No. 86-326 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1987 

LARRY THORNOCK , 

Plaintiff and Appellant, 

-vsPACK RIVER MANAGEMENT CO., PACK RIVER 

INVESTMENT CO., and MISSION INSURANCE 

COMPANY, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Twentieth Judicial District, 

In and for the County of Lake, 

The Honorable C.B. McNeil, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Michael J. McKeon, Anaconda, Montana 

For Respondent: 

Larry W. Jones; Garlington, Lohn & Robinson, Missoula, 

Montana 

Submitted on Briefs: Jan. 8, 1987 

Decided:- July 30, 1987 

-.XI 

a */b & -- 

Clerk 
Mr. Justice Fred J. Weber delivered the Opinion of the Court. 

In this personal injury action, Mr. Thornock appeals 

from the Lake County District Court's summary judgment in 

favor of defendant Pack River Management Company. We affirm. 

The issues are: 

1. Was summary judgment improper because factual issues 

remain in dispute? 

2. Did the District Court err in granting summary 

judgment before discovery was completed? 

Mr. Thornock's arm was traumatically amputated while he 

was operating a piece of equipment at work. His employer was 

Flathead Lumber Company (Flathead Lumber). Mr. Thornock has 

received a full settlement from Flathead Lumber through 

workers' compensation. 

Mr. Thornock brought this action to recover damages from 

entities other than his employer. This appeal involves only 

the claim against Pack River Management Company (Pack River). 

Mr. Thornock abandons any further claim against defendant 

Pack River Investment Company in his brief on appeal. The 

claim against defendant Mission Insurance Company has been 

stayed because Mission is in conservatorship. 

Pack River is a Washington partnership whose members own 

85% of the stock in Flathead Lumber, a Montana corporation. 

Mr. Thornock sued Pack River on a theory that it owed him a 

duty to provide a safe place to work, based on its relationship with his immediate employer, Flathead Lumber. He relied 

upon this Court's opinion in Reynolds v. Burlington Northern, 

Inc. (Mont. 1980), 621 P.2d 1028, 37 St.Rep. 1883, as authority for the duty. The District Court concluded that because 

of factual differences, a casting aside of the corporate 

cloak was not justified in this case as it was in Reynolds. 

It ruled that Mr. Thornock had presented no factual situation 
which would allow him to pursue a separate claim against Pack 

River. Mr. Thornock appeals from the resulting summary 

judgment for Pack River. 

I 

Was summary judgment improper because factual issues 

remain in dispute? 

Mr. Thornock argues that summary judgment was improperly 

granted. He says material issues of fact remain, under his 

theory that Pack River is liable as a parent company to its 

subsidiary Flathead Lumber. He also maintains that Pack 

River is liable under either an alter-ego or a 

principal/agency theory. 

In a deposition, the manager of Flathead Lumber characterized the relationship between Pack River and Flathead 

Lumber as a parent-subsidiary relationship. Mr. Thornock 

argues that under this Court's opinion in Reynolds, that 

admission prohibits summary judgment because it requires Pack 

River to provide a safe place for him to work. 

In Reynolds, plaintiff was a lumber company employee who 

was badly injured while loading woodchips into defendant 

Burlington Northern's railroad cars. Plaintiff's place of 

employment was a railroad siding leased from the defendant 

railroad by plaintiff's employer, the wholly-owned subsidiary 

of a wholly-owned subsidiary of the railroad. Several railroad cars had been placed on the siding by railroad employees, and the brakes had not been set. A string of empty cars 

began to roll and struck a cable on which the plaintiff was 

working, throwing him into the air and breaking his leg. 

This Court stated that " [t] he plaintiff was performing work 

more directly connected to the operations of a railroad than 

to the operations of a lumber company," and that "[tlhe 

plaintiff was working directly in the operations of the 
railroad in every sense of the word." Reynolds, 621 P. 2d at 

1037 and 1038. The Court held that the defendant railroad 

company owed plaintiff the duty to provide him with a safe 

place to work. Reynolds, 621 P.2d at 1038. 

In the present case, Mr. Thornock was injured while 

working in the Flathead Lumber mill using equipment owned by 

Flathead Lumber. There is no suggestion that Pack River was 

or is engaged directly in the lumber business, or in a directly related business. In addition, nothing has been 

presented to show that Pack River was an operating entity 

engaged in operating its business at the place of injury. 

This is in direct contrast to the operation of the railroad 

by Burlington Northern in Reynolds. We conclude that these 

factual differences are controlling and that as a result Mr. 

Thornock has failed to prove that Pack River owed him the 

duty to provide a safe place to work under Reynolds. 

Under his alter ego and principal/agency theories, Mr. 

Thornock argues that Flathead Lumber was so controlled by 

Pack River that it "amounts to nothing more than a facade 

that should be disregarded." He contends that the corporate 

cloak should therefore be cast aside, allowing the Flathead 

Lumber shareholders to be sued. The rule, as cited by Mr. 

Thornock, is that the corporate cloak will not be cast aside 

under either an agency or an alter ego theory unless it 

appears "not only that the corporation is controlled and 

influenced by one or a few persons, but, in addition . . . that the corporate cloak is utilized as a subterfuge to 

defeat public convenience, to justify wrong, or to perpetrate 

fraud." 18 C.J.S., Corporations, sec. 6, p. 378, cited in 

State v. Holmes (1942), 113 Mont. 303, 308, 124 P.2d 994, 

996. 

Mr. Thornock refers to deposition testimony in which the 

manager of Flathead Lumber stated that Flathead Lumber was a 
subsidiary of Pack River and that major corporate decisions 

were discussed with the managers of the Pack River partnership. The manager also testified, however, that he himself 

made the day-to-day decisions and conducted the day-to-day 

operation of Flathead Lumber. Further, Mr. Thornock has not 

shown by affidavit or deposition any indication that Flathead 

Lumber was utilized as a subterfuge to defeat public convenience, to justify wrong, or to perpetrate fraud. We conclude that summary judgment is not precluded under the alter 

ego or principal/agency theory. 

We further point out that Mr. Thornock has failed to 

show a legal theory under which recovery would be allowed had 

he been able to prove that Pack River in fact was the principal for which Flathead Lumber was the agent, or that Pack 

River was the alter ego of Flathead Lumber. Had he been 

successful in proof of either the principal/agency or alter 

ego theory, the result would be that Pack River would be 

classed as the same entity as Flathead Lumber. Flathead 

Lumber has discharged its responsibility for Mr. Thornock by 

securing workers' compensation insurance, with the result 

that neither Flathead Lumber nor Pack River would be separately subject to liability for the injury which was covered 

by the Workers' Compensation Act. 

I1 

Did the District Court err in granting summary judgment 

before discovery was completed? 

Mr. Thornock maintains that summary judgment was improperly granted before he received answers to two sets of interrogatories, two requests for production, and a request for an 

admission. He cites Rule 56(c), M.R.Civ.P.: 
. . . The [summary] judgment sought shall be 

rendered forthwith if the pleadings, depositions, 

answers to interrogatories, and admissions on file, 

together with the affidavits, if any, show that 

there is no genuine issue as to any material fact 

and that the moving party is entitled to a judgment 

as a matter of law. . . . 

When Pack River moved for summary judgment, it also 

moved for and was granted an extension of time to answer the 

discovery requests at issue here. The District Court was 

clearly aware of the pending discovery requests. It had 

before it the undisputed affidavit of a Pack River partner 

that Pack River was a Washington partnership and that it 

owned 85% of the stock of Flathead Lumber, a Montana corporation. Copies of the Flathead Lumber corporate records from 

the office of the Secretary of State were before the court. 

It was undisputed that the piece of equipment on which Mr. 

Thornock was injured belonged to Flathead Lumber and that the 

area of injury was under the operational control of Flathead 

Lumber. A copy of Mr. Thornock's petition for full and final 

workers' compensation settlement with Flathead Lumber was a 

part of the District Court file. The discovery requests 

which remained unanswered related essentially to the business 

arrangements between Pack River and Flathead Lumber. There 

was nothing in these discovery requests which was aimed at 

determining whether or not Pack River in some way itself was 

an operating company in the specific area where the injury 

took place. The interrogatories were aimed at determining 

the nature of the control Pack River exercised over Flathead 

Lumber. We conclude that none of the requests are aimed at 

bringing forth information regarding the operations of Pack 

River in such a manner as to establish that Pack River owed 

Mr. Thornock a duty of providing a safe workplace. Under the 

facts of this ca'se we hold that the District Court did not 
err in granting summary judgment before discovery was 

completed. 

Affirmed. 

We Concur: 

Justices 
Mr. Justice William E. Hunt, Sr., dissenting: 

I dissent from the majority opinion and would hold that 

summary judgment was inappropriate. The plaintiff is 

entitled to show, after discovery, that material issues of 

fact remain. 

The lower court granted summary judgment to defendant 

finding that Pack River owned 85% of the Thornock's employers 

stock; Flathead Lumber Company, not Pack River, owned the 

equipment which injured Thornock; and that Thornock failed to 

counter defendant's claim that defendant was not engaged in 

duties closely connected to Flathead Lumber Company. 

I do not believe these stated findings are dispositive 

of the issues. An entity is not necessarily immune from tort 

liability to an employee of another entity that it controls 

for its own independent acts of negligence. It may be held 

liable under common law principles for any harm resulting 

from its own reckless conduct or negligence. Reynolds v. 

Burlington Northern, Inc. (Mont. 1980), 621 P.2d 1028, 37 

St.Rep. 1883; 30 A.L.R.4th 948. 

This rule is not limited to the facts in Reynolds. A 

rainbow of factual scenarios may create such a duty. - See 2A 

Larson, Workmen's Compensation Law, § 72.40; 30 A.L.R.4th 948 

Workers' Compensation Immunity As Extending to One Owning 

Controlling Interest In Employer Corporation. 

Further, the fact that Thornock had received Workers' 

Compensation benefits is not dispositive of the duties owed 

to him by Pack River. Thornock is entitled to thoroughly 

discover facts to support his theories. 

Discovery had not yet been completed by the parties. 

Two sets of plaintiff's interrogatories to defendant which 

requested information about the interrelationship of Flathead 
Lumber Company and defendant Pack River, are unanswered. Two 

sets of requests for production of documents and a request 

for admission remained unanswered. 

In its final order the trial court noted that Thornock 

did not counter Pack River's claim that the defendants were 

not engaged in duties "closely-connected" to Flathead Lumber 

Company. The discovery method was the only method available 

to Thornock to show a "close connection" or to show other 

factors indicative of a duty owed to him since respondent was 

in possession of that information. He may have been able to 

establish the existence of a duty owed to him by Pack River 

had he been allowed to complete discovery. 

I would hold that appellant is entitled to present his 

full case to the court after discovery is complete and would 

therefore reverse and remand this case with instructions to 

allow the parties to proceed with 

I concur with the dissent of Mr. Justice William E. 

Hunt, Sr.