No. 81-04 IN THE SUPREMF: COURT OF THE STATE OF MONTANA
TOWN OF BOULDER, Plaintiff, Cross-Appellant, and Respondent,
WILLIAM BULLOCK and SONJA BULLOCK, Defendants and Cross-Respondents and Appellants.
Appeal from: District Court of the Fifth Judicial District, In and for the County of Jefferson. Honorable Nat Allen, Judge presiding. Counsel of Record: For Cross-Appellant: Allen Le Mieux, Boulder, Montana
Harlen, Picotte & Thompson, Helena, Montana a-,-Nmimm-
Submitted on briefs: June 17, 1981 Decided : 2 1 1981 Filed: 2 1 @@' Mr. J u s t i c e J o h n Conway H a r r i s o n d e l i v e r e d t h e Opinion of the Court. The Town o f B o u l d e r f i l e d a c o m p l a i n t on F e b r u a r y 6 , 1979, to enjoin t h e Bullocks from c o n s t r u c t i n g their new
b u i l d i n g on any p a r t o f a c e r t a i n d e s i g n a t e d town s t r e e t . The B u l l o c k s a n s w e r e d and a l s o f i l e d a c r o s s - c o m p l a i n t for damages. The D i s t r i c t C o u r t o f t h e F i f t h J u d i c i a l D i s t r i c t ,
S t a t e o f Montana, i n and f o r t h e C o u n t y of J e f f e r s o n , d i s - m i s s e d t h e c o u n t e r c l a i m , e n t e r e d a judgment i n f a v o r o f t h e Bullocks on the injunction and then denied the Bullocks'
motion t o r e c o n s i d e r . The B u l l o c k s a p p e a l e d t h e e n t r y o f judgment o f d i s m i s s a l on t h e i r c o u n t e r c l a i m . T h i s C o u r t , by o r d e r d a t e d March 1 9 , 1980, dismissed t h a t appeal without prejudice until a t r i a l on t h e m e r i t s o f t h e Town's com- p l a i n t had been h e l d . T r i a l b e f o r e t h e p r e s i d i n g j u d g e was h e l d on A u g u s t
25, 1980. The D i s t r i c t C o u r t e n t e r e d f i n d i n g s o f f a c t and c o n c l u s i o n s of l a w and judgment i n favor of the Bullocks, refusing t o grant the injunction. The B u l l o c k s a p p e a l t h e
dismissal of their counterclaim, and t h e Town o f Boulder cross-appeals the denial of an injunction preventing the building of the structure or affirmative relief requiring i t s removal. The B u l l o c k s a r e o w n e r s o f property located in the C o n s o l i d a t e d A d d i t i o n t o t h e Town o f B o u l d e r , which p r o p e r t y b o r d e r s on Main and L e s l i e S t r e e t s . The p r o p e r t y i s t r a d i - tionally known as the L i n n Motel and c o n s i s t s of Lots 9 t h r o u g h 1 9 o f B l o c k 48 o f t h e C o n s o l i d a t e d A d d i t i o n . Some- time prior to September 1977 the Bullocks determined to b u i l d a home and a n o f f i c e on t h e p r o p e r t y . William Bullock attempted t o determine t h e boundaries of t h e p r o p e r t y . H e d e t e r m i n e d t h e b o u n d a r y on L e s l i e S t r e e t
by observing the position of the lots and the state of
physical features of longstanding, including a boundary
fence e r e c t e d before t h e Bullocks purchased t h e p r o p e r t y . I n
addition, he c o n s i d e r e d t h e power and telephone poles and
facilities located on L e s l i e Street, nearby properties
l o c a t e d on L e s l i e S t r e e t and t h e p o s i t i o n o f t h e used por-
t i o n of Leslie Street. Bullock testified t h a t he d i d n o t
know where t h e e d g e o f h i s p r o p e r t y was l o c a t e d , t h a t h e d i d
not get a surveyor to come out and that he located his
building by "eye-balling" the area. He t e s t i f i e d t h a t he
had s e e n s u r v e y p i n s on t h e b o u n d a r y where t h e e n c r o a c h m e n t
o c c u r r e d , b u t t h a t t h e y w e r e gone a t t h e t i m e h e c o n s t r u c t e d
the building on the encroachment. He d i d not locate his
property l i n e with certainty, and h e was uncertain as to
whether i t s l o c a t i o n was t o t a l l y w i t h i n h i s p r o p e r t y bound- a r i e s a t t h e t i m e of c o n s t r u c t i o n .
B u l l o c k made a n a p p l i c a t i o n f o r a b u i l d i n g p e r m i t t o
K e n n e t h W. T r e t t i n , t h e c i t y c l e r k and b u i l d i n g i n s p e c t o r o f
the Town of Boulder and the person authorized to issue
b u i l d i n g p e r m i t s by t h e Town. He was t o l d by T r e t t i n t h a t
he would h a v e t o s u b m i t a p l a n showing t h e l o c a t i o n and t h e
dimens i o n s of t h e proposed s t r u c t u r e t o r e c e i v e a b u i l d i n g
permit. Trettin testified that at the time he, as city
c l e r k and b u i l d i n g inspector, d i d n o t h a v e d e t a i l e d knowl-
edge of t h e b o u n d a r i e s of L e s l i e S t r e e t . The B u l l o c k s s u b -
m i t t e d a p l a n which c o n s i s t e d o f a d r a w i n g o f t h e proposed
s t r u c t u r e m e a s u r e d from t h e c o r n e r o f an e x i s t i n g b u i l d i n g
on t h e Bullock property. T h i s method of m e a s u r e m e n t was
specifically a p p r o v e d by T r e t t i n . On S e p t e m b e r 26, 1977, T r e t t i n i s s u e d a b u i l d i n g p e r m i t t o t h e B u l l o c k s b a s e d upon
the plan a s submitted. No s u r v e y o f t h e Bullock p r o p e r t y
was r e q u i r e d o f t h e B u l l o c k s a t t h a t t i m e .
D u r i n g t h e month o f O c t o b e r 1977 t h e B u l l o c k s o r d e r e d
m a t e r i a l s , h i r e d c o n t r a c t o r s and c o m p l e t e d t h e e x c a v a t i o n o f
t h e i r p r o p o s e d home and o f f i c e , had t h e f o o t i n g s p o u r e d on
the foundation and walls, and had the foundation walls
themselves poured. T h i s r e q u i r e d t h e e x p e n d i t u r e of s e v e r a l
t h o u s a n d d o l l a r s by t h e B u l l o c k s . A d d i t i o n a l p r o g r e s s was
made on t h e c o n s t r u c t i o n d u r i n g t h e r e m a i n d e r o f 1 9 7 7 .
T h e r e was no e v i d e n c e showing t h a t d u r i n g t h i s p e r i o d
o f t i m e anyone i n t h e Town o f B o u l d e r had a n y knowledge t h a t
t h e b u i l d i n g b e i n g c o n s t r u c t e d by t h e B u l l o c k s was e n c r o a c h -
i n g upon L e s l i e S t r e e t . T h i s i n f o r m a t i o n d i d n o t o c c u r u n t i l
sometime i n J u n e o r J u l y 1 9 7 8 . During t h e e a r l y c o n s t r u c -
t i o n p e r i o d i n 1978 t h e c i t y b u i l d i n g i n s p e c t o r a t t e m p t e d t o
f i n d a c u r b box and i n t h e p r o c e s s m e a s u r e d from a s u r v e y
pin eighty feet across the street. From that point the
building inspector, Trettin, sighted across the Bullock
property. At t h i s t i m e T r e t t i n assumed t h a t t h e B u l l o c k s
were building into the street, and he so informed the
Bullocks.
T h e r e was t e s t i m o n y a t t r i a l t h a t , w h i l e t h e B u l l o c k s
had no knowledge t h a t t h e y m i g h t be e n c r o a c h i n g on L e s l i e
S t r e e t w i t h t h e i r c o n s t r u c t i o n , T r e t t i n had d e t a i l e d knowl-
e d g e o f t h e b o u n d a r i e s of L e s l i e S t r e e t p r i o r t o i s s u i n g t h e b u i l d i n g p e r m i t on S e p t e m b e r 2 6 , 1 9 7 7 . During t h e s p r i n g of
1978 t h e B u l l o c k s p r o c e e d e d t o work on t h e b a s e m e n t f l o o r o f
their building and T r e t t i n was a g a i n on the property and
particularly a t the building site. A t t h o s e t i m e s h e made no m e n t i o n of t h e a l l e g e d e n c r o a c h m e n t .
However, a s noted above, the building inspector in
J u l y 1 9 7 8 , i n a t t e m p t i n g t o f i n d t h e c u r b box, f e l t t h a t t h e
b u i l d i n g was o u t on t h e s t r e e t and s o i n f o r m e d t h e B u l l o c k s .
On July 24, 1978, William Bullock attended the regular
meeting of t h e c i t y c o u n c i l and informed the council t h a t
T r e t t i n had t o l d him t h a t h e m i g h t b e b u i l d i n g i n t o L e s l i e
Street. Bullock further told the council that he was
w i l l i n g t o have a s u r v e y made.
The minutes of the council meeting show that the
members o f the council represented t o Bullock t h a t , if he
were b u i l d i n g i n t o t h e s t r e e t , t h e y would n e v e r make a man
t e a r down h i s h o u s e . Bullock t e s t i f i e d t h a t a t t h a t t i m e he
had i n mind a p r e v i o u s a c t i o n by t h e c i t y c o u n c i l i n O c t o b e r
1 9 7 7 when t h e y c l o s e d t w e n t y f e e t o f a s t r e e t a b u t t i n g t o
t h e n o r t h of h i s p r o p e r t y a t t h e b e h e s t of a Mr. Randall,
then a member of the c i t y council. I n r e l i a n c e upon the
r e p r e s e n t a t i o n s o f t h e members o f t h e c i t y c o u n c i l and w i t h
h i s knowledge o f t h e Randall m a t t e r , Bullock proceeded w i t h
a d d i t i o n a l work on h i s b u i l d i n g . By A u g u s t 1 4 t h e B u l l o c k s
had completed the basement floor, which was poured by a
member of t h e c i t y c o u n c i l .
S h o r t l y a f t e r August 1 4 , 1978, a s a r e s u l t of a c i t y
c o u n c i l m e e t i n g h e l d on t h a t d a t e , B u l l o c k was i n s t r u c t e d by
T r e t t i n t o c e a s e c o n s t r u c t i o n u n t i l h i s s u r v e y was s u b m i t t e d
t o the c i t y council. B u l l o c k d i d c e a s e c o n s t r u c t i o n , and on
August 2 8 , a t another r e g u l a r meeting of the c i t y council,
he submitted his survey. The survey indicated that the
Bullocks' building was, in fact, occupying approximately
e i g h t e e n f e e t o f t h e n o r t h p o r t i o n of L e s l i e S t r e e t . I t is important t o note here t h a t the s t r e e t s , a s l a i d out i n t h i s
a d d i t i o n , were e i g h t y f e e t w i d e .
On August 28, 1 9 7 8 , a t a m e e t i n g o f t h e c i t y c o u n c i l ,
Bullock's s u r v e y was r e c e i v e d . The t h e n c i t y a t t o r n e y was
instructed to do what was necessary to take care of the
Bullocks' problem w i t h r e g a r d t o t h e s t r e e t . Both W i l l i a m
Bullock and the acting city attorney testified that they
took t h e i n s t r u c t i o n s of t h e c i t y c o u n c i l t o mean t h a t t h e
c i t y a t t o r n e y was t o p r o c e e d w i t h l e g a l r e s e a r c h t o d e t e r -
mine a l a w f u l method by which t h e B u l l o c k s would b e a l l o w e d
t o k e e p t h e i r b u i l d i n g where i t w a s , and in particular, to
a l l o w them t o o c c u p y a p o r t i o n o f L e s l i e S t r e e t on which t h e
encroachment e x i s t e d . The c i t y a t t o r n e y , i n f a c t , p r o c e e d e d
on t h a t b a s i s and s o t e s t i f i e d a t t r i a l .
R e l y i n g on t h e s e r e p r e s e n t a t i o n s and t h e a c t s o f t h e
c i t y c o u n c i l a s an a u t h o r i z a t i o n t o proceed, Bullock testi-
f i e d t h a t he p u t up t r u s s e s and o t h e r e l e m e n t s o f t h e wood
portion of the building a t various times until about
S e p t e m b e r 1 2 , 1978. A f t e r a c i t y c o u n c i l meeting of which
Bullock was not given notice, h e was i n f o r m e d by T r e t t i n
t h a t t h e Town now r e q u i r e d him t o t e a r down h i s b u i l d i n g and
remove i t from L e s l i e S t r e e t . No a c t i o n was e v e r t a k e n by
t h e Town t o r e v o k e the original building permit issued to
the Bullocks, and t h e B u l l o c k s a t a l l t i m e s r e l i e d upon t h e
b u i l d i n g p e r m i t and t h e a c t s and t h e s t a t e m e n t s o f t h e c i t y
c o u n c i l a s a u t h o r i z a t i o n t o proceed with t h e i r c o n s t r u c t i o n .
The District Court refused to grant an injunction
against further c o n s t r u c t i o n and r e f u s e d t o g r a n t t h e Town
of Boulder its r e q u e s t f o r a f f i r m a t i v e r e l i e f t o r e q u i r e t h e
removal t h e B u l l o c k s t s t r u c t u r e . W e affirm that judgment. A s a p p e l l a n t s , t h e B u l l o c k s r a i s e one i s s u e : Whether
t h e D i s t r i c t C o u r t e r r e d i n g r a n t i n g t h e Town o f B o u l d e r ' s motion t o d i s m i s s t h e i r c o u n t e r c l a i m f o r f a i l u r e t o s t a t e a c l a i m upon which r e l i e f c o u l d be g r a n t e d . As cross-appellant, t h e Town o f Boulder raises two additional issues: ( 1 ) Whether the court erred i n holding t h e Town e s t o p p e d from c l a i m i n g a n i n j u n c t i o n o r r e q u i r i n g the removal of the Bullocks' building insofar as it en- c r o a c h e d upon L e s l i e S t r e e t i n t h e Town o f B o u l d e r ; and ( 2 ) whether the c o u r t e r r e d i n f a i l i n g t o g r a n t an i n j u n c t i o n
r e q u i r i n g t h e removal of the Bullocks' building insofar a s
i t e n c r o a c h e d upon any p o r t i o n o f L e s l i e S t r e e t .
W will e f i r s t turn to the i s s u e s on c r o s s - a p p e a l , whether the court erred in ordering t h e Town o f Boulder estopped from claiming an injunction from further con- s t r u c t i o n or r e q u i r i n g t h e removal o f d e f e n d a n t s ' b u i l d i n g
i n s o f a r a s i t e n c r o a c h e d upon t h e p o r t i o n o f L e s l i e S t r e e t and w h e t h e r t h e c o u r t f u r t h e r e r r e d i n r e f u s i n g t o a u t h o r i z e an i n j u n c t i o n r e q u i r i n g t h e removal o f d e f e n d a n t s ' b u i l d i n g from L e s l i e S t r e e t . The Town o f B o u l d e r a r g u e s t h a t i t i s u n d i s p u t e d t h a t
a c i t y o r town h a s t h e power t o p r e v e n t t h e o b s t r u c t i o n o f i t s s t r e e t s , c i t i n g s e c t i o n 7-14-4102, MCA, which p r o v i d e s : "The c i t y o r town c o u n c i l h a s t h e power to: (1) Regulate
and p r e v e n t t h e . . . o b s t r u c t i o n of s t r e e t s . . . by . . . any obstruction." The Town denies that there was any c o n d u c t on i t s p a r t which would p e r m i t t h e D i s t r i c t C o u r t t o invoke t h e d o c t r i n e of e q u i t a b l e e s t o p p e l and p r e v e n t t h e Town from exercising its statutory right to remove the o b s t r u c t i o n from t h e s t r e e t . W do n o t a g r e e . e The law governing the application of equitable estoppel as it applies to municipal corporations is dis- cussed and set forth by this Court in two cases. City of Billings v. Pierce Packing Co. (1945), 117 Mont. 255, 161 P.2d 636; State ex rel. Barker v. Stevensville (1974), 164 Mont. 375, 523 P.2d 1388. As argued by the Town of Boulder, this Court noted in Stevensville that the great weight of authority holds that a municipal corporation is not bound by acts or statements of its agents or officers made in excess of their authority, even where a third party relied thereon to his detriment. However, we further noted in Stevensville that there are exceptions to that rule. Such exceptions are to be applied with great caution and only in exceptional cases. We find this to be just such a case. This Court stated in City of Billings v. Pierce Packing Co., 117 Mont.
