Written By Jean Meyer
On April 27, 2021, the Supreme Court of Montana issued its decision in Heringer v. Barnegat Dev. Grp., LLC, 485 P.3d 731 (Mont. 2021). There, the Supreme Court upheld the District Court’s application of Montana’s “voluntary cessation doctrine” in determining whether the subject dispute was moot. The Heringer decision is noteworthy considering its detailed analysis of the contours of the “voluntary cessation doctrine” and its application in Montana.
The case arose after owners from the Moose Ridge Condominium Development in Big Sky, Montana (“Moose Ridge Owners”) brought suit against a developer, Barnegat Development Group, LLC (the “Developer”), for having recorded an Amendment creating two different homeowners’ associations ostensibly to address construction defect issues and a lack of financial reserves to perform the repairs. In this vein, the Developer took the position that splitting the Moose Ridge Condominium Owners’ Association, Inc. (the “Association”) was necessary to fix unaddressed foundation issues at one of the condominium buildings. Despite the Association’s obligation to maintain the common areas, the Association had both failed to maintain the common areas and also failed to set aside reserve money to perform the requisite repairs. Given these stated concerns, the Developer ultimately proceeded with creating two separate homeowners’ associations by recording an Amendment to the Amended and Restated Declaration for Moose Ridge Condominium (the “Declaration”).
In response the Moose Ridge Owners filed suit against the Developer alleging breach of contract and seeking a declaratory judgment that “the Amendment is invalid, null, and void.” Shortly after the commencement of the suit, the Developer obtained additional repair bids for the Association and concluded that repairs to the foundation would cost less than originally forecasted. The Developer then revoked its Amendment and subsequently sought dismissal of the pending claims against as moot via a motion for summary judgment. Instead of accepting their ostensible victory, the Moose Ridge Owners filed an extensive brief in opposition and cross-motion for summary judgment seeking a declaration that the Developer did not have authority under the Declaration to file the Amendment splitting the Association. Both parties sought their attorney fees and costs as the prevailing party.
After reviewing the two pending motions for summary judgments, the District Court dismissed the case as moot under M.R.C.P. 12(b)(1) and declined to award either party their attorney fees and costs, concluding that neither party was the prevailing party.
In their Appeal, the Moose Ridge Owners argued that the District Court should have awarded them their attorneys’ fees, that the dispute should not have been deemed moot considering that the Developer defended its acts as appropriate, and that the District Court incorrectly interpreted the “voluntary cessation doctrine.”
In its review of the District Court’s decision, the Montana Supreme Court began its analysis by first explaining that “[a] matter is moot when, due to an event or happening, the issue has ceased to exist and no longer presents an actual controversy.” “If the issue presented at the outset of the action has ceased to exist or if a court can no longer grant effective relief due to an intervening event or change in circumstances, the issue is moot.” “[A] justiciable controversy in which the parties have a personal stake must exist at the beginning of the litigation, and at every point thereafter, unless an exception to the doctrine of mootness applies.”
With this background, the Supreme Court then set forth that when challenged conduct is of indefinite duration, but is voluntarily terminated by a defendant prior to completion of appellate review, the “voluntary cessation” exception to mootness may apply. Under these circumstances, a case might become moot if subsequent event made it absolutely clear that the allegedly wrongful conduct could not be reasonably expected to recur. The Court further noted that due to concern that a defendant may utilize voluntary cessation to manipulate the litigation process, the “heavy burden” of demonstrating the “challenged conduct cannot reasonably be expected to start again lies with the party asserting mootness.”
In evaluating the relevant authority, applying the relevant law to the facts of this case, the Montana Supreme Court concluded that the District Court erred in focusing on the fact that there had only been a single instance of the alleged wrongful conduct. The more important factor is whether there is “concrete evidence suggesting that [a defendant] will perpetuate a substantially similar wrong” in the future.
Because in the Heringer case, there was substantial evidence that the issues leading to the filing of the Amendment were resolved and were unlikely to recur again, the Montana Supreme Court concluded that the District Court correctly applied the “voluntary cessation doctrine,” albeit for incorrect reasons. The Supreme Court observed that the Moose Ridge Owners could have provided “concrete evidence” of the risk of the wrongful conduct recuring such as evidence that the Developer had previously revoked an allegedly invalid amendment as a result of a lawsuit, or the like, but failed to do so. Without evidence of the risk of the alleged wrongful conduct recurring the Supreme Court affirmed the District Court’s decision.
For additional information regarding Herringer v. Barnegat Dev. Grp., LLC or about construction defect litigation in Montana generally, you can reach Jean Meyer by telephone at (406) 219-8422 or by e-mail at meyer@meyerconstructionlaw.com