                             No.   92-105
           IN THE SUPREME COURT OF THE STATE OF MONTANA




TOM and JODIE STEPHENS,
           plaintiffs and Appellants,
     -v-
SAFECO INSURANCE COMPANY OF AMERICA,
a Washington corporation,

           Defendant and Respondent,



APPEAL FROM:    District Court of the Fourth Judicial District,
                In and for the County of Ravalli,
                The Honorable Douglas G. Harkin, Judge presiding.


COUNSEL OF RECORD:
           For Appellant:
                Richard M. Baskett, Datsapoulos, MacDonald 61 Lind,
                Missoula, Montana
           For Respondent:
                Shelton C. Williams, Williams          &   Ranney, Missoula,
                Montana


                             Submitted on ~riefs: February 11, 1993
                                            Decided:       May 4, 1993
Filed:
Justice R. C. McDonough delivered the Opinion of the Court.

     This is an appeal from a Fourth Judicial District Court,
Ravalli County jury verdict in an insurance bad faith action.    We
reverse.
     The issues include:
          1. Did the District Court properly apply the law of
     Montana in holding that when two parties act in bad
     faith, the party at comparatively greater fault is denied
     recovery?
          2. Did the District Court properly interpret the
     Special Verdict by holding that damages were 53%
     attributable to Appellants' bad         faith and     47%
     attributable to Respondent's bad faith?
          3. If the Appellants are entitled to recovery for
     damages, is the amount of their recovery $38,333.33, or
     47% of $38,333.33?
     Appellants Tom and Jodie Stephens (appellants) owned Buster's
Body Shop in Hamilton, Montana.    Respondent Safeco Insurance of
America    (respondent) was the insurer of their automobile body
repair shop, covering the shop with a policy with limits on the
structure of $80,000 and limits on the structure's contents of


     An accidental fire occurred in the body shop around May 6,
1987.   Appellants notified the respondent's agent of the fire and
an investigation by their agents followed.
     Respondent and appellants encounteredproblems in settling the
claim and this litigation resulted.   The complaint in this action
was filed on May 5, 1989.   Trial in this case was held on May 28,
1991 by jury.
     The scope of review for questions of law is whether the trial
court's interpretation of the law is correct.       Steer Inc. v.
Department of Revenue (1990), 245 Mont. 470, 474-475, 803 P.2d 601,
     At the close of trial in this action the jury was given a
special verdict form.      The questions on the special verdict form
were as follows:
     1. Did Safeco violate any duty of good faith and fair
     dealing owed to Plaintiffs? Yes: 8-4
     2. Did the wrongful conduct found in question 1, if any,
     cause any damages to plaintiffs? Yes: 8-4
     3.  Did Safeco violate the Montana Unfair Claims
     Settlement Practices Act with such frequency as to
     indicate a general business practice? No: 12-0
     4. Did the wrongful conduct found in Question 3, if any,
     cause any damages to Plaintiffs?
     5.  What is the total amount of pecuniary damages for
     emotional distress, if any, caused to Plaintiff Tom
     Stephens by the wrongful conduct found in your answers to
     Questions 1 through 4, if any? $ 3 8 . 3 3 3 . 3 3
     6. Did plaintiffs violate any duty of good faith and fair
     dealing owed to Safeco? Yes: 11-1
     7. Did the Plaintiffs fail to exercise ordinary care to
     mitigate their damages in this case? No: 11-1
     8. Did Plaintiffs or their attorneys or agents interfere
     with Safeco's performance of its duties under the policy?
     Yes: 11-1
     9. Did the wrongful conduct of Plaintiffs found in answer
     to any of Questions 6-8 cause some of the Plaintiffs'
     damages? Yes: 9-3
     lo. If, in your answers to Questions 1 through 9, you
     have determined that wrongful conduct on behalf of both
     Plaintiffs and Defendant have contributed to Plaintiffs'
     damages, then, using 100% as the total combined wrongful
     conduct which has caused Plaintiffs' damages, what
     proportion of the wronqful conduct do you determine is
     attributable to each of -the parties, if iny? Plaintiffs:
     53% Defendants: 47%
The answers are as indicated.
     The jury returned with a verdict stating the amount awarded
for damages for emotional distress to Tom Stephens was $ 3 8 , 3 3 3 . 3 3 .
The jury also concluded that both parties violated the duty of good
faith   and   fair    dealing   and   the   appellants   interfered    with
respondent's performance of its duties.          The jury allocated the
percentage of wrongful conduct as 5 3 % for the appellants and 47%
for respondent.      It is noted that in answer to Question 9 the jury
found that appellant's wrongful conduct caused some of appellant's
damages, but the verdict does not indicate such damages were in any
way the same as the damages found in answer to Question 5, which
was caused by wrongful conduct of respondent.
     The trial court subsequently ordered the parties to prepare
briefs on the issue of the type of judgment which should be entered
by the court considering the verdict of the jury.        The trial court
reviewed the briefs and upon further study, ordered that the
appellants were precluded from recovering any award because the
jury had determined that their fault was proportionally greater
than the respondent.
     The appellants contend on appeal that they should receive the
entire jury award of $38,333.33 because their "fault" in this
matter cannot be compared to the "faultu of the respondent and
accordingly offset.      The respondent, however, states "that the
insured's own wrongful conduct was the major cause his (sic) own
damages, and that the insurer's wrongful conduct was a lesser
factor in causing these damages."       Therefore, the insured should
not recover from the respondent for his damages.
     We conclude that the appellants should receive the $ 3 8 , 3 3 3 . 3 3
awarded by the jury.    "[I]nsurance companies have a duty to act in
good faith with their insureds, and this duty exists independent of
the insurance contract and independent of statute."           Lipinski v.
Title Ins. Co. (1983), 202 Mont. 1, 15, 655 P.2d 970, 977. If this
duty is breached the cause of action of the insured against the
insurer sounds in tort.       First Sec. Bank of Bozeman v. Goddard
(1979), 181 Mont. 407, 419, 593 P.2d 1040, 1047.
     However, if the situation is reversed, and the insured
breaches the covenant of good faith and fair dealing, the result is
not a tort, but a breach of contract.          In Story v. City of Bozeman
(1990), 242 Mont. 436, 791 P.2d 767, this Court made clear "that
the bad faith tort should be used only when the parties have a
special relationship."       Story, 791 P.2d at 775. Story adopted five
elements to be applied in determining whether the parties have a
special relationship:
      (1) the contract must be such that the parties are in
      inherently unequal bargaining positions; [and] (2) the
      motivation for entering the contract must be a non-profit
      motivation, i.e., to secure peace of mind, security,
      future protection; [and] (3) ordinary contract damages
      are not adequate because (a) they do not require the
      party in the superior position to account for its
      actions, and (b) they do not make the inferior party
      llwhole";[and] (4) one party is especially vulnerable
      because of the type of harm it may suffer and of
      necessity places trust in the other party to perform: and
      (5) the other party is aware of this vulnerability.
Story, 791 P.2d at 776.
      When these five elements are applied to this case, the special
relationship is established. First, in the insurance context, the
insurer occupies the superior bargaining position and the insured
in the inferior.         This is because "in the insurance field the
insured usually has no voice in the preparation of the insurance
policy   . .   .   "   Goddard, 593 P.2d at 1047.        There is a "great
disparity between the economic positions of the parties to a
contract of insurance.       . . ."    Goddard, 593 P.2d at 1047.
      Second, the insured has a non-profit motive for entering into
the insurance contract. "The insured seeks to purchase protection
and security.          This expectation is perhaps justified, if not
entirely motivated, by insurers' advertisements promising security
and   freedom from worry."            Graham   and   Luck, "The Continuing
Development of the Tort of Bad Faith in Montana," 45 Mont. L. Rev.
     Third, ordinary contract damages would not make appellants
whole. Appellant Tom Stephens suffered from severe mental distress
due to the problems with the insurance claim. He incurred certain
medical expenses in connection with that distress.
     Fourth, "at the time an insured party makes a claim he may be
in dire    financial straits and     therefore may    be   especially
vulnerable to oppressive tactics by an insurer seeking a settlement
of a release.'I    Goddard, 593 P.2d at 1047.   Finally, the fifth
element applies because the insurer is the author of the insurance
contract and is aware of the insured's vulnerability. "The special
considerations existent in a consumer-held insurance contract do
not apply to an ordinary contract between businessmen."     Goddard,
593 P.2d at 1047.
     The insurer is certainly not in apprehension of the same
concerns in its relationship with the insured.      "The tort of bad
faith   . . .   serves to discourage oppression in contracts which
necessarily give one party a superior position."     Storv, 791 P.2d
at 776. The insurer, in the superior position, is therefore liable
in tort whereas there is no fear that the insured will harm the
insurer to such an extent.
     The respondent argues that under Martel v. Montana Power Co.
(1988), 231Mont. 96, 752 P.2d 140, respondent's bad faith and the
appellants' bad faith can be compared and the appellants' bad faith
can be used to offset the respondent's bad faith in determining
damages to appellant Tom Stephens.   We disagree.
     As stated earlier, the two parties occupy two very different
positions in relation to each other.     Because of their varying
positions, the respondent's conduct rises to the level of a tort
while the appellants' conduct is a breach of contract.
       Under Martel, conduct rising to the level of a tort is
compared to other conduct rising to a tort.         Martel, 752 P.2d at
143.   However, the appellants conduct here does not involve a tort
so it cannot be compared to the respondent's tortious conduct.
Therefore, the respondent's tort cannot be offset comparatively by
the appellants' contract breach.       These are two distinctive legal
concepts as to liability and damages. They are apples and oranges.
The jury verdict to award the appellants $ 3 8 , 3 3 3 . 3 3 is reinstated.


       The District Court was incorrect when it entered judgment
concluding the appellants were precluded from recovering any
portion of the jury's award.      REVERSED.



We Concur:
                                          May 4, 1993

                                  CERTIFICATE OF SERVICE

I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:


Richard M. Baskett
DATSOPOUMS, MacDONALD & LIND, P.C.
201 West Main, Central Square Bldg.
Missoula, MT 59802

Shelton C. Williams, Esq.
WILLIAM & RANNEY, P.C.
P.O. Box 9440
Missoula, MT 59807-9440

                                                     ED SMITH
                                                     CLERK OF THE SUPREME COURT
                                                     STATFWF MONTANA
