                                                                                          May 28 2013


                                          DA 12-0438

                  IN THE SUPREME COURT OF THE STATE OF MONTANA

                                          2013 MT 138



DAVE McDUNN and CATHY McDUNN,

              Plaintiffs and Appellees,

         v.

DIANA ARNOLD,

              Defendant and Appellant.



APPEAL FROM:            District Court of the Eighteenth Judicial District,
                        In and For the County of Gallatin, Cause No. DV 09-1235B
                        Honorable Mike Salvagni, Presiding Judge


COUNSEL OF RECORD:

                For Appellant:

                        Herman A. Watson, III, Attorney at Law, Bozeman, Montana

                For Appellee:

                        Rhett B. Nemelka, Nemelka & Restum, P.C., Bozeman, Montana


                                                     Submitted on Briefs: February 20, 2013
                                                                Decided: May 28, 2013




Filed:

                        __________________________________________
                                          Clerk
Chief Justice Mike McGrath delivered the Opinion of the Court.


¶1    Dave and Cathy McDunn (the McDunns) sued Diana Arnold (Arnold) in Gallatin

County Justice Court, alleging negligence, negligence per se, and breach of contract. The

Justice Court found for the McDunns, and Arnold appealed to the Eighteenth Judicial

District Court, Gallatin County. Following a bench trial, the District Court found for the

McDunns on their breach of contract claim and awarded them damages, costs, and attorney’s

fees. Arnold appeals from the Final Order and Judgment entered against her in District

Court. We affirm.

¶2    Arnold presents the following issues for review:

¶3    Issue One: Whether the District Court abused its discretion when it allowed the

McDunns to amend their Complaint to add a claim that had not been pled during the Justice

Court proceedings.

¶4    Issue Two: Whether the District Court abused its discretion when it denied Arnold’s

Motion in Limine to prohibit any reference to the testimony and evidence presented during

the Justice Court proceedings.

¶5    Issue Three: Whether Arnold was denied her right to a trial de novo.

                 PROCEDURAL AND FACTUAL BACKGROUND

¶6    In the spring of 2008, the McDunns agreed to lease an apartment from Arnold for

thirteen months beginning on June 1, 2008. Before the lease term expired, a dispute arose

between the parties, and the McDunns vacated the apartment on January 31, 2009.

¶7    The McDunns filed a complaint against Arnold in the Gallatin County Justice Court,


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which is not a court-of-record, on August 3, 2009. The McDunns, alleging breach of the

terms of the lease, negligence, and negligence per se, sought $1,300 in damages. The Justice

Court conducted a bench trial on November 19, 2009. The McDunns were represented by

counsel; Arnold represented herself. After the trial, the Justice Court entered a written

judgment in the McDunns’ favor, and awarded them $7,059.26 for damages, costs, and

attorney’s fees.

¶8     Arnold appealed to the District Court on December 22, 2009, seeking a trial de novo.

Through newly enlisted counsel, Arnold filed an Amended Answer and Counterclaims on

April 8, 2010, in which, among other things, she added counterclaims that she had not pled

during the Justice Court proceedings. On April 9, 2010, the McDunns filed a motion seeking

leave to amend their complaint. After the court granted their motion, the McDunns filed an

Amended Complaint that added a claim for intentional and negligent misrepresentation.

¶9     Arnold filed a Motion in Limine on October 21, 2011, to prohibit any reference to the

testimony given or evidence offered during the Justice Court trial. Arnold claimed that she

would be denied her right to a trial de novo if the McDunns were allowed to refer to the prior

proceedings. The District Court held that Arnold had not cited any authority to support her

argument and denied her motion on November 29, 2011. The District Court conducted a

two-day bench trial on February 28 and 29, 2012. The District Court issued Findings of Fact

and Conclusions of Law on May 21, 2012. The court ruled in the McDunns’ favor on their

Breach of Lease claim, but it found that they had failed to prove their negligence, negligence

per se, and intentional and negligent misrepresentation claims. The court ruled against



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Arnold on all of her counterclaims. The District Court awarded the McDunns $1,444.66 in

damages and $20,697 for attorney’s fees and costs.

                               STANDARD OF REVIEW

¶10    Whether a party has been afforded his or her constitutional and statutory right to a

trial de novo is a question of law that we review for correctness. State v. Stedman, 2001 MT

150, ¶ 7, 306 Mont. 65, 30 P.3d 353. We review a district court’s decision to allow amended

pleadings for an abuse of discretion. Porter v. Galarneau, 275 Mont. 174, 188, 911 P.2d

1143, 1151-52 (1996). A district court’s ruling on a motion in limine is an evidentiary ruling

that we also review for an abuse of discretion. Alexander v. Bozeman Motors, Inc., 2012 MT

301, ¶ 22, 367 Mont. 401, 291 P.3d 1120. We review a district court’s findings of fact to

determine if they are clearly erroneous, and its conclusions of law to determine if they are

correct. Summers v. Crestview Apts., 2010 MT 164, ¶ 11, 357 Mont. 123, 236 P.3d 586.

                                      DISCUSSION

¶11    Issue One: Whether the District Court abused its discretion when it allowed the

McDunns to amend their Complaint to add a claim that had not been pled during the Justice

Court proceedings.

¶12    Arnold argues that the District Court abused its discretion when it allowed the

McDunns to amend their Complaint to add a claim that had not been pled during the Justice

Court proceedings. District courts have appellate jurisdiction over justice courts. Mont.

Const. art. VII, § 4(2); § 3-5-303, MCA. If a party appeals from a justice court that is not a

court of record, then the district court must try the case de novo. Section 25-33-301(1),



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MCA.1 “When the action is tried anew on appeal, the trial must be conducted in all respects

as other trials in the district court. . . .” Section 25-33-301(2), MCA.

¶13     The district court proceedings “must be tried anew in the district court on the papers

filed in the justice’s or city court unless the court, for good cause shown and on terms that

are just, allows other or amended pleadings to be filed in the action.” Section 25-33-301(1),

MCA. Good cause is a “legally sufficient reason,” and what constitutes good cause “will

necessarily depend upon the totality of the facts and circumstances of a particular case.” City

of Helena v. Roan, 2010 MT 29, ¶ 13, 355 Mont. 172, 226 P.3d 601.

¶14     Here, the District Court had the discretion to allow Arnold to file her Amended

Answer and Counterclaims on April 8, 2010. In her Amended Answer, Arnold added

counterclaims that she had not pled during the Justice Court proceedings. The next day, the

McDunns filed a motion seeking leave to amend their Complaint, also a matter within the

court’s discretion. Arnold failed to file an answer brief within ten days, so, according to

Mont. Unif. Dist. Ct. R. 2(b), the District Court deemed the McDunns’ motion as “well

taken” and granted them leave to file an Amended Complaint. While the District Court did

not specifically address whether the McDunns had good cause to amend as required by § 25-

33-301(1), MCA, we will not hold a district court in error for failing to address an issue that

the parties did not raise. Unified Indus., Inc. v. Easley, 1998 MT 145, ¶ 15, 289 Mont. 255,

961 P.2d 100.




1
 An appeal from a lower court that is a court-of-record is conducted on the record. Section 25-33-301(3),
MCA.

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¶15     Issue Two: Whether the District Court abused its discretion when it denied Arnold’s

Motion in Limine to prohibit any reference to the testimony and evidence presented during

the Justice Court proceedings.

¶16     Arnold argues that the District Court abused its discretion when it denied her Motion

in Limine to prohibit any reference to the evidence offered or testimony given during the

Justice Court proceeding. She contends that references to testimony from a court that is not

a court-of-record are impermissible hearsay. Arnold failed to make that argument to the

District Court, however, either in her Motion in Limine or during the trial. In her Motion in

Limine, Arnold argued that she would be denied her right to a trial de novo and that § 25-33-

301, MCA, prohibited the use of testimony and evidence from being used in the trial de

novo.

¶17     Nothing in the provisions of § 25-33-301, MCA, precludes use of prior testimony. In

fact, the statute specifically provides that “the trial must be conducted in all respects as other

trials in the district court.” Section 25-33-301(2), MCA. When interpreting a statute, our

task is to “ascertain and declare what is in its term or in substance contained therein, not to

insert what has been omitted or to omit what has been inserted.” Section 1-2-101, MCA.

¶18     Arnold did not cite any authority in her Motion in Limine to support her argument that

all references to the Justice Court hearings should be prohibited. Arnold cited cases and

statutes that establish that cases on appeal from a justice court must be tried de novo, but she

did not cite authority regarding the admissibility of references to testimony from the lower-

court proceedings. Out-of-court statements may be admissible under the hearsay rules. For

example, as an exception to the hearsay rule when a declarant is unavailable, M. R. Evid.

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804(b)(1) allows, under certain conditions, the admission of former testimony in prior

proceedings. See State v. Hall, 1999 MT 297, ¶ 35, 297 Mont. 111, 991 P.2d 929. Further,

under M. R. Evid. 801, prior statements of witnesses, admissions of party-opponents, and

statements that are not offered to prove the truth of the matter asserted are, by definition, not

hearsay and thus not precluded by M. R. Evid. 802. See State v. Baker, 2013 MT 113, ¶ 29,

370 Mont. 43, __ P.3d __ (prior inconsistent statements of witness are not hearsay); Riggs v.

State, 2011 MT 239, ¶ 58, 362 Mont. 140, 264 P.3d 693 (admissions by party-opponents are

not hearsay); Sullivan v. Contl. Constr. of Mont., LLC, 2013 MT 106, ¶ 32, 370 Mont. 8, 299

P.3d 832 (statements offered for a reason other than to prove the truth of the statement are

not hearsay). A witness who testified under oath cannot pretend that her testimony was

never given, even if no record was taken. A district court should treat testimony given

during a justice court proceeding the same as any other statement that has not been recorded

or transcribed. The District Court did not err by denying Arnold’s Motion in Limine and

instead ruling on the admissibility of the references as they were made at trial.

¶19    Issue Three: Whether Arnold was denied her right to a trial de novo.

¶20    As previously discussed, the District Court did not err by letting the McDunns file an

Amended Complaint or by denying Arnold’s Motion in Limine. Nevertheless, Arnold

argues that the McDunns’ Amended Complaint and references to the lower-court testimony

tainted the District Court proceedings and effectively denied her the right to a trial de novo.

Arnold contends that the lower-court proceedings permeated and prejudiced her entire case

and that the prejudice is evident in the District court’s Findings of Fact and Conclusions of

Law.

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¶21    Arnold analogizes her case to State v. Stedman. In Stedman, the defendant was

convicted of Criminal Mischief in Justice Court. He appealed to the District Court for a trial

de novo and was again found guilty. In its Findings and Opinion, the District Court

specifically acknowledged that the Justice Court had found Stedman guilty. Additionally,

the District Court noted that a particular witness who testified against Stedman was credible,

“in both the Justice of the Peace and this Court’s view.” Further, while announcing that it

had found Stedman guilty, the District Court proclaimed, “so said the Justice of the [P]eace,

so says this Court.” Stedman, ¶ 9.

¶22    We concluded that the District Court’s references to the Justice Court’s findings and

conclusions strongly suggested that the District Court was influenced by the Justice Court’s

decision. We held that, “[a] trial ‘de novo’ means trying the matter anew, the same as if it

had not been heard before and as if no decision had been previously rendered.” Stedman, ¶

9. Because we could not conclude that the District Court had not been unduly influenced by

the Justice Court proceedings, we held that Stedman had been denied his right to a trial de

novo. Stedman, ¶ 9.

¶23    Here, like in Stedman, the District Court specifically referenced the Justice Court

proceedings in its Findings of Facts and Conclusions of Law. Unlike in Stedman, however,

those references do not suggest that the District Court was unduly influenced by the Justice

Court proceedings. The District Court’s references to the prior proceedings were made in the

context of discussing whether Arnold had made a false representation and whether Arnold

had breached the terms of the lease. The court found credible the McDunns’ evidence that

Arnold had misrepresented which version of the lease was the original during the Justice

                                              8
Court proceedings. The District Court nevertheless correctly held that the McDunns had

failed to prove their misrepresentation claim because they had not relied on Arnold’s

misrepresentation when they entered into the agreement. The court’s other references to the

Justice Court proceedings were made while discussing which version of the lease was

enforceable and which terms were operable. The District Court’s references to the prior

proceedings related directly to disputed facts and claims and do not suggest that the court

was influenced by the Justice Court’s decision.

¶24    For the reasons stated above, the decision of the District Court is affirmed.



                                                  /S/ MIKE McGRATH

We concur:

/S/ PATRICIA COTTER
/S/ BETH BAKER
/S/ LAURIE McKINNON
/S/ BRIAN MORRIS




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