Kraft v. HIGH COUNTRY MOTORS, INC.
2012 MT 83
| Mont. | 2012Background
- Kraft, a Virginia-based financial advisor, and Rider, owner of HCMI, engaged in a motor coach transaction financed by Kraft's loan.
- Rider inflated the purchase price of the motor coach, which Kraft later discovered, leading to dispute over liability and damages.
- Kraft sued for breach of contract, fraud, negligent misrepresentation, negligence, conspiracy, and unjust enrichment on December 20, 2007.
- Discovery requests were served in 2008; Rider and HCMI produced some, but withheld certain tax and financial data, prompting sanctions requests in 2010–2011.
- District Court compelled production in November 2010 but did not set a compliance deadline; by February 2011 sanctions were granted (fees) and a potential default judgment warned.
- Default judgment was entered April 11, 2011 as a discovery sanction; damages were awarded July 14, 2011 in Kraft's favor, with prejudgment interest and remand for further proceedings on interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the default judgment as a discovery sanction was an abuse of discretion. | Kraft contends sanctions appropriate due to extensive, willful discovery abuse by Rider/HCMI. | Rider/HCMI argue minimal, trivial violations and seek lesser sanctions or relief from default. | No abuse; default judgment upheld as proper sanction. |
| Whether the district court properly refused to set aside the sanction orders. | Kraft argues no abuse; sanctions remain proper and timely. | Rider/HCMI contend neglect was excusable and warrants relief from sanctions. | No abuse; court did not err in denying motions to set aside. |
| Whether the damages calculation was legally correct. | Kraft supports damages based on inflated loan amount and interest; seeks full recovery. | Rider/HCMI claim damages should be limited by mitigation and non-speculative measures. | Damages were reasonable and ascertainable; not an error. |
| Whether prejudgment interest was properly calculated and awarded. | Kraft seeks prejudgment interest on excess loan amount and related interest at statutory rate. | Rider/HCMI offer no contrary position beyond earlier objections. | Prejudgment interest awarded; remanded to determine amount at 10% statutory rate. |
Key Cases Cited
- Peterman v. Herbalife Int'l, Inc., 234 P.3d 898 (Mont. 2010) (sanctions for repeated assurances to provide discovery and failure to comply)
- McKenzie v. Scheeler, 949 P.2d 1168 (Mont. 1997) (willful disregard of court orders supports sanctions)
- Lords v. Newman, 688 P.2d 290 (Mont. 1984) (abandonment exception to client-attributable attorney neglect)
- In re Marriage of Castor, 817 P.2d 665 (Mont. 1991) (non-abandonment, neglect attributable to client)
- Paxson v. Rice, 706 P.2d 123 (Mont. 1985) (neglect attributed to client absent abandonment)
- Watson v. West, 353 Mont. 120 (Mont. 2009) (damages must be certain or capable of calculation; prejudgment interest framework)
- Byrne v. Terry, 741 P.2d 1341 (Mont. 1987) (prejudgment interest framework; compensation objective)
- Price Building Service, Inc. v. Holms, 693 P.2d 560 (Mont. 1985) (prejudgment interest statutory framework)
- Performance Machinery v. Yellowstone Mountain Club, 169 P.3d 394 (Mont. 2007) (damages must be proven and not speculative)
- Xu v. McLaughlin Research Institute, 328 Mont. 232 (Mont. 2005) (sanctions standard for discovery violations)