author: JUSTICE HARRISON

text:
    CASSANDRA LEE SILVIS, a minor, through her parents and next friends, Susan Silvis and David Silvis, and SUSAN SILVIS and DAVID SILVIS, Plaintiffs and Appellants, v. JOHN M. HOBBS, JR., M.D., and SAINT VINCENT HOSPITAL AND HEALTH CENTER, INC., a Montana corporation, Defendants and Respondents.
    No. 91-002.
    Submitted on briefs Dec. 12, 1991.
    Decided Jan. 23, 1992.
    49 St.Rep. 62.
    251 Mont. 407.
    824 P.2d 1013.

      For Appellants: William A. Trine, Williams and Trine, Boulder, Colorado; A. Clifford Edwards, Edwards and Paoli, Billings, Montana.
    For Respondents: Robert C. Brown and Brendon J. Rohan, Poore, Roth & Robinson, Butte, Montana; Richard F. Cebull and John J. Russell, Brown, Gerbase, Cebull, Fulton, Harman, & Ross, Billings, Montana.
   JUSTICE HARRISON

delivered the Opinion of the Court.

Appellants Cassandra Silvis and her mother, Susan (Silvis) Griep, appeal the judgment entered by the Thirteenth Judicial District Court, Yellowstone County, Montana, based upon a jury verdict for the respondents, Dr. John M. Hobbs, Jr. and Saint Vincent Hospital. We affirm.

The sole issue presented for review is whether substantial evidence existed to support the jury verdict in favor of the respondents.

FACTS

On May 16, 1984, at approximately twenty-nine weeks gestation, Susan began experiencing complications in her pregnancy. She was admitted to Saint Vincent Hospital as a patient at risk because she complained of painless vaginal bleeding. The admitting nurse gathered sufficient information regarding Susan’s condition and called Dr. Hobbs, Susan’s treating obstetrician. Dr. Hobbs instructed the nurse regarding Susan’s care. The treatment plan focused on determining the cause of Susan’s bleeding.

The optimal place for a twenty-nine week old fetus is in the mother’s uterus. Therefore, the plan initiated by Dr. Hobbs and the nursing staff included “expectant management.” Nothing actively was being performed to deliver the baby hoping to keep it in the uterus as long as possible. Consistent with expectant management, the nursing plan included monitoring Susan’s vital signs and checking for abdominal pain and uterine contractions. An external fetal heart monitor was placed on Susan to monitor the fetal heart rate and record the activity in the uterus, including uterine contractions. A nurse removed the monitor after a few hours of operation.

Dr. Hobbs examined Susan the morning of May 16, 1984. Susan was not in labor. The nursing staff continued monitoring Susan and the fetus. Susan’s vital signs remained normal for a woman in her seventh month of pregnancy. Her vaginal bleeding also began to subside and she did not experience pain or uterine contractions. Further, the fetal heart rate was within normal range.

Early in the morning on May 17, 1984, the nurse assigned to care for Susan determined that the fetal heart rate had risen, but was still within the normal range. Mid-morning, Susan complained of menstrual type pain. Although the nurse could not feel uterine contractions, she immediately placed the external fetal heart monitor on Susan to chart uterine activity. Within an hour, Susan began having noticeable contractions. The nurse notified Dr. Hobbs who instructed her to wait and watch to determine if this was a self-limiting condition. Meanwhile, the fetal heart monitor showed that the fetus’ heart rate had risen and remained above normal for a period of time, a possible cause of concern.

Dr. Hobbs arrived at the hospital between 1:00 pm. and 2:00 p.m. on May 17th to examine Susan. Her water had broken and her cervix was slightly dilated, indicating the early stages of labor. No signs of vaginal bleeding existed.

Because Susan was beginning premature labor, Dr. Hobbs and Susan determined that she should be transferred to a hospital better prepared to care for a twenty-nine week old baby. Hospital personnel prepared to transfer Susan to a Salt Lake City hospital. At approximately 3:25 p.m., immediately prior to departure, Dr. Hobbs performed another examination on Susan; she was completely dilated, indicating that she progressed into a later stage of labor. Dr. Hobbs canceled the transfer and ordered an emergency cesarean section to deliver the baby.

Susan arrived in the operating room at 3:40 p.m. The anesthesiologist charted that the fetal heart rate was “ok now” and administered the spinal anesthesia at 3:42 p.m. After the anesthesia was administered and before Dr. Hobbs began the surgery, the fetal heart rate dropped well below normal. Dr. Hobbs began the surgery at 3:50 p.m. and Cassandra Silvis was bom at 3:54 pm.

Cassandra weighed 3 pounds 9k2 ounces at birth and was depressed; she had a heart rate but she was not breathing. A pediatrician immediately placed her on a respirator. Among other complications, Cassandra suffered from a brain hemorrhage, low blood pressure, jaundice, and acidosis. Further, Cassandra has been diagnosed as having cerebral palsy.

Appellants brought the underlying medical malpractice action against Dr. Hobbs and Saint Vincent Hospital seeking damages for injuries sustained by Cassandra. Appellants contend that the respondents’ negligence caused Cassandra’s injuries. Atrial spanning approximately thirteen days resulted in the jury’s finding that Dr. Hobbs and Saint Vincent Hospital did not act negligently in their care of Susan.

When the District Court submitted the case to the jury at the conclusion of the trial, the court submitted a Special Verdict form for the jury’s use in its deliberations. The pertinent portions of the Special Verdict form and the jury’s answers are as follows:

“4. Did the care provided by Dr. Hobbs’ [sic] to Susan Griep violate the duty or standard of care he owed to her?
“ANSWER:
“Yes No X
“GO TO QUESTION NO. 5.
“5. Did the care provided to Susan Griep by the nurses of St. Vincent Hospital violate the nursing duty or standard of care it owed to her?
“ANSWER:
‘Yes_No X
“NOTE TO THE JURORS: If you have answered both Question Nos. 4 and 5 with ‘NO,’ then do not answer any further questions. The foreperson should sign the Special Verdict form on page 5. The bailiff should be notified that the jury has concluded its deliberations and reached a verdict. The bailiff will then notify the judge and return you to the courtroom.”

By answering these questions in the negative, the jury concluded that Dr. Hobbs and the nursing staff acted appropriately on May 17 th, and were not negligent in their care and treatment of Susan.

After the court entered the jury’s verdict in respondents’ favor, appellants moved the District Court for a new trial based on insufficiency of the evidence. This motion was deemed denied under Rule 59(d), M.R.Civ.R, when the District Court failed to rule upon the motion within forty-five days of filings. Appellants appeal claiming substantial evidence did not exist to support the jury verdict. We affirm the jury verdict.

DISCUSSION

This Court’s function is not to agree or disagree with the jury’s verdict. Griffel v. Faust (1983), 205 Mont. 372, 376, 668 P.2d 247, 249. The function of this Cotut is to determine whether substantial evidence existed to support the verdict that Dr. Hobbs and Saint Vincent Hospital were negligence free. Buskirk v. Nelson (Mont. 1991), [250 Mont. 92,] 818 P.2d 375, 378, 48 St.Rep. 864, 865. Once we find substantial evidence in the record to support the verdict, our job is finished. Griffel, 205 Mont. at 376, 668 P.2d at 249. Substantial evidence is defined as that evidence which a reasonable mind might accept as adequate to support a conclusion. Buskirk, 818 P.2d at 378, 48 St.Rep. at 865. Substantial evidence can be based on weak and conflicting evidence, but the evidence must be greater than trifling or frivolous. Buskirk, 818 P.2d at 378, 48 St.Rep. at 865.

When determining whether substantial evidence existed to support the jury verdict, this Court reviews the evidence in a light most favorable to the party which prevailed at trial. If conflicting evidence is presented at trial, the credibility and weight given to the evidence is in the province of the jury, not this Court. Kukuchka v. Ziemet (1985), 219 Mont. 155, 157, 710 P.2d 1361, 1363. This Court cannot reweigh the evidence or disturb the jury’s findings -unless the findings are inherently impossible or improbable as not to be entitled to belief. Hash v. State (Mont. 1991), 807 P.2d 1363, 1365, 48 St.Rep. 277, 278. This Court will not retry this case because the jury chose to believe the respondents’ evidence over that of the appellants. It is within the jury’s province to adopt testimony presented on behalf of one side at the exclusion of the other. Kleinsasser v. Superior Derrick Serv., Inc. (1985), 218 Mont. 371, 374-75, 708 P.2d 568, 570; citing Tompkins v. Northwestern Union Trust Co. (1983), 198 Mont. 170, 645 P.2d 402, 408.

Reviewing the evidence in a light most favorable to the prevailing party, we direct our analysis to the evidence submitted by Dr. Hobbs and Saint Vincent Hospital. In the case at bar, the record shows that the jury verdict for the respondents is supported by substantial evidence.

All parties presented expert testimony regarding the standard of care with which doctors and morses should comply in a situation such as was presented to Dr. Hobbs and Saint Vincent’s nursing staff on May 17, 1984. Appellants’ expert witnesses testified that both Dr. Hobbs and the nursing staff were negligent because they provided sub-standard care to Susan which resulted in Cassandra’s injuries. More importantly, both Dr. Hobbs and Saint Vincent Hospital presented expert witnesses who testified that the care provided by Dr. Hobbs and Saint Vincent’s nursing staff was appropriate and within the standard of care.

