Rohrer v. Knudson

• Decision Date: 18 February 2009
• Docket Number: No. DA 08-0142.,DA 08-0142.
• Court: Montana Supreme Court
• Parties: Bruce and Irene ROHRER, Plaintiffs and Appellants, v. Gary L. KNUDSON, Marjory A. Knudson, Individually and d/b/a G & M Properties, Delta Engineering, P.C., The City of Great Falls, and John Does 1-15, Defendants and Appellees.

203 P.3d 759

2009 MT 35

349 Mont. 197

Bruce and Irene ROHRER, Plaintiffs and Appellants, v. Gary L. KNUDSON, Marjory A. Knudson, Individually and d/b/a G & M Properties, Delta Engineering, P.C., The City of Great Falls, and John Does 1-15, Defendants and Appellees.

No. DA 08-0142.

Supreme Court of Montana.

Submitted on Briefs January 7, 2009.

Decided February 18, 2009.

Joe Seifert; Keller Reynolds, Drake, Johnson & Gillespie, P.C., Helena, MT, for Appellants.

E. Lee LeVeque, Attorney at Law, Great Falls, MT, for Appellees.

Chief Justice MIKE McGRATH delivered the Opinion of the Court.

¶ 1 Bruce and Irene Rohrer (Rohrers) appeal from a judgment of the Eighth Judicial District Court, Cascade County, entered after a jury verdict denying them recovery on their Montana Consumer Protection Act claims, and apportioning negligence 10% to Defendant Gary Knudson (Knudson), 45% to (settled) Defendant City of Great Falls, and 45% to Plaintiffs Rohrers. We reverse and remand for a new trial.

¶ 2 The Rohrers present the following issues for review:

¶ 3 Whether the District Court abused its discretion in prohibiting the Rohrers from presenting evidence of differential settlement damage to other residences in Bel View Palisades.

¶ 4 Whether the District Court's instruction defining "unfair practice" under the Montana Consumer Protection Act was a correct statement of the law.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 5 The Rohrers purchased an undeveloped lot in the hillside Bel View Palisades subdivision overlooking Great Falls from Knudson in 1999. The Rohrers built their own home on the lot, finishing construction in 2002. In 2004, they learned that their neighbors, Kurt and Mary Fagenstrom (Fagenstroms), were sustaining substantial damage to their home from differential settlement. The Rohrers recognized similar damages developing in their home, including cracked walls, broken floor tiles, and sticking doors.

¶ 6 The Rohrers learned that NTL Engineering had prepared a geotechnical engineering report concluding that the Fagenstroms' home demonstrated substantial differential movement. In February 2005, the Rohrers hired NTL Engineering to do a similar limited evaluation of their lot. Core sampling revealed uncontrolled fill materials to a depth of approximately 31 feet below grade.

¶ 7 The Rohrers attempted to mitigate their damages by hiring a contractor to install resistance piers on their foundation. They installed 20 piers in March 2005 up to a depth of 55 feet below the foundation. At the time of trial in 2008, one of the piers had failed, the house continued to settle, interior damage increased, and the Rohrers faced installing additional piers.

¶ 8 Knudson, doing business as G & M Properties, developed many blocks in Bel View Palisades, including Block 20 and Block 22 where the Rohrers built their house. Knudson is a licensed professional engineer, and his firm, Delta Engineering, Inc., engineered the development of Blocks 20 and 22. Knudson is a geologist with expertise in geotechnical engineering and residential foundations.

¶ 9 Development of Block 22 in the mid-1990s was formally reviewed under the Montana Subdivision and Platting Act, §§ 76-3-101 through -625, MCA. A joint City/County Planning Board approved development subject to several conditions, including requiring Knudson to submit to the Public Works and Community Development Department a report on soil compaction and density tests for anticipated building and public improvement locations. There is some dispute as to whether these soil compaction or density tests were completed on Block 22. While the annexation agreement between Knudson and the City of Great Falls references such tests, Knudson was unable to produce the test results during discovery or at trial.

¶ 10 Bruce Rohrer investigated the historic topography and development of Block 22 prior to initiating suit. He found information that a ditch and steep railroad embankment existed on Block 22 and that major earth moving activities filled in the ditch and eliminated the railroad embankment sometime before 1964. The Rohrers claimed that Knudson should have been aware of and disclosed the fill conditions on Block 22 for the following reasons: topographical maps used by Knudson to develop Block 22 revealed the historic location of the railroad embankment; publicly available aerial photographs revealed the deep ditch and its elimination over time as the area developed; and Knudson's activities, including grading, recontouring, and excavating the site, would have revealed the widespread fill conditions.

