Court Opinion

ID: 886634
Source: CourtListenerOpinion
Date Created: 2013-06-05 04:07:54.620592+00
Date Added: 2024-06-11T09:00:58.989306
License: Public Domain

BRUX, L.P.,

MINE AND MII-L HYDRAULICS, INC.; GLEN M.
CALDWELL; KATHLlXD.4 BETSISE, a'k.'a
KA'I'HLINDA CALDWELL; JAMES BURRINGTON;
WILLII\M ANDERS; WILLIAM L-i. STINCHFIELD;
GER.4LD E.NICHOLS; and MOKTANA HYDRAULICS, L1.C.

              Uefc~ldai~ts Respondents.
                        and

.4PPEAL FROM:        District Co~irt the First Judicial District,
                                    of
                     In and for the County of Lewis and Clark. Cause Xo. ADV-90-00370,
                     Honorable Dor'othy McC'arter, Judgc Presidiiig

COUNSEL OF RECORD:

              For Appellai~t:

                     John M. Kaufiman, Kasting, Cornbs & Kauffnlan, Hozenlan, Montana

              For Respondents:

                     li~ the Court.
                                        of

!il     The Appellant, TKIIX, L.P. iTrus), bsougirt this action agairist the Respnr~cionts

alleging constructive fratid, breach of fiduciary duty and unjust enrichment. The District

t.:ourt for the First Judicial District; Lewis and Clark County_granted summary judgment in

favor of the Respondents and against Trus, concluding that 'Frus was barred from recovery

by 4 27-1-303, MCA, bccausc Trux had already receued a judgment agalnst Mine and 11111

Hydraulics, Inc.. and because granting judgment against additional defendants lvouid d l l o ~ ~ .

Trux to reco\er more than the satisfaction of its losses. Trux now appeals. We reverse

$12     We rephrase and address the following issues on appeal:

c3      1. \\here it is alleged that there are multiple tortfeasors who are jointly and
se~erally liable and the plaintiff has obtained, in a separate action, a judgment against
one of the tortfeasors for the full amount of damages alleged. but has received no
reco%ery,does 5 27-1-303, MCA, prewent the plaintiff from bringing a separate action
against the other tortfeasors?

?I4    2. \Vhether the Directors are shielded from personal liabilit! for the contractual
obligation of Mine and Nlill to Trux.

!!5     On October 1") 1998, Mountain West Bank brought suit to collect on loans that it had

made to Mine and Mill Hydraulics, Inc. (Mine and blill), alleging that hline and Mill had

defaulted on its loans. That suit is known as itlozrtzrilitr !Test ilutzk ;V.;:A. 1;. iVfitze olrzd itfill

ilycir-c~~~lii.~, czi., CDV 98-596 (the 'Bank Case"). Because 7'rux had a security i~iterest
            Irrc. ef

in s o n ~ of the same collateral as Mountain C6'est Bank, the bank nained -1-ruxas an additiorial
           e
       'ryithi~ suit, '1-nrx filed a cross-citrim against %lint and Mil! and Glen Caid\v\.ell.
              that

sharcl-ioldiir and officer of Mine ant! Mill; for hreaci~of contnict, fraiid and un!iist

                                                              Rule 19. \/I.R.C~V,P.~
cnrichmcnt. After conducting some discovery. Trux raoved ~lnder                  to

                          LLC (MH), as an additionili party to the Bank Case. in February
add 'clontana f-%yciraulics,

2000, the District Court denied Trus's request to add ME1 as a party, stating:

       [Clomplete disposition can be made in this case without joining Montana
       Hydraulics as a party. Mine and Mill is the debtor and the claints presented are
       against blilie and Mill on account of its default on various loan obligations.
       Mountain West holds first priority liens on the collateral which was leased to
       Montana Hydraulics.

       'fKbX has superior priority to that of Mountain West in only the accounts
       receivable of Mine and Mill. 'There is no indication in the record, and TRIJX
       has not argued, that Montalia Hydraulics was involved with any aspect of those
       receivables. Furthermore, it has not been demonstrated that Montana
       I-lydraulics has any interest in the outcome of this foreclosure action, or in the
       ~tltimatedisposition of any funds received from the sale of the collateral.
       Accordingly. the Court conclutles that Montana Hydraulics need not be
       brought into this aetioi~ that TRUX's motion to add Montana Hydraulics
                                 and
       as a party should be denied.

                    Court did not allow Trux to add MH to t l ~ c
Although the Distr~ct                                           Bank Case, Trrix sought and

ultimately received a default judgment, on May 25, 2000, against Mine and Mill fbr

S 1.012,019 plus attomcq fees of $27,330.5 1.

