Opinion ID: 889724
Heading Depth: 1
Heading Rank: 15

Heading: Issue 3. Did the District Court err in denying the Larsens' request for attorney's fees?

Text: ¶ 64 Following the District Court's entry of its Findings of Fact and Conclusions of Law and Order, the Larsens filed a motion to assess attorney's fees under § 25-7-105, MCA. This statute provides, in pertinent part, that at any time more than 60 days after service of the complaint and more than 30 days before the trial begins, any party may serve upon the adverse party a written offer to settle a claim for the money or property or to the effect specified in the offer. An offer not accepted is considered withdrawn. If the final judgment is less favorable to the offeree than the offer, then the offeree shall pay the costs, including reasonable attorney's fees, incurred by the offeror after the offer was made. The statute applies to an action or claim which involves real property and for which the amount contained in a pleading is $50,000 or less, exclusive of costs, interest, and service charges. Section 25-7-105(1), (3), (4)(b), MCA. ¶ 65 In September 2008, well over 60 days after service of the Larsens' complaint, the Larsens served upon the Richardsons a written offer to settle. They offered to create an agricultural easement over a 73-foot-wide strip of land, approximately 0.62 acres in size, along the north side of the B-to-A fence. The easement would allow the Richardsons access from LaValle Creek Road to their property to the west of Larsens and would allow egress and ingress for livestock and equipment in support of raising livestock. The Richardsons rejected the offer. The case proceeded to trial in September 2009, after which the District Court ruled that the Richardsons neither own the disputed 9.74 acres nor hold an easement over any part of that property. Accordingly, the Larsens argued in their motion to assess attorney's fees that the final judgment was less favorable to the Richardsons than the offer of a 0.62-acre agricultural easement and that the Larsens, therefore, were entitled to recover their attorney's fees incurred after the offer was made. ¶ 66 It is important to note the factual circumstances which existed at the time the Larsens offered to settle. They commenced this lawsuit on July 10, 2007, seeking to quiet title to the 26.96-acre finger of land. On August 3, 2007, the Richardsons filed their Answer and Counterclaim, requesting a declaration of prescriptive easement over that portion of the subject property which includes the corrals, fences, and adjacent grounds. On February 7, 2008, the Richardsons filed a motion to amend the scheduling order to give their recently retained expert (Milam) time to analyze COS 5900 and the property at issue. On June 25, 2008, Milam issued his report, concluding that the Richardsons own the northernmost 9.74 acres. On September 10, 2008, the Larsens made their offer to settle, which the Richardsons rejected five days later. On September 17, 2008, the Richardsons filed a motion to amend their Answer and Counterclaim to include a claim of ownership. The District Court granted the motion. On December 2, 2008, the Richardsons filed an Amended Answer and Counterclaim, asserting ownership of the 9.74 acres and, in the alternative, a prescriptive easement over the entire 9.74 acres. ¶ 67 The only claims existing when the Larsens made their offer were the Larsens' request that title to the 26.96 acres be quieted in their names and the Richardsons' counterclaim for a prescriptive easement over that portion of the subject property which includes the corrals, fences, and adjacent grounds. Accordingly, in their reply brief in support of their motion to assess attorney's fees, the Larsens stated that their offer was directed at the Richardsons' prescriptive easement counterclaim. In the motion itself, however, the Larsens sought to recover attorney's fees arising in the case after the Defendants' rejection of the Offer of Settlement. Neither their motion nor their attached affidavit distinguishes, in any apparent fashion, between the attorney's fees incurred with respect to the prescriptive easement counterclaim and the attorney's fees incurred with respect to the subsequently filed ownership counterclaim. Yet, the Larsens' offer did not apply to the ownership counterclaim, since that counterclaim had not yet been alleged. ¶ 68 These factual circumstances raise some important questions concerning the proper application of § 25-7-105, MCA. Is a party entitled to recover attorney's fees incurred in the litigation of a claim or counterclaim that is added to the case after the settlement offer is made? In other words, may the Larsens recover attorney's fees incurred on the ownership counterclaim, even though their offer did not pertain to this claim (since it did not exist at the time the offer was made)? Does it depend on whether the original claim (the one for which the offer was made) and the later-added claim (the one added after the offer was made) are of such nature that all of the attorney's fees would have been incurred regardless of whether the later claim had been added? What if, in their Amended Answer and Counterclaim, the Richardsons had dismissed their prescriptive easement claim and pursued only their ownership claim? Is the dispositive fact the fact that this litigation, at its core, has always been about the Larsens' attempt to disperse any and all clouds upon their title to the 26.96-acre property, whatever form that cloud might take (an easement claim, a possessory claim, or some other encumbrance)? ¶ 69 The parties have not briefed these questions. The Larsens assume they are entitled to all attorney's fees incurred after September 10, 2008, while the Richardsons argue that the Larsens' claim fails for another reason. Because we agree with the Richardsons' argument, we leave resolution of the foregoing questions to another case in which they have been properly argued and briefed. We shall assume, for purposes of the present case, that the Larsens may be entitled to recover attorney's fees incurred litigating both the prescriptive easement issue and the ownership issue. ¶ 70 There is no question that the claims in this case involve real property. Section 25-7-105(4)(b), MCA. There also is no question that the offer to settle otherwise satisfies the criteria of the statute, with the exception of the amount in controversy. By its terms, the statute applies only to an action or claim for which the amount contained in a pleading is $50,000 or less, exclusive of costs, interest, and service charges. Section 25-7-105(4), MCA. As an initial matter, we agree with the Larsens and the Richardsons that parties cannot be allowed to manipulate the application of § 25-7-105, MCA, by stating in their pleadings an amount above or below $50,000 (regardless of the true value of the property at issue), or by not stating an amount at all, in order to avoid the statute's application or in order to apply it to situations that the Legislature never intended. The statute is designed to encourage the settlement of lawsuits involving real property [13] where the amount in controversy is not more than $50,000. Hence, the amount contained in a pleadingto which the $50,000 limit appliesrefers to the value of the real property interest that is at issue in the particular claim or claims to be settled. ¶ 71 As the moving party, therefore, it was incumbent on the Larsens to show that the value of the subject property (the 9.74 acres), the value of the prescriptive easement claimed by the Richardsons, or the value of both (given that the Larsens claim attorney's fees for litigating both the ownership claim and the easement claim) was not more than $50,000. As the Richardsons point out, however, and as the District Court observed in denying the Larsens' motion, the parties provided no evidence establishing the market value of their claimed property rights in the disputed parcel of land. Accordingly, we hold that the Larsens did not meet their burden under § 25-7-105(4), MCA, and that the District Court correctly denied their motion for attorney's fees due to a failure of proof.