NO. 91-365 IN THE SUPREME COURT OF THE STATE OF MONTANA 1992

ROBERT J. KASETA, and MARGARET R. KASETA, d/b/a JOHNNY'S HOUSE OF FINE FOODS, Plaintiffs and Appellants,-vsNORTHWESTERN AGENCY OF GREAT FALLS, and HAWKEYE-SECURITY INSURANCE COMPANY, Defendants and Respondents..

APPEAL FROM: District Court of the Eighth Judicial District, In and for the County of Cascade, The Honorable John M. McCarvel, Judge presiding.

COUNSEL OF RECORD: For Appellant: Patrick F. Flaherty, Great Falls, Montana For Respondent: Joseph R. Marra; Marra, Wenz, Johnson & Hopkins, Great Falls,Montana Robert J. Vermillion; Smith, Walsh, Clarke & Gregoire, Great Falls,Montana



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# -1932 Submitted on Briefs: December 19, 1991 Decided: March 3, 1992Justice Fred J. Weber delivered the Opinion of the Court.

Robert andMargaret Kaseta,d/b/a Johnny'sHouse of Fine Foods brought suitagainst Hawkeye-Security InsuranceCo., Inc. (Hawkeye) andNorthwestern InsuranceAgency of Great Falls (Northwestern)for breach of contract, negligent misrepresentation, constructive fraud, unfair claim settlement practices, and insurance company malpractice. The District Court of the Eighth Judicial District, Cascade County, Montana found no genuine issues of material fact and granted summary judgment in favor of both defendants. Kasetas appeal. We affirm. The Kasetas raise the following issues on appeal: 1. Did the court err in granting summary judgment in favor of Hawkeye? 2. Did the court err in granting summary judgment in favor of Northwestern? Robert and Margaret Kaseta, d/b/a Johnny's House of Fine Foods, bring this suit against their insurer, Hawkeye, and their insurance agent, Northwestern. In July 1990, while covered by a Hawkeye insurance policy, Kasetas contend a hail storm caused approximately $26,000damage to their bar and restaurant. Hawkeye paid $7,318 on the claims, contending the business was insured for less than 80% of its actualvalue. First, the Kasetas dispute that the business was underinsured. Next, in the alternative, they claim if the business was underinsured the defendants led them to believe they were properly insured, and had a duty toprovided them with a different policy. 2On March 1, 1989, the Kasetas purchased the restaurant from Johnny Austin on a contract for deed. Austin had informed the Kasetas that the commercialpolicy covering the businesswas a good policy. That policy, issued by Scottsdale Insurance, insured the building for $70,000 and the contents for $30,000. Austin representedto Kasetas that thispolicy had fully covered a $90,000 claim for fire damage in 1987. After purchasing the business, the Kasetas purchased health and lifepolicies fromLon Bowman of Northwestern InsuranceAgency. Bowman referred the Kasetas tohis associate atNorthwestern,Joyce Jenkins,regardinga commercialpolicy. When Jenkins contacted the Kasetas,Robert Kaseta informedher that he wanted the same policy coverage they had through Scottsdale. Jenkins informedRobertKasetathatHawkeye-Security Insurance would provide commercial coverage at a competitive rate. Kasetas applied for insurance, and Hawkeye issued a policy insuring the building for $70,000 and the contents for $30,000. Thus, the Kasetas received the policy and coverage they requested. Thepolicy declarationpage containeda coinsurancepercentage of 80%, indicating that Hawkeye would invoke a coinsurancepenalty if theproperty was insured at less than 80%of its actual value at the time of the loss. The contract explained: We will not pay the full amount of any loss if the value of Covered Property at the time of loss times the Coinsurance percentage shown for it in the Declarations is greater than the Limit of Insurance for the property. Next, the contract describes the company's method of calculating the maximum amounts payable if the company finds the business wasunderinsured. It states: "The amount determined 

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we will pay. For the remainder,you will either have to rely on other insurance or absorb the loss yourself.I1 Thispolicy and this provision were in effect in July 1990, at the time the hail storm damaged Kaseta's property. After the storm, Kasetas submitted approximately $26,000 in claims. At that time,the insurance adjuster informedKasetas that the business was underinsured. Thus, Hawkeye invoked the coinsurance penalty. At the hearing for summary judgment, the court granted summary judgment finding that no genuine issues of material fact existed, and as amatter of law the defendants should prevail. From this judgment Kasetas appeal. I Did the court err in granting summary judgment in favor of Hawkeye? Under Rule 56(c)

### , M.R. Civ.P., summary judgment is proper if the record discloses no genuine issues of material fact, and the moving party is entitled to judgment as a matter of law. Payne Realty & Housing v. First Sec. Bk. (1991), 247 Mont. 374, 376, 807 P.2d 177, 178. In reviewing amotion for summary judgment, we view the evidence in the light most favorable to the party opposing the motion. Lorashv. Epstein (1989), 236Mont. 21, 24, 767 P.2d 1335, 1337. Here, looking at the evidence in the light most favorable to the insured, we conclude the court properly granted summary judgment in favor of the insurer. The Kasetas contend genuine issues of material fact existwhich makes the breach of contract claim improper for summary judgment. In its findings, the ~istrict Court relies on Stott v. Fox (l99O), 246 Mont. 301, 805 P.2d 1305. In that case, this Court held that a party cannotmake a material issue of fact through the

use of their own contradictory testimony. Stott, 246 Mont. at 309, 805 P.2d at 1309-1310. In Stott, the plaintiff claimed a genuine issue of material factprevented the court from ruling summarily in support of the defendant. The material fact was created by the plaintiff's affidavit which contradicted prior deposition testimony. We held: "[A] district court may grant summary

[judgment] where a party's sudden and unexplained revision of testimony creates an issue of fact where none existed before." Stott, 246 Mont. at 309, 805 P.2d at 1310, citing Wilson v. Westinghouse (8th Cir. 1988), 838 F.2d 286, 289. As in Stott, here summary judgment was proper because Kasetas created a material issue of fact by contradicting prior sworn statements. On April 20, 1991, the Kasetals responded to the following interrogatories:

INTERROGATORY NO. 7: Paragraph 24 of the complaint alleges that the insurance company sold "an inadequate and substandard insurancepolicy." Please describewith specificity in what way the subject policy was "inadequate and substandard. ANSWER: We admit that the companv has paid the sums due to date under the insurancepolicv that was issued 

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(Emphasis added.) INTERROGATORY NO. 8: Please state how a standard and proper insurance policy would have differed from the policy which was sold to the plaintiff.ANSWER: The total value of buildins would have been nearer to $200.000.00 and would have covered all damages to that amount less the deductible. (Emphasis added.) INTERROGATORY NO. 9: Do you allege that Hawkeye Insurance underpaid theplaintiffs under the termsof the policy? ANSWER: Not under the terms of the policy issued. However,under the terms of thepolicy that theplaintiff thought he received,yes. INTERROGATORY NO. 15: Your first claim for relief is entitled "Breach of Contract." Please state what terms of the contract of insurance were breached. ANSWER: We will amend the Complaint and dismiss the first claim for relief entitled Breach of Contract. Therefore, we will not give an answer to this. Upon receiving these interrogatories, Hawkeye filed a motion for summary judgment on April 30, 1991. Then on May 13, 1991,Mr. Kaseta filed an affidavit which contradicted these sworn statements. The affidavit stated that: "in 

# . . . [Mr. Kaseta's] opinion, as owner of the property, the building is properly valued at $100,000.'' Thus, in contradiction of prior statements,Kasetas

now contend Hawkeye incorrectly invoked the coinsurancepenalty. Like Stott, here Kasetas attempt to make a material issue of fact through the use of their own contradictory testimony. Accordingly,we concludetheplaintiffs' simultaneouscontradictory positions regarding the value of the building create no genuine issues of material fact, and Hawkeye is entitled to judgment as a matter of law. Thus, the court appropriately granted summary judgment in favor of Hawkeye on the breach of contract issue. Next, Kasetas claim the court erred in granting summary judgment in favor of Hawkeye on the plaintiffs' claim of unfairclaims settlement practices under 

### 5 33-18-201(6)(7), MCA, the Unfair Trade Practices Act. 1 33-18-201 states in part: Unfair claim settlement practices prohibited. No person may, with such frequency as to indicate a general business practice, do any of the following:

(6) neglect to attempt in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear;

(7) compel insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds

# ... In this case, the Kasetas have admitted that Hawkeye made proper payment under the terms of the contract. Thus, plaintiffs have presented no evidence of unfair claims settlement under g 33- 18-201(6), or 5 33-18-201(7), MCA. Accordingly, we conclude the court properly granted Hawkeye summary judgment under the Unfair Trade PracticesAct. Finally,Kasetas contend the court improperly granted summary judgment on the claim of insurance company malpractice. Here, in their complaint,Kasetas allege Hawkeye breached its duty "to sell insurance to properly cover the insured's needs." However, the Kasetas admit Hawkeye provided them with the coverage they requested. Thus, we conclude the court properly granted summary judgment on this claim. Finally, Kasetas have produced no evidence that Hawkeye made any representationsto them regarding their coverage. Without such evidence Kasetas cannot support a claim of negligent misrepresentation or constructive fraud against the insurer, Hawkeye. Thus, we conclude the court properly granted summaryjudgment in favor of Hawkeye on this issue. We hold that the court properly granted summary judgment in favor of Hawkeye-Security Insurance Co. Inc. I I Did the court err in granting summary judgment in favor of Northwestern? The Xasetas claim the District Court incorrectly granted summary judgment in favor of Northwestern on the issue of negligent misrepresentation and constructive fraud. Kasetas base these claims on Northwestern's failure to supply them with material information regarding the value of their business and the coinsurance provision. First, the Xasetas testified that Jenkins made no representations regarding the insurance. Further Jenkinsprovided them with a Hawkeye policy which contained the same amount of coverage as the Scottsdalepolicy. Finally, Kasetas do not dispute they received the coverage they requested. Thus,we agreewith the District Court when it found that any damage suffered is attributable to Xasetas' request to receive the same coverage they had under their Scottsdalepolicy. We conclude the District Court properly granted summary judgment on the claims of constructive fraud and negligent misrepresentation. Next, the Kasetas appeal the summary judgment granted in favor of Northwestern on their claim of insurance agent malpractice. Here, the Kasetas did not plead a claim for relief based on insurance agent malpractice, and the District Court correctly

### disregarded this count with respect to Northwestern. Finally, the Kasetashave submitted noproof thatNorthwestern acted as an insurance company or was aparty to the contract, thus, this Court will not considerKasetas' claims for breach of contract and alleged violations of the Unfair Trade PracticesAct. We hold the court correctlygranted summary judgment in favor of Northwestern Insurance Agency of Great Falls. Affirm.

Concur: ,AMarch3, 1992 CERTIFICATEOFSERVICE Ihereby certifythatthe followingorderwas sentby United States mail,prepaid,tothe following named:

PatrickF. Flaherty Attorney atLaw 625 Central Ave. West,#lo1 Great Falls,MT59404 RobertJ.Vermillion SMITH,WALSH,CLARKE&GREGOIRE P.O.Box2227 GreatFalls, MT 59403-2227 JosephR.Marra MARRA,WENZ,JOHNSON&HOPKINS,P.C. P.O. Box 1525 GreatFalls,MT59403-1525 EDSMITH CLERKOFTHESUPREMECOURT STATEOFMONTANA