Maloney v. Home and Investment Center, Inc.

• Decision Date: 08 February 2000
• Docket Number: No. 99-100.,99-100.
• Citation: 994 P.2d 1124,2000 MT 34
• Court: Montana Supreme Court
• Parties: Kenneth MALONEY and Dawn Maloney, Plaintiffs and Respondents, v. HOME AND INVESTMENT CENTER, INC., d/b/a Century 21 Home and Investment Center, Inc., Sharon Costantino, and Larry O. Lee, Defendants and Appellants.

994 P.2d 1124

2000 MT 34

Kenneth MALONEY and Dawn Maloney, Plaintiffs and Respondents, v. HOME AND INVESTMENT CENTER, INC., d/b/a Century 21 Home and Investment Center, Inc., Sharon Costantino, and Larry O. Lee, Defendants and Appellants.

No. 99-100.

Supreme Court of Montana.

Submitted on Briefs April 29, 1999.

Decided February 8, 2000.

Marshall Murray, Law Office of Marshall Murray, Kalispell, Montana, For Appellant.

Chas. D. Dearden, Columbia Falls, Montana, For Respondent.

Justice JAMES C. NELSON delivered the Opinion of the Court.

¶ 1 Appellants Larry O. Lee (Lee) and Home and Investment Center, Inc., d/b/a Century 21 Home and Investment Center, Inc. (Century 21), appeal from a May 16, 1996 Order issued by the Eleventh Judicial District Court, Flathead County, which imposed sanctions against Appellants for discovery violations; and, from the same District Court's November 25, 1998 Judgment awarding damages to Respondents Kenneth and Dawn Maloney (Maloneys).

¶ 2 We affirm in part and reverse in part.

¶ 3 Lee and Century 21 raise the following issues on appeal:

1. Did the District Court err in its May 16, 1996 Order as to the extent and severity of the sanctions imposed?

2. Did the District Court err in its November 25, 1998 Order, adopting the Special Master's original and amended findings of fact, conclusions of law and recommendation and judgment?

Factual and Procedural Background

¶ 4 This matter involves the determination of damages flowing from the tortious interference by Century 21 and Lee, as president of Century 21, (hereafter referred to singularly as "Lee"),¹ with the Maloneys' right to purchase a 74.6 acre parcel adjacent to their property near Polebridge, Montana. Polebridge is located in a fairly remote area west of Glacier Park in northwest Montana.

¶ 5 The 74.6 acre parcel in question was owned by C.M. "Bud" Fishel (Fishel). The Maloneys, who reside in Fargo, North Dakota, have spent lengthy stays during the summers and winters in the Polebridge area since the early 1980s. Enamored of the area, they purchased a 20-acre parcel from Fishel in 1990. From that date forward, the Maloneys became well-acquainted with Fishel, and expressed an interest in the subject parcel, which is adjacent to their present 20-acre parcel. The Maloneys claim they dreamed of building their retirement home on the parcel, which provides access to Forest Service land and views of Glacier Park peaks in the distance.

¶ 6 Fishel, who is retired from a career in the timber industry, had cleared approximately two acres for a home site, and had drilled a well in anticipation of some day selling the parcel. Fishel acknowledges that the Maloneys did indeed frequently express interest in the property. At one point, Fishel sent them a letter stating "If I ever plan to sell, I'll let you know in advance." In fact, one of the first things Fishel did, once he decided to sell the property, was to discuss the matter with the Maloneys in January or February of 1991. Price terms were mentioned, but nothing definite was determined. In fact, Fishel would testify that he was left with the impression that the Maloneys, although interested, perhaps did not want to purchase the entire 74.6 acres. Nevertheless, it was his intention to ensure that they had the first opportunity to purchase the land when the time came.

¶ 7 That time arrived on May 3, 1991, when Fishel went to the office of Century 21 in Kalispell. There, he met with a Century 21 agent named Sharon Costantino (Costantino). Fishel specifically directed Costantino to first offer the property to the Maloneys and then another party, James M. Gaitis (Gaitis). Gaitis, another adjacent landowner, had likewise expressed an interest in the property that spring. When price terms were discussed, Fishel told Costantino he would not sell the property for less than $1,500 an acre. The land apparently had not been appraised and Fishel was actually seeking her guidance in determining a fair price. Fishel testified that Costantino immediately prepared a listing agreement with the $1,500-an-acre price. Not content with fixing the price terms at that point, Fishel left that day, a Friday, without reviewing or signing the listing agreement.

¶ 8 Approximately forty-five minutes later he received a call at home from Costantino. She informed him that she was in receipt of $1,000 in earnest money from an interested buyer, who he would later learn was Stephen Krasemann (Krasemann).

¶ 9 On Monday morning, May 6, Costantino arrived at Fishel's residence with a listing agreement in hand. Fishel indicated to her that he was upset that she had proceeded with the $1,500-an-acre price without his approval or signing a listing agreement. Costantino persuaded Fishel to proceed with the sale, suggesting that if Krasemann for some reason backed out, she would seek a higher price from future potential buyers. She also gave him the impression that it was too late to do anything but proceed with the sale. She did not inform Fishel, at the time, that she had not contacted either the Maloneys or Gaitis. Reluctantly, Fishel agreed to sign both the listing agreement and a buy-sell agreement.

¶ 10 Fishel would later learn that Costantino had not, in fact, offered the land to the Maloneys or Gaitis. It was alleged that Krasemann and Costantino had earlier agreed that if she arranged for Krasemann's purchase of Fishel's property—a transaction which would provide her with a full commission—he would subsequently list another parcel with Costantino from which she could derive yet another commission. It is undisputed that in the event either the Maloneys or Gaitis decided to purchase the parcel, Costantino's, as well as Century 21's, commission would be halved, a condition that was drafted into the listing agreement by Costantino at Fishel's request.

¶ 11 Upon learning that Costantino never attempted to contact the Maloneys, Fishel attempted to halt the sale on several occasions, and later testified that he "didn't think the deal was right." He was dissuaded from this by both his attorney, as well as Lee. Whether in fact Krasemann threatened to initiate litigation remains in dispute.

¶ 12 Lee was president of the Kalispell Century 21, and at all times was Costantino's supervising broker. Thus, the Special Master would conclude that Lee was "responsible for Costantino's conduct." Lee met with Ken Maloney and Gaitis on June 27, 1991. He was advised during this meeting that Costantino had never contacted the Maloneys or offered them the subject property as directed by Fishel. The Maloneys claim that at this meeting Ken strongly asserted they had a written first-option to buy from Fishel, and that Costantino had deliberately supplanted these agreements by her dealings with Krasemann. Thereafter, Lee made no attempt to stop the pending sale of the subject property to Krasemann, and, allegedly, displayed a callous indifference to whether the Maloneys' claims were valid. The subject property sold for $111,900, or approximately $1,500 an acre, and closed on July 9, 1991. Fishel would later testify that although the sale price was a "steal" for Krasemann, the price was "the least of my worries ... I wanted a fair price, but primarily I wanted... this party [the Maloneys] to have a chance to be honored. It wasn't done." Costantino received a $6,182.40 commission. Century 21 received a $4,121.60 commission.

¶ 13 In reaching this appeal, this matter has traveled a long and winding procedural road from its remote origins. Gaitis's original complaint was filed July 9, 1991. A discovery imbroglio ensued, with Gaitis charging counsel for Costantino and Century 21 with dilatory tactics. He filed a motion to compel on November 6, 1991. He filed further motions to compel on February 12, 1992, and March 12, 1992. Finally, on August 19, 1992, the District Court partially granted Gaitis's second motion to compel.

¶ 14 The Maloneys joined as plaintiffs, consolidating their case with Gaitis on January 7, 1993. Lee was added as a party defendant. Both Gaitis and the Maloneys filed amended complaints. Gaitis filed for a writ of supervisory control, which was denied on July 23, 1993. Soon thereafter, Gaitis dismissed his case.

¶ 15 The pattern of discovery delays, motions to compel, orders to compel, and intimation of sanctions continued for several years. Specifically, the Maloneys filed a motion to compel on September 1, 1993. This motion was interrupted by summary judgment proceedings, which were resolved in favor of the Maloneys. The Maloneys served further discovery requests in May of 1994. The court ordered response from Century 21 and Lee on October 19, 1994.

¶ 16 Meanwhile, a $88,000 default was entered against Costantino in September of 1994 after she apparently fled the state, and her counsel was unable to contact her. This left the Maloneys as plaintiffs, and Century 21 and Lee as defendants.

¶ 17 The requested responses were still not provided, forcing the Maloneys to file another motion on June 14, 1995, against Lee for his failure to comply with the court's order. The court again ordered the production of the requested materials, this time imposing a deadline of August 24, 1995. Again, responses were not complete. On October 6, 1995, the Maloneys filed another motion seeking sanctions. The requested material, which had been ordered produced no later than August 24, 1995, was provided on October 19, 1995.

¶ 18 Subsequent to the foregoing, the Maloneys served additional follow-up discovery on Lee on November 13, 1995. Five months later, on April 26, 1996, the Maloneys filed another motion for sanctions for Lee's failure to respond to the November requests as well as further requests served on February 16, 1996. The court again ordered production from Lee, and again the materials were not produced.

¶ 19 Finally, the District Court granted the Maloneys' third motion for sanctions on May 16, 1996. Pursuant to Rule...