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 

Mf R 3 - 1932 Submitted on Briefs: December 19, 1991 

Decided: March 3, 1992 
Justice Fred J. Weber delivered the Opinion of the Court. 

Robert and Margaret Kaseta, d/b/a Johnny's House of Fine Foods 

brought suit against Hawkeye-Security Insurance Co., Inc. (Hawkeye) 

and Northwestern Insurance Agency 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 $26,000 damage to their bar and restaurant. Hawkeye 

paid $7,318 on the claims, contending the business was insured for 

less than 80% of its actual value. 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 to provided them 

with a different policy. 

2 
On March 1, 1989, the Kasetas purchased the restaurant from 

Johnny Austin on a contract for deed. Austin had informed the 

Kasetas that the commercial policy covering the business was a good 

policy. That policy, issued by Scottsdale Insurance, insured the 

building for $70,000 and the contents for $30,000. Austin 

represented to Kasetas that this policy had fully covered a $90,000 

claim for fire damage in 1987. 

After purchasing the business, the Kasetas purchased health 

and life policies from Lon Bowman of Northwestern Insurance Agency. 

Bowman referred the Kasetas to his associate at Northwestern, Joyce 

Jenkins, regarding a commercial policy. When Jenkins contacted the 

Kasetas, Robert Kaseta informed her that he wanted the same policy 

coverage they had through Scottsdale. 

Jenkins informed Robert Kasetathat Hawkeye-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. 

The policy declaration page contained a coinsurance percentage 

of 80%, indicating that Hawkeye would invoke a coinsurance penalty 

if the property 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 was 
underinsured. It states: "The amount determined ... is the most 

we will pay. For the remainder, you will either have to rely on 

other insurance or absorb the loss yourself .I1 This policy 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 informed Kasetas 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 a matter 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 a motion for summary judgment, we view 

the evidence in the light most favorable to the party opposing the 

motion. Lorash v. Epstein (1989), 236 Mont. 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 exist 
which 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 cannot make 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 fact prevented 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 insurance policy." Please describe with 

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 insurance policv that was issued . . . (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 the plaintiffs under the terms of the 

policy? 

ANSWER: Not under the terms of the policy issued. 

However, under the terms of the policy that the plaintiff 

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 coinsurance penalty. 

Like Stott, here Kasetas attempt to make a material issue of 

fact through the use of their own contradictory testimony. 

Accordingly, we conclude the plaintiffs' simultaneous contradictory 

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 unfair 
claims 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 Practices Act. 

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 representations to 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 summary 
judgment 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 Jenkins provided 

them with a Hawkeye policy which contained the same amount of 

coverage as the Scottsdale policy. Finally, Kasetas do not dispute 

they received the coverage they requested. Thus, we agree with the 

District Court when it found that any damage suffered is 

attributable to Xasetas' request to receive the same coverage they 

had under their Scottsdale policy. 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 Kasetas have submitted no proof that Northwestern 

acted as an insurance company or was a party to the contract, thus, 

this Court will not consider Kasetas' claims for breach of contract 

and alleged violations of the Unfair Trade Practices Act. 

We hold the court correctly granted summary judgment in favor 

of Northwestern Insurance Agency of Great Falls. 

Affirm. 

Concur : ,A 
March 3, 1992 

CERTIFICATE OF SERVICE 

I hereby certify that the following order was sent by United States mail, prepaid, to the following 

named: 

Patrick F. Flaherty 

Attorney at Law 

625 Central Ave. West, #lo1 

Great Falls, MT 59404 

Robert J. Vermillion 

SMITH, WALSH, CLARKE & GREGOIRE 

P.O. Box 2227 

Great Falls, MT 59403-2227 

Joseph R. Marra 

MARRA, WENZ, JOHNSON & HOPKINS, P.C. 

P.O. Box 1525 

Great Falls, MT 59403-1525 

ED SMITH 

CLERK OF THE SUPREME COURT 

STATE OF MONTANA