No. 89-622
IN THE SUPREME COURT OF THE STATE OF MONTANA
ALEX E. SMITH and TRUDY
L. SMITH, husband and wife,
Plaintiffs and Respondents
and Cross-Appellants,
ROBERT L. JOHNSON and ANITA
A. JOHNSON, husband and wife,
Defendants and Appellants.
APPEAL FROM: District Court of the Tenth Judicial District,
In and for the County of Fergus,
The Honorable Byron L. Robb, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
James L. Stogsdill, Esq., Lewistown, Montana
$or Respondents and Cross-Appellants:
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Thomas P. Meissner, Esq., Lewistown, Montana
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Submitted on Briefs: June 14, 1990
o Decided: September 6, 1990
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Justice Diane G. Barz delivered the Opinion of the Court.
The plaintiffs, Alex and Trudy Smith, initiated this action
with a complaint for specific performance of a buy/sell agreement.
The Smiths sought to compel defendants, Robert and Anita Johnson,
to enter into a contract for deed in accordance with the terms of
the buy/sell agreement. The District Court for the Tenth Judicial
District, Fergus County, granted the Smiths' motion for partial
summary judgment on the issue of specific performance of the
buy/sell agreement. After a bench trial on the remaining issue of
damages resulting from the Johnsons' failure to timely deliver
possession of the real property, the District Court awarded the
Smiths monetary damages in the amount of $3,594.05. The Johnsons
appeal both the granting of partial summary judgment and the award
of damages. The Smiths cross-appeal the amount of attorney's fees
and costs awarded. We affirm and remand.
The issues raised by the Johnsons on appeal are:
1. Did the District Court err by granting the
Smiths1 motion for partial summary judgment?
2. Did the District Court improperly award specific
performance in favor of the Smiths?
3. Did the District Court err by awarding monetary
damages to the Smiths?
The Smiths present three additional issues on cross-appeal:
1. Did the District Court err in fixing the amount
of attorney's fees and costs awarded to the Smiths?
2. Are the Smiths entitled to attorney's fees and
costs on appeal?
3. Should sanctions be imposed against the Johnsons
pursuant to Rule 32, M.R.App.P., for bringing this
appeal?
Alex and Trudy Smith, the buyers, and Robert and Anita
Johnson, the sellers, entered into two buy/sell agreements for the
sale of two tracts of land near Lewistown, Montana. One agreement
provided for the sale, by contract for deed, of a house and six
acre tract. The transaction relating to the home tract has closed
and is not part of the Smithst claim for specific performance. The
other agreement provided for the sale, by contract for deed also,
of 87.337 acres of crop, pasture and timber land which adjoined the
six acres. The buy/sell agreement on the acreage tract provided
for a price of $40,000 with nothing down, amortized payments over
fifteen years, interest at 9%, and the first payment due on
December 30, 1989.
Both buy/sell agreements provided that the sales were to be
closed on or before March 1, 1989. The parties agreed Mr. Johnson,
who is a practicing attorney, was to prepare the contracts for deed
and accompanying closing documents. However, Mr. Johnson did not
submit anything for the Smithst review until March 1, and then only
the proposed contracts for deed.
During the month of March the parties corresponded and
negotiated with each other in attempt to reach an agreement on
additional or different terms of the contracts for deed than those
provided in the buy/sell agreements. Revised drafts of contracts
were exchanged but were found by the parties to be unacceptable.
Disagreement over when interest and real estate prorations would
commence on the acreage tract became a "bone of contention" between
the parties. The Johnsons believed that interest and tax
prorations should commence on March 1, as provided in the buy/sell
agreement. The Smiths proposed that since closing did not occur
on March 1, as agreed, interest and tax prorations should commence
on the actual date of closing.
On March 27, the Smiths, through their attorney, sent draft
contracts to the Johnsons and conveyed to them through a letter
that if the Johnsons did not wish to discuss any terms in addition
to or beyond the buy/sell agreements, then both transactions should
close in conformity with the buy/sell agreements. The Johnsons
responded in a letter dated April 3 informing the Smiths that, due
to what they perceived as an impasse on the financial aspects of
the transaction, they were placing the acreage contract Ifon the
back burner for awhile.I1 The Johnsons then re-leased the acreage
tract to George Hamilton, the current tenant of the property, for
a one-year term, beginning April 8.
