                                           No. 02-480

                IN THE SUPREME COURT OF THE STATE OF MONTANA

                                           2003 MT 188


SCOTTSDALE INSURANCE COMPANY,

               Plaintiff and Respondent,

         v.

GEORGE HALL d/b/a ROCON HOUSE MOVING,

               Defendant and Cross-Appellant,

         and

LAURA KELLY and JOHN KELLY,

               Defendants, Cross-Claim Plaintiffs, and Appellants.



APPEAL FROM:          District Court of the Thirteenth Judicial District,
                      In and for the County of Yellowstone, Cause No. DV 00-0381,
                      The Honorable Diane G. Barz, Judge presiding.


COUNSEL OF RECORD:

               For Appellants:

                      Steven A. Kelly, Attorney at Law, Billings, Montana

               For Respondent:

                      Timothy J. Whalen, Whalen & Whalen, Billings, Montana


                                                          Submitted on Briefs: March 20, 2003

                                                                     Decided: July 17, 2003
Filed:


                      __________________________________________
                                        Clerk
Justice Jim Regnier delivered the Opinion of the Court.

¶1     In February 2000, the Appellants, Laura and John Kelly, entered into a contract with

the Cross-Appellant, George Hall doing business as Rocon House Moving, to move four

fourplex residential units in Billings, Montana. During and after the move, the units

sustained damage. The Kellys filed negligence and breach of contract claims against Hall.

Hall counterclaimed against the Kellys for breach of contract. Following a non-jury trial,

the Thirteenth Judicial District Court, Yellowstone County, concluded that the Kellys failed

to establish that Hall negligently moved the units. Further, the court determined that both

parties breached the House Moving Agreement and, as such, neither party could recover

against the other. Both parties appeal. We affirm in part and reverse in part.

¶2     The parties present the following issues on appeal:

¶3     1. Did the District Court err when it concluded that the Kellys failed to establish their

negligence claim against Hall?

¶4     2. Did the District Court err when it concluded that each party breached the House

Moving Agreement and, therefore, neither party could recover under their respective breach

of contract claims?

                                      BACKGROUND

¶5     In January 2000, Laura and John Kelly purchased four fourplex residential units

(designated 706A, 706B, 718A, and 718B) for investment purposes. The units stood on a

site where Walmart intended to build a new store. Thus, the Kellys purchased the units with

the knowledge that they would have to be relocated. Toward this end, in February 2000, the


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Kellys contracted with O’Neil House Moving of Williston, North Dakota, to move the units.

The Kellys experienced difficulty securing a temporary storage location which resulted in

termination of the arrangement with O’Neil.

¶6     Thereafter, George Hall of Rocon House Moving approached the Kellys about moving

the units. The Kellys agreed to pay Rocon $9500 to move each unit. In turn, Hall agreed

to obtain $75,000 cargo insurance on each unit in the event the units sustained damage in the

move. The agreement required Rocon to move the units twice, first to a temporary storage

site and then to permanent foundations.

¶7     On March 10, 2000, Rocon proceeded to move the structures. During the move, the

trailer transporting 706B dropped into a water or sewer line trench causing considerable

damage to the unit. A wrecker had to pull the trailer and 706B out of the predicament.

Further, the Kellys assert that the units hit trees, telephone poles, streetlights, delineator

posts, and mailboxes during the move, damaging the siding, gutters, soffits, and shingles on

706A and 706B. Ultimately, Rocon transported the four units to a temporary site north of

Billings.

¶8     After the move to the temporary site, the Kellys sought remuneration for the damaged

structures. At that point, the Kellys discovered that Hall procured cargo insurance for only

two of the units, 706A and 706B. The Kellys submitted claims to the insurance carrier,

Scottsdale Insurance Company, with respect to 706A and 706B. Scottsdale denied the claims

and on April 19, 2000, filed a Complaint for Declaratory Judgment against Hall and the

Kellys. Therein, Scottsdale sought to void the insurance coverage or reduce its exposure


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because Hall allegedly misrepresented the value of the units and failed to disclose, or

concealed, other pertinent information.

¶9     On May 24, 2000, the Kellys filed an Answer to the Complaint and, simultaneously,

filed a cross-claim against Hall. The cross-claim sought breach of contract damages for

Hall’s failure to procure cargo insurance. Further, the Kellys alleged that Hall negligently

damaged the structures in preparation for and during the move. On May 31, 2000, Hall filed

a counterclaim against the Kellys. Hall sought breach of contract damages for the Kellys’

failure to secure permanent foundations for the units.          Hall alleged that this delay

unnecessarily encumbered his equipment. Hall sought payment of the outstanding contract

price and damages at the rate of $100 a day for each day that his equipment remained with

the units.

¶10    On April 1, 2002, the case proceeded to a non-jury trial. As of the time of trial, some

two years after the move, the Kellys had yet to secure permanent foundations for the units.

Rocon left its moving equipment with the units for a considerable period of time but removed

it just prior to trial. At trial, the Kellys asserted that Rocon further damaged the units when

it removed its equipment from the temporary location prior to trial.

¶11    On May 20, 2002, the District Court entered its Findings of Fact, Conclusions of Law,

and Order. The court found that Hall did not misrepresent or conceal information in

procuring the cargo insurance. The court found that unit 706A sustained damage in the move

totaling $34,209. The court found that 706B, valued at $75,000, sustained irreparable

damage in the move. Accordingly, the court entered judgment in favor of the Kellys and


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against Scottsdale in the amount of $109,209.

¶12    The court concluded that the Kellys failed to establish that Hall negligently moved

the units. Further, the court found that both Hall and the Kellys breached the House Moving

Agreement–Hall failed to obtain cargo insurance on all of the units and the Kellys failed to

secure permanent foundations for the units. Therefore, the court determined “that based

upon the breaches of Hall and the Kellys, the parties are not able to collect damages from

each other.” On June 17, 2002, the Kellys filed a notice of appeal from the portion of the

District Court’s judgment which denied recovery against Hall. On June 27, 2002, Hall filed

a notice of appeal from the portion of the District Court’s judgment which precluded his

recovery against the Kellys. Scottsdale is not a party to this appeal.

                                STANDARD OF REVIEW

¶13    We review a district court’s findings of fact to determine whether they are clearly

erroneous. Daines v. Knight (1995), 269 Mont. 320, 324, 888 P.2d 904, 906. In determining

whether a court’s findings of fact are clearly erroneous, we apply a three-part test. First, we

review the record to determine if the findings are supported by substantial evidence. Rettig

v. Kallevig (1997), 282 Mont. 189, 193, 936 P.2d 807, 809. Second, if the findings are

supported by substantial evidence, we determine whether the court misapprehended the

effect of the evidence. Rettig, 282 Mont. at 193, 936 P.2d at 809. Third, if substantial

evidence exists and the trial court has not misapprehended the effect of the evidence, we may

still adjudge a finding clearly erroneous when, although there is evidence to support it, the

record leaves this Court with a definite and firm conviction that a mistake has been


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committed. Rettig, 282 Mont. at 193, 936 P.2d at 809. We review conclusions of law to

determine whether the district court’s interpretation of the law is correct. Rettig, 282 Mont.

at 193, 936 P.2d at 809.

                                         DISCUSSION

                                         ISSUE ONE

¶14      Did the District Court err when it concluded that the Kellys failed to establish their

negligence claim against Hall?

¶15      The Kellys argue that the District Court’s findings of fact with regard to the

negligence claim are not supported by substantial evidence. Conversely, the Kellys assert

that substantial evidence supports their contention that the units were damaged due to Hall’s

negligence.

¶16      The court entered few findings with respect to the negligence claim. The court simply

found:

                 33. This Court finds that the Kellys and Scottsdale failed to establish
         that Rocon was negligent when the buildings were moved. Testimony was
         given about the procedure used by Rocon. It is uncontested that Rocon used
         a different procedure than O’Neil and that Rocon removed bracing that was
         installed by Rocon and Kelly. However, Kellys have not established that
         Rocon’s procedure was the cause of the damages to the fourplexes.

                34. Mark Coppe, inspection officer for O’Neil, stated in his deposition
         that the problem was that the c-channel steel was not strong enough for the
         two story fourplexes which lacked a floor. However, Mr. Coppe also stated
         that many house movers would use the very same procedure that Rocon used
         and that he was not present when the fourplexes were moved.

¶17      As the foregoing findings demonstrate, the court cites solely the testimony of Mark



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Coppe in support of its negligence determination. However, Mark Coppe’s testimony does

not stand for the proposition cited by the District Court.

¶18    Mark Coppe conceded that he was not present when Hall moved the fourplexes.

However, Mark Coppe examined the units after the move and developed an opinion as to the

cause of the damage based on his twenty-five years of experience in the field. He opined

that Hall’s moving technique subjected the units to the damage:

              The problem was using channel iron steel instead of steel beams.

              ....

       [W]hen you have a two-story building like that, you have to consider the
       weight of the second story . . . . [I]f that had been like a garage type of
       structure with the peg walls, you could get by with that type of system of just
       using channel iron, but when you have a building of that size, you have to use
       steel beams going both directions to support the weight of all of the walls
       which are supporting the weight of the upper level.

              ....

       I don’t think channel beams could get the job done, period.

¶19    Throughout his testimony, Mark Coppe never wavered from this position. He did

indicate that Hall’s technique would have been sufficient to move smaller structures but he

never stated that “many house movers would use the very same procedure that Rocon used”

under similar circumstances. Perhaps the District Court confused Mark Coppe’s testimony

with that of John Richards, discussed in greater detail below.

¶20    The Kellys presented additional evidence to support Mark Coppe’s opinion. Brunno

Coppe, a housemover from O’Neil with approximately twenty-nine years of experience,



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testified that he would use Hall’s moving method on smaller buildings. Brunno Coppe

testified that he “didn’t think . . . it was a good idea to use it on this building being as big as

it was and heavy as it was.” Brunno Coppe stated that the units were more likely to suffer

damage as a result of Hall’s moving technique as compared to that recommended by Mark

Coppe.

¶21      Jim Schilke, a structural engineer, testified that the units were “doomed to be

damaged” due to Hall’s moving technique. Schilke stated that “the channel iron or the cross

members were undersized significantly, sometimes [by] . . . a factor of 2.0 times. In other

words, they were overstressed by a factor of about two times what they should be able to

take.”

¶22      John Richards, a foreman with O’Neil who has moved approximately 2000 houses,

testified that he has used Hall’s technique on “small buildings like garages and some smaller

single stories on occasion.” However, he had “never once” considered Hall’s technique for

the Kellys’ units because they were “too big a structure for that kind of [technique] . . . . [I]t

would be a risk in traveling . . . .” Richards speculated that other movers would undertake

the risky procedure employed by Hall. However, in light of the testimony presented, such

a procedure appears inappropriate to accomplish the task at hand. Mere speculation that

other movers might undertake similarly risky action should not militate against the standard

of care evidence presented by the Kellys.

¶23      Aside from Richards’ speculative statement, the District Court’s Findings of Fact,

Conclusions of Law, and Order references no evidence to rebut the Kellys’ negligence claim.


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Additionally, the court did not address damage which Hall concedes occurred in transit

(hitting a post and the like) and upon cribbing the units for removal of Hall’s equipment.

Thus, we cannot conclude that the District Court’s negligence findings are supported by

substantial evidence. Accordingly, we hold that the District Court erred when it found that

the Kellys failed to establish Hall’s negligence.

                                        ISSUE TWO

¶24    Did the District Court err when it concluded that each party breached the House

Moving Agreement and, therefore, neither party could recover under their respective breach

of contract claims?

