Title: DREYER v BOARD OF TRUSTEES
Citation: N/A
Docket Number: 80-486
State: Montana
Issuer: Montana Supreme Court
Date: June 22, 1981

No. 80-486 IN THE SUPREME COURT OF THE STATE OF MONTANA 1981 ELMO DREYER, et al., Applicants and Respondents, VS. THE BOARD OF TRUSTEES OF MID-RIVERS TELEPHONE COOPERATIVE, INC., et al., Respondents and Appellants. Appeal from: District Court of the Seventh Judicial District, In and for the County of McCone. Honorable Alfred B. Coate, Judge presiding. Counsel of Record: For Appellants: Church, Harris, Johnson & Williams, Great Falls, Montana For Respondents: Moses Law Firm, Billings, Montana Submitted on briefs: April 2, 1981 Decided: JUN 22 Filed: All! 2 2 1 9 M .- I Clerk M r . Chief J u s t i c e Frank I. Haswell d e l i v e r e d t h e Opinion of t h e Court. T h i s is an a p p e a l from a judgment a g a i n s t d e f e n d a n t f o r $9,806.25 a t t o r n e y f e e s and $30.12 costs i n an a c t i o n wherein p l a i n t i f f members of Mid-Rivers Telephone C o o p e r a t i v e , I n c . were g r a n t e d an i n j u n c t i o n pendente l i t e i n a s u i t to p r e v e n t t h e o f f i c e r s and Board of T r u s t e e s of Mid-Rivers Telephone Co-op from c o n d u c t i n g a s p e c i a l meeting and e l e c t i o n on proposed amendments t o t h e by-laws of t h e Co-op. On May 14, 1979, c e r t a i n members of t h e Mid-Rivers Telephone Co-op f i l e d an a p p l i c a t i o n a g a i n s t t h e Board of T r u s t e e s of t h e Co-op s e e k i n g i n j u n c t i o n , mandamus, and o t h e r a p p r o p r i a t e r e l i e f t o p r e v e n t t h e Board of T r u s t e e s from h o l d i n g a s p e c i a l meeting and e l e c t i o n on May 16, 1979 and to compel them t o hold t h e 1978 a n n u a l meeting of t h e Co-op. The District C o u r t i s s u e d a temporary r e s t r a i n i n g o r d e r w i t h o u t n o t i c e pre- v e n t i n g t h e Board of T r u s t e e s from conducting t h e e l e c t i o n and set a show cause h e a r i n g on (1) whether a p r e l i m i n a r y i n j u n c t i o n should i s s u e ; ( 2 ) whether a w r i t of mandate should i s s u e to compel t h e h o l d i n g of t h e 1978 a n n u a l meeting; ( 3 ) w h e t h e r a t t o r n e y f e e s s h o u l d be awarded a p p l i c a n t s from t h e funds of t h e Co-op; and ( 4 ) why a t t h e t r i a l of t h e cause t h e temporary r e s t r a i n i n g o r d e r s , p r e l i m i n a r y i n j u n c t i o n , and w r i t of mandate should n o t be made permanent. The Board of T r u s t e e s moved to quash t h e temporary r e s t r a i n i n g o r d e r , t h e h e a r i n g was h e l d , and t h e D i s t r i c t Court i s s u e d an i n j u n c t i o n pendente l i t e on August 14, 1979, pending a h e a r i n g on t h e merits of t h e u n d e r l y i n g l i t i g a t i o n . N o f u r t h e r developments occurred u n t i l A p r i l 15, 1980, when p l a i n t i f f s ' a t t o r n e y s wrote a letter to t h e judge r e q u e s t i n g a h e a r i n g on a t t o r n e y f e e s . The Board of T r u s t e e s moved to quash t h e r e q u e s t f o r a t t o r n e y f e e s , a h e a r i n g was h e l d and on August 25, 1980, t h e District Court h e l d t h a t p l a i n t i f f s were e n t i t l e d to a t t o r n e y f e e s and costs. On September 5, 1980, judgment was e n t e r e d a g a i n s t t h e Board of T r u s t e e s f o r $9,806.25 a t t o r n e y f e e s and $30.12 costs, w i t h i n t e r e s t a t 10% from d a t e of judgment. The D i s t r i c t Court f i l e d a memorandum o p i n i o n on August 29, 1980, i n d i c a t i n g t h e c o u r t was t r e a t i n g t h e i n j u n c t i o n as a w r i t o f p r o h i b i t i o n , which t h e c o u r t c o n s i d e r e d t h e p r o p e r r e l i e f . The District Court h e l d t h a t s u b s t a n c e c o n t r o l s o v e r t h e form of r e l i e f and t h a t a l t h o u g h a t t o r n e y f e e s are n o t allowed by s t a t u t e i n an i n j u n c t i o n a c t i o n , p l a i n t i f f s s o u g h t and o b t a i n e d a c o u r t o r d e r p r e v e n t i n g t h e Board of T r u s t e e s from conducting t h e s p e c i a l meeting and e l e c t i o n , t h e same r e l i e f t h e y would have been e n t i t l e d t o i n an a c t i o n f o r a w r i t of p r o h i b i t i o n . The amount of a t t o r n e y f e e s awarded w a s computed by m u l t i p l y i n g t h e r e a s o n a b l e t i m e consumed i n f u r n i s h i n g t h e a t t o r n e y s 1 s e r v i c e s (130.75 h o u r s ) times t h e r e a s o n a b l e f e e per hour ($75.00) f o r a total of $9,806.25. There is no i s s u e on t h e c o s t s of $30.12. A d d i t i o n a l l y t h e District Court found t h a t t h e t r u s t e e s had n o t a c t e d i n good f a i t h and had i n t e r f e r e d w i t h p l a i n t i f f s 1 v o t i n g r i g h t s . The District Court found t h a t t h e award of a t t o r - n e y f e e s was p r o p e r under e i t h e r t h e " s u b s t a n t i a l b e n e f i t " d o c t r i n e or t h e " p r i v a t e a t t o r n e y g e n e r a l " p r i n c i p l e . The case was n e v e r c a r r i e d to its u l t i m a t e c o n c l u s i o n , i.e. t o a h e a r i n g and award of f i n a l judgment on t h e merits of t h e l i t i g a t i o n i n c l u d i n g a permanent i n j u n c t i o n o r a w r i t of mandate. According to t h e d e f e n d a n t s t h i s i s s u e h a s become moot by t h e p a s s a g e of time. The sole i s s u e on a p p e a l is whether t h e Board of T r u s t e e s is l i a b l e f o r a t t o r n e y fees from t h e f u n d s of t h e Co-op. N o i s s u e concerning t h e r e a s o n a b l e n e s s of t h e f e e awarded w a s r a i s e d i n e i t h e r b r i e f . The Board o f T r u s t e e s advances f o u r arguments why t h e y are n o t l i a b l e f o r a t t o r n e y f e e s : (1) a n award of a t t o r n e y f e e s is n o t a l l o w a b l e where t h e u n d e r l y i n g a c t i o n h a s n o t proceeded to f i n a l judgment on t h e merits, ( 2 ) a t t o r n e y f e e s a r e n o t a l l o w a b l e i n an i n j u n c t i o n a c t i o n , ( 3 ) a n i n j u n c t i o n a c t i o n should n o t be t r e a t e d as an a p p l i c a t i o n f o r a w r i t of p r o h i b i t i o n i n o r d e r to p e r m i t an award of a t t o r n e y f e e s , and ( 4 ) t h e record is b a r r e n of a n y f a c t s t h a t would s u p p o r t any recognized e q u i t a b l e d o c t r i n e of f e e s h i f t i n g . Respondents advance a number of c o n t e n t i o n s as to why t h e award of a t t o r n e y f e e s was proper: (1) The Court h a s i n h e r e n t e q u i t a b l e power t o compel t h e t r u s t e e s of t h e Co-op to f o l l o w p r o p e r p r o c e d u r e s i n c a l l i n g s p e c i a l m e e t i n g s and h o l d i n g e l e c t i o n s , ( 2 ) t h e g i s t of t h e a c t i o n is n o t o n l y to s t o p t h e improper meeting and e l e c t i o n but to compel t h e t r u s t e e s to con- t i n u e t h e meetings a c c o r d i n g t o law; a c c o r d i n g l y t h e remedy of mandamus is p a r t and p a r c e l of t h e r e l i e f s o u g h t and by s t a t u t e a t t o r n e y f e e s a r e awardable i n mandamus, ( 3 ) t h e f a c t s c o n t a i n e d i n t h e a f f i d a v i t of t h e p l a i n t i f f s , coupled w i t h t h e f i n d i n g t h a t t h e t r u s t e e s had n o t a c t e d i n good f a i t h and had i n t e r f e r e d w i t h p l a i n t i f f s ' v o t i n g r i g h t s , d e m o n s t r a t e t h a t p l a i n t i f f s won t h e case and were e n t i t l e d to a t t o r n e y f e e s , ( 4 ) t h i s was a class a c t i o n and t h e b e n e f i t s secured by p l a i n t i f f s enured to t h e bene- f i t of a l l members of t h e co-op e n t i t l i n g p l a i n t i f f s t o a t t o r n e y f e e s under t h e " s u b s t a n t i a l b e n e f i t " concept of f e e s h i f t i n g , ( 5 ) t h e presumption is t h a t t h e d e c i s i o n of t h e District Court is c o r r e c t a b s e n t a showing t h a t its d e c i s i o n is c l e a r l y e r r o n e o u s which was n o t done h e r e . Respondents draw an a n a l o g y between t h i s case and cases i n v o l v i n g a c t i o n s by union members a g a i n s t t h e union and its o f f i c e r s t o compel t h e use of p r o p e r p r o c e d u r e s i n union a f f a i r s where a t t o r n e y f e e s have been awarded. See G i l b e r t v. H o i s t i n g & P o r t a b l e Engineers ( 1 9 6 4 ) , 237 O r e . 130, 390 P.2d 320; Weber v. Marine Cooks & Stewards Assn. of P a c i f i c Coast ( 1 9 4 9 ) , 93 C.A. 2d 327, 208 P.2d 1009; Anno: 9 ALR3d 1045, P r e v a i l i n g Union Member's R i g h t - t o Recover A t t o r n e y ' s Fees i n Action A g a i n s t Union or -- - a n e l e c t i o n . The i s s u a n c e of t h e i n j u n c t i o n pendente l i t e is n o t c o n t e s t e d i n t h i s a p p e a l . An award of a t t o r n e y f e e s to a p a r t y who s e c u r e s a p r e l i - minary i n j u n c t i o n is e r r o r i n t h e absence of s t a t u t o r y o r c o n t r a c t a u t h o r i z a t i o n . Masonovich e t a l . v. School D i s t r i c t No. 1 e t a l . ( 1 9 7 8 ) , Mont . , 582 P.2d 1234, 35 St.Rep. 1175. Here t h e r e is n e i t h e r s t a t u t o r y n o r c o n t r a c t a u t h o r i t y f o r such award. A p p l i c a n t s c i t e S t a t e ex rel. B u t t e Teamsters Union v. D i s t . C t . ( 1 9 6 2 ) , 140 Mont. 581, 374 P.2d 336, as a u t h o r i t y f o r t h e award of a t t o r n e y f e e s h e r e . I n B u t t e Teamsters Union r e a s o n a b l e a t t o r n e y f e e s were allowed t h e union f o r t h e s e r v i c e s o f its a t t o r n e y s i n d i s s o l v i n g a temporary r e s t r a i n i n g o r d e r a g a i n s t t h e union which had been issued by t h e District Court i l l e g a l l y and i n e x c e s s of its j u r i s d i c t i o n . That s i t u a t i o n is r e a d i l y d i s t i n g u i s h a b l e and b r i n g s it w i t h i n t h e p r i n c i p l e s announced i n Foy v. Anderson ( 1 9 7 8 ) , 176 Mont. 507, 580 P.2d 114. Such is n o t t h e case h e r e . An award of a t t o r n e y f e e s t o t h e a p p l i c a n t f o r a w r i t of mandamus is improper where no w r i t of mandamus was i s s u e d . An award of a t t o r n e y f e e s i n p r o h i b i t i o n is improper where no w r i t o f p r o h i b i t i o n w a s awarded. I t is n o t t h e p r o v i n c e of e i t h e r t h e District Court or t h e Supreme Court on a p p e a l t o d e t e r m i n e f i n a l l y matters t h a t may a r i s e upon a t r i a l on t h e merits. Atkinson v. Roosevelt County ( 1 9 2 3 ) , 66 Mont. 411, 214 P. 74. I n g r a n t i n g temporary r e l i e f by i n j u n c t i o n , c o u r t s of e q u i t y should i n no manner a n t i c i p a t e t h e u l t i m a t e d e t e r m i n a t i o n of q u e s t i o n s of t h e r i g h t i n v o l v e d , P o r t e r , s u p r a . The f o l l o w i n g language from a case decided by t h i s Court on A p r i l 30, 1981, e x p r e s s e s t h e p r i n c i p l e s involved i n t h i s case. " . . . t h e l i m i t e d f u n c t i o n of a p r e l i m i n a r y i n j u n c t i o n is to p r e s e r v e t h e s t a t u s quo and to minimize t h e harm to a l l p a r t i e s pending f u l l t r i a l . I f a p r e l i m i n a r y i n j u n c t i o n w i l l - not accomplish t h e s e purposes, t h e n it should not i s s u e . F i n d i n g s and c o n c l u s i o n s d i r e c t e d to t h e r e s o l u t i o n of t h e u l t i m a t e i s s u e s a r e p r o p e r l y r e s e r v e d f o r f i n a l t r i a l on t h e merits." P o r t e r , s u p r a . A t t h i s p o i n t i n t h e l i t i g a t i o n t h e p a r t i e s have n o t y e t gone t o t r i a l on t h e u l t i m a t e m e r i t s of t h e c o n t r o v e r s y . Defendants have n o t had t h e i r day i n c o u r t on t h e s e i s s u e s . N o t r i a l has been h e l d and no f i n a l judgment a d j u d i c a t i n g t h e u l t i - mate r i g h t s of t h e p a r t i e s has been made. A l l o t h e r con- s i d e r a t i o n s a s i d e , p l a i n t i f f s have not y e t p r e v a i l e d i n t h e a c t i o n so a s t o e n t i t l e them to a t t o r n e y f e e s under any t h e o r y . A d d i t i o n a l l y t h e r e a r e p o l i c y c o n s i d e r a t i o n s s u p p o r t i n g t h i s r e s u l t . I f t h e members of a c o o p e r a t i v e c o r p o r a t i o n were a b l e to f i l e an a c t i o n a g a i n s t t h e t r u s t e e s f o r some real or ima- gined g r i e v a n c e ; s e c u r e a p r e l i m i n a r y i n j u n c t i o n pending f i n a l d e t e r m i n a t i o n of t h e merits of t h e i r complaint; abandon f u r t h e r p r o s e c u t i o n of t h e i r a c t i o n ; and t h e n c o l l e c t t h e i r a t t o r n e y f e e s w i t h o u t a f i n a l judgment i n t h e i r f a v o r on t h e merits of t h e i r c o m p l a i n t , an i n j u s t i c e would r e s u l t . The t r u s t e e s would have been denied a h e a r i n g on t h e u l t i m a t e r i g h t s of t h e parties and compelled to pay t h e i r opponents1 a t t o r n e y f e e s w i t h o u t a d e t e r m i n a t i o n of t h e merits of t h e complaint a g a i n s t them. T h i s v i o l a t e s t h e most fundamental r i g h t of due process--the r i g h t to appear and be heard on t h e merits of t h e i r a d v e r s a r i e s 1 c o m p l a i n t . It is no answer to say t h a t t h e t r u s t e e s 1 a c t i o n s i n c a l l i n g t h e s p e c i a l meeting and e l e c t i o n were not i n good f a i t h ; or t h a t t h e t r u s t e e s 1 a c t i o n s were improper; or t h a t t h e p l a i n - t i £ f s achieved t h e i r o b j e c t i v e i n p r e v e n t i n g t h e s p e c i a l meeting and e l e c t i o n and t h u s p r e v a i l e d i n t h e i r a c t i o n . The u l t i m a t e r e s o l u t i o n of t h e s e i s s u e s was n o t b e f o r e t h e District Court f o r a d j u d i c a t i o n a t t h e show cause h e a r i n g and it was error to ad ju- d i c a t e t h o s e i s s u e s a t t h a t hearing. The c a s e is n o t rendered moot by t h e passage of t i m e . The Union O f f i c e r s . Respondents also c i t e Foy v. Anderson ( 1 9 7 8 ) , 176 Mont. 507, 580 P.2d 114, f o r t h e p r o p o s i t i o n t h a t t h i s Court h a s some- times awarded a t t o r n e y f e e s i n t h e absence of s t a t u t e o r c o n t r a c t . Respondents f u r t h e r p o i n t o u t t h a t a t t o r n e y f e e s have been awarded t o t h e p r e v a i l i n g p a r t y who h a s secured a r e s t r a i n i n g o r d e r , c i t i n g S t a t e ex rel. B u t t e Teamsters v. D i s t . C t . ( 1 9 6 2 ) , 140 Mont. 581, 374 P.2d 336. Respondents a l s o contend t h a t a w r i t of p r o h i b i t i o n is c l e a r l y a p p l i c a b l e to t h i s s i t u a t i o n , t h a t its f u n c t i o n is pre- v e n t i v e r a t h e r t h a n r e m e d i a l , and t h e c o u r t was correct i n a l l o w i n g a t t o r n e y f e e s on t h i s b a s i s . W e need n o t d i s c u s s a l l t h e c o n t e n t i o n s of t h e p a r t i e s i n t h i s o p i n i o n i n o r d e r to a r r i v e a t a d e t e r m i n a t i o n of t h e i s s u e on a p p e a l . One c o n t e n t i o n is c o n t r o l l i n g . The award of a t t o r n e y f e e s i n t h i s c a s e is premature a s no f i n a l judgment h a s been e n t e r e d on t h e merits of t h e underlying c o n t r o v e r s y i n f a v o r of r e s p o n d e n t s . N o permanent i n j u n c t i o n was awarded. N o w r i t of mandate w a s i s s u e d . A l l o t h e r c o n s i d e r a t i o n s a s i d e , r e s p o n d e n t s are n o t e n t i t l e d to a judgment f o r a t t o r n e y f e e s w i t h o u t a f i n a l d e t e r m i n a t i o n of t h e underlying c o n t r o v e r s y i n t h e i r f a v o r . I n t h i s case p l a i n t i f f s were awarded a temporary i n t e r l o - c u t o r y i n j u n c t i o n f o l l o w i n g t h e show cause h e a r i n g . Its f u n c t i o n and e f f e c t was s i m p l y t o p r e s e r v e t h e s t a t u s quo pending t r i a l of t h e merits of p l a i n t i f f s ' c o m p l a i n t . P l a i n t i f f s , as a p p l i c a n t s f o r a p r e l i m i n a r y i n j u n c t i o n , were r e q u i r e d t o e s t a b l i s h a prima f a c i e case o r show t h a t it was a t l e a s t d o u b t f u l whether t h e y would s u f f e r i r r e p a r a b l e i n j u r y b e f o r e t h e i r r i g h t s could be f u l l y l i t i g a t e d . P o r t e r e t a l . v. K & S P a r t n e r s h i p e t a l . (19811, Mont . , 627 P.2d 836, 38 St.Rep. 648. The D i s t r i c t Court r u l e d i n e f f e c t t h a t p l a i n t i f f s had made such a showing and i s s u e d an i n j u n c t i o n pendente l i t e p r e v e n t i n g t h e Board of T r u s t e e s from h o l d i n g a s p e c i a l meeting and conducting i s s u e of whether t h e Board of T r u s t e e s is l i a b l e f o r t h e payment o f a p p l i c a n t s 1 a t t o r n e y f e e s remains f o r t r i a l on t h e merits; t o e q u a t e t h e " l i k e l i h o o d of s u c c e s s " t h a t j u s t i f i e s a p r e l i m i n a r y i n j u n c t i o n with "success" i n t h e underlying l i t i g a t i o n i g n o r e s s i g n i f i c a n t p r o c e d u r a l d i f f e r e n c e s be tween p r e l i m i n a r y and per- manent i n j u n c t i o n s ; and i n t h e g r a n t i n g of a p r e l i m i n a r y i n j u n c t i o n , t h e p a r t i e s g e n e r a l l y have been denied t h e b e n e f i t of a f u l l o p p o r t u n i t y to p r e s e n t t h e i r c a s e s and a f i n a l d e c i s i o n based on t h e a c t u a l merits of t h e c o n t r o v e r s y . U n i v e r s i t y of Texas e t a l . v. Camenisch ( 1 9 8 1 ) , U.S. - 1 - S.Ct. I 68 L.Ed.2d 175. The f i n d i n g s of f a c t s , c o n c l u s i o n s of law and judgment of t h e D i s t r i c t Court awarding a t t o r n e y f e e s was premature. These f i n d i n g s , c o n c l u s i o n s and judgment a r e vacated and set a s i d e . The cause is remanded t o t h e District Court f o r f u r t h e r p r o c e e d i n g s to determine t h e u l t i m a t e r i g h t s of t h e p a r t i e s i n t h e underlying c o n t r o v e r s y following t r i a l t h e r e o n . W e e x p r e s s no o p i n i o n on such r i g h t s nor on t h e o t h e r arguments advanced h e r e i n i n f a v o r o r a g a i n s t an award of a t t o r n e y f e e s to t h e pre- v a i l i n g p a r t y . Chief J u s t i c e M r . J u s t i c e John C. Sheehy dissenting: I d i d n o t agree with t h e holding i n P o r t e r v. K & S Partnership (1981), - Mont. , 627 P.2d 836, 38 St.Rep. 648. Here, t h e o r d e r forbidding t h e holding of t h e corporate meeting has become f i n a l , and t h e order of t h e c o u r t , p r o h i b i t o r y i n nature, is t h e only r e l i e f t h a t w a s sought i n t h e cause. Accordingly, I would view t h e matter a s having been determined by t h e D i s t r i c t Court and would allow t h e award of a t t o r n e y f e e s , which otherwise s e e m f a i r . I/ J u s t i c e f