Unit Owners All but four of the appellants are owners
of condominiums at Big Sky, Montana, located in two
buildings, both commonly known as the Deer Lodge
Condominiums. The four appellants who did not own
condominiums owned personal property located in units of
the Deer Lodge Condominiums. Except where necessary to
distinguish the four personal property owners, all
appellants are hereinafter referred to as "unit owners. l1
Biq Sky of Montana Inc.. (Biq Sky) A corporation
which originally developed the Big Sky, Montana, ski
resort in the early 1970s and merged in 1978 with another
corporation to form Boyne USA., Inc., hereinafter referred
to as I1Big Sky.
Biq Skv of Montana Realty, Inc. (Realty) A corporation
organized in 1976 to manage and liquidate certain real
property at Big Sky formerly owned by Big Sky, including
the Deer Lodge Condominiums, hereinafter referred to as
llRealty.llRealty performed significant repairs to the
Deer Lodge Condominiums in 1976.
Bovne Mountain Lodqe, Inc. A corporation that acquired
the Big Sky ski resort facilities and 39 units of the
Deer Lodge Condominiums in 1976.
Boyne USA, Inc. (Boyne) A corporation and the current
owner of the Big Sky ski resort. Boyne is the product
of a 1978 merger of Big Sky and Boyne Mountain Lodge,
Inc.
Thomas & Co. (General Electric Pension Trust) One of
seven stockholders of Big Sky and Realty.
The Montana Power Company One of seven stockholders
of Big Sky and Realty.
The State of Montana The governmental entity
responsible for enforcement of building and fire codes
at Big Sky, Montana.
Bruce A. Houston The State's fire inspector who
investigated two fires which occurred in 1981 in the Deer
Lodge Condominiums.
Association of Unit Owners of the Deer Lodse
Condominiums (Association) An incorporated Association
comprised of the owners of the condominium units. The
Association itself is a party plaintiff in this action.
Lloyd W. Dars and Associates (Darq) Construction
engineer, Deer Lodge Condominiums.
Douqlas A. Moe, Architects (Moe) ~rchitect,Deer
Lodge Condominiums.
Big Sky constructed the Deer Lodge Condominiums in 1973-1975.
Darg was the construction engineer, and Moe the architect for the
project. In 1976, Big Sky's shareholders negotiated the sale of
their stock to Boyne Mountain, Inc. Because Boyne Mountain did not
want to acquire stock in a corporation with real estate development
assets, Big Sky transferred its real estate development assets to
Big Sky Realty, a corporation newly formed on May 6, 1976, in
exchange for its stock. The real estate development assets
included 44 unsold units of the Deer Lodge Condominiums. Big Sky
then distributed its Big Sky Realty stock to the original Big Sky
shareholders.
Realty sold 39 of its 44 Deer Lodge Condominium units to Boyne
Mountain Lodge Inc. on December 1, 1976. Realty sold its remaining
five Deer Lodge Condominium units during an auction in 1977. None
of the unit owners purchased their units from Realty.
In 1978, Big Sky and Boyne Mountain Lodge, Inc. merged to
become Boyne USA, Inc. Boyne is the current owner of Big Sky
Resort.
Significant structural and safety deficiencies in the
construction of Deer Lodge Condominiums were discovered in early
1976. The Association and unit owners were first notified of the
deficiencies on April 1, 1976. Realty employed the engineering
firm of Morrison-Maierle of Helena, Montana, to investigate and
report concerning the structural and safety deficiencies at the
condominiums. Realty notified each unit owner of the Morrison-
Maierle findings on September 12, 1976. On September 22, 1976,
Realty provided the chairman of the Association with a copy of the
Morrison-Maierle report describing the structural deficiencies.
The Association, through its board of directors, acknowledged
receipt of the notice of the structural deficiencies, and
thereafter authorized Realty to perform the work required to
correct the deficiencies.
Realty made the repair effort during 1976-77. The repairs at
that time cost approximately $1.4 million. There is no record that
the fireplaces in the condominiums were repaired or reconstructed
during the 1976-77 reconstruction or repair effort. However, in
a letter dated December 24, 1976, the president of Realty advised
the unit owners that the condominiums had been satisfactorily
repaired, and were sound and safe for occupancy.
Two fires occurred at the Deer Lodge Condominiums located at
Big Sky, one on January 20, 1981, and one on February 20, 1981.
The deficiencies in the fireplaces related to lack of fire
stops, improper or missing chimney connections, improper or lack
of insulation around the chimney flues and throughways; and
particularly, a failure to install a tin sheet protective covering
over plywood at the base of the hearths. The purpose of the tin
sheet was to guard against sparks which might work their way down
through the mortar of the hearth to the plywood. Unit owners
contend that the fires principally were ignited because of lack of
the tin sheet protection.
The repairs instigated by the Morrison-Maierle report were
completed and the condominiums reoccupied prior to the fires. The
record does not show that the fireplace deficiencies were corrected
in those repairs.
This action, seeking damages resulting from the fires and the
fireplace deficiencies was filed on January 18, 1983. Certain of
the original defendants named in the action were improperly served
with process. The facts relating to the improper service and the
resultant dismissal of certain of the defendants are chronicled in
the first appeal to this Court, Association of Unit Owners et al.
v. Big Sky of Montana, Inc. et al. (1986), 224 Mont. 142, 729 P.2d
469.