Opinion ID: 879682
Heading Depth: 1
Heading Rank: 1

Heading: The actions of defendant Marcus McBeen in

Text: representing and warranting that the operating statement of the Johnson-Gardner Saloon for 1982 as a true and accurate statement of the gross income and expenses were false, deceitful of material facts, and constitute fraud. J. Defendant Marcus McBeen intended that plaintiffs should rely upon said representations. Plaintiffs were ignorant of the falsity of the representations, did in fact rely on them as they had a right to do, and thereby suffered injury. K. Plaintiffs William Selvidge and Virgie Renner are entitled to damages of $31,338 for net business loss on said business for the years 1983 through 1985, plus $30,900 for lost wages during said time, making a total of $62,238.00, which amount will compensate them for all the detriment proximately caused by Marcus McBeen's actions. L. Plaintiffs have not established that they are entitled to have said contract reformed or the price paid for the property and business reduced. M. Plaintiffs are not entitled to an award for loss of opportunity to earn a return on their investment and capital as that would be a duplication of the damages referred to in conclusion K above, and because the value of the real and personal property and business was not excessive or grossly disproportionate to the price paid by plaintiffs. N. Plaintiffs are entitled, however, to punitive damages against Marcus McBeen in the sum of $10,000.00 to deter similar future conduct by him. P. Plaintiffs were not contributorily negligent herein, and their damages should not be reduced. Because of some seemingly contradictory findings of fact with these conclusions of law, the District Court followed up the conclusions with an explanatory comment. EXPLANATORY COMMENT In case the foregoing findings or conclusions seem somewhat inconsistent, the court finds that while plaintiffs did make a thorough investigation of their own prior to purchasing the saloon and agree in the contract of sale they were relying on that and not on any representations of the sellers, and while the court also finds plaintiffs did not pay a grossly disproportionate or unreasonable price for the premises and business, and that they did have opportunity to examine McBeens records, I still find McBeen materially misrepresented the gross sales he reported in the operating statement he prepared, and because plaintiffs were entitled to and did rely on this, they are entitled to the damages proximately caused thereby, plus moderate punitive damages. However, plaintiffs seek duplicative, speculative and unjustified amounts of damages, both actual and punitive, and I have awarded only those that are reasonably certain. Ms. Renner's inconsistent and exaggerated testimony has caused me to reduce somewhat the punitive damages I might have otherwise awarded. The conclusions of law considered in light of the facts of this case and the judges explanatory comment satisfies the statutory requirements for punitive damages. We will not disturb the punitive award, nor the award for compensatory damages. Issue No. 4 Lastly, appellants allege that the District Court erred in failing to award attorney fees. In the absence of a contractual agreement or specific statutory authority, attorney fees are not recoverable as costs by the prevailing party. State ex rel. Wilson v. Department of Natural Resources and Conservation (1982), 199 Mont. 189, 648 P.2d 766, 769; § 25-10-301, MCA. In this case, appellants recovered on their allegation of fraud and misrepresentation--a tort. Their testimony indicates that they are satisfied with all the buildings and fixtures which they purchased under contract. The court found the purchase price to be reasonable. Because they recovered under tort law, appellants were awarded $10,000 punitives. There is no statutory authority nor contractual agreement which gives rise to an award of attorney fees in this case. We affirm the District Court's refusal to award attorney fees to Selvidge and Renner. Issue No. 5 McBeens' first issues raised on counter-claim alleges that the finding of fraud was not supported by the facts. The elements of fraud were outlined under issue no. 2 above. The District Court's relevant findings of fact, which were supported by the evidence include: 45. Defendant Marcus McBeen knew that the saloon business in question did not have gross sales in 1982 of $83,779 or gross rental income of $2,100. 46. McBeens said operating statement (EX. ll), financial statement (Ex. 14) , and 1982 income tax return (Ex. 15), were all prepared by Marcus McBeen . He is an experienced businessman, and engaged in and familiar with the management and running of several different and diverse businesses while in Gardiner, namely, a lumber yard, real estate business, home construction, solar heating, and a saloon. 47. The documents referred to in finding 4 6 were prepared by McBeen to purportedly accurately reflect his total business income and financial status, and were prepared for use of lending institutions and Internal Revenue Service, and only gratuitously given plaintiffs according to Marcus. The court finds, however, that the operating statement is not only inaccurate and vague, but misleading to anyone to whom he submitted it. 49. Plaintiffs had the right to rely upon the representation of defendant Marcus McBeen concerning the financial condition of business in question, and in fact plaintiffs did rely thereon, as well as on their own experience, observations and investigation, purchasing the business. 50. The representations made by Marcus McBeen to Selvidge and Renner were false and were material, and he intended plaintiffs to rely thereon to induce them to purchase said saloon business. 51. Plaintiffs were ignorant of the falsity of defendant McBeen's representations at the time of the purchase, and as a result of his false representations and plaintiffs reliance thereon, plaintiffs suffered injury. 52. That once plaintiffs purchased the business and. took possession, they operated it on a sound basis and increased their business some each year. However, they claim to have suffered annual losses as indicated by their partnership income tax returns (Ex. 2) including deductions for depreciation, as follows: Total ........ $31,338 53. That plaintiffs have suffered loss of reasonable wages since purchasing the business of $30,900. 54. That plaintiffs losses mentioned in findings 52 and 53 are directly attributable to the misrepresentations and deceitful statements of Marcus McBeen. 57. That the court does find, however, that Marcus McBeen's omissions and representations in the sale were fraudulent and oppressive toward plaintiffs, and they should be awarded punitive damages of $10,000 to deter similar future conduct. 60. The only damages plaintiffs have established are from Marcus McBeen's tort of fraud, so that no attorneys fees are awardable on the contract to either side. Appellants offer no evidence to contradict or show that these findings are clearly erroneous. We affirm the District Court on the issue of fraud. McBeens' last two contentions alleging that appellants' damages were not caused by McBeens' misrepresentations and that punitive damages were improperly awarded have been adequately addressed in the previous discussion. / Affirmed on all issues.