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Boyne Usa, Inc v. Spanish Peaks Development

January 2, 2013

BOYNE USA, INC., PLAINTIFF AND APPELLEE,
v.
SPANISH PEAKS DEVELOPMENT, LLC, LONE MOUNTAIN HOLDINGS, LLC AND JOHN DOES 1-5, DEFENDANTS AND APPELLANTS.



APPEAL FROM: District Court of the Fifth Judicial District, In and For the County of Madison, Cause No. DV 29-2008-8 Honorable Loren Tucker, Presiding Judge

The opinion of the court was delivered by: Justice Brian Morris

Submitted on Briefs: September 26, 2012

Decided: January 2, 2013

Filed:

Clerk

Justice Brian Morris delivered the Opinion of the Court.

¶1 Boyne USA, Inc. (Boyne) filed an action for breach of contract against Blixseth Group, Inc. that covered a land sale for 15 acres of property on Lone Peak in Madison County, Montana. Boyne sought specific performance. Boyne joined Yellowstone Mountain Club, LLC as a party due to Yellowstone Mountain Club's acquisition of the contested property.

¶2 Yellowstone Mountain Club purportedly conveyed the contested 15-acre Lone Peak property to Spanish Peaks Development, LLC (SPD). Boyne joined SPD as a party. SPD, in turn, conveyed the 15-acre Lone Peak property to Lone Mountain Holdings, LLC (LMH). Boyne joined LMH as a party. Boyne further alleged abuse of the legal process and deceit. The District Court dismissed Blixseth Group and Yellowstone Mountain Club from the case on January 15, 2010, due to Yellowstone Mountain Club's bankruptcy.

¶3 The jury awarded Boyne $300,000 from each defendant based on its determination that SPD and LMH had deceived Boyne and had abused the legal process. The District Court awarded Boyne specific performance on the Peak Agreement. The District Court also awarded attorney fees to Boyne. SPD and LMH appeal and we affirm subject to one minor modification. (See ¶ 70). We will refer to SPD and LMH collectively as "Appellants" when we address their claims on appeal.

¶4 Appellants raise the following issues on appeal:

¶5 1. Whether the District Court properly awarded specific performance to Boyne.

¶6 2. Whether the jury properly awarded compensatory damages to Boyne.

¶7 3. Whether the District Court properly awarded legal fees to Boyne pursuant to the terms of the contract.

¶8 4. Whether Boyne is entitled to legal fees on appeal.

PROCEDURAL AND FACTUAL BACKGROUND

¶9 The dizzying array of land transfers, assignments, and corporate metamorphoses leads us to prepare a program to identify the players: BLS Blixseth's & McDougal brothers' entities; owned checker-boarded land that it exchanged with the U.S. for the Lone Peak property; entered into the Peak Agreement with Boyne.

Yellowstone Mountain Club Entity managed by Dolan & Blixseth; owned the Lone

Peak property and transferred it to SPD.

Spanish Peaks Development (SPD)

Entity managed by Dolan and Blixseth.

Spanish Peaks Holding (SPH) Entity owned by SPD; managed by Dolan and

Blixseth.

Lone Mountain Holdings (LMH)

Entity owned and managed by Dolan and his family; purchased the Lone Peak property from SPD.

Peak Agreement Boyne receives Lone Peak land in return for 4 items of consideration that included transfer of land under the Southfork Agreement. Boyne entered into the Peak Agreement with BLS; BLS transferred its rights to SPD.

Southfork Agreement Boyne transfers 25 acres of land as partial consideration for the Peak Agreement. Boyne entered into the Southfork Agreement with McDougals; McDougals transferred their rights to SPD; SPD transferred its rights to SPH.

¶10 The United States Forest Service (U.S.) decided to consolidate lands in the Gallatin National Forest pursuant to the Gallatin Land Consolidation Act of 1998, Pub. L. No. 105-267, 112 Stat. 2371. Consolidation would make these lands easier for the U.S. to manage. Blixseth Group and two other entities, LeeLynn, Inc., and Wiley Mt., Inc., (collectively BLS), owned checker-boarded lands in the Gallatin National Forest that the U.S. wished to acquire. The U.S. entered into an agreement with BLS to exchange BLS lands for certain federal lands, including 15 acres of federal land at the top of Lone Peak.

The Peak Agreement

¶11 BLS contracted to sell this Lone Peak property to Boyne through the Peak Agreement.

Boyne owns and operates Big Sky Resort. Boyne intended to use the Lone Peak property as part of its ski resort. Boyne and BLS finalized the Peak Agreement on September 30, 1998. The Peak Agreement provided that BLS would transfer the property to Boyne if BLS were successful in obtaining the Lone Peak property from the U.S.

¶12 The Peak Agreement required Boyne to perform four obligations as consideration for its receipt of the Lone Peak property. First, Boyne would not challenge the U.S.'s decision to transfer the property to BLS. Second, Boyne would pay for a survey of the Lone Peak property. Third, Boyne would exchange 25 acres of Boyne's property with the McDougal brothers for the first half of the Lone Peak property, pursuant to a separate agreement, the Southfork Agreement. The Peak Agreement referred to the McDougal brothers because two brothers, Mel and Norm McDougal, owned LeeLynn, Inc. and Wiley Mt., Inc., two of the three entities that comprised BLS. Fourth, Boyne would pay cash to the Blixseth Group for the second half of the Lone Peak property. The parties estimated the Lone Peak property's value at $800 per acre. Boyne agreed to pay the appraised price of the property when the U.S. and BLS exchanged lands.

The Southfork Agreement

¶13 McDougals owned nine hundred acres of property, Southfork, situated south of Boyne's property. McDougals planned to develop Southfork into Spanish Peaks Resort. McDougals wanted ski in/ski out access to Big Sky Resort's chairlifts. Ski in/ski out access would increase the value of McDougals' planned Spanish Peaks Resort. Boyne owned the property between the planned Spanish Peaks Resort and the nearest chairlift at Big Sky Resort.

¶14 McDougals and Boyne finalized the Southfork Agreement in September 1998. The Southfork Agreement required Boyne to transfer 25 acres of Boyne's property to McDougals. The parties did not identify the exact location of the property to be transferred because McDougals had not yet designed Spanish Peaks Resort. The parties understood, however, that Boyne would transfer property that would provide McDougals ski in/ski out access for Spanish Peaks Resort to Big Sky Resort. McDougals agreed to pay an override fee to Boyne for each property that McDougals sold at Spanish Peaks Resort that would have ski in/ski out access to Big Sky Resort's chairlifts.

Assignment of Peak Agreement and Southfork Agreement

¶15 James Dolan (Dolan) and Tim Blixseth (Blixseth) co-managed SPD. SPD purchased the property that the McDougal brothers had been planning to develop as the Spanish Peaks Resort. The McDougal brothers then assigned their rights under both the Peak Agreement and the Southfork Agreement to SPD on September 5, 2000. The Southfork Agreement required Boyne to transfer the 25 acres that would facilitate ski in/ski out access for Spanish Peaks Resort. The third party to the Peak Agreement, Blixseth Group, managed by Blixseth, also assigned its rights under the Peak Agreement to SPD. These assignments left SPD as the sole beneficiary of both the Peak Agreement and the Southfork Agreement.

¶16 Dolan and Blixseth formed Spanish Peaks Holding (SPH) in 2002. The same two also managed SPH. SPH purchased the McDougals' Spanish Peaks Resort property from SPD. SPD then assigned its interest in the Southfork Agreement to SPH. SPD maintained its interest in the Peak Agreement.

Original Parties to Peak Agreement (1998) Blixseth Group & McDougal Brothers Transfer of McDougals' rights (2000) McDougal Brothers to SPD

Transfer of Blixseth Group's rights (2000) Blixseth Group to SPD

Final party with all rights to Peak Agreement SPD

Original Party to Southfork Agreement (1998) McDougal Brothers

Transfer 1 (2000) McDougal Brothers to SPD

Transfer 2 (2002) SPD to SPH

Final party with all rights to Southfork Agreement SPH

The Purchase and Sale Agreement

¶17 SPH, Boyne, and a third entity, Blue Sky Ridge, LLC, entered into a Purchase and Sale Agreement on March 30, 2002. Blixseth and Dolan owned and controlled Blue Sky Ridge. SPH and Blue Sky Ridge purchased approximately 1,734 acres of property from Boyne as part of the Purchase and Sale Agreement. SPH and Blue Sky Ridge paid $7 million to Boyne for this property.

¶18 The Purchase and Sale Agreement also modified the Southfork Agreement to limit the property at Spanish Peaks Resort for which Boyne would receive override fees. Boyne also agreed to upgrade the Southern Comfort chairlift at Big Sky Resort on a different schedule than originally contemplated in the Southfork Agreement. Boyne agreed further to forfeit override fees if Boyne failed to upgrade the Southern Comfort chairlift according to the new accelerated schedule.

¶19 All parties agree that Boyne transferred the 25 acres needed to facilitate ski in/ski out access as described in the Southfork Agreement as part of this Purchase and Sale Agreement.

Appellants contend that Boyne actually sold these 25 acres, along with the other property, and received $7 million in return. Boyne agrees that the transfers occurred at the same time.

Boyne argues, however, that the $7 million did not include any payment for the 25 acres.

ΒΆ20 Boyne suggests that the $7 million constituted payment for SPH and Blue Sky Ridge's purchase of the 1,734 acres of property from Boyne. SPH requested that the transfers occur at the same time to simplify the property transaction for SPH. The Southfork Agreement and the Purchase and Sale Agreement transferred contiguous parcels. The transfer of the Southfork Agreement property to SPH at the same time as the ...


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