No. 89-137 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

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*. f . i 5 C' 

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E. NEVEN ZUGG AND SCOTT SYME, f. -- 

II - -1 

Plaintiffs and Appellants, I I - - - 

-vs- .- 

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.. , 

JOHN RAMAGE, M. RODNEY YOUNG, et al., $-_A 

Defendants, Cross-Appellants and Respondents. r A? 

LJ 1 

APPEAL FROM: ~istrict Court of the ~ineteenth ~udicial ~istrict, 

In and for the County of Lincoln, 

The Honorable Robert Keller, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Channing J. ~artelius; ~artelius, Ferguson & Baker, 

Great Falls, Montana 

William A. Douglas; Douglas & sprinkle, ~ibby, Montana 

For ~espondent/Cross-Appellant: 

Kenneth E 0'~rien; Hash, 0'~rien & Bartlett, ~alispell, 

Montana 

Paul C. Meismer; Garlington, Lohn & ~obinson, Missoula, 

Montana 

Submitted on Briefs: June 30, 1989 

Decided: September 21, 1989 

Filed: 
Chief Justice J. A. Turnage delivered the Opinion of the Court. 

This suit arose out of a sale of commercial real estate in 

Lincoln County, Montana. In a trial in the District Court of the 

Nineteenth Judicial District, the jury returned a verdict against 

defendant John Ramage for $400,000 in compensatory damages and 

$300,000 in punitive damages. The court entered a directed verdict 

for defendant M. Rodney Young. Plaintiffs appeal from the directed 

verdict and denial of their motion for a new trial as to defendant 

Young. Ramage appeals from the judgment against him. We affirm 

the judgment as to defendant Ramage and reverse and remand as to 

defendant Young. 

The issues raised by plaintiffs are: 

1. Did the trial court err in denying the motion for a new 

trial and granting a directed verdict as to defendant Young? 

2. Did the trial court err in granting defendant Young's 

motion in limine to exclude all evidence of his resume, financial 

statement, bankruptcy petition and character? 

Defendant Ramage raises the following issues: 

3. Did the trial court err in denying Ramage's motion for a 

directed verdict and for a judgment notwithstanding the verdict? 

4. Did the trial court err in permitting plaintiff Zugg to 

testify as to the 1983 value of the property? 

5. Did the trial court err in permitting Jacqueline Tisher 

to testify concerning the 1983 value of the resort improvements and 

lease? 

6. Did the trial court err in instructing the jury on the 

claim of emotional distress? 

7. Is the award of punitive damages so excessive as to give 

rise to a presumption that they were awarded as a result of passion 

or prejudice? 
On May 4, 1984, Neven Zugg and Scott Syme entered into an 

agreement to purchase the Koocanusa Resort in Lincoln County, 

Montana, for $660,000. On December 6, 1985, they filed their 

complaint in this suit, alleging that in selling them the resort, 

the defendants had misrepresented its income and condition. 

Defendant John Ramage was the seller of the resort. Defendant M. 

Rodney Young was the realtor who made the sale. 

At trial, plaintiffs presented evidence that they had been 

misled verbally by both Ramage and Young and in a brochure prepared 

by Ramage to believe that the resort had grossed $150,000 in income 

in 1983. In contrast, Ramage1s 1983 income tax return reported 

gross income on the resort of only $94,762.03. The Forest Service 

leased land to the resort and required annual income reports on the 

resort. Ramage's 1983 report to the Forest Service showed gross 

income of only $59,847.51. The plaintiffs testified that they had 

originally asked to see the books of the resort for the previous 

year, but they signed an agreement waiving production of the books 

after Ramage told them that the books could not be found. 

Plaintiffs testified that Ramage guaranteed them that the resort 

would do $150,000 worth of business in 1984, but Zugg testified 

that it only did $96,000 worth of business that year, despite 

plaintiffs1 best efforts. 

Plaintiff Zugg also testified at trial that his purchase of 

the resort was only possible if he first sold a sports complex and 

motel he owned in Plentywood, Montana. He testified that he was 

induced to enter the contract to buy the resort by defendant 

Youngls purchase of the sports complex and motel. Young later 

defaulted on that contract, and the sports complex and motel were 

returned to Zugg. 
I 

Did the trial court err in denying the motion for a new trial 

and granting a directed verdict as to defendant Young? 

Plaintiffs argue that entry of a directed verdict as to 

defendant Young was improper. They cite the standard that a 

directed verdict should only be granted when, viewing the evidence 

in the light most favorable to the nonmoving party, reasonable 

persons could not differ as to the conclusions to be drawn from the 

evidence. They assert that they presented evidence that Young 

negligently failed to conduct a proper investigation as to certain 

facts about the resort, negligently misrepresented material facts, 

and committed constructive fraud. 

Zugg and Syme both testified that they relied upon Young's 

representations about the resort because he held himself out as 

an experienced and able investment analyst. It was undisputed that 

Young made no efforts to confirm Ramage's representations about the 

income of the resort. Yet plaintiffs testified that he repeatedly 

told them that the income figures in the brochure prepared by 

Ramage could be relied upon. Plaintiffs had a real estate broker 

testify that Young should have checked out Ramage's representations 

about the resort's income as part of his duty to prospective 

buyers. Zugg testified that Young provided them with a financial 

statement about himself as he prepared to purchase Zugg's Plentywood property, but that he did not disclose that he was borrowing 

money from Ramage to fund the purchase. 

We conclude that the plaintiffs presented sufficient evidence 

of Young's negligence and constructive fraud that these issues 

should have been presented to the jury. We therefore remand this 

case to the District Court for retrial as to defendant Young. 
I1 

Did the trial court err in granting defendant Young's motion 

in limine to exclude all evidence of his resume, financial 

statement, bankruptcy petition and character? 

Plaintiffs maintain that the charge of fraud brings Young's 

character directly in issue. They argue that they should have been 

able to inquire into Young's character by presenting evidence of 

his financial condition and contrasting that with his representations to them about his financial capabilities. They therefore 

assert that granting Young's motion in limine to exclude such 

evidence was error. 

Questions of the admissibility of evidence are left largely 

to the discretion of the trial court, which will be overturned only 

in cases of manifest abuse of that discretion. Britton v. Farmer's 

Ins. Group (1986), 221 Mont. 67, 86, 721 P.2d 303, 315. We refuse 

to disturb the District Court's ruling on this issue. We do note 

that counsel may wish to try to introduce some or all of this 

evidence on retrial. 

Did the trial court err in denying Ramage's motion for a 

directed verdict and for a judgment notwithstanding the verdict? 

Ramage argues that plaintiffs did not prove the following 

elements necessary to establish a claim of fraud: reliance, right 

to rely, and damages. Ramage asserts that plaintiffst lack of 

reliance on his representations about the income of the resort was 

demonstrated by Zuggfs request that his accountant be allowed to 

analyze the books. Ramage also notes that plaintiffs successfully 

bargained for Ramage's guarantee that if there was not at least a 

$150,000 gross income for 1984, he would grant a $14,000 refund of 

the purchase price. Ramage claims that the absence of a right to 
rely was shown by the Itred flagn of the missing books, which he 

says Young should have recognized. Also, he brings up the 

plaintiffs' failure to get financial information on the resort from 

the Forest Service. Finally, Ramage asserts that plaintiffs failed 

to submit evidence of the fair market value of the property, which 

was necessary to calculate damages. 

Both Zugg and Syme testified at length about their reliance 

on Ramage's representations and assurances of the income of the 

resort property. They both testified that Ramage strongly 

discouraged them from asking questions directly of Forest Service 

persons and told them that any questions directed to the Forest 

Service should go through him. The question of plaintiffst right 

to rely on the representations of a seller of real property about 

the property is, we believe, peculiarly in the province of a jury. 

Zugg testified as to the value of the property. This testimony is 

discussed below under issue IV. After reviewing the record, we 

conclude that there was sufficient evidence to support submitting 

the issue of fraud to the jury and to support the jury's verdict. 

IV 

Did the trial court err in permitting plaintiff Zugg to 

testify as to the 1983 value of the property? 

Over Ramage's objection, Zugg was allowed to give his 

estimate of the value of the resort. Ramage maintains that 

although an owner may testify as to the market value of his 

property, Zuggts testimony was not reasonable and should not have 

been allowed. 

This Court has recognized the right of a landowner to testify 

as to the value of his property. State Highway Commission v. Marsh 

(1974), 165 Mont. 198, 202-03, 527 P.2d 573, 575. The record 

indicates that Zugg based his valuation of the resort on cash flow 
during the time he and Syme owned it. The District Court accepted 

this as reasonable. Ramage was allowed to present his own 

testimony of the value of the resort, so that the jurors were not 

left with Zuggls opinion alone. We find no cause to disturb the 

court's ruling in permitting Zugg to testify about the resort's 

value. 

v 

Did the trial court err in permitting Jacqueline Tisher to 

testify concerning the 1983 value of the resort improvements and 

lease? 

Jacqueline Tisher, the Lincoln County appraiser, testified for 

plaintiffs, giving her valuation of the resort for the year 1983. 

Ramage argues that because her valuation was based upon 1978 and 

1972 figures, it was inaccurate and should not have been allowed 

into evidence. Also, Ramage asserts that it was not established 

that Tisher was qualified to testify as an expert about the 

resort's value. 

The determination of whether a witness is qualified as an 

expert is within the discretion of the trial court. State v. Berg 

(1985), 215 Mont. 431, 433, 697 P.2d 1365, 1366-67. Jacqueline 

Tisher testified that she had been the appraiser for the county 

since 1974. Her testimony indicated that she did numerous property 

appraisals in Lincoln County each year. Although she testified 

that she used a 1978 value and a 1972 market, Tisherls estimate 

of market value was then calculated to reflect what the property 

was worth in 1983. We hold that the ~istrict Court did not err in 

permitting Tisher to testify. 
VI 

Did the trial court err in instructing the jury on the claim 

of emotional distress? 

Ramage argues that there was insufficient evidence to support 

an award of damages for emotional distress. Specifically, he 

claims that there was no evidence that plaintiffs' emotional 

distress was severe and that there was no showing of a substantial 

invasion of a legally-protected interest, as required to support 

damages. See Johnson v. Supersave Markets, Inc. (1984) , 211 Mont. 

465, 686 P.2d 209. 

Zugg testified that he had to go to the doctor for chest pains 

as a result of his experience with the resort. He also testified 

that he had worries because of no longer being financially stable 

and that he had suffered a lot of sleepless nights. Syme testified 

that he had been forced to borrow money from his grandfather and 

had not been able to pay it back, transforming a Itreal goodn1 

relationship into a shaky one. He also testified that he had 

become cranky a lot and had lost sleep over the situation. 

Although the amount of evidence of emotional distress is close to 

the line in this case, we conclude that this testimony was 

sufficient to support submission of the issue of emotional distress 

to the jury. 

VII 

Is the award of punitive damages so excessive as to give rise 

to a presumption that they were awarded as a result of passion or 

prejudice? 

Ramage claims that the $300,000 in punitive damages awarded 

by the jury is so excessive in relation to his negative net worth, 

of which the jury was aware, as to shock onels conscience. 

However, defendant Is net worth is only one of the factors to be 
considered in reviewing an award of punitive damages. Section 27- 

1-221, MCA. In light of all the evidence presented, including that 

on the extent to which plaintiffs were damaged and the manner in 

which they were defrauded, we do not find the award of punitive 

damages excessive. 

Affirmed in part and reversed and remanded as to defendant 

Young . 

We concur: