06/02/2020
DA 19-0598 Case Number: DA 19-0598
IN THE SUPREME COURT OF THE STATE OF MONTANA 2020 MT 147N
TWO RIVERS APARTMENTS, LLLP,
Plaintiff and Appellant,
v.
AULTCO CONSTRUCTION, INC., OLD WORKS, INC., d/b/a AULTCO CONSTRUCTION, INC.,
Defendants and Appellees.
APPEAL FROM: District Court of the Fourth Judicial District, In and For the County of Missoula, Cause No. DV-15-1054 Honorable John W. Larson, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Michael O’Brien, St. Peter Law Office, P.C., Missoula, Montana
For Appellees:
Christopher W. Froines, Froines Law Office, P.C., Missoula, Montana
Submitted on Briefs: April 29, 2020
Decided: June 2, 2020
Filed: q3,,---,6mal•-.— 4( __________________________________________ Clerk Justice Ingrid Gustafson 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 This long-running dispute has spawned litigation before two separate district court
judges and resulted in four appeals to this Court. Once again, the issue before this Court
is whether the parties are permitted to relitigate issues already litigated and determined by
one district court in another district court. We conclude they cannot and reverse and
remand with instructions to reduce the attorney fee award accordingly.
¶3 Two Rivers Apartments, LLLP (Two Rivers) sued Aultco Construction, Inc.
(Aultco) in DV-15-1054 before Judge Larson in the Fourth Judicial District Court,
Missoula County, for negligent construction of an apartment building. After two years of
litigation, the parties signed a mutual release and settlement agreement. The agreement
included an indemnification provision that provided:
In the event any additional claim is made which directly or indirectly results in additional liability exposure to the Parties for the losses, injuries, and damages for which this Release is given, the Parties covenant and agree to indemnify and each other [sic] and hold harmless from all such claims and demands, including reasonable attorney’s fees and all other expenses necessarily incurred.
¶4 The tenants of the subject apartment building then brought suit against Two Rivers
and its general and limited partners before Judge Deschamps in DV-18-39. The general 2 partners of Two Rivers filed a third-party complaint against Aultco, seeking contribution
and indemnity if they were found liable for damages caused by Aultco’s negligent conduct.
Aultco filed a motion to dismiss the third-party complaint under the principles of res
judicata and collateral estoppel, citing the prior suit and settlement agreement between
Aultco and Two Rivers. Judge Deschamps granted the motion. The limited partner of
Two Rivers then filed a separate third-party complaint against Aultco on the same grounds.
Aultco again moved to dismiss based on res judicata and collateral estoppel. Judge
Deschamps again granted the motion. This Court affirmed the first dismissal of Aultco
from the suit on the grounds of res judicata and collateral estoppel. Adams v. Two Rivers
Apartments, LLLP, 2019 MT 157, ¶ 23, 396 Mont. 315, 444 P.3d 415.
¶5 Along with its second motion to dismiss before Judge Deschamps, Aultco sought
attorney fees under either Foy v. Anderson, 176 Mont. 507, 580 P.2d 114 (1978), or
pursuant to the terms of the settlement agreement from DV-15-1054. In granting the
motion, Judge Deschamps determined that an award of attorney fees was appropriate
“[p]ursuant to the Settlement Agreement, as well as Foy.” Aultco submitted two invoices
of $15,475 and $1,975 and sought the full amount of those invoices. Judge Deschamps
declined to award fees-for-fees and determined that the court would award fees associated
with Aultco’s first and second motions to dismiss, which he determined to be $6,475, but
reduced the amount to $5,550, reasoning that the second motion to dismiss was duplicative
of the first. Judge Deschamps ordered all of the defendants and third-party plaintiffs—that
is, Two Rivers and its general and limited partners—to pay the attorney fee award.
3 ¶6 Aultco then filed a motion to enforce the settlement agreement against Two Rivers
in the original action, DV-15-1054, before Judge Larson. Aultco submitted a number of
invoices to Judge Larson, totaling $23,273.83, which included the two invoices previously
submitted to Judge Deschamps.1 Judge Larson awarded Aultco the entire $23,273.83 in
requested attorney fees from Two Rivers.
¶7 Two Rivers appeals from Judge Larson’s order, arguing that the two invoices
totaling $17,450, already considered and awarded in part by Judge Deschamps, should have
been excluded under the principle of collateral estoppel. It argues the award should also
be reduced a further $625, which was billed by Aultco’s attorney-fee expert, because
“fees-for-fees” should not be awarded in this case.
¶8 A district court’s application of collateral estoppel is a question of law that this Court
reviews for correctness. Adams, ¶ 5. Collateral estoppel, also known as issue preclusion,
is a form of res judicata, and bars the reopening of an issue that has been litigated and
resolved in a prior suit. Adams, ¶ 9 (citing Baltrusch v. Baltrusch, 2006 MT 51, ¶ 15,
331 Mont. 281, 130 P.3d 1267). Collateral estoppel has four elements: (1) the identical
issue raised was previously decided in a prior adjudication; (2) a final judgment on the
merits was issued in the prior adjudication; (3) the party against whom the plea is now
asserted was a party or in privity with a party to the prior adjudication; and (4) the party
1 Aultco submitted two amended affidavits and supplemental briefing with additional invoices dated after the filing of the motion to enforce the settlement agreement that Judge Larson did not consider.
4 against whom preclusion is now asserted was afforded a full and fair opportunity to litigate
the issue. Adams, ¶ 9 (citing McDaniel v. State, 2009 MT 159, ¶ 28, 350 Mont. 422, 208
P.3d 817).
¶9 All four elements of claim preclusion are met in this case. Aultco submitted two
invoices totaling $17,450 to Judge Deschamps after he awarded it attorney fees under the
terms of the settlement agreement and Foy. After a reasonableness hearing, Judge
Deschamps determined a reasonable award of attorney fees based on those invoices.
Aultco did not appeal from that decision. Aultco then brought additional proceedings
before Judge Larson to enforce the settlement agreement and resubmitted those same two
invoices, along with other invoices. Aultco did not argue before Judge Larson that Judge
Deschamps had failed to previously consider or award any portion of those invoices, but
again sought the full amount of the invoices. Judge Larson should have excluded these
invoices in considering additional attorney fees. The issue of whether Aultco was entitled
to the attorney fees billed in those two invoices under the settlement agreement had been
litigated, considered, and awarded in DV-18-39 before Judge Deschamps. The party
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06/02/2020
DA 19-0598 Case Number: DA 19-0598
IN THE SUPREME COURT OF THE STATE OF MONTANA 2020 MT 147N
TWO RIVERS APARTMENTS, LLLP,
Plaintiff and Appellant,
v.
AULTCO CONSTRUCTION, INC., OLD WORKS, INC., d/b/a AULTCO CONSTRUCTION, INC.,
Defendants and Appellees.
APPEAL FROM: District Court of the Fourth Judicial District, In and For the County of Missoula, Cause No. DV-15-1054 Honorable John W. Larson, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Michael O’Brien, St. Peter Law Office, P.C., Missoula, Montana
For Appellees:
Christopher W. Froines, Froines Law Office, P.C., Missoula, Montana
Submitted on Briefs: April 29, 2020
Decided: June 2, 2020
Filed: q3,,---,6mal•-.— 4( __________________________________________ Clerk Justice Ingrid Gustafson 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 This long-running dispute has spawned litigation before two separate district court
judges and resulted in four appeals to this Court. Once again, the issue before this Court
is whether the parties are permitted to relitigate issues already litigated and determined by
one district court in another district court. We conclude they cannot and reverse and
remand with instructions to reduce the attorney fee award accordingly.
¶3 Two Rivers Apartments, LLLP (Two Rivers) sued Aultco Construction, Inc.
(Aultco) in DV-15-1054 before Judge Larson in the Fourth Judicial District Court,
Missoula County, for negligent construction of an apartment building. After two years of
litigation, the parties signed a mutual release and settlement agreement. The agreement
included an indemnification provision that provided:
In the event any additional claim is made which directly or indirectly results in additional liability exposure to the Parties for the losses, injuries, and damages for which this Release is given, the Parties covenant and agree to indemnify and each other [sic] and hold harmless from all such claims and demands, including reasonable attorney’s fees and all other expenses necessarily incurred.
¶4 The tenants of the subject apartment building then brought suit against Two Rivers
and its general and limited partners before Judge Deschamps in DV-18-39. The general 2 partners of Two Rivers filed a third-party complaint against Aultco, seeking contribution
and indemnity if they were found liable for damages caused by Aultco’s negligent conduct.
Aultco filed a motion to dismiss the third-party complaint under the principles of res
judicata and collateral estoppel, citing the prior suit and settlement agreement between
Aultco and Two Rivers. Judge Deschamps granted the motion. The limited partner of
Two Rivers then filed a separate third-party complaint against Aultco on the same grounds.
Aultco again moved to dismiss based on res judicata and collateral estoppel. Judge
Deschamps again granted the motion. This Court affirmed the first dismissal of Aultco
from the suit on the grounds of res judicata and collateral estoppel. Adams v. Two Rivers
Apartments, LLLP, 2019 MT 157, ¶ 23, 396 Mont. 315, 444 P.3d 415.
