Lee v. Andrews

No. 82-326

IN TEIE SUPREIE COURT OF THE STATE OF MONTANA

1983

JAMES LEROY LEE,
Plaintiff, Respondent and Cross-appellant,
-vs-
JAPlES R. APJDREWS,
Defendant and Appellant.

Appeal from: District Court of the Fourth Judicial District,
In and for the County of Ptissoula,
The IIonorable James B . Wheelis , Judge presiding.

Counsel of Record:
For Appellant:
Worden, Thane & Haines; Ronald Bender argued,
Missoula, Montana

For Respondent r
Garlington, Lohn & Xobinson; Sherman Lohn argued,
1/Iissoula, Montana
Paul Meismer argued, ?4issoula, Montana

Submitted: April 25, 1983
Decided: July 5, 1983

Clerk
Mr. J u s t i c e L. C. G u l b r a n d s o n d e l i v e r e d t h e O p i n i o n of t h e C o u r t .

A f t e r e n t e r i n g judgment for defendant, Andrews, upon a spe-

cial jury verdict, the District Court of the Fourth J u d i c i a l
D i s t r i c t , M i s s o u l a C o u n t y , g r a n t e d p l a i n t i f f L e e ' s m o t i o n f o r new
trial. Andrews a p p e a l s from t h e new t r i a l o r d e r , and Lee c r o s s -

a p p e a l s , c l a i m i n g t h e D i s t r i c t Court should have d i r e c t e d v e r d i c t

o r e n t e r e d judgment n o t w i t h s t a n d i n g t h e v e r d i c t f o r him.
P l a i n t i f f , J a m e s L e e , and d e f e n d a n t , J a m e s Andrews, had b e e n

friends for over ten years. They were n e i g h b o r s , played golf
together, and saw e a c h o t h e r frequently. Over t h e y e a r s , they
had been i n v o l v e d i n s e v e r a l minor b u s i n e s s d e a l s .

Andrews is an i n s u r a n c e a g e n t , and h a s worked f o r S t a t e Farm
I n s u r a n c e Company f o r a b o u t t w e n t y - o n e years. Lee had p u r c h a s e d

a u t o m o b i l e i n s u r a n c e from Andrews i n t h e 1 9 6 0 1 s , b u t had l e t many

of t h e s e p o l i c i e s l a p s e a f t e r s i x months. I n 1 9 7 7 , Lee had two
f i r e i n s u r a n c e p o l i c i e s and o n e l i f e i n s u r a n c e p o l i c y p u r c h a s e d

t h r o u g h Andrews. The c o n t r o v e r s y h e r e is b a s e d upon L e e ' s c l a i m

t h a t Andrews b r e a c h e d an o r a l a g r e e m e n t t o p r o c u r e car i n s u r a n c e .
On September 28, 1977, Lee was driving his Oldsmobile

T o r o n a d o and c o l l i d e d w i t h a m o t o r c y c l e d r i v e n by E a r l W i l s o n .

W i l s o n b r o u g h t s u i t a g a i n s t Lee and o b t a i n e d a judgment of a b o u t
$152,000.

Meanwhile, Lee had r e q u e s t e d S t a t e Farm t o r e p r e s e n t him i n

t h e a c t i o n b r o u g h t by W i l s o n . S t a t e Farm r e f u s e d and b r o u g h t a
d e c l a r a t o r y judgment action i n federal District Court, claiming
i t had no o b l i g a t i o n t o d e f e n d Lee o r pay damages i n t h e W i l s o n
action. A f t e r a j u r y t r i a l , t h e f e d e r a l D i s t r i c t Court concluded
t h a t S t a t e Farm had no o b l i g a t i o n t o w a r d L e e .
On S e p t e m b e r 2 7 , 1979, Lee f i l e d a complaint i n the s t a t e
District Court, against Andrews, alleging breach of an oral

c o n t r a c t , t o r t , and g e n e r a l p r o m i s s o r y e s t o p p e l . On F e b r u a r y 1 6 ,
1982, a p r e - t r i a l o r d e r was f i l e d r e d u c i n g t h e c l a i m t o b r e a c h of

contract.
Lee c l a i m s t h a t an o r a l c o n t r a c t t o p r o c u r e i n s u r a n c e a r o s e
from t h e f o l l o w i n g c i r c u m s t a n c e s .
I n e a r l y J u n e 1 9 7 7 , Lee n e g o t i a t e d w i t h c a r d e a l e r , M i c h a e l
Dolce, f o r t h e l e a s e of a n O l d s m o b i l e T o r o n a d o . Dolce t o l d Lee

he would need insurance and Lee t o l d Dolce to call Andrews'
I n s u r a n c e Agency. Lee t e s t i f i e d t h a t he had t o l d Andrews he was
g o i n g t o l e a s e a c a r and would need i n s u r a n c e . A c c o r d i n g t o Lee,

Andrews had r e p l i e d t h a t he "would t a k e c a r e of it." They d i d

n o t d i s c u s s t h e amount of c o v e r a g e , t h e t e r m s of t h e p o l i c y , the
amount of t h e premium, o r t h e names of t h e i n s u r e d s .

Dolce t e s t i f i e d t h a t b e f o r e d e l i v e r y of a vehicle financed

t h r o u g h GMAC, he was r e q u i r e d t o c o m p l e t e a n i n s u r a n c e v e r i f i c a -
tion form and verify that the information given him by his

p r o s p e c t i v e c u s t o m e r was c o r r e c t .
On J u n e 1 5 , 1977, D o l c e c a l l e d Andrews' o f f i c e and talked

w i t h Mrs. Andrews t o v e r i f y t h e i n s u r a n c e c o v e r a g e . Based on t h e

information received from Mrs. Andrews, Dolce completed the
insurance verification form. He wrote in policy limits of
$100,000/$300,000 for bodily injury, and $25,000 for property

damage. He testified t h a t Mrs. Andrews t o l d him " i t would be
taken c a r e of."

Mrs. Andrews admitted receiving the c a l l from D o l c e . She
made a note t h a t Lee wanted automobile insurance, listing the
y e a r , make, model, and s e r i a l number of the car. Although she
normally handled car insurance herself, she placed t h e n o t e on

her husband's desk because she realized that Lee's insurance
would n o t be h a n d l e d i n t h e o r d i n a r y m a n n e r . She a l s o t e s t i f i e d
t h a t s h e assumed L e e would come i n t o t h e i r o f f i c e and c o m p l e t e

i n s u r a n c e a p p l i c a t i o n forms.
Barbara Sharp, a n a g e n t f o r GMAC, w r o t e "confirmed 6/20" on
t h e i n s u r a n c e v e r i f i c a t i o n form c o m p l e t e d by D o l c e . Although she

did not recall the particular conversation, Barbara Sharp

t e s t i f i e d t h a t s h e would n o t h a v e w r i t t e n " c o n f i r m e d " on t h e form

had she not called ~ n d r e w s 'Insurance and confirmed insurance
c o v e r a g e on t h e l e a s e d v e h i c l e .
 While Lee and Andrews saw and s p o k e t o e a c h o t h e r many times
o v e r t h e n e x t few m o n t h s , Lee n e v e r c o m p l e t e d a n i n s u r a n c e a p p l i -

c a t i o n form n o r p a i d any premium.

Based on t h e a b o v e e v i d e n c e , t h e j u r y r e t u r n e d a s p e c i a l v e r -
d i c t form w i t h t h e f o l l o w i n g f i n d i n g s :
1. Did J i m Lee r e q u e s t insurance for the
1977 Oldsmobile Toronado from J i m Andrews?
ANSWER: Yes 8 , No 4
2. Did Jim Andrews agree to procure
i n s u r a n c e f o r J i m L e e ? ANSWER: Y e s 9 , No 3

3 . Was t h e r e s u f f i c i e n t i n f o r m a t i o n
regarding L e e ' s insurance needs so t h a t J i m
Andrews c o u l d h a v e , u s i n g r e a s o n a b l e c a r e and
s k i l l i n making i n q u i r i e s and a s s e m b l i n g
information, obtained the d e t a i l s necessary t o
c a r r y any a g r e e m e n t . ANSWER: Y e s 9 , No 3

4. Did J i m Andrews f a i l t o e x e r c i s e o r d i n a r y
c a r e and r e a s o n a b l e d i l i g e n c e i n p r o c u r i n g t h e
i n s u r a n c e ? ANSWER: Yes 8 , No 4
5 . Did J i m L e e , by any f a i l u r e of c o o p e r a -
t i o n , o r by h i s a c t i o n s o r i n a c t i o n s , p r e v e n t
J i m Andrews from p r o c u r i n g t h e i n s u r a n c e ?
ANSWER: Yes 1 2 , No 0

6. Did J i m Andrews f a i l t o p r o c u r e i n s u r a n c e
f o r t h e T o r o n a d o a s he a g r e e d ? ANSWER: Yes
8, NO 4
7. Did J i m Andrews r e c e i v e any c o n s i d e r a t i o n
f r o m Lee f o r u n d e r t a k i n g t o p r o v i d e s u c h
i n s u r a n c e c o v e r a g e ? ANSWER: Yes 8 , No 4
I n findings 8 - 1 2 , t h e j u r y found t h a t Lee and Andrews had
n o t a g r e e d on t h e s p e c i f i c terms of the contract, such as, the

amount of insurance, who would be insured, and who would be
responsible for the premiums. While the jury found t h a t Lee
b e l i e v e d he had insurance, t h e j u r y a l s o found t h a t t h i s b e l i e f
was u n r e a s o n a b l e . The j u r y t h e n awarded L e e $ 8 0 , 1 5 0 i n damages.
S e v e r a l weeks after the verdict, and a f t e r d i s c u s s i o n w i t h
c o u n s e l f o r b o t h p a r t i e s , t h e D i s t r i c t C o u r t e n t e r e d judgment f o r
Andrews. Lee f i l e d s e v e r a l p o s t - t r i a l motions, seeking i n the
a l t e r n a t i v e , judgment notwithstanding the verdict, amendment of

t h e judgment, o r a new t r i a l . The D i s t r i c t C o u r t g r a n t e d L e e ' s

m o t i o n f o r new t r i a l , and d i d n ' t d i s c u s s t h e m o t i o n s f o r amended
j udgment and j udgmen t notwithstanding the verdict.

The D i s t r i c t C o u r t g r a n t e d a new t r i a l on t h e g r o u n d s t h a t
Lee had b e e n d e n i e d h i s r i g h t t o a f a i r t r i a l . Lee had t h e r i g h t
t o c h o o s e h i s form of a c t i o n and had c h o s e n t o p u r s u e s o l e l y t h e

b r e a c h of c o n t r a c t a c t i o n . Court's i n s t r u c t i o n 10 described the
d u t y of a n a g e n t o r b r o k e r i n t e r m s of n e g l i g e n c e , n o t c o n t r a c t .
The D i s t r i c t C o u r t r e a s o n e d t h a t t h e j u r y was o b v i o u s l y c o n f u s e d
b e c a u s e i t d i d n ' t g r a n t t h e t o t a l amount of u n c o n t r a d i c t e d dama-

ges introduced into evidence. By a p p o r t i o n i n g damages, the jury
seemingly applied comparative negligence principles. Lee was

t h e r e b y denied his right to a fair trial and a new t r i a l was

granted.
Lee on c r o s s - a p p e a l a r g u e s t h a t t h e D i s t r i c t C o u r t e r r e d by

n o t g r a n t i n g him a d i r e c t e d v e r d i c t o r judgment n o t w i t h s t a n d i n g

the verdict. H e a r g u e s t h a t t h e r e is no e v i d e n c e t o s u p p o r t t h e

j u r y f i n d i n g t h a t Lee p r e v e n t e d Andrews from p r o c u r i n g i n s u r a n c e .

(Finding #5) Absent t h i s f i n d i n g , Lee c l a i m s t h a t t h e v e r d i c t
s u p p o r t s a judgment f o r him. (See, i n p a r t i c u l a r , findings #2
and # 3 ) W a g r e e w i t h Lee's c o n t e n t i o n .
e

There i s no e v i d e n c e in the record to support the jury's
f i n d i n g t h a t L e e p r e v e n t e d Andrews from p r o c u r i n g t h e i n s u r a n c e .
A p p l y i n g t h e d o c t r i n e of c o l l a t e r a l e s t o p p e l from t h e f i n d i n g s i n

S t a t e Farm's f e d e r a l a c t i o n , t h e D i s t r i c t Court s u s t a i n e d objec-
tions t o any t e s t i m o n y i n d i c a t i n g t h a t Andrews had t o l d Lee t o
come i n t o h i s o f f i c e and c o m p l e t e a n a p p l i c a t i o n . In f a c t , the

o n l y e v i d e n c e on t h i s p o i n t was L e e ' s own t e s t i m o n y d e n y i n g t h a t

Andrews told him he would have to come into the office and
complete an a p p l i c a t i o n .
Excluding the finding t h a t L e e p r e v e n t e d Andrews from pro-
curing insurance, the remaining findings support judgment for
Lee. We therefore order that Lee be granted judgment not-
w i t h s t a n d i n g t h e v e r d i c t , and remand f o r a new t r i a l on t h e i s s u e

o f damages o n l y .
Andrews argues that on remand t h i s Court should l i m i t the

evidence of damages to the limits of the alleged insurance
policy. Lee, on t h e o t h e r h a n d , a r g u e s t h a t damages s h o u l d be
limited o n l y by t h e o p e r a t i o n of s e c t i o n 27-1-311, MCA, which
p r o v i d e s t h a t t h e m e a s u r e of damages f o r b r e a c h of c o n t r a c t " i s

t h e amount which w i l l c o m p e n s a t e t h e p a r t y a g g r i e v e d f o r a l l t h e
d e t r i m e n t which was p r o x i m a t e l y c a u s e d t h e r e b y o r i n t h e o r d i n a r y
course of things would be likely to result therefrom."
I n Gay v . L a v i n a S t a t e Bank ( 1 9 2 1 ) , 6 1 Mont. 4 4 9 , 202 P. 7 5 3 ,
t h i s Court stated:

"And a s b e t w e e n t h e i n s u r e d and h i s own a g e n t
or broker authorized b y him to procure
i n s u r a n c e t h e r e is t h e u s u a l o b l i g a t i o n on t h e
p a r t of t h e l a t t e r t o c a r r y o u t t h e i n s t r u c -
t i o n s g i v e n him and f a i t h f u l l y d i s c h a r g e t h e
t r u s t r e p o s e d i n him, and he may become l i a b l e
i n damages f o r b r e a c h of d u t y . ---i s
I f he
i n s t r u c t e d t o p r o c u r e s p e c i f i c i n s u r a n c e and
-
f a i l s ---d o s o , h e i s l i a b l e t o h i s p r i n c i p a l
to
for -
- t h e damage s u f f e r e d - b y r e a s o n o f t h e w a n t
-
o f s u c h i n s u r a n c e . The l i a b i l i t y o f t h - e n t
e ag
w i t h r e s p e c t -o -t h e l o s s i s t h a t w h i c h -
t- -
- would
-
h a v e f a l l e n u p o n t h e company h a d t h e i n s u r a n s
-e e n e f f e c t e d a s c o n t e m p l a t e d .
b- . . ." 202 P.
a t 755. (emphasis added)
Andrews i s t h e r e f o r e p o s s i b l y l i a b l e f o r a l l damages S t a t e Farm
would have p a i d . S t a t e Farm would have been responsible for

t h e d e f e n s e of Lee i n W i l s o n ' s s u i t a g a i n s t him, and r e s p o n s i b l e
for the damages awarded in that action to the amount of its
policy. F u r t h e r , had S t a t e Farm c o m p l e t e d t h e s e o b l i g a t i o n s , Lee
would n o t h a v e had t o b o r r o w money a t 20 p e r c e n t i n t e r e s t . Under

Gay, t h e n , damages from t h e W i l s o n j u d g m e n t , attorneys fees i n
that action, and the damages resulting from having to borrow
money a t 20 p e r c e n t i n t e r e s t a r e a l l p r o p e r e v i d e n c e of damages.
W e remand f o r e n t r y of judgment n o t w i t h s t a n d i n g t h e v e r d i c t

i n f a v o r of L e e , and f o r a new t r

rile c o n c u r :
-

Chief J u s t i c e
Justices
 Mr. Justice Fred J. Weber dissents as follows:
The majority opinion overruled the order of the District
Court granting the plaintiff's motion for a new trial on all
issues and requires the entry of judgment for the plaintiff
Lee, with a new trial to be limited to a determination of
plaintiff's damages. I respectfully dissent.
In its Opinion and Order granting the new trial, the
District Court pointed out that plaintiff initially sought
damages on the basis of a breach of an oral contract, tort
and general promissory estoppel; but pursuant to the change
in contentions on the part of the plaintiff, the plaintiff
reduced "his cause of action for trial to the single claim of
breach of oral contract. " The District Court therefore
concluded that the only cause of action on which the
plaintiff was entitled to proceed and recover was the breach
of an oral contract.
Notwithstanding that limitation of issues, at the
request of the defendant, the District Court gave the
following instruction No. 10 on negligence to the jury:
"Negligence on behalf of an agent or broker is the
failure to exercise skill, care and diligence of a
reasonable and prudent agent or broker under the
circumstances."
Upon consideration of the post-trial motions, the District
Court concluded that a new trial was necessary. The District
Court referred to section 25-11-102 (1), MCA, which provides :
"The former verdict or other decision may be
vacated and a new trial granted . . .
for any of
the following causes materially affecting the
substantial rights of such party:
" (1) irregularity in the proceedings of the court
. . . or any order of the court . . .
by which
either party was prevented from having a fair
trial;
 " (6) insufficiency of the evidence to justify the
verdict or other decision or that is against the
law. "
In reaching its conclusion that the new trial was warranted
the District Court stated:
"This Court grants plaintiff's Motion for a new
trial solely on the ground that its giving of
defendant's instruction regarding negligence on
behalf of an agent or broker as well as allowing
into evidence testimony of witnesses directed at
demonstrating the defendant's exercise of
reasonable care improperly interjected negligence
concepts; this error resulted in jury confusion
which prevented plaintiff from having a fair trial
and is inconsistent with substantial justice.
M.C.A. 525-11-102(1) (1981); Mont. R. Civ. P. 61.
For these reasons, this Court will neither consider
nor discuss plaintiff's argument that there is
insufficient evidence to support the findings of
.
the jury "
Having concluded that there was such an irregularity, the
District Court then addressed the issue of whether the
irregularity materially affected the plaintiff's substantial
rights by depriving him of a fair trial. Rasmussen v.
Siebert (1969), 153 Mont. 286, 456 P. 2d 835. The ~istrict
Court analyzed the instructions, including the above
instruction No. 10 and the conclusions on the part of the
jury as to the damages to be awarded, and concluded that the
jury was confused by the negligence instruction and
erroneously applied negligence concepts and comparative
negligence principles. In conclusion the District Court
stated:
"The giving of the negligence instruction
materially affected a substantial right of the
plaintiff and this court's refusal to reject the
instruction was inconsistent with substantial
justice. MCA, 525-11-102 (1), (1981)."
The District Court has set forth a comprehensive analysis of
the problems and of its conclusions upon which the award of a
new trial was based.
The standard which is to be applied by this Court in
reviewing that order granting a new trial is of long standing
and is set forth in Moen v. Peter Kiewit & Sons' Co. (1982),

Mont . , 655 P.2d 482, 487, 39 St.Rep. 2209, 2215 as
follows:
". . . This decades-old standard has been fleshed
out by caselaw establishing that the decision to
grant or deny a new trial is within the sound
discretion of the trial court, Fredericksen v.
Fredericksen (1980), Mont. 605 P.2d 1135, 1137 3 7
St.Rep. 191, 193, and will not be overturned absent
a showing df a manifest abuse of that discretion.
Giles v. Flint Val Forest Products (1979), 179
Mont. 382, 588 ~ . 2 d
535, 538, 36 St.Rep. 23, 26."
The majority opinion has not set forth any showing which can
be construed as a "manifest abuse of discretion" by the trial
court.
In addition, I agree with the analysis of the District
Court in concluding that the negligence instruction No. 10
was of necessity confusing to the jury. The special verdict
form cited in the majority opinion was also confusing.
Verdict question No. 4 stated:
"Did Jim Andrews [defendant] fail to exercise
ordinary care and reasonable diligence in procuring
the insurance?
Answer: Yes-8, No-4"
That question injected a negligence standard rather than a
standard relating to the breach of oral contract.
Finding ample facts and law to sustain the order, and in
the absence of any showing of manifest abuse of discretion, I
would affirm the order granting new trial;_*--..-,

\
, .... '
Mr. C h l e f J u s t i c e F r a n k I . H a s w e l l , d i s s e n t i n g :

I concur in the foregoing dissent of Mr. Justice
Weber. I would a d d t h a t t h e j u r y was a r g u a b l y c o n f u s e d by

Instruction No. 1 0 and the special interrogatories. The

D i s t r i c t C o u r t s o f o u n d , and t h e r e i s no a b u s e o f d i s c r e t i o n

i n g r a n t i n g a new t r i a l u n d e r s u c h c i r c u m s t a n c e s .

On r e t r i a l , p l a i n t i f f ' s damages s h o u l d n o t be l i m i t e d

t o t h e l i a b i l i t y l i m i t s of t h e supposed p o l i c y . Montana l a w

p r o v i d e s t h a t t h e m e a s u r e o f damages f o r b r e a c h o f c o n t r a c t

" i s t h e amount which w i l l c o m p e n s a t e t h e p a r t y a g g r i e v e d f o r

a l l t h e detriment which was p r o x i m a t e l y c a u s e d t h e r e b y o r i n

the ordinary course of things would be likely to result

therefrom." S e c t i o n 27-1-311, MCA.

C h i e f ~ u s t i c e " ---

Mr. J u s t i c e D a n i e l J. Shea d i s s e n t s a n d w i l l f i l e a w r i t t e n
d i s s e n t later.