No. 04-045
IN THE SUPREME COURT OF THE STATE OF MONTANA
2004 MT 351
CRANE CREEK RANCH, INC.,
Plaintiff and Appellant,
v.
PAUL CRESAP,
Defendant and Respondent.
APPEAL FROM: District Court of the Seventh Judicial District,
In and for the County of Richland, Cause No. DV 2000-24
The Honorable David Cybulski, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Gary L. Jackson, Attorney at Law, Sidney, Montana; Gene R. Jarussi, Jarussi
& Bishop, Billings, Montana
For Respondent:
Fred E. Whisenand and Ken G. Hedge, Crowley, Haughey, Hanson, Toole
& Dietrich, Williston, North Dakota
Submitted on Briefs: June 15, 2004
Decided: December 14, 2004
Filed:
__________________________________________
Clerk
Justice Patricia O. Cotter delivered the Opinion of the Court.
¶1 Crane Creek Ranch, Inc. (Crane Creek) appeals the judgment of the Seventh Judicial
District Court, Richland County, granting Paul H. Cresap’s (Cresap) Motion for Summary
Judgment. We affirm.
¶2 We address the following issue on appeal: Did the District Court err in granting
Cresap’s Motion for Summary Judgment, thereby finding that Cresap was not liable of
negligent misrepresentation?
FACTUAL AND PROCEDURAL BACKGROUND
¶3 Crane Creek participated as a bidder in a sealed auction for the sale of certain real
property in Richland County owned by Diane Sorenson (Sorenson) and her three children.
Paul H. Cresap (Cresap), Sorenson’s attorney, prepared the written auction instructions
provided to Crane Creek and to Marvin and Ervin Goss (the Goss brothers) as potential
bidders.
¶4 The bidding instructions stated that Sorenson retained the right to reject all bids below
$270,000.00. However, undisclosed was the fact that Sorenson had determined that
$270,000.00 was the minimum amount she would take for the property. Nowhere in the
bidding instructions did Cresap list $270,000.00 as the minimum bid. The instructions also
stated that any bidder present at the sale would have the option of raising a bid, so long as
that bidder raised the bid by five percent of the highest bid.
¶5 Crane Creek bid $248,000.00 in its sealed bid. Sorenson rejected this bid. The Goss
brothers bid $305,560.00 in their sealed bid. Once this occurred, Cresap advised Crane
Creek that it was no longer considered a bidder because it had not met the $270,000.00
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minimum bid requirement, and therefore Crane Creek could not raise its bid. Thereafter the
sale of the property to the Goss brothers was completed.
¶6 Crane Creek filed an action against Cresap and Sorenson, asserting claims for specific
performance, fraud, negligent misrepresentation, and deceit. Crane Creek then moved for
partial summary judgment, and Cresap moved for summary judgment in his favor on all
claims against him. The District Court denied Crane Creek’s motion and granted Cresap’s
motion. Thereafter, a stipulation and order for dismissal with prejudice for all remaining
claims against Sorenson was signed by the parties and filed with the court.
¶7 In granting Cresap’s Motion for Summary Judgment, the District Court found that the
basic facts surrounding the bidding process were undisputed, and that the sale was properly
completed to the highest bidder. Thus, it concluded that there was no factual basis for
recovery against Cresap. Crane Creek appeals from the District Court’s grant of Cresap’s
Motion for Summary Judgment.
STANDARD OF REVIEW
¶8 We review a district court’s grant or denial of a motion for summary judgment de
novo. Cole ex rel. Cole Revocable Trust v. Cole, 2003 MT 229, ¶ 8, 317 Mont. 197, ¶ 8, 75
P.3d 1280, ¶ 8. The movant must prove that no genuine issues of material fact exist. Once
the movant demonstrates this, the burden shifts to the non-moving party to prove that a
genuine issue of material fact does exist. After a district court determines that no genuine
issues of material fact exist, the district court must then determine whether the movant is
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entitled to judgment as a matter of law. Cole, ¶ 8. We review a district court’s legal
conclusions for correctness. Cole, ¶ 8.
DISCUSSION
¶9 Crane Creek argues that the District Court erred in granting Cresap’s Motion for
Summary Judgment because: (1) the written and oral representations made by Cresap “were
incomplete and misleading as to critical terms of the auction that were established and in
existence at the time the representations were made;” (2) it relied both upon the “unqualified
written representation about oral bidding made by Cresap in the Instructions, in formulating
and submitting its initial sealed bid,” and upon Cresap’s representation that it would be
allowed a recess; and (3) “Cresap’s misrepresentations and failure to disclose [rules
essential to the auction process] were certainly a substantial factor in bringing about Crane
Creek’s loss of the opportunity to orally bid on the property, and its resulting damages.”
¶10 Cresap responds first that this Court should not review Crane Creek’s argument, as
Crane Creek raises its negligent misrepresentation argument for the first time now on appeal.
However, in the alternative, Cresap argues that “Crane Creek has not offered any legal
authority supporting its apparent position that Paul [Cresap], the attorney for Diane
[Sorenson], somehow owed a duty of care to Crane Creek, one of the potential purchasers
of Diane’s property and a potential adverse party.” We conclude this argument is
determinative of the question before us.
¶11 As a general rule, an attorney’s duty of loyalty runs to his client, and not to third
parties with whom he has no agency relationship. See Rhode v. Adams, 1998 MT 73, 288
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Mont. 278, 957 P.2d 1124. Crane Creek was at all times aware that Cresap was acting as
Sorenson’s attorney in these proceedings, and that he prepared the auction instructions in that
capacity. It has presented no factual basis or legal authority to support its contention that
Cresap owed an independent duty of due care to it, as opposed to his client Sorenson.
¶12 It is also well established in Montana that the attorney-client relationship is an agency
relationship. Smith v. Fladstol (1991), 248 Mont. 18, 19, 807 P.2d 1361, 1362. Here,
Cresap was acting at all times as attorney and agent for Sorenson, his principal. Under § 28-
10-602, MCA, the principal will be held liable to third persons for the negligent acts of her
agents. An agent, on the other hand, is not liable to third persons for acts performed in the
course of his agency unless, with the consent of his principal, he receives personal credit for
a transaction, he enters into a written contract in the name of his principal without believing
in good faith he has the authority to do so, or his acts are wrongful in their nature. Section
28-10-702, MCA.
¶13 The allegations against Cresap spring from Crane Creek’s contention that he made
written and oral misrepresentations that resulted in Crane Creek’s damages. See ¶ 10. There
is no allegation that Cresap engaged in an independent wrong outside the scope of his agency
relationship with Sorenson. Thus, under the provisions of § 28-10-702, MCA, Cresap, as
Sorenson’s agent, cannot be held individually liable to Crane Creek, a third party; any
negligence on his part while acting in the scope and discharge of his duties as Sorenson’s
agent, would be imputed to Sorenson under § 28-10-602, MCA.
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¶14 As noted above, Crane Creek dismissed its cause of action against Sorenson with
prejudice. Under the principles set forth above, it would be Sorenson and not Cresap who
would be liable for Cresap’s negligent acts undertaken in his capacity as her attorney and
agent. There is simply no factual or legal basis for holding Cresap directly liable to Crane
Creek. Therefore, we conclude the District Court did not err in granting summary judgment
in favor of Cresap.
¶15 We disagree with the basis for the District Court’s summary judgment order.
However, as we have frequently done in the past, we will affirm a district court’s correct
conclusion even when that conclusion may have been reached for the wrong reason. Essex
Ins. Co. v. Jaycie, Inc., 2004 MT 278, ¶ 16, 323 Mont. 231, ¶ 16, 99 P.3d 651, ¶ 16.
¶16 Affirmed.
/S/ PATRICIA O. COTTER
We Concur:
/S/ KARLA M. GRAY
/S/ JOHN WARNER
/S/ JIM RICE
/S/ W. WILLIAM LEAPHART
/S/ JAMES C. NELSON
/S/ JIM REGNIER
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