¶25    The District Court found that “the parties agreed that George Hall would obtain cargo

insurance on all four of the fourplexes.” The court also implicitly found that, pursuant to the

House Moving Agreement, the Kellys were required to provide permanent foundations for

the units shortly after the initial move. The court determined that Hall secured insurance for

only two of the units, in violation of the agreement. Further, it found that “[a]s of the time

of trial, the Kellys had yet to obtain a site and build a foundation to place the fourplexes.”

Based on these findings, the court concluded that “both Rocon and the Kellys breached the

House Moving Agreement” and, therefore, “the parties are not able to collect damages from

each other.”

¶26    Hall argues that the House Moving Agreement required the Kellys to furnish the

requisite cargo insurance. Therefore, according to Hall, he did not breach the agreement and

is entitled to recover from the Kellys based on their failure to provide permanent


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foundations.

¶27    The Agreed Facts in the Pretrial Order and Hall’s testimony belie Hall’s position on

appeal. The original House Moving Agreement does contain a boilerplate provision which

obligates the property owner to procure the necessary cargo insurance. However, the Agreed

Facts in the Pretrial Order state that “Hall agreed to purchase the [cargo] insurance.”

Further, Hall testified that he told the Kellys he would procure the cargo insurance on all

four units. He stated that he failed to comply with the obligation because “I run out of

money and–plainly run out of money. I didn’t have the money to do it.”

¶28    There is sufficient evidence in the record to support the District Court’s finding that

Hall agreed to procure cargo insurance on all four units. By his own admission, Hall failed

to perform this obligation. Therefore, the District Court did not err when it concluded that

Hall breached the House Moving Agreement and, as such, could not recover under the

agreement.

¶29    As for the Kellys, they concede that the House Moving Agreement required them to

provide permanent foundations for the units within sixty days of the initial move. However,

they argue that the procurement of cargo insurance was a condition precedent to their

performance under the contract. The Kellys argue that they “did not have to provide Hall

with a final foundation until he purchased cargo insurance.” Since Hall never acquired the

insurance, the Kellys contend the court erred when it found that they breached the

agreement.

¶30    Section 28-1-403, MCA, defines a condition precedent as “one which is to be


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performed before some right dependent thereon accrues or some act dependent thereon is

performed.” For years, this Court has recognized that conditions precedent are not favored

in the law, must be strictly construed, and must be plainly expressed. See Atlantic Pacific

Oil Co. v. Gas Development Co. (1937), 105 Mont. 1, 17-19, 69 P.2d 750, 755-56; First Nat.

Bank of White Sulphur Springs v. Stoyanoff (1960), 137 Mont. 20, 29, 349 P.2d 1016, 1021

(Angstman, J., dissenting). Further, “[i]t is a principle of contract law that a mere stipulation

or covenant in a contract will not be construed as a condition precedent, particularly where

a forfeiture would result and where it appears a condition precedent, if desired, could have

been provided for by express agreement.” Palmquist v. Allardyce Petroleum Corp. (1974),

164 Mont. 178, 180, 520 P.2d 783, 784.

¶31    The House Moving Agreement contains no language indicating the agreement was

contingent upon Hall’s procurement of cargo insurance. Further, the Kellys cite no legal

authority or compelling evidence in support of their contention that Hall’s failure to secure

cargo insurance excused their performance. The Kellys simply offer the bare assertion that

“[o]btaining the cargo insurance was a condition precedent to the Kellys providing Hall with

a final foundation.” Based on the presumption against conditions precedent and inconclusive

evidence, we hold that the District Court did not err when it found that the Kellys breached

the House Moving Agreement and, therefore, could not recover breach of contract damages

against Hall.

¶32    Affirmed in part, reversed in part, and remanded for a trial on causation and damages

consistent with this Opinion.


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                                               /S/ JIM REGNIER



We Concur:

/S/ KARLA M. GRAY
/S/ PATRICIA COTTER
/S/ JAMES C. NELSON
/S/ W. WILLIAM LEAPHART
/S/ JIM RICE
/S/ STEWART E. STADLER
District Court Judge Stewart E. Stadler
sitting in for Justice Warner




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