United States District Court, D. Montana, Great Falls Division
PETER B. HUTTON, Plaintiff,
JERALD L. NYHART, Defendant.
MORRIS, UNITED STATES DISTRICT COURT JUDGE.
dispute involves a series of motions filed by Plaintiff Peter
B. Hutton (“Hutton”) and Defendant Jerald L.
Nyhart (“Nyhart”) regarding the purchase and
leaseback of agricultural property located in Madison County
and Beaverhead County in southwestern Montana. The Court
conducted a hearing at the Mansfield Courthouse in Butte,
Montana on February 28, 2019. The Court will address first
facts common to each motion and then address each motion in
Court hesitates to designate this section as undisputed facts
as the parties agree on little about what transpired over the
past fourteen years. The Court instead will characterize
competing allegations by the parties where appropriate. The
ubiquity of these competing allegations highlights the
Court's difficulty in analyzing the claims for summary
formerly owned the agricultural property at issue. Nyhart
listed the property with a realtor with an asking price of
$1, 550, 000 in 2004. (Doc. 30 at ¶¶ 5-7). Hutton
inquired about purchasing the property. Nyhart eventually
sold the property to Hutton for the price of $648, 069.04.
Nyhart alleges that this reduced price reflected the
favorable terms that Hutton afforded to Nyhart on a
lease-back of the agricultural property and the residential
portion of the property. Id. at ¶ 10.
and Nyhart entered a written Sales Agreement drafted by
Hutton. Nyhart alleges that Hutton promised to upgrade the
irrigation system on the property as a material term to the
Sales Agreement. Hutton never replaced the irrigation system,
but he did make repairs to the system in 2005. Nyhart alleges
that the irrigation system ultimately failed and that its
failure caused him to suffer financial loss. Id. at
met Hutton in Kalispell, Montana on April 1, 2005, when they
both executed the Farm Lease and the Residential Lease. The
Farm Lease term on the agricultural portion of the property
ran for a period of five years from January 6, 2005 to
January 5, 2010. (Doc. 1 at ¶ 7). The Farm Lease
provided for an initial term of rent at $1, 000 per year.
Id. at ¶ 8. The Farm Lease provided that Nyhart
would pay all property taxes on the agricultural property and
would maintain insurance coverage. The Residential Lease
provided that Hutton would lease the house and related
outbuildings to Nyhart for a period not to exceed fifty years
from the date of closing. Id. at ¶ 11.
Farm Lease includes a holdover clause that specifically
prohibits a subsequent year-to-year lease upon completion of
the leased term. Id. at ¶ 10. The clause
instead provides that “a year to year lease shall not
be created . . . but the same shall be a tenancy from month
to month at a monthly rental calculated on the basis of one
thousand times (“1000x”) the amount of money rent
being paid hereunder at the date of termination.”
after the meeting in Kalispell, Nyhart borrowed $72, 606.60
from Hutton. The parties executed a Security Agreement that
is also at issue. The parties dispute the terms of the
Security Agreement as well as the purpose of the underlying
loan. Nyhart contends that the Security Agreement served the
sole purpose of securing the $72, 606.60 debt and that he
repaid this debt in full on December 31, 2005. (Doc. 30 at
¶¶ 20-21). Hutton counters that the Security
Agreement protected him from Nyhart's failure to perform
under the terms of the Farm Lease and entitles him to
possession of Nyhart's farm equipment, inventory, and
related accounts that served as collateral for the loan.
(Doc. 1 at ¶¶ 11-12).
remained on the property after the expiration of the initial
five-year term of the Farm Lease in 2010. The parties never
executed any written agreement regarding Nyhart's
continued possession of the property. Hutton apparently made
some repairs to the irrigation system over the years, but
never replaced it as Nyhart claims Hutton had promised to do.
Hutton eventually sent Nyhart an eviction notice on August 1,
2017. Nyhart left the property on December 31, 2017.
filed a complaint against Nyhart on November 3, 2017. (Doc.
1). Hutton alleges that Nyhart has breached the terms of the
Farm Lease and seeks to recover $771, 233.33 in past due
rent. Id. at ¶ 22. In the alternative, and to
the extent that the Farm Lease proves invalid and
unenforceable, Hutton claims that Nyhart has been unjustly
enriched by his continued occupation of the property and
seeks to recover in quantum meruit. Id. at
¶¶ 25-26. Hutton finally seeks to claim the
collateral that he alleges attaches to the Security
Agreement. Id. at ¶¶ 30-34. Nyhart
answered the complaint and filed a counterclaim on March 28,
2018. (Doc. 30). Nyhart's counterclaim alleges eight
causes of action and also seeks punitive damages.
Id. Nyhart demands a jury trial.
Hutton's Motion for Partial Summary Judgment (Doc.
Judgment is appropriate where the movant demonstrates that no
genuine dispute exists “as to any material fact”
and the movant is “entitled to judgment as a matter of
law.” Fed.R.Civ.P. 5(a); see also Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23 (1986). A motion for
partial summary judgment is appropriate in order to
“isolate and dispose of factually unsupported claims or
defenses.” E.piphany, Inc. v. St. Paul Fire &
Marine Ins. Co., 590 F.Supp.2d 1244, 1250 (N.D. Cal.
2008) (quoting Celotex, 477 U.S. at 323). The moving
party bears the initial burden of demonstrating the absence
of a genuine issue of material fact. Celotex, 477
U.S. at 322-23. If the moving party satisfies that burden,
summary judgment shall be granted unless the non-moving party
demonstrates “specific facts showing that there is a
genuine issue for trial.” Id. at 324.
has filed a motion for summary regarding all of Nyhart's
counterclaims; Nyhart's Fifth Affirmative Defense of
Accord and Satisfaction; Nyhart's Seventh Affirmative
Defense of Failure of Consideration/Excuse of Performance;
and Nyhart's Eleventh Affirmative Defense under Montana
Code Ann. § 70-27-108(2). (Doc. 33). Nyhart concedes
that Hutton is entitled to summary judgment on the Fifth
Affirmative Defense of Accord and Satisfaction. Id.
Nyhart opposes the remainder of Hutton's motion. (Doc.
62). The Court grants the motion with respect to Nyhart's
Fifth Affirmative Defense of Accord and Satisfaction.
claims that Hutton made numerous false representations of
fact to Nyhart. Hutton allegedly represented that he would
pay to install a modern pivot irrigation system. (Doc. 30 at
16-17). Nyhart claims to have understood that he would hold a
lifetime lease on the residential portion of the Ranch.
Id. Other representations include, among other
things, Nyhart's understanding that he was not
responsible to make rent payments or to obtain receipts from
Hutton unless told otherwise. Nyhart claims also that Hutton
led him to believe that the legal documents drafted by Hutton
and his attorney considered the best interest of both
parties. Nyhart further contends that Hutton did not take
issue with Nyhart's continued occupation of the
agricultural land after January 5, 2010. Finally, Nyhart
suggests that he was not obligated to pay the 1000x monthly
rent pursuant to the Holdover Provision after January 5,
2010. Id. Nyhart claims that these representations
proved to be false, that Hutton knew the representations were
false, and that Hutton made the representations for the
purpose of inducing Nyhart to sell the property at a
significantly reduced price. Id. at 17.
asserts that Hutton's promises with regard to the new
pivot system amounts to fraud and constructive fraud.
Id. 17-18. Nyhart also asserts claims for breach of
contract, breach of the implied covenant of good faith and
fair dealing, and promissory estoppel arising out of
Hutton's promise. Id. at 19-22. Nyhart seeks the
rescission of the parties' contract due to Hutton's
alleged failure to keep his promise to provide a new pivot
system. Id. at 24-25.
argues that he properly fulfilled his promise to
“fix” the pivot system, but that the
counterclaims lack reviewability because each counterclaim
remains time-barred by the relevant statute of limitations
under Montana. (Doc. 34 17-23). Nyhart counters that Montana
law provides, however, a discovery rule that tolls a relevant
statute of limitations. In the context of fraud or mistake a
claim is “not to be deemed to have accrued until
discovery by the aggrieved party of the facts constituting
the fraud or mistake.” Mont. Code Ann. § 27-2-203.
This doctrine applies when the injury was inherently
self-concealing or if the defending party concealed facts
relating to the injury from the injured party. Wilson v.
Brandt, 2017 MT 290, ¶ 17, 389 Mont. 387, 393-94,
406 P.3d 452, 456.
claims that Hutton took action to “prevent Nyhart from
discovering the injury [and] affirmatively and fraudulently
misrepresented - and continued to renew and reiterate such
misrepresentation - that he would eventually replace the
Existing Pivot.” (Doc. 62 at 16). Hutton claims that he
sufficiently fulfilled his promise by “fixing”
the pivot system. (Doc. 34 at 15). All the counterclaims
brought by Nyhart arise out of this same transaction or
occurrence of the alleged promises and reciprocal obligations
required pursuant to the sale/lease-back agreement between
the parties. The parties clearly dispute the issues regarding
what each side promised and understood throughout Hutton and
Nyhart's relationship. The existence of these disputed
issues of material fact preclude summary judgment and these
competing claims must be resolved by the jury. The Court
denies Hutton's motion for summary judgement on
Nyhart's Seventh Affirmative Defense of Failure of
Consideration and Excuse of Performance
seventh affirmative defense for failure of consideration and
excuse of performance arise from the same facts and
allegations regarding the pivots as noted above. Nyhart
alleges that Hutton failed to perform his duties as promised
under the agreements surrounding the sale/lease-back
agreement. (Doc. 30 at ¶ 7). Nyhart argues that
Hutton's failure to perform consequently excuses him from
performing his own duties under the agreement. Id.
Hutton claims that he agreed only to fix the pivot system and
that he completed this task when he repaired the Existing
Pivot. (Doc. 34 at 15).
issues regarding what each party promised and what each party
understood in relation to the sale/lease-back agreement
remain disputed and resolution of these genuine issues of
material fact will be left to the jury. The Court denies
Hutton's motion for summary judgment on Nyhart's
seventh affirmative defense.
Nyhart's Eleventh Affirmative Defense based on Montana
Code Annotated §70-27-108(2)
70-27-108(2) of the Montana Code provides a definition of
unlawful detainer and an explanation of how this principle
should be applied to a holdover tenant of agricultural
property. The section specifically provides that “when
a tenant continues in possession . . . without permission of
the landlord . . . [and] the tenant has held over and
retained possession for more than 60 days after expiration of
the term without any demand of possession or notice to quit
by the landlord . . . the tenant is considered to be holding
by permission.” Mont. Code Ann. § 70-27-108(2).
argues that Mont. Code Ann § 70-27-108(2) has no
application here as it simply defines unlawful detainer and
Hutton is not seeking possession of the agricultural
property. (Doc. 34 at 31). Hutton contends also that Nyhart
did not maintain possession of the agricultural property
after 2010 “without permission of the landlord.”
Hutton suggests instead that Nyhart retained possession of
the agricultural ...