Detienne ex rel. Vibeke Detienne Trust v. Bryan Sandrock, GG&me, LLC

• Decision Date: 25 July 2017
• Docket Number: DA 16-0649
• Citation: 400 P.3d 682,2017 MT 181,388 Mont. 179
• Parties: Kevin DETIENNE, individually and on behalf of the Vibeke DeTienne Trust, as Trustee, The Train Station, LLC, a Montana Limited Liability Company, and The Money Train, LLC, a Montana Limited Liability Company, Plaintiffs and Appellees, v. Bryan SANDROCK, GG&ME, LLC, a Montana Limited Liability Company, and Draes, Inc., a Montana Close Corporation, Defendants and Appellants.
• Court: Montana Supreme Court

388 Mont. 179

400 P.3d 682

2017 MT 181

Kevin DETIENNE, individually and on behalf of the Vibeke DeTienne Trust, as Trustee, The Train Station, LLC, a Montana Limited Liability Company, and The Money Train, LLC, a Montana Limited Liability Company, Plaintiffs and Appellees,

v.Bryan SANDROCK, GG&ME, LLC, a Montana Limited Liability Company, and Draes, Inc., a Montana Close Corporation, Defendants and Appellants.

DA 16-0649

Supreme Court of Montana.

Submitted on Briefs: May 24, 2017

Decided: July 25, 2017

Rehearing Denied September 6, 2017

For Appellants: John C. Doubek, Keif Storrar, Doubek, Pyfer & Fox LLP, Helena, Montana, Perry J. Schneider, Milodragovich, Dale & Steinbrenner, P.C., Missoula, Montana

For Appellees: Stefan T. Wall, Wall, McLean & Gallagher, PLLC, Helena, Montana

Justice Michael E Wheat delivered the Opinion of the Court.

¶1 This case arises from a 2007 real estate transaction in Helena, Montana. The parties to this transaction have litigated the transaction and other related issues in multiple courts since 2008. In the case before us, Sandrock appeals the order of the First Judicial District Court, Lewis and Clark County, denying his motion to set aside a default and a subsequent default judgment entered against him. In his motions to set aside, Sandrock claims the default and default judgment were caused by his counsel's neglectful representation and the District Court abused its discretion in denying his motions to set aside the default. He also appeals the District Court's Judgment and Judicial Decree (Decree), asserting that the Decree is replete with errors, including the court's failure to provide a reasonable basis for its computation of damages. We affirm in part and remand in part.

ISSUES

¶2 A restatement of the issues on appeal is:

¶3 Did the District Court slightly abused its discretion when it denied Sandrock's motion to set aside a default and a default judgment?

¶4 Did the District Court err in its calculation of damages?

FACTUAL AND PROCEDURAL BACKGROUND

¶5 In January 2007, Kevin DeTienne and his mother, Vibeke DeTienne, established a limited liability company, The Train Station. The original Articles of Organization indicated Ms. DeTienne was the sole "member" of The Train Station. The DeTiennes created The Train Station to purchase real property located at 1110 West Custer Avenue, Helena, Montana, on which to establish a casino that Kevin would operate through his company, The Money Train. When financing was delayed the DeTiennes approached Bryan Sandrock, a local business man and acquaintance of Kevin, for a short-term loan. As part of the agreement to provide funding, Sandrock requested and was granted 50% membership in The Train Station.¹ In September 2007, Ms. DeTienne created a Trust and transferred her membership in The Train Station to the Trust. Ms. DeTienne died in December 2007 and Kevin DeTienne became the Trustee of the Trust.

¶6 In February 2008, Kevin and two of his siblings initiated probate proceedings in the Fifteenth Judicial District Court, Sheridan County. In the Matter of the Estate of Vibeke B. DeTienne , DP-46-2008-0005076-FT (Feb. 27, 2008) (Cause No. 08-5076). Ultimately, Kevin was appointed personal representative of Ms. DeTienne's estate. In June 2008, Kevin DeTienne and Sandrock entered into a "substitution of member" agreement putting "Vibeke DeTienne Trust, Kevin DeTienne, Trustee, in the place and stead of Vibeke DeTienne, Member." Also, in June 2008, after the building on 1110 West Custer was completed, The Train Station entered into a lease agreement with The Money Train under which The Money Train was obligated to make monthly rental payments to The Train Station for the property.

¶7 Following a dispute with Sandrock, in August 2009, Kevin began depositing his monthly lease payment into the Trust bank account rather than to The Train Station bank account. In November 2009, Sandrock, through original counsel, initiated eviction proceedings against Kevin in the First Judicial District Court, Lewis and Clark County. Sandrock v. DeTienne , DV-25-2009-0001105-RP (Nov. 30, 2009) (Judge Kathy Seeley presiding) (Cause No. 09-1105). Sandrock claimed Kevin breached the lease agreement the parties had entered into by failing to pay rent.

¶8 In January 2010, Judge Seeley entered a temporary restraining order and later a preliminary injunction prohibiting DeTienne from entering the subject property pending a decision on the merits of the case. DeTienne appealed this ruling and, in November 2010, we affirmed and returned the matter to the District Court for a ruling on the merits. Sandrock v. DeTienne , 2010 MT 237, 358 Mont. 175, 243 P.3d 1123. This eviction proceeding lay dormant from November 2010—when this Court entered its Opinion— until May 2013, when Judge Seeley ordered a status report.

¶9 In February 2010, Sandrock, while asserting that he was the sole member and only interest holder in the assets of The Train Station, transferred the real property by deed to GG & ME, a Montana limited liability company of which he is the managing member. GG & ME then leased the property to Drae's Station Casino, a corporation formed on February 1, 2010, and whose sole shareholder is Deryl Rae Sandrock, Sandrock's spouse.

¶10 In March 2010, Kevin DeTienne initiated a declaratory judgment action against Sandrock, also in the First Judicial District Court, Lewis and Clark County. DeTienne v. Sandrock , DV-25-2010-0000262-DK (Mar. 15, 2010) (Judge Jeffrey Sherlock presiding) (Cause No. 10-262). Kevin sought a declaratory judgment that his mother's Trust was a member of The Train Station and Sandrock's transfer of the property was unlawful as it was done without the consent of the other member, i.e. the Trust. In July 2010, DeTienne as Trustee of his mother's Trust moved for partial summary judgment. Sandrock opposed the motion. Judge Sherlock conducted a hearing on summary judgment in December 2010 and, in March 2011, the District Court ordered the case, including the pending motion for partial summary judgment, transferred to Sheridan County and consolidated with the probate proceeding, Cause No. 08-5076. Sandrock's original attorney represented him from the initiation of the declaratory judgment proceeding until the matter was transferred to Sheridan County.

¶11 As the eviction and the declaratory judgment cases were advancing, so was the 2008 Sheridan County probate action and, in January 2011, Sandrock, by original counsel, filed a claim against Ms. DeTienne's estate. In April 2012, after Sandrock's original attorney pursued other opportunities, Sandrock retained new counsel² to represent him in the Sheridan County proceeding. In November 2012, the Sheridan County District Court granted DeTienne's motion for partial summary judgment, issuing an express declaratory judgment that Ms. DeTienne's Trust was a member of The Train Station and had been since the June 2008 agreement between Kevin DeTienne and Sandrock. In December 2014, the Sheridan County District Court transferred the consolidated probate/declaratory action proceeding to Lewis and Clark County for consolidation with Cause No. 09-1105, the eviction proceeding.

¶12 In summary, Cause No. 08-5076 was the probate proceeding filed in Sheridan County by Kevin DeTienne and his siblings. Cause No. 09-1105 is the eviction proceeding Sandrock filed against DeTienne in Lewis and Clark County. Cause No. 10-262 was the declaratory judgment action filed in Lewis and Clark County by DeTienne against Sandrock. The declaratory judgment action was transferred to and consolidated with Sheridan County probate Cause No. 08-5076 in March 2011. In December 2014, the Sheridan County consolidated probate/declaratory judgment action was transferred to and consolidated with the Lewis and Clark County eviction proceeding, Cause No. 09-1105.

¶13 The appeal currently before us arose in the 2009 eviction proceeding, Cause No. 09-1105. Following the above-referenced hiatus from November 2010 until May 2013, the District Court ordered the parties to provide a status report. At that time, Sandrock's new counsel provided the status report on behalf of Sandrock. A scheduling order was issued in June 2013 and the parties began preparing for trial. In April 2014, DeTienne served discovery requests and admissions on Sandrock. Sandrock, through counsel, responded in May 2014. In September 2014, asserting that Sandrock's responses were "wholly inadequate," DeTienne moved for sanctions or, in the alternative, for a motion to compel. Sandrock opposed the motion.

¶14 In February 2015, while DeTienne's motion for sanctions was pending, DeTienne moved to realign the parties designating himself and The Train Station as plaintiffs and Sandrock, GG & ME, and Drae's as defendants. Sandrock objected but on August 5, 2015, Judge Seeley granted the motion to realign and allowed DeTienne to file a second amended complaint. The court instructed Sandrock to respond to DeTienne's complaint within thirty days. Sandrock failed to answer the complaint within the designated time.

¶15 On September 11, 2015, at DeTienne's request, the clerk of the District Court entered Sandrock's default. DeTienne then requested a hearing to obtain a default judgment and to establish damages. The hearing was conducted on November 30, 2015. Minutes before the hearing was to commence, Sandrock, through counsel, filed a motion to set aside default judgment based upon an alleged fraud upon the court committed by DeTienne. Sandrock's counsel also submitted his proposed answer to DeTienne's complaint and admitted to the court that he had given the matter inadequate attention. As DeTienne's expert witness was present, the District Court allowed her to testify and informed the parties that a future damages hearing would be held in the event Sandrock's motion to set aside was denied. The witness, a certified public accountant with the WIPFLI accounting firm, testified that she had prepared, on behalf of DeTienne...