No. 96-049 INTHESUPREMECOURTOFTHESTATE OFMONTANA 1996

WILLIAM J. SEBENA, d/b/a LEWISAND CLARKMOTELOFBOZEMAN, MONTANA,

Plaintiff andAppellant,

APPEAL FROM: District Court of the First Judicial District,

In and for the County of Lewis and Clark, The Honorable Thomas C.Honzel, Judge presiding.

COUNSELOFRECORD:

For Appellant: Kevin E. Vainio, Butte, Montana For Respondent: Barry G.O'Connell, Bozeman, Montana

Filed: Submitted onBriefs: September 12, 1996 Decided: December 19, 1996Chief Justice J. A. Turnage delivered the Opinion of the Court.

William J. Sebena, d/b/a Lewis and Clark Motel of Bozeman, Montana, appeals ajudgment of the First Judicial District Court, Lewis and Clark County. That court rejected Sebena's claim that the American Automobile Association (AAA) andAAA Montana intentionally interfered with the Lewis and Clark Motel's prospective business advantage by delisting the motel from the AAA travel directory. Weaffirm. The following issues are dispositive of this appeal: 1. Whether the District Court erred in denying Sebena ajury trial. 2. Whether the court erred in ruling that Sebena failed to prove damages. AAAis anonprofit Connecticut corporation which maintains its principal place of business in Heathrow, Florida. There are approximately 36,000,OOO AAA members. AAA publishes regional TourBooks which provide information for its members onattractions, lodging, and restaurants in various regions of the United States. AAAMontana, anonprofit Montana corporation and amember club of AAA, maintains its principal place of business in Helena, Montana. Tobe listed in aTourBook, anestablishment must undergo an annual inspection and meet certain minimum standards. AAA ranks the motels listed in its TourBooks with one to five diamonds, in ascending order of quality. Beginning in 1978, the Lewis and Clark Motel was listed in AAA's annual TourBook for Montana, Idaho, andWyoming. Until 1994,
2it was listed as athree- or four-diamond establishment. However,

beginning in 1987, AAA's annual inspectors noted deficiencies from AAArequirements in the Lewis and Clark Motel. Each year, Sebena
wasdirected to correct these deficiencies to maintain the motel's rating.In March 1993, AAA advised Sebena that, based upon its most recent inspection, it would not list the Lewis and Clark Motel in its 1994 TourBook. Sebena subsequently brought this action, alleging that the defendants wrongfully and intentionally interfered with the motel's business relationships with traveling members of AAAandwith the motel's expectancy of future economic benefit.After a two-day nonjury trial, the court issued findings, conclusions, andjudgment for the defendants. Sebena appeals. ISSUE 1 Did the District Court err in denying Sebena ajury trial? Sebena did not include a demand for jury trial in his complaint. He served his demand for jury trial as a separate document on June 16, 1994. The court granted the defendants' motion to strike the demand for jury trial on the basis that the demand wasuntimely. Rule 38(b), M.R.Civ.P., states: Any party may demand atrial by jury

. . by serving upon the other parties ademand therefor in writing at any time after the commencement of the action and not later than 10days after the service of the last pleadinsL.1 [Emphasis added. 

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3Sebena's summons and complaint were served upon AAAonApril 18,

1994. AAAandAAAMontana served ajoint answer to the complaint
onMay 26. Thereafter, onMay31, AAAMontana was served with the
summons and complaint. TheDistrict Court ruled that Sebena's June 16demand for jury trial was untimely based upon its determination that the defendants' joint answer served onMay 26wasthe last pleading served for purposes of Rule 38(b). Sebena argues that the last pleading served was, instead, the copy of the complaint served upon AAA Montana on May 31, with return of service filed on June 2. He maintains that with three additional days for service by mail pursuant to Rule 6(e), M.R.Civ.P., andexcluding weekends pursuant to Rule 6(a), M.R.Civ.P., his time for filing ademand for jury trial did not expire until June 21, 1994. Citing Matter of Texas General Petroleum Corp. (5th Cir. 1995), 52 F.3d 1330, Sebena concedes that in the "usual" case, service of the last pleading would bethe service of the answer or
areply to acounterclaim. Thepleadings in this action consist of the complaint andthe answer. See Rule 7(a), M.R.Civ.P. TheMay26answer to Sebena's complaint clearly stated that it
was filed by "the Defendants, American Automobile Association and AAAMontana." Whenthis joint answer wasfiled, the District Court
was vested with jurisdiction over both defendants, because "[jlurisdiction may be acquired by our courts over any person through service of process asherein provided; or bythe voluntary appearance in anaction byanyperson either personally, orthrough
4anattorney[.l" Rule 4B(2), M.R.Civ.P. Service of the complaint

upon AAAMontana after AAAMontana hadalready filed its answer to the complaint was thus superfluous for jurisdictional purposes. Weconclude that when the joint answer was served onMay26, 1994, the last pleading hadbeen served for purposes of Rule 38(b), M.R.Civ.P. Allowing three additional days for mailing and excluding weekends, atimely demand for jury trial should have been filed by June 10, 1994. See Detienne Associates v. Montana Rail Link (1993), 261 Mont. 238, 862P.2d 1106. Sebena's counsel admits that heoverlooked the fact that the May 26answer was ajoint answer by both defendants. Heargues, however, that even if his demand for jury trial was late, the District Court abused its discretion in denying him ajury trial as allowed under Rule 39(b), M.R.Civ.P. Under that Rule, acourt may order ajury trial notwithstanding the parties' failure to timely demand one. Because there is no Montana case onpoint, welook to cases decided under the corresponding federal rule of civil procedure, after which Rule 39(b), M.R.Civ.P., waspatterned. The inadequacy of attorney oversight fin failing to timely demand ajury trial as a reason for ordering a jury trial under Rule 39(b) has been clearly established in the federal courts.

It is clear in the Ninth Circuit that a district court does not abuse its discretion in denying arequest for ajury trial under Rule 39(b) when the only excuse for the failure to timely file ademand is oversight, inadvertence, neglect, or counsel's unfamiliarity with federal practice and procedure.

. . . Indeed, Ninth Circuit authority suggests that the district judge may
5actually abuse his discretion bygranting relief in these

circumstances. Robertson v. Equitable Life Assur. Sot. of U.S. (D.C. Cal. 1987), 661 F.Supp. 416, 424-25, aff'd, 869 F.2d 1498 (1989). Wehold that the District Court did not err in ruling that the time for demanding ajury trial pursuant to Rule 38(b), M.R.Civ.P., began to run upon the service of the defendants' joint answer to Sebena's complaint and expired before Sebena filed his demand for jury trial. Wefurther hold that the District Court did not abuse its discretion bydeclining to order ajury trial under Rule 39(b), M.R.Civ.P. ISSUE 2 Did the court err in ruling that Sebena failed to prove damages? Toestablish acase of intentional interference with prospective business advantage, aplaintiff must show acts which (1) were intentional andwillful; (2) were calculated to cause damage to the plaintiff's business; (3) were done with unlawful purpose of causing damage or loss, without right or justifiable cause onthe part of the actor; and (4) resulted in actual damages or loss. State Med. Oxygen v. Amer. Med. Oxygen (1988), 230Mont. 456, 462, 750 P.2d 1085, 1088-89. Damages must be proven by substantial evidence which is not the product of mere guess or speculation. Lens Const. Co. v. Cameron (1984), 207 Mont. 506, 511, 674 P.2d 1101, 1103. Sebena argued that the defendants' failure to list his motel in the TourBook cost him guests and, therefore, money. His 6evidence of damages consisted of his statement that the motel had

aloss of 1,065 room rentals between 1993, the last year the motel
was listed in the TourBook, and 1994, the first year it was not listed. Hemultiplied that number byanightly room rental rate of $48.36 to arrive at afigure of $51,503.40 for his 1994 revenue loss from delisting. During cross-examination, Sebena andhis daughter, the motel's general manager, both admitted that they maintained no records showing the number of room rentals generated through AAA. Sebena's daughter also admitted that additional motels built in Bozeman might have had an impact on the business of the Lewis and Clark Motel. Sebena's accountant similarly testified that he did not have any records on the percentage of the motel's business attributable to the AAAlisting. The accountant further attested
oncross-examination that no significant capital improvements had been made to the Lewis and Clark Motel between 1989 and 1993. In short, Sebena offered no concrete information on the percentage of his motel business which wasattributable to the AAA listing. Nor did heoffer expert testimony specifying the portion of loss of business, if any, which wasattributable to delisting by AAA, or the portion of the claimed lost revenue representing lost profits.This Court has set forth the following rules pertaining to the recovery of lost profits: Damages for loss of profits may be awarded if not speculative. Therule that prohibits speculative profits does not apply to uncertainty as to the amount of such profits but to uncertainty or speculation asto whether 7the loss of profits is the result of the wrong and

whether such profit would have been derived at all. Once liability is shown, that is the certainty that the damages are caused bythe breach, then loss of profits on areasonable basis for computation andthe best evidence available under the circumstances will support areasonably close estimate of the loss byaDistrict Court. But no damages are recoverable which are not clearly ascertainable both in nature and origin, and only profits which are reasonably certain maybeawarded. Stensvad v. Miners &Merchants Bank, Etc. (1982), 196 Mont. 193, 206, 640 P.2d 1303, 1310 (citations omitted). The District Court concluded that Sebena failed to show that hesuffered any damages, based onthe absence of records regarding the portion of the motel's business related to AAAand the absence of analysis by the accountant of lost profits relating to the delisting. Weagree with the conclusion of the District Court. Sebena has also raised two other issues onappeal. Oneof them concerned the court's refusal to admit into evidence guests' comment cards about the motel, which he offered as evidence that delisting his motel wasunjustified. Theother issue Sebena raised
was whether the court should have addressed abreach of contract claim which he asserted. Any claim for breach of contract, like the claim of intentional interference with prospective business advantage, would have required nonspeculative proof of damages. SeeBolz v. Myers (1982), 200Mont. 286, 300-01, 651P.2d 606, 613- 14. Given our holdings onthe issues discussed above, weconclude that weneed not further address these other two issues. Affirmed.

, Chief JusticeWeconcur:

Justices

9Justice Terry N. Trieweiler specially concurring in part and

dissenting in part. Iconcur with the majority's conclusions that Sebena's demand for ajury trial wasuntimely pursuant to Rule 38(b), M.R.Civ.P., and that the District Court did not abuse its discretion when it declined to order ajury trial pursuant to Rule 39(b), M.R.Civ.P. Idissent from the majority's conclusion that Sebena failed to prove damages. The majority seems to conclude that because Sebena has no specific record of howmanyroomrentals were directly attributable to his listing by AAA, and because there might have been other factors which also contributed to adecrease in his rental rate, he has not, asamatter of law, proven damages. However, in arriving at its conclusion, the majority has misapplied our decision in Stensvadv.MinersC?

MerchantsBankofRoundup(1982), 196Mont 193, 640P.2d 1303. Pursuant to Stensvad,it is not the amount of damages which must be proven with certainty. It is the fact that damages have been sustained which must beproven with reasonable certainty. In this case, to conclude that there were no damages from being delisted byAFA is to ignore all of AAA's admissions in the form of promotional materials suggesting there is an economic advantage to those who are listed. For example, Exhibit 77 admitted by the District Court includes testimonials from others listed byA?&who state that "[a] go-day tracking period revealed that 50 %of our business came from the AAATourbook" and that

10"[wle feel that our AAATourbook adaccounts for about 50%of our

total business." GeneDeFrance is the former employee of the Montana Automobile Association who first approached Sebena about aAAA listing. He promoted the listing bytelling Sebena howmanymembers AAAhad and how reliant they were on the tour book for information about accommodations. Hetestified that it waseconomically advantageous to be listed in the book. Lisa Sebena is the daughter of William Sebena, andat the time of trial had been the manager of the Lewis and Clark Motel for eight years. In that capacity, she worked in all aspects of the business andwasfamiliar with the motel's volume of business, both while it was listed with AAA and after it was delisted. Lisa testified that prior to the delisting by AAA, close to sixty percent of the motel's business resulted from its inclusion in AAA's tour book. Shetestified that from her personal observations while working at the motel, there has been a loss of business directly attributable to having the motel removed from the tour book. Shetestified that many of the people whocame to the motel based onaAAAlisting walked in off the street, andthat for them there would be no record of the fact that they came to the motel because of AAA. However, she also testified that because on occasion potential guests called and asked for the AAA rate and
were told that they were no longer affiliated with AAA, she was able to definitely state that they lost business by the loss of their affiliation. 11William Sebena wasasked the following questions andgave the

following answers: Q. Have you made an observation or a study of your business before when you were AAA affiliated, and your three and four-diamond listings in the tour book, as compared to what you're left with now? A. As compared to after wewere deleted? Q. Right. A. Yes. Q- Andwhat have beenyour observations with respect to that?

. . Q. Tell me about your observations. What have you observed, what have you done to make these observations about your lessening of business? A. Wewent to our accounting records and compared figures.

. Q. Andwhat did you discover in making your comparison of before you were terminated from AAAand afterwards? A. I discovered that wewere, even though we, in 1994, January and February, weare still listed in the current book, that wehad aconsiderable loss in room rentals by the number of 1,065

Q.

. Canyou compute ayearly loss for the year in 1994? A. Weaveraged the cost of the 1993 rooms. Q. What wasthat average? A. Weaveraged $48andsomecents throughout the year. Q. YOU, in fact, figured $48.36; is that correct?

12A. Yes. Andthen wemultiplied it bythose 1,065 rooms

and arrived at aquite accurate figure at aloss.

. . Q. In using those figures, canyou tell us the amount of money that you lost during the 1994 calendar year? A. $48.36? Q. Right. A. $51,503.40. Steve Hamilton, who is acertified public accountant and has practiced in Montana since 1978, and was allowed by the District Court to testify as anexpert witness, testified that hehad been Sebena's accountant for seven or eight years at the time of trial. Hetestified that the method used bySebena to calculate his annual loss from being delisted byAAAwas reasonable in light of what he knew about the business's prior history and trends for other businesses in the Bozeman area. Healso testified that asof 1993, Sebena had run aprofitable business and that it would not have been unreasonable to expect him to continue operating the business in that fashion for anadditional twenty years. If there was noeconomic advantage to being listed, then how could AAAcharge, andwhywould Sebena and thousands of others pay to belisted? If there wasaneconomic advantage to being listed, then there hadto beaneconomic disadvantage from being delisted. 1nsum, it wasnot speculative that damages hadbeen sustained
asaresult of the fact that the Lewis andClark Motel wasexcluded from AAA's Tourbook. Pursuant to our previous decisions, once the probability of damage hasbeen shown, the loss of profits need only 13be computed onthe basis of the best evidence available. Sebena

provided the best evidence available andthe District Court had an obligation to arrive at somecalculation of damages based onthat evidence. Because I conclude that the District Court erred in its finding that no damages were sustained, I conclude that the District Court also erred whenit failed to address the plaintiff's specific claim that the defendant breached anexpress contract with the plaintiff by excluding his business from the AAATourbook, in spite of his alleged efforts to improve the premises to the extent of his financial ability. Rule 52(a), M.R.Civ.P., provides in part
asfollows: "In all actions tried upon the facts without ajury or with anadvisory jury, the court shall find the facts specially and state separately its conclusions of law thereon." In this case, the court madenofinding that acontract did or did not exist, and therefore made no finding which resolved Sebena's allegation that AAAhad breached its contract with him. TheDistrict Court did conclude that plaintiff failed to prove that AAA had acted arbitrarily, capriciously, or fraudulently when it delisted the motel, and further concluded that plaintiff had not proven interference with aprospective business advantage, but made
no conclusions regarding the existence of or breach of acontract between the parties. Instead of entering findings or conclusions related to Sebena's contract claim, the District Court simply concluded that:

14"Assuming AAAdid dosomething wrong, Plaintiff has failed to show

that he suffered any damages." For the reasons, and based onthe facts set forth above, I conclude that plaintiff did offer proof of damages. The District Court's responsibility wasto determine whether there had been a breach of contract andthe amount of damages that had been proven. For these reasons, I dissent from the majority's conclusion that no damages were proven. Iwould reverse the judgment of the District Court and remand for findings and conclusions regarding Sebena's contract claim. If the District Court found andconcluded that acontract existed between the parties and had been breached byAAA, then I conclude the District Court should have arrived at
acalculation of damages sustained by Sebena as aresult of &AA's contractual breach.

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