Kaseta v. N. Western Agency of Gr. Falls

NO. 91-365

IN THE SUPREME COURT OF THE STATE OF MONTANA
1992

ROBERT J. KASETA, and MARGARET R. KASETA,
d/b/a JOHNNY'S HOUSE OF FINE FOODS,
Plaintiffs and Appellants,
-vs-
NORTHWESTERN AGENCY OF GREAT FALLS, and
HAWKEYE-SECURITY INSURANCE COMPANY,
Defendants and Respondents..

APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable John M. McCarvel, Judge presiding.

COUNSEL OF RECORD:
For Appellant:
Patrick F. Flaherty, Great Falls, Montana
For Respondent :
Joseph R. Marra; Marra, Wenz, Johnson & Hopkins,
Great Falls, Montana
Robert J. Vermillion; Smith, Walsh, Clarke &
Gregoire, Great Falls, Montana

Mf R 3 - 1932 Submitted on Briefs: December 19, 1991
Decided: March 3, 1992
Justice Fred J. Weber delivered the Opinion of the Court.

Robert and Margaret Kaseta, d/b/a Johnny's House of Fine Foods
brought suit against Hawkeye-Security Insurance Co., Inc. (Hawkeye)
and Northwestern Insurance Agency of Great Falls (Northwestern) for
breach of contract, negligent misrepresentation, constructive
fraud, unfair claim settlement practices, and insurance company
malpractice. The District Court of the Eighth Judicial District,
Cascade County, Montana found no genuine issues of material fact
and granted summary judgment in favor of both defendants. Kasetas
appeal. We affirm.
The Kasetas raise the following issues on appeal:
1. Did the court err in granting summary judgment in favor of
Hawkeye?
2. Did the court err in granting summary judgment in favor of
Northwestern?
Robert and Margaret Kaseta, d/b/a Johnny's House of Fine
Foods, bring this suit against their insurer, Hawkeye, and their
insurance agent, Northwestern. In July 1990, while covered by a
Hawkeye insurance policy, Kasetas contend a hail storm caused
approximately $26,000 damage to their bar and restaurant. Hawkeye
paid $7,318 on the claims, contending the business was insured for
less than 80% of its actual value. First, the Kasetas dispute that
the business was underinsured. Next, in the alternative, they
claim if the business was underinsured the defendants led them to
believe they were properly insured, and had a duty to provided them
with a different policy.
2
 On March 1, 1989, the Kasetas purchased the restaurant from
Johnny Austin on a contract for deed. Austin had informed the
Kasetas that the commercial policy covering the business was a good
policy. That policy, issued by Scottsdale Insurance, insured the
building for $70,000 and the contents for $30,000. Austin
represented to Kasetas that this policy had fully covered a $90,000

claim for fire damage in 1987.

After purchasing the business, the Kasetas purchased health
and life policies from Lon Bowman of Northwestern Insurance Agency.
Bowman referred the Kasetas to his associate at Northwestern, Joyce
Jenkins, regarding a commercial policy. When Jenkins contacted the
Kasetas, Robert Kaseta informed her that he wanted the same policy
coverage they had through Scottsdale.
Jenkins informed Robert Kasetathat Hawkeye-Security Insurance
would provide commercial coverage at a competitive rate. Kasetas
applied for insurance, and Hawkeye issued a policy insuring the
building for $70,000 and the contents for $30,000. Thus, the
Kasetas received the policy and coverage they requested.
The policy declaration page contained a coinsurance percentage
of 80%, indicating that Hawkeye would invoke a coinsurance penalty
if the property was insured at less than 80% of its actual value at
the time of the loss. The contract explained:
We will not pay the full amount of any loss if the value
of Covered Property at the time of loss times the
Coinsurance percentage shown for it in the Declarations
is greater than the Limit of Insurance for the property.
Next, the contract describes the company's method of calculating
the maximum amounts payable if the company finds the business was
underinsured. It states: "The amount determined ... is the most
we will pay. For the remainder, you will either have to rely on
other insurance or absorb the loss yourself .I1 This policy and this
provision were in effect in July 1990, at the time the hail storm
damaged Kaseta's property.
After the storm, Kasetas submitted approximately $26,000 in
claims. At that time, the insurance adjuster informed Kasetas that
the business was underinsured. Thus, Hawkeye invoked the
coinsurance penalty. At the hearing for summary judgment, the
court granted summary judgment finding that no genuine issues of
material fact existed, and as a matter of law the defendants should
prevail. From this judgment Kasetas appeal.
I
Did the court err in granting summary judgment in favor of
Hawkeye?
Under Rule 56 (c), M.R. Civ.P., summary judgment is proper if
the record discloses no genuine issues of material fact, and the
moving party is entitled to judgment as a matter of law. Payne
Realty & Housing v. First Sec. Bk. (1991), 247 Mont. 374, 376, 807
P.2d 177, 178. In reviewing a motion for summary judgment, we view
the evidence in the light most favorable to the party opposing the
motion. Lorash v. Epstein (1989), 236 Mont. 21, 24, 767 P.2d 1335,
1337. Here, looking at the evidence in the light most favorable to
the insured, we conclude the court properly granted summary
judgment in favor of the insurer.
The Kasetas contend genuine issues of material fact exist
which makes the breach of contract claim improper for summary
judgment. In its findings, the ~istrictCourt relies on Stott v.
Fox (l99O), 246 Mont. 301, 805 P.2d 1305. In that case, this Court
held that a party cannot make a material issue of fact through the
use of their own contradictory testimony. Stott, 246 Mont. at 309,
805 P.2d at 1309-1310. In Stott, the plaintiff claimed a genuine
issue of material fact prevented the court from ruling summarily in
support of the defendant. The material fact was created by the
plaintiff's affidavit which contradicted prior deposition
testimony. We held: "[A] district court may grant summary
[judgment] where a party's sudden and unexplained revision of
testimony creates an issue of fact where none existed before."
Stott, 246 Mont. at 309, 805 P.2d at 1310, citing Wilson v.
Westinghouse (8th Cir. 1988), 838 F.2d 286, 289.
As in Stott, here summary judgment was proper because Kasetas
created a material issue of fact by contradicting prior sworn
statements. On April 20, 1991, the Kasetals responded to the
following interrogatories:

INTERROGATORY NO. 7: Paragraph 24 of the complaint
alleges that the insurance company sold "an inadequate
and substandard insurance policy." Please describe with
specificity in what way the subject policy was
"inadequate and substandard.
ANSWER: We admit that the companv has paid the sums due
to date under the insurance policv that was issued ...
(Emphasis added.)
INTERROGATORY NO. 8: Please state how a standard and
proper insurance policy would have differed from the
policy which was sold to the plaintiff.
 ANSWER: The total value of buildins would have been
nearer to $200.000.00 and would have covered all damages
to that amount less the deductible. (Emphasis added.)
INTERROGATORY NO. 9: Do you allege that Hawkeye
Insurance underpaid the plaintiffs under the terms of the
policy?
ANSWER: Not under the terms of the policy issued.
However, under the terms of the policy that the plaintiff
thought he received, yes.
INTERROGATORY NO. 15: Your first claim for relief is
entitled "Breach of Contract." Please state what terms
of the contract of insurance were breached.
ANSWER: We will amend the Complaint and dismiss the
first claim for relief entitled Breach of Contract.
Therefore, we will not give an answer to this.
Upon receiving these interrogatories, Hawkeye filed a motion
for summary judgment on April 30, 1991. Then on May 13, 1991, Mr.
Kaseta filed an affidavit which contradicted these sworn
statements. The affidavit stated that: "in . . . [Mr. Kaseta's]
opinion, as owner of the property, the building is properly valued
at $100,000.'' Thus, in contradiction of prior statements, Kasetas
now contend Hawkeye incorrectly invoked the coinsurance penalty.
Like Stott, here Kasetas attempt to make a material issue of
fact through the use of their own contradictory testimony.
Accordingly, we conclude the plaintiffs' simultaneous contradictory
positions regarding the value of the building create no genuine
issues of material fact, and Hawkeye is entitled to judgment as a
matter of law. Thus, the court appropriately granted summary
judgment in favor of Hawkeye on the breach of contract issue.
Next, Kasetas claim the court erred in granting summary
judgment in favor of Hawkeye on the plaintiffs' claim of unfair
claims settlement practices under 5 33-18-201(6)(7), MCA, the
Unfair Trade Practices Act. 1 33-18-201 states in part:
Unfair claim settlement practices prohibited. No person
may, with such frequency as to indicate a general
business practice, do any of the following:
(6) neglect to attempt in good faith to effectuate
prompt, fair, and equitable settlements of claims in
which liability has become reasonably clear;
(7) compel insureds to institute litigation to recover
amounts due under an insurance policy by offering
substantially less than the amounts ultimately recovered
in actions brought by such insureds ...
In this case, the Kasetas have admitted that Hawkeye made
proper payment under the terms of the contract. Thus, plaintiffs
have presented no evidence of unfair claims settlement under g 33-
18-201(6), or 5 33-18-201(7), MCA. Accordingly, we conclude the
court properly granted Hawkeye summary judgment under the Unfair
Trade Practices Act.
Finally, Kasetas contend the court improperly granted summary
judgment on the claim of insurance company malpractice. Here, in
their complaint, Kasetas allege Hawkeye breached its duty "to sell
insurance to properly cover the insured's needs." However, the
Kasetas admit Hawkeye provided them with the coverage they
requested. Thus, we conclude the court properly granted summary
judgment on this claim.
Finally, Kasetas have produced no evidence that Hawkeye made
any representations to them regarding their coverage. Without such
evidence Kasetas cannot support a claim of negligent
misrepresentation or constructive fraud against the insurer,
Hawkeye. Thus, we conclude the court properly granted summary
judgment in favor of Hawkeye on this issue.
We hold that the court properly granted summary judgment in
favor of Hawkeye-Security Insurance Co. Inc.
II
Did the court err in granting summary judgment in favor of
Northwestern?
The Xasetas claim the District Court incorrectly granted
summary judgment in favor of Northwestern on the issue of negligent
misrepresentation and constructive fraud. Kasetas base these
claims on Northwestern's failure to supply them with material
information regarding the value of their business and the
coinsurance provision.
First, the Xasetas testified that Jenkins made no
representations regarding the insurance. Further Jenkins provided
them with a Hawkeye policy which contained the same amount of
coverage as the Scottsdale policy. Finally, Kasetas do not dispute
they received the coverage they requested. Thus, we agree with the
District Court when it found that any damage suffered is
attributable to Xasetas' request to receive the same coverage they
had under their Scottsdale policy. We conclude the District Court
properly granted summary judgment on the claims of constructive
fraud and negligent misrepresentation.
Next, the Kasetas appeal the summary judgment granted in favor
of Northwestern on their claim of insurance agent malpractice.
Here, the Kasetas did not plead a claim for relief based on
insurance agent malpractice, and the District Court correctly
disregarded this count with respect to Northwestern.
Finally, the Kasetas have submitted no proof that Northwestern
acted as an insurance company or was a party to the contract, thus,
this Court will not consider Kasetas' claims for breach of contract
and alleged violations of the Unfair Trade Practices Act.
We hold the court correctly granted summary judgment in favor
of Northwestern Insurance Agency of Great Falls.
Affirm.

Concur: A
,
 March 3, 1992

CERTIFICATE OF SERVICE

I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:

Patrick F. Flaherty
Attorney at Law
625 Central Ave. West, #lo1
Great Falls, MT 59404

Robert J. Vermillion
SMITH, WALSH, CLARKE & GREGOIRE
P.O. Box 2227
Great Falls, MT 59403-2227

Joseph R. Marra
MARRA, WENZ, JOHNSON & HOPKINS, P.C.
P.O. Box 1525
Great Falls, MT 59403-1525

ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA