Runkle v. Allen ( 2016 )

March 8 2016
DA 15-0336
Case Number: DA 15-0336
IN THE SUPREME COURT OF THE STATE OF MONTANA
2016 MT 55N
JOHN D. RUNKLE,
Plaintiff and Appellant,
v.
DUANE ALLEN,
Defendant and Appellee.
APPEAL FROM: District Court of the Nineteenth Judicial District,
In and For the County of Lincoln, Cause No. DV-13-261
Honorable James B. Wheelis, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
John D. Runkle, self-represented, Troy, Montana
For Appellee:
Amy N. Guth, Law Offices of Amy Guth, Libby, Montana
Submitted on Briefs: January 13, 2016
Decided: March 8, 2016
Filed:
__________________________________________
Clerk
Justice Beth Baker delivered the Opinion of the Court.
¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court Internal Operating
Rules, this case is decided by memorandum opinion and shall not be cited and does not
serve as precedent. Its case title, cause number, and disposition shall be included in this
Court’s quarterly list of noncitable cases published in the Pacific Reporter and Montana
Reports.
¶2 John D. Runkle appeals from the orders of the Nineteenth Judicial District Court,
Lincoln County, granting summary judgment to Appellee Duane Allen, and sanctioning
Runkle pursuant to M. R. Civ. P. 11 (Rule 11). This case arises from a dispute over a
cabin in Yaak, Montana, which straddled portions of both Allen’s and Runkle’s land.
¶3 Runkle, through his LLC—World Famous Dirty Shame Saloon LLC—acquired
real property in Yaak in April 2013. The Dirty Shame Saloon is located on this property.
Allen purchased an adjacent five-acre parcel in November 2013. There are six small
cabins located on Allen’s property.
¶4 Prior to Allen’s purchase, Runkle suspected that a portion of one of the cabins
encroached on Runkle’s property. Runkle surmised that he owned the entire cabin
because access to the cabin’s door was on his property. Runkle stored personal property
in the cabin and posted a “no trespassing” sign on the cabin.
¶5 When Allen learned of the possible encroachment, he commissioned a survey of
his property. According to Runkle, the survey disclosed that at least half of the cabin was
located on Runkle’s property. Runkle and Allen never communicated directly regarding
2
ownership of the cabin and neither gave permission to the other to enter upon their
respective properties. Runkle did not remove his personal property from the cabin
interior.
¶6 Sometime after the survey, Allen removed the cabin from its foundation and
relocated the cabin off the property line. He separated the porch and entry from the cabin
proper and left the porch on Runkle’s property. In December 2013, Runkle, appearing on
his own behalf, filed a complaint claiming damages for breach of contract, conversion,
trespass, intentional infliction of emotional distress, and treble damages for waste.
Runkle later amended his complaint to add claims against Geoff Decker for allegedly
assisting with the cabin’s relocation.
¶7 The District Court denied Allen’s motion to dismiss the amended complaint.
After the parties engaged in discovery, Runkle filed and then withdrew a second amended
complaint. Runkle then requested permission to file a third amended complaint and add
additional defendants. Allen opposed Runkle’s motion to file a third amended complaint
and moved for summary judgment on all issues. The court heard oral argument from the
parties on July 23, 2014.
¶8 Following oral argument, Allen moved for Rule 11 sanctions against Runkle for
Allen’s attorney’s fees and costs on the ground that Runkle’s amended complaint was
“based upon fanciful and frivolous legal theories that lack any authority or merit.” On
August 7, 2014, the District Court granted Allen’s motion for summary judgment, and on
October 22, 2014, it granted Rule 11 sanctions against Runkle for Allen’s attorney’s fees
3
and costs. The court denied Runkle’s subsequent motion to set aside the sanctions on the
ground that it was time barred under M. R. Civ. P. 59(e). Runkle did not attend the
hearing at which the court determined the amount of fees to award, and thereafter the
court entered final judgment dismissing Runkle’s claims and awarding Allen attorney’s
fees in the amount of $12,513.30 with interest accruing at a rate of ten percent per
annum.
¶9 On appeal, Runkle argues that the District Court erred by granting summary
judgment and by denying his motion to file a third amended complaint. Runkle also
claims that the court erred in imposing Rule 11 sanctions against him and abused its
discretion by issuing sanctions without first conducting a hearing.
¶10 We review a district court’s ruling on a motion for summary judgment de novo,
applying M. R. Civ. P. 56(c)(3). Bailey v. State Farm Mut. Auto. Ins. Co., 2013 MT 119,
¶ 18, 370 Mont. 73, 300 P.3d 1149. We review de novo the district court’s determination
that a pleading violates Rule 11. Byrum v. Andren, 2007 MT 107, ¶ 19, 337 Mont. 167,
159 P.3d 1062. We review a district court’s findings of fact underlying the conclusion to
determine whether the findings are clearly erroneous. Byrum, ¶ 19. If the court
determines that Rule 11 was violated, we review a district court’s choice of sanction for
abuse of discretion. Byrum, ¶ 19.
¶11 In granting summary judgment, the District Court began by rejecting one of
Allen’s arguments—that the complaint should be dismissed based on failure to prove that
Runkle personally owns an interest in the Dirty Shame Property. The court concluded
4
that Runkle was “not non-suited by the failure to prove a property interest” because it
was “clear from Runkle’s testimony that the World Famous Dirty Shame Saloon, LLC, is
the alter ego of John D. Runkle, personally.”
¶12 In regard to Runkle’s claims, the District Court concluded that Runkle “fail[ed] to
present any facts that support a claim for breach of contract” because he and Allen “had
no communication with each other regarding the cabin or the survey findings.” Thus, the
District Court concluded that the essential elements of a contract under § 28-2-301,
MCA, did not exist. The court also concluded that Runkle’s trespass and conversion
claims failed as a matter of law. The court determined that Runkle could not prove that
he owned the cabin to establish a claim for conversion, and that Runkle could not prove
that Allen acted intentionally or recklessly in entering upon Runkle’s property to
establish a claim for trespass. Similarly, the court concluded that Runkle was not entitled
to conversion damages for his personal property located in the portion of the cabin on
Allen’s real property. According to the court, Runkle, not Allen, had the legal duty to
remove the property and “[h]is failure to do so does not create a cause of action.” The
court further concluded that Runkle’s claim for waste—which he based on § 70-16-106,
MCA—fails because that statute pertains to property waste committed by persons with a
shared interest in real property and Runkle and Allen do not have shared interest in real
property. Finally, the court concluded that Runkle failed to set forth a prima facie case to
support an award of emotional distress damages because Runkle “fail[ed] to present proof
that [his] ‘stress’ is so severe as to warrant compensation.”
5
¶13 Runkle asserts the following arguments on appeal: 1) that the District Court
abused its discretion by stating that the World Famous Dirty Shame Saloon LLC, is the
alter ego of Runkle because such an order “could open up the LLC to additional liability
by making a ruling on such an issue”; 2) that the District Court erred in concluding that
“relocation of a structure located on Allen’s property by Allen cannot be trespass or
conversion against Runkle” because Allen had “admitted trespassing onto [Runkle’s]
property, tearing down ‘no trespassing’ signs, [and] cutting the lock off of the front door
of the [cabin]” in interrogatories and during oral argument; 3) that the District Court
never decided the issue of ownership of the cabin and “therefore a triable issue still
exists”; 4) that the District Court should have considered Runkle’s claim for waste
because it was “feasible” for the District Court to conclude that Runkle and Allen shared
or would have a shared interest in the property; and 5) that the District Court erred and
abused its discretion in finding that Runkle failed to set forth a case for emotional distress
damages because “it was a foreseeable certainty that [Runkle] would suffer such
emotional distress and the infliction of such emotional distress is probably a motivation
that inspired [Allen] to take such action to begin with.”
¶14 Our review of the record demonstrates that Runkle has failed to substantiate a
genuine issue of material fact to defeat summary judgment. To avoid summary
judgment, the non-moving party must establish substantial evidence, as opposed to mere
denial, speculation, or conclusory assertions that a genuine issue of material fact exists or
that the moving party is not entitled to prevail under applicable law. Hansard Mining,
6
Inc. v. McLean, 2014 MT 199, ¶ 10, 376 Mont. 48, 335 P.3d 711. To support his claims
on appeal, Runkle relies on conclusory assertions that are unsupported by legal authority
as well as his own oral arguments from summary judgment proceedings. These
arguments do not establish substantial evidence to raise a genuine issue of material fact.
¶15 Moreover, this appeal is the first time Runkle has argued that he partially owned
the cabin, that he and Allen jointly owned the cabin, or that the cabin was affixed to
Runkle’s property. At all times before the District Court, Runkle argued that he alone
owned the cabin because its entrance was on his property. We will not address an issue
raised for the first time on appeal. Hansen Trust v. Ward, 2015 MT 131, ¶ 19, 379 Mont.
161, 349 P.3d 500. “This rule applies to both substantive and procedural matters, as well
as to a change in a party’s theory of the case.” Hansen Trust, ¶ 19 (citation and internal
quotation marks omitted). It is unfair to fault the trial court for an error when it was
never given the opportunity to consider the issue. Hansen Trust, ¶ 19. We therefore
decline to review these arguments on appeal. Accordingly, we affirm the District Court’s
order granting summary judgment to Allen.
¶16 In granting Rule 11 sanctions, the District Court concluded that while some of
Runkle’s claims were “arguably judicable,” the “vast majority” of Runkle’s legal theories
were not supported by existing law and were not well-grounded in fact. For example, the
court explained:
[N]o law exists to support Runkle’s theory that joint ownership in real
property permits a stranger to title or interest to sue for waste. No law
exists that permits a real property owner who relocates personal property
7
located on his or her own real property to be sued for trespass. No law
exists to support Runkle’s claim that the location of an encroaching
structure’s entrance dictates the ownership of the encroaching structure and
the ground beneath the encroaching structure.
The court also took into account Runkle’s pro se status, noting that, “[w]hile the Court
may give procedural leeway to Runkle based on his pro se status, the Court is not
inclined to permit Runkle to use the judicial process to harass Allen or to cause him
needless financial harm.” Quoting D’Agostino v. Swanson, 240 Mont. 435, 445, 784 P.2d
919, 925 (1990), the court determined that sanctions were appropriate in this case in order
to punish Runkle for and deter the future use of “‘wasteful and abusive litigation
tactics.”’ Therefore, the court concluded that it is “fair and appropriate that Runkle
compensate Allen for his reasonable and necessary attorney’s fees.”
¶17 Runkle argues that the court denied him due process by failing to hold a hearing
prior to issuing sanctions against him. Runkle also argues that the court erred in
awarding sanctions because the court found at least part of his claims to be “arguably
judicable.”
¶18 Rule 11(b) provides, in relevant part,
b) Representations to the Court. By presenting to the court a pleading,
written motion, or other paper -- whether by signing, filing, submitting, or
later advocating it -- an attorney or unrepresented party certifies to the best
of the person’s knowledge, information, and belief, formed after an inquiry
reasonable under the circumstances:
(1) it is not being presented for any improper purpose, such as to harass,
cause unnecessary delay, or needlessly increase the cost of litigation;
8
(2) the claims, defenses, and other legal contentions are warranted by
existing law or by a nonfrivolous argument for extending, modifying, or
reversing existing law or for establishing new law;
(3) the factual contentions have evidentiary support or, if specifically so
identified, will likely have evidentiary support after a reasonable
opportunity for further investigation or discovery . . . .
M. R. Civ. P. 11(b)(1)-(3).
¶19 If a court determines that Rule 11(b) has been violated, the court may impose
appropriate sanctions so long as the party being sanctioned has had “notice and a
reasonable opportunity to respond.” M. R. Civ. P. 11(c)(1). We have held that before
imposing Rule 11 sanctions, a district court “must provide the party with due process by
giving [the party] notice to show cause and affording [him] an opportunity to be heard
and to defend against the imposition of sanctions.” Brandt v. Sade, 2000 MT 98, ¶ 36,
299 Mont. 256, 1 P.3d 929 (citations omitted). “We will not review a district court’s
procedural error unless the appellant has made a timely objection.” Kinsey-Cartwright v.
Brower, 2000 MT 198, ¶ 19, 300 Mont. 450, 5 P.3d 1026. “[I]t has long been the rule of
this Court that on appeal we will not put a District Court in error for a ruling or procedure
in which the appellant acquiesced, participated, or to which appellant made no
objection.” Kinsey-Cartwright, ¶ 19 (citation and internal quotation marks omitted). In
Kinsey-Cartwright, we determined that the appellant was entitled to a hearing regarding
the district court’s imposition of Rule 11 sanctions. Kinsey-Cartwright, ¶ 20. However,
because the appellant did not cite to, and our review of the record did not reveal, an
9
objection to the district court’s failure to conduct a hearing, we held that the district court
did not err in failing to conduct a Rule 11 hearing. Kinsey-Cartwright, ¶ 20.
¶20 Similar to Kinsey-Cartwright, Runkle has not cited to, and the record does not
reveal, that he objected to the District Court’s failure to conduct a hearing prior to the
court ordering sanctions against him. Runkle did not raise the issue of the hearing until
he filed his motion to set aside the attorney’s fees award on April 7, 2015—nearly six
months after the court issued its Order Granting Rule 11 Sanctions. Even if Runkle’s
motion to set aside the sanctions order can be construed as raising an objection, Runkle
cannot establish that his due process rights were violated because it is clear from the
record that he had “notice and a reasonable opportunity to respond.” M. R. Civ. P.
11(c)(1). Runkle received Allen’s Motion and Memorandum in Support of Rule 11
Sanctions on August 4, 2014. On August 12, 2014, Runkle filed a seven-page response
to the sanctions motion. The District Court did not issue its order granting sanctions until
October 22, 2014. As such, Runkle had notice of potential sanctions against him, had a
reasonable opportunity to respond to those allegations, and in fact did respond prior to the
District Court’s imposition of sanctions. Runkle did not seek a hearing until long after
after the motion had been granted. Further, the District Court’s statement that Runkle’s
claims were “arguably judicable” is not an endorsement of the merits. “Judicable” means
“capable of being judged; liable to judgment.” 2 The Compact Edition of the Oxford
English Dictionary 1518 (Oxford Univ. Press, 1971). Having reviewed the record and
10
the basis for the District Court’s order, we conclude that the court did not commit legal
error and acted within its discretion when it granted sanctions to Allen against Runkle.
¶21 Allen also requests that this Court impose sanctions upon Runkle for filing this
appeal. We may award sanctions on appeal, including attorney’s fees and costs, if the
claim for relief is “frivolous, vexatious, filed for purposes of harassment or delay, or
taken without substantial or reasonable grounds.” M. R. App. P. 19(5). In evaluating the
issue of sanctions, “‘we generally assess whether the arguments were made in good
faith.’” Hilten v. Bragg, 2010 MT 273, ¶ 30, 358 Mont. 407, 248 P.3d 282 (quoting
Wolf’s Interstate Leasing & Sales, L.L.C. v. Banks, 2009 MT 354, ¶ 13, 353 Mont. 189,
219 P.3d 1260). Applying this standard, we decline to award Allen his attorney’s fees
and costs in this appeal.
¶22 We have determined to decide this case pursuant to Section I, Paragraph 3(c) of
our Internal Operating Rules, which provides for memorandum opinions. This appeal
presents no constitutional issues, no issues of first impression, and does not establish new
precedent or modify existing precedent. The District Court’s orders granting summary
judgment to Allen and imposing sanctions against Runkle are affirmed.
/S/ BETH BAKER
We concur:
/S/ PATRICIA COTTER
/S/ MICHAEL E WHEAT
/S/ LAURIE McKINNON
/S/ JIM RICE
11