Court Opinion

ID: 883381
Source: CourtListenerOpinion
Date Created: 2013-06-05 02:18:29.997872+00
Date Added: 2024-06-11T12:35:45.161080
License: Public Domain

NO.     94-149
            IN THE SUPREME COURT OF THE STATE OF MONTANA
                                     1994

STATE MEDICAL OXYGEN AND SUPPLY, INC.,
a Montana Corporation,
            Plaintiff and Appellant,
     -vs-
AMERICAN MEDICAL OXYGEN CO.,
a Montana Corporation, J.C. LYNDES,
GARY GOMEZ and RONALD WRIGHT,
            Defendants and Respondents.

APPEAL FROM:     District Court of the Second Judicial District,
                 In and for the County of Silver Bow,
                 The Honorable James E. Purcell, Judge presiding.

COUNSEL OF RECORD:
            For Appellant:
                 Brian L. Delaney: Mulroney, Delaney & Scott,
                 Missoula, Montana

            For Respondents:
                 Michael G. Moses: Moses Law Firm, Billings,
                 Montana

                                     Submitted on Briefs:   June 30, 1994
                                                 Decided:   October 25, 1994
Filed:

                                     Cle$k
Justice Karla M. Gray delivered the Opinion of the Court.

        State Medical Oxygen and Supply Inc. (State Medical) appeals

from orders of the Second Judicial District Court, Silver Bow

County,     granting summary judgment in favor of American Medical

Oxygen Co.       (American   Medical)        and   denying    its     motion     for

reconsideration.      We affirm.
        This is the fourth time the parties have been before this

Court.     Both are Montana corporations involved in the business of

providing oxygen and associated health care products to customers

in their homes and in hospitals.              In 1985,    State     Medical    filed
complaints in five Montana counties against American Medical and

several of its employees and directors.               Generally, those actions

involved allegations that American Medical had violated § 1877(b)

of the Social Security Act, 42 U.S.C. 5 1395nn,              by enticing State

Medical route drivers to work for American Medical, resulting in

route    customers   switching   companies.        Because   the    lawsuits   were

similar,     the parties chose the action in Cascade County as the

"lead case."

         Summary judgment was granted in the lead case on the basis

that a Social Security Act violation does not give rise to a

private civil cause of action.              On appeal,    we affirmed on that

issue,     but remanded with instructions that the district court

consider the depositions of former State Medical employees for the

purpose of other issues,         and allow State Medical to amend or

supplement     its   pleadings     to       include   a   claim     of   tortious

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interference with its business.      State Med. Oxygen v. American Med.
Oxygen Co. (1988), 230 Mont. 456, 463, 750 P.2d 1085, 1089 (State
Med. I).
     State Medical subsequently amended the complaints and the
litigation   continued.    The district court in Cascade County again
granted summary judgment to American Medical, on the basis that
State Medical's nondisclosure agreement was unreasonable and
unenforceable.        We affirmed on appeal,     concluding that the
agreement was void as against public policy and unenforceable as a
matter of law.        State Med. Oxygen v. American Med. Oxygen Co.

(1989) I 240 Mont. 70, 75, 782 P.2d 1272, 1276 (State Med. II).
     Following State Med. II, the parties agreed to transfer "lead"
status to the case in Silver Bow County.     In October 1991, American
Medical filed motions to dismiss and for summary judgment in the
Silver Bow County action based on an earlier Cascade County
district court order not at issue in the previous appeals: the
motions were granted and State Medical appealed.       We reversed and
remanded,    concluding that the order of the district court in
Cascade County was not a final judgment on the merits and that res
judicata and collateral estoppel did not apply. We also concluded
that 42 U.S.C.    §    1395a,   which allows an individual receiving
Medicare/Medicaid benefits to obtain health services from any
qualified agency or person, does not act as a bar to a state law
claim of tortious interference with a business relationship. State
Med. Oxygen v. American Med. Oxygen Co. (1992),      256 Mont. 38, 43-
45, 844 P.Zd 100, 104-105 (State Med. III).

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     On remand following State Med.           III,     the District Court
scheduled trial for February, 1994.       American Medical moved for
summary judgment in August of 1993.       Following oral argument on
October 20, 1993, the District Court granted the motion in an order
and memorandum dated December 1,      1993.      The    court    subsequently
denied State Med .ical's motion for recons,ideration.           State Medical
appeals.

     1 . Did the District Court err in concluding that no
     genuine issue of material fact existed and that American
     Medical was entitled to summary judgment as a matter of
     law?
     Summary judgment is proper when there are no genuine issues of
material fact and the moving party is entitled to judgment as a
matter of law.   Rule 56(c), M.R.Civ.P.   We review an order granting
summary judgment by utilizing the same criteria as the district
court, determining whether a genuine issue of material fact exists
and whether the moving party is entitled to summary judgment as a
matter of law.   Minnie v. City of Roundup (1993),            257 Mont. 429,
431, 849 P.2d 212, 214.
     State Medical's action against American Medical is presented
as tortious interference with its business relations with former
employees and with former customers.           An action for tortious
interference with business relations entails four elements: that
the defendant's acts:      (1) are    intentional       and     willful:   (2)

calculated to cause damage to the plaintiff's business; (3) done
with the unlawful purpose of causing damage or loss, without right
or justifiable cause on the part of the actor; and (4) result in

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actual damages and loss.            State Med. I, 750 P.2d at 1088-1089.

        If a defendant establishes the absence of a genuine issue of

material fact as to one of the elements constituting the cause of
action, and the plaintiff fails to come forward with proof showing

the existence of a genuine issue as to that element, summary

judgment in the defendant's favor is proper. See White v. Murdock

(Mont. 1994), 877 P.2d 474, 477-78, 51 St.Rep. 547, 548. Disputed

facts are material, therefore, if they involve the elements of the

cause of action or defense at issue to an extent that necessitates

resolution of the issue by a trier of fact.                    See Bails v. Gar

(1976) r 171 Mont. 342, 346, 558 P.2d 458, 461.                Any inferences to

be drawn from the factual record must be resolved in favor of the
party opposing summary judgment.              Boylan v. Van Dyke (1991), 247
Mont. 259, 266, 806 P.2d 1024, 1028.               In this case, our review of
the District Court's order granting summary judgment focuses on the

third    element   of    tortious    interference    with    business   relations;

namely, the existence of a genuine issue of material fact regarding

whether American Medical's             acts   were    done    without   right   or

justifiable    cause.

        American Medical came forward with evidence to meet its burden

of demonstrating that no genuine issue of material fact exists on

this element regarding State Medical's customers or employees.

Concerning     the      relationship     between     State    Medical    and    its

customers, AmericanMedical's evidence indicatedthatstate                   Medical

supplied customers with oxygen and other medical supplies by

running an ordinary route service, in a certain area, on a regular

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basis.      The business relationship between the customers and State
Medical was noncontractual and each party was free to terminate the
relationship without future obligation.             Affidavits also indicate
that, after beginning employment with American Medical, the drivers
contacted their former State Medical customers from memory.                  The
customers were not approached in any unusual way, but merely
informed that the route driver had switched companies and asked if
they wanted to purchase oxygen and supplies from the new provider.
Some,     but not all,    of the customers made the change to American
Medical with the route drivers.
         Similarly,     American    Medical's     evidence   regarding     State
Medical's relationship with former employees established that State
Medical route drivers first initiated contact with American Medical
in 1983 and 1984.           The drivers were working for State Medical
without a contract; they were dissatisfied with their employment
and     looking   for   greater    opportunity.    In August and September,
1984, American Medical negotiated with, and ultimately hired, these
route drivers who immediately began servicing customers on American
Medical's behalf in the Butte area.
         Whether American Medical's evidence demonstrates the absence
of a genuine issue of material fact regarding whether it acted
without right or justifiable cause can be determined by applying
factors we have adopted from the Restatement (Second) of Torts §
767 (1965).        State Med. I,      750 P.2d at 1088.      Considering     the
facts,     circumstances,    and evidence presented in this case, two of
those factors are particularly probative: first, the nature of the

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relationship between State Medical and its former employees and
customers: and second, the nature of American Medical's conduct.
        American Medical's evidence establishes that the relationship
between State Medical and its customers was informal, voluntary and
noncontractual.          The customers were free to terminate their
relationship with State Medical at any time and find another
provider for any reason or no reason at all.
        Based on the record before us, State        Medical's    relationship
with its employees also was noncontractual and without a specified
term.     Indeed, State Medical's relationship with the employees at
issue here can be characterized as "at will" employment under § 39-
2-503, MCA.     "At will" generally refers to the employer's and the
employee's ability to terminate the employment relationship for any
reason or no reason.          Scott v.   Eagle    Watch   Investments,    Inc.

(1991) I 251 Mont. 191, 195, 828 P.2d 1346, 1349.
        Notwithstanding the voluntary nature of the relationships at
issue here in determining whether American Medical acted without
right or justifiable cause, however, a genuine issue of material
fact could still exist regarding whether American Medical acted
without right or justifiable cause based on the nature of American
Medical's     conduct.     Indeed,   that factor was important in the
context of noncontractual business relationships in Daniels v. Dean

(1992) I 253 Mont. 465, 474, 833 P.2d 1078, 1084.
        In Daniels,   the defendant's acts in interfering with the
plaintiff's relationships with his customers were of an egregious
and outrageous nature.        They   included    threatening    and   harassing
patrons, obstructing entrance to the business and interfering with
customer parking spaces.                  Daniels,    833 P.2d at 1080-81.

        By contrast,            no evidence in the present case suggests that

American       Medical's         acts   in   hiring    State    Medical's    employees    and
soliciting its customers were in any way unusual, wrongful, or

unjustified.         We conclude, therefore, that American Medical met its
burden on summary judgment with regard to establishing the absence

of a genuine issue of material fact on the "without right or

justifiable         cause" element of State Medical's cause of action.

        State Medical             contends that the record establishes the
existence of five broad issues of material fact.                             These     alleged

issues include: (1) whether American Medical had a firm employment
agreement with State Medical's key employees prior to 1984; (2)

whether American Medical first contacted State Medical's employees

or     the    employees         first   contacted     American    Medical;    (3)    American

Medical's       intent; and (4) whether American Medical employees were

using State Medical's proprietary information.                        The fifth alleged

issue is merely an aggregation of the first four.

        None of these alleged factual issues relate to the "without

right or justifiable cause" element of State Medical's action for

tortious interference with business relations.                              The first two

"issues" relate to the nature of State Medical's relationship with

its     employees.              Because that relationship was voluntary and

noncontractual and none of the acts suggested by these "issues" was

even    inferentially           tortious, these factual questions do not raise

an    issue    of    material   fact    regarding     whether    American    Medical    acted

                                                 8
without right or justifiable cause.    Similarly, questions involving
American Medical's intent relate to the first element of the cause
of action, but do not raise a genuine issue of material fact with
regard to the "without right or justifiable cause" element.
      Finally, with regard to the fourth ltissueV' asserted by State
Medical, no evidence of record suggests that the drivers involved
in this Silver Bow County action used State Medical's written
customer lists.    Moreover, we conclude that the District Court did
not abuse its discretion in refusing to consider affidavit evidence
relating to the Missoula     County action and the drivers at issue
therein: even assuming the admissibility of that evidence in that
action, the evidence is not relevant to the case presently before
us.
      We conclude that none of the disputed factual issues alleged
by State Medical raises a genuine issue of material fact regarding
whether American Medical acted without right or justifiable cause.
No genuine issue of material fact exists on the record before us on
this necessary element of State Medical's claim for tortious
interference with business relations: we hold, therefore, that the
District Court did not err in granting American Medical's motion
for summary judgment.

      2. Did the District Court err in denying State Medical's
      motion for reconsideration or relief from judgment?
      State Medical moved for reconsideration of the District
Court's   summary judgment order pursuant to Rule 59(g) or,
alternatively,    for relief from that order pursuant to Rule 60(b),
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M.R.Civ.P.      Its Rule 59(g), M.R.Civ.P., argument--that the District
Court erred in determining that no genuine issue of material fact
existed--is addressed and resolved by our conclusion on the first
issue.
        Rule 60(b)(l)-(6), M.R.Civ.P., sets forth the reasons for
which a court may relieve a party from a final judgment, order or
proceeding.      Rule 60(b)(2), M.R.Civ.P., provides for relief in the
event of "newly discovered evidence" which could not have been
discovered with due diligence.             The District Court denied State
Medical's Rule 60(b)(2) motion on the basis that the evidence
presented was not "newly discovered."
        The "newly discovered" evidence State Medical submitted to the
District Court in support of its motion consisted of two sets of
records.        The first was American Medical's patient records,
allegedly       indicating that American Medical agreed to accept
assignment of Medicare payments in violation of federal law.           The
second consisted of telephone records, allegedly showing that an
American Medical employee was in Butte several times prior to the
opening of American Medical's Butte office.
        State Medical concedes this evidence was in its possession
before the October 20, 1993, oral argument on American Medical's
motion    for   summary   judgment.   Indeed, the record reflects that
most,    and perhaps all,     of this evidence was available to State
Medical in June of 1987.         Consequently,    the evidence in question
cannot be characterized as newly discovered under Rule 60(b)(2),
M.R.Civ.P.      Moreover,   in the context of litigation which has been

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ongoing since 1985,      State Medical's assertions that it had

insufficient time to review the available records and,              in any
event,    that it "thought"   the records related to the issue of

damages rather than liability, are less than compelling.

         We agree with the District Court that State Medical had
sufficient time to find, review, analyze and present the evidence

it characterizes as     "newly   discoveredl'       before and during the

summary judgment process.     The record reflects neither an effort by

State Medical to bring the evidence to the court's attention nor a

request for additional time prior to the resolution of the summary

judgment motion.

     Rule 56(f), M.R.Civ.P., provides the party opposing a summary

judgment motion with a means of establishing, by affidavit, that it

"cannot for reasons stated present by affidavit facts essential to
justify the party's opposition. . . .'I      In this case, State Medical

could have followed this procedure,     requesting time to analyze the

evidence in its possession insofar as that evidence might have been

relevant to its opposition to American Medical's motion for summary

judgment. It did not do so.

     The evidence State Medical submitted in support of its Rule

60(b)(Z) motion does not meet the         *'newly    discovered" evidence

standard set forth in Rule 60(b)(2), M.R.Civ.P.              We   conclude,

therefore,   that the District Court did not err in denying State
Medical's motion for relief from judgment under Rule 60(b)(2),

M.R.Civ.P.

     Affirmed.

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