353 P.3d 483
Mont.2015Background
- MHN administers the Plan as sponsor and trustee; GFOA adopted the Plan via a MHN-drafted Adoption Agreement that incorporated the Plan.
- The Adoption Agreement initially ran 2005–2008 and automatically renewed for 2009–2010; renewals continued every two years unless GFOA gave 30 days' notice of nonrenewal.
- In December 2010, GFOA sought to withdraw from the Plan; MHN refused to honor withdrawal and required notice to avoid automatic renewal for 2011–2012.
- GFOA issued waivers of coverage for 27 employees under the Adoption Agreement’s waiver provision, while five employees remained covered and premiums were paid for them.
- MHN declared GFOA in default for nonpayment of premiums for the waived employees and sought liquidated damages; the district court later granted summary judgment to GFOA, and MHN appealed.
- The Montana Supreme Court affirmed, holding that the waiver provision and 75% participation requirement were compatible only if the waiver provision controlled, making GFOA’s waivers valid and resulting in no breach.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the contract is ambiguous due to conflicting waiver and 75% participation provisions | MHN contends waivers contradict 75% participation | GFOA argues waivers and 75% rule are compatible or later agreement controls | Yes, ambiguous; later Adoption Agreement controls and waivers valid |
| Which contract provision governs—the Adoption Agreement or the Plan | MHN argues Plan governs; ambiguity unresolved | GFOA argues Adoption Agreement modifies Plan for GFOA | Adoption Agreement controls for GFOA; waivers valid and no breach |
| Whether GFOA breached by failing to maintain 75% participation | MHN asserts failure to maintain 75% participation | Waivers show compliance; 75% not breached | No breach; waivers control and participation verified by waiver outcome |
Key Cases Cited
- West v. Club at Spanish Peaks L.L.C., 343 Mont. 434, 186 P.3d 1228 (2008 MT 183) (interpretation against drafter for ambiguous contract terms)
- Bridaham v. Moore, 648 P.2d 731 (1982 MT) (when former terms conflict with later terms, later controls)
- Kester v. Nelson, 10 P.2d 379 (1932 MT) (most recent contract controls doctrine)
- Frank v. Cobban, 50 P. 423 (1897 MT) (expressions in later contract may modify earlier contract)