No. 01-094
IN THE SUPREME COURT OF THE STATE OF MONTANA
2003 MT 9N
RALPH ANDERSON and CAPITAL FORD SALES, INC.,
Plaintiffs and Respondents,
v.
DUGAN ANDERSON, TERRY LEA LANE, CAPITAL
IMPORTS, INC., and WILD WEST MOTORS, INC.,
d/b/a BIG MOUNTAIN TOYOTA,
Defendants and Appellants.
********************************
DUGAN ANDERSON, TERRY LEA LANE, CAPITAL
IMPORTS, INC., and WILD WEST MOTORS, INC.,
d/b/a BIG MOUNTAIN TOYOTA,
Counterclaimants,
v.
RALPH ANDERSON and CAPITAL FORD SALES, INC.,
Counterdefendants.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis and Clark,
Honorable James E. Purcell and Honorable Ed McLean, Presiding
COUNSEL OF RECORD:
For Appellants:
Douglas J. Wold and Leslie Ann Budewitz, Wold Law Firm, PC.,
Polson, Montana
For Respondents:
Ross W. Cannon, Cannon & Sheehy, Helena, Montana
Submitted on Briefs: August 23, 2001
Decided: January 23, 2003
Filed:
__________________________________________
Clerk
Justice Jim Rice delivered the Opinion of the Court.
¶1 Pursuant to Section I, Paragraph 3(c) Montana Supreme Court
1996 Internal Operating Rules, the following decision shall not be
cited as precedent but shall be filed as a public document with the
Clerk of the Supreme Court and shall be reported by case title,
Supreme Court cause number and result to the State Reporter
Publishing Company and to West Group in the quarterly table of
noncitable cases issued by this Court.
¶2 Ralph Anderson and Capital Ford Sales, Inc. (collectively
“Ralph”), sued to collect on loans extended to his son Dugan
Anderson, daughter-in-law Terry Lea Lane and his son’s business
enterprises (collectively “Dugan”). On summary judgment, the First
Judicial District Court, Lewis and Clark County, ordered Dugan to
pay loan balances with interest and Ralph’s court costs and
attorney fees. We affirm in part, reverse in part, and remand for
further proceedings consistent with this opinion.
FACTUAL AND PROCEDURAL BACKGROUND
¶3 Ralph Anderson purchased the Ford dealership in Helena,
Montana, from his father and for nearly 40 years owned and managed
Capital Ford Sales, Inc. (“Capital Ford”). Dugan Anderson worked
with his father from 1977 until 1982 when he acquired Wild West
Motors, Inc. (“Wild West Motors”), which conducted business as Big
Mountain Toyota in Kalispell, Montana. To obtain financing for the
purchase of the Kalispell dealership, Dugan’s father, mother and
grandmother co-signed Dugan’s bank loans. In 1984, Dugan and Ralph
jointly purchased the Nissan and Mazda dealerships in Helena,
renamed as Capital Imports, Inc. (“Capital Imports”), and held 51
2
percent and 49 percent interests, respectively. Again, Ralph co-
signed the loans from Norwest Bank of Helena for the purchase of
the dealership.
¶4 By 1987, financial difficulties at Wild West Motors required
Dugan to seek Ralph’s support in refinancing the dealership’s
loans, which then were held by Norwest Bank of Kalispell. Capital
Imports and Capital Ford were also in financial distress at this
time. Dugan, Ralph and other family shareholders in the three
dealerships entered into a Settlement, Forbearance and Liquidation
Agreement with Norwest Bank on December 8, 1987, which allowed time
for the parties to obtain new financing. By the end of the month,
Ralph arranged for a loan of $1,327,000 to Capital Ford from Ford
Motor Credit Corporation (“Ford Credit”), a portion of which was
disbursed to Dugan and his business enterprises in three separate
loans totaling $506,574.42. In his capacity as the president of
Wild West Motors and Capital Imports, Dugan signed promissory notes
to Capital Ford for two business loans in the amounts of
$141,861.14 and $288,812.30. Ralph also claims that he loaned
$75,900.98 from the Capital Ford account to Dugan personally.
Dugan, and his wife, Terry Lea Lane, executed personal guarantees
for each note, although no promissory note or guaranty evidenced
the personal loan.
¶5 After the acquisition of Capital Imports by Ralph and Dugan in
1984, Dugan frequently traveled between the Kalispell Toyota and
Helena Nissan/Mazda dealerships. Dugan also worked on a consulting
basis with Capital Ford, which was managed at that time by his
3
brother, David Anderson. In April 1989, Capital Ford purchased the
assets of Capital Imports and merged inventory and sales at one
location. Dugan continued to divide his time between Helena and
Kalispell until early 1991 when he relocated to Helena to assume
full-time management of the combined Nissan/Mazda and Ford
dealerships.
¶6 In January 1994, Ralph and Dugan signed a Memorandum of
Understanding (MOU) that outlined the process by which Dugan could
purchase the Helena dealerships and take full control of all
operations. In his deposition testimony, Dugan characterized his
working relationship with Ralph as “difficult.” In March 1995,
Dugan left Helena and resumed full-time management of Big Mountain
Toyota in Kalispell. Ralph stepped in to manage Capital Ford on a
full-time basis and began negotiations to sell the dealership to a
third party.
¶7 The action subject to this appeal was initiated on December
22, 1995, when Ralph filed a Complaint alleging that Dugan
defaulted on three 1987 loans from Capital Ford and failed to
transfer to Ralph a promised share of Wild West Motor stock. Ralph
sought payment of the loan balances with interest from the dates of
default, plus attorney fees and court costs, as provided in the
loan agreements. After numerous district court judges recused
themselves, the court appointed Honorable James E. Purcell to
preside over the matter.
¶8 An Amended Complaint, filed on April 16, 1996, enumerated
four Counts, which we summarize as follows:
4
Count I: $141,861.14 loan to Wild West Motors, Inc.,
dated December 23, 1987, used to pay debts at Norwest
Bank of Kalispell and to provide the dealership with
working capital. Loan in default as of June 1, 1995,
with an unpaid balance of $60,614.21 plus interest.
Count II: $288,812.30 loan to Capital Imports, Inc.,
dated December 23, 1987, used to pay the debts at Norwest
Bank of Helena and to provide the dealership with working
capital. Loan in default as of February 28, 1989, with
an unpaid balance of $181,963.00 plus interest.
Count III: Demand for the transfer of 39 percent of Wild
West Motors stock from Dugan to Ralph in exchange for
financial support extended by Ralph and Capital Ford in
accordance with an oral agreement.
Count IV: $75,900.98 loan to Dugan, personally, on
December 23, 1987, used to pay Norwest Bank of Kalispell
the balance due on the Wild West Motors stock purchase
and to reduce the mortgage on Dugan’s home. No payments
ever received, with full amount due plus interest.
¶9 Dugan admitted in his Amended Answer that he had not paid the
loan obligations in full, but raised various defenses and
counterclaims. Admitting an unpaid balance of $57,863.62 on the
Count I loan to Wild West Motors, Dugan argued that this debt was
forgiven by Ralph as consideration for Dugan’s release of all
claims against Ralph for the sale of the combined Capital
Ford/Capital Imports dealership to a third party in February 1997
without regard for the 1994 MOU for Dugan’s purchase of the
business. Regarding the Count II loan to Capital Imports, Dugan
asserted that any outstanding obligation had been assumed by
Capital Ford when the two entities merged in 1989. Dugan denied he
promised to transfer any Wild West Motor stock to Ralph, as claimed
by Count III. Dugan answered that the Count IV loan was used to
5
purchase Capital Imports stock rather than Wild West Motors stock.
He asserted that Capital Ford assumed liability for the
outstanding balance of that portion of the Count IV loan that went
to the stock purchase when Capital Ford bought the assets and
assumed the liabilities of Capital Imports. Dugan counterclaimed
for loss of business opportunities, constructive discharge and
other damages resulting from Ralph’s alleged breach of the 1994
MOU.
¶10 Ralph was deposed by opposing counsel in April 1997. The
parties entered settlement negotiations and filed one stipulation
with the District Court on May 27, 1997. The stipulation stated
that the pretrial order would include the affirmative defenses of
statute of limitations and laches against Ralph’s Count III claim.
In July 1997, Ralph’s attorneys advised the court by letter that
the parties had agreed to eliminate three counts from the Amended
Complaint. Later that month, Dugan’s attorneys affirmed in another
letter to the judge that only one count and the counterclaims
remained for trial. In August 1997, Ralph dismissed his attorneys
and the court vacated the trial date to allow Ralph time to obtain
new counsel. With new counsel representing Ralph, the parties
proceeded with discovery and Dugan’s deposition was taken in July
1998.
¶11 In June 1999, Ralph moved for partial summary judgment on
Counts I, II and IV and dismissal of Dugan’s counterclaims. Dugan
objected and moved for partial summary judgment on Counts II, III
and IV. The parties presented oral arguments in August 1999. The
6
court directed the parties to arrange for a formal settlement
conference, which was held in February 2000 and followed by a
telephone conference. Both attempts proved unsuccessful. The
parties then filed proposed findings of fact and conclusions of
law.
¶12 By summary judgment on November 20, 2000, the District ruled
in favor of Ralph on Counts I, II, and IV, and dismissed Count III
for violation of the statute of limitation. The court dismissed
Dugan’s cross-motion for partial summary judgment and each of his
counterclaims. The Order directed Ralph to file affidavits
calculating accrued interest and supporting his request for
attorney fees on Counts I and II. On the same day, the Honorable
James E. Purcell recused himself from the case in anticipation of
stepping down from the bench. On November 29, 2000, Ralph filed a
motion for entry of judgment with affidavits documenting interest
accrual, court costs and attorney fees. Judge Purcell signed the
judgment nunc pro tunc on December 1, 2000, and assessed Dugan
$100,897.62 in fees for Ralph’s attorneys. Dugan immediately filed
for relief from judgment, arguing that the court afforded him
insufficient time to file a brief in response to Ralph’s motion for
entry of judgment and that the amount of attorney fees was
unreasonable. The Honorable Edward P. McLean assumed jurisdiction
on December 11, 2000. Judge McLean denied Dugan’s motion for
relief and assessed an additional $1,231.90 in fees.
¶13 We restate the issues raised by Dugan on appeal as follows:
7
¶14 Issue 1. Did the District Court err by granting summary
judgment to Ralph and dismissing Dugan’s counterclaims?
¶15 Issue 2. Did the District Court err by declining to enforce a
settlement agreement?
¶16 Issue 3. Did the District Court err by relying on
inadmissible evidence?
¶17 Issue 4. Did the District Court err by entering judgment
before Dugan responded to the motion for entry of judgment?
¶18 Issue 5. Did the District Court abuse its discretion by
awarding unreasonable attorney fees?
STANDARD OF REVIEW
¶19 Our standard of review for a district court’s order granting
summary judgment is de novo, using the same Rule 56, M.R.Civ.P.,
criteria applied by the district court. Abraham v. Nelson, 2002
MT 94, ¶ 9,
309 Mont. 366, ¶ 9,
46 P.3d 628, ¶ 9. We look to the
pleadings, depositions, answers to interrogatories, admissions on
file, and affidavits to determine the existence or nonexistence of
genuine issues of material fact. Erker v. Kester,
1999 MT 231, ¶
17,
296 Mont. 123, ¶ 17,
988 P.2d 1221, ¶ 17.
¶20 Summary judgment is an extreme remedy which should be granted
only when there is no genuine issue as to any material fact and the
moving party is entitled to judgment as a matter of law. Lee v.
USAA Casualty Insurance Co.,
2001 MT 59, ¶ 25,
304 Mont. 356, ¶ 25,
22 P.3d 631, ¶ 25. The party seeking summary judgment, therefore,
has the burden of demonstrating a complete absence of any genuine
factual issues. Lee, ¶ 25. The party seeking summary judgment
8
also must overcome the burden that all reasonable inferences that
might be drawn from the offered evidence will be drawn in favor of
the party opposing summary judgment. Lee, ¶ 25.
¶21 Where the moving party is able to demonstrate that no genuine
issue as to any material fact remains in dispute, the burden shifts
to the party opposing the motion. Lee, ¶ 26. This burden shift
requires that the opposing party present material and substantial
evidence, rather than merely conclusory or speculative statements,
to raise a genuine issue of material fact. Lee, ¶ 26.
¶22 This Court has routinely stated that the purpose of summary
judgment is to eliminate unnecessary trials, but that summary
adjudication should “never be substituted for a trial if a material
factual controversy exists.” Boyes v. Eddie, 1998 MT 311, ¶ 16,
292 Mont. 152, ¶ 16,
970 P.2d 91, ¶ 16 (citation omitted).
Because the practical result of applying the summary judgment
remedy is to deprive the party against whom judgment is granted of
a trial in the usual course, the remedy should be used only in
those cases in which the justice of its application is clear.
Issue 1.
¶23 Did the District Court err by granting summary judgment to
Ralph and dismissing Dugan’s counterclaims?
¶24 Dugan first claims that the District Court committed
reversible error by adopting the findings of fact and conclusions
of law prepared by Ralph. This assertion is not supported by the
law.
¶25 Rule 52(a), M.R.Civ.P., states, in pertinent part:
9
The court may require any party to submit proposed
findings of fact and conclusions of law for the court’s
consideration and the court may adopt any such proposed
findings and conclusions so long as they are supported by
the evidence and law of the case.
¶26 We have held that a court’s adoption of the findings and
conclusions presented by the prevailing party is not grounds for
reversal. In re Marriage of Nikolaisen (1993), 257 Mont. 1, 5,
847 P.2d 287, 289. Instead, we examine whether the findings are
sufficiently comprehensive, pertinent and supported by substantial
evidence to provide a basis for the decision. Nikolaisen,
257
Mont. at 5,
847 P.2d at 289 (citing In re Marriage of Hurley
(1986),
222 Mont. 287, 296,
721 P.2d 1279, 1285).
¶27 The District Court resolved this case by adopting, virtually
verbatim, the findings of fact and conclusions of law prepared by
Ralph. While the court’s findings are sufficiently comprehensive
and pertinent, the court employed an incorrect legal standard for
summary judgment. Rather than ascertaining whether genuine issues
of material fact remained, the court’s Findings of Fact,
Conclusions of Law and Order reveal that the court weighed the
evidence to reach conclusions supported by substantial, but
nonetheless disputed, evidence.
¶28 The claims asserted in this action arise from a complicated
series of financial transactions spanning many years and
encompassing the purchase and operation of three car dealerships
and the merger and sale of two. While the District Court’s
wholesale adoption of the plaintiffs’ proposed findings and
conclusions does not, in and of itself, constitute reversible
10
error, the importation of an incorrect legal standard resulted in
an incorrect analysis. Using the de novo standard of review
outlined above, we have examined the record on appeal to determine
whether the moving party was entitled to summary judgment as a
matter of law.
Count I
¶29 Ralph presented an executed promissory note from Capital Ford
to Wild West Motors and a signed guaranty to document the 1987 loan
to Dugan in the amount of $141,861.14. Ralph alleged in his
Amended Complaint that the loan was in default as of June 1995.
Dugan admitted an unpaid balance of $57,683.62. Consequently,
Ralph met his initial burden of demonstrating the undisputed
existence of a $57,683.62 debt.
¶30 The burden then shifted to Dugan to demonstrate by more than
mere denial, speculation or conclusory statement that a genuine
issue of material fact existed to preclude summary judgment. Dugan
raised the affirmative defense of accord and satisfaction, claiming
that Ralph had promised to forgive the debt in exchange for Dugan’s
forbearance in exercising his interest in purchasing Capital Ford
under the terms of the MOU. When Dugan learned in 1995 that Ralph
was engaged in negotiations for the sale of the Helena dealership
to a third party, Dugan stated that he twice wrote to Ralph’s
attorney and presented two forbearance offers. The attorney
forwarded Dugan’s letters to Ralph, but the record contains no
evidence that Ralph responded to Dugan’s offers. Dugan presented
no evidence that the Count I obligation was released by Ralph or in
11
any way connected to the MOU. Because Dugan failed to offer
factual support for his defense of accord and satisfaction, his
admission that the unpaid balance on the Count I loan was
$57,863.62 stands as uncontroverted fact.
¶31 Dugan also asserts on appeal that the Count I debt should be
set off against the damages resulting from Ralph’s alleged breach
of the MOU. However, Dugan’s counterclaim for breach of contract
must be established before set off may be considered. We affirm
the District Court’s grant of summary judgment in Ralph’s favor on
Count I.
Count II
¶32 Ralph and Dugan both moved for summary judgment on Count II,
and the District Court ruled in Ralph’s favor. To meet his initial
burden, Ralph presented a promissory note documenting the 1987 loan
by Capital Ford to Capital Imports in the amount of $288,812.30,
together with a signed guaranty. Ralph asserted that the loan was
in default as of February 1989, with an unpaid balance of
$181,963.00. He stated that he received no payments on the loan
after the sale of Capital Imports and that he never forgave the
debt.
¶33 Dugan countered in his Amended Answer that “the obligation of
Capital Imports was satisfied at such time as the business of
Capital Imports was merged with Capital Ford, and in consideration
of that transaction.” He argued that Capital Ford assumed
liability for the Count II loan as part of its acquisition of
Capital Imports in 1989 and, when Capital Ford paid off Ford Credit
12
in full after the asset sale, Dugan’s liability as a guarantor was
extinguished. To substantiate his argument, Dugan cited his
affidavit, where he stated:
Capital Ford purchased Capital Imports in 1989, assuming
all liabilities, including the debts alleged in Counts II
and IV. Capital Imports is no longer a going concern.
After the purchase, Capital Imports made no further
payments or distributions.
Dugan also cited the following excerpt from his deposition
testimony:
MR. CANNON [attorney for Ralph]: This $288,812.30 is
still owing to Capital Ford Sales? You haven’t paid it?
A. [DUGAN]: Well, I think if you get the document that
was prepared–the sale document between Capital Ford and
Capital Imports–you will find that the note was assumed
by Capital Ford.
Q. That’s this contract of sale that you’re speaking of,
I assume?
THE DEPONENT: You know, I think we have covered this
territory previously, but I don’t know–I don’t know where
to look for it.
MR. WOLD [attorney for Dugan]: I think your answer is
just fine.
THE DEPONENT: Okay.
MR. CANNON: Are you saying that there should be an
instrument somewhere that in–in which it specifically
says that Capital Ford Sales forgives indebtedness?
A. I believe this instrument (indicating)–
Q. Says that somewhere?
A. No. There is no forgiveness. They took it–They took
it over.
Q. And therefore it’s no longer a debt owing from you to
Capital Ford Sales; is that your position?
A. I believe that’s how it’s handled, yes.
13
¶34 The First Amended Contract for Sale of Assets of Capital
Imports to Capital Ford (“Contract for Sale”) states that the
transfer was to be “free of all debts and encumbrances except those
expressly assumed.” The Contract purchase price was $857,107.05,
which equaled the listed value of the assets sold. Capital Ford
also expressly assumed $973,207.00 in liabilities from Capital
Imports as part of the acquisition. The list of existing creditors
attached to the Contract for Sale included a $66,655.23 debt to
Capital Ford and two debts to Ford Credit in the amounts of
$572,900.05 and $290,502.00.
¶35 In 1987, Ford Credit provided the financing that permitted
Capital Ford and Ralph to make the loan to Capital Imports that is
the subject of Count II. While the Contract for Sale did not
specifically enumerate the outstanding balance on the Count II loan
as a liability on the list of existing creditors when the
dealerships merged, Dugan contends that this debt was subsumed
within the obligations to Ford Credit and Capital Ford that Capital
Ford expressly assumed.
¶36 We first examine whether either party successfully
demonstrated a complete absence of issues of material fact. While
Ralph’s sworn testimony that he did nothing to forgive Dugan’s
Capital Imports debt remained undisputed, Dugan raised the defense
of debt assumption, which Ralph denied. Dugan’s sworn assertion
that Capital Ford assumed the liability for the Count II debt by
executing the 1989 Contract for Sale conflicts with Ralph’s
contention that Capital Imports had no legal basis for ceasing to
14
make payments on the obligation when this merger with Capital Ford
occurred. The Contract for Sale’s inclusion of the debts that
existed between the two dealerships and with Ford Credit is subject
to interpretation and cannot be resolved given the conflict in the
parties’ sworn testimony. Therefore, we conclude that neither
party demonstrated an absence of genuine issues of material fact.
¶37 The District Court in its findings and conclusions
consistently mischaracterized Dugan’s position as an assertion that
the Count II obligation had been forgiven by Ralph. Debt
forgiveness and debt assumption are wholly different defenses
requiring different proofs. Whereas an obligation of a debtor is
released by a creditor only upon the acceptance of new
consideration or in writing, see § 28-1-1601, MCA, an obligation
may be transferred with the consent of the party entitled to its
benefits, see § 28-1-1002, MCA. Dugan maintained that Ralph’s
consent to the transferred liability for Capital Imports’ debt was
manifested by the Contract for Sale. However, the court overlooked
the legal theory propounded by Dugan, revealing its
misunderstanding of the dispute between the parties. As a result,
the court failed to hold Ralph to the requirement that he
demonstrate that all facts material to the substantive law raised
by Dugan’s defense were undisputed. We reverse the grant of
summary judgment in Ralph’s favor and remand Count II for trial.
Count IV
¶38 Both Ralph and Dugan also moved for summary judgment on Count
IV. Ralph alleged that Dugan defaulted on the entire $75,900.98
15
loan extended to Dugan personally from Capital Ford as part of the
disbursement of the Ford Credit recapitalization loan in 1987.
Ralph asserted that the personal loan to Dugan was used to pay-off
a $55,900.98 balance that remained on the note with Norwest Bank of
Kalispell that Ralph had co-signed in 1982 for the purchase of Big
Mountain Toyota. The remaining $20,000 of the personal loan was
used to reduce the mortgage on Dugan’s home. Because the Count IV
loan was not evidenced by a promissory note, Ralph attached various
financial records prepared by Capital Ford’s accountant to his
opening and reply briefs in support of his motion for summary
judgment. Dugan challenged each of these exhibits as
unauthenticated and inadmissible for lack of proper foundation.
¶39 In his Amended Answer Dugan acknowledged that he received the
Count IV personal loan in 1987 as part of the refinancing provided
by Ford Credit. However, he denied that he used the loan to pay-
off Norwest Bank of Kalispell for his Wild West Motors stock
purchase and instead asserted that he had used the money to pay-off
Norwest Bank of Helena for his 1984 Capital Imports stock purchase.
In his Amended Answer to the Count IV allegations, Dugan
explained:
In approximately 1984, Ralph Anderson and Dugan Anderson
jointly borrowed $75,000.00 from Norwest Bank for the
purpose of buying stock in Capital Imports, 51% of which
was for the benefit of Dugan Anderson, and 49% of which
was for the benefit of Ralph Anderson. This debt
obligation was assumed by Capital Ford at such time as
16
the business of Capital Imports was merged with Capital
Ford, and in consideration of that transaction.
By affidavit, Dugan declared:
I had borrowed money from Norwest for part of my purchase
of Capital Imports stock; the balance at the time of the
refinance was $55,900.98. I had also borrowed from
Norwest for part of the purchase of my home; the balance
at the time of the refinance was $20,000. As part of the
refinance, my note related to Capital Imports was
forgiven. I then paid off the home loan. All other
indebtedness by Ralph, my brother David, me, my wife,
Capital Imports, and Wild West to Norwest Bank was
released, with the exception of two smaller loans not at
issue here.
Dugan further asserted that the portion of the Count IV obligation
he used to purchase Capital Imports stock had been assumed by
Capital Ford as part of the 1989 acquisition and merger.
¶40 While Ralph failed to establish the purpose, disposition or
lack of payment on the alleged $75,900.98 obligation with
uncontroverted evidence, Dugan also failed to demonstrate an
absence of a genuine issue of material fact under his theories of
debt assumption, payment or forgiveness. For example, Dugan’s
sworn assertion that he paid the $20,000.00 home mortgage loan in
full does not trump Ralph’s sworn statement that Dugan never repaid
the obligation, when no other evidence supports either claim. On
cross-motions for summary judgment, both parties enjoy the benefit
17
of all reasonable inferences drawn from the evidence presented. We
conclude that neither party met their initial burden and that
genuine issues of material fact exist. We reverse the entry of
summary judgment in Ralph’s favor on the Count IV loan and remand
for trial.
18
Counterclaims
¶41 In his Amended Answer, Dugan counterclaimed for deprivation of
business opportunity and profit and deprivation of the right to
purchase Capital Ford under the terms of the MOU, which resulted
from Ralph’s breach of contract, misrepresentation and constructive
discharge of Dugan as general manager of Capital Ford. Dugan
contended that the sale of the Helena dealership to a third party
without a release from the terms of the MOU that obligated Ralph to
sell the business to Dugan entitles Dugan to reliance and
expectancy damages. Ralph moved for dismissal of all
counterclaims, which the District Court granted on summary
judgment.
¶42 The District Court excerpted Dugan’s deposition testimony at
length in its findings and conclusions. Dugan stated in his
deposition that he could not think of any actual business
opportunities that he had foregone as a result of his employment
with Capital Ford. Later, he neither supplemented nor contradicted
this testimony by affidavit or in his briefs. The court also
referenced Dugan’s deposition testimony regarding the circumstances
of his departure from the Helena dealership in March 1995.
Although Dugan declared that working with Ralph was untenable and
resulted in Dugan’s constructive discharge, Dugan also stated that
he could not think of any examples of acts or omissions by Ralph
that created an intolerable employment situation.
¶43 The District Court noted that the MOU for the purchase of
Capital Ford demanded that Dugan take affirmative action to carry
19
out the intent of the agreement. Before the MOU would compel Ralph
to surrender his operational authority and resign as an officer and
director, the agreement required Dugan to arrange for the transfer
of Capital Ford’s dealership sales and service agreements from
Ralph to Dugan, to obtain life insurance coverage for himself, and
to execute a stock redemption agreement with Ralph for the purchase
of Ralph’s interest. Dugan acknowledged in his deposition that he
did not apply for the transfer of the franchise agreements with
Ford Motor Company. He also stated that he and Ralph had discussed
the Capital Ford buy-out arrangements over the years, but had
reached no agreement.
¶44 Consequently, we conclude that the uncontroverted evidence
shows that Ralph met his burden of demonstrating the counterclaims
lack any basis in fact. Dugan presented no evidence in rebuttal
that supported his counterclaims or established a genuine issue of
material fact. Therefore, we affirm the District Court’s dismissal
of Dugan’s counterclaims by summary judgment.
Issue 2.
¶45 Did the District Court err by declining to enforce a
settlement agreement?
¶46 Dugan grounded his cross-motion for summary judgment on Counts
II and IV on an alternative theory that Ralph was “bound by [his]
counsel’s agreement to dismiss those counts.” The District Court
concluded that Counts II and IV were not effectively dismissed by
agreement. On appeal, this Court will affirm the court’s ruling
if the court reached the correct result, even if it did so for the
wrong reasons. Eschenbacher v. Anderson, 2001 MT 206, ¶ 40, 306
20
Mont. 321, ¶ 40,
34 P.3d 87, ¶ 40. See State v. Parker,
1998 MT
6, ¶ 20,
287 Mont. 151, ¶ 20,
953 P.2d 692, ¶ 20 (citation
omitted). In order for Dugan to prevail on his cross-motion for
partial summary judgment, he must demonstrate that no genuine issue
as to any material fact regarding the existence of a binding
agreement to settle the Count II and IV claims remains in dispute
and that he is entitled to judgment as a matter of law.
¶47 Dugan claims that Ralph’s counsel, Patrick Hooks, offered to
dismiss Counts II and IV without condition in April 1997, and
counsel for Dugan unconditionally accepted the offer. Ralph
counters that he never consented to a final settlement agreement,
regardless of his attorneys’ representations. Citing § 37-61-
401(1), MCA, as authority, Ralph argues that any agreement reached
by his attorney is not binding because no agreement was filed with
the clerk of the court or entered into the minutes of the court.
¶48 Section 37-61-401(1), MCA, states, in pertinent part:
An attorney and counselor has authority to: (a) bind his
client in any steps of an action or proceeding by his
agreement filed with the clerk or entered upon the
minutes of the court and not otherwise. . .
Years ago, this Court observed that “a literal construction [of the
above statute] would greatly retard the business of the court and
lead to absurd consequences. Every admission, consent or agreement
made in the course of the trial would either have to be reduced to
writing or filed with the clerk or by the clerk entered in his
minutes. It was never intended that the section should receive
such a construction.” State v. Turlok (1926), 76 Mont. 549, 563,
21
248 P. 169, 175 (citation omitted). In practice, § 37-61-401(1),
MCA, is applied solely to agreements between attorneys. State v.
Nelson (1991),
251 Mont. 139, 141,
822 P.2d 1086, 1087 (citing St.
Paul Fire & Marine Ins. Co. v. Freeman (1927),
80 Mont. 266,
274-75,
260 P. 124, 127; Bush v. Baker (1913),
46 Mont. 535,
544-46,
129 P. 550, 553-54). The purpose of the statute is to
relieve the presiding judge of the burden of determining disputes
between attorneys concerning their unexecuted agreements. Nelson,
251 Mont. at 141,
822 P.2d at 1087 (citing Bush,
46 Mont. at 540,
129 P. at 553).
¶49 An agreement to settle is binding if made by an unconditional
offer and accepted unconditionally. Hetherington v. Ford Motor Co.
(1993),
257 Mont. 395, 399,
849 P.2d 1039, 1042. The parties must
consent to all terms before a settlement agreement becomes binding.
In re Estate of Goick (1996),
275 Mont. 13, 23,
909 P.2d 1165,
1171. See also §§ 28-2-501 and -504, MCA. Because a settlement
agreement reached by the respective attorneys becomes binding on
the parties only when the parties consent to all terms, the
agreement is not one that exists solely between the attorneys and
need not be “filed with the clerk or entered upon the minutes of
the court” to be valid, as contemplated by § 37-61-401(1), MCA. In
this case, the existence of a binding agreement between Ralph and
Dugan to settle the Count II and IV claims may be demonstrated by
evidence of the unconditional acceptance of an unconditional offer
by the parties.
22
¶50 Dugan argues that Ralph’s acquiescence to the settlement
agreement is demonstrated by his deposition testimony, taken on
April 11, 1997, during which Ralph failed to protest his attorney’s
statement that Count II would be dismissed. The testimony reads:
Q. [MR. WOLD, attorney for Dugan]: Let’s move on to the
second claim, which is one for $288,812.30, which is,
according to the Complaint, the subject of a promissory
note attached to the Complaint as Exhibit C. For the
purposes of the record, I’ll ask whether you are going to
maintain that claim after this point? Either of you can
answer that.
MR. HOOKS [attorney for Ralph]: I’ll answer. The claim
will be dismissed.
Q. [By MR. WOLD]: So, as a result of that representation,
which I accept, I’m not going to ask any questions about
that claim. We’ve just saved ourselves quite a bit of
time.
A. [By RALPH]: And I’ve lost $282,000 [sic].
Q. [By MR. WOLD]: Well, let’s move on . . .
¶51 As further proof of settlement, Dugan stated that Hooks
confirmed the agreement to dismiss Counts II, III and IV in a
letter dated May 14, 1997. Although Dugan referenced a copy of
this May 14 letter as an attachment to his brief on cross-motion
for summary judgment, the letter is not included in the record on
appeal. By affidavit, Douglas J. Wold, Dugan’s attorney, stated
that Hooks offered to dismiss Counts II and IV without condition
and that Wold confirmed his clients’ acceptance of the offer on May
15, 1997. The affidavit continues, “Mr. Hooks and I agreed that no
written dismissal or release was necessary, and that instead, the
two counts would be omitted when the pretrial order was prepared.”
23
¶52 Another letter to Dugan’s attorney from Hooks, dated May 28,
1997, states that Ralph was willing to dismiss Counts II, III and
IV on the condition that Dugan disclaim any interest in Ford
Country, Inc., the real estate holding entity associated with
Capital Ford. No response to this offer is included in the record
and Dugan never asserted that he accepted this settlement proposal
unconditionally. Although no other settlement offer or evidence of
acceptance is in evidence, attorneys representing both parties
informed the District Court judge by mail in July 1997 that three
of the four counts had been eliminated from the litigation. These
letters do not indicate which counts were to be dropped and which
remained for trial.
¶53 Although the record includes various expressions of intent to
settle by both parties, evidence concerning the agreement and the
terms thereof are not consistent. By way of examples, the letters
between counsel and from counsel to the judge demonstrate that the
attorneys concurred that a settlement had been reached, which is
supported by the Wold affidavit, but a meeting of the minds on the
terms of the settlement is not demonstrated. The Wold affidavit
states that the parties’ settlement agreement was affirmed by May
15, 1997, yet Ralph sent Dugan another conditional offer to settle
two weeks later on May 28, 1997. The May 28 letter raises a
genuine issue of fact regarding Dugan’s claim that the parties had
reached an unconditional agreement prior to that date. We note
that Dugan did not file a motion to compel settlement following
Ralph’s dismissal of counsel in August 1997, but proceeded with
24
discovery. And, finally, the parties filed no pretrial order,
stipulation, motion for dismissal or amended pleading that
expressed an intention to delete Counts II or IV from the
litigation.
¶54 Therefore, we conclude that Dugan did not meet his burden by
demonstrating that an unconditional offer to settle was
unconditionally accepted. The factual dispute precludes summary
judgment as a matter of law, and the District Court was correct to
refuse to dismiss Ralph’s Count II and IV claims on the basis that
the parties had already settled the claims. We affirm the court’s
denial of Dugan’s cross-motion. Because we are reversing the entry
of summary judgment in Ralph’s favor on Counts II and IV, the issue
of a settlement agreement may be raised again upon remand.
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CONCLUSION
¶55 In conclusion, we reiterate that a court’s role on summary
judgment is not to weigh the evidence, which occurred here, but to
save all parties involved the expense and time of taking a case to
trial when no material issues of fact remain in dispute.
Uncontroverted evidence sustains the District Court’s grant of
summary judgment in favor of Ralph on Count I and dismissal of all
counterclaims. However, the record raises genuine issues of
material fact regarding Counts II and IV as well as the purported
agreement to settle these two claims. Additional proceedings are
required to resolve these matters.
¶56 We remand to the District Court without discussing the merits
of the final three issues. We reached our decision to reverse on
Counts II and IV without reference to the evidence challenged by
Dugan. Therefore, it is not necessary for us to decide whether the
District Court improperly considered unauthenticated exhibits that
were submitted without proper foundation. However, our holding
necessitates reversal of the District Court’s award of attorney
fees to Ralph, as the award was premised upon multiple claims that
Ralph had prevailed upon, two of which are now reversed and
remanded. Thus, the issue of attorney fees will need to be
resolved by further proceedings in the District Court.
¶57 Affirmed in part, reversed in part, and remanded for further
proceedings consistent with this opinion.
/S/ JIM RICE
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We concur:
/S/ KARLA M. GRAY
/S/ JAMES C. NELSON
/S/ JIM REGNIER
/S/ TERRY N. TRIEWEILER
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