NO. 89-614 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1991 

MELANIE VESTRE and DAVID V. KNOLL, 

Plaintiffs and Appellants, 

PAUL LAMBERT, DONALD C. BARRINGER, NORMA L. BARRINGER, DEAN CONAWAY 

and CENTURY 21 PREFERRED PROPERTIES, INC., 

Defendants and Respondents, 

DAVID V. KNOLL, 

Plaintiff and Appellant, 

STANLEY W. PINE, 

Defendant and Respondent. 

APPEAL FROM: District Court of the Eleventh Judicial District, 

In and for the County of Flathead, 

The Honorable Leif B. Erickson, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Lane K. Bennett, Attorney at Law, Kalispell, 

Montana. 

For Respondent: 

Stephen C. Berg; Warden, ~hristiansen, Johnson & 

Bera. Kalis~ell, Montana; M. Dean Jellison, 

~tt6rne~ at Law, . Kalispell , Montana. 

AU G 2 0 199'1 

Submitted on Briefs: June 18, 1991 

Decided: Ausust20, 1991 
Justice Fred J. Weber delivered the Opinion of the Court. 

The District Court for the Eleventh Judicial District, 

Flathead County, consolidated two lawsuits and a jury trial was 

held. Plaintiffs, Melanie Vestre and v avid Knoll, sought damages 

for fraud, negligent misrepresentation, negligent construction, and 

breach of warranty against Century 21, Paul Lambert, Dean Conaway 

and Donald and Norma Barringer, d/b/a, Barringer Construction. 

Judgment was entered in favor of the Barringers and they are not 

parties to this appeal. The jury found that defendants Lambert and 

Conaway had negligently misrepresented material facts and awarded 

plaintiffs $10,000. The jury found in favor of Lambert, Conaway 

and Century 21 in all other respects. Plaintiff Knoll also brought 

an action against Stanley Pine to recover on a promissory note. 

Pine counterclaimed and sought damages for misrepresentation. The 

jury found Knoll violated a duty owed to Pine and awarded Pine 

$40,000. Plaintiffs appeal. We reverse and remand. 

We will address the following issues: 

1. Did the District Court err in allowing Pine to testify 

as an expert witness? 

2. Did the District Court err in allowing defense counsel 

to testify and argue the case? 

3. Did the District Court err in allowing Pine's testimony 

on his community activities and involvement? 

Plaintiffs, Melanie Vestre (Vestre) and David Knoll (Knoll), 

lived in their home located on Flathead Lake near Kalispell, 

Montana ("the Lake home") . Plaintiffs contacted Dean Conaway 

2 
(Conaway), a real estate agent employed by Century 21 Preferred 

Properties, Inc. (Century 21), regarding the purchase of real 

estate investment property. Plaintiffs informed Conaway that they 

were looking for undeveloped property on which to build 

improvements and rental units. plaintiffs informed Century 21, 

Paul Lambert (Lambert), President of Century 21, and Conaway that 

they wanted an investment that would be profitable and beneficial 

for taxation purposes also. 

Conaway, Lambert and Century 21 referred plaintiffs to 

townhouses in the Buffalo Head Addition Number 92, located in 

Kalispell, Montana, then being built and constructed by Donald and 

Norma Barringer, d/b/a Barringer Construction (Barringers). 

Century 21, Lambert and Conaway informed plaintiffs that Barringers 

were finishing one four-plex unit which would be available for sale 

to them and had two townhouses in a finished unit for sale 

immediately. 

Century 21, Lambert, Conaway and Barringers all suggested that 

the parties involve Stanley Pine (Pine), developer of the Buffalo 

Head Addition No. 92, in a complex three-way property exchange. 

The parties exchanged various appraisals. Subsequently, on May 6, 

1985, plaintiffs, Barringers and Pine entered into an exchange 

agreement whereby various properties, cash, notes, and equity were 

transferred among them. 

As part of the exchange, plaintiffs transferred their Lake 

home property to Pine and received a total of six townhouses (the 

"original units1') from Pine and Barringers. Barringers were the 
developers, builders, and contractors on these six original units. 

Plaintiffs also received from Barringers two vacant building lots 

in the development, and committed to building a four-plex unit on 

each lot. Plaintiffs did eventually construct one four-plex unit 

on one lot, known as the "Blue Unitstt. Pine executed a promissory 

note in the amount of $20,521. 

During the negotiation process, prior to the closing of the 

exchange agreement, plaintiffs became aware of the fact that six 

townhouse units in the same subdivision constructed by Barringers, 

which adjoined two of their potential townhouse units, were 

involved in a dispute between the purchaser, Dr. Douglas Wood 

(Wood), and the defendants -- ~arringers, Century 21 and Lambert. 

Wood filed a lawsuit demanding rescission. 

Certain problems were bothering the tenants of the units 

purchased by plaintiffs, and high utility bills were experienced 

during this period by the tenants. Defendants advised plaintiffs 

that the units were considered to be energy efficient and that an 

approximate heating cost of $110 per month was likely. These 

problems, among many others, apparently started a chain reaction 

of problems culminating in defaults and foreclosures involving all 

parties. This lawsuit resulted. 

Plaintiffs maintained that Century 21, Lambert, and Conaway 

breached their duty to fully disclose as contained in § 37-51-321, 

MCA; and misrepresented the value and marketability of the units, 

amounting to misrepresentation, negligence and constructive fraud. 

Knoll also filed a default action against Pine alleging that Pine 
failed to pay the promissory note when due. Pine counterclaimed. 

The District Court granted Knoll summary judgment on the 

promissory note but found that Pine's counterclaim alleged material 

misrepresentations in conjunction with the real estate transaction 

which formed the basis for the promissory note. Thus, the 

counterclaims were consolidated with the Century 21 case. 

The jury returned a special verdict finding: 

1. Plaintiffs violated a duty owed to Pine and Pine was 

damaged in the amount of $40,000. 

NEGLIGENCE CLAIMS: 

2. Barringers were not negligent. 

3. Century 21, Lambert and Conaway were negligent but such 

negligence was not a legal cause of damages to the plaintiffs. 

4. Plaintiffs were negligent and such negligence was a legal 

cause of damage to them. 

5. Negligence was allocated as follows: 

(a) Negligence of Century 21, Lambert, Conaway and 

Barringers: 60% 

(b) Negligence of Plaintiffs: 

6. The total damages sustained by plaintiffs as a result of 

the negligence of Century 21, Lambert, Conaway and Barringer was 

zero. 

NEGLIGENT MISREPRESENTATION CLAIMS: 

7. Lambert and Conaway negligently misrepresented material 

facts to the plaintiffs. Barringers did not. 

8. The negligently misrepresented material facts were a 

legal cause of damage to the plaintiffs. 
9. The total damages sustained by plaintiffs as a result of 

the negligent misrepresentation was $10,000. 

FRAUD CLAIMS: 

10. Defendants did not defraud plaintiffs. 

11. The total damages sustained by plaintiffs as a result of 

the fraud of Century 21 and Lambert was zero. 

EXPRESS WARRANTY (Original Units): 

12. Barringers did not breach an express warranty in favor 

of the plaintiffs regarding the original units. 

Subsequently, the District Court entered judgment on the 

verdicts and ordered that plaintiffs have judgment against Century 

21, Larnbert and Conaway in the amount of $10,000. The District 

Court further ordered that Barringers have judgment against 

plaintiffs and were entitled to their costs and disbursements. As 

to Pine, the District Court ordered that the total amount due on 

the note was on offset to the $40,000 judgment plus costs for Pine, 

leaving Knoll a balance due to Pine of $10,647 plus costs. 

Plaintiffs appeal. 

I 

Did the District Court err in allowing Pine to testify as an 

expert witness? 

At trial, defendants called Pine to testify in their casein-chief. Plaintiffs maintained that Pine was qualified as an 

expert and testified as such over plaintiff's objection. 

Plaintiffs had notice that Pine would be called as a witness, but 

not as an expert witness. Plaintiffs maintain that Pine's 
testimony as an expert witness was unfair surprise because they had 

no opportunity to prepare for cross-examination of an expert, and 

no opportunity to prepare an expert of their own for rebuttal. 

Defendants Century 21, Lambert and Conaway acknowledge that 

Pine was not identified in the pre-trial order as an expert 

witness. However, they deny that Pine was called as an expert 

witness, but instead that he "expressed an opinion as a layman and 

central participant in the subject exchange". We disagree. 

Relevant portions of Pine's testimony are set out below: 

Direct Examination 

BY [DEFENSE COUNSEL] : 

Q. Would you please state your name and your 

address? 

A. Stan Pine, . . . 

Q. Stan, would you give the Jurors an idea of your 

post-high school education and professional training? 

A. I graduated with a Bachelor's Degree in 

accounting at Kent State university. 

Q. In what year? 

A. In 1967. And then I proceeded to go to work for 

Arthur Anderson and Company. They are a large CPA firm 

in their Denver office. And I worked for them for a few 

years. I opened up my own CPA practice in a smaller town 

in Colorado and ran and managed that practice for about 

six years. Then I moved up here. 

Q. In what year? 

Q. Are you a licensed Certified Public Accountant? 

A. I am, in the State of Colorado. I have never 

changed my certificate to Montana. 

Q. So have you practiced in Montana as a CPA? 
A. I have worked fur Larry Simpson, who is a CPA 

here. And if you don't transfer your certificate, you 

have to work underneath somebody else. So I have done 

some work for him. 

Q. Stan, at my request have you reviewed the 

Plaintiffs' Exhibit 30 which I am holding in my hands? 

A. Ihave. 

Q. To the extent it can be reviewed? 

A. Yes. I have not had time to go through item by 

item on some of the littler checks. But I have looked 

at the major items. 

Following this questioning, defense counsel was allowed to put the 

original Exhibit 30 on the jury box and hand out copies of it to 

the Jurors. The questioning continued. 

[PLAINTIFFS' COUNSEL]: Your Honor, after the 

qualification statement, I would again like to make my 

objection. 

THE COURT: The objection is duly noted and 

overruled. 

[DEFENSE COUNSEL]: Your Honor, I would like the 

court to be aware that Stanley Pine has at all times been 

listed as a witness whom we would call in this trial. 

[Plaintiffs1 Counsel] is correct, not in an expert 

capacity, and he will not be testifying in that capacity. 

Q. Stan, having reviewed Exhibit 30, and at my 

request and with the input of not only me, but the town 

folks I am representing there and your own attorney, did 

you have occasion to have prepared a document which might 

aid you in your analysis of Exhibit 30? 

A. It is a long, roundabout way of saying I 

prepared a document. Yes. 

... Q. What is it entitled? 

A. "Knoll transaction per Exhibit 30." 
Q. Would you identify, please Exhibit J, and tell 

me if Exhibit J is not an identical copy of what you just 

referred to? 

A. It is. ... 

[DEFENSE COUNSEL]: Your Honor, I have provided a 

copy of Exhibit J to counsel. I would like to offer it 

in evidence. 

[PLAINTIFFS COUNSEL] : We object on the same basis 

we have been doing; it is an expert. (sic). 

Following that exchange, defense counsel was allowed to give copies 

of Exhibit J to the Jurors. Pine then testified at length and in 

detail regarding the information and calculations provided by 

Exhibit J and compared it to the calculations of Melanie Vestre. 

Plaintiffsf counsel again objected arguing that Pine was commenting 

completely on the evidence. The Court again overruled the 

objection and allowed the testimony as rebuttal to Melanie Vestrefs 

calculations. 

Admissibility of evidence is within the sound discretion of 

the ~istrict Court and will not be reversed absent an abuse of 

discretion. Morning Star Enters., Inc. v. R.H. Grover, Inc. 

(Mont. 1991), 805 P.2d 553, 556, 48 St.Rep. 112, 113; Massman v. 

City of Helena (1989), 237 Mont. 234, 240, 773 P.2d 1206, 1210. 

Pine was not deposed by either party in this case. He was not 

listed as an expert witness pursuant to Rule 26(e) (1) and (2), 

M.R.Civ.P. He did testify in plaintiffsf case-in-chief on direct 

examination for the limited purpose of "showing the last of the 

agreements in the exchangeM, but he was not cross-examined by 

defendants. Plaintiffs did not have their own expert to testify 
on this matter. 

We conclude that Pine was unquestionably qualified by 

defendants as an expert and testified as such. This amounted to 

unfair surprise to the plaintiffs. We conclude that the District 

Court abused its discretion in allowing Pine to testify as an 

expert witness. 

We hold that the District Court erred in allowing Pine to 

testify as an expert witness. We reverse on this issue. 

I1 

Did the District Court err in allowing defense counsel to 

testify and argue the case? 

At trial, plaintiffs called Daniel W. Hileman (Hileman), the 

attorney who had represented Wood in his litigation concerning his 

townhouses, to testify. Hileman was listed as a witness in the 

pre-trial order. He testified that prior to the May 6, 1985, 

closing date of the exchange transaction he had advised counsel for 

defendants -- Century 21, Lambert and Conaway, that Wood was not 

making his payments, and would not make his payments. Counsel for 

defendants then offered himself as a surrebuttal witness to this 

testimony. Plaintiffs objected but the objection was overruled. 

On appeal, plaintiffs maintain that allowing defense counsel's 

testimony was error and in violation of Rule 3.7, Rules of 

Professional Conduct, because the testimony did not relate to an 

uncontested issue or the nature or value of legal services. 

Plaintiffs urge that defendants could have discovered the nature 

of Hileman's testimony through normal discovery procedures but 
failed to do so. Defendants maintain that since Hileman was not 

deposed, the nature of his testimony was not clear until he 

actually testified. Defendants further allege that no other 

witness could have testified to the nature of defense counsells 

communications with Hileman. 

Rule 3.7 provides (in part) : 

(a) A lawyer shall not act as advocate at a trial 

in which the lawyer is likely to be a 

necessary witness except where: 

(1) the testimony relates to an uncontested 

issue. 

(2) the testimony relates to the nature and 

value of legal services rendered in the case; 

or 

(3) disqualification of the lawyer would work 

substantial hardship on the client. 

We agree with plaintiffs that defense counsells testimony in this 

case was improper. Hileman was listed as a witness in the pretrial order. Defendants had every opportunity to depose him but 

did not. No interrogatories were addressed to his testimony. The 

fact that they did not use the discovery available to them does not 

justify allowing defense counsells testimony to veil their 

shortcomings. Rule 3.7 clearly does not allow a lawyer to testify 

under these circumstances. 

We hold that the District Court erred in allowing defense 

counsel to testify and conduct the trial of the case. We reverse 

on this issue. 

I11 

Did the District Court err in allowing Pine1s testimony on his 
community activities and involvement? 

We will consider this issue for the assistance of the District 

Court and parties on retrial. ~uring trial, on direct examination, 

Pine testified as follows: 

[BY DEFENSE COUNSEL] : 

Q. You were previously sworn and gave your name, 

address and occupation and your educational experience. 

Could you tell us a little bit about your community 

involvement and what you do in this community, how long 

you have been here and the like? 

A. We moved here-- 

[PLAINTIFFS ' COUNSEL] : Objection, 

relevance. 

[THE COURT]: Overruled. You may 

answer. 

[THE WITNESS]: We moved here in 1976, and I 

have been involved in, I think, as was stated the first 

day I testified, some in-town and some other business 

involvements. And as far as community involvement, I 

have been on the Cayuse Prairie School Board, which is 

a little school out where we live. I am presently on the 

Hospital Board, Kalispell Regional Hospital Board, and 

Northwest Hospice Care, which oversees the hospital and 

Health Promotion Center, and a couple of other things. 

I am on the Youth for Christ Board, and was one of 

the founders on that. Various such boards and other 

things like that. 

[DEFENSE COUNSEL]: 

Q. When did you first become involved with Buffalo 

Head Subdivision? 

On appeal, plaintiffs' maintain that the District Court erred 

in allowing this testimony on community activities. They maintain 

that such testimony was irrelevant to any issue involved at trial 

and that pinets character and reputation were not at issue. 

Plaintiffs urge that evidence of character is not admissible in a 
trial unless the character of the witness is at issue. Rule 404, 

Pine contends that it is always proper to establish a witness' 

background and to place him in his setting by asking what he is 

doing and what he has done for a living. 

Rule 404(c), M.R.Evid., provides: 

Character in issue. Evidence of a person's character or 

a trait of his character is admissible in cases in which 

character or a trait of character of a person is an 

essential element of a charge, claim, or defense. 

In Lindberg v. Leatham Bros. Inc. (1985), 215 Mont. 11, 693 P.2d 

1234, this Court addressed a similar question. Lindberq was a 

wrongful death and survivorship action which arose from a fatal 

car-truck collision between a car driven by Patricia Lindberg and 

a trailer truck driven by David Toland of Leatham Brothers, Inc. 

At trial, plaintiffs attempted to introduce evidence that Mr. 

Toland had been fired from a bus-driving job for being late to 

work. 

In affirming the District Court's decision disallowing the 

introduction of such evidence this Court stated: 

This evidence is relevant only to prove a character 

trait of driver Toland, to-wit: He is an irresponsible 

employee. Character evidence of this nature is 

specifically proscribed. See Rule 404, M.R.Evid. ... Appellants misconstrue what is meant by putting 

one's character into issue. Rule 404(a)(l), M.R.Evid., 

incorporates the time-honored practice of allowing the 

accused in a criminal case to introduce evidence of his 

good character. The prosecution may then rebut the same. 

The rule has no application in civil cases unless the 

character trait is an essential element of the charge, 

claim, or defense. A character trait of tardiness is not 

an essential element of an action alleging negligent 

driving. 
Lindberq, 693 P.2d at 1242. Such is the case here. Pine's 

community involvement is not an essential element of an action to 

recover under any of the theories presented in this case: 

misrepresentation, recovery on a promissory note, fraud, negligent 

misrepresentation, negligent construction or breach of warranty. 

We conclude that the District Court erred in allowing Pinens 

testimony on his community activities, and that such testimony 

should not be presented on retrial. 

We find it unnecessary to address the remaining issues. We 

note the contradiction in the "negligencenn section of the jury 

verdict form where the jury found negligence on the part of 

defendants and yet concluded the total damages to be zero. This 

should be considered on re-trial. 

Reversed and remanded. 

We Concur: / 

Chief Justic