Simmons Oil Corp. v. Wells Fargo Bank, N.A.

• Citation: 289 Mont. 119,1998 MT 29,960 P.2d 291
• Decision Date: 11 February 1997
• Docket Number: No. 95-029,95-029
• Parties: SIMMONS OIL CORPORATION, Plaintiff and Appellant, v. WELLS FARGO BANK, N.A., Defendant and Respondent. . Heard
• Court: United States State Supreme Court of Montana

Page 291

960 P.2d 291

1998 MT 29

SIMMONS OIL CORPORATION, Plaintiff and Appellant, v. WELLS FARGO BANK, N.A., Defendant and Respondent.

No. 95-029.

Supreme Court of Montana.

Heard Feb. 11, 1997.

Submitted March 25, 1997.

Decided May 28, 1998.

H. Charles Stahmer (argued), Stahmer Law Offices, James Goetz (argued), Goetz, Madden & Dunn, Bozeman, Charles J. Wisch, Law Offices of Charles J. Wisch, San Francisco, CA, for Plaintiff and Appellant.

Dennis C. Brown (argued), Allison B. Stein and Marsha Hymanson, Munger, Tolles & Olson, Los Angeles, CA, John D. Stephenson, Jardine, Stephenson, Blewett & Weaver, Great Falls, for Defendant and Respondent.

LARSON, Justice.

¶1 Appellant Simmons Oil Corporation (hereinafter Simmons) appeals trial and post-trial rulings from a November 1993 jury verdict which awarded it $2,238,743.00 against defendant Wells Fargo Bank (hereinafter Wells Fargo). This Court has expressly permitted Wells Fargo to appeal the denial of its request for attorney fees as a sanction against Simmons for pursuing a Rule 60(b), M.R.Civ.P., motion during this appeal. We affirm the District Court.

¶2 Simmons presents the following issues on appeal:

¶3 1. Whether the District Court erred when it denied Simmons' motion in limine concerning Wells Fargo's expert testimony of refinery value;

¶4 2. Whether the District Court erred when it instructed the jury to disregard testimony by Simmons' damage expert, Don Knudsen, concerning defendant Holly Corporation's (hereinafter Holly) analysis of a sulphur reduction unit at the Black Eagle Refinery (Exhibit 73);

¶5 3. Whether the District Court erred when it refused Exhibit 73--a Holly budget document analyzing the projected profits of the sulphur reduction unit at the Black Eagle Refinery;

¶6 4. Whether the District Court erred when it refused Simmons' motion for new trial on damages;

¶7 5. Whether the District Court erred when it calculated the set-off for the earlier settlement with a former co-defendant, Holly;

¶8 6. Whether the District Court erred when it refused Simmons' post-trial request for attorney fees.

¶9 With the express permission of this Court, Wells Fargo presents the following issue on appeal from our remand to the District Court:

¶10 7. Whether the District Court erred when it refused Wells Fargo's request for attorney fees as sanctions for Simmons' Rule 60(b), M.R.Civ.P., motion.

Procedural and Factual History

¶11 This is the third appeal stemming from the sale of Simmons' debt by Wells Fargo to Simmons' partner and former co-defendant, Holly. Simmons alleged in its complaint that when Wells Fargo sold the Simmons' debt to Holly, Wells Fargo knew Holly wanted to acquire sole ownership of the Black Eagle Oil Refinery jointly owned by a Simmons/Holly partnership. At the time of the sale to Holly, Simmons had also offered to purchase this debt. Wells Fargo refused and instead sold the debt to Holly. Holly foreclosed the debt and Simmons lost its interest in the refinery.

¶12 Simmons filed this case in December 1988, against Holly and two of its subsidiaries and Wells Fargo. In May 1989, the District Court granted Holly's and Wells Fargo's motions to dismiss for lack of personal jurisdiction. This ruling was reversed in Simmons Oil Corp. v. Holly Corp. (1990), 244 Mont. 75, 796 P.2d 189 (Simmons I).

¶13 Holly and Wells Fargo were granted summary judgment in October 1991. In a settlement prior to this Court's decision on the appeal of the summary judgment, Simmons Oil Corp. v. Holly Corp. (1993), 258 Mont. 79, 852 P.2d 523 (Simmons II), Holly paid Simmons cash and a promissory note worth $3.5 million and forgave notes of $18 million in return for stock of Simmons and dismissal from the action.

¶14 Pursuant to the opinion in the second appeal, a jury trial was held November 1-12, 1993, on the issue of breach of the implied covenant of good faith and fair dealing. The jury awarded Simmons $2,238,743.00. Extensive post-trial activity followed. First, Simmons requested and received court approval for the deposition of Leland Griffin based on the allegation that Wells Fargo's expert had committed perjury. Next, Simmons sought a new trial based on the alleged perjury of Mr. Capers. Wells Fargo then moved for entry of judgment with a verdict of $0.00 in view of the Holly settlement which it contended had a present value of $3.5 million. Simmons opposed the motion and sought in excess of $900,000.00 in attorney fees and costs.

¶15 Simmons' motions for new trial and attorney fees were denied in December 1994. The District Court then calculated the set-off for the Holly settlement and entered judgment for Simmons against Wells Fargo for $0.00 plus costs of $25,536.94. Simmons filed its Notice of Appeal, and briefing to this Court commenced.

¶16 During the briefing, Simmons raised an issue concerning new evidence affecting the value of the contingency note which was part of the settlement between Simmons and Holly. This Court issued an order on January 4, 1996, remanding the matter back to the District Court for consideration of the issue under Rule 60(b), M.R.Civ.P., and suspending the appeal process pending the District Court's consideration of the issue. In May 1996 the District Court denied the Rule 60(b), M.R.Civ.P., motion, as well as a subsequent request by Wells Fargo for sanctions (attorney fees). Following the District Court ruling on May 1, 1996, this Court issued a supplemental briefing order on May 30, 1996. In Simmons' brief filed pursuant to that order, Simmons withdrew from the appeal the Rule 60(b), M.R.Civ.P., issue of the valuation of the contingency note. However, Wells Fargo preserved for appeal its request for attorney fees from Simmons as sanctions for Simmons' Rule 60(b), M.R.Civ.P., motion.

Standard of Review

¶17 We review a district court's rulings on evidentiary issues for an abuse of discretion. In Re Matter of Seizure of $23,691.00 (1995), 273 Mont. 474, 905 P.2d 148; Hansen v. Hansen (1992), 254 Mont. 152, 160, 835 P.2d 748, 753; Cech v. State (1979), 184 Mont. 522, 604 P.2d 97. The question is not whether this Court would have reached the same decision, but, whether the district court abused its discretion in reaching the decision to deny admissibility. Ingraham v. State (1997), 284 Mont. 481, 945 P.2d 19. An abuse of discretion occurs when a district court acts arbitrarily without conscientious judgment or exceeds the bounds of reason. Investigative Records of City of Columbus Pol. Dept. (1995), 272 Mont. 486, 488, 901 P.2d 565, 567.

¶18 This standard also applies to the denial of a motion for new trial based on evidentiary rulings and further requires the abuse of discretion "must be so significant as to materially affect the substantial rights of the complaining party." Hansen, 835 P.2d at 753.

¶19 As to relevancy issues, the district court has broad discretion to determine whether or not evidence is relevant and admissible. State v. McKeon (1997), 282 Mont. 397, 938 P.2d 643,, citing State v. Oatman(1996), 275 Mont. 139, 143-44, 911 P.2d 213, 216. Relevance is determined based on whether the evidence logically or based on experience has any value in proving the proposition for which it is offered. Oatman, 911 P.2d at 216, citing State v. Oman (1985), 218 Mont. 260, 264, 707 P.2d 1117, 1119. Further, the weighing of potential prejudice against probative value will also be upheld unless the district court committed an abuse of discretion. Oatman, 911 P.2d at 216, citing State v. Laird (1987), 225 Mont. 306, 312, 732 P.2d 417, 421.

¶20 1. Did the District Court err when it denied Simmons' motion in limine concerning Wells Fargo's expert testimony of refinery value?

¶21 Simmons sought in its motion in limine to preclude J. David Capers from testifying concerning refinery value. Simmons argues that Capers' testimony was not relevant to the issue of Simmons' damages. Simmons also argues the valuation testimony offered by Capers was misleading and confusing to the jury because Simmons was seeking lost partnership cash flow, not the value of the facility. Wells Fargo responds that its expert, Capers, did testify to the cash flow and capital improvement needs as well as a market value analysis. Further, Capers testified to a different discount rate than that testified to by Simmons' damage expert, Knudsen.

¶22 After review of Capers' testimony and noting that it was not adopted by the jury, and, that it did address cash flow and capital improvement issues--also addressed by Simmons' expert--we do not find the District Court abused its discretion by denying Simmons' motion in limine. Alternative approaches to measure loss are within the meaning of Rule 401, M.R.Evid. It is up to the jury to decide which is more or less probable as a measure of loss. Here, the jury did not accept Capers' testimony concerning valuation, and, thus, the evidentiary ruling by the District Court does not constitute a manifest abuse of discretion.

¶23 2. Did the District Court err when it instructed the jury to disregard testimony by Simmons' damage expert, Don Knudsen, concerning Holly's analysis of a sulphur reduction unit at the Black Eagle Refinery (Exhibit 73)?

¶24 During trial, the court admonished the jury "to disregard the testimony regarding the profits expected from the instrument referred to that is not yet in evidence." (Emphasis supplied.) Simmons argues this instruction from the court was reversible error because under Rule 703, M.R.Evid., experts may rely on matters which are not admissible evidence. In this instance, Wells Fargo submits that Simmons' expert, Knudsen, did not include the sulphur reduction unit in his cash flow analysis and, thus, such testimony was outside the exception provided for in Rule 703, M.R.Evid. Simmons counters that Wells Fargo opened the door when it examined Knudsen about the sulphur reduction unit during cross-examination and that it should have been permitted to ask about the...