No. 90-420 IN THE SUPREME COURT OF THE STATE OF MONTANA

FRED G. NIMMICK AND ANN G. NIMMICK, Plaintiffs and Respondents,

v. DALE P. HART, Defendant and Appellant.

No. 90-204

DALE P. HART, Plaintiff and Appellant,

ALLEN E. ERICKSON, MELBA E. ERICKSON, FRED G. NIMMICK, ANN M. NIMMICK, ROBERT E. WRIGHT, DONNA MAE WRIGHT, CHARLES R. TAYLOR, and SAM MARTIN, Defendants and Respondents.

APPEAL FROM: ~istrict Court of the Fourth Judicial District, In and for the County of Missoula, The Honorable Ed McLean, Judge presiding.

COUNSEL OF RECORD: ForAppellant: Thomas

### W. Trigg,Missoula, Montana Terry A. Wallace, Missoula, MontanaFiled: For Respondent: Dirk A. Williams, Snavely & Phillips, Missoula, Montana Richard A. Weber, Jr., Koch, McKenna, Goheen, Boggs & Weber, Hamilton, Montana

Submitted on briefs: January 17, 1991

Decided: March 21, 1991

ClerkJustice Terry N. Trieweilerdelivered the Opinion of the Court.

In this consolidated action Dale P. Hart appeals from the Fourth Judicial District Court orders granting summary judgment in favor of CharlesR. Taylor in causeno. 66726,and Fred G. Nimmick and Ann M. Nimmick in cause no. 66726 and cause no. 71128. We affirm in part and reverse and remand in part. Theparties raise several issues which we restate as follows: As to Tavlor: I. Whether the District Court erred in determining Hart failedtoplead failureof considerationasan affirmative defense. As to the Nimmicks: 11. Whether the District Court erred in finding no misrepresentation and fraud on the part of the Nimmicks. 111. Whether the District Court erred in collaterally estopping Hart from raising the issues of rescission and misrepresentation concerning his purchase of Terrace. IV. Whether the District Court erred in dismissing Hart's affirmative defense of accord and satisfaction. V. Whether the District Court erred in finding that the Nimmicks had no obligation to mitigate their damages. VI. Whether the District Court erred in dismissing Hart's counterclaims. This cause of action is based on a series of transactions involvingthe TerraceMobile Home Park (Terrace) located near East Missoula,Montana. Terrace was originally owned by the Ericksons. The Ericksons sold Terrace by contract for deed to Furman H.v I Stockton and Clare E. Stockton on September 25, 1978. The Stocktonsthen soldTerraceby contract for deed toFred C. Nimmick and Ann M. Nimmick on November 5, 1982. On April 16, 1984, the Nimmicks in turn sold the property by contract for deed to Robert E. Wright and Donna Mae Wright. TheWrightswere indebted to CharlesR. Taylor on apromissory note. After the debt to Taylor arose, Wrights purchased Terrace from the Nimmicks. Subsequently, Taylor acquired a judgment against the Wrights for the debt owed on the promissory note. Taylor then filed a judgment lien against theWrightslinterest in Terrace. Taylor scheduledan execution sale of theWrights interest in Terrace to satisfy his judgment against the Wrights. The Wrights

were on theverge of losing their interest in theproperty through the foreclosure of Taylor's judgment lien when Samuel Martin, a realtor, contacted Dale Hart in an effort to stave off the impending foreclosure. Previously Martinhadbeen therealtor that handled the Stockton-Nimmick transaction and the Nimmick-Wright transaction. The involvement of Hart in Terrace took place in two stages. 

### In order to avoid the sale, the Wrights paid $7,500 to Taylor and agreed to pay the balance of the judgment ($7,500within one year upon a specified schedule). Hart gave theWrights theabove $7,500 to pay Taylor to avoid the execution sale. In return, Hart received a partial assignment of one-third of the Wrights' purchasers interest in Terrace. Hart also agreed to pay theWrights an additional $7,500 in January, 1986, to pay off the remaining judgment debt to Taylor. Despite thispayment, on November, 1985,theWrightsdefaulted

on the underlying contract payments which were to be made to the Ericksons, the title holders of the property. As a result, the Ericksons issuedanotice of default and acceleration. To overcome this default, Hart purchased all of the Wrights' interest in the property and agreed to assume all of the obligations on Terrace, including the remaining debt ($7,500)to Taylor. In order to cure the Wrightsldefault to the Ericksons, Hart borrowed $3,500 from the Nimmicks. Hart also gave the Nimmicks a $10,000 promissory note to clear a lien the Nimmicks held against Terrace. The note

was secured by a trust indenture on Hart's personal residence. Next, Hart signed a promissory note to Taylor for $5,000 and Taylor agreed to release his judgment lien. Hart agreed to grant

a trust-indenture covering his interest in Terrace, to secure payment to Taylor. Hart also later delivered $2,500 to attorney Dennis Lind for partial payment of his debt to Taylor. Lind then delivered the $2,500 to Taylor's attorney. As the parties agreed, Hart signed a promissory note and a trust indenture with Taylor. Unfortunately,Taylor's judgment lienwas not immediatelyreleased

or satisfied,nordid Hart request Taylor to releaseor satisfythe judgment 1ien

# . Hart's promissory note to Taylor was due and payable in full

on January 12, 1987. On that date, Hart paid Taylor $687 in interest on thepromissory note,but failed to pay the full amount, J 

### of the principal. Other than the single payment of interest on January 12, 1987,Harthasmade nopayments on thepromissory note. On February 20, 1987, Hart sent a letter to Taylor and other parties stating his intention to rescind all transactions related to Hart's purchase of Terrace. On April 10, 1987, Hart sued Taylor,theNimmicks,and others in Missoula CountyCauseNo. 66726 alleging thathe was fraudulently induced to enter the contractto purchase the mobile home park, and seeking rescission of the contract and damages. Specifically, in regard to Taylor, Hart sought to rescind or avoid Hart's obligationsunder thepromissory note he signed with Taylor. In response, Taylor denied Hart's allegations of fraud, and counterclaimed for payment under the promissory note. On March 22, 1988, the District Court granted summary judgment in favor of Taylor upon Hart's claims of fraud and misrepresentation. Subsequently, Taylor requested summary judgment upon his counterclaim. Thatmotion was also granted. Hart now appeals theDistrictCourtlssecond summary judgment order in favor of Taylor. This appeal also includes Hart's claims of fraud, misrepresentation and rescission against theNimrnicks in causeno. 66726, and the Nimmicksl subsequent complaint against Hart for payment of a promissory note in cause no. 71128. As we mentioned previously in this Opinion, Hart sued the Nimmicks, along with various other defendants, in cause no. 66726 alleging fraud and misrepresentation on the part of the Nimmicks.Specifically,Hart claimed that the Nimmicks, through their agent realtor Sam Martin, misrepresented the value of Terrace. This misrepresentation, according to Hart, led him to purchase an interest in Terrace. The Nimmicks denied anymisrepresentation in the sale of Terrace, and further denied any agency relationship with realtor Martin. On April 15, 1988, the Nimmicks filed a motion for summary judgment. The court found no agency relationship between the Nimmicks and Martin, and, therefore, any statements that Martin made about Terrace could not be imputed to the Nimmicks. The District Court found no misrepresentations on the part of the Nimmicks in the sale of Terrace. After the District Court's summary judgment, the Nimmicks served a Notice of Entry of Order upon Hart's counsel on November 16, 1988. The Nimmicks failed to enter a final judgment. On June 8, 1989, the Nimmicks filed a complaint in cause no. 71128, to collect payment under the promissorynote. The facts of theNimmickslcause of action on thepromissory note are tied into Hart's earlier fraud and misrepresentation complaint surrounding his purchase of Terrace. Hart had given the Nimmicks the note, secured by a trust indenture in Hart's personal residence, in the amount of $10,000with interest at the rate of 10% on November 21, 1985. As mentioned earlier, Hart gave the note to the Nimmicks in order to clear a lien the Nimmicks had on Terrace. The record reveals that City Federal Savings Bank also had a trust indenture on Hart's personal residence; the Bank's trust

### indenturewas superiorto the trust indentureheldby theNimmicks. On December 19, 1988,Michael J. 

### Reiley, trustee under the Bank's trust indenture, recorded a notice of trustee's sale. On 

### February 20, 1989,Nimmickslattorney sentHart's attorney

an offer to settle Nimmicks' claim for $8,541.25. By its terms, the compromise offer expired on March 15, 1989. Sometime later Hart called the Nimmicks' attorney and offered a deed to his home in lieuof foreclosure. TheNimmicks' attorneyby letter toHart s 

### attorney rejected Hart s offer. Furthermore, the Nimmicks' attorney advised Hart's counsel that the Nimmicks would be filing suit on the note if the Bank foreclosed its trust indenture on schedule. On May 19, 1989, the Bank's trustee sold Hart's home at a 

### trustee sale. As promised, having lost their security, the Nimmicks sued Hart on the note on June 8, 1989. Hart answered, raised affirmative defenses and asserted counterclaims. On September 20, 1989, theNimmicksmoved for summary judgment

onthe complaintandHart's counterclaims. FollowingtheNimmicks' motion, briefing by the parties, and oral argument, the District Court granted partial summary judgment to the Nimmicks, and maintained that Hart is collaterally estopped from raising the claims of rescission and misrepresentation, since both of these claims had been adjudicated in District Court in cause no. 66726. 

### TheNimmicks thenmoved for summary judgment on the remaining issues, which Hart opposed. The District Court agreed with the Nimmicks and granted the Nimmickstmotion for summary judgment.

### TheCourt entered judgment onJune 7,1990,and theNimmicks served Notice of Entry of Judgment on June 11, 1990. Hart now appeals both of the District Courtlssummary judgments. Both of these cases on appeal are motions for summary judgment. In reviewing orders for summary judgment, the standard of review for this Court is the same as that used by 

### the District Court under Rule 56(c), M.R.Civ.P.; Kronen

### v. Richter (1984), 211 Mont. 208, 211, 683 P.2d 1315, 1317. Therefore, this Court can find summary judgmentwhen Itthe 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 themoving party is entitled to a judgment

as a matter of law. Rule 56(c)

## ,M.R.Civ. P. ;

### Mayer Bros.v. Daniel Richards Jewelers, Inc. (1986), 223 Mont. 397, 399, 726 P.2d 815, 816. Once the record reveals no genuine issue of material fact, the burden of proof shifts to the party opposing the summary judgment motion to present facts of a substantial nature that a 

### material fact issue exists. Maver, 726 P.2d at 816. Mere conclusory or speculative statements are insufficient to raise a genuine issue of material fact. National Gypsum Co. v. Johnson

(1979), 182 Mont. 209, 212, 595 P.2d 1188, 1189; Mayer, 726 P.2d at 816. ##Theopposing party 'may not rest upon the mere allegations or denials of his pleadings, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showins that there is a senuine issue for trialll1 (emphasisin original) Maver, 726 P.2d at 816, citing Rule 56(e),M.R.Civ.P. With this standard in mind, we will now review the issues presented by the parties. Hart

### v. Tavlor

Whether the District Court erred in determining Hart failed to plead failure of consideration as an affirmative defense. Taylor moved for summary judgment on his counterclaim for payment on thepromissory note on October 26, 1988. In an effort to rebut Taylor's counterclaim, Hart argued rescission based on failure of consideration. Hart contended that the consideration between theparties failed, due to the fact that Taylor failed to release the judgment lien Taylor held on Terrace. Taylor maintained, and the District Court found, that Hart had not pled failure of consideration as an affirmative defense as required by Rule 8(c), M.R.Civ.P. Furthermore, the Court found that "the letter of rescission from counsel forHart doesnot mention failure of consideration for non-payment of the obligation [promissory note] from Hart to Taylor." The District Court then granted Taylor's summary judgment motion. Rule 8(c), M.R.Civ.P. states in pertinent part: Affirmative Defenses. In pleading to a preceding pleading, a party shall set forth affirmatively accord and satisfaction, arbitration and award, assumption of risk, contributory negligence, discharge in bankruptcy, duress, estoppel,failure of consideration,

# ...and any other matter constituting an avoidance or affirmative defense

# ... (Emphasisadded.) The record reveals that Hart failed to affirmatively plead failure of consideration. Hart offers a number of excuseswhy he

# . failed to plead the affirmative defense, none of which have any merit on this appeal. "Anaffirmativedefense is generallywaived if not set forth affirmatively." Pracht v. Rollins (1989), 239 Mont. 62, 68,779 P.2d 57, 61;Chandlerv. Madsen (1982), 197Mont. 234, 241, 642 P.2d 1028, 1032. Here, the District Court properly denied Hart's affirmative defense. In addition to failing to plead his affirmative defense, Hart's claim also failsbecause Hart received actual consideration from Taylor. Taylor had a judgment lien on the Wrights' interest in Terrace and Taylor scheduled a sale upon a writ of execution. The salewas cancelled when Hart provided funds to the Wrights to make a partial payment to Taylor. Hart then took over the remainder of the Wrights' interest in Terrace and, among other things, agreed to pay Taylor. Hart paid Taylor $2,500, and also signedapromissory note toTaylorandTayloragreed toreleasehis judgment lien. Hart also agreed to grant a trust indenture in Terrace to secure payment to Taylor. Hart maintains that the release of the judgment lien was consideration for his execution of the promissory note. According to Hart, once Taylor failed to release the judgment lien, the consideration between the parties failed and Hart could properly rescind the contract. Hart mistakenly contends Taylor's consideration was the release of the judgment lien. The actual consideration in this

casewhich Hart received was Taylor's forbearance,Hart's right to possession of the trailer court,and the receipt of rents from the trailer court.

### Release of the judgment lienwould not have cleared the title

on Terrace. Hart's granting of a trust indenture for the satisfaction of a judgment lien would only have changed the form of the encumbrance and would not have changed the fact of an encumbrance on Terrace. The facts are clear that Taylor granted to Hart what he wanted, which was time to make payment. After Taylor granted that time and patiently awaited payment, Hart rescinded the contract. Likewise, Hart's rescission letter reflects that failure of considerationwasnot thebasis ofHart's rescission. Inpertinent part, the rescission letter states, "The reason for the rescission is that Dale's consent to the various agreements was obtained by themistake and or fraud of Sam Martin,who representedthat hewas
a partner and agent of some of you, that themobile home park was in good condition,and that the cash flowand profitability of the mobile home park was substantial. None of these representations were true, and it is clear that the representationswere made to defraud Mr. Hart. Nowhere in Hart's rescission letter is there any mention of Taylor's judgment lien as a basis for failure of consideration. The District Court was keenly aware of this fact in its order granting Taylor summary judgment: [Tlheletter of rescissionfromcounsel forHart doesnot mention failure of consideration as a reason for nonpayment of the obligations from Hart to Taylor. In looking to the essence of the transaction, it is clear that thequidpro quowasnot therelease of the judgment lien but rather an extension of time due Hart within which to make payment to Taylor. Such payment has not been made and no material facts exist to support Hart's

# . nonpayment of his obligation to Taylor. Accordingly, the evidence does not support the defense of failure of consideration. Hart received adequate consideration from Taylor. We affirm the District Court grant of summary judgment in favor of Taylor. HART V. 

### NIMMICKS Hart raises a number of issues in his lawsuits with Nimmicks in cause nos. 66726 and 71128. Both of these cases involve


### numerousmotions, orders,affidavitsand depositions. In order to 

### sift through the legal quagmire involved in this appeal, we find it necessary to first discuss Hart's cause of action against Nimmicks in cause no. 66726. OnApril 10, 1987,Hart filedhis complaint incauseno. 66726 againstNimmicks, among others, seeking rescission of the Terrace purchase agreement and punitive damages for fraud and misrepresentation in his purchase of Terrace. Hart's complaint alleged thatdefendant realtor SamMartin fraudulently inducedhim to purchase Terrace. Hart also alleged that the Nimmicks were liable for the acts of Martin because (1) Martin was acting as their agent, and (2) 

### the Nimmicks were partners with Martin. He made no allegation that the Nimmicks acted improperly. The Nimmicks denied allegationsthatMartinacted astheiragent. They also supported theirdenialwith affidavits, 

### inwhich theNimmicks established that they did not employ Martin as their real estate agent, nor gave him the authority to act as their real estate agent, in connection with Hart's purchase of Terrace. 12The Nimmicks moved for summary judgment on April 15, 1988. Later, on November 7, 1988, the District Court granted the Nimmickslmotion for summary judgment. The District Court found

no agency relationship between the Nimmicks and Martin. Furthermore, the court found that any misrepresentations made to Hart occurred in 1985 when Martinwas employed by theWrights. The court found no fraud or misrepresentation on the part of the Nimmicks. After the District Court's summary judgment order, the Nimmicks sewed a Notice of Entry of Order upon Hart's counsel on November 16, 1988. The record reveals that theNimmicks failed to enter a final judgment with the District Court.

Whether the District Court erred in finding no misrepresentation and fraud on the part of the Nimmicks. On appeal, Hart argues the District Court overlooked facts which link theNimmicks to the alleged fraud and misrepresentation in the sale of Terrace. Specifically, Hart claims the District Court disregarded his affidavit, showing the Nimmicksl fraudulent conduct and subsequent motion to amend thepleadings to conform to his filed affidavit. However, there was no allegation of misconduct by Nimmicks in the complaint and their was no proper motion to amend that complaint. A review of the records reveal thatHart, in his responsivebrief stated, "Plaintiffdemands that the pleadings be amended to reflect the facts set forth in the affidavit of the parties." The District Court properly ignored Hart's udemandvl to amendhis pleadings. In order to amend a pleading under Rule 15(a) or Rule 15(b)

### , M.R.Civ.P., a party must file an appropriate motion, and brief accompanying that motion. Rule 2(a)

## , Uniform District Court Rule. I1Failureto file a brief in five days by the moving party shall be deemed an admission that the motion is without merit.I1 Rule 2(b), Uniform District Court Rules. Here, Hart did not properly file a motion to amend his pleadings. He attempted to amend his pleadings in his responsivebrief. Hart's demand in his responsive brief does not remotely resemble a proper motion, and Hart also failed to file a brief as required under Rule 2(a). Aside from Hart's attempt to amend his pleadings, Hart's affidavit itself does not support his allegations of fraud and misrepresentation on the part of the Nimmicks. Inhis affidavit, Hart claims Fred Nimmick made a misrepresentation directly tohim. Specifically, Hart stated in his affidavit: 10. At this time Fred Nimmick told Hart that the income fromthe trailerwas there,reaffirming what Martin told Hart;

13. Therepresentation of FredNimmickwasnot true, and this was a direct representation made by Nimmick to Hart in conjunction with representations made to Hart by Martin, on behalf of the Nimmicks, after Wright's interest in the park had been terminated. These statements are directly contrary to allegations Hart made in his complaint and deposition. In his deposition, Hart statedthat the informationhe relied on inpurchasinghis interest in Terracewas the listing agreementby which theWrights employed Martin as the real estate agent. Hart also testified that the

# . Wrights and Martin made the statements on which he relied in purchasing Terrace. Moreover, Hart admitted that the only writing he relied on was a listing agreement between the Wrights and Martin. Hart stated inhis deposition that the only representation of the Nimmicks was that the trailer park had good value. In his affidavit,he contradictedhis deposition testimony and maintains that the Nimmicks also stated that all the trailers were in good conditionand incomeproducing. TheNimmickslalleged statements to Hart do not support a cause of action for misrepresentation. In order forNimmicklsstatementsto constitute misrepresentation, Hart needed to rely on those statements to his detriment. There is nothing inHartlsaffidavit, or inhis complaintwhich indicate that Hart relied on the statements allegedly made by the Nimmicks inhispurchase ofTerrace. Hart's affidavitand complaintand the District Court record do not support Hart's claim of fraud and misrepresentation against Nimmicks. Accordingly, the District Court properly found no fraudulent conduct or misrepresentations by the Nimmicks.

Whether the District Court erred in collaterally estopping Hart from raising the issues of rescission and misrepresentation concerning his purchase of Terrace. On September 20, 1989,theNimmicksmoved for summary judgment on their promissory note complaint, and Hart counterclaimed rescissionbased onmisrepresentation. The District Court grantedpartial summary judgment to Nimmicks, and found that Hart was collaterally estopped from raising claims of rescission and misrepresentation sinceboth of these claims had been adjudicated in District Court in cause no. 66726. Hart argues that the District Court improperly applied the doctrine of collateral estoppel because the court never entered a final judgment in cause no. 66726. Hart reminds this Court that a final judgment is one of the necessary elements of collateral estoppel. Hart is correct that the District Court never entered a final judgment. The record shows only an order of summary judgment and a subsequent Notice of Entry of Order. We could at this stage remand this issue to the District Court, since the parties failed to enter a final judgment. A remand on this issue, however,would furtherdelay theadjudication of this case, and unreasonably burden the District Court. This Court turns to its equitable powers to resolve this dilemna of hearing an issue without the necessary final judgment. Under our equity jurisdiction, "Wehave a duty todetermine all of the issues of this case and do complete justice." Peterson

### v. Montana Bank of Bozeman (1984), 212 Mont. 37, 49, 687 P.2d 673, 679. Our duty to decide equitable issues, such as whether collateral estoppel applies, is defined in section 3-2-204(5), MCA. Under this section, this Court has the power in equity cases and in matters

or proceedings of an equitable nature, to review all questions of fact arising on the evidence presented in the record, and to determine the same. Section 3-2-204(5), MCA; Carpenters-Emp. Ret.

### Tr. v. Galleria Partnership (1989), 239 Mont. 250, 265, 780 P.2d 608, 617. Hart's counterclaim for rescission was an equitable defense. 17AAm.Jur.2d 1 

### 540 Contracts. Under our equitable jurisdiction power we will decide the issue of collateral estoppel, despite the fact theparties did not enter a final judgment. It would be inequitable to remand this issue back to the District Court, especially in light of the fact that the record reveals no evidence of misrepresentation by the Nimmicks, and no support forHart's claim of rescission. We would be remiss in our duty to "do complete justicew if we failed to resolve the issue of collateral estoppel. As the District Court properly noted in its order: The doctrine of collateral estoppel bars litigation of an issue if (1)

### the issuedecided ina prior adjudication was identical with the one presented in the action at bar; (2) the Court in the prior adjudication issued a final judgment on themerits; and (3) the party against whom the collateral estoppel is assertedwas a party or hadprivitywith aparty intheprior action. Aetna Life and Casualty Insurance Co. v. Johnson (1984), 207 Mont. 409, 673 P.2d 1277, 1279. Applying this test to the facts in this case, it is clearthat collateral estoppelbars Hart fromraisingthe issues of rescission and misrepresentation. These issues were fully litigated by the parties in cause no. 66726. Despite the fact that the issue of rescissionwas previously litigated in the earlier District Court case, Hart attempts resurrect the issue of rescissionby now arguing rescissionbased

on failure of consideration and breach of contract. A review of Hart's allegations reveals nothing new from what he alleged inCause no. 66726. Hart is once again alleging misrepresentations which were previously found to have no basis in fact. IV. Whether the District Court erred in dismissing Hart's affirmative defense of accord and satisfaction. In his answer, Hart raised accord and satisfaction as an affirimativedefense. Hart's answer stated: The complaint in this case must be dismissed since the claims upon which it is founded are not enforceable because of an accord and satisfaction. A review of the facts reveal that the District Court properly denied Hart's defense of accord and satisfaction. On February 28, 1989, in a letter from the Nimmicks' attorney, Robert Marcott, to Hart's attorney, Terry Wallace, the Nimmicks made an offer to settle their claims against Hart for $5,000plus attorney fees of $3,541.25. Marcott set a March 15, 1989 deadline payment of the

SometimethereafterHart calledMarcott, and offered thedeed to his house in lieu of theNimmicksfforeclosure on his home. In

an affidavit, Hart maintains that the parties orally agreed over the telephone that "the Nimmicks' claim would be settled by the payment ofmoney if theNimmicksfagreed,and that if theydid not, it would be settled by them relinquishing their claim and me signingmy house over to them 

# . . .II By letter dated May 4, 1989, Marcott wrote to Wallace, rejecting Hart's offer of a deed to his home in lieu of foreclosure, and enclosed a key Hart apparently had left at

### Marcottfsoffice. Now, Hart claims the Nimmicks created an accord through the oral agreement betweenHart andMarcott. Furthermore,Hart claims that the Nimmicks failed to satisfy the new accord between the parties. The Nimmicks contend their offer on February 28, 1989, set the parameters of settlement including a deadline forpayment of March 15, 1989. The Nimmicksmaintain therewas no accord, so there could not have been an accord and satisfaction. Theoriginal promissory note betweenthepartieswas a written contract. "A contract inwriting may be altered by a contract in writing orby anexecuted oralagreement. Section28-2-1602,MCA. 

### The parties never signed a newwritten contract, but Hart alleges theparties formedanoral agreementtochange andmodify theterms of thepromissorynote. Aswe stated inStoddardv. Gookin (1981)

### , 191Mont. 495, 503, 625 P.2d 529, 534, "Anoral agreement altering

awritten agreement isnot an 'executedoral agreementfwithin the statute [§ 

### 28-2-1602, MCA] authorizing modifications of written contractsby an executed oral agreement unless its terms havebeen fully performed, and performance on one side is not sufficient.

## " In this case, the terms of the alleged oral agreement were not fullyperformed. By theirattorney's letterdatedMay 4,1989, the Nimmicks established that they would not accept a deed in lieu of foreclosure as a modification of theirpromissory note. Clearly, the oral agreement was not executed and thus the contract

(promissorynote) was never properly altered by the parties. The District Court reviewed the evidence and correctlydeterminedthat thewritten agreement between theNimmicks and Hart had not been altered by an executed oral agreement, and that there

was no accord and satisfaction.

Whether the District Court erred in findingthat theNimmicks had no obligation tomitigate their damages. In the past, we have held ''that a non-defaulting party in a contractual arrangement must act reasonably underthecircumstances

so as not to unnecessarily enlarge damages caused by the default." IFG Leasing Co. v. Schultz (1985), 217 Mont. 434, 437, 705 P.2d 576, 577; Diede v. Davis (1983), 203 Mont. 205, 214-215, 661 P.2d



### Inthiscase, Hart argues that theNimmicks failed tomitigate their damages by not purchasing his home at the foreclosure sale. Hart claims that Nimmicks as the junior lienholders, should have bought his house and then in turn sold it at the best possible price. Hart maintains there was enough equity 

### in his home after City Federal SavingsBank (firstlienholder)waspaid to discharge completely any obligation Hart had to the Nimmicks. Hart also claims, relying on IFG Leasinq, 705 P.2d at 577,that the question of mitigation is a material issue of fact not susceptible to a motion for summary judgment. Nimmicks maintain Hart's bare assertions are insufficienttodefeatamotion for summary judgment and that Hart has failed to produce any evidence to support his allegations that he had equity in his home prior to the City Federal foreclosure.After reviewing the record, we find the Nimmicks did not violate theprinciple of reasonable mitigation of damages. There is no evidence that there existed enough equity in the home after City Federal's foreclosure to cover the Nimmicksl lien. Hart's assertions of equity come from his conclusory affidavit. Hart

never introduced any evidence concerningthe foreclosuresaleprice of his home, and whether that sale price in turn covered City Federal's lien and the Nimmicksl lien. Instead, Hart simply asserts there was equity in his property to cover his debt to the Nimmicks. Hart's bare assertions are insufficient to defeat a motion for summary judgment. Furthermore, if Hart believed there was equity in the house, he could have recaptured his equity by buying his home at the foreclosure sale. As the District Court properly noted in its order: [A]plaintiff is not under a duty tomitigate damages if the other party, who had the duty to perform under the contract, had equal opportunity to perform and equal knowledge of the consequences of nonperformance. 22 Am.Jur.2d 1 508,p. 591. Inthis case, it istheCourt's opinion that Defendant had equal opportunity and equal knowledge of the consequences of his defaulting promissory note. Hart has failed to showany genuine issue of material fact in support of his allegations that the Nimmicks failed to reasonably mitigate their damages. Therefore, the District Court properly entered summary judgment in favor of Nimmicks on the issue of failure tomitigate damages.

Whether the District Court erred in dismissing Hart'scounterclaims. Hart advanced two counterclaims in his answer, one for tortious interference with business relationshipsand the other for the loss of his house. Both of these claims accrued on or after May 19, 1989,when City Federal foreclosed on Hart's home. Nimmicks argue that Hart's counterclaims are barred by the doctrine of collateral estoppel, which theNimmicks claim arose as a resultof theNovember 7, 1988, District Court order in causeno. 66726. That argument fails because of the timing of the events. A judgment can bar claims in existence at the time the judgment was entered, but it cannot bar claims that arise after its entry. Here, Hart's two counterclaimsarose after the foreclosure sale in May, 1989. These counterclaimsaccrued after theNovember 7, 1988 District Court order, and therefore this order could not have preclusive effect on Hart's counterclaims. The District Court's order does not address Hart's counterclaims of tortious interferencewith business relationships and loss of his house. After reviewing the record, we find little evidence to support these counterclaims. Nevertheless, they are not barred by the District Court's November 7, 1988 order and the District Court on remand should entertain Hart's counterclaims. However, unless Hart produces evidence in support of his claims, Rule 11 sanctions should be considered by the District Court. Accordingly, we affirm the District Court's summary judgment orders, with the exception ofHart's two counterclaims. Taylor andNimmicks are entitled to an award of attorney fees and costs including those incurred on appeal. Fees and costs on Hart's counterclaims shall be decided separately.

We Concur: /