text:
    IN RE THE MARRIAGE OF KAYLEEN MARIE JONES VAN ATTA, Petitioner and Respondent, v. LAWRENCE CLARE VAN ATTA, Respondent and Appellant.
    No. 91-412.
    Submitted on Briefs March 5, 1992.
    Decided March 31, 1992.
    49 St.Rep. 264.
    252 Mont. 310.
    829 P.2d 3.

      For Appellant: David R. Paoli, Edwards and Paoli, Billings.
    For Respondent: Virginia A. Bryan, Wright, Tolliver and Guthals, Billings.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

Lawrence Clare Van Atta (Lawrence) appeals the May 9, 1991 findings of fact and conclusions of law of the Thirteenth Judicial District, Yellowstone County, which awarded Kayleen Marie Jones Van Atta (Kayleen) $700 monthly maintenance payments following their marriage dissolution.We affirm.

We rephrase the issue presented on appeal as follows:

Did the District Court abuse its discretion when it awarded Kayleen $700 monthly maintenance payments until May 1, 1998, or until the death of either party, Kayleen’s remarriage or her cohabitation?

Kayleen and Lawrence were married on August 31, 1974, in Roundup, Montana.Their marriage produced two children, Kelsey Lynne, bom June 4, 1977, and Brie Anne, born April 22,1980.

At the time of the marriage, both parties were employed as school teachers in Roundup. Thereafter, the parties left their teaching careers to pursue other employment opportunities. At the time of trial, Lawrence was the office manager of Piper, Jaffray & Hopwood in Billings and earned approximately $115,000 in 1990. Lawrence participated in a retirement program as well as other fringe benefits including a country club membership. At the time of trial, Kayleen was employed at River Run Interiors in Billings earning $6.50 an hour with no retirement benefits, sick pay, vacation pay, health insurance, or other fringe benefits. Kayleen completed a paralegal program at Rocky Mountain College, but failed to find employment as a paralegal in the Billings area. Her teaching certificate had also expired.

Kayleen petitioned for dissolution of marriage on May 11, 1990. A Property Settlement Agreement dated April 12, 1991, awarded Kayleen approximately $118,720 of the marital estate and Lawrence approximately $117,405. In addition, on May 9, 1991, the District Court awarded Kayleen $700 monthly maintenance payments until May 1,1998, or until the death of either party, Kayleen’s remarriage, or her cohabitation. Lawrence now appeals the District Court’s award of maintenance to Kayleen.

Did the District Court abuse its discretion when it awarded Kayleen $700 monthly maintenance payments until May 1,1998, or until the death of either party, Kayleen’s remarriage or her cohabitation?

Section 40-4-203, MCA, provides:

(1) In a proceeding for dissolution of marriage or legal separation or a proceeding for maintenance following dissolution of the marriage by a court which lacked personal jurisdiction over the absent spouse, the court may grant a maintenance order for either spouse only if it finds that the spouse seeking maintenance:
(a) lacks sufficient property to provide for his reasonable needs; and
(b) is unable to support himself through appropriate employment or is the custodian of a child whose condition or circumstances make it appropriate that the custodian not be required to seek employment outside the home.
(2) The maintenance order shall be in such amounts and for such periods of time as the court deems just, without regard to marital misconduct, and after considering all relevant facts including:
(a) the financial resources of the party seeking maintenance, including marital property apportioned to him, and his ability to meet his needs independently, including the extent to which a provision for support of a child living with the party includes a sum for that party as custodian;
(b) the time necessary to acquire sufficient education or training to enable the party seeking maintenance to find appropriate employment;
(c) the standard of living established during the marriage;
(d) the duration of the marriage;
(e) the age and the physical and emotional condition of the spouse seeking maintenance; and
(f) the ability of the spouse from whom maintenance is sought to meet his needs while meeting those of the spouse seeking maintenance.

Lawrence argues that Kayleen is not entitled to maintenance under § 40-4-203(1), MCA, because she does not lack “sufficient property” to provide for her reasonable needs and she is able to support herself through “appropriate employment.” We disagree.

“Sufficient property” under § 40-4-203(l)(a), MCA, means income-producing property, not income-consuming property. In Re the Marriage of Bowman (1981), 194 Mont. 233, 237, 633 P.2d 1198, 1200. Here, Kayleen received approximately $118,720 in marital property, $80,000 of which constitutes a Piper, Jaffray & Hopwood ESOP Account, a retirement account. The funds in this account are tax-deferred and are subject to a tax penalty if withdrawn prior to retirement. Kayleen testified that she intended to leave these funds for her retirement as she had no other retirement benefits. Although these funds are income-producing property, they are earmarked for Kayleen’s retirement and she need not use such funds to meet her present reasonable needs. The rest of Kayleen’s share of the marital estate consists of a buy-out from the family home totaling $15,000, a 1988 Honda Accord LX valued at $11,800, and approximately $11,900 from various bank accounts. Kayleen testified that she intends to use the money from the buy-out of the family home for a down-payment on a home, and the money from the various bank accounts to inter alia, pay substantial attorney fees associated with the dissolution. We hold that the District Court properly found that the property awarded to Kayleen under the Property Settlement Agreement was primarily income-producing property but is not sufficient property to provide for her reasonable present needs.

“Appropriate employment” under § 40-4-203(l)(b), MCA, “must be determined with relation to the standard of living achieved by the parties during the marriage.” In Re the Marriage of Bowman, 194 Mont. at 237, 633 P.2d at 1200 (citation omitted). Here, Kayleen enjoyed a high standard of living during the marriage, including a home valued at $172,500, new cars, out-of-state trips, and a country club social life. The District Court found that Kayleen’s reasonable monthly expenses, including her costs associated with child support, do not exceed $2200. The record indicates that Kayleen’s monthly earnings of approximately $700 without benefits was comparable to an entry level paralegal position, the field in which she recently had been certified but was unable to find a position in Billings. The record further indicates that Kayleen was awarded $800 monthly child support.

At the time of trial, Kayleen was unable to return to teaching without further education as her teaching certificate had expired. Kayleen testified that she had no intent of returning to school to renew her teaching certificate nor did she desire to further pursue a career as a paralegal. Accordingly, the District Court found that Kayleen was “not entitled to maintenance in an amount similar to that enjoyed during the marriage.”

At the time of trial, Kayleen’s earnings, including child support, totals approximately $1500 a month. This amount falls $700 short of her monthly reasonable expenses. We hold that the District Court properly found that Kayleen is unable to support herself through appropriate employment in relation to the standard of living she enjoyed during her marriage. Kayleen therefore satisfies the requirements of § 40-4-203(1), MCA, and is entitled to maintenance payments.

Lawrence further argues that Kayleen is not entitled to maintenance under § 40-4-203(2), MCA, because she has sufficient financial resources to meet her needs, she has sufficient education and training to support herself, she is young, she is in good health and she is emotionally stable. Lawrence also argues that he does not have the ability to meet his own needs and his children’s needs while meeting the maintenance awarded to Kayleen.

The record indicates that Lawrence earned approximately $115,000 in 1990. The District Court in its findings of fact and conclusions of law, carefully examined the applicable factors of § 40-4-203(2), MCA, and found that Lawrence was capable of paying and Kayleen was entitled to $700 monthly maintenance payments until May 1, 1998, when their daughter Brie Anne reached the age of emancipation, or until the death of either party, Kayleen’s remarriage, or her cohabitation. We hold that the District Court properly considered the factors under § 40-4-203(2), MCA.

In conclusion, we affirm the District Court’s May 9, 1991 findings of fact and conclusions of law that awarded Kayleen Marie Jones Van Atta maintenance payments.

JUSTICE HARRISON, GRAY, HUNT and McDONOUGH concur.


source: Caselaw Access Project

author: JUSTICE TRIEWEILER

license: Public Domain

text:
    CESSNA FINANCE CORPORATION, Plaintiff and Respondent, v. ROBERT E. CHAMBERS; JOHN S. PARKER, Defendants and Appellants.
    No. 91-388.
    Submitted on Briefs January 16, 1992.
    Decided March 31, 1992.
    Rehearing Denied April 30, 1992.
    49 St.Rep. 271.
    252 Mont. 315.
    828 P.2d 1373.

      For Appellant: Robert J. Emmons, Emmons and Sullivan, Great Falls.
    For Respondent: G. Curtis Drake, Keller, Reynolds, Drake, Sternhagen& Johnson, Helena.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

On September 16,1982, Cessna Finance Corporation filed a complaint against Robert E. Chambers and John S. Parker in the Eighth Judicial District Court in Cascade County. In this complaint, Cessna sought a deficiency judgment following the sale of an airplane it had repossessed from Chambers and Parker. Cessna obtained a default judgment against Parker, but Chambers contested the action. On May 21, 1991, the District Court entered Findings of Fact, Conclusions of Law, and a Judgment in which it found Chambers liable for the deficiency. The court denied a subsequent motion by Chambers to amend the Findings, Conclusions, and Judgment. Chambers appeals. We affirm.

The issues are:

1. Did the District Court err when it concluded that the contract authorized a late-payment penalty in the amount of 12 percent of the outstanding balance?

2. Did the District Court err when it found that Cessna’s denomination of late-payment penalties as “finance charges” did not violate the Montana Retail Installment Sales Act?

On August 10, 1978, Chambers and Parker bought a Cessna 206 airplane from Skymart Aviation in Great Falls. They financed this purchase by entering into an installment contract with Skymart, which subsequently assigned the contract to Cessna Finance Corporation, an entity that assists buyers in financing purchases of airplanes manufactured by the Cessna Aircraft Company. After the downpayment, $62,250 remained to be paid in six annual installments. The agreement between Cessna, Chambers, and Parker called for an “annual percentage rate” of 12 percent.

Before long, a dispute arose between Chambers and Parker regarding the use of the airplane. They agreed that Parker would assume the sole obligation to make payments in exchange for sole use of the airplane. Cessna, however, did not release Chambers from his liability on the purchase contract. Parker actually made the 1979 and 1980 payments, but defaulted on the 1981 payment. Neither Parker nor Chambers made any payments on the airplane after 1980.

Cessna then accelerated the remaining balance, repossessed the airplane, and sold it to a third party. At the time Cessna repossessed the airplane, $53,060.59 remained outstanding on the purchase contract itself. To this amount, Cessna added $152.88 for storage, $44.00 for storage insurance, and $2,452.12 in repossession expenses. The sale yielded $35,501.00, which left a deficiency of $20,208.60.

Cessna obtained a default judgment against Parker and proceeded against Chambers alone for the deficiency. Chambers raised the affirmative defenses of failure to pursue a guarantor and failure to mitigate damages. The court, sitting without a jury, conducted a trial of the matter on January 3, 1990. Subsequently, the court issued its Findings of Fact, Conclusions of Law, and Judgment in which it found Chambers liable for the deficiency and rejected his affirmative defenses.

On June 7, 1991, Chambers moved to amend the Findings, Conclusions, and Judgment. Chambers argued that the purchase contract violated the Montana Retail Installment Sales Act by denominating late-payment penalties as “finance charges” rather than “interest.” The court denied this motion on July 10, 1991. Chambers appeals.

I

Did the District Court err when it concluded that the contract authorized a late-payment penalty in the amount of 12 percent of the outstanding balance?

The relevant contract provisions read as follows:

*6. CREDIT SERVICE CHARGE, FINANCE CHARGE, TIME PRICE
DIFFERENTIAL £28.594.80
ANNUAL PERCENTAGE RATE 12.%
Buyer and Seller further agree that (i) should Buyer make any payment after its due date the FINANCE CHARGE (CREDIT SERVICE CHARGE, TIME PRICE DIFFERENTIAL) will he increased proportionately since the FINANCE CHARGE (CREDIT SERVICE CHARGE, TIME PRICE DIFFERENTIAL) is computed on a daily basis ....
DEFAULT CHARGES — Seller has the option to declare the unpaid balance of the PRINCIPAL (UNPAID BALANCE, BASE TIME PRICE) to be immediately due if Buyer defaults in making payments according to the above PAYMENT SCHEDULE or otherwise defaults.
If any payment is not made by the due date the unpaid PRINCIPAL (UNPAID BALANCE BASE, TIME PRICE) shall continue to accrue FINANCE CHARGE (CREDIT SERVICE CHARGE, TIME PRICE DIFFERENTIAL) at the above ANNUAL PERCENTAGE RATE.
*The amounts shown above in Item 6 (FINANCE CHARGE, CREDIT SERVICE CHARGE, TIME PRICE DIFFERENTIAL)... are estimates as authorized hy Regulation Z §226.6(f) computed on the assumption that all installment payments will be made on the scheduled dates. As the FINANCE CHARGE (CREDIT SERVICE CHARGE, TIME PRICE DIFFERENTIAL) ... is computed on a daily basis, if Buyer fails to make any installment payment on or before the due date, Buyer will be obligated to pay additional amounts by reason of the FINANCE CHARGE (CREDIT SERVICE CHARGE, TIME PRICE DIFFERENTIAL)....

Chambers argues that Cessna cannot collect interest on the judgment because the contract provisions quoted above do not use the word “interest.” He asserts that “finance charges” are calculated differently than “interest” and that, therefore, when he agreed to pay a “finance charge” he did not necessarily agree to pay “interest.” We reject this argument because we conclude that Chambers did in fact agree to a late-payment penalty expressed as a percentage of the outstanding principal.

The contract’s discussion of the “finance charge” refers to Regulation Z, which was promulgated by the Federal Reserve Board under the authority of the Federal Truth in Lending Act, 15 U.S.C. § 1601-1667(e). It is clear that the Truth in Lending Act and Regulation Z do not control or preempt state law in regard to this $62,250 transaction because they do not apply to transactions that exceed $25,000. 15 U.S.C. § 1603; 12 C.F.R. § 226.3(b). However, in light of the contract’s reference to Regulation Z in its discussion of the “finance charge,” we turn to that regulation for assistance in defining terms.

A “finance charge” is the expression of the cost of the credit as a dollar amount. It includes, but is not limited to, interest. 15 U.S.C. § 1604; 12 C.F.R. § 226.4(a).

An “annual percentage rate” is “a measure of the cost of credit, expressed as a yearly rate, that relates the amount and timing of value received by the consumer to the amount and timing of payments made.” 12 C.F.R. § 226.22(a)(1).

The contract addresses the problem of late payments by providing that in the event of default the “finance charge” continues to accrue at the “annual percentage rate.” It is significant that the contract refers to the “annual percentage rate” in this manner. Under Regulation Z, an “annual percentage rate” is merely a rough decimal approximation of the “finance charge.” The Truth in Lending Act requires the creditor to disclose this rough estimate in addition to the “finance charge,” 12 C.F.R. § 226.18, in order to assist buyers in making fully informed decisions, see 15 U.S.C. § 1601(a); 12 C.F.R. § 226.1(b).

The contract, however, provides that in the event of a default, the “finance charge” will continue to accrue at the “annual percentage rate.” When Chambers signed the contract, he agreed to a fixed late-payment penalty of 12 percent on the outstanding balance. This is the provision the District Court relied upon when it found that Chambers had agreed to a late-payment penalty at the annual rate of 12 percent.

We hold that the District Court did not err when it concluded that the contract authorized a late-payment penalty in the amount of 12 percent of the outstanding balance.

II

Did the District Court err when it found that Cessna’s denomination of late-payment penalties as “finance charges” did not violate the Montana Retail Installment Sales Act?

Chambers cites § 31-1-235, MCA, in support of his argument that Cessna’s denomination of late-payment penalties as “finance charges” violated the Montana Retail Installment Sales Act (MRISA). That statute provides that:

The holder may collect a delinquency charge on each installment in default for a period of not less than 10 days in an amount not in excess of 5% of each installment or $5, whichever is less, or in lieu thereof, interest after maturity on each such installment not exceeding the highest lawful contract rate. [Emphasis added.]

Chambers contends that § 31-1-235, MCA, does not authorize lenders to denominate late-payment penalties as “finance charges” and that Cessna violated the MRISA by doing so.

Cessna, on the other hand, argues that Chambers is attempting to construe the MRISA too strictly and that substance should prevail over form. In support of this argument, Cessna cites Bright v. Ball Memorial Hospital Association, Inc. (7th Cir. 1980), 616 F.2d 328. The plaintiffs in that case were former patients who sued the hospital for failure to make certain disclosures required by the Truth in Lending Act. In order to determine whether the Act applied, the Seventh Circuit had to decide whether charges denominated in the hospital’s bills as “finance charges” were really finance charges or whether they were actually late-payment penalties. This distinction was critical, because the Act’s definition of “finance charge” specifically excludes late-payment penalties. Bright, 616 F.2d at 336 (quoting 12 C.F.R. § 226.4(c)).

The plaintiffs in Bright argued that the hospital had assessed “finance charges” because it had expressly denominated its late-payment penalties as “finance charges” in its billing statements. Essentially they argued, just as Chambers argues in this case, that “finance charge” means “finance charge.”

The Seventh Circuit held substance to prevail over form. Specifically, the court said:

Finally, appellants argue that the Hospital’s use of the label “finance charge” on its printed materials indicates that the charges are, in fact, “finance charges” under the Act. While we agree with appellants that this terminology is relevant to our determination, see FRB Unofficial Staff Interpretation No. 1172, supra, it is by no means determinative. See FRB Unofficial Staff Interpretation No. 414, supra. In this regard, we agree with the district court that “the substance of the billing system controls, not its labels.” We conclude, therefore, that the monthly charges assessed against Bright’s and Barber’s accounts were bona fide “late payment” charges under Regulation Z, 12 C.F.R. § 226.4(c).

Bright, 616 F.2d at 338.

We agree with the Seventh Circuit’s analysis of the problem. Chambers agreed to a late-payment penalty of 12 percent on the outstanding principal. His attempt to limit Cessna to the terminology contained in § 31-1-235, MCA, is an unduly restrictive attempt to exalt form over substance.

We hold that the District Court did not err in treating this late-payment structure as equivalent to a simple rate of interest.

Affirmed.

CHIEF JUSTICE TURNAGE and JUSTICES HARRISON, HUNT and WEBER concur.


text:
    SHEFFIELD INSURANCE COMPANY, Plaintiff and Respondent, v. LIGHTHOUSE PROPERTIES, INC., a Montana corporation, GORDON R. HARDING, d/b/a ANCIENT MARINER BAR, and TODD TIBBETS, Defendants and Appellants.
    No. 91-396.
    Submitted on Briefs January 30, 1992.
    Decided March 31, 1992.
    49 St.Rep. 274.
    252 Mont. 321.
    828 P.2d 1369.

      For Appellant: Sam E. HadLdon and William L. Crowley, Boone, Karlberg & Haddon, Missoula.
    For Respondent: Steven S. Cary, Garlington, Lohn & Robinson, Missoula.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

On February 17, 1989, Todd Tibbetts filed an amended complaint against Gordon R. Harding in which he sought to hold Harding liable for damages arising from the sale of alcohol and management of his business premises. Sheffield Insurance Company, which insured Harding’s business, responded by filing a declaratory judgment action in the Twentieth Judicial District in Lake County to determine whether coverage existed for the acts or omissions alleged in Tibbetts’ complaint. The District Court granted summary judgment for Sheffield, and held that the insurance policy did not cover damages arising from the acts alleged in Tibbetts’ complaint. The District Court also awarded attorney fees to Sheffield under § 37-61-421, MCA. Tibbetts appeals. We affirm in part and reverse in part.

The issues are:

1. Did the District Court err when it held that Tibbetts’ amended complaint was barred by the doctrine of res judicata?

2. Did the District Court err when it held that the insurance policy excluded liability for the acts alleged in Tibbetts’ amended complaint?

3. Did the District Court err when it imposed the sanction of costs and attorney fees against Tibbetts’ attorneys?

On October 5 and 6,1985, Tibbetts and his cousin Vince Kelly had several drinks at the Ancient Mariner Bar in Poison. Later that night, Kelly and Tibbetts had an automobile accident while Kelly was driving. Tibbetts was severely injured. Tibbetts then sued Harding as the owner and operator of the Ancient Mariner. Tibbetts alleged that Harding had negligently sold alcohol to Kelly and that Harding was, therefore, hable for the damages Tibbetts had suffered.

On September 11,1986, Sheffield responded by filing a declaratory judgment action in which it sought a ruling that the insurance policy it had issued for the Ancient Mariner did not cover liability for damages arising from the sale of alcohol. The District Court granted summary judgment to Sheffield, and we affirmed. Sheffield Ins. Co. v. Lighthouse Prop., Inc. (1988), 234 Mont. 395, 763 P.2d 669 (Sheffield I).

On February 17, 1989, Tibbetts filed an amended complaint in which he attempted to set forth an additional theory of liability not based on the sale of alcohol. Specifically, Tibbetts claimed that he was a business invitee, that Harding therefore owed him the ordinary duty of due care, and that Harding breached that duty by allowing Tibbetts to leave the Ancient Mariner in the company of an obviously intoxicated person. Sheffield responded by filing this action for declaratory judgment.

The District Court granted Sheffield’s motion for summary judgment. The court found that res judicata barred Tibbetts’ amended claim and that the insurance policy would exclude that claim even in the absence of res judicata. Tibbetts appeals from the judgment of the District Court.

I

Did the District Court err when it held that Tibbetts’ amended complaint was barred by the doctrine of res judicata!

Tibbetts contends that the District Court erred in its application of res judicata because his amended complaint presented a new claim that we did not address in Sheffield I. Specifically, he contends that his original complaint alleged liability for the sale of alcohol based on our decision in Nehring v. LaCounte (1986), 219 Mont. 462, 712 P.2d 1329, and that his amended complaint presented a claim based upon premises liability.

The District Court held that res judicata barred Tibbetts’ premises liability claim, based on our decision in Sheffield I. Res judicata “bars the same parties from relitigating the same cause of action,” and furthers the public policy of finality in litigation. Smith v. Schweigert (1990), 241 Mont. 54, 58, 785 P.2d 195, 197-98. Generally, res judicata bars relitigation not only of issues that have already been decided but also issues that the parties had the opportunity to present for decision. First Bank Missoula v. Fourth Judicial Dist. Court (1987), 226 Mont. 515, 519, 737 P.2d 1132, 1134.

Tibbetts argues that in declaratory judgment actions the application of res judicata is more narrow and that it does not apply to claims that were not expressly declared or decided in the previous action. In support of his position, he brings to our attention decisions from other jurisdictions which hold that declaratory judgment actions are an exception to the ordinary broad scope of the res judicata doctrine. See, e.g., Bernard v. Gulf Ins. Co. (Tex. Ct. Civ. App. 1976), 542 S.W.2d 429. He asserts that we did not address his premises liability claim in Sheffield I and that, therefore, he is not attempting to relitigate the issues we resolved in that decision.

Although we have not previously considered this exception to the res judicata doctrine, we find it unnecessary to do so in this case because we actually addressed Tibbetts’ amended claim in Sheffield I. In that case we said:

While Mr. Tibbetts attempts to argue that there is a basis to consider his allegations of negligence separately from sale or service of alcohol, our analysis of the pleadings and affidavits considered in conjunction with the granting of summary judgment leads us to conclude that Mr. Tibbetts has failed to set forth a theory of negligence separate and apart from the sale or service of alcohol. As a result, we hold that coverage is specifically excluded by the language of the policy.
Mr. Tibbetts contends that coverage should not be excluded for negligent acts of the bar owner in failing to properly manage the bar and to properly supervise the bar employees. We do recognize that the management and supervision of employees could involve matters not related to the sale or service of alcohol. However, as we analyze the facts presented in support of Mr. Tibbetts’ position, we conclude that claims of improper employee supervision or mismanagement of the bar directly relate to the sale or service of alcohol. [Emphasis added.]”

Sheffield I, 763 P.2d at 671-72.

Tibbetts asserts that his premises liability claim is separate and distinct from his original liability theory. He asserts that Harding, as a landowner, owed Tibbetts, as a business invitee, a general duty to warn of known hazards existing on Harding’s property. He cites Fuhrer v. Gearhart by the Sea (Or. 1988), 760 P.2d 874, and Restatement (Second) of Torts § 371 (1976) in support of this theory. Tibbetts contends that Kelly’s intoxication was a known hazard, both on and off the premises of the Ancient Mariner, and that Harding, therefore, should have warned Tibbetts of the danger.

The problem with this theory is that Kelly’s intoxication still arises from the sale of alcohol. Other jurisdictions have rejected similar attempts to circumvent liquor liability exclusions in tavern and saloon insurance policies. In Marston v. Merchants Mutual Insurance Company (Me. 1974), 319 A.2d 111, for example, the court considered a failure to warn claim that was identical to the one alleged in Tibbetts’ amended complaint and found that it was excluded under policy language very similar to the language we construed in Sheffield I. In New Hampshire Insurance Company v. Hillwinds Inn, Inc., (N.H. 1977), 373 A.2d 354, the court found that policy language identical to the language we construed in Sheffield I excluded coverage for a tavern owner’s failure to “police” patrons as they left the bar.

In Sheffield I, we held that the insurance policy excluded coverage for all claims arising from the sale of alcohol on the premises. We conclude that Tibbetts’ amended complaint is not based upon an activity unrelated to the sale of alcohol and is therefore barred by the doctrine of res judicata.

II

Did the District Court err when it held that the insurance policy excluded liability for the acts alleged in Tibbetts’ amended complaint? The insurance policy provides as follows:

This insurance does not apply:
(h) to bodily injury or property damage for which the indemnitee may be held liable
(1) as a person or organization engaged in the business ofmanufacturing, distributing, selling or serving alcoholic beverages, or
(2) if not so engaged, as an owner or lessor of premises used for such purposes, if such liability is imposed
(i) by, or because of the violation of, any statute, ordinance or regulation pertaining to the sale, gift, distribution or use of any alcoholic beverage, or
(ii) by reason of the selling, serving or giving of any alcoholic beverage to a minor or to a person under the influence of alcohol or which causes or contributes to the intoxication of any person;
but part (ii) of this exclusion does not apply with respect to liability of the insured or his indemnitee as an owner or lessor described in (2) above.

This provision excludes coverage for liability arising from the sale of alcohol, subj ect only to an exception in which it affirmatively provides coverage to passive owners who do not actively engage in selling alcohol on the insured premises. Thus, this provision would extend coverage to Harding if he was not actively engaged in the operation of the Ancient Mariner.

Tibbetts sued Harding “d/b/a Ancient Mariner Bar.” In his amended complaint, Tibbetts alleged that Harding (1) “owned and operated” the Ancient Mariner; (2) sold 13 to 20 drinks to Kelly on October 5 and 6, 1985; (3) should have known that Kelly was too drunk to drive; and (4) should have warned Tibbetts of the danger. Furthermore, in response to discovery by Tibbetts, Harding admitted that “at times he was engaged in the actual operation” of the Ancient Mariner.

Tibbetts, however, contends that summary judgment was improper because Harding earlier denied taking an active role in the operation of the Ancient Mariner. However, if Tibbetts’ allegations regarding Harding’s involvement are true, then Harding is not excepted from the exclusion. If they are untrue, Tibbetts has no basis for alleging that Harding is liable to him. Either way, summary judgment was appropriate.

We hold that the District Court did not err when it held that the insurance policy excluded liability for the acts alleged in Tibbetts’ amended complaint.

III

Did the District Court err when it imposed the sanction of costs and attorney fees against Tibbetts’ attorneys?

The District Court awarded attorney fees under the authority of § 37-61-421, MCA, which provides:

An attorney or party to any court proceeding who, in the determination of the court, multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorney fees reasonably incurred because of such conduct. [Emphasis added.]

Tibbetts argues that courts must act with circumspection in penalizing attorneys -under this statute in order to “avoid the chilling of an attorney’s legitimate ethical obligations to represent his client zealously.”

We agree. A we have concluded that Tibbetts’ amended complaint did not present new issues or circumvent the exclusion in the insurance policy, we do not believe it was “unreasonable and vexatious” for his attorneys to attempt to amend the complaint in a way that would reach Harding’s insurance coverage.

We hold that the District Court erred when it assessed costs and attorney fees against Tibbetts’ attorneys.

The decision of the District Court is affirmed with respect to its order of summary judgment, but reversed with respect to its imposition of attorney fees.

JUSTICES HARRISON, McDONOUGH, HUNT and WEBER concur.


author: JUSTICE GRAY

text:
    TRUCK INSURANCE EXCHANGE, a reciprocal inter-insurance exchange, Plaintiff and Respondent, v. THOMAS G. WALLER and LINDA L. WALLER, Defendants and Appellants, DONALD ENGELKE, CHARLES ENGELKE, and CHARLES and DONALD ENGELKE, d/b/a/ CHARLES and DONALD ENGELKE, a partnership, Defendants. and THOMAS G. WALLER and LINDA L. WALLER, Counterclaimants and Appellants, v. TRUCK INSURANCE EXCHANGE, a reciprocal Inter-insurance Exchange, Counterclaim Defendant and Respondent.
    No. 90-544.
    Submitted on Briefs January 30, 1992.
    Decided April 10, 1992.
    Rehearing Denied May 7, 1992.
    49 St.Rep. 318.
    252 Mont. 328.
    828 P.2d 1384.

      For Appellants: David L. Irving, Attorney at Law, Glasgow; David S. Evinger, Robins, Kaplan, Miller & Ciresi, Minneapolis, Minn.

      For Respondents: George C. Dalthorp and Peter F. Habein, Crowley, Haughey, Hanson, Toole & Dietrich, Billings.
   JUSTICE GRAY

delivered the Opinion of the Court.

The appellants, Thomas and Linda Waller, appeal from an order of the District Court of the Fifteenth Judicial District, Roosevelt County, which granted summary judgment in favor of the respondent, Truck Insurance Exchange (Truck Insurance). We affirm.

The issues on appeal are:

1. Did the District Court err in concluding that the language of the Engelkes’ insurance policies excluded coverage for Mr. Waller’s injuries arising from the airplane accident and, thus, that Truck Insurance was entitled to summary judgment?

2. Did the District Court err in granting summary judgment to Truck Insurance on the Wallers’ misrepresentation counterclaim?

3. Did the District Court err in dismissing the Wallers’ bad faith counterclaim?

Truck Insurance brought this action in 1985 seeking a declaration that the insurance policies it issued to Donald and Charles Engelke did not provide coverage for the injuries suffered by Mr. Waller while he was a passenger in an airplane which crashed while piloted by Donald Engelke. Prior to the accident, the Engelkes had insured their farm through Truck Insurance with a Farm Sentinel policy and a commercial umbrella policy. When this declaratory judgment action originated, the Engelkes were defendants in a personal injury action filed by the Wallers. Judgment in that action was entered in 1989 against Donald Engelke.

The Engelkes answered Truck Insurance’s declaratory judgment complaint by admitting that the insurance policies provided no coverage for the airplane accident; they are no longer involved in this suit. The Wallers answered by alleging that there was coverage for the airplane accident. They also counterclaimed for misrepresentation against Truck Insurance asserting that after the Engelkes purchased their insurance, Truck Insurance’s agent misrepresented to Donald Engelke that Engelke could not obtain insurance coverage for his aircraft because he did not have a pilot’s license. The Wallers sought reformation of the insurance policies to provide coverage or estoppel on the part of Truck Insurance to deny coverage.

Truck Insurance filed a motion for summary judgment on all issues, including the Wallers’ misrepresentation counterclaim, on February 14, 1989. The District Court allowed further discovery by the Wallers and the motion for summary judgment was set for hearing on May 30, 1990.

Prior to the hearing, the Wallers filed a cross-motion for summary judgment on May 9, 1990, as to coverage under the policies. In addition, the Wallers were granted leave on May 24,1990, to amend their answer to add a second counterclaim for bad faith. On May 30, 1990, the day of the hearing on the cross-motions for summary judgment, Truck Insurance filed a motion for reconsideration of the court’s order granting the Wallers leave to amend their answer; it subsequently filed its answer to the second counterclaim on June 5, 1990. The court never ruled on Truck Insurance’s motion for reconsideration.

The District Court granted summary judgment to Truck Insurance on August 10, 1990. It ruled that the policy language did not provide coverage for the accident in which Mr. Waller was injured and that the counterclaim for misrepresentation or “coverage by estoppel” was without merit. The court also dismissed the Wallers’ counterclaim for bad faith. The Wallers appealed.

I.

Did the District Court err in concluding that the language of the Engelkes’ insurance policies excluded coverage for Mr. Waller’s injuries arising from the airplane accident and, thus, that Truck Insurance was entitled to summary judgment?

Summary judgment is proper when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.P. The interpretation of an insurance contract is a question of law. Truck Insurance Exchange v. Nelson (1987), 228 Mont. 233, 236, 743 P.2d 572, 574. The language of the insurance policy governs its interpretation if it is clear and explicit. Section 28-3-401, MCA.

Coverage “E2” of the Farm Sentinel policy states that the insurer agrees to pay various medical expenses incurred as a result of bodily injury caused by an accident while on the premises with the permission of the insured, or elsewhere if such injury is caused by the activities of an insured. The policy also contains the following exclusion:

THIS POLICY DOES NOT APPLY UNDER:
(b) Coverages... E2 to the ownership, maintenance, operation, use, loading or unloading of... (iv) aircraft; but, with respect to bodily injury to a residence employee or a farm employee, arising out of and in the course of employment by the insured of such residence or farm employee, parts (i), (ii) and (iii) of this exclusion do not apply, and part (iv) applies only while such employee is engaged in the operation or maintenance of aircraft[J

The commercial umbrella policy states that coverage under that policy is subject to the insuring provisions in the underlying (Farm Sentinel) policy.

The District Court concluded that the Farm Sentinel policy does not provide coverage for the accident in which Mr. Waller was injured. The Wallers claim error. They assert that the aircraft exclusion applies only to injuries sustained by farm or residence employees and that, because Mr. Waller was not an employee of the Engelkes, the exclusion does not apply to the accident in which he was injured. We disagree.

The meaning of the aircraft exclusion is clear and explicit. The language plainly excludes coverage for bodily injury arising from the ownership, maintenance, operation, use, loading or unloading of aircraft; however, in the case of bodily injury to a residence or farm employee, the policy excludes coverage only where such employee is engaged in the operation or maintenance of aircraft. It is undisputed that the injuries to Mr. Waller arose out of the operation and use of an aircraft and that he was not a residence or farm employee at the time of his injuries. Thus, the airplane accident in question is excluded from coverage. Accordingly, we hold that the District Court did not err in granting summary judgment to Truck Insurance on the question of coverage under the insurance policies.

II.

Did the District Court err in granting summary judgment to Truck Insurance on the Wallers’ misrepresentation counterclaim?

The Wallers contend that the misrepresentation counterclaim was not involved in the cross-motions for summary judgment. Citing Hereford v. Hereford (1979), 183 Mont. 104, 598 P.2d 600, they argue that it is reversible error to grant summary judgment on a claim not before the court without affording them notice and reasonable opportunity to respond.

We find no error on the part of the District Court. Truck Insurance’s February 14, 1989 motion for summary judgment specifically included the misrepresentation counterclaim. Thus, the Wallers cannot reasonably argue that they had no notice or opportunity to respond.

In analyzing the merits of the counterclaim for misrepresentation, the District Court, having already found that the language of the policies excluded coverage, addressed whether Truck Insurance was nonetheless estopped from denying coverage because of statements made to Donald Engelke by Truck Insurance’s agent, LeRoy Tvedt. The court found that no issue of material fact existed with respect to the conversation between Engelke and Tvedt. It then applied the elements of estoppel to the Wallers’ claim and, finding some of the elements of estoppel to be lacking, concluded that Truck Insurance was entitled to summary judgment as a matter of law.

The Wallers maintain that the District Comb erroneously characterized the counterclaim as one of estoppel, arguing that misrepresentation is a cause of action independent of the declaratory judgment action. We find the Wallers’ attempt to distinguish estoppel from misrepresentation unpersuasive under the circumstances of this case. The Wallers did not seek money damages for the alleged misrepresentation; they sought reformation of the policies to provide coverage or estoppel on the part of Truck Insurance to deny coverage. The remedies sought make it clear that the counterclaim was tied to, and not independent of, the declaratory judgment action.

In addition, an element of both estoppel and misrepresentation is detrimental reliance. The Wallers were not parties to the conversation and in no way relied on Mr. Tvedt’s statements. Therefore, they cannot establish this element.

The Wallers assert that, as judgment creditors of Donald Engelke, “they have the right to stand in the same position as Donald Engelke with respect to his insurer, Truck Insurance.” Assuming arguendo that the Wallers correctly assert that they have the right to bring a misrepresentation action against Truck Insurance on behalf of Donald Engelke, their claim still fails. Donald Engelke did not change his position for the worse in reliance on Mr. Tvedt’s statements. He did not have or seek insurance coverage for the airplane before the conversation with Mr. Tvedt and did not pursue obtaining coverage after that conversation. Under these facts, it is clear that the Wallers cannot establish the element of detrimental reliance. Thus, their misrepresentation counterclaim fails as a matter of law. We hold that the District Court did not err in granting summary judgment to Truck Insurance on the Wallers’ misrepresentation counterclaim.

III.

Did the District Court err in dismissing the Wallers’ bad faith counterclaim?

Having determined that there was no coverage pursuant to the language of the insurance policies or by estoppel, the court concluded that it was proper to address the Wallers’ bad faith counterclaim. It dismissed the counterclaim concluding that “[i]n light of the court’s ruling that there is no coverage under the insurance policies, the counterclaim is without merit and totally inapplicable to this case.”

The Wallers argue that the bad faith counterclaim was not before the court at the time of the May 30, 1990 summary judgment hearing and, thus, the District Court erred in addressing and dismissing it. They also argue that a determination that the insurance policies do not provide coverage for the airplane accident does not mandate dismissal of the bad faith counterclaim because “[t]he claim stands alone as a separate and independent cause of action from the declaratory judgment action.” We conclude that under the circumstances of this case the District Court did not err in dismissing the bad faith counterclaim.

The Wallers’ bad faith counterclaim alleges that:

Since the filing of the declaratory action herein, and especially since judgment was granted against the insured in the underlying personal injury action, Cause Number 10105 in this Court, upon information and belief the counterclaim defendants have violated their fiduciary duty and the contractual rights of the Wallers, as third party claimants, concerning good faith and fair dealing in the investigation, discovery, prosecution and settlement of the declaratory action. Upon information and belief, said violations amount to a breach of the implied covenant of good faith and fair dealing, as well as the statutory protections of the Montana Unfair Trade Practices Act.”

(Emphasis added.) It is clear that the Wallers’ claims of bad faith on the part of Truck Insurance were all premised upon the existence of a contract between Truck Insurance and the Engelkes, that is, that the Engelkes’ insurance policies provided coverage for the airplane accident in which Mr. Waller was injured. Because the policies excluded coverage, the Wallers’ claims of bad faith on the part of Truck Insurance fail as a matter of law. While we agree with the Wallers that the counterclaim for bad faith was not within the scope of the parties’ respective motions for summary judgment, the law does not require the performance of idle acts. Section 1-3-223, MCA. To compel the District Court, under the circumstances of this case, to dispose of the bad faith counterclaim in a separate, independent proceeding would be to compel inefficient and idle acts.

Affirmed.

CHIEF JUSTICE TURNAGE and JUSTICES TRIEWEILER, McDONOUGH and WEBER concur.


text:
    FARM CREDIT BANK OF SPOKANE, a corporation, successor by merger to the Federal Land Bank of Spokane, Plaintiff and Respondent, v. G. CHARLES NEWTON; GAIL NEWTON; SUSAN LEE DAHLGREN NEWTON; G. CHARLES NEWTON II; HALLIE M. GIFFORD; and JEAN MRAZ NEWTON, Defendants, and GAIL NEWTON, Appellant.
    No. 91-352.
    Submitted on Briefs December 12, 1992.
    Decided March 31, 1992.
    49 St.Rep. 267.
    252 Mont. 336.
    829 P.2d 931.

      For Appellant: M. Dean Jellison, Attorney at Law, Kalispell.
    For Respondent: William R. Baldassin, Attorney at Law, Missoula.
   JUSTICE TRIEWEILER

the Opinion of the Court.

The Eleventh Judicial District Court issued a judgment and decree of foreclosure that authorized Farm Credit Bank to foreclose upon a parcel of property in Flathead County. Farm Credit Bank purchased the property at the foreclosure sale. However, Gail Newton initially refused to surrender possession. The District Court awarded Farm Credit Bank its attorney fees, including fees for services performed to recover possession after Farm Credit Bank bought the property at the foreclosure sale. The court denied Newton’s motion for satisfaction of the judgment and subsequently awarded Farm Credit Bank its attorney fees, costs, and interest as a lien on the property. The court then denied Newton’s motion for a new trial or amendment of judgment. She appeals. We affirm.

The issues are:

1. Did the District Court err when it awarded attorney fees to Farm Credit Bank for work performed after it purchased the mortgaged property at the foreclosure sale?

2. Did the District Court err when it awarded attorney fees to Farm Credit Bank for work performed in connection with a post-foreclosure dispute regarding possession and attorney fees when possession was resolved by stipulation?

3. Did the District Court err when it held that attorney fees awarded in connection with post-foreclosure proceedings constituted a part of the original judgment lien?

4. Did the District Court err when it awarded attorney fees without first conducting an evidentiary hearing?

5. Is Farm Credit Bank entitled to recover its attorney fees incurred in this appeal?

On August 28,1989, Farm Credit Bank of Spokane filed a mortgage foreclosure complaint against several defendants, including appellant Newton, in the Eleventh Judicial District Court in Flathead County. Newton was the mortgagor and fee simple owner of the subject property. The mortgage provided that:

In case of any suit to foreclose this mortgage or to collect any charge growing out of the debt hereby secured, or any suit which the mortgagee may deem it necessary to prosecute or defend to effect or protect the lien hereof, the mortgagors agree to pay a reasonable sum as attorneys fees and all costs and legal expenses in connection with said suit, and further agree to pay the reasonable costs of searching records and abstracting or insuring the title, and such sums shall be secured hereby and included in the decree of foreclosure. [Emphasis added.]

The mortgage also granted Farm Credit Bank the right to immediate possession in the event of foreclosure.

Farm Credit Bank took default judgments against all of the defendants, including Newton. On May 16, 1990, the court awarded Farm Credit Bank judgment in the amount of $126,332.64 and issued a decree of foreclosure. The courts order specifically provided that the pin-chaser at the foreclosure sale would be entitled to immediate possession and that a writ of assistance would issue if the debtor did not surrender possession. Farm Credit Bank had specifically requested this relief in the complaint which it served on Newton. The order also provided that Farm Credit Bank would be entitled to a deficiency judgment if the successful bid at the foreclosure sale was less than the amount of the judgment plus attorney fees and costs expended in enforcing the judgment.

On June 27, 1990, Farm Credit Bank purchased the property at the foreclosure sale for $128,948.00, which represented the amount of the May 16 judgment, plus allowances for interest, costs, and attorney fees incurred to that date. Newton, whose son took possession shortly before the foreclosure sale, refused to vacate. Farm Credit Bank then moved for a writ of assistance, together with attorney fees and costs incurred to obtain the writ. Newton did not reside on the property at that point and her son was not a party to the mortgage. The parties resolved the possession portion of the dispute by stipulation, but the stipulation did not address attorney fees and costs. Subsequently, Newton redeemed the property and sold it to a third party.

Farm Credit Bank then sought additional interest, attorney fees, and costs incurred in attempting to recover possession. The District Court awarded the relief asked for, concluded that a deficiency judgment therefore existed, and held that the deficiency judgment constituted a lien against the subject property. Newton appeals from this order of the District Court.

I

Did the District Court err when it awarded attorney fees to Farm Credit Bank for work performed after it purchased the mortgaged property at the foreclosure sale?

Newton argues that judgment creditors cannot recover attorney fees for work performed after foreclosure. She cites § 71-1-234, MCA, which provides:

If the mortgagee shall demand attorneys fees in case of the sale of real estate under and by virtue of the power of sale contained in any mortgage ... in this state ... he shall petition the district court of the county in which said real estate or any part thereof may be situated to fix the amount of such attorneys fee, and a copy of such petition shall be served upon all parties having or claiming an interest of record in the property to be sold... at least 10 days before the day fixed for hearing .... Such petition shall be acted upon by the district court before the notice of sale by publication or posting, as hereinbefore provided for, shall be given. [Emphasis added.]

Newton asserts that this statute precludes an award of attorney fees for post-foreclosure legal work because such an award would require a second determination of fees, in violation of the “one-action” rule contained in § 71-1-222, MCA.

We note that this statute does not expressly prohibit post-judgment attorney fees. Nor does it expressly provide that an award of fees earned prior to the foreclosure decree is final and conclusive.

Farm Credit Bank has been consistent in its pursuit of post-judgment attorney fees in this action. On May 10,1990, Farm Credit Bank moved for entry of judgment. It supported this motion with an affidavit, which alleged that Farm Credit had already incurred $3,093.28 in attorney fees and would “incur additional fees and costs in enforcing the Judgment entered herein.” The affidavit also alleged that “the amount of [Newton’s] indebtedness should be increased by the amount of [Farm Credit Banks] actual attorneys fees and costs incurred.” The judgment provided for immediate possession, a writ of assistance if necessary, and any attorney fees incurred in enforcing the judgment. The motion for entry of judgment and the supporting judgment were served upon Newton’s attorney. She cannot deny being on notice that Farm Credit Bank was seeking post-judgment attorney fees. She did not respond to either document.

The court entered judgment for Farm Credit Bank in the amount of $126,332.64. This sum represented the original debt of $112,016.41, plus Farm Credit Banks various costs totalling $11,222.95, and attorney fees in the amount of $3,093.28. Additionally, the judgment provided that:

[Farm Credit Bank] shall have and retain a deficiency judgment against the Defendant GAIL NEWTON in the event the bid at said sale is less than the sum of Plaintiffs entire judgment, plus all sums expended as attorney’s fees and costs in enforcing this Judgment. [Emphasis added.]

