11/30/2021
DA 21-0116
Case Number: DA 21-0116
IN THE SUPREME COURT OF THE STATE OF MONTANA
2021 MT 308
PF2 LEASING, LLC,
Intervenor and Appellant,
v.
JIM GALIPEAU,
Receiver and Appellee.
APPEAL FROM: District Court of the Fourth Judicial District,
In and For the County of Missoula, Cause No. DV-18-1450
Honorable John W. Larson, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Dustin M. Chouinard, Markette & Chouinard, P.C., Hamilton, Montana
For Appellee:
Donald C. St. Peter, Michael O’Brien, Logan Nutzman, St. Peter Law
Offices, P.C., Missoula, Montana
Submitted on Briefs: September 22, 2021
Decided: November 30, 2021
Filed:
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__________________________________________
Clerk
Justice Laurie McKinnon delivered the Opinion of the Court.
¶1 PF2 Leasing, LLC, (PF2) appeals from the Special Master’s Determination in the
Fourth Judicial District Court, Missoula County, that resolved a dispute between PF2 and
Jim Galipeau, Receiver for Black Gold Enterprises, LLC, (Black Gold). We affirm in part
and reverse in part.
¶2 We restate the issues on appeal as follows:
1. Did the Special Master exceed the scope of his authority by applying the theory
of judicial immunity to the Receiver’s possession and release of PF2’s equipment?
2. Did the Special Master err in concluding that the Receiver shares the
District Court’s immunity from liability?
3. Did the Special Master exceed the scope of his authority when he concluded that
the Receiver acted in good faith and within his court-appointed authority in taking
and retaining possession of PF2’s property?
FACTUAL AND PROCEDURAL BACKGROUND
¶3 Black Gold rents real property to commercial tenants. It was formed as a
member-managed limited liability company (LLC), with its members—
Joshua T. Patterson, Adam Pummill, and Kurtis Robertson—each having an equal interest.
In addition to being one of the LLC members, Patterson also owned and operated several
businesses that were Black Gold’s tenants. Patterson became involved in a dispute with
Pummill and Robertson over the tenancies, culminating in the litigation that underlies the
matter on appeal.
¶4 On August 22, 2019, the District Court granted Pummill and Robertson’s motion
for the appointment of a receiver for Black Gold. The court appointed Galipeau, granting
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him the powers enumerated in § 27-20-302, MCA1, and ordering him to “marshal, preserve,
protect, maintain, manage and safeguard the Assets of Black Gold Enterprises, LLC in a
reasonable, prudent, diligent, and efficient manner.”2 Galipeau filed his Oath of
Receivership on September 9, 2019.
¶5 On March 13, 2020, the District Court ordered Patterson and his businesses to vacate
the Black Gold premises immediately. The next day, and without further notice, Galipeau
changed the locks on the building.
¶6 On April 29, 2020, Galipeau moved the District Court for an order adopting a
process to allow third parties to reclaim personal property that remained within
Black Gold’s building. Galipeau wanted to ensure that the property was returned to the
rightful owner and “to limit the potential liability to the Receiver in regards to this
property[.]” This motion was apparently spurred by a letter Galipeau received from PF2’s
counsel on April 24, 2020, that demanded release of personal property located within
Black Gold’s building that allegedly belonged to PF2, an LLC owned by Mark and
Reid Fournier. Galipeau informed the court that he had received a copy of an Agreement
for Sale and Purchase reflecting a sale of this property from Patterson to Mark Fournier,
but no evidence that the sale had been completed, that the sale was undertaken at arm’s
1
The receiver has, under the control of the court, the power to:
(1) bring and defend actions in the receiver’s own name, as receiver;
(2) take and keep possession of the property;
(3) receive rents, collect debts, and compound for and compromise the rents and debts;
(4) make transfers; and
(5) generally do acts respecting the property that the court may authorize.
2
This Court affirmed the District Court’s appointment of a receiver in the underlying dispute.
Pummill v. Patterson, No. DA 19-0124, 2019 MT 265N, 2019 Mont. LEXIS 741.
3
length, or that PF2 currently had title to the property. Thus Galipeau asked the court to
require PF2 to provide copies of cancelled checks for the purchase price of the property,
along with bills of sale, proof of ownership, and copies of any leases existing between PF2
and Patterson or any of Patterson’s business entities.
¶7 On May 13, 2020, Patterson responded to Galipeau’s motion, asserting that
Galipeau inappropriately refused to release personal property to third parties unless the
parties agreed that he be held harmless. Patterson argued Galipeau had no legal
justification for refusing to return property to third parties and no basis to condition the
return of property on the execution of a hold-harmless agreement.
¶8 In reply, Galipeau argued that he became an involuntary bailee of the personal
property when he took possession of Black Gold’s premises. Galipeau asserted that when
he took possession, he did not know who owned the property at issue, he was not obligated
to return it until the owner made a demand, and once a demand was made he had
“some obligation” to ascertain the rightful owner. Galipeau further asserted that PF2’s
demand, through its attorney, was accompanied by a Verified Complaint alleging
conversion by the Receiver. Galipeau, through counsel, then requested that PF2 provide
verification of its ownership, but PF2 instead provided evidence that the property was
owned by Mark Fournier personally. Galipeau considered this a potential competing claim
of ownership and he requested further documentation. After PF2 provided additional
documentation, Galipeau agreed to release the property to PF2 contingent upon PF2
signing a release of liability, which PF2 refused to do. Galipeau acknowledged that he still
possessed the disputed property as he and PF2 had reached an impasse. He argued that a
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release was necessary to protect him from claims beyond the scope of liability as an
involuntary bailee.
¶9 On May 18, 2020, PF2 moved to intervene in Cause No. DV-18-1450 for the limited
purpose of seeking an order requiring Galipeau to return PF2’s personal property. PF2
then filed an amended motion to intervene on May 20, 2020.
¶10 On September 18, 2020, the District Court granted PF2’s motion to intervene for
the limited purpose of seeking an order requiring Galipeau to return PF2’s property. The
court further filed PF2’s Motion and Brief for Order to Return Property, which PF2 had
attached to its amended motion to intervene. In its combined motion and brief, PF2 argued
for the immediate return of its property in Galipeau’s possession “without condition.”
¶11 In response to PF2’s motion for return of property, Galipeau asserted, “The Receiver
has received sufficient documentation from PF2 to determine that PF2 and/or
Mark Fournier have a claim of ownership which allows the Receiver to release the subject
property to them subject to an indemnification from PF2 and Mark Fournier.” Galipeau
further asserted, “[T]he sole impediment to the Receiver allowing PF2 to remove personal
property from the Black Gold property has been PF2 and Mark Fournier’s refusal to release
the Receiver from the claims set forth in the verified complaint it delivered to the
Receiver.” Galipeau argued that it was reasonable for him to request a release because PF2
had threatened him with litigation. In reply, PF2 asserted that Galipeau had offered no
legal authority to support his refusal to return PF2’s property only on the condition that
PF2 release him from liability.
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¶12 After briefing was completed, Galipeau requested a hearing on both his Motion for
Order Adopting Receiver’s Process and PF2’s Motion and Brief for Order to Return
Property. PF2 objected to the need for hearing on the motions.
¶13 On October 27, 2020, the District Court denied Galipeau’s request for a hearing on
the motions. In its Order Denying Receiver’s Request for Hearing and Order Appointing
Special Master on Limited Issue, the court framed the dispute between PF2 and Galipeau
as “disagreement between the Receiver and PF2 over the ownership of the property at issue
and/or method of return.” The court then ruled as follows:
The Court finds that there are competing claims regarding the disputed
property and the terms of return. In the best interest of the parties and
efficient use of judicial resources, a special master shall be appointed to
resolve the limited issue of the return of PF2’s property and other issues as
outlined in the Receiver’s Motion for Order Adopting Receiver’s Process
(ROA 172)3 and PF2’s Motion for Order to Return Property (ROA 246).
¶14 The court ultimately appointed attorney Kevin S. Jones as Special Master. In its
December 8, 2020 Order Appointing Special Master, the court ruled:
Mr. Kevin Jones is appointed Special Master to resolve the disputes
regarding the property located on Black Gold’s premises between the
Receiver and Intervenor PF2 Leasing, LLC, including Intervenor’s Motion
and Brief for Order to Return Property (Dckt. # 246) and Receiver’s Motion
for Order Adopting Receiver’s Process for Reclaiming Personal Property
(Dckt. # 156). Mr. Jones shall have all duties and powers granted to a
Special Master under Mont. R. Civ. P. 53(c)(2).
¶15 Finally, on December 18, 2020, the court issued its Order Regarding Receiver’s
Motion for Order Submitting All Outstandning [sic] Motions to the Special Master, in
3
The Receiver’s Motion for Order Adopting Receiver’s Process is docketed in the District Court
record as Item No. 156. The District Court corrected this error in subsequent orders.
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which it reiterated its earlier ruling and added resolution of an additional dispute to the
Special Master’s scope of authority:
On December 8, 2020, and based upon written agreement by the parties, the
Court appointed Keven [sic] Jones as Special Master to resolve the disputes
regarding the property located on Black Gold’s premises between the
Receiver and Intervenor PF2 Leasing, LLC, including the Intervenor’s
Motion and Brief for Order to Return Property (Dkt. 246) and Receiver’s
Motion for Order Adopting Receiver’s Process for Reclaiming Personal
Property (Dkt. 156). . . . In the interest of judicial economy, the Court finds
that Defendants’ Motion for Leave to File Sur-Reply to Address the
Receiver’s Reply in Support of Motion for Order Adopting Receiver’s
Process (Dkt. 175) as well as any scheduling issues that may be agreed to by
the parties as outlined in Defendants’ Motion to Amend the Scheduling Order
and Request for Scheduling Conference (Dkt. 181) are additional preliminary
motions that may be resolved by the Settlement [sic] Master.
¶16 On February 8, 2021, Jones issued the Special Master’s Determination that is the
subject of this appeal. In the Determination, he found that PF2 had provided evidence that
it owned the property at issue and no one else had claimed ownership of it. Jones did not
rely on Galipeau’s bailment theory. Instead, he relied on the theory of judicial immunity,
ruling that Galipeau did not need a release or indemnification agreement from PF2 to
surrender those items to PF2 because he was “immune from personal liability as a
ministerial officer of the Court.” The Special Master concluded:
The Receiver does not have any personal liability to PF2, or to any other third
party, in relation to that equipment, or as the result of the release of the
equipment to PF2. The District Court’s immunity from liability is shared by
the Receiver and would apply to any claims against the Receiver in relation
to the Receiver’s possession or release of the subject equipment.
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¶17 On February 8, 2021, PF2 filed objections to the Special Master’s Determination in
the District Court. However, PF2 filed its Notice of Appeal in this Court prior to the
District Court ruling on its objections.4
STANDARDS OF REVIEW
¶18 Section 3-5-113(1)(c), MCA, specifies that any order, judgment, or decree made by
a special master has the same force and effect “as if made . . . by the district court with the
regular judge presiding.” Therefore, the only procedure by which to obtain review of that
special master’s decision is by direct appeal to this Court. PF2 Leasing, LLC v. Galipeau,
2021 MT 93, ¶ 6, 404 Mont. 53, 485 P.3d 188. As such, this Court applies the same
standards of review to a special master’s report as it would to any other district court order.
Maloney v. Home & Inv. Ctr., Inc., 2000 MT 34, ¶ 28, 298 Mont. 213, 994 P.2d 1124.
¶19 We review a district court’s legal conclusions for correctness. Whether a district
court has jurisdiction to rule on a matter is a question of law which we review to determine
whether the district court had authority to act. A court exceeds jurisdiction through acts
which exceed the defined power of a court, whether that power be defined by constitutional
provisions, express statutes, or rules developed by the courts. Southwest Mont. Bldg. Indus.
Ass’n v. City of Bozeman, 2018 MT 62, ¶ 20, 391 Mont. 55, 414 P.3d 761 (citations
omitted).
4
See PF2 Leasing, LLC v. Galipeau, 2021 MT 93, 404 Mont. 53, 485 P.3d 188, in which we
concluded that this matter is properly before us on appeal.
8
¶20 Immunity is a legal conclusion. Smith v. Butte-Silver Bow County, 266 Mont. 1, 15,
878 P.2d 870, 878-81 (1994) (Nelson, J., concurring). It is therefore reviewed for
correctness. Southwest Mont. Bldg. Indus. Ass’n, ¶ 20.
DISCUSSION
¶21 1. Did the Special Master exceed the scope of his authority by applying the theory
of judicial immunity to the Receiver’s possession and release of PF2’s equipment?
¶22 Both PF2 and Galipeau agree that the theory of judicial immunity was not raised by
any party. However, they disagree as to whether the Special Master acted within the scope
of the authority the District Court granted to him when he concluded that Galipeau, in his
role as court-appointed Receiver, was protected by judicial immunity.
¶23 Under M. R. Civ. P. 53(c)(1), a court may specify or limit a special master’s powers.
Once a special master is appointed to try a matter under § 3-5-113, MCA, that cause which
the special master is appointed to decide is no longer “to be tried by the court” that
appointed the special master. PF2, ¶ 17. PF2 argues that the Special Master exceeded his
authority when he ruled that Galipeau, as a court-appointed receiver, was protected by
judicial immunity. Galipeau responds that the Special Master acted within the scope of his
authority by acknowledging that under Montana law, court-appointed receivers are agents
of the judiciary and are thus entitled to judicial immunity.
¶24 As set forth above, the District Court issued three orders that define the scope of the
authority it granted to the Special Master. Those orders indicate that the court intended the
Special Master’s scope of authority to include issues raised by PF2 and Galipeau in specific
filings, including Galipeau’s Motion for Order Adopting Receiver’s Process for
9
Reclaiming Personal Property and Brief in Support, docketed as Item No. 156 in the
District Court record, and PF2’s Motion and Brief for Order to Return Property, docketed
as Item No. 246. We therefore consider the contents of those documents in determining
whether the Special Master’s determinations fell within the Special Master’s authority.
¶25 In the Motion for Order Adopting Receiver’s Process for Reclaiming Personal
Property and Brief in Support, Galipeau proposed a process for returning personal property
and he requested the District Court’s approval. In part, Galipeau proposed that each person
requesting recovery of personal property provide certain documentation, including
“an agreement to hold the Receiver harmless and indemnifies the Receiver from any claims
by any other person or entity regarding the property being retrieved[.]” In PF2’s Motion
and Brief for Order to Return Property, PF2 requested from the court “an order directing
the Receiver to return PF2’s property without condition[.]” These two filings clearly
indicate that the necessity for a release from liability was a dispute between PF2 and
Galipeau and that the District Court intended the resolution of this dispute to be within the
scope of authority it granted the Special Master.
¶26 In the Determination, the Special Master outlined the dispute between PF2 and
Galipeau, noting that Galipeau, as Receiver, took possession of certain equipment when he
took control of Black Gold’s real property. PF2 later claimed ownership of that equipment
and, after Galipeau demanded that PF2 prove ownership, PF2 provided Galipeau with a
copy of a sale and purchase agreement for the equipment. Galipeau then moved the
District Court for an order adopting his proposed process for returning personal property.
The Special Master noted that Galipeau specifically asked the court to require PF2 to
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provide further proof of ownership and “an agreement to hold harmless and indemnify the
Receiver from any claims of other persons or entities in relation to the equipment”—a
requirement to which PF2 objected. The Special Master further explained, “PF2 threatened
to sue the Receiver for conversion, causing the Receiver to then also demand a release of
all claims from PF2 prior to surrendering possession of the personal property claimed by
PF2. PF2 claims that Montana’s property statutes require the Receiver to immediate[ly]
surrender its equipment, without condition.”
¶27 The Special Master then determined that Galipeau should release the equipment to
PF2 without requiring a release or indemnification agreement from PF2 because Galipeau
shared the District Court’s immunity from liability. This determination was within the
scope of the authority the District Court granted to the Special Master because these
disputes—whether the Receiver should release the equipment claimed by PF2 and whether
PF2 should be required to provide a release or indemnification agreement—were set forth
in the referenced filings.
¶28 While no party raised the question of whether Galipeau was entitled to immunity, it
would make little sense to define the Special Master’s scope of authority as including the
dispute about the necessity for a release, but excluding the Special Master’s reasoning for
his conclusion. Nothing in the District Court orders limited the legal theories upon which
the Special Master could rely and we therefore conclude he did not err in considering
whether judicial immunity applied to the Receiver.
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¶29 2. Did the Special Master err in concluding that the Receiver shares the
District Court’s immunity from liability?
¶30 Because we have concluded that the Special Master acted within the scope of his
authority when he concluded that Galipeau, in his role as a court-appointed receiver, is
protected by judicial immunity, we further must determine if the Special Master’s
conclusion is correct.
¶31 A court-appointed receiver is an agent of the court whose only authority is that
which has been conferred by the appointing court. Parcells v. Price, 110 Mont. 537, 540,
104 P.2d 12, 13 (1940) (citations omitted). Finding Montana caselaw “limited” on the
issue of receivers’ authority, the Special Master cited Parcells and further turned to
treatises to reach his conclusion. Although PF2 does not overtly disagree that a
court-appointed receiver may be protected by judicial immunity, we recognize, as the
Special Master did, that little Montana case law speaks to whether a receiver has judicial
immunity. Galipeau asserts that the case law is silent because a receiver’s judicial
immunity is axiomatic; since a receiver is an agent of the court, a receiver is entitled to
judicial immunity for acts taken in good faith and within the authority conferred upon him.
¶32 While a receiver’s entitlement to judicial immunity is perhaps not “axiomatic,”
Galipeau is correct that when the question of judicial immunity for receivers has arisen,
courts have generally concluded that receivers are protected. In New Alaska Dev. Corp. v.
Guetschow, 869 F.2d 1298 (9th Cir. 1989), the Ninth Circuit Court of Appeals concluded
that Guetschow, who was appointed by the Alaska Superior Court to assume the business
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affairs of a spouse who was party to a divorce proceeding, was entitled to judicial
immunity. The court explained:
While our cases have not directly addressed the immunity due a receiver
appointed by a state court to manage the business assets of a marital estate
during a dissolution proceeding, their rationale teaches that absolute
derivative judicial immunity is appropriate. Moreover, cases from other
circuits have held uniformly that state court-appointed receivers are entitled
to absolute immunity.
Guetschow, 869 F.2d at 1303 (citations and internal quotations omitted). However, as
Guetschow further holds, absolute immunity extends only to the performance of judicial
tasks; acts in the absence of jurisdiction—such as, in Guetschow’s case, accusations of
theft and slander—are not judicial acts. Guetschow, 869 F.2d at 1304-05.
¶33 Guetschow appears consistent with courts’ general approach to receivers’
entitlement to judicial immunity. According to 65 Am. Jur. 2d Receivers § 189 (Westlaw
through Nov. 2021):
Generally, a receiver has no personal liability for actions performed within
the receiver’s official capacity and within the scope of the receiver’s
authority pursuant to the receivership order. The receiver’s obedience to the
orders and directions of the appointing court assures that the receiver will not
be held personally liable, even if the court order under which the receiver
acts is erroneous and subsequently reversed. A receiver appointed by and
acting on behalf of the court shares the court’s immunity from personal
liability. Like the court itself, the receiver’s immunity from suit exists by
virtue of the context in which the receiver acts, not the content of the
receiver’s actions. Judicial immunity only extends to a receiver who acts in
good faith and with appropriate care and prudence, and does not extend to
everything a receiver may do in the course of performing responsibilities or
to every kind of lawsuit that might be filed against a receiver in an official
capacity. A state court order will not provide immunity to the extent that the
receiver must defend itself on the merits of whether it acted with reasonable
business judgment if the receiver did not analyze risks inherent in various
known options and bring risks to attention of court and parties for their
consideration in the decision-making process.
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¶34 In light of this persuasive authority, we conclude that the Special Master’s ruling
that Galipeau, in his role as court-appointed Receiver, is protected by judicial immunity is
correct.
¶35 3. Did the Special Master exceed the scope of his authority when he concluded that
the Receiver acted in good faith and within his court-appointed authority in taking and
retaining possession of PF2’s property?
¶36 PF2 further asserts that, even if the Special Master was within the scope of his
authority when he determined that Galipeau, as a court-appointed receiver, is entitled to
judicial immunity for actions taken “in good faith and within the authority conferred upon
him,” the Special Master exceeded that scope when he further concluded that Galipeau’s
actions in obtaining and retaining possession of PF2’s property were undertaken in good
faith and within his authority as Receiver. PF2 argues that it was entitled to advance notice
that the Special Master was considering granting immunity to Galipeau and that
“the Special Master’s grant of immunity ends in an [sic] sweeping, arbitrary and unjust
result.” PF2 characterizes this ruling as preemptive: Since neither party raised the question
of judicial immunity, the Special Master’s conclusion violates PF2’s right to due process
because it precludes PF2 from asserting that any of Galipeau’s actions are not covered by
judicial immunity. Galipeau responds that the Special Master acted within the scope of his
authority because the conclusion that Galipeau acted in good faith and within the authority
of his appointment was part of the resolution of the dispute regarding PF2’s property.
¶37 The distinction between this issue and Issue One is subtle but significant: In
Issue One, we concluded that the Special Master did not exceed the scope of his authority
when he concluded that Galipeau, in his role as court-appointed Receiver, generally has
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judicial immunity by virtue of the fact that he is the court-appointed Receiver in this case.
Here, we consider PF2’s argument that the Special Master exceeded his authority by
granting immunity to Galipeau by determining that Galipeau’s actions concerning PF2’s
property fall within the scope of that immunity. For the reasons set forth below, we
conclude that the Special Master exceeded his authority in this instance.
¶38 To determine the scope of the Special Master’s authority, we again look to the three
District Court orders that define the scope of authority granted to the Special Master. These
orders gave the Special Master the authority to resolve the “disputes regarding the
property” as further set forth in specific filings. By the time the District Court appointed
the Special Master, PF2 had proven ownership to Galipeau’s satisfaction; the only dispute
regarding the property was whether Galipeau could condition its return upon PF2 releasing
Galipeau from liability.
¶39 The Special Master correctly concluded that Galipeau’s actions as Receiver are
generally protected by judicial immunity. He further correctly concluded that the
protection afforded to Galipeau eliminated Galipeau’s justification for withholding PF2’s
property in exchange for such a release. However, the issue of whether the specific actions
Galipeau took regarding PF2’s property were undertaken in good faith and within the
authority of his appointment was not set forth as a dispute in the filings referenced by the
District Court’s orders referring the matter to the Special Master. In the present case, the
District Court granted PF2 intervention for the limited purpose of seeking an order
requiring Galipeau to return its personal property; any other claims PF2 may have,
15
including a conversion claim, are beyond the scope of its intervention here. Therefore, it
was not within the scope of the Special Master’s authority to make such determination.
¶40 In Guetschow, the Ninth Circuit recognized that while court-appointed receivers are
protected by judicial immunity, they can nonetheless be subject to litigation for actions that
are not a normal function of a court-appointed receiver or which exceed the scope of
appointment. Guetschow, 869 F.2d at 1303-04 (citations omitted). Guetschow explains
that a receiver would be “a lightning rod for harassing litigation” absent broad immunity
and to prevent such harassment, a plaintiff is required to allege the absence of judicial
immunity in order to pursue a claim against a receiver. Guetschow, 869 F.2d at 1303
(citations omitted). In this case, the Special Master was correct to order PF2’s property
returned without a release of liability because all appropriate actions taken by Galipeau as
Receiver are protected by judicial immunity and therefore a release would be unnecessary.
In his motion to the District Court for an order adopting a process for return of property,
Galipeau asserted that the purpose of such request was, in part, “to limit the potential
liability to the Receiver in regards to this property[.]” The protection afforded by judicial
immunity accomplishes this goal without the necessity of a release of liability.
¶41 Because we have concluded the District Court did not grant the Special Master the
authority to determine whether Galipeau acted in good faith and within the scope of his
authority as Receiver in obtaining and retaining possession of PF2’s personal property, we
reverse and vacate that portion of the Special Master’s Determination. Since this question
was not properly before the Special Master, we need not consider PF2’s arguments as to
16
why it believes Galipeau’s actions concerning PF2’s personal property should not be
protected by judicial immunity.
CONCLUSION
¶42 We conclude the Special Master correctly concluded that a court-appointed receiver
is protected by judicial immunity and that the Special Master acted within the scope of his
authority when he determined that it was unnecessary for Galipeau to require a release or
indemnification agreement to return PF2’s personal property. However, the Special Master
exceeded the scope of his authority when he further granted Galipeau immunity for the
actions Galipeau took regarding PF2’s personal property.
/S/ LAURIE McKINNON
We concur:
/S/ MIKE McGRATH
/S/ INGRID GUSTAFSON
/S/ BETH BAKER
/S/ JIM RICE
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