December 16 2008
DA 08-0019
IN THE SUPREME COURT OF THE STATE OF MONTANA
2008 MT 431N
FLATHEAD RIVER RANCH ESTATES,
Plaintiff and Appellee,
v.
PHILLIP WOLF and KATHLEEN WOLF,
Defendants and Appellants.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and For the County of Flathead, Cause No. DV 05-857 B
Honorable Ted O. Lympus, Presiding Judge
COUNSEL OF RECORD:
For Appellants:
Phillip Wolf and Kathleen Wolf (self-represented), Wheatridge, Colorado
For Appellee:
Sean S. Frampton, Morrison & Frampton, Whitefish, Montana
Submitted on Briefs: November 19, 2008
Decided: December 16, 2008
Filed:
__________________________________________
Clerk
Justice John Warner delivered the Opinion of the Court.
¶1 Pursuant to Section I, Paragraph 3(d)(v), Montana Supreme Court 1996 Internal
Operating Rules, as amended in 2003, the following memorandum decision shall not be cited
as precedent. It shall be filed as a public document with the Clerk of the Supreme Court and
its case title, Supreme Court cause number and disposition shall be included in this Court’s
quarterly list of noncitable cases published in the Pacific Reporter and Montana Reports.
¶2 Phillip and Kathleen Wolf (Wolfs) appeal from a judgment against them in the
Eleventh Judicial District Court, Flathead County. The District Court entered the Wolfs’
default as a sanction, and assessed damages at $2,351,122.76, including $500,000 in punitive
damages against the Wolfs and in favor of Appellee Flathead River Ranches Estates (FRRE).
We Affirm.
¶3 The Wolfs and FRRE entered into an agreement in August of 2003 whereby FRRE
purchased approximately 320 acres of undeveloped land in Flathead County from the Wolfs
for the purpose of developing and selling high end residential lots. The purchase price was
$2,250,000. The contract provided that the Wolfs would “carry back” $1,000,000 to
improve a 5.2 mile access road so that the roadbed would be 24-feet wide and ready to
receive asphalt that complied with Flathead County road standards. The parties executed a
mortgage against the real property in favor of the Wolfs to secure the carry back. The road
was to be completed on or before June 1, 2004. This date was later extended to July 1, 2004,
and the carry back amount was reduced to $800,000.
¶4 Approximately two miles of the road crosses Forest Service land. The Wolfs failed to
apply for a road improvement permit from the Forest Service until June 24, 2004. The
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Forest Service did not issue the permit because the required studies had not been completed
and the application was incomplete. The Wolfs did not construct the road.
¶5 FRRE applied for and received a permit to construct the road in October of 2004. By
mid-2005, due to the lack of an adequate road, FRRE missed the opportunity to sell lots and
it became apparent to FRRE that the Wolfs would not improve the road in a timely fashion.
FRRE solicited bids and entered into a contract for construction of the road and ultimately
the road was built.
¶6 FRRE filed a complaint against the Wolfs in November of 2005, alleging breach of
contract, negligent or intentional misrepresentation, and fraud. FRRE also claimed it was
entitled to punitive damages.
¶7 The Wolfs, self-represented, filed an answer in February of 2006, in which they
denied numerous allegations and pled affirmative defenses. The District Court entered a
scheduling order on March 17, 2006. The order specified that discovery was to be
completed by June 16, 2006, and that a jury trial was scheduled for the September 25, 2006,
term, with a specific date to be set following the pretrial conference.
¶8 In April, the Wolfs sent a letter to the clerk of court in which they indicated that they
intended to file an amended answer and asked for time to complete an attorney search.
FRRE served discovery requests upon the Wolfs on April 20, 2006. While FRRE fully
complied with the discovery order, identified its exhibits, witnesses and expert witnesses, the
Wolfs did not respond and did not conduct any discovery.
¶9 On June 9, 2006, FRRE moved for a default judgment against the Wolfs as a sanction
for their failure to comply with the scheduling order and lack of cooperation in the litigation.
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Phillip Wolf (Phillip) then filed a document entitled, “Defendant’s Answer to Civil
Complaint, defenses, counterclaim.” FRRE filed an objection and moved for sanctions
under M. R. Civ. P. 11. Counsel for FRRE stated he refused to respond to the answer and
counterclaim unless ordered to do so and requested a $1,000 sanction for Phillip’s attack on
counsel’s character.
¶10 Counsel for FRRE attempted to schedule a settlement conference in August of 2006
when the Wolfs could be personally present. The Wolfs failed to respond, and FRRE moved
for waiver of the settlement conference.
¶11 The Wolfs failed to appear at an August 30, 2006, pretrial conference. In September
of 2006, FRRE filed a renewed motion for a default judgment as a sanction under M. R. Civ.
P. 37(d). The Wolfs moved for a continuance based on Phillip’s alleged heart condition and
contacted counsel for FRRE. FRRE’s counsel asked that Phillip produce a letter from his
physician confirming his medical condition. When Phillip submitted a “medical order” from
a cardiologist, it did not appear to be authentic. FRRE’s counsel investigated and was
advised by the cardiologist that he did not sign the medical order.
¶12 In November of 2006, the District Court granted FRRE’s motion for default as a
sanction and denied the Wolfs’ motion for a continuance. The Wolfs appealed that order to
this Court. FRRE moved to dismiss the appeal. We dismissed the appeal without prejudice
because the order was not a final order.
