No. 95-470
IN THE SUPREM COURT OF THE STATE OF MONTANA
1996
RANDALL R. CHAMBERLIN and
RANDALL R. CHAMBERLIN d/b/a
CUSTOM FRAMING,
Plaintiffs and Appellants,
v.
PUCKETT CONSTRUCTION,
Defendant and Respondent
APPEAL FROM: District Court of the Eighteenth Judicial District,
In and for the County of Gallatin,
The Honorable Larry W. Moran, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Donald E. White, Attorney at Law,
Bozeman, Montana
For Respondent:
John Brown; Cok, Wheat & Brown,
Bozeman, Montana
Submitted on Briefs: April 25, 1996
Decided: July 1, 1996
Justice Karla M. Gray delivered the Opinionof the Court.
Randall R. Chamberlin, d/b/a Custom Framing (Custom Framing),
appeals from the Findings of Fact, Conclusions of Law and Judgment
of the Eighteenth Judicial District Court, Gallatin County,
concluding that Custom Framing committed an anticipatory breach of
the subcontractor agreement between Custom Framing and Puckett
Construction and from the court's subsequent order awarding Puckett
Construction attorney's fees and costs. We affirm and remand for
determination and award of Puckett Construction's attorney's fees
and costs on appeal.
We address the following issues:
1. Did the District Court err in concluding that Custom
Framing committed an anticipatory breach of the subcontractor
agreement?
2. Did the District Court abuse its discretion with regard to
the amount of attorney's fees and costs awarded to Puckett
Construction?
3. Is Puckett Construction entitled to attorney's fees and
costs on appeal?
Factual Background
In January of 1994, Puckett Construction executed a contract
with LT Hotel Enterprises under which Puckett Construction would be
the general contractor for construction of a Ramada Inn in Bozeman,
~Montana. ~~~~~Thereafter;~~~~Puckett~~~Constru~t~~~on r~ece~iv~ed ~a~~~~~wr~itten ~-Eyd~~~
from Custom Framing to perform the framing work associated with the
2
project. Phil Puckett (Puckett), the owner of Puckett
Construction,-drafted and signed a subcontractor agreement for the
framing, which is dated March 24, 1994, and forwarded it to Randall
Chamberlin (Chamberlin), one of the partners and owners of Custom
Framing. Chamberlin and his partner, David Worthington
(Worthington), made ten changes to the agreement and Chamberlin
initialed each change.
Chamberlin signed the revised subcontractor agreement and
returned it to Kenneth Cavenah (Cavenah), Puckett Construction's
superintendent and sole on-site representative for the Ramada Inn
project. In early April, Cavenah took the revised agreement to
South Dakota and reviewed it with Puckett; thereafter, he returned
to Bozeman and, on April 14, 1994, initialed the changes in the
presence of Chamberlin and Worthington.
Inclement weather had delayed the Ramada Inn project several
times and Custom Framing was scheduled to begin work on April 25,
1994. Ten days prior to that start date, Chamberlin called Puckett
Construction's office in South Dakota and informed the receptionist
that Custom Framing would not begin work until Puckett personally
initialed the changes Chamberlin had made to the subcontractor
agreement. Puckett Construction subsequently sent Custom Framing
a letter advising that l*Puckett Construction will not be hiring
Custom Framing on the Ramada Inn job." Puckett Construction hired
a different framing subcontractor on April 18, 1994.
3
In June of 1994, Chamberlin, individual ly and d/b/a Custom
Framing, sued Puckett Construction for breach of contract and
-.
requested an unspecified amount of damages. Puckett Construction
answered and denied the existence of a contract. Both parties
conducted discovery.
In April of 1995, Puckett Construction moved for summary
judgment on the basis that no contract existed. Custom Framing
opposed the motion, arguing that "when the contract was signed and
initialed by [Cavenahl that there was indeed a binding agreement."
The District Court denied Puckett Construction's motion, concluding
that a contract was formed when Cavenah, Puckett Construction's
agent, signed and initialed the revised agreement; the court also
determined that a factual issue existed as to which party breached
that contract. The pretrial order subsequently was amended to
include a counterclaimby Puckett Construction alleging that Custom
Framing's "refusal to begin work on the project . . . constituted
a material and total breach of the contract . _ . [and] [Puckett
Construction] was entitled to . . terminate the contract."
A bench trial was held in June of 1995. The District Court
directed a verdict on behalf of Puckett Construction on Custom
Framing's breach of contract claim, awarded Puckett Construction
damages in the amount of $11,405 on its counterclaim, and
determined that Puckett Construction was entitled to reasonable
attorney's fees and costs. Thereafter, the District Court held a
hearing on attorney's fees and costs and awarded Puckett
4
Construction $9,600 in attorney's fees and $1,990.65 for costs.
-
Custom Framing appeals.
Discussion
1. Did the District Court err in concluding that Custom
Framing committed an anticipatory breach of the
subcontractor agreement?
An anticipatory breach of a contract is a repudiation of the
promiser's contractual duty before the time fixed for performance
has arrived. STC, Inc. v. City of Billings (1975), 168 Mont. 364,
370, 543 P.2d 374, 377 (citations omitted). A repudiation must be
entire, absolute and unequivocal to support an action for
anticipatory breach. STC, 543 P.2d at 379. An expression of
intent not to perform, standing alone, is not enough. n, 543
P.2d at 379. An anticipatory breach by one party excuses further
performance by the other. See STC, 543 P.2d at 378.
The District Court concluded that Chamberlin's statement
during the telephone call to Puckett Construction on April 15,
1994, that Custom Framing would not begin work until Puckett
personally initialed the changes Chamberlin made to the
subcontractor agreement, constituted an anticipatory breach of the
agreement. We review a district court's conclusions of law to
determine whether the court's interpretation of the law is correct.
Loney v. Milodragovich, Dale & Dye, P.C. (1995), 273 Mont. 506,
510, 905 P.2d 158, 161 (citing Boreen v. Christensen (1994), 267
Mont. 405, 408, 884 P.2d 761, 762).
. ~~~~~~~~~ ~~~~~~~~
We have not pre~vlously addressed whe~ther a party's demand for
performance of terms not contained in a contract, accompanied by a
5
statement that it will not perform if those terms are not met,
constitutes an anticipatory breach. Other courts, however, have
held that such a demand constitutes an anticipatory repudiation.
&, gcJ&, P & L Contractors, Inc. v. American Norit Co. (5th Cir.
1993)) 5 F.3d 133, 139; United California Bank v. Prudential Ins.
CO. (Ariz. Ct. App. 1983), 681 P.2d 390, 430; Twenty-Four
Collection, Inc. v. M. Weinbaum Constr. (Fla. Ct. App. 1983), 427
So. 2d 1110, 1111.
As discussed by the Arizona Court of Appeals, a party's offer
to perform under a contract in accordance with that party's
erroneous interpretation of its contractual rights is not, in
itself, an anticipatory repudiation. United California Bank, 681
P.2d at 431. The reason is that, while the party may be asserting
an erroneous interpretation of the contract, it is still offering
to meet its own contractual obligations and cannot be said to be
stating an intent not to perform or a refusal to perform. In order
to constitute an anticipatory breach, the party's insistence on
terms which are not contained in the contract must be accompanied
by a "clear manifestation of intention not to perform" unless the
additional term is met. See United California Bank, 681 P.2d at
430-31. Moreover, a repudiation occurs regardless of whether the
demand for performance of terms not contained in the contract was
made wilfully or by mistake; in either instance, the other party
has been deprived of the benefit of its bargain. United California
Bank ~~6~8~1~~p~~. ~2 do d TV ~~~~4~31;~~~~
-,
6
We adopt the rationale of the Arizona Court of Appeals in
-
United California Bank regarding the effect of a party's demand for
performance of terms not contained in a contract coupled with a
refusal to perform unless those terms are met. A party acts at his
peril if, "insisting on what he mistakenly believes to be his
rights, he refuses to perform his duty." United California Bank,
681 P.2d at 430 (quoting RESTATEMENT (SECOND) OF CONTRACTS § 250 cmt. d
(1981)). On that basis, we conclude that a demand for performance
of a term not contained in the parties' contract, accompanied by an
unequivocal statement that the demanding party will not perform
unless the additional term is met, constitutes an anticipatory
breach of the contract excusing performance by the other party.
Here, Custom Framing's breach of contract action against
Puckett Construction was premised on Cavenah's authority to sign
and initial the revised subcontractor agreement on behalf of
Puckett Construction; absent such authority, no contract existed
upon which Custom Framing could maintain a breach action. Indeed,
Custom Framing prevailed on this issue when it successfully opposed
Puckett Construction's motion for summary judgment.
Notwithstanding such authority in Cavenah, however, Chamberlin
stated that Custom Framing would not perform under the
subcontractor agreement unless Puckett initialed the changes
Chamberlin had made to that agreement. Nothing in the agreement
required that Puckett, rather than an authorized agent, initial
such~~~~~~changes .~ ~~~~The~refore ;~~~~~~nothing~~~~in the~~~.~~~agreeme~nt~~~ entitled
Chamberlin to demand such performance by Puckett and to refuse to
perform unless its demand was met.
Custom Framing contends that its conduct in this regard does
not satisfy the strict criteria for anticipatory breach set forth
in a. We disagree.
STC holds that a mere expression of intent not to perform,
standing alone, is insufficient to constitute an anticipatory
breach; a repudiation must be clear and unequivocal. m, 543 P.2d
at 379. Here, Chamberlin did more than express a mere intent by
Custom Framing not to perform. His statement that Custom Framing
would not perform unless Puckett initialed the changes was an
unequivocal refusal to perform unless Puckett complied with the
demand Custom Framing was not entitled to make under the
subcontractor agreement. Pursuant to STC and the rationale adopted
from United California Bank, we conclude that Custom Framing's
unauthorized demand for performance and refusal to perform absent
compliance with that demand constitutes a clear and unequivocal
repudiation of its contractual duty to perform and an anticipatory
breach of the subcontractor agreement.
Custom Framing argues that it "stood ready to perform at all
times since Mr. Cavenah initialed the changes" on April 14, 1994.
In this regard, Chamberlin testified that "I made that statement
[indicating Custom Framing would not begin work until Puckett
initialed the changes1 on the 15th, but we took action that
~~~following~~~week ~as~~~-if~~~~to~~~~st~~rt~~ it ;~"~~ ~~~~~~ChBmberlin~~~ further tesf~ified
that he made the statement to "get [Puckett's] attention."
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Custom Framing's -
argument that it stood ready to perform and
its suggestion that it did not intend to refuse to perform under
the agreement--even if taken as true--are irrelevant under the
doctrine of anticipatory repudiation. In determining whether an
anticipatory breach was committed, courts are concerned with
whether the promisor communicated an unequivocal indication of an
intent not to perform under the contract and not with the
promisor's uncommunicated subjective intent in repudiating its
contractual obligations. a, a, United California Bank, 681
P.2d at 429; -I 543 P.2d at 379. A promisee need not jeopardize
STC
its own interests by speculating about the promisor's clear refusal
to perform or by waiting until the time set for performance to
ascertain whether the promisor's unequivocal repudiation was
serious.
Here, Custom Framing clearly and unequivocally communicated
its intent not to begin work absent performance by Puckett of an
act not required by the subcontractor agreement. Custom Framing
cannot rely on what it contends was its actual, but hidden, intent
in order to avoid liability for its anticipatory breach of the
subcontractor agreement.
We hold that the District Court did not err in concluding that
Chamberlin's statement during the telephone call to Puckett
Construction constituted an anticipatory breach of the
subcontractor agreement.
Dia~~~~the Di~St~rict~~~~Court~ ~-~~~se it sag ~~di~Scret ion~~~~~with
'2.
regard to the amount of attorney's fees and costs awarded
to Puckett Construction?
9
The determination of reasonable attorney's fees is not subject
to precise calculation or a formulaic approach. We previously have
stated that the following factors should be considered as
guidelines in making such a determination: (1) the amount and
character of services rendered; (2) the labor, time, and trouble
involved; (3) the character and importance of the litigation in
which the services were rendered; (4) the amount of money or the
value of the property to be affected; (5) the professional skill
and experience required; (6) the attorneys' character and standing
in their profession; and (7) the result secured by the services of
the attorneys. Swenson v. Janke (Mont. 1995), 908 P.2d 678, 682-
83, 52 St.Rep. 1272, 1275; Majers v. Shining Mountains (1988), 230
Mont. 373, 380, 750 P.2d 449, 453. These factors are not
exclusive, however, and district courts may consider other factors
as well. Morning Star Enters. v. R.H. Grover (1991), 247 Mont.
105, 113, 805 P.2d 553, 558 (citing Talmage v. Gruss (1983), 202
Mont. 410, 413, 658 P.2d 419, 421). Thus, the reasonableness of
attorney's fees must be ascertained under the unique facts of each
case. Morning Star, 805 P.2d at 558.
The District Court held a hearing to determine the amount of
attorney's fees and costs to which Puckett Construction was
entitled. John Brown (Brown), Puckett Construction's attorney,
submitted an affidavit regarding attorney's fees and costs,
together with an itemized list of the time charges and costs, prior
~ ~ ~ ~~~He~~statea ~~~-fhere~in~~~~~~that ~~LthG~~~--~~~tot al Paramount roof
to the hearing.
attorney's fees charged to Puckett Construction in conjunction with
10
this case through July 31, 1995, was $9,600 and the total costs
were $1,990.65. Brown testified at the hearing that all of the
time and costs reflected in his affidavit and attached list related
to his representation of Puckett Construction in this case.
Brown and Stephen Pohl (Pohl), Puckett Construction's expert
witness on attorney's fees, were the sole witnesses at the hearing.
Pohl testified that the Swenson/Maiers factors for determining the
reasonableness of attorney's fees formed part of the basis of his
opinion and he discussed each of those factors in the context of
this case. He noted Brown's extensive legal research on such
issues as contract formation, anticipatory repudiation and breach
of contract. Pohl pointed out that, in addition to drafting
Puckett Construction's answer and counterclaim, Brown prepared
responses to discovery, conducted discovery and wrote numerous
briefs. He observed that the approximately $35,000 in damages
sought by Custom Framing was a substantial amount of money and
that, "not only did [Brown] avoid a judgment on behalf of [Custom
Framing], but [Brown] did obtain a verdict in favor of [Puckett
Construction] . . . and so obviously the results were excellent. .
. . 11 Pohl also testified that Brown is an excellent attorney who
has an excellent reputation in the community.
Custom Framing cross-examined Pohl and Brown, but did not
present its own expert on attorney's fees. During cross-
examination, Pohl did not change his opinions under the
~sw,enso~~~~~~~~~'~ers~~~~~f~actorsorhis~ ~~ur~~imate~~~~~o~~i~~~ibn ~~~~~~~ ~ased~~~~~on~~~~~~~those~
1
11
.., factors and the facts of this case, that the claimed fees and costs
were reasonable.
The District Court determined that the claimed fees and costs
were reasonable and issued an order awarding Puckett Construction
$9,600 in attorney's fees and $1,990.65 for costs. We will not
disturb a district court's determination of reasonable attorney's
fees absent an abuse of the court's discretion. Maiers, 750 P.2d
at 453 (citing Talmaoe, 658 P.2d at 420).
Custom Framing argues that the District Court's award of
attorney's fees and costs constituted an abuse of discretion in
five specific respects, all of which were brought to the court's
attention during cross-examination of Brown and Pohl. We address
each in turn, bearing in mind the abuse of discretion standard and
that, in matters such as this, witness credibility and the weight
accorded testimony are within the province of the district court.
See Keebler v. Harding (1991), 247 Mont. 518, 522, 807 P.2d 1354,
1357 (citing Matter of Estate of Murnion (1984), 212 Mont. 107,
113, 686 P.2d 893, 896).
a. "Unrelated Matters"
Custom Framing contends that the District Court abused its
discretion in awarding Puckett Construction attorney's fees for
"disputes that arose during the course of construction that are
unrelated to [this case]." This contention relates to three
specific entries contained in Brown's listing of time charges.
~~~~~~ Fi rsf~~l~~Custom ~~~Fra~~ng dhal~Ienges ;~
75~~ hours charged onJune 10,
1994, for a ll[c]onference w/Ken Cavenah and Phil Puckett re:
construction dispute." Brown testified that -,.all of the entries
were attributable to Puckett Construction's dispute with Custom
Framing. Pohl testified that he had no reason to believe that the
.75 hour conference was unrelated to this case. Custom Framing did
not inquire of Brown about this conference on cross-examination and
did not present any evidence in support of its contention that the
conference was unrelated to this case.
Second, Custom Framing challenges .50 hours charged on April
13, 1995, for drafting and revising a letter to Puckett regarding
"status and delinquent accounts." Custom Framing contends that the
purpose of this letter was to collect money owed to Brown by
Puckett and, therefore, the time Brown spent on the letter cannot
properly be included in the court's award of attorney's fees.
However, Custom Framing did not ask Brown about this letter on
cross-examination and Pohl testified that this was a proper charge
because "it does say status also, and Mr. Brown apparently wrote
[Puckett] a letter to let him know where he was in the case."
Third, Custom Framing challenges .50 hours charged on May 3,
1995, for telephone conferences with Rick Nellen (Nellen) and
Calvin Braaksma (Braaksma). Brown testified that both telephone
conferences related to this case. Regarding the NelLen conference,
Brown explained that Nellen represented Cavenah in a dispute which
had arisen between Cavenah and Puckett and which resulted in
concerns about whether Cavenah would testify on Puckett
Construction's behalf '~~ in thG~~~-dase; according to Brown, ~~his
~~~~~
discussion with Nellen on May 3 resolved the matter. Brown also
13
explained that Braaksma represented a party with a pending
foreclosure action against the Ramada Inn and that he and Braaksma
discussed how Braaksma's client's interests could or would be
affected by the litigation between Puckett Construction and Custom
Framing. Again, Custom Framing presented no evidence indicating
that the time charged for these two telephone conferences was
unrelated to this case.
b. Summary Judgment Motion
Custom Framing argues that the District Court abused its
discretion by awarding fees for 20.25 hours Brown spent on the
preparation of, and hearing on, Puckett Construction's summary
judgment motion. It points out that the District Court denied the
summary judgment motion from the bench without hearing argument
from Custom Framing and apparently relies on Smith v. Johnson
(1990), 245 Mont. 137, 798 P.2d 106, for the proposition that
attorney's fees should be denied for time spent on the unsuccessful
motion. Custom Framing's reliance on Smith is misplaced.
Smith involved a scenario opposite from that presented in the
instant case. There, the district court denied attorney's fees for
time spent on a successful summary judgment motion and we affirmed
on the basis that the "fixing of attorney's fees is largely within
the discretion of the district court and will not be disturbed
absent a clear abuse of discretion." Smith, 798 P.2d at 111.
Nothing in Smith mandates a conclusion that district courts must
~d~~ny~~~attorney~ ~~sfees ~~,~,associt~e~d~~~~~~ith~~~~~unSuccessful demotions ~~~as~~~B
matter of law or that this Court will determine that a grant of
14
j such fees is an abuse of discretion. .- The discretion involved in .-~
--
determining reasonable attorney's fees militates against "black
letter rules" such as that Custom Framing seems to advocate here
and for which it cites no controlling or persuasive authority.
Custom Framing also contends that the motion for summary
judgment was "without merit and being so, [was] summarily denied by
the Court." While Custom Framing's legal argument in this regard
is not particularly clear, we observe that the District Court did
not state or otherwise indicate that Puckett Construction's motion
for summary judgment was totally without merit or in any way
frivolous, as Custom Framing seems to suggest. Moreover, even
after Custom Framing brought this theory to the District Court's
attention during the hearing in cross-examining Pohl, the court
included all of the fees associated with the summary judgment
motion in its fee award. The District Court apparently rejected
Custom Framing's theory of the court's own evaluation of the
summary judgment motion and we cannot do otherwise in order to
conclude that the court abused its discretion in awarding the
associated fees.
c. Pretrial Order
Custom Framing challenges one hour Brown spent in amending the
pretrial order to add a counterclaim for damages which was not in
Puckett Construction's answer or the original pretrial order,
contending that it should, not be charged for that "omission."
Again, the record contarns no evrdence In support of Custom
Framing's contention that this time was unreasonable, Moreover,
15
inclusion of the coun,terclaim e.arlier in,,,the proceedings presumably
would have resulted in the same charge for the work performed,
merely recorded at an earlier date.
d. Trial Preparation
Custom Framing challenges the award of attorney's fees for 2g
hours of trial preparation, arguing that such extended preparation
is unreasonable for a four-hour trial with no contested facts.
Pohl testified, however, that 29 hours was reasonable and the
record contains no evidence to the contrary.
e. Computer Research
Finally, Custom Framing challenges the entirety of the $1,306
in costs for Westlaw research which Puckett Construction claimed
and the District Court awarded. Brown explained that his firm
assigns a code number for each case for the purpose of Westlaw
research and that the Custom Framing/Puckett Construction case was
assigned such a number. When Westlaw bills Brown's firm, it sends
a "master sheet per code number, [indicating the] amount charged
per code number." Brown testified that "the time related in my
affidavit is based upon [the] Puckett Constructionlchamberlin code
number." Pohl opined that the amount of computer research time was
reasonable in this case in which Brown wrote numerous briefs and
that "the time [Brown] spent using Westlaw was money well spent,
probably would have taken a lot more hours of research . . . if he
had come down here to the law library."
Custom Framing presented~ no evidence itid~i~ca~tiug that the
Westlaw costs were unreasonable or not properly attributable to
16
this case. Its argument, for which no authority is cited, his that
there was a'total failure of proof regarding the reasonableness and
propriety of the Westlaw research costs. While Brown might have
presented a stronger case in support of this claimed amount, we
cannot conclude on the record before us that his evidence
constituted insufficient proof as a matter of law upon which to
premise an award of $1,306 for Westlaw research costs.
We hold that the District Court did not abuse its discretion
in the amount of attorney's fees and costs it awarded to Puckett
Construction.
3. Is Puckett Construction entitled to attorney's fees
and costs on appeal?
Puckett Construction requests that it be awarded its costs and
attorney's fees on appeal. Costs on appeal in civil actions are
automatically awarded to the prevailing party under Rule 33,
M.R.App.P. Additionally, we previously have held that where an
award of attorney's fees is based on a contract, the prevailing
party is also entitled to an award of reasonable attorney's fees
incurred on appeal. Smith, 798 P.2d at 111 (citing Lauderdale v.
Grauman (19861, 223 Mont. 357, 359, 725 P.2d 1199, 1200).
Here, the subcontractor agreement between Puckett Construction
and Custom Framing provides for attorney's fees and costs incurred
in an action "arising out of, in connection with, or incident to
[Custom Framing's] performance of this SUBCONTRACT." The District
Court's determination that Puckett Construction was entitled to
attorney's fees was based on that provision of the subcontractor
agreement. Accordingly, we hold that Puckett Construction is
17
entitled to its costs and reasonable attorney's fees incurred in
this appeal.
We affirm the decision of the District Court and remand for
determination and award of Puckett Construction's costs and
attorney's fees on appeal.
We concur:
Justi&%
18