Santacroce v. Ferron ( 2022 )

10/11/2022
DA 22-0063
Case Number: DA 22-0063
IN THE SUPREME COURT OF THE STATE OF MONTANA
2022 MT 198NMICHAEL A. SANTACROCE,
Plaintiff and Appellee,
v.
KENNITH G. FERRON,
Defendant and Appellant.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and For the County of Flathead, Cause No. DV-19-1029(A)
Honorable Amy Eddy, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Stephanie M. Breck, Breck Law Office, PC, Columbia Falls, Montana
For Appellee:
Richard De Jana, Richard De Jana & Associates, PLLC, Kalispell,
Montana
Submitted on Briefs: September 14, 2022
Decided: October 11, 2022
Filed:
__________________________________________
Clerk
Chief Justice Mike McGrath delivered the Opinion of the Court.
¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court Internal Operating
Rules, this case is decided by memorandum opinion and shall not be cited and does not
serve as precedent. Its case title, cause number, and disposition shall be included in this
Court’s quarterly list of noncitable cases published in the Pacific Reporter and Montana
Reports.
¶2 Kennith G. Ferron (Ferron) appeals from the Findings of Fact, Conclusions of Law
and Order, and Judgment With Permanent Injunction entered by the Eleventh Judicial
District Court, Flathead County, granting Michael A. Santacroce (Santacroce) injunctive
relief and awarding Santacroce attorney’s fees. We affirm.
¶3 Ferron owns property located at 3000 MT Hwy. 35 in Kalispell, Montana
(Property). A set of restrictive covenants govern the use of the property, with the stated
purpose to provide “country residential living.” This case directly implicates three of the
covenants: a covenant that forbids any use of the land for any commercial purpose, with
exceptions for personal home office activity and sales activity necessary to promote the
development of the subject property; a covenant that prohibits the use of any road on the
property for an impermissible land use; and a provision for reasonable attorney’s fees to
the prevailing party in a suit brought on the covenants.
¶4 In 2004, Ferron built a gym on the property and created a parking area in front of
the gym.1 Ferron provided paid fitness services at the gym; his then-wife, Diane Ferron
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Facts taken from the District Court’s Findings of Facts, Conclusions of Law and Order.
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(Diane), provided paid dance training there. In 2010, Ferron and Diane began divorce
proceedings, which finalized in or around 2015. In 2012, Vergena Mahilom (Mahilom)
moved into the property. Mahilom maintains a workspace at the property for personal
home office activity related to her occupation as a masseuse. As of 2015, Ferron and
Mahilom operated a business called Edge Fitness from the gym.
¶5 In or around 2014, Ferron’s financial situation changed which eventually
precipitated an alleged end of commercial operations at the gym. Ferron claims that he
financially sustained himself during this period by relying on savings, selling personal
property, and borrowing money. He has not had to file any taxes since 2015. Ferron
maintained that he had not performed any paid services on the property after 2016. He
claimed that after his divorce, which was finalized well before 2016, he decided that
providing paid fitness services was not worth the marginal income it produced nor the legal
risk it created. However, Diane, now his ex-wife, testified that she still had friends paying
for fitness services at the gym on the property.
¶6 At some point prior to February 2017, Mahilom wrote social media posts that
implied commercial activity was continuing at the gym. One post advertised her location
in Kalispell, her possession of fitness equipment, and a specific offer of 60 minutes of
fitness training for $50. In 2019, Mahilom formed a limited liability company (LLC) called
Advanced Functional Fitness and listed the property as the company’s address. Mahilom
testified that her employer required her to create the LLC and that she had no other address
to provide.
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¶7 In 2009, Santacroce acquired property near Ferron’s property. At some point in
2014, Ferron provided fitness training to Santacroce’s wife for a fee. That year Santacroce
began complaining to Ferron about noises and vibrations from the gym. Santacroce also
documented between eight and ten vehicles per day visiting the property and the immediate
plowing of the parking area in front of the gym upon snowfall. In response to the noise
complaints, Santacroce and Ferron reached an agreement regarding the volume level of
music from the gym. Though Ferron complied with that volume level, Santacroce
continued to complain. Ferron stopped answering calls from Santacroce.
¶8 On September 3, 2019, Ferron received a letter from Santacroce’s legal counsel
threatening legal action unless Ferron ceased any commercial activity at his gym and
stopped the noises and vibrations emerging from the gym. Ferron did not alter his use of
the property, and, on January 29, 2020, he was served with a summons and complaint.
¶9 On May 6 and 7, 2021, the District Court conducted a bench trial. The court granted
Santacroce injunctive relief and awarded him attorney’s fees. Ferron requested a hearing
on his objection to the awarded fees. He also sought a new trial or relief from judgment.
The court denied both of those motions. Ferron then withdrew his request for a hearing
regarding the attorney’s fees. On January 7, 2022, the court entered a judgment granting a
permanent injunction, and awarded attorney’s fees based on uncontested affidavits.
¶10 We review a district court’s findings of fact to determine whether they are clearly
erroneous. A finding of fact is clearly erroneous if it is not supported by substantial
evidence, if the district court misapprehended the effect of the evidence, or, if after
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reviewing the record, we are left with a firm conviction that a mistake has been made.
Morley v. Morley, 2022 MT 12, ¶ 11, 407 Mont. 241, 502 P.3d 666.
¶11 We review a district court’s grant of injunctive relief for a manifest abuse of
discretion. A manifest abuse of discretion is an obvious, evident, or unmistakable abuse
of discretion. Davis v. Westphal, 2017 MT 276, ¶ 10, 389 Mont. 251, 405 P.3d 73.
¶12 Substantial evidence in the record supports the District Court’s grant of injunctive
relief for Santacroce based on Ferron’s violation of the covenants applicable to the
property. Neither party contests that for several years Ferron used the gym for a
commercial purpose. Ferron and Mahilom, whether in their individual capacities or jointly,
set up a number of commercial entities associated with fitness and the gym. They both
continued to invite guests to the property for the explicit purpose of using the gym.
Mahilom advertised fitness-related services on social media. Diane testified that her
friends continued to pay for fitness services at the property. Santacroce documented
continued vehicular traffic to the gym. This record supports the findings the District Court
made that Ferron used his property for a commercial purpose.
¶13 The District Court did not abuse its discretion by granting Santacroce injunctive
relief. The covenants explicitly grant parties with any right, title, or interest in any tract of
the burdened territory the right to “prevent or stop violation of any of the covenants by
injunction or other lawful procedure[.]” Santacroce complained for years about noises and
vibrations coming from the property. He documented vehicular traffic to and from the
gym. He observed patterns, such as the timing and prioritization of snow plowing, to
validate his suspicions. The court included these facts and others in a comprehensive
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summary of Ferron’s violation of the covenants. Santacroce presented substantial evidence
to support the injunctive relief granted by the District Court.
¶14 A district court lacks the discretion to deny a request for attorney’s fees where a
contract requires an award of fees. See Gibson v. Paramount Homes, 2011 MT 112, ¶ 10,
360 Mont. 421, 253 P.3d 903. We presume that contractual provisions that provide the
prevailing party with attorney’s fees cover fees arising from appellate costs and fees.
See Boyne USA, Inc. v. Lone Moose Meadows, LLC, 2010 MT 133, ¶ 27, 356 Mont. 408,
235 P.3d 1269. Here, the covenants unambiguously provide for attorney’s fees for the
prevailing party in a suit arising from an alleged violation of the covenants. Santacroce
did not cross-appeal but requests attorney’s fees and costs incurred by Ferron’s appeal.
Santacroce is entitled to reasonable attorney’s fees, including those incurred by this appeal.
We remand for a determination of Santacroce’s reasonable attorney’s fees and costs arising
from this appeal.
¶15 We have determined to decide this case pursuant to Section I, Paragraph 3(c) of our
Internal Operating Rules, which provides for memorandum opinions. In the opinion of the
Court, the case presents a question controlled by settled law or by the clear application of
applicable standards of review.
¶16 Affirmed, and remanded to the District Court for a determination of attorney’s fees
on appeal.
/S/ MIKE McGRATH
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We Concur:
/S/ JAMES JEREMIAH SHEA
/S/ LAURIE McKINNON
/S/ BETH BAKER
/S/ DIRK M. SANDEFUR
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