432 P.3d 133
Mont.2018Background
- Mark Markovich operated Dependant Foundations, Inc. (DF Inc.); DF LLC (Montana) had a Kenyon Noble credit account with Mark's personal guaranty signed in 2007. DF Inc. became successor-by-merger to DF LLC but did not notify Kenyon Noble.
- In September 2012 DF Inc.'s bookkeeper mailed letters to suppliers (including Kenyon Noble) stating DF Inc. had ceased operations and revoking Marco Markovich’s authority; Kenyon Noble denied receiving the letter.
- Marco (Mark's son) charged large concrete purchases to the inherited account in late 2013; debt grew to ~$28,800 and a $15,000 check from Marco bounced.
- Kenyon Noble sued Mark and DF Inc.; Marco later admitted the debt belonged to him but defaulted; Kenyon Noble ultimately pursued claims against Mark and DF Inc.
- At bench trial the court found JoEllen’s mailing testimony credible, applied the statutory presumption that a properly mailed letter is received, concluded Kenyon Noble failed to rebut it, held Kenyon Noble breached the contract by allowing Marco to charge after notice, and awarded DF Inc. attorney fees. The Montana Supreme Court affirmed and awarded appellate fees.
Issues
| Issue | Plaintiff's Argument (Kenyon Noble) | Defendant's Argument (Mark/DF Inc.) | Held |
|---|---|---|---|
| Whether DF Inc. proved Kenyon Noble received its September 20, 2012 revocation letter | DF Inc. failed to prove proper mailing/receipt; Kenyon Noble’s mail practices show no record of the letter | JoEllen testified she mailed properly addressed, stamped letters as her custom; statutory presumption of receipt applies | Court held presumption applied and Kenyon Noble failed to rebut it; no clear error |
| Whether Kenyon Noble breached the credit contract by allowing Marco to charge after revocation | No breach because Kenyon Noble lacked actual notice Marco’s authority was terminated | Revocation was effective upon mailing; continued allowing charges constituted breach | Court held Kenyon Noble breached by permitting charges after notice presumption applied |
| Whether Mark/DF Inc. were prevailing parties entitled to contractual attorney fees | They did not prevail on most counterclaims; thus not prevailing party or failed to segregate fees | They obtained net benefit: Kenyon Noble recovered nothing and lost primary claim; claims overlapped so fees are inseparable | Court held they were prevailing parties and fee award proper |
| Whether the hourly rate awarded ($375) for senior defense counsel was reasonable | $375 exceeds prevailing community rate for comparable commercial disputes; rate should be lowered | Contractual fee award judged by Plath factors (not strictly community rates); counsel’s skill, complexity, and results justify reduced but substantial rate | Court upheld $375 as reasonable under Plath factors and abuse-of-discretion standard |
Key Cases Cited
- Crissey v. State Highway Comm'n, 147 Mont. 374, 413 P.2d 308 (disputable presumption that a letter duly directed and mailed was received)
- General Mills v. Zerbe Bros., 207 Mont. 19, 672 P.2d 1109 (office practice/custom may support mailing/receipt presumption)
- Doig v. Cascaddan, 282 Mont. 105, 935 P.2d 268 (factors in determining prevailing party for fee awards)
- Schmidt v. Colonial Terrace Assocs., 215 Mont. 62, 694 P.2d 1340 (defendant entitled to fees where plaintiff's claims are denied and defendant receives net benefit)
- Rod & Rifle Inn v. Giltrap, 273 Mont. 232, 902 P.2d 38 (net benefit test for prevailing party)
- Blum v. Stenson, 465 U.S. 886 (market-rate approach for fee awards under § 1988; discussed distinction from contractual fee awards)