Morley v. Morley
| Decision Date | 18 January 2022 |
| Docket Number | DA 21-0318 |
| Citation | 2022 MT 12 |
| Parties | DANIEL L. MORLEY, Plaintiff and Appellee, v. CYNTHIA J. MORLEY and KENNETH E. MORLEY, Defendants and Appellants. |
| Court | Montana Supreme Court |
Submitted on Briefs: December 1, 2021
Appeal From: District Court of the Third Judicial District, In and For the County of Powell, Cause No. DV-20-46 Honorable Ray J Dayton, Presiding Judge
For Appellants: Craig D. Charlton, Lewis K. Smith, Smith Law Firm, P.C., Helena, Montana
For Appellee: Kenneth A. Connors, Connors Law Firm, PLLC Anaconda, Montana
¶1 Defendants and Appellants Cynthia J. Morley (Cynthia) and Kenneth E. Morley (Kenneth) appeal from the May 27, 2021 Order Confirming Referees' Division of Property issued by the Third Judicial District Court, Powell County. In this partition action, the District Court's order confirmed the division of property owned by Cynthia, Kenneth, and Plaintiff and Appellee Daniel L. Morley (Daniel) as set forth in the January 15, 2021 Referees Report to the Court.
¶2 We address the following restated issues on appeal:
¶3 We affirm.
¶4 In early 2017, Cynthia, Kenneth, and Daniel each inherited an undivided one-third interest in real property, as tenants in common, following the death of their mother. That property is more particularly described as:
The property consists of 52.996 acres and a cabin, and is known as 148 Stickney Road in Elliston. In addition to the land and buildings, the property also contained personal property and had appurtenant water rights. Cynthia, Kenneth, and Daniel each owned an undivided one-third interest in these as well.[1] Daniel and Kenneth owned an undivided one-half interest in a bank account used to pay expenses on the property, to which Cynthia had contributed as well. The parties agreed each should be entitled to a one-third interest in the bank account.
¶5 Later in 2017, Cynthia, Kenneth, and Daniel entered into an operating agreement to govern the management and operation of the property. The agreement provided that the parties intended to leave the property intact, and, if one of them wished to sell their portion of the property, the others would have the opportunity to purchase that share of the property. In the event the other members agreed to the sale but declined to purchase the share, the person selling their share agreed to "assume all costs associated with dividing and selling the 'Property' including but not limited to 'Property' surveys, all document filings, escrow payments, fencing, [and] appraisal fees." The parties operated the property together without much incident for a couple of years after entering into the operating agreement. In late 2019 and early 2020, the parties explored options for buying out the interest of the others, but were unable to come to acceptable terms.
¶6 On June 16, 2020, Daniel filed his Complaint for Partition of Real and Personal Property in the District Court. In his complaint, Daniel sought to partition the property such that he would retain a portion of the real property which did not contain the cabin and a portion of the water rights appurtenant to the real property he wished to retain. The complaint further alleged the property was situated such that the District Court could order its division, that the parties may be required to pay an owelty to equalize the value awarded after the division, and that Daniel, Cynthia, and Kenneth should each be responsible for one-third of the costs of the partition action. Daniel set forth a proposed division of the property in his complaint as well. On July 30, 2020, Cynthia and Kenneth filed their Answer to Complaint. In their answer, Cynthia and Kenneth asserted Daniel's proposed division of the property was inequitable and proposed their own division. Cynthia and Kenneth did not reference the 2017 operating agreement in their answer.
¶7 On November 5, 2020, the parties participated in an unsuccessful settlement conference. On November 20, 2020, the parties filed a Stipulation Regarding Referees and Other Matters. In accordance with this stipulation, the District Court issued an Order Appointing Referees on November 23, 2020, which appointed three referees and directed the referees to file a report recommending how the property should be divided. The order further ordered the parties and their counsel to provide all information and documentation requested by the referees. Daniel provided the referees with four appraisals: a March 13, 2017 appraisal completed by Mike Zimmerman of Zimmerman Appraisal Services; a July 11, 2019 appraisal completed by Shaun Moore of S P Moore Appraisal, PLLC (Moore Appraisal); an August 14, 2020 appraisal completed by Mike Zimmerman of Zimmerman Appraisal Services (Zimmerman Appraisal); and an October 31, 2020 appraisal completed by Tyler D. Warne of TD Appraisal LLC (Warne Appraisal). Cynthia and Kenneth provided the referees with the Warne Appraisal, the Moore Appraisal, and a November 1, 2020 market analysis completed by Dan Senecal of Big Sky Brokers, LLC (Senecal Market Analysis). On December 16, 2020, the referees met with the parties' attorneys and toured the property.
¶8 On January 15, 2021, the appointed referees filed their report in the District Court. The referees' report referred to each of the Moore Appraisal, Zimmerman Appraisal, and Warne Appraisal. The report did not refer to the 2017 Zimmerman appraisal or the Senecal Market Analysis. The referees' report determined the property should be divided into two parcels: Parcel I, which was 10.152 acres plus easements for access and utilities; and Parcel II, which was 42.844 acres. The referees determined Parcel I was worth $44, 000, Parcel II was worth $100, 000, and the value of the buildings, including the cabin, and personal property was $225, 000. The total value assigned to the property was $369, 000. The referees determined Daniel should be awarded Parcel II, while Cynthia and Kenneth would be awarded Parcel I, along with the buildings, including the cabin, and personal property. As Daniel's parcel was valued at $100, 000, compared with the $269, 000 value of Cynthia and Kenneth's parcel, the referees further ordered Cynthia and Kenneth to pay Daniel a total owelty of $23, 000-$11, 500 from each. The referees determined one of the property's water rights should remain owned one-third each by Cynthia, Kenneth, and Daniel, while the other, a well, should go with the cabin and Parcel I, and Daniel would have to drill a new well for Parcel II. The referees also divided the bank account one-third to each. Finally, the referees ordered the partition costs (survey, recording expenses, water transfer fees, and the costs of the referees) to be split equally among the three parties.
¶9 On February 2, 2021, Cynthia and Kenneth filed their Objection to Referees' Proposed Division of Property and Request for Hearing. Cynthia and Kenneth objected to the value the Referees gave to the cabin, the value attributed to the land, the need to pay an owelty to Daniel, and the one-third division of costs to each party. Cynthia and Kenneth attached the Warne Appraisal, the Senecal Market Analysis, the 2017 operating agreement, and their proposed division of the property as exhibits to their objection. On February 18, 2021, Daniel filed the Plaintiff's Notice of No Objection, Response to Defendants' Objection, and Motions. Cynthia and Kenneth thereafter filed a Reply Brief in Support of Defendants' Objection to Referees' Report and Request of Hearing and Opposition to Plaintiff's Motions. Cynthia and Kenneth attached one page of the Zimmerman appraisal and again attached the 2017 operating agreement as exhibits to their reply brief.
¶10 On May 27, 2021, the District Court issued its Order Confirming Referees' Division of Property. In its order, the District Court determined Cynthia and Kenneth's objections to the referees' report were insufficient to require an evidentiary hearing and confirmed the referees' report, including both its division of the property and its division of costs. On June 25, 2021, Cynthia and Kenneth appealed to this Court. After Cynthia and Kenneth filed their opening brief and appendix in this matter, Daniel filed a Motion to Strike Certain Exhibits of Appellants and Brief in Support Thereof, which requested this Court strike Exhibit E (the Moore Appraisal) and all but one page of Exhibit G (the Zimmerman Appraisal) from the record as they were not presented to the District Court. Cynthia and Kenneth responded in opposition to Daniel's Motion, and this Court issued an Order taking the matter under advisement pending our full consideration of the appeal on November 9, 2021. For the reasons set forth in this opinion, Daniel's motion to strike is denied as moot.
¶11 We review a district court's findings of fact in a partition action to determine whether they are clearly erroneous. Britton v. Brown, 2013 MT 30, ¶ 20 368 Mont. 379, 300 P.3d 667 (citing Kellogg v. Dearborn Info. Servs., LLC, 2005 MT 188, ¶ 9, 328 Mont. 83 119 P.3d 20). A finding of fact...
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