State Medical Oxygen and Supply, Inc. v. American Medical Oxygen Co.

• Decision Date: 25 October 1994
• Docket Number: No. 94-149,94-149
• Citation: 883 P.2d 1241,267 Mont. 340
• Parties: STATE MEDICAL OXYGEN AND SUPPLY, INC., a Montana Corporation, Plaintiff and Appellant, v. AMERICAN MEDICAL OXYGEN CO., a Montana Corporation, J.C. Lyndes, Gary Gomez and Ronald Wright, Defendants and Respondents.
• Court: Montana Supreme Court

Page 1241

883 P.2d 1241

267 Mont. 340

STATE MEDICAL OXYGEN AND SUPPLY, INC., a Montana Corporation, Plaintiff and Appellant, v. AMERICAN MEDICAL OXYGEN CO., a Montana Corporation, J.C Lyndes, Gary Gomez and Ronald Wright, Defendants and Respondents.

No. 94-149.

Supreme Court of Montana.

Submitted on Briefs June 30, 1994.

Decided Oct. 25, 1994.

Brian L. Delaney, Mulroney, Delaney & Scott, Missoula, for appellant.

Michael G. Moses, Moses Law Firm, Billings, for respondents.

GRAY, Justice.

State Medical Oxygen and Supply Inc. (State Medical) appeals from orders of the Second Judicial District Court, Silver Bow County, granting summary judgment in favor of American Medical Oxygen Co. (American Medical) and denying its motion for reconsideration. We affirm.

This is the fourth time the parties have been before this Court. Both are Montana corporations involved in the business of providing oxygen and associated health care products to customers in their homes and in hospitals. In 1985, State Medical filed complaints in five Montana counties against American Medical and several of its employees and directors. Generally, those actions involved allegations that American Medical had violated § 1877(b) of the Social Security Act, 42 U.S.C. § 1395nn(b), by enticing State Medical route drivers to work for American Medical, resulting in route customers switching companies. Because the lawsuits were similar, the parties chose the action in Cascade County as the "lead case."

Summary judgment was granted in the lead case on the basis that a Social Security Act violation does not give rise to a private civil cause of action. On appeal, we affirmed on that issue, but remanded with instructions that the district court consider the depositions of former State Medical employees for the purpose of other issues, and allow State Medical to amend or supplement its pleadings to include a claim of tortious interference with its business. State Med. Oxygen v. American Med. Oxygen Co. (1988), 230 Mont. 456, 463, 750 P.2d 1085, 1089 (State Med. I ).

State Medical subsequently amended the complaints and the litigation continued. The district court in Cascade County again granted summary judgment to American Medical, on the basis that State Medical's nondisclosure agreement was unreasonable and unenforceable. We affirmed on appeal, concluding that the agreement was void as against public policy and unenforceable as a matter of law. State Med. Oxygen v. American Med. Oxygen Co. (1989), 240 Mont. 70, 75, 782 P.2d 1272, 1276 (State Med. II ).

Following State Med. II, the parties agreed to transfer "lead" status to the case in Silver Bow County. In October 1991, American Medical filed motions to dismiss and for summary judgment in the Silver Bow County action based on an earlier Cascade County district court order not at issue in the previous appeals; the motions were granted and State Medical appealed. We reversed and remanded, concluding that the order of the district court in Cascade County was not a final judgment on the merits and that res judicata and collateral estoppel did not apply. We also concluded that 42 U.S.C. § 1395a, which allows an individual receiving Medicare/Medicaid benefits to obtain health services from any qualified agency or person, does not act as a bar to a state law claim of tortious interference with a business relationship. State Med. Oxygen v. American Med. Oxygen Co. (1992), 256 Mont. 38, 43-45, 844 P.2d 100, 104-105 (State Med. III ).

On remand following State Med. III, the District Court scheduled trial for February, 1994. American Medical moved for summary judgment in August of 1993. Following oral argument on October 20, 1993, the District Court granted the motion in an order and memorandum dated December 1, 1993. The court subsequently denied State Medical's motion for reconsideration. State Medical appeals.

1. Did the District Court err in concluding that no genuine issue of material fact existed and that American Medical was entitled to summary judgment as a matter of law?

Summary judgment is proper when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.P. We review an order granting summary judgment by utilizing the same criteria as the district court, determining whether a genuine issue of material fact exists and whether the moving party is entitled to summary judgment as a matter of law. Minnie v. City of Roundup (1993), 257 Mont. 429, 431, 849 P.2d 212, 214.

State Medical's action against American Medical is presented as tortious interference with its business relations with former employees and with former customers. An action for tortious interference with business relations entails four elements: that the defendant's acts: (1) are intentional and willful; (2) calculated to cause damage to the plaintiff's business; (3) done with the unlawful purpose of causing damage or loss, without right or justifiable cause on the part of the actor; and (4) result in actual damages and loss. State Med. I, 750 P.2d at 1088-1089.

If a defendant establishes the absence of a genuine issue of material fact as to one of the elements constituting the cause of action, and the plaintiff fails to come forward with proof showing the existence of a genuine issue as to that element, summary judgment in the defendant's favor is proper. See White v. Murdock (Mont.1994), 877 P.2d 474, 477-78. Disputed facts are material, therefore, if they involve the elements of the cause of action or defense at issue to an extent that necessitates resolution of the issue by a trier of fact. See Bails v. Gar (1976), 171 Mont. 342, 346, 558 P.2d 458, 461. Any inferences to be drawn from the factual record must be resolved in favor of the party opposing summary judgment. Boylan v. Van Dyke (1991), 247 Mont. 259, 266, 806 P.2d 1024, 1028. In this case, our review of the District Court's order granting summary judgment focuses on the third element of tortious interference with business relations; namely, the existence of a genuine issue of material fact regarding whether American Medical's acts were done without right or justifiable cause.

American Medical came forward with evidence to meet its burden of demonstrating that no genuine issue of material fact exists on this element regarding State Medical's customers or employees. Concerning the relationship between State Medical and its customers, American Medical's evidence indicated that State Medical supplied customers with oxygen and other medical supplies by running an ordinary route service, in a certain area, on a regular basis. The business relationship between the customers and State Medical was noncontractual and each party was free to terminate the relationship without future obligation. Affidavits also indicate that, after beginning employment with American Medical, the drivers contacted their former State Medical customers from memory. The customers were not approached in any unusual way, but merely informed that the route driver had switched companies and asked if they wanted to purchase oxygen and supplies from the new provider. Some, but not all, of the customers made the change to American Medical with the route drivers.

Similarly, American Medical's evidence regarding State Medical's relationship with former employees established that State Medical route drivers first initiated contact with American Medical in 1983 and 1984. The drivers were working for State Medical without a contract; they were dissatisfied with their employment and looking for greater opportunity. In August and September, 1984, American Medical negotiated with, and ultimately hired, these route drivers who immediately began servicing customers on American Medical's behalf in the Butte area.

Whether American Medical's evidence demonstrates the absence of a genuine issue of material fact regarding whether it acted without right or justifiable cause can be determined by applying factors we have adopted from the Restatement (Second) of Torts § 767 (1965). State Med. I, 750 P.2d at 1088. Considering the facts, circumstances, and evidence presented in this case, two of those factors are particularly probative: first, the nature of the relationship between State Medical and its former employees and customers; and second, the nature of American Medical's conduct.

American Medical's evidence establishes that the relationship between State Medical and its customers was informal, voluntary and noncontractual. The customers were free to terminate their relationship with State Medical at any time and find another provider for any reason or no reason at all.

Based on the record before us, State Medical's relationship with its employees also was noncontractual and without a specified term. Indeed, State Medical's relationship with the employees at issue here can be characterized as "at will" employment under §...