Green v. Peschel ( 1996 )

No. 95-495
IN THE SUPREME COURT OF THE STATE OF MONTANA
1996
GERTRUDE L. GREEN and SCOTT R. GREEN,
Plaintiffs and Appellants,
v.
RICHARD C. PESCHEL, FLORENCE M. PESCHEL,
and MICHAEL E. HANWAY, d/b/a/ A TO Z
HOME INSPECTION SERVICE,
Defendants, Respondents,
and Cross-Appellants.
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable John Larson, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Henry c. Crane, Attorney at Law,
Missoula, Montana
For Respondents:
Kathleen O'Rourke-Mullins, Attorney at Law,
Polson, Montana (for respondents Peschels)
Submitted on Briefs: April 11, 1996
Decided: May 17, 1996
Filed:
Justice Charles E. Erdmann delivered the opinion of the Court.
Pursuant to Section I, Paragraph 3 (c), Montana Supreme Court
1995 Internal Operating Rules, the following decision shall not be
cited as precedent and shall be published by its filing as a public
document with the Clerk of the Supreme Court and by a report of its
result to State Reporter Publishing Company and West Publishing
Company.
Plaintiffs Gertrude Green and Scott Green and defendants
Richard and Florence Peschel both appeal from an opinion and order
on costs and attorney fees entered by the Fourth Judicial District
Court, Missoula County. We affirm.
We restate the issues on appeal as follows:
1. Were the Peschels entitled to recover attorney fees?
2. Did the District Court abuse its discretion in awarding
attorney fees of $1,500.00 to the Greens and $16,450.10 to the
Peschels?
FACTS
On March 24, 1992, the Greens and Peschels executed a purchase
agreement contract for the Greens to purchase the Peschels' house
in Frenchtown for a sale price of $105,000. Nearly two years after
the Greens had purchased the home a dispute arose over alleged
structural defects and other problems with the home. The Peschels
offered to repurchase the property but the Greens refused that
offer.
On February 17, 1994, the Greens filed a complaint with the
District court alleging claims of fraud, negligent
misrepresentation, constructive fraud, deceit, promissoryestoppel,
breach of the Consumer Protection Act, breach of the covenant of
good faith and fair dealing, breach of the implied warranty of
habitability, and negligence. The Greens attached the first page
of the purchase agreement to the complaint. On March 14, 1994, the
Peschels answered the complaint and stated that "Defendants fully
performed under their Buy-Sell Contract with the Plaintiffs," and
requested that "these Defendants be awarded their costs and fees
incurred in defending this action."
A jury trial was held between April 26-30, 1995. Prior to
trial the District Court granted summary judgment in favor of the
Peschels on the claim for breach of the warranty of habitability.
The court also determined during the pretrial settling of jury
instructions that it would not submit a jury instruction on the
promissory estoppel claim finding that "all arguments made prior to
the trial concerned issues of negligence or contracts."
On April 27, 1995, following the Greens' case-in-chief, the
Peschels moved the District Court to conform the pleadings to the
evidence in order to reflect a breach of contract claim. The
Greens did not oppose the motion and it was granted by the District
Court. The court also granted the Peschels' motion for a directed
verdict on the claims of actual fraud, deceit, and constructive
fraud. The remaining claims of negligence, breach of contract,
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breach of the covenant of good faith and fair dealing, and breach
of the Consumer Protection Act were submitted to the jury.
The jury returned a verdict in favor of the Greens on the
Consumer Protection Act claim, awarding them $400 in damages. The
jury found in favor of the Peschels on the claims for breach of
contract, breach of the covenant of good faith and fair dealing,
and negligence. After trial both parties submitted affidavits of
fees and costs. The District Court conducted a hearing on the
matter and on July 6, 1995, the court entered its order awarding
attorney fees to the Greens in the amount of $1,500.00 pursuant to
§ 30-14-133, MCA, and $16,450.10 to the Peschels pursuant to the
purchase agreement contract which provided for the award of
attorney fees to the prevailing party.
On August 4, 1995, the District Court entered an amended
opinion and order as final judgment of its July 6, 1995, opinion
and order. On August 29, 1995, the District Court denied the
Greens' motion for reconsideration. Both parties then filed a
notice of appeal from the July 6, 1995, order. Each party appeals
the District Court's apportionment of attorney fees and, in
addition, requests costs and attorney fees incurred in this appeal.
STANDARD OF REVIEW
We have stated that absent an abuse of discretion we will not
reverse the district court's decision concerning attorney fees.
Sage v. Rogers (19931, 257 Mont. 229, 242, 848 P.2d 1034, 1042
(citing Joseph Russell Realty Co. v. Kenneally (1980), 185 Mont.
4496, 505, 605 P.2d 1107, 1112). The test for abuse of discretion
is whether the trial court acted arbitrarily without employment of
conscientious judgment or exceeded the bounds of reason resulting
in substantial injustice. Gaustad v. City of Columbus (1995), 272
Mont. 486, 488, 901 P.2d 565, 567.
ISSUE 1
Were the Peschels entitled to recover attorney fees?
The purchase agreement contract between the parties provided
for the recovery of attorney fees as follows:
In any action brought by the Buyer or the Seller to
enforce any of the terms of this agreement, the
prevailing party in such action shall be entitled to such
reasonable attorney fees as the court or arbitrator shall
determine just.
In its July 6, 1995, order the District Court stated that "the case
was amended during trial to include a breach of contract claim
which was agreed to by the parties during the trial." In awarding
attorney fees to the Peschels the court relied on the language of
the purchase agreement contract and the fact that the Peschels were
the prevailing party on the breach of contract claim.
The Greens argue that their lawsuit was based on tort
allegations and not on a breach of contract theory. They claim
that the contract was not intended to cover the many duties which
were separate and apart from the contract terms and that it was the
Peschels' breach of those duties which formed the basis of their
complaint. The Greens argue that the language of the contract
reinforces their position in that it only allows attorney fees to
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the prevailing party in an action "to enforce any of the terms of
this agreement." They contend that the District Court erred in
awarding the Peschels attorney fees based on the contract when the
lawsuit alleged tortious conduct.
The Greens further argue that even if the Peschels were
entitled to attorney fees based on the language of the contract,
they were not the prevailing party in the lawsuit. They rely on
Lauderdale v. Grauman (1986), 223 Mont. 357, 725 P.2d 1199, Parcel
v. Myers (1984), 214 Mont. 220, 697 P.2d 89, and Knudsen v. Taylor
(1984), 211 Mont. 459, 685 P.2d 354, to argue that there is no
prevailing party when both parties gain a victory but also suffer
a loss. The Greens claim that since the jury found in their favor
on the Consumer Protection Act claim the Peschels were not the
prevailing party in the lawsuit. The Greens argue that the
Peschels should not be allowed to capitalize on their violation of
the Consumer Protection Act by recovering attorney fees.
The Peschels respond that even though the Greens' complaint
did not initially allege breach of contract, it resounded in
allegations supporting such a claim. The Peschels claim they
defended against what they believed was a breach of contract claim,
alleging that they had performed under the terms of the agreement.
The Peschels stress that both parties agreed at trial to conform
the pleadings to the evidence and to include the breach of contract
claim in the cause of action.
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The Peschels contend that they were the prevailing party in
the lawsuit. They note that the Greens sued them on nine different
claims, not including the breach of contract claim, and rely on the
fact that they prevailed on all but one of the claims. The
Peschels argue that since the Greens prevailed in only one out of
ten claims and obtained $400 in damages when the requested relief
was $73,000, they cannot be considered the prevailing party.
The record reflects that the parties stipulated at trial to
add the breach of contract claim to the pleadings. That claim
became part of the cause of action when the pleadings were amended
and it was submitted to the jury for consideration. The jury
determined that the Peschels did not breach the terms of the
agreement and the District Court awarded attorney fees to the
Peschels based on their prevailing on the breach of contract claim.
The Greens reliance on Lauderdale, Parcel, and Knudsen is
misplaced. While each of these cases presents the general rule
that there is no prevailing party where both parties gain a victory
but also suffer a loss, in none of those cases did the court award
attorney fees to both parties. In the present case the District
Court awarded attorney fees to the Greens and to the Peschels. The
Greens' fee award was based on the jury finding in their favor on
the Consumer Protection Act claim, while the Peschels' fee award
was based on their successful defense of the breach of contract
claim. The Peschels prevailed on the contract claim and the clear
language of the contract entitled them to attorney fees.
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ISSUE 2
Did the District Court abuse its discretion in awarding
attorney fees of $l,SOO.OO to the Greens and $16,450.10 to the
Peschels?
The Greens sought $28,704.99 in attorney fees and the Peschels
requested fees in the amount of $23,500.15. The District Court
awarded fees to the Greens in the amount of $1,500.00 pursuant to
5 30-14-133(3), MCA (the attorney fees provision of Montana's
Consumer Protection Act), and awarded fees to the Peschels in the
amount of $16,450.10.
In awarding attorney fees to the Greens the District Court
stated as follows:
Based upon the Court's review of the file and after
sitting through the four-day trial in this matter, the
many counts advanced by the Greens which were
unsuccessful, and after consideration of the Verdict,
amount of real and personal property as issue, the
complexity of the case and the respective characters,
experience, and abilities of counsel, the Court finds the
issue of the violation of the Consumer Protection Act to
have been straight-forward and uncomplicated compared to
the complexity of the other issues presented, and,
therefore, awards attorney's fees of $1,500.00 to the
Greens and no additional damages pursuant to Section
30-14-133, MCA.
