NO. 89-329 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1989 

FINN and VIRGINIA WALSTAD; 

and NORDAK INDUSTRIES, U.S.A., INC., 6. 

Plaintiffs and Appellants, r',m : (3 P? 

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-vs- ;/ c.7 . yu <>--I a 

NORWEST RANK OF GREAT FALLS OR NORTHWESTERN . -, 

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BANK OF GREAT FALLS; THE ECONOMIC GROWTH COUNCIL ., J - I -1 <-, 

OF GREAT FALLS; and NORWEST INCORPORATED, a 

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rrt"' W Minnesota corporation, 7 1 n 7: 0 C 

Defendants and Respondents. 

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APPEAL FROM: District Court of the Eighth Judicial District, 

In and for the County of Cascade, 

The Honorable R. D. McPhillips, Judge presidinq. 

COUNSEL OF RECORD: 

For Appellant: 

Terry W. Mackey, Cheyenne, Wyoming 

Howard F. Strause, Great Falls, Montana 

For Respondent: 

Robert S. Vermillion; Smith, Baillie & Walsh, Great 

Falls, Montana (~conomic Growth Council, Cross-Appellant) 

James #, Poore, 111; Poore, Roth & Robinson, Butte, 

Montana (Norwest, etc) 

David L. Hashmall; Popham, Haik, Schnnbrich & Kaufman, 

Minneapolis, Minnesota (Norwest, etc) 

Filed: 

Submitted on Briefs: Oct. 20, 1989 

Clerk 
Justice Diane G. Barz delivered the Opinion of the Court. 

This is an appeal and cross-appeal from an order of the 

District Court of the Eighth Judicial District granting 

Norwest Bank of Great Falls' motion for summary judgment and 

Finn and Virginia Walstads' motion to amend their complaint 

allowing the addition of Nordak Industries, Inc. as a party 

plaintiff against the Economic Growth Council. We affirm in 

part and reverse in part. 

Appellants Finn and Virginia Walstad are the sole 

shareholders and directors of Nordak Industries, USA, Inc., a 

Montana corporation. As part of an expansion program, Nordak 

borrowed funds from Norwest Bank of Great Falls (Norwest) and 

the Economic Growth Council (EGC). Walstads were guarantors 

of these loans which were also secured by Nordak's assets. 

Subsequent to borrowing these funds, Nordak underwent a 

period of financial difficulty. Walstads allege that EGC's 

failure to qualify for a Small Business Administration 

program that would have lowered Nordak's interest rate 

coupled with both defendants' mismanagement of Nordak's 

business affairs culminated in the forced transfer of 

Nordak's assets pursuant to an assignment executed by Nordak 

in favor of Norwest. 

The Walstads' complaint, filed January 6, 1986, 

included counts of breach of loan agreements, fraud and 

negligent misrepresentation, negligence, tortious 

interference with business and alleged vicarious liability on 

the part of Norwest, Incorporated (Norwest, Inc.). Both 

Norwest and EGC counterclaimed for the remainder of the 

loans to Nordak due under the Walstads' guaranty. Walstads 

moved to amend their complaint to add Nordak as a party 

plaintiff on August 11, 1987. The District Court permitted 
the amendment as to EGC but denied the amendment as to 

Norwest. 

Walstads appeal from the District Court's denial of 

their motion to amend as to Norwest while EGC cross appeals 

the District Court's grant of the motion to amend as to EGC. 

Both Norwest and EGC filed motions for summary judgment which 

the District Court granted as to the Walstads, based on the 

absence of genuine issues of material fact and the propriety 

of judgment in favor of respondents as a matter of law. 

Walstads' first contention on appeal is that the 

District Court improperly refused to permit amendment adding 

Nordak as a party plaintiff as against Norwest. We affirm. 

The Montana Rules of Civil Procedure allow amendment of 

pleadings with the district court's permission or the consent 

of the adverse party if such amendment would further the ends 

of justice. Rule 15(a), M.R.Civ.P. Rule 15(a) has been 

interpreted liberally, allowing amendment of pleadings as the 

rule and denying leave to amend as the exception. Priest v. 

Taylor (1987), 227 Mont. 370, 378, 740 P.2d 648, 653. One 

exception to the general rule arises when the amendment would 

be subject to dismissal. Halpert v. Wertheim & Co. , Inc. 

(S.D.N.Y. 1979), 81 F.R.D. 734. 

The District Court correctly found that Nordak's claims 

against Norwest are barred because Nordak expressly and 

voluntarily transferred and assigned to Norwest all its 

assets including its legal claims on August 25, 1983. 

The Agreement assigning Nordak ' s claims to Norwest is 

clear and unambiguous. The Agreement provided: 

3. Concurrent with the execution of this 

Agreement, NORDAK will execute and 

deliver such bills of sale and other 

documents reasonably necessary to vest in 

NORWEST all of NORDAK'S . . . d) All 

contract rights, and all other rights to 

payment of every type and description, 

excluding only that certain claim of 
NORDAK against Dyecraftsman, Inc. 

currently being prosecuted in Cause No. 

BDV-82-015 in the District Court of the 

Eighth Judicial District of the State of 

Montana; and any rights of action or 

claim against Great Falls Economic Growth 

Council . . . 

Montana law is clear that where the language of a 

written contract is clear and unambiguous, the court is to 

apply the contractual language as written. Kartes v. Kartes 

(1981), 195 Mont. 383, 387, 636 P.2d 272, 274. 

[Ilntent of the parties is only looked to 

when the agreement in issue is not clear 

on its face. (Citation omitted.) Where 

the contractual language is clear and 

unambiguous on its face, it is this 

Court's duty to enforce the contract as 

drafted and executed by the parties. 

(Citation omitted.) 

Monte Vista Co. v. Anaconda Co. (Mont. 1988), 755 P.2d 1358, 

1362, 45 St.Rep. 809, 814. The Walstads attempt to 

characterize the August 25, 1983 Agreement as a release in 

order to argue that there is a dispute regarding the intent 

of the parties to release Norwest. Citing Tribby v. 

Northwestern Bank of Great Falls (1985) , 217 Mont. 196, 704 

P.2d 409. Tribby did not involve a transfer and assignment 

of rights or legal claims. The Agreement in this case is not 

a settlement by one joint tortfeasor with a plaintiff. The 

Agreement also does not bar Nordak's claims against Norwest 

because Nordak "released" Norwest; it bars Nordak's claims 

because Nordak transferred away its right to assert claims 

except those specifically reserved by the Agreement. 

The District Court also correctly found that any claim 

Nordak may have had against Norwest is barred by the statute 

of limitations, 5 27-2-204, MCA. All of the claims against 

Norwest are essentially tort claims. The proposed amended 

complaint was filed August 11, 1987. The cause of action 
against Norwest accrued at the time of the Agreement, August 

25, 1983, more than three years before the proposed 

amendment. 

Appellants argue that pursuant to Rule 15(c), 

M.R.Civ.P., the amendment to add Nordak as a party plaintiff 

relates back to the filing of the original complaint and thus 

is not barred by the three-year statute of limitations on 

tort actions. Section 27-2-204, MCA. We addressed for the 

first time whether a second plaintiff's cause of action 

related back to the filing of the original complaint in Tynes 

v. Bankers Life Co. (1986), 224 Mont. 350, 730 P.2d 1115. 

The decision in that case was founded in the policies 

underlying the enactment of statutes of limitations, and, 

when the defendant has "adequate notice of a claim against 

it," has an opportunity to prepare a reasonable defense, and 

is not subject to undue prejudice, the second plaintiff's 

cause of action will relate hack. Tynes, 730 P.2d at 

1120-21. 

The first plaintiff in Tynes alleged the defendant 

wrongfully refused to provide insurance coverage for 

plaintiff's psychiatric treatment in violation of the policy 

held by plaintiff's father. Tynes, 730 P.2d at 1119. The 

first plaintiff's father, as second plaintiff, sought to 

bring causes of action against the defendant for breach of 

contract, promissory estoppel, and negligence. Tynes, 730 

P.2d at 1121. We found in that case that: 

Permitting [father's] claims against 

[defendant] to relate back to the date of 

[son's] original complaint did not 

undermine [defendant's] ability to defend 

itself. The claims of the two parties 

are nearly identical. They arise from 

the exact same "conduct, transaction, or 

occurrence set forth . . . in the 

original pleading" as required by Rule 

15 (c) , M.R.Civ.P. The pleadings contain 

the same causes of acti.on. Finally, 
there is a "clear identity of interest" 

between [son] and [father]. [Father] was 

the original insured. He agreed . . . to 

be responsible for [son's] medical bills 

incurred at Wilson Center. The only 

difference in the two pleadings is 

damages. Under these circumstances, we 

do not believe [defendant] was prejudiced 

when the trial judge allowed [father's] 

claims to relate back to the date of 

[son's] original complaint. 

Tynes, 730 P.2d at 1120-21. 

Walstads, as directors of Nordak, neglected any claims 

Nordak may have been entitled to assert against the 

defendants for approximately four years. Nordak's alleged 

injuries result from defendants' loan of money to it. 

Walstads' alleged harm derived from their guarantee of 

Nordak's loans. While collateral, these transactions are not 

identical. Furthermore, Nordak and Walstads had no "clear 

identity of interest." The claims of Nordak and Tynes as 

well as the facts of both cases are distinguishable. The 

District Court's denial of leave to amend as regards Norwest 

and Norwest, Inc. is clearly an appropriate exception to Rule 

15 (c) . 

The District Court's order did allow the Walstads to 

amend the complaint which added Nordak as a party plaintiff 

against EGC. EGC has filed a cross appeal. We reverse. The 

District Court allowed the amended complaint to be filed 

against EGC because the Agreement expressly reserved to 

Nordak the right to assert legal claims against the Economic 

Growth Council of Great Falls. 

However, the amended complaint alleges that Nordak's 

claims against EGC arose prior to September of 1983. The 

claims against EGC included negligence, tortious interference 

with business, and breach of fiduciary duty. Obviously, 

S 27-2-204, MCA, applies to EGC based on the foregoing 
discussion and EGC is also entitled to have the claims 

against it dismissed. 

Walstads further contend the District Court erred in 

granting summary judgment in favor of both defendants based 

on the lack of a separate duty owed by the defendants to 

Walstads as shareholders and guarantors of Nordak. We 

af firm. 

A shareholder guaranteeing corporate loans may recover 

individual damages from the lender provided that a duty 

separate from that owed the corporation exists. Bottrell v. 

American Bank (Mont. 1989), 773 P.2d 694, 710, 46 St.Rep. 

561, 579. 

We previously held that when corporate shareholders 

personally guarantee corporate debts, the shareholders may 

not recover as individuals for the lender's breach of the 

covenant of good faith and fair dealing and negligent 

misrepresentation absent a separate duty owed to the 

shareholders. Bottrell, 773 P.2d at 709. 

Walstads' alleged damages are substantially similar to 

those suffered by the plaintiff in Bottrell. In neither case 

did the guarantor/shareholders establish either a separate 

duty owed them by the lender or damages distinct from those 

suffered by the corporation. Bottrell, 773 P.2d at 710. We 

find no abuse of discretion in the District Court's grant of 

summary judgment. 

We affirm the District Court's order denying Walstads 

permission to add Nordak as a party plaintiff as against 

Norwest and reverse its order permitting addition of the same 

as against EGC. We affirm the District Court's grant of 

respondents' motions for summary judgment. 
We concur: