No. 92-297 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1992 

DEBBIE NENTWIG, 

Plaintiff and Appellant, 

-vsUNITED INDUSTRY, INC., 

Defendant and Respondent. 

DEC 3 0 1992 

APPEAL FROM: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Honorable Robert W. Holmstrom, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

W. Scott Green, Attorney at Law, Billings, Montana 

For Respondent: 

Earl J. Hanson, Attorney at Law, Billings, Montana 

Filed: 

Submitted on Briefs: October 22, 1992 

Decided: December 30, 1992 
Justice John Conway Harrison delivered the opinion of the Court. 

This is an appeal from the Thirteenth Judicial District, 

Yellowstone County, the Honorable Robert W. Holmstrom presiding. 

Appellant Debbie Nentwig (Nentwig) appeals from the entry of 

summary judgment in favor of respondent United Industry, Inc. 

(United) on her claims of breach of contract and fraud. We aff inn. 

The following issues are raised on appeal: 

1. Did the District Court abuse its discretion by raising an 

issue that was not in the pretrial order? 

2. Did the District Court err in granting summary judgment in 

favor of United? 

3. Did the District Court err in refusing to grant summary 

judgment in favor of Nentwig? 

Nentwig and her then partner, Jill Murphy, entered into a 

lease dated October 21, 1982, to rent approximately 271 square feet 

of space in the Transwestern I building (TWI) in Billings. The 

term of the lease was December 15, 1982 to December 14, 1985. The 

purpose of the lease was to provide a location for their hair 

styling salon. Nentwig dealt with Jeff Shoop who was a managing 

partner in TW Partnership, the owner of TWI, and with Larry Nitz 

who worked for the firm that managed TWI for the partnership. 

In October 1985, Nentwig and Murphy dissolved their 

partnership. Also in October 1985, Nitz delivered to Nentwig a 

copy of a lease for another three years because the original lease 

was due to expire in December of that year. This new lease (the 

1985 lease) expired on October 31, 1988. Nentwig signed this lease 

2 
and added a letter that read: 

f am herewith delivering an executed Office Lease 

Agreement pertaining to the space I am leasing for "A 

Touch of Class1@ barbershop. It is my understanding that 

if you cancel this lease after October 31, 1987, you will 

provide me with alternative space in the TW Plaza and 

will pay me some amount to be agreed upon for relocation 

costs and for leasehold improvements. I understand that 

you do not want to have this put in writing in the lease 

but I do want you to know what my understanding is in the 

event you elect to terminate the lease after October 31, 

1987. As you know, I have had to buy out my ex-partner, 

Jill Murphy, and in doing so I had to obtain a 

substantial loan which will not be paid off until after 

October 31, 1987. Therefore, it is extremely important 

to me that I know that I have space available to me down 

the road and that I will not be required to spend 

additional money for leasehold improvements, etc. If 

this letter does not reflect our understanding, please 

let me know as soon as possible. 

She returned the lease and the letter to Nitz who then passed 

it on to Jeff Shoop for execution by TW Partnership. However, no 

executed copy was produced, and Shoop and Nitz allege that it never 

was executed. In fact, Shoop and ~itz testified in their 

depositions that they told Nentwig that the long term lease would 

not be signed until another tenant, Mutual of New York, decided 

whether it wanted to expand into her area of the building. They 

claim to have told her that the lease was not signed. However, 

Nentwig claims that she was under the impression the lease had been 

signed and that she was never given any indication that it was not, 

or would not be, signed. She does admit in her deposition that 

Nitz never told her or led her to believe that Shoop had physically 

signed the document. 

 ent twig remained in the building and continued to pay rent 

after the original lease expired in December 1985. 
In July 1986, TW Partnership, as part of the sale of the 

building, assigned its leases and rents in TWI to United, from whom 

it had bought TWI originally. Appended to the assignment was a 

list entitled "Transwestern 1 Leases," which included Nentwig's 

salon. Nitz remained as manager of the TWI property. 

In December 1986, Nitz sent a letter to all TWI tenants, 

including Nentwig, which stated: 

All office space leases between Transwestern 1 Tenants 

and TW Partnership have been assigned to United Industry, 

Inc. Here is a copy of the Assignment document for your 

files. If you have a written lease, this document should 

be attached to it. 

In July 1988, Nentwig sent a letter to Nitz informing him that 

she desired to exercise an option to renew her lease, which was 

contained in the 1985 lease. United's general counsel denied 

Nentwig's request on the basis that the 1985 lease had never been 

signed on the lessor's behalf, therefore she had no option to 

exercise. Counsel informed Nentwig that she had a month-to-month 

lease after United took back the property. The letter informed 

Nentwig that the building would undergo extensive remodelling and 

that her tenancy was terminated effective October 31, 1988. We 

note that this is the date the 1985 lease expired under its own 

terms anyway. 

Nentwig then sued United for breach of contract for failing to 

allow her to renew the lease, provide alternative space, pay 

relocation costs, and reimburse her for improvements. Later she 

filed an amended complaint asserting that her claim was not barred 

by the Statute of Frauds and alleging part performance, equitable 
estoppel, promissory estoppel, and fraud. She was again allowed to 

amend her complaint to allege breach of the implied covenant of 

good faith and fair dealing. 

A pretrial conference was held September 13, 1991, at which 

time the attorneys-and the judge signed a pretrial order. On the 

day of trial, the court held a conference in chambers where 

Nentwig's counsel informed the court that he was relying on the 

option provision contained in the 1985 lease. The judge then 

informed the parties that his independent research in preparing for 

trial led him to two Montana cases, Riis v. Day (1980), 188 Mont. 

253, 613 P.2d 696, and Drug Fair Northwest v. Hooper Enters., Inc. 

(1987), 226 Mont. 31, 733 P.2d 1285, which he felt controlled the 

issues in this case. He informed the parties that the option 

clause in the 1985 lease might be void for vagueness or 

indefiniteness under the holdings in those cases. He recognized 

that the issue had not been raised in the pleadings, in the motions 

for summary judgment, in the pretrial order, or in the parties 

trial briefs. He gave United fifteen days to file a brief on the 

issue and to make any motion it deemed appropriate. He gave 

Nentwig fifteen days to respond, and he gave United five days to 

reply after that. 

Both parties filed briefs and moved for summary judgment. The 

District Court granted unitedis motion and denied Nentwigls motion. 

I 

Did the District court abuse its discretion by raising an 

issue that was not in the pretrial order? 
Nentwig asserts that the issue of whether the provision was 

void for vagueness or indefiniteness had not been raised in a 

timely fashion, therefore it should be considered waived. The 

District Court recognized that the issue had not been previously 

raised, but on the basis of Rule 16, M.R. Civ. P., which provides for 

modification of the pretrial order to prevent manifest injustice, 

it determined that it would be best to dismiss the jury and provide 

the parties an opportunity to argue the issue in briefs. 

The District Court reasoned that !Ithe submission to the jury 

of a case contrary to the law as announced by our Supreme Court 

would be manifest injustice to one or both of the parties." After 

considering the alternatives, the court determined that dismissing 

the jury and allowing the parties to brief the issue was the best 

procedure to follow. 

Nentwig correctly points out that failure to raise an issue in 

the pretrial order may result in a waiver. Har-Win, Inc, v. 

Consolidated Grain & Barge Co. (5th Cir. 1986), 794 F.2d 985; Miles 

v. Tennessee River Pulp 6t Paper Co. (11th Cir. 1989), 862 F.2d 

1525. The purpose of the pretrial order is to prevent surprise, 

simplify the issues, and permit the parties to prepare for trial. 

Bache v. Gilden (Mont, 1992),.827 P.2d 817, 819, 49 St.Rep. 203, 

204. However, this Court said in Bell v. Richards (1987), 228 

Mont. 215, 217, 741 P. 2d 788, 790, that the pretrial order "should 

be liberally construed to permit any issues at trial that are 

'embraced within its language."' (~uoting Miller v, Safeco Title 

Ins. Co. (9th Cir. l985), 758 F.2d 364, 368.) But the theory or 
issue must be at least implicitly included in the pretrial order. 

United States v. First Nat'l Bank of Circle (9th Cir. 1981), 652 

F.2d 882, 886; ACORN v. City of Phoenix (9th Cir. 1986), 798 F.2d 

In the present case, in chambers before the trial was to 

begin, Nentwig's counsel informed the District Court that Nentwig 

intended to rely on a theory that United breached the option clause 

contained in the 1985 lease. In her contentions listed in the 

pretrial order, Nentwig raised this issue generally by claiming 

that United breached the lease. In the "Issues of Laww section of 

the pretrial order, Nentwig raised the issue of whether options to 

renew a lease are subject to the Statute of Frauds. United 

generally denied that it had breached the lease or any contract. 

In resolving this matter, the judge was required to review the 

contract, especially the option provision. We feel that Nentwig's 

reliance on the option provision necessarily carried with it a 

requirement that the provision be valid. 

As the court said in Manbeck v. Ostrowski (D.C. Cir. 1967), 

384 F.2d 970, 975, cert. denied, 390 U.S. 966 (1967): 

[Wlhile the pre-trial order may be the beginning, it is 

never the end of a matter of this sort. It normally 

"controls the subsequent course of the action," but not 

if it is "modified at the trial to prevent manifest 

injustice." The judicial function does not terminate 

upon discovery that an issue is unspecified, but extends 

to a determination as to whether the ends of justice 

implore that the issue nonetheless be introduced into the 

litigation. This frequently involves a delicate balance 

of competing considerations, variable from case to case, 

in order that the decision may be soundly made. And 

absent perceptible irregularity in a process so largely 

discretionary, we are loath to disturb the result. 
Although the district court has wide discretion, Manbeck, and 

the pretrial order is to be viewed liberally, m, the district 

court must be mindful not to prejudice the parties. See Glissman 

v. AT&T Technologies, Inc. (8th Cir. 1987), 827 F.2d 262. We 

recently held in Bache that the district court abused its 

discretion by allowing a witness who had not been listed in the 

pretrial order to testify at trial. We held that because the 

respondent had not revealed the information in a timely fashion and 

the appellant was not given the opportunity to depose the witness, 

the court had abused its discretion. Bache, 827 P.2d at 819. 

In a case similar to the present one, Morris v. Homco Int'l, 

Inc. (5th Cir. 1988), 853 F.2d 337, the seller of a business 

brought suit to collect payments under the terms of a noncompetition clause. Although the defendant buyer had not raised 

the issue of substantial performance in his counterclaim or in the 

pretrial conference, the court, in drafting its opinion a month 

after trial, injected the doctrine into the case to the defendant's 

benefit. The appellate court held this was error because the issue 

had not been raised and the plaintiff had no notice that the issue 

would be important in the case "until the time had passed to meet 

the issue squarely." 853 F.2d at 343. 

On the other hand, we held that there was no error in Ottersen 

v. Rubick (1990), 246 Mont. 93, 803 P.2d 1066, where even though 

certain legal issues had not been set forth specifically in the 

pretrial order, they had been argued in briefs before the court. 

We hold that the District Court did not abuse its discretion 
by raising the issue of vagueness because it is vested with wide 

discretion, the issue was implicit in those raised, and the court 

overcame any prejudice to Nentwig by allowing her a full 

opportunity to brief the issue. We also note that the court's 

action did not require Nentwig to develop further facts or present 

new evidence to make her argument. This was strictly a matter of 

law. 

Did the District Court err in granting summary judgment in 

favor of United? 

United also filed a motion for summary judgment along with its 

brief on the issue of vagueness. The court granted this motion. 

Summary judgment I1shall be rendered forthwith if the pleadings, 

depositions, answers to interrogatories, and admissions on file, 

together with the affidavits, if any, show that there is no genuine 

issue as to any material fact and that the moving party is entitled 

to a judgment as a matter of law." Rule 56(c), M.R.civ.P. On 

appeal, this Court applies the same standard as that applied by the 

trial court. McCracken v. City of Chinook (1990), 242 Mont. 21, 

24-25, 788 P.2d 892, 894. 

We first address the issue of whether the option provision in 

the lease was void for vagueness or indefiniteness. The provision 

states, I9Lessee shall have an option to renew this Lease for 3 

years with rent to be agreed upon by the parties.I1 

The District Court relied on Riis v. Day (1980), 188 Mont. 

253, 613 P.2d 696, and Drug Fair Northwest v. Hooper Enters., Inc. 
(19871, 226 Mont. 31, 733 P.2d 1285, in determining that this 

clause was void because it was "nothing more than an agreement to 

agree in the future [and did] not establish a definite mode for the 

determination of the rent. . . .Ig Riis is analogous to the present 

case. In Riis, a two-year lease contained a renewal provision 

which read in part: 

Lessees are hereby given an exclusive option to renew 

this Lease and Agreement for an additional two years, 

under the same terms and provisions as this present Lease 

and Agreement except that the amount of rental shall be 

subject to negotiation and mutual agreement between the 

parties. 

We stated in Riis that generally an agreement must contain all 

essential terms to be binding upon the parties. 613 P.2d at 697. 

We then noted that at that time this Court had not ruled on the 

validity of a renewal provision where the amount of rent was 

negotiable, and that other jurisdictions were divided on the issue. 

In Riis, we looked to Slayter v. Pasley (Or. 1957), 264 P.2d 

444, for a discussion of the three prevailing views of the time. 

The Ifold rulenv requires that the renewal provision specify the term 

of the lease and the rate of rent with certainty, leaving nothing 

for future determination. 613 P.2d at 697. The Itfirst minority 

view1' permits enforcement of the provision if it expressly 

contemplates a clear and definite mode for determining future rent. 

613 P.2d at 697. The "liberal viewt1 permits enforcement if the 

contract shows that the parties mutually agreed to meet in the 

future and make provisions for reasonable rent. 613 P.2d at 698. 

In Riis we said: 

10 
We believe the 'Ifirst minority viewn reflects the best 

standard. It recognizes the business utility of renewal 

provisions. Such provisions often do provide the 

inducement for entering the original lease. But, given 

fluctuating market conditions, the parties cannot fairly 

determine what would be an adequate rent in the future. 

At the same time, this standard also adheres to the 

wisdom of the old rule. It recognizes the danger of 

courts arbitrarily interpolating provisions into an arm's 

length transaction to breathe life into an otherwise 

invalid agreement. 

We cited Riis extensively in Drus Fair where Drug Fair argued 

that a letter from the owner of a shopping center in which it was 

a tenant constituted a lease. The letter provided for four fiveyear options but did not provide at least a method to determine 

rent during those periods. We concluded that Drug Fair only had a 

month-to-month lease. 733 P.2d at 1288. 

Nentwig argues that various cases cited in Slavter establish 

that the first minority view only requires that the language of the 

lease demand reasonableness or adherence to commercial standards. 

However, Riis and Drus air require more. Although they may be 

inconsistent with the cases cited in Slavter, we clearly follow 

Riis and Druq Fair. They require at least a definite mode for 

determining rent. 

Nentwig argues that our decision in Story v. City of Bozeman 

(1990), 242 Mont. 436, 791 P.2d 767, effectively overrules Riis by 

providing that If[e]ach party to a contract has a justified 

expectation that the other will act in a reasonable mannerw and 

that every contract contains an implied covenant of good faith and 

fair dealing. 791 P.2d at 775. The requirement of reasonableness 
is not inconsistent with Riis and Druq Fair. These cases, however, 

require more for the reasons stated in u, which we have 

reproduced above. Anytime a material term is required, one could 

argue that provides a sufficient method of establishing that 

term by requiring that the parties act reasonably. We refuse to 

extend Story that far. 

The present case illustrates the problem foreseen in u. 

Under the 1982 lease, Nentwig paid $400 per month over the threeyear term. Under the 1985 lease, she paid $405 per month. This 

rent was higher on a per square-foot basis than what the other 

tenants were paying. They averaged about nine dollars per squarefoot during the first lease period and twelve dollars per squarefoot during the second period. Nentwig was paying about eighteen 

dollars per square-foot until her rent was reduced during the 

second term when United took back the building. In her letter 

seeking to exercise the option provision, she proposed that the 

rent be ten dollars per square-foot for a total of $225.83 per 

month. This is two dollars per square-foot less than she testified 

Shoop was willing to agree to in the 1985 lease. We point out that 

the 1982 and 1985 leases both contained a provision that Nentwig 

would pay $532 per month if she held over after the expiration of 

the term. Nentwig relies on this term to argue that a price had 

been fixed in the lease and therefore, the option provision is not 

vague. 

The range of prices evidenced in this case provides a clear 

example of the problem that the Court in Riis and Druq Fair sought 
to avoid. The courts must not be forced to provide the material 

term of rent. 

We hold that the ~istrict Court did not err in determining 

that the option clause was void for vagueness when it granted 

summary j udgment . 

