Kananen v. South

Kananen v. South, 2013 MT 232 (Aug. 20, 2013) (5-0) (Wheat, J.)

Issue: (1) Whether the district court properly dismissed Kananen’s fraud claim on the basis of the statute of limitations; (2) whether the district court erred by not conducting a hearing on the motion to dismiss; and (3) whether the district court properly awarded attorney fees and costs.

Short Answer: (1) Yes; (2) no; and (3) no. The award of attorney fees and costs under § 40-4-110, MCA, is reversed.

Affirmed and reversed

Facts: Carl Kananen and Karen South married in November 1993. In January 1995, South made Kananen a co-owner of property South had owned and lived on prior to the marriage. In October 2007 a quit claim deed transferring Kananen’s interest back to South was recorded.

The marriage ended in 2009. At the hearing, testimony revealed that the property increased in value by $100,000 between 1993 and 2009. The parties disputed whether that increase was part of the marital estate. The district court concluded that South owned the property and that the increase in value was due to market forces, not to any contributions made by Kananen. The court granted $8,000 to Kananen for his minimal contributions.

In June 2012, Kananen filed a complaint alleging that South forged his signature on the quit claim deed, and that Alta Marie Pallett notarized the forged signature. Pallett’s surety was also a named defendant.

Procedural Posture & Holding: Defendants moved to dismiss on the basis of statute of limitations, collateral estoppel and lack of damages. The district court granted the motion, reasoning that the two-year statute for fraud claims had run, and awarded attorney fees and costs to the defendants pursuant to § 40-4-110. Kananen appeals, and the Supreme Court affirms the dismissal and reverses the award of attorney fees and costs.

Reasoning: (1) The parties dispute when the two-year statute began to run on Kananen’s fraud claim. The Court affirms the district court’s holding that the statute began to run at the time of the dissolution hearing in November 2009, as he was put on notice then that he was no longer a co-owner of the property.

Rule 12 provides that a motion to dismiss shall be heard and determined before trial if a party moves for a hearing. No party did so here. Kananen’s due process rights were not violated by the district court’s failure to hold a hearing prior to granting the motion to dismiss.

(3) Kananen argues, and the Supreme Court agrees, that § 40-4-110, MCA, does not apply to an action for fraud. The district court determined that Kananen’s complaint attempted to relitigate the property division made in the final decree, and granted attorney fees and costs on that basis. TheSupreme Court holds that the two causes of action were separate, and the award of attorney fees and costs was in error.