NO. 89-104 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1990 

GEORGE MADDUX, d/b/a MOM'S OLD FASHIONED 

GRAVY, 

Plaintiff, Appellant and CrossRespondent, 

-vsLYNN BUNCH, FBS INSURANCE MONTANA HOINESS 

LaBAR, INC., and UNITED STATES FIDELITY AND 

GUARANTEE COMPANY, 

Defendants, Respondents and Cross-. 

Appellants. 

APPEAL FROM: ~istrict Court of the Thirteenth ~udicial ~ist.rict. 

In and for the County of Yellowstone, 

The Honorable G. Todd Raugh, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

James C. Capser, ~illings, Montana 

For Respondent: 

Neil S. Keefer; Keefer, Roybal, Hanson, Stacey & Walen, 

~illings, Montana 

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a &- *), . submitted on ~riefs: Oct. 20, 1989 

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Decidpd: January 10, 1990 
Justice John C. Sheehy delivered the opinion of the Court. 

Plaintiff George Maddux filed suit in the District 

Court, ~hirteenth Judicial ~istrict, Yellowstone County, 

charging united States ~idelity and Guaranty Company 

(hereinafter USF & G) with breach of contract of insurance 

and unfair claim settlement practices. The jury found that a 

contract of insurance existed at the time of plaintiff's 

loss, defendant breached the contract, and owed plaintiff 

$23,378.95 in damages. On post-trial motion, the judgment 

was reduced to $7,792.98. From that judgment, both parties 

appeal. We affirm. 

The issues raised by Maddux are: 

1. Whether the District Court erred in granting USF & 

GIs motion for directed verdict on the issue of punitive 

damages. 

2. Whether the District Court erred in refusing to 

amend the jury's damage award to include lost profits. 

3. Whether the District Court erred in red.ucing the 

award to $7,792.98. 

4. Whether the District Court erred in denying 

pre-j-udgment interest on the award. 

The issues raised on cross-appeal by USF & G are: 

1. Whether the District Court erred in not granting USF 

& G's motion for a directed verdict. 

2. Whether the court erred. in not reducing the award to 

zero. 

Appellant George Madd-ux conceived the idea of a 

commercial gravy manufacturing and sales business in October 

of 1985. is preparations for business included the purchase 

of a new building, ordering various pieces of equipment, 

including a freezer, and the electrical work necessary to 
make the operation ready for business. In addition, Maddux 

contacted his insurance agent, Lynn Bunch, of Hoiness LaRar 

Agency, regarding insurance for the new operation. 

It is uncontested by the parties that due to problems 

with the refrigeration system, 2,748 cases of gravy product 

ultimately spoiled and had to be disposed of. Maddux was 

paid $39,078.08 by the insurance carrier of the electrical 

contractor for faulty wiring, $25,000 by the insurance 

carrier of the refrigeration supplier Brodie-Dohrman, for 

improper installation and defective product, and $5,000 by 

Hoiness LaBar, Inc. and Lynn Bunch. Maddux proceeded to 

trial against USF & G, the insurance carrier for the Maddux 

policy. 

Strongly contested at trial was whether coverage existed 

to insure against product spoilage and whether USF & G's 

refusal to pay constituted breach of contract and bad faith. 

The jury found that a contract existed, that USF & G breached 

the contract, and that the refusal to pay constituted bad 

faith. The jury awarded Maddux $23,378.95 for his losses, 

but declined to award Madd.ux anything for emotional distress, 

despite the determination of its existence. 

USF & G made post-trial motions to reduce the jury 

verdict pro tanto to zero, and to tax costs. The court in 

its order stated: 

Now that the jury has rendered its verdict we have 

the hindsight to perceive the whole situation as it 

should have been. We now know that there was an 

insurance contract and that defendant should have 

provided coverage for plaintiff Is damages for his 

loss of gravy in the amount of $23,378.95. 

We have known all along that when the insurance 

company declined coverage that plaintiff went out 

and did what his insurance company should have, to 

wit: recovered his damages for his gravy loss. 

Apparently plaintiff also recovered other damages 

unrelated to the insurance coverage, but it cannot 
be seriously contested that plaintiff was [not] 

paid for his gravy loss. Accordingly, the jury 

verdict must be reduced (sic). 

However, it is not proper to reduce the verdict to 

zero as requested by defendant because plaintiff 

incurred attorney fees in doing what we now know 

the insurance company should have done. Those fees 

are apparently a one-third contingency and the 

verdict should be reduced to one-third or $7,792.98 

in order that plaintiff recover his attorney fees 

on the amount we now know he was damaged. 

Plaintiff's motions for prejudgment interest and to 

amend the jury verdict were denied. This appeal and 

cross-appeal followed. 

Did the District Court err by granting USF & G's motion 

for a directed verdict as to punitive damages? 

Maddux's claim for punitive damages is based on failure 

to conduct reasonable investigation of the claim. 

Madd.ux maintains that USF & G intentionally avoided 

learning facts pertaining to coverage, such as what coverage 

Maddux believed he had acquired. In conference, co.unsel, 

prior to jury deliberation, conceded that USF & G did not 

seek out this information. However, the court states that 

this lack of fact-finding did not create a high degree of 

risk of harm to the substantial interests of Madd.ux, as 

required by § 27-1-221(2), MCA. 

The court went on to state: 

. . . plaintiff notes that the Court should let 

punitive damages go to the jury not only beca.use 

plaintiff thinks that is right but also because if 

it is wrong it would be a simple matter for the 

Supreme Court to subtract out any punitive damages. 

. . . [I]n the long run considering all the many 

cases these days in which punitive damages are 

sought this avenue is deceptive, misleading and 

inefficient. ~eviewing courts are loathe to 
overturn juries and defendants should not have to 

run the risk that a jury will award punitive 

damages and reviewing court (sic) will not overturn 

a jury in cases where punitive damages should not 

have been considered by the jury in the first 

place. Judicial economy demands that the trial 

court not pass the buck. Judicial economy demands 

a trial court not present to a jury those issues 

for which insufficient evidence exists. 

It is evident from the record that the testimony of 

Maddux and Agent Lynn Bunch was hopelessly conflicting. 

Section 27-1-221(5), MCA, states that "all elements of the 

claim for punitive damages must be proved by clear and 

convincing evidence." Here, the district judge, after 

hearing the evidence and observing the witnesses, was in the 

best position to make a determination whether the 

requirements of proof of punitive damages had been met.. 

Tague v. John Caplice Co. (1903), 28 Mont. 51, 72 P. 297. 

Maddux next contends that the District Court erred in 

refusing to amend the jury findings to conform to evidence 

presented on amount of loss. At issue is simply whether 

Maddux was entitled to a 40 percent markup from the value of 

the gravy. A breakdown of the figures is helpful. 

2,748 cases at $12.96 per case 

Less 40% 

Plus: cleanup costs 

lost bar code 

Jury computation total 

From the testimony and evidence, it is reasonably clear 

that Maddux had neither sold nor contracted to sell any of 

his product when the loss occurred. With that in mind and 

instr-uctions on damages, the jury made its determination. 

Instruction no. 26 reads: 

Damages must be reasonable. If you should find 

that plaintiff is entitled to a verdict, y0.u may 

award him only such damages as will reasonably 
compensate for such injury and damages as you find 

from a preponderance of the evidence in the case, 

that he has sustained as a proximate result of the 

incident. 

You are not permitted to award speculative damages. 

So you are not to include in any verdict 

compensation for any prospective loss, which 

although possible, 1s not reasonably certain to 

occur in the fut-ure. 

An award of lost profits on a product with no proof of 

marketability might certainly be construed as speculative 

damage. From evidence and testimony presented, the jury 

determined what it thought to be reasonable damages. The 

District Court, presented with Madduxls motion to amend the 

jury's findings, did not see fit to substitute its judgment 

for that of the jury. Due to the speculative nature of lost 

profits, it was not error for the court to leave the jury 

verdict undisturbed. section 27-1-311, MCA. Swanson v. St. 

John's Lutheran ~ospital (1980), 189 Mont. 259, 615 P.2d 883. 

Maddux's next contention is that the District Court 

erred in reducing the jury damages to $7,792.98. 

Maddux argues that subrogation is not proper in this 

case, as the insurance policy states that USF & G will be 

subrogated to the insured's right of recovery "in the event 

of payment under this policy" and no payment under the policy 

has taken place. Further, Maddux contends that subrogation 

is simply an acquisition of rights of the insured against 

other parties, and those parties were released, all after USF 

& G refused payment. As further argument against 

subrogation, Madd.ux cites Western ~edia, Inc. v. ~errick 

(1988), 757 P.2d 1308, 1311, 1312, 45 St.Rep. 1212, 1216, 

which stated: 

It is the position of this Court that once a 

contract has been breached, its terms may not be 

unilaterally resumed. A non-breaching party has no 
duty to perform the terms of the contract once it 

has been breached. 

It is a maxim of jurisprudence that "no one can 

take advantage of his own wrong." § 1-3-208, MCA. 

A party who breaches a contract cannot take 

advantage of his own act or omission to escape 

liability thereon. (Cites omitted. ) ~errick's 

breach may not have been willful or intentional. 

However, the breach occurred and the contract was 

severed. 

Maddux arg-ues that the breach of the contract of 

insurance by USF & G severed the contract, and USF & G no 

longer has standing to assert any rights arising from the 

breached contract. 

Maddux's claim against USF & G was unquestionably based 

on insurance coverage for spoilage of gravy product. The 

damages awarded by the jury were directly related to damages 

for spoilage. There is testimony and evidence that the 

pretrial settlements amounting to $69,078.08 compensated 

Maddux for his gravy loss. Maddux released those tortfeasors 

upon settlement, and then proceeded against USF C G for 

damages, including payment for gravy loss. The judge 

instructed the jury not to consider the settlements, that 

they should determine damages as if no settlements had 

occ.urred, and that the court would "make all adjustments to 

the award of damages as may be required by law.. . ." 

Those pretrial settlements prevented contribution or 

indemnity claims by USF & G. In State ex rel. Deere & Co. v. 

~istrict Court (1986), 224 Mont. 384, 730 P.2d 396, this 

Court determined that a joint or concurrent tortfeasor who 

settles with a claimant before judgment on the claim is 

entered in District Court is not subject to claims for 

contrib.ution or indemnity from nonsettling joint or 
concurrent tortfeasors against whom judgment may be rendered. 

With no possibility of indemnity, Maddux would stand to be 

paid for his gravy loss twice. 

It has been the standard practice in Montana that a 

plaintiff's recovery is diminished pro tanto, that is, given 

a dollar credit based on the consideration paid by the 

settling tortfeasor. This encourages compromise, lends 

finality to such compromises, and provides a single 

satisfaction for a single injury. Deere, supra; Azure v. 

City of Billings (1979), 182 Mont. 234, 596 P.2d 460; Black 

v. arti in (1930), 88 Mont. 256, 292 P. 577. We hold that the 

precepts of Deere, et al. were correctly found by the lower 

court to apply in this case. Maddux is entitled to but a 

single recovery for his gravy loss, which he received in his 

earlier settlements. The lower court's reduction of the 

award to $7,792.98 was proper. The $7,792.98 adequately and 

fairly compensates Maddux for his attorney fees and costs in 

pursuing the settlements and this claim. 

Maddux's final claim is that the District Court erred in 

refusing prejudgment interest under S 27-1-211, MCA. Section 

27-1-211, MCA, provides as follows: 

~ight to interest. Every person who is entitled to 

recover damages certain or capable of being made 

certain by calculation and the right to recover 

which is vested in him upon a particular day is 

entitled also to recover interest thereon from that 

day except during such times as the debtor is 

prevented by law or by the act of the creditor from 

paying the debt. 

Maddux claimed a loss of $35,614.08. The jury awarded 

$23,378.95. Clearly, Maddux did not show damages capable of 

being made certain by calculation as required by S 27-1-211, 

MCA. As the amount of damages due upon breach was not 

clearly ascertainable until determined by the trial court, 

prejudgment interest was not appropriate. Swenson v. Buffalo 
Bldg. Co. (1981), - Mont . - , 635 P.2d 978; Carriger v. 

Ballenger (1981), - Mont. , 628 P.2d 1106. 

11. 

Issues on cross-appeal: 

USF & G's first contention is that the ~istrict Court 

erred in not reducing the jury verdict to zero. USF & G 

maintains that, under Deere, Maddux had been fully credited 

for his gravy loss prior to trial. As such, the verdict 

should have been adjusted to zero. USF & G is correct in 

asserting that Maddux was compensated for his loss of gravy 

product. However, the $7,792.98 does not represent a portion 

of that loss. Rather, it is the court's determination of 

reasonable costs in the form of attorney fees. As the 

~istrict Court noted, those costs are proper "because 

plaintiff incurred attorney fees in doing what we now know 

the insurance company should have done," i.e. investigate and 

pay the claim. As such, it was not error for the ~istrict 

Court to retain $7,792.98 in damages as reasonable attorney 

costs. 

The second contention is that the ~istrict Court erred 

in not granting USF & G's motion for a directed verdict. A 

motion for a directed verdict is properly granted only in the 

complete absence of any evidence to warrant submission to the 

jury. Britton v. Farmers Ins. Group (1986), 221 Mont. 67, 

721 P.2d 303. The court must view the motion in a light most 

favorable to the non-moving party. Dieruf v. Gollaher 

(1971), 156 Mont. 440, 481 P.2d 322. Clearly, there was 

evidence in this case of the existence of an insurance 

contract covering the loss, and subsequent breach by the 

insurer. As such, a directed verdict is not proper. 

Affirmed. 
We Concur: 

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Chief Justice 

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