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                                                               No. 00-810

                          IN THE SUPREME COURT OF THE STATE OF MONTANA

                                                              2001 MT 228


                                 ROY L. SHERRARD; KATHERYN N. SHERRARD,

                                                     Plaintiffs and Appellants,

                                                                      v.

                                      RON PREWETT; PREWETT EXCAVATING

                                                   & CONSTRUCTION, INC.,

                                                  Defendants and Respondents.

                       APPEAL FROM: District Court of the Twenty-First Judicial District,

                                                In and for the County of Ravalli,

                                   The Honorable Jeffrey H. Langton, Judge presiding.

                                                    COUNSEL OF RECORD:

                                                            For Appellants:

                                Brian Lilletvedt; Bosch, Kuhr, Dugdale, Martin & Kaze,

                                                            Havre, Montana

                                                           For Respondents:

                     Robert J. Phillips, Fred Simpson, Phillips & Bohyer, Missoula, Montana

                                             Submitted on Briefs: March 22, 2001
                                                Decided: November 20, 2001



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                                                                    Filed:

                                    __________________________________________

                                                                    Clerk



Chief Justice Karla M. Gray delivered the Opinion of the Court.

¶1Roy Sherrard (Sherrard) and his mother Katheryn Sherrard (collectively, the Sherrards)
appeal from the judgment entered by the Twenty-First Judicial District Court, Ravalli
County, on its Opinion and Order granting summary judgment to Ron Prewett and Prewett
Excavating and Construction, Inc. (collectively, Prewett). We affirm.

¶2 The issue on appeal is whether the District Court erred in determining that no genuine
issues of material fact exist and, on that basis, in granting summary judgment to Prewett.

                                                          BACKGROUND

¶3 The Sherrards purchased approximately 40 acres of property in Ravalli County,
Montana, in November of 1995, on which they later built a home and intended to build a
horse arena. In September of 1995, prior to the Sherrards' purchase of the property or
construction of either building, Ravalli County Sanitarian Ron Curley (Curley) issued a re-
site evaluation of the property which addressed groundwater levels and designated
appropriate septic systems to service each building. His evaluation was based on two test
holes gauging groundwater levels: one dug where the house was to be situated and another
where the horse arena was to be built. In October of 1995, Curley approved a permit for a
shallow cap system to be installed on the site of the proposed horse arena. The system was
subject to Montana Department of Environmental Quality (DEQ) regulations which
require minimum 12-inch trench depths and which also prohibit installation of a shallow
cap septic system where the water table reaches within five feet of the natural ground
surface.

¶4 In the spring of 1996, while preparing to build the horse arena, Sherrard hired Prewett
to transport building materials to the property, and Prewett subsequently completed other
jobs for Sherrard. During this time, Sherrard entered into an oral contract with Prewett to
install a shallow cap septic system for the horse arena. Sherrard gave Prewett a copy of the


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permit Curley had approved and indicated the area where Sherrard wanted the septic
system installed.

¶5 Prewett began installing the system on June 18, 1996. He dug a hole and placed the
septic tank in the ground, dug 36-inch deep trenches for lateral pipes in the drain field,
placed washed gravel and then pipes in the trenches, and prepared the system for
inspection. The next day, Prewett noticed water had filled the space left in the septic tank
hole within three feet of the ground surface. At that time, he put backfill material in
around the tank and covered up the water in the hole. Jake Kammerer (Kammerer), the
new Ravalli County Sanitarian, inspected the system late that day. He observed and
identified standing groundwater inside the septic tank and saw water squirt up around one
of the pipes laid in the lateral trenches in the drain field when he stepped on it. After
completing the inspection, Kammerer fixed the groundwater level on the site at 27 inches
below the natural surface of the ground and ultimately determined the groundwater level
was too high to meet state and county requirements for a shallow cap system. Kammerer
informed Prewett he would not approve the system and revoked the Sherrards' permit.

¶6 The Sherrards subsequently sued Prewett seeking damages for negligent installation of
the septic system, breach of contract, and breach of the implied covenant of good faith and
fair dealing. Prewett moved for summary judgment and the Sherrards filed a cross-motion
for partial summary judgment on the issue of liability. The District Court held a hearing at
which testimony and oral arguments were received, and considered depositions and an
affidavit. Thereafter, it granted summary judgment to Prewett and denied the Sherrards'
cross-motion as moot. The District Court subsequently entered judgment dismissing the
Sherrards' complaint with prejudice and awarding Prewett his costs. The Sherrards appeal.
STANDARD OF REVIEW

¶7 We review a district court's summary judgment ruling de novo, using the same Rule 56,
M.R.Civ.P., criteria applied by the district court. Clark v. Eagle Systems, Inc. (1996), 279
Mont. 279, 282, 927 P.2d 995, 997 (citations omitted). Rule 56(c), M.R.Civ.P., provides,
in pertinent part:

The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law.



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¶8 The party moving for summary judgment has the initial burden of establishing the
absence of any genuine issue of material fact and entitlement to judgment as a matter of
law. Once the moving party meets this burden, the burden shifts to the nonmoving party to
establish otherwise by more than mere denial or speculation. Johnson v. Barrett, 1999 MT
594, ¶ 8, 295 Mont. 254, ¶ 8, 983 P.2d 925, ¶ 8 (citations omitted). Reasonable inferences
drawn from the offered proof will be drawn in favor of the party opposing summary
judgment. See Schmidt v. Washington Contractors Group, 1998 MT 194, ¶ 7, 290 Mont.
276, ¶ 7, 964 P.2d 34, ¶ 7 (citations omitted).

                                                            DISCUSSION

¶9 Did the District Court err in determining that no genuine issues of material fact exist
and, on that basis, in granting summary judgment to Prewett?

¶10 The District Court determined no genuine issue of material fact existed that the

groundwater depth at the horse arena site was less than five feet from the natural ground
surface and, as a result, the shallow cap system could not meet DEQ regulations allowing
such systems only when the groundwater level is more than five feet from the natural
surface of the ground. Consequently, the District Court concluded the object of the
contract between the Sherrards and Prewett was illegal and the Sherrards could not
proceed with their contract-based claims. For the same reasons, the court concluded the
Sherrards' claim that Prewett negligently constructed the system by digging the lateral
trenches too deep, even if true, could not have caused them any damages.

¶11 We begin our de novo review by determining whether Prewett met the initial burden
of establishing that no genuine issue exists as to any material fact. See Johnson, ¶ 8. In this
regard, Prewett presented Kammerer's testimony that he would not have approved the
septic system Prewett installed, regardless of whether the lateral trenches were dug to a
correct depth, because the groundwater at the site was simply too high. Kammerer testified
that the level of groundwater at the sight was 27 inches below the natural surface of the
ground and there was no way a shallow cap system at that site could comply with DEQ
regulations. In light of Kammerer's testimony, we conclude Prewett has met the initial
burden of establishing that no genuine issue of material fact exists.

¶12 The burden thus shifts to the Sherrards to establish, by more than mere denial or
speculation, that a genuine issue of material fact exists. See Johnson, ¶ 8. They argue the


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existence of a genuine issue of material fact regarding the groundwater level at the horse
arena site where Prewett installed the shallow cap septic system.

¶13 The Sherrards rely on Curley's re-site evaluation, which they argue documents the
ground water level at seven feet below the surface of the ground. However, Curley's
evaluation discussed two different test holes, one located at the home site, and the other
located at the horse arena site. While the record supports the Sherrards' contention that
Curley documented a groundwater level of seven feet, that was the groundwater level at
the home site. Curley made no express determination of the groundwater level at the horse
arena site. Consequently, Curley's evaluation is of no value to the Sherrards in establishing
the existence of a genuine issue of material fact regarding the groundwater level at the
horse arena site.

¶14 The Sherrards also rely on Prewett's deposition testimony. Prewett testified that, in his
various excavations around the approximately 40-acre property, he hit water at eight feet
while digging a pond and at between six and seven feet while digging the hole for the
septic tank. The record indicates the pond is situated at the north end of the property, some
distance from where the septic system was installed. With regard to the groundwater level
at the septic tank hole location, Prewett testified that, after he encountered water at the six
to seven foot level while digging, the hole filled overnight and the water table had
equalized at about three feet below the surface of the ground by the next morning. Finally,
the Sherrards contend Prewett testified he did not encounter groundwater while digging
the 36-inch deep trenches for the drain field. In fact, however, Prewett testified he and his
crew were "right at" the groundwater level while digging the trenches. Prewett's
testimony, taken in its entirety, fails to establish a genuine issue of material fact with
regard to whether the groundwater level was sufficiently deep to avoid the DEQ
prohibition against shallow cap systems where the water table is within five feet of the
natural ground surface.