"The general rule is that equitable estoppel is applied to municipal corporations with great caution and only in exceptional cases. 'While the doctrine of equitable estoppel is sometimes invoked in what are termed "excep- tional cases," it is always applied, and wisely so, with much caution to municipal corporations in matters pertaining to their governmental functions . . . There is greater reason why city streets should not be subject to destruction by nonuse or adverse posses- sion than can be found applicable to any other kind of property. No other kind of public property is subject to more persistent and insidious attacks or is less diligently guarded against seizure.' McQuillan, Muni- cipal Corporations, Vol. 4, Sec. 1515, and supporting cases." Here, the District Court in its Conclusion of Law No. 4 noted : "The elements necessary to make out a case for the application of the Doctrine of Equitable Estoppel are succinctly set forth in the case of City of Billings v. Pierce Packing Co., 117 Mont. 266, 161 P.2d 636. T h o s e e l e m e n t s a r e a s f o l l o w s : ( 1 ) T h e r e must be c o n d u c t - - a c t s , language, or silence-- amounting t o a r e p r e s e n t a t i o n o r a c o n c e a l - ment o f f a c t s . ( 2 ) T h e s e f a c t s m u s t be known t o t h e p a r t y estopped a t t h e time of h i s s a i d c o n d u c t , o r a t l e a s t t h e c i r c u m s t a n c e s must be s u c h t h a t knowledge o f them i s n e c e s s a r i l y imputed t o him. ( 3 ) The t r u t h c o n c e r n i n g t h e s e f a c t s must be unknown t o t h e o t h e r p a r t y claiming t h e b e n e f i t of t h e e s t o p p e l , a t t h e t i m e when i t was a c t e d upon by him. ( 4 ) The c o n d u c t m u s t be done w i t h t h e i n t e n - tion, or a t l e a s t with the expectation, t h a t i t w i l l be a c t e d upon by t h e o t h e r p a r t y , o r under such c i r c u m s t a n c e s t h a t i t is b o t h n a t u r a l and p r o b a b l e t h a t i t w i l l be s o a c t e d upon. ( 5 ) The c o n d u c t must be r e l i e d upon by t h e o t h e r p a r t y , and t h u s r e l y i n g , h e m u s t be l e d t o a c t upon i t . ( 6 ) H e must i n f a c t a c t upon i t i n s u c h a manner a s t o c h a n g e h i s p o s i t i o n f o r t h e worse; i n o t h e r words, he m u s t s o a c t t h a t h e would s u f f e r a l o s s i f h e were compelled t o s u r r e n d e r o r f o r e g o o r a l t e r what h e h a s d o n e by r e a s o n o f t h e f i r s t p a r t y b e i n g p e r m i t t e d t o r e p u d i a t e h i s con- d u c t and t o a s s e r t r i g h t s i n c o n s i s t e n t w i t h it."
The District Court, in its findings of fact and
conclusions of l a w , w e n t on t o n o t e t h a t T r e t t i n , the city
clerk, had sufficient knowledge, as both city clerk and
building inspector, t o have ascertained the boundaries of
the property in question and that Trettin was on the
p r o p e r t y f o r a p e r i o d of n e a r l y a y e a r b e f o r e t h e a c t i o n of
the c i t y council was taken. The c o u r t further noted the
council's representation to the Bullocks and its instruc-
tions t o the c i t y attorney t o take c a r e of the Bullocks'
p r o b l e m s a t t h e c i t y c o u n c i l m e e t i n g on A u g u s t 28, 1 9 7 8 .
The judge found that these acts and many others
constituted a representation or concealment of material
facts. W e agree with t h e D i s t r i c t Court t h a t t h e f a c t s a r e
sufficient to deny t h e Town's request for removal of the
structure. I n p a r t i c u l a r t h e judge found: t h a t t h e b u i l d i n g
p e r m i t c o n s t i t u t e d a n a u t h o r i z a t i o n t o p r o c e e d and a r e p r e - sentation that the plans submitted by the Bullocks were
proper; that the acts and representations of the city
c o u n c i l c o n s t i t u t e d a r e p r e s e n t a t i o n r e a s o n a b l y t a k e n by t h e
Bullocks a s a u t h o r i z a t i o n t o proceed with t h e i r c o n s t r u c t i o n
a f t e r t h e presence of t h e e n c r o a c h m e n t was d i s c o v e r e d ; and
that, a c c o r d i n g t o t h e t e s t i m o n y o f t h e f o r m e r mayor o f t h e
Town, s h e , and i n h e r o p i n i o n o t h e r members o f t h e c o u n c i l ,
i n t e n d e d t o r e q u i r e t h e removal of t h e s t r u c t u r e a s e a r l y a s
J u l y 24, 1 9 7 8 , b u t d i d n o t communicate t h i s i n t e n t i o n t o t h e
The i s s u e s r a i s e d by t h e B u l l o c k s on a p p e a l involve
t h e d i s m i s s a l of their counterclaim. As previously noted,
t h e Town o f B o u l d e r b r o u g h t a n a c t i o n t o e n j o i n d e f e n d a n t s '
e n c r o a c h m e n t on t h e c i t y s t r e e t , and d e f e n d a n t s a n s w e r e d by
g e n e r a l d e n i a l and a s s e r t e d a c o u n t e r c l a i m a g a i n s t t h e Town.
The Town replied by a motion to dismiss and strike the
counterclaim which the court granted. At no time did
d e f e n d a n t s amend t h e i r c o u n t e r c l a i m . The c a s e went t o t r i a l
on t h e Town's c l a i m f o r a n i n j u n c t i o n . The c o u r t h e l d t h a t
t h e Town was e s t o p p e d from p r e v e n t i n g d e f e n d a n t s ' encroach-
ment. The t o t a l e f f e c t o f t h e p r o c e e d i n g t h u s f a r h a s b e e n
t o j u d i c i a l l y a l l o w t h e e n c r o a c h m e n t and t o d e n y t h e c l a i m e d
damages.
W a r e confronted w i t h t h e b a s i c i s s u e of whether t h e e
counterclaim states a claim upon which relief can be
granted. S t r i p p e d down t o t h e e s s e n t i a l s , the defendants'
counterclaim is very nearly an a s s e r t i o n t h a t b e c a u s e t h e
Town filed the suit, defendants have been damaged. The
c o u n t e r c l a i m c a n be d i v i d e d i n t o three counts. The f i r s t
count alleges negligent conduct giving rise to something l i k e an e s t o p p e l , a l t h o u g h t h e term " e s t o p p e l " is n o t used,
that the council by its action led the Bullocks into
changing their position to their detriment. It further
a l l e g e s a v i o l a t i o n of defendants' constitutional right to
due p r o c e s s w i t h r e s p e c t t o a p r o p o s a l or a t t e m p t t o pur-
chase a p o r t i o n of t h e s t r e e t right-of-way i n t h a t defen-
d a n t s were n o t g i v e n n o t i c e o f a n y p r o p o s e d s a l e which was
allegedly on the agenda of the council at the time this
trouble occurred.
The second count alleges that the Bullocks were
v i c t i m s o f d i s c r i m i n a t i o n by t h e Town. It lists individuals
whose structures encroach on various street right-of-ways
and alleges that t h e Town, having allowed o t h e r encroach-
ments, is u n l a w f u l l y d i s c r i m i n a t i n g against defendants by
a t t e m p t i n g t o remove d e f e n d a n t s ' encroachment.
The third count alleges that the Town issued a
building permit t o t h e d e f e n d a n t s and u n l a w f u l l y m i s r e p r e -
s e n t e d t o them t h e y c o u l d l e g a l l y b u i l d a s t r u c t u r e on t h e i r
property and t h a t defendants relied to their d e t r i m e n t on
the misrepresentations.
In each count the Bullocks claimed damages as a
r e s u l t of t h e Town's conduct. The B u l l o c k s h a v e a l l e g e d l y
s u f f e r e d " h u m i l i a t i o n , f r u s t r a t i o n , p u b l i c r i d i c u l e , l o s s of
business reputation, m e n t a l a n g u i s h and m o r t i f i c a t i o n . "
They a l s o c l a i m t h a t i f t h e y w e r e r e q u i r e d t o remove t h e i r
building, t h e y would be e n t i t l e d t o t h e sum o f $ 2 2 , 5 0 0 a s a
c o s t of removal. As noted above, that i s s u e h a s b e e n de-
cided i n t h e i r favor. D e f e n d a n t s f u r t h e r c l a i m damages o f
$450 p e r month f o r l o s s o f r e n t and t h e i n a b i l i t y t o c l o s e
down a motel structure. Defendants prayed, among other things, f o r t h e items o f damage m e n t i o n e d and f o r a t t o r n e y
fees.
The Town's motion to dismiss was made p u r s u a n t to
R u l e 1 2 ( b ) ( 6 ) , M.R.Civ.P., which r e a d s i n p e r t i n e n t p a r t a s
follows:
" ( b ) How p r e s e n t e d . Every d e f e n s e , i n law o r f a c t , t o a c l a i m f o r r e l i e f i n any p l e a d i n g , whether a c l a i m , c o u n t e r c l a i m , cross-claim, or t h i r d p a r t y c l a i m , s h a l l be a s s e r t e d i n t h e r e s p o n s i v e p l e a d i n g t h e r e t o i f one is required, except t h a t the following defenses may, a t t h e o p t i o n o f t h e p l e a d e r , b e made by motion: . . . ( 6 ) f a i l u r e t o s t a t e a claim upon which r e l i e f c a n be g r a n t e d . . ." The B u l l o c k s a r g u e t h a t t h e i r c o m p l a i n t f o r damages
s h o u l d n o t h a v e been d i s m i s s e d and r e l y on D u f f y v . Butte
T e a c h e r s ' Union No. 332, AFL-CIO ( 1 9 7 5 ) , 1 6 8 Mont. 246, 541
P.2d 1199, where this Court, speaking to a motion to
dismiss, stated:
"A m o t i o n t o d i s m i s s f o r f a i l u r e t o s t a t e a c l a i m upon which r e l i e f c a n b e g r a n t e d , R u l e 1 2 ( b ) ( 6 ) , M.R.Civ.P., is equivalent t o a demurrer under former c i v i l procedure. [Citation omitted. ] A motion t o d i s m i s s a d m i t s t o a l l f a c t s w e l l p l e a d e d and i n c o n s i d e r i n g t h e motion t h e m a t e r i a l a l l e g a - t i o n s of t h e p l e a d i n g a t t a c k e d a r e taken a s true. [ C i t a t i o n o m i t t e d . I Where a c o m p l a i n t s t a t e s f a c t s s u f f i c i e n t t o c o n s t i t u t e a cause o f a c t i o n upon a n y t h e o r y , t h e n t h e m o t i o n t o d i s m i s s m u s t be o v e r r u l e d . [ C i t a t i o n omit- ted.]" 1 6 8 Mont. a t 252-253, 5 4 1 P.2d a t 1202-1203.
Defendants c i t e a l s o a s a u t h o r i t y t o t h i s holding B u t t r e l l
v. McBri.de Land and L i v e s t o c k ( 1 9 7 6 ) , 1 7 0 Mont. 296, 553
P.2d 407. Thus, i n a r g u i n g a g a i n s t t h e d i s m i s s a l of their
c o u n t e r c l a i m below, t h e B u l l o c k s a r g u e t h a t c e r t a i n assump-
tions must be made: first, all facts set forth in the
c o u n t e r c l a i m a r e assumed t r u e ; second, a l l these f a c t s are
t o be read and interpreted i n favor of the Bullocks; and
third, t h a t t h e g r a n t i n g of a motion t o d i s m i s s is held i n disfavor unless the allegations i n the counterclaim affirma-
t i v e l y d e m o n s t r a t e t h a t no a c t i o n l i e s and t h e m o t i o n s h o u l d
be d e n i e d . Whether the Town's conduct is characterized as n e g l i g e n c e o r is c h a r a c t e r i z e d a s c o n t a i n i n g m i s r e p r e s e n t a - t i o n s , w e f e e l makes l i t t l e d i f f e r e n c e . The e s s e n c e o f t h e c l a i m s i s t h a t t h e y w e r e m i s l e d by t h e c o n d u c t o f t h e Town to their disadvantage. This Court has held recently in
Adams v . Adams ( 1 9 7 9 ) , - Mont. , 604 P.2d 332, 334, 36 St.Rep. 2374, 2377, a s t o e q u i t a b l e e s t o p p e l : ". . . To i t e r a t e , f o r e q u i t a b l e e s t o p p e l t o e x i s t , t h e r e must be: (1) a f a l s e r e p r e s e n t a - t i o n o r a c o n c e a l m e n t o f f a c t s , ( 2 ) made w i t h t h e knowledge, a c t u a l o r c o n s t r u c t i v e , o f t h e f a c t s , ( 3 ) t o a p a r t y w i t h o u t knowledge o r means o f knowledge o f t h e f a c t s , ( 4 ) w i t h t h e i n t e n t i o n t h a t i t s h o u l d b e a c t e d upon and ( 5 ) r e l i a n c e on t h e f a l s e r e p r e s e n t a t i o n t o h i s o r h e r p r e j u d i c e by t h e o t h e r . . ." The D i s t r i c t C o u r t d i d n o t e r r i n dismissing the counter-
claim. Affirmed.
/
W concur: e