Edgewater Townhouse Homeowner's Ass'n v. Holtman

No. 91-513
IN THE SUPREME COURT OF THE STATE OF MONTANA
EDGEWATER TOWNHOUSE
HOMEOWNER'S ASSOCIATION,
Plaintiff, Respondent,
and Cross-Appellant,
ROGER HOLTMAN ,
Defendant, Appellant,
and Respondent on Cross-Appeal
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable Douglas Harkin, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Charles J. Tornabene; Patterson, Marsillo,
Tornabene, Schuler & McKenna, Missoula, Montana
For Respondent:
Lon Dale; Milodragovich, Dale & Dye, Missoula
Montana
For Amicus Curie:
William 0 Bronson; James, Gray & McCafferty, Great
.
Falls, Montana (MT Big Sky Paralegals Assoc. ; Natl.
Assoc. of Legal Assts. (NALA); Natl. Fed. of
Paralegal Assoc.; and Legal Asst. Mngmnt Assoc.)
Submitted on Briefs: March 12, 1992
JAN 1 2 1393
Justice Karla M. Gray delivered the Opinion of the Court.
Roger Holtman appeals from a judgment of the Fourth Judicial
District Court, Missoula County, granting summary judgment in favor
of the Edgewater Townhouse Homeowner's Association and dismissing
his counterclaim. The Edgewater Townhouse Homeowner's Association
cross-appeals the District Court's denial of claimed attorney's
fees for attorney-supervised paralegal work.
We phrase the issues on appeal as follows:
1) Did the District Court err in granting summary judgment for
the Association?
2) Did the District Court err in dismissing Holtman's
counterclaim?
The Edgewater Townhouse Homeowner's Association (the
Association) is a condominium association of eleven condominiums
located in Missoula. The Association is governed by its articles
of incorporation and its bylaws, filed respectively with the
Montana Secretary of State and the Missoula County Clerk and
Recorder. Pursuant to Art. I, Sect. 3 of the bylaws, all owners or
occupants of the units are subject to the rules contained in the
bylaws and articles of incorporation. Roger Holtman (Holtman)
purchased Unit #1 in 1985.
In March of 1988, the Association held meetings to discuss the
installation of a new heating system forthe condominiums. Holtman
opposed installing a new system and argued to either repair the
existing central heating system or allow the unit owners to
purchase individual systems of their choice. At a meeting on
August 23, 1988, the unit owners present voted to install a Weil-
McLain heating system. Holtman did not attend the meeting. After
receiving bids, the Association assessed each member $3,900 to
cover the costs. Holtman subsequently refused to pay the
assessment or allow the Association access to his condominium to
install the new system.
On February 5, 1989, while Holtman was out of town, a neighbor
heard running water in Holtmanls condominium. A meeting of the
Board members was called and the situation was declared an
emergency requiring entry into Holtmanlsunit. After a unit owner
entered Holtmanlscondominium, the Association authorized a plumber
to fix the leak and install the new heating system. When Holtman
returned, he found that he was locked out of his damaged
condominium, the new heating system was partially installed and,
allegedly, asbestos contaminated his basement. He refused to allow
further installation or pay for the heating system.
The Association filed a complaint on February 17, 1989,
seeking an injunction to require the installation of the new
heating system, damages, costs and attorney's fees. Holtman
answered by generally denying the Associationls allegations. On
May 10, 1989, Holtman filed a third-party complaint against the
individual unit owners, claiming they had deprived him of his
property rights, invaded his privacy, and wrongfully contaminated
his condominium with asbestos. Nearly a year later, the District
Court granted the Associationfsmotion for an "alternative writr1
to
require the installation of the Weil-McLain heating system, and
determined that the installation was necessary to preserve the
property during the litigation. On September 17, 1990, the
District Court granted the third-party defendants1 motion for
summary judgment and dismissed the third-party complaint. Although
the judgment was certified as final pursuant to Rule 54(b),
M.R.Civ.P., Holtman did not appeal.
On January 14, 1991, the Association moved for summary
judgment on its complaint. Two weeks later, Holtman responded by
filing a counterclaim against the Association without obtaining
leave of court; the allegations against the Association mirrored
those made against the individual unit owners in Holtmanlsearlier
third-party complaint. On February 14, 1991, the Association moved
to dismiss or strike the counterclaim. On June 4, 1991, the
District Court filed orders granting both the motion for summary
judgment and the motion to strike the counterclaim. In entering
judgment, the District Court awarded the Association $16,367.92 in
attorney's fees; that amount was decreased by $4,000 in a
supplemental judgment in response to Holtman's objection. Both
parties appeal.
Did the District Court err in granting summary judgment for
the Association?
Under Rule 56(c), M.R.Civ.P., summary judgment is proper when
no genuine issue of material fact exists and the moving party is
entitled to judgment as a matter of law. Summary judgment was not
intended, nor can it be used, as a substitute for existing methods
in the trial of issues of fact. Hull v. D. Irvin Transport (1984),
4
213 Mont. 75, 81, 690 P.2d 414, 417.
In granting the Association's motion for summary judgment, the
District Court stated that the Association complied with its bylaws
and applicable statutes in changing the heating system and entering
Holtmanls condominium. Specifically, it found that six of the
eleven unit owners voted for installation of the heating system at
the August 23, 1988, meeting. On that basis, the court further
found that the quorum and voting majority requirements of the
bylaws were met. We conclude that the District Court improperly
decided disputed issues of fact.
Insofar as the bylaws are pertinent here, one membership in
the incorporated association is appurtenant to each unit.
Consequently, each unit is allowed only one vote. As a result,
there are a total of eleven votes in the Association. Regardless
of the number of individuals who may co-own one unit, the unit
nevertheless can cast only one vote at Association meetings. The
bylaws also provide that a majority vote at a meeting at which a
quorum is present is binding upon all unit owners. A quorum
requires the representation in person or by proxy of 50% of the
total authorized votes and a majority is defined as more than 50%
of the total authorized votes.
The District Court relied on the minutes of the August 23
meeting in determining that the Association complied with its
bylaws. The minutes list the six individuals present as Ken, Mike,
Doug, Lois and Jerry, and Andrea. In numerous references in the
record, the names ItLoisand Jerry CovaultM appear to refer to the
co-owners of one unit. Because each unit has only one vote to
cast, it is possible that only five of eleven voting units were
present at the meeting in question. If this is the case, no quorum
existed because the bylaws require the presence of unit owners
having 50% of the total authorized votes to constitute a quorum for
the transaction of Association business.
In light of Holtmanlscontention that the ~ssociationdid not
comply with the procedures as required by its bylaws in deciding to
change the heating system, a genuine issue of material fact exists
regarding whether a quorum existed at the August 23, 1988, meeting.
Absent a quorum, no decision made at that meeting is binding on
other unit owners. We conclude that the District Court erred in
granting summary judgment.
Did the District Court err in dismissing Holtmanfs
counterclaim?
In responding to the Association's February 17, 1989,
complaint, Holtman generally denied the allegations and did not
assert a counterclaim. On February 1, 1991, Holtman filed a
counterclaim against the Association without leave of court. The
District Court determined that the counterclaim arose out of the
same transaction or occurrence as the ~ssociation'scomplaint filed
in February, 1989; therefore, it was a compulsory counterclaim
governed by the timeliness requirements of Rule 13(a), M.R.Civ.P.
Applying Rule 1 3 ( f) , M. R. Civ.P, which governs omitted
counterclaims, the District Court dismissed the untimely
counterclaim because Holtman did not obtain leave of court.
Holtman does not dispute the District Court's characterization
6
of his counterclaim as compulsory under Rule , M.R. C i v . P.
1 3 (a) He
argues that the District Court's result was unduly harsh and that
requires" the acceptance of the counterclaim under these
fgjustice
circumstances.
We look t o Rule 13(f), M.R.Civ.P., in addressing this issue:
When a pleader fails to set up a counterclaim through
oversight, inadvertence, or excusable neglect, or when
justice requires, the pleader may by leave of court set
up the counterclaim by amendment.
Although we have not interpreted this subsection of Rule 13,
M.R.Civ.P., we have held generally that the decision to allow an
amendment is left to the discretion of the trial court. Stanford
et al. v. Rosebud County et al. (Mont. 1992), - P.2d -, 49
St-Rep. 828-30. In interpreting the identical federal rule, the
Ninth circuit Court of Appeals has held that a trial court's denial
of leave to assert an omitted counterclaim under Rule 13(f),
F.R. Civ.P., is reversible only when it constitutes an abuse of
discretion, even though t h e rule is generally applied liberally.
Ralston-Purina Co. v. Bertie (9th C i r . l9?6), 541 F.2d 1363, 1367.
We adopt that standard of review for the issue before us.
In a case factually analogous to the one before us, the Third
Circuit Court of Appeals affirmed a trial courtls dismissal of an
untimely compulsory counterclaim for failure to meet the "leave of
court" requirement of Rule 1 3 ( f) , F .R. C i v . P. Owens-Illinois, Inc.
v. Lakeshore Lane Co, (3d. Cir. 1979), 610 F.2d 1185, 1188. Here,
as in Owens, Holtman filed his counterclaim nearly two years after
his answer and did not obtain leave of court to do so, as required
by Rule 1 3 ( f ) , M.R.Civ.P. Under these circumstances, we hold that
7
the District Court did not abuse its discretion in dismissing
Holtman's untimely counterclaim. To hold otherwise would render
the "leave of courtfv requirement of Rule 13(f), M.R.Civ.P.,
meaningless.
We note that the District Court's award and denial of certain
attorney's fees is based in part on its grant of summary judgment
to the Association. In light of our conclusion that summary
judgment was in error, we vacate the award of attorney's fees.
Affirmed in part, reversed in part, and remanded to the
District Court for further proceedings consistent with this
opinion.
We concur:
January 12, 1993
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:
Charles J. Tornabene
PATTERSON, MARSILLO, TORNABENE, SCHULER & McKENNA
113 South 5th East
Missoula. MT 59801
Lon Dale
MILODRAGOVICH, DALE & DYE, P.C.
P.O. Box 4797
Missoula, MT 49806-4797
William 0 . Bronson
James, Gray & McCafferty
P.O. Box 2885
Great Falls, MT 59403
Natl. Fed. of Paralegal Assoc.)
ED SMITH
CLERK OF THE SUPREME COURT