No. 89-137
IN THE SUPREME COURT OF THE STATE OF MONTANA
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E. NEVEN ZUGG AND SCOTT SYME, f--.
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Plaintiffs and Appellants, II --
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JOHN RAMAGE, M. RODNEY YOUNG, et al., $-_A
Defendants, Cross-Appellants and Respondents. r
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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, ~ i b b y ,
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 Plenty-
wood 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 representa-
tions 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, Zuggtstestimony 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 ~istrictCourt 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: