NO. 94-149

IN THE SUPREME COURT OF THE STATE OF MONTANA

1994

STATE MEDICAL OXYGEN AND SUPPLY, INC.,

a Montana Corporation,

Plaintiff and Appellant,

-vsAMERICAN MEDICAL OXYGEN CO.,

a Montana Corporation, J.C. LYNDES,

GARY GOMEZ and RONALD WRIGHT,

Defendants and Respondents.

APPEAL FROM: District Court of the Second Judicial District,

In and for the County of Silver Bow,

The Honorable James E. Purcell, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Brian L. Delaney: Mulroney, Delaney & Scott,

Missoula, Montana

For Respondents:

Michael G. Moses: Moses Law Firm, Billings,

Montana

Filed:

Submitted on Briefs: June 30, 1994

Decided: October 25, 1994

Cle$k
Justice Karla M. Gray delivered the Opinion of the Court.

State Medical Oxygen and Supply Inc. (State Medical) appeals

from orders of the Second Judicial District Court, Silver Bow

County, granting summary judgment in favor of American Medical

Oxygen Co. (American Medical) and denying its motion for

reconsideration. We affirm.

This is the fourth time the parties have been before this

Court. Both are Montana corporations involved in the business of

providing oxygen and associated health care products to customers

in their homes and in hospitals. In 1985, State Medical filed

complaints in five Montana counties against American Medical and

several of its employees and directors. Generally, those actions

involved allegations that American Medical had violated § 1877(b)

of the Social Security Act, 42 U.S.C. 5 1395nn, by enticing State

Medical route drivers to work for American Medical, resulting in

route customers switching companies. Because the lawsuits were

similar, the parties chose the action in Cascade County as the

"lead case."

Summary judgment was granted in the lead case on the basis

that a Social Security Act violation does not give rise to a

private civil cause of action. On appeal, we affirmed on that

issue, but remanded with instructions that the district court

consider the depositions of former State Medical employees for the

purpose of other issues, and allow State Medical to amend or

supplement its pleadings to include a claim of tortious

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interference with its business. State Med. Oxygen v. American Med.

Oxygen Co. (1988), 230 Mont. 456, 463, 750 P.2d 1085, 1089 (State

Med. I).

State Medical subsequently amended the complaints and the

litigation continued. The district court in Cascade County again

granted summary judgment to American Medical, on the basis that

State Medical's nondisclosure agreement was unreasonable and

unenforceable. We affirmed on appeal, concluding that the

agreement was void as against public policy and unenforceable as a

matter of law. State Med. Oxygen v. American Med. Oxygen Co.

(1989) I 240 Mont. 70, 75, 782 P.2d 1272, 1276 (State Med. II).

Following State Med. II, the parties agreed to transfer "lead"

status to the case in Silver Bow County. In October 1991, American

Medical filed motions to dismiss and for summary judgment in the

Silver Bow County action based on an earlier Cascade County

district court order not at issue in the previous appeals: the

motions were granted and State Medical appealed. We reversed and

remanded, concluding that the order of the district court in

Cascade County was not a final judgment on the merits and that res

judicata and collateral estoppel did not apply. We also concluded

that 42 U.S.C. § 1395a, which allows an individual receiving

Medicare/Medicaid benefits to obtain health services from any

qualified agency or person, does not act as a bar to a state law

claim of tortious interference with a business relationship. State

Med. Oxygen v. American Med. Oxygen Co. (1992), 256 Mont. 38, 43-

45, 844 P.Zd 100, 104-105 (State Med. III).

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On remand following State Med. III, the District Court

scheduled trial for February, 1994. American Medical moved for

summary judgment in August of 1993. Following oral argument on

October 20, 1993, the District Court granted the motion in an order

and memorandum dated December 1, 1993. The court subsequently

denied State Med.ical's motion for recons,ideration. State Medical

appeals.

1 . Did the District Court err in concluding that no

genuine issue of material fact existed and that American

Medical was entitled to summary judgment as a matter of

law?

Summary judgment is proper when there are no genuine issues of

material fact and the moving party is entitled to judgment as a

matter of law. Rule 56(c), M.R.Civ.P. We review an order granting

summary judgment by utilizing the same criteria as the district

court, determining whether a genuine issue of material fact exists

and whether the moving party is entitled to summary judgment as a

matter of law. Minnie v. City of Roundup (1993), 257 Mont. 429,

431, 849 P.2d 212, 214.

State Medical's action against American Medical is presented

as tortious interference with its business relations with former

employees and with former customers. An action for tortious

interference with business relations entails four elements: that

the defendant's acts: (1) are intentional and willful: (2)

calculated to cause damage to the plaintiff's business; (3) done

with the unlawful purpose of causing damage or loss, without right

or justifiable cause on the part of the actor; and (4) result in

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actual damages and loss. State Med. I, 750 P.2d at 1088-1089.

If a defendant establishes the absence of a genuine issue of

material fact as to one of the elements constituting the cause of

action, and the plaintiff fails to come forward with proof showing

the existence of a genuine issue as to that element, summary

judgment in the defendant's favor is proper. See White v. Murdock

(Mont. 1994), 877 P.2d 474, 477-78, 51 St.Rep. 547, 548. Disputed

facts are material, therefore, if they involve the elements of the

cause of action or defense at issue to an extent that necessitates

resolution of the issue by a trier of fact. See Bails v. Gar

(1976) r 171 Mont. 342, 346, 558 P.2d 458, 461. Any inferences to

be drawn from the factual record must be resolved in favor of the

party opposing summary judgment. Boylan v. Van Dyke (1991), 247

Mont. 259, 266, 806 P.2d 1024, 1028. In this case, our review of

the District Court's order granting summary judgment focuses on the

third element of tortious interference with business relations;

namely, the existence of a genuine issue of material fact regarding

whether American Medical's acts were done without right or

justifiable cause.

American Medical came forward with evidence to meet its burden

of demonstrating that no genuine issue of material fact exists on

this element regarding State Medical's customers or employees.

Concerning the relationship between State Medical and its

customers, AmericanMedical's evidence indicatedthatstate Medical

supplied customers with oxygen and other medical supplies by

running an ordinary route service, in a certain area, on a regular

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basis. The business relationship between the customers and State

Medical was noncontractual and each party was free to terminate the

relationship without future obligation. Affidavits also indicate

that, after beginning employment with American Medical, the drivers

contacted their former State Medical customers from memory. The

customers were not approached in any unusual way, but merely

informed that the route driver had switched companies and asked if

they wanted to purchase oxygen and supplies from the new provider.

Some, but not all, of the customers made the change to American

Medical with the route drivers.

Similarly, American Medical's evidence regarding State

Medical's relationship with former employees established that State

Medical route drivers first initiated contact with American Medical

in 1983 and 1984. The drivers were working for State Medical

without a contract; they were dissatisfied with their employment

and looking for greater opportunity. In August and September,

1984, American Medical negotiated with, and ultimately hired, these

route drivers who immediately began servicing customers on American

Medical's behalf in the Butte area.

Whether American Medical's evidence demonstrates the absence

of a genuine issue of material fact regarding whether it acted

without right or justifiable cause can be determined by applying

factors we have adopted from the Restatement (Second) of Torts §

767 (1965). State Med. I, 750 P.2d at 1088. Considering the

facts, circumstances, and evidence presented in this case, two of

those factors are particularly probative: first, the nature of the

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relationship between State Medical and its former employees and

customers: and second, the nature of American Medical's conduct.

American Medical's evidence establishes that the relationship

between State Medical and its customers was informal, voluntary and

noncontractual. The customers were free to terminate their

relationship with State Medical at any time and find another

provider for any reason or no reason at all.

Based on the record before us, State Medical's relationship

with its employees also was noncontractual and without a specified

term. Indeed, State Medical's relationship with the employees at

issue here can be characterized as "at will" employment under § 39-

2-503, MCA. "At will" generally refers to the employer's and the

employee's ability to terminate the employment relationship for any

reason or no reason. Scott v. Eagle Watch Investments, Inc.

(1991) I 251 Mont. 191, 195, 828 P.2d 1346, 1349.

Notwithstanding the voluntary nature of the relationships at

issue here in determining whether American Medical acted without

right or justifiable cause, however, a genuine issue of material

fact could still exist regarding whether American Medical acted

without right or justifiable cause based on the nature of American

Medical's conduct. Indeed, that factor was important in the

context of noncontractual business relationships in Daniels v. Dean

(1992) I 253 Mont. 465, 474, 833 P.2d 1078, 1084.

In Daniels, the defendant's acts in interfering with the

plaintiff's relationships with his customers were of an egregious

and outrageous nature. They included threatening and harassing
patrons, obstructing entrance to the business and interfering with

customer parking spaces. Daniels, 833 P.2d at 1080-81.

By contrast, no evidence in the present case suggests that

American Medical's acts in hiring State Medical's employees and

soliciting its customers were in any way unusual, wrongful, or

unjustified. We conclude, therefore, that American Medical met its

burden on summary judgment with regard to establishing the absence

of a genuine issue of material fact on the "without right or

justifiable cause" element of State Medical's cause of action.

State Medical contends that the record establishes the

existence of five broad issues of material fact. These alleged

issues include: (1) whether American Medical had a firm employment

agreement with State Medical's key employees prior to 1984; (2)

whether American Medical first contacted State Medical's employees

or the employees first contacted American Medical; (3) American

Medical's intent; and (4) whether American Medical employees were

using State Medical's proprietary information. The fifth alleged

issue is merely an aggregation of the first four.

None of these alleged factual issues relate to the "without

right or justifiable cause" element of State Medical's action for

tortious interference with business relations. The first two

"issues" relate to the nature of State Medical's relationship with

its employees. Because that relationship was voluntary and

noncontractual and none of the acts suggested by these "issues" was

even inferentially tortious, these factual questions do not raise

an issue of material fact regarding whether American Medical acted

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without right or justifiable cause. Similarly, questions involving

American Medical's intent relate to the first element of the cause

of action, but do not raise a genuine issue of material fact with

regard to the "without right or justifiable cause" element.

Finally, with regard to the fourth ltissueV' asserted by State

Medical, no evidence of record suggests that the drivers involved

in this Silver Bow County action used State Medical's written

customer lists. Moreover, we conclude that the District Court did

not abuse its discretion in refusing to consider affidavit evidence

relating to the Missoula County action and the drivers at issue

therein: even assuming the admissibility of that evidence in that

action, the evidence is not relevant to the case presently before

us.

We conclude that none of the disputed factual issues alleged

by State Medical raises a genuine issue of material fact regarding

whether American Medical acted without right or justifiable cause.

No genuine issue of material fact exists on the record before us on

this necessary element of State Medical's claim for tortious

interference with business relations: we hold, therefore, that the

District Court did not err in granting American Medical's motion

for summary judgment.

2. Did the District Court err in denying State Medical's

motion for reconsideration or relief from judgment?

State Medical moved for reconsideration of the District

Court's summary judgment order pursuant to Rule 59(g) or,

alternatively, for relief from that order pursuant to Rule 60(b),

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M.R.Civ.P. Its Rule 59(g), M.R.Civ.P., argument--that the District

Court erred in determining that no genuine issue of material fact

existed--is addressed and resolved by our conclusion on the first

issue.

Rule 60(b)(l)-(6), M.R.Civ.P., sets forth the reasons for

which a court may relieve a party from a final judgment, order or

proceeding. Rule 60(b)(2), M.R.Civ.P., provides for relief in the

event of "newly discovered evidence" which could not have been

discovered with due diligence. The District Court denied State

Medical's Rule 60(b)(2) motion on the basis that the evidence

presented was not "newly discovered."

The "newly discovered" evidence State Medical submitted to the

District Court in support of its motion consisted of two sets of

records. The first was American Medical's patient records,

allegedly indicating that American Medical agreed to accept

assignment of Medicare payments in violation of federal law. The

second consisted of telephone records, allegedly showing that an

American Medical employee was in Butte several times prior to the

opening of American Medical's Butte office.

State Medical concedes this evidence was in its possession

before the October 20, 1993, oral argument on American Medical's

motion for summary judgment. Indeed, the record reflects that

most, and perhaps all, of this evidence was available to State

Medical in June of 1987. Consequently, the evidence in question

cannot be characterized as newly discovered under Rule 60(b)(2),

M.R.Civ.P. Moreover, in the context of litigation which has been

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ongoing since 1985, State Medical's assertions that it had

insufficient time to review the available records and, in any

event, that it "thought" the records related to the issue of

damages rather than liability, are less than compelling.

We agree with the District Court that State Medical had

sufficient time to find, review, analyze and present the evidence

it characterizes as "newly discoveredl' before and during the

summary judgment process. The record reflects neither an effort by

State Medical to bring the evidence to the court's attention nor a

request for additional time prior to the resolution of the summary

judgment motion.

Rule 56(f), M.R.Civ.P., provides the party opposing a summary

judgment motion with a means of establishing, by affidavit, that it

"cannot for reasons stated present by affidavit facts essential to

justify the party's opposition. . . .'I In this case, State Medical

could have followed this procedure, requesting time to analyze the

evidence in its possession insofar as that evidence might have been

relevant to its opposition to American Medical's motion for summary

judgment. It did not do so.

The evidence State Medical submitted in support of its Rule

60(b)(Z) motion does not meet the *'newly discovered" evidence

standard set forth in Rule 60(b)(2), M.R.Civ.P. We conclude,

therefore, that the District Court did not err in denying State

Medical's motion for relief from judgment under Rule 60(b)(2),

M.R.Civ.P.

Affirmed.

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