LEE v ANDREWS

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No. 82-326 IN TEIE SUPREIE COURT OF THE STATE OF MONTANA 1983 JAMES LEROY LEE, Plaintiff, Respondent and Cross-appellant, -vsJAPlES R. APJDREWS, Defendant and Appellant. Appeal from: District Court of the Fourth Judicial District, In and for the County of Ptissoula, The IIonorable James B . Wheelis , Judge presiding. Counsel of Record: For Appellant: Worden, Thane & Haines; Ronald Bender argued, Missoula, Montana For Respondent r Garlington, Lohn & Xobinson; Sherman Lohn argued, 1/Iissoula, Montana Paul Meismer argued, ?4issoula, Montana Submitted: Decided: Clerk April 25, 1983 July 5, 1983 Mr. J u s t i c e L. C. G u l b r a n d s o n d e l i v e r e d t h e O p i n i o n of t h e C o u r t . A f t e r e n t e r i n g judgment cial jury verdict, the for defendant, District Court Andrews, of the upon a spe- Fourth J u d i c i a l D i s t r i c t , M i s s o u l a C o u n t y , g r a n t e d p l a i n t i f f L e e ' s m o t i o n f o r new trial. Andrews a p p e a l s from t h e new t r i a l o r d e r , and Lee c r o s s - a p p e a l s , c l a i m i n g t h e D i s t r i c t Court should have d i r e c t e d v e r d i c t o r e n t e r e d judgment n o t w i t h s t a n d i n g t h e v e r d i c t f o r him. P l a i n t i f f , J a m e s L e e , and d e f e n d a n t , J a m e s Andrews, friends for together, over They were n e i g h b o r s , ten years. and saw e a c h o t h e r had b e e n golf Over t h e y e a r s , frequently. played they had been i n v o l v e d i n s e v e r a l minor b u s i n e s s d e a l s . Andrews is an i n s u r a n c e a g e n t , and h a s worked f o r S t a t e Farm I n s u r a n c e Company f o r a b o u t t w e n t y - o n e years. Lee had p u r c h a s e d a u t o m o b i l e i n s u r a n c e from Andrews i n t h e 1 9 6 0 1 s , b u t had l e t many of I n 1 9 7 7 , Lee had two t h e s e p o l i c i e s l a p s e a f t e r s i x months. f i r e i n s u r a n c e p o l i c i e s and o n e l i f e i n s u r a n c e p o l i c y p u r c h a s e d t h r o u g h Andrews. The c o n t r o v e r s y h e r e is b a s e d upon L e e ' s c l a i m t h a t Andrews b r e a c h e d an o r a l a g r e e m e n t t o p r o c u r e car i n s u r a n c e . On September 28, 1977, Lee was driving T o r o n a d o and c o l l i d e d w i t h a m o t o r c y c l e his Oldsmobile d r i v e n by E a r l W i l s o n . W i l s o n b r o u g h t s u i t a g a i n s t Lee and o b t a i n e d a judgment of a b o u t $152,000. Meanwhile, Lee had r e q u e s t e d S t a t e Farm t o r e p r e s e n t him i n t h e a c t i o n b r o u g h t by W i l s o n . d e c l a r a t o r y judgment S t a t e Farm r e f u s e d and b r o u g h t a action i n federal District Court, claiming i t had no o b l i g a t i o n t o d e f e n d Lee o r pay damages i n t h e W i l s o n action. A f t e r a j u r y t r i a l , t h e f e d e r a l D i s t r i c t Court concluded t h a t S t a t e Farm had no o b l i g a t i o n t o w a r d L e e . On S e p t e m b e r 2 7 , District Court, 1979, against Lee f i l e d Andrews, a complaint i n the s t a t e alleging breach c o n t r a c t , t o r t , and g e n e r a l p r o m i s s o r y e s t o p p e l . 1982, a p r e - t r i a l of an oral On F e b r u a r y 1 6 , o r d e r was f i l e d r e d u c i n g t h e c l a i m t o b r e a c h of contract. Lee c l a i m s t h a t an o r a l c o n t r a c t t o p r o c u r e i n s u r a n c e a r o s e from t h e f o l l o w i n g c i r c u m s t a n c e s . I n e a r l y J u n e 1 9 7 7 , Lee n e g o t i a t e d w i t h c a r d e a l e r , M i c h a e l Dolce, he f o r t h e l e a s e of a n O l d s m o b i l e T o r o n a d o . would need insurance I n s u r a n c e Agency. and Lee t o l d Dolce Dolce t o l d Lee to call Andrews' Lee t e s t i f i e d t h a t he had t o l d Andrews he was g o i n g t o l e a s e a c a r and would need i n s u r a n c e . A c c o r d i n g t o Lee, Andrews had r e p l i e d t h a t he "would t a k e