                                                                                              May 14 2013


                                           DA 12-0761

                  IN THE SUPREME COURT OF THE STATE OF MONTANA

                                          2013 MT 128N



HAROLD MARTIN KLINKER, JR.,
and MARCIA ANN KLINKER,

              Plaintiffs and Appellees,

         v.

DEAN L. PEARSON and GARY L. PEARSON,

              Defendants,

K. DALE SCHWANKE,

               Defendant and Appellant.

APPEAL FROM:            District Court of the Ninth Judicial District,
                        In and For the County of Teton, Cause No. DV 12-017
                        Honorable David Cybulski, Presiding Judge


COUNSEL OF RECORD:

                For Appellant:

                        Norman L. Newhall, Linnell, Newhall, Martin & Schulke, P.C.; Great Falls,
                        Montana

                For Appellee:

                        J. Daniel Hoven, Daniel J. Auerbach, Browning, Kaleczyc, Berry & Hoven,
                        P.C.; Missoula, Montana

                                                     Submitted on Briefs: March 20, 2013
                                                                Decided: May 14, 2013


Filed:

                        __________________________________________
                                          Clerk
Justice Brian Morris delivered the Opinion of the Court.

¶1     Pursuant to Section I, Paragraph 3(d), Montana Supreme Court Internal Operating

Rules, this case is decided by memorandum opinion and shall not be cited and does not serve

as precedent. Its case title, cause number, and disposition shall be included in this Court’s

quarterly list of noncitable cases published in the Pacific Reporter and Montana Reports.

¶2     Appellant Dale Schwanke (Schwanke) appeals from the order of the Ninth Judicial

District Court, Teton County, that denied his motion for substitution of district judge.

Appellees Harold Martin Klinker, Jr. and Marcia Ann Klinker (Klinkers) have filed notice

that they take no position on the matters set forth in the appeal. We vacate the District

Court’s order and direct the court to appoint a substitute district judge.

¶3     The action arises from a purchase and sale agreement for real property in Teton

County, Montana. Under the agreement, the Klinkers agreed to purchase the property from

Dean L. Pearson and Gary L. Pearson (Pearsons). Schwanke served as the Pearsons’

attorney. The deal unraveled when the Pearsons also entered a fully-executed buy-sell

agreement concerning the same property with Jay Ratliff (Ratliff).

¶4     The Klinkers filed claims against the Pearsons for which they seek specific

performance and damages for breach of contract. They also allege that the Pearsons and

Schwanke are liable to them for fraud, constructive fraud, negligent misrepresentation, and

punitive damages.

¶5     Section 3-1-804(1), MCA, allows each adverse party to a district court action one

substitution of district judge. The Pearsons obtained a substitution of district judge in May

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of 2012. Schwanke separately moved to substitute the district judge in November of 2012.

The District Court denied Schwanke’s motion based on the Pearsons’ previous motion for

substitution and the court’s conclusion that no adversity of interest existed between the

Pearsons and Schwanke.

¶6     We determined that the Pearsons and Schwanke qualified as adverse parties for

purposes of substitution of district judge in an action brought by Ratliff, the other

prospective buyer of the Pearsons’ property. Ratliff v. Pearson, 2011 MT 241, ¶ 31, 362

Mont. 163, 261 P.3d 1037. We concluded that differing factual allegations against the

various defendants, the apparent availability of separate defense strategies, and the

possibility that the duties owed by the various defendants to the plaintiffs may differ, were

sufficient factors to qualify the defendants as adverse parties. Ratliff, ¶¶ 30-31. We reach

the same conclusion here.

¶7     The interests of the Pearsons and Schwanke do not align completely. The differences

prove sufficiently adverse to support a separate motion for substitution of judge by each

defendant.    Among other things, the Pearsons could contest the validity of the

representations allegedly made to the Klinkers by Schwanke on the Pearsons’ behalf;

Schwanke and the Pearsons may dispute factual statements that either party allegedly made

to the other; the duties that the Pearsons may owe to the Klinkers likely differ from any

duties that Schwanke may owe to the Klinkers; the parties have retained separate counsel and

have available separate defense strategies; the Pearsons may assert a separate malpractice

claim against Schwanke; and Schwanke may claim that he acted on misinformation provided
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by the Pearsons.

¶8    We have determined to decide this case pursuant to Section I, Paragraph 3(d) of our

Internal Operating Rules, which provides for noncitable memorandum opinions. We vacate

the order denying Schwanke’s motion as Montana law allows for substitution of district

judge under these circumstances. We direct the District Court to enter an order granting

Schwanke’s motion.

                                               /S/ BRIAN MORRIS


We concur:

/S/ MIKE McGRATH
/S/ MICHAEL E WHEAT
/S/ BETH BAKER




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