No. 93-275
IN THE SUPREME COURT OF THE STATE OF MONTANA
1993
DANIEL G. SINCLAIR,
Plaintiff and Appellant,
and Cross-Respondent,
-vs-
BIG BUD MANUFACTURING COMPANY, BIG BUD
INDUSTRIES, INC., THE MEISSNER BROTHERS
PARTNERSHIP, MEISSNER TRACTORS, INC., JOE
MEISSNER, PAUL MEISSNER, BIG BUD TRACTORS,
INC., and RON HARMON, individually,
Defendants, Respondents and
Cross-Appellants.
APPEAL FROM: District Court of the Twelfth Judicial District,
In and for the County of Hill,
The Honorable John Warner, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Elizabeth A. Best: Best Law Offices, Great
Falls, Montana
For Respondents:
L. D. Nybo and Evan Danno; Conklin, Nybo, LeVegue &
Murphy, Great Falls, Montana (Big Bud Industries, et
Cal.)
George N. McCabe; Jardine, Stephenson, Blewett
& Weaver, Great Falls, Montana (Big Bud Industries,
et al.)
Submitted on Briefs: October 5, 1993
Decided: December 14, 1993
Filed:
Justice Karla M. Gray delivered the Opinion of the Court.
This case involves the application of Rule 41(e), M.R.Civ.P.,
which provides that an action shall not be further prosecuted
unless summons is issued within one year of its commencement. We
reverse the District Court's refusal to grant a motion to dismiss
filed by Big Bud Industries, Inc., Meissner Brothers Partnership,
Meissner Tractors, Inc., Joe Meissner, Paul Meissner, Big Bud
Tractors, Inc., and Ron Harmon (collectively referred to as the
non-BBMC defendants), holding that they were entitled to dismissal
under Rule 41(e), M.R.Civ.P.
Daniel Sinclair (Sinclair) formed the first of many employment
relationships with the various defendants in 1979. In that year,
Ron Harmon, the owner of Big Bud Tractors, Inc. (BBTI), hired
Sinclair as marketing manager and vice president. The corporation
manufactured tractors in Havre, Montana.
In 1985, Joe and Paul Meissner, operating as Meissner Brothers
Partnership, purchased the assets of BBTI. Meissner Brothers
Partnership was subsequently incorporated as Meissner Tractors,
Inc. (MTI). MT1 hired Sinclair as vice president of operations in
1985. In 1986, MT1 transferred its manufacturing operations to Big
Bud Manufacturing, Inc. (later renamed Big Bud Industries, Inc.),
but retained its sales and service activities. Sinclair
subsequently became vice president of operations and marketing for
Big Bud Manufacturing, Inc.
In 1986 and 1987, MT1 initiated negotiations with the
Chippewa-Cree Tribe of the Rocky Boy's Reservation and the
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Assiniboine-Gros Ventre Tribes of the Fort Belknap Reservation to
form a joint partnership. The negotiations resulted in the
incorporation of Big Bud Manufacturing Company (BBMC) in 1988. MT1
owned one-third of the newly-formed corporation and elected John
and Paul Meissner and Ron Harmon to serve on its board.
In June of 1989, Sinclair accepted employment with BBMC as
vice president and general manager. He reported to John Jollie
(Jollie), BBMC's president and chief executive officer. The two
men disagreed about the management of the corporation and, on March
15, 1990, Jollie fired Sinclair.
On May 31, 1990, Sinclair filed a wrongful discharge action
against BBMC. Discovery was marred by BBMC's dilatory tactics and
the District Court levied sanctions accordingly. BBMC subsequently
became insolvent and, in April of 1991, its shareholders voted to
liquidate the corporation.
Sinclair filed an amended complaint in January of 1992. He
joined the non-BBMC defendants, asserting that they were liable for
his wrongful discharge under theories of "piercing the corporate
veil." He also asserted claims of actual fraud, tortious
interference with contract, misrepresentation, and race and age
discrimination.
In February of 1992, the non-BBMC defendants moved for
dismissal, asserting that Sinclair had failed to have summonses
issued within one year of the commencement of the action as
required by Rule 41(e), M.R.Civ.P. On that basis, the non-BBMC
defendants argued that they were entitled to dismissal under Rule
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12(b) for lack of jurisdiction, insufficiency of process and
insufficiency of service of process. The District Court denied the
motion. The non-BBMC defendants then answered Sinclair's
complaint.
In March of 1993, the District Court granted summary judgment
in favor of the non-BBMC defendants. It determined that Sinclair
had failed to present sufficient evidence on any of his claims to
withstand summary adjudication.
Sinclair appeals from the grant of summary judgment dismissing
his claims, asserting that genuine issues of material fact exist.
The non-BBMC defendants cross-appeal, challenging the court's
refusal to dismiss the claims under Rule 41(e), M.R.Civ.P. Because
the cross-appeal issue relating to Rule 41(e), M.R.Civ.P., is
dispositive, we focus on the application of that rule.
The District Court declined to dismiss the non-BBMC
defendants, concluding that the last sentence of Rule 41(e),
M.R.Civ.P., gave it the discretion to allow an action to proceed
against defendants who appeared within three years. Our standard
in reviewing a district court's conclusion of law is to determine
whether the interpretation of law is correct. Steer, Inc. v. Dep't
of Revenue (1990), 245 Mont. 470, 474-5, 803 P.2d 601, 603.
Rule 41(e), M.R.Civ.P., provides as follows:
Failure to serve summons. No action heretofore or
hereafter commenced shall be further prosecuted as to any
defendant who has not appeared in the action or been
served in the action as herein provided within 3 years
after the action has been commenced, and no further
proceedings shall be had therein, and all actions
heretofore or hereafter commenced shall be dismissed bv
the court in which the same shall have been commenced, on
4
its own motion, or on the motion of any oartv interested
therein, whether named in the complaint as a oartv or
not, unless summons shall have been issued within 1 Year,
or unless summons issued within one year shall have been
served and filed with the clerk of the court within 3
years after the commencement of said action, or unless
appearance has been made by the defendant or defendants
therein within said 3 years. When more than one
defendant has been named in an action, the action may
within the discretion of the trial court be further
prosecuted against any defendant who has appeared within
3 years, or upon whom summons which has been issued
within 1 year has been served and filed with the clerk
within 3 years as herein required. [Emphasis added.]
The purpose of Rule 41(e), M.R.Civ.P., is to ensure that actions
are timely prosecuted. Livingston v. Treasure County (1989), 239
Mont. 511, 513, 781 P.2d 1129, 1130.
Rule 41(e), M.R.Civ.P., does not afford the District Court
discretion to allow the further prosecution of Sinclair's action
against the non-BBMC defendants. Phrased in mandatory language,
the rule requires dismissal of an action where summons is not
issued within one year of the commencement of the action. Indeed,
we have previously stated that the failure to issue summons within
that time frame entitles a defendant to dismissal. sooy v.
Petrolane Steel Gas, Inc. (1985), 218 Mont. 418, 424, 708 P.2d
1014, 1018.
In the case before us, Sinclair filed his original complaint
against BBMC on May 31, 1990. The summonses naming the non-BBMC
defendants as parties were not issued until January 22, 1992, after
the amended complaint was filed. Thus, they were not issued within
one year of the commencement of the action as required by Rule
41 (e) , M.R.Civ.P., entitling the non-BBMC defendants to dismissal
of the claims against them.
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Notwithstanding the failure to issue the summonses timely, the
District Court determined that it could allow the action to proceed
because the non-BBMC defendants had made an appearance. It is true
that an action may be further prosecuted under Rule 41(e),
M.R.Civ.P., if a defendant appears within three years of the
commencement of the action even though summons has not been timely
issued. However, the only appearance made by the non-BBMC
defendants prior to the court's ruling was the Rule 12(b),
M.R.Civ.P., motion to dismiss asserting the Rule 41(e), M.R.Civ.P.,
bar to further proceedings. Rule 41(e), M.R.Civ.P., specifically
allows a party to move for dismissal of the action and requires the
district court to do so if summons was not properly issued. Thus,
the non-BBMC defendants' motion to dismiss does not serve as a
basis for further prosecution of the action.
Sinclair advances a number of disjointed arguments purporting
to demonstrate compliance with Rule 41(e), M.R.Civ.P. He
apparently argues that literal compliance with the rule is not
required. He relies on Livingston v. Treasure County (1989), 239
Mont. 511, 781 P.2d 1129, in which we excused the failure to file
within three years the return of service that otherwise complied
with Rule 41(e), M.R.Civ.P., and Sink v. Squire (1989), 236 Mont.
269, 769 P.2d 706, in which we stated that a failure to comply with
all mandatory constructive service requirements would not be fatal
to a district court's jurisdiction if no prejudice resulted.
Neither Livingston nor -, however,
Sink relax the requirement that
summons be issued within one year of the commencement of the action
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pursuant to Rule 41(e), M.R.Civ.P.
Sinclair also asserts that the non-BBMC defendants were served
within two years of the commencement of the lawsuit. On that
basis, he argues that they had ample time to appear within the
three-year limit set forth in Rule 41(e), M.R.Civ.P. This
argument, however, is merely an effort to circumvent the rule's
requirement that summons be issued within one year of the
commencement of the action. As discussed above, failure to issue
the summons timely is, in itself, fatal to further prosecution of
the action.
Sinclair also argues that BBMC and the non-BBMC defendants are
"one and the same" and, therefore, that the non-BBMC defendants
were "actually" served or at least put on notice of the pending
action with the filing of the original complaint. There is no
merit to this argument. Here, the fatal flaw was the failure to
timely issue summons naming the non-BBMC defendants as required by
Rule 41(e), M.R.Civ.P.
Furthermore, we find no merit to Sinclair's "one and the same"
argument even if applied to the issuance of the summons. Rule
4(c), M.R.Civ.P., expressly requires summons to set forth the names
of the parties. Thus, the summons naming only BBMC as a defendant
does not provide a basis for the court to allow the prosecution of
the action against the non-BBMC defendants, each of which is a
separate legal entity or individual.
Finally, Sinclair argues that equity precludes dismissal of
his claims against the non-BBMC defendants, relying on Courchane v.
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Kountz (1990), 246 Mont. 216, 806 P.2d 12. This argument is again
premised on Sinclair's assertion that the non-BBMC defendants and
BBMC shared the same identity. On that basis, he contends that the
non-BBMC defendants are responsible for the dilatory discovery
tactics that allegedly prevented Sinclair from discovering the
claims against them.
'
Rather than supporting Sinclair's lFequity*l argument, Courchane
supports dismissing the non-BBMC defendants. In Courchane, we
determined that plaintiffs were aware of.the factual basis for
joining defendants when the original complaint was filed and had
the burden of pursuing their claims at that time. Thus, we found
no legal reason "to invoke the equity of a court" and affirmed the
dismissal of the action against the defendants who had been added
in violation of Rule 41(e), M.R.Civ.P. Courchane, 806 P.2d at 14.
The record reflects that Sinclair knew of the factual basis
for any claims against the non-BBMC defendants when he filed the
original complaint. Those claims were based, in large part, on
allegations that the Meissners formed BBMC to obtain federal
funding not otherwise available and to avoid the payment of debt.
Additionally, various agreements executed by BBMC and the Meissners
and Ron Harmon were integral to his claims.
Sinclair served as a member of the steering committee that
formed BBMC. He also routinely participated in meetings held by
its interim and permanent boards of directors. The minutes of the
meetings held by these entities indicate that Sinclair participated
in discussions concerning BBMC's acquisition of federal funds as a
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minority small-business enterprise and assumption of the Meissners'
loan. Sinclair also was present when the interim board of
directors voted to accept the various agreements between BBMC, the
Meissners and Ron Harmon. Because Sinclair knew of the factual
basis for his claims against the non-BBMC defendants when he filed
the original complaint, he had the burden of pursuing his claims at
that time. Thus, as in Courchane, equity provides no grounds for
precluding the operation of Rule 41(e), M.R.Civ.P.
We conclude that the non-BBMC defendants were entitled to
dismissal because summonses were not issued within one year of the
commencement of the action, as required by Rule 41(e), M.R.Civ.P.
Thus, we hold that the District Court erred in declining to grant
their motion to dismiss. We vacate the District Court's grant of
summary judgment and remand for entry of an order and judgment
dismissing the claims against the non-BBMC defendants in accordance
with this opinion.
Reversed.
We concur: