Osterman v. Sears, Roebuck & Co.

• Decision Date: 26 November 2003
• Docket Number: No. 02-028.,02-028.
• Citation: Osterman v. Sears, Roebuck & Co., 80 P.3d 435, 2003 MT 327, 318 Mont. 342 (Mont. 2003)
• Parties: Laura OSTERMAN, Plaintiff and Appellant, v. SEARS, ROEBUCK & COMPANY, and K-Decorators, Inc., a Montana corporation, d/b/a K-Designers, Defendants and Respondents.
• Court: Montana Supreme Court

80 P.3d 435

2003 MT 327

318 Mont. 342

Laura OSTERMAN, Plaintiff and Appellant, v.SEARS, ROEBUCK & COMPANY, and K-Decorators, Inc., a Montana corporation, d/b/a K-Designers, Defendants and Respondents.

No. 02-028.

Supreme Court of Montana.

Submitted on Briefs August 8, 2002.

Decided November 26, 2003.

For Appellant: Thomas E. Boland and Mark D. Meyer, Attorneys at Law, Great Falls, Montana.

For Respondents: Michael K. Rapkoch and Randolph Jacobs, Jr., Felt, Martin, Frazier Jacobs & Rapkoch, P.C., Billings, Montana (K-Decorators), J. Michael Young, Alexander, Baucus, Taleff, Paul & Young, PLLC, Great Falls, Montana (Sears, Roebuck).

Justice JIM RICEdelivered the Opinion of the Court.

¶ 1Laura Osterman(Osterman) brought this action in the District Court for the Eighth Judicial District, Cascade County, alleging actual and constructive fraud, negligent misrepresentation, negligence, negligent hiring of an independent contractor, breach of express warranty, and deceptive, unfair trade practices.Defendants moved for summary judgment on all claims.The District Court granted summary judgment to Defendants on Osterman's claims for actual and constructive fraud, unfair trade practices, and negligent misrepresentation.A jury trial ensued on the remaining claims, and a verdict was returned in favor of Osterman for breach of express warranty.Osterman thereafter sought attorney fees and costs.Following a hearing, the District Court concluded Osterman was entitled to attorney fees and costs for her breach of warranty claim only, reducing her requested amount based upon a pro rata calculation of the attorneys' time spent on that claim.Osterman appeals the District Court's order granting summary judgment on her claims for fraud and unfair trade practices, as well as the court's award of attorney fees.We affirm in part, reverse in part, and remand.

¶ 2 Osterman raises the following issues on appeal:

¶ 3 1.Did the District Court err in granting summary judgment to Defendants on Osterman's claims for actual fraud, constructive fraud, unfair trade practices, and negligent misrepresentation?

¶ 4 2.Did the District Court abuse its discretion in applying a pro rata reduction to Osterman's requested attorney fees?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 5 In the summer of 1996, Laura Osterman, then age 69 and recently widowed, responded to a written solicitation from Sears, Roebuck & Co.(Sears) regarding vinyl siding for her home.On August 15, 1996, James E. Sluder(Sluder) of K-Designers (K-Designers), an authorized contractor of Sears, visited Osterman at her home to discuss the purchase and installation of vinyl siding.During his visit, Sluder provided Osterman with a number of color brochures, including one clearly identifying the manufacturer of the siding as a company named "Gentek."Sluder also provided a brochure, several pages in length, in which the words "SEARS SIDING," repeatedly appeared throughout the brochure in large print followed by the slogan, "[p]roudly sold, furnished and installed by K-Designers, a Sears authorized contractor," which appeared in small font near the bottom of the page.The brochure also contained one page dedicated entirely to promoting K-Designers, bearing the K-Designers logo at the bottom right hand corner.

¶ 6 On the day of Sluder's visit, Osterman agreed to purchase approximately $22,000 worth of vinyl siding, to be financed through "Sears Financial," and installed at her residence the following month.Osterman and Sluder executed a Sales Agreement, whereby Osterman agreed to purchase the siding and "to contract with K-Designers, to furnish, deliver, and arrange for installation of all materials...."Osterman additionally agreed to participate in a product awareness program and signed a certificate-like document indicating that she would, among other things, allow K-Designers to use "before and after" photographs of her home, allow placement of a Sears Siding/K-Designers sign on her property during installation, and allow K-Designers to show the exterior of her property to prospective customers.

¶ 7 Despite this, Osterman believed she was dealing exclusively with Sears, that Sluder was a Sears' employee, and that the materials provided would be Sears' products.When installation of the siding commenced in September 1996, however, it was K-Designers, not Sears, that arrived to install the siding.

¶ 8 On October 7, 1996, at the completion of installation, Osterman tendered a check to K-Designers for approximately $11,000 and signed a Certificate of Completion acknowledging "that all goods and services sold to us by K-Designers have been furnished and performed in a workmanlike manner and in accordance with the terms of said contract."However, shortly after signing this document, Osterman discovered numerous defects in the installation of the siding.In particular, she noticed that the trim was not properly installed, that nails were put through the siding at inappropriate places, that some of the trim siding was attached to the house with double sided tape, and that the siding material was inappropriate to Montana's climate.Osterman accordingly notified her local Sears store regarding her dissatisfaction.

¶ 9 Following several warranty service calls by both K-Designers and Sears, Osterman continued to be dissatisfied with the siding project.On May 4, 1999, Osterman filed suit, seeking damages for actual and constructive fraud, negligent misrepresentation, breach of express warranty, negligent hiring of an independent contractor, negligent installation, and deceptive, unfair trade practices.

¶ 10 After substantial discovery, K-Designers filed a motion for summary judgment asserting that Osterman's claims for fraud, misrepresentation, and unfair trade practices were barred by the applicable two years statute of limitations.Thereafter, both K-Designers and Sears moved for summary judgment on the merits of Osterman's fraud, negligent misrepresentation, and unfair trade practices claims, with K-Designers additionally requesting summary judgment on Osterman's claims for negligent installation and breach of express warranty.

¶ 11 Following a hearing, the District Court granted summary judgment in favor of K-Designers and Sears on Osterman's claims for actual and constructive fraud, as well as unfair trade practices, as time barred.The District Court also concluded that summary judgment on the merits of these claims and on Osterman's negligent misrepresentation claim was appropriate.The court reserved the breach of express warranty, negligence, and negligent hiring of an independent contractor claims for trial.

¶ 12 On November 9, 2000, a Cascade County jury returned a verdict for Osterman in the amount of $12,500 for breach of express warranty against both K-Designers and Sears.The jury rejected, however, Osterman's negligent installation claim against K-Designers and the negligent hiring of an independent contractor claim against Sears.

¶ 13 Osterman thereafter moved for an award of attorney fees and costs.Pursuant to the Sales Agreement entered with K-Designers, the District Court determined Osterman was entitled to recover attorney fees and costs, but only from K-Designers and only with respect to her breach of express warranty claim.The court accordingly scheduled a hearing to determine the proper amount of fees and costs to be awarded to Osterman.

¶ 14 At the hearing, Osterman's attorneys indicated that they had expended 147.15 hours prior to the entry of summary of judgment, which dismissed four of Osterman's seven claims, and 68.65 hours thereafter, for a total of 215.80 hours.Allocating this time between the various claims on a pro rata basis, the District Court concluded Osterman was entitled to one-seventh of the 147.15 hours expended prior to the entry of summary of judgment, or 21.02 hours, and one-third of the 68.65 hours spent thereafter, or 22.88 hours, for a total of 43.9 hours.At $125.00 per hour, which the parties agreed was a reasonable hourly rate, the District Court awarded Osterman attorney fees in the amount of $5,487.50.

¶ 15 With respect to costs, the court similarly concluded Osterman should receive only those incurred in relation to the breach of express warranty claim.The court reduced Osterman's requested amount of costs proportionately, for a total award of $790.25.Osterman appeals the District Court's summary dismissal of her claims for fraud, negligent misrepresentation, and unfair trade practices, and the court's award of partial attorney fees against K-Designers.We affirm the District Court's order granting summary judgment in favor of Sears and K-Designers.However, we conclude the District Court erred in its award of attorney fees and costs, and remand that issue to the District Court for redetermination.

DISCUSSION

¶ 16 Did the District Court err in granting summary judgment to Defendants on Osterman's claims for actual fraud, constructive fraud, unfair trade practices, and negligent misrepresentation?

¶ 17We review a district court's summary judgment ruling de novo and employ the same method of evaluation, based upon Rule 56 M.R.Civ.P., as applied by the district court.Andrews v. Plum Creek Manufacturing, LP.,2001 MT 94, ¶ 5, 305 Mont. 194, ¶ 5, 27 P.3d 426, ¶ 5.Pursuant to Rule 56, M.R.Civ.P., we apply the following inquiry:

The movant must demonstrate that no genuine issues of material fact exist.Once this has been accomplished, the burden then shifts to the non-moving party to prove, by more than mere denial and speculation, that a genuine issue [of fact] does exist.Having determined that genuine issues of fact do not exist, the court must then determine whether the moving party is entitled to judgment as a matter of law.We review the legal determinations made by a district court as to whether the court erred.

Bruner v. Yellowstone County(1995), 272 Mont. 261, 264, 900 P.2d 901, 903(citations...