97-282

No. 97-282

IN THE SUPREME COURT OF THE STATE OF MONTANA

 

1998 MT 79

DANIEL J. SCHUMACKER and

MARIE B. SCHUMACKER,

Plaintiffs and Appellants,

v.

MERIDIAN OIL CO., SLAWSON OIL CO.,

COWRY ENTERPRISES, INC., PARAFFIN

SERVICES, INC., and KEN OLSEN,

Defendants and Respondents.

APPEAL FROM: District Court of the Seventh Judicial District,

 In and for the County of Richland,

 The Honorable Richard G. Phillips, Judge presiding.

COUNSEL OF RECORD:

For Appellants:

Robert L. Johnson, Attorney at Law, Lewistown, Montana

Richard W. Heineman, Attorney at Law, Wibaux, Montana

For Respondents:

John G. Crist; Crist Law Firm, Billings, Montana (for

Meridian Oil)

John D. Alexander; Ugrin, Alexander, Zadick & Higgins, 

Great Falls, Montana (for Slawson Exploration)

Jacque W. Best; Habedank, Cumming, Best & Savage,

Sidney, Montana (for Cowry Enterprises, Inc.)

 

Calvin J. Stacey, Kevin M. Funyak; Stacey & Walen Law Firm, 

Billings, Montana (for Paraffin Services and Ken Olsen)

 

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Submitted on Briefs: November 20, 1997

Decided: April 14, 1998 

Filed:

 __________________________________________

Clerk

Justice Karla M. Gray delivered the Opinion of the Court.

¶1 Daniel J. Schumacker and Marie B. Schumacker (the Schumackers)

appeal from the judgment entered by the Seventh Judicial District Court,

Richland County, on its order granting the summary judgment motions of

Meridian Oil Co., Slawson Oil Co., Cowry Enterprises, Inc., Paraffin Services,

Inc., and Ken Olsen (collectively, the Defendants). We affirm.

¶2 The Schumackers raise the following issues on appeal:

¶3 1. Did the District Court err in granting summary judgment to the

Defendants on the basis that the Schumackers failed to present any evidence

on an essential element of civil conspiracy?

¶4 2. Did the District Court err in granting summary judgment to Paraffin

Services, Inc. and Ken Olsen on the basis of the exclusivity provision

contained in the Workers' Compensation Act?

 BACKGROUND

¶5 Daniel Schumacker (Daniel) worked as a mechanic for Paraffin

Services, Inc. (Paraffin) during the summer of 1994. Paraffin is a licensed

trucking company primarily engaged in transporting fluids from oil wells to

various disposal points. Production water, one of the fluids transported by

Paraffin, is water from wells that may be contaminated by hydrocarbons or

hydrogen sulfate gases; when the water is contaminated, it is highly

flammable. If contaminated production water has been transported in a tank,

the tank must be steamed or flushed with carbon monoxide to remove any

flammable contaminants before any welding can be done. If the tank is not

specially cleaned, welding on the tank can cause an explosion.

¶6 In June of 1994, the United States Department of Transportation

Federal Highway Administration ordered Paraffin to ensure that all hazardous

material be accompanied by a proper shipping paper and transported only in

cargo tanks authorized for the transport of hazardous material. Paraffin also

was required to determine the flash points of any hazardous materials it hauled

and to properly mark and placard the tanks carrying hazardous material.

¶7 On July 24, 1994, Paraffin's tank-trailer number 103 (Unit #103) was

used to transport fluids from wells owned by Cowry Enterprises, Inc. (Cowry),

Meridian Oil Co. (Meridian), and Slawson Oil Co. (Slawson). The next day,

Daniel checked the driver's log, which indicated that Unit #103 required

welding. Before beginning the repair, Daniel asked Ken Olsen (Olsen), his

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immediate supervisor and the president of Paraffin, what had been transported

in Unit #103 on the previous day. Olsen responded that only water had been

transported. Daniel began to weld and an explosion occurred. He was

seriously injured and received workers' compensation benefits for the injuries

he sustained in the explosion.

¶8 On July 24, 1995, Daniel filed a complaint against the Defendants

alleging that the Defendants conspired to illegally transport hazardous material

and that Paraffin and Olsen had wrongfully discharged him. Several of the

Defendants moved to dismiss and one moved, in the alternative, for a more

definite statement. The District Court denied the motions to dismiss, but

ordered Daniel to submit a more definite statement. In response, Daniel filed

his "More Definite Statement as to the Allegations of Conspiracy" in October

of 1996.

¶9 The District Court subsequently entered a scheduling order requiring

Daniel to file any amendments to his pleadings by December 1, 1996. The

order expressly provided that later amendments could be made only with the

court's permission.

¶10 The Schumackers filed an amended complaint adding Daniel's wife,

Marie Schumacker, as a plaintiff and a loss of consortium claim against all the

Defendants. The wrongful discharge claim was deleted. Slawson answered

the amended complaint and the remaining defendants again moved for a more

definite statement. The Schumackers responded that the Defendants were well

aware of their legal theory and the District Court did not rule on the motion for

a more definite statement.

¶11 The Defendants subsequently moved for summary judgment on the

basis that the Schumackers had presented no evidence on the meeting of the

minds element of civil conspiracy. They relied on portions of Daniel's

deposition, which had been filed with the court, and on Daniel's responses to

interrogatories. In the alternative, Paraffin and Olsen also sought summary

judgment premised on the exclusivity provision of the Workers' Compensation

Act (WCA) and Olsen submitted an affidavit in support of that portion of his

and Paraffin's motion. The Schumackers filed briefs in opposition to the

motions for summary judgment and a supporting affidavit from Daniel.

¶12 The Schumackers also filed--and then formally withdrew--a conditional

motion to further amend their complaint. They subsequently filed a "more

definite statement" of their claim which, for the first time, mentioned

negligence with regard to the Defendants and which specifically asserted the

applicability of the doctrine of res ipsa loquitur. The Schumackers requested

the District Court to deem their amended complaint amended again in

accordance with their "more definite statement." 

¶13 The District Court granted the Defendants' motions for summary

judgment and, in a separate order, denied the Schumackers' request to deem

their complaint amended. Judgment was entered accordingly and the

Schumackers appeal from the District Court's grant of summary judgment to

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the Defendants. 

 STANDARD OF REVIEW

¶14 "Summary judgment is proper when no genuine issues of material fact

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

Grove Cement Co. v. Jefferson County (1997), 283 Mont. 486, 491, 943 P.2d

85, 88; Rule 56(c), M.R.Civ.P. We review an order granting summary

judgment de novo, applying the same Rule 56(c), M.R.Civ.P., criteria applied

by the district court. Ash Grove Cement Co., 943 P.2d at 88 (citation omitted). 

¶15 "[I]f the moving party establishes that one element of a cause of action

lacks any genuine issue of material fact and the non-moving party does not

come forward with proof that a genuine issue does exist, summary judgment

is proper." Wiley v. City of Glendive (1995), 272 Mont. 213, 216, 900 P.2d

310, 312 (citation omitted). The party opposing summary judgment cannot

rely on mere allegations in the pleadings, but must present its evidence raising

genuine issues of material fact in the form of affidavits or other sworn

testimony. Klock v. Town of Cascade (Mont. 1997), 943 P.2d 1262, 1266, 54

St.Rep. 829, 831(citation omitted). While we must resolve any inferences

drawn from the factual record in favor of the party opposing summary

judgment (Hatch v. State Dept. of Highways (1994), 269 Mont. 188, 193, 887

P.2d 729, 732 (citation omitted)), "mere denial, speculation, or conclusory

statements" are insufficient to raise a genuine issue of material fact. Klock,

943 P.2d at 1266 (citation omitted). 

 DISCUSSION

¶16 1. Did the District Court err in granting the Defendants'

motions for summary judgment on the basis that the Schumackers failed

to present any evidence on an essential element of civil conspiracy? 