$7     in June 1999, while the Rank Case was still proceeding and before receiving its

dcfault jtidgnIent against Mine and 121111,Trux tiled its coruplaint In the instant case The

original complaint is nearly identical to the cross-claim 'I'rux filed against Mine and Mill ir?
                                           Mine arid ;~lii! iii~i~
thc Bit& Cast. Trux narncd as dcli.i~diitlts              and  and Kaihiindii Caid\%cii*

                      officers of Mine and Miii.
both sharchoiders a~~ird

7jX    0 1 thc
        1        same day that Trux received its default judgment against Mine and Mill in the

Bank Case, 'Trux fi!cd an amended complaint in the instant case. adding as dofendants MFI

and its Directors. The allegations in the amended complaint involve the same actions that

led to the default judgment against Mitie and Mill in the Bank Case.

9      M H and its Directors (collectively "Respondents") thereafter moved the court to

dismiss. arguing, in part, that allowing Trux to recover against them ivould violate    4 27-1-
303, MCA. The Respondents argucd that the statute prohibited T n ~ x
                                                                   from recovering a

greater amount of da~i~ages it suffered from any bi-each of an obligation, and that
                         than

allowing Trux to proceed against them would esseirtially permit l'mx to reccive "double

recovery" for its damages. The District Court converted the motion to one for summary

judgment and on April 5,2001. granted summary judgment to the Respondents and against

'Trux, concluding that     5   27-1-303, MCIA, barred l'rux from recovering against the

Rcspondents in light of the default judgment awarded Trux for its full damages against Mine

and Mill.

7 10   Tmx moved the District Court to alter or amend its jtldgment, noting iil part, that 'Trux

allegcd t!mt thc Respondents u-erc jointly and severally liable: and therefore, that any

j~idgrncnt
         against thc Rcspondents, and damagcs collected tliercfrom, would he offset by any
dslrniigcs itctualiy co!!ccted from the cief&uitjudgrncnt against Mint tind i.iiii.' The Dislrict

C:uu-r cienied Tnix's rnotioi~.

!/I I   It is from the District Court's grant of summary judgment to tlie Kcspondents and

frorn the District Court's denial of Trilx-s motion to alter and aincnd judgment that Trux now

appeals.

                                    S 7 A liCrI1.il R L) 0F RE VIb:'W

712     f h c standard of review for a grant of surnmary judgment is rfe rzovo. This Court will

apply the same etaluatlon as the distrtct cotlrt based upon K~rle b'I.R.C'rv.P. The mo\ ing
                                                                56,

pally must establish both the absence of a genuine issue of ~naterial
                                                                    fact and entitlement to

                                                         2002 MT 262, Tj 9, 3 12 Mont. 240,y 9,
judgrnent as a matter of law. Gilrlzcz1e.s v. FValclt~lli,

              rl                par?>:has met its burden, the opposing party must: if it
59 P.3d 377, 9. Once tlie mot~ing

~vishes raise a genuine issue of material fact rather than merely arguing for a favorable
      to

judgment, present rnaterial and substantial evidence essential to one or Inore elements of its

                                                         statements. (;otlsmles: 9. As
case rather than presenting mere conclusory or spe~ulati\~c                                 '
we stated iu Cionzales, "[ojnce the moving party has met its burden, t11c opposing party must

present material and subqtant~ale~ldenee.rather than mere conclusory or speculative

           Part of the District Court's concern when granting siimmary judgment was that Trux's
default jndgmmt in the Bank Case diii uot explicitly provide for an o f k t from any amount
rccovercd from other defendants. To allay this concern, Tr~rx    moved for anil Xvas granted an
atnendnient to its previous default judgment, providing that any recovery kom other defcndants
~vould  offscl tlie mount collec~able   Srom Mini: and Mill. Tliereafrer, Trux lilcd its uiotion to
alter or arneiid the District Court's grant ofsumrnary judgment in the instant case.
siillerncnls; 10 raise a genuine issiic of material hct." Oiir standard nf -cviclv o f a qircsrjan

of law is whcthcr the lcgai conciusions o f the trial coiil-t arc correct, <;of2zde,7,7 9

Ill    1. Where it is alleged that there are multiple tortfcasoss who are jointly and
severaliy liable and the plaintiff has obtained, in a separate action, a judgment against
one of the tortfeasors for the full amount of damages alleged, but has received no
recovery, does 8 27-1-303, MC.4, prevent the plaintiff from bringing a separate action
against the other tortfeasors?

1 14
1       Sectlon 27- 1-303, MCA, pro\ ides:

        Limitation of damages for breach of obligation. No person call recover a
        greater amount in damages for the breach of an obligation than he could have
        gained by the full performance thereof on both sides unless a greater recovery
        is specified by statute.

?] 15   '1-1-ux contends that the District C o ~ ~ r t in applying the above statute; arguing that
                                                  erred

the statute prohrbits only rccoi,ei-) of more than the satisfaction of its losses, but does not

preclude its right to attain a judgment against any and all parties 246 Mont. 336, 341, 805 P.2d 1318, 1322.

While the srattite plainly limits total recovery to the satisfaction of a plaintiff's losses for

breach of an obligation?the wordiitg of tlie statute nowhere shields from liability any parties

who may be jointly or severally liable.

710     The District Court concluded that Trux offered no authority that joint artd several

liability enabled it to collect more than it is entitled to collcct under the la\v. Trux did not

arguc, hoivcver, that joint and several liability permitted or- cnablcd it to collcct nlore than

it was entitled to collect under the law. Rather, Trux argued that    4 27-1-303, MCA, did not
bar separate actions against jointly and severally liable tortfeasors even \vlsere Trux had
already recci1:cd a dchuli judgment covering its iosscs: but had not hec~isucccssiirl in

collecting thc jtid,irmcnt.

9120   We agrce with i'r~lx.Nothing in the plain worciing of 5 27-1 -303; MCA, prevents a

pan) from pursuing and receiving scparaic jlidgmcnts against jointly and severally liable

tortfeasors. This is true even if more than one judgment entitles the plaintiff to the full

amou~it damages suffered. By definition, "a liability is said to be joint and several when
      of

the creditor may denland payment or sue one or more of'the parties to such liability

separately, or all of the111 together at [the creditor's] option." Black's Lan Dictionary 837

(6'"ed. 1990).

7121   In conjunction with joirrtand several liability. the plain languageof 3 27-1-303. MCA,

prevents a person from recovering for breach of all obligatio~tan amount greater than the

da~nagcs
       suffered. Pennitting joint and several liability-that is, separate judgme~itsagainst

multiple tortfeasors-does not, as concluded by the District Court, defeat the purpose of the

statute. Section 27-1 -303, MCA, does not shield a jointly and severally liable tortfeasor from

judgment il~erelybecause a judgment for full recovery has already been entered against

another jointly and severally liable tortfeasor. Tile statute docs not design;rtc which liable

party mtrst pay. It merely limits a person's recovery to actual losses suffered by breach of

an obligation. To inter-pret the statute as the ilistrict Court has done would effectively shield

other tol-tfeasors who are jointly and scvc~-ally
                                                liable, and thiis responsible for a plaintiffs

damages. simply because the plaintiffreceived a judgment, or right of recovery, against one
                                   K-ouid cffectivciy provide a route lhrnugh which jointly
oi'tbi: tortfeasors. This reasonir~g

and severally liable tortfeasors could avoid l i b l t .a resrrlt that is clcarly nor rhi: purpose
                                              iriiy

or intention of the statute.

rl22    We agree with Trux that its previous judgment merely represents a right to recover

against Mine and Mill. The judgment does not represent aettral reco\.ery. Section 27-1-303,

MC.4, is therefore inapplicable in the instant case. If it is determined that the Respondents

are jointly and severally liable because they breached an obligation to Trux, the judgment

against Mine and Mill will not shield them.

'123    We conclude, therefore, that $27- 1-303, MC'A, by its plain language, merely prevents

a person from recovering a greater amount of damages tiIan suffered by breach of an

obligation unlcss otherwise provided by statulc. It docs not preclude separate judgn~ents

against tortfeasors who are jointly and severally liable and is therefore inapplicable to the

present ease. The District Court thus erred when it granted surnmary judgment on that basis.

112.1  2. Whether the Directors are shielded from personal liability for the contractual
obligation of Mine and Nlill to Trux.

:j25    On appeal, the Respondents claim that joint and several liability is i~nproper
                                                                                     because

Trux did slot establish that the Ilirectors acted against the best ititerests of the corporation or

acted only on the basis of their own pecuniary benefit or wit11 the intent to harm Trux. In

granting summary judgment, the District Court did not address thc issue of wl~ethcrthe

Respondents are or are not jointly and severally liable and the issue will not be addressed
TlZ6    -1.h~:Rcspondcnts also allege that si!mmaryjucJgcrr~enrwould hare been appropriate

01
 1   the biasis of collsitcra? csluppei or-, aiter-natively; bccausi: Trux co~iidhatc ackicd ihc

Respondents to the iiarlk Case under Rule 13(hj. M.R.Civ.P., bat failed to do so. The

District Court ctici not grant summary jiidgment on thc basis o f these issues and the issues arc

not properly before this Court on appcal.

'27     We conclude that the District Court erred in granting surnlnary judgment to the

Rcspondcnts on the basis of 9 27-1-303, MCA. We reverse and remand accordingly.