                                   NO.    94-371
                 IN THE SUPREME COURT OF THE STATE OF MONTANA
                                         1995


RUTH L. LOCKWOOD, Individually and
as Personal Representative of the
Estate of DARRELL w. LOCKWOOD,
                 Plaintiff and Appellant,
         -vs -
W. R. GRACE & COMPANY,
                 Defendant and Respondent.




APPEAL FROM:          District Court of the Nineteenth Judicial District,
                      In and for the County of Lincoln,
                      The Honorable Robert S. Keller, Judge presiding.


COUNSEL OF RECORD:
                 For Appellant:
                      Tom L. Lewis, Attorney at Law, Great Falls,
                      Montana

                 For Respondent:
                      Gary L. Graham; Garlington, Lohn & Robinson,
                      Missoula, Montana



                                   Submitted on Briefs:       January 26, 1995
                                                   Decided:   August 3, 1995
Filed:
Justice Karla M. Gray delivered the Opinion of the Court.


         Ruth Lockwood appeals from orders of the Nineteenth Judicial
District Court, Lincoln County, granting W. R. Grace & Company's
motion to dismiss her complaint with prejudice and denying her
motion to alter or amend the judgment.      We affirm in part, reverse
in part and remand.
         We restate the issues on appeal as follows:
         1 . Did the District Court err in concluding that Gidley
         v. W. R. Grace & Co. does not permit Lockwood to escape
         the exclusivity of the Occupational Disease Act of
         Montana?
         2 . Did the District Court err in granting Grace's motion
         to dismiss and in denying Lockwood's motion to alter or
         amend?
         Darrell Lockwood (Darrell) worked for W. R. Grace & Company
(Grace)     in its vermiculite mine and    mill   for approximately ten
years until he retired in 1984.      Six years later, he was diagnosed
with mesothelioma, an asbestos-specific cancer of the lining of the
lungs.     Darrell died in 1991.   Ruth Lockwood (Lockwood), Darrell's
widow,     submitted a claim for beneficiaries' occupational disease
benefits with Crawford & Company (Crawford), the adjuster for
Grace's      Occupational   Disease Act of Montana      (MODA)   insurer.
Crawford denied the claim on the basis that the three-year statute
of limitations contained in § 39-72-403, MCA (1983), had run.
Lockwood did not formally file a claim or petition for MODA
benefits after Crawford's denial.
     Lockwood filed survival and wrongful death actions against

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Grace.     Grace moved to dismiss Lockwood's complaint.           It asserted
that,    taking Lockwood's allegations as true, her complaint stated
an occupational disease    claim   for which compensation under the MODA
was the exclusive remedy pursuant to 5 39-72-305,                 MCA (1983).
After full briefing and oral argument, the District Court granted
Grace's motion to dismiss.         The court concluded that Gidley v. W.
R. Grace & Co. (1986), 221Mont. 36, 717 P.2d 21, does not preserve
Lockwood's common law actions and thereby allow her to avoid MODA
exclusivity.
        Lockwood subsequently moved to alter or amend the judgment
pursuant to Rules 52(b) and 59(g), M.R.Civ.P.              The District Court
denied the motion,       concluding        that    Lockwood's   complaint was
insufficient to avoid MODA exclusivity via allegations that Grace
committed an intentional tort.         Lockwood appeals.
        1. Did the District Court err in concluding that Gidlev
        v. W. R. Grace & Co. does not permit Lockwood to escape
        the exclusivity of the Occupational Disease Act of
        Montana?
        The MODA generally provides for compensation by an employer to
an employee disabled by reason of occupational disease arising out
of the course of employment.         See, e.q., §§ 39-72-302 and 39-72-
401, MCA.      It applies to all employers and employees subject to
Montana's Workers' Compensation Act.              Section 39-72-301, MCA. The
MODA statutes in effect on an employee's last day of work govern
resolution of an occupational disease claim.              Gidlev, 717 P.2d at
22.      Because Darrell's last day of employment with Grace was in
1984,    the 1983 version of the MODA is applicable here.

