Victory Ins. Co. v. Mont. State Fund, DA 14–0152.

• Decision Date: 17 March 2015
• Docket Number: No. DA 14–0152.,DA 14–0152.
• Parties: VICTORY INSURANCE COMPANY, INC., Plaintiff and Appellant, v. MONTANA STATE FUND, Liberty Northwest Insurance Corporation, Payne Financial Group, Inc., Western States Insurance Agency, Inc., A Western States Company, and John Does 1–100,Defendants and Appellees.
• Court: Montana Supreme Court

378 Mont. 388

344 P.3d 977

2015 MT 82

VICTORY INSURANCE COMPANY, INC., Plaintiff and Appellant

v.MONTANA STATE FUND, Liberty Northwest Insurance Corporation, Payne Financial Group, Inc., Western States Insurance Agency, Inc., A Western States Company, and John Does 1–100¹ Defendants and Appellees.

No. DA 14–0152.

Supreme Court of Montana.

Submitted on Briefs Jan. 28, 2015.

Decided March 17, 2015.

For Appellant: Linda M. Deola, Scott Peterson, Morrison, Sherwood, Wilson & Deola, PLLP, Helena, Montana.

For Appellees: W. Anderson Forsythe, George T. Kimmet, Moulton Bellingham, PC, Billings, Montana, (Attorneys for Montana State Fund).

John E. Bohyer, Esq., Erin M. Erickson, Esq., Bohyer, Erickson, Beaudette & Tranel, PC, Missoula, Montana, (Attorneys for Liberty Northwest Insurance Corp.).

Randy J. Cox, Thomas J. Leonard, Boone Karlberg, P.C., Missoula, Montana, (Attorneys for Payne Financial Group, Inc.).

Michael F. McMahon, Stefan T. Wall, Denny K. Palmer, McMahon, Wall & Hubley, PLLC, Helena, Montana, (Attorneys for Western States Insurance Agency, Inc.).

For Amicus Curiae: Lawrence A. Anderson, Attorney at Law, P.C, Helena, Montana, (Attorney for Montana Trial Lawyers Association).

Opinion

Justice PATRICIA COTTER delivered the Opinion of the Court.

¶ 1 Victory Insurance Company appeals from orders of the First Judicial District Court, Lewis and Clark County, dismissing its common law cause of action against Defendants brought under the Unfair Trade Practices Act (UTPA), and entering summary judgment for Defendants on its cause of action for intentional interference with prospective economic advantage. We affirm.

ISSUES

¶ 2 Victory presents two issues on appeal: (1) whether the District Court erred in dismissing Victory's UTPA cause of action; and (2) whether the District Court erred in granting summary judgment in favor of Defendants.

¶ 3 As addressed below, we conclude it is not necessary for us to determine whether the District Court erred in rejecting Victory's request for relief “under a common law UTPA action,” as we conclude that Victory's inability to establish damages is fatal to its claims for intentional interference with prospective economic advantage and would be fatal as well to any UTPA-related claim.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 4 The plaintiff and defendants in this case are competitors in the workers compensation industry. Plaintiff Victory Insurance is a Montana corporation located in Miles City, Montana, and began its operation in 2007. It sells workers' compensation insurance directly to business employers without the use of insurance agencies for sales or claims adjustments. Defendant Montana State Fund (State Fund) is an organization that sells workers' compensation insurance through in-house and out-of-house agents. Defendants Liberty Northwest (Liberty), Payne Financial Group (Payne), and Western States Insurance (WSI) also sell workers' compensation insurance, including State Fund policies.

¶ 5 Victory's growth rate failed to meet ownership's expectations and Victory concluded that its business was being harmed by a “barrage of falsehoods” being told by representatives of the Defendants to prospective customers about Victory. In March 2011, Victory filed an Amended Complaint against the Defendants (and other subsequently-dismissed parties who are not a part of this appeal), alleging that they had made derogatory comments to prospective customers about Victory and its leadership and financial condition, in an effort to dissuade those customers from purchasing insurance from Victory. The insurer asserted that such tactics (1) violated multiple provisions of the UTPA; and (2) intentionally interfered with prospective economic advantage and with a business contract. Victory sought punitive damages as well as actual, economic, special and compensatory damages and pre- and post-judgment interest. Victory subsequently moved to dismiss without prejudice its claim pertaining to interference with a business contract. The District Court granted the motion and that ruling is not appealed.

¶ 6 Each Defendant promptly moved for dismissal of Victory's claim under the UTPA, and on September 22, 2011, the District Court granted the Defendants' motions holding that the UTPA does not create a private right of action by one insurance company against another. This ruling left pending Victory's claim for interference with prospective economic advantage.

¶ 7 During lengthy discovery with respect to the remaining claim, the Defendants asked Victory to identify those prospective clients to which Defendants' representatives were alleged to have maligned Victory or interfered in some fashion. Victory identified a total of 51 companies. Victory claimed that State Fund had denigrated Victory to five companies, Liberty had done so with nine companies, and Payne and WSI had done so with 13 and 24 companies respectively.

¶ 8 Subsequently, between May 2013 and October 2013, all Defendants filed motions for summary judgment asserting that Victory had failed to establish damages as a result of the Defendants' alleged actions—an element required in order to prevail in an intentional interference case. Each Defendant, in support of its summary judgment motion, presented detailed evidence pertaining to its business relationship with each company Victory had identified during discovery. The evidence supported Defendants' argument that Victory had failed to establish damages. Referencing this evidence, the District Court issued a lengthy and thorough order granting the Defendants' motions for summary judgment.

¶ 9 Victory appeals the dismissal of its UTPA claim and the District Court's grant of summary judgment with respect to interference with prospective economic advantage.

STANDARD OF REVIEW

¶ 10 We review a district court's summary judgment ruling de novo, applying the same rule, M.R. Civ. P. 56(c)(3), that a district court does when making a summary judgment ruling. Summary judgment “should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” M.R. Civ. P. 56(c)(3) ; Bennett v. Hill, 2015 MT 30, ¶ 9, 378 Mont. 141, 342 P.3d 691 (citations omitted).

¶ 11 We review a district court's ruling on a motion to dismiss under the standards set forth in M.R. Civ. P. 12(b)(6). A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts which would entitle him to relief. A district court's determination that a complaint has failed to state a claim for which relief can be granted is a conclusion of law which we review for correctness. Scheafer v. Safeco Ins. Co., 2014 MT 73, ¶ 14, 374 Mont. 278, 320 P.3d 967 (citation omitted).

DISCUSSION

¶ 12 Did the District Court err in dismissing Victory's UTPA claims and in granting Defendants' motions for summary judgment?

¶ 13 Victory argues that the District Court erred in concluding that Defendants did not intentionally interfere with Victory's prospective economic advantage. It relies upon Maloney v. Home & Inv. Ctr., Inc., 2000 MT 34, ¶ 41, 298 Mont. 213, 994 P.2d 1124, in which we set forth the four elements of intentional interference with prospective economic advantage. Such acts: (1) are intentional and willful; (2) are calculated to cause damage to the plaintiff's business; (3) are done with the unlawful purpose of causing damage or loss, without right or justifiable cause on the part of the actor; and (4) result in actual damages or loss. See also Restatement (Second) of Torts § 767.

¶ 14 The intentional interference elements are framed in the conjunctive; therefore, all four elements must be met before Victory can prevail. Victory claims that all four elements were satisfied but the court's errors led it to conclude elements three and four were not met. As element four, damages, is dispositive in this case, we focus our analysis on the requirement that Victory prove that it suffered “actual damages or loss” as a result of Defendants' alleged misconduct.

¶ 15 Victory's claim of damages has been somewhat of a moving target during the District Court proceedings. At times, Victory appeared to claim that it suffered out-of-pocket damages as a result of lost revenues from the loss of one or more particular contracts. At other times, Victory acknowledged that it had no out-of-pocket damages when the prospective customer actually chose to contract with Victory despite any alleged attempts by Defendants to dissuade them. Still at other times, Victory alleged it suffered “general damages,” in the form of damages to its reputation. Victory frequently linked its claim for reputational damages with the statutory standards, trade practices, and industry rules underlying the UTPA.

¶ 16 All Defendants approached the process of proving that Victory had failed to establish actual damages using a similar method. Each Defendant referenced the prospective customers with whom Victory claimed it had interfered, and presented specific details of the Defendant's transactions with those companies. For example, Payne, referencing each of the 13 prospective clients with which it had allegedly interfered, presented detailed evidence to the District Court concerning comments made or discussions had between Payne representatives and the company representatives. Payne also submitted affidavits of representatives from those companies who swore that Payne employees did not engage in the alleged misconduct.

¶ 17 By way of example, one such company, Econo Print, Inc., through its president and its bookkeeper/accountant, testified that no one at Payne “relayed derogatory information or comments” to Econo Print regarding Victory. The affiants further testified that the company chose not to use Victory after conducting its own independent research and concluding the company was too new and...