Court Opinion

ID: 885521
Source: CourtListenerOpinion
Date Created: 2013-06-05 03:35:30.397987+00
Date Added: 2024-06-11T09:12:25.250862
License: Public Domain

file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm

                                                               No. 98-635

                          IN THE SUPREME COURT OF THE STATE OF MONTANA

                                                             2000 MT 66N

                                            AMCO BUILDING SYSTEMS, INC.,

                                                       a Montana Corporation

                                          Plaintiff and Respondent/Cross Appellant,

                                                                      v.

                                         JOHN P. STOKES, PAMELA J. STOKES,

                                    KEITH A. EDWARDS, WILLMA J. EDWARDS,

                                    ROBERT K. EDWARDS, JOHN M. EDWARDS,

                                 and CONRAD RANCH, INC., a Montana Corporation,

                                                     Defendant and Appellants.

                         APPEAL FROM: District Court of the Twentieth Judicial District,

                                                  In and for the County of Lake,

                                     The Honorable Robert S. Keller, Judge presiding.

                                                     COUNSEL OF RECORD:

                                                             For Appellant:

                                           John P. Stokes, Bigfork, Montana, pro se

                                                            For Respondent:

file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm (1 of 12)4/5/2007 2:05:44 PM
 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm

                             W. Arthur Graham, Sullivan & Tabaracci, Missoula, Montana

                                                 Submitted on Briefs: July 1, 1999

                                                       Decided: March 16, 2000

                                                                    Filed:

                                    __________________________________________

                                                                     Clerk

Justice James C. Nelson delivered the Opinion of the Court.

¶1.Pursuant to Section I, Paragraph 3(c), Montana Supreme Court 1996 Internal Operating
Rules, the following decision shall not be cited as precedent but shall be filed as a public
document with the Clerk of the Supreme Court and shall be reported by case title,
Supreme Court cause number, and result to the State Reporter Publishing Company and to
West Group in the quarterly table of noncitable cases issued by this Court.

¶2.Appellants, John and Pamela Stokes, appeal the judgment of the Twentieth Judicial
District Court, Lake County, in which the court found in favor of the respondent, Amco
Building Systems, Inc., in a lien foreclosure action. Pursuant to a written contract between
the parties, Amco agreed to provide the material and labor to construct a metal building on
the Stokes' property in Lake County, Montana, and the Stokes agreed to pay Amco
$55,000. Upon completion of the building, however, the Stokes refused to pay the
outstanding amount due, $27,990, alleging that Amco breached the contract. Instead, the
Stokes offered in writing to pay Amco $19,484 to extinguish the obligation. Amco filed a
construction lien on the Stokes' property for the full amount due. On October 31, 1994,
Amco commenced a foreclosure action on the lien in Lake County. After almost four
years of litigation, a jury returned a general verdict in Amco's favor in the amount of
$16,500. In its judgment, entered June 23, 1998, the District Court awarded Amco
$16,500 on its lien, $436.31 in costs, plus $2,547.69 in attorney fees, for a total judgment
of $19,484--the same amount the Stokes originally offered to pay Amco. From this, the
Stokes appeal.

¶3.We restate the following issues:

 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm (2 of 12)4/5/2007 2:05:44 PM
 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm

¶4. Did the Stokes' written offer to pay part of the amount owing defeat the validity of a
construction lien or extinguish the underlying debt?

¶5. Is a general contractor who supplies materials and labor through third parties and
subcontractors required to give notice of right to file a lien?

¶6. Did Amco erroneously obtain relief by false and conflicting testimony, destroying
discovery documents, and fabricating evidence?

¶7. Did the District Court abuse its discretion by denying the Stokes' right to amend their
pleadings or allowing Amco's amended complaint?

¶8. Was it error for the District Court not to require Amco to prove complete performance
or enhancement?

¶9. Did the District Court correctly allow venue of this action to be in Lake County?

¶10. Did the District Court err by ordering the Stokes' entire property to be sold at sheriff
sale?

¶11.Amco raises three issues on cross-appeal, asserting that it should have been awarded
more money and requesting a new trial. The following are the issues Amco raises:

¶12. Did the District Court err by failing to instruct the jury not to consider the Stokes'
claims for offsets or damages which were previously rejected as a result of a directed
verdict?

¶13. Did the District Court abuse its discretion and commit prejudicial error by refusing to
allow Amco to submit its rebuttal expert witness?

¶14. Did the District Court abuse its discretion in limiting the award of attorney fees and
denying pre-judgment interest?

                                                      ISSUES ON APPEAL

                                                                 ISSUE 1

¶15.Did the Stokes' written offer to pay part of the amount owing defeat the validity of a

 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm (3 of 12)4/5/2007 2:05:44 PM
 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm

construction lien or extinguish the underlying debt?

¶16.Section 28-1-1201, MCA, provides that an obligation is extinguished by an offer of
performance when it is made in conformity to the rules prescribed in Title 28, Chapter 1,
Part 12, and with the intent to extinguish the obligation. The Stokes contend that their
original offer to pay Amco $19,484 should have extinguished their obligation to pay any
outstanding amount due. Accordingly, they believe they should be the prevailing party and
should not owe Amco anything.

¶17.In support of their argument, the Stokes refer to the District Court's conclusion that
the Stokes' written offer to pay Amco a particular sum of money was equivalent to the
actual production and tender of the money and that pursuant to § 28-1-1202, MCA,
Amco's refusal to accept the offer stopped the running of interest. They suggest that the
same rationale should extinguish their obligation to pay Amco the outstanding amount due.

¶18.The Stokes fail to recognize, however, the applicability of § 28-1-1225, MCA, which
provides that "[a]n obligation for the payment of money is extinguished by a due offer of
payment if the amount is immediately deposited in the name of the creditor with some
bank of deposit within the state of good repute and notice thereof is given to the creditor."
Under this rule, the Stokes' obligation cannot be extinguished because there is no evidence
that they deposited their offer of payment with a bank in Amco's name prior to Amco's
filing of a lien.

¶19.Furthermore, the Stokes added conditions to their offer that were not in the parties'
contract. Contrary to § 28-1-1211(1), MCA, which requires that an offer of performance
be made free from any conditions, the Stokes demanded that Amco provide original lien
waivers as to all suppliers and laborers, plus they proposed deductions from the amount
due. Instead of offering Amco the outstanding balance of $27,990, they offered to pay
Amco $19,484. An offer of payment that modifies the original contract cannot extinguish
a party's obligation.

¶20.The Stokes contend that because Amco breached the contract, they are excused from
complying with these statutes. In particular, they believe that because Amco used
subcontractors, which allegedly was not part of the contract and in effect caused Amco to
pledge the Stokes' property for its own credit to obtain materials, Amco unilaterally
created a condition precedent to furnish proof that its creditors were paid before the Stokes
were obligated to make final payment to Amco. The Stokes cite no authority to support

 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm (4 of 12)4/5/2007 2:05:44 PM
 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm

their argument.

¶21.The Stokes also contend that because Amco's position at trial was limited to whether
the Stokes offered enough money, Amco cannot now argue that the Stokes did not
properly tender payment nor can it characterize the offer as an offer to settle. In our
assessment, however, Amco's argument simply is in response to the argument the Stokes
make on appeal. Despite its reference to the Stokes' offer as an "offer of settlement,"
Amco does not characterize the offer any differently than the Stokes presented it.

¶22.Based on the Stokes' failure to comply with the applicable statutes, we conclude that
the Stokes' written offer to pay part of the amount owing did not defeat the validity of
Amco's construction lien or extinguish the underlying debt.

                                                                 ISSUE 2

¶23.Is a general contractor who supplies materials and labor through third parties and
subcontractors required to give notice of right to file a lien?

¶24.Amco did not provide the Stokes a notice of right to file a lien. It claims that it was
exempt from the notice requirement pursuant to § 71-3-531(1)(a), MCA, because it
"furnishe[d] services or materials directly to the owner at the owner's request" to construct
the building.

¶25.The Stokes disagree based on the fact that Amco utilized third-party suppliers and
subcontractors. The Stokes argue that Amco misrepresented itself as being able to perform
all the work needed to construct the building and as having all the necessary supplies
available in inventory.

¶26.The contract between the parties specified that "Amco proposes . . . to furnish all
materials and labor necessary to install, construct and place the described herein."
Contrary to the Stokes' argument, this language does not prohibit Amco from utilizing
suppliers and subcontractors, and acting as a general contractor. The existence of a
contractual relationship between the parties is the basis upon which Amco furnished
materials and labor "directly" to the Stokes. Thus, Amco was exempt from the lien notice
requirement.

                                                                 ISSUE 3

 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm (5 of 12)4/5/2007 2:05:44 PM
 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm

¶27.Did Amco erroneously obtain relief by false and conflicting testimony, destroying
discovery documents, and fabricating evidence?

¶28.Here, the Stokes argue that an attorney or counselor who is guilty of any deceit or
collusion or consents to any deceit or collusion with the intent to deceive the court or a
party forfeits to the party injured treble damages. See § 37-61-406, MCA. In accordance
with this statute, the Stokes must prove that the alleged deceit caused such damage to
impact the lower court's decision and warrant a reversal. See Barrett v. Holland & Hart
(1992), 256 Mont. 101, 109-10, 845 P.2d 714, 719. The Stokes are concerned that
evidence presented to the jury by Amco's allegedly deceitful acts influenced the jury's
decision against them.

¶29.The Stokes call attention to Plaintiff's Exhibit no. 16, an engineer's document which
they allege was fabricated to support false testimony regarding whether Amco had the
proper authority to alter installation of the trusses on their building. The contract between
Amco and the Stokes specifies that while the approximate bay spacing for the trusses
would be ten feet, the final spacing would be left to the engineer. The Stokes contend that
Amco tried to hide the fact that it altered the truss installation without the authority of an
engineer. Notwithstanding, Amco's witness admitted during the Stokes' cross-examination
that Plaintiff's Exhibit no. 16 was not the same document offered in discovery and that a
four-ply truss was placed on a ten foot center instead of the five-foot center recommended
for a two-ply truss in the installation instructions.

¶30.Evidence also shows that Amco used a lesser-quality, less expensive five-sack cement
instead of the five-and-one-half-sack cement which the contract required. Allegedly,
Amco acknowledged in an affidavit that five-sack cement had been delivered to the site,
but then at trial contradicted itself by stating that it "just now learned" that five-sack
cement was used.

¶31.Upon our review, Amco's purported deceit does not warrant a reversal of the case. The
record shows that the Stokes exercised ample opportunity at trial to question Amco about
the installation of the trusses and the cement that was used and that they were able to
provide the jury sufficient information so the jury could make an informed decision.

¶32.Next, the Stokes argue that Amco withheld from them copies of lien waivers from
third-party suppliers and subcontractors, and that a particular lien waiver that was
introduced had been altered. Plaintiff's Exhibit no. 15 is a copy of a lien waiver dated

 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm (6 of 12)4/5/2007 2:05:44 PM
 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm

April 30, 1994, for which Amco's bill appears to not have been paid until May 3 or May 6,
1994, sometime after Amco alleged full and complete performance of its contract with the
Stokes. However, given our foregoing conclusion that the use of third parties and
subcontractors was not a breach of contract, evidence of the lien waivers was not a
necessary factor in the jury's determination.

¶33.The Stokes further contend that Amco destroyed records and documents and
prevented evidence from being admitted at trial. The Stokes, however, do not draw our
attention to any particular exhibits, records or documents that would have changed the
outcome of this case.

¶34.Finally, the Stokes allege that Amco deceitfully obtained satisfaction of judgment and
entered a notice of entry of judgment in error. We are simply unable to determine from the
Stokes' brief what sort of error they claim. It appears, however, that the Stokes brought
their claim before the District Court post-trial and the court granted them relief.
Accordingly, there is no basis for reversal.

¶35.We conclude that none of the Stokes' arguments prove that Amco obtained erroneous
relief.

                                                                 ISSUE 4

¶36.Did the District Court abuse its discretion by denying the Stokes' right to amend their
pleadings or allowing Amco's amended complaint?

¶37.Three years after Amco commenced this action, the Stokes filed a motion to amend
and supplement their pleadings in order to "clarify any misunderstanding of [their]
counterclaims that were through inadvertence, and oversight mislabeled as an affirmative
defense." The Stokes contend that they wanted to include a counterclaim for fraud to
support a request for punitive damages. By the court's denial of their motion, the Stokes
now argue that they were prejudiced from changing their legal theory.

¶38.Rule 15(a), M.R.Civ.P., provides that a court should freely allow amendment when
justice so requires. In this matter, justice did not require an amendment of the pleadings
because John Stokes had listed a number of affirmative defenses and claims relative to
fraud in his original pleadings. As noted in the trial transcript, the Stokes were allowed to
raise all the issues at trial which would have been raised in an amended counterclaim.

 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm (7 of 12)4/5/2007 2:05:44 PM
 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm

¶39.The Stokes further contend that Amco prejudicially and without leave of the court
filed an amended summons and complaint, and served it only on Pamela Stokes. However,
we conclude that there was no prejudice because the only difference in Amco's amended
complaint compared to its original complaint was the title of the case referring to "Pamela
J. Stokes" instead of "Paula J. Stokes." Furthermore, the record reveals that the fact that
John Stokes was not served the amended complaint did not interfere with his ability to
participate effectively in the pretrial proceedings.

                                                                 ISSUE 5

¶40.Was it error for the District Court not to require Amco to prove complete performance
or enhancement?

¶41.The Stokes believe that because Amco in its complaint pled for the full amount due of
$27,990, its threshold of proof should have been full and complete performance, nothing
less. They allege that it was error for the District Court to allow the jury to award Amco
$16,500 in a general verdict without an explanation, because the jury's verdict represents
only partial performance under the contract. They argue that the reduction in Amco's
award reflects quantum meruit relief, which Amco did not plead.

¶42.Once again, the Stokes fail to support their argument. Based on our assessment, the
amount that the jury awarded Amco reflects the offsets and credits the Stokes successfully
established pursuant to their own breach of contract claim. Section 27-1-311, MCA,
allows for the appropriate measure of damages in the amount which compensates a party
aggrieved for the detriment which was proximately caused thereby.

¶43.The Stokes contend that Amco should not have received an award because it breached
the contract. They argue the condition of the structure Amco built is defective, it is not an
enhancement to the property, and it was completed thirteen days after the agreed upon
completion date despite the language in the contract that time was of the essence. In the
alternative, the Stokes argue that Amco itself produced evidence to support an award no
greater than $12,000.

¶44.In our review of a jury verdict in a civil case, the prevailing party is entitled to any
reasonable inference that can be drawn from the facts which are proven; we will not
disturb the jury's findings unless they are inherently impossible to believe. See Sandman v.
Farmers Ins. Exchange, 1998 MT 286, ¶ 41, 291 Mont. 456, ¶ 41, 969 P.2d 277, ¶ 41. The

 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm (8 of 12)4/5/2007 2:05:44 PM
 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm

Stokes do not convince us that the jury's verdict, which suggests there was substantial
performance on Amco's behalf and no material breach, is inherently impossible to believe.
Thus, there was no error.

                                                                 ISSUE 6

¶45.Did the District Court correctly allow venue of this action to be in Lake County?

¶46.The Stokes next argue that this case should not have been heard in Lake County based
on a provision in the contract which states that in "any suit or action . . . , Purchaser agrees
that the venue of said action shall be in Missoula County." This venue provision is not
controlling, however, since the relevant action was not on the contract, but rather an action
to foreclose the lien.

¶47.Pursuant to § 71-3-563(1), MCA, the provisions of Title 25 are applicable to and
constitute the rules of practice in proceedings involving construction liens. Section 25-2-
123(1)(d), MCA, provides that the proper place of trail for the foreclosure of liens and
mortgages on real property is the county where the subject of the action is located.
Similarly, § 25-2-123(3), MCA, provides that the proper place of trial for all actions for
the enforcement of liens upon real property is the county in which the real property
affected by such action is situated. Thus, statutory law provides that the proper venue for
Amco's foreclosure action was in Lake County.

¶48.The Stokes are disturbed that in a previous action involving Amco and a different
contracting party, Amco argued that the proper venue for a foreclosure action under the
same contract provision was Missoula County. The Stokes cite to an unpublished opinion
issued by this Court. Such decisions are not citeable as precedent. Furthermore, the fact
that an attorney takes conflicting positions in different cases does not sway our decisions.

¶49.The Stokes' argument also must fail because they did not properly raised the venue
issue in the District Court. When they first raised the issue in June 1997, they asked the
District Court to dismiss the action. Instead, they should have sought a change of place of
trial. They did not seek a change of place of trial until February 1998, almost three-and-
one-half years after the action commenced. Their motions were not timely and would have
been overly burdensome to the judicial system if a change of venue was permitted.

¶50.Thus, we conclude that the District Court correctly allowed venue of this action to be

 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm (9 of 12)4/5/2007 2:05:44 PM
 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm

in Lake County.

                                                                 ISSUE 7

¶51.Did the District Court err by ordering the Stokes' entire property to be sold at sheriff
sale?

¶52.The Stokes' land in Lake County was mortgaged to the Edwards and to Conrad Ranch,
Inc. prior to construction. The District Court, in recognizing this, ordered that "[t]he rights
of Amco Building Systems, Inc., under the construction lien are subordinate to the interest
of Keith A. Edwards, Wilma J. Edwards, Robert K. Edwards, John M. Edwards and
Conrad Ranch, Inc." and that "out of proceeds of sale, the Sheriff shall first recover fees,
costs and disbursements, then pay to the person listed . . . all amounts owing, then pay to
Amco Building Systems, Inc., the amounts due under this judgment." However, no order
of sale was issued. Nearly one month after the court entered judgment, it ordered a stay on
the foreclosure until August 19, 1998, to allow the Stokes to either pay and fully satisfy
the judgment and interest thereon or to place the funds in an account payable to Amco.
The Stokes placed the money in an account and on August 19, 1998, Amco withdrew it
pursuant to the authority of the court.

¶53.The Stokes' concern appears to be based on the alleged fact that the court's order of a
sheriff's sale caused the Edwards and Conrad Ranch, Inc., to accelerate their mortgage and
declare the Stokes in default. This, in effect, allegedly caused the Stokes to take out a
different mortgage on less desirable terms to pay off the underlying mortgage, which cost
them $100,000 more. The Stokes argue that the District Court should not have ordered the
Edwards' and Conrad Ranch, Inc.'s, interests to be sold as part of the foreclosure and
sheriff's sale. They suggest that, instead, the building Amco constructed could have been
disassembled and removed not to disturb the Edwards' and Conrad Ranch, Inc.'s superior
interests.

¶54.However, the Stokes did not make this argument to the District Court. We find no
evidence in the record to substantiate their claim of an accelerated mortgage or a new
mortgage. Also, we find no objection to the court's order of a sheriff's sale. An objection
must be made and it must be clear to the court so that the court has an opportunity to
correct itself. See State v. Huerta (1997), 285 Mont. 245, 261, 947 P.2d 483, 493. In the
absence of an objection on the record, we do not consider the issue.

 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm (10 of 12)4/5/2007 2:05:44 PM
 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm

¶55.The District Court's judgment and decree of foreclosure is affirmed.

                                               ISSUES ON CROSS-APPEAL

¶56.On cross-appeal, Amco challenges the District Court's judgment, asserting that the
District Court should have awarded it more money and requesting a new trial. However,
after collecting $19,484 from the Stokes, Amco filed a partial satisfaction of judgment
noting only that the amounts remaining unsatisfied are post-judgment interest and attorney
fees that were awarded separately by this Court. By collecting the money and filing a
partial satisfaction of judgment, Amco has waived its cross-appeal.

¶57.This Court has held that the acceptance of the fruits of a judgment is inconsistent with
the prosecution of an appeal which attacks the judgment. The general rule is that:

the right to accept the fruits of a judgment and at the same time to prosecute an appeal
from it are not concurrent; on the contrary, they are wholly inconsistent rights. The
election of one necessarily excludes the enjoyment of the other.

Ferguson v. Town Pump, Inc. (1978), 177 Mont. 122, 127, 580 P.2d 915, 918 (citing Peck v.
Bersanti (1935), 101 Mont. 6, 9, 52 P.2d 168, 169).

¶58.There is an exception to this rule, however:

Where the reversal of a judgment cannot possibly affect an appellant's right to the benefit
accepted under a judgment, then appeal may be taken and will be sustained despite the fact
that the appellant has sought and secured such benefit.

Ferguson, 177 Mont. at 127 , 580 P.2d at 918. In cases such as Ferguson, Oster v. Oster (1980), 186
Mont. 160, 606 P.2d 1075, and Maloney v. Heer (1993), 257 Mont. 500, 850 P.2d 957, this Court
upheld the exception when on appeal the appellants asked only that their damage awards be increased
and where an increase in damages was the only possibility. This is not the case here.

¶59.Amco contends that the trial court committed prejudicial error in instructing the jury
as to matters affecting damages and by refusing to allow it to submit testimony from an
expert rebuttal witness. Amco claims that, while Stokes received a fair trial, it did not. As
relief for these claims of error, Amco requests that we reverse the judgment and order a
new trial. Were we to grant the relief requested by Amco, there remains the possibility that
the fact-finder in the new trial might award Amco less than it was awarded in the first trial.

 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm (11 of 12)4/5/2007 2:05:44 PM
 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm

That being the case the general rule articulated in Ferguson applies. Amco's election to
accept and to satisfy the damages judgment is inconsistent with its appeal of that same
judgment. Consequently, we decline to address Amco's cross-appeal issues.

¶60.Amco may still seek to collect post-judgment interest on the judgment awarded and
the attorney fees awarded by this Court, neither of which obligations were satisfied. Post-
judgment interest, however, accrued by reason of the underlying judgment. Once the
judgment was satisfied, interest ceased to accrue and the amount of post-judgment interest
owing is frozen as of the date of satisfaction of the judgment. Furthermore, as to the prior
awards of attorney fees by this Court, neither of those would have been the subject of a
new trial.

¶61.Affirmed.

                                                    /S/ JAMES C. NELSON

We Concur:

                                                        /S/ J. A. TURNAGE

                                                      /S/ KARLA M. GRAY

                                                /S/ TERRY N. TRIEWEILER

                                               /S/ W. WILLIAM LEAPHART

 file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/98-635%20Opinion.htm (12 of 12)4/5/2007 2:05:44 PM