NO. 96-180
IN THE SUPREME COURT OF THE STATE OF MONTANA
HAROLD SORENSON, d/b/a SORENSON FARMS,
Plaintiff, Appellant
and Cross-Respondent,
v.
MASSEY-FERGUSON, INC., a nonresident \
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corporation,
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Defendant, Respondent R supkc. £
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and Cross-Appellant.
APPEAL FROM: District Court of the Sixteenth Judicial District,
In and for the County of Rosebud,
The Honorable Joe L. Hegel, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
John Houtz, Forsyth, Montana
For Respondent:
Kathleen H. Richardson, Havre, Montana
Submitted on Briefs: October 24, 1996
Decided: November 26, 1996
Filed:
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Chief Justice J. A. Turnage delivered the Opinion of the Court.
Harold Sorenson brought this action to recover damages from
his purchase of a defective Massey-Ferguson combine. The District
Court for the Sixteenth Judicial District, Rosebud County, granted
the motion of Massey-Ferguson, Inc., to dismiss Sorenson's
complaint pursuant to Rule 12(b) (6), M.R.Civ.P. We affirm.
The sole issue Sorenson raises on appeal is whether the
doctrine of equitable tolling should have been invoked to toll the
statutes of limitation on his claims. Massey-Ferguson, Inc., filed
a cross-appeal in which it argues that this appeal was taken
without substantial or reasonable grounds, meriting an award of
damages under Rule 32, M.R.App.P.
For purposes of ruling on the Rule 12 (b)(6) motion, the
District Court accepted as true the allegations pled in Sorenson's
complaint. In September 1984, Sorenson purchased two Massey-
Ferguson combines from an implement dealer in Glasgow, Montana.
The combines were represented as new, but were actually 1982
models. Sorenson obtained two-year warranties on the combines.
One of the combines performed well, but the other combine
repeatedly broke down, beginning almost immediately. Over the
years, Sorenson sought warranty coverage for repairs, but he
usually had to pay for them himself. In 1993, an improperly cast
transmission was identified as the source of the repeated problems
with the combine, and was repaired.
In February 1995, Sorenson filed his complaint claiming breach
of warranty, failure of consideration and breach of contract,
mistake, negligence, and unfair trade practices. Massey-Ferguson
,
moved to dismiss pursuant to Rule 12 (b)(6) M.R.Civ.P., for failure
to state a claim upon which relief can be granted. The District
Court granted the motion as to all five counts of the complaint.
The court's ruling was based upon the running of the applicable
statutes of limitation on the first four claims and, as to the
claim of unfair trade practices, the unavailability of that remedy
for equipment purchased for business purposes.
Issue 1
Should the doctrine of equitable tolling have been invoked to
toll the statutes of limitation?
The applicable statutes of limitation for the claims dismissed
due to passage of time are: four years for the breach of warranty
claim and the claim of failure of consideration and breach of
contract, under § 30-2-725, MCA; two years after discovery of the
facts constituting a claim of mutual mistake, under § 27-2-203, MCA
(the complaint alleged under this count that the combine was
believed to be new and in proper working order when Sorenson
purchased it); and three years on the negligence claim under 5 27-
2-204, MCA. Although Sorenson became aware of defects in the
combine shortly after purchasing it, he did not file his complaint
in District Court until over ten years later.
The doctrine of equitable tolling arrests the running of
statutes of limitation while the claimant reasonably and in good
faith pursues one of several possible legal remedies. Harrison v.
Chance (IggO), 244 Mont. 215, 797 P.2d 200. The claimant must meet
three criteria: (1) timely notice to the defendant within the
applicable statute of limitation in filing the first claim; (2)
lack of prejudice to the defendant in gathering evidence to defend
against the second claim; and (3) good faith and reasonable conduct
by the claimant in filing the second claim. Harrison, 797 P.2d at
208.
The District Court ruled that Sorenson's requests to Massey-
Ferguson to repair the combine under warranty provisions did not
constitute "'pursuit of a legal remedy' as is contemplated by the
cases discussing the doctrine of 'equitable tolling.'"
Sorenson argues that the statutes of limitation should be
equitably tolled in this case because he pursued his remedy of
seeking warranty coverage from Massey-Ferguson during the warranty
period and before any statute of limitation expired. He argues
that the definition of "remedy" in the Uniform Commercial Code at
5 30-1-201( 3 4 ) , MCA, should be used here. Section 30-1-201(341,
MCA, defines "remedy" as any remedial right to which an aggrieved
party is entitled with or without resort to a tribunal.
Sorensonl argument is off the mark. The UCC definition which
s
he promotes defines "remedy," not "legal remedies.'I "Legal
remedies" is not defined in Montana statutes.
The term "legal remedies" has been interpreted in Montana case
law. In Hash v. U.S. West Communications Services (1994), 268
Mont. 326, 886 P.2d 442, Hash claimed that she had been wrongfully
discharged from employment with U.S. West. The district court
dismissed her claim because the applicable statute of limitation
had expired.
Hash argued on appeal that the statute of limitation had been
equitably tolled while she filed a complaint before the Montana
Human Rights Commission. This Court ruled that the doctrine of
equitable tolling did not apply. We stated that Hash did not have
more than one legal remedy available to her. Instead, it was first
her obligation to timely file her complaint before the Human Rights
Commission, as a prerequisite to her filing in district court.
While she also had the right to pursue an intra-company remedy, she
was required to do so within the context of the time limitations
imposed for filing before the Human Rights Commission. Hash, 886
P.2d at 446.
Implicit in Hash is that the term "legal remedies" does not
include self-help measures such as informal efforts seeking intra-
company remedies or warranty coverage. If it did, equitable
tolling would virtually eradicate statutes of limitation. The
Montana cases applying equitable tolling have dealt with "legal
remedies" of filing court or administrative proceedings seeking to
enforce the plaintiff's legal rights. Chance v. Harrison (1995),
272 Mont. 52, 899 P.2d 537 (statute of limitation for filing a
claim before the Montana Human Rights Commission was equitably
tolled by the filing of a district court action for sexual
harassment) ; Nicholson v. Cooney (l994), 265 Mont. 406, 877 P.2d
486 (statute of limitation for filing a complaint of constitutional
violations in a referendum was equitably tolled by the filing of a
petition for declaratory judgment as to the same subject).
The case at bar is the first action or proceeding, administra-
tive or judicial, which Sorenson has filed to enforce his legal
rights. We hold that Sorenson's self-help pursuit of his rights
under warranty was not a "legal remedy" available to him for
purposes of the doctrine of equitable tolling. While he may have
had rights under warranty, he was required to pursue those rights
within the context of the time limitations imposed for filing his
legal claims. We hold that the District Court did not err in
dismissing Sorenson's claims based on the lapsing of the applicable
statutes of limitation.
Issue 2
Is an award of damages merited under Rule 32, M.R.App.P.?
Rule 32, M.R.App.P.,provides:
If the supreme court is satisfied from the record and the
presentation of the appeal in a civil case that the same
was taken without substantial or reasonable grounds, such
damages may be assessed on determination thereof as under
the circumstances are deemed proper.
Massey-Ferguson asserts that damages are justified in this case
because the appeal is not warranted by existing law as expressed in
Hash, and Sorenson has not made a good faith argument for a change
in existing law.
While Sorenson's argument for equitable tolling is unconvinc-
ing, there is no evidence that it was not made in good faith.
Under the circumstances here presented, we are not persuaded that
this appeal was taken without substantial or reasonable grounds,
thereby justifying the assessment of damages. The request for
damages under Rule 32, M.R.App.P., is denied.
A££ irmed .
We concur: