Nimmick v. Hart

No. 90-420
IN THE SUPREME COURT OF THE STATE OF MONTANA
FRED G. NIMMICK AND ANN G. NIMMICK,
Plaintiffs and Respondents,
v.
DALE P. HART,
Defendant and Appellant.
No. 90-204
DALE P. HART,
Plaintiff and Appellant,
ALLEN E. ERICKSON, MELBA E. ERICKSON,
FRED G. NIMMICK, ANN M. NIMMICK,
ROBERT E. WRIGHT, DONNA MAE WRIGHT,
CHARLES R. TAYLOR, and SAM MARTIN,
Defendants and Respondents.
APPEAL FROM: ~istrictCourt of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable Ed McLean, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Thomas W. Trigg, Missoula, Montana
Terry A. Wallace, Missoula, Montana
For Respondent:
Dirk A. Williams, Snavely & Phillips, Missoula,
Montana
Richard A. Weber, Jr., Koch, McKenna, Goheen,
Boggs & Weber, Hamilton, Montana
Submitted on briefs: January 17, 1991
Decided: March 21, 1991
Filed:
Clerk
Justice Terry N. Trieweiler delivered the Opinion of the Court.
In this consolidated action Dale P. Hart appeals
from the Fourth Judicial District Court orders granting summary
judgment in favor of Charles R. Taylor in cause no. 66726, and Fred
G. Nimmick and Ann M. Nimmick in cause no. 66726 and cause no.
71128. We affirm in part and reverse and remand in part.
The parties raise several issues which we restate as follows:
As to Tavlor:
I. Whether the District Court erred in determining Hart
failedto plead failure of consideration as an affirmative defense.
As to the Nimmicks:
11. Whether the District Court erred in finding no
misrepresentation and fraud on the part of the Nimmicks.
111. Whether the District Court erred in collaterally
estopping Hart from raising the issues of rescission and
misrepresentation concerning his purchase of Terrace.
IV. Whether the District Court erred in dismissing Hart's
affirmative defense of accord and satisfaction.
V. Whether the District Court erred in finding that the
Nimmicks had no obligation to mitigate their damages.
VI. Whether the District Court erred in dismissing Hart's
counterclaims.
This cause of action is based on a series of transactions
involving the Terrace Mobile Home Park (Terrace) located near East
Missoula, Montana. Terrace was originally owned by the Ericksons.
The Ericksons sold Terrace by contract for deed to Furman H.
v I
Stockton and Clare E. Stockton on September 25, 1978. The
Stocktons then sold Terrace by contract for deed to Fred C. Nimmick
and Ann M. Nimmick on November 5, 1982. On April 16, 1984, the
Nimmicks in turn sold the property by contract for deed to Robert
E. Wright and Donna Mae Wright.
The Wrights were indebted to Charles R. Taylor on a promissory
note. After the debt to Taylor arose, Wrights purchased Terrace
from the Nimmicks. Subsequently, Taylor acquired a judgment
against the Wrights for the debt owed on the promissory note.
Taylor then filed a judgment lien against the Wrightsl interest in
Terrace.
Taylor scheduled an execution sale of the Wrights interest in
Terrace to satisfy his judgment against the Wrights. The Wrights
were on the verge of losing their interest in the property through
the foreclosure of Taylor's judgment lien when Samuel Martin, a
realtor, contacted Dale Hart in an effort to stave off the
impending foreclosure. Previously Martin had been the realtor that
handled the Stockton-Nimmick transaction and the Nimmick-Wright
transaction.
The involvement of Hart in Terrace took place in two stages.
In order to avoid the sale, the Wrights paid $7,500 to Taylor and
agreed to pay the balance of the judgment ($7,500 within one year
upon a specified schedule). Hart gave the Wrights the above $7,500
to pay Taylor to avoid the execution sale. In return, Hart
received a partial assignment of one-third of the Wrights'
purchasers interest in Terrace. Hart also agreed to pay the
Wrights an additional $7,500 in January, 1986, to pay off the
remaining judgment debt to Taylor.
Despite this payment, on November, 1985, the Wrights defaulted
on the underlying contract payments which were to be made to the
Ericksons, the title holders of the property. As a result, the
Ericksons issued a notice of default and acceleration. To overcome
this default, Hart purchased all of the Wrights' interest in the
property and agreed to assume all of the obligations on Terrace,
including the remaining debt ($7,500) to Taylor. In order to cure
the Wrightsl default to the Ericksons, Hart borrowed $3,500 from
the Nimmicks. Hart also gave the Nimmicks a $10,000 promissory
note to clear a lien the Nimmicks held against Terrace. The note
was secured by a trust indenture on Hart's personal residence.
Next, Hart signed a promissory note to Taylor for $5,000 and
Taylor agreed to release his judgment lien. Hart agreed to grant
a trust-indenture covering his interest in Terrace, to secure
payment to Taylor. Hart also later delivered $2,500 to attorney
Dennis Lind for partial payment of his debt to Taylor. Lind then
delivered the $2,500 to Taylor's attorney. As the parties agreed,
Hart signed a promissory note and a trust indenture with Taylor.
Unfortunately, Taylor's judgment lien was not immediately released
or satisfied, nor did Hart request Taylor to release or satisfy the
judgment 1ien .
Hart's promissory note to Taylor was due and payable in full
on January 12, 1987. On that date, Hart paid Taylor $687 in
interest on the promissory note, but failed to pay the full amount
, J
of the principal. Other than the single payment of interest on
January 12, 1987, Hart has made no payments on the promissory note.
On February 20, 1987, Hart sent a letter to Taylor and other
parties stating his intention to rescind all transactions related
to Hart's purchase of Terrace. On April 10, 1987, Hart sued
Taylor, the Nimmicks, and others in Missoula County Cause No. 66726
alleging that he was fraudulently induced to enter the contract to
purchase the mobile home park, and seeking rescission of the
contract and damages. Specifically, in regard to Taylor, Hart
sought to rescind or avoid Hart's obligations under the promissory
note he signed with Taylor. In response, Taylor denied Hart's
allegations of fraud, and counterclaimed for payment under the
promissory note.
On March 22, 1988, the District Court granted summary
judgment in favor of Taylor upon Hart's claims of fraud and
misrepresentation. Subsequently, Taylor requested summary
judgment upon his counterclaim. That motion was also granted.
Hart now appeals the District Courtls second summary judgment
order in favor of Taylor.
This appeal also includes Hart's claims of fraud,
misrepresentation and rescission against the Nimrnicks in cause no.
66726, and the Nimmicksl subsequent complaint against Hart for
payment of a promissory note in cause no. 71128.
As we mentioned previously in this Opinion, Hart sued the
Nimmicks, along with various other defendants, in cause no. 66726
alleging fraud and misrepresentation on the part of the Nimmicks.
Specifically, Hart claimed that the Nimmicks, through their agent
realtor Sam Martin, misrepresented the value of Terrace. This
misrepresentation, according to Hart, led him to purchase an
interest in Terrace. The Nimmicks denied any misrepresentation in
the sale of Terrace, and further denied any agency relationship
with realtor Martin.
On April 15, 1988, the Nimmicks filed a motion for summary
judgment. The court found no agency relationship between the
Nimmicks and Martin, and, therefore, any statements that Martin
made about Terrace could not be imputed to the Nimmicks. The
District Court found no misrepresentations on the part of the
Nimmicks in the sale of Terrace.
After the District Court's summary judgment, the Nimmicks
served a Notice of Entry of Order upon Hart's counsel on November
16, 1988. The Nimmicks failed to enter a final judgment.
On June 8, 1989, the Nimmicks filed a complaint in cause no.
71128, to collect payment under the promissory note. The facts of
the Nimmicksl cause of action on the promissory note are tied into
Hart's earlier fraud and misrepresentation complaint surrounding
his purchase of Terrace. Hart had given the Nimmicks the note,
secured by a trust indenture in Hart's personal residence, in the
amount of $10,000 with interest at the rate of 10% on November 21,
1985. As mentioned earlier, Hart gave the note to the Nimmicks in
order to clear a lien the Nimmicks had on Terrace.
The record reveals that City Federal Savings Bank also had a
trust indenture on Hart's personal residence; the Bank's trust
indenture was superior to the trust indenture held by the Nimmicks.
On December 19, 1988, Michael J. Reiley, trustee under the Bank's
trust indenture, recorded a notice of trustee's sale.
On February 20, 1989, Nimmicksl attorney sent Hart's attorney
an offer to settle Nimmicks' claim for $8,541.25. By its terms,
the compromise offer expired on March 15, 1989. Sometime later
Hart called the Nimmicks' attorney and offered a deed to his home
in lieu of foreclosure. The Nimmicks' attorney by letter to Hart s
attorney rejected Hart s offer. Furthermore, the Nimmicks'
attorney advised Hart's counsel that the Nimmicks would be filing
suit on the note if the Bank foreclosed its trust indenture on
schedule.
On May 19, 1989, the Bank's trustee sold Hart's home at a
trustee sale. As promised, having lost their security, the
Nimmicks sued Hart on the note on June 8, 1989. Hart answered,
raised affirmative defenses and asserted counterclaims.
On September 20, 1989, the Nimmicks moved for summary judgment
on the complaint and Hart's counterclaims. Following the Nimmicks'
motion, briefing by the parties, and oral argument, the District
Court granted partial summary judgment to the Nimmicks, and
maintained that Hart is collaterally estopped from raising the
claims of rescission and misrepresentation, since both of these
claims had been adjudicated in District Court in cause no. 66726.
The Nimmicks then moved for summary judgment on the remaining
issues, which Hart opposed. The District Court agreed with the
Nimmicks and granted the Nimmickst motion for summary judgment.
The Court entered judgment on June 7, 1990, and the Nimmicks served
Notice of Entry of Judgment on June 11, 1990. Hart now appeals
both of the District Courtls summary judgments.
Both of these cases on appeal are motions for summary
judgment. In reviewing orders for summary judgment, the standard
of review for this Court is the same as that used by the District
Court under Rule 56(c), M.R.Civ.P.; Kronen v. Richter (1984), 211
Mont. 208, 211, 683 P.2d 1315, 1317. Therefore, this Court can
find summary judgment when Itthepleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment
as a matter of law. Rule 56 (c), M.R.Civ. P. ; Mayer Bros. v. Daniel
Richards Jewelers, Inc. (1986), 223 Mont. 397, 399, 726 P.2d 815,
816. Once the record reveals no genuine issue of material fact,
the burden of proof shifts to the party opposing the summary
judgment motion to present facts of a substantial nature that a
material fact issue exists. Maver, 726 P.2d at 816. Mere
conclusory or speculative statements are insufficient to raise a
genuine issue of material fact. National Gypsum Co. v. Johnson
(1979), 182 Mont. 209, 212, 595 P.2d 1188, 1189; Mayer, 726 P.2d
at 816. ##The opposing party 'may not rest upon the mere
allegations or denials of his pleadings, but his response, by
affidavits or as otherwise provided in this rule, must set forth
specific facts showins that there is a senuine issue for trialll1
(emphasis in original) Maver, 726 P.2d at 816, citing Rule 56(e),
M.R.Civ.P. With this standard in mind, we will now review the
issues presented by the parties.
Hart v. Tavlor
Whether the District Court erred in determining Hart failed
to plead failure of consideration as an affirmative defense.
