                             NO.    93-577
          IN THE SUPREME COURT OF THE STATE OF MONTANA



THE STATE OF MONTANA, ex rel,
the matter of JACK M. SCANMN
          Petitioner and Appellant,


NATIONAL ASSOCIATION OF INSURANCE
COMMISSIONERS (NAIC),
A Missouri Association, and
SOCIETY OF FINANCIAL EXAMINERS, INC.
(SOFE), A Washington D.C. Corporation
and Agency of NAIC, and                                 MAY 2 4 1994
ANDREA vvANDYvv
              BENNETT, State Auditor
and Ex Officio Commissioner of
Insurance Individually, and as an
Associate of NAIC and SOFE,
          Respondents and Respondents.




APPEAL FROM:   District Court of the First Judicial District,
               In and for the County of Lewis & Clark,
               The Honorable Thomas C. Honzel, Judge presiding.


COUNSEL OF RECORD:
          For Appellant:
               Leonard J. Haxby, Butte, Montana
          For Respondents:
               Stuart L. Kellner, Helena, Montana:         Stephen M.
               Frankino, Helena, Montana


                                 Submitted on Briefs:   March 24, 1994
                                             Decided:   May 24, 1994
Filed:

                             ,

                                   .iL   i
                                   Clgrk
Justice James C. Nelson delivered the Opinion of the Court.

       This is an appeal from an Order of the First: Judicial District
Court        granting   defendant/respondent*s        Society     of   Financial
Examiners, Inc.'s          (SOFE1s) motion for summary judgement.            We
affirm.
       Plaintiff/appellant, Jack Scanlon (Scanlon) presents five
issues on appeal. Because of our holding, we need only discuss the
following two issues:
       1.      Did the District Court err in determining that Scanlon
failed to meet his burden of raising a genuine issue of material
fact     with     regard    to    whether    he    possessed     the   necessary
qualifications when he applied for CFE status in 1974 and 1990?
        2.     Did the District Court err in determining that Scanlon
did not possess a constitutionally protected s'franchises'or other
property        interest    in     Certified      Financial     Examiner   (CFE)
certification?
                                 FACTUAL BACKGROUND
       This case        involves Scanlon's        attempts to obtain a CFE
designation from SOFE in December 1974 and November 1990. Because
this case involves the interaction between the Montana Insurance
Commissioner, the National Association of Insurance Commissioners
(NAIC), and SOFE, some background about these organizations is
necessary.
        The Montana Insurance Commissioner is charged by statute to
conduct examinations of local and foreign insurance companies doing
business in this state.            Section 33-1-401, MCA.       Examinations of

                                         2
foreign insurance companies are customarily conducted through the
auspices     of   NAIC.   NAIC   is   an    association   of   insurance
commissioners, who are members by virtue of their office. NAIC has
divided the United States into various Igzoneswfor the purpose of
sharing the cost of financial examinations of foreign insurance
companies.    NAIC procedures require that only examiners certified
by SOFE may participate in financial examinations of foreign
insurance companies as representatives of an NAIC zone.
     SOFE, a non-profit corporation, is a professional society for
examiners of insurance companies, banks, savings and loans, and
credit unions.        SOFEfs purpose is to establish and promote
professional standards, minimum requirements of conduct, training
and expertise, for members engaged in the examination of financial
institutions. SOFE has established four classes of membership, two
of which are pertinent to this case.           The definitions of the
membership classes are found at Article 111, Sections 2 and 3 of
SOFE's bylaws and are as follows:
     Section 2.     Accredited Membership
          Accredited Membership and the title of !'Accredited
     Financial Examiner ( A F E ) " shall be bestowed upon
     financial examiners who are general members in good
     standing, and who have the specified educational,
     experience and approval criteria as determined by the
     Board of Governors and these bylaws.
     Section 3.     Certified Membership
          Certified Membership and the title of "Certified
     ~inancial ~xaminer (CFE)      shall be bestowed upon
     Accredited members in good standing who have met the
     specific educational, experience and approval criteria as
     determined by the Board of Governors and these bylaws.
SOFEfs bylaws require that employment by a governmental agency is
a prerequisite to both AFE and CFE membership.           Society of
Financial Examiner's bylaws, Article I, Section 3.
     Prior to SOFE's creation in 1973, NAIC certified and listed
insurance examiners as either "Junior" or "Seniorw based on their
education and experience. Scanlon representedthe State of Montana
and zone 6 of NAIC in examinations of insurance companies from 1964
to 1971. Scanlon received the classification of Senior Examiner in
January of 1966.
     When SOFE was incorporated in 1973, Scanlon was practicing law
and no longer contracted for NAIC insurance examinations.            In
December   of   1974, Scanlon   applied   for   membership    and   CFE
designation.    At that time, SOFE had an Early Entrance Program
which conferred or ltgrandfatheredl1either AFE or CFE status on
applicants who previously had been classified by the NAIC as a
Senior Examiner and who were employed by a governmental agency.
SOFE denied Scanlon's application because he was not employed by a
governmental agency.
     In 1990 Scanlon was retained to represent the Montana
Insurance Department as a contract in-state examiner.        Because he
was once again conducting insurance examinations for a governmental
agency, Scanlon contacted SOFE in November of 1990, for membership
and CFE designation. SOFE denied Scanlon's request because he did
not meet the education requirements for CFE status.     Moreover, he
was no longer able to obtain CFE designation through the Early
Entrance Program as it was discontinued in March of 1975.
     Scanlon filed a Petition for Declaratory Judgment, Writ of
Mandamus and Writ of Quo Warranto on September 14, 1992.           On
January   19, 1993,   the District Court granted the motion to dismiss
of State Auditor and ex officio Commissioner of Insurance, on the
grounds that Scanlon had failed to state a claim against the
Insurance Commissioner upon which relief could be granted. Scanlon
has not appealed from that order.
     Scanlon moved to dismiss NAIC from this action pursuant to
Rule 21, M.R.Civ.P.,      on June 3, 1993, and the District Court
entered its order dismissing      NAIC   on June 21, 1993.   The sole
remaining party, SOFE, filed its motion for summary judgment on
June 10, 1993.    After considering the briefs of both parties and
hearing oral argument, the ~istrictCourt granted SOFE's motion on
the grounds that Scanlon failed to meet his burden of raising a
genuine issue of material fact as to his possessing the necessary
qualifications for CFE status.       Scanlon appeals from this order.
                            STANDARD OF REVIEW
     In reviewing a grant of summary judgment, we use the same
criteria initially used by the District Court under Rule 56,
M.R.Civ.P.    Minnie v. City of Roundup (1993), 257 Mont. 429, 431,
849 P. 2d 212, 214.      Summary judgment is proper when there is no
genuine issue as to any material fact and the moving party is
entitled to a judgment as a matter of law. Rule 56(c), M.R. Civ.P.
The District Court concluded that Scanlon failed to meet his burden
of raising a genuine issue of material fact as to his possessing
the necessary qualifications when he applied for CFE status and
that he had no constitutionally protected franchise or property
right.   We agree and address each of those issues in turn.
                              ISSUE I
     Did the District Court err in determining that Scanlon
     failed to meet his burden of raising a genuine issue of
     material fact with regard to whether he possessed the
     necessary qualifications when he applied for CFE status
     in 1974 and 1990?
     To sustain a motion for summary judgment, the moving party
must establish that no genuine issues of material fact exist which
would necessitate a trial of the issues presented.       Berens v.
Wilson (1990), 246 Mont. 269, 271, 806 P.2d 14, 16. Upon meeting
this initial burden, the burden shifts to the party opposing the
motion, who must show that an issue of material fact does exist.
Sprunk v. First Bank System (1992), 252 Mont. 463, 466, 830 P.2d
103, 104. To determine the existence of genuine issues of material
fact, it is important to ascertain whether the material facts are
actually disputed by the parties, or whether the parties are simply
interpreting the facts differently.     Sprunk, 830 P.2d at 105.
Although summary judgment is not proper when material facts are
disputed, "mere disagreement about the interpretation of a fact or
facts does not amount to genuine issues of material fact." S~runk,
830 P.2d at 105.
     After carefully reviewing the record, we conclude that Scanlon
failed to meet his burden of presenting a genuine issue of material
fact.    It is undisputed that Scanlon was not entitled to CFE
designation when he first applied to SOFE in 1974, because he was
not employed as a financial examiner by a governmental agency at
the time of his application. Therefore, Scanlon did not meet the
requirements of SOFEfs Early Entrance Program.           It is also
undisputed that when he requested CFE designation in 1990, Scanlon
did not meet SOFE1s education requirements.       Furthermore, at the
time he applied in 1990, Scanlon could no longer receive CFE status
under the   "grandfathern or Early Entrance Program, as SOFE
discontinued that program in 1975.
     Scanlon does not refute these facts but instead presents
arguments   that   summary   judgment    should    be   reversed   on
constitutional grounds. Scanlon's constitutional arguments aside,
it is undisputed that Scanlon did not meet the requirements for CFE
designation in either 1974 or in 1990. We hold that the District
Court correctly concluded that Scanlon failed to raise any genuine
issue of material fact in opposition to SOFE1smotion for summary
judgment.
                             ISSUE I1
     Did the District Court err in determining that Scanlon
     did not possess a constitutionally protected "fran~hise~~
     or other property interest in CFE certification?
     Scanlon, nevertheless, asserts that his designation by the
NAIC and the Montana State Auditor as a Senior Examiner is a vested
property right subject to constitutional protection.          Scanlon
received the designation of Senior Examiner by fulfilling the
required education and experience requirements fortnat designation
at the time it was granted. Scanlon reasons that, once he received
the Senior Examiner designation, it became a property right which
cannot be eliminated without a rational justification, or in an
arbitrary or capricious fashion.        Scanlon claims that SOFE's
classifications of AFE and CFE arbitrarily eliminate his property
right and that the classifications are not a rational means to
attain a legitimate government objective      --   i.e. insuring that
financial examiners are qualified to do the work            assigned.
Consequently, we must determine whether Scanlon had a property
interest subject to the protection of the Fourteenth Amendment to
the united Stated Constitution, and Article 11, Section 17, of the
Montana Constitution. Akhtar v. Van de Wetering (1982), 197 Mont,
205, 210, 642 P.2d 149, 152. (Citations omitted.)
       It is a fundamental principle of constitutional law that "[tlo
have a property interest in a benefit, a person clearly must have
more than an abstract need or desire for it.        He must have more
than a unilateral expectation of it.       He must, instead, have a
legitimate claim of entitlement to it."     Board of Regents v. Roth
(l972), 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d. 548,
561, adopted by this Court in Akhtar, 642 P.2d at 153.     It is also
well established that legitimate claims to entitlement cannot be
premised on the Constitution itself, but must be derived from some
independent source such as state law or in the rules and
understandings existing between employee and employer.       Medicine
Horse v. Big Horn Co. Sch. Dist. (lggl), 251 Mont. 65, 70, 823 P.2d
230, 233, citing   Roth. 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed. 2d
548.
       In the instant case, Scanlon presents no specific statutory or
regulatory authority mandating that SOFE confer CFE status upon
Senior Examiners.      The applicable law requires only that the
Insurance Commissioner conduct audits of insurers at least once
every five years. Section 33-1-401(1), MCA.        To carry out that
duty, the Insurance Commissioner may appoint competent examiners to
conduct or assist in examinations of insurers or others.       Section
33-1-303 (4), MCA.      The   statutory guidelines     for examiners'
qualifications require that "[elxaminers must be competent, because
of experience or special education or training, to fulfill the
responsibilities of an insurance examiner."       Section 33-1-303(4),
MCA.   There simply is no statute entitling individuals who were at
one time classified as Senior ~xaminersto CFE status.
       The complete absence of any statute or regulation in this case
does not preclude the possibility that Scanlon had a property
interest in CFE status.        A *tmutuallyexplicit understanding"
between the employee and employer can also create a property
interest.     Medicine Horse, 823 P.2d at 233, citing Perry v.
Sindermann (1972), 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570.
Here    too, Scanlon   fails to present     any    objective evidence
indicating that SOFE and Scanlon had an understanding that he was
entitled to CFE status by reason of his prior designation of Senior
Examiner.
       Scanlon argues that when he applied for CFE status in 1974,
SOFE had an Early Entrance Program which allowed qualified Senior
Examiners to be granted either AFE or CFE status without having to
fulfill the required educational requirements instituted by SOFE.
However, Scanlon did not meet the requirements of SOFE1s Early
Entrance Program in 1974 as he was not employed by a governmental
agency at that time.   When Scanlon applied for CFE designation in
1990, he met the tlemployed a governmental agencyt1
                          by                       requirement.
However, Scanlon was not entitled to CFE designation at that time
because he failed to meet SOFE1seducation requirements, and he was
not entitled to a waiver of the education requirements under the
Early Entrance Program, as it had been discontinued in June of
1975.
     Scanlon asserts that he is competent to do the work of a CFE
based on his education and past experience.   This allegation does
not, however, support a conclusion that a mutually explicit
understanding existed between himself and SOFE, giving rise to a
legitimate claim to CFE status.   Rather, the undisputed evidence
that he did not meet the requirements for CFE status in either 1974
or 1990 supports the conclusion that Scanlon's claim to a property
right in CFE status was merely a subjective expectancy.
        In either 1974 or 1990 Scanlon could have obtained CFE
designation by simply fulfilling SOFE1scertification requirements
in effect on the dates he applied. He failed to do that.   Even if
we were to accept Scanlonlscontention that being classified as a
Senior Examiner is a franchise or property right, the fact remains
that neither SOFE nor the State of Montana deprived Scanlon of his
Senior Examiner status; he still holds that designation. The point
to be made is that merely being classified as a Senior Examiner
was, without more, insufficient to meet the different requirements
for being classified as a CFE in 1974 and in 1990. As the District
Court correctly observed, ItScanlon1scompetence is not being
challenged. Rather, this case centers on the requirements SOFE has
adopted for certification and Scanlon's failure to meet those exact
requirements." We hold that the District Court correctly concluded
that Scanlon was not deprived of a constitutionally protected
property right or franchise.
     Scanlon raises other issues on appeal that are       premised
either on his contention that there were genuine issues of material
fact or that he was deprived of a constitutionally protected
property right in not being granted CFE certification.      Having
decided both of those issues against Scanlon, it is unnecessary
that we address his other arguments.
     AFFIRMED.
