Hinderman v. Krivor

Decision Date07 December 2010
Docket NumberNo. DA 10-0201.,DA 10-0201.
Citation358 Mont. 111,2010 MT 230,244 P.3d 306
PartiesTom HINDERMAN and Gloria Schnell, Plaintiffs and Appellants, v. G. Allan KRIVOR, Rocky Mountain Land, and Northern Rockies Corporation, Defendants and Appellees.
CourtMontana Supreme Court

For Appellants: D. Scott Manning, Montana Property Law, PC, Missoula, Montana.

For Appellees: Matthew Baldassin, Datsopoulos, MacDonald & Lind, PC, Missoula, Montana.

Justice MICHAEL E. WHEAT delivered the Opinion of the Court.

¶ 1 The Fourth Judicial District Court, Mineral County, granted Defendants' motion for summary judgment, enforcing the settlement agreement entered into between the parties. We affirm.

BACKGROUND

¶ 2 In 2003, Plaintiffs entered into agreements to purchase Lots 7 1 and 8 of the Cayuse Ridge Ranch subdivision owned by Defendants. The purchase agreement for Lot 8 specifically noted matters of record, including a "Montana Trust Indenture by and between Larsen, [sic] & Northern Rockies Corporation, Grantor...." Defendants conveyed Lot 8 to Plaintiffs by warranty deed in March 2003. The Lot 8 warranty deed guaranteed that the property was "free from all encumbrances, EXCEPT ... other matters of record...." Defendants had recorded two mortgages on Lot 8 before Plaintiffs acquired the lot: (1) a mortgage to Northern Rockies Corporation, mortgagor, and Larsons, mortgagees, in May 2002 and (2) a mortgage to Northern Rockies Corporation, mortgagor, and Krivors, mortgagees, in July 2002.

¶ 3 After Plaintiffs acquired the lots, a dispute arose between the parties regarding the installation of power, and Plaintiffs filed suit in 2005, alleging breach of contract, fraud, negligent misrepresentation, and violations of the Montana Unfair Trade Practices and Consumer Protection Act.

¶ 4 In 2006, Plaintiffs purchased an additional parcel, Lot 10, from the Draves. The Lot 10 warranty deed noted that the property was "free from all encumbrances except a lien to Rocky Mountain Land/Northern Rockies Corporation." Defendants had also recorded a mortgage on the lot in July 2002 to Northern Rockies Corporation, mortgagor, and Krivors, mortgagees.

¶ 5 While the lawsuit was pending, Plaintiffs, on the advice ofcounsel, quit making payments on Lots 8 and 10. Consequently, Defendants initiated foreclosure proceedings on those lots.

¶ 6 The parties met for a settlement conference in June of 2007 and settled. Under the terms of the settlement agreement, Defendants agreed to postpone the July 2007 foreclosure sale of Lots 8 and 10 to allow time for Plaintiffs to pay off both lots at a discounted amount. However, if Plaintiffs did not pay the discounted amount by September 7, 2007, they would then be responsible for paying the full purchase price within three days, or Defendants would foreclose on the lots. The parties also agreed to sign a mutual release of all claims and dismiss their claims with prejudice. Both parties entered the settlement with the advice and approval of counsel.

¶ 7 Plaintiffs failed to pay off the discounted amount by September 7, 2007, and, as provided under the terms of the settlement agreement, Defendants foreclosed and purchased the properties on September 10, 2007. Within a week, Plaintiffs filed a lis pendens on the properties. Plaintiffs refused Defendants' request to release the lis pendens.

¶ 8 In February 2008, Defendants filed a motion to enforce the settlement agreement. Plaintiffs' counsel subsequently withdrew. In September 2008, Defendants moved for summary judgment, requesting that the DistrictCourt enforce the settlement agreement, remove the lis pendens, and dismiss the case with prejudice. The District Court issued an order allowing Plaintiffs until December 2008 to respond to Defendants' motion for summary judgment. In December 2008, Plaintiffs' current counsel appeared and filed a motion either for additional discovery pursuant to M.R. Civ. P. 56(f) or to strike Defendants' motions to enforce the settlement agreement and for summary judgment. The District Court denied Plaintiffs' motion in July 2009 and ordered Plaintiffs to file a response to Defendants' motion for summary judgment. Following briefing, the District Court deemed the matter submitted and granted Defendants' motion for summary judgment in March 2010.

¶ 9 We rephrase the issues on appeal as follows:

¶ 10 Issue 1: Did the District Court err in denying Plaintiffs' M.R. Civ. P. 56(f) motion for additional discovery?

¶ 11 Issue 2: Did the District Court err in enforcing the settlement agreement?

STANDARDS OF REVIEW

¶ 12 A district court may continue a motion for summary judgment on the basis that an opposing party needs additional discovery. M.R. Civ.P. 56(f); Rosenthal v. County of Madison, 2007 MT 277, ¶ 23, 339 Mont. 419, 170 P.3d 493. We review the denial of a M.R. Civ. P. 56(f) motion for an abuse of discretion. Rosenthal, ¶ 23.

¶ 13 We review a district court's summary judgment ruling de novo, applying M.R. Civ. P. 56 criteria. Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, demonstrate that no genuine issue as to any material fact exists and that the moving party is entitled to judgment as a matter of law. Phelps v. Frampton, 2007 MT 263, ¶ 15, 339 Mont. 330, 170 P.3d 474. Once the moving party establishes that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law, the burden shifts to the nonmoving party to demonstrate with substantial evidence, not mere denial, speculation, or conclusory assertions, that a genuine issue of material fact exists or that the moving party is not entitled to judgment as a matter of law. The district court's conclusion that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law is a conclusion of law which we review for correctness. Id. at ¶ 16.

DISCUSSION

¶ 14 Issue 1: Did the District Court err in denying Plaintiffs' M.R. Civ. P. 56(f) motion for additional discovery?

¶ 15 The District Court denied Plaintiffs' Rule 56(f) motion on the basis that Plaintiffs failed to demonstrate why additional discovery was necessary or how it would preclude summary judgment. Plaintiffs contend that because the District Court denied additional discovery pursuant to Rule 56(f), the material facts were never analyzed by the District Court. Plaintiffs allege that, therefore, it was impossible for the District Court to conclude that no genuine issue of material fact exists or that Defendants were entitled to judgment as a matter of law.

¶ 16 A district court retains inherent discretionary control over discovery, including whether, pursuant to Rule 56(f), to continue a motion for summary judgment to allow an opposing party additional time to conduct discovery. Rosenthal, ¶ 37. M.R. Civ. P. 56(f) provides:

Should it appear from the affidavits of a party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order asis just.

A district court does not abuse its discretion in denying a Rule 56(f) motion if the party moving for additional discovery fails to establish how the proposed additional discovery will prevent summary judgment. Rosenthal, ¶ 38.

¶ 17 Plaintiffs' counsel's affidavit in support of their Rule 56(f) motion reveals that counsel conducted an initial investigation of the status of the properties' titles, which revealed encumbrances on the lots. Counsel's affidavit fails to establish why additional discovery is necessary or how it would prevent summary judgment. If anything, the affidavit demonstrates Plaintiffs had constructive notice of the encumbrances, an undisputed material fact that, as discussed in Issue 2, makes summary judgment appropriate. Because Plaintiffs failed to establish how additional discovery would prevent summary judgment, we conclude the District Court did not abuse its discretion in denying Plaintiffs' Rule 56(f) motion.

¶ 18 Issue 2: Did the District Court err in enforcing the settlement agreement?

¶ 19 Plaintiffs argue the settlement agreement is invalid because Defendants misrepresented that the properties were free from all encumbrances when the properties were in fact encumbered by Defendants' own mortgages. Plaintiffs allege this prevented them from obtaining financing and, therefore, performing under the settlement agreement. Plaintiffs also assert that constructive notice of the mortgages should not be a defense to sellers who intentionally misrepresent the status of title. Further, Plaintiffs claim the settlement agreement should have been pled as a new cause of action before it could be enforced.

¶ 20 The District Court concluded that because Plaintiffs had actual and constructive notice of the mortgages and/or because means were available to Plaintiffs to ascertain the truth—the mortgages were recorded five years before Plaintiffs entered into the settlement agreement—Plaintiffs could not claim that alleged misrepresentations regarding the warranty deeds invalidated the settlement agreement. In addition, the District Court found that Plaintiffs failed to raise any genuine issue of material fact demonstrating that Defendants had actually misrepresented the status of title. Plaintiffs' erroneous assumption that they would be able to obtain third party financing in order to perform under the settlement agreement was not, in and of itself, sufficient to invalidate the agreement. The District Court further concluded that Defendants were not required to file a separate lawsuitin order to enforce the settlement agreement.

¶ 21 A valid settlement agreement is enforceable like any other binding...

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