Svkv, L.L.C. v. Harding

• Decision Date: 20 November 2006
• Docket Number: No. 04-391.,04-391.
• Citation: 2006 MT 297,148 P.3d 584
• Parties: SVKV, L.L.C., d/b/a Beehive Homes of Helena, Plaintiff, Counterdefendant and Respondent, v. Ty HARDING, d/b/a Harding Enterprises, Defendant, Counterclaimant and Appellant.
• Court: Montana Supreme Court

Page 584

148 P.3d 584

2006 MT 297

SVKV, L.L.C., d/b/a Beehive Homes of Helena, Plaintiff, Counterdefendant and Respondent, v. Ty HARDING, d/b/a Harding Enterprises, Defendant, Counterclaimant and Appellant.

No. 04-391.

Supreme Court of Montana.

Submitted on Briefs: July 19, 2006.

Decided: November 20, 2006.

For Appellant: G. Patrick HagEstad; Milodragovich, Dale, Steinbrenner & Binney, P.C., Missoula, Montana.

For Respondent: Joe Seifert; Keller, Reynolds, Drake, Johnson & Gillespie, P.C., Helena, Montana.

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

¶ 1 Ty Harding, doing business as Harding Enterprises (Harding), appeals from the order of the First Judicial District Court, Lewis and Clark County, granting summary judgment to SVKV, L.L.C. (SVKV), doing business as Beehive Homes of Helena, on Harding's counterclaims, and from the court's later order denying Harding's request for a hearing on SVKV's motion. We affirm.

¶ 2 The issues on appeal are:

¶ 3 1. Did the District Court abuse its discretion by failing to hold a hearing or obtain the parties' express waiver of a hearing before granting SVKV summary judgment on Harding's counterclaims?

¶ 4 2. Did the District Court err in granting summary judgment to SVKV?

¶ 5 3. Is SVKV entitled to attorney's fees or costs on appeal?

BACKGROUND

¶ 6 In October of 1996, Bee Hive Homes of Northern Montana, Inc. (Northern) entered into a contract, with Ken Vivrette and Damian Flaherty signing it in their capacity as Northern's officers. The other party to the 1996 contract was Bee Hive Development, Inc.

¶ 7 According to a document of record, Bee Hive Homes Development, Inc., was the predecessor of both Bee Hive Homes of America, Inc., and Bee Hive Homes, Inc. Another document states Bee Hive Homes of America, Inc., and Bee Hive Homes, Inc., had entered into an agreement pursuant to which the sub-franchisor, Bee Hive Homes, Inc., could in turn sub-franchise to others, upon written consent from Bee Hive Homes of America, Inc. The relationship of these three entities is not at issue in this appeal. Therefore, we refer to all of them as Bee Hive.

¶ 8 The 1996 contract generally stated that Bee Hive would provide certain plans, specifications, operations and procedural manuals for residential care facilities (homes) in exchange for Northern's payments of certain sums. One paragraph of the contract stated that, as consideration for Bee Hive's providing certain consulting services—including assistance in construction-related matters, accounting and payroll procedures, training, and menus—Northern would pay specified percentages of its homes' gross rents.

¶ 9 In late 1996, apparently before or around the same time as the 1996 contract involving Northern was executed, Tricia and Damian Flaherty and Sue and Ken Vivrette formed TDSK, L.L.C. (TDSK) to build and operate homes. It is not clear what, if any, relationship existed between TDSK and Northern. Later—perhaps in March of 1999, according to Sue Vivrette's deposition testimony—the Vivrettes bought out the Flahertys and formed SVKV. The Vivrettes were involved, via one entity or another, in the construction, development and operation of three homes in Lewis and Clark County.

¶ 10 In June of 1998, Bee Hive sent a letter to the Vivrettes, addressed to them at Bee Hive Homes of Helena, in which Bee Hive advised it was "restructuring its operations to conform to all national and federal franchise law" and recommended the execution of a franchise agreement with Bee Hive. The letter also set forth two other options: a repurchase offer and an "option to reject the repurchase offer .... This means that you will agree to continue under the existing agreement and that you do not elect to sign a new franchise agreement." The letter stated that acceptance of either of the last two options would constitute a release of Bee Hive from any claims and liabilities regarding the offer and sale of homes. Neither the Vivrettes nor any entity involving the Vivrettes responded to the letter.

¶ 11 Later, in October of 1998, Bee Hive executed a "sub-franchise agreement" with Harding, which stated that Bee Hive granted Harding "the exclusive right to build, own, and operate Bee Hive Homes (under the franchise agreement ...) and to sell franchises on [Bee Hive's] behalf of Homes using the System under the Names and Marks" within Montana. Under the 1998 agreement, Harding agreed to pay a franchise fee in the amount of 50% of the franchise fees payable under "the Franchise Agreement for each franchise" after the first eight acquired and owned by Harding, as well as "each franchise sold" by Harding in Montana. In addition, the 1998 agreement stated that Harding agreed to pay 50% of franchise royalties on the franchises acquired and owned by Harding in Montana and "each franchise sold" in Montana. After the 1998 agreement was executed by Bee Hive and Harding, SVKV paid Harding certain amounts for a period of time, but later reduced—and ultimately stopped—its payments.

¶ 12 In August of 2000, SVKV filed a complaint against Ty Harding, doing business as Harding Enterprises, asserting he had demanded money under the 1996 agreement and had threatened to sue SVKV to collect. Among other things, SVKV requested a declaratory judgment that the 1996 contract was void, asserted breach of the 1996 contract, and requested damages and restitution. At different points during the underlying action, the District Court dismissed each of SVKV's claims.

¶ 13 Harding answered and counterclaimed, affirmatively alleging that he and Harding Enterprises were actually Harding Enterprises, Inc., and asserting breach of contract, fraud, and unjust enrichment. SVKV responded to the counterclaims.

¶ 14 The District Court held a scheduling conference in June of 2002, which counsel for both parties attended telephonically, and later entered a scheduling order stating

[w]hen any motion has been fully briefed, oral argument if requested by any party has been held and the motion is submitted for decision, one of the parties must so advise the Court by filing and serving a "Notice of Submittal." Until such notice has been filed and served, the motion will not be deemed submitted for decision. Hearing on a motion for summary judgment is deemed waived unless a written request for hearing is submitted within the time period for filing the briefs on the motion.

In September of 2003, after the parties stipulated to continue the trial date, the court entered another scheduling order containing the same language.

¶ 15 In October of 2003, SVKV moved for summary judgment on Harding's counterclaims, and Harding responded. On the same day it filed its reply brief in November of 2003, SVKV filed and served a "Notice of Submittal" stating that "[p]ursuant to local rule, the undersigned hereby advised [sic] the Court that briefing on the Plaintiff's motion for summary judgment ... has been completed, neither party has requested oral argument, and the matters may be deemed submitted and ready for decision." Harding did not dispute or respond to the Notice.

¶ 16 In January of 2004, the District Court granted SVKV's motion for summary judgment on Harding's counterclaims, determining there was no evidence of contractual privity between Harding and SVKV. Approximately four days later, Harding requested a hearing on SVKV's motion for summary judgment—asserting, among other things, that "it would ... be an abuse of discretion should the Court deny [Harding] a hearing on the matter `unless' [Harding] `specifically' waived its right to a hearing."

¶ 17 The District Court denied the request for a hearing. It referred Harding to the June 24, 2002 and September 26, 2003 scheduling orders that directed the parties, in bold print, to request a hearing by the end of briefing on a motion or the hearing would be deemed waived. Noting it had ruled two months after briefing was completed and neither party had requested a hearing, the court stated Harding "apparently expects the Court to sit on pending summary judgment motions indefinitely until a party decides it wants a hearing."

¶ 18 Harding appeals. We set forth additional facts in the discussion below.

STANDARDS OF REVIEW

¶ 19 We review a district court's decision to deny a hearing on a summary judgment motion for an abuse of discretion. Virginia City v. Olsen, 2002 MT 176, ¶ 13, 310 Mont. 527, ¶ 13, 52 P.3d 383, ¶ 13 (citation omitted). A court abuses its discretion when it acts arbitrarily, without employment of conscientious judgment, or exceeds the bounds of reason resulting in substantial injustice. Pumphrey v. Empire Lath and Plaster, 2006 MT 99, ¶ 16, 332 Mont. 116, ¶ 16, 135 P.3d 797, ¶ 16 (citation omitted).

¶ 20 We review a district court's grant of summary judgment de novo, determining whether—viewing the evidence in the light most favorable to the nonmoving party and drawing all reasonable inferences in the nonmoving party's favor—genuine issues of material fact exist and whether the moving party is entitled to judgment as a matter of law. See Rule 56(c), M.R.Civ.P.; Prindel v. Ravalli County, 2006 MT 62, ¶ 19, 331 Mont. 338, ¶ 19, 133 P.3d 165, ¶ 19 (citations omitted).

DISCUSSION

¶ 21 Before addressing the issues before us on appeal, we note the parties' briefs variously refer to the appellant as Mr. Harding, Harding Enterprises, and Harding Enterprises, Inc. In this regard, we observe the 1998 agreement names Harding Enterprises, Inc. as "Sub-Franchisor" and is signed, in pertinent part, "Sub-Franchisor: By Ty Harding, Its Owner"—an unusual designation for a person signing on a corporation's behalf. Although Harding alleged a corporate status via its answer and counterclaims, Harding has never moved to amend the caption under which SVKV filed its complaint, which is the caption set forth above. However, both parties and the District Court have used a caption—never formally adopted— naming Ty Harding, doing...