NO. 93-365 IN THE SUPREMECOURTOFTHESTATE OFMONTANA 1994

ROGERHOLTMAN,

Plaintiff and Appellant,
-vs4-G's PLUMBING &HEATING, INC., a corporation, 

### .?RS-1$)4

Defendants and Respondents. &/ J&f BL CLERK OFSLjPREME

COURT ="A-EOF iMoi\iTANA

APPEAL FROM: District Court of the Fourth Judicial District,

In and for the County of Missoula, The Honorable Douglas G. Harkin, Judge presiding.

COUNSELOFRECORD:

For Appellant: Charles 3. Tornabene; Patterson, Marsillo, Tornabene, Schuyler &McKenna, Missoula, Montana
For Respondent: Ronald A. Bender; Worden, Thane &Haines, Missoula, Montana

Filed: Submitted on Briefs: December 16, 1993 Decided: April 5, 1994Justice Karla M. Gray delivered the Opinion of the Court.

Roger Holtman (Holtman) appeals from anorder entered bythe Fourth Judicial District Court, Missoula County, granting summary judgment in favor of 4-G's Plumbing and Heating, Inc. (4-G's Plumbing). Thecourt determined that dismissal with prejudice of Holtman's counterclaim in aprevious lawsuit barred his trespass, invasion of privacy andasbestos contamination claims against 4-G's Plumbing under the doctrines of res iudicata and collateral estoppel. Holtman asserts error only in the court's application of the doctrines to his asbestos contamination claim. Because all of the elements of res iudicata andcollateral estoppel are not met,
wereverse the court's grant of summaryjudgment in favor of 4-G's Plumbing onthat claim. Holtman ownedacondominium located inthe Edgewater Townhouse Complex in Missoula, Montana. In February of 1989, the Edgewater Townhouse Homeowner's Association (the Association) authorized an employee of 4-G's Plumbing to enter Holtman's condominium, in his absence, to repair aleak andinstall anewheating system. When Holtman returned to his condominium, he discovered a partially installed heating system and alleged asbestos contamination. Holtman refused to allow further installation of the system. The Association filed a complaint seeking an injunction to require the installation of the heating system. Holtman responded by generally denying the Association's allegations. Nearly two years later, Holtman filed acounterclaim without leave of court.
2He alleged that the Association had deprived him of property

rights, invaded his privacy, and contaminated his condominium with asbestos. In addition to other rulings, the court dismissed the counterclaim with prejudice because the compulsory counterclaim was not timely filed under Rule 13(a), M.R.Civ.P., and Holtman had failed to obtain leave of court pursuant to Rule 13(f), M.R.Civ.P. Both Holtman and the Association appealed. We affirmed the dismissal of Holtman's counterclaim in Edgewater Townhouse v. Holtman (1993), 256 Mont. 182, 845 P.2d 1224. In January of 1992, Holtman filed the present action against the Association and 4-G's Plumbing, asserting claims of invasion of privacy, trespass, and asbestos contamination. The Association moved for summary judgment, arguing that the claims were barred by
res iudicata. 4-G's Plumbing joined in the Association's motion and filed a separate motion for summary judgment relying on both
res iudicata and collateral estoppel. The District Court granted summary judgment for each defendant by separate order, dismissing the claims against the Association under res iudicata and the claims against 4-G's Plumbing under res iudicata and collateral estoppel. Holtman appeals only from the summary adjudication in favor of 4-G's Plumbing. Our standard for reviewing agrant of summary judgment is the
same as that used by the district court. Emery v. Federated Foods (Mont. 1993), 863 P.2d 426, 431, 50St.Rep. 1454, 1456. Initially,
we determine whether there is an absence of genuine issues of material fact. Minnie v. City of Roundup (1993), 257 Mont. 429,
3431, 849P.2d 212, 214. Theparty moving for summaryjudgment has

the initial burden of demonstrating a complete absence of any genuine factual issues. D'Agostino v. Swanson (1990), 240Mont. 435, 442, 784 P.2d 919, 924. In order to meet this burden, the moving party must support its motion with an appropriate evidentiary basis. Minnie, 849P.2d at 214. Themoving party may draw from the pleadings, depositions, answers to interrogatories, andadmissions onfile, together with anyaffidavits. Rule 56(c), M.R.Civ.P. Once an absence of genuine issues of material fact is established, wedetermine whether the moving party is entitled to judgment asamatter of law. Minnie, 849P.2d at 214. Here, the District Court concluded that 4-G's Plumbing was entitled to summaryjudgment under the doctrines of res iudicata andcollateral estoppel. Wedonot defer to adistrict court's legal conclusions, but determine whether they are correct. Steer, Inc. v. Dep't of Revenue (1990), 245Mont. 470, 474-75, 803P.2d 601, 603.

ResJudicata Thedoctrine of res iudicata is grounded onthe principle that litigation must at somepoint cometo anend. Orlando v. Prewett (1989)r 236 Mont. 478, 481, 771 P.2d 111, 113. It bars the relitigation of anentire cause of action onceafinal judgment has been entered. Marriage of Stout (1985), 216Mont. 342, 349, 701 P.2d 729, 733. All of the following elements are necessary for yes judicata to apply:
41) the parties or their privies must be the same:

2) the subject matter of the action must be the same: 3) the issues must be the same and relate to the same subject matter; and 4) the capacities of the persons must be the same in reference to the subject matter and to the issues. Tisher v. Nor-west Capital Mgmt. (Mont. 1993), 859 P.2d 984, 987-88, 50 St.Rep. 960, 962. Holtman asserts that his "asbestos contaminationl' claim alleges negligent workmanship onthe part of 4-G's Plumbing in the installation of the heating system. Because his prior counterclaim against the Association contained no such claim, he argues that
none of the elements of res iudicata is met. 4-G's Plumbing urges application of the doctrine, asserting that the claims advanced in the complaint do not contain an allegation of negligent workmanship, but are identical to those raised in the prior counterclaim. Holtman's That said asbestos contamination claim reads as follows:

defendant, 4-G's Plumbing &Heating, Inc., in the process of installing said hot water heating system in Plaintiff's home, disturbed older plumbing pipes, which were contaminated with asbestos, resulting in asbestos contamination of Plaintiff's home and the personal property contained therein. This asbestos contamination claim--as alleged--is hardly amodel of clarity. However, 4-G's Plumbing did not move for summary judgment
onthe basis of afailure to state aclaim upon which relief could be granted or challenge the claim as alleged in any other way. We decline to rule on an issue that was not presented to the District Court. Goodover v. Lindey's, Inc. (1992), 255 Mont. 430, 441, 843 5P.2d 765, 772. Thus, weaddress the applicability of res iudicata

to Holtman's asbestos contamination claim to the extent that claim is read to allege negligent workmanship by 4-G's Plumbing in the installation of the heating system. The "parties or their privies" element of res iudicata is dispositive here. It is undisputed that 4-G's Plumbing wasnot a party to the prior litigation. The District Court determined, however, that 4-G's Plumbing and the Association were privies because they "acted in concert." Wepreviously have focused on whether a defendant's legal right or interest hasbeen represented bythe previous litigant to determine whether the two are privies. Aswestated in Brault v. Smith (1984), 209Mont. 21, 27, 679P.2d 236, 239, the concept of
a "privy" in the context of a judgment applies to one whose interest hasbeen legally represented at trial. Wehave similarly defined privies asthose whoare soconnected in estate or in blood
or in law as to be identified with the same interest and, consequently, affected with eachother bylitigation. Tisher, 859 P.2d at 988. Asthe party moving for summaryjudgment, 4-G's Plumbing had the initial burden of demonstrating the absence of agenuine issue of material fact andentitlement to judgment asamatter of law on the privity element. 4-G's Plumbing did not file an answer to Holtman's complaint; nor did it submit anydepositions, answers to interrogatories, admissions oraffidavits to support its motion for summaryjudgment. Thus, it did not provide anyevidentiary basis
6for summaryadjudication.

