Chase v. Bearpaw Ranch Ass'n

• Decision Date: 11 April 2006
• Docket Number: No. 05-220.,05-220.
• Citation: 2006 MT 67,133 P.3d 190,331 Mont. 421
• Court: Montana Supreme Court
• Parties: Mark CHASE, Dave Burton and Barbara Herman, Plaintiffs and Appellants, v. BEARPAW RANCH ASSOCIATION, Gene Aubrey, Ron Fraze, David Grimland, James Dickey and Mike Preyer, Defendants and Respondents.

Page 190

133 P.3d 190

2006 MT 67

331 Mont. 421

Mark CHASE, Dave Burton and Barbara Herman, Plaintiffs and Appellants, v. BEARPAW RANCH ASSOCIATION, Gene Aubrey, Ron Fraze, David Grimland, James Dickey and Mike Preyer, Defendants and Respondents.

No. 05-220.

Supreme Court of Montana.

Submitted on Briefs December 14, 2005.

Decided April 11, 2006.

COPYRIGHT MATERIAL OMITTED

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For Appellants: Robert L. Sterup, Holland & Hart, Billings, Montana.

For Respondents: Leonard H. Smith and Christopher C. Voigt, Crowley, Haughey, Hanson, Toole & Dietrich, PLLP, Billings, Montana.

Justice W. WILLIAM LEAPHART delivered the Opinion of the Court.

¶ 1 Mark Chase, Dave Burton and Barbara Herman (collectively, "Chase") filed an action against a homeowner's association and its board of directors — Bearpaw Ranch Association, Gene Aubrey, Ron Fraze, David Grimland, James Dickey and Mike Preyer (collectively, "Bearpaw") — seeking a declaratory judgment that the governance of the association violates Montana law and requesting injunctive relief. The District Court granted summary judgment in favor of Bearpaw. Bearpaw then moved the court to award attorney fees. The District Court awarded Bearpaw $79,107.50 in attorney fees. Chase now appeals.

¶ 2 We reframe the issues on appeal as follows:

¶ 3 (1) whether the District Court erred in awarding attorney fees to Bearpaw; and

¶ 4 (2) whether the District Court abused its discretion in calculating the amount of attorney fees.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 5 This dispute has endured in the courts of Montana for nearly half a decade and has reached this Court once before. Thankfully, we need not rehash its entire sordid past to resolve the issues on appeal. Instead, we begin in medias res, when the District Court granted summary judgment in favor of Bearpaw, by order dated September 4, 2003. The District Court did not file this order, however, until October 16, 2003. Meanwhile, on October 2, 2003, Chase filed a notice of appeal. Neither Chase nor Bearpaw filed a notice of entry of judgment on the court's grant of summary judgment.

¶ 6 After both parties had filed appellate briefs in this Court, Chase eventually moved this Court to dismiss its appeal. We dismissed the case and remanded for a determination of costs, pursuant to Rule 36, M.R.App.P.

¶ 7 On June 23, 2004, Bearpaw filed a motion requesting that the District Court award attorney fees. On August 13, 2004 the District Court signed an order granting Bearpaw's request for attorney fees and scheduling a subsequent hearing to determine the proper amount of attorney fees. This ruling was filed on August 23, 2004.

¶ 8 The District Court initially provided three potential bases for its decision to award attorney fees: a contractual fee-shifting provision, rendered reciprocal by § 28-3-704, MCA; the Declaratory Judgment Act, § 27-8-313, MCA; and the equitable Foy exception to the American Rule, see, e.g., National Cas. Co. v. American Bankers, 2001 MT 28, ¶ 28, 304 Mont. 163, ¶ 28, 19 P.3d 223, ¶ 28. The District Court failed, however, to specify which of the three rationales it relied upon in ruling that Bearpaw is entitled to recover attorney fees.

¶ 9 The District Court granted Chase's motion to vacate the scheduled hearing on the proper amount of attorney fees so that the court could also address the question of whether it lacked jurisdiction to award attorney fees. Chase argued that, pursuant to Rule 59(g), M.R.Civ.P., the District Court's failure to hold a hearing and award attorney fees within sixty days of Bearpaw's initial request for attorney fees divested the court of jurisdiction to make such an award.

¶ 10 Chase's counsel failed to show up for the beginning of the consolidated hearing on the issues of whether the District Court retained the authority to award attorney fees and determination of the appropriate amount of attorney fees. At the hearing, Bearpaw presented the testimony of its counsel, Leonard Smith, who indicated that Bearpaw would be billed $8,352 for legal services rendered in August and September of 2004. Bearpaw also presented an expert witness, Robert E. Lee (Lee), who commented on the "work-enhancing characteristics" of the case — including the need to communicate with multiple individual defendants, the "onerous" burden to review voluminous documents, and the contentious zeal that characterized Chase's prosecution of the case ("a scorched earth approach on the part of the plaintiffs and their counsel"). Lee testified that each of the seven factors considered in determining the reasonableness of attorney fees, see Forrester & MacGinnis v. B. & M. Co. (1914), 29 Mont. 397, 409, 74 P. 1088, 1093, and Plath v. Schonrock, 2003 MT 21, ¶ 36, 314 Mont. 101, ¶ 36, 64 P.3d 984, ¶ 36, supported the reasonableness of an award of $71,171.50 in attorney fees (for expenses incurred through July 26, 2004). Lee also speculated that "whatever fees have been accrued since [July 26] dealing with the motions that I have seen on file and the issues that I have heard discussed in my presence in court today, even that additional amount, which I haven't personally reviewed, would be justified in this case." Chase's counsel arrived during Lee's testimony and informed the court that he had not received notice of the hearing until he received a telephone call from the clerk of court when the hearing began. After the District Court denied Chase's counsel's first request for a continuance so that he could prepare for the hearing, counsel cross-examined Lee. Avowedly lacking notice of the hearing, however, counsel was not prepared to offer testimony from Chase's own witnesses. Consequently, Chase's counsel requested that the hearing be continued until such time as those witnesses would be available to testify.

¶ 11 Several weeks later, the court held a second hearing at which time Chase offered the expert testimony of Bruce Fain (Fain). Fain testified that in his opinion, charges totaling $10,763 for client conferences are excessive for a case that is resolved on summary judgment. He also testified that, in comparison to similar cases he has litigated, $12,122 is an unreasonable charge for briefing and preparing a motion for summary judgment. Fain opined that Chase's opposition to Bearpaw's fee claim is reasonable, and therefore Bearpaw should not recover fees incurred in attempting to recover attorney fees, nor should Bearpaw recover appellate fees, since the Supreme Court declined to award them when afforded the opportunity. Finally, although he acknowledged that Bearpaw's counsel needed to review roughly 8,000 documents, Fain suggested that the seven factors utilized in assessing a claim for attorney fees would support an award of only $15,200, which roughly coincides with the fees incurred by Chase before the court granted summary judgment.

¶ 12 Chase also sought to present the testimony of the three named plaintiffs. The District Court, however, sustained Bearpaw's objection to their testimony. Chase made an offer of proof which indicated that the plaintiffs anticipated that the litigation would be quickly resolved, that they made eleven separate offers to settle or submit to arbitration, and that they would suffer hardship if saddled with nearly $80,000 in fees. The court denied the offers, reasoning that the three lay witnesses lacked competence to testify as to the propriety of attorney fees claimed by Bearpaw and that their testimony would not prove relevant to that issue.

¶ 13 The District Court subsequently ordered Chase to reimburse Bearpaw $79,107.50 (plus interest) for the attorney fees incurred in defending the suit and seeking attorney fees. The court specified that Bearpaw is entitled to recover attorney fees incurred in defending the action in the District Court pursuant to a contractual fee-shifting provision, rendered reciprocal by § 28-3-704, MCA. The court determined that Bearpaw is entitled to recover attorney fees incurred in preparing its appeal of the summary judgment ruling pursuant to the Foy equitable exception to the American Rule. Finally, the court held that Bearpaw is entitled to recover attorney fees incurred in seeking attorney fees ("fees-for-fees") pursuant to State ex rel. DOT v. Slack, 2001 MT 137, 305 Mont. 488, 29 P.3d 503, because Chase unreasonably opposed Bearpaw's fee claims. Chase then filed this appeal.

STANDARDS OF REVIEW

¶ 14 "We review a district court's conclusions of law to determine whether the district court's interpretation of the law is correct." Chamberlin v. Puckett Construction (1996), 277 Mont. 198, 202-03, 921 P.2d 1237, 1240. "The construction and interpretation of a contract is a question of law for the court to decide." Cole v. Valley Ice Garden, L.L.C., 2005 MT 115, ¶ 24, 327 Mont. 99, ¶ 24, 113 P.3d 275, ¶ 24 (citation and quotations omitted). Whether or not a party is entitled to recover attorney fees is "strictly a question of law." Thus, "[w]e review a district court's conclusions of law pertaining to the recovery of attorney's fees to determine whether those conclusions are correct." Transaction Network v. Wellington Tech., 2000 MT 223, ¶ 17, 301 Mont. 212, ¶ 17, 7 P.3d 409, ¶ 17 (citation omitted).

¶ 15 We review a district court's award of reasonable attorney fees for an abuse of discretion. Chamberlin, 277 Mont. at 206, 921 P.2d at 1242. "A court abuses its discretion if it acts arbitrarily without employment of conscientious judgment or exceed[s] the bounds of reason resulting in substantial injustice." McDermott v. Carie, 2005 MT 293, ¶ 10, 329 Mont. 295, ¶ 10, 124 P.3d 168, ¶ 10 (quotations and citations omitted, alteration in original).

DISCUSSION

Issue 1: Whether the District Court erred in awarding attorney fees to Bearpaw.

¶ 16 Chase argues that the District Court erred in awarding attorney fees to Bearpaw because, pursuant to Rule 59, M.R.Civ.P., the District Court lost authority to award attorney fees...