Cook v. Buscher Constr. & Dev., Inc.

551 P.3d 811

2024 MT 137

Ralph COOK, Barbara Cook, Individually and on behalf of classes of similarly situated Montanans, Plaintiffs and Appellees,

v.BUSCHER CONSTRUCTION AND DEVELOPMENT, INC., a Montana Corporation, Buscher Construction, Ltd., a Montana Corporation, Aviara, Inc., a Montana Corporation, Falcon Ridge, LLC, a Montana Limited Liability Company, Falcon Ridge II, LLC, a Montana Limited Liability Company, Dennis Buscher, Linda Buscher, Trent Buscher, and Does 1-10, Defendants and Appellants,andMetro Realtors, LLP, a Montana Limited Liability Partnership, Cross-Plaintiff,

v.Buscher Construction and Development, Inc., a Montana Corporation, Buscher Construction, Ltd., a Montana Corporation, Aviara, Inc., a Montana Corporation, Falcon Ridge, LLC, a Montana Limited Liability Company, Falcon Ridge II, LLC, a Montana Limited Liability Company, Dennis Buscher, Linda Buscher, Trent Buscher, and Does 1-10, Cross-Defendants.

DA 23-0600

Supreme Court of Montana.

Submitted on Briefs: March 27, 2024

Decided: July 2, 2024

APPEAL FROM: District Court of the Thirteenth Judicial District, In and For the County of Yellowstone, Cause No. DV 19-575, Honorable Rod Souza, Presiding Judge

For Appellants: John G. Crist, Crist, Krogh, Alke & Nord, PLLC, Billings, Montana

For Appellees: John Heenan, Heenan & Cook, PLLC, Billings, Montana David P. Legare, David Legare Law, PLLC, Billings, Montana Tucker P. Gannett, Gannett Law, PLLC, Billings, Montana Amanda Beckers Sowden, Sowden Law Group, PLLC, Billings, Montana

Justice Beth Baker delivered the Opinion of the Court.

¶1 Buscher Construction and Development, Inc., et al., appeal the order of the Montana Thirteenth Judicial District Court, Yellowstone County, certifying a class action of homeowners in the Falcon Ridge subdivision in the Billings Rimrocks area who alleged damage to their homes from differential soil settlement. We restate the issues on appeal as follows:

1. Whether the District Court abused its discretion in determining that the proposed class satisfied M. R. Civ. P. 23(a)’s prerequisites to class certification.

2. Whether the District Court abused its discretion by certifying the class under M. R. Civ. P. 23(b)(3).

¶2 We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

¶3 Plaintiffs, including class representatives Ralph and Barbara Cook, are homeowners in the Falcon Ridge subdivision ("Subdivision") in Billings, Montana. The Subdivision encompasses 139 lots with more than 180 private dwellings comprising "Falcon Ridge I" and "Falcon Ridge II." Defendants Buscher Construction and Development, Inc. ("Buscher Construction and Development"), Buscher Construction, Ltd. ("Buscher Construction"), Aviara, Inc. ("Aviara"), Falcon Ridge, LLC ("Falcon Ridge"), Falcon Ridge II, LLC, Dennis Buscher, Linda Buscher, and Trent Buscher (collectively, the "Buschers") are developers, builders, and realtors of the Subdivision. Falcon Ridge developed Falcon Ridge I. Aviara and Rims Development, LLC developed Falcon Ridge II. Aviara and 4 D’s Development, LLC each owned fifty percent of the membership interests in Falcon Ridge. Dennis and Linda Buscher each owned twenty-five percent of shares in Aviara. Dennis, Linda, and Trent Buscher were real estate agents for the properties built by Buscher Construction.

¶4 In September 2020, Plaintiffs filed an amended complaint¹ against the Buschers for

their negligent design and development of the subdivisions known as Falcon Ridge, Reflections at Copper Ridge, Copper Ridge, and Copper Ridge West (collectively, the "Subdivision"), their failure to construct homes within the Subdivision so as to mitigate against the possibility of differential settlement on hydro-collapsible soils, and their failure to disclose material adverse facts known to them' as the original owners and of all the lots within the Subdivision.

¶5 Falcon Ridge hired Engineering, Inc. for engineering work on Falcon Ridge in- frastructure. Engineering, Inc. then hired Terracon Consultants ("Terracon") for geotechnical investigation in connection with engineering work for the Subdivision. Although Terracon was hired "not … to provide any [home-building] recommendations" for the Subdivision, Terracon opined on the poor condition of soils within the Subdivision in several geotechnical engineering reports between July 2004 and December 2005 ("the Terracon Reports"). The July 2004 Terracon Report stated, "The majority of the soils encountered above the claystone exhibited characteristics that indicate a potential for collapse upon becoming wet." It also stated, "Frequently structures built with conventional footing foundations on these types of soils have suffered damaging settlements, sometimes many years after construction." It noted that "[i]n most areas of the United States, the commonly accepted practice for supporting structures where collapsible soils are present is to use deep foundations … and construct structural floors[.]"

¶6 The District Court found that Dennis Buscher "knew of the Terracon Report and could have reviewed it." Two years after the latest Terracon Report, however, the Buschers sought an evaluation from Rimrock Engineering, Inc. ("Rimrock Engineering") to provide recommendations for utilizing conventional shallow spread foundations. Accordingly, Rimrock Engineering’s geotechnical investigation reports prepared for Buscher Construction and Development or Buscher Construction did not consider "alternative deep foundation systems … since spread footing foundations bearing on structural fill can be used." The class-certification record shows that nearly all of Rimrock’s reports for individual lots also found the soils to exhibit a "moderate" to "high/moder- ate" potential for hydro-collapse.²

¶7 In February 2006, Falcon Ridge entered a "Subdivision Improvements Agreement" with the City of Billings as "required by the City prior to approval of the final plat[.]" The Agreements noted, "A geotechnical report has been prepared … by Terracon Consultants, Inc. There are variable soil conditions throughout the Subdivision, and the potential exists for collapsible soils within the Subdivision." It was signed by Dennis Buscher as "President" of Falcon Ridge. In August 2013, Falcon Ridge II, LLC, entered another "Subdivision Improvements Agreement" with the City of Billings.³ Both Agreements noted a Declaration of Restrictions placed upon the lots in the Subdivision. The Declaration of Restrictions, dated October 2005 for Falcon Ridge I and January 2014 for Falcon Ridge II, required that "[a]ll [l]ots … must be fully landscaped within eight months after substantial completion of construction of a residence on that [l]ot." It further required, "Lot owners shall keep their lawns mowed and watered[.]" The Declaration of Restrictions for Falcon Ridge I was signed by the manager of Four D’s Development, LLC, and Dennis Buscher, as the President of Aviara. The Declaration of Restrictions for Falcon Ridge II was signed by two members of Rims Development and Dennis Buscher, as the President of Aviara.

¶8 In October 2021, the Cooks moved for class certification, which the Buschers opposed. After conducting a hearing, the District Court issued its findings of fact and conclusions of law, certifying a class pursuant to Rule 23(a) and 23(b)(3) of the Montana Rules of Civil Procedure. The court found that "[e]very home in Falcon Ridge allegedly is adversely impacted by the soil issues and corresponding foundation concerns due to nondisclosure of the Terraeon Reports" and that "[t]hese alleged impacts will affect the value of homes in the Subdivision and homeowners’ ability to sell their home." It defined the class as "[a]ll persons who own or have owned property prior to June 15, 2019, within the Falcon Ridge subdivision." It certified the following question for class-wide determination under M. R. Civ. P. 23(c)(1)(B):

"Whether Defendants, both individually and in their representative capacities, were negligent in failing to warn lot purchasers, builders, realtors, and consumers alike of the material adverse soil conditions present in the neighborhood, of which Defendants were actually aware."

STANDARD OF REVIEW

[1–4] ¶9 ‘We afford trial courts the broadest discretion when reviewing a decision on class certification." Houser v. City of Billings, 2020 MT 51, ¶ 3, 399 Mont. 140, 458 P.3d 1031 (quoting Jacobsen v. Allstate Ins Co., 2013 MT 244, ¶ 25, 371 Mont. 393, 310 P.3d 452). A district court’s judgment is accorded great deference because "it is in the best position to consider the most fair and efficient procedure for conducting any given litigation." Chipman v. Northwest Healthcare Corp., 2012 MT 242, ¶ 17, 366 Mont. 450, 288 P.3d 193 (citing Diaz v. Blue Cross & Blue Shield, 2011 MT 322, ¶ 10, 363 Mont. 151, 267 P.3d 756; Sieglock v. Burlington Northern & Santa Fe Ry. Co., 2003 MT 355, ¶ 8, 319 Mont. 8, 81 P.3d 495). We review a district court’s decision on a motion for class certification for an abuse of discretion. Chipman, ¶ 17 (citations omitted). "The abuse of discretion question ‘is not whether this Court would have reached the same decision, but whether the district court acted arbitrarily without conscientious judgment or exceeded the bounds of reason.’ " Roose v. Lincoln Cty. Emp. Grp. Health Plan, 2015 MT 324, ¶ 11, 381 Mont. 409, 362 P.3d 40 (quoting Rolan v. New West Health Servs., 2013 MT 220, ¶ 13, 371 Mont. 228, 307 P.3d 291) (citations omitted).

DISCUSSION

[5] ¶10 For a class action to proceed, it must first meet the four requirements of M. R. Civ. P. 23(a). Roose, ¶ 14 (citation omitted). The Rule requires the proponent of a class action to prove four elements: (1) the class is so numerous that joinder of all members is impracticable (numerosity); (2) there are questions of law or fact common to the class (commonality); (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class (typicality); and (4) the representative p...