No. 94-093 

IN THE: SUPREME COURT OF THE STATE OF MONTANA 

NORTHWEST TRUCK & TFLAILER SALES, 

INC., a Montana corporation, 

Plaintiff and Respondent, 

v. 

ROGER W. DVORAK and utc 2 Y 1994 

PATRICIA J. DVORAK, 

Defendants and Appellants 

APPEAL FROM: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

Honorable Maurice R. Colberg, Jr., Judge presiding. 

COUNSEL OF RECORD: 

For Appellants : 

Jack E. Sands, Billings, Montana 

For Respondent: 

James P. Murphy and Stewart R. Kirkpatrick, 

Murphy & Kirkpatrick, Billings, Montana 

Filed: 

Submitted on Briefs: November 23, 1994 

Decided: December 29, 1994 
Chief Justice J. A. Turnage delivered the Opinion of the Court. 

In this action, Northwest Truck & Trailer Sales, Inc. 

(Northwest), sought repossession of and the balance owing on a 

truck it sold to Roger W. and Patricia J. Dvorak. The Dvoraks 

counterclaimed, alleging fraud and breach of contract. The 

District Court for the Thirteenth Judicial District, Yellowstone 

County, entered summary judgment for Northwest on the Dvoraks' 

counterclaim of fraud. At trial on Northwest's claims and the 

remaining counterclaims, a jury found that Northwest did not breach 

its contract with the Dvoraks. The court directed a verdict 

awarding Northwest a deficiency judgment of $30,211.47, plus costs. 

The Dvoraks appeal. We affirm. 

The issues are: 

1. Did the District Court err in granting Northwest's motion 

for summary judgment on the counterclaim of fraud? 

2. Did the court err in refusing to allow the Dvoraks' 

proposed evidence that the truck was not a new truck? 

3. Did the court err in directing a verdict against the 

Dvoraks for $30,211.47? 

4. Did the court err in refusing the Dvoraks' proposed jury 

instructions? 

5. Do the jury's answers on the special verdict form require 

a reversal of th(3ir verdict because they are internally inconsistent? 

In June 1987, the Dvoraks bought a 1987 Peterbilt tractor 

truck from Northwest to use in their two-person trucking business. 
The $85,600 sale price of the truck was financed over a sixty-month 

term. In January 1990, Northwest filed a complaint in the District 

Court alleging that the Dvoraks had failed to make the required 

monthly payments on the truck. It asked to be restored to 

immediate possession of the vehicle and for damages, costs, and 

attorney fees. 

The Dvoraks counterclaimed, alleging that Northwest falsely 

represented to them that the truck was new when they bought it. 

They provided affidavits in which their son-in-law and four other 

persons stated they had examined the truck and found signs that it 

was not in its original condition. The Dvoraks asserted that 

Northwest's misrepresentation constituted fraud and breach of 

contract. They asked for compensatory and punitive damages and for 

their attorney fees and costs. 

In May 1990, following a hearing, the District Court ordered 

that the truck be delivered to Northwest. Roger Dvorak admitted to 

being at least eight payments in arrears at that time. Northwest 

resold the truck in September of 1990 for $58,000. The truck's 

odometer showed some 326,000 miles at that time. 

In May 1991, the District Court granted partial summary 

judgment for Northwest on the Dvoraks' counterclaim alleging fraud 

and requesting punitive damages. The court ruled that the Dvoraks 

had failed to establish material issues of fact concerning 

necessary elements of their fraud claim. 

The case proceeded to trial on Northwest's claim for a 

deficiency judgment and on the Dvoraks' counterclaims that 
Northwest breached the implied covenant of good faith and fair 

dealing and otherwise breached the contract. In a special verdict, 

the jury found that the written contract between the parties had 

been altered by an oral agreement, but that Northwest had not 

breached the modified contract or breached the implied covenant of 

good faith and fair dealing therein. The jury further found that 

Northwest had breached the implied covenant in the original written 

contract, but that there were no damages from that breach. The 

court directed a. verdict against the Dvoraks for the $30,211.47 

deficiency proved by Northwest between the amount owing on the 

contract and the resale price of the truck. The Dvoraks appeal. 

This Court has previously ruled that the Dvoraks' notice of 

appeal in this matter was timely filed. See Northwest Truck & 

Trailer Sales, Inc. v. Dvorak (Mont. 1994) , 877 P.2d 31, 51 St .Rep. 

564. 

Issue 1 

Did the District Court err in granting Northwest's motion for 

summary judgment on the counterclaim of fraud? 

A motion for summary judgment is properly granted if the 

record demonstrates no genuine issues of material fact and that the 

moving party is entitled to judgment as a matter of law. Rule 

56(c), M.R.Civ.P. A party opposing a motion for summary judgment 

may not rest upon the mere allegations or denials of the pleadings, 

but must set forth specific facts showing there is a genuine issue 

for trial. Rule 56(e), M.R.Civ.P. This Court reviews a ruling on 

a motion for summary judgment under the same standard as that used 
by the district court in its ruling on the motion. Minnie v. City 

of Roundup (1993), 257 Mont. 429, 431, 849 P.2d 212, 214. 

The nine elements of fraud are: 

1. A representation; 

2. Falsity of the representation; 

3. Materiality of the representation; 

4. The speaker's knowledge of the falsity of the representation or ignorance of its truth; 

5. The speaker's intent that the representation shall be 

relied upon; 

6. The hearer's ignorance of the falsity of the representation; 

7. The hearer's reliance on the representation; 

8. The hearer's right to rely upon the representation; 

9. Consequent and proximate injury caused by the reliance on 

the representation. 

Wiberg v. 17 Bar, Inc. (1990), 241 Mont. 490, 496, 788 P.2d 292, 

295. The District Court ruled that the Dvoraks failed to establish 

elements 2, 5, 6, and 9. 

The Dvoraks claim that contrary to the District Court's 

ruling, they produced evidence creating genuine issues of material 

fact concerning whether the truck was used and rebuilt before they 

bought it. They claimed damages because a rebuilt truck is worth 

less than a new one. 

Attached to the Dvoraks' brief in opposition to Northwest's 

motion for claim and delivery were affidavits signed by the 

Dvoraks' son-in-law and four other individuals. The affidavits 

were identical and were all dated April 20, 1990. Attached to each 
affidavit was a list of thirty-two observed defects in the Dvoraks ' 

truck. Each affidavit stated: 

From my personal observations noted on Exhibit 1, it is 

my opinion that the truck either is not a factory-built 

new truck, or has had major components replaced and had 

repainting done to conceal the work done on the truck. 

The affidavits were dated almost three years after the Dvoraks 

purchased the truck. At that time, the Dvoraks had driven the 

truck over 300,000 miles. The affidavits do not state when the 

observations about the truck were made. They state no opinion as 

to who created the alleged defects in the truck or when they were 

created. Moreover, the affidavits do not demonstrate that 

Northwest knew or should have known of the claimed defects in the 

truck. 

The Dvoraks essentially argue that "because we did not tamper 

with the truck, Northwest must have." However, this general 

assertion does not satisfy the Dvoraks' obligation to prove their 

claim of fraud with particularity. See Rule 9(b), M.R.Civ.P. We 

conclude that the District Court did not err in ruling that the 

Dvoraks failed to establish element 2 of their claim of fraud. 

The District Court observed as to the sixth element of the 

fraud claim that, within a few days after he bought the truck, 

Roger Dvorak had it inspected by a qualified person engaged in the 

truck repair business. That person stated by deposition that he 

did not note the defects listed in the above-mentioned affidavits. 

As to the ninth element of fraud, damages, Northwest cited 

Roger Dvorak's deposition testimony that the truck ran okay and he 

had been satisfied with its condition. The Dvoraks, in rebuttal, 

6 
maintained "it is common knowledge that trucks which have been 

wrecked and rebuilt are worth far less than those which have not." 

However, they offered no specific proof of their damages to support 

this allegation. An April 29, 1991 affidavit of the Dvoraks' sonin-law, to which. they refer in their briefs on appeal, does not 

appear in the record nor is it listed on the court's docket. We 

conclude that the court did not err in ruling that the Dvoraks 

failed to present a genuine issue of material fact as to the ninth 

element of their claim of fraud. 

We hold that the District Court did not err in granting 

Northwest summary judgment on the counterclaim of fraud. 

Issue 2 

Did the court err in refusing to allow the Dvoraks' proposed 

evidence that the truck was not a new truck? 

In its memorandum accompanying the order granting partial 

summary judgment for Northwest, the District Court stated: 

In addition, there being no substantial evidence to 

establish that the plaintiff did not sell the defendants 

a new truck, no evidence on this issue of the alleged 

breach of the contract by the plaintiff will be permitted 

at the trial. 

The Dvoraks argue that this was error because it precluded a 

contract claim for the difference between the contract price and 

the value of a used/wrecked truck. The Dvoraks maintain that the 

ruling "had additional far-reaching consequences for the remaining 

portion of the Dvoraks' counterclaims which eventually went to the 

jury e., breach of contract, breach of the covenant of good 

faith and fair dealing, and odometer tampering." 
Under any counterclaim based on the alleged used condition of 

the truck, the Dvoraks would be obliged to prove damages therefrom. 

As discussed above in regard to the motion for summary judgment, 

they failed to provide evidence of any damages resulting from their 

claim that the truck was not new when they bought it. Moreover, 

Northwest produced evidence at trial that the resale price of the 

truck was above the average price for a truck with that many miles 

on it. 

The Dvoraks were allowed to try to the jury their counterclaims concerning warranties, modification to and breach of 

contract, and odometer tampering. We hold that the District Court 

did not err in refusing to allow evidence at trial that the truck 

was not new when the Dvoraks bought it. 

Issue 3 

Did the court err in directing a verdict against the Dvoraks 

for $30,211.47? 

The Dvoraks contend no deficiency judgment should have been 

granted because the sale was not done in a commercially reasonable 

manner for the following reasons: (1) the repossession affidavit 

signed by the bank officer was false; and (2) Northwest improperly 

refused to credit. the Dvoraks with credit life and credit disability insurance refunds which Northwest got back when it foreclosed 

and cancelled the Dvoraks' insurance. The Dvoraks maintain that 

commercial reasonableness is a question of fact for the jury. 

The Dvoraks have not demonstrated any way in which the bank's 

affidavit changed the amount of money received from the sale or 
credited to the Dvoraks. Also, the evidence showed that the 

Dvoraks' maintenance account on the truck was credited with the 

insurance refund . 

During the presentation of Northwest's deficiency case at 

trial, the Dvoraks stipulated that they received notice of the sale 

and that Northwest obtained a commercially reasonable price for its 

resale of the truck. The Dvoraks did not raise an issue at trial 

as to the time, place, or advertising of the sale of their truck. 

This Court generally will not review issues raised for the first 

time on appeal. Weinberg v. Farmers State Bank of Worden (1988), 

231 Mont. 10, 19, 752 P.2d 719, 724. We therefore affirm the 

District Court's directed verdict against the Dvoraks for 

$30,211.47. 

Issue 4 

Did the court err in refusing the Dvoraks' proposed jury 

instructions? 

The standard of review for a trial court's refusal to give 

jury instructions is whether the trial court abused its discretion. 

Hislop v. Cady (1993), 261 Mont. 243, 247, 862 P.2d 388, 390. A 

court may refuse instructions when the facts proven at trial do not 

show a basis for the instructions requested. Bushnell v. Cook 

(1986), 221 Mont. 296, 300, 718 P.2d 665, 668. 

Two sets of proposed instructions are at issue. One set would 

have instructed the jury on the Uniform Commercial Code (UCC) 

measure of damages. The other set would have instructed on the 
Dvoraks' claims that Northwest had improperly sold insurance in 

violation of Montana's laws. 

The rights of and remedies for a buyer claiming breach in a 

sale of goods under the UCC are listed at §§ 30-2-601 and -711, 

MCA. In this case, the evidence showed that the Dvoraks did not 

reject the truck upon delivery, as described under § 30-2-602, MCA. 

Absent rejection of nonconforming goods, the UCC requires notice to 

the seller within a reasonable time. See 5 30-2-607, MCA. The 

evidence also showed that the Dvoraks failed to notify Northwest of 

the alleged nonconformity of the trcck until after Northwest filed 

suit to recover the truck, when they filed their counterclaims. It 

does not appear therefore that the Dvoraks were entitled to any 

damages under the UCC. 

The second set of offered instructions concerned the unlawful 

sale of insurance by Northwest. This related to a policy of 

insurance on Roger Dvorak's life which the Dvoraks purchased when 

they entered the financing agreement. The Dvoraks failed to 

introduce any evidence at trial to show who sold the insurance or 

who received the commissions, or that Northwest received any 

commission. 

Because the facts proven at trial did not show a basis for the 

above jury instructions offered by the Dvoraks, we hold that the 

District Court did not abuse its discretion in refusing them. 

Issue 5 

Do the jury's answers on the special verdict form require a 

reversal of their verdict because they are internally inconsistent? 
The jury answered "no" to question no. 2 on the special 

verdict form, whether Northwest breached the modified contract or 

breached the covenant of good faith and fair dealing implied by law 

in the modified contract. In question no. 4, the jury answered 

"yes" to the question of whether Northwest breached the implied 

covenant of good faith and fair dealing in the written contract 

between Northwest and the Dvoraks. The Dvoraks maintain that this 

is inconsistent. 

At trial, the Dvoraks introduced evidence that the written 

financing agreement was altered to allow them to make late payment. 

The jury accepted this argument, because it found in question no. 

1 that the contract was modified. In answer to question no. 2, 

however, the jury found that the modified contract was not 

breached. 

The Dvoraks also introduced evidence at trial that Northwest 

breached, in other ways, the covenant of good faith and fair 

dealing implied in the written contract. The jury found that this 

covenant was breached, but found no damages from this breach. 

The Dvoraks' counterclaims included several separate theories. 

We hold that the Dvoraks have shown no inconsistency in the jury's 

verdict which warrants reversal. 

We affirm the judgment of the District Court. 
1 We concur: 
Justice Terry N. Trieweiler dissenting. 

I dissent from the majority's conclusion that the District 

Court correctly dismissed the Dvoraks' counterclaim for punitive 

damages based on fraud. 

Pursuant to Rule 56, M.R.Civ.P., summary judgment is only 

appropriate where there is no genuine issue of material fact and 

the moving party is entitled to judgment as a matter of law. In 

deciding whether there is an issue of fact, the party opposed to 

summary judgment is entitled to all reasonable inferences which may 

be drawn from the offered proof. Brown v. Merrill Lynch (1982) , 197 

Mont. 1, 9, 640 P.2d 453, 457; Reavesv. Reinbold (1980), 189 Mont. 284, 

287, 615 P.2d 896, 898. Any doubt is to be resolved in favor of 

the party opposing summary judgment. Reagan v. Union Oil Co. (1984 ) , 208 

Mont. 1, 7, 675 P.2d 953, 956. 

I conclude that the affidavits attached to the Dvoraks' 

memorandum in opposition to Northwest's motion for summary judgment 

were sufficient to raise factual issues regarding the Dvoraks' 

claim that they were induced to purchase a truck from Northwest by 

fraudulent representations. 

For example, Robert G. Wittman operates a service shop where 

trucks are rebuilt and serviced, and where body work is performed. 

He inspected the truck purchased by the Dvoraks and swore in his 

af f idavit that the truck had, at some time, sustained damage to its 

body, the engine had been in another truck, and numerous parts were 

not installed at the factory. The affiant also stated that the 
truck had been painted somewhere other than at the factory and that 

the new paint did not match the factory paint. In fact, there was 

evidence that the entire cab had been removed and substantial work 

done on the truck. 

The Dvoraks testified that none of the work described in 

Wittman's affidavit was done while they owned and operated the 

truck, and that no one else had possession of the truck for a 

sufficient period of time within which to perform such extensive 

work after its purchase. 

Northwest represented to Dvoraks that the truck it sold them 

was new. The affidavits offered evidence that it was not new. 

Obviously, the dealer's representation was material to the Dvoraks' 

decision to purchase the truck. 

Knowledge of the speaker's falsity can never be proven 

directly unless the speaker admits that he lied. Therefore, to 

prove fraud, knowledge must normally be inferred based on all of 

the circumstances. In this case, the truck in question was 

delivered to Northwest in December 1986 and was in its possession 

until sold to Dvoraks on June 1, 1987. The truck was presumably 

inspected by Northwest after delivery from the factory and prior to 

resale. If the conditions which were noted by those persons who 

filed af f idavits in support of Dvoraks' claim were present prior to 

sale, it can be inferred that they were equally apparent to the 

qualified service people working for Northwest. 

Likewise, it can be inferred that when a purchaser comes into 

a new car or truck dealership, the dealer intends that person to 
rely on his or her representations that the vehicle being sold is 

new, as opposed to used. Finally, it can be inferred that when a 

purchaser pays the price appropriate for a new vehicle, as opposed 

to a discounted price for a used or damaged vehicle, that purchaser 

relied on representations by the dealer that the vehicle was new. 

It was not necessary in order for the Dvoraks to prevail on 

their claim for fraud that they prove appreciable out-of-pocket 

loss. Section 27-1-204, MCA, provides that " [wl hen breach of duty 

has caused no appreciable detriment to the party affected, he may 

yet recover nominal damages." Furthermore, § 27-1-221, MCA, 

provides that "reasonable punitive damages may be awarded when the 

defendant has been found guilty of actual fraud . . . ." 

In Laumanv.Lee (1981), 192 Mont. 84, 89, 626 P.2d 830, 833, we 

held that nominal damage may serve as the basis for a punitive 

damage award, even where the amount of actual damage is elusive. 

Certainly, in this case, if the Dvoraks purchased a used and 

repaired truck for the price of a new truck, they received less 

than they bargained for at the time of sale, even though over the 

long term, their use of the truck was not adversely affected. As 

pointed out in Lauman, where some actual damage can be presumed, 

based on the breach of a legal duty, punitive damages may be 

awarded even where the finder of fact assigns no value to the 

actual damages sustained. 

For these reasons, I would reverse the District Court's 

dismissal of the Dvoraks' claim based on fraud, and remand this 
case to the District Court for retrial of all issues, including the 

claims of fraud and breach of contract. Based on this conclusion, 

I would not address the remaining issues discussed in the majority 

opinion. 

Justice William E. Hunt, Sr., joins in the foregoing dissenting 

opinion. 
December 29, 1994 

CERTIFICATE OF SERVICE 

I hereby certify that the following certified order was sent by United States mail, prepaid, to the 

following named: 

Jack E. Sands 

Attorney at Law 

100 North 27th St., #250 

Billings. MT 59101 

James P. Murphy & Stewart R. Kirkpatrick 

MURPHY & KIRKPATRICK 

2929 Third Avenue North 

Billings, MT 59101 

ED SMITH 

CLERK OF THE SUPREME COURT 

STATE OF MONTANA 

BY: dDeputy