Mont. Code Anno. (Case 1:01-cv-12257, Document 3904-16)

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Document 3904-16, filed March 22, 2007 in Case 1:01-cv-12257-PBS, reproduces LexisNexis Montana Code Annotated pages with case notes. It begins partway through the annotations to Mont. Code Ann. § 27-1-221, the punitive damages statute, then reproduces § 27-2-211, § 30-14-103, § 30-14-142 and § 53-6-155 with their notes. The § 27-1-221 notes summarize Montana decisions on when punitive damages may be awarded, including Finstad v. W.R. Grace & Co.-Conn., which found the statute's unanimous verdict requirement unconstitutional. The § 27-2-211 notes address statute of limitations questions.

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Mont. Code Anno., § 27-1-221

221(7)(b), which merely required the district court lo reconsider whether the facts of the case supported the award of
punitive damages, and if so, to comply with the requirements of § 27-1-221(7)(b) by setting forth the reasons justifying
such an award. Bragg v. McLaughtin, 1998 MT 284N, 1998 Mont. LEXIS 274 (Nov. 24 $998).

22. Trial court in a prescriptive easement case pranted injunctive relief to a farmer as well as compensatory damages
and held open the possibility of punitive damages if the landowner violated the final judgment and order that kept open
a road across the landowner's property. Consequently, because an earlier injunction to keep the road open during litiga-
tion was not disobeyed, the trial court's decision to deny the farmer's motion for punitive damages at the judgment stage
and to reserve the award of punitive damages was not clearly erroneous. Rasmussen v. Fowler, 245 Mont. 308, 800 P.2d
1053, 1990 Mont. LEXIS 361 (Mont. 1990).

23. There was no error in a district court's assessment of damages for defendant's failure to assign a lease of certain
farmland to plaintiffs who purchased the farm and related interests, because, as required by Mont. R. Civ. P. $2(a), there
was enough relevant evidence to support the district court's findings of fact on the issue and the district court properly
applied Mont. Code Ann. § 27-1-314 in determining the appropriate damages. Similarly, an award of punitive damages
under Mont. Code Ann. § 27-41-22] was also proper. Moore v. Hardy, 230 Mont. 138, 748 P.2d 477, 1988 Mont, LEXIS
15, 45 Mont. St. Rep. 108 (Mont, 1988).

24. To sustain an award of punitive damages against an objection that the evidence is insufficient, there must be sub-
stantial evidence in the record of oppression, fraud or malice, actual or presumed, toward the plaintiff, where the puni-
tive damage award is given for the sake of example and by way of punishing the defendant, Mont. Code Ann. $ 27-1-
221. Johnson v. Murray, 201 Mont, 495, 656 P.2d 170, 1982 Mont. LEXIS 1019 (Mont. 1982).

25. In a negligence action, it was determined that Mont. Code Ann. § 27-1-221 which required unanimous punitive
damages verdicts, was unconstitutional where il directly conflicled with Mont. Const. Art. I, § 26, which allowed two-
thirds verdicts in ali civil actions. Finstad v. W.R. Grace & Co.-Conn., 2000 MT 228, 307 Mont. 240, 8 P.3d 778, 2000
Mont, LEXIS 229, 57 Mont. St. Rep. 934 (2000).

26, Although a trial court found as a matter of law that the actions of defendant company in drawing on a letter of credit
constituted a tortious breach of the obligation of good faith and fair dealing, as defined by Afont, Code Ann, § 28-1-211,
in that the contract was "oppressive" and "malicious," which were terms used to characterize the type of conduct in
which exemplary damages were allowed, Mont. Code Ann. § 27-1-221, under Mont. Code Ann. § 27-1-220 exemplary
damages were not allowed for a breach of contract unless otherwise expressly provided by statute. Haines Pipeline
Constr. v. Mont. Power Co., 251 Mont. 422, 830 P.2d 1230, 1991 Mont. LEXIS 316 (Mont, 1991), overruled by Porter
vy. Galarneau, 275 Mont. 174, 911 P.2d 1143, 1996 Mont. LEXIS 23, 53 Mont. St. Rep. 99 (Mont. 1996).

27. To recover punitive damages in addition to compensatory recovery from a breach of the implied covenant of good
faith and fair dealing requires the plaintiffs to prove that the defendants’ actions in breaching the implied covenant of
good faith and fair dealing met the requirements of Moni. Code Ann. § 27-1-221. McGregor v. Mommer, 220 Mont. 98,
714 P.2d 536, 1986 Mont. LEXIS 803 (Mont. 1986).

28. Seller of land was not entitled to punitive damages in a breach of contract action brought against the potential buyers
of the land, as there was insufficient evidence that the buyer acted with actual malice towards seller by bringing a num-
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Mont. Code Anno., § 27-1]-221

ber of actions against the seller, including an action that was filed in iribal court. Weter v. Archambauli, 2002 MT 336,
313 Mont. 284, 61 P.3d 771, 2002 Mont. LEXIS 644 (2002).

29. Reasonable punitive damages may be awarded where defendant was found guilty of actual fraud. Webcor Elecs. v.
Home Elecs., 23] Mont. 377, 754 P.2d 491, 1988 Mont. LEXIS 126, 45 Mont. St. Rep. 695, 7 U.C.C. Rep. Serv. 2d
(CBC) 683 (Mont. 1988).

30. Compensatory and punitive damages awarded for a seller in ils action against a manufacturer of telephone systems
for breach of contract, breach of covenant of good faith, and fraud was proper where there was evidence of a breach and
fraud. Webcor Elecs. v. Home Elees., 231 Mont. 377, 754 P.2d 491, 1988 Mont, LEXIS 126, 45 Moni, St. Rep, 695, 7
UC.C. Rep. Serv. 2d (CBC) 683 (Mont. 1988).

3k. Under Mont. Code Ann. $ 27-1-22/(1), the breach of a seller of real property's obligation to allow the purchaser
“peaceable occupation of his home and property did nol arise from contract. Punitive damages are proper in an action
for a breach of an obligation not arising from contract where the defendant has been guilty of oppression, fraud, or mal-
ice. Rauch v. Michel, 22] Mont. 1, 716 P.2d 617, 1986 Mont. LEXIS 862 (Mont. 1986).

32. To recover punitive damages in addition to compensatory recovery from a breach of the implied covenant of good
faith and fair dealing requires the plaintiffs to prove that the defendants’ actions in breaching the implied covenant of
good faith and fair dealing met the requirements of Mont. Code Ann. $ 27-1-221. MeGregor v. Mommer, 220 Mont. 98,
714 P.2d 536, 1986 Mont, LEXIS 803 (Mont. 1986).

33. Defendant's actions in frustrating plaintiffs allempts to conform with lemns of their contract met the state's bad faith
standard required for breach of the implied covenant of good faith and fair dealing; thus, punitive damages were appro-
priate. Nicholson v. United Pac. Ins. Co., 219 Mont. 32, 710 P.2d 1342, 1985 Mont. LEXIS 96] (Mont. 1985), ques-
tioned by Davey v. Nessan, 252 Mont, 397, 830 P.2d 92, 1992 Mont. LEXIS 92, 49 Mont. St, Rep, 294 (Mont, 1992),
questioned by Keller v. Dooling, 248 Mont, 535, 813 P.2d 437, 1991 Mont. LEXIS 163, 48 Mont. St. Rep. 554 (Mont.
L992), criticized by Story v. Rozeman, 242 Mont. 436, 791 P.2d 767, 1990 Mont. LEXIS 143, 12 U.C.C. Rep. Serv. 2d
(CBC) 359 (Mont. 1990).

34. In a dispute over a sublease, it was error to award the sublessee punitive damages when no tortious conduct on the
sublessor's part had been shown. Lemley v. Allen, 203 Mont. 37, 659 P.2d 262, 1983 Mont. LEXIS 627 (Moni. 1983).

35. Ina dispute over a sublease, it was error to award the sublessee punitive damages when no tortious conduct on the
sublessor's part had been shown. Lemiey v. Allen, 203 Mont, 37, 659 P.2d 262, 1983 Mont. LEXIS 627 (Mont, 1983).

36, Where a personal injury plaintiff sought punitive damages under Mont. Cade Ann. § 27-1-221 for injuries allegedly
cause by defendant driver's willful and wanton misconduct in driving his vehicle at an excessive speed, evidence of the
driver's prior guilty pleas to charges that he supplied liquor to minor was irrelevant because the oppression, fraud, or
malice reflected by those pleas was not associated with the alleged act of reckless driving and did not tend to make any
of the requisite factors for punitive damages more or less probable. Derenberger v. Lutey, 207 Mont. 1, 674 P.2d 485,
1983 Mont, LEXIS 848 (Moni. 1983).

37, Ina products liability action against a tire manufacturer, evidence that the manufacturer made illegal political con-
tributions should not have been admitted under Mont. R. Evid. 402 on the issue of punitive damages under Moni. Code
Ann. § 27-1-221, as plaintiff completely failed to connect the political contributions to a federal investigation of the
multi-piece wheels, which exploded and caused plaintiff's injury. The evidence was extremely damaging and obviously
inflammatory in nature and should have been admitted only upon proof showing its relevance to the action, Kuiper v.
Goodyear Tire & Rubber Co., 207 Mont. 37, 673 P.2d 1208, 1983 Mont. LEXIS 874 (Mant. 1983).
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Mont. Code Anno., § 27-1-221

38. Trial court exceeded its authority when it reduced the jury punitive damages awarded for the msurers' bad faith in
adjusting a hail crop damage claim; the court was bound by the jury's determination of facts on all issues submitted to
the jury pursuant to Mont. Code Ann. § 27-1-221(7)(c). DeBruycker v. Guar. Nat'l Ins. Co., 266 Mont. 294, 880 P.2d
819, 1994 Mont. LEXIS 187, 51 Mont. St. Rep. 835 (Mont, 1994).

39, The court must clearly state its reasons for increasing, decreasing, or not increasing or decreasing the punitive dam-
ages award im findings of fact and conclusions of law, demonstrating consideration of each of the factors listed in Adont
Code Ann, § 27-1-221(¢7)(b) and (c). DeBruycker v. Guar. Nat'l Ins. Ca., 266 Mont. 294, 880 P.2d 819, 1994 Mont.
LEXIS 187, 5] Mont. St. Rep. 835 (Mont. 1994).

40. Title companies acted in bad faith by refusing to defend the insured, and their bad faith was a basis for properly as-
sessing punitive damages that was independent of a contract and of the Montana Insurance Code; thus the prohibition of
the imposition of punilive damages for a breach of contract contained in Mont. Code Ann. § 27-1-221 did not apply, and
there was no requirement that a breach of the Montana Insurance Code was a prerequisite for the assessment of punitive
damages. Lipinski v. Title Ins. Co., 202 Mont. 1, 655 P.2d 970, 1982 Mont. LEXIS 1017 (Mont. 1982).

41, Although, pursuant to Mont. Code Ann. § 27-1-22!, malice, oppression, or fraud was necessary to establish a basis
for punitive damages, malice on the part of an insurer was not a necessary component lo impose liability upon the in-

surer for bad faith refusal to setile. Gibson v. Western Fire Ins. Co., 210 Mont. 267, 682 P.2d 725, 1984 Mont. LEXIS

936, 57 A.LR.4th 773 (Mont. 1984).

42. Where, based on the testimony at trial, a jury could have found that a malpractice insurer was at least recklessly in-
different to the risk to which it was putting its insured in failing to settle an underlying tort case, consideration of puni-
tive damages was a proper issue to submil to the jury and the Supreme Court of Montana found no reason to state, as a
matter of law, that punitive damages should nol have been awarded to the msured for {he insurer's failure to setile. Gib-
son vy, Western Fire Ins. Co., 210 Mont. 267, 682 P.2d 725, 1984 Mont. LEXIS 936, 57 ALR.4th 773 (Mont. 1984),

43, Although the district court's directed verdict in favor of defendant insurer and against plaintiff claimant under Mont.
Code Ann. § 33-18-201(6), (13) (2002), of Montana's Unfair Trade Practices Act, was reversed, the recard did not show
sufficient evidence of actual fraud or actual malice, and thus, the directed verdict in favor of the insurer on the issue of
punitive damages under Mont. Code Ann. § 33-18-242(4) was affirmed; the permissive language of § 33-/8-242(4) did
not mean that the violation was per se "actual malice" under Mont. Code Ann. § 27-1-221. Burgett v. Safeco Nat'l Ins.
Co., 2003 US. App. LEXIS 15134 (9th Cir. Mont. July 17 2003), reprinted as amended at 73 Fed. Appx. 254, 2003 U.S.
App. LEXIS 16957 (9th Cir. Mont, 2003).

44, Where insurer sought to avoid punitive damages liability in wrongful repossession suits against an insured, on certi-
fied question from federal court, state supreme court ruled that state public policy did not bar insurance coverage of
punitive damages. First Bank (N.A.)-Billings v. Transamerica Ins. Co., 209 Mont. 93, 679 P.2d 1217, 1984 Mont.
LEXIS 869 (Mont, 1984).

45. Violations of the Discrimination in Employment Statutes, Mont. Code Ann. § 49-4-10] and Mont. Code Ann. § 49-
4-102, warrant a claim for punitive damages under Mont. Code Ann. § 27-1-221/ if the violations are shown to have been
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Mont. Code Anno., § 27-1-221

intentional or reckless. Owens v. Parker Drilling Co., 207 Mont, 446, 676 P.2d 162, 1984 Mont. LEXIS i151, 2 Am.
Disabilities Cas. (BNA) 312, 44 Empl. Prac. Dec. (CCH) P37382 (Mont. 1984).

46. Punitive damages may be assessed for breach of the obligation owed to deal fairly with an employee if the provi-
sions of Mont. Code Ann. § 27-1-22/ are satished. Gates v, Life of Montana Ins. Co., 205 Mont. 304, 668 P.2d 213,
1983 Mont, LEXIS 781, 115 L.R.R.M. (BNA) 4350, 98 Lab. Cas. (CCH) P55399 (Mont. 1983).

47. Mont. Code Ann. § 27-1-22! only exempts breach of contract actions from its provisions. Breach of the duty owed
to deal fairly and in good faith in an employment relationship is a tort for which punitive damages can be recovered if
an employer's conduct is sufficiently culpable. Gates v. Life of Montana Ins. Co., 205 Mont. 304, 668 P.2d 213, 1983
Mont. LEXIS 781, 115 LRRM, (BNA) 4350, 98 Lab. Cas. (CCH) P55399 (Mont. 1983).

48. Where the evidence was sufficient to justify the jury in finding that an employer induced an employee to submit a
letter of resignation by promising to give the employee a favorable letter of reference and in finding that the employer
refused the employee's demand for the retum of the letter of resignation, the employer's conduct was sufficient to form
the basis for a jury finding of fraud, oppression, or malice that justified an award of punitive damages under Mont. Code
Ann. § 27-1-221, Gates v. Life of Montana Ins. Co., 205 Mont. 304, 668 P.2d 213, 1983 Mont. LEXIS 781, 115 LARRM.
(BNA) 4350, 98 Lab, Cas. (CCH) P55399 (Mont. 1983).

49. In an employee's wrongful discharge action against his employer for violations of the Discrimination in Employ-
ment Statutes, Mont. Code Ann. § 49-4-10] and Mont. Code Ann. § 49-4-102, after he was fired from his job on an ail
rig because he had only one arm, the employee was entitled to seek punitive damages because there was sufficient evi-
dence to establish a germine issue of reckless conduct by the employer which crealed a presumption of malice to support
a claim for punitive damages under Mont. Code Ann. § 27-1-221. Owens v. Parker Drilling Co., 207 Mont. 446, 676
P.2d 162, 1984 Mont. LEXIS 1151, 2 Am. Disabilities Cas. (BNA) 312, 44 Empl. Prac. Dec. (CCH) P37382 (Mont.
£984),

50. In a boundary dispule action, punitive damages were validly awarded because the testimony at trial indicated that
the owners of one piece of properly refused to negotiate the boundary dispute, and destroyed two fences. Bollinger v.
Hollingsworth, 227 Mont. 454, 739 P.2d 962, 1987 Mont. LEXIS 940, 44 Mont. St. Rep. 1228 (Mont, 1987).

51. Landlord's argument that the trial court erred in awarding a tenant three month's periodic rent under Mont. Code
Ann. § 70-24-47 1 because the award was punitive in nature and the tenant did not meet the requirements for punitive
damages under Mont. Code Ann. § 27-1-22/ was without meril. As a specific statute, § 70-24-47] took priority over any
general statute that was inconsistent with il, Mont. Code Ann. § £-2-102. Whalen v. Taylor, 278 Mont. 293, 925 P.2d
462, 1996 Mont. LEXIS 190, 53 Mont. St. Rep. 914 (Mont. 1996).

52. Under Mont. Code Ann. § 27-1-221(2), actual malice existed in a prescriptive casement case where a landowner had
been told by his predecessors and others that the road across his properly was to remain open, the farmer told the land-
owner that a new gate would prevent the farmer from harvesting his crop on state-leased land, and the landowner pro-
ceeded to block the road, Rasmussen v. Fowler, 245 Mont. 308, 800 P.2d 1053, 1990 Mont. LEXIS 367 (Mant, 1999).

53. Trial court in a prescriplive easement case granted injunctive relief to a farmer as well as compensatory damages
and held open the possibility of punitive damages if the landowner violated the final judgment and order that kept open
a road acrass the landowner's property. Consequently, because an earlier injunction to keep the road open during liliga-
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Mont. Code Anno., § 27-1-221

tion was not disobeyed, the trial court's decision to deny the farmer's motion for punitive damages at the judgment stage
and to reserve the award of punitive damages was not clearly erroneous. Rasmussen vy. Fowler, 245 Mont. 308, 800 P. 2d
1053, 1990 Mont. LEXIS 36] (Moni. 1990).

54, Where defendants engaged in a fraudulent real estate scheme, the district court erred by awarding punitive damages
without stating the reasons in its findings of fact and conclusions of law. Williams v. Global Fin. Servs., Inc., 2006 MT
ON, 131 P.3d 571, 2006 Mont. LEXIS 5 (20006).

35. Findings supported a district court's awards of compensatory damages pursuanl to Afont. Code Ann. § 27-1-317 and
punitive damages pursuant lo Mfont. Code Ann. § 27-1-220. Findings as to the punitive damages met the requirements of
Mont. Code Ann. § 27-1-221(7)(b). Selvidge v. McBeen, 230 Mont. 237, 750 P.2d 429, 1988 Mont. LEXIS 26 (Mont.
1988),

56. Punitive damages are recoverable under Mont. Code Ann. § 27-1-22] where malice, oppression, or fraud is shown.
Malice is defined for these purposes as when a person knows or has reason to know of facts which create a high degree
of risk of harm to the substantial interests of another, and either deliberately proceeds to act in conscious disregard of or
indifference to that risk, or recklessly proceeds in unreasonable disregard of or indifference to that risk, his conduct
meets the standard of willful, wanton, or reckless to which the law of Montana will allow imposition of punitive dam-
ages on the basis of presumed malice; oppression includes acts that constitute an abuse of power. First Natl Bank v.
Twombly, 213 Mont. 66, 689 P.2d 1226, 1984 Mont. LEXIS 1077, 39 U.C.C. Rep. Serv. (CBC) 1192 (Mont. 1984).

27. Where the evidence was sufficient for the jury to find that a bank's acceleration of a promissory note was done with
malice and the jury resolved the issues that would have formed the basis for an award of punitive damages under Mont.
Code Ann. § 27-1-221 in favor of the promisors, the trial court erred in refusing to submit the issue of punitive damages
to the jury. First Nat'l Bank v. Twombly, 213 Mont. 66, 689 P.2d 1226, 1984 Mont. LEXIS 1077, 39 U.C.C, Rep. Serv.
(CBC) 1192 (Mont. 1984).

58. In addition to the actual damages, juries may pive damages for the sake of example and by way of punishment
where they find that defendanis have been guilty of oppression, fraud, or actual or presumed malice in tort actions. Gee
v. Egbert, 209 Mont. f, 679 P.2d 1194, 1984 Mont. LEXIS 834 (Mont. 1984).

59. Exemplary damages can be awarded permissibly in cases where there is no direct evidence of fraud or malice or
gross negligence; they may be allowed where there is evidence of such recklessness and wanton disregard of another's
rights that malice and evil intent will be inferred. Gee v. Egbert, 209 Mont. 1, 679 P.2d 1194, 1984 Mont, LEXIS 834
(Mont. 1984).

60. Mont. Code Ann. § 27-1-221 allows punitive damages for fraud. Because Mont. Code Ann. § 28-2-404 specifically
defines fraud as including constructive fraud, the breach of a fiduciary relationship constiluting a constructive fraud
forms the basis for an award of punitive damages. Purcefi v. Automatic Gas Distribs., 207 Mont. 223, 673 P.2d 1246,
1983 Mont. LEXIS 871 (Mont. 1983).

61. If the conduct of a particular defendant is tortious, the fact that an underlying contract exists does not defeat an
award of punitive damages. Fraud, if present in the record, constitutes a tori and provides a basis for an award of exem-
plary damages. Purcel? v. Automatic Gas Distribs., 207 Mont. 223, 673 P.2d 1246, 1983 Mont. LEXIS 871 (Mont.
£983),

62, Distinctive definition of “actual fraud" under Afont. Code Ann. § 27-1-221{3) applies only to the consideration of
punitive damages and does not define-or affect the definition of-the underlying tort. Hallenberg v. General Mulls Opera-
tions, Inc., 2006 MT 191, 333 Mont. 143, 141 P.3d 1216, 2006 Mont. LEXIS 384 (2006).
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Mont. Code Anno., § 27-1-221

63. Trial court's interpretation and application of Mont. Code Ann. § 27-1-221 was erroneously influenced by case law
relative to the definitions of fraud and constructive fraud for claims brought under Mont. Code Ann. tit, 28, and thus the
court remanded for reconsideration of the farmer's punitive damage claim based on actual fraud as defined in § 27-/-
221. Hallenberg v. General Mills Qperations, Inc., 2006 MT 191, 333 Mont. 143, 141 P.3d i216, 2006 Mont. LEXIS
384 (2006).

64. Reasonable punitive damages may be awarded when the defendant has been found guilty, by clear and convincing
evidence, of actual fraud or actual malice. DeBruycker v. Guar. Natl ins. Co., 266 Mont. 294, 880 P.2d 819, 1994
Mont. LEXIS 187, 51 Mont. St. Rep. 835 (Mont. 1994).

65. In an action under the Montana Unfair Trade Practices Act, punitive damages may be assessed pursuant to Mont.
Code Ann. § 27-1-221 for a violation of subsections (1), (4), (5), (6), (9), or (13) of Mont. Code Ann. § 33-18-242(4).
Dees v. Am. Nat'l Fire Ins. Co., 260 Mont. 431, 861 P.2d 141, 1993 Mont, LEXIS 268, 50 Mont. St. Rep. [068 (Mont.
£993).

66. In calculating damage awards, the court can also consider any other circumstances that may operate to increase or
reduce, without wholly defeating, punitive damages, pursuant to Mont. Code Ann. § 27-1-221(7)(b) (ty). Maloney v.
Home & inv. Ctr., Inc., 2000 MT 34, 298 Mont. 213, 994 P.2d 1124, 2000 Mont. LEXIS 33, 57 Mont. St. Rep. 144
(2000).

