No. 86-155 IN THE SIJPREME COURT OF THE STATE OF MONTANA 1986

KENNETH REINTSMA,RONALD HAVERLANDT, et al., Plaintiffsand Respondents,

ALBERT LAWSON and DANA YATSKO, Defendantsand Appellants.

APPEAL FROM: District Court of the Eighth JudicilaDistrict, Inand for the County of Cascade, The HonorableJohnMcCarvel,Judgepresiding.

COUNSEL OF RECORD:

ForAppellant: Cotter & Cotter;Patricia O'Rrien Cotter, Great Falls, Montana

For Respondent: Jardine, Stephenson,Rlewett.& Weaver;K Dale Schwanke, Great Falls,Montana

Submitted on Briefs: July 31, 1986 Decided: October 30, 1986Mr. Justice JohnConway Harrison delivered the Opinion of the Court.

This is an appeal froma judgmentof theDistrictCourt of the Eighth Judicial District in and for the County of Cascade, Montana, granting plaintiffs injunctive relief and compensatory and punitive damages. We affirm in part,

reverse inpart and remand. The plaintiffs and defendant Albert Lawson are all property owners in the Cooper Valley Estate subdivision located in CascadeCounty. This subdivision is a residential development, apparently comprised only of multi-acre lots designed to afford a convenient, rustic environment inwhich to live. To this end, each lot is subject to a number of restrictive covenants designed to maintain, as much as possible,the area'spristine state. The covenantsexpressly prohibit comprehensive logging operations. In June, 1984, Lawson sought and obtained a consent certificate from the Cooper Valley Owners Association allowing him to remove from his property diseased and over-aged timber. Plaintiffs, however, ultimately concluded that Lawson

was removing far more than simply diseased and over-mature timber and soeventually filed this action in DistrictCourt. They sought as relief a permanent injunction enjoining defendant from conducting further logging operations within the development, compensatory damages for the diminution in value of theirproperty,punitive damages and costs. Lawson counterclaimed, alleging generally that in pursuing this litigation, plaintiffs were converting for their own use the assets of Cooper Valley Estates, Incorporated, a corporation mostly comprised of the subdivision's property owners. Lawson also claimed that plaintiffs' suit was frivolous and sought punitive damages.The District Court held a bench trial in March, 1985. Though the record is incomplete, plaintiffs evidently withdrew their prayer for compensatory damages at the conclusionof trial. On November 7, 1985,the court entered its findings of fact and conclusions of law. Therein, the court found that Lawson's activities went beyond the scope of the consent certificate and had violated the restrictive covenants. The court concluded that Lawson was permanently enjoined from conducting any further logging operations within the development. The court further found that Lawson was responsible for rehabilitating his property, the cost of which was at a minimum $30,000, and that the counterclaims brought by Lawson were without merit. Finally, the court directed that the plaintiffs should recover an award of costs and attorney's fees and instructed plaintiffs to submit an affidavit detailing these fees. Believing the court's entry of its findings and conclusions constituted entry of judgment, Lawson filed, on November 21, amotion to amend the court's findingsor for a
new trial. In support of his motion, Lawson filed his own affidavit which indicated that between the time the trialwas held in March and the time the court entered its findingsand conclusions in November, he had spent over $43,000 on the rehabilitationofhis ownproperty. Before any action was taken on this motion, however, the court issued on November 27, 1985, a "Judgment Entered Pursuant to Court's Findings of Fact and Conclusions of Law of November 7, 1985.'' Here, the court, in addition to awarding plaintiffs' injunctive relief, awarded plaintiffs $30,000 in compensatory damages and stated that a hearing would be held to determine any rights to attorney's fees.Both parties filed motions to amend this judgment. On December 6,1985, plaintiffs filed amemorandum in opposition to Lawson's motion to amend or for a new trialwhich he had earlier filedon November 21. Plaintiffs further filed their

own motion to amend the court's findings, requesting both that the court award plaintiffs punitive damages and that it award plaintiffs attorney's fees and costs. Plaintiffs additionally filed a motion to strike Lawson's affidavit filed November 21 and, finally, filed affidavits detailing their attorney's feesand costs. On December 9,Lawson filed a supplementarymotion for

new trial. On December 13, 1985,the DistrictCourtheld ahearing

on the various motions and pleadings filed by the parties. Six days later it issued its order. The court,reiterating its earlier finding that Lawson's counterclaimswere without merit,held that plaintiffs were entitled to punitive damages and awarded such damages "by way of compensating the plaintiffs for their attorney's fees and costs incurred in the proceedings." The court,however, awarded only one-half ofplaintiffs' requested $25,000attorney's fees, so that the punitive damage award was limited to $12,500, plus plaintiffs' costs. Finally,onJanuary 6,1986, the DistrictCourt entered its "Final Judgment." In this judgment, the court first restated that Lawson was enjoined from any further logging operations within the CooperValley Estates subdivision. The court then awarded plaintiffs' damages totalling over $46,000: $30,000 in compensatory damages; $12,500 attorney's fees; and $4,190.49 in costs. Lawsonnow appeals the court's entry of itsNovember 27 judgment and its award of compensatory and punitive damages;he does not appeal the adequacy of the court's findings of fact and conclusionsof law enteredNovember 7. Plaintiffs cross-appeal the court's award of only one-half of the attorney's fees sought.

I Appellant first argues that the District Court abused. its discretion by substituting its initial November 7 judgment with its subsequent, altered judgment of November 27. This argument is of course based upon the premise that entry of the November 7 findings and conclusionsconstituted entry of a judgment. We disagree. As noted, in its November 7 findings and conclusions, the court found that Lawson was responsible for the rehabilitation of his property, the cost of which was at least $30,000. The court further concluded as a matter of law that Lawson was permanently enjoined from conducting any further logging within the area. The findings and conclusions endedwith the sentence, "Let judgmentbe entered accordingly." On November 8,the clerk of court entered in the judgment docket the court's findings and conclusions. Then on November 27, the court issued its judgment enteredpursuant to its findingsand conclusions. There,the court, in addition to enjoining defendant's further logging operations, awarded plaintiffs $30,000 compensatory damages. Appellant contends that because the November 7 findings and conclusions were properly entered by the clerk, a proper judgment had been entered and the District Court was thereafter powerless to enter its November 27 judgment which materially altered its November 7 judgment. Appellant asserts he suffered prejudice because the District Courtdid not award plaintiffs compensatory damages under its first judgment, but did under its second. This, appellantconcludes, constituted abuse of discretion where the plaintiffs had not filed any motion to amend the November 7 judgment. Appellant's argument fails from the outset. This Court has long held that findingsof fact and conclusionsof lawdo not constitute the judgment, but merely form the basis upon which the judgments are subsequently to be rendered. Woodward v. Perkins (1946), 119 Mont. 11, 15, 171 P.2d 997, 998; Conway 

### v. Fabian (1939), 108 Mont. 287, 303, 89 P.2d 1022, 1028;Galigerv. McNulty (1927),80Mont. 339, 351, 260 P. 401,403. In Woodward, supra,theDistrict Court,as in our case, filed its findings of fact and conclusions of law prior to its entry of formal judgment. Appellant later appealed, inter alia, from a "decision" of the District Court, "set forth in [its] Findings of Fact, and Conclusions of Law



# . .." In dismissing that portion of the appeal, this Court stated that the decision of the District Courtbased upon its findings and conclusions did not constitute a judgment and therefore was not appealable. Woodward, 171 P.2d at 998. Accord, Turnbull 

### v. Brown (1953), 126 Mont. 548, 254 P.2d 1085, (Adair,C.J., specially concurring). Likewise,entry in our case of the court's findingsand conclusions did not constitute a judgment, notwithstanding the statement that judgmentbe entered.

I1 Appellant's second argument is that the DistrictCourt abused its discretion by awarding plaintiffs compensatory damages. Appellant specifically asserts that the court erred by awarding compensatory damages when plaint.iffsthemselves dropped theirprayer for suchan award.We agree. We cannot affirm an award of compensatory damageswhere plaintiffs themselves dropped their demand for such an award. Appellant failed to provide us with a transcript of the proceedings below so thatwe are unable to determine whether this award is supported by sufficient, credible evidence. Typically, such a failure would work against appellant. Here, however, plaintiffs conceded in a post-trial motion that theywere unable toprovide sufficient evidence to justify a compensatory damage award: Counsel for theplaintiffs spent sometime trying to develop this issue prior to trial and finally determined that it was not worthwhile because appropriate proof couldnotbe submitted. We therefore find the District Court erred in awarding plaintiffs compensatory damages and vacate this award.

I11 Next, appellant contests the District Court's award of punitive damages. In its December 19 "Award of Attorney Fees," the court awarded plaintiffs punitive damages by way of compensating plaintiffs forone-half their attorney's fees plus costs. Without intending to express any opinion on the propriety of a punitive damage award in general,we are not persuaded that an award of attorney's fees and costs,entered under the guise of punitive damages, is appropriate in this

case. We recognize,however, thatunder the circumstancesof this case, a punitive damage award may be proper. We therefore vacate this award, but remand this issue to the District Court for its determination of whether a proper punitive damage award is warranted.Finally,we note that the District Court stated in its findings and conclusions that Lawsonwas responsible for the rehabilitation of his properties and had estimated the cost to be at least $30,000. Lawson, prior to entry of the court's November 27 judgment,had filed an affidavit stating that he had already expended approximately $43,000 in the rehabilitation of his properties. A review of the pre-trial proceedings and docket entries reflects that the motion of plaintiffs to strike Lawson's affidavitwas never officially denied. We therefore remand this issuewith instructionsto determine whether Lawson has sufficiently rehabilitated his property. In conclusion,we approve the District Court's filing of itsNovember 27 judgment,but reverse the court'saward of compensatorydamages. We vacate and remand the court's award of punitive damages. Upon remand,we instruct the District Court to determine whether appellant has satisfactorily rehabilitated hisproperty.

We concur: