Case Title: SCHMIDT v COLONIAL TERRACE ASSOC

Citation: 

Docket Number: 81-396

State: montana

Court: Montana Supreme Court

Date: 1982-12-29T00:00:00Z

Document:
No. 81-396 IN THE SUPREFU COURT OF THE STATE OF MONTANA 1982 F. W. SCHMIDT, et al., Plaintiff and Appellant, VS. COLONIAL TERRACE ASSOCIATES, et al., Defendants and Respondents. Appeal from: District Court of the First Judicial District, In and for the County of Lewis and Clark Honorable Peter G. Meloy, Judge presidins. Counsel of Record: For Appellant: James A. Currming argued, Columbia Falls, Montana For Respondents: Worden, Thane & Haines, Missoula, Montana Ronald Bender argued., Missoula, Montana - - Submitted: September 16, 1982 Decided: December 29, 1982 ;-ILL 2 A i98L Filed: . Justice Daniel J. Shea delivered the Opinion of the Court. F. W. Schmidt, e t al. (Schmidt) brought this suit in Lewis and Clark County District Court seeking a forfeiture of property by defendants, Colonial Terrace Associates e t al. (Colonial Terrace) for breach of contract. Colonial Terrace filed a general denial and counterclaimed for breach of contract, negligence, fraud, and unljust enrichment. The jury returned a verdict in favor of Colonial Terrace and against Schmidt and awarded $128,278 damages to Colonial Terrace; subject to the trial court determining the offsets claimed by Schmidt. Judgment was entered on that verdict. Schmidt moved to amend the judgment. The trial court entered an order denying Schmidt's motion to m n d judgment and an order awarding attorney fees of $27,002.50 and costs of $9,346.90 to Colonial Terrace. Schmidt apw-als froan both orders. Schmidt claims that the trial court erred in entering j u d p n t on the verdict without first holding a hearing to determine offset. Schmidt bases this claim on the response to a question from the j q during delikerations, where the parties agreed to l i m i t the j q ' s verdict to the amount of damages and allow the trial court to determine the amount of offset in a later proceeding. A provision of the contract allows the prevailing party to recover a reasonable attorney fee plus costs of suit. Schmidt does not claim error in the amount awarded for attorney fees, but argues that the determination should have been made by the jury instead of by the trial judge. Schmidt fails to M e anv argument to support his claim that the awarded costs are in error. W e affirm the order awarding attorney's fees and costs to Colonial Terrace. W e vacate the judgment and w e remand the case for a hearing to determine whether the evidence establishes that an offset should be applied to the jury verdict; and the amount of the offset if applicable. The hearing shall be confined to the existing record, without admission of any new evidence. The dispute involves a contract for the exchange of real esete. In 1977, Schmidt started construction of an apartment house complex i n Helena consisting of 18 separate four unit buildings. When construction was w e l l . under w a y , Schmidt entered into negotiations for the sale of the entire project to Colonial Terrace. On August 10, 1977, Schmidt agreed to transfer the entire apartment complex to Colonial Terrace in exchange for real estate and paymnt of b t money. The t o t a l . sale price of the a p a r - t s was $1,450,000. Colonial Terrace paid $20,000 earnest mney down and agreed to transfer real estate worth $150,000 and additional cash of $55,000 when Schmidt cqleted construction of the complex. Thirty days after construction was complete, Colonial Terrace was to begin making mnthly paymnts on the remaining balance of $1,225,000. On December 16, 1977, the construction lenders accepted the apartment project as complete for their purposes. At that time Schmidt was required to begin making mnthly payments on his construction loans. However, at about the same time, disputes arose between Schmidt and Colonial Terrace. Colonial Terrace notified Schmidt of construction deficiencies. After November 1979, Colonial Terrace made no further paynents into escrow, but began making mnthly paymnts directly to Schmidt's construction lenders. Colonial Terrace continued to demand construction repairs and corrections. In the meantime, Schmidt was cqlaining about the actions of Colonial Terrace. Schmidt claimed that Colonial Terrace did not pay the full amount of the first instalhnt of 1978 proprty taxes. In D e c e r r b e r 1978, Schmidt gave Colonial Terrace notice of default. In February 1979, Schmidt filed this action seeking a forfeiture of Colonial Terrace's interest in the contract. Colonial Terrace filed a general denial and counterclaimed for breach of contract, negligent construction, fraudulent representations, and unjust enrichment. The t r i a l was long and cmplicated and both sides presented a considerable amo~mt of detailed evidence. In the course of deliberations, the -jury sent a note t o the t r i a l judge asking whether they could confine the verdict t o a determination of damages and leave it t o the judge and. counsel t o determine the m u n t of offset t o be subtxacted from the damages. The exact question was : "Play the jury decide on a dmage m u n t w i t h the Court t o hear from counsel as t o the amount of offset - t o be substracted from the damages awarded? W e have trouble defining the m u n t of offset paid by Colonial Terrace. " (-hasis added. ) Although the matter of the offset appars in the record and is a t issue, the jury was not given any instruction regarding an off set. After consulting with the attorneys and with their approval, the t r i a l judge sent the following reply t o the jury: "The jury shall decide the damage m u n t i f any without reference t o offset sjnce the court w i l l ---- decide -- the offset -- i f any." (Enphasis added.) The jury . . . deliberated a short while longer and returned the following verdict: " W e the jury in the above entitled matter find i n favor of Defendants on their counterclaim and against the Plaintiffs on their complaint and a.ward damages t o Defendants i n the m u n t of $128,278." The verdict was a general verdict, and the jury needed only t o f i l l in the amount of damages in the hlanlc space. The only alternative verdict form i n the record states: "We the jury find i n favor of Plaintiffs and w e find for the Defendants by way of restitution i n that Defendants are entitled t o judgment in the sum of $ II Neither form provided the jury w i t h a method for dealing w i t h offset. Colonial Terrace did not, however, wait for a hearing on offset Sefore obtaining a judgmnt. Rather, Colonial Terrace immediately obtained a judgment and Schmidt was served w i t h notice that a iudgment of $128,278 had been entered against him. A t about the same time Colonial Terrace obtained the judgment, it filed a motion and notice of hearing to have the t r i a l court determine attorney fees and costs, both of which were provided for in the contract. Schmidt was then compelled to f i l e a motion to amend the judgment on the grounds that it was premature because it had been entered before the t r i a l court had mad.e any determination on the issue of offsets. Both sides briefed the motion t o mend judgment. The t r i a l court held a hearing on Schmidt's mtion t o amend judgment and Colonial Terrace's motion to assess attorney fees. After argument the t r i a l court denied Schmidt's motion to amend judgment and awarded Colonial Terrace attorney fees of $27,002.50 and costs of $9,346.90. Concerning the question of offset, w e ha.ve no doubt that both parties intended the t r i a l court to determine offset j-n a separate proceeding after the jury had rendered the verdict. Both parties were represented by counsel when the t r i a l judge responded to the $.xy' s query; and both sides agreed t o allow the jury to decide the damage amunt without reference to offset and t o allow the t r i a l judge t o determine applicability of offset in a latex proceeding. Yet, after the verdict was returned and before the t r i a l court had such a hearing, counsel for Colonial Terrace acting ex parte prepared and submitted the judgment based solely on the verdict and without reference t o offset. Colonial Terrace would have us affirm the judgmnt on the p r e s q t i o n that the jury's verdict is correct. The correctness of the jury's verdict is not the question. Neither party contends that the verdict was either t o o large or too small. Rather, Schmidt argues, and we agree that the parties intended the trial court to determine the amount of offset after the jury returned its verdict. And it is abundantly clear by the jury's question and the response to that question that the jury was led to believe the trial court, with the aid of counsel would determine the proper m u n t of the offset in a later proceeding. Colonial Terrace can not now camplain that offset was a matter for the jury to decide after having agreed t o let the trial court make that determination. Colonial Terrace also argues that no offset is permitted because the jury may have returned a verdict on either a fraud t h e o r y or a negligence theory, neither of which permits an offset. In fact, the trial court adopted this approach i n denying Schmidt's motion to amend the judgment. We are not aware, hwver, of any law which would forbid a n offset if a party prevails on either a fraud or negligence theory. No authority was cited to the District Court and none has been cited here. To argue that the jury's verdict was based on only fraud or negligence and that the jury did not intend a n offset, Colonial. Terrace has some duty to show that the verdict was in fact based on fraud or negligence. The jury's verdict was general and no instruction was offered or given regardinq offset. The record does not reveal which theory the jury actually relied upon, and the evidence is sufficient to support a n award of damages to Colonial Terrace on fraud, negligence or on their other counterclaims of breach of contract or unjust enrichment. Colonial Terrace's contentions on this point are not supported by the record. We therefore vacate the judgment on the verdict and remand the case to the trial court for further proceedings to determine offset, i f any. Such proceeding shall be confined t o evidence on khe record. W e turn t o Schmidt's claim of error iin the award of attorney fees of $27,002.50 and costs of s u i t of $9,346.90 t o Colonial Terrace. The contract between the parties allows the prevailing party t o recover a reasonable attorney fee, plus costs of suit. Schmidt does not dispute the hourly rate, or the amount of the attorney fee awarded by the t r i a l judge. Rather, he argues that because the case was tried t o a jury, evidence of attorney fees should have been presented t o the jury, and the jury instead of the t r i a l judge should have detemined the m u n t . Schmidt did not the matter of attorney fees t o the jury during the t r i a l . H e therefore waived the right t o claim error in the procedure on appeal. The t r i a l judge held a post t r i a l hearing t o determine attornev fees. Both sides were represented by counsel and evidence was introduced. Following that hearing the t r i a l judge made findings based on the standards we set out in Crncevich v. Georgetown Recreation Corp. (1975) , 168 Mont. 113, 541 P.2d 56. W e therefore affirm the award of attorney fees. W e are bewildered by Schmidt's claim of error in the award of $9,346.90 for costs of suit. Costs of s u i t were expresslv provided for in the contract between Schmidt and Colonial Terrace. In his appeal brief, Schmidt states, " . . . [Colonial Terrace ' s] claim was accepted and approved by the t r i a l judge without exdanation, and [we] await the answer of the respondents on this so [we] w i l l have som definite position t o attack." Although Schmidt claims error in the taxing of costs he has failed t o present us with any specific objections. W e therefore affirm the award of costs. The judgment on the verdict is vacated and the case is remanded t o the t r i a l court for further proceedings t o determine offset, i f any. Such proceeding shall be limited t o the existing record. W e affirm the award of $27,002.50 f o r a t t o r n e y f e e s and $9,346.90 f o r costs to Colonial Terrace. W e Concur: