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1990

STEVEN G. BOYD and JERRI BOYD, Husband and Wife, and MONTANA MEDICAL OXYGEN & SUPPLY, INC., a Montana Corporation,
plaintiffs and Appellants,

STATE MEDICAL OXYGEN & SUPPLY, INC., a Montana corporation; LARRY R. WILLIAMS; MARK C. HUNGERFORD; and BRIAN R. CLOUTIER,
Defendants and Respondents.

APPEAL FROM: District Court of the Eleventh Judicial District,
In and for the County of Flathead,
The Honorable C. B. McNeil, Judge presiding.

COUNSEL OF RECORD:

For Appellants:

Lon J. Dale, Jon R. Binney; Milodragovich, Dale & Dye, Missoula, Montana
For Respondent:

Dexter L. Delaney and P. Mars Scott; Mulroney, Delaney & Scott, Missoula, Montana
Submitted on ~riefs: August 30, 1990

Decided: October 23, 1990

J
Filed:

9 Clerk

plaintiff sf Montana Medical Oxygen and Supply, Inc. and Steven
and Jerri Boyd (the Boyds), brought suit against defendants, State
Medical Oxygen and Supply, Inc., Larry ~illiams, Mark Hungerford,
and ~rian ~loutier (State ~edical), for damages for breach of
contract, breach of the implied covenant of good faith and fair
dealing, and conversion. State ~edical brought a cross-claim
against the Boyds for damages for breach of contract, breach of the
implied covenant of good faith and fair dealing, and actual or
constructive fraud. Following a jury trial in the ~istrict Court
for the Eleventh Judicial District, Flathead County, the jury
returned a verdict against the Boyds on the Boydsl claims, and
against State Medical on State Medical's claims. Thus, no damages
were awarded to either side. The ~istrict Court then denied the
Boyds' motion for a new trial. The Boyds appeal. We affirm.

The issues are:

1.
Are plaintiffs entitled to a new trial because the
District Court erred in rejecting plaintiffs1 special verdict form
and replacing it with the court's own general verdict form?


2.
Are plaintiffs entitled to a new trial because the
District Court improperly admitted testimony of defendants1 expert?



3. Are plaintiffs entitled to a new trial because the

District Court failed to properly instruct the jury?
Steven and Jerri Boyd, husband and wife, owned and operated

Medical). In 1983, the Federal Medicare ~ivision initiated
Medicare fraud charges against Montana Medical and Steven Boyd in
federal court. These criminal charges resulted in a five year
prison sentence for Steven Boyd and a $190,000 fine for Montana
Medical. The federal judge agreed to review the prison sentence
and fine under Rule 35 of the Criminal Rules of civil Procedure if
Steven Boyd would divest himself of all ownership in Montana
Medical within 120 days. In response, Boyd executed an agreement
with defendants Williams, Hungerford and Cloutier, for the sale and
purchase of the assets and the assumption of certain liabilities
of Montana Medical. At about the same time, the Boyds executed
documents granting powers of attorney to Williams, Hungerford and
Cloutier and providing them with the right to manage Montana
Medical. Upon execution of these documents, the federal judge
reduced Steven Boyd's prison term to sixty days and Montana
Medical's fine to $19.00.

At about the same time as the pleas to the federal medicare
fraud indictments were entered, Montana Medical and Steven Boyd
were suspended from receiving Medicare reimbursements. As a result
of the suspension and the criminal fines against Montana Medical,
Williams, Hungerford, and Cloutier formed a new corporation, State
Medical Oxygen and Supply, Inc. (State Medical), to purchase the
assets of Montana Medical rather than purchasing the corporation
outright. Once the federal sentences against Boyd and Montana

closing date. ultimately the Boyds terminated the defendants1
powers of attorney. The Boyds claimed that defendantst continued
management of the company beyond the termination of the powers of
attorney was conversion. The Boyds also claimed that State Medical
refused to close the deal resulting in breach of contract and
breach of the implied covenant of good faith and fair dealing.

On the other side, State Medical claimed that the Boyds had
fraudulently misrepresented the financial condition of Montana
Medical which resulted in Williams, Hungerford and Cloutier having
to infuse massive amounts of capital into the business to keep it
going. Because Steven Boyd had to divest himself of ownership of
Montana Medical within 120 days of the federal sentencing, the
agreements between the parties were executed before in depth
audits had been completed. Defendants claimed that the Boyds were
the ones who never showed any interest in closing the deal,
resulting in breach of contract and breach of the implied covenant
of good faith and fair dealing.

The deal never closed and each party sought damages against
the other, asserting that the other had caused the breach. The
jury found against both parties and neither party recovered. The
Boyds filed a motion for a new trial and the District Court denied
the motion.

The Boyds claim that they are entitled to a new trial under the provisions of Rule 59(a), M.R. Civ. P., and under the provisions
states:

Rule 59 (a). Grounds. A new trial may be granted to all or any of the parties and on all or part of the issues for any of the reasons provided by the statutes of the state of Montana.
A motion for new trial shall state with
particularity the grounds therefor, it not being
sufficient merely to set forth the statutory grounds, but
the motion may be amended, upon reasonable notice, up to
and including the time of hearing the motion.

On motion for a new trial in an action tried without
a jury, the court may take additional testimony, amend
the findings of fact and conclusions of law or make new
findings and conclusions, set aside, vacate, modify or
confirm any judgment that may have been entered or direct
the entry of a new judgment.

Section 25-11-102, states in pertinent part:

25-11-102. Grounds for new trial. The former verdict or other decision may be vacated and a new trial granted on the application of the party aggrieved for any of the following causes materially affecting the substantial rights of such party:
(1) irregularity in the proceedings of the court,

jury, or adverse party or any order of the court or abuse
of discretion by which either party was prevented from
having a fair trial;

.. .
(3) accident or surprise which ordinary prudence
could not have guarded against;

...
(7) error in law occurring at the trial and excepted
to by the party making the application.

Are the plaintiffs entitled to a new trial because the

District Court erred in rejecting plaintiffs1 special verdict form

and replacing it with the courtls own general verdict form?

The District Court rejected the Boyds' special verdict form,

concluding that it was virtually impossible to follow and was an

specifically delineated each of their three causes of action requiring the jury to vote separately on each claim. The court's general verdict form submitted to the jury stated in pertinent part:
Plaintiffs' claims:

1.
Upon Plaintiffs' claims we find in favor of the Plaintiffs and award damages against the Defendant in the amount of $

2.
If your verdict is in favor of the Plaintiffs
and includes damages for wrongful conversion of personal
property, the date of conversion is found to be



and the value of the property converted on the date is $ and which value is to be included in the total amount due.
The Boyds submit affidavits from eight of the twelve jurors, claiming that these affidavits prove that the majority of the jurors thought that they must find all three of the Boyds' causes of action were present before they could award damages to the Boyds, and that the problem arose in establishing a date of conversion. The Boyds contend that such an interpretation by the jury was not contemplated by any of the parties or by the court at the time the court's general verdict form was presented to the jury. The Boyds assert the juror affidavits prove the jury was misled in its duties and is an irregularity in the proceedings that prevented the Boyds from having a fair trial under 5 25-11-102(1), MCA, and/or was an accident under

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