author: CHIEF JUSTICE TURNAGE

text:
    FIRST TRUST COMPANY OF MONTANA, as Trustee, Plaintiff and Respondent, v. CITY OF GREAT FALLS, MONTANA, Defendant and Appellant.
    No. 92-433.
    Submitted on Briefs December 11, 1992.
    Decided January 21, 1993.
    50 St.Rep. 45.
    256 Mont. 390.
    845 P.2d 1227.

      For Defendant and Appellant: David V. Gliko, City Attorney, Great Falls.
    For Plaintiff and Respondent: Norman L. Newhall, Alexander, Baucus & Linnell, Great Falls.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

The City of Great Falls appeals a ruling of the District Court for the Eighth Judicial District, Cascade County, granting summary judgment to First Trust Company of Montana. We affirm.

The issue is whether the District Court erred in ruling that a prior recorded mortgage lien securing IDR municipal bonds is superior to a subsequent lien securing delinquent SID municipal bonds.

In February of 1975, the City of Great Falls adopted a resolution declaring its intention to create an industrial park. The following January, the City held a public hearing on its proposal to issue Industrial Development Revenue Bonds (IDR bonds) to acquire property for such purposes. After the public hearing, the City resolved that it was “in the best interests of the public to issue $500,000 industrial revenue bonds to acquire and develop land northeast of the City as an industrial park.”

In June of 1976, the City passed a resolution authorizing the issuance and sale of IDR bonds for the purchase of the property which later became known as North Park. The amount of the bond issue was later amended to $540,000.

Proceeds from the sale of the bonds were deposited in escrow until they totalled $540,000, at which time they were disbursed to the Economic Development Corporation, the owner of the North Park property. On November 8,1976, the Economic Development Corporation, in consideration of the payment of the bond proceeds, conveyed the North Park property to the City of Great Falls by warranty deed. Also on November 8, 1976, and as security for the repayment of the IDR bonds, the City of Great Falls granted a mortgage and indenture of trust to First Trust Company. The deed to the City from the Economic Development Corporation was recorded in the records of Cascade County on November 9,1976, as was the mortgage from the City to First Trust.

The City leased the North Park property to a corporation known as Northeast Industrial Park, Inc., until each lot was sold. It then passed title to the third-party purchasers of the lots.

In December of 1976, the City annexed the North Park property into the City of Great Falls as the North Park Addition. Two months later, the City authorized the issuance and sale of Special Improvement District Coupon Bonds (SID bonds) to defray the cost of construction of streets and utilities in North Park Addition. In March 1977, the City created a Special Improvement District for the construction of streets and utilities in North Park Addition. Sometime after March 1,1977, the SID bonds were sold and the improvements were constructed and installed.

Repayment of the IDR bonds is in default. A principal balance of $235,000, together with accrued interest, was due on July 1,1986. As of April 1, 1992, $111,055.44 in interest had accrued and was due on the outstanding principal. Repayment of the SID bonds is also delinquent, in the sum of $186,915.09 as of April 1, 1992. The estimated fair market value of the property remaining in North Park is insufficient to secure repayment of both the IDR bonds and the SID bonds.

First Trust Company, as the holder of the mortgage securing repayment of the IDR bonds, brought this action seeking declaratory judgment that its mortgage has a higher priority than the City’s lien securing the SID bonds. The District Court ruled that it does, and the City appeals.

Did the District Court err in ruling that a prior recorded mortgage lien securing IDR municipal bonds is superior to a subsequent lien securing delinquent SID municipal bonds?

Section 71-3-113, MCA, provides that “[o]ther things being equal, different liens upon the same property have priority according to the time of their creation.” The City argues that this statute does not apply because of the statement in Section 7-12-4191, MCA, that an SID lien “can only be extinguished by payment.” This, according to the City, establishes the superiority of SID liens over all other liens.

However, this Court’s interpretation of Section 7-12-4191, MCA, in Hartman v. Mimmack (1944), 116 Mont. 392, 154 P.2d 279, refutes the City’s argument. In Mimmack, the Court rejected the argument that SID hens had priority over general tax liens due to the statutory provision that SID’s can only be extinguished by payment. The Court held that general tax hens and SID’s are not of equal rank. Mimmack, 154 P.2d at 280. In a broad statement, the Court further ruled:

On petition for rehearing appellant contends that this Court’s decision is in conflict with an express statute, namely [what is now Section 7-12-4191, MCA],
The objection might be tenable if that were the only statute to be considered. However, all applicable statutes must be taken into consideration.
The district was created on August 13,1938, and its obligations were thereafter issued. The latter, and the liens for the assessments to pay them, were subject to all existing statutes .... [Emphasis supplied.]

Mimmack, 154 P.2d at 282.

In this case, both liens arise from municipal bonds issued for public purposes. The City expressly determined that the purpose of the IDR bond issue was “to create new jobs and an expanded tax base by... [cheating an industrial park on land to be controlled by the City.” The improvements funded by the SID bonds benefit the real property in North Park. We hold that the liens are equal for purposes of application of Section 71-3-113, MCA, and that application of that statute is not precluded by Section 7-12-4191, MCA.

The City asserts that the intent to expressly except special assessments and taxes from the lien of the IDR mortgage appears in key documents of the IDR bond issue. It maintains that this contractual intent of the parties overrides the general rules of priority of liens. Specifically, the City cites the Official Statement used in connection with the sale of the IDR bonds, the lease between the City and Northeast Industrial Park, Inc., and the indenture on the mortgage.

The Official Statement provided:

The lien of the Indenture will be subject to Permitted Encumbrances which will include the Lease, liens for special assessments (including special assessments to pay the SID Bonds) and taxes and encumbrances which in NIPC’s opinion do not adversely affect the Project.

As First Trust points out, however, the Official Statement is extraneous to the transaction whereby First Trust was granted a lien to secure repayment of the IDR bonds. It is merely a document prepared by or for the underwriter. It does not define the nature and extent of the lien granted to First Trust.

The lease between the City and Northeast Industrial Park, Inc., states:

Permitted Encumbrances: this Lease, the Indenture, and, as of any particular time, (A) liens for taxes and special assessments not then delinquent, or delinquent but being contested by the Tenant in accordance with Section 4.06 hereof. [Emphasis supplied.]

“Not then delinquent” does not apply to the SID’s here, which are now delinquent. We conclude this lease provision has no effect in this instance.

The indenture on the mortgage provides:

There is, however, expressly excepted and excluded from the lien and operation of this Indenture the following described property, now owned or hereafter acquired (herein sometimes called Excepted Property):... B. Any special assessments, taxes or payments in lieu of taxes that maybe received by the Municipality in respect of the Project.

This provision relates to the disposition of payments for special assessments or taxes received by the City, not to the relative priority of the IDR mortgage lien and the SID lien.

The City also cites Section 7-12-4183(2)(b), MCA, which provides:

Delinquent special assessments shall be certified to the county clerk of the county in which the city or town is situated. The county treasurer must collect the delinquent special assessment and taxes in the same manner and at the same time as taxes for general, municipal, and administrative purposes are collected by him. In case they are not paid, the entire property shall be sold in the same manner as property is sold for taxes....

The City argues that the collection procedure for delinquent SID assessments finally resulting in the issuance of a tax deed conclusively sets up the ultimate priority of the SID lien and reduces the IDR bond mortgage to a subordinate position. This is similar to the City’s argument concerning Section 7-12-4191, MCA. This Court’s holding in Mimmack refutes this argument.

The City contends that Section 90-5-105(5), MCA, will be violated if the IDR bond mortgage has priority over the SID hen. That section provides:

No breach of any such agreement [mortgage made by a municipality] shall impose any pecuniary liability upon a municipality or county or any charge upon their general credit or against their taxing powers.

Imposition of liability will occur in this case if the SID’s are not paid and the liability to pay them reverts to the City as a whole. This imposition of liability will be a direct result of nonpayment of the SID’s and only indirectly, at best, a result of the IDR mortgage.

Finally, the City contends that the mortgage lien securing the IDR bonds is not a purchase money mortgage and is otherwise not entitled to priority under Section 71-3-114, MCA, because of the leasing arrangement with Northeast Industrial Park, Inc. We need not rule on this argument because we do not apply that statute.

We hold that under the facts of this case the IDR lien has priority under Section 71-3-113, MCA, because it was created prior in time to the SID lien. Our holding is limited to factual events such as occurred here, where a governmental body creates a Special Improvement District and issues SID bonds that are a lien on the property of the District which is also subject to a prior IDR lien created by a governmental body. We affirm the decision of the District Court granting summaiy declaratory judgment to First Trust Company of Montana.

JUSTICES HARRISON, GRAY, HUNT, TRIEWEILER, WEBER and McDONOUGH concur.


source: Caselaw Access Project

author: JUSTICE TRIEWEILER

license: Public Domain

text:
    IN RE THE MARRIAGE OF CATHARINE GAY GROUNDS, f/k/a CATHARINE GAY COWARD, Petitioner, Respondent and Cross-Appellant, and HAROLD MARK COWARD, Respondent, Appellant, and Cross-Respondent.
    No. 91-382.
    Submitted on Briefs August 27, 1992.
    Rehearing Denied March 4, 1993.
    Decided February 11, 1993.
    50 St.Rep. 114.
    256 Mont. 397.
    846 P.2d 1034.

      For Appellant: Michael Sol, Sol & Wolfe, Missoula.
    For Respondent: John Rayburn Velk, Missoula.
   JUSTICE TRIEWEILER

delivered the Opinion of the Corut.

Appellant Mark Coward filed a premature notice of appeal before the disposition of respondent Catharine Grounds’ post-trial motion. No new motion was filed by appellant after respondent’s motion was deemed denied, as required by Rule 5 of the Montana Rules of Appellate Procedure. We dismiss the appeal.

On February 28, 1991, the District Court of the Fourth Judicial District, Missoula County, granted a petition for dissolution to Mark Coward (Mark) and Catharine Grounds (Catharine). Findings of fact and conclusions of law were issued on March 14, 1991, and a judgment incorporating those findings and conclusions was entered on March 20, 1991. Among other provisions, the judgment provided Catharine with maintenance for life. Notice of entry of judgment was filed on March 28, 1991.

On April 1,1991, Catharine filed a motion for contempt for failure to pay maintenance. An order to show cause was issued on April 2, 1991. On April 4, 1991, Mark timely filed a motion to alter or amend the judgment, requesting the court to modify the maintenance award to his ex-wife. Mark also made a motion for a new trial. Mark’s motions were made in accordance with Rule 59(g), M.R.Civ.P.

On April 15,1991, a hearing was held on the contempt proceedings. On April 17, 1991, the court entered an order holding Mark in contempt. In the same order, the court ruled on Mark’s two motions. The judge: (1) partially granted Mark’s motion to alter or amend the March 20, 1991, judgment by modifying the maintenance award provided in the original judgment; and (2) denied Mark’s motion for a new trial.

On April 30, 1991, Catharine filed a motion in accordance with Rule 59(g), M.R.Civ.P., requesting the court to alter or amend the April 17, 1991, order. Before the court’s disposition of Catharine’s motion, Mark filed a notice of appeal of the March 14,1991, findings and the April 17,1991, order. He made his filing on May 17,1991. On May 23, 1991, the District Court issued a memorandum and order responding to Catharine’s motion; however, the court did not dispose of her motion at this time nor at any time thereafter. On June 15, 1991, Catharine’s motion was deemed denied. On June 28, 1991, Catharine filed her notice of appeal.

Catharine maintains that Mark’s notice of appeal, filed on May 17, 1991, was premature, and therefore, ineffective, according to Rule 5(a)(4), M.R.App.P. She maintains that Mark’s appeal should be dismissed based upon his failure to comply with Rule 5 of the Montana Rules of Appellate Procedure. We agree.

Rule 5(a)(1), M.R.App.P, requires the notice of appeal in civil cases to be filed within 30 days of the entry of judgment. However, if a motion under Rule 59(g), M.R.Civ.P., is timely filed by either party, the time for appeal shall rim from the entry of the order granting or denying the motion, or if applicable, from the time the motion is deemed denied pursuant to Rule 59(d), M.R.Civ.P., by the court’s failure to rule on it within 45 days. If a notice of appeal is filed before the motion is disposed of, the notice of appeal shall have no effect. Rule 5(a)(4), M.R.App.P. Semenza v. Hartelius (1991), 248 Mont. 294, 295, 811 P.2d 1262, 1263. Further, if a notice of appeal is filed prematurely, a new notice of appeal must be filed after the motion is disposed of or deemed denied in order to remedy the original untimely filing. Rule 5(a)(4), M.R.App.P.

The language of Rule 5(a)(4), M.R.App.R, requires the conclusion that Mark filed a premature notice of appeal. Catharine timely filed her post-trial motion to alter or amend the April 17, 1991, order on April 30,1991. While this motion was pending, Mark filed a notice of appeal on May 17, 1991. Pursuant to Rule 5(a)(4), M.R.App.P., Mark should have waited until after the court disposed of Catharine’s timely motion or until her motion was deemed denied to file his notice of appeal.

Mark contends that the time for appeal began to rim on April 18, 1991, when the court filed the ruling on Mark’s motions; and consequently his May 17, 1991, filing was timely. Mark bases this argument on an erroneous assumption that Catharine’s motion was filed two days too late, and therefore, could be disregarded.

Catharine filed her motion on April 30,1991. Mark asserts that Catharine’s filing was made 12 days after the April 18, 1991, order which she sought to amend. He contends that this was two days beyond the 10 day filing limit required by Rule 59(g), M.R.Civ.P. Consequently, Mark asserts, he acted properly when he disregarded Catharine’s motion and filed the notice of appeal when he did. Mark’s assumption is incorrect.

Rule 6(a), M.R.Civ.P, provides the methodology by which computation of time is to be determined:

In computing any period of time prescribed or allowed by these rules, by order of court, or by any applicable statute, the day of the act, event, or default after which the designated period of time begins to rim is not to be included.

April 17,1991, the day the order was issued, is not to be included in the time computation, as that is the date of the act of the court, namely the altering and amending of the prior judgment.

Further, Rule 6(a) of the Montana Rules of Civil Procedure provides that:

When the period of time prescribed or allowed is less than 11 days, intermediate Saturdays, Sundays and holidays shall be excluded in the computation.

Pursuant to Rule 59(g), M.R.Civ.P, a motion to alter or amend a judgment shall be served no later than 10 days after the notice of entry of judgment. This time period is less than the 11 days referred to in Rule 6(a), M.R.Civ.P., therefore, intervening Saturdays and Sundays are not counted. Accordingly, Catharine had until May 1, 1991, to file her motion to alter or amend. She filed her motion on April 30, 1991, one day before the time limit expired. She filed her motion within the time limitations required by the Montana Rules of Civil Procedure.

On May 23, 1991, the court responded to Catharine’s motion by a memorandum and order, but neither denied nor granted her motion in this order or at any time thereafter. According to Rule 59(d), M.R.Civ.P., because the court failed to dispose of Catharine’s motion, the motion was deemed denied on June 15, 1991, 45 days after the April 30,1991, filing date. Pursuant to Rule 5(a)(4), M.R.App.R, Mark should have waited until on or after June 15, 1991, to file his notice of appeal for his filing to be effective; or, subsequent to his premature filing, Mark should have filed a new notice of appeal on or after June 15, 1991. Mark did neither.

Rule 5(a)(4), M.R.App.P., mandates the conclusion that because Mark’s filing was premature, it was ineffective. Moreover, because Mark failed to remedy his situation and to file a new notice of appeal after Catharine’s motion was deemed denied, his appeal is hereby dismissed.

CATHARINE’S APPEAL

Although we dismissed Mark’s appeal due to a failure to comply with the timely filing requirements of Rule 5 of the Montana Rules of Appellate Procedure, we will address Catharine’s appeal because she timely filed a notice of appeal of the April 17, 1991, order. The court never disposed of Catharine’s April 30, 1991, motion; consequently, Catharine’s motion was deemed denied on June 15,1991, 45 days after her motion was made. Rule 59(d), M.R.Civ.P. According to Rule 5, M.R.App.P., Catharine had 30 days from June 15,1991, to file her notice of appeal. She timely filed the notice on June 28,1991, well within the prescribed time limit.

The sole issue on Catharine’s appeal is:

Did the District Court err when it partially granted Mark’s motion to alter or amend the judgment, despite Mark’s failure to file a supporting brief within five days of his motion, and despite his failure to notify Catharine of when his motions would be heard?

In the original March 20, 1991, judgment, the District Court awarded Catharine maintenance until she dies or remarries, whichever shall occur first. On April 4, 1991, Mark filed a motion to alter or amend the judgment and a motion for a new trial. He did not file briefs in support of either motion at any time. Mark also failed to notify Catharine that his motions would be heard in conjunction with Catharine’s contempt motion at the scheduled contempt hearing on April 15, 1991.

At the April 15, 1991, hearing, Mark did not present evidence regarding either of his motions. The only argument made on behalf of Mark’s motion to amend the judgment was a comment by Mark at the end of the hearing that maintenance should be modified because “no woman should be paid $2,000 for life.” Nonetheless, on April 17, 1991, the District Court partially granted Mark’s motion to amend the judgment and modified the lifetime maintenance award.

In the April 17, 1991, order, the District Judge explained that further consideration of the findings of fact and conclusions of law warranted a modification of the maintenance agreement. He stated that: “[t]he award of maintenance in the judgment dated March 20, 1991, is modified so that maintenance shall terminate if [Catharine] remarries or on March 20, 2001, whichever shall first occur.”

On April 30,1991, Catharine filed a motion to amend the April 17, 1991, order. On May 23, 1991, the District Court responded to Catharine’s motion by recognizing that confusion existed as to Catharine’s lack of notice of when Mark’s motions would be heard. The court requested the parties to propose a briefing schedule and/or evidentiary hearing date; however, the parties never acted on this request.

Catharine contends that the District Court abused its discretion when it partially granted Mark’s motion. She argues that according to Uniform District Court Rule 2, a moving party’s failure to file a brief in support of its motion within five days of the filing of the motion shall be deemed an admission that the motion is without merit. Consequently, she asserts, Mark’s -unsupported motions should have been deemed meritless, and therefore, denied.

Secondly, Catharine contends that no notice of hearing was submitted regarding Mark’s motion to amend; therefore, she had no notice that the court was going to consider Mark’s motion to amend the judgment at the April 15, 1991, hearing.

Catharine asserts that at the very minimum, she is entitled to a remand and further proceedings at which she may present evidence and testimony to justify the lifetime maintenance award which she was originally granted in the March 20,1991, judgment. She asserts that the District Court’s abuse of discretion should be corrected.

In Maberry v. Gueths (1989), 238 Mont. 304, 777 P.2d 1285, we held that although we will view a failure to file an answer brief within the time allowed as an admission that the motion is well taken by the nonmoving party, Uniform District Court Rule 2 does not require the district court to grant the unanswered motion. The Rule states that “failure to file briefs may subject the motion to summary ruling.” We concluded in Maberry that Uniform District Cotut Rule 2 did not remove the discretion of the district court to grant or deny an unanswered motion as it sees fit. Maberry, 111 P.2d at 1289.

Similarly, we conclude in this case that although Mark failed to file a brief in support of his motion and such failure to file a brief is to be viewed as an admission by Mark that his motion is without merit, Uniform District Court Rule 2 does not require the District Corut to dismiss Mark’s unsupported motions. The District Court retains the discretion to grant or deny unsupported motions as it sees fit. Furthermore, the parties were invited by the District Corrrt to propose a briefing schedule and/or evidentiary hearing date to present supplemental arguments on the issue of maintenance; yet the parties never did.

We hold that the District Court did not err when it granted Mark’s motion to alter or amend the judgment and reduced Catharine’s award of maintenance from a lifetime duration to 10 years or until Catharine remarries, whichever shall occur first. The District Court made its decision based upon further consideration of the record and determined that the original findings of fact and conclusions of law warranted modification. We conclude that there was no abuse of discretion and affirm the District Court’s modification of the maintenance award.

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


text:
    STATE OF MONTANA, Plaintiff and Respondent, v. JAMES JOHN PERSAK, Defendant and Appellant.
    No. 92-062.
    Submitted on Briefs August 6, 1992.
    Decided February 11, 1993.
    50 St.Rep. 123.
    256 Mont. 404.
    847 P.2d 280.

      For Defendant and Appellant: Charles A. Graveley, Townsend.
    For Plaintiff and Respondent: Marc Racicot, Attorney General, Cregg W. Coughlin, Assistant Attorney General, Mike McGrath, Lewis and Clark County Attorney, and Carolyn A. Clemens, Deputy County Attorney, Helena.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

Defendant James Persak appeals from an order of the First Judicial District Court of the State of Montana, denying his motion to withdraw his guilty plea and refusing to dismiss the charges against him. We affirm the District Court.

There is one issue on appeal. Did the District Court abuse its discretion when it denied defendant’s motion to withdraw his plea and ordered that defendant be resentenced by a different judge after the State breached a plea agreement?

Defendant was charged by information on August 31, 1990, with three counts of felony sexual assault. On April 18, 1991, defendant was charged by amended information with a total of four counts of sexual assault. Defendant pleaded not guilty to all counts on May 2, 1991.

Subsequently, the State entered into an oral plea bargain agreement with defendant. The parties agreed that if defendant would plead guilty to Counts III and IV, the State would dismiss Counts I and II of the amended information. Additionally, the State agreed that if a report from a local psychiatric social worker indicated that community treatment was feasible for defendant, the prosecutor would not seek the imposition of a prison sentence before the District Judge.

On July 15, 1991, a change of plea hearing was held. Defendant entered pleas of guilty to Counts III and IV, and upon the State’s motion, the court dismissed Counts I and II of the amended information. After being clearly advised by the court that it would not be bound by the terms of defendant’s plea agreement with the State, defendant represented to the court that he understood and that his guilty pleas were voluntary. The court accepted the pleas and set a date for sentencing.

During the October 4, 1991, sentencing hearing before Judge Jeffrey Sherlock, the social worker testified that he recommended probation in conjunction with outpatient treatment for defendant. At the same hearing, however, the prosecutor violated the plea agreement. In contravention of the parties’ bargain, the prosecutor recommended a long prison sentence for defendant, despite the social worker’s opinion that community treatment was feasible.

Because of the prosecutor’s breach, defendant moved, on October 17,1991, (1) to set aside the judgment; (2) for withdrawal of his guilty pleas; and (3) for dismissal of the charges against him. These motions were denied by the District Court. However, to remedy the prosecutor’s breach, Judge Sherlock disqualified himself from the case, vacated the prior judgment, sealed the record, and ordered that defendant be immediately resentenced by another local District Judge, Dorothy McCarter.

Defendant was resentenced by Judge McCarter on November 8, 1991. Prior to that sentence, the prosecutor abided by the terms of the plea agreement and made no recommendation regarding imprisonment. However, Judge McCarter (after noting lack of support from the prosecutor) sentenced defendant to two consecutive 15-year terms. Defendant was designated a dangerous offender for purposes of parole eligibility.

Defendant appeals from Judge Sherlock’s refusal to allow a withdrawal of guilty pleas and from his refusal to dismiss the charges against defendant. Additionally, defendant appeals from Judge McCarter’s order of incarceration.

On appeal, defendant asserts that because he relied on the prosecutor’s promises, and because the prosecutor breached the plea agreement, the charges against him should be dismissed. As an alternative, defendant asserts that he should be allowed to withdraw his pleas of guilty which were entered in reliance on a promise that was broken. At the very least, defendant seeks specific performance of the plea agreement, which he contends would bind the District Court by the social worker’s recommendation.

The parties do not dispute that defendant was entitled to some remedy because of the prosecutor’s breach of the plea agreement. Neither does the court. Central to this appeal is defendant’s dissatisfaction with the District Court’s choice of remedies to cure the prosecutor’s breach.

The two remedies that are available for the government’s breach of a plea agreement in connection with sentencing are the withdrawal of a guilty plea or specific performance of the plea agreement. Santobello v. New York (1971), 404 U.S. 257, 263, 92 S.Ct. 495, 499, 30 L.Ed.2d 427, 433. The law is clear that the choice of remedy for a breach of a plea agreement is within the sound discretion of the trial court. United States v. Nelson (11th Cir. 1988), 837 F.2d 1519, 1525; Santobello, 404 U.S. at 263, 92 S.Ct at 499.

We conclude that when Judge Sherlock refused to dismiss the charges against defendant, he did not abuse his discretion. Neither did he abuse his discretion when he (1) vacated the judgment; (2) sealed the record; (3) ordered that defendant be resentenced before a different judge who was untainted by the breach of the plea agreement; and (4) specifically directed the prosecutor “to stick with the plea agreement in front of Judge McCarter” during the subsequent hearing.

By his order, Judge Sherlock effectively mandated the remedy of specific performance of the plea agreement. Specific performance entitles a defendant to a resentencing by a different judge in accordance with the plea agreement. United States v. Tobon-Hernandez (11th Cir. 1988), 845 F.2d 277, 280; Santobello, 404 U.S. at 263, 92 S.Ct. at 499. At the new sentencing hearing, the prosecution must perform the promise it made in the plea agreement. Gamble v. State (Nev. 1979), 604 P.2d 335, 338. This remedy of specific performance is an alternative remedy to allowing defendant to withdraw his guilty plea. Santobello, 404 U.S. at 263, 92 S.Ct. at 499.

Contrary to defendant’s assertion, specific performance does not entitle defendant to the implementation of the State’s recommendation. The court is not bound by the plea agreement and required to follow the recommendations of the prosecutor because the court is not a party to the plea agreement. The plea bargain is between the state and the defendant. It binds the parties, not the court. State v. Jacobson (1992), 252 Mont. 94, 96, 826 P.2d 555, 556. Judge McCarter was free to disregard the recommendations of the parties and to sentence defendant according to her determinations. See Benjamin v. McCormick (1990), 243 Mont. 252, 792 P.2d 7. She did just that.

Despite Judge McCarter’s final decision to order incarceration, defendant was afforded relief from the prosecutor’s breach. Defendant received specific performance of the plea bargain because (1) he was resentenced by a judge who was unprejudiced by the breach; and (2) at resentencing, the prosecutor complied with the plea agreement by not requesting that defendant be sentenced to a prison term. In short, defendant was placed in the position he would have been in had the State not breached the plea agreement. Any prejudice as a result of the State’s breach of the plea agreement was cured at the resentencing. Consequently, defendant is not entitled to additional relief.

We affirm Judge Sherlock’s order for the resentencing of defendant before a different judge. We also affirm the sentence imposed by Judge McCarter.

JUSTICES WEBER, HARRISON, HUNT and McDONOUGH concur.


author: JUSTICE McDONOUGH

text:
    JAMES and LINDA NELSON, d/b/a GOODTIME SPORTS, and NORTHWESTERN NATIONAL INSURANCE GROUP, an insurance company, Plaintiffs and Appellants, v. THE MONTANA POWER COMPANY, a Montana corporation, Defendant and Respondent.
    No. 92-068.
    Submitted on Briefs October 8, 1992.
    Decided February 11, 1993.
    50 St.Rep. 126.
    256 Mont. 409.
    847 P.2d 284.

      For Plaintiffs and Appellants: E. Eugene Atherton and Tara DePuy, Kalispell.
    For Defendant and Respondent: Robert T. O’Leary, The Montana Power Company, Butte.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

This is an appeal from a Sixth Judicial District Court, Park County judgment, granting the defendant’s motion for summary judgment. We affirm.

The sole issue on appeal is whether the trial court erred in granting the defendant’s motion for summary judgment.

On November 14,1988, firefighters for the city of Livingston were called to the scene of a fire at Goodtime Sports, a local business, at about 12:30 p.m. No flames were evident but smoke was observed coming from under the eaves.

Livingston Fire Chief Frederick called the dispatch a short time later and requested that they alert Montana Power Company (MPC) about the fire and send workers out to turn the gas and electricity off. Jack Swanson, and Tom Petty, employees of MPC, arrived around 1:40 a.m. Swanson terminated the electricity and Petty stated that he observed a gas meter on the I Street side of the building and it appeared to be off. Petty then walked to the other side of the building and shut off a gas meter there and one at an adjacent building, in the company of Chief Frederick and Assistant Chief Parks.

An affidavit of Jack Swanson states that when he arrived at the scene of the fire, a few minutes before Perry, the building “was totally engulfed in flames and the back of the roof had fallen in.” Tom Petty, in an interview on December 22, 1988, stated that the fire involved the whole building and the roof was caved in.

Chief Frederick concluded that the Nelson’s loss for the fire was total. (Chief’s investigative report) Chief Frederick also stated that between 7:00 and 7:30 a.m., he noticed a gas meter on the I Street side was on so he used a wrench to turn the valve off. State Assistant Fire Marshall, Tom Selleck, stated in his investigative report that the probable cause of the fire was electrical wiring.

After the fire, the Nelsons filed a complaint, later amended, in which they claimed that a MPC employee “negligently, carelessly and recklessly carried out its duty of turning of (sic) the gas service.... As a proximate cause of the negligence ... the fire in the subject building was fed by natural gas which severely complicated suppression efforts and created long and sustained burning leading to considerably more property damage than would have or should have occurred had the Defendant properly shut off the gas utility.”

The defendant filed a motion for summary judgment in August of 1991. The motion was granted on December 2, 1991, and the judgment was entered on December 9, 1991. This appeal from that decision followed.

“Under Rule 56(c), M.R.Civ.P., summary judgment is proper if the record discloses no genuine issues of material fact, and the moving party is entitled to judgment as a matter of law.” Kaseta v. N. Western Agency of Gr. Falls (1992), 252 Mont. 135, 138, 827 P.2d 804, 806.

The Nelsons contend that there is a factual controversy which precludes a grant of summary judgment — “whether MPC carried out its duty to turn off the gas service to the building.” MPC counters that whether the gas was on or off, “there was no evidence that natural gas either fed the fire or contributed to its spread and resulting damage.” Although there is a question about whether MPC turned off the gas service to Goodtime Sports, this Court agrees with MPC that no evidence was presented to show that natural gas fed the fire or increased the fire damage, regardless of whether the gas was on.

Firefighters Wagman and Spannring made full reports after the fire and neither mentions seeing blue flames or smelling natural gas, nor do they provide any information that might lead one to believe that natural gas was involved in feeding or increasing the fire. Also, neither Chief Frederick nor Assistant Fire Marshall Tom Selleck mention any such information in their reports. The Fire Chief’s investigative report asks whether a fuel shutoff was involved in the fire and the Fire Chief answered that a fuel shutoff was “not applicable.” The Assistant Fire Marshall’s report did show that “[e]xamination of the suspended gas heater showed it had broken loose snapping the gas line when the roof collapsed on it. The area of the gas heater did not show the fire damage nor did it show the fire started in that area.”

An affidavit by Jack Swanson, the MPC employee who arrived at the scene to turn off electrical service to Goodtime Sports, stated that he “never observed the distinctive blue flame of burning natural gas, nor did he smell any natural gas at the fire scene. Further, neither Chief Frederick nor any fireman at the scene mentioned or complained of natural gas to your Affiant.”

Fire Chief Frederick’s deposition statements do not reflect evidence that natural gas fed the fire either. When the Chief was asked whether he noticed any particular fire coming from any gas appliances, he stated, “No, I didn’t.” He was then asked if he noticed any fire coming from any gas piping and he replied, “No, I could not see any gas piping.” He was then asked whether he could smell any gas and he answered that he did not.

The Chief stated that the fire was under control at about 6:00 a.m. when Fire Truck 1 returned to the station but he was still at the scene about 7:00 or 7:30 a.m. when he noticed the gas meter was still on. He was asked whether he smelled any gas between 6:00 a.m. and when he noticed the gas meter was on, and he noted that he had not smelled any gas. When asked whether he believed the fire, which was determined to have started because of an electrical wiring malfunction, would have completely destroyed the building whether the gas line was open, he replied that he did not have an opinion. Finally, MPC counsel asked whether it would be fair to say that as far as the Chief knew, there was no evidence that he saw or that was reflected in the firefighters’ statements that “natural gas fed that fire in any way?” Fire Chief Frederick replied that there was no such evidence.

When the Chief was examined by Mr. Atherton, plaintiff’s counsel, the attorney stated that he understood that the Chief “may be of the opinion that the reason you lost this particular building is not so much because it was a cockloft fire as much as it was because possibly it was being fed by some other fuel?” The Chief replied, “That’spossible, yes.” (Emphasis added.) Mr. Atherton also asked if the Chief could think of any other reason that the fire may have been hotter in the area where the fire vented through the roof other than the possibility “of having a gas line feeding the fire at that location?” The Chief responded that he could not think of another reason.

The statements immediately preceding are speculative and conclusory. As we stated in Benson v. Diehl (1987), 228 Mont. 199, 203, 745 P.2d 315, 317, “[a] suspicion, regardless of how particularized it may be, is not sufficient to sustain an action or to defeat a motion for summaiy judgment. Unsupported conclusory or speculative statements do not raise a genuine issue of material fact. The trial court has no duty to anticipate possible proof.” We conclude that summary judgment was properly granted because no genuine issue of material fact was raised.

AFFIRMED.

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


text:
    EMPIRE LATH & PLASTER, INC., Plaintiff and Respondent, v. AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA, Defendant and Appellant.
    No. 92-090.
    Submitted on Briefs May 28, 1992.
    Rehearing Denied March 4, 1993.
    Decided February 11, 1993.
    50 St.Rep. 128.
    256 Mont. 413.
    847 P.2d 276.

      For Defendant and Appellant: Richard J. Andriolo, Berg, Lilly, Andriolo & Tollefsen, Bozeman.
    For Plaintiff and Respondent: P. Bruce Harper, Billings.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

Defendant American Casualty Company of Reading, Pennsylvania (American Casualty), appeals from a default judgment of $58,049.40, entered in favor of Empire Lath & Plaster, Inc. (Empire) on November 6, 1991, in the Thirteenth Judicial District Court, Yellowstone County. American Casualty’s subsequent motion to set aside the judgment was deemed denied pursuant to Rule 60(c), M.R.Civ.P., when the District Court failed to rule on the motion within 45 days.

We affirm.

The sole issue for our consideration is whether the District Court abused its discretion when it did not grant American Casualty’s motion to set aside the default judgment.

This litigation arises out of a construction contract associated with the building of the Billings Parking Garage and City Hall Expansion Project. In April 1990, the City of Billings awarded the general contract for the construction project to C & D Contractors, Inc. (CD), and CD thereafter subcontracted a portion of the project to Empire. In connection with the general contract, a bond in excess of $3 million was executed by American Casualty to guarantee payment to subcontractors for labor, material, and equipment supplied during the construction project.

Empire completed its portion of the work on April 16, 1991, and submitted its final billing statement to CD which reflected an unpaid balance due Empire totalling $47,124.96. In addition to the amount owed under the subcontract, Empire had performed a “change order” for the project which had been authorized by CD and approved by the project architect, at a cost of $1,200.00.

At the same time Empire submitted its final statement, CD sent a letter to Empire confirming the outstanding balance due under the contract, but asserting that Empire had failed to “diligently pursue its work in a timely manner.” CD claimed this failure to properly perform under the contract delayed the entire project and resulted in significant additional costs to CD. No further facts nor specifics were ever provided to Empire in regard to the alleged contract breach.

After computing the costs which it alleged were a result of Empire’s delay, CD determined it would withhold $31,576.00, and tendered a check to Empire for $15,548.96. The check contained a restrictive endorsement which provided that Empire’s endorsement would acknowledge final and conclusive payment for all work performed, and would release CD from any further liability under the subcontract. Empire refused to execute the check due to the restrictions, and insisted on either full payment, or payment of the uncontested sum of $15,548.96, with an understanding that the parties would attempt to resolve the dispute over the remaining amount.

Empire received no payments from CD, and on July 2, 1991, Empire submitted a notice to the City of Billings, CD, and American Casualty (as the surety for the project), stating that it had a claim of $47,124.96 against the bond for the work performed under the subcontract, and also for the $1,200.00 incurred for the change order. Empire received no response from either CD or American Casualty regarding the claim notice.

On August 14, 1991, Empire filed a complaint in District Court against American Casualty in order to collect the outstanding balance owed to Empire which was guaranteed by the bond. This civil action was filed in Yellowstone County as required by provisions contained in the bond; CD was not named as a defendant in the case because the subcontract between CD and Empire required venue in Lewis and Clark County. The summons and complaint were served on American Casualty’s legal department on August 23, 1991.

The Claims Analyst for American Casualty immediately forwarded the summons and complaint to CD, along with a letter tendering the defense of the action to CD as was apparently standard practice. Although American Casualty was in communication with CD on other matters, Empire’s pending lawsuit was never discussed, and CD asserts that it had no knowledge of the action nor ever received American Casualty’s letter tendering the defense of the action to CD.

The District Court, based on an affidavit from the supervising architect of the construction project, found that Empire had fully and competently performed the requirements of the subcontract in a timely manner, and that there was no basis to withhold full payment to Empire. The court concluded that Empire had complied with all conditions required by the bond, and was, therefore, entitled to recover from American Casualty under the bond. The court entered a default judgment against American Casualty on November 6,1991, for $58,049.40, which represented the contract amount due Empire, plus interest, the $1,200.00 incident to the change order, and attorney fees and costs of $170.39.

The following day, American Casualty discovered that the default judgment had been entered and that no appearance had been made by CD on behalf of the surety. On November 14, 1991, American Casualty moved to set aside the default judgment, filed its answer to the complaint, and requested a trial on the merits. The District Court did not rule on the motion within 45 days from the time it was filed, and the motion was, therefore, deemed denied pursuant to Rule 60(c), M.R.Civ.P. From this denial of the motion to set aside the default judgment, American Casualty appeals.

The issue presented is whether the District Court abused its discretion when it did not set aside the default judgment. American Casualty argues that the court should have granted relief from the judgment under Rule 55(c), M.R.Civ.P., which allows for the setting aside of a default judgment:

For good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b).

Rule 60(b), M.R.Civ.P., states in pertinent part:

On motion and upon such terms as are just, the court may relieve a party or a party’s legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect... or (6) any other reason justifying relief from the operation of the judgment.

Where a trial court fails to grant a motion to set aside a default judgment, the finding of even a slight abuse of discretion is sufficient to justify reversal of such an order. Board of Directors Edelweiss Owners’ Assn. v. McIntosh (1991), 251 Mont. 144, 822 P.2d 1080. In Lords v. Newman (1984), 212 Mont. 359, 363, 688 P.2d 290, 293, we emphasized two basic tenets to be considered in setting aside default judgments: (1) every litigated case should be tried on its merits and judgments by default are not favored; and (2) trial courts have a certain amount of discretion when considering a motion to set aside a default judgment. We have also clearly stated that the burden of proof rests on the party seeking to set aside the default judgment. Siewing v. Pearson Co. (1987), 226 Mont. 458, 461, 736 P.2d 120, 122.

After considering these factors and applying the appropriate standard of review to the present case, we conclude that the District Court did not abuse its discretion when it failed to grant American Casualty’s motion.

American Casualty contends that the failure to file an answer was excusable neglect, and it is, therefore, entitled to relief from the judgment pursuant to Rule 60(b), M.R.Civ.P. However, in In re Marriage of Castor (1991), 249 Mont. 495, 817 P.2d 665, we emphasized that “mistake,” inadvertence," and “excusable neglect” generally require some justification for an error beyond mere carelessness or ignorance of the law. Castor, 817 P.2d at 667 (citing Lomas and Nettleton Co. v. Wiseley (7th Cir. 1989), 884 F.2d 965, 967). In this instance, we conclude that American Casualty’s neglect was not justified and that the criteria of Rule 60(b) have not been satisfied.

The bonding company asserts that it was standard practice to have CD take over the defense of actions filed against American Casualty. American Casualty then maintains that after notifying CD, the claims analyst kept the complaint with other active files because she was purportedly monitoring negotiations between Empire and CD. This resulted in the normal calendaring procedure being overlooked and, consequently, American Casualty did not check to see that a timely response had been filed. Furthermore, CD claims it never received the tender letter, and attributes this to the fact that CD was moving its offices and reducing office personnel at the time the letter was sent.

Based on Blume v. Metropolitan Life Insurance Company (1990), 242 Mont. 465, 791 P.2d 784, where this Court found the district court abused its discretion when it refused to vacate a default judgment, American Casualty suggests the neglect in this situation is also inadvertent and excusable. In Blume, certified mail containing a summons and complaint was delivered to the defendant company, but was apparently lost before anyone in a position of authority saw it. After reviewing the record in this case, however, we conclude that the neglect demonstrated by both American Casualty and CD is not comparable to the inadvertence we excused la. Blume.

Unlike Blume, where the defendant company was unaware that the plaintiff was seriously considering filing suit and had no reason to suspect that a court appearance was necessary, neither American Casualty nor CD can profess ignorance of Empire’s intention to pursue recovery under the bond. When Empire refused to execute the check for $15,548.96 because acceptance of this check would have released CD from further liability under the subcontract, CD was fully aware that Empire was challenging the -unilateral withholding of payments. Empire then complied with the required notice provisions prior to filing its complaint, thus giving both American Casualty and CD written notice of its claim against the bond and intent to seek recovery.

The record shows that American Casualty was put on notice that Empire would assert its rights under the bond directly against the bonding company a minimum of five times prior to the filing of the complaint, and unlike the defendant in Blume, the appropriate personnel did receive a copy of the summons and complaint. While it may have been reasonable to assign CD the responsibility of responding to Empire’s complaint, American Casualty cannot justify its failure to follow-up on the matter. This is particularly true in light of the following statement made in the August 27, 1991 tender letter:

Please acknowledge your acceptance of this tender of defense prior to the answer date and furnish the undersigned with a copy of the answer.

As the only defendant named in the case, American Casualty had the responsibility to follow-up on its own request and insure that CD received and accepted the tender, and was preparing an appearance on American Casualty’s behalf.

The neglect demonstrated in this case was not like the unintentional oversight in Blume, and is, therefore, not excusable.

In addition to finding excusable neglect, the judgment of a district court can be set aside for “any other reason justifying relief from the operation of the judgment.” Rule 60(b)(6), M.R.Civ.P. Generally, relief is afforded under this subsection only in extraordinary situations when circumstances go beyond those covered specifically in Rule 60(b). Castor, 817 P.2d at 668; Fuller v. Quire (6th Cir. 1990), 916 F.2d 358, 360. After reviewing the record, we conclude that American Casualty has failed to establish any other reason which would justify relief from the operation of the default judgment.

We hold the District Court did not abuse its discretion when it did not grant the motion to set aside the judgment entered against American Casualty.

Affirmed.

JUSTICES HARRISON, HUNT, McDONOUGH and WEBER concur.


text:
    LARRY BOYKEN, Plaintiff and Respondent, v. STEVEN STEELE, Defendant and Appellant.
    No. 92-130.
    Submitted on Briefs August 6, 1992.
    Decided February 11, 1993.
    50 St.Rep. 131.
    256 Mont. 419.
    847 P.2d 282.
    For Defendant and Appellant: H. William Coder, Great Falls.
    For Plaintiff and Respondent: Patrick F. Flaherty, Great Falls.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

Plaintiff Larry Boyken brought this action against defendant Steven Steele to recover damages for intentional assault and battery. A jury assessed Boyken’s damages at $2500, but found that Boyken was 75 percent responsible for the incident which caused his injuries. The District Court granted Boyken’s motion for a judgment notwithstanding the verdict, and awarded the full amount of damages. The District Court did not allow offset against amounts previously received by Boyken for the same injuries in a negligence settlement with Lee’s Northside Bar. From this judgment, Steele appeals. We reverse.

The following issue is dispositive of this appeal:

Was plaintiff entitled to recover damages without regard to amounts collected from another defendant as compensation for the same injuries?

This action arises from a barroom fight between Larry Boyken and Steven Steele on the evening of July 25,1990, which resulted in facial injuries to Boyken. Boyken filed a complaint in District Court naming Steele and Lee’s Northside Bar in Great Falls as co-defendants. He alleged that Steele had committed assault and battery and that the bar had been negligent.

Prior to trial, Boyken settled with the bar’s insurance carrier for $5000. The bar was discharged from any further liability, and the release further stated that any claims for contribution or indemnity against the bar were extinguished. The complaint against the bar was then dismissed.

The claim against Steele was tried in October 1991, and the jury found that Steele had committed assault and battery when he “sucker punched” Boyken in the eye. The jury found that Boyken’s actual damages as a result of that incident totalled $2500. However, the jury also found that Boyken had used profane and abusive language and had challenged Steele to fight him, and was therefore responsible for 75 percent of his own damages.

Boyken moved for judgment notwithstanding the verdict pursuant to Rule 50(b), M.R.Civ.P, and argued that the doctrine of comparative negligence should not be applied to bar recovery in cases based upon intentional torts. The District Court agreed, and on December 5, 1991, granted a directed verdict in favor of Boyken. The court held it was error to instruct the jury on the doctrine of comparative negligence, and pursuant to the jury verdict, entered judgment for Boyken in the amount of $2500.

The District Court also held that the terms of the release signed by Boyken and the bar had clearly reserved Boyken’s right to sue for the intentional tort of assault, and that the settlement against the bar should not be offset against the damages recovered from Steele. Therefore, the court concluded that Boyken was entitled to a judgment of $2500 against Steele, with no offset against amounts recovered in the previous settlement. Steele appeals from this decision.

We need not address the issue raised by Steele regarding whether it was proper to apply comparative negligence in this situation, because we conclude that Boyken was fully compensated for his injuries by the bar and is not entitled to recover an additional damage award under any legal theory.

The jury, after hearing testimony and considering the evidence, found that Boyken had incurred actual damages in the amount of $2500. That finding has not been challenged or appealed. Furthermore, Boyken received $5000 from the bar in a voluntary settlement for those same damages. The law is clear in Montana that when a joint tort-feasor settles with a claimant, the claimant’s recovery against the remaining tort-feasor is to be reduced dollar-for-dollar by the consideration paid by the settling tort-feasor. State ex rel. Deere & Co. v. District Court (1986), 224 Mont. 384, 386, 730 P.2d 396, 398. (See also Whiting v. State (1991), 248 Mont. 207, 810 P.2d 1177; Maddux v. Bunch (1990), 241 Mont. 61, 784 P.2d 936; Kuhnke v. Fisher (1987), 227 Mont. 62, 740 P.2d 625.) This policy provides a single satisfaction for a single injury. Maddux, 784 P.2d at 940.

In this case, Boyken raised claims against Steele and the bar as joint tort-feasors, alleging intentional assault and battery, and negligence, respectively. These alleged acts together resulted in the facial injuries sustained by Boyken. There can only be one amount of actual damages as a result of those injuries. The jury found that amount was $2500. Since the $5000 Boyken received in the settlement with the bar exceeds his total actual damages, Boyken is entitled to no additional compensatory damages from Steele.

We hold the District Court erred when it entered the judgment against Steele in the amount of $2500 without allowing an offset in the amount previously received by Boyken as compensation for the same injuries. We reverse and remand for further proceedings consistent with this opinion.

CHIEF JUSTICE TURNAGE, HARRISON, HUNT, McDONOUGH, GRAY and WEBER concur.


author: JUSTICE HUNT

text:
    IN RE THE MARRIAGE OF JOANN JOCELYN NIKOLAISEN, Petitioner and Appellant, and ALAN KRIS NIKOLAISEN, Respondent and Respondent.
    No. 92-241.
    Submitted on Briefs November 5, 1992.
    Decided February 11, 1993.
    50 St.Rep. 133.
    257 Mont. 1.
    847 P.2d 287.

      For Petitioner and Appellant: Richard J. Carstensen, Billings.
    For Respondent and Respondent: Laura Christoffersen, Gallagher, Archambeault, & Knierim, Wolf Point.
   JUSTICE HUNT

delivered the Opinion of the Court.

Appellant JoAnn Jocelyn Nikolaisen appeals from a judgment of the Fifteenth Judicial District Court, Sheridan County, modifying the divorce decree regarding child support and custody.

We affirm in part and reverse and remand.

JoAnn (Joey) presents to this Court three issues for our consideration which we reduce and rephrase as follows:

1. Did the District Court abuse its discretion in modifying child custody and visitation of the minor children?

2. Did the District Court err in allowing respondent to incorporate the provisions of his Chapter 12 bankruptcy plan as well as other “legitimate business expenses” when it calculated child support?

3. Did the District Court err in failing to order respondent to pay Joey’s educational loans?

Alan and Joey Nikolaisen were married on August 4, 1972, in Plentywood. Two children were born into the marriage. The parties primarily resided in Plentywood until the original dissolution decree was entered on June 8, 1987. Currently, Alan lives on his farm near Plentywood and is an accountant and farmer/rancher. Joey is a counselor and lives in Billings. Both parties have had physical custody of the children over an extended period of time. From 1985 to the entry of the decree, Alan had physical custody of the children. Since 1987 to the present, Joey has had primary physical custody of the children pursuant to a joint custody agreement signed by both parties. The original decree and custody agreement does not provide for custody after 1988.

Both children have ailments which require medical attention. The oldest child, Jessica, was 14 years old at the time of trial. She suffers from a round back deformity known as kyphosis. If the condition is left untreated it will result in back deformity and poor posture, and in some cases back pain is also experienced. Joshua was 11 years old at the time of trial. He was five feet tall and weighed approximately 170 lbs. He has been diagnosed as having a severe weight problem and may also have slightly high blood pressure resulting from his excessive weight. Currently, both children reside with Joey in Billings.

Both parents have had difficulty getting their children to respond to medical treatment. Joey has not been able to get Jessica to wear a back brace which would correct the curvature in her spine, and has taken the position that she will not force her to wear the brace.

Alan’s efforts have been more successful. While Jessica is in his care he has been able to get her to wear the brace. Alan has had difficulty getting cooperation from Joey regarding medical appointments to determine the future course of Jessica’s condition. On one occasion, Alan made an appointment with Jessica’s orthopedic doctor in Billings for spinal x-rays. Upon his arrival from Plentywood, Alan found out that Joey had canceled the appointment and had taken the children to Flathead Lake.

Both parents also differ on how to best deal with Joshua’s weight problem. While in his father’s care in the summer months, Joshua, with Alan in attendance, participates in a weight program with good results. During the summer of 1989, Joshua lost 20 pounds, and in the summer of 1990 lost approximately 15 pounds. When Joshua returned to Joey’s care, the program was discontinued. At the beginning of 1990, Joshua was approximately 37 pounds heavier than the summer before. Every summer that he has returned to Plentywood, Joshua has regained the weight that had been lost, plus he has put on some additional weight. During a medical visit, Alan discovered that Joshua may have high blood pressure due to his excessive weight. Alan asked Joey to have Joshua’s blood pressure rechecked in Billings, which Joey either failed to do or failed to advise Alan that she did. Joey believes that exercise is the best method of weight loss and purchased a membership at the YMCA which Joshua has not used.

Alan’s visitation rights which were originally agreed upon in the custody agreement have gradually eroded with time and have been frustrated by Joey. Alan has primary custody of the children during part of the summer and on school holidays. Over the past year, Jessica has increasingly refused to visit with her father. Joey has stated that she would not force Jessica to visit with Alan. On July 2, 1991, the District Court ordered Jessica to spend two weeks with Alan in Plentywood over the Labor Day weekend. On one occasion, Joey enticed Joshua to cut short his visitation by offering to buy him tickets to a concert in Billings.

Communication between the parents with regard to the welfare of the children has broken down. Joey has failed to notify Alan of the children’s activities, even though he has attended such events when advised of the time and date. In addition, Joey has continually failed to advise Alan of the children’s educational progress and medical conditions.

Both parties have filed a motion for modification of custody and support. Joey claims that the children want to live with her and are now well accustomed to Billings. Alan counters that Joey is failing to meet the medical and physical needs of the children, does not encourage visitation, and in fact, impedes visitation. The children were appointed a Guardian ad Litem for the litigation. The District Court proceedings were stayed pending the outcome of Alan’s Chapter 12 bankruptcy action and the filing of a plan. A hearing was held on November 19,1991, to determine custody and child support. Both the Guardian ad Litem and the family’s psychologist recommended that the children continue to reside with Joey. Both children expressed their desire to live with Joey. On March 6, 1992, the District Court issued its Findings of Fact and Conclusions of Law and Order. Joey appeals the decision of the District Court.

I.

Did the District Court abuse its discretion in modifying child custody and visitation of the minor children?

Joey declares that it was error for the District Court to adopt verbatim Alan’s proposed findings of fact and conclusions of law. We discourage district courts from adopting verbatim findings of fact and conclusions of law submitted by the prevailing party. In re Marriage of Hurley (1986), 222 Mont. 287, 295-96, 721 P.2d 1279, 1285. Although a district court may adopt verbatim findings of fact and conclusions of law, the practice does not constitute error per se. When reviewing the adequacy of the findings of fact and conclusions of law, we examine whether they are sufficiently comprehensive and pertinent to provide a basis for a decision, and whether they are supported by substantial evidence. Hurley, 721 P.2d at 1285. With the exception of child support calculations, we hold that the District Court’s findings of fact and conclusions of law meet the above test.

Joey argues that the court’s custody and visitation order should be stricken because it is based upon facts that were not before the court and the issues should be resolved by the court as necessary following the development of any facts that might occur later.

Recently we have stated the following principles when reviewing a district court’s order modifying physical custody of a child:

Joint custody is presumed to be in the best interest of the child, § 40-4-224(1), MCA, and is awarded to assure frequent and continual contact of the minor child with both parents. Physical custody should be arranged as equally as practical between the parents to comply with the express purpose of an award of joint custody, with the child’s best interest as the primary consideration. Section 40-4-224(2), MCA.
Modification of physical custody within a joint custody arrangement is proper when the change is in the best interest of the child. A request to change the physical custodian of the child requires an application of Section 40-4-224(2), MCA, which states in part:
“[JJoint custody” means an order awarding custody of the minor child to both parents and providing that the physical custody and residency of the child shall be allotted between the parents in such a way as to assure the child frequent and continuing contact with both parents. The allotment of time between the parents must be as equal as possible; however,
(a) each case shall be determined according to its own practicalities, with the best interest of the child as the primary consideration....
The District Court must consider the factors set forth in Section 40-4-212, MCA, when determining whether the modification of physical custody is in the child’s best interest. The court is under no obligation to consider the more stringent factors set forth in Section 40-4-219, MCA, when faced with an action for modification of physical custody rather than an action for termination of joint custody.

In re Marriage of Ulland (1992), 251 Mont. 160, 166-67, 823 P.2d 864, 868-69.

In its order, the District Court ordered Joey to take whatever action she believes is necessary to reduce Joshua’s weight. Joshua’s placement was on a temporary basis contingent upon his demonstrating a substantial decrease in his weight by the summer vacation in 1992. If Joey cannot get Joshua to lose the weight, then Alan may petition the court for a change of custody.

In his medical report, Dr. Peter Teal, an orthopedist, concluded that Jessica would derive very little benefit from wearing a back brace because its effectiveness diminishes once a female child reaches full growth at age 15 or 16. In its findings, the District Court ordered the parents to make an appointment with another doctor specializing in kyphosis and obtain a second opinion. If the opinion is that Jessica needs to wear a brace, then Joey would be given one month to demonstrate that she can get Jessica to wear the brace. If J oey cannot obtain Jessica’s compliance, physical custody of Jessica shall be transferred to Alan. No second medical opinion was submitted into evidence for this appeal.

The court was confronted with balancing the children’s wishes against what would be in their best interests, as well as ensuring that the children have a continuing relationship with their father. The court found that the children had familial and educational ties in both Billings and Plentywood. The record demonstrates that the court considered at length the children’s health and welfare. The court recognized that the children did not wish to move from Billings to Plentywood. The court tailored its order so that the children could remain in Billings so long as Joey is properly attending to the children’s medical problems. Both of the children’s medical conditions are treatable, and the order offers an incentive to Joey to ensure the children receive proper treatment.

With regard to the visitation, the court ordered a more detailed arrangement than the existing custody agreement. Again the court balanced the wishes of the children, specifically Jessica, against Alan’s right to see his children and foster a meaningful relationship with them. The record demonstrates that Joey, on several occasions, has actively undermined Alan’s right to see the children. Although she stated at trial that she encourages the children to visit their father, the pattern of her actions have, in reality, discouraged the children from visiting him. The court ordered that the parties should restrict the children’s nonschool activities if they refuse to visit the noncustodial parent and ordered Alan and Joey to attend counseling sessions. This portion of the order is an attempt by the court to reduce the friction between the parties and have both parents actively encourage the children to have a relationship with the other parent. In addition, the District Court ordered Alan and Jessica to attend counseling sessions in an effort to facilitate more communication between the two so that Jessica will want to spend more time with her father. We hold that the District Court did not abuse its discretion in modifying custody and visitation.

II.

Did the District Court err in allowing respondent to incorporate the provisions of his Chapter 12 bankruptcy plan as well as other “legitimate business expenses” when it calculated child support?

In its child support calculation, the District Court found that Alan had $102,000 in gross income while Joey had approximately $25,000 in gross income. The District Court deducted from Alan’s gross income expenditures for replacement cows, office equipment, and a stock waterer. The court also deducted approximately $38,465 as a result of payments being made under Alan’s Chapter 12 bankruptcy, as well as an additional $38,203 in various farm expenses. The court deducted the necessary tax payments from Alan’s net income after business deductions. The court found that Alan’s net income available for child support amounted to approximately $10,500, while finding that Joey had net income of $25,000 available for child support. The court did not deduct taxes from Joey’s gross income, even though there was evidence offered regarding her tax liability. The court ordered Alan to pay $300 a month in child support for the entire year while Joey was responsible for approximately $600 a month. The court ordered Joey to pay three months of child support to Alan when the children are required to reside with Alan during the summer which could be deducted from Alan’s overall obligation.

Joey argues that the District Court improperly used several business deductions from Alan’s farm/ranch operation to reduce Alan’s child support obligation. Specifically, she maintains that the court should not have applied Alan’s Chapter 12 bankruptcy plan payments to determine the amount of his child support obligation because it includes payments of his home mortgage. In essence, Joey is arguing that with the exception of excluding state, federal, and social security taxes, none of the deductions awarded to Alan are proper under the guidelines.

Our standard of review of the district court’s findings relating to child support is that a presumption exists in favor of the district court and we will overturn the court’s findings only if it has abused its discretion. In re Marriage of Sacry (Mont. 1992), 253 Mont. 378, 833 P.2d 1035, 49 St. Rep. 452.

Rule 5 of the Guidelines for Determining Child Support implements a policy of keeping the primary focus on the needs of the children by requiring from each obligor’s income only a minimum of exclusions to be allowed. Rule 5, Guidelines for Determining Child Support (1991). The following deductions subtracted from gross income are the only ones allowed under the Guidelines for the determination of net income:

[FJederal and state income taxes; FICA; union dues, retirement contributions, uniforms, etc., which are required as a condition of employment and are not reimbursed by the employer; legitimate business expenses', and health insurance if the benefits are maintained for the obligor parent’s dependents, including the child(ren) of the action at hand. [Emphasis added.]

Rule 5, Guidelines.

The Social & Rehabilitative Services Department is responsible for

the adoption of child support guidelines. Section 40-4-209(5), MCA. They have defined “net income” as meaning:

[G]ross income, including imputed income and income attributed to assets, less any deductions for state or federal taxes, social security, and other similar deductions required by law or court order. Unreimbursed expenses incurred as a condition of employment such as union dues, retirement contributions, uniforms and other occupational or business expenses should also be deducted. [Emphasis added.]

46.30.1516, ARM.

We have stated that when determining income under the Guidelines, the court should examine the disposable income of the parent and not rely solely on the parent’s tax returns. In re Marriage of Gray (1990), 242 Mont. 69, 73, 788 P.2d 909, 912. The extent of Alan’s farm/ranch business is complex. Alan testified at considerable length regarding the income that he receives from his farm/ranch operation and his accounting position. The evidence shows that Alan’s expenses were both business and personal in nature.

The court considered, and the record demonstrates, that Alan’s tax returns did not provide an accurate picture of his ability to pay child support for the last two years. Alan was not in bankruptcy during the years his tax returns were filed. In one year, he had taken as income two years’ worth of calf crops, and in another year he received ASCS disaster payments which would not be payable in a normal crop year. Moreover, during those tax years, he testified he had trouble getting the ASCS deficiency payments. Due to the lack of those payments, as well as a general decline in the farm economy, he became delinquent in his debt obligations and thus the returns did not accurately reflect his debt service requirements. Furthermore, Alan testified that he had added in 75 percent of the total farm estate taxes paid as a personal expense since his personal residence was on the farm property. He added in between one-third to three-quarters of his vehicle’s value, and telephone and travel expenses because they were considered personal in nature. The Bankruptcy Court ordered Alan to pay $39,465 to the bankruptcy trustee for each year.

The deduction of the bankruptcy payments is in error. The court allowed the husband to deduct his mortgage payments on the farm before arriving at what was available for support. These mortgage payments were part of the bills that were ordered paid by the bankruptcy court. However, the principal which is applied to the mortgage each year actually increases the husband’s net equity. This is especially true when the husband’s income of $45,000 per year as an accountant appears to be used to subsidize his farming operations. Such payments should not be allowed to be subtracted as deductions under the guidelines. Interest on the mortgage, however, would be a legitimate business expense. There also appears to be farm equipment purchased that should have been capitalized and not deducted in full. The District Court has not followed the guidelines for determining child support. We reverse and remand for a full reconsideration and recalculation of all factors relating to child support.

III.

Did the District Court err in failing to order respondent to pay Joey’s educational loans?

Joey asserts that the Dissolution Decree provided that Alan agreed to pay Joey’s educational loans and that this Court should order him to pay the loans. The record demonstrates that no evidence regarding the educational loans was presented at trial. We decline to review the matter on appeal.

We affirm in part and reverse and remand for a full reconsideration and recalculation of all factors relating to child support.

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


text:
    LUMBER ENTERPRISES, INC., a Montana corporation, Plaintiff, Respondent and Cross-Appellant, v. DUANE F. HANSEN and PEGGY HANSEN, d/b/a MODEL LOG HOMES, Defendants, Appellants and Cross-Respondents.
    No. 92-375.
    Submitted on Briefs January 8, 1993.
    Decided February 11, 1993.
    50 St.Rep. 138.
    257 Mont. 11.
    846 P.2d 1046.

      For Appellant: Marcelle C. Quist, Quist Law Office, Bozeman.
    For Respondent: John H. Tarlow, Landoe, Brown, Planalp & Braaksma, P.C., Bozeman.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

This is an action for breach of contract. The District Court for the Eighteenth Judicial District, Gallatin County, granted judgment to Lumber Enterprises, Inc., in the amount of $45,460.50 plus interest and costs. Duane F. Hansen and Peggy Hansen appeal. Lumber Enterprises, Inc., cross-appeals. We affirm.

The issues are:

1. Did the District Court abuse its discretion in application of Section 30-2-309, MCA?

2. Should the court have awarded prejudgment interest to Lumber Enterprises, Inc.?

Lumber Enterprises, Inc., is a Montana corporation with its principal place of business at Gallatin Gateway, Montana. It sells specially prepared logs for log homes through a network of dealers. Duane F. Hansen and his wife Peggy Hansen do business as Heartbilt Homes (formerly Model Log Homes) in Stockton, Illinois, as a dealer of Lumber Enterprises’ products.

The parties have had a working relationship since 1972. On October 29, 1985, at the request of the Hansens, the parties agreed to a special pricing arrangement for approximately thirty loads of logs to be delivered in January, February and March of 1986. Lumber Enterprises agreed to the reduced price to keep its crews busy during the winter months.

The thirty loads were delivered but, at the request of the Hansens, over a much longer period of time than originally agreed. The last load was shipped on October 31, 1988. The price of the last twelve of the thirty loads is the subject of this lawsuit.

On April 27, 1987, Lumber Enterprises issued a new price list to the Hansens and told them to “take it or leave it.” The practical effect was to raise prices to the Hansens by about 50 percent. After the April 1987 price change, the Hansens ordered twelve loads of logs to complete the thirty-load agreement of October 1985. They paid for the first nine of those twelve loads at the new 1987 prices, but under protest. Mr. Hansen testified he told the office manager for Lumber Enterprises that eventually there would have to be a reconciliation of the 1987 prices. The Hansens did not make payment for the last three loads, contending that this was the only way to force Lumber Enterprises to deal with their concerns.

Lumber Enterprises brought suit claiming $45,460.50 was due from the Hansens for logs, catalogs, trusses and insulation, using the 1987 prices. The Hansens contended the twelve disputed loads should have been billed at 1985 prices. They further contended that Lumber Enterprises owed them $859 as part of a professional photography bill; a credit of $9,827.55 for half logs billed as full logs; and a $500 credit for help in photographing and assembling new company catalogues. By the Hansens’ calculations, Lumber Enterprises owed them money.

After trial, the District Court concluded that because of the long history of amicable dealings between the parties, neither party saw the need to have a formal written contract. It concluded that the Hansens would expect to deal with Lumber Enterprises in the future, because of the specialized nature of the product. The court concluded that the parties, by their conduct, allowed the shipments agreed to in the October 1985 negotiations to extend past the express terms of the contract and that the practical effect of the contract between the parties and their modifications of that contract was to transform the relationship into a contract calling for successive performances but indefinite in duration. The court concluded that Section 30-2-309, MCA, applied:

Absence of specific time provisions — notice of termination. (1) The time for shipment or delivery or any other action under a contract if not provided in this chapter or agreed upon shall be a reasonable time.
(2) Where the contract provides for successive performances but is indefinite in duration it is valid for a reasonable time but unless otherwise agreed may be terminated at any time by either party.
(3) Termination of a contract by one party except on the happening of an agreed event requires that reasonable notification be received by the other party and an agreement dispensing with notification is invalid if its operation would be unconscionable.

The court further concluded that the unilateral announcement of new prices by Lumber Enterprises on April 27, 1987, did not satisfy the requirement under Section 30-2-309(3), MCA, of reasonable notice. Taking into account the long history of dealings between the parties, the court deemed that thirty days’ notice would be reasonable before Lumber Enterprises changed its prices.

For purposes of calculating damages, the court allowed the parties to supplement the evidence to show how many loads of logs were ordered by the Hansens during the thirty-day period beginning April 27, 1987. The parties stipulated that no loads were ordered during that period. The court then ruled that the Hansens owe Lumber Enterprises $45,460.50, plus costs of suit. The court denied the credits sought by the Hansens for photography and half logs, the damages sought by the Hansens for breach of good faith and consequential damages, and the request of Lumber Enterprises for attorney fees.

The Hansens appeal and Lumber Enterprises cross-appeals.

I

Did the District Court abuse its discretion in application of Section 30-2-309, MCA?

The Hansens claim the April 27, 1987 price increase by Lumber Enterprises was a unilateral modification of a term of the contract, not a termination of the contract. They assert that the attempted modification of the contract was not made in good faith and that the original contract should be enforced. They claim the remedy should have been the one for modification of contract in the absence of good faith.

The test of good faith as to merchants includes observance of reasonable commercial standards of fair dealing in the trade. This

may in some situations require an objectively demonstrable reason for seeking a modification. But such matters as a market shift which makes performance come to involve a loss may provide such a reason even though there is no such unforeseen difficulty as would make out a legal excuse from performance under Sections 30-2-615 and 30-2-616.

Official Comment to Section 30-2-209.

ALumber Enterprises manager testified that the April 27,1987 price increase was necessary “[b]ecause we were losing money at the 1985 price agreement.” He testified that when the original agreement was entered, Lumber Enterprises had never before sold truckloads of logs without the usual trim work done on them, and they believed the price was proper. However, after a year of supplying the Hansens with such logs, they realized they were selling the logs at a price below the cost of production. We conclude that the test of good faith has been met.

More importantly, the Hansens ignore that the contract had already been extended indefinitely, with the acquiescence of both parties, at the time of the April 27,1987 price increase. The indefinite extension placed the contract within Section 30-2-309(2), MCA, in that “the contract provides for successive performances but is indefinite in duration.” Under that statute, termination is allowed “at any time by either party” in such a contract.

The Hansens contend that the contract between the parties was never terminated, so that Section 30-2-309(3), MCA, does not apply. Termination is defined at Section 30-2-106(3), MCA, as “when either party pursuant to a power created by agreement or law puts an end to the contract otherwise than for its breach.” As stated above, Section 30-2-309(2), MCA, provides that either party has the power, at any time, to terminate a contract for successive performances but indefinite in duration. We conclude that when Lumber Enterprises unilaterally raised its prices, it had the power to, and did, put an end to the previous contract between the parties.

Section 30-2-309(3), MCA, provides that a party is entitled to “reasonable notification” before a contract is terminated. The statute leaves to the finder of fact the determination of what is “reasonable notification.” Here, the contract between the parties originally called for the purchase of approximately thirty loads of logs during a three-month period. The time was extended for over a year, at the Hansens’ request, before Lumber Enterprises changed its prices. We conclude that, in this case, the court did not abuse its discretion in adopting thirty days’ notice as reasonable and in determining that the Hansens were entitled to the original contract price only on additional loads of logs purchased during that amount of time.

In buying loads of logs more than thirty days after the unilateral price increase, the Hansens effectively entered into a new contract with Lumber Enterprises. Lumber Enterprises brought this suit to collect on the unpaid debt under that contract.

We hold that the District Court did not abuse its discretion in application of Section 30-2-309, MCA.

II

Should the court have awarded prejudgment interest to Lumber Enterprises, Inc.?

One of the reasons the District Court denied the request of Lumber Enterprises for prejudgment interest was that Lumber Enterprises did not file a brief in support of its motion to amend the findings to allow the award of prejudgment interest. The filing of a supporting brief is required by Uniform District Court Rule 2(b):

[Fjailure to file a Brief within five days [of the filing of a motion] by the moving party shall be deemed an admission that the motion is without merit.

By failing to abide by this rule, Lumber Enterprises admitted at the trial court level that its motion for the award of prejudgment interest was without merit. As a result, it waived its right to bring a request to this Court to award such interest. We therefore will not consider this issue.

Affirmed.

JUSTICES HARRISON, McDONOUGH, TRIEWEILER and GRAY concur.