Stanley v. Holms

• Decision Date: 12 March 1999
• Docket Number: No. 98-119,98-119
• Citation: 293 Mont. 343,975 P.2d 1242
• Parties: Roy W. STANLEY and Carol A. Stanley, individually and Roy W. Stanley, Carol A. Stanley, Libby Stanley, Holly Stanley and Carrie Stanley as the assignees of Roy Stanley Chevrolet Company, Plaintiffs and Respondents, v. Allan G. HOLMS, AGH, Inc., a/k/a Allan G. Holms, Inc., a Washington corporation or any successor, entity or assignees of the assets of Holms Motors, Inc., and The Allan G. Holms Trust, Roger Crist, Trustee, Defendants and Appellants.
• Court: Montana Supreme Court

Page 1242

975 P.2d 1242

1999 MT 41

Roy W. STANLEY and Carol A. Stanley, individually and Roy W Stanley, Carol A. Stanley, Libby Stanley, Holly Stanley and Carrie Stanley as the assignees of Roy Stanley Chevrolet Company, Plaintiffs and Respondents, v. Allan G. HOLMS, AGH, Inc., a/k/a Allan G. Holms, Inc., a Washington corporation or any successor, entity or assignees of the assets of Holms Motors, Inc., and The Allan G. Holms Trust, Roger Crist, Trustee, Defendants and Appellants.

No. 98-119.

Supreme Court of Montana.

Submitted on Briefs Feb. 24, 1999.

Decided March 12, 1999.

Lee C. Henning; Henning & Keedy, Kalispell, Montana, Frank B. Morrison; Morrisons, McCarthy & Baraban, Whitefish, Montana, For Appellants.

Gary R. Christiansen; Warden, Christiansen, Johnson & Berg, Kalispell, Montana, For Respondents.

Justice KARLA M. GRAY delivered the Opinion of the Court.

¶1 This is an appeal from the Eleventh Judicial District Court, Flathead County. The District Court granted the plaintiffs' second motion for summary judgment, and denied the defendants' motion to amend the judgment. The defendants appeal. We affirm.

¶2 We address the following dispositive issues:

¶3 1. Did the District Court abuse its discretion when it ruled on the motion for summary judgment without allowing Holms the opportunity to conduct further discovery?

¶4 2. Did the District Court err by failing to consider the second affidavit of Allan Holms when deciding the motion for summary judgment?

¶5 3. Do genuine issues of material fact exist concerning fraud and economic duress which precluded summary judgment on Holms' counterclaims?

FACTUAL AND PROCEDURAL BACKGROUND

¶6 The following facts are taken primarily from the two affidavits of Allan Holms filed in opposition to the plaintiffs' motion for summary judgment. In 1992, Allan G. Holms and affiliated entities (collectively, Holms) purchased an automobile dealership located in Kalispell, Montana, from Roy W. Stanley, Carol A. Stanley and other assignees of the Roy Stanley Chevrolet Company(collectively, the Stanleys). The purchase agreement contained a provision giving Holms the option to purchase the real property on which the dealership was located. In 1994, Holms and the Stanleys entered into negotiations to sell the dealership to a third party because Holms was developing another dealership in Spokane, Washington, and needed cash from the sale of the Kalispell dealership to fund it.

¶7 Holms received two offers from third parties to purchase the Kalispell dealership. Pursuant to the first offer, Holms would exercise the option in the 1992 agreement to purchase the real property underlying the dealership for $1.5 million which by 1994 appraised for $2.45 million. The terms of the first offer allowed Holms to pay the Stanleys monies owed under the 1992 agreement. Holms received a second offer from an entity known as the Corwin-Eisinger group. Under the second offer, the Stanleys would retain ownership of the land, but the purchasers would lease it for 10 years for an ultimate payment of $1.7 million. This second offer would provide tax advantages to the Stanleys and the capital needed by ¶8 On September 19, 1994, Holms sent the Stanleys a letter and memorandum, outlining the terms of the proposed agreement with the Corwin-Eisinger group; Holms and the Corwin-Eisinger group entered into an Asset Sale Agreement according to the terms and conditions allegedly agreed to by the Stanleys on September 23, 1994. The closing date for the sale was set for November 1, 1994.

Holms to invest in the Spokane dealership. The Stanleys decided that Holms should sell the dealership to the Corwin-Eisinger group.

¶9 Later in the day on September 23, 1994, Holms received a letter from the Stanleys purporting to clarify the status of Holms' proposal to sell the dealership. In Holms' view, however, the letter contained significant differences from the prior agreement, which already had been incorporated into the Asset Sale Agreement. After receiving the letter, Holms contacted the first prospective purchaser, who renewed his earlier offer. The Stanleys, however, informed Holms that the dealership could not be sold under the terms of the first offer, because Holms had defaulted on the 1992 purchase agreement and, as a result, no longer had the option to purchase the underlying real property.

¶10 In the meantime, the Stanleys sent the Corwin-Eisinger group a letter dated September 29, 1994, which purported to outline an agreement between the Stanleys and the Corwin-Eisinger group. The letter states that it is "a letter of intent, not a legal contract, [and] is subject to the approval of all parties, attorneys, General Motors, GMAC, etc." Holms claims that this letter confirmed the terms of the Asset Sale Agreement, even though the Stanleys had informed Holms that they were no longer agreeing to the terms which had been incorporated into that agreement. Holms also claims that over the next 60 days, the Stanleys took inconsistent positions between Holms and the Corwin-Eisinger group, in an effort to negotiate more favorable terms on their own behalf.

¶11 Holms further asserts that, during this time frame, the Stanleys disrupted Holms' business. For example, Allan Holms' second affidavit states that the Stanleys publicly disclosed the fact that Holms was in the process of selling the dealership. They also sent Holms a notice claiming Holms had defaulted on the 1992 purchase agreement, and sent copies of the default notice to Holms' financing sources and various automobile manufacturers. Holms testified that this disruption caused financial loss and resulted in the near cessation of the Kalispell business.

¶12 Eventually, Holms and the Corwin-Eisinger group entered into a final closing agreement dated November 30, 1994. The Stanleys and other entities such as Like-Nu corporation, to whom Holms owed certain monies, also signed the agreement. Holms alleges that the terms of that agreement differed materially from the agreement entered into with the Stanleys in September of 1994. In particular, the final agreement included a release waiving "all claims for all damages arising out of acts, representations, or matters known or unknown each may have against the other ...," except for claims against Holms for monies owed relating to the 1992 purchase of the Kalispell dealership. Holms testified by affidavit that the Stanleys presented the final agreement containing the release on a take it or leave it basis. Holms also testified to a shortfall in operating cash exceeding half a million dollars that would have been obtained had the Stanleys fulfilled their September of 1994 agreement. Ultimately, Holms was not able to make the Spokane dealership a success.

¶13 On August 25, 1995, the Stanleys filed a complaint and, on September 18, 1995, they filed an amended complaint against Holms to recover monies due pursuant to various contractual agreements, guarantees, and promissory notes relating to the 1992 purchase of the Kalispell dealership. On December 1, 1995, three days prior to the deadline for answers to the Stanleys' first discovery requests, Holms' counsel filed a motion to withdraw. Neither Holms nor counsel filed a response to the discovery requests. On December 8, 1995, the Stanleys filed a motion for summary judgment based primarily on matters deemed admitted by Holms' failure to respond to the request for admissions.

¶14 Holms' present counsel undertook to represent Holms on January 9, 1996, and, on January 10, 1996, Holms filed various motions, including a motion to amend to assert counterclaims against the Stanleys. Holms sought to bring claims for breach of the implied covenant of good faith and fair dealing, breach of contract, and fraud. Holms essentially claimed that the Stanleys had entered into an agreement in September of 1994, but subsequently reneged on that agreement, causing harm. On January 23, 1996, Holms also served objections and answers to the Stanleys' first discovery requests. The District Court granted the Stanleys' motion for summary judgment on April 26, 1996.

¶15 On appeal, this Court reversed and remanded. We directed the District Court to rule on Holms' motion to amend the pleadings pursuant to the criteria set forth in Rule 15(a), M.R.Civ.P., and to consider the Stanleys' motion for summary judgment in light of any amended pleadings the court permitted to be filed, Holms' discovery responses, and the state of the record at the time the motion for summary judgment was heard. See Stanley v. Holms (1997), 281 Mont. 329, 340, 934 P.2d 196, 203.

¶16 Following remand, the Stanleys filed a reply to Holms' counterclaims on April 24, 1997, alleging as an affirmative defense that Holms had executed a release waiving all claims against them. The Stanleys also filed a second motion for summary judgment on both the amended complaint and the counterclaims. On October 27, 1997, the District Court entered an order granting Holms' motion to amend the pleadings to assert counterclaims against the Stanleys. The court also granted the Stanleys' motion for summary judgment on both the amended complaint and on the counterclaims. The District Court entered judgment in favor of the Stanleys on October 30, 1997, and on December 30, 1997, denied Holms' motion to amend the judgment. This appeal followed.

ISSUE ONE

¶17 Did the District Court abuse its discretion when it ruled on the motion for summary judgment without allowing Holms the opportunity to conduct further discovery?

¶18 Holms contends that the motion for summary judgment was premature because of an inadequate opportunity to conduct discovery. Specifically, the arguments are: 1) there were fewer than 45 days during which the case was not subject to either an appeal or a dispositive summary judgment motion in which to conduct discovery; 2) because the District Court simultaneously granted Holms' motion to file the counterclaims and...