Montana Fair Housing Inc. v. Barn

2002 MT 353

• Court: Montana Supreme Court
• Decided: December 31, 2002
• Docket: 02-329
• Status: Published

Opinion

No, i)2-3%')

IN Ti-it3S!IPli'F;'~l,IE COURT OF THE S'I-?TE OF l.?Ovl'.aN.i\

2002 V T 353 T

MONTANA FAIR HOUSING, INC.,

intervening Plaintiff and Appellal~i,

V. :,? -n :

LAVERN A N D DOLORES BARNES, dlbia TARGET R'ANGE TRAILER COURT, and DARRELL TRAVER, Agent,

Defendants and Respondents.

APPEAL. FROM: District Court ofthe Fourth Judicial District, In and For the County of Missoula, Honorable John W. Lauson, Judge Presiding

COL!YSLI OF RECORD

For Appellallt:

f lnlotby C Kelly, Piltorncy ai Law, E n i ~ g r a ~ ~ t , Montana

Mary Gallagher, Attorney at Lam, Missoula, hfoiltana

For Respondents

h21chacl Sol, Sol atid LVolfe. Mrssoula, Montaua

Charles K. Ikiil, Special Assislani Aiiomey Gelieral, hloi~tana Fiu111an Rights Commission, Helena, Morrtal~a

Submitted on Br~eis Seprcmhcr 5. 2002

Dcc~dcd. December 31. 2002 LV. Opinion of rh;: Court. i~isiicc tViiliam Leaphart ciclivcrcd t11~

e: 1 t ,,~-i-cninii 1-1 , , ,aitit,fl'si~dAppellent~ 1'1 :- ; appcziis thrcc Montana f a i r Hiiusing; ine. (i4l'il).

orders oi'the Fourth Juiiicial District: one denying its request tor attorncy fees, onc denying

its motioii to vacate the Rule 08. M.R.Ci\-.P., offer ofjudgment, and one dismissing the case.

We reverse the District Court's denial of MFHis requcst for attorney fees, and remand the

rnatter for a determination of whether an award of discretionary attol-tieyfees is appropriate.

We affirm llie District Court's ruling regarding tile service pl-ovisions of Rule 3 a j .

M.R.Civ.P., as this issue Lvas raised fol- the first time on appeal.

'2 \1FH raises the follo\ving two issues on appeal:

ci3 1. in making a Rule 68 offer ofjjudgnient, must the defendant clearly indicate that

attorney fees are included in tlie offer i n order to effect a waiver of plaintiff's rights to

recover statutory fees under the blontani~Human Rights Act'?

74 1 2. Is an intervening plaintiff or a relator in a discrimination case brought by the State

pursuant to $40-2-5 10. MCA. of the Human Rights Act, entitleci to notice ctnder Rule 5(a),

M.R.Civ.P., of the final terms and conditions of a settlement agreement and stipulated

ciisnrissal bet~veen State and the defendants prior to entry o f a final ordcr dismissing the the

case?

Background

ii5 M F H is a nonprofit Montana corporation whose primary purpose is to protect and

increase equal housing opportunities for persof~s thruughcrut the State of 'uiontana. 111 Juac

1996; 'LIFH filed an admi~~istrative complaint with the Montana tluman Rights Commission

7 -- (1-ifZCj, a state agency. 'fhe complaint allegecd that Kcspondcnis; Lavern and Doiorcs iiarircs

anci Urrrreil 'I rcvcir jthc Barr~cscs), arid owi~eis opcraioc-s oftha: Tiirglir Riir~gc 7'r:iii:r C"c~urt

in "l;lissclii!a. had violared and \%-erevictlating Montana's Ff~i?nan Kighrs Act by ijenyiiig equal

housirzg opportunities to persons based on familial status, age, and marital status.

76 After an administrative investigatio~iof the conrpiaint, the FIRC issued a final

investigative report, finding: (1) that MFH's allegations were supported by- substantial

evidence, and (2j that thcrc was reasonable cause to believe the Barnescs had violated state

fair housing laws. :1Aer its investigative finding anti an unsuccessful effort at conciliation,

the f-!KC issued notice prirsuant to 8 40-2-5 l ( i ( l ) , blC'A. that a contested case lrcaring would

be held on the MFI-I complaint, uniess any party elected to have thc iliattcr \?card in a civil

action. The Barneses elected to have the matter heard in district c o u ~ t .The HRC' thcn filed

the civil action in [his ease. ,4fontizll(i Huixnn Rights C'oiilnziisiorz, c.r rcl. h l ~ l ~ t uFoir i i ~~

Cunipbcll (DV 90-88288). Ils. C'amphcll ff(~z~.si~~g~ndiVic.ole /I Lrriici-n in~iJi~olo~-c.sB~~rnc.c

is a former resident of the Target Range Trailer Court who had also fjlcd a housing

ctiscritnination complaint against tlie Barncses. The HRC aiso found hcr discrimination

complaint was suppoi-tcd b j snbstantial evidence. Pursuant to 9 49-2-5 10(4)(a),kfCA, the ~

District Court granted MFFI and Campbell the right to intervene in the case as party-

plaintiffs.

77 MFfi au offer ofjiicigrncrit pursuant to in Septcrnhcr 2000. the Rarneses serveci i~porl

Rule 68;M.K.('iv.i'. 'I-he offer stipulated thatjucigr??entwouid hc takcr~ agaiasrrl~c i3atnescs

"pursuant to Rule 08 . . . in the arnount of 'f\tjo 'lhousanci Dollars (S2.OiiO) together with

3 cosrs only that accrued." I..atcr that morrth, CIFH filed an acccprarrcc? trd~isiilgii-iat it

acceprecd "'the offci. of[thi. Barncscs] . . . iorjudgrncnt in i;ic,or.of jMi;iil rtrrd cigrtiiist s.8' I U ' ~ I

dcfcndants on its clairiis in the above entitled case pursuant to defendanis' Offer. of

Judgmci~t."

"8 11 Pursuant to Rule judgment was entered against the Rarneses on the housing

discrimillation claitns. Following the entry of judgment, MFH moved for designation as a

prevailing party a t ~ d an award of attot-i~ey fhr fees pursuant to the fee shifting pro~risions of

the Hutnan Rights Act. The District Court denied the motion for fees and directed the

Bat-neses to pay HRC the amount offered to MFit in the of?;crofjudgment. As aresult, MFl-I

moved to vacate the offer ofjudgrnent on grounds that it had rtot accepted any offer whicli

waived the right to recover atlorney fees or. in the ahenlarive, to amend the judgment to

correctly reflect that MFH, not t l ~ e HRC, was to bc paid the sums offered, with interest. The

District Court denied MFFl's motion to vacate: however, it granted the motion to amend the

judgn~ent reflect that MFti was the correct recipient of the sums offered. to

9 '['he case proeeedect on the claims filed by the HRC on behalf of btFH and Can~pbell

dismissal between the I-(KCand the as relators until, pursuant to a settlement and stip~ilated

Harneses, tile District Court entered a final order of dismissal. Neither thc Rxneses nor the

FiKC served notice oftheiv ntotion for stipulated disniissal on VIFH, and tire L3istricl Court's

itself w ,s not sen-ed on \ilFII until two and a half months later, at fjnal order of disi~lissal -

MFi-1's r c , ttest. ,o 0 '1.1~~ ltfter rcceiviilg a copy ofthe final ctrder dismissing thc case: "C1Fi-I iiied di iy ti

iiolicc o f appeal oi' the ilrst order dcr~ying t s reqlucst for attorney f - , second order i e s the

: i e ~ i n g motion to vacate the Rule 68 offer of judgment, iiud rhc third order dismissing its

thc case.

Discussion

I -

31 1 in making a Rule 68 offer of judgment, must the defendant clearly indicate that

attorney fees are included in the offer in order to effect a waiver of plaintiffs rights to

izcover ststrrtory fees under the .Montana fluman Rights Act?

71 2 ofattonley fccs, under the Montana I-lurnairRights We re\ icw a district court's der~irtl

Act, to detcnnine wl~ether cou~z the abused its discretion. Sile La:iclert v. Nicirlmid C'OIIII~L.

Sket.iff'.s Iicpt.. 2001 MT 287, I' 12.307 Mmt. 403,' 12,38 f3.3d700, 1' 12. A district court ..

cibitses its discrction if its dcnial is based oil a11iinaccurate view of the la;^ or : i finding offact

is clearly crroiieous. See Ln~iilcrt, 12; Il~lcr ('iri.sl:oiin,2000 M?'7 . 7 221.: 298 8 h n t . 2M4, 'j I,.

1' , 24, 095 P.2d 439. .j 24.

1 Whether a Rule 68 offer of juctgment must cxpiicitiy state that attorney fecs arc

inciudeci in order to effect a waiver of plaintifrs rights to recover stat~ttc>r>e s is matter of k

first impression for this Court. MFI I argues that, as the prevailir!g party, it is entitled to scck

discretionary attorney fecs under three sections of the t-iuman Rights Act, namcly $ $ 49-2-

505j7). 49-2-509(6), and 40-2-5 !O(il), MCA, and that it did not wailvc i1.i right 10 scek t1lcse

fecs by accepting the Kule 68 offer ofjudgtncnt. 7hc District Court. in denying k1F;ii's

5 lriotiiili to seek attorney fees, concluded that the aiccptancc eftbe R~ilc offcr ~[judgrncnt 68 resoi\;cii a \ ) is-;ues [?er\vccrr tile parilcs. .~ 93 under ihi: incliiding a claim for riltornc! f i ~ c ' ;

iluman Rights Act.

"14. M F H maictaii~s the District C'orrr! rr-red i n concluding that in accepting the ilule that

68 offer oofjudgmcnt, \vhich was silent as to the accepting party's uaik~cr the right to seck of

attorney k e s , %iFH waived its right to seek a separate award of attorney fees. :MFf~I argues

that such a waiver must be clearly and una~nbiguously out in an offer ofjndg:nent. set

q 5 'Ihe basic purpose of Rule 68 is to encotsrage settlement and avoid protracted

litigation. See FVe.ston v. Kzlntr !1981)1 194 Mont. 52, 57. 635 F.2d 269. 272. :Is we noted

in li-i,sior~.""/t]lre rule also attempts to alleviate thc burden of subsequciitly accrued costs to

thc de'i'cndant by placing thert-i on a plaintiff who rclirscs to accept a gooci faith offer and

subsequently receives a jndgn-ient which is not greater than the offer." Ifiston, 104 blont.

at 57; 635 1'.2d at 272. In this casc, the y~~cstion "What was the offcr?" CZFF~Jurges this is:

Coiirt to conclude that the offer did not include a waiver of its right to seck attoniey fkes;

while the Barneses, naturally, argue the opposite.

'710 In support of its contention that the offer did not include a waiver, MFi-1 directs us to

thc holding in :Vic.so~i~ C'CII~~IH v. CZi)or/hunr,Inc. (9th C'ir. 1997); !22 F.3ci 830. in !l'li.som,

the Ninth Circuit COLLIX,.Xppeals ruled that "a itule 68 offer forjudgment ill a specific sum of

together xvlih costs, wkich is silent as to attorney fecs, docs not preclude the plaintiff ti-orn

seeking fees ivlien thc underlying statute docs not iliakc attorney fees a part of the costs.'.

Xlr.~onl,122 F,3d at 835. The JVirsorncourt cortcludcd that, in a Rule 68 cjffer ofjiidgn~ent,

6 "any waikcr or limitation must be clear and unamhiguo~~s" rcspccr to attonley kc.;. wii!i

>. :\iiSciiii. 7 - ..-aat 833, ' t ~-, ,- 1

" 7 MFH maintains tliat an ambiguous offer of.jud;r.nientmay spawn additional litigation;

thereby defeating the intended purposc ctf Rule 68. The casc at bar is a case in point.

Additionally, MFE-I argues that an anibiguous offer rnay put a corlrt in the unenviable position

of deciphering the intentions of the parties at the time they entered into the offer, again

increasing litigation. 'I'hc Bamcses, on the other hand, contend rhat MFtl's argument

attempts to rewrite Rule 68 and claims that LlFl~l'sacceptance letter was so "broad and all-

cncompassing" that the aeccpvance itself proscribes a request for attoriicy fees. These

assertions are ]lot supported by any casc law.

118 It is in the interests ofbotlr the offeror arid the offercc that a Rule 68 offer ofjudgment

must bc clear and unantbiguous, in order to effect a waiver of attorney fees. Today's ruling

minimizes litigatio~iover the offer of judgment itself. 12'hiic we hold that a waib-er of

must be clear and unambigrroits, tile offer itself attorney fees in a Rule 68 offer oofj~ldgrnent

need not incluclc the words "attorney fees" to effect a waiver. We look to the decision of the

Seventh Circuit i l l ATorcihj.v. A~rchor Fior.kiizg fJrrc.kogilzg( ' 0 . (7th Cir. IOO"), 199 F.3d 390,

which offers this trrcasured approach. In Vorn'!)~..Chicf Judge Post~erarfirrncd that

"anibiguities in fZule 68 offers are to be resolved against the offerors;" howevcr, hc rejected

the "magic-lvords approach . . . ill favor of an approach . . . that gives effect to an

t~narnbiguous fees explicitly." r\,'(jt-di?:,': ':(I9 F.3d offer even if it does not mcr?tion atton~cys

at 303. -.he offer ofjudgment in ,'L'or.cihl,provided "one total sum as to ali cotints of the I

7 i:mcndcd inrnplaint." iVcirdi,i, 109 F.3d at 392. Rccat:se the oFkr was clear illat it inciuded

ail courrrs, including I couiir specifying attorney fees as part of the rciicTsoug,ri~l, cotirf : tile

affiimed the Fedcral Ilistriet Court's denial ofthe accepting party's rig111in request attorney

fecs.

"1 19 In this case, thc Rarneses offcred MFI1 "T\vo Thousand Dollars jS2,000) together

with costs only aec~xed." The offer on its face includes costs. but it is not clear whether

attorney fecs are included. Attorney fees are not included as ""costs geilcrally allewable."

See 5 25-1 0-201. MLZCA. 'The offer does not state that the sum to be paid is consideration for

'rhei-eforc, it is ambiguous \vhcthei-Mi'f-i. by acccpting thc offer, the resolutioft ofall cour~ts.

waived its right to recover attorney fecs. Accordiilgly, we conclude that thc Barnescs' offer

ofjudgment did not include a waiver of attorney fees.

'20 Because the Rule 08 offer ofjudgment was not clear and unambiguous that h FH \\.as f

wriaivi~~g right to seek attorney fees, we hold that the District Court abused its discretion its

in denying k1FF-l'~ request to seck attorney fees undcr the Human Rigl~ts Act. 7-hcrcfore: we

reverse and remand the matter to the District Court for a determination of whether to award

MFH ciiscrctionary attorney fees undcr the Human Rights Act.

II -

7\21 is an intcrvc~ling plaintiff or a relator in a discrimination case brunglit by the State

pursuant to 5 4'4-2-51 0; 'L1C.X ofthe fluman Rights Act, entitled to ~loticc under Rtllc 5(a),

M.R.C3iv.P,, of the final tenizs and co~lditiollsof a settlement agrccincnt and stipularccl dismissal bcrwccn the Slarc arid the defcncianis prior to ciiery ctf a tiiitll order dismissing the

'$22 k t some point after MFH acccpted the Rule 68 offer of judgmenti the Rarxescs er~tcred a settlement agreement wit11 FIRC, which stipulated to the dismissal ofthe case. into

The final order of ciismissal was entered into on January 30,2002; however. MFtl was not

notificd of the settlement betlveen the HRC and the Bameses and the subsequent dismissal

of the case until two and a half months later. Therefore, MFH argues that it did not have an

agreement between FfRC and the opportunity to review or oppose tlie executed settlcl~lerit

Bameses or the stipulated dismissal. MFH coritcrids that this lack of notice denied it its

fundanrental riglit to due process. Couseyucntly, hIFH asks this Court to vacate the final

order of dismissal and remand it to District Court for the purpose ofproviding notice to MFI-I

in accordance with the service provisions of Rule 5(a), bf.R.Civ.P. In turn, b1FH requests

that it be afforded the opportunity to object to the entry of a final order of dismissal.

7\23 MF1-1 received notice of the final order of dismissal on April 14, 2002. Rather than

MFk-1sliould have filed amotio~t filing the subsequent notice ofappeal with this Co~lrt, with

the District Court so tliat the court could address the issue of lack of notice. As it stands,

though, MFH raisecl this issue for the first timc on appcal.

'21 1. I'hc gcncral l-ulc is tliat this Court will not address arr issue raised fi>rthe tirst timc on

appeal. Sce L'rrificd I/ztlusr~-ics, Inc. 1. . E(~siq,, 1908 M'f 1.15:' 15, 280 Viont. 255,'j !5,061

P.2d 100, fj 15; Diij: 1 Prrytlr (l996j, 28ii blont. 273,276,92WP.2d 864, SO!,. : . "The basis for

the general rule is that 'it is fundamentally unfair to fault ihe trial cour? h . i failing to r-tlie correctly on an issue ir was ncver given the opporiu~lit:;to consider."' Ctrijieil Irm'u.s1rit!.~*

[:ti.., 7 15 (cjuoting i l i r ~280 'tioi~i. 270-77: 029 PP.Zri K6Gi. 1 .~ at sir

"25 !I In conclusion. we reverse the District Court's denial of b4FH's right to seek :itto.r~cy

fces and remand t h i s issue to the District C'ourt for a. cictcrn~ii.iation whether- an award of' of

attorney fees is appropriate. A s the second issue was not brought before the District C'ourt.

we decline to address it on appeal.

bVc concur:

Justices Justlce Ferry l . speci a11,\ concurs i Irreue~lcr

E2h 1 c o n c ~tvirh thc restilt of rhc majority Opinion. I-Ioi\:cvcr. 1 do not agrcc will1 ail that ~r

is said in that Opinion.

yj27 Finding virtue in certainty and nothing inherently beneficial about a "measured

approach" that provides no future guidance to litigants, I would follow the precedent of the

9th Circuit Got~rt Appeals in ~Vusonl C:O/Mt-I Ct.i,oc/l~~(rtl, (9th Cir. 1997), 122 F.3d of 1). Irlc.

830, rathcr than the 7th Circuit's approach in ?lor+ Co. v. .-lrzclzor Hocking l'rrck~zgi~lg (7th

q,28 In ;Vzr~or,r.the 9th Ctrcu~t held that:

[A] Rule 68 offer for judgment in a specific sum together with costs, which is silent as to attorney fees, does not preclude the plaintiff from seeking fees when the underlying statute does not make attorney fees a part of costs.

2 That 1s a rule that anyone can understand

7130 1 the 01 other hand, the 7th Circu~t held in .2hr-* that:

['S/he appropriate adjustment is to insist that the Rule 68 offer be completely unambiguous. not that it use the magic words "attorneys' fees."

T3 1 Insisting that Rule 68 offers be completely unambiguous and then deciding on a ease-

by-case basis whether an offer is or is not unambiguous does not serve anyone's interest. No

one would ever make a Rule 08 offer that he or she thought was ambiguous in the first place.

ignores the prior admonition in thc Furthernlore, the anlbiguous rule established in ~Vorcihy samc case scgardirzg the importance of certainty in Rule 0 8 offers. Tlrat court corrcctiy statcd

rim: \L'e arid that an ambiguous offer places the plaintiff in a11 uncomfortable position. Not knowing thc actual value of the offer: he can't make an ii~telligentchoicc whether to accept it--and there are consequences either way. For unlike the case of an ordinary contract offer, the offeree cannot reject it without legal consequences, since if he rejects it atid then doesn't do bcttcr at trial he has to pay the dcfcndant's post-offer costs. [Citation omitted.]

1,32 Bccausc the Defendant's offer mas s~lent regard~ng wan er of attorney fecs M h ~ c h ere v

statutorily authorized to a prevailing claimant and because I concur that it is in the interests

of the offeror and offcrec that a Rule 08 offer ofjudgment be clcar and unan~biguous order in

to effect a waiver of attorney fees, 1 concur with the majority's conclusion that MFtf did not

waive its claim for attorney fecs which was independent of statutory costs a ~ i d decision its

to reverse the Distrtct Court. I-loueher. I disagree that a Rule (18 offer of ludgment can be

clear and unanib~guous regard~ng tndepcndent statutory cla~m attorney fees ulthout an for

refening to "attorney fees" in the offer. Justice .iim Rice concurring in part and dissefiting i n part.

"133 holding or1 ISSUC 1. I agree with the Coricurring on lsslie 2. 1 cfiisscrrt from thc Co~1rt.s

holding ill /Vii.~-tiii~ attonicy fees niust be addrcsscd unambiguously within Rrrlc 68 that

judgrncnls in order to rcsolve the issue. However, I do not bciicvc arnbigiiity cxisted hcrc.

MFfi's acceptance indicated that all of its claims were resolved by thc Rancses' offcr of

judgment; which necessarily included its express claim for attorney fees.

7/34 Like the Crourt, I find the reasoning in !Voviihy persu:isive. but, contrary to the Court,

I would reach thc same rcsult as the Arordby court did. In K'ordhy, languagc similar to that

uscd 'here was found to have encompassed the plairttiffs claim for attorney fces. 1 do not

find it necessary. for ~ L I I - p o s e m f case, to distinguish iVo'or.i&r on ihc g r o u ~ ~ that ihc this ds

language there was uscd by the party making the offcr, while the similitr language hcrc tvas

used by the party accepting the offer. l'o the extent that the attorney fee issue was ambiguous

within the Barneses' offer, the issue was clarified by MFtl's acceptance, and confirmed by

tltc parties' subsequent actions in accordance thcrcwith.

'135 1 firtil no fault with thc District Court's ruling, and would aftirnm.