c a r e of it." They d i d n o t d i s c u s s t h e amount of c o v e r a g e , t h e t e r m s of t h e p o l i c y , the amount of t h e premium, o r t h e names of t h e i n s u r e d s . Dolce t e s t i f i e d form a vehicle financed he was r e q u i r e d t o c o m p l e t e a n i n s u r a n c e v e r i f i c a - t h r o u g h GMAC, tion t h a t b e f o r e d e l i v e r y of and verify that the information given him by his p r o s p e c t i v e c u s t o m e r was c o r r e c t . On J u n e 1 5 , 1977, D o l c e c a l l e d Andrews' o f f i c e and w i t h Mrs. Andrews t o v e r i f y t h e i n s u r a n c e c o v e r a g e . information insurance received verification $100,000/$300,000 damage. He Mrs. from for form. injury, t h a t Mrs. Dolce wrote He bodily testified Andrews, in and talked Based on t h e completed limits policy $25,000 the for of property Andrews t o l d him " i t would be taken c a r e of." Mrs. made a Andrews note y e a r , make, receiving t h a t Lee wanted model, normally handled her admitted husband's the c a l l automobile insurance, and s e r i a l number of car desk insurance herself, because she from D o l c e . the car. that would n o t be h a n d l e d i n t h e o r d i n a r y m a n n e r . listing the Although she she placed realized She t h e n o t e on Lee's insurance She a l s o t e s t i f i e d t h a t s h e assumed L e e would come i n t o t h e i r o f f i c e and c o m p l e t e i n s u r a n c e a p p l i c a t i o n forms. Barbara Sharp, a n a g e n t f o r GMAC, w r o t e "confirmed 6/20" t h e i n s u r a n c e v e r i f i c a t i o n form c o m p l e t e d by D o l c e . did not recall the particular conversation, on Although she Barbara Sharp t e s t i f i e d t h a t s h e would n o t h a v e w r i t t e n " c o n f i r m e d " on t h e form had she not called ~ n d r e w s 'Insurance c o v e r a g e on t h e l e a s e d v e h i c l e . and confirmed insurance While Lee and Andrews saw and s p o k e t o e a c h o t h e r many times o v e r t h e n e x t few m o n t h s , Lee n e v e r c o m p l e t e d a n i n s u r a n c e a p p l i c a t i o n form n o r p a i d any premium. Based on t h e a b o v e e v i d e n c e , t h e j u r y r e t u r n e d a s p e c i a l v e r d i c t form w i t h t h e f o l l o w i n g f i n d i n g s : 1. Did J i m Lee r e q u e s t 1977 Oldsmobile Toronado ANSWER: Yes 8 , No 4 insurance from J i m for the Andrews? 2. Did Jim Andrews agree to procure i n s u r a n c e f o r J i m L e e ? ANSWER: Y e s 9 , No 3 3 . Was t h e r e s u f f i c i e n t i n f o r m a t i o n regarding L e e ' s insurance needs so t h a t J i m Andrews c o u l d h a v e , u s i n g r e a s o n a b l e c a r e and s k i l l i n making i n q u i r i e s and a s s e m b l i n g information, obtained the d e t a i l s necessary t o c a r r y any a g r e e m e n t . ANSWER: Y e s 9 , No 3 4. Did J i m Andrews f a i l t o e x e r c i s e o r d i n a r y c a r e and r e a s o n a b l e d i l i g e n c e i n p r o c u r i n g t h e i n s u r a n c e ? ANSWER: Yes 8 , No 4 5 . Did J i m L e e , by any f a i l u r e of c o o p e r a t i o n , o r by h i s a c t i o n s o r i n a c t i o n s , p r e v e n t J i m Andrews from p r o c u r i n g t h e i n s u r a n c e ? ANSWER: Yes 1 2 , No 0 6. Did J i m Andrews f a i l t o p r o c u r e i n s u r a n c e f o r t h e T o r o n a d o a s he a g r e e d ? ANSWER: Yes 8, NO 4 7. Did J i m Andrews r e c e i v e any c o n s i d e r a t i o n f r o m Lee f o r u n d e r t a k i n g t o p r o v i d e s u c h i n s u r a n c e c o v e r a g e ? ANSWER: Yes 8 , No 4 I n findings 8 - 1 2 , t h e j u r y found t h a t Lee and Andrews had n o t a g r e e d on t h e s p e c i f i c terms of the contract, amount insured, of insurance, responsible for b e l i e v e d he had the who premiums. insurance, was u n r e a s o n a b l e . S e v e r a l weeks would be While the and jury such as, who found would the be t h a t Lee t h e j u r y a l s o found t h a t t h i s b e l i e f The j u r y t h e n awarded L e e $ 8 0 , 1 5 0 i n damages. after the verdict, and a f t e r d i s c u s s i o n w i t h c o u n s e l f o r b o t h p a r t i e s , t h e D i s t r i c t C o u r t e n t e r e d judgment f o r Andrews. Lee f i l e d s e v e r a l p o s t - t r i a l a l t e r n a t i v e , judgment t h e judgment, notwithstanding o r a new t r i a l . motions, seeking the verdict, i n the amendment of The D i s t r i c t C o u r t g r a n t e d L e e ' s m o t i o n f o r new t r i a l , and d i d n ' t d i s c u s s t h e m o t i o n s f o r amended j udgment and j udgmen t The D i s t r i c t C o u r t g r a n t e d notwithstanding the verdict. a new t r i a l on t h e g r o u n d s t h a t Lee had b e e n d e n i e d h i s r i g h t t o a f a i r t r i a l . Lee had t h e r i g h t t o c h o o s e h i s form of a c t i o n and had c h o s e n t o p u r s u e s o l e l y t h e b r e a c h of c o n t r a c t a c t i o n . Court's i n s t r u c t i o n 10 described the d u t y of a n a g e n t o r b r o k e r i n t e r m s of n e g l i g e n c e , n o t c o n t r a c t . The D i s t r i c t C o u r t r e a s o n e d t h a t t h e j u r y was o b v i o u s l y c o n f u s e d b e c a u s e i t d i d n ' t g r a n t t h e t o t a l amount of u n c o n t r a d i c t e d damages introduced into evidence. By a p p o r t i o n i n g damages, the jury seemingly negligence Lee was a new t r i a l was applied t h e r e b y denied comparative his right to a fair principles. trial and granted. Lee on c r o s s - a p p e a l a r g u e s t h a t t h e D i s t r i c t C o u r t e r r e d by n o t g r a n t i n g him a d i r e c t e d v e r d i c t o r judgment n o t w i t h s t a n d i n g H e a r g u e s t h a t t h e r e is no e v i d e n c e t o s u p p o r t t h e the verdict. j u r y f i n d i n g t h a t Lee p r e v e n t e d Andrews from p r o c u r i n g i n s u r a n c e . Absent t h i s f i n d i n g , (Finding #5) s u p p o r t s a judgment and # 3 ) f o r him. Lee c l a i m s t h a t t h e v e r d i c t (See, i n p a r t i c u l a r , findings #2 W a g r e e w i t h Lee's c o n t e n t i o n . e There i s no e v i d e n c e in the record to support the jury's f i n d i n g t h a t L e e p r e v e n t e d Andrews from p r o c u r i n g t h e i n s u r a n c e . A p p l y i n g t h e d o c t r i n e of c o l l a t e r a l e s t o p p e l from t h e f i n d i n g s i n S t a t e Farm's f e d e r a l a c t i o n , t h e D i s t r i c t Court s u s t a i n e d objections t o any t e s t i m o n y i n d i c a t i n g t h a t Andrews had t o l d Lee t o come i n t o h i s o f f i c e and c o m p l e t e a n a p p l i c a t i o n . In f a c t , the o n l y e v i d e n c e on t h i s p o i n t was L e e ' s own t e s t i m o n y d e n y i n g t h a t Andrews told him he would have to come into the office and complete an a p p l i c a t i o n . Excluding the curing insurance, Lee. W e finding the therefore t h a t L e e p r e v e n t e d Andrews remaining order that findings Lee be support granted from pro- judgment judgment for not- w i t h s t a n d i n g t h e v e r d i c t , and remand f o r a new t r i a l on t h e i s s u e o f damages o n l y . Andrews argues evidence of policy. Lee, that damages to on remand the t h i s Court limits on t h e o t h e r h a n d , of the should l i m i t the alleged insurance a r g u e s t h a t damages s h o u l d be limited o n l y by t h e o p e r a t i o n of s e c t i o n 27-1-311, which MCA, p r o v i d e s t h a t t h e m e a s u r e of damages f o r b r e a c h of c o n t r a c t " i s t h e amount which w i l l c o m p e n s a t e t h e p a r t y a g g r i e v e d f o r a l l t h e d e t r i m e n t which was p r o x i m a t e l y c a u s e d t h e r e b y o r i n t h e o r d i n a r y course of things would be likely to result therefrom." I n Gay v . L a v i n a S t a t e Bank ( 1 9 2 1 ) , 6 1 Mont. 4 4 9 , 202 P. 7 5 3 , t h i s Court stated: "And a s b e t w e e n t h e i n s u r e d and h i s own a g e n t or broker authorized b y him to procure i n s u r a n c e t h e r e is t h e u s u a l o b l i g a t i o n on t h e p a r t of t h e l a t t e r t o c a r r y o u t t h e i n s t r u c t i o n s g i v e n him and f a i t h f u l l y d i s c h a r g e t h e t r u s t r e p o s e d i n him, and he may become l i a b l e i n damages f o r b r e a c h of d u t y . ---i s I f he i n s t r u c t e d t o p r o c u r e s p e c i f i c i n s u r a n c e and f a i l s ---d o s o , h e i s l i a b l e t o h i s p r i n c i p a l to for t h e damage s u f f e r e d - b y r e a s o n o f t h e w a n t o f s u c h i n s u r a n c e . The l i a b i l i t y o f t h - e n t e ag w i t h r e s p e c t -o -t h e l o s s i s t h a t w h i c h t- would h a v e f a l l e n u p o n t h e company h a d t h e i n s u r a n s b202 P. -e e n e f f e c t e d a s c o n t e m p l a t e d . a t 755. (emphasis added) . . ." Andrews i s t h e r e f o r e p o s s i b l y l i a b l e f o r a l l damages S t a t e Farm would have p a i d . S t a t e Farm would have been responsible for t h e d e f e n s e of Lee i n W i l s o n ' s s u i t a g a i n s t him, and r e s p o n s i b l e for the policy. damages awarded in that action to the amount its F u r t h e r , had S t a t e Farm c o m p l e t e d t h e s e o b l i g a t i o n s , Lee would n o t h a v e had t o b o r r o w money a t 20 p e r c e n t i n t e r e s t . Gay, t h e n , damages from t h e W i l s o n j u d g m e n t , that of action, and the damages resulting from Under attorneys fees i n having to borrow money a t 20 p e r c e n t i n t e r e s t a r e a l l p r o p e r e v i d e n c e of damages. W e remand f o r e n t r y of judgment n o t w i t h s t a n d i n g t h e v e r d i c t i n f a v o r of L e e , and f o r a new t r rile c o n c u r : - Chief J u s t i c e Justices Mr. Justice Fred J. Weber dissents as follows: The majority opinion overruled the order of the District Court granting the plaintiff's motion for a new trial on all issues and requires the entry of judgment for the plaintiff Lee, with a new trial to be limited to a determination of plaintiff's damages. I respectfully dissent. In its Opinion and Order granting the new trial, the District Court pointed out that plaintiff initially sought damages on the basis of a breach of an oral contract, tort and general promissory estoppel; but pursuant to the change in contentions on the part of the plaintiff, the plaintiff reduced "his cause of action for trial to the single claim of breach of oral contract. " concluded that the only The District Court therefore cause of action on which the plaintiff was entitled to proceed and recover was the breach of an oral contract. Notwithstanding request of the that defendant, limitation the of District issues, Court at the gave the following instruction No. 10 on negligence to the jury: "Negligence on behalf of an agent or broker is the failure to exercise skill, care and diligence of a reasonable and prudent agent or broker under the circumstances." Upon consideration of the post-trial motions, the District Court concluded that a new trial was necessary. The District Court referred to section 25-11-102 (1), MCA, which provides : "The former verdict or other decision may be vacated and a new trial granted for any of the following causes materially affecting the substantial rights of such party: . . . " (1) irregularity in the proceedings of the court . . . . . . or any order of the court by which either party was prevented from having a fair trial; " (6) insufficiency of the evidence to justify the verdict or other decision or that is against the law. " In reaching its conclusion that the new trial was warranted the District Court stated: "This Court grants plaintiff's Motion for a new trial solely on the ground that its giving of defendant's instruction regarding negligence on behalf of an agent or broker as well as allowing into evidence testimony of witnesses directed at demonstrating the defendant's exercise of reasonable care improperly interjected negligence concepts; this error resulted in jury confusion which prevented plaintiff from having a fair trial and is inconsistent with substantial justice. M.C.A. 525-11-102(1) (1981); Mont. R. Civ. P. 61. For these reasons, this Court will neither consider nor discuss plaintiff's argument that there is insufficient evidence to support the findings of the jury " . Having concluded that there was such an irregularity, the District Court then addressed the issue of whether the irregularity materially affected the plaintiff's substantial rights by depriving him of a fair trial. Siebert (1969), 153 Mont. 286, 456 P. 2d 835. Court analyzed the instructions, including Rasmussen v. The ~istrict the above instruction No. 10 and the conclusions on the part of the jury as to the damages to be awarded, and concluded that the jury was erroneously confused applied by the negligence negligence negligence principles. concepts instruction and and comparative In conclusion the District Court stated: "The giving of the negligence instruction materially affected a substantial right of the plaintiff and this court's refusal to reject the instruction was inconsistent with substantial justice. MCA, 525-11-102 (1), (1981)." The District Court has set forth a comprehensive analysis of the problems and of its conclusions upon which the award of a new trial was based. The standard which is to be applied by this Court in reviewing that order granting a new trial is of long standing and is set forth in Moen v. Peter Kiewit Mont . , & Sons' Co. (1982), 655 P.2d 482, 487, 39 St.Rep. 2209, 2215 as follows: ". . . This decades-old standard has been fleshed out by caselaw establishing that the decision to grant or deny a new trial is within the sound discretion of the trial court, Fredericksen v. Fredericksen (1980), Mont. 605 P.2d 1135, 1137 3 7 St.Rep. 191, 193, and will not be overturned absent a showing df a manifest abuse of that discretion. Giles v. Flint Val Forest Products (1979), 179 Mont. 382, 588 ~ . 2 d 535, 538, 36 St.Rep. 23, 26." The majority opinion has not set forth any showing which can be construed as a "manifest abuse of discretion" by the trial court. In addition, I agree with the analysis of the District Court in concluding that the negligence instruction No. 10 was of necessity confusing to the jury. form cited in the majority The special verdict opinion was also confusing. Verdict question No. 4 stated: "Did Jim Andrews [defendant] fail to exercise ordinary care and reasonable diligence in procuring the insurance? Answer: Yes-8, No-4" That question injected a negligence standard rather than a standard relating to the breach of oral contract. Finding ample facts and law to sustain the order, and in the absence of any showing of manifest abuse of discretion, I would affirm the order granting new trial;_*--..-, \ , .... ' Mr. C h l e f J u s t i c e F r a n k I . H a s w e l l , d i s s e n t i n g : I Weber. concur in the foregoing dissent of Mr. Justice I would a d d t h a t t h e j u r y was a r g u a b l y c o n f u s e d by Instruction No. 1 0 and the special interrogatories. The D i s t r i c t C o u r t s o f o u n d , and t h e r e i s no a b u s e o f d i s c r e t i o n i n g r a n t i n g a new t r i a l u n d e r s u c h c i r c u m s t a n c e s . On r e t r i a l , p l a i n t i f f ' s damages s h o u l d n o t be l i m i t e d t o t h e l i a b i l i t y l i m i t s of t h e supposed p o l i c y . Montana l a w p r o v i d e s t h a t t h e m e a s u r e o f damages f o r b r e a c h o f c o n t r a c t " i s t h e amount which w i l l c o m p e n s a t e t h e p a r t y a g g r i e v e d f o r a l l t h e detriment which was p r o x i m a t e l y c a u s e d t h e r e b y o r i n the ordinary therefrom." course of things S e c t i o n 27-1-311, would be likely to result MCA. C h i e f ~ u s t i c e " --- J u s t i c e D a n i e l J. Shea d i s s e n t s a n d w i l l f i l e a w r i t t e n d i s s e n t later. Mr.

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