Court Opinion

ID: 9913516
Source: CourtListenerOpinion
Date Created: 2023-12-28 00:05:36.890557+00
Date Added: 2024-06-11T13:01:09.531668
License: Public Domain

12/27/2023

                                     DA 22-0670
                                                                              Case Number: DA 22-0670

           IN THE SUPREME COURT OF THE STATE OF MONTANA

                                     2023 MT 250

360 RECLAIM, LLC, a Montana limited liability company,

           Plaintiff and Appellee,

     v.

WILLIAM M. RUSSELL, an individual, and MOUNTAIN
VIEW INVESTMENTS, L.C., an Idaho limited liability company,

          Defendants and Appellants.
______________________________________________________

360 RECLAIM, LLC, a Montana limited liability company,

           Defendant, Counter-Plaintiff and Third-Party
           Plaintiff, and Appellee,

     v.

WILLIAM M. RUSSELL,

           Counter-Defendant and Appellant,

     and

U.S. TREASURY by and through the INTERNAL
REVENUE SERVICE,

           Third-Party Defendants.

APPEAL FROM:       District Court of the Eleventh Judicial District,
                   In and For the County of Flathead, Cause No. DV-19-305 B
                   Honorable Robert B. Allison, Presiding Judge
COUNSEL OF RECORD:

         For Appellant William H. Russell:

               William M. Russell, Self-Represented, Pocatello, Idaho

         For Appellant Mountain View Investments, L.C.:

               Nicholas J. Lofing, Garlington, Lohn & Robinson, PLLP, Missoula,
               Montana

         For Appellee:

               Kristin L. Omvig, Benjamin J. Hammer, Omvig Hammer Law, P.C.,
               Kalispell, Montana

                                             Submitted on Briefs: July 19, 2023

                                                       Decided: December 27, 2023

Filed:
                         v   i,,..,
               __________________________________________
                                Clerk

                                      2
Justice Laurie McKinnon delivered the Opinion of the Court.

¶1     William Russell (Russell) and Mountain View Investments, LLC, (MVI), appeal the

judgment of the Eleventh Judicial District Court, Flathead County, entered in favor of 360

Reclaim, LLC (360 Reclaim). We reverse and remand for findings and conclusions to be

made by the District Court consistent with this decision.

¶2     We restate the dispositive issue:

       Did the District Court err in determining 360 Reclaim could include abatement and
       cleanup costs as maintenance expenses under § 25-13-802(3), MCA?

                 FACTUAL AND PROCEDURAL BACKGROUND

¶3     The real property at issue, a twenty-acre parcel of land located near Columbia Falls,

Montana, (Property), has a long and tortuous legal history and has been the subject of

several proceedings before this Court. See KS Ventures, LLC v. Russell, 2019 MT 4N, 395

Mont. 519, 432 P.3d 715 (KS Ventures); Russell v. 360 Reclaim, LLC, 2019 MT 178N, 397

Mont. 552, 455 P.3d 441 (Russell I); 360 Reclaim, LLC v. Russell, 2020 MT 136N, 400

Mont. 559, 463 P.3d 460 (Russell II). Relevant to the instant proceeding, Russell purchased

the Property for $700,000.00 in 2010 and defaulted on loan payments secured by the

Property. In March of 2018, the District Court ordered that the Property be foreclosed and

sold at a sheriff’s sale. Larry Matson (Matson), through his salvage company, 360

Reclaim, purchased the Property on June 1, 2018, for $100,000.00 at the sheriff’s sale.

¶4     On June 12, 2018, 360 Reclaim arrived at the Property with police and forcibly

evicted Russell. Russell was arrested and charged with criminal trespass and obstructing

                                             3
a peace officer; charges which were later dismissed. Russell contended he had a right of

possession during the redemption period which we addressed in Russell I.1 Following

Russell’s removal, 360 Reclaim assumed possession of the Property which it has held to

this day.

