May v. ERA Landmark Real Estate of Bozeman, 99-429.

• Decision Date: 04 December 2000
• Docket Number: No. 99-429.,99-429.
• Citation: 15 P.3d 1179,2000 MT 299
• Parties: Michael J. MAY, Marilyn D. May, and Myrna May, Plaintiffs and Appellants, v. ERA LANDMARK REAL ESTATE OF BOZEMAN and Sue Frye, Defendants and Respondents.
• Court: Montana Supreme Court

15 P.3d 1179

2000 MT 299

Michael J. MAY, Marilyn D. May, and Myrna May, Plaintiffs and Appellants, v. ERA LANDMARK REAL ESTATE OF BOZEMAN and Sue Frye, Defendants and Respondents.

No. 99-429.

Supreme Court of Montana.

Submitted on Briefs November 18, 1999.

Decided December 4, 2000.

Michael J. San Souci, Law Office of Michael J. San Souci, Bozeman, MT, For Appellants.

Michael J. Lilly, Berg, Lilly, Andriolo & Tollefsen, Bozeman, MT, For Respondents.

Justice TERRY N. TRIEWEILER delivered the opinion of the Court.

¶ 1 The Plaintiffs, Michael J. May, Marilyn D. May, and Myrna May, brought this action in the District Court for the Eighteenth Judicial District in Gallatin County alleging eight claims for relief arising from the sale of Plaintiffs' real property through the agency of the Defendants, ERA Landmark Real Estate ("ERA") of Bozeman and Sue Frye, an individual real estate agent employed by ERA. The Defendants filed a counterclaim in which they sought damages for breach of the listing agreement by failure to pay their real estate commission. The District Court awarded summary judgment to the Defendants, dismissed Plaintiffs' eight claims for relief and awarded damages and attorney fees to the Defendants pursuant to their counterclaim. The Plaintiffs appeal the award of summary judgment by the District Court. We affirm in part and reverse in part.

¶ 2 The following issues are presented on appeal:

¶ 3 1. Did the District Court err when it granted Defendants' motion for summary judgment and dismissed Plaintiffs' claims 1 through 8?

¶ 4 2. Did the District Court err when it granted Defendants' motion for summary judgment and awarded damages and attorney fees to the Defendants based on Defendants' counterclaim?

FACTUAL BACKGROUND

¶ 5 On October 1, 1993, Plaintiffs Michael and Marilyn May, for themselves and on behalf of Mr. May's mother, Myrna, entered into a Standard Listing Contract with Defendants, Sue Frye and ERA. The listed property, located at 915 East Main Street, in the city of Bozeman, Montana, had been owned and operated by the Plaintiffs as a commercial service station and automobile repair facility. The exclusive listing agreement provided that the property was to be listed for the price of $195,000, and the Defendants would be paid a 7 percent commission for any sale of the property. The Plaintiffs contend that the Defendants understood that the Plaintiffs would only sell the property "as is" and would not assume tank removal expenses or toxic cleanup costs.

¶ 6 On or about March 18, 1994, Frye telephoned Mr. May and advised him that a local businessman, Harry Huntsinger, and his partners, the Huntsinger Group, had submitted an offer of $175,000. Mr. May rejected the offer.

¶ 7 According to Mr. May's deposition testimony, approximately four days later, on March 22, 1994, Frye met with Mr. May in person at the gas station and presented another offer to purchase the property by Huntsinger. The terms of this second offer included a purchase price of $185,000, obligated the Plaintiffs to remove the fuel tanks and pumps, and required the Plaintiffs to indemnify the purchaser against any toxic litigation. Mr. May expressly rejected the offer for being too low and for exposing Plaintiffs to cleanup liability. According to Mr. May's deposition testimony, Frye then requested that Mr. May initial the second offer to acknowledge that he had received the offer. Mr. May complied and placed his initials, MM, on the "seller signature" line.

¶ 8 Mr. May additionally testified in his deposition that on March 24, 1994, Frye telephoned him, at which time he confirmed that he would only accept the full list price of $195,000, and only sell the property as is. Frye returned to the gas station later that day with a standard form counteroffer which included the following form language:

Having considered the said offer, but not being satisfied therewith, the undersigned seller hereby makes the following counter-offer and agrees to accept and consummate the sale of said property for the price and on terms and conditions as follows:

Frye had added the following typed words below the form language:

Purchase price to be $195,000. Seller is willing to carry up to $20,000 interest free, with monthly payments of $1,000 until balance is paid.

Following approximately three inches of blank lines, the form language states that "[a]ny part of purchaser's original written offer not hereinabove changed, altered or modified hereby is approved and accepted by the seller...." The seller signature line is found immediately below that language.

¶ 9 In his deposition, Mr. May testified that Frye represented to him that she would draft a counteroffer with a sale price of $195,000 and no cleanup obligation. Mr. May testified that he was unsure whether he read the entire counteroffer, but that based on Frye's knowledge of the express terms that he would require, he signed the counteroffer.

¶ 10 Mr. May also testified in his deposition that at the time Frye had him initial the rejected $185,000 offer, there was no date, nor any reference to "see counter attached," and that the only thing he added to the $185,000 offer was his initials MM. However, at some time prior to Huntsinger's acceptance of the counteroffer, the date "March 24, 1994" and the words "see counter attached" were affixed immediately preceding Mr. May's initials on the $185,000 offer.

¶ 11 Frye telephoned Mr. May later that day and informed him that Huntsinger had accepted the counteroffer. Mr. May testified in his deposition that it was not until he contacted his attorney, Bill Madden, to draft a contract for sale of the property, that he was informed that the terms of the counteroffer incorporated the unaltered terms of the $185,000 offer and that, as a result, he was liable for the toxic cleanup, including removal of the tanks. Following several communications between Madden and Huntsinger, May and Madden agreed that the Mays' failure to abide by the terms in the counteroffer would subject them to a breach of contract action by Huntsinger. The Mays agreed to abide by the terms of the counteroffer, and advised the Defendants that recourse would then be sought against them. The Plaintiffs subsequently closed the sale on September 22, 1994.

¶ 12 On January 22, 1996, the Plaintiffs filed a complaint which alleged eight claims for relief, including: fraud, breach of contract, breach of fiduciary duty, bad faith, intentional infliction of emotional distress, negligent misrepresentation, professional negligence, and negligent infliction of emotional distress.

¶ 13 On March 12, 1996, the Defendants filed an answer and counterclaim which sought damages for breach of the listing agreement for refusal to pay the 7 percent real estate commission.

¶ 14 Following extensive discovery, the Defendants moved the District Court to dismiss all eight of Plaintiffs' claims for relief by summary judgment. On September 18, 1998, the District Court granted Defendants' motion for summary judgment in its entirety.

¶ 15 On October 2, 1998, the Defendants moved for summary judgment on their counterclaim, and requested attorney fees pursuant to the provisions of the listing agreement.

¶ 16 On March 3, 1999, the District Court granted the Defendants' motion for summary judgment, and awarded damages and attorney fees.

STANDARD OF REVIEW

¶ 17 Our standard of review on appeal from summary judgment orders is de novo. See Motarie v. Northern Montana Joint Refuse Disposal Dist. (1995), 274 Mont. 239, 242, 907 P.2d 154, 156. We review a district court's summary judgment to determine whether it was correctly decided pursuant to Rule 56, M.R.Civ.P., which provides that summary judgment is appropriate only when there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. See Motarie, 274 Mont. at 242,907 P.2d at 156.

DISCUSSION

ISSUE 1

¶ 18 Did the District Court err when it granted Defendants' motion for summary judgment and dismissed Plaintiffs' claims 1 through 8?

Fraud

¶ 19 The Plaintiffs contend that the District Court erred when it dismissed their cause of action for fraud by summary judgment.

¶ 20 The Defendants assert that the Plaintiffs have failed to allege in their complaint or produce any evidence of a misrepresentation of material fact or that Plaintiffs justifiably relied upon a misrepresentation by the Defendants, both of which are required elements to prove fraud.

¶ 21 To survive a motion for summary judgment, a party alleging fraud must establish a prima facie case by providing evidence of the following elements:

1. a representation;

2. its falsity;

3. its materiality;

4. the speaker's knowledge of its falsity or ignorance of its truth;

5. the speaker's intent that it should be acted upon by the person and in the manner reasonably contemplated;

6. the hearer's ignorance of its falsity;

7. the hearer's reliance upon its truth;

8. the right of the hearer to rely upon it; and

9. the hearer's consequent and proximate injury or damage.

Stanley v. Holms, 1999 MT 41, ¶ 33, 293 Mont. 343, ¶ 33, 975 P.2d 1242, ¶ 33.

¶ 22 Our review of the record reveals that there is sufficient evidence of a misrepresentation of a material fact and justifiable reliance upon that fact to survive a motion for summary judgment. Mr. May testified to the following in his deposition:

She [Frye] brought this offer in, showed it to me. I told her that I wasn't interested in any offer less than the listing price.... I told her the price didn't come up to what I was asking for. I wouldn't have anything to do with the indemnification against the toxicity. It was an "as-is" which it had been from the beginning. And I scolded her. And I told her, "Don't bring me this stuff. I'm not interested in anything but what I'm asking." And she said, "Well, I'm obliged to bring you all offers." I said, "Fine, Sue, you brought me the offer. I'm not interested." And

...