NO. 95-540
IN THE SUPREME COURT OF THE STATE OF MONTANA
1996
TIMOTHY J. WHALEN, d/b/a SHANNON
ROSE APARTMENTS,
Plaintiff and Appellant,
v.
JOHN LEWIS TAYLOR,
Defendant, Respondent,
and Cross Appellant.
APPEAL FROM: District Court of the Thirteenth Judicial District,
1n and for the County of Yellowstone,
The Hon. Maurice R. Colberg, Jr., Judge presiding.
COUNSEL OF RECORD:
For Appellant:
John A. Hauf, Hauf & Forsythe, Billings, Montana
For Respondent:
Elizabeth Halverson, Montana Legal Services,
Billings, Montana
Submitted on Briefs: May 2, 1996
Decided: September 26, 1996
STATE OF MONTANA
Justice James C. Nelson delivered the Opinion of the Court.
Plaintiff, Timothy J. Whalen, (Whalen) initiated this suit in
Justice Court for possession of rental property, damages, and
attorney fees. Following a trial de nova, the District Court for
the Thirteenth Judicial District, Yellowstone county, entered
judgment for Defendant, John Lewis Taylor, (Taylor) and awarded
Taylor damages and possession of property. From that judgment,
Whalen appeals and Taylor cross appeals. We affirm in part,
reverse in part and remand.
We address the following issues on appeal:
1. Does substantial evidence support the District Court's
finding that Taylor did not abandon the apartment, but that Whalen
locked out Taylor in violation of § 70-24-411, MCA?
2. Did Whalen violate §§ 70-24-202 and 70-24-403, MCA, by
including a prohibited'provision in the rental agreement?
3. Is Taylor entitled to attorney fees under § 70-24-442,
MCA, because he prevailed at every stage of the litigation?
4. Did the District Court properly expedite discovery
matters and the trial schedule pursuant to § 70-24-427, MCA?
FACTUAL AND PROCEDURAL BACKGROUND
Whalen owns and personally manages the Shannon Rose Apartments
located at 703 North 32nd Street in Billings, Montana. Whalen is
an attorney, a former legislator, and has owned the Shannon Rose
Apartments since 1985. He has used the same rental agreement since
1985. Taylor is a 48-year-old man who works as a janitor in
Billings.
2
On June 23, 1994, Whalen rented an apartment to Taylor under
a month-to-month written rental agreement that Whalen had copied
from a 1978 Montana Law Review article. Under the agreement,
Taylor agreed to pay rent on the first of each month and to pay a
security deposit of $250.' The rental agreement contained a
provision stating that "[alcceptance of a refund of all or a
portion of the deposit by Tenant shall constitute a full and final
release of Landlord from any claims of Tenant of any nature
whatsoever."
Over the course of the tenancy, Taylor habitually made late
rental payments; however, Whalen always accepted those payments.
In June 1995, Taylor was again late with the rent payment. In
response, Whalen served Taylor a three-day notice to quit by
slipping it under Taylor's door on June 7, 1995. On June 13, 1995,
the parties verbally agreed to extend the time for payment of the
rent to June 16, 1995, the date Taylor expected his next paycheck.
However, Taylor did not pay the rent by June 16, 1995, and Whalen
gave him no additional notice to quit.
Taylor's paycheck did not arrive on June 16, 1995; however, a
co-worker delivered it to Taylor at his apartment on June 17, 1995.
Taylor did not pay Whalen the rent during the day on June 17, 1995,
and when Taylor arrived home that evening he found that Whalen had
changed the locks to his apartment. Whalen had in fact changed the
locks after 5:00 p.m. on June 17, 1995. When Taylor arrived home,
he tendered the June rent, but Whalen refused to accept it. Taylor
then requested possession of the apartment, but Whalen refused
3
because of the delinquent rent. At Taylor's request, Whalen did go
back into Taylor's apartment and retrieve some of Taylor's
clothing. They then made arrangements for Taylor to retrieve the
rest of his possessions the next day. Taylor moved into the
Esquire Motor Inn that night. In early July, 1995, Whalen moved
into the apartment.
On June 22, 1995, Whalen filed a complaint in Justice Court,
Yellowstone County, for possession of the premises, money damages
and attorney fees. Taylor counterclaimed for possession, money
damages and attorney fees.. Taylor prevailed on all claims in
Justice Court. On September 13, 1995, Whalen filed a Notice of
Appeal to the Montana Thirteenth Judicial District court,
Yellowstone County. After both attorneys moved to substitute two
different judges, trial was finally set for October 27, 1995. On
October 17, 1995, Whalen served discovery requests on Taylor and
the District Court ordered that Taylor answer Whalen's discovery
requests by October 23, 1995.
Following a trial de nova, the District Court entered judgment
for Taylor, awarding him money damages and possession of the rental
property. From this judgment, Whalen appeals and Taylor cross
appeals.
DISCUSSION
1. Does substantial evidence support the District Court's
finding that Taylor did not abandon the apartment, but that Whalen
locked out Taylor in violation of s 70-24-411, MCA?
Our review of a district court's findings of fact is set forth
as follows:
This Court reviews the findings of a trial court
sitting without a jury to determine if the court's
findings are clearly erroneous. Rule 52(a), M.R.Civ.P.
A district court's findings are clearly erroneous if they
are not supported by substantial credible evidence, if
the trial court has misapprehended the effect of the
evidence, or if a review of the record leaves this Court
with the definite and firm conviction that a mistake has
been committed.
Solem v. Chilcote (1995), 274 Mont. 72, 76, 906 P.2d 209, 211-12
(quoting YA Bar Livestock Company v. Harkness (I994), 269 Mont.
239, 887 P.2d 1211).
The Montana Residential Landlord and Tenant Act of 1977
(MRLTA) limits a landlord's recovery of possession of property.
See 5 70-24-428, MCA. As provided under MRLTA, 'I [elxcept in the
case of abandonment, surrender, or as permitted in this chapter, a
landlord may not recover or take possession of the dwelling unit by
action or otherwise...." Section 70-24-428, MCA. Thus, a
landlord may take possession of a dwelling unit only under three
circumstances: 1) abandonment; 2) surrender; or 3) as permitted in
MRLTA. This case deals only with Taylor's alleged abandonment and
Whalen's unauthorized actions.
This Court has defined abandonment as "the absolute
relinquishment of the premises consisting of the tenant's act or
omission and intent to abandon." Johnston v. American Reliable
Ins. (1992), 253 Mont. 253, 258, 833 P.2d 176, 180 (wherein we held
that landlord's one phone call concerning tenant's whereabouts was
not enough evidence to show tenant's abandonment). In an earlier
5
case, this Court did find evidence of abandonment. Napier v.
Adkison (1984), 209 Mont. 163, 678 P.2d 1143. While we decided
Napier prior to adopting the formal definition of abandonment in
Johnston, we evaluated similar evidence to determine whether the
tenants had abandoned the premises. In Napier, when the tenants
did not make the rental payment on time, the landlord repeatedly
stopped by the tenants' rental unit, but never found the tenants
there. Furthermore, the landlord found that the tenants' left
their dogs unattended on the premises. Finally, the landlord
called the tenants' daughter who stated she did not know where her
parents were. All of this evidence clearly supported the District
Court's conclusion that the tenants had abandoned their rental
unit. Unlike Napier, the evidence in the case before us on appeal
does not indicate that Taylor abandoned his apartment.
Taylor lived consistently in his apartment for over one year.
Despite his habitual lateness in paying the rent, Taylor always
made arrangements with Whalen for payment. When Taylor was again
late with payment of his June 1995 rent, he made arrangements with
Whalen to pay the rent on June 16, 1995, when Taylor expected his
paycheck to arrive. However, because his paycheck did not arrive
on time, Taylor did not meet the June 16th deadline. Instead,
Taylor tendered the June rent the following evening after he had
received and cashed his paycheck.
In response to Taylor's failure to pay rent on June 16, 1995,
Whalen changed the locks to Taylor's apartment after 5:00 p.m. on
June 17, 1995, claiming that Taylor had abandoned the premises.
6
However, later that same evening, Taylor arrived at his apartment
and upon meeting Whalen tendered the June rent. Further, after
Whalen declined to accept the rent, he refused to allow Taylor
access to the apartment to collect his belongings inside.
Nothing in the evidence indicates "absolute relinquishment" of
the apartment by Taylor. Taylor kept his belongings in the
apartment. He contacted Whalen as to the delinquent June rent and
asked for more time to pay, showing his intention to continue to
live there. Further, Taylor did ultimately tender the June rent on
the same day that Whalen changed the locks to Taylor's apartment.
Based on these facts, Taylor lacked an intent to abandon and he
committed no act or omission to indicate abandonment of his
apartment. See Johnston, 833 P.2d at 180. We hold that
substantial evidence supports the District Court's conclusion that
Taylor did not abandon his apartment, but rather that he intended
to pay the rent and continue to live there.
As noted, a landlord's recovery of possession is limited to
three circumstances: abandonment, surrender, or as permitted under
MRLTA. Here, Taylor did not abandon his apartment and the parties
have raised no issue concerning surrender. Therefore, Whalen's
only other option under § 70-24-428, MCA, was to pursue a permitted
course of action under MRLTA, that is, a proper eviction procedure.
A proper eviction procedure for a tenant's failure to pay rent is
set forth in §§ 70-24-422(2) (a), 70-24-108 and 70-24-427, MCA. If
a tenant does not pay rent when due, a landlord must give the
tenant written notice indicating that rent must be paid within
7
three days or the landlord intends to terminate the rental
agreement. Sections 70-24-422(Z) (ai and 70-24-108, MCA. If the
tenant still does not pay, the landlord may terminate the rental
agreement and bring an action for possession. Sections 70-24-
422(2) (a) and 70-24-427, MCA Whalen failed to follow this
procedure.
While Whalen had provided Taylor with a three-day notice to
quit based on Taylor's failure to pay the June 1995 rent, he
subsequently extended the time for compliance. When Taylor did not
pay the June rent by the extended deadline, Whalen did not provide
Taylor with another notice to quit, nor did he bring an action for
possession. Instead, Whalen resorted to a self-help procedure of
changing the locks to Taylor's apartment. In fact, Whalen did not
bring suit against Taylor until June 22, 1995, five days after he
had changed the locks. Section 70-24-427, MCA, authorizes courts,
not landlords, to resolve disputes over possession of rental
property. Consequently, when Whalen locked out Taylor, he resorted
to an extrajudicial eviction procedure in violation of § 70-24-428,
MCA, and wrongfully excluded Taylor from his apartment. Whalen,
therefore, is liable under 5 70-24-411, MCA.
If wrongfully excluded, a tenant has two concurrent remedies
under § 70-24-411, MCA. First, a tenant may recover possession or
terminate the rental agreement. Additionally, a tenant may recover
an amount not more than three months' periodic rent or treble
damages, whichever is greater. Section 70-24-411, MCA. Here,
Taylor requested possession of his apartment and elected to prove
8
his rent amount and requested that the District Court treble that
amount. We hold that the District Court properly awarded both
remedies.
Whalen contends that neither remedy under § 70-24-411, MCA,
was proper in this case. First, Whalen argues the provision in §
70-24-411, MCA, that allows for trebling of rent or damages is
intended as a penalty and is therefore punitive in nature. As a
result, Whalen contends that Taylor must meet proof requirements
for punitive damages under § 27-l-221, MCA. We disagree. As a
specific statute, § 70-24-411, MCA, takes priority over any general
statute that is inconsistent with it. Section l-Z-102, MCA. See
also, Sage v. Rogers (1993), 257 Mont. 229, 848 P.2d 1034.
Therefore, § 70-24-411, MCA, takes priority over § 27-l-221, MCA.
Accordingly, Taylor had the option to choose between three months'
periodic rent or treble damages, whichever was greater. See 5 70-
24-411, MCA. Taylor requested three months' periodic rent, and the
District Court properly awarded it.
Second, Whalen argues that the District Court's awarding
possession of the apartment to Taylor is an inappropriate remedy in
this case. Whalen presently occupies the apartment. Whalen claims
that if Taylor gains possession then Whalen will promptly give
Taylor thirty days' notice of termination of the tenancy as allowed
under MRLTA. Again, notwithstanding this line of reasoning, § 70-
24-411, MCA, allows a wrongfully excluded tenant to choose
possession or termination of a rental agreement in addition to
money damages. Under the facts and circumstances of this case, the
3
District Court did not commit reversible error by awarding a remedy
which the statute specifically authorizes.
Based on the foregoing, we affirm the District Court on this
issue and hold that Whalen is liable under § 70-24-411, MCA, and
that the District Court properly awarded Taylor both remedies under
§ 70-24-411, MCA.
Finally, after the District Court's Judgment of November 1,
1995, Whalen filed a homestead exemption on November 6, 1995, for
his property because he had taken up residence in the apartment.
Whalen argues that this filing should exempt him from the specific
remedies awarded to Taylor under 5 70-24-411, MCA. However, Whalen
cites no authority for his proposition. Therefore, we decline to
further address his argument absent his setting forth persuasive
legal authority on which to base such a decision.
2. Did Whalen violate §§ 70-24-202 and 70-24-403, MCA, by
including a prohibited provision in the rental agreement?
We review a district court's conclusion of law to determine if
the court's interpretation of the law is correct. Solem, 906 P.2d
at 212.
The rental agreement that Whalen selected and used contains
the following provision:
Acceptance of a refund of all or a portion of the deposit
by Tenant shall constitute a full and final release of
Landlord from any claims of Tenant of any nature
whatsoever.
In Solem, we considered an identical rental agreement
provision and held that such language is prohibited and violates
§ 70-24-202(l), MCA, and we affirmed the District Court's award of
10
damages pursuant to § 70-24-403(2), MCA. SolemI
- 906 P.Zd at 209.
Clearly, 5 70-24-202(l), MCA, makes unlawful any agreement to waive
or forego rights or remedies under MRLTA. Further, 5 70-24-403(2),
MCA, provides that if a party purposely uses a rental agreement
containing provisions known by him to be prohibited, then the other
party may recover, in addition to his actual damages, an amount up
to three months' periodic rent.
In the case at bar, it is clear that the rental agreement
provision in question is prohibited and violates § 70-24-202(l),
MCA. Solem, 906 P.2d at 213-14. It is equally clear that Whalen
purposely used a rental agreement with prohibited provisions and he
may be liable for an amount up to three months' periodic rent.
Section 70-24-403(2), MCA. Here, Whalen is not only a landlord,
but a practicing attorney and former legislator. He had used this
rental agreement for ten years, knew its contents and personally
chose to use it when he rented to Taylor. Further, he intended the
rental agreement to be legal and enforceable, citing its provisions
in his suit against Taylor. Moreover, Taylor had no legal counsel
when he signed the agreement and no way to determine whether or not
the agreement was legal. Therefore, the District Court erred in
finding that Whalen did not believe that the rental agreement
contained any illegal or unlawful provisions.
Whalen violated MRLTA by unlawfully excluding Taylor from his
apartment and by using a rental agreement that contained a
prohibited provision. Both of these violations call for treble
damage awards. See §§ 70-24-411 and 70-24-403, MCA. However, two
11
separate awards of treble damages should not be imposed upon Whalen
absent a clear legislative direction to that effect. Under these
circumstances, in the absence of any clear legislative mandate for
the cumulative imposition of penalties, we conclude that the
provisions of MRLTA are adequately served when only one treble
damage award is imposed, despite the two separate violations of the
Act.
On this issue, we remand for further proceedings consistent
with this opinion and for entry of judgment for treble damages in
favor of Taylor.
3. Is Taylor entitled to attorney fees under 5 70-24-442,
MCA, because he prevailed at every stage of the litigation?
A District Court may award reasonable attorney fees, along
with costs and necessary disbursements, to the prevailing party in
whose favor final judgment is rendered. Section 70-24-442, MCA.
The District Court found that Taylor prevailed on all claims except
the issue concerning the. prohibited provision in the rental
agreement, and thus, the court did not award Taylor attorney fees.
Absent an abuse of the lower court's discretion, this Court will
not reverse the lower court's decision concerning attorney fees.
Saqe, 848 P.2d at 1042.
However, on appeal, we have held that the provision in the
rental agreement discussed in Issue 2 is unlawful, and the District
Court must enter judgment on this issue in favor of Taylor.
Consequently, Taylor is now the prevailing party on all issues,
and, in the court's discretion, may be entitled to an award of
12
attorney fees, costs and necessary disbursements. See 5 70-24-442,
MCA.
Whalen debates the appropriateness of awarding attorney fees
to legal services or pro bono attorneys. However, the propriety
of these awards has already been decided. See In re Marriage of
Malquist (1994), 266 Mont. 447, 880 P.2d 1357 (wherein we held that
legal services and pro bono attorneys were eligible under § 40-4-
110, MCA, to receive awards of attorney fees). Just as in
Maluuist, no reason exists here to exclude legal service attorneys
from an award of attorney fees. First, under 5 70-24-442, MCA,
the District Court is given discretion to award attorney fees in
landlord/tenant cases to a prevailing party. Second, and more
broadly, in order to provide equal access to justice for all, the
award of attorney fees to individuals represented by legal services
or pro bono attorneys is required. As we stated in Malquist:
Presumably, if Montana Legal Services Association
and pro bono attorneys can recoup from the non-indigent
litigant those fees and costs for which he or she would,
otherwise, be liable under the statute, that organization
and those attorneys will be financially better able to
provide more legal services to the increasing numbers of
indigent litigants who need such services. Moreover,
non-indigent litigants who might be encouraged to simply
"run up the other party's bill" with vexatious conduct
and frivolous court proceedings, might be less inclined
to do so knowing that the court has the statutory
discretion to award the indigent party's attorney fees
and costs against the offending party.
Malauist, 880 P.2d at 1364.
Based on the same policy reasons as set forth in Maluuist, we
conclude that an attorney's status does not affect eligibility for
attorney fee awards under 5 70-24-442, MCA. Accordingly, we remand
13
this issue of attorney fees to the District CC.Xlrt for
reconsideration and further proceedings consistent with this
opinion.