¶5       The Property is a scrap yard. At the time of sale, the Property had items belonging

to Russell that included, by way of example, buses; approximately 50 junk vehicles;

trailers; equipment; forklifts; piles of tires; crushed trailer homes; firewood; and hazardous

contaminants. Russell also kept his personal papers and items belonging to his girlfriend

on the Property. Russell alleges that after being forcibly removed from the Property he

was unable to retrieve his personal items and that 360 Reclaim refused to return them. 360

Reclaim maintained they had accommodated Mr. Russell in every way they could. Starting

on June 18, 2018, 360 Reclaim began charging Russell $500.00 per day in storage fees.

This amount was increased to $1,000.00, beginning July 16, 2018.2 360 Reclaim described

these fees as “a very minimal amount of money for what is considered to be on that 20

acres.” The scrap and salvage material located on the Property apparently has significant

value.

¶6       During his years of ownership, Russell was cited multiple times for violating

Flathead County Ordinance No. 6, the county’s public nuisance ordinance. Russell failed

1
  On appeal, Russell again raises whether he was entitled to remain on the Property during the
redemption period. We will not address this issue as it has already been litigated and resolved in
Russell I.
2
 On June 28, 2022, the District Court issued an order finding that 360 Reclaim was “entitled to
$250.00 per day from and after June 18, 2018 through June 21, 2021. . . .”
                                               4
to bring the Property into compliance and was subsequently convicted in 2016 for violating

the ordinance. After taking possession of the Property, 360 Reclaim was also cited for

violation of Ordinance No. 6 on June 1, 2018. The county instructed 360 Reclaim to abate

the nuisance by “means of removal or shielding of the conditions,” and that time for

abatement could be extended through submission of an abatement plan. When 360

Reclaim remained noncompliant, the county sent another letter on December 6, 2018,

advising that no abatement had occurred and giving 360 Reclaim 10 days to provide

information concerning its abatement plan. On March 21, 2019, the county acknowledged

and approved 360 Reclaim’s abatement plan, which had been provided on March 19, 2019,

but advised 360 Reclaim that approval by the Department of Environmental Quality (DEQ)

was also necessary. On March 28, 2019, the DEQ sent 360 Reclaim a letter citing several

DEQ violations.

¶7    During the redemption period from June 2018 until June 2019, 360 Reclaim began

removing, shipping, and selling salvage materials from the Property. 360 Reclaim hired

LM Construction to handle the cleanup. LM Construction is owned by 360 Reclaim. 360

Reclaim cleaned the shop building, removed garbage, paid the utilities, and paid for

propane to keep the buildings heated. Russell claims that once 360 Reclaim came into

possession of the Property they began removing, scrapping, and salvaging his property to

turn a profit. For example, Russell claims that 360 Reclaim sold containers of metals

valued at $4,406.75 in July of 2018 to Pacific Steel. 360 Reclaim does not dispute this

and, in fact, acknowledges that Russell is entitled to a credit in this amount. 360 Reclaim

                                            5
similarly acknowledges that Russell is entitled to a credit of $200.00 for Reclaim’s sale of

a push mower. There are other instances in which Russell and MVI assert appropriate

amounts were not credited, such as 360 Reclaim’s failure to offset $4,000.00 in tenant rents

it collected and an ATV 360 Reclaim took possession of valued at $8,000.00.

¶8     On June 3, 2019, Russell, through MVI, attempted to redeem the Property by wiring

funds in the amount of $117,000.00 to the trust account of 360 Reclaim’s counsel. Russell

calculated the amount to include the purchase price of $100,000.00, one year’s interest at

7.5% ($7,500.00), taxes ($7,243.58), and added a “safety margin” ($2,256.42). The

payment was rejected, however, as 360 Reclaim believed it was insufficient. 360 Reclaim

calculated a different redemption amount of $486,959.77. 360 Reclaim arrived at this total

by adding together the $100,000.00 purchase price, $334,000.00 in storage fees, $7,479.45

in interest, $125.96 for the cost of purchasing padlocks to secure the Property, $502.64 in

liability insurance payments, $8,587.55 in property taxes, $38,147.65 for cleanup work that

LM Excavating had completed on the Property, $866.51 for the cost of propane, and

$1,856.75 in electrical fees. While noting that the sale to Pacific Steel of metals and a

mower was not included as an expense which increased the redemption price, Russell

claims 360 Reclaim did not offset the redemption price by the amount $4,406.75 and

$200.00.    Additionally, Russell was notified that he would continue to be charged

$1,000.00 per day for storage fees and that the per diem interest would accrue at a rate of

$20.55 per day until paid in full.

                                             6
¶9      On June 4, 2019, 360 Reclaim filed motions for a restraining order and preliminary

injunction in the District Court. 360 Reclaim argued Russell had failed to timely and

properly redeem the Property within the one-year redemption period authorized by § 25-

13-802, MCA, as the $117,000.00 he wired was insufficient. 360 Reclaim also argued

Russell had broken into the Property following 360 Reclaim’s rejection of the redemption

amount. The District Court granted 360 Reclaim a restraining order on June 11, 2019, and

a preliminary injunction on July 10, 2019. This Court affirmed the preliminary injunction

on May 26, 2020. Russell II.

¶10     In a separate but subsequently consolidated proceeding, the District Court

considered the issue of storage fees. On November 11, 2021, the court issued an order

concluding that 360 Reclaim was acting as custodian of property owned by Russell and

was therefore entitled to be paid storage costs pursuant to § 71-3-1201, MCA.3 Contrary

to 360 Reclaim’s assertion that $1,000.00 per day in storage costs was reasonable, the

District Court determined a reasonable storage cost was $250.00 per day.

¶11     In August of 2022, 360 Reclaim and MVI filed cross-motions for summary

judgment. The District Court reasoned the dispositive issue was whether 360 Reclaim was

3
  The court entered an extensive order July 11, 2021, in which it concluded that § 71-3-1201, MCA,
provided the basis for 360 Reclaim to secure a lien and foreclose on Russell’s personal property.
On appeal, Russell faults the District Court on the singular basis that it referred to the storage lien
as an “agister’s lien” which is provided for in § 71-3-1211, MCA. While the court did, at times,
refer to it as an agister’s lien which can only apply to livestock, it is clear from review of the court’s
order that the basis for 360 Reclaim’s lien, requested as well in 360 Reclaim’s counterclaim, was
through invoking the provisions of § 71-3-1201, MCA. Further, the question of whether the
District Court’s conclusion that storage costs are not properly a part of the redemption price has
not been disputed on appeal.
                                                    7
entitled to payment for cleanup costs under § 25-13-802, MCA, upon redemption. In an

order granting summary judgment to 360 Reclaim, the District Court first noted that it

would “not consider [storage fees] for purposes of this analysis as they had not yet been

judicially determined. . . .”    However, in a footnote it was clarified that “[a]t its

November 11, 2022, hearing the Court sua sponte determined it would not apply storage

fees to the redemption price.” The District Court next held:

       “[T]he amount of the purchase ($100,000.00), interest ($7,541.10), taxes
       ($8,587.55), and other expenditures such as padlocks ($125.96), liability
       insurance ($502.64), electricity ($1,856.75), and propane ($866.51),
       combine for a redemption price of $119,480.51. Russell paid $117,000.00
       to redeem the property on June 3, 2019. Whether Russell’s redemption
       substantially complied with timeliness requirements, full redemption payout
       requirements, and filing requirements is moot if Reclaim’s $38,147.65
       clean-up costs are included under “maintenance expenses” as stated in
       § 25-13-802(3), MCA. If they are, Russell cannot argue $117,000[.00]
       substantially complies with a needed redemption payment of $157,628.16
       ($119,480.51 + $38,147.65) since Reclaim would be “injured or adversely
       affected” by a difference of over $38,000.00. (internal citations omitted)

¶12    The District Court concluded that “maintenance expenses” did include cleanup costs

and that Russell’s redemption was therefore invalid.

¶13    Russell and MVI appeal.

                                STANDARD OF REVIEW

¶14    We review a district court’s “summary judgment rulings de novo for conformance

to the applicable standards specified in M. R. Civ. P. 56.” Lawrence v. Pasha, 2023 MT

150, ¶ 8, 413 Mont. 149, 533 P.3d 1029. “Summary judgment is proper only when there

is no genuine issue of material fact, and the moving party is entitled to judgment as a matter

of law.” Pasha, ¶ 8. “A genuine issue of material fact is a fact materially inconsistent with

                                              8
proof of an essential element of a claim or defense at issue.” Pasha, ¶ 8. The moving party

“has the initial burden of showing a complete absence of any genuine issue of material fact

on the Rule 56 record and that the movant is accordingly entitled to judgment as a matter

of law.” Pasha, ¶ 8. “[T]he burden then shifts to the non-moving party to prove, by more

than mere denial and speculation, that a genuine issue [of fact] does exist.” Osterman v.

Sears, 2003 MT 327, ¶ 17, 318 Mont. 342, 80 P.3d 435. When determining whether there

exists a genuine issue of material fact, “all facts considered material in light of the

substantive principles that entitle the moving party to judgment as a matter of law and all

reasonable inferences are to be drawn in favor of the party opposing summary judgment.”

Weber v. Interbel Tel. Coop., Inc., 2003 MT 320, ¶ 5, 318 Mont. 295, 80 P.3d 88.

                                      DISCUSSION

¶15    The redemption statute at issue is § 25-13-802, MCA, which addresses the time for

redemption and the amount to be paid. Section 25-13-802, MCA, provides:

       The judgment debtor or redemptioner may redeem the property from the purchaser
       any time within 1 year after the sale on paying the purchaser:
       (1) the amount of the purchase with interest at a rate established by the judgment in
           the action that led to the execution sale, up to the time of redemption;
       (2) the amount of any assessment or taxes that the purchaser may have paid on the
           property after purchase and interest on that amount;
       (3) the amount of any repairs, maintenance expenses, or other expenditures that the
           purchaser may reasonably have made after purchase for the maintenance of the
           property, with interest on the amounts from the date of expenditure; and
       (4) if the purchaser is also a creditor having a prior lien to that of the redemptioner
           other than the judgment under which the purchase was made, the amount of the
           lien with interest.

Thus, as relevant here, § 25-13-802, MCA, provides for a one-year redemption period,

interest on the purchase price, taxes and interest on the tax amount, and maintenance

                                              9
expenses for the property. The parties dispute on appeal only the issue of maintenance

expenses.

¶16    We have consistently held that “redemption statutes are remedial in nature and are

to be liberally construed and that in the absence of some form of prejudice to parties

involved, substantial compliance with redemption statutes is sufficient to affect a

redemption in connection with mortgage foreclosure.” Savoy v. Cascade Cty. Sheriff’s

Dept., 268 Mont. 507, 513, 887 P.2d 160, 164 (1994). Further, “foreclosure is in the nature

of a forfeiture, which the law does not favor.” Savoy, 268 Mont. at 513-14, 887 P.2d at

164. Consistent with the foregoing:

       [R]ules and statutes dealing with redemption are regarded as remedial in
       character and should be given liberal construction and application to permit
       a property owner who can pay his debts to do so, and thus make his creditor
       whole, and save his property. Therefore, if a debtor, acting in good faith, has
       substantially complied with the procedural requirements of the rule in such a
       manner that the lender mortgagee is not injured or adversely affected, and is
       getting what he is entitled to, the law will not aid in depriving the mortgagor
       of his property for mere falling short of exact compliance with technicalities.

Savoy, 268 Mont. at 514, 887 P.2d at 164 (quoting United States v. Loosley, 551 P.2d 506,

508 (1976)). “In taking possession of the property the buyer is taking a calculated chance

that the mortgagor will be unable to redeem and thus the buyer may have gained the

property at a bargain price.” Lester v. J. & S. Inv. Co., 171 Mont. 149, 153, 557 P.2d 299,

301 (1976). “When the mortgagor redeems the property, and the buyer has had it managed

by someone, that is part of the price of his investment -- a chance that he takes.” Lester,

171 Mont. at 153, 557 P.2d at 301.

                                             10
¶17    Section 25-13-802(3), MCA, provides that a redemptioner must pay the amount of

any repairs and maintenance expenses, “for the maintenance of the property.” (Emphasis

added). “Property,” under the redemption statutes, means the real property purchased at

the foreclosure sale, not the personal property of the debtor.          Thus, in construing

§ 25-13-802, MCA, we cannot insert what has been omitted by holding that “property”

includes both real and personal property. Part 8 and the redemption statutes contained

therein deal only with the redemption of real property and, indeed, Part 8 is titled

“Redemption of Real Property.” Further, Part 7, which addresses sale and execution upon

foreclosure, sets forth the interest transferred, which notably does not include personal

property: “[u]pon a sale of real property, the purchaser is substituted to and acquires the

right, title, interest, and claim of the judgment debtor thereto. . . .” Section 25-13-710,

MCA. Accordingly, “maintenance expenses” must be for maintenance of the real property

and not maintenance of the redemptioner’s personal property.

¶18    Here, 360 Reclaim’s expenses are related to the cleanup of personal property created

by Russell on his real property. 360 Reclaim’s expenses are not attributable to maintenance

of the real property; rather 360 Reclaim purchased the real property knowing of its

condition and the personal property that was there. 360 Reclaim took a calculated risk

based on a bargain price at the foreclosure sale. 360 Reclaim, in the salvage business itself,

knew the property was a scrap yard littered with Russell’s personal property. 360 Reclaim

cannot add to the redemption price expenses for cleaning up Russell’s personal property,

which are not provided for in the redemption statute and which would be inconsistent with

                                             11
the requirement to broadly construe redemption statutes to allow debts to be repaid and the

general disfavor in the law of foreclosure. Redemption statutes are remedial in nature and

must be construed broadly. 360 Reclaim seeks a windfall by pursuing both storage costs

and $38,147.65 in cleanup costs as part of the redemption price. The District Court’s

decision that storage costs are not part of the redemption price does not mean that 360

Reclaim must store Russell’s personal property without recourse. However, 360 Reclaim

is not entitled to claim cleanup costs for Russell’s personal property as part of the

redemption price.

¶19    Having concluded that the District Court erred by including cleanup costs as

maintenance costs, the question remains whether Russell’s tendered redemption price of

$117,000.00 was valid. The parties do not dispute the purchase price, interest rate, or tax

amount under § 25-13-802, MCA. Neither does any party dispute the amount of 360

Reclaim’s cleanup costs. In 360 Reclaim’s summary judgment motion, it provided a

breakdown of what it believed Russell owed. 360 Reclaim represented that the total

redemption cost was $240,771.41, which included $38,147.65 in cleanup costs and

$87,750.00 in storage costs. If cleanup costs were improperly included, as we determine

they were, and storage costs are not included in the redemption price, as the District Court

ordered, then 360 Reclaim’s redemption, based on 360 Reclaim’s figures, is reduced to

$114,873.76. The District Court, however, found that if storage costs and cleanup fees

were excluded, the redemption amount would be $119,480.514 Based on the District

4
 We note that the difference between $119,480.51 and $114,873.76 is over $4,606.75, the amount
Russell claims he was owed for the sale of the scrap metal and the mower. It appears the District
                                                12
Court’s calculations, Russell’s tendered redemption amount of $117,000.00 fell short

$2,480.51 of the amount 360 Reclaim argued they were entitled to. Putting aside whether

Russell’s tender of $117,000.00 “substantially complied” with a redemption price of

$119,480.51, we note that Russell and MVI maintain the redemption price did not consider

various credits that would reduce the redemption price. Russell maintains he was not

credited for the $4,406.75 sale of metals to Pacific Steel, the $200.00 sale of his mower,

tenant rents in the amount of $4,000.00, and a converted ATV valued at $8,000.00.

Accordingly, we remand for the District Court to determine what credits, if any, Russell

and MVI are entitled to against the redemption price and whether Russell’s offer of

redemption was in substantial compliance with the redemption statutes. Further, from our

review of the record, we do not discern there were any objections made that specific items

of the $38,147.65 in cleanup costs were attributable only to real property or only to personal

property. Rather, the parties argued generally that all cleanup costs related either to real

or personal property.

                                      CONCLUSION

¶20    We conclude that “maintenance expenses,” as used in § 25-13-802(3), MCA, does

not include cleanup costs for the removal of a redemptioner’s personal property.

¶21    Reversed and remanded for findings and conclusions consistent with this decision.

                                                  /S/ LAURIE McKINNON

Court did not credit Russell this amount. However, the District Court will be able to make any
necessary clarifications on remand.
                                             13
We Concur:

/S/ JIM RICE
/S/ BETH BAKER
/S/ DIRK M. SANDEFUR
/S/ JAMES JEREMIAH SHEA

Justice James Jeremiah Shea, concurring.

¶22    I concur with the Court’s analysis and resolution of the dispositive issue and with

the Court’s decision to remand this matter for the District Court to determine what credits,

if any, Russell and MVI may be entitled to against the redemption price. Opinion, ¶ 19.

Since the matter is being remanded for this purpose, I likewise concur that it is procedurally

appropriate for the District Court to reassess, in light of this Opinion, whether Russell’s

redemption offer was in substantial compliance with the redemption statutes. Opinion,

¶ 19. I write separately because I think it bears noting that as it pertains to MVI’s $117,000

redemption offer on Russell’s behalf, within the context of the specific history of this case,

I strain to conceive how the amount of the redemption offer did not substantially comply

with what we have determined was a proper redemption amount of $119,480.51.

¶23    Russell’s redemption offer amounts to 98% of what we have determined to be the

correct redemption price—and that is before factoring in any potential credits to which

Russell and MVI may be entitled. Opinion, ¶ 19. This is not to suggest that a redemption

offer that amounts to 98% of the redemption price might always automatically constitute

substantial compliance. “Substantial compliance” should not be mistaken for “close

enough.” If, for example, the redemption price is concrete and undisputed, even a liberal

                                             14
construction of the redemption statutes may not necessarily allow the redemptioner to

redeem by offering a lesser amount. But the redemption amount here was far from concrete

or undisputed.

¶24       When MVI tendered the $117,000 redemption offer on Russell’s behalf in June

2019, 360 Reclaim responded with a redemption amount of $486,959.77—more than four

times what we have determined to be the correct redemption price. Opinion, ¶ 8. By the

time 360 Reclaim and MVI cross-motioned for summary judgment in 2022, 360 Reclaim’s

calculation had been more than cut in half to $240,771.41—still more than double what we

have determined to be the correct redemption price. While both parties’ respective

calculations may have missed the mark, 360 Reclaim was shooting at an entirely different

target.

¶25       As the Court observes, this property has had a long and tortuous history, and in the

annals of that history Russell is the author of much of his own misfortune. But that history

is not the narrow issue before us. Redemption rules and statutes are “remedial in character

and should be given liberal construction and application to permit a property owner who

can pay his debts to do so, and thus make his creditor whole, and save his property.” Savoy,

268 Mont. at 514, 887 P.2d at 164. Redemption rules and statutes are not intended to

bestow a windfall upon any party. In that regard, if it is ultimately determined that Russell

properly redeemed the property, 360 Reclaim may yet have a claim for reasonable costs

expended during the term of its possession of the property that are not recoverable under

the redemption statutes. As the Court notes, and as MVI acknowledges in its briefing on

                                               15
appeal, there may be recourse in a separate action—for example, a claim for unjust

enrichment. 360 Reclaim’s remedy to recover these costs, however, does not lie within the

redemption statutes.

                                                /S/ JAMES JEREMIAH SHEA

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