2014 MT 51N
Mont.2014Background
- Stafford transferred $100,000 to Fockaert’s Korea Exchange Bank account in July 2010; she later demanded repayment and alleges he refused or failed to repay.
- Stafford sued asserting unjust enrichment, imposition of a constructive trust, and fraud. Both parties agree the transfer occurred and repayment was not made.
- In his answer Fockaert included affirmative defenses, denied some allegations, but admitted paragraph 13 of the complaint that Stafford agreed to "loan" him $100,000.
- Stafford moved for judgment on the pleadings relying on those admissions; Fockaert sought leave to amend his answer (asserting the admission was inadvertent) and filed a cross motion for judgment on the pleadings.
- The District Court denied leave to amend and granted Stafford’s motion, holding the admission established unjust enrichment or a constructive trust and awarded interest.
- The Supreme Court reversed, concluding the district court abused its discretion in denying leave to amend and therefore erred in granting judgment on the pleadings based on the admission.
Issues
| Issue | Stafford's Argument | Fockaert's Argument | Held |
|---|---|---|---|
| Whether the district court abused its discretion by denying leave to amend the answer | Denial proper because Fockaert’s motion was untimely, made after Stafford relied on his admission, and in bad faith | Amendment sought promptly after the admission was identified; the admission was inadvertent and should be corrected | Reversed: court abused its discretion; leave to amend should have been allowed (no undue prejudice shown) |
| Whether judgment on the pleadings was proper | Admission that Stafford loaned $100,000 and demanded repayment entitled her to judgment for unjust enrichment/constructive trust | There is a genuine issue whether the transfer was a loan vs. investment; admission was inadvertent and cannot be dispositive | Reversed: judgment on the pleadings was erroneous because it relied on an admission the court should have allowed to be amended |
Key Cases Cited
- Paulson v. Flathead Conservation Dist., 321 Mont. 364 (2004) (standard of review for judgment on the pleadings)
- Peuse v. Malkuch, 275 Mont. 221 (1996) (prejudice may justify denying amendment when opposing party relied on unchanged pleadings for an extended period)