Association of Unit Owners of the Deer Lodge Condominium v. Big Sky of Montana, Inc., 798 P.2d 1018 (1990)

owners that he had discovered the deficiencies in the fireplaces
that had led to the two earlier fires in 1981.          The State of
Montana is added as a defendant in this case because it was the
employer of Houston, who was an assistant state fire inspector.
     The unit owners point out that after the repairs were made in
1976, they were informed by an official of Realty that the units
were Itsafeand soundn and that Houston's negligence in failing to
find the defects which existed constitutes a separate cause of
action against Houston and the State of Montana based on different
facts from the action pending against the other defendants.
        In granting summary judgment, the District Court took judicial
notice of the Structure case and the summary judgments granted to
Darg and Moe.       The District Court determined in effect that
collateral estoppel arose from the judgments in both cases in that
in 1976, the plaintiffs knew or should have known that the Deer
Lodge    Condominium in general and      the   fireplaces therein    in
particular were defective, and that such notice was sufficient to
put the unit owners on notice of their injury and damage.           The
court further determined that the only possible claims that the
unit owners might have against Houston and the State of Montana
were founded upon negligence in the alleged failure to discover and
warn the plaintiffs of the fireplace defects.
     The unit owners contend that the summary judgment against them
was improper on the basis that collateral estoppel does not apply,
because there was no identity of the parties and identity of issues
in the two cases. They also contend that collateral estoppel does
not apply because the summary judgments were not final judgments
in the Structure case.
     The unit owners rely on a sentence in State ex rel. First Bank
System v. District Court (1989), - Mont .    I      782 P.2d 1260,
1262, 46 St.Rep. 1956, in which this Court said:     ". . .   We do
emphasize that summary judgment is not a decision on the merits."
That sentence, however, is taken out of context.     The very next
sentence in the case goes on to say that a denial of summary
judgment is simply a decision that there are factual issues.     We
are not dealing in this case with a denial of summary judgment, but
rather a qrant of summary judgments to Darg and to Moe.   There can
be no doubt that a grant of summary judgment is a decision on the
merits of the case.   Granger v. Time, Inc. (1977), 174 Mont. 43,
568 P.2d 535, 538.
     In Marriage of Stout (1985), 216 Mont. 342, 701 P.2d 729, we
determined that collateral estoppel had three elements:         (1)