*1 McNEIL, LINDA Appellant, Plaintiff & THOMAS CURRIE and GROUP, FARMERS INSURANCE FARMERS INSURANCE GROUP OF COMPANIES, THE TRUCK INSURANCE EXCHANGE, Respondents. Defendants No. 90-436. September 24, Submitted on Briefs 1991. April Decided St.Rep. 253 Mont. 9. 830 P.2d 1241. *2 McKeon, Law, Appellant: Attorney Michael J. Anaconda.

For *3 Robinson, Carey, Lohn & Respondent: Garlington, For Steven S. Missoula; Poore, Brown, Robinson, Butte. Robert C. Roth & Opinion of the Court.

JUSTICE McDONOUGH delivered the appeals summary judgment of Linda McNeil from order District, Deer granted by the District Court of the Third Judicial Currie, In- County, of Farmers Lodge in favor defendants Thomas The Group, Companies and Group surance Farmers Insurance Exchange. held that there were Truck Insurance The District Court supported and law genuine applicable no issues of material fact summary judgment. part for We affirm in defendants’ motions part. in reverse are: appeal

The issues on McNeil determining District erred in 1. Whether the Court faith have a for a ofthe covenant did not claim breach dealing. and fair that McNeil determining District erred in

2. Whether the Court have a for fraud. did not claim did not finding in that McNeil the District Court erred

3. Whether Act. Settlement Practices a claim under the Unfair Claim determining Whether District Court erred in McNeil did not have a claim intentional infliction of emotional distress.

A complex background review of somewhat factual is neces- (McNeil) sary. store, Appellant Linda has clothing McNeil owned a Montana, Company, Anaconda, Calico & Respondent, since 1983. (Currie), during an independent agent Thomas Currie was insurance the time in sold question. products Currie both Farmers Insurance (Farmers) (TIE), Group Exchange Truck Insurance member business, Farmers Group. Insurance Currie’s “Thomas Currie In- surance” located door clothing was next to McNeil’s store Anacon- da.

In approached purchasing June of McNeil Currie about coverage an application for her business. Currie filled out special package policy signed for a Sentinel TIE. from application gave payment. Currie a check down $113.00 as a days accepted balance was due within 60 if TIE $113.00 insuring risk of McNeil’s store. 28,1984, along

On June Currie application submitted the with the check TIE July stating to TIE. sent Currie a notice on Company ineligible Calico & special policy, was for a Sentinel but that TIE regular policy, would consider the business for a Sentinel completed and that application should be sent. Currie testified he mistakenly thought Company TIE would consider Calico & for the regular policy original application already Sentinel from the sub- Thus, application regular mitted. no for a Sentinel policy sub- mitted Consequently, policy. Currie. TIE did not issue McNeil a provided coverage July through TIE binder from September 4,1984. Currie testified he led McNeil to believe she was going policy. to receive a

TIE accept application did the special policy Sentinel requirements & did Company because Calico not meet the being business for at least three not have years did Bradstreet(D B) requisite 31,1984, & Rating. July Dun & Credit On refund, Linda cancellation, along TIE sent a notice of August 1,1984, McNeil’s correct address at store in Anaconda. On cancellation, McNeil unaware of the sent the balance of $113.00 *4 premium. for the McNeil testified did not the notice she receive cancellation, seeing recalled it in her files. but

The refund check of less from the first $113.00 $74.10 $38.90 installment, coverage provided covered the amount for the binder 31, 4, TIE refunded July September between 1984 and 1984. This went to Currie’s office of 1984. check September second check between testified that no discussions to McNeil. McNeil payable until after again regarding Currie insurance occurred herself and ignore year. However, he told McNeil Currie testified the first of if received one. a cancellation notice she 24, Jarvi, is not to this 1984, party who On December William lawsuit, building into the which housed Calico drove his automobile Insurance, causing damage to both Company & and Thomas Currie was, coincidentally by Farmers. John Gil- insured businesses. Jarvi claim adjuster, adjusted and settled McNeil’s lespie, a Farmers claim her policy. policy. McNeil did not submit a claim under under Jarvi’s in- being adjusted under Jarvi’s During the time claim surance, Greg Skakles McNeil. Skakles settled attorney represented 19, $5,006.95 April on of McNeil for on the claim with Farmers behalf for emotional distress and payment 1985. The settlement included after Christmas. profits days lost for the two the store was closed out have a sometime policy testified she found she didn’t McNeil deposition repeatedly February of 1985. McNeil testified on that she Attorney requested copy policy her from Skakles insurance Currie. that copy policy also from Currie. Currie testified requested application regular realized his mistake that an for the Sentinel when he necessary, he policy was informed Skakles. Skakles demanded Currie for store. coverage obtain immediate McNeil’s May 3, Subsequently, application Currie sent with TIE, signature, regular file time for a Sentinel McNeil’s August had along the two refund checks TIE returned obtained the refund September 1984. Currie testified he unaware of this second checks from McNeil. McNeil testified she was May application, attorney demanded Currie though even that McNeil coverage her. of TIE testified Representatives obtain coverage 14,1985 September 1,1985, received from March binder during period, if loss she would and McNeil had sustained a been covered. May 24,1985. by TIE on policy application was denied

This second two applied Farmers refund Currie notified Skakles of the denial. 14,1985 from March coverage the binder for McNeil’s store checks to for the However, owed September $242.00 until still July to McNeil on coverage. premium TIE notices binder sent July These documents advised same time coverage if had inform TIE she obtained other *5 14

period, so, charge if the premium and would be dropped. McNeil she testified did not receive these notices. applied business insurance with Yeoman Insurance of 3, policy

Anaconda received a effective June 1985. Neither TIE McNeil or Skakles informed she this coverageAfter obtained two McNeil, premium more notices were sent to TIE turned the account & B over to D for collection. McNeil received a collection notice from 22, D & B replied August 1985, to which she informing TIE that she never a any money. received and did not owe them DAfter & B McNeil, they failed to collect the amount from sent the account back any to Farmers. Farmers halted efforts to collect the amount. filed alleging a lawsuit that the defendants breached the good of dealing, fraud, covenant faith and fair committed violated the Act, Unfair Trade Practices and the defendants’ conduct constituted an intentional infliction of emotional The distress. District Court granted summary judgment in favor of TIE. McNeil appeals. scope

The of review is the same as the trial Summary court. M.R.Civ.P., judgment 56(c), under Rule proper only is if the record genuine moving discloses no issue of fact party material judgment entitled as a matter of law. Supply Beaverhead Bar v. (1991), 117, 120, Harrington 560, 247 Mont. 805 P.2d 562.

I Whether the District Court erred in determining that McNeil did a claim implied good for breach of the covenant of faith and dealing. fair

McNeil maintains that the erred District Court when it held contract, failed a therefore, she to claim breach of could not sustain recovery good a under the breach of implied covenant dealing. However, faith fair precedent a breach of underlying longer requirement. Recently, contract is no a we said: “In order to theory covenant, on a recover ... of breach of the there must be an enforceable contract to which the covenant attends.” Beaver 124, Supply Harrington, (1991), 117, head Bar v. Mont. 805 P.2d 564, citing Story City (1990), 436, 450, v. Bozeman 242 Mont. 767, 791 P.2d 775. 3,1990. Story May was decided on The District Court rendered its opinion 27,1990. general “Achange and order on June The rule is that (here court) prius ruling the law between nisi in the district requires appellate apply and an decision court appellate Thorpe Authority changed Housing City law.” v. Durham 518, citing 525-26, 21 L.Ed.2d 474 (1969), 89 S.Ct. 393 U.S. 73,78. Court, citing This (1943), 318 Inc. v. States U.S. Ziffrin, United apply court must provided “generally appellate has Thorpe, its Lee v. Flathead at the time it renders decision.” the law effect 1060, Story says (1985), Mont. 704 P.2d County contract, honesty fact standard the covenant applying Story City Bozeman applies. standard, therefore, in fact must be met for honesty dealing, faith and which results of the covenant fair breach is, contract That in the breach of the itself. *6 justified a that the other party expectation

Each to the contract has performance act in reasonable manner in its or efficient will a party When one uses discretion conferred the contract breach. dishonestly practices or to act of accepted to act outside commercial contract, contract deprive party to the other ofthe benefit the the is breached.

Story at 791 P.2d 775. existed that received information TIE Evidence Currie from they July of 1984 that would not underwrite McNeil’s store. While underwriting interpreting testified he made a mistake in the Currie action, testimony there is of misinformation from Currie to McNeil credibility honesty his lies and therefore the determination as to Thus, prove the trier fact. Currie entitled to dishonestly handling application. prove acted If McNeil can dishonestly, sustaining Currie acted thus of contract under breach covenant, only has implied damages the contract are due. McNeil already plus interest. been reimbursed for the cost the pled damages may also costs as after the which be awarded outcome of proceedings.

Damages tort are sometimes available for the contract related However, satisfy the dealing. faith fair McNeil does not of the requirements to sustain action tortious breach Story. as In order the tort of faith covenant set forth bad special must be relationship all the elements of the apply, essential Story at 776. present. at P.2d

(1) inherently parties must be that the are in contract such (2) entering unequal positions; [and] the motivation for bargaining i.e., motivation, peace non-profit the contract must be secure (3) mind, ordinary contract security, protection; [and] future (a) require party adequate they do not are not because (b) actions, they do not superior for its position account (4) make the party “whole”; inferior [and] one party is especially vulnerable because of type of harm may it suffer and of necessity (5) places trust in the party other to perform; [and] other party is aware of this vulnerability.

Story 791 P.2d at 776. determining

Cases that a special relationship exists between in- usually sured and insurer analyze fact situations in which insurance companies upper claims, have the hand in settling denying coverage (Alak. and paying claims. See State Farm &Fire Cas. Co. v. Nichols 1989), 1152, 1155-57; Alaska Assur. Co. v. Collins Pacific (Alak. 1990), However, 794 P.2d 936. under undisputed facts of case, parties are not in inherently unequal bargaining posi- McNeil, tions. businesswoman, approached Currie obtaining about purchase insurance. The of insurance was a business deal which she could have entered into with any other agent. McNeil fails satisfy an element of a special relationship and does not have abad faith claim in tort.

We therefore reverse the District Court action, as to the contract and affirm as to the bad faith action in tort.

II Whether the District Court determining erred in that McNeil did not have a claim for fraud. prima

A facie case of actual fraud must include the following 1) 2) nine proof 3) elements: representation; of a its falsity; its 4) materiality; speaker’s *7 knowledge of its falsity ignorance or of 5) truth; its speaker’s intent that it should be acted upon by the 6) person and in the manner reasonably contemplated; the hearer’s 7) ignorance falsity; 8) of its truth; hearer’s reliance on its 9) right of the rely upon it; hearer to consequent hearer’s proximate injury damage. or Avco Financial Services v. Foreman (1989), Donovan 260, 862, 237 Mont. 772 P.2d Although 864. McNeil failed plead the elements of fraud particularity as required 9(b) by M.R.Civ.R, Rule evidence of fraud presented in deposi tion, 9(b). waiving any defense to the violation of Rule

Here, McNeil admitted seeing the cancellation notice in her office files. Currie testified ignore he advised her to a cancellation one, notice if she received gave and also coverage. assurance of McNeil testified she spoke Thus, never to Currie about it. there is an issue here credibility as to and summary judgment is proper. not In addition, viewing in all may inferences that in be drawn favor of the eight ele- proof of the first party, there is evidence of non-moving 9) (No. of fraud necessary a element fraud. Damages Eire ments. only plaintiff may A difficult to ascertain. damages McNeil claims are by the defendant’s proximately that caused damages recover for are (1991). cases 27-1-317, Montana MCA misrepresentations. § Miller v. Fox: damages. we said in subject only require finding a As “* 17-208, 1947, true, claims, R.C.M. plaintiff It is as that under § * * damages punitive or recovery exemplary can no there be damages.” v.Krutar plaintiff is entitled actual Smith unless Although trier (1969), 153 Mont. fact, awarding damages, must prerequisite exemplary a for as damages, unnecessary find actual it is the claimant suffered damages on the actual or place monetary the trier of fact a value (1949), 123 any Fauver v. damages. make award actual Wilkoske 228, 239, 211 P.2d 420. Mont. 804,808. (1977), 504, 510, 571 finding If a

Miller Fox 174 Mont. P.2d v. made, punitive damages is the trier offact could make award 510-511, 571 requisite proved. if the malice were Miller at 808; P.2d P.2d at Butcher Petranek Therefore, ruling Court in we conclude that the District erred prima a case for fraud. McNeil failed make facie

Ill not finding Whether the District in that McNeil did Court erred a Act. claim under the Unfair Trade Practices 33-18-212, MCA, apply argues 33-18-201 and §§ 33, MCA, com governs to the facts. Title insurance MCA, 33-18-201, claim panies. Section titled “Unfair settlement governs claims have been practices prohibited”, situations which case, companies. made to insurance Under the facts 33-18-201, Accordingly, hold that never submitted a claim to TIE. we § MCA, applicable. is not 33-18-212, MCA, part: Section states — charges premiums improper

“Illegal dealing (1) willfully any premium collect sum as person may insurance. not insurance, then or provided is not charge or which insurance (subject acceptance by of risk provided course to be due insurer) by by an insurer as authorized an insurance issued this code.” which he premium did collect a sum from McNeil as

Currie not receive While it is true that McNeil did submitted to Farmers. *8 18

policy, 1, she did coverage receive binder between 1984 July 4, September 1984, 14, 1, and March September 1985 and accept insuring Farmers declined to the risk of McNeil’s store based on the business, amount time McNeil been in her had low D&B rating. 33-18-212, These facts do not a support violation MCA. § neither

We hold Currie nor Farmers violated 33-18-212or 33-12- §§ 201, MCA, therefore the District Court did not err in concluding that McNeil did not have a claim under the Unfair Trade Practices Act.

IV Whether District Court in determining erred McNeil did not have a claim for intentional infliction of emotional distress. constantly badgered

McNeil maintains that Currie her reopen her business quickly after Christmas Eve accident and pressured that he to accept policy. settlement under Jarvi’s McNeil testified that she was embarrassed and humiliated open her store while the with plywood. windows were boarded Further attempt worried that the D&B collection would affect her result, rating. credit As a developed McNeil contends she der problems matological medical requiring support treatment. In of her position, (1989), Big Sky Eyewear relies Niles v. 236 Mont. 455, 114, proposition recognizes P.2d for the that Montana independent cause of action for intentional infliction emotional distress.

In Niles we affirmed District Court’s refusal to a issue directed employer Big Sky Sky verdict in favor of the Eyewear. Big Eyewear falsely stealing accused Niles of had her arrested and as a result spent jail. she time In Niles we stated: “Where there is evidence legally protected substantial invasion interest which causes significant impact upon person ofthe plaintiff, emotional distress compensable or showing physical injury.” without mental Niles 465, 119, Markets, 771 P.2d at citing Supersave Johnson v. Inc. (1984), 475, 465, 209, facts, 211 Mont. 686 P.2d 213. Under the Court held that Niles met this standard and overturn declined to District Court’s denial of In defendant’s directed verdict on issue. the case at McNeil can no similar bar show substantial invasion of legally protected interest. (1990), 195, 789 Day