¶ 11 Rohrers filed this action alleging negligence, negligent misrepresentation, and violations of the Montana Consumer Protection Act. The Rohrers claimed Knudson was negligent in failing to discover and disclose the existence of fill on their lot. Rohrers claimed that Knudson made a negligent misrepresentation when he told Bruce Rohrer that "there's good dirt at curb height," which Bruce Rohrer understood to represent that footings and foundation could be installed without extraordinary precautions. Lastly, the Rohrers claimed that Knudson's failure to perform required soil compaction or density tests was an unfair or deceptive act or practice resulting in damages recoverable under the Montana Consumer Protection Act.

¶ 12 At trial in late January 2008, Knudson claimed that the Rohrers' settlement problems resulted from their own negligence. Ray Womack, an engineering expert, testified that the cause of settlement was "invariably a water problem" resulting from irrigation next to the foundation, poor site grading, and the failure to install drains around the foundation footings.

¶ 13 The jury verdict denied the Rohrers recovery on their Montana Consumer Protection Act claims, found no negligent misrepresentation, and apportioned negligence 10% to Defendant Knudson, 45% to (settled) Defendant City of Great Falls, and 45% to Plaintiffs Rohrers. The Rohrers appeal.

STANDARD OF REVIEW

¶ 14 We review a district court's ruling on the admissibility of evidence for an abuse of discretion. Payne v. Knutson, 2004 MT 271, ¶ 20, 323 Mont. 165, 99 P.3d 200. We will not reverse the district court unless the error be "of such character to have affected the result." Payne, ¶ 20. The standard of review of a district court's refusal to issue a proposed jury instruction is whether it abused its discretion. Howard v. St. James Community Hosp., 2006 MT 23, ¶ 16, 331 Mont. 60, 129 P.3d 126.

DISCUSSION

¶ 15 Whether the District Court abused its discretion in prohibiting the Rohrers from presenting evidence of differential settlement damage to other residences in Bel View Palisades.

¶ 16 On motion prior to trial, Knudson's counsel sought to preclude the Rohrers from presenting evidence of differential settlement damage to any residences in Bel View Palisades other than the Rohrers' and Fagenstroms'. Knudson's counsel argued that such evidence was irrelevant and prejudicial. In response the Rohrers' counsel asserted:

[I]f the argument is either made or insinuated by the Defense that the Rohrers' house is a unique anomalous occurrence, then I think it would be appropriate to show that there are a number of other homes within shouting distance of their house that are experiencing this, a similar thing.

Knudson's counsel responded, "[w]e don't intend to try to introduce that." The court granted the motion to exclude evidence of damage to residences other than the Rohrers' and Fagenstroms'.

¶ 17 The Rohrers recite a litany of instances from the trial when Knudson's counsel referred to hundreds of homes in the Bel View Palisades area. They suggest that such testimony was presented to insinuate that damage to the Rohrers' house was unique, and thus likely the result of their own negligence. A review of the record reveals that much of this testimony merely attempted to support Knudson's argument that he did not know of any differential settlement problems at the time the Rohrers built their house. However, some testimony went beyond this legitimate argument and warranted an opportunity for rebuttal.

¶ 18 In one such instance, Knudson's counsel ended his direct examination of Jean Clary, a real estate expert, by inquiring "[a]re you aware of any reputation amongst buyers or sellers in the real estate community that the homes in Bel View Palisades are not worth as much as they used to be by virtue of any problems with settlement?" She replied that she was not. In a sidebar shortly thereafter, Rohrers' counsel complained that opposing counsel had asked every witness about the hundreds of homes in Bel View Palisades:

The only inference that can be drawn from that is that their house is an aberration. We have evidence to the effect that there's five houses on Block 22 that exhibit evidence of settlement. And she has testified that it has no adverse reputation for settlement. And I think I should be entitled to ask her if she is aware of those other houses that exhibit evidence of settlement.

However, the court adhered to its earlier ruling and prohibited counsel from inquiring about other residences that had settled.

¶ 19 Similarly, at the close of Knudson's case, Rohrers' counsel sought to rebut Knudson's claims that no extraordinary foundation measures were needed on houses he constructed in the area. In particular, Bruce Rohrer was prepared to testify that he observed substantial settlement in a neighboring house that Knudson built and discussed in his testimony. Again the court excluded the testimony.

¶ 20 Relevant evidence is generally admissible. M.R. Evid. 402. Evidence is relevant if it has "any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." M.R. Evid. 401. Evidence that is relevant may be excluded, however, if its probative value is substantially outweighed by the danger of...