Schmidt v. Colonial Terrace Assoc. ( 1982 )

No. 81-396
IN THE SUPREFU COURT OF THE STATE OF MONTANA
1982
F. W. SCHMIDT, et al.,
Plaintiff and Appellant,
VS.
COLONIAL TERRACE ASSOCIATES, et al.,
Defendants and Respondents.
Appeal from: District Court of the First Judicial District,
In and for the County of Lewis and Clark
Honorable Peter G. Meloy, Judge presidins.
Counsel of Record:
For Appellant:
James A. Currming argued, Columbia Falls, Montana
For Respondents:
Worden, Thane & Haines, Missoula, Montana
Ronald Bender argued., Missoula, Montana
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Submitted: September 16, 1982
Decided: December 29, 1982
;-ILL2 A i98L
Filed:
. Justice Daniel J . Shea delivered the Opinion of the Court.
F. W. Schmidt, e t a l . (Schmidt) brought t h i s s u i t in Lewis and
Clark County District Court seeking a forfeiture of property by
defendants, Colonial Terrace Associates e t a l . (Colonial Terrace)
for breach of contract. Colonial Terrace filed a general denial and
counterclaimed for breach of contract, negligence, fraud, and unljust
enrichment. The jury returned a verdict in favor of Colonial
Terrace and against Schmidt and awarded $128,278 damages t o Colonial
Terrace; subject t o the t r i a l court determining the offsets claimed
by Schmidt. Judgment was entered on that verdict. Schmidt moved t o
amend the judgment. The t r i a l court entered an order denying
Schmidt's motion t o m n d judgment and an order awarding attorney
fees of $27,002.50 and costs of $9,346.90 t o Colonial Terrace.
Schmidt apw-als froan both orders.
Schmidt claims that the t r i a l court erred in entering j u d p n t
on the verdict without f i r s t holding a hearing t o determine offset.
Schmidt bases t h i s claim on the response t o a question from the j q
during delikerations, where the parties agreed t o l i m i t the j q ' s
verdict t o the amount of damages and allow the t r i a l court t o
determine the amount of offset in a l a t e r proceeding. A provision
of the contract allows the prevailing party t o recover a reasonable
attorney fee plus costs of suit. Schmidt does not claim error i n
the amount awarded for attorney fees, but argues that the
determination should have been made by the jury instead of by the
trial judge. Schmidt f a i l s t o M e anv argument to support his
claim that the awarded costs are in error.
W affirm the order awarding attorney's fees and costs t o
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Colonial Terrace. W vacate the judgment and w remand the case for
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a hearing t o determine whether the evidence establishes that an
offset should be applied t o the jury verdict; and the amount of the
offset if applicable. The hearing shall be confined to the existing
record, without admission of any new evidence.
The dispute involves a contract for the exchange of real
esete. In 1977, Schmidt started construction of an apartment house
complex i Helena consisting of 18 separate four unit buildings.
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When construction was well. under way, Schmidt entered into
negotiations for the sale of the entire project to Colonial Terrace.
On August 10, 1977, Schmidt agreed to transfer the entire apartment
complex to Colonial Terrace in exchange for real estate and paymnt
of b t money. The total. sale price of the a a - s
prt was
$1,450,000. Colonial Terrace paid $20,000 earnest mney down and
agreed to transfer real estate worth $150,000 and additional cash of
$55,000 when Schmidt cqleted construction of the complex. Thirty
days after construction was complete, Colonial Terrace was to begin
making mnthly paymnts on the remaining balance of $1,225,000.
On December 16, 1977, the construction lenders accepted the
apartment project as complete for their purposes. At that time
Schmidt was required to begin making mnthly payments on his
construction loans. However, at about the same time, disputes arose
between Schmidt and Colonial Terrace. Colonial Terrace notified
Schmidt of construction deficiencies. After November 1979, Colonial
Terrace made no further paynents into escrow, but began making
mnthly paymnts directly to Schmidt's construction lenders.
Colonial Terrace continued to demand construction repairs and
corrections.
In the meantime, Schmidt was cqlaining about the actions of
Colonial Terrace. Schmidt claimed that Colonial Terrace did not pay
the full amount of the first instalhnt of 1978 proprty taxes. In
Decerrber 1978, Schmidt gave Colonial Terrace notice of default. In
February 1979, Schmidt filed this action seeking a forfeiture of
Colonial Terrace's interest in the contract. Colonial Terrace filed
a general denial and counterclaimed for breach of contract,
negligent construction, fraudulent representations, and unjust
enrichment.
The t r i a l was long and cmplicated and both sides presented a
considerable amo~mt of detailed evidence. In the course of
deliberations, t h e -jury s e n t a note t o the t r i a l judge asking
whether they could confine t h e v e r d i c t t o a determination of damages
and leave it t o the judge and. counsel t o determine t h e m u n t of
o f f s e t t o be subtxacted from the damages. The exact question was :
"Play the jury decide on a dmage m u n t w i t h the
Court t o hear from counsel a s t o t h e amount - o f f s e t
of
t o be substracted from the damages awarded? W e have
trouble defining the m u n t of o f f s e t paid by
Colonial Terrace. " (-hasis added. )
Although the matter of t h e o f f s e t a p p a r s i n the record and is
a t issue, t h e jury was not given any i n s t r u c t i o n regarding an
off set.
After consulting with the attorneys and with their approval,
the t r i a l judge s e n t t h e following reply t o t h e jury:
"The jury s h a l l decide the damage m u n t i f any
sjnce t h e court
without reference t o o f f s e t - - - - w i l l
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-- o f f s e t i f any." (Enphasis added.)
decide the
The . . deliberated a short while longer and returned t h e
jury
.
following verdict:
" e the jury in the above e n t i t l e d matter find i n
W
favor of Defendants on t h e i r counterclaim and against
the P l a i n t i f f s on t h e i r complaint and a.ward damages
t o Defendants i n the m u n t of $128,278."
The verdict was a general verdict, and t h e jury needed only t o
fill i n the amount of damages i n t h e hlanlc space. The only
a l t e r n a t i v e verdict form i n t h e record states:
"We the jury find i n favor of P l a i n t i f f s and w find
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f o r the Defendants by way of r e s t i t u t i o n i n t h a t
Defendants are e n t i t l e d t o judgment i n t h e sum of
II
$
Neither form provided the jury w i t h a method for dealing w i t h
offset.
Colonial Terrace did not, however, wait for a hearing on o f f s e t
Sefore obtaining a judgmnt. Rather, Colonial Terrace immediately
obtained a judgment and Schmidt was served w i t h notice that a
iudgment of $128,278 had been entered against him. A t about the
same time Colonial Terrace obtained the judgment, it filed a motion
and notice of hearing t o have the t r i a l court determine attorney
fees and costs, both of which were provided for i n the contract.
Schmidt was then compelled t o f i l e a motion t o amend the
judgment on the grounds t h a t it was premature because it had been
entered before the t r i a l court had mad.e any determination on the
issue of offsets. Both sides briefed the motion t o mend judgment.
The t r i a l court held a hearing on Schmidt's m t i o n t o amend judgment
and Colonial Terrace's motion t o assess attorney fees. After
argument the t r i a l court denied Schmidt's motion t o amend judgment
and awarded Colonial Terrace attorney fees of $27,002.50 and costs
of $9,346.90.
Concerning the question of o f f s e t , w ha.ve no doubt t h a t both
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parties intended the t r i a l court t o determine o f f s e t j-n a separate
proceeding a f t e r the jury had rendered the verdict. Both p a r t i e s
were represented by counsel when the t r i a l judge responded t o the
$.xy' s query; and both sides agreed t o allow the jury t o decide the
damage amunt without reference t o o f f s e t and t o allow the t r i a l
judge t o determine applicability of o f f s e t in a latex proceeding.
Yet, a f t e r the verdict was returned and before the t r i a l court had
such a hearing, counsel f o r Colonial Terrace acting ex parte
prepared and submitted the judgment based solely on the verdict and
without reference t o offset.
Colonial Terrace would have us affirm the judgmnt on the
p r e s q t i o n t h a t the jury's verdict i s correct. The correctness of
the jury's verdict is not the question. Neither party contends that
the verdict was either too large or too small. Rather, Schmidt
argues, and we agree that the parties intended the trial court to
determine the amount of offset after the jury returned its verdict.
And it is abundantly clear by the jury's question and the response
to that question that the jury was led to believe the trial court,
with the aid of counsel would determine the proper m u n t of the
offset in a later proceeding. Colonial Terrace can not now camplain
that offset was a matter for the jury to decide after having agreed
to let the trial court make that determination.
Colonial Terrace also argues that no offset is permitted
because the jury may have returned a verdict on either a fraud
theory or a negligence theory, neither of which permits an offset.
In fact, the trial court adopted this approach i denying Schmidt's
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motion to amend the judgment. We are not aware, hwver, of any law
which would forbid a offset if a party prevails on either a fraud
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or negligence theory. No authority was cited to the District Court
and none has been cited here.
To argue that the jury's verdict was based on only fraud or
negligence and that the jury did not intend an offset, Colonial.
Terrace has some duty to show that the verdict was in fact based on
fraud or negligence. The jury's verdict was general and no
instruction was offered or given regardinq offset. The record does
not reveal which theory the jury actually relied upon, and the
evidence is sufficient to support an award of damages to Colonial
Terrace on fraud, negligence or on their other counterclaims of
breach of contract or unjust enrichment. Colonial Terrace's
contentions on this point are not supported by the record.
We therefore vacate the judgment on the verdict and remand the
case to the trial court for further proceedings to determine offset,
if any. Such proceeding s h a l l be confined t o evidence on khe
record.
W e turn t o Schmidt's claim of e r r o r iin the award of attorney
fees of $27,002.50 and c o s t s of s u i t of $9,346.90 t o Colonial
Terrace. The contract between the p a r t i e s allows t h e prevailing
party t o recover a reasonable attorney fee, plus c o s t s of s u i t .
Schmidt does not dispute the hourly r a t e , o r t h e amount of t h e
attorney f e e awarded by the t r i a l judge. Rather, he argues t h a t
because the case was t r i e d t o a jury, evidence of attorney fees
should have been presented t o the jury, and the jury instead of the
t r i a l judge should have detemined the m u n t . Schmidt d i d not t h e
matter of attorney f e e s t o the jury during the t r i a l . H e therefore
waived the r i g h t t o claim e r r o r in t h e procedure on appeal. The
t r i a l judge held a post t r i a l hearing t o determine attornev fees.
Both sides were represented by counsel and evidence was introduced.
Following t h a t hearing the t r i a l judge made findings based on t h e
standards we set out in Crncevich v. Georgetown Recreation Corp.
(1975) , 168 Mont. 113, 541 P.2d 56. W therefore affirm the award
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of attorney fees.
W e are bewildered by Schmidt's claim of e r r o r i n t h e award of
$9,346.90 f o r c o s t s of s u i t . Costs of s u i t were expresslv provided
f o r i n t h e contract between Schmidt and Colonial Terrace. In h i s
appeal b r i e f , Schmidt states, " ... [Colonial Terrace ' s] claim was
accepted and approved by the t r i a l judge without e x d a n a t i o n , and
[we] await the answer of t h e respondents on this so [we] w i l l have
s o m d e f i n i t e position t o attack." Although Schmidt claims e r r o r in
the taxing of c o s t s he has f a i l e d t o present us with any s p e c i f i c
objections. W therefore affirm the award of costs.
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The judgment on the v e r d i c t is vacated and the case i s remanded
t o t h e t r i a l court f o r f u r t h e r proceedings t o determine o f f s e t , i f
any. Such proceeding shall be limited t o t h e e x i s t i n g record. We
affirm the award of $27,002.50 f o r a t t o r n e y f e e s and $9,346.90 for
costs t o C o l o n i a l Terrace.
W e Concur: