97-530
No. 97-530
IN THE SUPREME COURT OF THE STATE OF MONTANA
1998 MT 131
MICHAEL J. ZIMMERMAN and
GAIL L. ZIMMERMAN,
Plaintiffs/Appellants,
v.
KEVIN CONNOR, d/b/a KEVIN
CONNOR CONSTRUCTION,
Defendant/Respondent.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis and Clark,
The Honorable Dorothy McCarter, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
John C. Doubek, Small, Hatch, Doubek & Pyfer, Helena,
Montana
For Respondent:
John P. Poston, Harrison, Loendorf, Poston & Duncan,
Helena, Montana
Submitted on Briefs: May 14, 1998
Decided:May 28, 1998
Filed:
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__________________________________________
Clerk
Justice James C. Nelson delivered the Opinion of the Court.
1 This is an appeal from the decision and order on motion to dismiss of
the First Judicial District Court, Lewis and Clark County, dated August 18,
1997, wherein the court granted defendant's motion to dismiss plaintiffs'
complaint on the basis that the complaint raises matters involving compulsory
counterclaims in a related cause of action. We affirm.
BACKGROUND
2 In April 1996, Kevin Connor, d/b/a Kevin Connor Construction
(Connor), filed a lien foreclosure action against Michael J. Zimmerman and
Gail L. Zimmerman (Zimmermans). That cause of action, Lewis and Clark
County Cause No. ADV 96-438, was tried to a jury in December 1997, and
resulted in a verdict for Connor.
3 In the instant cause of action, Zimmermans claim that Connor
contracted with Zimmermans to remodel and expand the business premises of
Zimmermans in Helena, Montana, known as the "Country Kitchen."
Zimmermans contend that Connor negligently failed to protect the roof of the
building from heavy rain during the construction process with the result that
the building was damaged by flooding. Zimmermans claim various damages
as a result of Connor's alleged negligence, including structural damages, loss
of income, loss of rent and other expenses.
4 Connor moved to dismiss Zimmermans' complaint contending that Rule
13(a), M.R.Civ.P., precluded Zimmermans from litigating their cause of action
because their claims were compulsory counterclaims that were required to
have been asserted in the lien foreclosure action which Connor filed against
Zimmermans. Following briefing, the First Judicial District Court, Lewis and
Clark County, ruled on the basis of our decision in Julian v. Mattson (1985),
219 Mont. 145, 710 P.2d 707, that Zimmermans' claims were in fact
compulsory counterclaims in the lien foreclosure action and that as such,
Zimmermans' complaint was barred, and was subject to dismissal.
5 This appeal followed.
ISSUE
6 The sole issue on appeal is whether the court correctly concluded that
the claims in Zimmermans' complaint were compulsory counterclaims under
Rule 13(a), M.R.Civ.P.
STANDARD OF REVIEW
7 The District Court's decision to dismiss a complaint on the basis of
Rule 13(a), M.R.Civ.P., is a conclusion of law. We review the legal
conclusions of a trial court de novo. We simply determine whether the
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tribunal's interpretation of the law is correct. See Boreen v. Christensen
(1994), 267 Mont. 405, 408, 884 P.2d 761, 762.
DISCUSSION
8 Rule 13(a), M.R.Civ.P., provides:
Compulsory counterclaims. A pleading shall state as a
counterclaim any claim which at the time of serving the
pleading the pleader has against any opposing party, if it arises
out of the transaction or occurrence that is the subject matter of
the opposing party's claim and does not require for its
adjudication the presence of third parties of whom the court
cannot acquire jurisdiction. But the pleader need not state the
claim if (1) at the time the action was commenced the claim was
the subject of another pending action, or (2) the opposing party
brought suit upon the claim by attachment or other process by
which the court did not acquire jurisdiction to render a personal
judgment on that claim, and the pleader is not stating any
counterclaim under this Rule 13.
9 As stated in our decision in First Bank Missoula v. District Court
(1987), 226 Mont. 515, 737 P.2d 1132, the purpose of this requirement is to
avoid a multiplicity of suits by requiring the parties to adjust, in one action,
their various differences growing out of any given transaction. First Bank
Missoula, 226 Mont. at 521, 737 P.2d at 1135 (citing Fredrichsen v. Cobb
(1929), 84 Mont. 238, 275 P. 267). "This insures that only one judicial
proceeding is required to settle all matters determinable by the facts or law and
to bring all logically related claims into a single litigation." First Bank
Missoula, 226 Mont. at 521, 737 P.2d at 1135-36 (citing Julian, 219 Mont.
145, 710 P.2d 707).
10 As we pointed out in First Bank Missoula:
Since a claim which "arises out of the transaction or
occurrence that is the subject matter of the opposing party's
claim" must be pleaded or is barred, it is important to
understand what the quoted phrase means. The United States
Supreme Court defined "transaction" as follows:
" Transaction' is a word of flexible
meaning. It may comprehend a series of many
occurrence[s], depending not so much upon the
immediateness of their connection as upon their
logical relationship . . . It is the one circumstance
without which neither party would have found it
necessary to seek relief. Essential facts alleged
by appellant enter into and constitute in part the
cause of action set forth in the counterclaim. That
they are not precisely identical, or that the
counterclaim embraces additional allegations . . .
does not matter. To hold otherwise would be to
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rob this branch of the rule of all serviceable
meaning, since the facts relied upon by the
plaintiff rarely, if ever, are, in all particulars, the
same as those constituting the defendant's
counterclaim." Moore v. New York Cotton
Exchange (1926), 270 U.S. 593, 610, 46 S.Ct.
367, 371, 70 L.Ed. 750, 757.
First Bank Missoula, 226 Mont. at 521-22, 737 P.2d at 1136.
11 Moreover, in Turtainen v. Poulsen (1990), 243 Mont. 355, 792 P.2d
1089, we stated that even though two lawsuits may require different proof,
identical evidence is not required for compulsory counterclaims. Rather, all
that is required is that the claims be logically related. Turtainen, 243 Mont.
at 359, 792 P.2d at 1092 (citing First Bank, 226 Mont. at 521-22, 737 P.2d at
1136).
12 Finally, Rule 13, M.R.Civ.P., makes no distinction between legal and
equitable counterclaims or suits but only between compulsory and permissive
counterclaims. If a defendant's counterclaim is compulsory it must be pleaded
regardless of whether the plaintiff's suit is legal or equitable in nature, and, if
not pleaded, a compulsory counterclaim will be barred. Turtainen, 243 Mont.
at 359, 792 P.2d at 1092.
13 In Connor v. Zimmerman, Cause No. ADV 96-438, Connor sued to
foreclose a construction lien which it claimed against the business premises of
Zimmermans and arising out of Connor's construction contract. Zimmermans'
claims in the case at bar arise out of the construction contract. In fact,
Zimmermans' answer in Connor's lien foreclosure suit sets up a second
affirmative defense and counterclaim as follows:
II.
With respect to the allegations in paragraph V of
[Connor's] complaint, [Zimmermans] allege that the Country
Kitchen commercial building sustained serious damage as a
result of certain flooding which occurred on July 10, 1995,
which flooding occurred because of negligence on the part of
[Connor]. One of the results of said flooding was that [Connor]
and [Zimmermans] did then agree to share some of the effort
toward getting the commercial building remodeled and
rehabilitated. Prior to the flooding there had been a bid given
by [Connor] to [Zimmermans] which [Zimmermans] had
accepted. Following the flooding much of the items which were
to be furnished by [Connor] were instead furnished by
[Zimmermans] and paid for by [Zimmermans].
14 Furthermore, in paragraph V of Zimmermans' second affirmative
defense and counterclaim in Connor's suit, Zimmermans contended that they
were damaged as a result of Connor's negligence and that even without such
negligence they had paid all sums owing which Connor's claimed in his lien
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foreclosure action.
15 Under the circumstances, we conclude that Zimmermans' claims in the
case at bar arise out of the transaction or occurrence that was the subject
matter of Connor's claims in his lien foreclosure action. Moreover, while
Zimmermans claim that the two causes of action involve different witnesses,
they have failed to demonstrate that the adjudication of their counterclaim
against Connor would have required the presence of third parties over whom
the court could not acquire jurisdiction. Furthermore, and contrary to
Zimmermans' argument, the fact that Connor's claim and Zimmermans'
counterclaim have a different legal basis and require different proof and
evidence, does not defeat application of the compulsory counterclaim rule,
providing that, as in this case, the claims and counterclaims are logically
related because they arise out of a single transaction. First Bank Missoula,
226 Mont. at 522, 737 P.2d at 1136; Turtainen, 243 Mont. at 359, 792 P.2d at
1092. Finally, neither of the exceptions set forth in the final sentence of Rule
13(a), M.R.Civ.P., is applicable here.
16 As previously mentioned, the District Court relied on our decision in
Julian. While Zimmermans attempt to distinguish the case at bar from the
facts of Julian, we conclude that Julian is persuasive authority for the trial
court's order of dismissal. Our decision in Julian was preceded by our
opinion in Mattson v. Julian (1984), 209 Mont. 48, 678 P.2d 654. Mattson
arose out of a transaction where a property owner entered into a contract for
construction work on his property. Upon completion of the work, the
contractor sued the owner for payment on the contract. The owner, however,
failed to properly plead a compulsory counterclaim based on his claim of
defective work for which he sought recoupment. The trial court refused
evidence of the defective workmanship claim since there was no properly
pleaded counterclaim. Mattson, 209 Mont. at 53, 678 P.2d at 657. Citing
Rule 13(a), M.R.Civ.P., we held that the owner was not entitled to present
evidence of defective performance inasmuch as he had not pleaded or
otherwise given notice of his defects theory prior to trial by way of a
compulsory counterclaim. Mattson, 209 Mont. at 54, 678 P.2d at 657-58.
17 Following our decision in Mattson, Julian sued, pleading the same
claim that was concluded to be the compulsory counterclaim in Mattson. In
affirming the district court's summary judgment in favor of the
defendant/contractor, we stated:
This Court has defined the term transaction as:
" that combination of acts and events, circumstances and
defaults, which, viewed in one aspect, results in the plaintiff's
right of action, and viewed in another aspect, results in the
defendant's right of action'(Cite omitted.), and it applies to any
dealings of the parties resulting in wrong, without regard to
whether the wrong be done by violence, neglect or breach of
contract.'" Scott v. Waggoner (1914), 48 Mont. 536, 545, 139
P. 454, 456.
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Julian, 219 Mont. at 148, 707 P.2d at 710.
18 The instant case is different from Julian only in that Zimmermans did
file a counterclaim against Connor but then chose not to pursue their
counterclaim in the lien foreclosure suit but, instead, opted to file a second
cause of action. Since Zimmermans' counterclaim was a compulsory
counterclaim in Connor's lien foreclosure action, the effect of Zimmermans'
failure to litigate their counterclaim in that action is res judicata. First Bank
Missoula, 226 Mont. at 522-23, 737 P.2d at 1136.
19 We conclude that the District Court correctly ruled that Zimmermans'
claim should have been pursued as a mandatory counterclaim in Connor's
foreclosure action and that, thus, their instant cause of action is barred. We
hold that the District Court properly dismissed Zimmermans' complaint.
20 Affirmed.
/S/ JAMES C. NELSON
We Concur:
/S/ J. A. TURNAGE
/S/ W. WILLIAM LEAPHART
/S/ KARLA M. GRAY
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