Deschamps v. Treasure State Trailer Court

• Decision Date: 13 April 2010
• Docket Number: No. DA 09-0493.,DA 09-0493.
• Citation: 356 Mont. 1,2010 MT 74,230 P.3d 800
• Parties: Dennis DESCHAMPS, Plaintiff and Appellant,v.TREASURE STATE TRAILER COURT, LTD., and Dennis Rasmussen, as Personal Representative of the Estate of Larry R. Rasmussen, Defendants, Appellees and Cross-Appellants.
• Court: Montana Supreme Court

356 Mont. 1

230 P.3d 800

2010 MT 74

Dennis DESCHAMPS, Plaintiff and Appellant,v.TREASURE STATE TRAILER COURT, LTD., and Dennis Rasmussen, as Personal Representative of the Estate of Larry R. Rasmussen, Defendants, Appellees and Cross-Appellants.

No. DA 09-0493.

Supreme Court of Montana.

Submitted on Briefs March 17, 2010.

Decided April 13, 2010.

For Appellant: Quentin M. Rhoades, Nathan G. Wagner, Sullivan, Tabaracci & Rhoades, Missoula, Montana.

For Appellee: James C. Bartlett, Attorney at Law, Kalispell, Montana.

Justice PATRICIA O. COTTER delivered the Opinion of the Court.

¶ 1 Dennis Deschamps (Deschamps) purchased a mobile home trailer park (Park) from Larry Rasmussen, now deceased. Deschamps later discovered serious problems with the Park's water supply system. He sued Rasmussen's estate (Estate) for negligent misrepresentation and breach of contract. After the Estate filed its Answer and discovery was underway, Deschamps moved for leave to amend his Complaint in order to allege fraud and constructive fraud. The Eighth Judicial District Court denied his motion, and ultimately entered a final judgment, as further explained below. Deschamps appeals. We affirm.

ISSUES

¶ 2 A restatement of Deschamps' issue on appeal is:

¶ 3 Did the District Court abuse its discretion by denying his motion to amend his Complaint?

¶ 4 The Estate presents the following issue on cross-appeal:

¶ 5 After a previously-entered injunction was dissolved, did the District Court err by failing to compel Deschamps to pay the amount the Estate claimed it was due?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 6 In April 2003, Deschamps and Larry Rasmussen entered into a written Commercial Buy-Sell Agreement (Agreement) drafted by Deschamps' real estate broker, under which Deschamps purchased a Great Falls mobile home trailer park with ninety-six residential spaces from Rasmussen. Of the $1,625,000 purchase price, Deschamps paid $2,000 in earnest money. The parties agreed that the remaining balance would be paid in part by cash at closing and the remainder via monthly payments to Rasmussen.

¶ 7 In May 2003, in response to Deschamps' expressed concern over the condition of the property, the parties renegotiated the purchase price and executed a written addendum to the Agreement lowering the price to $1,445,000 but retaining the remaining original terms. While not reflected in the Agreement or addendum, Deschamps claimed that Rasmussen also agreed to transfer ownership of two mobile homes Rasmussen personally owned to Deschamps. Additionally, Deschamps asserted that Rasmussen retained ownership of fourteen trailer units within the Park, and was required to pay rent to Deschamps for those units until such units were removed. The parties closed on the transaction on May 23, 2003. On June 10, 2003, Larry Rasmussen died, and on July 2 the court appointed Dennis Rasmussen as the Estate's personal representative.

¶ 8 In mid-July 2003, a water system well pump failed and Deschamps replaced it. He claims that he began learning at that time that the tenants had been complaining of poor water quality and little, or no, water pressure for some time. In fall 2003, Deschamps hired a consultant, Nash Enterprises, to drain and clean the storage tank for the water system. The consultant discovered that the water supply system serving the Park was defective and “structurally unfit for pressurization.” In December 2003, Deschamps submitted written notice to the Estate of “claims against the estate.”

¶ 9 In May 2004, Deschamps excavated a portion of the underground water distribution system. He discovered that some of the materials used to construct the system were improper and inadequate for the water distribution needs of the Park. He then hired Neil Consultants to evaluate the entire water system. In August 2004, Neil Consultants recommended extensive remedial measures to correct the problems with the water system, at an estimated cost of $400,000. Deschamps thereafter began making small upgrades to the system.

¶ 10 Between 2003 and 2005, Deschamps made all the monthly payments required by the Agreement. After making only three monthly payments in 2006, however, Deschamps stopped making payments, stating that much of the monthly payment was required to keep the Park operating and to pay for additional remedial projects. In March 2006, Deschamps filed a complaint against the Estate alleging that Rasmussen negligently misrepresented the quality and condition of the water system. Deschamps also presented two breach of contract claims-one alleging that Rasmussen's personal mobile units were never transferred to Deschamps but were instead removed from the Park by the Estate, and the other for failure of Rasmussen to pay rent on the fourteen units to which he retained ownership.

¶ 11 In May 2006, the same well pump that Deschamps had replaced in July 2003 failed again and Deschamps hired Pat Byrne Drilling to replace it. Deschamps claims Byrne told him that Larry Rasmussen had extended that particular well in April 2002 but had refused to extend the well casing as recommended by Byrne. The purposes of extending the casing would have been to minimize particulate in the water and avoid damage to the pumps.

¶ 12 In February 2007, the Estate recorded a Notice of Trustee's Sale indicating that the Park would be sold at auction on June 29, 2007, as a result of Deschamps' failure to make monthly payments. In May 2007, Deschamps sought an injunction precluding the Estate from taking action to foreclose against him. The District Court granted Deschamps' request for a Temporary Restraining Order in June 2007 and, in July, granted his request for a preliminary injunction, thereby enjoining the foreclosure. To provide security to the Estate, Deschamps filed an irrevocable letter of credit in the amount of $67,000 made payable to Dennis Rasmussen and Rasmussen's attorney, James Bartlett. The letter of credit dollar figure represented the amount by which Deschamps was in arrears on payments to the Estate, plus interest accrued, to June 2007. The letter of credit was payable upon demand by both parties and order of the court.

¶ 13 Also in June 2007, Deschamps moved for leave to file his first amended complaint. The court denied his motion on procedural grounds. For reasons not pertinent to this appeal, in December 2007 the District Court vacated its earlier order denying Deschamps' motion to amend and issued a new order granting Deschamps' motion in part and denying it in part. Deschamps declined to file an amended complaint and requested a trial on the merits.

¶ 14 Following cross-motions for summary judgment, the court granted partial summary judgment to the Estate on Deschamps' negligent misrepresentation claim and his breach of contract claim as it pertained to Rasmussen's personal trailers. Deschamps withdrew his remaining breach of contract claim for unpaid rent just before the jury trial began. The order also denied Deschamps' motion for partial summary judgment, postponed a decision on the Estate's request to dissolve the injunction, and instructed Deschamps that he could move to file an amended complaint stating a claim for negligent non-disclosure of latent defects to the water system.

¶ 15 In June 2008, Deschamps filed his amended complaint. The matter proceeded to a jury trial held April 27-30, 2009. By special verdict, the jury ruled on the only remaining issue, concluding that Larry Rasmussen did not negligently fail to disclose latent material defects in the Park's water distribution system for the Park before selling it to Deschamps. On May 7, 2009, the Estate moved to dissolve the injunction and compel payment by Deschamps of all monthly installments accruing since June 2007, plus costs and attorney fees. The court dissolved the injunction immediately. Following a subsequent hearing, the court ordered payment of the $67,000 letter of credit to the Estate and James Bartlett. It declined, however, to grant the Estate's request that Deschamps pay the remaining monthly installments that, but for the injunction, would have been due from June 2007 to May 2009, in the approximate sum of $167,000.

¶ 16 In September 2009, Deschamps filed a timely appeal from the District Court's December 2007 rejection of various proposed claims set forth in Deschamps' June 2007 First Amended Complaint. The Estate filed a timely cross-appeal of the court's rejection of its motion to order Deschamps to pay the amount the Estate claimed it was owed. Deschamps also moved the District Court for an injunction pending appeal prohibiting the Estate from foreclosure attempts. The District Court granted this motion and waived the requirement for a bond.

STANDARD OF REVIEW

¶ 17 We note the parties disagree on the proper standard of review for this case. The Estate argues that we review a district court's denial of a M.R. Civ. P. 15 (Rule 15) motion to amend for an abuse of discretion. Deschamps argues that we should look to the precise ruling of the District Court in this case, i.e., a ruling that particular amendments to his complaint were futile, and that we review such a legal conclusion de novo.

¶ 18 It is well established that we review the denial of a motion to amend for an abuse of discretion. Wormall v. Reins, 1 Mont. 627, 630 (1872) (“The court may, in furtherance of justice and upon such terms as are just, allow the amendment of any pleading at any stage of a proceeding. This power is a discretionary one, and this court cannot review the exercise of the same. Unless there has been some abuse of that discretion, courts have frequently permitted pleadings to be amended even after verdict and judgment to correspond with the proofs in the case....”). See also Callan v. Hample, 73 Mont. 321, 326, 236 P. 550, 551-52 (1925) (“The matter of an amendment of a pleading, at any time, rests within the sound discretion of the trial court, and its action will not be reversed in the absence of an...