Tipp v. Skjelset, 98-303

Decision Date05 November 1998
Docket NumberNo. 98-303,98-303
Citation967 P.2d 787,291 Mont. 288
CourtMontana Supreme Court
Parties, 1998 MT 263 Raymond P. TIPP, Thomas W. Frizzell and Richard R. Buley, Plaintiffs and Appellants, v. Douglas G. SKJELSET, Defendant and Respondent.

Richard R. Buley; Tipp & Buley, Missoula, Montana, for Appellants.

John H. Gilliam; Skjelset & Gilliam, Missoula, Montana, for Respondent.

LEAPHART, Justice.

¶1 This is an appeal from the District Court of the Fourth Judicial District, County of Missoula. Raymond P. Tipp (Tipp), Thomas W. Frizzell, and Richard R. Buley (TFB) appeal the District Court's order awarding Douglas G. Skjelset (Skjelset) interest on a money judgment against TFB. We affirm.

¶2 We restate the two issues on appeal:

¶3 (1.) Did the District Court err in awarding Skjelset postjudgment interest on his money judgment against TFB?

¶4 (2.) Should Skjelset be granted damages for a frivolous appeal by TFB?

Factual and Procedural Background

¶5 Tipp and Skjelset were formerly partners in a law firm. This case originated with a complaint filed by TFB in 1989 alleging that Skjelset had breached an agreement between the parties concerning the distribution of partnership assets upon its dissolution. The primary asset in dispute was a piece of real estate located in Missoula, which was jointly owned by Tipp and Skjelset. The case went to a mandatory settlement conference, from which a settlement agreement was derived in April of 1994. This agreement provided that Skjelset's ownership interest in the real estate was to be purchased by the remaining partners (i.e., by TFB).

¶6 Thereafter, a dispute arose as to the interpretation of the settlement agreement. Alleging that Skjelset had breached the agreement, TFB requested that the District Court enforce the parties' rights under the settlement agreement. On March 3, 1997, the court awarded Skjelset a 50% interest and Tipp the remaining 50% interest based on the deeds, practices and understandings in effect between the parties. Skjelset's 50% ownership interest in the real estate was valued by the District Court at $158,300.03, which, after deducting $30,000 for the costs of settlement and the payment of outstanding taxes, amounted to a net judgment of $128,300.03. This net amount represented the value of Skjelset's ownership interest in the real estate that TFB had promised to purchase from Skjelset upon dissolution of the partnership.

¶7 Further, the District Court concluded that because "Tipp ha[d] attempted to transfer [his interest in] the real estate outside of and contrary to the settlement agreement in an effort to limit the jurisdiction of the Court in effectuating the settlement agreement which he initially requested," it was "appropriate ... to closely control and manage the refinancing of the real estate" under the settlement agreement. Accordingly, the court directed that the parties investigate refinancing opportunities within the 45 days following the judgment and report back to the court on or before May 1, 1997, for purposes of setting forth a specific time-line to allow Skjelset to be paid his interest in the real estate, while still allowing Tipp clear title to facilitate refinancing the amount of the payment to Skjelset. TFB appealed the District Court's distribution of the partnership assets under the settlement agreement. This Court affirmed the District Court judgment in Tipp v. Skjelset (1997), 285 Mont. 274, 947 P.2d 480 (Tipp I).

¶8 After the affirmance, Skjelset's counsel wrote TFB's counsel requesting a certified check for $137,922.56, the principal amount of the judgment plus interest through December 3, 1997. Skjelset waited approximately two weeks without payment from TFB before filing a motion for enforcement of judgment with the District Court. Fifteen days after the filing of this motion, TFB deposited the principal amount of the judgment into trust with the District Court; Skjelset then delivered a quitclaim deed into trust with the court nine days later. In his motion, Skjelset requested that the court award him interest on the judgment amount from the date of entry of the District Court's findings and conclusions to the date that the amount was paid into trust with the court.

¶9 On February 23, 1998, the District Court entered its order, granting Skjelset "post-judgment interest" at the statutory rate of 10% from the date of the original findings and conclusions through the date the amount was paid into trust. This amounted to an award of $10,691.70 in postjudgment interest. The court further directed the clerk of court to disburse the$128,300.03 to Skjelset, but ordered that the quitclaim deed would not be released to TFB until it filed a satisfaction of judgment respecting the postjudgment interest with the court. TFB appeals from the District Court order.

Discussion

¶10 The first issue on appeal is whether the District Court erred in granting postjudgment interest to Skjelset on the monetary judgment against TFB.

¶11 TFB contends that the District Court erred in awarding interest to Skjelset under § 27-1-211, MCA. Statutory construction is a question of law. We review a district court's conclusion of law to determine if the court's interpretation of the law is correct. Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603.

¶12. Section 27-1-211, MCA, states:

Right to Interest. Every person who is entitled to recover damages certain or capable of being made certain by calculation and the right to recover which is vested in him upon a particular day is entitled also to recover interest thereon from that day except during such time as the debtor is prevented by law or by the act of the creditor from paying the debt.

Section 27-1-211, MCA. According to TFB, § 27-1-211, MCA, cannot support the District Court's grant of interest because the money judgment owed Skjelset by TFB is not an award of "damages" within the meaning of the statute. We agree that § 27-1-211, MCA, cannot support an award of postjudgment interest, but we disagree with TFB's conclusion that the District Court's reliance on § 27-1-211, MCA, necessarily voids an otherwise valid award of postjudgment interest.

¶13 As Skjelset makes clear, this Court has construed § 27-1-211, MCA, as mandating an award of "prejudgment interest" where three criteria are satisfied: "(1) [there exists] an underlying monetary obligation; (2) the amount of recovery is certain or capable of being made certain by calculation; and (3) the right to recover the obligation vests on a particular day." Byrne v. Terry (1987), 228 Mont. 387, 390, 741 P.2d 1341, 1343 (emphasis added). Thus, § 27-1-211, MCA, is applicable only to an award of "prejudgment interest." See also Martel Const., Inc. v. State (1991), 249 Mont. 507, 512, 817 P.2d 677, 680 (referring to § 27-1-211, MCA, as "the general prejudgment interest statute" of Montana); Price Bldg. Service, Inc. v. Holms (1985), 214 Mont. 456, 468, 693 P.2d 553, 559 (discussing the legislative intent underlying § 27-1-211, MCA, "[t]he prejudgment interest statute").

¶14 This case is factually analogous to our decision in In re Marriage of Mannix (1990), 242 Mont. 137, 788 P.2d 1363. That case involved the appeal of an award of interest by the trial court on a debt created by the parties' property settlement agreement. The language of the property settlement agreement, like here, required one party to purchase the other party's interest in jointly owned real estate. We noted that even though the payment was to be made in the future (i.e., upon the sale of the real estate), the right to the money vested on the day the trial court entered its final decree. We thus held that postjudgment interest was properly awarded at the rate of 10% per annum from the date of the court's entry of judgment to the day that the party owing the money tendered payment. Marriage of Mannix, 242 Mont. at 140, 788 P.2d at 1365.

¶15 In Marriage of Mannix, we rejected the petitioner's arguments based upon § 27-1-211, MCA. Specifically, we stated that the petitioner's "reliance on Sec. 27-1-211, MCA, is inappropriate in this case, since the issue here concerns 'post judgment' interest, rather than prejudgment interest under Sec. 27-1-211, MCA." Marriage of Mannix, 242 Mont. at 140, 788 P.2d at 1366. In rejecting the arguments based on § 27-1-211, MCA, we affirmed the District Court's award of postjudgment interest at a rate of 10% per annum as a proper result pursuant to § 25-9-205, MCA. Marriage of Mannix, 242 Mont. at 140, 788 P.2d at 1365. Similarly, TFB's reliance on case law interpreting § 27-1-211, MCA, is inappropriate here because postjudgment interest, not prejudgment interest, is at issue.

¶16 Skjelset recognizes that "[t]he award of interest here was really an award of post-judgment interest--not pre-judgment interest." Despite the District Court's reliance on the wrong statute, he contends that the award of postjudgment interest was appropriate. We agree. In this case, the District Court reached the right result by awarding Skjelset postjudgment interest, but incorrectly based its conclusion on § 27-1-211, MCA. We conclude that the court's judgment "can be sustained under the wrong-reason, right-result appellate rule." Knutson v. State (1984), 211 Mont. 126, 129, 683 P.2d 488, 490 (citing Fergus County v. Osweiler (1938), 107 Mont. 466, 86 P.2d 410). A harmless error does not mandate that we reverse a district court judgment; an "error must cause substantial prejudice" to warrant reversal. Erickson v. State ex rel. Bd. of Med. Exam. (1997), 282 Mont. 367, 375, 938 P.2d 625, 630. The District Court's error regarding the application of § 27-1-211, MCA, was harmless.

¶17 The statutory bases for an award of postjudgment interest in Montana are §§ 25-9-204 and 25-9-205, MCA. The District Court should have applied § 25-9-205, MCA, to support its award of postjudgment interest. S...

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