Slaathaug v. Allstate Ins. Co.

• Decision Date: 31 March 1999
• Docket Number: No. 23823,23823
• Citation: 979 P.2d 107,132 Idaho 705
• Parties: Hollie SLAATHAUG and Karen Slaathaug, husband and wife, Plaintiffs-Respondents, v. ALLSTATE INSURANCE COMPANY, a foreign corporation, Defendant-Appellant. Boise, January, 1999 Term
• Court: Idaho Supreme Court

Page 107

979 P.2d 107

Hollie SLAATHAUG and Karen Slaathaug, husband and wife, Plaintiffs-Respondents, v. ALLSTATE INSURANCE COMPANY, a foreign corporation, Defendant-Appellant.

No. 23823.

Supreme Court of Idaho,

Boise, January, 1999 Term.

March 31, 1999.

Rehearing Denied June 9, 1999.

Lynch & Associates, Boise, for appellant. James B. Lynch argued.

Ringert, Clark, Chtd., Boise, for respondent. Patrick D. Furey argued.

TROUT, Chief Justice

Allstate Insurance Company (Allstate) appeals from the district judge's (1) grant of Hollie and Karen Slaathaugs' (the Slaathaugs) motion for a new trial and (2) denial of Allstate's motion to alter or amend judgment.

I. BACKGROUND

A fire severely damaged the Slaathaugs' home in September 1992. The Slaathaugs filed a claim with their insurer, Allstate. Allstate maintained a list of recommended contractors it believed competent to complete the repairs. As an incentive for the Slaathaugs to choose a contractor from the list, Allstate promised to guarantee the work for three years. After receiving bids, the Slaathaugs hired General Services, owned by Paul Bushman (Bushman). Bushman was on the list of recommended contractors.

The Slaathaugs were able to move back into their home in December 1992. In early 1993, their basement flooded causing the At the trial's outset, the trial court granted the Slaathaugs' motion to exclude fact witnesses under I.R.E. 615. As parties to the litigation, the Slaathaugs, Steger, and Allstate's designated corporate representative, William Ball (Ball), were excepted from the order. The trial spanned thirteen days, and the jury returned a verdict for the Slaathaugs on the breach of contract claim only and awarded $17,500 in compensatory damages. The jury returned a verdict in favor of Steger on the fraud claim. After the trial court entered judgment, Allstate filed a motion to alter or amend judgment under I.R.C.P. 59(e) claiming the evidence did not support the $17,500 damage award and that the Slaathaugs should only receive $5,364.

house to fill with odors of charred wood and smoke. The Slaathaugs investigated by removing sheetrock in their basement. They discovered that their home had not been repaired to its pre-fire condition. Instead, Bushman had merely scraped, sealed, and covered-up charred portions of the framing, floor joists, and flooring. The Slaathaugs complained to Allstate who referred them back to Bushman. In mid-1994, the problem was still not cured, and the Slaathaugs filed a complaint against Allstate and Timothy Steger (Steger), an adjuster for Allstate. The Slaathaugs alleged breach of contract, bad faith, and fraud. The Slaathaugs claim that Allstate intentionally caused Bushman to underbid the project, grossly underestimating the cost and materials needed to restore their home to its pre-fire condition. In September 1996, the Slaathaugs filed a second amended complaint requesting punitive damages.

Both parties filed motions for costs and attorney fees. Allstate submitted its billing records which indicated that during the trial its attorney obtained daily transcripts and provided those transcripts to defense witness James Hunter (Hunter), a property claims manager for Allstate. The Slaathaugs responded filing a motion for a new trial limited to their tort claim that Allstate breached its duty of good faith and fair dealing. In its second memorandum opposing the Slaathaugs' motion for a new trial, Allstate's counsel admitted he also provided trial transcripts to Richard Stewart, another defense witness. In response, the Slaathaugs filed a motion for a new trial under I.R.C.P. 59(a)(1). Ruling on the post-trial motions, the trial court (1) denied Allstate's motion to alter or amend judgment, (2) granted the Slaathaugs' motion for a new trial on the tort claim, and (3) postponed any decision on costs and attorney fees until suit was "fully concluded." Allstate appeals.

II. DISCUSSION

A. Motion to Alter or Amend Judgment.

Allstate argues that the trial court erred in denying its motion to alter or amend judgment under I.R.C.P. 59(e). As a means to circumvent an appeal, Rule 59(e) provides a trial court a mechanism to correct legal and factual errors occurring in proceedings before it. First Security Bank v. Neibaur, 98 Idaho 598, 603, 570 P.2d 276, 281 (1977). So long as a motion to alter or amend is made within the two-week time constraint of the rule, notions of finality are not disturbed. Id. This Court will review an order denying a motion to alter or amend judgment for an abuse of discretion. See Lowe v. Lym, 103 Idaho 259, 263, 646 P.2d 1030, 1034 (Ct.App.1982). So long as the trial court recognized the matter as discretionary, acted within the outer boundaries of the court's discretion, and reached its conclusion through an exercise of reason, this Court will not disturb the decision on appeal. See Sun Valley Shopping Center, Inc. v. Idaho Power Co., 119 Idaho 87, 94, 803 P.2d 993, 1000 (1991).

Allstate argues that the evidence presented to the jury does not support an award for $17,500 on the breach of contract claim. The $17,500 figure will allow the Slaathaugs to replace all the sills ¹ in their home. Since the Slaathaugs will be forced to move out of their home while the repairs are made, the award is also large enough to cover resulting living expenses. Allstate argues that the In support of this argument, Allstate submitted to the trial court an affidavit from Maurice Gregory (Gregory), an expert who had testified at trial. In that affidavit Gregory asserted that only a small portion of the sills could have been charred based upon the evidence presented at trial. The cost of replacing those sills would be just over $5,000. The Slaathaugs filed a motion to strike the affidavit as irrelevant, arguing that Allstate was attempting to present new evidence in support of its motions. The trial court granted the motion to strike, and Allstate has not appealed that ruling.

record provides no evidence that all of the sills need to be replaced. Moreover, the record does not support a damage award to cover living expenses incurred while the repairs are completed. Thus, the trial court should have amended the judgment to award only $5,364.

Gregory's own trial testimony supports the damage award. On direct examination Gregory testified that to replace the sills it would cost $66.33 per lineal foot plus the cost to remove and then replace "finishes." That cost includes a $22.00 mark-up to cover the contractor's profit and other costs. Gregory testified that to replace the sills, a contractor would jack the house up in stages, replacing twenty to thirty feet at a time. Counsel for Allstate questioned Gregory further about those costs:

Q Now, if somebody decided to replace a given number of lineal feet of sill, they would simply multiply that number of feet by this $44 price plus profit; is that right?

A Yes, I would.

Q If you wanted to replace the sill, for some reason, all the way around the house, would you, then, just continue to multiply the lineal feet times the price per foot?

A Yes, you would, and, of course, this does not include any removal of finishes or replacement of finishes.

On cross-examination, counsel for the Slaathaugs questioned Gregory, without objection, as to what it would cost to replace all of the sills. Gregory answered "For the sill plates, to remove and replace, would be approximately $11,440. To replace--to remove and replace the sheetrock would be approximately $855. And you're going to have to paint that sheetrock...." Gregory concluded that $12,500 would be a fair estimate and that it would take around thirty days to complete the work.

The trial court properly noted that Gregory never stated that only a portion of the sills needed replacement. Further, Allstate never made that argument to the jury. The trial court ruled that it could not "conclude that there is insufficient evidence to support the award for $12,500 to replace the sills." The court also recognized that because the repairs would take thirty days and the house would be uninhabitable the jury "apparently included the $5,000 for the plaintiffs' expenses to live elsewhere while the sills were being replaced in their home."

In light of the above, Allstate has failed to establish that the trial court abused its discretion in denying Allstate's motion.

B. Motion for a New Trial

Rule 59(a)(1) allows a trial court to grant a new trial "on all or part of the issues" in an action where there was an "[i]rregularity in the proceedings of the court, jury or adverse party ... by which either party was prevented from having a fair trial." I.R.C.P. 59(a)(1). This Court will review an order granting a party's motion for a new trial for an abuse of discretion.

Early in the proceedings, the trial court granted the Slaathaugs' motion to amend their complaint to add a request for punitive damages. In its ruling the trial court stated: "Whether or not the plaintiffs can prove their allegations will depend largely on the jury's assessment of the credibility of Messrs. Steger and Bushman, and the inferences the jury is willing to draw from the evidence." Consistent with that ruling, the Slaathaugs filed a motion to exclude all non-party fact witnesses under I.R.E. 615. Rule 615 provides:

At the request of a party the court may order witnesses excluded so that they cannot hear the testimony of other witnesses, and it may make the order of its own motion. This rule does not authorize exclusion I.R.E. 615. The trial court ruled from the bench stating: "I'll grant the motion to exclude fact witnesses while testimony is going on. That will not apply to Mr. Ball, Mr. Steger, or the Slaathaugs, since they are parties or representatives of parties."

of (1) a party who is a natural person, or (2) an officer or employee of a party that is not a natural person designated as its representative by its attorney, or (3) a person whose presence is...