No. 88-324 

IN THE SIJPREME COIJRT OF THE STATE OF MONTANA 

1989 

ELEANOR KELLY, 

Plaintiff and Appellant, 

-vsDON WIDNER and HARLEY HUNTLEY, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Twentieth Judicial District, 

In and for the County of Sanders, 

The Honorable C.B. McNeil, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Joan Jonkel argued; Jonkel Law Offices, Missoula, 

Montana 

Richard Simonton; Simonton, Howe & Jackson, Glendive, 

Montana 

For Respondent: 

Robert A. Terrazas argued; Worden, Thane & ~aines, 

Missoula, Montana 

Submitted: February 10, 1989 

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Mr. J.ustice Fred J. Weber delivered the Opinion of the Court. 

This appeal arises from a suit for personal injuries 

brought by Eleanor Kelly against Mr. Widner and Mr. Huntley. 

Ms. Kelly signed a release with Farmers Insurance Company in 

exchange for $8,900. She later filed a personal injury 

action against the insureds, Mr. Widner and Mr. Huntley, 

alleging negligence. In their answer, defendants plead the 

affirmative defense of release. The District Court granted 

summary judgment in favor of the defendants and Ms. Kelly 

appeals from that judgment. We reverse the summary judgment 

of the District Court and remand. 

The issues are: 

1. Did the District Court err in granting summary 

judgment by finding that no genuine issues of material fact 

existed? 

2. Did the District Court err in imposing technical 

pleading requirements in its summary judgment motion? 

3. Did the District Court err in granting defendants' 

request for a protective order? 

Ms. Kelly was injured in an auto accident on November 

18, 1979. Mr. Widner was the driver of the automobile which 

was owned by Mr. Huntley. Ms. Kelly was a passenger in the 

automobile. The accident fractured Ms. Kelly's left leg in 

several places and caused other minor in juries. Doctors 

inserted a rod and bolts in her leg to hold the bone together 

and placed the leg in a cast. Ms. Kelly was hospitalized for 

23 days, and was in a cast for 10 months. 

At the time of the accident Ms. Kelly was 45, divorced, 

and lived alone. She had a ninth grade education. She 

rented a log cabin with no phone, and her car did not run. 

She had previously worked as a waitress, earning $2.75 an 

hour. Had she not been injured, she claims she would have 
begun a new job at $3.50 an hour. With her leg in a cast she 

was unable to work at all. During the months of December 

1979 and January 1980, she had only $10 and food stamps to 

live on. In January 1980 Mr. Huntley's insurance agents 

contacted Ms. Kelly. Mr. Widner brought her to his home so 

she could receive a call from the insurance agents. They 

questioned her over the phone about the accident and her 

injuries. The next day, on thirty minutes notice, the agents 

came to her home. They asked about her medical bills, lost 

wages, and income. The agents made out a check for $5,325, 

which Ms. Kelly endorsed to the hospital, and a check to Ms. 

Kelly for $3,634. From the $3,634, Ms. Kelly paid $1,542 in 

doctor bills; $1,460 was attributable to lost wages. The 

agents were at her home approximately thirty minutes. Ms. 

Kelly was not represented by an attorney. In exchange for 

the checks Ms. Kelly signed a release dated ~Tanuary 24, 1980. 

She also endorsed the two checks. Each check contained 

release language above the signature line. Thus Ms. Kelly 

actually signed three releases. 

In September of 1980 Ms. Kelly's doctors determined that 

her bone had not healed. They removed the cast and performed 

another leg surgery. However, pain and instability have 

prevented Ms. Kelly from holding any job which requires 

standing and walking. Ms. Kelly has incurred additional 

medical bills, and claims she has been unable to work during 

the 8 years since the accident. 

Before discussing the issues involved, we feel it is 

appropriate to mention the obvious time delay in Ms. Kelly's 

suit. While this is not a complicated case, it has stretched 

over a period of nearly 9 years to date. Ms. Kelly filed her 

initial suit on November 25, 1980. Defendants answered on 

March 5, 1981, asserting the release as an affirmative defense. In February of 1982, Ms. Kelly served her first set 
of interrogatories; however, defendants objected, calling 

them stock interrogatories. The case then lay dormant for 

fo.ur years, and from 1986 to present minimal discovery has 

been accomplished. No explanation is given for this delay. 

It is apparent that plaintiff's co.unse1 have not been diligent in pursuing this claim. The record also demonstrates 

that the defendants were not interested in bringing the 

matter to dispostion. Neither party has handled this case in 

a timely manner. 

Did the District Court err in granting summary judgment 

by finding that no genuine issues of material fact existed? 

The appropriate standard in granting summary judgment 

was stated in Kronen v. Richter (1984), 211 Mont. 208, 683 

Summary judgment is never to be .used as a 

substit.ute for trial if a factual controversy 

exists. Reaves v. Reinbold (Mont. 1980), 615 P.2d 

896, 37 St.Rep. 1500. S.umrnary judgment is only 

proper if the pleadings, depositions, answers to 

interrogatories and admissions on file show there 

is no gen-uine issue of material fact. Anderson v. 

Applebury (1977), 173 Mont. 411, 567 P.2d 951. The 

standard that an appellate court applies in reviewing a grant or denial of a motion for summary 

judgment is the same as that utilized by the trial 

co,urt initially ,under Rule 56, M.R.Civ.P.--a summary j,udgment is proper when it appears "that there 

is no gen.uine issue as to any material fact and 

that the moving party is entitled to a judgment as 

a matter of law." 10 Wright, Miller and Kane, 

Federal Practice and Procedure, section 2716, p. 

643. 

F,urther, the defendant correctly recognizes the burden 

of proof which is required in a summary adjudication. Initial.1~ the b.urden of proof must be carried by the moving 

party seeking summary judgment, in this case, Mr. Widner and 
Mr. Huntley. However, where the record discloses no genuine 

issue of material fact, the b.urden of proof shifts to the 

party opposing the motion, in this case Ms. Kelly, who must 

come forward with substantial evidence raising an issue of 

fact. Once the burden has shifted in this fashion, the party 

opposing the motion is held. to a standard of proof abo.ut 

eq.ual to that initially imposed upon the moving party under 

Rule 56 (c) , M.R.C~V.P. Harl-and 17. Anderson (19761 , 169 Monte 

447, 548 P.2d 613, 615; Kronen, 683 P.2d at 1318. 

In light of the above standard and burden of proof, we 

concl.ude that Ms. Kelly raised a genuine issue of material. 

fact in this case. Therefore, summary judgment was not 

appropriate. 

A release is governed by contract law, and may be rescinded for the same reasons which allow rescission of a 

contract. Westfall v. Motors Insurance Corporation (1962) , 

140 Mont. 564, 374 P.2d 96, 98-99. The validity of a release 

may be challenged therefore on the basis of 

unconscionability. 

In determining .unconscionability we have previously 

applied the UCC standard. In All-States Leasing v. Top Hat 

Lounge (1982), 198 Mont. 1, 649 P.2d 1250, a case involving a 

lease transaction, we looked to S 30-2-302, MCA, which is 

modeled after the same provision in the Uniform Commercial 

Code, and provides: 

(1) If the court as a matter of law finds the 

contract or any clause of the contract to have been 

.unconscionable at the time it was made the court 

may ref.use to enforce the contract, or it may 

enforce the remainder of the contract without the 

unconscionable clause, or it may so limit the 

application of any .unconscionable cla,use as to 

avoid any unconscionable result. 

(2) When it is claimed or appears to the 

court that the contract or any cl.a,use thereof may 
be unconscionable the parties shall be afforded a 

reasonable opport.unity to present evidence as to 

its commercial setting, p.urpose and effect to aid 

the court in making the determination. 

The official comment to this section of the UCC states 

the basic test for unconscionability: 

[Wlhether, in light of the general commercial 

background and the commercial needs of the particular trade or case, the clauses involved are so 

one-sided as to be .unconscionable under the circumstances existing at the time of the making of the 

contract . . . The principle is one of the prevention of oppression and .unfair surprise. 

In Westlake v. Osborne (1986), 713 P.2d 548, 551, 43 

St.Rep. 200, 204, we applied this test in a contract case. 

While this statute applies to sales transactions .under the 

UCC, courts have .used this definition by analogy, to apply in 

non-sales cases. Restatement (Second) of Contracts S 208 

(1979). See also Howard D. Hunter, Modern Law of Contracts S 

12.06 (1986). We reaffirm the use of this standard. 

Unconscionability is an equitable doctrine, without a 

s.uccinct or precise definition. While no single factor is 

determinative, elements which may be indicators of 

unconcionability include unequal bargaining power, lack of 

meaningful choice, oppression, and exploitation of the weaker 

party's vulnerability or lack of sophistication. See generally, J. Calamari and J. Perillo, The Law of Contracts § 56 

(1970). Inadequacy of consideration does not by itself 

invalidate a bargain, but may be a factor in determining 

conscionability. Restatement {Second) of Contracts 228 

(1979). 

The und-erlying principle of conscionability is that of 

doing justice under the circ.umstances of each case. We 

approve of this standard, framed by the Illinois S.upreme 
Court, in Scherer v. Ravenswood Hosp. Med. Ctr. (Ill. 1979), 

388 N.E.2d 1268, 1271, when it stated: 

The modern trend is to set aside releases of personal injury claims in sit.uations where the facts, 

when finally known, present an .unconscionable 

result because of the equitable principle of doing 

justice under the circumstances of each case. 

The present case includes three circumstances which are 

relevant to a determination of .unconscionability. First, Ms. 

Kelly1 s dire financial situation, her lack of ed,ucation and 

lack of legal advice, and her isolated living arrangements 

created a vulnerability susceptible to exploitation. Second, 

at the time of settlement there was substantial uncertainty 

as to the extent of injury to Ms. Kelly's leg, and the future 

prognosis. The s.urgery on Ms. KeI..ly1s leg had required 

insertion of a steel rod. When Ms. Kelly executed the release, it had only been two months since the accident. Her 

leg was still in a cast and would remain in a cast for another 8 months. It was 0bvio.u~ that Ms. Kelly1 s leg wo,uld not 

be healed for some time. It was also clear that Ms. Kelly 

would be .unable to resume work in the near future. Ms. 

Kelly's physical condition suggests that this was not an 

appropriate time for execution of a complete release. Third, 

the insurance adj.ustors promred a very hasty settlement in 

this case, spending only half an hour in the total disc.ussion. When they left, Ms. Kelly had released all claims, yet 

received barely eno,ugh money to pay her medical expenses 

through the date of settlement. There is an iss.ue of fact 

whether the checks issued to Ms. Kelly were adequate ,under 

the circ.umstances known by the parties at that time. The 

appropriateness of having Ms. Kelly exec.ute a complete release in her partic.ular sit,uation, and procured in that 

manner, is subject to question. We conclude that the 
combination of these three circumstances raises an issue of 

fact whether under all the circumstances, justice was done. 

Furthermore, facts subsequent to a settlement may be 

considered in determining unconscionability. Newborn v. Hood 

(Ill.App.3d 1980), 408 N.E.2d 474, 476. The Illinois Supreme 

Court in Scherer and Hood considered the large disparity 

between the settlement amount and the actual monetary loss 

which the injured party eventually incurred. In the present 

case that disparity may be similarly large. Ms. Kelly claims 

she has been unable to work for the 8 years since the accident, and this disability may continue. She claims her leg 

needs further medical attention, including surgery. She is 

entitled to a factual determination on the issue of whether 

the settlement amount indicates an unconscionable bargain. 

We conclude that Ms. Kelly has raised a sufficient issue of 

material fact to preclude summary iudgment. 

We reverse the summary judgment by the District Court 

and remand. 

I1 

Did the District Court err in imposing technical pleading requirements in its summary judgment ruling? 

Ms. Kelly alleges that the District Court imposed technical pleading requirements in making its summary judgment 

ruling, and we conclude that the court may have done so. We 

therefore discuss this issue although it does not appear that 

Ms. Kelly was prejudiced. In Ms. Kelly's complaint she 

alleged only negligence. Defendants ' answer raised the 

affirmative defense of release. Ms. Kelly challenged the 

validity of the release in answers to interrogatories and in 

her brief in opposition to summary j udgment. She never 

amended her complaint, nor made a responsive pleading to 

defendants' answer. In the Order and Memorandum which granted summary judgment, the District Court stated, "The 
Plaintiff has not, in any of her pleadings or replys to 

Defendant's pleadings, questioned the validity of the Jan.uary 

24, 1980 Release." The opinion also mentioned twice that 

plaintiff had not plead with partic.ularity nor argued duress, 

menace, fra.ud, nor .und.ue influence. The co.urt stated that it 

therefore ~70,uld not address any of those defenses which Ms. 

Kelly had asserted. Because we have concl.uded that an issue 

of fact exists as to .unconscionability, it i.s unnecessary to 

consider whether an issue of fact exists relative to these 

other theories. We nevertheless discuss the pleading requirements for clarification. 

Pleading requirements begin with Rule 7 (a) M. R.Civ.P., 

which provides: 

There shall be a complaint and an answer; and 

there shall be a reply to a co,unt.erclaim denominated as s.uch; and an answer to a cross-claim; a 

third-party complaint, if a person who was not an 

original party is summoned ,under Rule 14; and there 

shall be a third-party answer, if a third-party 

complaint is served. No other pleading shall be 

allowed, except that the co,urt may order a reply to 

an answer or a third-party answer. 

This rule neither requires nor allows a responsive pleading 

to an answer. Th.us Ms. Kelly was not required to reply to 

defendant Is answer. F.urther, the affirmative defense of 

release was deemed denied p.urs,uant to Rule 8 (d) , M.R.Civ.P., 

which provides: 

Averments in a pleading to which a responsive 

pleading is req.uired, other than those as to the 

amount of damage, are admitted when not denied in 

the responsive pleading. Averments in a pleading 

to which no responsive pleading is required or 

permitted shall be taken as denied or avoided. 

In Wheat v. Safeway Stores, Incorporated (1965), 146 

Mont. 105, 404 P.2d 317, the defendants raised the 
affirmative defense of release in the answer, and later moved 

for judgment on the pleadings based on the gro.und that plaintiff failed to reply to the answer. The motion was granted, 

b.ut we concl.uded that the District Co.urt had erred, stating: 

From this a.uthority, it is clear that the 

plaintiff had no duty to reply unless ordered to do 

so by the court. No s.uch order was made in this 

case. The defendant's contention that a reply was 

mandatory to an affirmative defense of a release 

set forth in defendant's answer is, under the above 

a.uthority and Rule 7 (a) , without merit. 

404 P.2d at 319. 

The intent of Rule 7 (a) was explained in E. Mason, The 

Montana Rules of Civil Procedure, 23 Mont.L.Rev. 3, 19, 

(1961), as follows: 

Under the Rules pleadings are fewer and terminate earlier than under code practice. Code practice contemplates a three stage system of 

pleadings, consisting of a complaint, an answer, 

and a reply whenever new matter is alleged in the 

answer. The Rules allow only two stages, unless 

the co,urt in its discretion otherwise orders. 

Under Rule 7(a) a reply is mandatory only when the 

answer contains a co,unterclaim denominated. as s.uch 

As stated in Wheat, Ms. Kelly was not req.uired to file a 

reply or otherwise plead to the issue of release. The absence of a responsive pleading sho.uld not have been considered by the District Co,urt in a s.ummary j,udgment mot.?'.on. We 

sense the presence of fr.ustration on the part of the District 

Co.urt because of the extreme delay in this case, and we have 

the same sense of fr.ustration. Nevertheless, procedural- law 

must still be applied to Ms. Kelly's case. 

Did the District Court err in granting defendant's 

request for a protective order? 
In December of 1986, defendant moved for summary judgment on whether the release barred Ms. Kelly's claim. Ms. 

Kelly requested a continuance pursuant to Rule 56(f), 

M.R.Civ.P., which was granted. Thereafter, in interrogateries and req.uests for production, she req,uested information 

abo,ut the training of the insurance agents, the process by 

which they evaluate claims, and their job descriptions. 

Defendants sought a protective order, stating that this 

information was not relevant to the adequacy of the release. 

The co.urt granted the protective order. 

In view of o.ur concl.usions in Part I it is not necessary 

to disc.uss this issue in detail. Ms. Kelly may now proceed 

under Rule 26, M.R.Civ.P., and this type of information will 

be obtainable. 

We reverse and remand to the District Court. 

We Concur: A 

Mr. Justice R. C. McDonough did not take part in this decision.