Diana's Great Idea, LLC v. Jarrett

401 Mont. 1

471 P.3d 38

2020 MT 199

DIANA'S GREAT IDEA, LLC, a Montana limited liability company; Engwis Investment Company, Ltd., a Montana limited partnership; R.F. Building Company, LP, a Montana limited partnership; Rock Creek Ranch I Ltd., a Texas limited partnership; and Wild Eagle Mountain Ranch, Plaintiffs, Counter-Defendants, and Appellees,

v. Richard "Rick" JARRETT, general partner of Crazy Mountain Cattle Co. ; and Alfred Anderson, Defendants, Counter-Plaintiffs, and Appellants,andCrazy Mountain Wind, LLC; Crazy Mountain Land and Livestock, LLC; Crazy Mountain Cattle Co. ; Pattern Energy Group, Inc. ; and Pattern Energy Group LP, Defendants.

DA 19-0594

Supreme Court of Montana.

Submitted on Briefs: May 13, 2020

Decided: August 11, 2020

For Appellants: Monica J. Tranel, Tranel Law Firm, P.C., Missoula, Montana

For Appellee Wild Eagle Mountain Ranch, LLC: Nick J. Lofing, J. Andrew Person, Garlington, Lohn & Robinson, PLLP, Missoula, Montana

For Appellees Diana's Great Idea, LLC, Engwis Investment Company, Ltd., R.F. Building Company, LP, and Rock Creek Ranch I Ltd.: Elizabeth Greenwood, Inga L. Parsons, Greenwood Law, LLC, Pinedale, Wyoming, Stephen E. Woodruff, Huppert, Swindlehurst & Woodruff, P.C., Livingston, Montana

Justice Beth Baker delivered the Opinion of the Court.

¶1 Richard "Rick" Jarrett and Alfred Anderson appeal the order of the Sixth Judicial District Court, Park County, denying leave to amend their answer and dismissing their counterclaims with prejudice. Jarrett and Anderson also appeal the sufficiency of a cash bond that the District Court imposed earlier in the litigation pursuant to § 27-19-306(2), MCA. We conclude that the District Court correctly disallowed Jarrett and Anderson's amendments as untimely under M. R. Civ. P. 15(a)(2), but that it erred in concluding their counterclaims were compulsory under M. R. Civ. P. 13(a) and dismissing them with prejudice. We conclude further that the bond issue is moot. Accordingly, we affirm in part, reverse in part, and remand for entry of dismissal of the counterclaims without prejudice.

FACTUAL AND PROCEDURAL BACKGROUND

¶2 Jarrett is a fifth-generation rancher from Park County, Montana. Anderson's family has ranched in Sweet Grass County, Montana, since the early 1900s. Together, Jarrett and Anderson leased property to Pattern Energy Group 2 LP and its subsidiaries ("Pattern")¹ to develop a wind farm called Crazy Mountain Wind ("CMW"). Jarrett and Anderson hoped that CMW would generate income to sustain their family ranches, pay for ranch and medical bills, and support their retirement. The record reflects that early stages of the wind farm project began as early as 2004.

¶3 Plaintiffs Diana's Great Idea, LLC, Engwis Investment Company, LTD., R.F. Building Company, LP, and Rock Creek Ranch I, LTD. (collectively, "Neighbors") are corporations that own land in Park and Sweet Grass Counties. Their properties include residential improvements, agricultural lands, and ranching operations. Intervenor Wild Eagle Mountain Ranch, LLC ("WEMR") is a Montana limited liability company that owns a ranch in Park and Sweet Grass Counties. The land owned by Neighbors and WEMR completely surrounds and abuts Jarrett's and Anderson's properties, including the projected wind farm, with the exception of one state school section.

¶4 As planned, CMW would consist of 22 wind turbines configured into four rows. According to testimony and renderings of the project, each turbine would have a maximum height of approximately 492 feet and be visible for miles, including from Neighbors' properties and from one Neighbor's residence.

¶5 On September 28, 2018, Neighbors filed a complaint in the Sixth Judicial District Court claiming, among other things, that construction of the wind farm constituted a private, public, and anticipatory nuisance and seeking both damages and injunctive relief.² Jarrett and Anderson answered the complaint on November 14, 2018, but did not interpose any counterclaims. WEMR filed a motion to intervene in the lawsuit on December 5, which the court granted on February 5, 2019.

¶6 The court held a three-day hearing on Neighbors' motion for a preliminary injunction from February 19 to 21, 2019. On February 20, the court conducted a site visit to view the area of the proposed wind farm and the parties' properties. Jarrett and Anderson claim that on February 21, the final day of the hearing, David Chesnoff, principal of Plaintiff Diana's Great Idea, LLC, was overheard during a recess admitting that Neighbors instigated the litigation "to delay this long enough—4 or 5 months—to kill it once and for all." Upon reconvening, counsel for Jarrett and Anderson questioned Chesnoff under oath about his statements.³

¶7 On March 19, the District Court issued its findings of fact, conclusions of law, and order, granting Neighbors' request for a preliminary injunction based on the testimony and evidence presented at the hearing. The court further ordered Neighbors to post a cash bond pursuant to § 27-19-306(2), MCA. Pattern requested a bond of $181,000,000; Jarrett and Anderson requested a separate bond of $5,000,000. The court concluded that the projected wind farm was an "industrial operation"; that there was no evidence of any loss of wages, salaries, or benefits to Jarrett and Anderson; and that a single $50,000 cash bond proposed by Neighbors was appropriate for all three of the defendants.⁴

¶8 The District Court issued a scheduling order on April 24, requiring in part that "any request for amendment to the pleadings, joinder of other parties, or counterclaims must be filed by May 9, 2019." Jarrett and Anderson filed an Amended Answer and Counterclaim and Request for Jury Trial on May 6, asserting ten affirmative defenses and alleging the following counterclaims: Count I-Tortious Interference With A Contract; Count II-Abuse of Process; Count III-Conversion; Count IV-Slander of Title; Count V-Vexatious Litigation; Count VI-a claim for Prejudgment Interest; and Count VII-a notice seeking Punitive Damages. On May 17, Neighbors jointly moved to dismiss the counterclaims as untimely, arguing in part that they were compulsory and should have been included in Jarrett and Anderson's original answer. On June 3, Jarrett and Anderson moved to file a Second Amended Answer and Counterclaim, replacing Count III with a claim for constructive trust and unjust enrichment. On June 28, they moved to file a Third Amended Answer and Counterclaim adding WEMR as a counterclaim defendant.

¶9 On July 1, Pattern moved the District Court to dismiss it without prejudice from the lawsuit. Pattern explained that the court's March 19 preliminary injunction rendered it impossible to obtain the necessary financing to complete the wind project and to satisfy certain contractual obligations, and thus Pattern was compelled to abandon development of the wind farm.

¶10 On September 13, the District Court issued its Order on Pending Motions, concluding that Jarrett and Anderson's counterclaims were compulsory under M. R. Civ. P. 13(a) ; that they were required to file their counterclaims with their initial answer on November 9, 2018; and that their late-added counterclaims were untimely. The court further concluded that M. R. Civ. P. 15(a)(2) barred Jarrett and Anderson's amendments, reasoning that they had failed to obtain the opposing parties' consent or leave of court to amend their pleadings as required under the rule and that allowing the amendments would prejudice Neighbors and WEMR. The court dismissed Jarrett and Anderson's counterclaims with prejudice and denied their motions to file the second and third amendments.⁵ Jarrett and Anderson appeal the District Court's denial of their motions to amend, its determination that their counterclaims were compulsory, and the sufficiency of the previously court-ordered $50,000 bond.

STANDARD OF REVIEW

¶11 A district court has discretion to grant or deny a motion to amend a pleading. Ally Fin., Inc. v. Stevenson , 2018 MT 278, ¶ 10, 393 Mont. 332, 430 P.3d 522. We therefore review a district court's denial of a motion to amend a pleading for abuse of discretion. Ally Fin., Inc. , ¶ 10 (citing Farmers Coop. Ass'n v. Amsden, LLC , 2007 MT 286, ¶ 12, 339 Mont. 445, 171 P.3d 690 ); Rolan v. New W. Health Servs. , 2017 MT 270, ¶ 10, 389 Mont. 228, 405 P.3d 65 (citing Lindey's v. Prof'l Consultants , 244 Mont. 238, 242, 797 P.2d 920, 923 (1990) ).

¶12 We review a district court's conclusions of law, including a decision to dismiss a pleading on the basis of M. R. Civ. P. 13(a), de novo for correctness. Zimmerman v. Connor , 1998 MT 131, ¶ 7, 289 Mont. 148, 958 P.2d 1195.

DISCUSSION

¶13 1. Did the District Court abuse its discretion in denying Jarrett and Anderson leave to amend their Answer and Counterclaim under M. R. Civ. P. 15(a)(2) ?

¶14 The District Court disallowed Jarrett and Anderson's amendments to their answer, concluding first that they had failed to obtain Neighbors' written consent or the court's leave as required by M. R. Civ. P. 15(a)(2). The District Court relied on Edgewater Townhouse Homeowner's Ass'n v. Holtman , 256 Mont. 182, 187, 845 P.2d 1224, 1227 (1993), in which we affirmed dismissal of an untimely compulsory counterclaim for failure to meet the "leave of court" requirement of M. R. Civ. P. 13(f).⁶ Citing Peeler v. Rocky Mt. Log Homes Can., Inc. , 2018 MT 297, 393 Mont. 396, 431 P.3d 911, Jarrett and Anderson assert that " Rule 15(a)'s requirement for consent of other parties or leave of court only applies ‘[A]fter expiration of specified deadlines for filing an amended pleading as a matter of course [...]’ " and that no such deadlines had expired. Jarrett and Anderson misread Peeler . It referenced Rule 15(a)(1), which in relevant part allows one amendment of a pleading as a matter of course within "21 days after serving it[.]" Jarrett and Anderson filed their original answer on November 14, 2018. They filed their amended answer on May 6,...