After further negotiations, during which time the Johnsons
maintained their position that the acreage contract was "on the
back burner,l1 the parties finally agreed on a contract for the home
and six acres. The Smiths paid the required down payment, the
parties executed a contract for deed and the transaction was closed
on approximately April 17. The terms of the contract are not in
dispute.
On April 20, the Smiths filed their complaint in the District
Court seeking: (1) a decree of specific performance, requiring the
Johnsons to enter into a contract for deed for the acreage tract;
and (2) money damages for loss of use of the property as a result
of the Johnsons' failure to deliver possession of the property in
accordance with the buy/sell agreement.
I. Johnsons' Appeal
Did the District Court err by granting the Smiths1 motion for
partial summary judgment?
Summary judgment is proper pursuant to
Rule 56(c), Mont.R.Civ.P., where the record
discloses no genuine issue of material fact
and the moving party is entitled to judgment
as a matter of law. All reasonable inferences
that may be drawn from the offered proof are
to be drawn in favor of the party opposing
summary judgment. (Citation omitted.)
Halcro v. Moon (1987), 226 Mont. 121, 123, 733 P.2d 1305, 1306.
The Johnsons contend the District Court improperly granted
summary judgment in favor of the Smiths because there was a
material question of fact concerning the smiths' willingness to
perform in accordance with the exact terms of the parties1 buy/sell
agreement. The Johnsons allege that they presented a contract on
March 6 that was in conformity with the buy/sell agreement and that
the Smiths refused to sign the contract. The Johnsons further
argue that the Smiths were unwilling to perform in accordance with
the buy/sell agreement because of their insistence that the
commencement of interest and the proration of taxes take place on
the actual date of closing instead of March 1, as provided in the
buy/sell agreement. We disagree.
In directing the parties to enter into a contract strictly in
accordance with the buy/sell agreement, including the term that
commencement of interest and the proration of taxes would take
place on March 1, the District Court noted that I1[t]he dispute over
specific performance herein does not arise over the buy/sell
agreement the parties acknowledge entering, but rather over
supplemental terms and conditions in the contract for deed to
execute and fulfill the buy/sell.I1 And in its explanatory comment
accompanying the court's order denying the Johnsons1 motion to
amend the judgment the court stated:
In his own argument on the motions for summary
judgment, Mr. Johnson acknowledged buy/sell
agreements seldom contain all the terms that
may go into a formal contract for deed, and
that it is not uncommon for parties to do some
negotiating about such additional terms after
the execution of the buy/sell. Here both
parties requested some other terms, and
unfortunately could not reach agreement.
The record clearly shows that the Johnsons breached the
buy/sell agreement by placing the acreage contract "on the back
burner," refusing to discuss it further or place the smiths in
possession, and renewing the lease of the property to a third
party. Contrary to the Johnsons' contention, the record reveals
the Johnsons did not propose a contract conforming to the buy/sell
agreement on March 6. The purchase price provision of that
contract called for a total first payment of over $700 more than
required in the buy/sell agreement. Moreover, although not as
clear, the record shows that the smiths were not unwilling to
perform in accordance with the buy/sell agreement, but rather were
merely attempting to resolve the final form of the contract for
deed.
Negotiations of terms beyond the buy/sell agreement does not
destroy the right to seek specific performance. In Somont Oil Co.
v. Nutter (1987), 228 Mont. 467, 743 P.2d 1016, a party sought to
avoid a contract, claiming the contract was merely "an agreement
to agree" and that it was too vague to constitute a contract. This
Court held that the agreement contained all the essential terms
needed to constitute a contract and further stated:
Admittedly, the agreement does not include
every i t e m t h a t m i g h t have been included
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. . However, I1a contract is not invalid
simply because it does not contain all the
provisions or conditions the parties might
have incorporated into it. Wilkerson v.
School District No. 15, Glacier County (Mont.
1985), 700 P.2d 617, 621, 42 St.Rep. 745, 749.
Somont Oil Co., 743 P.2d at 1019.
Even though the parties here attempted negotiations of
additional terms, such does not affect the validity of the buy/sell
agreement and the ability to maintain a suit for specific
performance upon a breach of that agreement.
Furthermore, with regard to the commencement date of interest
and the date of proration of taxes, the District Court could
properly, as a matter of law, determine whether the buy/sell
agreement contained an ambiguity. SAS Partnership v. Schafer
(1982), 200 Mont. 478, 482, 653 P.2d 834, 836. During negotiations
the Smiths proposed that since the transaction did not close on
March 1, as agreed, interest and tax prorations should commence on
the actual date of closing. In granting summary judgment and
ordering that interest and the proration of taxes would commence
on March 1, the District Court stated:
While the printed part of the agreement states
possession shall be on the date of closing
"unless otherwise agreed," the typewritten
part of the buy/sell plainly states, "First
period payment will be from March lst, 1989,
to December 30th, 198911,and section 1-4-105,
MCA 1987, states, "when an instrument consists
partly of written words and partly of a
printed form and'thetwo are inconsistent, the
former control the latter."
The District Court, upon determining as a matter of law that an
ambiguity does not exist, may properly grant summary judgment.
See, Monte Vista Co. v. The Anaconda Co. (1988), 231 Mont. 522, 755
We conclude the record in this case discloses no genuine issue
of material fact and supports the award of partial summary judgment
in favor of the Smiths.
Did the District Court improperly grant specific performance
in favor of the Smiths?
In an argument nearly identical to their argument presented
under the first issue, the Johnsons contend that the Smiths were
not parties who could seek the remedy of specific performance.
Section 27-1-411(4), MCA, provides that specific performance may
be compelled when the parties to a contract have expressly agreed
in writing that specific performance shall be an available remedy.
The buy/sell agreement signed by the parties expressly provided for
a remedy of specific performance. Having determined that the
record shows the Johnsons did not propose a contract on March 6
which conformed to the buy/sell agreement and that the Smiths were
not unwilling to perform in accordance with the provisions of the
buy/sell agreement, we conclude the Smiths were parties who could
seek specific performance.
We hold the District Court properly granted specific
performance in favor of the Smiths.
Did the District Court err by awarding monetary damages to the
Smiths?
The Johnsons assert that they were subjected to the Smiths1
"whipsawing in the matter of damages1'and argue that the Smiths are
responsible for their own damages, ''real or imagined," in that they
failed to act. reasonably in preventing or mitigating those
damages.
The District Court 'found that the Johnsons' actions in
unilaterally terminating the negotiations between the parties,
placing the sale of the acreage property ''on the back burner,'' and
renewing the lease on the property to a former tenant for another
year constituted an unjustified refusal to complete the transaction
or convey the property. Accordingly, the court awarded the Smiths
damages for loss of use of the property for approximately one year
in the sum of $1,600, plus attorney's fees and costs of $2,091.20,
less an offset to the Johnsons of $97.15 for five-sixths of the
1989 taxes, for a total damage award of $3,594.05.
When reviewing the findings of fact in a civil action tried
by a district court without a jury, this Court will not substitute
its judgment for that of the trier of fact. Rather, our review is
confined to determining whether the findings of fact are clearly
erroneous. The court's findings of fact will be presumed correct
if supported by substantial evidence. Meridian Minerals Co. v.
Nicor Minerals, Inc. (1987)~228 Mont. 274, 282-83, 742 P.2d 456,
461. We find the record contains substantial evidence justifying
the award of damages.
11. Smiths' Cross-Appeal
Did the District Court err in fixing the amount of attorney's
fees and costs awarded to the Smiths?
The District Court's award of attorney's fees and costs is
discussed in the court's Finding of Fact number 16, which states
in part:
Smiths also seek attorney fees and costs
for the entire lawsuit. However, when the
court granted partial summary judgment to
plaintiffs it directed each side to pay its
own fees and costs to that time, and now finds
that such ruling was fair and equitable, and
reaffirms it. However, as to additional time
plaintiffs' counsel has spent on various
motions, briefs, damage issues and trial, the
court finds plaintiffs are entitled to recover
the same pursuant to written provision of the
buy/sell agreement . . . and plaintiffs are
further entitled to allowable costs since
summary judgment of $165.20 . . . Said costs
are as follows: George Hamilton deposition
$130.20; Witness fee $10.00; Judgment fee
$25.00.
The Smiths do not contest the award of attorney's fees from the
time of partial summary judgment, but argue that attorney's fees
incurred prior to such time should be awarded.
The buy/sell agreement contains an attorney's fee provision
which states:
In any action brought by the Buyer or the
Seller to enforce any of the terms of this
agreement, the prevailing party in such action
shall be entitled to such reasonable attorney
fees as the court or arbitrator shall
determine just.
The fixing of attorney's fees is largely within the discretion of
the district court and will not be disturbed absent a clear abuse
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of that discretion. In Re Marriage of Milanovich (1985) 215 Mont.
367, 370-71, 697 P.2d 927, 929. The record contains substantial
evidence to support the conclusions of the District Court
concerning attorney's fees. We find no abuse of discretion.
The District Court awarded the Smiths costs from the time of
partial summary judgment in the amount of $165.20. The total costs
claimed by the Smiths are $345.20. Section 25-10-101(5), MCA,
provides that "Costs are allowed, of course, to the plaintiff upon
a judgment in his favor . . . in an action which involves the title
or possession or right of possession of real estate . . ." Under
§ 25-10-101, MCA, allowable costs are recoverable by the plaintiff
upon timely application. See, Medhus v. Dutter (1979), 184 Mont.
437, 447, 603 P.2d 669, 674; State v. Cronin (1978), 179 Mont. 481,
491, 587 P.2d 395, 401. We therefore remand for determination of
allowable costs incurred prior to the time of partial summary
judgment .
Are the Smiths entitled to attorney's fees and costs on
appeal?
The District Court made numerous findings regarding the
assessment of attorney's fees and costs concluding that if the
Johnsons' appeal is unsuccessful they should be subject to
assessment of the Smiths1 costs and attorney's fees in defending
such appeal. This Court has previously held that 'I [wlhere an award
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of attorneys1 fees is based on a contract, the award includes
attorneys fees generated on appeal. Lauderdale v. Grauman
(1986), 223 Mont. 357, 359, 725 P.2d 1199, 1200. In regard to
costs on appeal, such are automatically awarded to the successful
party under Rule 33, M.R.App. P. Walker v. Warner (1987), 228 Mont.
162, 167, 740 P.2d 1147, 1150. We find that, as the prevailing
party on appeal, the Smiths are entitled to reasonable attorney's
fees and costs.
Should sanctions be imposed against the Johnsons pursuant to
Rule 32, M.R.App.P., for bringing this appeal?
The Smiths contend they are entitled to an additional award
of damages, arguing that the Johnsons' appeal on the issue of
specific performance is frivolous.
Rule 32, M.R.App.P., provides:
If the supreme court is satisfied from
the record and the presentation of the appeal
in a civil case that the same was taken
without substantial or reasonable grounds,
such damages may be assessed on determination
thereof as under the circumstances are deemed
proper.
Where a reasonable ground for appeal exists, sanctions or
damages are not appropriate under Rule 32, M.R.App.P. Searight v.
~ i m i n o(1988), 230 Mont. 96, 103-04, 748 P.2d 948, 952; Erdman v.
C & C Sales, Inc. (1978), 176 Mont. 177, 184, 577 P.2d 55, 59. In
the present case, the question of whether the District Court
properly granted partial summary judgment was reasonably in issue.
We find no basis for imposing sanctions against the Johnsons.
We affirm and remand for determination of reasonable
attorney's fees and costs on appeal and for determination of
allowable costs pursuant to 3 25-10-101(5), MCA.
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We concur: