                                           No. 05-186

               IN THE SUPREME COURT OF THE STATE OF MONTANA

                                           2007 MT 109


PETER and TANYA ROTHING, d/b/a
DIAMOND R ENTERPRISES, INC.,

              Plaintiffs and Appellants,

         v.

ARNOLD KALLESTAD,

              Defendant and Respondent.




APPEAL FROM:         The District Court of the Eighteenth Judicial District,
                     In and For the County of Gallatin, Cause No. DV 2001-291,
                     Honorable John W. Larson, Presiding Judge


COUNSEL OF RECORD:

              For Appellant:

                     Calvin J. Stacey (argued), Stacey & Funyak, Billings, Montana

              For Respondent:

                     James R. Halverson (argued), Herndon, Sweeney & Halverson,
                     Billings, Montana


                                                                  Argued: February 1, 2006
                                                               Submitted: February 14, 2006
                                                                      Decided: May 8, 2007

Filed:

                     __________________________________________
                                        Clerk
Justice James C. Nelson delivered the Opinion of the Court.

¶1     Peter and Tanya Rothing (the Rothings) brought this action to recover damages

resulting from the death of nineteen horses owned by the Rothings that they alleged were

fed botulism contaminated hay purchased from Arnold Kallestad (Kallestad).               The

Rothings sought recovery under theories of strict liability in tort, negligence and breach

of contract. The District Court for the Eighteenth Judicial District, Gallatin County,

granted Kallestad’s Motions for Summary Judgment thereby dismissing the Rothings’

Amended Complaint. The court also granted two Motions to Compel filed by Kallestad,

awarded Kallestad his attorney’s fees and granted Kallestad’s Motion for a Protective

Order regarding the determination of attorney’s fees. The Rothings appeal. We affirm in

part, reverse in part and remand for further proceedings consistent with this Opinion.

¶2     The Rothings raise several issues on appeal which we have restated as follows:

¶3     1. Whether the District Court erred in concluding that hay is not a “product” for

purposes of a strict liability in tort cause of action.

¶4     2. Whether the District Court erred in concluding that the Rothings’ negligence

claim against Kallestad fails because it was unforeseeable that the hay could cause injury

and death to the Rothings’ horses, thus no duty of care existed.

¶5     3. Whether the District Court erred in concluding that the Rothings’ breach of

contract claim against Kallestad fails because it was unforeseeable that the hay could

cause injury and death to the Rothings’ horses.

¶6     4. Whether the District Court erred in imposing discovery sanctions against the

Rothings.


                                                2
¶7     5. Whether the District Court erred in awarding attorney’s fees to Kallestad and

denying the Rothings a hearing in respect to the calculation of attorney’s fees.

¶8     Because we find the Rothings’ breach of contract claim dispositive of this case, we

do not address the Rothings’ strict liability and negligence claims.

                          Factual and Procedural Background

¶9     The Rothings conducted business near Belgrade, Montana, under the name

Diamond R Enterprises which included Diamond R Stables, Diamond R Kennels and

Diamond R Cattle Company. Diamond R Stables is involved in the breeding, training

and selling of horses; Diamond R Kennels is involved in the breeding of Labrador

Retrievers; and Diamond R Cattle Company is involved in breeding, raising and selling

miniature heifers.

¶10    Kallestad owns a ranch in Gallatin County where he primarily raises hay and a

small amount of grain. He also raises Red Angus cattle on the ranch. Each year since he

began ranching in 1984, Kallestad has sold some of the hay he raised, and at times, he has

advertised his hay for sale in the Bozeman Daily Chronicle. Kallestad estimated that he

sells between 300 and 1,000 tons of hay annually.

¶11    Tanya Rothing’s father, Steven Howells, is in the trucking business and, from time

to time, he purchased and transported hay from North Dakota to the Rothings in

Belgrade. In April 2001, the Rothings needed hay for their horses. Because Howells did

not have time to go to North Dakota to get the hay that he had planned to deliver to the

Rothings, the Rothings purchased hay from Kallestad for $90.00 a ton.




                                             3
¶12    Kallestad later testified that this hay was a second-cutting of alfalfa taken from a

field that had been re-seeded approximately two years earlier. The hay was cut with a

swather and allowed to dry for two to four days depending on the temperature. The hay

was then twin-raked (wherein two rows are turned and combined so that the bottom

portion can also dry) and baled with a mid-size square baler a day or two after being

raked. The bales were then stacked outside on a raised bed of gravel and fly ash from

August 2000 until April 2001 when it was sold to the Rothings.

¶13    Kallestad further testified that the hay was exposed to moisture during the winter

months and that, one winter, a ditch near the stacked hay overflowed causing water to go

along the west side of the stack of hay and then onto a road. Kallestad was unsure

whether the ditch water came in contact with the hay, but he indicated that the water

“may have been up there an inch or so.”

¶14    On April 23, 2001, the Rothings received 45 to 48 large bales of hay from

Kallestad.   Some of the hay was fed to the Rothings’ horses the same day it was

delivered. On May 2, 2001, nine days after the delivery of the hay, one of the Rothings’

yearling colts was found “down.” That afternoon, the colt was taken to the Hardaway

Veterinary Hospital in Belgrade where the colt had to be euthanized. The following day,

two other yearling colts exhibited similar signs as the first colt. One of these yearling

colts also had to be euthanized. The body was transported to the Marsh Laboratory at

Montana State University where a post mortem was performed by Dr. Bill Layton. The

other yearling colt was treated with charcoal, but died two days later.




                                             4
¶15    On May 3, 2001, Dr. Layton contacted Dr. Robert Whitlock at the University of

Pennsylvania. Dr. Whitlock is an Associate Professor of Medicine and the Director of

the Botulism Laboratory at the University. Dr. Layton inquired about sending diagnostic

samples to be tested for botulism.

¶16    On May 4, 2001, three mares with foals exhibited symptoms similar to the others.

They were taken to the Hardaway Veterinary Hospital and treated with charcoal and

other medications. One of the foals died during the night. The treating veterinarians,

Dr. Gordon Hardaway and Dr. Thomas Jakob, suspected that the hay purchased from

Kallestad may be the cause of the problem, hence the remaining hay was removed from

the feeding area.

¶17    Shortly thereafter, Dr. Whitlock shipped botulism antitoxin to the Rothings and

their veterinarians, but by the time the outbreak was over, nineteen animals had died.

Dr. Whitlock concluded that the hay purchased from Kallestad and fed to the Rothings’

horses was contaminated with botulism. He based his opinion on diagnostic studies and

testing which he performed on numerous samples taken from the Rothings’ property as

well as the location where the hay had been stored on Kallestad’s property. Some of the

hay samples that were tested showed evidence of preformed Clostridium botulinum type

B toxin.

¶18    The Rothings filed suit against Kallestad on July 26, 2001. In their suit, the

Rothings pursued theories of recovery based upon strict liability, negligence and breach

of contract.   As a result of this incident, the Rothings claimed that they suffered

significant damages, including veterinarian bills for services and antitoxin in the amount


                                            5
of $38,549.28; the value of the nineteen dead horses in the amount of $40,000; and the

loss of income as a result of the deaths of the nineteen horses in excess of $100,000.

They also sought damages for emotional distress from watching their horses die and the

resulting economic devastation to their business.

¶19   In addition, Dr. Whitlock advised the Rothings that, as a result of this incident on

their property, they are at a greater risk of a reoccurrence of botulism poisoning in their

horses and they should vaccinate all of their horses yearly for as long as they own the

property. Dr. Whitlock also recommended that the Rothings warn all individuals who

might bring mares to be bred on their property of this incident and that if the Rothings

ever sell their property, they should disclose this incident.     As a consequence, the

Rothings maintained that the value of their property has diminished. They also claimed

that they have incurred expenses for cleaning up their property as a result of the

contaminated hay and for additional feed costs.

¶20   Kallestad filed two separate Motions for Summary Judgment. In his first motion,

filed May 13, 2003, Kallestad argued that, under Montana law, hay is not a product and

he is not a manufacturer; therefore, he was entitled to summary judgment on the

Rothings’ strict products liability claim. In his second motion, filed June 22, 2004,

Kallestad argued that the Rothings’ remaining theories of negligence and breach of

contract should be dismissed because, if botulism was present, it was in no way

foreseeable.

¶21   The District Court granted both of Kallestad’s Motions for Summary Judgment in

orders filed on January 28, 2004, and August 18, 2004. In addition, the court granted


                                            6
Kallestad’s several Motions to Compel; awarded Kallestad attorney’s fees incurred in

preparing the Motions to Compel; granted Kallestad’s Motion for Protective Order; and

sanctioned the Rothings by excluding evidence including Dr. Whitlock’s report.

¶22    The Rothings appeal all of the orders entered by the District Court including the

court’s January 28, 2004, and August 18, 2004 orders on Kallestad’s Motions for

Summary Judgment; the court’s June 29, 2004 order excluding evidence and awarding

expenses; and the court’s orders on Kallestad’s various Motions to Compel.

                                  Standard of Review

¶23    We review a district court’s grant of summary judgment de novo, applying the

same evaluation under M. R. Civ. P. 56, as the district court. Cole ex rel. Cole Revocable

Trust v. Cole, 2003 MT 229, ¶ 8, 317 Mont. 197, ¶ 8, 75 P.3d 1280, ¶ 8 (citing Vivier v.

State Dept. of Transp., 2001 MT 221, ¶ 5, 306 Mont. 454, ¶ 5, 35 P.3d 958, ¶ 5). In this

regard, we have stated that

       [t]he movant must demonstrate that no genuine issues of material fact exist.
       Once this has been accomplished, the burden then shifts to the non-moving
       party to prove, by more than mere denial and speculation, that a genuine
       issue does exist. Having determined that genuine issues of fact do not
       exist, the court must then determine whether the moving party is entitled to
       judgment as a matter of law.

Cole, ¶ 8 (quoting Bruner v. Yellowstone County, 272 Mont. 261, 264-65, 900 P.2d 901,

903 (1995)). In addition, we review a district court’s legal conclusions for correctness.

Cole, ¶ 8.

                                         Issue 3.




                                            7
¶24 Whether the District Court erred in concluding that the Rothings’ breach of
contract claim against Kallestad fails because it was unforeseeable that the hay could
cause injury and death to the Rothings’ horses.

¶25    The District Court concluded that under Martel Const. Inc. v. State, 249 Mont.

507, 817 P.2d 677 (1991), and Ehly v. Cady, 212 Mont. 82, 687 P.2d 687 (1984),

forseeability is a factor in breach of contract claims in Montana. Hence, the court granted

Kallestad’s Motion for Summary Judgment on the Rothings’ breach of contract claim on

the basis that the injuries to the Rothings’ horses were not foreseeable.

¶26    However, neither Martel nor Ehly dealt with a transaction in goods as in the case

sub judice. In Martel, a construction company brought an action against the State to

recover interest expenses paid on funds the construction company was required to borrow

in order to finance extra work allegedly caused by the State in the reconstruction of a

railroad overpass. Martel, 249 Mont. at 508, 817 P.2d at 677-78. And in Ehly, the

purchaser of a parcel of real property brought an action against the sellers and the sellers’

broker over the breach of a buy-sell agreement. Ehly, 212 Mont. at 86, 687 P.2d at 689.

¶27    In the instant case, the Rothings’ purchase of hay from Kallestad was a transaction

in goods, thus it may be governed by Montana’s Uniform Commercial Code (UCC)

pertaining to sales if it meets the other requirements of Title 30, Chapter 2, Montana

Code Annotated (1999).1       Section 30-2-102, MCA, provides: “Unless the context

otherwise requires, this chapter applies to transactions in goods . . . .” “Goods” are

defined at § 30-2-105(1), MCA, to mean:

1
  Because the sale of hay in this case took place on April 23, 2001, the 1999 version of
the MCA applies and all references to the MCA are to the 1999 version unless otherwise
stated.

                                             8
      all things (including specially manufactured goods) which are movable at
      the time of identification to the contract for sale other than the money in
      which the price is to be paid, investment securities . . . and things in action.
      “Goods” also includes the unborn young of animals and growing crops and
      other identified things attached to realty . . . . [Emphasis added.]

Hence, as the Official Comment to § 30-2-105, MCA, provides: “The definition of goods

is based on the concept of movability . . . . It is not intended to deal with things which

are not fairly identifiable as movables before the contract is preformed.” The hay in this

case had been cut, baled and stacked and was “movable” at the time the Rothings

purchased it from Kallestad.

¶28   Furthermore, in Mogan v. Cargill, Inc., 259 Mont. 400, 403, 856 P.2d 973, 975

(1993), this Court determined that wheat fell within the definition of “goods.” Other

items determined to be “goods” by this Court include: Smith v. General Mills, Inc., 1998

MT 280, 291 Mont. 426, 968 P.2d 723 (wheat); Konitz v. Claver, 1998 MT 27, 287 Mont.

301, 954 P.2d 1138 (timber); Carelli v. Hall, 279 Mont. 202, 926 P.2d 756 (1996) (elk);

Trad Industries, Ltd. V. Brogan, 246 Mont. 439, 805 P.2d 54 (1991) (elk); Webcor

Electronics v. Home Electronics, 231 Mont. 377, 754 P.2d 491 (1988) (telephone

systems); Norwest Bank Billings v. Murnion, 210 Mont. 417, 684 P.2d 1067 (1984)

(loader); Little v. Grizzly Mfg., 195 Mont. 419, 636 P.2d 839 (1981) (modular home); and

Scott v. Hjelm, 188 Mont. 375, 613 P.2d 1385 (1980) (horses).

¶29   In addition to the requirement that the transaction consist of the sale of “goods,”

the seller must meet the definition of a “merchant.” A “merchant” under the UCC

“means a person who deals in goods of the kind or otherwise by his occupation holds

himself out as having knowledge or skill peculiar to the practices or goods involved in


                                             9
the transaction . . . .” Section 30-2-104(1), MCA. Whether or not a person qualifies as a

merchant under the UCC is a mixed question of law and fact. Smith, 291 Mont. at 430,

968 P.2d at 726 (citing Dawkins & Co. v. L & L Planting Co., 602 So. 2d 838, 843 (Miss.

1992)). We further stated in Smith that

       [d]espite the split of authority on this issue, a majority of courts have held
       that under the Uniform Commercial Code, a farmer may be included under
       the definition of “merchant” in some instances. However, whether a
       particular farmer qualifies as a merchant cannot be determined through
       application of a per se rule; rather, it is a conclusion that must be reached
       on a case by case basis.

Smith, 291 Mont. at 431, 968 P.2d at 726-27 (internal citations omitted).

¶30    Thus, in this case, if the trial court determines that Kallestad was a merchant for

purposes of the sale of his hay to the Rothings, then the provisions of the UCC, and more

specifically, the Implied Warranty of Merchantability, would apply to this transaction.

“Unless excluded or modified [], a warranty that the goods shall be merchantable is

implied in a contract for their sale if the seller is a merchant with respect to goods of that

kind.” Section 30-2-314(1), MCA.

¶31    Prior to the advent of the UCC, the common law concept of “implied warranty”

developed in cases of food stuffs sold for immediate human consumption where “a

warranty of soundness or wholesomeness will be implied.”                Larson v. Farmers

Warehouse Co., 297 P. 753, 754 (Wash. 1931). Courts extended the concept of implied

warranty to products to be fed to livestock, but initially limited its application to

“processed and packaged” food. See, e.g., Midwest Game Co. v. M.F.A. Milling Co., 320




                                             10
S.W.2d 547, 550 (Mo. 1959) (attaching implied warranty where the animal food “is not

in its raw state but has been processed and packaged by the manufacturer”).

¶32    The court in Larson applied the concept of implied warranty to the sale of goods

to be fed to livestock. The owner of four cows purchased two tons of hay in the form of

31 bales from a retail seller of hay. The buyer alleged that the hay contained lead

arsenate and had poisoned his cows. Larson, 297 P. at 753. Other courts had refused to

extend the concept where an inspection of the goods purchased “would have disclosed

the presence therein of the injurious articles . . . .” Larson, 297 P. at 755. By contrast, no

amount of inspection, short of a chemical analysis, would have disclosed the presence of

lead arsenate in the hay. As a result, the court concluded that the seller was “liable as for

an implied warranty that the hay sold to [the buyer] was not only of the kind and quality

ordered, but was, as a lot, generally free from deleterious substances, poisonous to stock.”

Larson, 297 P. at 756.      See also Brown v. Bigelow, 88 N.E.2d 542 (Mass. 1949)

(extending implied warranty to hay); Thatcher Milling & Elevator, Co. v. Campbell, 231

P. 621 (Utah 1924) (implied warranty in favor of purchaser of chicken feed); Gussner v.

Miller, 176 N.W. 359 (N.D. 1920) (implied warranty that hay was fit to be fed to the

stock upon a farm).

¶33    This Court also recognized the common law concept of an implied warranty

attaching to the sale of animal feed. Seaton Ranch Co. v. Montana Vegetable Oil & Feed

Co., 123 Mont. 396, 217 P.2d 549 (1950). The buyer of oil cake pellets brought an action

against the seller when 474 sheep died after eating the pellets. The buyer recovered a

verdict in his favor and the seller appealed. A sharply divided Court reversed on appeal


                                             11
due to a faulty jury instruction, but in doing so, the Court upheld a separate jury

instruction regarding implied warranty. The Court determined that an implied warranty

of “soundness and wholesomeness” attached to the sale of food for animal consumption.

Seaton Ranch, 123 Mont. at 405, 217 P.2d at 554. The Court rejected the notion that the

buyer’s ability to inspect the product should dissolve the implied warranty as “[n]o

amount of inspection short of a chemical analysis would have disclosed the poisonous

condition of the feed.” Seaton Ranch, 123 Mont. at 405, 217 P.2d at 554. See also

Valdosta Milling Co. v. Garretson, 217 F.2d 625 (5th Cir. 1954) (applying Florida law in

determining that implied warranty attached to the sale of horse feed); G. Bernd Co. v.

Rahn, 96 S.E.2d 185 (Ga. 1956) (implied warranty attached to sale of steamed bone-meal

feed supplement intended for cattle).

¶34   Likewise courts in Washington and California applied the common law implied

warranty theory to the sale of hay. In Dougherty v. Lee, 168 P.2d 54 (Cal. Ct. Apps.

1946), the California Court of Appeals upheld a verdict against the seller of a single ton

of Sudan hay, a relatively small amount, where the hay caused the death of plaintiff’s

dairy cows from botulism poisoning. And, in Libke v. Craig, 216 P.2d 189 (Wash. 1950),

the Supreme Court of Washington reaffirmed its earlier ruling in Larson that the concept

of implied warranty applied to the sale of goods to be fed to livestock. In Libke, a

middleman had purchased hay from the grower and resold it to various parties, including

horseback riding academies. The middleman refused to pay for some of the hay that had

sickened horses at some of the riding academies. The grower of the hay brought an

action for the deficiency and the middleman cross-claimed based on the theory of implied


                                           12
warranty. The court rejected the notion that the seller was relieved of any implied

warranty simply because the middleman had inspected the hay prior to purchase. Libke,

216 P.2d at 195.

¶35   These principles were carried over into the UCC. 2 Now, under the UCC, goods to

be merchantable must be at least such as:

             (a) pass without objection in the trade under the contract
      description; and
             (b) in the case of fungible goods, are of fair average quality within
      the description; and
             (c) are fit for the ordinary purposes for which such goods are used;
      and
             (d) run, within the variations permitted by the agreement, of even
      kind, quality, and quantity within each unit and among all units involved;
      and
             (e) are adequately contained, packaged, and labeled as the
      agreement may require; and
             (f) conform to the promises or affirmations of fact made on the
      container or label if any.

Section 30-2-314(2), MCA (emphasis added). “Surely goods are not merchantable, if in

their ordinary use, the goods cause damage to the property to which they are applied or

harm to the person using them.” Streich v. Hilton-Davis, Div. of Sterling Drug, 214

Mont. 44, 59, 692 P.2d 440, 448 (1984).




2
   The Official Comment to § 30-2-101, MCA, provides: “The coverage of the present
Chapter is much more extensive than that of the old Sales Act and extends to the various
bodies of case law which have been developed both outside of and under the latter.” This
language mirrors the Official Comment to Article 2-101 of the UCC. Similarly, the
Official Comment to § 30-2-314, MCA, provides: “This section, drawn in view of the
steadily developing case law on the subject . . . .” This language mirrors the Official
Comment to Article 2-314 of the UCC.


                                            13
¶36    Here, Kallestad would have breached the Implied Warranty of Merchantability if

the trial court determines that the goods were not “fit for the ordinary purposes for which

such goods are used,” i.e., as feed for livestock. And, under § 30-2-715, MCA, if the trial

court determines that Kallestad breached the Implied Warranty of Merchantability, the

Rothings may be entitled to both their incidental and consequential damages.

              Buyer's incidental and consequential damages. (1) Incidental
       damages resulting from the seller's breach include expenses reasonably
       incurred in inspection, receipt, transportation and care and custody of goods
       rightfully rejected, any commercially reasonable charges, expenses or
       commissions in connection with effecting cover and any other reasonable
       expense incident to the delay or other breach.
              (2) Consequential damages resulting from the seller's breach
       include:
              (a) any loss resulting from general or particular requirements and
       needs of which the seller at the time of contracting had reason to know and
       which could not reasonably be prevented by cover or otherwise; and
              (b) injury to person or property proximately resulting from any
       breach of warranty.

Section 30-2-715, MCA (emphasis added). The Official Comment to § 30-2-715, MCA,

provides:

       5. Subsection (2)(b) states the usual rule as to breach of warranty, allowing
       recovery for injuries “proximately” resulting from the breach. Where the
       injury involved follows the use of goods without discovery of the defect
       causing the damage, the question of "proximate" cause turns on whether it
       was reasonable for the buyer to use the goods without such inspection as
       would have revealed the defects. If it was not reasonable for him to do so,
       or if he did in fact discover the defect prior to his use, the injury would not
       proximately result from the breach of warranty.

This language mirrors the language of the Official Comment to Article 2-715(2)(b) of the

UCC.




                                             14
¶37    Furthermore, Article 2-715(2)(b), does not contain a foreseeability requirement,

thus a seller “is liable for injury to person or property even if the seller did not know of or

have reason to know of the buyer’s intended use.” James J. White & Robert S. Summers,

Uniform Commercial Code vol. 1, § 10-4, 733 (5th ed., Thomson West 2006).

Analogously, this Court has established that forseeability is not required in connection

with causation in negligence cases. See Prindel v. Ravalli County, 2006 MT 62, 331

Mont. 338, 133 P.3d 165 (“In order to establish proximate causation, however, the

specific injury to a plaintiff need not have been foreseen.”) (internal quotation marks and

italics omitted); Busta v. Columbus Hosp. Corp., 276 Mont. 342, 916 P.2d 122 (1996)

(where this Court held that in cases which do not involve issues of intervening cause,

proof of causation is satisfied by proof that a party’s conduct was cause-in-fact of damage

alleged, and no consideration of foreseeability is required in connection with causation).

¶38    Thus, contrary to the District Court’s conclusion that all breach of contract actions

in Montana require foreseeability, a breach of contract action under the UCC does not

require foreseeability if injury to person or property proximately results from any breach

of warranty.

¶39    Accordingly, we hold that the District Court erred in granting Kallestad’s Motion

for Summary Judgment on the Rothings’ breach of contract claim.

                                           Issue 4.

¶40 Whether the District Court erred in imposing discovery sanctions against the
Rothings.




                                              15
¶41    Kallestad contended that because none of the other individuals that he sold hay to

during the time period that he sold hay to the Rothings had any problems with their

livestock, he was entitled to basic information from the Rothings to respond to their

claims. This information included test results of water samples, feed samples, and tissue

samples, along with feed records, veterinarian records and autopsy reports. Kallestad

claimed that the Rothings did not respond to his requests for this information, thus he

filed a Motion to Compel on October 29, 2001. On December 14, 2001, a hearing was

held on the motion during which the Rothings’ attorney assured the District Court that he

would promptly provide the requested discovery information. Based on these assurances,

the District Court denied Kallestad’s motion.

¶42    Kallestad filed a renewed Motion to Compel on June 7, 2002, alleging that, despite

their assurances, the Rothings still had not responded to his discovery requests

approximately six months later. Attached to Kallestad’s brief in support of this motion

were eleven letters from Kallestad’s counsel to the Rothings’ counsel following up on

Kallestad’s requests for the discovery information.          The District Court granted

Kallestad’s motion on July 3, 2002. Kallestad also maintained that because of the

Rothings’ delays in submitting the information, the District Court had to vacate the

original trial date and issue a new scheduling order on July 15, 2002.

¶43    On January 21, 2003, Kallestad filed another Motion to Compel claiming that the

Rothings still had not complied with Kallestad’s discovery requests and the District

Court’s July 3, 2002 order. Kallestad subsequently filed a motion to postpone ruling on

this motion when it appeared that the Rothings were about to comply with the discovery


                                            16
requests. However, Kallestad filed another Motion to Compel on July 11, 2003, based on

what he perceived as continuing discovery abuses by the Rothings.

¶44    The Honorable Judge John Larson took over the handling of this case on

November 3, 2003. A hearing was held in chambers on or about February 13, 2004,

during which Judge Larson ordered the Rothings to produce supplemental discovery

within thirty days or evidence would be excluded. The Rothings failed to provide the

requested information and on June 29, 2004, the District Court issued an Order to

Exclude Evidence and Award Expenses. This order barred the Rothings from presenting

any evidence discussing the report of their expert witness, Dr. Whitlock, or their alleged

“snowballing credit” damages.      In addition, the court ordered the Rothings to pay

reasonable attorney’s fees and costs for prior discovery violations.

¶45    The Rothings first moved to vacate the court’s order and then submitted a request

for clarification of the order. In another order dated July 22, 2004, the District Court

withdrew the language from its previous order that barred the Rothings from discussing

Dr. Whitlock’s report. The court further ordered that the matter would be discussed at

the hearing scheduled for August 13, 2004, on Kallestad’s second Motion for Summary

Judgment. During this hearing, the Rothings’ counsel informed the court that without

Dr. Whitlock’s evidence, his clients would have no chance of prevailing at trial.

¶46    The District Court filed its Opinion and Order Granting Kallestad’s Motion for

Summary Judgment and Order Vacating Trial on August 18, 2004. The only reference to

any evidence relating to Dr. Whitlock in the court’s order is found in the court’s

discussion of forseeability regarding the Rothings’ negligence claim. The court makes no


                                            17
mention of its June 29, 2004 order wherein it barred the Rothings from discussing

Dr. Whitlock’s report, or its July 22, 2004 order wherein it withdrew the language barring

the Rothings from discussing that report. However, it is clear from the court’s opinion

and order wherein it considered the evidence relating to Dr. Whitlock that, although the

court had originally excluded such evidence, it reversed that order and vacated such

exclusion. Consequently, because the court made no further orders expressly barring any

discussion of Dr. Whitlock’s report, we conclude that the court’s July 22, 2004 order

permanently withdrew the proscription against Dr. Whitlock’s report.

¶47   In addition, the Rothings contend on appeal that the District Court erred in

granting Kallestad’s Motions to Compel. They maintain that in doing so, the court did

not order the Rothings to respond to any specific written discovery requests or produce

specific documentation. Instead, the Rothings argue that the court incorrectly sanctioned

them and awarded Kallestad his attorney’s fees.

¶48   Kallestad argues that the District Court has discretion to grant motions to compel,

to award attorney’s fees, and to impose sanctions against those who abuse the discovery

process. He maintains that two different judges witnessed the Rothings’ “constant delay

and non-responsiveness” over the course of three years and that, based on these discovery

abuses, the District Court properly granted Kallestad’s Motions to Compel, awarded

attorney’s fees and excluded evidence.

¶49   We review a district court’s decision regarding the imposition of sanctions for

alleged discovery abuse to determine whether the court abused its discretion. Richardson

v. State, 2006 MT 43, ¶ 21, 331 Mont. 231, ¶ 21, 130 P.3d 634, ¶ 21 (citing Estate of


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Nielsen v. Pardis, 265 Mont. 470, 478, 878 P.2d 234, 238 (1994); Schuff v. A.T. Klemens

& Son, 2000 MT 357, ¶ 26, 303 Mont. 274, ¶ 26, 16 P.3d 1002, ¶ 26). “In doing so, we

generally defer to the district court because it is in the best position to determine both

whether the party in question has disregarded the opponent’s rights, and which sanctions

are most appropriate.” Richardson, ¶ 21 (citing Delaware v. K-Decorators, Inc., 1999

MT 13, ¶ 86, 293 Mont. 97, ¶ 86, 973 P.2d 818, ¶ 86; McKenzie v. Scheeler, 285 Mont.

500, 506, 949 P.2d 1168, 1172 (1997)).

              The purpose of discovery is to promote the ascertainment of truth
      and the ultimate disposition of the lawsuit in accordance therewith.
      Discovery fulfills this purpose by assuring the mutual knowledge of all
      relevant facts gathered by both parties which are essential to proper
      litigation. Modern instruments of discovery, together with pre-trial
      procedures, make a trial less a game of blindman’s buff and more a fair
      contest with the basic issues and facts disclosed to the fullest practicable
      extent.

Richardson, ¶ 22 (internal citations and quotation marks omitted).

¶50   Based on our review of the record, including the numerous letters from Kallestad’s

counsel requesting that the Rothings’ counsel provide the requested information or at

least respond to counsel’s previous letters, we conclude that the District Court did not

abuse its discretion in imposing sanctions against the Rothings for discovery abuse.

Accordingly, we affirm the District Court’s order granting Kallestad’s Motion to Compel.

                                         Issue 5.

¶51 Whether the District Court erred in awarding attorney’s fees to Kallestad and
denying the Rothings a hearing in respect to the calculation of attorney’s fees.

¶52   In its June 30, 2004 Order to Exclude Evidence and Award Expenses, the District

Court ordered that the Rothings “shall pay the reasonable fees and costs incurred in the


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preparation of the prior motion and brief to compel” and “the reasonable attorney’s fees

and costs incurred in the preparation of all prior filings other than those [already]

covered.” On July 22, 2004, the court issued an order setting a hearing on the attorney’s

fees for the same time as the August 13, 2004 hearing on Kallestad’s Motion for

Summary Judgment. However, at that hearing, the court granted the parties a week “to

file expert affidavit [sic] questioning the hourly rate or the entries, or both.” No actual

hearing on the reasonableness of the attorney’s fees occurred. On February 7, 2005, the

court entered its Judgment wherein it ordered that the Rothings pay $4,569.00 in

attorney’s fees.

¶53    A district court’s award of reasonable attorney’s fees is a discretionary act and we

will not reverse the district court absent an abuse of discretion. Swenson v. Janke, 274

Mont. 354, 360, 908 P.2d 678, 682 (1995) (citing Ihler v. Chisholm, 259 Mont. 240, 246,

855 P.2d 1009, 1013 (1993), overruled on other grounds by Porter v. Galarneau, 275

Mont. 174, 911 P.2d 1143 (1996)). We have also consistently held that it is improper to

award attorney’s fees based solely on the affidavit of counsel without holding an

evidentiary hearing on the matter. Rossi v. Pawiroredjo, 2004 MT 39, ¶ 29, 320 Mont.

63, ¶ 29, 85 P.3d 776, ¶ 29 (citing Stark v. Borner, 234 Mont. 254, 258, 762 P.2d 857,

860 (1988)). “An award of fees, like any other award, must be based on competent

evidence . . . . Furthermore, the proper determination of a legal fee is central to the

efficient administration of justice and the maintenance of public confidence in the bench

and bar.” Rossi, ¶ 29 (citing First Security Bank of Bozeman v. Tholkes, 169 Mont. 422,

429, 547 P.2d 1328, 1332 (1976)).


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¶54   In the case sub judice, the District Court should have conducted an evidentiary

hearing to demonstrate the proper amount of attorney’s fees to be awarded. Without

consideration of such evidence, the award of attorney’s fees in this case was improper.

¶55   Accordingly, the judgment of the District Court on the issue of attorney’s fees is

vacated and the cause remanded for an evidentiary hearing to determine the proper

amount of attorney’s fees to be awarded.

¶56   Affirmed in part, reversed in part and remanded for further proceedings consistent

with this Opinion.


                                                 /S/ JAMES C. NELSON



We Concur:

/S/ KARLA M. GRAY
/S/ PATRICIA COTTER
/S/ W. WILLIAM LEAPHART
/S/ JOHN WARNER
/S/ BRIAN MORRIS
/S/ JIM RICE




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