Fraud-Based Rescission for Misrepresented Lease Term & Waiver of Affirmative Defenses Not Raised at Bench Trial
(Shepard v. Bickham, 2026 MT 221N)

I. Introduction

Parties. Plaintiff/Appellee Bryan Jon Shepard (“Bryan”) sued Defendants/Appellants Bickham Properties, LLC, Amy Bickham, Justin Bickham, and Jessica Bickham (collectively, “Bickham Defendants”).

Background. Bryan, a lifelong resident of a Billings home (Frances Avenue), entered a rapid relationship with Amy. Amy urged Bryan to sell his home to her ex-husband Justin, who formed Bickham Properties in anticipation of the purchase. At a signing meeting, Justin presented multiple documents and represented Bryan would receive a rent-free lease in his own name to ensure housing if Bryan and Amy separated. Bryan signed without reading, after Amy advised him to “trust” Justin.

Core dispute. Bryan alleged fraud in the inducement—that he was induced to sign a contract for deed and related instruments by misrepresentations (particularly the promised rent-free lease). He sought rescission. After a bench trial, the District Court found actual fraud, concluded Bryan’s consent was not “real or free” under § 28-2-401(c), MCA, rescinded the transaction, and ordered restoration of value received under § 28-1-1713, MCA.

Issues on appeal. The Supreme Court considered (1) whether substantial credible evidence supported the District Court’s finding of actual fraud, and (2) whether the District Court erred by not addressing affirmative defenses (waiver, estoppel, ratification) that were pleaded but not argued at trial.

II. Summary of the Opinion

The Court affirmed. It held there was substantial credible evidence supporting each of the nine common-law elements of fraud (as articulated in Franks v. Kindsfather) based on the misrepresentation that Bryan would receive a rent-free lease in his own name as part of the deal.

The Court also held the Bickham Defendants’ affirmative defenses were waived for appeal because they were not raised during the bench trial, relying on preservation principles and Hansen Trust v. Ward. The Court rejected Appellants’ “meeting of the minds” argument as undeveloped and, in any event, self-defeating: if no meeting of the minds, then no enforceable agreement conferring an interest in the property.

A concurrence by Chief Justice Swanson underscored that “meeting of the minds” is not the operative framework; contract formation is analyzed under the statutory elements in § 28-2-102, MCA, and “consent” is assessed objectively, consistent with Chipman v. Nw. Healthcare Corp.

III. Analysis

A. Precedents Cited (and How They Shaped the Decision)

1. Appellate record and deciding cases on the merits

• In re Marriage of Hodge — Cited for the principle that an appellant challenging findings of fact must provide a transcript under M. R. App. P. 8 or be precluded from arguing insufficiency of evidence. The Court noted the late transcript filing but proceeded.
• Carter v. Badrock Rural Fire Dist.; Whitefish Credit Union v. Sherman; Engelsberger v. Lake Cnty. — Invoked to support the Court’s preference to decide cases on the merits where possible and efficient, informing the Court’s choice to reach the merits despite transcript timing.

2. Standards of review and evidentiary sufficiency

• Only A Mile, LLP v. State — Provided the bench-trial review framework: uphold findings supported by substantial credible evidence, view evidence favorably to the prevailing party, and defer to trial-court credibility determinations.
• Pedersen v. Ziehl — Reinforced “clearly erroneous” review for findings of fact and correctness review for conclusions of law.
• Blaine Cnty. v. Stricker — Defined “substantial credible evidence” as evidence a reasonable mind might accept as adequate to support a conclusion.

These cases collectively constrained the Supreme Court’s role: it would not reweigh Justin’s testimony against contrary evidence but would ask whether the District Court had an adequate evidentiary basis for its fraud findings.

3. Fraud elements and burden of proof

• Franks v. Kindsfather — Supplied the nine-element common-law fraud test used to evaluate the misrepresentation about the lease.
• Sandman v. Farmers Ins. Exch. — Cited for the burden: a preponderance of the evidence is necessary to establish fraud’s elements.

The Court then methodically matched trial evidence (including testimony from Bryan and Amy, and admissions by Justin) to each Franks element. This structured approach anchored the affirmance: once substantial credible evidence supported each element, the fraud finding stood.

4. “Meeting of the minds” and contract formation

• Jarussi v. Sandra L. Farber Tr.; Glob. Client Sols., LLC v. Ossello; Keesun Partners v. Ferdig Oil Co.; Hilbig v. Cent. Glass Co. — Cited for the proposition that absent a meeting of the minds there is no enforceable agreement. The Court used these citations chiefly to show Appellants’ argument was unhelpful: suggesting no meeting of the minds undercuts their claimed property interest.
• Chipman v. Nw. Healthcare Corp. (concurrence) — Emphasized that consent is assessed by objective manifestations, not “subjective, undisclosed intent.”

The concurrence further reframed the debate: rather than metaphysical “mind meeting,” Montana’s contract formation turns on the statutory elements in § 28-2-102, MCA, especially objective consent.

5. Preservation of issues and affirmative defenses

• State v. Akers — Appellants relied on this criminal-case authority to argue affirmative defenses must be addressed. The Court distinguished it: Akers involved statutorily required jury instructions and the defense was actually argued at trial.
• Hansen Trust v. Ward — Used to hold that affirmative defenses not raised at trial are waived for purposes of appeal, even if pleaded.

This set of authorities supplied the doctrinal basis for the Court’s key procedural holding: pleading defenses is not enough; the trial court must be given a fair opportunity to consider and rule on them.

B. Legal Reasoning

1. Fraud as vitiating consent and justifying rescission

The District Court found Bryan’s consent was not “real or free” due to fraud under § 28-2-401(c), MCA, and the Supreme Court affirmed. The Supreme Court’s analysis centered on one misrepresentation: Justin’s promise that Bryan would receive a rent-free lease in his name, which the District Court found to be part of the transaction and material to Bryan’s decision to sign.

Applying the Franks v. Kindsfather elements, the Supreme Court identified substantial credible evidence supporting:

• Representation — testimony from Bryan and Amy, plus Justin’s own acknowledgment that he discussed a lease while presenting documents.
• Falsity and knowledge — no lease was included in signed documents; no lease was provided; Justin’s testimony about “rental credits” supported an intent not to deliver the promised rent-free lease.
• Materiality and reliance — Bryan would not have sold without assured housing; he relied on the promise in signing.
• Right to rely — the context of negotiations (including admitted messages about a lease) made reliance reasonable.
• Damages/injury — conveying a home valued at about $110,000 for $5,000 and older vehicles established financial injury.

2. Appellate deference to trial-court credibility

A central move in the Court’s reasoning was to refuse reweighing credibility. Justin’s appellate framing—“just a disagreement over transaction scope”—was treated as a request to retry facts on appeal. Under Only A Mile, LLP v. State and Pedersen v. Ziehl, that is not the Supreme Court’s role.

3. Preservation: affirmative defenses pleaded but not tried

The Supreme Court held the District Court did not err by not analyzing waiver/estoppel/ratification because those defenses were not raised during the bench trial. The Court grounded this in the preservation principle articulated in State v. Akers (fairness to the trial court) and applied Hansen Trust v. Ward to conclude the defenses were waived on appeal.

Importantly, the Court rejected the idea that “scant facts” in the record—without argument—force a trial court to address affirmative defenses. The functional rule applied is: issues must be affirmatively litigated, not merely pleaded, to be preserved.

4. The “meeting of the minds” detour

The majority treated the “meeting of the minds” argument as both under-supported (no authority developed) and counterproductive. The concurrence went further, cautioning against using “meeting of the minds” as a substitute for analyzing consent under § 28-2-102, MCA and objective manifestations under Chipman v. Nw. Healthcare Corp.

C. Impact

1. Practical guidance in fraud-and-rescission litigation

Although noncitable, the decision signals how Montana courts may approach a common real-estate fact pattern: a written conveyance coupled with alleged oral promises (here, a rent-free lease). The Court’s affirmation illustrates that a trial court can find fraud from a single material misrepresentation if the Franks elements are supported by substantial credible evidence.

2. Preservation warning for affirmative defenses

The most practice-shaping component is procedural: pleading waiver/estoppel/ratification is insufficient if counsel does not actually present and argue the defenses at trial. This incentivizes:

• explicitly identifying the defenses in opening, evidence presentation, and closing;
• requesting findings/conclusions on the defenses in bench trials; and
• creating a record showing the trial court was asked to decide the issue.

3. Clarifying contract-formation rhetoric

The concurrence’s emphasis—contract formation through statutory elements and objective consent rather than “meeting of the minds”—may shape how litigants frame arguments, pushing toward evidence of outward assent, disclosures, and inducement rather than subjective intent narratives.

IV. Complex Concepts Simplified

• “Consent was not real or free” (§ 28-2-401(c), MCA). A contract requires genuine consent. If a party signs because they were deceived about an important term, the law treats that “consent” as defective.
• Actual fraud (§ 28-2-405, MCA). Fraud includes making false statements, hiding the truth, or promising something with no intent to perform—when done to induce another to enter the contract.
• Nine elements of fraud (Franks v. Kindsfather). Montana’s common-law checklist for fraud claims: a false, material statement; knowledge/ignorance; intent; reliance; a right to rely; and resulting harm.
• “Substantial credible evidence.” Not “proof beyond doubt,” but enough evidence that a reasonable person could accept it. If that standard is met, appellate courts generally defer.
• Rescission and restoration (§ 28-1-1713, MCA). Rescission aims to unwind the deal. The party rescinding typically must restore what they received (here, the value of vehicles).
• Waiver on appeal (issue preservation). An appellate court usually will not decide issues the trial court was never asked to decide. Pleading a defense without arguing it at trial risks losing it on appeal.
• “Meeting of the minds.” Often used colloquially, but Montana analysis focuses on statutory formation elements and objective manifestations of consent, not subjective mental alignment.

V. Conclusion

Key takeaways. The Montana Supreme Court affirmed rescission where substantial credible evidence supported that Bryan was induced to convey his home by a material misrepresentation—specifically, the promise of a rent-free lease in his name that was never provided. The Court also held that affirmative defenses (waiver, estoppel, ratification) were not preserved for appeal when they were pleaded but not raised during the bench trial.

Broader significance. Even as a nonprecedential memorandum opinion, Shepard v. Bickham illustrates two durable lessons in Montana civil practice: (1) a single, material, transaction-linked misrepresentation can support a fraud-based rescission when proven by a preponderance and supported by substantial credible evidence; and (2) preservation is an action, not a filing—affirmative defenses must be litigated, not merely listed in an answer.