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      Section 39-72-305(l), MCA (1983), provides that the right to
recover      compensation       for an         employment-related       occupational
disease, whether resulting in death or not, is the exclusive remedy
against a properly insured employer.               In granting Grace's motion to
dismiss,     the District Court concluded that Lockwood's claim "is
governed exclusively by the Occupational Disease Act."
      Lockwood argues that, under Gidlev, her causes of action are
not barred by the MODA           exclusivity provision.             Her reliance on
Gidley is misplaced.
      The sole issue on appeal in Gidlev was whether the MODA
constituted the exclusive remedy for the widow of a deceased Grace
employee's      cancer-related     death       where   the    occupational    disease
allegedly was not discovered until after the MODA statute of
limitations had run.           The 1977 MODA statutes were applicable and
our resolution of the issue turned on the proper interpretation of
§§ 92-1308 and 92-1331, R.C.M. (1977).                     Section 92-1308, R.C.M.
(197-J),    provided that the MODA was the exclusive remedy for
employment-related        occupational         diseases      "against the employer
electing to be bound by and subject to this act . . . ;" § 92-1331,
R.C.M.     (197-l),   barred   common   law      actions     for   employment-related
occupational      diseases "excepting for those employees not eligible
for compensation under           the terms of this act,              or who reject
coverage of this act. . I'               Gidlev, 717 P.2d at 22.
      Concluding that the two statutes were at least ambiguous, if
not contradictory, we looked to the legislative history of the MODA


                                           4
and to § 92-1368, R.C.M., which provided that the MODA was to be
liberally    construed.   Gidlev, 717 P.2d at 23.     Applying the MODA
statutes to the facts, we determined that the deceased employee's
occupational disease claim was barred by the MODA statute of
limitations and, therefore, that the employee was "not eligible for
compensation"    under the MODA.     On that basis,   we held that the
common law right of action was preserved under 5 92-1331, R.C.M.

(19771, and that the MODA did not constitute the widow's exclusive
remedy.     Gidley, 717 P.2d at 23-24.
     Our decision in Gidley was dependent upon the ambiguous and
contradictory statutes at issue there.         Section 92-1331, R.C.M.
(1977) I was repealed in 1979.     Section 92-1308,   R.C.M. (1977), was
amended in 1979 and recodified as 5 39-72-305, MCA, which in the
version applicable here states only that the MODA is the exclusive
remedy against a properly insured employer for an occupational
disease arising from employment.        See § 39-72-305(l), MCA (1983).
Thus, while Gidlev and the present case share factual        similarities,

Gidlev has no application here and does not support Lockwood's
argument that her causes of action are preserved and are not barred
by § 39-72-305(l), MCA (1983).
     We hold that the District Court did not err in concluding that
Gidlev neither preserves Lockwood's common law actions nor permits
her to escape the exclusivity of the Occupational Disease Act of
Montana.    Issues relating solely to whether Lockwood's MODA claim
is barred by the applicable statute of limitations are not properly


                                    5
before us in this action and must await resolution in the event
Lockwood litigates a MODA claim.


        2 . Did the District Court err in granting Grace's motion
        to dismiss and in denying Lockwood's motion to alter or
        amend?
        Grace premised its motion to dismiss on the exclusivity of the
MODA remedy.           Lockwood's opposition to the motion largely tracked
Grace's       arguments, although she presented the allegations of her
complaint       at    some   length.    The District Court granted Grace's
motion        and     dismissed     Lockwood's    complaint    with   prejudice,
concluding that Lockwood's claim is governed exclusively by the
MODA.
        Lockwood subsequently moved the court to alter or amend its
order    of     dismissal.        She argued,    in pertinent part,     that her
complaint alleges facts bringing the action within the "intentional
and active           injurious    conduct"   exception   to   exclusivity.   The
District Court denied Lockwood's motion on the basis that the
allegations in her complaint were insufficient to avoid exclusivity
as a matter of law.
        Our standard in reviewing a district court's ruling on a
motion to dismiss under Rule 12(b) (6), M.R.Civ.P., is clear:
              "A complaint should not be dismissed for failure to
        state a claim unless it appears beyond doubt that the
        plaintiff can prove no set of facts in support of his
        claim which would entitle him to relief.      A motion to
        dismiss under Rule 12(b) (6), M.R.Civ.P., has the effect
        of admitting     all well-pleaded   allegations in the
        complaint.   In considering the motion, the complaint is
        construed in the light most favorable to the plaintiff,

                                             6
       and all allegations of fact contained therein are taken
       as true."
Boreen v. Christensen (1994), 267 Mont. 405, 408, 884 P.2d 761, 762
(citation omitted).     The determination that a complaint fails to
state a claim upon which relief can be granted is a conclusion of
law.   We review a district court's conclusions of law to determine
whether the court's interpretation of the law is correct.          Boreen,
884 P.2d at 762 (citation omitted).
       Prior to scrutinizing the allegations at issue here, it will
be helpful to review our recent cases holding that, in limited
circumstances     involving   intentional    harm,   exclusivity   can be
avoided.     In Great Western Sugar Co. v. District Court (1980), 188
Mont. 1, 7,     610 P.2d 717, 720, we explained that the intentional
harm which creates the exception to exclusivity is harm which the
employer "maliciously and specifically directed at an employee, or
class of employeeL, out of which such specific intentional harm
the employee receives injuries as a proximate result."               Great
Western,   610 P.2d at 720.    Incidents resulting in employee injury
which involve any lesser degree of intent to harm not directed
specifically at the injured employee cannot provide a basis for
recovery against the employer.          Great Western,   610 P.Zd at 720.
Because only negligence, albeit wanton or malicious negligence, was
alleged in Great Western, we held that the Workers' Compensation
Act provided the plaintiff's exclusive remedy against the employer
and that the complaint must be dismissed.        Great Western, 610 P.2d
at 719-20.

                                    7
        We revisited the Great Western principles in a summary
judgment context in Noonan v. Spring Creek Forest Products (1985),
216 Mont. 221, 700 P.2d 623.             There,   the employee alleged an
intentional tort against the employer.            Relying on Great Western,
the district court concluded that no genuine issues of material
fact existed regarding whether the harm suffered was maliciously
and specifically directed at the plaintiff.            Noonan,   700 P.2d at
624.     Prior to addressing the summary judgment issues, we observed
that,     unlike the plaintiff in Great Western, Noonan          had included
sufficient allegations in his complaint which, if proved, would
remove the cause of action from the exclusivity provision of the
Workers' Compensation Act.       Noonan,    700 P.2d at 625.
        In opposition to the employer's motion for summary judgment,
Noonan     submitted his own affidavit and deposition, setting forth
facts that the machine with which he was required to work was known
by the employer to be broken and that the employer knew the machine
violated     OSHA regulations.        We    determined that       the   facts
established that the employer operated a hazardous and dangerous
workplace; we concluded, however, that these facts could not be
interpreted to mean that harm was specifically directed at Noonan.
Noonan, 700 P.2d at 626.
        In our recent decision in Blythe v. Radiometer America, Inc.

(1993),    262 Mont. 464, 866 P.2d 218, we addressed the intentional
harm exception to exclusivity in the context of the dismissal of a
complaint.       There, we   evaluated     Blythe's   allegation that his


                                     8
employer knew of the defective and hazardous character of the
medical devices he and other employees were required to use on the
job.      Blvthe,   866 P.2d at 222.      Analogizing closely to the
situation presented in Noonan,    we concluded that the plaintiff had
failed to allege sufficient malicious and specific intent to harm
him to survive a motion to dismiss pursuant to the exclusivity
provision of the Workers' Compensation Act.       Blvthe,   866 P.2d at
225.
        Against this backdrop, we       scrutinize the allegations in
Lockwood's     complaint   which the District Court determined were
insufficient to escape MODA exclusivity as a matter of law. We
take the allegations as true and address whether it appears beyond
doubt that Lockwood can prove no set of facts in support of her
claim which would entitle her to relief.       See Boreen, 884 P.2d at
'762.
        Lockwood alleges, among other things, that: (1) Grace knew or
had reason to know that extended inhalation or continuous ingestion
of vermiculite and asbestos particles created a high degree of risk
or harm to Darrell; (2) Grace willfully and deliberately concealed
its knowledge from Darrell and his co-employees; (3) Grace failed
to provide protective equipment sufficient to avoid the danger; (4)
Grace advised Darrell and other employees that it was safe to work
continuously in      close proximity to vermiculite      and   asbestos
particles;    and (5) Grace's acts and omissions proximately caused
Darrell's mesothelioma and, ultimately, his death.


