No. 81-40
IN THE SUPREME COURT OF THE STATE OF MONTANA
STATE OF MONTANA, upon the relation of
FLORENCE-CARLTON CONSOLIDATED SCHOOLS
DISTRICT 15 & 6"et al.,
Petitioners,
DISTRICT COURT OF THE FIRST JUDICIAL
DISTRICT OF THE STATE OF MONTANA, IN
AND FOR THE COUNTY OF LEWIS & CLARK et ax.,
Respondents.
ORIGINAL PROCEEDING:
Counsel of Record:
For Petitioners:
Herron, Meloy & Llewellyn, Helena, Montana
Clayton Herron argued, Helena, Montana and
Peter Meloy argued, Helena, Montana
For Respondents:
Bellingham & Christenson, Billings, Montana
Cresap McCracken argued, Great Falls, Montana
Bruce T. Toole argued, Billings, Montana
John North, Helena, Montana
Robert Gannon, Butte, Montana
Thomas D. Ebzery, Billings, Montana
Murphy, Robinson Law Firm, Kalispell, Montana
Gregory C. Black, Butte, Xuntana
Alan Hux and Carol Dunn, Indianapolis, hdiana
Hon. John Henson, District Judge, Missoula, Montana
Submitted: June 12, 1981
Decided :
Filed: AUG 3 - 1981
*
Clerk
Mr. J u s t i c e Gene B. D a l y d e l i v e r e d t h e O p i n i o n o f t h e C o u r t .
T h i s a c t i o n was commenced i n t h e D i s t r i c t C o u r t of
the First Judicial District, i n and f o r t h e County o f Lewis
and C l a r k , by c o m p l a i n t f o r d e c l a r a t o r y judgment on A u g u s t
31, 1979. On March 20, 1 9 8 0 , a n amended c o m p l a i n t , adding
n e c e s s a r y p a r t i e s and d e l e t i n g p a r t i e s deemed u n n e c e s s a r y t o
t h i s a c t i o n , was f i l e d . Plaintiffs-relators f i l e d a motion
for leave t o f i l e a s e c o n d amended c o m p l a i n t on J u n e 1 8 ,
1980. Prior to any action of the court regarding this
motion, r e l a t o r s f i l e d a second motion f o r l e a v e t o f i l e a
revised s e c o n d amended c o m p l a i n t . Defendants objected to
t h i s m o t i o n and r e q u e s t e d s a n c t i o n b e imposed upon r e l a t o r s
as a condition to proceeding with this revised second
amended complaint. Respondent D i s t r i c t Court g r a n t e d the
motion f o r l e a v e t o f i l e t h e r e v i s e d complaint, but reserved
ruling on the requested terms. After briefing by all
parties, respondent D i s t r i c t Court granted defendants'
r e q u e s t by i m p o s i n g a n award o f c o s t s upon relators as a
condition precedent t o proceeding with the revised second
amended c o m p l a i n t . From t h i s o r d e r , r e l a t o r s p e t i t i o n f o r a
w r i t of s u p e r v i s o r y c o n t r o l .
On August 31, 1979, Friends of the Earth, Inc.,
Edward M. Dobson, Daniel H. Henning, Gary Matson, Vicki
Gale, Robert K. Lendis, t h e Montana E d u c a t i o n A s s o c i a t i o n ,
and t h e Montana S t a t e F e d e r a t i o n o f T e a c h e r s , a s p l a i n t i f f s ,
filed a complaint for declaratory judgment against the
Montana Board of Land Commissioners and Westmoreland
Resources, Inc., as defendants. This complaint alleged
basically that the land commissioners were not requiring
Westmoreland R e s o u r c e s , Inc., t o pay t h e f u l l market v a l u e
f o r r o y a l t y r i g h t s f o r t h e e x t r a c t i o n o f c o a l on s t a t e t r u s t
lands as required by law. The complaint prayed for
d e c l a r a t o r y judgment t h a t c o a l l e a s e s i s s u e d t o W e s t m o r e l a n d
by the land commissioners were null and void, for an
a d j u d i c a t i o n of t h e l a n d c o m m i s s i o n e r s 1 d u t y t o o b t a i n f u l l
m a r k e t v a l u e , and f o r a t t o r n e y f e e s and c o s t s o f s u i t .
Westmoreland Resources, Inc., filed successive
motions f o r s u b s t i t u t i o n of judge, and t h e H o n o r a b l e J o h n S .
Henson assumed j u r i s d i c t i o n on November 1, 1 9 7 9 . Pursuant
t o s t i p u l a t i o n of t h e p a r t i e s and o r d e r o f the court, an
amended c o m p l a i n t was f i l e d on J a n u a r y 1 7 , 1 9 8 0 , which added
Florence-Carlton C o n s o l i d a t e d S c h o o l s , D i s t r i c t s 1 5 and 6 ,
a s a plaintiff to t h i s action.
On March 11, 1 9 8 0 , following motions, notices, and
hearings, the District Court ruled that Friends of the
Earth, Inc., did not have standing and was, therefore,
dismissed from the action. The court also ruled that
additional parties were indispensable to the action and
o r d e r e d p l a i n t i f f s , r e l a t o r s h e r e , t o e f f e c t j o i n d e r of s u c h
parties. On March 20, 1 9 8 0 , i n c o m p l i a n c e w i t h t h i s o r d e r ,
relators f i l e d a n amended c o m p l a i n t j o i n i n g the following
defendants with the land commissioners and Westmoreland
Resources, Inc.: Arkland Company; A y r s h i r e C o a l Company;
the Carter Oil Company; Consolidated C o a l Company; Decker
C o a l Company; Gulf O i l C o r p o r a t i o n ; Mapco, Inc.; Mobil O i l
Corporation; Spring Creek Coal Company; Peabody Coal
Company; Peter K i e w i t Sons1 Corporation; R o b e r t W. Adams;
United States Steel Corporation; Western Energy Company;
Thermal E n e r g y , I n c . ; and Thermal R e s o u r c e s , I n c .
The amended c o m p l a i n t s o u g h t t o r e n d e r v o i d a l l s t a t e
s c h o o l l a n d c o a l l e a s e s h e l d by t h e above-named defendants.
It sought declaratory judgment alleging solely that the
royalty rates in the existing leases did not reflect f u l l
mar k e t value. No alternative theories or grounds for
challenging the leases than t h a t included in the original
c o m p l a i n t o f August 31, 1 9 7 9 , w e r e i n c l u d e d i n t h e amended
c o m p l a i n t f i l e d March 20, 1 9 8 0 .
On J u n e 1 8 , 1 9 8 0 , r e l a t o r s f i l e d and s e r v e d a m o t i o n
for leave to file a second amended complaint. A l l
defendants, except the Board of Land Commissioners,
Westmoreland R e s o u r c e s , Inc., Thermal R e s o u r c e s , Inc., and
Thermal E n e r g y , I n c . , had f i l e d r e s p o n s i v e p l e a d i n g s t o t h e
amended complaint of March 20, 1980, p r i o r t o t h e second
motion to amend. The proposed second amended complaint
added an additional count i n mandamus and s e t f o r t h f i v e
additional allegations, reasons and bases for relators'
c o n t e n t i o n t h a t t h e c o a l l e a s e s w e r e n u l l and v o i d .
Defendant United S t a t e s S t e e l Corporation o b j e c t e d t o
the filing of the second amended complaint and, in the
alternative, requested the court t o impose s a n c t i o n s upon
relators, such sanctions to be a reasonable allowance of
a t t o r n e y f e e s n e c e s s a r i l y i n c u r r e d i n p r e p a r i n g a n answer t o
t h e s e c o n d amended c o m p l a i n t . T h i s o b j e c t i o n was f i l e d J u n e
24, 1 9 8 0 .
Prior to a ruling on either relators' motion for
l e a v e t o f i l e a s e c o n d amended c o m p l a i n t o r U n i t e d S t a t e s
S t e e l ' s o b j e c t i o n t o such motion, relators filed a motion
f o r l e a v e t o f i l e a r e v i s e d s e c o n d amended c o m p l a i n t on J u l y
16, 1980. The p r o p o s e d e f f e c t o f t h i s r e v i s i o n was t o make
t e n c h a n g e s t o t h e s e c o n d amended c o m p l a i n t , such changes
being matters of style and correct usuage, rather than
m a t t e r s of substance. T h i s m o t i o n was n o t i c e d f o r h e a r i n g
on A u g u s t 6 , 1 9 8 0 .
Prior t o August 6, 1980, a l l defendants s e r v e d and
f i l e d objections t o relators' motion f o r l e a v e t o f i l e t h e
s e c o n d amended c o m p l a i n t r e v i s e d . A l l defendants requested
sanctions or conditions be imposed upon relators in the
alternative.
Following hearing on August 6, 1980, respondent
D i s t r i c t C o u r t r u l e d t h a t l e a v e was g r a n t e d t o r e l a t o r s t o
file the second amended complaint (revised). The court
r e s e r v e d r u l i n g on t h e q u e s t i o n o f imposition of sanctions
u n t i l f u r t h e r b r i e f i n g c o u l d be s u b m i t t e d by a l l p a r t i e s .
On September 24, 1980, respondent court granted
t h e r e q u e s t f o r t e r m s by a w a r d i n g c o s t s t o d e f e n d a n t s . The
award was limited by the court to the "expenses, costs,
attorney fees and so forth that the defendants have
i n c u r r e d " r e l a t i n g t o t h e r e v i s e d s e c o n d amended c o m p l a i n t .
Defendants requested that such information be
presented t o t h e c o u r t by a f f i d a v i t s . The c o u r t r e q u e s t e d
such a f f i d a v i t s from d e f e n d a n t s by O c t o b e r 7, 1980. The
court then granted relators until October 13, 1980, to
review the affidavits and decide whether to request a
h e a r i n g r e g a r d i n g t h e c o s t s o r t o s i m p l y f i l e s o m e t h i n g on
the record.
Defendants filed af f i d a v i t s of costs ranging from
$209.28 t o $2,520. R e l a t o r s f i l e d a n a f f i d a v i t and m o t i o n s
in opposition to claims for attorney fees on O c t o b e r 13,
1 9 8 0 , b u t f a i l e d t o r e q u e s t a h e a r i n g on t h e m a t t e r . Even-
t u a l l y r e l a t o r s d i d f i l e a m o t i o n f o r a h e a r i n g on November
28, 1980. The motion, however, came af t e r the imposed
deadline; thus, the court took no action regarding the
request.
On November 28, 1980, the court awarded each
d e f e n d a n t $150 p a r t i a l costs as a condition t o relators1
proceeding on the revised second amended complaint. The
court further ordered t h a t s u c h a n award was n o t d u e t h e
Montana Board of Land Commissioners or Westmoreland
Resources because those defendants had not filed any
responsive pleadings i n the matter. R e l a t o r s were r e q u i r e d
to make payment within thirty days after entry of the
j udgment .
On December 22, 1980, relators deposited with the
c l e r k of t h e c o u r t f i v e c h e c k s i n t h e amount o f $150 e a c h ,
p a y a b l e t o t h e f i v e s e p a r a t e law f i r m s h a n d l i n g t h e a c t i o n
for defendants. The c h e c k s w e r e d e p o s i t e d w i t h t h e e x p r e s s
r e s e r v a t i o n t h a t t h e y w e r e t o be d e l i v e r e d o n l y i f t h e c o u r t
i n d i c a t e d t h a t t h e amount r e c e i v e d was i n f u l l s a t i s f a c t i o n
of its order. T h e s e c h e c k s , however, were never d e l i v e r e d
t o d e f e n s e c o u n s e l b e c a u s e on J a n u a r y 9 , 1 9 8 1 , J u d g e Henson
wrote r e l a t o r s 1 counsel, i n f o r m i n g him t h a t r e l a t o r s w e r e
r e q u i r e d t o p a y e a c h d e f e n d a n t d e s i g n a t e d by t h e o r d e r $ 1 5 0 ,
n o t e a c h l a w f i r m i n v o l v e d ( a t o t a l award o f $ 2 , 4 0 0 ) .
Subsequently, various defendants f i l e d motions for
d i s m i s s a l because of r e l a t o r s 1 noncompliance w i t h t h e o r d e r
o f November 2 8 , 1980. On J a n u a r y 3 0 , 1 9 8 1 , r e l a t o r s f i l e d
t h i s p e t i t i o n f o r w r i t of s u p e r v i s o r y c o n t r o l r e g a r d i n g t h e
order awarding c o s t s a s a condition t o p r o c e e d i n g on t h e
r e v i s e d s e c o n d amended c o m p l a i n t .
T h e r e have been two i s s u e s submitted t o t h i s Court
f o r review:
1. Is a w r i t o f s u p e r v i s o r y c o n t r o l a n a p p r o p r i a t e
form o f j u d i c i a l r e v i e w i n t h i s i n s t a n c e ?
2. Did t h e D i s t r i c t C o u r t a b u s e i t s d i s c r e t i o n in
awarding " c o s t s " t o defendants a s a c o n d i t i o n t o r e l a t o r s '
p r o c e e d i n g on t h e s e c o n d amended c o m p l a i n t ( r e v i s e d ) ?
Relators contend g e n e r a l l y t h a t t h e r e i s no d i r e c t
appeal or other remedial procedure available in this
instance. Moreover, if review is n o t granted under the
p e t i t i o n o r t h e award n o t p a i d , r e l a t o r s w i l l be d e n i e d t h e
r i g h t t o have t h e i r c o m p l a i n t d e t e r m i n e d i n a c c o r d a n c e w i t h
due p r o c e s s of law, thereby resulting in gross injustice,
o p p r e s s i o n and i r r e p a r a b l e i n j u r y .
Regarding t h e second i s s u e r e l a t o r s contend t h a t t h e
D i s t r i c t C o u r t h a s no a u t h o r i t y t o impose s a n c t i o n s a g a i n s t
a p a r t y a s a c o n d i t i o n t o a l l o w i n g p r o p o s e d amendments t o
its pleadings. Even i f t e r m s c a n be i m p o s e d , t h e D i s t r i c t
C o u r t ' s a w a r d i n g o f " a t t o r n e y f e e s , " a s o p p o s e d t o t h e award
o f " i n c i d e n t a l c o s t s , " was i m p r o p e r . Furthermore, s i n c e t h e
d e f e n d a n t s have n o t b e e n p r e j u d i c e d by t h e amendments and
since relators have not engaged i n g r o s s misconduct, the
i m p o s i t i o n o f s a n c t i o n s c a n n o t be j u s t i f i e d .
Respondent contends f i r s t t h a t t h e r e l i e f asked f o r
by r e l a t o r s i s n o t a p r o p e r a r e a f o r a w r i t o f s u p e r v i s o r y
control. The o r d e r awarding "costs" is interlocutory in
nature and does not present extraordinary or compelling
c i r c u m s t a n c e s beyond s i m p l y r e q u i r i n g r e l a t o r s t o p r o c e e d t o
trial. The i s s u e r a i s e d by r e l a t o r s c a n e a s i l y be r a i s e d on
appeal after a trial has been had on the merits and a
judgment r e n d e r e d t h e r e o n .
R e s p o n d e n t f u r t h e r c o n t e n d s t h a t a u t h o r i t y t o impose
c o n d i t i o n s on r e l a t o r s ' r e q u e s t t o amend t h e i r c o m p l a i n t i s
drawn f r o m t h e language i n Rule 1 5 ( a ) , M.R.Civ.P., which
provides t h a t ". . . a p a r t y may amend h i s p l e a d i n g s o n l y by
l e a v e o f c o u r t o r by w r i t t e n c o n s e n t o f t h e a d v e r s e p a r t y ;
and l e a v e s h a l l b e f r e e l y g i v e n when j u s t i c e s o r e q u i r e s . "
Thus, the District Court i s empowered to act as justice
requires, to safeguard the parties from prejudice by
imposing such t e r m s a s a r e j u s t upon t h e p a r t y r e q u e s t i n g
t h e amendment. Here, d e f e n d a n t s have been p r e j u d i c e d t o t h e
extent of incurring substantial costs as a result of
relators' desire to expand their complaint to include
a d d i t i o n a l l e g a l t h e o r i e s and r e l i e f , t h e r e b y j u s t i f y i n g t h e
imposition of terms.
R e s p o n d e n t r a i s e s a t h i r d i s s u e on a p p e a l : Did t h e
r e l a t o r s w a i v e any r i g h t t o an e v i d e n t i a r y h e a r i n g on t h e
award to be given, either by failing to make a timely
r e q u e s t f o r s u c h a h e a r i n g o r by a t t e m p t i n g t o comply w i t h
the D i s t r i c t Court's order? The i s s u e , however, need n o t b e
discussed further in that relators have stated in their
r e p l y b r i e f t h a t t h e y do n o t s e e k a h e a r i n g on t h e amount o f
the award to be granted under the court's order. The
relators' s o l e c o n t e n t i o n i s t h a t no amount c a n be p r o p e r l y
awarded u n d e r t h e c i r c u m s t a n c e s , a n d , t h u s , a h e a r i n g i s n o t
required.
Proper judicial administration requires freedom of
action by the District Court prior to trial and
n o n i n t e r f e r e n c e on o u r p a r t a t t h i s s t a g e o f t h e p r o c e e d i n g .
S t a t e e x r e l . Kosena v . D i s t r i c t C o u r t ( 1 9 7 7 ) , 1 7 2 Mont. 2 1 ,
560 P.2d 522. The i n s t i t u t i o n o f a n o r i g i n a l p r o c e e d i n g i n
t h i s Court seeking a writ of supervisory control can be
justified, however, when t h e r e is no d i r e c t a p p e a l o r o t h e r
remedial procedure available to provide relief from the
District Court's action and when extraordinary and
compelling circumstances are presented. See Rule 17 ( a ) ,
M.R.App.Civ.P.
I n t h i s i n s t a n c e , no d i r e c t a p p e a l is a v a i l a b l e f r o m
t h e o r d e r r e q u i r i n g r e l a t o r s t o p a y t h e award t o d e f e n d a n t s
a s a c o n d i t i o n t o a l l o w i n g t h e amendment o f t h e i r c o m p l a i n t .
Furthermore, we find that extraordinary circumstances a r e
p r e s e n t which r e q u i r e a n i n q u i r y i n t o t h e D i s t r i c t C o u r t ' s
proceedings prior to trial and final judgment. If we
d e c l i n e d t o review t h e matter a t t h i s s t a g e , r e l a t o r s could
be precluded from proceeding on all counts they deem
necessary for appropriate relief, resulting in a possible
improper d e n i a l of t h e i r r i g h t of a c c e s s t o t h e c o u r t s .
The major issue in this proceeding is whether the
D i s t r i c t C o u r t was w i t h i n i t s j u r i s d i c t i o n i n i m p o s i n g t e r m s
upon the allowance of relators' amended complaint. Rule
1 5 ( a ) , M.R.Civ.P., provides i n part:
". . . O t h e r w i s e a p a r t y may amend his
p l e a d i n g o n l y by l e a v e o f t h e c o u r t o r by
w r i t t e n consent of t h e adverse p a r t y ; and
l e a v e s h a l l b e f r e e l y g i v e n when j u s t i c e so
requires."
R u l e 1 5 ( a ) , M.R.Civ.P., a s c i t e d above, is i d e n t i c a l
t o R u l e 1 5 ( a ) o f t h e f e d e r a l r u l e s u n d e r which it i s w i d e l y
h e l d t h a t i t is w i t h i n a c o u r t ' s d i s c r e t i o n t o impose t e r m s
or c o n d i t i o n s upon g r a n t i n g a m o t i o n f o r l e a v e t o amend.
S e e Key P h a r m a c e u t i c a l s , I n c . v . Lowey (S.D. N . Y . 1 9 7 2 ) , 54
F.R.D. 447; S h e r r e l l v . M i t c h e l l Aero, I n c . ( D . Wisc. 1971),
3 4 0 F.Supp. 219; Thermodynamics C o r p . v . Union C a r b i d e C o r p .
(D. N.H. 1 9 6 7 ) , 42 F . R . D . 607; Jacobs v. McCloskey & Co.
(E.D. Pa. 1 9 6 6 ) , 40 F.R.D. 486. Comments and r e a s o n s f o r
u p h o l d i n g s u c h an e x e r c i s e o f d i s c r e t i o n i s f u l l y d i s c u s s e d
i n 6 Wright & M i l l e r , F e d e r a l P r a c t i c e and P r o c e d u r e , C i v i l
"Rule 1 5 ( a ) g i v e s t h e c o u r t e x t e n s i v e
d i s c r e t i o n t o d e c i d e whether t o g r a n t l e a v e
t o amend a f t e r t h e t i m e f o r amendment a s o f
course has passed. I n a d d i t i o n , a number o f
c o u r t s h a v e c o n c l u d e d t h a t i t g i v e s them
authority to impose conditions when
p e r m i s s i o n t o amend i s a l l o w e d . . . The
s t a t e m e n t i n R u l e 1 5 ( a ) t h a t ' l e a v e s h a l l be
f r e e l y g i v e n when j u s t i c e s o r e q u i r e s '
p r e s u p p o s e s t h a t t h e c o u r t may u s e i t s
d i s c r e t i o n t o impose c o n d i t i o n s on t h e
a l l o w a n c e o f a p r o p o s e d amendment a s a n
a p p r o p r i a t e means o f b a l a n c i n g t h e i n t e r e s t s
o f t h e p a r t y s e e k i n g t h e amendment and t h o s e
o f t h e p a r t y o b j e c t i n g t o i t . The i m p o s i t i o n
of terms o f t e n w i l l f u r t h e r t h e r u l e ' s
l i b e r a l amendment p o l i c y . If the party
o p p o s i n g t h e amendment c a n b e p r o t e c t e d by
t h e use of c o n d i t i o n s from any p o s s i b l e
prejudice t h a t might result from t h e
u n t i m e l i n e s s o f t h e amendment, t h e r e i s no
j u s t i f i a b l e reason for not allowing i t . "
S e e a l s o 3 M o o r e ' s F e d e r a l P r a c t i c e tl15.08 [ 6 ] .
As a result of the District Court's discretion to
impose t e r m s , t h e q u e s t i o n now becomes w h e t h e r t h e c o u r t i n
t h i s i n s t a n c e abused its d i s c r e t i o n . In t h i s regard, the
m o s t i m p o r t a n t f a c t o r , and p e r h a p s t h e m o s t f r e q u e n t r e a s o n
g i v e n f o r d e n y i n g l e a v e t o amend, is t h a t t h e o p p o s i n g p a r t y
w i l l be p r e j u d i c e d i f t h e movant i s p e r m i t t e d t o a l t e r h i s
pleading. Mitchell v. Mitchell ( 1 9 7 6 ) , 1 6 9 Mont. 1 3 4 , 545
P.2d 6 5 7 . O t h e r f a c t o r s t o be c o n s i d e r e d a r e t h e good f a i t h
of the party seeking the amendment, the reasons for the
movant's delay, and t h e l e n g t h o f the delay. M i t c h e l l v.
Mitchell, supra; 6 Wright & Miller, F e d e r a l P r a c t i c e and
Procedure, C i v i l 55 1487, 1488.
H e r e , t h e o r i g i n a l c o m p l a i n t was f i l e d on A u g u s t 3 1 ,
1979. The complaint alleged that certain coal leases
e n t e r e d i n t o by d e f e n d a n t S t a t e Board o f Land C o m m i s s i o n e r s
and t h e remaining d e f e n d a n t s were v o i d a b l e o r void. The
c o m p l a i n t was grounded on the theory that t h e Board, by
e n t e r i n g i n t o l e a s e s which p r o v i d e d f o r a r o y a l t y r a t e b e l o w
f u l l market value, was i n v i o l a t i o n of s e c t i o n 77-3-315,
MCA, a n d , t h u s , was i n b r e a c h o f t r u s t r e s p o n s i b i l i t i e s owed
to relators. R e l a t o r s prayed t h a t t h e D i s t r i c t Court i s s u e
a d e c l a r a t o r y judgment a d j u d i c a t i n g t h e d u t y o f t h e Board o f
Land C o m m i s s i o n e r s t o o b t a i n t h e f u l l m a r k e t v a l u e o f the
l a n d and d e c l a r i n g t h e l e a s e s n u l l and v o i d f o r t h e B o a r d ' s
f a i l u r e t o a b i d e by t h i s d u t y .
Certain plaintiffs were dismissed from the
proceedings and additional plaintiffs and d e f e n d a n t s w e r e
j o i n e d by o r d e r o f t h e c o u r t and s t i p u l a t i o n o f t h e p a r t i e s
i n amended c o m p l a i n t s f i l e d on J a n u a r y 1 7 , 1980 and March
20, 1 9 8 0 . No a d d i t i o n a l a l l e g a t i o n s o r t h e o r i e s c h a l l e n g i n g
the validity of the leases were included in these
complaints. On J u n e 1 8 , 1 9 8 0 , r e l a t o r s f i l e d t h e i r m o t i o n
f o r l e a v e t o f i l e t h e s e c o n d amended c o m p l a i n t . T h i s motion
was made after all but four of the defendants had filed
responsive pleadings to the allegations and grounds for
r e l i e f s e t f o r t h i n t h e o r i g i n a l and amended c o m p l a i n t .
The s e c o n d amended c o m p l a i n t a g a i n a l l e g e d t h a t t h e
c o a l l e a s e s were v o i d o r v o i d a b l e . Relators, however, in
s u p p o r t i n g t h e a l l e g a t i o n expanded t h e t h e o r y o f t h e i r case
to include the following contentions not previously
presented t o t h e court:
(1) The B o a r d , by e n t e r i n g i n t o t h e l e a s e s , had a c t e d
i n v i o l a t i o n of Art. X, S e c t i o n 11, 1 9 7 2 M o n t . C o n s t . ; of
section 81-501 through 81-551, R.C.M. 1947 (sections
77-3-301 through 77-3-321, MCA) ; section 81-103, R.C .M.
1947 ( s e c t i o n s 77-1-202 and 77-1-203(1), MCA); section
77-1-102, MCA; and t h e l a w s o f t h e S t a t e o f Montana and t h e
United States relating to the powers and obligations of
trustees.
( 2 ) The Board h a s v i o l a t e d i t s t r u s t r e s p o n s i b i l i t i e s
i n w a s t i n g t h e a s s e t s o f t h e t r u s t by removing t h e s u b j e c t
of the trust ( c o a l d e p o s i t s ) from t h e c o m p e t i t i v e m a r k e t ,
wherein a g r e a t e r royalty r a t e could be o b t a i n e d , for an
unconscionable p e r i o d of t i m e .
(3) The Board has further violated its trust
r e s p o n s i b i l i t i e s by f a i l i n g t o e f f e c t a f o r f e i t u r e o f the
l e a s e s on t h e b a s i s t h a t t h e d e f e n d a n t l e s s e e s h a v e b r e a c h e d
a n i m p l i e d c o v e n a n t t o d e v e l o p , p r o d u c e and m a r k e t t h e c o a l .
(Defendant l e s s e e s a l l e g e d l y have y e t t o develop t h e land
for coal production.)
( 4 ) The B o a r d , by g r a n t i n g a u n i l a t e r a l , preemptory
r i g h t of t e r m i n a t i o n t o defendant l e s s e e s without r e c e i v i n g
a similar right, has unreasonably relinquished control of
t r u s t a s s e t s without mutuality or consideration.
( 5 ) The r o y a l t y r a t e s i n t h e l e a s e d o n o t r e p r e s e n t
f u l l and f a i r m a r k e t v a l u e a s compared w i t h o t h e r r o y a l t i e s
on c o n t i g u o u s o r s i m i l a r l a n d . The l e a s e s h a v e t h u s r e d u c e d
t h e f u l l market value of the estate constituting a direct
v i o l a t i o n o f t h e p u r p o s e o f t h e t r u s t t o o b t a i n t h e maximum
benefit for its beneficiaries.
I n a d d i t i o n t o expanding t h e t h e o r y of t h e i r a c t i o n ,
relators' s e c o n d amended c o m p l a i n t a l s o e x p a n d e d t h e p r a y e r
for relief to include a request for a writ of mandamus
c o m p e l l i n g t h e Board t o v o i d t h e l e a s e s and t o make t h e l a n d
a v a i l a b l e f o r new and r e n e g o t i a t e d l e a s e s .
Upon receiving the motion for leave to file this
amended c o m p l a i n t , d e f e n d a n t s o b j e c t e d and a r g u e d t h a t , if
leave was granted, it should be made conditional.
Defendants' request was based on a contention that by
allowing the amendment, t h e y would be prejudiced to the
e x t e n t of incurring substantial costs. The D i s t r i c t C o u r t
agreed with defendants' position and imposed terms in
g r a n t i n g r e l a t o r s ' motion.
I n t h e i r p e t i t i o n f o r a w r i t of supervisory control
r e l a t o r s a r g u e t h a t s i n c e f o r m a l d i s c o v e r y p r o c e e d i n g s had
not been instituted e . , interrogatories served or
d e p o s i t i o n s t a k e n ) and s i n c e t h e c a s e had n o t b e e n s e t f o r
t r i a l o r b r i e f i n g on t h e m e r i t s , t h e r e was no p r e j u d i c e t o
defendants c a u s e d by f i l i n g t h e s e c o n d amended c o m p l a i n t .
The only retracing of effort required of defendants,
m a i n t a i n s r e l a t o r s , would b e t o f i l e amended a n s w e r s .
We find t h a t g e n e r a l l y t h e D i s t r i c t Court has the
power to impose terms or c o n d i t i o n s on l e a v e to file an
amended complaint. Relators argue, however, that the
D i s t r i c t Court erred i n considering "attorney fees" as a
component o f the partial costs granted a s a condition to
t h e i r amendment. I n s u p p o r t of t h e argument, r e l a t o r s r e l y
upon the general rule adopted by t h i s Court t h a t in the
absence of a contractual agreement or specific statutory
authority, attorney fees are not recoverable. S e e Winer v .
Jonal Corporation (1976), 1 6 9 Mont. 247, 545 P.2d 1094;
K i n t n e r v . H a r r ( 1 9 6 5 ) , 1 4 6 Mont. 461, 408 P.2d 487.
R e l a t o r s have p r o p e r l y set f o r t h t h e g e n e r a l r u l e i n
r e g a r d t o a n award o f a t t o r n e y f e e s . It s h o u l d be n o t e d ,
however, t h a t t h e r u l e h a s b e e n e x p a n d e d t o i n c l u d e a l l o w i n g
attorney fees in spite of the absence of any specific
statute or contractual agreement, solely upon equitable
grounds. S e e Means v . Montana Power Company (1981), -
Mont. , 625 P.2d 32, 38 S t . R e p . 351. I t is upon t h i s
same i n h e r e n t e q u i t a b l e power t h a t o t h e r c o u r t s h a v e a l l o w e d
t h e i m p o s i t i o n o f a n award o f a t t o r n e y f e e s a s a c o n d i t i o n
t o amendment. See M a t l a c k , Inc. v. Hupp C o r p o r a t i o n ( E . D .
Pa. 1 9 7 2 ) , 57 F . R . D . 1 5 1 ; M i r a b e l l a v . Banco I n d u s t r i a l d e
l a Republics A r g e n t i n a (1970), 34 A p p . D i v . 2 d 630, 309
N.Y.S.2d 400; W i l l i a m v . Myer ( 1 9 0 7 ) , 150 Cal. 714, 89 P .
972.
I f , under a l l of t h e c i r c u m s t a n c e s o f a c a s e , j u s t i c e
would require the imposition of costs as a condition t o
a l l o w i n g an amendment, e q u i t y c a n f u r t h e r , i n e x t r e m e c a s e s ,
allow, as an element of those costs, attorney fees.
P r e j u d i c e t o a p a r t y i n t h i s k i n d o f c a s e r e s u l t i n g from a n
amended complaint is n o t limited solely t o general costs
expended i n u n d e r t a k i n g a d d i t i o n a l p r e p a r a t i o n b u t o b v i o u s l y
c a n i n c l u d e a t t o r n e y f e e s expended i n r e s p o n d i n g t o i s s u e s
or t h e o r i e s not previously asserted. T h i s d i s c r e t i o n by t h e
c o u r t , however, s h o u l d b e c a r e f u l l y and s p a r i n g l y u s e d and
t h e c o u r t s h o u l d be c a r e f u l t h a t a s p i n - o f f does not develop
which would o r c o u l d d e n y t h e a d v e r s e p a r t y a c c e s s t o t h e
c o u r t and a f a i r t r i a l on t h e m e r i t s .
Relators' final argument i s t h a t t h e $150 award t o
each defendant is unsupported, unreasonable, and amounts t o
a c l e a r a b u s e o f d i s c r e t i o n by t h e D i s t r i c t C o u r t .
Due t o r e l a t o r s ' f a i l u r e t o timely request a hearing
o n t h e m a t t e r , t h e o n l y e v i d e n c e upon which t h e award c o u l d
be based is contained i n t h e a f f i d a v i t s s u b m i t t e d by t h e
parties listing the costs incurred as a result of the
amendment. The total costs listed in the affidavits
(including attorney fees) ranged from $209.28 to $2,520.
T h e s e c l a i m s r e p r e s e n t e x p e n d i t u r e s made by t h e v a r i o u s l a w
firms, which in some instances represent more than one
defendant. It would appear that the claims have been
i n f l a t e d w i t h i n a p p r o p r i a t e e x p e n d i t u r e s ( i . e . , e x p e n s e s and
fees for a l l services a s t o a l l pleadings t o date, not j u s t
t h o s e e x p e n s e s and f e e s r e l a t e d t o t h e f i l i n g o f t h e s e c o n d
amended c o m p l a i n t ) . T h i s , however, d o e s n o t i n v a l i d a t e t h e
$150 a s s e s s m e n t , a t l e a s t m a t h e m a t i c a l l y .
As indicated herein, we affirm the District Court's
authority to impose conditions on a request to amend
pleadings, a s o r when j u s t i c e r e q u i r e s . The i m p o s i t i o n o f
s u c h s a n c t i o n s , h o w e v e r , r e q u i r e s a showing o f e x t r a o r d i n a r y
prejudice. W do n o t f i n d s u f f i c i e n t s t r e n g t h i n t h e r e c o r d
e
here to support this degree of prejudice; nor did all
parties suffer the same kind or amount of prejudice.
T h e r e f o r e , t h e o r d e r i m p o s i n g c a s h s a n c t i o n s i s v a c a t e d and
set aside, without prejudice, so that the matter c a n be
r a i s e d on a n a p p e a l , i f a p p r o p r i a t e .
We concur:
4
D'strict Judge, sitting in
p ace of Mr. Chief Justice
Frank I. Haswell