Taylor moved for summary judgment on his counterclaim for
payment on the promissory note on October 26, 1988. In an effort
to rebut Taylor's counterclaim, Hart argued rescission based on
failure of consideration. Hart contended that the consideration
between the parties failed, due to the fact that Taylor failed to
release the judgment lien Taylor held on Terrace. Taylor
maintained, and the District Court found, that Hart had not pled
failure of consideration as an affirmative defense as required by
Rule 8(c), M.R.Civ.P. Furthermore, the Court found that "the
letter of rescission from counsel for Hart does not mention failure
of consideration for non-payment of the obligation [promissory
note] from Hart to Taylor." The District Court then granted
Taylor's summary judgment motion.
Rule 8(c), M.R.Civ.P. states in pertinent part:
Affirmative Defenses. In pleading to a preceding
pleading, a party shall set forth affirmatively accord
and satisfaction, arbitration and award, assumption of
risk, contributory negligence, discharge in bankruptcy,
duress, estoppel, failure of consideration, ... and any
other matter constituting an avoidance or affirmative
defense ... (Emphasis added.)
The record reveals that Hart failed to affirmatively plead
failure of consideration. Hart offers a number of excuses why he
.
failed to plead the affirmative defense, none of which have any
merit on this appeal. "An affirmative defense is generally waived
if not set forth affirmatively." Pracht v. Rollins (1989), 239
Mont. 62, 68, 779 P.2d 57, 61; Chandler v. Madsen (1982), 197 Mont.
234, 241, 642 P.2d 1028, 1032. Here, the District Court properly
denied Hart's affirmative defense.
In addition to failing to plead his affirmative defense,
Hart's claim also fails because Hart received actual consideration
from Taylor. Taylor had a judgment lien on the Wrights' interest
in Terrace and Taylor scheduled a sale upon a writ of execution.
The sale was cancelled when Hart provided funds to the Wrights to
make a partial payment to Taylor. Hart then took over the
remainder of the Wrights' interest in Terrace and, among other
things, agreed to pay Taylor. Hart paid Taylor $2,500, and also
signed a promissory note to Taylor and Taylor agreed to release his
judgment lien. Hart also agreed to grant a trust indenture in
Terrace to secure payment to Taylor. Hart maintains that the
release of the judgment lien was consideration for his execution
of the promissory note. According to Hart, once Taylor failed to
release the judgment lien, the consideration between the parties
failed and Hart could properly rescind the contract.
Hart mistakenly contends Taylor's consideration was the
release of the judgment lien. The actual consideration in this
case which Hart received was Taylor's forbearance, Hart's right to
possession of the trailer court, and the receipt of rents from the
trailer court.
Release of the judgment lien would not have cleared the title
on Terrace. Hart's granting of a trust indenture for the
satisfaction of a judgment lien would only have changed the form
of the encumbrance and would not have changed the fact of an
encumbrance on Terrace. The facts are clear that Taylor granted
to Hart what he wanted, which was time to make payment. After
Taylor granted that time and patiently awaited payment, Hart
rescinded the contract.
Likewise, Hart's rescission letter reflects that failure of
consideration was not the basis of Hart's rescission. In pertinent
part, the rescission letter states, "The reason for the rescission
is that Dale's consent to the various agreements was obtained by
the mistake and or fraud of Sam Martin, who represented that he was
a partner and agent of some of you, that the mobile home park was
in good condition, and that the cash flow and profitability of the
mobile home park was substantial. None of these representations
were true, and it is clear that the representations were made to
defraud Mr. Hart.
Nowhere in Hart's rescission letter is there any mention of
Taylor's judgment lien as a basis for failure of consideration.
The District Court was keenly aware of this fact in its order
granting Taylor summary judgment:
[Tlhe letter of rescission from counsel for Hart does not
mention failure of consideration as a reason for
nonpayment of the obligations from Hart to Taylor. In
looking to the essence of the transaction, it is clear
that the quid pro quo was not the release of the judgment
lien but rather an extension of time due Hart within
which to make payment to Taylor. Such payment has not
been made and no material facts exist to support Hart's
.
nonpayment of his obligation to Taylor.
Accordingly, the evidence does not support the defense of
failure of consideration. Hart received adequate consideration
from Taylor. We affirm the District Court grant of summary
judgment in favor of Taylor.
HART V. NIMMICKS
Hart raises a number of issues in his lawsuits with Nimmicks
in cause nos. 66726 and 71128. Both of these cases involve
numerous motions, orders, affidavits and depositions. In order to
sift through the legal quagmire involved in this appeal, we find
it necessary to first discuss Hart's cause of action against
Nimmicks in cause no. 66726.
On April 10, 1987, Hart filed his complaint in cause no. 66726
against Nimmicks, among others, seeking rescission of the Terrace
purchase agreement and punitive damages for fraud and
misrepresentation in his purchase of Terrace. Hart's complaint
alleged that defendant realtor Sam Martin fraudulently induced him
to purchase Terrace. Hart also alleged that the Nimmicks were
liable for the acts of Martin because (1) Martin was acting as
their agent, and (2) the Nimmicks were partners with Martin. He
made no allegation that the Nimmicks acted improperly. The
Nimmicks denied allegations that Martin acted as their agent. They
also supported their denial with affidavits, in which the Nimmicks
established that they did not employ Martin as their real estate
agent, nor gave him the authority to act as their real estate
agent, in connection with Hart's purchase of Terrace.
12
The Nimmicks moved for summary judgment on April 15, 1988.
Later, on November 7, 1988, the District Court granted the
Nimmicksl motion for summary judgment. The District Court found
no agency relationship between the Nimmicks and Martin.
Furthermore, the court found that any misrepresentations made to
Hart occurred in 1985 when Martin was employed by the Wrights. The
court found no fraud or misrepresentation on the part of the
Nimmicks. After the District Court's summary judgment order, the
Nimmicks sewed a Notice of Entry of Order upon Hart's counsel on
November 16, 1988. The record reveals that the Nimmicks failed to
enter a final judgment with the District Court.
Whether the District Court erred in finding no
misrepresentation and fraud on the part of the Nimmicks.
On appeal, Hart argues the District Court overlooked facts
which link the Nimmicks to the alleged fraud and misrepresentation
in the sale of Terrace. Specifically, Hart claims the District
Court disregarded his affidavit, showing the Nimmicksl fraudulent
conduct and subsequent motion to amend the pleadings to conform to
his filed affidavit. However, there was no allegation of
misconduct by Nimmicks in the complaint and their was no proper
motion to amend that complaint. A review of the records reveal
that Hart, in his responsive brief stated, "Plaintiff demands that
the pleadings be amended to reflect the facts set forth in the
affidavit of the parties."
The District Court properly ignored Hart's udemandvl amend
to
his pleadings. In order to amend a pleading under Rule 15(a) or
Rule 15 (b), M.R. Civ.P., a party must file an appropriate motion,
and brief accompanying that motion. Rule 2 (a), Uniform District
Court Rule. I1Failure to file a brief in five days by the moving
party shall be deemed an admission that the motion is without
merit.I1 Rule 2(b), Uniform District Court Rules. Here, Hart did
not properly file a motion to amend his pleadings. He attempted
to amend his pleadings in his responsive brief. Hart's demand in
his responsive brief does not remotely resemble a proper motion,
and Hart also failed to file a brief as required under Rule 2(a).
Aside from Hart's attempt to amend his pleadings, Hart's
affidavit itself does not support his allegations of fraud and
misrepresentation on the part of the Nimmicks. In his affidavit,
Hart claims Fred Nimmick made a misrepresentation directly to him.
Specifically, Hart stated in his affidavit:
10. At this time Fred Nimmick told Hart that the income
from the trailer was there, reaffirming what Martin told
Hart ;
13. The representation of Fred Nimmick was not true, and
this was a direct representation made by Nimmick to Hart
in conjunction with representations made to Hart by
Martin, on behalf of the Nimmicks, after Wright's
interest in the park had been terminated.
These statements are directly contrary to allegations Hart
made in his complaint and deposition. In his deposition, Hart
stated that the information he relied on in purchasing his interest
in Terrace was the listing agreement by which the Wrights employed
Martin as the real estate agent. Hart also testified that the
.
Wrights and Martin made the statements on which he relied in
purchasing Terrace. Moreover, Hart admitted that the only writing
he relied on was a listing agreement between the Wrights and
Martin.
Hart stated in his deposition that the only representation of
the Nimmicks was that the trailer park had good value. In his
affidavit, he contradicted his deposition testimony and maintains
that the Nimmicks also stated that all the trailers were in good
condition and income producing. The Nimmicksl alleged statements
to Hart do not support a cause of action for misrepresentation.
In order for Nimmickls statements to constitute misrepresentation,
Hart needed to rely on those statements to his detriment. There
is nothing in Hartls affidavit, or in his complaint which indicate
that Hart relied on the statements allegedly made by the Nimmicks
in his purchase of Terrace. Hart's affidavit and complaint and the
District Court record do not support Hart's claim of fraud and
misrepresentation against Nimmicks. Accordingly, the District
Court properly found no fraudulent conduct or misrepresentations
by the Nimmicks.
Whether the District Court erred in collaterally estopping
Hart from raising the issues of rescission and misrepresentation
concerning his purchase of Terrace.
On September 20, 1989, the Nimmicks moved for summary judgment
on their promissory note complaint, and Hart counterclaimed
rescission based on misrepresentation. The District Court granted
partial summary judgment to Nimmicks, and found that Hart was
collaterally estopped from raising claims of rescission and
misrepresentation since both of these claims had been adjudicated
in District Court in cause no. 66726.
Hart argues that the District Court improperly applied the
doctrine of collateral estoppel because the court never entered a
final judgment in cause no. 66726. Hart reminds this Court that
a final judgment is one of the necessary elements of collateral
estoppel. Hart is correct that the District Court never entered
a final judgment. The record shows only an order of summary
judgment and a subsequent Notice of Entry of Order.
We could at this stage remand this issue to the District
Court, since the parties failed to enter a final judgment. A
remand on this issue, however, would further delay the adjudication
of this case, and unreasonably burden the District Court. This
Court turns to its equitable powers to resolve this dilemna of
hearing an issue without the necessary final judgment. Under our
equity jurisdiction, "We have a duty to determine all of the issues
of this case and do complete justice." Peterson v. Montana Bank
of Bozeman (1984), 212 Mont. 37, 49, 687 P.2d 673, 679. Our duty
to decide equitable issues, such as whether collateral estoppel
applies, is defined in section 3-2-204(5), MCA. Under this
section, this Court has the power in equity cases and in matters
or proceedings of an equitable nature, to review all questions of
fact arising on the evidence presented in the record, and to
determine the same. Section 3-2-204(5), MCA; Carpenters-Emp. Ret.
Tr. v. Galleria Partnership (1989), 239 Mont. 250, 265, 780 P.2d
608, 617. Hart's counterclaim for rescission was an equitable
defense. 17A Am.Jur.2d 1 540 Contracts.
Under our equitable jurisdiction power we will decide the
issue of collateral estoppel, despite the fact the parties did not
enter a final judgment. It would be inequitable to remand this
issue back to the District Court, especially in light of the fact
that the record reveals no evidence of misrepresentation by the
Nimmicks, and no support for Hart's claim of rescission. We would
be remiss in our duty to "do complete justicew if we failed to
resolve the issue of collateral estoppel.
As the District Court properly noted in its order:
The doctrine of collateral estoppel bars litigation of
an issue if (1) the issue decided in a prior adjudication
was identical with the one presented in the action at
bar; (2) the Court in the prior adjudication issued a
final judgment on the merits; and (3) the party against
whom the collateral estoppel is asserted was a party or
had privity with a party in the prior action. Aetna Life
and Casualty Insurance Co. v. Johnson (1984), 207 Mont.
409, 673 P.2d 1277, 1279.
Applying this test to the facts in this case, it is clear that
collateral estoppel bars Hart from raising the issues of rescission
and misrepresentation. These issues were fully litigated by the
parties in cause no. 66726.
Despite the fact that the issue of rescission was previously
litigated in the earlier District Court case, Hart attempts
resurrect the issue of rescission by now arguing rescission based
on failure of consideration and breach of contract. A review of
Hart's allegations reveals nothing new from what he alleged in
Cause no. 66726. Hart is once again alleging misrepresentations
which were previously found to have no basis in fact.
IV.
Whether the District Court erred in dismissing Hart's
affirmative defense of accord and satisfaction.
In his answer, Hart raised accord and satisfaction as an
affirimative defense. Hart's answer stated:
The complaint in this case must be dismissed since the
claims upon which it is founded are not enforceable
because of an accord and satisfaction.
A review of the facts reveal that the District Court properly
denied Hart's defense of accord and satisfaction. On February 28,
1989, in a letter from the Nimmicks' attorney, Robert Marcott, to
Hart's attorney, Terry Wallace, the Nimmicks made an offer to
settle their claims against Hart for $5,000 plus attorney fees of
$3,541.25. Marcott set a March 15, 1989 deadline payment of the
Sometime thereafter Hart called Marcott, and offered the deed
to his house in lieu of the Nimmicksf foreclosure on his home. In
an affidavit, Hart maintains that the parties orally agreed over
the telephone that "the Nimmicks' claim would be settled by the
payment of money if the Nimmicksf agreed, and that if they did not,
it would be settled by them relinquishing their claim and me
signing my house over to them ... II
By letter dated May 4, 1989, Marcott wrote to Wallace,
rejecting Hart's offer of a deed to his home in lieu of
foreclosure, and enclosed a key Hart apparently had left at
Marcottfs office.
Now, Hart claims the Nimmicks created an accord through the
oral agreement between Hart and Marcott. Furthermore, Hart claims
that the Nimmicks failed to satisfy the new accord between the
parties. The Nimmicks contend their offer on February 28, 1989,
set the parameters of settlement including a deadline for payment
of March 15, 1989. The Nimmicks maintain there was no accord, so
there could not have been an accord and satisfaction.
The original promissory note between the parties was a written
contract. "A contract in writing may be altered by a contract in
writing or by an executed oral agreement. Section 28-2-1602, MCA.
The parties never signed a new written contract, but Hart alleges
the parties formed an oral agreement to change and modify the terms
of the promissory note. As we stated in Stoddard v. Gookin (1981),
191 Mont. 495, 503, 625 P.2d 529, 534, "An oral agreement altering
a written agreement is not an 'executed oral agreementf within the
statute [§ 28-2-1602, MCA] authorizing modifications of written
contracts by an executed oral agreement unless its terms have been
fully performed, and performance on one side is not sufficient."
In this case, the terms of the alleged oral agreement were not
fully performed. By their attorney's letter dated May 4, 1989, the
Nimmicks established that they would not accept a deed in lieu of
foreclosure as a modification of their promissory note. Clearly,
the oral agreement was not executed and thus the contract
(promissory note) was never properly altered by the parties.
The District Court reviewed the evidence and correctly
determined that the written agreement between the Nimmicks and Hart
had not been altered by an executed oral agreement, and that there
was no accord and satisfaction.
Whether the District Court erred in finding that the Nimmicks
had no obligation to mitigate their damages.
In the past, we have held ''that a non-defaulting party in a
contractual arrangement must act reasonably under the circumstances
so as not to unnecessarily enlarge damages caused by the default."
IFG Leasing Co. v. Schultz (1985), 217 Mont. 434, 437, 705 P.2d
576, 577; Diede v. Davis (1983), 203 Mont. 205, 214-215, 661 P.2d
In this case, Hart argues that the Nimmicks failed to mitigate
their damages by not purchasing his home at the foreclosure sale.
Hart claims that Nimmicks as the junior lienholders, should have
bought his house and then in turn sold it at the best possible
price. Hart maintains there was enough equity in his home after
City Federal Savings Bank (first lienholder) was paid to discharge
completely any obligation Hart had to the Nimmicks. Hart also
claims, relying on IFG Leasinq, 705 P.2d at 577, that the question
of mitigation is a material issue of fact not susceptible to a
motion for summary judgment. Nimmicks maintain Hart's bare
assertions are insufficient to defeat a motion for summary judgment
and that Hart has failed to produce any evidence to support his
allegations that he had equity in his home prior to the City
Federal foreclosure.
After reviewing the record, we find the Nimmicks did not
violate the principle of reasonable mitigation of damages. There
is no evidence that there existed enough equity in the home after
City Federal's foreclosure to cover the Nimmicksl lien. Hart's
assertions of equity come from his conclusory affidavit. Hart
never introduced any evidence concerning the foreclosure sale price
of his home, and whether that sale price in turn covered City
Federal's lien and the Nimmicksl lien. Instead, Hart simply
asserts there was equity in his property to cover his debt to the
Nimmicks. Hart's bare assertions are insufficient to defeat a
motion for summary judgment.
Furthermore, if Hart believed there was equity in the house,
he could have recaptured his equity by buying his home at the
foreclosure sale. As the District Court properly noted in its
order:
[A] plaintiff is not under a duty to mitigate damages if
the other party, who had the duty to perform under the
contract, had equal opportunity to perform and equal
knowledge of the consequences of nonperformance. 22
Am.Jur.2d 1 508, p. 591. In this case, it is the Court's
opinion that Defendant had equal opportunity and equal
knowledge of the consequences of his defaulting
promissory note.
Hart has failed to show any genuine issue of material fact in
support of his allegations that the Nimmicks failed to reasonably
mitigate their damages. Therefore, the District Court properly
entered summary judgment in favor of Nimmicks on the issue of
failure to mitigate damages.
Whether the District Court erred in dismissing Hart's
counterclaims.
Hart advanced two counterclaims in his answer, one for
tortious interference with business relationships and the other for
the loss of his house. Both of these claims accrued on or after
May 19, 1989, when City Federal foreclosed on Hart's home.
Nimmicks argue that Hart's counterclaims are barred by the
doctrine of collateral estoppel, which the Nimmicks claim arose as
a result of the November 7, 1988, District Court order in cause no.
66726.
That argument fails because of the timing of the events. A
judgment can bar claims in existence at the time the judgment was
entered, but it cannot bar claims that arise after its entry.
Here, Hart's two counterclaims arose after the foreclosure sale in
May, 1989. These counterclaims accrued after the November 7, 1988
District Court order, and therefore this order could not have
preclusive effect on Hart's counterclaims.
The District Court's order does not address Hart's
counterclaims of tortious interference with business relationships
and loss of his house. After reviewing the record, we find little
evidence to support these counterclaims. Nevertheless, they are
not barred by the District Court's November 7, 1988 order and the
District Court on remand should entertain Hart's counterclaims.
However, unless Hart produces evidence in support of his claims,
Rule 11 sanctions should be considered by the District Court.
Accordingly, we affirm the District Court's summary judgment
orders, with the exception of Hart's two counterclaims. Taylor and
Nimmicks are entitled to an award of attorney fees and costs
including those incurred on appeal.
Fees and costs on Hart's counterclaims shall be decided
separately.
We Concur: /