Section 30-14-133(3), MCA, states that 'I [iln any action brought
under this section, the court may award the prevailing party
reasonable attorney fees incurred in prosecuting or defending the
action."
In awarding attorney fees to the Peschels, the District Court
stated that the breach of contract claim "in reality was the focus
of 70% of this case" and explained its ruling as follows:
After considering the results obtained, the amount of
work involved and the jury's determination of this issue
as well as the amount of real and personal property at
issue, the complexity of the case and the respective
characters, experience, and abilities of counsel, the
Court exercises its discretion to award the Peschels
seventy percent (70%) of their attorney's fees or
$16,450.10.
The Greens argue that the breach of contract claim was "not
even close to 70% of the case," and note that it was only after
they presented their entire case-in-chief that the Peschels pursued
the breach of contract claim. The Greens argue that the Peschels'
fee award should be limited to the number of hours spent defending
against the contract claim and maintain that the Peschels' attorney
"expended little or no time in preparing for a defense of a breach
of contract claim."
The Peschels argue that the District Court's distribution of
attorney fees was more than equitable. They maintain that the
majority of time spent in defending the lawsuit was attributable to
the contract between the parties. The Peschels argue that they
could not have prevailed on the breach of contract claim without
proving to the jury that they did not misrepresent the character of
the property and that they were not negligent in its construction.
Thus, the Peschels claim that the District Court's determination
that the breach of contract claim constituted seventy percent of
the entire lawsuit was reasonable and that its corresponding award
of attorney fees was proper. The Peschels also rely on Morning
Star Enterprises v. R.H. Grover (1991), 247 Mont. 105, 805 P.2d
553, to argue that the District Court's fee award to the Greens was
excessive in light of the $400.00 damages award the Greens
received.
Both § 30-14-133(3), MCA, and the attorney fee provision of
the purchase agreement contract provide for "reasonable" attorney
fees to the prevailing party. In Mornins Star we stated that in
determining the reasonableness of attorney fees the trial court
should consider the following factors: (1) the amount and character
of the 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 professional skill and
experience required; (5) the character and standing of the
attorneys in their profession; and (6) the result secured by the
services of the attorneys. Morninq Star, 805 P.2d at 558 (citing
Majers v. Shining Mountains (1988), 230 Mont. 373, 379-80, 750 P.2d
449, 453). We also stated that the reasonableness of attorney fees
must be ascertained under the facts of each case and the "result
secured" factor is only one of the factors which the district court
should weigh at arriving at a reasonable fee. Morninq Star, 805
P.2d at 558.
In the present case, neither 5 30-l4-133(3), MCA, nor the
contractual provision limits the award of fees and both provisions
leave the final determination to the discretion of the District
Court. Here, the District Court received fee affidavits from the
parties, conducted a hearing on the matter, and explained its
reasons for awarding fees to each party. We conclude that under
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the circumstances of this case the District Court did not act
arbitrarily without the employment of conscientious judgment nor
did it exceed the bounds of reason resulting in substantial
injustice. We therefore hold that the District Court did not abuse
its discretion in apportioning reasonable attorney fees to the
parties in this case.
Finally, we address the parties' request for costs and
attorney fees incurred in this appeal. Costs are automatically
awarded to the successful party under Rule 33, M.R.App.P. Smith v.
Johnson (19901, 245 Mont. 137, 145, 798 P.2d 106, 111. With
respect to attorney fees, we have stated that " [wl here an award of
attorneys' fees is based on a contract, the award includes
attorneys' fees generated on appeal." Smith, 798 P.2d at 111
(quoting Lauderdale, 725 P.2d at 1200). We have also stated that
l'[i]nsomuch as there has been no reversal of the claims under which
the prevailing party is entitled to reasonable attorney's fees, the
plaintiffs are entitled to their fees to defend this appeal."
Baird v. Norwest Bank (19921, 255 Mont. 317, 329, 843 P.2d 327,
335.
In the present case, each party filed a notice of appeal from
the District Court's July 6, 1995, opinion and order. Each party
had to defend the other's allegations and had one or the other
prevailed in their appeal, that party would have been entitled to
attorney fees. However, we have affirmed the District Court and
conclude that neither party has prevailed over the other on appeal.
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We therefore hold that each party should be responsible for their
own costs and attorney fees incurred in this appeal.
Affirmed.
We concur:
aa Justice
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IN THE SUPREME COURT OF THE STATE OF MONTANA
No. 95-495
GERTRUDE L. GREEN and SCOTT R. GREEN, ;&
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