In Montana Power P.2d Co. (Second) said, only have adopted j we ‘We comment to Restatement (1965), defining of Torts 46 First severe emotional distress. Bank § (N.A.) v. Clark Section 46 Mont. *9 distress which emotional infliction of of intentional the tort concerns Day at a cause of action.” recognized as have not we (1991), 247 Mont. 38 School Dist. No. Bigfork v. See also Doohan Court declined 1354, 1362, 1365, in which this 125, 143, 144, 805 P.2d emotional infliction of intentional facie case for prima find a to the facts. under distress by extreme “One who provides:

Moreover, 46 of the Restatement § recklessly causes severe intentionally or outrageous conduct emotional liability to for such subject another is distress to emotional bodily it, such results from bodily harm to the other and if distress harm.” to the level nor Farmers rises conduct of Currie

Neither the suffered Further, emotional distress outrageous. extreme in Restate- severity called for to the level of does not rise Neill, dermatologist, on two occasions Dr. saw ment. McNeil Dr. Neill testified moderate acne. of what Dr. Neill labeled treatment of the acne. Commentators possible one cause that stress was the distress only where "... The law intervenes Restatement note: expected person could be severe that no reasonable inflicted is so (Second) (1965), j. We comment Torts § it.” Restatement endure society expected in our should be person reasonable find that a McNeil suffered. problems endure rating, credit about her

Additionally, although McNeil was worried D & B by the rating not affected that her credit she testified loan, nor for a turned down attempt. She has been collection purchases. inventory credit for store denied granting did not err the District Court conclude that We intentional summary judgment on McNeil’s defendants’ motions claim. distress infliction of emotional and remand part and reverse

Therefore, part affirm in we opinion. with this not inconsistent proceedings District Court HARRISON, GRAY and JUSTICES TURNAGE CHIEF JUSTICE concur. and WEBER concurring part specially TRIEWEILER

JUSTICE dissenting part. affirm majority opinion which of the parts those

I concur with violation claims for dismissing plaintiff’s Court’s order District distress. infliction of emotional MCA, intentional 33-18-201, and for § reverses which majority opinion part of the with that I also concur plaintiff’s claim which was based on the District Court’s dismissal fraud.

I majority opinion I of the affirms the part dissent from that which dismissing plaintiff’s Court’s order claim for tort District faith and fair upon of the covenant of based breach dealing. (Mont. Pipeline Company

As I stated in Haines v. Montana Power 1102, 1109,I 1991), 422,] Story would not St.Rep. [251 Mont. follow City 791 P.2d 767. Bozeman chapter jurisprudence, in Montana which Story represents sorry so, doing the tort of faith. In practical purposes for all eliminated bad did favor to the citizens of this State. Supreme Court no reasoning through of bad faith evolved careful tort law *10 and long experience profit oppressive to take the out of dishonest in Story profit superior returned that for those practices. business bargaining positions. in Mon-

Every consumer and small businessman and woman Story. tana are off of worse because (Trieweiler, J., dissenting). at 1109 Pipeline, St.Rep. Haines 48 Story legal principle that the part The worst of the decision is by parties an issue raised and briefed the which it stands was not even Sheehy dissenting in by opinion: As out Justice his appeal. pointed on light portion majority opinion, read the ofthe When we second The the reason for the reversal on this thin record. dawns as to agenda, beyond appeal the in this case: majority higher have a one v. United Ins. Co. implied the reversal ofNicholson Pacific case, 32, 710 They use the vehicle ofthis weak P.2d is, purpose. as it to their work in or the parties no issue raised this case from the

There is good dealing and fair concept implied record as to the covenant subject by used the District applying in contracts. The law application by That the supplied by Court was that the defendants. has the law of the case. Without briefs District Court become general, majority the issues, notice to the Bar the and without following results: accomplishes exists, damages relationship only available special 3. Where no the conduct of the damages, regardless egregious of how are contract regardless the tort involved. wrongdoing party is and any abrogate case is to done in this majority What by a contract- egregious conduct arbitrary, capricious or remedy for on the record in this file nor not raised ing party, upon issues the hard-won general. reversal notice to the Bar without joke. Under Story in this case is by Mark obtained verdict justly again never be he will majority opinion, of the limitations jury. by any compensated J., dissenting). (Sheehy,

Story, in Nichol- articulated policy was public I that the sounder believe 32, 710 P.2d (1985), 219 Mont. States Insurance son v. United Pacific stated that: where we fair faith and of an covenant The nature and extent justifiable particular in a contract dealing is measured arbitrarily, acts party one expectations parties. of the Where justifiable exceeds the unreasonably, that conduct capriciously, or then should be party. party The second expectations of the second culpable resulting from the other’s damages compensated conduct.

Nicholson, P.2d at 1348. Currie, possibly

I there evidence in this case believe was was arbitrarily unreasonably. His conduct employer, his acted plaintiff. contrary justifiable expectations certainly of bad criteria, there sufficient evidence Under the Nicholson by the defendant. summary judgment faith to a motion for overcome faith claim tort pursue I her bad plaintiff would allow that claim. jury let a decide whether she is entitled Story, there was sufficient decision in Even under this Court’s I jury. to a of this case require faith to submission evidence of bad Story which all of the elements plaintiff conclude that the satisfied *11 faith. damages tort for bad necessary support are this Court held (1) unsophisticated lay-person I who Specifically, believe that: goes professional insurance to a coverage who the technicalities of by agent is made representations relies on agent licensed (2) had no basis plaintiff inherently bargaining position; unequal by to her someone that was made any representation questioning for knowledge qualifications special to have presumed she (3) into the entering made; purpose her that he representations by mind peace it was to obtain certainly nonprofit; contract was (4) insurance; ordinary contract acquiring property business plaintiff for compensate adequate in this case are not experience that has resulted from the defendants’ conduct and will plaintiff not make disruption whole for the to her life that has resulted (Contract in this case. damages will not even legal expense cover the person that a in plaintiff’s position normally would just have incurred (5) to protect her credit rating); and she especially vulnerable placed when she Currie, her trust in certainly and he was aware of vulnerability by his the fact that accepted every she one of misrepresentations at face value.

For these I reasons dissent majority’s from the disposition of plaintiff’s claim based on the tort of bad faith.

H. UNFAIR TRADE PRACTICES ACT I also dissent part from that of majority opinion which affirms plaintiff’s 33-18-212, dismissal of MCA, claim under of the § Unfair Trade Practices Act. 33-18-212, MCA,

Section provides that: (1) A person may willfully any collect premium stun as or charge insurance, which insurance is not then provided or is not in due provided (subject course to be acceptance by risk insurer) by an policy by issued an insurer as by authorized this code. case,

In plaintiff paid Currie coverage for insurance from $226 July 1, 1984, until June 1985. She did not receive insurance coverage during period of time. The majority disposed of this by claim observing that according to Currie she during was covered portions of that time based authority on his company. bind the However, providing her coverage during portion of the time paid that she providing for is not the same as coverage her with the paid Furthermore, that she for. there was no written ever upon plaintiff issued which could have relied to assert a claim for coverage, had one necessary. been All the record reflects is that in retrospect dispute after a regarding arose an additional premium which Truck Insurance Exchange due, claimed was it asserted that 1,1984, it July through 4,1984, was bound from September again from through March September I proven conclude that the facts support this case would a cause 33-18-212, Therefore, action based on a violation of I MCA. would § reverse the District Court’s order plaintiff’s which dismissed claim under that summary judgment. statute foregoing JUSTICE HUNT concurs in the concurrence and dissent.