Court Opinion

ID: 883464
Source: CourtListenerOpinion
Date Created: 2013-06-05 02:22:50.617443+00
Date Added: 2024-06-11T15:12:24.415921
License: Public Domain

NO.       95-148
               IN THE SUPREMECOURT OF THE STATE OF MONTANA
                                              1995

V.K.     PUTMAN, INC.,
              Plaintiff       and Appellant,
         v.
MICHAEL HARDIN,
              Defendant       and Respondent.

APPEAL FROM:          District  Court of the Eighteenth  Judicial District,
                      In and for the County of Gallatin,
                      The Honorable Larry W. Moran, Judge presiding.

COUNSELOF RECORD:
              For Appellant:
                      Lyman H. Bennett,           III,   Morrow,      Sedivy   & Bennett,
                      Bozeman, Montana
              For Respondent:
                      Derik    Pomeroy,       Bozeman, Montana

                                            Submitted    on Briefs:       August    10, 1995
                                                           Decided:       November 14, 1995
Filed:
Justice         William              E.      Hunt,        Sr.        delivered            the       Opinion           of        the     Court.

          Pursuant             to      Section              I,     Paragraph             3(c),        Montana          Supreme                Court
1995 Internal                  Operating                Rules,            the     following           decision              shall         not      be
cited      as precedent                     and shall              be published                 by its       filing             as a public

document          with         the         Clerk       of this            Court         and by a report                    of    its      result

to     State      Reporter                 Publishing                Company            and West           Publishing                  Company,

          In    August               1990,            Appellant                 V.K.     Putman            (Putman)              instituted

proceedings               in         the         Eighteenth               Judicial              District           Court,              Gallatin

County,         seeking              damages            for        breach          of    contract           and failure                   to      pay

for       goods          and          services                   rendered.                Respondent               Michael                Hardin

(Hardin)          denied             the      allegations                  and filed             a counterclaim,                       alleging

Putman         breached              the         contract           and seeking                 consequential                   damages.              A

jury      found          that          both           parties             breached            the      contract                 and     awarded

damages         accordingly.                       Plaintiff              Putman         appeals           and Defendant                  Hardin

cross-appeals.

          We affirm.

                                                                        ISSUES

          We restate                 the         issues           as follows:

          1.      Did          the         District              Court          abuse     its       discretion                  by allowing

the     testimony              of         three        former           employees             of    V.K.      Putman,                 Inc.?

          2.      Did          the         District               Court         abuse     its       discretion                  by granting

Putman's          motion              to     dismiss              any      claim        for      punitive          damages?

          3.       Did         the         District               Court         abuse     its       discretion                  by     refusing

Hardin's          offered                 jury        instruction                 on mitigation               of      damages?
          4.      Did the District              Court       abuse its             discretion           by refusing               to
allow      Hardin           to     amend his        counterclaim               at       the     conclusion             of   the
evidence?
                                                            FACTS
          V.K.       Putman owns V.K.                   Putman,        Inc.,         a trucking                company in
Belgrade,           Montana.           Michael         Hardin        was an owner/operator                          who owned
his      own truck           but who did not own a trailer.
          In March 1989,                   Putman and Hardin                entered            into     a contract               by
which          Putman agreed               to provide         Hardin         with        a trailer             and Hardin
agreed          to haul          various      commodities            for     Putman.
          The contract               stated      that       Putman would                make every             reasonable
effort          to maximize           the volume of traffic                       for     Hardin        to transport.
It       also       stated          that      Hardin        was       responsible                for         fuel       taxes,
licensing            fees,        and equipment             maintenance.                 The contract                  further
provided           that      Hardin        would receive             no compensation                   for     "deadhead"
runs,      which           are trips         made from one location                           to another            when the
truck        is    empty.
          In January              1990,      Putman was informed                     that       Hardin's            wife    was

pregnant.             Shortly         thereafter,            Hardin        began experiencing                        problems
at work,          including          longer      layovers,           more deadhead runs,                      and greater
difficulty             in arranging            to haul        the type             of load        he preferred.
          In April           1990, Hardin           began pulling                 a larger        trailer            supplied
by Putman.                 Hardin         alleged      at    trial         that      Putman offered                    him the
trailer            after           they       discussed              the      difficulties                   Hardin          was
experiencing.                    Hardin      further        alleged         Putman told               him he needed a
bigger          trailer,          and Hardin        agreed to drive                  the bigger              trailer        on a

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trial      basis       only.        For his          part,          Putman alleged             Hardin       requested
the bigger         trailer,         and represented                   to Putman that            he wished          to buy

         Putman drew up a lease-purchase                                    agreement         and Hardin               began
using      the larger          trailer.           Putman also began paying                       Hardin         a higher
percentage           of the profits,              allegedly           because he believed                  Hardin        was
buying      the bigger          trailer.             However,         Hardin        never     signed       the lease-
purchase       agreement.              Hardin's         profits            continued         to decline,           and in
late     May 1990,          he quit         working          for     Putman.
        At trial         for    breach         of contract,                Putman presented              evidence          to
support        his      claim      that        Hardin         owed him money for                       tires,          truck
repairs,        fuel     taxes,         and licensing                 fees.
         Hardinpresented                  evidence       to show Putman breached                        the contract
by failing           to exert       every       reasonable                effort     to provide          Hardin         with
as large        a volume          of      cargo       traffic          as possible.               Hardin         alleged
Putman breached                the contract             in order              to force       Hardin's           pregnant
wife     off    the health             insurance         plan.
         In the late            1980's,         the group health                    plan    which       covered         V.K.
Putman,        Inc.     suffered           massive       losses,            due in part          to the birth              of
an employee's            premature           twins,      which cost the insurer                        approximately
$50,000.              The      insurance             company's              losses         resulted        in      higher
premiums.             Although         the employees                 of V.K.        Putman,      Inc.      paid        their
own premiums,                 a former          employee             of      Putman        testified            that      the
insurance          agent told          him the company plan                        could not afford              any more
pregnancies.              The insurance               agent          denied        making such a statement.
         Hardin's           problems          began          after         he informed           Putman          of     Mrs.

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Hardin's          pregnancy.               In essence,          Hardin's          breach      of contract              theory
was premised               on a concerted                 effort        by Putman to keep pregnancies
off     the insurance                   plan.      To support            this      theory,      Hardin          presented
testimony           from         a former          employee,           Brenda Arrotta,                who was fired
after      having          a baby.             He also presented                corroborating            testimony            of
another       former             employee,         Keith       Atwood,           as well      as testimony               of a
third      employee,              Michael        Winsick,          who had also            been fired           from V.K.
Putman.
          After         trial,           the    jury      found       both       parties       had breached                  the
contract.                The jury              awarded     Hardin           $12,471.12         for      profits          lost
during      the last              four     months he worked for                   Putman.        The jury         awarded
Putman $5,550.23                   for repairs,           overpayments,              tires,      and various             fees
and taxes.
                                                 STANDARDOF REVIEW
          The parties'                   allegations            of      error       involve          an evidentiary
ruling,           the      grant          and denial           of     motions,         and      the      denial         of      a
proposed          jury      instruction.                The standard              of review       for     these         three
issues       is whether                 the District          Court         abused its        discretion.               State
v. Pinkerton               (1995),         270 Mont. 287, 891 P.2d 532; In re Marriage                               of
Craib       (19941,              266 Mont. 483,       880 P.2d 1379;        Northwest           Truck         &
Trailer       Sales,             Inc.     v. Dvorak           (1994),        269 Mont. 150,      887 P.2d 260;
Yellowstone               Conference              of    the     United           Methodist        Church          v.     D.A.
Davidson,           Inc.         (19871,        228 Mont. 288,    741 P.2d 794.
                                                           ISSUE 1
          Did the District                      Court     abuse its             discretion       by allowing                 the
testimony           of three             former        employees         of V.K.       Putman,          Inc.?

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          Hardin's                 breach         of        contract             claim               was premised                 on the           theory

that        Putman               intentionally                    tried             to        rid         the      company            of     pregnant

employees                  (or          employees'                 spouses)                    in      order             to      reduce            health

insurance                 premiums.                    In      order            to            bolster             this          theory,            Hardin

presented                 evidence              from         Brenda             Arrotta,                   Mike         Winsick,            and          Mike

Atwood.

          MS.        Arrotta               is     a former                employee                   of      V.K.         Putman,           Inc.            At

trial         in          this          case,          she        testified                     to         the      poor         treatment                she

received             after              she     informed                 the        company                she      was         pregnant.                 She

testified                 that          she     was         placed             on        mandatory                 maternity               leave          and
subsequently                     had to drop                her     health               insurance                because           she could             not

afford         the         payments.
          Mike            Atwood           is     also         a former                   employee                of      V.K.        Putman.               He

offered            related              testimony             regarding                  the         nature         of the          treatment             Ms.

Arrotta            received                and        the         concerns                of         the         company          regarding               the

increasing                 health             insurance             premiums.

            Mike       Winsick,                 the      third           former               employee,                 testified            that         the

company's                 insurance              agent            told         him        that          the       reason            the     insurance

rates        continued                  to rise          was because                     of     "three            pregnancies               that         have

been        substantial                  in     cost."             Putman            objected                 to the          testimony             of all

these        former              employees              as irrelevant.

            The District                      Court         has broad                discretion                    to     determine            whether

evidence             is        relevant           and admissible.                               Galbreath                v.     Golden        Sunlight

Mines,          Inc.             (1995),         270 Mont. 19,           22,         890 P.2d 382,       384.           It    was

not       an abuse                 of     discretion                 for         the           District                 Court        to     allow         the

testimony                 of      these         three         witnesses.

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                                                           ISSUE 2
          Did     the        District           Court        abuse           its        discretion                  by     granting
Putman's        motion           to dismiss          any claim               for     punitive             damages?
          For his       cross-appeal,                    Hardin        alleges           three          specific                errors,
the first         of which is that                  the District                Court abused its                        discretion
by     granting         Putman's               motion      to       dismiss             any      claim            for      punitive
damages.
          In    Montana,               punitive          damages          for        breach             of        contract            are
limited         by      statute.                   Section           27-l-220(2)               (a),          MCA,          provides
"[ulnless         otherwise             expressly          provided           by statute,               punitive                damages
may not be recovered                      in any action                arising           from:           (i)        contract;             or
(ii)      breach        of       contract."               Prior         to      trial,           Hardin             amended his
counterclaim               to        allege        breach         of      contract               as          an      affirmative
defense.
          On appeal,                 Hardin       now argues                 the         evidence              in        this       case
supports          a finding              that     Putman committed                       the     tort          of       bad faith,
Punitive        damages are allowable                         in tort              cases.
          While      the        tort      of    bad faith              may still               apply         in      exceptional
circumstances,                  in      the       vast      majority               of     contract                  cases,          only
contract        damages are due.                     Daniels            v. Dean (1991),                        253 Mont. 465,
473, 833 P.2d 1078, 1083 (citing                                Story        v. Bozeman (1990),                           242 Mont.
436,      791 P.2d 767).                  Most of the common applications                                           of this         tort
have been codified;                        in the remainder                   of cases,               a party             must show
that      a "special             relationship"               exists,            beyond that                  of contracting
parties.           Daniels, 833 P.2d at 1083.                     Such a special                        relationship
does not exist                  in this         case.        Further,              Hardin        did         not         allege       the

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tort    of bad faith                in the pleadings                   nor present               substantive               evidence
regarding             it     at trial.                Instead,         he specifically                    and voluntarily
limited         his        counterclaim                to breach          of contract.
          We hold           that         the District             Court       did         not abuse its               discretion
by dismissing                 the claims               for     punitive        damages.
                                                               ISSUE 3
          Did      the        District                Court      abuse        its          discretion            by        refusing
Hardin's         offered            jury         instruction           on mitigation                    of damages?
          Hardin           next     alleges            the District                Court        abused its            discretion
by refusing                 to allow            his     offered        jury         instruction             on mitigation.
He argues             that,         had he been able                   to      instruct            on his            own duty          to
mitigate          his        damages,            the jury         would        have awarded                 him additional
damages.
          The duty             to mitigate                 damages encompasses                         a party's            duty       to
lessen         the amount of damage he or she suffers,                                            if     such lessening                or
mitigation                 is possible.                This      Court        is         not persuaded               by Hardin's
theory         that         the District               Court's         failure             to    instruct            the     jury      on
his     own duty              to     mitigate                was somehow prejudicial                            to     his         case.
Because he was the plaintiff                                  on his counterclaim,                       any error           arising
from       the        failure             to     instruct         on mitigation                        would     work         to     his
advantage.
          At     trial,            all         proffered         testimony                on damages was                    allowed,
after      which            the     jury        set     the award.             NO testimony                    or evidence             on
the     subject             of damages was refused.                                "It     is    not     reversible                error
for     a trial             court        to refuse            to give         an offered               instruction             unless
such refusal                 affects            the substantial               rights            of the party               proposing

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the       instruction,                            thereby            prejudicing                  him."             King          v.         Zimmerman
(1994),              266 Mont. 54,        64,     878 P.2d 895,         902.            See also               Chambers
through              Chambers                v.     Pierson               (1994),         266 Mont. 436,         880 P.2d 1350.

           The District                       Court's              refusal           to instruct               on mitigation                       was not

an abuse              of      discretion.

                                                                           ISSUE 4

           Did         the        District                   Court        abuse          its      discretion                in         refusing                  to

allow           Hardin            to         amend           his     counterclaim                  at        the        conclusion                  of       the

evidence?

           Hardin            lastly               alleges           the      District            Court         abused           its         discretion
by       refusing                 to         allow             him        to      amend           his          counterclaim                        at        the

conclusion                   of        the         evidence            to       allow           a claim            for      fraud.                  Hardin

points           out         that            Rule        15(b),           M.R.Civ.P.,                   states           that          a court               may
allow           the        pleadings                    to     be     amended            and       that         permission                    to        do       so

shall           be      freely               granted               when        justice            so        requires.                   This            Rule,

however,              does not                grant          a party           free       rein         to    amend the                pleadings                  at

any      time         for         any        reason.

           In         this          case,            Hardin            amended             his         answer            and          counterclaim

twice.            In his               second            amended            answer,            Hardin         eliminated                    fraud         as a

claimed              affirmative                     defense.                  Further,           Hardin            moved             the      court             in
limine          to bar            any testimony                      regarding                 fraud        at trial,             stating                that:

           none of these       issues     [including       fraud1    are relevant     to
           the contentions       defendant      will   be attempting       to prove at
           the trial    . . . raising        these issues       could only serve to
           confuse   the jury.         [Hardin]      is not attempting         to prove
           any of these      issues     at trial,       and no jury      instructions
           will   be provided      on any of these issues.
While           leave             to         amend           the      pleadings                 should             be     freely              given,               a

repeated               failure                to         cure        deficiencies                  by        amendments                     previously
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allowed        may      be     reason      enough       to     deny       a   motion      to     amend.
Yellowstone           Conference      of the United           Methodist       Church, 741 P.2d at
737.        Hardin      amended his         answer      and counterclaim            twice       without
raising       fraud     as a claim.          Further,         Hardin      unequivocally         dropped
any fraud       claim        by his     motion   in limine,        which      the court        granted.
It   was not an abuse of discretion                     for    the District       Court     to refuse
to allow       Hardin        to amend his pleading              again.
          Affirmed.

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