*1 OF INC., CONLIN’S REFF-CONLIN’S INC., and CONLIN’S FORKS, GRAND INC., SERVICE, CONTRACT Plaintiff/Respondent/Cross-Appellant, COMPANY INSURANCE FIREMAN’S FUND INSURANCE STATES WESTERN INC., COMPANY, Defendants/Appellant/Cross-Respondent. No. 00-795. January 2002.
Submitted on Briefs
Decided March
2002.
Rehearing
May
Denied
2002.
MT 60.
142.
For Respondent: Dorsey James L. & Whitney, Billings.
JUSTICE TRIEWEILER delivered Opinion the of the Court. Plaintiff, Inc., brought ¶1 Reff-Conlin’s this action in the District Court for the Thirteenth Judicial District in Yellowstone County to compensation recover for losses caused when the Red River flooded Forks, Dakota, Conlin’s Grand North furniture store. Named as insurer, defendants were its Fireman’s Fund Company, Insurance and its agent, insurance Western Company. States Insurance Conlin’s settled with Fireman’s Fund proceeded but to trial against Western States. The found that Western States negligently procured flood insurance for the Grand Forks store negligently misrepresented and its efforts to obtain the insurance and is 100% liable Conlin’s damages. Following a post-trial hearing to damages, determine judgment District Court entered in favor of Conlin’s. Western States appeals judgment from the of the District Court and Conlin’s cross- appeals. We reverse the District Court and remand for a new trial. Although numerous appeal ¶2 issues are raised on and cross-appeal, our resolution of following requires issue a new trial and therefore we decline to address additional issues: Did the District
¶3 Court err when it denied Western’s cause of potential Derrig?
FACTUAL AND PROCEDURAL BACKGROUND 19, 1997, April On Red River flooded Reff-Conlin’s Inc.’s Forks, flood, furniture store Grand North Dakota. At the time of the by Fund, Inc., Conlin’s was insured through the Defendant Fireman’s agent, States, Inc., its Defendant independent Western an insurance agency with fourteen offices across Montana. complaint Conlin’s filed a in the District Court for Thirteenth
Judicial County August District Yellowstone on 1997. Conlin’s Grand flood insurance to the it asked Western to add alleged that However, Fireman’s failed existing policy in March 1997. Forks store’s April until would be offered that no flood insurance to inform Western 18, 1997, Grand Forks broke. day protecting the dikes before (1) its contract that Fireman’s breached Conlin’s claimed: (2) store; and Western committed that Fireman’s insure handling misrepresentation negligent fraud and constructive (3) negligently Fireman’s request; Conlin’s flood insurance (4) insurance; that Fireman’s request for flood handled Conlin’s dealing; good faith and fair implied covenant Western breached (5) insurance claim handling Conlin’s that Fireman’s conduct (6) Act; that Western Claims Settlement Practices violated the Unfair (7) insurance; for flood request Conlin’s negligently handled fraud and malice Defendants amounted to actual the conduct of the damages. punitive which entitled Conlin’s 8, 1998, Conlin’s Complaint September filed In an Amended coverage representations about alleged that Fireman’s made further should therefore be relied and that Fireman’s upon which Conlin’s damage caused flood. relying policy on a exclusion for estopped from its contract with that Western breached Finally, Conlin’s contended Conlin’s. Court was that argument at the District The essence of Conlin’s *3 $329,000 $665,000 of its loss. covered existing policy
an Fireman’s failing to Moreover, negligent for alleged that Fireman’s was Conlin’s offer flood its decision not to either Western or Conlin’s of inform elsewhere. Conlin’s late for Conlin’s to look insurance until it was too failing procure to flood negligent for alleged that Western was that flood insurance negligently misrepresented and insurance the Grand Forks store. acquired for settlement a confidential and Fireman’s reached Conlin’s ¶9 10, 1999, which May order the District Court filed agreement, and A release general as a defendant. Fireman’s with dismissed Conlin’s filed on subsequently was against claims Fireman’s of all However, against to trial proceeded Conlin’s 1999. September against Fireman’s. Western, a claim for contribution which made summary filed a motion January Western On ¶10 specifically had never argued that Conlin’s judgment. Western the Grand Forks flood insurance for procure that Western requested flood duty procure to it had no argued further store. Western with Conlin’s. pursuant to its contract insurance motion summary judgment Western’s granted Court The District ¶11 claims, concluding fraud and constructive of contract on the breach obligation to flood insurance. provide had no contractual Western However, Court concluded that issues of material fact the District summary judgment implied on the breach of the covenant precluded good dealing, negligent misrepresentation, faith and fair against on negligence proceeded claims. Conlin’s to trial Western these remaining claims. During Derrig voir dire Martin disclosed that he prospective
¶ Bank, which, trial, president represented of US at the time of was counsel; past Conlin’s trial that he had in the worked with that firm president; as bank and that U.S. Bank was one of Conlin’s creditors. challenged Derrig during Western for cause twice voir dire. The ¶13 challenges. District Court denied both Western then used one of its peremptory challenges Derrig jury panel. to remove from the Western during used all of its peremptory challenges jury selection. trial, Following day jury a seven found that Western was
negligent in the procurement of flood insurance for the Grand Forks store negligently misrepresented and that Western its efforts to obtain the insurance. The liability attributed 100% of the to Western. post-trial hearing damages, After a on the District Court offset $146,849, interest, added and entered judgment favor of Conlin’s for $615,030. appeals judgment Western now from that and Conlin’s cross- appeals. We reverse remand for a new trial.
