State v. Skyline Broadcasters, Inc.

• Decision Date: 05 June 2009
• Docket Number: No. DA 07-0281.,DA 07-0281.
• Citation: State v. Skyline Broadcasters, Inc., 211 P.3d 189, 2009 MT 193, 351 Mont. 127 (Mont. 2009)
• Parties: STATE of Montana, Acting by and Through the Montana Department of Transportation, Plaintiff and Appellant, v. SKYLINE BROADCASTERS, INC., a Montana Corporation, John P. Stokes; Z-600, Inc., A Montana Corporation; Questa Resources, Inc., a Montana Corporation, William E. Mytty; Sandra F. Mytty; Quality Supply, Inc., Profit Sharing Plan and Trust; Douglas S. Hadnot; J. Chriss Crawford; Myrna K. Crawford; Stephen S. Ellis, M.D., P.C., Employees Amended and Restated Pension Plan; and Thomas H. Boone, Trustee of the Boone Karlberg Employees Profit Sharing Trust, Defendants, Appellees and Cross-Appellants.
• Court: Montana Supreme Court

211 P.3d 189

2009 MT 193

351 Mont. 127

STATE of Montana, Acting by and Through the Montana Department of Transportation, Plaintiff and Appellant, v.SKYLINE BROADCASTERS, INC., a Montana Corporation, John P. Stokes; Z-600, Inc., A Montana Corporation; Questa Resources, Inc., a Montana Corporation, William E. Mytty; Sandra F. Mytty; Quality Supply, Inc., Profit Sharing Plan and Trust; Douglas S. Hadnot; J. Chriss Crawford; Myrna K. Crawford; Stephen S. Ellis, M.D., P.C., Employees Amended and Restated Pension Plan; and Thomas H. Boone, Trustee of the Boone Karlberg Employees Profit Sharing Trust, Defendants, Appellees and Cross-Appellants.

No. DA 07-0281.

Supreme Court of Montana.

Submitted on Briefs April 24, 2008.

Decided June 5, 2009.

For Appellant: James A. Lewis, Robert Gentry, Timothy W. Reardon, Montana Department of Transportation, Helena, Montana.

For Appellees: Christy L. Brandon, Brandon Law Firm, PLLC, Bigfork, Montana, John Stokes(Self-Represented), Kalispell, Montana.

Justice JAMES C. NELSONdelivered the Opinion of the Court.

¶ 1 The Montana Department of Transportation(MDT), appeals from a judgment entered by the Eleventh Judicial District Court, Flathead County, in favor of MDT after the court determined the amount of attorney fees and costs to be awarded to the defendants in this condemnation action.DefendantsQuesta Resources, Inc.; William E. Mytty and Sandra F. Mytty; Quality Supply Inc. Profit Sharing Plan and Trust; Douglas S. Hadnot; J. Chriss Crawford and Myrna K. Crawford; Stephen S. Ellis, M.D., P.C., Employees Amended and Restated Pension Plan; and Thomas H. Boone, Trustee of the Boone, Karlberg Employees Profit Sharing Trust (collectively, the lender defendants) cross-appeal on two issues relating to liability for and the amount of the judgment.We affirm in part and reverse and remand in part.

¶ 2 The issues are:

¶ 3 1.Did the District Court err in setting the hourly rate of attorney fees to be awarded to defense counselWade Dahood?

¶ 4 2.Did the District Court err in concluding the proper treatment of the May 2004 stipulation was to set off $30,000 from the attorney fee award?

¶ 5 3.Did the District Court err in ruling the lender defendants were jointly and severally liable for the overage judgment?

¶ 6 4.Did the District Court err in its calculation of the final judgment amount?

BACKGROUND

¶ 7 MDT brought this action in 2001 to condemn the defendants' property south of Kalispell, Montana, for a highway project.Early on in the litigation, the defendants stipulated to the necessity for the taking and possession of a part of the property, and MDT amended its complaint to reduce the size of the taking.In connection with that stipulation and amendment, MDT agreed, in May of 2004, to pay the defendants $30,000 as a compromise amount for their "claim for necessary expenses of litigation."

¶ 8 The condemnation action eventually was resolved on November 5, 2005, again by agreement of the parties.MDT agreed to pay $400,000 for the property, along with the defendants' necessary expenses of litigation as defined under § 70-30-306, MCA.Counsel for defendants Questa and Mytty moved for payment of their attorney fees and other expenses of litigation in the amount of $3,665, which motion MDT did not oppose.However, MDT moved to retax defense attorney Wade Dahood's claim for fees and costs in the amount of $667,891.

¶ 9The District Court held a hearing in June of 2006 to determine the amount of the defendants' necessary expenses of litigation.Dahood testified and submitted documentation in support of his claim, which he had re-totaled at $681,907.75, including paralegal fees, expenses, and 1,906 hours of work at an hourly rate of $250 for his own services.Dahood supported this hourly rate with affidavits of eight other Montana attorneys, who averred that the rate was appropriate for an attorney of his stature in a complicated condemnation case.MDT, on the other hand, presented testimony that the customary hourly rate for attorneys in Flathead County was $150.MDT also challenged the total number of hours Dahood claimed, on several grounds.In its written judgment filed November 14, 2006, the District Court reduced the number of hours for which it allowed Dahood payment from the 1,906 hours he claimed to 1,205 hours.The court adopted the $250 hourly rate for Dahood's services, and awarded the defendants $301,250 for attorney fees, plus expert fees totaling $45,650 and costs of $4,488.23.

¶ 10The District Court then determined the $750,500 deposit MDT had made with the court pending this action, pursuant to §§ 70-30-308and -311(5)(b), MCA, plus statutory interest on that amount, was more than the total judgment against MDT.Dahood had withdrawn all of the deposit in 2001 through 2003, using it to, among other things, pay off the lender defendants' mortgages in the amount of $293,930.The District Court ruled the defendants are jointly and severally liable to repay MDT for that overage, plus interest.As a result, on February 26, 2007, the court entered an order granting MDT a net judgment of $98,960.69 plus interest at the rate of 10 percent.MDT appeals, and the lender defendants cross-appeal.

¶ 11 After this appeal had been briefed and submitted to the Court, defendantJohn Stokes filed for bankruptcy in the United States Bankruptcy Court for the District of Montana.By order dated April 17, 2009, the Bankruptcy Court lifted the automatic bankruptcy stay imposed pursuant to 11 U.S.C. § 362, to allow this appeal to go forward.The stay remains in effect as to any efforts to enforce judgment against Stokes.

STANDARDS OF REVIEW

¶ 12We review a district court's interpretation and application of a statute for correctness.State, ex rel. Montana Dept. of Transp. v. American Bank of Montana,2008 MT 362, ¶ 7, 346 Mont. 405, 195 P.3d 844.The same standard applies to our review of the construction and interpretation of written agreements and determinations as to whether ambiguity exists in a contract; we review rulings on these matters to determine whether the district court's conclusions of law are correct.SeeIn re Marriage of Holloway,2000 MT 104, ¶ 5, 299 Mont. 291, 999 P.2d 980.

ISSUE 1

¶ 13Did the District Court err in setting the hourly rate of attorney fees to be awarded to defense counselWade Dahood?

¶ 14Section 70-30-306, MCA, defines necessary expenses of litigation for purposes of condemnation actions, including "reasonable and necessary attorney fees, expert witness fees, exhibit costs, and court costs."The statute provides that "[r]easonable and necessary attorney fees are the customary hourly rates for an attorney's services in the county in which the trial is held."Section 70-30-306(2), MCA.

¶ 15 After briefing was completed in this case, we construed the language of § 70-30-306, MCA, in American Bank.We held that reasonable and necessary attorney fees awarded under § 70-30-306, MCA, must be computed based on hourly rates typical or common for a non-specific attorney's services in the county in which trial is held; they are not to be computed pursuant to the "Forrester factors" which are applied when computing attorney fees in other types of cases.American Bank,¶¶ 9, 14.

¶ 16 As a result of timing, the District Court lacked the benefit of our decision in American Bank.In its findings on this matter, the court began by stating it would set the attorney fees at "the customary hourly rate in Flathead County," but it then went on to incorporate the Forrester factors into its analysis.Based on Dahood's testimony and the affidavits he presented—which addressed the Forrester factors—the court set Dahood's hourly rate for this action at $250 per hour.However, as we determined in American Bank, the Forrester factors do not apply in a condemnation action.For that reason, that portion of the judgment of the District Court must be, and is, vacated.

¶ 17 At the District Court's hearing on attorney fees, MDT introduced testimony by two attorneys who have practiced law in Flathead County, Richard DeJana and Marshall Murray.Both testified the usual and customary fee for an attorney's services in Flathead County in the year 2005 was $150 per hour; DeJana also filed an affidavit to that effect.That is the evidence upon which the District Court should have relied in setting Dahood's hourly rate.On remand, the District Court is instructed to recalculate the attorney fees to which the defendants are entitled, based on an hourly rate of $150 for Dahood.

ISSUE 2

¶ 18Did the District Court err in concluding the proper treatment of the May 2004 stipulation was to set off $30,000 from the attorney fee award?

¶ 19 MDT argues it should have been granted more than a $30,000 credit against the total attorney fees and costs as a result of the settlement by stipulation between the parties in May of 2004.MDT contends the settlement was intended to encompass all litigation expenses incurred up to the time the amended complaint was filed.MDT points out Dahood had submitted a bill indicating he performed 462 hours of work at $250 per hour up to the time of the stipulation, plus paralegal fees and expenses.As a result, MDT contends it should have received a credit for a total of $176,785.57 in pre-settlement legal fees, paralegal fees, and expenses, instead of just $30,000.

¶ 20 The May 2004 stipulation provided that "the `lump sum' amount of $30,000" was

for a complete and total settlement of that certain claim for necessary expenses of litigation as defined in § 70-30-306, MCA, and incurred as a result of the reduction in the area of the taking and attached to Mr. Dahood's letter of April 6, 2004.The taking was reduced by the Judge's Order Amending the Complaint dated December 18, 2001.This agreement represents the settlement of a doubtful and disputed claim and neither party is agreeing to validity or correctness of any particular item included...