NO. 94-248

IN THE SUPREME COURT OF THE STATE OF MONTANA

1995

GARY KNUDSON, STAN SOLSVIK, GREG

COLVIN, SUE ANN LOVE, LARRY ANTONICH,

ADAM DAHLMAN and JASON RAMPTON,

Plaintiffs and Appellants,

.'\F'[f ;! tj 'y#j

v.

EUGENE AND LILA McDUNN,

Defendants and Respondents.

APPEAL FROM: District Court of the Eighth Judicial District,

In and for the County of Cascade,

The Honorable John M. McCarvel, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

K. Dale Schwanke, Jardine, Stephenson,

Blewett & Weaver, Great Falls, Montana

For Respondent:

E. Lee LeVeque, Conklin, Nybo,

LeVeque & Murphy, Great Falls, Montana

Filed:

Submitted on Briefs: February 9, 1995

Decided: April 25, 1995
Justice William E. Hunt, Sr., delivered the opinion of the Court.

Appellants Gary Knudson, Stan Solsvik, Greg Calvin, Sue Ann

Love, Larry Antonich, Adam Dahlman, and Jason Rampton appeal from

an order of the Eighth Judicial District Court, Cascade County,

terminating a temporary restraining order, denying appellants'

request for an injunction pendente lite, and awarding respondent's

costs and attorney fees. The District Court issued its order

following a show cause hearing on appellants' request for an

injunction pendente lite at which the District Court resolved

substantive issues without first obtaining respondents' answer to

appellants' complaint and without allowing for full discovery by

the parties.

We reverse and remand for further proceedings in accordance

with this opinion.

We frame the issues as follows:

1 . Did the District Court err in reaching a final

determination on the merits at a show cause hearing for injunctive

relief before obtaining responsive pleadings and without allowing

for discovery?

2 . Did the District Court err in awarding respondents'

attorney fees and costs?

Each appellant owns a lot in the Addition, a housing

development in Great Falls. Construction of new homes in the

Addition is subject to certain restrictions. Paragraph 3 of the

restrictions provides:

2
That no building should be constructed or permitted on

any of the above described lots other than a one-story

building or a tri-level building, and if such building

shall be a tri-level design, due care shall be used in

the design and erection of said tri-level building in

order that the view of the surrounding territory may not

be blocked for other lot owners. Buildings having an

excess of one and one-half stories shall not be

permitted.

Respondents purchased a lot in the Addition with the intention

of building a home. They hired a Great Falls design and

construction company to build their home. Respondents and the

design company knew of the height restrictions contained in

paragraph three of the restrictions prior to beginning

construction.

In January 1994, after construction had begun on respondents'

home, appellants informed respondents that if constructed as

designed, their home would violate that portion of the restrictions

which limits homes to no more than tri-level construction, and that

portion of the restrictions which prohibits construction that

blocks the view of the surrounding territory.

In response to appellants' concerns, respondents voluntarily

ceased construction of their home and modified its design so that

the roof line that would be four to five feet lower than originally

planned. Appellants maintained that even with respondents'

proposed modifications, the finished home would exceed three levels

and would obstruct the view of the surrounding area. Having

reached an impasse in their discussions with appellants,
respondents resumed, and ultimately completed, construction of

their home.

On March 15, 1994, appellants filed a complaint seeking to

obtain an injunction prohibiting respondents from completing

construction. On March 17, 1994, the District Court issued a

temporary restraining order halting construction of respondents'

home. Respondents were ordered to appear on April 8, 1994, to show

cause why an injunction pendente lite should not issue. Without

waiting for responsive pleadings or discovery, the District Court,

on April 18, 1994, issued its findings of fact, conclusions of law,

and order terminating the temporary restraining order, denying

appellants' motion for an injunction pendente lite, and awarding

costs and attorney fees to respondents. It is from the District

Court's order that appellants appeal.

ISSUE 1

Did the District Court err in reaching a final determination

on the merits at a show cause hearing for injunctive relief before

obtaining responsive pleadings and without allowing for discovery?

"Granting a preliminary injunction is within a trial court's

discretion, and we will not interfere unless manifest abuse is

shown." J.M., J.R. v. Montana High School Ass'n (1994), 265 Mont.

230, 237, 875 P.2d 1026, 1030. However, if the district court

arrives at a conclusion of law, no discretion is involved, and

therefore, we review the district court's conclusions of law to

4
determine whether the district court's interpretation of the law is

correct. J.M., 875 P.2d at 1030.

The District Court denied appellants' request for an

injunction pendente lite after concluding that:

2 . The presently constructed McDunn home does not

violate the restrictive covenant as alleged by

plaintiffs.

3 . Further, even if the McDunn home were violative of

the covenant, the covenant is ambiguous in that it does

not define "tri-level," "due care, " "surrounding

territory," Land1 "one and one-half stories."

Ambiguities are to be construed in favor of the McDunns

and their right to have free use of their land. The

covenant is non-sensible. While due care is to be used

in the design of a tri-level home so as not to block the

view, there is no such requirement that a one-story home

be so constructed. In other words it appears a one-story

could block the view while a tri-level cannot.

4 . In any event, even if the McDunn home were violative

of the covenants, the height covenant is unenforceable in

that there have been multiple violations of the covenant

in the past and plaintiffs are held to have waived their

right to enforce the height covenant.

5 . The defendants are entitled to their costs not to

exceed $100 and to their reasonably incurred attorney

fees pursuant to M.C.A. Sec. 27-19-306 and Montana case

law, specifically, Marta v. Smith, 191 Mont. 179, 622

P.2d 1011 (1981).

Appellants argue that the District Court erred in denying

their application for an injunction pendente lite because the

District Court made findings and conclusions regarding appellants'

claims and defenses without first obtaining respondents' answer and

without allowing for discovery. Appellants contend that the show

cause hearing was a de facto final hearing on the merits where both
parties presented conflicting testimony and evidence without the

benefit of full discovery and requisite pleadings.

A preliminary injunction may be granted when it appears that

the continuance of an act would produce a great or irreparable

injury to the applicant. Section 27-19-201, MCA; See Awareness

Group v. Board of Trustees of School Dist. No. 4 (1990), 243 Mont.

469, 795 P.2d 447. A preliminary injunction does not determine the

merits of the case, but rather, prevents further injury or

irreparable harm by preserving the status quo of the subject in

controversy pending an adjudication on the merits. Boyer v.

Karagacin (1978), 178 Mont. 26, 33, 582 P.2d 1173, 1177. Before

the district court can issue a preliminary injunction, the

applicant must establish a prima facie case, or show that it is at

least doubtful as to whether the applicant will suffer irreparable

injury before an adjudication on the merits. If either showing is

made, courts are inclined to issue the preliminary injunction.

Porter v. K. & S. Partnership (1981), 192 Mont. 175, 181, 627 P.2d

836, 839. If, however, a preliminary injunction will not preserve

the status quo and minimize harm to all parties pending a full

trial on the merits, it should not be issued. Porter, 627 P.2d at

839.

When granting temporary relief by injunction, it is not the

province of the district court to determine matters that may arise

during a trial on the merits. Porter, 627 P.2d at 839. The record

shows that the District Court determined matters at the show cause

6
hearing that should have been determined at a trial on the merits.

Both parties presented substantial testimony, witnesses, and

exhibits without the benefit of full discovery and without the

benefit of responsive pleading to appellants' complaint. During a

show cause hearing on a preliminary injunction, the district court

should restrict itself to determining whether the applicant has

made a sufficient case to warrant preserving a right in status quo

until a trial on the merits can be had. Porter, 627 P.2d at 839.

We hold that the District Court erred in reaching a final

determination on the merits at a hearing for injunctive relief

before obtaining responsive pleadings and without allowing for

discovery. We remand for a trial on the merits to determine what,

if any, permanent equitable relief appellants are entitled to after

the requisite pleadings have been filed and the parties have

completed discovery.

ISSUE 2

Did the District Court err in awarding respondents' attorney

fees and costs?

The District Court concluded that respondents were entitled to

their costs, not to exceed $100, and to their reasonably incurred

attorney fees pursuant to 5 27-19-306, MCA, and Marta v. Smith

(1981), 191 Mont. 179, 622 P.2d 1011.

Because this matter is being remanded to the District Court

for further proceedings, we reverse the award of attorney fees and

costs.
We reverse and remand for further proceedings in accordance

with this opinion.

We concur:

c/d

Chief Justice