VonLutzow v. Leppek

Decision Date18 August 2003
Docket NumberNo. 02-046.,02-046.
Citation317 Mont. 109,75 P.3d 782,2003 MT 214
PartiesTammy VonLUTZOW, Plaintiff and Appellant, v. Larry LEPPEK, Defendant and Respondent.
CourtMontana Supreme Court

James A. Manley, Manley Law Firm, Polson, Montana, For Appellant.

No Appearance, For Respondent.

Justice PATRICIA O. COTTER delivered the Opinion of the Court.

¶ 1 Tammy VonLutzow (Tammy) filed a claim in the Lake County District Court, seeking repayment of over $17,000 allegedly provided as loans to Larry Leppek (Larry). The District Court held Tammy was owed only $1,000, concluding that she failed to prove that Larry promised to repay the rest of the funds. Tammy appeals. We reverse and remand for a new trial.

ISSUES

¶ 2 Tammy presents the following issues on appeal:

1. Did the District Court violate Rule 408, M.R.Evid., when it admitted Defendant's Exhibit A, a letter Tammy wrote to Larry seeking to settle their financial differences?
2. Did the District Court err in denying recovery to Tammy because she failed to show there was an agreement to repay the $15,000 on a specific date or in a specific manner?
FACTUAL AND PROCEDURAL BACKGROUND

¶ 3 Because our decision turns on the evidentiary question, we limit our recounting of the facts to those relevant to that question.

¶ 4 Tammy had been acquainted with Larry since 1990 when he did carpentry work on the building she owned in Whitefish with her husband. After her husband's death in March 1999, Tammy began a personal relationship with Larry. Over the course of the brief relationship, money changed hands frequently. At times Larry helped Tammy with bills, and more often, Tammy transferred relatively large sums to Larry, including a check for $1,200, and another for $15,000. Tammy contends that the bulk of the money she gave to Larry was understood to be a loan. Larry, on the other hand, claims that these monies were provided as payment for services he provided to Tammy.

¶ 5 Tammy asserts that the $1,200 check she wrote to Larry on August 25, 1999 was a down payment for her purchase of Larry's RV, where she lived with her son for a few months. The check was marked "RV-down payment" in the memo line and Larry did transfer the RV title to Tammy. Tammy subsequently transferred the title back to Larry, allegedly under duress, and thus she is seeking repayment of the $1,200.

¶ 6 Larry denied that this money was a down-payment for the RV. He testified that the $1,200 was "... as part of her rent thing." Larry claimed Tammy had agreed to pay him rent of $500 per month for two months, as well as $200 to store some of her personal belongings in one of the empty houses he was building. Larry further testified that Tammy was willing to pay such rent, despite the fact that the RV was not hooked up to electricity, heat, sewage or water.

¶ 7 In December 1999, Tammy sold her property in Whitefish and netted $47,000. She testified that Larry pressured her to give him the sale proceeds, offering in return to transfer to her title to a 5-acre parcel of land he owned. Because Larry provided no paperwork to protect her, Tammy declined to give Larry the sum of her sale proceeds. Rather, she testified, she agreed to loan him $15,000. She wrote him a $15,000 check on December 16, 1999.

¶ 8 Larry claims that the $15,000 check was money Tammy owed him, not a loan. Regarding Tammy's debts to him, Larry testified:

She gave me $15,000 for the money that I had loaned her, the things that I had done, the rent for staying out there in the trailer, all kinds of stuff. She gave me $15,000 at the completion of the sale of her building for the money I loaned her and rents and storage and what have you; you know, money I had loaned her and stuff.

On direct examination, Larry testified that he had kept a ledger for the amounts Tammy purportedly owed him. On cross-examination, he admitted there was no ledger, but " ... it was kind of just in the head." He testified, for example, that Tammy's late husband owed him $3,500 for carpentry work done years before. Tammy had never heard about this debt and did not believe it was valid.

¶ 9 In an effort to settle their dispute and recoup some portion of the money she had given to Larry, Tammy wrote a letter to Larry on April 30, 2000, seeking to compromise. The letter lists the amounts Tammy had paid to Larry and shows deductions for the amounts Larry claimed Tammy owed him. The letter seeks repayment of the balance, nearly $8,000.

¶ 10 The letter reads, in part:

Dear Larry,
You said you would be fair with me. I pray you will. I am tired of playing this game and it is over for me. We have had no relationship for sometime and I fear friendship is no longer a possibility for we don't seem to possess the qualities of a true friendship.
Attached is an accounting of the dollars I have paid. I need to get the access. I really thought we had a lifetime commitment but now realize we don't. I signed over the RV because I trusted you. I always felt that it was half mine as you told me. I was afraid not to sign it over. I feared what you might do if I didn't. I didn't want to because it was my security for the excess funds I provided. I hate it has come to this, but I must protect my interest and not just write it off. I can't afford too [sic]. Please be fair to me, for I have been more than fair in my part and actually left out a lot of checks. The trips we took, I pretty much paid for. You said they were for me, but I think you enjoyed them as well. The mileage you put on my car and your taking it was not a good thing. No one that cared for anyone would do that, but I'll let that go.

Tammy owed Larry Jack's debt I was unaware of: $ 3,500 Your time and trouble 5,000 Rent@500/month Aug, Sept, Nov 1,500 Storage from 12/15-1/15 200 Loans 1,500 400 1,000 ________ Total $ 13,100 Paybacks from Tammy Paid to you after I closed 12/18/99 $ 15,000 Down payment of rv ck# 3731 8/25/99 1,200 Deposit to your personal acct ck# 4061 12/9/99 300 ck# 4065 12-12-99 600 Larry's Glasses 150 _______ Total $21,033 ------- Less amount to Larry 13,100 Money owed to Tammy $ 7,933 -------

This amount is fair and in your favor. I sent Luke about 1,000 and a lot of other things I paid for I have not included. Please let me know how we can put this too [sic] rest. I am sorry it had to end like this. God knows I wish you all the best... Tammy

¶ 11 This letter is at the center of the evidentiary dispute before us. When defense counsel offered the letter into evidence, Tammy's counsel objected and sought voir dire on the document. During voir dire, Tammy testified that the letter was written as a compromise offer in an attempt to settle the debt claim. Accordingly, Tammy's counsel objected on the grounds that the letter was inadmissible under Rule 408 of the Montana Rules of Evidence, which bars admission of evidence of or offers to compromise.

¶ 12 Larry's counsel responded by asserting that the letter was not an offer of settlement, but an accounting. Further, he argued, the accounting was made prior to any claim being filed against Larry, stating: "Rule 408 needs to be read together with Rule 8, which identifies what a claim is. And a claim, under Rule 8, is after an action has been filed. This [letter] predates the action by a year, predates the document which she is suing him on." Finally, counsel asserted that the letter was not being offered to show the amounts therein, but to impeach Tammy.

¶ 13 It is unclear which of the above arguments the district court found persuasive, but the letter was admitted.

STANDARD OF REVIEW

¶ 14 Our standard of review of a district court's evidentiary rulings is abuse of discretion. Finstad v. W.R. Grace & Co., 2000 MT 228, ¶ 43, 301 Mont. 240, ¶ 43, 8 P.3d 778, ¶ 43 (citing Busta v. Columbus Hosp. Corp. (1996), 276 Mont. 342, 353, 916 P.2d 122, 128). "The test for abuse of discretion is whether the trial court acted arbitrarily without employment of conscientious judgment or exceeded the bounds of reason resulting in substantial injustice." Jarvenpaa v. Glacier Elec. Co-Op., Inc., 1998 MT 306, ¶ 13, 292 Mont. 118, ¶ 13, 970 P.2d 84, ¶ 13.

DISCUSSION

¶ 15 Did the District Court violate Rule 408, M.R.Evid., when it admitted Defendant's Exhibit A, a letter Tammy wrote to Larry seeking to settle their financial differences?

¶ 16 To answer this question, we must address and resolve three preliminary inquiries:

(1) Was Tammy's letter an offer to compromise?
(2) To fall under Rule 408, must the letter have been written after a legal claim was filed in court?
(3) If the letter would otherwise be inadmissible under Rule 408, does it fall within one of the exceptions?

¶ 17 Rule 408, M.R.Evid., reads:

Evidence of (1) furnishing or offering or promising to furnish, or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations is likewise not admissible. This rule does not require exclusion of any evidence otherwise discoverable merely because it is presented in the course of compromise negotiations. This rule also does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice of a witness, negativing a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution.

¶ 18 First, based on our review of the record and the text of Tammy's letter to Larry, we conclude that the letter constitutes an offer of compromise. Several aspects of the letter support this conclusion. Tammy begins by asserting, "You said you would be fair with me. I pray you will." She writes, "Please be fair to me, for I have been more than fair in my part and actually left out a lot of checks."...

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