No. 85-125 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1986 

KATHRYN ANN BUSHNELL, 

Plaintiff and Appellant, 

GENE E. COOK, FRED BELL, COOK-BELL 

REAL ESTATE, STORY HILLS EAST, a 

Montana partnership, and JAMES A. BOS, 

CLARANCE R. BROWN, KENNETH R. BR.OWN, 

WILLIAM H. ERWIN, DONN R. ERWIN, et al., 

Defendants and Respondents. 

APPEAL FROM: District Court of the Eighteenth Judicial District, 

In and for the County of Gallatin, 

The Honorable Joseph B. Gary, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Nash, Wellcome, Frost, Guenther & Zimrner; Page 

Wellcome argued, Bozeman, Montana 

For Respondent: 

Morrow, Sedivy & Bennett; Edmund P. Sedivy argued, 

Rozeman, Montana 

Landoe-Brown Law Firm; Allan McGarvey argued, Bozeman, 

Montana 

Submitted: April 22, 1986 

Decided: May 15, 1986 

Clerk 
Mr. Justice John C. Sheehy delivered the Opinion of the 

Court. 

The appellant, Kathy Bushnell, brought an action in the 

District Court of the Eighteenth Judicial District, Gallatin 

County against Gene Cook, Fred Bell, Cook-Bell Real Estate 

and the Story Hills East (SHE) partnership. The jury 

returned a verdict in favor of the defendants and judgment 

was entered in accordance with the verdict. The plaintiff 

moved for new trial. The District Court denied the motion. 

Plaintiff appeals from the judgment and denial of motion for 

new trial. We affirm. 

Appellant raises five issues in this case. 

1. Are the verdict and judgment supported by the 

evidence? 

2. Did the court err in failing to instruct the jury on 

the breach of the implied covenant of good faith and fair 

dealing? 

3. Did the court err in failing to instruct the jury on 

negligent misrepresentation? 

4. Did the court err in failing to grant a new trial? 

5. Did the court err in instructing the jury generally? 

Respondent raises one issue on cross-appeal: did the 

court err in failing to award SHE partnership its reasonable 

attorney's fees? 

When Kathy Bushnell, the appellant in this case, was 22 

years old, she received a settlement of about $40,000 from a 

car accident. Her athletics trainer put her in contact with 

Gene Cook of Cook-Bell Real Estate. Cook understood she 

wanted an investment for her money and she was relying on him 

to recommend a good investment. He showed her several 
properties, including Lot 45 of Story Hills East. The Story 

Hills East (SHE) development was a partnership, formed in 

1973 to buy land from Winston Cox and subdivide it. Cox 

hired Overturf, Strand, and Associates, an architectural firm 

to assist him with planning and zoning. Overturf was managing 

partner of the SHE partnership from 1973-75 and Overturf and 

Cook shared the management from 1975-78. Strand was also a 

member of SHE partnership. In the course of getting the 

planned unit development approved by the Bozeman Zoning 

Commission, SHE hired Dr. John Montagne, a geologist to study 

the geology and soils of the area. Dr. Montagne warned of 

unstable soils in the area. However, Montagne and other 

experts testified that homes could be built on the soils, if 

special precautions were taken. 

Kathy Bushnell decided to buy lot 45 of Story Hills 

East. She paid a total of $28,000, $20,000 down and $8,000 

in installments over ten years. Cook advised Kathy that by 

subdividing the lot and selling it, she would maximize her 

investment. So in 1.979, Cook put Kathy in contact with 

Robert Babb, Gallatin County Surveyor, to do the subdivision 

work. As a result the lot was divided into two lots, 45A and 

45B. Thereafter, Kathy listed the lots with Radcliff Realty. 

Radcliff sold Lot 45A to Blackwood on April 13, 1981 for 

$19,000. In the fall of 1982, Ra.dcliff received a telephone 

call and letter from Blackwood indicating there had been soil 

slippage on his lot, that he felt there were no suitable 

building sites on the lot and wanted his money back. As a 

result of this, Bushnell, Blackwood, Radcliff and Gary 

France, managing partner of the SHE partnership, met on 

December 31, 1982. They discussed various ways to settle the 

dispute. Eventually, they agreed to a compromise. Blackwood 
got his money back from the developer, and was released from 

his contract. Bushnell got the land back, and she was 

released from the final payments of $5,582.80 owed to the 

partnership. She was also allowed to keep the payments and 

downpayment made by Blackwood. 

In August, 1983, Bushnell filed a complaint against SHE 

partnership alleging damages for breach of contract or right 

to rescission and return of all money paid. At trial, she 

dropped the rescission claim and elected to keep the lot and 

sue for damages on the breach of contract claim. 

The damages alleged by Bushnell were that the defendants 

failed to discover a fault line that ran through the 

property. However, at trial Dr. Montagne testified no fault 

line runs through the property. A fault does exist in the 

near vicinity, but Montagne testified a home properly built 

would not be damaged unless it was directly over or within 

fifty feet of the fault line. 

The soil on Lot 45 has slipped downhill in places, 

however experts testified there were still suitable building 

sites on the property if adequate precautions were taken in 

building a home. 

Bushnell alleged she was damaged because SHE partnership 

pastured cattle and horses on her land without paying her. 

However, at trial checks for pasture rent paid to Bushnell 

were introduced showing she had been paid for 1978, 1981, 

1982. The lands were not used for pasture in 1979 or 1980. 

Bushnell also alleged that the contract was breached 

because the SHE partnership did not finish the roads as 

required by the sales agreement by November 1, 1979. Cook 

testified that not all the roads were completed by November 

1, 1979. He wrote to Bushnell in December, 1981, saying the 
roads had not been completed because of slowness in selling 

the lots. He indicated that if Bushnell decided to build a 

home or found a buyer, to let him know and he would tell the 

contractor to finish that portion of the road. Rushnell did 

not contact him to ask that the road be finished. 

Finally, Bushnell contended that the SHE partnership 

encumbered her title by leasing her lot for oil and gas 

exploration. The leasing agent testified at trial that he 

approached France about leasing the area in May, 1983. 

France explained that the ownership of Lot 45 was in dispute. 

The agent requested both SHE and Bushnell sign leases, and 

that both would be paid. He stated the company would release 

the party that didn't end up with title, but that party could 

keep the lease rental money. France agreed to this top 

leasing, but Bushnell did not. She later complained that 

France had encumbered her title by agreeing to the oil and 

gas lease. 

After jury trial on issues, the jury returned a verdict 

in favor of defendants Cook, Bell, Cook-Bell Real Estate, and 

SHE partnership and against Bushnell on all issues. 

Appellant's first contention on appeal is that the 

judgment and verdict are not supported by the evidence. 

Although it is not listed as an issue, counsel also contends 

in his argument that the District Court erred in refusing his 

motion for new trial based on lack of substantial evidence to 

support the verdict. In reviewing the claim that the verdict 

and judgment were not supported by evidence, we are aware 

that the evidence must be viewed in the light most favorable 

to the prevailing party. The standard of review is whether 

there is substantial evidence to support the verdict. Powers 

Manufacturing Co. v. Leon Jacobs Enterprises (Mont. 1985), 
701 P.2d 1377, 1379, 42 St.Rep. 906, 908. "Substantial 

evidence is such relevant evidence as a reasonable mind might 

accept as adequate to support a conclusion." State v. 

Plouffe (1982), 198 Mont. 379, 389, 646 P.2d 533, 538. 

Contrary to Bushnell's assertion that the evidence of damage 

to her was "basically uncontradicted," the evidence in this 

case was hotly disputed throughout trial and on appeal. 

However, in reading the transcript in the light most 

favorable to the defendants it is clear that there was 

sufficient evidence for the jury to decide in favor of the 

defendants on all counts. Likewise, we find the District 

Court was correct in refusing to grant a new trial on the 

basis of lack of sufficient evidence to support the verdict. 

Next appellant argues the District Court erred in 

refusing to instruct the jury on breach of the implied 

covenant of good faith and fair dealing. Appellant argues 

the covenant of good faith and fair dealing should be applied 

to Cook-Bell as real estate agents and to SHE partnership, as 

developers. 

It was not error to refuse to give the instruction as 

against Cook-Bell Real Estate because it was not shown at 

trial that Cook had actual knowledge of claimed defects in 

the land necessary to constitute bad faith. Further, while 

knowledge may be imputed to Cook as a member of the SHE 

partnership, it cannot be imputed from the SHE partnership to 

the Cook-Bell Real Estate partnership. 

It was also not error for the District Court to refuse 

to give the bad faith instruction against the SHE 

partnership. In this case, the court instructed the jury on 

constructive fraud as follows: 
Constructive fraud is a breach of duty which, 

without an actual fraudulent intent, gains 

advantage to the persons in fault by misleading 

another to her prejudice. 

The jury found no breach of duty by SHE partnership under 

this instruction which does not require a showing of 

fraudulent intent. An instruction on bad faith would require 

the plaintiff prove intentional concealment. If the 

pla.intiff could not meet her burden of proof on constructive 

fraud, she could not meet the higher burden of proof on bad 

faith. Thus the instruction would have been superfluous. 

Appellant also contends the District Court erred in 

failing to instruct on negligent misrepresentation. While 

the court did not instruct on negligent misrepresentation, it 

did instruct on constructive fraud. In Montana an action for 

negligent misrepresentation is an action for fraud, so the 

jury was adequately instructed. Falls Sand and Gravel Co. v. 

Western Concrete, Inc. (D. Mont. 1967), 270 F.Supp. 495, 502. 

Appellant contends the District Court erred in not 

granting a new trial. There were two bases for a new trial. 

First, appellant contends the District Court erred in 

allowing the jury to view the property prior to the time 

plaintiff rested her case, and in not giving a cautionary 

instruction. The record shows counsel for plaintiff made no 

objection to jury view and did not request a cautionary 

instruction. This Court will not put a district court in 

error for a procedure to which appellant did not object. 

State ex rel. Department of Highways v. DeTienne (Mont. 

1985), 707 P.2d 534, 537, 42 St-Rep. 1557, 1559. 

Second, appellant contends the District Court should 

have granted a new trial on the basis of newly discovered 

evidence as to the correct survey corner of Lot 45. She 
alleges that if the ma-rker was wrong, the property line was 

wrong and the jury was shown the wrong lot. 

The standard for determining whether newlydiscovered evidence is sufficient reason for a new 

trial is governed by the statute, section 

25-11-102 (4) , MCA, which provides that the 

newly-d.iscovered evidence must be that which the 

applicant could not with reasonable diligence have 

discovered and produced at the trial. Whether to 

grant or deny a new trial is within the sound 

discretion of the trial court. Fredricksen. v. 

Fredericksen (Mont. 1980), 605 P.2d 1135, 1137, 37 

St.Rep. 191, 193, and will not be overturned absent 

a showing of manifest abuse of that discretion. 

Giles v. Flint Valley Forest Products (1979), 179 

Mont. 382, 588 P.2d 535, 538. Every presumption is 

indulged that the movant for a new trial on the 

ground of newly-discovered evidence could have 

secured the testimony for the former trial, and the 

movant must negative any negligence on his part. 

In Re Colbert's Estate (19041, 31 Mont. 461, 80 P. 

248. The movant must show that such evidence came 

to his knowledge since the trial and that even 

through diligence it was not discovered earlier; it 

must also appear that its materiality will proba.bly 

produce a different result on trial and it is not 

merely cumulative or only tending to impeach. 

State v. Estep (1936), 103 Mont. 78, 61 P.2d 830. 

Walter v. Evans Products Co. (Mont. 19831, 672 P.2d 613, 616, 

In this case appellant did not show that she could not 

have discovered the new evidence with reasonable diligence, 

and that the new evidence would produce a materially 

different result. We hold the District Court did not abuse 

its discretion in refusing to grant a new trial. 

Appellant cl-aims the District Court erred in instructing 

the jury generally. In reviewing the jury instructions, we 

must consider them in their entirety and in light of the 

evidence introduced at trial. Brown v. North American 

Manufacturing Co. (Mont. 1978), 176 Mont. 98, 114, 576 P.2d 

711, 721. Viewed in their entirety, the instructions fairly 

instructed the jury on the issues presented by the evidence. 
Finally we turn to the issue on cross-appeal. Did the 

District Court err in failing to award attorneys fees to SHE 

partnership? SHE partnership sought attorneys fees under the 

election of remedies paragraph of the contract for deed 

between Bushnell and SHE partnership. It states: 

It is understood and agreed that the forfeiture 

privilege, a remedy in case of default above, under 

paragraph 9-a-c, shall not be exclusive and. the 

Seller reserves the right to sue for specific 

performance or breach of contract if it elects not 

to exercise the forfeiture or foreclosure clauses 

above. In the event of litigation under this 

paragraph, the Buyer agrees to pay a reasonable 

attorney's fee for an [sic] on behalf of the 

Seller's attorney. 

Attorneys fees are not available to SHE partnership under 

this section because this action was not instituted pursuant 

to the default provision of the contract. 

We affirm the judgment of District Court in all 

respects. 

We Concur: fl