R.H. Grover, Inc. v. Flynn Ins. Co.
| Decision Date | 11 August 1989 |
| Docket Number | No. 88-441,88-441 |
| Citation | 238 Mont. 278,46 St.Rep. 1266,777 P.2d 338 |
| Parties | R.H. GROVER, INC., a Montana corporation, Plaintiff, Respondent and Cross-Appellant, v. FLYNN INSURANCE COMPANY, a Montana corporation, Defendant and Appellant. |
| Court | Montana Supreme Court |
Jardine, Stephenson, Blewett & Weaver; William D. Jacobsen, argued, Great Falls, for defendant and appellant.
Worden, Thane & Haines, Martin King, argued, Missoula, for plaintiff, respondent and cross-appellant.
Defendant Flynn Insurance appeals a jury verdict and judgment entered in favor of plaintiff in the Fourth Judicial District, Missoula County. The jury returned a verdict March 22, 1988, in the amount of $106,866, to which the district judge added $54,194.28 in prejudgment interest. The District Court denied Flynn's motions for summary judgment, directed verdicts on many issues and for judgment N.O.V. Flynn appeals.
R.H. Grover, Inc. (Grover) cross-appeals the District Court's denial of Grover's bill of costs. The District Court found that Grover's bill of costs in the amount of $4,406.50 was not filed timely under section 25-10-501, MCA.
We affirm.
This case went to the jury on a general verdict form, over the objection of defense counsel, with instructions on the following six separate causes of action:
1) negligent misrepresentation;
2) general negligence;
3) negligent failure to procure insurance;
4) contractual failure to procure insurance;
5) breach of third party beneficiary contract; and
6) promissory estoppel.
Defense counsel moved for directed verdicts, which were denied, on each of the last five claims arguing that plaintiff's only proper claim was negligent misrepresentation and that it was barred as a matter of law. Defendant continues to dispute the applicability of the last five claims sent to the jury.
Thus, the issues on appeal as stated by defendant's counsel are as follows:
Whether the District Court committed reversible error by:
1. Giving the case to the jury on a general verdict form which contained one or more inapplicable legal theories;
2. Refusing to grant Flynn judgment as a matter of law on Grover's claim of negligent misrepresentation;8
3. Giving Instruction # 15 over objection of defense counsel regarding an agent's liability;
4. Refusing Flynn's proposed Instruction # 38 instructing that liability could not exceed the policy limits; and
5. Allowing Grover $54,194.28 in prejudgment interest.
The issue on cross-appeal is whether it was error to deny Grover's bill of costs as untimely.
The following facts are not contested.
Grover is a mechanical and plumbing contractor. In 1978-1979 Grover became associated with Fire Protection Analysis, Inc. (Fire Protection). Grover later subcontracted with Fire Protection for the design of fire protection systems (ceiling sprinklers, etc.) to be installed in four major construction projects around Montana.
Problems later arose with these projects. Grover did not pay Fire Protection in full, asserting that it had incurred extensive costs due to Fire Protection's errors and omissions. Fire Protection sued Grover for final payment. Grover counterclaimed for damages due to negligence. As a result, Fire Protection allowed a judgment to be entered in favor of Grover in the amount of $106,866 as compensation for those problems.
Prior to design and construction, Fire Protection had procured for Grover a certificate of professional liability insurance (E & O coverage) from its insurance agent, Flynn. The certificate was dated August 21, 1979, and listed Grover as the certificate holder, Fire Protection as the insured, policy limits of $400,000 and an expiration date during September of 1980. The certificate specifically listed professional liability insurance issued by CNA Insurance Company as Policy Number AEP 821 357 which covered Fire Protection for its errors and omissions up to $400,000.
The certificate was prepared erroneously a by Flynn employee. Fire Protection did not have professional liability insurance and never had any such coverage or policy.
In exchange for not executing on the judgment against Fire Protection, Grover was assigned all proceeds which may result from Fire Protection's action against Flynn. Grover then proceeded against Flynn directly.
The issues of legal liability, reliance, and damages were disputed and litigated at trial. Grover later stipulated its damages were $106,866 as evidenced by the judgment in the underlying suit.
Flynn cites Martin v. N.P. Ry. Co. (1915), 51 Mont. 31, 149 P. 89, for the proposition that it is reversible error to let a verdict rendered on a general verdict form stand if one or more of the legal theories was improper.
In Martin, the plaintiff plead one cause of action (negligence) in four separate counts. The court struck Count III as being too indefinite to impose a duty and submitted the remaining three counts of negligence on a general verdict to the jury which returned a verdict for the plaintiff.
On appeal, this Court held that Counts I and IV likewise should have been stricken for insufficient evidence. In reversing the verdict based on the general verdict form, this Court stated:
We are unable to agree ... that if the complaint contains one good count ... the jurors ... founded their verdict upon it, rather than upon the counts which fail to state facts sufficient to warrant recovery.
. . . . .
A fair and impartial trial comprehends a trial upon issues properly submitted, and, when different theories of the same case are placed before a jury, it is impossible to know upon which the general verdict is made to depend.
Flynn argues that this 1915 case is good law in Montana and controls on this issue.
Grover maintains that requiring a general verdict form is within the sound discretion of the trial court, pursuant to Rule 49(a), M.R.Civ.P. ("a court may require a jury to return a special verdict") and that reversal requires proof of abuse of discretion.
In support of the argument that no abuse of discretion can be shown, Grover argues, first, that all legal theories were properly submitted because credible evidence supported each theory; and second, that if a general verdict contains one viable theory on which the entire verdict could stand, the verdict ought not be reversed. Grover cites Dunlap v. GMC (App.1983), 136 Ariz. 338, 666 P.2d 83 (); and Jenkins v. C. & E. Ry. (1972), 5 Ill.App.3d 954, 284 N.E.2d 392 (). We do not agree.
We conclude that Martin is not controlling on this issue because it was decided prior to the adoption of the new rules of civil procedure in 1961. Therefore, the special verdicts known to courts in 1915 may have been different than those now allowed under Rule 49(a). However, we find the reasoning applied in Martin persuasive and conclude that it was error to submit these six issues to the jury on a general verdict form.
The trial court must allow only those claims supported by the evidence to go to the jury. If there is a factual question as to the applicability or validity of particular claims, the preferred solution is to submit the claims to the jury on a special verdict form as allowed under Rule 49(a). Such procedure makes a record more easily reviewable by this Court, thus protecting the rights of both parties.
A motion for directed verdict is properly granted when there is an absence of any evidence to warrant sending the case to the jury. Britton v. Farmers Ins. Group (1986), 221 Mont. 67, 721 P.2d 303. Under this standard of review we conclude that it was error to submit the last four claims to the jury.
As was argued vehemently by defense counsel during motions for directed verdicts on the last four claims, the record is devoid of the critical elements of a contract. Fundamentally lacking was evidence of offer and acceptance, as well as exchange of consideration between Flynn and Grover, or even between Flynn and Fire Protection regarding the professional liability insurance policy.
The record is clear that in 1979 Fire Protection did not request Flynn to procure professional liability insurance and did not pay any premiums for such a policy. It is impossible to find that Flynn's erroneous certificate created a "contract" under which they were bound to procure insurance. Thus, the contractual failure to procure insurance claim must fail as a matter of law.
We also conclude based on the foregoing analysis that it is impossible to imply that Flynn had a "duty" to procure insurance under these facts. Issuing the certificate cannot create a "duty" to procure insurance at a later date. Rather, Montana law requires a client's request to procure certain insurance, followed by an agent's commitment to do the same to put the agent under a "duty" to procure. Lee v. Andrews (1983), 204 Mont. 527, 667 P.2d 919. The claim of negligent failure to procure insurance also fails for want of proof. Absent a duty, there can be no negligent failure to procure insurance.
The contractual claim for a third-party beneficiary contract likewise fails for lack of evidence regarding the critical elements of a contract under this analysis. The record is devoid of any evidence regarding offer and acceptance, intent to create a contract for Grover's benefit and consideration. This claim is not supported by the evidence.
Grover also asserted a claim of promissory estoppel. Grover claimed that Flynn's certificate was a promise that...
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