Thus, the court fixed Farm Credit Banks attorney fees on the date of judgment at $3,093.28, the amount alleged in the affidavit. It then awarded Farm Credit Bank any future attorney fees it might incur in enforcing the judgment. The amount of those fees was still uncertain because it remained to be seen whether Newton would acquiesce in the enforcement of the judgment. Therefore, the court’s award of attorney fees was as precise as the court could make it, given what it knew on the date of the judgment.

Section 71-1-234, MCA, merely requires the District Court to “act upon” the mortgagees petition for attorney fees before the notice of sale issues. The court did so in this case by awarding Farm Credit Bank its attorney fees with as much precision as possible on the date of the foreclosure decree. The judgment and decree of foreclosure was entered on May 16, 1990, and the order of sale was issued on May 24, 1990. The court “acted upon” Farm Credit Banks petition within the time frame contemplated by the statute.

Newton argues that by this procedure the court essentially gave Farm Credit Bank a “blank check” award of any fees its attorney might see fit to bill during post-foreclosure proceedings. We disagree. After Newton redeemed the property, Farm Credit Bank submitted a detailed affidavit that set forth its attorney fees. Newton could have challenged this affidavit but chose not to do so. Farm Credit Banks submission of this affidavit, and its apparent readiness to defend it, refute Newton’s argument that the District Court somehow gave it a “blank check.”

We hold that the District Court did not err when it awarded attorney fees to Farm Credit Bank for work performed after it purchased the subject property at the foreclosure sale.

II

Did the District Court err when it awarded attorney fees to Farm Credit Bank for work performed in connection with a post-foreclosure dispute regarding possession and attorney fees when possession was resolved by stipulation?

After Farm Credit Bank purchased the property at the foreclosure sale, it moved for a writ of assistance because Newton did not immediately vacate the property. This motion included a request for attorney fees.

The parties settled this possession dispute by a stipulation in which Farm Credit Bank allowed Newton to retain possession until September 30, 1990. Newton’s attorney prepared the stipulation, which was silent on the question of attorney fees. On October 4,1990, Newton redeemed the property by paying $131,046.50. This sum did not include any allowance for attorney fees.

Newton now argues that because she retained possession until she could redeem the property and sell it to a third party, she was the “prevailing party,” and therefore, cannot be liable for attorney fees. We believe this argument misses the point.

The judgment and decree of foreclosure awarded Farm Credit Bank the right to immediate possession. It also awarded Farm Credit Bank any attorney fees it might incur in enforcing the judgment. Farm Credit Bank had to move for a writ of assistance in order to enforce its right to possession, which was a part of the judgment. In that motion, it specifically asked for its costs and fees.

In Nett v. Stockgrowers Finance Corporation (1929), 84 Mont. 116, 274 P. 497, we observed that attorney fees serve to make the execution creditor whole. We said:

The idea in providing for attorneys fees and costs is that, if the promisor fails to make good his promise, the promisee may collect such a sum as will leave him the actual amount due him, net. Following out this idea, this court has held, regardless of the rules in other jurisdictions, that the payee is entitled to an attorneys fee if, after default by the maker of the note, it is placed in the hands of an attorney for collection, irrespective of whether action on the note is brought or not.

Nett, 274 R at 500. Although Nett did not involve a real property mortgage, we believe its analysis of attorney fees is equally applicable to the land mortgage situation. The case stands for the proposition that the prevailing creditor is entitled to recoup the costs of collection, even if the matter never goes to court.

Newton does not deny that Farm Credit Bank actually incurred attorney fees in attempting to secure possession of the property. Furthermore, her attorney prepared the stipulation that purported to resolve the dispute. At that point it was incumbent upon him to resolve the question of attorney fees. He did not do so, and the stipulation is silent on the matter. However, the award of attorney fees is consistent with the District Courts judgment and decree of foreclosure.

We will not look beyond the terms of the judgment and the stipulation and attempt to determine who was the “prevailing party” in the possession dispute. The judgment provided for an award of future attorney fees, and in Issue I of this opinion we held that part of the judgment valid. Farm Credit Bank ultimately incurred those fees, and Newton must pay them.

We hold that the District Court did not err when it awarded attorney fees to Farm Credit Bank for work performed in connection with a post-foreclosure dispute regarding possession and attorney fees when only the possession portion of the dispute was resolved by stipulation.

Ill

Did the District Court err when it held that attorney fees awarded in connection with post-foreclosure proceedings constituted a part of the original judgment lien?

This Court considered this question in McQueeney v. Toomey (1907), 36 Mont. 282, 92 P. 561. In that case, we drew a distinction between redemption by a third party and redemption by the judgment debtor. We held a third party who redeems takes the property free of any outstanding deficiency judgment. McQueeney, 92 P. at 564. However, a different rule applies when the judgment debtor redeems in his own right. We said:

Of course, if the debtor redeems, the effect of section 1236 [the predecessor of present § 25-13-809, MCA] ... is to terminate the sale and restore the estate to him, whereupon any deficiency judgment would attach as a lien. [Emphasis added.]

McQueeney, 92 P. at 565.

In Issue I of this opinion, we concluded that Farm Credit Banks future attorney fees formed part of the judgment and decree of foreclosure. Newton does not dispute that the amount she paid to redeem the property did not include an allowance for attorney fees. Therefore, a deficiency judgment existed. Under McQueeney, that deficiency judgment reattached to the property as a lien when Newton redeemed.

We hold that the District Court did not err when it held that attorney fees awarded in connection with post-foreclosure sale proceedings constituted a part of the original judgment lien.

rv

Did the District Court err when it awarded attorney fees without first conducting an evidentiary hearing?

Newton argues that because § 71-1-234, MCA, contemplates a hearing on the reasonableness of any petition for attorney fees, the District Court erred in not holding such a hearing. However, she did not dispute the amount claimed as attorney fees by Farm Credit Bank, nor did she request a hearing. Therefore, she argues essentially that the District Court should have scheduled such an evidentiary hearing sua sponte. We disagree.

Farm Credit Bank submitted a detailed affidavit of attorney fees. Newton did not respond to this document and never suggested to the court that the fees claimed in it might be unreasonable. Under these circumstances, the Court had no duty to conduct a hearing with no issue to decide.

We hold that the District Court did not err when it awarded attorney fees without first conducting an evidentiary hearing.

V

Is Farm Credit Bank entitled to recover its attorney fees incurred in this appeal?

The underlying mortgage in this case obligated Newton to pay Farm Credit Banks attorney fees incurred in connection with any future foreclosure action. This appeal is from a foreclosure action, and Farm Credit Bank has prevailed on appeal. We conclude that Farm Credit Bank is entitled to recover its attorney fees incurred in this appeal.

The order of the District Court is affirmed and this case is remanded for a determination of attorney fees incurred in this appeal.

CHIEF JUSTICE TURNAGE and JUSTICES HARRISON, GRAY and WEBER concur.