Pacific Hide & Fur Depot v. Emineth Custom Homes, Inc.

Pacific Hide & Fur Depot v. Emineth Custom Homes, Inc., 2016 MT 114 (May 17, 2016) (McGrath, C.J.) (5-0, aff’d & rev’d)

Issue: Whether the district court properly entered judgment following the jury’s verdict. 

Short Answer: No. It erred in assuming Pacific was entitled to a refund of its down payment.

Affirmed in part, reversed in part, and remanded

Facts: Pacific put a warehouse construction and office/shop remodeling project out for bid in 2011, and awarded the contract to Emineth as the low bidder. An unsuccessful bidder threatened to cancel a rail siding lease if Emineth were allowed to proceed, and Pacific revoked the contract with Emineth. Shortly thereafter Pacfici entered into two contracts with Emineth, one for renovating the office/shop and one to build employee housing.

In February 2012 Emineth and Pacific signed a contract for Emineth to build employee housing for about $1.9 million. Pacific paid a $474,625 down payment upon execution of the contract. Emineth was responsible for getting all necessary permits. The project required a zoning change, which proved difficult.

In July 2012 Pacific canceled the contract for the housing, contending Emineth had not performed in a timely manner, and demanded return of the down payment. Eventually Pacific forgave $32,000 and asked Emineth to sign a promissory note for the remainder. Emineth declined, estimating cancellation of the project cost the company at least $100,000 in lost income.

Pacific sued Emineth in April 2013, alleging breach of contract, unjust enrichment, constructive trust and bad faith and seeking $437,625 of the down payment. Emineth counterclaimed for damages.

The parties tried the case to a jury in June 2015. Pacific abandoned all of its claims except breach of contract just before trial, and did not assert as an affirmative defense the issues of offset or restitution in its answer to Emineth’s counterclaims.

Using a special verdict form, the jury found that Emineth did not breach the contract and Pacific did, causing Emineth damages in the amount of $238,241. After trial, the parties could not agree on the effect of the verdict.

Procedural Posture & Holding: The district court entered judgment for Emineth in the amount of $238,241, but additionally found that Pacific was entitled to credit for its down payment to Emineth. The court stated that the verdict in Emineth’s favor was to be deducted from Pacific’s original down payment of $474,625, and ordered Emineth to return $236,139 to Pacific. Emineth appeals, and the Supreme Court affirms and reverses. 

Reasoning: At trial, Pacific’s only claim was that Emineth breached the contract, entitling Pacific to recover the down payment. But the jury found that Emineth did not breach the contract, which ended Pacific’s claim to a return of the down payment. In entering judgment, the district court made a factual determination contrary to the verdict. Neither side appeals the liability decisions rendered by the jury. Emineth is entitled to recover $238,241 from Pacific, and Pacific is not entitled to anything from Emineth.