Brandt v. Sande

Decision Date18 April 2000
Docket NumberNo. 99-160.,99-160.
Citation299 Mont. 256,2000 MT 98,1 P.3d 929
PartiesRussell H. BRANDT and Eileen A. Brandt, Plaintiffs and Appellants, v. Steve SANDE, an Individual d/b/a Land Title Services, Defendant and Respondent.
CourtMontana Supreme Court

Robert L. Johnson, Lewistown, Montana, For Appellants.

James L. Stogsdill, Lewistown, Montana, For Respondent.

JAMES C. NELSON delivered the Opinion of the Court.

¶ 1 Russell H. Brandt and Eileen A. Brandt (the Brandts) brought this action in the District Court for the Tenth Judicial District, Fergus County, to recover $20,000 lost in an investment alleging that Steve Sande (Sande), an escrow agent, negligently failed to disburse the money to them from a real estate closing. The District Court granted summary judgment in favor of Sande and imposed sanctions against the Brandts. The Brandts appeal and we affirm.

¶ 2 We address the following issues on appeal:

¶ 3 1. Whether the District Court erred in concluding that Sande was not presented with an equitable assignment of closing proceeds.

¶ 4 2. Whether the District Court erred in imposing sanctions upon the Brandts.

Factual and Procedural Background

¶ 5 In 1995, the Brandts invested in Esplanade, Inc., a condominium development corporation in Lewistown. Sande served as escrow agent for the closing of a real estate sale and purchase transaction between Gordon McGuire (McGuire), president of Esplanade, Inc., and the Joe and Vesta Wichman Family Trust (Wichman Trust).

¶ 6 On August 4, 1995, the Brandts gave Esplanade, Inc., a check for $20,000 in exchange for a promissory note signed by McGuire. The note read, in pertinent part:

These funds loaned to Esplanade, Inc. are due and payable with interest at the close of the Vesta Wichman suite, Esplanade # 203, on or about or possibly before October 15, 1995. The annual percentage rate of interest is 18%.
A Letter of Instruction concerning this Note will be sent to Land Title and a confirmation to Russell Brandt for the pay-off will be sent to the Brandts.

McGuire sent the letter referred to in the note to Linda Crimmins of Land Title Services (LTS) on August 11, 1995. It read:

At the Wichman closing, suite 203, on or about October 15, 1995 I want you to pay Russell Brandt $20,000.00 plus the accrued interest on that $20,000.00. I will advise you specifically at closing what the interest amount is.
Please send the Brandt's [sic] a letter of confirmation that this is in place.

Neither McGuire nor the Brandts forwarded a copy of the promissory note to LTS.

¶ 7 On August 18, 1995, LTS sent a letter to the Brandts acknowledging receipt of the August 11, 1995 instructions from McGuire. However, over two months later, on October 25, 1995, McGuire delivered a letter to LTS that read: "Per the Wichman escrow concerning the $20,000.00 due Russell Brandt at that closing, this letter hereby rescinds that instruction."

¶ 8 LTS received various payments relating to the Wichman condominium over the summer and fall of 1995. On July 10, 1995, LTS received $25,000 which was immediately disbursed to Esplanade, Inc. LTS also received $35,000 on October 23, 1995, and $6,670 on October 26, 1995. Pursuant to instructions from Esplanade, Inc., LTS disbursed checks on October 25, 1995, from the Wichman account to Esplanade, Inc., and United Building Center totaling $23,246.14.

¶ 9 Thereafter, on October 26, 1995, Esplanade, Inc., conveyed all interests in the condominium development to David Schlosser (Schlosser) who subsequently deeded the project to Esplanade of Central Montana, Inc. (ECMI). LTS disbursed $331.80 from the Wichman account for title insurance on October 30, 1995. A balance of $18,092.06 remained in the Wichman account until LTS disbursed this amount to ECMI in three separate payments made on December 26, 1995, January 11, 1996, and April 10, 1996.

¶ 10 On November 14, 1995, prior to the disbursement of these funds, the Brandts signed an agreement with Schlosser, the president of ECMI. The agreement expressly released and discharged any and all outstanding claims the Brandts held against Esplanade, Inc. The Brandts also signed a letter seemingly affirming McGuire's rescission of the instruction to disburse $20,000 plus interest to the Brandts from the Wichman closing. This new set of instructions read:

1. No distribution shall be carried out under earlier instructions from RUSSELL BRANDT, et. al.;
2. All prior instructions are hereby terminated and to be held for naught with no payments to be made through LAND TITLE SERVICES unless and until further instructions are given to you hereafter.

Copies of the new escrow instructions and the release agreement were mailed to LTS.

¶ 11 Almost two years later, on October 15, 1997, the Brandts, acting pro se, filed suit alleging that Sande and LTS negligently and wrongfully misapplied $20,000 from the Wichman escrow account. Service of process was not completed until 11 months later on September 16, 1998. Sande subsequently filed a Motion to Dismiss pursuant to Rule 12(b)(6), M.R.Civ.P., and requested that the court consider imposing sanctions against the Brandts under Rule 11, M.R.Civ.P., for signing and filing a frivolous complaint that was not warranted by existing law or fact and was not based on a good faith argument for the modification of existing law. In their reply brief, the Brandts attempted to show that sanctions were not appropriate in this case.

¶ 12 The District Court scheduled a hearing for December 1, 1998, on the motion for sanctions and the motion to dismiss, which had been converted to a motion for summary judgment. At the hearing, the parties presented oral argument on both motions.

¶ 13 On December 18, 1998, the District Court entered its order granting summary judgment in favor of Sande and imposing sanctions upon the Brandts. The Brandts moved to amend the order and submitted two additional affidavits and a brief for the court's consideration. The court denied all post-judgment motions, affirmed the order of sanctions against the Brandts, and set a date to hear the Brandts' objection to Sande's attorney's fees. At the hearing, the court determined that $4000 was a reasonable attorney's fee in this case. Thus, the court ordered that the Brandts pay Sande's attorney's fees in that amount as well as Sande's costs in the amount of $110.

¶ 14 The District Court issued final judgment on March 9, 1999. The Brandts now appeal the court's judgment as well as its December 18, 1998 and February 1, 1999 orders.

Issue 1.

¶ 15 Whether the District Court erred in concluding that Sande was not presented with an equitable assignment of closing proceeds.

¶ 16 The District Court determined that there was neither a valid assignment, nor legal notice of an assignment, to the Brandts of an interest in the proceeds from the Wichman closing. Hence, the court granted summary judgment in favor of Sande on the grounds that Sande owed no legal duty to the Brandts.

¶ 17 Our standard of review in appeals from summary judgment rulings is de novo. Oliver v. Stimson Lumber Co., 1999 MT 328, ¶ 21, 297 Mont. 336, ¶ 21, 993 P.2d 11, ¶ 21 (citing Motarie v. N. Mont. Joint Refuse Disposal (1995), 274 Mont. 239, 242, 907 P.2d 154, 156; Mead v. M.S.B., Inc. (1994), 264 Mont. 465, 470, 872 P.2d 782, 785). When we review a district court's grant of summary judgment, we apply the same evaluation as the district court based on Rule 56, M.R.Civ.P. Oliver, ¶ 21 (citing Bruner v. Yellowstone County (1995), 272 Mont. 261, 264, 900 P.2d 901, 903). We set forth our inquiry in Bruner as follows:

The movant must demonstrate that no genuine issues of material fact exist. Once this has been accomplished, the burden then shifts to the non-moving party to prove, by more than mere denial and speculation, that a genuine issue does exist. Having determined that genuine issues of fact do not exist, the court must then determine whether the moving party is entitled to judgment as a matter of law. We review the legal determinations made by a district court as to whether the court erred.

Oliver, ¶ 21 (quoting Bruner, 272 Mont. at 264-65, 900 P.2d at 903).

¶ 18 Moreover, in a summary judgment proceeding, the evidence must be viewed in the light most favorable to the nonmoving party, and all reasonable inferences will be drawn therefrom in favor of the party opposing summary judgment. Oliver, ¶ 22 (citing Joyce v. Garnaas, 1999 MT 170, ¶ 8, 295 Mont. 198, ¶ 8, 983 P.2d 369, ¶ 8). Consequently, we will view the evidence in the light most favorable to the Brandts and all reasonable inferences will be drawn in their favor.

¶ 19 On July 8, 1995, McGuire entered into an escrow agreement with the Wichman Trust to govern the collection and disbursement of funds from the sale and purchase of a condominium in the Esplanade project. Sande served as the escrow holder and agent. The agreement signed by the principals delineated the duty of the escrow agent to follow the written instructions of the parties in the disbursement of money, instruments or other documents received by the escrow holder. As a convenience to the parties, Sande disbursed funds to various creditors of Esplanade, Inc., at the direction of McGuire.

¶ 20 The Brandts do not dispute that they were not a party to the escrow agreement. However, they argue that the "settled Montana precedent that surely applies in this case is Merchants and Miners National Bank vs. Barnes (1896), 18 Mont. 335, 45 P. 218." They cited Barnes for the proposition that "an order to pay money out of a fund to be acquired in the future is, in Montana, held to be an assignment of an interest in the fund which is directly enforceable against the holder." They argue that McGuire's apparent repudiation was of no effect because his control over the portion of the proceeds of the Wichman closing that he transferred to the Brandts ceased immediately upon his...

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4 cases
  • Byrum v. Andren
    • United States
    • Montana Supreme Court
    • May 1, 2007
    ...that the facts constitute a violation of Rule 11 will be reversed if the determination constitutes an abuse of discretion." Brandt v. Sande, 2000 MT 98, ¶ 35, 299 Mont. 256, ¶ 35, 1 P.3d 929, ¶ 35 (citing D'Agostino v. Swanson, 240 Mont. 435, 446, 784 P.2d 919, 926 (1990) (emphasis added)).......
  • BABCOCK PLACE LTD. v. Berg, Lilly, Andriolo & Tollefsen
    • United States
    • Montana Supreme Court
    • April 25, 2003
    ...It is without dispute that escrow agents "occup[y] a fiduciary responsibility to the parties to [an] escrow transaction." Brandt v. Sande, 2000 MT 98, ¶ 28, 299 Mont. 256, ¶ 28, 1 P.3d 929, ¶ 28 (citations omitted). However, we have held that "the duty of an escrow agent is narrowly defined......
  • Hilten v. Bragg
    • United States
    • Montana Supreme Court
    • December 21, 2010
    ...abusive tactics and help to streamline the litigation process by lessening frivolous claims or defenses.’ ” Byrum, ¶ 32 (quoting Brandt v. Sande, 2000 MT 98, ¶ 35, 299 Mont. 256, 1 P.3d 929). Interpreting the clear language of the rule, we have stated that “sanctions under Rule 11 shall be ......
  • Flagstone Dev., LLC v. Joyner, 12-35407
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • October 30, 2013
    ...of fiduciary duty. Montana law limits the fiduciary duty of an escrow agent to the narrow terms of the escrow contract. Brandt v. Sande, 1 P.3d 929, 933 (Mont. 2000). Here, no reasonable trier of fact could conclude that AT&E breached any of the terms of its escrow contract with Flagstone. ......

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