Seltzer v. Morton

• Decision Date: 12 March 2007
• Docket Number: No. 05-378.,05-378.
• Citation: 2007 MT 62,154 P.3d 561
• Parties: W. Steve SELTZER, Plaintiff, Appellant, and Cross-Respondent, v. Steve MORTON, Gibson, Dunn & Crutcher, LLP, and Dennis A. Gladwell, Defendants, Respondents, and Cross-Appellants.
• Court: Montana Supreme Court

154 P.3d 561

2007 MT 62

W. Steve SELTZER, Plaintiff, Appellant, and Cross-Respondent, v. Steve MORTON, Gibson, Dunn & Crutcher, LLP, and Dennis A. Gladwell, Defendants, Respondents, and Cross-Appellants.

No. 05-378.

Supreme Court of Montana.

Argued and Submitted June 28, 2006.

Decided March 12, 2007.

For Appellant: Alexander Blewett, III (argued), Joseph P. Cosgrove, Hoyt & Blewett, Great Falls, Montana.

For Respondents: Keith Strong (argued), Dorsey & Whitney, Great Falls, Montana, Gary L. Graham, Garlington, Lohn & Robinson, PLLP, Missoula, Montana, Theodore J. Boutrous, Jr., John J. Swenson, Gibson, Dunn & Crutcher, LLP, Los Angeles California.

For Amicus Curiae: Lawrence A. Anderson, Attorney at Law, Great Falls, Montana (for the Montana Trial Lawyers Association), Leonard H. Smith, Kimberly S. More, Crowley, Haughey, Hanson, Toole & Dietrich, PLLP, Billings, Montana (for the Montana Defense Trial Lawyers, Inc.).

Justice JAMES C. NELSON delivered the Opinion of the Court.

¶ 1 This appeal follows a civil jury trial conducted in the District Court of the Eighth Judicial District, Cascade County. The Plaintiff, W. Steve Seltzer ("Seltzer"), filed suit against Steve Morton ("Morton"), Dennis A. Gladwell ("Gladwell"), and Gibson, Dunn & Crutcher, L.L.P., ("GDC") (collectively "Defendants"), claiming that they had committed the torts of malicious prosecution and abuse of process. In the first phase of trial, the jury found in favor of Seltzer and awarded $1.1 million in compensatory damages. At this time, the jury also determined that the Defendants should be subjected to a punitive sanction. In the second phase of trial, the jury assessed punitive damages in the amount of $100,000.00 against Morton, $150,000.00 against Gladwell, and $20 million against GDC. The District Court reviewed the punitive damages verdicts, pursuant to both Montana statutory law and federal caselaw, and issued an order reducing the sanction against GDC to $9.9 million.

¶ 2 Seltzer has filed an appeal, arguing that the District Court erred in reducing the punitive damages verdict. The Defendants have filed a cross-appeal, arguing that the court erred by not further reducing the punitive damages verdict. Additionally, the Defendants have presented numerous other cross-appeal issues that were raised during trial and in post-verdict motions. We will address these various cross-appeal issues before considering the propriety of the District Court's decision regarding punitive damages. Specifically, in this order, we consider:

¶ 3 (1) Did the District Court err in instructing the jury regarding Seltzer's two theories of liability?

¶ 4 (2) Are the Defendants entitled to judgment as a matter of law on Seltzer's abuse-of-process claim?

¶ 5 (3) Are the Defendants entitled to a new trial based on the District Court's evidentiary rulings?

¶ 6 (4) Are the Defendants entitled to a new trial or remittitur based on Seltzer's closing argument?

¶ 7 (5) Is the jury's award of compensatory damages supported by substantial credible evidence?

¶ 8 (6) Did the District Court err in not applying the current statutory cap on punitive damages?

¶ 9 (7) Did the District Court err in following Montana statutory law regarding evidence of a defendant's financial condition?

¶ 10 (8) Is GDC entitled to judgment as a matter of law on the punitive damages verdict?

¶ 11 (9) Did the District Court err in applying federal due process law to the jury's punitive damages award?

¶ 12 We affirm in all respects.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 13 Seltzer is, among other things, a professional appraiser and authenticator of Western American artwork ("Western art"). In late 2000 or early 2001, at the request of an art auction house, he rendered his opinion as to the authenticity of a watercolor painting that Morton owned. Morton subsequently demanded that Seltzer recant his opinion. When he refused to do so, GDC filed a multi-count lawsuit against Seltzer. That lawsuit, which was eventually dismissed with prejudice, is the subject of this litigation.

¶ 14 Morton's painting, which was at the center of the underlying suit against Seltzer, bears a signature indicating that it is the work of Charles M. Russell ("Russell"). However, Seltzer and a number of other art experts believe the painting is actually the work of Seltzer's grandfather, Olaf Carl Seltzer ("O. C. Seltzer").

¶ 15 Russell and O.C. Seltzer were renowned Western artists who were contemporaries and friends. They both lived and produced Western art in the area of Great Falls, Montana, beginning in the late 1890's.¹ O.C. Seltzer was a protégé of Russell and they both painted similar types of old west cowboy scenes common in Montana. However, they had distinctly different painting styles and color palettes. O.C. Seltzer's work generally manifested more distinct lines and detail and a more subtle use of color. In contrast, Russell's work generally manifested a more vivid use of color and less distinct, suggested, lines and detail. These differences are often most notable by comparison of the sage brush and the motion of the figures depicted. Although both Russell and O.C. Seltzer are recognized as fine Western artists, Russell's work is more widely known and significantly more valuable.

¶ 16 Morton's painting, which is known as "Lassoing a Longhorn," depicts action and figures similar to that of other works by both Russell and O.C. Seltzer. Specifically, it depicts two cowboys, mounted on horseback, roping a longhorn steer. This action takes place on open prairie land against the backdrop of a distant cattle herd and another cowboy approaching on horseback. The steer, bearing a brand in the middle of its left side, is positioned near the center of the painting. The two cowboys featured in the foreground are positioned to the left and right of the steer. The cowboy to the left has secured a rope around the steer's horns, while the cowboy to the right is in the process of throwing a large loop towards the steer's hind feet. The overall color scheme is generally subtle, while the lines and details therein are generally distinct. In its lower left corner, the painting bears a signature, a bison skull marking, and a date, all in heavy black ink, purporting that the painting is a 1913 work by Russell. The signature style is similar to that used by Russell in 1913. Additionally, a bison skull insignia resembling that in the painting is a hallmark accompaniment to Russell's signatures. The painting currently measures 16½ by 22¾ inches.

¶ 17 There is no record or known information regarding the painting's origin, ownership, or whereabouts from 1913 to 1939. In November of 1939, the Newhouse Galleries in New York, New York, sold the painting to Amon Carter of Fort Worth Texas. The Amon Carter Museum's records listed the dimensions of the painting in 1939 as 20 5/8 by 26¾ inches—approximately 4 inches wider and 4 inches longer than the current dimensions of the painting. These same dimensions were cited in a 1966 book, discussed below, which catalogued the Museum's collection of Russell works. There is no evidence that the Amon Carter Museum ever authenticated or obtained independent authentication of the painting as a work of Russell.

¶ 18 In February of 1972, the Amon Carter Museum sold the painting to the Kennedy Galleries of New York, New York. In March of 1972, the Kennedy Quarterly, a publication featuring Western art then owned by the Kennedy Galleries, featured a print of the painting and listed its dimensions as 16½ by 22¾ inches—the same as the current dimensions. There is no evidence that the Kennedy Galleries ever authenticated or obtained independent authentication of the painting as a work of Russell.

¶ 19 Morton and his brother, Frank, purchased the painting from the Kennedy Galleries in May of 1972 for $38,000.00. Other than obtaining verbal assurances from officials of the Kennedy Galleries, the Mortons neither requested nor obtained any proof or independent verification that the painting was an authentic Russell.

¶ 20 In 1998, Morton contacted Bob Drummond ("Drummond"), the Director of the Coeur d'Alene Art Auction, inquiring about the possibility of selling the painting at the Auction's annual Western art auction. Drummond advised Morton that the Coeur d'Alene Art Auction could sell the "choice C.M. Russell painting" at a "very good price." In August of 2000, Drummond notified Morton that the painting would likely "fetch a record price" at auction. Later that month, at Morton's request, Drummond appraised the fair market value of the painting as $650,000.00. Drummond is an experienced art appraiser familiar with the works of Russell. However, his aforementioned statements to Morton and his appraisal were premised on the assumption that the painting was an authentic Russell. He had not authenticated or obtained independent authentication of the painting as a Russell.

¶ 21 In late 2000 or early 2001, Morton decided to proceed with the sale of the painting by way of auction. However, Drummond's partner in the Coeur d'Alene Art Auction, Stuart Johnson, suspected that the painting was a work of O.C. Seltzer. Accordingly, Johnson recommended that Drummond consult with Seltzer before attempting to sell the painting as an authentic Russell.

¶ 22 Seltzer resides in Great Falls, Montana, which is the home of the C.M. Russell Art Museum. He is the world's foremost expert on the works of O.C. Seltzer, and to a lesser extent, an expert on the works of C.M. Russell. As noted above, Seltzer is a professional authenticator and appraiser of Western artwork. Particularly, he has long been engaged, upon request, in the business of authenticating the works of O.C. Seltzer throughout the country. In addition, Seltzer is a highly accomplished artist, having received numerous honors and awards at the prestigious C.M. Russell Art Auction held annually in Great Falls.

¶ 23 When Seltzer was contacted by...