                                                                                             08/22/2017


                                           DA 16-0394
                                                                                         Case Number: DA 16-0394

              IN THE SUPREME COURT OF THE STATE OF MONTANA
                                          2017 MT 204


JEFFREY R. FOLSOM,

               Plaintiff, Appellee, and Cross-Appellant,

         v.

MONTANA PUBLIC EMPLOYEES’ ASSOCIATION, INC.,
a Montana non-profit Corporation,

               Defendant, Appellant and Cross-Appellee.



APPEAL FROM:            District Court of the Eleventh Judicial District,
                        In and For the County of Flathead, Cause No. DV 14-832(C)
                        Honorable Heidi Ulbricht, Presiding Judge


COUNSEL OF RECORD:

                For Appellant:

                        James P. Molloy, Gallik, Bremer & Molloy, P.C., Bozeman, Montana

                For Appellee:

                        Kim T. Christopherson, Attorney at Law, Christopherson Law Office,
                        P.C., Kalispell, Montana


                                                    Submitted on Briefs: March 8, 2017

                                                              Decided: August 22, 2017


Filed:

                        __________________________________________
                                         Clerk
Justice Dirk M. Sandefur delivered the Opinion of the Court.

¶1     Montana Public Employees’ Association (MPEA) appeals judgments of the

Montana Eleventh Judicial District Court, Flathead County: (1) decreeing that MPEA

breached its duty of fair representation (DFR) to Jeffrey R. Folsom (Folsom) and engaged

in related common law fraud; (2) awarding Folsom $47,550 in attorney fees as an element

of compensatory damages on his DFR claim; and (3) awarding $50,000 in punitive

damages on his related common law fraud claim. MPEA further appeals the court’s denial

of MPEA’s subsequent M. R. Civ. P. 59(e) and 60(b)(6) motions for post-judgment relief.

Folsom cross-appeals the District Court’s denial of his request for compensatory lost wages

on the DFR claim and his subsequent motion for post-judgment relief under M. R. Civ. P.

59(a)(2) and 60(b)(1) and § 25-11-102(3), MCA.          We reverse the District Court’s

judgments and remand for further proceedings on Folsom’s DFR claim.

                                         ISSUES

¶2     We restate the issues on appeal as:

       1. Is Folsom’s common law fraud claim independently cognizable distinct from his
          DFR claim on the record in this case?

       2. Did the District Court erroneously conclude that insufficient evidence of
          causation precluded Folsom’s recovery of lost wages and benefits as
          compensatory damages on his DFR claim?

       3. Did the District Court erroneously award attorney fees to Folsom as an element
          of compensatory damages on his DFR claim?

       4. Are punitive damages recoverable absent a compensatory damages award on a
          predicate claim for relief?

       5. Are punitive damages recoverable against a union predicated on a Montana DFR
          claim?


                                             2
          6. Did the District Court erroneously deny MPEA’s motions for post-judgment relief
             under M. R. Civ. P. 59(e) and 60(b)(6)?

                    FACTUAL AND PROCEDURAL BACKGROUND

¶3        Folsom was a non-probationary police officer employed by the City of Whitefish

(City). In 2012, Folsom was one of many advocating that the Whitefish Police Protective

Association (WPPA), a union of officers of the Whitefish Police Department, affiliate with

MPEA. Following a contentious process that resulted in WPPA affiliating with MPEA,

the City suspended Folsom on February 13, 2013, with notice of intent to terminate his

employment for cause under the collective-bargaining agreement (CBA) between the City

and MPEA.

¶4        At the time of the termination notice, MPEA was the exclusive bargaining agent for

the WPPA under the CBA and the Montana Public Employees’ Collective Bargaining Act.1

The CBA provided a four-step employee grievance process. Either MPEA or the aggrieved

employee could initiate Steps 1 and 2 of the process but only MPEA could initiate Steps 3

and 4. MPEA field representative Darcy Dahle timely initiated Steps 1 and 2 on Folsom’s

behalf.

¶5        After the City denied Folsom’s grievance at Steps 1 and 2, Dahle attempted to

initiate Step 3 of the process by correspondence to the City Manager dated April 2, 2013.

The City Manager rejected the Step 3 grievance as untimely initiated beyond the ten-day




1
    See Title 39, chapter 31, MCA.


                                               3
deadline specified by the CBA.2            On the condition that MPEA produce certain

documentation, the City nonetheless offered to participate in the Step 3 process despite its

assertion that it had no obligation to do so. Dahle refused the City’s document request and

proposed binding arbitration to resolve the Step 3 timeliness issue. Upon the City’s

rejection of the arbitration proposal, Dahle next proposed to resolve the issue by mediation

through the Board of Personnel Appeals.3 Standing on its assertion that MPEA failed to

timely initiate Step 3, the City refused and declared Folsom’s grievance rights exhausted

pursuant to the terms of the CBA.4

¶6       MPEA ultimately referred the matter for further action to in-house counsel, Carter

Picotte, who was thereafter exclusively responsible for handling Folsom’s grievance on

behalf of MPEA. Picotte submitted a notice of appeal to the City Police Commission

pursuant to CBA Step 4 and § 7-32-4155(1), MCA.5 In response, the City reasserted that




2
  The record on appeal indicates that a factual dispute may persist as to whether MPEA’s attempted
initiation of the Step 3 process was indeed untimely.
3
    See Admin. R. M. 24.26.695A.
4
 MPEA did not seek relief from the Board of Personnel Appeal through an unfair labor practice
complaint.
5
  Independent of collective bargaining agreements, Montana law mandates establishment of a
three-person police commission in all cities and towns that have “organized police departments”
that have “three or more full-time law enforcement officials.” Section 7-32-4151, MCA. Inter
alia, the police commission “shall hear and decide appeals brought by any member or officer of
the police department who has been disciplined, suspended, removed, or discharged.” Section
7-32-4155(1), MCA. Upon notice and hearing, the police commission has the authority “to
sustain, modify, or overrule the disciplinary order of the mayor, city manager, or chief executive.”
Section 7-32-4160, MCA.


                                                 4
Folsom and MPEA waived the police commission remedy under the terms of the CBA by

failing to timely initiate CBA Step 3.

¶7     Over the next year, Picotte scheduled several meetings with Folsom to discuss the

status and future course of his grievance but ultimately cancelled each meeting. Picotte

nonetheless repeatedly assured Folsom that he was taking appropriate action to enforce his

grievance rights. On or about October 25, 2013, Picotte specifically told Folsom that he

had filed and would aggressively prosecute a district court action against the City to enforce

Folsom’s CBA grievance rights. Picotte contemporaneously made a similar representation

to MPEA’s executive director, Quint Nyman. On at least one occasion, Nyman directed

Picotte to proceed on Folsom’s grievance without delay.

¶8     However, at some point in mid-2014, Folsom discovered that, contrary to earlier

representations, Picotte had taken no action on his behalf. Upon this discovery, Folsom

retained separate counsel and, on August 6, 2014, filed a district court complaint asserting

a wrongful discharge claim against the City and DFR and common law fraud claims against

MPEA. In essence, the claims alleged that: (1) the City wrongfully terminated him in

violation of the CBA; (2) MPEA breached its duty to fairly represent him; and (3) MPEA,

through Picotte, fraudulently induced Folsom to effectively waive his grievance rights

through inaction. As compensatory damages on his claims against the union, Folsom

prayed for lost wages and benefits as well as attorney fees incurred in prosecuting the

action. Folsom also prayed for punitive damages on the fraud claim. Upon learning of the

complaint from an MPEA field representative, Nyman spoke with Picotte, who assured

Nyman that he would be taking appropriate action in defense of MPEA and in furtherance


                                              5
of Folsom’s grievance rights. Picotte made a similar representation to Nyman on at least

one occasion thereafter.6

¶9     Upon service of the district court complaint, Picotte timely appeared and answered

Folsom’s claims against MPEA. On September 19, 2014, Folsom served comprehensive

discovery requests on Picotte that included sixty-nine M. R. Civ. P. 36 (Rule 36) requests

for admission of pertinent facts. Inexplicably, Picotte did not respond. Based on MPEA’s

Rule 36 deemed admissions by default and a supplemental affidavit showing, Folsom

subsequently moved for M. R. Civ. P. 56 (Rule 56) summary judgment that MPEA was

liable on his DFR and common law fraud claims. Folsom did not seek summary judgment

on his wrongful discharge claim against the City or on the causation and damages elements

of his claims against the union. The City separately moved for summary judgment on

Folsom’s wrongful discharge claim.

¶10    Without seeking relief from the Rule 36 deemed admissions, Picotte filed a response

opposing Folsom’s motion for summary judgment on the asserted grounds that: (1) the

fraud claim failed to state a claim against MPEA; (2) MPEA’s general pleading denials

raised genuine issues of material fact precluding summary judgment; (3) as a non-party to

the agreement, Folsom had no standing to enforce the CBA; and (4) Folsom failed to



6
  On January 16, 2015, almost two years after the City’s notice of intent to terminate, a year after
he misrepresented to Folsom that he had filed the action, and 6 months after Folsom filed this
action, MPEA, through Picotte, filed a separate district court action to compel the City to
participate in a suspension or discharge appeal hearing before the City Police Commission
pursuant to CBA Step 4 and §§ 7-32-4155(1) and -4160, MCA. Montana Eleventh Judicial District
Court Cause No. DV-15-036(C). As of the date of the post-summary judgment evidentiary hearing
in this case on September 1, 2015, the court file indicated no more than the filing of the complaint
and issuance of a summons.


                                                 6
exhaust his contract grievance remedies, i.e., CBA Step 4 (police commission appeal).

Picotte attempted no responsive factual showing to preclude summary judgment and

inexplicably failed to appear and represent MPEA at the summary judgment hearing on

May 26, 2015.

¶11   On June 17, 2015, while the summary judgment ruling was still pending after

hearing, Folsom entered into a settlement agreement with the City wherein he resigned his

employment and released all claims against the City without compensation. The agreement

included an express disclaimer of any City liability related to Folsom’s claims. The

agreement barred the City from “actively challeng[ing]” Folsom’s claims against MPEA

but recognized that City witnesses could “testify truthfully in any proceeding if called to

testify.” The District Court ultimately dismissed the City from the action with prejudice

pursuant to the agreement.

¶12   On July 15, 2015, based on MPEA’s Rule 36 deemed admissions, Folsom’s

supplemental affidavit showing, and no responsive factual showing from MPEA, the

District Court granted summary judgment against MPEA on Folsom’s DFR and common

law fraud claims. On the DFR claim, the court decreed, inter alia, that the record facts

showed that “MPEA arbitrarily ignored Folsom’s grievance or processed it in a perfunctory

manner,” thereby effectively extinguishing his CBA grievance rights. Concluding that

Picotte’s misrepresentations to Folsom on or about October 25, 2013, regarding the

fictitious district court action against the City constituted both common law fraud and

actual fraud, as defined by § 27-1-221(3) and (4), MCA, the District Court further granted




                                            7
summary judgment that MPEA was liable for punitive damages on Folsom’s common law

fraud claim.

¶13    On September 1, 2015, the District Court conducted a post-summary judgment

evidentiary hearing to determine compensatory damages on Folsom’s DFR claim and

punitive damages on the fraud claim. Appearing on MPEA’s behalf, Picotte acknowledged

that he had “made some misrepresentations of scheduling and that sort of thing to Mr.

Folsom because I got busy and I didn’t have the courage to tell him that I just hadn’t gotten

it done.” However, Picotte asserted that his false statements caused “no real damages”

because Folsom “won’t have lost his job until the grievance procedure and litigation

fomented by it are concluded.” Picotte further asserted that the City, not MPEA, was

exclusively responsible for Folsom’s discharge and any resulting wage loss. Based on the

assertion that Picotte’s failure to act after the City refused to participate in the Step 3

process in April of 2013 effected a waiver of his CBA grievance rights and caused him to

have to sue the City and MPEA, Folsom requested compensatory damages for wages and

benefits lost after April 1, 2013,7 emotional distress, and attorney fees incurred in

prosecuting the action. Folsom also requested $50,000 in punitive damages.

¶14    On March 14, 2016, prior to issuance of the District Court’s ruling on the damages,

MPEA appeared through new counsel and filed a motion pursuant to M. R. Civ. P. 60(b)

(Rule 60(b)) requesting that the court delay its damages ruling to allow MPEA to file an

appropriate motion for relief from the prior summary judgment rulings based on alleged


7
 Folsom apparently pegged April 1, 2013, as the date after which he would have, or should have,
been reinstated to his employment at Step 3 but for MPEA’s breach of duty.


                                              8
gross neglect and misconduct by Picotte in his representation of MPEA. On March 16,

2016, without reference to MPEA’s motion, the District Court issued findings of fact,

conclusions of law, and judgment on Folsom’s DFR and common law fraud claims based

on the court’s prior grant of summary judgment and the post-summary judgment hearing

record.

¶15   On the ground that he failed to meet his threshold burden of proving that the City

wrongfully terminated his employment in violation of the CBA, the District Court denied

Folsom’s claim for lost wages and benefits. The court also denied Folsom’s claim for

emotional distress damages due to lack of proof of related emotional distress. However,

on the ground that MPEA’s failure to fairly represent him in the grievance process “forced

[him] to hire a lawyer in order to obtain representation that the MPEA should have provided

in the first place,” the court awarded Folsom $47,550 in compensatory damages for

attorney fees incurred in prosecuting the district court action. The court also awarded him

$50,000 in punitive damages on his common law fraud claim.

¶16   Folsom and MPEA respectively filed alternative M. R. Civ. P. 59 and 60(b) motions

for post-judgment relief. On the asserted grounds of unfair surprise and that the District

Court erroneously interjected lack of evidence as an affirmative defense sua sponte,

Folsom requested a new trial to allow him to present evidence proving that the City

discharged him in violation of the CBA. MPEA sought relief on the asserted ground of

prejudicial gross neglect and misconduct by Picotte in the representation of MPEA. MPEA

supported its motion with exhibits and affidavits showing its reliance on Picotte and its

belated discovery of his alleged gross neglect and misconduct.


                                            9
¶17    The District Court effectively denied the parties’ cross-motions by allowing them

to time-out without action pursuant to M. R. Civ. P. 59(f) and 60(c)(1). Upon entry of final

judgment on June 15, 2016, both parties timely appealed. MPEA asserts that the District

erroneously awarded Folsom attorney fees and punitive damages and erroneously denied

its alternative motions for post-judgment relief. Folsom asserts that the District Court

erroneously denied his claim for lost wages and benefits as compensatory damages on his

DFR claim and erroneously denied his alternative motion for related post-judgment relief.

                              STANDARDS OF REVIEW

¶18    The standard of review of district court findings of fact is whether they are clearly

erroneous on the pertinent evidentiary record. We review conclusions of law de novo for

correctness. The standard of review of district court rulings on motions for post-judgment

relief under M. R. Civ. P. 59 and 60(b) is an abuse of discretion. Lee v. USAA Cas. Ins.

Co., 2001 MT 59, ¶ 27, 304 Mont. 356, 22 P.3d 631 (Rule 59); Essex Ins. Co. v. Moose’s

Saloon, Inc., 2007 MT 202, ¶ 16, 338 Mont. 423, 166 P.3d 451 (Rule 60(b)).

                                      DISCUSSION

¶19    1. Is Folsom’s common law fraud claim independently cognizable distinct from his
       DFR claim on the record in this case?

¶20    The question of whether separately pled claims for relief are independently

cognizable on the record in the same action is a question of law. The District Court granted

summary judgment against MPEA on Folsom’s separate DFR and common law fraud

claims. Conflating common law fraud with “actual fraud,” as defined by § 27-1-221,

MCA, the District Court concluded that “Folsom has established that MPEA committed



                                            10
the tort of fraud so, pursuant to [§] 27-1-221, MCA, [he] is entitled to seek punitive

damages as a consequence thereof.” On the ground that “all of attorney Picotte’s conduct

related exclusively to his handling of Folsom’s grievance,” MPEA asserts that Folsom’s

common law fraud claim is legally and factually subsumed in his DFR claim and thus not

independently cognizable in this action. Folsom contrarily asserts that his common law

fraud claim is cognizable independent of his DFR claim based on a different factual

predicates. The parties’ briefing and the District Court’s judgments clearly indicate that

Folsom separately pled DFR and common law fraud claims to circumvent a perceived per

se federal law ban on recovery of punitive damages on DFR claims.

¶21    A plaintiff generally has a choice of any remedy cognizable at law or equity and

may generally plead alternative claims even if based on the same predicate facts.

Corporate Air v. Edwards Jet Center, 2008 MT 283, ¶¶ 49-50, 345 Mont. 336, 190 P.3d

1111; Glacier Campground v. Wild Rivers, Inc., 182 Mont. 389, 403, 597 P.2d 689, 696

(1978); M. R. Civ. P. 8(a)(2). A plaintiff may recover under both alternative claims if the

remedies are consistent. Corporate Air, ¶ 40. However, a plaintiff “may not recover on

more than one theory for the same injury” or damages. Regions Bank v. Griffin, 217

S.W.3d 829, 832 (Ark. 2005); Olympic Hotels Corp. v. Johnson Wax Dev. Corp., 908 F.2d

1363, 1371 (7th Cir. 1990) (distinguishing between superseded procedural pleading and

still viable substantive equity aspect of election of remedies doctrine). If alternative

remedies are inconsistent, the plaintiff must elect one or the other and cannot obtain

judgment on both. Kaufman Bros. v. Home Value Stores, Inc., 2012 MT 121, ¶¶ 17-20,

365 Mont. 196, 279 P.3d 157; Parsons v. Rice, 81 Mont. 509, 521, 264 P. 396, 401 (1928).


                                            11
Alternative claims grounded on the same conduct are consistent and independently

cognizable only if the claims are based on independent legal duties and the same or related

conduct constitutes a breach of each independent legal duty. Dewey v. Stringer, 2014 MT

136, ¶¶ 8, 14-15, 375 Mont. 176, 325 P.3d 1236 (discussing conceivably coexistent fraud,

constructive fraud, and contract claims based on independent legal duties related to real

estate purchase agreement); Draggin’ Y Cattle Co., Inc. v. Addink, 2013 MT 319, ¶ 33, 372

Mont. 334, 312 P.3d 451 (discussing coexistent contract and tort remedies for breach of

professional services contract and negligent performance of services); Tin Cup Co. Water

v. Garden City Plumbing & Heating, Inc., 2008 MT 434, ¶ 25, 347 Mont. 468, 200 P.3d

60 (discussing coexistent contract and tort remedies based on professional services

contract); Corporate Air, ¶ 49 (fraud claim not necessarily precluded by contract claim

based on same facts).

¶22    If the facts support either type of claim and neither applicable statute of limitation

has expired, a plaintiff may elect either coexistent remedy regardless of whether the claim

may be more akin to one type of claim than the other. Draggin’ Y Cattle Co., Inc., ¶¶ 33-36.

However, regardless of characterization, alternative claims based on the same breach of

the same legal duty are merely duplicative or subsumed in one or the other and, thus, not

independently cognizable in the same action. May v. ERA Landmark Real Estate, 2000

MT 299, ¶¶ 41-43, 302 Mont. 326, 15 P.3d 1179 (claim for breach of real estate agent

fiduciary duty essentially duplicative of other asserted tort claims based on same predicate

facts); Joyce v. Garnaas, 1999 MT 170, ¶¶ 17-19, 295 Mont. 198, 983 P.2d 369 (claim for




                                             12
breach of lawyer fiduciary duty not distinctly cognizable from professional negligence

claim on same predicate facts).

¶23    Implied from their federal or state labor law status as the exclusive bargaining agents

of their memberships, labor unions have a common law duty to fairly represent all of their

members in the enforcement of grievance rights provided by collective bargaining

agreements. E.g., Ford v. University of Montana, 183 Mont. 112, 121-22, 598 P.2d 604,

608-10 (1979), overruled on other grounds by Teamsters Local No. 45 v. State ex rel. Bd.

of Personnel Appeals (Teamsters I), 195 Mont. 272, 274-78, 635 P.2d 1310, 1311-13

(1981); Int’l Bhd. of Elec. Workers v. Foust, 442 U.S. 42, 46-48, 99 S. Ct. 2121, 2125

(1979); Woods v. Graphic Communications, 925 F.2d 1195, 1203 (9th Cir. 1991).

However, due to the broad discretion that unions must have to balance the often competing

interests of individual members and the union as a whole, mere negligence is insufficient

alone to constitute a breach of the duty of fair representation. Vaca v. Sipes, 386 U.S. 171,

191-92, 87 S. Ct. 903, 917-18 (1967) (union not required to exhaust all grievance remedies

in every case); Woods, 925 F.2d at 1203 (“union need not process meritless grievances”);

Robesky v. Quantas Empire Airways, Ltd., 573 F.2d 1082, 1089 (9th Cir. 1978); see also,

Ford, 183 Mont. at 121-23, 598 P.2d at 609-10 (union has broad good-faith discretion to

“sift-out” or abandon frivolous or meritless grievances and to unilaterally settle with

employer). A breach of the duty of fair representation thus requires proof of fraud, bad

faith, gross negligence, or other arbitrary or unlawful disregard or discrimination in the

enforcement of grievance rights.      Ford, 183 Mont. at 121-23, 598 P.2d at 609-10;

Teamsters Local No. 45 v. State ex rel. Bd. of Personnel Appeals (Teamsters II), 223 Mont.


                                             13
89, 96, 724 P.2d 189, 193 (1986); Amalgamated Ass’n of St., Elec. Ry. & Motor Coach

Employees v. Lockridge, 403 U.S. 274, 299, 91 S. Ct. 1909, 1924 (1971); Vaca, 386 U.S.

at 190, 87 S. Ct. at 916; Woods, 925 F.2d at 1203; Robesky, 573 F.2d at 1089-90.

¶24    In contrast, the essence of common law fraud is a knowingly or recklessly false

representation intended to induce another’s detrimental reliance thereon. See Estate of

Kindsfather, 2005 MT 51, ¶ 17, 326 Mont. 192, 108 P.3d 487 (nine-element Montana

formulation of common law fraud); see also, § 27-1-712, MCA (Field Code formulation

of common law fraud adopted from Cal. Civ. Code). Thus, the essential legal duty

underlying common law fraud is the duty to be truthful in material representations of fact

intended to induce another’s reliance thereon. Kindsfather, ¶ 17; § 27-1-712, MCA.

¶25    On the Rule 56 factual record in this case, Folsom attempted to plead, and the

District Court found, distinct factual bases supporting his separately pled DFR and

common law fraud claims. The court granted summary judgment on Folsom’s DFR claim

based on MPEA’s arbitrary disregard or perfunctory handling of his grievance as evidenced

by its failure to either timely invoke grievance Step 3 or “take advantage of the City’s

offer” to proceed with Step 3 regardless of timeliness. The District Court separately

granted summary judgment on Folsom’s common law fraud claim based on Folsom’s

detrimental reliance on Picotte’s false representation on or about October 25, 2013, that he

had instituted and was actively prosecuting litigation against the City to enforce Folsom’s

grievance rights. In effect, Folsom and the District Court parsed the continuum of Picotte’s

handling of Folsom’s grievance rights into two separate parts to support two separate

claims: (1) the failure to timely initiate, or subsequently accept the City’s offer to


                                            14
participate in, grievance Step 3 and (2) Picotte’s ensuing failure, and related

misrepresentations, to file an appropriate action against the City to enforce Folsom’s

grievance rights.

¶26       Regardless of this artificial parsing of the Rule 56 factual record, the District Court’s

summary judgment analysis, and its subsequent findings and conclusions on damages,

clearly     manifest    an   indivisible   continuum      of    conduct   and   directly   related

misrepresentations by Picotte in the handling of Folsom’s grievance rights. The course of

Picotte’s conduct spanned his alleged failure to timely exercise or enforce the Step 3

process in April 2013 through the time that Folsom discovered in mid-2014 that Picotte

had not instituted enforcement litigation against the City as represented. MPEA’s duty of

fair representation included the duty to fairly represent Folsom in the CBA grievance

process and in the enforcement of those grievance rights in the face of any breach of the

agreement by the City. Picotte’s misrepresentation to Folsom that he had instituted and

was prosecuting enforcement litigation against the City was inseparable as matters of fact

and law from his failure to act as represented.                On this record, Picotte’s alleged

mishandling of Folsom’s grievance rights, and his related misrepresentations in regard

thereto, were part and parcel of the union’s alleged breach of duty of fair representation.

¶27       In May, a real estate seller asserted multiple tort and contract claims against his real

estate agent based on the agent’s drafting and tender of a seller counteroffer to the buyers

that included language that exposed the seller to environmental clean-up liability on a

former gas station property. May, ¶¶ 7-12. On appeal, we affirmed the district court

dismissal of a breach of fiduciary duty claim that was essentially “repetitious” of the factual


                                                 15
and legal bases for the plaintiff’s separately pled professional negligence, fraud, negligent

misrepresentation, and bad faith claims “based upon the same facts,” which “add[ed]

nothing to [the] claims for relief.” May, ¶¶ 37-43.

¶28    In Joyce, a former client asserted a malpractice claim against his former lawyer in

1995 alleging that the lawyer negligently caused the client to forfeit a bona fide personal

injury claim in 1984 by failing to timely serve process on the third-party tortfeasor within

three years of issuance of the summons in 1981. Joyce, ¶¶ 3-4. To circumvent the absolute

bar of the applicable ten-year statute of repose barring the malpractice claim after 1994,

the former client asserted that a subsequent misrepresentation by the lawyer that the client’s

claim was proceeding in active litigation was an independent breach of the lawyer’s

fiduciary duty, separate from the lawyer’s initial negligence and silence regarding the

missed service deadline, thus giving rise to an independent tort claim not barred by the

applicable statutes of limitation and repose. Joyce, ¶¶ 17-18. In affirming the dismissal of

the malpractice claim pursuant to the ten-year statute of repose, we concluded that the

lawyer’s breach of professional duty occurred at the time of his initial malpractice, “not

years later” when he continued to conceal it by subsequent misrepresentation. Joyce, ¶ 19.

We thus held that “[t]here [was] no separate claim for the failure to disclose the effect” of

the initial malpractice distinct from the malpractice claim—“any such claim is subsumed

with the initial malpractice” claim. Joyce, ¶ 19.

¶29    Here, in the context of handling of an employee’s grievance rights, a union’s duty

of fair representation broadly encompasses, inter alia, the essential legal duty that is the

basis of a common law fraud claim, i.e., the duty to be fair and truthful to the employee in


                                             16
the handling of his or her grievance rights. As in May and Joyce, Folsom is attempting to

creatively cleave two independent tort claims out of one and, as in Joyce, for an ulterior

purpose, i.e., creating a predicate for punitive damages perceived to be unavailable on a

DFR claim. However, similar to the claims at issue in May and Joyce, Folsom’s separately

pled common law fraud claim is not based on a breach of legal duty independent of the

breach of legal duty that is the basis of his DFR claim. As manifest by his claim for lost

wages, the alleged harm resulting from MPEA’s breach of duty is the same on both

claims—loss of his employment and resulting wages in violation of the CBA. We hold

that Folsom’s separately pled common law fraud claim is necessarily subsumed in his DFR

claim and, thus, not independently cognizable on the record in this case.

¶30 2. Did the District Court erroneously conclude that insufficient evidence of
causation precluded Folsom’s recovery of lost wages and benefits as compensatory
damages on his DFR claim?

¶31    Though it granted summary judgment that MPEA breached its duty of fair

representation, the District Court denied Folsom’s claim for compensatory lost wages and

benefits on the ground that he failed to prove that the City terminated his employment in

violation of the CBA. Folsom subsequently moved for post-judgment relief from the

court’s ruling pursuant to Rules 59(a)(2) and 60(b)(1) and § 25-11-102(3), MCA. On

appeal, Folsom acknowledges his burden “to prove that the City breached the CBA” but

nonetheless asserts that the District Court erred because: (1) it improperly injected proof

of causation as an affirmative defense sua sponte; (2) sufficient proof of wrongful

termination existed on the Rule 56 record in any event; and (3) MPEA’s pleading




                                            17
admission that the City lacked cause for termination constituted a judicial admission of

causation on his DFR claim.

¶32    Causation and damages are essential elements of every tort claim. Oliver v. Stimson

Lumber Co., 1999 MT 328, ¶ 41, 297 Mont. 336, 993 P.2d 11. A plaintiff has the burden

of proving all essential elements of a tort claim by a preponderance of the evidence. Oliver,

¶ 41; §§ 26-1-401, -402, and -403(1) MCA. Here, upon obtaining summary judgment that

MPEA breached its duty of fair representation, Folsom had the burden of proving that

MPEA’s breach of duty caused his claimed damages.

¶33    Mere proof of a union breach of duty is insufficient to prove that the breach caused

harm to the employee. Vaca, 386 U.S. at 192-98, 97 S. Ct. at 918-21. A union’s breach of

duty will not necessarily cause harm and resulting damages to the employee in every case.

Vaca, 386 U.S. at 197-98, 97 S. Ct. at 920-21. To prove that a union’s breach of duty

caused harm and resulting damages, the employee must prove (1) that the employer

disciplined or discharged the employee in violation of the collective-bargaining agreement,

see Hines v. Anchor Motor Freight, Inc., 424 U.S. 554, 570-71, 96 S. Ct. 1048, 1059

(1976); City of Detroit v. Goolsby, 535 N.W.2d. 568, 573 (Mich. App. 1995); Womble v.

Local Union 73, Int’l Bhd. of Elec. Workers, 826 P.2d 224, 227 (Wash. App. 1992); see

also, Dutrisac v. Caterpillar Tractor Co., 749 F.2d 1270, 1275 (9th Cir. 1983) (union

breach of duty harmless only if employee grievance was frivolous); and (2) that the union’s

breach of duty caused the employee to suffer damages in excess of those caused by the

employer’s breach of the collective bargaining agreement. Vaca, 386 U.S. at 197-98, 97

S. Ct. at 920-21 (union not liable for damages caused by the employer). Absent collusion


                                             18
with the employer,8 unions are generally not liable for an employee’s lost wages because

lost wages are the direct and natural consequence of the employer’s independent breach of

the collective bargaining agreement. Vaca, 386 U.S. at 196-98, 97 S. Ct. at 920-21 (union

breach of duty does not exempt employer from contract damages he would otherwise have

to pay); Czosek v. O’Mara, 397 U.S. 25, 29, 90 S. Ct. 770, 773 (1970) (union liable only

for damages that flow from own conduct); Foust, 442 U.S. at 52, 99 S. Ct. at 2128

(Blackmun, J., concurring) (union damages typically will be minimal with “bulk” of

damages “paid by the . . . perpetrator of the wrongful discharge”).9, 10

¶34    Here, the District Court’s denial of Folsom’s claim for lost wages and benefits

because he failed to prove that the City wrongfully terminated his employment was

essentially a finding and conclusion that he failed to meet his threshold burden of proof of

causation of damages on his DFR claim. Contrary to Folsom’s assertion, the court’s

conclusion was not a sua sponte interjection of an unpled affirmative defense; it was a


8
  A union is jointly and severally liable with the employer for lost wages caused by a wrongful
termination if the union affirmatively caused or colluded with the employer to discharge the
employee in violation of the collecting bargaining agreement. Vaca, 386 U.S. at 197-98, n.18, 97
S. Ct. at 920-21; Czosek, 397 U.S. at 29, 90 S. Ct. at 773.
9
  In effect, a union’s subsequent breach of the duty is not an unforeseeable independent intervening
cause that, as a matter of law, cuts off the employer’s antecedent liability for the employer’s own
independent breach of duty. See, e.g., Larchick v. Diocese of Great Falls-Billings, 2009 MT 175,
¶¶ 49-50, 350 Mont. 538, 208 P.3d 836; Cusenbary v. Mortenson, 1999 MT 221, ¶¶ 23-29, 296
Mont. 25, 987 P.2d 351; Sizemore v. Montana Power Company, 246 Mont. 37, 41-48, 803 P.2d
629, 632-36 (1990).
10
  However, a union may be liable for a portion of the employee’s lost wages upon non-speculative
proof of a point in time after which the grievance procedure would otherwise have resulted in
reinstatement of the employee but for the union’s breach of duty. See Bowen v. U.S. Postal Service,
459 U.S. 212, 222-24, 103 S. Ct. 588, 594-95 (1983) (affirming apportionment of lost wages based
on hypothetical reinstatement date).


                                                19
judgment rendered on an issue squarely before it on the claim pled. Further, though he

presented evidence that MPEA’s breach of duty caused him to incur attorney fees and costs

in excess of lost wages, Folsom presented no evidence or argument at the post-summary

judgment evidentiary hearing to satisfy his burden of proving that the City terminated his

employment in violation of the CBA.

¶35    The Rule 56 record was similarly insufficient to establish proof of causation.

Folsom did not seek, and the District Court did not grant, summary judgment on the

causation or damages elements of his DFR claim. He merely sought and obtained summary

judgment that MPEA breached its duty of fair representation, committed fraud, and was

liable for damages to be proven later. The issue of whether the City wrongly terminated

his employment in violation of the CBA was not properly before the court on the summary

judgment record. MPEA thus had no responsive Rule 56(e)(2) burden to raise a genuine

issue of material fact to defeat Folsom’s cursory assertion that the City terminated him in

violation of the CBA. Folsom further presented no authority for the proposition that a

district court must or may take judicial notice of facts on the Rule 56 record as evidence in

a subsequent evidentiary hearing absent a prior adjudication of those facts pursuant to Rule

56(c)(3) and (d)(1) (adjudication of established facts not subject to genuine material dispute

on Rule 56 record).

¶36    Contrary to Folsom’s further assertion, the terms of his settlement agreement with

the City did not preclude a factual question as to whether the City discharged him in

violation of the CBA. The agreement affirmatively acknowledged the right and duty of

City witnesses to subsequently testify under process as to the facts and circumstances of


                                             20
Folsom’s discharge. The agreement expressly disclaimed any City liability or wrongdoing

and fully discharged and released the City without compensation to Folsom.

¶37    Folsom’s assertion that MPEA judicially admitted to causation on his DFR claim is

similarly unsound. A judicial admission is an express waiver made to the court by a party

or counsel conceding the truth of an alleged fact for purposes of trial. Bilesky v. Shopko

Stores Operating Co., LLC, 2014 MT 300, ¶ 12, 377 Mont. 58, 338 P.3d 76. “Judicial

admissions have the effect of stipulations” and have “conclusive effect” on “the party

making the admission,” thus precluding presentation of further evidence to prove, disprove,

or contradict the admitted fact. Bilesky, ¶ 12. Judicial admissions apply only to statements

of fact, not statements of opinion or law. Bilesky, ¶ 13. Whether a court should view a

party’s statement or assertion of fact as a judicial admission is a question of law dependent

on whether giving it conclusive effect will (1) “facilitate judicial efficiency and save the

parties time, labor, and expense” and (2) “protect the integrity of the judicial process by

preventing parties from unfairly playing fast and loose with the facts to suit the exigencies

of self-interest.” Bilesky, ¶ 20.

¶38    In its answer to Folsom’s complaint, MPEA admitted that the City discharged him

without just cause in violation of the CBA. While the existence of a legal duty is a question

of law, whether a party breached a legal duty is generally an ultimate question of fact.

Garza v. Forquest Ventures, Inc., 2015 MT 284, ¶ 38, 381 Mont. 189, 358 P.3d 189. In

that regard, out of context, MPEA’s pleading admission was seemingly an assertion of

ultimate fact. However, in context, Picotte made the admission, however unnecessarily or

improvidently, only in response to the wrongful discharge claim pled against the City. In


                                             21
response to the DFR claim against MPEA, its answer generally denied, with exceptions not

pertinent here, Folsom’s pertinent factual averments and affirmatively prayed that he “take

nothing” against MPEA.

¶39    Just as plaintiffs may plead inconsistent claims for relief, defendants may plead

inconsistent defenses. M. R. Civ. P. 8(d)(3). In accordance with its duty to fairly represent

Folsom and consistent with the position previously taken on Folsom’s behalf during the

CBA grievance process, MPEA made its seemingly adverse pleading admission in

alignment with Folsom’s breach of contract claim against the City. However, in defense

of itself, MPEA pled a seemingly inconsistent general denial in response to the DFR claim.

Read as a whole in context, MPEA’s pleading admission in response to the claim pled

against the City was not an adverse admission to the DFR claim pled against MPEA.

¶40    As an admission in response to Folsom’s claim against the City, MPEA’s pleading

admission was also more akin to a preliminary statement of opinion based on anticipated

proof than an express waiver or concession of an adverse material fact. See Weaver v.

State, 2013 MT 247, ¶¶ 24-25, 371 Mont. 476, 310 P.3d 495 (statement in brief that State

“acted reasonably” in fighting a fire merely a preliminary assertion based on anticipated

proof); DeMars v. Carlstrom, 285 Mont. 334, 338, 948 P.2d 246, 249 (1997) (defendant’s

cross-exam testimony that accident was all her fault not a judicial admission but merely an

expression of her personal opinion based on facts within her personal knowledge). Under

these circumstances, giving the statement conclusive effect against MPEA was not

necessary to promote judicial economy or to protect the integrity of the judicial process.

Therefore, the District Court did not err in failing to give conclusive effect to MPEA’s


                                             22
pleading admission. We hold that, on the state of the record before it, the District Court

correctly concluded that Folsom did not meet his burden of proving that MPEA’s breach

of duty caused his claimed damages. Thus, we hold that the District Court did not err in

declining to grant Folsom’s alternative motion for post-judgment relief under Rules

59(a)(2) and 60(b)(1) and § 25-11-102(3), MCA.11

¶41    3. Did the District Court erroneously award attorney fees to Folsom as an element
       of compensatory damages on his DFR claim?

¶42    Whether a party may recover attorney fees as an element of compensatory damages

is a matter of law. Jacobsen v. Allstate Ins. Co. (Jacobsen I), 2009 MT 248, ¶ 17, 351

Mont. 464, 215 P.3d 649. The District Court awarded Folsom $47,550 as compensation

for attorney fees incurred in prosecuting this action pursuant to Dutrisac, 749 F.2d at

1275-76. The court reasoned that MPEA’s failure to fairly represent him “in the grievance

proceeding forced Folsom to hire a lawyer in order to obtain representation that the MPEA

should have provided in the first place.” Pursuant to Petaja v. Montana Public Employees’

Ass’n, 2016 MT 143, 383 Mont. 516, 373 P.3d 40, MPEA asserts that a plaintiff may not

recover attorney fees as compensatory damages on a DFR claim. Folsom asserts that

MPEA procedurally waived any substantive objection to the attorney fees award by failing

to challenge it before the District Court. Since MPEA raised this issue before the District

Court in its motion for post-judgment relief, Folsom’s procedural argument turns on our

resolution of Issue 6. We address MPEA’s assertion of substantive error here.



11
  However, as a necessary incident of our holding on Issue 6, Folsom will yet have the opportunity
on remand to satisfy his burden of proving the essential elements of his DFR claim.


                                               23
¶43    Under the common law “American Rule,” the prevailing party is not entitled to

recover attorney fees incurred in prosecuting or defending an action unless otherwise

expressly provided by contract or statute. Petaja, ¶ 25; Schuff v. A.T. Klemens & Son, 2000

MT 357, ¶ 97, 303 Mont. 274, 16 P.3d 1002. The essence of the American Rule is that

each party to a dispute “pays its own attorney fees.” Chase v. Bearpaw Ranch Ass’n, 2006

MT 67, ¶ 29, 331 Mont. 421, 133 P.3d 190. We have consistently construed the American

Rule to preclude not only same-suit fee shifting, but to also preclude recovery of attorney

fees incurred in a prior dispute but claimed as compensatory damages, or as a new

exception to the American Rule, in a subsequent action between the same parties. E.g.,

Jacobsen I, ¶¶ 19-23; Petaja, ¶¶ 25-26.

¶44    In Jacobsen I, an insurer refused to rescind a premature settlement of a third-party

automobile liability claim until after the injured party retained and pressed the issue

through counsel. Jacobsen I, ¶ 2. Upon finding the insurer liable on the third party’s

ensuing common law bad faith claim, the jury awarded compensatory damages that

included the cost of attorney fees previously incurred by the third party to force the insurer

to re-open and re-adjust the claim prior to the bad faith litigation. Jacobsen I, ¶ 6. In the

absence of a contract or statutory attorney fees provision, we reversed the attorney fees

award on the grounds that no recognized exception to the American Rule applied,

recognition of a new exception for third-party common law bad faith claims would be

inconsistent with the Legislature’s failure to provide similar relief on statutory bad faith

claims, and in deference to the Legislature’s prerogative “to rectify” any such “unfair gap

in existing law.” Jacobsen I, ¶¶ 19-23.


                                             24
¶45    In Petaja, after her public employer terminated and then temporarily reinstated her

in a lesser position with a substantial pay cut, an employee asserted an age discrimination

claim against the employer and a DFR claim against her union (MPEA). Petaja, ¶¶ 4-8.

The employee claimed the union breached its duty of fair representation by unilaterally

settling her grievance after the employer reassigned her. Petaja, ¶¶ 6-8. At trial, the jury

determined the discrimination claim against the employer was time-barred but returned a

$100,000 verdict against MPEA on the DFR claim. Petaja, ¶ 10. Pursuant to Jacobsen I

and despite the union’s “incomprehensible [default] admission” to an attorney fees award,

we affirmed the District Court’s denial of the employee’s post-trial motion for attorney

fees absent a contract or statutory attorney fees provision, an applicable recognized

exception to the American Rule, or a showing of sufficient cause to recognize a new

exception. Petaja, ¶¶ 25-26. To preserve it as “a foundation of our jurisprudence,” we

must continue to broadly construe the American Rule to avoid its consumption by a

multitude of exceptions. Jacobsen I, ¶ 23; Petaja, ¶¶ 25-26.

¶46    However, without offense to the American Rule, attorney fees and costs incurred in

legal action against a third party may be a permissible element of compensatory damages

in an action against a tortfeasor where the tortfeasor’s conduct caused the plaintiff to have

to resort to legal action to protect his or her interests against the third party. Restatement

(Second) of Torts § 914(2) (1979). See also, Annotation, Right to Recover Attorney’s Fees

Incurred in Earlier Litigation with a Third Person Because of Involvement Therein

Through a Tortious Act of Present Adversary, 45 A.L.R.2d 1183 (1956 & Supp. 2015).

Recovery of attorney fees in this limited context does not violate or undermine the


                                             25
American Rule because the recovery does not constitute a direct or indirect shifting or

allocation of attorney fees between the same litigating parties. Thus, federal and state

courts have long recognized that, as an element of compensatory damages on a DFR claim,

an employee may recover attorney fees and costs incurred to enforce the employee’s

collective bargaining agreement rights against an employer if incurred as a result of the

union’s failure to represent the employee in breach of its duty of fair representation.

Dutrisac, 749 F.2d at 1275-76 (requiring union to compensate employee for cost of

representation union failed to provide not contrary to American Rule); Rogers v. Int’l Air

Line Pilots Ass’n, 988 F.2d 607, 616 (5th Cir. 1993) (distinguishing American Rule-barred

recovery of fees incurred in prosecuting DFR claim against union from permissible

recovery of attorney fees from union as costs incurred in action against employer); Seymour

v. Olin Corp., 666 F.2d 202, 212-15 (5th Cir. 1982); Scott v. Int’l Bhd. of Teamsters Local

377, 548 F.2d 1244, 1246 (6th Cir. 1977); Int’l Bhd. of Elec. Workers Local 1547 v.

Lindgren, 985 P.2d 451, 455-57 (Alaska 1999) (attorney fees and costs incurred pursuing

claims against employer is “fair measure” of “uncompensated damages” caused by union

breach of fair representation). See also, Czosek, 397 U.S. at 29, 90 S. Ct. at 773 (“damages

against the union for loss of employment are unrecoverable except to the extent” that its

breach “added to the difficulty and expense of collecting from the employer”).

¶47    Accordingly, we affirm our holding in Petaja that the American Rule precludes an

award or recovery of attorney fees incurred by an employee in the prosecution of a DFR

claim against a union. However, we distinguish Petaja and clarify that the American Rule

does not bar an employee from recovering, as an element of compensatory damages on a


                                            26
DFR claim against a union, attorney fees incurred by the employee to enforce grievance

rights against an employer if caused by the union’s breach of its duty of fair representation.

Where, as here, the employee asserts a claim against the employer on the contract and a

DFR claim against the union in the same action, the employee has the burden of proving

the amount of attorney fees incurred in prosecuting the claim against the employer, as

distinct from those incurred in prosecuting the DFR claim against the union.

¶48    As an element of compensatory damages on his DFR claim against MPEA, Folsom

can recover attorney fees and costs incurred in pressing his wrongful discharge claim

against the City upon proof that: (1) MPEA breached its duty of fair representation; (2) the

City wrongfully discharged him in violation of the CBA; and (3) the union’s breach caused

him to incur attorney fees and costs to enforce his CBA rights against the City. However,

in the manifest absence of a contrary statutory or contract provision or an applicable

exception to the American Rule, he cannot recover attorney fees incurred in prosecuting

claims against MPEA. The District Court awarded Folsom $47,550 as compensation for

attorney fees incurred in prosecuting this action despite his adjudicated failure to meet his

burden of proving that the City discharged him in violation of the CBA and without

distinction between fees incurred in prosecuting his claim against the City and those

incurred in prosecuting his claims against MPEA. Under these circumstances, we hold that

the District Court erred in awarding Folsom $47,550 in attorney fees.




                                             27
¶49    4. Are punitive damages recoverable absent a compensatory damages award on a
       predicate claim for relief?

¶50    Whether a party may recover punitive damages absent a compensatory damages

award on a predicate claim is a matter of law. In contemplation of this issue, the District

Court, citing Weinberg v. Farmers State Bank, 231 Mont. 10, 31, 752 P.2d 719, 732 (1988),

ruled that even if Folsom “is not entitled to his attorney fees . . . as an element of damages,

punitive damages may be awarded where the plaintiffs [are] granted only nominal

damages.” This issue is before us by necessary implication from the District Court’s ruling,

the broad swath of the parties’ contentions on appeal, and our holdings on attorney fees,

punitive damages, and related matters warranting remand on appeal.

¶51    The finder of fact may award punitive damages “in addition to compensatory

damages.” Section 27-1-220(1), MCA (emphasis added). In accordance with this express

statutory language, we have held that punitive damages are not available as a matter of law

absent an award of compensatory damages on a predicate cause of action from which the

actual malice or actual fraud arose. Jacobsen I, ¶ 67; Stipe v. First Interstate Bank-Polson,

2008 MT 239, ¶ 23, 344 Mont. 435, 188 P.3d 1063; see also, Penn v. Burlington Northern,

Inc., 185 Mont. 223, 231, 605 P.2d 600, 605 (1980) (pre-1987 amendment of §§ 27-1-220

and -221, MCA—punitive damages unavailable absent actual damages); Paulson v.

Kustom Enterprises, Inc., 157 Mont. 188, 201-02, 483 P.2d 708, 715-16 (1971) (discussing

inconsistent jurisprudence prior to 1987 amendment of §§ 27-1-220 and -221, MCA);

Gilham v. Devereaux, 67 Mont. 75, 214 P. 606 (1923) (under pre-1985 codified common

law punitive damages standard), overruled, in part, by Fauver v. Wilkoske, 123 Mont. 228,



                                              28
238-39, 211 P.2d 420, 425-26 (1949). Under an older line of authority, construing

“nominal damages” as a form of “actual damages” under prior statutory language, we have

contrarily held that punitive damages were available in the absence of compensatory

damages upon a proof of “nominal damages” characterized as a “substantial injury” not

readily “susceptible of measurement by a money standard.” Long v. Davis, 68 Mont. 85,

217 P. 667 (1923). See also, Weinberg, 231 Mont. at 31, 752 P.2d at 732; Lauman v. Lee,

192 Mont. 84, 89-90, 626 P.2d 830, 833 (1981); Butcher v. Petranek, 181 Mont. 358, 364,

593 P.2d 743, 746 (1979); Miller v. Fox, 174 Mont. 504, 510, 571 P.2d 804, 808 (1977);

Fauver, 123 Mont. at 238-39, 211 P.2d at 425-26.

¶52   However, we decided our Long-Weinberg line of cases under prior versions of

§§ 27-1-220 and -221, MCA, that made punitive damages available “in addition to actual

damages.” Section 27-1-221(1), MCA (1985) (emphasis added). In 1987, the Legislature

amended §§ 27-1-220 and -221, MCA, to allow punitive damages “in addition to

compensatory damages.”      Section 27-1-220(1), MCA (emphasis added).        Thus, our

Long-Weinberg line of cases allowing punitive damages based on “nominal damages” has

been superseded by statute and is no longer of consequence. Here, the erroneous attorney

fee award was the only element of compensatory damages awarded to Folsom. Absent a

valid compensatory damages award, punitive damages were unavailable to Folsom as a

matter of law pursuant to § 27-1-220(1), MCA. We hold that the District Court erroneously




                                           29
awarded punitive damages without a compensatory damages predicate as required by

§ 27-1-220(1), MCA.12

¶53    5. Are punitive damages recoverable against a union predicated on a Montana
       DFR claim?

¶54    Pursuant to § 27-1-221(1) and (6), MCA, the District Court granted summary

judgment that MPEA was liable for punitive damages on the ground that Picotte’s

misrepresentations to Folsom regarding the fictitious district court enforcement action

constituted both common law fraud and “actual fraud,” as defined by § 27-1-221(3) and

(4), MCA. Our determination that Folsom’s separately pled common law fraud claim is

subsumed in his DFR claim elevates the significance of the parties’ secondary cross-

contentions on that issue as to whether the rule of Foust, 442 U.S. at 52, 99 S. Ct. at 2128

(per se bar on recovery of punitive damages on DFR claims), bars recovery of punitive

damages on DFR claims under Montana law.

¶55    Implied from their pivotal role as the exclusive bargaining agents of employees

under the federal Railway Labor Act (RLA) and National Labor Relations Act (NLRA),

labor unions subject to the RLA and NLRA have a federal common law duty to fairly



12
   Though we take no position at this juncture, this holding may necessarily implicate a related
issue for consideration on remand. Punitive damages are available under Montana law only when
“the defendant has been found guilty of actual fraud or actual malice.” Section 27-1-221(1), MCA
(emphasis added). Sections 27-1-220 and -221, MCA, do not expressly address whether and when
a principal may be vicariously liable for actual fraud or actual malice committed by the principal’s
agent. Restatement (Second) of Torts § 909 (1979) addresses when a principal may be sufficiently
culpable to be vicariously liable for punitive damages based on the conduct of an agent. See
similarly, Campen v. Stone, 635 P.2d 1121, 1123-26 (Wyo. 1981). While this Court has yet to
squarely reconcile it with § 27-1-221(1), MCA, we have applied Restatement § 909 where assumed
by the parties to be consistent with Montana law. Cartwright v. Equitable Life Ins., 276 Mont. 1,
30-33, 914 P.2d 976, 994-96 (1996).


                                                30
represent all members in the enforcement of grievance rights provided by collective

bargaining agreements. Foust, 442 U.S. at 47, 99 S. Ct. at 2125; Vaca, 386 U.S. at 177-78,

87 S. Ct. at 909-10; Ford Motor Co. v. Huffman, 345 U.S. 330, 337, 73 S. Ct. 681, 686

(1953) (NLRA); and Woods, 925 F.2d at 1203 (citing Steele v. Louisville & Nashville R.R.

Co., 323 U.S. 192, 204, 65 S. Ct. 226, 232 (1944) (RLA)). A union breaches the duty if it

handles an employee grievance in a fraudulent, bad faith, or grossly negligent manner or

with arbitrary or unlawful disregard or discrimination. Amalgamated Ass’n of St., Elec.

Ry. & Motor Coach Employees, 403 U.S. at 299, 91 S. Ct. at 1924; Vaca, 386 U.S. at 190,

87 S. Ct. at 916-17; Woods, 925 F.2d at 1203. Thus, independent of administrative

remedies available under the RLA and NLRA, the U.S. Supreme Court recognized a DFR

claim as an independent federal common law tort claim to provide a remedy for individual

employees in the event that a union fails to represent them fairly, impartially, and in good

faith without arbitrary or unlawful discrimination. Foust, 442 U.S. at 47-49, 99 S. Ct. at

2125-26; Vaca, 386 U.S. at 190, 87 S. Ct. at 916; Woods, 925 F.2d at 1203. Attempting to

balance the purpose of federal labor law to protect and maintain the vitality of labor unions

as the guardians of employee rights with the potentially competing public policy interest

in providing individual workers with a remedy for union misconduct, the U.S. Supreme

Court has decreed, as a matter of federal common law, that punitive damages are not

available on federal DFR claims. Foust, 442 U.S. at 46-52, 99 S. Ct. at 2124-28. Though

effectively limited in application, see, e.g., Woods, 925 F.2d at 1204-06 (noting availability

of punitive damages against unions under other federal labor laws and holding that Foust




                                             31
did not preclude punitive damages where independently available on co-pled federal civil

rights claim), the rule of Foust has stood without Congressional intercession since 1979.

¶56    As defined by § 39-31-103(6), MCA, MPEA is a union of state and local public

employees subject to the Montana Public Employees Collective Bargaining Act

(MPECBA). Title 39, chapter 31, MCA. The U.S. Supreme Court did not decide Foust

on federal constitutional grounds.    Foust, 442 U.S. at 46-52, 99 S. Ct. at 2124-28.

Moreover, the NLRA and RLA, from which federal DFR claims derive, do not apply to

unions of state and local government employees. See 29 U.S.C. §§ 152(2), (6) and (7) and

160(a) (NLRA); 45 U.S.C. §§ 151-53 (RLA). Though modeled on federal DFR claims

based on the similarity of MPECBA to corresponding provisions of the NLRA and RLA,

Teamsters II, 223 Mont. at 95-96, 724 P.2d at 193; Teamsters I, 195 Mont. at 274-78,

635 P.2d at 1311-13; Ford, 183 Mont. at 118-23, 598 P.2d at 607-10, our Montana common

law DFR claims derive exclusively from §§ 39-31-103(4), -205, -206(1), -305(1),

and -309(2), MCA (exclusive bargaining agent duty to represent interests of all employees

without discrimination). Though persuasive guidance where consistent with Montana law

and public policy, see Teamsters I, 195 Mont. at 275, 635 P.2d at 1312, the rule of Foust

is not binding authority on Montana DFR claims.

¶57    We have not previously had occasion to consider whether Foust’s per se ban on

punitive damages comports with Montana law and public policy. Because we are reversing

Folsom’s punitive damages award on other grounds, it is not necessary for us to reach and

resolve this issue at this time.




                                            32
¶58    6. Did the District Court erroneously deny MPEA’s motions for post-judgment
       relief under M. R. Civ. P. 59(e) and 60(b)(6)?

¶59    M. R. Civ. P. 59(e) contemplates motions to alter or amend judgments in the

interests of justice but specifies no particular grounds for relief.         Lee, ¶¶ 71-72

(distinguishing Rule 59 motion for a new trial from motion to alter or amend non-trial

judgment). We have held, however, that Rule 59(e) relief is not available to relitigate

previously litigated matters, reconsider arguments previously made, or raise new

arguments “which could, and should, have been” previously made. Lee, ¶ 76 (citing Nelson

v. Driscoll, 285 Mont. 355, 360-61, 948 P.2d 256, 259 (1997)). Rule 59(e) relief is

available in the discretion of the court only in extraordinary circumstances such as to:

(1) “correct manifest errors of law or fact upon which the judgment was based;” (2) “raise

newly discovered or previously unavailable evidence;” (3) “prevent manifest injustice

resulting from, among other things, serious misconduct of counsel;” or (4) “bring to the

court’s attention an intervening change in controlling law.” Lee, ¶ 75 (citing Nelson, 285

Mont. at 360, 948 P.2d at 259). The standard of review for a denial of a motion for Rule

59(e) relief is whether the district court abused its discretion. Bevacqua v. Union Pac. R.R.

Co., 1998 MT 120, ¶ 36, 289 Mont. 36, 960 P.2d 273.

¶60    In contrast to Rule 59(e), M. R. Civ. P. 60(b)(6) provides for relief “from a final

judgment, order, or proceeding” when required by fairness or equity to remedy a lack of

“full presentation of the cause or an accurate determination of the merits” caused by

extraordinary circumstances other than the grounds for relief specified in Rule 60(b)(1)

through (b)(5). In re Marriage of Orcutt, 2011 MT 107, ¶¶ 9-11, 360 Mont. 353, 253 P.3d



                                             33
884.13 Like Rule 59(e) relief, Rule 60(b)(6) relief is not a substitute for appeal, is not

available for reconsideration of matters previously considered, and is not available for

consideration of new matters that reasonably could and should have been previously raised.

Orcutt, ¶ 11. Rule 60(b)(6) relief is available to remedy alleged neglect or misconduct by

a party’s counsel only upon a showing: (1) of extraordinary gross neglect or actual

misconduct by counsel; (2) that the party sought relief within a reasonable time; and (3) that

the moving party was not at fault for the alleged neglect or misconduct. Orcutt, ¶ 12. The

standard of review of a grant or denial of a motion for Rule 60(b) relief based on alleged

gross neglect or misconduct of counsel is whether the district court abused its discretion.

Orcutt, ¶ 5.

¶61       Here, MPEA alternatively moved the District Court for Rule 59(e) or 60(b)(6) relief

from its summary judgment rulings and its resulting compensatory attorney fees and

punitive damage awards. MPEA sought relief under both rules on the asserted ground that

the liability judgments and resulting damages awards were based on manifest errors of law

and fact resulting from the “gross neglect and misconduct” of its former counsel. MPEA

asserted that counsel’s gross neglect and misconduct effectively caused it to suffer a default


13
     Rule 60(b) provides:
          On motion and just terms, the court may relieve a party or its legal representative from a
          final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence,
          surprise, or excusable neglect; (2) newly discovered evidence that, with reasonable
          diligence, could not have been discovered in time to move for a new trial under Rule 59(b);
          (3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or
          misconduct by an opposing party; (4) the judgment is void; (5) the judgment has been
          satisfied, released, or discharged; it is based on an earlier judgment that has been reversed
          or vacated; or applying it prospectively is no longer equitable; or (6) any other reason that
          justifies relief.



                                                   34
judgment on liability which, in turn, became the basis of the erroneous compensatory and

punitive damage awards.

¶62    MPEA retained new counsel after the damages hearing and shortly before the

District Court issued its post-summary judgment order on damages. MPEA timely asked

the District Court to delay its damages ruling to afford MPEA an opportunity to file an

appropriate motion for relief. After the District Court issued its damages ruling in apparent

disregard of MPEA’s initial motion, MPEA moved for particularized post-judgment relief

with supporting affidavits, exhibits, and briefing.

¶63    The record reflects that MPEA’s counsel seriously compromised its litigation

posture on the merits by failing to respond to critical requests for admission, failing to

subsequently seek relief from the resulting admissions deemed by default, and failing to

make any affirmative factual showing to oppose Folsom’s motion for summary judgment.

Though he appeared at the subsequent damages hearing, counsel manifestly made no

competent attempt to effectively represent MPEA’s interests through briefing, oral

argument, or motion practice. He failed to present critical legal authority and argument

opposing Folsom’s claims, to present proposed findings of fact and conclusions of law, or

to seek relief from his earlier neglect.

¶64    MPEA made a prima facie showing that it was not substantially at fault for Picotte’s

neglect or misconduct under the circumstances. Apart from general assertions that MPEA

had knowledge that Picotte was “burnt-out” and that MPEA could and should have more

closely supervised him and acted sooner, Folsom made no compelling showing of specific

contributory fault by MPEA.


                                             35
¶65    Under these circumstances, MPEA made a reasonably diligent and compelling

showing for post-judgment relief under Rules 59(e) and 60(b)(6). From the outset of this

litigation, Folsom asserted that the City wrongfully terminated his employment in violation

of the CBA. The alleged breach of the CBA by the City was also at the core of Folsom’s

ancillary DFR and subsumed common law fraud claims. Yet, seizing the opportunity to

exploit the manifest extraordinary gross neglect of MPEA’s counsel, Folsom made the

tactical decision to release the alleged primary wrongdoer, without compensation or

admission of liability, to instead pursue the compromised MPEA for the entirety of his

asserted compensatory and punitive damages. Under the totality of the circumstances, this

was truly an extraordinary situation where fundamental fairness and equity warranted relief

under Rule 59(e) or 60(b)(6) to remedy a lack of full presentation and inaccurate

determination of the merits as a result of the extraordinary gross neglect of counsel. We

hold that the District Court abused its discretion in refusing to grant MPEA’s alternative

motion for relief from its summary judgment and resulting attorney fees and punitive

damage awards.

                                    CONCLUSION

¶66    In summary, we hold that: (1) Folsom’s separately pled common law fraud claim

is necessarily subsumed in his DFR claim and thus not independently cognizable in this

case; (2) the District Court’s ruling that Folsom did not meet his burden of proving that

MPEA’s breach of duty caused his claimed damages was not erroneous and, thus, the

District Court did not err in declining to grant his motion for post-judgment relief under

Rules 59(a)(2) and 60(b)(1) and § 25-11-102(3), MCA; (3) the District Court erred in


                                            36
awarding Folsom $47,550 in attorney fees; (4) the District Court erroneously awarded

punitive damages without a compensatory damages predicate as required by § 27-1-220(1),

MCA; and (5) the District Court abused its discretion in refusing to grant MPEA’s

alternative Rule 59(e) or 60(b)(6) motion for relief from its summary judgment and

resulting attorney fees and punitive damage awards. We therefore reverse the District

Court’s Order on Plaintiff’s Motion for Summary Judgment, filed July 15, 2015, and its

subsequent Findings of Fact, Conclusions of Law, and Order on Damages, filed March 16,

2016, and remand for further proceedings on the merits of Folsom’s DFR claim in

accordance with this Opinion.

¶67    This remand necessarily returns Folsom and MPEA to the procedural posture that

they were in upon Folsom’s service of discovery requests on MPEA. Accordingly, MPEA

shall timely respond to Folsom’s previously propounded discovery requests within 30 days

of remand. On M. R. Civ. P. 16 motion, the District Court shall confer with the parties and

set a litigation schedule providing, inter alia, for any additional discovery necessary in the

discretion of the court, pretrial motion practice, and, as necessary, trial on the merits. In

the ordinary course, the District Court may or may not allow amendment of the pleadings

in its discretion under M. R. Civ. P. 15.

                                                  /S/ DIRK M. SANDEFUR

We concur:

/S/ MICHAEL E WHEAT
/S/ JAMES JEREMIAH SHEA
/S/ BETH BAKER
/S/ JIM RICE



                                             37
Justice Dirk Sandefur, specially concurring.

¶68    I obviously concur in all aspects of the Court’s Opinion as far as it goes. Because I

believe the issue is squarely before us by necessary implication from the District Court’s

ruling and the parties’ cross-arguments on Issues 1 and 6, it is incumbent on us to reach

and resolve Issue 5 rather than merely kick the can down the road without guidance on

remand to the District Court and the litigating parties. Therefore, pursuant to § 3-2-204(3),

MCA (in reversing and remanding this “court must pass upon and determine all the

questions of law involved in the case presented upon such appeal and necessary to the final

determination of the case”) (emphasis added), I would further reach and resolve Issue 5 as

follows.

¶69    Though we have not previously had occasion to consider whether Foust’s per se ban

on punitive damages comports with Montana law and public policy, the New Mexico

Supreme Court has considered whether to apply the rule of Foust to New Mexico common

law DFR claims based on a state Public Employees Bargaining Act (NMPEBA) similar to

MPECBA. Akins v. U.S.W., Local 187, 237 P.3d 744 (N.M. 2010). In Akins, a city motor

vehicle shop worker, who was the lone African-American member of the public employees

union local, asserted a state common law DFR claim against the union after union officials

refused his repeated requests to file a grievance to stop racial slurs and discrimination

directed at him by largely Hispanic co-workers and supervisors. Akins, 237 P.3d at 746.

After the New Mexico Court of Appeals affirmed a jury verdict awarding $1,661 in

compensatory damages and $30,000 in punitive damages, the New Mexico Supreme Court

considered the union’s assertion that, based on Foust’s compelling public policy


                                             38
considerations, New Mexico should adopt a similar “per se ban on punitive damages” on

its state common law DFR claims. Akins, 237 P.3d at 747. After careful consideration of

a wide range of federal and state public policy concerns, the New Mexico Court ultimately

affirmed the ruling of its intermediate Court of Appeals and rejected adoption of the rule

of Foust as contrary to New Mexico law and public policy. Akins, 237 P.3d at 747-54.

¶70    The New Mexico Supreme Court acknowledged without dispute the U.S. Supreme

Court’s “assessment of national needs” and the policy and purpose of federal labor laws to

protect and maintain the vitality of private sector labor unions. Akins, 237 P.3d at 749. As

to the U.S. Supreme Court’s particular concern that “windfall recoveries against labor

unions could deplete union treasuries and impair the effectiveness of unions as collective

bargaining agents,” the New Mexico Court observed that:

       nothing . . . indicates that such fears are presently warranted in New Mexico’s
       public sector. Despite Foust’s holding in the DFR context, unions . . . are
       currently subject to punitive damages under a variety of federal laws, such
       as the Labor Management Reporting and Disclosure Act (LMRDA) and 42
       U.S.C. § 1981 (2006). See 29 U.S.C. §§ 411(a)(4), 412 (2006) (right to sue
       and civil action/jurisdiction provisions of the LMRDA); Int’l Bhd. of
       Boilermakers v. Braswell, 388 F.2d 193, 200 (5th Cir. 1968) (punitive
       damages available under LMRDA); Woods, 925 F.2d at 1204 (“Under
       § 1981, the common law rule is that punitive damages may be awarded in
       appropriate cases.”). Unions have also, up to now, been subject to punitive
       damages for breach of the state duty of fair representation. Thus, to adopt a
       per se ban here would be to depart from the status quo. Despite the potential
       for exposure to punitive damages from several angles, the Union cannot point
       to a single example where runaway punitive damages awards substantially
       debilitated a labor union in New Mexico.

Akins, 237 P.3d at 750 (emphasis original). The New Mexico Court further noted that the

compelling public policy concern “for the vitality of unions as collective bargaining

agents” of workers is already reflected in a higher standard of DFR liability which “shields”


                                             39
unions from liability “for merely negligent” conduct “at no small cost” to the subordinated

interests of individual union members. Akins, 237 P.3d at 749. “To now go further and

shield even the most egregious conduct from punitive damages, would . . . undermine the

interests of both Unions and their members.” Akins, 237 P.3d at 749.

¶71    Contrasting federal policy to state policy, the New Mexico Court observed that

“Foust was developing an area of interstitial federal common law to effectuate distinct

congressional goals set forth in federal statutes governing unions in the private sector.”

Akins, 237 P.3d at 749 (citing Foust, 442 U.S. at 47-48, 99 S. Ct. at 2125-26 and Woods,

925 F.2d at 1203). The Court acknowledged that New Mexico DFR claims further a similar

state policy as enacted in NMPEBA, but noted that the primary purpose of federal and state

common law DFR claims is to provide individual workers an effective remedy for

enforcement of collective bargaining rights not otherwise provided by statute. Akins, 237

P.3d at 749. To that end, the New Mexico Court agreed with the concurrence in Foust that

recognition of a common law enforcement remedy for that purpose should avail the

enforcing party of “the full panoply of tools traditionally” available at common law “to do

justice between the parties,” including punitive damages. Akins, 237 P.3d at 749 (citing

Foust, 442 U.S. at 53, 99 S. Ct. at 2128 (Blackmun, J., concurring)). The New Mexico

Court concluded that existing procedural, substantive, and constitutional due process

protections are more than adequate to protect unions, like other tortfeasors, from excessive

punitive damages awards. Akins, 237 P.3d at 752-54.

¶72    Turning to other provisions of state law, the New Mexico Court noted that punitive

damages serve the important state public policy of punishing reprehensible conduct and


                                            40
deterring similar conduct in the future. Akins, 237 P.3d at 749-50. The court noted that

those policy objectives are of particular critical import “where unions appropriately enjoy

broad discretionary authority and the employee has little recourse outside of the grievance

process.” Akins, 237 P.3d at 749-50. The New Mexico Court thus concluded that “punitive

damages are the best means of deterring” egregious union misconduct in the DFR context

where “compensatory damages may be de minimis or difficult to quantify.” Akins, 237

P.3d at 750.

¶73    Ultimately, the Court noted that “New Mexico law reflects a preference for holding

individuals and institutions accountable for their actions regardless of status.” Akins, 237

P.3d at 751. “[W]e are aware of no New Mexico common-law cause of action in tort where

we have [declared] that punitive damages are unavailable as a matter of law.” Akins, 237

P.3d at 752. “Absent a more compelling policy consideration than that presented by the

Union, we make no exception for DFR claims.” Akins, 237 P.3d at 752. The New Mexico

Court instead adhered “to the general common law principle in New Mexico that punitive

damages should be available as long as the wrongdoer’s conduct is willful, wanton,

malicious, reckless, fraudulent, or in bad faith.” Akins, 237 P.3d at 752. Because “the

Legislature is capable of making exceptions to general tort principles when public policy

so counsels,” the Court deferred “to the Legislature for such a drastic departure” from

existing state law and public policy, if so inclined. Akins, 237 P.3d at 751.

¶74    I find Akins’ reasoning even more compelling under Montana law and public policy

considerations. By following the federal model and consistent with the public policy of

MPECBA to provide for the continued vitality of public employees’ unions, we, too, have


                                             41
adopted a higher standard of liability that shields public employees’ unions from liability

for merely negligent conduct, thus subordinating the interests of individual workers to

those of the union collective. However, on balance with MPECBA’s important public

policy of facilitating effective collective bargaining in the public sector, Montana statutory

and common law embodies an equally important policy of holding individuals and entities

accountable for their tortious conduct regardless of status. To that end, punitive damages

are available in Montana “for the sake of example and for the purpose of punishing”

defendants who engage in “actual fraud” or “actual malice,” as narrowly defined. Sections

27-1-220(1) and -221(1), MCA.

¶75    The Legislature has mandated that punitive damages are available as a supplemental

tort remedy “[e]xcept as otherwise expressly provided by statute.” Section 27-1-220(1),

MCA (emphasis added). While this Court is certainly free to fashion the contours of

Montana DFR claims absent contrary statutory provision, see Miller v. Fallon County, 222

Mont. 214, 217-18, 721 P.2d 342, 344 (1986) (judicial discretion to determine or revise

common law as necessary “to prevent great injustice” or conform common law to

“changing needs of society”); accord, Brookins v. Mote, 2012 MT 283, ¶ 57, 367 Mont.

193, 292 P.3d 347; § 1-1-108, MCA (common law is “the law and rule of decision” except

where in conflict with statute), our adoption of a per se Montana common law rule barring

punitive damages as a supplemental remedy on a DFR claim would contravene the

unqualified mandate of § 27-1-220(1), MCA, that punitive damages are an available

supplemental tort remedy except as otherwise expressly provided by statute.




                                             42
¶76      As in Akins, the assertion that punitive damages exposure will weaken unions is no

more valid in regard to unions than to other benevolent entities subject to punitive damages

liability. Punitive damages awards are subject to federal due process limitations and

various procedural and substantive protections and limitations provided by §§ 27-1-220

and -221, MCA. Since 1985, Montana has had an even higher standard of punitive

damages liability than the common law standard articulated in Akins. Punitive damages

are available under Montana law only upon proof of “actual fraud” or “actual malice” by

“clear and convincing evidence.” Section 27-1-221(1), (5), and (6), MCA. In contrast to

the nine elements of common law fraud under Montana law, “actual fraud” means:

         (1)     knowingly making a false representation to another who has “a right
                 to rely on the representation” and suffers injury as a result of reliance
                 thereon; or

         (2)     causing injury to another by “conceal[ing] a material fact with the
                 purpose of depriving the [other] of property or legal rights” or
                 otherwise causing injury to the other.

Section 27-1-221(3) and (4), MCA. Contrary to the District Court’s apparent conflation of

“actual fraud” and common law fraud in this case, common law fraud, tortious bad faith,

or other unlawful or arbitrarily discriminatory conduct subsumed as a matter of law in the

elements of a tortious DFR claim do not necessarily equate as a matter of law with “actual

fraud” or “actual malice,” as defined by § 27-1-221(2) through (4), MCA. The question of

whether facts constituting common law fraud, tortious bad faith, or other unlawful or

arbitrarily discriminatory conduct by a mere preponderance of the evidence1 in the DFR


1
    See § 26-1-403(1), MCA (general civil burden of proof).



                                                43
context may also constitute “actual fraud” or “actual malice” by clear and convincing

evidence, pursuant to § 27-1-221(3) and (4), MCA, is a question of fact for separate

determination by the finder of fact upon proper instruction under the circumstances of each

case.2

¶77      As in Akins, I am aware of no case in which this Court has exempted a particular

class of tortfeasor from punitive damages liability by judicial fiat. Whether punitive

damages should be available as a supplemental remedy on a Montana common law DFR

claim is a question of pure public policy upon which the Legislature has unequivocally

spoken in its exclusive domain. See, § 27-1-220(1), MCA. For these reasons, I would

reach Issue 5 and hold that Foust’s per se bar of punitive damages on federal common law

DFR claims is not consistent with existing Montana law and public policy. Thus, I would

hold that MPEA is not exempt as a matter of law from punitive damages under §§ 27-1-

220 and -221, MCA, on Folsom’s Montana DFR claim.

                                                       /S/ DIRK M. SANDEFUR


Michael E Wheat joins in the special concurring Opinion of Justice Sandefur.


                                                       /S/ MICHAEL E WHEAT




2
  Note further that Restatement (Second) of Torts § 909 (1979) limits a principal’s vicarious
liability for punitive damages by requiring proof that the principal, apart from the agent, is directly
culpable under the applicable standard of punitive damages liability. See similarly, Campen v.
Stone, 635 P.2d 1121, 1123-26 (Wyo. 1981). While this Court has yet to squarely reconcile it with
§ 27-1-221(1), MCA, we have applied Restatement § 909 where assumed by the parties to be
consistent with Montana law. Cartwright v. Equitable Life Ins., 276 Mont. 1, 30-33, 914 P.2d 976,
994-96 (1996).


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45
