Murphy Homes, Inc. v. Muller

No. 05-237
IN THE SUPREME COURT OF THE STATE OF MONTANA
2007 MT 140MURPHY HOMES, INC.,
a Montana Corporation,
Plaintiff, Counter-Defendant
and Respondent,
v.
MARILYN MULLER and
PATRICK ABERLE,
Defendants, Counter-Claimants
and Appellants.
APPEAL FROM: The District Court of the Fifth Judicial District,
In and For the County of Jefferson, Cause No. DV 2002-10043,
Honorable Loren Tucker, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Palmer A. Hoovestal, Hoovestal Law Firm, PLLC, Helena, Montana
For Respondent:
Gary L. Davis, Candace Payne, Luxan & Murfitt, PLLP, Helena, Montana
Submitted on Briefs: January 31, 2006
Decided: June 12, 2007
Filed:
__________________________________________
Clerk
Justice James C. Nelson delivered the Opinion of the Court.
¶1 Patrick Aberle and Marilyn Muller, who are husband and wife (collectively
“Aberle/Muller”), appeal a jury verdict in the District Court for the Fifth Judicial District,
Jefferson County, awarding Murphy Homes, Inc. (Murphy Homes), damages, punitive
damages, attorney’s fees and costs. The case involves a cost-plus contract wherein
Murphy Homes agreed to do certain building and remodeling to Aberle/Muller’s
residence. We affirm.
¶2 Aberle/Muller present eleven issues for review, however, their brief is broken
down into six main issues or contentions (as Aberle/Muller refer to them) and more than
23 sub-issues. Such a “shotgun” approach serves no useful purpose and tends to
obfuscate legitimate issues by peppering them with irrelevant asides. With difficulty we
have disentangled Aberle/Muller’s morass of issues and have consolidated them into the
following seven issues:
¶3 1. Whether the District Court erred in denying Aberle/Muller’s First and Third
Motions for Summary Judgment.
¶4 2. Whether the District Court erred in denying Aberle/Muller’s Motion for
Judgment as a Matter of Law.
¶5 3. Whether the District Court erred in barring Aberle/Muller’s “foreseeability”
defense.
¶6 4. Whether the District Court erred in denying Aberle/Muller’s Motion to
Continue and, instead, ordering a bifurcated trial.
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¶7 5. Whether the District Court erred in permitting the jury to view Aberle/Muller’s
residence and in admitting other evidence of Aberle/Muller’s financial condition on the
issue of liability.
¶8 6. Whether the District Court erred in refusing Aberle/Muller’s proposed jury
instructions.
¶9 7. Whether the District Court erred in denying Aberle/Muller’s post-trial motions.
¶10 In addition, Murphy Homes has asked for an award of attorney’s fees on appeal if
we affirm the District Court’s Judgment.
Factual and Procedural Background
¶11 Aberle/Muller hired Murphy Homes to remodel their existing home, construct a
new building next to it, and connect the two, forming a U-shaped building to be used as
Aberle/Muller’s personal residence. Murphy Homes originally estimated the work at
$438,000.00, but as Murphy Homes’ President, John Murphy, and Aberle/Muller’s
architect, Robert Karhu, both testified, there was no actual bidding and no fixed price was
established.
¶12 Aberle/Muller and Murphy Homes entered into a cost-plus contract for the
proposed construction. Under the contract, Aberle/Muller were to reimburse Murphy
Homes for actual costs plus a contractor’s fee of 15% of the costs of material and labor as
its compensation for managing the project and overseeing the subcontractors.
¶13 Once the project commenced, Aberle/Muller ordered numerous changes to the
architect’s original plans. Murphy Homes alleges that while the original plans called for
minor remodeling of the existing structure, in the end, that structure was completely
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gutted and new electrical and plumbing systems were added, along with a new roof, new
windows and new exterior siding.
¶14 Murphy Homes also alleges that when costs on the project reached $638,000.00, it
became concerned about the costs it was carrying and about the 15% contractor’s fee.
Hence, Murphy Homes sent a bill to Aberle/Muller for $11,000.00 representing the 15%
fee on the most recent construction draw. Murphy Homes further alleges that, besides the
15% contractor’s fee, Aberle/Muller still owed Murphy Homes $160,000.00 for
construction costs already incurred and paid by Murphy Homes.
¶15 Aberle/Muller allege that there were no written change orders or change directives
adjusting the contract sum or the contract price which would have entitled Murphy
Homes to more fees for changes in the work. They also allege that they paid Murphy
Homes its entire fee and that when Murphy Homes realized that it had miscalculated its
fee on the project, Murphy Homes made a claim for additional fees to be applied to the
remainder of the project.
¶16 At a meeting on September 4, 2002, Aberle stated that he would not pay Murphy
Homes any more money, consequently the relationship ended. Aberle/Muller contend
that when they refused to pay the additional fee, Murphy Homes walked off the job and
abandoned the project, leaving them to find other contractors to finish the work. Murphy
Homes contends, on the other hand, that it was, in effect, fired from the project when
Aberle/Muller refused to pay the additional fee.
¶17 After the relationship ended, Aberle/Muller paid Murphy Homes the $160,000.00
for construction costs already incurred, but refused to pay the $11,000.00 contractor’s
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fee. On November 19, 2002, Murphy Homes filed a Complaint seeking to foreclose on a
construction lien it had filed against the property. Aberle/Muller counterclaimed alleging
defective work, fraud, slander of title and other claims.
