NO. 88-441 

Ib? THE SUPREME COURT OF THE STATE OF MONTANA 

1989 

R. H. GROVER, INC. ! 

a Montana corporation, 

plaintiff, Respondent and 

Cross-Appellant, 

-VSFLYNN INSURANCE COMPANY, 

a Montanz- corporation, 

Defe~da.nt and Appellant, 

APPEAL FROM: ~istrict Court of the Fourth Judicial ~istrict, 

In and for the County of Missoula, 

The Honorable James wheelis, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Jardine, Stephenson, Blewett & Weaver; ~illiam D. 

Jacobsen argued, Great Falls, Montana 

For Respondent: 

Worden, Thane & Haines; arti in King argued, Missoula, 

, . Montana 

Submitted: July 20, 1989 

~ecided: July 25, 1989 
Mr. Chief Justice J. A. Turnage delivered the Opinion of the Court. 

Defendant Flynn Insurance appeals a jury verdict and judgment 

entered in favor of plaintiff in the Fourth Judicial District, 

Missoula County. The jury returned a verdict March 22, 1988, in 

the amount of $106,866, to which the district judge added 

$54,194.28 in prejudgment interest. The District Court denied 

Flynn's motions for summary judgment, directed verdicts on many 

issues and for judgment N.O.V. Flynn appeals. 

R. H. Grover, Inc. (Grover) cross-appeals the District Court ' s 

denial of Grover's bill of costs. The District Court found that 

Grover's bill of costs in the amount of $4,406.50 was not filed 

timely under section 25-10-501, MCA. 

We affirm. 

This case went to the jury on a general verdict form, over the 

objection of defense counsel, with instructions on the following 

six separate causes of action: 

1) negligent misrepresentation; 

2) generalnegligence; 

3) negligent failure to procure insurance; 

4) contractual failure to procure insurance; 

5) breach of third party beneficiary contract ; and 

6) promissory estoppel. 

Defense counsel moved for directed verdicts, which were 

denied, on each of the last five claims arguing that plaintiff Is 

only proper claim was negligent misrepresentation and that it was 

barred as a matter of law. Defendant continues to dispute the 

applicability of the last five claims sent to the jury. 

Thus, the issues on appeal as stated by defendant's counsel 

are as follows: 

Whether the District Court committed reversible error by: 
1. Giving the case to the jury on a 

general verdict form which contained 

one or more inapplicable legal theories; 

2. Refusing to grant Flynn judgment as 

a matter of law on Grover's claim of 

negligent misrepresentation;8 

3. Giving Instruction #15 over objection of defense counsel regarding an 

agent's liability; 

4. Refusing Flynn's proposed Instruction #38 instructing that liability 

could not exceed the policy limits; 

and 

5. Allowing Grover $54,194.28 in prejudgment interest. 

The issue on cross-appeal is whether it was error to deny 

Grover's bill of costs as untimely. 

The following facts are not contested. 

Grover is a mechanical and plumbing contractor. In 1978-1979 

Grover became associated with Fire Protection Analysis, Inc. (Fire 

Protection). Grover later subcontracted with Fire Protection for 

the design of fire protection systems (ceiling sprinklers, etc.) 

to be installed in four major construction projects around Montana. 

Problems later arose with these projects. Grover did not pay 

Fire Protection in full, asserting that it had incurred extensive 

costs due to Fire Protection's errors and omissions. Fire Protection sued Grover for final payment. Grover counterclaimed for 

damages due to negligence. As a result, Fire Protection allowed 

a judgment to be entered in favor of Grover in the amount of 

$106,866 as compensation for those problems. 

Prior to design and construction, Fire Protection had procured 

for Grover a certificate of professional liability insurance (E & 

0 coverage) from its insurance agent, Flynn. The certificate was 

dated August 21, 1979, and listed Grover as the certificate holder, 
Fire Protection as the insured, policy limits of $400,000 and an 

expiration date during September of 1980. The certificate specifically listed professional liability insurance issued by CNA 

Insurance Company as Policy Number AEP 821 357 which covered Fire 

Protection for its errors and omissions up to $400,000. 

The certificate was prepared erroneously a by Flynn employee. 

Fire Protection did not have professional liability insurance and 

never had any such coverage or policy. 

In exchange for not executing on the judgment against Fire 

Protection, Grover was assigned all proceeds which may result from 

Fire Protection's action against Flynn. Grover then proceeded 

against Flynn directly. 

The issues of legal liability, reliance, and damages were 

disputed and litigated at trial. Grover later stipulated its 

damages were $106,866 as evidenced by the judgment in the underlying suit. 

I. General Verdict Form 

Flynn cites Martin v. N.P. Ry. Co. (1915), 51 Mont. 31, 149 

P. 89, for the proposition that it is reversible error to let a 

verdict rendered on a general verdict form stand if one or more of 

the legal theories was improper. 

In Martin, the plaintiff plead one cause of action (negligence) in four separate counts. The court struck Count I11 as 

being too indefinite to impose a duty and submitted the remaining 

three counts of negligence on a general verdict to the jury which 

returned a verdict for the plaintiff. 

On appeal, this Court held that Counts I and IV likewise 

should have been stricken for insufficient evidence. In reversing 

the verdict based on the general verdict form, this Court stated: 

We are unable to agree . . . that if the 

complaint contains one good count . . . the 

jurors . . . founded their verdict upon it, 

rather than upon the counts which fail to 

state facts sufficient to warrant recovery. 
A fair and impartial trial comprehends a trial 

upon issues properly submitted, and, when 

different theories of the same case are placed 

before a jury, it is impossible to know upon 

which the general verdict is made to depend. 

Martin, 149 P. at 91. 

Flynn argues that this 1915 case is good law in Montana and 

controls on this issue. 

Grover maintains that requiring a general verdict form is 

within the sound discretion of the trial court, pursuant to Rule 

49 (a) , M.R. Civ. P. ("a court mav require a jury to return a special 

verdict") and that reversal requires proof of abuse of discretion. 

In support of the argument that no abuse of discretion can be 

shown, Grover argues, first, that all legal theories were properly 

submitted because credible evidence supported each theory; and 

second, that if a general verdict contains one viable theory on 

which the entire verdict could stand, the verdict ought not be 

reversed. Grover cites Dunlap v. GMC (Ariz. 1983), 666 P.2d 83 

("General verdict will be upheld when several counts, issues, or 

theories are submitted to the jury if the evidence on one count, 

issue or theory is sufficient to sustain the verdictw1) ; and Jenkins 

v. C. & E. Ry. (Ill. 1972), 284 N.E.2d 392 ("where several causes 

of action have been alleged and a general verdict results, the 

verdict will be sustained against a general motion for directed 

verdict or a motion N.O.V. if there are one or more good causes of 

action or counts to support itw). We do not agree. 

We conclude that Martin is not controlling on this issue 

because it was decided prior to the adoption of the new rules of 

civil procedure in 1961. Therefore, the special verdicts known to 

courts in 1915 may have been different than those now allowed under 

Rule 49(a). However, we find the reasoning applied in Martin 

persuasive and conclude that it was error to submit these six 

issues to the jury on a general verdict form. 
The trial court must allow only those claims supported by the 

evidence to go to the jury. If there is a factual question as to 

the applicability or validity of particular claims, the preferred 

solution is to submit the claims to the jury on a special verdict 

form as allowed under Rule 49 (a). Such procedure makes a record 

more easily reviewable by this Court, thus protecting the rights 

of both parties. 

A motion for directed verdict is properly granted when there 

is an absence of any evidence to warrant sending the case to the 

jury. Britton v. Farmers Ins. Group (1986), 221 Mont. 67, 721 P. 2d 

303. Under this standard of review we conclude that it was error 

to submit the last four claims to the jury. 

As was argued vehemently by defense counsel during motions for 

directed verdicts on the last four claims, the record is devoid of 

the critical elements of a contract. Fundamentally lacking was 

evidence of offer and acceptance, as well as exchange of consideration between Flynn and Grover, or even between Flynn and Fire 

Protection regarding the professional liability insurance policy. 

The record is clear that in 1979 Fire Protection did not 

request Flynn to procure professional liability insurance and did 

not pay any premiums for such a policy. It is impossible to find 

that Flynnls erroneous certificate created a l'contractll under which 

they were bound to procure insurance. Thus, the contractual 

failure to procure insurance claim must fail as a matter of law. 

We also conclude based on the foregoing analysis that it is 

impossible to imply that Flynn had a "dutyw to procure insurance 

under these facts. Issuing the certificate cannot create a lldutyll 

to procure insurance at a later date. Rather, Montana law requires 

a client's request to procure certain insurance, followed by an 

agent's commitment to do the same to put the agent under a llduty" 

to procure. Lee v. Andrews (1983), 204 Mont. 527, 667 P.2d 919. 

The claim of negligent failure to procure insurance also fails for 

want of proof. Absent a duty, there can be no negligent failure 
to procure insurance. 

The contractual claim for a third-party beneficiary contract 

likewise fails for lack of evidence regarding the critical elements 

of a contract under this analysis. The record is devoid of any 

evidence regarding offer and acceptance, intent to create a 

contract for Grover's benefit and consideration. This claim is not 

supported by the evidence. 

Grover also asserted a claim of promissory estoppel. Grover 

claimed that Flynn's certificate was a promise that the insurance 

policy existed. Once Flynn promised that, Grover argues, it 

should be estopped from denying the same. We do not agree. The 

certificate cannot be a contract or a promise. Flynn Insurance 

has promised nothing by issuing the certificate. The promissory 

estoppel claim likewise should have been dismissed under defendant's motion for directed verdict for lack of evidence of a 

I1promise. 'I 

Based on the foregoing discussion, we conclude at least these 

four claims were submitted erroneously to the jury on the general 

verdict form. This Court disapproves of counsel pleading and 

urging the submission to juries of claims for which there is no 

basis in admissible evidence. More certainly, this Court will find 

error when a trial court allows juries to consider a claim when no 

law or fact exists in support thereof. 

The error committed under the facts of this case was not 

reversible error. 

Rule 61, M.R.Civ.P., provides: 

Harmless error. No error in either the admission or the exclusion of evidence and no error 

or defect in any ruling or order or in anything done or omitted by the court or by any 

of the parties is ground for granting a new 

trial or for setting aside a verdict or for 

vacating, modifying, or otherwise disturbing 

a judgment or order, unless refusal to take 

such action appears to the court inconsistent 

with substantial justice. The court at every 
stage of the proceeding must disregard any 

error or defect in the proceeding which does 

not affect the substantial rights of the 

parties. 

Our careful review of the record and analysis of the applicable law as stated above leads us to conclude that the trial 

judge did not commit reversible error in any of the issues raised 

by appellant. Therefore, we omit any discussion regarding the 

contested jury instructions. We affirm the District Court's 

judgment and order in its entirety based on the following analysis. 

We hold that substantial injustice would occur by denying 

Grover's jury verdict based on the remaining two claims: general 

negligence and negligent misrepresentation. Specifically, we note 

the record as it refers to general negligence. 

Grover asserted that Flynn Insurance committed general 

negligence which damaged Grover apart from and in addition to the 

issuance of the faulty certificate. We agree. The record is 

replete with such evidence: inadequate supervision of an employee 

new to the job, failure to follow other established internal office 

procedures which would have caught the error immediately and 

failure to notify Grover. 

The District Court gave the jury instruction No. 40, "You are 

instructed that Flynn Insurance Agency was negligent." This 

instruction was equivalent to a directed verdict on the issue of 

the negligence of appellant Flynn. Having been directed as a 

matter of law that they will find Flynn negligent in its issuance 

of the certificate of professional liability insurance, the jury 

had only left to decide if there was a causal connection between 

Flynn's negligence and Grover's damages which were stipulated to 

be $106,866. Based on these facts, we conclude that the jury 

verdict is based on the law and substantial credible evidence. 

Reversal of the verdict would constitute substantial injustice to 

Grover. However, in the absence of a directed verdict on Flynn's 
negligence, reversal would be mandated under this general verdict 

form. 

Thus, under the facts of this case, and under the standard set 

forth in Rule 61, the errors committed by the trial judge regarding 

the general verdict form were not reversible error. 

At this juncture, we must discuss Flynnts contention that the 

damage award must still be overturned as a matter of law. 

Flynn argues that notwithstanding the directed verdict, Grover 

is not entitled to any damages because its claims are barred as a 

matter of law by the statute of limitations. The jury was 

instructed on the various claims that the applicable limitations 

were two years (negligent misrepresentation), three years (negligence), five years (oral contract) and eight years (actions founded 

upon a written instrument). Flynn argues that these instructions 

were reversible error because all claims should hinge on the two 

year limitation, which had expired. 

Based on our discussions in White v. Lobdell (1984), 208 Mont. 

295, 678 P.2d 637, the parties below agreed that the statute of 

limitations for negligent misrepresentation claims is two years. 

See White, 678 P.2d at 642 and section 27-2-203, MCA. This 

limitation begins to run when the plaintiff wdiscoverstt the 

misrepresentation. Section 27-2-203, MCA. Under Mobley v. Hall 

(1983) , 202 Mont. 227, 657 P. 2d 604, wdiscovery" occurs when the 

plaintiff acquires such facts as would reasonably prompt inquiry 

or action. 

Grover argues that his March 19, 1984, complaint was filed 

timely. Regarding the date of discovery, Grover testified to the 

jury that he did not discover that the certificate was erroneous 

until 1983, well within the two year limitation. Grover argues 

that the jury must decide if a claim is time-barred when conflicting evidence as to the date of accrual of the action is presented. 

Hill v. Squibb (1979), 181 Mont. 199, 592 P.2d 1383. The jury 

found in favor of Grover and he asserts that this verdict should 
be upheld. 

Flynn asserts that the verdict should be stricken as a matter 

of law because "discovery1' occurred at least by January 1982 and 

thus the claim was time-barred under the two year limitation. 

Flynn introduced into evidence a letter dated in January 1982 which 

was written to Grover by Fire Protection's attorney. The letter 

generally sought a settlement rather than a trial of the dispute 

between Fire Protection and Grover and stated 'I. . . assuming you 

win, you will collect nothing since we have no insurance . . . l1 

This letter was all that Flynn introduced regarding "disc~very.~~ 

From there it made only conclusory arguments that the letter 

necessarily constituted discovery of such facts as would lead a 

reasonable person to inquiry. (Regarding this letter, Grover 

testified that he simply did not understand the letter to mean this 

certificate which he held was inaccurate.) 

In its appellate brief, Flynn further argued that since all 

of Grover's claims were based upon Flynn's erroneous representation, all claims are barred by the same two year statute of 

limitations which expired in January of 1982, two months prior to 

Grover's complaint being filed. 

We do not agree. However, we do not find Grover's version of 

the events persuasive either. 

The liability of Flynn could be characterized properly as 

founded on an instrument in writing (thus bearing an eight year 

limitation on the action), however it need not necessarily be 

characterized so. The action for general negligence (the record 

is replete with evidence of Flynn's negligence) is controlled by 

the three year limitation found in section 27-2-204, MCA. The jury 

was instructed properly on that limitation. Further, as discussed 

above, the trial judge directed a verdict on the issue of general 

or ordinary negligence. We conclude under this analysis that 

Grover's action is not barred as a matter of law and that the jury 

verdict was lawful. We reject Flynnts plea to overturn the 
, '. ' . '. 

verdict. 

