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Fox v. Fairbrother

Supreme Court of Montana

June 6, 2017

SANDRA D. FOX, Plaintiff and Appellee,

          Submitted on Briefs: May 3, 2017

         APPEAL FROM: District Court of the Twentieth Judicial District, In and For the County of Sanders, Cause No. DV 14-80 Honorable Deborah Kim Christopher, Presiding Judge

          For Appellants: Matthew H. O'Neill, O'Neill Law Office, PLLC, Polson, Montana

          For Appellee: Douglas G. Skjelset, Suzanne E. Geer, Skjelset & Geer, PLLP, Missoula, Montana



         ¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court Internal Operating Rules, this case is decided by memorandum opinion and shall not be cited and does not serve as precedent. Its case title, cause number, and disposition shall be included in this Court's quarterly list of noncitable cases published in the Pacific Reporter and Montana Reports.

         ¶2 Ethan and Christina Fairbrother (Fairbrothers) appeal the order of the Montana Twentieth Judicial District Court, Sanders County, which awarded Fairbrothers litigation costs as the prevailing party in an action for rescission of a real estate contract, but denied their motion for attorney's fees. We affirm.

         ¶3 The parties do not dispute the facts detailed by the District Court findings. In April 2013, Sandra Fox (Fox) executed a hand-written agreement to sell Fairbrothers a five-acre parcel in Noxon, Montana, for $45, 000 plus interest. The structured payment arrangement involved a $9, 000 down payment; monthly contributions totaling $19, 200 to an escrow account for Fox's benefit; and an unsecured promissory note requiring Fairbrothers to pay Fox $24, 000 over ten years in $200 monthly installments.

         ¶4 Fairbrothers executed a Montana Trust Indenture with Clark Fork Title Co., which established the escrow account and secured the $19, 200 to be paid over a ten-year period. A promissory note accompanied the trust indenture and memorialized Fairbrothers' $19, 200 debt, interest at 3%, and the monthly payment schedule. As the beneficiary of the trust indenture, Fox had no role in negotiating, drafting, or executing the agreement. At closing, Fox received copies of two trust documents executed by the Fairbrothers with the title company: the one-page trust promissory note and the two-page Montana Trust Indenture (short-form trust). The short-form trust stated that "provisions numbered 1 through 25 of the Trust Indenture recorded April 15, 2005" and filed separately with the Sanders County Clerk and Recorder were "incorporated and made an integral part hereof for all purposes as though set forth herein in their entirety." Fairbrothers did not provide Fox with a copy of the seven-page Montana Trust Indenture (long-form trust), which contained the trust's boilerplate provisions and was incorporated by reference in the short-form trust.

         ¶5 Tensions over the construction of an access road to Fairbrothers' property through an easement across Fox's adjacent land aggravated deteriorating relations between the neighbors. On August 14, 2014, Fox filed a complaint in district court seeking rescission of the agreement to sell the five acres to Fairbrothers, alleging mistake, fraud, and undue influence. Fox attached a copy of the short-form trust to her complaint, together with other documents related to the five-acre sale. By the time of her filing, Fox had received approximately $13, 000 on the real estate contract. Fox made no offer or attempt to return any money to Fairbrothers. While the legal action was pending, Fairbrothers continued to make monthly payments of $200 to Fox and $160 to the escrow account at Clark Fork Title Co. When Fox refused to accept payment, Fairbrothers deposited her $200 monthly payments in their attorney's trust account.

         ¶6 At trial, Fairbrothers sought to have the long-form trust admitted into evidence for the purpose of showing "the provisions for attorney fees" for "the prevailing party [in] litigation over trust indentures." Fox objected on the grounds of unfair surprise because the long-form trust had not been shared in discovery. Although the long-form trust may have been filed with the county and available to the public-at-large, Fox argued the document did not appear on Fairbrothers' pretrial exhibit list and Fox had no prior notice of Fairbrothers' intent to offer the long-form trust into evidence. The District Court reserved ruling on the admission of the long-form trust, pending final briefing by the parties.

         ¶7 Following the two-day bench trial in June 2016, the District Court determined that Fairbrothers agreed to pay fair market value for the five-acre parcel and did not misrepresent any material facts, commit fraud, coerce, or exert undue influence over Fox. The court further determined that Fox was competent and fully capable of engaging in the real estate sale. The court concluded that Fox failed to comply with the legal requirements for rescission of a real estate contract pursuant to § 28-2-1713, MCA, by failing to act promptly and failing to restore everything of value she had received from Fairbrothers. Because the District Court found no evidence to support Fox's claim for contract rescission, the court held that Fox "takes nothing from her complaint."

         ¶8 On November 18, 2016, in response to Fairbrothers' M. R. Civ. P. 54(d) motion, the District Court awarded litigation costs pursuant to § 25-10-501, MCA, but denied attorney's fees to Fairbrothers on the stated grounds that the "contract containing any requirement to pay attorney's fees was not admitted during trial." The stated reason for the court's refusal to admit the long-form Montana Trust Indenture was "because it was not provided in discovery."

         ¶9 The issues on appeal are whether the District Court abused its discretion by denying admission of the long-form Montana Trust Indenture at trial and whether the court correctly ...

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