Delaney & Co. v. City of Bozeman, DA 08-0386.

CourtUnited States State Supreme Court of Montana
Citation354 Mont. 181,222 P.3d 618,2009 MT 441
Docket NumberNo. DA 08-0386.,DA 08-0386.
PartiesDELANEY & COMPANY, Plaintiff and Appellee, v. CITY OF BOZEMAN, Defendant and Appellant.
Decision Date23 December 2009

For Appellant: Robert F. James (argued), Cathy J. Lewis; Ugrin, Alexander, Zadick & Higgins, PC, Great Falls, Montana, Allan H. Baris; Moore, O'Connell & Refling, PC, Bozeman, Montana.

For Appellee: David M. Wagner (argued); Crowley Fleck PLLP, Bozeman, Montana.

Justice JOHN WARNER delivered the Opinion of the Court.

¶ 1 Delaney & Company, a Montana corporation, (Delaney) brought suit against the City of Bozeman and its former city manager (together referred to as Bozeman) in the Eighteenth Judicial District Court, Gallatin County, seeking damages for lost profits. Delaney's complaint alleges constructive fraud, negligent misrepresentation, and intentional interference with prospective economic advantage. The jury returned a verdict in favor of Delaney in the amount of $3,000,000. Bozeman now appeals. We affirm.

¶ 2 We restate and consolidate the issues raised as follows:

¶ 3 Issue 1: Did the District Court err in ruling the governmental liability cap of $750,000 contained in § 2-9-108(1), MCA, does not apply?

¶ 4 Issue 2: Did the District Court err in ruling that its order entered as a sanction, that Bozeman is liable to Delaney, includes the element of causation?

¶ 5 Issue 3: Did the District Court err when it instructed the jury that it must award damages for lost profits?

¶ 6 Issue 4: Did the District Court err in allowing the testimony of an expert concerning lost profits?

¶ 7 Issue 5: Did the District Court err in not including necessary standards to assess damages for lost profits in its instructions to the jury?

BACKGROUND

¶ 8 Delaney is a Montana corporation that is engaged in developing and managing property in the Bozeman area. In May and June 2003, Delaney attempted to purchase land referred to as the Mandeville Ranch. At the same time Delaney was attempting to negotiate with the Mandevilles, Bozeman decided to construct a new waste transfer station (WTS) because its landfill was projected to be full by November 2003. Delaney knew of Bozeman's solid waste dilemma. In May 2003, Mike Delaney, Delaney's principal shareholder and president of the company, told Bozeman's director of public works that Delaney wanted to purchase and develop the Mandeville property into an industrial park, a portion of which could accommodate a WTS.

¶ 9 Delaney struck a deal on a price per acre with the Mandevilles. The Mandevilles had been attempting to sell their property for ten years, and the first offer to purchase was Delaney's. Mike Delaney revealed to Lloyd Mandeville (the Mandevilles' son and listing agent) that he planned to locate the WTS on the property and develop the balance into an industrial park.

¶ 10 Delaney had worked out detailed plans to develop the Mandeville property, including an analysis of the property layout, easements, and a location for a WTS. Mike Delaney had multiple meetings with Montana Rail Link regarding rail service and had investigated the State of Montana's potential use of the property. Mike Delaney discussed his plans with the Bozeman city manager, who told him that the city would review the information and get back to him. Bozeman's city manager also told him that it would provide him with Bozeman's WTS design layouts. Instead, the city manager contacted Lloyd Mandeville and started to negotiate with the Mandevilles on behalf of Bozeman. Delaney was unaware that Bozeman had started negotiations directly with the Mandevilles.

¶ 11 Thereafter, Bozeman executed a buy-sell for the Mandeville property. Bozeman had not revealed to Delaney that it desired to purchase the property, but rather told Mike Delaney that it supported his company's plans to purchase and develop the property. After Bozeman had completed the purchase of the Mandeville property, Delaney filed this suit.

¶ 12 During the course of this litigation, the District Court, as a sanction for discovery abuse, ordered that Bozeman was liable to Delaney. This order established that Bozeman had interfered with the purchase and development of the Mandeville property resulting in injury to Delaney. Bozeman does not appeal this order.

¶ 13 This case proceeded to a jury trial on damages. At trial, Delaney presented four witnesses to establish that Mike Delaney had extensive experience in real estate and development. Delaney also presented the testimony of Bozeman's own expert consultant, Erik Nelson who, in 2006, had presented the city a development plan for the Mandeville property. Nelson opined that Bozeman would make a profit of at least $3,000,000 from developing the property.

