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In re Platt

Supreme Court of Montana

March 13, 2018

IN RE THE MATTER OF: DAVID PLATT and DIANA COSSA-PLATT, collectively, Plaintiffs and Appellees,
v.
STEPHEN A. HELD, TWIN HEARTS SMILING HORSES, INC., a Montana Corporation and all other Persons Unknown, Claiming or Who Might Claim Any Right, Title, Estate, or Interest in or Lien or Encumbrance Upon the Real Property Described in the Complaint Adverse to Plaintiffs' Ownership or any Cloud Upon Plaintiffs' Title Thereto, Whether Such Claim or Possible Claim be Present or Contingent, Defendants and Appellants. and TWIN HEARTS, LLC, a Montana limited liability company, Plaintiff-Intervenor and Appellee,

          Submitted on Briefs: December 20, 2017

         APPEAL FROM: District Court of the Sixteenth Judicial District, In and For the County of Powder River, Cause No. DV-38-2014-2536 Honorable Michael B. Hayworth, Presiding Judge

          For Appellants: Jeff A. Turner, Towe, Ball, Mackey, Sommerfeld & Turner, PLLP; Billings, Montana

          For Appellees: Mark D. Parker, Parker, Heitz & Cosgrove, PLLC, Billings, Montana, David J. Dietrich, Dietrich & Associates, PC, Billings, Montana (Attorneys for David Platt and Diana Coss-Platt) Jessica T. Fehr, Adam Warren, Moulton, Bellingham, P.C., Billings, Montana (Attorneys for Twin Hearts, LLC)

          OPINION

          Jim Rice, Justice

         ¶1 Stephen Held (Held) and Twin Hearts Smiling Horses, Inc., [1] appeal from the Findings of Fact, Conclusions of Law, and Order, Judgment, and Decree entered by the Sixteenth Judicial District Court, Powder River County, following a bench trial. Held raises six issues, but we affirm by addressing the merits of the following:

         1. Did the District Court err by concluding that Platt and Welu's mutual mistake claims were not barred by the statute of limitations?

         2. Did the District Court err by considering extrinsic evidence to interpret and reform the parties' contract?

         FACTUAL AND PROCEDURAL BACKGROUND

         ¶2 In 2005, David Platt and Diana Cossa-Platt, husband and wife, together with Steve Held and Ginger Held, husband and wife, purchased a 6, 000-acre ranch near Broadus in Powder River County, Montana (the property, or ranch), for the sum of $2.2 million. The Helds, Montana residents, lived on the property and ran a cattle ranch. The Platts, New York residents, used the property for occasional recreational visits and as an investment. The Platts did not have experience in managing a large rural property, so Ginger Held suggested that Platts have Steve Held serve as ranch manager and oversee Platts' investment. To formalize this arrangement, Helds and Platts entered into an Operating Agreement under which Steve Held was designated the operator of the agricultural operation on the property, and would be responsible for its financial, legal, and day-to-day management.

         ¶3 In 2007, Tim Welu, an avid outdoorsman from Texas, became interested in purchasing a portion of the property, intending to make it a hunting property. Held, Platt, and Welu decided to divide the property into three parts, or "parcels, " of approximately 2, 000 acres each. The three-way division was relative to each party's particular goals: Held's parcel was the best for agricultural use, Welu's parcel included the best hunting ground, and Platt's parcel was the most aesthetically pleasing for recreation.

         ¶4 Attorney A. Lance Tonn, with whom Held had a prior relationship, was retained to coordinate the transaction (Land Sale). Not specified in the course of Tonn's representation was which party or parties he represented, the scope of his representation and engagement terms, and possible conflicts of interest or the parties' option to seek independent counsel. Held served as the parties' contact with Tonn. Welu and Platt believed that Tonn was "the attorney" for the Land Sale and believed their interests would be protected by the documents.

         ¶5 In December 2008, before completion of the Land Sale, the parties discussed creating "usage rights" whereby all three parties could access and use the entire ranch property. The parties verbally agreed that they would grant each other access to their respective parcels for their individual pursuits: Welu would have hunting rights, Platt would have recreational rights, and Held would have grazing rights on the entire property. A first draft of a usage agreement was circulated in early December that granted each party and their descendants a 99-year right to use the entire ranch for their specific purposes. However, this draft was not acceptable to the parties, and they instead expressed a desire to narrow the terms of the usage agreement from what they had originally contemplated. On December 20, 2008, Held emailed Tonn, copying Welu and Platt, attempting to express the parties' intent. The email, which became Exhibit 25 at trial, stated, in pertinent part, as follows:

NOT transferring the hunting, grazing and recreational rights; Lance, we've decided it's better if these 'extended rights' don't survive us, nor are they transferable. In other words, if Welu's die or sell, the only hunting rights their survivor/buyer has will be on their own land. Recreation for Platt is the same. In essence then these extended rights are only through our lifetimes. Leaving future owners to negotiate their own deals. Please use your discretion to word it.

(Hereinafter Exhibit 25.)

         ¶6 On December 30, the Land Sale was consummated, although the parties were not all together for the closing. Welu paid $2 million for his portion of the property. An existing loan and accompanying encumbrance on the property were satisfied, and the Helds and Platts each received $286, 253.73 from the proceeds. As planned, the property was divided into three parcels pursuant to a survey, with each party owning approximately 2, 000 acres. Apparently, a written agreement was used to guide the closing (Buy-Sell Agreement), but conflicting evidence was presented at trial concerning the content of this Agreement, including whether it contained language about the agreed usage rights or whether it was even signed by all the parties, which could not be resolved by the document trail.[2]

         ¶7 After completing the Land Sale, the parties decided not to record the putative Buy-Sell Agreement so that the purchase price would be kept private, and instead contemplated preparation of a separate agreement for recording that would address their usage rights (Ancillary Agreement). In January 2009, Tonn sent drafts of the Ancillary Agreement to the parties for review, instructing that "once the Agreement has been placed in final form, I will [circulate it for signature]." The language in the Ancillary Agreement regarding the specified usage rights was identical for each party, and terminated their rights to use the entire property upon conveyance of their respective parcels to a third-party. On January 20, Welu and Held reviewed and approved the Ancillary Agreement. However, Platt never received the document. On January 21, Tonn advised the parties that mistakes in the Ancillary Agreement required its re-drafting, and provided instructions for re-circulating the Agreement. In an email sent to Tonn on July 10, Held expressed frustration that the Ancillary Agreement had not yet been recorded. On August 3, Tonn replied that he had not yet received a signed Ancillary Agreement from Held. On August 20, Held, noting a fully executed agreement with all the parties' signatures had still not been executed, asked Tonn to send a new Agreement for signatures. Consequently, on August 25, Tonn emailed the parties with directions that they should sign a "previously signed" document so that a "fully signed" document could be recorded.

         ¶8 In October, a new draft of the agreement was circulated and signed by all the parties, and recorded (Recorded Agreement). However, the Recorded Agreement was not identical to the previous agreements. It specified that all the usage rights over the entire ranch were "exclusive" as among the three parties, but while the Agreement contained provisions terminating Platts' and Welus' rights to use the other two parcels ("on the entire ranch") upon conveyance of their parcel to a third party, Held's grazing rights contained no such termination provision.[3]

         ¶9 The parties were on good terms throughout these transactions and referred to each other as "partners, " but things turned sour. Tragically, Tonn passed away in September, 2010. In 2011, Stephen and Ginger Held were involved in a difficult dissolution proceeding that strained the relationship among the parties. In 2012, Welu sued Held in an irrigation system dispute that was ultimately appealed to this Court.[4] In 2014, Platt discovered and received an attorney's opinion that, because of the manner in which the property was surveyed for division, his parcel lacked legal access and, consequently, marketable title. When Held refused to grant an easement across his property to Platt, because he believed Platt had other access, Platt initiated this lawsuit against Held, alleging easement by express grant, prescription, and implication, and praying for reformation of the contract due to mutual mistake and fraud. Welu moved to intervene, which was unopposed and granted. Welu's complaint alleged the Recorded Agreement did not express the intent of the parties regarding usage, ...


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