Cossitt v. Flathead Indus., Inc.

• Decision Date: 10 April 2018
• Docket Number: DA 17-0490
• Parties: James H. COSSITT ; Glacier Mountaineering Guides, LLC., Plaintiffs and Appellants, v. FLATHEAD INDUSTRIES, INC., Defendant and Appellee.
• Court: Montana Supreme Court

391 Mont. 156

415 P.3d 486

2018 MT 82

James H. COSSITT ; Glacier Mountaineering Guides, LLC., Plaintiffs and Appellants,

v.FLATHEAD INDUSTRIES, INC., Defendant and Appellee.

DA 17-0490

Supreme Court of Montana.

Submitted on Briefs: February 28, 2018

Decided: April 10, 2018

For Appellants: James H. Cossitt, James H. Cossitt P.C., Kalispell, Montana

For Appellee: Antonia P. Marra, William J. Levine, Marra, Evenson & Bell, P.C., Great Falls, Montana

Justice Jim Rice delivered the Opinion of the Court.

¶ 1 James Cossitt and Glacier Mountaineering Guides, LLC (collectively "Cossitt") appeal from the Order Dismissing Complaint entered by the Eleventh Judicial District Court, Flathead County. Cossitt raises four issues, but we address the following:

1. Did the District Court err by dismissing the claims asserted under the Montana Residential Landlord and Tenant Act of 1977 (Landlord–Tenant Act)?

2. Did the District Court err by dismissing claims alleging violations of the restrictive covenants?

We affirm in part, reverse in part and remand for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 2 Cossitt and Flathead Industries, Inc. (Flathead) own neighboring townhouse duplexes in Kalispell. Cossitt owns the duplex located at 1229 and 1231 Sixth Street West, and Flathead owns the duplex at 1233 and 1235 Sixth Street West. The duplexes share a common property boundary, with a fence separating the two properties. Flathead rents its townhouses to disabled persons. Flathead is an assisted-living service provider, and, as such, provides assisted-living services to its tenants. Cossitt occupies one townhouse and rents out the other townhouse in his duplex.

¶ 3 Pursuant to a 1980 Declaration of Covenants, Conditions, and Restrictions of Sixth Street West Townhouses (Covenants), Cossitt and Flathead are the only members of a homeowners' association. Article IX of the Covenants contains "Use Restrictions," prohibiting use of the properties for business or commercial purposes and prohibiting members from engaging in "noxious or offensive activity" that may "interfere with the quiet enjoyment of each of the owner's respective residence."

¶ 4 On January 25, 2017, Cossitt filed a Complaint against Flathead and "John Does 1–5," referring to the tenants of Flathead's property. Count I alleged that Flathead violated the business use restriction in the Covenants by conducting its living support programs "at" the townhouse for its tenants, and "out of" the property; allowing employees and contractors to park vehicles on lawns and non-paved surfaces, and plowing snow to create de facto employee parking lots in the front yard, causing vehicle congestion; and allowing trash and construction materials to accumulate. Count I also alleged that Flathead and the tenants engaged in "noxious or offensive activity" in violation of the Covenants by allowing employees to drive vehicles across Cossitt's front yard, damaging flower beds, landscaping boundaries, and border materials; smoking on Flathead property and allowing smoke to waft onto Cossitt's property; parking in a manner that obstructs Cossitt's access to his driveway; having frequent loud conversations; and operating televisions loudly. Count II prayed for a Temporary Restraining Order and preliminary injunction. Count III alleged that Flathead breached obligations to Cossitt under the Landlord–Tenant Act. Count IV prayed for a declaratory judgment as to the rights, status, and legal relations between all parties.

¶ 5 Flathead responded by filing a M. R. Civ. P. 12(b)(6) motion to dismiss the Complaint for failure to state a claim.¹ On August 1, the District Court entered its Order Dismissing Complaint, granting the motion. Regarding Count I, the District Court determined that Cossitt pled no facts to support a violation of the Covenants' business use restrictions, reasoning that providing assisted-living services to residences could not itself be considered running a business. The court did not separately analyze the alleged breach of the Covenants' prohibition against "noxious or offensive activity." As to Count III, the court determined Cossitt failed to establish standing to assert claims under the Landlord–Tenant Act, because the Act applies to landlords, tenants, and third-parties who visit the premises. The District Court dismissed the claims for injunctive and declaratory relief under Counts II and IV.

¶ 6 Cossitt appeals.

STANDARD OF REVIEW

¶ 7 We review de novo a district court's ruling on a motion to dismiss pursuant to M. R. Civ. P. 12(b)(6). W. Sec. Bank v. Eide Bailly LLP , 2010 MT 291, ¶ 18, 359 Mont. 34, 249 P.3d 35 (citation omitted). A district court's determination that a complaint has failed to state a claim for which relief can be granted is a conclusion of law which we review for correctness. Sinclair v. Burlington N. & Santa Fe Ry. , 2008 MT 424, ¶ 25, 347 Mont. 395, 200 P.3d 46 (citation omitted).

DISCUSSION

¶ 8 Rule 8(a), M. R. Civ. P., provides that a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief," along with a demand for relief sought. The purpose of Rule 8(a) is to provide the defendant fair notice of the claim and the grounds upon which it rests so that the defendant may prepare a responsive pleading. Salminen v. Morrison & Frampton, PLLP , 2014 MT 323, ¶ 20, 377 Mont. 244, 339 P.3d 602 (citations omitted). This Court and the district court must accept as true the complaint's factual allegations, considering them in the light most favorable to the plaintiff. Salminen , ¶ 18 (citations omitted).

¶ 9 We follow liberal rules of pleading to allow for compliance with the spirit and intent of the law, rather than a rigid adherence to formula or specific words. McKinnon v. W. Sugar Co-Op. Corp. , 2010 MT 24, ¶ 17, 355 Mont. 120, 225 P.3d 1221. However, liberal application of the rules does not excuse omission of facts necessary to entitle relief. Mysse v. Martens , 279 Mont. 253, 266, 926 P.2d 765, 773 (1996). Rather, the "complaint must state something more than facts which, at the most, would breed only a suspicion" that the claimant may be entitled to relief. Jones v. Mont. Univ. Sys. , 2007 MT 82, ¶ 42, 337 Mont. 1, 155 P.3d 1247. A district court may dismiss a complaint for failure to state a claim if it appears "beyond doubt" the plaintiff can "prove no set of facts in support of his claim that would entitle him to relief." Jones , ¶ 15 (citation omitted).

¶ 10 1. Did the District Court err by dismissing the claims asserted under the Landlord–Tenant Act?

¶ 11 The District Court determined the Complaint did not allege facts that would establish that Cossitt had standing under the Landlord–Tenant Act, because the Act applied only to landlords, tenants, and guests on the premises. The Complaint alleged that Flathead and its residents breached their obligation of good faith to Cossitt because the Landlord–Tenant Act required them to "conduct oneself ... in a manner that will not disturb the tenant's neighbors' peaceful enjoyment of the premises[.]" Section 70-24-321(1)(f), MCA. On appeal, Cossitt argues that "neighbor" and "premises" apply not only to other tenants on Flathead's property, but to occupants of neighboring buildings.

¶ 12 The Landlord–Tenant Act provides for the "rights and obligations of landlords and tenants." Section 70-24-102(2)(a), MCA. Generally, landlords and tenants are the only persons that may bring a claim under the Act. We have recognized only a narrow exception for "third persons such as a guest of a tenant[,]" observing that the "minimum duties of the landlord ... extend to any person foreseeably on the premises." Kunst v. Pass , 1998 MT 71, ¶¶ 31-32, 288 Mont. 264, 957 P.2d 1 (concluding the Landlord–Tenant Act applied to an overnight guest of a tenant who suffered carbon monoxide poisoning in the tenant's apartment). Then, § 70-24-321, MCA, entitled "Tenant To Maintain Dwelling Unit[,]" requires the tenant to "conduct oneself and require other persons on the premises with the tenant's consent to conduct themselves in a manner, that will not disturb the tenant's neighbors' peaceful enjoyment of the premises[.]" Section 70-24-321(1)(f), MCA. The Act defines "premises" as "a dwelling unit and the structure of which it is a part, the facilities and appurtenances in the structure, and the grounds, areas, and facilities held out for the use of tenants generally or promised for the use of a tenant." Section 70-24-103(11), MCA.

¶ 13 Here, Cossitt does not allege he is a landlord, tenant, guest, or that he otherwise suffered an injury on Flathead's premises. Given the parameters of the Act, we conclude the District Court did not err by dismissing Count III because Cossitt can prove "no set of facts" in support of his claim that would entitle him to relief under the Landlord–Tenant Act. See Jones , ¶ 15.

¶14 2. Did the District Court err by dismissing claims alleging violations of the restrictive covenants?

A. Business use restrictions.

¶ 15 The Complaint alleges that Flathead's employees and contractors operated its business out of the townhouses, used Flathead's front lawn as a "de facto" employee parking lot, and allowed trash and construction materials to accumulate on Flathead property, in violation of Article IX of the Covenants, which provides, in pertinent part:

Section 2. Business and Related Use. No part of the properties shall ever be used or caused, allowed or authorized in any way, directly or indirectly, to be used for any business [or] commercial ... purpose.

¶ 16 In its Order Dismissing Complaint, the District Court perceived the Complaint to allege that Flathead's provision of assisted-living services constituted the operation of a business by a tenant :

[P]ersons visiting, or even providing services to a residence does not equate to the resident of a home conducting ‘business.’ If that were the case, then anyone who hired a cleaning or lawn service would be conducting business

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