Title: LEE v ANDREWS
Citation: N/A
Docket Number: 82-326
State: Montana
Issuer: Montana Supreme Court
Date: July 5, 1983

No. 82-326 IN TEIE SUPREIE COURT OF THE STATE OF MONTANA 1983 JAMES LEROY LEE, Plaintiff, Respondent and Cross-appellant, -vs- JAPlES R. APJDREWS, Defendant and Appellant. Appeal from: District Court of the Fourth Judicial District, In and for the County of Ptissoula, The IIonorable James B . Wheelis , Judge presiding. Counsel of Record: For Appellant: Worden, Thane & Haines; Ronald Bender argued, Missoula, Montana For Respondent r Garlington, Lohn & Xobinson; Sherman Lohn argued, 1/Iissoula, Montana Paul Meismer argued, ?4issoula, Montana Submitted: April 25, 1983 Decided: July 5, 1983 Clerk Mr. J u s t i c e L. C. Gulbrandson d e l i v e r e d t h e Opinion of t h e Court. A f t e r e n t e r i n g judgment f o r d e f e n d a n t , Andrews, upon a spe- c i a l j u r y v e r d i c t , t h e D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t , Missoula County, g r a n t e d p l a i n t i f f L e e ' s motion f o r new t r i a l . Andrews a p p e a l s from t h e new t r i a l o r d e r , and Lee cross- a p p e a l s , c l a i m i n g t h e D i s t r i c t Court should have d i r e c t e d v e r d i c t o r e n t e r e d judgment n o t w i t h s t a n d i n g t h e v e r d i c t f o r him. P l a i n t i f f , James Lee, and d e f e n d a n t , James Andrews, had been f r i e n d s f o r over t e n y e a r s . They were neighbors, played g o l f t o g e t h e r , and saw each o t h e r f r e q u e n t l y . Over t h e y e a r s , they had been involved i n s e v e r a l minor b u s i n e s s d e a l s . Andrews is an i n s u r a n c e a g e n t , and h a s worked f o r S t a t e Farm I n s u r a n c e Company f o r about twenty-one y e a r s . Lee had purchased automobile i n s u r a n c e from Andrews i n t h e 1 9 6 0 1 s , b u t had l e t many o f t h e s e p o l i c i e s l a p s e a f t e r s i x months. I n 1977, Lee had two f i r e i n s u r a n c e p o l i c i e s and one l i f e i n s u r a n c e p o l i c y purchased t h r o u g h Andrews. The c o n t r o v e r s y h e r e is based upon L e e ' s c l a i m t h a t Andrews breached an o r a l agreement t o p r o c u r e car i n s u r a n c e . On September 28, 1977, Lee was d r i v i n g h i s Oldsmobile Toronado and c o l l i d e d w i t h a motorcycle d r i v e n by E a r l Wilson. Wilson brought s u i t a g a i n s t Lee and obtained a judgment of about $152,000. Meanwhile, Lee had r e q u e s t e d S t a t e Farm t o r e p r e s e n t him i n t h e a c t i o n brought by Wilson. S t a t e Farm r e f u s e d and brought a d e c l a r a t o r y judgment a c t i o n i n f e d e r a l District Court, c l a i m i n g it had no o b l i g a t i o n t o defend Lee o r pay damages i n t h e Wilson a c t i o n . A f t e r a j u r y t r i a l , t h e f e d e r a l D i s t r i c t Court concluded t h a t S t a t e Farm had no o b l i g a t i o n toward L e e . On September 27, 1979, Lee f i l e d a complaint i n t h e s t a t e District C o u r t , a g a i n s t Andrews, a l l e g i n g breach of a n o r a l c o n t r a c t , t o r t , and g e n e r a l promissory e s t o p p e l . On February 1 6 , 1982, a p r e - t r i a l o r d e r was f i l e d reducing t h e c l a i m t o breach of c o n t r a c t . Lee c l a i m s t h a t an o r a l c o n t r a c t t o p r o c u r e i n s u r a n c e a r o s e from t h e f o l l o w i n g c i r c u m s t a n c e s . I n e a r l y J u n e 1977, Lee n e g o t i a t e d w i t h c a r d e a l e r , Michael Dolce, f o r t h e l e a s e of an Oldsmobile Toronado. Dolce t o l d Lee h e would need i n s u r a n c e and Lee t o l d Dolce t o c a l l Andrews' I n s u r a n c e Agency. Lee t e s t i f i e d t h a t he had t o l d Andrews he was going t o l e a s e a c a r and would need i n s u r a n c e . According t o Lee, Andrews had r e p l i e d t h a t he "would t a k e c a r e of i t . " They d i d n o t d i s c u s s t h e amount of coverage, t h e terms of t h e p o l i c y , t h e amount of t h e premium, o r t h e names of t h e i n s u r e d s . Dolce t e s t i f i e d t h a t b e f o r e d e l i v e r y of a v e h i c l e financed t h r o u g h GMAC, he was r e q u i r e d t o complete an i n s u r a n c e v e r i f i c a - t i o n form and v e r i f y t h a t t h e i n f o r m a t i o n given him by h i s p r o s p e c t i v e customer was c o r r e c t . On J u n e 1 5 , 1977, Dolce c a l l e d Andrews' o f f i c e and t a l k e d w i t h Mrs. Andrews t o v e r i f y t h e i n s u r a n c e coverage. Based on t h e i n f o r m a t i o n r e c e i v e d from Mrs. Andrews, Dolce completed t h e i n s u r a n c e v e r i f i c a t i o n form. H e wrote i n p o l i c y l i m i t s of $100,000/$300,000 f o r b o d i l y i n j u r y , and $25,000 f o r p r o p e r t y damage. H e t e s t i f i e d t h a t Mrs. Andrews t o l d him " i t would be t a k e n c a r e of." Mrs. Andrews admitted r e c e i v i n g t h e c a l l from Dolce. She made a n o t e t h a t Lee wanted automobile i n s u r a n c e , l i s t i n g t h e y e a r , make, model, and s e r i a l number of t h e c a r . Although s h e n o r m a l l y handled c a r i n s u r a n c e h e r s e l f , she placed t h e n o t e on h e r husband's desk because she r e a l i z e d t h a t Lee's i n s u r a n c e would not be handled i n t h e o r d i n a r y manner. She a l s o t e s t i f i e d t h a t she assumed L e e would come i n t o t h e i r o f f i c e and complete i n s u r a n c e a p p l i c a t i o n forms. B a r b a r a Sharp, an a g e n t f o r GMAC, w r o t e "confirmed 6/20" on t h e i n s u r a n c e v e r i f i c a t i o n form completed by Dolce. Although s h e d i d n o t r e c a l l t h e p a r t i c u l a r c o n v e r s a t i o n , Barbara Sharp t e s t i f i e d t h a t she would not have w r i t t e n "confirmed" on t h e form had s h e n o t c a l l e d ~ n d r e w s ' I n s u r a n c e and confirmed i n s u r a n c e coverage on t h e l e a s e d v e h i c l e . While Lee and Andrews saw and spoke t o each o t h e r many times over t h e n e x t few months, Lee never completed an i n s u r a n c e a p p l i - c a t i o n form nor paid any premium. Based on t h e above evidence, t h e j u r y r e t u r n e d a s p e c i a l ver- d i c t form w i t h t h e following f i n d i n g s : 1. Did J i m Lee r e q u e s t i n s u r a n c e f o r t h e 1977 Oldsmobile Toronado from J i m Andrews? ANSWER: Yes 8 , No 4 2. Did J i m Andrews a g r e e t o p r o c u r e i n s u r a n c e f o r J i m Lee? ANSWER: Y e s 9 , N o 3 3 . W a s t h e r e s u f f i c i e n t i n f o r m a t i o n r e g a r d i n g L e e ' s i n s u r a n c e needs so t h a t J i m Andrews could have, using r e a s o n a b l e c a r e and s k i l l i n making i n q u i r i e s and assembling i n f o r m a t i o n , o b t a i n e d t h e d e t a i l s n e c e s s a r y t o c a r r y any agreement. ANSWER: Y e s 9 , No 3 4 . Did J i m Andrews f a i l t o e x e r c i s e o r d i n a r y c a r e and r e a s o n a b l e d i l i g e n c e i n procuring t h e i n s u r a n c e ? ANSWER: Yes 8 , N o 4 5. Did J i m Lee, by any f a i l u r e of coopera- t i o n , o r by h i s a c t i o n s o r i n a c t i o n s , p r e v e n t J i m Andrews from procuring t h e i n s u r a n c e ? ANSWER: Yes 1 2 , N o 0 6 . Did J i m Andrews f a i l t o p r o c u r e i n s u r a n c e f o r t h e Toronado a s he agreed? ANSWER: Yes 8, NO 4 7. Did J i m Andrews r e c e i v e any c o n s i d e r a t i o n from Lee f o r undertaking t o p r o v i d e such i n s u r a n c e coverage? ANSWER: Yes 8 , No 4 I n f i n d i n g s 8 - 12, t h e j u r y found t h a t Lee and Andrews had n o t agreed on t h e s p e c i f i c terms of t h e c o n t r a c t , such a s , t h e amount of i n s u r a n c e , who would be i n s u r e d , and who would be r e s p o n s i b l e f o r t h e premiums. While t h e j u r y found t h a t Lee b e l i e v e d he had i n s u r a n c e , t h e j u r y a l s o found t h a t t h i s b e l i e f was unreasonable. The j u r y t h e n awarded Lee $80,150 i n damages. S e v e r a l weeks a f t e r t h e v e r d i c t , and a f t e r d i s c u s s i o n w i t h c o u n s e l f o r both p a r t i e s , t h e District Court e n t e r e d judgment f o r Andrews. Lee f i l e d s e v e r a l p o s t - t r i a l motions, seeking i n t h e a l t e r n a t i v e , judgment notwithstanding t h e v e r d i c t , amendment of t h e judgment, o r a new t r i a l . The District Court granted L e e ' s motion f o r new t r i a l , and d i d n ' t d i s c u s s t h e motions f o r amended j udgment and j udgmen t n o t w i t h s t a n d i n g t h e v e r d i c t . The District Court granted a new t r i a l on t h e grounds t h a t Lee had been denied h i s r i g h t t o a f a i r t r i a l . Lee had t h e r i g h t t o choose h i s form of a c t i o n and had chosen t o pursue s o l e l y t h e breach of c o n t r a c t a c t i o n . C o u r t ' s i n s t r u c t i o n 10 d e s c r i b e d t h e d u t y of an agent or broker i n terms of n e g l i g e n c e , n o t c o n t r a c t . The District Court reasoned t h a t t h e j u r y was o b v i o u s l y confused because it d i d n ' t g r a n t t h e t o t a l amount of u n c o n t r a d i c t e d dama- g e s introduced i n t o evidence. By a p p o r t i o n i n g damages, t h e j u r y seemingly a p p l i e d comparative n e g l i g e n c e p r i n c i p l e s . Lee was t h e r e b y denied h i s r i g h t t o a f a i r t r i a l and a new t r i a l was g r a n t e d . Lee on cross-appeal argues t h a t t h e D i s t r i c t Court e r r e d by n o t g r a n t i n g him a d i r e c t e d v e r d i c t o r judgment n o t w i t h s t a n d i n g t h e v e r d i c t . H e argues t h a t t h e r e is no evidence t o s u p p o r t t h e j u r y f i n d i n g t h a t Lee p r e v e n t e d Andrews from procuring i n s u r a n c e . ( F i n d i n g # 5 ) Absent t h i s f i n d i n g , Lee c l a i m s t h a t t h e v e r d i c t s u p p o r t s a judgment f o r him. ( S e e , i n p a r t i c u l a r , f i n d i n g s #2 and # 3 ) W e a g r e e w i t h Lee's c o n t e n t i o n . There is no evidence i n t h e record t o s u p p o r t t h e j u r y ' s f i n d i n g t h a t Lee p r e v e n t e d Andrews from procuring t h e i n s u r a n c e . Applying t h e d o c t r i n e of c o l l a t e r a l e s t o p p e l from t h e f i n d i n g s i n S t a t e Farm's f e d e r a l a c t i o n , t h e D i s t r i c t Court s u s t a i n e d objec- t i o n s t o any testimony i n d i c a t i n g t h a t Andrews had t o l d Lee t o come i n t o h i s o f f i c e and complete an a p p l i c a t i o n . I n f a c t , t h e o n l y evidence on t h i s p o i n t was L e e ' s own testimony denying t h a t Andrews t o l d him he would have t o come i n t o t h e o f f i c e and complete an a p p l i c a t i o n . Excluding t h e f i n d i n g t h a t L e e prevented Andrews from pro- c u r i n g i n s u r a n c e , t h e remaining f i n d i n g s s u p p o r t judgment f o r Lee. W e t h e r e f o r e o r d e r t h a t L e e be granted judgment not- w i t h s t a n d i n g t h e v e r d i c t , and remand f o r a new t r i a l on t h e i s s u e of damages only. Andrews argues t h a t on remand t h i s Court should l i m i t t h e e v i d e n c e of damages t o t h e l i m i t s of t h e a l l e g e d i n s u r a n c e p o l i c y . Lee, on t h e o t h e r hand, argues t h a t damages should be l i m i t e d o n l y by t h e o p e r a t i o n of s e c t i o n 27-1-311, MCA, which p r o v i d e s t h a t t h e measure of damages f o r breach of c o n t r a c t " i s t h e amount which w i l l compensate t h e p a r t y aggrieved f o r a l l t h e d e t r i m e n t which was p r o x i m a t e l y caused t h e r e b y o r i n t h e o r d i n a r y c o u r s e of t h i n g s would be l i k e l y t o r e s u l t therefrom." I n Gay v. Lavina S t a t e Bank ( 1 9 2 1 ) , 61 Mont. 449, 202 P. 753, t h i s Court s t a t e d : "And a s between t h e insured and h i s own a g e n t o r broker a u t h o r i z e d by him t o p r o c u r e i n s u r a n c e t h e r e is t h e usual o b l i g a t i o n on t h e p a r t of t h e l a t t e r t o c a r r y o u t t h e i n s t r u c - t i o n s given him and f a i t h f u l l y d i s c h a r g e t h e t r u s t reposed i n him, and he may become l i a b l e i n damages f o r breach of duty. --- I f he is i n s t r u c t e d t o p r o c u r e s p e c i f i c i n s u r a n c e and - f a i l s --- t o do s o , he is l i a b l e t o h i s p r i n c i p a l f o r t h e damage suffered-by r e a s o n o f t h e want --- o f such i n s u r a n c e . The l i a b i l i t y o f t h e - a g e n t w i t h r e s p e c t t o t h e l o s s is t h a t which would - - - - - - - have f a l l e n u p o n t h e company had t h e i n s u r a n s been e f f e c t e d a s contemplated. . . ." 202 P. - - a t 755. (emphasis added) Andrews is t h e r e f o r e p o s s i b l y l i a b l e f o r a l l damages S t a t e Farm would have p a i d . S t a t e Farm would have been r e s p o n s i b l e f o r t h e d e f e n s e of Lee i n Wilson's s u i t a g a i n s t him, and r e s p o n s i b l e f o r t h e damages awarded i n t h a t a c t i o n t o t h e amount of i t s p o l i c y . F u r t h e r , had S t a t e Farm completed t h e s e o b l i g a t i o n s , Lee would not have had t o borrow money a t 20 p e r c e n t i n t e r e s t . Under Gay, t h e n , damages from t h e Wilson judgment, a t t o r n e y s f e e s i n t h a t a c t i o n , and t h e damages r e s u l t i n g from having t o borrow money a t 20 p e r c e n t i n t e r e s t a r e a l l proper evidence of damages. W e remand f o r e n t r y of judgment n o t w i t h s t a n d i n g t h e v e r d i c t i n f a v o r of Lee, and f o r a new t r rile concur: - Chief J u s t i c e Justices Mr. Justice Fred J. Weber dissents as follows: The majority opinion overruled the order of the District Court granting the plaintiff's motion for a new trial on all issues and requires the entry of judgment for the plaintiff Lee, with a new trial to be limited to a determination of plaintiff's damages. I respectfully dissent. In its Opinion and Order granting the new trial, the District Court pointed out that plaintiff initially sought damages on the basis of a breach of an oral contract, tort and general promissory estoppel; but pursuant to the change in contentions on the part of the plaintiff, the plaintiff reduced "his cause of action for trial to the single claim of breach of oral contract. " The District Court therefore concluded that the only cause of action on which the plaintiff was entitled to proceed and recover was the breach of an oral contract. Notwithstanding that limitation of issues, at the request of the defendant, the District Court gave the following instruction No. 10 on negligence to the jury: "Negligence on behalf of an agent or broker is the failure to exercise skill, care and diligence of a reasonable and prudent agent or broker under the circumstances." Upon consideration of the post-trial motions, the District Court concluded that a new trial was necessary. The District Court referred to section 25-11-102 (1) , MCA, which provides : "The former verdict or other decision may be vacated and a new trial granted . . . for any of the following causes materially affecting the substantial rights of such party: " (1) irregularity in the proceedings of the court . . . or any order of the court . . . by which either party was prevented from having a fair trial; " (6) insufficiency of the evidence to justify the verdict or other decision or that is against the law. " In reaching its conclusion that the new trial was warranted the District Court stated: "This Court grants plaintiff's Motion for a new trial solely on the ground that its giving of defendant's instruction regarding negligence on behalf of an agent or broker as well as allowing into evidence testimony of witnesses directed at demonstrating the defendant's exercise of reasonable care improperly interjected negligence concepts; this error resulted in jury confusion which prevented plaintiff from having a fair trial and is inconsistent with substantial justice. M.C.A. 525-11-102(1) (1981) ; Mont. R. Civ. P. 61. For these reasons, this Court will neither consider nor discuss plaintiff's argument that there is insufficient evidence to support the findings of the jury . " Having concluded that there was such an irregularity, the District Court then addressed the issue of whether the irregularity materially affected the plaintiff's substantial rights by depriving him of a fair trial. Rasmussen v. Siebert (1969) , 153 Mont. 286, 456 P. 2d 835. The ~istrict Court analyzed the instructions, including the above instruction No. 10 and the conclusions on the part of the jury as to the damages to be awarded, and concluded that the jury was confused by the negligence instruction and erroneously applied negligence concepts and comparative negligence principles. In conclusion the District Court stated: "The giving of the negligence instruction materially affected a substantial right of the plaintiff and this court's refusal to reject the instruction was inconsistent with substantial justice. MCA, 525-11-102 (1) , (1981) ." The District Court has set forth a comprehensive analysis of the problems and of its conclusions upon which the award of a new trial was based. The standard which is to be applied by this Court in reviewing that order granting a new trial is of long standing and is set forth in Moen v. Peter Kiewit & Sons' Co. (1982) , Mont . , 655 P.2d 482, 487, 39 St.Rep. 2209, 2215 as follows: ". . . This decades-old standard has been fleshed out by caselaw establishing that the decision to grant or deny a new trial is within the sound discretion of the trial court, Fredericksen v. Fredericksen (1980), Mont. 605 P.2d 1135, 1137 3 7 St.Rep. 191, 193, and will not be overturned absent a showing df a manifest abuse of that discretion. Giles v. Flint Val Forest Products (1979), 179 Mont. 382, 588 ~.2d 535, 538, 36 St.Rep. 23, 26." The majority opinion has not set forth any showing which can be construed as a "manifest abuse of discretion" by the trial court. In addition, I agree with the analysis of the District Court in concluding that the negligence instruction No. 10 was of necessity confusing to the jury. The special verdict form cited in the majority opinion was also confusing. Verdict question No. 4 stated: "Did Jim Andrews [defendant] fail to exercise ordinary care and reasonable diligence in procuring the insurance? Answer: Yes-8, No-4" That question injected a negligence standard rather than a standard relating to the breach of oral contract. Finding ample facts and law to sustain the order, and in the absence of any showing of manifest abuse of discretion, I would affirm the order granting new trial;_*--..-, \ , .. . . ' Mr. Chlef J u s t i c e Frank I. Haswell, d i s s e n t i n g : I concur i n t h e f o r e g o i n g d i s s e n t of Mr. J u s t i c e Weber. I would add t h a t t h e j u r y was a r g u a b l y confused by I n s t r u c t i o n No. 10 and t h e s p e c i a l i n t e r r o g a t o r i e s . The D i s t r i c t Court s o found, and t h e r e is no abuse of d i s c r e t i o n i n g r a n t i n g a new t r i a l under such circumstances. On r e t r i a l , p l a i n t i f f ' s damages should n o t be l i m i t e d t o t h e l i a b i l i t y l i m i t s of t h e supposed p o l i c y . Montana law p r o v i d e s t h a t t h e measure of damages f o r breach of c o n t r a c t " i s t h e amount which w i l l compensate t h e p a r t y aggrieved f o r a l l t h e detriment which was p r o x i m a t e l y caused t h e r e b y o r i n t h e o r d i n a r y c o u r s e of t h i n g s would be l i k e l y t o r e s u l t therefrom." S e c t i o n 27-1-311, MCA. Chief ~ u s t i c e " --- M r . J u s t i c e Daniel J. Shea d i s s e n t s and w i l l f i l e a w r i t t e n d i s s e n t later.