Opinion ID: 890183
Heading Depth: 3
Heading Rank: 3

Heading: Martin Factors; Clarification of Mootness Versus Waiver

Text: ¶ 38 We now come to Martin Dev. Co. v. Keeney Constr. Co., 216 Mont. 212, 703 P.2d 143 (1985), which presents the most analogous circumstances to the present case. There, the district court entered judgment in favor of Martin for $72,000: $40,000 in lost profits, $20,000 in attorney's fees, and $12,000 in interest. Peschel, the appellant, did not take any action to stay execution of the judgment, and the judgment was thereafter satisfied. For this reason, Martin argued (like Stuivenga does here) that the appeal was moot. This Court disagreed. While acknowledging some apparent confusion in our caselaw, we concluded that the basic rule on mootness was stated best in Bank of Roundup: payment of a money judgment by the judgment debtor does not, by itself, render the cause moot for purposes of appeal; a defeated party's compliance with the judgment renders his appeal moot only where the compliance makes the granting of effective relief by the appellate court impossible. Martin, 216 Mont. at 218-19, 703 P.2d at 147 (citing Bank of Roundup, 167 Mont. at 432, 539 P.2d at 724). Martin had relied on Henke and First Sec. Bank of Kalispell v. Income Props., Inc., 208 Mont. 121, 675 P.2d 982 (1984), but we found these cases distinguishable. In Bank of Kalispell, the defendants had surrendered real property pursuant to the lower court's order, and this Court accordingly dismissed their appeal as moot because we were not able to render the relief the defendants sought. In Henke, various changes of position had occurred in the course of satisfying the judgment which would have made it very difficult, if not impossible, for this Court to reverse. In contrast, [n]o property changed hands pursuant to the judgment in Martin and there were no third party interests involved; rather, a simple money judgment was satisfied. 216 Mont. at 220, 703 P.2d at 148. Thus, we held that there was no reason why this Court could not grant effective relief. Martin, 216 Mont. at 220, 703 P.2d at 148. Though not citing the Restatement, we implicitly recognized Peschel's entitlement to restitution of the amounts that had been improperly paid to Martin in satisfaction of the judgment (the $20,000 in attorney's fees and the $12,000 in interest). ¶ 39 The last significant clarification in this line of cases occurred in Turner v. Mt. Engg. & Constr., 276 Mont. 55, 915 P.2d 799 (1996). There, we noted that confusion had arisen from this Court's attempt to distinguish between voluntary and involuntary compliance with a judgment within the context of analyzing mootness. See Turner, 276 Mont. at 59, 915 P.2d at 802 (citing cases). We explained that voluntariness bears on the question whether the appellant has waived his or her right of appeal, but has no bearing on the question of mootness. Turner, 276 Mont. at 59-60, 915 P.2d at 802. The fact that the appellant has voluntarily complied with the judgment does not necessarily mean the appeal is moot. Likewise, the fact that the appellant has involuntarily complied with the judgment does not necessarily mean the appeal is still live. Rather, in deciding whether the appeal is moot, the issue is whether this Court can fashion effective relief. Turner, 276 Mont. at 61, 915 P.2d at 803. Separate and distinct from this issue is the question of waiver. Voluntary compliance with the judgment may result in a waiver of the right to appealin which case it would be unnecessary to address the question of mootness. Turner, 276 Mont. at 61, 64, 915 P.2d at 803, 805; see also H-D Irrigating, Inc. v. Kimble Props., Inc., 2000 MT 212, ¶ 19, 301 Mont. 34, 8 P.3d 95 (The general rule is that a litigant who voluntarily and with knowledge of all the material facts accepts the benefits of an order, decree, or judgment of court, cannot afterward take or prosecute an appeal to reverse it.). This is what occurred in Black's Estate. Conversely, where compliance is involuntary, the party cannot be deemed to have waived or acquiesced in the judgment such that an appeal would be precluded. Turner, 276 Mont. at 61, 64, 915 P.2d at 803, 805; see also e.g. Kennedy v. Dawson, 1999 MT 265, ¶¶ 30-33, 296 Mont. 430, 989 P.2d 390. The appeal may, however, be moot to the extent that this Court cannot grant any effective relief, as occurred in Hagerty. ¶ 40 The Turner Court criticized some of our prior decisions for fail[ing] to analyze the question of what, if any, relief could be fashioned in the event of a reversal. 276 Mont. at 62, 915 P.2d at 803. The Turner Court itself, however, failed to provide a complete analysis of this question. The underlying dispute in the case was between a mortgagee (Turner) and construction lien creditors who had performed work on the subject property. The district court determined that Turner's mortgages were valid and superior to the construction liens and entered a decree of foreclosure and order of sale. The lien creditors filed a notice of appeal but did not stay the foreclosure sale or post a supersedeas bond. A sheriff's sale was held to satisfy the outstanding mortgages, and Turner purchased the property. Turner, 276 Mont. at 58, 915 P.2d at 801. On appeal, this Court identified two factors as dispositive of the mootness issue: whether property has changed hands, and whether third party interests are involved. Turner, 276 Mont. at 63, 915 P.2d at 804 (citing Martin, 216 Mont. at 219-20, 703 P.2d at 147-48). Here, the Court observed, the subject property has been sold at a sheriff's sale and third party interests, albeit Turner's, are involved. Turner, 276 Mont. at 63, 915 P.2d at 804. The Court posited that because the lien creditors had not posted a supersedeas bond or stayed the foreclosure sale pending appeal, and because no surplus had been recovered at the sale, it was impossible for this Court to grant effective relief. [3] Turner, 276 Mont. at 63, 915 P.2d at 804. ¶ 41 Stuivenga engages in the same sort of analysis in the present case. He reasons that because Evans did not post a supersedeas bond or stay disbursement of the interpleaded funds, and because Stuivenga has since paid those funds to third parties, it is impossible for this Court to grant effective relief. The flaw in this analysis is that it fails to account for the possibility of a restitution claim. This Court in Hagerty to which the third party interests factor may be tracedmade a specific point of noting that it could not effect restitution upon a reversal of the district court's writ in that case. 130 Mont. at 558, 304 P.2d at 920. The Hagerty Court distinguished Kurth, where we held that if [the appellant] is entitled to a reversal of the judgment, then [w]e may exercise the right of compelling restitution by our own mandate or direct the lower court to do so. Kurth, 96 Mont. at 612-13, 32 P.2d at 16; see also Hagerty, 130 Mont. at 558, 304 P.2d at 920. The Turner Court, in contrast, did not analyze whether, upon a reversal of the judgment, the lien creditors would have a claim in restitution as necessary to avoid unjust enrichment. Restatement (Third) of Restitution and Unjust Enrichment § 18; see also Restatement (Third) of Restitution and Unjust Enrichment § 18 cmt. f (discussing the rights of purchasers at execution sales); cf. Marriage of Gorton, ¶ 18 (reasoning that although the real estate had already been sold to a third party, the basic question in analyzing mootness is whether effective relief could be granted, and [i]f we were to conclude the [parties'] agreement is unconscionable or invalid, we would remand to the District Court to fashion a remedy which could involve payment from the sale proceeds or other adjustments). [4] Stuivenga, likewise, overlooks the fact that Evans may be entitled to restitution upon a reversal of the judgment in this case.