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

• Decision Date: 14 January 1993
• Docket Number: No. 92-067,92-067
• Citation: 844 P.2d 90,256 Mont. 19
• Parties: PAYNE REALTY AND HOUSING, INC., Plaintiff, v. FIRST SECURITY BANK OF LIVINGSTON, a Montana corporation, Defendant and Appellant, and Harry Joe Brown, Jr., Defendant, Respondent and Cross-Appellant.
• Court: Montana Supreme Court

Page 90

844 P.2d 90

256 Mont. 19

PAYNE REALTY AND HOUSING, INC., Plaintiff, v. FIRST SECURITY BANK OF LIVINGSTON, a Montana corporation Defendant and Appellant and Harry Joe Brown, Jr., Defendant, Respondent and Cross-Appellant.

No. 92-067.

Supreme Court of Montana.

Submitted on Briefs June 25, 1992.

Decided Dec. 17, 1992.

Rehearing Denied Jan. 14, 1993.

Sidney R. Thomas, Moulton, Bellingham, Longo & Mather, Billings, for appellant.

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

TRIEWEILER, Justice.

This appeal involves a dispute between First Security Bank of Livingston and Harry Joe Brown over an earnest money deposit. Each party contends it is entitled to the $50,000 that Brown deposited with a realtor to secure the purchase of a ranch sold by the bank. First Security Bank of Livingston appeals from summary judgment entered in the Sixth Judicial District Court, Park County, Montana, in favor of Respondent, Harry Joe Brown.

Appellant contends that genuine issues of material fact exist which preclude summary judgment. We reverse and remand for resolution of the factual issues.

The sole issue raised by the appellant is:

Did the District Court err when it granted summary judgment in favor of Respondent and ordered the return of Respondent's earnest money deposit and the payment of attorney fees?

On August 29, 1988, Harry Joe Brown, Jr. (Brown) approached Payne Realty (Realtor) in Livingston, Montana. Brown wanted to purchase land in or near the Paradise Valley. After reviewing a brochure which described real estate known as the Riverside Ranch, Brown expressed an interest in the property. Brown arranged to view the property with the owner of the Riverside Ranch, First Security Bank of Livingston (Bank). While touring the Riverside Ranch, Brown was told of another piece of property known as the Elkhorn Ridge Ranch. The Bank owned this real estate as well.

The Bank and Brown entered into a buy-sell agreement for the Riverside Ranch on August 29, 1988. The agreement required that Brown deposit $50,000 with the Realtor to insure Brown's compliance with the agreement. In exchange, the Bank promised to remove the property from the market for the duration of the buy-sell agreement. As part of the buy-sell agreement, the Bank agreed to provide financing for Brown. In addition, Brown received an option to purchase the Elkhorn Ridge Ranch. Finally, at Brown's request, the parties agreed on an early closing date, and After Brown and the Bank President, Bruce Erickson (Erickson), reached a verbal agreement, the Realtor drafted the written buy-sell agreement. That same afternoon, Brown returned to the Realtor's office and "read every word" of the completed document. Brown made several changes to the agreement, including the deletion of two of the three standard remedies available to the seller upon a default by the buyer. Brown requested that forfeiture of the earnest money deposit be the only remedy available to the Bank in the event of Brown's default. Also, according to the Realtor, Brown requested the deletion of the lines in the buy-sell agreement that make the buy-sell agreement contingent on the buyer obtaining third-party financing.

planned to meet on October 1, 1988, in New York City to finalize the sale.

Brown deposited $50,000 with the Realtor. In exchange, the Bank removed the ranch from the market for the fall season, a prime marketing time for Paradise Valley property. The Bank also incurred significant expense in preparing the property for Brown. The Bank moved the current tenants off the property by buying out their leasehold interest for approximately $17,000. Further, at Brown's request, the Bank removed a complex irrigation/sprinkler system at a cost of $45,000.

On October 1, 1988, Erickson flew to New York City with his wife to complete the sale. At the closing, Brown informed Erickson that he was "disenchanted" with the sale. Brown requested a one-day extension of the closing date, which Erickson granted. Brown asked for this extension so that his counsel could review the closing documents, including a mortgage agreement proposed by the Bank. On October 2, 1988, Brown notified the Realtor, without notice to Erickson, that he was no longer interested in the Riverside Ranch purchase and wanted his earnest money deposit returned. On the same day, Brown asked the Bank for a one-week extension so that his Montana counsel could review the financing documents. Erickson granted this second extension as well. Meanwhile, the Realtor informed the Bank that Brown had contacted the real estate agency and wanted his deposit returned to him.

On October 4, 1988, the Bank provided Brown with a title commitment. On October 5, 1988, Brown sent another message to the Realtor asking again for the return of his money. The Bank did not hear from Brown on the last scheduled closing date of October 11, 1988. Twenty days after October 11, 1988, the Bank's attorney received a letter from Brown's attorney requesting the return of Brown's deposit. Included with the letter was a list of Brown's objections to the mortgage documents furnished by the Bank.

The Bank's attorney responded by asking whether Brown would be willing to close the real estate deal if all of his objections were resolved. Brown's attorney informed the Bank that Brown did not wish to proceed with the transaction.

Payne Realty and Housing, Inc. initiated this lawsuit on October 24, 1988, by filing an interpleader action. Payne Realty asked the District Court to determine whether First Security Bank of Livingston, the seller of the ranch, or Harry Joe Brown, the purchaser, was entitled to the money paid by Brown to secure the ranch sale. Following discovery, Payne Realty was dismissed from the action and the parties were realigned with Brown as plaintiff and the Bank as defendant.

On May 23, 1990, District Judge Byron L. Robb granted summary judgment for the Bank based on an "ordinary, complete and unambiguous buy-sell agreement" and Brown's failure to complete the sale. The Buyer appealed the judgment to this Court. On March 4, 1991, this Court reversed the District Court judgment, finding genuine issues of material fact existed regarding the parties' intentions about financing terms. Payne Realty and Housing, Inc. v. First Security Bank of Livingston (1991), 247 Mont. 374, 807 P.2d 177.

Upon remand to the District Court, Brown disqualified Judge Robb and District Judge John M. McCarvel assumed jurisdiction of the case. Brown moved for summary judgment. The Bank moved to The Bank appeals the summary judgment entered by Judge McCarvel, contending that genuine issues of material fact exist. Brown cross-appeals the court's refusal to award paralegal fees.

                amend its answer and cross-claim.  Judge McCarvel granted the Bank's motion to amend;  however, all of the affirmative defenses set forth in the Bank's amended answer were dismissed when Judge McCarvel entered summary judgment for Brown on September 23, 1991.  In the District Court opinion, Judge McCarvel reasoned that the Bank, acting as both lender and seller, did not offer financing terms consistent with the buy-sell agreement;  consequently, the financing terms were unacceptable to Brown and there was no "meeting of the minds."   The Judge ordered the return of the earnest money to Brown, together with interest and attorney fees
                

Did the District Court err when it granted summary judgment in favor of Respondent and ordered the return of Respondent's earnest money deposit and the payment of attorney fees?

The purpose of summary judgment is to encourage judicial economy through the elimination of any unnecessary trial. However, summary judgment is never to be a substitute for trial if there is an issue of material fact. Reaves v. Reinbold (1980), 189 Mont. 284, 288, 615 P.2d 896, 898. Summary judgment is proper only when no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.P.

It is well established that the party moving for summary judgment has the burden of showing a complete absence of any genuine factual issues. D'Agostino v. Swanson (1990), 240 Mont. 435, 442, 784 P.2d 919, 924; Cereck v. Albertson's Inc. (1981), 195 Mont. 409, 411, 637 P.2d 509, 511. To defeat the motion, the nonmoving party must set forth facts demonstrating a genuine factual issue exists. O'Bagy v. First Interstate Bank of Missoula (1990), 241 Mont. 44, 46, 785 P.2d 190, 191. All reasonable inferences that may be drawn from the offered proof must be resolved in favor of the party opposing summary judgment. D'Agostino, 784 P.2d at 924; Cereck, 637 P.2d at 511.

As the moving party, Brown must carry the burden of showing a complete absence of factual issues. The Bank must demonstrate a factual controversy does exist. As we review the evidence, we will draw all reasonable inferences in favor of the nonmoving party, the Bank. If there is any doubt regarding the propriety of the summary judgment motion, it should be denied. Whitehawk v. Clark (1989), 238 Mont. 14, 18, 776 P.2d 484, 486-87.

In his motion for summary judgment, Brown makes two arguments: (1) the buy-sell agreement executed between the parties was not a binding contract; or in the alternative (2) if the buy-sell agreement was a binding contract, the Bank breached the contract by not providing financing that complied with the buy-sell agreement.

In support of its argument on appeal that summary judgment was inappropriate because factual controversies exist, the Bank disputes Brown's two contentions and raises four claims of its own. The Bank disputes that (1) the buy-sell agreement was a valid and binding contract; and (2) that Brown breached the binding buy-sell agreement when he refused to complete the purchase. Additionally, the Bank argues: (1) Brown manufactured reasons not to close and therefore prevented the Bank's performance; (2) Brown...