                              NO.    89-415

            IN THE SUPREME COURT OF THE STATE OF MONTANA
                                    1990


JOSEPHINE M. DIEMERT,
                 Petitioner and Appellant,
     -vs-
STATE OF MONTANA, DEPARTMENT OF LABOR
AND INDUSTRY, and MONTANA DEACONESS
MEDICAL CENTER, a Montana corp.,
                 Respondent and Respondent.




APPEAL FROM:     District Court of the Eighth Judicial District,
                 In and for the County of Cascade ,
                 The Honorable Thomas M. McKittrick, Judge presiding.


COUNSEL OF RECORD:
            For Appellant:
                 Daniel Donovan, Great Falls, Montana
                 Lawrence A. Anderson, Great Falls, Montana

            For Respondent:
                David A. Scott, Dept. of Labor & Industry, Helena,
                Montana
                Neil E. Ugrin and Nancy P. Cory, Great Falls,
                Montana



                                Submitted on Briefs:   Jan. 11, 1990
                                                       March 20, 1990
Filed:



                                Clerk
Justice Fred J. Weber delivered the Opinion of the Court.

     Appellant, Josephine Diemert, filed a petition for judicial
review of an unemployment claim she had against the Department of
Labor and Industry (flDLIff) the Montana Deaconess Medical Center
                          and
(wDeaconessff),in the ~istrict Court for the Eighth Judicial
~istrict, Cascade County.      On December 12, 1986, DL1 moved to
dismiss the petition for judicial review based on failure to
prosecute, pursuant to Rule 4l(b),M.R.Civ.P.
     On December 17, 1986, the District Court issued an order
setting a hearing for the motion to dismiss and scheduled it for
January 29, 1987.     On December 31, 1986, DL1 withdrew its motion
to dismiss.   Nonetheless, the District Court entered an Order of
Dismissal on January 6, 1987.     However, neither party was served
with notice of the order and consequently proceeded as though the
matter was pending.    Diemert appeals.    We reverse.
     The sole issue for our review is whether the District Court
erred in dismissing the case?
     This action initially arose as a wrongful discharge action
after appellant was fired from her job at Deaconess for allegedly
slapping a patient.     She was also denied unemployment benefits.
She filed her complaint on October 24, 1985. On December 12, 1986,
DL1 moved to dismiss for failure to prosecute, pursuant to Rule
41(b), M.R.c~v.P.     On December 31, 1986, DL1 withdrew its motion
to dismiss based on an agreement between counsel for appellant and
Deaconess that this claim would       be    held   in    abeyance until
                                  2
resolution of a companion case.   However, on January 6, 1987, the
District Court entered an Order of Dismissal.    Neither party was
served with notice of the dismissal.    Then, on January 13, 1988,
the District Court, ignoring its own Order of Dismissal, held a
hearing regarding disputed discovery.   Both parties proceeded with
discovery unaware of the purported dismissal.     Finally, in May,
1989, counsel for respondent discovered the Order of Dismissal
while reviewing the District Court file. Appellant then moved for
relief from the January 6, 1987, order pursuant to Rule 60,
M.R.Civ.P.
     The court ordered a hearing to be held on appellant's motion
on June 29, 1989.   The hearing date was postponed until July 27,
and then until September 14. However, the hearing was never held,
and the District Court did not act on the motion.   The motion was
deemed denied under Rule 60(c).   Appellant filed this appeal from
the District Court's dismissal.
     In it's December 12, 1986, motion to dismiss for failure to
prosecute, DL1 relied on Rule 41(b), M.R.Civ.P., which states:
     For failure of the plaintiff to prosecute or to comply
     with these rules or any order of court, a defendant may
     move for dismissal of an action or of any claim against
     him.    ...
Rule 41(b) further provides that unless otherwise specified, a
dismissal under this subsection operates as an adjudication upon
the merits.   DL1 maintained that appellant had taken no action to
move the case forward since October 24, 1985.    Deaconess did not
join in DL1 Is motion.
     We first point out that Rule 41(b) provides the District Court
no basis for a discretionary dismissal after the motion to dismiss
had been withdrawn.     Thus, since DL1 withdrew it's motion one week
before the District Court's purported Order of Dismissal, the
dismissal was not authorized under Rule 41(b).        We have reviewed
the record and found no other basis for dismissal.
        Under Rule 60(b), M.R.Civ.P., the District Court may relieve
a party     or his legal representative from a         final order or
proceeding     for mistake or inadvertence, or any other reason
justifying relief from the operation of the order.            Deaconess
maintains that appellant's motion to vacate the dismissal was not
timely made, and thus the dismissal was proper. We disagree. Rule
60(b) sets forth specific time periods in which a motion shall be
made.     In this case none of the time periods were met.     However,
the last sentence of Rule 60(b) is controlling here.
        Rule 60(b) provides:
        The motion shall be made within a reasonable time . . .
        and for [mistake, inadvertence, surprise, or excusable
        neglect] when a defendant has been personally served,
        whether in lieu of publication or not, not more than 60
        days after the judgment, order or proceeding was entered
        or taken. . .  This rule does not limit the power of a
        court to entertain an independent action to relieve a
        party from a judgment, order, or proceeding, or to srant
        relief to a defendant not actually personally notified
        as may be reauired by law     ... (emphasis added).
First of all, appellant was not notified of the January 6, 1987,
order.     In fact, both parties proceeded with the case as if DLI1s
motion had been denied.        The District Court even held a discovery
hearing in January, 1988, one year after its purported dismissal.
When counsel for Deaconess discovered the purported Order of
Dismissal in the trial court file in May of 1989, appellant,
pursuant to Rule 60, moved for relief within 30 days from the date
of such discovery.
     We conclude that the District Court's Order of Dismissal
pursuant to Rule 41(b) was either a mistake or inadvertent as
contemplated by Rule 60(b), and that the appellant was not actually
personally notified, so she was entitled to relief under that rule.
We hold that the District Court erroneously refused to set aside
the Order of Dismissal.     We therefore set aside the Order of
Dismissal and remand this case for further proceedings consistent
with this opinion.




We Concur:    /'


i/    thief Justice




          Justices
