No. 89-622 IN THE SUPREME COURT OF THE STATE OF MONTANA

ALEX E. SMITH and TRUDY L. SMITH,husband and wife, Plaintiffs and Respondents and Cross-Appellants,

ROBERT L. JOHNSON and ANITA A. JOHNSON,husband and wife, Defendants and Appellants.

APPEAL FROM: District Court of the Tenth Judicial District, In and for the County of Fergus, The Honorable Byron L. Robb, Judge presiding.

COUNSEL OF RECORD: ForAppellants: James L. Stogsdill, Esq., Lewistown, Montana $or Respondents and Cross-Appellants: 3 

## 2

# g Thomas P. Meissner, Esq., Lewistown, Montana LJ .A 2E --, LlJ -,

- CT: .-5 I- :3 $ ,_cn u)a Submitted on Briefs: June 14, 1990 

# z2

Z o Decided: September 6,1990 

### x *Justice Diane G. Barz delivered the Opinion of the Court.

The plaintiffs, Alex and Trudy Smith, initiated this action with a complaint for specificperformance of a buy/sell agreement. The Smiths sought to compel defendants, Robert and Anita Johnson, to enter into a contract for deed in accordance with the terms of thebuy/sell agreement. The District Court for the Tenth Judicial District, Fergus County, granted the Smiths' motion for partial summary judgment on the issue of specific performance of the buy/sell agreement. After a bench trial on the remaining issue of damages resulting from the Johnsons' failure to timely deliver possession of the real property, the District Court awarded the Smithsmonetary damages in the amount of $3,594.05. The Johnsons appeal both the granting ofpartial summary judgment and the award of damages. The Smiths cross-appeal the amount of attorney's fees and costs awarded. We affirm and remand. The issues raised by the Johnsons on appeal are: 1. Did the District Court err by granting the Smiths1motion for partial summary judgment? 2. Did theDistrict Court improperlyaward specific performance in favor of the Smiths? 3. Did the District Court err by awardingmonetary damages to the Smiths? The Smiths present three additional issues on cross-appeal: 1. Did the District Court err in fixing the amount of attorney's fees and costs awarded to the Smiths? 2. Are the Smiths entitled to attorney's fees and costs on appeal? 3. Should sanctionsbe imposedagainsttheJohnsons pursuant to Rule 32, M.R.App.P., for bringing thisappeal? Alex and Trudy Smith, the buyers, and Robert and Anita Johnson, the sellers,entered into twobuy/sell agreements for the sale of two tracts of land near Lewistown,Montana. One agreement provided for the sale, by contract for deed, of a house and six

acre tract. The transactionrelating to thehome tracthas closed and isnotpart of the Smithstclaim for specificperformance. The other agreement provided for the sale,by contract for deed also, of 87.337 acres of crop,pasture and timber landwhich adjoined the six acres. The buy/sell agreement on the acreage tract provided for a price of $40,000 with nothing down, amortized payments over fifteen years, interest at 9%, and the first payment due on December 30, 1989. Both buy/sell agreements provided that the sales were to be closed on orbefore March 1, 1989. Theparties agreedMr. Johnson, who is a practicing attorney, was toprepare the contracts fordeed and accompanying closing documents. However, Mr. Johnson did not submitanything forthe Smithstreview until March 1,and then only the proposed contracts for deed. During the month of March the parties corresponded and negotiated with each other in attempt to reach an agreement on additional or different terms of the contracts fordeed than those provided in the buy/sell agreements. Revised drafts of contracts

were exchanged but were found by the parties to be unacceptable. Disagreement over when interest and real estate prorations would

commenceon theacreage tractbecame a "boneof contention" betweenthe parties. The Johnsons believed that interest and tax prorations should commence onMarch 1,asprovided in thebuy/sell agreement. The Smiths proposed that since closing did not occur

onMarch 1,as agreed, interest and taxprorations should commence

on the actual date of closing. On March 27, the Smiths, through their attorney, sent draft contracts to the Johnsons and conveyed to them through a letter that if the Johnsonsdid notwish to discuss any terms in addition toorbeyond thebuy/sell agreements,thenboth transactionsshould close in conformity with the buy/sell agreements. The Johnsons responded in a letter datedApril 3 informing the Smiths that,due to what they perceived as an impasse on the financial aspects of the transaction, they were placing the acreage contract Ifonthe back burner for awhile.I1 The Johnsons then re-leased the acreage tract to George Hamilton, the current tenant of the property, for

a one-year term, beginning April 8. After further negotiations, during which time the Johnsons maintained their position that the acreage contract was "on the back burner,l1 theparties finally agreed on a contract for thehome and six acres. The Smiths paid the required down payment, the parties executed a contract fordeed and the transactionwas closed

on approximately April 17. The terms of the contract are not in dispute. OnApril 20, the Smiths filed their complaint in the District Court seeking: (1)a decree of specificperformance,requiring the Johnsons to enter into a contract for deed for the acreage tract;and (2)money damages for loss of use of the property as a result of the Johnsons' failure to deliver possession of the property in accordance with the buy/sell agreement.

I. Johnsons'Appeal Did the District Court err by granting the Smiths1motion for partial summary judgment? Summary judgment is proper pursuant to Rule 56(c), Mont.R.Civ.P., where the record discloses no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. All reasonable inferences that may be drawn from the offered proof are to be drawn in favor of the party opposing summary judgment. (Citationomitted.) Halcro v. Moon (1987), 226 Mont. 121, 123, 733 P.2d 1305, 1306. The Johnsons contend the District Court improperly granted summary judgment in favor of the Smiths because there was a material question of fact concerning the smiths' willingness to perform in accordancewith the exact termsof theparties1buy/sell agreement. The Johnsons allege that they presented a contract on March 6thatwas in conformitywith thebuy/sell agreement and that the Smiths refused to sign the contract. The Johnsons further argue that the Smiths were unwilling toperform in accordancewith the buy/sell agreement because of their insistence that the commencement of interest and the proration of taxes take place on the actual date of closing instead of March 1,as provided in the buy/sell agreement. We disagree. In directing theparties to enter into a contract strictly in accordance with the buy/sell agreement, including the term thatcommencement of interest and the proration of taxes would take place onMarch 1,theDistrict Courtnoted that I1[t]hedispute over specific performance herein does not arise over the buy/sell agreement the parties acknowledge entering, but rather over supplemental terms and conditions in the contract for deed to execute and fulfill thebuy/sell.I1 And in its explanatory comment accompanying the court's order denying the Johnsons1 motion to amend the judgment the court stated: Inhis own argument on themotions for summary judgment, Mr. Johnson acknowledged buy/sell agreements seldom contain all the terms that may go into a formal contract for deed, and that it is notuncommon forparties to do some negotiating about such additional terms after the execution of the buy/sell. Here both parties requested some other terms, and unfortunately could not reach agreement. The record clearly shows that the Johnsons breached the buy/sell agreement by placing the acreage contract "on the back burner," refusing to discuss it further or place the smiths in possession, and renewing the lease of the property to a third party. Contrary to the Johnsons' contention, the record reveals the Johnsonsdid not propose a contract conforming to thebuy/sell agreement on March 6. The purchase price provision of that contract called for a total first payment of over $700 more than required in the buy/sell agreement. Moreover, although not as clear, the record shows that the smiths were not unwilling to perform in accordance with thebuy/sell agreement, but ratherwere merely attempting to resolve the final form of the contract for deed.Negotiations of terms beyond the buy/sell agreement does not destroy the right to seek specificperformance. In Somont Oil Co.

v. Nutter (1987), 228 Mont. 467, 743 P.2d 1016, a party sought to avoid a contract, claiming the contract was merely "an agreement to agree" and that itwas toovague to constitutea contract. This Court held that the agreement contained all the essential terms needed to constitute a contract and further stated: Admittedly, the agreement does not include every item that might have been included



# . . 

# . However, I1a contract is not invalid simply because it does not contain all the provisions or conditions the parties might have incorporated into it. Wilkerson v. School DistrictNo. 15, Glacier County (Mont. 1985), 700 P.2d 617, 621,42 St.Rep. 745, 749. Somont Oil Co., 743 P.2d at 1019. Even though the parties here attempted negotiations of additionalterms,such doesnot affect thevalidity of thebuy/sell agreement and the ability to maintain a suit for specific performance upon a breach of that agreement. Furthermore, with regard to the commencementdate of interest and the date of proration of taxes, the District Court could properly, as a matter of law, determine whether the buy/sell agreement contained an ambiguity. SAS Partnership v. Schafer

(1982), 200Mont. 478, 482,653 P.2d 834,836. During negotiations the Smiths proposed that since the transaction did not close on March 1,as agreed, interest and taxprorations should commence on the actual date of closing. In granting summary judgment and ordering that interest and the proration of taxes would commence

on March 1, the District Court stated:While theprinted part of the agreement states possession shall be on the date of closing "unless otherwise agreed," the typewritten part of the buy/sell plainly states, "First period payment will be from March lst, 1989, to December 30th, 198911,and section 1-4-105, MCA 1987, states, "whenan instrument consists partly of written words and partly of a printed formand'thetwo are inconsistent,the former control the latter." The District Court, upon determining as a matter of law that an ambiguity does not exist, may properly grant summary judgment. See,Monte Vista Co. v. TheAnaconda Co. (1988), 231Mont. 522, 755

We conclude therecord inthis casedisclosesno genuine issue ofmaterial factand supports the award ofpartial summary judgment in favor of the Smiths. Did the District Court improperly grant specific performance in favor of the Smiths? In an argument nearly identical to their argument presented under the first issue, the Johnsons contend that the Smiths were not parties who could seek the remedy of specific performance. Section 27-1-411(4), MCA, provides that specific performance may be compelled when the parties to a contract have expressly agreed inwriting that specificperformance shallbe an available remedy. Thebuy/sell agreementsignedby theparties expressly provided for

a remedy of specific performance. Having determined that the record shows the Johnsons did not propose a contract on March 6 which conformed to thebuy/sell agreement and that the Smithswere not unwilling to perform in accordance with the provisions of the buy/sell agreement, we conclude the Smiths were parties who couldseek specificperformance. We hold the District Court properly granted specific performance in favor of the Smiths. Did theDistrict Court errby awarding monetarydamages to the Smiths? The Johnsons assert that they were subjected to the Smiths1 "whipsawing in the matter ofdamages1' and argue that the Smithsare responsible for their own damages, ''realor imagined," in thatthey failed to act. reasonably in preventing or mitigating those damages. The District Court 'found that the Johnsons' actions in unilaterally terminating the negotiations between the parties, placing the sale of the acreageproperty ''ontheback burner,'' and renewing the lease on the property to a former tenant for another year constitutedanunjustified refusalto completethetransaction or convey theproperty. Accordingly, the court awarded the Smiths damages for loss of use of theproperty forapproximately one year in the sum of $1,600, plus attorney's fees and costs of $2,091.20, less an offset to the Johnsons of $97.15 for five-sixths of the 1989 taxes, for a total damage award of $3,594.05. When reviewing the findings of fact in a civil action tried by a district courtwithout a jury,this Courtwill not substitute its judgment for that of the trier of fact. Rather, our review is confined to determining whether the findings of fact are clearly

erroneous. The court's findings of fact will be presumed correct if supported by substantial evidence. Meridian Minerals Co. v.Nicor Minerals, Inc. (1987)~ 228 Mont. 274, 282-83, 742 P.2d 456, 461. We find the record contains substantial evidence justifying the award of damages.

11. Smiths' Cross-Appeal Did the District Court err in fixing the amount of attorney's fees and costs awarded to the Smiths? The District Court's award of attorney's fees and costs is discussed in the court's Finding of Fact number 16,which states in part: Smiths also seek attorney fees and costs for the entire lawsuit. However, when the court granted partial summary judgment to plaintiffs it directed each side to pay its own fees and costs to that time, and now finds that such ruling was fair and equitable, and reaffirms it. However, as to additional time plaintiffs' counsel has spent on various motions, briefs, damage issues and trial, the court findsplaintiffs are entitled to recover the same pursuant to written provision of the buy/sell agreement 

# . . . and plaintiffs are further entitled to allowable costs since summary judgment of $165.20 

# . . . Said costs are as follows: George Hamilton deposition $130.20; Witness fee $10.00; Judgment fee $25.00. The Smiths do not contest the award of attorney's fees from the time of partial summary judgment, but argue that attorney's fees incurred prior to such time should be awarded. The buy/sell agreement contains an attorney's fee provision which states: In any action brought by the Buyer or the Seller to enforce any of the terms of this agreement,theprevailingparty in such action shall be entitled to such reasonable attorneyfees as the court or arbitrator shall determine just. The fixing of attorney's fees is largely within the discretion of the district court and will not be disturbed absent a clear abuse of thatdiscretion. InReMarriage ofMilanovich (1985) 

## , 215 Mont. 367, 370-71, 697 P.2d 927, 929. The record contains substantial evidence to support the conclusions of the District Court concerning attorney's fees. We find no abuse of discretion. The District Court awarded the Smiths costs from the time of partial summary judgment in the amount of $165.20. The total costs claimed by the Smiths are $345.20. Section 25-10-101(5), MCA, provides that "Costs are allowed,of course,to theplaintiff upon a judgment inhis favor

# . . . in an action which involves the title or possession or right of possession of real estate 

# . . 

# ." Under § 25-10-101,MCA, allowable costs are recoverableby theplaintiff upon timely application. See,Medhus v. Dutter (1979),184 Mont. 437,447, 603 P.2d 669,674;Statev. Cronin (1978),179Mont. 481, 491, 587 P.2d 395, 401. We therefore remand for determination of allowable costs incurred prior to the time of partial summary judgment

# . Are the Smiths entitled to attorney's fees and costs on appeal? The District Court made numerous findings regarding the assessment of attorney's fees and costs concluding that if the Johnsons' appeal is unsuccessful they should be subject to assessment of the Smiths1costs and attorney's fees in defending suchappeal. This Courthaspreviously held that 'I [wlherean award 11of attorneys1 fees is based on a contract, the award includes attorneys fees generated on appeal. Lauderdale v. Grauman

(1986), 223 Mont. 357, 359, 725 P.2d 1199, 1200. In regard to costs on appeal, such are automatically awarded to the successful party underRule 33,M.R.App. P. Walkerv. Warner (1987)

## , 228Mont. 162, 167, 740 P.2d 1147, 1150. We find that, as the prevailing party on appeal, the Smiths are entitled to reasonable attorney's fees and costs. Should sanctions be imposed against the Johnsons pursuant to Rule 32,M.R.App.P., forbringing this appeal? The Smiths contend they are entitled to an additional award of damages, arguing that the Johnsons' appeal on the issue of specificperformance is frivolous. Rule 32, M.R.App.P., provides: If the supreme court is satisfied from the record and the presentation of the appeal in a civil case that the same was taken without substantial or reasonable grounds, such damagesmay be assessed on determination thereof as under the circumstances are deemed proper. Where a reasonable ground for appeal exists, sanctions or damages are not appropriateunder Rule 32,M.R.App.P. Searightv. ~imino(1988), 230 Mont. 96, 103-04, 748 P.2d 948, 952; Erdman 

### v. C & C Sales, Inc. (1978), 176Mont. 177, 184, 577 P.2d 55, 59. In the present case, the question of whether the District Court properly granted partial summary judgmentwas reasonably in issue. We find no basis for imposing sanctions against the Johnsons. We affirm and remand for determination of reasonableattorney's fees and costs on appeal and for determination of allowable costs pursuant to 3 25-10-101(5), MCA.

We concur: 

# -