Dees v. American Nat. Fire Ins. Co.
| Decision Date | 14 September 1993 |
| Docket Number | No. 92-339,92-339 |
| Citation | 260 Mont. 431,861 P.2d 141 |
| Parties | Charles DEES, Plaintiff, Respondent and Cross-Appellant, v. AMERICAN NATIONAL FIRE INSURANCE COMPANY, a New York corporation, Defendant, Appellant and Cross-Respondent. |
| Court | Montana Supreme Court |
Robert F. James, James, Gray & McCafferty Great Falls, for appellant.
Mort Goldstein, Goldstein Law Firm, Havre, for respondent.
American National Fire Insurance Company (American National) appeals from a judgment entered on a jury verdict in the Twelfth Judicial District Court, Hill County, awarding respondent Charles Dees (Dees) compensatory and punitive damages. We affirm in part and reverse in part.
American National raises the following issues on appeal:
1. Whether the District Court erred in denying American National's motions for summary judgment and directed verdict on the issue of its alleged violations of the Unfair Trade Practices Act.
2. Whether the District Court erred in denying American National's motion for mistrial based on Dees' testimony about his costs and attorney's fees.
3. Whether the District Court erred in not striking the jury award of punitive damages.
4. Whether the District Court erred in awarding pre-judgment interest on the punitive damages award.
Dees' cross-appeal raises the following issue:
5. Whether the District Court erred in reducing the jury award of punitive damages.
This case originated as an action on a promissory note, filed by the Solem Insurance Agency (Solem) of Havre, Montana, in March 1990. Dees was the defendant. The note represented the $5,772 premium for "companion plan" hail insurance, issued to Dees by American National and covering 1,310.8 acres planted in wheat and barley. The insurer's liability was limited to $50 per acre, but an endorsement on the policy included a multiplier that would triple Dees' recovery in the event of loss. Dees purchased the policy on June 26, 1989, to cover the 1989 crop year.
On July 10, 1989, a hail storm passed over Dees' wheat fields near Kremlin, Montana. Dees was working with his father at the farm shop, about four miles from the fields for which he eventually filed a claim for hail damage. After the storm he and his father inspected his fields and noticed that numerous plants had been knocked over in two adjoining fields, each about 160 acres in size. He testified that it "looked like a third of my crop was knocked over." For purposes of litigation, the two fields are designated by their location in Township 31 North, Range 13 East, Section 3, and Township 32 North, Range 13 East, Section 34 (Sections 3 and 34).
Evidence of hail damage in these fields was provided at trial through the testimony of Arnold Berg, a neighbor, who said that he had observed hail in Dees' fields immediately after the storm, and Marty Ritterhouse, the custom cutter who harvested Dees' wheat during the first week of August 1989.
Ritterhouse testified that he had been harvesting wheat in the Hi-Line area since the early sixties; that he had often observed the effects of hail on spring wheat in the area; and that in August 1989 the effects of hail were "plumb obvious" in Dees' fields in Sections 3 and 34. In particular, he mentioned broken plants, heads of wheat lying on the ground, and the typical hail storm pattern of downed plants in a relatively narrow strip, curving from southeast to northwest. He agreed that one-third of the crop was a reasonable estimate of Dees' loss in the two fields.
Photographs taken by Dees on August 7, 1989, which were entered in evidence at the trial, showed rows of standing wheat with numerous stems lying on the ground between the rows.
Dees' wheat was a special type called "Newana." According to Donald Baldridge, a Montana State University agronomist who testified for Dees, Newana wheat was developed as a short-stemmed, semi-dwarf variety of spring wheat. It has very strong stems that resist "lodging" or falling over, and shatter-resistant heads. Looking at the fallen wheat in Dees' photographs, Baldridge testified that he had never observed that kind of breakage in Newana spring wheat from wind alone, and that it "looks like hail damage to me."
On the evening of July 10, the day of the storm, Dees telephoned his insurance agent and reported that his spring wheat had been damaged by hail. He expected representatives of the insurance company to inspect his wheat soon afterward, but no one came until August 1, 1989. By that time the field in Section 3 had been cut, with patches left uncut for inspection, but the field in Section 34 had not been cut because the custom cutter considered it too green.
Victor Velk, the agent who had sold Dees the companion hail policy, arrived at Dees' farm late on August 1 with James Schaible, an American National adjuster. Schaible had not intended to "adjust" Dees' claim that day, because he had already worked a full day on another claim and was tired. To accommodate Dees, however, he made some informal observations in Section 3. According to his testimony at the trial, he told Dees that he had probably lost twenty to twenty-five percent of his crop, but not because of hail. He observed that the wheat stems were bent over, not broken, and were all bent over at one point; therefore, Schaible testified, the damage appeared to be due to wind, not hail.
Dees testified that he had seen Schaible counting wheat stems in an uncut portion of Section 3 and that Schaible had told him that his loss was approximately twenty-three percent. While they were still in the field, Dees testified, he asked Velk, the agent, what he would recover under his companion hail policy. Velk told him that under his particular policy the "pay out" would be roughly sixty to eighty percent. According to Dees, "that's when Mr. Schaible changed [his] mind about finishing an adjustment."
Two days later, Velk returned with a second adjuster, Sam McCormick. McCormick had been adjusting hail insurance since 1975; he estimated at the trial that he had made over one thousand hail adjustments during his career. On August 3, McCormick inspected uncut patches of wheat in Section 3 as well as the uncut wheat in Section 34. He testified that he observed some crop damage, but "I just could not find the type of thing that indicated that we had had a hail loss." He said that he had explained to Dees that if it were hail damage, the stems of the wheat would be broken in a variety of places, not uniformly bent over near the ground; he also said that at the time, Dees did not disagree with this explanation. Dees testified, however, that McCormick told him the wheat had been damaged by wind, and that he
After McCormick inspected the fields, he asked Dees to sign a "withdrawal of claim" form acknowledging that he had not sustained a loss that would entitle him to payment under his American National hail insurance policy. Dees refused to sign this form.
On November 28, 1989, Dees' attorney, Mort Goldstein, wrote to American National, stating that Dees had lost 25 percent of his crop, due to hail, and that the loss payable by American National under its companion hail policy exceeded the amount of the unpaid premium. Goldstein's letter demanded payment of the cash balance or, in the alternative, joint appraisal of Dees' loss using the procedures outlined in the policy, and included the name and telephone number of the custom cutter who had observed the damage to Dees' crop in August. American National did not respond to this letter. In March 1990, the insurance agency initiated its collection action against Dees.
Dees asserted in his answer that the promissory note was "contingent," not intended to be enforced until after American National had paid his claim for hail damage, which Dees then estimated at $9,462. He relied on Solem's representation, he said, that Solem and American National:
would at all times pay for hail damage, and that Charles Dees would not be required to pay the face value on the alleged "promissory note", if there was an amount due to Charles Dees for hail damage ... that equaled ... or was greater than the face value of the contingent note.
Dees' answer included a counterclaim against American National for the damage to his crop, plus interest, costs, attorney's fees, and exemplary damages.
After hearing oral argument on March 5, 1991, the court granted Solem's motion for summary judgment, on the grounds that Dees was precluded from admitting oral evidence "to prove that the Promissory Note had terms and conditions other than those set forth in the written document." Dees subsequently paid the full amount due on the promissory note. At a second hearing on March 7, 1991, the court denied American National's motion for partial summary judgment on Dees' counterclaim.
A jury trial on Dees' counterclaim began on April 1, 1991, and ended on April 5, 1991, with a verdict for Dees. The special verdict form is reproduced below, with the jury's response to each question.
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