Hall v. Hall, DA 13-0577

• Docket Nº: DA 13-0577
• Citation: 2015 MT 226
• Case Date: August 04, 2015
• Court: United States State Supreme Court of Montana

2015 MT 226

GREGORY S. HALL, Plaintiff and Appellee,
v.
DON HALL d/b/a DON HALL BUILDERS, DONNA HALL
d/b/a/ TOWN & COUNTRY PROPERTY MANAGEMENT
AND REAL ESTATE, DEBRA CERNICK d/b/a DEBRA'S MONTANA
COUNTY REAL ESTATE also d/b/a MONTANA COUNTRY
REAL ESTATE and JOHN HEINLEIN, Defendants and Appellants.

DA 13-0577

SUPREME COURT OF THE STATE OF MONTANA

Submitted on Briefs: June 10, 2014
August 4, 2015

APPEAL FROM: District Court of the Nineteenth Judicial District, In and For the County of Lincoln, Cause No. DV-07-67 Honorable C.B. McNeil, Presiding Judge

COUNSEL OF RECORD:

For Appellant:

Jeffry M. Foster, Davis, Hatley, Haffeman & Tighe, P.C., Great Falls, Montana

Ada C. Montague, Franz & Driscoll, P.L.L.P, Helena, Montana

For Appellee:

Maxwell G. Battle, Jr., Battle & Edenfield, PLLC, Kalispell, Montana

/s/_________
Clerk

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Justice Laurie McKinnon delivered the Opinion of the Court.

¶1 This case arises from a dispute over a home inspection performed by Don Hall of a home purchased by Gregory S. Hall in 2006. (Don and Gregory are not related.) Gregory filed a complaint against Don; the seller of the home, John Heinlein; real estate broker Donna Hall, also Don's wife; and real estate broker Debra Cernick. Gregory alleged that the defendants failed to disclose material defects in the property including structural leaks, a faulty furnace, clogged plumbing, and toxic mold. Defendants Donna Hall, Heinlein, and Cernick ultimately obtained summary judgment on the grounds that Gregory received a disclosure statement and had imputed knowledge of the defects. Gregory appealed, and the judgment was affirmed by this Court. The District Court, determining that Don had not filed a sufficient answer to the complaint, entered default judgment against Don in the amount of $206,522.80. After issuance of a writ of execution, Don asked for the default judgment to be set aside and also sought to claim exemptions. These requests were denied by the District Court. Don appeals. We reverse.

FACTUAL AND PROCEDURAL BACKGROUND

¶2 Don, who represented himself during most of the proceedings, claims little knowledge of the legal system, and thus the timeline of his participation in this case requires close examination. Gregory filed his complaint on March 5, 2007, Judge Michael C. Prezeau presiding. On March 8, 2007, Gregory requested a substitution of judge. Judge C. B. McNeil assumed jurisdiction on March 20, 2007. A summons was issued to Don on March 5, 2007, naming Judge Prezeau as the presiding judge, and informing Don that he was

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required to file a response within 20 days or suffer default.¹ The return of service indicates that Don was served with the summons and complaint on March 13, 2007. Don was thus required to appear or answer on or before April 2, 2007. Don submitted a financial affidavit and request for waiver of fees, which he signed on March 28, 2007, and which was filed April 4, 2007. The order waiving fees was signed by Judge McNeil on April 3, 2007, and also filed April 4, 2007. Don continued to receive service of all filings in the case, and on May 7, 2007, Don signed and returned a copy of the order calling in Judge McNeil.

¶3 The next filing by Don to appear in the record is a typed letter from Don to Judge Prezeau, filed in the District Court on September 20, 2007. There is no date reflecting when Don may have written or mailed the letter. In the letter, Don states that he received the summons and complaint on March 14, 2007, and would "try to answer this as best as I can," although he could not afford an attorney. He admitted that he looked over the house for structural damage and general appearance in July of 2006 and wrote up a short list of noticeable defects. He stated that he had retired two years earlier and only looked at the house as a favor. He stated that he was not paid for the inspection, did not have insurance, and is not licensed to conduct specialized inspections for issues such as mold. He noted that the house was older, and therefore likely to have some flaws. Nevertheless, he felt the house was in good shape. He indicated that he took no part in the buying and selling of the house. He suggested mediation of the case "between Mr. [Gregory] Hall and Mr. Heinlein [by] a person agreeable to both." He also stated, "I really think this should be dismissed and I am

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asking for a Dismissal on account of the fraudulent claims by Mr. [Gregory] Hall." The letter was copied to Judge McNeil on September 20, 2007, docketed as "Answer of Don Hall/Motion to Dismiss," and a page was placed in the record immediately following the letter indicating that a copy had been mailed to counsel for all parties.

¶4 On October 19, 2007, "[a]ll of the Defendants having filed an answer," a scheduling conference was set. On November 30, 2007, Gregory filed a "Motion to Determine Sufficiency of Writing as an Answer," attaching a handwritten letter Gregory's counsel, Maxwell Battle, had received from Don. Judge McNeil signed an order prepared by Battle stating "that the writing served upon Plaintiff's Counsel by Pro Se Defendant DON HALL does not comply with Rule 8, M. R. Civ. P." Judge McNeil inserted a handwritten note adding, "and the letter to Judge Prezeau filed Sept. 20, 2007." The order, filed November 28, 2007, directed Don to file an answer satisfying the requirements of M. R. Civ. P. 8 within 10 days. No further writings by Don were filed within that time. On February 11, 2008, Gregory moved for default against Don, which was entered by the District Court on February 20, 2008.

¶5 Defendants Donna Hall, Heinlein, and Cernick moved for summary judgment, which was granted on February 20, 2009. The District Court concluded that Donna Hall, as Gregory's agent for the purchase of the home, was aware of a possible defect in the furnace, and this knowledge should be imputed to Gregory. Further, the District Court did not find credible Gregory's claim that the page from the disclosure form on which the furnace defect was disclosed was missing. The District Court also noted Donna Hall's testimony that she informed Gregory of the furnace defect when he first toured the property and that no pages

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were missing from the disclosure form she provided to Gregory. The District Court concluded that other defects alleged by Gregory, such as "toxic mold," were immaterial due to Gregory's concession that "this case would not exist but for his failure to 'see' the allegedly missing page" containing notice of the furnace defect. The determination that material defects were disclosed to Gregory undermined the factual basis of his claims against all defendants, including Donald. Gregory appealed, and this Court affirmed in a memorandum decision on November 10, 2010. Hall v. Hall, 2010 MT 243N, 359 Mont. 444, 249 P.3d 80.

¶6 On February 16, 2010, after entry of summary judgment in favor of defendants, Gregory requested "final default judgment" against Don. Gregory stated that default "on the issue of liability" had been entered against Don, and further stated that it was unknown whether Don objected to the motion because "[c]ontact with him is impractical and would serve no purpose under the circumstances of this case." Gregory requested damages in the amount of $206,522.80.

¶7 Each of the remaining defendants, Donna Hall, Heinlein, and Cernick, filed responses or notices of position objecting to the motion for a default judgment against Don. Donna Hall argued that "Don Hall's fate should be allowed to rise or fall with the rest of the Defendants, rather than entering a judgment against him based on claims and theories that saw no traction in any other capacity in this proceeding." Heinlein argued that despite the default, Hall had a right to a hearing on damages, which must be limited to those the plaintiff could reasonably prove as a matter of law. Cernick similarly argued that, based on the

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earlier summary judgment ruling, "it appears . . . that a portion of the damages sought by Plantiff against Don Hall are not recoverable as a matter of fact or law."

¶8 Gregory moved to strike these responses, arguing that none of the remaining defendants or their counsel had standing to object on behalf of Don. Gregory provided correspondence with Tracy Axelberg, counsel for Donna Hall, in which Axelberg acknowledged that he did not have authority to act on Don's behalf, but said, "It's just the right thing to do, in my view. He did file a response to the complaint, at least in a fashion; not really responsive, but something as opposed to nothing." On April 1, 2010, Gregory's counsel, Battle, filed notice with the court of a letter received from Don stating, "I feel that you don't have a so called Default Judgment of any sorts against me or anyone. . . . I did answer your letter of Default over 2 years ago."

¶9 On April 14, 2010, the District Court granted Gregory's motions to strike and for default judgment. Judgment was entered against Don in the amount of $206,522.80. The District Court concluded, "Said Defendant [Don] has filed no appearance in this proceeding inclusive of consideration of the document filed by Plaintiff April 1, 2010 which attaches an unsigned letter to Plaintiff's counsel which does not constitute a response by Defendant Don Hall to the Motion for Default Judgment as a matter of law."

¶10 On October 8, 2010, the judgment being unpaid, a writ of execution was issued directing the sheriff to seize Don's personal property in order to satisfy the judgment. On December 14, 2010, Don filed a letter in which he "ma[de] a motion or appearance to have an unjustified Court Order of Default Judgment set aside and forever stricken . . . ." He stated that he had "recently found out that I cannot send any papers directly to the Judge,"

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and thus many of his writings or responses may never have been considered by the court. He attached a copy of a letter to Judge McNeil, dated December 6, 2007, stating, "I received your letter Nov 30, 2007 about a hand...