Following trial by jury in the Eighteenth Judicial
District, Gallatin County, judgment was entered against
Kaufman and Broad Homes (K & B ) on a claim of negligence and
against Ponderosa Homes (Ponderosa) on a claim of negligent
misrepresentation. All litigants allege error. FJe affirm.
The parties present the following issues for review:
1. Did the District Court properly refuse to instruct
the jury on strict liability, the covenant of good faith and
fair dealing and punitive damages?
2. Did the District Court properly grant directed
verdicts dismissing claims of breach of the implied warranty
of habitability, breach of the implied warranty of
merchantability, express warranty and constructive fraud?
3. Did the District Court properly allow the jury to
view the mobile home at issue?
4. Did the District Court properly refuse to grant a
directed verdict on the claims of negligence and negligent
misrepresentation?
Ponderosa is engaged in the business of selling mobile
homes, including those manufactured by K & B. The
controversy at hand arose from the McJunkins' purchase of a K
& B mobile home from Ponderosa.
In December, 1982, the McJunkins met with Ponderosa
salesman Vern Gusick concerning the purchase of a K & B
mobile home. The McJunkins subsequently returned to
Ponderosa and ordered a K & B mobile home with a number of
special features. It arrived in Belgrade on or about
December 21, 1982.
The McJunkins first inspected their mobile home on
December 23, 1982. At that time, Mr. McJunkin noted that the
mobile home did not conform to their specifications in
certain areas. The McJunkins allege that they told Gusick
they were not going to take the mobile home. Gusick is
alleged to have responded that the trailer was a special
order and they had to take it. In any event, it is
uncontested that Gusick informed the McJunkins not to worry,
that everything will be taken care of. Thereafter, the
McJunkins entered an installment contract for the purchase of
the mobile home.
Ponderosa transported the trailer to the McJunkins' home
in Sheridan, Wyoming, and set it in place. Mrs. McJunkin
testified that she observed the mobile home fishtail wildly
during the trip on an icy curve near Crow Agency. The stress
placed on the trailer during this incident is alleged to be
partially responsible for problems the McJunkins later had
with the trailer.
Immediately upon moving in, the McJunkins noted problems
with the mobile home. A significant problem was that the
trailer was not level. The serviceman who attempted to
relevel the trailer discovered that it could not be leveled
because of the frame. Mr. McJunkin was advised by the
serviceman not to move the trailer as a result. At various
times, the McJunkins also discovered that the doors fit
poorly; the carpet was coming loose; the floor plan had not
been changed; there were not copper pipes as ordered;
shutters were missing; the ceiling fan was defective; there
was not an outside faucet as ordered; the furnace was noisy;
the vent was in the wrong place; the shower heads were not
positioned as ordered; the wrong materials had been used in
the bathroom door casings; the paneling was coming off the
bath wall; the door trim had been incorrectly installed; a
special order cabinet was damaged; shingles came off the
roof; the floor tile was coming up around the toilet; the
front door lock broke; the door bell was installed on the
wrong side; and other problems.
Although Ponderosa and K & B made efforts to remedy some
of the defects, the McJunkins received very little relief.
Efforts to correct defects often resulted in further damage
or more sloppy work. As a result, the McJunkins sent a
revocation of acceptance on December 10, 1984, but continued
to live in the trailer.
Prior to trial, both parties had engineers examine the
mobile home for structural defects. The engineer who
examined the trailer at the request of the McJunkins found
that the wooden frame had been overstressed at some point.
He agreed with the serviceman that the trailer should not be
moved. Defendants' engineer examined the mobile home after
it had been returned to Belgrade. In his opinion, the frame
had not suffered excessive stress and could safely be moved.
Both engineers agreed that the mobile home was habitable.
The jury was also allowed to view the mobile home to make
their own determination. Many of the alleged errors revolve
around the sufficiency of the complaint filed on December 21,
1984, as amended by the pretrial order of October 6, 1986.
The liberal pleading philosophy of the Montana Rules of
Civil Procedure has superseded the highly technical theory of
code pleading which often resulted in substantial injustice
to the injured party. "Ancestor worship in the form of
ritualistic pleadings has no more disciples. The time when
the slip of an [attorney's] quill pen could spell death for a
plaintiff Is cause of action is past." Thompson v. Allstate
Insurance Company (5th Cir. 1973), 476 F.2d 746, 749. A
pleading will be liberally construed in order to achieve
substantial justice. Johnson v. Herring (19311, 89 Mont.
1.56, 173, 295 P. 1100, 1105; Rule 8 ( £ 1 , M.R.Civ.P.
Generally, a pleading need only provide "a short and
plain statement of the claim that will give the defendant
prior notice of what the plaintiff's claim is and the grounds
upon which it rests." Conley v. Gibson (1957), 355 U.S. 41,
47, 78 S.Ct. 99, 103, 2 L.Ed.2d 80, 85. Discovery procedures
and the pretrial conference under Rule 16 are the primary
means of formulating and clarifying the issues so that the
only real function of pleadings is that of giving notice. 2A
Moore's Federal Practice 5 8.13 at 8-71. However, "it is
not enough to indicate merely that the plaintiff has a
grievance ... sufficient detail must be given so that the
defendant, and the court, can obtain a fair idea of what the
plaintiff is complaining and can see that there is some legal
basis for recovery." Davis v. Passman (1979), 442 U.S. 226,
238 n.15, 99 S.Ct. 2264, 2273, 60 L.Ed.2d 846, 858, 2A
Moore's Federal Practice 5 8.13 at 8-13.
The failure to set forth all claims initially is not
fatal. Under Rule 15 (b), M. R.Civ. P., when issues not raised
hy the pleadings or amended by the pretrial order are tried
by the express or implied consent of the parties, they shall
be treated as if raised in the pleading. The general rule is
that such amendments shall be freely granted. Union
Exchange, Inc. v. Parker (1960), 138 Mont. 348, 357 P.2d 339.
However, liberal construction and amendment of pleadings
does not grant counsel carte blanche to advance new theories
on an unsuspecting opponent. In Brothers v. Surplus Tractor
Parts Corp. (1973), 161 Mont. 412, 506 P.2d 1362, we
cautioned counsel in this state that any reliance on the
liberality of the courts in granting amendments was at their
peril.
It is generally accepted that the appellant cannot
recover beyond the case stated by him in his
complaint . . .. This Court believes that fair
notice to the other party remains essential, and
pleadings will not be deemed amended to conform to
the evidence because of "implied consent" where the
circumstances were such that the other party was
not put on notice that a new issues was being
raised . . .. (Citations omitted.)
Rule 1 5 (b), M. R.Civ. P. should be applied liberally
to avoid the old requirements of formalism and to
allow litigants to proceed efficiently on the
merits of the case. However, leave to amend
pleading under Rule 1 5 (b), cannot be granted
arbitrarily or perfunctorily because the result
would create a question of due process in cases
where the defendant may not have an adequate
opportunity to prepare his case on the new issues
raised by the amended pleading, therefore the facts
attendant to each case become controlling.
161 Mont. at 4 1 7 - 4 1 8 , 5 0 6 P.2d at 1 3 6 5 .
The McJunkins allege that the District Court improperly
granted a directed verdict on the express warranty claim. It
is alleged that the District Court based its decision on the
McJunkins' failure to plead the claim against Ponderosa. We
disagree. A review of the trial transcript indicates that
Ponderosa did not request, nor did the court grant, a
directed verdict on the express warranty claim. Rather, the
court properly found that the claim was not pleaded.
As noted above, the purpose of pleading is to provide
notice. See Conley, supra. The McJunkins had two and
one-half years to amend their complaint. In addition, the
pretrial order signed by the parties specifically states that
the express warranty claim applied only to K & B. Under
these facts, we cannot say the District Court clearly abused
its discretion. We hold that the District Court properly
refused to submit the issue to the jury.
Implied Covenant - -
of Good faith -- Dealing
and Fair
The District Court also refused to instruct the jury on
the implied covenant of good faith and fair dealing.
Although the claim had not been plead, the ~ c ~ u n k i n s
submitted a jury instruction defining good faith "as honesty
in fact in the conduct or transaction concerned." We find
that the instruction inadequately defines the tort.
The seminal case on the issue of the implied covenant of
good faith and fair dealing is Nicholson v. United Pacific
Insurance Co. (Mont. 1985), 710 P.2d 1342, 42 St.Rep. 1822.
In Nicholson, this Court engaged in an exhaustive examination
of the nature of the duty of good faith and fair dealing. We
stated:
The nature and extent of an implied covenant of
good faith and fair dealing is measured in a
particular contract by the justifiable expectations
of the parties. Where one party acts arbitrarily,
capriciously or unreasonably, that conduct exceeds
the justifiable expectations of the second party.
The second party then should be compensated for
damages resulting from the other's culpable
conduct.