¶17 In granting the Defendants summary judgment on the Schumackers'

civil conspiracy claim, the District Court concluded that the Schumackers had

failed to produce any evidence on the meeting of the minds element of civil

conspiracy and, therefore, no genuine issue of material fact existed on that

necessary element of the conspiracy claim. The Schumackers argue that direct

evidence on the meeting of the minds element of conspiracy is not necessary

and that their circumstantial evidence on that element is sufficient to raise a

genuine issue of material fact. 

¶18 The elements of a civil conspiracy are "(1) [t]wo or more persons, and

for this purpose, a corporation is a person; (2) an object to be accomplished;

(3) a meeting of the minds on the object or course of action; (4) one or more

unlawful overt acts; and (5) damages as the proximate result thereof." 

Simmons Oil Corp. v. Holly Corp. (1993), 258 Mont. 79, 91, 852 P.2d 523,

530 (citation omitted). Moreover, it is not the conspiracy itself that gives rise

to the cause of action; it is the torts committed or the wrong done in

furtherance of a civil conspiracy that do so. Duffy v. Butte Teachers' Union

Number 332, AFL-CIO (1975), 168 Mont. 246, 251, 541 P.2d 1199, 1202(citation 

omitted).

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¶19 The gist of the Schumackers' conspiracy claim is that the Defendants

conspired to maximize profits and undercut legitimate transportation by

knowingly causing hazardous substances to be transported in unsuitable

containers. Acknowledging that a meeting of the minds is an essential element

requiring proof, the Schumackers contend that there is direct evidence of a

meeting of the minds for "every act of transport." The meeting of the minds

element, however, requires a meeting of the minds on the unlawful object or

course of action (see Simmons Oil, 852 P.2d at 530) which, in this case, is the

unlawful transportation of hazardous substances in unsuitable containers. In

this regard, the Schumackers concede that they presented no direct evidence

of a meeting of the minds regarding the unlawful method of transportation, but

argue that strong circumstantial evidence supports an inference sufficient to

withstand summary judgment that there was a meeting of the minds as to the

method of transportation.

¶20 Circumstantial evidence is evidence which tends to establish one fact

by proving another and which, while not conclusively establishing the first

fact, affords an inference of its existence. Section 26-1-102(1), MCA. We

have not previously addressed whether circumstantial evidence may be used

to establish the meeting of the minds element of civil conspiracy. We

repeatedly have held, however, that circumstantial evidence may be used to

prove the agreement element of a criminal conspiracy. See, e.g., State v.

Stever (1987), 225 Mont. 336, 342, 732 P.2d 853, 857 (citations omitted);

State v. Fitzpatrick (1977), 174 Mont. 174, 184, 569 P.2d 383, 391 (citations

omitted); State v. Alton (1961), 139 Mont. 479, 503-04, 365 P.2d 527, 539

(citations omitted). 

¶21 Moreover, other states have allowed the use of circumstantial evidence

to establish the meeting of the minds element of a civil conspiracy due to the

difficulty in obtaining direct evidence on that element. See, e.g., Four R Cattle

Co. v. Mullins (Neb. 1997), 570 N.W.2d 813, 818 (citation omitted); Adam

v. MT. Pleasant Bank & Trust Co. (Iowa 1986), 387 N.W.2d 771, 773

(citation omitted); Beverly v. McCullick (Kan. 1973), 505 P.2d 624, 633

(citation omitted); Shows v. Silver Shield Mining and Milling Company (Colo.

1962), 375 P.2d 522, 524. Because direct evidence of the meeting of the

minds is typically in the possession and control of the alleged conspirators

and, therefore, difficult--if not impossible--to obtain, we hold that

circumstantial evidence may be used to establish the meeting of the minds

element of a civil conspiracy.

¶22 The Schumackers argue that they raised a genuine issue of material fact

on the meeting of the minds element of civil conspiracy by circumstantial

evidence. Specifically, they contend that the following evidence supports an

inference that there was a meeting of the minds among the Defendants to

transport production fluid illegally: Paraffin transported production water in

Unit #103 from wells operated by Cowry, Meridian, and Slawson on the day

before the explosion; Unit #103 was unmarked and unsuitable for transporting

production fluid and, therefore, transporting production fluid in Unit #103 was

illegal; and, in addition, signs at wells operated by Cowry and Meridian warn

of the presence of flammable substances. 

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¶23 This evidence does not support an inference that there was a meeting

of the minds to transport production fluid illegally. The evidence may be

sufficient to indicate that Paraffin unlawfully transported a hazardous

substance in an unsuitable container, but that is not the claim set forth against

the Defendants in the Schumackers' complaint. The fact that Paraffin

transported fluids from wells owned and operated by Cowry, Meridian, and

Slawson establishes only that they were customers of Paraffin; it is insufficient

to create an inference that they knew of, agreed to, or promoted any illegal

transportation of hazardous material by Paraffin. We conclude that the

Schumackers' circumstantial evidence is insufficient to raise a genuine issue

of material fact on the essential meeting of the minds element of their civil

conspiracy claim. 

¶24 Perhaps anticipating our adverse decision on their conspiracy claim, the

Schumackers contend that, even if their civil conspiracy claim fails, they

should be permitted to proceed to trial on the issue of negligence. The

Defendants respond that the Schumackers did not plead negligence claims in

their initial or amended complaint and should not be permitted to add such a

claim now. We agree.

¶25 Although the Schumackers argue that they pleaded a negligence claim

from the outset, their initial complaint alleges only civil conspiracy and

wrongful discharge. The amended complaint alleges only civil conspiracy and

loss of consortium. The record does not reflect any effort by the Schumackers

to state a negligence-based claim until after the Defendants had moved for

summary judgment and the time for amendments of right had long since

passed. 

¶26 We previously have held that "[l]itigants should be allowed to change

legal theories after a motion for summary judgment has been filed only in

extraordinary cases." Peuse v. Malkuch (1996), 275 Mont. 221, 228, 911 P.2d

1153, 1157. No extraordinary circumstances exist in this case that would

justify permitting the Schumackers to change their legal theory after the

motions for summary judgment had been filed. Moreover, the Schumackers

filed and then withdrew a motion to further amend their complaint and did not

raise as an issue on appeal the District Court's denial of their tardy and indirect

effort to "amend" via their "more definite statement." Therefore, we decline

to further address the Schumackers' contentions regarding negligence. 

¶27 We hold that the District Court did not err in granting summary

judgment in favor of the Defendants on the basis that the Schumackers failed

to present any evidence on an essential element of civil conspiracy.

¶28 2. Did the District Court err in granting summary judgment to

Paraffin and Olsen on the basis of the exclusivity provision contained in

the WCA?

¶29 In addition to granting Paraffin and Olsen's motion for summary

judgment on the civil conspiracy claim, as discussed above, the District Court

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also granted their motion for summary judgment on the basis of the exclusivity

provision in the WCA. The Schumackers contend that the District Court erred

in determining facts, rather than merely determining whether genuine issues

of material fact existed in this regard.

¶30 Our conclusion above, that the District Court did not err in granting

summary judgment to the Defendants on the civil conspiracy claim, is

dispositive as to all Defendants. As a result, we need not address the District

Court's alternative basis for granting summary judgment to Paraffin and Olsen.

¶31 Affirmed.

 /S/ KARLA M. GRAY

We concur:

/S/ WILLIAM E. HUNT, SR.

/S/ JIM REGNIER 

/S/ TERRY N. TRIEWEILER

/S/ W. WILLIAM LEAPHART

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