No. 04-309
IN THE SUPREME COURT OF THE STATE OF MONTANA
2005 MT 121
LEROY and JANIE TRIPP,
Plaintiffs and Appellants,
v.
JELD-WEN, INC., d/b/a OREGON
STRAND BOARD,
Defendant and Respondent.
APPEAL FROM: The District Court of the Fourth Judicial District,
In and For the County of Missoula, Cause No. DV 97-84690,
Honorable Douglas G. Harkin, Presiding Judge
COUNSEL OF RECORD:
For Appellants:
Lon J. Dale and Christian T. Nygren, Milodragovich, Dale,
Steinbrenner & Binney, P.C., Missoula, Montana
For Respondent:
Richard N. Sieving, Sieving & Momjian, LLP, Sacramento, California
Ronald A. Bender, Worden Thane P.C., Missoula, Montana
Submitted on Briefs: January 12, 2005
Decided: May 11, 2005
Filed:
__________________________________________
Clerk
Justice W. William Leaphart delivered the Opinion of the Court.
¶1 Leroy and Janie Tripp appeal from the judgement of the District Court. We affirm
in part, reverse on the question of attorney fees, and remand for further proceedings
consistent with this Opinion.
¶2 We address the following issues on appeal:
¶3 1. Whether the District Court erred in refusing to allow the Tripps’ expert to testify
concerning other incidents of failure involving COMPLY.
¶4 2. Whether the District Court erred in allowing evidence concerning a settlement
entered into by the third-party contractor.
¶5 3. Whether the District Court erred in allowing the expert testimony of Stephen
Zylkowski concerning industry standards.
¶6 4. Whether the District Court erred in giving Jeld-Wen’s proposed jury instruction
regarding negligent misrepresentation.
¶7 5. Whether the District Court erred in awarding attorney fees under the Montana
Consumer Protection Act.
FACTUAL AND PROCEDURAL BACKGROUND
¶8 In 1995 the Tripps contracted with Howard Construction (Howard) to build their
home. The Tripps sought a floor that did not “squeak.” They ordered plywood as the sub-
flooring, but instead received a product known as COMPLY Sturd-I-Floor. COMPLY is
manufactured by Oregon Strand Board, which is owned by Respondent Jeld-Wen, Inc. In
installing the product, Howard utilized staples, something the manufacturers’ specifications
2
specifically said to avoid. Also, during construction, the product was left out in the open and
exposed to rain. According to the Tripps, they were reassured by Jeld-Wen’s advertisements
for COMPLY that the use of staples and exposure to rain were acceptable because the ads
indicated that COMPLY was an acceptable substitute for plywood.
¶9 When the home was finished, the Tripps moved in and found that their floor
“squeaked” after all. After complaining to Jeld-Wen and unsuccessfully waiting to see if the
noise abated, the Tripps filed suit against Jeld-Wen, claiming negligence, breach of warranty,
and unfair or deceptive trade practices under the Montana Consumer Protection Act
(MCPA). Jeld-Wen then sued Howard as a third-party plaintiff.
¶10 Before trial, the Tripps settled with Howard. Because of this the court dismissed Jeld-
Wen’s suit against Howard. Evidence of the settlement was later used by Jeld-Wen to
impeach the testimony of Howard’s owner, who testified for the Tripps. Also before trial,
Jeld-Wen disclosed an expert witness, but then shortly before trial substituted another expert
witness, Stephen Zylkowski, who until then had only been listed as a fact witness. During
trial, Jeld-Wen objected to the Tripps’ expert witness, Dr. Burke, testifying to other incidents
of homeowner dissatisfaction with COMPLY. The District Court sustained this objection.
In addition, Jeld-Wen submitted a proposed jury instruction regarding the standard for
negligent misrepresentation, a theory the Tripps had not pled in their complaint. The
instruction was given over the Tripps’ objection.
¶11 The jury returned a verdict in favor of Jeld-Wen and the court entered judgment
accordingly. Following that, the District Court awarded attorney fees to Jeld-Wen, in
3
accordance with its interpretation of the MCPA. From the judgment and the award of
attorney fees, the Tripps bring this appeal.
STANDARD OF REVIEW
¶12 We review a district court’s evidentiary rulings for abuse of discretion. Kiely Const.,
L.L.C. v. City of Red Lodge, 2002 MT 241, ¶ 92, 312 Mont. 52, ¶ 92, 57 P.3d 836, ¶ 92
(citing Finstad v. W.R. Grace & Co., 2000 MT 228, ¶ 43, 301 Mont. 240, ¶ 43, 8 P.3d 778,
¶ 43). “‘The test for abuse of discretion is whether the trial court acted arbitrarily without
employment of conscientious judgment or exceeded the bounds of reason resulting in
substantial injustice.’” Kiely, ¶ 92 (quoting Jarvenpaa v. Glacier Elec. Coop., Inc., 1998 MT
306, ¶ 13, 292 Mont. 118, ¶ 13, 970 P.2d 84, ¶ 13). The same standard applies when we
review a discovery matter, Hawkins v. Harney, 2003 MT 58, ¶ 17, 314 Mont. 384, ¶ 17, 66
P.3d 305, ¶ 17; jury instructions, Montana Dep’t of Transp. v. Simonson, 2004 MT 60, ¶ 14,
320 Mont. 249, ¶ 14, 87 P.3d 416, ¶ 14 (citing Harwood v. Glacier Elec. Coop., Inc. (1997),
285 Mont. 481, 487, 949 P.2d 651, 655); or an award of attorney fees, Lewistown Propane
Co. v. Moncur, 2002 MT 349, ¶ 19, 313 Mont. 368, ¶ 19, 61 P.3d 780, ¶ 19.
DISCUSSION
ISSUE ONE
¶13 Whether the District Court erred in refusing to allow the Tripps’ expert to testify
concerning other incidents of failure involving COMPLY.
¶14 At trial, the Tripps wanted their expert witness, Dr. Edwin Burke, to testify to other
incidents of COMPLY failing to function properly. The District Court allowed Dr. Burke
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to testify to experiments he had conducted on pieces of COMPLY as well as to the
experience of another witness, Dean Gingerich, who had previously testified that he also had
a “squeaky” COMPLY floor. However, the court did not allow Dr. Burke to speak to the
experiences of other third-parties with COMPLY floors. The court agreed with Jeld-Wen
that the basis for Dr. Burke’s opinion had already been given through other testimony. The
court ruled that it would not allow Dr. Burke to testify to these third-parties’ experiences
because under Rule 403, M.R.Evid., the “prejudicial effect outweigh[ed] the probative
value.” The Tripps argue that the court abused its discretion, and that Dr. Burke should have
been allowed to testify concerning other incidents of COMPLY failure because (1) they
formed the basis for Dr. Burke’s opinion, and (2) they were admissible to demonstrate
notice.
¶15 The Tripps are correct in stating that an expert witness may testify to evidence that
might be otherwise inadmissible. See Rule 703, M.R.Evid. (“If of a type reasonably relied
upon by experts in the particular field in forming opinions . . . the facts or data need not be
admissible in evidence.”). See also Azure v. City of Billings (1979), 182 Mont. 234, 255,
596 P.2d 460, 472 (“‘The rationale in favor of the admissibility of expert testimony based
on hearsay is that the expert is fully capable of judging for himself what is or is not a reliable
basis for his opinion.’” (quoting United States v. Sims (9th Cir. 1975), 514 F.2d 147, 149 )).
However, Rule 703, as with all rules of evidence, may collide with Rule 403, M.R.Evid.
State v. Van Dyken (1990), 242 Mont. 415, 428, 791 P.2d 1350, 1358.
5
¶16 Rule 403 states, “Although relevant, evidence may be excluded if its probative value
is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or
misleading the jury, or by considerations of undue delay, waste of time, or needless
presentation of cumulative evidence.” The Tripps wanted Dr. Burke to comment on non-
witness third-parties’ experiences with COMPLY. Since such testimony might improperly
induce the jury into thinking COMPLY is rampantly defective, there was a danger that it
would unfairly prejudice the jury.
¶17 Under Rule 403 this danger must be weighed against the testimony’s probative value.
Jeld-Wen argues that the probative value of the testimony was minimal because Dr. Burke
had already given a reliable basis for his opinion. He had, in fact, already produced detailed
testimony on his testing of COMPLY and was allowed to testify to the experience of
homeowner Dean Gingerich. Gingerich appeared as a witness and was subjected to cross-
examination by Jeld-Wen. If Dr. Burke had been allowed to testify to the experiences of
other third-parties whom Jeld-Wen had not had the opportunity to cross-examine, there
would have been a heightened danger that Dr. Burke’s testimony about their experiences
would be treated as unrebutted substantive evidence. Furthermore, although the court
specifically allowed the Tripps the opportunity to question Dr. Burke about the experiences
of Dean Gingerich, the Tripps declined to do so. Having chosen not to question Dr. Burke
about the experiences of witness Gingerich, the Tripps’ contention that Dr. Burke should
have been allowed to testify about the experiences of third-party non-witnesses rings hollow.
Therefore, with foundational testimony already in evidence, Jeld-Wen is correct in arguing
6
that the probative value of Dr. Burke’s testimony on the experiences of non-witness third-
parties would likely have been minimal. We conclude the court did not abuse its discretion.
¶18 The Tripps also argue that Dr. Burke’s testimony regarding third-party experiences
with COMPLY was admissible to demonstrate that Jeld-Wen had notice of COMPLY’s
alleged defectiveness. This argument similarly fails. As the Tripps note in their briefs, we
follow a “relaxed” standard when evidence is offered to demonstrate notice rather than
liability. Kissock v. Butte Convalescent Ctr., 1999 MT 322, ¶ 17, 297 Mont. 307, ¶ 17, 992
P.2d 1271, ¶ 17. However, the standard only applies “so long as ‘the differences [between
different accidents] can easily be brought out on cross-examination and understood by the
jury.’” Kissock, ¶ 18 (citing Mueller & Kirkpatrick, Modern Evidence § 4.8, at 283). Had
the District Court allowed Dr. Burke to testify to the non-witness third-parties’ experiences,
Jeld-Wen would have been denied the opportunity to cross-examine the third-parties as to
whether their experiences with COMPLY were similar enough to constitute notice to Jeld-
Wen. The opportunity to cross-examine Dr. Burke about his brief conversations with the
non-witness third-parties would not allow Jeld-Wen to “easily” demonstrate any difference
between the third-party experiences and the Tripps’ experience. In light of this, we conclude
that the court did not abuse its discretion in excluding the testimony.
ISSUE TWO
¶19 Whether the District Court erred in allowing evidence concerning a settlement
entered into by the third-party contractor.
7
¶20 The Tripps contend that evidence of their settlement with their contractor, Howard,
was improperly allowed by the District Court when Jeld-Wen cross-examined Howard’s
owner. Rule 408, M.R.Evid., does not allow for evidence of settlements in order to prove
or disprove liability. However, as the court below recognized, the witness was not asked
about the settlement in order to prove any issues of liability, but to illustrate the bias of the
witness. This is permissible under Rule 408. In addition, the Tripps argue that in inquiring
into Howard’s settlement, Jeld-Wen was improperly trying to apportion liability to a person
not involved in the lawsuit. See Plumb v. Fourth Judicial Dist. Court (1996), 279 Mont.
363, 379, 927 P.2d 1011, 1021. Again, since Jeld-Wen was not seeking to apportion
liability, but instead seeking to show bias, the District Court did not abuse its discretion in
allowing inquiry into the settlement. See Pula v. State, 2002 MT 9, ¶ 17, 308 Mont. 122, ¶
17, 40 P.3d 364, ¶ 17 (allowing evidence of third-party negligence to show causation, not
liability).
¶21 The Tripps argue in the alternative that even if it is permissible to inquire into a
settlement for purposes of illustrating bias, such inquiry must be kept within the bounds of
necessity. Specifically, they point to Jeld-Wen’s inquiring into the amount of the settlement.
This, they continue, goes beyond merely revealing the existence of a settlement and into the
specifics of the settlement itself. Contrary to this argument, however, we have held that
“[t]here will be times . . . when the jury should be informed of the amount of the settlement.”
Azure, 182 Mont. at 247, 596 P.2d at 467. One such time was present here: The amount
Howard settled for was very similar to the amount that Howard’s owner earlier had
8
contended it would have cost to repair the floor. Because he settled at that amount, Jeld-Wen
could argue that he was inconsistent when he testified to a different, much greater, repair
figure. Therefore, inquiry into the amount was pertinent to the credibility of the witness and
the court did not abuse its discretion by allowing the testimony.
ISSUE THREE
¶22 Whether the District Court erred in allowing the expert testimony of Stephen
Zylkowski concerning industry standards.
¶23 Jeld-Wen’s witness Zylkowski testified regarding industry standards. Zylkowski was
a substitute for Gregg Froman, a previously listed expert witness. Unlike Froman, Zylkowski
did not have personal knowledge of the Tripp floor. Since Zylkowski was added as a witness
late in the course of litigation, was only designated as an expert witness shortly before trial,
and was to testify on slightly different matters than Froman, the Tripps argue that the District
Court should not have allowed him to testify.
¶24 The Tripps point us toward cases where we have upheld the exclusion of expert
testimony on the grounds that the experts were not fully disclosed in advance of trial or that
a party abused a discovery deadline. See, e.g., Seal v. Woodrows Pharmacy, 1999 MT 247,
¶ 25, 296 Mont. 197, ¶ 25, 988 P.2d 1230, ¶ 25; Rocky Mountain Enters., Inc. v. Pierce
Flooring (1997), 286 Mont. 282, 299, 951 P.2d 1326, 1336-37. However, these cases do not
necessarily help the Tripps’ cause because in this case the District Court allowed the expert
to testify.
9
¶25 In this case, although Zylkowski was not disclosed as a witness until late in the
litigation, he was disclosed to the Tripps six months before trial. Although his expert status
was not made known until two weeks before trial, the Tripps were on notice, through the
District Court’s Pre-Trial Order, that the prior witness disclosures could be supplemented
at a later time. These facts are similar to Ostermiller v. Alvord (1986), where the plaintiff
objected because a treating physician, although listed as a witness, had not been listed as an
expert witness. 222 Mont. 208, 212, 720 P.2d 1198, 1201. Since plaintiff did not contend
that he was surprised by the doctor’s testimony, we characterized his argument as “hyper-
technical,” and affirmed the District Court. Ostermiller, 222 Mont. at 212, 720 P.2d at
1201. Given that, here, the Tripps had six months notice that Zylkowski was a witness and
two weeks notice that he was an expert witness, we conclude that the District Court did not
abuse its discretion.
ISSUE FOUR
¶26 Whether the District Court erred in giving Jeld-Wen’s proposed jury instruction
regarding negligent misrepresentation.
¶27 The Tripps contend that the District Court abused its discretion in giving Jeld-Wen’s
jury instruction (Instruction 19) detailing the elements of negligent misrepresentation. The
Tripps argue that since they did not assert a claim for negligent misrepresentation, the
instruction confused the jury in its consideration of the Tripps’ negligence and unfair trade
practices claims.
10
¶28 In reviewing jury instructions, not only do we look for abuse of discretion, but “[t]he
party assigning error . . . must show prejudice in order to prevail, and prejudice will not be
found if the jury instructions in their entirety state the applicable law of the case.”
Christofferson v. City of Great Falls, 2003 MT 189, ¶ 9, 316 Mont. 469, ¶ 9, 74 P.3d 1021,
¶ 9 (citing Kiely, ¶ 62). It is undisputed that Instruction 19 was a correct statement of law.
However, it is also true that Instruction 19 was sandwiched in the middle of Instructions 17-
20, and that 17, 18, and 20 speak only of “negligence,” not of “negligent misrepresentation.”
¶29 Jeld-Wen counters by pointing out that although the Tripps may not have pled
negligent misrepresentation in their complaint, during the trial they repeatedly contended
that they had relied on representations by Jeld-Wen or its supplier. The record supports Jeld-
Wen in this regard. Furthermore, the fact that the Tripps repeatedly claimed that
misrepresentations led them to use the COMPLY product demonstrates that their negligence
claim could also be characterized as a negligent misrepresentation claim. The Tripps did not
argue at trial that Jeld-Wen negligently manufactured or transported COMPLY. Instead,
their contention was that Jeld-Wen misrepresented how COMPLY stands up when installed.
Therefore, “the jury instructions in their entirety state the applicable law of the case,” and
we cannot conclude that the District Court abused its discretion in including an instruction
for negligent misrepresentation among the more general negligence instructions.
Christofferson, ¶ 9.
¶30 The Tripps also argue that Instruction 19, with its requirement of intent to deceive,
confused the jury in considering the Tripps’ separate unfair trade practices claim, which has
11
no scienter requirement. This argument has no merit. First, negligent misrepresentation does
not require “intent to deceive” but, as Instruction 19 plainly states, intent to induce reliance
on a representation without any reasonable ground to believe that it is true. In other words,
it requires negligence not intent. Second, all three claims were explicitly divided into three
different sets of instructions. Clearly, Instruction 19 was to be considered in the context of
the negligence claim and not in the unfair trade practices claim. We conclude the District
Court did not abuse its discretion.
ISSUE FIVE
¶31 Whether the District Court erred in awarding attorney fees under the Montana
Consumer Protection Act.
¶32 Having successfully defended against the Tripps’ claims of unfair or deceptive trade
practices under the MCPA, Jeld-Wen requested attorney fees pursuant to the Act. The
MCPA states, in pertinent part, “In any action brought under this section, the court may
award the prevailing party reasonable attorney fees incurred in prosecuting or defending the
action.” Section 30-14-133(3), MCA. The District Court concluded that Jeld-Wen was thus
entitled to reasonable attorney fees “in defending the Consumer Protection aspect of the
action . . . .”
¶33 We applied this provision in the context of a prevailing defendant in Dilleree v. Devoe
(1986), 223 Mont. 47, 54, 724 P.2d 171, 175-76, where we concluded that a party does not
have to win a claim brought under the MCPA, but only prevail in an action brought under
the Act. We did not inquire into the separate question of what standard should be followed
12
in making an attorney fees award to a prevailing defendant under the Act. The Tripps urge
us to adopt a “bad faith” standard so as to not create a chilling effect on consumers bringing
meritorious claims. We conclude that there is merit in the Tripps’ argument, but that we
should adopt an intermediate standard between “bad faith” and “prevailing party.”
¶34 For guidance we look to standards utilized in awarding attorney fees under statutes
very similar to the MCPA. Title VII of the Civil Rights Act of 1964 allows an award of
attorney fees as follows: “In any action or proceeding under this title the court, in its
discretion, may allow the prevailing party . . . a reasonable attorney’s fee as part of the costs
. . . .” 42 U.S.C. § 2000e-5(k) (1977).1 The United States Supreme Court interpreted this
language in the context of an award to a defendant in Christiansburg Garment Co. v. Equal
Employment Opportunity Commission (1978), 434 U.S. 412, 98 S.Ct. 694, 54 L.Ed.2d. 648.
It held that the language did not apply to plaintiffs and defendants in the same way. When
awarding a plaintiff attorney fees a court is doing so “to vindicate ‘a policy that Congress
considered of the highest priority’” and against a “violator of federal law.” Christiansburg,
434 U.S. at 418, 98 S.Ct. at 699, 54 L.Ed.2d at 655 (quoting Newman v. Piggie Park Enters.
(1968), 390 U.S. 400, 402, 88 S.Ct. 964, 966, 19 L.Ed.2d 1263, 1265). However, when
awarding a defendant attorney fees, “quite different equitable considerations” are relevant.
Christiansburg, 434 U.S. at 419, 98 S.Ct. at 699, 54 L.Ed.2d at 655. An example of these
different considerations is “to protect defendants from burdensome litigation having no legal
The language has been amended since Christiansburg, but it is essentially the
1
same today.
13
or factual basis.” Christiansburg, 434 U.S. at 420, 98 S.Ct. at 700, 54 L.Ed.2d at 656. Thus,
although the reasons for awarding prevailing plaintiffs and prevailing defendants reasonable
attorney fees are significant for each class of litigant, the reasons for granting attorney fees
to a prevailing plaintiff are more compelling since they serve to further the public policy
embodied in the legislation. Therefore, the standard applied to plaintiffs and defendants
should not be the same.
¶35 In Christiansburg the losing plaintiff asked the Court to adopt “bad faith” as the
standard in awarding attorney fees to a prevailing defendant. The Court declined. It
reasoned that even under the traditional American rule where parties generally are
responsible for their own legal fees, courts can award attorney fees if the litigation is brought
in “bad faith.” Christiansburg, 434 U.S. at 419, 98 S.Ct. at 699, 54 L.Ed.2d at 655.
Therefore, “if that had been the intent of Congress, no statutory provision would have been
necessary . . . .” Christiansburg, 434 U.S. at 419, 98 S.Ct. at 699, 54 L.Ed.2d at 655.
Instead, the Court adopted an intermediate standard, holding that “a district court may in its
discretion award attorney’s fees to a prevailing defendant in a Title VII case upon a finding
that the plaintiff’s action was frivolous, unreasonable, or without foundation, even though
not brought in subjective bad faith.” Christiansburg, 434 U.S. at 421, 98 S.Ct. at 700, 54
L.Ed.2d at 657. In addition, it cautioned that just because a plaintiff loses a case does not
mean that this standard has been met.
¶36 We adopted the view of Christiansburg in interpreting the attorney fees provision of
the Montana Human Rights Act (MHRA). McCann v. Trustees, Dodson School Dist. (1991),
14
249 Mont. 362, 364-65, 816 P.2d 435, 437. In reviewing the award of attorney fees to the
defendant school district, we cited § 49-2-505(4), MCA (1991) (now § 49-2-505(7), MCA),
which states, “The prevailing party in a hearing under this section may bring an action in
district court for attorneys’ fees. The court in its discretion may allow the prevailing party
reasonable attorney fees.” Citing the important interests at stake–civil rights–and the manner
in which the statute is enforced–lawsuits brought by private citizens–we determined that the
intermediate standard of Christiansburg should apply. McCann, 249 Mont. at 364-65, 816
P.2d at 437.
¶37 The attorney fees language of § 30-14-133(3), MCA, is substantially similar to that
of the MHRA. The rationales for applying the Christiansburg standard are also applicable.
First, the purpose of the MCPA is “to protect the public from unfair or deceptive practices
. . . .” Plath v. Schonrock, 2003 MT 21, ¶ 28, 314 Mont. 101, ¶ 28, 64 P.3d 984, ¶ 28.
While perhaps not rising to the heights of the MHRA, this purpose is of a high legislative
priority. Second, the MCPA is enforced by private litigants. Thus, the often tenuous
financial position of private plaintiffs must be taken into account when deciding on a
standard for awarding attorney fees. Indeed, a preference for protecting the monetary
interests of plaintiffs, and not defendants, is evidenced by the Act’s treble damages
provision. Section 30-14-133(1), MCA. Therefore, we conclude that an award of attorney
fees under the MCPA should be made under the same standard as that of the MHRA. When
faced with a successful defendant, a district court should only award attorney fees “upon a
finding that the plaintiff’s action was frivolous, unreasonable, or without foundation, even
15
though not brought in subjective bad faith.” Christiansburg, 434 U.S. at 421, 98 S.Ct. at
700, 54 L.Ed.2d at 657.2
¶38 Because the District Court did not have the benefit of the Christiansburg standard,
we affirm issues One through Four, reverse on the issue of attorney fees, and remand for
further proceedings consistent with this Opinion.
/S/ W. WILLIAM LEAPHART
We concur:
/S/ JOHN WARNER
/S/ BRIAN MORRIS
2
Other courts have applied a similar analysis in deciding whether to apply
Chrstiansburg to consumer protection statutes. See Vill. of Palm Springs v. Ret. Builders
(Fla. App. 1981), 396 So.2d 196, 198 (adopting Christiansburg standard for a utility rate
consumer protection statute); State v. Black (Wash. 1984), 676 P.2d 963, 971 (declining
to apply Christiansburg standard to a consumer protection statute when the State
Attorney General brings suit because of the “powerful civil litigation resources” available
to the State).
16
Justice James C. Nelson dissents.
¶39 I dissent from our decision as to Issues One, Two, and Four. I would reverse and
remand for a new trial. I would not address Issues Three and Five.
¶40 Before addressing these issues, however, it is fair to point out that our Opinion does
not adequately describe the so called “squeaks” that developed in the Tripps’ home as a
result of the failure of the COMPLY product. Floor squeaks in a residential structure are
usually considered a minor annoyance. The “squeaks” at issue here, however, were anything
but. Excerpts from the trial transcript more accurately convey the substantial noise the was
forced upon the Tripps in this case.
¶41 At trial, Mr. Tripp testified that the “squeaks” emanating from the floor of the walk-in
closet were loud enough to wake a person who was sleeping in the adjacent bedroom. Mrs.
Tripp testified “when somebody says that it’s a creak or it’s a squeak, that’s not what it is.
When your dog walks over it, and you can hear it, when a forty-pound nephew or niece
walks across it and asks you what - what’s wrong with the floor.” Further, Mrs. Tripp
testified “[i]t’s just horrible. I’m embarrassed to have people come in. . . . [I]t’s not a
squeak, it’s not, you know, a little creak, it’s a noise.”
17
¶42 Further, our Opinion fails to mention that the Tripps sought to purchase strong and,
pointedly, noise-proof flooring material because of the possibility that Mrs. Tripp could
someday be confined to a 200 pound electric wheelchair because of her sixteen year struggle
with rheumatoid arthritis. Our Opinion simply does not do justice to the problem that
prompted the Tripps’ lawsuit against Jeld-Wen.
¶43 Turning next to our resolution of the issues, as to Issue One, I would hold that the
District Court abused its discretion by refusing to allow the Tripps’ expert, Dr. Edwin Burke,
to testify concerning other incidents of failure of the COMPLY product as the basis for his
opinion. Our Opinion holds that the District Court did not abuse its discretion in excluding
this testimony because the probative value would likely have been minimal. The District
Court ruled that the witnesses’s other-incidents testimony would not be admitted because Dr.
Burke had already given a reliable basis for his opinion and because of the danger of unfair
prejudice, given that the testimony might improperly induce the jury into thinking that
COMPLY is rampantly defective.
¶44 Our affirmance of the District Court is based on Rule 403, M.R.Evid., which provides
that relevant evidence may be excluded if its probative value is substantially outweighed by
the danger of unfair prejudice. A proper application of Rule 403, M.R.Evid., demonstrates
that the District Court abused its discretion and that we have erred in upholding the court’s
decision.
¶45 First, the probative value of the excluded testimony was considerable for several
reasons. Most notably, this testimony was an integral part of the basis for Dr. Burke’s expert
18
opinion. When asked why he would consider other incidents of failure of the COMPLY
product in forming his opinion, Dr. Burke testified:
Well, first and foremost, I want to make certain that the reported problem is
not isolated . . . that it’s not something that is only seen at this one location.
And I’m interested - a person doing this type of work would be interested in
knowing if - if there were other situations, that would allow for more, um,
general knowledge to be gathered about - about the product, about the effects
of the precipitation, or any of the other factors that could come into play here.
Additionally, the circumstances surrounding these other incidents were substantially similar
to those in this case. As with the Tripps’ house, the COMPLY product used in these other
instances produced “squeaky” floors after being exposed to weather during construction.
These were precisely the circumstances here. Furthermore, the excluded testimony would
have assisted the jury in properly evaluating Dr. Burke’s expert opinion by providing a more
complete understanding of the basis of his opinion. It is clear that Dr. Burke found these
other incidents of problems with the COMPLY product to be indicative and predictive of the
product’s failure when exposed to weather conditions during construction.
¶46 Second, the danger of unfair prejudice posed by this testimony was minimal because
Dr. Burke’s testimony could have been adequately challenged and clarified with thorough
cross-examination. The Court concludes that this testimony could “improperly induce the
jury into thinking COMPLY is rampantly defective . . . .” Unfortunately, it may just be that
the COMPLY product is rampantly defective under the conditions at issue in this case and
present in the other incidents. If so, it was the jury’s prerogative to reach that conclusion
based on the complete testimony of Dr. Burke. The trial court’s ruling and our resolution
19
of this issue does not properly respect the role of cross-examination with regard to disclosure
of the basis of an expert’s opinion. We have previously stated that cross-examination is the
proper means by which to reveal weaknesses in the basis of an expert’s opinion. Hunsaker
v. Bozeman Deaconess Found. (1978), 179 Mont. 305, 323, 588 P.2d 493, 504. Here, the
jury should have been allowed to evaluate the complete basis of Dr. Burke’s opinion, and
Jeld-Wen would have had the opportunity to demonstrate weaknesses therein through
vigorous cross-examination.
¶47 Under Rule 403, M.R.Evid., the probative value of the excluded testimony was not
substantially outweighed by the danger of unfair prejudice. Indeed, the District Court’s
exclusion of this testimony severely prejudiced the Tripps because Dr. Burke’s opinion and
the basis for his conclusions was such an integral part of their case. I would, therefore, hold
that the District Court erred and abused its discretion in refusing to allow the testimony at
issue. I would reverse and remand for a new trial.
¶48 As to Issue Two, I would hold that the District Court abused its discretion in allowing
evidence of the Tripps’ settlement with Howard. We have time and time again stated that
Montana law favors compromise and settlement. In State ex rel. Deere & Co. v. District
Court (1986), 224 Mont. 384, 730 P.2d 396, we stated:
“The law favors compromises. This is especially true in tort actions,
not only because they relieve the labors of the courts, and avoid expense, but
also because, where the parties agree between themselves upon a settlement
of the claim, the result reached is frequently a more equitable adjustment than
is possible to be had in a court of law.”
20
Deere, 224 Mont. at 394, 730 P.2d at 403 (citation omitted). See also DeTienne Assocs. Ltd.
Partnership v. Mont. Rail Link (1994), 264 Mont. 16, 22, 869 P.2d 258, 262.
¶49 Ostensibly, evidence of the Tripps’ settlement with Howard was admitted under the
exception of Rule 408, M.R.Evid., to demonstrate bias on the part of Howard. However, the
use of this evidence at trial did not serve the purpose for which it was allowed because it did
not, in any logical way, tend to establish bias on the part of Howard. Rather, this evidence
effectively imputed liability to Howard--precisely the result Rule 408, M.R.Evid., was
designed to prevent.
¶50 The basic policy of Rule 408, M.R.Evid., is “to encourage compromises and
settlement of disputes.” Tribby v. Northwestern Bank of Great Falls (1985), 217 Mont. 196,
210, 704 P.2d 409, 418. This policy is clearly violated when, as here, evidence of settlement
is admitted based on pure speculation.
¶51 In order to place Jeld-Wen’s arguments and our Opinion in context, I will briefly
review the pertinent facts, some of which are not included in the Court’s Opinion. In 1995,
the Tripps contracted with Howard to construct their new home. Pursuant to this agreement,
the COMPLY floor product was installed in the Tripps’ home. After the “squeaking”
problems surfaced, the Tripps asked Howard to estimate the cost to fix the problem. In
August of 1996, Howard provided an estimate of $30,829 for the repairs. In April of 1997,
the Tripps brought their suit against Jeld-Wen. Jeld-Wen filed a third-party complaint
against Howard, alleging that the Tripps’ damages were caused by improper installation, and
requesting indemnity and contribution. Howard then filed a cross-claim against Jeld-Wen
21
for indemnity and contribution. Subsequently, Howard’s insurance carrier settled with the
Tripps for $20,000 and the District Court dismissed Howard from the lawsuit. Then, in
September of 2002, when the floor problem had grown worse, Howard provided a second
estimate of $98,000 for repairing the floor.
¶52 After the Tripps had settled with Howard, they moved to exclude evidence of the
settlement pursuant to Rule 408, M.R.Evid., which provides in pertinent part:
Evidence of (1) furnishing or offering or promising to furnish, or (2)
accepting or offering or promising to accept, a valuable consideration in
compromising or attempting to compromise a claim which was disputed as to
either validity or amount is not admissible to prove liability for or invalidity
of the claim or its amount. Evidence of conduct or statements made in
compromise negotiations is likewise not admissible. . . . This rule also does
not require exclusion when the evidence is offered for another purpose, such
as proving bias or prejudice of a witness . . . .
In its Order and Memorandum of January 26, 2001, the District Court correctly ruled that
evidence of the settlement was inadmissible at trial, noting that Jeld-Wen had not proposed
admission of such evidence under any of the exceptions of Rule 408, M.R.Evid. At trial,
however, Jeld-Wen contended that evidence of the settlement should be admissible to
demonstrate bias on the part of Howard. The District Court then reversed itself and
admitted, over objection, the evidence for that purpose.
¶53 The problem with the District Court’s decision is that Jeld-Wen offered no logical
reason to support its contention that this evidence could show a bias on the part of Howard.
In arguing for admission of the settlement, Jeld-Wen’s counsel conjectured “[t]here could
very well be some other agreements that we have not been privy to about why [Howard’s]
22
cost to prepare [sic] has jumped some three hundred percent . . . .” Jeld-Wen’s counsel also
opined “I think the jury could reasonably conclude that there was - especially - that there was
some sort of a - a bias that exists with Mr. Howard, given the amount of his settlement,
twenty thousand dollars, when compared to the amount of money that the Plaintiffs are now
seeking.” The District Court accepted these speculations as the basis for admitting evidence
of the settlement, stating “[w]ell, I know that settlement is generally precluded, but counsel
makes the point - and I think it’s a good one - that something smells here.”
¶54 It appears Jeld-Wen’s counsel was speculating that Howard stood to gain something
from improperly increasing his second repair estimate, or that Howard had some other
conflict of interest with respect to Jeld-Wen. Had there been evidence to back up its
conjectures, Jeld-Wen would have been within its rights to seek admission of the settlement.
The problem is Jeld-Wen utterly failed to offer any such evidence to back up either its rank
speculation or its conclusion that “the settlement agreement . . . clearly explains the
distinction” between the two estimates. If Jeld-Wen believed that Howard was biased
because of his settlement with the Tripps, then it could have, and should have, developed that
theory through discovery. Jeld-Wen did not.
¶55 Rule 408, M.R.Evid., precludes the use of settlements to prove liability. While, as
noted, evidence of Howard’s settlement was ostensibly used to show bias, it was effectively
used to impute liability to Howard. This is clearly demonstrated by Jeld-Wen’s repeated use
of questions such as: “You settled a claim against you with the Tripps related to this exact
issue, didn’t you?” and “You or someone on your behalf paid to the Tripps twenty thousand
23
dollars to settle the issues raised in this lawsuit; yes or no?” Indeed, Jeld-Wen’s counsel’s
closing argument was almost entirely devoted to placing liability for the failure of the
COMPLY product on Howard.
¶56 The Tripps argue that these questions effectively attributed liability to Howard.
However, our Opinion does not address that argument. Rather, this Court simply accepts
Jeld-Wen’s assertion that these questions were not used to prove any issue of liability.
Hence, with no analysis, our Opinion concludes that this evidence was permissible under
Rule 408, M.R.Evid. This is a truly unfortunate precedent to impose on our future
jurisprudence.
¶57 Additionally, even if, arguendo, evidence of the settlement was properly admitted, the
District Court’s ruling allowing evidence of the amount of the settlement was clear reversible
error. In Azure v. City of Billings (1979), 182 Mont. 234, 596 P.2d 460, we discussed the
type of prejudice that results from placing the amount of a settlement before the jury.
Among other things, we stated that allowing evidence of a settlement involving one of the
parties poses a danger that “the jury will be adversely influenced by extraneous factors which
will creep into the jury’s decision-making process,” and that “if a settlement is disclosed to
the jury, there is a danger that the jury may consider the settlement as evidence of total
responsibility for the injury and the defendant’s freedom from fault.” Azure, 182 Mont. at
245, 596 P.2d at 466-67. We also cited with approval language from Degen v. Bayman (S.D.
1972), 200 N.W.2d 134, 139, that the court could “visualize no circumstances where the
amount involved in a release or covenant need be disclosed to the jury.”
24
¶58 In addressing the Tripps’ argument that admission of the amount of the settlement was
improper, our Opinion adopts Jeld-Wen’s rationale, stating at ¶ 21:
The amount Howard settled for was very similar to the amount that Howard’s
owner earlier had contended it would have cost to repair the floor. Because
he settled at that amount, Jeld-Wen could argue that he was inconsistent when
he testified to a different, much greater, repair figure. Therefore, inquiry into
the amount was pertinent to the credibility of the witness . . . .
The Court determines that $20,000 and $30,829 are “very similar” in this case, and
apparently finds some significance in the fact that Howard settled for an amount that was
approximately two-thirds of his original repair estimate. What this significance may be, we
are not told. As far as I can see, this fact carries no significance at all in the resolution of this
issue. Furthermore, it is not clear why the Court thinks such a fact justifies the conclusion
that Jeld-Wen could argue Howard was inconsistent in providing two differing repair
estimates. The reality of the matter is that Jeld-Wen was entitled to make that argument
regardless of the settlement amount, and even if no settlement had occurred, because that
argument was justified by the mere fact that the two estimates were significantly different.
¶59 Even if, as we hold, evidence of Howard’s settlement was permissible to demonstrate
bias and prejudice, nonetheless the testimony should have been limited to the mere existence
of the agreement and the fact that Howard might have received some benefit from the
agreement. Allowing evidence of the amount of the agreement was reversible error.
¶60 Jeld-Wen utterly failed to demonstrate that evidence of the settlement would show
bias on the part of Howard. Furthermore, substantial injustice resulted because the
admission of the settlement imputed liability to Howard--precisely what Rule 408,
25
M.R.Evid., was designed to prevent. Moreover, admission of the amount of the settlement
was clear reversible error under our case law. I would hold that the District Court committed
reversible error when it allowed evidence of Howard’s settlement agreement with the Tripps,
and, in particular, evidence of the amount of the settlement. I would, accordingly, reverse
and remand for a new trial on Issue Two.
¶61 Finally, I disagree with our conclusion under Issue Four, that the District Court did
not err in giving Jeld-Wen’s proposed jury instruction regarding negligent misrepresentation.
The Tripps’ complaint asserted claims for negligence, breach of warranty, and deceptive
trade practice. No claim was made for negligent misrepresentation, and evidence of
negligent misrepresentation was not introduced at trial.
¶62 We apparently determine that there is some significance in the fact that Instruction
19 (the negligent misrepresentation instruction) was grouped with Instructions 17-20, and
that Instructions 17, 18 and 20 only speak of negligence and not negligent misrepresentation.
This conclusion begs the question: “So what?” The District Court read Instruction 19 to the
jury and presumably the jury studied and followed the Instruction during its deliberations.
The fact that the improper instruction was buried in with other proper instructions does not
mitigate the error in giving it.
¶63 Instruction 19 states that “[p]laintiffs claim negligent misrepresentation.” That is
patently untrue. The Tripps did not claim negligent misrepresentation in their complaint or
at trial. Indeed, that fact was reflected in the verdict form, which included only the three
26
claims made by the Tripps, namely: (1) negligence; (2) breach of warranty; and (3)
deceptive trade practice.
¶64 Instruction 16 stated: “The following principles of law apply to the Plaintiffs’
negligence claim.” Instruction 17 stated:
Every person is responsible for injury to the person or property of
another, caused by his or her negligence.
Negligence is the failure to use reasonable care. Negligence may
consist of action or inaction. A person is negligent if he fails to act as an
ordinarily prudent person would act under the circumstances.
¶65 Instruction 18 stated:
The Defendant is liable if his negligence was the cause of Plaintiffs’
damages. The Defendant’s conduct is the cause of the damage if it produced
it and if the damages would not have occurred without it.
¶66 According to Instruction 19, in order to establish a claim of negligent misrepresenta-
tion the Plaintiffs had to prove that: (1) the Defendant made a representation as to a material
fact; (2) the representation was untrue; (3) regardless of his actual belief, the Defendant made
the representation without any reasonable ground for believing it to be true; (4) the
representation was made with the intent to induce Plaintiffs to rely upon it; (5) Plaintiffs
were unaware of the falsity of the representation and were justified in relying on it; and (6)
as a result of the reliance, Plaintiffs sustained damage.
¶67 Instruction 19 directly preceded the final negligence instruction--Instruction 20--
which told the jury that the Plaintiffs had the burden of proving that: (1) the Defendant was
negligent; (2) the Plaintiffs’ property was damaged; (3) the Defendant’s negligence was a
27
cause of the injury to the Plaintiffs’ property; and (4) the amount of money that will
compensate the Plaintiffs for the damage to Plaintiffs’ property.
¶68 These instructions, in isolation, may correctly state the law of negligence and of
negligent misrepresentation. Taken together, however, and based on the record of this case,
Instruction 19 hopelessly confused the jury by indicating that somehow negligent
misrepresentation was a part of the negligence claim--which, of course, it was not.
Instruction 19 placed before the jury an issue that was never pled or presented throughout
the course of the trial. The fact that the Tripps claimed that misrepresentations led them to
use the COMPLY product does not mean that their negligence claim “could also be
characterized as a negligent misrepresentation claim,” as our Opinion concludes.
¶69 Moreover, as noted above, the jury had no way to render a verdict on the tort of
negligent misrepresentation, which was not raised, separate from the negligence claim which
was raised. From the verdict form and from the jury’s perspective, negligent misrepresenta-
tion and negligence were combined into one tort. Indeed, the jury’s confusion was manifest.
From post-trial polling, according to the Tripps, a majority of the jurors stated that they could
not find liability against Jeld-Wen on negligent misrepresentation since Jeld-Wen had not
made any representations to the Tripps with the intent of inducing reliance in deciding to use
the COMPLY product.
¶70 Tripps’ counsel did make arguments in closing with respect to negligent misrepresen-
tation but obviously he had to do so, since the trial court improperly injected that theory into
the case via Instruction 19.
28
¶71 I would hold that the District Court abused its discretion and erred in giving
Instruction 19. I would reverse and remand as to Issue Four.
¶72 In summary, I would hold that the District Court erred as to Issues One, Two and Four
and would remand for new trial. That being the case, I would not reach Issues Three or Five.
¶73 I dissent.
/S/ JAMES C. NELSON
Justice Patricia O. Cotter dissenting and concurring.
¶74 I join Justice Nelson’s dissent. However, in light of the fact that the Court is
affirming the judgment for the defendant, the Court must reach the question of whether the
District Court erred in its award of attorney fees to the defendant under the MCPA. While
I would not award fees at all to the defendant, I concur with the Court’s analysis of how fees
to a prevailing defendant in an MCPA action ought to be analyzed. I therefore join the
Court’s Opinion as to Issue Five only.
/S/ PATRICIA O. COTTER
30
Justice Jim Rice concurring in part and dissenting in part.
¶75 I concur in the Court’s holding on Issues One through Four. I dissent from Issue Five.
¶76 Drawing on its assessment that the Consumer Protection Act constitutes a “high
legislative priority” with the purpose, unstated anywhere in the statute itself, of “protecting
the monetary interests of plaintiffs, and not defendants,” the Court today re-writes the
attorney fee provision of the Act to fit its own policy preferences. Although not adopting the
Tripps’ argument that prevailing defendants be awarded attorney fees only when a plaintiff
has acted in “bad faith,” it nonetheless concludes that “we should adopt an intermediate
standard between ‘bad faith’ and ‘prevailing party.’” The Court’s profound error is this: it
is allowed no such choice. The Legislature has already adopted “prevailing party” as the
standard–not “bad faith,” “frivolous,” “unreasonable” or “without foundation”–and this
Court is constitutionally powerless to change it–except by taking to itself power it has not
been granted.
¶77 The result of this decision, unstated by the Court, is that fewer prevailing defendants
will be eligible for an award of attorney fees, and fewer losing plaintiffs will be subjected
to payment of a fee award, than intended by the Legislature. Unquestionably then, the
Court’s new “standard” takes away from the discretion which the Legislature granted to the
district courts for resolution of attorney fee issues under the Act. The Court has thus
engaged in an extra-judicial act which usurps legislative authority.
31
¶78 The federal and state judiciary in our country is today bringing much attention to a
principle it holds dear: judicial independence. Criticisms of judicial decisions or legislative
proposals which would affect the judicial organization are denounced by the judiciary and
its affiliated organizations, such as the various Bars, as an infringement upon judicial
independence, as if the judiciary is immune from criticism, or that changes in the judicial
structure are barred by the separation of powers. Many would acknowledge that much of
this is political rhetoric,3 and yet, there is a central premise to judicial independence that
must rightly be preserved. Defenders of judicial independence often fail to understand,
however, that the judiciary can best protect its independence by being careful not to infringe
on the independence of the legislative and executive branches:
The power of the Supreme Court to command acceptance and support
not only for its decisions but also for its role in government seems to depend
upon a sufficiently widespread conviction that it is acting legitimately, that is,
performing the functions assigned to it, and only those functions, in the
manner assigned.
ARCHIBALD COX, THE ROLE OF THE SUPREME COURT IN AMERICAN GOVERNMENT (Oxford
University Press 1976), 104-05.
¶79 The Court today steps outside of its legitimate role and steps into the legislative arena.
It thereby invites the other branches to act similarly. It should not act surprised when that
occurs.
See Stephen B. Burbank, What Do We Mean by “Judicial Independence”?, 64
3
Ohio St. LJ. 323 (2003).
32
¶80 I would affirm the District Court on Issue 5.
/S/ JIM RICE
Chief Justice Karla M. Gray joins the concurring and dissenting opinion of Justice Rice.
/S/ KARLA M. GRAY
Justice John Warner concurs.
¶80 I agree with the principles in Justice Rice’s dissent on issue five. I would sign that
dissent if I was of the opinion that such principles applied. However, as provided in § 30-
14-133(3), MCA, and noted by the Court at ¶ 32, the legislature has made an award of
attorney fees to either a prevailing plaintiff or defendant discretionary, not mandatory. We
here set a standard for the exercise of that discretion. We show no disrespect to, nor do we
infringe on, the legislature’s prerogative by setting such standard.
/S/ JOHN WARNER
33