author: JUSTICE NELSON

text:
    JAMES R. DEAN and LINDA M. DEAN, Plaintiffs, v. AUSTIN MUTUAL INSURANCE COMPANY, Defendant.
    No. 93-152.
    Submitted on Briefs February 3, 1994.
    Decided February 15, 1994.
    51 St.Rep. 102.
    263 Mont. 386.
    869 P.2d 256.
    For Plaintiffs: Jeffrey D. Ellingson, Ellingson Law Offices, Kalispell.
    For Defendant: Gary R. Christiansen, Warden, Christiansen, Johnson & Berg, Kalispell.
   JUSTICE NELSON

delivered the Opinion of the Court.

This case is before us on a certified question from the United States District Court for the District of Montana, Missoula Division, concerning the interpretation of § 33-18-242(5), MCA. We accepted certification pursuant to Rule 44 of the M.R.App.P.

The following facts were presented to this Court in the certification order as relevant to the question posed by the federal district court.

Afire destroyed James and Linda Dean’s (the Deans) residence in Olney, Montana, on July 5,1989. The Deans made demand upon their insurance company, Austin Mutual Insurance Company (Austin Mutual), for payment of their losses. That policy provided for coverage for damages to the Deans’ residence, as well as their personal property, destroyed by the fire.

Austin Mutual hired an independent investigator to attempt to determine the cause of the fire. During the same period of time, the State Fire Marshal and the Flathead County Attorney’s Office conducted a similar investigation, which resulted in criminal arson charges being filed against the Deans in August, 1989. A preliminary hearing was held before the Flathead County Justice of the Peace, who found probable cause to bind the Deans over to the District Court for trial on the charge of felony arson.

In December, 1989, the Flathead County Attorney’s Office filed a motion seeking leave of the District Court to file an Amended Information adding a count of conspiracy to commit arson, a felony. The presiding judge found probable cause to believe the Deans had committed the offense alleged in the second count and granted the motion to file the Amended Information.

Pending the outcome of the criminal trial, Austin Mutual refused to make any payments under the policy, except for a small payment used by the Deans to clear away debris from the fire, which was preventing the operation of a water system serving several buildings in the immediate vicinity of the fire.

The Deans were acquitted of the criminal charges inMarch of1990, and, on March 26, 1990, Austin Mutual paid the Deans the balance of their policy limits for the dwelling coverage under the policy. Prior to this time, Austin Mutual had paid the outstanding balance due under a mortgage on the Deans’ property to the mortgagee. In June of 1990, the Deans demanded additional compensation under the policy with the result that Austin Mutual paid some of the items but contested payment of others.

On February 4,1991, the Deans filed an action in the United States District Court, alleging a number of violations of § 33-18-201, MCA, and setting forth several separate claims for relief.

The Deans took the deposition of Clinton Weekley, the Assistant Vice-President for Claims for Austin Mutual. In that deposition, Mr. Weekley stated that “the claim was denied initially because criminal charges were brought.” He also stated that “Austin Mutual did not have information to indicate that the Deans contributed in any way to burning their house down.”

The parties filed cross-motions for summary judgment. The Deans requested a “[rjuling as a matter of law that Austin Mutual’s refusal to pay any policy benefits pending the Deans’ criminal acquittal was ‘unreasonable’; and was therefore a violation of Montana’s Unfair Claims Settlement Practices Act. ...” Austin Mutual contended that, with regard to the alleged violations of § 33-18-201, MCA, it had a complete defense under § 33-18-242(5), MCA, as it had a reasonable basis for denying the claim.

In their briefs filed with this Court, the Deans cite Britton v. Farmers Ins. Group (1986), 221 Mont. 67, 721 P.2d 303, and contend that Austin Mutual had no reasonable basis in law or fact for denying their claim because the fact that criminal arson charges were filed against them was “inadmissible evidence.” In Britton, we held that an insurer was outside the bounds of the duty of good faith if it relied on inadmissible evidence to deny a claim and force the insured to take court action to collect the proceeds of the claim. Britton, 721 P.2d at 316.

Austin Mutual responds to this contention with the argument that Britton was a “bad faith” case and thus is not applicable to this action, citing the special concurring opinion in Dees v. Am. Nat'l Fire Ins. Co. (1993), [260 Mont. 431], 861 P.2d 141, 50 St. Rep. 1068, which stated that § 33-18-242(3), MCA, explicitly prohibits bringing an action for bad faith in connection with the handling of an insurance claim and thus had no application to the statutory cause of action. Dees, 861 P.2d at 147, 50 St. Rep. at 1076.

The statute at issue, § 33-18-242, MCA, provides, in pertinent part: (5) An insurer may not be held liable under this section if the insurer had a reasonable basis in law or in fact for contesting the claim or the amount of the claim, whichever is in issue.

The “reasonable basis” for denying a claim is a defense to liability under § 33-18-242, MCA. The Deans brought an action under this statute and alleged violations of § 33-18-201, MCA; therefore, if Austin Mutual had a “reasonable basis in law or in fact” for denying the Deans’ claim, that basis will serve as a defense to the Deans’ action.

The Deans desire a ruling that, as a matter of law, Austin Mutual’s refusal to pay policy benefits pending the criminal acquittal was unreasonable. On the other hand, Austin Mutual desires a ruling that, as a matter of law, denying the payment of policy benefits pending the outcome of the criminal trial was reasonable.

However, reasonableness is generally a question of fact; therefore, it is for the trier of fact to weigh the evidence and judge the credibility of the witnesses in determining whether the insurer had a “reasonable basis” for denying a claim. This is not a determination that can be made “as a matter of law,” as requested by the Deans and by Austin Mutual. Rather, whether an insurer has a reasonable basis in law or in fact for contesting a claim or the amount of a claim is to be determined as any other disputed issue of fact based upon the evidence and circumstances of each case. See Dees, [260 Mont. 431], 861 P.2d at 152, 50 St. Rep. at 1077 (Gray, J., special concurrence).

Based upon the above discussion, we answer the certified question: Whether, as a matter of law, an insurer has a “reasonable basis in law or in fact” for contesting a claim or the amount of the claim as set forth in § 33-18-242(5), MCA, for alleged violations of § 33-18-201, MCA, based solely on the fact that the insureds have been charged with felony arson

as follows:

No; whether the insurer had a “reasonable basis in law or in fact” is an issue properly presented for determination to the trier of fact.

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


source: Caselaw Access Project

license: Public Domain

text:
    DENNIS THORNTON, Plaintiff/Appellant, v. SUSAN NISWANGER SONGSTAD, SALLY NISWANGER, MICHELLE NISWANGER LYTLE, RITA LAWSON, and NORWEST CAPITAL MANAGEMENT TRUST CO., f/k/a/ UNION BANK AND TRUST CO., as Trustee, Defendants/Respondents.
    No. 93-236.
    Submitted on Briefs December 16, 1993.
    Decided February 15, 1994.
    51 St. Rep. 104.
    263 Mont. 390.
    868 P.2d 633.

      For Appellant: Chris Christensen, Kalispell.
    For Respondents: James C. Bartlett, Hash, O’Brien & Bartlett, Kalispell.
   JUSTICE NELSON

delivered the Opinion of the Court.

This is an appeal from an Eleventh Judicial District Court, Flathead County order, granting the defendants’ motion for summary judgment. We affirm.

The sole issue on appeal is whether the District Court erred in granting the defendants’ motion for summary judgment.

According to Plaintifi/Appellant Dennis Thornton’s (Thornton’s) deposition, he became interested in the property at issue (160 acres — up Ashley Lake Road in Kalispell) in April of 1990. The property was shown to Thornton by Dave Bailey (Bailey), a real estate agent for Glacier Realty, who also stated that he could sell the property because it was listed through the Multiple Listing Service. The property was owned by Norwest Capital Management and Trust Company (Norwest), Trustee, as to an undivided one-half and by Susan Niswanger Songstad, Sally Niswanger, Michelle Niswanger Lytle and Rita Lawson (in undivided fractional shares) as to the remaining undivided one-half.

Thornton sought out American Timber and proposed that he borrow the money to purchase the land from that company and that he deliver the timber to American in order to pay off the loan. When Thornton secured the loan commitment for the property, he went to Bailey’s office to make an offer of $60,000. Bailey handwrote an offer in the form of a proposed buy/sell agreement and told Thornton that he would have to put up $500 in earnest money. The offer also provided that the seller or agent would point out the property corners to buyer’s satisfaction and that the seller would demonstrate that roadway and utility easements to the property existed. The offer was dated April 27, 1990. The offer was given to Susan Niswanger Songstad (Songstad), one of the defendant/owners of the land.

The offer was returned with some sections deleted and new sections added, making a counteroffer. Songstad wanted $1,500 earnest money to which Thornton agreed if the listing agent would take him to the property to ensure that he had been viewing the correct property. Thornton signed the counteroffer on May 7, 1990 and closing was set for May 27,1990. The sellers did not, however, appear at the closing. Accordingly, the buy/sell agreement/offer was rewritten on May 30, 1990. The proposed May 30 offer incorporated the terms of the previous offer along with some new terms and was intended to supersede all prior agreements.

Thornton stated in his deposition that he wanted all the signatures of the people involved on the May 30 agreement. At the time Glacier Realty typed the May 30 agreement, Thornton gave Bailey a check for $1,500. Bailey telephoned Songstad in Washington, read the new agreement to her and, when she had agreed to all the new terms, Thornton signed the agreement. The agreement was then sent to Songstad for the signatures of all the owners. The agreement was signed by Susan Niswanger Songstad, Sally Niswanger, Rita Lawson and Michelle Niswanger Lytle, four of the five co-owners of the 160 acres. Norwest did not sign the agreement.

