No. 89-053 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1989 

JULIUS R. TRESCH and JOAN TRESCH, 

Husband and Wife, 

Plaintiffs and Appellants, 

-vsNORWEST BANK OF LEWISTOWN, N.A., 

JOHN DOE CORPORATION, I through V, 

and JOHN DOE 1 through 10, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Tenth Judicial District, 

In and for the County of Fergus, 

The Honorable Peter Rapkoch, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Torger S. Oaas, Lewistown, Montana 

For Respondent: 

Donald C. Robinson and Mark W. Mattioli; Poore, Roth 

and Robinson, Butte, Montana 

Filed: :-- 

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Submitted on Briefs: Aug. 3, 1989 

Decided: August 25, 1989 
Justice R. C. McDonough delivered the Opinion of the Court. 

Julius Tresch and Joan Tresch (Tresch) appeal from an 

order of the Tenth Judicial District, Fergus County, granting 

summary judgment to respondent Norwest Bank of Lewistown, 

N.A. (Norwest). We affirm. 

The issues in this case are: 

1. Whether Norwest breached the implied covenant of 

good faith and fair dealing when it denied a $3,100.00 loan 

requested by Tresch. 

2. Whether Norwest breached a fiduciary duty owed 

Tresch when it denied the $3,100.00 loan. 

Julius and Joan Tresch have owned and operated a dairy 

farm near Lewistown, Montana since 1966. For over three 

decades, they have done their banking business with Norwest. 

In 1983, Tresch increased his operating loan at Norwest to 

the amount of approximately $147,000.00. This note was to be 

paid in monthly installments and was secured by an assignment 

of proceeds from the dairy, and other collateral. One of the 

terms of this financing agreement provided that Tresch could 

not make any capital purchase in excess of $500.00 without 

the express consent of Norwest. 

Shortly after receiving this loan, Tresch used advanced 

funds to upgrade the equipment in his dairy. This upgrading 

included the purchase of new milking machines. Tresch 

quickly became dissatisfied with these machines, because he 

believed that they were responsible for an outbreak of 

"mastitis" in his dairy herd. 

Mastitis is defined as an inflammation of the mammary 

glands in dairy cattle. It is caused and spread by toxic 

microorganisms. The disease is endemic to the entire dairy 

industry and its presence can lead to contaminated milk and 

the destruction of a dairy herd. Although its cause is 
subject to debate, it is generally agreed that it can be 

caused by malfunctioning equipment, unsanitary conditions 

within the cows' environment, or improper milking procedures. 

Because Tresch believed that the new milking machines 

were the cause of the mastitis, he approached Norwest in 

March of 1984, for a three thousand one hundred dollar 

($3,100.00) loan which would enable him to replace the 

machines. Norwest doubted that this purchase would cure the 

mastitis problem because, as it noted, the disease had 

existed in his dairy herd for a number of years prior to the 

acquisition of the new machines. It also doubted that the 

purchase of new milkers would generate sufficient additional 

income to repay the loan. 

In order to confirm this supposition, Norwest contacted 

the local implement dealer and the dairy extension service at 

Montana State University to determine if the new machines 

were needed. This investigation supported Norwest's original 

beliefs. During this inquiry, it was learned that although 

milking machines can cause mastitis, the primary causes are 

improper hygiene and sanitation, and improper milking 

procedures. Moreover, because the disease had been present 

in the herd prior to the installation of the milking machines 

it was doubtful that they were the cause of Tresch's problem. 

Consequently, the loan was denied. 

Eventually Tresch obtained funds from another source, 

which allowed him to purchase new milking machines. 

Unfortunately, the mastitis problem continued and the 

resulting loss of production nearly forced Tresch into 

foreclosure in late 1986. 

Because Tresch believed these problems were caused by 

Norwest's refusal to advance him the money he filed suit 

seeking compensatory and punitive damages for breach of the 

implied covenant of good faith and fair dealing and for 
breach of fiduciary duty. Norwest moved for summary 

judgment. On October 13, 1988, this motion was granted. 

This appeal followed. 

I 

Tresch maintains that Norwest breached the implied 

covenant of good faith and fair dealing by refusing to loan 

him the funds necessary to purchase new milking machines. We 

disagree. 

At the outset we note that this is an appeal from an 

order granting summary judgment. Summary judgment should be 

granted if there is no genuine issue of material fact and the 

moving party is entitled to judgment as a matter of law. 

Rule 56 (c) , M.R.Civ.P. : 

The party moving for summary judgment has the 

burden of establishing the absence of any genuine 

issue of material fact and then the party opposing 

the motion must come forward with evidence 

supporting the existence of a genuine fact issue. 

Pretty on Top v. City of Hardin (1979), 182 Mont. 

311, 315, 597 P.2d 58, 60. 

However, when reviewing such an order, this Court must review 

the evidence in a light which is most favorable to the 

non-moving party. Nitschke v. Blue Cross of Montana (1988), 

751 P.2d 175, 176, 45 St.Rep. 473, 475. Therefore, we must 

review the facts of this case in a light most favorable to 

Tresch in order to determine the propriety of the court's 

order. 

Even if this Court was to assume that the implied 

covenant of good faith and fair dealing applies to a lending 

arrangement of the nature presented in this case, the facts 

presented do not indicate that there was any violation of 

this duty. In making this determination, we look to prior 

decisions for guidance. In Nicholson v. United Pacific Ins. 

Co. (1985), 219 Mont. 32, 710 P.2d 1342, we held that: 
The nature and extent of an implied covenant of 

good faith and fair dealing is measured in a 

particular contract by the justifiable expectations 

of the parties. Where one party acts arbitrarily, 

capriciously, or unreasonably, that conduct exceeds 

the justifiable expectations of the second party. 

The second party then should be compensated for 

damages resulting from the other's culpable 

conduct. 

Nicholson, 710 P.2d at 1348. 

Therefore, in order to prove that Norwest breached the 

covenant, Tresch must show that its decision not to advance 

the $3,100.00 was arbitrary, capricious or unreasonable. 

Under the agreed upon facts Tresch does not meet this burden. 

Tresch maintains that he needed the loan in order to buy 

new milking machines. It was his theory, upon applying for 

the loan, that new machines would cure the chronic mastitis 

that had plagued his herd for years. Norwest doubted that 

this purchase would cure the problem. Norwest based its 

conclusion upon inquires made with an agricultural scientist 

at Montana State University and a local dealer who sold 

milking machines. Inquiry also led Norwest to believe that 

the new machines would not generate sufficient additional 

income to repay the loan. 

The uncontested facts clearly establish that Norwest's 

refusal to advance the funds was based upon solid business 

reasons. It then became incumbent upon Tresch to come 

forward with evidence of his own that would tend to dispute 

this conclusion. Barich v. Ottenstrong (1976), 170 Mont. 38, 

550 P.2d 395; Mayer Bros. v Daniel Richards Jewlers Inc., 

(1986), 223 Mont. 397, 726 P.2d 815. Tresch did not meet 

this burden, nor did he come forward with any other issue of 

material fact. In fact, as noted by the trial court, Tresch 

admitted in his deposition that he did not think that Norwest 

acted out of motives or for reasons other than those stated. 
Therefore, the order granting summary judgment must be 

affirmed. 

I1 

Tresch also maintains that Norwest breached its 

fiduciary duty by denying the loan. Again, we disagree. 

With respect to this argument, the following provision 

in the loan agreement is: 

"4. Borrowers shall make no capital purchases in 

excess of $500.00 without prior consent of the 

Bank. " 

Tresch maintains that under this clause, Norwest had the 

ability to exercise "absolute managerial" control over the 

dairy operation by retaining the power to determine which 

expenditures could be made. He further states because 

Norwest took "complete charge" over the finances of the 

Tresch Dairy, it had a duty to place the interests of Tresch 

on par with its own interest. 

Assuming arguendo that such a clause leads to the 

creation of a fiduciary duty, we fail to find that Norwest 

acted unreasonably or unfairly towards Tresch. As stated 

earlier, Norwest's refusal was based upon solid business 

grounds and there are no facts to refute it. Accordingly, 

Norwest's refusal was not a breach of any fiduciary duty 

which may have been owed to Tresch. We affirm. 

Hz 

L Justice 

Chief Justice