MARK G. WEST and LEAH J. JEDINY, Plaintiffs, Counterclaim Defendants and Appellees, v. THE CLUB AT SPANISH PEAKS, L.L.C., Defendant, Counterclaim Plaintiff and Appellant.
No. DA 07-0065
Supreme Court of Montana
May 28, 2008
Rehearing Denied July 9, 2008
2008 MT 183 | 343 Mont. 434 | 186 P.3d 1228
Submitted on Briefs February 13, 2008.
For Appellee: Robert K. Baldwin, Trent M. Gardner, Goetz, Gallik & Baldwin, P.C., Bozeman,
JUSTICE COTTER delivered the Opinion of the Court.
¶ 1 The Club at Spanish Peaks, L.L.C. (Spanish Peaks), appeals from several rulings and orders issued prior to, during, and after a jury trial held before the District Court in the Eighteenth Judicial District, Gallatin County. This jury trial resulted in a judgment for appellees Mark G. West (West) and Leah J. Jediny (Jediny) exceeding one million dollars inclusive of interest, statutory penalties for violation of
FACTUAL AND PROCEDURAL BACKGROUND
¶ 2 Spanish Peaks is a Montana limited liability company which developed a resort (Spanish Peaks Resort) in Big Sky, Montana. Spanish Peaks Resort is a residential resort community which operates as a club, meaning that persons who purchase property in the resort area must also purchase a club membership. Spanish Peaks is affiliated with a separate company, known as Spanish Peaks Holdings, L.L.C. (Holdings), which actually owns the real property comprising the Spanish Peaks Resort area.
¶ 3 West began his employment with Spanish Peaks on December 1, 2003, as the vice president of sales and marketing. In this position, West was responsible for wоrking with local and regional real estate brokerage firms to promote and sell lots and “built products” (i.e., homes, cabins, condominiums, or townhomes) in the Spanish Peaks Resort, and another resort known as Lone Moose Meadows. Prior to his employment with Spanish Peaks, West executed two employment contracts, one on November 17, 2003, and one on November 24, 2003. The contracts are nearly identical. Both cover a wide range of subjects pertaining to West’s employment with Spanish Peaks, including a job description, compensation, and provisions regarding his potential termination.
¶ 4 Paragraph 8 of both versions of the contract covers the issue of West’s compensation and contains the following identical provisions:
8.1 Base Compensation. In consideration of services rendered by Employee to Resort, Resort shall pay Employee a base salary of $175,000 per year, payable biweekly through twenty-six pay periods commencing in early December 2003, pro rata to the commencement date of December 1, 2003 (“Base Compensation”). Base compensation during the first extension shall increase to $210,000 per year. Base compensation during the second extension shall increase to $225,000 per year.
....
8.3 Commission Compensation. Employee shall earn Commission Compensation as аn override on sales closed on the following products:
- 1.0% commission on all lot/homesite sales within the Spanish Peaks Resort or the Lone Moose Resort Meadows (LMM) projects.
- 0.5% commission on all built product (homes, cabins, condominiums, townhomes etc) within the Spanish Peaks or Lone Moose Meadows projects.
8.4 Spanish Peaks Resort Lot.
8.4.1 Lot Discount. Resort agrees to offer a lot within the Spanish Peaks Resort Project (in either Estates or Resort) for sale to Employee at a 25% discount from the then current list price (“Lot Discount”). Title to the Lot shall be conveyed subject to usual restrictions, covenants, easements and other typical matters of record against the Lot, and if Employee chooses to avail himself of the Company mortgage, that lot shall be subject to a mortgage in favor of Resort.
¶ 5 Moreover, both agreements contain termination clauses. Paragraph 13 of both contracts reads as follows:
13. Termination for Cause. The employment of Employee by Resort may be terminated immediately in the sole discretion of Resort upon the occurrence of any of the following causes:
....
13.2 In the event Employee shall be guilty of fraud, dishonesty, or any other act of misconduct in the performance of employee’s duties on behalf of Resort.
¶ 6 Paragraph 14 of one of the contracts reads as follows:
14. Termination With Notice. This Agreement may also be terminated by either party without cause, upon 120 days’ written notice to the other, in which case the termination shall be effective at the end of the 120 days’ notification period.
Significantly, paragraph 14 of the other contract reads as follows, with the additional language in italics:
14. Termination With Notice. This Agreement may also be terminated by either party without cause, upon 120 days’ written notice to the other, in which case the termination shall be effective at the end of the 120 days’ notification period. Any outstanding commissions and bonuses due at time of termination shall be paid to the Employee in accordance with the closing schedule of associated properties without deduction or penalty of any kind except for normal payroll deductions and taxes within [a] 30 day period after closing of the sales.
West claims this additional language was inserted as a result of negotiations between he and Spanish Peaks. In any event, the District Court determined that the employment contract includes the additional sentence of paragraph 14 from the second contract, and the parties do not dispute this determination on appeal. Moreover, both agreements are identical with respect to other provisions key to this case, namely paragraph 17, entitled “Proration of Basе Compensation,” and paragraph 22, “Entire Agreement,” which are reproduced in full below. Thus, although there were two separate employment contracts, we will simply refer to both of these contracts as the Employment Agreement throughout this Opinion.
¶ 7 In early 2004, an individual named Wayne Lee purchased Lot 84 in the Spanish Peaks Resort and a club membership in Spanish Peaks. West and Spanish Peaks differ on what transpired next. According to West, Lee became unhappy with the Spanish Peaks Resort and wished to sell Lot 84. West claims that he assisted Lee in getting Spanish Peaks to purchase the lot, but that Spanish Peaks would not pay Lee for the lot until it had a third-party buyer. A buyer was found, but the deal fell through. West claims that Lee then approached him about personally buying Lot 84. West thought this was a perfect solution to Lee’s dilemma because he and Jediny (his fiancé at the time but now his wife) were in the process of purchasing Lot 85 under the terms of paragraph 8.4.1. Jediny eventually purchased Lot 84 from Lee.
¶ 8 According to West, he fully apprised executives from Spanish Peaks of this real estate transaction. However, Spanish Peaks disagrees. It claims that the Lees entered into a contract with Holdings, whereby Holdings agreed to repurchase Lot 84 at the original price of $330,000.00, with the closing contingent upon Holdings entering into an agreement to sell Lot 84 to another buyer. Spanish Peaks claims that West wrote a contract for Jediny to purchase Lot 84 without its knowledge, and in spite of the repurchase contract already executed between Holdings and Lee. Spanish Peaks claims that under
¶ 9 Spanish Peaks asserts that it discovered the existence of the Jediny-Lee contract to purchase Lot 84 for the first time in early November of 2004. After this transaction was discovered, Spanish Peaks claims that West made efforts to seize and shred the original buy-back contract between Holdings and Lee, and that he also tried to delete scanned versions of the contract from the Spanish Peaks’ computer system.
¶ 10 At a meeting on November 8, 2004, Spanish Peaks confronted West about his actions, and presented him with a confidential separation agreement and general release (Separation Agreement). The Separation Agreement stated, among other things, that West would voluntarily resign his position, convey Lot 84 to Spanish Peaks, agree not to sue Spanish Peaks, and that, as consideration for the Separation Agreement, Spanish Peaks would forego its right to recoup what it claimed were $5,000.00 in damages as a result of West’s actions. The Separation Agreement stated that, upon its acceptance by West, no further amounts would be due or owed from Spanish Peaks to West for, or in any way relating to or connected with, West’s employment with Spanish Peaks. Moreover, it stated its acceptance by West would “satisfy all sums which might otherwise be due you from [Spanish Peaks], including, without limitation, any real estate or membership benefits and any commission or bonus payments ....” West refused to accept the Separation Agreement. As a result, Spanish Peaks terminated West’s employment for what it claimed were his fraudulent and dishonest actions in misappropriating a real estate profit from Spanish Peaks and misleading Spanish Peaks about his actions.
¶ 11 West claims that his actions were above board and that his firing was simply a pretext so that Spanish Peaks would not have to pay him hundreds of thousands of dollars in “trailing commissions”; i.e., commissions for sales that West had arranged, but that had not yet closed. West claims he was lured into the November 8 meeting under false pretenses, given a “pre-drafted take-it-or-leave it release” in an effort to intimidate him into releasing all claims against Spanish Peaks, and then fired.
¶ 12 On November 26, 2004, West filed suit against Spanish Peaks in District Court, with Judge Holly Brown initially presiding. In Count I of his complaint, West sought a declaration that Spanish Peaks was required, under the terms of the Employment Agreement, to make bonus payments to West for commissions on executed sales and purchase agreements which were in place when West was terminated, but had not yet closed. Count II asserted breach of contract and breach of the covenant of good faith and fair dealing claims for Spanish Peaks’ failure to pay him for commissions on sales which had closed since his termination. Count III asserted a claim seeking damages, penalties, and attorney’s fees for alleged violations of the Montana Wage Protection Act, Title 39, Chapter 3, MCA (Wage Act).
¶ 13 Spanish Peaks answered on December 27, 2004, and filed a number of counterclaims, including breach of the Employment Agreement and covenant of good faith and fair dealing, breach of fiduciary duty, fraud, interference with contractual relations, intentional interference with prospective economic advantage, and negligent misrepresentation. Subsequently, on February 8, 2005, Spanish Peaks filed a notice of lis pendens in the District Court with respect to Lot 84. The ostensible reason for this filing was that West had committed constructive fraud and interference with Spanish Peaks’ contractual relations and prospective economic advantage by facilitating the sale of Lot 84 when Spanish Peaks had a contractual interest in the purchase of that lot.
¶ 14 On April 28, 2005, West sought and was granted leave to amend his original complaint. The amended complaint added Jediny as a plaintiff to the suit, and seven new counts to the complaint itself. Among those
¶ 15 As proceedings continued in the District Court, a number of motions were filed and argued by both parties. On November 7, 2005, West and Jediny filed a motion for partial summary judgment seeking a declaration that the Employment Agreement was ambiguous as a matter of law. Furthermore, West asked that the Employment Agreement be construed against Spanish Peaks, requiring it to pay West “trailing commissions”-i.e., bonuses for sales which West earned but which did not close until after his termination. West and Jediny also sought partial summary judgment on Counts VI, VIII, and IX of their amended complaint, and partial summary judgment on all of Spanish Peaks’ counterclaims. That same day, Spanish Peaks filed a motion for partial summary judgment seeking to dismiss West’s declaratory judgment action with respect to Count I of his original complaint. Arguments on these motions were heard before Judge Holly Brown on February 2, 2006.
¶ 16 The District Court granted in part and denied in part West’s summary judgment motion, and denied in full Spanish Peaks’ motion. On Count I, Judge Holly Brown found that the Employment Agreement was susceptible to two reasonable interpretations on the issue of whether West was entitled to trailing commissions for sales that he had facilitated prior to his termination, but which did not close until after he was fired. Thus, she ruled the Employment Agreement was ambiguous as a matter of law. Consequently, she construed the Employment Agreement against Spanish Peaks and ordered that the intent of the parties on the issue of trailing commissions would be decided by a jury.
¶ 17 With respect to Counts VI, VIII, and IX, the District Court concluded as a matter of law that Spanish Peaks’ filing of the lis pendens on Lot 84 was not authorized under
¶ 18 On September 5, 2006, Judge Holly Brown recused herself from the case, and Judge John Brown assumed jurisdiction over the proceedings. A jury trial began on October 16, 2006, and concluded with a verdict from the jury on October 27, 2006.
¶ 19 During the course of the trial, Judge John Brown made a number of rulings which Spanish Peaks now appeals. The first was a ruling which allowed the Separation Agreement to be admitted into evidence. Prior to trial, Spanish Peaks had unsuccessfully sought to exclude the admission of this evidence on the grounds that it was an offer of compromise, and thus inadmissible under
¶ 20 The second ruling now at issue was an October 19, 2006 ruling imposing sanctions against Spanish Peaks under
INTERROGATORY NO. 10: Please state the amount of compensation that Spanish Peaks would have had to pay to Mr. West for sales that were scheduled for closings as of the time of Mr. West’s termination, had Mr. West not been terminated.
¶ 21 In response, Spanish Peaks provided a spreadsheet which contained real estate phase descriptions, lot numbers, actual closing dates, prices and the dates of purchase and sales agreements. Spanish Peaks later filed a supplementary response in which it objected to the interrogatory on the grounds that it was “vague, overly broad or general, ambiguous, confusing and unintelligible, or argumentative in its present form.” Without waiving these objections, Spanish Peaks further stated that it had already provided this information in response to a previous production request by West.
¶ 22 Believing Spanish Peaks had not provided the requested answer in these responses, West moved for sanctions аgainst Spanish Peaks on November 7, 2005, seeking to preclude Spanish Peaks from disputing at trial West’s evidence concerning the amount of the trailing commissions due to him under the Employment Agreement. West argued that the information produced by Spanish Peaks was not sufficient because it failed to provide a specific calculation of the outstanding trailing commissions potentially owed to him. That same day, West also filed a motion in limine seeking the same sanctions. Spanish Peaks opposed both motions, arguing that it had supplied the requested information and that sanctions were not warranted.
¶ 23 On July 31, 2006, Judge Holly Brown issued an order on the motions, stating that she had “no way to know” whether Spanish Peaks was actually withholding information on this issue, but emphasizing that “Spanish Peaks must comply with and continually supplement Plaintiffs’ discovery requests.” Accordingly, Judge Holly Brown ordered that “[t]o the extent it has not yet done so, the Court hereby orders Spanish Peaks to supply the requested report within ten (10) days of the date of this Order.” Spanish Peaks subsequently transmitted additional sales reports to West on August 10, 2006.
¶ 24 At the end of the third day of trial, when West objected to the admission of some sales traffic reports by Spanish Peaks, this issue resurfaced. West argued that although Spanish Peaks had provided him with additional information related to its salеs, it still had not provided him with a specific calculation of the compensation it believed would be owed to him should the jury find that Spanish Peaks breached the Employment Agreement. West argued that, as a sanction, Spanish Peaks should be prevented from disputing any calculations he might offer on the amount of damages owed.
¶ 25 Outside the presence of the jury, West argued that it was prejudicial to him to be in the midst of trial and still not know what Spanish Peaks believed the measure of damages should be nor how Spanish Peaks would arrive at such a figure. Spanish Peaks argued that it had supplied all the data West needed to make his calculations and that it was simple math for him to come up with a
¶ 26 Judge John Brown disagreed with Spanish Peaks and granted West’s motions for sanctions under
¶ 27 A third issue on appeal arises from the District Court’s denial of Spanish Peak’s motion for a directed verdict. After West rested, Spanish Peaks moved for a directed verdict on Count VII of West’s complaint which alleged breach of a contract to allow him to purchase Lot 85 at a discount. (See ¶ 4). Prior to his termination, West had elected to purchase Lot 85 under the terms of his Employment Agreement and had entered into a contract with Holdings to purchase it. The District Court deferred its ruling until Spanish Peaks had an opportunity to file briefs on the motion. Two days later, Spanish Peaks filed those briefs, in which it argued that West failed to point to any communication from Spanish Peaks stating that he could not close on Lot 85, and further that West had not yet even purchased Lot 85 or been unsuccessful in obtaining financing from Spanish Peaks under the terms of his Employment Agreement. The District Court denied the motion.
¶ 28 Spanish Peaks filed a post-trial motion under
¶ 29 A fourth ruling on appeal stems from the decision by the District Court during trial to limit the testimony of a witness proffered by Spanish Peaks, Martha Johnson (Johnson). During its case-in-chief,
Spanish Peaks attempted to elicit testimony from Johnson, a local real estate broker, about her experience with the custom and practice in Montana concerning payments of “trailing commissions.” West objected that Johnson’s testimony on this subject should not be allowed because it was not based on facts pertaining to this case, and, further, that she was an undisclosed expert witness. The District Court sustained West’s objection and did not allow Johnson to testify because she was an undisclosed expert and because her testimony was irrelevant since she was not an employee of Spanish Peaks.
¶ 30 On October 27, 2006, the jury returned a verdict in this matter. Although the special verdict form contained a total of twenty-four questions, we will recite only the jury’s findings on those issues which are the focus of the present appeal. The jury found that Spanish Peaks breached the Employment Agreement by refusing to pay West bonuses and commissions he had earned at the time of his termination. As a result, West was awarded damages of $464,942.59. The jury further found that Spanish Peaks’ filing of the lis pendens on Lot 84 caused damage to Jediny in the amount of $154,937.50. The jury also found that Spanish Peaks breached the contract which would have allowed West to purchase Lot 85, and that West’s damages as a result of this breach were $85,000.00.
¶ 32 Finally, on February 22, 2007, the District Court issued an order for attorney’s fees and costs. It awarded costs to West and Jediny in the amount of $20,137.19. Additionally, the District Court awarded attorney’s fees to West in the amount of $358,580.54, based on a 40% contingent fee arrangement between West and his attorneys. The District Court based this figure on the following awards: (1) $464,942.59 in unpaid wages to West; (2) $252,718.42 penalty on the unpaid wages under the Wage Act; (3) $61,624.35 prejudgment interest on the unpaid wages; (4) $29,166.00 in damages for West’s wrongful termination; and (5) $85,000.00 in damages for Spanish Peaks’ breach of its contract to allow West to purchase Lot 85. The District Court awarded these fees based on the fee-shifting clause contained in the Employment Agreement, as well as the attorney’s fees provision of the Wage Act at
¶ 33 Spanish Peaks now timely appeals the District Court’s grant of summary judgment, the aforementioned trial rulings of the District Court, the order granting penalties in favor of West under the Wage Act, and the District Court’s award of attorney’s fees.
ISSUES
¶ 34 We state the issues on appeal as follows:
¶ 35 Issue One: Did the District Court err in concluding the Employment Agreement was ambiguous?
¶ 36 Issue Two: Did the District Court err in concluding that Spanish Peaks’ filing of the lis pendens on Lot 84 was not authorized under
¶ 37 Issue Three: Did the District Court abuse its discretion by allowing the admission of the Separation Agreement?
¶ 38 Issue Four: Did the District Court abuse its discrеtion in imposing sanctions against Spanish Peaks by limiting its presentation of evidence and argument on the issue of damages for breach of the Employment Agreement?
¶ 39 Issue Five: Did the District Court err in denying Spanish Peaks’ motion for a directed verdict and post-trial motion for judgment as a matter of law on the claim that it breached an agreement to allow West to purchase Lot 85?
¶ 40 Issue Six: Did the District Court abuse its discretion by limiting the testimony of Johnson on the custom and practice in Montana of paying trailing commissions after an employee’s termination?
¶ 41 Issue Seven: Did the District Court err in ordering penalties in favor of West for Spanish Peaks’ alleged violation of the Wage Act?
¶ 42 Issue Eight: Did the District Court abuse its discretion in ordering attorney’s fees to West in the amount of $358,580.54?
STANDARDS OF REVIEW
¶ 43 We review appeals from a district court’s grant of summary judgment de novo, applying the standards established in
¶ 44 Evidentiary rulings by a district court are reviewed for an abuse of discretion. Faulconbridge v. State, 2006 MT 198, ¶ 22, 333 Mont. 186, ¶ 22, 142 P.3d 777, ¶ 22. Similarly, we review a district court’s decision to impose sanctions under
¶ 45 A district court’s decision to deny a motion for a judgment as a matter of law, however, we review de novo. State v. Marler, 2008 MT 13, ¶ 20, 341 Mont. 120, ¶ 20, 176 P.3d 1010, ¶ 20. “Judgment as a matter of law is properly granted only when there is a complete absence of any evidence which would justify submitting an issue to a jury and all such evidence and any legitimate inferences that might be drawn from that evidence must be considered in the light most favorable to the party opposing the motion.” Bevacqua v. Union Pacific R.R. Co., 1998 MT 120, ¶ 46, 289 Mont. 36, ¶ 46, 960 P.2d 273, ¶ 46.
DISCUSSION
¶ 46 Issue One: Did the District Court err in concluding the Employment Agreement was ambiguous?
¶ 47 The Employment Agreement between West and Spanish Peaks contained two termination clauses. Under paragraph 14, either party could terminate the Employment Agreement without cause upon 120 days notice. Paragraph 14 also specifiсally stated that if either party terminates with notice, “[a]ny outstanding commissions and bonuses due at [the] time of termination shall be paid to the Employee in accordance with the closing schedule of associated properties without deduction or penalty of any kind except for normal payroll deductions and taxes within [a] 30 day period after closing of the sales.”
¶ 48 Paragraph 8 of the Employment Agreement describes how West is to be compensated with respect to his base salary and commissions on sales closed. (See ¶ 4.) Paragraph 13 is silent on the issue of whether West would receive outstanding bonuses, or “trailing commissions,” on sales he earned, but which had not yet closed, in the event he was terminated for cause. (See ¶ 5.) Additionally, the Employment Agreement contains the following paragraphs:
17. Proration of Base Compensation. Upon termination of employment, the compensation payable to Employee pursuant to paragraph 8 shall be pro rated to the effective date of such termination and shall be payable on the first day of the month following such termination date, provided that [sic] if Employee is terminated under paragraph 13, for cause, or Employee terminates under paragraph 14 without the required notice.
22. Entire Agreement. This Agreement constitutes a full and final exрression by the parties and supercedes all prior oral or written negotiations and agreements. This Agreement may be modified only by a writing signed by both parties.
¶ 49 In her grant of summary judgment on July 31, 2006, Judge Holly Brown concluded that the Employment Agreement was subject to more than one reasonable interpretation on the issue of whether West should receive trailing commissions, and thus was ambiguous as a matter of law. The District Court concluded that while paragraph 17 requires West’s compensation to be prorated to the
¶ 50 Moreover, the District Court noted that paragraph 8.3 itself gives rise to additional interpretation questions. For instance, while it states that West will earn a commission on sales “closed,” the precise meaning of the term “closed” is not defined in the contract. As stated by Judge Holly Brown, “[t]his could either mean that West ‘earned’ a commission upon making a sale, with commission to be paid when the sale closed, or that he ‘earned’ the commission when the sale closed and would be paid at that time. A salesperson generally ‘earns’ a commission when the salesperson makes the sale, even though payment of commission may not occur until title is transferred or the purchase price is paid.”
¶ 51 Complicating the matter was the explicit reference in paragraph 14 to the fact that West would be entitled to receive “outstanding commissions and bonuses” which were “due” at the time of the termination “in accordance with the closing schedule” of such properties, the implication being that commissions are considered to be “due” when “earned,” with payment at a later date simply being a function of the nature of real estate transactions and the fact that actual closings occur at a later date. Thus, Judge Holly Brown concluded as follows:
According to paragraph 14, commissions are “due” at the time of termination regardless of whether the sales had closed. Paragraph 14 indicates the parties intended commissions to be paid if termination was with notice, even for sales that had not yet closed. Paragraph 13 is not as clear. Paragraph 13 provides that West “earns” a commission on “sales closed,” but it does not define these terms. Thus, there are two reasonable interpretations of this contract.
¶ 52 Accordingly, because of these contract ambiguities, the District Court construed the clauses in question against Spanish Peaks, the drafter, and ordered that the jury would decide the parties’ intent with respect to the issue of whether West was entitled to trailing commissions.
¶ 53 Spanish Peaks argues that the District Court erred in concluding that the Employment Agreement was ambiguous. We disagree. Whether an ambiguity exists in a contract presents a question of law. Eschenbacher v. Anderson, 2001 MT 206, ¶ 21, 306 Mont. 321, ¶ 21, 34 P.3d 87, ¶ 21. “An ambiguity exists where the language of a contract, as a whole, reasonably is subject to two different interpretations.” Wurl v. Polson Sch. Dist. No. 23, 2006 MT 8, ¶ 17, 330 Mont. 282, ¶ 17, 127 P.3d 436, ¶ 17. If a contract is found to be ambiguous, it is to be interpreted “most strongly” against the party who drafted it. Eschenbacher, ¶ 24. Moreover, “when a contract term is ambiguous, interpretation of the term involves determining a question of fact regarding the intent of the parties to the contract.” Wurl, ¶ 17.
¶ 54 Based upon the foregoing contract analysis and law, the District Court did not err in concluding that the Employment Agreement was ambiguous on the issue of whether West would be paid trailing commissions or bonuses if he was terminated for cause under paragraph 13. Thus, the District Court did not err in ordering that the parties’ intent on this issue be submitted to the jury.
¶ 55 Issue Two: Did the District Court err in concluding that Spanish Peaks’ filing of the lis pendens on Lot 84 was not authorized under
¶ 57 On appeal, Spanish Peaks maintains the District Court erred because the privilege to file a lis pendens is broadly construed under Paulson, and because a judgment on its claims against West, if successful, would affect the title to or interest in Lot 84. Spanish Peaks maintains this argument is supported by its counterclaim and jury demand wherein it claimed as damages “lost business opportunities and revenues,” as well as “such other and further relief as the Court deems just and appropriate.” At a minimum, Spanish Peaks claims, West’s interest in Lot 84 raised an issue of fact which should have precluded summary judgment.
¶ 58 Furthermore, Spanish Peaks disputes the propriety of the jury instruction given by the District Court on this issue. In particular, Spanish Peaks maintains that the conclusion that the lis pendens made the title to Lot 84 “unmarketable” was nothing more than a “thinly veiled legal conclusion,” essentially directed the jury to accept, without any evidence, that Jediny was damaged by the lis pendens, and unduly restricted the jury to determining only an award of damages. In response, West argues that under Paulson the filing of a lis pendens requires that the underlying claim affect title or possession оf real property, and that this element was lacking here. Further, West maintains that the District Court properly instructed the jury on this issue. West argues that, by definition, a lis pendens renders title unmarketable, that the question of marketability of title is a question of law, and that
¶ 59 Whether title is marketable is a question of law for the court. Maloney v. Heer, 257 Mont. 500, 507, 850 P.2d 957, 961 (1993). As we have stated previously, “marketable title is one of such character as assures to the purchaser the quiet and peaceable enjoyment of the property and one which is free from encumbrances.” First Mont. Title Co. of Billings v. North Point Square Assn., 240 Mont. 33, 37-38, 782 P.2d 376, 379 (1989) (quoting Ogg v. Herman, 71 Mont. 10, 15-16, 227 P. 476, 477 (1924)). While our case law has not squarely addressed this issue, we have implicitly recognized that a lis pendens casts a “cloud on title” which impairs the ability to sell the property to others. See Public Lands Access Assn. v. Jones, 2008 MT 12, ¶ 15, 341 Mont. 111, ¶ 15, 176 P.3d 1005, ¶ 15 (citing Leisnoi, Inc. v. United States, 170 F.3d 1188 (9th Cir. 1999)); see also, Reilly v. Farm Credit Bank of Spokane, 261 Mont. 532, 534, 863 P.2d 420, 422 (1993).
¶ 60 In Paulson, we held that
¶ 62 While Spanish Peaks asserts that a general, boilerplate claim for damages renders the filing of a lis pendens proper simply because a property transfer gave rise to several of its counterclaims, the fact remains that none of its counterclaims sought to affect the possession of, title to, or any interest in, Lot 84. Thus, the District Court did not err in holding that the filing of the lis pendens was improper, and granting summary judgment to West on Counts VI, VIII, and IX of its amended complaint.
¶ 63 Moreover, the District Court correctly instructed the jury on this issue. Spanish Peaks acknowledges that the question of marketability is a question of law for the court, but claims that the District Court erred in taking judicial notice that the lis pendens rendered Lot 84 unmarketable because
¶ 64 Issue Three: Did the District Court abuse its discretion by allowing the admission of the Separation Agreement?
¶ 65 During trial, the District Court admitted the Separation Agreement into evidence over Spanish Peaks’ objection. Spanish Peaks argues the admission of the Separation Agreement was an abuse of discretion, and that this evidence should have been excluded under
¶ 66 West argues the admission of the Separation Agreement was not an abuse of discretion for several reasons. First, West asserts that before
¶ 67
Rule 408. Compromise and offers to compromise.
Evidence of (1) furnishing or offering or promising to furnish, or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations is likewise not admissible. This rule does not require exclusion of any evidence otherwise discoverable merely because it is presented in the course of compromise negotiations. This rule also does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice of a witness, negativing a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution. (Emphasis added.)
¶ 68 As the last sentence of
¶ 69 In this case, the District Court stated clearly that it was allowing the Separation Agreement into evidence to support West’s argument that his firing was pretextual. It was not offered in order to prove Spanish Peaks’ liability or the invalidity of the claim. Thus, the District Court did not abuse its discretion in admitting it under
¶ 70 Issue Four: Did the District Court abuse its discretion in imposing sanctions against Spanish Peaks by limiting its presentation of evidence and argument on the issue of damages for breach of the Employment Agreement?
¶ 71 As noted above, Judge John Brown imposed sanctions against Spanish Peaks under
¶ 73 The District Court concluded that if Spanish Peaks intended to present its own calculations to the jury, it should provide that information to West as requested. On the third day of trial, the District Court specifically instructed Spanish Peaks to provide an alternative figure to West by the following day. Spanish Peaks did not comply with this order. Therefore, the District Court imposed a sanction under
¶ 74 We review the imposition of sanctions for an abuse of discretion and generally defer to the judgment of the district courts on the appropriateness of sanctions. Richardson v. State, 2006 MT 43, ¶ 21, 331 Mont. 231, ¶ 21, 130 P.3d 634, ¶ 21. Under the circumstances presented here, we cannot conclude that the District Court abused its discretion in imposing this sanction against Spanish Peaks.
¶ 75 Issue Five: Did the District Court err in denying Spanish Peaks’ motion for a directed verdict and post-trial motion for judgment as a matter of law on the claim that it breached an agreement to allow West to purchase Lot 85?
¶ 76 On October 24, 2006, Spanish Peaks moved for a directed verdict on West’s claim that it breached an agreement to allow West to purchase Lot 85. Spanish Peaks maintained that West had presented no evidеnce in its case-in-chief to support this claim. The District Court denied the motion. After trial, Spanish Peaks moved for judgment as a matter of law on this claim under
¶ 77 In response, West pointed out that at trial, Spanish Peaks argued that a directed verdict was proper because West failed to present sufficient evidence; it did not argue, as it did post-trial, on the grounds that Holdings, not Spanish Peaks, was a party to the contract. West argued that the plain language of
¶ 78 The District Court denied Spanish Peaks’ post-trial motion, finding that it was simply an attempt to use a “back door approach” to have it rеconsider its earlier rulings preventing Spanish Peaks from arguing it was not a party to the contract. Moreover, the District Court found the jury’s verdict was supported by sufficient evidence, that there was no substantial conflict in that evidence, and that the issue was properly submitted to the jury.
¶ 79 On appeal, Spanish Peaks argues that West and Jediny entered into a contract to purchase Lot 85 with Holdings, and that it was not party to that contract. In addition to other arguments, it also maintains that no evidence was adduced at trial which shows that it made any communications to West that he could not close on Lot 85, or that it took steps to prevent the sale.
¶ 80 In response, West argues that the Employment Agreement contained a separate promise to allow him to purchase Lot 85 which was not related to the contract between he and Holdings, and that the jury properly found that Spanish Peaks breached it. West points to specific testimony from
¶ 81 We review the denial of a motion for judgment as a matter of law de novo. Marler, ¶ 20. Here, the jury found that Spanish Peaks breached the contract which would allow West to purchase a lot at a discount. Prior to his termination, West had identified the lot and entered into a contract to purchase it with Holdings. West argued that Spanish Peaks breached the contract to allow him to purchase Lot 85. The jury agreed, and its decision was supported by credible evidence. Thus, the District Court did not err in allowing this issue to be submitted to the jury and denying Spanish Peaks’ post-trial motion.
¶ 82 Issue Six: Did the District Court abuse its discretion by limiting the testimony of Johnson on the custom in Montana of paying trailing commissions after an employee’s termination?
¶ 83 At trial, Spanish Peaks sought to introduce the testimony of Martha Johnson, a local real estate agent, on the custom and practice of paying trailing commissions in Montana on real estate transactions. West objected to her testimony on the grounds that she was giving undisclosed expert testimony, and not evidence based upon her personal knowledge as required under
¶ 84 Spanish Peaks argues the District Court abused its discretion in prohibiting Johnson’s testimony. Spanish Peaks insists that her testimony was relevant because it addressed West’s claim that he was owed bonuses or commissions, and that an expert disclosure was not required in her case because Johnson would be giving lay testimony under
¶ 85 Issue Seven: Did the District Court err in ordering penalties in favor of West for Spanish Peaks’ alleged violation of the Wage Act?
¶ 86 After the jury returned a verdict in favor of West, finding that Spanish Peaks had breached the Employment Agreement, the District Court addressed the issue of whether West was entitled to penalties under the Wage Act. The District Court concluded that West was entitled to statutory penalties under
[E]very employer of labor in the state of Montana shall pay to each employee the wages earned by the employee in lawful money of the United States or checks on banks convertible into cash on demand at the full face value of the checks, and a person for whom labor has been performed
may not withhold from any employee any wages earned or unpaid for a longer period than 10 business days after the wages are due and payable.
¶ 87 As noted by the District Court, ¶ 88 Spanish Peaks maintains the District Court erred in its conclusion, and argues that its analysis of the Wage Act is incorrect. Spanish Peaks notes that the plain language of ¶ 89 In construing and applying statutes, we first look to the plain language of the statute to determine legislative intent. Delaware, ¶ 30. “If the legislature’s intent can be determined by the plain language of the words used, we may not go further and apply other means of interpretation.” Delaware, ¶ 30. Moreover, “in construing a statute, ‘the office of the judge is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted or to omit what has been inserted.’” Schuff v. A.T. Klemens & Son, 2000 MT 357, ¶ 115, 303 Mont. 274, ¶ 115, 16 P.3d 1002, ¶ 115 (quoting ¶ 90 In this case, the District Court’s construction and application of the statute is not supported by the plain language of the Wage Act. In the first instance we note that the term “employee,” as used in the Wage Act, is specifically defined as follows: “‘Employee’ includes any person who works for another for hire.” ¶ 91 As a result, we cannot say that ¶ 92 We hold that ¶ 93 Issue Eight: Did the District Court abuse its discretion in ordering attorney’s fees to West in the amount of $358,580.54? ¶ 94 By an order dated February 22, 2007, the District Court awarded attorney’s fees to West in the amount of $358,580.54 based on a 40% contingency fee arrangement between West and his attorneys. Spanish Peaks challenges the award of attorney’s fees in several respects. First, Spanish Peaks argues that the District Court erred in awarding attorney’s fees based on the contingent fee arrangement because the fee-shifting provision in the Employment Agreement stated that attorney’s fees for a prevailing party were limited to “reasonable” fees “actually incurred.” Spanish Peaks argues that the only fees “actually incurred” are those as reflected in hourly billing statements submitted by West’s attorneys. Thus, only hourly fees, not the 40% contingent fee arrangement, are permitted under the Employee Agreement. ¶ 95 The District Court concluded that the Employment Agreement says nothing pertaining to either hourly or contingent fee agreements, and that the contingent fees were “actually incurred.” We agree. Because the Employment Agreement was silent on this subject, and since both hourly and contingent fee arrangements are appropriate methods of billing, the District Court did not err in concluding that the contingent fees were the fees “actually incurred” under the fee-shifting provision in the Employment Agreement. ¶ 96 Spanish Peaks also argues it was improper for the District Court to award a contingent fee based on damages from Spanish Peaks’ breach of the Employment Agreement allowing West to purchase Lot 85. However, as correctly noted by the District Court, it was proper to award fees based on these damages because the jury found that Spanish Peaks breached the contract which would allow him to purchase Lot 85, and not the contract for sale between West and Holdings. ¶ 97 Spanish Peaks further argues that the District Court abused its discretion in applying the eight factors necessary to award attorney’s fees as set forth in Stimac v. State, 248 Mont. 412, 812 P.2d 1246 (1991). Those factors are as follows: Stimac, 248 Mont. at 417, 812 P.2d at 1249. In particular, Spanish Peaks argues that the District Court erred in concluding that the case presented any “novel or difficult” legal issues under factor number (1). Spanish Peaks notes that West’s own expert testified that there was not anything particularly novel about the case from a legal perspective. Second, Spanish Peaks argues that the District Court erroneously relied on factor (7) when in fact there was no competent evidence to support findings that West and Jediny could not pay attorney’s fees. In this connection, Spanish Peaks points out that West and Jediny did not appear at an evidentiary hearing on fees, only submitted an affidavit, and generally provided no evidence to prove that they could not pay attorney’s fees. Spanish Peaks relies on our opinion in James Talcott Const., Inc. v. P & D Land Enterprises, 2006 MT 188, 333 Mont. 107, 141 P.3d 1200, for the proposition that West bears thе burden of proving that an award of attorney’s fees is based on “competent evidence.” Third, Spanish Peaks argues that the District Court erred in its analysis of factor (8) under Weinberg v. Farmers State Bank of Worden, 231 Mont. 10, 752 P.2d 719 (1988), because there was no risk in this case due to the presence of the fee-shifting provision in the Employment Agreement. ¶ 98 Because the award of attorney’s fees was calculated in part upon the award of statutory penalties under the Wage Act, the award of attorney’s fees must be remanded to the District Court for recalculation. Nonetheless, we will address Spanish Peaks’ remaining fee arguments in the interests of judicial efficiency. ¶ 99 With respect to its challenge under factor (8), we agree with the District Court that Spanish Peaks has simply misread our precedent in Weinberg. It is true that in Weinberg we stated that the “factor of risk which prompts courts to approve contingent fees ... is not contemplated in those cases involving statutory or contractual provisions for attorney fees.” Weinberg, 231 Mont. at 35-36, 752 P.2d at 735. However, we went on to say that “a contingent fee contract does not bind a district court in determining a proper amount of attorney fees to be awarded ....” Weinberg, 231 Mont. at 36, 752 P.2d at 735 (emphasis added). We did not say in Weinberg that fee-shifting provisions prohibit an award of contingent fees, as Spanish Peaks argues. Thus, the District Court did not err in concluding that factor (8) supported an award of fees based on the contingency agreement. ¶ 100 With regard to factor (1), novelty or difficulty of the case, Spanish Peaks focuses solely on the legal issues involved in the case, disregarding that factor (1) encompasses both legal and factual novelty or difficulty. The extensive and voluminous record in this case, coupled with the fact that the trial lasted over ten days, demonstrates the factual complexities of this case, irrespective of whether the case presented novel legal issues of first impression. Thus, the District Court did not abuse its discretion in concluding this factor weighed in favor of an award of contingent fees. ¶ 101 Respecting factor (7), we agree with West that the affidavits submitted at the evidentiary hearing on fees were properly considered under ¶ 102 We affirm the District Court’s orders of summary judgment determining that the Employment Agreement was ambiguous, and that the filing of the lis pendens was improper and not privileged. We also affirm the following District Court rulings during trial: (1) the admission of the Separation Agreement; (2) the sanctions against Spanish Peaks under ¶ 103 However, under Issue Seven we reverse the District Court’s order granting West penalties for violation of CHIEF JUSTICE GRAY, JUSTICES NELSON, WARNER and RICE concur.
CONCLUSION