Peschel v. Jones
| Decision Date | 14 July 1988 |
| Docket Number | No. 88-58,88-58 |
| Citation | 232 Mont. 516,760 P.2d 51,45 St.Rep. 1244 |
| Parties | Walter H. PESCHEL, Plaintiff and Appellant, v. William Evan JONES, Defendant and Respondent. |
| Court | Montana Supreme Court |
Martin J. Elison, Larry M. Elison, Missoula, William J. Powell, Spokane, Wash., for plaintiff and appellant.
William L. Crowley, Boone, Karlberg & Haddon, Missoula, for defendant and respondent.
Plaintiff/appellant, Walter H. Peschel, appeals a summary judgment granted in favor of defendant/respondent, William Evan Jones. Summary judgment was granted on two separate dates, December 11, 1986 and December 8, 1987, in the Fourth Judicial District, Missoula County. We affirm.
In October of 1978, Walter Peschel (Peschel) was involved in the development and construction of an apartment complex which was to be known as the "Mountain Wood Apartments." Peschel was the sole general partner of a limited partnership. In June, 1978, Peschel entered an oral agreement, known as the MacDonald Agreement, with Charles Isaly (Isaly) for the construction of the complex. Isaly represented the construction contractor, Martin Development Company (Martin Development).
The principal lender was the Washington Mortgage Company (Washington Mortgage), the loan was guaranteed by the Department of Housing and Urban Development (HUD), and the parties entered a HUD form construction contract June 6, 1978. The loan amount obtained from Washington Mortgage did not include the total amount needed for construction. Peschel desired to construct a complex of a quality which would cost more than the guarantee obtained from HUD. Peschel intended to personally finance the amounts above that provided in the principal loan.
Construction of the complex began in July, 1978 and financing problems developed shortly thereafter. Peschel later hired defendant, William Evan Jones (Jones) an attorney at law, to assist in negotiations regarding the financing difficulties. On October 2, 1979, Washington Mortgage notified Peschel that he had defaulted on his loan and that the loan was going to be assigned to HUD. On November 10, 1979, Peschel and the contractor Martin Development entered into a written agreement, entitled Addenda No. 1. The agreement was signed by these two parties only and was an attempt to cure the financing problems so as to allow construction to continue. The Addenda agreement released and discharged both parties from all disputes existing between them on that date. Work resumed on the project into December, 1979. However, when Martin Development prepared construction loan requisition No. 13 (Draw No. 13), Washington Mortgage refused to pay the disbursement because it intended to reassign the construction loan to HUD. As a result, no further construction loan draws would be authorized and disbursed until HUD accepted the assignment and approved the draws. Many subcontractor bills were not paid on time and construction ceased.
Peschel filed a "complaint for damages for professional negligence" against Jones on November 14, 1985. The complaint alleged that the agreement negotiated by Jones, Addenda No. 1, was inadequate and proximately caused damages totalling $1,095,740 for increased construction costs, monies which could not be refunded from escrow, legal fees, accounting fees, rent impoundment charges, and an interest rate increase incurred when forced to refinance the project. Peschel alleged Addenda No. 1 was defective because, inter alia, it failed to obtain consent from HUD, the contractor's bonding company, and Washington Mortgage. Additionally, the complaint alleged various other defects including: Jones failed to negotiate a resolution as to the current defaults with Washington Mortgage, failed to advise Peschel that construction would cease unless additional parties consented, released the contractor Martin Development from all claims, and incorrectly advised Peschel of liability limitations.
The District Court granted a partial summary judgment in favor of defendant Jones December 11, 1986, based on a theory of collateral estoppel. The District Court granted summary judgment for Jones as to the remainder of the complaint December 8, 1987, holding that the statute of limitations prohibited the remaining issues from going forward.
Peschel raises two issues on appeal:
1. Did the District Court correctly determine that defendant was entitled to partial summary judgment based on collateral estoppel?
2. Did the statute of limitations prohibit plaintiff from his cause of action?
The facts surrounding this case are somewhat involved and have spawned a significant amount of litigation. In Martin Development Co. v. Keeney Construction Co. (Mont.1985), 703 P.2d 143, 42 St.Rep. 752, we affirmed a District Court award of $40,000 to Martin Development for lost profits and against Peschel. We also held that the Addenda represented the entire agreement of the parties and reversed an award of attorney's fees and an award of interest based on lost profits. Martin Development Co., 703 P.2d at 148, 42 St.Rep at 758. In the present case, plaintiff Peschel is bound by the facts and law as established by this prior case.
Defendant Jones entered a motion for summary judgment on November 10, 1986. Jones alleged that portions of the acts or omissions alleged by Peschel to constitute legal malpractice had been effectively determined by prior litigation and that Jones was entitled to summary judgment as to those acts or omissions according to the theory of collateral estoppel. The District Court granted partial summary judgment December 11, 1986, and denied a motion by plaintiff Peschel to alter or amend the partial summary judgment February 9, 1987. The District Court also issued two orders clarifying the extent of the partial summary judgment on June 5, 1987 and August 12, 1987.
Simply stated, Peschel's claim is that Jones produced a defective document and offered Peschel defective legal advice when he presented Addenda No. 1 to Peschel and advised him to sign it. More specifically, Peschel listed the following twelve acts or omissions in his complaint labeled a. through l. of paragraph V:
a. Defendant failed to procure the consent of HUD to "Addenda No. 1," agreement between Plaintiff and the contractor.
b. Defendant failed to obtain the consent of the contractor's bonding company to "Addenda No. 1."
c. Defendant failed to obtain the consent of Washington Mortgage Company to "Addenda No. 1" or to attempt to negotiate resolution of current defaults with that firm.
d. Defendant advised Plaintiff that the consent of the foregoing parties was not necessary for "Addenda No. 1" to be effective and for the project to continue.
e. Defendant drafted and advised Plaintiff to agree to paragraph 11 of "Addenda No. 1," which released and discharged the contractor from all claims.
f. Defendant failed to obtain commitment from HUD to release draw No. 13 in conjunction with carrying out "Addenda No. 1."
g. Defendant advised Plaintiff that commitment of HUD to release Draw No. 13 was not necessary.
h. Defendant failed to obtain written agreement from the contractor's bonding company to guarantee completion of the project.
i. Defendant advised Plaintiff that such commitment from the bonding company was not necessary and that the bonding company would still be liable.
j. Defendant failed to include in "Addenda No. 1" and failed to attempt to negotiate provisions in said agreement requiring the contractor to produce lien waivers each month so that progress disbursements would not be held up.
k. Defendant advised Plaintiff that his liability under paragraph 13 of "Addenda No. 1" was limited to the $50,000.00 and $15,000.00 mentioned in paragraphs 2(a) and 2(d).
l. Defendant advised Plaintiff not to accept a proposal subsequently made by the bonding company to construct a third building and thereafter litigate certain issues then pending.
By way of its order granting partial summary judgment, the order denying Peschel's motion to alter or amend, and the two orders of clarification, the District Court granted summary judgment based on the doctrine of collateral estoppel as to issues (a), (b), (d), (f), (g), (h), (i), (j), and the portion of (c) referring to the failure to obtain the consent of Washington Mortgage to Addenda No. 1 ().
In the initial order, the District Court stated Peschel was bound by the facts and law as established in Martin Development Co. v. Keeney Construction Co. (Mont.1985), 703 P.2d 143, 42 St.Rep. 752, and the District Court litigation preceeding that appeal. The District Court framed Peschel's issue by stating:
[P]laintiff is not contesting whether or not [he] is bound under the doctrine of collateral estoppel by those facts and matters found to be established in the District Court action and the Supreme Court action. Rather, Plaintiff's position was that such established facts and matters, while binding on Plaintiff in this action, were not dispositive of the specific issues raised between Plaintiff and Defendant as framed and defined by the pleadings and contentions of the parties.
This is the crux of Peschel's argument on appeal. While Peschel does not challenge the fact that he is bound by the facts and law as established in the prior litigation, he does contend that the prior litigation did not determine those issues he now raises and were determined to be without merit by the District Court according to collateral estoppel.
A party is entitled to summary judgment if the totality of the record shows "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), M.R.Civ.P. The purpose of summary judgment is to promote judicial economy by eliminating unnecessary trials. Still, the motion should be granted only when there...
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