Mountain West Bank, NA v. Mine and Mill Hydraulics, Inc., 01-762.
| Decision Date | 27 February 2003 |
| Docket Number | No. 01-762.,01-762. |
| Citation | 314 Mont. 248,64 P.3d 1048,2003 MT 35 |
| Court | Montana Supreme Court |
| Parties | MOUNTAIN WEST BANK, N.A., Plaintiff and Appellant, v. MINE AND MILL HYDRAULICS, INC.; Glenn Caldwell; Clifton W. Hayden, Successor Trustee; Anders Family Trust; William E. Anders; Grant Metz; All Points Business Financing, Inc.; Helena Abstract and Title Company; First Montana Title Company; State of Montana, Department of Labor and Industry, Unemployment Insurance Division; State of Montana, ex rel. State Compensation Insurance Fund; State of Montana, Department of Revenue; State of Montana, Commissioner of the Department of Labor and Industry, Employment Labor and Industry, Employment Relations Division, ex rel. Samuel L. Cascaddan; State of Montana, Commissioner of the Department of Labor and Industry, Employment Relations Division, ex rel. Joseph F. Salm; State of Montana, Commissioner of the Department of Labor and Industry, ex rel. Mark A. Ritter; State of Texas, Texas Work Force Commissioner for Unemployment Taxes; United States of America, Internal Revenue Service; John Does 1-10; Jane Does 1-10; and XYZ Companies 1-10, Defendants and Respondents, and Trux, L.P., Defendant, Respondent and Cross-Appellant. |
Jonathan Motl, Brenda Lindlief Hall, Reynolds, Motl and Sherwood, P.L.L.P., Helena, Montana, for appellant.
Clifton W. Hayden, Attorney at Law, Whitefish, Montana, for respondent All Points Business Financing, Inc.
John M. Kauffman, Kasting, Combs & Kauffman, P.C., Bozeman, Montana, for respondent and cross-appellant Trux, L.P.
¶ 1 Appellant Mountain West Bank (MWB) filed a complaint against several defendants, including Respondents Mine and Mill Hydraulics, Inc. (Mine & Mill), All Points Business Financing, Inc. (All Points), and Trux, L.P. (Trux), in the First Judicial District Court, Lewis and Clark County. MWB's complaint sought to foreclose on items of Mine & Mill's real and personal property in which MWB held a security interest. MWB's complaint also requested monetary damages from Mine & Mill and its CEO Glenn Caldwell. The remaining defendants were included in the complaint because they held some type of interest in the property in dispute. MWB and All Points filed motions for summary judgment. The District Court granted summary judgment to both MWB and All Points, and MWB appeals. Trux cross-appeals the District Court's grant of summary judgment to MWB, as well as the District Court's denial of its motion to add a party to this action. We affirm in part and reverse in part the judgment of the District Court.
¶ 2 We restate the issues on appeal as follows:
¶ 3 1. Did the District Court err in granting All Points' motion for summary judgment?
¶ 4 2. Did the District Court err in granting Mountain West Bank's motion for summary judgment?
¶ 5 3. Did the District Court err in denying Trux's motion to add Montana Hydraulics as a party to this action?
¶ 6 MWB made several commercial loans to Mine & Mill between 1993 and 1997. As collateral for the loans, MWB took a security interest in all of Mine & Mill's assets, including its accounts receivable, in November of 1993. On June 22, 1995, All Points executed a factoring agreement with Mine & Mill, in which All Points agreed to loan Mine & Mill money in exchange for a security interest in Mine & Mill's accounts receivable. To reconcile their competing security interests, All Points also signed a subordination agreement with MWB on June 22, 1995. The subordination agreement provided that MWB would subordinate to All Points its security interest in Mine & Mill's presently existing and after-acquired accounts receivable, up to $700,000.00.
¶ 7 On June 23, 1997, MWB made loan # 9869 to Mine & Mill for $75,000.00. As collateral for loan # 9869, Mine & Mill assigned a contract it had with Consolidated Rail Corporation (Conrail) to MWB. MWB contacted Conrail before accepting the assignment, and Conrail assured MWB that its contract with Mine & Mill was not assigned to any other party. The document acknowledging the assignment was not signed by All Points.
¶ 8 Generally, upon receipt of money from Mine & Mill's accounts receivable, MWB's practice was to telephone Mine & Mill's CEO Glenn Caldwell to discuss how the money should be applied. During June and July of 1997, Mine & Mill received $23,619.31 from Conrail. This money was applied to repayment of loan # 9869. Mine & Mill also received a series of additional payments from Conrail, which totaled approximately $66,000.00. This additional money was deposited in Mine & Mill's checking account at MWB. Therefore, Mine & Mill and MWB received a total of approximately $89,000.00 from Conrail in 1997.
¶ 9 Throughout 1997, All Points also continued to advance funds to Mine & Mill. In exchange for these funds, Mine & Mill sold several of Conrail's accounts receivable to All Points. However, All Points did not notify Conrail that it had purchased accounts receivable from Mine & Mill, or instruct Conrail to make payments on the accounts receivable directly to All Points. In October of 1997, with several of Conrail's accounts receivable still unpaid, Mine & Mill signed a promissory note and trust indenture with All Points. The promissory note was executed to provide assurance to All Points that the unpaid accounts receivable would be paid.
¶ 10 In January of 1998, All Points entered into an inter-creditor agreement with Trux, another company that had purchased accounts receivable from Mine & Mill. Pursuant to the inter-creditor agreement, All Points received $471,000.00 from Trux in exchange for selling Trux its outstanding accounts receivable. The inter-creditor agreement also provided that All Points would release its security interest in Mine & Mill's assets, with the exception of those assets secured by the October 1997 promissory note.
¶ 11 Mine & Mill's business failed. On October 19, 1998, MWB filed a complaint against several defendants, including Mine & Mill, All Points, and Trux. MWB's complaint sought to foreclose on items of Mine & Mill's real and personal property in which MWB held a security interest. MWB's complaint also requested monetary damages from Mine & Mill and its CEO Glenn Caldwell. The remaining defendants were included in the complaint because they held some type of interest in the property in dispute.
¶ 12 On February 16, 1999, MWB filed an amended complaint, in which it added additional defendants. On February 24, 1999, Trux filed a counter-claim against MWB, and a cross-claim against Mine & Mill. All Points filed a counter-claim against MWB on March 26, 1999. On August 20, 1999, MWB filed a motion for summary judgment. On August 31, 1999, Trux filed a motion to add Montana Hydraulics, L.L.C., as a party to the case. Montana Hydraulics is a new company created by several members of Mine & Mill's former board of directors. All Points filed a motion for summary judgment on September 14, 1999.
¶ 13 The District Court conducted a hearing on all pending motions on October 1, 1999. On October 27, 1999, MWB moved for a default judgment against Mine & Mill, as Mine & Mill failed to appear or answer MWB's amended complaint. The District Court conducted a hearing on this motion on November 4, 1999. On February 23, 2000, the District Court issued an order, in which it granted summary judgment to MWB, with regard to MWB's claim against several of Mine & Mill's assets. The District Court also granted summary judgment to All Points because it found that MWB had breached its subordination agreement with All Points. Finally, the District Court denied Trux's motion to add Montana Hydraulics as a party to the case, and granted MWB a default judgment against Mine & Mill. Trux then obtained a default judgment against Mine & Mill on May 25, 2000.
¶ 14 On August 3, 2000, the District Court conducted a hearing to consider damages. On June 11, 2001, the District Court issued findings of fact and conclusions of law, in which it determined that as a result of MWB's breach of its subordination agreement, All Points was entitled to recover damages in the amount of $78,250.01 plus interest from MWB. The District Court then issued a judgment on June 22, 2001, in which it concluded that, with interest, All Points was entitled to recover damages in the amount of $108,052.64 from MWB. MWB filed a motion to alter or amend the District Court's findings of fact and conclusions of law on June 25, 2001. On August 31, 2001, the District Court denied MWB's motion, but reduced the amount of its judgment against MWB by $234.58. On September 12, 2001, MWB appealed the District Court's findings of fact and conclusions of law, as well as its June 22, 2001, judgment. On September 18, 2001, Trux cross-appealed the District Court's February 23, 2000, order.
¶ 15 We review a district court's findings of fact to ascertain whether they are clearly erroneous. Daines v. Knight (1995), 269 Mont. 320, 324, 888 P.2d 904, 906. A finding is clearly erroneous if it is not supported by substantial evidence, if the trial court misapprehended the effect of the evidence, or if our review of the record convinces us that a mistake has been committed. Kovarik v. Kovarik, 1998 MT 33, ¶ 20, 287 Mont. 350, ¶ 20, 954 P.2d 1147, ¶ 20. The standard of review of a district court's conclusions of law is whether the court's interpretation of the law is correct. Carbon County v. Union Reserve Coal Co., Inc. (1995), 271 Mont. 459, 469, 898 P.2d 680, 686.
¶ 16 Our review of a district court's grant or denial of a motion for summary judgment is de novo. Casiano v. Greenway Enterprises, Inc., 2002 MT 93, ¶ 13, 309 Mont. 358, ¶ 13, 47 P.3d 432, ¶ 13. Therefore, we apply the same Rule 56, M.R.Civ.P., criteria as applied by the district court. Casiano, ¶ 13, 47 P.3d 432. Pursuant to Rule 56, M.R.Civ.P.:
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