STANDARD OF REVIEW grant We will review a district court’s refusal cause for an abuse discretion1.
DISCUSSION Did the District Court err when it denied Western’s juror Derrig? cause of potential Western contends that the District Court denied its
challenge for cause prospective juror Derrig. Because Western was forced peremptory challenge prevent Derrig serving, to use a from peremptory challenges, and because Western used all of its Western now maintains that it was an correspondingly equal denied number *4 past, challenge juror In the the standard of review of denial of a to a for cause “clearly in civil cases has been erroneous” while “abuse of discretion” has been used in 1190, 1196. (1991), 132, 141-42, 818 criminal cases. See However, Walden State P.2d clearly findings appropriately applied erroneous standard is more Knight 320, 324, Rulings fact. See Daines v. 888 P.2d 906. on challenges typically for cause more invoke the District Court’s discretion. to a trial. challenges and is therefore entitled new
peremptory trial, challenging Derrig At asserted two for Western bases challenged Derrig cause. based on the debtor-creditor Western challenged and Bank and Western relationship between Conlin’s US attorney-client Derrig potential arising from his due to the bias attorneys. Conlin’strial Each of these relationship with was and Western was forced to use a cause denied Derrig jury. from the challenge to exclude - Relationship 1. Debtor Creditor during provided financing dire that US Bank Derrig revealed voir challenge for cause for Conlin’s. The District Court denied Western’s relationship on US Bank’s creditor with Conlin’s. Western now based Bank, Derrig professional of US had a president maintains that as therefore, and, recovery of it flood losses its interest Conlin’s Derrig contends that granted. should have been Conlin’s merely employee an of a creditor and that the District Court properly Derrig considered the facts and concluded that could relevant impartial. be 25-7-223(3), MCA, “[cjhallenges for cause provides Section
may grounds relationship taken” on the that a debtor-creditor exists there is no party. between the and either We conclude that of a difference between the Chief Executive Officer substantive the creditor responsible creditor who is for the creditor’s success and impartiality jury duty. it comes to and To hold otherwise itself when Therefore, form we conclude that the would exalt over substance. its discretion when it denied Western’s District Court abused relationship of Conlin’s and US Derrig based on the debtor-creditor Bank. Attorney-Client Relationship
2. represented Bank Derrig during also stated voir dire that US was attorneys he with attorneys for Conlin’s and that had worked Derrig president, revealed that as he one of two from that firm. was regard to which firm the bank would people who made decisions with however, Derrig that he could be fair and questioned, said use. When Conlin’s trial despite professional relationship his with impartial attorneys. removed for cause Derrig contends that should have been Western Conlin’strial counsel. Conlin’s relationship
because ofUS Bank’s with its attorney-client relationship no between counters that there was Rather, any professional relationship attorneys Derrig. and any replies US Bank. Western attorneys between eroded representation is personal corporate between distinction *5 147 officer, director, of the juror is an or shareholder potential where Bank, Derrig had a president and notes that as of US corporation opposing interest in his with counsel. professional relationship 25-7-223, MCA, grounds challenge jurors lists the for Section Although specifically for cause in civil actions. the statute does not attorney-client relationship, suggests address a current Western (5), might by a covered which relationship subparagraph such permits challenges prospective juror for cause when the has an action,” (7), by event of the or subparagraph interest “the which permits challenges on the “the existence of a state of mind ... basis of evincing enmity against or of either See 25-7- party.” bias favor §§ (5), (7), 223 MCA. previously We have not addressed the issue of whether a district
court
by refusing
challenge
abuses its discretion
a
for cause based on
a
relationship
attorney
current
between an
one
representing
of the
have, however,
parties
prospective juror.
and a
We
had occasion to
the propriety
denying
challenge
discuss
a
for cause based on an
attorney’s past relationship
prospective juror.
with a
In Williams v.
(1988),
Rigler
161,
833,
jurors
761 P.2d
two
considered
defense
attorney,
counsel to be their
neither had any
but
business
pending
attorney
with the
at the time of trial. When asked by the
judge,
jurors
one of
past
answered that her
relationship would not
ability
affect her
a juror.
upheld
to act as
We
the District Court’s
cause,
denial of plaintiffs challenge
stating:
“Because the District
Court
present
confirmed that no
pending
business was
between either
jurors
counsel,
of the
defense
we find no
of discretion
abuse
refusing
Williams,
District Court in
Williams’
for cause.”
164,
relationship attorneys. Derrig with Conlin’s was one of the people responsible hiring attorneys, at US Bank Conlin’s which strongly suggests opinion that he had a of their work. An favorable ongoing attorney-client relationship juror a prospective between presents strong possibility party trial counsel of the bias favor represented by attorneys. those conclude that granted We the District Court should have 25-7-223(7), challenge pursuant
Western’s for cause MCA. § Accordingly, hold that the District Court erred when it denied we attorney-client challenge Western’s for cause on the basis of an relationship. principle Prior decisions of this Court have established cause, challenge court denies a we
when
district
presume
party
prejudiced
that one
and is therefore entitled to
presuming prejudice
trial.
the rationale for
as a
explained
new
We
530,
matter of
in State v.
866 P.2d
law
Williams
Good,
59,MT
part
grounds,
rev’d in
on other
State v.
Mont.
43 P.3d
a criminal case where we looked at the
to use a
advantage
party
party
created for one
when
other
had
to remove even one
who should have been
by the
Court for cause. We held that:
removed
District
jurors
When
who should have been removed for cause are not
must,
therefore,
by peremptory
removed and
be removed
challenge,
wrongfully
for cause was
whose
effectively
peremptory challenges provided
denied
loses one of the
*6
words,
In
of
court’s
by
law.
other
the effect
the district
abuse
in
of
of discretion
this case was to reduce defendant’s number
five,
challenges to
rather than six.
peremptory
Williams,
537,
opponent,
party
that
a tactical
that
nearly
King
Special
to
See
v.
Resource
impossible
prove.
but
Inc., (1993),
367, 371-74, 846
In
Management,
P.2d 1040-42.
.’’King,
“prejudice
presumed
these circumstances
is
as a matter of law
subsidiaries
given eight peremptory challenges
jury compared
were each
to the
to
that defendants
had not
King’s four. This Court concluded
hostility
justify
peremptory
to
additional
demonstrated sufficient
however,
challenges.
importantly,
recognized
the Court
More
why,
peremptory challenges
explained
beneficial effect of extra
received,
they
presumed
are
must be
whether or not
prejudice
when
Kelly
up
Leary
it
noted that
until that time
v.
can be demonstrated. We
required
that a
Pipe Co.
P.2d
challenges
required
claiming prejudice
peremptory
based on extra
prejudiced.
that he or she had in fact
We then outlined
prove
been
meeting
requirement:
difficulty
of
this
adversely
parties
affected
to show that
Leary
requires
test
actually
by grant
peremptory
a
of additional
they
prejudiced
were
places
impossible
This
an almost
challenges
opposing party.
to the
Moreover,
focus on review
objecting party.
on the
when we
burden
of the
juror,
ignore
a
the correctness
on the actual conduct of
we
virtually
and that decision becomes
trial court’s decision
Hunsaker,
noted
Justice
It for cause allowed. are only challenges cases and We civil long As as present English practice. informed that this is the however, trial we they part process, are retained as of the litigants their allocation is a proper believe that between its right pervades process substantial which so as a matter of law if application requires erroneous reversal properly preserved by adversely the issue is affected (citations omitted). litigant, require showing prejudice Leary,
If we a of as in we cannot grant an improper peremptory challenges evaluate the effect of invading processes jury. without the internal of a We also should disregard advantages upon by having not one side bestowed challenges granted additional to them. We previously Leary to prejudice modified the extent need not be forth guidelines demonstrated when trial court follows the set Williams, expressly Hunsaker. See 761 P.12d 833. We now Leary Kelly Pipe requires overrule Co. to the extent it showing to reverse a verdict for an incorrect grant peremptory challenges to one side. 373-74,
King, 256 Mont. at
at 1042.
P.2d
*7
recently
in King
We have
followed the rule announced
and
112,
Bueling
Swift,
reinforced its rationale in
v.
1998 MT
694,
Gondeiro,
326,
472,
in
MT
303
Armstrong
958 P.2d
2000
37,
Therefore,
principle
Mont.
CHIEF JUSTICE JUSTICES NELSON concur.
JUSTICE COTTER dissents. the Court agree majority’s I the conclusions that District with challenge
erred when it denied Western’s for cause on the of the basis attorney-client Moreover, I relationship. agree majority’s with the conclusion that when one more peremptory challenges receives However, prejudice than an is I the opponent, presumed. dissent from majority’s prejudice presumed, inquiry conclusion that once is ends jury’s my and the In judgment, verdict must be reversed. here, presumption and therefore the rebutted verdict should have been affirmed. majority cites the case of State v. Williams Mont.
530, 1099, that, 866 P.2d for the once a proposition district court cause, erroneously denies for challenge a the error is deemed law, ends, a prejudicial inquiry as matter and the verdict must Williams, Recently, be reversed. 27. of State v. application ¶ challenge Williams to the erroneous denial of a cause in a criminal for Good, 59, 309 case was reconsidered this Court. In State v. 2002 MT 948, 113, Court, Kirk, relying upon Mont. 43 P.3d this State v. Van MT 32 P.3d concluded that where a denying cause, district court its discretion in challenge abuses a peremptory challenges defendant must use one of his to remove the disputed juror, and the defendant all thereby exhausts of his peremptory challenges, subject the district court’s denial of the challenge for cause will be deemed structural error and thus automatically To the extent reversible. State v. Williams had defendant to previously required foregoing a both establish elements, and establish that the error to the defendant’s contributed conviction, we overruled Williams. I majority’s concurred conclusion in State v. Good that a in failing grant challenge
district court’s abuse of discretion a during in a criminal case should a cause voir dire be considered my I conclusively prejudicial. structural error that As noted in concurring in State v. Good: opinion criminal necessity a in a light of the unanimous verdict
case, one lost to the defendant due to an prospective clearly erroneous denial of a for cause could mean the hung jury. difference and either or a acquittal between conviction However, I I limit the Court’s separately wrote state that would only, holding regard apply this to criminal cases different suggest test in civil cases. I write here to what that test would be, that a district court’s and to dissent from the Court’s conclusion failing grant for cause a civil abuse of discretion conclusively prejudicial. case is “conclusively prejudicial” of the argument application In its for the *8 King v. Resource cases, Special relies on majority in
test civil 1038, held 367, where we (1993), 846 P.2d 256 Mont. Management challenges than an more that, peremptory one receives party when King, a matter of law. presumed is as opponent, prejudice here. presented than those substantially different circumstances were by court erred King in that the district plaintiffs complained The to the defendants Montana challenges granting eight peremptory subsidiary corporations, while and its two non-hostile Company Power Thus, the challenges plaintiffs. to the granting only peremptory four them challenges available to peremptory had twice the defendants showing a of King concluded in that than the had. We plaintiffs in disadvantaged by disparity peremptory party prejudice jury support reversal of a longer required would no be under such circumstances King prejudice said in that verdict. While we law, presumption never said the is as a matter of we presumed prejudice was conclusive. decided, gratuitously this Court years King Five after DeVore, said in dicta in State v.
expanded King holding when we 816, case, 340, 325, a criminal that “the 1998 MT 972 P.2d party rule in a civil context is that when one has been challenges, presume we equal peremptory denied an number automatically grant the offended prejudice as a matter of law and DeVore, DeVore, Thus, in announced for the party a new trial.” we ¶36. (until setting, only today) first and time that in the civil we will both automatically grant reversal where a presume prejudice and erroneously denied. for cause is that, presinned I error be when a submit while should erroneously denied, presumption that should
for cause in a civil case is Rather, to be presumption I allow the not be conclusive. Leary in v. advocating adopted I am not a return to the rule rebutted. P.2d where we Kelly Company Pipe a for an incorrect party urging held that the reversal of verdict prejudice or show challenges must demonstrate grant peremptory Leary, King Special in order to obtain result. We overruled 374, 846 P.2d at Management, 256 Mont. at Resource urging reversal of a verdict properly Requiring party so. King we holding of our that flies in the face prejudice demonstrate failing to strike from a district court’s error presume prejudice will the burden to Rather, presumed, prejudice for cause. once received on the who placed should be presumption overcome That not challenge. party-and the benefit of the extra once error is established required, appellant-should presumed, possibility demonstrate that there is no reasonable the District Court’s error to the contributed verdict. We had the test right Leary. problem imposed wrong is we the burden on the *9 party. here, propose The test I requiring prevailing party
¶38 the to possibility demonstrate that there is no the reasonable error verdict, contributed to the is not to our jurisprudence. recently new We adoption Kirk, announced the analytical of similar framework in Van 47, holding errors, considering that when trial the ¶ State as prevailing must party demonstrate there is no possibility reasonable that admitted evidence contributed to the defendant’s conviction. We have thus demonstrated our willingness ability to engage in type possibility this of “reasonable the error contributed to analysis the verdict” in criminal cases. There is simply no reason we engage analysis, necessary, cannot in a similar if in a civil case. There my is a fundamental reason for that the belief test should criminal in be different civil cases than in cases. The verdict in criminal prospective juror cases must be unanimous. The one lost to the defendant because ofthe court’s erroneous challenge denial of a conviction, cause could against have been the one who would vote case, a finding guilt impossible. make of In the though, civil while the juror loss of one prospective pivotal, may always could be it not be so. unanimity Thus, This is because is required jury. not of a civil while case, one lost could make all the in may difference the criminal it be immaterial and potentially prejudicial therefore not even in a civil case. This case point exactly. illustrates the argued Reff-Conlin that the differential of one peremptory challenge could not have made a in difference the outcome of the light In plaintiff verdict. of the fact that the verdict for the here was unanimous, mention, majority right. which the fails to Reff-Conlin is simply possibility There is no reasonable that the erroneous denial of challenge for cause at issue here could have contributed to the plaintiff verdict. The needed the of only eight jurors votes of twelve However, order to obtain a verdict its favor. it secured the votes case, all In prevailed twelve. order for the defendant to have it this eight jurors would have needed to vote for a verdict. There is defense simply possibility no reasonable that with the addition of one peremptory challenge, swayed eight Western would have of the jurors unanimous twelve voted in favor of the plaintiff who vote contrary result. It presumption prejudice cases like this that the can be irrefutably Obviously, overcome. in cases in which the verdict is not of the extra unanimous, that received the benefit prevailing party meet. If difficult have a more burden would there is no demonstrating that not meet the burden of he or she could verdict, to the then that the error contributed possibility reasonable reversal would unrebutted and prejudice would be presumption required. losing cases sum, In I hold that in those civil where erroneously denied one could demonstrate that the district court party cause, to that would be or more of its opportunity then have the presumed. prevailing party would there is no reasonable by establishing that presumption rebut If he she met the error to the verdict. or possibility that contributed justify or reversal. If the burden, compel then the error would not burden, presumption not meet the would be prevailing party could required. and reversal would be deemed unrebutted the error in possibility Because there is no reasonable to the denying Firemen’s Fluid’s for cause contributed case, I my judgment, verdict in this would affirm. it is senseless manifestly unfair to an error made overturn verdict when *10 during jury possibly selection could not have affected the outcome of I the trial. therefore dissent. dissenting.
JUSTICE RICE I concur with Justice Cotter’s dissent inasmuch as it addresses the proper applied standard to be to a district court’s abuse discretion case, denying jury for cause in a civil and therefore judgment dissent from the Court’s reversal of the entered herein. regard denying to a district court’s of discretion in abuse case, I standard apply for cause a criminal 59, 309 Good, 113, 43 MT my set forth in dissent in State v. Mont. P.3d 948.