Cartwright v. Equitable Life Assurance Society of the United States

NO. 95-138
IN THE SUPREME COURT OF THE STATE OF MONTANA
1996

ROBERT CARTWRIGHT, FERRIS H. (BUSTER)
NESS and GRACE NESS, husband and wife,
Plaintiffs, Respondents,
and Cross-Appellants,
v.
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES and BLAINE LeSUER,
Defendants, Appellants,
and Cross-Respondents.

APPEAL FROM: District Court of the Twelfth Judicial District,
In and for the County of Hill,
The Honorable John Warner, Judge presiding.

COUNSEL OF RECORD:
For Appellants:
Richard E. Gillespie, Keller, Reynolds, Drake,
Johnson & Gillespie, Helena, Montana
(attorneys for The Equitable)
Theodore K. Thompson, Attorney at Law,
Havre, Montana (attorney for Blaine LeSuer)
For Respondents:
Ward E. Taleff, Alexander, Baucus,
& Paul, Great Falls, Montana
Brian Lilletvedt, Bosch, Kuhr, Dugdale,
Martin & Kaze, Havre, Montana

Submitted on Briefs: October 19, 1995
Decided: April 15, 1996
Filed:

Clerk
Justice Terry N. Trieweiler delivered the opinion of the Court.

The plaintiffs, Robert Cartwright, Ferris H. (Buster) Ness,

and Grace Ness, commenced this action by amended complaint filed in

the District Court for the Twelfth Judicial District in Hill

County. They alleged that the defendant, Blaine LeSuer, in his

capacity as an agent for the defendant, The Equitable Life

Assurance Society of the United States, misrepresented the terms of

life insurance policies that he sold to them, that they relied on

those misrepresentations to their detriment, and that as a result

of the defendants' conduct, they were entitled to compensatory and

punitive damages. The defendants denied the material allegations

of the plaintiffs' amended complaint and asserted various

affirmative defenses.
Following a jury trial in Hill County, the jury returned a

verdict in favor of the plaintiffs in which it found that the

defendants were liable to the plaintiffs for compensatory damages

based on breach of fiduciary duty, negligent misrepresentation,

negligence, constructive fraud, and actual fraud. The jury also

found that the defendants were liable for punitive damages. They

awarded actual damages to Cartwright in the amount of $144,025, to

Grace Ness in the amount of $44,738, and to Buster Ness in the

amount of $169,828. After considering further evidence and

arguments, the jury returned punitive damage awards in favor of the

plaintiffs in the amount of $30,000 against LeSuer, and in the

amount of $6,127,845 against Equitable. Following its statutory

review of the jury's punitive damage awards, the District Court

2
reduced the amount assessed against LeSuer to $18,000, and reduced

the amount assessed against Equitable to $4,000,000.

LeSuer and Equitable appeal from the judgment entered against

them. Cartwright and Grace and Buster Ness cross-appeal the

District Court's reduction of the jury's punitive damage awards.

We affirm the jury's verdict, reverse the order of the District

Court which reduced its verdict, and remand for entry of judgment
consistent with the jury's verdict.

Although numerous issues are raised by LeSuer and Equitable,

we conclude that the following issues are dispositive of their

appeals:

1. Were the plaintiffs' claims barred by the applicable

statutes of limitations?

2. Did the District Court abuse its discretion when it

admitted evidence that LeSuer had similarly misrepresented the

terms of policies to other individuals? If not, did the District
Court err by precluding further evidence of the specific manner in

which those person's claims against Equitable were resolved?

3. Was the jury's finding that the defendants committed

fraud supported by substantial evidence?

4. Was the jury's award of actual damages supported by

substantial evidence?

5. Did the District Court abuse its discretion when it

refused to instruct the jury that plaintiffs could not recover for

fraud in light of their failure to examine the insurance policies

they purchased?

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 6. Was there substantial evidence to support an award of
punitive damages against each defendant?

7. Should the plaintiffs' compensatory damage awards be

reduced by a percentage equal to the degree to which the jury found

that each plaintiff was contributorily negligent?

8. Did the District Court err by its award of punitive

damages made pursuant to § 27-l-221, MCA?

The issue raised by the plaintiffs' cross-appeal is whether

the District Court erred when, pursuant to its statutory obligation

to review the jury's punitive damage awards, it reduced the amounts

of those awards.
FACTUAL AND PROCEDURAL BACKGROUND

Buster Ness had been insured by Equitable Life Assurance

Company since he was eleven years old when his father purchased a

life insurance policy for him. In 1950, when he was 21, he

purchased his own retirement policy from Equitable.

Buster first met Blaine LeSuer in 1962 when he began

purchasing chemicals from LeSuer's chemical supply business for use

in Buster's crop spraying business. Although that business

relationship ended in the 196Os, the two of them stayed in touch

with each other occasionally and Buster would contact LeSuer when

he had questions regarding the chemical business.

After working out of state with other firms for a period of

years, LeSuer applied for employment with Equitable and received

his license to sell life and disability insurance in 1980. After

he became an insurance agent he continued to stop at Ness's place

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of business periodically to discuss the chemical business and

occasionally inquire about Buster's or Grace's life insurance

needs.

In April 1982, Buster agreed to purchase and LeSuer agreed to

sell on behalf of Equitable, a whole life insurance policy insuring

the life of Grace Ness for the face amount of $25,000. Page three

of the policy indicated that the premium period was thirty-five

years and that the annual premium was $541.25. However, Grace
testified that they were told by LeSuer that they would only have

to pay premiums for four or five years and that after that time the

policy would be self-sustaining. They paid the premiums for that

policy through 1985. However, when they got a premium notice in

1986, they contacted LeSuer to find out why they had received an

additional premium notice. According to the Nesses, he advised

them "not to worry about it." He told them that it was a

bookkeeping error at Equitable's home office and that he would take

care of it. When, in subsequent years, they received similar

premium notices which by then indicated that loans had been

advanced against the policy value to pay the previous year's

premium, they had similar conversations with LeSuer and, according

to their testimony, were given similar assurances.

In 1982 Buster and Bob Cartwright applied for an SBA loan to

operate their agricultural products business. They were advised by

their banker that they would need $150,000 of life insurance per

person to guarantee repayment of the loan in the event that either

of them died before it was repaid. After discussing the loan

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requirements with LeSuer, each of them agreed to purchase from him
and Equitable a convertible term life insurance policy for the face

amount of $150,000. Those policies were issued in June 1982. They

are not the subject of plaintiffs' claims, but were converted to

whole life insurance policies in 1986 and 1988 which are the

subject of the plaintiffs' claims.

During 1982 Buster and Grace also purchased convertible term

life insurance policies from LeSuer and Equitable insuring each of

their lives for the face amount of $100,000 to assure payment of

the debt which was secured by their farm. Neither are those

policies the subject of the plaintiffs' claims. However, they were
also later converted to whole life policies which are the subject

of their claims.
In 1983 LeSuer advised Buster that he could replace the

retirement policy Buster had purchased in 1950 by converting it to

a better policy with greater coverage. Grace also testified that

they were told by LeSuer that only four or five premium payments
would have to be made by them to purchase paid up coverage under

the new 1993 policy. Buster testified that they were told that

premiums would eventually be paid on the policy from accumulated

dividends which the policy earned. Premium payments were made for

that policy in 1983, 1984, and 1985. When the fourth premium

notice was received in 1986, there apparently was some confusion

about how many premiums would be due. According to Buster, he

contacted LeSuer and was advised that there had been a computer

mixup, that he should not worry about it, and that LeSuer would

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take care of it. The next premium notice was received in 1987 and
showed that a loan had been taken against the policy to pay the

previous year's premium. He recontacted LeSuer and, according to

him, was given similar assurances during that and subsequent years.

In 1986 the premium for Buster's $150,000 term life policy,
and for Buster's and Grace's $100,000 term policies had increased

substantially and so they discussed alternatives with LeSuer. He

suggested that the three policies be converted to whole life
policies. According to Buster and Grace, he told them that after

three premium payments the policies would be self-sustaining and

they would not have to make the future premium payments. Based on
those representations, Buster purchased whole life policies for the

face amount of $150,000 and $100,000 from Equitable in 1986. An

additional whole policy in the face amount of $100,000 was issued

by Equitable to Grace in 1986. The third page of Buster's 1983

whole life policy indicated that premiums were due for thirty

years. The third page of the whole life policies purchased by

Buster and Grace in 1986 indicated that premiums were due for life.

However, Grace testified that when the policies were delivered by

LeSuer he did not bother to explain the terms, or suggest that they

read them. She stated that he simply said to put them in a safe

place and if they ever had a question that he would help them with

it.
The Nesses paid premiums for the whole life policies they

purchased in 1986 during 1986, 1987, and 1988. When they received

premium notices in 1989, they testified that they contacted LeSuer

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and received the same assurances that they had received regarding

their previous policies. They testified that they were told that

there had been a mistake, that they should not worry about it, and

that he would take care of it. Finally, when they received notices

in February 1990 indicating that loans were being taken against

their policies, they again tried to contact LeSuer but were advised

that he had been terminated from employment with Equitable and were

referred to Equitable's office in Billings. There they talked to
a gentleman by the name of Brad Schaffer who told them not to pay

any more premiums until their questions could be resolved to their

satisfaction. They learned for the first time in January or

February 1990 during conversations with Shaffer that there was no

such thing as an Equitable whole life policy which was self-

supporting after three payments, and that they actually had
problems with their policies other than bookkeeping errors.

Buster and Grace testified that LeSuer never discussed with

them the option of taking loans against the face value of their

policies to pay premiums after the third year and that they never

authorized him to do so. Although the portion of one or more of

their policy application forms entitled “automatic premium loan"

was checked, they testified that they had not previously known that

it was checked, nor did they ever authorize LeSuer to do so.

Buster testified that his application forms were filled in by

LeSuer and that he then signed them. Grace testified that she

signed her application forms in blank and that they were later

completed by LeSuer. During discovery, Equitable produced executed

8
forms entitled "policy owner request for service" which had been
submitted to Equitable for the purpose of authorizing a loan
against the Nesses' policies for payment of premiums after they
stopped making premium payments. However, the request forms were
executed by Blaine LeSuer. The Nesses testified that they neither
executed any such forms nor authorized LeSuer to execute the forms
on their behalf and that they were unaware that the requests for
loans against their policies had ever even been made. Officials
from Equitable acknowledged that agents could execute the forms
without any written authorization from their insureds and that
there would have been no way for the insureds to know about the
request for a loan until the following year's premium notice
arrived. The same witnesses also testified that every time a loan
was taken against the Nesses' policies to pay a premium, LeSuer
received a commission.
Because of their assumption that premiums were due for a
limited time after which the policies would be self-sustaining from
dividends and earnings, the Nesses stopped paying premiums for all
five whole life policies so that by the time of trial the status of
the policies purchased by the Nesses was as follows:
1. The whole life policy purchased by Buster to insure
Grace's life in the face amount of $25,000 in 1982 had loans
against it in the amount of $4,391, which will be deducted from any
life benefit payable pursuant to that policy.
2. Grace's $100,000 whole life policy was cancelled.

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 3. Buster's whole life policy, which was purchased in 1993
with a face value of $50,000, was cancelled.
4. Buster's whole life policy purchased in 1986 with a face
value of $150,000 had loans against it in the amount of $29,888.
5. Buster's whole life policy purchased in 1986 with a face
value of $100,000 was cancelled.
Robert Cartwright testified that as a requirement for a loan,
he purchased the same term life insurance policy that Buster Ness
had purchased from LeSuer and Equitable in 1982. After an
unsuccessful effort to.purchase his own whole life policy in 1986,
he learned in 1988 that he had a right to convert his term life
policy to a whole life policy. He contacted LeSuer about doing so
and testified that he was told by LeSuer that he could purchase a
policy which required only three payments. Based on that
representation, he applied to convert his term policy in January
1988 to a variable life insurance policy. He testified that a week
or two later LeSuer brought a policy to him which he rejected
because it did not include language to the effect that it was a
"three pay" policy. LeSuer then returned with a new document
entitled "standard ledger statement whole life 50" which appears to
set forth the annual net premium, net cash value, and net death
benefit of a whole life policy for Robert Cartwright in the face
amount of $150,000. However, on the top of the form LeSuer wrote
"what I am changing you to." Under the annual loan column he put
"x three pay" and under the net death benefit column he entered
another "x." Cartwright testified that he accepted the document as

10
his policy and placed it in his safe. He stated that no other

document was given to him.

Cartwright testified that LeSuer did not discuss the terms of

the policy with him, other than to state that only three premiums

would have to be paid. When the third premium notice arrived in

1990, he contacted Buster Ness who advised him for the first time

that there was no such thing as a "three pay" policy. Therefore,
he did not make the third payment, and in the fall of 1990 was

notified by Equitable that his policy had been terminated. At the

present time, Cartwright is uninsurable because of his health.

Blaine LeSuer testified that when the Nesses received premium

notices for years subsequent to those in which they paid their own

premiums, they contacted him and requested that he arrange to pay
premiums by taking loans against their policies. He denied that he

checked any portions of the policy applrcation forms without

authorization from the Nesses or that he sent in service requests
without being asked to do so. He agreed that when the Nesses

received premium notices they would call him and ask him to "take

care of it." However, he testified that when he did take care of

it by applying for loans with which to pay the premiums he was

simply carrying out the terms which had been agreed to at the time

the policies had been sold to the Nesses.

LeSuer testified that he had a similar agreement with

Cartwright. However, he acknowledged that Cartwright rejected the

first policy that was presented to him, and that in response to
that rejection he presented the computer printout on which the

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handwritten notations previously described were made. He explained
the notations by stating that Cartwright was concerned about having
to make more than three payments. He testified that the "three
pay" notation was Cartwright's terminology and that he would have
preferred to describe the policy as "self-supporting."
In his testimony, LeSuer repeatedly referred to the policies
which he sold to Cartwright and the Nesses as "self-supporting,"
however, he explained that that meant that after three premium
payments future premiums would be paid by a combination of
dividends earned by the policy and loans against the policy which
would be deducted from the death benefit.
The jury resolved the factual issues raised by the parties'
testimony in favor of the plaintiffs when it found that Blaine
LeSuer as the agent, and Equitable as his principal, breached a
fiduciary duty that they owed to the plaintiffs, made negligent
misrepresentations to the plaintiffs, acted negligently, committed
constructive fraud, and were guilty of actual fraud. In response
to a special interrogatory, the jury also found that the conduct of
both defendants satisfied the factual predicate for an award of
punitive damages set forth at § 27-l-221, MCA, and that punitive
damages should be awarded. In its verdicts, the jury returned
actual and punitive damages in the amounts previously stated.
Based on its statutorily required review, the District Court then
affirmed the awards of punitive damages, but reduced them by the
amounts previously discussed. Further facts, as necessary, will be
set forth in the context of the issues raised by the parties.

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 ISSUE 1
Were the plaintiffs' claims barred by the applicable statutes
of limitations?
Buster and Grace Nesses' original complaint was filed on
October 28, 1991. The amended complaint, which included Robert
Cartwright's claim, was first filed on November 12, 1991. LeSuer
and Equitable contend that they were entitled first to summary
judgment, and then to a directed verdict dismissing all of the
plaintiffs' claims based on the applicable statutes of limitations.
They contend that the three-year statute of limitations found
at § 27-2-204(l), MCA, applies to the plaintiffs' claims for breach
of fiduciary duty and negligence, and that the two-year statute of
limitations found at § 27-2-203, MCA, applies to the claims for
negligent misrepresentation and fraud. Their argument continues
that the three-year statute of limitations began to run when the
plaintiffs' causes of action accrued, that that occurred when all
elements of their claims existed, and that all elements of the
plaintiffs' claims existed when their policies were delivered in
1982, 1983, 1986, and in Cartwright's case, March 1988. They
contend that the two-year statute of limitations for fraud begins
to run two years from the date on which the fraud is alleged to
have occurred unless by the nature of the conduct complained of, it
could not have been discovered until later. However, they contend
that in this case plaintiffs are charged as a matter of law with
notice of any fraud perpetrated by LeSuer from the dates on which
their policies were delivered, and no later than the dates on which

13
they received a notice that premiums were due in addition to those
they had been led to believe they would have to pay.
The District Court agreed that plaintiffs were damaged, and
therefore, that their tort causes of action accrued when they
received policies which were not what they had been led to believe
they would receive. The District Court also held that plaintiffs
had an obligation to read their insurance contracts and that if
they had done so they would have discovered the misrepresentations
they alleged had been made, and therefore, that the statue of
limitations for fraud also began to run on the dates on which the
policies were delivered. Eased on just that part of the District
Court's analysis, the statutes of limitations for all claims by all
plaintiffs would have expired prior to the dates on which their
complaints were filed. However, the District Court went on to
conclude that when the Nesses were told by LeSuer not to worry
about the premium notices they received, the statute of limitations
pertaining to fraud was tolled by fraudulent concealment. The
District Court held that the statute pertaining to the plaintiffs'
other tort causes of action was tolled by the doctrine of
continuing relationship set forth by this Court in NorthernMontana

Hospitalv.Knight (1991), 248 Mont. 310, 316, 811 P.2d 1276, 1279.

The District Court concluded that Cartwright's tort claims did
not accrue in 1988 and that he was not put on notice of facts
constituting LeSuer's misrepresentation because no policy had in
fact ever been delivered to him. Instead, the court concluded that

14
Cartwright received, at most, an ambiguous document which included
computer generated information cancelled by Cartwright's
handwritten notations. For these reasons, the District Court
denied Equitable's motion for summary judgment and the defendants'
motions for a directed verdict. We will affirm the result of the
District Court's decision, if correct, even though arrived at for
the wrong reasons. Normanv. CityofWhitefsh (1993), 258 Mont. 26, 30,

852 P.2d 533, 535.
We conclude for the reasons that follow that the plaintiffs'
complaint alleging fraud was filed on time. Since that claim was
a sufficient basis for the jury's verdict, we will not address the
District Court's conclusion or the issues raised by the defendants
regarding the statute of limitations that applied to the
plaintiffs' other tort claims.
Section 27-2-203, MCA, provides that:
The period prescribed for the commencement of an action
for relief on the ground of fraud or mistake is within
2 years, the cause of action in such case not to be
deemed to have accrued until the discovery by the
aggrieved party of the facts constituting the fraud or
mistake.
Section 27-2-102, MCA, provides in relevant part that:

(3) The period of limitation does not begin on any
claim or cause of action for an injury to person or
property until the facts constituting the claim have been
discovered or, in the exercise of due diligence, should
have been discovered by the injured party if:
(a) the facts constituting the claim are by their
nature concealed or self-concealing; or
(b) before, during, or after the act causing the
injury, the defendant has taken action which prevents the
injured party from discovering the injury or its cause.

15
 Reading these statutes in combination we conclude that the
statute of limitations for an action based on fraud begins when the
fraud occurs unless the facts which form the basis for the
allegation are, by their nature, concealed. We also conclude that
even after acts which form the basis for an allegation of fraud are
discovered, the statute may be tolled if the defendant takes
affirmative action to prevent the injured party from discovering
that he or she has been injured.
In Holmanv. Hansen (19891, 237 Mont. 198, 203, 773 P.2d 1200,

1203, we held that "[ulnder 5 27-2-203, MCA, whether there has been
a 'discovery' of facts sufficient to start the running of the
statute of limitations is a question of law." Without directly
saying so, we impliedly held that the related question of whether
there has been fraudulent concealment which would toll the statute
of limitations is also a question of law. Neither party challenges
this analysis on appeal. The defendants contend that as a matter
of law plaintiffs' claims are barred by the applicable statutes of
limitations. Plaintiffs contend that as a matter of law their
complaints were filed within the allowable time. The District
Court agreed. We review a District Court's conclusions of law to
determine whether they are correct. Carbon County v. Union Reserve Oil Co.

(1995), 271 Mont. 459, 469, 898 P.2d 680, 686.
The issue, then, stated another way, is when did the
plaintiffs, or when should the plaintiffs have discovered that
their policy was not "self-sustaining" as represented, and was

16
there fraudulent concealment by the defendant which prevented them
from discovering that fact during the normal course of events.
Citing Holman, defendants contend that failure to discover an

alleged act of fraud will not necessarily postpone the statute of
limitations. In that case we held that:
The party asserting fraud is put on inquiry notice
of the other party's misdeeds, and must exercise ordinary
diligence to discover the facts constituting the fraud.
Yellowstone Conference of United Methodist Church v. D.A. Davidson ( 1987) ,
[228 Mont. 288,] 741 P.2d 794; Gregoryx CityofForsyth (1980),
187 Mont. 132, 609 P.2d 248. Mere ignorance of the facts
will not suffice to toll the statute of limitations.
"He must show that the acts of fraud were committed
under such circumstances that he would not be presumed to
have knowledge of them, it being the rule that if he has
'notice or information of circumstances which would put
him on inquiry which if followed would lead to knowledge,
or that the facts were presumptively within his
knowledge, he will be deemed to have actual knowledge of
the facts."'
Mobleyv.Hall(1983), 202 Mont. 227, 232, 657 P.2d 604, 607
(quoting Kerrigan V. O’Meara (1924), 71 Mont. 1, 8, 227
P. 819, 822).
Holman , 237 Mont. at 202, 773 P.2d at 1203.

Defendants contend that plaintiffs were on notice of LeSuer's
allegedmisrepresentations because of language in the policies that
were delivered to the Nesses and the computer printout which was
provided to Cartwright. The specific language they rely on
indicates that premiums were due for life or for periods of time
substantially in excess of three years. They also contend that the
Nesses were put on notice by the annual statements they received
from Equitable indicating that premiums were due in addition to
those that they assumed were due and that loans were being charged

17
against their policies to pay for previous premiums which they had
not paid.

We disagree with the defendants' argument and the District

Court's conclusion that policy language should have placed the

plaintiffs on notice that LeSuer's alleged representations were

incorrect. The only notice given to the plaintiffs by either their

policies or the computer printout provided to Cartwright was that

premiums would be due for twenty years, thirty years, or a

lifetime. However, to suggest that that information contradicted

LeSuer's alleged misrepresentations misconstrues the plaintiffs'

contentions which the jury found to be true. There was no
allegation by the plaintiffs that LeSuer ever told them that future

premiums would not be due. The dispute was over how those premiums

would be paid. Plaintiffs contended that LeSuer assured them that
after their first three payments (four or five payments for the

1982 and 1983 policies) the policies would earn sufficient

dividends and income to pay future premiums. LeSuer contended that

he told them that after three payments future premiums could be

paid by a combination of dividends and loans taken against the

policy. The jury resolved that conflict in the testimony in favor

of the plaintiffs.

If, as the jury found, LeSuer represented to the plaintiffs

that dividends and other earnings from the policy would be

sufficient to pay premiums after three years (or four or five

years) , we conclude that there was nothing in the policy language

to suggest otherwise. In fact, page three of each policy, upon

18
which defendants principally rely, specifically states that the
tables listed "do not reflect dividend credits or loans." Page

five provides the following information regarding dividends:

We will determine your policy's share, if any, of our
divisible surplus annually. It will be payable as a
dividend at the end of each policy year if the policy is
then in effect with all premiums duly paid. We do not
expect any dividend to be paid on your policy before the
end of the second policy year.

DIVIDEND OPTIONS. You may choose one of these options:
. CASH: Your dividends will be paid directly to
you.
. PREMIUMS: Your dividends will be used to helo
pay any premium then due.

(Emphasis added.) There was nothing in the policy which would have

indicated to the Nesses, had they read it, that dividends would not

be sufficient to pay premiums after the third, fourth, or fifth

year of the policy's existence.

Therefore, we conclude that the misrepresentations which the

jury found that LeSuer has made were made under such circumstances

that the plaintiffs would not have known they were false, nor were

they aware of facts from the language in their policy which should

have put them on notice that the representations were false.

Furthermore, we conclude that the first fact which should have

suggested to the Nesses that LeSuer had misrepresented the terms of

their policies was the notice that they received indicating

premiums due beyond those they had been led to believe would be

due, but that following receipt of those notices, the period of
limitations was tolled annually by LeSuer's fraudulent concealment

19
when he made statements to them which were planned to prevent
inquiry or the acquisition of information which would have
disclosed his misrepresentations to them.
Fraudulent concealment consists of "the employment of
artifice, planned to prevent inquiry or escape
investigation, and mislead or hinder acquisition of
information disclosing a cause of action." E.W. [v. D.C.H.,
231 Mont. 4811, 754 P.2d at 821 (quoting Monroev. Harper, 164
Mont. 23, 28, 518 P.2d 788, 790 (1974)). To invoke this
doctrine, plaintiffs must show "affirmative conduct by
the defendant calculated to obscure the existence of the
cause of action." Holman , 773 P.2d at 1203 (citing
Yellowstone Conference of United Methodist Church v. D.A. Davidson, Inc. , 22 8
Mont. 288, [2941, 741 P.2d 794, 798 (1987)).
Shupakv.NewYorkLifIns.Co. (D. Mont. 1991), 780 F. Supp. 1328, 1335.

Citing Falls Sand and Gravel Co. v. WesternConcrete Co., Inc. ( D . Mont . 19 67 ) ,

270 F. Supp. 495, Holman, 237 Mont. 198, 773 P.2d 1203, Carlsonv.Ray

GeophysicalDivision (1971), 156 Mont. 450, 481 P.2d 237, defendants

contend that fraudulent concealment, as a matter of law, cannot
consist of merely reaffirming an original misrepresentation.
However, the facts in the cases relied on by the defendants are
distinguishable from the facts in this case. In all three cases
relied on by the defendants, the plaintiffs had discovered the
facts which gave rise to their claims for fraud but were assured by
the defendants that the defects or inadequate performance
complained of would be cured. Under those circumstances, this
Court, and the Federal District Court, held that those plaintiffs
elected to rely on informal resolution of their claims and that
fraudulent concealment did not occur. In this case, LeSuer was not
accused of acknowledging defects in the policy that he sold to the

20
plaintiffs and then representing that the defects would be cured.
He was accused of denying that any problem existed with the
plaintiffs' policies for the purpose of discouraging the plaintiffs

from making further inquiry. That brings his alleged conduct
squarely within our prior description of fraudulent concealment.

Since neither the Nesses nor Cartwright were aware of facts

which would have led them to discover LeSuer's alleged

misrepresentations based on policy language, and since LeSuer

fraudulently concealed the true significance of the premium notices

that the Nesses received, the plaintiffs' first actual knowledge
that the terms of their policies had been misrepresented was

acquired in 1990. We therefore conclude that the complaint and

amended complaint filed in 1991 were within the two-year period of

limitation provided at 5 27-2-203, MCA, and were, therefore,

timely.

ISSUE 2

Did the District Court abuse its discretion when it admitted

evidence that LeSuer had similarly misrepresented the terms of

policies to other individuals? If not, did the District Court err

by precluding further evidence of the specific manner in which

those person's claims against Equitable were resolved?

During the course of their investigation and pretrial

discovery, the plaintiffs learned that complaints about LeSuer's

sales practices had been made by twenty-seven others to the Montana

Insurance Commissioner. Complaints had also been made to

Equitable's home office in New York and its regional office in

21
Fresno, California. Since L&Suer testified during discovery that
he would not have applied for loans against a customer's policy
without their authorization, the plaintiffs offered testimony from
four other customers to prove that he had done so as a routine
practice.
Audrey Kaercher, Lyle Richards, Richard Berger, and Elsie
Mills all testified that they owned life insurance policies issued
by Equitable when they were approached by LeSuer in the 1980s with
the suggestion that they use the cash value of their existing
policies to purchase newer and better policies. They all testified
that LeSuer represented to them that by a combination of the value
in their existing policy and a minimal number of premiums they
could obtain greater coverage from a policy which would be self-
supporting in a short period of time. They also testified that at
the point in time when they expected their new policy to be
self-supporting they continued receiving premiumnotices indicating
that loans were being taken against their policy to pay the
additional premiums, but that LeSuer had never discussed loans with
them and that they had never authorized him or Equitable to loan
them money for the payment of premiums. All four people testified
that when they were notified of the situation, they contacted
LeSuer who told them not to worry about it and that he would take
care of it.
Lyle Richards and Elsie Mills testified that when they tried
to contact Equitable's telephone number listed on their annual

22
premium notice, the only person either of them was ever able to
reach was the janitor.
The defendants objected to testimony from these four witnesses
on the grounds that it was irrelevant and inadmissible pursuant to
Rules 401 and 402, M.R.Evid.; it was prejudicial pursuant to
Rule 403; and their complaints lacked sufficient similarity to
qualify pursuant to Rule 404(b) and the standards established in
Siajev. Mutt (1991), 249 Mont. 136, 814 P.2d 52, for admission of

evidence of other acts. The District Court, however, admitted the
testimony of these four witnesses pursuant to Rules 404(b) and 406,
M.R.Evid.
We review a district court's evidentiary rulings to determine
whether there has been an abuse of discretion. In re $23,691.00 (Mont.

1995), 52 St. Rep. 1063, 1065, 905 P.2d 148, 152 (citing S&&v.

Passama (1993), 261 Mont. 338, 341, 863 P.2d 378, 380). The

district court has broad discretion to determine if evidence is
admissible. Accordingly, absent an abuse of discretion this Court
will not overturn the district court's determination. Inre$23,691.00,

905 P.2d at 152, 52 St. Rep. at 1065.
Relevant evidence means evidence having any tendency
to make the existence of any fact that is of consequence
to the determination of the action more probable or less
probable than it would be without the evidence. Relevant
evidence mav include evidence bearins upon the
credibilitv of a witness or hearsay declarant.
Rule 401, M.R.Evid. (emphasis added).
All relevant evidence is admissible, except as
otherwise provided by constitution, statute, these rules,
or other rules applicable in the courts of this state.

23
Rule 402, M.R.Evid.

Buster Ness, Grace Ness, and Robert Cartwright testified that

they were told by LeSuer that they could purchase whole life

insurance policies from Equitable which would be supporting after

payment of a few annual premiums. They testified that loans
against the policy which had the effect of reducing the policy's

death benefit had never been suggested by LeSuer and were not part

of the bargain. Buster and Grace also testified that when they did
receive notice that loans were being taken against the policies,

LeSuer told them there had been a bookkeeping or computer

programming mistake, that they should not worry about it, and that

he would take care of it.

LeSuer testified that he explained to all three plaintiffs

that they could purchase policies from Equitable for which they

would have to pay cash premiums for only three years because after

that period of time premiums could be paid by a combination of

dividends, policy earnings, and loans against the policy. He

testified that he never requested loans against policies without

the plaintiffs' authorizations, and that when they called him to

request that he deal with additional premium notices, they were

actually calling him to request that he secure the loans necessary

to pay their additional premiums.

LeSuer, who testified by video deposition, had no specific

recollection of exact conversations with Buster and Grace Ness.

However, attorneys for the defendants refreshed his recollection

24
regarding his conversations with them based on documents in the

company's possession.

After being shown premium notices issued to Grace Ness which

showed loans taken against her policy, LeSuer testified, based on
that notice, that Grace had called him and said she did not have

the money for the premium and asked him to have it paid by

authorizing a loan against her policy.
When shown a customer service form authorizing payment of a

premium loan which had been filled out by him, LeSuer testified

that Buster or Grace must have requested a loan or he would not

have filled out the form. Based on LeSuer's testimony, which

assumed facts because of documents that were in existence, the

plaintiffs were entitled to show that similar customer service

forms or notices of loan payments to pay premiums which existed

among the records of other customers did not automatically

establish approval by that customer for loans against their
policies.

If similar notices were sent to other customers and similar

customer service forms were filled out on behalf of other customers

without any request by them that LeSuer do so, those facts made

LeSuer's reconstruction of events, based on the documents

pertaining to the Nesses' policies, less credible. Therefore, we
conclude that the testimony of Kaercher, Richards, Berger, and

Mills was relevant and admissible, absent some other basis in the

Rules of Evidence for excluding it.
 The defendants contend that pursuant to Rule 404(b),
M.R.Evid., the evidence of prior acts and representations by LeSuer

was inadmissible character evidence. Rule 404(b) provides as

follows:

Evidence of other crimes, wrongs, or acts is not
admissible to prove the character of a person in order to
show action in conformity therewith. It may, however, be
admissible for other purposes, such as proof of motive,
opportunity, intent, preparation, plan, knowledge,
identity, or absence or mistake or accident.

We have not previously applied or discussed Rule 404(b) in the

context of a civil action, however, because defendants' contention
is not that the Rule should not have been applied, but rather that

it was misapplied, its applicability is not before us. We have
stated in the context of criminal law that certain criteria must be

considered before prior bad acts can be admitted without offending

Rule 404(b). In statev.hfatt (1991), 249 Mont. 136, 142, 814 P.2d 52,

56, we held that: (1) the other acts must be similar; (2) the other

acts must not be remote in time; (3) the other acts may be admitted

for one of the permissible purposes provided in Rule 404(b); and

(4) the probative value of the other act must not be outweighed by

the danger of unfair prejudice.

LeSuer contends that the first of the four criteria set forth

above is not satisfied in this case because the nature of LeSuer's

alleged representations to these four witnesses was different than

his alleged representations to the plaintiffs. He distinguishes

the representations to the other four witnesses on the basis that

they had existing policies which were being used to partially fund

26
premiums for new policies. However, we conclude that the
distinction is insignificant.
The basic conduct which the testimony was offered to prove is
the same. All four witnesses claimed that they were told they
could purchase a better policy for a minimal number of premiums,
that the policies would become self-supporting, and that after a
few years they would owe no further premiums from their own
personal funds. When instead they received notices of additional
premiums which were being paid by loans against the policies, they
contacted LeSuer who told them that the notices were a mistake,
they should be ignored, and that he would take care of the problem.
All of the witnesses testified that loans to pay premiums were
never explained to them or discussed with them and that they had
not given authorization to LeSuer to apply for loans against their
policies. In all significant respects, the misrepresentations they
described and the pattern of conduct they complained of were
identical to those misrepresentations and the pattern of conduct
complained of by the plaintiffs. Therefore, we conclude that the
acts to which the four witnesses testified were sufficiently
similar to those which were the subject of the plaintiffs'
complaint. We furthermore conclude that the acts about which these
four witnesses complained occurred during the approximate time of
the acts complained of by the plaintiffs; they were probative of
LeSuer's plan to earn commissions by selling policies to customers
which they would have known they could not afford had the policies
been honestly explained to them, and further probative of the fact

27
that the problems complained of by the plaintiffs were not the
result of a mistake or miscommunication on LeSuer's part. Finally,
we conclude that the probative value of the offered evidence
substantially outweighed the danger of unfair prejudice, and
therefore, that the evidence was admissible pursuant to
Rule 404(b), M.R.Evid.
After the testimony of these four witnesses was admitted, the
District Court allowed defendants' counsel to ask on cross-
examination whether their complaints about the way in which LeSuer
handled their policies had been satisfactorily resolved. They all
answered that their claims had been resolved. However, defendants
were not allowed to further explore the specific details of each
resolution. The District Court limited cross-examination to that
extent for the stated purpose of avoiding other trials within the
trial of this case.
On appeal, LeSuer complains that the jury was left with
incomplete information and that in fairness, he should have been
allowed to explore completely the manner in which each of the four
claims was resolved. We conclude, however, that the manner in
which each of the four claims was resolved is irrelevant. The
plaintiffs were entitled to corroborate their own testimony and
impeach LeSuer's testimony by establishing LeSuer's pattern of
conduct. The defendants were entitled to show that when LeSuer's
conduct was brought to Equitable's attention, it took measures to
cure the problems that he created. However, the particular manner
in which the problems were resolved had no bearing on any issue in

28
this case. Therefore, we conclude that the District Court did not

abuse its discretion by limiting the cross-examination of these

four witnesses in the manner described.

ISSUE 3

Was the jury's finding that the defendants committed fraud

supported by substantial evidence?

Defendant LeSuer argues on appeal that there was insufficient

evidence to sustain the jury's verdict that the defendants

defrauded the plaintiffs
We review a jury's factual findings to determine whether there

is substantial evidence in the record to support those findings.

Hoganv. FIatheadHealthCtu.,Inc. (19921, 255 Mont. 388, 390, 842 P.2d 335,

337. As we stated in Cechovicv.Hardin&Associates (Mont. 1995), 902 P.2d

520, 525, 52 St. Rep. 854, 848:

This Court's role is not to agree or disagree with a
jury's verdict. Once we conclude that substantial
evidence supports the verdict, our inquiry is complete.
Substantial evidence has been defined as evidence a
reasonable mind might accept as true and can be based on
weak and conflicting evidence. When we determine whether
substantial evidence supports the jury's verdict, we
review the evidence in a light most favorable to the
party who prevailed at trial. If the evidence at the
trial conflicts, the jury's role is to determine the
weight and credibility of the evidence.

(Citations omitted.)

We have previously held that in a civil action for fraud it is

necessary to establish the following nine elements:

The nine elements of fraud are:

1. A representation;

29
 2. Falsity of the representation;
3. Materiality of the representation;

4. The speaker's knowledge of the falsity of the
representation or ignorance of its truth;

5. The speaker's intent that the representation shall
be relied upon;

6. The hearer's ignorance of the falsity of the
representation;

7. The hearer's reliance on the representation;

8. The hearer's right to rely upon the representation;

9. Consequent and proximate injury caused by the
reliance on the representation.

NorthwestTruck& TrailerSalesv. Dvorak (1994), 269 Mont. 150, 154, 887 P.2d

260, 262 (quoting Wibergv. I7Bar, Inc. (1990), 241 Mont. 490, 496, 788

P.2d 292, 295).

The jury was properly instructed on the elements that

plaintiffs had to prove to establish fraud. LeSuer does not claim

otherwise. What he does contend is that because of the policies

which were provided to the plaintiffs, and the language in those

policies which indicated the number of premiums which were due,

plaintiffs were not justified in relying on LeSuer's alleged

misrepresentations that the policies would be self-supporting after

three, four, or five premium payments. However, for the reasons

stated in our discussion of Issue 1, we repeat that the dispute in

this case was not about the number of premiums due for the policies

sold by LeSuer, or about the length of time over which premiums

would have to be paid. The dispute was whether LeSuer represented

30
that premiums after the first few would be paid by dividends and
policy earnings, or whether he advised plaintiffs that in fact
future premiums would have to be paid by them personally or paid by
loans taken against the policy. As we have previously noted, there
was nothing in the policy language which would have informed the
plaintiffs one way or the other. Therefore, there was nothing
about the policy language which would have precluded plaintiffs as
a matter of law from relying on LeSuer's representations.
For these reasons, and based on the testimony of Buster Ness,
Grace Ness, and Robert Cartwright, we conclude that there was
substantial evidence in support of each of the elements of a civil
claim for fraud. We therefore affirm the jury's verdict that the
defendants committed fraud.
ISSUE 4
Was the jury's award of actual damages supported by
substantial evidence?
Defendant LeSuer contends that there was insufficient evidence
to sustain the jury's verdict that the plaintiffs incurred actual
damage as a result of LeSuer's alleged misrepresentations. We
review a jury's damage award as we do its determination of
liability, to determine whether it is supported by substantial
evidence. Leev.Kane (1995), 270 Mont. 505, 510, 893 P.2d 854, 857.

LeSuer contends that because neither Cartwright nor the Nesses
could afford to continue making premium payments on the term
policies that they purchased in 1982, that their options were very
limited and that the only thing they have lost based on any

31
misrepresentation made by him are the premium payments that they
made toward the whole life policies to which their term policies

were converted.

Our review of the record establishes that the jury's
compensatory damage awards were based on the testimony of Darby

Minnick. Mr. Minnick is a life insurance agent with Northwestern

Mutual Life in Bozeman and has been in the business for fifteen

years. He expressed the opinion after reviewing the plaintiffs'

policies that they had suffered economic loss based on their

purchases from Equitable and gave the following opinions regarding

the extent of damages that the plaintiffs' sustained.

Minnick expressed the opinion that Cartwright's damages were

based upon his agreement to purchase whole life coverage with a

face value of $150,000 for three premium payments and the fact that

after making two premium payments he discovered that he had not

received what he had purchased, stopped making payments, and his

policy was terminated. He testified that not only is Cartwright

now without his term life coverage, but he has no whole life policy

and he is uninsurable due to his health and age. After deducting

the premium payments that Cartwright agreed to pay from the amount

of coverage Equitable agreed to provide, he calculated that

Cartwright's damage is $144,025. That was the amount awarded by

the jury.
He testified that Grace Ness purchased coverage in the face

amount of $25,000 in 1982 and that as of April 13, 1994, the policy

should have provided coverage worth $27,114, but that loans against

32
that policy reduced her death benefit to $22,723. He stated that
her damage related to the 1982 policy, therefore, was $4,391. He

also testified that had loans not been taken against that policy,

there would currently be sufficient dividends accumulated to pay

premiums from this point forward.

Minnick also testified that the $100,000 whole life policy

which Grace purchased in 1986 was terminated on November 18, 1994,

due to failure to pay the premium and that the cost of buying that
much coverage for a person of her age and paying premiums until the

policy was self-supporting, based on a given rate of return, was

$40,384. The jury returned a verdict of compensatory damage to

Grace Ness in the amount of $44,738.

Minnick testified that at the time of trial, loans in the

amount of $29,888 had been taken against Buster's $150,000 whole
life policy and that to purchase a policy which would provide the

coverage which had been represented to him at the price he had been

told he would have to pay, those loans would have to be paid back

and an additional $10,632 worth of premium payments would have to

be made. To replace the $50,000 policy which he purchased in 1983

but which has been terminated or cancelled for failure to pay

premiums, and to provide for the extent of coverage represented

without the necessity for payment of future premiums, would cost

$34,313. He added that to replace Buster's $100,000 whole life

policy purchased in 1986 with a policy that would provide the

amount of coverage represented at the cost represented, would cost

between $57,166 and $81,848, depending on the rate of return that

33
the policy earned. The jury returned a verdict for Buster in the
amount of $144,025.
We conclude that based on the testimony of Darby Minnick,
there was substantial evidence to support the jury's compensatory
damage award.
ISSUE 5
Did the District Court abuse its discretion when it refused to
instruct the jury that plaintiffs could not recover for fraud in
light of their failure to examine the insurance policies they
purchased?
Defendant LeSuer's proposed Instruction No. I7 was as follows:
"A person who fails to take the opportunity to examine a written
form before executing it cannot claim fraud." That instruction was
rejected by the District Court.
LeSuer claims that his proposed instruction was supported by
the evidence because the plaintiffs claimed that they signed
applications for insurance which were later filled in by LeSuer and
that the instruction is justified by our decision in MontanaBankv.

LightjTeld (19891, 237 Mont. 41, 771 P.2d 571.

We have held that a district court has discretion regarding
the instructions it gives or refuses to give to a jury and that we
will not reverse a district court on the basis of its instructions
absent an abuse of discretion. Cechovic v. Hardin & Assoc. (Mont . I9 95 ) ,

902 P.2d 520, 527, 52 St. Rep. 854, 860. When we examine whether
jury instructions were properly given or refused, we consider the

34
instructions in their entirety, as well as in connection with the
other instructions given and the evidence at trial. Story v. City of

Bozeman (1993), 259 Mont. 207, 222, 856 P.2d 202, 211. While

LeSuer's proposed Instruction No. 17 accurately paraphrased a
portion of our discussion in Montana Bank, the instruction was

incomplete and taken out of context. The entire paragraph from
which the instruction was drafted is as follows:
Typically, a person who fails to take the
opportunity to examine a written form before executing it
cannot claim fraud. Jenkinsv.Hillard (1982)) 199 Mont. 1, 6,
647 P.2d 354, 357; Hjermstadv. Bark&o (1954), 128 Mont. 88,
98, 270 P.2d 1112, 1117. As noted by the Bank, however,
a person may claim fraud to a document he signs "where he
is prevented from reading it or having it read to him by
some fraud, trick, artifice, or devise by the other
party." 17 Am. Jur. 2d Contracts § 152 (1964).

MontanaBank, 237 Mont. at 47-48, 771 P.2d at 576.

In this case, Buster and Grace Ness testified that they were
asked to sign application forms for insurance at a time when the
forms did not include representations or requests which appeared on
the forms as they were submitted to Equitable. The inference was
that the information was added by LeSuer after the documents were
executed by the Nesses. Based on the testimony given, the
instruction proposed by LeSuer was an incomplete statement of the
law and would have been misleading. If the jury was going to be
instructed on the plaintiffs' obligation to examine the documents
they signed, the jury should also have been instructed that the
obligation did not apply where, because of artifice on the part of
the other party, they did not have an opportunity to observe the

35
objectionable part of the document. For these reasons, we conclude

that the District Court did not abuse its discretion, and

therefore, did not err when it refused LeSuer's proposed

Instruction No. 17.
ISSUE 6

Was there substantial evidence to support an award of punitive

damages against each defendant?
Section 27-l-220, MCA, provides that punitive damages, in

addition to compensatory damages, may be awarded by a judge or jury

for the sake of punishing a defendant. Section 27-l-221, MCA,

limits awards of punitive damages to those situations in which a

defendant has been found guilty of actual fraud or actual malice.

The same statute defines actual malice as follows:

(2) A defendant is guilty of actual malice if he
has knowledge of facts or intentionally disregards facts
that create a high probability of injury to the plaintiff
and:
(a) deliberately proceeds to act in conscious or
intentional disregard of the high probability of injury
to the plaintiff; or
(b) deliberately proceeds to act with indifference
to the high probability of injury to the plaintiff.

Section 27-1-221, MCA.
Section 27-l-221, MCA, defines the type of fraud which wi ,ll

support an award of punitive damages as follows:

(3) A defendant is guilty of actual fraud if he:
(a) makes a representation with knowledge of its
falsity; or
(b) conceals a material fact with the purpose of
depriving the plaintiff of property or legal rights or
otherwise causing injury.
(4) Actual fraud exists only when the plaintiff has
a right to rely upon the representation of the defendant
and suffers injury as a result of that reliance.

36
 Subparagraph (5) of 5 27-l-221, MCA, provides that all
elements of a claim for punitive damages must be proven by clear

and convincing evidence and defines clear and convincing evidence

as "more than a preponderance of evidence but less than beyond a

reasonable doubt."

As stated previously, we review a jury's findings in civil

cases to determine whether there was substantial evidence to

support those findings. Hogan, 255 Mont. at 390, 842 P.2d at 337.

That standard of review, however, is normally applied to the

situation where the burden of proof is satisfied by a preponderance

of the evidence. In criminal cases, where guilt must be proven

beyond a reasonable doubt, our standard of review is specific to

that burden. SeeStatev. Gould (Mont. 1995), 902 P.2d 532, 541, 52 St.

Rep. 930, 935-36. We have not previously analyzed whether actions

which must be proven by clear and convincing evidence should be

reviewed by something more than substantial credible evidence.

However, we have upheld jury verdicts which awarded punitive

damages where those verdicts were supported by substantial

evidence. Kingv.Zimmerman (1994), 266 Mont. 54, 64, 878 P.2d 895,

901-02; Deesv. AmericanNat’lFireIns. Co. (1993), 260 Mont. 431, 444, 861

P.2d 141, 149. Furthermore, when we have reviewed district court

decisions to terminate parental rights, which must also be based on

clear and convincing evidence, we have also applied the substantial

evidence standard of review. See, e.g., In reSC. (1994) , 264 Mont. 24,

28, 869 P.2d 266, 268; InreF.M (19911, 248 Mont. 358, 363, 811 P.2d

37
1263, 1266. We therefore review the jury's verdict in this case to
determine whether there was substantial evidence to support its

determination that plaintiffs were entitled to recover punitive

damages.
The jury was instructed on the law of punitive damages and

neither defendant objects on appeal to the manner in which the jury

was instructed on that subject. Based on those instructions, the

jury responded in the affirmative when asked by special
interrogatory whether punitive damages should be awarded against

each defendant. However, both defendants contend on appeal, for

different reasons, that there was insufficient evidence to support

that part of the jury's verdict.

LeSuer contends that because the District Court should not

have admitted evidence of complaints by people other than the

plaintiffs, the only evidence offered in support of the plaintiffs'

claim for punitive damages was their own testimony; and that since

there were inconsistencies in the plaintiffs' testimony,

substantial doubt was raised about their credibility, and

therefore, the evidence against LeSuer was not clear and

convincing. Based on our review of the record, we disagree.

LeSuer, himself, corroborated the plaintiffs' testimony in

many particulars. He agreed that he told them they would only have

to pay three premiums from their personal funds for whole life

insurance policies. He agreed that he described the policies to

them as "self-supporting." He agreed that when they called him to

advise him of the premium notices they had received, he told them

38
he would take care of the problem. LeSuer's testimony differs from
the plaintiffs only because he testified that to him "self-

supporting" meant that future premiums would be paid by a

combination of dividends, policy earnings, and loans against the

policy, and in the further respect that when he told them he would

take care of the premiums the understanding was that he would take

care of them by obtaining loans from Equitable.

Furthermore, as discussed previously in this opinion, the
plaintiffs' testimony, although substantial evidence, does not

stand alone. Four other individuals testified that when LeSuer

sold policies to them which he described as "self-supporting" he

did not discuss loans to pay future premiums and did not obtain

their authorization to borrow money against their policies. These
same people testified that when they complained of premium notices

which they had not expected to pay, LeSuer clearly conveyed to them

that the premium notices were the result of a clerical error.

Lyn Gunning sold life insurance for Equitable in Great Falls

from 1969 until 1976. He worked for the same company in Billings

until 1978, and has been the office manager for Equitable's Denver
agency since 1986. When he took over the Denver agency in 1986 it

was responsible for the entire state of Colorado. However, in

1990, that same agency assumed responsibility for the states of

Wyoming and Montana as well. At that time, he began reviewing

complaints that LeSuer had sold life insurance policies by

misrepresenting the actual cost of those policies to his customers.

In the course of his investigation of those complaints, he prepared

39
a number of memos setting forth his findings. In a note dated
February 24, 1992, related to a complaint by Janet Breedan, he
referred to Don Blumer (LeSuer's former supervisor), Joe Wanago

(another Great Falls salesperson), and Blaine LeSuer by stating,

"they are all part of that mess up in Montana." He explained that

the mess he referred to was a series of complaints involving

LeSuer.

In a July 26, 1990, memo regarding the complaint filed by

Lloyd Kaercher, after Gunning had been involved in a high number of

complaints about LeSuer for several months he stated, "attached is

correspondence relating to another policy holder being raped by

Blaine LeSuer."

Gunning testified that during the course of his investigations

of LeSuer he developed no evidence which would refute any of the

complaints that he had received about LeSuer. Neither did he have

any evidence to suggest that there was any basis for refuting the

claims made by Cartwright and the Nesses. He testified that after
reviewing complaints against LeSuer he concluded that it was

LeSuer's common practice to take unauthorized loans against policy

holders policies, and when they were notified to tell them not to

worry about it because he would take care of it. It was his

opinion that LeSuer had engaged in a regular practice of destroying

the value of people's life insurance in order to sell them more

life insurance.

We conclude that the evidence that LeSuer engaged in

fraudulent and malicious conduct within the meaning of § 27-1-221,

40
MCA, was supported by substantial credible evidence and that the

evidence was clear and convincing. The jury's verdict to that

effect is affirmed.

Equitable challenges the jury's finding that it is liable for
punitive damages on a different basis. It contends that the
undisputed evidence was that LeSuer was a rogue agent who broke the

company's rules by acting dishonestly, and that as a matter of law,

based on the proof in this case, it is not vicariously liable for

punitive damages based on his conduct.
Equitable argues that the circumstances which will support an

award of punitive damages against a principle are set forth in

Restatement (Second) of Torts 5 909, and that those circumstances

were not proven in this case. Section 909 provides as follows:

Punitive damages can properly be awarded against a
master or other principle because of an act by an agent
if, but only if,
(a) The principle or a managerial agent authorized
the doing and the manner of the act, or
(b) The agent was unfit and the principle or a
managerial agent was reckless in employing or retaining
him, or
(c) The agent was employed in a managerial capacity
and was acting in the scope of employment, or
(d) The principle or a managerial agent of the
principle ratified or approved the act.

Restatement (Second) of Torts 5 909 (1979).
With the exception of a minor change to subparagraph cd),

which in fact increased the burden on the plaintiff, the jury was

instructed that 5 909 is the law in Montana. Neither party

objected to this instruction. Therefore, while we express no

opinion that § 909 does or does not state the law in Montana

41
regarding the liability of a principle for punitive damages based
on the acts of an agent, we will review the evidence as it relates
to the law as it was given to the jury.
Equitable's administrative structure consisted of a home
office in New York, four regional offices at various locations in
the country, and agency offices covering a smaller geographical
areas which included various districts. When LeSuer began selling
insurance for Equitable, he worked for an agency office located in
Billings, but his district office was located in Great Falls.
Joseph Wanago testified that he is a retired insurance broker
who sold policies for Equitable from 1961 to 1987. He was the
district manager in Great Falls from 1962 until about 1975. He
testified that he resigned the managerial position in 1975 after he
complained to the new office manager about the exploitation of
customers and was told to mind his own business.
He testified that he recalled LeSuer's customers calling the
Great Falls office to inquire about why they had loans taken
against their policies. He testified that when he advised them
they must have authorized it, they disagreed with him. He recalled
referring five to ten such people to Equitable's regional office in
Fresno to resolve their problems.
Wanago explained that when he first became alerted to the fact
that LeSuer was misleading customers about the nature of coverage
they were purchasing and then borrowing money against their
policies without their authorization, he reported the fact to Don

Blumer, the new district manager, who told him to mind his own

42
business. Eventually he reported the problem to Bud Partridge, the

agency manager in Billings, who responded by getting mad at him,

telling him it was none of his business, and explaining that the

theory by which they operated was "buyer beware." He described

LeSuer's sales practices and Blumer's tacit approval of those

practices as "wrong and unethical."

He explained that LeSuer and other agents were telling people

they could buy life insurance for nothing when what they were

actually doing was tapping an existing policy which eventually

became worthless, or borrowing money against the new policy which
diminished the value of that policy, and that in the process agents

like LeSuer made huge commissions.

Wanago testified that in addition to the customers who he

personally referred to the regional office in Fresno, he also

personally made complaints to regional officials and to two

different presidents of the company.
Carol Ann Matthew testified that beginning in 1975 she worked

for Equitable's customer relations department in New York where she

corresponded with customers about their complaints. She also

served on a sales resolution committee which investigated and

handled complaints. She first received complaints about LeSuer

which were similar to the complaints in this case in 1984, handled

additional complaints in 1985 and 1986, and a final complaint in

1990. However, she testified that no disciplinary action was taken

against LeSuer as a result of any of these complaints.

43
 Ken Tarrant testified that he became the staff manager at the

Fresno regional office for Equitable in 1990. Among his

responsibilities, he handled customer complaints related to sales

practices. By then there were at least twenty complaints filed

against LeSuer involving loans against policies, and each of them

involved an unauthorized loan for which LeSuer signed the customer

request form. He admitted that during the time involved there was

nothing in the policies provided to the insureds which informed
them that an agent could take out loans against their policy

without their approval or written authorization, and that during
the time that the conduct complained of in this case occurred

customers would not even be provided notice that a loan was made

until the following year's premium notice was received.

John Doherty was appointed agency manager for the Wyoming

agency in 1979. Responsibility for Montana was added to his duties

in 1985. Although Equitable had 22,000 policy holders in Montana

who owned $400,000,000 worth of life insurance, the company

concluded it was not feasible for the state to have its own agency

manager.
Doherty testified that because of the distance he was located

from Montana, he did not have frequent communication with LeSuer,

but he was aware from the agency's records that from 1985 to 1987

LeSuer was selling "leveraged policies." However, he had not been

advised of the complaints made against LeSuer with other offices

until they were brought to his attention by the plaintiffs'

attorneys.

44
 He stated that LeSuer was terminated as an agent in 1989, but
not because of sales practices which Doherty described as
"fraudulent." LeSuer was finally terminated by Equitable for lack

of production.

There was additional evidence that managerial agents for

Equitable were aware of LeSuer's dishonest sales practices, but did

nothing to prevent them from being repeated. In the interest of

avoiding repetition, we will not set forth all of the evidence in
this opinion.

In determining whether there is sufficient evidence to support

a jury's verdict, we review the evidence in the light most

favorable to the party which prevailed. The prevailing party is

also entitled to any reasonable inference that can be drawn from

the facts which are proven. Silvisv. Hobbs (1992), 251 Mont. 407, 411,

824 P.2d 1013, 1015; see Jacques V. Montana Nat’1 Guard (1982) , 199 Mont.

493, 504, 649 P.2d 1319, 1325. Applying that standard of review to

the evidence that has been described, we conclude that there was

clear and convincing evidence from which a jury could find that

both subparagraphs (b) and (d) of 5 909 were proven in this case.
Conduct by LeSuer, which was described by his own coworkers as

unethical, and by his managerial personnel as fraudulent, was

reported repeatedly to his supervisors and to high executive

officers of Equitable. In spite of those reports, he was retained

by the company. Furthermore, it can be inferred from the testimony

that LeSuer's supervisors or managerial agents approved of his

45
conduct. LeSuer testified himself that when he was supervised by

Blumer, Blumer frequently made disparaging remarks about customers,

such as "piss on 'em." He also testified that when he reported

similar dishonest sales practices by another agent, he was told by

Blumer not to worry about it. Finally, he testified that his

practice of financing new policies by a combination of dumping old
policies and borrowing money on behalf of the client was never

criticized by Equitable officials in Billings, Cheyenne, Fresno, or

New York.

For these reasons, we conclude that the evidence that

plaintiffs were entitled to recover punitive damages against LeSuer

and Equitable was supported by substantial credible evidence and

that the evidence was clear and convincing. The jury's verdict to

that effect is affirmed.

ISSUE 7
Should the plaintiffs' compensatory damage awards be reduced

by a percentage equal to the degree to which the jury found that

each plaintiff was contributorily negligent?

After the entry of judgment in favor of the plaintiffs, LeSuer

and Equitable moved the court to amend the judgment by reducing the

actual damages awarded to the plaintiffs by the percentages of

their contributory fault. That motion was denied by the District

Court.

As authority for their contention that plaintiffs' damages

should be reduced by the percentage of their contributory

46
negligence, the defendants rely on § 27-l-702, MCA, which provides
as follows:
Contributory negligence shall not bar recovery in an
action by any person or his legal representative to
recover damages for neqliqence resulting in death or
injury to person or property if such negligence was not
greater than the neslisence of the person or the combined
negligence of all persons against whom recovery is
sought, but any damages allowed shall be diminished in
the proportion to the amount of negligence attributable
to the person recovering.
(Emphasis added.)
The plaintiffs respond that § 27-l-702, MCA, clearly
authorizes reduction of damage awards based on contributory
negligence only to the extent that the defendants' liability is
also based on negligence. They contend that since, in this case,
all of their actual damages were independently caused by the
defendants' fraud, there is no basis for reducing their recovery
pursuant to the comparative negligence statute.
The defendants contend, however, that the plaintiffs'
negligence can be compared to the defendants' fraudulent conduct
for purposes of reducing their recovery pursuant to our prior
decisions in Martelv. Montana Power Co. (1988), 231 Mont. 96, 752 P.2d

140, Drilcon, Inc. v.RoilEnergyCorp. (1988), 230 Mont. 166, 749 P.2d 1058,

and Evansv.TeakettleReaI~ (1987), 226 Mont. 363, 736 P.2d 472. For the

following reasons, we conclude that the cases relied on by the
defendants are inapplicable to the facts established in this case.
In Evans, the plaintiffs alleged that they purchased an

uninhabitable home as a result of the defendant realtor's

47
negligence and violation of the Montana Consumer Protection Act
(55 30-14-101 -142, MCA). The defendant alleged that the

plaintiffs' contributory negligence caused their own damages.

After trial, a jury found that the defendant violated the Consumer

Protection Act, that each party was fifty percent at fault based on
negligence principles, and that the plaintiffs' damages were

$26,000. Evans, 226 Mont. at 364-65, 736 P.2d at 473. The verdict

did not specify what amount of those damages was attributable to

the violation of the Consumer Protection Act, as opposed to the
parties' negligence. The district court allowed reduction of the

plaintiffs' damages by fifty percent. On appeal the plaintiffs

contended that the district court erred when it compared their

negligence to the defendant's Consumer Protection Act violation for

purposes of reducing their recovery. Evans, 226 Mont. at 365, 736

P.2d at 473. In affirming the district court, we noted that based

on the instructions given to the jury, damages for violation of the

Consumer Protection Act were different than the damages recoverable

for negligence, but that based on the jury's verdict there was no

way for us to determine what amount of the total damages were

awarded for each cause of action. Therefore, based on the

inadequacy of the record, we affirmed the district court. Evans,

226 Mont. at 366, 736 P.2d at 473-74. In dissent, Justice Sheehy

noted that the instructions given to the jury, as interpreted by
the special verdict, were so confusing, that the entire case should

have been retried. Evans, 226 Mont. at 367, 736 P.2d at 474.

48
 Evans has no application to the facts in this case. The

plaintiffs in this case recovered damages based on five independent

causes of action and the damage instruction was the same for each

cause of action. Therefore, it was not necessary for the district

court to reduce the plaintiffs' damages based on confusion about

which damages were attributable to the defendant's negligence, as

opposed to the defendant's fraudulent conduct.

III Drilcon, the issue was not whether a plaintiff's contributory

negligence could be compared to a defendant's fraudulent or

intentional conduct. The issue raised by the defendant on appeal

was whether a jury verdict form which allowed the jury to consider

the defendant's negligence, as well as fraudulent conduct by third

parties when it apportioned liability, was unduly confusing in

light of the defendant's contention that the third parties'

fraudulent conduct was an intervening and superseding cause of the

plaintiff's damages. However, since the jury actually found that

the defendant was ninety-five percent negligent and the plaintiff

was five percent contributorily negligent, we held that the

defendant was not prejudiced by the form of the special verdict.

Since there was no prejudice, we concluded there was no cause for

reversal based on the district court's verdict form. Drilcon , 23 0

Mont. at 173, 749 P.2d at 1062. Drilcon clearly has no relevance to

the issue raised by the defendants on appeal.

In Martel, the plaintiff suffered permanent injuries when he was

electrocuted after coming in close proximity to the defendant's

49
electric power transmission line. Martel, 231 Mont. at 98, 752 P.2d

at 142. He alleged, and the trial court concluded, that he had
proven willful and wanton conduct on the part of the defendant

which contributed to the cause of his injuries. However, the

district court allowed the jury to compare the plaintiff's

negligent conduct to the defendant's conduct for the purposes of

apportioning liability. On appeal, the plaintiff contended that

based on our prior decisions negligence could not be compared to

willful and wanton misconduct. We noted that the rule relied on by

the plaintiff preceded the enactment of comparative negligence in

Montana and reversed that rule. Martel, 231 Mont. at 99-100, 752

P.2d at 142-43. We held that:

[~I11 forms of conduct amounting to negligence in any
form including but not limited to ordinary negligence,
gross negligence, willful negligence, wanton misconduct,
reckless conduct, and heedless conduct, are to be
compared with any conduct that falls short of conduct
intended to cause injury or damase.

Ma&l, 231 Mont. at 100, 752 P.2d at 143 (emphasis added).

As is evident from the quoted portion of Martel, we did not hold

that a plaintiff's negligence could be compared to conduct by a

defendant which was intended to cause harm for purposes of reducing

the plaintiff's recovery pursuant to § 27-l-702, MCA.

In this case, the jury found that plaintiffs were entitled to

recover punitive damages based on instructions which required that

they first find that misrepresentations were made for the purpose

of causing damage to the plaintiff. Therefore, based on the jury's

finding, and based on the plain language of the comparative

50
negligence statute and our application of that statute in Martel, we

conclude that the defendants' fraudulent conduct is not a form of

negligence to which the plaintiffs' negligence can be compared for

the purpose of diminishing the plaintiffs' recovery of actual
damages.

For these reasons, we affirm the District Court's order

denying the defendants' motion to amend its judgment in favor of
the plaintiffs.

ISSUE 8

Did the District Court err by its award of punitive damages

made pursuant to § 27-l-221, MCA?

Although liability for punitive damages must first be
determined by the trier of fact which in this case was the jury,

and although the jury has the responsibility for, in the first

instance, determining the appropriate amount of punitive damages,

the district court must, pursuant to § 27-l-221(7) (c), MCA, review

the punitive damage award based on specified criteria. Following

that review, and based on its findings as applied to those

criteria, the district court may increase, decrease, or affirm the
jury's verdict. In this process, the district court has broad

discretion. However, its discretion is not unlimited. If it

decides to increase or decrease the jury verdict, its decision must

be supported by the statutorily prescribed criteria, by findings of

fact which are supported by substantial evidence, and by findings
of fact which are not inconsistent with findings that are implicit

51
in the jury's verdict. See DeBruycker v. Guarantee Nat’l Ins. Co. ( 19 94 ) , 266

Mont. 294, 300, 880 P.Zd 819, 822.

We will review the district court's findings made pursuant to

5 27-I-221, MCA, based on the three-part test set forth in Interstate

Production Credit Association v. DeSaye ( 19 91) , 25 0 Mont. 3 2 0, 3 23, 82 0 P .2d

1285, 1287), to determine whether they are clearly erroneous. We

will review the district court's decision to reduce, increase, or

affirm the jury's verdict regarding punitive damages to determine

whether the district court abused its discretion. See Dees v. American

Nat’lFireImCo. (1993), 260 Mont. 431, 449, 861 P.2d 141, 152.

All of the parties contend on appeal that the District Court

erred by the amount of punitive damages it awarded pursuant to its

process of statutory review.

LeSuer contends that the District Court abused its discretion

by not completely setting aside that amount assessed by the jury

against him. He points out that 5 27-l-221(7) (a), MCA, requires

that a defendant's financial condition be considered when arriving

at the amount of punitive damages and that there was no evidence of

his financial condition. However, there was no evidence of his

financial condition because he produced none, and therefore, based

on our previous holdings, LeSuer's complaint is without merit. As

we recently pointed out in Maurerv. Clausen Distributing Co. (Mont. 1996),

_ P.2d _, _, 53 St. Rep. 78, 80:

In Gurnseyv.ConklinCo.,Inc. (1988), 230 Mont. 42, 55, 751 P.2d
151, 158, we stated a plaintiff is not required to show
proof that a defendant's net worth supports an award of

52
 punitive damages. If the defendant's net worth does not
support an award of punitive damages, the defendant must
produce evidence to that fact. Gurnsey , 751 P.2d at 158.
Tucker [defendant] should not gain an advantage from
failing to produce evidence of his net worth.
Accordingly, there was no evidence that Tucker's net
worth could not support a punitive damage award of
$75,000, and so, the District Court erred in vacating the
jury's award of punitive damages against Tucker.

For these reasons, we affirm the District Court's refusal to

vacate the punitive damage award against LeSuer.

Equitable contends that the punitive damage award assessed
against it by the jury should have been further reduced or set

aside for the following reasons:

1. The jury verdict was a result of passion and prejudice

based on appeal to local bias and should be set aside pursuant to

our decision Safeco Insurance Co. Y. Ellinghouse (1986), 223 Mont. 239, 725

P.2d 217.

2. The District court 's findings made pursuant to
§ 27-l-221(7), MCA, either favored Equitable or were clearly

erroneous.

BY cross-appeal the plaintiffs contend that pursuant to our

decision in DeBruycker the district court is not free to substitute

its judgment for that of the jury; and that based on the net worth

of Equitable, and LeSuer's failure to produce any evidence of his

net worth, there was no evidence that the jury's verdict was based

on passion and prejudice.

Resolution of the issues raised by Equitable and the

plaintiffs is more problematic than the issue raised by LeSuer and

53
requires scrutiny of the District Court's findings in light of the

criteria the District Court was required to consider pursuant to

statute. The following are the criteria set forth at § 27-P

221(7) (b) (i)-(ix), MCA, and a summary of the court's findings

regarding each as it applied to each defendant:

(i, The nature and reprehensibility of the defendanis’ wrongdoing.

LeSuer

IV.
The nature of LeSuer's wrong Was that he
deliberately deceived plaintiffs and others concerning
the policies they had purchased in order to secure their
business and earn commissions. He wrongly advised these,
and other insurance clients, concerning the manner of
payment of policy premiums, which resulted in loans
against the policies, reduced the amount of insurance,
and in some instances terminated coverage. He acted
purposely and knowingly. He first gained the trust of
his clients, and then defrauded them. The nature and
reprehensibility of LeSuer's acts iustifv the amount of
punitive damaces awarded aqainst him.

Ecruitable

V.
Equitable hired LeSuer to sell its policies. LeSuer
was assigned to another agent for training. The evidence
showed that the training agent was engaged in highly
questionable practices, andwas essentiallyunsupervised.
. .
VI.
. . When another agent, with more seniority, and
whose integrity was proven, complained about LeSuer's
treatment of customers, such complaint was ignored. .

VII.

Equitable had notice that something was amiss. At
least five times before he left the company complaints
were received from customers. NO actions were taken
to prevent serious harm to insureds, or to find out if
other irregularities existed.

54
 VIII.

Even after Equitable had more than adequate notice
of the problems with LeSuer, nothing was done. . . Even
though the amount of business Equitable conducted in
Montana was substantial, policies here were a very small
percentage of the total business, and the territory was
substantially ignored by management.

IX.

. [Its] policy of urging customers to trust and
rely on agents, combined with lack of supervision of the
agents, and failure to make any serious attempt at
investigation of known complaints, is truly reprehensible
conduct. Such conduct, in conjunction with the remaininq
facts found bv the Court, iustifies the amount of
punitive damacres awarded bv the iurv.

(Emphasis added.)

(ii) The extent of the defendants’ wrongdoing.

LeSuer

X.

LeSuer not only defrauded plaintiffs here, but many
others, as evidenced by the number of complaints that
have come to light. It is very probable that he either
did, or was willing to, lie to all of his customers.
LeSuer's wrongdoing was as widespread and extensive as
his service area.

Equitable

XI.

. . It is also apparent that Equitable handled
complaints from insureds all over the United States in
its New York office. These complaints were not looked at
with protection of an insured in mind, but rather from
the standpoint of how to protect the company. The
evidence at trial was clear and convincing that while
Equitable courted the public by posing as a caring, even
paternal, company, it put its own interests above the
interests of its insureds.

The Court recognizes that it would be next to
impossible for these, or any, plaintiffs to examine the
records of a substantial portion of Equitable's thousands

55
 of agents to find such fraud. HOWeVer, with the lack of
such evidence the culpability of Equitable is somewhat
mitigated.
(iii) The intent of the defendants in committing the wrong.

LeSuer
XII.
LeSuer's intent in committing the wrong was not
directly to harm the plaintiffs, or the others he lied
to. His intent was to switch insurance policies, or sell
new policies, so that he could earn commissions. He
obviously did not care what the effect on the insured's
would be, he just wanted his commissions. He obviously
knew what he was doing, and cared not about his clients.
Euuitable
XIII.
Equitable's intent, as it affected plaintiffs'
claims, was to concentrate it resources in those areas of
sales and investments which generated profit, and to pay
insufficient attention to internal controls that
protected its insureds.
. . Equitable's willingness to sacrifice its
insureds' best interests to increase profits easilv
justifies the amount of punitive damases.
(Emphasis added.)
(iv) The projitabirity of the defendants’ wrongdoing, if applicable.

LeSuer
XIV.
LeSuer profited from the fraudulent sales to
plaintiffs and to other customers. He earned greater
commissions on the sale of new policies, and earned
renewal commissions. .
Equitable
xv.
Equitable profited from the sales of the policies to
the plaintiffs. It also profited from other
misrepresentations by LeSuer. .

56
 (v) The amount of actual damages awarded by the jury.

LeSuer and Equitable

XVI.

The amount of actual damages awarded, $358,591.00,
is substantial. AlSO, it is everything that plaintiffs
prayed for. It is doubtful that LeSuer will be able to
make a substantial contribution to satisfaction of the
judgment for actual damages. Based on the evidence, it
is just as doubtful that payment of the full amount of
such damages would begin to be enough to impress upon
Equitable the extent of its wrongdoing.

(vi) The defendants’ net worth.

LeSuer

XVII.
LeSuer's net worth is unknown. He chose not to give
evidence concerning his assets. It is known that he is
physically ill and that he is retired. His actions,
leadinq to the award of actual damaqes, iustifv the award
of punitive damases.

Euuitable
XVIII.

Equitable's networthin1993 was $1,832,462,923.00.
Equitable introduced no evidence of a change. The jury's
award, while substantial, is hopefully enough to make
Equitable examine its policies, but will not affect the
solvency of the company, or endanger its ability to
perform its insurance contracts. Reserves are shown by
Equitable's financial statement to be sufficient, after
payment of the verdict here, to protect policy holders.

The net worth of Equitable makes it apparent that an
award of punitive damages must be substantial to be
effective.

(Emphasis added.)

(vii) Previous awards of punitive damages against the defendants based on the same

wrongfiil act.

57
 LeSuer and Equitable
XIX.

The evidence does not reveal any previous awards of
exemplary or punitive damages against either LeSuer or
Equitable. Thus, there is no showing that either
defendant would be punished more than once for conduct
such as that proved in this case.

(viii) Potential or prior criminal sanctions against the defendants based on the same

wrongful act.

LeSuer

xx.
While it might be possible to prosecute LeSuer for
criminal fraud, it is very unlikely that such will
happen, and the statute of limitations has probably run
if criminal proceedings were contemplated.

Equitable

XXI.

Criminal action against Equitable is not a viable
remedy. Its corporate nature would make punishment via
the criminal statutes virtually impossible. Punitive
damages are the only practical way of making an example
of Equitable and deterring the conduct found malicious
and fraudulent here.

(k) Any other circumstances.

XXII.

The jury in this case was conservative by nature,
listened carefully to the evidence, and gave no
indication that they acted out of passion or prejudice.
The jury did not act out of ignorance. They considered
the evidence and coolly decided that punishment should be
lx% of Equitable's net profit for 1993. [$408,523,0111
The jury was convinced, as is the Court, that a sizable
award of punitive damages against both defendants is both
warranted and necessary.

58
 The District Court also found that while LeSuer no longer sold
insurance and did not need to be deterred from further fraudulent
conduct, it was necessary to make an example of him in order to
deter others from acting similarly, but that his retirement and
lack of knowledge concerning his net worth tended to reduce the
amount of the award. The court also found that as far as Equitable
was concerned, the jury's verdict was rationally based, was not the
result of passion and prejudice, was necessary to get Equitable's
attention, and that "[t]he very size of the punitive damage award
against Equitable is not a circumstance that operates to either
increase or reduce the amount." The court decided though that
because the full magnitude of LeSuer's wrongdoing was not known
until after he retired, and that because some changes in its
practices were made after that discovery, those efforts justified
some reduction in the amount of punitive damages awarded.
For these reasons, the District Court reduced the punitive
damage award assessed against LeSuer to the amount of $18,000, and
the amount of the punitive damage award assessed against Equitable
to $4,000,000.
We conclude, based on our review of the record as set forth in
previous portions of this opinion, that the District Court's
findings, with the exception of Finding XII, are supported by
substantial evidence and are not clearly erroneous. Finding XII,
to the effect that LeSuer did not intend to harm the plaintiffs or
others that he lied to, directly contradicts the District Court's
Finding IV that LeSuer deliberately deceived the plaintiffs and

59
others for his own profit, knowing that by doing so, he reduced the
amount of their insurance, and in some instances terminated their

coverage. We conclude that that finding is not supported by

substantial credible evidence, and therefore, is clearly erroneous.

For this reason, we conclude that the District Court did not

abuse its discretion when it concluded that an award of millions of

dollars was necessary to get Equitable's attention and that the

very size of the punitive damage award was justified. We conclude,

therefore, that Equitable's objections on appeal to the District

Court's punitive damage award, and the findings on which that award

was based, are without merit.

On the other hand, it is necessary to examine the District

Court's reduction of the jury's punitive damage awards based upon

the statutory framework for arriving at punitive damages.

While it is true that the district court is given broad

discretion to either increase, decrease, or affirm a jury's

punitive damage award, the jury's role is not without significance

and cannot be ignored. Pursuant to 5 27-l-221(7) (a), MCA, it is

the jury which must first determine whether punitive damages are

recoverable, and then, in a separate proceeding, determine, in the

first instance, the amount of punitive damages to be awarded. To

hold that the district court has complete and unbridled discretion

to ignore the jury's award would mean that the function assigned to

the jury in this process is meaningless. Therefore, we conclude

that while the district court has broad discretion, that discretion

must be exercised consistent with the greater weight of those

60
factors the district court is required to consider pursuant to

§ 27-l-221(7) (b) (i)-(ix), MCA.

That does not mean that the district court's function is

simply to engage in a mathematical calculation to determine whether

the majority of factors favor one disposition or the other. Under

any given set of circumstances one factor may be weighted more

heavily than others. For example, when a defendant's net worth has

been established and simply precludes a substantial damage award,
that factor may merit primary consideration. However, in those

situations the district court must articulate why one factor weighs
more heavily than the other in support of its decision if its

decision is to alter the jury's punitive damage award.

In this case, all of the District Court's findings that

pertained to those specific factors which the District Court was

directed to consider by the legislature, with the exception of

LeSuer's net worth, either explicitly or by inference supported the

jury's punitive damage award. LeSuer's net worth could not be

considered because he offered no evidence of that amount. We

conclude that under these circumstances the District Court abused

its discretion by then setting aside and reducing the jury's awards

based simply on LeSuer's retirement and the fact that remedial

action was taken by Equitable after the extensive and prolonged

abuses which caused the damage done in this case.

For these reasons, we reverse the judgment of the District

Court entered December 23, 1994, by which the jury's punitive

damage awards were reduced. We affirm the verdict of the jury and

61
order that on remand judgment for the full amount of the jury's

verdict, plus statutory costs and interest, be entered.

We cone

((7-79,
Justices

62