No. 95-388
IN THE SUPREME COURT OF THE STATE OF MONTANA
1996
RANDY PEUSE,
Plaintiff and Respondent,
JAMES R. MALKUCH and BETTY MALKUCH,
husband and wife,
Defendants and Appellants.
APPEAL FROM: District Court of the Seventh Judicial District,
In and for the County of Dawson,
The Honorable Dale Cox, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Richard L. Burns, Attorney at Law,
Glendive, Montana
For Respondent:
Marvin L. Howe, Simonton, Howe & Schneider,
Glendive, Montana
Submitted on Briefs: January 18, 1996
Decided: February 22, 1996
Filed:
Justice Charles E. Erdmann delivered the opinion of the Court.
This is an appeal from a decision of the Seventh Judicial
District Court, Davison County, granting partial summary judgment in
favor of respondent Randy Peuse, and denying appellants James R.
Malkuch and Betty Malkuch's motion for reconsideration of summary
judgment order and motion for leave to amend answer. We affirm.
The issues on appeal are as follows:
1. Did the District Court err in granting Peuse's motion for
partial summary judgment?
2. Did the District Court err in denying the Malkuchs the
opportunity to amend their answer?
FACTS
In March 1990 Peuse and the Malkuchs entered into an agreement
to sell and purchase certain real property in Dawson County,
Montana. The agreement provided for specific performance and the
Malkuchs were to deliver possession and occupancy to Peuse on the
closing date. The agreement also provided that if the Malkuchs'
title was not merchantable and could not be made merchantable
before the closing date, an additional thirty day grace period
would be allowed to make the title merchantable. At the time the
agreement was executed there existed an unsatisfied judgment
against the Malkuchs.
The Malkuchs had enrolled this particular property in the
United States Department of Agriculture's Conservation Reserve
Program (CRP) . The agreement provided that Peuse would receive the
CRP payments but it did not address whether the property would be
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kept in the program after the sale. After executing the agreement,
the Malkuchs sought assurances that Peuse would keep the property
in CRP so that the Malkuchs would not incur penalties on payments
already received. Peuse refused.
The agreement's closing date was originally set for April 21,
1990. On September 24, 1990, Peuse and James Malkuch agreed to
extend the closing date to January 15, 1991, in order to reduce the
Malkuchs' tax burden. Betty Malkuch refused to sign the amendment
for the extension of time. No other amendments to agreement were
made.
The closing date of January 15, 1991, passed with no sale
occurring, and on May 27, 1992, Peuse filed suit for specific
performance. The Malkuchs answered, alleging that Peuse breached
the agreement and thus the Malkuchs were not obligated to perform.
The Malkuchs also retained the right to file an amended answer when
they obtained the necessary information through discovery to fully
answer Peuse's complaint.
On November 24, 1992, Peuse sent a set of interrogatories and
a request for admissions to the Malkuchs' attorney. The Malkuchs
complied with the discovery request but initiated no discovery
efforts of their own.
On January 15, 1993, Peuse filed a motion for continuance of
the pretrial conference acknowledging that the Malkuchs' original
attorney had been in ill health. On March 31, 1993, the Malkuchs
filed a motion continuing all proceedings because their attorney
was undergoing treatment for cancer and had insufficient time to
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prepare his case. Due to this illness, the Malkuchs' attorney
withdrew from representation of the Malkuchs on December 20, 1993.
A preliminary pretrial conference was scheduled for March 1,
1994. The Malkuchs obtained new counsel immediately prior to the
scheduling conference. Trial was set for October 6, 1994. On
April 5, 1994, Peuse filed a motion for partial summary judgment.
On April 29, the Malkuchs filed an opposition to the motion
alleging two questions of fact not alleged in the Malkuchs'
original answer.
On May 19, the Malkuchs filed a motion for leave to amend
their answer to include two new affirmative defenses which
corresponded to the new questions of fact raised in the Malkuchs'
response to the summary judgment motion. The District Court
granted partial summary judgment in favor of Peuse on June 9, 1994.
On June 17, the Malkuchs moved the court to reconsider its order.
The District Court denied both the Malkuchs' motion for leave to
amend the answer and their motion to reconsider on August 9, 1994.
From the District Court's orders of June 9 and August 9, 1994, the
Malkuchs appeal.
ISSUE 1
Did the District Court err in granting Peuse's motion for
partial summary judgment?
In our review of a district court's grant of summary judgment,
we use the same standard as that used by the court under
Rule 56(c), M.R.Civ.P.--"[slummary judgment is proper only when no
genuine issue of material fact exists and the moving party is
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entitled to a judgment as a matter of law." Spain-Morrow Ranch,
Inc. v. West (1994)r 264 Mont. 441, 444, 872 P.Zd 330, 331-32
(citing Minnie v. City of Roundup (1993), 257 Mont. 429, 431, 849
P.2d 212, 214).
In Sprunk v. First Bank Western Montana Missoula (1987), 228
Mont. 168, 172, 741 P.2d 766, 768, we ruled that the moving party
in a motion for summary judgment has the initial burden of
establishing that there are no genuine issues of fact. If this
burden is met, the party opposing the motion has the burden to show
that a material factual issue does exist. In meeting that burden,
the opposing party must set forth specific findings showing that
there is no genuine factual issue for trial.
As the District Court noted, the agreement provided that Peuse
could demand that the Malkuchs specifically perform their
obligations. The court also noted that the Malkuchs admitted they
failed to perform their obligations under the agreement at the time
appointed for their performance, and that Peuse claimed he was
ready and willing to purchase the property at all times on and
between the two closing dates.
The court found that while "there is a disagreement between
the parties as to whether or not Peuse agreed to keep the Malkuch
property on the CRP program, there is no dispute that continuing
the Malkuch property on the CRP program was not a term written into
the 'Agreement to Sell and Purchase'." The court reasoned that
even if Peuse had agreed to keep the property on the CRP program a
breech of that term was not a material breach of the agreement
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entitling the Malkuchs to terminate the agreement. The court found
no material issues of fact and thus concluded the interest of
justice, judicial economy, and existing law required the granting
of Peuse's motion for partial summary judgment based on specific
performance.
The Malkuchs assert that summary judgment was not appropriate
because there were genuine issues of material fact. First, they
contend they did not have merchantable title to the property
pursuant to the terms of the agreement. Therefore, a question
exists as to whether there was a valid agreement in existence after
the closing date and grace period. Second, they contend that Betty
Malkuch did not initial the extension of the closing date which
creates a genuine issue of material fact regarding whether any
provision extending the closing date was binding upon her.
Finally, they argue that Peuse's obligation to keep the property in
CRP is implicit in the agreement's reference to CRP payments and a
question exists as to whether Peuse breached the agreement.
Peuse asserts that the issues of merchantable title and the
extension of the agreement's closing date were not presented by the
Malkuchs prior to their response to Peuse's motion for summary
judgment. Therefore, Peuse contends the District Court's grant of
partial summary judgment on the issues set forth by the parties at
the time the summary judgment motion was filed was proper. Peuse
reasons that in any event the District Court considered the
Malkuchs' new defenses and concluded they were not material to an
award of summary judgment based on specific performance.
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Specific performance may be compelled pursuant to
§ 27-l-411(4), MCA, when "it has been expressly agreed in writing,
between the parties to the contract, that specific performance
thereof may be required by either party or that damages shall not
be considered adequate relief." In Halcro v. Moon (1987), 226
Mont. 121, 125, 733 P.2d 1305, 1307, we held that summary judgment
based on specific performance was appropriate when the buyer
attempted to rescind on a buy/sell agreement after he discovered
water problems in the house he was purchasing. We said:
"A breach which goes to only part of the consideration,
is incidental and subordinate to the main purpose of the
contract and may be compensated in damages does not
warrant a rescission of the contract; the injured party
is still bound to perform his part of the agreement, and
his only remedy for the breach consists of the damages he
has suffered therefrom."
Halcro, 733 P.2d at 1307 (quoting Johnson v. Meiers (1946), 118
Mont. 258, 164 P.2d 1012). In Smith v. Johnson (1990), 245 Mont.
137, 798 P.2d 106, we held that negotiations of terms beyond the
buy/sell agreement do not destroy the right to seek specific
performance. We concluded in that case that the sellers could seek
specific performance because they were willing to conform in
accordance with the provisions of the buy/sell agreement. Smith,
798 P.2d at 110.
1n this instance, Peuse was willing to close on the property
On the first closing date and continually thereafter. The
agreement clearly had no provision requiring that the property
continue in CRP. The Malkuchs' failure to perform the agreement
was due to the Malkuchs' concern over the continuation of the
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property in CRP. We agree with the District Court's reasoning that
the disagreement concerning the property's participation in CRP was
not material to the main purpose of the agreement and did not
abrogate the remedy of specific performance. As the District Court
noted in this case, the agreement to sell and purchase explicitly
provided for the remedy of specific performance. Accordingly, we
conclude that there were no questions of material fact, and under
the facts presented in this case specific performance could be
enforced as a matter of law. We therefore affirm the District
Court's grant of summary judgment in favor of Peuse.
ISSUE 2
Did the District Court err in denying the Malkuchs the
opportunity to amend their answer?
We review a district court's denial of a party's motion for
leave to amend the pleadings to determine if the district court
abused its discretion. Trout v. Bennett (1992), 252 Mont. 416,
429, 830 P.Zd 81, 88. Rule 15(a), M.R.Civ.P., provides that a
party may amend its pleading by leave of court and leave shall be
freely given when justice so requires. An opportunity to amend a
pleading is not appropriate, however, when the party opposing the
amendment would incur substantial prejudice as a result of the
amendment. Kearns v. McIntyre Construction Co. (1977), 173 Mont.
239, 248, 567 P.2d 433, 438.
In this case, the Malkuchs moved for leave to amend their
answer after a motion for partial summary judgment on those issues
had been filed. In addition, we note that the Malkuchs' request to
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amend their answer was filed two years after the original pleadings
were filed. The Malkuchs contend that their request was timely
because additional defenses became apparent after discovery
documents were given to the Malkuchs' new attorney. However, the
discovery documents the Malkuchs refer to were the Malkuchs'
answers to Peuse's request for admissions. The Malkuchs were
therefore already aware of the matters "discovered" in those
documents
Although the attorney who composed the original answer
withdrew from the case, no evidence was presented that the attorney
lacked the skills to adequately represent the Malkuchs. In fact,
the Malkuchs retained his services without apparent complaint until
he was forced to withdraw because of illness. The fact that the
new attorney "discovered" additional defenses not contemplated by
the original attorney does not excuse an inopportune request for
amendments when those defenses were available to the original
attorney. Otherwise
[tlhe result contended for would allow seriatim assertion
of claims. Under such a process, one of the important
thrusts of the rules of civil and appellate procedure--
that actions contain all related claims and parties in
order that cases proceed in an orderly and expeditious
manner to final judgment--would be completely undone.
The detriment to parties litigant, as well as the burden
such a process would place on Montana courts, cannot be
overstated.
Stanford v. Rosebud County (1992), 254 Mont. 474, 477-78, 839 P.2d
93, 95.
While the rule [15(a), M.R.Civ.P.1 favors allowing
amendments, a trial court is justified in denying a
motion for an apparent reason "such as undue delay, bad
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faith or dilatory motive on the part of the movant.
repeated failure- to cure deficiencies by amendments
previously allowed, undue prejudice to the opposing party
by allowance of the amendment, futility of the amendment,
etc."
Lindeys v. Professional Consultants (1990), 244 Mont. 238, 242, 797
P.2d 920, 923 (quoting Foman v. Davis (1962), 371 U.S. 178, 182, 83
S. Ct. 227, 230, 9 L. Ed. 2d 222, 226).
The delays in this case, although not necessarily undue, were
all for the benefit of the Malkuchs. The Malkuchs were represented
and there was sufficient time to make any necessary amendments
prior to the time summary judgment was requested. If the amendments
were allowed after the motion for summary judgment, Peuse would be
unduly prejudiced since his motion was based on the original
pleadings which remained unchanged for almost two years. Litigants
should be allowed to change legal theories after a motion for
summary judgment has been filed only in extraordinary cases.
Therefore, the District Court was within its discretion in denying
the Malkuchs leave to amend their answer, and we affirm the
District Court's order.
m=
We affirm.
Justice
We concur:
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