67. District court abused the discretion granted by Mont. Code Ann. 25-1 1/-102(5) to grant a new trial on the basis that
the jury's verdict was given under the influence of passion or prejudice because it failed to consider the appreciation of
the corporate lortfeasor's assets, as well as the corporation's policy of retaining profits when it determined the corpora-
tion's net worth and taxable income, as required by Mont. Code Ann. § 27-1-221. Maurer v. Clausen Distrib. Co., 275
Mont. 229, 912 P.2d 195, 1996 Mont. LEXIS 19, 53 Mont. St. Rep. 78 (Moni. 1996).

68. Although defendant's net worth was one of the factors Mont. Code Ann. $ 27-1-221(7)(a) required to be considered
in determining the appropriate punitive damage award, the plaintiff was not required to show proof (hat the defendant's
net worth supported an award of damages; therefore, because defendant in a personal injury action did not produce evi-
dence regarding his net worth, the award of punitive damages against him was not subject to vacation. Maurer v.
Clausen Distrib. Co., 275 Mont, 229, 912 P.2d 195, 1996 Mont. LEXIS 19, 53 Mont. St. Rep. 78 (Mant. 1996).

69. Mont. Code Ann. § 27-1-202 allows compensatory damages to every person who suffers detriment from the unlaw-
ful act of another, and a plaintiff need only show actual damages; furthermore, Mont. Code Ann. § 27-1-221 allows a
jury to award exemplary damages where a defendant has been guilty of either actual or implied malice, which can be
shown by proof that a defendant engaged in a course of conduct knowing it to be harmful or unlawful, and there is no
specific statutory requirement of an underlying lort or mental disiress. Therefore, in an accident victim's negligence
action against the driver and the owner of a car that was involved in an automobile accident with the victim's car, the
victim was properly awarded damages because the owner indisputably wiped the headlights of his car, thus destroying
critical physical evidence relating to the victim's theory of the case, so the victim was damages as a resull of the owner's
wanton actions. Lawman v. Lee, 192 Moni. 84, 626 P.2d 830, 1987 Mont. LEXIS 695 (Mont. 1981).

70. It was not error for the district court lo grant the corporation's Fed. 2. Civ. P. 50 motion on the issue of punitive
damages because the passenger failed to demonstrate that the corporation acted with malice under Mont. Code Ann. §
27-1-221 (2), and the passenger did not present any evidence to suggest, as a threshold matter, that there was a high
probability that intoxicated passengers would injure other passengers, nor did the passenger demonstrate that the corpo-
ration knew that its procedure for dealing with disorderly or intoxicated passengers was inadequate. Groves v. Grey-
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Mont. Code Anno., § 27-1-221

hound Lines, Inc., 79 Fed. Appx. 255, 2003 U.S. App. LEXIS 21165 (9th Cir. Mont. 2003), amended by 2003 U.S, App.
LEXIS 25886 (9th Cir. Dec, 18, 2003).

71. In an employee's discrimination, assauli, and battery suil against her employer and her supervisor, the trial court
erred in denying the employee punitive damages against the supervisor as work-related matters were clearly not the
reason that the supervisor rented the motel room and his deliberate planning to put the employee in a place where he
could sexually assault her constituted actual fraud under Mont. Code Ann. § 27-1-221(3), (4) (1993), Beaver v. Mont.
Dep't of Natural Res. & Conservation, 2003 MT 287, 318 Mont. 35, 78 P.3d 857, 2003 Mont. LEXIS 742, 92 Fair Empl.
Prac. Cas. (BNA) 1514 (2003).

72. Although the district court's directed verdict in favor of defendant insurer and against plaintiff claimant under Mont.
Code Ann. § 33-18-201(6), (13) (2002), of Montana's Unfair Trade Practices Act, was reversed, the record did not show
sufficient evidence of actual fraud or actual malice, and thus, the directed verdict in favor of the insurer on the issue of
punitive damages under Mont. Code Ann. § 33-18-242(4) was affirmed; the permissive language of § 33-18-242(4) did
not mean that the violation was per se "actual malice" under Mont. Code Ann. § 27-1-221. Burgett v. Safeco Nat'l Ins.
Co., 2003 U.S. App. LEXIS 15134 (9th Cir. Mont. July 17 2003), reprinted as amended at 73 Fed. Appx. 254, 2003 U.S.
App. LEXIS 16957 (9th Cir. Mont. 2003).

73, Punitive damages may be awarded where the nature of the wrong complained of and injury inflicted goes beyond
merely violating the rights of another and is found to be willful and malicious. Trifad Bnim't, Inc.v. Andersen, 2001 MT
227, 306 Mont. 499, 36 P.3d 363, 200] Mont. LEXIS 479 (2002).

74. Punitive damages may be awarded only when the defendant has been found guilty of actual fraud or actual malice.
Onstad v. Payless Shoesource, 2000 MT 230, 301 Mont, 259, 9 P.3d 38, 2000 Mont. LEXIS 233, 57 Mont. St. Rep. 943,
16 ZELR. Cas, (BNA) 1209 (2000).

75, After reviewing a jury's award of punitive damages, the court must clearly state the reasons for increasing, decreas-
ing, or not increasing or decreasing the punitive damages award of the jury in findings of fact and conclusions of law,
demonstrating consideration of each of the factors listed in Mont, Code Ann. § 27-1-221. The factors which the court
must consider are: the nature and reprehensibility of the defendant's wrongdoing; the extent of the defendant's wrongdo-
ing: the intent of the defendant in commilting the wrong; the profitability of the defendant's wrongdoing, if applicable;
the amount of actual damages awarded by the jury; the defendant's net worth; previous awards of punitive or exemplary
damages against the defendant based upon the same wrongful act; potential or prior criminal sanctions against the de-
fendant based upon the same wrongful act; and any other circumstances thal may operate to increase or reduce punitive
damages without wholly defealing them. Onstad v. Payless Shoesource, 2000 MT 230, 301 Mont. 259, 9 P.jd 38, 2000
Mont. LEXIS 233, 57 Mont. St. Rep, 943, 16 LER. Cas. (BNA) 1209 (2000),

76, Legislative safeguards listed in Mont, Code Ann. § 27-1-221 ensures that an award of punitive damages is not
preater than reasonably necessary to punish and deter. Finstad v. WR. Grace & Co.-Conn., 2000 MT 228, 301 Mont.
240, 8 P.3d 778, 2000 Mont. LEXIS 229, 57 Mont. St. Rep. 934 (2000).

77. Under Montana law punitive damages serve two purposes: (1) to set an example, and (2) to punish the wrongdoer.
Mont. Code Ann. § 27-1-220(1). Finstad v. WR. Grace & Co.-Conn., 2000 MT 228, 301 Mont. 240, 8 P. 3d 778, 2000
Mont. LEXIS 229, 57 Mont, St. Rep. 934 (2000).

78. In a case where plaintiff alleged thal defendants stole tires, the trial court erred by failing to address the issue of pu-
nitive damages under Mont, Code Ann. $ 27-1-221. Cen-Dak Leasing, Inc. v. Morris, 2000 MT 80N, 2000 Mont. LEXIS
69 (Mar. 23 2000).

79, Insured was not entitled to punitive damages because the jury failed to make the prerequisite finding of actual fraud
or actual malice. Sandman v. Farmers ins. Exch., 1998 MT 286, 291 Mont. 456, 969 P.2d 277, 1998 Mont. LEXIS 278,
55 Mont, St. Rep. 1165 (1998).
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Monl. Code Anno., § 27-1-221

80. Insured was not entitled to punitive damages as a matter of law because the decision to award or not to award puni-
tive damages is statutorily committed to the fact finder. Sandman v. Farmers Ins. Exch., 1998 MT 286, 29} Mont. 456,
969 P.2d 277, 1998 Mont. LEXIS 278, 55 Mont. St Rep. 1165 (1998).

$1. Preponderance of the evidence is necessary to establish the elements of fraud, while clear and convincing evidence
is required to prove all elements for a claim of punitive damages. Sandman v. Farmers Ins. Exch., 1998 MT 286, 291
Mont. 456, 969 P.2d 277, 1998 Mont. LEXTS 278, 55 Mont. St. Rep, 1165 (1998).

82. The court is empowered to evaluate the amount of the award of punitive damages and to make findings of fact and
conclusions of law as to its reasons for increasing, decreasing, or letting stand the amount of the punitive damages
award. Sandman v. Farmers Ins, Exch., 1998 MT 286, 29] Mont. 456, 969 P.2d 277, 1998 Mont. LEXIS 278, 55 Mont.
St. Rep. 1165 (1998).

83. Where the jury was properly instructed on the issue of punitive damages and made ils decision after considering the
evidence presented, the trial court considers whether to increase or decrease the award based on the following Mont.
Code Ann, § 27-1-221(7)(c) factors: (i) the nature and reprehensibility of the defendant's wrongdoing; (ii) the extent of
the defendant's wrongdoing; (iii) the intent of the defendant in committing the wrong; (iv) the profitability of the defen-
dant's wrongdoing, if applicable; (v) the amount of actual damages awarded by the jury; (vi) the defendant's net worth:
(vii) previous awards of punitive or exemplary damages against the defendant based upon the same wrongful act: (viii)
potential or prior criminal sanctions against the defendant based upon the same wrongful act; and (ix) any other citcum-
stances thal may operate to increase or reduce, without wholly defeating, punitive damages. Rocky Mi. Enters. v. Pierce
Flooring, 286 Mont. 282, 951 P.2d 1326, 1997 Mont. LEXIS 276, 54 Mont. St. Rep. 1410 (Mont. 1997).

84. Pursuant to Mont. Code Ann, § 27-1-224, punitive damages are available where a defendant is found guilty of actual
fraud or actual malice. Accordingly, for the issue of punitive damages to reach the jury, a party must present evidence of
actual fraud or malice. Mattingly v. First Bank, 285 Mont. 209, 947 P.2d 66, 1997 Mont. LEXIS 231, 54 Mont. St. Rep.
L116 (Mont. 1997).

85. Punitive damage award, pursuant to Mont. Code Ann, § 27-1-221, in a fraud action upon an insurance policy was
proper because it was supported by substantial credible evidence, which was clear and convincing. Cartwright v. Equi-
table Life Assur. Soc'y of the United States, 276 Mont. I, 914 P.2d 976, 1996 Mont, LEXIS 35, 53 Mont, St. Rep, 268
(Mont. 1996).

86. District court abused the discretion granted by Mont. Code Ann. 25-/ 1-102(5) to grant a new trial on the basis that
the jury's verdict was given under the influence of passion or prejudice because it failed to consider the appreciation of
the corporate tortfeasor's assets, as well as the corporation's policy of retaining profits when it determined the corpora-
tion's net worth and taxable income, as required by Mont. Code Ann. § 27-]-221. Maurer v, Clausen Distrib. Co., 275
Mont, 229, 912 P.2d 195, 1996 Mont. LEXIS 19, 53 Mont. St. Rep. 78 (Mont. 1996).

87. Although defendant's net worth was one of the factors Mont. Code Ann. § 27-/-221(7){a) required to be considered
in determining the appropriate punitive damage award, the plaintiff was nol required 1o show proof ihat the defendant's
net worth supported an award of damages; therefore, because defendant in a personal injury action did nol produce evi-
dence regarding his net worth, the award of punitive damages against him was not subject to vacation. Maurer v.
Clausen Distrib. Co., 275 Mont. 229, 912 P.2d 195, 1996 Mont. LEXIS 19, 53 Moni. St. Rep. 78 (Mont. 1996).

88. Under Mont. Code Ann. § 27-1-221(1) and Mont. Code Ann, § 27-1-221(5), punilive damages may be awarded
when a defendant is found, by clear and convincing evidence, to be guilty of actual malice. In an action against a corpo-
ration ta recover compensatory and punitive damages for injuries sustained by a minor when he rode his bicycle into a
watering pipe, which was laid across a sidewalk by an employee of the corporation, the minor was not entitled to puni-
tive damages because he did not produce any evidence to contradict the testimony of the employee, which showed that a
sidewalk basticade was in place when he initially laid the pipe on the sidewalk and every time he moved the pipe there-
alter. Barnes by & Through Barnes v. United Indus., 275 Mout. 25, 909 P.2d 700, 1996 Mont, LEXIS 4, 53 Mont. St.
Rep. [7 (Mont. 1996).
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Mont. Code Anno., § 27-1]-221

89. In an action against a corporation, seeking compensatory and punitive damages for injuries sustained by a minor
when he rede his bicycle into a watering pipe laid across a sidewalk by an employee of the corporation, although actual
malice was alleged under Mont. Code Ann, § 27-1-221{2), the minor was not entitled to punitive damages because he
did not present a prima facie case, including clear and convincing evidence of all elements required under Mont. Code
Ann. § 27-1-221, Barnes by & Through Barnes v. United Indus., 275 Mont. 25, 909 P.2d 700, 1996 Mont. LEXIS 4, 53
Mont. St. Rep. 17 (Mont. 1996).

90. Pursuant to Mont. Code Ann. § 27-1-221(5), all elements of the claim for punitive damages must be proved by clear
and convincing evidence which is more than a preponderance of evidence but less than beyond a reasonable doubt. King
v. Zimmerman, 266 Mont. 54, 878 P.2d 895, 1994 Mont. LEXIS 155, 51 Mont. St. Rep. 659 (Mont. 1994).

91. Under Mont. Code Ann. § 27-1-221(7)(c), a jury award of punitive damages must be reviewed by the district court
judge. A district court judge, having heard the evidence and observed the witnesses, is in the best position to determine
whether the requirements of proof of punitive damages have been met. King v. Zimmerman, 266 Mont. 54, 878 P.2d
895, 1994 Mont. LEXIS 155, 51 Mont. St. Rep. 659 (Mont. 1994),

92. Trial court's order that pranted summary judgment in favor of a chemical company and denied fish farmers an award
of punitive damages against the chemical company in their negligence action brought under Mont. Code Ann, § 27--
22/ against the chemical company that sought damages for the death of their fish, was reversed; a factual dispute ex-
isted regarding whether the chemical company represented to EPA that a warning label was not required when il knew
otherwise, and whether the chemical company represented that it was safe to mix the herbicides and apply the mixture
in the vicinity of fish cultures, when it knew otherwise. Hagen v. Dow Chem. Co., 261 Mont. 487, 863 P.2d 413, 1993
Mont, LEXIS 360, 50 Mont. Si. Rep. 1421, CCH Prod. Liab. Rep. P13804 (Mont. 1993).

93. In an action under the Montana Unfair Trade Practices Act, punitive damages may be assessed pursuant to Mont.
Code Ann. § 27-1-22] for a violation of subsections (1), (4), (5), (6), (9), or (13) of Mont. Code Ann. § 33-18-242(4),
Dees vy. Am. Nat'l Fire Ins. Co., 260 Mont, 431, 861 P.2d 141, 1993 Mont. LEXIS 268, 50 Mont. St. Rep. 1068 (Mont.
1993),

94, Under Mont. Code Ann. $ 27-1-221, reasonable punitive damages may be awarded when a defendant has been found
guilty of actual malice. Dees v. Am. Nat'l Fire Ins. Co., 260 Mont. 431, 861 P 2d 141, 1993 Mont. LEXIS 268, 50 Mont.
St, Rep, 1068 (Mont. 1993).

95. Prejudgment interest on damages is controlled by Mon. Code Ann. § 27-1-211, which provides that every person
who is entitled to recover damages certain or capable of being made certain by calculation and the right to recover
which is vested in him upon a particular day is entitled also to recover interest thereon from that day. Dees v. Aim. Natl
Fire Ins. Co., 260 Mont, 431, 861 P.2d 141, 1993 Mont. LEXIS 268, 50 Moni. St. Rep. 1068 (Mont. 1993).

96. Mont. Code Ann. § 27-1-211 permits the jury, or the court, to consider any other circumstances that may operate to
increase or reduce without wholly defeating punitive damages. Dees v. Am. Nat'l Fire Ins. Co., 260 Mont. 431, 861 P.2d
141, 1993 Mont, LEXIS 268, 50 Mont. St. Rep. 1068 (Mont. 1993).

97. Where the son of an elderly decedent, who was also the personal representative of her estate, told his siblings that
they would share equally in their mother's estate but refused to communicate any information to the siblings regarding
the estate, did not disclose that he was a joint tenant of the decedent, with right of survivorship, with respect to most of
the assets of the estate, and caused ihe assets held in joint tenancy with the decedent to be transferred to his name, a trial
court finding of malice that was uncontested on appeal was a sufficient basis for awarding punitive damages against the
son under Mont. Code Ann. § 27-1-221. Flikkema v. Kimm, 255 Mont. 34, 839 P.2d 1293, 1992 Mont. LEXIS 277, 49
Mont. St. Rep. 880 (Mont. 1992).

98. Although a trial court found as a matter of law that the actions of defendant company in drawing on a letter of credit
constituted a tortious breach of the obligation of good faith and fair dealing, as defined by font, Code Ann. § 28-1-211,
in that the contract was "oppressive" and "malicious," which were terms used to characterize the type of conduct in
which exemplary damages were allowed, Mont. Code Ann. § 27-i-221, under Mont. Code Ann. $ 27-1-220 exemplary
damages were not allowed for a breach of contract unless otherwise expressly provided by statute. Haines Pipeline
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Mont. Code Anno., § 27-1-221

Constr. v. Mont. Power Co., 251 Mont. 422, 830 P.2d 1230, 1991 Mont. LEXIS 316 (Mont. 2991), overculed by Porter
v, Galarneau, 275 Moni. 174, 941 P.2d 1143, 1996 Mont. LEXTS 23, 53 Mont. St. Rep. 99 (Mont. 1996).

99. Where a special interrogatory required the jury to determine if a bank was liable for punitive damages, and the jury
answered "yes" to that interrogatory, under Mont. Code Ann. § 27-1-221, the trial court should have held an immediate,
separate proceeding for the determination of the amount of punitive damages. First Sec. Bank v. Gary, 245 Mont. 394,
798 P.2d 523, 1990 Mont. LEXIS 277, 47 Mont. St. Rep. 1646 (Mont. 1990).

100. Mont, Code Ann. § 27-1-220, which prohibited punitive damages arising from a contract, did not apply to bar an
award of punitive damages for constructive fraud in connection with a contract for the sale of real property where the
suit was filed prior to enactment of § 27-1-220, because, under Mont. Code Ann. § 27-1-221, the statute in effect when
the suit was filed, an underlying contract did not defeat a right to punitive damages for fraudulent conduct. Lee v. Arm-
strong, 244 Mont. 289, 798 P.2d 84, 1990 Mont. LEXIS 232, 47 Mont. St. Rep, 1421 (Mont. 1990).

101. District court did not err in denying a request for punitive damages because the judge was in the best position make
a determination whether there was clear and convincing evidence that punitive damages were appropriate. Maddux v.
Bunch, 241 Mont. 61, 784 P.2d 936, 1990 Mont. LEXIS 13, 47 Mont. St. Rep. 82 (Mont. 1990).

102. In an action by buyers for fraud and emotional! distress against their broker, a broker's net worth was only one of
the factors to be considered in reviewing an award of punitive damages under Mont. Code Ann. § 27-1-221. Zugg v.
Ramage, 239 Mont. 292, 779 P.2d 913, 1989 Mont. LEXIS 256 (Mont. 1989).

103. Where a plaintiff seeking punitive damages under Mont. Code Ann, § 27-1-221 for wrongful discharge failed to
present clear and convincing evidence that she was discharged, the trial court did not err in ruling that the prima facie
case, including clear and convincing evidence of all elements of her claim, was not presented as required under the stat-
ute, and it did not err in striking the claim for punitive damages. Niles v. Big Sky Eyewear, 236 Mont. 455, 771 P.2d
114, 1989 Mont. LEXIS 76 (Mont. 1989), overruled by Sacco v. High Country Indep. Press, 27] Mont. 209, 896 P.2d
4i1, 1995 Mont. LEXIS 95, 52 Mont. St. Rep. 407, 10 LER. Cas. (BNA) 1041 (Mont. 1993).

104. Subcontractor presented sufficient evidence to present to a jury a claim for punitive damages where the evidence
showed that the subcontractor needed a contract to avoid financial ruin and a bonding agent pressured the general con-
tractor to award the bid to someone else. Phillip R. Morrow, Inc. v. FBS Ins. Mont.-Hoiness Labar, inc., 236 Mont. 394,
770 P.2d 859, 1989 Mont. LEXIS 69 (Mont. 1989).

105. In the consumer's action against the merchant concerning a defective hearing aid under an installment contract, the
trial courl was required to conduct an evidentiary hearing and make findings of faci to support an award of punitive
damages under statule. Ward v. Vibrasonic Lab., 236 Mont. 314, 769 P.2d 1229, 1989 Mont. LEXIS 60 (Mont. 1989).

106. Mont. Code Ann. § 27-1-221 and Mont. Code Ann. § 27-1-220 authorize an award of punitive damages where the
defendant has been guilty of either actual or implied malice; liability for punitive damages must be determined by the
trier of fact, whether judge or jury. Cooper v. Rossion, 232 Mont. 186, 756 P.2d 1125, 1988 Mont. LEXIS 163, 43 Mont.
St. Rep. 978 (Mont. 1988).

107. It was error to sirike plaintiff's claim for punitive damages because the evidence presented the jury with numerous
questions of malicious, willful, wanton or reckless conduct by defendant, which might have warranted an award of pu-
nilive damages. Cooper v. Rossion, 232 Mont. 186, 736 P.2d 1125, 1988 Mont, LEXIS 163, 45 Mant. St. Rep. 978
(Mont. 1988).

108. Findings supported a district court's awards of compensatory damages pursuant to Mont. Code Ann. § 27-1-317 and
punitive damages pursuant lo Mont. Code Ann, § 27-1-220. Findings as to the punilive damages met the requirements of
Mont. Code Ann, § 27-1-221(7)(b). Selvidge v. McBeen, 230 Mont. 237, 750 P.2d 429, 1988 Mont. LEXIS 26 (Mont.
1988).
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Mont. Code Anno., § 27-1-221

109. In a boundary dispute action, punitive damages were validly awarded because the testimony at trial indicated that
the owners of one piece of property refused (o negotiate the boundary dispute, and destroyed two fences. Bollinger v.
Hollingsworth, 227 Mont. 454, 739 P.2d 962, 1987 Mont. LEXIS 940, 44 Mont. St. Rep. 1228 (Mont. 1987).

110. Employer's argument that it had no notice that its conduct would be subject to punitive damages had no merit
where the punitive damage statute, Mont. Code Ann, § 27-1-221, was in effect at the time il committed the malicious
and oppressive conduct against an employee. Flanigan v. Prudential Fed. S&L Ass'n, 221 Mont. 419, 720 P.2d 257,
1986 Mont, LEXIS 906, 1 LE.R. Cas. (BNA) 1410, 122 L.R.R.M. (BNA) 2597, 104 Lab. Cas. (CCH) P55589 (Mont.
1986).

111. Trial court sitting as a fact finder was entitled to award punilive damages; the court held that an award of punitive
damages was not limited solely to a jury. Skors v. Branch, 221 Mont. 390. 720 P.2d 239, 1986 Mont. LEXIS 921 (Mont.
1986).

112. Where, viewing the evidence in a light most favorable to plaintiff franchisees, a jury question was raised as to
fraud, oppression, and malice on the part of defendant franchisar, the factual question of punitive damages, Mont. Code
Ann. § 27-1-221, was properly submitied to the jury. Dunjfee v. Baskin-Robbins, Ine., 227 Mont. 447, 720 P.2d £148,
1986 Mont. LEXIS 915 (Mont. 19864).

113. Because, under Mont. R. Civ. P. 54(c), every final judgment had to grant the relief in whose favor it was rendered
was entitled, where plaintiffs, purchasers of land, were awarded compensatory damages based on fraud and misrepre-
sentation by defendant sellers, there was no error in an award of punitive damages to the purchasers pursuant to Mont.
Code Ann. § 27-1-221. Castillo v. Franks, 213 Moni. 232, 690 P.2d 425, 1984 Mont. LEXIS 1095 (Mont. 1984).

114. Punitive damages are recoverable under Mont. Code Ann. § 27-I-22] where malice, oppression, or fraud is shown.
Malice is defined for these purposes as when a person knows or has reason to know of facts which create a high degree
of risk of harm to the substantial interests of another, and either deliberately proceeds to act in conscious disregard of or
indifference to that risk, or recklessly proceeds in unreasonable disregard of or indifference to that risk, his conduct
meets the slandard of willful, wanton, or reckless to which the law of Montana will allow imposition of punitive dam-
ages on the basis of presumed malice; oppression includes acts thal constilute an abuse of power. First Nat'l Bank v.
Twombly, 213 Mont. 66, 689 P.2d 1226, 1984 Mont. LEXIS 1077, 39 U.C.C. Rep. Serv. (CBC) 1192 (Mont. 1984).

115. Where the evidence was sufficient for the jury to find that a bank's acceleration of a promissory note was done with
malice and the jury resolved the issues that would have formed the basis for an award of punitive damages under Mont.
Code Ann. § 27-1-22] in favor of the promisors, the trial court erred in refusing to submit the issue of punitive damages
to the jury. First Nat'l Bank v. Twombly, 213 Mont. 66, 689 P.2d 1226, 1984 Mont. LEXIS 1077, 39 UCC. Rep. Serv,
(CBC) 1192 (Mont, 1984).

116, Although, pursuant to Mont. Code Ann. § 27-1-22/, malice, oppression, or fraud was necessary to establish a basis
for punitive damages, malice on the part of an insurer was not a necessary component to impose liability upon the in-
surer for bad faith refusal to settle. Gibson v. Western Fire Ins. Co., 2/0 Mont. 267, 682 P.2d 725, 1984 Mont. LEXIS
936, 57 ALR.4th 773 (Mont. 1984).

157. Where, based on the testimony ai trial, a jury could have found that a malpractice insurer was al least recklessly
indifferent to the risk to which it was pulting its insured in failing to settle an underlying tort case, consideration of pu-
nitive damages was a proper issue to submit to the jury and the Supreme Court of Montana found no reason to state, as a
matter of law, that punitive damages should not have been awarded to the insured for the insurer's failure to settle. Gib-
son v. Western Fire Ins. Co., 210 Mont. 267, 682 P.2d 725, 1984 Mont. LEXIS 936, 57 ALR.4th 773 (Mont, 1984).

118, When a person knows or has reason to know of facts which create a high degree of risk of harm to the substantial
interests of another, and cither deliberately proceeds to act in conscious disregard of or indifference to that risk, or reck-
lessly proceeds in unreasonable disregard of or indifference to that risk, his conduct meets the standard of willful, wan-
ton, and/or reckless to which the law of Montana will allow imposition of punitive damages on the basis of presumed
malice. First Bank (N.A.)-Billings v. Transamerica Ins. Co., 209 Mont. 93, 679 P.2d 1217, 1984 Mont. LEXIS 869
(Mont. 1984).
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Mont. Code Anno., § 27-1-221

119. Where insurer sought to avoid punitive damages liability in wrongful repossession suits against an insured, on cer-
tified question from federal court, state supreme court ruled that state public policy did not bar insurance coverage of
punitive damages. First Bank (N.A.)-Billings v. Transamerica Ins. Co., 209 Mont. 93, 679 P.2d 1217, 1984 Mont.
LEXIS 869 (Mont. 1984).

120. In addition to the actual damages, juries may give damages for the sake of example and by way of punishment
where they find that defendants have been guilly of oppression, fraud, or actual or presumed malice in tort actions. Gee
v. Egbert, 209 Mont. 1, 679 P.2d 1194, 1984 Mont. LEXIS 834 (Mont. 1984).

121. Exemplary darnages can be awarded pernissibly in cases where there is no direct evidence of fraud or malice or
gross negligence; they may be allowed where there is evidence of such recklessness and wanton disregard of another's
rights that malice and evil intent will be inferred. Gee v. Egbert, 209 Mont. 1, 679 P.2d 1194, 1984 Mont. LEXIS 834
(Mont. 1984).

122. In an employee's wrongful discharge action against his employer for violations of the Discrimination in Employ-
ment Statutes, Mont. Code Ann. § 49-4-10] and Mont. Code Ann. § 49-4-102, after he was fired from his job on an oil
tig because he had only one arm, the employee was entitled to seek punitive damages because there was sufficient evi-
dence to establish a genuine issue of reckless conduct by the employer which created a presumption of malice to support
a claim for punitive damages under Mont. Code Ann. § 27-J-221. Owens v. Parker Drilling Co., 207 Mont. 446, 676
P.2d 162, 1984 Mont, LEXIS 1151, 2 Am. Disabilities Cas, (BNA) 312, 44 Empi. Prac. Dec. (CCH} P37382 (Mont.
1984).

123. Mere fact that the conduct on which a lawsuit is based is unlawful does not in and of itself authorize a recovery of
punitive damages under Mont. Code Ann. § 27-1-221. Particular facts must be present which show actual or presumed
malice unless the particular statute specifically proscribes conduct which is actually malicious. Owens y, Parker Drilt-
ing Co., 207 Mont. 446, 676 P.2d 162, 1984 Mont, LEXIS fI51, 2 Am. Disabilities Cas. (BNA) 312, 44 Empl. Prac.
Dec, (CCH) P37382 (Mont. 1984).

124. Term "malice" under Mont. Code Ann. § 27-1-22! does not necessarily mean that which must proceed froma
spiteful, malignant, or revengeful disposition. When a person knows or has reason to know of facts which create a high
degree of risk of harm to the substantial interests of another, and either deliberately proceeds to act in conscious disre-
gard of or indifference to that risk, or recklessly proceeds in unreasonable disregard of or indifference to that risk, his
conduct meets the standard of willful, wanton, or reckless to allow imposition of punitive damages on the basis of pre-
sumed malice. Owens v. Parker Drilling Co., 207 Mont. 446, 676 P.2d 162, 1984 Mont. LEXIS 1151, 2 Am. Disabilities
Cas. (BNA) 312, 44 Empl. Prac. Dec. (CCH} P37382 (Mont. 1984).

125. Where a statute is designed to protect the substantial interests of a person from a high degree of risk and the statute
is violated either intentionally or recklessly, a jury question of punitive damages pursuant to Mont. Code Ann. § 27-1-
221 is raised. Owens v. Parker Drilling Co., 207 Mont, 446, 676 P.2d 162, 1984 Mont. LEXIS 1151, 2 Am. Disabilities
Cas. (BNA) 312, 44 Empl. Prac. Dec. (CCH) P37382 (Mont. 1984).

126. Violations of the Discrimination in Employment Statutes, Mont. Code Ann. § 49-4-101 and Mont. Code Ann. § 49-
4-702, warrant a claim for punitive damages under Mont. Code Ann. § 27-J-22/ if the violations are shown to have been
intentional or reckless. Owens v. Parker Drilling Co., 207 Mont. 446, 676 P.2d 162, i984 Mont. LEXIS 1151, 2 Am.
Disabilities Cas. (BNA) 312, 44 Empl. Prac. Dec. (CCH) P37382 (Mont. 1984).

127. Given the provisions of Mont. Code Ann. § 27-]-221 and thal, on a motion for directed verdict, a trial judge had to
view the evidence in a light most favorable to plaintiff injured worker, a district court erred in striking the worker's pu-
nitive damage claim. Mydlarz v. Palmer/Duncan Constr. Co., 209 Mont. 325, 682 P.2d 695, 1984 Mont. LEXIS 890
(Mont, 1984).

128. Mont. Code Ann. § 27-1-22/ allows punitive damages for fraud. Because Mont. Code Ann. § 28-2-404 specifically
defines fraud as including constructive fraud, the breach of a fiduciary relationship constituting a constructive fraud
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Mont. Code Anno., § 27-1-221

forms the basis for an award of punitive damages. Purcell v. Automatic Gas Distribs., 207 Mont. 223, 673 P.2d 1246,
1983 Mont. LEXTS 871 (Mont. 1983).

129. If the conduct of a particular defendant is tortious, the fact that an underlying contract exists does not defeat an
award of punitive damages. Fraud, if present in the record, constitutes a tort and provides a basis for an award of exem-
plary damages. Purcell v. Automatic Gas Distribs., 207 Mont. 223, 673 P.2d 1246, 1983 Mont. LEXIS 871 (Mont.
1983).

130. In a products liability action against a tire manufacturer, evidence that the manufacturer made illegal political con-
tributions should not have been admitted under Mont. R. Evid. 402 on the issue of punitive damages under Mont. Code
Ann. § 27-1-221, as plaintiff completely failed to connect the political contributions to a federal investigation of the
multi-piece wheels, which exploded and caused plaintiff's injury. The evidence was extremely damaging and obviously
inflammatory in nature and should have been admitted only upon proof showing its relevance to the action. Kuiper v.
Goodyear Tire & Rubber Co., 207 Mont. 37, 673 P.2d 1208, 1983 Mont. LEXIS 874 (Mont, 1983 i

131. Punitive damages may be assessed for breach of the obligation owed to deal fairly with an employee if the provi-
sions of Mont. Code Ann. § 27-1-221 are satisfied, Gates v. Life of Montana Ins. Co., 205 Mont. 304, 668 P.2d 213,
1983 Mont. LEXIS 781, 115 L.RRM. (BNA) 4350, 98 Lab. Cas. (CCH) P55399 (Mont. 1983).

132. Mont. Code Ann. § 27-1-221 only exempts breach of contract actions from its provisions. Breach of the duty owed
to deal fairly and in good faith in an employment relationship is a tort for which punitive damages can be recovered if
an employer's conduct is sufficiently culpable. Gates v. Life of Montana Ins. Co., 205 Mont. 304, 668 P.2d 213, 1983
Mont. LEXIS 781, 115 LRR.M, (BNA} 4350, 98 Lab. Cas. (CCH) P55399 (Mont. 1983),

133. Where the evidence was sufficient 1o justify the jury in finding that an employer induced an employee to submit a
letter of resignation by promising to give the employee a favorable letter of reference and in finding that the employer
refused the employee's demand for the return of the letter of resignation, the employer's conduct was sufficient to form
ihe basis for a jury finding of fraud, oppression, or malice that justified an award of punitive damages under Mont. Code
Ann. § 27-1-221. Gates v. Life of Montana Ins. Co., 205 Mont. 304, 668 P.2d 213, 1983 Mont, LEXIS 781, 113 L.RRM.
(BNA) 4350, 98 Lab. Cas. (CCH) P55399 (Mont. 1983).

134. Insurance companies have a duty to act in good faith with their insureds, that duty exists independent of insurance
contracts and independent of statutes, and a breach that duty can be a basis for the award of punitive damages; any
statements lo the contrary in First Security Bank v. Goddard, 181 Mont. 407, 593 P.2d 1040 (1979), or any other cases
that appear to conflict with the good-faith rule are overruled. Lipinski v. Title Ins. Co., 202 Mont. 1, 655 P.2d 970, 1982
Mont. LEXIS 1017 (Mont. 1982).

135. To sustain an award of punitive damages against an objection that the evidence is insufficient, there must be sub-
stantial evidence in the record of oppression, fraud or malice, actual or presumed, toward the plaintiff, where the puni-
live damage award is given for the sake of example and by way of punishing the defendant, Mont. Code Ann. § 27-1-
221. Johnson v. Murray, 201 Mont, 495, 656 P.2d 170, 1982 Mont. LEXIS 1019 (Mont. 1982).

136. Punitive or exemplary damages are allowed where the defendant is guilty of oppression, fraud, or malice, actual or
presumed, for the sake of example and by way of punishing the defendant, Mont. Code Ann. § 27-1-22]. Exemplary
damages are used when the defendant clearly shows that he is deserving of such special treatment and punishment.
Miller v. Watkins, 200 Mont. 455, 653 P.2d 126, 1982 Mont, LEXIS 971 (Mont. £982).

137. Punitive damages under Mont. Code Ann. § 27-1-22] were recoverable in a personal injury action brought against
an intoxicated driver. A/lers y. Willis, 197 Mont. 499, 643 P.2d 592, 1982 Mant. LEXIS 775 (Mont, 1982).

138. Award of punitive damages in favor of property owners in their suil against a drilling company for damages to
their land was upheld because the drilling company was guilty under Mont. Code Ann. § 27-1-22] of oppression or mal-
ice, actual or presumed. The drilling company's unauthorized aclivities produced a leak of water on the land of the own-
ers that damaged a large amount of land. Dahi v. Petroleum Geophysical Co., 194 Mont. 294, 632 P.2d 1136, 198!
Mont. LEXIS 813, 72 Oil & Gas Rep. 301 (Mont. 1981).
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Page 53
Mont, Code Anno., § 27-1-221

139, Where a bank seized a cattle breeder's cows, which carried brands establishing prima facie ownership in someone
other than the bank's debtor, and moved them 30 miles away, then adamantly refused to divulge the cows! location to
the breeder when he sought to recover them, and finally returned his cows to a pasture with six unregistered bulls, there
was sufficient evidence to raise an issue for the jury's consideration. justifying the submission of punitive damages to
the jury under the "recklessness" standard Mont, Code Ann. $ 27-1-22]. Graham v. Clarks Fork Nat'l Bank, 193 Mont.
282, 631 P.2d 718, 1981 Mont. LEXIS 782 (Mont. 1981).

140. Malice in law was presumed, pursuant to Afont. Code Ann. § 27-7-22/, in an action alleging assault because defen-
dant landowner's use of force against persons who entered his properly was unjustifiable given that he had given an
easement to the telephone company and the men were doing work on behalf of the telephone company. Magnuson v.
Bilimayer, 189 Mont. 458, 616 P.2d 368, 1980 Mont. LEXIS 831 (Mont. 1980).

141, In a wrongful death action arising out of a collision between a train and the decedent's truck, the district court erred
in excluding evidence that the railroad had used its position as an employer to exert pressure on its employee, who was
also a town councilman, not to propose reducing the speed of the railroads (rains through lown. Runkle v. Burlington N,,
188 Mont. 286, 613 P.2d 982, 1980 Mont. LEXTS 784 (Mont. 1980).

142. Alleged tortfeasor's malice in the form of threatening to shoot a co-tenant, the co-tenant's subtenant, and any live-
stock on the land in which the co-tenant had a leasehold interest and in the form of removing an approach and a gate to
the land entitled the co-tenant, pursuant to Mont. Code Ann. § 27-1-221, to punitive damages in the action in which she
sought a recovery for the gate's removal. Toeckes v. Baker, 188 Mont. 109, 611 P.2d 609, 1980 Mont, LEXIS 736 (Mont.
1980).

143. Where neighbors, who had lost an action in which he sought an easement across a property owner's land and who
had had prior confrontations with the owner, plowed a swath through the owner's wheat field that stripped the topsoil,
an award of punitive damages under Mont. Code Ann. § 27-1-22/ that was 22 times the amount of the aclual damages
awarded was not excessive; the neighbors acted with malice because they acted with full knowledge of relevant pending
litigation and gross disregard for the owner's rights and property, and the jury could have reasonably calculated that a
smaller award would not have been sufficient because of the neighbors' wealth. Butcher v. Peiranek, 181 Mont. 358,
593 P.2d 743, 1979 Mont. LEXIS 799 (Mont. 1979).

144. Distinctive definition of “actual fraud" under Mont, Code Ann, § 27-!-221(3) applies only to the consideration of
punitive damages and does not define-or affect the definition of-the underlying tort. Haflenberg v. General Mills Opera-
tions, Inc., 2006 MT 191, 333 Mont. 143, 141 P.3d 1216, 2006 Mont. LEXIS 384 (2006).

145. Trial court's interpretation and application of Mont. Code Ann. § 27-1-221 was erroneously influenced by case law
relative to the definitions of fraud and constructive fraud for claims brought under Mont. Code Ann. tit, 28, and thus the
court remanded for reconsideration of the farmer's punitive damage claim based on actual fraud as defined in § 27-/-
221. Hallenberg v. General Mills Operations, Inc., 2006 MT 191, 333 Mont. 143, 141 P.3d 1216, 2006 Mont. LEXIS
384 (2006).

146. For purposes of Mont. R. Civ. P. 16, the portions of the pretrial order were sufficient to operate as a pleading of
actual malice under Mont. Code Ann. & 27-1-221(2), however, this finding was not fatal to the trial court's ullimate con-
clusion that the farmer failed to prove actual malice against (he company, which acted under the presumption that no
injury would have resulted in ils misrepresentation to the farmer that the seed to be planted was the same seed the
farmer originally delivered to the company for cleaning, as the company had no knowledge of facts nor intentionally
disregarded facts that created a high probability of injury to the farmer. Hallenberg v. General Mills Operations, Inc.,
2006 MT i9], 333 Mont. 143, [41 P.3d i216, 2006 Mont. LEXIS 384 (2006).
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Page 54
Mont. Code Anno., § 27-1-22]

147, Where a plaintiff seeking punitive damages under Mont. Code Ann. § 27-/-22/ for wrongful discharge failed to
present clear and convincing evidence that she was discharged, the trial court did not err in ruling that the prima facie
case, including clear and convincing evidence of all elements of her claim, was not presented as required under the stat-
ule, and it did not err in striking the claim for punitive damages. Niles v. Big Sky Eyewear, 236 Mont. 435, 771 P.2d
114, 1989 Mont. LEXIS 76 (Mont, 1989), overruled by Sacco v. High Country Indep. Press, 271 Mont. 209, 896 P.2d
411, 1995 Mont. LEXIS 95, 52 Moni, St, Rep. 407, 10 LER. Cas. (BNA) 1041 (Mont, 1995).

148, Where a personal injury plaintiff sought punitive damages under Mont. Code Ann. § 27-1-22/ for injuries allegedly
cause by defendant driver's willful and wanton misconduct in driving his vehicle at an excessive speed, evidence of the
driver's prior guilty pleas to charges that he supplied liquor to minor was imelevant because the oppression, fraud, or
malice reflected by those pleas was not associated with the alleged act of reckless driving and did nol lend to make any
of the requisile factors for punitive damages more or less probable. Derenberger v. Lutey, 207 Mont, 1, 674 P.2d 485,
1983 Mont. LEXIS 848 (Mont, 1983).

149. Supreme Court of Montana concluded that the legislature did not intend the definition of "actual malice" in Mont.
Code Ann. § 27-1-221(2), to apply to determine whether conduct qualifies as an exception to the exclusive remedy un-
der the Workers’ Compensation Act, Mont. Code Ann, § 39-71-4211. The definition of "actual malice" set forth in Afont.
Code Ann. § 27-1-221 (2), was intended for purposes of punitive damages awards and is specifically not applicable lo
Mont. Code Ann. § 39-71-41], Blythe v. Radiometer Am., 262 Mont. 464, 866 P.2d 218, 1993 Mont. LEXIS 419, 50
Mont. St. Rep. 1640 (Mont. 1993).

150. In an action by an independent agent for actual damages for conversion of her commission and expense, a punitive
damages award, following a finding that the agent's manager wrongfully converted the agent's commission checks, was
proper because there was evidence of oppression, pursuant to font. Code Ann. § 27-1-221. Lane v. Dunkle, 231 Mont.
365, 753 P.2d 321, 1988 Mont, LEXIS 120, 45 Mont. St. Rep. 686 (Mont. £988).

151, Where a bank seized a catile breeder's cows, which carried brands establishing prima facie ownership in someone
other than the bank's debtor, and moved them 30 miles away, then adamantly refused to divulge the cows' location lo
the breeder when he sought to recover them, and finally returned his cows to a pasture with six unregistered bulls, there
was sufficient evidence to raise an issue for the jury's consideration, justifying the submission of punitive damages to
the jury under the "recklessness" standard Mont. Code Ann. § 27-1-221, Graham v. Clarks Fork Nat'l Bank, 193 Mont.
282, 631 P.2d 718, 1987 Mont. LEXIS 782 (Mont. 1981).

152. Malice in law was presumed, pursuant to Mont. Code Ann. § 27-i-22/, in an action alleging assault because defen-
dant landowner's use of force against persons who entered his properly was unjustifiable given that he had given an
easement to the telephone company and the men were doing work on behalf of the telephone company. Magnuson v.
Billmayer, 189 Mont. 458, 616 P.2d 368, 1980 Mont. LEXTS 83] (Mont. 1980).

153. Punitive damages may be awarded where the nature of the wrong complained of and injury inflicted goes beyond
merely violating the rights of another and is found to be wiliful and malicious. Trifad Enim't, Inc.v. Anderson, 2001 MT
227, 306 Mont. 499, 36 P.3d 363, 200] Mont, LEXIS 479 (2001).

154, Appropriate definition of “malice” for use in an earlier version of Mont. Code Ann. § 39-71-413, is found in Mont.
Code Ann. § 27-1-221(2), a defendant is guilty of actual malice if defendant has knowledge of facts or intentionally
disregards facts that create a high probability of injury to the plaintiff and: deliberately proceeds to act in conscious or
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Page 55
Mont. Code Anno., § 27-1-221

intentional disregard of the high probability of injury to the plaintiff, or deliberately proceeds to act with indifference to

the high probability of injury to the plaintiff. Sherner v. Conaco, Inc., 2000 MT 50, 298 Mont. 401, 995 P.2d 990, 2000

Mont. LEXIS 53, 57 Mont. St. Rep. 241, O.S.H. Dec. (CCH) P32040, 2000 O.S.H. Dec. (CCH) P32040 (2000), amended
by 2000 MT 50A, 2000 Mont. LEXIS 78 (Mar. 30, 2000).

155. In a personal injury action it was determined that the term act was not defined in Mont. Code Ann. $ 27-1-221(2)
and had no technical definition. Therefore, if the word act could be construed according to ils plain meaning; "act" is
"the process of doing or performing something." Sherner v. Conoco, Inc., 2000 MT 50, 298 Mont. 401, 995 P.2d 990,
2000 Mont. LEXIS 53, 57 Mont. St. Rep. 241, O.S.H. Dec. (CCH) P32040, 2000 O.S.H. Dee. (CCH) P32040 (2000),
amended by 2000 MT SGA, 2000 Mont, LEXIS 78 (Mar. 30, 2000).

156. Trial court's order that granted summary judgment in favor of a chemical company and denied fish farmers an
award of punitive damages against the chemical company in their negligence action brought under Mont. Code Ann. §
27-1-221 against the chemical company thal sought damages for the death of their fish, was reversed; a factual dispute
existed regarding whether the chemical company represented to EPA that a warning label was not required when it
knew otherwise, and whether the chemical company represented that it was safe to mix the herbicides and apply the
mixture in the vicinity of fish cultures, when it knew otherwise. Hagen v. Dow Chem. Co., 261 Mont. 487, 863 P.2d
413, 1993 Mont. LEXIS 360, 50 Mont. St. Rep. 1421, CCH Prod. Liab. Rep. P13804 (Mont. 1993).

137. Where one is grossly and wantonly reckless in exposing olhers to dangers, the law holds one to have intended the
natural consequences of one's acl and treats one as guilty of a willful wrong; malice in law is implied where one's con-
duct is unjustifiable. Gee v. Egbert, 209 Mont. 1, 679 P.2d 1194, 1984 Mont. LEXIS 834 (Mont. 1984),

158. Where there was nothing in the testimony that indicated that any of defendants including the building contractor
and the engineer could have acted to remedy the installation of the dumbwaiter based on knowledge or information that
injuries such as plaintiff employee's might occur, there was no basis on which to imply malice or wantonness on the part
of any of defendants, ergo, the employee whose arm was caught by a descending car of the dumbwailer could not re-
cover punitive damages. Gee v. Egbert, 209 Mont, 1, 679 P.2d 1194, 1984 Mont. LEXIS 834 (Mont. 1984).

159. Award of punitive damages in favor of property owners in their suit against a drilling company for damages to
their land was upheld because the drilling company was guilty under Mont. Code Ann. § 27-1-221 of oppression or mal-
ice, actual or presumed. The drilling company's unauthorized activities produced a leak of water on the land of the own-
ers that damaged a large amount of land. Dah! v. Petroleum Geophysical Co., 194 Mont. 294, 632 P.2d 1136, 1981
Mont. LEXIS 813, 72 Oil & Gas Rep. 30) (Mont. 1981).

160. While the trial court determined that the property owners damaged the land owner's pump site by diverting the
main channel of the river, the trial court did not award the land owner treble damages for trespass under Mon. Code
Ann. § 70-16-1098, because there was no evidence of wrongful injuries ta, or removal of, timber, trees, or underwood
upon the land owner's land, and the trial court award did not punitive damages, as not all of the elements of a claim for
punitive damages were proved by clear and convincing evidence as required by Mont. Code Ann. § 27-1-221. Street v.
Zabloiney, 2003 MT I5N, 2003 Mont. LEXIS 16 (Feb. 11 2003).

161. Alleged tortfeasor's malice in the form of threatening to shoot a co-tenant, the co-tenant's subtenant, and any live-
stock on the land in which the co-tenant had a leasehold interest and in the form of removing an approach and a gate to
the land entitled the co-tenant, pursuant to Mont, Code Ann. § 27-1-22/, to punitive damages in the action in which she
sought a recovery for the gate's removal. Toeckes v. Baker, 188 Mont. 109, 611 P.2d 609, 1980 Mont. LEXIS 736 (Mont.
1988).
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Mont. Code Anno., § 27-1-221

162. Where neighbors, who had lost an action in which he sought an easement across a property owner's land and who
had had prior confrontations with the owner, plowed a swath through the owner's wheat field that stripped the topsoil,
an award of punitive damages under Mont. Code Ann. § 27-1-221 that was 22 limes the amount of the actual damages
awarded was not excessive; the neighbors acted with malice because they acled with full knowledge of relevant pending
litigation and gross disregard for the owner's rights and property, and the jury could have reasonably calculated that a
smaller award would not have been sufficient because of the neighbors’ wealth. Butcher v. Petranek, 181 Moni. 358,
594 P.2d 743, 1979 Mont. LEXIS 799 (Mont. £979).

163. Punitive damages under Mont. Code Ann, § 27-1-22] were recoverable in a personal injury action brought against
an intoxicated driver. Ailers v. Willis, 197 Mont. 499, 643 P.2d 592, 1982 Mont. LEXIS 775 (Mont. 1982).

164. injured railway employee's state action against a railway under Mont. Code Ann. § 27-i-22] and Mont. Const. art.
if, § 16 for post-injury claims mishandling was not preempted by the Federal Employers’ Liability Act (FELA), 45
U.S.C.S, § SJ el seq., because FELA did not provide such a remedy. Reidelbach v. Burlington Northern & Santa Fe Ry.
Co., 2002 MT 289, 312 Mont. 498, 60 P.3d 418, 2002 Mont. LEXIS 563 (2002).

165. In a wrongful death aclion arising oul of a collision between a train and the decedent's truck, the district court erred
in excluding evidence that the railroad had used its position as an employer to exert pressure on its employee, who was
also a town councilman, nol to propose reducing the speed of the railroad’s trains through town. Runkle v. Burlington N.,
188 Mont. 286, 613 P.2d 982, 1980 Mont. LEXIS 784 (Mont. 1980).

166. Injured railway employee's state action against! a railway under Mont. Code Ann. § 27-1-22/ and Mont. Const. art.
H, § 16 for post-injury claims mishandling was not preempted by the Federal Employers' Liability Act (FELA), 45
USCS, § 5] et seq., because FELA did not provide such a remedy. Reidelbach v. Burlington Northern & Sania Fe Ry.
Co., 2002 MT 289, 312 Mont. 498, 60 P.3d 418, 2002 Mont. LEXIS 563 (2002).

167. Trial court properly granted summary judgment to an employer and a fellow employee in an injured employee's
action against them, alleging that they were within the intentional act exceptian to the Workers' Compensation Act im-
munity from suil, pursuant to Mons. Code Ann. § 39-71-413, where the fellow employee had loaded roof trusses onto a
truck for delivery and in attempting to support the extra-long load, the weight shifted and fell on the injured employee;
the court found that the threshold showing of malice under Mont. Code Ann. § 27-1-22/ was not met, as {here was no
evidence thal they were aware thal their actions would create a high probability of infury io the injured employee. Ol-
szewski v, BMC W. Corp., 2004 MT 187, 322 Mont. 192, 94 P.3d 739, 2004 Mont. LEXIS 349 (2004).

168. Summary judgment for a mining company was proper in a wrongful death suit brought by decedent's personal rep-
resentative, as there were no facts that showed that a co-worker, who operated a locomotive in a mine, acted with actual
malice when he caused decedent's death. Blain v. Stillwater Mining Co., 2004 MT 141, 321 Mont. 403, 92 P.3d 4, 2004
Mont. LEXIS 223 (2004).

169. Summary judgment for a mining company was proper in a wrongful death suit brought by decedent's personal rep-
resentative, as there were no facts that showed that a co-worker, who operated a locomotive in a mine, acted with actual
malice when he caused decedent's death. Blain v. Stillwater Mining Co., 2004 MT 141, 321 Mont. 403, 92 P.3d 4, 2004
Mont, LEXIS 223 (2004).
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Mont. Code Anno., § 27-1-221

170. Summary judgment in a personal injury action in favor of an employer was reversed where the plain language of
an earlier version of Mont, Code Ann. § 39-74-42, and the definition of actual malice found in font. Code Ann. § 27-
1-221(2), made it clear that an exception to the exclusive remedy rule applied to causes of action against an employer
who intentionally and maliciously injured an employee. Sherner v. Conoco, Inc., 2000 MT 50, 298 Mont. 401, 995 P.2d
990, 2000 Mont. LEXIS 53, 57 Mont. St. Rep. 241, O.S.H. Dec, (CCH) P32040, 2000 O.S.H. Dee. (CCH) P32040
(2000), amended by 2000 MT 50A, 2000 Mont. LEXIS 78 (Mar. 30, 2000).

LAW REVIEWS

1. 60 Mont. L. Rev. 367, ARTICLE: BMW OF NORTH AMERICA, INC. v. GORE: A TRIAL JUDGE'S GUIDE TO
JURY INSTRUCTIONS AND JUDICIAL REVIEW OF PUNITIVE DAMAGE AWARDS.

2. 66 Mont. L. Rev. 329, ARTICLE: RESOLVING EMPLOYEE DISCHARGE DISPUTES UNDER THE MONTANA
WRONGFUL DISCHARGE ACT (MWDA), DISCHARGE CLAIMS ARISING APART FROM THE MWDA, AND
PRACTICE AND PROCEDURE ISSUES IN THE CONTEXT OF A DISCHARGE CASE.
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Page 1

LEXSTAT MONT, CODE ANNO., § 27-2-211
LexisNexis (R) Montana Code Annotated

*+** THIS DOCUMENT IS CURRENT THROUGH THE 2005 SPECIAL SESSION ***
*#4 ANNOTATIONS CURRENT THROUGH JANUARY 3, 2007 ***

TITLE 27 CIVIL LIABILITY, REMEDIES, AND LIMITATIONS
CHAPTER 2 STATUTES OF LIMITATIONS
PART 2 TIME LIMITS ON SPECIFIC KINDS OF ACTIONS

GO TO CODE ARCHIVE DIRECTORY FOR THIS JURISDICTION
Mont. Code Anno., § 27-2-214 (2005)
27-2-211 Actions to enforce penalty or forfeiture or other statutory liability.

(1) Within 2 years is the period prescribed for the commencement of an action upon:

(a) a statute for a penalty or forfeiture when the action is given to an individual or to an individual and the state,
except when the statute imposing it prescribes a different limitation;

(b) a statute or an undertaking in a criminal action for a forfeiture or penalty to the state;
{c) a liability created by statute other than:

(i) a penalty or forfeiture; or

(ii) a statutory debt created by the payment of public assistance.

(2) The period prescribed for the commencement of an action by a municipal corporation for the violation of any
city or lown ordinance is within | year.

(3) Notwithstanding any other provision of this chapter, actions against directors or stockholders of a corporation
to recover a penalty or forfeiture imposed or lo enforce a liability created by law must be brought within 3 years after
the discovery by the aggrieved party of the facts upon which the penalty of forfeiture attached or the liability was cre-
ated.

(4) Unless fraud is involved or unless a support obligation has been entered, an action to enforce a statutory debt
created by the payment of public assistance must be brought within 5 years from the date the debt arises. If fraud is in-
volved, an action must be brought within 5 years of the discovery of the fraud. If a support obligation has been entered,
an action must be brought within 10 years of the termination of the support obligation or within 10 years from entry of a
lump-sum judgment or order for support arrears, whichever is later.

HISTORY: Ap. p. Sec. 515, C. Civ. Proc. 1895; re-en. Sec. 6448, Rev. C. 1907; re-en. Sec. 9032, R.C.M. 1921; Cal. C.
Civ. Proc. Sec. 340; re-en. Sec. 9032, R.C.M. 1935; Sec. 93-2606, R.C.M. 1947; Ap. p. Sec. I, p. 50, L. 1893; re-en,
Sec. 524, C. Civ. Proc. 1895; amd. Sec. 1, Ch. 128, L. 1903; re-en. Sec. 6449, Rev. C. 1907; amd. Sec. 1, Ch. 47, L.
1917; amd. Sec. 1, Ch. 172, L. 1921; re-en. Sec. 9033, R.C.M. 1921; Cal. C, Civ. Proc, Sec, 338; re-en. Sec. 9033,
R.C.M. 1935; amd. Sec. 1, Ch. 423, L. 1975; Sec, 93-2607, R.C.M. 1947; Ap. p. Sec. $16, C. Civ. Proc. 1895; amd.
Sec. 1, p. 144, L. 1899; re-en. Sec. 6450, Rev. C. 1907; amd. Sec. 2, Ch. 47, L. 1917; re-en. Sec. 9034, R.C\M. 1921;
Cal. C. Civ. Proc. Sec. 340; re-en. Sec. 9034, R.C.M, 1935; Sec. 93-2608, R.C.M. 1947; Ap. p. Sec. 554, C. Civ. Proc,
1895; re-en. Sec, 6471, Rev. C. 1907; re-en. Sec. 9061, R-C.M. 1921; Cal. C. Civ. Proc. Sec, 359; re-en. Sec. 9061,
R.C.M. 1935; Sec. 93-2715, R.C_.M. 1947; Ap. p. Sec. 510, C. Civ. Proc. 1895; re-en. Sec. 6443, Rev. C. 1907; re-en.
Sec. 9027, R.C.M. 1921; Cal. C. Civ. Proc. Sec. 335; re-en. Sec. 9027, R.C.M. 1935; Sec. 93-2601, R.C.M. 1947;
R.C.M. 1947, 93-2601 (part), 93-2606(1}, (2), 93-2607(1), 93-2608(part), 93-2715; amd. Sec. 18, Ch. 12, L. 1979; amd.
Sec. 1, Ch. 190, L. 1981; amd. Sec. 6, Ch. 631, L. 1993; amd. Sec. 6, Ch. 60, L. 1995.
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Page 2
Mont. Code Anno., § 27-2-211

NOTES:

Compiler's Comments

1995 Amendment: Chapter 60 in (4), al end of third sentence, inserted "or within 10 years from entry of a lump-
sum judgment or order for support arrears, whichever is later”.

Severability: Section 18, Ch. 60, L. 1995, was a severability clause.

1993 Amendment: Chapter 631 near beginning of first sentence of (4), after "involved", inserted "or unless a sup-
port obligation has been entered" and inserted third sentence that read: "If a support obligation has been entered, an ac-
tion must be brought within 10 years of the termination of the support obligation.”

Preamble: The preamble attached to Ch. 631, L. 1993, provided: "WHEREAS, it is necessary to draft a composite
bill containing unrelated sections in order to present the proposed program improvements in a single, comprehensive
bill that prornotes the needs of legislative energy, efficiency, and economy by limiling the number of possible bills and
by reducing the need for hearings and readings on those bills.

THEREFORE, the Legislature finds it appropriate to enact the follow:ng legislation."
Severability: Section 29, Ch. 631, L. 1993, was a severability clause.

1981 Amendment: Inserted (1)(c)(ii) relating to statutory debt created by payment of public assistance; and in-
serted (4) relating to statute of limitations to enforce statutory debt created by payment of public assistance.

Chapter Case Noles

Statute of Limitations Applicable to FELA Actions -- Statute Tolled by Employer Misrepresentations: A 3-year
statute of limitations applies to actions brought under the Federal Employers' Liability Act (FELA), 45 U.S.C. 3/
through 60. However, plaintiff is entitled to have the cause tried on the merits, even if the suit was not filed within the
statutory limit, if misrepresentations made by the employer justifiably misled plaintiff into not filing a timely action, A
FELA defendant may be estopped from raising the statute of limitations for equitable reasons even if the misrepresenta-
tions upon which the employee relied were unintentional. In this case, Bevacqua was examined by independent physi-
cians, acting as agents for the railroad, who misrepresented Bevacqua's injuries. Because those misrepresentations mis-
led Bevacqua into not filing suit within 3 years, he was entitled to have his cause tried on the merits. Revacqua v. Union
Pac. RR Co,, 1998 MT 120, 289 M 36, 960 P2d 273, 55 St. Rep. 469 (1998), citing numerous federal cases giving a lib-
eral construction to FELA in favor of injured railroad workers.

Tolling of Statute of Limitations by Second Action Filed Before Dismissal of First Action -- Refiled First Action Al-
lowed if Second Action Still Pending: If a first action tolls a statute of limitations and a second (allowable) action is
filed before a different forum before the first action is dismissed, the second action continues to toll the statute of limita-
tions. If the first aclion is then refiled while the second action is pending, it is filed while the statute is tolled and is not
barred by the statute of limitations. Webb v. 7.D., 275 M 243, 912 P2d 202, 53 St. Rep. 117 (1996).

Tolling of Statute of Repose by Chiropractic Legal Panel Proceeding Filed Before Dismissal of Court Action -- Fil-
ing of Second Court Action After Panel Decision Not Barred; A medical malpractice complaint filed in District Court
on April 16, 1992, tolled the statute of repose pursuant to 27-2-205. On Augus| 2, 1993, an application was timely filed
with the Montana Chiropractic Legal Panel. Voluntary dismissal of the District Courl complaint without prejudice on
August 3, 1993, did not nullify the complaint's tolling of the statute of limitations because under 27-/2-70/, the filing of
the Panel application also tolled the statute. The Montana Chiropractic Legal Pane! Act continued to toll the statute
while the application under it was pending, and because the second District Court complaint was timely filed under the
Act within 30 days after the Panel's decision, the second complaint was not barred by the statute of repose. Webb v.
TD., 275 M 243, 912 P2d 202, 53 St. Rep. 117 (1996).

When Statute of Limitations or of Repose Tolled: A statute of limitations or a statule of repose is tolled by the
commencement of an action, and an action is commenced when a complaint is filed. Webb v. T.D., 275 M 243, 912 P2d
202, 53 St. Rep. £17 (£996).
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Page 3
Mont. Code Anno., § 27-2-211]

Architectural Malpractice -- Applicability of Continuing Relationship Doctrine: An architecl was hired to design
and oversee the building of a hospital. Shortly after completion in 1975, problems developed with the heating, air condi-
tioning, and ventilating systems. The hospital contacted the architect about remedies for the problems, seeking and con-
tinuing to rely on his advice until 1979, when the parties! relationship ended. The hospital filed suit in 1981, which the
architect contended was beyond the statute of limitations that normally would begin running upon substantial comple-
tion of the facility in 1975. Distinguishing Schneider v. Leaphart, 228 M 483, 743 P2d 613 (1987), the Supreme Court
applied the continuing relationship doctrine because no specific statute of limitations governed the tort of architectural
malpractice and because "accrual" was not statutorily defined at the lime of the acts giving rise to the action. The con-
tinuing relationship doctrine may be used when, during the course of an ongoing, developing, and dependent relation-
ship between a professional and a client, the professional commits a tortious act that injures the client. The doctrine sus-
pends the accrual of the cause of action in order to give the professional an opportunity to remedy, avoid, or establish
(hat there was no error or altempt to mitigate damages. The cause of action does not accrue until either the professional
relationship ends or, if a general professional relationship conlinues between the parties, the professional ceases to treat
or advise the client for the particular act causing the injury. Therefore, the statute of limitations in this case was sus-
pended until the professional relationship ended in 1979 and the hospital's complaint in 1981 was filed well within the
general 3-year tort statute of limitations. N. Mont. Hosp. v. Knight, 248 M 310, 811 P2d 1276, 48 St. Rep. 444 (1991).

Requirements of “Equitable Tolling" — Doctrine Not Recognized: Plaintiff relied on out-of-state decisions to pre-
sent the proposition that, in instances when an injured person has several legal remedies and reasonably and in good
faith pursues one, the statute of limitations will not be available as a defense where equitable principles justify tolling of
the statute. Requirements of the doctrine, known as “equitable tolling", were outlined in Collier v. Pasadena, 19} Cal.
Rep. 681 (Cal. App. 1983): (1) timely nolice to the defendant (within the applicable statute of limitations) in filing the
first claim; (2) lack of prejudice to defendant in gathering evidence to defend against the second claim; and (3) good
faith and reasonable conduct by plaintiff in filing the second claim. The Supreme Court determined that in the present
case the notice requirement was not met; therefore, the court did not address arguments with regard to the remaining
iwo elements or recognize the doctrine of equitable tolling in Montana. Erickson v. Croft, 233 M 146, 760 P2d 706, 45
St. Rep. 1379 (1988), but see Harrison v. Chance, 244 M 215, 797 P2d 200, 47 St. Rep. 1539 (1990), in which the Su-
preme Court expressed an apparent willingness to apply the doctrine when the requirements set out in Erickson ap-
peared to be met. See also Sorenson v. Massey-Ferguson, Inc., 279 M 527, 927 P2d 1030, 53 St. Rep. 1269 (1996), in
which the Supreme Court applied the criteria and determined that plaintiff's self-help pursuit of his rights under a war-
ranted purchase of a combine was not a legal remedy available for purposes of equitable tolling because plaintiff was
required to pursue the warranty rights within the context of time limitations imposed for filing legal claims.

No Judicial Discretion to Alter Statute of Limitations: Plaintiffs' complaint was dismissed because it was not
timely filed, missing the statute of limilalions by | day. Plaintiffs moved for relief under Rule 60(b), M.R.Civ.P., be-
cause of mistake, inadvertence, surprise, or excusable neglect. The statute of limitations does not discriminate between a
just and unjust claim. The statute represents legislative and public policy controlling the rights of potential litigants. A
trial court does not have judicial discretion to alter, change, or lessen statutory limits for commencement of actions.
Schaffer v. Champion Home Builders Co., 229 M 533, 747 P2d 872, 44 St. Rep. 2196 (1987).

Applicable Statute of Limitations Governed by Basis of Claim: Rule 54(c), M.R.Civ.P. (Title 25, ch. 20), provides
that a party must be granted any relief to which he is entitled even hough he may not have demanded the relief in his
pleadings. Thus, under Rule 8, M.R.Civ.P. (Title 25, ch. 20), it is nol necessary to set out the legal theory under which
the claim is based. However, the Statute of Limitations applicable must necessarily be in conformity with the basis of
the action. Castilfo v. Franks, 213 M 232, 690 P2d 425, 41 St. Rep. 2071 (1984),

Laches: The Supreme Court held in Castillo v. Kunnemann, 197 M 190, 642 P2d 10/9 (7982), that Kunnemann,
the original owner of a 160-acre parcel of land, had reserved cerlain water and ditch rights when he conveyed the land
io Franks, and that Franks, therefore, had not conveyed any of these water rights to the Castillos and the Cotants when
they each purchased subdivided portions of the original parcel from Franks. Following the Supreme Court's decision,
the Cotants and Castillos sued Franks for breach of contract, fraud, and in the case of the Cotants, for breach of war-
ranty. Franks asserted that these actions were barred by laches. On appeal of this second case, the Supreme Court re-
jected Franks' argument for the following reasons: (1) plaintiffs had acted reasonably promptly in suing Kunnemann for
the rights that Franks contended had been conveyed to them; (2) plaintiffs filed this action 3 1/2 months after the Su-
preme Court rejected their claim against Kunnemann; and (3) plaintiffs' dernands are not stale. They have not been lax
in enforcing their rights, and they have not acquiesced in the loss of denial of their rights. Castillo v. Franks, 2/3 M 232,
690 P2d 425, 41 St. Rep. 2071 (1984).
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Mont. Code Anno., § 27-2-211

Raising for First Time on Appeal Disallowed: Statute of Limitations defense was an affirmative defense and could
not be raised in Supreme Court when il was not raised in District Court. Taylor v. Dept. of Fish, Wildlife, & Parks, 205
M85, 666 P2d 1228, 40 St. Rep. 1112 (1983).

Products Liability -- Statute of Limitations -- Fraudulent Concealment Test Adopted: Plaintiff was injured in May
1975, when his holstered Ruger revolver discharged into his leg as he crawled under some brush. He filed this products
liability action in September 1979, Ruger moved for summary judgment based upon the Statute of Limitations. The
statutory period for (ort action in Montana is 3 years. The Statute begins to run from the time the right of action accrues
and not from the time when the plaintiff who was ignorant before comes to knowledge of his rights. Plaintiff contended
ihe Statute tolled due to Ruger's fraudulent concealment of the defective nature of the revolver. The Supreme Court has
never considered fraudulent concealment in a products liability case but has considered it in malpractice actions, which
could apply here. To toll the Statute, the fraud must be of such a character as to prevent inquiry, elude investigation, or
to mislead the party who claims the cause of action. There first must be injury and then concealment. It is the cause of
action which must be fraudulently concealed by failing to disclose the fact of injury. Application of this test io this case
establishes no fraudulent concealment. There must be some affirmative act of the defendant calculated to obscure the
existence of the cause action. Much v. Sturm, Ruger & Co., Inc., 502 F. Supp. 743, 37 Si. Rep. 2116 (D.C. Mont. 1980).

Object of Statute of Limitations: A true Statute of Limitations establishes a time period within which suit must be
brought. Its object is to suppress stale and fraudulent claims after the facts concerning them have become obscure from
lapse of time, defective memory, or death or removal of witnesses. Nelson v. Twin Bridges High School, 18] M 318,
593 P2d 722 (1979).

Part Case Notes

Architectural Malpractice -- Applicability of Continuing Relationship Doctrine: An architect was hired to design
and oversee the building of a hospital. Shortly after completion in 1975, problems developed with the heating, air condi-
tioning, and ventilating systems. The hospital contacted the architect about remedies for the problems, seeking and con-
tinuing to rely on his advice until 1979, when the parties’ relationship ended. The hospital filed suit in 1981, which the
architect contended was beyond the statute of limitations that normally would begin running upon substantial comple-
tion of the facility in 1975. Distinguishing Schneider v. Leaphart, 228 M 483, 743 P2d 613 (1987), the Supreme Court
applied the continuing relationship doctrine because no specific statute of limitations governed the tort of architectural
malpractice and because "accrual" was not statutorily defined at the time of the acts giving rise lo the action. The con-
tinuing relationship doctrine may be used when, during the course of an ongoing, developing, and dependent relation-
ship between a professional and a client, the professional commits a tortious act that injures the client. The docirine sus-
pends the accrual of the cause of action in order to give the professional an opportunity to remedy, avoid, or establish
that there was no error or attempt to mitigate damages. The cause of action does not accrue until either the professional
relationship ends or, if a general professional relationship continues between the parties, the professional ceases to treat
or advise the client for the particular act causing the injury. Therefore, the statute of limitations in this case was sus-
pended until the professional relationship ended in 1979 and the hospital's compiaint in 1981 was filed well within the
general 3-year tort statute of limilations. N. Afont. Hosp. v. Knight, 248 M 310, 871 P2d 1276, 48 St. Rep. 444 (1991).

Requirements of “Equitable Tolling” -- Doctrine Not Recognized: Plaintiff relied on out-of-state decisions to pre-
sent the proposition that, in instances when an injured person has several legal remedies and reasonably and in good
faith pursues one, the statute of limitations will not be available as a defense where equitable principles justify tolling of
ihe statute. Requirements of the doctrine, known as "equitable tolling", were outlined in Colfier v. Pasadena, 191 Cal.
Rep. 681 (Cal. App. 1983): (1) timely notice to the defendant (within the applicable statute of limitations) in filing the
first claim; (2) lack of prejudice to defendant in gathering evidence to defend against the second claim; and (3) good
faith and reasonable conduct by plaintiff in filing the second claim. The Supreme Court determined that in the present
case the notice requirement was not mel; therefore, the court did not address arguments with regard to the remaining
two elements or recognize the doctrine of equitable tolling in Montana. Erickson v. Croft, 233 M 146, 760 P2d 706, 45
St. Rep. 1379 (1988), but see Harrison v. Chance, 244 M 215, 797 P2d 200, 47 St. Rep. 1539 (1990), in which the Su-
preme Court expressed an apparent willingness to apply the doctrine when the requirements set out in Erickson ap-
peared to be met.

Relation Back of Amendment to Substitute True Name: When a complaint sets forth a cause of action against a de-
fendant designated by a fictitious name under 25-5-/03 and his true name is thereafter discovered and substituted by
amendment, the fictitiously named defendant is considered a party to the action from its commencement, so that the
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Page 5
Mont. Code Anno., § 27-2-211

Statute of Limitations stops running as to the fictitiously named defendant on the date the original complaint is filed.
Sooy v. Petrolane Steel Gas, Inc., 218 M 418, 708 P2d 1014, 42 St. Rep. 1702 (1983).

Applicable Statute of Limitations Governed by Basis of Claim: Rule 54{c), M.R.Civ.P. (Title 25, ch. 20), provides
that a party must be granted any relief to which he is entitled even though he may not have demanded the relief in his
pleadings. Thus, under Rule 8, M.R.Civ.P. (Title 25, ch. 20), it is not necessary to set out the legal theory under which
the claim is based. However, the Statute of Limitations applicable must necessarily be in conformity with the basis of
the action. Castillo v. Franks, 213 M 232, 690 P2d 425, 41 St. Rep. 2071 (1984).

Case Notes

Statutory Cause of Action for Railroad Mismanagement -- Complaint Dismissed for Failure to Meet Statute of
Limitations for Filing Statutory Claim: Haux's employment with defendant was terminated December 27, 1999, and
Haux filed a complaint on October 10, 2002, asserting that the termination was negligent and malicious and part of de-
fendant's general business practice of firing employees without cause, constituting mismanagement The District Court
found that 39-2-703 does not create a cause of action for mismanagement and granted defendant's motion for summary
dismissal, and Haux appealed. The Supreme Court held that a plain reading of 39-2-703 does in fact create a cause of
action for mismanagement, so the District Court erred in dismissing the action on those grounds. However, dismissal
was still proper because Haux's action for mismanagement was barred when Haux failed to meet the 2-year statute of
limitations for filing the statutory claim. Thus, dismissal was affirmed because the right result was reached for the
wrong reason. Haux v. Mont. Rail Link, Inc., 2004 MT 233, 322 M 456, 97 P3d 540 (2004), following Winslow v. Mont.
Rail Link, Inc., 2000 MT 292, 302 M 289, 16 P3d 992 (2000), and distinguishing Dillon v. Great N. Ry., 38 M 485, 100
P 960 (1909), Johnson vy. Butte & Superior Copper Co., 41 M 158, 108 P 1057 (1910), Beeler v. Butte & London Cop-
per Dev. Co., 41 M 465, 110 P 528 (1910), and Melzner v. Raven Copper Co., 47 M 351, 132 P 552 (1913).

Claims Under Unfair Trade Practices Act Subject to Statute of Limitations on Actions for Constructive Fraud: As
a liability created by statute that is neither a penalty nor a statutory debt, claims brought under the Montana Unfair
Trade.Practices and Consumer Protection Act of 1973 are subject to the 2-year statute of limitations in this seclion. Os-
ferman v. Sears, Roebuck & Co,., 2003 MT 327, 318 M 342, 80 Pid 435 (2003), following Royal Ins. Co. v. Roadarmel,
2000 MT 259, 30] M 508, 11 P3d 105 (2000).

Exercise of Ordinary Diligence Required in Discovery of Unfair Trade Practices Constituting Fraud for Tolling
Statute of Limitations: For purposes of tolling the statute of limitations in an action for fraud or unfair trade practices,
ordinary diligence must be exercised by the aggrieved party in discovery of the facts constituting the fraud or deceplive
practice. Pursuant to Johnson v, Barrett, 1999 MT 176, 295 M 254, 983 Pad 925 (1999), the test is whether the plaintiff
has information of circumstances sufficient to put a reasonable person on inquiry or has the opportunity to obtain
knowledge from sources open to the plaintiff's investigation. Mere ignorance of the facts will not suffice to toll the stat-
ute of limitations. In this case, plaintiff filed an unfair trade practices complaint about 2 years and 9 months after enter-
ing an agreement with defendant siding installer, believing at the time that the contract was with the defendant company
that manufactured the siding. However, plaintiff showed no affirmative conduct by either defendant that was calculated
to obscure the existence of a cause of action, nor were the facts giving rise to the alleged fraud concealed. Thus, plaintiff
discovered or should have discovered the facts constituting the alleged fraud when the contract was entered more than 2
years prior to filing suit, so the claim was barred by the 2-year statute of limitations in this seclion. Osterman v. Sears,
Roebuck & Co., 2003 MT 327, 318 M 342, 80 P3d 435 (2003).

Statute of Limitations Applicable to Workers' Compensation Subrogation Right Created by Statute -- Subrogation
Agreement Not Created by Correspondence Between Attorneys for Claimant and Insurer: Roadarmel suffered an in-
dustrial injury and filed a workers' compensation claim against his employer, and the claim was defended by Royal In-
surance Company (Royal). Roadarmel received a judgment and then filed a third-party action against two companies
that had supplied the chemicals that injured him. Roadarmel's attorney, White, properly notified Royal that the third-
party action was being commenced. Pursuant to 39-7/-44, Roadarmel requested that Royal pay a portion of the costs,
and Royal agreed to participate in the costs rather than waive its subrogation rights, tendering a check for $ 5,000 to-
ward the costs. Roadarmel was successful in the third-party action, and White advised Royal that the third parlies would
appeal. The appeal was upheld, and White notified Royal of that fact, attaching copies of the settlement check and jury
verdict forms, a breakdown of the actual costs of the third-party action, and a request that Royal determine its subroga-
lion interest in a portion of the third-party proceeds. Royal independently computed the amount that it contended that it
was owed and advised Roadarmel in letters that an aclion would be filed to determine Royal's subrogation interests.
White did not respond to ihe letters, and 3 1/2 years passed before Royal filed a petition to determine its subrogation
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Page 6
Mont. Code Anno., § 27-2-211

rights. Royal later learned through discovery that White had disbursed the third-party proceeds on the same day that
Royal had been requested to determine its subrogation interest, allegedly instructing Roadarmel to hold the funds pend-
ing a subrogation determination. Royal then also filed a separate count against White for an alleged breach of the duty
of trust owed Royal as a third-party beneficiary of the trust imposed on the third-party proceeds. The Workers' Compen-
salion Court determined that a subrogation agreement had been formed in the exchange of letlers between White and
Royal's counsel, that the statute of limitations on the contract had not expired, and thal Roadannel and White were
jointly and severally liable for $ 63,864.79 for breaching the subrogation contract and failing to honor Royal's first lien
of the third-party judgment. Roadarmel and White appealed, contending that Royal's subrogation action was based on a
statutory liability thal was time-barred by the 2-year statute of limitations in this section and that the 3-year statute of
limitations in 72-34-5114, which governs actions based on an alleged breach of trust, also barred Royal's action against
White. Royal argued that the correspondence between the parties formed an enforceable contract that was subject to the
longer statute of limitations in 27-2-202. The Supreme Court agreed with Roadarmel and White. The correspondence
only confirmed in writing that which was required by and took place entirely in the context of the mandatory statutory
procedures and did not create an enforceable contract. Although the court recognized the rights of equitable subrogation
at common law, those rights were conceptually distinguished from an insurer's first lien against third-party proceeds
recovered by an injured employee, which constitutes a statutory liability amounting to an unqualified right of reim-
bursement not found at common law. As sel out in St. Paul Fire & Marine Ins. Co. v. Glassing, 269 M 76, 887 P2d 218
(1994), the concept of subrogation merely gives the insurer the right to prosecute the cause of action that the insurer
possessed, so the insurer's claim by subrogation, being purely derivative, is subject to the same statute of limitations as
though the cause of action were sued upon by the insured. The statutory right to reimbursement or recoupment is distin-
guishable from the insurer's right of subrogation proper. Thus, Royal's claim against Roadarmel, being based on a liabil-
ity created by stalute, was time-barred under subsection (1)(c) of this section. Further, Royal's breach of trust claim
against While was time-barred by 72-34-5171. Because Royal's statutory lien was exlinguished as a matter of law 2 years
after Royal received notice that the third-party action was settled, by the time that the statute of limitations on White's
actions began to run, even if that time was determined to be the date on which he disbursed the third-party funds, he
could no longer be characterized as a trustee, constructive or otherwise, of the third-party proceeds. The case was re-
versed and remanded for summary judgment in favor of Roadarmel and White. Royal Ins. Co. v. Roadarmel, 2000 MT
259, 301 M 508, 11 P3d 105, 57 St. Rep. 1080 (2000).

Action by Minority Stockholder Against Majority Stockholder -- Three-Year Statute of Limitations Applicable: A
complaint by a minority stockholder against a majority stockholder is subject to the 3-year slatule of limitations in sub-
section (3) of this section. Hansen v. 75 Ranch Co., 1998 MT 77, 288 M 310, 957 P2d 32, 55 St. Rep. 322 (1998).

Section Not Appropriate Limitations Period for Civil Suit Under Federal Individuals With Disabilities Education
Act: Ina suit under the federal Individuals With Disabilities Education Act, because the Act does not specify a limita-
tions period, the courts will use the most analogous state statute of limitations unless that statute would undermine the
federal policies underlying the Act. Montana's statute of limitations applicable to judicial reviews of administrative ap-
peals, 2-4-702, was applicable to the school district's civil action challenging the administrative hearings officer's deci-
sion after the due process hearing. Livingston School Disirict Nos. 4 and I v. Keenan, 82 F3d 912 (9th Cir. 1996).

Claim for Utility Relocation Project Reimbursement Not Time-Barred: Although the bulk of primary work ina
utility relocation project was accomplished by April 1988, various items of related work were done as lale as March
1989. Because the claim for reimbursement was filed in July 1990, less than 2 years later, payment of the claim was not
barred by the applicable statute of limitations in this section. N. Lights, Inc. v. St, 265 M 47, 874 P2d 6, 51 St. Rep, 394
(1994).

Conflicting Statutes of Limitations Resolved in Favor of Longest Statute: Kearney, a news manager working for a
television station under an oral contract, sued KXLF for overtime compensation. The District Court applied a 5-year
statute of limitations pursuant to 27-2-202(2). KXLF argued that the applicable statute of limitations was the 2-year
limit contained in this section, Citing Ritland v. Rowe, 260 M 453, 861 P2d 175 (1993), and Thiel v. Taurus Drilling
Ltd. [980-H, 218 M 201, 710 P2d 33 (1985), the Supreme Court held that conflict between the statutes applicable in this
case should be resolved in favor of the statute containing the longer limitation. Kearney v. KXLF Communications, Inc.,
263 M 407, 869 P2d 772, 51 St. Rep, 119 (1994). See also Travelers Indem. Co. v. Andersen, 1999 MT 201, 295 M 434,
983 P2d 999, 56 St. Rep. 782 (1999).

Statute of Limitations Applicable to Penalty for Deceit: Because 37-61-406, which provides a penalty for deceit or
collusion by an attomey, is clearly a penalty statute, the 2-year statute of limitations in this section applies rather than
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Mont. Code Anno., § 27-2-211

the 3-year general tort statute of limitations. Barrett v. Holland & Hart, 256 M 101, 845 P2d 714, 49 St. Rep. 1156
(7992), and 50 St. Rep. 63 (7993).

Applicability of Ten-Year Statute of Limitations to Pre-1983 Mines Net Proceeds Tax: Prior to 1983, the limita-
tions period for assessment revisions of property taxes, including the mines net proceeds tax, was 10 years as set in /5-
8-601. Because this specific statute of limitations was governing, the general 2-year limitations period prescribed in this
section did not apply to these particular taxes. WR. Grace & Co. v. Dept. of Revenue, 238 M 439, 779 P2d 470, 46 St.
Rep. 1399 (1989), distinguishing Caterpillar Tractor Co. v. Dept. of Revenue, 194 M 537, 633 P2d 618, 38 St. Rep.
1245 (1982),

Statute of Limitations Begins at Time of Injury: Plaintiff alleged defendant violated 37-5/-323 by misrepresenting
himself as being a real estate broker licensed by another state. Plaintiff's complaint was filed over 2 years after the al-
leged tort. Plaintiff contends that defendant's alleged misrepresentation constitutes concealment of a material fact, and
therefore the statute of limitations should be tolled. The court held that defendant's misrepresentation was not an af-
firmative act calculated to obscure plaintiff's cause of action. In nonmalpractice tort actions, the statute of limitations
begins to run on the date of plaintiffs injury. This action is barred because plaintiff did not file within the 2-year period.
Payne v. Stratman, 229 M 377, 747 P2d 210, 44 St. Rep. 2059 (1987).

Statute of Limitations as Applied to Civil RICO Actions: Section 27-2-2//, rather than 27-2-215 (renumbered 27-
2-231), provides the Statute of Limitations for claims mest analogous to civil RICO claims in Montana since the Rack-
eteer Influenced and Corrupt Organizations Act (RICO) itself contains no limilalions. Jacobson v. W. Mont. Prod.
Credit Ass'n, 643 F. Supp. 391, 43 St. Rep. 1598 (D.C. Mont. 1986).

Eight-Year Statute of Limitations for Civil Action Under Securities Act of Montana: The U.S. District Court for
the District of Montana certified a question to the Supreme Court on the applicable Statute of Limitations for a civil
action brought pursuant to 30-/ 0-307. In deciding that the 8-year limitation period rather than the 2-year period applied,
the court traced the legislative history of the civil enforcement limitation period under the Securities Act of Montana. In
1967, the Legislature eliminated the relevant 2-year limitation and left a void. The court reviewed the legislative intent,
underlying purposes of the Act, and characterization of the essence of the claim, Finding that each count of plaintiff's
complaint could be interpreted as sounding in tort, contract, or statutory violation, the court resolved the case in favor of
the longest limitation period. Thief v. Taurus Drilling Lid. 1980-H, 218 M201, 710 P2d 33, 42 St. Rep. 1520 (1985),
followed in Ritland v. Rowe, 260 M 453, 861 P2d 175, 50 St. Rep. 1183 (1993), and in Kearney v. KXLF Communica-
tions, Inc., 263 M 407, 869 P2d 772, SI St. Rep. 119 (1994).

Federal Civil Rights Action -- Accrual of Action: Although federal courts apply the state Statute of Limitations in
a civil rights action brought under 42 U.S.C. § 1983, the date on which the action accrues is determined by federal stan-
dards. The time of accrual under federal law is when the plaintiff knows or has reason to know of the injury that is the
basis for the action. Where the only incident that could give rise to a cause of aclion occured 4 years prior to the federal
court filing, the parties were properly dismissed, there being 2 2-year Statute of Limitations in effect. Harvey v. Pomroy,
535 F. Supp. 78, 39 St. Rep. 657 (D.C. Moni. 1982).

Corporate License Tax -- Limitations on Assessment Where No Return -- No Revival of impliedly Repealed Section
by Internal Reference: The 2-year Statute of Limilations in 27-2-21] applied to the assessment of corporate Sicense tax
for corporations that failed to file a return for the reason that the Supreme Court in Sz. v. King Colony Ranch, 137 M
145, 350 P2d 841 (1960), had held that sec. 1, Ch. 209, L. 1945 (amending /5-3/-526), had superseded sec. 9, Ch. 166,
L. 1933 (enacling /5-3{-542, repealed in 1983), as to the time limitation and the Legislature, in sec. 2, Ch. 186, L. 1963
(enacting /5-3/-509), though referencing /5-3/-542 on an exception, had not used language to revive it, therefore /5-
34-542 remained superseded or repealed. (But see /5-31-544.) Caterpillar Tractor Co., Inc. v. Dept. of Revenue, 194M
537, 633 P2d 678, 38 St. Rep. 1245 (1981).

Misrepresentation Action in Real Estate Sale: The court properly awarded summary judgment to defendants in a
misrepresentation action under the Montana real estate license law when the record indicated that no fraudulent repre-
sentations were made by defendants and the Statute of Limitations had expired, notwithstanding the "discovery" excep-
tion. Anderson v. Applebury, 173 M 411, 567 P2d 931 (1977).

Rental -- Effect of Payments Upon Limitation: Whether or not rent was paid, the lease contained no default clause
and no evidence was presented as to termination of lease. Therefore, lease was voidable, not void, and the statute did
not begin to nin until there was a demand and refusal. Grinde v. Tindall, 172 M 199, 562 P2d 818 (1977).
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Mont. Code Anno., § 27-2-211

"Liability Created by Statute": Action against county by motorist who alleged he suffered personal injuries in a
single vehicle accident due to negligent failure of county to properly maintain and mark a "T" intersection of county
roads was subject to 3-year Statute of Limitations under 27-2-209, rather than 2-year Statute of Limitations under 27-2-
211 as an action "upon a liability created by statute", since 33-23-102, waiving sovereign immunity to extent of county's
liability insurance, simply removes a defense previously existing rather than creating a new cause of action. State ex rel.
Fallon County v. District Court, 161 M 79, 505 P2d 126 (1972).

Action Under Federal Civil Rights Statute: Cause of action under federal civil rights statute for improper search
accrued at the time of the search, not at the time the search was adjudicated invalid or when criminal prosecution was
terminated, so that action brought more than 2 years after the search was barred by this section. Strung v. Anderson, 452
Fld 632 (9th Cir. 1972).

Railroad's Statutory Duty: The cause of action based on a railroad's statutory duty to maintain a cement drop, si-
phon, and wooden flume on its right-of-way did not accrue on the taking of the right-of-way or on the abandonment of
the right-of-way and notice to water rights owners that it would no longer maintain the works but rather would accrue
only after injury occurred from the railroad’s failure to maintain the works. Harrer v. N. Pac. Ry., 147 M 130, 410 P2d
713 (1966).

Antitrust Civil Actions: Federal District Court properly dismissed counterclaims charging deliberate course of
conduct on the part of a utility aimed at destroying business of one of the defendants and failure of utility to operate its
pipelines as a common carrier as required by the Federal Leasing Act and the Natural Gas Act and seeking damages for
violations of antitrust laws, which were barred by this section. Wight v. Montana-Dakota Util. Co., 299 F2d 470 (9th
Cir, 1962).

Action by packing company to recover treble damages from competitors for alleged violation of antitrust laws, filed
more than 2 years afier competitors had been engaged in a local price war in Montana, was barred by 2-year limitation
under this section, (hough within that period short weighting and varying prices occasioned by keen competition oc-
curred, in absence of evidence of concerted effort by competitors or systematic price cutting. Action for treble damages
is not for a "penalty" or "forfeiture" under this section; liability is not mere codification of common law but is "liability
created by slatute". Hansen Packing Co. v. Swift & Co., 27 F. Supp. 364 (D.C. Mont. £939).

Public Officers’ Obligations: Action against former Commissioner of Public Works, appointed by former Mayor
of city, to recover money received as additional salary for managing housing projects was nat barred by this section
where city had no knowledge of the payments taken by Commissioner. Roundup v. Liebetrau, 134 M 114, 327 P2d 810
(1958),

The duty of a County Treasurer to receive, keep safely, and account for all money of the county, as weil as that di-
rected by a court or statute to be deposited with him for safekeeping, being one imposed by express statutory require-
ment, an action on the official bond of such an officer is on "a liability created by statute" and is barred in 2 years by 27-
2-211. Gallatin County v. USF&G Co., 50 M 55, 144 P 1085 (1974), distinguished in School District v. Pondera
County, 89 M 342, 297 P 498 (1931).

Section 27-2-2/1(1)(c) does not apply to an action against a City Treasurer to recover interest received by him on
deposits of city funds that he failed to tum over to his principal. Butte v. Goodwin, 47 M 155, 134 P 670 (1913),

Burden of Proof as to Timeliness of Action: Section 27-2-2/ 1{3) is not a Statute of Limitations but is of the es-
sence of the right itself, and one who seeks to enforce a right must show affirmatively that his action is timely. (Opinion
on rehearing.) State ex rel. Lewis & Clark County v. District Court, 90 M 213, 300 P 544 (1931).

Oil and Gas Lease Forfeiture: An action for the cancellation of record of an oil and gas lease which had thereto-
fore been declared forfeited, brought under 82-/-20/ through 82-/-203, was not an action "upon a statute for a penalty
or forfeiture” within the meaning of this section or one “upon a liability created by statute other than a penalty or forfei-
ture". Abell v. Bishop, 86 M 478, 284 P 525 (1930).

Oil and Gas Leases: A Statute of Limitations, such as this section, prescribing a limitation of 2 years for an action
"npon a liability created by statute" does not extend to an action based upon defendant's alleged negligence in addition
io a statutory liability or to an action in which the element of agreement enters, as where defendant in an action of the
nature of the above specifically agreed, as lessee in an oil and gas lease, in case of default on his part to release the lease
of record. Abell v. Bishop, 86 M478, 284 P 525 (1930).
Case 1:01-cv-12257-PBS Document 3904-16 Filed 03/22/07 Page 27 of 49
Page 9
Mont. Code Anno., § 27-2-211

Double Liability of Bank Stockholders: The statutory liability imposed upon holders of bank stock by section
6036, R.C.M. 1921 (since repealed), for debts of the bank, is in the nature of a guaranty, not primary but secondary, and
the liability is created within the meaning of this section, not when the statute imposing it was enacted or when the rela-
tion of debtor and creditor between the bank and plaintiff first arose but when the bank became insolvent; therefore, the
complaint in such an action showing on ils face that it was commenced within the 3-year period was sufficient as
against a general demurrer (demurrer abolished, Rule 7(c), M.R.Civ.P., and 25-3 1-503 (25-3/-503 now repealed)).
Mitchell v. Banking Corp. of Mont., 83 M 581, 273 P 1055 (1929).

Quaere: When is the double statutory liability of a stockholder in a state bank “created” within the meaning of this
section, fixing a limitation of 3 years; was il created at the time the creditor made the deposit in question or at the time
the corporation was shown to be without assets? Brown v. Roberts, 78 M 301, 254 P 419 (1927).

While the double liability of stockholders in state banks is contractual in nature, the 5-year limitation on contracts
not in writing (27-2-202) does not apply in an action on such liability, but, the liability being one created by law, the
provision of this section, that an action of that nature must be brought within 3 years afler it was created, applies. Brown
v. Roberts, 78 M 301, 254 P 419 (1927).

Accrual of Cause of Action: Limitation does not begin to run against suit to charge directors of national bank with
personal liability for making excessive loans so long as defendants remain in control. Adams v. Clarke, 22 F2d 957 (9th
Cir, 1927).

An action by a depositor in an insolvent bank to enforce the stockholders’ liability is based on a statutory rather
than a contractual liability and is not penal in nature, so under this section it must be commenced within 3 years after the
liability was created by law, without reference as to when plaintiff made discovery of the facts in the case. Brown v.
Roberts, 78 M 301, 254 P 419 (1927).

An action against a director to enforce his statutory liability for failure of his corporation to file its annual statement
is not for a penalty or forfeiture, so it must be brought within 3 years afier the liabilily was created by law and not
within 3 years after the aggrieved party discovered the fact with relation thereto. Williams v. Hilger, 77 M 399, 251 P
524 (1926).

Notary Public's Liability: An action against a notary public to recover damages for making a false certificate to a
mortgage is one "upon a liability created by statute” within the meaning of this section and barred if not brought within
2 years from the date of false making. Steinbrenner v. Elder, 80 M 395, 260 P 725 (1927).

Actions in Other States: In an action brought in the federal District Court of a foreign state to enforce directors’ li-
ability for failure of a corporation to file the required annual report, the 3-year limitation prescribed by this section gov-
ems. NV. Pac. Ry. v, Crowell, 245 F 668 (D.C. N.J. 1917).

This section applies to Jiabilities incurred before its passage under a different statute and goes with them as a quali-
fication when they are sued upon in other states. Davis v. Mills, 194 US 451, 48 L Ed 1067, 24 S Ct 692 (1904), distin-
guished in Pearson v. NE, Airlines, Inc., 309 F2d 553 (2nd Cir. 1962),

Mining Company's Liability: An action under 39-2-704(1) for personal injuries, founded upon actionable negli-
gence, is not an action on a "liability created by statute"; hence, such an action is not barred in 2 years. Beeler v. Butte &
London Copper Dev. Co., 41 M 465, 110 P 328 (1910),

NOTES:

Atlomey General's Opinions

Wage Claims by Public Officers Considered Liability Created by Statute -- Two-Year Statute af Limitations Appli-
cable: Because the extent and nature of public officers’ duties and the amount of compensation are statutorily defined,
claims for compensation must be considered liabilities created by statute. Therefore, the 2-year statute of limitations set
out in subsection (1)(c) of this section applies to wage claims by public officers, including elected county officials and
their deputies, and claims for longevity payments from Deputy Sheriffs and undersheriffs. 43 .4.G. Op. 58 (1990).

Chapter Law Review Articles
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Page 10
Mont. Code Anno., § 27-2-211

Does It Have to be This Hard? Rule 41(e} in Montana, Ford, 60 Mont. L. Rev. 285 (1999).
Statutes of Limitation in Montana, Mont. L. Rev. Special Issue (1977).
Wrongful Death and the Statute of Limitations, Broeder, 34 Mont. L. Rev. 170 (1973).

Collateral References
Banks and Banking [Key number] 55(2), 58(1); Corporations [Key number] 264, 356.
9 C.I.S. Banks and Banking §§ | 19, 126; 18 C.J.8. Corporations § 414; 19 C.1.8. Corporations §§ 537, 532.

LexisNexis (R} Notes:

CASE NOTES

1, Claims brought under the Montana Unfair Trade Practices Act, § 30-/4-1/0/ et seq., are subject to the two-year time
limitation set forth in Mont. Code Ann. § 27-2-2/ 1; therefore, summary judgment was properly granted on a purchaser's
claim for unfair trade practices against a seller and an independent contractor, and the time period was not tolled be-
cause the evidence showed that the purchaser was aware of the relationship between the seller and the independent con-
tractor at the time that a check was written to pay for the services rendered. Osterman v. Sears, 2003 MT 327, 318 Mont.
342, 80 P.3d 435, 2003 Mont. LEXIS 791 (2003),

2. In an owner's action against the contractors for breach of contract for the failure to complete construction work on
lime, the trial court erred in applying Mont. Code Ann. $ 27-2-2/1 in the award of judgment interest because the amount
of damages was not certain until determined by the trial court. Carriger v. Ballenger, 192 Mont. 479, 628 P.2d 1106,
1987 Mont. LEXIS 739 (Mont. 1981).

3. Utility company’s claim for reimbursement of relocation expenses under Mont. Code Ann. § 60-4-403 did not accrue
unlil the relocation was complete. Therefore, the two-year slatute of limitations that was applicable to the claim, Mont.
Code Ann, § 27-2-211, did not begin to run until the relocation was complete. NV. Lights v. Dep't af Highways, 265 Monit.
47, 874 P.2d 6, 1994 Mont. LEXTS 96, 51 Mont. St. Rep. 394 (Mont. 1994).

4, Insurer's subrogation claim on an injured worker's recovery against a third party was barred by a two-year limitation
on statutory liabilities. Royal Ins. Co. v. Roadarmel, 2000 MT 259, 30] Mont. 508, 17 P.3d 105, 2000 Mont. LEXIS 262,
57 Moni, St. Rep. 1080 (2000).

5. District court erred in finding that Mont. Code Ann. § 39-2-703 did nol provide a cause of action for mismanagement,
however, in dismissing the suit, it reached the right result because the employee's claim for mismanagement was barred

by the two-year statute of limitations under Mont. Code Ann. § 27-2-211(1}(c). Haux v. Mont. Rail Link, Inc., 2004 MT

233, 322 Mont, 456, 97 P.3d 540, 2004 Mont. LEXIS 402 (2004).
Case 1:01-cv-12257-PBS Document 3904-16 Filed 03/22/07 Page 29 of 49
Page 1]
Mont. Code Anno., § 27-2-211

6. Utility company's claim for reimbursement of relocation expenses under Mont. Code Ann. § 60-4-403 did not accrue
until the relocation was complete. Therefore, the two-year statute of limitations that was applicable to the claim, Mont.
Code Ann. § 27-2-23 1, did not begin to min until the relocation was complete. M. Lighis v. Dep't of Highways, 265 Mont.
47, 874 P.2d 6, 1994 Mont. LEXIS 96, 51 Mont. St. Rep. 394 (Mont. 1994).

7, Because an employment relationship is contractual in nature, the applicable statute of limitations in Montana for
claims involving employment relationships with no written contract is five years, pursuant to Ment. Code Ann, § 27-2-
202(2) and Mont, Cade Ann, § 39-2-101. In several former employees’ action to recover for unpaid wages camed, the
district court did not err in determining that the statute of limitations was five years instead of two years pursuant to
Mont, Code Ann. § 27-2-211. Craver v. Waste Mamt. Partners, 265 Mont, 37, 874 P.2d J, 1994 Mont, LEXTS 60, 5]
Mont, St, Rep. 268, 2 Wage & Hour Cas. 2d (BNA) 17 (Mont. 1994), overruled by Jn re Estate af Lande, 1999 MT 179,
295 Mont. 277, 983 P.2d 316, 1999 Mont. LEXIS 189, 56 Mont. St. Rep. 701 (1999),

8. Where both the two-year statute of limitalions under Moni. Code Ann. § 27-2-211(1)(c) and the five-year statute of
limitations under Mont. Code Ann. § 27-2-202(2) had application to a suit brought by an employee for the payment of
overtime wages, the general rule required the court to resolve any doubt in favor of the statute containing the longer
limitation. Kearney v. KXLF Communs., 263 Mont. 407, 869 P.2d 772, 1994 Mont. LEXIS 34, 51 Mont. St. Rep. 119
(Moni. 1994),

9. Licensed real estate broker's action against an individual for the cancellation of a fee-splitling agreement and for the
return of a commission paid pursuant to the agreement on the basis that the individual allegedly misrepresented that he
was a licensed real estate broker, in violation of Mont. Code Ann. § 37-51-323, was barred by the statute of limitations,
Mont. Code Ann. § 27-2-211 because it was filed more than two years after the alleged torl. Payne v, Stratman, 229
Mont. 377, 747 P.2d 210, 1987 Mont. LEXIS 1081, 44 Mont. St. Rep. 2059 (Mont, 1987),

10. Licensed real estate broker's action against an individual for the cancellation of a fee-splilting agreement and for the
retum of a cammission paid pursuant to the agreement on the basis that the individual allegedly misrepresented that he
was a licensed real estate broker, in violation of Mont. Code Ann. § 37-51-323, was barred by the slatute of limitations,
Mont. Code Ann, § 27-2-21/ because it was filed more than two years after the alleged tort. Payne v. Stratman, 229
Mont. 377, 747 P.2d 210, 1987 Mont. LEXIS 1081, 44 Mont. St. Rep. 2059 (Mont, 1987),

11. Where both the two-year statule of limitations under Mont. Code Ann. § 27-2-211(i)(c} and the five-year statute of
limitations under Mont. Code Ann. § 27-2-202(2) had application to a suit brought by an employee for the payment of
overtime wages, the general rule required the court to resolve any doubt in favor of the statute containing the longer
limilation. Kearney v. KXLF Conumuns., 263 Mont. 407, 869 P.2d 772, 1994 Mont. LEXIS 34, 51 Mont. St. Rep. 119
(Moni. 1994).

12, Because an employment relationship is contractual in nature, the applicable statute of limitations in Montana for
claims involving employment relationships with no written contract is five years, pursuant to Adoni. Code Ann. § 27-2-
202(2) and Mont. Code Ann. § 39-2-101. In several former employees’ action to recover for unpaid wages eamed, the
district court did not err in determining that the statute of limitations was five years instead of two years pursuant to
Mont. Code Ann. § 27-2-211. Craver v. Wasie Mamt. Partners, 265 Mont. 37, 874 P.2d 1, 1994 Mont, LEXIS 60, 31
Mont. St. Rep. 268, 2 Wage & Hour Cas. 2d (BNA} 17 (Mont. 1994), overruled by Jn re Estate of Lande, 1999 MT £79,
295 Mont. 277, 983 P.2d 316, 1999 Mont. LEXIS 189, 56 Mont. St. Rep. 701 (1999).
Case 1:01-cv-12257-PBS Document 3904-16 Filed 03/22/07 Page 30 of 49

Page |2
Mont. Cade Anno., § 27-2-211

13. In the absence of a specific statute of limitations governing a particular tax, the general two-year limitations period
prescribed in Mont. Code Ann, § 27-2-211(1)(c) for a liability created by statute other than a penalty or forfeiture ap-
plies. WR. Grace & Co. v. Dep't of Revenue, 238 Mont. 439, 779 P.2d 470, 1989 Mont. LEXIS 213 (Mont. 1989).

14. In a second action by plaintiff former employee against defendant law firm for damages arising out of allegedly
false representations by which the law firm obtained a retrial of the employee's first trial on claims on wrongful termina-
tion, summary judgment under Mont. R. Civ. P. 56(c) was properly granted in favor of the law firm on the employee's
claim for deceit because that claim accrued with the reversal of the first judgment and was barred by the two-year siat-
ute of limitations: the general three-year statute, pursuant to Mont. Code Ann. § 27-2-204, did not apply. Barrett v. Hol-
land & Hart, 256 Mont. 101, 845 P.2d 714, 1992 Mont. LEXIS 350, 49 Mont. St. Rep. 1156 (Mont. 1992).

15. Claims brought under the Montana Unfair Trade Practices Act, § 30-/4-/0/ et seq., are subject to the two-year time
limitation set forth in Mont. Code Ann. § 27-2-21 1, therefore, summary judgment was properly granted on a purchaser's
claim for unfair trade practices against a setler and an independent contractor, and the time period was not tolled be-
cause the evidence showed that the purchaser was aware of the relationship between the seller and the independent con-
tractor at the lime that a check was written to pay for the services rendered. Osterman v. Sears, 2003 MT 327, 318 Mont.
342, 80 P.3d 435, 2003 Mont, LEXIS 791 (2003).

16, Claims brought under the Montana Unfair Trade Practices Act, § 30-/4-/0/ et seq., are subject to the two-year time
limitation set forth in Mfont. Code Ann, § 27-2-211; therefore, summary judgment was properly granted on a purchaser's
claim for unfair trade practices against a seller and an independent contractor, and the time period was not tolled be-
cause the evidence showed that the purchaser was aware of the relationship between the seller and the independent con-
tractor at the time thal a check was written to pay for the services rendered. Osterman v. Sears, 2003 MT 327, 318 Mont.
342, 86 P. 3d 435, 2003 Mont. LEXIS 791 (2003).

17. In a second action by plaintiff former employee against defendant law firm for damages arising out of allegedly
false representations by which the law firm obtained a retrial of the employee's first trial on claims on wrongful termina-
tion, summary judgment under Mont. R. Civ. P. 56(c) was properly granted in favor of the law firm on the employee's
claim for deceit because that claim accrued with the reversal of the first judgment and was barred by the two-year stat-
ute of limilations; the general three-year statute, pursuant to Mont. Code Ann. $ 27-2-204, did nol apply. Barrett v. Hel-
land & Hart, 256 Mont. 101, 845 P.2d 714, 1992 Mont. LEXIS 350, 49 Mont. St. Rep. 1156 (Mont. 1992).

18. District court erred in finding that Afont. Code Ann. § 39-2-703 did not provide a cause of action for mismanage-
ment, however, in dismissing the suit, it reached the right result because the employee's claim for mismanagement was
barred by the two-year statute of limitations under Mont. Code Ann, § 27-2-211(i)(c). Haux v. Mont. Rail Link, Inc.,
2004 MT 233, 322 Mont. 456, 97 P.3d 540, 2004 Mont, LEXIS 402 (2004).

19. Insurer's subrogation claim on an injured worker's recovery against a third party was barred by a two-year limitation
on statutory liabilities. Royal Ins. Co. v. Roadarmel, 2000 MT 259, 303 Mont. 508, 11 P.3d 105, 2000 Mont. LEXIS 262,
57 Mont. St. Rep. 1080 (2080).

20. Insurer's lien thal was created by Mont. Code Ann. & 39-71-414(1) as against third-party proceeds that were recov-

ered by an employee constituted a “liability created by statute” within the meaning of Mant. Code Ann. § 27-2-211(L)(e)
because it amounted to an unqualified right of reimbursement that was nat found al common law; the right of "subroga-
lion" that is granted by § 39-7/-4/4 must necessarily be read in reference to he Workers’ Compensation Act as a whole.
Case 1:01-cv-12257-PBS Document 3904-16 Filed 03/22/07 Page 31 of 49
Page 13
Mont. Code Anno., § 27-2-211

Royal Ins. Ce. v. Roadarmel, 2000 MT 259, 307 Mont. 508, 17 P.3d 105, 2000 Mont. LEXIS 262, 57 Mont. St. Rep.
L080 (2008).

21. When an injured employee became entitled to proceeds from a third-party tortfeasor, it marked the time at which the
insurer’s right o reclaim its "statutorily prescribed compensation payout" began to run for purposes of the statute of
limitations under Mont. Cede Ann. § 27-2-102(1){a); a workers’ compensation insurer's claim for statutory reimburse-
ment that is brought pursuant to Mont. Code Ann. § 39-71-4/4(1) constitutes a "liability created by statute" within the
meaning of Mont. Code Ann. § 27-2-211{1)(c). Royal Ins. Co, v. Roadarmel, 2000 MT 259, 301 Mont. 508, 11 P.3d
105, 2000 Mont. LEXIS 262, 57 Moni. St. Rep. 1086 (2000).

22. When an injured employee became entitled to proceeds from a third-party tortfeasor, if marked the time al which the
insurer's nght to reclaim its "statutorily prescribed compensation payout" began to run for purposes of the statute of
limitations under Mont. Code Ann, § 27-2-102(1}(a}; a workers' compensation insurer's claim for statutory reimburse-
ment that is brought pursuant to Mont. Code Ann. § 39-7/-414(1) constitutes a "liability created by statute” within the
meaning of Mont, Code Ann. § 27-2-211(1)(c). Royal Ins. Co. v. Roadarmel, 2000 MT 259, 301 Mont. 508, if P.3d
05, 2000 Mont. LEXIS 262, 57 Mont. St. Rep. 1080 (2060).

OPINIONS OF ATTORNEY GENERAL

1. Counties -- Application of 7 percent increase in section 7-4-2504(3), Counties -- Two-year statute of limitations on
wage claims from public officers and claims for longevily from deputy sheriffs and undersheriffs; County Commission-
ers -- Application of 7 percent increase in section 7-4-2504(3); County Commissioners -- Discretionary authority to
freeze salaries of elected county officials; County Officers And Employees -- Applicalion of 7 percent increase in sec-
tion 7-4-2504¢3): County Officers And Employees -- Two-year statute of limitations on wage claims from public off-
cers and claims for longevity from depuly sheriffs and undersheriffs; Employees, Public -- Two-year statute of limita-
tions on wage claims from public officers and claims for longevity from deputy sheriffs and undersheriffs; Labor Rela-
tions -- Two-year statute of limitations on wage claims from public officers and claims for longevity from deputy sher-
iffs and undersheriffs; Limitations On Action -- Two-year statute of limitations on wage claims from public officers and
claims for longevity from deputy sheriffs and undersheriffs; Public Officers -- Two-year statute of limitations on wage
claims from public officers and claims for longevity from deputy sheriffs and undersheriffs; Salaries -- Application of 7
percent increase in seclion 7-4-2504/3); Salaries -- Discretionary authority to freeze salaries of elected county officials;
Salaries -- Two-year statute of limitations on wage claims from public officers and claims for longevity from deputy
sheriffs and undersheriffs, Sheriffs -- Two-year statute of limitations on wage claims from public officers and claims for
longevity from deputy sheriffs and undersheriffs, Montana Code Annotated -- Sections 7-4-2503, 7-4-2504, 27-2-202,
27-2-211; Opinions Of The Attorney General -- 42 Op. Ait'y Gen. No. 85 (1988), 39 Op. Att'y Gen. No. 32 (1981).
HELD: 1. The 7 percent increase in section 7-4-2504(3), CA, must be considered a cost-oF living increment (COLA)
used to determine salaries for elected county officials in fiscal year 1982 and must be added to the base salary on July 1,
1982, before computing the Cola for fiscal year 1982-83., OPINION No. 58, 1990 Mont. AG LEXIS 9; 43 Op. Atty Gen.
Mont. No. 58.

2, The two-year statute of limilalions in section 27-2-21/(1){c), MCA, applies to wage claims by public officers, inelud-
ing elected counly officials and their deputies, and claims for longevity payments from deputy sheriffs and undersher-
iffs., OPINION No. 58, 1990 Mont. AG LEXIS 9, 43 Op. Atty Gen. Mont. No. 38.
17-8-231

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Page |

1 of 100 DOCUMENTS

LexisNexis (R) Montana Code Annotated
**#* ARCHIVE DATA ***

*** THIS DOCUMENT IS CURRENT THROUGH ALL 2003 LEGISLATION ***
*** No legislation enacted in 2004 ***
*+* ANNOTATIONS CURRENT THROUGH JULY 12, 2005 ***
TITLE 17 STATE FINANCE
CHAPTER 8 DISBURSEMENT AND EXPENDITURE
PART 2 CLAIMS
MCA § 17-8-231 (2004)

Liability for false claims.

(1) A person who knowingly presents or causes to be presented a false, fictitious, or fraudulent claim for allowance or

payment

to any state agency or ils contractors forfeits the claim, including any portion (hat may be legitimate, and in

addition is subject to a penalty of not to exceed $ 2,000 plus double the damages sustained by the state as a result of the
false claim, including all legal costs.

(2) The forfeiture and the penalty may be sued for in the same suit.

HISTORY:
En. Sec. 2, Ch. 151, L. 1981.

NOTES:

Chapter Cross-References
Prohibited payments, Art. VIII, sec. 14, Mont. Const.

Treasurer to withhold payment, 2-2-206.

Part Cross-References

Stale insurance plan and tort claims, Title 2, ch. 9.

Board of Examiners -- allocation, 2-15-1007.
Claim settlement by Attorney General, 18-1-412, 18-1-4]3.
Verification of pleadings, 25-4-203.

Cross-References

False claims to public agencies -- criminal offense, 45-7-210,

NOTES:

General's Opinions

Penalties for Fraudulent Benefits Claim -- Specific Remedy Controlling Over General Remedy: Although 17-8-
231 appears to provide a penalty for fraudulent claiming of unemployment. insurance benefits, that statute is a general
Case 1:01-cv-12257-PBS Document 3904-16 Filed 03/22/07 Page 33 of 49

Page 2
MCA § 17-8-231

one which provides a penalty in conflict with the more specific penalty provided under 39-51-3201, Because the more
particular statute must contro! to the extent of any inconsistency, the Department of Labor and Industry is limited to
recovery of those amounts of benefils wrongfully received by the claimant. The Department may not sue a claimant for
all benefits paid to the claimant or for the additional penalty provided in 17-8-231, but may disqualify the claimant un-
der 39-51-3201 from receipt of future benefits. 40.4.G. Op. 21 (1983).
Chapter Collateral References

72 Am. Jur. 2d States $§ 90, 91,

Inherent power of court to compel appropriation or expenditure of funds for judicial purposes. 59 ALR 3d 569.

Part Collateral References

Amount of appropriation as limitation on damages for breach of contract recoverable by one contracting with gov-
ernment agency. 40 ALR 4th 998.
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Page |

LEXSTAT MONT. CODE ANNO., § 30-14-103
LexisNexis (R) Montana Code Annotated

#*® THIS DOCUMENT IS CURRENT THROUGH THE 2005 SPECIAL SESSION ***
##* ANNOTATIONS CURRENT THROUGH JANUARY 3, 2007 ***

TITLE 30 TRADE AND COMMERCE
CHAPTER 14 UNFAIR TRADE PRACTICES AND CONSUMER PROTECTION
PART 1 CONSUMER PROTECTION ACT

GO TO CODE ARCHIVE DIRECTORY FOR THIS JURISDICTION
Mont. Code Anno., § 30-14-103 (2005)
30-14-103 Unlawful practices.

Unfair methods of competition and unfair or deceptive acls or practices in the conduct of any trade or commerce are
unlawful.

HISTORY: En. Sec. 2, Ch. 275, L. 1973; R-C.M. 1947, 85-402.

NOTES:

Chapter Cross-References
Protection of consumers from unfair practices of corporations, Art. XUL, sec. 1, Mont. Const.
Plain Language in Contracts Act, Title 30, ch. 14, part LI.

New motor vehicle warranties -- remedies, Title 61, ch. 4, part 5.

Part Cross-References
Consumer Counsel, Art. XTL, sec. 2, Mont. Const.
Policy of Montana Alcoholic Beverage Code, /6-/-/0/.
Policy of The Montana Cigarette Sales Act, /6-/0-/02.
Viclation of consumer reporting agencies' law as violation of part, 3/-3-253.

Montana Consumer Product Safety Act of 1975, Title 50, ch. 30.

Cross-References
Violation of consumer reporting agencies’ law as violation of part, 3/-3-/53.
Deceptive practices, 45-6-317.
Deceptive business practices, #5-6-378.
Chain distributor schemes, 45-6-319,
Illegal branding or altering or obscuring of brand, 45-6-327,

Chapter Compiler's Comments
Case 1:01-cv-12257-PBS Document 3904-16 Filed 03/22/07 Page 35 of 49
Page 2
Mont. Code Anno., § 30-14-103

Similarity to Uniform Law: This chapter is substantially similar to the Uniform Unfair Trade Practices and Con-
sumer Protection Law, which may be found in 29 Suggested State Legislation 141 (1972).

Part Compiler's Comments

Severability Clause: Section 18, Ch. 275, L. 1973, read: "If any provision of this act is declared unconstitutional,
or the application to any person or circumstances is held invalid, the constitutionality of the remainder of the act and its
applicability to other persons and circumstances is not affected.”

Administrative Rules

ARM 2.61.507 State do-not-call database.

Chapter Case Notes

Claims Under Unfair Trade Practices Act Subject to Statute of Limitations on Actions for Constructive Fraud: As
a liability created by slatute that is neither a penalty nor a statutory debt, claims brought under the Montana Unfair
Trade Practices and Consumer Protection Act of 1973 are subject to the 2-year statute of limitations in 27-2-2//, OQs-
terman v. Sears, Roebuck & Co., 2003 MT 327, 318 M 342, 80 P3d 435 (2003), following Royal Ins. Co. v. Roadarmel,
2000 MT 259, 301 M 508, 2 P3d 105 (2000).

Exercise of Ordinary Diligence Required in Discovery of Unfair Trade Practices Constituting Fraud for Tolling
Statute of Limitations: For purposes of tolling the statute of limitations in an action for fraud or unfair trade practices,
ordinary diligence must be exercised by the aggrieved party in discovery of the facts constituting the fraud or deceptive
practice. Pursuant to Johnson v. Barrett, 1999 MT 176, 295 M 254, 983 P2d 925 (1999), the test is whether the plaintiff
has information of circumstances sufficient to put a reasonable person on inquiry or has the opportunity to obiain
knowledge from sources open to the plaintiff's investigation. Mere ignorance of the facts will not suffice to toll the stat-
ute of limitations. In this case, plaintiff fited an unfair irade practices complaint about 2 years and 9 months after enter-
ing an agreement with defendant siding installer, believing at the time that the contract was with the defendant company
that manufactured the siding. However, plaintiff showed no affirmative conduct by either defendant ihat was calculated
to obscure the existence of a cause of action, nor were the facts giving rise to the alleged Fraud concealed. Thus, plaintiff
discovered or should have discovered the facts constituting the alleged fraud when the contract was entered more than 2
years prior to filing suit, so the claim was barred by the 2-year statute of limitations in 27-2-2/1. Osterman v. Sears,
Roebuck & Co., 2003 MT 327, 318 M 342, 80 P3d 435 (2003).

Provisions af Act Not Applicable -- Altorney Fees Proper: The District Court found that the provisions of the
Montana Unfair Trade Practices and Consumer Protection Act of 1973 were inapplicable to the subject of this case but
(hat pursuant to the Act the defendant, as prevailing party, was entitled to reasonable attomey fees under 30-/ 4-33.
Appellant contended that since the Act did not apply, award of attorney fees was not appropriate. The Supreme Court
affirmed the award, noting that defendant prevailed on the main issue in controversy and that since the action was
brought under the Act, reasonable attorney fees were proper. Dillree v. Devoe, 223 M 47, 724 P2d 171, 43 St. Rep. 152]
(1986).

Applicability of Chapter Where No Fraud, Duress, or Undue Influence Present: Attorney, mutes before he was
to defend client on criminal charges, threatened to withdraw as counsel unless client executed security apreement and
quitclaim deed as security for attomey's fee, Attorney had given the instruments to client weeks before trial, but client
had failed to execute them. No fraud, duress, or undue influence was found. Under these facts, this chapter has no appli-
cation. Matthews v. Berryman, 196 M 49, 637 P2d 822, 38 Si. Rep. 2112 (1981).

Part Case Noles

Negligence Compared With Violation of Consumer Protection Act: The jury found the defendant violated the
Consumer Protection Act and was negligent. The trial court applied the comparative negligence statute to reduce the
plaintiffs' recovery under the Act. On appeal, the Supreme Court affirmed the reduction of damages, stating that the law
as stated in the jury instructions does not allow the separation of the defendant's actions in violalion of the Consumer
Protection Act from its actions that were negligent. Evans v. Teakettle Realty, 226 M 363, 736 P2d 472, 44 St. Rep. 723
Case 1:01-cv-12257-PBS Document 3904-16 Filed 03/22/07 Page 36 of 49
Page 3
Mont, Code Anno., § 30-14-1903

Public Service Commission Exempt From Consumer Protection Act: The plain meaning of 30-14-1705 is that ac-
lions and transactions of the Public Service Commission, acting under its statulory authority, are exempt from the Con-
sumer Protection Act. Rozel Corp. v. Dept. of Public Service Regulation, 226 M 237, 735 P2d 282, 44 St. Rep. 618
(7987),

No Individual Cause of Action Concerning Goods Purchased for Business Rather Than for Personal, Family, or
Household Purposes: When uncontradicted testimony established that a machine had been purchased for use in re-
spondents' business, respondents did not fall within the class of persons who may bring a private action under 30-14-
133. Doll v. Major Muffler Centers, Inc., 208 M 401, 687 P2d 48, 41 St. Rep. 429 (1984).

Case Notes

Electric Cooperative Requirement That New Customer Pay Prior Customer's Delinquent Bul Unreasonable:
Granbois applied to have an electric cooperative provide service to her lot. However, the bylaws of the cooperative re-
quired that before she could receive service, Granbois pay the delinquent bill of the person who previously received
service at the location. She paid the delinquent bill, began receiving service, and then brought an aclion against the co-
operative on grounds that the policy violated unfair trade practices. Citing Howe v. Big Horn Elec. Co-op, 206 M 297,
670 P2d 936, 40 St. Rep. 1670 (1983), the Supreme Court held that the disparity in the relative positions of the coopera-
live and the consumer necessarily required the cooperative lo deal reasonably with its members and that the policy re-
quiring a new customer to either pay the predecessor's bill or go without electricity was an unreasonable restriction on
Granbois's access to clectric services. After determining that the case could proceed as an unfair trade practices action,
the court remanded with instructions to refund Granbois the amount of the delinquent bill. Granbois v. Big Horn County
Elec. Co-op, Inc., 1999 MT 222, 296 M 45, 986 P2d 1097, 56 St. Rep. 874 (1999).

Expert Testimony Unnecessary on Issue of Standard of Care -- District Court Not Directed as to All Expert Testi-
mony on All Claims: Durbins purchased a home through the seller's realtors. Contrary to the representations of the
realtors, Durbins discovered that the property had no legal septic system, that the household water was unsafe to use for
any purpose, and that the access road was located on the neighbor's property. Durbins brought an action against the real-
tors, alleging negligent misrepresentation, actual and constructive fraud, and statutory violations involving the Montana
real estate licensing laws and the Montana Unfair Trade Practices and Consumer Protection Act of 1973. The defen-
dants sought and achieved dismissal of the case on the grounds that Durbins failed to prove through expert testimony
the applicable standard of care of the realtors. The Supreme Court held that expert wilnesses were unnecessary io prove
a standard of care. Durbins also asked that the Supreme Court direct the District Court to exclude testimony of any ex-
pert witnesses on any claim asserted by the Durbins. The Supreme Court noted that the District Courts have great lati-
tude conceming the admissibility of evidence and that the District Court would in any event have to comply with Rule
702, M.R.Ev. (Title 26, ch. 10). The Supreme Court therefore declined to direct the District Court as requested by the
Durbins. Durbin v. Ross, 276 M 463, 916 P2d 758, 53 St. Rep. 471 (1996).

Retention of Building Materials by Architects Not Violative of Professional Conduct or Consumer Protection Act:
Architects who retained property and building materials from a building site after defendant failed to make contractual
payments did not. violate standards of professional conduct or commit unfair practices under the Montana Unfair Trade
Practices and Consumer Protection Act of 1973. Taylor, Thon, Thompson & Peterson v. Cannaday, 230 M 151, 749
P2d 63, 43 St. Rep. 102 (1988).

No Proof of Misrepresentation by Car Salesman: When the plaintiff, a purchaser of a used truck, brought an ac-
lion against defendant car salesman alleging that the condition of a truck had been misrepresented, the District Court did
not err in ruling that the plaintiff failed to offer proof establishing that the truck did not conform to the representations
made by the salesman. The defects discovered by the plaintiff were discoverable by reasonable inspection and none
rendered the truck inoperable or presented a safety hazard. Emick v. Koch, 227 M 365, 739 P2d 947, 44 St. Rep. 1153
(1987).

Parallel Pricing as Insufficient Circumstantial Evidence of Restraint of Trade: Where the State brought an action
against the defendant retail gasoline dealer, alleging that the defendant acted to restrain trade in the setting of gasoline
prices, ihe federal District Court found that the defendant's actions of price following and parallel pricing were consis-
tent with the defendant's own policies and self-interest, were a rational response to market conditions, were nol accom-
panied by any evidence of other "plus factors" tending to show restraint of trade, and that the evidence of the defen-
dant's pricing methods was therefore insufficient circumstantial evidence to show a violation of either state or federal
law. St. v. SuperAmerica, 559 F. Supp. 298, 40 St. Rep. 944 (D.C. Mont, 1983).
Case 1:01-cv-12257-PBS Document 3904-16 Filed 03/22/07 Page 37 of 49

Page 4
Mont. Code Anno., § 30-14-103

Consumer Protection Act Violation Alleged as Cause of Accident -- Agency Rule Not in Conflict With Federal Law
-- Summary Judgment: The District Court properly denied summary judgment on plaintiff's Court No. II, which
claimed misrepresentation as to the odometer reading on a used car sold to her by defendant corporation as the proxi-
mate cause of her accident and subsequent injuries. A state agency rule adopted pursuant to 30-/4-/04 was nol inconsis-
tent with the rules and decisions of the FTC and decisions of the Federal Courts, although the rule deals with sales and
the main purpose of the federal law is to prevent unlawful restraint of trade. Whether the alleged violation was a cause
of plaintiff's damages was a jury issue. Kopischke v. First. Cont. Corp., 187 M 471, 610 P2d 668 (1980).

NOTES:

Part Law Review Articles

MONTANA ARTICLES
Recent Consumer Protection Developments in Montana, Swartley, 37 Mont. L. Rev. 371 (1976).

The Supreme Court's Changing Altitude Toward Consumer Protection and Its Impact on Montana Prejudgment
Remedies, McDermott, 36 Mont. L. Rev. 165 (1975).

The Supreme Court's Still Changing Attitude Toward Consumer Protection and Its Impact on the Integrity of the
Court, McDermolt, 37 Mont. L. Rev. 27 (2976).

ARTICLES FROM OTHER STATES
Case Law Under the Texas Deceptive Practices--Consumer Protection Act, 33 Baylor L. Rev. 533 (1981).

Consumer Action Against Unfair or Deceptive Acts or Practices: The Private Use of FTC Jurisprudence, Leuffer &
Lipson, 48 George Washington L. Rev. 521 (1980).

Consumer Protection: The Caveat Emptor's New Clothes?, Maher, 59 Law Inst. J. 178 (1985).

Deceptive Trade Practice--Consumer Protection Acts and Their Effect on Product Liability Litigation, Buswell,
Stage, & Myers, 15 Forum 716 (7980).

Innovative Use of the Deceptive Trade Practices Act, Alderman, 18 Tex. Tech L. Rev. 45 (1987).
Re-examining New Jersey's Consumer Fraud Act: Loopholes for Professionals?, 7 Seton Hail Legis. J. 45 (1983).
Symposium: The Developing Law of Consumer Protection, /0 Gonz. L. Rev. 319 (1975).
The Consumer Protection Act Private Right of Action: A Reevaluation, Rowland, 19 Gonz. L. Rev. 673 (1983).
The Seller's Duty to Disclose Under Consumer Protection Statutes: Defining the Standard of Care, 77 Suffotk ULL.
Rev, 727 (1983).
Law Review Articles
Toward a Theory and Legal Standard of Consumer Unfairness, Rice, 3 J. £. & Com. [11 (1984).

Chapter Collateral References
Uniform State Antitrust Act, National Conference of Commissioners on Uniform State Laws (1979).
Uniform Trade Secrets Act, National Conference of Commissioners on Uniform State Laws (1979).

When Statute of Limitations commences to mun on action under state deceptive trade practice or consumer protec-
tion acts. 18 ALR 4th 1340.
Case 1:01-cv-12257-PBS Document 3904-16 Filed 03/22/07 Page 38 of 49
Page 5
Mont. Code Anno., § 30-14-103

Finance company’s liability in connection with consumer fraud practice of party selling goods or services. 18 ALR
4th 824,
Part Collateral References

Uniform Consumer Credit Code (1974), 7 UL.A. 601.

Uniform Consumer Credit Code (1968), 7 U.L.A. 233.

Uniform Consumer Sales Practices Act (1970), (1971), 7A U.L.A. 3.

Uniform Deceptive Trade Practices Act (1966), 7A U.L.A. 35.

Uniform Deceptive Trade Practices Act (1964), 7A ULL.A. 65,

What goods or property are "used," "second hand," or the like, for purposes of state consumer laws prohibiting
claims that such items are new. 39 ALR 4th T1292.

Award of attomeys' fees in actions under state deceptive trade practice and consumer protection acts. 35 ALR 4th
72.

When statute of limitations commences to run on action under slale deceptive trade practice or consumer protection
acts. 18 AER 4th 1340.

Practices forbidden by state deceptive trade practice and consumer protection acts. 89 ALR 3d 449.

Right to private action under state consumer protection act. 62 ALR 3d 169.

Collateral References

Landlord's fraud, deceptive trade practices, and the like, in connection with mobile home owner's lease or rental of
landsite. 39 ALR 4th 859.

Consumers’ rights and remedies, under modem state regulation, with respect (o formaldehyde foam insulation con-
sidered as a health hazard. 38 ALR 4th 1064.

Liability of repairer for unauthorized, unnecessary, or fraudulent repairs of motor vehicle. 23 ALR 4th 274.
Failure to deliver ordered merchandise to customer on date promised as unfair or deceptive trade practice. 7 ALR

4th 1257.

LexisNexis (R) Notes:

CASE NOTES

1. Where plaintiffs' complaint alleged that defendants engaged in a fraudulent real estate scheme, defendants’ failure to
answer and the district court's entry of a default judgment constituted an admission of the allegatians contained in the
complaint. Defendants' deceptive trade praclices supported an award of treble damages. Williams vy. Global Fin. Servs.,
Ine., 2006 MT 9N, 131 P.3d 571, 2006 Mont. LEXIS 5 (2006).

2. In a consumer's action against a car dealership and a car salesman, the consumer failed to prove an unfair or decep-
tive act or practice which would justify application of the Montana Corisumer Protection Act. Emick v. Koch, 227 Monit.
365, 739 P.2a 947, 1987 Mont, LEXIS 926, 44 Mont. St. Rep. 1153 (Mont. 1987).
Case 1:01-cv-12257-PBS Document 3904-16 Filed 03/22/07 Page 39 of 49

Page 6
Mont. Code Anno., § 30-14-103

3. Regardless of whether a transaction was classed as a lease or a purchase by the lessees, it did not came within the
statutory definition of a purchase or lease of goods primarily for personal, family or household purposes. Doll y. Major
Muffler Ctrs., 208 Mont. 401, 687 P.2d 48, 1984 Mont, LEXIS 912 (Mont. 1984).

4. The provisions which dealt with unfair or deceptive acts or practices by a motor vehicle dealer were not mconsistent
with 15 U.S.C.S. § 45 or the federal cases interpreting and applying il. Kopischke v. First Cont'l Corp., 187 Mont. 471,
610 P.2d 668, 1980 Mont. LEXIS 745, CCH Prod. Liab. Rep. P8669, 29 U.C.C. Rep. Serv. (CBC) 454 (Mont. 1980).

5. Motor home dealer did not violate the requirement of Mont. Code Ann. § 30-14-/03 to avoid engaging in unfair trade
practices in a case in which a motor home was sold to the dealer without the consent of a motor home owner because
the owner and the dealer did not have a contractual relationship at the time that the owner purchased the home, because
the owner lawfully purchased and thus lawfully came into possession of the home, and because the dealer returned the
home once she received convincing information that the home was stolen. Ray v. Stewart, 2002 MT 20N, 2002 Mont.
LEXIS 35 (Feb. I 2002).

6. In an action alleging an unfair trade practice under Mont. Code Ann. § 30-/4-103 and Mont. Code Ann. § 45-6-317,
an electric cooperative cutting aff a member's service was found to be unreasonable when the member lived in rural
area; it was unreasonable for cooperatives io make prospective members pay pasl members’ arrears and to terminate
service for non-payment when the member refused. Howe v. Big Horn Elec. Coop., 206 Mont. 297, 670 P.2d 936, 1983
Mont. LEXIS 805 (Mont. 1983).

7. The provisions which dealt with unfair or deceptive acts or practices by a motor vehicle dealer were not inconsistent
with /5 U.S.C. § 45 or the federal cases interpreting and applying il. Kopischke v. First Cont'l Corp., 187 Mont. 471,
610 P.2d 668, 1980 Mont. LEXIS 745, CCH Prod. Liab. Rep. P8669, 29 U.C.C. Rep. Serv. (CBC) 454 (Mont. 1980).

8. In an action alleging an unfair trade practice under Mont. Code Ann. § 30-14-1063 and Mont. Code Ann. § 45-6-317,
an electric cooperative cutting off a member's service was found to be unreasonable when the member lived in rural
area; it was unreasonable for cooperatives to make prospective members pay past members’ arrears and to terminate
service for non-payment when the member refused. Howe v. Big Horn Elec. Coop., 206 Mont. 297, 670 P.2d 936, 1983
Mont. LEXIS 805 (Mont. 1983).

9, The purpose of the Unfair Trade Practices and Consumer Protection Act, as stated in Mont, Code Ann. § 30-14-104,
is to conform to the Federal Trade Commission Act; on the other hand, the purpose of the Unfair Claims Settlement
Act, Mont. Code Ann. § 33-18-20! et seq, is to provide effective state regulation so as to be exempt from federal regu-
lations. Thus, the provisions of the Unfair Trade Practices Act could not be applied with respect to insurance company
practices, and an insured seeking to recover altomney's fees and nontaxable costs could not recover under Mont. Code
Ann. § 30-14-103 and Mont, Code Ann. § 30-14-133, but was confined to such relief as might arise out of the Unfair
Claims Act. Brition v. Farmers ins. Group, 221 Mont. 67, 721 P.2d 303, 1986 Mont. LEXIS 880 (Mont. 1986).

10. Where plaintiffs’ complaint alleged thal defendants engaged in a fraudulent real estate scheme, defendants’ failure to
answer and the district court's entry of a default judgment constituted an admission of the allegations contained in the
complaint. Defendants' deceptive trade practices supported an award of treble damages. Williams v. Global Fin. Servs.,
inc., 2006 MT 9N, 131 P.3d 571, 2006 Mont. LEXIS 3 (2006).
Case 1:01-cv-12257-PBS Document 3904-16 Filed 03/22/07 Page 40 of 49
Page 7

Mont. Code Anno., § 30-14-1053

11. The purpose of the Unfair Trade Practices and Consumer Protection Act, as stated in Mont. Code Ann. $ 30-14-104,
is to confonn to the Federal Trade Commission Act; on the other hand, the purpose of the Unfair Claims Settlement
Act, Mont, Code Ann. § 33-18-201 et seq., is to provide effective state regulation so as to be exempt from federal regu-
lations. Thus, the provisions of the Unfair Trade Practices Act could not be applied with respect to insurance company
practices, and an insured seeking to recover atlorney's fees and nontaxable costs could nol recover under Mont. Code
Ann, § 30-14-1063 and Mont. Code Ann. § 30-14-133, but was confined to such relief as might arise out of the Unfair
Claims Act. Britton v. Farmers Ins. Group, 221 Mont. 67, 721 P.2d 303, 1986 Mont. LEXTS 880 (Mont, 1986).

12. Where plaintiffs’ complaint alleged that defendants engaged in a fraudulent real estate scheme, defendants’ failure to
answer and the district court's entry of a default judgment constituted an admission of the allegations contained in the
complaint. Defendants' deceptive trade practices supported an award of treble damages. Williams v. Global Fin, Servs,
dnc., 2006 MT 9N, 137 P.3d 571, 2006 Mont. LEXIS 5 (2006).
Case 1:01-cv-12257-PBS Document 3904-16 Filed 03/22/07 Page 41 of 49
Page 1

LEXSTAT MONT, CODE ANNO., § 30-14-142
LexisNexis (R) Montana Code Annotated

## THIS DOCUMENT IS CURRENT THROUGH THE 2005 SPECIAL SESSION ***
++ ANNOTATIONS CURRENT THROUGH JANUARY 3, 2007 ***

TITLE 30 TRADE AND COMMERCE
CHAPTER #4 UNFAIR TRADE PRACTICES AND CONSUMER PROTECTION
PART 1 CONSUMER PROTECTION ACT

GO TO CODE ARCHIVE DIRECTORY FOR THIS JURISDICTION
Mont. Code Anno., § 30-34-142 (2005)
30-14-142 Penalties.

(1) In addition to any fine that a person might be subject to under subsection (2), a person who violates the terms of
an injunction ox temporary restraining order issued under 30-/4-//1 shall forfeit and pay to the state a civil fine of not
more than $ 10,000 for each violation. For the purposes of this section, the district court issuing an injunction or tempo-
rary restraining order retains jurisdiction and the cause must be continued, and in those cases, the department, acting in
the name of the state, may petition for recovery of civil penalties.

(2) In an action brought under 30-14-17, if the court finds that a person is willfully using or has willfully used a
method, act, or practice declared unlawful by 30-/4-/03, the department, upon petition to the court, may recover on
behalf of the state a civil fine of not more than $ 10,000 for each violation. The fine provided for in this subsection is in
addition to any liability that a person might be subject to under subsection (1).

(3) A person who engages in a fraudulent course of conduct declared unlawful by 30-74-103 shall upon conviction
be fined an amount nol more than § 5,000, imprisoned for not more than 1 year, or both, in the discretion of the court.
This subsection does nat limit any other provision of this part.

(4) For purposes of this section, a willful violation occurs when the parly committing the violation knew or should
have known that the conduct was a violation of 30-/4-703.

HISTORY: En. Sec. 14, Ch. 275, L. 1973; R.C.M. 1947, 85-414; amd. Sec. 8, Ch. 137, L. 1979; amd. Sec. 2, Ch. 394,
L. 1979; amd. Sec. 15, Ch. 342, L. 1999; amd. Sec. 6, Ch, 322, L. 2003.

NOTES:

Chapter Cross-References
Protection of consumers from unfair practices of corporations, Art. XFL, sec. 1, Mont. Const.
Plain Language in Contracts Act, Title 30, ch. 14, part 11.

New motor vehicle warranties -- remedies, Title 61, ch. 4, part 5.

Part Cross-References
Consumer Counsel, Art. XTH, sec. 2, Mont. Const.
Policy of Montana Alcoholic Beverage Code, /6-/-102.
Policy of The Montana Cigarette Sales Act, /6-/0-/82,

Violation of consumer reporting agencies’ law as violation of part, 3/-3-/53.
Case 1:01-cv-12257-PBS Document 3904-16 Filed 03/22/07 Page 42 of 49
Page 2
Mont. Code Annoa., § 30-14-142

Montana Consumer Product Safety Act of 1975, Title 50, ch. 30.

Cross-References
Deceptive practices, 45-6-317.

Deceptive business practices, 45-6-378.

Chapter Compiler's Comments

Similarity to Uniform Law: This chapter is substantially similar to the Uniform Unfair Trade Practices and Con-
sumer Protection Law, which may be found in 29 Suggested State Legislation 141 (1972).

Part Compiler's Comments

Severability Clause: Section 18, Ch. 275, L. 1973, read: "If any provision of this act is declared unconstitutional,
or the application to any person or circumstances is held invalid, the constitulionality of the remainder of the act and its
applicability io other persons and circumstances is not affected."

Compiler's Comments

2003 Amendment: Chapter 322 at beginning of (1) inserted initial clause concerning subsection (2); in (2) in first
senience increased maximum fine from $ 1,000 to 5 10,000 and inserted last sentence relating to effect of the fine; and
made minor changes in style. Amendment effective April 15, 2003.

1999 Amendment. Chapter 342 in (1) and (2) substituted "fine" for "penalty"; in (2) increased fine amount from $
500 to $ 1,000; in (3) increased fine amount from $ 2,000 to $ 5,000; and made minor changes in style. Amendment
effective October 1, 1999.

Chapter Case Notes

Claims Under Unfair Trade Practices Act Subject to Statute of Limitations on Actions for Constructive Fraud: As
a liability created by statute that is neither a penalty nor a statutory debt, claims brought under the Montana Unfair
Trade Practices and Consumer Protection Act of 1973 are subject to the 2-year statute of limitations in 27-2-2//, Os-
terman v. Sears, Roebuck & Co., 2003 MT 327, 318 M 342, 80 P3d 435 (2003), following Royal Ins. Co. v. Readarmel,
2000 MT 259, 301 M 508, 11 P3d 105 (2000).

Exercise of Ordinary Diligence Required in Discovery of Unfair Trade Practices Constituting Fraud for Tolling
Statute of Limiiations: For purposes of tolling the statute of limitations in an action for fraud or unfair trade practices,
ordinary diligence must be exercised by the aggrieved party in discovery of the facts constituting the fraud or deceptive
practice. Pursuant to Johnson v. Barrett, 1999 MT 176, 295 M 254, 983 P2d 925 (1999), the test is whether the plaintiff
has information of circumstances sufficient to put a reasonable person on inquiry or has the opportunity to obtain
knowledge from sources open (o the plaintiff's investigation. Mere ignorance of the facts will not suffice to toll the stat-
ute of limitations. In this case, plaintiff filed an unfair trade practices complaint about 2 years and 9 months after enter-
ing an agreement with defendant siding installer, believing at the time that the contract was with the defendant company
ihat manufactured the siding. However, plaintiff showed no affirmative conduct by either defendant that was calculated
to obscure the existence of a cause of action, nor were the facts giving rise to the alleged fraud concealed. Thus, plaintiff
discovered or should have discovered the facts constituting the alleged fraud when the contract was entered more than 2
years prior to filing suit, so the claim was barred by the 2-year statute of limitations in 27-2-2/1. Osterman yv. Sears,
Roebuck & Co., 2003 MT 327, 318 M 342, 80 P3d 435 (2003).

Provisions of Act Not Applicable -- Attorney Fees Proper: The District Court found that the provisions of the
Montana Unfair Trade Practices and Consumer Protection Act of 1973 were inapplicable to the subject of this case but
that pursuant to the Act the defendant, as prevailing party, was entitled to reasonable atlomey fees under 30-1 4-133.
Appellant contended that since the Act did not apply, award of attomey fees was not appropriate. The Supreme Court
affirmed the award, noting that defendant prevailed on the main issue in controversy and that since the action was
brought under the Act, reasonable attorney fees were proper. Dilfree v. Devoe, 223 M 47, 724 P2d 171, 43 Si. Rep. 1521
(1986).
Case 1:01-cv-12257-PBS Document 3904-16 Filed 03/22/07 Page 43 of 49
Page 3
Mont. Code Anno., § 30-14-142

Applicability of Chapter Where No Fraud, Duress, or Undue Influence Present: Atlorney, minutes before he was
to defend client on criminal charges, threatened to withdraw as counsel unless client executed security agreement and
quitclaim deed as security for attomey's fee. Altorey had given the instruments to client weeks before trial, but client
had failed to execute (hem. No fraud, duress, or undue influence was found. Under these facts, this chapter has no appli-
cation, Matthews v. Berryman, 196 M 49, 637 P2d 822, 38 St. Rep. 2112 (1981).

Part Case Notes

Negligence Compared With Violation of Consumer Protection Act: The jury found the defendant violated the
Consumer Protection Act and was negligent. The trial court applied the comparative negligence stalute to reduce the
plaintiffs' recovery under the Act. On appeal, the Supreme Court affirmed the reduction of damages, stating thal the law
as stated in the jury instructions does not allow the separation of the defendant's actions in violation of the Consumer
Protection Act from ils actions thal were negligent. Evans v. Teaketile Realty, 226 M 363, 736 P2d 472, 44 St. Rep. 723

Public Service Commission Exempt From Consumer Protection Act: The plain meaning of 30-/4-205 is that ac-
tions and transactions of the Public Service Commission, acling under its statutory authority, are exempt from the Con-
sumer Protection Act. Rozel Corp. v. Dept. of Public Service Regulation, 226 M 237, 735 P2d 282, 44 St. Rep. 618
(1987).

No Individual Cause of Action Concerning Goods Purchased for Business Rather Than for Personal, Family, or
Household Purposes: When uncontradicted testimony established that a machine had been purchased for use in re-
spondents! business, respondents did not fall within the class of persans who may bring a private action under 30-/4-
133. Doll v. Major Muffler Centers, Inc., 208 M 401, 687 P2d 48, 41 St. Rep. 429 (1984).

NOTES:

Part Law Review Articles

MONTANA ARTICLES
Recent Consumer Protection Developments in Montana, Swartley, 37 Mont. LZ. Rev. 372 (1976).

The Supreme Court's Changing Attitude Toward Consumer Protection and Its Impact on Montana Prejudgment
Remedies, McDermott, 36 Mont. L. Rev. 165 (1975).

The Supreme Court's Still Changing Attitude Toward Consumer Protection and Its Impact on the Integrity of the
Court, McDermott, 37 Moni. L. Rev. 27 (1976).

ARTICLES FROM OTHER STATES
Case Law Under the Texas Deceptive Practices--Consumer Protection Act, 33 Baylor £. Rev. 533 (198D).

Consumer Action Against Unfair or Deceptive Acts or Practices: The Private Use of FTC Jurisprudence, Leuffer &
Lipson, 48 George Washington L. Rev. 521 (1980).

Consumer Protection: The Caveat Emptor's New Clothes?, Maher, 59 Law Inst. J. 178 (1985).

Deceptive Trade Practice--Consumer Protection Acts and Their Effect on Product Liability Litigation, Buswell,
Stagg, & Myers, £5 Forum 776 (1989).

Innovative Use of the Deceptive Trade Practices Act, Alderman, /8 Tex. Tech L. Rev. 43 (1987).

Re-examining New Jersey's Consumer Fraud Act: Loopholes for Professionals?, 7 Seton Hall Legis, J. 45 (1983).
Symposium: The Developing Law of Consumer Protection, /0 Gonz. L. Rev. 39 (£975).

The Consumer Protection Act Private Right of Action: A Reevaluation, Rowland, /9 Gonz. £. Rev. 673 (1983).
Case 1:01-cv-12257-PBS Document 3904-16 Filed 03/22/07 Page 44 of 49
Page 4
Mont. Code Anno., § 30-14-142

The Seller's Duty to Disclose Under Consumer Protection Statutes: Defining the Standard of Care, /7 Suffolk U.L.
Rev. 721 (1983).
Chapter Collateral References

Uniform State Antitrust Act, National Conference of Commissioners on Uniform State Laws (1979).

Uniform Trade Secrets Act, National Conference of Commissioners on Uniform State Laws (1979).

When Statute of Limitations commences to run on action under state deceptive trade practice or consumer protec-
tion acts. 18 ALR 4th 1340.

Finance company's liability in connection with consumer fraud practice of party selling goods or services. /8 ALR
4th 824.
Part Collateral References

Uniform Consumer Credit Code (1974), 7 U.L.A. 601.

Uniform Consumer Credit Code (1968), 7 U.L.A. 233.

Uniform Consumer Sales Practices Act (1970), (1971), 7A U.L.A. 3.

Uniform Deceptive Trade Practices Act (1966), 7A U.L.A. 35.

Uniform Deceptive Trade Practices Act (1964), 7A U.L.A. 65,

What goods or property are "used," "second hand," or the like, for purposes of state consumer laws prohibiting
claims that such items are new. 59 ALR 4th 1192.

Award of attormeys' fees in actions under state deceptive trade praclice and consumer protection acts. 35 ALR 4th
£2,

When statute of limitations commences to run on action under state deceptive trade practice or consumer protection
acts. [8 ALR 4th 1340.

Practices forbidden by state deceptive trade practice and consumer protection acts. 89 ALR 3d 449.

Right to private action under state consumer protection act. 62 ALK 3d 169.

LexisNexis (R) Notes:
CASE NOTES

1. While a litigant, if determined to be a violator may have suffered civil penalties pursuant to Mont Code Ann. § 30-14-
142, or potential damage to his business, the litigant would not "be convicted" or have "a record." Harne v. Deadmond,
1998 MT 22, 287 Mont. 255, 954 P.2d 732, 1998 Mont. LEXTS 22, 55 Mont. St. Rep. 80 (1998).
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LEXSTAT MONT. CODE ANNO., § 53-6-155
LexisNexis (R} Montana Code Annotated

*+* THIS DOCUMENT IS CURRENT THROUGH THE 2005 SPECIAL SESSION ***
*** ANNOTATIONS CURRENT THROUGH JANUARY 3, 2007 ***

TITLE 53 SOCIAL SERVICES AND INSTITUTIONS
CHAPTER 6 HEALTH CARE SERVICES
PART 1 MEDICAL ASSISTANCE -- MEDICAID

GO TO CODE ARCHIVE DIRECTORY FOR THIS JURISDICTION
Mont. Code Anno., § 53-6-255 (2005)
53-6-155 Definitions.

As used in this part, unless expressly provided otherwise, the following definitions apply:

(1) “Abuse” means conduct by an applicant, recipient, provider, or other person involving disregard of and an un-
reasonable failure to conform with the statutes, regulations, and rules governing the medical assistance program when
the disregard or failure results or may result in an incorrect determination that a person is eligible for medical assistance
or payment by a medicaid agency of medical assistance payments to which the provider is not entitled.

(2) "Applicant" means a person:

(a) who has submitted an application for determination of medicaid eligibility to a medicaid agency on the person's
own behalf or on behalf of another person; or

(b) on whose behalf an application has been submitted.

(3) "Benefit" means the provision of anything of pecuniary value to or on behalf of a recipient under the medicaid
program.

(4) "Claim" means a communication, whether in oral, written, electronic, magnetic, or other form, that is used to
claim specific services or items as payable or reimbursable under the medicaid program or that slates income, expense,
or other information that is or may be used to determine entitlement to or the rate of payment under the medicaid pro-
gram. The term includes any documents submitted as part of or in support of the claim.

(5) "Department" means the department of public health and human services provided for in 2-25-2201,

(6) "Document" means any application, claim, form, report, record, writing, or correspondence, whether in written,
electronic, magnetic, or other form.

(7) "Fraud" means any conduct or activity prohibited by statute, regulation, or rule involving purposeful or know-
ing conduct or omission to perform a duty that results in or may result in medicaid payments or benefits to which the
applicant, recipient, or provider is net entitled. Fraud includes but is not limited to any conduct or omission under the
medicaid program that would constitute a criminal offense under Title 45, chapter 6 or 7.

(8) "Medicaid" means the Montana medical assistance program established under Title 53, chapter 6.

(9) "Medicaid agency" means any agency or entity of state, counly, or local government that administers any part
of the medicaid program, whether under direct statutory authority or under contract with an authorized agency of the
state or federal government. The term includes but is not limited to the department, (he department of corrections, local
offices of public assistance, and other local and state agencies and their agents, contractors, and employees, when acting
with respect to medicaid eligibility, claims processing or payment, utilization review, case management, provider certi-
fication, investigation, or other administration of the medicaid program.
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Mont. Code Aumno., § 53-6-155

(10) "Misappropriation of patient property" means exploilation, deliberate misplacement, or wrongful use or taking
of a patient's property, whether temporary or permanent, without authorization by the palient or the patient's designated
representative. Misappropriation of patient property includes but is nol limited to any conduct with respect to a patient's
property that would constitute a criminal offense under Title 45, chapter 6, part 3.

(11) "Patient abuse" means the willful infliction of physical or mental injury of a patient or unreasonable confine-
ment, intimidation, or punishment that results in pain, physical or mental harm, or mental anguish of a patient. Patient
abuse includes but is not limited to any conduct with respect to a patient that would constitute a criminal offense under
Tile 45, chapter 5,

(12) "Patient neglect” means a failure, through inattentiveness, carelessness, or other omission, to provide to a pa-
tient poods and services necessary to avoid physical harm, mental anguish, or mental illness when an omission is not
caused by factors beyond the person's control or by good faith errors in judgment. Patient neglect includes but is not
limited to any conduct with respect to a patient thal would constitute a criminal offense under 45-5-208.

(13) “Provider” means an individual, company, partnership, corporation, institution, facility, or other entity or
business association that has enrolled or applied to enroll as a provider of services or items under the medical assistance
program established under this part,

(14) "Recipient" means a person:

(a} who has been determined by a medicaid agency to be eligible for medicaid benefits, whether or nol the person
actually has recerved any benefits; or

(b) who actually receives medicaid benefits, whether or not determined eligible.

(15) (a) "Records" means medical, professional, business, or financial information and documents, whether in wril-
ten, electronic, magnetic, microfilm, or other form:

(i) pertaining to the provision of treatment, care, services, or items ta a recipient;
Gi) pertaining to the income and expenses of the provider; or

(iii) otherwise relating lo or pertaining to a determination of eligibility for or entitlement to payment or reimburse-
ment under the medicaid program.

(b) The term includes all records and documents, regardless of whether the records are required by medicaid laws,
regulations, rules, or policies to be made and maintained by the provider.

HISTORY: En. Sec. 1, Ch. 354, L. 1995; amd. Sec. 40, Ch. 571, L. 2001.

NOTES:

Title Cross-References

Institulions and assistance, Art, XL, sec. 3, Mont. Const.

Part Cross-References
Institulions and assistance, Ari. XH, sec. 3, Mont. Const.

Families Achieving Independence in Montana (FAIM) -- financial assistance, Title 53, ch. 4, part 2.

Part Compiler's Comments

Study of Conversion to Private Coverage: Chapter $23, L. 1995, requires the Department of Social and Rehabili-
tation Services (now Depariment of Public Health and Human Services) to, if sufficient funds are available from public
and private sources, contract with the Legislative Auditor for a study of the conversion and cost-effectiveness of con-
verting Medicaid to a combined private insurance and medical savings accounts program. Alter the sludy 1s completed,
if the Office of Budget and Program Planning decides that conversion would be cost-effective, the Department must
apply to the United Stales government for a waiver of Medicaid statutes and males and, if the waiver is granted, convert
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Mont. Code Anno., § 53-6-155

Medicaid 10 a combined private insurance and medical savings accounts program. The act is effective July |, 1995, and
terminates October 1, 1996.
Compiler's Comments

2001 Amendment: Chapler $71 in definition of medicaid agency in second sentence near beginning after "the de-
partment of correclions" substituled "local offices of public assistance" for "county offices of human services and public
welfare”. Amendment effective July 1, 2001.

Severability: Section 18, Ch. 354, L. 1995, was a severability clause.

Effective Date: Section 19(1), Ch. 354, L. 1995, provided that this section was effective on passage and approval.
Approved April 11, 1995,

Code Commissioner Changes: Pursuant to sec. 1, Ch. 546, L. 1995, the Code Commissioner substituted Depart-
ment of Public Health and Human Services for Department of Social and Rehabilitation Services.

Pursuant to sec. 3, Ch. 546, L. 1995, the Code Commissioner substituted Department of Public Health and Human
Services for Department of Health and Environmental Sciences.

Pursuant to sec. 4, Ch. 546, L. 1995, the Code Commissioner substituted Department of Public Health and Human
Services for Department of Corrections and Human Services.
Chapter Administrative Rules

Title 37, chapter 40, ARM Senior and long-term care services.

Title 37, chapter 49, ARM IV-E foster care services.

Title 37, chapter 82, ARM Medicaid eligibility.

Title 37, chapter 85, ARM General Medicaid services.

Title 37, chapter 86, ARM Medicaid primary care services.

Title 37, chapter 88, ARM Medicaid mental health services.

Part Administrative Rules
Title 37, chapter 82, ARM Medicaid eligibility.
Title 37, chapter 83, ARM Medicaid for certain Medicare beneficiaries and others.
Title 37, chapter 85, ARM General Medicaid services.
Title 37, chapter 86, ARM Medicaid primary care services.
Title 37, chapter 88, ARM Medicaid mental health services.

Part Case Notes

implied Contracts -- Medicaid Payments: The principle underlying the implied contract doctrine is that one person
should not be permitted to be unjustly enriched at the expense of another but should be required to make restitution for
property or benefits received where it is just and equitable that such restitution be made and where such action involves
no violation or frustration of law or opposition to public policy, either directly or indirectly. The circumstances on the
record do not justify payment be made on any formula other than the "reasonable costs” formula as set forth in federal
Medicaid statutes and regulations. Flathead Health Center v. Flathead County, 183 M 211, 598 P2d 1111, 36 Si. Rep.
1465 (1979),

NOTES:
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Mont. Code Anno., § 53-6-155

Title Law Review Articles

Equality in Basic Needs and Services: Constitutional Right to Subsidy and Sharing. Welfare Rights in a Constitu-
tiona! Democracy. F. I. Michelman. Commentary. R. H. Bork, B. Levin, §. F. Appleton; Panel discussion. Reaching the
Private Sphere; Schools, Clubs, Monopolies. Changing Concepts of Equality: From Equality Before the Law to the
Welfare State. R. K. Winter, Jr.; Commentary. J. H. Choper, M. B. Wilson; Panel discussion, Wash. U.L.Q. 1979: 659
through 793 (Summer 1979),

Part Law Review Articles

Between Welfare Medicine and Mainstream Entitlement: Medicaid at the Crossroads, Grogan & Patashnik, 28 J.
Health Pol., Pol'y & L. 821 (2003).

Get Medicaid Without Giving Up the Farm: A Medicaid Applicant Can Keep His Home and His Eligibility,
Sandoval, 142 Tr. & Est. 29 (2003).

Medicaid Eligibility Rules, Knoepfle, 34 Tax Adviser 354 (2003).

Medicaid Eligibility Rules for the Elderly Long-Term Care Applicant: History and Developments, 1965-1998,
Ahmad, 20/7. Legal Med. 251 (1999).

Balancing the Budget on the Backs of American's Elderiy--Section 4734 of the Balanced Budget Act: Criminaliza-
tion of the Attormmey's Role as Advisor and Counselor, Miller, 29 U. Mem. L. Rev. 165 (1998).

Criminal Penalty for Assisting With Medicaid Planning Transfers, Coplan, 29 Tax Adviser 17 (1998).

Long-Term Care Financing Crisis--Recent Federal and Slate Efforts to Deter Asset Transfers as a Means to Gain
Medicaid Eligibility, Reich, 74 N.D.L. Rev. 383 (7998).

A Crealive Strategy for Protecting the Home for Medicaid Purposes, Bove, 24 Est. Plan. 22 (7997).
Advising the Elder Client: Trusts and Medicaid Eligibility, Barrett, 43 Prac. Law. 57 (1997).

Legal Issues in Securing Home Health Services Under Medicare and Medicaid (Elder Law), Bogart, Chilin,
Gottlich, & Stein, 3/ Clearinghouse Rev. 199 (1997).

The Welfare Law and Its Effects on Medicaid Recipients, 30 Clearinghouse Rev. 1008 (1997).
Medicaid Reform: Saving an American Success Story, Graham, 23 Fig, St. ULL, Rev. 947 (1996).

Medicaid and the Elderly Poor--A Second Look al the Medicare Catastrophic Coverage Act: Transfer of Assets and
Spousal Impoverishment, Finberg & Nemore, 25 Clearinghouse Rev. 1316 (1992).

Symposium on Medical Cost Containment, 3 Notre Dame J.L., Ethics, & Pub. Pol'y (1988).

Equal Protection Problems With Welfare Fraud Prosecution (Special Issue: Poverty Law), Collin & Hemmons, 37
Loy. L. Rev. 17 (1987).

Health Care Delivery and the Elderly: Teaching Old Patients New Tricks, Kapp, 7 Cum. £. Rev. 437 (1987),
Medicare Regulalions--Judicial Review, 12 Am. .L. & Med. 162 (1987).

Part Collateral References
Social Security and Public Welfare [Key number] 241.
81 C.J.S. Social Security and Public Welfare § 126, et seq.
79 Am. Jur, 2d Welfare Laws §§ 33 through 38.

Supreme Court's views as to construction and application of Medicaid Act (42 USCS &$§ 7396 - 1396s). 85 L. Ed. 2d

Grants to States for Medical Assistance Programs, Title 42, ch. 7, subchapter 19, U.S.C.

Montana's Welfare Reform Project: Families Achieving Independence in Montana, FAIM, Febmiary 1998 Update,
Montana Department of Public Health and Human Services.
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Mont, Code Anno., § 53-6-155

Welfare in Montana: A Time for Reform, Interim Report, Mont. Leg. Council (Dec. 1988).


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