IN THE SUPREME COURT OF THE STATE OF MONTANA
No. 95-329
JOHN P. TURNER
Respondent and
Cross-Appellant,
v.
MOUNTAIN ENGINEERING And
CONSTRUCTION, INC., et al.,
Appellants and
Cross-Respondents.
On January 11, 1996, the Opinion of this Court in the above-
entitled cause was filed. On January 19, 1996, Appellants and
Cross-Respondents filed their Petition for Rehearing. On January
26, 1996, Respondent and Cross-Appellant filed his Objections to
Petition for Rehearing.
After review of this Court's Opinion issued January 11, 1996,
and having considered Appellants' and Cross-Respondents' Petition
for Rehearing as well as Respondent's and Cross-Appellant's
Objections,
IT IS ORDERED:
1. Issue 5 of this Court's January 11, 1996 Opinion (Slip Op.':
pp. 11 through 14) is hereby withdrawn and replaced with the
following:
5. Did the District Court err in amending its Memorandum and
Order for Summary Judgment when it deleted Turner's award of costs
and attorney's fees?
In 1987, Kerin filed suit to foreclose its construction lien.
Figgins Sand & Gravel and Johnston Excavating were named as
defendants in the suit, and Figgins counterclaimed and cross-
claimed seeking a determination of the priority of the liens and
1
foreclosure of its lien. In that action, the mortgagees who were
Turner's predecessors in interest were also named as defendants,
however, the action was stayed because of the bankruptcy petition
filed by Ameritrust. Turner obtained an order from the United
States Bankruptcy Court for the Eastern District of California
abandoning the trustee's interest in the Royal Village subdivision.
After obtaining this order, Turner filed suit to foreclose on
the Royal Village subdivision on December 30, 1992. In February of
1993, Turner's suit was consolidated with the lien creditors' suit.
In an attempt to invalidate Turner's mortgage and to obtain
priority and validity of their liens, the lien creditors filed
counterclaims and cross-claims. After a protracted dispute between
the lien creditors and Turner, both Figgins and Turner filed
motions for summary judgment. Turner's brief in support of his
motion for summary judgment included a request for attorney's fees
and referenced 5 71-3-124, MCA.
In its March 14, 1995, Memorandum and Order for Summary
Judgment, the District Court awarded Turner his costs and;-
attorney's fees pursuant to §§ 71-1-233 and 71-3-124, MCA. Lien
creditors moved the District Court to reconsider its award of costs
and attorney's fees and, on April 21, 1995, the District Court
entered its Order Amending Summary Judgment striking the award. On
cross-appeal, Turner argues that the lien creditors waived their
right to object to the award of costs and attorney's fees and,
further, that the District Court was without the power to amend the
original award. Lien creditors rely on Rules 52(b) and 60(b),
M.R.Civ.P., as authorizing the District Court to amend its order.
Even assuming that the court had authority to amend the award, an
amendment denying the fees previously awarded pursuant to 5 71-3.
124, MCA, was not appropriate. Section 71-3-124, MCA, provides:
In an action to foreclose any of the liens provided for
by parts 3, 4, 5, 6, 8, or 10 of this chapter, the court
must allow as costs the money paid for filing and
recording the lien and a reasonable attorney's fee in the
district and supreme courts, and such costs and
attorneys' fees must be allowed to each claimant whose
lien is established, and such reasonable attorneys' fees
must be allowed to the defendant against whose property
a lien is claimed, if such lien be not established.
[Emphasis added.]
In Home Interiors, Inc. v. Hendrickson (1984), 214 Mont. 194,
692 P.2d 1229, this Court resolved a question of whether a
mechanics lien took priority over a trust indenture in favor of the
lien creditor and awarded attorney's fees to the lien creditor
under § 71-3-124, MCA. Home Interiors, 692 P.2d at 1232. The Home
Interiors decision simply awarded attorney's fees to the lien
creditors without giving a rationale as to how § 71-3-124, MCA,
applied to the facts. The effect of the decision, however, is that .I_
?
the fees were to be paid, not by Jones (the owner of the property)
but by Security Pacific, the holder of the trust indenture
(mortgagee). Apparently, the Court was persuaded that since
Security Pacific, as mortgagee, defended the suit on behalf of the
owner, it should be held responsible for the lien creditors'
attorney‘s fees. In the alternative, the Court may have considered
the fact that Security Pacific later purchased the property at the
foreclosure sale, thereby becoming the owner of the property.
Without expressing any opinion on the correctness of these
3
rationales, we note that they both work to the benefit of Turner,
because he, like Security Pacific, is a non-owner mortgagee who
defended against the lien claimants, as well as an owner who
purchased the property at a sheriff's sa1e.l
Furthermore, in this case, it is difficult to determine who
was the "owner" of the property at the time of suit because of the
confusing, disputed and allegedly fraudulent conveyances and
mortgages of the property and Ameritrust's bankruptcy petition.
Since the encumbrances on the property exceeded its fair market
value, the Bankruptcy Court granted Turner's motion to abandon the
property. After the abandonment, Ameritrust, the title owner of
the property, no longer had an interest.
Section 71-3-124, MCA, required an award of attorney's fees to
the party successfully defending the lien foreclosure. Carkeek v.
Ayer (1980), 188 Mont. 345, 348, 613 P.2d 1013, 1015. Thus, under
the unique facts of this case, the District Court was correct in
its original order which granted costs and attorney's fees to
Turner pursuant to § 71-3-124, MCA. :;
The proceedings evolved into a contest to determine the
priorities and validity of various construction liens and mortgages
as well as an action by Turner to foreclose on the mortgages. Lien
creditors and Turner were the principal parties to the litigation
and the priority of the construction liens and their foreclosure
1 We note that the result in Home Interiors is inconsistent
with our mootness holding in issue one in the instant case.
However, the parties in Home Interiors did not raise the issue of
mootness, nor did we discuss that issue in the opinion.
Accordingly, we do not overrule our decision in Home Interiors.
4
was central to the litigation. Here, Turner was not only
attempting to determine the priority of his mortgages and foreclose
on them, he was also defending against the construction lien
holders' foreclosure suits. Thus, under the unique circumstances
of this case regarding the abandonment of the property by the
bankruptcy trustee and Turner's subsequent action as a principal
party, the award was proper under § 71-3-124, MCA.
We reverse and remand for a determination of Turner's costs
and attorney's fees pursuant to § 71-3-124, MCA.
*******************************
2. In all other respects, Appellants' and Cross-Respondents'
Petition for Rehearing is DENIED. Let Remittitur issue forthwith.
3. The Clerk is directed to mail copies of this order to
counsel of record, to West Publishing Company, to State Reporter
Publishing Company and to the Honorable Larry W. Moran, District
Judge. 5
DATED this