Grenfell v. Anderson

• Decision Date: 10 October 2002
• Docket Number: No. 01-268.,01-268.
• Citation: 56 P.3d 326,311 Mont. 385,2002 MT 225
• Parties: Roger GRENFELL, Plaintiff and Respondent, v. Gary ANDERSON, individually; Gary Anderson, d/b/a PG & L Marketing, Inc.; and PG & L, Inc., and John Doe One, Defendants and Appellants, and Gary Anderson, individually; Gary Anderson, d/b/a PG & L Marketing, Inc.; and PG & L, Inc., Defendants and Counterclaimants, v. Roger Grenfell, Plaintiff and Counterdefendant.
• Court: Montana Supreme Court

56 P.3d 326

311 Mont. 385

2002 MT 225

Roger GRENFELL, Plaintiff and Respondent, v. Gary ANDERSON, individually; Gary Anderson, d/b/a PG & L Marketing, Inc.; and PG & L, Inc., and John Doe One, Defendants and Appellants, and Gary Anderson, individually; Gary Anderson, d/b/a PG & L Marketing, Inc.; and PG & L, Inc., Defendants and Counterclaimants, v. Roger Grenfell, Plaintiff and Counterdefendant.

No. 01-268.

Supreme Court of Montana.

Submitted on Briefs October 4, 2001.

Decided October 10, 2002.

Linda Osorio St. Peter, St. Peter & Warren, Missoula, MT, for Appellants.

P. Mars Scott, Missoula, MT, for Respondents.

Justice JIM RICE delivered the Opinion of the Court.

¶ 1 Defendants and Appellants Gary Anderson and PG & L, Inc. (Anderson) appeal from judgment entered by the Fourth Judicial District Court, Missoula County, pursuant to remand by this Court in Grenfell v. Anderson, 1999 MT 272, 296 Mont. 474, 989 P.2d 818 (Grenfell I). On remand the District Court entered amended findings of fact and conclusions of law awarding Anderson $25,800 in lost profits for Plaintiff and Respondent Roger Grenfell's (Grenfell) breach of the commercial lease agreement and denying Anderson's claim of breach of the implied covenant of good faith and fair dealing, and denying Anderson's claims for treble damages and punitive damages for forcible entry and forcible detainer, and for tortious interference with a contract. Anderson appeals the denial of his claims and raises the following issues for review:

¶ 2 1. Did the District Court exceed its jurisdiction on remand?

¶ 3 2. Did the District Court mistakenly base Anderson's counterclaim for breach of the lease agreement on an issue not pled or raised at trial?

¶ 4 3. Did the District Court err in concluding that Anderson was not the prevailing party and therefore not entitled to attorney fees?

¶ 5 4. Did the District Court err in denying Anderson's counterclaims for forcible entry and forcible detainer?

¶ 6 5. Did the District Court err in denying Anderson's counterclaim for tortious interference?

¶ 7 6. Did the District Court err in denying Anderson's counterclaim for punitive damages?

BACKGROUND

¶ 8 We review here only the necessary and relevant factual and procedural background required to make a determination of the issues herein on appeal. For a full background discussion, see Grenfell I.

¶ 9 This action originally arose from a commercial lease agreement entered into by Grenfell and Anderson on January 18, 1989, for property located on Brooks Avenue in Missoula, Montana. The lease was for three years with a provision that Anderson could exercise a five-year option to extend the terms of the lease. The record demonstrates that the parties contemplated a second five-year option, but there is no written agreement accordingly. A written addendum, signed by the parties on or about June 15, 1990, specified that the written five-year option would begin on February 1, 1992. The parties were in agreement that the premises would be used only for commercial purposes, and Anderson sublet the premises to various commercial tenants up through the time that Grenfell terminated the lease agreement.

¶ 10 A mutual covenant in the lease agreement provided that if Anderson was in default for failure to pay rent or otherwise perform under the agreement, and thereafter failed to remedy such default within ten days after written notice by Grenfell, then Grenfell could lawfully enter and repossess the premises as if the lease had not been made, effectively terminating the agreement.

¶ 11 From the commencement of the agreement, Anderson occupied only half of the premises, and in February 1989, sublet the other half to Rick Bice (Bice), pursuant to an oral month-to-month tenancy. In February of 1991, Anderson relocated his business to a nearby building and sought to sublet his vacated half of the premises. On October 20, 1991, Anderson executed a five-year sublease agreement with Richard Houldson (Houldson), agreeing to sublet the entire premises. Anderson sent a letter to Bice, dated October 24, 1991, notifying Bice that Anderson had rented the entire building and that Bice had 30 days to vacate. Shortly thereafter, Bice informed Grenfell of the Anderson-Houldson sublease.

¶ 12 On October 17, 1991, however, Grenfell had sent to Anderson via certified mail a notice of default for failure to pay past due rent and utility bills, a letter that we determined in Grenfell I had neither provided Anderson with actual nor constructive notice. See Grenfell I, ¶¶ 35, 44-46. Eleven days later, on October 28, 1991, Grenfell entered and repossessed the premises by changing the locks. We determined that Grenfell's act of changing the locks effectively terminated the lease agreement between Grenfell and Anderson pursuant to the explicit provisions of the agreement. See Grenfell I, ¶ 50.

¶ 13 On November 25, 1991, Grenfell filed suit against Anderson, alleging breach of the lease agreement, unlawful detainer, and violation of the implied covenant of good faith and fair dealing. Anderson filed a counterclaim on February 21, 1992, alleging damages for forcible entry and forcible detainer, breach of contract, breach of the covenant of good faith and fair dealing, and tortious interference with Anderson's contractual relations.

¶ 14 Anderson prevailed on a motion for partial summary judgment wherein the District Court determined that the options contained in the lease agreement could be automatically exercised and could thus be a basis for an award of damages. Grenfell prevailed in the subsequent bench trial, receiving an award of $4,148.78, plus attorney fees and costs. The District Court dismissed all of Anderson's counterclaims, stating that Anderson had not presented credible evidence to support his claim for damages.

¶ 15 Anderson appealed and this Court affirmed in part, reversed in part, and remanded to the District Court for further proceedings. Upon remand, the District Court entered amended findings of fact, conclusions of law and an order, concluding that Anderson breached the lease agreement and the implied covenant of good faith and fair dealing for failing to timely pay rent and utilities to Grenfell, entitling Grenfell to $256.91. The District Court also concluded that Grenfell breached the lease agreement by failing to provide effective notice to Anderson of his default prior to entering and changing the locks on the premises. The District Court concluded that Grenfell's breach of the lease interfered with the Anderson Houldson sublease, awarding Anderson $25,800.00 in "lost profits" resulting from Grenfell's breach of the lease agreement. The District Court denied Anderson's treble damage claim for forcible entry and forcible detainer and denied Anderson's punitive damage claim for tortious interference with contractual or business relations. The District Court concluded that Grenfell acted in good faith and did not breach the implied covenant of good faith and fair dealing. The District Court finally concluded that neither party was the "prevailing party" for purposes of awarding attorney fees, and ordered that each party bear the burden of their own costs and fees.

ISSUE 1

¶ 16 Did the District Court exceed its jurisdiction on remand? ¶ 17 Anderson argues that the District Court exceeded its jurisdiction on remand when it entered further findings and conclusions on Grenfell's original claims when Grenfell had not cross-appealed the District Court's initial order, and this Court's remand did not require further determination of Grenfell's claims. Anderson argues that the doctrine of res judicata barred the District Court from entering any further findings or conclusions on Grenfell's original claims. Grenfell responds that the District Court's amended findings and conclusions are directly in line with this Court's instructions on remand.

¶ 18 This Court has previously defined the interrelated theories of res judicata and "law of the case." In Scott v. Scott (1997), 283 Mont. 169, 939 P.2d 998, we stated that "res judicata is a final judgment which, when rendered on the merits, is an absolute bar to a subsequent action between the same parties or those in privity with them, upon the same claim or demand." Scott, 283 Mont. at 175, 939 P.2d at 1001 (citing Fiscus v. Beartooth Electric Cooperative, Inc. (1979), 180 Mont. 434, 435-37, 591 P.2d 196, 197). In contrast, "the law of the case doctrine `expresses the practice of courts generally to refuse to reopen what has been decided. It expresses the rule that the final judgment of the highest court is the final determination of the parties' rights.'" Scott, 283 Mont. at 175, 939 P.2d at 1001-02; Fiscus, 180 Mont. at 436, 591 P.2d at 197.

¶ 19 "The general rule in Montana is that where a decision has been rendered by the Supreme Court on a particular issue between the same parties in the same case, whether that decision is right or wrong, such decision is binding on the parties and the courts and cannot be relitigated in a subsequent appeal." Belgrade State Bank v. Swainson (1978), 176 Mont. 444, 446, 578 P.2d 1166, 1167 (citations omitted). Thus, "when a case is reversed and remanded, the trial court may not ignore the mandate and opinion of the reviewing court; instead, the trial court `must proceed in conformity with the views expressed by the appellate court.'" In re Marriage of Pfeifer, 1998 MT 228, ¶ 12, 291 Mont. 23, ¶ 12, 965 P.2d 895, ¶ 12 (citation omitted).

¶ 20 Anderson contends that the District Court did not proceed on remand in conformity with the views expressed by this Court when it entered additional findings and conclusions on Grenfell's three original claims breach of the lease agreement, breach of the implied covenant of good faith and fair dealing, and unlawful detainer.

¶ 21 Regarding Grenfell's claim for Anderson's breach of the lease agreement, the District Court originally found that Anderson breached...