Runkle v. Allen

2016 MT 55N

• Court: Montana Supreme Court
• Decided: March 8, 2016
• Docket: 15-0336
• Status: Published

Opinion

March 8 2016

DA 15-0336 Case Number: DA 15-0336

IN THE SUPREME COURT OF THE STATE OF MONTANA 2016 MT 55N

JOHN D. RUNKLE,

Plaintiff and Appellant,

v.

DUANE ALLEN,

Defendant and Appellee.

APPEAL FROM: District Court of the Nineteenth Judicial District, In and For the County of Lincoln, Cause No. DV-13-261 Honorable James B. Wheelis, Presiding Judge

COUNSEL OF RECORD:

For Appellant:

John D. Runkle, self-represented, Troy, Montana

For Appellee:

Amy N. Guth, Law Offices of Amy Guth, Libby, Montana

Submitted on Briefs: January 13, 2016

Decided: March 8, 2016

Filed:

__________________________________________ Clerk Justice Beth Baker delivered the Opinion of the Court.

¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court Internal Operating

Rules, this case is decided by memorandum opinion and shall not be cited and does not

serve as precedent. Its case title, cause number, and disposition shall be included in this

Court’s quarterly list of noncitable cases published in the Pacific Reporter and Montana

Reports.

¶2 John D. Runkle appeals from the orders of the Nineteenth Judicial District Court,

Lincoln County, granting summary judgment to Appellee Duane Allen, and sanctioning

Runkle pursuant to M. R. Civ. P. 11 (Rule 11). This case arises from a dispute over a

cabin in Yaak, Montana, which straddled portions of both Allen’s and Runkle’s land.

¶3 Runkle, through his LLC—World Famous Dirty Shame Saloon LLC—acquired

real property in Yaak in April 2013. The Dirty Shame Saloon is located on this property.

Allen purchased an adjacent five-acre parcel in November 2013. There are six small

cabins located on Allen’s property.

¶4 Prior to Allen’s purchase, Runkle suspected that a portion of one of the cabins

encroached on Runkle’s property. Runkle surmised that he owned the entire cabin

because access to the cabin’s door was on his property. Runkle stored personal property

in the cabin and posted a “no trespassing” sign on the cabin.

¶5 When Allen learned of the possible encroachment, he commissioned a survey of

his property. According to Runkle, the survey disclosed that at least half of the cabin was

located on Runkle’s property. Runkle and Allen never communicated directly regarding 2 ownership of the cabin and neither gave permission to the other to enter upon their

respective properties. Runkle did not remove his personal property from the cabin

interior.

¶6 Sometime after the survey, Allen removed the cabin from its foundation and

relocated the cabin off the property line. He separated the porch and entry from the cabin

proper and left the porch on Runkle’s property. In December 2013, Runkle, appearing on

his own behalf, filed a complaint claiming damages for breach of contract, conversion,

trespass, intentional infliction of emotional distress, and treble damages for waste.

Runkle later amended his complaint to add claims against Geoff Decker for allegedly

assisting with the cabin’s relocation.

¶7 The District Court denied Allen’s motion to dismiss the amended complaint.

After the parties engaged in discovery, Runkle filed and then withdrew a second amended

complaint. Runkle then requested permission to file a third amended complaint and add

additional defendants. Allen opposed Runkle’s motion to file a third amended complaint

and moved for summary judgment on all issues. The court heard oral argument from the

parties on July 23, 2014.

¶8 Following oral argument, Allen moved for Rule 11 sanctions against Runkle for

Allen’s attorney’s fees and costs on the ground that Runkle’s amended complaint was

“based upon fanciful and frivolous legal theories that lack any authority or merit.” On

August 7, 2014, the District Court granted Allen’s motion for summary judgment, and on

October 22, 2014, it granted Rule 11 sanctions against Runkle for Allen’s attorney’s fees 3 and costs. The court denied Runkle’s subsequent motion to set aside the sanctions on the

ground that it was time barred under M. R. Civ. P. 59(e). Runkle did not attend the

hearing at which the court determined the amount of fees to award, and thereafter the

court entered final judgment dismissing Runkle’s claims and awarding Allen attorney’s

fees in the amount of $12,513.30 with interest accruing at a rate of ten percent per

annum.

¶9 On appeal, Runkle argues that the District Court erred by granting summary

judgment and by denying his motion to file a third amended complaint. Runkle also

claims that the court erred in imposing Rule 11 sanctions against him and abused its

discretion by issuing sanctions without first conducting a hearing.

¶10 We review a district court’s ruling on a motion for summary judgment de novo,

applying M. R. Civ. P. 56(c)(3). Bailey v. State Farm Mut. Auto. Ins. Co., 2013 MT 119,

¶ 18, 370 Mont. 73, 300 P.3d 1149. We review de novo the district court’s determination

that a pleading violates Rule 11. Byrum v. Andren, 2007 MT 107, ¶ 19, 337 Mont. 167,

159 P.3d 1062. We review a district court’s findings of fact underlying the conclusion to

determine whether the findings are clearly erroneous. Byrum, ¶ 19. If the court

determines that Rule 11 was violated, we review a district court’s choice of sanction for

abuse of discretion. Byrum, ¶ 19.

¶11 In granting summary judgment, the District Court began by rejecting one of

Allen’s arguments—that the complaint should be dismissed based on failure to prove that

Runkle personally owns an interest in the Dirty Shame Property. The court concluded 4 that Runkle was “not non-suited by the failure to prove a property interest” because it

was “clear from Runkle’s testimony that the World Famous Dirty Shame Saloon, LLC, is

the alter ego of John D. Runkle, personally.”

¶12 In regard to Runkle’s claims, the District Court concluded that Runkle “fail[ed] to

present any facts that support a claim for breach of contract” because he and Allen “had

no communication with each other regarding the cabin or the survey findings.” Thus, the

District Court concluded that the essential elements of a contract under § 28-2-301,

MCA, did not exist. The court also concluded that Runkle’s trespass and conversion

claims failed as a matter of law. The court determined that Runkle could not prove that

he owned the cabin to establish a claim for conversion, and that Runkle could not prove

that Allen acted intentionally or recklessly in entering upon Runkle’s property to

establish a claim for trespass. Similarly, the court concluded that Runkle was not entitled

to conversion damages for his personal property located in the portion of the cabin on

Allen’s real property. According to the court, Runkle, not Allen, had the legal duty to

remove the property and “[h]is failure to do so does not create a cause of action.” The

court further concluded that Runkle’s claim for waste—which he based on § 70-16-106,

MCA—fails because that statute pertains to property waste committed by persons with a

shared interest in real property and Runkle and Allen do not have shared interest in real

property. Finally, the court concluded that Runkle failed to set forth a prima facie case to

support an award of emotional distress damages because Runkle “fail[ed] to present proof

that [his] ‘stress’ is so severe as to warrant compensation.” 5 ¶13 Runkle asserts the following arguments on appeal: 1) that the District Court

abused its discretion by stating that the World Famous Dirty Shame Saloon LLC, is the

alter ego of Runkle because such an order “could open up the LLC to additional liability

by making a ruling on such an issue”; 2) that the District Court erred in concluding that

“relocation of a structure located on Allen’s property by Allen cannot be trespass or

conversion against Runkle” because Allen had “admitted trespassing onto [Runkle’s]

property, tearing down ‘no trespassing’ signs, [and] cutting the lock off of the front door

of the [cabin]” in interrogatories and during oral argument; 3) that the District Court

never decided the issue of ownership of the cabin and “therefore a triable issue still

exists”; 4) that the District Court should have considered Runkle’s claim for waste

because it was “feasible” for the District Court to conclude that Runkle and Allen shared

or would have a shared interest in the property; and 5) that the District Court erred and

abused its discretion in finding that Runkle failed to set forth a case for emotional distress

damages because “it was a foreseeable certainty that [Runkle] would suffer such

emotional distress and the infliction of such emotional distress is probably a motivation

that inspired [Allen] to take such action to begin with.”

¶14 Our review of the record demonstrates that Runkle has failed to substantiate a

genuine issue of material fact to defeat summary judgment. To avoid summary

judgment, the non-moving party must establish substantial evidence, as opposed to mere

denial, speculation, or conclusory assertions that a genuine issue of material fact exists or

that the moving party is not entitled to prevail under applicable law. Hansard Mining, 6 Inc. v. McLean, 2014 MT 199, ¶ 10, 376 Mont. 48, 335 P.3d 711. To support his claims

on appeal, Runkle relies on conclusory assertions that are unsupported by legal authority

as well as his own oral arguments from summary judgment proceedings. These

arguments do not establish substantial evidence to raise a genuine issue of material fact.

¶15 Moreover, this appeal is the first time Runkle has argued that he partially owned

the cabin, that he and Allen jointly owned the cabin, or that the cabin was affixed to

Runkle’s property. At all times before the District Court, Runkle argued that he alone

owned the cabin because its entrance was on his property. We will not address an issue

raised for the first time on appeal. Hansen Trust v. Ward, 2015 MT 131, ¶ 19, 379 Mont.

161, 349 P.3d 500. “This rule applies to both substantive and procedural matters, as well

as to a change in a party’s theory of the case.” Hansen Trust, ¶ 19 (citation and internal

quotation marks omitted). It is unfair to fault the trial court for an error when it was

never given the opportunity to consider the issue. Hansen Trust, ¶ 19. We therefore

decline to review these arguments on appeal. Accordingly, we affirm the District Court’s

order granting summary judgment to Allen.

¶16 In granting Rule 11 sanctions, the District Court concluded that while some of

Runkle’s claims were “arguably judicable,” the “vast majority” of Runkle’s legal theories

were not supported by existing law and were not well-grounded in fact. For example, the

court explained:

[N]o law exists to support Runkle’s theory that joint ownership in real property permits a stranger to title or interest to sue for waste. No law exists that permits a real property owner who relocates personal property 7 located on his or her own real property to be sued for trespass. No law exists to support Runkle’s claim that the location of an encroaching structure’s entrance dictates the ownership of the encroaching structure and the ground beneath the encroaching structure.

The court also took into account Runkle’s pro se status, noting that, “[w]hile the Court

may give procedural leeway to Runkle based on his pro se status, the Court is not

inclined to permit Runkle to use the judicial process to harass Allen or to cause him

needless financial harm.” Quoting D’Agostino v. Swanson, 240 Mont. 435, 445, 784 P.2d

919, 925 (1990), the court determined that sanctions were appropriate in this case in order

to punish Runkle for and deter the future use of “‘wasteful and abusive litigation

tactics.”’ Therefore, the court concluded that it is “fair and appropriate that Runkle

compensate Allen for his reasonable and necessary attorney’s fees.”

¶17 Runkle argues that the court denied him due process by failing to hold a hearing

prior to issuing sanctions against him. Runkle also argues that the court erred in

awarding sanctions because the court found at least part of his claims to be “arguably

judicable.”

¶18 Rule 11(b) provides, in relevant part,

b) Representations to the Court. By presenting to the court a pleading, written motion, or other paper -- whether by signing, filing, submitting, or later advocating it -- an attorney or unrepresented party certifies to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:

(1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation;

8 (2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law;

(3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery . . . .

M. R. Civ. P. 11(b)(1)-(3).

¶19 If a court determines that Rule 11(b) has been violated, the court may impose

appropriate sanctions so long as the party being sanctioned has had “notice and a

reasonable opportunity to respond.” M. R. Civ. P. 11(c)(1). We have held that before

imposing Rule 11 sanctions, a district court “must provide the party with due process by

giving [the party] notice to show cause and affording [him] an opportunity to be heard

and to defend against the imposition of sanctions.” Brandt v. Sade, 2000 MT 98, ¶ 36,

299 Mont. 256, 1 P.3d 929 (citations omitted). “We will not review a district court’s

procedural error unless the appellant has made a timely objection.” Kinsey-Cartwright v.

Brower, 2000 MT 198, ¶ 19, 300 Mont. 450, 5 P.3d 1026. “[I]t has long been the rule of

this Court that on appeal we will not put a District Court in error for a ruling or procedure

in which the appellant acquiesced, participated, or to which appellant made no

objection.” Kinsey-Cartwright, ¶ 19 (citation and internal quotation marks omitted). In

Kinsey-Cartwright, we determined that the appellant was entitled to a hearing regarding

the district court’s imposition of Rule 11 sanctions. Kinsey-Cartwright, ¶ 20. However,

because the appellant did not cite to, and our review of the record did not reveal, an

9 objection to the district court’s failure to conduct a hearing, we held that the district court

did not err in failing to conduct a Rule 11 hearing. Kinsey-Cartwright, ¶ 20.

¶20 Similar to Kinsey-Cartwright, Runkle has not cited to, and the record does not

reveal, that he objected to the District Court’s failure to conduct a hearing prior to the

court ordering sanctions against him. Runkle did not raise the issue of the hearing until

he filed his motion to set aside the attorney’s fees award on April 7, 2015—nearly six

months after the court issued its Order Granting Rule 11 Sanctions. Even if Runkle’s

motion to set aside the sanctions order can be construed as raising an objection, Runkle

cannot establish that his due process rights were violated because it is clear from the

record that he had “notice and a reasonable opportunity to respond.” M. R. Civ. P.

11(c)(1). Runkle received Allen’s Motion and Memorandum in Support of Rule 11

Sanctions on August 4, 2014. On August 12, 2014, Runkle filed a seven-page response

to the sanctions motion. The District Court did not issue its order granting sanctions until

October 22, 2014. As such, Runkle had notice of potential sanctions against him, had a

reasonable opportunity to respond to those allegations, and in fact did respond prior to the

District Court’s imposition of sanctions. Runkle did not seek a hearing until long after

after the motion had been granted. Further, the District Court’s statement that Runkle’s

claims were “arguably judicable” is not an endorsement of the merits. “Judicable” means

“capable of being judged; liable to judgment.” 2 The Compact Edition of the Oxford

English Dictionary 1518 (Oxford Univ. Press, 1971). Having reviewed the record and

10 the basis for the District Court’s order, we conclude that the court did not commit legal

error and acted within its discretion when it granted sanctions to Allen against Runkle.

¶21 Allen also requests that this Court impose sanctions upon Runkle for filing this

appeal. We may award sanctions on appeal, including attorney’s fees and costs, if the

claim for relief is “frivolous, vexatious, filed for purposes of harassment or delay, or

taken without substantial or reasonable grounds.” M. R. App. P. 19(5). In evaluating the

issue of sanctions, “‘we generally assess whether the arguments were made in good

faith.’” Hilten v. Bragg, 2010 MT 273, ¶ 30, 358 Mont. 407, 248 P.3d 282 (quoting

Wolf’s Interstate Leasing & Sales, L.L.C. v. Banks, 2009 MT 354, ¶ 13, 353 Mont. 189,

219 P.3d 1260). Applying this standard, we decline to award Allen his attorney’s fees

and costs in this appeal.

¶22 We have determined to decide this case pursuant to Section I, Paragraph 3(c) of

our Internal Operating Rules, which provides for memorandum opinions. This appeal

presents no constitutional issues, no issues of first impression, and does not establish new

precedent or modify existing precedent. The District Court’s orders granting summary

judgment to Allen and imposing sanctions against Runkle are affirmed.

/S/ BETH BAKER

We concur:

/S/ PATRICIA COTTER /S/ MICHAEL E WHEAT /S/ LAURIE McKINNON /S/ JIM RICE