Trustees of Washington-Idaho-Montana Carpenters-Employers Retirement Trust Fund v. Galleria Partnership, WASHINGTON-IDAHO-MONTANA

• Decision Date: 10 September 1991
• Docket Number: No. 90-404,WASHINGTON-IDAHO-MONTANA,CARPENTERS-EMPLOYERS,90-404
• Citation: 819 P.2d 158,250 Mont. 175
• Parties: The TRUSTEES OF THERETIREMENT TRUST FUND and the Trustees of the Laborers--A.G.C. Pension Trust of Montana, Plaintiffs and Appellants, v. The GALLERIA PARTNERSHIP, a Montana general partnership, et al., and Marble's Moving, Storage & Transfer, a Montana corporation; and A.T. Klemens & Sons, a Montana corporation, Defendants, Appellants and Respondents. The GALLERIA PARTNERSHIP, et al., a Montana general partnership, Counterclaimants, and Third-Party Plaintiffs, v. The TRUSTEES OF THERETIREMENT TRUST FUND and the Trustees of the Laborers A.G.C. Pension Trust of Montana, Counter-Defendants, and Compass Group, Inc., a Washington corporation, and Old National Bancorporation, a Delaware corporation, Third-Party Defendants. MARBLE'S MOVING, STORAGE & TRANSFER, INC., a Montana corporation, Cross-claimants and Third-Party Plaintiff, v. The GALLERIA PARTNERSHIP, a Montana general partnership, et al., Cross-Defendants, and Daniel W. Cook, Kent Bray, Marvin Hessler, Delvin Trost, James McKeague, Donald Fisher, Robert C. Patterson, Arthur C. West, James W. McDermand and James D. Miller, Third-Party Defendants.
• Court: Montana Supreme Court

Page 158

819 P.2d 158 250 Mont. 175 The TRUSTEES OF THE WASHINGTON-IDAHO-MONTANA
CARPENTERS-EMPLOYERS RETIREMENT TRUST FUND and the
Trustees of the Laborers--A.G.C. Pension
Trust of Montana, Plaintiffs
and Appellants,
v.
The GALLERIA PARTNERSHIP, a Montana general partnership, et
al., and Marble's Moving, Storage & Transfer, a Montana
corporation; and A.T. Klemens & Sons, a Montana
corporation, Defendants, Appellants and Respondents.
The GALLERIA PARTNERSHIP, et al., a Montana general
partnership, Counterclaimants, and Third-Party Plaintiffs,
v.
The TRUSTEES OF THE WASHINGTON-IDAHO-MONTANA
CARPENTERS-EMPLOYERS RETIREMENT TRUST FUND and the
Trustees of the Laborers A.G.C. Pension
Trust of Montana, Counter-Defendants, and
Compass Group, Inc., a Washington corporation, and Old
National Bancorporation, a Delaware corporation,
Third-Party Defendants.
MARBLE'S MOVING, STORAGE & TRANSFER, INC., a Montana
corporation, Cross-claimants and Third-Party Plaintiff,
v.
The GALLERIA PARTNERSHIP, a Montana general partnership, et
al., Cross-Defendants, and
Daniel W. Cook, Kent Bray, Marvin Hessler, Delvin Trost,
James McKeague, Donald Fisher, Robert C.
Patterson, Arthur C. West, James W.
McDermand and James D. Miller,
Third-Party Defendants. No. 90-404. Supreme Court of Montana. Submitted on Briefs June 13, 1991.
Decided Aug. 2, 1991.
Rehearing Denied Sept. 10, 1991.

Page 159

[250 Mont. 177] K. Dale Schwanke, Jardine, Stephenson, Blewett & Weaver, Great Falls, for defendants, appellants and respondents.

William VanCanagan, Datsopoulos, MacDonald & Lind, Missoula, for plaintiffs and appellants.

HARRISON, Justice.

The parties appeal from a June 15, 1990, judgment of the District Court of the Eighth Judicial District, Cascade County, Montana, valuing certain foreclosed property at $1,100,000 and awarding no interest on appellants' loan accrued from the date of the sheriff's sale to the date the new judgment was entered. We affirm.

The parties present the following issues:

1. Did the District Court abuse its discretion in determining the value of the Galleria property?

[250 Mont. 178] 2. Was it appropriate for the Montana Supreme Court to suspend the accrual of interest on appellants' loan from the date of the sheriff's sale until date of entry of the new judgment?

In the first appeal, Trustees of Washington-Idaho-Montana Carpenters-Employers Retirement Trust Fund v. Galleria Partnership (1989), 239 Mont. 250, 780 P.2d 608, this Court affirmed the grant of deficiency judgment to the Trustees of

Page 160

Washington-Idaho-Montana Carpenters-Employers Retirement Trust Fund (Trustees) and remanded this case to the District Court for determination of the proper amount of deficiency judgment based upon the fair market value of the Galleria property. This Court held that the Galleria Partnership members were jointly and severally liable on the promissory note that they had signed individually and were liable for the deficiency judgment. In addition, if the fair market value of the Galleria property were determined to be greater than $565,000, the price the Trustees bid on the Galleria property at the sheriff's sale, this Court instructed the District Court not to allow interest from the date of the sheriff's sale to the date the new judgment was entered. Galleria Partnership, 239 Mont. at 269, 780 P.2d at 619.

In 1982, sixteen individuals executed a promissory note for $1,200,000 payable to the Trustees. Under the terms of the promissory note, the individuals undertook jointly and severally to pay the principal sum of the note and accrued interest.

At about the same time, Galleria Partnership, composed of ten of the individuals who signed the promissory note and three additional persons, the Great Falls Investors, executed to Safeco Title Insurance Company as trustee, a trust indenture and security agreement to secure the principal sum of $1,200,000 and interest according to the terms of the promissory note.

The real property secured by the trust indenture was a warehouse, the Galleria building, which had been remodeled for leasing to various business tenants. The building had been purchased and remodeled in 1982 by Galleria Associates, managed by Dan Cook.

Cook had obtained a $1,950,000 appraisal of the Galleria property in its remodeled state to get a long-term loan to pay off Galleria Associate's interim construction loan. Cook sought to borrow the money from Compass, a wholly owned subsidiary of Old National Bancorporation, specializing in handling loans of union pension trust funds. Because Cook was advised by Compass that Galleria Associates could not borrow from Trustees under the provisions of the [250 Mont. 179] Federal Employee Retirement Income Security Act (ERISA), he formed Galleria Partnership, to which Galleria Associates would eventually sell the property. Galleria Partnership qualified as a borrower under ERISA. Cook lined up the thirteen individuals and the Great Falls Investors that held varying fractions of interest in the partnership and eventually signed the trust agreement.

Cook owned an interest in several businesses owned by the tenants of the Galleria building. When Cook's economic situation deteriorated, many of the tenants could not pay their rents on a timely basis, making it difficult for Galleria Partnership to meet the $14,916 loan payments each month. Compass was aware of the reason for the late payments from Galleria Partnership and continued to accept the payments and late charges.

By early December, 1984, the November 1984 loan payment had not been paid. On December 11, 1984, Compass sent a default notice, accelerating the entire loan balance of $1,225,668.81 and demanding its payment within nine days. The default notice crossed...