360 Ranch Corp. v. R & D HOLDING

IN THE SUPREME COURT OF THE STATE OF MONTANA

360 RANCH CORP., a Nevada Corporation,
Plaintiff and Respondent,

APPEAL FROM: District Court of the Eighteenth Judicial District,
In and for the County of Gallatin,
The Honorable Larry W. Moran, Judge presiding.

COUNSEL OF RECORD:
For Appellant:
Thomas R. Anacker, Anacker Law Office,
Bozeman, Montana
For Respondent:
Karl Knuchel, Attorney at Law,
Livingston, Montana

Submitted on Briefs: August 8, 1996
Decided: October 31, 1996
Filed:
Justice Terry N. Trieweiler delivered the opinion of the Court.
The respondent, 360 Ranch Corp. ("360Ranch"), filed an action
for declaratory relief in the District Court of the Eighteenth
Judicial District in Gallatin County. The District Court granted
summary judgment in favor of 360 Ranch. The appellant, R & D
Holding, appeals the order of the District Court. We reverse the
District Court, and remand for resolution of the factual issues.
The issue on appeal is whether the District Court erred when
it granted summary judgment in favor of 360 Ranch Corp.
FACTUAL BACKGROUND
In January 1994, 360 Ranch, as seller, entered into a land
sale contract with Patrick Lancione by which it agreed to sell a
five-acre parcel for the amount of $260,000. Lancione subsequently
contracted with David Williams1 to sell the parcel for $381,150.
The simultaneous closings on the land sale contracts were held on
April 28, 1994. Williams paid the sum of $381,150, and 360 Ranch
received the sum of $260,000. At the time of closing, however,
360 Ranch was unable to convey title to the five-acre parcel. The
five acres, as part of a larger twenty-acre tract, could not be
conveyed until a survey of the land was conducted, and all of the
applicable subdivision review requirements were satisfied. As a
result, 360 Ranch conveyed to Williams a recordable deed for the
entire twenty-acre parcel of land.

' n June 1994, Williams conveyed the property to R & D
I
Holding. As a result, R & D Holding became the successor in
interest to Williams, and is the appellant herein.
 Then, on April 29, 1994, Williams and 360 Ranch entered into
a written option agreement. The agreement gave 360 Ranch the
option to reacquire fifteen of the twenty acres conveyed to

Williams at the closing. In order to exercise its option, however,
360 Ranch was required to prepare and file a minor subdivision plat
no later than one year following the date of the option agreement.
The agreement also stated that, if the contingencies in the option
agreement were not met within the one-year period, then "Williams
[would] retain the consideration paid today as liquidated damages,
and this option [would] become null and void."
360 Ranch's attempts to comply with the contingencies in the
option agreement were unsuccessful. In January 1995, they applied
for minor subdivision review, but their application was denied on
the ground that a conflict between the Bozeman Area Master Plan and
the Bozeman Area Zoning Map was discovered. The conflict was
eventually resolved, but not until after the one-year period
specified by the option agreement had expired.
Ultimately, therefore, a minor subdivision plat was not filed
within one year of the option date. No additional consideration
was paid to extend the option, and it expired on April 29, 1995.
360 Ranch filed an action for declaratory relief in which it
requested the District Court to extend the one-year period
specified in the parties' option agreement. 360 Ranch moved for
summary judgment, and a hearing was held before the District Court.
At the conclusion of the hearing, the District Court made the
following findings: (1) the clear intent of the parties was to
contract for a five acre, and not a twenty acre, parcel of land;
and (2) because of the conflict between the Bozeman Area Master
Plan and the Bozeman Area Zoning Ordinance, it was "impossible" for
360 Ranch to comply with the requirements of the option agreement.
Based on its findings, the District Court granted summary
judgment in favor of 360 Ranch. The District Court determined that
"equity and good conscience . . . requires that [360 Ranch] be
given reasonable additional time" to fulfill the obligations
imposed upon it by the option agreement, and ordered R & D Holding,
as the "record owner of the 20-acre parcel," to sign the
application for the minor subdivision plat.
DISCUSSION
Did the District Court err when it granted summary judgment in
favor of 360 Ranch Corp.?
Summary judgment is governed by Rule 56 (c), M.R.Civ.P., which
provides, in relevant part, as follows:
The judgment sought shall be rendered forthwith if the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material
fact and that the moving party is entitled to a judgment
as a matter of law . . . .
The purpose of summary judgment is to encourage judicial
economy through the elimination of any unnecessary trial. However,
summary judgment is never to be a substitute for trial if there is
an issue of material fact. ,
Reaves v. Reinbold (1980) 189 Mont. 284,
 It is well established that the moving party is required to
show a complete absence of any genuine factual issues. D'Agostinov.

Swanson (1990), 240 Mont. 435, 442, 784 P.2d 919, 924. To defeat

the motion, the nonmoving party must set forth facts which

demonstrate that a genuine factual issue exists. O'Bagv v. First Interstate

BankofMissoula (1990), 241 Mont. 44, 46, 785 P.2d 190, 191. All

reasonable inferences that may be drawn from the offered proof must

be resolved in favor of the nonmoving party. U'Agostino, 240 Mont.

at 442, 784 P.2d at 924. Additionally, if there is any doubt

regarding the propriety of the summary judgment motion, it should

be denied. Whitehawkv.Clark (1989), 238 Mont. 14, 18, 776 P.2d 484,

486-87.

When the District Court granted 360 Ranch's motion for summary

judgment, it concluded that "there are no genuine issues of
material fact in dispute . . . and that [360 Ranch] is entitled to

judgment as a matter of law."

R & D Holding, however, asserts on appeal that there are

genuine issues of material fact, and that, therefore, the District

Court erred when it granted 360 Ranch's motion for summary

judgment. Specifically, R & D Holding claims that genuine factual

disputes exist with regard to the following issues: (1) the intent

of the parties with regard to the conveyance of the twenty acres
and the execution of the option agreement; and (2) whether

360 Ranch's failure to perform, as required by the terms of the
option agreement, can be excused on the grounds of impossibility of
performance.
INTENT OF THE PARTIES
The District Court determined that, "[cllearly, it never was
within the contemplation of anyone involved in these transactions
that [R & D Holding] would get a 20-acre parcel of real property
. . . ." The District Court found, instead, that the parties
intended only to buy and sell a five-acre parcel.
R & D Holding, however, contends that there is a genuine issue
of material fact with regard to the parties' intent. To support
their claim, they first point to the affidavit of David Williams,
in which he asserts, "it was [my] intent to purchase 20 acres for
the sum of $381,150.00, subject to the 360 Ranch Corporation
option, and to retain the entirety of said 20 acres if the option
was not exercised in accordance with its termjsl . " 360 Ranch
claims that this affidavit is self-serving and was made only after
the institution of litigation. We recognize, however, that when a
court determines whether summary judgment is appropriate, "the
papers supporting [the] movant's position are closely scrutinized,
while the opposing papers are indulgently treated. " Payne Reallyv. Firs1

Sec. Bank (1992), 256 Mont. 19, 25, 844 P.2d 90, 94.

Even more significant, however, is the contract itself. The
language of the option agreement states, " [ilf the option is not
exercised on or before the above-specified date [one year from the
date of the option agreement], DAVID WILLIAMS is to retain the
consideration paid today as liquidated damages and this option
shall become null and void." The option agreement clearly
contemplates the possibility that Williams (and R & D Holding as
his successor in interest) could acquire the entire twenty acre
parcel.
In Engebretsonv.Pz~lnarn (1977), 174 Mont. 409, 413, 571 P.2d 368,

370, we held that "summary judgment is usually inappropriate where
the intent of the contracting parties is an important
consideration." Furthermore, all reasonable inferences must be
drawn in favor of R & D Holding, the nonmoving party.
Therefore, we conclude that there is a genuine issue of
material fact with regard to the intent of the parties.
IMPOSSIBILITY OF PERFORMANCE
The District Court found that 360 Ranch's "efforts to divide
the 20-acre parcel through the minor subdivision process were made
impossible due to the conflict between the Bozeman Area Master Plan
and the Bozeman Area Zoning Ordinance." On that basis, the
District Court excused 360 Ranch's failure to perform, and gave
them "reasonable additional time" to comply with the terms of the
option agreement.
R & D Holding, however, contends that there is a genuine issue

of material fact with regard to whether 360 Ranch's failure to
perform should be excused on the ground of impossibility of
performance. In support of its contention, R & D Holding makes the

following assertions: 360 Ranch did not file its first application
for minor subdivision review until January 1995--more than eight
months after the term of the option commenced; the application
contained errors which caused the Bozeman City Planning Office to
reject the application; and as of March 1995, one month before the
option expired, 360 Ranch did not have a valid application on file
with the proper authority.
R & D Holding concedes that the conflict in the Bozeman area

planning documents caused a delay, and that 360 Ranch was not
responsible for either the conflict or the delay. Nonetheless,
R & D Holding claims, on appeal, that the delay "would not have
prevented [360 Ranch1 from obtaining minor subdivision review
during the term of the one (1) year option period had it simply
made a timely filing of its minor subdivision application." In
essence, R & D Holding contends that the doctrine of laches, rather
than impossibility of performance, should apply to the facts of
this case.
The starting point for our analysis is the principle that
" [ilmpossibility of performance is a strict standard that can only
be maintained where the circumstances truly dictate impossibility."
Barrettv. Ballard (l98O), 191 Mont. 39, 44, 622 P.2d 180, 184.

There will, undoubtedly, be contract cases in which a district
court could grant summary judgment based on impossibility of
performance. For example, where an Act of God physically destroys
the subject matter of a contract, or where the subject matter of a
contract is subsequently declared illegal, then it could be held
that, as a matter of law, performance of the contract was
impossible. In many other cases, however, whether performance of
a contract was impossible will be a question of fact, and summary
judgment will not be appropriate.
We conclude that this case falls into the latter category.
Based on the facts alleged in this case, there are two possible
interpretations. The first is that, as the District Court
determined, due to the conflict in the Bozeman area planning
documents and ensuing delay, it was impossible for 360 Ranch to
file a minor subdivision plat within the one-year time period
specified by the option agreement. The other is that, as R & D
Holding contends, had 360 Ranch acted with proper diligence, their
application for a minor subdivision plat could have been filed
within the one-year time period, despite the conflict in the
planning documents and ensuing delay.
We conclude that, based on the facts alleged in this case, the
question of impossibility of performance presents a genuine issue
of material fact.
Accordingly, we hold that the District Court erred when it
granted summary judgment in favor of 360 Ranch.
Finally, we note that when the District Court issued its
order, it determined that "equity and good conscience . . .
requires that [360 Ranch] be given reasonable additional time" to
comply with the terms of the option agreement. We conclude that
the District Court exceeded its authority when it modified the
express terms of the parties' contract
It is well established that a district court may only assert
its equitable jurisdiction when no statutory or legal remedy is
available. Jefjies Coal Co. v. Industrial Accident Board (1953) , 126 Mont . 411,

252 P.2d 1046. In this case, the District Court modified the

express terms of the parties' contract, and also failed to apply
5 28-2-603, MCA, which states:

Where a contract has but a single object and such object
is unlawful, whether in whole or in part, or wholly
impossible of performance, or so vaguely expressed as to
be wholly unascertainable, the entire contract is void.
Thus, if after resolution of the pertinent factual issues it
is determined that performance was, in fact, impossible, the
District Court would be bound by the mandate of 5 28-2-603, MCA.
The judgment of the District Court is reversed, and the case
is remanded for resolution of the factual issues.

We concur: