Kunst v. Pass

97-468

No. 97-468

IN THE SUPREME COURT OF THE STATE OF MONTANA

1998 MT 71

DENISE KUNST and
CHARLA ERPENBACH,

Plaintiffs and Appellants,
v.

CHARLES B. PASS and
SHIRLEY A. PASS,

Defendants and Respondents.

APPEAL FROM: District Court of the Eighteenth Judicial District,
In and for the County of Gallatin,
The Honorable Mike Salvagni, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Michael J. San Souci, Bozeman, Montana

For Respondent:

Steve Reida, Landoe, Brown, Planalp, Braaksman & Reida,
Bozeman, Montana

Submitted on Briefs: November 6, 1997

Decided: March 31, 1998
Filed:

__________________________________________

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Clerk

Justice William E. Hunt, Sr., delivered the Opinion of the Court.

¶1 Plaintiffs Denise Kunst (Kunst) and Charla Erpenbach (Erpenbach)
(collectively "Plaintiffs") appeal from the order of the District Court for the
Eighteenth Judicial District, Gallatin County, denying their post-trial motion
for attorney's fees and costs. We affirm in part, reverse in part, and remand
for further proceedings consistent with this opinion.

¶2 The issues raised on appeal are as follows:

¶3 1. Did the District Court err in denying Plaintiffs' bill of costs as
untimely?

¶4 2. Did the District Court err in denying Plaintiffs' request for
attorney's fees?
FACTUAL AND PROCEDURAL BACKGROUND

¶5 Erpenbach, a tenant, and Kunst, her overnight guest, suffered carbon
monoxide poisoning due to a furnace leak while staying at an apartment rented
from Defendants Charles Pass and Shirley Pass. Plaintiffs filed a four-count
complaint against Defendants. The caption of the first count alleged general
negligence, and paragraph seven of that count stated that Plaintiffs were
bringing that claim pursuant to § 27-1-701, MCA, and the Residential
Landlord and Tenant Act, § 70-24-303(1)(d), MCA (the "Act"). The second
count alleged breach of warranty of habitability and the third count alleged
strict liability. Both of those counts also referenced the Residential Landlord
and Tenant Act, § 70-24-303, et seq., MCA. Finally, the fourth count alleged
res ipsa loquitur. While that count did not reference the Act, it incorporated
by reference every allegation contained within the first three counts. Among
the various damages requested, Plaintiffs requested costs of the suit and any
other relief the court deemed just and proper.

¶6 The case proceeded to a jury trial on August 20, 1996. After the
presentation of the evidence, the Plaintiffs moved for a directed verdict on the
liability issue pursuant to the Act. The presiding District Court Judge Larry
Moran granted their motion and held that the jury would consider only the
amount of damages to be assessed. At that same hearing, the Plaintiffs also
requested costs and attorney's fees pursuant to the Residential Landlord and
Tenant Act. However, the court reserved its decision on the applicability of
that Act and the attorney's fees issue until the conclusion of the trial.

¶7 The jury returned a verdict for Plaintiffs on August 22, 1996, awarding
them each $5,000 in damages. Plaintiffs filed a post-trial motion for attorney's
fees and costs on September 10, 1996. On that same date, the District Court
formally entered judgment in the case. Subsequently, on December 6, 1996,
the District Court held a hearing on the issue of costs and attorney's fees, and
took the matter under advisement.

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¶8 Before he had decided Plaintiffs' motion, District Court Judge Moran
retired on December 31, 1996. The case was thus reassigned to District Court
Judge Mike Salvagni, who reheard the motion on February 14, 1997. On
March 21, 1997, the court issued an order denying Plaintiffs' request for both
costs and attorney's fees. It held that Plaintiffs' motion for costs was untimely
pursuant to § 25-10-501, MCA. The court also held that the request for
attorney's fees was untimely, because Plaintiffs had not placed Defendants on
notice of a claim for attorney's fees until after the court directed a liability
verdict. Finally, it held that the Residential Landlord and Tenant Act did not
apply, because the Plaintiffs had not limited their cause of action to a violation
of that statute, and Plaintiffs had prevailed in the directed verdict solely under
the general theory of negligence. Plaintiffs appeal.
ISSUE ONE

¶9 Did the District Court err in denying Plaintiffs' bill of costs as
untimely?

¶10 We review a district court's conclusions of law to determine whether
they are correct. Carbon County v. Union Reserve Coal Co. (1995), 271
Mont. 459, 469, 898 P.2d 680, 686.

¶11 The law requires a prevailing party to file the bill of costs within five
days after the jury renders its verdict. Section 25-10-501, MCA, states:
Bill of costs. The party in whose favor judgment is rendered
and who claims his costs must deliver to the clerk and serve
upon the adverse party, within 5 days after the verdict or notice
of the decision of the court or referee or, if the entry of the
judgment on the verdict or decision be stayed, then before such
entry is made, a memorandum of the items of his costs and
necessary disbursements in the action or proceeding, which
memorandum must be verified by the oath of the party, his
attorney or agent, or the clerk of his attorney, stating that to the
best of his knowledge and belief the items are correct and that
the disbursements have been necessarily incurred in the action
or proceeding.

¶12 In this case, the jury verdict was signed and filed on August 22, 1996.
Plaintiffs filed their motion to tax costs with a memorandum of costs nineteen
days later on September 10, 1996. Even allowing Plaintiffs two additional
days for the weekend and three additional days for mailing, the Plaintiffs
failed to file their bill of costs within five days of the jury verdict. The
District
Court thus properly denied Plaintiffs' bill of costs as untimely.

¶13 Plaintiffs argue that at the August 22, 1996 hearing where the court
granted Plaintiffs a directed verdict, District Court Judge Moran also granted
them an extension of the five-day time limit when it ordered that their bill of
costs should be filed within twenty days after the conclusion of trial. But the
transcript of the hearing contains no discussion about an enlargement of the
time for filing the bill of costs, and the record does not reflect that such an
order was ever entered. At the December 6, 1996 hearing on the motion for

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attorney's fees, Judge Moran himself did not specifically recall ever making
such an order, although he conceded that it "sounds like something the Court
would do," and stated that he was "not going to dispute" that he gave the
Plaintiffs twenty days to file that document.

¶14 Notwithstanding the court's concession that it might have allowed the
Plaintiffs' an additional twenty days, the bill of costs is untimely. The five-day
time limit provided for in the statute is mandatory: a party "must" file a
memorandum of costs within five days after the verdict is entered. Section
25-10-501, MCA. Plaintiffs were thus tardy in filing that document.

¶15 Plaintiffs next contend that the five-day limit did not begin to run until
the District Court entered the judgment on September 10, 1996. Because they
filed their bill of costs that same day, they maintain that they were thus well
within the statutory time period. But it is well-settled that where a case
involves a jury trial, as opposed to a bench trial, the time period begins to run
on the day following the jury verdict and not on the entry of the judgment.
R.H. Grover, Inc. v. Flynn Ins. Co. (1989), 238 Mont. 278, 288-89, 777 P.2d
338, 344. In Grover, this Court noted that in a bench trial, the judge has more
latitude than a jury as to when it will render its decision. In such a case, the
time period is computed from the day the court enters its judgment, and not
when the court orally announces its decision. The oral announcement of a
decision, which may be subject to changes when the court finally enters the
judgment, is not comparable to the jury rendering its verdict. Thus, in a jury
trial, the time limit begins to run on the day after the jury enters its verdict.
Grover, 238 Mont. at 288-89, 777 P.2d at 344. See also Rocky Mountain
Enterprises, Inc. v. Pierce Flooring Carpet Barn (Mont. 1997), __ P.2d __, __,
54 St. Rep. 1410, 1417 ("[T]o claim costs under § 25-10-501, MCA, the
plaintiffs had five days from the date of the jury verdict to file and serve upon
the adverse party a verified memorandum of costs.")

¶16 Plaintiffs maintain that this case should be treated as a bench trial for
purposes of computing the time limitations, because the District Court granted
Plaintiffs a directed verdict on the liability issue. Even so, however, the case
still involved a jury trial and the jury rendered a verdict on the damages issue.
When the court granted the directed verdict, it did not serve as the trier of fact,
but instead directed liability as a matter of law.

¶17 We hold that the District Court did not err in denying Plaintiffs' bill of
costs as untimely.
ISSUE TWO

¶18 Did the District Court err in denying Plaintiffs' request for attorney's
fees?

¶19 As previously stated, the standard of review of a district court's
conclusions of law is whether the court's interpretation of the law is correct.
Carbon County, 271 Mont. at 469, 898 P.2d at 686.

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¶20 In denying the Plaintiffs' motion for attorney's fees, the District Court
stated that the Defendants' "liability was limited to the general theory of
negligence as Judge Moran concluded." After considering the allegations of
the complaint, the directed verdict, and the jury verdict on damages, the court
reasoned that Plaintiffs prevailed solely under a general theory of negligence
and not under the Residential Landlord and Tenant Act, § 70-24-101, MCA,
et seq. It thus concluded that the attorney fees provision of that Act did not
apply and denied Plaintiffs' motion.

¶21 We do not agree. In rendering the directed verdict, Judge Moran did
not conclude that "liability was limited to the general theory of negligence."
Instead, he specifically left open the question as to whether the Residential
Landlord and Tenant Act applied, and if so, whether Plaintiffs were entitled
to attorney's fees under that statute. As he stated:
Well, that's a matter that will have to be handled after the
jury trial is over. I haven't at this time made any determination
about whether the Landlord/Tenant Act applies to this case, nor
whether my ruling is based upon the Landlord/Tenant Act. So
when we get around to that issue, you're going to have to bear
the burden of showing the applicability of the Landlord/Tenant
Act, as well as your entitlement to attorney's fees under that
Act.
Before Judge Moran could rule on that issue, he retired. Upon review, we
conclude that liability was not limited to the general theory of negligence, but
also arose under the Act, § 70-24-101, MCA, et seq.

¶22 The Residential Landlord and Tenant Act provides in part:
(1) A landlord shall:

. . . .

(b) make repairs and do whatever is necessary to put and
keep the premises in a fit and habitable condition;

. . . .

(d) maintain in good and safe working order and condition
all electrical, plumbing, sanitary, heating, ventilating, air-conditioning,
and other facilities and appliances, including
elevators, supplied or required to be supplied by the landlord;
Section 70-24-303, MCA.

¶23 In this case, every single count of Plaintiffs' complaint references or
incorporates by reference the Residential Landlord and Tenant Act. Although
the first count is captioned as "general negligence," the count specifically
states that it is also brought pursuant to the Act, § 70-24-303(1)(d), MCA.
When the Plaintiffs moved for a directed verdict, they did not do so on general
negligence grounds, but instead contended that the Defendants violated the
Act. As the transcript of the hearing on that motion reveals:

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[Plaintiffs' attorney]: I'd like -- at this time, I would like
to move for a directed verdict on behalf of the Plaintiffs in this
case. As reflected in our proposed jury instructions, as reflected
in the law, referenced in our trial brief, I think that this case
clearly falls under the Montana Residential Landlord & Tenant
Act and, in particular, Section 70-24-303(1)(d), which, in part,
provides, "A landlord shall maintain in good and safe working
order and condition all heating, ventilating and other facilities
and appliances supplied or required to be supplied by him."

Based upon that, based upon what are, in effect, the
admissions at trial of the Defendants, the acknowledged
responsibility on their part, I believe that it would be appropriate
to have a directed verdict on this issue.

¶24 When Judge Moran granted Plaintiffs' motion for a directed verdict, he
held that as a matter of law the Defendants failed to keep the heating system
in a good and safe working order. He stated:
[T]he owners of the premises were well aware that they had a
duty to inspect the premises on a routine basis, that duty and
warning or admonition or advice that had been rendered first in
the inspection report. And I think that that is a matter that
repeats itself down through every year after the inspection
report, that they should check out these matters on an annual
basis.
The evidence is clear that they never checked out the
premises. They never looked at the heating system. They never
did anything to inspect the heating system, either personally or
through the retaining services of an expert to do that.
We have then the testimony of Mr. Doug Schnell, who
testifies that when he got to the premises and looked at the
thing, that the boiler -- that it was in a state and a condition that
an inspection of it would have -- he believes would have
precluded the boiler ever to have gotten into that condition, so
that there could have been the leaking of gas fumes resulting in
carbon monoxide poisoning to the Plaintiffs.
The defendant has essentially come to court with no
evidence that would counter that, either in weight or quantity.
I feel that this is a proper case to direct a verdict of liability on
behalf of the Plaintiffs, and I'll do that.

¶25 Although the court did not expressly hold that the Defendants violated
the Act, the undisputed facts that form the very basis of his holding indicate
that as a matter of law the Defendants breached the duty imposed by the Act
to "make repairs and do whatever is necessary to put and keep the premises in
a fit and habitable condition," and "maintain in good and safe working order
and condition all . . . heating . . . facilities. . . supplied by the landlord."
Section 70-24-303(b),(d), MCA. We thus hold that the Defendants breached
their statutory duties pursuant to the Residential Landlord and Tenant Act.

¶26 Having held that the Defendants breached the duties imposed by the

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Act, the next question is whether this breach exposed Defendants to liability
for damages and for attorney's fees. Defendants contend that an award is not
warranted because there is no precedent for a personal injury plaintiff to
receive attorney's fees under the Act. Defendants are incorrect. In Calder v.
Anderson (1996), 275 Mont. 273, 911 P.2d 1157, we addressed the
circumstances under which a landlord could be held liable for personal injuries
caused to a tenant for failing to comply with the Act. We stated that because
"§ -303 of the Act was obviously intended by the legislature to be for the
benefit and safety of tenants, a landlord's failure to comply with the statute is
negligent per se." Calder, 275 Mont. at 278, 911 P.2d at 1160. We also
repeated the well-settled holding that:
The violation of statutes is negligence as a matter of law when
the purpose of the statute is to protect a class of persons, the
plaintiff is a member of that class, and the defendant is a person
against whom a duty is imposed. The purpose of the statute also
must be to protect against the kind of injury received by the
plaintiff.

Calder, 275 Mont. at 278, 911 P.2d at 1160 (citing Nehring v. LaCounte
(1986), 219 Mont. 462, 468, 712 P.2d 1329, 1333) (internal citations omitted).

¶27 In this case, Defendants, as landlords, were members of the class on
whom a duty was imposed; carbon monoxide poisoning from the faulty
heating system was the type of injury that the statute was designed to prevent;
and Plaintiff Erpenbach, a tenant, was a member of the class the Act was
designed to protect. See Calder, 275 Mont. at 279, 911 P.2d at 1160. The
Defendants, however, contend that Plaintiff Kunst has no standing to enforce
remedies under the Residential Landlord and Tenant Act because she was only
an overnight guest of Defendant Erpenbach and was not a tenant. The
Defendants cite no authority and provide no analysis to support this position.

¶28 One Montana case has touched upon the issue of a landlord's liability
to third persons under the Act. Rennick v. Hoover (1980), 186 Mont. 167, 606
P.2d 1079, overruled on other grounds by Richardson v. Corvallis Pub. School
Dist. (Mont. 1997), 950 P.2d 748, 54 St. Rep. 1422. In Rennick, a guest of a
tenant brought suit against the landlords after he fell on an icy cement slab in
the common area of the apartment building. Rennick, 186 Mont. at 169, 606
P.2d at 1080. This Court declined to address the landlord's statutory liability
under the Residential Landlord and Tenant Act, because the plaintiff was not
a tenant. This Court stated:
In Montana, a landlord owes a duty to the tenant to "keep all
common areas of the premises in a clean and safe condition."
Section 70-24-303, MCA. However, this appeal does not
involve an injury to a tenant. . . .
Rennick, 186 Mont. at 170, 606 P.2d at 1081. In making that statement, the
Court provided no further analysis and it is not clear whether the issue of a
landlord's liability to third persons under the Act was actually an issue on
appeal. The statement constitutes dicta only and was not the holding of the
Court. We thus view the issue of whether a guest of a tenant is a member of
the class that the Act was intended to protect to be one of first impression in

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Montana.

¶29 Upon review, we conclude that pursuant to Montana's Residential
Landlord and Tenant Act, a landlord's liability is not limited to tenants, but
also extends to third persons who may foreseeably be on the premises. Indeed,
the Act expressly extends its remedies to any person who is aggrieved when
the landlord breaches the duties embodied in § 70-24-303, MCA. Specifically,
§ 70-24-401, MCA, states that the "remedies provided by this chapter must be
administered so that an aggrieved party may recover appropriate damages."
The comment to the corresponding section of the Uniform Residential
Landlord and Tenant Act, from which Montana's Act was substantially
adopted, explains that "[t]he use of the words 'aggrieved party' is intended to
indicate that in appropriate circumstances rights and remedies may extend to
third persons under this Act or supplementary principles of law. . . ."
Uniform Residential Landlord and Tenant Act, 7B Uniform Laws Annotated
section 1.105(a).

¶30 In our view "aggrieved party" includes third persons foreseeably on the
property, such as the tenant's guest, who suffers injuries when the landlord
breaches the duties embodied in the Act. This Court is not alone in its
interpretation of the Act. Based upon precisely the same reasoning, the
Oregon Supreme Court has also held that a tenant's guest has a cause of action
against a landlord pursuant to Oregon's Residential Landlord and Tenant Act
for injuries resulting from the landlord's violation of its statutory duties.
Humbert v. Sellars (Or. 1985), 708 P.2d 344, 347. The pertinent portions of
Oregon's Act are substantially identical to Montana's Act. Upon interpreting
the meaning of "aggrieved party" in the Oregon Act, the Oregon Supreme
Court similarly held:
An aggrieved party includes a tenant's guest who is injured by
a landlord's failure to maintain the premises in a habitable
condition, if the tenant herself could recover damages for the
same injury. The measure of a "habitable condition" may be
what is habitable by those who reside in the premises, but when
the measure is breached, ORS 91.725 recognizes that others
may suffer the consequences. The [tenant's guest] therefore has
a cause of action if she is injured because of the [landlord's]
breach of the act.

Humbert, 708 P.2d at 347.

¶31 In addition to the term "aggrieved party" contained within the remedies
section of the Act, a review of § 70-24-303, MCA, itself also leads us to
conclude that the duties imposed by the Act extend to third persons such as a
guest of a tenant. The comment to the section of the Uniform Residential
Landlord and Tenant Act which corresponds to § 70-24-303, MCA, indicates
that the standards of habitability embodied in that section extend beyond
simply the contractual rights between a landlord and a tenant. Instead, the
standards involve a matter of public police power. The comment states:
Vital interests of the parties and public under modern
urban conditions require the proper maintenance and operation

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of housing. It is thus necessary that minimum duties of
landlords and tenants be set forth.

. . . .
Standards of habitability dealt with in this section are a
matter of public police power rather than the contract of the
parties or special landlord-tenant legislation. This section
establishes minimum duties of landlords consistent with public
standards.

Uniform Residential Landlord and Tenant Act, 7B Uniform Laws Annotated
section 2.104.

¶32 The fact that a person does not enjoy a contractual landlord/tenant
relationship with the landlord is thus not dispositive. Rather, what is at issue
is whether the interests of public standards require that the standards of
habitability extend not only to tenants but to third persons in certain
circumstances. We conclude that they do. As evidence of these standards, we
turn to other areas of the law that govern the landlord's duty. For example, in
Limberhand v. Big Ditch Co. (1985), 218 Mont. 132, 706 P.2d 491, we held
that the status of the injured party does not affect a property owner's general
duty of care. Limberhand, 218 Mont. at 140, 706 P.2d at 496. Instead, a
landlord's duties under § 27-1-701, MCA, extend to all persons foreseeably
on the premises, including social guests of a tenant. Limberhand, 218 Mont.
at 145, 706 P.2d at 498, 499. Although the Residential Landlord and Tenant
Act establishes minimum duties of the landlord, nothing in the Act limits those
duties only to a tenant, and indeed we conclude that the public interests require
those duties to extend to any person foreseeably on the premises. In short, we
conclude that both Plaintiffs were members of the class the Act was designed
to protect, and Defendants' liability arose under the Residential Landlord and
Tenant Act, § 70-24-303, MCA.

¶33 Because liability arose under the Act, the Defendants may also be
required to pay attorney's fees. The Act provides that reasonable attorney's
fees may be awarded to any person who prevails in an action "arising under
this chapter." Section 70-24-442(1), MCA. In this case, both Plaintiffs
prevailed in an action arising under the Act. Hence, attorney's fees are an
appropriate award.

¶34 Defendants nonetheless urge this Court to affirm the District Court's
order denying attorney's fees for an additional reason. They point to Rule
8(a), M.R.Civ.P., which requires the complaint to contain "a demand for
judgment for the relief the pleader seeks," and contend that the District Court
correctly held that Plaintiffs did not put them on notice in their complaint,
their pretrial order or their trial brief that they sought attorney's fees. They
maintain that the first time Plaintiffs raised a claim for attorney's fees was
after the court granted a directed verdict on liability, and insist that the failure
to present this claim earlier bars their claim entirely. We reject Defendants'
position for several reasons.

¶35 First, it is well settled that Montana's rules of civil procedure, including

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Rule 8(a), M.R.Civ.P., are notice pleading statutes. Mysse v. Martens (1996),
279 Mont. 253, 266, 926 P.2d 765, 773; Butte Country Club v. Metropolitan
Sanitary & Storm Sewer Dist. No. 1 et al. (1974), 164 Mont. 74, 77, 519 P.2d
408, 409. Pursuant to Rule 8(a), M.R.Civ.P., a complaint must put a
defendant on notice of the facts the plaintiff intends to prove; the facts must
disclose the elements necessary to make the claim; and the complaint must
demand judgment for the relief the plaintiff seeks. Mysse, 279 Mont. at 266,
926 P.2d at 773; Rule 8(a), M.R.Civ.P.

¶36 In this case, the complaint does not specifically request attorney's fees.
However, the complaint itself was brought pursuant to the Residential
Landlord and Tenant Act. As pointed out earlier, the first count specifically
states that it was brought pursuant to § 70-24-303(1)(d), MCA, and both the
second and third counts specifically reference that Act. The fourth count
incorporates by reference each allegation of the other counts, including the
Act. Both Plaintiffs and Defendants reference the Act several times in the
pretrial order, and the Plaintiffs' trial brief addresses the Plaintiffs' claim that
the Defendants were liable under the Act for failing to properly maintain the
heating system. The Act itself provides that attorney's fees may be awarded
to the prevailing party in an action "arising under this chapter." Section
70-24-442(1), MCA. Accordingly, although the Plaintiffs did not specifically
request attorney's fees, it should have been apparent to Defendants that if
Plaintiffs prevailed, an award of attorney's fees was possible. Furthermore,
in the complaint the Plaintiffs requested that they be awarded "other and
further relief as the Court may deem just and proper." This Court liberally
construes pleadings, and under this demand for general relief, the court could
grant Plaintiffs any relief to which they were entitled.

¶37 Second, any claim by the Defendants of unfair surprise or that they had
no opportunity to defend themselves lacks merit. The Defendants had a full
opportunity to file objections to the request for attorney's fees and to be heard
at oral argument as to why the Plaintiffs should not receive such an award.
We conclude that the Defendants did indeed have notice and an opportunity
to defend themselves.

¶38 Finally, attorney's fees may be awarded only to a "prevailing party,"
which "means the party in whose favor final judgment is rendered." Section
70-24-442(2), MCA. It was thus entirely proper and necessary for Plaintiffs
to wait until after the court had granted them a directed verdict to file a motion
for attorney's fees. See § 70-24-442(1), MCA. Plaintiffs immediately
requested attorney's fees at the hearing where the court granted a directed
verdict, but the court stated it would not consider the motion until a later date
after the jury had rendered its verdict. Indeed the court conceded that it
probably gave them twenty days after the verdict to file their motion. Montana
does not have a statute that provides for a mandatory time limit for filing such
a motion, such as the statute that requires the bill of costs to be filed within
five days of the verdict. Section 25-10-501, MCA. In sum, we hold that the
Plaintiffs' request for attorney's fees was timely.

¶39 For the foregoing reasons, we hold that the District Court erred in
denying Plaintiffs' request for attorney's fees. However, the award of

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attorney's fees still remains within the court's discretion. Section 70-24-442(1),
MCA. Because the Plaintiffs' request for attorney's fees was denied
for legal reasons, the court did not exercise its discretion. We thus remand this
issue to the District Court for a determination as to whether to award
attorney's fees, and if so, for what amount.

¶40 Affirmed in part, reversed in part, and remanded for further proceedings
consistent with this opinion.

/S/ WILLIAM E. HUNT, SR.

We concur:

/S/ TERRY N. TRIEWEILER
/S/ W. WILLIAM LEAPHART
/S/ JIM REGNIER
/S/ JAMES C. NELSON

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