No. 95-470

IN THE SUPREM COURT OF THE STATE OF MONTANA

1996

RANDALL R. CHAMBERLIN and

RANDALL R. CHAMBERLIN d/b/a

CUSTOM FRAMING,

Plaintiffs and Appellants,

v.

PUCKETT CONSTRUCTION,

Defendant and Respondent

APPEAL FROM: District Court of the Eighteenth Judicial District,

In and for the County of Gallatin,

The Honorable Larry W. Moran, Judge presiding.

COUNSEL OF RECORD:

For Appellants:

Donald E. White, Attorney at Law,

Bozeman, Montana

For Respondent:

John Brown; Cok, Wheat & Brown,

Bozeman, Montana

Submitted on Briefs: April 25, 1996

Decided: July 1, 1996
Justice Karla M. Gray delivered the Opinionof the Court.

Randall R. Chamberlin, d/b/a Custom Framing (Custom Framing),

appeals from the Findings of Fact, Conclusions of Law and Judgment

of the Eighteenth Judicial District Court, Gallatin County,

concluding that Custom Framing committed an anticipatory breach of

the subcontractor agreement between Custom Framing and Puckett

Construction and from the court's subsequent order awarding Puckett

Construction attorney's fees and costs. We affirm and remand for

determination and award of Puckett Construction's attorney's fees

and costs on appeal.

We address the following issues:

1 . Did the District Court err in concluding that Custom

Framing committed an anticipatory breach of the subcontractor

agreement?

2. Did the District Court abuse its discretion with regard to

the amount of attorney's fees and costs awarded to Puckett

Construction?

3 . Is Puckett Construction entitled to attorney's fees and

costs on appeal?

Factual Background

In January of 1994, Puckett Construction executed a contract

with LT Hotel Enterprises under which Puckett Construction would be

the general contractor for construction of a Ramada Inn in Bozeman,

~Montana. ~~~~~Thereafter;~~~~Puckett~~~Constru~t~~~on r~ece~iv~ed ~a~~~~~wr~itten ~-Eyd~~~

from Custom Framing to perform the framing work associated with the

2
project. Phil Puckett (Puckett), the owner of Puckett

Construction,-drafted and signed a subcontractor agreement for the

framing, which is dated March 24, 1994, and forwarded it to Randall

Chamberlin (Chamberlin), one of the partners and owners of Custom

Framing. Chamberlin and his partner, David Worthington

(Worthington), made ten changes to the agreement and Chamberlin

initialed each change.

Chamberlin signed the revised subcontractor agreement and

returned it to Kenneth Cavenah (Cavenah), Puckett Construction's

superintendent and sole on-site representative for the Ramada Inn

project. In early April, Cavenah took the revised agreement to

South Dakota and reviewed it with Puckett; thereafter, he returned

to Bozeman and, on April 14, 1994, initialed the changes in the

presence of Chamberlin and Worthington.

Inclement weather had delayed the Ramada Inn project several

times and Custom Framing was scheduled to begin work on April 25,

1994. Ten days prior to that start date, Chamberlin called Puckett

Construction's office in South Dakota and informed the receptionist

that Custom Framing would not begin work until Puckett personally

initialed the changes Chamberlin had made to the subcontractor

agreement. Puckett Construction subsequently sent Custom Framing

a letter advising that l*Puckett Construction will not be hiring

Custom Framing on the Ramada Inn job." Puckett Construction hired

a different framing subcontractor on April 18, 1994.

3
In June of 1994, Chamberlin, individually and d/b/a Custom

Framing, sued Puckett Construction for breach of contract and

-.

requested an unspecified amount of damages. Puckett Construction

answered and denied the existence of a contract. Both parties

conducted discovery.

In April of 1995, Puckett Construction moved for summary

judgment on the basis that no contract existed. Custom Framing

opposed the motion, arguing that "when the contract was signed and

initialed by [Cavenahl that there was indeed a binding agreement."

The District Court denied Puckett Construction's motion, concluding

that a contract was formed when Cavenah, Puckett Construction's

agent, signed and initialed the revised agreement; the court also

determined that a factual issue existed as to which party breached

that contract. The pretrial order subsequently was amended to

include a counterclaimby Puckett Construction alleging that Custom

Framing's "refusal to begin work on the project . . . constituted

a material and total breach of the contract . _ . [and] [Puckett

Construction] was entitled to . . terminate the contract."

A bench trial was held in June of 1995. The District Court

directed a verdict on behalf of Puckett Construction on Custom

Framing's breach of contract claim, awarded Puckett Construction

damages in the amount of $11,405 on its counterclaim, and

determined that Puckett Construction was entitled to reasonable

attorney's fees and costs. Thereafter, the District Court held a

hearing on attorney's fees and costs and awarded Puckett

4
Construction $9,600 in attorney's fees and $1,990.65 for costs. -

Custom Framing appeals.

Discussion

1. Did the District Court err in concluding that Custom

Framing committed an anticipatory breach of the

subcontractor agreement?

An anticipatory breach of a contract is a repudiation of the

promiser's contractual duty before the time fixed for performance

has arrived. STC, Inc. v. City of Billings (1975), 168 Mont. 364,

370, 543 P.2d 374, 377 (citations omitted). A repudiation must be

entire, absolute and unequivocal to support an action for

anticipatory breach. STC, 543 P.2d at 379. An expression of

intent not to perform, standing alone, is not enough. n, 543

P.2d at 379. An anticipatory breach by one party excuses further

performance by the other. See STC, 543 P.2d at 378.

The District Court concluded that Chamberlin's statement

during the telephone call to Puckett Construction on April 15,

1994, that Custom Framing would not begin work until Puckett

personally initialed the changes Chamberlin made to the

subcontractor agreement, constituted an anticipatory breach of the

agreement. We review a district court's conclusions of law to

determine whether the court's interpretation of the law is correct.

Loney v. Milodragovich, Dale & Dye, P.C. (1995), 273 Mont. 506,

510, 905 P.2d 158, 161 (citing Boreen v. Christensen (1994), 267

Mont. 405, 408, 884 P.2d 761, 762).

. ~~~~~~~~~ ~~~~~~~~ We have not pre~vlously addressed whe~ther a party's demand for

performance of terms not contained in a contract, accompanied by a

5
statement that it will not perform if those terms are not met,

constitutes an anticipatory breach. Other courts, however, have

held that such a demand constitutes an anticipatory repudiation.

&, gcJ&, P & L Contractors, Inc. v. American Norit Co. (5th Cir.

1993)) 5 F.3d 133, 139; United California Bank v. Prudential Ins.

CO. (Ariz. Ct. App. 1983), 681 P.2d 390, 430; Twenty-Four

Collection, Inc. v. M. Weinbaum Constr. (Fla. Ct. App. 1983), 427

So. 2d 1110, 1111.

As discussed by the Arizona Court of Appeals, a party's offer

to perform under a contract in accordance with that party's

erroneous interpretation of its contractual rights is not, in

itself, an anticipatory repudiation. United California Bank, 681

P.2d at 431. The reason is that, while the party may be asserting

an erroneous interpretation of the contract, it is still offering

to meet its own contractual obligations and cannot be said to be

stating an intent not to perform or a refusal to perform. In order

to constitute an anticipatory breach, the party's insistence on

terms which are not contained in the contract must be accompanied

by a "clear manifestation of intention not to perform" unless the

additional term is met. See United California Bank, 681 P.2d at

430-31. Moreover, a repudiation occurs regardless of whether the

demand for performance of terms not contained in the contract was

made wilfully or by mistake; in either instance, the other party

has been deprived of the benefit of its bargain. United California

Bank ~~6~8~1~~p~~. ~2 do d TV ~~~~4~31;~~~~

-,

6
We adopt the rationale of the Arizona Court of Appeals in

-

United California Bank regarding the effect of a party's demand for

performance of terms not contained in a contract coupled with a

refusal to perform unless those terms are met. A party acts at his

peril if, "insisting on what he mistakenly believes to be his

rights, he refuses to perform his duty." United California Bank,

681 P.2d at 430 (quoting RESTATEMENT (SECOND) OF CONTRACTS § 250 cmt. d

(1981)). On that basis, we conclude that a demand for performance

of a term not contained in the parties' contract, accompanied by an

unequivocal statement that the demanding party will not perform

unless the additional term is met, constitutes an anticipatory

breach of the contract excusing performance by the other party.

Here, Custom Framing's breach of contract action against

Puckett Construction was premised on Cavenah's authority to sign

and initial the revised subcontractor agreement on behalf of

Puckett Construction; absent such authority, no contract existed

upon which Custom Framing could maintain a breach action. Indeed,

Custom Framing prevailed on this issue when it successfully opposed

Puckett Construction's motion for summary judgment.

Notwithstanding such authority in Cavenah, however, Chamberlin

stated that Custom Framing would not perform under the

subcontractor agreement unless Puckett initialed the changes

Chamberlin had made to that agreement. Nothing in the agreement

required that Puckett, rather than an authorized agent, initial

such~~~~~~changes .~ ~~~~The~refore ;~~~~~~nothing~~~~in the~~~.~~~agreeme~nt~~~ entitled
Chamberlin to demand such performance by Puckett and to refuse to

perform unless its demand was met.

Custom Framing contends that its conduct in this regard does

not satisfy the strict criteria for anticipatory breach set forth

in a. We disagree.

STC holds that a mere expression of intent not to perform,

standing alone, is insufficient to constitute an anticipatory

breach; a repudiation must be clear and unequivocal. m, 543 P.2d

at 379. Here, Chamberlin did more than express a mere intent by

Custom Framing not to perform. His statement that Custom Framing

would not perform unless Puckett initialed the changes was an

unequivocal refusal to perform unless Puckett complied with the

demand Custom Framing was not entitled to make under the

subcontractor agreement. Pursuant to STC and the rationale adopted

from United California Bank, we conclude that Custom Framing's

unauthorized demand for performance and refusal to perform absent

compliance with that demand constitutes a clear and unequivocal

repudiation of its contractual duty to perform and an anticipatory

breach of the subcontractor agreement.

Custom Framing argues that it "stood ready to perform at all

times since Mr. Cavenah initialed the changes" on April 14, 1994.

In this regard, Chamberlin testified that "I made that statement

[indicating Custom Framing would not begin work until Puckett

initialed the changes1 on the 15th, but we took action that

~~~following~~~week ~as~~~-if~~~~to~~~~st~~rt~~ it ;~"~~ ~~~~~~ChBmberlin~~~ further tesf~ified

that he made the statement to "get [Puckett's] attention."

8
Custom Framing's argument that it stood ready to perform and -

its suggestion that it did not intend to refuse to perform under

the agreement--even if taken as true--are irrelevant under the

doctrine of anticipatory repudiation. In determining whether an

anticipatory breach was committed, courts are concerned with

whether the promisor communicated an unequivocal indication of an

intent not to perform under the contract and not with the

promisor's uncommunicated subjective intent in repudiating its

contractual obligations. a, a, United California Bank, 681

P.2d at 429; STC -I 543 P.2d at 379. A promisee need not jeopardize

its own interests by speculating about the promisor's clear refusal

to perform or by waiting until the time set for performance to

ascertain whether the promisor's unequivocal repudiation was

serious.

Here, Custom Framing clearly and unequivocally communicated

its intent not to begin work absent performance by Puckett of an

act not required by the subcontractor agreement. Custom Framing

cannot rely on what it contends was its actual, but hidden, intent

in order to avoid liability for its anticipatory breach of the

subcontractor agreement.

We hold that the District Court did not err in concluding that

Chamberlin's statement during the telephone call to Puckett

Construction constituted an anticipatory breach of the

subcontractor agreement.

'2. Dia~~~~the Di~St~rict~~~~Court~ ~-~~~se it sag ~~di~Scret ion~~~~~with

regard to the amount of attorney's fees and costs awarded

to Puckett Construction?

9
The determination of reasonable attorney's fees is not subject

to precise calculation or a formulaic approach. We previously have

stated that the following factors should be considered as

guidelines in making such a determination: (1) the amount and

character of services rendered; (2) the labor, time, and trouble

involved; (3) the character and importance of the litigation in

which the services were rendered; (4) the amount of money or the

value of the property to be affected; (5) the professional skill

and experience required; (6) the attorneys' character and standing

in their profession; and (7) the result secured by the services of

the attorneys. Swenson v. Janke (Mont. 1995), 908 P.2d 678, 682-

83, 52 St.Rep. 1272, 1275; Majers v. Shining Mountains (1988), 230

Mont. 373, 380, 750 P.2d 449, 453. These factors are not

exclusive, however, and district courts may consider other factors

as well. Morning Star Enters. v. R.H. Grover (1991), 247 Mont.

105, 113, 805 P.2d 553, 558 (citing Talmage v. Gruss (1983), 202

Mont. 410, 413, 658 P.2d 419, 421). Thus, the reasonableness of

attorney's fees must be ascertained under the unique facts of each

case. Morning Star, 805 P.2d at 558.

The District Court held a hearing to determine the amount of

attorney's fees and costs to which Puckett Construction was

entitled. John Brown (Brown), Puckett Construction's attorney,

submitted an affidavit regarding attorney's fees and costs,

together with an itemized list of the time charges and costs, prior

to the hearing. ~~~~~ ~~~He~~statea ~~~-fhere~in~~~~~~that ~~LthG~~~--~~~tot al Paramount roof

attorney's fees charged to Puckett Construction in conjunction with

10
this case through July 31, 1995, was $9,600 and the total costs

were $1,990.65. Brown testified at the hearing that all of the

time and costs reflected in his affidavit and attached list related

to his representation of Puckett Construction in this case.

Brown and Stephen Pohl (Pohl), Puckett Construction's expert

witness on attorney's fees, were the sole witnesses at the hearing.

Pohl testified that the Swenson/Maiers factors for determining the

reasonableness of attorney's fees formed part of the basis of his

opinion and he discussed each of those factors in the context of

this case. He noted Brown's extensive legal research on such

issues as contract formation, anticipatory repudiation and breach

of contract. Pohl pointed out that, in addition to drafting

Puckett Construction's answer and counterclaim, Brown prepared

responses to discovery, conducted discovery and wrote numerous

briefs. He observed that the approximately $35,000 in damages

sought by Custom Framing was a substantial amount of money and

that, "not only did [Brown] avoid a judgment on behalf of [Custom

Framing], but [Brown] did obtain a verdict in favor of [Puckett

Construction] . . . and so obviously the results were excellent. .

11 . . Pohl also testified that Brown is an excellent attorney who

has an excellent reputation in the community.

Custom Framing cross-examined Pohl and Brown, but did not

present its own expert on attorney's fees. During crossexamination, Pohl did not change his opinions under the

~sw,enso~~~~~~~~~'~ers~~~~~f~actorsorhis~ ~~ur~~imate~~~~~o~~i~~~ibn ~~~~~~~

1

~ased~~~~~on~~~~~~~those~

11
factors and the facts of this case, that the claimed fees and costs ..,

were reasonable.

The District Court determined that the claimed fees and costs

were reasonable and issued an order awarding Puckett Construction

$9,600 in attorney's fees and $1,990.65 for costs. We will not

disturb a district court's determination of reasonable attorney's

fees absent an abuse of the court's discretion. Maiers, 750 P.2d

at 453 (citing Talmaoe, 658 P.2d at 420).

Custom Framing argues that the District Court's award of

attorney's fees and costs constituted an abuse of discretion in

five specific respects, all of which were brought to the court's

attention during cross-examination of Brown and Pohl. We address

each in turn, bearing in mind the abuse of discretion standard and

that, in matters such as this, witness credibility and the weight

accorded testimony are within the province of the district court.

See Keebler v. Harding (1991), 247 Mont. 518, 522, 807 P.2d 1354,

1357 (citing Matter of Estate of Murnion (1984), 212 Mont. 107,

113, 686 P.2d 893, 896).

a. "Unrelated Matters"

Custom Framing contends that the District Court abused its

discretion in awarding Puckett Construction attorney's fees for

"disputes that arose during the course of construction that are

unrelated to [this case]." This contention relates to three

specific entries contained in Brown's listing of time charges.

~~~~~~ Fi rsf~~l~~Custom ~~~Fra~~ng dhal~Ienges ;~ 75~~ hours charged onJune 10,

1994, for a ll[c]onference w/Ken Cavenah and Phil Puckett re:
construction dispute." Brown testified that all of the entries

-,.

were attributable to Puckett Construction's dispute with Custom

Framing. Pohl testified that he had no reason to believe that the

.75 hour conference was unrelated to this case. Custom Framing did

not inquire of Brown about this conference on cross-examination and

did not present any evidence in support of its contention that the

conference was unrelated to this case.

Second, Custom Framing challenges .50 hours charged on April

13, 1995, for drafting and revising a letter to Puckett regarding

"status and delinquent accounts." Custom Framing contends that the

purpose of this letter was to collect money owed to Brown by

Puckett and, therefore, the time Brown spent on the letter cannot

properly be included in the court's award of attorney's fees.

However, Custom Framing did not ask Brown about this letter on

cross-examination and Pohl testified that this was a proper charge

because "it does say status also, and Mr. Brown apparently wrote

[Puckett] a letter to let him know where he was in the case."

Third, Custom Framing challenges .50 hours charged on May 3,

1995, for telephone conferences with Rick Nellen (Nellen) and

Calvin Braaksma (Braaksma). Brown testified that both telephone

conferences related to this case. Regarding the NelLen conference,

Brown explained that Nellen represented Cavenah in a dispute which

had arisen between Cavenah and Puckett and which resulted in

concerns about whether Cavenah would testify on Puckett

Construction's behalf '~~ in thG~~~-dase; according to Brown, ~~~~~ ~~his

discussion with Nellen on May 3 resolved the matter. Brown also

13
explained that Braaksma represented a party with a pending

foreclosure action against the Ramada Inn and that he and Braaksma

discussed how Braaksma's client's interests could or would be

affected by the litigation between Puckett Construction and Custom

Framing. Again, Custom Framing presented no evidence indicating

that the time charged for these two telephone conferences was

unrelated to this case.

b. Summary Judgment Motion

Custom Framing argues that the District Court abused its

discretion by awarding fees for 20.25 hours Brown spent on the

preparation of, and hearing on, Puckett Construction's summary

judgment motion. It points out that the District Court denied the

summary judgment motion from the bench without hearing argument

from Custom Framing and apparently relies on Smith v. Johnson

(1990), 245 Mont. 137, 798 P.2d 106, for the proposition that

attorney's fees should be denied for time spent on the unsuccessful

motion. Custom Framing's reliance on Smith is misplaced.

Smith involved a scenario opposite from that presented in the

instant case. There, the district court denied attorney's fees for

time spent on a successful summary judgment motion and we affirmed

on the basis that 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 discretion." Smith, 798 P.2d at 111.

Nothing in Smith mandates a conclusion that district courts must

~d~~ny~~~attorney~ ~~sfees ~~,~,associt~e~d~~~~~~ith~~~~~unSuccessful demotions ~~~as~~~B

matter of law or that this Court will determine that a grant of

14
j such fees is an abuse of discretion. - - The discretion involved in .- .-~

determining reasonable attorney's fees militates against "black

letter rules" such as that Custom Framing seems to advocate here

and for which it cites no controlling or persuasive authority.

Custom Framing also contends that the motion for summary

judgment was "without merit and being so, [was] summarily denied by

the Court." While Custom Framing's legal argument in this regard

is not particularly clear, we observe that the District Court did

not state or otherwise indicate that Puckett Construction's motion

for summary judgment was totally without merit or in any way

frivolous, as Custom Framing seems to suggest. Moreover, even

after Custom Framing brought this theory to the District Court's

attention during the hearing in cross-examining Pohl, the court

included all of the fees associated with the summary judgment

motion in its fee award. The District Court apparently rejected

Custom Framing's theory of the court's own evaluation of the

summary judgment motion and we cannot do otherwise in order to

conclude that the court abused its discretion in awarding the

associated fees.

c. Pretrial Order

Custom Framing challenges one hour Brown spent in amending the

pretrial order to add a counterclaim for damages which was not in

Puckett Construction's answer or the original pretrial order,

contending that it should, not be charged for that "omission."

Again, the record contarns no evrdence In support of Custom

Framing's contention that this time was unreasonable, Moreover,

15
inclusion of the coun,terclaim e.arlier in,,,the proceedings presumably

would have resulted in the same charge for the work performed,

merely recorded at an earlier date.

d. Trial Preparation

Custom Framing challenges the award of attorney's fees for 2g

hours of trial preparation, arguing that such extended preparation

is unreasonable for a four-hour trial with no contested facts.

Pohl testified, however, that 29 hours was reasonable and the

record contains no evidence to the contrary.

e. Computer Research

Finally, Custom Framing challenges the entirety of the $1,306

in costs for Westlaw research which Puckett Construction claimed

and the District Court awarded. Brown explained that his firm

assigns a code number for each case for the purpose of Westlaw

research and that the Custom Framing/Puckett Construction case was

assigned such a number. When Westlaw bills Brown's firm, it sends

a "master sheet per code number, [indicating the] amount charged

per code number." Brown testified that "the time related in my

affidavit is based upon [the] Puckett Constructionlchamberlin code

number." Pohl opined that the amount of computer research time was

reasonable in this case in which Brown wrote numerous briefs and

that "the time [Brown] spent using Westlaw was money well spent,

probably would have taken a lot more hours of research . . . if he

had come down here to the law library."

Custom Framing presented~ no evidence itid~i~ca~tiug that the

Westlaw costs were unreasonable or not properly attributable to

16
this case. Its argument, for which no authority is cited, his that

there was a'total failure of proof regarding the reasonableness and

propriety of the Westlaw research costs. While Brown might have

presented a stronger case in support of this claimed amount, we

cannot conclude on the record before us that his evidence

constituted insufficient proof as a matter of law upon which to

premise an award of $1,306 for Westlaw research costs.

We hold that the District Court did not abuse its discretion

in the amount of attorney's fees and costs it awarded to Puckett

Construction.

3 . Is Puckett Construction entitled to attorney's fees

and costs on appeal?

Puckett Construction requests that it be awarded its costs and

attorney's fees on appeal. Costs on appeal in civil actions are

automatically awarded to the prevailing party under Rule 33,

M.R.App.P. Additionally, we previously have held that where an

award of attorney's fees is based on a contract, the prevailing

party is also entitled to an award of reasonable attorney's fees

incurred on appeal. Smith, 798 P.2d at 111 (citing Lauderdale v.

Grauman (19861, 223 Mont. 357, 359, 725 P.2d 1199, 1200).

Here, the subcontractor agreement between Puckett Construction

and Custom Framing provides for attorney's fees and costs incurred

in an action "arising out of, in connection with, or incident to

[Custom Framing's] performance of this SUBCONTRACT." The District

Court's determination that Puckett Construction was entitled to

attorney's fees was based on that provision of the subcontractor

agreement. Accordingly, we hold that Puckett Construction is

17
entitled to its costs and reasonable attorney's fees incurred in

this appeal.

We affirm the decision of the District Court and remand for

determination and award of Puckett Construction's costs and

attorney's fees on appeal.

We concur:

Justi&%

18