Nentwig also argues that there was a writing sufficient to 

satisfy the Statute of Frauds and puts forth several other 

arguments including an equitable argument that "[tlhat which ought 

to have been done is to be regarded as done, . . . ." Section 1-3- 

220, MCA; an argument that the lease was signed because 

"Transwestern Partnershipw was typed above the signature line; an 

argument that options are not subject to the Statute of Frauds; 

integration; part performance; and fraud. Because the District 

Court assumed for the purpose of summary judgment that TW 

Partnership had signed the lease, therefore eliminating any Statute 

of Frauds problems Nentwig encountered, we need not address these 

issues. As we view the facts in the same light as the District 

Court, we will make the same assumption. McCracken, 788 P.2d at 

894. 

Nentwig argues that United, as assignee of the leases in TWI, 

assumed the benefits and burdens of the assignment, As we hold 

that the option provision was void, there is no burden associated 

with it. 

Further, Nentwig argues that United breached the relocation 

agreement contained in the letter she included with the 1985 lease. 

That letter stated: 
It is my understanding that if you cancel this lease 

after October 31, 1987, you will provide me with 

alternative space in the TW Plaza and will pay me some 

amount to be agreed upon for relocation costs and for 

leasehold improvements. 

Jeff Shoop admitted in his deposition that he would provide as 

stated in the letter. However, Nentwig does not assert, nor could 

it be argued, that the agreement extended beyond the term of the 

lease to which it was attached. That lease expired by its own 

terms on October 31, 1988. Nentwig was not forced to relocate 

between October 31, 1987 and October 31, 1988. Therefore, United 

did not breach this agreement. 

Lastly, Nentwig argues in her brief to this Court that the 

District Court erred in granting summary judgment to United because 

United committed fraud. The elements of fraud are: a 

representation, falsity of the representation, materiality of the 

representation, the speaker's knowledge of the falsity of the 

representation or ignorance of the truth, the speaker's intent that 

it should be relied on, the hearer's ignorance of the falsity, the 

hearer's reliance upon the representation, the hearer's right to 

rely on the representation, and consequent and proximate injury 

caused by reliance on the representation. Lee v. Armstrong (1990), 

244 Mont. 289, 293, 798 P.2d 84, 87. 

In its Memorandum accompanying the Order, the court stated: 

While there is a genuine issue of material fact as to 

whether or not the acts of the Defendant and its assignor 

amounted to fraud, it is clear that Plaintiff did not 

sustain any damage resulting from the alleged fraud. She 

asserts that the fraud consisted of representations that 

the 1985 lease had been signed and that a signed copy 

would be returned to her, that she was entitled to and 

did rely upon the representations. However, she was not 
damaged thereby because she received everything that she 

was entitled to receive under the 1985 lease. It expired 

by its own terms on October 31, 1988, and she was 

permitted to occupy the premises until that date. 

Further, Defendant, after it acquired the building, 

reduced her rent by fifty percent (50%) and as testified 

by one or more of its officials, this would not have 

occurred had it been known that there was a written 

lease. Not only did the Plaintiff not sustain any damage 

but she actually received a benefit from what she claims 

to be the fraud committed upon her. 

In her brief, Nentwig does not dispute the District Court's 

determination that she was not damaged and in fact received a 

benefit. We find no evidence on the record otherwise. She 

received everything to which she was entitled under the 1985 lease. 

Because the option provision was void, she could have suffered no 

damages based on it. 

We hold that the District Court did not err in granting 

summary judgment to United. 

Did the District Court 

judgment in favor of Nentwig? 

In its Memorandum, the 

I11 

err in refusing to grant summary 

District Court stated that "[tlhe 

granting of the Defendant's Motion for Summary Judgment of 

necessity required a denial of the Plaintiff's Motion for Summary 

Judgment. We agree. 

Af f inned. 

December 30, 1992 

CERTIFICATE OF SERVICE 

I hereby certify that the following order was sent by United States mail, prepaid, to the 

following named: 

W. Scott Green 

W. SCOTT GREEN, P.C. 

301 North 27th Street 

Billings, MT 59101 

Earl J. Hanson 

Attorney at Law 

Suites 214-215, Transwestern I 

404 North 31st St. 

Billings, MT 59101 

ED SMITH 

CLERK OF THE SUPREME COURT 

STATE OF MONTANA 

BY: