NO. 82-279
I N THE SUPREME COURT OF THE STATE OF MONTANA
1983
ST. PAUL F I R E a n d MARINE INSURANCE
COMPANY, a c o r p o r a t i o n ,
Plaintiff and Respondent,
vs.
KEVIN E . CUMISKEY, J O H N E . CUMISKEY,
STEPHANIE S . CUMISKEY, a n d K . S . J . , INC.,
a Montana c o r p o r a t i o n ,
Defendants and Appellants,
and
ELIZABETH M . BRADLEY,
Defendant and Cross Appellant.
Appeal from: D i s t r i c t Court of the Eighteenth Judicial D i s t r i c t ,
I n and f o r t h e County o f G a l l a t i n
Honorable Joseph B. Gary, Judge p r e s i d i n g .
Counsel of Record:
For Appellant:
L a r r y W. Moran a r g u e d , Bozeman, Montana
For Cross-Appellant:
L a n d o e , B r o w n , P l a n a l p , Kommers & L i n e b e r g e r ,
Bozeman, Montana
Randy K . D i x , a r g u e d , Bozeman, Montana
For Respondents:
A n d e r s o n , Brown, G e r b a s e , C e b u l l & J o n e s , Billings,
Montana
J a m e s L. J o n e s a r g u e d , B i l l i n g s , M o n t a n a
Submitted: March 1, 1983
Decided: J u n e 10, 1983
~ i l e d : JUN 1 0 1983
Clerk
Mr. Chief Justice Frank I. Haswell delivered the Opinion of
the Court.
Cumiskeys and Bradley appeal a judgment upon a
Gallatin County jury verdict which set the cost of repairs
of fire damaged property, which determined the parties'
liabilities to one another and which awarded and set
attorney fees. We affirm in part and reverse in part.
In early 1978, Kevin Cumiskey contacted Elizabeth
Bradley in order to lease West Yellowstone property owned by
Bradley as the site of a Mexican restaurant. They entered
into a lease agreement prepared by Cumiskey's attorney which
required that Cumiskey insure the property to protect
Bradley's interest and which specified that fixtures and
alterations added by Cumiskey would remain his property.
Kevin opened the restaurant, "Chiripa's," for a short 1978
tourist season, closed it for the winter, and then reopened
it for summer 1979. From September 1978 to September 1979,
the property was insured in the name of Kevin Cumiskey,
d/b/a "Chiripa's." During that period, Kevin improved the
premises with funds borrowed from his father, John Cumiskey.
At no time was Bradley's interest insured. From September
1979 to June 1980, the property was not insured at all.
In 1979 the restaurant business was incorporated as
K.S.J., Inc. (for Kevin, Stephanie, and John Cumiskey), and
the lease was assigned to the corporation. Kevin and his
mother, Stephanie, each owned 49 percent of the stock. John
owned 2 percent. Kevin is president, John is vice president
and Stephanie is secretary.
Kevin decided to stay in New York to work for the sum-
mer of 1980, so John and Stephanie Cumiskey agreed to spend
the summer in West Yellowstone operating the restaurant.
Upon their arrival, the Cumiskeys contacted a Bozeman
insurance agency to arrange for reissuance of the prior
insurance coverage. Again, the insured on the policy was
listed as Kevin Cumiskey, d/b/a "Chiripass." John and
Stephanie ran the restaurant, which had consistently lost
money since its opening, until, on August 10, 1980, a series
of explosions accompanied by fire damaged the premises.
The fire investigation revealed that the blazes had
been intentionally set. Extensive circumstantial evidence
focused on John Curniskey as the alleged arsonist. That
evidence included serious burns sustained by Cumiskey, a
series of inconsistent and uncorroborated stories told by
Cumiskey to explain his burns and his actions after the
fire, and the fact that his keys to the restaurant and other
objects owned by Cumiskey were found in the street outside
Chiripass after the explosions.
Once the investigation established that the fire had
been intentionally set, St. Paul requested that Cumiskeys
produce the financial records of the business. John
Cumiskey refused to do so for some sixteen months af ter the
August 1980 fire. In October 1980, Kevin Cumiskey filed a
claim with St. Paul seeking recovery under the policy. St.
Paul was told both that the destroyed property belonged to
Kevin Cumiskey and that it was the property of K.S. J., Inc.
St. Paul also became aware of the Bradley lease, which
required that Bradley's interest be insured.
John Cumiskey was charged with arson and criminal
mischief in connection with the fire and was tried in
November 1980. The business records were not a part of the
criminal trial. Cumiskey's defense was that he was a
w e a l t h y man, t h a t t h e b u s i n e s s was p r o f i t a b l e , and t h a t h e
had no m o t i v e s f o r a r s o n . H e was a c q u i t t e d o f b o t h c h a r g e s .
Two months a f t e r J o h n C u m i s k e y ' s a c q u i t t a l , St. Paul
filed this action for d e c l a r a t o r y judgment. In i t s com-
plaint, S t . P a u l a s k e d t h e c o u r t t o d e c l a r e Kevin Cumiskey
the proper recipient of any p o l i c y p r o c e e d s , t o determine
t h e r i g h t s and o t h e r l e g a l r e l a t i o n s h i p s o f t h e p a r t i e s , to
determine the specific amount of recovery t o which Kevin
Cumiskey was e n t i t l e d , and t o r e q u i r e t h a t J o h n E . Cumiskey
s u b r o g a t e any c l a i m p a i d by S t . Paul. K.S.J., Inc., was
l a t e r a d d e d t o t h e a c t i o n by s t i p u l a t i o n o f t h e p a r t i e s .
Bradley cross-claimed against Kevin Cumiskey and
M.S.J., Inc., for failure to insure her interest in the
building. She also brought a tort claim against John
Cumiskey for deliberate destruction of the property.
Cumiskeys and K.S.J., Inc., brought counterclaims against
St. Paul for the company's breach of both statutory and
common-law duties to settle the insurance claims i n good
f a i t h and f o r l i b e l and s l a n d e r .
A number of i s s u e s r a i s e d w e r e d i s p o s e d of b e f o r e t h e
c a s e was g i v e n to the jury. Before trial, the District
C o u r t e n t e r e d summary judgment i n f a v o r of B r a d l e y on t h e
issue of Kevin Cumiskey's failure to insure Bradley's
i n t e r e s t i n t h e premises. K.S.J., Inc., dropped its c l a i m
t o t h e i n s u r a n c e p r o c e e d s on t h e d a y b e f o r e t r i a l . At the
outset of trial, the District Court dismissed Cumiskeys'
s t a t u t o r y counterclaim f o r f a i l u r e t o s t a t e a proper claim.
It a l s o dismissed Cumiskeys' c l a i m of libel and slander,
which was b a s e d upon S t . P a u l ' s f i l i n g of this action for
d e c l a r a t o r y judgment. At t h e c l o s e of e v i d e n c e , the t r i a l
court entered a directed verdict in favor of St. Paul on
Cumiskeys' common-law c o u n t e r c l a i m f o r bad f a i t h .
The j u r y r e t u r n e d a s p e c i a l . v e r d i c t which d e t e r m i n e d :
(1) S t . P a u l and B r a d l e y had p r o v e d by a p r e p o n d e r a n c e o f
t h e e v i d e n c e t h a t J o h n E. Cumiskey c a u s e d t h e f i r e ; (2) the
cost t o repair t h e main b u i l d i n g o f t h e r e s t a u r a n t was s e t
at $12,300.00; (3) that Kevin Cumiskey was entitled to
r e c o v e r $19,910.00 under the policy; and, ( 4 ) t h a t Bradley
was e n t i t l e d t o r e c o v e r $ 2 5 , 0 0 0 . 0 0 i n p u n i t i v e damages f r o m
J o h n E. Cumiskey. The p a r t i e s stipulated in the pretrial
order t h a t t h e f i r e had been s e t intentionally. The j u r y
was so informed and was instructed that if it f o u n d that
John E. Cumiskey set the fire, St. Paul was entitled to
recover from him t h e amount i t m u s t p a y t o Kevin Cumiskey
under t h e p o l i c y .
Cumiskeys and K . S . J . , Inc., moved f o r a judgment n o t -
withstanding the verdict or in the alternative for a new
trial. The m o t i o n s w e r e d e n i e d . C u m i s k e y s now a p p e a l a n d
Bradley cross-appeals.
Appellants, in their shotgun approach, barrage this
Court with issues. We will address only two of those
issues. W w i l l also address cross-appellant's
e claim. We
h a v e c o n s i d e r e d t h e o t h e r e r r o r s a d v a n c e d by a p p e l l a n t s and
f i n d them t o be w i t h o u t m e r i t . W e w i l l n o t c o n c e r n o u r s e l v e s
w i t h t h e s e arguments s i n c e t h e y w i l l n o t change t h e outcome
of t h i s appeal. W also note
e i n passing that appellants'
briefs, which c o n t a i n more v i t r i o l t h a n s u b s t a n c e , fail to
substantiate their claims with references to the record
p u r s u a n t t o R u l e 2 3 ( a ) and ( e ) , f4.R.App.Civ.P.
The i s s u e s w e a d d r e s s a r e :
I. Whether the District Court properly directed a
v e r d i c t on C u m i s k e y s ' c o u n t e r c l a i m s f o r bad f a i t h ;
2. Whether the District Court properly granted
summary judgment i n f a v o r o f B r a d l e y ; a n d ,
3. Whether t h e D i s t r i c t Court correctly calculated
t h e a t t o r n e y f e e s awarded t o B r a d l e y .
Kevin Cumiskey f i r s t c h a l l e n g e s d i s m i s s a l o f h i s bad
f a i t h counterclaims against St. Paul. H e contends t h a t S t .
P a u l v i o l a t e d b o t h s t a t u t o r y and common-law duties t o settle
t h e i n s u r a n c e c l a i m s i n good f a i t h . The s t a t u t o r y c l a i m i s
b a s e d upon s e c t i o n 3 3 - 1 8 - 2 0 1 ( 6 ) and ( 1 3 ) , MCA, o f t h e U n f a i r
T r a d e P r a c t i c e C h a p t e r o f t h e I n s u r a n c e Code. I t provides:
"Unfair claim s e t t l e m e n t p r a c t i c e s prohi-
-
b i t e d . No p e r s o n may, w i t h s u c h f r e q u e n c y
a s t o indicate a general business prac-
t i c e , do a n y of t h e f o l l o w i n g :
" ( 6 ) n e g l e c t t o a t t e m p t i n good f a i t h t o
e f f e c t u a t e p r o m p t , f a i r , and e q u i t a b l e
s e t t l e m e n t s o f c l a i m s i n which l i a b i l i t y
h a s become r e a s o n a b l y c l e a r ;
" ( 1 3 ) f a i l t o promptly s e t t l e claims, i f
l i a b i l i t y h a s become r e a s o n a b l y c l e a r ,
under one p o r t i o n of t h e i n s u r a n c e p o l i c y
coverage i n order t o i n f l u e n c e s e t t l e -
ments under o t h e r p o r t i o n s of t h e i n s u r -
ance p o l i c y coverage;" (Emphasis added.)
The s t a t u t o r y c l a i m was s t r u c k by t h e D i s t r i c t C o u r t
prior to trial on the basis that Kevin Cumiskey had not
p l e a d e d a n d was n o t g o i n g t o p r e s e n t e v i d e n c e t h a t S t . P a u l
f a i l e d t o s e t t l e claims "with such frequency t o i n d i c a t e a
general business practice." Dismissal of the statutory
c l a i m on that b a s i s was p r o p e r . Klaudt v. Flink (1983),
Mont . , 658 P.2d 1 0 6 5 , 40 S t . R e p . 64; H a r r i s v.
American G e n e r a l L i f e I n s u r a n c e Company o f D e l a w a r e ( 1 9 8 3 ) ,
The common-law bad f a i t h c l a i m was d i s p o s e d o f w i t h a
d i r e c t e d v e r d i c t a t the c l o s e of evidence. W f i r s t recog-
e
nized t h a t a n i n s u r a n c e company h a s a d u t y i n d e p e n d e n t o f
s t a t u t e or of i n s u r a n c e c o n t r a c t t o s e t t l e c l a i m s i n good
f a i t h w i t h i t s i n s u r e d s i n L i p i n k s i v. The T i t l e I n s u r a n c e
Company ( 1 9 8 2 ) , Mon t . , 655 P.2d 970, 39 S t . R e p .
2283. The District Court here properly allowed Kevin
Cumiskey t o p r e s e n t e v i d e n c e i n s u p p o r t o f h i s claim t h a t
St. P a u l a c t e d i n bad f a i t h and b r e a c h e d t h a t d u t y . Con-
f l i c t i n g e v i d e n c e was i n t r o d u c e d on w h e t h e r a g e n t s of St.
Paul had represented that the insurer would settle the
claim. Kevin p r i m a r i l y b a s e d h i s c l a i m on the assertion
t h a t t h e f i l i n g of t h e d e c l a r a t o r y judgment a c t i o n was in
bad f a i t h s i n c e t h e c l a i m s h o u l d h a v e b e e n p a i d and s i n c e
the action served to destroy the business relationship
between Cumiskeys and Bradley. A t the close of the
e v i d e n c e , however, the court dismissed t h a t claim with t h e
following statement:
" I ' m going t o r e v e r s e myself. I am g o i n g
t o g r a n t t h e motion f o r a d i r e c t e d ver-
d i c t on t h e q u e s t i o n o f p u n i t i v e damages
t o t h e i n s u r a n c e company on t h e i r coun-
t e r c l a i m and l e t you g o on y o u r a c t u a l
damages . . . T h e r e was a l e g i t i m a t e
q u e s t i o n i n t h i s c a s e on t h e b a s i s of who
s e t t h e f i r e , how t h e f i r e was s e t , who
t h e c l a i m was i n , and t h e i n s u r a n c e com-
pany came i n and a s k e d f o r a d e c l a r a t o r y
j u d g m e n t , and t h e o n l y a l t e r n a t i v e i s t o
make t h e i n s u r a n c e company p a y i n a n y
r e s p e c t , and t h e n a t t e m p t t o g e t i t b a c k ,
and t h e y u s e d t h e p r o c e s s o f t h e c o u r t s
and w i t h i n r e a s o n a b l e t i m e , and s o you
a r e , h o w e v e r , e n t i t l e d t o g o on y o u r
a c t u a l damages on y o u r c l a i m . "
The D i s t r i c t C o u r t p r o p e r l y g r a n t e d a d i r e c t e d v e r d i c t
i n favor of St. Paul on t h o s e grounds. The c o u r t s h o u l d
vlew a motion for a directed verdict in the light most
f a v o r a b l e t o t h e p a r t y a g a i n s t whom t h e m o t i o n i s d i r e c t e d .
Dleruf v. Gollaher (1971), 156 Mont. 440, 481 P.2d 322.
Here, even viewed in the light most favorable to Kevin
Cumiskey, t h e c o u r t found t h a t S t . P a u l ' s d e c i s i o n t o b r i n g
this action for d e c l a r a t o r y j u d g m e n t was a p p r o p r i a t e . We
agree.
An a c t i o n f o r d e c l a r a t o r y j u d g m e n t may b e b r o u g h t f o r
the purpose of s e t t l i n g and a f f o r d i n g " r e l i e f from uncer-
t a i n t y and insecurity with respect to rights, status, and
other legal relations." S e c t i o n 27-8-101 e t seq., MCA. The
action, in order to terminate the controversy as to all
parties, should i n c l u d e a s p a r t i e s a l l p e r s o n s who h a v e o r
c l a i m any i n t e r e s t t h a t would b e a f f e c t e d by t h e d e c l a r a -
tion. Empire F i r e & Marine I n s . Co. v . Goodman ( 1 9 6 6 ) , 1 4 7
Mont. 3 9 6 , 412 P.2d 569.
If otherwise appropriate, an action for declaratory
judgment is n o t p r e c l u d e d by t h e e x i s t e n c e of a n o t h e r a d e -
q u a t e remedy. Rule 57, I4.R.Civ.P. In a proper case, an
i n s u r e r may u s e t h i s p r o c e d u r a l d e v i c e i n o r d e r t o o b t a i n a
d e t e r m i n a t i o n of the validity, continuance, or coverage of
an insurance policy; a determination of the extent of
l i a b i l i t y ; o r a d e t e r m i n a t i o n of t h e i n s u r e r ' s d u t i e s under
the policy. 6A M o o r e ' s Federal Practice, l(57.19 a t 57-195
through 57-198. We hold that in this case, St. Paul
p r o p e r l y f i l e d an a c t i o n f o r d e c l a r a t o r y judgment.
W h i l e Kevin Cumiskey f i l e d a c l a i m f o r p r o c e e d s a s t h e
named insured, a potential for l i a b i l i t y t o other parties
also existed. Bradley's i n t e r e s t should have been insured
p u r s u a n t t o t h e l e a s e a g r e e m e n t and was n o t . T h e r e was t h e
p o s s i b i l i t y t h a t s h e would a t t e m p t t o c l a i m a l l o r p a r t o f
t h e insurance proceeds.
K.S.J., Inc., i n s i s t e d t h r o u g h o u t m o s t of t h e l a w s u i t
that it was t h e named insured since St. P a u l ' s a g e n t s had
been informed of the incorporation of the business. Not
until the day b e f o r e trial was that c l a i m dropped. John
Cumiskey's p o s s i b l e c u l p a b i l i t y i n r e g a r d t o t h e f i r e a l s o
raised questions on the insurer's liability. Where an
officer , director, stockholder, and managing agent of a
c o r p o r a t i o n is r e s p o n s i b l e f o r i n t e n t i o n a l l y s e t t i n g a f i r e ,
the insurer has a v a l i d defense t o t h e claim. 1 8 Couch o n
Insurance, 2d, S 74:671; 5 Appleman Insurance Law and
Practice, S 3113 ( 1 9 7 0 ) . St. P a u l had a sufficient basis
b e f o r e t h e f i l i n g of t h i s a c t i o n t o r a i s e t h a t d e f e n s e .
John Cumiskey argues that section 33-24-102, MCA,
r e q u i r e s payment o f t h e p o l i c y l i m i t where t h e p r o p e r t y i s
considered a total loss and where no criminal fault is
established on the part of the insured or his assigns.
Therefore, h e c o n t e n d s t h a t h i s a c q u i t t a l on t h e a r s o n and
criminal mischief charges required the insurer t o pay the
policy l i m i t s rather than bringing t h i s action. He ignores
t h e c o m p l e t e c o n t r a d i c t i o n i n h i s s t a n c e on t h e i s s u e o f t h e
amount o f t h e l o s s .
Cumiskeys t e s t i f i e d at trial that St. Paul's agents
had s t a t e d t h a t t h e b u i l d i n g was a t o t a l l o s s and t h e c l a i m
would be p a i d i n f u l l . The a g e n t d e n i e d making t h a t s t a t e -
ment. No o t h e r e v i d e n c e i n d i c a t e d t h a t t h e b u i l d i n g was a
total loss. I n f a c t , w h i l e B r a d l e y ' s e s t i m a t e on r e p a i r s t o
the b u i l d i n g set t h e c o s t a t approximately $12,500, Cumis-
Keys p r e s e n t e d t h e a f f i d a v i t o f t h e i r c o n t r a c t o r a n d a b r i e f
i n o p p o s i t i o n t o B r a d l e y ' s m o t i o n f o r summary judgment t h a t
set t h e r e p a i r c o s t s a t $8,500. At no t i m e t h r o u g h o u t t h e
course of this action did Cumiskeys agree to settle
B r a d l e y ' s c l a i m i n a n amount t h a t would r e p a y h e r f o r t o t a l
l o s s of t h e b u i l d i n g .
Nor d i d Cumiskeys introduce evidence t o demonstrate
the loss to the business itself. The jury relied upon
evldence introduced by St. Paul: the business income tax
r e t u r n s and e x p e r t t e s t i m o n y by t h e b u s i n e s s ' s accountant.
No e v i d e n c e was p r e s e n t e d t h a t s u g g e s t e d t h e b u s i n e s s was a
total loss other than John Cumiskey's statement that an
a d j u s t o r had s t a t e d : "Well, a s f a r a s I can see, it's a
total loss."
St. P a u l a l s o f a c e d a q u e s t i o n on t h e e x t e n t i t was
liable to Kevin Cumiskey as the named insured since the
property insured i n h i s name had b e e n a s s i g n e d t o K.S.J.,
Inc. T h i s c r e a t e s a n i s s u e on t h e e x t e n t o f K e v i n ' s r i g h t
t o recover a s stockholder. See, 3 Couch on I n s u r a n c e , S
24:92; Annot., 39 ALR2d 714; 4 Appleman on Insurance, S
2145. The f a c t s o f t h i s c a s e p r e s e n t e d a j u s t i c i a b l e con-
troversy, e x i s t i n g and g e n u i n e . The a c t i o n f o r d e c l a r a t o r y
judgment was a p p r o p r i a t e l y b r o u g h t t o determine t h e legal
r i g h t s and r e l a t i o n s h i p s o f t h e p a r t i e s . The D i s t r i c t C o u r t
p r o p e r l y d i r e c t e d a v e r d i c t on t h e i s s u e o f bad f a i t h .
Cumiskeys n e x t a r g u e t h a t t h e D i s t r i c t C o u r t e r r e d i n
g r a n t l n g summary judgment i n f a v o r o f B r a d l e y on t h e i s s u e
ot b r e a c h of the l e a s e agreement. They c o n t e n d t h a t t h e
p r o v i s i o n s o f t h e l e a s e a l l o w e d C u m i s k e y s and K.S.J., Inc.,
t o r e t a i n any f i x t u r e s o r o t h e r improvements added t o t h e
property. Therefore, B r a d l e y was n o t e n t i t l e d t o summary
judgment on t h e i s s u e of liability for failure to insure
b e c a u s e B r a d l e y ' s l o s s was u n c l e a r . W e disagree.
Bradley's motion for partial summary judgment
requested the D i s t r i c t Court t o find l i a b i l i t y for Bradley's
damages o r l o s s on t h e b a s i s of t h e f a i l u r e t o i n s u r e . The
amount of damages were u n d e t e r m i n e d and w e r e t o b e i n c l u d e d
a s an i s s u e a t t r i a l . Cumiskeys and K . S . J . , Inc., argued
that t h e y had made e x t e n s i v e improvements t o the property
which, under the terms of the contract, remained their
property. Therefore, their contract l i a b i l i t y t o Bradley
u n d e r t h e t e r m s o f the a g r e e m e n t was u n c l e a r and s h o u l d b e
left for a jury determination. T h i s argument is w i t h o u t
merit.
The lease agreement clearly required that Kevin
Cumiskey o r h i s a s s i g n s i n s u r e B r a d l e y ' s i n t e r e s t . They d i d
not. The D i s t r i c t C o u r t p r o p e r l y f o u n d t h a t t h e t e r m s on
i m p r o v e m e n t s w e r e a m b i g u o u s and u s e d a n a p p r o p r i a t e r u l e o f
construction t o i n t e r p r e t those clauses.
The l e a s e p r o v i d e d t h a t "ALTERATIONS" w e r e t o r e m a i n
t h e p r o p e r t y of t h e l e s s e e s :
"The Lessees w i l l b e e n t i t l e d t o make, o r
w i l l s u f f e r t o be made, a n y a l t e r a t i o n s
which t h e y i n t h e i r s o l e d i s c r e t i o n deem
necessary. Any a d d i t i o n s t o , o r a l t e r a -
tions of, attached t o the said leased
p r o p e r t y s h a l l n o t become p a r t o f t h e
r e a l t y b u t w i l l remain t h e s o l e and
s e p a r a t e p r o p e r t y of t h e Lessees. The
Lessees a g r e e t o a d v i s e L e s s o r s i n w r i t -
i n g o f t h e d a t e upon w h i c h s u c h a l t e r a -
t i o n s w i l l commence i n o r d e r t o p e r m i t
t h e L e s s o r s t o p o s t n o t i c e of nonrespon-
sibility. The L e s s e e s s h a l l k e e p t h e
d e m i s e d p r e m i s e s f r e e f r o m a n y and a l l
l i e n s a r i s i n g o u t o f a n y work p e r f o r m e d ,
materials furnished, or other obligations
i n c u r r e d by t h e L e s s e e s . "
It a l s o provided that "FIXTURES1' were t o r e m a i n the
p r o p e r t y of t h e lessees:
" I t is h e r e b y e x p r e s s l y a g r e e d between
the p a r t i e s t o t h i s Lease t h a t any
c o u n t e r s , t a b l e s , c h a i r s , s t o v e s , ovens,
g r i l l s , i c e machines, s i n k s , o r any o t h e r
p e r s o n a l p r o p e r t y b e l o n g i n g t o t h e Les-
sees which is b r o u g h t upon t h e d e m i s e d
p r e m i s e s and a t t a c h e d t h e r e t o , s h a l l n o t
become a f i x t u r e and p a r t o f t h e r e a l t y .
The L e s s o r h e r e b y e x p r e s s l y g r a n t s p e r -
m i s s i o n t o t h e L e s s e e s t o remove a n y and
a l l p e r s o n a l p r o p e r t y which t h e y b r i n g
upon s a i d d e m i s e d p r e m i s e s . L e s s e e s a g r e e
t o r e p a i r a n y damage t o t h e p r e m i s e s
which is c a u s e d by r e m o v a l o f s a i d p e r -
sonal property. "
The D i s t r i c t C o u r t f o u n d t h a t t h e p r o v i s i o n on a l t e r a -
t i o n s was u n c l e a r i n t h a t i t d i d n o t s p e c i f y what t y p e o f
a 1t e r a t i o n s w e r e i n c l u d e d . The c o u r t t h e r e f o r e f o u n d t h a t
the specific "FIXTURES" clause controlled the general
"ALTERATIONS" c l a u s e and t h a t s u c h a n i n t e r p r e t a t i o n was i n
conformance w i t h t h e g e n e r a l p r a c t i c e o f Montana l a n d l o r d s
and t e n a n t s and w i t h Montana s t a t u t e s . W e agree.
Where a d d i t i o n s a r e b u i l t o r a f f i x e d t o p r o p e r t y by a
tenant without a n a g r e e m e n t t o a l l o w him to remove those
additions or fixtures, they may not be removed if their
r e m o v a l w i l l damage t h e p r e m i s e s . S e c t i o n 70-18-102, MCA;
S a n d e r s v. B u t t e Motor Co. ( 1 9 6 3 ) , 1 4 2 Mont. 524, 385 P.2d
263. Here, a n a g r e e m e n t e x i s t s t o a l l o w r e m o v a l o f f i x t u r e s
and a l t e r a t i o n s . I t is u n c l e a r w h a t was c o n t e m p l a t e d by i t s
t e r m s , however. The c o n t r a c t was p r e p a r e d by a n a t t o r n e y on
b e h a l f o f K e v i n Cumiskey. Kevin p r e s e n t e d i t t o B r a d l e y f o r
signature. She d i d not take part in preparation of the
terms. The r e c o r d a l s o d e m o n s t r a t e s K e v i n C u m i s k e y ' s i n t e n -
t i o n t o use these clauses t o coerce Bradley i n t o renewing
t h e l e a s e or s e l l i n g her property.
B r a d l e y t e s t i f i e d t h a t s h e had t o l d K e v i n Cumiskey on
s e v e r a l o c c a s i o n s t h a t s h e was n o t i n t e r e s t e d i n s e l l i n g t h e
p r o p e r t y and had no i n t e n t i o n of d o i n g s o . He testified at
h i s d e p o s i t i o n t h a t B r a d l e y had a g r e e d t o a l l o w him t o b u i l d
a d d i t i o n s on s k i d s s o t h a t h e c o u l d " p i c k them up and c a r r y
them away." H e was then asked about t h i n g s t h a t could n o t
be c a r r i e d away:
"Q. T h o s e t h i n g s you c o u l d n o t p i c k up
and c a r r y away I assume you w e r e g o i n g t o
l e a v e on t h e p r e m i s e s . A. No, I was n o t .
"Q. What w e r e you g o i n g t o d o w i t h t h e
t h i n g s you c o u l d n ' t p i c k up a n d move
away? A. I was g o i n g t o u s e them a s a
l e v e r f o r a new l e a s e .
"Q. C o u l d you e x p l a i n w h a t you mean b y
that? A. W e l l , i n my l e a s e , a l l t h e
improvements a r e mine, a n d i f Mrs.
B r a d l e y d i d n ' t want t o i s s u e m e a new
l e a s e or give me a f i x t u r e s fee, then I
would t a k e them o u t . "
I t was c l e a r f r o m K e v i n ' s d e p o s i t i o n t e s t i m o n y t h a t i f
Kevin " c o u l d b u i l d i n a 'manner where w e c o u l d p i c k i t up
and c a r r y i t away, ' i t was f i n e w i t h [ B r a d l e y ] ."
The D i s t r i c t C o u r t f o u n d a m b i g u i t y a n d c o n f l i c t i n t h e
lease provisions and ruled that those items s p e c i f i c a l l y
nained in the "FIXTURES" clause (the counters, tables,
chairs, etc. ) belonged to Cumiskeys and everything else
belonged to Bradley. Kevin Cumiskey argued that any
improvements o r a l t e r a t i o n s , including wiring i n the roof,
s h o u l d b e l o n g t o him u n d e r t h e "ALTERATIONS" c l a u s e . He has
failed to demonstrate that the parties intended such an
interpretation o f t h e c l a u s e s o r t h a t an agreement a c t u a l l y
existed t h a t would a l l o w damage t o t h e p r o p e r t y t o remove
those alterations. The specific "FIXTURES" clause clearly
i n d i c a t e d t h a t a n y damage t o t h e p r e m i s e s c a u s e d by r e m o v a l
o f f i x t u r e s would be r e p a i r e d . T h e r e is no i n d i c a t i o n t h a t
t h e p a r r l e s concernplated a l l o w i n g a r e m o v a l of a 1t e r a t i o n s
t h a t m i g h t r e s u l t i n damage t o t h e p r e m i s e s .
Where a n a m b i g u o u s term i s u s e d , the parties' intent
w i l l g o v e r n i t s c o n s t r u c t i o n and e x t r i n s i c e v i d e n c e c a n b e
used t o d i s c o v e r t h a t i n t e n t . Adams v. C h i l c o t t ( 1 9 7 9 ) , 1 8 2
Mont. 5 1 1 , 5 1 7 , 597 P.2d 1140, 1144. A c o u r t should look t o
t h e w h o l e c o n t r a c t and its purpose i n determining intent
and is not bound by any single provision or expression.
Gropp v . Lotton ( 1 9 7 2 ) , 1 6 0 Mont. 415, 421, 503 P.2d 661,
664-665. Repugnant p r o v i s i o n s s h o u l d be interpreted in a
way t o give them some e f f e c t , subordinate to the general
intent and purpose of the entire contract. Riis v. Day
(1980)I Mon t . , 613 P.2d 6 9 6 , 6 9 8 , 37 S t . R e p . 1093,
1096. Where u n c e r t a i n t y i n a w r i t t e n i n s t r u m e n t e x i s t s , t h e
provisions should p r o p e r l y be construed against the party
causing the uncertainty. P a r k h i l l v. Fuselier (1981),
Mon t . , 632 P.2d 1 1 3 2 , 1 1 3 5 , 38 S t . R e p . 1424, 1427.
Here, the parties' intent was unclear. It is n o t
certain that Bradley intended to allow Kevin Cumiskey to
damage the premises in removing alterations. Cumiskey
prepared t h e l e a s e a g r e e m e n t and was responsibile for the
ambiguity t h a t existed. The D i s t r i c t C o u r t p r o p e r l y i n t e r -
preted the provisions t o give some e f f e c t t o each and to
conform w i t h g e n e r a l l a n d l o r d t e n a n t p r a c t i c e s .
Cumiskeys t h e n had t h e o p p o r t u n i t y t o p r e s e n t e v i d e n c e
o t t h e i r l o s s of b u s i n e s s f i x t u r e s and t o d i s p u t e B r a d l e y ' s
c l a i m f o r t h e c o s t of repairs. They f a i l e d t o d o s o . They
may n o t now a r g u e t h a t t h e j u r y may h a v e l i m i t e d a n award t o
K e v i n Cumiskey t o t h e amount o f Bradley's c o s t of repairs.
It is a p p a r e n t t h a t the jury did not. K e v i n Cumiskey w a s
awarded 519,910, while the cost to repair the building was
set at only $12,300.
Further, the lease agreement remained in effect until
the end of its term in April 1983. At that time, the build-
ing was to be returned to Bradley in its original condition.
The effect of the District Court's ruling was simply to
remove from the jury an issue not properly before it at that
time.
Attorney fees were awarded pursuant to the terms of
the lease agreement. Cross-appellant challenges the calcu-
lation of those fees.
Bradley's attorneys filed affidavits in support of
awarding attorney fees that computed time expended: (1)
solely relating to pretrial matters concerning Bradley's
claims against Kevin Cumiskey and K.S.J., Inc., and
excluding all time spent in preparation of the tort claim
against John Cumiskey (39.4 hours at $60 = $2,364); (2) for
the entire six days of trial time actually expended (6 days
at $750 per day = $4,500); and, (3) for services rendered in
connection with the preparation, briefing and attendance at
the hearing on the claim for attorney fees ($348). The
aggregate amount requested was $7,212.
The District Court granted attorney fees for the
pretrial preparation, for the work in preparing for the
hearing on attorney fees and for one-third of the trial
time. In its supporting memorandum, the District Court
noted that possibly less than one-third of trial time was
actually occupled with Bradley's claim against Kevin
Cumiskey and that most of her effort was against John
Cumiskey f o r w r o n g f u l s e t t i n g o f t h e f i r e and d e s t r u c t i o n o f
t h e premises. W e hold t h a t the D i s t r i c t Court e r r e d i n both
t h e c a l c u l a t i o n o f t h e a t t o r n e y f e e s and i n t h e r e d u c t i o n o f
f e e s for t r i a l t i m e t o one-third of t h e r e q u e s t .
In its order, the District Court awarded $2,636,
"which r e p r e s e n t s o n e - t h i r d ( 1 / 3 ) of t h e a t t o r n e y s ' fees for
t h e e n t i r e t r i a l " and awarded $348 f o r p r e s e n t a t i o n o f the
h e a r i n g on a t t o r n e y f e e s p l u s an a d d i t i o n a l b r i e f . The sum
of $6,864 d o e s n o t r e p r e s e n t t h e f e e s f o r t h e e n t i r e t r i a l .
That figure i s t h e t o t a l of both the pretrial preparation
work d i r e c t l y r e l a t i n g t o t h e c l a i m a g a i n s t Kevin Cumiskey
and t h e s i x f u l l d a y s of t r i a l . The D i s t r i c t C o u r t e r r e d i n
r e d u c i n g b o t h f i g u r e s by t w o - t h i r d s w h e r e t h e p r e t r i a l work
a l l r e l a t e d s p e c i f i c a l l y t o t h e K e v i n Cumiskey c l a i m . At a
minimum, t h e award s h o u l d h a v e i n c l u d e d $ 2 , 3 6 4 f o r t h e p r e -
trial work, $1,500 f o r two d a y s o f trial, and $348 f o r t h e
attorney fees hearing, for a t o t a l of $4,212. We further
hold, however, that it e r r e d i n reducing f e e s awarded for
t h e t r i a l t i m e by t w o - t h i r d s .
B r a d l e y was f o r c e d t o pursue her c l a i m a g a i n s t Kevin
Cu~niskey through the trial. She a t t e m p t e d t o r e s o l v e the
damages issue stemming from Kevin's breach of the lease
agreement through a motion for summary judgment. Kevin
Cumiskey s u c c e s s f u l l y r e s i s t e d t h a t m o t i o n on t h e b a s i s o f
an a f f i d a v i t provided by h i s c o n t r a c t o r t h a t disputed the
Bradley repair estimates. Bradley and her counsel were
therefore forced t o a t t e n d a six-day trial. She p r e s e n t e d
damages t e s t i m o n y t h a t went unchallenged. Kevin Cumiskey
i n t r o d u c e d no e v i d e n c e w h a t s o e v e r i n d i s p u t e o f h e r c l a i m .
Here, the record reveals that the trial schedule
r e q u i r e d t h a t counsel f o r Bradley be p r e s e n t throughout t h e
six days in order to pursue the claim against Kevin
Cumiskey. The e n t i r e f i r s t d a y o f t r i a l was s p e n t i n j u r y
selection. On the morning of the second day of trial,
B r a d l e y ' s counsel gave h i s opening statement. On t h e f o u r t h
day, a witness offered by Cumiskeys required extensive
c r o s s - e x a m i n a t i o n on B r a d l e y ' s b e h a l f t o e s t a b l i s h t h a t e v e n
Cumiskey's evidence supported the amount of damages she
claimed. On t h e f l f t h d a y , c o u n s e l was r e q u i r e d t o object
to Kevin Cumiskey's attempt to testify to the building's
condition prior to acquisition of the lease. Kevin
attempted to introduce t h i s matter i n s p i t e of a pretrial
r u l i n g t h a t t h e e v i d e n c e was i m p r o p e r . Much o f t h e l a s t d a y
of t r i a l was s p e n t i n s e t t l e m e n t o f i n s t r u c t i o n s , p r e s e n t a -
t l o n of B r a d l e y ' s c a s e - i n - c h i e f , and c l o s i n g a r g u m e n t s .
I n t h i s i n s t a n c e it is n o t p o s s i b l e t o c l e a r l y s e g r e -
g a t e t h e t r i a l t i m e d u r i n g which B r a d l e y p u r s u e d h e r c l a i m s
a g a i n s t Kevin Cumiskey i n t o o n e - t h i r d of t h e t i m e expended.
W r e v e r s e t h e D i s t r i c t C o u r t ' s o r d e r on a t t o r n e y f e e s d a t e d
e
March 18, 1982, and hold that Bradley is entitled to
a t t o r n e y f e e s i n t h e amount o f $ 7 , 2 1 2 i n c o n n e c t i o n w i t h t h e
proceedings below and a n a d d i t i o n a l $ 1 , 5 0 0 for the efforts
e x p e n d e d on a p p e a l . W remand t h i s m a t t e r t o t h e D i s t r i c t
e
Court for further proceedings not inconsistent with this
opinion.
A f f i r m e d i n p a r t and r e v e r s e d i n p a r t .
7 4 4 4 ,c ; b Q e
Chief J u s t i c e
W concur:
e
Mr. Justice John C. Sheehy, concurring in part and dissenting
in part:
I dissent from that portion of the foregoing opinion
which affirms the District Court's dismissal of Kevin
Cumiskey's bad-faith action against St. Paul Fire and Marine
Insurance Company.
Under our recent spate of decisions on the point of bad
faith, Kevin's cause of action should have been submitted to
the jury. See Klaudt v. Flink, 658 P.2d 1065 40 St.Rep. 64;
Lipinski v. The Title Insurance Company (1982) Montana
, 655 P.2d 970, 39 St.Rep. 2283.
I am also of the opinion that the District Court should
have submitted the question of total loss to the jury to
determine if the valued policy law, Section 33-24-102, MCA,
was applicable to Kevin's claim against St. Paul. The
District Court's interpretation of the valued policy law was
disadvantageous to Kevin, and would make no difference to St.
Paul, since it, under the verdict, would be subrogated for
anything it paid to Kevin from John Cumiskey.
Otherwise, I concur in the judgment entered in the
District Court.