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Tarter v. Throne Law Office P.C.

United States District Court, D. Montana, Billings Division

February 6, 2019

BRYAN M. TARTER, Plaintiff,
v.
THRONE LAW OFFICE, P.C. and JACOB T. HASEMAN, Defendant.

          OPINION AND ORDER

          SUSAN P. WATTERS UNITED STATES DISTRICT JUDGE

         Plaintiff Bryan Tarter filed this action against the Defendants, his former lawyers, Throne Law Office and Jacob Haseman, for legal malpractice. (Doc. 1-2). Now pending before the court is Defendants' motion for summary judgment on three of Tarter's damage claims and his claim for attorney's fees related to the underlying action in which Tarter alleges the legal malpractice occurred. (Doc. 17).[1]

         I. Statement of Facts

         Tarter and his family have a ranch in southeastern Montana. (Doc. 1-2 at ¶ 9). The ranch consists of approximately two pieces of land: the first piece the Tarters refer to as "Section 12," which consists of 640 acres; the second they refer to as "Section 6" which consists of 660 acres. (Doc. 22-5 at 45:6-20). Tarter used Section 12 and Section 6 to grow hay and graze cattle. (Id.) He also holds several grazing permits on the Custer National Forest, encompassing 7, 000 acres adjacent to his property. (Id. at 184:24-190:1; 202:2-6).

         In 2010, Arch Coal, Inc. planned to develop a coal mine, known as the Otter Creek mine, near Tarter's ranch. (Doc. 8 at ¶ 7). Arch Coal's real estate arm, Ark Land Company, [2] approached Tarter about surface access use and a water monitoring agreement on Tarter's Section 12 property for the mine. (Id.) After some discussion with Arch Coal representative Doug Downing, Tarter suggested that Arch Coal "skip" the access angle and consider purchasing Section 12 instead. (Doc. 20-1 at 25).

         By December 2010, at Arch Coal's suggestion, Tarter had retained Jacob Haseman from the Throne Law Office to represent him during the Section 12 sale. (Id. at 26). In March 2011, Arch Coal offered to purchase Section 12 for two million dollars. The offer included $500, 000 down and annual installments of $100, 000 over fifteen years. (Doc. 8 at ¶ 15). In addition, Arch Coal also offered Tarter: (1) a grazing lease on Section 12 so that Tarter could continue to use the property for a period of time; and (2) a repurchase option giving him the exclusive right to re-purchase Section 12. (Id.)

         A. The Sale

         From January 2011 to May 2011, Downing and Tarter negotiated the "main parts of the deal," without involving their lawyers, which was to "sell Section 12, lease it back til mining, and then repurchase it when [Arch] was through with it." (Docs. 22-5 at 117:16-23, 118:10-23; 22-12 at 35-36; 8 at ¶ 14). In May, Arch Coal's attorney, Alan Bryan, provided Haseman the draft agreements regarding the proposed sale. (Doc. 8 at ¶ 15). After Haseman forwarded the documents to Tarter, Tarter reviewed and commented on various drafts. (Doc. 20-5 at 133:4-134:6, 156:20-160:2). According to their billing records, Throne Law Office spent nearly 20 hours reviewing and revising the proposed sale documents. (See Doc. 22-8). Haseman communicated his impressions of the provisions in the agreements to Tarter, and Tarter provided input to Haseman on the provisions that were important to him. (Doc. 22-5 at 146:2-11).

         According to Haseman's notes of his conversations with Tarter in May and June, the two million purchase price and the down payment were acceptable to Tarter, but Tarter preferred the balance paid over nine years, not fifteen. (Doc. 22-7 at 19). Also Haseman's notes state that, according to Tarter, some "situations aren't described correctly" in the drafts, that the "lease-back" and "buy-back" options "were there," (id. at 17), but that "Downing represented Tarter would get it back at minimal cost" and the "current proposal was contrary to this understanding." (Mat21).

         On June 21, 2011, Tarter, Haseman, Downing, and Bryan met in person at the Throne Law Office in Sheridan, Wyoming. (Doc. 22-5 at 169:9-170:10). They discussed the sale agreements line-by-line. (Id. at 169:9-170:10). The meeting lasted eight hours and a Sale and Purchase Agreement, Grazing Lease, and Purchase Option were finalized and executed that day. (Doc. 8 at ¶¶ 19-20). Arch Coal paid Tarter the $500, 000 down payment on July 1, 2011. (Doc. 8 at ¶ 23). The closing was completed by July 15, 2011. (Id.)

         1. The Sale Documents

         a. The Sale and Purchase Agreement

         According to the Sale and Purchase Agreement, the final agreed upon purchase price was $2 million, or $3, 125 per acre, with $500, 000 cash due on the closing date. (Doc. 22-9). Annual installments of $166, 666.67, were to be paid over the next nine years until paid in full. (Id.) The purchase price was not secured by a deed of trust or mortgage. (Id.) The parties dispute whether Haseman or anyone from the Throne Law Firm discussed securing the property with Tarter at or before the sale. (Doc. 22-5 at2:13:8-215:10, 239:7-241:1; Doc. 20-3 at 56:1-21; Doc. 20-4 at 285:18-286:2).

         Under Paragraph 9 of the Sale and Purchase Agreement, Tarter also received the first right to lease additional property that Arch Coal owned and leased to Tarter's neighbors, Keith and KP Stevens, as well as certain lands elsewhere in Powder River County, if the land became available after the Sale and Purchase Agreement, if Arch Coal decided to lease the land, and if the land was used for agricultural purposes. (Doc. 4 at ¶ 32; Doc. 20-2 at 176:20-178:2; Doc. 22-9). Arch Coal retained full discretion whether to lease the land to Tarter should it become available. (Doc. 20-3 at 47:8-15; 48:12-49:9). From the time the Sale and Purchase Agreement was signed, none of the land leased to the Stevens has come up for lease, nor has the chance to lease any of the other land identified in Paragraph 9 arisen. (Doc. 20-2 at 27:23-28:5, 182:25-183:2; 189:7-19).

         Under Paragraph 9 of the Sale and Purchase Agreement, Arch Coal agreed to execute and deliver a Grazing Lease for Section 12 after closing. Under Paragraph 10, Arch agreed to grant Tarter the option to purchase Section 12 upon the terms and conditions of a Purchase Option. Both documents are discussed in more detail below.

         b. The Grazing Lease

          The Grazing Lease grants Tarter the right to continue to ranch Section 12 for a ten-year term post sale. (Doc. 22-11). The Grazing Lease is renewable for an additional ten years, after the first ten years, until 2031, and then terminates with no provision for an additional renewal. (Id.) If the mine is developed before 2031, Arch Coal may terminate the lease by providing Tarter written notice that it has a mining permit for the land. (Id. at 2). Tarter's lease terminates nine months after service of that written notice. (Id. at 3).

         c. The Purchase Option

          The Purchase Option grants Tarter the exclusive right to repurchase Section 12. (Doc. 22-10). Tarter has one year from the date Arch Coal serves him with a Notice of Right to Exercise Option to make the purchase. (Id. at 1). The Purchase Option anticipates that Arch Coal will serve notice on Tarter after all bonding for Section 12 under the applicable mining permits is released, provided however, that the timing is in Arch Coal's "sole and absolute discretion." (Id.). If Tarter exercises the Option, Arch Coal is required to convey the property to him by quitclaim deed for $250 an acre. (Id. at 2). The parties dispute whether the form of the ...


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