Jardine, Stephenson, Blewett & Weaver v. United States Fidelity & Guaranty Co.

91 F.R.D. 284, 1981 U.S. Dist. LEXIS 14530
CourtDistrict Court, D. Montana
DecidedSeptember 16, 1981
DocketNo. CV-81-22-GF
StatusPublished
Cited by2 cases

This text of 91 F.R.D. 284 (Jardine, Stephenson, Blewett & Weaver v. United States Fidelity & Guaranty Co.) is published on Counsel Stack Legal Research, covering District Court, D. Montana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jardine, Stephenson, Blewett & Weaver v. United States Fidelity & Guaranty Co., 91 F.R.D. 284, 1981 U.S. Dist. LEXIS 14530 (D. Mont. 1981).

Opinion

MEMORANDUM

HATFIELD, District Judge.

Plaintiff filed an action for payment of attorneys’ fees and exemplary damages against the defendant, United States Fidelity and Guaranty Company (hereinafter “USF&G”). Jurisdiction is based upon diversity of citizenship pursuant to 28 U.S.C. § 1332. Plaintiff is a partnership whose members are citizens and residents of Montana. USF&G is a Maryland corporation with its principal place of business in Maryland.

In its complaint, the plaintiff alleges that USF&G, acting as surety for the Leigland Company, agreed to pay the plaintiff $15,-000.00 in attorneys’ fees incurred by the Leigland Company. Correspondence between the parties indicates that payment was to be made upon completion of certain conditions precedent performed by the plaintiff. One such condition required the plaintiff to produce a statement purporting to show that the Leigland Company was unable to meet its financial obligations. Plaintiff asserts that it performed the services necessary for meeting the conditions for payment and is entitled to receive the sum to which it is entitled.

Plaintiff further alleges that it is entitled to receive exemplary damages as a result of the defendant’s delay in making payment of the attorneys’ fees. Plaintiff contends that the delay constitutes an intentional and bad faith tort separate from any contractual obligation on the part of USF&G to pay the plaintiff.

Presently before the court are four consolidated motions filed by USF&G: (1) motion to dismiss; (2) motion to strike; (3) motions for more definite statement or, in the alternative, for production of documents; and (4) motion to join necessary parties.

DISCUSSION

A. Motion to Dismiss

[I] USF&G contends that the complaint fails to allege satisfaction of a condition precedent to payment, i. e., that a financial statement be produced by the Leigland Company showing its financial condition. Plaintiff counters by arguing that paragraph IX of Count One in the complaint alleges “All conditions precedent required by law have occurred or have been complied with.”

Such a general averment comports with the provisions of Rule 9(c) of the Federal Rules of Civil Procedure. .“In pleading the performance or occurrence of conditions precedent, it is sufficient to aver generally that all conditions precedent have been performed or have occurred.” The court is satisfied that the general averment in the complaint regarding the occurrence or performance of conditions precedent is sufficient under Rule 9(c). See Equal Employment Opportunity Comm’n v. Wah Chang Albany Corp., 499 F.2d 187 (9th Cir. 1974). Therefore, the motion to dismiss is denied.

B. Motion to Strike

USF&G moves to strike the plaintiff’s claim for exemplary damages on the [286]*286grounds that exemplary damages are prohibited in contract actions. USF&G bases its assertion on Montana Code Annotated § 27-1-221 (1979), which states:

When exemplary damages allowed. In any action for a breach of an obligation not arising from contract where the defendant has been guilty of oppression, fraud, or malice, actual or presumed, the jury, in addition to the actual damages, may give damages for the sake of example and by way of punishing the defendant.

Plaintiff asserts that exemplary damages are allowed in contract actions when an independent and bad faith tort arises separate from any contractual obligation between the parties. Specifically, the plaintiff contends that the intentional delay on the part of USF&G in making payment after the conditions precedent were performed is an independent tort arising after the contract was completed.

It is generally recognized that exemplary damages are not awarded in contract actions. See Generally J. Calimari & J. Perillo, Contracts § 14-3 (2d ed. 1977); 84 A.L.R. 1345 (1933). This is also the general rule in Montana. Westfall v. Motors Ins. Corp., 140 Mont. 564, 374 P.2d 96 (1962). See also State ex. rel. Cashen v. District Court, 157 Mont. 40, 482 P.2d 567 (1971); Ryan v. Ald, Inc., 146 Mont. 299, 406 P.2d 373 (1965).

In subsequent cases, an exception was carved out of the general rule. In State ex. rel. Larson v. District Court, 149 Mont. 131, 423 P.2d 598 (1967), the Montana Supreme Court held that exemplary damages could be awarded where the acts constituting the breach of contract also violated state law. Id. at 136, 423 P.2d at 601. On the specific issue presented here, where the tort is alleged to have stemmed from conduct independent of the contract, the Montana Supreme Court has ruled that exemplary damages may be awarded. See Harrington v. Holiday Rambler Corp., 176 Mont. 37, 575 P.2d 578 (1978); Miller v. Fox, 174 Mont. 504, 571 P.2d 804 (1977); Paulson v. Kustom Enterprises, Inc., 157 Mont. 188, 483 P.2d 708 (1971).

The conduct complained of in this case is the delay by USF&G in making payment of the attorneys’ fees to the plaintiff upon completion of the contract. The Montana Supreme Court has ruled that failure to exercise expediency in the performance of a contract is a tort:

Accompanying every contract is a com-monlaw duty to perform the thing agreed to be done with care, skill, reasonable expediency, and faithfulness, and a negligent failure to observe any of these conditions is a tort, as well as a breach of the contract.

Garden City Floral Co., Inc. v. Hunt, 126 Mont. 537, 541, 255 P.2d 352, 355 (1953). Accord, Ferguson v. Town Pump, Inc., 177 Mont. 122, 580 P.2d 915 (1978). Based upon the foregoing authority, the court is of the opinion that the plaintiff has alleged a tort separate from any obligation arising from the contract between the parties. The complaint alleges that the delay in making payment occurred subsequent to the completion of the conditions precedent by the plaintiff. The court finds that such delay constitutes conduct independent of the contract. Further, the allegation of delay as an independent and willful tort is properly founded upon Montana case law. See Garden City Floral Co., Inc. v. Hunt, supra, and Ferguson v. Town Pump, supra. Accordingly, exemplary damages may be considered and the motion to strike is denied.

C.

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Cite This Page — Counsel Stack

Bluebook (online)
91 F.R.D. 284, 1981 U.S. Dist. LEXIS 14530, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jardine-stephenson-blewett-weaver-v-united-states-fidelity-guaranty-mtd-1981.