Written By Jean Meyer
On January 18, 2022, the Montana Supreme Court published its Opinion in Rafes v. McMillan, 2022 MT 13, ¶ 1. The Montana Supreme Court’s recent Opinion clarifies when the reciprocal right to attorney’s fees may be invoked pursuant to § 28-3-704, MCA.
The facts of the underlying case arise from a construction defect action commenced by David Rafes and Bairstow, Ltd. (“Rafes Plaintiffs”) concerning a residential property in Bozeman, Montana. In the underlying District Court action, the Rafes Plaintiffs asserted claims, in relevant part, against Josh McMillan, arising from construction defects in the work performed by Mr. McMillan. In this vein, the Rafes Plaintiffs asserted claims of negligence, breach of contract, or, in the alternative, unjust enrichment.
The District Court conducted a bench trial in March 2020 and determined on the merits that “any defects that do exist with regard to the construction [were] of the [Rafes Plaintiffs] own making.” Subsequently the District Court entered an Interim Order with its findings and conclusions that granted Mr. McMillan’s request for reasonable attorney fees and costs. Following the award of attorney’s fees, the Rafes Plaintiffs appealed challenging the award of attorney’s fees. On Appeal, the Rafes Plaintiffs challenged whether the District Court erred by determining that Mr. McMillan had a reciprocal right to an award of attorney fees under § 70-19-428, MCA and § 28-3-704, MCA.
In evaluating the issues presented, the Montana Supreme Court observed that “[a] party in a civil action generally may not recover attorney’s fees absent a specific contractual or statutory provision for those fees.” Further, Montana law provides for reciprocal contractual attorney’s fees pursuant to Section 28-3-704, MCA, as follows:
[W]henever, by virtue of the provisions of any contract or obligation in the nature of a contract . . . one party to the contract or obligation has an express right to recover attorney fees from any other party to the contract or obligation in the event the party having that right brings an action upon the contract or obligation, then in any action on the contract or obligation all parties to the contract or obligation are considered to have the same right to recover attorney fees and the prevailing party in any action, whether by virtue of the express contractual right or by virtue of this section, is entitled to recover reasonable attorney fees from the losing party or parties. [(Emphasis added.)]
As applied to the facts of that case, the relevant contract was an oral contract, which did not contain any fee provision. Therefore, notwithstanding the fact that the Rafes Plaintiffs requested attorney’s fees in their Complaint, the Rafes Plaintiffs had no contractual right to recover attorney fees, and therefore Mr. McMillan had no reciprocal right under the statute.
Of additional note, the Montana Supreme Court distinguished between the right to statutory attorney’s fees, to which Section 28-3-704, MCA does not apply, and contractual attorney’s fees to which the statute does apply. Said differently, the plain language of § 28-3-704, MCA, only makes contractual attorney fees reciprocal, not statutory attorney fees.
For additional information concerning the reciprocal right to contractual attorney’s fees in Montana or about construction defect litigation in Montana, generally, you may reach Jean Meyer by telephone at (406) 219-8422 or by e-mail at meyer@meyerconstructionlaw.com.