¶18 During a protracted and contentious pretrial process, both parties filed numerous
Motions to Compel and Motions for Sanctions which we need not go into here. The trial
commenced on January 26, 2004, with a six-person jury and two alternates. The trial was
originally scheduled for five days, however, as the trial got underway, it became apparent
that five days was not sufficient, thus the District Court rearranged its court calendar to
provide two more days. Nevertheless, after seven days, Aberle/Muller had only begun to
present their defense, hence, the District Court ordered that the trial resume at some
unspecified time in the future when the court could find additional time in its busy
schedule.
¶19 After some difficulty in setting a date to resume trial (the details of which will be
addressed more specifically under Issue 4), trial resumed August 9, 2004, and continued
through August 12, 2004. The jury affirmatively responded to the question of whether
Aberle/Muller had acted with fraud, deceit and malice towards Murphy Homes and they
returned a unanimous verdict awarding Murphy Homes $366,100.00 in damages. Shortly
thereafter, a punitive damages hearing took place wherein the jury unanimously awarded
another $366,000.00 in punitive damages to Murphy Homes. The total judgment against
Aberle/Muller was $896,494.62, which included accrued interest, attorney’s fees and
costs.
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¶20 After trial, Aberle/Muller filed numerous post-trial motions including a Motion to
Amend Judgment, a Motion to Limit Punitive Damages, and Defendants’ Motion for
Attorney’s Fees and Costs, all of which were denied by the District Court.
¶21 Aberle/Muller appeal the District Court’s Judgment. Additional facts are set forth
where necessary to our resolution of the issues.
Discussion
¶22 Before examining the issues, we note that rather than setting forth the procedural
background of this case in their brief as required by M. R. App. P. 23(a)(3),
Aberle/Muller included that information in an appendix to their brief. In response,
Murphy Homes asks this Court to disregard those eleven pages in Aberle/Muller’s
appendix and strike them from the record on appeal because they violate this Court’s
limitations on the length of briefs to be filed in this Court.
¶23 Murphy Homes’ argument is well taken. By including in their appendix
information that should have been included in their brief itself, Aberle/Muller not only
violated M. R. App. P. 27(d), regarding the length of briefs allowed on appeal, but they
violated M. R. App. P. 25(b), which sets forth what documents may be contained in an
appendix to a brief.
[A]n appendix shall contain: (1) the relevant docket entries in the
proceeding below; (2) any relevant pleading and relevant given or refused
jury instruction, finding and opinion; (3) the judgment, order, findings of
fact, conclusions of law, or decision in question, together with the
memorandum opinion, if any, in support thereof; and (4) such other parts of
the record as any party deems it essential for the judges of the court to read
in order to decide the issues presented.
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M. R. App. P. 25(b). A summary of a party’s view of the proceedings below is wholly
inappropriate for including in an appendix to a brief on appeal. Consequently, we
conclude that Aberle/Muller’s Appendix 7 consisting of eleven pages and entitled “Detail
of the District Court Proceedings” is appropriately stricken from the record on appeal,
and we have disregarded it.
¶24 We also note that Aberle/Muller have asked this Court to adopt and incorporate by
reference into their brief facts; citations to deposition and trial testimony; authorities; and
argument contained in their numerous filings before the District Court. This is also an
attempt to circumvent this Court’s page limitations on briefing. To do as Aberle/Muller
ask would in effect add another 200 pages to Aberle/Muller’s brief. M. R. App. P.
23(a)(4) “requires that an appellant present a concise, cohesive argument which
‘contain[s] the contentions of the appellant with respect to the issues presented, and the
reasons therefor, with citations to the authorities, statutes and pages of the record relied
on.”’ In re Marriage of McMahon, 2002 MT 198, ¶ 6, 311 Mont. 175, ¶ 6, 53 P.3d 1266,
¶ 6.
¶25 Aberle/Muller’s brief is neither concise nor cohesive, and it has been with great
difficulty that this Court has slogged through the quagmire of issues and contentions
presented by Aberle/Muller on appeal. Nevertheless, we have managed to drain the
swamp sufficiently to reveal at the bottom, seven issues for review by this Court.
Issue 1.
¶26 Whether the District Court erred in denying Aberle/Muller’s First and Third
Motions for Summary Judgment.
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¶27 In its First Motion for Summary Judgment, Aberle/Muller argued that the facts are
“uncontroverted” that the contract price had been paid in full because there were no
written change orders or directives as required by the contract which would have entitled
Murphy Homes to additional profit or overheard. Similarly, in their Third Motion for
Summary Judgment, Aberle/Muller argued that the facts are “uncontroverted” that the
contract price has been paid in full because Montana lien law prohibits Murphy Homes’
claim as it constitutes a claim for profits and general overhead and not for performance of
services or the furnishing of materials.
¶28 In its response to Aberle/Muller’s Motions for Summary Judgment, Murphy
Homes argued that the facts are not “uncontroverted.” Murphy Homes maintained that
change orders come from the owner and the architect, not the contractor, and the fact that
there were no written change orders is irrelevant as change orders have little or no role in
a cost-plus contract. Murphy Homes also argued that Aberle/Muller’s so-called “profits
and general overhead” were actually negotiated rates between the parties as confirmed by
the contract.
¶29 The District Court denied all four of Aberle/Muller’s Motions for Summary
Judgment during a hearing held to discuss those motions on January 14, 2004. As to
Aberle/Muller’s First and Third Motions for Summary Judgment, the court determined
that there were material factual issues in dispute, thus summary judgment was not
appropriate.
¶30 Summary judgment is proper only when no genuine issue of material fact exists
and the moving party is entitled to judgment as a matter of law. Watkins Trust v.
8
Lacosta, 2004 MT 144, ¶ 16, 321 Mont. 432, ¶ 16, 92 P.3d 620, ¶ 16 (citing M. R. Civ. P.
56(c)). Our standard in reviewing a district court's summary judgment ruling is de novo.
Watkins Trust, ¶ 16 (citing Johnson v. Barrett, 1999 MT 176, ¶ 9, 295 Mont. 254, ¶ 9,
983 P.2d 925, ¶ 9; Stutzman v. Safeco Ins. Co. of America, 284 Mont. 372, 376, 945 P.2d
32, 34 (1997)). We use the same M. R. Civ. P. 56 criteria applied by the district court.
Watkins Trust, ¶ 16 (citing Johnson, ¶ 9). Moreover, all reasonable inferences which
may be drawn from the offered proof must be drawn in favor of the party opposing
summary judgment. Watkins Trust, ¶ 16 (citing Johnson, ¶ 8; Schmidt v. Washington
Contractors Group, 1998 MT 194, ¶ 7, 290 Mont. 276, ¶ 7, 964 P.2d 34, ¶ 7). If there is
any doubt regarding the propriety of the summary judgment motion, it should be denied.
360 Ranch Corp. v. R & D Holding, 278 Mont. 487, 491, 926 P.2d 260, 262 (1996)
(citing Whitehawk v. Clark, 238 Mont. 14, 18, 776 P.2d 484, 486-87 (1989)).
¶31 On appeal, Aberle/Muller argue that when the District Court ruled from the bench
and denied their Motions for Summary Judgment, the court erred because it did not
discuss the law, a specific contract provision, or the testimony, and the court failed to
specify what facts appeared without substantial controversy.
¶32 In the Pretrial Order, Aberle/Muller listed 59 issues of disputed facts including:
whether Murphy Homes was paid in full under the contract; whether the additional
compensation Murphy Homes seeks amounts to nothing more than profit and general
overhead and is beyond the expressed permissible scope of Montana lien law; whether
the figures Murphy Homes reported and applied for actual labor rates were accurate
and/or permissible; whether Murphy Homes is entitled to claim a fee on any project
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changes not formalized through change orders or change directives as required by the
contract; whether Murphy Homes was paid in full as described by the parties’ written
contract; and whether Murphy Homes was overpaid under the parties’ written contract.
Consequently, by their own representation, the facts relevant to Aberle/Muller’s First and
Third Motions for Summary Judgment were not “uncontroverted,” and there were
material factual issues in dispute precluding summary judgment.
¶33 Accordingly, we hold that the District Court did not err in denying
Aberle/Muller’s First and Third Motions for Summary Judgment.
Issue 2.
¶34 Whether the District Court erred in denying Aberle/Muller’s Motion for Judgment
as a Matter of Law.
¶35 On August 3, 2004, six days before trial was scheduled to resume in this matter,
Aberle/Muller filed their 70-page-long Motion for Judgment as a Matter of Law. In their
motion, they claimed that the
evidence in Plaintiff’s case established eight critical facts which entitle
Patrick Aberle and Marilyn Muller to judgment as a matter of law:
a. Patrick Aberle is neither the record owner nor the contacting [sic]
owner of the property.
b. Murphy’s claim for equitable adjustment is for additional
contractor’s fee, which consists solely of profit and general
overhead.
c. Murphy’s claim for equitable adjustment is not for the payment of
unpaid costs of materials or services.
d. Murphy’s claim is proactive in nature, and not retroactive.
Murphy requested additional contractor’s fee for the remainder of
the project.
e. Murphy has already been paid the entire contract price, including
all costs of construction as well as its entire contractor’s fee.
f. When Patrick Aberle and Marilyn Muller rejected Murphy’s
request for additional contractor’s fee, Murphy walked off the job
10
and abandoned the project without further discussion of costs or
renegotiation of the contract.
g. When Murphy abandoned the project, Murphy had been paid all
amounts requested in each and every one of its draw requests,
including all costs of construction and the entire contractor’s fee.
h. After Murphy abandoned the project, Murphy did not do any
further work. [Emphasis in original.]
These eight “critical facts” were then broken down into 23 Motions for Judgment as a
Matter of Law and numerous sub-issues.
¶36 On appeal, Aberle/Muller argue that the District Court erred in denying their
Motion for Judgment as a Matter of Law as untimely because under M. R. Civ. P.
50(a)(2), such motions may be made at any time before submission of the case to the
jury. While Aberle/Muller are correct in that regard, we note that a District Court has the
power to provide for the orderly conduct of proceedings before it and to compel
obedience to its judgments, orders, and process. Sections 3-1-111(3) and (4), MCA.
¶37 Because of the flurry of motions from both sides during this litigation, the District
Court issued an Order on July 28, 2004, that no further motions would be considered
except upon leave of court after demonstration of good cause. After Aberle/Muller filed
their Motion for Judgment as a Matter of Law, the District Court concluded that the
motion was untimely both by reference to the court’s scheduling order which required
that all pretrial motions were due on or before November 7, 2003, and by the court’s July
28, 2004 Order prohibiting the filing of motions unless good cause had been
demonstrated.
¶38 Furthermore, the District Court did not deny Aberle/Muller’s motion simply on the
basis of timeliness. In denying Aberle/Muller’s motion, the District Court stated that a
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variety of the legal issues presented in the motion had been considered before and denied,
and other claims for relief demanded by Aberle/Muller involved hotly disputed fact
issues which the jury must resolve.
¶39 We review a district court’s order granting or denying a motion for judgment as a
matter of law as a legal question for which the de novo or plenary standard of review is
appropriate. Johnson v. Costco Wholesale, 2007 MT 43, ¶ 18, 336 Mont. 105, ¶ 18, 152
P.3d 727, ¶ 18. Judgment as a matter of law is properly granted only when there is a
complete absence of any evidence which would justify submitting an issue to a jury and
all such evidence and any legitimate inferences that might be drawn therefrom must be
considered in the light most favorable to the party opposing the motion. Johnson, ¶ 13
(citations omitted). Judgment as a matter of law is not proper if reasonable persons could
differ regarding conclusions that could be drawn from the evidence. Johnson, ¶ 13
(citing Kearney v. KXLF Communications, Inc., 263 Mont. 407, 417, 869 P.2d 772, 777-
78 (1994)). Moreover, as we explained in Johnson, courts should exercise the greatest
self-restraint in interfering with the constitutionally mandated processes of a jury
decision. Johnson, ¶ 13 (citing Ryan v. City of Bozeman, 279 Mont. 507, 510, 928 P.2d
228, 230 (1996)).
¶40 In reviewing the evidence in a light most favorable to Murphy as we are
constrained to do, Johnson, ¶ 13, we conclude that reasonable persons could differ as to
the conclusions that could be drawn from the evidence. Accordingly, we hold that the
District Court did not err in denying Aberle/Muller’s Motion for Judgment as a Matter of
Law.
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Issue 3.
¶41 Whether the District Court erred in barring Aberle/Muller’s “foreseeability”
defense.
¶42 After Aberle/Muller consumed several hours of trial time with questions about
foreseeability, the District Court determined that that doctrine had no place in the lawsuit
and ordered Aberle/Muller’s counsel to discontinue asserting it. The court ruled on the
basis that foreseeability had not been pled as “foreseeability for purposes of trying to
determine the size of a particular construction contract is not the same as foreseeability
from the standpoint of causal relationship in a negligence claim.”
¶43 On appeal, Aberle/Muller contend that they did plead foreseeability. They
maintain that in one of their affirmative defenses they argued that if Murphy Homes
suffered damages, such damages were the result of its own negligence. However, the
words “foreseeable” and “foreseeability” do not appear in any of Aberle/Muller’s
pleadings or anywhere in the Pretrial Order. Murphy Homes maintains, and we agree,
that the fundamental flaw in Aberle/Muller’s argument is the attempt to apply
foreseeability as an element of tort law to a construction project governed by contract.
Aberle/Muller are mixing inconsistent legal doctrines in their argument.
¶44 This Court has repeatedly held that contentions not included in the pretrial order
may not be presented at trial. Zimmerman v. Robertson, 259 Mont. 105, 111-12, 854
P.2d 338, 342 (1993). M. R. Civ. P. 16(e) provides that a pretrial order controls the
subsequent course of the action unless modified by a subsequent order. The purpose of
pretrial orders is to prevent surprise, simplify the issues and permit counsel to prepare
13
their case for trial on the basis of the pretrial order. Zimmerman, 259 Mont. at 111, 854
P.2d at 342 (citing Workman v. McIntyre Const. Co., 190 Mont. 5, 617 P.2d 1281(1980)). Permitting the introduction of issues first raised during trial would undermine
the purposes pretrial orders are intended to serve.
¶45 We conclude in this case that Aberle/Muller did not sufficiently raise the
foreseeability issue—even assuming it has any place in this case—prior to trial in either
their pleadings or the Pretrial Order. Accordingly, we hold that the District Court did not
err in barring Aberle/Muller’s “foreseeability” defense.
Issue 4.
¶46 Whether the District Court erred in denying Aberle/Muller’s Motion to Continue
and, instead, ordering a bifurcated trial.
¶47 The parties had originally estimated that they would need five days for trial in this
matter. However, as discovery progressed and more issues and witnesses were added, the
parties requested additional time to try the case. The District Court determined that it did
not have available on its calendar the two-week period the parties requested for trial until
February 2005, more than a year away. Consequently, the court decided to bifurcate the
trial on the basis that it would be unfair to require Murphy Homes to wait an additional
year to try their case.
¶48 Aberle/Muller objected, but their Motion to Continue was denied by the District
Court. On January 21, 2004, Aberle/Muller filed an Application for Writ of Supervisory
Control or Other Appropriate Relief with this Court (Supreme Court Cause No. 04-053)
wherein they sought an order requiring the District Court to reset the trial to a time when
14
the case could be tried to final verdict at one time, without bifurcation or interruption.
We denied Aberle/Muller’s application and the case proceeded to trial on January 26,
2004.
¶49 After five days, Murphy Homes had not completed its case in chief, consequently,
the District Court rearranged its court calendar to provide two more days for trial.
Nevertheless, when, after seven days, Aberle/Muller had only begun to present their
defense, the District Court ordered that the trial resume at an unspecified time in the
future. The court warned that it could be as much as six months before the court found
an opening in its busy trial schedule and it ordered the parties to provide the court with a
list of dates that they were not available.
¶50 One month after the first portion of the trial in this case concluded, the District
Court found it had time in its calendar to resume the trial as another case had settled.
Thus, on March 2, 2004, the District Court ordered that trial resume on March 9, 2004.
Aberle/Muller objected and on March 5, 2004, they filed an Emergency Petition for Writ
of Supervisory Control or Other Appropriate Relief with this Court (Supreme Court
Cause No. 04-148) wherein they requested that this Court order the District Court to
vacate the trial dates set for March 9, 10, and 12, 2004, and to continue the trial to a date
that provides at least thirty days notice to counsel and the parties.
¶51 We granted Aberle/Muller’s petition and ordered the District Court to provide
counsel with a minimum of thirty days notice of new continuation dates. In response to
this Court’s Order, the District Court filed a Memorandum with this Court explaining the
problems it had encountered with scheduling a trial date in this case. The District Court
15
also noted that it is not always possible to know thirty days in advance if another case
will settle and thereby free up some days on the court’s calendar allowing the court to
resume trial in this case.
¶52 On March 26, 2004, the District Court reset trial to April 27, 2004, but once again,
Aberle/Muller objected contending that that date conflicted with a trial in federal court in
which counsel was involved. The District Court again vacated trial and imposed
sanctions against Aberle/Muller’s counsel for failing to keep the court informed of his
availability. The court reset trial for August 9, 10 and 11, 2004, noting that if other
earlier dates became available with at least thirty days notice, the court would order trial
to commence then.
¶53 On July 15, 2004, the District Court applied to this Court for relief from our
March 5, 2004 Order requiring the District Court to give thirty days notice to the parties
before trial recommenced in this case. The court noted that “[e]fficient administration of
the District Court calendar and any hope of concluding the trial of this case requires that
discretion be vested in the District Court to schedule all cases for trial, including this
one.” Hence, the court requested that we amend our Order to require that it provide
“reasonable notice” to the parties.
¶54 Recognizing that the District Court had made every attempt to comply with our
March 5, 2004 Order and to accommodate Aberle/Muller, but without success, we
amended our Order on July 27, 2004, to require that the District Court provide reasonable
notice to the parties for all purposes after August 9, 2004.
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¶55 Aberle/Muller now argue on appeal that the delay in the resumption of the trial in
this case worked to their disadvantage because Murphy Homes’ case remained
unrebutted for months and cemented Murphy Homes’ case in the juror’s minds.
However, contrary to Aberle/Muller’s opinion, it is just as likely that the jurors forgot key
aspects of Murphy Homes’ case in the interim thereby putting Murphy Homes at a
disadvantage. Moreover, part of the fault for the delay in resuming this case lies with
Aberle/Muller and their counsel as the facts set forth above demonstrate.
¶56 Nevertheless, this Court already decided the issue of the correctness of a
bifurcated trial when we denied Aberle/Muller’s Application for Writ of Supervisory
Control or Other Appropriate Relief (Supreme Court Cause No. 04-053) in January 2004.
Under the law of the case doctrine, a prior decision of this Court resolving an issue
between the same parties is binding and may not be relitigated. Muri v. Frank, 2003 MT
316, ¶ 11, 318 Mont. 269, ¶ 11, 80 P.3d 77, ¶ 11. This doctrine “expresses the practice of
courts generally to refuse to reopen what has been decided.” Scott v. Scott, 283 Mont.
169, 175, 939 P.2d 998, 1001 (1997) (quoting Fiscus v. Beartooth Elec. Cooperative,
Inc., 180 Mont. 434, 436, 591 P.2d 196, 197 (1979); see also State v. Van Dyken, 242
Mont. 415, 791 P.2d 1350 (1990), cert. denied, 498 U.S. 920, 111 S. Ct. 297 (1990) (this
Court’s earlier decision rendered in response to defendant’s application for writ of
supervisory control addressing the issue of failure to poll the jury before declaring a
mistrial, remained binding and could not be relitigated under the law of the case
doctrine)).
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¶57 Accordingly, we hold that the issue of whether the District Court erred in
bifurcating the trial in this matter has already been decided by this Court and may not be
relitigated.
Issue 5.
¶58 Whether the District Court erred in permitting the jury to view Aberle/Muller’s
residence and in admitting other evidence of Aberle/Muller’s financial condition on the
issue of liability.
¶59 Several months prior to trial, Murphy Homes moved the court to allow the jury to
view the residence in question. Murphy Homes explained that because Aberle/Muller
were alleging numerous construction defects, such a tour would enhance the ability of the
jurors to understand the areas of the house involved and to see the specific features in
dispute. At first, Aberle/Muller did not object to the motion for the tour, but they later
argued and now argue on appeal, that the sole purpose of the tour was to see their
affluence and to prejudice the jury against them.
¶60 The decision to permit or deny a jury view of the property in question is left to the
sound discretion of the trial court. McJunkin v. Kaufman & Broad Home Systems, 229
Mont. 432, 446, 748 P.2d 910, 919 (1987); see also McGinley v. Ole’s Country Stores,
Inc., 241 Mont. 248, 250, 786 P.2d 1156, 1157 (1990) (“It is in the discretion of district
courts to permit jurors to view the physical location under consideration.”). A district
court abuses its discretion when it acts arbitrarily, without employment of conscientious
judgment, or in excess of the bounds of reason resulting in substantial injustice. Whipps
v. Kaufman, 2007 MT 66, ¶ 6, 336 Mont. 386, ¶ 6, 156 P.3d 11, ¶ 6 (citing Pumphrey v.
Empire Lath and Plaster, 2006 MT 255, ¶ 9, 334 Mont. 102, ¶ 9, 144 P.3d 813, ¶ 9).
18
¶61 Aberle/Muller offers only speculation that the tour of their home prejudiced the
jury against them. Accordingly, we hold that the District Court was acting within its
discretion in allowing the jury to view the residence.
¶62 In addition, because both parties sought punitive damages, the District Court
ordered that the parties file sworn financial statements disclosing their net worth. In
response, Aberle/Muller filed a sworn statement showing a joint net worth of more than
$665,000.00. Earlier, as part of discovery prior to trial, Murphy Homes had requested
that Aberle/Muller produce any financial statements filed at a financial institution since
January 1, 2000. Aberle/Muller responded that they had not filed any such financial
statements. However, during the six month recess in the trial, Murphy Homes obtained
authorization from the court to subpoena a loan file at Wells Fargo Bank of Helena in
which the joint financial statement of Aberle/Muller showed their net worth at
$4.6 million, almost $4 million more than indicated on the sworn financial statement they
had submitted to the court. Upon receipt of this information, Murphy Homes moved for
sanctions for discovery fraud in the form of vacating the trial; entering summary
judgment for Murphy Homes; awarding Murphy Homes monetary damages of
$134,000.00 plus interest; and dismissing all of Aberle/Muller’s counterclaims.
¶63 When trial resumed in this matter, the District Court allowed Murphy Homes to
introduce Aberle/Muller’s inconsistent financial statements and prevented Aberle/Muller
from refuting that evidence. Aberle/Muller asserts on appeal that the District Court erred
by admitting evidence of their financial condition on the issue of liability. Aberle/Muller
rely on § 27-1-221(7)(a), MCA, which provides in pertinent part: “Evidence regarding a
19
defendant’s financial affairs, financial condition, and net worth is not admissible in a trial
to determine whether a defendant is liable for punitive damages.”
¶64 The court initially allowed evidence of Aberle/Muller’s financial condition to
impeach statements made by Aberle/Muller during their direct testimony. “[I]t is
axiomatic that a witness may be cross-examined on any subject raised or fact stated on
direct examination.” Hando v. PPG Industries, Inc., 272 Mont. 146, 150, 900 P.2d 281,
283 (1995) (citing M. R. Evid. 611(b)(1); Tigh v. College Park Realty Co., 149 Mont.
358, 364, 427 P.2d 57, 61 (1967)).
¶65 In this case, Aberle/Muller’s counsel had opened the door with questions about the
financial impact of the lawsuit on Aberle/Muller. Aberle testified to the fact that Muller
had to reduce her work schedule thereby losing a year’s salary. On cross examination,
Murphy Homes’ counsel asked Aberle to quantify Muller’s loss of income and Aberle
testified that the loss was $300,000.00, a “substantial amount of money.” Counsel then
referred to the Wells Fargo financial statements indicating that during the time in
question, Muller’s income had actually increased.
¶66 The District Court allowed additional testimony regarding Aberle/Muller’s
financial condition as a sanction for Aberle/Muller’s failure to comply with the court’s
order to file accurate financial statements and their failure to provide Murphy Homes
with the information it had requested during discovery. Our standard of review of
sanctions imposed under M. R. Civ. P. 37, is whether the district court abused its
discretion. Maloney v. Home and Investment Center, Inc., 2000 MT 34, ¶ 27, 298 Mont.
20213, ¶ 27, 994 P.2d 1124, ¶ 27 (citing Carl Weissman & Sons v. D & L Thomas Corp.,
1998 MT 213A, ¶ 53, 290 Mont. 433, ¶ 53, 963 P.2d 1263, ¶ 53).
¶67 “‘The purpose of discovery is to promote the ascertainment of truth and the
ultimate disposition of the lawsuit in accordance therewith. Discovery fulfills this
purpose by assuring the mutual knowledge of all relevant facts gathered by both parties
which are essential to proper litigation.’” Richardson v. State, 2006 MT 43, ¶ 22, 331
Mont. 231, ¶ 22, 130 P.3d 634, ¶ 22 (quoting Massaro v. Dunham, 184 Mont. 400, 405,
603 P.2d 249, 252 (1979) (citing Hickman v. Taylor, 329 U.S. 495, 507, 67 S. Ct. 385,
392 (1947))).
¶68 “This Court has long taken a dim view of discovery abuses.” Dambrowski v.
Champion Intern. Corp., 2000 MT 149, ¶ 34, 300 Mont. 76, ¶ 34, 3 P.3d 617, ¶ 34. Our
position is that dilatory abuse of discovery must no longer be dealt with leniently and that
the transgressors of discovery abuses should be punished rather than repeatedly
encouraged to cooperate. Maloney, ¶ 34. Consequently, we regard with favor the
imposition of sanctions for failure to comply with discovery. Richardson, ¶ 56 (citing
Schuff v. A.T. Klemens & Son, 2000 MT 357, ¶ 71, 303 Mont. 274, ¶ 71, 16 P.3d 1002,
¶ 71; McKenzie v. Scheeler, 285 Mont. 500, 506, 949 P.2d 1168, 1172 (1997)). “When
litigants use willful delay, evasive response, and disregard of court discretion as part and
parcel of their trial strategy, they must suffer the consequences.” Maloney, ¶ 34 (citing
Owen v. F.A. Buttrey Co., 192 Mont. 274, 280, 627 P.2d 1233, 1236 (1981)). “‘It is, after
all, a maxim of our rules of discovery that the price for dishonesty must be made
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unbearable to thwart the inevitable temptation that zealous advocacy inspires.’”
Richardson, ¶ 56 (quoting Schuff, ¶ 71).
¶69 With that in mind, we generally defer to the decision of the trial court regarding
sanctions for discovery abuses because the trial judge is in the best position to know
“which parties callously disregard the rights of their opponents and other litigants seeking
their day in court[] [and] is also in the best position to determine which sanction is the
most appropriate.” Dambrowski, ¶ 35 (quoting Smith v. Butte-Silver Bow County, 276
Mont. 329, 332, 916 P.2d 91, 93 (1996)).
¶70 Nevertheless, we find it incredible that Aberle/Muller now complain that the
District Court permitted Murphy Homes to introduce Aberle/Muller’s inconsistent
financial statements when it was Aberle/Muller who suggested that particular sanction for
their discovery abuses. In “Defendant’s Brief Re Discovery Sanctions” filed August 10,
2004, Aberle/Muller stated:
Aberle/Muller are prepared to accept an appropriate, measured sanction, but
suggest that sanction be limited to allowing Murphy Homes to raise
Mr. Aberle’s inconsistent statements regarding the financial statements—
testimony that would otherwise be permissible only in a punitive damages
hearing following a verdict—together with a monetary sanction.
Aberle/Muller further stated:
The facts do not support granting Murphy Homes total victory for a
discovery violation. A more careful response would be to punish
Aberle/Muller by allowing Murphy Homes to use Aberle/Muller’s
discovery error against them. Murphy Homes could be allowed in their
principal case to introduce otherwise impermissible evidence of financial
statements to draw the jury’s attention to Aberle/Muller’s inconsistent
statement. Obviously, Murphy Homes would then be allowed to argue that
inconsistency to its advantage.
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¶71 Accordingly, we hold that the District Court did not err as Aberle/Muller’s
inconsistent financial statements came into evidence as proper impeachment on cross-
examination and as a sanction for Aberle/Muller’s discovery abuses.
Issue 6.
¶72 Whether the District Court erred in refusing Aberle/Muller’s proposed jury
instructions.
¶73 Aberle/Muller argue that the District Court erred in refusing to give their proposed
jury instructions that relied on cases from the United States Court of Federal Claims.
They maintain that these cases were completely authoritative and reliable as well as on
point. Murphy Homes argues, on the other hand, that the Court of Federal Claims cases
upon which Aberle/Muller relied for its proposed jury instructions principally involved
fixed price, bid contracts, and have no relevance to the cost-plus contract in dispute here.
¶74 A district court has discretion regarding the instructions it gives or refuses to give
to a jury and we will not reverse a district court on the basis of its instructions absent an
abuse of discretion. Williams v. Union Fidelity Life Ins. Co., 2005 MT 273, ¶ 46, 329
Mont. 158, ¶ 46, 123 P.3d 213, ¶ 46 (citing Christofferson v. City of Great Falls, 2003
MT 189, ¶ 9, 316 Mont. 469, ¶ 9, 74 P.3d 1021, ¶ 9; Kiely Const., L.L.C. v. City of Red
Lodge, 2002 MT 241, ¶ 62, 312 Mont. 52, ¶ 62, 57 P.3d 836, ¶ 62). In reviewing whether
a particular jury instruction was properly given or refused, we consider the instruction in
its entirety, as well as in connection with the other instructions given and with the
evidence introduced at trial. Williams, ¶ 46. The party assigning error to a district court's
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instruction must show prejudice in order to prevail, and prejudice will not be found if the
jury instructions in their entirety state the applicable law of the case. Williams, ¶ 46.
¶75 Aberle/Muller offered more than sixty proposed jury instructions for the District
Court’s consideration. The District Court adopted some of Aberle/Muller’s proposed
instructions and refused some, and Aberle/Muller withdrew several of their proposed
instructions because they were duplicative of instructions proposed by Murphy Homes or
instructions already adopted by the District Court.
¶76 In refusing Aberle/Muller’s proposed instructions based on authority from the
Court of Federal Claims, the District Court determined, first, that there was no assurance
that Court of Federal Claims law was the law in Montana and, second, that most of these
proposed instructions “verge on a jury argument that the jury ultimately will have to
decide, having first determined what is the agreement between the parties.”
¶77 On appeal, Aberle/Muller failed to show how its proposed instructions were
relevant to the fact issues before the jury, how the exclusion of those proposed
instructions was prejudicial, or how Court of Federal Claims’ decisions are binding on
this Court. Furthermore, after a review of all of the jury instructions given by the District
Court in this case, we conclude that the jury instructions did state the applicable law of
the case. Williams, ¶ 46.
¶78 Accordingly, we hold that the District Court did not err in refusing
Aberle/Muller’s proposed jury instructions that relied on decisions from the Court of
Federal Claims.
Issue 7.
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¶79 Whether the District Court erred in denying Aberle/Muller’s post-trial motions.
¶80 Aberle/Muller filed numerous post-trial motions, however, they appeal the District
Court’s denial of only three of those motions: (1) Motion to Amend Judgment;
(2) Motion to Limit Punitive Damages Award; and (3) Defendants’ Motion for
Attorney’s Fees and Costs.
Motion to Amend Judgment
¶81 Aberle/Muller contend on appeal that the District Court erred as a matter of law
when it denied their Motion to Amend Judgment and thus did not rule that the “Prompt
Payment Act” 1 does not apply to this case. In their brief on appeal, Aberle/Muller fail to
demonstrate why the “Prompt Payment Act” does not apply here, nor do they cite to any
authority in support of this contention.
¶82 M. R. App. P. 23(a)(4) provides that “[t]he argument shall contain the contentions
of the appellant with respect to the issues presented, and the reasons therefor, with
citations to the authorities, statutes and pages of the record relied on.” We have
repeatedly held that “‘we will not consider unsupported issues or arguments’ since ‘this
Court is under no obligation to locate authorities or formulate arguments for a party in
support of positions taken on appeal.’” Leichtfuss v. Dabney, 2005 MT 271, ¶ 37 n.8,
329 Mont. 129, ¶ 37 n.8, 122 P.3d 1220, ¶ 37 n.8 (quoting In re Marriage of McMahon,
2002 MT 198, ¶ 6, 311 Mont. 175, ¶ 6, 53 P.3d 1266, ¶ 6).
1
The “Prompt Payment Act,” as referred to by the parties, is found at Title 28,
Chapter 2, Part 21, MCA, and is actually entitled “Payment of Construction Contractors
and Subcontractors.” Among other things, this act provides for interest of 1½% a month
on any unpaid balance under a construction contract. Section 28-2-2104, MCA.
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¶83 Counsel’s assertion that error was committed is insufficient, consequently, we will
not consider Aberle/Muller’s argument on this issue.
Motion to Limit Punitive Damages Award
¶84 Aberle/Muller contend on appeal that the District Court erred when it did not limit
the punitive damages to the statutory limit provided in § 27-1-220(3), MCA, which
provides that “[a]n award for punitive damages may not exceed $10 million or 3% of a
defendant’s net worth, whichever is less.”
¶85 The Montana Legislature amended § 27-1-220, MCA, in 2003 to include the 3%
limitation on punitive damages. The Compiler’s Comments to this statute indicate that
this amendment was effective October 1, 2003. All of the relevant events in this case,
including the actions of the parties leading up to the meeting of September 4, 2002; the
filing of the construction lien; and the subsequent filing of this lawsuit, took place before
October 1, 2003. “No law contained in any of the statutes of Montana is retroactive
unless expressly so declared.” Section 1-2-109, MCA. Consequently, we hold that the
statutory limitation in § 27-1-220(3), MCA, does not apply to this case. See Seltzer v.
Morton, 2007 MT 62, ¶¶ 121-26, 336 Mont. 225, ¶¶ 121-26, 154 P.3d 561, ¶¶ 121-26
(3% cap on punitive damages in § 27-1-220(3), MCA, held not applicable because cause
of action accrued before effective date of statute).
Defendants’ Motion for Attorney’s Fees and Costs
¶86 Aberle/Muller contend on appeal that the District Court erred when it did not
award costs and attorney’s fees to Aberle for Murphy Homes’ failure to prevail on its
construction lien. Aberle/Muller rely on § 71-3-124, MCA, for their contention.
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¶87 Beyond their citation to § 71-3-124, MCA, Aberle/Muller fail to provide any
argument in their brief explaining how they believe Aberle prevailed on the issue of the
construction lien thereby entitling him to attorney’s fees and costs. Once again we note
that “this Court is under no obligation to locate authorities or formulate arguments for a
party in support of positions taken on appeal.” Leichtfuss, ¶ 37 n.8. Aberle/Muller’s
argument on this issue is not only unpersuasive, it is nonexistent.
¶88 Accordingly, we hold that the District Court did not err in denying
Aberle/Muller’s post trial motions.
Murphy Homes’ Request for Attorney’s Fees on Appeal.
¶89 Murphy Homes requests that it be awarded attorney’s fees on appeal if we affirm
the District Court. This Court may impose sanctions against a party for filing a frivolous
appeal pursuant to M. R. App. P. 32, which provides as follows:
Damages for appeal without merit. If the supreme court is
satisfied from the record and the presentation of the appeal in a civil case
that the same was taken without substantial or reasonable grounds, such
damages may be assessed on determination thereof as under the
circumstances are deemed proper.
¶90 As a general rule, we will not impose sanctions pursuant to M. R. App. P. 32,
unless the appeal is entirely unfounded and intended to cause delay or unless counsel’s
actions otherwise constitute an abuse of the judicial system. Lee v. Lee, 2000 MT 67,
¶ 66, 299 Mont. 78, ¶ 66, 996 P.2d 389, ¶ 66 (citing In re Marriage of Moss, 1999 MT
62, ¶ 41, 293 Mont. 500, ¶ 41, 977 P.2d 322, ¶ 41).
¶91 As we noted throughout this Opinion, Aberle/Muller made numerous errors in
filing their brief on appeal. In an attempt to circumvent this Court’s page limitations,
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Aberle/Muller included information in an appendix to their brief that should have been
included in the brief itself and they improperly asked this Court to adopt and incorporate
by reference into their brief more than 200 pages of facts; citations to deposition and trial
testimony; authorities; and argument contained in their numerous filings before the
District Court. In addition, their brief was convoluted and confusing as their list of
eleven issues did not correspond in any meaningful way to the more than 29 contentions
they set forth in the argument portion of their brief. Further, their brief is dominated by
bald declarations of error by the District Court with little or no substantiation.
¶92 As noted previously in this Opinion, M. R. App. P. 23(a)(4) “requires that an
appellant present a concise, cohesive argument which ‘contain[s] the contentions of the
appellant with respect to the issues presented, and the reasons therefore, with citations to
the authorities, statutes and pages of the record relied on.’” McMahon, ¶ 6. Many of the
errors Aberle/Muller made on appeal could have been avoided had they attempted to
weed out and substantiate legitimate issues rather than using a “shotgun” approach to
attempt to hit every conceivable issue, viable or not, and then failing to support those
issues with proper analysis and legal authority.
¶93 We are satisfied from the record and the presentation of the appeal in this matter
that Aberle/Muller proceeded here without respect for the integrity of the judicial
process, and did so without sufficient reasonable grounds. We therefore conclude that
pursuant to M. R. App. P. 32, Murphy Homes’ request for attorney’s fees and costs in
defending this appeal is appropriate.
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¶94 The judgment of the District Court is affirmed and this matter is remanded to the
District Court for the sole purpose of determining the attorney’s fees and costs associated
with this appeal and the entry of an award of those fees and costs in Murphy Homes’
favor.
/S/ JAMES C. NELSON
We Concur:
/S/ W. WILLIAM LEAPHART
/S/ JOHN WARNER
/S/ JIM RICE
/S/ BRIAN MORRIS
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