author: JUSTICE HUNT JUSTICE TRIEWEILER

text:
    NELSON SEELEY, Plaintiff and Appellant, v. GARY DAVIS and WALTER MURFITT, Defendants and Respondents.
    No. 96-598.
    Submitted on Briefs May 1, 1997.
    Decided October 3, 1997.
    54 St.Rep. 1006. 946 P.2d 119.
    284 Mont. 517.

      For Appellant: John C. Douhek, Small, Hatch, Doubek & Pyfer, Helena.
    For Respondent: P. Keith Keller, Keller, Reynolds, Drake, Johnson & Gillespie, Helena.
   JUSTICE HUNT

delivered the Opinion of the Court.

Appellant Nelson Seeley (Seeley) filed suit in the First Judicial District Court, Lewis and Clark County, alleging that Respondents Gary Davis (Davis) and Walter Murfitt (Murfitt) cost him the opportunity to purchase a commercial property in Helena, Montana. Seeley contended that the actions of Davis and Murfitt constituted legal malpractice and that he incurred damages due to their alleged malpractice. After discovery, Davis and Murfitt moved the District Court for summary judgment, asserting no genuine issues of material fact existed and they were entitled to summary judgment as a matter of law. The District Court granted the motion, concluding the facts presented unequivocally indicated that Davis and Murfitt had fulfilled the duty of care owed to their client Seeley. Seeley appeals. We affirm.

The sole issue presented on appeal is whether the District Court erred in granting summary judgment in favor of Davis and Murfitt.

Davis and Murfitt are attorneys practicing law in Helena, Montana. Seeley is also an attorney, although not in practice. Seeley is the owner of several commercial and rental properties in Helena.

In 1990, Lewis and Clark County (the County) acquired possession of the Placer Center in Helena after the braiding’s previous owner failed to pay the property taxes. After taking title, the County twice attempted to sell the Placer Center at auction but received no bids. Seeley, who was interested in purchasing the building, attended both auctions but did not bid. After failing at the second auction to receive any bids at the listed price, the County announced that it would next accept sealed bids for the property.

On or about Friday, November 9,1990, Seeley determined that he wanted to buy the building without waiting for the sealed-bid process. He therefore offered to buy the building for the price set at the second auction. In discussing the proposed sale with County Commissioner Linda Stoll-Anderson (Stoll-Anderson), Seeley suggested drawing up an earnest money agreement and giving the County a nonrefundable deposit of $1000 to hold the building for one week. Then, by the following Friday, Seeley would either tender the balance of the down payment or decide not to proceed with the sale, in which case the County would keep the $1000 earnest money deposit. Stoll-Anderson agreed to this process, and an earnest money agreement was prepared. Seeley did not immediately sign the agreement or tender the $1000; instead, he advised Stoll-Anderson that he was giving the earnest money agreement and deposit to his attorneys, Murfitt and Davis, who would give the documents to her on Tuesday morning after reviewing the building’s history and checking the title. (Tender of the deposit and the agreement was set for Tuesday morning instead of Monday morning because Monday was a holiday.) Stoll-Anderson agreed to accept the earnest money agreement on Tuesday, but advised Seeley that she did not consider the County obligated to “hold” the building for him in the absence of a signed agreement. She further advised him the building was subject to sale on a “first-come, first-served” basis until she received a signed earnest money agreement or a signed contract for sale.

Seeley then took the earnest money agreement and deposit check to the offices of Murfitt and Davis. He directed them to check the building’s history for liens or “other complications” so serious that he might not want to finalize the purchase. Assuming none were found, Murfitt and Davis were to take the deposit and signed earnest money agreement down to Stoll-Anderson on Tuesday morning. Seeley was aware that the County offices would be closed until Tuesday morning due to the three-day holiday weekend. Having dropped off the paperwork with the attorneys on Friday, Seeley left for the weekend to go hunting in Canada.

On Monday, Seeley called to check in with Davis. Davis reported that he was having an informal title search done and that he expected a telephone report on it the next morning. Seeley reiterated his interest in the building and contends that he directed Davis to present the earnest money agreement and deposit to Stoll-Anderson first thing Tuesday morning. Davis contends that his understanding was that he would deliver the documents as soon as he received the informal title report, provided no major problems with the title were found.

By early Tuesday morning, Stoll-Anderson had not received the deposit and agreement. She called Davis to ask whethér the documents were going to be delivered and he told her that he would take care of it. At about 10 o’clock Tuesday morning, the building was sold to a third party. Davis and Murfitt were still waiting for the title report.

Seeley learned that the building had been sold to someone else when he returned from hunting in Canada. He filed suit against Davis and Murfitt, alleging that their failure to deliver the earnest money agreement and deposit resulted in his loss of the opportunity to buy the building and constituted legal malpractice. Davis and Murfitt responded that they had fulfilled their duty of care to their client and had followed Seeley’s instructions in waiting for the title report. After discovery, Davis and Murfitt moved for summary judgment, which the District Court granted. Seeley appeals.

The sole question presented on appeal is whether the District Corut erred by granting summary judgment in favor of Davis and Murfitt. This Court reviews the grant or denial of summary judgment rulings de novo. Mysse v. Martens (1996), 279 Mont. 253, 259, 926 P.2d 765, 769 (citing Mead v. M.S.B., Inc. (1994), 264 Mont. 465, 470, 872 P.2d 782, 785). When reviewing a district court’s grant of summary judgment, this Court applies the same criteria as the district court based on Rule 56, M.R.Civ.P. Mysse, 926 P.2d at 769 (citing Bruner v. Yellowstone County (1995), 272 Mont. 261, 264-65, 900 P.2d 901, 903). Further, in order for summary judgment to be granted:

the movant must demonstrate that no genuine issues of material fact exist. Once this has been accomplished, the burden then shifts to the non-moving party to prove, by more than mere denial and speculation, that a genuine issue does exist. Having determined that genuine issues of fact do not exist, the court must then determine whether the moving party is entitled to judgment as a matter of law.

Bruner, 900 P.2d at 903. This Court reviews the legal determinations made by a district court to determine whether the court erred. Mysse, 926 P.2d at 769.

In this case, Seeley contends that the District Court erred in finding that no genuine issues of material fact existed. Seeley argues that several important factual points remain in dispute which should have precluded a grant of summary judgment.

First, the District Court found that Seeley had instructed Davis and Murfitt to deliver the agreement and check to the County on Tuesday after they had investigated any possible complications with the title to the building. Seeley contends this finding is erroneous, or at the least contested, because he asserts that his clear understanding with the attorneys was that the earnest money and agreement had to be delivered first thing Tuesday morning, regardless of the status of the search or whatever defects the attorneys may have discovered. Second, the District Court found that Davis and Murfitt did not know that time was of the essence in delivering the earnest money agreement, or that a third party was seriously interested in purchasing the building. Seeley contends this is erroneous, or at least contested, because Stoll-Anderson recalled informing the attorneys that other parties were also interested in the building when she called their office on Tuesday morning and because Seeley had directed the attorneys to tender the agreement and check to Stoll-Anderson first thing Tuesday morning. Seeley therefore contends that genuine issues of material fact remain regarding the parties’ representations and intentions. Such factual issues, Seeley argues, indicate that summary judgment was inappropriate in this case.

After reviewing the record in its entirety, we cannot agree that the findings in question are subject to attack. No genuine issue of material fact exists regarding the representations and intentions of the parties. A reading of the record leaves but one reasonable interpretation of events, which was the interpretation adopted by the District Court in its findings of fact. Seeley seeks to create a genuine issue of material fact by asserting that his instruction to Davis and Murfitt to check the building’s title for major defects was secondary to his instruction that they deliver the earnest agreement and check to the Comity first thing Tuesday morning. Common sense indicates, however, that if Seeley’s intent was to secure his right to purchase the building regardless of the status of the title, he could have tendered the check and agreement to Stoll-Anderson himself on Friday, before leaving for Canada. Instead, he transferred the documents to the attorneys, with instructions to investigate the title for major problems.

Furthermore, Seeley’s assertion that he told the attorneys to tender the check and agreement without waiting for the results of the preliminary title search is contradicted by his deposition testimony. In his deposition, Seeley testified that, before leaving town on Friday, he instructed Davis to “check on the status of the title” and told him “[t]hat I was going to buy the building unless he came up with something before Tuesday, before we presented the check back, that would say don’t buy it.” (Emphasis added.) Seeley further testified that he had called Davis on Monday morning and told him “I had done a lot of staying awake nights thinking about [the building], what I’d do with it, and I wanted it unless there was a complication, and the property is a good value, I definitely want it, and get that check up to [Stoll-Anderson] unless you have something.” (Emphasis added.) In addition, Seeley admitted in his deposition that he himself was unaware that a third party was also seriously interested in buying the building. Likewise, Davis and Murfitt also were unaware of the third party’s interest until after the building was sold.

The depositions in this case indicate that neither party was aware of any great urgency in tendering the check and agreement due to the possibility a third party might step in and buy the building on Tuesday morning. The parties do not dispute that the check and agreement were to be delivered to Stoll-Anderson Tuesday morning. They dispute only whether the check should have been delivered before receipt of the title report. Seeley insists he directed Davis and Murfitt to tender the documents first thing Tuesday morning. Davis and Murfitt contend they were told to deliver the documents as soon as possible after receiving the informal title report. As noted above, Seeley’s contention is contradicted by his own deposition testimony. The District Court correctly found that the question of when the documents were to be delivered was not a genuine issue of material fact which would defeat the motion for summary judgment.

Seeley next contends that even if Davis’s and Murfitt’s actions were not willfully negligent, the parties nevertheless did not have a mutual understanding of what Seeley expected the attorneys to accomplish. He contends that the failure of the attorneys to discover his intentions, as well as their failure to avoid the misunderstanding by setting forth what they intended to do and when, constituted legal malpractice.

The District Court, however, found no such misunderstanding. Rather, it found that Seeley instructed Davis and Murfitt to investigate the title to the building before tendering the earnest agreement and deposit. The attorneys’ duty to do so did not change just because a third party bought the building before the title investigation was completed, especially considering that neither Davis, Murfitt, nor Seeley were aware of the third party’s interest until after the sale. Given Seeley’s extensive real estate background and legal training, there was no reason to believe he did not understand what he had asked of Davis and Murfitt.

When reasonable minds could reach but one conclusion, questions of fact may be decided as a matter of law. Mills v. Mather (1995), 270 Mont. 188, 194, 890 R2d 1277, 1281. The District Court concluded no genuine issues of material fact existed in this case and summary judgment was proper as a matter of law. The District Court did not err in so concluding.

Affirmed.

CHIEF JUSTICE TURNAGE, JUDGE LANGTON, District Judge, sitting for JUSTICE LEAPHART and JUDGE RODEGHIERO, District Judge, sitting for JUSTICE REGNIER concur.

JUSTICE TRIEWEILER

dissenting.

I dissent from the majority opinion.

I conclude that there are genuine factual issues regarding the nature of the services the defendants were retained to perform and whether they exercised reasonable care in the performance of those services. The District Court erred by resolving factual issues and setting forth its findings as if they were undisputed facts. The majority’s opinion does the same thing.

Seeley’s cause of action is based on his contention that on Friday, November 9, 1990, he delivered to the firm of Luxan and Murfitt a signed earnest money agreement and a draft in the amount of $1000 to secure his right to purchase the Placer Center in Helena, Montana, on or before November 16, 1990. He contends that he asked the law firm to see if there were any liens against the building, or other complications that would make purchase of the building inadvisable, but that the firm was specifically instructed that if no problems were discovered by the beginning of business on Tuesday morning, the earnest money and the written agreement were to be delivered to Linda Stoll-Anderson so that the right to purchase the building could be secured while farther investigation was conducted. He contends that it was his plan that if problems were discovered after his earnest money in the amount of $1000 was delivered, but before purchase of the building was accomplished, he was prepared to forfeit his earnest money. However, he did not want to lose the opportunity to purchase the building, and it is his contention that he made that clear to his attorneys.

It is also Seeley’s contention that after he left town, his attorneys failed to perform as they had been instructed, did not deliver the earnest money or the written agreement on time, and, therefore, that he lost the opportunity to profit from the purchase of the Placer Center.

The District Court entered summary judgment for the defendants based on its finding that the following facts were true:

1. That Seeley told his attorneys to deliver the agreement and check to the County only after they investigated possible complications with the title to the building; and

2. That at no time did Seeley advise his attorneys that time was of the essence in performance of the services they were retained to perform.

Based on these findings, the District Court concluded that the defendants did not breach their duty to Seeley and, therefore, are entitled to judgment as a matter of law.

The majority opinion accepts the same findings as undisputed facts and arrives at the same conclusion. However, the nature of Seeley’s instructions to his attorneys and, therefore, the nature of their duty to him, is factually disputed based on the record before us.

For example, Nelson Seeley filed an affidavit in opposition to the defendants’ motion for summary judgment in which he testified to the following facts:

2. On Friday, November 9, 1990, Linda Stoll-Anderson agreed to let me have over the weekend to have my lawyers consider matters pertaining to title. Linda Stoll-Anderson knew that I had taken the earnest agreement which I signed in her presence, which had been prepared by the County in consultation with one of its deputy county attorneys, and my signed check of $1000 earnest money and delivered it to the defendants. Linda Stoll-Anderson said she would sign the earnest agreement when it was delivered by Mr. Davis and indicated that that was acceptable but they would need the check and earnest agreement first thing Tuesday morning (November 13, 1990).
3. I then delivered the earnest agreement and $1000 check to the defendants (Gary Davis) and told them precisely of my meeting with Linda Stoll-Anderson and that the check and earnest agreement needed to be delivered to the County first thing Tuesday morning. I understood my attorneys would have some time, at least until first thing Tuesday morning, to look at title issues. They indicated in my conversations with them on Friday, November 9, and Monday, November 12, that they had not found any difficulties or problems, vis-a-vis title. Indeed, Mr. Davis told me on Monday, November 12,1990, that because the building had been condominiumized such was a real advantage for me.
4. While a specific time, such as 8:01 a.m. or 8:02 a.m., was not specified to Mr. Davis or Mr. Murfitt, I made it very, very clear that they needed to make sure that the check and earnest agreement were delivered to the County first thing Tuesday morning, not 10:00 a.m.; not 12:00 noon. Neither of the defendants ever asked me for any more specificity, but both seemed to understand precisely what I was telling them.
6.1 never asked the attorneys to do what would be tantamount to an abstract of title, which is what they seem to suggest in their brief (page 10). I simply wanted them to double check to see if there were some other liens against the building that we may not be aware of otherwise and I know Mr. Davis was doing that on Friday, 11/9/90, because he told me he had done so. We also specifically discussed and the attorneys concede that in the earnest agreement we had until Friday, 11:59 a.m., to go any further with the purchase of the building but that in the meantime by delivering the earnest agreement and check to the County first thing Tuesday morning the building would be secured for me.
8. ... There certainly was a time constraint given to my attorneys. If the defendants did not give one to the person at the title company that was their fault, not mine.

Seeley’s affidavit directly contradicts the District Court’s findings which are again set forth as fact in the majority opinion. The factual issues raised by his affidavit, and his deposition testimony to the same effect, were sufficient, without more, to overcome the defendants’ motion for summary judgment. However, his version of events was also corroborated by former County employees. Renee Podel stated in her affidavit that in November 1990 she was the executive secretary for the County Commissioners. The earnest agreement was prepared on her computer. She recalled Seeley’s meeting with Linda Stoll-Anderson on the afternoon of November 9, 1990, and recalled him telling Stoll-Anderson of his intention to buy the Placer building. She also stated that on Tuesday, November 13, she remembered that Stoll-Anderson left the County Commission meeting and upon her return seemed upset that the earnest agreement and check had not yet been delivered. She quoted Stoll-Anderson as saying “I don’t understand why they haven’t been delivered yet.” Stoll-Anderson testified that it was during this break during the County Commission meeting that she called the Luxan and Murfitt firm and advised Murfitt that another party was coming to purchase the property and that it would be sold on a first-come, first-served basis.

Mary Ann Gregory stated by affidavit that on November 9, 1990, she was an administrative secretary at the Lewis and Clark County offices. She recalled overhearing a conversation between Seeley and Stoll-Anderson on that date in which Seeley expressed his interest in purchasing the Placer Center and offered to give Stoll-Anderson a check for $1000 and the earnest agreement. She then related the following conversation:

She [Stoll-Anderson] told him that she did not need the check and agreement at that time but she needed to have them first thing Tuesday morning. Mr. Seeley told Linda that he was going to give the check and agreement to his attorney, Mr. Murfitt. Linda Stoll-Anderson said that would be fine but again to make sure she got the agreement and the check first thing Tuesday morning and she would sign the agreement and present it to the Commission. I also heard Linda Stoll-Anderson tell Mr. Seeley that buying the building was a “first-come, first-served” situation.
I remember Linda Stoll-Anderson calling an individual whom she referred to as Howdy Murfitt during a break in the meeting on Tuesday, November 13, 1990. ... I also remember Linda Stoll-Anderson told this person that he (Howdy) better hurry up and get the check and agreement to her or Mr. Seeley would lose his interest in the building. She also told him (Howdy) it was first-come, first-served. It was a very short conversation after which Linda StollAnderson returned to the meeting room.

(Emphasis added.)

The majority opinion states that:
[I]f Seeley’s intent was to secure his right to purchase the building regardless of the status of the title, he could have tendered the check and agreement to Stoll-Anderson himself on Friday, before leaving for Canada. Instead, he transferred the documents to the attorneys, with instructions to investigate the title for major problems.

The answer to that observation is, first of all, that it is simply an argument regarding weight to be given to Seeley’s testimony. It is not this Court’s function when reviewing summary judgments to weigh conflicting evidence. Furthermore, Seeley fully explained why he put off delivering the earnest agreement until Tuesday morning. He testified that if there were obvious problems with the building that could be detected between Friday afternoon and Tuesday morning, it would have been his preference to avoid losing the $1000, but that if no major problems were detected during that time, he was willing to risk the $1000 rather than risk losing the building itself. I find nothing illogical about that approach, and neither is it inconsistent with Seeley’s basic claims.

In addition to the testimony cited in the preceding paragraphs, Joel Guthals, a licensed attorney who practices in Billings with an emphasis in the areas of business and commercial law, expressed his opinion by deposition that the defendants did not exercise a reasonable degree of professional care and skill in the performance of their services for Seeley. His opinion was based on the deposition testimony of the parties and other persons involved in the real estate transaction.

Even assuming that all of the cited testimony is controverted, there are, at most, seriously contested issues of fact related to the liability of the defendants. It is not appropriate to resolve issues of fact by summary judgment. Summary judgment should be granted only where there are no issues of fact and where a party is entitled to judgment as a matter of law. The issues and facts in this case are very clearly defined. Seeley’s claims are supported by substantial evidence and the District Court’s conclusion to the contrary should be reversed.

For these reasons, I dissent from the majority opinion.


source: Caselaw Access Project

license: Public Domain

text:
    LARRY SMITH, Petitioner, v. THE HONORABLE JOHN McKEON, sitting as District Judge in the Fifteenth Judicial District Court, Roosevelt County, Montana IN RE MARRIAGE OF LARRY SMITH, Petitioner and BRIDGET SMITH, Respondent.
    No. 97-499.
    Rehearing Denied October 30, 1997.
    Decided September 30, 1997.
    54 St.Rep. 990. 946 P.2d 117.
    284 Mont. 528.
   OPINION AND ORDER

The petitioner, Larry Smith, has petitioned this Court for an order of supervisory control pursuant to Rule 17, M.R.App.P, and Article VII, Section 2, of the Montana Constitution.

In support of his petition for supervisory control, Smith has established that he is an Indian person, duly enrolled as a member of the Fort Peck Tribes, who resides on the Fort Peck Indian Reservation near Wolf Point, Montana, and that his spouse, Bridget Smith, is a non-Indian person who resides in Wolf Point, Montana. The petitioner has filed a petition in the District Court for the Fifteenth Judicial District in Roosevelt County for dissolution of his marriage. The respondent, the Honorable John McKeon, is the presiding judge who has assumed jurisdiction to decide that petition.

Some percentage of the petitioner’s assets consist of Indian trust land held in trust by the Bureau of Indian Affairs for his benefit. On December 3,1996, the District Court ordered the petitioner to obtain an appraisal of the trust properties from the Bureau of Indian Affairs to assist the court in its division of the marital estate. When the BIA rejected that request, petitioner was ordered to appeal its rejection to the district office for the BIA in Billings. When the district office affirmed the local office’s rejection, the petitioner was ordered to appeal that decision to the Board of Appeals in Washington, D.C.

The petitioner contends that the trust lands are not subject to valuation or division in a dissolution proceeding and, therefore, that he has been ordered to take a position before the Board of Appeals in Washington, D.C., which is inconsistent with the law. The petitioner contends that he will be irreparably damaged if required to argue a position unfavorable to him at the national level.

The petitioner contends, based on our decision In re Marriage of Wellman (1993), 258 Mont. 131, 852 P.2d 559, that the District Court has no jurisdiction to divide Indian trust lands and, therefore, no jurisdiction to require the appraisal of Indian trust lands, and that neither can the District Court require an appraisal as a “condition precedent” to assinning jurisdiction in this matter.

The Assiniboine and Sioux Tribes of the Fort Peck Reservation have appeared as amici curiae in support of Larry Smith’s petition.

In response, the District Court contends that it cannot be called upon to make equitable division of the marital estate without first knowing the value of Indian trust properties which represent a significant portion of the marital estate. The District Court states that it has not required the petitioner to take any position with the Secretary of Interior with regard to the value of the trust land property. The petitioner has been ordered to participate only so that the Secretary can make a proper valuation.

Bridget Smith, in her response to the petition for supervisory control, points out that petitioner previously filed a petition for supervisory control on the same basis on January 30, 1997, and that it was denied by this Court on February 20, 1997. Bridget also contends that this case is not appropriate for supervisory control, and that even if it was, it should be denied on the merits because if she is denied a BIA appraisal, her right to due process and a proper valuation of the marital estate will be denied.

DISCUSSION

We held in Plumb v. Fourth Judicial District Court (1996), 279 Mont. 363, 927 P.2d 1011, that where a district court is proceeding based on a mistake of law, and the cost and complexity of a case will thereby be affected to the extent that a substantial injustice will occur, and there is no adequate remedy by appeal, a party is entitled to the exercise of supervisory control. On that basis, we accept supervisory control in this case.

In Wellman, we held that a district court had neither jurisdiction to distribute Indian trust land nor consider its value for purposes of valuing the marital estate. We held as follows:

Thus, an assertion of state court jurisdiction to apportion a marital estate consisting primarily of Indian trust land appears on its face to be in conflict with the federal government’s direct interest in Indian trust property.
Robert attempts to circumvent this barrier by arguing that even though the District Court has no authority to transfer title to the trust land to a non-Indian, it has the power to value the marital estate and the obligation to apportion it equitably, either by awarding him a monetary judgment equal to his equitable share of the estate or by ordering the land to be sold to other tribal members and the proceeds divided. We disagree.
Here, we are urged to assert state court jurisdiction over Indian trust land by figuratively bringing it into state court for valuation prior to an ordered sale and division of proceeds or a monetary award equal to Robert’s equitable share of the value of the land. Based on our discussion of 28 U.S.C. § 1360(b), above, we conclude that any of these actions would result in a prohibited adjudication of interests in Indian trust land. See Sheppard, 655 P.2d at 923 (Bristline, J., dissenting).
We hold that, under the facts of this case, the District Court did not err in concluding that it lacked jurisdiction to adjudicate the disposition of the Indian trust land that was the parties’ only significant marital asset.

Wellman, 258 Mont, at 137-41, 852 P.2d at 563-65.

If the District Court has no authority to distribute petitioner’s Indian trust land and no authority to consider its value for purposes of distributing the remainder of the marital estate, it has no authority to order him to request an appraisal of that property from the BIA and to appeal the BIA’s refusal to give him one. Neither does the District Court have authority to condition acceptance of those issues over which it properly has jurisdiction on the parties’ willingness to give the court jurisdiction over Indian trust lands.

For these reasons, we accept supervisory jurisdiction pursuant to Rule 17, M.R.App.P., and hold that the District Court erred when it ordered Larry Smith to request an appraisal of his Indian trust lands from the Bureau of Indian Affairs, and when it ordered him to appeal the BIA’s refusal to give him an appraisal. That order of the District Court is REVERSED and set aside.

This case is remanded to the District Court for further proceedings necessary to dissolve the parties’ marriage and distribute that part of the marital estate over which the District Court does have jurisdiction.

The Clerk of Court is directed to mail a true and correct copy of this order to all parties of record.

DATED this 30th day of September, 1997.

/S/ TERRY N. TRIEWEILER

/S/ JIM REGNIER

/S/JAMES C. NELSON

/SI W. WILLIAM LEAPHART

/S/KARLA M. GRAY

CHIEF JUSTICE TURNAGE would deny the application for writ of supervisory control.


author: JUSTICE NELSON

text:
    YOUDERIAN CONSTRUCTION, INC., Plaintiff, Respondent and Cross-Appellant, v. DAVID and PATRICIA HALL, Defendants and Appellants.
    No. 96-526.
    Submitted on Briefs March 13, 1997.
    Decided October 7, 1997.
    54 St.Rep. 1012.
    945 P.2d 909.
    285 Mont. 1.

      For Appellant: Louis D. Nybo, Jeffrey T. McAllister, Conklin, Nybo, Leveque & Murphy, Great Falls.
    For Respondent: A. Clifford Edwards, Roger W. Frickle, Edwards Law Firm, Billings.
   JUSTICE NELSON

delivered the Opinion of the Court.

Youderian Construction, Inc. (Youderian) filed this action to recover for work and materials it provided in the process of constructing a cabin for David and Patricia Hall (the Halls or David). Following a bench trial, the District Court for the Tenth Judicial District, Judith Basin County, allowed Youderian to recover some of the charges claimed. The court denied Youderian’s request for attorney fees. From this judgment, the Halls appeal and Youderian cross-appeals. We affirm.

The issues on appeal, as framed by this Court, are:

1. Whether there is substantial evidence in the record to support a finding of ostensible agency determining that John Hill (John) had authority, acting as the ostensible agent on behalf of the Halls, to hire Youderian to complete the road improvement project.

2. Whether there is substantial evidence in the record to support the finding that those claiming the agency (Youderian) acted reasonably.

3. Whether, as a matter of law, the ostensible agency was created.

4. Whether the District Court erred in concluding that the Halls are estopped to deny John’s ostensible authority.

The issues on cross-appeal are:

5. Whether the District Court erred in determining that John did not have ostensible authority as agent for the Halls to hire Youderian to complete the water system, sewer system and related landscaping project.

6. Whether the District Court erred in denying Youderian’s request for attorney fees.

Factual and Procedural Background

The Halls leased land in Judith Basin County from John and Lois Hill for the purpose of constructing a cabin. The Halls hired George Klind (Klind), Lois Hill’s brother, to build the cabin. The original plan for the cabin called for it to be very rustic without indoor plumbing. However, the Halls eventually changed their minds in this regard and a sketch of the floor plan of the cabin faxed to the Halls by Klind on July 6, 1994, showed the existence of a bathroom.

On August 13, 1994, Klind and the Halls entered into a written contract regarding the construction of the cabin. The contract was silent regarding any particulars of the construction of the cabin except for its size. Klind estimated the cost of construction at $60,000. This estimate was included in the contract.

Youderian was hired to perform work on the cabin which entailed laying the footings, putting up the logs, laying a water line and septic system, and landscaping portions of the property. Almost a year prior to the construction of the cabin, Youderian performed other work for John, David, and David’s partner, Bill Egbert, at another site. The purpose of that project was for the construction of a lodge. The cost of this work was split in half with David and Bill Egbert paying one half and John paying the other half. The lodge project was never completed.

Upon a visit to the cabin building site, David realized that the road was merely an unimproved dirt trail that was not accessible when it was wet or covered with snow. Consequently, David discussed the condition of the road with J ohn. There is some dispute as to when this discussion took place and what it entailed. David contends that he merely explained the situation to John and asked his permission to improve the road since itwas on John’s land. John states that he believed David was instructing him to hire someone to improve the road. Whatever the case, John hired Youderian who completed the road improvements over a seven to eight day period in September 1994.

Youderian billed Klind for all of the work Youderian performed on the cabin. While Klind paid Youderian for laying the footings and putting up the logs, Klind did not pay for the water line, the septic system, the landscaping, or for the improvements to the road. Youderian had not filed a construction lien on the project. Hence, Youderian billed the Halls directly claiming that since the Halls received the benefit of Youderian’s services, they were ultimately responsible for payment. Although, the contract between the Halls and Klind estimated the cost of the project at $60,000, the Halls had sent Klind more than $115,000. Thus, the Halls refused to pay claiming that they had already paid Klind for the work and that it was Klind that owed Youderian.

Youderian filed a complaint against the Halls on April 11, 1995, and an amended complaint on November 30, 1995, alleging that Youderian performed and completed contracting services on real estate leased by the Halls and that Youderian had not received payment for these services. Youderian sought to recover from the Halls $17,651.68, the amount of Youderian’s services, along with Youderian’s attorney fees for prosecuting this case.

A bench trial was conducted on May 30, 1996. On July 18, 1996, the District Court issued its Findings of Fact, Conclusions of Law and Judgment wherein it determined that all of the items claimed against the Halls by Youderian, with the exception of the road, were actually owed to Youderian by Klind. The court concluded that the road should be paid for by the Halls because John was the ostensible agent of the Halls and had ostensible authority to bind Halls regarding the road. Thus, the court granted judgment against the Halls in the amount of $8,567.00 for the road improvements. The District Court denied Youderian’s claims for the water system, septic system and the landscaping as well as Youderian’s request for attorney fees. Both Youderian and the Halls appeal the District Court’s judgment and order.

Standard of Review

The standard of review of a district court’s findings of fact is whether they are clearly erroneous. Daines v. Knight (1995), 269 Mont. 320, 324, 888 P.2d 904, 906 (citing Columbia Grain Intern. v. Cereck (1993), 258 Mont. 414, 417, 852 P.2d 676, 678).

In Interstate Production Credit v. DeSaye (1991), 250 Mont. 320, 820 P.2d 1285, we adopted the following three-part test to determine whether the district court’s findings are clearly erroneous. First, the Court will review the record to see if the findings are supported by substantial evidence. Second, if the findings are supported by substantial evidence, the Court will determine if the trial court misapprehended the effect of the evidence. Third, if the findings are supported by substantial evidence and that evidence has not been misapprehended, this Court may still hold that a finding is clearly erroneous when, although there is evidence to support it, a review of the record leaves this Court with the definite and firm conviction that a mistake has been committed. DeSaye, 820 P.2d at 1287.

“Substantial evidence is evidence that a reasonable mind might accept as adequate to support a conclusion; it consists of more than a scintilla of evidence and may be less than a preponderance of evidence.” Jones v. Arnold (1995), 272 Mont. 317, 323, 900 P.2d 917, 921 (citing Yellowstone Basin Properties v. Burgess (1992), 255 Mont. 341, 346, 843 P.2d 341, 344).

The standard of review of a district court’s conclusions of law is whether the court’s interpretation of the law is correct. Carbon County v. Union Reserve Coal Co. Inc. (1995), 271 Mont. 459, 469, 898 P.2d 680, 686 (citing Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603-04).

Issue 1.

Whether there is substantial evidence in the record to support a finding of ostensible agency determining that John had authority, acting as the ostensible agent on behalf of the Halls, to hire Youderian to complete the road improvement project.

The District Court found that John had ostensible authority acting at the Halls’ request to hire Youderian to complete the road improvement project which principally benefitted the Halls. The court further found that the cost of the road improvements was not calculated into the contract executed between Klind and the Halls as the contract makes no mention of additional costs for road improvements over and above Klind’s original construction estimate. Therefore, the court decreed that the Halls are individually liable for the costs of the road improvements.

The Halls contend that they did not direct John to hire anyone to improve the road. They assert that the conversation between David and John was nothing more than the recital of a need for a road and not a direction to have a road built. The Halls also contend that no agency relationship existed as there was no contract between themselves, the supposed principal, and John, the supposed agent.

Both the agency and the agent’s authority may be ostensible. An ostensible agency is created when the principal intentionally or by want of ordinary care causes a third person to believe another to be his agent who is not really employed by him. Section 28-10-103, MCA; Turjan v. Valley View Estates (1995), 272 Mont. 386, 394, 901 P.2d 76, 81-82. The agency relationship may be implied from the conduct and from all the facts and circumstances in the case and it may be shown by circumstantial evidence. Butler Manufacturing. Co. v. J & L Implement Co. (1975), 167 Mont. 519, 524, 540 P.2d 962, 965.

Ostensible authority is that which a principal, intentionally or by want of ordinary care, causes or allows a third person to believe the agent to possess. Section 28-10-403, MCA; Northwest Polymeric v. Farmers State Bk. (1989), 236 Mont. 175, 177, 768 P.2d 873, 875. Ostensible authority can be implied from the words and conduct of the parties and the circumstances of the particular case notwithstanding a denial by the alleged principal. Audit Serv., Inc. v. Elmo Road Corp. (1978), 175 Mont. 533, 541, 575 P.2d 77, 81.

The Halls contend that statements made by an alleged agent to a third party cannot be testified to by the third party in order to prove the existence of an agency relationship. While this may rule out the testimony of representatives of Youderian, as the third party, regarding any agency relationship, it does not rule out the testimony of the alleged agent. This Court has previously stated that the direct testimony of an agent on the witness stand is admissible to prove the existence and the extent of his authority where his powers and duties have not been reduced to writing. Phelps v. Union Central Life Ins. Co. (1937), 105 Mont. 195, 199, 71 P.2d 887, 889.

To this end, John testified at trial that David instructed him to have the road improved:

Q. ... Could you tell us how you were involved in the improving of this road.
A. [David] and I had been visiting about it, and he said that he needed a road, and I said something about, well, I will talk to Youderians, and he never said anything different, so I just thought that he wanted them to do it.
Q. You knew the Youderians and their work before?
A. Yes.
Q. They had worked on your ranch many times?
A. Yes.
Q. And you found them to be honest and good contractors?
A. Yes.
Q. And you provided their name to Mr. Hall because he didn’t know any contractors in this area, I assume.
A. Yes.
Q. And what was the — were you getting paid anything by Mr. Hall to get the Youderians involved and get this road upgraded?
A. No.
Q. It was a favor, right—
A. Yes.
Q. —and you weren’t trying to get this road improved for yourself, were you—
A. No.
Q. —and you wouldn’t have done it for yourself; would you?
A. No.
Q. It was done strictly and completely because Hall wanted an improved road to his cabin that he could use then all year around; correct?
A. Yes.
Q. And because of your suggestion did he tell you to go ahead and put the Youderians on the property?
A. I don’t remember whether he specifically said that or not, but—
Q. But it was clear in your mind—
A. That he wanted them to do it.
Q. Yes, you had his authority to put Youderians to work?
A. Yes.

Trial Transcript at 93-94.

Q. Did Mr. Hall have you take care of the details of getting the local contractors, Youderian, on scene to build [the road]?
A. That was my understanding.
Q. And that’s what you did?
A. Yes.
Q. You relied on that?
A. Yes.
Q. And obviously the Youderians relied on you?
A. Yes.
Q. Because for Mr. Hall they went out and built a road; correct?
A. Yes.
Q. And were you satisfied they did what you asked them to do on behalf of Mr. Hall?
A. Yes.
Q. But there was no question that you were the contact with the Youderians on behalf of Mr. Hall; is that right?
A. That’s right.
Q. And it was a road that would have never been built except that Mr. Hall was building a cabin and asked you to get somebody out there to upgrade the trail to a passable road?
A. Yes.
Q. And that’s exactly what the Youderians did?
A. Yes.

Trial Transcript at 97-98.

Accordingly, we hold that there is substantial evidence in the record that a reasonable mind might accept as adequate to support a finding of ostensible agency determining that John had authority, acting as the ostensible agent on behalf of the Halls, to hire Youderian to complete the road improvement project.

Issue 2.

Whether there is substantial evidence in the record to support the finding that those claiming the agency (Youderian) acted reasonably.

The District Court found that because of Youderian’s prior dealings with John and David in the construction of the lodge, Youderian had no reason to doubt John’s authority regarding the road improvements. Part of the test to determine whether an ostensible authority exists is to determine what a prudent person, acting in good faith, under the circumstances would reasonably believe the authority to be. Bogle v. Ownerrent Rent to Own (1994), 264 Mont. 515, 519, 872 P.2d 800, 803 (citing Butler, 540 P.2d at 967).

Fred Youderian testified that, even though the construction of the lodge was a joint project between the Halls, John and Bill Egbert, it was John that contacted Youderian to install the water line for the lodge project. Youderian also dug an electrical line from an existing power pole down to the site of the lodge and dug a basement and set the footings for the lodge. Youderian relied on John for instructions on these projects.

Furthermore, because John owned the property where the cabin was being constructed, the Halls continually relied on his general knowledge of the property to assist them in building their cabin. The Halls consulted John on several aspects of the cabin construction, including placement of the water lines, and included John in many of the discussions regarding construction of the cabin.

Thus, the conduct of the Halls and John gave Youderian the impression that John was working closely with the Halls on the cabin construction. Therefore, it was not unreasonable for Youderian to believe that John was acting on the Halls’ behalf in hiring Youderian to improve the road.

Accordingly, we hold that the District Court did not err in finding that Youderian acted reasonably.

Issue 3.

Whether, as a matter of law, the ostensible agency was created.

“An agency may be created and an authority may be conferred by a precedent authorization or a subsequent ratification.” Section 28-10-201, MCA. “A ratification can be made ... by knowingly accepting or retaining the benefit of the act.” Section 28-10-211, MCA.

We have already stated that an ostensible agency is created when the principal intentionally or by want of ordinary care causes a third person to believe another to be his agent who is not really employed by him. Section 28-10-103, MCA; Turjan, 901 P.2d at 81-82. We also stated that an ostensible agency may be implied from the conduct and from all the facts and circumstances in the case and may be shown by circumstantial evidence. Butler, 540 P.2d at 965.

The Halls, by retaining the benefit of the improved road, ratified John’s actions in hiring Youderian for the road improvement project. Moreover, the conduct of the Halls of consulting John on certain aspects of the cabin construction and of including John in the majority of the discussions regarding the cabin made it appear that the Halls considered John to be their agent in some respects. Consequently, the Halls, by want of ordinary care in their behavior regarding John led Youderian to believe that John was the Halls’ agent and that John had the authority to hire Youderian to improve the road.

Accordingly, we hold that, as a matter of law, an agency relationship was created regarding the road improvement project.

Issue 4.

Whether the District Court erred in concluding that the Halls are estopped to deny John’s ostensible authority.

The District Court concluded that it would be inequitable to allow the Halls to enjoy the benefit of the road while denying Youderian payment for its work in improving the road. Thus, the court determined that the Halls were estopped to deny John’s authority to hire Youderian to construct the road for the Halls’ benefit.

An estoppel arises when one, by act or acquiescence, causes another in good faith to change his position for the worse. Powers Mfg. Co. v. Leon Jacobs Enter. (1985), 216 Mont. 407, 411, 705 P.2d 1377, 1380 (citing Bagnell v. Lemery (1983), 202 Mont. 283, 657 P.2d 608, 611). Moreover, in First Nat. Bank in Miles City v. Nunn (1981), 192 Mont. 487, 628 P.2d 1110, we stated:

It is well-settled that a principal who accepts the benefits of an agency transaction cannot later deny there was an agency. [Citations omitted.] Even if the agent’s actions were unauthorized, the principal ratifies them by receiving the benefits and is estopped to deny the agency. [Citations omitted.]

Nunn, 628 P.2d at 1116.

Youderian, believing that John was acting on the Halls’behalf, incurred considerable expense in improving the road thereby changing its position for the worse. The Halls now have the benefit of an “all-weather road” to access their cabin and, having accepted the benefits of the agency transaction — i.e., the improved road-they cannot now deny there was an agency.

Accordingly, we hold that the District Court did not err in concluding that the Halls are estopped to deny John’s ostensible authority.

Issue 5.

Whether the District Court erred in determining that John did not have ostensible authority as agent for the Halls to hire Youderian to complete the water system, sewer system and related landscaping project.

The District Court determined that Klind was the prime contractor in the construction of the cabin including the water system, sewer system and related landscaping project. As a result, the court concluded that Youderian must look to Klind for payment relating to the services provided to Klind.

Youderian contends that the “undisputed evidence” demonstrates that the Halls, through John, their agent, hired Youderian to not only construct the access road, but also, to perform the work necessary to install the water line and related services to the cabin. Contrary to Youderian’s assertion, this contention is disputed by the evidence.

At the May 30, 1996 trial of this matter, John Hill testified that he did not hire Youderian to do the work on the water and sewer systems. In addition, Fred Youderian testified as follows:

Q. Was anybody from Youderian Construction aware of the arrangement between George Klind and David Hall?
A. No.
Q. Sir, is it your testimony that Youderian Construction, that you or Youderian Construction, did not know that Dave Hall had hired George Klind to build him a cabin?
A. Yes.
Q. You did know that?
A. Yes, we knew.
Q. Okay, and — but John Hill didn’t have anything to do with building the cabin; did he?
A. Not to my knowledge.
Q. So he didn’t supervise you or tell you what to do or check you with respect to costs with any of the work done on the cabin itself; did he?
A. No. no.
Q. And John HiU didn’t negotiate any prices for Youderian Construction or for David HaU with respect to the water line, the septic system, and those items performed on the cabin itself; isn’t that correct?
A. I believe so.
Q. Okay. Those were done through Youderian Construction’s dealings with George Klind; isn’t that correct?
A. Yes.
Q. Okay, and George Klind hired Youderian Construction to do those things on the cabin; didn’t he?
A. He directed us to do it.

Trial Transcript at 31-32.

Mike Youderian, the president of Youderian Construction, testified as follows:

Q. And who contacted Youderian Construction to provide services for the water line and a septic system?
A. Mr. Klind had contacted us for the septic system, and Mr. Klind contacted us for the water system. We visited on occasion with Mr. Hill about those projects also, but — but Mr. Klind — I would say Mr. Klind directed us on both projects.

Trial Transcript at 50-51.

Q. Okay, and you were contacted by George Klind to do the water line; correct? I think that’s what you said.
A. Yes, sir.
Q. Okay, and you were contacted by George Klind to do the septic system—
A. Yes, sir.
Q. —and the landscaping?
A. Yes, sir.

Trial Transcript at 71.

Given this testimony, we hold that the District Court did not err in determining that John did not have ostensible authority as agent for the Halls to hire Youderian to complete the water system, sewer system and related landscaping project as it was Klind, not John, that hired Youderian to complete these projects.

We next must determine whether Klind was acting as the prime contractor on the project or merely as the Halls’ agent. The District Court concluded that Klind held himself out as the prime contractor, hired numerous subcontractors to complete the various aspects of the cabin and was not acting as an agent on behalf of the Halls when he contracted with Youderian to develop a water system, sewage facilities and landscaping for the cabin.

Youderian contends that Klind was not the prime contractor as to the water system, sewer system or the landscaping since the contract between Klind and the Halls for construction of the cabin was silent regarding these projects. Youderian maintains that it was not until John telephoned the Halls on or about October 4, 1994, for the purpose of receiving authorization for a water line, that Youderian was hired to perform these tasks.

Although the August 13, 1994 contract between Klind and the Halls does not specifically state that indoor plumbing was to be included in the construction of the cabin, a sketch faxed to the Halls from Klind on July 6, 1994, one month prior to the signing of the contract, shows a bathroom complete with tub, sink and toilet facilities. While Youderian maintains that this does not mean that the cabin was to be equipped with indoor plumbing, clearly some type of water and sewer facilities were agreed upon prior to the parties entering into the construction contract. Furthermore, John testified that it was Klind who spoke to David in the October 4, 1994 phone call, and that the purpose of the call was to get the okay to relocate the water line, not to get authority to put one in.