11. Prejudgment Interest 

Prejudgment interest can be awarded by the trial judge 

pursuant to section 27-1-211, MCA, when the following three 

criteria are met: (1) there is an underlying monetary obligation; 

(2) the amount of recovery is certain or capable of being made 

certain by calculation; and (3) the right to recovery vests on a 

particular day. 

Flynn asserts that there is no monetary obligation until the 

jury determines liability. Palmer v. Farmers Insurance Exchange 

(Mont. 1988), 761 P.2d 401, 45 St.Rep. 1694 ("when liability is 

contested . . . the conditions [of section 27-1-2111 fail since no 

monetary obligation exists until the day the jury determines the 

degrees of comparative negligence. The right to recover does not 

vest until the jury returns its verdict.") 

Flynn also asserts that Grover contested the amount of damages 

as being above and beyond the $106,866 judgment. Flynn contends 

that Grover is trying to have its cake and eat it too with regard 

to whether or not these damages are a fixed amount. 

Grover distinguishes Palmer in that there are no issues of 

comparative negligence in the case at bar (thus there would be no 

later reduction in the damages) and asserts that the fixed amount 

of the previous judgment on a particular day satisfies this entire 

statute. The trial court agreed with Grover. 

We conclude there is no error in the trial court's analysis 

of this issue. The parties stipulated during trial as to the 

amount of Grover's damages on the underlying suit (those damages 

attributable to Fire Protection's negligence regarding the sprinkler system designs). That amount was reflected in the $106,866 

default judgment against Fire Protection. That judgment was 

rendered December 31, 1982. These facts certainly fulfill all 

three requirements of section 27-1-211, MCA. 
Prejudgment interest was awarded properly. 

CROSS-APPEAL 

Bill of Costs 

Section 25-10-501, MCA, reads in pertinent part: 

The party in whose favor judgment is rendered 

and who claims his costs must deliver to the 

clerk and serve upon the adverse party, within 

5 days after the verdict or notice of the 

decision of the court or referee or, if the 

entry of the judgment on the verdict or decision be stayed, then before such entry is 

made, a memorandum of the items of his costs 

and necessary disbursements in the action or 

proceeding, which memorandum must be verified 

by the oath of the party, his attorney or 

agent, or the clerk of his attorney . . . 

Verdict was rendered March 22, 1988, and judgment was entered 

upon it on March 30, 1988. Grover received the judgment on April 

4, 1988, and filed its bill of costs on April 5, 1988. 

The District Court struck Grover's bill as untimely because 

it was not filed within five days after the verdict. We agree. 

Grover relied on Funk v. Robbin (1984) , 212 Mont. 437, 689 

P.2d 1215, wherein this Court allowed costs under section 25-10- 

501, MCA, the bill for which was filed long after the decision of 

the court was rendered. That case quoted Poeppel v. Fisher (1977) , 

175 Mont. 136, 572 P.2d 912, as follows: 

This Court has held that the five-day period 

allowed for filing of a memorandum of costs 

and disbursements is computed from the day the 

court enters judgment, not from the day the 

court orally announces its decision. 

Poeppel, 572 P.2d at 1221. 

Funk and Poemel are not controlling on this issue because 

they involved bench trials. The statute and the case at bar both 

deal with jury verdicts. By taking matters under advisement, the 

trial judge has more latitude than a jury as to when it will render 
its decision. Thus, the announcement of a decision by the bench 

is not comparable to the jury rendering its decision. Lastly, we 

note that even in Funk and Poeppel, the bill for costs was filed 

prior to entry of the judgment. 

Grover's bill was properly stricken. 

In summary, we conclude the errors committed by the trial 

court regarding the general verdict form are not reversible error 

and therefore, affirm the District Court's judgment based on the 

jury verdict. We find no error in the District Court's other 

evidentiary rulings. Likewise, the trial court's rulings awarding 

prejudgment interest and denying Grover s bill of costs were 

correct. The District Courtls judgment is affirmed in its 

entirety. 

ief ~ustice 

We concur: 

z/ Justices