                                                                                             06/02/2020


                                           DA 19-0598
                                                                                         Case Number: DA 19-0598

              IN THE SUPREME COURT OF THE STATE OF MONTANA
                                          2020 MT 147N



TWO RIVERS APARTMENTS, LLLP,

               Plaintiff and Appellant,

         v.

AULTCO CONSTRUCTION, INC., OLD WORKS, INC.,
d/b/a AULTCO CONSTRUCTION, INC.,

               Defendants and Appellees.


APPEAL FROM:           District Court of the Fourth Judicial District,
                       In and For the County of Missoula, Cause No. DV-15-1054
                       Honorable John W. Larson, Presiding Judge


COUNSEL OF RECORD:

                For Appellant:

                       Michael O’Brien, St. Peter Law Office, P.C., Missoula, Montana

                For Appellees:

                       Christopher W. Froines, Froines Law Office, P.C., Missoula, Montana



                                                   Submitted on Briefs: April 29, 2020

                                                               Decided: June 2, 2020


Filed:
                                 q3,,---,6mal•-.— 4(
                       __________________________________________
                                         Clerk
Justice Ingrid Gustafson delivered the Opinion of the Court.

¶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     This long-running dispute has spawned litigation before two separate district court

judges and resulted in four appeals to this Court. Once again, the issue before this Court

is whether the parties are permitted to relitigate issues already litigated and determined by

one district court in another district court. We conclude they cannot and reverse and

remand with instructions to reduce the attorney fee award accordingly.

¶3     Two Rivers Apartments, LLLP (Two Rivers) sued Aultco Construction, Inc.

(Aultco) in DV-15-1054 before Judge Larson in the Fourth Judicial District Court,

Missoula County, for negligent construction of an apartment building. After two years of

litigation, the parties signed a mutual release and settlement agreement. The agreement

included an indemnification provision that provided:

       In the event any additional claim is made which directly or indirectly results
       in additional liability exposure to the Parties for the losses, injuries, and
       damages for which this Release is given, the Parties covenant and agree to
       indemnify and each other [sic] and hold harmless from all such claims and
       demands, including reasonable attorney’s fees and all other expenses
       necessarily incurred.

¶4     The tenants of the subject apartment building then brought suit against Two Rivers

and its general and limited partners before Judge Deschamps in DV-18-39. The general
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partners of Two Rivers filed a third-party complaint against Aultco, seeking contribution

and indemnity if they were found liable for damages caused by Aultco’s negligent conduct.

Aultco filed a motion to dismiss the third-party complaint under the principles of res

judicata and collateral estoppel, citing the prior suit and settlement agreement between

Aultco and Two Rivers. Judge Deschamps granted the motion. The limited partner of

Two Rivers then filed a separate third-party complaint against Aultco on the same grounds.

Aultco again moved to dismiss based on res judicata and collateral estoppel. Judge

Deschamps again granted the motion. This Court affirmed the first dismissal of Aultco

from the suit on the grounds of res judicata and collateral estoppel. Adams v. Two Rivers

Apartments, LLLP, 2019 MT 157, ¶ 23, 396 Mont. 315, 444 P.3d 415.

¶5     Along with its second motion to dismiss before Judge Deschamps, Aultco sought

attorney fees under either Foy v. Anderson, 176 Mont. 507, 580 P.2d 114 (1978), or

pursuant to the terms of the settlement agreement from DV-15-1054. In granting the

motion, Judge Deschamps determined that an award of attorney fees was appropriate

“[p]ursuant to the Settlement Agreement, as well as Foy.” Aultco submitted two invoices

of $15,475 and $1,975 and sought the full amount of those invoices. Judge Deschamps

declined to award fees-for-fees and determined that the court would award fees associated

with Aultco’s first and second motions to dismiss, which he determined to be $6,475, but

reduced the amount to $5,550, reasoning that the second motion to dismiss was duplicative

of the first. Judge Deschamps ordered all of the defendants and third-party plaintiffs—that

is, Two Rivers and its general and limited partners—to pay the attorney fee award.

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¶6     Aultco then filed a motion to enforce the settlement agreement against Two Rivers

in the original action, DV-15-1054, before Judge Larson. Aultco submitted a number of

invoices to Judge Larson, totaling $23,273.83, which included the two invoices previously

submitted to Judge Deschamps.1 Judge Larson awarded Aultco the entire $23,273.83 in

requested attorney fees from Two Rivers.

¶7     Two Rivers appeals from Judge Larson’s order, arguing that the two invoices

totaling $17,450, already considered and awarded in part by Judge Deschamps, should have

been excluded under the principle of collateral estoppel. It argues the award should also

be reduced a further $625, which was billed by Aultco’s attorney-fee expert, because

“fees-for-fees” should not be awarded in this case.

¶8     A district court’s application of collateral estoppel is a question of law that this Court

reviews for correctness. Adams, ¶ 5. Collateral estoppel, also known as issue preclusion,

is a form of res judicata, and bars the reopening of an issue that has been litigated and

resolved in a prior suit. Adams, ¶ 9 (citing Baltrusch v. Baltrusch, 2006 MT 51, ¶ 15,

331 Mont. 281, 130 P.3d 1267). Collateral estoppel has four elements: (1) the identical

issue raised was previously decided in a prior adjudication; (2) a final judgment on the

merits was issued in the prior adjudication; (3) the party against whom the plea is now

asserted was a party or in privity with a party to the prior adjudication; and (4) the party




1
  Aultco submitted two amended affidavits and supplemental briefing with additional invoices
dated after the filing of the motion to enforce the settlement agreement that Judge Larson did not
consider.

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against whom preclusion is now asserted was afforded a full and fair opportunity to litigate

the issue. Adams, ¶ 9 (citing McDaniel v. State, 2009 MT 159, ¶ 28, 350 Mont. 422, 208

P.3d 817).

¶9     All four elements of claim preclusion are met in this case. Aultco submitted two

invoices totaling $17,450 to Judge Deschamps after he awarded it attorney fees under the

terms of the settlement agreement and Foy.         After a reasonableness hearing, Judge

Deschamps determined a reasonable award of attorney fees based on those invoices.

Aultco did not appeal from that decision. Aultco then brought additional proceedings

before Judge Larson to enforce the settlement agreement and resubmitted those same two

invoices, along with other invoices. Aultco did not argue before Judge Larson that Judge

Deschamps had failed to previously consider or award any portion of those invoices, but

again sought the full amount of the invoices. Judge Larson should have excluded these

invoices in considering additional attorney fees. The issue of whether Aultco was entitled

to the attorney fees billed in those two invoices under the settlement agreement had been

litigated, considered, and awarded in DV-18-39 before Judge Deschamps. The party

against whom the plea is now asserted was a party in the prior adjudication—Judge

Deschamps awarded the award of attorney fees to Aultco against Two Rivers and its

general and limited partners. Finally, Aultco had a full and fair opportunity to litigate the

issue before Judge Deschamps—it succeeded on its argument that it was entitled to fees

under the settlement agreement and brought evidence and experts to support the

reasonableness of its requested fee.

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¶10    We also agree with Two Rivers that the award should be reduced by the $625 billed

for hearing preparation and testimony by Aultco’s expert on the reasonableness of the

attorney fees requested. Judge Deschamps, awarding fees under the settlement agreement

and Foy, had already determined that fees-for-fees were not appropriate under the

settlement agreement. Aultco did not appeal from this finding and it is estopped from

asking another district court to reweigh the same issue.

¶11    We reverse and remand the District Court’s attorney fee order with instructions to

reduce the amount rewarded by $18,075. The corrected attorney fee award in DV-15-1054

is $5,198.83.

¶12    We have determined to decide this case pursuant to Section I, Paragraph 3(c) of our

Internal Operating Rules, which provides for memorandum opinions. In the opinion of the

Court, the case presents a question controlled by settled law or by the clear application of

applicable standards of review. The District Court’s interpretation and application of the

law were incorrect.

¶13    Reversed and remanded with instructions.


                                                 /S/ INGRID GUSTAFSON


We concur:

/S/ MIKE McGRATH
/S/ LAURIE McKINNON
/S/ BETH BAKER
/S/ DIRK M. SANDEFUR


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