No. 91-112 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1991 

EDWARD L. OLSON, -. 

. 

-vsJACOB A. 

Plaintiff 

PARCHEN, 

Defendant 

and 

and 

APPEAL FROM: District Court of the Eighth Judicial District, 

In and for the County of Cascade, 

The Honorable Joel G. Roth, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Philip J. OtConnell: Thueson Law Office, Helena, 

Montana. 

For Respondent: 

Lon T. Holden: Jardine, Stephenson, Blewett & 

Weaver, Great Falls, Montana. 

Filed: 

Submitted on Briefs: June 6, 1991 

Decided: August 1, 1991 

Clerk 
Justice Karla M. Gray delivered the Opinion of the Court. 

Edward L. Olson appeals from a judgment of the District Court 

of the Eighth Judicial District, Cascade County, Montana, denying 

his xotion for summary judgment on the issue of liability and 

granting Parchen's motion to exclude evidence of certain economic 

damages suffered in an automobile collision. Olson also appeals 

from the jury verdict finding him contributorily negligent. We 

affirm in part and reverse in part. 

Olson presents the following issues: 

1. Did the District Court err in denying Olson's motion for 

summary judgment on the issue of liability? 

2. Did the District Court abuse its discretion by allo7hing 

the issue of contributory negligence to be submitted to tne 

jury? 

3. Did the District Court properly refuse to permit. Olson to 

present evidence at trial of economic damages relating to loss of 

rental income and loss of profits from the sales of rental 

property? 

On November 14, 1985, at approximately 4:15 p.m., vehicles 

operated by Edward L. Olson and Jacob A. Parchen collided at the 

intersection of First Avenue South and 18th Street in Great Falls, 

Montana. Olson was proceeding south on 18th Street as he 

approached the intersection, and Parchen was proceeding east on 

First Avenue South. Parchen failed to heed the yield right of way 

sign, and his 1977 GMC pickup truck collided with Olson's 1964 
Chevrolet Corvair on the passenger side. Both drivers stated that 

they were traveling at fifteen miles per hour 

Olson testified that a few moments prior to the collision he 

observed Parchen's vehicle approaching from the right, but thought 

that Parchen was goinq to stop. Olson looked to the left for 

traffic. When he glanced back to the right and realized that 

Parchen's pickup truck was not going to stop, Olson attempted to 

brake and turn to the left to avoid a collision, but was 

unsuccessful. 

Parchen said that he did not see Olson's car until it had 

entered the intersection moments before the collision. He applied 

his brakes, but his pickup truck skidded. Parchen also theorized 

that Olson had been blinded by the setting sun and didn't see him 

approaching the intersection. Parchen asserted that Olson did not 

properly watch for traffic and should have been traveling slowly 

enough to stop. 

The collision extensively damaged the right side of Olson's 

Corvair. Olson suffered a bruise over the right collar bone, 

broken upper dentures, a bruise on the right side of the scalp, and 

a deep bruise over the outside of his right foot. Olson also 

clained economic losses resulting from his alleged inabiLity to 

complete rental property renovations because of physical injuries 

sustained in the collision. 

Olson moved for partial summary judgment on the issue of 

liability. The District Court denied that motion, as well as 
Olson's subsequent motions for a directed verdict at the close of 

the evidence and fcr judgment notwithstanding the verdict. The 

District Court granted Parchen's motion in iimi~e rc exclude 

econonic damges for losses associated with Olson's rental property 

from the jury's consideration. The District Court denied Olson's 

motion for a new trial to consider econoaic damages. 

The jury found that Parchen was eighty per cent negligent and 

had proximately caused Olson's damages and injuries. Two thousand 

dollars in damages were awarded, of which Olson received $1,600. 

Did the District Court err in denying Olson's motion for 

sumn.ary judgment on the issue of liability? 

Olson claims that partial summary judgment should have been 

granted as a matter of law. 

When approaching a "yield" sign, the follo.wing rule appliss: 

[Tlhe driver of a vehicle approaching the "Yield" sign 

shall slow to a speed of not more than 15 miles per hour 

and yield right-of-way to all vehicles approaching from 

the right or left on the intersecting roads or streets 

which are so close as to constitute an immediate hazard. 

If a driver is involved in a collision at an intersection 

or interferes with the movement of other vehicles after 

driving past a "Yield" sign, such collision cr 

interference shall be deemed evidence of the driver's 

failure to yield right-of-way. 

Section 61-8-342, MCA. A driver's failure to yield the riqht-ofway is both a "statutorily recognized duty and breach of that 

duty." DeTJerniero v. Eby (1972), 159 Mont. 146, 151, 496 p.2d 290, 

Parchen adnitted that he failed to yield the right-of--da:; to 
Olson's vehicle, but argued that he was unable to stop beca~se kis 

l~ehkle skidded, Parchen also conjectured that Olsor aay ha-,;e been 

unable to see Parchen's picku? truck because he was blinded by the 

sun. This argument is irrelevant because Parchen, not Oiscn, had 

a duty to yield. In addition, the skidding of Parchen's vehicle 

is not a defense; it suggests only that Parchen may have been 

driving too fast for conditions. As a matter of law, Parchen ,'$as 

negligent under 4 61-8-342, MCA. 

Nonetheless, Parchen maintains that the District Court 

properly denied Olson partial summary judgment accordi.ng to our 

holding in Reed v. Little (1984), 209 Mont. 199, 680 P.2d 937. He 

contends that m requires the issue of liability to be submi.tted 

to the jury if the defense of contributory negligence is asserted 

in a traffic violation case. 

The facts of this case can be distinguished from the facts 

forming the basis for our holding in Reed. In m, the defendant 

ran into the plaintiff's car when the plaintiff allegedly made a 

sudden stop in heavy traffic for no apparent reason. The plaintiff 

denied the sudden stop. Questions of fact regarding the speed and 

distances of the vehicles remained for the jury's deterxination. 

Reed, 209 Mont. at 206, 680 P.2d at 940-41. As explained in our 

discussion below, under the facts of this case Olson could not be 

found contributorily negligent. 

Suniaary judgment is appropriate where no genuine issue of 

material fact exists and the moving party is entitled to judgxent 
as a matter of law. Rule 56(c), M.R.Civ.P.; First Security Bank 

of Bozeman v. Jones (1990), 243 Mont. 301, 3C3, 734 P.22 679, 681. 

Since Parchen was negligent as a matter of law, the court erred by 

denying partial summary judgment to Olson. 

I I 

Did the District Court abuse its discretion by allowing the 

issue of contributory negligence to be submitted to the jury? 

Before the question of contributory negligence can be 

submitted to the jury, evidence must be presented not only showing 

plaintiff's negligence, but demonstrating that such negligence 

proximately caused the accident and resulting injuries. Stephens 

v. Brown (1972), 160 Mont. 453, 457-58, 503 P.2d 667, 669. No such 

factual evidence showing contributory negligence existed in this 

case. 

Parchen argues that Olson violated the "basic rule" of 5 61- 

8-303, MCA, by not properly watching for Parchen's vehicle at the 

intersection. Section 61-8-303 is entitled "Speed restrictiocs - 

- basic rule" and provides in part that a driver shall drive "in 

a careful and prudent manner, and at a rate of speed no greater 

than is reasonable and proper under the conditions. . . ." 

According to the evidence, at the time of the collision Olson was 

traveling in a safe manner well below the speed limit. 

In Deb'erniero, the defendant alleged that because plaintiff 

did not properly watch for the other vehicle, he was contributorily 

negligent. We held that even though the plaintiff may have failed 
to Look, his failure to observe defendant approaching was not the 

proxinate cause of the accident: 

"Yad plaintiff looked it would not have affected 

defendant's driving or speed. Defendant testified that 

he never saw plaintiff till defenda~t was withir. 100 feet 

of the intersection. Unless plaintiff had been able to 

cast soine hypnotic spell over defendant his looking 

earlier would have had no effect on the collision." 

DeVerniero, 159 Mont. at 154, 496 P.2d at 294 (quoting Bates v. 

Burns (Utah 1955), 281 P.2d 209, 213). The proximate cause of the 

collision was defendant's breach of his duty to yield right-ofway. Plaintiff could not be contributorily negligent when his 

actions were not the proximate cause of the accident. CeVerniero, 

159 Mont. at 154, 496 P.2d at 294. 

The case before us is even clearer than DeVerniero on the 

issue of contributory negligence because Olson did not violate the 

basic rule. Parchen, on the other hand, did breach the basic rule 

by failing to watch for traffic and by failing to drive at a speed 

allowing him to stop his vehicle in time to avoid the collision. 

According to Parchen, he did not see Olson's car in the 

intersection until moments before the collision. Olson said that 

he saw Parchen's pickup truck, but thought Parchen was going to 

stop and looked away momentarily. A driver of a vehicle traveling 

cn a street protected by a "yield" sign has a right to rely upcn 

the compliance of the driver of a vehicle which must yield wit;? the 

yield right-of-way statutes. Olson cannot be contributorily 

negligent because his alleged failure to see Parchen's vehicle 

entering the intersection was not the proximate cause of the 
collision. 

Since the question of contributory negliqence should not have 

been subnitted to the jury, we reverse the jury's finding that 

olson was twenty per cent negligent and remand to the District 

Court for entry of judgment accordingly. 

I11 

Did the District Court properly refuse to permit Olscn to 

present evidence at trial of economic damages relating to loss of 

rental income and loss of profits from the sales of rental 

property? 

Olson asserts that the District Court abused its discretion 

in refusing to admit evidence of certain economic losses on the 

ground that they were speculative. Tort damages are allowed "for 

all the detriment proximately caused" by the breach "whether [the 

detriment] could have been anticipated or not." Section 27-1-317, 

MCA. Although damages need not be proved with precision, daaaqes 

which are a matter of mere speculation cannot be the basis of 

recovery. Bottrell v. American Bank (1989), 237 Mont. 1, 22-23, 

773 P.2d 694, 707-706. 

Thus, damages for lost profits may be awarded if such loss is 

shown to be the "natural and direct result of the act of the 

defendant" and if the loss is not speculative. Hostetter v. Donlar 

(1?86), 221 Hont. 380, 382, 719 P.2d 1243, 1245 (citing Cruse v. 

Clawson (1960), 137 Mont. 439, 448, 352 P.2d 989, 994). The 

prohibition against speculative profits does not necessarily apply 
to uncertainty about the amount of such profits, but applies tc 

uncertainty about "whether the loss of profits is the resxlt cf 

tbe xrong and whether such profit would have been derived at all." 

Stensvad v. Miners and Merchants Bank of Roundup (1982), 196 Mont. 

193, 206, 640 P.2d 1303, 1310, cert. denied, 459 C.S. 831, iO2 

S.Ct. 69, 74 L.Ed.2d 69; Hostetter, 221 Mont. at 382-83, 719 P.24 

at 1245. 

Olson did not complete renovations on two rental buildings; 

they remained unoccupied for two years until he sold the 

properties. Olson maintained that alleged losses of rental income 

and alleged losses suffered when the rental properties xere sold 

were attributable to his physical inability, caused by injuries 

suffered in the collision, to complete renovation of the 

properties. Less than two per cent of the necessary renovations 

to the rental properties were finished prior to the collision in 

which Olson was injured. During part of the time that the rental 

proprties sat empty, Olson worked for Boeing Company as an 

electrician. 

All of the theories underlying Olson's damage claims for loss 

of rents and profits are speculative. Olson could show only that 

he intended to restore the properties, that he might have been able 

to rent the restored properties, and that he night have garnered 

greater profits on the sale of the restored rental properties. We 

agree with the District Court that a question arises in Olscn's 

case about "whether such profit would have been derived at all" and 
that the profits Olson claine" he mould have made are speculative. 

(z~~~+' -A or- .a sf adxissibility of evidence are left largely to the 

Eiscretion of the trial court. Zuqq v. Ramaqe (l989), 239 Xont. 

292, 296, 779 P.2d 913, 915. The District Court did not abuse its 

discretion in excluding evidence of losz profits as speculati~ie. 

The District Court shall enter judqnent for the plaintiff in 

the total a~.ount of $2,000, and the judgment is otherwise affi.rmed. 

We concur: A 
Justice Terry N. Trieweiler concurring in part and dissenting in 

part. 

I concur with that part of the majority's opinion which 

relates to issues one and two; holds that plaintiff was entitled 

to judgment as a matter of law on the issue of liability, and holds 

that there was no evidence to support a finding of contributory 

negligence on the part of the plaintiff. 

I dissent from that part of the majority's opinion which 

affirms the District Court's refusal to permit the plaintiff to 

present evidence at trial of economic damage resulting from the 

loss of rental income and lost profits. 

The majority cavalierly dismissed Olson's damage claim with 

the following conclusion: 

All of the theories underlying Olson's damage claims for 

loss of rents and profits are speculative. Olson could 

show only that he intended to restore the properties, 

that he might have been able to rent the restored 

properties, and that he might have garnered greater 

profits on the sale of the restored rental properties. 

We agree with the District Court that a question arises 

in Olson's case about "whether such profit would have 

been derived at allw and that the profits Olson claimed 

he would have made are speculative. 

To fully understand how inaccurate the majority's treatment 

of this issue is, it is necessary to set forth in full the complete 

text of the evidence plaintiff offered to present, had he been 

allowed to do so. 
In a written offer of proof filed with the District Court 

prior to trial, plaintiff offered to prove the following facts 

through the following witnesses: 

1. Edward L. Olson will testify that before the 

automobile accident, he made a living by purchasing 

run down homes and apartments, renovating the same, 

renting the homes and apartments and selling the 

renovated buildings at a profit. Olson will testify 

that he performed virtually all of the renovation 

work himself, including: carpentry, plumbing, 

electrical, heating, plastering and painting. By 

performing the renovations himself, Olson was able 

to earn a substantial profit by adding value to the 

homes and apartments. 

2. Olson will testify that before the November 14, 1985 

automobile accident, he owned the Alcoy Apartments 

located on 18th Street and a single family residence 

located at 2526 First Avenue South. Olson will 

testify that in October, 1985, he gutted the 

interior of Apartment No. 5 in the Alcoy Apartments 

and the home at 2526 First Avenue South. Olson 

intended to completely renovate Apartment No. 5 and 

the single family home during the winter of 1985 - 

1986. He intended to relet the apartment and home 

in April, 1986 when the renovations had been 

completed. 

3. Olson will testify that he anticipated charging a 

rent of $185 per month for Apartment No. 5 in the 

Alcoy after the renovations were completed. He will 

testify that he anticipated charging a rent of at 

least $375 per month for the single family home. 

4. Olson will testify that as a result of the 

automobile accident, he was physically unable to 

complete the renovations to the two rental units. 

He will testify that he and his physician, Dr. 

James D. Hinde, expected that he would recover from 

the injuries suffered in the automobile accident 

within three to six months after the accident. 

However, he found that when he attempted to return 

to work, he suffered prolonged, debilitating pain 

and muscle spasms when he attempted to do the heavy 

lifting involved in the renovations. 
5. Olson will testify that for more than two years 

following the accident, he expected that he would 

fully recover from his injuries and be able to 

complete the renovations and rent Apartment No. 5 

in the Alcoy and the home at 2526 First Avenue 

South. His treating physician will also testify 

that he expected that [sic] Olson to recover from 

his injuries. However, by December, 1987, it became 

clear to Olson and Dr. Hinde that Olson would likely 

continue to suffer from chronic myofascial pain into 

the indefinite future. Accordingly, Olson decided 

that he would likely never be able to complete the 

renovations through his own efforts. Olson sold the 

rental units at the first opportunity, in the early 

spring of 1988. 

6. Olson will testify that he sold the Alcoy Apartments 

to Rick Sowers in April, 1988 for $110,000. At the 

time of the sale, Apartment No. 5 was gutted, 

untenantable, and earning no income. The sales 

price of the Alcoy was reduced accordingly. Olson 

believes that the sales price was reduced by 

approximately 10% of the potential value of the 

Alcoy, or $11,000. 

7. Olson will testify that he sold the single family 

home at 2526 First Avenue South to Don Bisgard and 

Mike Holland in June, 1988 for $30,000. Olson will 

testify that if he had been able to complete the 

renovations on the home, he would have been able to 

sell it for approximately $45,000. Additionally, 

a vacant building lot adjoining the home at 2526 

First Avenue South was included in the $30,000 sale 

to Bisgard and Holland. Olson believes that he 

would have been able to sell the building lot 

separate from the home for a profit of between 

$8,000 and $12,000. 

8* Rick Sowers, the present owner of the Alcoy 

Apartments will also testify. Sowers will testify 

that he also makes a living by buying older, run 

down homes, remodeling them and either renting or 

selling the homes for a profit. Sowers will testify 

that he is only able to make a profit remodeling 

older homes if he does all of the work himself. 

Sowers will testify that if he is unable to make the 

renovations himself, he is likely to loose money on 

a project. 
Sowers will testify that after purchasing the Alcoy 

Apartments from Ed Olson, he completed the 

renovations on Apartment No. 5. Sowers will testify 

that he invested between 160 and 200 hours of his 

time and approximately $2,000 into the renovations. 

Sowers will testify that after completing the 

renovations, he immediately rented Apartment No. 5 

at a rental of $250 per month. Since first renting 

the apartment, it has never been vacant even though 

four separate tenants have lived in the apartment. 

Sowers will also testify that he paid $110,000 to 

purchase the Alcoy Apartments from Ed Olson. He 

will testify that the Alcoy would clearly have been 

worth more money had the renovations to Apartment 

No. 5 been completed, since Apartment No. 5 would 

then have been generating income which would have 

improved the cash flow of the building. Sowers will 

testify that he believes he would have paid $8,000 

to $10,000 more for the Alcoy had Apartment No. 5 

been fully renovated at the time he purchased it. 

Don Bisgard will testify at trial. Bisgard will 

testify that he purchased the single family 

residence at 2526 First Avenue South from Ed Olson 

in the spring of 1988 at a cost of $30,000. Bisgard 

will testify that he and his partner, Mike Holland, 

are also in the business of remodeling and selling 

older homes. Bisgard will also testify that he is 

only able to make a profit in the remodeling 

business by doing the work himself. Bisgard will 

testify that after spending $30,000 to purchase the 

home at 2526 First Avenue South, he invested 

approximately $8,860 in materials, $3,200 in labor 

and approximately $2,900 in miscellaneous costs. 

Bisgard sold the home at 2526 First Avenue South 

after completing renovations for $41,900. 

Additionally, Bisgard split off the adjoining vacant 

lot and sold that lot separately after building a 

new house on the lot. For his accounting purposes, 

Bisgard assigns a value of $5,000 to the vacant lot, 

separate and apart from the value of the renovated 

house. 

The foregoing is a brief summary of the evidence to 

be offered at trial regarding the economic losses 

suffered by Ed Olson as a consequence of the 

November 14, 1985 automobile accident. 
Plaintiff was never given an opportunity to offer the above 

evidence. However, for purposes of our review, we must presume 

that he was capable of proving what he offered to prove. In that 

event, there was nothing speculative about his damages. In fact, 

the proof that he would have offered exceeded all of the prior 

requirements established by this Court for the proof of lost 

profits and economic damages. 

We held in Crusev. Clawson (1960), 137 Mont. 439, 448, 352 P.2d 

989, 994, that: 

[I]n Montana the rule is that a person may recover for 

loss of profits where it is shown that such loss is the 

natural and direct result of the act of the defendant 

complained of and that such amount is certain and not 

speculative. 

Plaintiff satisfied the Cm~e requirement by offering to prove 

through his own testimony and the testimony of his physician that 

he was unable to complete the renovation of his rental properties 

due to the injury he sustained in his collision with the defendant. 

In i/inion v. Wood Yard, Inc. (1988), 232 Mont. 110, 113, 755 P.2d 

31, 34, we reaffirmed "[tlhat the owner of property may testify as 

to its value." In this case, therefore, plaintiff was qualified 

to testify to the value of his property, with and without the 

improvements that he would have made, but for his injury. The 

District Court abused its discretion by disallowing that testimony. 

In L%ziorz, we affirmed a verdict of damages for the plaintiff 

based solely upon his opinion testimony about the diminution in 
value of his building which resulted from damage caused by the 

defendant, even though neither the plaintiff nor defendant's 

experts were able to assess the impact of the structural damage on 

the value of the building. We held that: 

Wood Yard [defendant] admitted that it caused the damages 

in this case. If it is reasonably certain that damages 

were sustained by the wrongful act or breach of the 

defendant, then reasonable damages rationally supported 

by the evidence will be upheld. Castillo v. Frank (Mont. 

l984), 1213 Mont. 232,] 690 P.2d 425, 431, 41 St.Rep. 

2071. 

%ion, 232 Mont. at 113, 775 P.2d at 34. 

In this case, the plaintiff offered specific opinion evidence 

regarding the diminution in the value of his building, due to his 

inability to complete the improvements he had started. He also 

offered qualified opinion evidence regarding the rental value of 

the property, had he been permitted to complete it. However, in 

addition to his own opinion, plaintiff went further than he was 

required to go by our previous case law when he offered the 

testimony of the people who purchased his rental properties to 

corroborate his own opinion testimony. The proof in this case was 

=ore than was required by our previous decision in Cremer v. Cremer 

Rodeo Lnnd & Livestock Co. (1981) , 192 Mont. 208, 214, 627 P.2d 1199, 

1202, where, when discussing proof of lost profits and rental 

proceeds, we held that: 

Recovery of damages will not be denied, even if the 

mathematical precision of the figure is challenged, 

provided the evidence is sufficient to afford a 
reasonable basis for determining the specific amount 

awarded . Accord, Jacqueline's Washington, Inc. v. i2fercanhle Stores Co. 

(1972) 80 Wash.2d 784, 498 P.2d 870. 

In Stensvad L. z%finers & .%firchants Bank (1982) , 196 Mont. 193, 206, 

640 P.2d 1303, 1310, when discussing damages for lost profits, we 

held that: 

Damages for loss of profits may be awarded if not 

speculative. Silfiastv.Asplund (1935)' 99 Mont. 152, 161, 

42 P.2d 452, 456. The rule that prohibits speculative 

profits does not apply to uncertainty as to the amount 

of such profits, but to uncertainty or speculation as to 

whether the loss of profits is the result of the wrong 

and whether such profit would have been derived at all. 

Tri-Tron Intern. v. Veko. (9th Cir. 1975), 525 F.2d 432, 437. 

Once liability is shown, that is the certainty that the 

damages are caused by the breach, then loss of profits 

on a reasonable basis for computation and the best 

evidence available under the circumstances will support 

a reasonably close estimate of the loss by a District 

Court. Smith v. Zepp (l977), 173 Mont. 358, 370, 567 P. 2d 

923, 930. But no damages are recoverable which are not 

clearly ascertainable both in nature and origin, and only 

profits which are reasonably certain may be awarded. 

Smith v. Fergru Co~mg~ (l934), 98 Mont. 377, 386, 39 P.2d 193, 

195. 

The holding of the majority in this case is contrary to all 

precedent established by this Court during the past ten years for 

the proof of lost profits. The result of the majority's opinion 

is to create an impossible burden for any property owner who is put 

in the unfortunate position of having to prove the nature and 

extent of his damage when he is unable to maintain or improve his 

personal or real property, due to the negligence of another. 

As shown by the above offer of proof, there is nothing 

questionable about plaintiff's ability to rent his property had he 
completed its restoration. The subsequent owner did complete the 

restoration and immediately rented the property. There was nothing 

questionable about Olson's opinion that he would have sold the 

property for a greater profit had the improvements been completed. 

The purchaser of the property did complete the improvements and 

offered to testify that the property had a greater value following 

the completion of those improvements. 

I strongly disagree with the majority's conclusion that "[all1 

of the theories underlying Olson's damage claims for loss of rents 

and profits are speculative." There was absolutely nothing 

speculative about the evidence that plaintiff sought to present 

regarding his loss of profits and business income. 

For these reasons, I conclude that the District Court abused 

its discretion by excluding plaintiff's proof that he 

economically damaged by loss of rental income and profits from 

sale of rental property. I would reverse the District Court 

was 

the 

and 

remand this case for a new trial on the is ue of damages. 5 

We concur in the foregoing concurrence and dissent of Justice 

Trieweiler. 

Justices