No. 88-55 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

LEVIN DAVIS AND SARA DAVIS, 

Plaintiffs and Appellants, 

-vsCOURT V. SHERIFF, MARDI M. SHERIFF 

and THE COMMERCIAL UNION INSURANCE 

COMPANY, a Massachusetts corporation, 

Defendants and Respondents. 

APPEAL FROM: District Court of the First Judicial District, 

In and for the County of Lewis & Clark, 

The Honorable Henry Loble, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Mark P. Yeshe; Harrison, Yeshe & Murphy, Helena, 

Montana 

For Respondent : 

Paul Meismer; Garlington, Lohn & Robinson, Missoula, 

Montana 

James L. Jones; Dorsey & Whitney, Billings, Montana 

Submitted on Briefs: Aug. 18, 1988 

Decided: September 26, 1988 

Filed: SEp 2 6 1988 

&A n, 

Clerk 
Mr. Chief Justice J. A. Turnage delivered the Opinion of the 

Court. 

Plaintiffs Levin and Sara Davis (the Davises) brought a 

malicious prosecution action against Court and Mardi Sheriff 

(the Sheriffs) and against Commercial Union Insurance Companies (Commercial). The Davises also filed first-party and 

third-party insurance bad faith claims against Commercial 

Union. 

The District Court of the First Judicial District, 

Honorable Henry Loble presiding, directed verdicts for defendants on the malicious prosecution claims and on Mr. Davis's 

first-party bad faith claim. Trial was had on the remaining 

issue of third-party insurance bad faith. The jury returned 

a verdict in favor of the plaintiff Davises but awarded them 

only one dollar compensatory damages and one dollar punitive 

damages. The Davises' motion for a new trial on the issue of 

damages was denied December 16, 1987, and this appeal 

followed. 

We affirm. 

The Davises present the following issues on appeal: 

Did the District Court abuse its discretion by 

(1) directing verdicts on the malicious prosecution 

claims in favor of Sheriffs and Commercial; 

(2) directing the verdict for Commercial on the firstparty insurance bad faith claim; 

(3) refusing to grant a new trial as to compensatory 

damages ; 

(4) refusing to grant a new trial as to punitive 

damages; and 

(5) refusing to admit plaintiffs' proposed exhibit 

number 45 on damages. 

This malicious prosecution suit arises out of a series 

of events beginning with a fire in 1977. As of March 22, 
1977, the Davises were managing/leasing the Yacht Basin Bar 

and Restaurant from the Sheriffs until a fire on October 1, 

1977, destroyed the premises, including property of the 

Davises. The Davises asserted that the cause of the fire was 

a leaky roof which caused a short in the electrical system. 

The Davises lost roughly $10,000 due to the fire. They 

attempted to recover this sum from Commercial Union who 

insured the premises for the Sheriffs. Commercial Union 

refused to pay, saying that the cause of the fire was either 

arson or negligence on the part of the Davises. It was 

determined that a burner had been left on either by the 

Davises or one of their employees. This, however, was disputed as the cause of the fire since at least one expert 

testified that the fire could not have started in the kitchen. However, Commercial Union then counterclaimed in the 

amount of $150,000 in damages for the building, which amount 

was later reduced to $75,000. Eventually, that claim was 

dropped all together. It was that counterclaim that forms 

the basis for this action. 

Trial was had on those issues which resulted in a 

verdict for the Davises for their loss of $10,000. (Levin 

and Sara Davis v. Court V. and Mardi M. Sheriff, Cause No. 

44240) . However, it cost the Davises $5,000 to recover that 

money due to them under the insurance policy because of 

Commercial Union's refusal to pay the claim, their counterclaim and their insistence on litigating the matter. Thus, 

the Davises suffered an out-of-pocket loss of $5,000, and 

this claim of malicious prosecution against the Sheriffs and 

their insurance company resulted. 

The Davises also claimed that they were listed as 

insured on the policy and they filed a first-party as well as 

a third-party insurance bad faith claim against Commercial 

Union. The first-party claims were dropped by the District 
Court on a motion for directed verdict. Likewise, verdicts 

on the malicious prosecution claims were directed in favor of 

both defendants. Davises assign those directed verdicts as 

abuse of discretion by the District Court. We disagree. 

I. Standard of Review 

The standard for reviewing a trial court's judgment was 

set forth by this Court recently in Marriage of Watson (Mont. 

1987), 739 P.2d 951, 44 St.Rep. 1167. There, we stated that 

a District Court's judgment, when based on substantial credible evidence, will not be altered unless a clear abuse of 

discretion is shown. Watson, 739 P.2d at 954, 44 St.Rep. at 

1170. In In re Marriage of Stewart (Mont. 1988), 757 P.2d 

765, 45 St.Rep. 850, this Court specifically condemned previous language regarding the standard of review. Determinations of whether the district judge acted arbitrarily, 

without the employment of conscientious judgment or exceeded 

the bounds of reason were specifically rejected by this 

Court. We have defined substantial evidence as "such relevant evidence as a reasonable mind might accept as adequate 

to support a conclusion. " State v. Lamb (1982) , 198 Mont. 

323, 646 P.2d 516. 

Thus, for each issue raised by the Davises, this Court 

should defer to the discretion of the trial court unless this 

Court finds that the District Court's ruling was not based on 

substantial credible evidence and was an abuse of discretion. 

11. Directed Verdicts 

We defined the standard for a directed verdict as 

follows: 

The test commonly employed to determine 

if the evidence is legally sufficient to 

withdraw cases and issues from the jury 

is whether reasonable men could draw 
different conclusions from the evidence. 

[Citations omitted.] If only one conclusion is reasonably proper, then the 

directed verdict is proper. 

Semenze v. Leitzke (Mont. 1988), 754 P.2d 509, 511, 45 

St.Rep. 829, 831. 

Thus, in this case the District Court granted the 

directed verdicts because it held there was insufficient 

evidence to support the claims of malicious prosecution and 

first-party insurance bad faith. We agree. 

111. Malicious Prosecution 

The burden on plaintiffs asserting malicious prosecution is heavy. They may only recover damages when each of 

the six essential elements of the claim are fully "complied 

with." Orser v. State (1978), 178 Mont. 126, 582 P.2d 1227. 

It is well settled that those six elements are as follows: 

(1) a judicial proceeding commenced and prosecuted against the plaintiff; 

(2) the defendant's responsibility for litigating, 

prosecuting, or continuing the proceeding; 

(3) lack of probable cause for the defendant's 

acts; 

(4) that the defendant was actuated by malice; 

(5) that the proceeding terminated in favor of 

the plaintiff; and 

(6) that the plaintiff suffered damages. 

See, Vehrs v. Piquette (1984), 210 Mont. 386, 390, 684 ~.2d 

476, 478; Reece v. Pierce Flooring (Mont. 1981), 634 P.2d 

640, 642, 38 St.Rep. 1655, 1657-1658. 

If one of these elements is not proved, verdict may be 

directed for the defendant. Orser, 582 P.2d at 1232; St. 
Paul Mercury Insurance Co. v. Jeep Corp. (1977) , 175 Mont. 

69, 71, 572 P.2d 204, 205. 

It is clear from the evidence in the case at bar that 

plaintiffs' case lacks evidence against both defendants on 

the issues of lack of probable cause and malicious intent. 

Evidence of the remaining elements is also weak. Because 

plaintiffs are not able to prove a prima facie case of malicious prosecution, their claim must fail as a matter of law 

and verdict was properly directed. 

The first issue is that of probable cause on which to 

base the. defendants' counterclaim. The record is clear that 

defense counsel acting for Sheriffs had probable cause before 

instituting the counterclaim. Because the damages sought in 

the counterclaim arose out of the same transaction and same 

set of facts as the plaintiffs' suit, defense counsel properly viewed his claim as a compulsory or mandatory counterclaim 

under Rule 13 (a), M.R.Civ.P., and knew he must assert his 

clients' claim or it would be barred. That would be no 

excuse for negligent factual investigation, but this fact 

coupled with the interviews conducted by counsel Drake defeats the claim of lack of probable cause. 

Most noteworthy in Drake's factual investigation is the 

following. Ed Herzog, the insurance adjuster, filed a report 

that listed the cause of fire as arson. Drake reviewed this 

report and interviewed Herzog personally as to that report 

prior to filing his counterclaim. Drake also interviewed Dan 

Schulte, a prospective buyer of the Yacht Basin Bar and 

Restaurant. One week before the fire, Schulte had hired 

Deputy State Fire Marshall Matt Kunnary to inspect the electrical and wiring system on the premises. Drake confirmed 

with Schulte that Kunnary's report showed the electrical 

system to he "in good working order." 
Thus, there was a real dispute among the experts as to 

the cause of the fire and plaintiffs' claim of faulty electrical wiring was discounted on at least two occasions. From 

the foregoing, one could reasonably find probable cause to 

assert the Sheriffs' counterclaim and plaintiffs' prima facie 

case of malicious prosecution fails. The verdict was properly directed in favor of defendants. 

Because Davises fail on this element and their case 

against the Sheriffs fails, we will not discuss the other 

areas revealed by the record of insufficient evidence for 

this claim. 

The Davises next allege malicious prosecution against 

Commercial Union under the same facts. However, probable 

cause existed for the insurance company just as for the 

Sheriffs, as discussed above, and plaintiffs' case fails. 

We find no reason to discuss the other issues on which 

plaintiffs' case against Commercial also fails. Verdict was 

properly directed in favor of Commercial Union on the malicious prosecution claim. 

IV. First-Party Insurance Bad Faith Claim 

Plaintiff Mr. Davis next assigns error to the directed 

verdict on his claim of first-party insurance bad faith. Mr. 

Davis asserts that since he was listed on the policy as an 

insured, he should be afforded a status such that the statutory duty Commercial Union owed to the Sheriffs was likewise 

owed to Mr. Davis. 

However, plaintiff's case fails both in evidence and by 

his conduct. Plaintiff failed to bring forth evidence of any 

specific statutory violations by Commercial and even failed 

to present evidence of general business practice. 

Additionally, Davis's conduct complicates his case. 

The only possible "duty" owed by Commercial to Davis would 
have been to provide a legal defense to Davis for the counterclaim and then indemnify if necessary in that suit. But 

the record clearly shows Davis retained his own counsel and 

at no time requested Commercial to defend. Thus, even though 

Commercial had knowledge of the suit pending, bad faith 

cannot be found for not providing what has not been requested. Likewise, we will not stretch the contractual fiduciary 

duty of an insurer to cover this situation where Davis made 

no claimant contact with Commercial, no request for defense, 

and no request for indemnity. The status argument has been 

treated by Davis as an afterthought. 

From the foregoing want of evidence to support any 

existing theory of bad faith, verdict was properly directed. 

V. New Trials 

Davises also appeal from denial of their request for a 

new trial on the issues of compensatory and punitive damages. 

Davises assert that both damages awards are inadequate, that 

they are contrary to the law as given to the jury, and contrary to the weight of the evidence. Davises argue that 

since the evidence of their damages was uncontroverted, they 

are somehow entitled to the amount alleged as a matter of 

right. We disagree. 

Although appeals as to damages usually occur because 

the amount awarded is alleged to be excessive rather than 

inadequate, the law in Montana as to damages is well-settled. 

The amount of damages is committed first to the discretion of 

the jury and next to the discretion of the trial judge who, 

in passing on the motion for a new trial, may set aside the 

verdict if it is not just. Dahlin v. Rice Truck Lines 

(1960) , 137 Mont. 430, 352 P.2d 801. "This Court will not 

substitute its judgment for that of the jury, especially 

where, as here, the trial court has approved the verdict by 
denying the motion for a new trial." Dahlin, 137 Mont. at 

438, 352 P.2d at 805, quoting McNair v. Berger (1932), 92 

Mont. 441, 15 P.2d 834. Accord: Sullivan v. City of Butte 

(1930), 87 Mont. 98, 285 P. 184; Teesdale v. Anschutz Drilling Co. (1960), 138 Mont. 427, 357 P.2d 4; Wyant v. Dunn 

(1962), 140 Mont. 181, 368 P.2d 917; Hurly v. Star Transfer 

Co. (1962), 141 Mont. 176, 376 P.2d 504; Vogel v. Fetter 

Livestock Co. (1964), 144 Mont. 127, 394 P.2d 766. 

Thus, the standard of review is not whether the nominal 

damages are inadequate, but rather, whether the trial court 

abused its discretion in refusing to grant a new trial. It 

is fundamental to our system of trial by jury that the 

factfinder who hears the evidence possesses the right to 

judge the credibility of the witnesses and may accept or 

reject the evidence offered. In the case at bar, after a 

week of testimony and lengthy explanation of the underlying 

years of litigation and previous damage awards made to the 

Davises, the jury determined the appropriate award for the 

Davises in this case was two dollars. 

The trial judge, relying on the same evidence and the 

knowledge that damage awards are left first to the sound 

discretion of the jury, properly refused to upset that jury 

determination. 

It should be further noted that no plaintiff is ever 

entitled to exemplary damages as a matter of right, regardless of the situation or the sufficiency of the facts. 

Spackman v. Ralph M. Parsons Co. (1966), 147 Mont. 500, 414 

P.2d 918. 

Based on the law and the record in this case, Davises 

fail to convince this Court that the trial court abused its 

discretion. 
VI. Proposed Exhibit 45 

Plaintiffs next assign as error the refusal of their 

proposed exhibit number 45. Exhibit 45 was a written summary 

which purported to show the financial arrangement between 

Davises and their counsel and the disposition of funds recovered from the underlying tort action as evidence of Davises' 

damages. 

The District Court properly refused to admit Exhibit 45 

because it was a writing containing hearsay. This writing 

did not fit into any hearsay exception under Rule 801, 

M.R.Evid. Further, it was not the exclusive evidence on this 

issue. The record reveals that the trial judge invited 

counsel to present oral testimony in lieu of Exhibit 45 to 

reach the same result, but counsel totally discontinued his 

line of questioning when Exhibit 45 was refused. 

A District Court's ruling on the admissibility of 

certain evidence will not be disturbed absent a showing of an 

abuse of discretipn. Cooper v. Rosston (Mont. 1988), 756 

P.2d 1125, 45 St-Rep. 978. Under these facts, Davises fail 

to prove that the trial court abused its discretion by refusing to admit Exhibit 45, especially when the trial judge 

encouraged the evidence to come in through other means. 

Finding no abuse of discretion by the trial judge on 

any of the five issues raised by Davises, judgment is hereby 

affirmed. 

/ 

A* 

Chief Justice 
We concur: