Houden v. Todd

April 29 2014
DA 13-0311
IN THE SUPREME COURT OF THE STATE OF MONTANA
2014 MT 113CHRISTOPHER A. HOUDEN and
JEFFREY HOUDEN,
Plaintiffs and Appellees,
v.
WAYNE S. TODD,
Defendant and Appellant.
APPEAL FROM: District Court of the Twenty-Second Judicial District,
In and For the County of Carbon, Cause No. DV 08-04
Honorable Blair Jones, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
John C. Doubek; Doubek, Pyfer & Fox, LLP; Helena, Montana
For Appellees:
Robert K. Baldwin; Spencer C. Thomas; Goetz, Baldwin & Geddes, P.C.;
Bozeman, Montana
Submitted on Briefs: February 26, 2014
Decided: April 29, 2014
Filed:
__________________________________________
Clerk
Justice Beth Baker delivered the Opinion of the Court.
¶1 Wayne Todd appeals the final judgment of the Twenty-Second Judicial District
Court, Carbon County, finding in favor of Christopher and Jeffrey Houden (Houdens)
and awarding attorneys’ fees.
¶2 We address the following issues on appeal:
¶3 1. Whether the District Court erred in its entry of judgment in favor of the
Houdens.
¶4 2. Whether the adoption of the Restated Covenants mooted the Houdens’ claim
for attorneys’ fees and costs.
¶5 3. Whether the District Court abused its discretion in awarding the Houdens
attorneys’ fees and costs in the amount of $371,513.03.
¶6 We affirm the court’s entry of judgment in favor of the Houdens. We affirm the
award of attorneys’ fees but reverse the amount of the fee award and remand for
recalculation.
PROCEDURAL AND FACTUAL BACKGROUND
¶7 This case arises from a dispute between property owners in Canyon Ranches, a
subdivision developed by the Houdens in Carbon County, Montana. Canyon Ranches
consists of twenty-six lots. On June 4, 2002, prior to selling any of the lots, the Houdens
recorded a “Declaration of Covenants, Conditions, Restrictions and Reciprocal
Easements for Canyon Ranches Subdivision” (the Original Covenants). The Houdens
incorporated “Canyon Ranches Subdivision Homeowners’ Association” (HOA) on
June 11, 2002, in part to enforce the Original Covenants on all properties within Canyon
Ranches.
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¶8 The Original Covenants prohibited further subdivision of lots “[e]xcept for . . .
division of Lots containing twenty (20) or more acres . . . .” This provision of the
Original Covenants, referred to as the No Standing Provision, added, “[n]either the
Association, nor any Owner, shall have standing to oppose the further division of any Lot
containing twenty (20) or more acres as of the effective date of this Declaration, provided
such division is proposed in accordance with all then-applicable statutes, ordinances,
regulations, rules and orders of governmental entities with applicable jurisdiction . . . .”
The Houdens sold twenty-four lots, including Lot One to Todd. Only Lot Twenty-Six—
retained by the Houdens—exceeded twenty acres.
¶9 The Original Covenants allowed for amendment of the covenants when at least
seventy-five percent of the lot owners voted for an amendment. In December 2007,
twenty-three lot owners voted to record an amendment to the Original Covenants,
referred to as the Second Amendment.1 The Second Amendment prohibited division of
lots in excess of twenty acres absent approval of seventy-five percent of the lot owners.
It also reversed the No Standing Provision, granting the HOA or any owner the right to
oppose further subdivision of any lot.
¶10 On January 3, 2008, the Houdens filed a complaint against the lot owners
(collectively referred to as Defendants) who voted for the Second Amendment. The
complaint alleged that the changes imposed by the Second Amendment were invalid and
“in contravention of the settled rights and expectations of the parties.” The Houdens
1
There was a First Amendment to the Original Covenants adopted in 2002; it is not at issue in
this appeal.
3
sought injunctive relief to declare the Second Amendment invalid. They also asked for
attorneys’ fees pursuant to a provision in the Original Covenants. That provision allows
a prevailing party to recover costs and reasonable attorneys’ fees in any action to
“enforce, enjoin any violation of, or to construe the provisions of [the Original
Covenants].”
