Sandrock v. DeTienne

Decision Date09 November 2010
Docket NumberNo. DA 10-0070.,DA 10-0070.
Citation358 Mont. 175,2010 MT 237,243 P.3d 1123
PartiesBryan SANDROCK, Individually and as Sole Operating Member of The Train Station, LLC, a Montana Limited Liability Company, Plaintiffs and Appellees, v. Kevin DeTIENNE, Individually and as a Sole Operating Member of The Money Train, LLC, a Montana Limited Liability Company, Defendants and Appellants, John Sedminik, Jr., Subtenant, Defendant.
CourtMontana Supreme Court

For Appellants: Stefan T. Wall, McMahon Law Firm, PLLC; Helena, Montana.

For Appellees: Gregory A. Van Horssen, Keller, Reynolds, Drake, Johnson & Gillespie, P.C.; Helena, Montana.

Justice JIM RICE delivered the Opinion of the Court.

¶ 1 Defendants Kevin DeTienne and The Money Train, LLC (collectively, "Money Train") appeal from the order entered by the First Judicial District, Lewis and Clark County, converting a temporary restraining order against Money Train to a preliminary injunction. We affirm. We state the issue as follows:

¶ 2 Did the District Court manifestly abuse its discretion in entering a preliminary injunction against Money Train?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 3 In August 2007, Plaintiff The Train Station, LLC, as landlord, and Money Train, as tenant, entered into a 15-year commercial real property lease, which was later revised in June 2008. Plaintiff Bryan Sandrock (Plaintiffs collectively, "Train Station") and DeTienne acted as signatories on the lease for Train Station and Money Train, respectively. DeTienne is the sole member of The Money Train. The lease property is a building owned by Train Station in which Money Train operated a casino/liquor establishment. Under the lease, rent was due on the first day of each month, delivered to the address of Train Station. Rent began at the rate of $9,525 per month and increased by 3% annually, in September. If rent was not paid in full on or before the 10th day of the month, alate charge and interest were assessed against the tenant. The lease further provided that:

In the event of any breach of this Lease by Tenant, then Landlord, in addition to other rights or remedies it may have, shall have the immediate right of re-entry and may remove all persons and property from the premises.... Should Landlord elect to re-enter as herein provided or should it take possession pursuant to legal proceedings or pursuant to any notice provided for by law, it may either terminate this Lease or ... re-let said premises ... upon such other terms and conditions as Landlord in its sole discretion may deem advisable.... [Emphasis added.]

¶ 4 In August 2009, Money Train withheld $1,000 of the monthly rent due to Train Station. On August 18, 2009, Sandrock sent a letter and e-mail to DeTienne notifying him of the deficiency in rent and assessing a late fee and interest. In September 2009, the rent increased by 3% as scheduled in the lease, and Money Train withheld $1,295 of rent. Sandrock sent another letter and e-mail to DeTienne, notifying him of the deficiency and assessing another late fee. In October 2009, legal counsel for Train Station sent notice to Money Train's legal counsel acknowledging receipt of $2,000 from Money Train toward rent due in August and September, but noted continuing deficiencies, including for the September and October rent, unpaid late fees and interest. The total deficiency was then stated as $2,677.35, and demand for immediate payment was made.

¶ 5 On November 13, 2009, Train Station's counsel sent a notice of default to Money Train's counsel regarding the full November rent, stating "I understand from your recent letter that your client, Kevin DeTienne, has unilaterally decided that he may make rent payments to the Vibeke DeTienne Trust in lieu of payments to the landlord, Train Station, LLC," and observed that the lease "makes no arrangements for this type of payment and ... it is quite likely that [Train Station] will be in default" on its mortgage obligation. The letter demanded full payment of all rents due and owing and stated that if the amounts were not paid by "November 23, 2009, the lease will be terminated."

¶ 6 On November 26, 2009, having not received the rents, Sandrock entered the premises, changed the locks in the building and posted signs of eviction. The following day, DeTienne reentered the building and reopened his business.

¶ 7 On November 30, 2009, Train Station filed an action for rent and to evict Money Train and subtenants from the premises, confirm that the lease had been terminated, and award damages and costs. Concurrently, Train Station sought a temporary restraining order ("TRO") and temporary injunction supported by an affidavit from Sandrock requesting that the District Court order Money Train to vacate the property and be restrained from conducting further business operations. Sandrock's affidavit alleged, inter alia, that the amounts due under the lease totaled $17,356.91, he had provided notice, DeTienne had broken into the premises after Sandrock reentered the building in accordance with the terms of the lease, and the mortgage on Train Station's property would go into default if Money Train remained on the premises without paying rent. The courtgranted the TRO and set a show cause hearing for December 22, 2009, which was ultimately continued to January 5, 2010. DeTienne was personally served with the TRO on December 1, 2009, and has not since attempted to reenter the building.

¶ 8 At the hearing, DeTienne challenged the ownership structure of The Train Station and its authority to bring the action. Sandrock testified that he was formerly a member of Train Station with Vibeke DeTienne, DeTienne's mother, but that he currently believed he was the sole member of Train Station based on disassociation of Vibeke's interest upon her death under Train Station's amended operating agreement. In contrast, DeTienne testified that he believed the Vibeke DeTienne Trust ("Trust") held Vibeke's interest in Train Station and that, as sole trustee of the Trust, he had not consented to the actions taken by Sandrock. DeTienne testified to other issues that had arisen betweenSandrock and DeTienne and his belief that the lease was unfair.

¶ 9 DeTienne testified that he initially withheld rent in response to Sandrock's delay in approving a proposed sublease arrangement. He further testified that he paid the November rent to the Trust because of Sandrock's actions. An internet bank statement for the Trust admitted at the hearing reflected that undesignated amounts totaling $12,330 had been paid into the Trust's account on November 6, November 19, and November 25, 2009. Sandrock testified that Train Station was never authorized to receive or access these amounts.

¶ 10 Testimony was offered indicating that rent paid to Train Station was essential for paying its mortgage on the building. Sandrock testified that Train Station's cash had been entirely expended for legal fees, and he had personally loaned money to the business to stay current "in the hopes that we can get another tenant who can demonstrate an ability to pay on time." He further testified that he had received many inquiries on purchasing or leasing the property and believed re-leasing the property would be possible within a period of three to six months.

¶ 11 The District Court issued findings of fact and conclusions of law ordering that the TRO be converted into a preliminary injunction prohibiting DeTienne from entering the subject property pending a decision on the merits or further order. Money Train appeals.

STANDARD OF REVIEW

¶ 12 An order granting an injunction is immediately appealable, notwithstanding the fact that the merits of the controversy remain tobe determined. M.R.App. P. 6(3)(e).

¶ 13 A district court's decision to grant or deny a preliminary injunction is " 'largely within the discretion of the district court.' " Pinnacle Gas Resources, Inc. v. Diamond Cross Props., LLC, 2009 MT 12, ¶ 12, 349 Mont. 17, 201 P.3d 160 (quoting Yockey v. Kearns Props., LLC, 2005 MT 27, ¶ 12, 326 Mont. 28, 106 P.3d 1185). We will only disturb a district court's decision to grant or deny a preliminary injunction upon a showing of manifest abuse of discretion. Cole v. St. James Healthcare, 2008 MT 453, ¶ 9, 348 Mont. 68, 199 P.3d 810 (citing Sweet Grass Farms, Ltd. v. Bd. of Co. Comm'rs of Sweet Grass Co., 2000 MT 147, ¶ 20, 300 Mont. 66, 2 P.3d 825). " 'A manifest abuse of discretion is one that is obvious, evident, or unmistakable.' " Pinnacle Gas, ¶ 12 (quoting Yockey, ¶ 12). Preliminary injunctions do not resolve the merits of the case, Benefis Healthcare v. Great Falls Clinic, LLP, 2006 MT 254, ¶ 19, 334 Mont. 86, 146 P.3d 714 (citing Yockey, ¶ 18), and our analysis "is not intended to express and does not express any opinion about the ultimate merits" of the underlying case. Benefis, ¶ 19. In addition, we review a district court's conclusions of law for correctness. Pinnacle Gas, ¶ 12 (citing Yockey, ¶ 12).

DISCUSSION

¶ 14 Did the District Court manifestly abuse its discretion in entering a preliminary injunction against Money Train?

¶ 15 Money Train makes four arguments in challenging the District Court's issuance of a preliminary injunction. Money Train contends that the evidence did not justify granting the injunction, as Train Station failed to make a showing that it would prevail on the merits or that irreparable injury would result without an injunction. Second, Money Train argues that the District Court erred by ordering injunctive relief on the issue of right or title to real property. Third, Money Train argues that the court erred by making a decision on the merits of the case and, lastly, by failing to appoint a receiver to manage rents. Train Station counters that the court's use of injunctive relief was adequately supported by the evidence, necessary and appropriate in this lease case, did not decide the merits, and was not a manifest abuse of discretion.

¶ 16 Preliminary...

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