McJunkin v. Kaufman and Broad Home Systems, Inc.

Decision Date11 February 1988
Docket NumberNo. 87-77,87-77
Citation748 P.2d 910,44 St.Rep. 2111,229 Mont. 432
Parties, 5 UCC Rep.Serv.2d 1341 Arlyn McJUNKIN and Lorraine McJunkin, Plaintiffs and Appellants, v. KAUFMAN AND BROAD HOME SYSTEMS, INC., a California Corp., and Ponderosa Homes, a Montana Corporation, Defendants and Respondents.
CourtMontana Supreme Court

Larry W. Moran, Bozeman, for plaintiffs and appellants.

Herndon, Harper & Munro; Rodney T. Hartman, Billings, Berg, Coil, Stokes & Tollefsen; Gig A. Tollefsen, Bozeman, for defendants and respondents.

SHEEHY, Justice.

Following trial by jury in the Eighteenth Judicial District, Gallatin County, judgment was entered against Kaufman and Broad Homes (K & B) on a claim of negligence and against Ponderosa Homes (Ponderosa) on a claim of negligent misrepresentation. All litigants allege error. We affirm.

The parties present the following issues for review:

1. Did the District Court properly refuse to instruct the jury on strict liability, the covenant of good faith and fair dealing and punitive damages?

2. Did the District Court properly grant directed verdicts dismissing claims of breach of the implied warranty of habitability, breach of the implied warranty of merchantability, express warranty and constructive fraud?

3. Did the District Court properly allow the jury to view the mobile home at issue?

4. Did the District Court properly refuse to grant a directed verdict on the claims of negligence and negligent misrepresentation?

Ponderosa is engaged in the business of selling mobile homes, including those manufactured by K & B. The controversy at hand arose from the McJunkins' purchase of a K & B mobile home from Ponderosa.

In December, 1982, the McJunkins met with Ponderosa salesman Vern Gusick concerning the purchase of a K & B mobile home. The McJunkins subsequently returned to Ponderosa and ordered a K & B mobile home with a number of special features. It arrived in Belgrade on or about December 21, 1982.

The McJunkins first inspected their mobile home on December 23, 1982. At that time, Mr. McJunkin noted that the mobile home did not conform to their specifications in certain areas. The McJunkins allege that they told Gusick they were not going to take the mobile home. Gusick is alleged to have responded that the trailer was a special order and they had to take it. In any event, it is uncontested that Gusick informed the McJunkins not to worry, that everything will be taken care of. Thereafter, the McJunkins entered an installment contract for the purchase of the mobile home.

Ponderosa transported the trailer to the McJunkins' home in Sheridan, Wyoming, and set it in place. Mrs. McJunkin testified that she observed the mobile home fishtail wildly during the trip on an icy curve near Crow Agency. The stress placed on the trailer during this incident is alleged to be partially responsible for problems the McJunkins later had with the trailer.

Immediately upon moving in, the McJunkins noted problems with the mobile home. A significant problem was that the trailer was not level. The serviceman who attempted to relevel the trailer discovered that it could not be leveled because of the frame. Mr. McJunkin was advised by the serviceman not to move the trailer as a result. At various times, the McJunkins also discovered that the doors fit poorly; the carpet was coming loose; the floor plan had not been changed; there were not copper pipes as ordered; shutters were missing; the ceiling fan was defective; there was not an outside faucet as ordered; the furnace was noisy; the vent was in the wrong place; the shower heads were not positioned as ordered; the wrong materials had been used in the bathroom door casings; the paneling was coming off the bath wall; the door trim had been incorrectly installed; a special order cabinet was damaged; shingles came off the roof; the floor tile was coming up around the toilet; the front door lock broke; the door bell was installed on the wrong side; and other problems.

Although Ponderosa and K & B made efforts to remedy some of the defects, the McJunkins received very little relief. Efforts to correct defects often resulted in further damage or more sloppy work. As a result, the McJunkins sent a revocation of acceptance on December 10, 1984, but continued to live in the trailer.

Prior to trial, both parties had engineers examine the mobile home for structural defects. The engineer who examined the trailer at the request of the McJunkins found that the wooden frame had been overstressed at some point. He agreed with the serviceman that the trailer should not be moved. Defendants' engineer examined the mobile home after it had been returned to Belgrade. In his opinion, the frame had not suffered excessive stress and could safely be moved. Both engineers agreed that the mobile home was habitable. The jury was also allowed to view the mobile home to make their own determination. Many of the alleged errors revolve around the sufficiency of the complaint filed on December 21, 1984, as amended by the pretrial order of October 6, 1986.

The liberal pleading philosophy of the Montana Rules of Civil Procedure has superseded the highly technical theory of code pleading which often resulted in substantial injustice to the injured party. "Ancestor worship in the form of ritualistic pleadings has no more disciples. The time when the slip of an [attorney's] quill pen could spell death for a plaintiff's cause of action is past." Thompson v. Allstate Insurance Company (5th Cir.1973), 476 F.2d 746, 749. A pleading will be liberally construed in order to achieve substantial justice. Johnson v. Herring (1931), 89 Mont. 156, 173, 295 P. 1100, 1105; Rule 8(f), M.R.Civ.P.

Generally, a pleading need only provide "a short and plain statement of the claim that will give the defendant prior notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson (1957), 355 U.S. 41, 47, 78 S.Ct. 99, 103, 2 L.Ed.2d 80, 85. Discovery procedures and the pretrial conference under Rule 16 are the primary means of formulating and clarifying the issues so that the only real function of pleadings is that of giving notice. 2A Moore's Federal Practice § 8.13 at 8-71. However, "it is not enough to indicate merely that the plaintiff has a grievance ... sufficient detail must be given so that the defendant, and the court, can obtain a fair idea of what the plaintiff is complaining and can see that there is some legal basis for recovery." Davis v. Passman (1979), 442 U.S. 228, 238 n. 15, 99 S.Ct. 2264, 2273, 60 L.Ed.2d 846, 858, 2A Moore's Federal Practice § 8.13 at 8-13.

The failure to set forth all claims initially is not fatal. Under Rule 15(b), M.R.Civ.P., when issues not raised by the pleadings or amended by the pretrial order are tried by the express or implied consent of the parties, they shall be treated as if raised in the pleading. The general rule is that such amendments shall be freely granted. Union Exchange, Inc. v. Parker (1960), 138 Mont. 348, 357 P.2d 339.

However, liberal construction and amendment of pleadings does not grant counsel carte blanche to advance new theories on an unsuspecting opponent. In Brothers v. Surplus Tractor Parts Corp. (1973), 161 Mont. 412, 506 P.2d 1362, we cautioned counsel in this state that any reliance on the liberality of the courts in granting amendments was at their peril.

It is generally accepted that the appellant cannot recover beyond the case stated by him in his complaint.... This Court believes that fair notice to the other party remains essential, and pleadings will not be deemed amended to conform to the evidence because of "implied consent " where the circumstances were such that the other party was not put on notice that a new issues was being raised.... (Citations omitted.)

Rule 15(b), M.R.Civ.P. should be applied liberally to avoid the old requirements of formalism and to allow litigants to proceed efficiently on the merits of the case. However, leave to amend pleading under Rule 15(b), cannot be granted arbitrarily or perfunctorily because the result would create a question of due process in cases where the defendant may not have an adequate opportunity to prepare his case on the new issues raised by the amended pleading, therefore the facts attendant to each case become controlling.

161 Mont. at 417-418, 506 P.2d at 1365.

The McJunkins allege that the District Court improperly granted a directed verdict on the express warranty claim. It is alleged that the District Court based its decision on the McJunkins' failure to plead the claim against Ponderosa. We disagree. A review of the trial transcript indicates that Ponderosa did not request, nor did the court grant, a directed verdict on the express warranty claim. Rather, the court properly found that the claim was not pleaded.

As noted above, the purpose of pleading is to provide notice. See Conley, supra. The McJunkins had two and one-half years to amend their complaint. In addition, the pretrial order signed by the parties specifically states that the express warranty claim applied only to K & B. Under these facts, we cannot say the District Court clearly abused its discretion. We hold that the District Court properly refused to submit the issue to the jury.

Implied Covenant of Good faith and Fair Dealing

The District Court also refused to instruct the jury on the implied covenant of good faith and fair dealing. Although the claim had not been plead, the McJunkins submitted a jury instruction defining good faith "as honesty in fact in the conduct or transaction concerned." We find that the instruction inadequately defines the tort.

The seminal case on the issue of the implied covenant of good faith and fair dealing is Nicholson v. United Pacific Insurance Co. (Mont.1985), 710 P.2d 1342, 42 St.Rep. 1822. In Nicholson, this Court engaged in an exhaustive examination of the...

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