By joining the Association's motion for summary judgment, however, 4-G's Plumbing ostensibly adopted the Association's evidentiary basis for summary judgment, including copies of the prior counterclaim, the order striking it with prejudice, andthe findings and rulings contained in the court file relating to the previous litigation. Therefore, we focus on whether these materials form asufficient basis for summaryjudgment onthe issue of privity--a shared legal interest--between the Association and4- G's Plumbing onthe asbestos contamination claim. The materials indicate that the Association hired 4-G's Plumbing andallowed its employee into the condominium to install the heating system, supporting the District Court's determination that the two "acted in concert" in entering the condominium. This mutual conduct in entering the condominium, however, does not establish that the Association shared alegal interest with 4-G's Plumbing with regard to its workmanship in the installation of the heating system. Thus, the court's conclusion that the Association and 4-G's Plumbing are privies, in the context of the asbestos contamination claim, is incorrect. 4-G's Plumbing attempts to establish ashared legal interest in the asbestos contamination claim to the extent that claim alleges negligent workmanship byarguing that it acted asanagent of the Association in installing the heating system. Anagency relationship would exist if the Association controlled or hadthe right to control the physical conduct of 4-G's Plumbing in the

7installation of the heating system. See Eccleston v. Third Jud.

Dist. Ct. (1989), 240Mont. 44, 51-52, 783P.2d 363, 368, quoting Restatement (Second) of Agency, 52. Nothing in the record of the prior litigation or the present case establishes such a right of control. Weconclude that the materials relied on by 4-G's Plumbing to support summaryadjudication donot establish that it
was a privy of the Association with regard to the asbestos contamination claim. 4-G's Plumbing advances two other arguments, loosely tied to the doctrine of res iudicata, to bar Holtman's asbestos contamination claim. Based on its assertion that Holtman could have raised the claim in the prior proceeding, 4-G's Plumbing argues that heis barred bythe doctrine from doing sohere. It is true that res iudicata precludes claims that could have been raised in the prior lawsuit as well as those actually adjudicated. Beckv. Flathead County (1989), 240Mont. 128, 133, 783 P.2d 383, 386; Orlando v. Prewett (1989), 236Mont. 478, 481,
771 P.2d 111, 113. Thepreclusive effect of res iudicata, however, applies only to claims raised in subsequent lawsuits between the parties in the original action or their privies, reflecting the "parties or their privies" element of the doctrine. &.&, 783P.2d at 386; Orlando, 771P.2d at 113. Thus, res iudicata's preclusive effect as to claims not actually litigated does not apply to the
case before us. Finally, 4-G's Plumbing asserts that Rule 12(b), M.R.Civ.P., required Holtman to assert his claims against it in the prior

8litigation. Rule 12(b), M.R.Civ.P., requires that every defense to

a claim, counterclaim or third-party claim be raised in the responsive pleading. Holtman's claims against 4-G's Plumbing were not adefense to the claims asserted by the Association in the prior litigation. Thus, he was not required by Rule 12(b), M.R.Civ.P., to file his claims against 4-G's Plumbing in that action.4-G's Plumbing hasnot demonstrated that the "parties ortheir privies" element of res iudicata is met. Wehold that the District Court erred in applying res iudicata to bar Holtman's asbestos contamination claim against 4-G's Plumbing.

Collateral Estoppel Again focusing entirely onthe asbestos contamination claim, Holtman asserts that the District Court erred in concluding that 4- G's Plumbing wasentitled to summaryjudgment under the doctrine of collateral estoppel. Hecontends that collateral estoppel does not bar the claim because the issue of 4-G's Plumbing's negligence was not raised in his prior counterclaim. Collateral estoppel, sometimes referred to as issue preclusion, is a form of res iudicata. While res iudicata bars parties from relitigating claims insubsequent proceedings based on the samecause of action, collateral estoppel bars the reopening of
an issue in asecond cause of action that has been litigated and determined in aprior suit. Linder v. Missoula County (1992), 251 Mont. 292, 294, 824 P.2d 1004, 1005. The doctrine has three

9elements:

1)the identical issue raised hasbeenpreviously decided in aprior adjudication: 2) afinal judgment onthe merits wasissued inthe prior adjudication: and 3) the party against whomthe plea is nowasserted wasa party or in privity with a party to the prior adjudication. State v. Young (1993), 259Mont. 371, 377, 856P.2d 961, 965. Our analysis neednot proceed beyond the first element. Identity of issues is the most crucial element of collateral estoppel. Anderson v. State (1991), 250 Mont. 18, 21, 817 P.2d 699, 702. In order to satisfy this element, the identical issue or "precise question" must have been litigated in the prior action. Anderson, 817P.2d at 702. Todetermine whether the issue raised is identical, wecompare the pleadings, evidence andcircumstances surrounding the two actions. Aetna Life Ins. Co. v. McElvain (1986), 221Mont. 138, 146, 717P.2d 1081, 1086. Wenote that we have only the asbestos-related allegations to examine from the previous litigation since Holtman's counterclaim wasdismissed on legal grounds prior to the receipt of anyevidence onthe claim. It is true that Holtman's prior counterclaim against the Association arose from the sameevents as his claim against 4-G's Plumbing and, like his present claim, sought damages for the alleged asbestos contamination. Holtman's asbestos-related contamination claim against the Association inthe prior litigation
wasas follows: [The Association] did, without the knowledge or consent of [Holtman], terminate the heating service to 10[Holtman's] unit sometime between March, 1988 and

February 5, 1989, which resulted in certain waterlines freezing, breaking and creating water leaks in [Holtman's] unit and subsequently therewith caused the asbestos covering of certain pipes to be removed and generally distributed throughout the unit, all of which rendered [Holtman's] unit damaged, unsafe and uninhabitable. Whenthis claim is compared to Holtman's asbestos contamination claim against 4-G's Plumbing set forth above, it is clear that the identical issue, or precise question, raised in the present case wasnot raised anddecided in the earlier litigation involving the Association. Holtman's prior asbestos-related claim canberead asalleging
an intentional wrongful act by the Association--the unauthorized termination of heat to the condominium--followed byall the damage that flowed therefrom, including broken waterlines and asbestos disturbance and distribution. Tothe extent the prior claim is read in this fashion, it is clear that the issue of the alleged negligence of 4-G's Plumbing in the present case is not identical. Furthermore, to the extent the prior asbestos-related claim is read as an allegation of negligence against the Association resulting in asbestos contamination, that claim did not raise the issue of 4-G's Plumbing's negligent workmanship inthe installation of the newheating system. Anegligence action is premised, first,
onthe existence of aduty. Nautilus Ins. v. First National Ins. (1992)I 254Mont. 296, 299, 837P.2d 409, 411. 4-G's Plumbing has not established that its legal duties to Holtman in installing the
newheating system were co-extensive with the duties owedhim by the Association. 11Weconclude that the "identical issue" element of collateral

estoppel is not met under the circumstances before us. Therefore,
wehold that the District Court erred in concluding that Holtman is collaterally estopped from asserting the asbestos contamination claim andin granting summaryjudgment in favor of 4-G's Plumbing
onthat claim. Reversed andremanded for further proceedings consistent with this opinion. ! ^

Weconcur:

12April5,1994 CERTIPICATEOFSERVICE IherebycertifythatthefollowingcertifiedorderwassentbyUnitedStates mail,prepaid,tothe followingnamed:
Charles J.Tornabene Patterson, Marsillo,Tomabene,

Schuyler &McKenna 103So.5thEast Missoula,MT59801 Ronald A.Bender,Esq. Worden,Thane

&Haines,P.C. P.O.Box4747 Missoula,MT59806 JohnR.Gordon,Esq. Reep,Spoon

&Gordon,P.C. P.O.Box9019 Missoula, MT59807-9019 EDSMITH CLERKOFTHESUPREME COURT