360 Reclaim v. Russell
Citation414 Mont. 328, 540 P.3d 1046, 2023 MT 250
Date Filed2023-12-27
DocketDA 22-0670
Cited1 times
StatusPublished
Syllabus
Opinion - Published - Justice McKinnon - Reversed and Remanded for findings and conclusions consistent with this decision
Full Opinion (html_with_citations)
12/27/2023
DA 22-0670
Case Number: DA 22-0670
IN THE SUPREME COURT OF THE STATE OF MONTANA
2023 MT 250
360 RECLAIM, LLC, a Montana limited liability company,
Plaintiff and Appellee,
v.
WILLIAM M. RUSSELL, an individual, and MOUNTAIN
VIEW INVESTMENTS, L.C., an Idaho limited liability company,
Defendants and Appellants.
______________________________________________________
360 RECLAIM, LLC, a Montana limited liability company,
Defendant, Counter-Plaintiff and Third-Party
Plaintiff, and Appellee,
v.
WILLIAM M. RUSSELL,
Counter-Defendant and Appellant,
and
U.S. TREASURY by and through the INTERNAL
REVENUE SERVICE,
Third-Party Defendants.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and For the County of Flathead, Cause No. DV-19-305 B
Honorable Robert B. Allison, Presiding Judge
COUNSEL OF RECORD:
For Appellant William H. Russell:
William M. Russell, Self-Represented, Pocatello, Idaho
For Appellant Mountain View Investments, L.C.:
Nicholas J. Lofing, Garlington, Lohn & Robinson, PLLP, Missoula,
Montana
For Appellee:
Kristin L. Omvig, Benjamin J. Hammer, Omvig Hammer Law, P.C.,
Kalispell, Montana
Submitted on Briefs: July 19, 2023
Decided: December 27, 2023
Filed:
v i,,..,
__________________________________________
Clerk
2
Justice Laurie McKinnon delivered the Opinion of the Court.
¶1 William Russell (Russell) and Mountain View Investments, LLC, (MVI), appeal the
judgment of the Eleventh Judicial District Court, Flathead County, entered in favor of 360
Reclaim, LLC (360 Reclaim). We reverse and remand for findings and conclusions to be
made by the District Court consistent with this decision.
¶2 We restate the dispositive issue:
Did the District Court err in determining 360 Reclaim could include abatement and
cleanup costs as maintenance expenses under § 25-13-802(3), MCA?
FACTUAL AND PROCEDURAL BACKGROUND
¶3 The real property at issue, a twenty-acre parcel of land located near Columbia Falls,
Montana, (Property), has a long and tortuous legal history and has been the subject of
several proceedings before this Court. See KS Ventures, LLC v. Russell, 2019 MT 4N,395 Mont. 519
,432 P.3d 715
(KS Ventures); Russell v. 360 Reclaim, LLC,2019 MT 178N
,397 Mont. 552
,455 P.3d 441
(Russell I); 360 Reclaim, LLC v. Russell,2020 MT 136N
,400 Mont. 559
,463 P.3d 460
(Russell II). Relevant to the instant proceeding, Russell purchased
the Property for $700,000.00 in 2010 and defaulted on loan payments secured by the
Property. In March of 2018, the District Court ordered that the Property be foreclosed and
sold at a sheriffâs sale. Larry Matson (Matson), through his salvage company, 360
Reclaim, purchased the Property on June 1, 2018, for $100,000.00 at the sheriffâs sale.
¶4 On June 12, 2018, 360 Reclaim arrived at the Property with police and forcibly
evicted Russell. Russell was arrested and charged with criminal trespass and obstructing
3
a peace officer; charges which were later dismissed. Russell contended he had a right of
possession during the redemption period which we addressed in Russell I.1 Following
Russellâs removal, 360 Reclaim assumed possession of the Property which it has held to
this day.
¶5 The Property is a scrap yard. At the time of sale, the Property had items belonging
to Russell that included, by way of example, buses; approximately 50 junk vehicles;
trailers; equipment; forklifts; piles of tires; crushed trailer homes; firewood; and hazardous
contaminants. Russell also kept his personal papers and items belonging to his girlfriend
on the Property. Russell alleges that after being forcibly removed from the Property he
was unable to retrieve his personal items and that 360 Reclaim refused to return them. 360
Reclaim maintained they had accommodated Mr. Russell in every way they could. Starting
on June 18, 2018, 360 Reclaim began charging Russell $500.00 per day in storage fees.
This amount was increased to $1,000.00, beginning July 16, 2018.2 360 Reclaim described
these fees as âa very minimal amount of money for what is considered to be on that 20
acres.â The scrap and salvage material located on the Property apparently has significant
value.
¶6 During his years of ownership, Russell was cited multiple times for violating
Flathead County Ordinance No. 6, the countyâs public nuisance ordinance. Russell failed
1
On appeal, Russell again raises whether he was entitled to remain on the Property during the
redemption period. We will not address this issue as it has already been litigated and resolved in
Russell I.
2
On June 28, 2022, the District Court issued an order finding that 360 Reclaim was âentitled to
$250.00 per day from and after June 18, 2018 through June 21, 2021. . . .â
4
to bring the Property into compliance and was subsequently convicted in 2016 for violating
the ordinance. After taking possession of the Property, 360 Reclaim was also cited for
violation of Ordinance No. 6 on June 1, 2018. The county instructed 360 Reclaim to abate
the nuisance by âmeans of removal or shielding of the conditions,â and that time for
abatement could be extended through submission of an abatement plan. When 360
Reclaim remained noncompliant, the county sent another letter on December 6, 2018,
advising that no abatement had occurred and giving 360 Reclaim 10 days to provide
information concerning its abatement plan. On March 21, 2019, the county acknowledged
and approved 360 Reclaimâs abatement plan, which had been provided on March 19, 2019,
but advised 360 Reclaim that approval by the Department of Environmental Quality (DEQ)
was also necessary. On March 28, 2019, the DEQ sent 360 Reclaim a letter citing several
DEQ violations.
¶7 During the redemption period from June 2018 until June 2019, 360 Reclaim began
removing, shipping, and selling salvage materials from the Property. 360 Reclaim hired
LM Construction to handle the cleanup. LM Construction is owned by 360 Reclaim. 360
Reclaim cleaned the shop building, removed garbage, paid the utilities, and paid for
propane to keep the buildings heated. Russell claims that once 360 Reclaim came into
possession of the Property they began removing, scrapping, and salvaging his property to
turn a profit. For example, Russell claims that 360 Reclaim sold containers of metals
valued at $4,406.75 in July of 2018 to Pacific Steel. 360 Reclaim does not dispute this
and, in fact, acknowledges that Russell is entitled to a credit in this amount. 360 Reclaim
5
similarly acknowledges that Russell is entitled to a credit of $200.00 for Reclaimâs sale of
a push mower. There are other instances in which Russell and MVI assert appropriate
amounts were not credited, such as 360 Reclaimâs failure to offset $4,000.00 in tenant rents
it collected and an ATV 360 Reclaim took possession of valued at $8,000.00.
¶8 On June 3, 2019, Russell, through MVI, attempted to redeem the Property by wiring
funds in the amount of $117,000.00 to the trust account of 360 Reclaimâs counsel. Russell
calculated the amount to include the purchase price of $100,000.00, one yearâs interest at
7.5% ($7,500.00), taxes ($7,243.58), and added a âsafety marginâ ($2,256.42). The
payment was rejected, however, as 360 Reclaim believed it was insufficient. 360 Reclaim
calculated a different redemption amount of $486,959.77. 360 Reclaim arrived at this total
by adding together the $100,000.00 purchase price, $334,000.00 in storage fees, $7,479.45
in interest, $125.96 for the cost of purchasing padlocks to secure the Property, $502.64 in
liability insurance payments, $8,587.55 in property taxes, $38,147.65 for cleanup work that
LM Excavating had completed on the Property, $866.51 for the cost of propane, and
$1,856.75 in electrical fees. While noting that the sale to Pacific Steel of metals and a
mower was not included as an expense which increased the redemption price, Russell
claims 360 Reclaim did not offset the redemption price by the amount $4,406.75 and
$200.00. Additionally, Russell was notified that he would continue to be charged
$1,000.00 per day for storage fees and that the per diem interest would accrue at a rate of
$20.55 per day until paid in full.
6
¶9 On June 4, 2019, 360 Reclaim filed motions for a restraining order and preliminary
injunction in the District Court. 360 Reclaim argued Russell had failed to timely and
properly redeem the Property within the one-year redemption period authorized by § 25-
13-802, MCA, as the $117,000.00 he wired was insufficient. 360 Reclaim also argued
Russell had broken into the Property following 360 Reclaimâs rejection of the redemption
amount. The District Court granted 360 Reclaim a restraining order on June 11, 2019, and
a preliminary injunction on July 10, 2019. This Court affirmed the preliminary injunction
on May 26, 2020. Russell II.
¶10 In a separate but subsequently consolidated proceeding, the District Court
considered the issue of storage fees. On November 11, 2021, the court issued an order
concluding that 360 Reclaim was acting as custodian of property owned by Russell and
was therefore entitled to be paid storage costs pursuant to § 71-3-1201, MCA.3 Contrary
to 360 Reclaimâs assertion that $1,000.00 per day in storage costs was reasonable, the
District Court determined a reasonable storage cost was $250.00 per day.
¶11 In August of 2022, 360 Reclaim and MVI filed cross-motions for summary
judgment. The District Court reasoned the dispositive issue was whether 360 Reclaim was
3
The court entered an extensive order July 11, 2021, in which it concluded that § 71-3-1201, MCA,
provided the basis for 360 Reclaim to secure a lien and foreclose on Russellâs personal property.
On appeal, Russell faults the District Court on the singular basis that it referred to the storage lien
as an âagisterâs lienâ which is provided for in § 71-3-1211, MCA. While the court did, at times,
refer to it as an agisterâs lien which can only apply to livestock, it is clear from review of the courtâs
order that the basis for 360 Reclaimâs lien, requested as well in 360 Reclaimâs counterclaim, was
through invoking the provisions of § 71-3-1201, MCA. Further, the question of whether the
District Courtâs conclusion that storage costs are not properly a part of the redemption price has
not been disputed on appeal.
7
entitled to payment for cleanup costs under § 25-13-802, MCA, upon redemption. In an
order granting summary judgment to 360 Reclaim, the District Court first noted that it
would ânot consider [storage fees] for purposes of this analysis as they had not yet been
judicially determined. . . .â However, in a footnote it was clarified that â[a]t its
November 11, 2022, hearing the Court sua sponte determined it would not apply storage
fees to the redemption price.â The District Court next held:
â[T]he amount of the purchase ($100,000.00), interest ($7,541.10), taxes
($8,587.55), and other expenditures such as padlocks ($125.96), liability
insurance ($502.64), electricity ($1,856.75), and propane ($866.51),
combine for a redemption price of $119,480.51. Russell paid $117,000.00
to redeem the property on June 3, 2019. Whether Russellâs redemption
substantially complied with timeliness requirements, full redemption payout
requirements, and filing requirements is moot if Reclaimâs $38,147.65
clean-up costs are included under âmaintenance expensesâ as stated in
§ 25-13-802(3), MCA. If they are, Russell cannot argue $117,000[.00]
substantially complies with a needed redemption payment of $157,628.16
($119,480.51 + $38,147.65) since Reclaim would be âinjured or adversely
affectedâ by a difference of over $38,000.00. (internal citations omitted)
¶12 The District Court concluded that âmaintenance expensesâ did include cleanup costs
and that Russellâs redemption was therefore invalid.
¶13 Russell and MVI appeal.
STANDARD OF REVIEW
¶14 We review a district courtâs âsummary judgment rulings de novo for conformance
to the applicable standards specified in M. R. Civ. P. 56.â Lawrence v. Pasha, 2023 MT
150, ¶ 8,413 Mont. 149
,533 P.3d 1029
. âSummary judgment is proper only when there
is no genuine issue of material fact, and the moving party is entitled to judgment as a matter
of law.â Pasha, ¶ 8. âA genuine issue of material fact is a fact materially inconsistent with
8
proof of an essential element of a claim or defense at issue.â Pasha, ¶ 8. The moving party
âhas the initial burden of showing a complete absence of any genuine issue of material fact
on the Rule 56 record and that the movant is accordingly entitled to judgment as a matter
of law.â Pasha, ¶ 8. â[T]he burden then shifts to the non-moving party to prove, by more
than mere denial and speculation, that a genuine issue [of fact] does exist.â Osterman v.
Sears, 2003 MT 327, ¶ 17,318 Mont. 342
,80 P.3d 435
. When determining whether there exists a genuine issue of material fact, âall facts considered material in light of the substantive principles that entitle the moving party to judgment as a matter of law and all reasonable inferences are to be drawn in favor of the party opposing summary judgment.â Weber v. Interbel Tel. Coop., Inc.,2003 MT 320, ¶ 5
,318 Mont. 295
,80 P.3d 88
.
DISCUSSION
¶15 The redemption statute at issue is § 25-13-802, MCA, which addresses the time for
redemption and the amount to be paid. Section 25-13-802, MCA, provides:
The judgment debtor or redemptioner may redeem the property from the purchaser
any time within 1 year after the sale on paying the purchaser:
(1) the amount of the purchase with interest at a rate established by the judgment in
the action that led to the execution sale, up to the time of redemption;
(2) the amount of any assessment or taxes that the purchaser may have paid on the
property after purchase and interest on that amount;
(3) the amount of any repairs, maintenance expenses, or other expenditures that the
purchaser may reasonably have made after purchase for the maintenance of the
property, with interest on the amounts from the date of expenditure; and
(4) if the purchaser is also a creditor having a prior lien to that of the redemptioner
other than the judgment under which the purchase was made, the amount of the
lien with interest.
Thus, as relevant here, § 25-13-802, MCA, provides for a one-year redemption period,
interest on the purchase price, taxes and interest on the tax amount, and maintenance
9
expenses for the property. The parties dispute on appeal only the issue of maintenance
expenses.
¶16 We have consistently held that âredemption statutes are remedial in nature and are
to be liberally construed and that in the absence of some form of prejudice to parties
involved, substantial compliance with redemption statutes is sufficient to affect a
redemption in connection with mortgage foreclosure.â Savoy v. Cascade Cty. Sheriffâs
Dept., 268 Mont. 507, 513,887 P.2d 160, 164
(1994). Further, âforeclosure is in the nature of a forfeiture, which the law does not favor.â Savoy,268 Mont. at 513-14
,887 P.2d at 164
. Consistent with the foregoing:
[R]ules and statutes dealing with redemption are regarded as remedial in
character and should be given liberal construction and application to permit
a property owner who can pay his debts to do so, and thus make his creditor
whole, and save his property. Therefore, if a debtor, acting in good faith, has
substantially complied with the procedural requirements of the rule in such a
manner that the lender mortgagee is not injured or adversely affected, and is
getting what he is entitled to, the law will not aid in depriving the mortgagor
of his property for mere falling short of exact compliance with technicalities.
Savoy, 268 Mont. at 514,887 P.2d at 164
(quoting United States v. Loosley,551 P.2d 506, 508
(1976)). âIn taking possession of the property the buyer is taking a calculated chance that the mortgagor will be unable to redeem and thus the buyer may have gained the property at a bargain price.â Lester v. J. & S. Inv. Co.,171 Mont. 149, 153
,557 P.2d 299, 301
(1976). âWhen the mortgagor redeems the property, and the buyer has had it managed by someone, that is part of the price of his investment -- a chance that he takes.â Lester,171 Mont. at 153
,557 P.2d at 301
.
10
¶17 Section 25-13-802(3), MCA, provides that a redemptioner must pay the amount of
any repairs and maintenance expenses, âfor the maintenance of the property.â (Emphasis
added). âProperty,â under the redemption statutes, means the real property purchased at
the foreclosure sale, not the personal property of the debtor. Thus, in construing
§ 25-13-802, MCA, we cannot insert what has been omitted by holding that âpropertyâ
includes both real and personal property. Part 8 and the redemption statutes contained
therein deal only with the redemption of real property and, indeed, Part 8 is titled
âRedemption of Real Property.â Further, Part 7, which addresses sale and execution upon
foreclosure, sets forth the interest transferred, which notably does not include personal
property: â[u]pon a sale of real property, the purchaser is substituted to and acquires the
right, title, interest, and claim of the judgment debtor thereto. . . .â Section 25-13-710,
MCA. Accordingly, âmaintenance expensesâ must be for maintenance of the real property
and not maintenance of the redemptionerâs personal property.
¶18 Here, 360 Reclaimâs expenses are related to the cleanup of personal property created
by Russell on his real property. 360 Reclaimâs expenses are not attributable to maintenance
of the real property; rather 360 Reclaim purchased the real property knowing of its
condition and the personal property that was there. 360 Reclaim took a calculated risk
based on a bargain price at the foreclosure sale. 360 Reclaim, in the salvage business itself,
knew the property was a scrap yard littered with Russellâs personal property. 360 Reclaim
cannot add to the redemption price expenses for cleaning up Russellâs personal property,
which are not provided for in the redemption statute and which would be inconsistent with
11
the requirement to broadly construe redemption statutes to allow debts to be repaid and the
general disfavor in the law of foreclosure. Redemption statutes are remedial in nature and
must be construed broadly. 360 Reclaim seeks a windfall by pursuing both storage costs
and $38,147.65 in cleanup costs as part of the redemption price. The District Courtâs
decision that storage costs are not part of the redemption price does not mean that 360
Reclaim must store Russellâs personal property without recourse. However, 360 Reclaim
is not entitled to claim cleanup costs for Russellâs personal property as part of the
redemption price.
¶19 Having concluded that the District Court erred by including cleanup costs as
maintenance costs, the question remains whether Russellâs tendered redemption price of
$117,000.00 was valid. The parties do not dispute the purchase price, interest rate, or tax
amount under § 25-13-802, MCA. Neither does any party dispute the amount of 360
Reclaimâs cleanup costs. In 360 Reclaimâs summary judgment motion, it provided a
breakdown of what it believed Russell owed. 360 Reclaim represented that the total
redemption cost was $240,771.41, which included $38,147.65 in cleanup costs and
$87,750.00 in storage costs. If cleanup costs were improperly included, as we determine
they were, and storage costs are not included in the redemption price, as the District Court
ordered, then 360 Reclaimâs redemption, based on 360 Reclaimâs figures, is reduced to
$114,873.76. The District Court, however, found that if storage costs and cleanup fees
were excluded, the redemption amount would be $119,480.514 Based on the District
4
We note that the difference between $119,480.51 and $114,873.76 is over $4,606.75, the amount
Russell claims he was owed for the sale of the scrap metal and the mower. It appears the District
12
Courtâs calculations, Russellâs tendered redemption amount of $117,000.00 fell short
$2,480.51 of the amount 360 Reclaim argued they were entitled to. Putting aside whether
Russellâs tender of $117,000.00 âsubstantially compliedâ with a redemption price of
$119,480.51, we note that Russell and MVI maintain the redemption price did not consider
various credits that would reduce the redemption price. Russell maintains he was not
credited for the $4,406.75 sale of metals to Pacific Steel, the $200.00 sale of his mower,
tenant rents in the amount of $4,000.00, and a converted ATV valued at $8,000.00.
Accordingly, we remand for the District Court to determine what credits, if any, Russell
and MVI are entitled to against the redemption price and whether Russellâs offer of
redemption was in substantial compliance with the redemption statutes. Further, from our
review of the record, we do not discern there were any objections made that specific items
of the $38,147.65 in cleanup costs were attributable only to real property or only to personal
property. Rather, the parties argued generally that all cleanup costs related either to real
or personal property.
CONCLUSION
¶20 We conclude that âmaintenance expenses,â as used in § 25-13-802(3), MCA, does
not include cleanup costs for the removal of a redemptionerâs personal property.
¶21 Reversed and remanded for findings and conclusions consistent with this decision.
/S/ LAURIE McKINNON
Court did not credit Russell this amount. However, the District Court will be able to make any
necessary clarifications on remand.
13
We Concur:
/S/ JIM RICE
/S/ BETH BAKER
/S/ DIRK M. SANDEFUR
/S/ JAMES JEREMIAH SHEA
Justice James Jeremiah Shea, concurring.
¶22 I concur with the Courtâs analysis and resolution of the dispositive issue and with
the Courtâs decision to remand this matter for the District Court to determine what credits,
if any, Russell and MVI may be entitled to against the redemption price. Opinion, ¶ 19.
Since the matter is being remanded for this purpose, I likewise concur that it is procedurally
appropriate for the District Court to reassess, in light of this Opinion, whether Russellâs
redemption offer was in substantial compliance with the redemption statutes. Opinion,
¶ 19. I write separately because I think it bears noting that as it pertains to MVIâs $117,000
redemption offer on Russellâs behalf, within the context of the specific history of this case,
I strain to conceive how the amount of the redemption offer did not substantially comply
with what we have determined was a proper redemption amount of $119,480.51.
¶23 Russellâs redemption offer amounts to 98% of what we have determined to be the
correct redemption priceâand that is before factoring in any potential credits to which
Russell and MVI may be entitled. Opinion, ¶ 19. This is not to suggest that a redemption
offer that amounts to 98% of the redemption price might always automatically constitute
substantial compliance. âSubstantial complianceâ should not be mistaken for âclose
enough.â If, for example, the redemption price is concrete and undisputed, even a liberal
14
construction of the redemption statutes may not necessarily allow the redemptioner to
redeem by offering a lesser amount. But the redemption amount here was far from concrete
or undisputed.
¶24 When MVI tendered the $117,000 redemption offer on Russellâs behalf in June
2019, 360 Reclaim responded with a redemption amount of $486,959.77âmore than four
times what we have determined to be the correct redemption price. Opinion, ¶ 8. By the
time 360 Reclaim and MVI cross-motioned for summary judgment in 2022, 360 Reclaimâs
calculation had been more than cut in half to $240,771.41âstill more than double what we
have determined to be the correct redemption price. While both partiesâ respective
calculations may have missed the mark, 360 Reclaim was shooting at an entirely different
target.
¶25 As the Court observes, this property has had a long and tortuous history, and in the
annals of that history Russell is the author of much of his own misfortune. But that history
is not the narrow issue before us. Redemption rules and statutes are âremedial in character
and should be given liberal construction and application to permit a property owner who
can pay his debts to do so, and thus make his creditor whole, and save his property.â Savoy,
268 Mont. at 514,887 P.2d at 164
. Redemption rules and statutes are not intended to
bestow a windfall upon any party. In that regard, if it is ultimately determined that Russell
properly redeemed the property, 360 Reclaim may yet have a claim for reasonable costs
expended during the term of its possession of the property that are not recoverable under
the redemption statutes. As the Court notes, and as MVI acknowledges in its briefing on
15
appeal, there may be recourse in a separate actionâfor example, a claim for unjust
enrichment. 360 Reclaimâs remedy to recover these costs, however, does not lie within the
redemption statutes.
/S/ JAMES JEREMIAH SHEA
16