Montana Mining Properties, Inc. v. Asarco, Inc. , 52 State Rptr. 284 ( 1995 )

No. 94-394
IN THE SUPREME COURT OF THE STATE OF MONTANA
1995
MONTANA MINING PROPERTIES, INC.,
a Montana corporation,
Plaintiff and Appellant,
ASARCO, INC., a New Jersey
corporation, DENNIS R. WASHINGTON,
MONTANA RESOURCES, INC., a Montana
corporation, and MONTANA RESOURCES,
a General Partnership,
Defendants and Respondents.
APPEAL FROM: District Court of the Second Judicial District,
In and for the County of Silver Bow,
The Honorable Robert S. Keller, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
R.D. Corette, John T. Johnston, Corette, Pohlman,
Allen, Black & Carlson, Butte, Montana
For Respondents:
Ronald B. MacDonald, Darla J. Keck, Datsopoulos,
MacDonald & Lind, Missoula, Montana
Submitted on Briefs: January 12, 1995
Decided: April 11, 1995
Filed:
Justice James C. Nelson delivered the Opinion of the Court.
Plaintiff and Appellant, Montana Mining Properties
(hereinafter MMP), appeals from a decision and order of the Second
Judicial District Court, Silver Bow County, granting Defendants'
and Respondents' Dennis R. Washington, Montana Resources, Inc. and
Montana Resources, a general partnership (hereinafter Washington),
motion for summary judgment. We reverse and remand for trial.
MMP raises four issues on appeal, however, we shall only
address one issue, as that issue is dispositive. We state the
issue as follows:
1. Whether the District Court erred in granting
Washington's motion for summary judgment where
genuine issues of material fact exist regarding
MMP's alleged breach of contract, and regarding
Washington's waiver of the claimed right to
terminate the contract.
Washington and MMP entered into a contract dated January 27,
1987, which was executed in June 1987, wherein Washington agreed to
sell, and MMP to buy two mining properties and equipment located in
Butte, Montana. The first property, known as the "Main Butte
Property," was sold to MMP for three million dollars in cash. The
parties agree that this sum has been paid. The second property,
known as the "North Butte Property," sold for $500,000, and the
equipment on the property was sold for three million dollars. The
contract provided that half of the price of the equipment (1.5
million dollars) was to be paid in cash, and there is no dispute
that this part of the contract was performed.
The dispute arose from the agreement provisions concerning the
2
$500,000 payment for the "North Butte Property" and the 1.5 million
dollar payment, which represents the balance for the price of the
equipment. According to the agreement, these amounts were to be
paid to Washington in:
[Ul nrestricted free trading common stock of a corporation
Or corporations, which have directly or indirectly
through a subsidiary corporation, an interest in any part
of the property referred to under this Agreement. .
"Butte Mining PLC," was the public company from which the
stock was to be issued. Butte Mining PLC was organized and
promoted in London by Clive J. Smith who was one of four joint
venturers who controlled MMP. The joint venture used MMP as a
vehicle to acquire mining properties that were then transferred to
Butte Mining PLC. Shares in this company were then sold in public
stock offerings.
Payment for the "North Butte Property" was to be made "in a
timely fashion" but in no event was the purchase payment to exceed
ten months from the date of the agreement. Payment for the
equipment was to be made "on or before the 21st day of September,
1987. " The agreement expressly provided that time was of the
essence with respect to the payments, and it contained an express
termination clause, wherein Washington was entitled to terminate
the contract in the event of default. The agreement granted to MMP
a "first right of refusal to acquire an interest in any mineral
property owned by Washington in the Butte Mining District."
On October 8, 1987, Washington received a facsimile from
Bryant & Company, an accounting firm located in Jersey, Channel
islands. The facsimile indicated that Bryant & Company had been
3
instructed to release to Washington's order, 1.5 million dollars
worth of Butte Mining PLC shares, representing the balance due on
the equipment. The facsimile further noted that Bryant & Company
was awaiting Washington's instructions with respect to the stock.
On November 6, 1987, Bryant & Company sent Washington another
facsimile advising Washington that it was holding $500,000 worth of
Butte Mining PLC shares to Washington's order. This stock
represented the $500,000 due under the contract for the land.
Washington does not deny receiving these facsimiles, and in
fact acknowledged by return correspondence that Bryant & Company
was holding the stock until it received further instructions from
Washington's attorney. Washington maintains however, that he was
surprised by this turn of events as he had never authorized Bryant
& Company to hold his stock. Nevertheless, Washington alleges he
was not initially concerned about Bryant & Company holding his
stock, as he believed the stock certificates would be immediately
forwarded to him for his disposition. MMP alleges that Washington,
through his attorney, had agreed that MMP was to deliver the stock
to Bryant & Company. MMP further argues that Washington did not
object to the method and manner of the stock delivery between
November 6, 1987 and March 14, 1989. Washington, however, argues
that his attorney contacted Bryant & Company and Mr. Smith and
informed them to sell the stock. Washington points to a letter
dated April 18, 1988, wherein Washington's attorney sent a letter
to Mr. Smith in care of Bryant & Company stating that Washington
did want the shares of stock sold.
4
Washington maintains that he never gained possession, dominion
or control over the stock. In addition to the above evidence,
Washington testified that he was never sent any documents regularly
disseminated to Butte Mining PLC shareholders, nor given dominion
over the shares. Washington alleges that he was unable to sell the
shares because Mr. Smith retained control over the escrow where the
stock was held. Washington argues that this evidence taken
together demonstrates that the shares held by Bryant & Company were
not under his control, and accordingly he was not paid the monies
due him under the terms of the contract. Accordingly, Washington
concluded that MMP was in breach of the contract, and filed suit
against MMP on March 15, 1989. Washington also served MMP with a
Notice of Default notifying MMP that unless it cured the alleged
default within 30 days, Washington had the right to cancel the
agreement. MMP answered Washington's complaint and denied the
allegations that it had breached the contract. MMP maintained that
its deliveries of stock to the holding company constituted valid
deliveries under the contract.
On April 25, 1989, Washington publicly announced he had
entered into a contract with ASARCO, Inc. for the sale of certain
mining properties located in Butte to ASARCO. On or about April
26, 1989, Washington sent MMP a document entitled "Notice of Sale
and First Right of Refusal." This document noted the offer of
purchase Washington had received from ASARCO, and indicated that
MMP had thirty days to notify Washington whether MMP wished to
exercise its first refusal right. In a letter accompanying the
5
above offer, Washington requested that MMP "formally waive its
first right of refusal in and to the copper mining properties."
On May 10, 1989, MMP filed an action in the District Court
alleging that Washington had breached the January 27, 1987
agreement because Washington had entered into an agreement to sell
mineral property in the Butte Mining District without providing MMP
an opportunity to exercise its first right of refusal. MMP sought
money damages and injunctive relief barring the closing of the
contract between Washington and ASARCO. The District Court held a
hearing regarding MMP's request for an injunction to determine the
primary issue of whether MMP had breached the contract. Washington
argued that MMP had violated the terms of the contract, and
therefore he was entitled to terminate the contract, and MMP was
not entitled to enforce its first right of refusal. In a
memorandum opinion and order dated May 26, 1989, the District Court
found MMP had not validly transferred the Butte Mining PLC shares
to Washington, that Washington did not have dominion or control
over the stock and therefore MMP had not validly made payments
under the contract. The court therefore concluded that MMP had
breached the contract, and denied MMP's request for a preliminary
injunction.
On June 22, 1989, MMP filed a motion to disqualify the
District Court Judge, and moved to vacate the District Court's
memorandum opinion and order. We issued a decision concerning
MMP'S motion to vacate the order denying injunctive relief in our
order dated December 21, 1989. In that order, we dismissed MMP's
6
appeal of the District Court's order denying injunctive relief
because MMP's motion was not timely filed and the notice of appeal
relative to the District Court's order was also not timely filed.
Our order of December 21, 1989, was final as to any further issue
concerning the District Court's denial of injunctive relief.
Regarding MMP's motion to disqualify the presiding judge, we
issued a writ of supervisory control requiring that all further
proceedings be assigned to another district judge who had not
previously participated in the case. Washington v. Montana Min.
Properties (1990), 243 Mont. 509, 795 P.2d 460.
Subsequently, another district court judge assumed
jurisdiction, and on August 2, 1991, Washington filed a motion for
summary judgment primarily asserting that MMP had breached the
agreement because it failed to deliver the stock. After
considering the parties' briefs and arguments, the District Court
granted Washington's motion for summary judgment. MMP appeals from
this order.
This court's standard of review in appeals from a summary
judgment is de nova. Therefore, we review a summary judgment
utilizing the same criteria initially used by the District Court
under Rule 56(c), M.R.Civ.P. Brinkman & Lenon v. P & D Land
Enterprises (1994), 263 Mont. 238, 241, 867 P.2d 1112, 1114.
According to Rule 56(c), M.R.Civ.P., summary judgment may only be
rendered when there is no genuine issue as to any material fact,
and the moving party is entitled to judgment as a matter of law.
The moving party has the initial burden of demonstrating that
7
there are no genuine issues of material fact. Morton v. M-W-M,
Inc. (19941, 263 Mont. 245, 249, 868 P.2d 576, 579. If the moving
party is able to meet this burden of proof, the non-moving party
must then demonstrate the existence of a genuine issue of material
fact. Morton, 868 P.2d at 579. Under Rule 56(e), M.R.Civ.P., the
non-moving party may not rest upon the mere allegations or denials
of the adverse party's pleading, but must demonstrate by its
response, affidavits, or otherwise that there is a genuine issue
for trial. Any factual evidence which can be drawn from the record
must be resolved in favor of the non-moving party. D'Agostino v.
Swanson (1990), 240 Mont. 435, 442, 784 P.Zd 919, 924.
1n the instant case, after examining the record in a light
most favorable to MMP, we conclude there is a genuine issue of
material fact concerning whether the parties agreed to Bryant &
Company holding the stock.
In granting Washington's motion for summary judgment, the
District Court concluded that MMP materially breached the contract
by failing to deliver the stock to Washington. The court stated in
its order:
The facts clearly show that Plaintiff materially
breached the contract with the Washington defendants.
The delivery by Plaintiff to the Washington defendants of
shares of unrestricted free-trading stock in Butte Mining
P.L.C. was the essence of the consideration. The facts
are undisputed that Plaintiff issued the shares and had
them held by Bryant & Company; that the Washington
defendants and Plaintiffs sent correspondence back and
forth over these shares; and that one of Plaintiff's
officers, Clive Smith had the shares held in a trust
naming his daughters as beneficiaries. The facts are
also undisputed that the Washington defendants were never
issued stock certificates nor given any documents
regularly disseminated to Butte Mining P.L.C.
8
shareholders, and the Washington defendants' orders to
sell the shares were never complied with. The Washington
defendants lacked dominion and control over these shares.
Overall, there is no dispute that the Washington
defendants did not receive their shares of unrestricted
free trading stock by the September-November, 1987
deadlines as required under the contract.
However, upon review of the record, we conclude that the facts
concerning whether MMP's delivery of the stock to Bryant & Company
constituted a material breach are in dispute. The District Court
ignored the conflicting testimony of the parties concerning whether
the parties agreed to Bryant & Company holding the stock.
Mr. Smith argues that he fulfilled his obligations under the
contract. He maintains that Washington, through his attorney
Milton Datsopoulos, agreed that MMP was to deliver the stock to
Bryant & Company. Mr. Smith also notes that the contract does not
specify or define the manner or method in which the stock was to be
delivered. Washington and his attorney, however, testified that
neither had agreed that the stock would be delivered to Bryant &
Company.
This dispute is in our view sufficient to establish an issue
concerning whether MMP failed to deliver the stock. "It is not the
function of summary judgment to decide that issue but simply to
establish whether an issue exists that required determination and
resolution at trial." Baylor v. Jacobson 119761, 170 Mont. 234,
242, 552 P.2d 55, 59. Accordingly, after reviewing this evidence
as we must in favor of MMP, the non-moving party, we conclude that
a factual dispute exists concerning the delivery of the stock
thereby precluding summary judgment under Rule 56(c), M.R.Civ.P.
9
MMP also argues that Washington is precluded from a summary
judgment because a question of fact exists concerning whether
Washington waived his right to terminate the contract. MMP
suggests the following facts demonstrate the existence of a genuine
issue of material fact. We agree.
On March 14, 1989, Washington sent MMP a "Notice of Default,"
essentially asserting that MMP had defaulted under the terms of the
contract because it had failed to deliver the unrestricted free
trading stock. The notice granted MMP thirty days to correct the
alleged default. The next day, Washington filed a complaint
alleging that MMP had failed to deliver the payment of the
unrestricted stock as required by the agreement. Washington
requested relief in the alternative; either termination of the
contract or damages in the amount due under the contract. On April
26, 1989, Washington served MMP with a Notice of Sale and First
Right of Refusal, along with a letter requesting that MMP provide
a formal written waiver. The letter stated:
Although I prefer that your client provide formal written
waiver, I nevertheless felt an obligation to forward on
to Montana Mining Properties, Inc. the Notice of Sale and
First Right of Refusal for purposes of complying with
Section 6 of the Agreement dated January 21, 1987 .
Finally, on May 4, 1989, Washington informed MMP that he was
terminating the contract and withdrawing the Notice of Sale and
First Right of Refusal.
This sequence of events is not in dispute, however, it does
raise the question of whether Washington waived his right to
terminate the agreement. It is well established that waiver is the
1 0
voluntary relinquishment of a known right. McGregor v. Mommer
(1986), 220 Mont. 98, 110, 714 P.2d 536, 543. It is for the trier
of fact to determine whether an act is voluntary and the actor's
intent. McGresor, 714 P.2d at 544. Consequently, we conclude that
the sequence of events raise as an issue of fact Washington's
intent when he delivered the inconsistent documents, which, on the
one hand, appear to maintain that the contract was terminated by
breach, but on the other hand, appear to acknowledge the continuing
existence of the contractual right of first refusal.
upon review of the record, we conclude that there are material
fact issues that cannot be disposed of by summary judgment.
Accordinalv. we reverse and remand for further,01
11
April 11, 1995
I hereby certify that the following certified order was sent by United States mail, prepaid, to the
following named:
R. D. Corette, Esq. and Robert M. Carlson, Esq.
and John T. Johnston, Esq.
Corette, Pohlman, Allen, Black & Carlson
P.O. Box 509
Butte, MT 59703
Anthony F. Phillips, Esq.
Willkie, Farr & Gallagher
One Citicorp Center
153 E. 53rd St.
New York, NY 10022
Ronald B. MacDonald, Esq.
Datsopoulos, MacDonald & Lind, P.C.
201 W. Main, Central Square Bldg.
Missoula, MT 59802
Ross Richardson, Esq.
Henningsen, Vucurovich & Richardson
P.O. Box 399
Butte, MT 59071
Laura Hoguet, Esq.
White & Case
1155 Avenue of the Americas
New York, NY 10036
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA