No. 96-413 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1996 

LLOYD BACHE and VIRGINIA BACHE, 

Plaintiffs and Respondents, 

MARK OWENS, d/b/a MARK OWENS LOGGING, 

Defendant, Counterclaimant, 

and Appellant. 

APPEAL FROM: Distr~ict Court of the Nineteenth Judicial District, 

In and for the County of Lincoln, 

The Honorable C. B. McNeil, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

I. James Heckathorn, Murphy, Robinson, 

Heckathorn & Phillips, Kalispell, Montana 

For Respondents: 

Lon J. Dale, Milodragovich, Steinbrenner 

& Binney, Missoula, Montana 

Filed: 

Submitted on Briefs: November 7, 1996 

Decided: December 10, 1996 
Justice Terry N. Trieweiler delivered the opinion of the Court. 

The respondents, Lloyd Bathe and Virginia Bathe, filed an 

action against the appellant, Mark Owens, d/b/a Mark Owens Logging, 

in the District Court for the Nineteenth Judicial District in 

Lincoln County to enjoin Owens from encroaching on an easement 

which they alleged had been established in their favor. Owens 

filed a counterclaim for specific performance of the buy-sell 

agreement entered into between the parties and for other relief. 

The District Court granted summary judgment in favor of the Bathes, 

and denied Owens' motion for summary judgment. Owens appeals the 

judgment of the District Court. We affirm the District Court. 

The dispositive issue on appeal is whether the District Court 

erred when it denied Owens' motion for summary judgment, and 

granted summary judgment in favor of the Bathes. 

FACTUAL BACKGROUND 

The Bathes owned approximately 34 acres of property in Lincoln 

County. In April 1988, they entered into an agreement with Owens 

for the sale and purchase of 2.42 acres of their property. 

Pursuant to the Agreement to Sell and Purchase ("the Agreement"), 

the Bathes promised to: 

[C]onvey the real property by Warranty Deed, free of all 

liens and encumbrances except those described in the 

title insurance section of this agreement. 

The title insurance section of the Agreement provided that the 

Bathes would: 

[Flurnish Buyer Title Insurance committing to 

insure merchantable title to the real property in the 

Buyer's name, free and clear of all liens and 

encumbrances except: encumbrances hereinabove mentioned, 

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zoning ordinances, building and use restrictions, 

reservations in federal patents, beneficial utility 

easements apparent or of record, easements of record, and 

no others. 

Subsequently, a Preliminary Title Insurance Policy was issued 

with regard to the property, and provided that: 

PRIOR TO THE ISSUANCE OF TITLE INSURANCE, a complete 

legal description must be placed of record in the office 

of the Lincoln County Clerk and Recorder. 

On July 6, 1988, the Bathes filed Certificate of Survey Number 

1657 ("COS No. 1657") with the Lincoln County Clerk and Recorder. 

COS No. 1657 depicts two easements along the westerly border of the 

property: (1) a thirty-foot-wide private roadway easement, 

retained by the Bathes; and (2) a public utility easement. On that 

same day, the Bathes executed a Warranty Deed in favor of Owens. 

The deed describes the property, and references COS No. 1657. 

On July 8, 1988, the parties finalized their transaction, and 

executed a Contract for Deed which also makes reference to 

COS No. 1657. 

During 1991 and 1992, Owens constructed a building on the 

property he purchased from the Bathes. He and his building 

contractor, Mike Helberg, examined cos No. 1657 prior to 

establishing the building site. However, they misidentified the 

easement boundary, and constructed the building only six feet from 

the property boundary. As a result, the building encroached upon 

twenty-four feet of the Bathes' easement. 

The Bathes filed an action in the District Court. They sought 

the removal of Owens' building, and contract remedies for the 

obstruction of their easement. Owens contended that no easement 

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existed, and asserted counterclaims for specific performance, 

breach of contract, estoppel, fraud and deceit, quiet title, 

slander of title, and punitive damages. 

Owens moved for partial summary judgment. He contended that, 

as a matter of law, the land sale documents did not create an 

access easement in favor of the Bathes. 

The Bathes filed their own motion for partial summary 

judgment. They asked the District Court to conclude, as a matter 

of law, that the land sale documents created an easement by 

reservation in their favor. 

The District Court granted partial summary judgment in favor 

of the Bathes, and certified its judgment as final pursuant to 

Rule 54(b), M.R.Civ.P., for purposes of appeal. On appeal, in 

Bathe I, we held that the parties' land sale documents created a 

valid easement in favor of the Bathes. We then remanded the case 

to the District Court for its determination of the remaining 

issues. Bachev. Owens (19941, 267 Mont. 279, 883 P.2d 817. 

On remand, the Bathes filed a motion for dismissal of Owens' 

counterclaims by summary judgment. Owens also moved for summary 

,judgment in his favor. He claimed that the existence of an 

easement contradicts the express provisions of the Agreement. The 

District Court denied Owens' motion for summary judgment, and 

granted summary judgment in favor of the Bathes. 

Subsequently, the Bathes again moved for summary judgment on 

the remaining issues. They requested injunctive relief to enjoin 

Owens from interfering with their easement, and to require him to 

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remove his building. They also requested an award of their 

attorney fees. The District Court granted the Bathes' motion, and 

certified its judgment as final. 

DISCUSSION 

Did the District Court err when it denied Owens' motion for 

summary judgment, and granted summary judgment in favor of the 

Bathes? 

Summary judgment is governed by Rule 56(c), M.R.Civ.P., which 

provides, in relevant part: 

The judgment sought shall 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. 

The purpose of summary judgment is to encourage judicial 

economy through the elimination of any unnecessary trial. However, 

summary judgment is not a substitute for trial if a genuine factual 

controversy exists. Reavesv.Reinbold (1980), 189 Mont. 284, 288, 615 

P.2d 896, 898. 

It is well established that the moving party must prove that 

it is entitled to judgment as a matter of law. To do this, it is 

required to show a complete absence of any genuine factual issues. 

D’Agostinov.Swanson (1990), 240 Mont. 435, 442, 784 P.2d 919, 924. To 

defeat the motion, the nonmoving party must set forth facts which 

demonstrate that a genuine factual issue exists. O’Bagvv.FirstInterstate 

BankofMssoula (19901, 241 Mont. 44, 46, 785 P.2d 190, 191. 
on appeal, Owens maintains that the District Court erred when 

it denied his counterclaims. On that basis, he contends that 

summary judgment for the Bathes should be reversed, and that 

summary judgment should, instead, be granted in his favor. We 

will, therefore, address each of his counterclaims asserted on 

appeal. 

SPECIFIC PERFORMANCE 

The Agreement among the parties did not explicitly mention the 

Bathes' easement. Owens maintains that the Agreement is a binding 

contract which establishes the terms of the sale, and that the 

subsequent creation of the Bathes' easement constitutes a 

modification. This modification, he asserts, is invalid because it 

was not supported by consideration, and was not a product of the 

parties' mutual consent. Therefore, he contends that he is 

entitled to specific performance of the strict terms of the 

Agreement 

Relevant to our consideration of Owens' argument is the law of 

the case doctrine, which provides: 

[Iln deciding a case upon appeal, when the Supreme Court 

states in its opinion a principle or rule of law 

necessary to the decision, such pronouncement becomes the 

law of the case, and must be adhered to throughout its 

subsequent proceedings, both in the trial court and upon 

subsequent appeal. 

Haines Pipeline Construction, Inc. V. Montana Power Co. ( 19 94 ) , 2 6 5 Mont 2 8 2 , 2 8 9, 

876 P.2d 632, 637 (citing Zavarelliv.Might (19891, 239 Mont. 120, 124, 

779 P.2d 489, 492). 

In Bathe I, we stated that there were four instruments of 

conveyance: (1) the Agreement to Sell and Purchase ("the 

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Agreement"); (2) the Warranty Deed; (3) the Contract for Deed; and 

(4) Certificate of Survey Number 1657 ("COS No. 1657"). We 

interpreted those four instruments, and held that they established 

a valid easement in favor of the Bathes. BacheI, 267 Mont. at 286, 

883 P.2d at 822. 

Owens ' counterclaim is, in essence, a collateral attack on our 

prior holding in BacheI. As a result of that decision, the Bathes 

successfully established the existence of a valid easement in their 

favor on Owens' property; they cannot now be compelled, by an order 

requiring specific performance, to forfeit that interest. 

Furthermore, the Bathes complied with the terms of the 

Agreement. Therefore, contrary to Owens' assertions, there was not 

a modification of the Agreement, nor was one necessary. 

Pursuant to the Agreement, the Bathes promised to: 

[Clonvey the real property by Warranty Deed, free of all 

liens and encumbrances except those described in the 

title insurance section of this aqreement. 

(Emphasis added.) 

The title insurance section of the Agreement provided that the 

Bathes would: 

[Flurnish Buyer Title Insurance committing to 

insure merchantable title to the real property in the 

Buyer's name, free and clear of all liens and 

encumbrances except: encumbrances hereinabove mentioned, 

zoning ordinances, building and use restrictions, 

reservations in federal patents, beneficial utility 

easements apparent or of record, easements of record, and 

no others. 

(Emphasis added.) 
Subsequently, a Preliminary Title Insurance Policy, which was 

required by the Agreement, was issued with regard to the property. 

It provided that: 

PRIOR TO THE ISSUANCE OF TITLE INSURANCE, a complete 

legal description must be placed of record in the office 

of the Lincoln County Clerk and Recorder. 

The Bathes filed COS No. 1657, which contains their easement, 

prior to closing, and in accordance with the Preliminary Title 

Insurance Policy. Both the Warranty Deed and the Contract for Deed 

reference COS No. 1657. As a result, the easement in favor of the 

Bathes was, in fact, "of record," and Owens had constructive notice 

of its existence. 

BREACH OF CONTRACT 

Owens maintains that the Bathes did not comply with the terms 

of the Agreement, and have, therefore, breached the terms of the 

parties' contract. This counterclaim is subsumed by the claim for 

specific performance, and fails for the same reasons. 

ESTOPPEL 

Owens asserts that the Bathes are estopped from claiming an 

easement. He contends that the Bathes concealed material facts 

with the knowledge that they would be acted upon, and that, as a 

result, he changed his position for the worse. 

We begin our analysis with the principle that, u [elquitable 

estoppel is not favored and will be sustained only upon clear and 

convincing evidence." Duchamv.Tuma (1994), 265 Mont. 436, 441, 877 

P.2d 1002, 1006. 
The six required elements of equitable estoppel are as 

follows : 

1) There must be conduct, acts, language or silence by 

the estopped party amounting to a representation or 

concealment of facts; 

2) these facts must be known to the estopped party at 

the time of the conduct, or at least the circumstances 

must be such that knowledge of them is necessarily 

imputed to the estopped party; 

3) the truth concernins these facts must be unknown to 

the other oartv claiminq the benefit of the estoooel at 

the time they were acted upon; 

4) the conduct must be done with the intention, or at 

least with the expectation, that it will be acted upon by 

the other party, or under the circumstances that it is 

both natural and probable that it will be acted upon; 

5) the conduct must be relied upon by the other party; 

and 

6) the other party must in fact act upon it in such a 

manner as to change the other party's position for the 

worse. 

Ducham , 265 Mont. at 441-42, 877 P.2d at 1006 (emphasis added). 

Owens has failed to present clear and convincing evidence in 

support of these elements. Although the preliminary title 

commitment did not reference the Bathes' easement, it did state: 

PRIOR TO THE ISSUANCE OF TITLE INSURANCE, a complete 

legal description must be placed of record in the office 

of the Lincoln County Clerk and Recorder. 

The Bathes complied with this provision when, prior to the 

issuance of title insurance, they filed COS No. 1657 with the 

Lincoln County Clerk and Recorder. As we have previously held, the 

Agreement, the Warranty Deed, the Contract for Deed, and COS No. 

1657 created a valid easement in favor of the Bathes. Based on 

these documents of conveyance, Owens had constructive notice of the 

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easement, and his estoppel claim necessarily fails as a matter of 

law. 

FRAUD & DECEIT 

Owens' claim for fraud and deceit is based upon the alleged 

failure of the Bathes to disclose the existence of their easement. 

This claim is similar to the estoppel claim, and fails, as a matter 

of law, for the same reason. 

The Warranty Deed and the Contract for Deed both reference COS 

No. 1657, and at the time of closing, the Bathes' easement was "of 

record." As a result, Owens had constructive notice of the 

easement by operation of law. The Bathes had no affirmative duty 

to disclose that which was, by virtue of the conveyancing 

documents, of public record. Owens cannot now assert that the 

existence of the easement was a fact which was fraudulently and 

deceitfully suppressed by the Bathes. 

QUIET TITLE 

Finally, Owens claims that he is entitled to quiet his title. 

This claim was resolved by our decision in BacheI. In that case, 

we held that the Bathes have a legitimate right, title, and 

interest in their easement on Owens' property. They do not claim 

an easement. They have a valid easement. Their easement, therefore, 

is not a cloud on Owens' title, and his claim fails as a matter of 

law. 

We conclude that there are no genuine issues of material fact, 

and that the Bathes are entitled to judgment as a matter of law. 

Accordingly, we hold that the District Court did not err when it 

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denied Owens' motion for summary judgment, and granted summary 

judgment in favor of the Bathes. 

The judgment of the District Court is affirmed. 

We concur: 

Chief Jkstice 

Justices 

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Justice W. William Leaphart, dissenting. 

I dissent with regard to the breach of contract claim. The 

Court treats Owens' claims as collateral attacks upon our holding 

in Bathe I in which we held that the Buy/Sell Agreement, Contract 

for Deed and Certificate of Survey, created a valid easement in 

favor of Bathe. The fact that these instruments created a valid 

easement as of the time of closing, however, does not preclude a 

claim that such an easement was not contemplated by the original 

Buy/Sell Agreement which provided that Bathes would convey the 

property "free of all liens and encumbrances except those described 

in the title insurance section of this agreement." The title 

insurance section of the Agreement provided that Bathes would 

convey title free and clear of all liens and encumbrances except 

easements of record. When the Agreement speaks of easements "of 

record," there is an ambiguity as to time; that is, "of record" as 

of when. Despite the fact that Bathes' easement was "of record" as 

of the date of the closing, there is a genuine issue of material 

fact as to whether, in signing the Agreement, the parties only 

contemplated easements of record as of the April 1988 date of the 

Agreement as opposed to an easement which was recorded on July 6th, 

two days before the closing. When there is an ambiguity in the 

contract, the intent becomes a question for the jury. Klawitter v. 

Dettman (1994), 268 Mont. 275, 281, 886 P.2d 416, 420; _- see also 

Johnson v. Nyhart (1995), 269 Mont. 379, 387, 889 P.2d 1170, 1174. 

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I would reverse the summary judgment as to breach of contract and 

remand for trial on that issue. 

Justices Karla M. Gray and James C. Nelson join in the foregoing 

dissent. 

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