For a second time, the land sale did not close. Thornton then filed a six-count complaint against the defendants, alleging breach of the May 30 buy/sell agreement and seeking specific performance and damages against the four women who signed the agreement and against Norwest. In due course, the defendants filed a motion for summary judgment, which the District Court granted on February 10, 1993.

“Under Rule 56(c), M.R.Civ.P., summary judgment is proper if the record discloses no genuine issues of material fact, and the moving party is entitled to judgment as a matter of law.” Lutey Construction - The Craftsman v. State (1993), 257 Mont. 387, 851 P.2d 1037, 1038, 50 St.Rep. 321, 321-22, citing Kaseta v. N. Western Agency of Gr. Falls (1992), 252 Mont. 135, 138, 827 P.2d 804, 806. The standard that this Court, as an appellate court, applies in reviewing a grant of summary judgment is the same as that initially utilized by the trial court under Rule 56, M.R.Civ.P. McCracken v. City of Chinook (1990), 242 Mont. 21, 24, 788 P.2d 892, 894.

Thornton offered to purchase 160 acres of land from the defendants. However, only four of the five co-owners signed the buy/sell agreement. Thornton claims that the four owners who signed the buy/sell agreement can bind the fifth co-owner, and he demands specific performance — the sale of the entire 100% ownership interest in the 160 acres. The defendants contend that since all the owners of the real property did not sign the buy/sell agreement, a valid contract does not exist, and Thornton cannot compel the defendants to sell the property to him by the remedy of specific performance. The District Court agreed with the defendants.

DISCUSSION

It is axiomatic that a purchaser may not be granted the remedy of specific performance in connection with the claimed breach of a purported agreement for the sale of land unless it is first established that there is a valid contract in existence. In Schwedes v. Romain (1978), 179 Mont. 466, 587 P.2d 388, we cited with approval the general rule that:

[wjhile it is universally recognized that equitable relief by way of specific performance does not follow as a matter of course by establishing the existence and validity of the contract, the performance of which is sought, the existence of a valid contract is essential to the remedy of specific performance. In order for equity to decree specific performance, it is necessary that there be in existence and in effect a contract valid at law and binding upon the parties against whom performance is sought, for specific performance is never applicable where there is no obligation to perform. (Citation omitted.)

Schwedes, 587 P.2d at 391.

It is black-letter law that, essential to the existence of a contract, there be:

(1) identifiable parties capable of contracting;

(2) their consent;

(3) a lawful object; and

(4) a sufficient cause or consideration.

Section 28-2-102, MCA. The element that defendants contend is absent here is consent. The Agreement to Sell and Purchase dated May 30,1990 (the buy/sell agreement), contains the signature of the four women co-owners but does not contain the signature of Norwest, owner of the other 50% of the 160-acre tract.

If Thornton’s offer was to purchase 100% ownership of the land but owners of only 50% of the ownership interest of the land signed the contract and thus accepted his offer, then a valid contract did not come into existence because Thornton did not have the consent of all the owners of the title to the property which was the object of the contract.

In Weigand v. Mt. Land & Real Estate Inv., Inc. (1986), 223 Mont. 137, 724 P.2d 194, we held that “[t]he Earnest Money Receipt and Agreement to Sell and Purchase [was] not a legally enforceable contract because sellers failed to sign it,” noting that one of the essential elements for a valid contract required by § 28-2-102, MCA, — consent — was lacking. “Had sellers consented to the Agreement, they needed only to sign it. They did not. There is nothing in the record to show they consented to the Agreement.” Weigand, 724 P.2d at 196.

Accordingly, we must first determine the percentage of ownership interest for which Thornton was contracting — 100% including the interest of Norwest or simply the 50% interest owned by the four co-owners who signed the May 30 buy/sell agreement.

Thornton stated numerous times in his deposition that he wanted the signatures of all the owners of the property. He stated that he was “under the impression on the 27th of May that [he] was going to be the owner of the property.”

In his deposition Thornton testified:

Q. And there’s no doubt in your mind that you gave specific and explicit instructions to Mr. Bailey that your offer needed to be signed by everyone who owned the property and that he understood that?

A. Yes, I believe that is the way it was.

Additionally, he stated:

A. I had told Dave Bailey that I wanted all of the signatures of the owners of the property on the new buy/sell agreement.

Q. What did he say in response?

A. Well, he had talked to them on the phone, and I had told him that I wanted everybody to sign that and that I was going to make a new — that I would make a new offer and that I wanted all the signatures on it. If I remember right, after we had it typed up, Dave Bailey called Susan Songstad and read it to her over the phone.

Q. But you explicitly told him you wanted all the owners to sign the buy/sell?

A. Yes, I did.

Thornton wanted to purchase the land so he could log it. That would have been impossible without complete ownership of 100% of the title to the property, or, at least, some authority from Norwest, absent its agreement to sell. See §§ 70-16-107 and 108, MCA.

Further evidence that Thornton was contracting for 100% of the ownership interest in the subject property is derived from the fact that he was aware of Norwest’s undivided 50% ownership interest before he signed the May 30 buy/sell agreement. During his deposition, Thornton stated that he received the commitment for title insurance “somewhere around the 15th of May” and “learned that title was held by more than Susan Songstad, the only individual [he] had seen paperwork on....” The commitment for title insurance states that:

Title to the Fee Simple estate or interest in said land is at the effective date hereof vested in:
NORWEST CAPITAL MANAGEMENT AND TRUST COMPANY, formerly the UNION BANK AND TRUST COMPANY, as Trustee, as to an undivided 1/2 interest.
SALLY NISWANGER, as to an undivided 1/12 interest.
SUSAN NISWANGER SONGSTAD, as to an undivided 1/12 interest. MICHELLE NISWANGER LYTLE, as to an undivided 1/12 interest. RITA LAWSON, as to an undivided 1/4 interest.

Thornton’s deposition reveals that he knew or should have known that Norwest was one of the co-owners of the land. However, Norwest did not sign the buy/sell agreement, and Thornton did not attempt to obtain its signature.

It is generally conceded that when someone purchases land under circumstances which suggest outstanding equities in third parties, there is imposed on the purchaser a duty to make a reasonable investigation as to the existence of outstanding claims against the property, and one who fails to use due diligence to ascertain the facts within his reach is not an innocent purchaser.

Rose v. Castle Mountain Ranch, Inc. (1981), 193 Mont. 209, 218, 631 P.2d 680, 685. Thornton did not use reasonable diligence and investigate to determine who the co-owners of the land were and ensure that all of the co-owners signed the buy/sell agreement.

Finally, the allegations by Thornton in his complaint lead inescapably to the conclusion that his intention was to purchase 100% of the ownership interest in the property, and nothing less than 100%. The general rule, applicable here, and in accord with our decision in Weigand, is set forth at 71 Am. Jur. 2d, Specific Performance § 175 as follows:

... In many cases the negotiations and the contract prepared for execution are construed as contemplating a joint sale only, or at least conditioned on all nominal vendors becoming bound. Where such is the construction it is considered that [when one or more vendors fail or refuse to sign] no contract of sale came into existence, in which event, or course, the vendee cannot obtain a decree of specific performance against any of the signers nor recover damages as for the breach of a sales contract.

Thornton, nevertheless, argues that his oral requests to have all of the co-owners sign the buy/sell agreement were superseded by the written buy/sell agreement itself, which did not make any provision requiring the signatures of all the owners. Although § 28-2-904, MCA, does provide that any oral negotiations or stipulations which precede or accompany the execution of the written instrument are superseded by the written instrument, parol evidence can be considered if the validity of the agreement is the matter which is in dispute. Section 28-2-905(l)(b), MCA. Here, because the essential question is whether the agreement is a valid contract, parol evidence can be considered. “ ‘[W]here the validity of the agreement is the fact in dispute,’ parol evidence is admissible, not to vary the terms of the instrument, but to show that what appears on its face as a valid, binding contract is, in fact, no such thing.” Smith v. Fergus County (1934), 98 Mont. 377, 390, 39 P.2d 193, 197.

Finally, Thornton states that he was under the impression that the four women co-owners could bind the trust to the buy/sell agreement, and that the manager of the trust told him that he [the manager] would go along with any plan for the land the four women decided. Thornton argues that those are material facts in dispute which defeat summary judgment.

In support of their motion for summary judgment, the defendants established: (1) that there was a written offer signed by Thornton and accepted by the four women for the sale and purchase of the 160 acres; (2) that the four women owned an undivided 50% interest and that Norwest owned the remaining undivided 50% interest as trustee; (3) that Thornton knew before signing the buy/sell agreement that there were five undivided owners and that to obtain 100% of the ownership interest he would have to have all five co-owners sign the agreement; and (4) that Thornton was contracting for 100% ownership interest in the property.

Having established those material facts, the burden shifted to Thornton to raise his claimed material factual issue — namely that Norwest, as trustee, was controlled by the four women co-owners and that they could compel Norwest to sign the buy/sell agreement. That was his theory; proving that theory would benefit his case and defeat the defendants’ motion for summary judgment; and, accordingly, he had the affirmative duty to bring before the court substantial evidence and specific material facts supporting his theory by filing affidavits or through sworn deposition testimony or interrogatory answers in the record. Gross v. Myers (1987), 229 Mont. 509, 514-15, 748 P.2d 459, 462-63.

Fatal to Thornton’s claim in that regard, however, is his failure to adequately raise, in opposition to defendants’ motion for summary judgment, any disputed material fact as to the four women co-owners’ exercise of control over the trust. “[W]hile the initial burden of proof [on a summary judgment motion] must attach to the movant, that burden shifts where the record discloses no genuine issue of material fact. Under these circumstances, the party opposing the motion must come forward with substantial evidence raising the issue.” (Citations omitted. Emphasis added.) Downs v. Smyk (1979), 185 Mont. 16, 21, 604 P.2d 307, 310. “Further, the non-moving party must set forth specific facts and cannot simply rely upon their pleadings, nor upon speculative, fanciful, or conclusory statements.” (Citations omitted. Emphasis added.) Thomas v. Hale (1990), 246 Mont. 64, 67, 802 P.2d 1255, 1257.

In the instant case, Thornton did nothing more than offer his own conclusory hearsay statements from his July 29, 1992 affidavit claiming that the trust manager told him that he [the manager] would agree to any decision of the four women co-owners. His assertion that the manager would follow any decision of the four women co-owners is not otherwise supported in the record. Kronen v. Richter (1984), 211 Mont. 208, 213, 683 P.2d 1315, 1318.

Rule 56(e) M.R.Civ.P., provides in pertinent part that:
Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. ...

Thornton’s affidavit dated July 29, 1992, filed in opposition to defendants’ motion for summary judgment consists almost entirely of statements allegedly made to Thornton by other persons regarding Susan Niswanger Songstad’s supposed authority to sell the property and the four women co-owners’ control over the trust. Those statements in Thornton’s affidavit are not of his own personal knowledge and fit within the definition of hearsay — statements, other than ones made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matters asserted. Rule 801(c), M.R.Evid.

In Eberl v. Scofield (1990), 244 Mont. 515, 519, 798 P.2d 536, 538, we held that it was proper for the district court to strike the affidavit of a party filed in a summary judgment proceeding, noting that the statements made in the affidavit which related to the issue on summary judgment were not of the affiant’s personal knowledge but were all hearsay.

While the statements attributed by Thornton to non-parties are clearly hearsay and, therefore, inadmissible under Eberl, the statements in Thornton’s affidavit attributed to the trust manager might, nevertheless, still be admissible as an exception to the hearsay rule inasmuch as the trust was a party defendant to the action. With respect to the trust, Thornton states as follows in his affidavit:

5. After filing this lawsuit and being informed that Norwest Capital Management and Trust Co. was not willing to sell the property I found out the individual’s name and telephone number who was managing the trust interests of Susan Niswanger Songstad, Sally Niswanger, Michelle Niswanger Lytle, and Rita Lawson, (hereafter referred to as the Niswangers).
6. I contacted the individual identified as the manager of the Niswangers trust interests. Upon questioning him about the sale of the property he informed me that Susan Niswanger Songstad was in charge of the property and that whatever the Niswangers agreed to do with the property was fine with him as manager of the trust.
7. Subsequently, I made contacts with this trust manager concerning terms to settle this matter but was always told by him to contact Susan Niswanger Songstad, that she was in charge of selling the property, that he only did what she told him to do.

The statements purportedly made by the trust manager appear to be admissions of a party-opponent, and therefore not considered hearsay under Rule 801(d)(2), M.R.Evid., which states that a statement is not hearsay if “[t]he statement is offered against a party and is ... (D) a statement by the party’s agent or servant concerning a matter within the scope of the agency or employment, made during the existence of that relationship.”

However, there is nothing in Thornton’s affidavit or in the record identifying the trust manager or demonstrating that the person Thornton spoke with had the authority as an agent or employee of the trust to make binding statements about the trust or concerning the beneficiaries’ control over the trust’s management of the property.

The court in Passovoy v. Nordstrom, Inc. (Wash. 1988), 758 P.2d 524, 527, dealt with an almost identical issue as that posed here. There the appellate court held that the trial court properly struck as hearsay and not as admissions of a party-opponent, that portion of a summary judgment affidavit which contained statements attributed by the affiant to the defendant-store’s employee where there was neither independent verification of the existence of the agency between the party opponent and the employee nor independent evidence as to the scope of the agency relationship. The Washington court held that the fact and scope of the agency could not be proved from the hearsay statements alone. Passovoy, 758 P.2d at 528.

Similarly, here, Thornton’s affidavit fails to lay any foundation for the use of the trust manager’s statements as substantive evidence. The affidavit contains no statements to establish the actual identity of the trust manager or to establish his authority to speak on behalf of the trust or its beneficiaries. Thornton provided no more than his own bare assertion that he spoke with the trust manager and that the manager stated that whatever the four women “agreed to do with the property was fine with him.” The testimony provided in Thornton’s affidavit does not provide a sufficient indicia of credibility; “independent proof of the existence of the agency and its scope must be shown.” Passovoy, 758 P.2d at 528. Clearly, the information concerning the manager’s statements found in Thornton’s affidavit does not qualify as a statement of a party-opponent, and therefore consists of hearsay to which Thornton himself was not competent to testify. Accordingly, we conclude that Thornton’s affidavit does not meet the requirements of Rule 56(e), M.R.Civ.P., and fails to properly raise the disputed issues of material fact that he claims are critical to his case.

Thornton could have deposed the manager of the trust or he could have filed an affidavit from the manager establishing his authority and stating that he [the manager] would agree with any decision made by the four women co-owners. He did neither. Thornton produced nothing in writing whereby Norwest authorized any of the four women co-owners to act on its behalf or to sell its interest in the property, or to bind the trust to the buy/sell. See §§ 28-2-903(l)(d) and 28-10-203, MCA. Thornton did not offer the trust instrument of which the four women co-owners were purportedly the beneficiaries which might have conceivably showed their power or control over the trust.

While Thornton offered evidence of other transactions between the trust and the four women co-owners, that evidence did nothing in the way of proving the fact of their control over the trust in the land sale at issue here and which Thornton claimed was material and dispositive of defendants’ motion for summary judgment.

In short, Thornton simply did not come forward with any substantial evidence that would raise a genuine issue of material fact as to the four women co-owners’ control over the trust. Kronen, 683 P.2d at 1318. See also Downs, 604 P.2d at 310. If Thornton possessed such evidence, it was his burden to produce it. He did not, and his hearsay affidavit statements were inadequate to carry his burden.

Ultimately, the defendants carried their burden to show that there were no genuine issues of material fact, and, when the burden shifted to Thornton, he did not come forward with specific facts and substantial evidence to support his theory of the case. The District Court correctly concluded there was no genuine issue of material fact concerning the four women’s control over the trust. Kronen, 683 P.2d at 1318. As we have previously stated,

[flailure of the party opposing the motion to either raise or demonstrate the existence of a genuine issue of material fact, or to demonstrate that the legal issue should not be determined in favor of the movant, is evidence that the party’s burden was not carried. Summary judgment is then proper, the court being under no duty to anticipate proof to establish a material and substantial issue of fact.

Taylor v. Anaconda Federal Credit Union (1976), 170 Mont. 51, 57, 550 P.2d 151, 154.

The facts presented to the District Court demonstrate that Thornton was contracting for 100% of the title to the land at issue and that he knew that he must obtain the signature of the trust or prove that the trust was under the control of the four other co-owners. Thornton failed in his burden to establish material disputed facts, and accordingly, we hold that the District Court was correct in concluding that no contract was in existence, and that defendants were entitled, as a matter of law, to summary judgment in their favor.

Affirmed.

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


author: CHIEF JUSTICE TURNAGE

text:
    IN RE THE MARRIAGE OF HELEN J. RADA, Petitioner and Respondent, and FRED A. RADA, Respondent and Appellant.
    No. 93-288.
    Submitted on Briefs January 13, 1994.
    Decided February 15, 1994.
    51 St.Rep. 110.
    263 Mont. 402.
    869 P.2d 254.

      For Appellant: Patrick F. Flaherty, Great Falls.
    For Respondent: Joan E. Cook, Great Falls.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

Fred Rada appeals from a dissolution of marriage and property distribution decree entered in the District Court for the Eighth Judicial District, Cascade County. We affirm.

The issues are rephrased as follows:

1. Whether the District Court erred in dividing the marital estate and in determining the values of marital estate property, specifically the pieces of property referred to as the West Hill house, the Tenth Avenue house, the Manchester house, the parties’ personal property, bank accounts and various loans.

2. Whether the court erred in denying the request for sanctions against Helen Rada in the amount of $252.

Fred Rada (Fred) and Helen Rada (Helen) were married on November 18, 1950, at Great Falls, Montana. Both brought assets into the marriage, which lasted approximately forty-two years. Together they had four children, all of whom were emancipated at the time Helen filed the petition for dissolution of marriage. At the time of dissolution, Helen worked as a bookkeeper for the Catholic Diocese and at two additional part-time jobs. Fred was self-employed with the Fred Rada Construction Company.

Several legal delays occurred in this case. After filing the petition for dissolution of marriage in June 1988, Helen consecutively employed three attorneys to represent her in the matter. Fred consecutively employed two. Several motions to continue, motions to compel discovery and motions for sanctions were filed by the parties. Three separate trial dates were set and vacated. Trial was finally held in December 1992, approximately four and one-half years after the petition was filed.

The court found the marital estate to be worth approximately $308,000 and evenly divided it between the parties, with each receiving approximately $154,000. The court valued some assets at the time the parties separated, and some assets at the time of dissolution. In its conclusions of law, the court noted:

The court makes these conclusions after considering the relevant factors set out in Section 40-4-202, MCA. All marital asset values are included in the estate as of the date of dissolution, except for when such action would be unconscionable. (In re the Marriage of Wagner, 208 Mont. 369, 679 P.2d 753 (1984)). Specifically, Helen’s IRA, Fred’s IRA, Fred Rada Construction Checking Account, Fred’s First Bank West Bank Account, Helen’s Traveler’s Pension and Fred’s New York Life Annuity are valued at their June 1988 principle balance with interest added to date at a reasonable rate below or equal to the rates the assets would have earned. [Fred] has agreed to this approach (see [Fred’s] Exhibit 16A). (In re the Marriage of Garst, 199 Mont. 393, 649 P.2d 450 (1982)). Although Fred argues that he has only one checking account as of this date, there is ample evidence that he had the checking accounts this Court has included in the marital estate at the time the parties separated. Fred admitted that he has liquidated some banking accounts. This Court finds it equitable for these funds to be included in the marital estate. ([Section] 40-4-202, [MCA]; In re the Marriage of Merry, 213 Mont. 141, 689 P.2d 1250 (1984)).

Fred appeals, alleging that the court incorrectly valued the marital property and therefore erroneously divided the marital estate. Additionally, he claims that the court erred in denying his request for sanctions against Helen in the amount of $252.

ISSUE 1

Did the District Court err in dividing the marital estate and in determining the values of marital estate property, specifically the pieces of property referred to as the West Hill house, the Tenth Avenue house, the Manchester house, the parties’ personal property, bank accounts and various loans?

On appeal, we review whether the District Court’s findings of fact are clearly erroneous and whether its conclusions of law are correct. In re Marriage of Danelson (1992), 253 Mont. 310, 317, 833 P.2d 215, 219-20. When reviewing discretionary trial court rulings, such as marital estate distributions and the valuations of marital property during dissolution of marriage proceedings, we determine whether the District Court abused its discretion. Danelson, 833 P.2d at 220.

The factors to be considered in the division of the marital estate are set forth at § 40-4-202, MCA, which states, inter alia, that the court shall finally and equitably apportion the property of the parties, however and whenever acquired. The statute vests wide discretion in the district court. In re Marriage of Stewart (1988), 233 Mont. 40, 757 P.2d 765. The court is free to adopt any reasonable valuation of marital property which is supported by the record. In re Marriage of Luisi (1988), 232 Mont. 243, 756 P.2d 456.

The trial court has discretion to make an equitable division of the marital estate, using reasonable judgment and relying on common sense. Danelson, 833 P.2d at 220. An equitable distribution is not necessarily an equal distribution. In re Marriage of Scott (1992), 254 Mont. 81, 835 P.2d 710.

Fred essentially argues questions of fact by contending that the court failed to value the marital estate according to his wishes. The court, however, was well within its discretion. Moreover, after reviewing the record in the instant case, we hold that this Court’s reasoning in In re Marriage of Wagner (1984), 208 Mont. 369, 378, 679 P.2d 753, 757-58, is applicable here:

[t]o include in the valuation of the marital estate any accumulation of financial wealth, or, conversely, the increase in financial liabilities of either spouse subsequent to the termination of the “marital relationship” may effectuate an injustice and frustrate the intended purpose of division of marital property.

Because of the circumstances of this case, inherent time delays and the parties’ accumulation of assets and liabilities during the interim, we conclude that the District Court did not err in determining appropriate values for the marital estate property; we also conclude that the court did not err in dividing the marital estate.

ISSUE 2

Did the court err in denying appellant’s request for sanctions against Helen in the amount of $252?

Fred alleges the court erred in denying him $252 in sanctions which he requested against Helen for her refusal to answer his discovery requests. Helen asserts that the court found there were excusable time delays (such as her changes of counsel) which kept Helen from answering Fred’s discovery requests, and that the court did not abuse its discretion. We agree with Helen. This Court will reverse a trial court’s refusal to invoke Rule 37, M.R.Civ.P., sanctions only when the court’s judgment materially affected the substantial rights of the parties or allowed a possible miscarriage of justice. See Wolf v. Northern Pac. Ry. Co. (1966), 147 Mont. 29, 409 P.2d 528.

Affirmed.

JUSTICES HARRISON, HUNT, TRIEWEILER and GRAY concur.


author: JUSTICE TRIEWEILER

text:
    PATRICK KEARNEY, Plaintiff, Respondent, and Cross-Appellant, v. KXLF COMMUNICATIONS, INC., a Montana Corporation, Defendant and Appellant.
    No. 93-223.
    Submitted on Briefs January 7, 1994.
    Decided February 17, 1994.
    51 St.Rep. 119.
    263 Mont. 407.
    869 P.2d 772.

      For Appellant: R.D. Corette and Gregory C. Black, Corette, Pohlman, Allen, Black & Carlson, Butte.; S.M. Fallís, Jr., and Tom Robertson, Nichols, Wolfe, Stamper, Nally & Fallis, Inc., Tulsa, Oklahoma.
    For Respondent: Donald C. Robinson and J. Richard Orizotti, Poore, Roth & Robinson, Butte.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

Patrick Kearney commenced this action in the District Court for the Second Judicial District in Silver Bow County alleging that he was wrongfully discharged from employment and was entitled to overtime compensation, statutory penalties, and attorney fees. Following an eight-day jury trial in Bozeman, the jury returned a verdict in favor of Kearney on the claim for overtime compensation. However, judgment was entered in favor of Kearney’s employer, KXLF Communications, Inc., on the wrongful discharge from employment claim. The court awarded certain costs and attorney fees to Kearney, and denied costs and attorney fees to KXLF. KXLF and Kearney appeal.

We affirm in part, and reverse in part, the judgment of the District Court.

The following issues are presented on appeal:

1. Did the District Court err when it denied KXLF’s motions for summary judgment and for a directed verdict dismissing Kearney’s overtime compensation claim?

2. Did the District Court err when it held that a five-year statute of limitations applied to Kearney’s overtime compensation claim?

3. Did the District Court err when it refused to award attorney fees to KXLF pursuant to the arbitration provisions of the Wrongful Discharge from Employment Act?

4. Did the District Court improperly award certain court costs to Kearney?

5. Did the District Court err when it directed a verdict against Kearney dismissing his claim that KXLF had violated the express provisions of its own written personnel policy?

Plaintiff Patrick Kearney was hired as a news reporter in 1981 by KXLF, the Butte station of the MTN television network. In 1986, Kearney was promoted to the position of news director by his supervisor, Ron Cass, General Manager of KXLF. At that time, KXLF was one of four MTN television stations in Montana owned by SJL of Montana Associates. In December 1986, Evening Post Publishing Company purchased all of the MTN television stations except the Billings station, and formed KXLF Communications, Inc. (KXLF), to operate Station KXLF in Butte.

News broadcasts for the MTN network originated primarily from Station KTVQ in Billings. The main segment of the news was broadcast statewide by KTVQ, and each of the local studios produced a short local segment of the newscast. The broadcast was then returned to KTVQ for statewide coverage of weather and sports. As the news director at KXLF, Kearney was responsible for story selection, reporting, production, and editing of the local segment of the newscasts.

When Evening Post purchased KXLF, the broadcasts continued to originate from Billings under the existing MTN network news agreement. However, in 1988, KXLF management made the decision to convert to a completely local news broadcast. Implementation of this plan required the purchase of new equipment and increased responsibilities for the director of the news department.

Although Kearney anticipated continuing as news director, Cass testified that he believed Kearney would not be able to handle the increased duties and responsibilities. According to Cass, this was due to Kearney’s history of conflicts with other staff members and problems controlling his temper. On December 6, 1988, Cass notified Kearney that he was removing him as news director and offered him the position of sports director. Kearney notified Cass the following day that he would not accept the demotion to sports director and thereby terminated his employment with KXLF.

In a complaint filed in the District Court on December 5, 1989, against Evening Post and Ron Cass, Kearney alleged that he had been constructively discharged from employment without good cause in violation of § 39-2-904(2), MCA, and that KXLF had violated the express provisions of its written personnel policy in violation of § 39-2-904(3), MCA. Kearney further alleged that he had worked in excess of 3626 overtime hours for which KXLF had not compensated him at the appropriate rate of pay. In addition to damages and overtime compensation, Kearney sought the statutory penalties provided for in Montana’s wage statutes and attorney fees.

By amended complaint dated February 5, 1989, Kearney added KXLF as a defendant. The corut later permitted Kearney to add a claim for intentional interference with business relationships, naming SJL of Montana Associates and Kim Allen Nash of KTVQ in Billings as defendants.

At the close of discovery, all defendants moved for summary judgment. In an order issued on November 18, 1992, the court granted summary judgment to Evening Post and Cass, dismissing them from the action. KXLF’s motion for summary judgment regarding the claims for wrongful discharge and overtime compensation was denied.

A jury trial commenced on November 23, 1992. At the conclusion of the eight-day trial, the court directed a verdict against Kearney and dismissed that part of his wrongful discharge claim which was based on a violation of the express provisions of the employer’s own written personnel policy, but refused to direct a verdict on the claim for overtime compensation. The jury returned a verdict in favor of Kearney on the overtime claim in the amount of $48,986. In regard to the claim that Kearney had been constructively discharged without good cause, the jury returned a verdict in favor of KXLF. Finally, the jury found that Nash and SJL had not interfered with Kearney’s business relationships.

In a judgment entered on January 14,1993, Kearney was awarded overtime compensation plus the statutory penalty, for a total amount of $97,972. The court also awarded costs and attorney fees to Kearney and denied costs and attorney fees to KXLF. From this judgment, KXLF appeals.

Kearney cross-appeals from the court’s directed verdict in favor of KXLF on the issue of whether KXLF violated the express provisions of its written personnel policy.

ISSUE 1

Did the District Court err when it denied KXLF’s motions for summary judgment and for a directed verdict dismissing Kearney’s overtime compensation claim?

KXLF contends that the District Court should have dismissed the claim for overtime compensation on the basis that Kearney was a covered employee under the federal Fair Labor Standards Act (FLSA) found at 29 U.S.C. §§ 201 through 219 (1988), and therefore, was not entitled to overtime compensation pursuant to § 39-3-405, MCA, of Montana’s Minimum Wage and Maximum Hour Act. KXLF asserts that under § 213(b)(9) of the FLSA, a person employed as an announcer or news editor in a small market television station such as KXLF is exempt from overtime compensation benefits.

