Plath v. Schonrock, 99-705.

• Decision Date: 13 February 2003
• Docket Number: No. 99-705.,99-705.
• Citation: 314 Mont. 101,64 P.3d 984,2003 MT 21
• Parties: Don PLATH and Debby Plath, Husband and wife, Plaintiffs, Appellants and Cross-Respondents, v. Mark J. SCHONROCK, d/b/a Precision Design Group, Defendant, Respondent and Cross-Appellant.
• Court: Montana Supreme Court

64 P.3d 984

2003 MT 21

314 Mont. 101

Don PLATH and Debby Plath, Husband and wife, Plaintiffs, Appellants and Cross-Respondents, v. Mark J. SCHONROCK, d/b/a Precision Design Group, Defendant, Respondent and Cross-Appellant.

No. 99-705.

Supreme Court of Montana.

Submitted on Briefs July 2, 2002.

Decided February 13, 2003.

Rehearing Denied March 6, 2003.

Patrick R. Watt; Jardine, Stephenson, Blewett & Weaver, Great Falls, for Appellants.

William J. Gregoire, Stephanie A. Hollar; Smith, Walsh, Clarke & Gregoire, Great Falls, for Respondent.

District Court Judge DOUGLAS G. HARKIN, sitting for Justice PATRICIA O. COTTER, delivered the Opinion of the Court.

¶ 1 The Plaintiffs, Don Plath and Debby Plath, brought this action in the District Court for the Eighth Judicial District in Cascade County to recover damages for negligence, emotional distress, breach of warranties, breach of contract and violations of the Montana Consumer Protection Act. Following a jury trial, a verdict in favor of the Plaths was returned on their claims for negligence, breach of warranties and Consumer Protection Act violations. The Plaths appeal from the District Court's post-verdict decision to deny treble damages, grant only partial attorney fees requested under the Consumer Protection Act, and allowing trial testimony regarding an over-collection claim.

¶ 2 The Defendant, Mark J. Schonrock, d/b/a Precision Design Group, cross-appealed the District Court's denial of a motion for an $8,000 offset representing a settlement paid to the Plaths by Co-Defendant Ed Boland, d/b/a Boland Drilling Company. Schonrock also appeals the District Court's submission of a jury instruction that Defendant was involved in a trade or commerce.

¶ 3 The Appellants raise the following issues on appeal:

1. Whether the District Court abused its discretion in applying a punitive damage standard in denying the Plaths' motion for treble damages under the Consumer Protection Act.

2. Whether the District Court erred in awarding only partial attorney fees to the Plaths by considering only one factor of the seven-part test adopted by this Court for determining the reasonableness of attorney fees.

3. Whether the District Court erred when it denied the Plaths' motion for judgment as a matter of law on their $1,441 over-collection claim.

¶ 4 The Cross-Appellant raises the following issues on appeal:

1. Whether the District Court erred when it instructed the jury that Mark J. Schonrock, d/b/a Precision Design Group, was involved in a trade or commerce in his dealings with the Plaths.

2. Whether the District Court erred when it denied Schonrock's motion for an $8,000 offset representing the settlement proceeds paid by Co-Defendant Ed Boland, d/b/a Boland Drilling Company.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 5 In 1992, the Plaths purchased a six-acre lot located on the outskirts of Great Falls, where they planned to build a house. The Plaths talked with several builders and ultimately decided to hire Mark J. Schonrock, d/b/a Precision Design Group, to build their house. A final contract executed on April 15, 1993, provided for several items, including the placement of a well. The Plaths claimed that during the negotiations held prior to the execution of the final contract, Schonrock made several untrue representations to them, including claims that he had built several houses and had drilled several wells, including deep wells.

¶ 6 After construction began, Schonrock subcontracted with Boland Drilling Company to drill the water well. The well was drilled in July 1993 and then capped for approximately four months. In late November, Don Plath attempted to obtain a water sample by filling a jug from the front water spigot. While filling this jug, he noticed a foul stench in the water. By late 1995, after completion of several tests on the water and the pipes, and after consulting with water treatment experts and state officials, Don Plath determined that the well water was contaminated with petroleum hydrocarbons.

¶ 7 The Plaths claim other problems surfaced with regard to Schonrock's construction of their house. Specifically, they contend the wrong-sized faux window grates were placed in the house and thereafter fell out, and a wall gas fireplace switch was coiled up and shoved under the fireplace. The Plaths also allege the back deck was improperly stained, a portion of the ceiling sheet-rock was not taped, textured, or painted, a screen door handle was never fixed, and a shower door leaked.

¶ 8 This action ensued against the contractor, Mark J. Schonrock, d/b/a Precision Design Group, and the subcontractor, Ed Boland, d/b/a Boland Drilling Company. The Plaths' second amended complaint alleged causes of action against both defendants for negligence, strict liability, infliction of emotional distress, and breach of implied warranties. Prior to the time of trial, the Plaths and Ed Boland, d/b/a Boland Drilling Company, entered into a settlement agreement. Boland was subsequently dismissed from this action. Thereafter, the Plaths filed a third amended complaint adding the Consumer Protection Act claims against Schonrock.

¶ 9 On September 11, 1998, after a four-day trial, the jury returned a verdict for the Plaths on the negligence, breach of warranties and Consumer Protection Act violation claims. The jury determined that Schonrock did not breach the contract and he did not inflict emotional distress on the Plaths. The jury awarded the Plaths $24,609.70 in damages, of which $22,321.70 was apportioned to the Consumer Protection Act claim.

¶ 10 After trial, the Plaths moved for a hearing on treble damages and attorney fees under the Consumer Protection Act. The Plaths claimed that they incurred attorney fees in the amount of $116,558, but that they were specifically requesting only $55,000 of that amount. Schonrock moved for an $8,000 setoff on the judgment representing the settlement paid by Ed Boland, d/b/a Boland Drilling Company. The District Court conducted a post-trial hearing on September 29, 1998, and thereafter issued an order denying the Plaths' motion for treble damages under the Consumer Protection Act, partially granting the Plaths' request for attorney fees in the amount of $10,000, and denying Schonrock's motion for an $8,000 set off. This appeal ensued.

DISCUSSION

¶ 11 Issue No. 1. Did the District Court abuse its discretion in denying treble damages under the Consumer Protection Act when it used a punitive damage standard?

¶ 12 Montana's Consumer Protection Act, §§ 30-14-101, et seq., MCA, sets forth the damages available under an individual action brought in district court. The statute specifically provides that a plaintiff may recover "actual damages or $200, whichever is greater. The court may, in its discretion, award up to three times the actual damages sustained and may provide such equitable relief as it considers necessary or proper." Section 30-14-133(1), MCA.

¶ 13 This Court's standard of review of a district court's discretionary ruling is whether the district court abused its discretion. Jarvenpaa v. Glacier Elec. Co-op., Inc., 1998 MT 306, ¶ 12, 292 Mont. 118, ¶ 12, 970 P.2d 84, ¶ 12 (citing May v. First Nat. Pawn Brokers, Ltd. (1995), 270 Mont. 132, 134, 890 P.2d 386, 388). The test for an abuse of discretion is "whether the trial court acted arbitrarily without employment of conscientious judgment or exceeded the bounds of reason resulting in substantial injustice." C. Haydon Ltd. v. MT Min. Properties, Inc. (1997), 286 Mont. 138, 146, 951 P.2d 46, 51.

¶ 14 The Plaths argue that the District Court abused its discretion by applying a punitive damage standard to Schonrock's acts and practices in reaching the conclusion that treble damages were not warranted. The Plaths argue that this Court specifically rejected this standard in our decision in T & W Chevrolet v. Darvial (1982), 196 Mont. 287, 293-94, 641 P.2d 1368, 1371-72, wherein this Court held that Montana's Consumer Protection Act does not require a party first prove malice, oppression or fraud to become eligible for an award of treble damages under § 30-14-133, MCA.

¶ 15 Schonrock responds that the Montana Supreme Court has upheld treble damages only when a defendant has committed an "egregious act" and refers to T & W Chevrolet, wherein the district court awarded treble damages as a result of conduct showing "outright misrepresentation by a car salesman."

¶ 16 The District Court's decision to deny an award of treble damages was set forth in an order dated September 29, 1999. The District Court concluded that: "notwithstanding this Court's decision in T & W Chevrolet, ... there must be some type of culpable behavior on the part of the Defendant to warrant an award of treble damages under the Consumer Protection Act." The District Court concluded that the trebling of damages under the Consumer Protection Act was: "in the nature of a punitive or exemplary damage award." The District Court found that the facts of this case did not warrant assessment of treble damages because the evidence did not support a finding associated with punitive damages, as Schonrock did not act with fraud, malice or other misconduct in the statements he made to the Plaths.

¶ 17 When Montana's Consumer Protection Act was enacted, it was the Legislature's intent that in construing § 30-14-103, MCA, "due consideration and weight [should] be given to the interpretations of the Federal Trade Commission and the federal courts relating to section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. 45(a)(1)), as amended." Section 30-14-104, MCA.

¶ 18 The language of § 30-14-103, MCA, closely resembles that portion of the Federal Trade Commission (FTC) Act codified in 15 U.S.C. § 45(a)(1); under both the federal and state acts, unfair or deceptive acts or practices affecting commerce are deemed unlawful. The primary purpose of the FTC Act is to protect the public from unfair or deceptive practices by...