NO. 81-44
INTHE SUPREME COURT OF THE STATE OF MONTANA
1981

LARRY L. UNRUH, H. JAMES OLESON, and ALFRED WALLNER, M.D., Plaintiffs and Appellants,
-vsBUFFALO BUILDING COMPANY, Defendant and Respondent.

Appeal from: DistrictCourt of the Eleventh Judicial District, In and for the County of Flathead, The Honorable Robert C. Sykes, Judge presiding.
Counsel of Record:
For Appellants: E. Eugene Atherton, Kalispell, Montana For Respondent: Merritt N. Warden, Kalispell, Montana

Submitted on Briefs: April 15, 1981 Decided: 

### &A- 

## 22 

## 1981

Filed: 

### NL..

## 22 

### 1981Mr. Daniel J. Shea delivered the Opinion of the Court. Plaintiffs Larry L. Unruh, H. James Oleson and Alfred Wallner appeal from the order of summary judgment of the Flathead County ~istrict Court granting summary judgment to the defendantBuffalo Building Company. In its order, the court held that plaintiffs' claimwas barred by the statute of limitations applicable to tort actions. We hold that the claims are governed by the contract statute of limitations and thereforereverse. Plaintiffs leased office space from defendant on the second floor of the Buffalo Building, a renovated commercial office building in Kalispell,Montana. In September 1976, the Buffalo Building caught fire. This fire gutted the building, destroying the plaintiffs' offices. In September 1980,almost fouryears later, plaintiffs Unruh and Oleson brought this lawsuit against defendant by filing a complaint claiming property and business loss damages. This complaint
was amended onemonth later to includeplaintiff Wallner in the lawsuit. The amended complaint alleged that defendant breached an implied warranty of plaintiffs' lease agreements providing for the peaceful and quiet enjoymentof their office space leaseholds. Theplaintiffs alleged the breaches occurred because the defendant leased another portion of the Buffalo ~uilding to a tenantwho stored highly flammable material on his premises, and because,when the building was remodeled the defendant failed to use fireproof building materials and to install fire extinguishing equipment. Defendant answered plaintiffs' amended complaint by asserting that the claimwas barred by the two-year statuteof limitations set out in section 27-2-207, MCA, and that the complaint failed to state a legal claim. In its brief supporting itsmotion for summary judgment, defendant argued that because plaintiffswere seeking recovery for injury to property, that the actionmust be covered by the two-year statute of limitations. Inmaking this argument, defendant relied on language from Quitmeyer v. Theroux (1964)

## , 144 Mont. 302, 395 P.2d 965,holding that "the statute of limitation applicable must necessarily be in conformitywith the basis of the action," and that itmust then be determinedwhether the essence of the claimed breach arises from a breach of contract or arises from the commission of a tort. The District Court reasoned that the essence of the action isbased on a tort violation and therefore that the two-year statute of limitationsprovided for in section 27- 2-207, MCA, applies. Accordingly, the DistrictCourt granted summary judgmentbased on the affirmative defense of statute of limitation, and entered judgment for defendant. From that order, plaintiffs appeal. The trial court's reliance on the rule in Quitmeyer, supra, ismisplaced, forwe have specifically adopted a rule to apply to situations falling within the "twilight zone"of contract and tort law. In Garden City Floral Co. v. Hunt

(1953),126 Mont. 537, 255 P.2d 352, this Court set out the following rule to follow: "Under certain circumstances, a ground of liability in tortmay coexistwith a liability in contract, giving the injured party the right to electwhich form of action he will pursue. Ordinarily,where there is no duty except such as the contract creates, the plaintiff's remedy is for breach of contract,but when the breach of duty alleged arises out a liability independentlyof the personal obligationundertaken by contract, it is a tort. (Citation omitted.) 'As a general rule, theremust be some active negligence ormisfeasance to support tort. There must be some breach of duty distinct from breach of contract.' (Citationomitted.) 

# ".

. . 'But even if the question be regarded as a doubtful one, the doubt must be resolved in favor of an action ex contractu.' "When the factswarrant either form of action plaintiff may elect as to which he will pursue.

(Citationsomitted.)" 126 Mont. at 543, 544. Here, the trial court specificallynoted that the claim does not contend that the defendantwas guilty of active negligence, and with this assessment,we must agree. In applying Garden City Floral, however,we must reach the conclusion that the eight-year statute of limitation applicable to contract actions governs this action framed by plaintiffs
as a claim for breach of a covenant of quiet enjoyment, implied from the term of the parties' lease agreements. Plaintiffs' claim here is entirely different from the claim presented in Quitmeyer,where we found that the claim "was based strictly upon defendant's negligence." Plaintiffs had a right to base their claim on breach of contract. The judgment isvacated and this cause is remanded to the District Court for furtherproceedings.

We concur:



## --------- 

# vd4L%4 Chief Jnstice

Justices