NO. 93-346
IN THE SUPREME COURT OF THE STATE OF MONTANA
1994
BRINKMAN AND LENON, ARCHITECTS
AND ENGINEERS,
Plaintiff and Respondent,
v.
P & D LAND ENTERPRISES, a joint
venture by NDI, Inc., and MINNESOTA
TRUST COMPANY OF AUSTIN, a Minnesota
Corp. ,
Defendants and Appellants.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and for the County of Flathead,
The Honorable Michael H. Keedy, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
A. Clifford Edwards, Kevin M. Funyak, Edwards Law
Firm, Billings, Montana
For Respondent:
Debra D. Parker, Kendra L. Kawaguchi, Murphy,
Robinson, Heckathorn & Phillips, Kalispell, Montana;
Peter D. Plunkett, Warren F. Plunkett & Associates,
Austin, Minnesota; David M. Ortley, Kalispell,
Montana
t
%
g k.w&
,~sim'
r4
.g 0
~
&=
fubmitted on Briefs: December 22, 1993
FEB 0 1 1994 Decided: February 1, 1994
Filed:
I- rrp
"
L
,
.
'='
--<.,~... h'%
>. ,
:<
?
., .-p
CLERK 67 $:,:i?i?%&?< Ca%jy&
sra, f 2,;>2cz'&;i:a
&
t
Cldrk
Justice Karla M. Gray delivered the Opinion of the Court.
In this case, we conclude that the District Court erred in
granting summary judgment to plaintiff Brinkman & Lenon because
plaintiff failed to meet its initial burden of establishing the
absence of genuine issues of material fact. Therefore, we reverse
and remand.
The facts necessary to our resolution of this case are
straightforward. Brinkman and Lenon, Architects and Engineers
(Brinkman), entered into a standard form architectural contract
with P & D Land Enterprises (P&D) on May 21, 1990. Pursuant to the
contract, Brinkman was to perform certain architectural and
engineering services in connection with improvements to real estate
owned by P&D and P&D was to pay for those services. Under § 4.10
of the contract, P&D was required to give written notice of any
deficiency in performance of the services. Section 8.6 required
that, in the event of termination of the contract by P&D not
resulting from any fault of Brinkman, payment was to be made for
services performed prior to the termination date.
Brinkman filed a breach of contract action against P&D in the
Eleventh Judicial District Court, Flathead County. Brinkman
asserted that it performed services under the contract, and that
P&D terminated the contract and then failed to pay the amount owing
to Brinkman at that time, in violation of 5 8.6 of the contract. In
its answer, P&D admitted the existence of the contract and its
termination, but denied any breach by it or that it owed Brinkman
any money under the contract. P&D also counterclaimed, alleging
2
both breach of contract and negligent failure to provide proper
services which resulted in delays, &necessary expense and lost
revenue.
Prior to discovery, Brinkman moved for summary judgment and
presented the contract, a letter from P&D, an affidavit and certain
invoices in support of its motion. P&D responded generally that
issues of fact were raised by the pleadings and not met by Brinkman
in its motion and supporting materials. The District Court granted
Brinkman's motion for summary judgment via Memorandum and Order and
judgment was entered.
Pursuant to Rule 59(g), M.R.Civ.P., P&D moved the court to
alter or amend its judgment, on the basis that Brinkman did not
meet its initial burden of establishing the absence of genuine
issues of material fact. In particular, P&D argued that its answer
and counterclaim required Brinkman to establish entitlement to
payment under the contract by, among other things, presenting
evidence that P&D failed to give written notice of deficiencies in
Brinkman's services as required by the contract. According to P&D,
Brinkman offered only statements of counsel regarding the lack of
written notice of deficiencies; no evidence of the lack of such
required notice was provided via affidavit or otherwise. Thus, P&D
contended, the question of whether such notice was given was a
genuine issue of material fact raised by its answer and
counterclaim and not met by Brinkman. P&D also presented
correspondence to Brinkman, which it characterized as written
notice of deficiencies in performance.
Brinkman responded that P&D had the burden of establishing
that it had given the required notice of deficiency in response to
the motion for summary judgment. Having failed to do so, Brinkman
argued, P&Dts presentation of the correspondence purporting to
establish that it had given the required notice was untimely.
According to Brinkman, P&D was required to raise this "substantive
defense" in opposition to the motion for summary judgment. Relying
on Scott v. Robson (1979), 182 Mont. 528, 597 P.2d 1150, the
District Court denied the motion to alter or amend on the basis
that the letter was not timely offered in opposition to the motion
for summary judgment and could not be considered thereafter. P&D
appeals from the summary judgment which became final upon the
court's denial of its motion to alter or amend.
Did the District Court apply the correct standard to
Brinkman's motion for summary judgment?
Our standard of review in appeals from summary judgment is &
m;we review a summary judgment utilizing the same criteria used
by the District Court initially under Rule 56, M.R.Civ.P. Minnie
v. City of Roundup (1993), 257 Mont. 429, 431, 849 P.2d 212, 214.
We determine whether there is an absence of genuine issues of
material fact and whether the moving party is entitled to judgment
as a matter of law. Minnie, 849 P.2d at 214. In this case, we
conclude that summary judgment was improper because the record is
devoid of the required showing of proof demonstrating an absence of
genuine issues of material fact and an entitlement to judgment as
a matter of law. Specifically, we focus on the District Court's
determination that P&D did not notify Brinkman of any deficiency in
4
performance.
It is clear that a party moving for summary judgment bears the
initial burden of establishing the absence of any genuine issue of
material fact and its entitlement to judgment as a matter of law.
Rule 56(c), M.R.Civ.P. Furthermore,
[wlhen a motion for summary judgment is made
supported as provided in this rule, an adverse party may
not rest upon the mere allegations or denials of [its]
pleading, butthe adverse party's response, by affidavits
or as otherwise provided in this rule, must set forth
specific facts showing that there is a genuine issue for
trial.
Rule 56(e), M.R.Civ.P. (Emphasis added.) Put another way, the
nonmoving party has no obligation to establish that genuine issues
of fact exist until the moving party has shown an absence of such
issues of fact; unless that initial burden is met by the moving
party, the nonmoving party may rest on its pleading. Minnie, 849
P.2d at 214.
In Mathews v. Glacier General Assurance Co. (1979), 184 Mont.
368, 603 P.2d 232, the plaintiff alleged entitlement to the policy
limits under a contract for insurance as a result of fire damage.
The defendant insurer generally denied the entitlement and asserted
the affirmative defense of material alteration of the premises.
The plaintiff moved for summary judgment, but did not present
evidence from which it could be concluded that a material
alteration had not taken place as was alleged in the defendant's
affirmative defense. The district court granted the motion. We
noted that the matters considered were devoid of any evidence
initially presented by the plaintiff to justify a conclusion that
a material question of fact did not exist regarding the affirmative
defense of material alteration; absent this showing, the defendant
had no duty to come forward with counterproof. Mathews, 603 P.2d
at 235, 237. We reversed the district court, stating:
The order granting summary judgment was based on a deter-
mination that although plaintiff was the moving party,
defendant had the initial burden to show by affidavits or
other evidence, that a material question of fact existed
in relation to its affirmative defense of material
alteration. Because defendant did not do so, the court
granted summary judgment to plaintiff. It was error to
impose this initial burden on defendant, the nonmoving
party. . . .
Mathews, 603 P.2d at 236.
As was the case in Mathews, the pleadings in this case framed
the issues. Brinkman alleged that he was entitled to payment under
the contract; P&D alleged that Brinkman had performed deficiently.
Given that the contract required P&D to give notice of such
deficiencies before terminating the contract, the issue of whether
notice was given was crucial to each party's claim. Further,
Brinkman does not dispute on appeal, and did not dispute at the
District Court, that P&D1s answer and counterclaim raised the
material factual issue of whether notice of deficiency had been
given. Thus, with its motion for summary judgment, Brinkman bore
the initial burden of establishing the absence of genuine issues of
material fact, including the material issue of notice of deficiency
in performance. Accordingly, we review the materials submitted in
support of Brinkman's motion.
Brinkman presented the contract containing the provisions
referred to in this opinion. Brinkman also presented a letter from
P&D referencing the contractual "terminate and payf1 provision.
Nothing in that letter related to notices of deficiency required by
the contract. Finally, Brinkman submitted the affidavit of Tom
Heinecke (Heinecke), a Brinkman stockholder, and copies of certain
invoices. Heinecke stated that he was familiar with the services
performed and invoices corresponding to those services and that
Brinkman had not been paid for services performed in the amount of
$4,751.98 as of the date of the termination of the contract.
Heinecke's affidavit did not refer to the contract provision
regarding deficiency notices or assert that no such notice had been
given by P&D.
Brinkman's brief in support of its motion made numerous
references to P&Dfs contractual obligation to provide written
notice of any alleged deficiency in performance. Brinkman's
counsel stated that "P&D never gave Plaintiff written notification
of an alleged deficiency in Plaintiff's work;" she further stated
that "P&D failed to fulfill its obligation to notify Plaintiff of
such defective performance, as required under Section 4.10 of the
contract;" and again, she stated at some length:
Because P&D never gave Plaintiff written notification of
defective performance it cannot claim that its non-
payment for services performed is justified. P&Dts
failure to provide Plaintiff with the prompt written
notification required under the terms of the contract
precludes P&D from objecting to its obligation to pay
Plaintiff for services performed.
The obvious problem with these statements is just that: they
are merely statements of counsel. Such statements of counsel do
not meet the evidentiary basis required to support a motion for
summary judgment under Rule 56(c), M.R.Civ.P. Traders State Bank
of Poplar v. Mann Farms, Inc. (1992), 258 Mont. 226, 242, 852 P.2d
604, 614. As a result, counseltsstatements cannot meet Brinkmants
duty to establish the absence of a genuine issue of material fact
regarding a contractually required notice of deficiency.
We conclude that Brinkman did not meet its initial burden with
regard to the issue of notice of deficiency; as a result, the
burden did not shift to P&D to come forward with evidence
establishing the existence of that fact. It is clear from the
District Court's memorandum that the court placed the burden on P&D
to present affirmative evidence that, in fact, notice was given.
P&D having failed to do so, the court determined that "[tlhere is
no issue of fact that P&D did not notify Plaintiff of defective
performance" and that Brinkman was entitled to judgment as a matter
of law. This conclusion was in error.
Absent a showing that no genuine issues of material fact
existed, Brinkman was not entitled to judgment as a matter of law
on its breach of contract claim. We hold that the District Court
erred in applying an incorrect standard to Brinkman's motion for
summary judgment and in making a determination of the disputed and
material factual issue of whether a notice of deficiency was given
without evidence of record to support that determination. It
follows logically, therefore, that the District Court compounded
its error by denying P&D1s motion to alter or amend.
In conclusion, we observe here as we did in Mathews that,
although P&D was technically correct in relying solely on its
pleading because Brinkman did not meet its initial burden, "that is
not to say that we recommend this procedure." Mathews, 603 P.2d at
240. Here, as in Mathews, P&D may have been able to prevent an
appeal on the summary judgment question if it had placed affidavits
or other evidence in the record demonstrating that a genuine issue
of material fact existed as to the contractually required notice of
deficiency.
Reversed and remanded for further proceedings.
n .