State Ex Rel. Florence-Carlton Cons

No. 81-40 IN THE SUPREME COURT OF THE STATE OF MONTANA

STATE OF MONTANA, upon the relation of FLORENCE-CARLTON CONSOLIDATED SCHOOLS DISTRICT 15 & 6"et al.,

Petitioners,

DISTRICT COURT OF THE FIRST JUDICIAL DISTRICT OF THE STATE OF MONTANA, IN AND FOR THE COUNTY OF LEWIS & CLARK et ax., Respondents.

ORIGINAL PROCEEDING: Counsel of Record: For Petitioners: Herron, Meloy & Llewellyn, Helena, Montana Clayton Herron argued, Helena, Montana and Peter Meloy argued, Helena, Montana For Respondents:

Bellingham & Christenson, Billings, Montana Cresap McCracken argued, Great Falls, Montana Bruce T. Toole argued, Billings, Montana John North, Helena, Montana Robert Gannon, Butte, Montana Thomas D. Ebzery, Billings, Montana Murphy, Robinson Law Firm, Kalispell, Montana Gregory C. Black, Butte, Xuntana Alan Hux and Carol Dunn, Indianapolis, hdiana Hon. John Henson, District Judge, Missoula, Montana

Submitted: June 12, 1981 Decided : Filed: AUG 3 - 1981

* Clerk

Mr. J u s t i c e Gene B. D a l y d e l i v e r e d t h e O p i n i o n o f t h e C o u r t .

T h i s a c t i o n was commenced i n t h e D i s t r i c t C o u r t of the First Judicial District, i n and f o r t h e County o f Lewis and C l a r k , by c o m p l a i n t f o r d e c l a r a t o r y judgment on A u g u s t 31, 1979. On March 20, 1 9 8 0 , a n amended c o m p l a i n t , adding

n e c e s s a r y p a r t i e s and d e l e t i n g p a r t i e s deemed u n n e c e s s a r y t o t h i s a c t i o n , was f i l e d . Plaintiffs-relators f i l e d a motion

for leave t o f i l e a s e c o n d amended c o m p l a i n t on J u n e 1 8 , 1980. Prior to any action of the court regarding this motion, r e l a t o r s f i l e d a second motion f o r l e a v e t o f i l e a revised s e c o n d amended c o m p l a i n t . Defendants objected to t h i s m o t i o n and r e q u e s t e d s a n c t i o n b e imposed upon r e l a t o r s as a condition to proceeding with this revised second amended complaint. Respondent D i s t r i c t Court g r a n t e d the motion f o r l e a v e t o f i l e t h e r e v i s e d complaint, but reserved ruling on the requested terms. After briefing by all parties, respondent D i s t r i c t Court granted defendants' r e q u e s t by i m p o s i n g a n award o f c o s t s upon relators as a condition precedent t o proceeding with the revised second amended c o m p l a i n t . From t h i s o r d e r , r e l a t o r s p e t i t i o n f o r a w r i t of s u p e r v i s o r y c o n t r o l .

On August 31, 1979, Friends of the Earth, Inc., Edward M. Dobson, Daniel H. Henning, Gary Matson, Vicki Gale, Robert K. Lendis, t h e Montana E d u c a t i o n A s s o c i a t i o n ,

and t h e Montana S t a t e F e d e r a t i o n o f T e a c h e r s , a s p l a i n t i f f s , filed a complaint for declaratory judgment against the Montana Board of Land Commissioners and Westmoreland Resources, Inc., as defendants. This complaint alleged basically that the land commissioners were not requiring Westmoreland R e s o u r c e s , Inc., t o pay t h e f u l l market v a l u e

f o r r o y a l t y r i g h t s f o r t h e e x t r a c t i o n o f c o a l on s t a t e t r u s t

lands as required by law. The complaint prayed for d e c l a r a t o r y judgment t h a t c o a l l e a s e s i s s u e d t o W e s t m o r e l a n d by the land commissioners were null and void, for an a d j u d i c a t i o n of t h e l a n d c o m m i s s i o n e r s 1 d u t y t o o b t a i n f u l l m a r k e t v a l u e , and f o r a t t o r n e y f e e s and c o s t s o f s u i t .

Westmoreland Resources, Inc., filed successive motions f o r s u b s t i t u t i o n of judge, and t h e H o n o r a b l e J o h n S . Henson assumed j u r i s d i c t i o n on November 1, 1 9 7 9 . Pursuant t o s t i p u l a t i o n of t h e p a r t i e s and o r d e r o f the court, an amended c o m p l a i n t was f i l e d on J a n u a r y 1 7 , 1 9 8 0 , which added Florence-Carlton C o n s o l i d a t e d S c h o o l s , D i s t r i c t s 1 5 and 6 ,

a s a plaintiff to t h i s action. On March 11, 1 9 8 0 , following motions, notices, and hearings, the District Court ruled that Friends of the Earth, Inc., did not have standing and was, therefore, dismissed from the action. The court also ruled that additional parties were indispensable to the action and

o r d e r e d p l a i n t i f f s , r e l a t o r s h e r e , t o e f f e c t j o i n d e r of s u c h parties. On March 20, 1 9 8 0 , i n c o m p l i a n c e w i t h t h i s o r d e r , relators f i l e d a n amended c o m p l a i n t j o i n i n g the following defendants with the land commissioners and Westmoreland Resources, Inc.: Arkland Company; A y r s h i r e C o a l Company; the Carter Oil Company; Consolidated C o a l Company; Decker

C o a l Company; Gulf O i l C o r p o r a t i o n ; Mapco, Inc.; Mobil O i l Corporation; Spring Creek Coal Company; Peabody Coal Company; Peter K i e w i t Sons1 Corporation; R o b e r t W. Adams; United States Steel Corporation; Western Energy Company; Thermal E n e r g y , I n c . ; and Thermal R e s o u r c e s , I n c . The amended c o m p l a i n t s o u g h t t o r e n d e r v o i d a l l s t a t e

s c h o o l l a n d c o a l l e a s e s h e l d by t h e above-named defendants. It sought declaratory judgment alleging solely that the royalty rates in the existing leases did not reflect f u l l

mar k e t value. No alternative theories or grounds for challenging the leases than t h a t included in the original c o m p l a i n t o f August 31, 1 9 7 9 , w e r e i n c l u d e d i n t h e amended c o m p l a i n t f i l e d March 20, 1 9 8 0 . On J u n e 1 8 , 1 9 8 0 , r e l a t o r s f i l e d and s e r v e d a m o t i o n for leave to file a second amended complaint. A l l

defendants, except the Board of Land Commissioners, Westmoreland R e s o u r c e s , Inc., Thermal R e s o u r c e s , Inc., and Thermal E n e r g y , I n c . , had f i l e d r e s p o n s i v e p l e a d i n g s t o t h e

amended complaint of March 20, 1980, p r i o r t o t h e second motion to amend. The proposed second amended complaint added an additional count i n mandamus and s e t f o r t h f i v e

additional allegations, reasons and bases for relators' c o n t e n t i o n t h a t t h e c o a l l e a s e s w e r e n u l l and v o i d . Defendant United S t a t e s S t e e l Corporation o b j e c t e d t o

the filing of the second amended complaint and, in the alternative, requested the court t o impose s a n c t i o n s upon relators, such sanctions to be a reasonable allowance of a t t o r n e y f e e s n e c e s s a r i l y i n c u r r e d i n p r e p a r i n g a n answer t o

t h e s e c o n d amended c o m p l a i n t . T h i s o b j e c t i o n was f i l e d J u n e 24, 1 9 8 0 . Prior to a ruling on either relators' motion for l e a v e t o f i l e a s e c o n d amended c o m p l a i n t o r U n i t e d S t a t e s S t e e l ' s o b j e c t i o n t o such motion, relators filed a motion f o r l e a v e t o f i l e a r e v i s e d s e c o n d amended c o m p l a i n t on J u l y 16, 1980. The p r o p o s e d e f f e c t o f t h i s r e v i s i o n was t o make t e n c h a n g e s t o t h e s e c o n d amended c o m p l a i n t , such changes

being matters of style and correct usuage, rather than m a t t e r s of substance. T h i s m o t i o n was n o t i c e d f o r h e a r i n g on A u g u s t 6 , 1 9 8 0 .

Prior t o August 6, 1980, a l l defendants s e r v e d and f i l e d objections t o relators' motion f o r l e a v e t o f i l e t h e s e c o n d amended c o m p l a i n t r e v i s e d . A l l defendants requested sanctions or conditions be imposed upon relators in the alternative.

Following hearing on August 6, 1980, respondent

D i s t r i c t C o u r t r u l e d t h a t l e a v e was g r a n t e d t o r e l a t o r s t o file the second amended complaint (revised). The court

r e s e r v e d r u l i n g on t h e q u e s t i o n o f imposition of sanctions u n t i l f u r t h e r b r i e f i n g c o u l d be s u b m i t t e d by a l l p a r t i e s .

On September 24, 1980, respondent court granted t h e r e q u e s t f o r t e r m s by a w a r d i n g c o s t s t o d e f e n d a n t s . The award was limited by the court to the "expenses, costs, attorney fees and so forth that the defendants have i n c u r r e d " r e l a t i n g t o t h e r e v i s e d s e c o n d amended c o m p l a i n t .

Defendants requested that such information be presented t o t h e c o u r t by a f f i d a v i t s . The c o u r t r e q u e s t e d such a f f i d a v i t s from d e f e n d a n t s by O c t o b e r 7, 1980. The court then granted relators until October 13, 1980, to review the affidavits and decide whether to request a h e a r i n g r e g a r d i n g t h e c o s t s o r t o s i m p l y f i l e s o m e t h i n g on the record.

Defendants filed af f i d a v i t s of costs ranging from $209.28 t o $2,520. R e l a t o r s f i l e d a n a f f i d a v i t and m o t i o n s in opposition to claims for attorney fees on O c t o b e r 13, 1 9 8 0 , b u t f a i l e d t o r e q u e s t a h e a r i n g on t h e m a t t e r . Event u a l l y r e l a t o r s d i d f i l e a m o t i o n f o r a h e a r i n g on November 28, 1980. The motion, however, came af t e r the imposed

deadline; thus, the court took no action regarding the request. On November 28, 1980, the court awarded each d e f e n d a n t $150 p a r t i a l costs as a condition t o relators1 proceeding on the revised second amended complaint. The court further ordered t h a t s u c h a n award was n o t d u e t h e Montana Board of Land Commissioners or Westmoreland Resources because those defendants had not filed any responsive pleadings i n the matter. R e l a t o r s were r e q u i r e d to make payment within thirty days after entry of the j udgment . On December 22, 1980, relators deposited with the c l e r k of t h e c o u r t f i v e c h e c k s i n t h e amount o f $150 e a c h , p a y a b l e t o t h e f i v e s e p a r a t e law f i r m s h a n d l i n g t h e a c t i o n for defendants. The c h e c k s w e r e d e p o s i t e d w i t h t h e e x p r e s s r e s e r v a t i o n t h a t t h e y w e r e t o be d e l i v e r e d o n l y i f t h e c o u r t i n d i c a t e d t h a t t h e amount r e c e i v e d was i n f u l l s a t i s f a c t i o n of its order. T h e s e c h e c k s , however, were never d e l i v e r e d

t o d e f e n s e c o u n s e l b e c a u s e on J a n u a r y 9 , 1 9 8 1 , J u d g e Henson wrote r e l a t o r s 1 counsel, i n f o r m i n g him t h a t r e l a t o r s w e r e r e q u i r e d t o p a y e a c h d e f e n d a n t d e s i g n a t e d by t h e o r d e r $ 1 5 0 , n o t e a c h l a w f i r m i n v o l v e d ( a t o t a l award o f $ 2 , 4 0 0 ) . Subsequently, various defendants f i l e d motions for d i s m i s s a l because of r e l a t o r s 1 noncompliance w i t h t h e o r d e r

o f November 2 8 , 1980. On J a n u a r y 3 0 , 1 9 8 1 , r e l a t o r s f i l e d t h i s p e t i t i o n f o r w r i t of s u p e r v i s o r y c o n t r o l r e g a r d i n g t h e order awarding c o s t s a s a condition t o p r o c e e d i n g on t h e r e v i s e d s e c o n d amended c o m p l a i n t . T h e r e have been two i s s u e s submitted t o t h i s Court

f o r review:

1. Is a w r i t o f s u p e r v i s o r y c o n t r o l a n a p p r o p r i a t e

form o f j u d i c i a l r e v i e w i n t h i s i n s t a n c e ? 2. Did t h e D i s t r i c t C o u r t a b u s e i t s d i s c r e t i o n in awarding " c o s t s " t o defendants a s a c o n d i t i o n t o r e l a t o r s ' p r o c e e d i n g on t h e s e c o n d amended c o m p l a i n t ( r e v i s e d ) ? Relators contend g e n e r a l l y t h a t t h e r e i s no d i r e c t appeal or other remedial procedure available in this instance. Moreover, if review is n o t granted under the p e t i t i o n o r t h e award n o t p a i d , r e l a t o r s w i l l be d e n i e d t h e r i g h t t o have t h e i r c o m p l a i n t d e t e r m i n e d i n a c c o r d a n c e w i t h due p r o c e s s of law, thereby resulting in gross injustice, o p p r e s s i o n and i r r e p a r a b l e i n j u r y .

Regarding t h e second i s s u e r e l a t o r s contend t h a t t h e D i s t r i c t C o u r t h a s no a u t h o r i t y t o impose s a n c t i o n s a g a i n s t a p a r t y a s a c o n d i t i o n t o a l l o w i n g p r o p o s e d amendments t o

its pleadings. Even i f t e r m s c a n be i m p o s e d , t h e D i s t r i c t C o u r t ' s a w a r d i n g o f " a t t o r n e y f e e s , " a s o p p o s e d t o t h e award o f " i n c i d e n t a l c o s t s , " was i m p r o p e r . Furthermore, s i n c e t h e d e f e n d a n t s have n o t b e e n p r e j u d i c e d by t h e amendments and since relators have not engaged i n g r o s s misconduct, the i m p o s i t i o n o f s a n c t i o n s c a n n o t be j u s t i f i e d . Respondent contends f i r s t t h a t t h e r e l i e f asked f o r by r e l a t o r s i s n o t a p r o p e r a r e a f o r a w r i t o f s u p e r v i s o r y

control. The o r d e r awarding "costs" is interlocutory in nature and does not present extraordinary or compelling c i r c u m s t a n c e s beyond s i m p l y r e q u i r i n g r e l a t o r s t o p r o c e e d t o trial. The i s s u e r a i s e d by r e l a t o r s c a n e a s i l y be r a i s e d on appeal after a trial has been had on the merits and a

judgment r e n d e r e d t h e r e o n .

R e s p o n d e n t f u r t h e r c o n t e n d s t h a t a u t h o r i t y t o impose c o n d i t i o n s on r e l a t o r s ' r e q u e s t t o amend t h e i r c o m p l a i n t i s drawn f r o m t h e language i n Rule 1 5 ( a ) , M.R.Civ.P., which provides t h a t ". . . a p a r t y may amend h i s p l e a d i n g s o n l y by l e a v e o f c o u r t o r by w r i t t e n c o n s e n t o f t h e a d v e r s e p a r t y ;

and l e a v e s h a l l b e f r e e l y g i v e n when j u s t i c e s o r e q u i r e s . " Thus, the District Court i s empowered to act as justice requires, to safeguard the parties from prejudice by

imposing such t e r m s a s a r e j u s t upon t h e p a r t y r e q u e s t i n g t h e amendment. Here, d e f e n d a n t s have been p r e j u d i c e d t o t h e extent of incurring substantial costs as a result of relators' desire to expand their complaint to include a d d i t i o n a l l e g a l t h e o r i e s and r e l i e f , t h e r e b y j u s t i f y i n g t h e imposition of terms. R e s p o n d e n t r a i s e s a t h i r d i s s u e on a p p e a l : Did t h e

r e l a t o r s w a i v e any r i g h t t o an e v i d e n t i a r y h e a r i n g on t h e award to be given, either by failing to make a timely r e q u e s t f o r s u c h a h e a r i n g o r by a t t e m p t i n g t o comply w i t h the D i s t r i c t Court's order? The i s s u e , however, need n o t b e discussed further in that relators have stated in their

r e p l y b r i e f t h a t t h e y do n o t s e e k a h e a r i n g on t h e amount o f the award to be granted under the court's order. The relators' s o l e c o n t e n t i o n i s t h a t no amount c a n be p r o p e r l y

awarded u n d e r t h e c i r c u m s t a n c e s , a n d , t h u s , a h e a r i n g i s n o t required. Proper judicial administration requires freedom of action by the District Court prior to trial and n o n i n t e r f e r e n c e on o u r p a r t a t t h i s s t a g e o f t h e p r o c e e d i n g . S t a t e e x r e l . Kosena v . D i s t r i c t C o u r t ( 1 9 7 7 ) , 1 7 2 Mont. 2 1 , 560 P.2d 522. The i n s t i t u t i o n o f a n o r i g i n a l p r o c e e d i n g i n

t h i s Court seeking a writ of supervisory control can be

justified, however, when t h e r e is no d i r e c t a p p e a l o r o t h e r remedial procedure available to provide relief from the District Court's action and when extraordinary and compelling circumstances are presented. See Rule 17 ( a ) , M.R.App.Civ.P. I n t h i s i n s t a n c e , no d i r e c t a p p e a l is a v a i l a b l e f r o m t h e o r d e r r e q u i r i n g r e l a t o r s t o p a y t h e award t o d e f e n d a n t s

a s a c o n d i t i o n t o a l l o w i n g t h e amendment o f t h e i r c o m p l a i n t . Furthermore, we find that extraordinary circumstances a r e p r e s e n t which r e q u i r e a n i n q u i r y i n t o t h e D i s t r i c t C o u r t ' s

proceedings prior to trial and final judgment. If we d e c l i n e d t o review t h e matter a t t h i s s t a g e , r e l a t o r s could be precluded from proceeding on all counts they deem necessary for appropriate relief, resulting in a possible improper d e n i a l of t h e i r r i g h t of a c c e s s t o t h e c o u r t s . The major issue in this proceeding is whether the

D i s t r i c t C o u r t was w i t h i n i t s j u r i s d i c t i o n i n i m p o s i n g t e r m s upon the allowance of relators' amended complaint. Rule 1 5 ( a ) , M.R.Civ.P., provides i n part:

". . . O t h e r w i s e a p a r t y may amend his p l e a d i n g o n l y by l e a v e o f t h e c o u r t o r by w r i t t e n consent of t h e adverse p a r t y ; and l e a v e s h a l l b e f r e e l y g i v e n when j u s t i c e so requires."

R u l e 1 5 ( a ) , M.R.Civ.P., a s c i t e d above, is i d e n t i c a l t o R u l e 1 5 ( a ) o f t h e f e d e r a l r u l e s u n d e r which it i s w i d e l y h e l d t h a t i t is w i t h i n a c o u r t ' s d i s c r e t i o n t o impose t e r m s or c o n d i t i o n s upon g r a n t i n g a m o t i o n f o r l e a v e t o amend. S e e Key P h a r m a c e u t i c a l s , I n c . v . Lowey (S.D. N . Y . 1 9 7 2 ) , 54 F.R.D. 447; S h e r r e l l v . M i t c h e l l Aero, I n c . ( D . Wisc. 1971), 3 4 0 F.Supp. 219; Thermodynamics C o r p . v . Union C a r b i d e C o r p .

(D. N.H. 1 9 6 7 ) , 42 F . R . D . 607; Jacobs v. McCloskey & Co.

(E.D. Pa. 1 9 6 6 ) , 40 F.R.D. 486. Comments and r e a s o n s f o r u p h o l d i n g s u c h an e x e r c i s e o f d i s c r e t i o n i s f u l l y d i s c u s s e d i n 6 Wright & M i l l e r , F e d e r a l P r a c t i c e and P r o c e d u r e , C i v i l

"Rule 1 5 ( a ) g i v e s t h e c o u r t e x t e n s i v e d i s c r e t i o n t o d e c i d e whether t o g r a n t l e a v e t o amend a f t e r t h e t i m e f o r amendment a s o f course has passed. I n a d d i t i o n , a number o f c o u r t s h a v e c o n c l u d e d t h a t i t g i v e s them authority to impose conditions when p e r m i s s i o n t o amend i s a l l o w e d . . . The s t a t e m e n t i n R u l e 1 5 ( a ) t h a t ' l e a v e s h a l l be f r e e l y g i v e n when j u s t i c e s o r e q u i r e s ' p r e s u p p o s e s t h a t t h e c o u r t may u s e i t s d i s c r e t i o n t o impose c o n d i t i o n s on t h e a l l o w a n c e o f a p r o p o s e d amendment a s a n a p p r o p r i a t e means o f b a l a n c i n g t h e i n t e r e s t s o f t h e p a r t y s e e k i n g t h e amendment and t h o s e o f t h e p a r t y o b j e c t i n g t o i t . The i m p o s i t i o n of terms o f t e n w i l l f u r t h e r t h e r u l e ' s l i b e r a l amendment p o l i c y . If the party o p p o s i n g t h e amendment c a n b e p r o t e c t e d by t h e use of c o n d i t i o n s from any p o s s i b l e prejudice t h a t might result from t h e u n t i m e l i n e s s o f t h e amendment, t h e r e i s no j u s t i f i a b l e reason for not allowing i t . "

S e e a l s o 3 M o o r e ' s F e d e r a l P r a c t i c e tl15.08 [ 6 ] . As a result of the District Court's discretion to

impose t e r m s , t h e q u e s t i o n now becomes w h e t h e r t h e c o u r t i n t h i s i n s t a n c e abused its d i s c r e t i o n . In t h i s regard, the m o s t i m p o r t a n t f a c t o r , and p e r h a p s t h e m o s t f r e q u e n t r e a s o n g i v e n f o r d e n y i n g l e a v e t o amend, is t h a t t h e o p p o s i n g p a r t y w i l l be p r e j u d i c e d i f t h e movant i s p e r m i t t e d t o a l t e r h i s

pleading. Mitchell v. Mitchell ( 1 9 7 6 ) , 1 6 9 Mont. 1 3 4 , 545 P.2d 6 5 7 . O t h e r f a c t o r s t o be c o n s i d e r e d a r e t h e good f a i t h of the party seeking the amendment, the reasons for the movant's delay, and t h e l e n g t h o f the delay. M i t c h e l l v. Mitchell, supra; 6 Wright & Miller, F e d e r a l P r a c t i c e and Procedure, C i v i l 55 1487, 1488. H e r e , t h e o r i g i n a l c o m p l a i n t was f i l e d on A u g u s t 3 1 ,

1979. The complaint alleged that certain coal leases e n t e r e d i n t o by d e f e n d a n t S t a t e Board o f Land C o m m i s s i o n e r s

and t h e remaining d e f e n d a n t s were v o i d a b l e o r void. The c o m p l a i n t was grounded on the theory that t h e Board, by e n t e r i n g i n t o l e a s e s which p r o v i d e d f o r a r o y a l t y r a t e b e l o w f u l l market value, was i n v i o l a t i o n of s e c t i o n 77-3-315, MCA, a n d , t h u s , was i n b r e a c h o f t r u s t r e s p o n s i b i l i t i e s owed to relators. R e l a t o r s prayed t h a t t h e D i s t r i c t Court i s s u e a d e c l a r a t o r y judgment a d j u d i c a t i n g t h e d u t y o f t h e Board o f Land C o m m i s s i o n e r s t o o b t a i n t h e f u l l m a r k e t v a l u e o f the l a n d and d e c l a r i n g t h e l e a s e s n u l l and v o i d f o r t h e B o a r d ' s f a i l u r e t o a b i d e by t h i s d u t y . Certain plaintiffs were dismissed from the proceedings and additional plaintiffs and d e f e n d a n t s w e r e j o i n e d by o r d e r o f t h e c o u r t and s t i p u l a t i o n o f t h e p a r t i e s i n amended c o m p l a i n t s f i l e d on J a n u a r y 1 7 , 1980 and March 20, 1 9 8 0 . No a d d i t i o n a l a l l e g a t i o n s o r t h e o r i e s c h a l l e n g i n g the validity of the leases were included in these complaints. On J u n e 1 8 , 1 9 8 0 , r e l a t o r s f i l e d t h e i r m o t i o n

f o r l e a v e t o f i l e t h e s e c o n d amended c o m p l a i n t . T h i s motion was made after all but four of the defendants had filed responsive pleadings to the allegations and grounds for r e l i e f s e t f o r t h i n t h e o r i g i n a l and amended c o m p l a i n t .

The s e c o n d amended c o m p l a i n t a g a i n a l l e g e d t h a t t h e c o a l l e a s e s were v o i d o r v o i d a b l e . Relators, however, in s u p p o r t i n g t h e a l l e g a t i o n expanded t h e t h e o r y o f t h e i r case to include the following contentions not previously presented t o t h e court: (1) The B o a r d , by e n t e r i n g i n t o t h e l e a s e s , had a c t e d

i n v i o l a t i o n of Art. X, S e c t i o n 11, 1 9 7 2 M o n t . C o n s t . ; of section 81-501 through 81-551, R.C.M. 1947 (sections 77-3-301 through 77-3-321, MCA) ; section 81-103, R.C .M.

1947 ( s e c t i o n s 77-1-202 and 77-1-203(1), MCA); section 77-1-102, MCA; and t h e l a w s o f t h e S t a t e o f Montana and t h e United States relating to the powers and obligations of trustees. ( 2 ) The Board h a s v i o l a t e d i t s t r u s t r e s p o n s i b i l i t i e s i n w a s t i n g t h e a s s e t s o f t h e t r u s t by removing t h e s u b j e c t of the trust ( c o a l d e p o s i t s ) from t h e c o m p e t i t i v e m a r k e t , wherein a g r e a t e r royalty r a t e could be o b t a i n e d , for an unconscionable p e r i o d of t i m e . (3) The Board has further violated its trust r e s p o n s i b i l i t i e s by f a i l i n g t o e f f e c t a f o r f e i t u r e o f the l e a s e s on t h e b a s i s t h a t t h e d e f e n d a n t l e s s e e s h a v e b r e a c h e d a n i m p l i e d c o v e n a n t t o d e v e l o p , p r o d u c e and m a r k e t t h e c o a l . (Defendant l e s s e e s a l l e g e d l y have y e t t o develop t h e land for coal production.) ( 4 ) The B o a r d , by g r a n t i n g a u n i l a t e r a l , preemptory r i g h t of t e r m i n a t i o n t o defendant l e s s e e s without r e c e i v i n g a similar right, has unreasonably relinquished control of t r u s t a s s e t s without mutuality or consideration. ( 5 ) The r o y a l t y r a t e s i n t h e l e a s e d o n o t r e p r e s e n t

f u l l and f a i r m a r k e t v a l u e a s compared w i t h o t h e r r o y a l t i e s on c o n t i g u o u s o r s i m i l a r l a n d . The l e a s e s h a v e t h u s r e d u c e d t h e f u l l market value of the estate constituting a direct v i o l a t i o n o f t h e p u r p o s e o f t h e t r u s t t o o b t a i n t h e maximum benefit for its beneficiaries. I n a d d i t i o n t o expanding t h e t h e o r y of t h e i r a c t i o n , relators' s e c o n d amended c o m p l a i n t a l s o e x p a n d e d t h e p r a y e r for relief to include a request for a writ of mandamus

c o m p e l l i n g t h e Board t o v o i d t h e l e a s e s and t o make t h e l a n d

a v a i l a b l e f o r new and r e n e g o t i a t e d l e a s e s . Upon receiving the motion for leave to file this

amended c o m p l a i n t , d e f e n d a n t s o b j e c t e d and a r g u e d t h a t , if

leave was granted, it should be made conditional. Defendants' request was based on a contention that by allowing the amendment, t h e y would be prejudiced to the e x t e n t of incurring substantial costs. The D i s t r i c t C o u r t agreed with defendants' position and imposed terms in g r a n t i n g r e l a t o r s ' motion. I n t h e i r p e t i t i o n f o r a w r i t of supervisory control r e l a t o r s a r g u e t h a t s i n c e f o r m a l d i s c o v e r y p r o c e e d i n g s had not been instituted e . , interrogatories served or d e p o s i t i o n s t a k e n ) and s i n c e t h e c a s e had n o t b e e n s e t f o r t r i a l o r b r i e f i n g on t h e m e r i t s , t h e r e was no p r e j u d i c e t o defendants c a u s e d by f i l i n g t h e s e c o n d amended c o m p l a i n t . The only retracing of effort required of defendants, m a i n t a i n s r e l a t o r s , would b e t o f i l e amended a n s w e r s . We find t h a t g e n e r a l l y t h e D i s t r i c t Court has the power to impose terms or c o n d i t i o n s on l e a v e to file an amended complaint. Relators argue, however, that the D i s t r i c t Court erred i n considering "attorney fees" as a

component o f the partial costs granted a s a condition to t h e i r amendment. I n s u p p o r t of t h e argument, r e l a t o r s r e l y upon the general rule adopted by t h i s Court t h a t in the absence of a contractual agreement or specific statutory authority, attorney fees are not recoverable. S e e Winer v . Jonal Corporation (1976), 1 6 9 Mont. 247, 545 P.2d 1094; K i n t n e r v . H a r r ( 1 9 6 5 ) , 1 4 6 Mont. 461, 408 P.2d 487. R e l a t o r s have p r o p e r l y set f o r t h t h e g e n e r a l r u l e i n

r e g a r d t o a n award o f a t t o r n e y f e e s . It s h o u l d be n o t e d ,

however, t h a t t h e r u l e h a s b e e n e x p a n d e d t o i n c l u d e a l l o w i n g attorney fees in spite of the absence of any specific statute or contractual agreement, solely upon equitable grounds. S e e Means v . Montana Power Company (1981), - Mont. , 625 P.2d 32, 38 S t . R e p . 351. I t is upon t h i s

same i n h e r e n t e q u i t a b l e power t h a t o t h e r c o u r t s h a v e a l l o w e d t h e i m p o s i t i o n o f a n award o f a t t o r n e y f e e s a s a c o n d i t i o n t o amendment. See M a t l a c k , Inc. v. Hupp C o r p o r a t i o n ( E . D . Pa. 1 9 7 2 ) , 57 F . R . D . 1 5 1 ; M i r a b e l l a v . Banco I n d u s t r i a l d e l a Republics A r g e n t i n a (1970), 34 A p p . D i v . 2 d 630, 309 N.Y.S.2d 400; W i l l i a m v . Myer ( 1 9 0 7 ) , 150 Cal. 714, 89 P . 972. I f , under a l l of t h e c i r c u m s t a n c e s o f a c a s e , j u s t i c e would require the imposition of costs as a condition t o a l l o w i n g an amendment, e q u i t y c a n f u r t h e r , i n e x t r e m e c a s e s , allow, as an element of those costs, attorney fees.

P r e j u d i c e t o a p a r t y i n t h i s k i n d o f c a s e r e s u l t i n g from a n amended complaint is n o t limited solely t o general costs expended i n u n d e r t a k i n g a d d i t i o n a l p r e p a r a t i o n b u t o b v i o u s l y c a n i n c l u d e a t t o r n e y f e e s expended i n r e s p o n d i n g t o i s s u e s or t h e o r i e s not previously asserted. T h i s d i s c r e t i o n by t h e c o u r t , however, s h o u l d b e c a r e f u l l y and s p a r i n g l y u s e d and t h e c o u r t s h o u l d be c a r e f u l t h a t a s p i n - o f f does not develop which would o r c o u l d d e n y t h e a d v e r s e p a r t y a c c e s s t o t h e c o u r t and a f a i r t r i a l on t h e m e r i t s . Relators' final argument i s t h a t t h e $150 award t o each defendant is unsupported, unreasonable, and amounts t o a c l e a r a b u s e o f d i s c r e t i o n by t h e D i s t r i c t C o u r t . Due t o r e l a t o r s ' f a i l u r e t o timely request a hearing

o n t h e m a t t e r , t h e o n l y e v i d e n c e upon which t h e award c o u l d

be based is contained i n t h e a f f i d a v i t s s u b m i t t e d by t h e parties listing the costs incurred as a result of the amendment. The total costs listed in the affidavits (including attorney fees) ranged from $209.28 to $2,520. T h e s e c l a i m s r e p r e s e n t e x p e n d i t u r e s made by t h e v a r i o u s l a w firms, which in some instances represent more than one defendant. It would appear that the claims have been i n f l a t e d w i t h i n a p p r o p r i a t e e x p e n d i t u r e s ( i . e . , e x p e n s e s and fees for a l l services a s t o a l l pleadings t o date, not j u s t t h o s e e x p e n s e s and f e e s r e l a t e d t o t h e f i l i n g o f t h e s e c o n d amended c o m p l a i n t ) . T h i s , however, d o e s n o t i n v a l i d a t e t h e $150 a s s e s s m e n t , a t l e a s t m a t h e m a t i c a l l y .

As indicated herein, we affirm the District Court's authority to impose conditions on a request to amend pleadings, a s o r when j u s t i c e r e q u i r e s . The i m p o s i t i o n o f s u c h s a n c t i o n s , h o w e v e r , r e q u i r e s a showing o f e x t r a o r d i n a r y prejudice. W do n o t f i n d s u f f i c i e n t s t r e n g t h i n t h e r e c o r d e

here to support this degree of prejudice; nor did all parties suffer the same kind or amount of prejudice. T h e r e f o r e , t h e o r d e r i m p o s i n g c a s h s a n c t i o n s i s v a c a t e d and set aside, without prejudice, so that the matter c a n be r a i s e d on a n a p p e a l , i f a p p r o p r i a t e .

We concur:

4 D'strict Judge, sitting in p ace of Mr. Chief Justice Frank I. Haswell