No. 91-513 IN THE SUPREME COURT OF THE STATE OF MONTANA

EDGEWATER TOWNHOUSE HOMEOWNER'S ASSOCIATION, Plaintiff, Respondent, and Cross-Appellant,

ROGER HOLTMAN

## , Defendant,Appellant, and Respondent on Cross-Appeal

APPEAL FROM: District Court of the Fourth Judicial District, In and for the County of Missoula, The Honorable Douglas Harkin, Judge presiding.

COUNSEL OF RECORD: For Appellant: Charles J. Tornabene; Patterson,Marsillo, Tornabene, Schuler & McKenna, Missoula, Montana For Respondent: Lon Dale; Milodragovich, Dale & Dye, Missoula Montana For Amicus Curie: William 0. Bronson; James,Gray & McCafferty, Great Falls,Montana (MTBig Sky ParalegalsAssoc. ;Natl. Assoc. of Legal Assts. (NALA); Natl. Fed. of Paralegal Assoc.; and Legal Asst. Mngmnt Assoc.)



### JAN 

### 121393 Submitted on Briefs: March 12, 1992Justice Karla M. Gray delivered the Opinion of the Court.

Roger Holtman appeals from a judgment of the Fourth Judicial District Court,Missoula County,granting summary judgment in favor of the Edgewater Townhouse Homeowner's Association and dismissing his counterclaim. The Edgewater Townhouse Homeowner'sAssociation cross-appeals the District Court's denial of claimed attorney's fees for attorney-supervised paralegal work. We phrase the issues on appeal as follows: 1)Did the District Court err in granting summary judgment for the Association? 2) Did the District Court err in dismissing Holtman's counterclaim? The Edgewater Townhouse Homeowner's Association (the Association) is a condominium association of eleven condominiums located in Missoula. The Association is governed by its articles of incorporation and its bylaws, filed respectively with the Montana Secretary of State and the Missoula County Clerk and Recorder. Pursuant toArt. I,Sect. 3 of the bylaws, all owners or occupants of the units are subject to the rules contained in the bylaws and articles of incorporation. Roger Holtman (Holtman) purchased Unit #1 in 1985. InMarch of 1988, theAssociationheld meetings todiscuss the installationof a new heating system forthe condominiums. Holtman opposed installing a new system and argued to either repair the existing central heating system or allow the unit owners topurchase individual systems of their choice. At a meeting on August 23, 1988, the unit owners present voted to install a WeilMcLain heating system. Holtman did not attend themeeting. After receiving bids, the Association assessed each member $3,900 to cover the costs. Holtman subsequently refused to pay the assessment or allow the Association access to his condominium to install the new system. On February 5, 1989,while Holtmanwas out of town, a neighbor heard running water in Holtmanlscondominium. A meeting of the Board members was called and the situation was declared an emergency requiring entry into Holtmanls unit. After a unit owner enteredHoltmanls condominium,the Association authorized

### aplumber to fix the leak and install the new heating system. When Holtman returned, he found that he was locked out of his damaged condominium, the new heating system was partially installed and, allegedly, asbestoscontaminatedhis basement. He refused to allow further installation or pay for 

### the heating system. The Association filed a complaint on February 17, 1989, seeking an injunction to require the installation of the new heating system, damages, costs and attorney's fees. Holtman answered by generally denying the Associationlsallegations. On 

### May 10, 1989, Holtman filed 

### a third-party complaint against the individual unit owners, claiming they had deprived him of his property rights, invaded his privacy, and wrongfully contaminated his condominium with asbestos. Nearly a year later, the District Court granted theAssociationfs motion 

### for

### an "alternativewritr1 torequire the installation of the Weil-McLain heating system, and determined that the installation was necessary to preserve the property during the litigation. On September 17, 1990, the District Court granted the third-party defendants1 motion for summary judgment anddismissed the third-party complaint. Although the judgment was certified as final pursuant to Rule 54(b), M.R.Civ.P., Holtman did not appeal. On January 14, 1991, the Association moved for summary judgment on its complaint. Two weeks later, Holtman responded by filing a counterclaim against the Association without obtaining leave of court; the allegations against the Association mirrored those made against the individual unit owners in Holtmanls earlier third-party complaint. On February 14, 1991,theAssociationmoved to dismiss or strike the counterclaim. On June 4, 1991, the District Court filed orders granting both the motion for summary judgment and the motion to strike the counterclaim. In entering judgment, the District Court awarded theAssociation $16,367.92 in attorney's fees; that amount was decreased by $4,000 in a supplemental judgment in response to Holtman's objection. Both parties appeal. Did the District Court err in granting summary judgment for the Association? Under Rule 56(c), M.R.Civ.P., summary judgment is proper when

no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Summary judgmentwas not intended,nor can it be used, as a substitute for existing methods in the trial of issues of fact. Hull v. D. IrvinTransport (1984), 4213 Mont. 75, 81, 690 P.2d 414, 417. Ingranting theAssociation's motion for summary judgment, the District Court stated that theAssociation compliedwith itsbylaws and applicable statutes in changing theheating systemand entering Holtmanlscondominium. Specifically, it found that six of the eleven unit ownersvoted for installation of the heating system at the August 23, 1988, meeting. On that basis, the court further found that the quorum and voting majority requirements of the bylaws were met. We conclude that the District Court improperly decided disputed issues of fact. Insofar as the bylaws are pertinent here, one membership in the incorporated association is appurtenant to each unit. Consequently, each unit is allowed only one vote. As a result, there are a total of eleven votes in the Association. Regardless of the number of individuals who may co-own one unit, the unit nevertheless can cast only one vote at Association meetings. The bylaws also provide that a majority vote at a meeting at which a quorum is present is binding upon all unit owners. A quorum requires the representation in person or by proxy of 50% of the total authorized votes and a majority is defined as more than 50% of the total authorized votes. The District Court relied on the minutes of the August 23 meeting in determining that the Association complied with its bylaws. Theminutes list the 

### six individuals present as Ken,Mike, Doug, Lois and Jerry, and Andrea. In numerous references in the record, the names ItLoisand Jerry CovaultMappear to refer to theco-owners of one unit. Because each unit has only one vote to cast, it is possible that only five of eleven voting units were present at themeeting in question. If this is the case,no quorum existed because the bylaws require the presence of unit owners having 50% of the total authorizedvotes to constitute

### a quorum for the transaction of Association business. In light of Holtmanlscontention that the ~ssociation did not complywith theprocedures as requiredby itsbylaws indeciding to change the heating system, a genuine issue of material fact exists regarding whether a quorum existed at theAugust 23, 1988,meeting. Absent a quorum, no decision made at that meeting is binding on other unit owners. We conclude that the District Court erred in granting summary judgment. Did the District Court 

### err in dismissing Holtmanfs counterclaim? 

### In responding to the Association's February 17, 1989, complaint, Holtman generally denied the allegations and did not assert a counterclaim. On February 1, 1991, Holtman filed a counterclaim against the Association without leave 

### of court. 

### The District Court determined that the counterclaim arose out of the

sametransaction or occurrence as the~ssociation's complaint filed in February, 1989; therefore, it was a compulsory counterclaim governed by the timeliness requirements of Rule 13(a), M.R.Civ.P. Applying Rule 13(f)

## , M.R.Civ.P, which governs omitted counterclaims, the District Court dismissed the untimely counterclaim because Holtman did not obtain leave of court. Holtman doesnot disputethe DistrictCourt's characterization 6of his counterclaim as compulsory under Rule 13

### (a)

## ,M.R. Civ.P. He argues that the District Court's result was unduly harsh and that fgjustice requires" the acceptance of the counterclaim under these circumstances. We look toRule 13(f), M.R.Civ.P., in addressing this issue: When a pleader fails to set up a counterclaim through oversight, inadvertence, or excusable neglect, or when justice requires, the pleader may by leave of court set up the counterclaim by amendment. Although 

### we have not interpreted this subsection of Rule 13, M.R.Civ.P., we have held generally that the decision to allow 

### an amendment is left to the discretion of the trial court. Stanford et al. v. Rosebud County et al. (Mont. 1992), 

### - P.2d 

### -, 49 St-Rep. 828-30. In interpreting the identical federal rule, the Ninth circuit Court of Appeals has held that a trial court's denial of leave to assert an omitted counterclaim under Rule 13(f), F.R.Civ.P.

### , is reversible only when it constitutes an abuse of discretion, even though the rule is generally applied liberally. Ralston-Purina Co. 

### v. Bertie (9thCir. l9?6), 541 F.2d 1363, 1367. We adopt that standard of review for the issue before 

### us. In a case factually analogous to the one before us, the Third Circuit Court of Appeals affirmed a trial courtlsdismissal of an untimely compulsory counterclaim for failure to meet the "leave of court" requirement of Rule 13(f)

## , F.R. Civ.P. Owens-Illinois, Inc.



### v. Lakeshore Lane Co, (3d. Cir. 1979), 610 F.2d 1185, 1188. Here,

as in Owens, Holtman filed his counterclaim nearly two years after his answer and did not obtain leave of court to do so, as required by Rule 13(f)

### ,M.R.Civ.P. Under these circumstances,we hold that 7the District Court did not abuse its discretion in dismissing Holtman's untimely counterclaim. To hold otherwise would render the "leave of courtfvrequirement of Rule 13(f), M.R.Civ.P., meaningless. We note that the District Court's award and denial of certain attorney's fees is based in part on its grant of summary judgment to the Association. In light of our conclusion that summary judgment was in error, we vacate the award of attorney's fees. Affirmed in part, reversed in part, and remanded to the District Court for further proceedings consistent with this opinion.

We concur:January 12,1993 CERTIFICATEOFSERVICE Iherebycertify that the followingorderwas sentby United Statesmail, prepaid, tothefollowing named:

CharlesJ.Tornabene PATTERSON, MARSILLO,TORNABENE, SCHULER&McKENNA 113South5th East Missoula. MT 59801 LonDale MILODRAGOVICH, DALE &DYE,P.C. P.O. Box 4797 Missoula, MT 49806-4797 William0.Bronson James, Gray&McCafferty P.O. Box2885 GreatFalls,MT 59403 Natl. Fed. of Paralegal Assoc.)

ED SMITH CLERKOFTHE SUPREME COURT