Knucklehead Land Co. v. Accutitle, Inc., No. DA 06-0561.

Docket NºNo. DA 06-0561.
Citation2007 MT 301, 172 P.3d 116
Case DateNovember 20, 2007
CourtUnited States State Supreme Court of Montana
172 P.3d 116
2007 MT 301
KNUCKLEHEAD LAND COMPANY, INC., a Montana corporation, Plaintiff and Appellant,
v.
ACCUTITLE, INCORPORATED, a Montana corporation, d/b/a American Title and Escrow; and Flathead County Title Company, a Montana corporation, Defendants, Third-Party Plaintiffs and Appellees,
v.
Shapiro & Meinhold, L.L.P., Third-Party Defendant.
No. DA 06-0561.
Supreme Court of Montana.
Submitted on Briefs May 23, 2007.
Decided November 20, 2007.

[172 P.3d 118]

For Appellant: Harold V. Dye, Dye & Moe, P.L.L.P., Missoula, Montana.

For Appellees: Scott D. Hagel and Kimberly S. More, Crowley, Haughey, Hanson, Toole & Dietrich, P.L.L.P., Kalispell, Montana.

Justice JIM RICE delivered the Opinion of the Court.


¶ 1 Appellant Knucklehead Land Company (Knucklehead) appeals the District Court's grant of summary judgment in favor of the Appellees, Accutitle, Inc. d/b/a American Title and Escrow (ATE) and Flathead County Title Company (FCTC). We affirm.

¶ 2 We address the following issues:

¶ 3 Did the District Court err in granting summary judgment by:

a. Misconstruing the duties of a trustee under the Small Tract Financing Act of Montana?

b. Overlooking material issues of fact regarding commercial reasonableness of the Appellees' actions?

172 P.3d 119

c. Failing to give Knucklehead the benefit of reasonable inferences from the record?

d. Concluding as a matter of law that Knucklehead sustained no recoverable damages for breach of contract?

e. Premising its ruling on Knucklehead's negligent misrepresentation claim on the wrong representation?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 4 Knucklehead is a Montana corporation located in Flathead County. ATE is the successor trustee for a trust indenture filed upon residential property in Kalispell, Montana, known as the "McCabe property," pursuant to the Small Tract Financing Act. The original purchasers defaulted and the lender, Citimortgage, Inc. d/b/a Citicorp Mortgage, Inc., began the foreclosure process. Pursuant to an agreement between ATE and Citicorp, the law firm Shapiro & Meinhold L.L.P. (Shapiro) of Colorado Springs, Colorado, was designated to administer the non-judicial foreclosure sale of the McCabe property. Accordingly, Shapiro prepared the foreclosure sale documents and provided the required state and federal notices of foreclosure sale. Shapiro arranged for ATE to serve as substitute trustee, and ATE subsequently hired FCTC to act as its agent to cry the sale, which was scheduled for February 26, 2002.

¶ 5 On the morning of the sale, ATE received a fax from Shapiro stating that Shapiro believed the Internal Revenue Service (IRS) had not been properly notified of the sale. The IRS held a tax lien of approximately $60,000 on the property and Shapiro indicated that ATE should cancel the sale. ATE immediately tried to reach FCTC but, at that point, the sale was already in progress. Billy Christensen, President of Knucklehead, and Carl Haggar, Knucklehead's treasurer, attended the sale and, during the course of the sale, paid a competing bidder, Douglas Hatton, $2,500 to stop bidding on the property. As a result, Knucklehead submitted the high bid in the amount of $85,000 for the McCabe property, which appraised for $172,000. Following the sale, but prior to receiving any funds from Knucklehead, FCTC was advised by ATE of the perceived error in the notice of sale. Consequently, FCTC refused to accept payment from Knucklehead, informing Christensen that the sale had been voided. Knucklehead contacted Hatton, informed him of the cancelled sale, and Hatton agreed to destroy the $2,500 check given to him to withdraw from bidding. The sale was re-noticed and held again on July 18, 2002, at which time the property sold for $122,000. Knucklehead was not the high bidder. It then filed this action in the District Court.

¶ 6 Knucklehead's complaint alleged that ATE and FCTC had committed (1) breach of trust, (2) breach of contract, (3) breach of the implied covenant of good faith and fair dealing, and (4) negligent misrepresentation. ATE and FCTC filed a third-party action against Shapiro for indemnity or contribution and Shapiro filed a counterclaim against ATE and FCTC for the same. Shapiro, ATE, and FCTC eventually settled their claims against each other, and Shapiro is not a party to this appeal. Following discovery, the parties all moved for summary judgment.

¶ 7 The District Court denied ATE and FCTC's motion for summary judgment but granted Knucklehead's motion for partial summary judgment, holding as a matter of law that a defect did not exist in the IRS notice as Shapiro had believed. Consequently, the court concluded that the first foreclosure sale was valid, a contract was formed at the time of sale, and that the failure to tender a deed transferring the property to Knucklehead resulted in a breach of contract. However, because Knucklehead failed to offer evidence of loss, the court reserved the question of whether Knucklehead had sustained any recoverable damages. Knucklehead has not appealed the District Court's legal conclusion that the notice to the IRS was proper, and thus, that holding stands unchallenged.

¶ 8 After further discovery and motions by the parties, the District Court entered summary judgment in favor of ATE and FCTC on all remaining counts. As to the breach of trust claim, the District Court held that ATE

172 P.3d 120

and FCTC's trustee duties were limited by the Small Tract Financing Act of Montana, rejecting Knucklehead's reliance on the trust provisions of § 72-34-113, MCA. The parties had previously agreed that the "trustee at a forclosure [sic] sale has a duty to conduct the sale fairly, openly, reasonably, and with due diligence and sound discretion." The court ruled that Knucklehead failed to present any evidence that ATE "did anything to prevent the first sale from being conducted" in a manner consistent with this duty.

¶ 9 As to the breach of the implied covenant of good faith and fair dealing and the negligent misrepresentation claims, the court found that Knucklehead failed to establish disputed material facts and that ATE and FCTC were entitled to judgment as a matter of law. Regarding the previously established breach of contract, the District Court held that Knucklehead sustained no recoverable damages under § 27-1-314, MCA, and entered judgment in favor of ATE and FCTC. Knucklehead appeals.

STANDARD OF REVIEW

¶ 10 We review a district court's grant of summary judgment de novo. Precision Theatrical Effects, Inc. v. United Bank, N.A., 2006 MT 236, ¶ 20, 333 Mont. 505, ¶ 20, 143 P.3d 442, ¶ 20. We apply the same criteria as M.R. Civ. P. 56. Grant of summary judgment is proper when the moving party meets its burden and establishes both the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Precision Theatrical Effects, ¶ 20. The burden of proof then shifts to the nonmoving party to prove beyond mere speculation and denial that a genuine issue of material fact exists. Precision Theatrical Effects, ¶ 20.

DISCUSSION

¶ 11 Did the District Court err in granting summary judgment by:

a. Misconstruing the duties of a trustee under the Small Tract Financing Act of Montana?

¶ 12 Knucklehead asserts that the District Court erred by granting summary judgment on the breach of trust claim because the District Court misinterpreted the duties of a trustee under the Small Tract Financing Act of Montana. Knucklehead argues that in the absence of a statutory definition, a word's acquired meaning in law is incorporated into the statute. Specifically, Knucklehead asserts that because the term "trustee" has a legally accepted meaning, the legislature intended to impose the "well-settled obligations and duties" of "other" trustees on trust indenture trustees. Knucklehead thus offers that the duties of a trustee set forth in § 72-34-101 et seq., MCA, are required of indenture trustees, including the duty to not delegate. See § 72-34-113, MCA. Knucklehead asserts that ATE and FCTC committed breach of trust by delegating trust administration to Shapiro, arguing that a trustee's "core function is one that `the trustee can reasonably be required personally to perform,'" citing the Restatement of Trusts 2d, "yet . . . [ATE] abdicated this duty to Shapiro and allowed [Shapiro] to direct the voiding of the sale even though [ATE] had concluded that adequate notice had been given to the IRS." Knucklehead concludes that ATE "violated its duty to exercise general supervision" over Shapiro.

¶ 13 The Small Tract Financing Act of Montana (the Act) was originally introduced to reduce the strain on the financing of improvements upon small tracts, as explained in First State Bank of Forsyth v. Chunkapura, 226 Mont. 54, 734 P.2d 1203 (1987). Prior to passage of the Act, banks and investors were hesitant to invest in small tracts because when a loan financed by a standard mortgage went into default, funds were obstructed and possession of the property was prohibited for the statutory one-year period of redemption. Chunkapura, 226 Mont. at 57, 734 P.2d at 1205. The Act struck a compromise between...

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28 practice notes
  • Morrow v. Bank of Am., N.A., No. DA 13–0241.
    • United States
    • Montana United States State Supreme Court of Montana
    • May 7, 2014
    ...however, is a prerequisite to a claim for tortious breach of the covenant. [324 P.3d 1177]Knucklehead Land Co. v. Accutitle, Inc., 2007 MT 301, ¶ 18, 340 Mont. 62, 172 P.3d 116. While an original contract existed between the parties, the Morrows' claim is not based on this contract, but on ......
  • Pilgeram v. Greenpoint Mortg. Funding, Inc., No. DA 12–0629.
    • United States
    • Montana United States State Supreme Court of Montana
    • November 25, 2013
    ...trustee, performing duties under the STFA, to delegate those duties to another party. Knucklehead Land Co., Inc. v. Accutitle, Inc., 2007 MT 301, ¶¶ 12, 15, 340 Mont. 62, 172 P.3d 116;See also Diehl v. Recontrust Co., N.A., 2010 WL 2175894, **4, 5, 2010 U.S. Dist. LEXIS 52404, **11, 13 (D.M......
  • Ministry v. Faith Lutheran Church of Great Falls, Inc., No. DA 13–0127.
    • United States
    • Montana United States State Supreme Court of Montana
    • March 12, 2014
    ...however, inferences requiring a “speculative leap” are inappropriate for summary judgment. Knucklehead Land Co. v. Accutitle, Inc., 2007 MT 301, ¶¶ 24–25, 340 Mont. 62, 172 P.3d 116. We review the determination that the moving party is entitled to judgment as a matter of law for correctness......
  • Baumgart v. State, No. DA 13–0564.
    • United States
    • Montana United States State Supreme Court of Montana
    • September 3, 2014
    ...summary judgment; however, “[s]ummary judgment cannot be defeated by unsupported speculation.” Knucklehead Land Co. v. Accutitle, Inc., 2007 MT 301, ¶ 26, 340 Mont. 62, 172 P.3d 116.DISCUSSION ¶ 15 Did the District Court err in granting DOC's motions for partial summary judgment as they per......
  • Request a trial to view additional results
28 cases
  • Morrow v. Bank of Am., N.A., No. DA 13–0241.
    • United States
    • Montana United States State Supreme Court of Montana
    • May 7, 2014
    ...however, is a prerequisite to a claim for tortious breach of the covenant. [324 P.3d 1177]Knucklehead Land Co. v. Accutitle, Inc., 2007 MT 301, ¶ 18, 340 Mont. 62, 172 P.3d 116. While an original contract existed between the parties, the Morrows' claim is not based on this contract, but on ......
  • Pilgeram v. Greenpoint Mortg. Funding, Inc., No. DA 12–0629.
    • United States
    • Montana United States State Supreme Court of Montana
    • November 25, 2013
    ...trustee, performing duties under the STFA, to delegate those duties to another party. Knucklehead Land Co., Inc. v. Accutitle, Inc., 2007 MT 301, ¶¶ 12, 15, 340 Mont. 62, 172 P.3d 116;See also Diehl v. Recontrust Co., N.A., 2010 WL 2175894, **4, 5, 2010 U.S. Dist. LEXIS 52404, **11, 13 (D.M......
  • Ministry v. Faith Lutheran Church of Great Falls, Inc., No. DA 13–0127.
    • United States
    • Montana United States State Supreme Court of Montana
    • March 12, 2014
    ...however, inferences requiring a “speculative leap” are inappropriate for summary judgment. Knucklehead Land Co. v. Accutitle, Inc., 2007 MT 301, ¶¶ 24–25, 340 Mont. 62, 172 P.3d 116. We review the determination that the moving party is entitled to judgment as a matter of law for correctness......
  • Baumgart v. State, No. DA 13–0564.
    • United States
    • Montana United States State Supreme Court of Montana
    • September 3, 2014
    ...summary judgment; however, “[s]ummary judgment cannot be defeated by unsupported speculation.” Knucklehead Land Co. v. Accutitle, Inc., 2007 MT 301, ¶ 26, 340 Mont. 62, 172 P.3d 116.DISCUSSION ¶ 15 Did the District Court err in granting DOC's motions for partial summary judgment as they per......
  • Request a trial to view additional results

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