                                    9
      In addressing whether Lockwood's allegations are sufficient to
withstand Grace's motion to dismiss,           we focus primarily on the
first allegation listed above to determine its similarity to, or
difference from, those we found insufficient to avoid exclusivity
in our earlier cases.        The pertinent portion of the allegation is
stated as follows in Lockwood's complaint:            "Although   defendants
knew or had ample reason to know that the defendants' acts or
omissions created a hish desree of risk or harm to [Darrell]. . .
 II   (Emphasis added.)        Phrased in the alternative in several
places,    this allegation properly can be read in a number of
different ways.       Under Boreen,   we must construe the allegations
liberally in Lockwood's favor in the context of a motion to
dismiss.     See Boreen,    884 P.2d at 762.
      We begin by reading the allegation as one that the defendants
"had ample reason to know"       that their acts or omissions created a
high degree of risk or harm to Darrell.              This portion of the
alternatively pled knowledge element alleges a lesser degree of
knowledge than the facts involved, and rejected as insufficient to
constitute intentional harm, in Noonan and Blvthe.          In Noonan, the
employer knew of the broken planer, knew that it violated OSBA
standards, and knew of previous accidents on the planer.              Noonan,
700 P.2d at 624. Similarly, in Blvthe, the employer was alleged to
know of the defective and hazardous nature of the equipment.
Blvthe, 866 P.2d at 224.       In neither case was the actual knowledge
sufficient    to   avoid   exclusivity.    Thus,   under our cases,     it is


                                      10
clear that an allegation of less than actual knowledge, such as the

"had ample reason to know"    portion   of   Lockwood's   allegation,   is
insufficient as a matter of law to serve as the basis for avoiding

MODA exclusivity.

     Having excluded "had ample reason to know" from the allegation

on which we are focusing, we are left with an allegation that the

defendants knew their acts or omissions created a high degree of

risk or harm to Darrell.     The first alternative reading of the

allegation is that Grace knew its acts created a high degree of

risk to Darrell; the second is that Grace knew its acts created a

high degree of harm to Darrell.

     Applying these alternative readings to our earlier cases, it

is clear that the first reading of the allegation is substantially

similar to those involved in Noonan and Blvthe.           With regard to

Noonan,   the allegation that Grace knew its acts created a high

degree of risk can be read to correspond to the knowing operation

of a hazardous and unsafe workplace which we concluded did not

constitute intentional harm directed at the claimant.        See Noonan,

700 P.2d at 625-26.      That allegation also corresponds to the

allegation in Blvthe that the employer knew of the defective and

hazardous nature of the equipment it required its employees to use,

but which we rejected as insufficient to meet the "intentional

harm" requirement for avoiding exclusivity.       See Blvthe, 866 P.2d

at 224.     In Noonan,   Blvthe,   and this    reading    of Lockwood's

allegation, the allegation is essentially one of knowledge of risk


                                   11
of harm.
        The alternative reading of Lockwood's allegation--that Grace
knew its acts created a high degree of harm to Darrell--differs
significantly from a mere allegation of known risk.            This reading
of the allegation,      particularly when taken together with the
allegations of active concealment of this knowledge and affirmative
advice to Darrell and other employees that continuous exposure to
vermiculite and asbestos dust was safe, meets the requirement that
a plaintiff allege "the presence of intentional harm which his
employer maliciously and specifically directed at him . . . .'I           See
Blvthe, 866 P.2d at 221 (emphasis added).
        These allegations are not mere allegations of intentional
acts,    omissions or conduct in the traditional tort context.           Nor,
of    course, are they allegations of any desire by Grace to harm its
employees. As Professor Larson cautions, intent to injure does not
mean desire to injure; it means that the employer intended that the
employee should undergo the injury--the exposure to the harm--of
which the employer knew on a daily basis.          2A,    Larson's   Worker's
Comoensation    Law, 5 68.15(e), at 13-107.        This    constitutes    the
allegation of      intentional harm specifically and maliciously
directed at an employee.
        Indeed, our conclusion here is foreshadowed by our reference

to,     and discussion of,   People v.   O'Neil   (Ill.   App. lPPO),    550
N.E.2d 1090, cert. denied, 553 N.E.2d 400 (1990) (commonly referred
to as Film Recoverv), in Blvthe.         In Film Recoverv, an employee


                                    12
died after inhaling harmful fumes released in the course of the
employer's     manufacturing   process;   the employer knew that his
employees    were   inhaling the harmful fumes and concealed his
knowledge of the harm from the employees.          We indicated that
Professor Larson cited Film Recovery with approval as a case
involving facts constituting an intentional tort sufficient to
avoid exclusivity.     Blvthe, 866 P.2d at 223.
     The distinguishing factor between Film Recoverv and cases such
as Blvthe is the employer's alleged knowledge that the employee is
being injured, in the former, versus the employer's exposing the
employee to risk of harm without certain knowledge that the
employee is being or will be harmed, in the latter.       See Blvthe,
866 P.2d at 223.     Under this analysis, it is clear that Lockwood's
allegation that Grace knew its acts created harm to Darrell meets
both Professor Larson's definition of "intent to harm" and that of
this Court in Blvthe.
     Grace argues that Film Recover-v is inapplicable here because
it is a criminal case involving neither an intentional tort nor
exclusivity under legislation such as the MODA.        While   Grace's
characterization of Film Recovery is correct, its argument misses
the point.     We do not rely on Film Recoverv as precedent for our
determination that Lockwood's allegations are sufficient to avoid
exclusivity.     Rather, we address it only to indicate the type of
facts which will support an intentional tort sufficient to avoid
exclusivity and which must be alleged in a complaint to withstand


                                    13
a motion to dismiss.
     While     the   allegations of   Lockwood's   complaint   are   not
particularly artful with regard to the intent to harm, they do
include an allegation of "intentional harm" as we defined that       term

in Great Western, Noonan, and Blvthe.        Taking the allegations as
true and construing them in a light most favorable to Lockwood, we
conclude     that    the   allegations of   Lockwood's   complaint   are
sufficient to avoid MODA exclusivity and withstand a motion to
dismiss.     Therefore,    we hold that the District Court erred in
granting Grace's motion to dismiss and, for that reason, abused its
discretion in denying Lockwood's motion to alter or amend.
     Affirmed in part, reversed in part and remanded for further
proceedings consistent with this opinion.




We concur:
Justice Fred J. Weber dissents as follows:


     I dissent from the opinion's        holding on issue 2 that the
District Court erred in granting Grace's motion to dismiss.           The
key analysis is the interpretation of the following allegation in

Lockwood's    complaint:

     Althoush defendants knew of or had ample reason to know
     that the defendants' acts or omissions created a high
     degree of risk or harm to [Darrell] . .       (Emphasis
     supplied.)

The opinion first analyzes the allegation by reading it as stating

that the defendants had ample reason to know their acts or

omissions created a high degree of risk or harm.            The   opinion
concludes that such an allegation must be rejected as insufficient

to constitute "intentional harm" under Noonan       and Blythe.     As a

result,     the opinion concludes that the allegation of less than

actual knowledge such as an allegation that the defendants "had

ample reason to know" is insufficient as a matter of law to serve

as the basis for avoiding exclusivity.      I agree with that analysis.

     As a result,     I    am unable to agree with the balance of the

analysis.     The opinion excludes the phrase "had     ample reason to

know" from the analysis and considers whether an allegation that

the defendants knew that the defendants' acts or omissions created

a high degree of risk or harm is sufficient.       That analysis would

be appropriate if the alternatives had been alleged in different
paragraphs or even in different sentences.       However,   I do not see

how it can be applied here.        In a single sentence, the plaintiff

alleged that the defendants knew or had ample reason to know--that

alternative allegation can be met by proving the defendants had


                                    15
ample reason to know.        I conclude it is not a positive allegation

of sufficient knowledge on the part of the defendants.          I conclude
that,   as in Noonan and Blythe, the allegations are not sufficient
to demonstrate actual knowledge sufficient to avoid exclusivity.

        I would,   therefore,   affirm the conclusion of the District

Court that the complaint did not contain sufficient allegations of

an   intentional     tort,   and   its   reliance on   Blythe    for   that

conclusion.




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