As conceded in KXLF’s reply brief, however, we recently addressed this precise issue in Berry v. KRTV Communications, Inc. (1993), [261 Mont. 415], 865 P.2d 1104, 50 St. Rep. 1617. In Berry, we held that an employee in Kearney’s position is not covered by the FLSA due to the exemption found at 29 U.S.C. § 213(b)(9) (1988). Furthermore, because Montana is not preempted from providing overtime protection according to 29 U.S.C. § 218 (1988), we held that an employee such as Kearney is entitled to overtime compensation under Montana’s wage protection statute. Berry, 865 P.2d at 1111, 50 St. Rep. at 1622.

Therefore, pursuant to our decision in Berry, Kearney is entitled to benefits for overtime work as provided in Montana’s Minimum Wage and Maximum Hour Act. The District Court did not err when it denied KXLF’s motions to dismiss this claim.

ISSUE 2

Did the District Court err when it held that a five-year statute of limitations applied to Kearney’s overtime compensation claim?

Kearney filed his claim for overtime compensation on December 5, 1989. He sought benefits for the years 1987 and 1988. KXLF contends that the applicable statute of limitations for asserting an overtime claim should be two years, and that Kearney should not be awarded benefits for hours worked prior to December 5, 1987. This contention is based on § 27-2-211(l)(c), MCA, which establishes a two-year limitation for commencing actions when liability is created by a statute. In this instance, KXLF contends that liability was based on § 39-3-405, MCA, which requires employers to pay additional compensation for horns worked in excess of 40 hours during a workweek.

The District Court, however, found the applicable statute of limitations to be five years pursuant to § 27-2-202(2), MCA, and this Court’s decision in Intermountain Deaconess Home v. State (1981), 191 Mont. 309, 623 P.2d 1384. In that case, we held that a five-year statute of limitations pertains to a wage dispute based on an oral contract of employment. See also, Pope v. Keefer (1979), 180 Mont. 454, 591 P.2d 206. Although KXLF recognizes this Court’s conclusion in Intermountain and similar cases, it argues that those cases failed to properly analyze § 27-2-211, MCA.

The resolution of this issue requires us to reconcile inconsistent statutes of limitations, both of which have application to this situation. Kearney did perform services as an employee of KXLF pursuant to an oral contract of employment, and KXLF is liable for the payment of overtime wages to Kearney because of Montana’s Minimum Wage and Maximum Hour Act.

In Ritland v. Rowe (1993), 260 Mont. 453, 861 P.2d 175, 50 St. Rep. 1183, and Thiel v. Taurus Drilling Ltd. 1980-II (1985), 218 Mont. 201, 710 P.2d 33, we addressed the problem of inconsistent statutes of limitations. In Ritland, 861 P.2d at 178, we held that where a substantial question exists regarding which of two statutes of limitations should apply, the court should apply the general rule that “any doubt should be resolved in favor of the statute containing the longer limitation.” This conclusion was in accord with the public policy recognized in Thiel, 710 P.2d at 40, which favors access to our courts and resolution of claims on their merits rather than the arbitrary bar of the statute of limitations.

We conclude that our decision in Ritland applies to this case. Because there is more than one applicable statute of limitations, the conflict was correctly resolved in favor of permitting Kearney’s claim to be filed. The court did not err when it ruled that a five-year statute of limitations applied to Kearney’s claim for overtime compensation.

ISSUE 3

Did the District Court err when it refused to award attorney fees to KXLF pursuant to the arbitration provisions of the Wrongful Discharge from Employment Act?

Following the court’s directed verdict and the jury verdict in favor of KXLF on Kearney’s wrongful discharge claim, KXLF submitted a bill of costs which included a claim for attorney fees pursuant to § 39-2-914(4), MCA (1989), which provides as follows:

A party who makes a valid offer to arbitrate that is not accepted by the other party and who prevails in an action under this part is entitled as an element of costs to reasonable attorney fees incurred subsequent to the date of the offer.

KXLF sought attorney fees under this section based on its offer to arbitrate Kearney’s claim which was filed on January 31, 1990, and which was subsequently rejected by Kearney. KXLF contends that it prevailed in the wrongful discharge action, and therefore, is entitled to reasonable attorney fees because Kearney did not accept a valid offer to arbitrate.

Relying on this Court’s decision in Hoffman v. Town Pump (1992), 255 Mont. 415, 843 P.2d 756, the District Court refused to award KXLF attorney fees under this section because no written arbitration agreement existed between the parties. KXLF contends that Hoffman was incorrectly decided and that § 39-2-914(4), MCA (1989), should be interpreted to cover all employment termination claims, whether or not a written employment agreement contains an arbitration provision. To support its argument, KXLF notes that the Wrongful Discharge from Employment Act was amended in 1993 to delete the requirement of a written arbitration agreement before attorney fees could be awarded. Chapter 442, Montana Session Laws, 1993.

In Hoffman, 843 P.2d at 759, this Court analyzed the arbitration provisions of the Wrongful Discharge from Employment Act and held that the statute clearly requires a written agreement to arbitrate before attorney fees may be awarded. The amendments which were enacted in 1993 do not apply to the present case. It is undisputed that there was no written arbitration agreement between Kearney and KXLF. Therefore, based on our decision in Hoffman, we conclude that the court correctly refused to award KXLF attorney fees pursuant to this section.

ISSUE 4

Did the District Court improperly award certain court costs to Kearney?

Following the jury trial, Kearney filed a memorandum of costs and requested the District Court to assess specific costs of suit against KXLF. The court awarded all costs as claimed by Kearney, except for certain paralegal and attorney fees. KXLF contends that the court erred when it awarded certain costs to Kearney and sets forth three bases for this claimed error.

KXLF first contends that Kearney was not the “prevailing party” in this suit for purposes of recovering costs allowed by statute because KXLF prevailed on the wrongful discharge claim, which it maintains was the primary issue in dispute. Furthermore, KXLF contends that even if Kearney is deemed the prevailing party, he is entitled to only those costs which are specifically provided for in § 25-10-201, MCA. Finally, KXLF alleges that the court erroneously failed to determine the proportion of expenses related to the overtime claim, as opposed to the wrongful discharge claim, and award only those costs actually related to the overtime claim.

Section 25-10-101(3), MCA, provides that costs of suit are allowed as a matter of course to the plaintiff upon a judgment in the plaintiff’s favor in an action for damages when the amount recovered is over $50. Kearney clearly received an affirmative judgment in excess of $50. Although Kearney did not prevail on the wrongful discharge claim, this did not preclude the court from awarding costs associated with the litigation.

In Medhus v. Dutter (1979), 184 Mont. 437, 603 P.2d 669, this Court addressed the question of costs when a judgment is only partially favorable. We adopted the rule that if a plaintiff files a complaint in an action covered by § 25-10-101, MCA, and succeeds only partially, the plaintiff is entitled to costs. Medhus, 603 P.2d at 674. It is only in situations where a party initiates a law suit, the defendant counterclaims, and the judgment awards both parties part of the relief they seek, that the party prevailing on the main issue in controversy in the case is entitled to recover costs. In this case, Kearney was the only party to file a complaint, and this resulted in entry of judgment in his favor on the claim that KXLF was liable for overtime compensation. Therefore, the District Court correctly determined that Kearney was entitled to his costs of suit pursuant to § 25-10-101, MCA.

We further note that the Medhus Court did not establish a rule that a plaintiff who is only partially successful must apportion litigation costs, and may recover only those costs associated with the relief granted. Neither has KXLF set forth any authority which would require the District Court to apportion costs in that manner. Because of the inherent difficulties and uncertainties that would result from such a requirement, we decline to adopt a rule which would require the court to apportion costs where only partial relief is granted.

KXLF challenges some of the specific costs awarded to Kearney on the basis that they are not provided for in the pertinent statute. We have reviewed the record with respect to these specific items and conclude as follows:

1. The depositions of Ron Cass, Al Nash, and Viola Vigil were used at trial, and therefore, are allowable costs. Sage v. Rogers (1993), 257 Mont. 229, 848 P.2d 1034; Semenza v. Leitzke (1988), 232 Mont. 15, 754 P.2d 509.

2. The additional deposition expenses related to Viola Vigil which were awarded are allowable costs pursuant to Rule 30(h)(5), M.R.Civ.P.

3. With respect to the costs awarded for photocopy expenses and exhibit expenses, § 25-10-201(9), MCA, allows the taxing of costs for “such other reasonable and necessary expenses as are taxable according to the course and practice of the court or by express provision of law.” We conclude that the trial court’s broad authority for taxing costs permitted the taxing of these expenses. Cash v. Otis Elevator (1984), 210 Mont. 319, 684 P.2d 1041.

4. Witness fees in the amount of $20.00 were awarded for two witnesses, John Mizelle and Pat Bums. However, the record supports KXLF’s contention that neither of these witnesses appeared at trial to testify. Section 25-10-201(1), MCA, allows the taxing of costs for “legal fees of witnesses, including mileage.” We conclude that the obvious intent of this statute is to allow the party to whom costs are awarded to recover fees paid to witnesses who actually appear at trial. Therefore, this expense should not have been included in the award of costs to Kearney. The court also awarded costs for serving subpoenas on Mizelle and Burns, and an additional witness who was neither listed nor called as a witness during the trial. For the reasons already stated, we conclude the court erred when it awarded costs for serving subpoenas on witnesses who did not appear at trial.

We affirm the District Court’s award of costs to Kearney with the exception that it should be reduced by an amount of $87.90.

ISSUE 5

Did the District Court err when it directed a verdict against Kearney dismissing his claim that KXLF had violated the express provisions of its own written personnel policy?

On cross-appeal, Kearney alleges that the court erred when it directed a verdict against him dismissing his claim under § 39-2-904(3), MCA, which provides that an employer’s violation of the express provisions of its own written personnel policy constitutes a cause of action for wrongful discharge. Kearney does not appeal from the jury’s verdict dismissing his alternative theory of constructive discharge without good cause.

A court may grant a directed verdict only when it appears as a matter of law that the non-moving party could not recover upon any view of the evidence, including the legitimate inferences to be drawn from the evidence. Nautilus Insurance v. First National Insurance (1992), 254 Mont. 296, 837 P.2d 409. A directed verdict for the defendant is not proper if reasonable persons could differ regarding the conclusions which could be drawn from the evidence. Moralli v. Lake County (1992), 255 Mont. 23, 839 P.2d 1287. If there is any evidence which warrants submission to the jury, a directed verdict is not proper. Kestell v. Heritage Health Care (1993), 259 Mont. 518, 858 P.2d 3. When reviewing a directed verdict, this Court must consider the evidence in a light most favorable to the non-moving party. Stout v. Montana Power Co. (1988), 234 Mont. 303, 762 P.2d 875.

One of the theories set forth by Kearney to establish wrongful discharge from employment was that KXLF had a policy of performing annual evaluations of all of its employees and that such a policy existed in written form, as confirmed by Pamela Crawford who was called by Kearney as an expert witness. Kearney alleged that he had not received an evaluation in either 1987 or 1988 and, because Cass relied upon Kearney’s alleged performance deficiencies to justify the decision to demote Kearney, he was effectively discharged from the position of news director for reasons about which he was not forewarned and had no opportunity to correct. Therefore, he contends his constructive discharge was actionable because it resulted from KXLF’s failure to follow the express provisions of its own policy of evaluating employee performance.

The court granted KXLF’s motion for a directed verdict on this matter based on its finding that Kearney was unable to demonstrate that KXLF had violated a written personnel policy which “expressly states that there will written annual evaluations of managers.” The court determined that the statute in question requires a violation of an express provision of a policy, and because Kearney’s witness had to interpolate the existence of the policy from several writings, it concluded that KXLF had no express, written policy to perform annual evaluations.

In response to Kearney’s argument, KXLF contends that a directed verdict was proper because the court correctly reasoned that if the claimed policy had to be established by implication or inference, there was no express provision giving rise to a claim for wrongful discharge.

The record demonstrates that Kearney’s witness, Pamela Crawford, testified that KXLF had an express written policy of performing annual evaluations based on the existence of pre-printed evaluation forms and a memo from Cass’s supervisor, Travis Rockey, in which he stated, “[e]ach person should get an evaluation of their performance at least one time per year.” Although KXLF’s employee handbook contains no specific reference to annual evaluations, Crawford testified that such an express personnel policy can exist without its inclusion in an employee handbook. Furthermore, Kearney notes that Cass testified that all employees of the station were evaluated during 1987 and 1988, using the pre-printed forms, with the exception of Kearney and the other employees whom he directly supervised. Cass also admitted that he had demoted Kearney due to concerns about his ability to supervise subordinates, but had not documented these concerns or warned Kearney of his deficiencies in this regard.

Viewing this evidence most favorably to Kearney, we conclude that conflicting inferences could be drawn from this evidence and that reasonable persons could conclude that KXLF had an established and express policy of performing annual evaluations which it violated with respect to Kearney.

In this instance, Kearney was entitled to have the jury determine whether he met the threshold requirement of showing that KXLF’s personnel policy expressly required annual evaluations of all its employees. Therefore, we hold that the court erred when it directed a verdict on this issue.

We reverse the District Court’s directed verdict which dismissed Kearney’s claim that KXLF violated the express provisions of its personnel policy and remand for further proceedings on this issue. In all other respects, the judgment of the District Court, reduced by the amount of $87.90, is affirmed.

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


author: CHIEF JUSTICE TURNAGE JUSTICE WEBER JUSTICE GRAY JUSTICE TRIEWEILER

text:
    HART-ALBIN COMPANY and BROADWAY REALTY CORPORATION, Plaintiffs, Appellants, and Cross-Respondents, v. McLEES INCORPORATED, ACE ELECTRIC, INC., LEVITON MANUFACTURING CO., INC., RTB DEVELOPMENT, INC., and JOHN DOE I through JOHN DOE IV, Defendants, Respondents, and Cross-Appellants.
    No. 92-568.
    Submitted September 16, 1993.
    Rehearing Denied April 14, 1994.
    Decided February 17, 1994.
    51 St.Rep. 112.
    264 Mont. 1.
    870 P.2d 51.

      For Appellants: L. Randall Bishop (argued), Jarussi & Bishop, Billings; and Thomas S. Felker, Perry, Hiscock, Pierson & Ryder, Inc., P.S., Seattle, Washington.
    For Respondents: L.D. Nybo (argued), Conklin, Nybo, Leveque & Murphy, P.C., Great Falls.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

Plaintiffs sued defendant Levitón Manufacturing Co., Inc., in strict liability, claiming an electrical extension cord connector manufactured by Levitón caused a fire in the Hart-Albin store in downtown Billings, Montana. A jury in the District Court for the Thirteenth Judicial District, Yellowstone County, apportioned fault 40 percent to Levitón and 60 percent to plaintiffs, and the court entered judgment for Levitón. We reverse and remand for retrial on limited issues relating to damages.

The dispositive issues are:

1. Did the District Court err in instructing the jury on Leviton’s misuse defense?

2. Did the court err in prohibiting the plaintiffs from using videotaped depositions of Leviton’s designated corporate witnesses?

3. Did the court err in directing a verdict against the plaintiffs on their punitive damage claim?

4. Did the court err in allowing the testimony of the plaintiffs’ human factors expert?

In December of 1988, an early-morning fire caused extensive smoke damage in the flagship Hart-Albin department store located in downtown Billings, Montana. The store was closed for two months before reopening in February 1989. Just over a year later, Hart-Albin Company went out of business. Plaintiffs Broadway Realty Corporation, owner of the building in which the department store was located, and Hart-Albin Company (hereafter referred to collectively as HartAlbin) brought this action seeking recovery for damages, including loss of the business.

The fire started in a Christmas display suspended in the atrium of the store. Levitón, the only defendant remaining in the case at the time of trial, was the manufacturer of an electrical extension cord connector used in the Christmas display. During trial, Hart-Albin presented evidence that Leviton’s Catalog No. 67 extension cord connector overheated and started the fire.

The Catalog No. 67 cord connector was sold unattached to any electrical cord. In order to fasten an electrical cord to the screw terminals inside the connector, the user had to open the clamshell casing of the connector. Then, when the cord connector was reassembled, brass contact blades inside the clamshell served as the electrical contact for the “male” end of a second electrical cord plugged into the cord connector.

In this case, when the clamshell casing was reassembled, one of the brass contact blades, which were curved, was put in backwards. This prevented a solid electrical contact between the contact blades and the “male” end of the second electrical cord, which was plugged into the cord connector.

Hart-Albin’s theory was that the cord connector was a defective and unreasonably dangerous product because it was sold without assembly instructions and its misassembly caused it to overheat. Leviton’s defense was that no assembly instructions were needed with this particular type of cord connector, because of its design. Levitón also argued that the fire was a result of faulty construction of the Christmas display, including wiring code violations and use of flammable materials in violation of fire code.

After an eight-day trial, the jury answered a set of special interrogatories. It found that the fire was started by the Levitón cord connector, that the connector was unreasonably dangerous due to a failure to instruct, and that the defective connector was a proximate cause of Hart-Albin’s damages. The jury also found that Hart-Albin misused the cord connector and that the misuse was a proximate cause of damages. It apportioned fault as stated above. Applying the principles of comparative negligence set forth at § 27-1-702, MCA, the District Court entered judgment for Levitón.

I

Did the court err in instructing the jury on Leviton’s misuse defense?

Section 27-1-719, MCA, codifies strict liability law in Montana. It provides, at subsection (5):

Except as provided in this subsection, contributory negligence is not a defense to the liability of a seller, based on strict liability in tort, for personal injury or property damage caused by a defectively manufactured or defectively designed product. A seller named as a defendant in an action based on strict liability in tort for damages to person or property caused by a defectively designed or defectively manufactured product may assert the following affirmative defenses against the user or consumer, the legal representative of the user or consumer, or any person claiming damages by reason of injury to the user or consumer:
(a) The user or consumer of the product discovered the defect or the defect was open and obvious and the user or consumer unreasonably made use of the product and was injured by it.
(b) The product was unreasonably misused by the user or consumer and such misuse caused or contributed to the injury.

This statute limits defenses in strict liability actions to assumption of the risk under subsection (5)(a) and, as in this case, unreasonable misuse under subsection (5)(b).

Levitón contrasts cases concerning failure to warn or instruct with cases concerning manufacturing or design defects. It claims that a case concerning failure to warn or instruct does not clearly fall within the law of strict liability, but is indistinguishable from an action for negligence. On this basis, it asserts that the range of defenses is broadened.

Hart-Albin argues that misuse refers to use of a product other than for the intended purpose. It points out that, in this case, the cord connector was used precisely as intended: as a connector on an extension cord. It cites, in contrast, a classic example of misuse: a rotary lawnmower misused as a hedge trimmer. Hart-Albin argues that neither misassembly of the cord connector nor its use in a flammable display constitutes misuse, because neither constitutes use of the product other than for the purpose intended.

Neither of these arguments is dispositive. This case was pled and tried under a theory of strict liability. Therefore, the available defenses are limited in Montana as provided in § 27-1-719, MCA. And, although this Court has not previously ruled on the definition of the term “unreasonably misused” as found in that statute, we now hold that the generally-accepted definition of misuse in relation to strict liability, as discussed below, applies.

Montana’s federal district court has stated, in defining the defense of misuse, that a manufacturer is not responsible for injuries resulting from abnormal or unintended use of a product if such use was not reasonably foreseeable. Trust Corp. of Mont. v. Piper Aircraft Corp. (Mont. 1981), 506 F.Supp. 1093, 1097, citing 1 Frumer and Friedman, Products Liability, § 15.01. Generally, the defense of misuse refers to a use not foreseen by the manufacturer of the product. See Annotation, Products Liability: Product Misuse Defense, 65 A.L.R.4th 263 (1988). “Most cases have indicated that the key issue involved in a determination whether a product has been misused is foreseeability.” American Law of Products Liability 3d, Vol. 3, § 42:8 (T. Travers ed. 1987). The definition of misuse, then, incorporates the concept of abnormal or unintended use, but emphasizes unforeseeability. The defense of misuse is not available if the misuse of the product was reasonably foreseeable. We adopt the definition of misuse set forth in Trust Corp. of Mont., and now apply it to the facts of this case.

In answer to a written interrogatory concerning foreseeable misuse or misassembly of the Catalog No. 67 cord connector, Levitón stated that it “agrees that this product can be abused or misassembled.” At trial, Hart-Albin elicited an admission from Leviton’s corporate representative that he was aware that it was “possible” that the Catalog No. 67 cord connector could be misassembled as it was in this case.

We conclude Levitón admitted it was foreseeable that the Catalog No. 67 cord connector could be misused through misassembly. That admission on the part of Levitón, in light of the definition of misuse set forth above, leads us to conclude that the District Court erred in instructing the jury on the misuse defense as it related to misassembly of the cord connector.

Levitón maintains that Hart-Albin did not preserve an objection to the giving of the jury instruction concerning misuse but only to the burden of proof described therein. The record supports Hart-Albin’s response that it made known throughout trial its position that, because misassembly of the cord connector was foreseeable, it did not constitute misuse. For example, at the close of Hart-Albin’s case, in response to Leviton’s motion for directed verdict, Hart-Albin’s attorney argued:

Levitón has admitted that they can foresee misuse and misassembly of this product, and that admission, foreseeable misassembly, takes the concept of misuse as understood in the law. Completely out of the picture. [Sic]

We conclude Hart-AIbin preserved its objection to a jury instruction concerning misuse through misassembly of the cord connector.

Misassembly was only one of the misuse theories presented by Levitón. The other was use of the cord connector in a flammable Christmas display. To the extent that this defense incorporated the idea that the cord connector was misassembled, the defense was prohibited because of the foreseeability of misassembly, as discussed above. However, Levitón also presented expert testimony that the fire was caused by sparks resulting from power cord abuse unrelated to the cord connector. This defense theory was clearly separate from the misassembly defense.

The jury did not accept this defense theory. It answered “yes” to the question, ‘Was the fire started by the Levitón connector?” If the jury had found that the fire was caused by sparks resulting from power cord abuse not related to the cord connector, there would be no explanation for this finding, or for the finding that Levitón was partially responsible for damages. Therefore, we conclude it is not necessary to retry the issue of whether the fire was caused by factors other than the cord connector.

In sum, we hold that the court erred in instructing the jury on Leviton’s defense that Hart-AIbin misused the cord connector through misassembly. Because the jury found that the fire was started by the Levitón connector, it is unnecessary to retry the issue of whether the fire started due to causes unrelated to misassembly of the cord connector.

II

Did the court err in prohibiting Hart-AIbin from using videotaped depositions of Leviton’s designated corporate witnesses?

The two witnesses in the videotaped depositions were present in the courtroom during the trial as Leviton’s representatives. The District Court disallowed use of their deposition testimony on that basis. Hart-AIbin argues that, despite the presence of the two witnesses at trial, their videotaped deposition testimony was admissible under Rule 32(a)(2), M.R.Civ.R, “for any purpose” because they were “managing agents” of Levitón.

We agree. “Managing agent” has been generously construed under both Rule 32, M.R.Civ.R, and the identical federal rule of civil procedure. Whether one is considered a managing agent depends on several factors, including the individual’s right of general control, authority, and judgment within his department; whether the interests of the individual are identified to be those of the employer; and whether any person of higher authority possesses knowledge about the matters at issue. Clark Bros. Contractors v. State (1985), 218 Mont. 490, 493, 710 P.2d 41, 43; Wright and Miller, Federal Practice and Procedure, § 2103 (1970).

The two witnesses in the videotaped depositions were Steve Campolo and Dennis Dandeneau. Campolo worked at Leviton’s corporate headquarters as the head of the department responsible for the testing and evaluation of all products manufactured by Levitón and for getting those products to Underwriters Laboratory (UL) for testing and evaluation. He was designated by Levitón during discovery as the person within the company most knowledgeable regarding the Catalog No. 67 cord connector and UL approvals of that product.

Dandeneau had been employed by Levitón for twenty years and was the manager of Leviton’s quality control department in Rhode Island, where the Catalog No. 67 cord connector was manufactured. In the pretrial order, Levitón did not list as a potential witness either of Dandeneau’s supervisors in the Levitón corporate structure. Dandeneau and Campolo were the only Levitón employees who testified on Leviton’s behalf at trial. They testified concerning testing, safety, and UL approval of the Catalog No. 67 cord connector. We hold that Campolo and Dandeneau were “managing agents” for purposes of Rule 32(a)(2), M.R.Civ.P.

Levitón argues that Hart-Albin had full opportunity to impeach the witnesses at trial using their depositions. However, “[t]here is no provision in Rule 32(a)(2)... which requires a finding of unavailability of the witness or that notice was given of the intended use of a deposition at trial.” Clark Bros., 710 P.2d at 43. The analysis under the federal rule has been similar:

[Rule 32(a)] must be liberally construed. The trial court has discretion to exclude parts of the deposition that are unnecessarily repetitious in relation to the testimony of the party on the stand, but it may not refuse to allow the deposition to be used merely because the party is available to testify in person.

Wright and Miller, Federal Practice and Procedure, § 2145 (1970).

The purpose, as stated by Hart-Albin, for use of the videotaped deposition testimony at trial was to allow the jury to observe frank and unrehearsed answers to questions about Leviton’s knowledge of possible problems with its Catalog No. 67 cord connector. We hold that the District Court erred in denying Hart-Albin’s request to use the videotaped depositions of Campolo and Dandeneau at trial based on Rule 32(a)(2), M.R.Civ.R

III

Did the court err in directing a verdict against Hart-Albin on its punitive damage claim?

Hart-Albin asserts that Leviton’s actual malice was demonstrated by the testimony of its own witness, Campolo, that it marketed the Catalog No. 67 cord connector without assembly instructions despite full knowledge that misassembly of the cord connector could result in fire, electrical shock, or death by electrocution. Hart-Albin further asserts that clear and convincing evidence supported its claim that Levitón committed actual fraud in placing a UL safety mark on the inside surface of the Catalog No. 67 cord connector and in failing to properly identify the type of -wire to be used with the product.

In light of our ruling that the deposition testimony of Campolo and Dandeneau was admissible into evidence under Rule 32(a)(2), M.R.Civ.R, the evidence supporting Hart-Albin’s case may be different on remand. Therefore, we conclude that the issue of punitive damages must be reconsidered on remand. The District Court is instructed to determine on retrial whether Hart-Albin has presented a sufficient evidentiary basis supporting the claims of fraud or malice to allow the jury to consider the question of punitive damages.

IV

Did the court err in allowing the testimony of Hart-Albin’s human factors expert?

This issue is raised by Levitón on cross-appeal. Dr. Dorris, the human factors expert, testified that human factors is the field of studies that looks at human capabilities and limitations and tries to design jobs, workplaces, and products so that human beings can use them comfortably, efficiently, productively, and safely. He testified that he holds a Ph.D. in industrial engineering and is employed in the field of product safety warnings and instructions. He further testified that, in his opinion, warnings or instructions should have been provided with the Catalog No. 67 cord connector.

Levitón contends that Dorris is a “junk scientist” whose opinion misled the jury. Levitón states Dorris’s testimony should have been rejected because he was testifying as to techniques not “generally accepted” as reliable in the relevant scientific community, citing Frye v. United States (D.C. Cir. 1923), 293 F. 1013.

In its recent opinion in Daubert v. Merrell Dow Pharmaceuticals, Inc. (1993),_U.S._, 113 S.Ct. 2786, 125 L.Ed.2d 469, the United States Supreme Court rejected the “general acceptance” standard for admission of expert testimony. It affirmed the more expansive test embodied in Rule 702, F.R.Evid., of whether the expert is proposing to testify to (1) scientific knowledge that (2) will assist the trier of fact to understand or determine a fact in issue, stating that this is a flexible inquiry. Daubert,_U.S. at_, 113 S.Ct. at 2796-97.

Construing Montana law, this Court has stated:

[T]he determination of the qualification of a skilled or expert witness is a matter largely within the discretion of the trial judge and, in the absence of a showing of abuse, ordinarily will not be disturbed.

Goodnough v. State (1982), 199 Mont. 9, 18, 647 P.2d 364, 369. After reviewing the record, we conclude it supports the determination that Dorris testified regarding scientific knowledge that would assist the jury in understanding or determining a fact in issue. We hold that the District Court did not abuse its discretion in allowing the testimony of Dorris.

CONCLUSION

Because no error has been shown in the jury’s findings that Leviton’s defective cord connector started the fire and was a proximate cause of Hart-Albin’s damages, that part of the verdict is upheld. The court erred in instructing the jury on the defense of misuse through misassembly, because such a defense was precluded by Leviton’s admission of foreseeability. Therefore, application of principles of comparative negligence relieving Levitón of liability was error. We remand this case for retrial on the issue of damages, including redetermination of whether the jury should be allowed to consider punitive damages, based on the evidence presented. Because the issues on retrial will be limited, it is not necessary that we consider issues raised by Hart-Albin other than those herein discussed.

Remanded for farther proceedings consistent with this Opinion.

JUSTICES HARRISON, HUNT and NELSON concur.

JUSTICE WEBER

specially concurs and dissents as follows:

I dissent from the majority opinion on Issue I. I concur in the dissent of Justice Karla M. Gray on Issues II and III. I concur in the majority opinion on Issue IV.

Issue I asks if the District Court erred in instructing the jury on Leviton’s misuse defense. As pointed out by the majority, § 27-1-719(5)(b), MCA, provides that Leviton’s defense in this strict liability case depends upon whether or not the product was “unreasonably misused” by Hart-Albin. The majority points out that this Court has not previously ruled on the definition of “unreasonable misuse;” and then holds that the generally accepted definition of misuse in relation to strict liability applies. The majority then makes the following statement:

Montana’s federal district court has stated, in defining the defense of misuse, that a manufacturer is not responsible for injuries resulting from abnormal or unintended use of a product if such use was not reasonably foreseeable. Trust Corp. of Mont. v. Piper Aircraft Corp. (Mont. 1981), 506 F.Supp. 1093, 1097, citing 1 Framer and Friedman, Products Liability § 15.01. ... [Emphasis supplied.]

The majority states that it adopts the foregoing Trust Corp. of Mont. definition of misuse. It further states that the defense of misuse is not available if the misuse of the product was “reasonably foreseeable.”

In analyzing the evidence, the majority points out that Leviton’s interrogatory answer stated that it “agrees that this product can be abused or misassembled.” In addition, the Levitón representative stated that he was aware that it was “possible” that the cord connector could be misassembled. From that evidence, the majority concludes that Levitón admitted it was foreseeable that the cord connector could be misassembled and that such admission by Levitón eliminates its argument on misuse.

Leviton’s admissions that it was “possible” that the cord connector could be misassembled do not meet the test of Trust Corp. of Mont. Under that test the manufacturer is not responsible if such use was not reasonably foreseeable. The majority has disregarded the aspect of reasonableness. It has concluded that mere foreseeability is the same as reasonable foreseeability. Neither of the admissions by Levitón establish that it was reasonably foreseeable that the cord connector would be misassembled. Leviton’s admissions are perfectly consistent with its contention — while it is possible to misassemble, such misassembly could only occur upon unreasonable misuse. The majority opinion does not consider whether or not the use on the part of Hart-Albin could be classed as reasonably foreseeable. The effect of the majority opinion is to impose strict liability on Levitón without giving to the trier of fact, a jury in this instance, the obligation to determine whether or not the misuse was unreasonable and whether or not the misuse was reasonably foreseeable. I conclude this effectively eliminates Leviton’s statutory right -under § 27-1-719, MCA, to prove that Hart-Albin unreasonably misused the cord connector.

I dissent from the conclusion on Issue I by the majority opinion which holds that the court erred in instructing the jury on Leviton’s defense that Hart-Albin misused the cord connector through misassembly. I would therefore grant a retrial on Issue I.

JUSTICE GRAY

concurring in part and dissenting in part.

I concur in the Court’s opinion on issues one and four. I dissent from the opinion on issue two regarding the use of certain depositions and, because the Court’s resolution of issue three is premised on the resolution of issue two, I dissent on that issue as well.

Rule 32(a) of the Montana Rules of Civil Procedure allows any part or all of a deposition to be used against a party for any purpose if certain enumerated conditions are met. In pertinent part, the rule authorizes the use of depositions for any purpose if the deponent is designated under Rule 30(b)(6) or 31(a), M.R.Civ.P, to testify on behalf of a corporation. Rule 32(a)(2), M.R.Civ.P. That basis for allowing the use of the depositions at issue here is neither asserted by Hart-Albin nor relied on by the Court. It is not applicable on the record before us.

Rule 32(a)(2), M.R.Civ.P., also allows such use of depositions if the deponent is “an officer, director, or managing agent” of the corporation. The Court holds that Stephen Campólo and Dennis Dandeneau were managing agents of Levitón under this Rule and, therefore, that the District Court erred in denying Hart-Albin’s requested use of their depositions. I disagree.

It is my view that the Court misapplies or, indeed, fails to apply the Clark Bros, factors to these individuals. The applicable factors are the individual’s right to general control, authority, and judgment within his department; whether the interests of the individual are identified to be those of the employer; and whether any person of higher authority possesses knowledge about the matters at issue. Clark Bros., 710 P.2d at 43. I will apply the factors to Campólo and Dandeneau separately.

The burden of meeting the Clark Bros. factors is on the party seeking use of the depositions under Rule 32(a)(2), M.R.Civ.P. While the record reflects that Campolo was the director of Leviton’s corporate testing laboratory and agency approval department, the record does not establish that that position at Levitón gives Campolo the right to general control, authority and judgment within the department. Thus, the first factor is not met here. Nor does the record support the Court’s statement that Campolo was designated as the person within Levitón most knowledgeable with regard to the cord connector at issue and UL approvals of the connector. Indeed, the “discovery” to which the Court refers is not part of the transmitted record on appeal. Moreover, Hart-Albin’s only statement in this regard is that the transcript supports a designation by Levitón that Campolo was the most knowledgeable person. However, the transcript reference to Campolo’s testimony reflects only the following:

Q. You have been designated by Levitón Manufacturing Company to come here and testify at this trial, have you not?
A. Yes, sir.
Q. In fact, when I went back to New York to the offices of Levitón, you were designated there as the person that I should depose at that time and find out certain facts about this particular product, catalog 67 cord connector, weren’t you?
A. That was the outcome, yes.

Nothing therein supports a designation by Levitón of the type made by the Court. Thus, the third factor is not met here.

I have even greater concerns regarding the Court’s conclusion that Dandeneau was a managing agent of Levitón. A careful reading of the Court’s opinion makes it clear that Dandeneau did not meet even the first Clark Bros. factor. He was not the supervisor of Leviton’s quality control department in Rhode Island. He was a manager in that department and he had a department supervisor. There also was a Levitón vice-president of quality control. Thus, the record does not establish that Dandeneau had the right to general control, authority and judgment within his department. In addition, no showing was made that these persons of higher authority in Dandeneau’s chain of command did not possess knowledge of the matters at issue pursuant to the third factor. Finally, the Court finds some relevance in the fact that Campolo and Dandeneau were the only Levitón employee witnesses at trial. I submit that this consideration is totally irrelevant under Rule 32(a), M.R.Civ.R, and Clark Bros. in determining who is, and who is not, a “managing agent.”

The effect of the Court’s decision is to render every corporate employee at any managerial level who is identified as a witness or as having knowledge of matters at issue a “managing agent.” Such a result is at odds with the requirements of Clark Bros. More importantly, it voids the important limitation on the use of depositions “for any purpose” which is set forth in Rule 32(a), M.R.Civ.R I would affirm the District Court on this issue.

JUSTICE TRIEWEILER

specially concurring in part and dissenting in part.

I concur with the majority’s holding under Issues I, II, and IV.

With regard to Issue I, I would simply add that defendants’product was found to be defective because the manufacturer failed to instruct the purchaser or user of that product on how to assemble it. The jury found that that defect caused misassembly of the product, and that misassembly caused the fire in plaintiffs’ place of business. The misassembly, which resulted from the manufacturer’s failure to instruct, cannot, as a matter of law, be misuse. To hold otherwise would be to hold that the defect created by the manufacturer can cause an affirmative defense to the manufacturer’s own conduct or omission. Such a result would make no sense under the traditional principles of product liability law.

I would also add that placement of the cord connector near a flammable object cannot, as a matter of law, constitute misuse. So long as the cord connector was being used for its intended purpose, to connect electrical cords, it was not being misused as that term is defined in product liability law. Its misplacement may have been negligent. However, contributory negligence was not a defense to plaintiffs’ claim in this case pursuant to § 27-1-719(5), MCA.

Under Issue III, I agree with the majority’s reversal of the District Court’s directed verdict in favor of defendants. However, I conclude, based on the deposition testimony which this Court has now held admissible, that plaintiffs have presented sufficient evidence to raise a factual issue regarding their entitlement to punitive damages under § 27-1-221(1), MCA. Pursuant to that statute, punitive damages may be awarded where a defendant is aware of facts which create a high probability of injury to a plaintiff and deliberately proceeds to act in conscious or intentional disregard of the potential for injury. Based upon the deposition testimony of Steve Campolo, which this Court has now held was admissible, it is clear that Levitón knew that warnings, wiring diagrams, and assembly instructions were necessary for its Catalog No. 67 cord connector, but that it failed to provide them. It is also apparent that Levitón knew that if the cord connector was misassembled, the exact type of damage can occur which occurred in this case. In spite of this knowledge, Levitón not only failed to provide the necessary instructions or diagrams, but continued to market the cord connector with an Underwriters Laboratory designation which it had been instructed by that organization to remove.

The decision whether or not a factual issue has been raised regarding punitive damages will have to be based on the testimony that this Court has now held to be admissible. That testimony will not change from the time that this case is shipped from our clerk’s office back to the District Court. Therefore, the District Court is in no better position to rule on this issue than we are. Furthermore, this issue is properly before this Court based on the issues raised by the parties on appeal in this case.

Therefore, while I concur in the majority’s decision to reverse the District Court’s directed verdict on the issue of punitive damages, I dissent from that part of the majority opinion which concludes that whether or not a factual issue regarding punitive damages has been raised must necessarily be decided upon remand by the District Court.

For these reasons, and with these qualifications, I concur with part of the majority opinion, and dissent from part of that opinion.