Chandler v. Madsen

No. 81-265
IN THE SUPREME COURT OF THE STATE OF MONTANA

SHELDON CHANDLER and MARILYN
CHANDLER, husband and wife,
Plaintiffs land Respondents,

ROBERT H. MADSEN,
Defendant and Appellant.

Appeal from: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone
Honorable Robert Wilson, Judge presiding.
Counsel of Record:
For Appellant:
Hibbs, Sweeney, Colberg, Jensen and Koessler,
Billings, Montana
Maurice Colberg argued, Billings, Montana
For Respondents:
Crowley, Haughey, Hanson, Toole & Dietrich, Billings,
Montana
Bruce Toole argued, Billings, Montana

Submitted: December 4, 1981
Decided: nRp1 5 @tl
MAR
Filed. 15 7982
Mr. J u s t i c e J o h n Conway H a r r i s o n d e l i v e r e d the Opinion of
the Court.

'This a p p e a l arises from a complaint by Sheldon and

Marilyn Chandler, husband and w i f e , a g a i n s t R o b e r t Yladsen,

s e e k i n g damages f o r n e g l i g e n c e , b r e a c h of implied warranty

of h a b i t a b i l i t y and s t r i c t l i a b i l i t y i n t o r t .

In April 1977, respondents, the Chandlers, entered

into a buy-sell agreement with the appellant, Madsen, to

purchase a house, built by him, at 3203 S i l v e r w o o d S t r e e t

near Billings, Montana. The agreed purchase price was

$90,280, which was p a i d when t h e b u i l d i n g was t r a n s f e r r e d .

At the t i m e of this agreement, t h e framework on t h e h o u s e

was i n p l a c e , b u t t h e b u i l d i n g was n o t c o m p l e t e d .

Madsen, a civil engineer working for the United

S t a t e s Government, had c o n s t r u c t e d a number of b u i l d i n g s f o r

s a l e on h i s own, i n c l u d i n g s i n g l e f a m i l y r e s i d e n c e s .

In the summer and f a l l of 1977, t h e Chandlers com-

pleted the final. landscaping of the lot and installed a

swimming p o o l and s p r i n k l i n g s y s t e m .

I n J u n e 1 9 7 7 , t h e C h a n d l e r s moved i n t o t h e h o u s e and

immediately experienced problems with doors and windows

sticking and locks failing to operate. The Chandlers

n o t i c e d c r a c k s i n t h e bedroom w a l l s and a hump i n t h e l i v i n g

room floor which was above a supporting partition in the

basement. Through h i s e m p l o y e e s , Madsen made a d j u s t m e n t s t o

the doors, but they continued t o s t i c k .

By May 1978, additional settling had caused severe

cracks i n most rooms o f t h e house, bending and b u l g i n g o f

the floors, broken windows, inoperative doors and door

locks, bowed d e c o r a t i v e room d i v i d e r s , b e n t plumbing, badly

c r a c k e d basement w a l l s and f l o o r s , s e p a r a t i o n between f i r e -
place masonry and the house structure, cracked bathroom

tiles, separation between bathtubs and walls, uneven
b a s e m e n t f l o o r s and g e n e r a l u n s i g h t l y i n t e r i o r o f t h e h o u s e .
The s e t t l e m e n t d e v e l o p e d s o t h a t p a r t s of t h e f o u n d a t i o n on
t h e w e s t s i d e o f t h e h o u s e were a s much a s 3 . 6 i n c h e s l o w e r

t h a n t h e f o u n d a t i o n on t h e e a s t s i d e .
A depression extends along t h e n o r t h end o f t h e l o t

in question in an east-west direction. The depression
c o l l e c t s water periodically and h a s done so since before
t h e C h a n d l e r s took p o s s e s s i o n of t h e house. Former next-
door n e i g h b o r s of t h e Chandler house t e s t i f i e d v i a deposi-

tion that t h e y had t o r e f r a i n from w a t e r i n g t h e i r lawn t o
prevent "ponding" i n t h e depression both during and after

c o n s t r u c t i o n of t h e C h a n d l e r h o u s e and t h a t w a t e r c o l l e c t e d
periodically i n t h e depression before any l a n d s c a p i n g was

done. According to the landscaper, Jim Sturn, the only
c h a n g e i n g r a d e h e made n e a r t h e n o r t h end o f t h e l o t was

t h e removal of some e a r t h n e a r t h e deck, which would h a v e
t e n d e d t o improve d r a i n a g e o u t o f t h e d e p r e s s i o n .
Piadsen testified he created a depression extending

e a s t and west t o c o l l e c t w a t e r and c o n s t r u c t e d a s w a l e on
t h e e a s t s i d e of t h e h o u s e t o d r a i n t h e a r e a . The d e p r e s -
s i o n Madsen c r e a t e d was s u c h t h a t i t would be d i f f i c u l t t o

observe with the naked eye. He did not use any survey
i n s t r u m e n t o r t r a n s i t t o d e t e r m i n e i f i n f a c t t h e a r e a would
drain, nor d i d h e i n f o r m t h e C h a n d l e r s t h e y s h o u l d p r o c e e d
t o create drainage.
The house is located on moisture-sensitive soil
which, when wet, becomes compressible. The p r e s e n c e of
w a t e r i n t h e s o i l c a u s e d s e t t l i n g of the footings, founda-
t i o n s , and o t h e r p a r t s o f t h e h o u s e which i n t u r n c a u s e d t h e

e x t e n s i v e damage t o t h e s t r u c t u r e .

T e s t i m o n y showed a n e s t i m a t e d c o s t o f repairing the

h o u s e was $ 6 5 , 0 0 0 . T h i s e s t i m a t e was c a l c u l a t e d on a c o s t

plus overhead basis with a 12% contingency allowance for

c e r t a i n p o r t i o n s of t h e work. Further testimony revealed,

however, that a firm price contract for the repair would

c o s t 50% more t h a n t h e e s t i m a t e , o r $ 9 7 , 5 0 0 , considering the

c o n t i n g e n c i e s of t h e work. The r e p a i r s would require the

Chandlers to move out of their home for three to four

months.

The case was heard by the District Court sitting

without a jury. On J a n u a r y 15, 1981, t h e D i s t r i c t Court

issued findings of fact and conclusions of law holding

Madsen liable to t h e Chandlers on the t h e o r i e s of implied

w a r r a n t y and n e g l i g e n c e and a w a r d i n g damages of $ 1 0 7 , 4 6 2 . 5 1 .

Following p o s t - t r i a l m o t i o n s t h e D i s t r i c t C o u r t amended i t s

o r d e r on F e b r u a r y 2 6 , 1981, d e l e t i n g t h e f i n d i n g of negli-

gence and reducing the damage award to $99,975.00. The

reduction deleted $4,000 previously awarded for temporary

rental and $3,487.51 previously awarded for moving and

storage. From t h i s o r d e r , b o t h p a r t i e s a p p e a l .

The i s s u e s b e f o r e t h i s C o u r t a r e :

1. Whether appellant, as a builder-vendor of a

r e s i d e n c e which he s o l d t o r e s p o n d e n t s , may be h e l d l i a b l e

to respondents under the doctrine of implied warranty of

habitability?

2. Whether t h e D i s t r i c t C o u r t e r r e d i n n o t a l l o w i n g

a p p e l l a n t t o r e c o v e r t h e amount c l a i m e d on h i s c o u n t e r c l a i m ?

3. Whether t h e D i s t r i c t C o u r t e r r e d i n d e l e t i n g i t s
finding that the appellant's negligence was the proximate
cause of respondents' damages?
4. Whether appellant is liable unJer the doctrine of
strict liability in tort?
5. Whether the District Court erred in the award of
damages?

IMPLIED WARRANTY OF HABITABILITY
The question of the liability of a builder-vendor of
a new residence to the first purchaser under an implied
warranty of habitability is one of first impression before
this Court.
Caveat emptor, which traditionally has applied to
sal.es of real estate, developed at a time when a buyer and
seller were in equal bargaining positions. They were of
comparable skill and knowledge and eacn could protect
himself in a transaction.
In the modern marketplace that equality of position
no longer necessarily exists, and a growing number of juris-
dictions have abandoned caveat emptor in favor of implied
warranties where a builder-vendor sells a new residence.
Yepsen v. Burgess (1974), 269 Or. 635, 525 P.2d 1019;
Pollard v. Saxe & Yoll- Development Co.
=. (1974), 115
Cal.Rptr. 648, 12 Cal.3d 374, 525 P.2d 88; Hanavan v. Dye
(1972), 4 Ill.App.3d 576, 281 N.E.2d 398; Bethlahmy v.
Bechtel (1966), 91 Idaho 55, 415 P.2d 698; Carpenter v.
Donohoe (1964), 154 Colo. 78, 388 P.2d 399.
We agree with the Oregon Supreme Court which stated
in Yepsen that the essence of the transaction between a
builder-vendor and a buyer is an implicit agreement that the
seller w i l l transfer a h o u s e which is s u i t a b l e f o r h a b i t a -

tion. The b u y e r i s n o t i n an e q u a l b a r g a i n i n g p o s i t i o n and

is e s s e n t i a l l y forced to rely on the seller's skill and

knowledge regarding the habitability of the house. In

a d d i t i o n , t h e b u i l d e r i s i n a b e t t e r p o s i t i o n t o e x a m i n e and

discover defects. Yepsen v . B u r g e s s , 525 P.2d a t 1 0 2 2 .

The doctrine of c a v e a t emptor no longer serves the

r e a l i t i e s of the marketplace. Therefore, we h o l d t h a t t h e

builder-vendor of a new home impliedly warrants that the

residence is constructed in a workmanlike manner and is

suitable for habitation.

Madsen a r g u e s t h a t even if the implied warranty of

habitability is adopted, it should not apply i n t h i s c a s e

because the defect which caused the damage here is not

s t r u c t u r a l b u t r a t h e r is i n h e r e n t i n t h e l a n d .

I n t h i s c l a i m , Madsen r e l i e s p r i m a r i l y on B e r i , Inc.

v. Salishan Properties, Inc. ( 1 9 7 8 ) , 282 Or. 569, 580 P.2d

173, where the plaintiffs leased buildings constructed by

the d e f e n d a n t on oceanfront lots which s u b s e q u e n t l y began

eroding. The Oregon c o u r t found a n i m p l i e d w a r r a n t y d i d n o t

apply because the defect--susceptibility to erosion--had

s o l e l y t o do w i t h t h e i n h e r e n t n a t u r e of t h e land and was

n o t a p r o d u c t of t h e b u i l d e r ' s work on t h e l a n d .

In Beri, supra, the land in question was on the

o c e a n f r o n t where t h e p r o s p e c t o f e r o s i o n s h o u l d have been,

if not certain, at least equally as apparent to buyer-

lessees as to seller-lessors. In addition, the Beri opinion

gives no indication that the erosion was furthered by

a n y t h i n g o t h e r t h a n t h e n a t u r a l a c t i o n of t h e ocean.

That is not so in the present case. Here, the
District Court found the cause of settling damage to the

Chandler h o u s e was the presence of water in the moisture-

s e n s i t i v e s o i l upon which t h e h o u s e was b u i l t . The f a c t o f

the moisture-sensitive s o i l was n o t the sole defect. The

" p o o l i n g " of wa t e r a t t h e n o r t h end o f t h e h o u s e was also

part of the defective condition. The D i s t r i c t Court a l s o

found that, if water collected at the north end of the

house, it d i d s o b e f o r e any l a n d s c a p i n g by t h e C h a n d l e r s and

was n o t c a u s e d by t h e C h a n d l e r s .

A basic concern i n applying t h e implied warranty is
whether the defect r e l a t e s e s s e n t i a l l y t o u s e f u l occupancy

of t h e house. Mazurek v . N i e l s e n ( 1 9 7 9 ) , 42 Colo.App. 386,

599 P . 2 d 269; Yepsen, supra. Sometimes a d e f e c t i s e s s e n -

tial to occupancy but is not strictly structural. See:

Yepsen, supra (defect involved improper construction of

septic tank and drainfield); Tavares v. Horstman (Wyo.

1 9 7 5 ) , 542 P.2d 1275 ( s e p t i c d r a i n f i e l d installed i n gumbo

c l a y s o i t would n o t d r a i n ) ; F o r b e s v . Mercado ( 1 9 7 8 ) , 283

Or. 291, 583 P.2d 552 ( w e l l water u n u s a b l e because of h i g h

iron content).

Madsen a r g u e s h e had no r e a s o n t o s u s p e c t t h e r e was a

moisture-sensitive s o i l which would c a u s e s e t t l i n g . But t h a t

is not the issue. The c o n c e p t h e r e i s n o t o n e o f f a u l t or

wrong-doing but, rather, where o n e of two i n n o c e n t p a r t i e s

w i l l s u f f e r , which was i n t h e b e t t e r p o s i t i o n t o p r e v e n t t h e

harm?

Whether o r n o t t h e r e was r e a s o n f o r Madsen t o s u s p e c t

the problem, as the builder-vendor he c l e a r l y was in the

better position to prevent the problem. We, therefore,

a f f i r m t h e D i s t r i c t Court r e g a r d i n g Madsen's l i a b i l i t y under
t h e implied warranty.

COUNTERCLAIM

Madsen counterclaimed for $637 which the Chandlers

agree remained unpaid for specific "extras" completed by

Madsen. 'The D i s t r i c t Court concluded t h a t Madsen was n o t

entitled to the counterclaim because of failure of

consideration. Madsen a r g u e s t h i s c o n c l u s i o n was i n c o r r e c t

because the defense of failure of consideration was not

a l l e g e d by t h e C h a n d l e r s a s an a f f i r m a t i v e d e f e n s e o r r a i s e d

in their pretrial order and because there i s no e v i d e n c e
t h a t Madsen d i d n o t p e r f o r m t h e work f o r t h o s e e x t r a s .

Failure of consideration is an affirmative defense

which m u s t be p l e a a affirmatively. Rule 8 ( c ) , M.R.Civ.P.

If an affirmative defense is not plead, it is g e n e r a l l y

waived. C a m a l i e r & Buckley-Madison, I n c . v . Madison H o t e l ,
Inc. (D.C. Cir. 1 9 7 5 ) , 5 1 3 F.2d 407. The key t o d e t e r m i n i n g

t h e s u f f i c i e n c y of t h e p l e a d i n g of an a f f i r m a t i v e d e f e n s e i s

w h e t h e r i t g i v e s f a i r n o t i c e of t h e d e f e n s e . Wyshak v . C i t y

N a t i o n a l Bank ( 9 t h C i r . 1 9 7 9 ) , 607 F.2d 824.

H e r e , t h e C h a n d l e r s d i d n o t s p e c i f y t h e i r r e l i a n c e on

f a i l u r e of c o n s i d e r a t i o n a s a d e f e n s e t o Madsen's counter-

claim e i t h e r i n t h e p l e a d i n g s o r t h e i r p r e t r i a l memorandum.

Sheldon Chandler testified at trial that among the items

purchased f o r t h e house i n a d d i t i o n t o t h o s e included i n t h e

purchase price were "extras" from Madsen. Chandler also

testified that he had paid Madsen $1,500 and s t i l l owed

$637. The evidence does not specify what "extras" were

i n v o l v e d nor d o e s i t e s t a b l i s h t h a t t h o s e " e x t r a s " w e r e n o t

supplied.
 We find the Chandlers' failure to plead failure of

consideration here was fatal to that defense, and the

D i s t r i c t C o u r t ' s c o n c l u s i o n i s u n s u p p o r t e d by t h e e v i d e n c e .

NEGLIGENCE

I n i t s o r i g i n a l f i n d i n g s of f a c t and c o n c l u s i o n s o f

law the District Court found that Madsen had a responsi-

bility of providing drainage around the house to prevent

damage t o t h e h o u s e and t h a t Madsen n e g l i g e n t l y f a i l e d t o d o

so. Further, t h e D i s t r i c t Court found Pladsen's negligence

caused or contributed to cause the water to enter the

s u b s o i l and t h e h o u s e t o s e t t l e .

The amended findings and conclusions stated the

Chandlers failed to carry their burden of proof that

Madsen's n e g l i g e n c e was t h e p r o x i m a t e c a u s e of t h e damage.

The C h a n d l e r s a r g u e t h a t g i v e n t h e D i s t r i c t C o u r t ' s f i n d i n g

t h a t t h e m o s t p r o b a b l e c a u s e o f t h e damage t o t h e h o u s e was

water under the footings, t h e o n l y e x p l a n a t i o n i s Pladsen's

conduct.

On r e v i e w , t h e s t a n d a r d w e m u s t a p p l y is whether the

District Court's conclusion is supported by substantial

c r e d i b l e e v i d e n c e and t h e l a w . If s o , t h i s Court w i l l n o t

d i s t u r b it. Woodahl v . Matthews ( 1 9 8 2 ) , - Mont. -, -
P . 2d , 39 S t . R e p . 238; L a u t e r j u n g v . J o h n s o n ( 1 9 7 7 ) , 1 7 5

Mont. 74, 572 P.2d 511.

Although our weighing of the facts might have

resulted in a different conclusion, we find the District

Court ' s findings and conclusions regarding negligence are

s u p p o r t e d by s u b s t a n t i a l e v i d e n c e t h a t t h e C h a n d l e r s f a i l e d

t o prove Madsen's n e g l i g e n c e .
STRICT L I A B I L I T Y

S i n c e w e h a v e d e t e r m i n e d l i a b i l i t y h e r e on t h e t h e o r y

of implied warranty, we f i n d i t u n n e c e s s a r y t o d i s c u s s t h e

s t r i c t l i a b i l i t y doctrine.

DANAGES

Macisen claims the District Court's finding of the

cost of repairs at $97,500 is punitive, speculative and

u n s u p p o r t e d by t h e e v i d e n c e . H e r e l i e s heavily i n h i s claim

on Spackman v . R a l p h M. P a r s o n s Co. ( 1 9 6 6 ) , 147 Mont. 500,

414 P.2d 918, in which the plaintiff sought damages

resulting from sewage flooding to personal and real

property. Madsen a r g u e s t h a t Spackman f o r g e s a s t r i c t r u l e

of law i n Montana t h a t t h e m e a s u r e o f damages is t h e c o s t o f

repair if t h e c o s t i s less t h a n t h e d i m i n u t i o n i n v a l u e of

property but i n no c a s e w i l l t h e r e c o v e r y e x c e e d t h e v a l u e

of t h e p r o p e r t y b e f o r e i n j u r y .

Spackman d o e s n o t s e t t h i s p r i n c i p l e o u t , h o w e v e r , a s

a hard-and-fast rule but, rather, as a guide to common

sense:

"Where damage t o p r o p e r t y i s c o n c e r n e d , t h e
p u r p o s e of a w a r d i n g damages i s t o r e t u r n t h e
p a r t y i n j u r e d t o t h e same, o r a s n e a r l y a s
p o s s i b l e t h e same, c o n d i t i o n a s he e n j o y e d
before the injury t o h i s property ...
" I n g e n i o u s men h a v e p r o p o u n d e d i n g e n i o u s
m e t h o d s , s y s t e m s and f o r m u l a s f o r d e t e r m i n i n g
i n monetary t e r m s t h e v a l u e of p r o p e r t y p a r -
t i a l l y damaged o r d e s t r o y e d . h h i l e such
methods s e r v e a s u s e f u l g u i d e s , t h e f i n a l
answer must r e s t i n good s e n s e r a t h e r t h a n
mechanical a p p l i c a t i o n of such formulas."
Spackman, 1 4 7 M o n t . a t 5 0 6 , 414 P.2d a t
921-922.

I n Bos v . D o l a j a k ( 1 9 7 5 ) , 1 6 7 Mont. 1 , 534 P . 2 d 1 2 5 8 ,

t h i s Court recognized t h a t t h e Spackman r u l e c a n n o t a l w a y s
c l e a r l y be a p p l i e d . In - t h e defendants contracted with
Bos

p l a i n t i f f s t o e r e c t f o r $ 6 , 5 0 0 a g r a i n s i l o which p l a i n t i f f s

had p u r c h a s e d s e c o n d h a n d b u t which was t h e e q u i v a l e n t o f a

new silo. Defendants secured the raised s i l o with fewer

jacks t h a n r e q u i r e d by t h e c o n s t r u c t i o n manual and a l l o w e d

the silo to twist so it could not readily be lowered.

During the process, a windstorm threw the silo off its

f o u n d a t i o n and v i r t u a l l y d e s t r o y e d i t .

A t trial plaintiffs presented damages totaling

$25,274.61: $15,342.61 was t h e c o s t o f replacing the s i l o

and $9,932 cost from loss of use. The jury awarded

$17,626.75.

T h i s C o u r t a p p r o v e d t h e d e t e r m i n a t i o n o f damages and

n o t e d t h a t t h e Spackman r u l e d e a l t w i t h r e a d i l y r e p l a c e a b l e

i t e m s w i t h an e s t a b l i s h e d m a r k e t v a l u e . vJhere a n i t e m was

not readily replaceable, d i d n o t h a v e an e s t a b l i s h e d m a r k e t

value, and was i n t e g r a l t o a larger o p e r a t i o n such a s t h e

plaintiffs' dairy farm, this Court held that other

c o n s i d e r a t i o n s were appropriate including compensation for

l o s s of u s e .

In the case before us, Claude Gerbase, a Billings

contractor, testified that repair of the Chandler house

would require drying out the subsoil, cutting the house

l o o s e from i t s f o u n d a t i o n and b r i n g i n g i t t o a l e v e l g r a d e .

Once the house was made level and secure, additional

c o s m e t i c and s t r u c t u r a l r e p a i r s would be r e q u i r e d i n c l u d i n g

replacement of s h e e t r o c k .

Gerbase t e s t i f i e d h i s estimated c o s t of r e p a i r of t h e

h o u s e was $ 6 5 , 0 0 0 , which included a 12 percent contingency

factor. He further testified that because of the
c o m p l i c a t e d and u n c e r t a i n n a t u r e o f t h e j o b he would c h a r g e

$91,500 to enter into a fixed price contract for the

repairs. The D i s t r i c t C o u r t awarded damages o f $ 9 7 , 5 0 0 .

Madsen a r g u e s t h e f i n d i n g i s p u n i t i v e and c o n t r a r y t o

law i n p a r t b e c a u s e t h e h o u s e was o r i g i n a l l y s o l d f o r less

t h a n t h e damage a w a r d . W disagree.
e

Madsen also claims that if he is liable for any

damages the proper amount is $65,000 which was Gerbase's

repair estimate. Madsen a r g u e s t h e $ 9 7 , 5 0 0 i s s p e c u l a t i v e

i n t h a t i t was q u o t e d by G e r b a s e a s h i s f i x e d c o n t r a c t p r i c e

o n l y t o g u a r a n t e e h e would l o s e no money on t h e job. We

disagree.

An estimate, by its very nature, is speculative,

particularly where, as here, the job is complicated and

subject to revision as it progresses. It would be of

q u e s t i o n a b l e v a l u e t o t h e C h a n d l e r s t o r e c e i v e $65,000 for

r e p a i r s only t o discover, once into the project, the cost

would be s i g n i f i c a n t l y more. G i v e n t h e n a t u r e of t h e damage

t o t h e C h a n d l e r home and t h e r e p a i r s r e q u i r e d , w e a f f i r m t h e

D i s t r i c t C o u r t ' s award f o r r e p a i r s .

The Chandlers argue that the District Court erred

when i t d e l e t e d t h e c o s t s o f t e m p o r a r y r e n t a l and moving and

s t o r a g e from t h e damage a w a r d .

The initial question in resolving this issue is

whether a breach of an implied warranty arises out of a

c o n t r a c t obligation or some o t h e r obligation. That d e t e r -

mination will establish what damages are available as a

r e s u l t of b re a c h . S e c t i o n s 27-1-311 and 27-1-317, MCA.

I n F e r g u s o n v . Town Pump, I n c . ( 1 9 7 8 ) , 177 Mont. 122,

580 P.2d 915, this Court found an oral contract for
c o n s t r u c t i o n o f g a s o l i n e s t a t i o n t o c a r r y w i t h i t an i m p l i e d

term that the work would be performed in a reasonably

skillful and workmanlike manner. It also found that a

negligent f a i l u r e t o perform according t o t h e implied term

resulted i n a breach of contract a s w e l l as a tort. 177

Mont. a t 1 3 1 , 580 P.2d a t 920.

A l t h o u g h h e r e w e do n o t h a v e t h e n e g l i g e n c e component

which sustained the tort theory i n Ferguson, w e do h a v e a

b r e a c h of an i m p l i e d term of t h e c o n t r a c t . Madsen's breach

of i m p l i e d w a r r a n t y is a b r e a c h of c o n t r a c t and s u b j e c t t o

the provisions of section 27-1-311, IJICA. That provision

sets the measure of damages for breach of an obligation

a r i s i n g f r o m a c o n t r a c t a 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 -

mately caused thereby or i n t h e o r d i n a r y c o u r s e of things

would be l i k e l y t o r e s u l t t h e r e f r o m . "

It i s a p p a r e n t t h a t t h e n e c e s s i t y o f moving from a

residence undergoing irlassive repairs and of renting a

t e m p o r a r y r e s i d e n c e i s l i k e l y t o r e s u l t from major damage t o

a structure. We, therefore, f i n d t h a t c o s t s f o r moving and

s t o r a g e and temporary rental were improperly deleted from

t h e damage award.

M a r i l y n C h a n d l e r t e s t i f i e d s h e had o b t a i n e d e s t i m a t e s

from a B i l l i n g s r e a l e s t a t e o f f i c e t h a t a s u i t a b l e t e m p o r a r y

r e n t a l f o r t h e C h a n d l e r s would c o s t b e t w e e n $600 and $ 1 , 0 0 0

per month. She testified that she also had obtained an

e s t i m a t e of $3,487.51 f o r moving the Chandlers' furniture.

In addition, Gerbase testified the Chandlers would be

r e q u i r e d t o move from t h e i r h o u s e f o r t h r e e t o f o u r months

during repairs.
 Since the testimony establishes a $400-per-month

disparity in rental figures, an award of t h e middle f i g u r e

appears appropriate. Therefore, we award the Chandlers

$3,200 ( $ 8 0 0 p e r month f o r f o u r m o n t h s ) f o r t e m p o r a r y r e n t a l

and r e i n s t a t e t h e award o f $ 3 , 4 8 7 . 5 1 f o r moving and s t o r a g e .

The C h a n d l e r s a l s o a r g u e t h e D i s t r i c t C o u r t e r r e d i n

f a i l i n g t o g r a n t damages f o r e m o t i o n a l d i s t r e s s . Since we

have found no l i a b i l i t y f o r n e g l i g e n c e o r s t r i c t 1 - i a b i l i t y ,

s u c h damages need n o t be c o n s i d e r e d h e r e .

SURPRISE

Madsen requests that a new t r i a l be g r a n t e d on t h e

damage issue on the grounds he has been surprised under

s e c t i o n s 25-11-102(3) and 25-11-103, MCA. This request is

based on the affidavit of Madsen's attorney, which states

that an extensive discussion with Claude Gerbase, had in

l i e u of d e p o s i t i o n on December 6 , 1 9 8 0 , i n d i c a t e d G e r b a s e ' s

e s t i m a t e f o r c o s t of r e p a i r would be $ 6 5 , 0 0 0 . On December

9, 1980, a t t h e r e q u e s t of Madsen's a t t o r n e y , Gerbase sub-

m i t t e d a d e t a i l e d breakdown of t h e e s t i m a t e . Subsequently,

according to the a£f i d a v i t , Madsen's attorney contacted

another c o n t r a c t o r who examined t h e d o c u m e n t a r y and v i d e o -

taped evidence and concluded his estimate would not be

s i g n i f i c a n t l y l e s s t h a n $65,000.

The Chandlers argue the claim of surprise is
unfounded. In support of their position, the Chandlers

refer t o a l e t t e r of October 29, 1.980, from t h e i r attorney

t o Madsen's a t t o r n e y which stated: "Another item t o take

i n t o account i s t h a t t h e Gerbase e s t i m a t e is only t h a t . It

is n o t an agreement t o r e s t o r e t h e house. The C h a n d l e r s a r e
e n t i t l e d t o have their house restored and if a contractor

r e q u i r e s an a d d i t i o n a l sum of money f o r c o n t i n g e n c i e s , s u c h

a s h e would regularly charge in the course of his trade,

t h e n we w i l l want t o add t h a t o n . "

In addition, Claude Gerbase, by affidavit, stated

t h a t a c c o r d i n g t o h i s r e c o l l e c t i o n o f t h e December 6 , 1 9 8 0 ,

meeting with the attorneys for both parties, he told all

t h o s e p r e s e n t t h a t he would n o t e n t e r into a firm contract

f o r t h e amount o f h i s e s t i m a t e .

S u r p r i s e h a s o n l y o n c e been a c c e p t e d a s t h e b a s i s f o r

granting a new trial in Montana. Porter v. Industrial

P r i n t i n g Co. ( 1 9 0 1 ) , 26 Mont. 1 7 0 , 66 P . 839, m o d i f i e d , 67

P. 67. The C o u r t found s u c h s u r p r i s e where t h e t r i a l c o u r t

had granted default against the plaintiff for failure to

reply t o the defendant's counterclaim. At trial t h e defen-

d a n t p r e s e n t e d no p r o o f i n s u p p o r t o f i t s c o u n t e r c l a i m . The

C o u r t l a t e r d e c l a r e d o n l y t h r e e of t h e c o u n t e r c l a i m s s t a t e d

causes of action and entered judgment for the plaintiff.

T h i s C o u r t found s u r p r i s e which " o r d i n a r y p r u d e n c e c o u l d n o t

have guarded a g a i n s t . " P o r t e r , 26 Mont. 1 8 2 , 66 P. a t 8 4 1 .

W e do n o t have s u c h a s i t u a t i o n h e r e . iv"e f i n d t h e r e

was s u f f i c i e n t r e f e r e n c e t o t h e f a c t a f i x e d - p r i c e contract

would be d i f f e r e n t t h a n t h e e s t i m a t e and would be r e l i e d o n

by t h e C h a n d l e r s t o p r e c l u d e s u r p r i s e .

This case is remanded to the District Court with

i n s t r u c t i o n s t o amend i t s judgment i n accordance with t h i s

opinion.
W concur:
e

Chief J u s t i c e
Mr. J u s t i c e John C. Sheehy, c o n c u r r i n g s p e c i a l l y :

I agree with t h e r e s u l t here. I a f f i r m t h e damages

award o f $97,500 f o r r e p a i r o f t h e h o u s e b e c a u s e w e a r e bound

by t h e a p p e l l a t e r u l e t h a t t h e f i n d i n g s o f a d i s t r i c t c o u r t

may n o t b e s e t a s i d e u n l e s s c l e a r l y e r r o n e o u s . Rule 5 2 ( a ) ,

M.R.Civ.P. A f i n d i n g i s " c l e a r l y e r r o n e o u s " when, although

t h e r e i s e v i d e n c e t o s u p p o r t i t , t h e r e v i e w i n g c o u r t on t h e

e n t i r e e v i d e n c e i s l e f t w i t h t h e d e f i n i t e and f i r m c o n v i c t i o n

t h a t a m i s t a k e h a s b e e n committed. U n i t e d S t a t e s v . Gypsum

Co. ( 1 9 4 8 ) , 333 U.S. 364, 394-395, 68 S.Ct. 525, 92 L.Ed. 746.

I am p u r s u a d e d on t h i s p o i n t by t h e e v i d e n c e o f t h e c o n t r a c t o r

t h a t h e would n o t e n t e r i n t o a f i r m c o n t r a c t f o r r e p a i r a t t h e

f i g u r e o f $67,500. The b u r d e n o f p r o o f o n t h e p l a i n t i f f s was

by a p r e p o n d e r a n c e o f t h e e v i d e n c e . The G e r b a s e e v i d e n c e ,

b e i n g c r e d i b l e , i s s u b s t a n t i a l and t h e r e f o r e i t overcomes t h e

"clearly erroneous" rule. S e e W e s t e r n C o t t o n o i l Co. v. Hodges

(5th C i r . 1 9 5 4 ) , 218 F.2d 1 5 8 .

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