No. 85-426 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1987 

ROWAN OGDEN, 

Plaintiff and Respondent, 

-vsMONTANA POWER COMPANY, 

Defendant and Appellant. 

APPEAL FROM: District Court of the Eighth Judicial District, 

In and for the County of Cascade, 

The Honorable Joel G. Roth, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Jardine, Stephenson, Blewett & Weaver; Lon Holden 

argued, Great Falls, Montana 

For Respondent: 

Erik B. Thueson argued, Great Falls, Montana 

For Amicus Curiae: 

Robert F. James, argued for Montana Assoc. of Defense 

Counsel, Great Falls, Montana 

Submitted: November 20, 1987 

Decided: December 15, 1987 

Filed: Fjkc 151987 

Clerk 
Mr. Justice R. C. McDonough delivered the Opinion of the 

Court. 

Defendant Montana Power Company (MPC) appeals a jury 

verdict from the District Court of the Eighth Judicial District in and for the County of Cascade awarding compensatory 

and punitive damages for negligence and bad faith. MPC also 

appeals the lower court's denial of various pretrial motions 

and jury instructions. Ogden cross-appeals the decision of 

the jury's original special verdict and for a determination 

on Ogden's motion for sanctions. 

A decision was entered by this Court on February 23, 

1987. Ogden v. Montana Power Co. (Mont. 1987), 44 St.Rep. 

330. MPC petitioned the Court for a reconsideration under 

Rule 34 M.R.Civ.P. The petition was briefed by the parties 

and an amicus curiae brief was filed on behalf of the Montana 

Association of Defense Counsel. We granted oral argument. 

We now withdraw the original opinion and issue this opinion 

in its place. 

Having considered the arguments and briefs we affirm in 

part and reverse i.n part the District Court and remand for 

further proceedings. 

The following issues were raised on appeal and 

cross-appeal: 

1. Did the District Court err in granting partial 

summary judgment to Ogden on the issue of liability? 

2. Does the Unfair Trade Practices Act of the Montana 

Insurance Code apply to MPC, a self-insured corporation, and 

was the evidence sufficient to uphold a jury verdict for 

breach of the implied covenant of good faith and fair dealing 

against appellant? 
3. Did the District Court err in denying MPC's motion 

for separate trials on the property damage claim and bad 

faith claim? 

4. Did the District Court err in reducing the Special 

Verdict award? 

5. Did the District Court err in failing to impose 

economic sanctions upon MPC for alleged dilatory, obstructive, and threatening actions by MPC's attorney? 

On December 19, 1979 a fire occurred at Ogden's ranch. 

It burned 40 acres of vegetation and destroyed the ranch 

house, barn, sheds and corrals. It is conceded that the only 

possible cause of the fire was a "floater1I, which is a power 

line owned by MPC that became detached from a supporting pole 

and came in contact with another power line. Pieces of hot 

and molten metal heated by the contact dropped to the ground 

and ignited the vegetation and ultimately the buildings and 

improvements. 

Negotiations between the parties as to the amount of 

property damage failed and Ogden sued for damages caused by 

the alleged negligence of MPC. MPC filed an answer, discovery proceeded and Ogden filed a motion for partial summary 

judgment together with a memorandum and affidavit relative to 

liability. MPC opposed the motion by briefs, attached affidavits and argument at the hearing. The District Court 

granted the partial motion raising the first issue. 

I 

Did the District Court err in granting partial summary 

judgment to Ogden on the issue of liability? 

The only possible question remaining on the motion for 

partial summary judgment was whether the damage by the floater happened because MPC had negligently inspected and maintained the subject power line. In other words, did MPC 

breach its duty to inspect and maintain the line? The duty 
of care owed by an electric utility is presented in a thorough discussion in Bourke v. Butte Electric & Power Co. 

(1905), 33 Mont. 267, 83 P. 470. In Bourke, this Court held 

that the owner or operator of an electric plant owes a duty 

of reasonable care in creating pole lines, selecting appliances, insulating accessible wires and in maintaining a 

system of inspection. Bourke, 83 P. at 473. In discussing 

this duty of reasonable care the Bourke court favorably 

quotes a number of sources: 

'Reasonable care is all that is required. But this 

must be proportionate to the risks to be apprehended and guarded against.' 

Bourke, 83 P. at 474 (quoting Hoye v. Chicago M. & St. P. 

Ry. Co., 46 Minn. 269, 48 N.W. 1117.) 

Later in the opinion, the Bourke court approved a jury 

instruction which stated in part as follows: 

. . . the care required is measured by and equal to 

the danger. When anyone handles a force of utmost 

danger, a very great care is required. What would 

be care in handling a force of little danger might 

not be care in handling a force of great danger, 

and might be negligence in handling such a force. 

As the danger increases, so the degree of care 

increases which is required of persons who are 

handling the force. The degree of care required is 

proportionate to the danger of the force; . . . 

Bourke, 83 P. at 474. 

The standard of care from Bourke applies to this case. 

The standard is one of reasonable care under the circumstances which is measured by and equal to the danger of those 

circumstances. Farnum v. Montana-Dakota Power Co. (1935), 99 

Mont. 217, 43 P.2d 640. 

Section 69-4-201, MCA, adopts the National Electrical 

Safety Code (NESC) as Montana law. Section 214 A2 of NESC 
provides: "Lines and equipment should be inspected from time 

to time at such intervals as experience has shown to be 

necessary." 

MPC had no policy or procedural manual which provided 

guidelines for inspections. There had been no maintenance on 

the line in the fire area. The linecrew chief, Corcoran 

stated the only time linemen will inspect this type of line 

is when there is a "problem on them or something goes wrong 

then you patrol." MPC admits in its reply brief that the 

District Court had evidence before it that the subject power 

line was not in good repair at the time of the fire. The 

employees involved had no recollection of when they last 

visited the area and MPC did not come forward with anything 

in writing indicating when any inspection or maintenance had 

been done on the Zorce line involved. The power line at the 

time was not being used but the energy was not cut off. 

These facts could very well fail to meet the general 

standard of care as set out in the Bourke case. However, MPC 

states that a critical fact was lost in the shuffle. Strong 

winds had hit the area about two weeks prior to the fire and 

could have caused the fire. MPC, by affidavit, comes forward 

with statement and daily time tickets on December 2, 1977, 

that the Adel line in the same general area to which the 

Zorce line is attached, was "all out" and the employee conducted a "patrol & rep. floater". As stated i.n Bourke, a 

utility should inspect its property so that: 

. . . any change which has occurred in the physical 

condition surrounding the plant, poles or lines of 

wire, which would tend to create or increase the 

danger to persons lawfully in pursuit of their 

business or pleasure, may be reasonably discovered. 
Bourke, 83 P. 2d at 473. By their own admission the strong 

winds are such a change. MPC had knowledge but no inspection 

was done. 

At this point, to raise a question of fact, MPC was 

obligated to come forward with substantial evidence that it 

had exercised due care under the circumstances. Harland v. 

Anderson (1975), 169 Mont. 447, 548 P.2d 613. This it did 

not do. All it could do was speculate that the high winds 

caused the floater, it did not come forward with any facts or 

evidence to rai-se an issue of fact as to its duty. The 

evidence appeared overwhelming and the District Court did not 

err in finding MPC's liability was essentially uncontradicted 

by its evidence. 

We find partial summary judgment was correctly granted. 

I1 

Does the Unfair Trade Practices Act of the Montana 

Insurance Code apply to MPC, a self-insured corporation, and 

was there sufficient evidence to uphold a jury verdict for 

breach of the implied covenant of good faith and fair dealing 

by MPC? 

Ogden's amended complaint alleges appellant breached the 

implied covenant of good faith and fair dealing and violated 

the Unfair Trade Practices Act S 33-18-201 et seq., MCA, 

(Act). MPC moved to dismiss these counts contending that the 

Act did not apply to self-insurers. The District Court 

denied this motion and subsequent similar motions. At trial 

the 1-ower court instructed the jury that certain duties from 

the Act applied to MPC: 

Instruction No. 21 

The Montana Power Company is subject to the laws of 

Montana which state that no person may, with such 

frequency as to indicate a general business practice, do any of the following: 
(1) Fail to acknowledge and act reasonably promptly upon communications with respect to claims; or 

(2) Fail to adopt and implement reasonable standards for the prompt investigation of claims; or 

(3) Refuse to pay claims without conducting a 

reasonable investigation based upon all available 

information; or 

(4) Neglect to attempt in good faith to effectuate 

prompt, fair, and equitable settlements of claims 

in which liability has become reasonably clear. 

If you determine that Montana Power Company has 

violated one or more of the above duties, you 

should determine that the defendant has not complied with its duties under the laws of the State 

of Montana. 

A general business practice can be shown by multiple violations occurring in the same claim, or 

violations of the law in different cases, or from 

persons having knowledge of the company's general 

business practices. 

GIVEN : 

District Judge 

The jury found that MPC fa.iled to act reasonably and in good 

faith with respect to Ogden's claim. 

MPC claims the District Court erred in imposing the 

duties of the Act upon it and in instructing the jury to that 

effect. MPC contends the Act does not apply to it as a 

self-insurer and that it did not violate any duty to Ogden. 

Ogden contends that the jury was correctly instructed because 

MPC had both a common law duty to act in good faith and a 

similar statutory duty under the Act. 

The Montana Insurance Code's Unfair Trade Practices Act 

does not apply to a self-insured entity like MPC. The legislature enacted the Montana Insurance Code, Title 33, MCA, to 

govern and regulate the business of insurance. The Unfair 
Trade Practices Act, Section 33-18-101 et seq., MCA, as a 

part of the Montana Insurance Code and by virtue of its own 

stated purpose was enacted to govern and regulate trade 

practices in the business of insurance. Section 33-18-1.01, 

MCA, provides: 

The purpose of this chapter is to regulate trade 

practices in the business of insurance in accordance with the intent of congress as expressed in 

P.L. 79-15 . . . 

P.L. 79-15 is codified at 15 U.S.C. 5 1011 and states a 

declaration of policy by Congress "that the continued regulation and taxation by the several States of the business of 

insurance is in the public interest, . . . " Hence, 5 

33-18-101, MCA, explicitly and by reference to 15 U.S.C. S 

1011 expresses the legislative intent to regulate the business of insurance. 

Section 33-1-201(6), MCA, provides: "'Insurer' includes 

every person engaged as indemnitor, surety, or contractor in 

the business of entering into contracts of insurance." MPC 

is primarily in the business of providing power and utilities 

to customers, although it insures itself. The legislature 

did not intend a self-insured entity to be subject to all the 

technical Montana insurance industry regulations. The Act 

therefore, does not apply to MPC in this case. 

There is also no common law basis for the application of 

the duties imposed upon MPC as contained in the instruction. 

Although judicial modification of the common law is sometimes 

required to prevent great injustice or to ensure that common 

law is consonant with changing needs of society, see Miller 

v. Fallon County (Mont. 1986), 721 P.2d 342, 43 St.Rep. 1185, 

it is not warranted here. These are adversarial relationships and a sudd.en major change of this sort in the law can 

best be done by legislative enactment as was done with 
insurance companies. We note that the most recent Montana 

Legislative Session enacted 5 33-1-317, MCA, (effective date 

July 1, 1987), which applies specific parts of the Unfair 

Trade Practices Act to actions brought by third party claimants against self-insurers. 

We therefore reverse on the issue of MPC's duty of good 

faith and fair dealing and Instruction No. 21 and further 

dismiss the second, third and fourth counts of plaintiff's 

amended complaint for failure to state a claim. Appellant's 

motion below to dismiss these counts should have been 

granted. 

I11 

Did the District Court err in denying MPC's motion for 

separate trials on the property damage claim and bad faith 

claim? 

This issue concerns whether it was error to deny MPC's 

motion for separate trials on the property damage claim and 

on the had faith claims. MPC argues that denial of the 

motion resulted in confusion and severe prejudice to appellant. We again affirm. MPC contends the reasoning of Fode 

v. Farmers Insurance Exchange (Mont. 1986) , 719 P.2d 414, 43 

St.Rep. 814, requiring separation should be applied here. 

Fode does not control in this case. Separation of the bad 

faith claim in this case would have been appropriate only 

until the liability issue of the underlying case has been 

determined. Here the liability of the defendant had already 

been determined. The property damage issue was not complex 

and the danger of prejudice was minimal. The District Court 

correctly exercised its discretion which is authorized by 

Rule 42(b) M.R.Civ.P. See State v. District Court of Eighth 

Judicial District (Mont. 1985), 703 P.2d 148, 42 St.Rep. 

1061. The property damage verdict should stand. 
IV 

Did the District Court err in reducing the Special 

Verdict award? In light of this opinion, the question of 

changing the original jury verdict is moot. 

v 

Did the District Court err in failing to impose economic 

sanctions upon MPC for alleged dilatory, obstructive and 

threatening actions by MPC's attorney? We remand and request 

the District Court to enter its decision on the motion for 

sanctions. 

In summary, we affirm the motion for summary judgment on 

liability for property damages. We will not disturb the 

jury's verdict of $62,000 for property damages. We dismiss 

the second, third and fourth counts in the amended complaint 

for failure to state a claim and set aside the verdicts based 

thereon and we remand to the District Court to rule on motion 

for sanctions. 

We Concur: 

Justices 
Mr. Justice William E. Hunt, Sr., dissenting: 

I agree with the majority opinion insofar as affirming 

the issues of MPC's liability and upholding the original jury 

verdict of $62,000 for property damage. I also agree with 

remanding to the District Court for a ruling on Ogden's 

motion for sanctions. 

I disagree, however, with the majority's reversal of the 

award for punitive damages for a violation of good faith and 

fair dealing. 

The record is replete with instances of MPC's discovery 

violations and intentional delays. Although a self-insured 

company, such as MPC, did not fall under Montana Insurance 

Code's Unfair Trade Practices Act at the time of this fire, 

it should not be thereby freed from a responsibility to act 

in good faith and fair dealing with persons stating claims 

against the company. We note that the Montana legislature 

has just passed a statute which imposes this duty of good 

faith and fair dealing on self-insurers. 

Instruction no. 21, which in the majority opinion 

requires a reversal of the punitive damages award, does not 

impose strict or outlandish stand.ards of good faith and fair 

dealing on MPC. "Reasonable" is the standard of duty 

enumerated in Instruction No. 21. The jury was entitled to, 

and did in fact find that MPC failed to "attempt" to act in 

good faith based on a "reasonable" standard of prompt 

communication, prompt investigation and payment of valid 

claims after such "reasonable investigation." I would affirm 

the jury's finding of bad faith and uphold the jury award for 

all punitive damages. 

Mr. 

con 

Jus 

cur 

tic 

in 

:e John C. Sheehy 

the foregoing di 

.- - - - - - John C. Harrison