                                                                                          March 17 2015


                                          DA 14-0152
                                                                                         Case Number: DA 14-0152

                IN THE SUPREME COURT OF THE STATE OF MONTANA

                                          2015 MT 82


VICTORY INSURANCE COMPANY, INC.,

            Plaintiff and Appellant,

     v.

MONTANA STATE FUND, LIBERTY
NORTHWEST INSURANCE
CORPORATION, PAYNE FINANCIAL
GROUP, INC., WESTERN STATES
INSURANCE AGENCY, INC., A Western
States Company, and JOHN DOES 1-100,1

            Defendants and Appellees.


APPEAL FROM:          District Court of the First Judicial District,
                      In and For the County of Lewis and Clark, Cause No. BDV 2011-284
                      Honorable Jeffrey M. Sherlock, Presiding Judge

COUNSEL OF RECORD:

               For Appellant:

                      Linda M. Deola, Scott Peterson, Morrison, Sherwood, Wilson & Deola,
                      PLLP, Helena, Montana

               For Appellees:

                      W. Anderson Forsythe, George T. Kimmet, Moulton Bellingham, PC,
                      Billings, Montana
                      (Attorneys for Montana State Fund)

                      John E. Bohyer, Esq., Erin M. Erickson, Esq., Bohyer, Erickson,
                      Beaudette & Tranel, PC, Missoula, Montana
                      (Attorneys for Liberty Northwest Insurance Corp.)

                      Randy J. Cox, Thomas J. Leonard, Boone Karlberg, P.C., Missoula,
                      Montana
                      (Attorneys for Payne Financial Group, Inc.)




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          No John Does are active in this appeal.
               Michael F. McMahon, Stefan T. Wall, Denny K. Palmer, McMahon, Wall
               & Hubley, PLLC, Helena, Montana
               (Attorneys for Western States Insurance Agency, Inc.)

         For Amicus Curiae:

               Lawrence A. Anderson, Attorney at Law, P.C., Helena, Montana
               (Attorney for Montana Trial Lawyers Association)




                                          Submitted on Briefs: January 28, 2015
                                                     Decided: March 17, 2015


Filed:

               __________________________________________
                                 Clerk




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Justice Patricia Cotter delivered the Opinion of the Court.

¶1     Victory Insurance Company appeals from orders of the First Judicial District

Court, Lewis and Clark County, dismissing its common law cause of action against

Defendants brought under the Unfair Trade Practices Act (UTPA), and entering summary

judgment for Defendants on its cause of action for intentional interference with

prospective economic advantage. We affirm.

                                           ISSUES

¶2     Victory presents two issues on appeal: (1) whether the District Court erred in

dismissing Victory’s UTPA cause of action; and (2) whether the District Court erred in

granting summary judgment in favor of Defendants.

¶3     As addressed below, we conclude it is not necessary for us to determine whether

the District Court erred in rejecting Victory’s request for relief “under a common law

UTPA action,” as we conclude that Victory’s inability to establish damages is fatal to its

claims for intentional interference with prospective economic advantage and would be

fatal as well to any UTPA-related claim.

                 FACTUAL AND PROCEDURAL BACKGROUND

¶4     The plaintiff and defendants in this case are competitors in the workers

compensation industry. Plaintiff Victory Insurance is a Montana corporation located in

Miles City, Montana, and began its operation in 2007. It sells workers’ compensation

insurance directly to business employers without the use of insurance agencies for sales

or claims adjustments. Defendant Montana State Fund (State Fund) is an organization

that sells workers’ compensation insurance through in-house and out-of-house agents.


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Defendants Liberty Northwest (Liberty), Payne Financial Group (Payne), and Western

States Insurance (WSI) also sell workers’ compensation insurance, including State Fund

policies.

¶5     Victory’s growth rate failed to meet ownership’s expectations and Victory

concluded that its business was being harmed by a “barrage of falsehoods” being told by

representatives of the Defendants to prospective customers about Victory. In March

2011, Victory filed an Amended Complaint against the Defendants (and other

subsequently-dismissed parties who are not a part of this appeal), alleging that they had

made derogatory comments to prospective customers about Victory and its leadership

and financial condition, in an effort to dissuade those customers from purchasing

insurance from Victory. The insurer asserted that such tactics (1) violated multiple

provisions of the UTPA; and (2) intentionally interfered with prospective economic

advantage and with a business contract. Victory sought punitive damages as well as

actual, economic, special and compensatory damages and pre- and post-judgment

interest. Victory subsequently moved to dismiss without prejudice its claim pertaining to

interference with a business contract. The District Court granted the motion and that

ruling is not appealed.

¶6     Each Defendant promptly moved for dismissal of Victory’s claim under the

UTPA, and on September 22, 2011, the District Court granted the Defendants’ motions

holding that the UTPA does not create a private right of action by one insurance company

against another.     This ruling left pending Victory’s claim for interference with

prospective economic advantage.


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¶7    During lengthy discovery with respect to the remaining claim, the Defendants

asked Victory to identify those prospective clients to which Defendants’ representatives

were alleged to have maligned Victory or interfered in some fashion. Victory identified a

total of 51 companies. Victory claimed that State Fund had denigrated Victory to five

companies, Liberty had done so with nine companies, and Payne and WSI had done so

with 13 and 24 companies respectively.

¶8    Subsequently, between May 2013 and October 2013, all Defendants filed motions

for summary judgment asserting that Victory had failed to establish damages as a result

of the Defendants’ alleged actions—an element required in order to prevail in an

intentional interference case.    Each Defendant, in support of its summary judgment

motion, presented detailed evidence pertaining to its business relationship with each

company Victory had identified during discovery. The evidence supported Defendants’

argument that Victory had failed to establish damages. Referencing this evidence, the

District Court issued a lengthy and thorough order granting the Defendants’ motions for

summary judgment.

¶9    Victory appeals the dismissal of its UTPA claim and the District Court’s grant of

summary judgment with respect to interference with prospective economic advantage.

                                 STANDARD OF REVIEW

¶10   We review a district court’s summary judgment ruling de novo, applying the same

rule, M. R. Civ. P. 56(c)(3), that a district court does when making a summary judgment

ruling. Summary judgment “should be rendered if the pleadings, the discovery and

disclosure materials on file, and any affidavits show that there is no genuine issue as to


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any material fact and that the movant is entitled to judgment as a matter of law.”

M. R. Civ. P. 56(c)(3); Bennett v. Hill, 2015 MT 30, ¶ 9, 378 Mont. 141, 342 P.3d 691

(citations omitted).

¶11    We review a district court’s ruling on a motion to dismiss under the standards set

forth in M. R. Civ. P. 12(b)(6). A complaint should not be dismissed for failure to state a

claim unless it appears beyond doubt that the plaintiff can prove no set of facts which

would entitle him to relief. A district court’s determination that a complaint has failed to

state a claim for which relief can be granted is a conclusion of law which we review for

correctness. Scheafer v. Safeco Ins. Co., 2014 MT 73, ¶ 14, 374 Mont. 278, 320 P.3d 967

(citation omitted).

                                      DISCUSSION

¶12    Did the District Court err in dismissing Victory’s UTPA claims and in granting
       Defendants’ motions for summary judgment?

¶13    Victory argues that the District Court erred in concluding that Defendants did not

intentionally interfere with Victory’s prospective economic advantage. It relies upon

Maloney v. Home & Inv. Ctr., Inc., 2000 MT 34, ¶ 41, 298 Mont. 213, 994 P.2d 1124, in

which we set forth the four elements of intentional interference with prospective

economic advantage. Such acts: (1) are intentional and willful; (2) are calculated to

cause damage to the plaintiff’s business; (3) are done with the unlawful purpose of

causing damage or loss, without right or justifiable cause on the part of the actor; and (4)

result in actual damages or loss. See also Restatement (Second) of Torts § 767.




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¶14    The intentional interference elements are framed in the conjunctive; therefore, all

four elements must be met before Victory can prevail. Victory claims that all four

elements were satisfied but the court’s errors led it to conclude elements three and four

were not met. As element four, damages, is dispositive in this case, we focus our analysis

on the requirement that Victory prove that it suffered “actual damages or loss” as a result

of Defendants’ alleged misconduct.

¶15    Victory’s claim of damages has been somewhat of a moving target during the

District Court proceedings.     At times, Victory appeared to claim that it suffered

out-of-pocket damages as a result of lost revenues from the loss of one or more particular

contracts. At other times, Victory acknowledged that it had no out-of-pocket damages

when the prospective customer actually chose to contract with Victory despite any

alleged attempts by Defendants to dissuade them. Still at other times, Victory alleged it

suffered “general damages,” in the form of damages to its reputation. Victory frequently

linked its claim for reputational damages with the statutory standards, trade practices, and

industry rules underlying the UTPA.

¶16    All Defendants approached the process of proving that Victory had failed to

establish actual damages using a similar method.         Each Defendant referenced the

prospective customers with whom Victory claimed it had interfered, and presented

specific details of the Defendant’s transactions with those companies. For example,

Payne, referencing each of the 13 prospective clients with which it had allegedly

interfered, presented detailed evidence to the District Court concerning comments made

or discussions had between Payne representatives and the company representatives.


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Payne also submitted affidavits of representatives from those companies who swore that

Payne employees did not engage in the alleged misconduct.

¶17    By way of example, one such company, Econo Print, Inc., through its president

and its bookkeeper/accountant, testified that no one at Payne “relayed derogatory

information or comments” to Econo Print regarding Victory.           The affiants further

testified that the company chose not to use Victory after conducting its own independent

research and concluding the company was too new and unknown, and appeared to have

lesser financial reserves than Econo Print desired.

¶18    The company representatives of another identified company, Malta Ready Mix,

testified that Malta decided not to switch to Victory because it learned through its Payne

agent that Malta’s umbrella insurer would not issue coverage over a Victory policy.

After confirming this with both the umbrella carrier and Victory, Malta declined to obtain

coverage through Victory at that time. As another example, an Energy Laboratories, Inc.,

representative stated in her deposition that the company’s reason for not choosing Victory

to provide its coverage was that Victory did not have the insurance rating that Energy

required.

¶19    Payne presented similar evidence for each of the remaining 10 companies,

establishing that Victory had suffered no identifiable economic damages as a result of

Payne’s relationship, comments, or discussions with these 13 companies.

¶20    This pattern of evidence presentation was repeated by the remaining Defendants.

State Fund, referencing the five Victory-identified customers with which it was accused

of interfering, asserts Victory incurred no damages because Victory actually won the


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business of four of these customers away from State Fund. By taking clients from State

Fund, Victory benefitted rather than suffered damages. As for the last company, State

Fund presented an affidavit from the owner of the company that he had not heard any

derogatory comments or other statements from any insurance company that dissuaded

him from buying insurance from Victory.

¶21    Similarly, Liberty and WSI both detailed their transactions with the companies

Victory identified, and refuted the allegations of damage by Victory with strong

testimonial evidence. The District Court recited in its detailed Order on Motions for

Summary Judgment the rationale for each company’s decision to enter or not to enter into

a business relationship with Victory. Based upon the record and the evidence presented,

the District Court concluded that Victory failed to advance any evidence of actual

financial loss resulting from a lost contract or business opportunity resulting from

Defendants’ conduct. Having reviewed the record, we conclude that it fully supports the

District Court’s decision.

¶22    Victory argues on appeal that issues of fact preclude summary judgment on its

claim for reputational damage, and further argues that this Court can infer actual damage

by virtue of some derogatory comments having been made. We do not infer or presume

actual damage to a reputation based exclusively on a plaintiff’s argument that a defendant

made disparaging comments to a prospective client.        While exact damages are not

required, damages nonetheless must be established by substantial evidence and not be the

product of guess and speculation. Lenz Constr. Co. v. Cameron, 207 Mont. 506, 511, 674

P.2d 1101, 1103 (1984). We noted in Cremer v. Cremer Rodeo Land, 192 Mont. 208,


                                        9
627 P.2d 1199 (1981), that Cremer had established the existence of substantial damages

in her land claim against Cremer Rodeo and had quantified the damages in a reasonable

manner. We explained that “[r]ecovery of damages will not be denied, even if the

mathematical precision of the figure is challenged, provided the evidence is sufficient to

afford a reasonable basis for determining the specific amount awarded.” Cremer, 192

Mont. at 214, 627 P.2d at 1202. Here, Victory has given us no basis upon which to

attempt to quantify a damage award.

¶23   This Court has not addressed previously the quantum of evidence required for a

business to recover reputational damages under a claim for interference with prospective

economic advantage. Therefore, we take guidance from the recent case of Mut. Of

Enumclaw Ins. Co. v. Gregg Roofing, Inc., 315 P.3d 1143 (Wa. App. 2013), which

addresses this precise question. In Enumclaw, a roofing contractor was fired, mid-job, by

its church client, at the recommendation of the church’s insurance company. Gregg

Roofing had removed the church roof and installed a temporary roof when an unexpected

storm occurred and caused major damage to the interior of the church. The church filed a

claim with Enumclaw. Enumclaw suggested hiring another roofer which the church did,

and then Enumclaw, on behalf of its insured church, sued Gregg Roofing for breach of

contract. Gregg counterclaimed that Enumclaw tortiously interfered with its business

relationship with the church and sought reputational damages. Enumclaw, 315 P.3d at

1146-47.

¶24   The Washington court carefully reviewed the evidence Gregg presented but

concluded that Gregg’s “burden was to present some evidence of the amount of damages


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caused by the injury to its reputation.” Enumclaw, 315 P.3d at 1154. The court observed

that “in order for a business to recover damages for injury to its reputation, it must

produce some evidence of quantifiable, economic harm. . . . With regard to reputation,

individuals and businesses suffer different types of injury . . . injuring an individual’s

professional reputation may involve a ‘personal’ type of harm, such as hurt feelings,

humiliation, embarrassment, and loss of self esteem.” Enumclaw, 315 P.3d at 1153.

Such personal injury does not occur with businesses; consequently, “the only damages a

business can recover for injury to its reputation is economic. If a business has not

suffered any financial loss from diminished reputation, it has not been damaged. And by

definition economic harm to a business is quantifiable and measurable.” Enumclaw, 315

P.3d at 1153. The court identified such potentially quantifiable losses as decreased

income, diminished value of the business according to the business’s trade industry, or a

known reduction of the business’s goodwill. “But merely providing testimony that the

business’s reputation has been injured without evidence quantifying the amount of

damages is insufficient for recovery. A business cannot recover unquantified ‘general’

damages for injury to reputation.” Enumclaw, 315 P.3d at 1154.

¶25   Victory claimed throughout discovery that it had suffered reputational damages

but despite extensive discovery, it never identified or quantified any “actual damages or

loss.” The absence of such damages is fatal to Victory’s intentional interference claim.

Likewise, we conclude that even had the District Court permitted Victory to pursue a

“common law UTPA claim” under § 33-18-302, MCA, (precluding the dissemination or

publication of statements which are maliciously critical of or derogatory to the financial


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condition of an insurer), the establishment of quantifiable damages would still have been

required. In this connection, we reject Victory’s argument that in cases of defamation per

se, proof of actual damages is not required because defamation causes obvious damage

on its face. For this proposition, it cites Manley v. Harer, 73 Mont. 253, 259, 235 P. 757,

759 (1925), Fauver v. Wilkoske, 123 Mont. 228, 233, 211 P.2d 420, 423 (1949), and

McCusker v. Roberts, 152 Mont. 513, 523-24, 452 P.2d 408, 414 (1969). However, these

cases are not of assistance to Victory for two reasons.        First, these cases address

defamatory remarks made with respect to an individual as opposed to a business. As

noted above, a business cannot recover unquantified general damages for injury to its

reputation. Enumclaw, 315 P.3d at 1154. Second, Victory has not in any event set forth

a claim for defamation. In sum, proof of quantifiable damages would be a prerequisite

even if Victory had been permitted to pursue recovery under the UTPA.

¶26    Victory asserts that this case should not have been decided on summary judgment

because a factual dispute over the existence of damages remained. Victory claims that an

expert disclosure it filed with the District Court shortly before the October 17, 2013

summary judgment hearing established a material and factual dispute as to damages,

thereby precluding a ruling on summary judgment. In the disclosure, Victory asserted

that the Defendants’ misconduct damaged Victory’s business reputation. The disclosure

set forth topics its expert intended to address at trial such as insurance ratings and re-

insurance agreements. However, despite the fact that the absence of damages was the

basis for the summary judgment motions, the expert did not set forth any evidence of

damages so as to defeat summary judgment, as M. R. Civ. P. 56(e)(2) required it to do.


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Moreover, as Payne notes, Victory’s last-minute “expert disclosure” was not in affidavit

form and was not submitted as part of the summary judgment record.

¶27    It is well-established that “[i]n order to defeat a motion for summary judgment

properly made and supported, the opposing party must set out specific facts showing a

genuine issue for trial by affidavits or as otherwise provided by Rule 56. M. R. Civ. P.

56(e)(2).” Malpeli v. State, 2012 MT 181, ¶ 12, 366 Mont. 69, 285 P. 3d 509. While a

court considering summary judgment must view the evidence in a light most favorable to

the non-moving party and all reasonable inferences are to be drawn in favor of the party

opposing summary judgment, “if a defendant establishes the absence of a genuine issue

of material fact as to one of the elements constituting the cause of action, and the plaintiff

fails to come forward with proof showing the existence of a genuine issue as to that

element, summary judgment in the defendant’s favor is proper.” State Med. Oxygen v.

Am. Med. Oxygen, 267 Mont. 340, 344, 883 P.2d 1241, 1243 (1994). The parties had

been undergoing extensive discovery for two years by the time the October 17, 2013

summary judgment hearing commenced. Facing summary judgment, it was incumbent

on Victory to present admissible evidence of identifiable and quantifiable damages.

Victory’s expert disclosure lacked the specificity needed to establish a genuine issue for

trial as to damages and its promise of future trial testimony on damages was wholly

inadequate to defeat summary judgment.

¶28    The District Court appropriately decided this case on summary judgment and did

not err when it granted each Defendant’s motion on the ground that Victory did not

establish the existence of quantifiable damages so as to avoid summary judgment. We


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further conclude that in light of Victory’s inability to establish damages, there is no need

for this Court to determine whether a common-law UTPA claim should have been

permitted.

¶29    Affirmed.

                                                 /S/ PATRICIA COTTER

We Concur:

/S/ MICHAEL E WHEAT
/S/ LAURIE McKINNON
/S/ JAMES JEREMIAH SHEA
/S/ JIM RICE




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