¶11 An extensive litigation process ensued. Defendants removed the action to federal
court. Because there was not complete diversity of citizenship, the federal court later
remanded the action to the District Court. The Defendants brought counterclaims against
the Houdens and both parties filed motions. At Todd’s suggestion and by agreement of
the parties, the District Court appointed a Special Master to review the pending motions
and make recommendations to the court.
¶12 On August 9, 2009, the Special Master recommended that the District Court grant
the Houdens’ summary judgment motion and invalidate the Second Amendment.
Observing that the issue was one of first impression in Montana, the master adopted the
view of jurisdictions holding that an amendment—even one validly adopted—may not
take away the settled rights and expectations of the parties under a contract. Because the
Original Covenants gave the Houdens a reasonable expectation that they could subdivide
their twenty-plus acre parcel, the Second Amendment could not be applied to deprive
them of a settled right that existed as part of the expectation of their ownership of the
property. The District Court adopted the master’s findings and recommendations in
whole on December 14, 2009.
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¶13 Unbeknownst to the court, before its adoption of the master’s findings and
recommendations, the lot owners passed another amendment (Third Amendment) to the
Original Covenants. The Third Amendment purported to revoke the Second Amendment
by reinstating the right of the Houdens to subdivide Lot Twenty-Six as allowed by the
Original Covenants. It retained, however, the elimination of the No Standing Provision,
allowing lot owners to oppose the division of Lot Twenty-Six in the subdivision review
process.
¶14 Following the court’s adoption of the master’s findings and recommendations,
Defendants filed a motion requesting clarification of the court’s order. Defendants
argued that nothing in the order precluded the Third Amendment’s elimination of the No
Standing Provision. At the direction of the District Court, the Special Master addressed
Defendants’ motion. On April 30, 2010, the Special Master concluded that the
elimination of the No Standing Provision was invalid whether it was a part of another
amendment or a separately adopted amendment. The court adopted the master’s
recommendation on this issue in an order dated July 21, 2010.
¶15 In September 2010, the Houdens and all Defendants except Todd reached a
settlement. Pursuant to the terms of the Settlement Agreement, each of the settling
parties agreed to pay the Houdens $7500 and to sign “Amended and Restated Covenants”
(Restated Covenants). The Restated Covenants expressly prohibit amendment to deprive
the Houdens of their right to subdivide Lot Twenty-Six. After the filing of the Restated
Covenants on September 17, 2010, the Original Covenants, including the Second and
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Third Amendments, were superseded. The Settlement Agreement reserved the Houdens’
right to litigate any claims against lot owners not party to the settlement.
¶16 On February 22, 2011, the District Court entered partial judgment in favor of the
Houdens and against Todd, declaring the Second and Third Amendments null, void and
unenforceable. The court also ruled against Todd on his counterclaims.
¶17 On August 24, 2012, the District Court ordered that the Houdens were entitled to
attorneys’ fees under the Original Covenants as the prevailing party in the action. After
holding a hearing, the Court awarded the Houdens attorneys’ fees and costs in the amount
of $371,513.03. In its twenty-eight page order, including fifty findings of fact and
fifty-six conclusions of law, the court recounted the extensive collateral issues that Todd
raised in the case; it faulted him for complicating the litigation with unsubstantiated
counterclaims and an unreasonable removal to federal court. After consideration of these
factors, the court concluded that the Houdens’ requested attorneys’ fees were reasonable.
The amount awarded reflected a deduction of amounts already paid in the settlement and
the attorneys’ fee award by the U.S. District Court. It included fees for work on the fee
award and fees that the federal court declined to award for the removal proceeding.
¶18 Todd appeals: the final judgment entered on April 15, 2013; the findings of fact,
conclusions of law and order regarding the award of costs and attorneys’ fees entered on
April 10, 2013; and all orders resulting in the final judgment in favor of the Houdens and
against Todd.
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STANDARD OF REVIEW
¶19 We review a district court’s grant of summary judgment de novo. Chipman v.
N.W. Healthcare Corp., 2014 MT 15, ¶ 11, 373 Mont. 360, 317 P.3d 182. Whether a
party is entitled to recover attorneys’ fees is a question of law. Chase v. Bearpaw Ranch
Assn., 2006 MT 67, ¶ 14, 331 Mont. 421, 133 P.3d 190. “We review a district court’s
conclusions of law pertaining to the recovery of attorney fees to determine whether those
conclusions are correct.” Chase, ¶ 14 (internal citation omitted).
¶20 An award of attorneys’ fees is reviewed for an abuse of discretion. Chase, ¶ 15.
“A court abuses its discretion if it acts arbitrarily without employment of conscientious
judgment or exceeds the bounds of reason resulting in substantial injustice.” Chase, ¶ 15.
DISCUSSION
¶21 1. Whether the District Court erred in its entry of judgment in favor of the
Houdens.
¶22 Todd contends that the District Court erred in declaring the Second and Third
Amendments null, void and unenforceable. He argues that their adoption was consistent
with the broad amendment provisions of the Original Covenants. The Houdens respond
that the adoption of the Restated Covenants renders Todd’s arguments moot. Although
Todd was not a party to the Settlement Agreement, the Restated Covenants run with the
land and apply to Todd. Even if Todd’s argument regarding the Second and Third
Amendment is correct, the Houdens maintain the Amendments can no longer be enforced
because the Restated Covenants have superseded them.
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¶23 Todd does not dispute that the Restated Covenants have resolved the dispute
regarding division of the Houdens’ parcel of property. He maintains nonetheless that this
issue must be addressed because, if the District Court had interpreted the Second and
Third Amendments correctly, he would have been the prevailing party in the lawsuit
instead of the Houdens. Accordingly, the Houdens would not have received an attorneys’
fee award. Todd asserts that analysis of the issue is required in order for this Court to
determine the Houdens’ right to recover their fees.
¶24 Mootness is a threshold issue. Havre Daily News, LLC v. City of Havre, 2006 MT
215, ¶ 31, 333 Mont. 331, 142 P.3d 864. An issue is moot “if the issue presented at the
outset of the action has ceased to exist or is no longer ‘live,’ or if the court is unable due
to an intervening event or change in circumstances to grant effective relief or restore the
parties to their original position . . . .” Greater Missoula Area Fedn. of Early Childhood
Educators v. Child Start, Inc., 2009 MT 362, ¶ 23, 353 Mont. 201, 219 P.3d 881.
¶25 This Court has not addressed whether it may analyze a moot issue in order to
determine if attorneys’ fees properly were awarded. We previously have looked to
federal courts for guidance on justiciability. Greater Missoula, ¶ 22. Article VII,
Section 4 of the Montana Constitution confines our authority to justiciable controversies
in the same way the case or controversy provision of the United States Constitution limits
the federal courts. Greater Missoula, ¶ 22.
¶26 The weight of federal authority suggests that review of an award of attorneys’ fees
does not revive an otherwise moot issue. Lewis v. Contl. Bank Corp., 494 U.S. 472, 480,
8
110 S. Ct. 1249, 1255 (1990) (“This interest in attorney’s fees is, of course, insufficient to
create an Article III case or controversy where none exists on the merits of the underlying
claim.”); Ctr. for Biological Diversity v. Marina Pt. Dev. Co., 560 F.3d 903, 906 (9th Cir.
2009) (“When a matter becomes moot on appeal, the court will not, and cannot, review
the merits of the underlying dispute for the purpose of determining whether an award of
attorney fees was proper. That is to say, although it can consider whether the plaintiff
prevailed at all, it cannot ask whether the district court’s underlying decision on the
merits was erroneous.”) (citing numerous additional cases); see Diamond v. Charles, 476
U.S. 54, 70-71, 106 S. Ct. 1697, 1708 (1986) (“The fee award is wholly unrelated to the
subject matter of the litigation . . . . It is true that, were the Court to resolve the case on
the merits against appellees, appellees would no longer be ‘prevailing parties’ entitled to
an award of fees . . . . But the mere fact that continued adjudication would provide a
remedy for an injury that is only a byproduct of the suit itself does not mean that the
injury is cognizable under Art. III.”).
¶27 We find the federal authority persuasive. We do not address moot issues and we
do not issue advisory opinions. Serena Vista, LLC v. Mont. State Dept. of Natl.
Resources & Conserv., 2008 MT 65, ¶ 14, 342 Mont. 73, 179 P.3d 510. Any analysis of
the underlying substantive issues in this case would be merely advisory because we
cannot grant Todd the relief he sought originally—the prohibition of the subdivision of
Lot Twenty-Six. The Restated Covenants, which now apply to Canyon Ranches and
which are not challenged, expressly prohibit amendment to prevent subdivision of the lot.
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Consistent with the “wide agreement” among other appellate courts, we will “not
undertake to delve into the details of a district court’s resolution of a controversy that has
since become moot in order to decide the ancillary question of fees.” Ctr. for Biological
Diversity, 560 F.3d at 907.
¶28 2. Whether the adoption of the Restated Covenants mooted the Houdens’ claim
for attorneys’ fees and costs.
¶29 Todd contends that the District Court erred by refusing to dismiss the Houdens’
contract claim for legal fees as moot. He states that upon the filing of the Restated
Covenants, the language supporting the award of attorneys’ fees in the Original
Covenants was rescinded. He argues that the technical meaning of the word “rescind” is
to declare the Original Covenants “void in [their] inception and to put an end to it as
though it never were.” The Houdens respond that the parties to the Settlement
Agreement did not intend to use the word “rescind” in its technical meaning and instead
intended to preserve the Houdens’ claims against Todd.
¶30 While it is clear that the Restated Covenants have mooted the controversy
regarding the Second and Third Amendments, “[i]t is also plain that mootness alone does
not preclude an award of attorneys[’] fees.” Center for Biological Diversity, 560 F.3d at
906. Thus, “a determination of mootness neither precludes nor is precluded by an award
of attorneys’ fees. The attorneys’ fees question turns instead on a wholly independent
consideration: whether plaintiff is a ‘prevailing party.’” Doe v. Marshall, 622 F.2d 118,
120 (5th Cir. 1980); Williams v. Alioto, 625 F.2d 845, 848 (9th Cir. 1980), cert. denied,
450 U.S. 1012, 101 S. Ct. 1723 (1981) (“Claims for attorneys’ fees ancillary to the case
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survive independently under the court’s equitable jurisdiction, and may be heard even
though the underlying case has become moot.”). It is significant that the fees were
incurred in obtaining two summary judgment awards and negotiating a settlement of the
remaining substantive issues. The Houdens had obtained a judicial determination in their
favor under the Original Covenants before the Restated Covenants superseded them.
¶31 Todd argues that the Houdens’ claim to fees depends exclusively on the contract
between the parties and that the contract cannot serve as the basis for such an award
because it no longer exists. Todd overlooks the relationship between the Restated
Covenants and the Settlement Agreement under which they were adopted. “Several
contracts relating to the same matters, between the same parties, and made as parts of
substantially one transaction are to be taken together.” Section 28-3-203, MCA. When
the relationship between documents related to an agreement is close, they should be
viewed as one in order to determine the true intent of the parties. Rumph v. Dale
Edwards, Inc., 183 Mont. 359, 367, 600 P.2d 163, 168 (1979).
¶32 The lot owners’ action to rescind the Original Covenants was by virtue of the
Settlement Agreement, which expressly set apart and preserved the Houdens’ claim for
fees under the Original Covenants. These two documents relate to the same matter of
ending the litigation by preserving the Houdens’ right to subdivide Lot Twenty-Six.
They also were between the same parties and were made as part of the same transaction.
Because of the close relationship between the documents, they should be construed in
conjunction with each other to determine the parties’ intent.
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¶33 The Restated Covenants provide, “Upon the recording of this Declaration, the
[Original Covenants] shall become, and hereafter shall be, rescinded, null, void, and of no
further force and effect.” The Settlement Agreement states that “the parties do not
release, but instead expressly preserve, and reserve their right to assert . . . [a]ny and all
claims by or against any Non-Party Lot Owner.” The rescission was effectuated by the
Settlement Agreement to which Todd was not a party and which must be read together
with the Restated Covenants.
¶34 It is clear that the parties’ intent under the Settlement Agreement and the Restated
Covenants was to preserve the Houdens’ claims against Todd. The Houdens had
prevailed in their substantive legal claims against Todd before the Restated Covenants
mooted the controversy between the parties. Accordingly, we affirm the District Court’s
decision to allow a claim for attorneys’ fees under the Original Covenants to proceed.
¶35 3. Whether the District Court abused its discretion in awarding the Houdens
attorneys’ fees and costs in the amount of $371,513.03.
¶36 Because the Restated Covenants did not moot the Houdens’ claim for fees, we
address Todd’s argument regarding the reasonableness of the $371,513.03 award. He
contends that the District Court erred by: imposing fees against him despite his position
as an HOA board member; including fees incurred by the Houdens in their efforts to
recover fees; including fees determined to be excessive by the federal court; including
fees for two different law firms; including fees for the drafting and filing of the Restated
Covenants; and adopting several of Houdens’ proposed findings of fact without
evidentiary support. The Houdens, in turn, ask for fees on appeal.
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¶37 Though reviewed for abuse of discretion, an award of attorneys’ fees must be
reasonable. Plath v. Schonrock, 2003 MT 21, ¶ 36, 314 Mont. 101, 64 P.3d 984. District
courts should determine reasonableness under the facts of each case. Plath, ¶ 36.
Although not exclusive, we have articulated guidelines to be used by district courts when
determining reasonableness. Bitterroot River Protective Assn. v. Bitterroot Conserv.
Dist., 2011 MT 51, ¶ 45, 359 Mont. 393, 251 P.3d 131. These include “(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
amount of money or the value of the property to be affected; (5) the professional skill and
experience called for; (6) the attorneys’ character and standing in their profession; and
(7) the results secured by the services of the attorneys.” Plath, ¶ 36. The District Court
considered these factors in determining the Houdens’ claim.
a. Board member exemption
¶38 Todd challenges the award of attorneys’ fees because of his status as an HOA
board member. The Original Covenants contained a waiver of liability for HOA board
members for any “loss, damage or injury arising out of or in any way connected with the
adoption, implementation or enforcement of [the Original Covenants] . . . or any
amendment hereto.”
¶39 The Houdens sued Todd in his individual capacity. The lawsuit arose from Todd’s
actions as an individual lot owner who voted for the Second Amendment, not from any
action taken as a board member of the HOA. Todd does not provide any authority for his
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argument that his position as a board member insulates him from liability for his actions
as an individual lot owner. As such, we agree with the District Court that the liability
waiver in the Original Covenants does not insulate Todd from liability in this action.
b. Fees incurred in recovering fees (fees-for-fees)
¶40 Todd next contends that the District Court erred by allowing the Houdens to
recover fees-for-fees. The fee provision in the Original Covenants allowed for an award
of fees in any action to “construe the provisions of this Declaration.” The court
considered a dispute over a reasonable amount of fees as an action to interpret a contract
provision and concluded that an award of fees-for-fees was reasonable in this case.
¶41 Contractual fee-shifting provisions are a recognized exception to the American
Rule that a party generally pays its own attorneys’ fees. Chase, ¶ 29. Nevertheless, a
general contract provision shifting attorneys’ fees does not authorize an award of fees for
time spent in seeking the fees themselves. Chase, ¶ 30. The contract provision at issue
in Chase authorized attorneys’ fees “in any action of any kind for the enforcement of the
Covenants, Conditions, and Restrictions.” Chase, ¶ 31 (emphasis in original). Because
the contract authorized a fee award, the Court determined that establishing a right to such
an award was an action to enforce the contract. Chase, ¶ 32. We therefore permitted
fees-for-fees to the extent that such fees were incurred establishing the prevailing party’s
entitlement to such fees. Chase, ¶ 32. The Court declined, however, to allow fees for the
time spent establishing the amount of reasonable attorneys’ fees. Chase, ¶ 32. The Court
expressed concern that allowing such fees under a general contract provision would allow
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the exception of contractual fee-shifting to swallow the general rule that a party should
pay its own fees. Chase, ¶ 30.
¶42 The Houdens argue that establishing a reasonable amount of attorneys’ fees is an
action to “construe” the provisions of the Original Covenants as allowed by the attorneys’
fee provision. We disagree. The attorneys’ fees provision in the Original Covenants can
be characterized as a general contract provision that does not specifically contract for fees
incurred in connection with a proceeding to establish the amount of fees that may be
recovered. In accordance with Chase, we agree that the Houdens are entitled to recover
fees incurred in establishing their entitlement to fees under the Original Covenants. This
right does not extend, however, to fees incurred in establishing the amount of reasonable
attorneys’ fees. Chase, ¶ 32. We reverse the District Court’s determination and remand
for the court to recalculate the fee award properly excluding fees incurred in establishing
the reasonable amount of the Houdens’ claimed fees.
c. Removal fees
¶43 When the Houdens sought remand to state court, they requested an award of costs
and attorneys’ fees incurred as a result of the Defendants’ improper removal. Such fees
are authorized pursuant to 28 U.S.C. § 1447(c). The U.S. District Court denied the
Houdens’ motion for fees and costs. The Houdens appealed this denial. The Ninth
Circuit Court of Appeals reversed the district court’s judgment, holding that Todd’s
removal was “objectively unreasonable.” On remand to the federal district court, the
Houdens requested fees and costs in the amount of $55,968.12. The court awarded fees
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in the amount of $20,957.62. The court reduced the requested amount for two reasons.
First, it determined that the Houdens did not request fees for the appeal to the Ninth
Circuit Court of Appeals in a timely manner under the Ninth Circuit Local Rules.
Second, it determined that the hourly rates charged by the Houdens’ attorneys were
unreasonable and lowered each requested rate by $50 per hour.
¶44 In their request to the District Court for attorneys’ fees, the Houdens deducted the
$20,957.62 already awarded by the federal court. They included, however, a request for
$35,010.50, the difference between the amount they had requested and the amount the
federal court awarded. The District Court included the additional amount in the
Houdens’ fee award. Todd argues that this award of fees is unreasonable because a
federal judge already had determined that they were excessive. The Houdens counter that
the District Court was not bound by the federal court’s fee determination. Further, they
contend that the federal court’s fee award was limited by statutory restrictions that do not
apply to the contractual fee provision they sought to enforce in the District Court.
¶45 The Houdens’ attempt to characterize the District Court’s additional fee award as
allowable because it stemmed from the contractual provision is unpersuasive. Their
requested fee award was reduced by the federal court because they failed to follow the
court’s local rules and failed to convince the judge that their hourly rate was reasonable.
The amount of reasonable attorneys’ fees attributed to the improper removal already was
adjudicated. Concerns of comity and judicial economy invoke the law of the case
doctrine here. The law of the case doctrine is the practice of courts “generally to refuse
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to reopen what has been decided.” McCormick v. Brevig, 2007 MT 195, ¶ 38, 338 Mont.
370, 169 P.3d 352. A decision “made at one stage of litigation which is not appealed
when the opportunity to do so exists, becomes the law of the case for the future course of
that litigation . . . .” McCormick, ¶ 38. Contrary to the District Court’s assertion, the law
of the case doctrine applies to coordinate courts, including between state and federal
courts on removal and remand. Charles Alan Wright, Arthur R. Miller & Edward H.
Cooper, Federal Practice and Procedure vol. 18B, § 4478.4, 770 (2d ed., West 2002).
The Houdens litigated their fee claim for improper removal and received the fees to
which the federal court determined they were entitled under federal law for a federal
proceeding. They cite no cases in which additional fees have been awarded by a state
court under these circumstances. Allowing the Houdens a second chance to recover the
same fees required the District Court to review what the federal court already decided,
which disregards the comity afforded to a coordinate court. We conclude that the District
Court abused its discretion by including the $35,010.50 as part of the Houdens’ fee
award. On remand, the District Court should recalculate the fee award to deduct this
requested amount.
d. Two law firms
¶46 Todd contends that the court abused its discretion by awarding the Houdens fees
for two separate law firms when one firm would have been adequate. The District Court
found that the use of two law firms was reasonable because of the extensive motion
practice the case generated, the number of defendants and Todd’s actions that multiplied
17
the litigation. Further, the District Court found that the costs between the two firms did
not “unreasonably increase costs or fees or lead to unreasonable duplication,” and that
they “properly allocated the tasks between them to avoid duplication of effort.” The
court concluded that “[t]he working relationship between [Houdens’ lawyers] is not
appreciably different from the efforts of two attorneys in the same firm working on the
same case.” Todd does not contend that these findings are clearly erroneous, nor does he
articulate why the award constitutes an abuse of discretion. Rather, he generally asserts
that only one firm was necessary. The court’s extensive findings and the record upon
which they are based support an award for two attorneys. We are not convinced that the
District Court abused its discretion by determining that fees for two law firms was
reasonable in this case.
e. Fees for drafting and filing the Restated Covenants
¶47 Todd disputes the court’s imposition of fees for drafting and filing the Restated
Covenants. He argues that the $16,000 charged by the Houdens’ attorneys for execution
of the Settlement Agreement and the Restated Covenants “clearly had nothing to do with
the enforcement or interpretation of the Original Covenants, Second or Third
Amendments.”
¶48 The District Court actually concluded that Todd was not responsible for these fees
because the settling parties paid them. The Houdens received $157,000 from the settling
parties that they deducted from their request for fees. The District Court concluded that
“Wayne Todd is not being asked to pay for the fees and costs that the Houdens incurred
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in the settlement but has benefitted significantly by Houdens’ receipt of those funds.”
Todd does not dispute these findings and we find no abuse of discretion on this issue.
f. Findings contradicted by the record
¶49 Todd makes a general argument that the District Court’s adoption of the Houdens’
proposed findings of fact and conclusions of law ignored contrary evidence and resulted
in substantial injustice to Todd.
¶50 Specifically, he argues that the court mischaracterized the “crux” of his argument.
In its findings of fact, the court found that Todd’s defense revolved around the claim that
he and other Defendants were told prior to the purchase that the Houdens would not
develop Lot Twenty-Six. It determined that there was no evidence supporting this
assertion. Todd argues that his argument was actually based on the language of the
Original Covenants.
¶51 Todd fails to demonstrate how this finding resulted in the imposition of
unreasonable attorneys’ fees. When discussing this argument, the court merely was
pointing out one of the many ways Todd’s actions complicated the litigation. This was
an attempt to counter Todd’s arguments that attorneys’ fees were unreasonably high for a
simple contract case that did not go to trial. The court’s findings regarding the protracted
litigation in this case were detailed, thorough and followed the factors articulated in
Plath. The court stated, “Todd did everything possible to portray the case other than a
simple matter of contract interpretation and cannot now seek refuge in the very simplicity
he sought to obscure.” The court listed the ways that Todd’s action “greatly multiplied
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the issue, requiring an enormous amount of additional work by Houdens’ counsel” and
did not rely only on the one argument that Todd now challenges. We are not persuaded
that awarding fees as a result of the court’s characterization of Todd’s argument
amounted to an abuse of discretion.
g. Fees on appeal
¶52 The Houdens request an additional award of attorneys’ fees for the present appeal.
We previously have held that “if a contract includes a provision stating that a prevailing
party is entitled to reasonable attorney[s’] fees arising from litigation under the contact,
appellate attorney[s’] fees are included under the provision.” Boyne USA, Inc. v. Lone
Moose Meadows, LLC, 2010 MT 133, ¶ 26, 356 Mont. 408, 235 P.3d 1269. Although we
are reversing a portion of the District Court’s fee award, we uphold its decision on the
merits and its imposition of fees in this case. As such, the Houdens are the prevailing
party and are entitled to fees incurred on appeal. On remand, the District Court should
impose reasonable attorneys’ fees associated with this appeal.
CONCLUSION
¶53 Because the underlying merits of this case are now moot, we do not address
whether the District Court erred in its decision to void the Second and Third
Amendments. Thus, its judgment in favor of the Houdens is affirmed. The Restated
Covenants did not moot the Houdens’ right to attorneys’ fees and costs under the
fee-shifting provision of the Original Covenants. As the prevailing party, they are
entitled to reasonable fees and costs. We reverse and remand the District Court’s fee
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award. On remand, the court should recalculate the fee award to properly exclude fees-
for-fees in accordance with this Opinion, to exclude fees incurred on removal, and to
include the Houdens’ fees and costs on appeal.
/S/ BETH BAKER
We concur:
/S/ MIKE McGRATH
/S/ JIM RICE
/S/ PATRICIA COTTER
/S/ LAURIE McKINNON
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