Payne Realty and Housing, Inc. v. First Sec. Bank of Livingston, 90-451

• Decision Date: 04 March 1991
• Docket Number: No. 90-451,90-451
• Parties: PAYNE REALTY AND HOUSING, INC., Plaintiff, v. FIRST SECURITY BANK OF LIVINGSTON, A Montana Corporation, Defendant and Respondent, and Harry Joe Brown, Jr., Defendant and Appellant.
• Court: Montana Supreme Court

Page 177

807 P.2d 177

247 Mont. 374

PAYNE REALTY AND HOUSING, INC., Plaintiff, v. FIRST SECURITY BANK OF LIVINGSTON, A Montana Corporation, Defendant and Respondent, and Harry Joe Brown, Jr., Defendant and Appellant.

No. 90-451.

Supreme Court of Montana.

Submitted on Briefs Jan. 17, 1991.

Decided March 4, 1991.

Carl A. Hatch, Small, Hatch, Doubek & Pyfer, Helena, for appellant.

John T. Jones, Moulton, Bellingham, Longo & Mather, Billings, for respondent.

MCDONOUGH, Justice.

This is an appeal from the Montana Sixth Judicial District Court, Park County involving a real estate transaction. Harry Joe Brown (Buyer) appeals the order of the District Court granting summary judgment to First Security Bank of Livingston (Bank) and ordering that the Buyer forfeit $50,000.00 in earnest money deposited with Payne Realty (Realtor) on the grounds that the Buyer breached a buy-sell agreement. We reverse and remand for further proceedings.

The Buyer raises the following issues on appeal:

(1) Did the District Court err in granting summary judgment to the Bank and ordering a forfeiture of Buyer's earnest money to the Bank and dismissing all other claims raised by the pleadings?

(2) Did the District Court err in awarding the Bank its attorney fees and costs as prevailing party?

In reviewing a motion for summary judgment, we view the evidence in the light most favorable to the party opposing the motion, the Buyer in this case. See Lorash v. Epstein (1989), 236 Mont. 21, 24, 767 P.2d 1335, 1337; Cerek v. Albertson's, Inc. (1981), 195 Mont. 409, 411, 637 P.2d 509, 511. The evidence indicates that after reviewing some properties listed with Payne Realty (the Realtor), the Buyer became interested in some real estate known as the Riverside Ranch, located in the Paradise Valley about 15 miles south of Livingston. The Buyer arranged with the owner of Riverside Ranch, First Security Bank of Livingston (the Bank), to view the property. While touring the property, the Buyer was told of another piece of property, the Elkhorn Ridge Ranch, located about 32 miles northeast of Bozeman, which the Bank also had for sale. Buyer later viewed a videotape of this property at the Bank.

The Bank and Buyer entered into a buy/sell agreement for the Riverside Ranch on August 29, 1988. Buyer deposited $50,000.00 in earnest money with the Realtor. The agreement provided that the Bank would provide financing for the Buyer. It also provided the Buyer with an option to the buy the Elkhorn Ridge Ranch. The Bank's sole remedy for breach of the agreement by the Buyer was forfeiture of the earnest money. Finally, the agreement provided for a closing date on the sale on October 1, 1988.

At the closing date on October 1, the Buyer allegedly informed the Bank that he was "disenchanted" with the sale. A one-day extension of the closing date was requested by Buyer and granted by the Bank so that the Buyer's counsel could review the closing documents, including a mortgage proposed by the Bank. A second one-week extension was also granted so that the Buyer could have Montana counsel review the documents. Meanwhile, on October 4, 1988, the Bank provided Buyer with a title commitment. Twenty days after the last extension of the closing date, the Buyer's attorney requested the return of the earnest money and listed objections to the Bank-furnished mortgage documents. The Realtor eventually filed this interpleader action to obtain a court ruling concerning disposition of the earnest money.

After discovery, the Bank and Buyer stipulated to the Realtor's dismissal from the suit and the realignment of the parties with Buyer as plaintiff and Bank as defendant. The Bank filed a motion for summary judgment requesting forfeiture of the earnest money which the court granted in Bank's favor on May 23, 1989. The court also awarded the Bank its costs and attorney fees. The Buyer now appeals.

We begin our review by setting forth the standard for summary judgment. Summary judgment is proper only if the record discloses no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.P.; Reaves v. Reinbold (1980), 189 Mont. 284, 287, 615 P.2d 896, 898. While it is true that the purpose of summary judgment is to encourage judicial economy, it is also true that the procedure is never to be a substitute for trial if a material factual controversy exists. Reaves, 615 P.2d at 898.

The Buyer contends that the terms of the mortgage offered by the Bank are onerous and excuse him from completing the sale as set forth in the buy/sell. He alleges that there are genuine issues of material fact regarding whether the terms of the mortgage were agreed upon between the parties.

We agree with the Buyer's contention that the terms of the mortgage are questionable. As...