¶13 FRRE moved for a release of the mortgage and lien occasioned by the carry back, and
to substitute a bond for the recorded mortgage. The District Court granted the motion and
ordered the mortgage satisfied of record.
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¶14 After the Wolfs’ default was entered, the District Court held a hearing on damages.
At this hearing, counsel for Wolfs appeared, but they did not personally appear. The District
Court set damages as noted in ¶ 2 above.
¶15 The Wolfs raise four issues for appeal, which we restate as follows:
¶16 1. Did the District Court err in denying the Wolfs’ motion to continue the pre-trial
conference and the trial?
¶17 2. Did the District Court err in delaying a ruling upon the Wolfs’ motion to continue
the pretrial conference and trial until after the trial date?
¶18 3. Did the District Court err in granting a default judgment against the Wolfs as a
sanction?
¶19 4. Are the Wolfs entitled to a reversal of the default judgment on the grounds they
were not afforded sufficient latitude in proceeding as self-represented litigants?
¶20 We review discretionary rulings by a district court to determine if the court abused its
discretion. In the Matter of R.F., 2001 MT 199, ¶ 21, 306 Mont. 270, ¶ 21, 32 P.3d 1257,
¶ 21 (citations omitted).
¶21 The Wolfs assert that they had a valid defense to the complaint because FRRE was
responsible for securing the road permit and failed to do so. They also maintain that they
acted in good faith, and there was no inconvenience to FRRE. The Wolfs state in their
opening brief that Phillip had a heart condition that required two surgeries and that a back
injury resulted from rehabilitation. However, nothing in the record substantiates that Phillip
had heart surgery, or if he did, when the surgeries took place.
¶22 The District Court made detailed findings of fact and provided a rationale for denying
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the motion for a continuance. The court specifically referred to Wolfs’ failure to comply
with the scheduling order, unresponsiveness to discovery requests, the forged physician’s
order, and the Wolfs’ failure to appear at the pretrial conference.
¶23 The District Court’s findings of fact clearly demonstrate that the court did not abuse
its discretion. See In the Matter of R. F., ¶ 24.
¶24 Having determined the District Court did not abuse its discretion in denying the
continuance, we decline to further discuss the timeliness of the order as it is of no
consequence.
¶25 We review sanctions imposed for discovery abuse to determine whether a district
court abused its discretion. Richardson v. State, 2006 MT 43, ¶ 21, 331 Mont. 231, ¶ 21, 130
P.3d 634, ¶ 21. The District Court specifically found that: 1) the Wolfs unreasonably and
vexatiously prolonged the litigation; 2) FRRE had invested a great deal of money into the
property and was unable to sell it due to the Wolfs’ liens on the property; 3) the Wolfs’
conduct constituted a “concerted effort to avoid cooperating” with FRRE in the litigation; 4)
the Wolfs’ conduct included forging documents in an attempt to avoid cooperating in the
discovery process and to delay the proceedings; and 5) the Wolfs were aware that FRRE was
seeking default as a sanction, yet failed to appear at the pretrial conference.
¶26 Litigants who willfully delay the discovery process and defy the authority of the court
cause inexcusable prejudice to their opponents. Further, they deprive their opponents of
access to the courts as a dispute-settlement mechanism. Richardson, ¶ 57. The Wolfs’
conduct prejudiced FRRE and is sufficiently egregious to justify the default sanction.
¶27 The standard of review for determining whether, as self-represented litigants, the
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Wolfs are entitled to reversal of the default judgment is also an abuse of discretion. First
Bank v. Heidema, 219 Mont. 373, 711 P.2d 1384 (1989). We require all litigants--self-
represented as well as litigants represented by counsel--to comply with procedural rules.
Self-represented litigants are afforded considerable leeway in legal proceedings; however
that leeway may not prejudice the other party. Greenup v. Russell, 2000 MT 154, ¶ 15, 300
Mont. 136, ¶ 15, 3 P.3d 124, ¶ 15. We conclude that the District Court did not err in
concluding that FRRE suffered prejudice as a result of the Wolfs’ actions and inaction in this
litigation and did not err in refusing to excuse the Wolfs’ abuse of legal process even though
they appeared to be self-represented.
¶28 Finally, FRRE moves this Court for its attorney fees on appeal. Attorney fees on
appeal may be awarded when the underlying agreement specifies that a prevailing party is
entitled to attorney fees in the event of litigation. In this instance, paragraph 18 of the
purchase contract specifies that if legal action is necessary to enforce any provision of the
contract, the prevailing party is entitled to attorney fees. We, therefore, conclude FRRE is
entitled to the award of attorney fees on appeal in an amount to be determined by the District
Court.
¶29 We have determined to decide this case pursuant to Section I, Paragraph 3(d), of our
1996 Internal Operating Rules, as amended in 2003, which provides for memorandum
opinions. It is manifest on the face of the briefs and the record this appeal is without merit.
These issues are controlled by settled Montana law that the District Court correctly
interpreted.
¶30 We affirm the judgment and remand to the District Court to determine the amount of
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attorney fees to be awarded to FRRE on appeal.
/S/ JOHN WARNER
We Concur:
/S/ JAMES C. NELSON
/S/ W. WILLIAM LEAPHART
/S/ PATRICIA COTTER
/S/ JIM RICE
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