Estate of Kinnaman v. Mountain West Bank

Estate of Kinnaman v. Mountain West Bank, 2016 MT 25 (Feb. 2, 2016) (Cotter, J.) (5-0, aff’d)

Issue: (1) Whether the district court erred in grating Mountain West’s motion to change venue; (2) whether the district court erred in granting summary judgment to Mountain West on all claims; (3) whether the district court abused its discretion in taking judicial notice of the record in previous actions; and (4) whether the district court abused its discretion in denying the estate’s Rule 60(b) motion to vacate the summary judgment order.

Short Answer: (1) No; (2) no; (3) no; and (4) no.

Affirmed

Facts: This is the third of three lawsuits stemming from a condominium development at Hauser Lake. The first resulted in a final judgment that was not appealed, and the second was resolved in 2013 MT 99. Craig Kinnaman was the sole proprietor of CK Design and Construction, the general contractor on the project. He committed suicide in 2007, and his wife Nancy is the PR of his estate. Kinnaman agreed to fund the construction of the condos in exchange for $350,000 from the proceeds of the sale of each condo, and agreed to subordinate his interest to Mountain West Bank. The other parties are the Hales, who owned several LLCs including Cherrad.

The estate sued the bank in 2012, asserting eight claims that generally claim the bank misrepresented to Craig Kinnaman how the loan proceeds would be used, that it fraudulently induced Kinnaman into subordinating his interest in the condos to the bank’s interest, and that it unjustly enriched itself on profits from the sale of several condos.

The estate filed in Gallatin County, and the bank moved to change venue to Lewis & Clark County. The district court granted the motion, and the estate did not appeal that order.

Procedural Posture & Holding: The bank moved for summary judgment on all claims on the grounds that all claims could have been raised in the previous action and were barred by the compulsory counterclaim rule or claim preclusion. The district court agreed and granted summary judgment to the bank. The estate appeals and the Supreme Court affirms.

Reasoning: (1) The bank is the only defendant, and its principal place of business is Lewis & Clark County. The proper venue for contract claims is the county where a defendant resides or the county in which the contract was to be performed. The contracts at issue were to be performed in Lewis & Clark County. Even if Gallatin County was the proper venue for the estate’s non-contract claims, the bank was entitled to a change of venue on the contract claims.

(2) The Court affirms summary judgment for the bank on the grounds that all of the estate’s claims were barred by res judicata, or claim preclusion. The first, second and fourth elements of claim preclusion are clearly met, leaving only the question of whether the issues in the previous action and this action are the same, and whether the previous action was a final judgment on the merits of all claims.

The estate had an opportunity in the prior action to present the entire controversy and should have done so. This action arose from the same series of transactions that gave rise to the previous action. The facts forming the basis of the estate’s action here were all in existence at the time of the previous action. Because a final judgment on the merits was entered there, the estate is barred from relitigating issues that were or should have been determined in the prior suit.

(3) The district court reviewed the discovery produced in the previous action to determine whether the facts central to the estate’s claims here were in existence during the previous action. It properly exercised its discretion under Rule 202 to take judicial notice of the record.

(4) The estate moved for relief from the judgment under the catch-all provision of Rule 60(b). The motion was “essentially a request that the District Court change its mind.” The district court did not abuse its discretion in denying the motion.