¶15 The Sherrards repeatedly deny the groundwater level is only 27 inches below the
surface of the horse arena site, and speculate it must be deeper than 48 inches or the
original permit would never have been issued. However, "'mere denial, speculation, or
conclusory statements' are insufficient to raise a genuine issue of material fact."
Schumacker v. Meridian Oil Co., 1998 MT 79, ¶ 15, 288 Mont. 217, ¶ 15, 956 P.2d 1370,
¶ 15 (quoting Klock v. Town of Cascade (1997), 284 Mont. 167, 174, 943 P.2d 1262,
1266). The Sherrards' bare denial of the 27-inch groundwater level to which Kammerer
testified is insufficient to raise a genuine issue in that regard. Nor is their speculation about

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the groundwater level at the time Curley issued the permit in 1995 sufficient to do so.

¶16 It also is important to note that, while the Sherrards have singled out Kammerer's
determination that the groundwater level at the horse arena site is 27 inches below the
surface of the ground as the genuine issue of material fact, "[m]aterial issues of fact are
identified by looking to the substantive law which governs the claim" in summary
judgment proceedings. McGinnis v. Hand, 1999 MT 9, ¶ 6, 293 Mont. 72, ¶ 6, 972 P.2d
1126, ¶ 6 (citation omitted). DEQ regulations governing the installation of shallow cap
septic systems are the relevant substantive "law" in the present case. As such, the material
fact here is not whether the groundwater level at the horse arena site is precisely 27 inches
below the surface of the ground, but whether it is five feet or more below the surface of
the ground as required by DEQ regulations for installation of a shallow cap system.

¶17 Ultimately, the Sherrards "must come forward with substantial and material evidence
raising a genuine issue of material fact." Montana Metal Buildings, Inc. v. Shapiro (1997),
283 Mont. 471, 474, 942 P.2d 694, 696 (citations omitted). They have not done so.
Accordingly, we conclude the Sherrards have not met their burden of establishing that a
genuine issue of material fact exists with regard to the groundwater level at the horse
arena site.

¶18 The Sherrards further contend that Kammerer would not have revoked the permit, and
would have approved the shallow cap system, if Prewett had dug the trenches in the drain
field 12 to 18 inches deep instead of 36 inches. Kammerer testified, however, that he
would not have approved the system, even if the trenches were in compliance with the
trench-depth regulations, because the groundwater was simply too high at the horse arena
site. In light of that testimony, and in the absence of any evidence of record to the
contrary, the Sherrards' contentions are mere conclusory statements insufficient to raise a
genuine issue of material fact.

¶19 Finally, the Sherrards argue in their reply brief that, even if the groundwater level is
only 27 inches below the surface of the ground, it was Prewett's negligent installation of
the trenches too deep that alerted Kammerer to the high level of groundwater. In essence,
the Sherrards argue Kammerer would never have noticed the high groundwater level
during his inspection, and would have approved the system, if Prewett had dug the
trenches only 12 to 18 inches deep.

¶20 Under Rule 23(c), M.R.Civ.P., an appellant's reply brief must be confined to new


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matters raised in the respondent's brief. Therefore, an appellant may not raise new issues
in a reply brief. Pengra v. State of Montana, 2000 MT 291, ¶ 13, 302 Mont. 276, ¶ 13, 14
P.3d 499, ¶ 13 (citation omitted). The Sherrards' belated argument is unrelated to any
matter discussed in Prewett's brief and, accordingly, we decline to address it.

¶21 We hold the District Court did not err in determining that no genuine issues of
material fact existed and, on that basis, in granting summary judgment to Prewett.

¶22 Affirmed.

                                                     /S/ KARLA M. GRAY

                                                               We concur:

                                                    /S/ JAMES C. NELSON

                                                /S/ TERRY N. TRIEWEILER

                                                         /S/ JIM REGNIER

                                               /S/ W. WILLIAM LEAPHART




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