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Full Opinion
NO. 93-365
IN THE SUPREME COURT OF THE STATE OF MONTANA
1994
ROGER HOLTMAN,
Plaintiff and Appellant,
-vs-
4-G's PLUMBING & HEATING, INC., .?R S-1$)4
a corporation,
Defendants and Respondents. &/ J&f BL
CLERKOFSLjPREME COURT
="A-E OF iMoi\iTANA
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable Douglas G. Harkin, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Charles 3. Tornabene; Patterson, Marsillo,
Tornabene, Schuyler & McKenna, Missoula, Montana
For Respondent:
Ronald A. Bender; Worden, Thane & Haines,
Missoula, Montana
Submitted on Briefs: December 16, 1993
Decided: April 5, 1994
Filed:
Justice Karla M. Gray delivered the Opinion of the Court.
Roger Holtman (Holtman) appeals from an order entered by the
Fourth Judicial District Court, Missoula County, granting summary
judgment in favor of 4-G's Plumbing and Heating, Inc. (4-G's
Plumbing). The court determined that dismissal with prejudice of
Holtman's counterclaim in a previous lawsuit barred his trespass,
invasion of privacy and asbestos contamination claims against 4-G's
Plumbing under the doctrines of res iudicata and collateral
estoppel. Holtman asserts error only in the court's application of
the doctrines to his asbestos contamination claim. Because all of
the elements of res iudicata and collateral estoppel are not met,
we reverse the court's grant of summary judgment in favor of 4-G's
Plumbing on that claim.
Holtman owned a condominium located in the Edgewater Townhouse
Complex in Missoula, Montana. In February of 1989, the Edgewater
Townhouse Homeowner's Association (the Association) authorized an
employee of 4-G's Plumbing to enter Holtman's condominium, in his
absence, to repair a leak and install a new heating system. When
Holtman returned to his condominium, he discovered a partially
installed heating system and alleged asbestos contamination.
Holtman refused to allow further installation of the system.
The Association filed a complaint seeking an injunction to
require the installation of the heating system. Holtman responded
by generally denying the Association's allegations. Nearly two
years later, Holtman filed a counterclaim without leave of court.
2
He alleged that the Association had deprived him of property
rights, invaded his privacy, and contaminated his condominium with
asbestos. In addition to other rulings, the court dismissed the
counterclaim with prejudice because the compulsory counterclaim was
not timely filed under Rule 13(a), M.R.Civ.P., and Holtman had
failed to obtain leave of court pursuant to Rule 13(f), M.R.Civ.P.
Both Holtman and the Association appealed. We affirmed the
dismissal of Holtman's counterclaim in Edgewater Townhouse v.
Holtman (1993), 256 Mont. 182, 845 P.2d 1224.
In January of 1992, Holtman filed the present action against
the Association and 4-G's Plumbing, asserting claims of invasion of
privacy, trespass, and asbestos contamination. The Association
moved for summary judgment, arguing that the claims were barred by
res iudicata. 4-G's Plumbing joined in the Association's motion
and filed a separate motion for summary judgment relying on both
res iudicata and collateral estoppel. The District Court granted
summary judgment for each defendant by separate order, dismissing
the claims against the Association under res iudicata and the
claims against 4-G's Plumbing under res iudicata and collateral
estoppel. Holtman appeals only from the summary adjudication in
favor of 4-G's Plumbing.
Our standard for reviewing a grant of summary judgment is the
same as that used by the district court. Emery v. Federated Foods
(Mont. 1993), 863 P.2d 426, 431, 50 St.Rep. 1454, 1456. Initially,
we determine whether there is an absence of genuine issues of
material fact. Minnie v. City of Roundup (1993), 257 Mont. 429,
3
431, 849 P.2d 212, 214. The party moving for summary judgment has
the initial burden of demonstrating a complete absence of any
genuine factual issues. D'Agostino v. Swanson (1990), 240 Mont.
435, 442, 784 P.2d 919, 924. In order to meet this burden, the
moving party must support its motion with an appropriate
evidentiary basis. Minnie, 849 P.2d at 214. The moving party may
draw from the pleadings, depositions, answers to interrogatories,
and admissions on file, together with any affidavits. Rule 56(c),
M.R.Civ.P.
Once an absence of genuine issues of material fact is
established, we determine whether the moving party is entitled to
judgment as a matter of law. Minnie, 849 P.2d at 214. Here, the
District Court concluded that 4-G's Plumbing was entitled to
summary judgment under the doctrines of res iudicata and collateral
estoppel. We do not defer to a district court's legal conclusions,
but determine whether they are correct. Steer, Inc. v. Dep't of
Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603.
Res Judicata
The doctrine of res iudicata is grounded on the principle that
litigation must at some point come to an end. Orlando v. Prewett
(1989) r 236 Mont. 478, 481, 771 P.2d 111, 113. It bars the
relitigation of an entire cause of action once a final judgment has
been entered. Marriage of Stout (1985), 216 Mont. 342, 349, 701
P.2d 729, 733. All of the following elements are necessary for yes
judicata to apply:
4
1) the parties or their privies must be the same:
2) the subject matter of the action must be the same:
3) the issues must be the same and relate to the same
subject matter; and
4) the capacities of the persons must be the same in
reference to the subject matter and to the issues.
Tisher v. Nor-west Capital Mgmt. (Mont. 1993), 859 P.2d 984, 987-88,
50 St.Rep. 960, 962.
Holtman asserts that his "asbestos contaminationl' claim
alleges negligent workmanship on the part of 4-G's Plumbing in the
installation of the heating system. Because his prior counterclaim
against the Association contained no such claim, he argues that
none of the elements of res iudicata is met. 4-G's Plumbing urges
application of the doctrine, asserting that the claims advanced in
the complaint do not contain an allegation of negligent
workmanship, but are identical to those raised in the prior
counterclaim.
Holtman's asbestos contamination claim reads as follows:
That said defendant, 4-G's Plumbing & Heating, Inc., in
the process of installing said hot water heating system
in Plaintiff's home, disturbed older plumbing pipes,
which were contaminated with asbestos, resulting in
asbestos contamination of Plaintiff's home and the
personal property contained therein.
This asbestos contamination claim--as alleged--is hardly a model of
clarity. However, 4-G's Plumbing did not move for summary judgment
on the basis of a failure to state a claim upon which relief could
be granted or challenge the claim as alleged in any other way. We
decline to rule on an issue that was not presented to the District
Court. Goodover v. Lindey's, Inc. (1992), 255 Mont. 430, 441, 843
5
P.2d 765, 772. Thus, we address the applicability of res iudicata
to Holtman's asbestos contamination claim to the extent that claim
is read to allege negligent workmanship by 4-G's Plumbing in the
installation of the heating system.
The "parties or their privies" element of res iudicata is
dispositive here. It is undisputed that 4-G's Plumbing was not a
party to the prior litigation. The District Court determined,
however, that 4-G's Plumbing and the Association were privies
because they "acted in concert."
We previously have focused on whether a defendant's legal
right or interest has been represented by the previous litigant to
determine whether the two are privies. As we stated in Brault v.
Smith (1984), 209 Mont. 21, 27, 679 P.2d 236, 239, the concept of
a "privy" in the context of a judgment applies to one whose
interest has been legally represented at trial. We have similarly
defined privies as those who are so connected in estate or in blood
or in law as to be identified with the same interest and,
consequently, affected with each other by litigation. Tisher, 859
P.2d at 988.
As the party moving for summary judgment, 4-G's Plumbing had
the initial burden of demonstrating the absence of a genuine issue
of material fact and entitlement to judgment as a matter of law on
the privity element. 4-G's Plumbing did not file an answer to
Holtman's complaint; nor did it submit any depositions, answers to
interrogatories, admissions or affidavits to support its motion for
summary judgment. Thus, it did not provide any evidentiary basis
6
for summary adjudication.
By joining the Association's motion for summary judgment,
however, 4-G's Plumbing ostensibly adopted the Association's
evidentiary basis for summary judgment, including copies of the
prior counterclaim, the order striking it with prejudice, and the
findings and rulings contained in the court file relating to the
previous litigation. Therefore, we focus on whether these
materials form a sufficient basis for summary judgment on the issue
of privity--a shared legal interest--between the Association and 4-
G's Plumbing on the asbestos contamination claim.
The materials indicate that the Association hired 4-G's
Plumbing and allowed its employee into the condominium to install
the heating system, supporting the District Court's determination
that the two "acted in concert" in entering the condominium. This
mutual conduct in entering the condominium, however, does not
establish that the Association shared a legal interest with 4-G's
Plumbing with regard to its workmanship in the installation of the
heating system. Thus, the court's conclusion that the Association
and 4-G's Plumbing are privies, in the context of the asbestos
contamination claim, is incorrect.
4-G's Plumbing attempts to establish a shared legal interest
in the asbestos contamination claim to the extent that claim
alleges negligent workmanship by arguing that it acted as an agent
of the Association in installing the heating system. An agency
relationship would exist if the Association controlled or had the
right to control the physical conduct of 4-G's Plumbing in the
7
installation of the heating system. See Eccleston v. Third Jud.
Dist. Ct. (1989), 240 Mont. 44, 51-52, 783 P.2d 363, 368, quoting
Restatement (Second) of Agency, 5 2. Nothing in the record of the
prior litigation or the present case establishes such a right of
control. We conclude that the materials relied on by 4-G's
Plumbing to support summary adjudication do not establish that it
was a privy of the Association with regard to the asbestos
contamination claim.
4-G's Plumbing advances two other arguments, loosely tied to
the doctrine of res iudicata, to bar Holtman's asbestos
contamination claim. Based on its assertion that Holtman could
have raised the claim in the prior proceeding, 4-G's Plumbing
argues that he is barred by the doctrine from doing so here.
It is true that res iudicata precludes claims that could have
been raised in the prior lawsuit as well as those actually
adjudicated. Beck v. Flathead County (1989), 240 Mont. 128, 133,
783 P.2d 383, 386; Orlando v. Prewett (1989), 236 Mont. 478, 481,
771 P.2d 111, 113. The preclusive effect of res iudicata, however,
applies only to claims raised in subsequent lawsuits between the
parties in the original action or their privies, reflecting the
"parties or their privies" element of the doctrine. &.&, 783 P.2d
at 386; Orlando, 771 P.2d at 113. Thus, res iudicata's preclusive
effect as to claims not actually litigated does not apply to the
case before us.
Finally, 4-G's Plumbing asserts that Rule 12(b), M.R.Civ.P.,
required Holtman to assert his claims against it in the prior
8
litigation. Rule 12(b), M.R.Civ.P., requires that every defense to
a claim, counterclaim or third-party claim be raised in the
responsive pleading. Holtman's claims against 4-G's Plumbing were
not a defense to the claims asserted by the Association in the
prior litigation. Thus, he was not required by Rule 12(b),
M.R.Civ.P., to file his claims against 4-G's Plumbing in that
action.
4-G's Plumbing has not demonstrated that the "parties or their
privies" element of res iudicata is met. We hold that the District
Court erred in applying res iudicata to bar Holtman's asbestos
contamination claim against 4-G's Plumbing.
Collateral Estoppel
Again focusing entirely on the asbestos contamination claim,
Holtman asserts that the District Court erred in concluding that 4-
G's Plumbing was entitled to summary judgment under the doctrine of
collateral estoppel. He contends that collateral estoppel does not
bar the claim because the issue of 4-G's Plumbing's negligence was
not raised in his prior counterclaim.
Collateral estoppel, sometimes referred to as issue
preclusion, is a form of res iudicata. While res iudicata bars
parties from relitigating claims in subsequent proceedings based on
the same cause of action, collateral estoppel bars the reopening of
an issue in a second cause of action that has been litigated and
determined in a prior suit. Linder v. Missoula County (1992), 251
Mont. 292, 294, 824 P.2d 1004, 1005. The doctrine has three
9
elements:
1) the identical issue raised has been previously decided
in a prior adjudication:
2) a final judgment on the merits was issued in the prior
adjudication: and
3) the party against whom the plea is now asserted was a
party or in privity with a party to the prior
adjudication.
State v. Young (1993), 259 Mont. 371, 377, 856 P.2d 961, 965. Our
analysis need not proceed beyond the first element.
Identity of issues is the most crucial element of collateral
estoppel. Anderson v. State (1991), 250 Mont. 18, 21, 817 P.2d
699, 702. In order to satisfy this element, the identical issue or
"precise question" must have been litigated in the prior action.
Anderson, 817 P.2d at 702. To determine whether the issue raised
is identical, we compare the pleadings, evidence and circumstances
surrounding the two actions. Aetna Life Ins. Co. v. McElvain
(1986), 221 Mont. 138, 146, 717 P.2d 1081, 1086. We note that we
have only the asbestos-related allegations to examine from the
previous litigation since Holtman's counterclaim was dismissed on
legal grounds prior to the receipt of any evidence on the claim.
It is true that Holtman's prior counterclaim against the
Association arose from the same events as his claim against 4-G's
Plumbing and, like his present claim, sought damages for the
alleged asbestos contamination. Holtman's asbestos-related
contamination claim against the Association in the prior litigation
was as follows:
[The Association] did, without the knowledge or consent
of [Holtman], terminate the heating service to
10
[Holtman's] unit sometime between March, 1988 and
February 5, 1989, which resulted in certain waterlines
freezing, breaking and creating water leaks in
[Holtman's] unit and subsequently therewith caused the
asbestos covering of certain pipes to be removed and
generally distributed throughout the unit, all of which
rendered [Holtman's] unit damaged, unsafe and
uninhabitable.
When this claim is compared to Holtman's asbestos contamination
claim against 4-G's Plumbing set forth above, it is clear that the
identical issue, or precise question, raised in the present case
was not raised and decided in the earlier litigation involving the
Association.
Holtman's prior asbestos-related claim can be read as alleging
an intentional wrongful act by the Association--the unauthorized
termination of heat to the condominium--followed by all the damage
that flowed therefrom, including broken waterlines and asbestos
disturbance and distribution. To the extent the prior claim is
read in this fashion, it is clear that the issue of the alleged
negligence of 4-G's Plumbing in the present case is not identical.
Furthermore, to the extent the prior asbestos-related claim is
read as an allegation of negligence against the Association
resulting in asbestos contamination, that claim did not raise the
issue of 4-G's Plumbing's negligent workmanship in the installation
of the new heating system. A negligence action is premised, first,
on the existence of a duty. Nautilus Ins. v. First National Ins.
(1992) I 254 Mont. 296, 299, 837 P.2d 409, 411. 4-G's Plumbing has
not established that its legal duties to Holtman in installing the
new heating system were co-extensive with the duties owed him by
the Association.
11
We conclude that the "identical issue" element of collateral
estoppel is not met under the circumstances before us. Therefore,
we hold that the District Court erred in concluding that Holtman is
collaterally estopped from asserting the asbestos contamination
claim and in granting summary judgment in favor of 4-G's Plumbing
on that claim.
Reversed and remanded for further proceedings consistent with
this opinion. ! ^
We concur:
12
April 5, 1994
CERTIPICATEOF SERVICE
I herebycertify that the following certified order was sentby United Statesmail, prepaid,to the
following named:
CharlesJ. Tornabene
Patterson,Marsillo, Tomabene,
Schuyler McKenna
&
103 So. 5th East
Missoula,MT 59801
RonaldA. Bender,Esq.
Worden,Thane& Haines,P.C.
P.O. Box 4747
Missoula,MT 59806
JohnR. Gordon,Esq.
Reep,Spoon& Gordon, P.C.
P.O. Box 9019
Missoula,MT 59807-9019
ED SMITH
CLERK OF THE SUPREMECOURT