author: JUSTICE HUNT

text:
    STEVEN G. BOYD and JERRI BOYD, husband and wife, and MONTANA MEDICAL OXYGEN AND SUPPLY, INC., a Montana corporation, Plaintiffs and Appellants, v. FIRST INTERSTATE BANK OF KALISPELL, N.A., a National Banking Association, Defendant, Third-Party Plaintiff and Respondent, v. STATE MEDICAL OXYGEN AND SUPPLY, INC., LARRY R. WILLIAMS, MARK C. HUNGERFORD, BRIAN R. CLOUTIER, STEPHEN KASPRISIN, and ROGER BOYD, Third-Party Defendants and Respondents.
    No. 91-500.
    Submitted on briefs Mar. 26, 1992.
    Decided May 28, 1992.
    49 St.Rep. 459.
    253 Mont. 214.
    833 P.2d 149.

      For Appellants: Jon R. Binney and Lon J. Dale, Milodragovich, Dale & Dye, Missoula.
    For Respondents: Debra D. Parker, Murphy, Robinson, Heckathorn & Phillips, Kalispell; Dexter L. Delaney and Palmer Mars Scott, Mulroney, Delaney & Scott, Missoula.
   JUSTICE HUNT

delivered the opinion of the Court.

Plaintiffs/appellants Boyds brought suit against defendant/ respondent bank based on the deposit of certain negotiable instruments between November 1983 and February 1985. Respondent then brought State Medical into the action by way of a third-party complaint, alleging entitlement to indemnification for any damages which might be awarded in the action. Specifically, the appellants brought suit for statutory conversion under the Uniform Commercial Code pursuant to § 30-3-419, MCA (1989). The present action was stayed by the District Court pending resolution of related litigation arising out of the same events which were the basis for the present action. Following a jury verdict, this Court affirmed the decision in the related litigation. The District Court then lifted the stay in this case and granted summary judgment for the respondent bank on the grounds that the jury verdict in the related action collaterally es-topped appellants’ action against the respondent. Appellants brought this appeal arguing that collateral estoppel does not apply in this situation and that summary judgment was incorrectly granted to the respondent. We affirm.

The only issue before this Court is whether the District Court erred in granting summary judgment to the respondent bank based on the determination that the resolution of the related litigation collaterally estopped the appellants from bringing this action.

Much of the factual background concerning this dispute was set out by this Court in the related case of Boyd v. State Medical Oxygen and Supply, Inc. (1990), 246 Mont. 247, 249, 805 P.2d 1282, 1283-84. The following facts, as set out in Boyd, are relevant to the present appeal:

Steven and Jerri Boyd, husband and wife, owned and operated a corporation known as Montana Medical Oxygen Supply, Inc. (Montana Medical). In 1983, the Federal Medicare Division initiated Medicare fraud charges against Montana Medical and Steven Boyd in federal court. These criminal charges resulted in a five year prison sentence for Steven Boyd and a $190,000 fine for Montana Medical. The federal judge agreed to review the prison sentence and fine under Rule 35 of the Criminal Rules of Civil Procedure if Steven Boyd would divest himself of all ownership in Montana Medical within 120 days. In response, Boyd executed an agreement with defendants Williams, Hungerford and Cloutier, for the sale and purchase of the assets and assumption of certain liabilities of Montana Medical. At about the same time, the Boyds executed documents granting powers of attorney to Williams, Hungerford and Cloutier and providing them with the right to manage Montana Medical. Upon execution of these documents, the federal judge reduced Steven Boyd’s prison term to sixty days and Montana Medical’s fine to $19.00.
At about the same time as the pleas to the federal medicare fraud indictments were entered, Montana Medical and Steven Boyd were suspended from receiving Medicare reimbursements. As a result of the suspension and the criminal fines against Montana Medical, Williams, Hungerford, and Cloutier formed a new corporation, State Medical Oxygen and Supply, Inc. (State Medical), to purchase the assets of Montana Medical rather than purchasing the corporation outright.

An agreement for the purchase of the assets of Montana Medical was signed by both parties. The agreement provided that the buyers, State Medical, were authorized to collect and retain all of Montana Medical’s outstanding accounts receivable. State Medical opened a commercial deposit account for its new business with First Interstate Bank in Kalispell. Some of the checks deposited into this account by First Interstate were made payable to Montana Medical. First Interstate deposited these checks into State Medical’s account based on the language in the agreement to purchase which provided that State Medical was entitled to all of Montana Medical’s accounts receivable.

Shortly after the federal sentences against Boyd and Montana Medical were reduced, a dispute arose between the parties concerning the purchase of the assets. Eventually the sale fell through and each party sought damages from the other, alleging that the other had caused the breach. The present litigation, instigated by the Boyds/Montana Medical against First Interstate on a claim of statutory conversion, was stayed by the District Court on August 3, 1987, pending the outcome of the suit between Boyds/Montana Medical and State Medical. The District Court indicated in the order staying the present action that “[t]he resolution of that suit could be of great significance to this case and others involving these parties and may well resolve many issues raised herein.” In the related litigation, the jury found against both parties and neither Boyds/Montana Medical nor State Medical recovered anything. One of the issues the jury considered was the question of whether State Medical, or Williams, Hungerford, or Cloutier individually, had converted any property of Montana Medical. The jury determined that no conversion had occurred. This Court affirmed the verdict of the jury and the judgment of the District Court. Boyd, 805 P.2d at 1282.

The District Court in the present litigation between Boyd/Montana Medical and respondent bank lifted the stay following this Court’s decision of the related appeal. On August 7, 1991, the District Court denied both parties’ motions for summary judgment. Following the denial of both parties’ motions for summary judgment, the District Court, on August 13, 1991, issued an amended order granting summary judgment for the respondent bank. The District Court determined that the previous litigation “collaterally estops the present action by Plaintiffs against First Interstate Bank.”

Did the District Court err in granting summary judgment to the respondent bank based on the determination that the resolution of the related litigation collaterally estopped the appellants from bringing this action?

Appellants argue that the doctrine of collateral estoppel does not apply to the present litigation. Appellants contend that if collateral estoppel does not apply, then there are genuine issues of material fact in this case which make the District Court’s grant of summary judgment erroneous.

The doctrine of collateral estoppel, which is at times referred to as issue preclusion, has been previously explained by this Court as follows:

“Collateral estoppel” ... may be considered as a branch of the doctrine of res judicata but is distinguishable from the bar to litigation normally called res judicata. The distinction is that res judicata bars the same parties from relitigating the same cause of action while collateral estoppel bars the same parties from relitigating issues which were decided with respect to a different cause of action. [Citation omitted.] The bar that arises from collateral estoppel extends to all questions essential to the judgment and actually determined by a prior valid judgment. [Citations omitted.]

Gessell v. Jones (1967), 149 Mont. 418, 421, 427 P.2d 295, 296. Collateral estoppel provides that “the judgment in the prior suit precludes relitigation of issues actually litigated and necessary to the outcome.” Nat’l Coal Ass’n. v. Hodel (D.Mont. 1987), 675 F.Supp. 1231, 1237. Collateral estoppel prevents “relitigation of a particular issue or determinative fact which was actually or necessarily decided in a prior action ....” Fetherston v. Asarco Inc. (D.Mont. 1986), 635 F.Supp. 1443, 1445. This Court has adopted a three-prong test to determine if the doctrine of collateral estoppel should be applied. Marriage of Stout (1985), 216 Mont. 342, 349, 701 P.2d 729, 733. Collateral estoppel will act as a bar to litigation when:

1. The identical issue raised has been previously decided in a prior adjudication;

2. A final judgment on the merits was issued in the prior adjudication; and

3. The party against whom the plea is now asserted was a party or in privity with a party to the prior adjudication. Stout, 701 P.2d at 733-34.

In this case, the appellants contend that the first prong of the test is not satisfied in that the issue raised in the present suit has not been previously adjudicated. Appellants argue that the issue in the prior litigation was whether the buyers, State Medical, were liable under a theory of common law conversion. In the present action, appellants are seeking damages from the respondent for statutory conversion pursuant to § 30-3-419, MCA (1989). Appellants rely on that portion of § 30-3-419, MCA (1989), which provides that: “(1) An instrument is converted when ....

(c) it is paid on a forged endorsement.” Appellants’ contention is that the District Court erred in determining that the prior action for conversion collaterally estops the appellants from bringing the present action for statutoiy conversion.

In the amended order of the District Court granting summary judgment to respondent, the court stated that:

In previously denying the motion of the Defendant for summary judgment this Court was proceeding on the basis that there still remained questions of fact on a number of issues, including the authority of Third-Party Defendants herein to authorize Defendant First Interstate Bank to accept for deposit to Account No. 01-8550-7 checks made payable to Montana Medical. (It being clear that absent appropriate authority the Defendant First Interstate Bank would have been in error to deposit checks payable to Montana Medical in that account, it being an account for State Medical Services, Inc., a separate entity.)
Upon further review the Court is satisfied that this question of fact and others have been rendered moot by the verdict of the jury and subsequent judgment rendered in Flathead County Cause No. DV-84-146.

The District Court further explained that:

There can be no question that at issue as part of the claim for conversion in DV-84-146 were the very funds at issue here. That jury having determined that no conversion occurred relative to these funds as between Plaintiffs here and Third-Party Defendants here, it follows that any claim against the bank, which was, after all, acting only as conduit to the funds, can[not] withstand a challenge of either res judicata or collateral estoppel.
Thus it is the finding of this Court that the jury verdict in Cause No. DV-84-146 finding in favor of the Defendants as to Plaintiffs collaterally estops the present action by Plaintiffs against First Interstate Bank.

Appellants’ contention that a previous action for common law conversion does not collaterally estop subsequent litigation on a theory of statutory conversion is based on this Court’s decision in Stapleton v. First Security Bank (1983), 207 Mont. 248, 675 P.2d 83. However, Stapleton is readily distinguishable from the present case. In Stapleton, the husband deposited two joint-payee checks into an account that his wife had previously closed. The checks were both made payable to husband and wife. The bank accepted both checks without the endorsement of either payee and without the knowledge or consent of the wife. Shortly after depositing the checks, the husband withdrew the funds from the account without the knowledge or consent of the wife. The husband left Montana and initiated divorce proceedings in Nevada. The Nevada court determined that the funds had been converted by the husband.

Wife then brought suit in Montana against the depository bank and both drawee banks under a claim for statutory conversion. One of the issues in Stapleton was whether the wife was collaterally estopped from pursuing this action in light of the previous judicial determination regarding the underlying conversion by the husband. This Court held that the question of the banks’ liability for statutory conversion had not been decided in the prior litigation. The judicial determination in the prior litigation that the husband converted the funds did not in any way settle the question as to the banks.

In the present case, it has already been judicially determined that no conversion took place between Montana Medical and State Medical as to the very checks in question here. The prior adjudication determined that the appellants had no interest in or right to the checks deposited by the respondent into the account of State Medical. As the District Court in this case correctly pointed out, the decision in the related litigation also resolved the issue the appellants are now attempting to relitigate. The appellants’ claim of statutory conversion involves questions of the bank’s authority to deposit the disputed checks into the account. The determination of the jury indicates the bank correctly deposited the checks into the account in question. The present suit would not be barred by collateral estoppel if the jury had determined that a conversion of the checks had occurred. A subsequent suit would have then been necessary to determine if the bank was hable, and if so, the measure of damages. However, in this situation we hold that the District Court correctly granted summary judgment to the respondent based on the doctrine of collateral estoppel.

Affirmed.

JUSTICES HARRISON, GRAY, McDONOUGH and WEBER concur.


source: Caselaw Access Project

author: JUSTICE HARRISON

license: Public Domain

text:
    JOHN SIMCHUK, Plaintiff, Appellant and Cross-Respondent, v. ANGEL ISLAND COMMUNITY ASSOCIATION, A Montana Nonprofit Corporation, JOHN/JANE DOES I through X, ABC COMPANIES, I through X, Defendants, Respondents and Cross-Appellants. ANGEL ISLAND COMMUNITY ASSOCIATION, Third-Party Plaintiff, v. BARBARA J. DOBLER, Third-Party Defendant.
    No. 91-428.
    Submitted on briefs Apr. 15, 1992.
    Decided June 2, 1992.
    Rehearing Denied June 25, 1992.
    49 St.Rep. 473.
    253 Mont. 221.
    833 P.2d 158.

      For Appellant and Cross-Respondent: Michael F. Lamb and Jean E. Faure, Church, Harris, Johnson & Williams, Great Falls; Ronald Leighton, Gordon, Thomas, Honeywell, Malanca, Peterson & Daheim, Tacoma, Washington.
    For Respondents and Cross-Appellants: Robert J. Emmons, Emmons & Sullivan, Great Falls.
    For Third-Party Defendant: John R. Gordon, Reep, Spoon & Gordon, Missoula.
    For Amicus: David R. Paoli, Edwards & Paoli, Billings.
   JUSTICE HARRISON

delivered the Opinion of the Court.

Appellant, John Simchuk, appeals from the judgment notwithstanding the verdict (JNOVj entered in favor of respondent, Angel Island Community Association (Angel Island), by the Nineteenth Judicial District Court, Lincoln County, Montana. Angel Island cross-appeals the District Court’s denial of its motion for JNOV on the issue of negligence. Angel Island also cross-appeals the jury verdict in favor of Barbara Dobler, third-party defendant. We reverse in part and affirm in part.

The parties present the following issues for our review:

1. Did the District Court err in entering judgment in favor of Angel Island, notwithstanding the jury verdict for Simchuk, by ruling that Montana’s recreational use statute precludes Simchuk’s recovery for Angel Island’s negligence?

2. Did the District Court err in denying Angel Island’s motion for JNOV on the issue of negligence?

3. Was the evidence insufficient to justify the jury verdict for Simchuk and Dobler?

4. Were the general damages awarded by the jury excessive?

Angel Island is an incorporated homeowner’s association governing homes and lots located on Bull Lake, near Libby, Montana. Angel Island requires all members to pay annual dues for the maintenance and use of Angel Island’s common facilities. Membership dues entitle association members and their guests the use of these common facilities which include a paved and fenced tennis court exclusively reserved for members and their guests. At the time of the accident, the tennis court was equipped with a basketball hoop and free-standing light standards for night playing. Angel Island retains a caretaker for its premises.

On July 1, 1989, John Simchuk, an invited guest of an association member, John Hunter, was injured on Angel Island’s property when one of the light standards on the tennis/basketball court fell on him while he was playing basketball. The light standard struck Simchuk’s chest and head causing permanent brain damage.

Simchuk brought a personal injury lawsuit against Angel Island alleging negligence. Angel Island filed a third-party complaint against Barbara Dobler alleging that her negligence caused Simchuk’s injuries. The negligence issues were submitted to the jury which found in favor of Simchuk and Dobler. The jury found Angel Island negligent in its installation and maintenance of the light standards, and awarded Simchuk approximately $177,000. Additionally, the jury found Dobler negligence free.

After the jury rendered its verdict, Angel Island moved for a JNOV against Simchuk and Dobler. The District Court granted the motion as against Simchuk on the ground that Montana’s recreational use statute, § 70-16-302, MCA, precludes Simchuk’s recovery. The District Court denied Angel Island’s JNOV motions regarding its negligence and the negligence of Dobler. This appeal arises from the granting and denial of these motions.

I.

Did the District Court err in entering judgment in favor of Angel Island, notwithstanding the jury verdict for Simchuk, by ruling that Montana’s recreational use statute precludes Simchuk’s recovery for Angel Island’s negligence?

The standard of reviewing a district court’s grant of a judgment notwithstanding a verdict is well-settled.

The standard of review in appeals from a judgment notwithstanding the verdict made pursuant to Rule 50(b), M.R.Civ.R is the same as that for review of a motion for a directed verdict, and a directed verdict may be granted only where it appears as a matter of law that a plaintiff could not recover upon any view of the evidence, including the legitimate inferences to be drawn from it.

Wilkerson v. School Dist. No. 15 (1985), 216 Mont. 203, 211, 700 P.2d 617, 622 (citation omitted). In the instant case, the District Court submitted the issues to the jury for a factual determination, but entered judgment notwithstanding the jury’s verdict on the basis that Simchuk was not entitled to recover as a matter of law because of Montana’s recreational use statutes, §§ 70-16-301 and -302, MCA.

Simchuk maintains that the court erred in applying Montana’s recreational use statutes which provide:

Recreational purposes defined. “Recreational purposes”, as used herein, shall include hunting, fishing, swimming, boating, water skiing, camping, picnicking, pleasure driving, winter sports, hiking, touring or viewing cultural and historical sites and monuments, or other pleasure expeditions.
Restriction on liability of landowner or his agent or tenant. (1) A person who makes recreational use of any property in the possession or under the control of another, with or without permission and without giving a valuable consideration therefor, does so without any assurance from the landowner, his agent, or his tenant that the property is safe for any purpose. The landowner, his agent, or his tenant owes the person no duty of care with respect to the condition of the property, except that the landowner, his agent, or his tenant is liable to such person for any injury to person or property for an act or omission that constitutes willful or wanton misconduct.

Sections 70-16-301 and -302, MCA.

Section 70-16-302, MCA, limits liability, absent willful and wanton misconduct, for a landowner whose property is used for recreational purposes, subject to several exceptions. In granting JNOV for Angel Island, the District Court found § 70-16-302, MCA, applicable and the exceptions inapplicable. The District Court concluded that Simchuk used Angel Island’s recreational facilities for recreational purposes without giving valuable consideration and that he failed to submit evidence of any act or omission by Angel Island constituting willful and wanton misconduct. The District Court applied § 70-16-302, MCA, releasing Angel Island from liability even though the jury found Angel Island negligent. Therefore, Simchuk could not recover from Angel Island.

The overall intent of Montana’s recreational use statute is to grant a landowner relief from liability to persons gratuitously entering land for recreational purposes. State ex rel. Tucker v. District Court (1970), 155 Mont. 202, 206-07, 468 P.2d 773, 775. However, if the facts indicate that certain exceptions exist, a landowner’s limited liability will be destroyed. Simchuk argues that, in this case, the tennis court upon which he received injury was not open to the public and that valuable consideration was paid for his use of the facilities, thereby rendering § 70-16-302, MCA, inapplicable. We agree.

“The only purpose of the recreational use statute is to encourage landowners to make their lands freely available to the public by limiting the landowners’ tort liability.” Fisher v. United States (D. Mont. 1982), 534 F.Supp. 514, 515. After reviewing the legislative history, statutory and case law from other jurisdictions, and the definition of “recreational purposes” in § 70-16-301, MCA, it is evident that the recreational use statute applies to land made available for public use. Therefore, if the land upon which an injury occurs is not available for public use, the landowner does not enjoy the protection of limited liability. In the instant case, Simchuk’s injury occurred at a private resort on a private texmis/basketball court. This fact alone destroys the protection Angel Island seeks under § 70-16-302, MCA.

Nevertheless, Simchuk also argues that § 70-16-302, MCA, does not shield Angel Island from liability because valuable consideration was paid to Angel Island for his use of the facility. The clear intent of the recreational use statute is to grant landowners relief from liability to any person gratuitously present for any recreational purpose. State ex. rel Tucker, 155 Mont. at 206-07, 468 P.2d at 775. If the landowner receives an economic benefit, the use of the land is not gratuitous.

[W]here a landowner derives an economic benefit from allowing others to use his land for recreational purposes, the landowner is in a position to post warnings, supervise activities, and otherwise seek to prevent injuries. Such a landowner also has the ability to purchase liability insurance or to self-insure, thereby spreading the cost of accidents over all users of the land. [Footnote omitted.]

Ducey v. United States (9th Cir. 1983), 713 F.2d 504, 511.

Angel Island requires members who own, rent, or reside on Angel Island to pay a membership fee which is partially applied to maintenance of the common facilities, including the tennis/basketball court. Angel Island receives an economic benefit for allowing others to use the facilities. This economic benefit provides Angel Island with the ability to spread the risk whether the association member pays the dues or each individual guest pays a fee to use the facilities.

Angel Island argues that the association dues paid by the members do not extend to their guests to destroy Angel Island’s protection under the statute. Angel Island argues that in order to retain tort liability, the valuable consideration must flow directly from the injured party to the landowner. We disagree. To retain tort liability, it is not necessary that the ultimate user furnish the consideration. However, the consideration must be paid by someone to create access to the premises for the ultimate user. Twohig v. United States (D. Mont. 1989), 711 F.Supp. 560, 564 (citation omitted). Here, Angel Island requires members, including the Hunters, to pay dues for members and their guests to use the facilities. The Hunters’ payment was necessary to create Simchuk’s access to the tennis/basketball court. Accordingly, valuable consideration was paid destroying Angel Island’s limited liability under the recreational use statute.

We hold that the District Court erred in setting aside the jury verdict in favor of Simchuk based on the Montana recreational use statute. Therefore, we reverse the order of the District Court on this issue and remand for reinstatement of the jury verdict.

II.

Did the District Court err in denying Angel Island’s motion for JNOV on the issue of negligence?

Angel Island maintains that the District Court erred in denying its motion for judgment notwithstanding the jury verdict regarding Angel Island’s negligence and the negligence of third-party defendant, Barbara Dobler.

As stated in our prior discussion, a district court should grant a JNOV only if it appears that the non-moving party could not recover upon any view of the evidence. Larson v. K-Mart Corp. (1990), 241 Mont. 428, 433,787 P.2d 361, 364 (citation omitted). The district court must view the evidence in a light most favorable to the non-moving party when considering a motion for judgment notwithstanding the verdict; the court must deny the motion if the non-moving party built a prima facie case or if a substantial conflict in the evidence exists. Nicholson v. United Pac. Ins. Co. (1985), 219 Mont. 32, 37, 710 P.2d 1342, 1345. Only if the evidence presents no room for an honest difference of opinion should a JNOV be granted. Walters v. Getter (1988), 232 Mont. 196, 203, 755 P.2d 574, 578 (citation omitted).

Here the District Court denied various summary judgment and directed verdict motions because a dispute as to the evidence existed which necessarily forced the court to submit the case to the jury. After a thorough review of the record, we conclude that substantial evidence existed in the record from which the jury could resolve the conflicts in the manner in which it did. We hold, therefore, that the court properly denied the motions regarding Angel Island’s negligence and Dobler’s negligence. We affirm the District Court on this issue.

III.

Was the evidence insufficient to justify the jury verdict for John Simchuk and Barbara Dobler?

Angel Island maintains that the jury verdict finding Angel Island negligent and Dobler negligence free is error because insufficient evidence existed to support such a conclusion. We disagree.

We recently discussed our function in reviewing jury verdicts. See Silvis v. Hobbs (Mont. 1992), [251 Mont. 407,] 824 P.2d 1013, 49 St.Rep. 62. It is not the function of this Court to agree or disagree with the jury’s verdict. Our function is to determine whether substantial evidence existed to support the verdict. In our examination, we review the facts in the light most favorable to the prevailing parties. If conflicting evidence exists, the credibility and weight given to the evidence is in the jury’s province and we will not disturb the jury’s findings unless they are inherently impossible to believe. Silvis, 824 P.2d at 1015-16, 49 St.Rep. at 63-64. Our job is complete once we find substantial evidence in the record to support the jury’s conclusion.

The record shows that substantial evidence existed supporting the jury’s verdict in favor of Simchuk and Dobler. Reviewing the evidence in the light most favorable to the prevailing parties, we direct our analysis to the evidence submitted in favor of Simchuk and Dobler. Simchuk submitted evidence that it was foreseeable that a free-standing light standard could fall, injuring anyone in its path. Simchuk also submitted evidence that it was foreseeable that someone, like Dobler, could act in such a manner to intervene with the standard’s stability. Simchuk presented expert testimony regarding the minimal amount of force required to topple the light standard.

Angel Island argued that it was unforeseeable that the prone light standard would be raised by someone, that Dobler would pirouette around that standard, and that the standard would fall and injure a player using the tennis/basketball court for its intended purpose. Angel Island submitted expert testimony that more than minimal force was required to topple the light standard. Angel Island argued that Dobler’s actions were a superseding cause, ehminating Angel Island’s liability. Angel Island attempted to prove that but for Dobler’s actions, Simchuk would not have been injured.

By finding in favor of Simchuk and Dobler, it is obvious the jury chose to believe the evidence presented on behalf of those parties. We will not retry this case simply because the jury chose to believe one side’s evidence to the exclusion of the other. Silvis, 824 P.2d at 1016, 49 St.Rep. at 64. We hold that substantial evidence supported the jury’s verdict. We affirm the District Court on this issue.

IV.

Were the general damages awarded by the jury excessive?

Angel Island maintains that if the jury verdict is reinstated and upheld on appeal, the general damages of approximately $177,000 awarded by the jury are excessive. We disagree.

Section 27-1-317, MCA, provides:

For the breach of an obligation not arising from contract, the measure of damages, except where otherwise expressly provided by this code, is the amount which will compensate for all the detriment proximately caused thereby, whether it could have been anticipated or not.

The court instructed the jury that reasonable compensation could be awarded for pain and suffering, the reasonable value of purchases necessitated by the injury, reasonable value of medical expenses, and the reasonable value for Simchuk’s lost capacity to pursue an established course of life. The jury was not required to itemize their award pursuant to the above categories.

The amount of damages awarded is properly left to the jury; this Court will not substitute its judgment for the jury’s unless the amount is so grossly out of proportion as to shock the conscience of this Court. Gunning v. General Motors Corp. (1989), 239 Mont. 104, 107, 779 P.2d 64, 66. We review the record in the light most favorable to the prevailing party to determine if substantial evidence supports the verdict. Gunning, 239 Mont. at 109, 779 P.2d at 67.

Evidence was submitted regarding Simchuk’s pain and suffering, his medical care, and his medical prognosis experienced as a result of Angel Island’s negligence. Expert testimony revealed that Simchuk suffers from permanent brain damage. This brain damage affects his ability to remember new information. After reviewing the record and realizing the extent of Simchuk’s injuries, the juryes award of approximately $177,000 for Angel Island’s negligence does not shock the conscience of this Court. We affirm the damages award.

Reversed in part, affirmed in part, and remanded for entry of judgment in conformance with this opinion.

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


text:
    SCOTT G. MIRANTI, Plaintiff and Respondent, v. ROBERT KENT ORMS, Defendant and Appellant.
    No. 91-524.
    Submitted on briefs Mar. 26, 1992.
    Decided June 2, 1992.
    49 St. Rep. 478.
    253 Mont. 231.
    833 P.2d 164.
    For Appellant: Gig A. Tollefsen, Berg, Lilly, Stokes, Andriolo & Tollefsen, Bozeman.
    For Respondent: J. David Penwell, Bozeman.
   JUSTICE HARRISON

delivered the Opinion of the Court.

Respondent, Scott G. Miranti, brought suit in the Eighteenth Judicial District Court, Gallatin County, Montana, seeking damages sustained in a motor vehicle accident. The District Court entered its judgment following a jury verdict for Miranti; Robert Kent Orms appeals. We reverse.

Orms presents the following dispositive issue for our review:

Did the District Court err in allowing Weintraub and Warwick to testify as experts?

On March 31, 1987, Miranti was driving north on Highland Boulevard when he proceeded to make a right hand turn into a private drive. During the negotiation of this turn, the vehicle driven by Orms, also travelling north on Highland Boulevard, collided with Miranti’s vehicle. Damage to both vehicles was minimal. Shortly after the accident, Miranti went to the emergency room complaining of injury to his neck.

At the time of the accident, Miranti was a Bozeman police officer. He did not miss work as a result of the accident, therefore, he did not claim lost wages or lost earning capacity related to his law enforcement employment.

However, Miranti was also a competitor in Taekwondo, an amateur martial art sport akin to karate. Three days after the accident, Miranti competed in a national Taekwondo championship in California. He won six out of seven of his scheduled matches, losing the final match to Jimmy Kim, the number one blackbelt in the United States.

Sixteen months after the accident, Miranti fought Jimmy Kim again in an Olympic qualifying match. Jimmy Kim won that match which sent him to the 1988 Olympics where he won a gold medal in Taekwondo.

Miranti brought suit alleging that he suffered personal injury and other damages, including lost earning capacity damages, as a result of Orms’ negligence. Orms admitted that he negligently struck Miranti’s vehicle. Consequently, only the issues of comparative negligence and damages were submitted to the jury. The jury awarded Miranti $53,000 (less twenty-three percent for Miranti’s comparative negligence). Orms appeals from the jury’s verdict.

Did the District Court err in allowing Weintraub and Warwick to testify as experts?

Miranti called Michael Weintraub and Jay Warwick, both experienced in many aspects of Taekwondo, to testify as expert witnesses regarding Miranti’s lost earning capacity. Orms objected to Weintraub’s and Warwick’s expert testimony because Miranti failed to disclose them as experts in discovery and when ordered by the court. However, the District Court allowed both witnesses to testify as experts over Orms’ continuing objections.

Orms maintains that Miranti qualified Weintraub as an expert, based on his overall experience in Taekwondo and his marketing background, with special knowledge concerning the economic value of attaining an Olympic medal. Orms maintains that Miranti qualified Warwick as an expert, based on his participation in the 1988 Olympics, with special knowledge and experience on the value of possessing an Olympic medal.

Weintraub and Warwick testified about the effect Miranti’s injury would have on his career in Taekwondo. Miranti elicited testimony which indicated that he would be less successful in his Taekwondo career because the neck pain adversely affects his performance. Additionally, Weintraub and Warwick testified regarding Miranti’s failure to participate in the Olympics; both experts indicated that non-participation in the Olympics would adversely affect Miranti’s goal of operating a successful Taekwondo school. Weintraub testified that without the stature of being an Olympic competitor, Miranti would lose prospective students each year, resulting in a loss of profit. Weintraub testified that Miranti would lose approximately 100 students per year who would each pay roughly $1,000 per year, resulting in a net loss of about $100,000 per year. Warwick estimated that Miranti would lose between fifty and 100 students per year as a result of his non-performance in the Olympics.

Orms had notice that both Weintraub and Warwick would be called as witnesses, but not as expert witnesses. Orms contends that the court erred in allowing this expert testimony because it restricted his ability to cross-examine and he did not have an opportunity to prepare his own expert witness to rebut Miranti’s evidence regarding lost earning capacity.

Prior to trial, Orms repeatedly attempted to discover information concerning Miranti’s lost earning capacity claim, including information regarding Miranti’s choice of experts. First, Orms submitted interrogatories to Miranti in November of 1988 which Miranti answered December 15,1988. Orms elicited information to determine what evidence Miranti would present to support his claim. The following interrogatories and answers indicate the type of information Orms sought and received:

INTERROGATORY No. 12: Are you claiming lost earning capacity as a result of the injuries you sustained in the accident? If so, please state:
A) The total amount of lost earning capacity you are claiming;
B) How such amount of lost earning capacity was calculated; ANSWER: Undetermined at the present time. An economic analysis is being made and a copy of the report will be provided to the defendant when it is prepared.
INTERROGATORY No. 16: For each expert witness whom you intend to call to testify at trial of this matter please state:
A) His or her name and address;
B) The subject matter on which he or she is expected to testify;
C) The substance of the facts and opinions to which he or she is expected to testify;
D) A summary of the grounds for each opinion.
ANSWER: Not available at this time - information will be provided when available to the plaintiff.

Orms also submitted the following request for production to Miranti with which he complied on August 24,1989. Orms sought Mir anti’s tax returns for a five-year period to determine the amount of damages Miranti was claiming for lost earning capacity.

REQUEST FOR PRODUCTION NO. 1: All of your tax returns for the years 1983 through 1988. (This request need be complied with only if you are claiming lost wages of [sic] lost earning capacity in this lawsuit.) [Emphasis added.]
RESPONSE: Not applicable.

Miranti failed to provide the information even though he agreed to do so in his answers. Additionally, Miranti failed to supplement his answers to the above interrogatories as required by Rule 26(e), M.R.Civ.R, which states:

A party who has responded to a request for discovery with a response that was complete when made is under no duty to supplement the response to include information thereafter acquired, except as follows:
(1) A party is under a duty seasonably to supplement the response with respect to any question directly addressed to (A) the identity and location of persons having knowledge of discoverable matters, and (B) the identity of each person expected to be called as an expert witness at trial, the subject matter on which the person is expected to testify, and the substance of the person’s testimony. [Emphasis added.]

Further, the court required both parties to exchange witness lists pursuant to its scheduling order:

Exchange witness (including proposed experts) and exhibit lists. As to all witnesses state the substance of testimony anticipated, and, if experts, the grounds for opinion.

The parties partially complied with this order. Although Miranti listed Weintraub and Warwick as witnesses, he did not designate them as experts, nor did he indicate the grounds for their opinions as ordered by the court.

Miranti acknowledges that the names of these experts were not listed in his first answers to interrogatories and that the experts were merely listed as witnesses on the pre-trial order. However, Miranti contends that Orms knew both Weintraub and Warwick would testify as experts, rendering his failure to designate them as such harmless. We disagree.

As is evident from the foregoing, Orms sought information regarding the identity of any experts Miranti intended to produce at trial and the bases for their opinions. Miranti failed to provide Orms with this information. Further, Miranti failed to comply with his continuing obligation to supplement his answers to interrogatories and submit a list of experts to Orms prior to trial although he was given numerous opportunities to do so. We agree with Orms that this failure severely limited his ability to effectively cross-examine these witnesses. '

Admissibility of evidence is within the sound discretion of the trial court and we will reverse the trial court only if it abused its discretion. Vestre v. Lambert (1991), 249 Mont. 455, 461, 817 P.2d 219, 222. Weintraub and Warwick were qualified as expert witnesses and testified as such over the objection of Orms. Allowing this evidence amounted to an abuse of discretion. Therefore, the District Court erred in allowing Weintraub and Warwick to testify as experts.

Reversed and remanded.

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


author: JUSTICE HARRISON JUSTICE HUNT

text:
    STANLEY STRUCTURES, Employer, and AETNA LIFE AND CASUALTY COMPANY, Insurer and Respondent, v. CHESTER SCRIBNER, Claimant and Appellant.
    No. 91-489.
    Submitted on briefs Feb. 6, 1992.
    Decided June 4, 1992.
    49 St.Rep. 485.
    253 Mont. 236.
    833 P.2d 166.

      For Appellant: R. Russell Plath, Halverson, Sheehy & Plath, Billings.
    For Respondent: Brendon J. Rohan, Poore, Roth & Robinson, Butte/
   JUSTICE HARRISON

delivered the Opinion of the Court.

Claimant, Chester Scribner (Scribner), appeals from a judgment of the Workers’ Compensation Court issued on September 16, 1991, which ruled in favor of the insurer (Aetna). The order entitled Aetna to recoup lump sum advances and social security overpayment by reducing Scribner’s weekly workers’ compensation benefits. Further, Scribner was not entitled to an additional lump sum advance. We affirm.

On May 16,1979, Scribner suffered an injury arising out of and in the course of his employment. Scribner was injured when the 650 pound wheelbarrow he was pushing tipped over, resulting in torn muscles in his lower back. At the time of Scribner’s injury, his employer was insured under Plan II of the Workers’ Compensation Act. Aetna accepted liability for Scribner’s injury. In addition to paying medical, temporary total, and permanent total disability benefits, Aetna advanced Scribner three lump sum payments.

On April 2, 1984, the Social Security Administration determined that Scribner was eligible for social security disability benefits as of May 17, 1979. Therefore, on April 2, 1984, Aetna decreased Scribner’s workers’ compensation benefits to the social security offset rate provided for in § 39-71-702(2), MCA (1978). Aetna also determined that, prior to April 2,1984, it overpaid Scribner approximately $7,702 due to the social security offset.

Additionally, with court approval, Aetna advanced Scribner three lump sum payments from June 6, 1980, through June 2, 1982, totalling approximately $17,779.

Aetna petitioned the Workers’ Compensation Court for an order allowing Aetna to reduce Scribner’s benefits to recoup overpayment and lump sum advances previously made to him. Scribner cross-petitioned requesting an additional lump sum payment for debt management. Subsequently, the parties commenced settlement negotiations which resulted in a tentative settlement. When Scribner refused to sign the settlement agreement, Aetna moved the court to enforce the settlement agreement. On June 20,1991, Hearings Examiner, David J. Patterson, heard Aetna’s motion to enforce the settlement agreement as well as all other matters raised by the parties.

The hearings examiner issued proposed findings of fact and conclusions of law on September 12, 1991, denying Aetna’s motion to enforce the settlement agreement and Scribner’s request for an additional lump sum advance. The hearings examiner determined that Aetna could reduce Scribner’s weekly benefits to recoup the amount Aetna overpaid Scribner. The Workers’ Compensation Court adopted the hearings examiner’s proposed findings and conclusions on September 16, 1991, from which Scribner appeals.

Scribner presents the following issues for our review:

1. Did the Workers’ Compensation Court err in allowing Aetna to recoup social security overpayment and lump stun advances from Scribner by reducing his weekly workers’ compensation benefits?

2. Did the Workers’ Compensation Court err in denying Scribner’s request for an additional lump sum advance to implement a debt management plan?

I.

From the time of his injury until April 2, 1984, Scribner received full workers’ compensation benefits and social security disability benefits. Section 39-71-702(2), MCA (1978), allows an offset against workers’ compensation benefits when the injured worker receives social security disability benefits. Belton v. Carlson Transport (1986), 220 Mont. 194, 196, 714 P.2d 148, 149. Aetna did not take the offset until April 2, 1984, at which time it reduced Scribner’s compensation to the offset rate. Aetna determined that it overpaid Scribner approximately $7,702. Scribner does not dispute the amount or Aetna’s entitlement to recoup the social security overpayment; Scribner’s argument focuses on the manner in which Aetna proposed, and the Workers’ Compensation Court adopted, to realize the recoupment.

In addition to recoupment of the overpayment due to the social security offset, the Workers’ Compensation Court concluded that Aetna is entitled to recoup the lump sum advances previously made to Scribner, totalling approximately $17,779. Scribner contends that Aetna is only entitled to recoupment of the lump sum advances when a final settlement is reached between the parties. We disagree.

A claimant is not entitled to double recovery of both a lump sum advance and the biweekly payments. Since a lump sum advance is merely the whole or partial conversion of a claimant’s biweekly payments, the insurer is entitled to recover the advance.

Hedegaard v. Knife River Coal Mining Co. (1989), 238 Mont. 290, 293, 776 P.2d 1225, 1227.

The appropriate standard of review for reviewing conclusions of law by the Workers’ Compensation Court is to determine whether the lower court’s interpretation of the law is correct. Raffety v. Kanta Prod., Inc. (Mont. 1991), [250 Mont. 268,] 819 P.2d 1272, 1273, 48 St.Rep. 926. In the case at bar, the parties essentially agree on the facts. They disagree as to the Workers’ Compensation Court’s determination of what the law requires for an insurer to recoup overpayment. Here, case law indicates that insurers are entitled to recover lump sum advances. Since the Workers’ Compensation Court interpreted the law correctly, it did not err in concluding that Aetna was entitled to recoupment of the social security overpayment and the lump sum advances.

II.

Scribner maintains that if this Court finds that Aetna was entitled to recover the overpayment, the Workers’ Compensation Court erred in allowing Aetna to reduce Scribner’s weekly benefits because with the reduction, Scribner’s expenses exceed his income. Scribner contends that he is entitled to an additional lump sum advance to implement his proposed debt management plan before the court can reduce his weekly benefits.

Scribner sought a lump sum advance of $88,000 to reimburse Aetna for its prior overpayment and to pay off Scribner’s home mortgage, automobile expenses, and miscellaneous debts. Paying these debts in full would leave Scribner with monthly income in excess of his monthly expenses even with an offset to his weekly benefits.

On May 16, 1979, the date of Scribner’s injury, the statute controlling lump sum advances stated in part:

The biweekly payments provided for in this chapter may be converted, in whole or in part, into a lump-sum payment. Such conversion can only be made upon the written application of the injured worker or the worker’s beneficiary and shall rest in the discretion of the division, both as to the amount of such lump-sum payment and the advisability of such conversion. The division is hereby vested with full power, authority, and juris-diction to compromise claims and to approve compromises of claims under this chapter. All settlements and compromises of compensation provided in this chapter are void without the approval of the division ....

Section 39-71-741, MCA (1978). Lump sum settlements are granted in situations in which outstanding indebtedness exists, a pressing need is shown, or the best interests of the claimant, his family and the general public will be served. Willoughby v. Arthur G. McKee & Co. (1980), 187 Mont. 253, 257, 609 P.2d 700, 702.

Generally, the best interests of the claimant are served by compensating the claimant in regular periodic installments; lump sum conversions of periodic benefits are the exception rather than the rule. Phelps v. Hillhaven Corp. (1988), 231 Mont. 245, 252, 752 P.2d 737, 741-42 (citation omitted). However, if the best interests of the parties will be served by lump sum conversions, the Workers’ Compensation Court should award them without hesitation. Crittendon v. Terri’s Restaurant & Lounge (1991), 247 Mont. 293, 295, 806 P.2d 534, 536.

Scribner possessed the burden of proving that a lump sum conversion was in his best interest. Phelps, 231 Mont. at 252, 752 P.2d at 742. He failed to meet this burden. An additional lump sum would benefit Scribner by reducing his monthly expenses at the present time. However, the fact that Scribner’s debts exceed his income does not require conversion of Scribner’s weekly benefits into a lump sum settlement. Ruple v. Bob Peterson Logging Co. (1984), 209 Mont. 276, 281, 679 P.2d 1252, 1254.

The Workers’ Compensation Court is the proper forum for determining how an insurer can recover overpayment. In this case, the court denied Scribner’s lump sum request because Scribner’s tax-free yearly income does not justify such a result. Further the court found that a reduction in Scribner’s weekly benefits (by $25 per week until the overpayment are repaid) is fair and reasonable. The court’s findings of fact are undisputed and the court made correct conclusions of law. Therefore, we will not disturb its ruling.

Affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES GRAY and WEBER concur.

JUSTICE HUNT

dissenting.

I dissent. The benefits received by the claimant are insufficient to cover his living expenses, and the fact that this Court finds that reducing his income by $25 per week until overpayment are repaid is fair and reasonable does not mean that it is enough for claimant and his family to live on.

In its majority opinion, this Corut states that lump sum settlements are granted in situations in which outstanding indebtedness exists, a pressing need is shown, or the best interests of the claimant, his family, and the general public will be served. Willoughby v. Arthur G. McKee and Co. (1980), 187 Mont. 253, 609 P.2d 700. The Court further states that the fact that claimant’s debts exceeded his income does not require conversion of his weekly benefits into a lump sum settlement. As a matter of law, it does. While a carrier is entitled to receive its overpayment, a lump sum advance would be in the best interest of the claimant, his family, and the general public, and therefore, the reduction of his income to below his obligations is contrary to the statement of law as set forth in Willoughby. I dissent.

       Claimant received social security disability benefits from November 1, 1979, through November 1, 1982, while he was receiving full workers’ compensation permanent total disability benefits. Thereafter, he started receiving social security disability benefits on June 1,1983, continuing to present until he reaches age 65, at which time he will receive social security retirement benefits for which no offset exists in the Workers’ Compensation Act.


author: JUSTICE McDONOUGH JUSTICE GRAY

text:
    UNITED FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION, an Idaho corporation, Plaintiff, Respondent and Cross-Appellant, v. WHITE-STEVENS, LTD., and THOMAS STEVENS, Defendants, Appellants and Cross-Respondents.
    No. 91-373.
    Submitted on briefs Mar. 12, 1992.
    Decided June 4, 1992.
    Rehearing Denied July 21, 1992.
    49 St.Rep. 490.
    253 Mont. 242.
    833 P.2d 170.

      For Appellant: Sam E. Haddon and Dean A. Stensland, Boone, Karlberg & Haddon, Missoula.
    For Respondent: Harold V. Dye and Kristine L. Foot, Milodragovich, Dale & Dye, Missoula.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

White-Stevens, Ltd., and Thomas Stevens appeal from a judgment of the Fourth Judicial District Court, Missoula County, in favor of United First Federal Savings and Loan Association. We reverse. We frame the following issues for appeal:

1. Whether the District Court erred in admitting expert testimony; and

2. Whether the District Court erred in awarding United First Federal contractual damages.

Thomas Stevens, a professional appraiser and member of the American Institute of Real Estate Appraisers, prepared two appraisal reports on two properties in Missoula, Montana. The appraisals were prepared at the request of the Curran family (herein Curran). The first report was submitted on November 3,1983, for a building located at 800 Kensington. According to the report, the value of the property in 1983, was $1,600,000. The second report was submitted on February 8,1984, for an unimproved 6 acre tract located at the corner of Russell and 34th Street. According to the report the value of the property was $960,000. At the time of the appraisals, Stevens was a partner in White-Stevens, Ltd.

The prospective lender, United First Federal (UFF) reviewed the reports, and relied on the accuracy of the reports in making its decision to grant loans to Curran, secured by the appraised properties. On April 17,1984, UFF loaned Curran approximately $600,000, secured by a trust indenture on the 6 acre tract. On August 31, 1984, UFF loaned Curran $975,000, secured by a trust indenture on the Kensington property. The loan amounts were 61-62% of the appraised market values and were well below the industry average loan to value ratio of 70-75%.

Curran defaulted on both loans before the end of 1984. UFF judicially foreclosed each obligation and security as a mortgage. On December 10, 1985 the District Court entered a foreclosure decree. A default judgment was entered against the Currans which included interest, costs, and attorney fees. At the sheriff’s sale, UFF bid $850,000 for the Kensington property, and $200,000 for the 6 acre tract. As a result of the sheriff’s sale, a deficiency judgment of February 5,1986, in the amount of $848,067, was entered against the Currans. UFF has exhausted every alternative in attempting to collect the debt. Curran did not redeem either property. UFF later sold the Kensington property for $775,000. UFF has not been able to sell the 6 acre tract.

UFF brought an action against White-Stevens, Ltd. and Thomas Stevens for damages arising from negligent misrepresentations of the appraisals of real property. A bench trial commenced on December 21, 1990. The District Court entered judgment on April 17, 1991, awarding UFF $848,067. This appeal followed.

The standards of review are set out below as we discuss each issue.

I

Whether the District Court erred in admitting expert testimony.

Questions of evidence are discretionary with the trial court. The scope of review of discretionary acts by the trial court is whether or not the trial court’s determination was a misuse or abuse of discretion. Steer, Inc. v. Dept. of Revenue (1990), 245 Mont. 470, 803 P.2d 601.

Stevens argues the District Court improperly allowed expert testimony at trial, in violation of the Montana Rules of Civil Procedure. During discovery, Stevens’ counsel propounded interrogatories to UFF requesting UFF identify the names of persons they expected to call as experts at trial. UFF responded, stating they would be calling Steven Alan Hall as an expert. UFF did not supplement its original answer to interrogatories. It is clear that under Rule 26(b)(4)(A)(i), M.R.Civ.P., UFF was required to disclose the names of experts it intended to call at trial.

Rule 26(b)(4)(A)(i), M.R.Civ.R, provides:

A party may through interrogatories require any other party to identify each person whom the other party expects to call a an expert witness at trial, to state the subject matter on which the expert is expected to testify, and to state the substance of the facts and opinions to which the expert is expected to testify and a summary of the grounds for each opinion. (Emphasis added.)

Rule 702, M.R.Evid, which governs expert testimony provides:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training or education may testify thereto in the form of opinion or otherwise.

The Commissioner’s Comments to Rule 702, discuss two standards in determining when testimony is expert in nature. The standard involved under the facts here is concerned with whether or not the subject matter requires expert testimony. Former § 93-401-27(9), RCM (1947) (superseded), admitted expert opinion when a case involved questions of “science, art, or trade, when he is skilled therein”. This section has been interpreted to include matters not within the range of ordinary training or intelligence. The modern rule admits expert testimony to aid the trier of fact to understand facts and draw correct conclusions. The Commissioner’s Comments note that the modern rule intends to encompass both statements of the rule.

Nicholas Kaufman, Ken Staninger, and James Benn (whose testimony in part presented opinion evidence of Barney Olson, an appraiser hired by UFF) were called to testify at trial on behalf of UFF. UFF argues that neither Kaufman nor Staninger nor Olson, were identified as experts because they were not expected to testify as experts nor did they testify as such. We treat each witness separately.

Kaufman

Nicholas P. Kaufman, a land use consultant with the engineering firm of Sorenson and Co., was subpoenaed by UFF and testified on their behalf. UFF hired Sorenson and Co. to study the flood proofing problems on the 6 acre tract in an effort to market the property. During direct examination, counsel for UFF stated:

I have the intention of inquiring of you and asking you about what was available to you or to anyone who would have looked at the public record as of that date that related to flood-proofing or flood control issues on this property.

Stevens’ counsel objected on the grounds that Kaufman was an ■undisclosed expert. UFF counter-argued that Kaufman would be testifying to historical facts and would not be giving his opinion. The objection was overruled.

Counsel for UFF then asked Kaufman,

Based on your review of the records ... what did your analysis and investigation of the records show to you or tell you about this property.

Counsel for Stevens repeated his objection. UFF argued it was really a summary of facts in the public record. Stevens’ counsel counter-argued that without an expert to interpret the record, best evidence of public records are certified copies, and that interpreting public records is expert testimony. The objection was overruled.

Kaufman went on to present an analysis of the appropriate city council minutes, flood insurance rate maps, flood plain maps, and several sections of the flood plain ordinance.

Next, counsel for UFF asked Kaufman:

Did Sorenson and Co. ... come up with the calculations and a determination of what would need to be done? (to flood proof the property)

An objection was made and sustained as to the expert testimony.Kaufman went on to testify about the work he did relative to floodproofing the property.

Counsel for UFF then asked:

What did you determine about the necessity of a joint effort, multi-many owner effort to consider or deal with the flood-proofing issues on this property?

Stevens’ counsel objected on the grounds that the question called for an expert opinion. The objection was sustained as to the technical matters, but not as to the floodproofing. Kaufman testified that the property needed to be raised to prevent flooding, but was not allowed to testify as to how to fill the property for floodproofing purposes. Kaufman was allowed over objection to discuss five different options for floodproofing.

Kaufman is a land use consultant with a Bachelor’s degree in economics, a Master’s in planning, and two years of education in engineering. Kaufman has been working in the area of flood permitting since 1978. Kaufman’s area of specialty is not within the range of ordinary training and intelligence. Further, his testimony as such served to aid the trier of fact in drawing its conclusions. Therefore, we conclude that the District Court abused its discretion in allowing Kaufman to testify in violation of Rule 26, M.R.Civ.R

Staninger

Ken Staninger, a real estate broker in Missoula with 19 years experience, was involved in the sale of the Kensington property and received a commission. He acted as a co-broker working for the sellers. Since 1989 he has been the exclusive listing broker on the 6 acre tract. He was not listed as an expert by UFF. During Staninger’s testimony, a letter was admitted over objection, containing his opinions as to the value of the property. Staninger estimated what it would cost to sell the property with the water problems. Stevens’ counsel renewed his objection. The objection was overruled and Staninger went on to explain the marketing problems with the property.

Olson (Benn)

Mr. Benn, the attorney who handled the foreclosure proceeding, was allowed to essentially testify over objection as to the value of the property at the foreclosure sale. The value was provided in a letter from Barney Olson, an appraiser hired by UFF. Barney Olson was not named as an expert by UFF.

Ken Staninger, and Barney Olson, (through Benn’s testimony) both knowledgeable and experienced in the area of real estate, testified as to the value of the 6 acre tract. Montana has often allowed lay opinion testimony regarding the value of land. However, these cases involve the testimony of the verified owner of the land as to its value. See State v. Marsh (1978), 175 Mont. 460, 464, 575 P.2d 38, 42; Zugg v. Ramage (1989), 239 Mont. 292, 297, 779 P.2d 913, 916. The case before us concerns commercial property with significant flooding problems. The exact dispute in issue is the value of the land in question. The market value of the 6 acre tract required testimony beyond the scope of ordinary training and intelligence, and required expert testimony to aid the trier of fact in determining facts in issue. Kaufman, Staninger and Olson should have been named as experts upon the interrogatory request by Stevens. The days of disclosure are here. We conclude that the District Court abused its discretion in allowing such testimony as it was in violation of Rule 26, M.R.Civ.P.

II

Whether the District Court erred in awarding United First Federal contractual interest.

In reviewing questions of law we will determine if the trial court’s determination as to the law is correct. Our review will be plenary. Steer, Inc. v. Dept. of Revenue (1990), 245 Mont. 470, 803 P.2d 601. See also Hudon v. City of Butte (1940), 111 Mont. 210, 107 P.2d 882.

As stated above, the District Court awarded $848,067 in damages to UFF. Stevens contends that $241,333.02 was awarded erroneously because it represents contractual interest from the note between Curran and UFF. UFF argues that it is entitled to the $241,333.02, and in addition, $620,572 in lost earnings on the deficiency at a rate of 15% interest from February 5,1986 (the date of deficiency).

The foreclosure judgment summarized the items of contractual damages which included a 15% interest rate per annum from October 1, 1984 to December 6, 1985. The interest totaled $241,333.02. Nothing in the record supports the notion that $241,333.02 was anything but the contractual interest in the Curran-UFF note at a contractual default rate of 15%.

The case before us rests on the legal theory of negligent misrepresentation. Both parties cite § 552B of the Restatement (Second) of Torts. It provides:

(1) The damages recoverable for a negligent misrepresentation are those necessary to compensate the plaintiff for the pecuniary loss to him of which the misrepresentation is a legal cause, including
(a) the difference between the value of what he has received in the transaction and its purchase price or other value given for it; and
(b) pecuniary loss suffered otherwise as a consequence of the plaintiff’s reliance on the misrepresentation.
(2) The damages recoverable for a negligent misrepresentation do not include the benefit of the plaintiff’s contract with the defendant.

Under the Restatement, UFF is entitled to out of pocket expenses which accrued as a result of Stevens’ negligent misrepresentation. UFF is entitled to the difference between what they loaned to Curran (due to Stevens’ misrepresentation) and what they received. This does not include lost earnings, or opportunity cost between the deficiency and the date of judgment.

We conclude that the District Court erred in including $241,333.02 in the damage award against Stevens. The interest on the deficiency as of December 10, 1985, the date of the foreclosure action, has accrued at a rate of $348.44 per day between February 5, 1986 (date of foreclosure) and December 21,1990 (date of trial) in the amount of $620,572. The District Court awarded UFF damages in the amount of $848,067 based on what the court deemed actual pecuniary loss to UFF. The District Court declined to award UFF its claim for the $620,572 in interest as a basis for lost earnings. We affirm the District Court in its denial of awarding UFF $620,572 in lost earnings.

The issue of whether the District Court’s findings of fact and conclusions of law were supported by substantial credible evidence will not be discussed due to the fact we are reversing the judgment and remanding for a new trial.

Reversed and remanded for a new trial.

JUSTICES HARRISON, HUNT, TRIEWEILER and WEBER concur.

JUSTICE GRAY

concurring in part and dissenting in part.

I concur in the opinion of the majority on issue two. I respectfully dissent from the majority’s conclusion that the testimony of Nicholas Kaufman, Ken Staninger and James Benn which was admitted over “expert testimony” objection constituted expert testimony requiring disclosure under Rule 26, M.R.Civ.P. Given the content of the testimony at issue and the abuse of discretion standard of review, I would affirm the District Court on issue one.

Nicholas Kaufman's testimony is summarized by the majority. It contained two discrete parts: first, Kaufman testified as to flood plain regulations and other matters of public record regarding those regulations as they relate to the two property parcels at issue; he then testified generally on five alternatives for flood-proofing the parcels. Stevens’ counsel objected that Kaufman’s testimony was undisclosed expert testimony. The District Court overruled the objection to testimony on the flood plain regulations and related matters. The court specifically sustained objections to portions of Kaufman’s testimony addressed to the engineering aspects of the various flood-proofing alternatives but allowed Kaufman to testify generally on the alternatives “until we get in any technical matters.”

The majority states that Kaufman’s area of specialty and, assumedly, his testimony are not within the range of ordinary training and intelligence, in direct derogation of the District Court’s conclusion that it was not. It is my view that Kaufman’s testimony was, indeed, a “close call.” However, I cannot ascribe an abuse of discretion to the District Court in light of the clear and understandable nature of the testimony and the fact that, as the trier of fact in this case, the District Court did not believe the testimony was so complex or specialized as to constitute expert testimony.

Furthermore, I do not understand the majority’s reliance on the fact that the court, as trier of fact, used Kaufman’s testimony in drawing its conclusions. The majority seems to suggest that the court’s actual use of the testimony renders the testimony “expert.” If that is to be the definition of expert testimony, then we have reached a point where mere relevant testimony equates to expert testimony.

As to Ken Staninger, the majority correctly notes that he is a real estate broker of some years’ experience who was involved with both parcels of property at issue in this case. Stevens’ counsel’s “expert opinion” objection to Staninger’s opinion testimony on the $775,000 selling price for the Buttrey parcel was sustained because the testimony amounted to expert appraisal-type testimony. Staninger did provide testimony on the 6 acre tract, for which he was the exclusive listing broker. A letter from Staninger to UFF, in which Staninger discussed market conditions and his personal experiences in attempting to sell the property at the $250,000 asking price, was admitted over objection by Stevens’ counsel that it constituted expert opinion on the value of the property. The majority apparently concludes that this letter was expert opinion testimony and that, as such, the District Court abused its discretion in admitting the letter because Staninger was not identified as an expert. I disagree.

It is my view that the Staninger letter is lay opinion testimony under Rule 701, M.R.Evid. There is nothing of a scientific, technical or particularly specialized nature in Staninger’s letter which would constitute Rule 702 expert opinion. Nor does Staninger’s nineteen years’ experience in the real estate business necessitate a conclusion that everything he says or does invokes expert status requiring disclosure under Rule 26, M.R.Civ.R The letter recounts Staninger’s personal experience in trying to market the Russell property; it includes Staninger’s observations on market conditions he experienced relative to the property and UFFs asking price. Nothing in the letter approaches the kind of expert valuation or appraisal testimony the majority seems to suggest is there. The majority’s conclusion that the letter is expert testimony subject to Rule 26 disclosure is an extremely broad view which renders virtually all testimony by any person engaged in any trade or profession expert testimony. The majority states that “[t]he days of disclosure are here.” As a result of the majority opinion, that is certainly true; the traditional distinction between lay and expert testimony is no more.

It is my view that the majority similarly mischaracterizes the testimony of James Benn. Benn did not testify as to the value of the property at the foreclosure sale; he testified as to his own involvement in the foreclosure of both parcels and in helping UFF establish its bid price for each parcel.

Benn testified to the bid price for the Buttrey Suburban Building. His testimony included the information that Barney Olson was retained by UFF to provide a range of values for the property; neither Olson’s letter nor any specific valuation information from that letter was testified to by Benn. No objection was made to the referenced portion of Benn’s testimony on the bid price, and the manner of establishing it, for the Buttrey parcel. An objection was made and sustained on “expert testimony” grounds to a later portion of Benn’s testimony about fair market value.

Benn then testified that the same process was utilized in establishing UFF’s $200,000 bid price for the 6 acre tract. Stevens’ counsel objected that the question called for hearsay based on Olson’s valuation; the objection was overruled. It is this action by the District Court in overruling a hearsay objection that the majority holds is an abuse of discretion because the testimony was in violation of Rule 26, M.R.Evid. Again, I cannot agree.

Benn’s testimony as to the bid price for the 6 acre tract, and how it was established, is not expert testimony. It is factual testimony of Benn’s own participation in UFF’s action to foreclose the 6 acre tract. There is nothing specialized or technical about it, it does not constitute opinion testimony of any kind, and it is not valuation testimony as suggested by the majority. Furthermore, the testimony was not inadmissible on the hearsay grounds upon which the objection was based since it contained no reference whatsoever to the contents of Olson’s letter. I cannot find an abuse of discretion by the District Court on these facts.

The majority’s brief and generalized treatment of Benn’s testimony, and its resulting lack of clarity in concluding that testimony was expert testimony requiring disclosure under Rule 26, does not provide guidance to the bench and bar of Montana in distinguishing lay and expert opinion. Instead, as noted above, the message seems to be that the difference between the two no longer exists. I dissent.

CHIEF JUSTICE TURNAGE concurs in the foregoing concurring and dissenting opinion of JUSTICE GRAY.


author: JUSTICE HARRISON JUSTICE WEBER

text:
    MARIE JOHNSTON, Plaintiff and Appellant, v. AMERICAN RELIABLE INSURANCE COMPANY, ROBERT FRANCHUK, DONNA FRANCHUK, and JANEVA GALAYDA, Defendants and Respondents.
    No. 91-410.
    Submitted on briefs Dec. 30, 1991.
    Decided June 4, 1992.
    49 St.Rep. 495.
    253 Mont. 253.
    833 P.2d 176.

      For Appellant: Terry G.Sehestedt, Missoula.
    For Respondent: Kim L. Ritter, Milodragovich, Dale & Dye; Darla J. Keck, Datsopoulos, MacDonald & Lind, Missoula.
   JUSTICE HARRISON

delivered the Opinion of the Court.

This action began on April 18, 1989, when appellant, Marie Johnston (Johnston), filed a complaint in the Fourth Judicial District Court, Missoula County, alleging conversion and breach of contract. The District Court granted summary judgment in favor of the respondents, American Rehable Insurance (Reliable) and Janeva Galayda (Galayda). Johnston appealed and we remanded the case to the District Court with instructions to enter grounds for granting summary judgment in favor of the respondents. Johnston v. American Reliable Ins. Co. (1991), 248 Mont. 227, 810 P.2d 1189 (Johnston I).

On remand, the District Court stated its reasons for granting the respondents’ summary judgment. The District Court found that the Franchuks, the individuals who sold Johnston the mobile home, lawfully repossessed Johnston’s mobile home after proper notice of default, and that repossession of the mobile home was not covered under the terms of the homeowner’s insurance policy issued by Reliable. At the time of the lawsuit, the Franchuks had declared bankruptcy and were protected defendants.

Additionally, the court found that Johnston failed to establish that Galayda, the owner of the property on which Johnston’s mobile home was located, took possession of the mobile home converting it to her own use without lawful authority. The court found that the uncontested facts demonstrated Galayda did not take or maintain possession of the home, thereby precluding a wrongful conversion claim. Further, the court found that if Galayda had chosen to remove the mobile home from her premises, she possessed the lawful authority to do so based on a July 11, 1988, Justice Court default judgment. Johnston again appeals. We reverse and remand.

The factual background leading up to this case has been previously set forth in Johnston I. Therefore, we will only address the facts necessary to dispose of this case.

The issue presented for our review is whether the District Court erred in granting summary judgment in favor of the respondents and in denying Johnston’s motion for partial summary judgment.

Summary judgment is proper if no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.P. The moving party possesses the initial burden of proving no genuine issues of material fact exist. Martin v. Dorn Equip. Co. (Mont. 1991), [250 Mont. 422,] 821 P.2d 1025, 1029, 48 St. Rep. 978, 980; citing Westmont Tractor Co. v. Continental I, Inc. (1986), 224 Mont. 516, 521, 731 P.2d 327, 330.

In the case at bar, Reliable, Johnston, and Galayda all moved the court for summary judgment. Each party argued that no genuine issues of material fact exist and that it was entitled to judgment as a matter of law. Finding no genuine issues of material fact, the District Court held that Reliable and Galayda were entitled to judgment as a matter of law. Johnston contends that this was error. We agree.

Essentially, the only issue Johnston raises on appeal is whether the District Court erred in concluding as a matter of law that Johnston’s mobile home was repossessed by someone with lawful authority to do so. We conclude that the District Court erred in granting respondents’ summary judgment. The undisputed facts of this case do not support such a legal conclusion.

Conversion requires property ownership, the owner’s right of possession, and the unauthorized control over the property by another resulting in damages. Lane v. Dunkle (1988), 231 Mont. 365, 368, 753 P.2d 321, 323. Any unauthorized act depriving the owner of his or her property permanently or for an indefinite time is conversion. Harri v. Isaac (1940), 111 Mont. 152, 158, 107 P.2d 137, 140. In the case at bar, the record indicates that Johnston owned the mobile home, entitling her to its possession, and that Galayda unlawfully converted her home by taking possession of it without lawful authority to do so.

Galayda argues that since she did not physically remove the mobile home and never actually had the mobile home in her possession, she cannot be held liable for conversion. We find this argument unpersuasive. Galayda caused the removal of the mobile home by contracting with the Franchuks for its removal. Although the Franchuks participated in moving the home from Galayda’s premises, they did not repossess the mobile home. They merely removed the mobile home from Galayda’s premises pursuant to the following written agreement:

It is mutually agreed as of August 17,1988 that Robert and Donna Franchuk and, Janeva Galayda will cooperate with one another in the removal of the mobile home located at 1805 Eaton, Missoula, Montana. Robert and Donna Franchuk will remove the skirting from the mobile home prior to the move. Janeva Galayda will pay for the removal of the mobile home from 1805 Eaton to Old Farm Road, Lolo, Montana. Said charges for the removal of the mobile home will be reimbursed to Janeva Galayda by the Franchuk’s [sic] when copies of the moving charges are submitted to the Franchuk’s [sic].

It is undisputed that the Franchuks had no right to repossess the home as of the date of its removal. Mr. Franchuk acknowledged this in his deposition; he testified that he acted on Galayda’s behalf when he removed the mobile home because he thought that she possessed the legal authority to remove it. Additionally, Galayda testified that she contracted with the Franchuks to remove the mobile home.

Galayda contends that by virtue of the various notices to quit the premises and the default judgment she obtained against Johnston she had the legal authority to physically evict Johnston and her mobile home from the premises. Although Galayda attempted to follow correct procedure to lawfully evict Johnston, the procedure she followed was flawed.

First, Galayda notified Johnston, pursuant to the rental agreement and § 70-24-422, MCA, that the rental agreement would be terminated and Johnston would have to leave the premises if she did not remove her dogs. Johnston failed to remove the dogs, but she remained on the premises. Accordingly, the rental agreement was terminated and Galayda’s cause of action against Johnston for possession of the premises ripened pursuant to § 70-24-427, MCA. Galayda did not initiate this action.

Instead, Galayda filed a complaint against Johnston in Justice Court on June 16,1988, for back rent from July 1, 1988, and possession of the premises. As Chief Justice Turnage noted in his special concurrence in Johnston I, it is difficult for this Court to understand how back rent could be owed from July 1, 1988, when the complaint was filed in the middle of June. Regardless of this apparent mistake, Galayda indicated in her deposition that even though she received $220 from Johnston, postmarked July 4,1988, for June and July rent, she obtained a default judgment on July 11, 1988. This default judgment was based on Galayda’s incorrect sworn affidavit that Johnston still owed approximately $198.

Although the default judgment awarded money damages only, the Justice Court issued a Writ of Assistance directing the Missoula County Sheriff to physically remove Johnston’s mobile home from Galayda’s premises. The Sheriff served this writ on Johnston, but at Galayda’s direction, failed to physically remove the mobile home.

A number of procedural errors occurred during the above procedure rendering Galayda’s subsequent actions in removing the mobile home unauthorized. First, § 70-24-422, MCA, requires the landlord to give the tenant notice to pay rent prior to filing a complaint for non-payment of rent and possession of the premises. Section 70-24-422, MCA, states:

(2) (a) [I]f rent is unpaid when due and the tenant fails to pay rent within 3 days after written notice by the landlord of nonpayment and his intention to terminate the rental agreement if the rent is not paid within that period, the landlord may terminate the rental agreement.
(b) For a rental agreement involving a tenant who rents space to park a mobile home but who does not rent the mobile home, the notice period referred to in subsection (2)(a) is 15 days.

Galayda failed to provide Johnston with the requisite fifteen days notice before filing her complaint. Accordingly, Galayda’s complaint was premature and unfounded in fact.

Second, Galayda obtained the default judgment under somewhat spurious circumstances by submitting a sworn affidavit stating Johnston still owed her rent. In fact, Johnston paid Galayda.

Third, the Justice Court issued a Writ of Assistance directing the Sheriff to remove Johnston’s mobile home from Galayda’s premises. Although the Sheriff served the writ, the Sheriff did not participate in the actual removal of the mobile home. Instead, Galayda and the Franchuks contracted to remove the mobile home themselves. Since sheriffs and constables have the only authority to act under such writs pursuant to § 25-13-301, MCA, Galayda’s removal of the home by someone other than a sheriff or constable was unauthorized.

Finally, Galayda served a Notice of Abandonment dated August 17, 1988, on Johnston giving her another fifteen days to remove the mobile home. Subsequently, the Franchuks moved the mobile home to their property on Galayda’s behalf when Johnston failed to move the mobile home within fifteen days.

If Johnston abandoned the premises, Galayda was entitled to remove the mobile home from her premises. Section 70-24-430(1), MCA, states:

If a tenancy terminates in any manner except by court order and the landlord reasonably believes the tenant has abandoned all personal property which the tenant has left on the premises, and a period of time of at least 5 days has elapsed since the occurrence of events upon which the landlord formed that belief, the landlord may remove the property from the premises.

Abandonment is the absolute relinquishment of the premises consisting of the tenant’s act or omission and intent to abandon. LIC, Inc. v. Baltrusch (1985), 215 Mont. 44, 46-47, 692 P.2d 1264, 1266. Galayda testified during her deposition that she based her perception of abandonment on a phone call she received from Mrs. Franchuk. Otherwise, Galayda took no steps to investigate the situation to determine if, in fact, Johnston had abandoned the premises. Absent sufficient facts showing absolute relinquishment, Galayda was without legal authority to remove the mobile home.

Galayda was required to follow § 70-24-430, MCA, when disposing of the allegedly abandoned property. At minimum, § 70-24-430, MCA, requires the landlord to inventory and store the tenant’s personal property in a safe place and reasonably attempt to notify the tenant in writing that the property must be removed from the place of safekeeping.

The lower court record is devoid of any references to the foregoing procedure. It appears from the record before this Court that Galayda failed to inform Johnston of the location of her property and failed to notify Johnston of the steps necessary to reclaim her property. This failure is evidence of Galayda’s unauthorized acts depriving Johnston of her property. Accordingly, the District Court erred as a matter of law when it granted Galayda’s motion for summary judgment since the undisputed facts show Galayda wrongfully possessed Johnston’s property, constituting conversion.

Next, it is necessary for this Court to determine whether the District Court erred in granting summary judgment in Reliable’s favor. Reliable based its motion for summary judgment on the fact that Johnston’s mobile home was lawfully repossessed, precluding coverage pursuant to the unambiguous language of the insurance policy. However, in accordance with our above analysis, Johnston’s mobile home was not lawfully repossessed but was converted. Therefore, Reliable’s argument fails.

For Johnston to recover under the comprehensive coverage in her policy, she was required to prove that Galayda and the Franchuks had no right to remove and withhold the mobile home. Pursuant to our above analysis, Johnston met this burden. Galayda’s removal and withholding of Johnston’s mobile home was unauthorized and impermissible, constituting conversion. Johnston suffered a compensable loss and Reliable is liable under its policy.

This Court has the power to reverse the district court’s grant of summary judgment and order it to enter summary judgment in favor of the other party as a matter of law when all facts bearing on the issue are before this Court. Here, there were no genuine issues of fact as to whether the acts of the respondents were a conversion of the mobile home and covered under the policy. Martin, 821 P.2d at 1028, 48 St.Rep. at 980 (citing cases). We hold that the District Court erred in granting summary judgment in the respondents’ favor. We reverse and remand to the District Court with directions to enter partial summary judgment in Johnston’s favor and for further proceedings on the issue of Johnston’s damages.

REVERSED.

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

JUSTICE WEBER

dissents as follows:

I understand the desire of the majority to terminate extended litigation of the type involved in this case. However, I suggest that improper factual findings and conclusions have been made in the majority opinion.

As pointed out in the majority opinion, Galayda served a Notice of Abandonment dated August 17, 1988, on Johnston. That notice gave her 15 days to remove the mobile home. After Johnston failed to remove the mobile home within that 15 day period, Galayda had the mobile home moved by Franchuks. Under the express provisions of § 70-24-430(1), MCA, such facts establish a statutory right on the part of Galayda to remove the mobile home. Under the uncontradicted facts, we must therefore conclude that the moving of the mobile home from the Galayda trailer court was authorized by statute. Such an authorized removal does not constitute an unauthorized act depriving Johnston of her property and therefore could not constitute a conversion.

The majority points out that under § 70-24-430, MCA, Galayda was required to inventory and store the personal property in a safe place and reasonably attempt to notify the tenant that the property must be removed. While this was not an issue addressed in the record, even if we assume a failure to notify Johnston, the statutes do not warrant a conclusion that such failure to give notice constitutes a conversion.

The findings of fact and judgment on the part of the District Court demonstrate that there are material facts in dispute. The District Court concluded that as a result of the justice court action, Galayda had demonstrated a right to the lawful possession of the property. In addition, the District Court found the uncontradicted facts to show that it was the Franchuks who took possession and not Galayda. Clearly there exist issues of material fact which prohibit the type of summary judgment reached in the majority opinion.

       Galayda determined that Johnston owed $165 rent for June and half of July, a contractually imposed late payment fee of $10, $3.12 in interest, plus $20 in filing and service fees totalling $198.12.