Folsom v. City of Livingston

385 Mont. 20

381 P.3d 539

2016 MT 238

David W. Folsom and Alana L. Folsom, Plaintiffs, Appellants, and Cross–Appellees,

v.City of Livingston, a political subdivision of the State of Montana, Defendant, Appellee, and Cross–Appellant,Eagle's Rest, LLC, a Montana limited liability company, John Does 1–X, Defendants and Appellees.

DA 15-0499

Supreme Court of Montana.

Submitted on Briefs: July 20, 2016

Decided: September 20, 2016

Rehearing Denied October 25, 2016

For Appellants: Terry F. Schaplow, Terry F. Schaplow, P.C.; Bozeman, Montana.

For Appellees: Michael J. Lilly, Berg, Lilly & Tollefsen, P.C.; Bozeman, Montana (for City of Livingston), Susan B. Swimley, Attorney and Counselor at Law; Bozeman, Montana (for Eagle's Rest LLC), Alison P. Garab, Lund Law PLLC; Bozeman, Montana (for Eagle's Rest LLC).

Justice Jim Rice delivered the Opinion of the Court.

¶ 1 Following a jury trial, Plaintiffs/Appellants David W. and Alana L. Folsom (Folsoms) appeal from the orders of the Sixth Judicial District Court, Park County, granting motions in limine by Defendant/Appellee Eagle's Rest, LLC (Eagle's Rest). The Folsoms also challenge the jury instructions. On cross appeal, Defendant City of Livingston (Livingston) challenges the District Court's awards for damages and attorney fees to the Folsoms. We affirm in part, reverse in part, and remand for further proceedings.

1. Did the District Court err by excluding expert testimony of a professional appraiser?

2. Did the District Court err in granting the motion in limine that prevented David Folsom from testifying as an expert at trial?

3. Did the District Court properly instruct the jury regarding unjust enrichment?

4. Did the District Court err by awarding negligence damages to the Folsoms in view of their election of breach of contract damages?

5. Did the District Court err in awarding attorney fees to the Folsoms?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 2 In 1990, Recreational Leasing Inc., the Folsoms' predecessor in interest, constructed sewer and water lines and a sewer lift station outside of the City of Livingston, and transferred these utilities to Livingston pursuant to a Reimbursement Agreement (Agreement). The Agreement provided that Livingston would collect proportional reimbursement fees (referred to herein as “payback fees”) when new development connected to the water and sewer lines, and pay these fees to Recreational Leasing, Inc. The Folsoms succeeded to this contractual interest.

¶ 3 Eagle's Rest acquired property near Livingston in 2006 and began constructing Eagle's Landing Condominiums. It constructed Buildings A and B, which were condominiums, and Building K, which was a clubhouse. These units were connected to the sewer and water lines covered by the Agreement. Livingston initially calculated a payback fee for the hookups, but the fee was not paid by Eagle's Rest or collected by Livingston, and the Folsoms were not paid as provided in the Agreement.

¶ 4 In 2012, the Folsoms made an initial inquiry about the payback fees for the Eagle's Landing Condominiums hookups and then filed this lawsuit. Based upon the amount of the payback fees due under the Agreement, Livingston made an offer of judgment to the Folsoms “in the amount of $25,693.70, together with costs and reasonable attorney's fees to be determined by the Court.” The Folsoms rejected the offer, and the case proceeded against both Livingston and Eagle's Rest, with the Folsoms claiming breach of contract, negligence, unjust enrichment, and quantum meruit . The District Court issued a Scheduling Order setting an expert disclosure deadline of July 11, 2014, and setting a deadline of October 31, 2014, for all “pretrial motions, including motions in limine and motions for summary judgment.”

¶ 5 Meanwhile, Livingston sought and received payment of $25,693.70 in fees from Eagle's Rest on May 22, 2014. Livingston then delivered a check for that amount to the Folsoms. The Folsoms returned the check uncashed on July 9, 2014.

¶ 6 Counsel for the Folsoms sent a draft of their pretrial order submissions to the counsel for the Defendants in February 2015, listing professional appraiser William Bridwell as an expert witness regarding the value of the Eagle's Landing Condominiums, and Bridwell's written appraisal as an exhibit. Eagle's Rest filed a motion to exclude Bridwell's expert testimony and his appraisal on March 2, 2015, well after the motions deadline in the scheduling order, arguing that Bridwell had not been disclosed as an expert witness and permitting him to testify would be prejudicial. After hearing arguments at the pretrial conference, the District Court issued an order excluding Bridwell and his appraisal.

¶ 7 The next day, the Folsoms filed a notice stating they would instead rely on David Folsom's testimony regarding the value of the Eagle property. Eagle's Rest filed a second motion, this one to likewise exclude David Folsom's testimony as undisclosed expert testimony, which was also granted by the District Court.

¶ 8 These motions were disposed of on the eve of trial, which was conducted from March 23 to 27, 2015. The jury was instructed by the court as follows:

The Court has decided some issues as a matter of law in this case. Specifically, the Court has ruled that the City of Livingston breached the parties' Reimbursement Agreement by failing to pay Plaintiffs the sum of $25,436.40 for Buildings A and B in Eagle's Rest at the time they were connected to the water and sewer lines on October 4, 2006.

The Court has further decided that the City of Livingston cured this breach of contract in June of 2014, when it tendered the sum of $25,693.70 to the Plaintiffs. The City will be obligated, by the Court's Order, to pay this sum to the Plaintiffs.

Because the payback fee issue regarding Buildings A and B was decided as a matter of law, the special verdict form asked the jury to consider the issue of a payback fee only for the clubhouse. The form asked: “Did the City of Livingston breach the Agreement with Recreational Leasing, Inc., by failing to calculate and collect a payback fee for the Eagle's Landing clubhouse?” In answering, the jury selected “no.” In answer to questions about the Folsoms' negligence claim, the jury first found that Livingston was 60% negligent, while the Folsoms were 40% negligent. In answer to the question, “What amount of money will reasonably compensate Plaintiffs for the injuries caused by negligence?”, the jury answered: “$17,742 which is 60% of $25,000 error plus $2 [,]742 travel compensation.” Additionally, the jury specifically found that no implied contract existed between the Folsoms and Eagle's Rest, that Eagle's Rest did not retain a benefit conferred by the Folsoms by connecting to Livingston's water and sewer lines, and that the Folsoms' expectation to receive compensation from Eagle's Rest in the matter was unreasonable.

¶ 9 After trial, and upon a motion from Livingston, the District Court ordered the Folsoms to make an election of remedies—either for breach of contract or for negligence. The Folsoms elected to recover under breach of contract. The District Court then entered judgment, specifying that the Folsoms recovered nothing from Eagle's Rest, but awarding as to Livingston $25,460.40 in contract damages for Buildings A and B, $2,742 for the Folsoms' travel expenses, and $2,571 “in damages relative to payback fees for the clubhouse, which sum is reasonably construed as damages for negligence and is not a form of double damages as the clubhouse payback fee was left to the jury's determination.” The District Court also awarded $140,980 in attorney fees to the Folsoms as the prevailing party, pursuant to the fee provision in the Agreement. The District Court awarded almost all of the attorney fees claimed by counsel for the Folsoms, minus only the billable time spent in pursuing an injunction against the Defendants.

¶ 10 The Folsoms appeal the District Court's decisions in granting the motions in limine and in instructing the jury. Livingston cross-appeals the award of negligence damages to the Folsoms, and the award of attorney fees.

STANDARD OF REVIEW

¶ 11 “A motion in limine can seek to prevent or limit the introduction of evidence at trial, and the authority to grant or deny the motion rests in the inherent power of the district court to admit or exclude evidence so as to ensure a fair trial. Where a decision on a motion in limine involves the exercise of discretion, this Court will not overturn the district court absent an abuse of discretion.” Meek v. Mont. Eighth Judicial Dist. Court , 2015 MT 130, ¶ 9, 379 Mont. 150, 349 P.3d 493 (internal citations omitted) (citing Hulse v. Dep't of Justice , 1998 MT 108, ¶ 15, 289 Mont. 1, 961 P.2d 75 ; and State v. Weldele , 2003 MT 117, ¶ 41, 315 Mont. 452, 69 P.3d 1162 ). “We review for an abuse of discretion a district court's rulings on the admissibility of expert testimony.” Norris v. Fritz , 2012 MT 27, ¶ 17, 364 Mont. 63, 270 P.3d 79 (citing Weber v. BNSF Ry. Co. , 2011 MT 223, 362 Mont. 53, 261 P.3d 984 ).

¶ 12 “We review jury instructions for an abuse of discretion to determine whether, as a whole, they fully and fairly instruct a jury on the law applicable to the case.” Ammondson v. Northwestern Corp. , 2009 MT 331, ¶ 30, 353 Mont. 28, 220 P.3d 1 (citing State v. English , 2006 MT 177, 333 Mont. 23, 140 P.3d 454 ). “The district court maintains broad discretion when instructing the jury. The instructions must prejudicially affect the defendant's substantial rights to constitute error.” State v. Hudson , 2005 MT 142, ¶ 10, 327 Mont. 286, 114 P.3d 210 (internal citations omitted) (citing State v. Nelson , 2001 MT 236, 307 Mont. 34, 36 P.3d 405 ; and State v. Goulet , 283 Mont. 38, 938 P.2d 1330 (1997) ).

¶ 13 Livingston challenges the District Court's award of negligence damages to the Folsoms. We review a district court's conclusion of law for correctness. See Slater v. Cent. Plumbing & Heating Co. , 1999 MT 257, ¶ 13, 297...