Dr. Hobbs called Dr. Roger Spencer, an obstetrician, gynecologist, and subspecialist in high risk pregnancy, as an expert witness. Dr. Spencer testified that Dr. Hobbs’ care of Susan was excellent and met the standard of practice.

Dr. Donald Rommes, a neonatologist who specializes in the care of critically ill newborn babies, testified as an expert witness. Dr. Rommes testified that Dr. Hobbs’ care of Susan was appropriate. Additionally, he testified that he did not see anything in the medical records indicating that the nurses’ care was inappropriate.

Saint Vincent Hospital called Dr. Zane Brown and Judy Harmon, R.N., as expert witnesses. Dr. Brown testified that the nursing care provided to Susan by Saint Vincent’s nurses was appropriate. Nurse Harmon testified that the nursing care met or exceeded the applicable standard of care.

The foregoing evidence established a reasonable basis for the jury to support its conclusion; this evidence was admissible and credible. It supported the jury’s verdict and led the jury to conclude that neither Dr. Hobbs nor Saint Vincent Hospital was negligent.

We hold that the jury verdict was supported by substantial evidence. Accordingly, we affirm the judgment of the District Court based on the jury’s verdict in favor of the respondents.

CHIEF JUSTICE TURNAGE and JUSTICES TRIEWEILER, GRAY, and HUNT concur.


source: Caselaw Access Project

author: JUSTICE TRIEWEILER

license: Public Domain

text:
    BENJAMIN L. BROWN, Plaintiff and Appellant, v. FLOYD SMALL and JOHN C. DOUBEK, Defendants and Respondents.
    No. 90-625.
    Submitted on briefs July 25, 1991.
    Decided Jan. 28, 1992.
    49 St.Rep. 98.
    251 Mont. 414.
    825 P.2d 1209.

      For Appellant: Gerald J. Neely, Attorney at Law, Billings.
    For Respondent: Douglas A. Buxbaum and Mark Mattioli, Poore, Roth and Robinson, Butte.
   JUSTICE TRIEWEILER

delivered the opinion of the Court.

On March 17, 1988, Benjamin Brown filed a legal malpractice complaint against Floyd Small and John Doubek in the First Judicial District Court in Lewis and Clark County. The District Court granted summary judgment for Small and Doubek and dismissed the complaint on October 9, 1990. Brown appeals. We affirm.

The issues are:

1. Did the District Court err when it granted summary judgment against Brown on his claim of professional negligence?

2. Did the District Court err when it granted summary judgment against Brown on the portions of his complaint that attempted to reopen an earlier lawsuit that Brown had dismissed with prejudice?

In 1981, Brown owned several commercial properties in Helena, including the Denver Block Apartment Building. During the early morning of May 26, 1981, the Denver Block was badly damaged by fire. Brown, who had previously employed Helena attorney Carl Hatch, retained Hatch’s partners, Floyd Small and John Doubek, to assist him in recovering payment from his insurer. For a number of reasons, coverage was vigorously disputed.

Brown settled his claim with the insurer on August 19, 1981, for $315,000, and executed a settlement agreement. Claims against Brown’s recovery by other parties reduced Brown’s share to $109,963.80. Small and Doubek then charged Brown a contingent fee of $25,000. Brown claimed he had not agreed to a contingent fee, but he paid the fee despite his objection.

On March 15, 1984, Brown filed a complaint against Small and Doubek, alleging that they had overcharged him for their services. In that action, Brown claimed that by charging a contingent fee Small and Doubek had breached an oral contract to bill only by the hour. During the preparation of their defense in that action, Small and Doubek discovered that in 1980 Brown’s insurer had issued a midterm endorsement to Brown’s fire insurance policy on the Denver Block. The 1981 settlement with the insurer did not include the additional coverage available under this mid-term endorsement. The reasons why this endorsement was not originally considered are now disputed by the parties.

Small and Doubek then arranged for a settlement conference with Brown on March 19, 1985. Brown attended with his attorney R.J. Sewell, Jr., to whom he had transferred his business after leaving Small, Hatch, and Doubek. At this meeting, Doubek explained that he had come across “work product” that might result in recovering more money from Brown’s insurer. Doubek offered to use this “work product” on Brown’s behalf in exchange for Brown’s agreement to dismiss his complaint against Small and Doubek. Doubek refused to disclose the nature of the “work product” he had discovered.

Sewell protested vehemently. He took Brown aside and advised him that Brown should refuse to accept the offer. Sewell refused to sign any such agreement between Brown and his former attorneys and left the meeting.

Doubek had originally suggested that he could recover as much as $15,000 with the “work product.” Brown, however, insisted that he would not agree to dismiss the first lawsuit unless Doubek would promise to recover $20,000. Brown then signed an agreement in which he gave Small and Doubek four months to recover an additional $20,000 from the insurer. In this agreement, Brown specifically consented to a contingent fee arrangement. The agreement also provided that if Small and Doubek succeeded in recovering $20,000 from the insurer, Brown would dismiss his first lawsuit with prejudice.

Subsequently, Small and Doubek used the mid-term endorsement to recover another $112,500 from the insurer. It appears from the record that this amount was based at least in part on Brown’s allegation that his insurer had fraudulently and in bad faith concealed the existence of the mid-term endorsement. Brown further alleged that the insurer had misrepresented the available coverage as $277,200 instead of the true amount, $325,000. Brown netted almost $75,000 after deduction of costs and the contingent fee. On August 16, 1985, Brown stipulated to a dismissal of his first lawsuit with prejudice. Small and Doubek regarded the matter as finally settled.

Brown then filed the present complaint on March 17,1988. In this second lawsuit, Brown sought (1) damages for the allegedly negligent failure of Small and Doubek to discover the mid-term endorsement before the 1981 settlement with the insurance company; and (2) rescission of the 1985 settlement with Small and Doubek and reinstatement of the first lawsuit. The pretrial order clearly indicates that Brown was unprepared to present expert testimony on the standard of care applicable to Small and Doubek.

Both parties moved for summary judgment. The District Court granted summary judgment for Small and Doubek, noting that the new negligence theory was fatally flawed due to Brown’s failure to arrange for expert testimony and that reinstatement of the first lawsuit was barred under the doctrine of res judicata. The court then dismissed Brown’s complaint. It is from this order of summary judgment and dismissal that Brown appeals.

I

Did the District Court err in granting summary judgment on Brown’s claim of professional negligence?

Brown’s position on his negligence theory is inconsistent with the theory his agents used to obtain a second recovery from the insurance company. Acting as his attorneys, Small and Doubek filed a second action against Brown’s insurer. Pertinent portions of the complaint in that action read as follows:

“VIIL
“That ... [the insurer] did not fulfill its clear responsibility to [Brown] at the time of said resolution of the underlying claim by not informing [Brown] that the said endorsement was in effect when [Brown] submitted his proof of loss statement.
“IX.
“That said breach of responsibility was false, fraudulent, done in bad faith and for the purpose of producing a substantial loss to [Brown].
‘X.
“That [Brown] did in fact rely upon the false, fraudulent, and bad faith misrepresentations of [the insurer] to his detriment and was damaged thereby.” [Emphasis added.]

Small and Doubek settled this second action with the insurer for $112,500, and Brown accepted his share of almost $75,000 without protest. Now, however, he claims that it was the negligence of his attorneys, rather than the bad faith of the insurer, that resulted in the inadvertent exclusion of the mid-term endorsement from the first settlement with the insurance company. If the insurer actively concealed the endorsement in bad faith, it is difficult to see how Small and Doubek were negligent in not discovering it.

This attempt by Brown to take inconsistent positions is barred by judicial estoppel. In Rowland v. Klies (1986), 223 Mont. 360, 726 P.2d 310, we said:

“Judicial estoppel may arise when a person has taken a position or asserted a fact under oath in a judicial proceeding contrary to the position he is taking in the present litigation ... The rule’s purpose is to suppress fraud and prevent abuse of the judicial process by deliberate shifting of positions to suit the exigencies of a particular action, and it will not be applied when the previous act or statement is uncertain or based on undetermined facts, but only when it is clear and certain.” (Citations omitted.) [Emphasis added.]”

Rowland, 726 P.2d at 316 (quoting LaChance v. McKown (Tex. Ct. App. 1983), 649 S.W.2d 658, 660). In Rowland, we applied judicial estoppel against a party who sought to take a position contrary to an earlier sworn affidavit. Rowland, 726 P.2d at 316.

Judicial estoppel is equally applicable to a party like Brown who seeks to take a position contrary to his pleadings in an earlier judicial proceeding. Fey v. A.A. Oil Corp. (1955), 129 Mont. 300, 323, 285 P.2d 578, 590. The doctrine applies with additional force here because Brown’s allegation in the second complaint against the insurer resulted in a net recovery by him of almost $75,000. After accepting the benefits of that allegation, Brown cannot now change his position and allege that negligence by Small and Doubek was the real reason they did not discover the mid-term endorsement sooner.

Furthermore, Brown failed to alleviate this apparent inconsistency by arranging for expert testimony. In Carlson v. Morton (1987), 229 Mont. 234, 745 P.2d 1133, we held that expert testimony is ordinarily required in legal malpractice cases. We said:

“To expect a jury to sit through hours of examination and cross-examination, without the guidance of an attorney’s expert testimony and then arrive at a verdict consistent with the evidence is asking much. This is not because the average juror is not capable of understanding such matters but only because he or she has never had the occasion or desire to study such matters. The attorney’s standard of care depends upon the skill and care ordinarily exercised by attorneys, a criteria that rarely falls within the common knowledge of laymen....
“It is true that there are instances in which legal malpractice actions have been submitted for fact determination without the use of expert testimony. The theory in such cases is that the attorney’s misconduct is so obvious that no reasonable juror could not comprehend the lawyer’s breach ofduty.“ [Emphasis added.]

Carlson, 745 P.2d at 1137.

Brown attempts to bring his case within the exception rather than the general rule by arguing that jurors would not need expert assistance in deciding “whether a lawyer hired to collect insurance proceeds ought to look at the piece of paper which says how much insurance there is.” We note, however, that the “piece of paper” to which Brown refers is the very same document he previously accused the insurance company of concealing from Small and Doubek in bad faith. Based on that inconsistent representation Brown has already been compensated.

In analyzing Brown’s argument that the case is too simple to require expert testimony, the District Court said:

“The allegations of Count One are very complicated. The allegations deal with matters of insurance coverage and an attorney’s duty to seek out the maximum coverage possible for his client for a loss. The allegations also deal with the duty owed a former client, since in the view of this Court, these parties were not in an attorney/client relationship in March 1985. Rather, on March 19, 1985, they were engaged in a hotly contested lawsuit and it cannot be said that the duty owed by Doubek to his former client Brown is one that is commonly known by lawyers, let alone by lay people.
“Indeed, the complexity of this matter can be seen by looking at page 5 of Plaintiff’s supplemental memorandum filed on September 14, 1990. At page 5, Plaintiff indicates that Doubek’s duty was to determine the existence, nature, and amount of any midterm endorsement to the primary policy issued after the primary policy. Plaintiff has not directed this Court to any authority that shows that this duty is commonly known to lay people.”

We agree. In a case such as this one, in which the plaintiff has already been compensated based upon an allegation that his insurer took affirmative steps to conceal the key document from the defendant attorneys, expert testimony on the standard of care is critical.

We hold that the District Court did not err when it granted summary judgment against Brown on his professional negligence claim on the basis of Brown’s failure to provide expert testimony.

II

Did the District Court err when it granted summary judgment against Brown on the portions of his complaint that attempted to reopen the earlier lawsuit that Brown had dismissed with prejudice?

In counts two through ten of the complaint in the case at bar, Brown sought to set aside the March 1985 settlement agreement and the accompanying dismissal with prejudice of the first lawsuit. Because Brown cannot resurrect the first lawsuit unless he can show grounds to set aside the dismissal, we turn first to the question of whether Brown has shown sufficient grounds for setting aside the dismissal. We conclude that he has not.

A party who seeks relief from a final order can either file a Rule 60(b) motion for relief or file an independent equitable action based on the grounds enumerated in that Rule’s residual clause. Rule 60(b), M.R.Civ.P. Brown has not filed a Rule 60(b) motion so we treat his action as arising under the residual clause. See Salway v. Arkava (1985), 215 Mont. 135, 695 P.2d 1302.

In Salway, we held that the residual clause of Rule 60(b) provides one who seeks relief from a judgment with three avenues of attack: extrinsic fraud, lack of personal notification, and fraud upon the court. Salway, 695 P.2d at 1305-06. We do not consider lack of personal notification here because it is inapplicable.

In Salway, we characterized extrinsic fraud as “some intentional act or conduct by which the prevailing party has prevented the unsuccessful party from having a fair submission of the controversy.” Salway, 695 P.2d at 1306. In this case, Brown was not misled by his former attorneys. He acted contrary to the advice of his new attorney based on what he perceived to be in his best interest at that time. Small and Doubek did not prevent him from obtaining a fair submission of the controversy. It was Brown’s own action in stipulating to the dismissal that resulted in the case not being submitted to the District Court. We conclude that Brown has not made out a case of extrinsic fraud.

Fraud upon the court is “that species of fraud which does or attempts to subvert the integrity of the court itself.” Salway, 695 P.2d at 1306. Examples of fraud upon the court include bribery, evidence fabrication, and improper attempts to influence the court by counsel. Salway, 695 P.2d at 1306. Generally, fraud between the parties, without more, does not rise to the level of fraud upon the court. Salway, 695 P.2d at 1306.

Brown was an active and informed participant in what he now seeks to characterize as fraud upon the court. He stipulated to the dismissal of his own lawsuit with prejudice despite his attorney’s advice to the contrary. Brown may have made a bad bargain with Small and Doubek but it does not rise to the level of a fraud that “subvert[s] the integrity of the court itself.” We conclude that Brown has not made out a case of fraud upon the court.

Because Brown has shown neither extrinsic fraud nor fraud upon the court, we hold that the District Court did not err when it granted summary judgment against Brown on his attempt to set aside his dismissal of the first lawsuit.

The judgment of the District Court is affirmed.

CHIEF JUSTICE TURNAGE and JUSTICES HARRISON, GRAY, HUNT, McDONOUGH, and WEBER concur.


author: JUSTICE McDONOUGH JUSTICE TRIEWEILER

text:
    HAINES PIPELINE CONSTRUCTION, INC., Plaintiff, Respondent and Cross-Appellant, v. MONTANA POWER COMPANY, Defendant and Appellant.
    No. 90-281.
    Submitted October 31, 1991.
    Decided December 16, 1991.
    Rehearing Denied March 4, 1992.
    48 St.Rep. 1102.
    251 Mont. 462.
    _P.2d_.

      For Appellant: Bruce R. Toole and Donald L. Harris argued, Crowley Law Firm, Billings.
    For Respondent: Sam E. Haddon and Randy J. Cox argued, Boone, Karlberg & Haddon, Missoula.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

This is an appeal from a bench trial and judgment in the Second Judicial District Court, Silver Bow County. Defendant, Montana Power Company (MPC), appeals the judgment awarding Haines Pipeline Construction, Inc. (Haines), $502,361.26 in compensatory damages and $1,000,000 in punitive damages for MPC’s breach of a construction contract to build a natural gas pipeline. Haines has cross-appealed the portion of the judgment failing to award Haines damages for its lost profits. Regarding the judgment for compensatory damages we affirm in part and reverse in part. As to the punitive damages we reverse and remand, granting the parties leave to amend their pleadings in light of our decision in Story v. City of Bozeman (1990), 242 Mont. 436, 791 P.2d 767. In regards to the cross-appeal, we affirm the District Court’s judgment denying Haines recovery for lost anticipated profits.

MPC raises the following issues on appeal:

I. Did the District Court err by admitting into evidence MPC’s internal audit regarding its construction contract with Haines?

II. Did the District Court err in concluding that MPC, rather than Haines, was liable for breach of the construction contract?

III. Did the District Court err in awarding Haines compensatory damages including $16,000 in travel expenses and $50,000 in unspecified general damages?

IV. Did the District Court err in awarding punitive damages for breach of the implied covenant of good faith and fair dealing?

Haines raises the following issue on cross-appeal:

V. Did the District Court err in failing to award Haines damages for its lost profits?

On June 16,1983, Haines as contractor and MPC as owner, entered into a written contract for the construction of the southern half of a 16 inch natural gas pipeline from Warm Springs to Cut Bank, Montana. Walter Kelley, MPC’s chief operating officer and a director, was MPC’s agent responsible for administration of the contract.

In lieu of a construction bond, the parties required Haines to post an irrevocable letter of credit for $750,000 in favor of MPC, and to maintain such letter of credit until final acceptance and payment of the work under the contract. The terms for drawing on the letter of credit were as follows:

‘We hereby certify that Haines Pipeline Construction, Inc. has failed to comply fully with the terms of our contract, dated June 18, 1983 covering their laying of the 200 mile 16 inch pipeline between Warm Springs and Cutbank. We are therefore entitled to this drawing of$_.”

The original expiration date of the letter of credit was January 15, 1984.

Construction of the pipeline required welding sections of pipe in accordance with procedures developed by MPC and in compliance with federal regulations. MPC entered into a contract with Gamma Sonics (Gamma), to provide X-ray inspection of the welds made by Haines. Welds identified by Gamma as insufficient were immediately marked and repaired by Haines. No welds were buried unless they had been X-ray inspected and approved by Gamma and MPC inspectors.

The project had regulatory problems brought to the attention of the Montana Public Service Commission (PSC) by labor leaders and the Department of Transportation. Hearings were held on several alleged federal safety violations, regarding primarily the padding of the bed underneath the pipeline. At the time of the hearings, MPC declined to hold Haines harmless for these violations although Kelley testified that MPC accepted responsibility and paid costs for padding the pipeline. To avoid further hearings MPC developed a “plan to demonstrate fitness for service” of the portion of the pipeline that had been constructed and agreed to postpone further construction.

On April 16, 1984, the letter of credit which was previously extended, was reduced to $250,000 and the expiration date extended again, by agreement of the parties, from July 15,1984, to November 15, 1984. On April 23, 1984, the construction contract having been suspended pursuant to the fitness plan, MPC entered a settlement agreement with Haines covering all work done to that date. As part of that agreement, Haines would release all claims against MPC.

MPC hired Southwest Research Institute (SRI) to re-check the X-ray inspection of Gamma. On May 8, 1984, Haines and MPC entered into a second contract whereby Haines was to assist MPC in doing miscellaneous repair work on the completed portion of pipeline including repair of buried pipeline identified by SRI as defective. Under the contract Haines was paid as an independent contractor on an hourly basis.

On October 15, 1984, MPC Chief Executive Officer, Paul Schmechel, distributed a memorandum in response to the board of directors’ concerns about the pipeline. The memorandum indicated that MPC would “move Haines off the job” by mid-November. Furthermore, the memorandum indicated that the letter of credit was set to expire on November 15 and that the circumstances surrounding repair work were being reviewed to determine if claims should be made against Haines. Lastly, the memo noted that hydrostatic testing of the south half of the pipeline had been completed without failure.

On October 22,1984, Haines as a “good faith gesture” extended the letter of credit until May 15, 1985, at the request of MPC. On November 16, 1984, MPC terminated the June 1983 contract with Haines, pursuant to paragraph 31.0, allowing MPC to terminate at its convenience, and setting forth the amounts which Haines could recover upon such termination. Paragraph 31.0(c)(iii) of the contract specifically stated “the Contractor shall make no claim for lost anticipated profits.” The reason given by MPC for the termination was “severe cash problems.”

MPC conducted an internal audit of the pipeline construction. The audit focused on the shortcomings of MPC’s supervision of Haines and Gamma. One of the recommendations of the audit was to proceed against Gamma for the cost of digging up the pipeline and making the necessary repairs. It was later determined that Gamma had insufficient assets to pursue.

In January of 1985, MPC retained a law firm to advise the company if it had a claim against Haines for the cost of fixing defective welds. MPC did not provide the firm with the audit report nor did they make Chief Operating Officer Kelley available to the firm. MPC received an opinion letter from the law firm on May 10, 1985, advising MPC that it could assert both contractual and negligence claims against Haines to recover the costs MPC would incur in repairing defective welds.

Subsequently, MPC attorney, Robert Gannon, recommended to MPC’s vice chairman, Jack Burke, that MPC draw upon the $250,000 letter of credit which was due to expire Wednesday, May 15. Gannon concluded that the costs of repairing the welds would substantially exceed the value of letter of credit. On Tuesday, May 14, Gannon and Burke met with MPC’s CEO, Paul Schmechel, to obtain authority to draw upon the letter of credit.

On May 15, 1985, MPC drew upon the letter of credit after informing Haines that it had failed to perform proper welding under the contract. Haines responded stating that it had no further responsibility for the welds once they had been X-rayed, approved, and the pipe buried.

Haines initiated this action to recover damages against MPC for breach of the construction contract. MPC answered and counterclaimed for damages alleging defective work. After a bench trial in February 1989, the court entered its findings of fact and conclusions of law on May 3,1990, and entered judgment in favor of Haines on May 21, 1990. Among its findings and conclusions, the court held that MPC had accepted Haines’s work, had no authority to draw upon the letter of credit and that presentment of the letter of credit constituted a breach of the construction contract. Furthermore, the court concluded that MPC mislead Haines into extending the letter of credit constituting a breach of the implied covenant of good faith and fair dealing. Finally, the court concluded that the breach was oppressive conduct justifying the imposition of punitive damages. From this order MPC appeals.

I.

Did the District Court err by admitting into evidence MPC’s internal audit regarding its construction contract with Haines?

MPC contends that the District Court erred in admitting MPC’s internal audit into evidence. Several theories are offered. First MPC argues that the audit is hearsay and is not within any hearsay exception. They farther argue that the audit is hearsay within hearsay, as it was written by one MPC employee from information gathered by other individuals. Lastly, MPC argues that the probative value of the audit is outweighed by the prejudice MPC experienced due to its admission. Haines asserts that the audit is admissible because it is relevant, and that the audit is not hearsay because it is both a prior inconsistent statement and an admission by a party opponent.

Having heard these arguments the court admitted the audit into evidence. Admission of evidence is a discretionary act by a trial court. The function of this Court in determining if a court properly admitted evidence is to determine if the trial court misused or abused its discretion. See Steer, Inc. v. Dept. of Revenue (1990), 245 Mont. 470, 803 P.2d 601.

MPC notes that traditionally a report from an agent to its principal, intended to be confidential, was not an admission, and that commentators disagree whether such reports are admissible under the rules. See 4 Weinstein’s Evidence, ¶ 801-266, et seq. (1988). MPC further notes that with the exception of Runkle v. Burlington Northern (1980), 188 Mont. 286, 613 P.2d 982, this Court has not addressed the admissibility of an intracorporate document as an admission. MPC argues that Runkle is not dispositive. Specifically, MPC characterizes the language in Runkle referring to the admissibility of intracorporate memorandum as a “throwaway conclusion”. We disagree and find Runkle to be dispositive.

In Runkle, this Court specifically held that intracorporate communications concerning matters relevant to the issue of the case should have been admitted into evidence as an admission pursuant to Rule 801(d) (2), M.R.Evid. Runkle was a negligence action in which a memorandum was offered to demonstrate the railroad’s knowledge of a hazardous crossing condition and the railroad’s intent with respect to the same. MPC argues that the audit in the instant case is a retrospective study of past events and is therefore distinguishable from the consideration of the future act of installing a railroad crossing signal as in Runkle.

One of the purposes of the internal audit was to determine possible company exposures of any type. Such determination clearly requires retrospective analysis as argued by MPC; however, it is equally clear that another purpose of the audit was to aide MPC in the development of future plans. Similar to the memorandum in Runkle, the audit report was in response to a problem the company was experiencing and provided recommendations for future actions. MPC essentially argues that the audit reflects the opinion of the reporter and that a principal providing authority to an agent to investigate a topic, should not be bound by the findings of the agent.

The internal audit is relevant to the case because it is part of the information Schmechel had available when he ordered that the letter of credit be presented. We are not saying that MPC is committed to accept the audit’s conclusions as MPC suggests. Instead, consistent with our finding in Runkle, we find that the internal audit is admissible as an admission because it is relevant to the issue being resolved by the trial court. Schmechel had the opportunity to weigh the audit along with the opinion letter to make a considered decision as to what course of action MPC should take. The District Court should be afforded the same opportunity.

MPC cannot claim unfair prejudice simply because admission of the audit was adverse to its position. It was within the District Court’s discretion to determine if the prejudice was unfair; it was also in the court’s discretion, as trier of fact, to assign the audit the weight the court deemed appropriate. When a trial court determines that the prejudicial effect of evidence does not outweigh its probative value, pursuant to Rule 403, M.R. Evid.; that determination is in the province of the trial court and will not be disturbed absent abuse. Steer, Inc. v. Dept. of Revenue (1990), 245 Mont. 470, 803 P.2d 601. Because we find no abuse of court discretion the decision of the court to admit the internal audit into evidence is affirmed.

II.

Did the District Court err in concluding that MPC, rather than Haines, was liable for breach of the construction contract?

The District Court found that MPC breached its contractual obligations to Haines when they drew on the letter of credit. Specifically, the court found breaches of the implied warranty of good faith and fair dealing and the implied warranties of transfer and presentment. The District Court concluded that MPC waived its right to enforce the specific terms of the contract, that the pipeline contract had been amended by performance and oral agreement and that MPC did in fact accept the work of Haines. Because the welds were accepted, MPC had no right to recover against Haines for the welds. Therefore, the District Court ruled that MPC had no authority to draw on the letter of credit and in so doing breached its obligation towards Haines.

MPC contends the District Court erred in ruling that MPC breached the contract when allegedly Haines breached the contract by defectively welding the pipeline. MPC argues that the contract expressly holds Haines responsible for constructing the pipeline to meet federal standards that were not met. MPC denies ever accepting the defective welds suggesting to do so would be absurd. Furthermore, MPC alleges the District Court erred by allowing parol evidence to modify the terms of the written contact.

Whether the contract was administered as written and the determination of whether there is a breach of the contract are questions of fact to be determined by the trial court. The findings of a trial court in a non-jury trial will not be overruled unless they are clearly erroneous. Rule 52(a), M.R.Civ.P.

Section 28-2-1602, MCA, states:

“A contract in writing may be altered by a contract in writing or by an executed oral agreement, and not otherwise.”

An oral agreement modifying a written agreement is executed when its terms have been fully performed. Lemley v. Allen (1983), 203 Mont. 37, 659 P.2d 262.

The testimony of Walter Kelly establishes not only that it was standard practice to vary from the letter of the contract but also as the number one MPC man on the project he altered the terms of the contract on behalf of MPC on several occasions. When asked what role the written contract played in the administration of the contract and the construction project, Kelly testified:

‘Well, the contract is a point of beginning. You’ve got to start someplace, as we do on any job. And then you negotiate on a daily basis and do the job.”

In addition, Brad Haines, president of Haines Pipeline, testified to instances when changes in the contract were made that were not committed to writing.

Substantial evidence exists to support the District Court’s finding that the pipeline contract was amended by performance and oral agreement of the parties. Furthermore, when a written contract is altered or modified by an executed oral agreement, parol evidence of the alteration or modification can be heard. Jensen v. Olson (1964), 144 Mont. 224, 395 P.2d 465.

The District Court ruled and we agree that MPC waived or modified contract provisions regarding inspection and acceptance of Haines’s work and did in fact accept the welds prior to Haines burying them in the ground. Waiver and acceptance of the welds was determined on the basis of Kelly’s testimony that he did accept Haines’s work; the second contract whereby MPC hired and paid Haines to make repairs to the pipeline; and the standard business practice.

MPC argues that the contract expressly provides inspection of the work by MPC shall not constitute nor imply acceptance by MPC, and that this provision prevails over any industry standard to the contrary. MPC further contends the District Court erred in concluding that MPC waived its rights under the inspection clause by failing to demand Haines repair the welds and then paying Haines to repair welds under a separate repair contract. MPC argues that a waiver can occur only when the party clearly manifests such an intention and it never had any intention of the sort.

The District Court’s findings are supported by the testimony of Walter Kelly, who was in a position to accept Haines’s work on behalf of MPC and did in fact accept it. That it is standard practice to accept the welds prior to their burial is substantiated by the testimony of B.G. Simpson, an expert in the field. It is undisputed that MPC entered a second contract with Haines and paid Haines to repair faulty welds.

Waiver may be proven by express declarations or by a course of acts and conduct so to induce the belief that the intention or purpose was to waive. Northwestern Fire and Marine Insurance v. Pollard (1925), 74 Mont. 142, 238 P.2d 594. Mathis v. Daines (1982), 196 Mont. 252, 639 P.2d 503. In the instant case, waiver is supported by both the express declarations of Kelly and by MPC’s entering the second contract. Paying Haines to repair buried welds is indicative of MPC assuming responsibility for the buried welds and constitutes waiver of contract provisions to the contrary.

The District Court’s findings that the contract was not administered as written and that MPC accepted the welds and waived the contract provision holding Haines responsible for repair costs is not clearly erroneous and is therefore affirmed.

Presentment of the letter of credit warranted that Haines had not fully complied with the terms of the contract. Because Haines had not breached the contract, the District Court concluded that MPC’s presentment of the letter of credit breached warranties of presentment attendant to letters of credit and the implied warranty of good faith and fair dealing.

Section 30-5-111, MCA, provides that by demanding payment, a party warrants that the necessary conditions prior to presentment of the credit have been met. In this case, MPC was required to certify that Haines had failed to comply with the terms of the contract. The District Court having found that Haines had complied with the contract, as modified by Walter Kelly for MPC, determined the necessary conditions were not met prior to MPC’s presentment of the letter of credit. Therefore, the court ruled that MPC breached the warranty of presentment, entitling Haines to compensatory damages. Furthermore, the court found that MPC’s conduct breached the implied warranty of good faith and fair dealing.

The District Court’s conclusion that MPC breached the construction contract entitling Haines to compensatory damages is supported by substantial evidence, is not clearly erroneous and therefore is affirmed.

III.

Did the District Court err in awarding Haines compensatory damages including $16,000 in travel expenses and $50,000 in unspecified general damages?

In its judgment, entered, May 21,1990, the District Court awarded compensatory damages to Haines in the amount of $502,361.26. Determination of the actual damages suffered Haines as a result of MPC’s breach is a question of fact to be determined by the trial court. These findings will not be disturbed unless they are clearly erroneous. Rule 52(a), M.R.Civ.P.

MPC contends that the District Court erred in awarding Haines $16,000 for travel expenses. The District Court awarded Haines $16,000 for travel expenses that were subsequent to, and determined to be a result of, MPC’s presentment of the letter of credit. Haines provided an explanation of these expenses which was accepted by the court. The award of the $16,000 for travel expenses is not clearly erroneous and therefore is affirmed.

In addition, MPC contends the $50,000 award for “General Damages to include interest paid by Haines to keep the letter of credit valid” is not supported by the evidence. Haines argues that the record does substantiate the general damage award because damages are not to be denied even if mathematical precision is challenged, provided the evidence is sufficient to afford a reasonable basis for determining the specific amount awarded. See Cremer v. Cremer Rodeo Land and Livestock Co. (1981), 192 Mont. 208, 627 P.2d 1199. Thus, Haines contends that the testimony regarding damages, which included over $118,000 in additional damages above those specifically awarded by the court, supports the award.

The court indicated that the general damages award included interest paid by Haines to keep the letter of credit valid. MPC argues that it in fact paid the expenses associated with keeping the letter of credit valid and point to the testimony of Brad Haines to support this claim. The record makes clear that MPC paid the service charges necessary to maintain and extend the letter of credit, but not interest rates.

It appears the court is referring to the interest paid by Haines to an individual who guaranteed the letter of credit and following MPC’s presentment was required to pay the bank the $250,000. The court awarded Haines interest on the $250,000 from the time of the presentment of the letter of credit. The interest award of $125,000 is more than enough for Haines to pay the interest debt. We find no other basis for the award of general damages. Therefore, the $50,000 award for general damages is not allowed and the judgment of the District Court on this point is reversed.

IV.

Did the District Court err in awarding punitive damages for breach of the implied covenant of good faith and fair dealing?

The legislature has defined the implied covenant of good faith and fair dealing as:

“The conduct required by the implied covenant of good faith and fair dealing is honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade. Section 28-1-211, MCA. See also § 30-2-103(b), MCA.”

The District Court awarded Haines $1,000,000 in punitive damages for MPC’s breach of the implied covenant of good faith and fair dealing. The court concluded that:

“The actions of MPC in drawing on the letter of credit constituted a tortious breach of the obligation of good faith and fair dealing in the contract, and was oppressive. Conclusion of law number 4.
“and
“The willful conduct of MPC in enticing Haines Pipeline into renewals of the letter of credit when, in fact, all MPC was trying to do was gain time to be in a position to draw on the letter of credit when it already had determined that it was going to ‘move Haines off the job’ and re-bid the northern section and to preclude Haines from building the remaining portion of the pipeline for its own purposes constitutes a breach of the obligation of good faith and fair dealing implied in all contracts between the parties and was oppressive conduct. That breach caused damages to Haines Pipeline and justifies the imposition of punitive damages. Conclusion of law number 9.”

On May 9,1990, this Court handed down an opinion clarifying the application of the implied warranty of good faith and fair dealing in contract cases. Story v. City of Bozeman (1990), 242 Mont. 436, 791 P.2d 767. We held that every contract, regardless of type, contains an implied covenant of good faith and fair dealing and that a breach of the covenant is a breach of the contract. Story, 791 P.2d at 775. However, we further held that while a breach of the covenant entitles a party to contract damages, an award of tort damages is limited and allowed only in special circumstances which are not present here.

Until the Story decision was handed down the applicable rule of law for determining a tortious breach of contract entitling an award of punitive damages was whether the breach was arbitrary, capricious, or unreasonable given the justifiable expectations of the parties in light of their contract. Nicholson v. United Pacific Insurance Co. (1985), 219 Mont. 32, 710 P.2d 1342. Both parties relied on the “justifiable expectations” standard of Nicholson when presenting their case to the lower court.

The broad general rule is that “A change in the law between a nisi prius (prior law applied in the trial court) and an appellate decision requires the appellate court to apply the changed law.” Thorpe v. Housing Authority of the City of Durham (1969), 393 U.S. 268, citing Ziffrin, Inc. v. U.S. (1943), 318 U.S. 73. This Court, citing Thorpe, has provided that “Generally, an appellate court must apply the law in effect at the time it renders its decision.” Lee v. Flathead County (1985), 217 Mont. 370, 704 P.2d 1060.

An exception to the established rule is that it will not be applied when necessary to prevent “manifest injustice.” Thorpe at 282, citing Greene v. U.S. (1964), 376 U.S. 149. In Montana, manifest injustice can be defined as occurring when application of the new law impairs a vested right. See Western Montana v. Board of Health and Environmental Sciences (1985), 217 Mont. 178, 703 P.2d 850. However, “No one has a vested right to any rule of common law.” Meech v. Hillhaven West, Inc. (1989), 238 Mont. 21, 776 P.2d 488. Furthermore, judgment is not a vested right while it is subject to review or while an appeal is pending. See 46 Am.Jur.2d, 466. Therefore, Haines has no vested right in the application of the pre-Story (Nicholson) criteria for awarding punitive damages in a breach of the duty of good faith and fair dealing. The law of Story is dispositive of the instant case.

There is no dispute that the parties do not meet the special criteria of Story; therefore, Haines is not entitled to its award of punitive damages for MPC’s breach of the construction contract. However, it is clear and we reiterate that Story does not preclude the award of actual damages. Under Story, a breach of the implied covenant gives rise to contract damages only, unless special relationship exists.

Haines argues that Story still allows tort type damages in traditional contract-related torts such as fraud, fraudulent inducement, and tortious interference with contract. Furthermore Haines argues, the court’s findings of oppression and presumed malice justify the imposition of punitive damages because they are findings of tort damages independent of the contract damages disallowed by Story.

We disagree. “Oppression” and “malice” do not constitute torts; instead, they are adjectives used to characterize particular conduct. In the past, the legislature used these adjectives to characterize the type of conduct in which exemplary damages were allowed. Section 27-1-221, MCA (1985). However, before exemplary damages can be awarded, a tortious act must first be independently established. The District Court used these adjectives in the instant case to characterize MPC’s conduct in breaching the contract, not as an independently established tort. Story makes clear that exemplary damages will not be allowed for breach of contract alone.

Section 27-1-220, MCA, clearly says exemplary damages are not allowed for a breach of contract unless otherwise expressly provided by statute. Story further clarifies that the breach of the implied covenant of good faith and fair dealing constitutes breach of contract and not a tort.

“Each party to a contract has a justified expectation that the other will act in a reasonable manner in its performance or efficient breach. When one party uses discretion conferred by the contract to act dishonestly or to act outside of accepted commercial practices to deprive the other party of the benefit of the contract, the contract is breached. Story, 791 P.2d at 775.” (Emphasis added.)

The basis of the District Court’s award of punitive damages is in its finding that MPC wrongfully induced Haines into extending the letter of credit, conduct the court described as oppressive. While it is clear that oppression and presumed malice are not separate contract-related torts, a question exists whether or not a tort such as fraud was committed, which would give rise to tort damages under Story. The District Court awarded punitive damages because in its judgment it felt that MPC’s misconduct rose to a level deserving of punishment. However, the law has changed. Under the law of Nicholson the manner in which the court imposed judgment may have been proper; however, under the controlling law of Story it clearly is not.

Haines relied on the law as it stood prior to our ruling in Story and developed its strategy in accordance. Just as MPC’s pleading and trial briefs were void of reference to Story in the lower court; Haines’s pleading and trial briefs were void of explicit references to alternative tort claims that may have been appropriate. However, both parties throughout the proceedings addressed the appropriateness of punitive damages and whether MPC’s conduct rose to a level allowing their imposition.

We have held that a plaintiff has the right to try a case on the supposition that a rule announced in a prior case would be adhered to. Broderick v. Stevenson Consolidated Oil Co. (1930), 88 Mont. 34, 290 Pac. 244. In Broderick, the decision of the district court was correct on basis of the law as it existed at the time of trial but erroneous after the case on which it relied was expressly overruled. In reliance on the old law, plaintiff failed to introduce evidence that may have enabled her to prevail under the newly established law. Under the circumstances, the cause was remanded for a new trial to afford the plaintiff opportunity to make proof of her allegations. When there is an intervening case, remand is proper for reconsideration in light of the appellate court’s new decision. Gibson v. Berryhill, Alabama (1973), 411 U.S. 564, 93 S.Ct. 1689, 36 L.Ed.2d 488.

In Broderick, the plaintiff initially plead the cause of action for which it was allowed to pursue on remand. Ordinarily, when a party is unsuccessful in trying a case on one theory, a new trial will not be granted to allow trying the case on an alternative theory. However, we cannot expect an attorney to foresee that the contemporaneous causes of action available to his client will be overturned by the appellate court subsequent to the trial. When Haines’s complaint was filed, Haines relied on láw allowing courts to award punitive damages for the contract breach of the implied warranty of good faith and fair dealing.

When an appellate court reverses and remands for new trial, the appellate court may, in the furtherance of justice, grant leave to the parties to amend their pleadings. See 5B C.J.S. § 468, 1936 Appeal and Error. Where issues are “inextricably intertwined”, the pleadings may be amended on remand. O’Malley v. Casey (1979) 589 P.2d 1388. The issues of fraud and the breach of the covenant of good faith and fair dealing as applied in this case are inextricably intertwined.

In light of the Story decision and its applicability to the present case we reverse and remand this case on the issue of punitive damages for further proceedings in conformance with this opinion. Furthermore, in the furtherance of justice, we grant leave to the parties to amend their pleadings to allege fraud or other theories of recovery or defense consistent with this opinion.

V.

Did the District Corut err in failing to award Haines damages for its lost profits?

Haines contends that the District Court’s sole error was its failure to award Haines damages for lost profits. Haines argues that the court’s conclusion that MPC’s breach “deprived [Haines] of the benefit of its bargain” is inconsistent with its denial of damages for lost profits, which Haines allegedly proved to be in excess of $1 million. Haines argues that it had at the very least an implied contract with MPC to build the northern half of the pipeline based on representations made to it by Kelly. Thus, it is entitled to its lost profits for MPC’s breach of this contract or at least a remand of the case to determine the extent of such damages.

The District Court found that “Haines had no contractual assurance that it would build the north half of the pipeline.” The contract was terminated by MPC on September 16, 1984, pursuant to paragraph 31.0 of the contract which provides in part that:

“Should conditions arise which, in the opinion of Owner, make it advisable to cease work under this Contract, Owner may terminate this Contract by written notice to Contractor.”

Paragraph 31.0(c)(iii) includes; “The Contractor shall make no claim for lost anticipated profits.” Walter Kelly provided Haines with a letter that indicated MPC was terminating the contract for its convenience. The reason for the termination was cited as economically based and not performance related.

The evidence supports the court’s finding that MPC was not obligated to Haines for the construction of the north loop of the pipeline. It appears that paragraph 31.0 was properly invoked. There is no evidence offered to demonstrate that the termination clause was ever modified or amended in any way. The clause clearly states that there will be no claims for lost anticipated profits. The finding of the District Court denying Haines recovery of lost anticipated profits is affirmed.

Affirmed, reversed and remanded.

CHIEF JUSTICE TURNAGE and JUSTICES HARRISON, HUNT, WEBER, and HON. HENRY LOBLE, District Court Judge, retired, sitting in for JUSTICE GRAY concur.

JUSTICE TRIEWEILER

dissenting in part and concurring in part.

I would not follow Story v. City of Bozeman (1990), 242 Mont. 436, 791 P.2d 767. The tort law of bad faith evolved through careful reasoning and long experience to take the profit out of dishonest and oppressive business practices. Story returned that profit for those in superior bargaining positions.

Every consumer and small businessman and woman in Montana are worse off because of Story.

Therefore, I would affirm the judgment of the District Court.

Other than the majority’s reversal of the judgment for punitive damages based on Story, I concur in the majority opinion.


author: JUSTICE HUNT

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. MICHAEL LEE DAHMS Defendant and Appellant.
    No. 90-506.
    Submitted on briefs July 16, 1991.
    Decided Jan. 30, 1992.
    49 St.Rep. 106.
    252 Mont. 1.
    825 P.2d 1214.

      For Appellant: Joseph R. Massman, Massman Law Firm, Helena.
    For Respondent: Marc Racicot, Attorney General, and John Paulson, Assistant Attorney General, Helena; Richard J. Llewellyn, Jefferson County Attorney, Boulder.
   JUSTICE HUNT

delivered the opinion of the Court.

Defendant Michael Lee Dahms was found guilty of felony assault in violation of 45-5-202(2), MCA, after a jury trial in the District Court for the Fifth Judicial District, Jefferson County. The District Court sentenced the defendant to a term of ten years at the Montana State Prison for felony assault and a consecutive term of ten years with five years suspended for the knowing use of a firearm during the commission of the offense pursuant to the weapon enhancement statute 46-18-221, MCA. Defendant was designated a dangerous offender for purposes of parole eligibility and was fined the sum of $50,000. Defendant appeals. We affirm.

Defendant raises the following issues on appeal:

1. Did the District Court improperly limit defendant’s cross-examination of State’s witness Tom Jacobs?

2. Did the District Court err in denying defendant’s motion in which defendant requested that the District Court provide for travel expenses for several potential defense witnesses from California?

3. Did the District Court properly deny defendant’s motion to disqualify the County Attorney from prosecuting the case based on a conflict of interest?

4. Did defendant’s conviction in State court violate Montana’s double jeopardy statutes?

5. Was defendant denied his right to a speedy trial?

6. Was it error for the District Court to allow certain testimony by the State’s expert witness, Connie Anders?

7. Was the sentence imposed on the defendant by the District Court excessive?

8. Did the District Court err in refusing to give defendant’s proposed jury instruction D-l, and in giving the State’s proposed instruction 5-7?

In June 1988, Harriet Kay Plaunt and defendant met and began living together in Lyons, Michigan. In March 1989, Harriet and defendant were married while the defendant was serving time in the Ionia County Jail in Lyons. Living with Harriet at the time of this marriage were her two daughters from a previous marriage, ages 12 and 11. Upon his release from jail in May 1989, defendant decided to take Harriet and her daughters to Montana where they could find a home in the mountains and live close to nature. Accompanying the group west was Tom Jacobs, a mutual friend of both Harriet and the defendant. Harriet knew Tom from an adult education class and defendant had become acquainted with Tom while they were serving time together in a county jail in Michigan.

The Dahms party pooled their money and purchased a 1970 Buick. They loaded the car with their personal belongings, camping gear, bows and arrows, and two shotguns with ammunition, and left for Montana the first week of June 1989. The trip west was made difficult by car trouble along the way. Eventually the car broke down at the top of Homestake Pass near Butte. The group abandoned the vehicle at that point and continued on to Helena when a passerby in a pickup stopped and gave the group a ride. Upon arriving in Helena, the group went to a local shelter for homeless persons. At the shelter, they received assistance and were directed to a Helena hotel at which they could stay for several days.

At the hotel, the members of the Dahms party met another couple from Michigan who told them about the Nellie Grant Mine, an old abandoned gold mine located about ten miles south of Helena near Park Lake in Jefferson County. On June 14, 1989, with the help of a friend with a pickup truck, the group travelled up into the mountains to set up camp at the Nellie Grant Mine. The group found one of the old mine buildings and rigged up some bunking spaces.

Life at the mine was not exactly what the group had expected. As the group gathered around the campfire at night, there was speculation that a wild lynx or other predatory animal was in the area of the encampment, and so shots would periodically be fired into the darkness to scare away any unwanted intruders. By day the situation was no better. Harriet, in particular, grew weary of the conditions and the whole outdoor experience. Tempers flared and arguments ensued at different times. About four days after arriving at the mine, Harriet decided to take her daughters and hike back to Helena.

At this point, there was conflicting testimony offered at trial as to what transpired next. Harriet testified that as she and her 11-year-old daughter were preparing to leave defendant began firing shots from one of the shotguns into the ground at their feet. Defendant then struck the daughter, knocking her to the ground. Harriet then began striking defendant. She alleges defendant then pointed the shotgun directly at her face and said that if she moved, she was dead. Defendant pulled back the hammer, put his finger on the trigger, and told her to go ahead and say something so that he could kill her. Harriet’s daughters and Tom Jacobs were finally able to talk the defendant into putting down the shotgun. Harriet’s version of events is supported by the testimony of both her 12-year-old daughter and Tom Jacobs. Defendant admits that an argument took place and that heated words were exchanged while he was holding the shotgun. However, defendant contends he did not threaten to kill Harriet or anyone else with the shotgun.

The following morning the group was able to catch a ride back into Helena. That night they stayed at the Lewis and Clark County Fairgrounds and the following morning defendant and Tom Jacobs hopped a freight train to California. Harriet then reported the assault to the police. Afelony complaint was filed in Jefferson County and an arrest warrant was issued for defendant.

Shortly after arriving in California, Tom Jacobs telephoned his parents in Michigan and they wired him an airline ticket home. In October 1989, defendant telephoned Harriet in Helena. Harriet informed the police of the call. She then had subsequent telephone calls from the defendant during which she encouraged him to return to Montana, ostensibly for a reconciliation. Harriet testified that she in fact had no intention of reconciling with the defendant but was merely attempting to lure defendant to Montana so that he could be arrested. Defendant returned to Montana and was arrested on October 31, 1989, the day he arrived in Helena.

On April 13,1990, the defendant was found guilty after a jury trial of the offense of felony assault. On June 8, 1990, defendant was sentenced to ten years in prison for felony assault with an additional ten year sentence for the use of a weapon during the commission of the offense. The second sentence was to run consecutively with five years suspended. Defendant was designated a dangerous offender for purposes of parole eligibility and was fined the stun of $50,000, to be paid from any proceeds recovered by the defendant in a pending lawsuit. Defendant appeals.

I

Did the District Court improperly limit defendant’s cross-examination of State’s witness Tom Jacobs?

On appeal, defendant alleges that the District Court erred in not allowing greater latitude on cross-examination to impeach the credibility of the witness Jacobs. Specifically, the defendant contends the jury was not allowed to hear the subjective reason or ulterior motive Jacobs may have had for testifying.

At the time the assault occurred in Montana, Jacobs was on formal probation in Michigan for a felony offense. Owning and using a firearm and traveling to Montana without first obtaining the proper permission were violations of his probation, which subjected him to possible revocation of his probation. Defendant argued that Jacobs was testifying in order to avoid revocation of his probation. The State denied that Jacobs was to receive any favorable treatment in Michigan as a result of his testimony against the defendant.

Prior to trial, the State made a motion in limine requesting that the District Court restrict the defendant from inquiring into the criminal record of any of the State’s witnesses for purposes of impeachment. The defendant objected to the motion in regard to the State’s witness Jacobs. The District Court took the matter under advisement. Despite the fact that the State’s motion in limine was still pending, counsel for the defense told the jury during opening argument that Jacobs was a convicted felon. The State objected and the court warned counsel not to mention the matter again until the court issued a ruling.

Shortly before Jacobs was to testify, the District Court ruled that the defendant would be allowed to ask two questions concerning the witness’s probationary status and motive for testifying. On cross-examination, the defense could ask Jacobs if he was in fact on probation. If he answered in the affirmative, the defense could then ask if he had been granted or expected to receive any kind of immunity or favorable treatment in exchange for his testimony. In response to these questions, the witness admitted to being on probation, but denied he was to receive any immunity or favorable treatment for his testimony. Finally, in his closing argument, counsel for the defense argued to the jury that Jacobs’ motive for testifying was his fear that if he did not testify law enforcement would somehow retaliate against him.

Defendant is correct in his assertion that a cross-examiner should be given latitude in order to attempt to impeach the credibility of a witness. Rule 607, M.R.Evid., provides that, “[t]he credibility of a witness may be attacked by any party, including the party calling the witness.” Defendant wanted to attack the witness’s motive for testifying. This Court has stated that:

A witness’ credibility may be attacked through cross-examination to reveal possible biases, prejudices, or ulterior motives if they relate directly to issues or personalities in the case at hand.

State v. Short (1985), 217 Mont. 62, 67, 702 P.2d 979, 982. However, in this instance the defendant wanted to impeach the witness by eliciting testimony on cross-examination concerning the witness’s prior felony conviction. Rule 609, M.R.Evid., states “[f]or the purpose of attacking the credibility of a witness, evidence that the witness has been convicted of a crime is not admissible.”

Defendant’s right to impeach by showing an ulterior motive for testifying is therefore in conflict with the statutory prohibition against evidence of criminal history. Faced with this dilemma, the District Court allowed the defendant to ask the witness whether he was on probation and whether he expected to receive favorable treatment for his testimony. The extent of cross-examination allowed under these circumstances is -within the District Court’s discretion. Sloan v. State (1989), 236 Mont. 100, 104-05, 768 P.2d 1365, 1368.We hold the court was well within its exercise of discretion in restricting the cross-examination of the witness Jacobs as it did.

II

Did the District Court err in denying defendant’s motion in which defendant requested that the District Court provide for travel expenses for several potential defense witnesses from California?

Defendant filed a motion with the District Court requesting the court to authorize payment of travel expenses of several defense witnesses from California. Defendant contended these witnesses had overheard telephone conversations between the defendant and the victim. These conversations involved the victim’s attempt to persuade the defendant to return to Montana from California, ostensibly for a reconciliation. Defendant alleged these witnesses were necessary to attack the credibility of the victim. The District Court reserved ruling on the motion until additional proof of the materiality of the witnesses’ testimony was presented. After receiving a memorandum in support of the motion and letters from the potential witnesses setting out what their testimony would be, the District Court denied the defendant’s motion on the grounds that the testimony these witnesses would offer was not material. The District Court specifically noted that cost was not a factor in denying the motion.

Section 46-15-104, MCA (1989), provides that a district court may, in its discretion, provide in advance the travel expenses for witnesses appearing in criminal cases upon a subpoena. Section 46-15-113, MCA (1989), sets out the procedure for securing the attendance of a material witness in a pending prosecution. In interpreting this statute, this Court has previously held “that a trial court’s finding as to the materiality of a witness when applying this particular statute will not be disturbed absent a clear showing of abuse of discretion.” State v. Sanderson (1985), 214 Mont. 437, 449, 692 P.2d 479, 486. In Sanderson, we upheld a trial court’s denial of a defendant’s motion to provide for the attendance of an out-of-state witness. The trial court determined that the testimony of the potential witness would duplicate testimony to be offered by another defense witness, and therefore, the out-of-state witness did not qualify as a material witness under the statute.

In this case, both the victim and the defendant testified about the content of the telephone conversations. The District Court specifically noted that their testimony covered all the information the California witnesses could possibly have testified about. We hold that in this instance the trial judge had ample reason to conclude the testimony of the out-of-state witnesses would not be material and that it was not an abuse of discretion to deny defendant’s motion.

Ill

Did the District Court properly deny defendant’s motion to disqualify the county attorney from prosecuting the case based on a conflict of interest?

Subsequent to defendant’s arrest, but prior to trial, defendant filed a pro se civil suit against Jefferson County and several of its officers. By law, the Jefferson County Attorney was required to represent the county and its officers until the county’s insurance deductible had been met, at which time the representation shifted to the insurer’s retained counsel. On the first day of trial, defendant made a motion to disqualify the county attorney prosecuting the case. The trial judge pointed out to the defendant that if this motion were granted his trial would be delayed as long as six months. Despite the possible delay the defendant requested that the motion be heard. Defendant alleged that the county attorney’s defense against defendant’s civil suit created a conflict of interest for the prosecutor in that it created prejudice and animosity toward the defendant. The State objected to the motion. The State argued that the prosecution had begun well before the civil suit was filed, and that the defendant’s prosecution had not been handled differently because of the civil suit. The trial judge refused to disqualify the prosecutor. On appeal, defendant presents little authority in support of his position, and no evidence showing his prosecution was handled any differently because of his pending civil suit. We hold that the trial judge was well within his discretion in denying defendant’s motion to disqualify the county attorney.

IV

Did defendant’s conviction in State Court violate Montana’s double jeopardy statute?

Under the United States Constitution a federal prosecution does not bar a subsequent state prosecution, nor does a state prosecution bar a subsequent federal prosecution of the same person for the same offense. United States v. Wheeler (1978), 435 U.S. 313, 98 S.Ct. 1079, 55 L.Ed.2d 303. However, Montana is among those states which have by statute limited the concept of dual sovereignty. Section 46-11-504, MCA (1989), provides in part that:

When conduct constitutes an offense within the concurrent jurisdiction of this state and of the United States or another state ... a prosecution in any such other jurisdiction is a bar to a subsequent prosecution in this state under the following circumstances:
(1) The first prosecution resulted in an acquittal or in a conviction as defined in 46-11-503 and the subsequent prosecution is based on an offense arising out of the same transaction.

The double jeopardy argument was not raised by the defendant prior to or during trial. The argument was first raised moments before the District Court sentenced the defendant. Prior to sentencing, counsel for both the State and the defendant made their recommendations on sentencing to the District Court. During defense counsel’s recommendation he argued that:

[I]f the Court were to impose enhanced sentencing because of the inclusion of a firearm that it would involve double jeopardy for a case that the Defendant has already been processed on as far as his possession of this firearm in the federal system.

The double jeopardy argument was not presented in the form of a written motion nor was any citation to authority submitted. Immediately following the recommendations of counsel, the District Court sentenced the defendant to ten years for felony assault, with an additional ten years with five suspended for the use of a weapon during the commission of the offense.

The general rule is that this Court will not entertain on appeal issues not raised at trial. State v. Wiman (1989), 236 Mont. 180, 187, 769 P.2d 1200, 1204. Section 46-20-104, MCA (1989), provides that subject to the exceptions in 46-20-701(2), MCA (1989), none of which apply in this case, failure to make a timely objection during trial constitutes a waiver of the objection. In addition, 46-13-102, MCA (1989), provides in part that “[d]efenses and objections based on defects in the institution of the prosecution ...” must be raised prior to trial by way of a motion to dismiss or they are waived.

Additionally, the record before this Court concerning defendant’s double jeopardy allegation is entirely insufficient to allow for review, even if the argument had been raised in a timely fashion below. There was absolutely no evidence presented before, during, or after trial concerning the facts and circumstances of defendant’s federal prosecution. It is impossible to determine from the record if both prosecutions arose out of the same transaction or out of different transactions altogether. Concerning the timing of the two prosecutions, the record is only slightly more enlightening. While not entirely clear, it appears that the state prosecution was begun prior to the federal prosecution and that the defendant was convicted in state court prior to going to trial in federal court. If in fact this chronology is correct, then defendant’s conviction did not violate Montana’s double jeopardy statute. In any event, we hold that defendant’s double jeopardy argument must fail in that it was not raised in a timely fashion at trial and because the record presented to this Court for review is insufficient to establish a double jeopardy defense.

V

Was defendant denied his right to a speedy trial?

Defendant was arrested on October 31, 1989, and his trial began on April 11, 1990. The total unallocated delay between defendant’s arrest and trial was 161 days. Defendant contends this delay violated his right to a speedy trial guaranteed by the Sixth Amendment to the United States Constitution and Article II, § 24, of the Montana Constitution.

When analyzing alleged violations of a defendant’s Sixth Amendment right to speedy trial, this Court has adopted the four factor balancing test set out in Barker v. Wingo (1972), 407 U.S. 514, 530, 92 S.Ct. 2182, 2192, 33 L.Ed.2d 101, 117. State v. Curtis (1990), 241 Mont. 288, 787 P.2d 306. The four factors to be considered are: (1) the length of the delay; (2) the reason for the delay; (3) the assertion of the right by the defendant; and (4) the prejudice to the defense. Barker, 407 U.S. at 530, 92 S.Ct. at 2192, 33 L.Ed.2d at 117.

The first element, the length of the delay, is of primary importance in this analysis. Unless the length of the delay is determined to be presumptively prejudicial the analysis ends. Only a finding that the length of delay is prejudicial will trigger an analysis of the remaining three factors. Curtis, 787 P.2d at 313. This initial determination concerning the length of the delay is made by reviewing the entire delay without allocating the delay attributable to either party. Curtis, 787 P.2d at 313. We have also stated that “[w]hat length will be considered presumptively prejudicial depends on the facts of each individual case.” State v. Heffernan (Mont. 1991), [248 Mont. 67,] 809 P.2d 566, 568, 48 StRep. 327.

In State v. Wombolt (1988), 231 Mont. 400, 753 P.2d 330, we found that a 214 day delay was sufficient to trigger a full speedy trial analysis. In Wombolt, we set out a number of recent decisions indicating that delays over 200 days will usually trigger the full analysis. However, we have held that a delay as short as 175 days was presumptively prejudicial. State v. Bartnes (1988), 234 Mont. 522, 764 P.2d 1271. In this instance, we hold that a delay of 161 days is insufficient to require further analysis of the issue by the Court.

VI

Was it error for the District Court to allow certain testimony by the State’s expert witness, Connie Anders?

The State called Connie Anders, a domestic abuse specialist, to testify as an expert witness. Defendant’s objection that Anders was not qualified as an expert was overruled by the District Court. It is well settled that the question of whether a witness is qualified as an expert is largely within the discretion of the trial court and that the trial court’s decision will not be disturbed unless it is shown to have been an abuse of discretion. State v. Eiler (1988), 234 Mont. 38, 52, 762 P.2d 210, 218-19.

Defendant alleges that the witness Anders was allowed to testify concerning the credibility of the victim, contrary to this Court’s decision in State v. Harris (1991), 247 Mont. 405, 808 P.2d 453. Defendant is correct that testimony by Anders concerning the credibility of the victim would be improper under our holding in Harris. However, a careful study of the record of the testimony given by Anders reveals that at no time did she offer testimony on the credibility of the victim. We hold that it was not error to allow the testimony of Anders and that the District Court did not abuse its discretion by recognizing the State’s witness Anders as an expert in the area of domestic abuse.

VII

Was the sentence imposed on the defendant by the District Court excessive?

Defendant was sentenced to a term of ten years at the Montana State Prison for felony assault pursuant to § 45-5-202(2), MCA, and a consecutive term of ten years, with five years suspended, for the knowing use of a firearm during the commission of the offense, pursuant to the weapon enhancement statute § 46-18-221, MCA. Defendant was designated a dangerous offender for purposes of parole eligibility and was fined the sum of $50,000, with such fine to paid out of any proceeds recovered by the Defendant in a civil lawsuit which was pending at the time of sentencing. Defendant alleges that the sentence is excessive in light of the nature of the offense and the defendant’s past record.

The general rule regarding sentencing is that a sentence within the maximum statutory guidelines does not violate the Eighth Amendment prohibition against cruel and unusual punishment. State v. Watson (1984), 211 Mont. 401, 420-21, 686 P.2d 879, 889. Defendant’s sentence is within the statutory guidelines set out in 45-5-202(2), MCA, and 46-18-221, MCA. Defendant states that he has directed a challenge of his sentence to the Sentence Review Division. This is the proper procedure to challenge the equitability of a sentence as opposed to its legality. Watson, 686 P.2d at 889. The well settled rule concerning sentence review is that “ ‘we will not review a sentence on appeal for mere inequity or disparity. Such a review is to be conducted by the Sentence Review Division. ’” State v. Almanza (1987), 229 Mont. 383, 386, 746 P.2d 1089, 1090-91.

We hold the sentence given the defendant did not violate the Eighth Amendment prohibition against cruel and unusual punishment.

VIII

Did the District Court err in refusing to give defendant’s proposed jury instruction D-l, and in giving the State’s proposed instruction S-7?

Defendant objected to the District Court’s refusal to give his proposed instruction D-l which defined the term “imminent.” The State correctly argued that the term “imminent” does not refer to any element of felony assault, but applies to the justifiable use of force, which was never an issue in this case. Defendant also objected to the State’s proposed instruction S-7, which referred to the concept of “reasonable apprehension” which is relevant to the crime of felony assault. The District Court correctly allowed the instruction, finding it accurately reflected the law at the time. In reviewing instructions, this Court has previously stated that “[t]he instructions must be viewed as a whole to determine whether the defendant was limited in fairly presenting his theory.” Short, 702 P.2d at 984. We hold that the instructions given in this case accurately reflectedd the law at the time and provided defendant the opportunity to present his theory to the jury.

Affirmed.

JUSTICES GRAY, TRIEWEILER, McDONOUGH and WEBER concur.