Hanson v. Town of Fort Peck
| Docket Number | DA 22-0312 |
| Decision Date | 07 November 2023 |
| Parties | LANNY HANSON, JAMIE HANSON and WINDSOCK LAND AND CATTLE PARTNERSHIP, LLC, Plaintiffs and Appellees, v. TOWN OF FORT PECK, a political subdivision of the State of Montana, Defendant and Appellant. |
| Court | Montana Supreme Court |
Submitted on Briefs: January 11, 2023
District Court of the Seventeenth Judicial District, In and For the County of Valley, Cause No. DV-19-52 Honorable Yvonne Laird, Presiding Judge
For Appellant: John G. Crist, Harlan B. Krogh, Crist, Krogh, Alke & Nord, PLLC, Billings, Montana
For Appellees: Shawn P. Cosgrove, Geoffrey T. Cunningham, Parker Heitz & Cosgrove, PLLC, Billings, Montana
¶1 The Town of Fort Peck, Montana (Town), appeals from the April 2022 and June 2022 judgments of the Montana Seventeenth Judicial District Court, Valley County, enforcing the parties' April 2021 mediated memorandum of understanding (MOU) regarding a subdivision dispute, and then implementing it in the form of a more formal final settlement agreement proposed by Plaintiffs (Developers) for Town Council approval. We address the following restated issue:
Whether the District Court erroneously concluded that the mediated MOU was a valid and enforceable contract duly approved by the Town Council at its closed April 2021 meeting?
Affirmed in part, reversed in part, and remanded for further proceedings.
¶2 In separate series of contractual agreements with the Town Developers purchased and subdivided certain Town-owned tracts into two separate residential subdivisions (Windsock Sky Park Subdivision and Windsock Subdivision) in accordance with Title 76, chapter 3, MCA (Montana Subdivision and Platting Act).[1] Pursuant to those contractual agreements and resulting Town approval of the proposed subdivisions, the contemplated infrastructure for each subdivision included, inter alia, paved streets to be constructed by Developers in accordance with certain agreed specifications which the Town would then accept and maintain as public streets upon construction approval.
¶3 In 2016, years after Town approval of each subdivision, a dispute arose as to whether the recently paved Windsock Sky Park Subdivision streets complied with a previously agreed minimum street width requirement. The Town asserted that the governing subdivision approval and contracts required 24-foot wide streets, rather than the 21-foot wide streets constructed. In November 2017, following various back-and-forth communications, the Town Mayor notified Developers that the Town Council rejected the newly paved streets for public maintenance on the asserted ground that they did not comply with the previously agreed minimum width requirement. In August 2019, Developers filed a contract claim asserting that the Town breached its contract duty to accept the subject streets as constructed. The claim thus prayed for compensatory damages and prevailing-party contract attorney fees.
¶4 Upon initial and amended answers, the Town moved for summary judgment pursuant to M. R. Civ. P. 56 on the asserted grounds that the stated contract claim was time-barred by § 76-3-625(1), MCA (180-day limitation period regarding compensatory claims against local governments based on a final subdivision action/decision/order or subdivision regulation), and/or § 27-2-209(5), MCA (six-month limitations period regarding claims against municipalities "arising from" an adverse decision "relating to a land use, construction, or development project"). However, in April 2021, the parties engaged in mediated settlement negotiations in which Developers participated personally and through counsel, and the Town through the Town Attorney and Mayor. The day-long mediation resulted in an informal typewritten MOU which set forth 17 points of agreement and was undersigned by the Town Attorney, Developers, and Developers' counsel. In pertinent part, the MOU specified that: (1) the "20 foot" minimum "paving width" prescribed by "the 1982 Montana Model Subdivision Regulations" applied to all streets in both subdivisions; (2) "the Town will accept maintenance of" the previously constructed Sky Park subdivision streets upon Developers' provision of road "cross-section" drawings "confirm[ing]" that those roads "met" the agreed 20-foot minimum paving width standard; and (3) "each side [will] bear[] its own costs and attorney fees."
¶5 The MOU also included a line for the Mayor's signature upon the contemplated subsequent approval of the Town Council. At the time of initial signing of the MOU, the parties verbally agreed that Developers' counsel would draft a formal settlement agreement incorporating the MOU provisions for formal Town Council consideration and approval. Developers' counsel and the Town Attorney thus subsequently cosigned and filed a stipulated motion to that effect, to wit as pertinent:
Plaintiffs . . . and Defendant[] Town . . . by and through [their respective] attorney[s] of record . . . [report that] Plaintiffs and Defendants' representatives, following mediation, have reached an agreement in principle. The agreement requires approval from the Town Council and roadway testing.... Therefore, the parties ask that the Court vacate the present scheduling order and extend all pending deadlines indefinitely. The parties intend to file a status report with the Court within 45 days confirming settlement or to establish a new scheduling order going forward.
(Emphasis added-case original.)
¶6 On April 19, 2021, as previously agreed, Developers' counsel emailed the Town Attorney a proposed final settlement agreement intended to formalize the mediated MOU for Town Council approval. Later that day, the Town Council and Town Attorney met in a closed "executive session" to discuss the mediated MOU and resulting Developers-proposed final settlement agreement. Strangely, the record on appeal includes no contemporaneous meeting minutes or other official record refencing even the general purpose or subject matter of the closed meeting, much less who was present or what action resulted, if any.[2] In a subsequent litigation-related affidavit, however, the Town Clerk attested that she was personally present at the April 19th meeting and that:
[the Town Council discussed the MOU], the fact that the points in the MOU would be included in a formal settlement agreement, and that [the Council] would have to vote to approve the final agreement at a regular Town Council meeting. [Developer] Lanny Hanson was not present in the executive session[]. There was no vote taken by the Town Council in the executive session. The Town Council can only take action approving or disapproving a contract in regular or special session of the Town Council open to the public.
(Internal enumeration omitted-emphasis added.) At or after the closed meeting, however, the Mayor signed the informal MOU on the line previously left blank, but did not similarly sign the resulting Developers-proposed final settlement agreement.
¶7 The next day, the Town Attorney emailed a copy of the Mayor-signed MOU to Developers' counsel and requested an editable version of Developers' earlier-submitted proposed final agreement for contemplated Town amendments. In a responsive email remittal of the draft agreement, Developers' counsel asked, "[d]oes this mean things got approved last night?" An email string included with a later filed affidavit of the Town Attorney manifested that she responded, "[y]es[,] [t]he [MOU] was approved, but we did not act on the settlement agreement yet because I'd like to add more content." The affidavit email string further manifested the Town Attorney also referred to her contemplated additional content as "substantial additions" to the Developers-proposed settlement agreement.
¶8 A week later the Town Attorney sent Developers' counsel a Town-edited version of the proposed final settlement agreement, with an email assertion that the edited draft "matches [the Town's] understanding of our settlement." In regard to the MOU requirement for Developers to provide "street paving cross-section drawings" prepared by a qualified engineer, the Town-edited version of the proposed final agreement included new language further requiring Developers to provide and pay for a supporting geotechnical engineering investigation and report.[3] However, nothing in the language of the informal mediated MOU referenced or otherwise manifestly implied such a requirement. Developers' counsel thus later remitted a red-lined version of the Town-edited draft striking-out, inter alia, all references to a geotechnical investigation requirement.
¶9 By email dated May 20, 2021, the Town Attorney advised Developers' counsel that "we might have a serious problem" because "[t]he Town is insisting that the [street] development cross section include[] a geotechnical evaluation." The email explained that the Town's geotechnical investigation demand stemmed from a notation in a 2019 street cross-section drawing quote independently obtained by the Mayor from a third-party engineering firm stating that its proposed "[r]oadway section thicknesses" specification would be "based on the results of a geotechnical investigation." In a follow-up email on May 26, 2021, apparently recognizing that the parties had not previously agreed to such requirement, the Town Attorney asked whether Developers would "object to the Town performing a geotechnical investigation of the [subject] roads." (Emphasis added.) In June 2021 after responding that the parties' mediated agreement did not include a geotechnical investigation and report requirement, Developers provided the Town with engineer-prepared street cross-section drawings showing that the...
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