¶5 Along with its second motion to dismiss before Judge Deschamps, Aultco sought
attorney fees under either Foy v. Anderson, 176 Mont. 507, 580 P.2d 114 (1978), or
pursuant to the terms of the settlement agreement from DV-15-1054. In granting the
motion, Judge Deschamps determined that an award of attorney fees was appropriate
“[p]ursuant to the Settlement Agreement, as well as Foy.” Aultco submitted two invoices
of $15,475 and $1,975 and sought the full amount of those invoices. Judge Deschamps
declined to award fees-for-fees and determined that the court would award fees associated
with Aultco’s first and second motions to dismiss, which he determined to be $6,475, but
reduced the amount to $5,550, reasoning that the second motion to dismiss was duplicative
of the first. Judge Deschamps ordered all of the defendants and third-party plaintiffs—that
is, Two Rivers and its general and limited partners—to pay the attorney fee award.
3 ¶6 Aultco then filed a motion to enforce the settlement agreement against Two Rivers
in the original action, DV-15-1054, before Judge Larson. Aultco submitted a number of
invoices to Judge Larson, totaling $23,273.83, which included the two invoices previously
submitted to Judge Deschamps.1 Judge Larson awarded Aultco the entire $23,273.83 in
requested attorney fees from Two Rivers.
¶7 Two Rivers appeals from Judge Larson’s order, arguing that the two invoices
totaling $17,450, already considered and awarded in part by Judge Deschamps, should have
been excluded under the principle of collateral estoppel. It argues the award should also
be reduced a further $625, which was billed by Aultco’s attorney-fee expert, because
“fees-for-fees” should not be awarded in this case.
¶8 A district court’s application of collateral estoppel is a question of law that this Court
reviews for correctness. Adams, ¶ 5. Collateral estoppel, also known as issue preclusion,
is a form of res judicata, and bars the reopening of an issue that has been litigated and
resolved in a prior suit. Adams, ¶ 9 (citing Baltrusch v. Baltrusch, 2006 MT 51, ¶ 15,
331 Mont. 281, 130 P.3d 1267). Collateral estoppel has four elements: (1) the identical
issue raised was previously decided in a prior adjudication; (2) a final judgment on the
merits was issued in the prior adjudication; (3) the party against whom the plea is now
asserted was a party or in privity with a party to the prior adjudication; and (4) the party
1 Aultco submitted two amended affidavits and supplemental briefing with additional invoices dated after the filing of the motion to enforce the settlement agreement that Judge Larson did not consider.
4 against whom preclusion is now asserted was afforded a full and fair opportunity to litigate
the issue. Adams, ¶ 9 (citing McDaniel v. State, 2009 MT 159, ¶ 28, 350 Mont. 422, 208
P.3d 817).
¶9 All four elements of claim preclusion are met in this case. Aultco submitted two
invoices totaling $17,450 to Judge Deschamps after he awarded it attorney fees under the
terms of the settlement agreement and Foy. After a reasonableness hearing, Judge
Deschamps determined a reasonable award of attorney fees based on those invoices.
Aultco did not appeal from that decision. Aultco then brought additional proceedings
before Judge Larson to enforce the settlement agreement and resubmitted those same two
invoices, along with other invoices. Aultco did not argue before Judge Larson that Judge
Deschamps had failed to previously consider or award any portion of those invoices, but
again sought the full amount of the invoices. Judge Larson should have excluded these
invoices in considering additional attorney fees. The issue of whether Aultco was entitled
to the attorney fees billed in those two invoices under the settlement agreement had been
litigated, considered, and awarded in DV-18-39 before Judge Deschamps. The party
against whom the plea is now asserted was a party in the prior adjudication—Judge
Deschamps awarded the award of attorney fees to Aultco against Two Rivers and its
general and limited partners. Finally, Aultco had a full and fair opportunity to litigate the
issue before Judge Deschamps—it succeeded on its argument that it was entitled to fees
under the settlement agreement and brought evidence and experts to support the
reasonableness of its requested fee.
5 ¶10 We also agree with Two Rivers that the award should be reduced by the $625 billed
for hearing preparation and testimony by Aultco’s expert on the reasonableness of the
attorney fees requested. Judge Deschamps, awarding fees under the settlement agreement
and Foy, had already determined that fees-for-fees were not appropriate under the
settlement agreement. Aultco did not appeal from this finding and it is estopped from
asking another district court to reweigh the same issue.
¶11 We reverse and remand the District Court’s attorney fee order with instructions to
reduce the amount rewarded by $18,075. The corrected attorney fee award in DV-15-1054
is $5,198.83.
¶12 We have determined to decide this case pursuant to Section I, Paragraph 3(c) of our
Internal Operating Rules, which provides for memorandum opinions. In the opinion of the
Court, the case presents a question controlled by settled law or by the clear application of
applicable standards of review. The District Court’s interpretation and application of the
law were incorrect.
¶13 Reversed and remanded with instructions.
/S/ INGRID GUSTAFSON
We concur:
/S/ MIKE McGRATH /S/ LAURIE McKINNON /S/ BETH BAKER /S/ DIRK M. SANDEFUR