The District Court found that Youderian was, at a minimum, put on inquiry notice as to Klind’s authority relating to the Halls’ liability for specific construction costs and that Youderian could have filed a construction lien pursuant to Title 71, chapter 3, part 5 of the Montana Code Annotated. The District Court noted that the construction lien statutes protect owners from having to pay twice for services provided by contractors as well as protecting contractors and subcontractors from nonpayment.

Youderian contends that they were not required to look to Klind for payment of Youderian’s services since those services were not rendered to Klind and that the construction lien statutes do not apply in this case. Youderian claims that they were led to believe that all of the work performed by them was authorized by the Halls and was to be paid for by the Halls.

Bob Evans (Evans), who installed the cabinets in the cabin and who had joined in the original complaint with Youderian against the Halls over payment of his services, testified that both he and Youderian always considered that the bills were owed by Klind. Evans further testified that he did receive a check from Klind for payment of his services but that Klind asked him not to cash it as Klind had not yet been paid by the Halls. Evans testified that he later learned that the Halls had paid Klind.

Accordingly, we hold that the District Court was correct in concluding that Klind was the prime contractor in the construction of the cabin including the water, sewer and landscaping projects and that Youderian must look to Klind for payment.

Issue 6.

Whether the District Court erred in denying Youderian’s request for attorney fees.

Youderian contends that the District Court abused its discretion in denying Youderian’s request for attorney fees on the basis of this Court’s decision in Foy v. Anderson (1978), 176 Mont. 507, 580 P.2d 114, wherein this Court affirmed the trial court’s award of attorney fees to a third party defendant who was forced to secure the services of an attorney and incur expenses through no fault of her own. Youderian asserts that a district court has general equity power to make an injured party whole and that an award of attorney fees is encompassed within that power.

The longstanding rule in Montana is that absent statutory or contractual authority, attorney fees will not be awarded. Tanner v. Dream Island, Inc. (1996), 275 Mont. 414, 429, 913 P.2d 641, 650 (citations omitted). In certain instances in which bad faith or malicious behavior are involved, an equitable award of attorney fees has been upheld. Tanner, 913 P.2d at 650. However, this equitable considerationis invokedinfrequently and only where the prevailing party has been required to defend against an action, not when the prevailing party instituted the action. Tanner, 913 P.2d at 651; Goodover v. Lindey’s Inc. (1992), 255 Mont. 430, 447, 843 P.2d 765, 775.

The case before us presents neither a statutory nor a contractual basis for awarding attorney fees; nor does it fall within one of the narrow exceptions to the general rule regarding attorney fees. Youderian was not forced to defend frivolous litigation through no fault of its own. On the contrary, Youderian obtained an attorney to initiate legal action.

Moreover, Youderian is not necessarily the prevailing party. Although Youderian prevailed on its claim for the road improvements, the Halls prevailed on the remainder of the claims. Therefore, we hold that the District Court did not abuse its discretion in denying Youderian’s request for attorney fees.

Affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES LEAPHART, GRAY and REGNIER concur.


author: JUSTICE REGNIER

text:
    IN RE MATTER OF W.Z., Youth in Need of Care.
    No. 96-719.
    Submitted on Briefs July 17, 1997.
    Decided October 7, 1997.
    54 St.Rep. 1019.
    946 P.2d 125.
    285 Mont. 16.

      For Appellants: Daniel B. Buckley; Berg, Lilly, Andriolo & Tollefsen; Bozeman (for Appellant Father); Derik Pomeroy; Morgan, Cameron & Weaver; Bozeman (for Appellant Mother).
    For Respondent: Hon. Joseph P. Mazurek, Attorney General; Tammy K. Plubell, Assistant Attorney General; Helena; Marty Lambert, Gallatin County Attorney; Gary Balaz, Deputy County Attorney; Bozeman.
   JUSTICE REGNIER

delivered the Opinion of the Court.

Appellants C.W.M. (mother) and T.Z. (father) appeal from an order of the Eighteenth Judicial District Court, Gallatin County, terminating appellants’ parental rights over W.Z. For the reasons stated below, we affirm in part and reverse in part.

The following issues are present on appeal:

1. Did the District Court err in terminating the mother’s parental rights?

2. Did the District Court err in terminating the father’s parental rights?

FACTUAL BACKGROUND

W.Z. was born on November 4, 1991, to C.W.M., his biological mother, and T.Z., his biological father. The mother and father divorced in February 1994, following which the mother received custody of W.Z. Pursuant to the February 10, 1994, custody decree, the father received no visitation rights. In September 1994, while living, working, and attending school in Eau Claire, Wisconsin, the father petitioned the District Court to modify the decree’s visitation order. The court granted the father’s request, modifying the decree to permit him supervised visitation rights with his son.

Early in the morning on September 13, 1994, police officers responding to a call arrived at the mother’s home in Belgrade, Montana, to find W.Z., then age two, home alone. Soon thereafter, officers located the mother, in an intoxicated condition, walking home from a local bar. The Department of Family Services (DFS) assumed protective custody of W.Z., and the mother was cited for endangering the welfare of a child. W.Z. remained in protective custody until September 20,1994, at which point he was returned to his mother’s custody.

The DFS petitioned for temporary investigative authority, and the court conducted a hearing on October 4,1994. Without objection from the mother, the court granted DFS temporary investigative authority and protective services for a six-month period. The father, who was in Wisconsin at the time and whose location was unknown by DFS, was not present at the hearing. On November 25, 1994, the court approved a treatment plan for the mother which was intended to address, among other things, her chemical dependency.

At approximately 1 a.m. on January 12, 1995, shortly after the father arrived in Montana with the expressed intention of visiting his son, an officer from the Belgrade Police Department found W.Z. walking alone on some railroad tracks and subsequently found the mother in an intoxicated state. As a result of this incident, DFS removed W.Z. from his mother’s home and placed him in foster care, where he has since remained.

The father did not see W.Z. during his return visit to Montana because W.Z. was removed from the mother’s home shortly after the father’s arrival in Montana. On January 14, 1995, the father and mother engaged in an altercation which resulted in domestic abuse charges against the mother and felony assault charges against the father. On January 27, 1995, the mother and father were involved in yet another dispute which resulted in a felony assault charge against the father to which he pled guilty. The father received a six-year sentence pursuant to which he remains incarcerated at Montana State Prison. During his incarceration, the father has enrolled in anger management classes, the alternatives to violence project, and an addictive disease study program.

Citing the mother’s failure to comply with her treatment plan and her failure to maintain sobriety as partial grounds, DFS filed a petition for temporary custody of W.Z. on April 4,1995. Ahearing was held on April 17,1995, withboth the father and mother in attendance. At the suggestion of the County Attorney, the court asked the father whether he would waive any appearance at future hearings since he was not the custodial parent, to which he agreed. The mother requested counsel, and the court reset the temporary custody hearing for May 23, 1995.

On August 15, 1995, following two continuances, the court again convened a hearing on DFS’s petition for an additional six-month temporary custody and investigative period. The mother was intoxicated when she appeared for the second day of testimony, as evidenced by her disruptive behavior in court and the results of a court-ordered blood alcohol test. The father, who had waived his presence, remained incarcerated at the time of the hearing and did not appear. By stipulation of the parties, the court adjudicated W.Z. as a youth in need of care. At the conclusion of the hearing, the court granted DFS temporary custody of W.Z., and on November 9, 1995, the court approved a second treatment plan for the mother.

On December 22, 1995, the mother successfully completed an inpatient chemical dependency treatment program at Montana Chemical Dependency Center in Butte. On January 22, 1996, the mother was arrested for fraudulently obtaining dangerous drugs and subsequently pled guilty to that charge, receiving a three-year suspended sentence.

On February 15, 1996, DFS filed a petition to terminate both the mother’s and father’s parental rights. DFS sought to terminate the mother’s parental rights on the basis that she had failed to successfully complete her treatment plan. It sought to terminate the father’s parental rights on the basis that he abandoned W.Z., or, alternatively, that a treatment plan was impractical due to his imprisonment.

Following a hearing on April 11 and 12, 1996, at which both the mother and father were present, the District Court issued its findings of fact and conclusions of law terminating both the mother’s and father’s parental rights. It is from the termination of their parental rights that the mother and father now appeal.

DISCUSSION

The applicable standard of review for a district court’s termination of parental rights is whether the court interpreted the law correctly and whether the court’s findings of fact are clearly erroneous. In re Matter of K.F.L. and N.L. (1996), 275 Mont. 102, 104, 910 P.2d 241, 243, (citing In re Matter of J.J.G. (1994), 266 Mont. 274, 281, 880 P.2d 808, 812).

In In re Matter of D.H. and F.H. (1994), 264 Mont. 521, 524, 872 P.2d 803, 805, we clarified the standard of review for cases involving a youth in need of care and termination of parental rights. The appropriate standard of review to be applied to purely factual findings in a termination of parental rights proceeding is the clearly erroneous standard as set forth in Interstate Production Credit Association v. DeSaye (1991), 250 Mont. 320, 323, 820 P.2d 1285, 1287. In re Matter of D.H., 264 Mont. at 524, 872 P.2d at 805 (see also In re Matter of J.J.G., 266 Mont. at 281, 880 P.2d at 812). We review conclusions of law in a termination proceeding to determine if those conclusions are correct. In re Matter of D.H. and F.H., 264 Mont. at 524, 872 P.2d at 805 (see also In re Matter of J.J.G., 266 Mont. at 281, 880 P.2d at 812).

This court has recognized that “a natural parent’s right to care and custody of a child is a fundamental liberty interest, which must be protected by fundamentally fair procedures.” In re Matter of R.B., Jr. (1985), 217 Mont. 99, 103, 703 P.2d 846, 848. Accordingly, prior to terminating an individual’s parental rights, the district court must adequately address each applicable statutory requirement. In re Matter of R.B., Jr., 217 Mont. at 103, 703 P.2d at 848.

ISSUE 1

Did the District Court err in terminating the mother’s parental rights?

The State petitioned to terminate the mother’s parental rights pursuant to § 41-3-609(l)(c)(i) and (ii) (since renumbered § 41-3-609(l)(e)(i) and (ii)), MCA, which provides as follows:

(1) The court may order a termination of the parent-child legal relationship upon a finding that any of the following circumstances exist:
(c) the child is an adjudicated youth in need of care and both of the following exist:
(i) an appropriate treatment plan that has been approved by the court has not been complied with by the parents or has not been successful; and
(ii) the conduct or condition of the parents rendering them unfit is unlikely to change within a reasonable time ....

Following the August 15, 1995, hearing on DFS’s petition for temporary custody, and by stipulation of the parties, the court adjudicated W.Z. as a youth in need of care. The court approved the second of two appropriate treatment plans for the mother on November 9, 1995. Therefore, the first issue on appeal is whether the District Court erred in finding that the mother did not comply with, or successfully complete, her treatment plan. The second issue on appeal is whether the District Court erred in finding that the conduct and conditions which make the mother unfit to parent W.Z. are unlikely to change within a reasonable time. We address each issue in turn.

A. Completion and success of appropriate treatment plan.

In its findings of fact and conclusions of law terminating the mother’s parental rights, the District Court found that the mother did not complete either of her court-approved treatment plans, and that the plans were unsuccessful.

The record is replete with factual evidence which indicates the mother failed to comply with or successfully complete either of her treatment plans. Among the requirements of her first court-ordered treatment plan, approved by the court on November 25, 1994, were that the mother maintain sobriety, attend two AA meetings each week, and avoid leaving her son alone or without proper care. It is undisputed, however, that a mere two months after the plan’s implementation, W.Z. was found wandering outside alone in the middle of the night while the mother was intoxicated.

The evidence further indicates the mother continued to consume alcohol and minimize her addiction. For example, the mother arrived at her social worker’s office for two visits with W.Z. in February and March 1995, smelling of alcohol. On March 20, 1995, the mother refused to continue with the counseling sessions mandated by her treatment plan. In addition, the mother was intoxicated when she appeared for the second day of the August 15,1995, hearing on DFS’s petition for temporary custody. Accordingly, the District Court’s finding that the mother failed to comply with her first treatment plan is supported by substantial evidence and is not clearly erroneous.

The factual record additionally supports the District Court’s finding that the mother failed to complete her second treatment plan and that the plan was unsuccessful. Among the requirements of the mother’s second treatment plan, approved by the court on November 9, 1995, were that she complete inpatient and aftercare alcohol treatment programs and continue to participate in AA. The plan further required that the mother abstain from consuming alcohol and drugs, avoid breaking the law, attend counseling sessions, and request visits with her son.

There is testimony in the record to support the court’s finding that the mother continued to drink up until the time she began inpatient treatment in November 1995. Although the mother completed inpatient treatment as required, she failed to complete an aftercare program and failed to document her alleged continuing participation in AA. Although the mother claims she has maintained sobriety since completing inpatient treatment in December 1995, she was arrested for obtaining dangerous drugs with a fraudulent prescription within weeks of completing treatment. Further, the mother did not participate in counseling, as required, and visited only infrequently with her son.

The mother argues, however, that because her second treatment plan had only been in effect for three months when the State filed its petition to terminate her parental rights in February 1996, she did not have adequate time to demonstrate that the plan had been successful. The mother notes that the State filed for termination of her parental rights within two months of her discharge from inpatient chemical dependency treatment on December 22, 1995. Therefore, she argues, the State moved to terminate her rights just weeks after she had finally gained control over her alcoholism.

The mother’s argument that she did not have adequate time to demonstrate that the treatment plan was a success presupposes that she complied with the objectives of the plan and completed it. As discussed above, we hold the District Court properly found that the mother did not comply with either her first or second court-approved treatment plan. Further, this Court notes that, although the mother claims progress since the implementation of her second treatment plan, she was arrested for fraudulently obtaining dangerous drugs within weeks of completing inpatient treatment and roughly three weeks before DFS filed its petition to terminate her parental rights.

Finally, the record indicates that DFS first became involved with the mother in September 1994 in an attempt to help her improve her parenting skills and control her chemical dependency. In the two-year period following DFS’s initial involvement and the eventual filing of the petition to terminate her parental rights, the mother consistently failed to comply with either of the treatment plans approved for her. Any progress made by the mother in the two months prior to the filing of the petition does not accurately reflect DFS’s efforts to rehabilitate her relationship with W.Z. throughout the preceding two years. See In re Matter of B.T.B. and B.B. (1992), 254 Mont. 449, 452-53, 840 P.2d 558, 559-60 (citing In re Matter of M.J.D., C.K.D., A.R.D. (1987), 225 Mont. 200, 205, 731 P.2d 937, 939-40). Based on the foregoing, we hold the court properly found that the mother failed to successfully complete her second treatment plan.

B. Likelihood that conduct and conditions rendering the mother unfit will change within a reasonable time.

In terminating the mother’s parental rights, the District Court additionally found that the conditions which make her unfit to parent her son are unlikely to change in a reasonable time, and that continuation of the parent-child relationship will likely result in the continued abuse or neglect of the child.

In so finding, the court reviewed the following factors set out in § 41-3-609(2), MCA:

(a) emotional illness, mental illness, or mental deficiency of the parent of such duration or nature as to render the parent unlikely to care for the ongoing physical, mental, and emotional needs of the child within a reasonable time;
(b) a history of violent behavior by the parent;
(d) excessive use of intoxicating liquor or of a narcotic or dangerous drug that affects the parent’s ability to care and provide for the child;
.... [and]
(g) any reasonable efforts by protective service agencies that have been unable to rehabilitate the parent.

The court found that the mother suffers from chronic emotional and mental problems such that she cannot care for W.Z.’s emotional needs and noted her history of violent encounters with the father. The court additionally found that the mother’s addiction to alcohol renders her unable to effectively parent her child. Finally, the court recognized DFS’s lengthy involvement with the mother and her continued inability to provide a stable home for her child, who has remained in foster care since January 12, 1995.

Substantial evidence of record clearly supports these findings by the District Court. For example, in a written assessment of the mother’s fitness as a parent, clinical psychologist Frank Seitz identified her most significant problem as alcoholism. Furthermore, witness testimony at the termination hearing referred to the mother’s longstanding alcoholic behavior. Likewise, in an April 15, 1995, report, licensed counselor Joseph Scalia opined that the mother has a borderline personality defect. Incorporated into Dr. Seitz’s August 14, 1995, court-ordered assessment of the mother’s fitness as a parent, is the conclusion of Dr. Charles Kelly that the mother probably has a borderline personality disorder. The record additionally reveals continued intervention by DFS on the mother’s behalf for a period of time in excess of two years. In light of these facts of record, the court did not err in finding that the conditions which make the mother unfit to parent her son are unlikely to change in a reasonable time.

Again, the mother argues that, at the time the State filed its petition to terminate her parental rights, she was in the midst of successfully altering her conduct and the conditions which had previously rendered her an unfit parent. She points out that she successfully completed inpatient chemical dependency treatment just two months before the State filed its petition to terminate, and maintains she has not consumed alcohol since. The mother further argues she regularly attended AA meetings, and made extensive efforts to remain in contact with her son.

However, the record does not substantiate the mother’s claim that she has been attending AA meetings, nor does it document efforts on her part to remain in contact with her son. Although the record contains no evidence that she has consumed alcohol since her release from inpatient treatment in December 1995, the District Court properly looked to the mother’s extensive history of alcoholic behavior and inadequate parenting prior to finding that her conduct and behavior was unlikely to change within a reasonable time. In re Matter of K.F.L. and N.L. (1996), 275 Mont. 102, 106, 910 P.2d 241, 244.

Finally, pursuant to § 41-3-609(3), MCA, in determining whether the condition or conduct rendering the mother unfit was likely to change within a reasonable time, the District Court was bound to “give primary consideration to the physical, mental, and emotional conditions and needs of the child.” Indeed, the “best interest of the child is paramount and takes precedence over parental rights.” In re Custody of T.M. (1994), 267 Mont. 75, 79, 881 P.2d 1333, 1336 (citing In re Matter of J.J.C.H. (1992), 252 Mont. 158, 165, 827 P.2d 812, 816). The record in this case clearly indicates, and the District Court correctly found, that the termination of the mother’s parental rights was in W.Z.’s best interest. For example, W.Z.’s counselor testified at the termination hearing that the child was thriving in his foster home and opined that termination of the mother’s parental rights would be in W.Z.’s best interests.

Based on the foregoing, we hold that the District Court correctly found that the mother failed to comply with and successfully complete her treatment plans, and that the conditions that made the mother unfit as a parent were unlikely to change within a reasonable time. Therefore, we hold that the District Court’s findings of fact terminating the mother’s parental rights are not clearly erroneous.

ISSUE 2

Did the District Court err in terminating the father’s parental rights?

On February 15, 1996, the State petitioned to terminate the father’s parental rights pursuant to § 41-3-609(1)(b), MCA, which provides that the court may terminate the parent-child legal relationship upon finding that the child has been abandoned by the parents. The State alleged that the father abandoned W.Z. by committing crimes against the mother which he should have known would have resulted in his incarceration and inability to parent his son.

On March 19, 1996, the State filed an amended petition for the termination of the father’s parental rights, alternatively alleging that, prior to his incarceration at the Montana State Prison, the father abandoned W.Z. during the period extending from September 1994 through early January 1995. The State additionally petitioned for termination of the father’s parental rights pursuant to § 41-3-609(1)(c) (since renumbered § 41-3-609(1)(e)) and (4)(b), MCA, on the grounds that a treatment plan was not practical in light of the father’s incarceration.

A. Abandonment.

Without addressing the allegation that the father’s incarceration constituted abandonment, the District Court found that the father had abandoned W.Z. “by not taking any steps to remedy the youth’s situation during the period of September 1994 through early January 1995.” The court further found that “[b]efore his imprisonment the father showed [n]o inclination to support the child emotionally or financially” and noted that though the father “says he wants to be a parent, he has not manifested any firm intentions to do so.”

The State must present clear and convincing evidence to demonstrate that the father abandoned W.Z. during the relevant period. In re Matter of A.E., C.E., S.R., and J.R. (1992), 255 Mont. 56, 59, 840 P.2d 572, 574. The District Court’s determination of whether the father’s actions during the relevant time period constitute abandonment is a factual one which will be upheld by this Court unless clearly erroneous. See, i.e., In re Matter of R.B. (1985), 217 Mont. 99, 103, 703 P.2d 846, 848; In re Adoption of S.P.M. (1994), 266 Mont. 269, 271, 880 P.2d 297, 298.

In defining abandonment, § 41-3-102(7)(e) (since renumbered § 41-3-102(9)(f)), MCA, explains that a parent

abandons the child by leaving the child under circumstances that make reasonable the belief that the parent ... does not intend to resume care of the child in the future or willfully surrenders physical custody for a period of 6 months and during that period does not manifest to the child and the person having physical custody of the child a firm intention to resume physical custody or to make permanent legal arrangements for the care of the child....

(Emphasis added.)

We have previously held that the six-month requirement for establishing abandonment applies only to the second clause of this definition. In re Matter of A.E., 255 Mont. at 60, 840 P.2d at 575. The first clause applies where, as here, “a parent [allegedly] abandons a child under circumstances that make reasonable the belief the parent does not intend to resume care of the child.” No requisite time frame applies to this clause. In re Matter of A.E., 255 Mont. at 60, 840 P.2d at 575.

In the instant case, the State alleges abandonment over a period of approximately four months. Pursuant to the relevant portion of § 41-3-102(7)(e), MCA, the pertinent factual inquiry in this case is whether the father abandoned W.Z. from September 1994 through January 1995, and whether it was reasonable to believe that he did not intend to resume care of the child in the future.

This Court is aware that the father has an unimpressive history as a parent. The record indicates that the father has offered little, if any, financial or emotional support for his son in the past. The father, himself, testified that his son, now five years old, does not know him. The State, however, has alleged abandonment during the finite period from September 1994 to January 1995. Thus, the issue is whether the father abandoned his son during this specific time frame.

As the party seeking to establish abandonment, the State has the burden of demonstrating by clear and convincing evidence that the father abandoned W.Z. during the alleged time period. In re Matter of A.E., 255 Mont. at 59, 840 P.2d at 574. The State argues that the father was no more involved in W.Z.’s life during the fall of 1994 than he had ever been, and that it was reasonable to believe he had no intention of resuming, or assuming, care of the child in future.

Review of the record, however, indicates otherwise. For example, this court notes that in September 1994, the father petitioned the court to modify the February 10,1994, dissolution decree to allow him supervised visitation with his son. Further, the father testified that, although he was living in Wisconsin at the time, he contacted the mother during the fall of 1994 to discuss W.Z.’s well-being and to schedule visitation in Montana. Indeed, the father flew back to Montana in January 1995, and testified that he did so with the intent of visiting his son. Before any visitation occurred, however, W.Z. was placed in foster-care where he has since remained.

This evidence does not support the District Court’s finding that the father abandoned W.Z. during the period of September 1994 through early January 1995 by failing to take any steps to remedy W.Z.’s situation. We hold the State failed to sufficiently prove its allegations of abandonment during the relevant time period with clear and convincing evidence, and failed to adequately demonstrate that the statutory criteria of abandonment have been satisfied. Based on the foregoing, we hold the District Court erred in finding that the father abandoned W.Z. from September 1994 through early January 1995, and reverse the lower court on this issue.

B. Practicality of treatment plan.

The State additionally petitioned to terminate the father’s parental rights pursuant to § 41-3-609(1)(c) (since renumbered § 41-3-609(1)(e)) and (4)(b), MCA, on the grounds that a treatment plan was not practical in light of the father’s incarceration. Because we reverse the District Court’s determination that the father abandoned his son in the fall of 1994, we must next address this issue and determine whether the District Court erred in finding that a treatment plan was impractical in light of the father’s incarceration.

Section 41-3-609(4)(b), MCA, provides an exception to the requirement that the court approve an appropriate treatment plan prior to the termination of parental rights and states that:

(4) A treatment plan is not required under this part upon a finding by the court following hearing if:
(b) the parent is incarcerated for more than 1 year and a treatment plan is not practical considering the incarceration ....

In terminating the father’s parental rights, the court recognized that no treatment plan was in effect, and concluded that one was unnecessary pursuant to § 41-3-609(4)(b), MCA. As the court correctly noted, the father had been incarcerated for more than one year. Accordingly, the court then turned to the question of whether a treatment plan was practical considering the father’s incarceration. The court found that such a plan was in fact impractical because the father’s release date was not known. The court further noted that the father had shown minimal interest in the child, and had provided the mother and W.Z. with little financial or emotional support in the past.

Although the District Court found that a treatment plan was impractical in light of the father’s incarceration, the record does not support such a finding. We have previously stated that “we sound a stem warning that this Court will not permit the termination of parental rights without first establishing a treatment plan unless a showing of facts clearly proves the impossibility of any workable plan.” In re Matter of R.B., Jr. (1985), 217 Mont. 99, 105, 703 P.2d 846, 849 (citing In re Matter of C.L.R. (1984), 211 Mont. 381, 386, 685 P.2d 926, 928 (superseded by statute as stated in In Matter of Baby Boy Scott (1988), 235 Mont. 253, 767 P.2d 298)). The record presently before this Court contains no such showing of facts.

It is apparent from the record that neither DFS nor the social worker involved in the case ever presented the father with a proposed treatment plan, or even discussed with him the possibility of implementing one. At the termination hearing, the social worker testified that it would be difficult to implement a plan for the father while incarcerated, but conceded that certain prison programs might have been incorporated into a potential treatment plan.

In finding a treatment plan would be impractical, the court also relied, in part, on the fact that the father had shown little interest in his son in the past. Although the fact that the father has historically shown little or no interest in his son’s life indicates he might well have failed to comply with any court-approved treatment plan, given the fact that no treatment plan was ever attempted, such a finding is mere speculation.

The present record simply does not support the District Court’s finding that implementation of a treatment plan would have been impractical under the circumstances of this case. We hold the State failed to demonstrate that a treatment plan would have been impractical in light of the father’s incarceration.

Having held that the District Court erred in finding the father abandoned W.Z., and erred in finding a treatment plan was impractical, we reverse the court’s termination of the father’s parental rights.

CHIEF JUSTICE TURNAGE, JUSTICES GRAY, NELSON and TRIEWEILER concur.