In so holding, we acknowledge that the United States Congress
has prohibited the Legal Services Corporation from providing
financial assistance to any person or entity that claims, or
collects and retains, attorney fees. Departments of Commerce,
Justice, and State, the Judiciary, and Related Agencies
Appropriation Act, 1996, Pub. L. No. 104-134, § 504(a) (131, 110
Stat. 1321, 1321-53, -55 (1996) (hereinafter "the Act"). We note
that this prohibition only applies to claims for which a person or
entity begins to provide legal assistance on or after April 26,
1996, the date of enactment of the Act. Section 508(b) (3), 110
Stat. at 1321-57 to -58. In this case on appeal, Montana Legal
Services began providing legal assistance to Taylor in June 1995,
well before the enactment of the Act. Therefore, in this case, we
conclude that the Act would.not prohibit an award of attorney fees
to Montana Legal Services should the District Court exercise its
discretion to make such an award.
4. Did the District Court properly expedite discovery
matters and the trial schedule pursuant to 5 70-24-427, MCA?
We review a district court's ruling concerning granting or
denying discovery for abuse of discretion. In re Marriage of Smith
(1995), 270 Mont. 263, 271, 891 P.2d 522, 527. A district court is
in a better position than this Court to supervise the day to day
operations of pretrial discovery. Smith
, 891 P.2d at 527.
14
Whalen initiated this action and now contends that the
District Court committed reversible error when it failed to allow
proper time for discovery and failed to issue sanctions against
Taylor for requesting an expedited hearing. We disagree. Whalen
sought possession of the apartment. Claims for possession of
property under MRLTA are controlled by § 70-24-427, MCA, which
mandates an expedited trial schedule as follows:
70-24-427. Landlord's remedies after termination --
action for possession. (1) If the rental agreement is
terminated, the landlord has a claim for possession and
for rent and a separate claim for actual damages for any
breach of the rental agreement.
(2) An action filed pursuant to subsection (I) in
a court must be heardwithin 20 days after the tenant's
appearance or the answer date stated in the summons. If
the action is appealed to the district court, the hearing
must be held within 20 days after the case is transmitted
to the district court.
(3) The landlord and tenant may stipulate to a
continuance of the hearing beyond the time limit in
subsection (2) without the necessity of an undertaking.
(4) In a landlord's action for possession filed
pursuant to subsection (l), the court shall rule on the
action within 5 days after the hearing.
Whalen insists that § 70-24-427, MCA, provides a landlord, not
a tenant, the right to an expedited trial. Therefore, he contends
that Taylor perpetrated sanctionable conduct by requesting an
expedited hearing. This argument is not persuasive. An action for
possession m be heard within 20 days under the mandate of 5 70-
24-427(2), MCA, unless both the landlord and tenant stipulate to a
continuance, as allowed by § 70-24-427(3), MCA. Taylor's attorney
requested that the District Court expedite the trial for possession
as required by § 70-24-427(2), MCA. Taylor and his attorney should
not be sanctioned for demanding precisely what the statute
15
authorizes. Therefore, the District Court was correct in not
imposing sanctions.
Further, it is within the District Court's discretion to make
discovery rulings. Whalen filed a Notice of Appeal to District
Court on September 13, 1995. However, because both parties moved
to substitute two different judges, it was not until September 28,
1995, that the case was assigned. Further, due to the court's full
calendar, the trial was set more than 20 days after the case was
transmitted. Despite these delays, the District Court ordered
trial set for October 27, 1995. Whalen did not serve discovery
requests on Taylor until October 17, 1995. In an effort to
expedite this claim for possession, the District Court ordered that
Taylor answer Whalen's discovery requests by October 23, 1995. The
District Court made these rulings in compliance with § 70-24-427,
MCA. Therefore, we hold that the District Court did not abuse its
discretion, but, rather, that the District Court properly limited
the time and extent of discovery to expedite this claim for
possession.
We affirm in part, reverse in part and remand for further
proceedings consistent with this opinion. / A+,+
September 26, 199f i
CERTIFICATE OF SERVICE
I hereby certify that the following certified order wa!; sent by’united States mail, prepaid, to the
following named:
John A. Hauf, Esq.
Hauf & Forsythe, P.C.
P.O. Box 1715
Billings, MT 59103-1715
Elizabeth Haiverson
Montana Legal Services Association
2442 First Ave. No.
Billings, MT 59101
D SMITH
LERK OF THE SUPREME COURT
TATE OF MONTANA