Boyd v. First Interstate Bank of Kalispell, N.A.
| Decision Date | 28 May 1992 |
| Docket Number | No. 91-500,91-500 |
| Citation | 833 P.2d 149,253 Mont. 214 |
| Parties | Steven G. BOYD and Jerri Boyd, husband and wife, and Montana Medical Oxygen and Supply, Inc., a Montana corporation, Plaintiffs and Appellants, v. FIRST INTERSTATE BANK OF KALISPELL, N.A., a National Banking Association, Defendant, Third-Party Plaintiff and Respondent, v. STATE MEDICAL OXYGEN AND SUPPLY, INC., Larry R. Williams, Mark C. Hungerford, Brian R. Cloutier, Stephen Kasprisin, and Roger Boyd, Third-Party Defendants and Respondents. |
| Court | Montana Supreme Court |
Jon R. Binney and Lon J. Dale, Milodragovich, Dale & Dye, Missoula, for appellants.
Debra D. Parker, Murphy, Robinson, Heckathorn & Phillips, Kalispell, Dexter L. Delaney and Palmer Mars Scott, Mulroney, Delaney & Scott, Missoula, for respondents.
Plaintiffs/appellants Boyds brought suit against defendant/respondent bank based on the deposit of certain negotiable instruments between November 1983 and February 1985. Respondent then brought State Medical into the action by way of a third-party complaint, alleging entitlement to indemnification for any damages which might be awarded in the action. Specifically, the appellants brought suit for statutory conversion under the Uniform Commercial Code pursuant to Sec. 30-3-419, MCA (1989). The present action was stayed by the District Court pending resolution of related litigation arising out of the same events which were the basis for the present action. Following a jury verdict, this Court affirmed the decision in the related litigation. The District Court then lifted the stay in this case and granted summary judgment for the respondent bank on the grounds that the jury verdict in the related action collaterally estopped appellants' action against the respondent. Appellants brought this appeal arguing that collateral estoppel does not apply in this situation and that summary judgment was incorrectly granted to the respondent. We affirm.
The only issue before this Court is whether the District Court erred in granting summary judgment to the respondent bank based on the determination that the resolution of the related litigation collaterally estopped the appellants from bringing this action.
Much of the factual background concerning this dispute was set out by this Court in the related case of Boyd v. State Medical Oxygen and Supply, Inc. (1990), 246 Mont. 247, 249, 805 P.2d 1282, 1283-84. The following facts, as set out in Boyd, are relevant to the present appeal:
Steven and Jerri Boyd, husband and wife, owned and operated a corporation known as Montana Medical Oxygen Supply, Inc. (Montana Medical). In 1983, the Federal Medicare Division initiated Medicare fraud charges against Montana Medical and Steven Boyd in federal court. These criminal charges resulted in a five year prison sentence for Steven Boyd and a $190,000 fine for Montana Medical. The federal judge agreed to review the prison sentence and fine under Rule 35 of the Criminal Rules of Civil Procedure if Steven Boyd would divest himself of all ownership in Montana Medical within 120 days. In response, Boyd executed an agreement with defendants Williams, Hungerford and Cloutier, for the sale and purchase of the assets and assumption of certain liabilities of Montana Medical. At about the same time, the Boyds executed documents granting powers of attorney to Williams, Hungerford and Cloutier and providing them with the right to manage Montana Medical. Upon execution of these documents, the federal judge reduced Steven Boyd's prison term to sixty days and Montana Medical's fine to $19.00.
At about the same time as the pleas to the federal medicare fraud indictments were entered, Montana Medical and Steven Boyd were suspended from receiving Medicare reimbursements. As a result of the suspension and the criminal fines against Montana Medical, Williams, Hungerford, and Cloutier formed a new corporation, State Medical Oxygen and Supply, Inc. (State Medical), to purchase the assets of Montana Medical rather than purchasing the corporation outright.
An agreement for the purchase of the assets of Montana Medical was signed by both parties. The agreement provided that the buyers, State Medical, were authorized to collect and retain all of Montana Medical's outstanding accounts receivable. State Medical opened a commercial deposit account for its new business with First Interstate Bank in Kalispell. Some of the checks deposited into this account by First Interstate were made payable to Montana Medical. First Interstate deposited these checks into State Medical's account based on the language in the agreement to purchase which provided that State Medical was entitled to all of Montana Medical's accounts receivable.
Shortly after the federal sentences against Boyd and Montana Medical were reduced, a dispute arose between the parties concerning the purchase of the assets. Eventually the sale fell through and each party sought damages from the other, alleging that the other had caused the breach. The present litigation, instigated by the Boyds/Montana Medical against First Interstate on a claim of statutory conversion, was stayed by the District Court on August 3, 1987, pending the outcome of the suit between Boyds/Montana Medical and State Medical. The District Court indicated in the order staying the present action that "[t]he resolution of that suit could be of great significance to this case and others involving these parties and may well resolve many issues raised herein." In the related litigation, the jury found against both parties and neither Boyds/Montana Medical nor State Medical recovered anything. One of the issues the jury considered was the question of whether State Medical, or Williams, Hungerford, or Cloutier individually, had converted any property of Montana Medical. The jury determined that no conversion had occurred. This Court affirmed the verdict of the jury and the judgment of the District Court. Boyd, 805 P.2d at 1282.
The District Court in the present litigation between Boyd/Montana Medical and respondent bank lifted the stay following this Court's decision of the related appeal. On August 7, 1991, the District Court denied both parties' motions for summary judgment. Following the denial of both parties' motions for summary judgment, the District Court, on August 13, 1991, issued an amended order granting summary judgment for the respondent bank. The District Court determined that the previous litigation "collaterally estops the present action by Plaintiffs against First Interstate Bank."
Did the District Court err in granting summary judgment to the respondent bank based on the determination that the resolution of the related litigation collaterally estopped the appellants from bringing this action?
Appellants argue that the doctrine of collateral estoppel does not apply to the present litigation. Appellants contend that if collateral estoppel does not apply, then there are genuine issues of material fact in this case which make the District Court's grant of summary judgment erroneous.
The doctrine of collateral estoppel, which is at times referred to as issue preclusion, has been previously explained by this Court as follows:
"Collateral estoppel" ... may be considered as a branch of the doctrine of res judicata but is distinguishable from the bar to litigation normally called res judicata. The distinction is that res judicata bars the same parties from relitigating the same cause of action while collateral estoppel bars the same parties from relitigating issues which were decided with respect to a different cause of action. [Citation omitted.] The bar that arises from...
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