Bugger v. McGough, 05-668.

• Decision Date: 03 October 2006
• Docket Number: No. 05-668.,05-668.
• Citation: 144 P.3d 802,334 Mont. 77,2006 MT 248
• Parties: P. Kay BUGGER, Plaintiff, Counter-Defendant, and Appellant, v. Mike McGOUGH, Defendant and Respondent, and Mark Johnson, Defendant, Counter-Claimant and Respondent.
• Court: Montana Supreme Court

144 P.3d 802

2006 MT 248

334 Mont. 77

P. Kay BUGGER, Plaintiff, Counter-Defendant, and Appellant, v. Mike McGOUGH, Defendant and Respondent, and Mark Johnson, Defendant, Counter-Claimant and Respondent.

No. 05-668.

Supreme Court of Montana.

Submitted on Briefs August 8, 2006.

Decided October 3, 2006.

COPYRIGHT MATERIAL OMITTED

For Appellant: Geoffrey C. Angel, Angel Law Firm, Bozeman, Montana.

For Respondent: Jane Mersen, Kasting, Kauffman, & Mersen, P.C., Bozeman, Montana.

Justice BRIAN MORRIS delivered the Opinion of the Court.

¶ 1 Appellant P. Kay Bugger (Bugger) rented a house in Bozeman from Respondent Mark Johnson (Johnson). Respondent Mike McGough (McGough) served as Johnson's caretaker. Bugger brought a claim against McGough and Johnson to recover her security deposit. The claim alleged that Johnson and McGough violated provisions of the Montana Landlord and Tenant Act, the Residential Security Deposit Act, and breached the covenant of good faith and fair dealing. A jury found for Johnson and the District Court for the Eighteenth Judicial District, Gallatin County, awarded $20,479.71 in attorney's fees and costs. Bugger appeals and we affirm.

¶ 2 We address the following issues:

¶ 3 1. Did the District Court's award of attorney's fees for $20,479.71 to Johnson exceed the jurisdictional limit applied to the review of a justice court determination?

¶ 4 2. Did the District Court properly grant summary judgment in favor of McGough?

¶ 5 3. Did the District Court abuse its discretion when it granted Johnson's motion to withdraw certain admissions?

¶ 6 4. Did the District Court's instructions and special verdict form fully and fairly instruct the jury on the applicable law?

¶ 7 5. Did substantial evidence support the jury verdict?

¶ 8 6. Did the District Court abuse its discretion in awarding $20,479.71 to Johnson in attorney's fees and costs?

FACTS AND PROCEDURAL HISTORY

¶ 9 Bugger entered into a one-year lease agreement with Steve McGough (Steve) in November 1998, for a newly constructed home at 112 Meghans Way in Bozeman. Johnson purchased the property from Steve in the spring of 1999 for investment purposes. Johnson lived in Minnesota with his wife Karen Johnson (Karen). Bugger entered into a new one-year lease agreement on August 1, 1999, with Karen listed as the landlord.

¶ 10 Bugger met with Karen on at least one occasion after signing the lease. Bugger made out the rental checks directly to Karen. The Johnsons wanted a local contact person and sought the help of Mike McGough, Steve's brother, because he lived close to the rental. McGough met with Bugger and introduced himself in his caretaker capacity.

¶ 11 Bugger eventually decided not to renew the lease and received a 30-day notice of eviction. The parties disputed the notice and move-out date. Bugger alleged she turned over the keys on September 4, 2000, and completely moved out by September 5, 2000. Johnson claims that Bugger moved out late on the night of September 6, 2000.

¶ 12 Johnson sent Bugger a letter dated October 4, 2000, in which he enclosed a check for $180.32. The letter explained his actions in retaining the remainder of her $1,000.00 deposit. He cited general cleaning, repairs to the trim and woodwork, professional carpet cleaning services, unpaid water bills, insufficient funds charges on two rent checks, and carpet damage caused by an unauthorized pet.

¶ 13 Bugger, acting pro se, filed an action in Gallatin County Justice Court against McGough and Johnson pursuant to the Montana Residential Landlord and Tenant Act (MLTA). Title 70, Chapter 24, MCA. Bugger claimed she received inadequate notice of eviction, that McGough and Johnson failed to notify and give her time to remedy the deficiency with respect to cleaning, and that she did not receive her deposit refund check until 30 days after vacating the property. Bugger also claimed that her refrigerator sustained damage during the installation of an automatic garage door opener by Johnson and sought the replacement cost of $1,600.00. Bugger served McGough with the complaint and summons, but did not serve Johnson.

¶ 14 The Justice Court sitting without a jury found for McGough and awarded him attorney's fees and costs totaling $1,737.17, later revising it to $2,178.77. Bugger retained counsel and appealed to the District Court.

¶ 15 Johnson filed a motion in the District Court to dismiss on the grounds that Bugger never served him with the complaint and summons. McGough filed a separate motion for summary judgment. The District Court granted Johnson's motion to dismiss without prejudice on the grounds that Bugger had failed to serve him properly. The court granted summary judgment in favor of McGough in the same order. We issued an Order on March 21, 2003, dismissing as interlocutory Bugger's appeal of the award of attorney's fees in favor of McGough.

¶ 16 Bugger, still represented by counsel, filed an amended complaint in the District Court against Johnson and McGough. Bugger served Johnson with requests for admissions and Johnson's responses were due on March 24, 2003. The requests sought admissions from Johnson that he failed to provide a written statement of the damages within 30 days, that he failed to provide a written statement of the cleaning deficiency, and that he failed to provide written notice of 24 hours to remedy the deficiency.

¶ 17 Johnson requested more time from Bugger on March 21, 2003, to complete the responses. Bugger did not reply and on March 25, 2003, one day after the deadline, Bugger instead filed with the Court a Notice of Facts Deemed Admitted. Johnson submitted his responses to Bugger the next day, March 26, 2003. The District Court permitted Johnson to withdraw the admissions on June 15, 2004, under Rule 36(b), M.R. Civ. P., concluding that the withdrawal would serve the merits of the case and that Bugger did not suffer prejudice.

¶ 18 After a three-day trial, the court submitted a total of 40 jury instructions and the jury completed a special verdict form. The jury determined that Johnson had provided a written list of damages within 30 days of the end of the tenancy, that Johnson did not improperly withhold a portion of Bugger's deposit, and that Johnson did not breach the covenant of good faith and fair dealing or act with actual fraud or malice. The jury also determined that Bugger was estopped from claiming a right to notice of deficient cleaning and that she had materially breached the lease agreement and damaged the property. The jury awarded $742.19 in damages resulting from Bugger's occupancy. The District Court entered judgment in favor of Johnson for $742.19 as damages and $20,479.71 for attorney's fees and costs. Bugger appeals.

STANDARD OF REVIEW

¶ 19 Whether a court has subject matter jurisdiction presents a question of law. We review a district court's conclusions of law to determine whether they are correct. CBM Collections, Inc. v. Ferreira, 2005 MT 170, ¶ 4, 327 Mont. 479, ¶ 4, 115 P.3d 211, ¶ 4 (citation omitted). We review de novo a district court's grant of summary judgment. Petroleum Tank Release v. Capitol Indem., 2006 MT 133, ¶ 12, 332 Mont. 352, ¶ 12, 137 P.3d 522, ¶ 12.

¶ 20 The District Court sits in the best position to determine good faith discovery efforts and, as a result, we review discovery rulings under an abuse of discretion standard. In re S.C., 2005 MT 241, ¶ 16, 328 Mont. 476, ¶ 16, 121 P.3d 552, ¶ 16. We also review a district court's decision to give or refuse to give proffered jury instructions and to use a special verdict form for an abuse of discretion. Kiely Const., L.L.C. v. City of Red Lodge, 2002 MT 241, ¶¶ 57, 62, 312 Mont. 52, ¶¶ 57, 62, 57 P.3d 836, ¶¶ 57, 62. Finally, this Court reviews a district court's award of reasonable attorney's fees for an abuse of discretion. Chase v. Bearpaw Ranch Ass'n, 2006 MT 67, ¶ 15, 331 Mont. 421, ¶ 15, 133 P.3d 190, ¶ 15.

ISSUE ONE

¶ 21 Did the District Court's award of attorney's fees for $20,479.71 to Johnson exceed the jurisdictional limit applied to the review of a justice court determination?

¶ 22 Bugger contends that the District Court exceeded its jurisdiction by awarding attorney's fees to Johnson for $20,479.71, on the grounds that the jurisdictional limit of $7,000 for justice court claims applies to a district court on appeal. The District Court, in awarding Johnson $20,479.71 in attorney's fees, however, acted in its original jurisdiction capacity set forth in § 3-5-302, MCA; the court did not act on appellate review.

¶ 23 Bugger initially sued both McGough and Johnson in justice court, but served only McGough. Bugger never served Johnson in justice court. The District Court dismissed Johnson without prejudice from Bugger's justice court appeal and granted summary judgment in favor of McGough. Bugger's justice court action ended at that time.

¶ 24 Bugger then initiated a new action in District Court when she filed an amended complaint on December 16, 2002. Bugger's filing of the amended complaint triggered the District Court's original jurisdiction on the claim. Thus, the $7,000 limit to justice court actions provided in § 3-10-301(1)(a), MCA, does not apply and the District Court's award of $20,479.71 for attorney's fees and costs fell within the court's jurisdictional limit.

ISSUE TWO

¶ 25 Did the District Court properly grant summary judgment in favor of McGough?

¶ 26 Bugger argues that the District Court improperly granted McGough summary judgment on the grounds that he failed to disclose his managerial position, and, therefore, the MLTA permits Bugger to proceed directly against him. The general provisions of the MLTA state, however, that, "[a] person has notice of a fact if . . . a person has actual knowledge of it." Section 70-24-108(1)(a), MCA. Bugger's actions reveal that she possessed actual knowledge of McGough and Johnson's respective roles as caretaker and landlord. Bugger addressed a letter to Johnson...