Mitchell et al v. Wheatland Memorial Healthcare
Filing
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ORDER denying 18 Motion for Judgment on the Pleadings. Signed by Magistrate Carolyn S Ostby on 11/14/2011. (JDH, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BILLINGS DIVISION
GARY SCOT MITCHELL and
BONNIE L. MITCHELL,
Case No.: CV-11-50-RFC-CSO
Plaintiffs,
vs.
WHEATLAND MEMORIAL
HEALTHCARE,
ORDER DENYING
PLAINTIFF’S MOTION FOR
JUDGMENT ON THE
PLEADINGS
Defendant.
Plaintiffs Gary Scot Mitchell and Bonnie L. Mitchell [collectively,
Mitchells] filed a Motion for Judgment on the Pleadings. Court Doc. 18.
Defendant Wheatland Memorial Healthcare [WMH] opposes the
motion. For the reasons stated below, the motion will be denied.
I.
PROCEDURAL BACKGROUND
The Court has diversity jurisdiction. 28 U.S.C §1332 (2011); see
Court Doc.s 13, 14). Pursuant to the parties’ consent, this case was
assigned to the undersigned judge for all further proceedings. Court
Doc. 10. Now pending is Mitchells’ motion for judgment on the
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pleadings. Court Doc. 18. Before the motion was fully briefed,
Mitchells also filed an unopposed motion for leave to file a third
amended complaint. Court Doc. 26. After that motion was filed, the
Court held a preliminary pretrial conference. Court. Doc. 28. At that
conference the parties agreed that the Court should rule on the pending
motion for judgment on the pleadings, considering the most recently
amended pleadings.
The Court subsequently granted Mitchells’ motion to file a Third
Amended Complaint (“TAC”) (Court Doc. 31) and allowed WMH to file a
sur-reply to Mitchells’ reply brief on the motion for judgment on the
pleadings. Court Doc. 32 at 2. WMH filed its sur-reply and its answer
to the TAC on November 1, 2011. Court Doc. 36; Court Doc. 37. The
matter is now ripe, and the Court bases its decision on the most recent
pleadings: Court Doc. 29 (TAC); Court Doc. 36 (WMH’s Amended
Answer to TAC).
II.
FACT BACKGROUND
The TAC alleges that Plaintiff Scot Mitchell was WMH’s chief
executive officer. On June 7, 2005, WMH and Mitchells entered into a
Lease Option Agreement [“Agreement”] attached to the TAC as Exhibit
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B. The Agreement was amended on January 1, 2009, which
amendment is attached to the TAC as Exhibit C. Court Doc. 29 at 2-3.
Mitchells contend that the Agreement granted to them an option
to purchase a house and contained a provision for determining the
purchase price of the home once the option was exercised. Mitchells
allege that they exercised the purchase option but WMH refused to sell
the property to Mitchells in accordance with the Agreement. Id. at 2-4.
The TAC asserts three claims: (1) breach of contract; (2) breach of the
duty of good faith and fair dealing; and (3) specific performance. Id. at
4-5.
In its answer, WMH admits that the Agreement was signed as
alleged but denies that the Agreement’s option to purchase was
authorized, agreed to or entered into by WMH. Court Doc. 36 at 2.
WMH affirmatively alleges that the Mitchells had actual knowledge
that Leon Lammers and Dean Blomquist, who signed the 2005
Agreement for WMH, did not have authority to execute the option. Id.
at 3. WMH alleges that the option was not authorized and not agreed
to by WMH. Id. WMH also raises several affirmative defenses,
including mistake, fraud, conflict of interest, failure to mitigate
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damages, and repudiation of the Agreement by Mitchells. Id. at 4-6.
III.
LEGAL STANDARD
When considering a motion for judgment on the pleadings, the
Court must accept as true the fact allegations of the non-moving party,
here WMH. Austad v. U.S., 386 F.2d 147, 149 (9th Cir 1967). Where
the fact allegations of the Mitchells as the moving party have been
denied by WMH, they are taken as false. Id. (citing Wyman v. Wyman,
109 F.2d 473, 474 (9th Cir. 1940)). The motion can be granted only if it
appears that on the admitted facts the movant is clearly entitled to
prevail as a matter of law. See also Fleming v. Pickard, 581 F.3d 922,
925 (9th Cir. 2009); Doleman v. Meigi Mut. Life Ins. Co., 727 F.2d 1480,
1482 (9th Cir. 1984).
A plaintiff is not entitled to judgment on the pleadings when the
answer raises issues of fact that, if proved, would defeat recovery.
Similarly, if the defendant’s answer raises an affirmative defense it will
usually bar judgment on the pleadings. Gen. Conference Corp. of
Seventh-Day Adventists v. Seventh-Day Adventist Congregational
Church, 887 F.2d 228, 230 (9th Cir.1989).
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IV.
THE PARTIES= ARGUMENTS
A.
Mitchells= Arguments
Mitchells move for judgment on the pleadings “with respect to
Defendant’s contractual liability.” Court Doc. 18 at 1. Mitchells argue
that, applying Montana contract and agency law to the undisputed
facts, WMH’s contractual liability is clear. See Court Doc. 19 at 8-9.
Mitchells contend that any issues regarding the validity of the
underlying agreement were resolved when WMH ratified the agreement
by executing an amendment. They further contend that the affirmative
defenses of fraud and mistake do not preclude granting their motion
because WMH did not promptly rescind the agreement, but rather
acquiesced in it. They conclude that WMH’s breach-of-contract defense
fails as a matter of law because WMH failed to plead the defense “with
sufficient particularity” (Court Doc. 30 at 11) and because WMH ratified
the contract.
B.
WMH=s Arguments
WMH contends that Mitchells’ motion should be denied based on
the denials in its answer to the TAC and also based on the affirmative
defenses alleged therein. It argues that Mitchells are mistaken when
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they suggest that WMH must, at this juncture, provide facts to support
its assertions. Rather, a motion for judgment on the pleadings does not
require presentation of facts. Court Doc. 37 at 2-3.
V.
DISCUSSION
The Court recognizes that the Mitchells believe that the facts will
establish that they are entitled to recovery here. But, at this juncture,
the Court is not permitted to resolve disputed facts. As set forth above,
in deciding a motion for judgment on the pleadings under Fed. R. Civ.
P. 12(c), the Court generally must look to the pleadings alone,
construing them against the moving party. If the Court were to
consider matters outside the pleadings, the motion must be treated as a
motion for summary judgment. Fed. R. Civ. P. 12(d); Olsen v. Idaho
State Bd. Of Medicine, 363 F.3d 916, 921-22 (9th Cir. 2004). The Court
declines to convert this motion to a motion for summary judgment, and
notes that neither party has so requested.
The Court concludes that WMH has presented at least some
defenses and affirmative defenses that, if proved, would defeat
Mitchells’ claims. For example, WMH specifically denies that the
option set forth in the Agreement was authorized, agreed to or entered
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into by WMH. Court Doc. 36 at 2, ¶ 4. WMH affirmatively alleges that
the Mitchells “had actual knowledge that Leon M. Lammers and Dean
Blomquist did not have authority to execute the option.” Id. at 2-3.
WMH alleges that the option set forth in the agreement was “not
authorized and not agreed to by defendant.” Id. at 3, ¶ 5. WMH denies
that it “amended or ratified any portion of the lease option agreement
other than Section 8(A)” and raises the affirmative defenses of fraud
and mistake. Id. at 2, 4, 5. The question of whether these defenses
have merit will be decided another day. But they do present fact issues
that preclude judgment on the pleadings.
Mitchells argue that WMH should not be permitted to admit that
its agents signed the Agreement, but deny that it is bound by the option
provision in it, relying on M.C.A. § 35-2-444. Court Doc. 30 at 2-4. But
that statute only applies if the Mitchells did not have “actual knowledge
… that the signing officers did not have authority to execute the
contract….” WMH alleges that the Mitchells had such knowledge, and
the Court is bound to accept that allegation as true for purposes of
ruling on this motion. See also M.C.A. § 28-10-605.
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Mitchells also contend that, as a matter of law, WMH ratified the
Agreement by amending it in 2009, thus curing the defects raised by
WMH. WMH responds that nothing was done to validate the option,
but rather the amendment related only to the lease portion of the
Agreement and not to the option. WMH has affirmatively denied that it
ratified any portion of the Agreement other than Section 8(A). Court
Doc. 36 at 2.
The denial of this motion is without prejudice to the filing of
subsequent motions, such as motions for summary judgment.
VI.
CONCLUSION
For the reasons stated above,
IT IS ORDERED that Plaintiffs= motion (Court Doc. 18) is
DENIED.
DATED this 14th day of November, 2011.
/s/ Carolyn S. Ostby
United States Magistrate Judge
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