No. 86-462
IN THE SUPREME COURT OF THE STATE OF MONTANA
1987
MICHAEL J. BELL and LINDA L. BELL,
Plaintiffs and Respondents,
vs
KANNON C. RICHARDS and MARJORIE P. RICHARDS,
Defendants and Appellants.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Robert W. Holmstrom, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
JOCK B. WEST, Billings, Montana
For Respondent :
MATOVICH, ADDY and KELLER; John K. Addy,
Billings, Montana
Submitted on Briefs: June 18, 1987
Decided: August 26, 1987
AUG 2 : 7 3 7
,
Filed:
Clerk
Mr. Justice William E. Hunt, Sr., delivered the Opinion of
the Court.
This is an appeal from the Thirteenth Judicial District,
Yellowstone County, Montana, from an order denying
defendants ' motion to amend findings of fact, conclusions of
law and judgment.
We reverse and remand.
The sole issue before this Court is whether the District
Court erred in dismissing the defendants' motion to amend
findings of fact, conclusions of law and judgment to allow
attorneys fees.
The parties in this case were involved in a contractual
sale of land which the plaintiffs purchased from the
defendants as an intended homesite. Upon preparation to
obtain necessary permission from governmental authorities to
build a house on the land, the plaintiffs discovered that the
water table level was too near the surface of the ground to
permit construction of a water supply or sewage disposal. To
rectify the problem, the plaintiffs would have to bring in
fill material, let it sit undisturbed for two years and then
have the land retested. There was no assurance, even then,
that the requisite permission to build would be granted.
The plaintiffs filed suit against the defendants
claiming that they knew, or should have known, about the
building restrictions on the land at the time of the sale.
The plaintiffs allege further that due to this knowledge and
knowledge of their intention to use the land as a homesite,
plaintiffs should be excused from performance of their
obligations under the contract and be reimbursed for amounts
already paid to the defendants.
The original contract contained a provision which
stated:
Buyer has made an independent investi-
gation of the above mentioned property
and has entered into this Agreement
placing full reliance upon such indepen-
dent investigation and it is understood
and agreed that there are no representa-
tions or warranties other than those
herein expressed on the part of the
Seller.
and another which stated:
In the event that either party may
institute legal action for the enforce-
ment of any right, obligation, provision
or covenant of this Agreement, the
prevailing party shall be entitled to a
reasonable attorney's fee in addition to
costs of suit. In addition, Seller
shall be entitled to their reasonable
attorney's fee in the event Seller has
to furnish a default notice to Buyer.
The District Court dismissed plaintiffs' complaint with
prejudice and awarded defendants "costs incurred."
The defendants moved the court to amend its findings of
fact, conclusions of law and judgment pursuant to Rules 52(b)
and 59 (a), M.R.Civ.P. to include attorney fees. This motion
was denied on the basis that: (1) defendants abandoned their
claim for attorney fees by neglecting to state a claim for
them in their pretrial order and (2) because no evidence
relative to fees was introduced during trial and therefore
cannot be added as a post-trial issue.
Rule 16, M.R.Civ.P., relating to pretrial procedures is
a permissive, not a mandatory rule. Lenz v. Mehrens (1967),
149 Mont. 394, 397, 427 P.2d 297, 298.
One of the purposes of pretrial conferences is to
"substantially reduce the danger of surprise at trial." 6
Wright & Miller, Federal Practice and Procedure: Civil, 5
1522, at 566.
Rule 16(e), M.R.Civ.P., states that after a pretrial
conference, a pretrial order "shall control the subsequent
course of the action unless modified by a subsequent order.
The order following final pretrial conference shall be
modified only to prevent manifest injustice."
A pretrial order, however, should be liberally
construed to permit any issues at trial that are
"embraced within its language." United States v.
First National Bank of Circle (9th Cir. 1981), 652
F.2d 882, 886-87.
Miller v. Safeco Title Ins. (9th Cir. 1985), 758 F.2d 364,
368.
This Court held in Northwestern Union Trust Co. v. Worm
(Mont. 1983), 663 P.2d 325, 327-28, 40 St.Rep. 758, 761-62,
that Rule 15 (b), M.R.Civ.P., buffers the application of the
language in Rule 16.
Rule 15 (b), states:
When issues not raised by the pleadings are tried
by express or implied consent of the parties, they
shall be treated in all respects as if they had
been raised in the pleadings. Such amendment of
the pleadings as may be necessary to cause them to
conform to the evidence and to raise these issues
may be made upon motion of any party at any time,
even after judgment; but failure to so amend does
not affect the result of the trial of these issues.
If evidence is objected to at the trial on the
ground that it is not within the issues made by the
pleadings, the court may allow the pleadings to be
amended and shall do so freely when the
presentation of the merits of the action will be
subserved thereby and the objecting party fails to
satisfy the court that the admission of such
evidence would prejudice him in maintaining his
action or defense upon the merits. The court may
grant a continuance to enable the objecting party
to meet such evidence.
In the present case, attorney fees were contractually
agreed to by the parties. The issue of whether they should
be awarded is not one which would have been argued at trial.
It cannot be claimed that there would be any surprise,
inadequate opportunity for discovery or a lack of preparation
which could unfairly prejudice the plaintiffs by awarding
attorney fees to the defendants. Both parties anticipated an
award of attorney fees if they prevailed in court, so neither
party argued the issue at trial.
Under S 28-3-704, MCA, contractual rights to attorney
fees are reciprocal when the party from whom one is request-
ing fees has an express right to attorney fees. Lasar v.
Bechtel Power v. Oftedal (Mont. 1986), 727 ~ . 2 d526, 528, 43
Section 28-3-704, MCA, states:
Whenever, by virtue of the provisions of any
contract or obligation in the nature of a contract
made and entered into at any time after July 1,
1971, one party to such contract or obligation has
an express right to recover attorney fees from any
other party to the contract or obligation in the
event the party having that right shall bring an
action upon the contract or obligation, then in any
action on such contract or obligation all parties
to the contract or obligation shall be deemed to
have the same right to recover attorney fees and
the prevailing party in any such action, whether by
virtue of the express contractual right or by
virtue of this section, shall be entitled to
recover his reasonable attorney fees from the
losing party or parties.
It is clear from the language contained in the parties'
contract that they intended for attorney fees to be awarded
to the successful party in the event of a lawsuit. This
right to attorney fees was claimed on the Bells1 complaint,
the Richard.sl answer and counterclaim and on the pretrial
order, under "plaintiffs1 contentions," and under "issues of
fact." Under "issues of fact" on the pretrial order, issue
no. 8 stated: "The extent of attorneys' fees incurred by the
plaintiffs/defendants."
The defendants did not abandon their right to attorney
fees by failing to mention the issue under "defendants'
contentions" on the pretrial order. The right is reciprocal.
Presumably, since the plaintiffs mentioned the issue in the
pretrial order, if they had been successful in the lawsuit,
they would have been awarded attorney fees and costs. The
plaintiffs had a contractual right to attorney fees, and
pursuant to S 28-3-704, MCA, so do the defendants.
The District Court reasoned further that, since there
was no evidence introduced at trial with respect to attorney
fees, to award attorney fees after a judgment was announced
would amount to an issue being raised post-trial. However,
the issue of attorney fees is - outside the court's record.
not
The contract upon which the court relied in deciding the
dispute is before the court as evidence. A provision of that
contract clearly provides for attorney fees to the successful
party in a lawsuit concerning the contract. Also, the issue
of attorney fees was raised in two places on the pretrial
order.
Reversed and remanded to the District Court to determine
reasonable attorney fees and for judgment to appellants for
such fees.