Hove v. Mullin

IN THE SUPREME COURT OF THE STATE OF MONTANA
ARNIE HOVE,
plaintiff, Respondent
and Cross-Appellant,
CLINTON MULLTN, JR.; MULLIN TRUCKING, INC.,
a Montana Corporation; A & C SOARING EAGLE (:
tr,C. z:
TRUCKING, INC., a Montana Corporation;
*t$4
q .;~$?y
., F;. dt"(b:d@"!??*-"-\*@*- -
,<
. \
<.-:ii-
1
CLINTON MULLIN, SR., and MONA MULLIN,
Defendants and Appellants.
APPEAL FROM: District Court of the Seventh Judicial District,
In and for the County of Richland,
The Honorable Richard G. Phillips, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
James L. Norris, Attorney at Law, Bismarck,
North Dakota
For Respondent:
Mark D. Parker, Attorney at Law, Billings,
Montana
Submitted on Briefs: November 21, 1996
Filed:
Justice Karla M. Gray 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.
Clinton Mullin, Jr. (Clint Jr.), Mullin Trucking, Inc. (Mullin
Trucking), A & C Soaring Eagle Trucking, Inc. (A & C), Clinton
Mullin, Sr. (Clint Sr.) and Mona Mullin (Mona) (collectively, the
defendants) appeal from the judgment entered by the Seventh
Judicial District Court, Richland County, on its Findings of Fact,
Conclusions of Law and Judgment and from the court's earlier grant
of summary judgment to Arnie A. Hove (Hove) on two of their
counterclaims. We affirm on the appeal.
Hove cross-appeals from the judgment entered on the District
Court's Findings of Fact, Conclusions of Law and Judgment. We
affirm in part, reverse in part and remand on the cross-appeal.
The defendants raise the following issues on appeal:
1. Did the District Court err in granting Hove's motion for
summary judgment on two of the defendants' counterclaims?
2. Did the District Court err in its Findings of Fact and
Conclusions of Law?
Hove raises the following issues on cross-appeal:
3. Is Hove entitled to treble damages?
4. Did the District Court abuse its discretion in failing to
award Hove attorney fees pursuant to the premises lease?
5. Did the District Court err in awarding Mullin Trucking
damages for Hove's cancellation of the truck lease?
This case arose out of certain business dealings between
Hove, a Montana attorney, and the defendants. It began in March of
1994, when Hove filed a complaint for possession and defaulted
lease amounts. In his complaint, Hove alleged that he owned
certain real property (the premises) in Richland County, Montana,
for the use of which he and Mullin Trucking had entered into a
month-to-month lease for a 5-year period in May of 1993. According
to the complaint, Mullin Trucking thereafter transferred its
property and interests to A & C and/or Clint Sr. and Mona, all of
whom came to occupy the leased premises as Mullin Trucking's
successors and assigns.
The defendants allegedly defaulted on the rent, security
deposit and taxes provisions of the lease over a nine-month period;
Hove pleaded the total amount of the default at the time the
complaint was filed as $14,379.01. Hove alleged that he had given
the defendants notice to quit and that they were unlawfully
detaining the premises. He prayed for a judgment of possession;
rent, taxes and security deposit owed; costs incurred; and other
proper relief.
In their amended answer, the defendants admitted that Mullin
Trucking signed a document purporting to lease the premises,
affirmatively alleged that only Mullin Trucking and A & C were
occupying the premises, admitted that they had been served with
notice to quit the premises on March 15, 1994, and denied most of
3
the rest of Hove's allegations. The defendants also alleged that
Hove was the attorney for each of them at all pertinent times and
asserted primarily legal malpractice counterclaims against him.
Hove filed an early motion for summary judgment relating to
the defendants' counterclaims and the District Court denied it.
Hove subsequently filed another motion for summary judgment--on
different grounds--on all of the defendants' counterclaims. In
pertinent part, the District Court granted summary judgment to Hove
on Clint Jr.'s malpractice counterclaim which asserted that Hove
breached his professional duty by informing law enforcement
authorities that Clint Jr. might be in possession of stolen
snowmobiles (the snowmobile claim). The court also granted Hove
summary judgment on the counterclaim which asserted that Hove
allowed a $148,000 judgment to be entered against Clint Jr. when
the debt was only $80,000 (the First United Bank claim).
The parties conducted discovery and filed additional motions.
An extensive pretrial order was filed, by which time the parties'
contentions had been revised significantly.
The District Court held a bench trial on March 18 and 19,
1996, and, thereafter, filed its findings, conclusions and
judgment. Briefly stated, the District Court's judgment awarded
Hove $16,800 against Mullin Trucking for unpaid rent under the
premises lease, awarded Mullin Trucking $14,988 against Hove for
expenditures and expenses relating to Hove's cancellation of a
truck lease, and determined that there was no prevailing party in
the action and each party should bear its own costs. The court
dismissed the parties' remaining claims. The defendants appeal and
4
Hove cross-appeals.
1. Did the District Court err in granting Hove's motion
for summary judgment on two of the defendants'
counterclaims?
STANDARD OF REVIEW
Summary judgment is proper when no genuine issues of material
fact exist and the moving party is entitled to judgment as a matter
of law. Rule 56(c), M.R.Civ.P. We review a district court's grant
or denial of a motion for summary judgment de novo, using the same
criteria used by that court. Jarrett v. Valley Park, Inc. (Mont.
1996), 922 P.2d 485, 487, 53 St.Rep. 671, 672 (citation omitted).
DISCUSSION
a. The snowmobile counterclaim
Clint Jr. asserted a legal malpractice counterclaim against
Hove based on Rule 1.6 (a), Montana Rules of Professional Conduct
,
(M.R.Pr0f.C.) which prohibits a lawyer from revealing information
relating to representation of a client unless the client consents.
The essence of the counterclaim was that Hove breached this duty of
confidentiality when he reported to law enforcement authorities in
February of 1994 that he thought Clint Jr. was in possession of
stolen snowmobiles.
In moving for summary judgment on this counterclaim, Hove
submitted his affidavit stating that Clint Jr. had told many people
the snowmobiles had been stolen in North Dakota, that he was not
Clint Jr.'s attorney with regard to the snowmobile matter and that
he had not advised Clint Jr. in that regard. Therefore, according
5
to Hove, he did not breach his Rule 1.6(a) duty of confidentiality
as a matter of law.
The District Court relied on Clint Jr.'s deposition testimony
in concluding that no breach of the duty of confidentiality
occurred as a matter of law and in granting Hove's motion for
summary judgment on that counterclaim. In his deposition, Clint
Jr. testified that he did not seek Hove's legal advice with respect
to the snowmobiles or any legal issues surrounding the snowmobiles.
He also testified affirmatively that he never talked to Hove about
the snowmobiles and did not confide anything he knew about the
snowmobiles to Hove. We conclude, as did the District Court, that
"there can be no violation of a confidence which did not exist."
Clint Jr. does not contend on appeal, and did not contend in
the District Court, that his deposition testimony was
mischaracterized or mistaken. Nor did he make any effort to
correct or amend his deposition testimony in this regard.
Instead, Clint Jr. relies on the affidavit of attorney Steve
Moses, the defendants' former counsel in this action who became
their expert witness on the legal malpractice claims. With regard
to the snowmobile claim, Moses made numerous statements of "fact"
purportedly taken from affidavits filed by Hove in the criminal
proceeding against Clint Jr. Hove allegedly stated in those
affidavits that his actions regarding the snowmobiles arose from
statements made to him by his clients. Moses opined that Hove's
actions relating to the snowmobiles constituted a breach of the
attorney-client privilege.
Clint Jr. cites to no authority under which an expert witness
6
can create a genuine issue of material fact at odds with the sworn
factual statement of the real party in interest he represents on
the core fact forming the basis for a malpractice claim. Nor are
we aware of any such authority.
Moreover, Clint Jr. concedes that factual information in an
affidavit submitted in support of, or opposition to, a motion for
summary judgment must be admissible in evidence. See Rule 56(e),
M.R.Civ.P.; Carelli v. Hall (Mont. l996), 926 P.2d 756, 760, 53
St.Rep. 1116, 1117 (citation omitted). Notwithstanding Moses'
affirmation that his affidavit was made on personal knowledge, it
is clear from his reliance on the alleged Hove affidavits in the
criminal proceeding that he did not have personal knowledge of
Hove's actions which precipitated the snowmobile-related charges
against Clint Jr. Thus, the Rule 56(e) requirement that an
affidavit show affirmatively that the affiant is competent to
testify to the matters stated was not met here. Nor were sworn or
certified copies of the affidavits from the criminal proceeding to
which Moses referred in his affidavit attached as required by Rule
56 (e), M.R.Civ.P.
It is true, as Clint Jr. argues, that Rule 703, M.R.Evid.,
permits an expert's opinion to be based on facts "made known to the
expert at or before the hearing," and that such facts "need not be
admissible in evidence." The evidentiary rule facilitates the
presentation of expert opinions; it does not, however, permit an
expert witness, in the summary judgment context, to create a
material factual issue on the basis of "facts" not otherwise
admissible through his testimony. Here, Clint Jr.'s own deposition
7
testimony negated the fact of any confidence between himself and
Hove regarding the snowmobiles and Moses' expert witness affidavit
regarding a contrary "fact" was not admissible to create a genuine
issue of fact.
We agree with the District Court's assessment that the present
case presents the "curious situation" of Clint Jr. suing Hove for
divulging confidential information which Clint Jr. swears he did
not communicate to Hove. We hold that the District Court did not
err in granting Hove's motion for summary judgment on the
snowmobile counterclaim.
b. The First United Bank counterclaim
The District Court also granted summary judgment to Hove on a
llcounterclaim"
relating to Hove's defense of Clint Jr. in a debt
action against him by the First United Bank of Sidney. This
counterclaim was not specifically pleaded by the defendants, but it
and other general and vague references to legal malpractice were
mentioned by Clint Jr. in his deposition in the context of Hove
allegedly mishandling various matters for the Mullin defendants.
In moving for summary judgment on the First United Bank
matter, Hove essentially contended that Clint Jr. had not come
forward with anything concrete in the way of a counterclaim. In
responding to the motion, counsel for the defendants relied
primarily on Clint Jr.'s deposition statements that he hired Hove
to handle his defense of a claim by First United Bank and that Hove
"allowedu the Bank to obtain a judgment of $148,000 when Clint Jr.
"did not believe" he owed that amount. Clint Jr. also relied again
on the Moses affidavit.
8
As it had with regard to the snowmobile claim, the District
Court focused on Clint Jr.'s deposition testimony. That testimony
established that Clint Jr. was not seeking damages via counterclaim
in the present case for Hove's actions or inactions with regard to
the First United Bank case. When asked specifically, "So this
lawsuit has nothing to do with the United Bank of Sidney case?"
Clint Jr. responded "That's correct." While Clint Jr.'s counsel
contended during the summary judgment proceedings that Clint Jr.'s
deposition testimony was mistaken, counsel's arguments do not
establish facts; nor did Clint Jr. submit an affidavit or otherwise
attempt to correct any allegedly mistaken deposition testimony. We
conclude, as did the District Court, that no evidence of record
contradicts Clint Jr.'s sworn testimony that he was not pursuing a
counterclaim in this case regarding Hove's handling of the First
United Bank action. Therefore, no genuine issue of material fact
existed.
On appeal, Clint Jr. contends that the Moses affidavit raised
sufficient factual issues to preclude summary judgment. Moses'
statements in this regard were that Clint Jr. and Mullin Trucking
owed approximately $80,000 to First United Bank and that Hove
allowed judgment to be entered for an amount in excess of $148,000.
We observe, as we did above, that Moses stated no basis for his
purported personal knowledge of these matters. Indeed, the
statements are in the nature of conclusory statements lacking in
factual foundation or personal knowledge. Conclusory statements
are insufficient to establish the existence of a genuine issue of
material fact. Matter of Estate of Lien (1995), 270 Mont. 295,
9
298, 892 P.2d 530, 532 (citation omitted).
Moreover, even if accepted--and admissible--as fact, Moses'
statements do not controvert Clint Jr.'s sworn testimony that he
was not seeking anything in this case relating to Hove's handling
of the First United Bank action. An expert witness may opine that
professional negligence was committed; he cannot, however, assert
a leqal malpractice claim on behalf of a client who has testified
under oath that no such claim is being pursued. We hold that the
District Court did not err in granting Hove's motion for summary
judgment on the First United Bank counterclaim.
2. Did the District Court err in its Findings of Fact
and Conclusions of Law?
STANDARD OF REVIEW
We review a district court's findings of fact to determine
whether they are clearly erroneous. Rule 52(a), M.R.Civ.P. Under
our three-part clearly erroneous test, we first determine whether
the court's findings are supported by substantial credible
evidence; if so, the findings still may be clearly erroneous if the
court misapprehended the effect of the evidence or we are left with
the definite and firm conviction that a mistake has been committed.
Daines v. Knight (l995), 269 Mont. 320, 325, 888 P.2d 904, 906
(citations omitted). In this regard, it is within the province of
the trier of fact to weigh the evidence and determine the
credibility of witnesses, and we will not substitute our judgment
for that of the factfinder on such matters. Topco, Inc. v. State,
Department of Highways (19961, 275 Mont. 352, 362, 912 P.2d 805,
811 (citation omitted). We review a district court's conclusions
of law to determine whether they are correct. Daines, 888 P.2d at
906.
It is appropriate to begin our discussion with general
observations about the defendants' brief on this issue, which
apparently is intended to relate to both their defenses to Hove's
claim against them and their counterclaims against Hove. We say
"apparently" because their discussion of this issue is a confused
intermixture of largely conclusory statements which neither
challenges specific findings by the District Court under this
Court's standard of review nor advances legal analysis directed at
establishing error in the District Court's conclusions of law.
Moreover, the 30-page statement of "facts" with which the
defendants open their brief, and to which numerous references are
made in their discussion of this issue, does not contain facts; it
merely reiterates at length the trial testimony of the defendants
and the witnesses who testified on their behalf.
At the outset of their discussion of whether the District
Court erred in its findings and conclusions, the defendants cite to
In the Matter of Bretz (1975), 168 Mont. 23, 542 P.2d 1227, for the
proposition that an attorney entering into business transactions
with a client must show "by clear and satisfactory evidence" that
the client had all the information and advice necessary to
comprehend and understand the details of the business arrangement
and that no undue influence or unfairness occurred. The defendants
then merely state that the court failed to consider this law.
We note that Bretz was not a legal malpractice case. It was
11
before this Court on review of a disciplinary proceeding before the
Court's Commission on Practice. Bretz, 542 P.2d at 1228. The
defendants cite to no authority under which principles set forth in
a disciplinary proceeding necessarily are applicable in a legal
malpractice case.
Even assuming arguendo that Bretz is applicable here, however,
it does not aid the defendants. While the defendants correctly
restate certain language from Bretz, the language they rely on is
only a partial statement of the Bretz principle. Accepted as a
controlling principle, the language on which the defendants rely
would effectively eliminate a plaintiff's burden of proving a legal
malpractice claim based on business dealings between an attorney
and a client and shift that burden to the attorney to disprove the
claim.
Stated in its entirety, the Bretz principle provides that
" [wlhen the evidence reflects, as it does in this case, that an
attorney has seemingly profited at the expense of his clients," the
attorney must show--by clear and satisfactory evidence--both the
absence of undue influence or unfairness and that the client had
all the necessary information and advice to comprehend and
understand the details of their business arrangement. Bretz, 542
P.2d at 1245. Thus, where applicable, Bretz is clear that an
attorney's obligation to come forward with clear and satisfactory
evidence arises only where a factfinder has determined that the
attorney profited at the client's expense.
The defendants fail to apply this principle to either the
record before us or the District Court's findings and conclusions.
12
Here, the District Court did not make such a finding and the
defendants do not cite to evidence of record which would have
mandated a finding that Hove profited from either the premises
lease or the other business dealings underpinning the defendants'
counterclaims against him. In any event, the record does not
suggest such profit by Hove at the expense of his clients.
The defendants also cite to Daniels v. Paddock (1965), 145
Mont. 207, 221, 399 P.2d 740, 747, for the principle that "where an
attorney deals with his client for the former's benefit, the
transaction . . . is presumptively invalid on the ground of
constructive fraud, and that this presumption can be overcome only
by the clearest and most satisfactory evidence." Again, however,
the defendants fail to establish--and the District Court did not
find--that Hove's transactions with the defendants benefited Hove.
The defendants then state that their 30-page Statement of
Facts "establish[es] that the District Court's decision in
upholding the lease for Hove and in not holding for appellants is
clearly erroneous." They make similar conclusory statements
regarding their other claims and generally request that this Court
consider their 30-page Statement of Facts and references to the
transcript and exhibits "in order to determine how strong
appellants' evidence is."
In these regards, we need only reiterate that our standard in
reviewing a district court's findings of fact is whether those
standards are clearly erroneous; the first prong of the "clearly
erroneousu test is whether substantial credible evidence supports
the findings. Daines, 888 P.2d at 906. Our standard is not
13
whether evidence supports findings different from those made by the
district court. See Caekaert v. State Compensation Mutual Ins.
Fund (1994), 268 Mont. 105, 110, 885 P.2d 495, 498 (citation
omitted) . Thus, contrary to the defendants' suggestion, it is
clear that the mere recitation of evidence supporting their
positions does not "establish" that the District Court's findings
are clearly erroneous.
Moreover, it is within the province of the trier of fact to
weigh conflicting evidence, and we will not substitute our judgment
for that of the factfinder in such matters. Topco, 912 P.2d at
811. Thus, while we have reviewed the record, we reject the
defendants' request that we "determine how strong their evidence
is." To do so would improperly intrude this Court into the
province of the trier of fact in contravention of our well-
established standards.
The remainder of the defendants' discussion under this issue
centers on their contention that Hove failed to establish his
claims, and defend against theirs, by the "clearest and most
satisfactory evidence." While we have concluded above that this
portion of the Bretz principle does not come into play here, we
address this portion of the defendants' discussion briefly, noting
that the defendants advance neither a definition of the "clearest
and most satisfactory evidencen standard nor an analysis of how
that standard applies to this Court's review of a district court's
findings of fact.
For purposes of this case, and absent any definition offered
by the defendants, we equate the "clearest and most satisfactory
14
evidence" standard to the "clear and convincing evidence" standard.
[Cllear and convincing proof is simply a requirement that
a preponderance of the evidence be definite, clear, and
convincing, or that a particular issue must be clearly
established by a preponderance of the evidence or by a
clear preponderance of proof. This requirement does not
call for unanswerable or conclusive evidence. The
quality of proof, to be clear and convincing, is
somewhere between the rule in ordinary civil cases and
the requirement of criminal procedure--that is, it must
be more than a mere preponderance but not beyond a
reasonable doubt.
Matter of J.L. (Mont. 1996), 922 P.2d 459, 462, 53 St.Rep. 649, 651
(citations omitted). Even where applicable, however, the clear and
convincing burden of proof does not mandate a finding against the
party carrying that burden merely because conflicting evidence
exists. Matter of J.L., 922 P.2d at 462. Thus, the defendants'
reliance on that standard is to no avail here on a stand-alone
basis.
Moreover, it is clear that even where the clear and convincing
standard applies to a district court charged with making findings
of fact, that trial level standard does not affect our clearly
erroneous standard in reviewing such findings of fact. Matter of
J L ,922 P.2d at 462 (citation omitted). To hold otherwise would
..
result in this Court improperly substituting its judgment for that
of the factfinder on matters relating to the weight of the evidence
and the credibility of witnesses. See Matter of J.L., 922 P.2d at
The above discussion brings us to the only questions properly
before us in this issue; namely, whether the District court's
findings of fact are clearly erroneous and whether its conclusions
of law are correct. See Daines, 888 P.2d at 906. The defendants
do not challenge any finding of fact as being unsupported by
substantial evidence or, except as discussed above, otherwise
clearly erroneous. Accordingly, we conclude that the District
Court's findings relating to the defendants' appeal are not clearly
erroneous. Similarly, with regard to the conclusions of law
adverse to them, the defendants have not established any error by
the court. We hold, therefore, that the District Court did not err
in interpreting the law with respect to matters encompassed within
the defendants' appeal.
3. Is Hove entitled to treble damages?
As the first issue in his cross-appeal, Hove contends that he
was entitled to treble damages pursuant to § 70-27-205(2), MCA,
upon the District Court's finding and judgment that he was entitled
to unpaid rent from Mullin Trucking. He argues that the entry of
treble damages is a mere ministerial act under the facts of this
case. We disagree.
Section 70-27-205(2), MCA, provides that, in the event of an
unlawful detainer alleged in the complaint and proved at trial, the
finder of fact must determine the amount of any related rent due.
In addition, judgment must be entered against a defendant guilty of
the unlawful detainer for three times the amount of the rent found
due. Section 70-27-205(2), MCA.
Here, as noted above, Hove's complaint alleged defaulted rent
payments under the premises lease and unlawful detainer. The
District Court determined that the premises lease was valid, found
that rent was due--and not paid--after the first two months of the
lease, and entered judgment in Hove's favor for the amount of rent
16
not paid by Mullin Trucking for the months it occupied the leased
premises. The court did not, however, make a finding or
corresponding conclusion that Mullin Trucking was guilty of
unlawful detainer as defined in 5 70-27-108, MCA.
Treble damages are mandatory under § 70-27-205(2),MCA, only
where a defendant is determined to be guilty of unlawful detainer.
No such determination was made in this case and Hove has not
appealed the District Court's failure to do so. Therefore, we
conclude that Hove is not entitled to treble damages.
4. Did the District Court abuse its discretion in
failing to award Hove attorney fees pursuant to the
premises lease?
Since he prevailed on the premises lease issue, Hove argues
that the District Court abused its discretion in determining that
no party should be deemed a prevailing party in the action and each
party should bear its own costs, and in denying him attorney fees
to which he was entitled pursuant to the terms of the lease. We
disagree.
We note, at the outset, that Hove's complaint in this case
does not contain a claim for attorney fees under the premises
lease. Indeed, no claim for attorney fees is stated in the
complaint.
Hove contends that he preserved the issue of entitlement to
attorney fees under the premises lease in the pretrial order. We
have scrutinized the extensive pretrial order entered in this case,
however, and located no assertion of entitlement to attorney fees
under the premises lease. The only assertion by Hove in the
pretrial order which relates to his asserted entitlement to
attorney fees is as follows:
Hove is entitled to rent pursuant to the terms of the
lease and all remedies available under Section 70-27-201
et seq. M.C.A. including attorney's fees, treble damages
and costs.
This contention asserts entitlement to rent under the premises
lease; it does not assert entitlement to attorney fees thereunder.
Attorney fees, and other entitlements, are asserted only pursuant
to statute.
Hove also relies on Bell v. Richards (1987), 228 Mont. 215,
741 P.2d 788. His reliance is misplaced.
In w, plaintiffs sued to be excused from obligations under
a contractual land sale and to be reimbursed for amounts already
paid to defendants under the contract. The contract contained a
prevailing party attorney fees provision. Ultimately, the district
court dismissed plaintiffs' complaint with prejudice and awarded
defendants costs. Bell, 741 P.2d at 789. The court subsequently
denied defendants' motion to alter or amend to include attorney
fees, concluding that defendants' failure to include a claim for
attorney fees in the pretrial order constituted abandonment of such
a claim and that no evidence relative to fees was introduced at
trial under which Rule 15 (b), M.R.Civ.P., would come into play.
Bell, 741 P.2d at 790.
We reversed the district court on appeal. We relied, in
pertinent part, on the parties' mutual contractual agreement that
the prevailing party in any action relating to the contract would
be entitled to attorney fees and plaintiffs' inclusion of the issue
in the pretrial order. -,
Bell 741 P.2d at 790-91. Because
entitlement to attorney fees was vested in the prevailing party by
contract, plaintiffs claimed attorney fees under the contract, and
g 28-3-704, MCA, makes attorney fees reciprocal, we concluded that
defendants did not abandon their right to attorney fees by failing
to include such a claim under defendants' contentions in the
pretrial order. Bell, 741 P.2d at 790-91.
The present case is distinguishable from Bell. First, the
premises lease did not contain a prevailing party attorney fees
provision; Section Eleven of the premises lease provided that the
lessee would indemnify the lessor against expenses, including
attorney fees, arising out of a failure by lessee to perform any of
the terms of the lease. Second, Hove was the only party who could
have initially asserted a claim to attorney fees under this lease
provision in the pretrial order, and he did not do so. Thus, &JJ
does not support Hove's position here.
Moreover, we distinguished &JJ in Naftco Leasing Ltd. v.
Finalco, Inc. (1992), 254 Mont. 89, 835 P.2d 728, on facts nearly
identical to those presently before us. There, plaintiffs appealed
from the district court's adverse ruling in their action to reform
lease contracts and from the award of attorney fees to defendant.
Naftco, 835 P.2d at 729-30. We reversed on the attorney fees issue
on the basis that the pretrial order contained no reference to
attorney fees and the lease contracts did not contain a prevailing
party attorney fees provision. Indeed, the Naftco contracts
contained a provision substantially similar to that contained in
the premises lease at issue in the present case. Naftco, 835 P.2d
at 732. We expressly determined that "Bell is not authority for
19
allowing the defendant to collect attorney fees in the present
case." Naftco, 835 P.2d at 732. We reach the same conclusion
here.
As a final matter, we observe that Hove did not assert
entitlement to attorney fees under the premises lease at any stage
of the proceedings before the District Court. As noted above,
neither his complaint nor the pretrial order contains such a claim.
His brief and proposed findings of fact and conclusions of law
filed after trial also are devoid of any reference to such an
entitlement to attorney fees. Nor did he move the District Court
to alter or amend its findings, conclusions and judgment in this
regard.
We hold that the District Court did not err in failing to
award Hove attorney fees under the premises lease.
5. Did the District Court err in awarding Mullin
Trucking damages for Hove's cancellation of the
truck lease?
As part of the business dealings between Hove and the
defendants, Hove made a down payment on a 1993 Volvo truck. A one-
paragraph contract between Hove and Clint Jr. indicated that the
truck ultimately was to be sold to Mullin Trucking and that, in the
interim, Mullin Trucking would lease the truck. No written lease
agreement was ever executed with regard to this transaction and the
District Court found that the original contract was devoid of any
detail as to the terms and conditions of such a truck lease. The
court concluded that Hove violated his obligation as an attorney in
entering into business dealings with his clients in this regard
without providing a clear written contract specifying the terms of
the lease.
Hove subsequently terminated the truck transaction and
"repossessed" the truck. Damages were claimed against Hove for
loss of use, loss of profits and out-of-pocket expenses for
licensing, insuring and outfitting the truck, as well as being
required to go and pick up a trailer that was left in Illinois when
Hove reacquired the truck.
The District Court concluded that, in addition to Hove having
failed to properly conduct the truck lease transaction at the
outset, his method of terminating the arrangement also was improper
and resulted in loss of equipment from the truck and loss of the
out-of-pocket expenses incurred. Noting that the damages to which
Clint Jr. testified were not supported by documentation, the court
nevertheless determined that the damages did not appear to be
speculative and that Clint Jr.'s testimony was sufficient to
establish the damage claim. The District Court entered judgment
relating to the truck transaction in favor of Mullin Trucking in
the amount of $14,988 as damages for out-of-pocket expenses.
Hove does not challenge any of the District Court's findings
of fact relating to the truck lease transaction; nor does he
challenge the court's conclusions of law that he violated his
professional obligations in these regards and improperly reacquired
the truck, resulting in the loss of out-of-pocket expenditures. In
addition, while Hove observes that he preserved an objection to the
foundation for Clint Jr.'s testimony relating to damages, he does
not raise or argue--as a separate issue on cross-appeal--anabuse
of discretion by the District Court in admitting the testimony.
21
Thus, we do not address the admissibility of Clint Jr.'s testimony
relating to out-of-pocket expenses.
Hove does advance two challenges to the District Court's
actions in this regard. First, he argues that the court should not
have accepted Clint Jr.'s testimony on damages relating to the
truck transaction as sufficient to establish those damages.
Second, he contends that the District Court erred in awarding the
damages to Mullin Trucking rather than to A & C. We will address
these arguments in turn.
With regard to Hove's first argument, we conclude that the
District Court did not abuse its discretion. The court rejected
much of Clint Jr.'s damage testimony as speculative and improbable.
It accepted other testimony, over Hove's objection, with regard to
the out-of-pocket expenses incurred. While it is true that Clint
Jr. did not provide documentation for these damages, and used the
pretrial order to refresh his recollection about these amounts, he
testified that he had provided the information to his counsel at
the time the pretrial order was prepared.
Hove relies on Scott v. Scott (1990), 246 Mont. 10, 803 P.2d
620, as support for his contention that oral testimony unsupported
by readily available documents is insufficient proof as a matter of
law, but his reliance is misplaced. There, the parties to a
marital dissolution disputed the valuation of an automobile
purchased during the marriage. Scott, 803 P.2d at 624. The wife
testified that the value was $500; the husband testified to a value
of $1500 based on conversations he had with various automobile
dealers. Neither party submitted written valuations and the trial
22
court accepted the husband's testimony. Scott, 803 P.2d at 625.
On appeal, we observed that the trial court did not have the
best evidence on which to base its valuation of the automobile; we
also determined, however, that the trial court's determination of
value would stand unless it was not supported by the record.
Having reviewed the record, we concluded that it supported the
trial court's finding. Scott, 803 P.2d at 625. To the extent it
is applicable here, Scott supports the District Court's reliance on
Clint Jr.'s testimony regarding out-of-pocket expenses relating to
the truck transaction. Scott does not stand for the proposition
that oral testimony unsupported by readily available documents is
insufficient proof as a matter of law.
With regard to Hove's second argument, we agree--as do the
defendants--that the District Court erred in awardiny the damages
to which Clint Jr. testified to Mullin Trucking. Clint Jr. clearly
and repeatedly testified that the out-of-pocket expenses incurred,
and which the court ultimately awarded as damages, were sustained
by A & C. Thus, the record does not support the District Court's
entry of judgment in favor of Mullin Trucking in the amount of
$14,988 as damages relating to the truck transaction. As a result,
it is necessary to remand for modification of the District Court's
conclusions of law and judgment.
Affirmed in part, reversed in part, and remanded for further
proceedings consistent with this opinion.
We concur: