No. 13819
IN THE SUPREME COURT OF THE STATE OF MONTANA
1978
STANLEY W. FERGUSON et al.,
Plaintiffs,
-vs-
TOWN PUMP, INC., and BOZEMAN TOWN PUMP,
INC .
Defendants and Third Party Plaintiffs and
Appellants,
-vs-
WALLACE DITEMEN, INC., et al.,
Defendants and Third Party Defendants and
Appellants.
Appeal from: District Court of the Eighteenth Judicial District,
Honorable Jack D. Shanstrom, Judge presiding.
Counsel of Record:
For Appellants:
Bolinger and Wellcome, Bozeman, Montana
G. Page Wellcome argued, Bozeman, Montana
Brown, Pepper and Kommers, Bozeman, Montana
Gene Brown argued, Bozeman, Montana
For Respondents:
Goetz and Madden, Bozeman, Montana
James Goetz argued, Bozeman, Montana
Submitted: April 28, 1978
Decided: JUN 1 3 1978
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Mr. Justice John C. Harrison delivered the Opinion of the Court.
Plaintiffs instituted this action against Town Pump, Inc.
and Bozeman Town Pump, Inc. (hereinafter referred to as Town Pump)
to recover damages resulting from the gasoline contamination of
their household water wells. Town Pump filed a third party com-
plaint for indemnification against Wallace Diteman, Inc. Plain-
tiffs thereafter amended their complaint to include Diteman as
a joint defendant.
A jury trial was held in the District Court, Gallatin
County, commencing December 6, 1976. At the close of the evi-
dence, the court granted a directed verdict on the issue of lia-
bility against Town Pump and Diteman as joint tortfeasors. Town
Pump's third party action against Diteman was dismissed. The
jury was instructed only to determine the amount of plaintiffs'
damages.
The jury returned a verdict totaling $60,656.00 and judg-
ment was entered in that amount. Plaintiffs subsequently moved
that the court either substitute a higher damage award or grant
a new trial on the issue of damages. The court granted the mo-
tion for a new trial on the damages issue.
Defendants Town Pump and Diteman appeal from the granting
of the motion for a new trial. Town Pump appeals from the dis-
missal of its indemnification claim against Diteman. Plaintiffs
cross-appeal from the denial of their motion to mathematically
increase the damage award, and also from the denial of their
offered instruction regarding punitive damages.
Briefly summarized, the facts adduced at trial are: In
the fall of 1972, Town Pump entered into an oral cost-plus labor
contract with Diteman Construction Co. for the construction of a
gasoline station on the west end of Bozeman, Montana. Diteman
was given general plans but there was little or no supervision
of the construction by Town Pump. The work included the installa-
tion of two underground storage tanks and lines running from the
tanks to the gas pumps. Diteman completed the job, and Town Pump
leased the station to Richard and Patricia Hawkins for operation.
Plaintiff Ferguson, as well as the other plaintiffs, lives
immediately north of the Town Pump station just outside the City
of Bozeman and receives his household water from an underground
well. In April 1974, Ferguson began noticing the odor and taste
of gasoline in his water. Gradually over that spring and summer
the other plaintiffs in the vicinity had similar problems with
their water. In varying degrees with respect to the various
households, the water became increasingly impotable. A trailer
park in the area, Ponderosa Trailer Park, found gasoline in one
of its three wells. (The residents of the trailer park have as-
signed their claims to the "Ponderosa Trust" for the purposes of
this action.) Since that time, the plaintiffs, with the exception
of the trailer park residents, have had to haul water from other
sources for any uses requiring potable water.
In November 1974, the State Water Quality Bureau was noti-
fied. Its agents visited the area and conducted various tests
in December, confirmed that there was gasoline contamination, and
that the Town Pump Station was the probable source. In January
1975 standpipe tests were conducted revealing the likelihood of
a leak in a gasoline line. The Department of Health issued an
abatement order to Town Pump on January 25, 1975, after which
the pumps connected to the suspected lines were shut down. The
tanks and lines were excavated in March 1975 and the leak was
found .
A union in one of the lines was cross-threaded causing the
leakage. Large delivery trucks had been driving over the area
where the lines were covered, and settlement of the fill materials
had occurred, apparently putting pressure on the faulty union.
It was also found that double swing joints had not been used,
contrary to industry standards. Such joints allow for some flexi-
bility in the lines so that they better withstand any pressure.
Five issues are presented for review:
1. Whether plaintiffs' cross-appeal should be dismissed.
2. Whether the District Court erred in granting plain-
tiffs ' motion for a new trial.
3. Whether plaintiffs' damages may be mathematically re-
calculated by this Court.
4. Whether the Court erred in directing a verdict against
Town Pump on its indemnification claim against Diteman.
5. Whether the court erred in refusing plaintiffs'
offered instruction on punitive damages.
Pending appeal, plaintiffs have executed on the judgment
and obtained partial satisfaction from Town Pump in the amount
of approximately $33,000. Diteman argues that plaintiffs have
therefore waived their right to cross-appeal in this case, and
moves that this Court dismiss plaintiffs' cross-appeal for that
reason. This Court recently stated in Niles v. Carbon County,
(1977), Mont . , 568 P.2d 524, 34 St.Rep. 827, 829:
" * * * The general rule is:
" ' * * * the right to accept
the fruits of a
judgment and at the same time to prosecute an
appeal from it are not concurrent; on the con-
trary, they are wholly inconsistent rights.
The election of one necessarily excludes the
enjoyment of the other.' Peck v. Bersanti,
101 Mont. 6, 8, 52 P.2d 168, 169; In re Black's
Estate, 32 Mont. 51, 53, 79 P. 554.
"This rule is subject to the exception that:
" I * * * where the reversal of a judgment can-
not possibly affect an appellant's right to
the benefit accepted under a judyment, then
appeal may be taken and will be sustained
despite the fact that the appellant has
sought and secured such benefit.' Peck v.
Bersanti, 101 Mont. 6, 9, 52 P.2d 168, 169;
In re Black's Estate, 32 Mont. 51, 79 P. 554."
The instant appeal falls squarely within the exception to
the general rule. Plaintiffs have been awarded a new trial at the
District Court level, and the question of whether they are entitled
to keep the fruits of their judgment in light of that fact is not
before this Court. Here plaintiffs have asked on appeal only that
the damage award be increased mathematically. Where the only pos-
sible outcome of a successful appeal by a plaintiff is an increase
in the damage award, then there is nothing inconsistent about ac-
cepting the fruits of the original judgment and appealing from it,
and such an appeal may properly be taken. Peck v. ~ersanti,(1935),
101 Mont. 6, 9, 52 P.2d 168, 169.
Diteman's motion to dismiss plaintiffs' cross-appeal is
denied.
Turning to the merits of the case, we first consider
whether the District Court erred in granting a new trial on the
issue of damages.
Apparently plaintiffs' present wells have been permanently
contaminated by gasoline. Defendants contended throughout the
trial and presented some evidence to show that plaintiffs could
obtain relief by the installation of charcoal filters in their
water systems to filter out the gasoline. However, this method
was offered as no more than a temporary measure. There was con-
flicting evidence regarding its efficacy and safety.
Expert witnesses presented by plaintiffs postulated two
possible permanent solutions: (1) the digging of new, deeper
wells, and (2) annexation to the city and connections to city
water and sewer services. Estimated costs of new wells totaled
about $86,000 for all the individual plaintiffs and $16,500 for
the Ponderosa Trailer Park. City water and sewer services, in-
cluding landscaping and individual hookups were estimated to cost
approximately $69,500 for all the individual plaintiffs and
$129,500 for the trailer park.
The jury awarded approximately $43,500 in actual damages
to the individual plaintiffs and $15,000 to the Ponderosa Trust.
It is clear from the record that the District Court
granted a new trial on the issue of damages on the ground stated
in section 93-5603(6), R.C.M. 1947: "Insufficiency of the evi-
dence to justify the verdict * * *." It has long been the law
of this state that:
" * * * the District Court has broad discretion
in granting or denying motions for a new trial.
The District Court ruling will not be disturbed
on appeal in the absence of a clear showing of
manifest abuse of discretion." Yerkich v. Opsta,
(19781, Mont. - P.2d , 35 St.Rep.
465,64
.7
See also: Davis v. Smith, (1968), 152 Mont. 170, 175, 448 P.2d
133; State Highway Comm'n v. Greenfield, (1965), 145 Mont. 164,
171, 399 P.2d 989. Such an abuse of discretion is established if
the testimony was conflicting and the District Court merely chose
to follow a different line of testimony than what the jury fol-
lowed. Yerkich v. Opsta, supra.
Defendants attempt to justify the jury verdict by reference
to some of the costs of city services testified to by plaintiffs'
witnesses. They argue the jury must have awarded the individual
plaintiffs the costs of city water services only; the installation
costs of a charcoal filter; the costs associated with individual
hookups to city water; and costs of landscaping. It is further
argued that the $15,000 actual damage award to the Ponderosa Trust
at least approximates the testimony that a new well could be dug
for them at a cost of $16,500.
Even if it were possible to accurately reconstruct a jury
verdict in this manner, then it would have to be concluded that
the jury :
(1) Refused to award city sewer services along with city
water, when the undisputed testimony was that the city would not
provide water without installing a sewer.
(2) Awarded the installation costs of charcoal filters
without regard to costs associated with their maintenance.
(3) Ignored undisputed testimony that it would take two
years to provide city services, and that the inflation factor in
the industry is 15 percent per year.
(4) Ignored the fact that since the Ponderosa Trailer Park
/
lies between the individual households and the city, that the
individual households would not be annexed without annexation of
the trailer park.
The District Court instructed the jury in accordance with
section 17-401, R.C.M. 1947, that the measure of damages "is the
amount which will compensate for all the detriment proximately
caused thereby, whether it could have been anticipated or not."
While the jury could have considered other factors, such
as the possibility of imminent annexation of the area regardless
of the gasoline problem, as going to the issue of "proximate cause"
this would not explain the inadequacy and inconsistency of the ver-
dict in the light of uncontradicted testimony. Accordingly, we
are unable to find a manifest abuse of discretion by the District
Court in awarding a new trial.
We decline, however, plaintiffs' invitation to simply make
a mathematical recalculation of damages. Plaintiffs rely on Zook
Brothers Construction Co. v. State of Montana, (1976), - Mont .
, 556 P.2d 911, 33 St.Rep. 809, 818, wherein such a recalcula-
tion was made. In Zook Brothers the Court said:
"Where a verdict does not appear to have re-
sulted from passion and prejudice, and any error
may be ascertained by mathematical calculation,
this Court may properly modify the judgment
without reversing it." 33 St.Rep. 818.
The question of additur, at the appellate level, has not
been previously ruled on by this Court, although Zook Brothers
raised the trial court award.
While we are returning the instant case to the trial
court for a new trial on damages, we find the rule adopted by the
Supreme Court of Minnesota and cited in Seydel v. Reuber, (1959),
254 Minn. 168, 94 N.W.2d 265, 268, should be adopted in this state.
There the court held:
"The increase by additur was made on the
grounds that the verdict was entirely inadequate.
In that respect the trial court followed a re-
cently adopted rule announced by this court that
additur--the practice of the court to condition
a denial of a new trial on the defendant's con-
sent to an increase in the verdict--is within
the constitutional power of the court. Genzel
v. Halvorson, 248 Minn. 527, 80 N.W.2d 854.
However, unless the use of additur increases
the verdict, if entirely inadequate, to the
extent that it reasonably comports with the
proof in the record, a better result would be
reached by granting a new trial." 94 N.W.2d 268.
In Zook Brothers the Court dealt with damages for breach
of a construction contract, and the damages fixed by this Court
involved relatively certain amounts as established by the business
records of Zook Brothers, plus a claim for lost profits calculable
on a percentage basis. The instant case, on the other hand, in-
volves estimates of future costs in a highly inflationary industry,
various alternative solutions to consider, and questions regarding
the proximate cause of various costs which may be incurred. There
are also questions of special damages and an issue of whether such
damages were properly mitigated. While we agree the jury verdict
was unreasonable, these questions are still questions that are
properly within the province of a jury. We find the District
Court did not abuse its discretion in ordering a new trial on the
issue of special and general damages.
Next we consider the dismissal by the District Court of
Town Pump's indemnification claim against Diteman. The court
ordered a directed verdict against Town Pump on the theory that
Town Pump and Diteman were joint tortfeasors, and therefore no
contribution should be allowed.
It should be noted that Town Pump's third party complaint
includes counts for breach of contract and breach of implied war-
ranty against item an. It was established at trial that Town
Pump had an oral contract with Diteman for construction of the
station on a cost-plus labor and materials basis. In this state,
such a contract implies that the contractor will perform the work
in a reasonably skillful and workmanlike manner, and the negligent
failure to do so is a breach of contract as well as a tort. Gar-
den City Floral Co., Inc. v. Hunt, (1953), 126 Mont. 537, 541, 255
P.2d 252.
With respect to an indemnification claim based on a tort,
resort can be had to consideration of whether the negligence of
each is "active" or "passive", or "primary" or "secondary", to
determine whether the difference in the gravity of the fault of
the participants is sufficient to justify burdening one party
with the entire loss. Great Northern Railway Company v. United
States, (D. Mont. 1960), 187 F.Supp. 690, 693; Fletcher v. City
of Helena, (1973), 163 Mont. 337, 517 P.2d 365.
However, these cases do not apply to a theory of indemnity
based upon contract. In an indemnity action arising out of con-
tract, the "application of the theories of 'active' or 'passive'
as well as 'primary' and 'secondary1 negligence is inappropriate."
Weyerhaeuser S.S. Co. v. Nacirema Operating Co., (1958), 355 U.S.
563, 569, 78 S.Ct. 438, 442, 2 L Ed 2d 491, 495; Hill v. George
Engine Company, (1961), 190 F.Supp. 417.
In reviewing a directed verdict all evidence is viewed in
a light most favorable to the party against whom the verdict was
directed. LaVelle v. Kenneally, (1974), 165 Mont. 418, 529 ~ . 2 d
788. Viewed in this manner, the record indicates that Town Pump
and Diteman had a contract for the construction of the station
and that the work was performed in violation of an implied duty
to do the work in a reasonably skillful and workmanlike manner.
Therefore, the order of the District Court granting Diteman a
directed verdict on the indemnity claim should be set aside and
a new trial ordered on this issue. This does not, of course, a£-
fect the liability of both Town Pump and Diteman as joint tort-
feasors to plaintiffs, the negligence of both with respect to
plaintiffs has been determined and is not contested on this appeal.
The final issue is whether the District Court erred in
refusing plaintiffs' offered instruction regarding punitive damages
against Town Pump. Section 17-208, R.C.M. 1947, provides:
"In any action for a breach of an obligation
not arising from contract, where the defendant
has been guilty of oppression, fraud, or malice,
actual or presumed, the jury, in addition to the
actual damages, may give damages for the sake of
example, and by way of punishing the defendant."
Under this statute, it is necessary to prove more than
mere negligence; such willful disregard of duty amounting to actual
or implied malice must be shown. Spackman v. Ralph M. Parsons Co.,
(1966), 147 Mont. 500, 414 P.2d 918. Implied malice may be shown
by proof that defendant engaged in a course of conduct knowing it
to be harmful and unlawful. Miller v. Fox, (1977), Mont .
, 571 P.2d 804, 34 St.Rep. 1367; Cashin v. Northern Pacific
Ry. Co., (1934), 96 Mont. 92, 28 P.2d 862.
Plaintiffs contend that Town Pump knew the leak existed in
the summer of 1974, but did nothing to remedy the problem until
ordered to do so by the Department of Health in January 1975. In
this context, Patricia Hawkins, lessee of the station, testified
that she was informed of a gas line leakage by a resident of the
neighborhood in the summer of 1974 and that she conveyed this
information to Town Pump authorities. There is also evidence of
other indications of a possible leakage, including hesitating
pumps and minus inventory figures.
While these factors are certainly indicators of the negli-
gence of Town Pump, we do not find they support a finding of ac-
tual or implied malice. The record indicates that no one, not
even the Department of Health authorities, knew for certain that
Town Pump was the source of the gasoline contamination until Janu-
ary 1975; after that time Department of Health officials received
the full cooperation of Town Pump. While there is evidence from
which it may be inferred that Town Punp should have discovered the
problem earlier, there is no evidence that Town Pump knowingly
continued to dump gasoline into the ground. The District Court
correctly refused plaintiffs' instruction regarding punitive damages,
since there was no evidence of actual or implied malice on the part
of Town Pump.
Diteman's motion to dismiss plaintiffs' appeal is denied.
The District Court order of a new trial on the issue of actual and
special damages is affirmed. The dismissal of Town Pump's indem-
nification claim against Diteman is reversed, and a new trial is
ordered on that issue. The District Court's denial of plaintiffs'
offered instruction regarding punitive damages is affirmed.
We Concur:
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