex properties under class eight. Omimex I, ¶ 27. On 

remand, Judge Sherlock entered an amended judgment, vacating and superseding the 

earlier judgment.

¶7 In 2009, the Legislature amended § 15-6-141, MCA, deleting the phrase 

“companies having a major distribution system in this state,” and specifically including 

within class nine “common carrier pipeline[s]” and “pipeline carrier[s].” 2009 Mont. 

Laws 487. Section 15-23-101, MCA, was also amended to list common carrier pipelines 

and pipeline carriers among the types of property subject to central assessment. 2009 

Mont. Laws 487. The amendments did not alter the provision of § 15-23-101(2), MCA, 

requiring DOR to centrally assess properties operated as a single and continuous 

property.

¶8 For tax year 2011, DOR again centrally assessed Omimex’s property and 

classified it under class nine. Omimex filed a declaratory action in the Silver Bow 

County District Court, claiming it did not operate as a common carrier pipeline or a 

pipeline carrier. Omimex further argued it did not operate a single and continuous 
5

property, and thus did “not even meet the foundational statutory requirements for central 

assessment . . . .” DOR moved for partial summary judgment, arguing that Judge 

Sherlock had already determined during the previous litigation that Omimex operated a 

single and continuous property. DOR claimed the doctrine of issue preclusion barred

Omimex from relitigating the issue. 

¶9 In response, Omimex argued that issue preclusion was inapplicable because there 

was no final judgment on the merits. The judgment issued by Judge Sherlock was 

vacated on remand, and this Court did not reach the central assessment issue on appeal.

Omimex also submitted an affidavit by its vice president, Clark Storms, describing 

changes to Omimex’s personal property since tax year 2004. Storms said Omimex had 

drilled additional wells, rerouted the flow of gas from one of its fields, acquired 

additional oil production property, and upgraded several items of equipment. Omimex 

claimed central assessment may no longer be appropriate due to these changes.

¶10 The District Court granted partial summary judgment in favor of DOR, 

determining that our decision on appeal “did not reverse the trial court’s ruling that 

Omimex was properly subject to central assessment because it operated a single and 

continuous property . . . .” The District Court further concluded that Judge Sherlock’s 

amended judgment, which vacated the original judgment, “[did] nothing to undermine the 

finality of Judge Sherlock’s determination that Omimex operates a single and continuous 

property.” Omimex appealed the District Court’s order granting partial summary 

judgment. 
6

STANDARD OF REVIEW

¶11 We review a district court’s ruling on a motion for summary judgment de novo. 

Planned Parenthood v. State, 2015 MT 31, ¶ 11, 378 Mont. 151, 342 P.3d 684. 

Summary judgment is appropriate where there is no genuine issue as to any material fact 

and the movant is entitled to judgment as a matter of law. M. R. Civ. P. 56(c)(3).

DISCUSSION

¶12 1. Whether the District Court erred when it concluded that a 2007 finding by the 

First Judicial District Court, Lewis and Clark County, precludes Omimex from 

litigating the issue of whether it operates “a single and continuous property.”

¶13 Issue preclusion, also sometimes referred to as collateral estoppel, “‘bars the 

reopening of an issue that has been litigated and resolved in a prior suit.’” In re B.N.Y., 

2006 MT 34, ¶ 20, 331 Mont. 145, 130 P.3d 594 (quoting Kullick v. Skyline Homeowners 

Assn., 2003 MT 137, ¶ 18, 316 Mont. 146, 69 P.3d 225). The doctrine of issue preclusion

prevents litigants from reopening questions that were necessary to the determination of 

the prior action. Baltrusch v. Baltrusch, 2006 MT 51, ¶ 18, 331 Mont. 281, 130 P.3d 

1267. Courts apply the doctrine in order to prevent “incessant[] . . . piecemeal, collateral 

attacks against judgments.” Baltrusch, ¶ 15. Issue preclusion applies where the 

following four elements are satisfied: 

1. Was the issue decided in the prior adjudication identical to the issue 

raised in the action in question?

2. Was there a final judgment on the merits in the prior adjudication?

3. Was the party against whom preclusion is now asserted a party or in 

privity with a party to the prior adjudication? 

4. Was the party against whom preclusion is now asserted afforded a full 

and fair opportunity to litigate the issue which may be barred?
7

McDaniel v. State, 2009 MT 159, ¶ 28, 350 Mont. 422, 208 P.3d 817. There is no 

dispute that the parties in the present action are the same parties involved in the 2007 

litigation. Omimex contends that the remaining three elements of issue preclusion are not 

satisfied. 

¶14 Primarily, Omimex argues there was no final judgment on the merits regarding 

whether it operates a single and continuous property because Judge Sherlock’s 2007 

judgment was reversed and vacated on remand. DOR responds that although the 

judgment was vacated, the finding that Omimex operated a single and continuous 

property—upon which the judgment was based—was not. Issue preclusion bars a party 

from reopening matters necessary to the determination of the previous judgment. 

Baltrusch, ¶ 18; Haines Pipeline Constr. v. Montana Power Co., 265 Mont. 282, 288, 

876 P.2d 632, 636 (1994); Boyd v. First Interstate Bank, N.A., 253 Mont. 214, 218, 

833 P.2d 149, 151 (1992). In Omimex I, ¶ 27, we stated that it was not necessary to 

address the question of central assessment. The amended judgment, which vacated and 

superseded the previous judgment, was entered in accordance with Omimex I. Thus, 

although the finding that Omimex operated a single and continuous property may have 

been essential to the original judgment, it was not essential to our Opinion or to the 

amended judgment, and should not be afforded preclusive effect. Baltrusch, ¶ 18; Haines 

Pipeline Constr., 265 Mont. at 288, 876 P.2d at 636; Boyd, 253 Mont. at 218, 833 P.2d at 

151. 

¶15 Further, when a judgment is reversed, the “‘judgment cannot serve as the basis for 

a disposition on the grounds of res judicata or collateral estoppel [issue preclusion].’” 
8

Cal. Dept. of Soc. Servs. v. Thompson, 321 F.3d 835, 847 (9th Cir. 2003) (quoting 

Ornellas v. Oakley, 618 F.2d 1351, 1356 (9th Cir. 1980)). The judgment in the 2007 

litigation was three sentences long and stated that it was based upon Judge Sherlock’s 

previously-entered Findings of Fact, Conclusions of Law, and Order. The judgment itself 

added no substantive legal analysis. A determination that the judgment was vacated, but 

the extensive reasoning, findings, and conclusions upon which it wholly relied were not, 

would elevate form over substance. Moreover, to reverse and vacate a judgment, yet 

leave intact the findings and conclusions incorporated in that judgment, would lead to 

contradictory and unclear results. 

¶16 We next address whether Omimex was afforded a full and fair opportunity to 

litigate the issue in the previous action. Omimex argues it was not afforded a full and fair 

opportunity to litigate the question of whether it operates a single and continuous 

property because the issue was not conclusively decided on appeal. DOR cites a number 

of cases for the proposition that appellate review is not a required component of a full and 

fair opportunity to litigate. The cases cited, however, are those in which the party against 

whom preclusion was asserted never appealed from the first litigation. McDaniel, ¶ 40; 

Johnson v. Hamilton, 2003 MT 199, ¶ 15, 317 Mont. 24, 75 P.3d 778; Burgess v. State, 

237 Mont. 364, 365, 772 P.2d 1272, 1273 (1989). DOR also argues that our issue 

preclusion inquiry has never focused on whether the issue was addressed on appeal. In 

the cases cited by DOR as supporting examples, either no appeal was taken from the prior 

decision, Burgess, 237 Mont. at 365, 772 P.2d at 1273; Nasi v. State Dept. of Highways, 

231 Mont. 395, 396, 753 P.2d 327, 328 (1988), or the prior decision was squarely 
9

affirmed on appeal, Lindey’s v. Goodover, 264 Mont. 449, 453, 872 P.2d 764, 766 

(1994). 

¶17 Our issue preclusion analysis is instead focused on whether the parties had a full 

and fair opportunity to litigate the issue. E.g., McDaniel, ¶ 45; Burgess, 237 Mont. at 

366, 772 P.2d at 1273. Although we have adopted a relaxed requirement of finality for 

purposes of issue preclusion, with the result that a judgment may have preclusive effect 

even while an appeal is pending, Baltrusch, ¶ 21, a full and fair opportunity to litigate 

nevertheless includes the opportunity to pursue an appeal, Bell v. Dillard Dept. Stores, 

85 F.3d 1451, 1456-57 (10th Cir. 1996); Gray v. Lacke, 885 F.2d 399, 406 (7th Cir. 

1989); Monat v. State Farm Ins. Co., 677 N.W.2d 843, 847 (Mich. 2004).

2

 If a party has 

the opportunity, but chooses not to actually seek an appeal, issue preclusion may be 

applied. McDaniel, ¶ 40; Johnson, ¶ 15; Burgess, 237 Mont. at 365, 772 P.2d at 1273; 

Nasi, 231 Mont. at 396, 753 P.2d at 328. Where appellate review is unavailable,

however, issue preclusion should not be applied. See generally Restatement (Second) of 

Judgments § 28 cmt. a (1982). For that reason, “[i]f the appellate court upholds one of 

[the district court’s] determinations as sufficient and refuses to consider whether or not 

the other is sufficient and accordingly affirms the judgment, the judgment is conclusive 

as to the first determination,” but not the other. Restatement (Second) of Judgments § 27

cmt. o; see also People ex rel. Brown v. Tri-Union Seafoods, LLC, 171 Cal. App. 4th 

1549, 1574 (Cal. Ct. App. 2009) (“Where . . . a court of first instance renders its 

 

2

In Baltrusch, ¶ 20, we adopted the view that a judgment not regarded as final because 

of a pending appeal or motion may, nevertheless, have preclusive effect. In that circumstance, 

the judgment would cease to be final if it was in fact later set aside. Baltrusch, ¶ 21. 
10

judgment on alternative grounds and the reviewing court affirms on only one of those 

grounds, the grounds not considered are not conclusively established.”). 

¶18 Omimex did not forego the opportunity to seek review of the finding that it 

operated a single and continuous property. To the contrary, Omimex pursued its right to 

an appeal and specifically asked this Court to address the single and continuous property 

issue. Omimex I, ¶ 3. We considered it unnecessary to do so in the context of that 

appeal. Omimex I, ¶ 27. As a result, despite its diligence, Omimex was unable to obtain 

review of Judge Sherlock’s findings. Because we addressed only one of the issues raised 

in Omimex I, the other issues, including whether Omimex operated a single and 

continuous property, were not conclusively determined. See Restatement (Second) of 

Judgments § 27 cmt. o. Omimex is not precluded from now obtaining a determination of 

that issue.

¶19 Finally, Omimex argues that the property assessed in tax year 2011 is not identical 

to the property assessed in tax year 2004, and thus, genuine issues of material fact exist as 

to whether Omimex continues to operate a single and continuous property. Though the 

parties and the District Court have framed the issue as one of the existence of genuine 

issues of material fact on the single and continuous property issue, we find that this 

argument coincides with the first element of issue preclusion: whether the issue raised in 

the current litigation is “‘identical in all respects’” to the issue decided in the previous

litigation. Planned Parenthood, ¶ 23 (quoting Comm’r v. Sunnen, 333 U.S. 591, 

599-600, 68 S. Ct. 715, 720 (1948)). We recently addressed the identity of issues in 

Planned Parenthood, where we considered whether a previously-decided constitutional 
11

challenge to the 1995 version of a law precluded the State from defending a similar 

constitutional challenge to the 2011 and 2013 versions of that law. Planned Parenthood, 

¶ 2. We stated that although the same constitutional questions were raised in both the 

first and second suits, the laws being challenged were not substantively identical, and 

thus issue preclusion was inapplicable. Planned Parenthood, ¶¶ 15-17. 

¶20 Here, although the same question—whether Omimex operates a single and 

continuous property—has been raised in both the first and second suits, the property at 

issue has changed, just as the laws at issue had changed in Planned Parenthood. 

Omimex has drilled additional wells, diverted one of its gas lines, and acquired additional 

oil production properties. The 2007 litigation did not determine, and indeed could not 

have determined, whether these newly acquired properties are operated as a single and 

continuous property. The issue raised in the present litigation is therefore similar, but not 

identical in all respects to the issue raised in the 2007 litigation. Issue preclusion requires 

not just similarity, but identity. Planned Parenthood, ¶ 23. 

¶21 Further, we have previously observed that “each tax year is singular and 

self-contained.” Eagle Commc’ns v. Treasurer of Flathead Cnty., 211 Mont. 195, 203, 

685 P.2d 912, 916 (1984). DOR conducts a separate assessment and imposes a separate

tax for each year. See, e.g., § 15-1-212, MCA (referring to “centrally assessed property 

or industrial property that is assessed annually by the department”) and § 15-23-101, 

MCA (“The department shall centrally assess each year . . . .”). In the context of a 

requirement for annual assessment and valuation, and where Omimex has produced 
12

evidence of changes in the characteristics of its property, application of issue preclusion 

is not appropriate.

¶22 In treating the issue as one of whether genuine questions of material fact existed as 

to the single and continuous property issue, rather than as to whether the issue litigated in 

2007 was identical to the issue in the present litigation, the District Court concluded that 

Storm’s affidavit describing changes to Omimex’s property did not speak to whether

Omimex operated a single and continuous property. This characterization is accurate, but 

fails to account for the fact that the affidavit was submitted in response to a motion for 

partial summary judgment based on issue preclusion. Thus, the affidavit was not 

submitted to prove that Omimex did not operate a single and continuous property; it was 

submitted to prove that the issue of whether Omimex operated a single and continuous 

property in tax year 2004 was not identical to the issue of whether Omimex operated a 

single and continuous property in tax year 2011. Because the current litigation addresses 

a different tax year, and because Omimex has produced evidence that the characteristics 

of its property have changed, Omimex has demonstrated the existence of genuine 

questions of material fact regarding whether the issue in the current litigation is identical 

to the issue in the 2007 litigation, precluding summary judgment under 

M. R. Civ. P. 56(c)(3).

¶23 For the foregoing reasons, the Order of the District Court granting partial 

summary judgment in favor of DOR is reversed.

/S/ LAURIE McKINNON
13

We Concur:

/S/ MIKE McGRATH

/S/ MICHAEL E WHEAT

/S/ JAMES JEREMIAH SHEA

/S/ JIM RICE