¶ 14 The District Court refused Bozeman's proposed instructions that Delaney was required to prove that it had caused him damage, and instead instructed the jury it was to determine the amount of damage suffered. The District Court also refused Bozeman's proposed instructions concerning damages for lost profits. The jury awarded $3,000,000 to Delaney for lost profits. Bozeman appeals.

STANDARDS OF REVIEW

¶ 15 The District Court's determination that the governmental liability cap of $750,000 contained in § 2-9-108(1), MCA, does not apply in this case, is a conclusion of law. Our review of conclusions of law is plenary. In re Marriage of Guffin, 2009 MT 169, ¶ 6, 350 Mont. 489, 209 P.3d 225.

¶ 16 We review a district court's evidentiary rulings for an abuse of discretion. A district court abuses its discretion when it acts arbitrarily without conscientious judgment or exceeds the bounds of reason. Anderson v. Woodward, 2009 MT 144, ¶ 13, 350 Mont. 343, 207 P.3d 329; State v. Stearns, 2008 MT 356, ¶ 13, 346 Mont. 348, 195 P.3d 794.

¶ 17 A district court has discretion in deciding how to instruct a jury, and we will not reverse a district court's decision absent an abuse of that discretion. Edie v. Gray, 2005 MT 224, ¶ 12, 328 Mont. 354, 121 P.3d 516. When we review instructions to a jury to determine whether they were properly given or refused, we consider the instructions in their entirety, as well as in connection with the other instructions given and the evidence admitted during the trial. Busta v. Columbus Hosp. Corp., 276 Mont. 342, 359, 916 P.2d 122, 132 (1996).

DISCUSSION

¶ 18 Issue 1: Did the District Court err in ruling the governmental liability cap of $750,000 contained in § 2-9-108(1), MCA, does not apply?

¶ 19 Delaney and Bozeman agree that the resolution of this issue turns on the application of pertinent statutes. Bozeman argues that the judgment should be reduced from $3,000,000 to $750,000 pursuant to § 2-9-108(1), MCA, which provides, in part:

The state, a county, municipality, taxing district, or any other political subdivision of the state is not liable in tort action for damages suffered as a result of an act or omission of an officer, agent, or employee of that entity in excess of $750,000 for each claim and $1.5 million for each occurrence.

¶ 20 A claim to which § 2-9-108(1), MCA, applies is defined as:

"Claim" means any claim against a governmental entity, for money damages only, that any person is legally entitled to recover as damages because of personal injury or property damage caused by a negligent or wrongful act or omission committed by any employee of the governmental entity while acting within the scope of employment, under circumstances where the governmental entity, if a private person, would be liable to the claimant for the damages under the laws of the state. For purposes of this section and the limit of liability contained in 2-9-108, all claims that arise or derive from personal injury to or death of a single person, or damage to property of a person, regardless of the number of persons or entities claiming damages, are considered one claim.

Section 2-9-101(1), MCA. Property damage, for the purposes of § 2-9-101(1), MCA, means "injury or destruction to tangible property, including loss of use of the property, caused by an occurrence for which the state may be held liable." Section 2-9-101(6), MCA.

¶ 21 Bozeman argues on appeal that the District Court erred in holding that Delaney's claim in this case does not constitute a claim to which the $750,000 limit in § 2-9-108(1), MCA, applies. Bozeman posits that the phrase "injury or destruction to tangible property, including loss of use of the property," in § 2-9-101(6), MCA, encompasses both the loss of use of property which has been injured or destroyed, in addition to the loss of use of property under circumstances where the property has not been injured or destroyed. Thus, Bozeman argues that because Delaney lost the use of the Mandeville property to sell for a profit, Delaney's suit constitutes a claim and the $750,000 limit on damages applies.

¶ 22 We interpret statutes by looking at their plain language. Montana Sports Shooting Assn., Inc. v. State, 2008 MT 190, ¶ 11, 344 Mont. 1, 185 P.3d 1003. When interpreting statutes, this Court's only function is to give effect to the intent of the legislature. Albright v. State, 281 Mont. 196, 206, 933 P.2d 815, 821 (1997). A whole act must be read together and where possible, full effect will be given to all statutes involved. Carlson v. City of Bozeman, 2001 MT 46, ¶ 15, 304 Mont. 277, 20 P.3d 792; Albright, 281 Mont. at 206, 933 P.2d at 821.

¶ 23 Section 2-9-108(1), MCA, which contains the $750,000 limit on damages, only applies to those tort actions which constitute a "claim" as defined in § 2-9-101(1), MCA. As there is no personal injury in this case, the claim must be for property damage as described in § 2-9-101(6), MCA, in order for the limit on damages to apply. The District Court held that the phrase "loss of use of the property" in § 2-9-101(6), MCA, does not include a loss of use of property when there has been no injury or...

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