Fronk v. Collins , 363 Mont. 110 ( 2011 )

December 20 2011
DA 11-0290
IN THE SUPREME COURT OF THE STATE OF MONTANA
2011 MT 315
GARY L. FRONK, AND CRYSTAL J. FRONK,
Plaintiffs and Appellees,
v.
DAVID W. COLLINS, DIANNE J. COLLINS,
73 RANCH, 73 RANCH LLC, et al.
Defendants and Appellants.
APPEAL FROM: District Court of the Tenth Judicial District,
In and For the County of Petroleum, Cause No. DV 07-08
Honorable E. Wayne Phillips, Presiding Judge
COUNSEL OF RECORD:
For Appellants:
Allen Beck; Attorney at Law; Lewistown, Montana
For Appellees:
Page C. Dringman; Dringman Law Firm, PLLC; Big Timber, Montana
Submitted on Briefs: October 19, 2011
Decided: December 20, 2011
Filed:
__________________________________________
Clerk
Justice Jim Rice delivered the Opinion of the Court.
¶1 The Tenth Judicial District Court, Petroleum County, granted summary judgment
to Plaintiffs Gary and Crystal Fronk (Fronks) enforcing an agreement entered with
Defendants David and Dianne Collins (Collins), 73 Ranch, and 73 Ranch LLC.
Defendants appeal. We affirm.
¶2 Did the District Court err by granting summary judgment to Fronks?
FACTUAL AND PROCEDURAL BACKGROUND
¶3 According to affidavits, exhibits, and other documents filed with the District
Court, Fronks and Collins met in 2001 through mutual friends. Fronks, residents of
Pennsylvania, were interested in purchasing property in Montana and acquiring horses.
In 2002, Fronks purchased two pieces of Petroleum County property, the Fox and Dunn
Ridge properties, from Collins for $95,000. Fronks and Collins entered into an oral
agreement whereby Collins would acquire horses on behalf of Fronks, and Collins would
be entitled to keep the first foal from each mare as payment for their services. The horses
were to be run on 73 Ranch property. Fronks thereafter transferred around $215,000 to
Collins for the acquisition of horses.
¶4 In 2004, Collins informed Fronks that they and 73 Ranch were having financial
difficulties and needed additional resources to complete a cattle deal. Collins asked
Fronks to deed back the two Petroleum County properties for use as collateral for the
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cattle deal, and assured Fronks the properties would not be at risk. Fronks deeded the
properties to Collins, with the understanding that Collins would reconvey the land, free of
encumbrances, back to Fronks within five years.
¶5 Subsequently, Fronks discovered unauthorized sales and trades allegedly made by
Collins, leading to dissension between the parties. From December 2005 to April of
2006, Fronks exchanged correspondence directly with Collins in an effort to resolve the
dispute. The parties did not come to an agreement, so Fronks and Collins retained
counsel. In early 2007, Fronks’ counsel sent a letter to Collins’ then-counsel indicating
they needed to meet to settle the matter, or Fronks would pursue a civil action and ask the
county to pursue criminal charges against Collins.
¶6 On February 22, 2007, the parties met in the office of Collins’ counsel for the
purpose of attempting to settle their dispute, with Fronks participating via conference
call. All parties were represented by counsel, and signed a handwritten “Memorandum of
Agreement,” (Agreement) which resulted from their discussions. The Agreement
addressed several key issues, including the ownership and transfer of the Fox and Dunn
Ridge properties. At the time of the meeting, Collins had sold the Dunn Ridge property
to a third party, so the parties agreed that Collins owed Fronks $65,000 for this property.
Regarding the Fox property, the Agreement noted that the property would serve as
collateral on Collins’ cattle deal for three more years and Collins would thus execute a
second mortgage on the property to Fronks for the property’s full value. Upon repayment
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of Collins’ debt, Collins was to transfer the Fox property by warranty deed back to
Fronks. The Agreement noted that Fronks were to be reimbursed $215,000 for the
money they had transferred to Collins for purchase of horses. The Agreement also
indicated that the total sum owed for the Dunn Ridge land and horses was $280,000,
which would accrue 10% interest until paid in full. The Agreement concluded: “The
parties agree to diligently execute a final agreement encompassing this handwritten
agreement, security interests, mortgage and other required documentation to effectuate
their settlement. . . . Fronks and Collins agree that this Agreement and related documents
resolves [sic] the disputes between them.”
¶7 When Collins did not comply with the Agreement, Fronks brought an action in
December 2007 for breach of contract, breach of implied covenant of good faith and fair
dealing, and misrepresentation. They sought, inter alia, to enforce the Agreement and
recover damages, obtain ownership of the real property, and recover attorney fees.
Fronks filed a lis pendens on the Fox property. In February of 2008, Fronks moved for
summary judgment on the enforceability of the Agreement. When Collins did not
respond, the District Court granted Fronks’ motion, but thereafter Collins moved for
relief from the judgment, which the District Court granted. Fronks then discovered that
Collins had quitclaimed the Fox property to their newly formed 73 Ranch LLC, and later,
to a third party referenced generally in the Agreement. Consequently, Fronks amended
their complaint, naming the LLC as a party. Fronks filed a renewed motion for summary
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judgment in October, 2010. After briefing and a hearing, the District Court determined
that the Agreement was a valid, enforceable contract and granted summary judgment to
Fronks.
STANDARD OF REVIEW
¶8 “We review appeals from summary judgment de novo, and determine whether
there is an absence of genuine issues of material fact and whether the moving party is
entitled to judgment as a matter of law.” Bar OK Ranch, Co. v. Ehlert, 2002 MT 12,
¶ 31, 308 Mont. 140, 40 P.3d 378 (citation omitted). If the moving party satisfies its
burden of proof in demonstrating an absence of genuine issues of material fact and its
entitlement to judgment as a matter of law, then the non-moving party must provide
substantial and material evidence to raise a genuine issue of material fact. See Hiebert v.
Cascade Co., 2002 MT 233, ¶¶ 20-21, 311 Mont. 471, 56 P.3d 848 (citation omitted).
DISCUSSION
¶9 Did the District Court err by granting summary judgment to Fronks?
¶10 In the summary of argument section of their brief, Collins offer a statement to the
effect that the Agreement was only a “roadmap for further negotiations” instead of an
enforceable contract. However, Collins fail to further argue this point or to cite to any
supporting authority. M. R. App. P. 12(1)(f) requires a party to cite to relevant
authorities and statutes in support of an argument on appeal. State v. Cybulski, 2009 MT
70, ¶ 13, 349 Mont. 429, 204 P.3d 7. “We have repeatedly held that it is not this Court’s
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obligation to conduct legal research on behalf of a party or to develop legal analysis that
might support a party’s position.” State v. Gunderson, 2010 MT 166, ¶ 12, 357 Mont.
142, 237 P.3d 74 (citing Cybulski, ¶ 13). Consequently, because no argument is
developed for this issue, we decline to consider it further.
¶11 Collins also argue they were “induced to execute the [Agreement] because of the
unlawful threat of criminal prosecution,” which invalidated the Agreement due to an
absence of valid consent.
¶12 A contract needs four elements for its existence: identifiable parties capable of
contracting, the parties’ consent, a lawful object, and sufficient cause or consideration.
Section 28-2-102, MCA; AAA Constr. of Missoula, LLC v. Choice Land Corp., 2011 MT
262, ¶ 19, 362 Mont. 264, ___ P.3d ___ (citation omitted). The issue in this appeal
pertains to consent. The parties’ consent must be free, mutual, and communicated by
each to the other. Section 28-2-301, MCA; In re Estate of Kindsfather, 2005 MT 51,
¶ 31, 326 Mont. 192, 108 P.3d 487. A party’s apparent consent is not free or real if
obtained through, inter alia, duress or menace. Section 28-2-401(1)(a)-(b), MCA; see
also § 28-2-1711(1), MCA (2005) (“A party to a contract may rescind the same . . . if the
consent of the party rescinding or of any party jointly contracting with him was . . .
obtained through duress, menace . . . .”). Duress consists of:
(1) unlawful confinement of the person of the party . . .;
(2) unlawful detention of the property of any such person; or
(3) confinement of such person, lawful in form but fraudulently obtained or
fraudulently made unjustly harassing or oppressive.
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Section 28-2-402, MCA; Matthews v. Berryman, 196 Mont. 49, 52-53, 637 P.2d 822, 824
(1981). Menace consists of “a threat of: (1) such duress as is specified in subsections
(1) and (3) of 28-2-402; . . . (3) injury to the character of any such person.” Section 28-2-
403(1), (3), MCA.
¶13 Collins’ argument relies on two Montana cases. In Clifford v. Great Falls Gas
Co., 68 Mont. 300, 216 P. 1114 (1923), the plaintiff appealed the district court’s
judgment in favor of defendant’s motion for nonsuit. Plaintiff inserted a make-shift
device to use defendant’s gas without allowing the gas to pass through the meter.
Clifford, 68 Mont. at 304, 216 P. at 1114-15. Subsequently, the building caught on fire
and upon review of the matter, the manager of defendant gas company told the plaintiff,
“‘You are stealing gas. I will send you over the road to the penitentiary.”’ Clifford, 68
Mont. at 304, 216 P. at 1115. The manager wanted $200 for the gas consumed, although
the plaintiff indicated that he could not have used more than $10 worth of gas. Clifford,
68 Mont. at 304, 216 P. at 1115. Plaintiff testified that he was scared and that he paid the
defendant “‘for the purpose of avoiding prosecution or being sent to the penitentiary or
jail.”’ Clifford, 68 Mont. at 305, 216 P. at 1115. Considering whether the defendant’s
actions constituted menace, this Court noted that a jury could have come to the
conclusion that the “defendant’s threats to prosecute and imprison the plaintiff . . . were
made solely to compel the payment of a debt alleged to be due to the defendant from the
plaintiff,” and reversed the district court. Clifford, 68 Mont. at 306, 309, 216 P. at
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1115-16. This Court examined a number of authorities and concluded “[t]he foregoing
authorities fully sustain the proposition that even a lawful imprisonment for an unlawful
purpose will constitute duress, and therefore the threat of imprisonment for such purpose
constitutes menace . . . .” Clifford, 68 Mont. at 306-08, 216 P. at 1116.
¶14 Collins also cites Averill Machinery Co. v. Taylor, 70 Mont. 70, 223 P. 918
(1924). There the plaintiff company sued to enforce payment of promissory notes
executed by mother and son defendants and to foreclose a real estate mortgage executed
by the mother. Averill, 70 Mont. at 75-76, 223 P. at 919-20. Defendants defended by
claiming that plaintiff’s agent represented that the son had committed a crime punishable
by imprisonment, and that unless he executed and delivered to plaintiff the notes and had
his mother secure the payment of the notes by the mortgage, “plaintiff would prosecute
him, cause him to be arrested and sent to the penitentiary.” Averill, 70 Mont. at 76-77,
223 P. at 919-20. It was alleged that the son was unfamiliar with business and was not
given any opportunity to seek or obtain counsel, and that the notes and mortgage were
executed solely by reason of fear produced by such threats. Averill, 70 Mont. at 76-77,
223 P. at 920. This Court affirmed judgment in favor of the defendants and reasoned that
“[i]f the threats of prosecution actually excited in the mind of each of these defendants a
fear of imminent arrest and punishment of [the son], and impelled by that fear alone the
notes and mortgage were executed, it was wholly immaterial whether he was guilty or
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innocent, for there is absent the indispensable element—consent freely given.” Averill,
70 Mont. at 78, 83, 223 P. at 920, 922 (citations omitted).1,2
¶15 The facts here require a different conclusion than reached in those cases. The
communication in question was by letter, sent from Fronks’ counsel. This letter stated:
We are extending one more opportunity to meet and try to resolve this in an
amicable fashion. If I either get no response, or your clients do not wish to
resolve this, Fronks will be turning over all original bills of sale . . . and
asking the County to pursue felony criminal charges against Collins. In
addition, my clients will bring a civil action.
Please be advised that I have left a message at your office trying to
set up a meeting. . . . Your clients must attend this meeting so we have
some chance of resolving these issues short of litigation. Time is
absolutely of the essence.
Unlike the facts in the cases cited by defendants, Collins were represented by legal
counsel, and the communication was made between the parties’ attorneys, not to the
parties. The letter did not threaten or mention imprisonment to compel payment.
Instead, criminal remedies were mentioned along with civil remedies in an effort to
prompt Collins to avail themselves of “one more opportunity to meet and try to resolve
this.” Collins were represented by counsel at the later meeting, which was conducted at
their own counsel’s office. They were free to abandon negotiations at any time. See
1
Valley Bank of Ronan v. Hughes, 2006 MT 285, ¶ 37, 334 Mont. 335, 147 P.3d 185 recently
relied upon Averill for its discussion of ratification of a contract. Valley Bank cited to Averill’s
ratification discussion to negate the defendant’s claim of the invalidity of a promissory note due
to alleged menace. Valley Bank, ¶ 37 (citing Averill, 70 Mont. at 79-80, 223 P. at 921).
2
The District Court mistakenly quoted from the counsel’s argument section of the Averill case,
instead of the majority opinion. However, “[w]e will not reverse a district court where it reached
the right result, although for the wrong reason.” Ronning v. Yellowstone Co., 2011 MT 79, ¶ 8,
360 Mont. 108, 253 P.3d 818 (citations omitted).
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Degenhardt v. Dillon Co., 669 A.2d 946, 951 (Pa. 1996) (citation omitted) (“In short,
there can be no duress where the contracting party is free to come and go and to consult
with counsel before assuming new contractual obligations.”). Further, there was no
evidence of “unlawful confinement” of Collins, nor of lawful confinement “fraudulently
obtained or fraudulently made unjustly harassing or oppressive.” Section 28-2-402(1),
(3), MCA. See Matthews, 196 Mont. at 52-53, 637 P.2d at 824 (because there was “no
evidence of confinement or detention,” the appellants’ consent in signing a security
agreement and quitclaim deed for payment of legal fees was not obtained through
duress).
¶16 We concur with the District Court that the Agreement did not suffer from a lack of
consent by virtue of duress or menace.
¶17 Affirmed.
¶18
/S/ JIM RICE
We concur:
/S/ MIKE McGRATH
/S/ BETH BAKER
/S/ PATRICIA COTTER
/S/ MICHAEL E WHEAT
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