NO. 95-442
IN THE SUPREME COURT OF THE STATE OF MONTANA
1996
GERRY WILLIAMS,
Plaintiff and Appellant,
v.
ZORTMAN MINING, INC.,
Defendant and Respondent.
APPEAL FROM: District Court of the Seventeenth Judicial District,
In and for the County of Phillips,
The Honorable John C. McKeon, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
John F. Lynch; Jeff R. Lynch, Great Falls, Montana
For Respondent:
Thomas E. Hattersley, III, David C. Dalthorp;
Gough, Shanahan, Johnson & Waterman, Helena,
Montana
Submitted on Briefs: February 22, 1996
Decided: April 15, 1996
Filed:
Justice W. William Leaphart delivered the Opinion of the Court.
Gerry Williams appeals from the order of the Seventeenth
Judicial District Court, Phillips County, granting Zortman Mining,
Inc.'s motion to dismiss for failure to state a claim upon which
relief can be granted, based upon the running of the statute of
limitations. We affirm.
We consider the following dispositive issue on appeal:
Does the "savings statute," § 27-2-407, MCA, apply to save
Williams' claim from being barred by the statute of limitations?
Gerry Williams (Williams) was employed by Zortman Mining, Inc.
(Zortman), a wholly-owned subsidiary of Pegasus Gold Corporation,
from 1978 until 1991. In 1991, Williams resigned his position
rather than agree to a transfer to a position which amounted to a
demotion. Thereafter, on January 8, 1992, Williams filed a charge
of discrimination with the Montana Human Rights Commission (HRC)
alleging that he had been unlawfully discriminated against because
of his Native American origin and in retaliation for his complaints
over the lack of Native American hiring by Zortman and his
participation in a sexual discrimination suit brought by a female
co-worker. At the request of Zortman, the HRC issued a right to
sue letter on March 23, 1993. An amended right to sue letter was
issued on March 29, 1993.
On June 18, 1993, Williams filed his complaint in the United
States District Court for the District of Montana, Billings
Division, against "Pegasus Gold Corp., a Nevada Corporation, d/b/a
Zortman Mining, Inc." The court dismissed Williams' complaint on
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November 3, 1993. The court noted that Williams was attempting to
manipulate the diversity jurisdiction of the federal court in
naming the foreign parent corporation, Pegasus, and not the Montana
subsidiary, Zortman. Zortman was incorporated in the State of
Montana, and naming Zortman as a party would have defeated
diversity jurisdiction under 28 U.S.C. 5 1332. With respect to the
named party, Pegasus, the federal court determined that Williams
had not exhausted his administrative remedies against that entity.
Accordingly, the court granted Pegasus' motion to dismiss because
of Williams' failure to exhaust his administrative remedies.
On November 9, 1993, after the go-day period to file in
district court following the issuance of the right to sue letter,
Williams filed his complaint in state district court naming Zortman
as the only defendant. See § 49-2-509, MCA. On January 10, 1994
Zortman moved to dismiss Williams' complaint for failure to state
a claim upon which relief can be granted or, alternatively, for
judgment on the pleadings, based on the statute of limitations. On
September 1, 1995, the District Court granted Zortman's motion to
dismiss. Williams appeals from this determination.
The issue of whether the district court properly applied the
statute of limitations and granted a Rule 12(b) (6), M.R.Civ.P.
motion to dismiss presents a question of law. Hollister v.
Forsythe (1995), 271 Mont. 91, 93, 889 P.2d 1205, 1206. This Court
reviews issues of law to determine whether the district court's
application or interpretation of the law is correct. Hollister,
889 P.2d at 1206 (citing McGregor v. Madsen (1992), 253 Mont. 210,
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212, 832 P.2d 779, 780). In reviewing a district court's dismissal
for failure to state a claim upon which relief can be granted,
pursuant to Rule 12(b) (61, M.R.Civ.P., we will construe the
complaint in the light most favorable to the plaintiff and take the
allegations of the complaint as true. Smith v. Video Lottery
Consultants (1993), 260 Mont. 54, 57, 858 P.2d 11, 12 (citing
Wilson v. Taylor (1981), 194 Mont. 123, 126, 634 P.2d 1180, 1182).
The dismissal will be affirmed only if this Court finds that the
plaintiff is not entitled to relief under any set of facts which
could be proven in support of the claim. Smith, 858 P.2d at 12.
The District Court noted that "[tlhe federal district court
action named Pegasus, the parent corporation, 'd/b/a Zortman Mining
CO.,' as Defendant, but did not name Zortman as a distinct
corporate entity." Further, the District Court stated that
Williams did not file his state court complaint within 90 days of
receiving the right to sue letter from the HRC, rather, Williams
filed his complaint in federal district court. Williams contends
that this filing satisfied § 49-2-509(2), MCA, and that the
"savings statute," § 27-2-407, MCA, gives him one year to refile
his complaint following dismissal in federal court. The "savings
statute," 5 27-2-407, MCA, provides:
If an action is commenced within the time limited
therefor and a judgment therein is reversed on appeal
without awarding a new trial or the action is terminated
in any other manner than by a voluntary discontinuance,
a dismissal of the complaint for neglect to prosecute the
action, or a final judgment upon the merits, the
plaintiff or, if he dies and the cause of action
survives, his representative may commence a new action
for the same cause after the expiration of the time so
limited and within 1 year after such a reversal or
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termination.
The District Court aptly noted that "Plaintiff's argument
missed one critical point--that is, the action filed by Plaintiff
in federal district court is against a different party. The sole
defendant in the federal action was Pegasus, which is not a party
to this action." In interpreting a "savings statute" similar to
Montana's, the Tennessee Court of Appeals determined that:
The savings statute applies only when the new
complaint and the original complaint "are substantially
for the same cause of action." . . . There must be an
identity of the parties in order for the new and original
complaints to be substantially the same. . . .
[The court determined that plaintiff's] second
complaint in state court is not substantially similar to
his original state complaint because it involved
different parties. The savings statute is not applicable
to the claims in a renewed complaint against a party not
named as a defendant in the original complaint.
[Citations omitted.]
Turner v. Aldor Co. of Nashville, Inc. (Term. Ct. App. 1991), 827
S.W.Zd 318, 321 (emphasis added) (interpreting Term. Code Ann. §
28-1-105(a)). We find the reasoning of the Tennessee Court of
Appeals to be persuasive and agree that the "savings statute" does
not apply to save or "renew" a complaint against a party not named
in the original complaint.
Similarly, in McCoy Enterprises v. Vaughn (Ga. Ct. App. 1980),
268 S.E.2d 764, 765, the Georgia Court of Appeals discussed a
situation where, as here, the plaintiff knowingly named the wrong
party in the original complaint. The McCov court stated that even
though the corporate defendant likely had actual notice because of
the first suit, the second suit should have been dismissed because
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the corporation had not been named as a party in the first suit.
The court concluded that "since appellant corporation was never a
party to the original suit, [respondent] cannot maintain a
'renewal' action against it in light of the intervening statute of
limitation." McCoy, 268 S.E.2d. at 765.
In the instant case, the District Court noted that Zortman and
Pegasus were separate legal entities and stated that:
The only way for Plaintiff to prevail in his argument is
to show that Zortman is the alter ego of Pegasus; that
is, to show that the two entities should be treated as
the same. Plaintiff does not make any such allegations
in his complaint and has not made any other showing of
such evidence, by affidavit or otherwise, to this Court.
Although Williams named "Pegasus Gold Corp., a Nevada Corporation,
d/b/a Zortman Mining, Inc." in the federal suit, that does not
suffice for purposes of the "savings statute." Zortman is not
merely a d/b/a for Pegasus. Rather, Zortman is a separate legal
entity. Williams cannot have the best of both worlds; ignoring
Zortman as a separate legal entity for purposes of diversity
jurisdiction and then, after dismissal in federal court, expecting
the Montana state courts to acknowledge the "d/b/a" label as
sufficient designation of the proper entity for purposes of the
"savings statute."
This Court has held that the "savings statute" is to be
applied in cases where an action has been commenced and, without
plaintiff's fault, there has been a failure to reach a
determination of the merits and the statute of limitations has run
during the pendency of such action. Tietjen v. Heberlein (19181,
54 Mont. 486, 488, 171 P. 928, 928.
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Here, the District Court noted that "Plaintiff had every
opportunity to bring a discrimination claim against Zortman in the
proper forum within the statutory period." With respect to
Williams' filing in federal court, the court stated "it appears
that Plaintiff attempted to manipulate the jurisdiction of the
federal court by only suing Pegasus . . and Plaintiff cannot now
be said to be without fault in omitting Zortman as a defendant in
the federal claim." We agree with the District Court's conclusion,
citing 5 49-2-509(5),l MCA, that:
As Plaintiff chose not to include Zortman [a separate
legal entity] as a party in the federal action, that
action does not trigger the "savings" statute. Without
the Montana "savings" statute, the statute of limitations
under Section 49-[21-509(5), M.C.A. clearly applies.
Accordingly, the District Court concluded that § 49-2-509(5), MCA,
operated to bar Williams' state court complaint because it had not
been filed within the go-day period. We determine that the
District Court correctly concluded that Williams' claim was not
saved by § 27-2-407, MCA, because Zortman was not a party to the
first suit. Accordingly, the statute of limitations set forth in
5 49-2-509(5), MCA, operated to bar Williams' claim.
Affirmed.
' We note that the District Court's order mistakenly cites
5 49-2-509(5), MCA, as § 49-5-509(5), MCA. The statute of
limitations relied on by the District Court appears in § 49-2-
509 (5), MCA, and Title 49 does not include Chapter 5.
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We concur.
Justices
8
I
Justice Terry N. Trieweiler dissenting.
I dissent from the majority opinion.
The majority's result can only be accomplished by grafting
judicially-created elements onto Montana's saving statute which are
not present in the statute itself. In the process, the majority's
result is accomplished in total disregard of the purpose of the
saving statute and the merits of the plaintiff's claim.
Montana's saving statute, found at § 27-2-407, MCA, provides
in relevant part that:
If an action is commenced within the time limited
therefor and . the action is terminated in any other
manner than by a voluntary discontinuance, a dismissal of
the complaint for neglect to prosecute the action, or a
final judgment upon the merits, the plaintiff . . . may
commence a new action for the same cause after the
expiration of the time so limited and within 1 year after
such a . . termination.
(Emphasis added.)
Contrary to the discussion in the ancient case of Tietjen v.
Heberlein (1918), 54 Mont. 486, 488, 171 P. 928, 928, there is no
provision in the "saving statute" which renders the statute
inapplicable if the original federal action is dismissed based on
some subjective notion of the plaintiff's "fault." Neither is
there any language in the saving statute which would make it
inapplicable where the parties are not identical. The statute will
not save a subsequent state court action where three, and only
three, circumstances exist: (1) voluntary dismissal by the
plaintiff, (2) dismissal for failure to prosecute by the plaintiff,
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and (3) final judgment on the merits. None of those circumstances
exists in this case.
Furthermore, it is incorrect that in any substantive sense the
party that Williams sued in federal court was different than the
party subsequently sued in state court. The difference between
suing Pegasus Gold Corp., d/b/a Zortman Mining, Inc., and suing
Zortman Mining, Inc., as a wholly-owned subsidiary of Pegasus Gold
Corporation, is a difference that exists on paper only. The nature
of the relationship between the two corporations was correctly
alleged in substance, notice to one corporation was effectively
notice to the other, and the effect of allowing the subsequent
state action to proceed after amending the form in which the
defendant was named would have been no different than allowing
amendments in state court to relate back to the date of the
original action under Rule 15(c), M.R.Civ.P.
If Williams had sued Pegasus Gold Corp., d/b/a Zortman Mining,
Inc., in state court within ninety days after the Montana Human
Rights Commission issued its notice of right to sue and had amended
his complaint to correctly identify the defendant as simply Zortman
Mining, Inc., more than ninety days after the notice of right to
sue, his amendment would have related back to the date of the
original cause of action and would not have been subject to
dismissal based on the statute of limitations. Rule 15(c) provides
in relevant part that:
Whenever the claim or defense asserted in the amended
pleading arose out of the conduct, transaction, or
occurrence set forth or attempted to be set forth in the
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original pleading, the amendment relates back to the date
of the original pleading. An amendment changing the
party against whom a claim is asserted relates back if
the foregoing provision is satisfied and, within the
period provided by law for commencing the action against
the party to be brought in by amendment, that party
(I) has received such notice of the institution of the
action that the party will not be prejudiced in
maintaining a defense on the merits, and (2) knew or
should have known that, but for a mistake concerning the
identity of the proper party, the action would have been
brought against the party.
In Berlin v. Boedecker (1994), 268 Mont. 444, 087 P.2d 1180, we
allowed an action to proceed against a corporate defendant, even
though the complaint was not amended to name the corporate
defendant until seven and one-half years after the actions
complained of. We held that because a principal in the corporation
had been named in the original suit which had been filed prior to
expiration of the statute of limitations, the corporate defendant
had notice of the plaintiff's allegations in a timely fashion and
was not prejudiced by being named as a party by later amendment.
In this case, all the requirements of Rule 15(c) were
satisfied. Zortman Mining, Inc., had notice of the action against
Pegasus Gold in federal court; it knew that Zortman was the proper
party; and no prejudice can be shown to Zortman by now having to
defend the case on its merits.
Because an amendment changing the identity of the parties
would have been allowed in state court had the action originally
been filed against Pegasus Gold in state court, no different result
should occur in this situation in light of the saving statute. The
purpose of the saving statute is to allow actions which are filed
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on time in federal court to proceed in district court after
dismissal in federal court, except for limited circumstances which
are not present in this case. The fact that the form by which the
defendant was identified in federal court was not identical to the
form by which the defendant is identified in the state court action
is not one of those circumstances which precludes application of
the statute. Any reading of the two complaints requires the
conclusion that they are the same cause of action.
Furthermore, I conclude that the majority's reliance on
decisions from intermediate courts of appeal in Tennessee and
Georgia is misplaced. In Turner v. Aldor Co. of Nashville (Term. Ct. App.
1991), 027 S.W.2d 318, the plaintiff was injured by an overhead
garage door and originally sued the distributor for the door. That
action was voluntarily dismissed and later, after the statute of
limitations had run, a second action was brought against the
manufacturer of the door. There is no indication in that decision
that the distributor and manufacturer were in any way related, or
that the manufacturer had been mentioned as a party in the
plaintiff's original complaint in any form. Furthermore, although
the exact text of Tennessee's saving statute is not set forth in
the opinion, we can conclude that it is not identical to Montana's,
or the mere fact that the plaintiff's original complaint had been
dismissed voluntarily would have precluded its application. In
this case, Zortman was identified in the caption of Williams'
federal court complaint. The claim in the subsequent state court
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action was identical, and Williams' federal court claim was not
voluntarily dismissed.
In McCoyEnterprisesv. Vaughn (Ga. Ct. App. 1980), 268 S.E.Zd 764,
the plaintiff's original cause of action was dismissed voluntarily
more than two years after it had been filed and after the trial of
the claim had commenced. A second cause of action was filed nearly
four and one-half years after the negligent act complained of had
occurred and a new defendant was named. The applicable statute of
limitations was two years. Significantly, both actions were filed
in state court and the Georgia Court of Appeals held that the
plaintiff could have availed himself of the opportunity to rename
the party defendant by amendment of his pleading, but had chosen
not to do so. Instead, he voluntarily dismissed his first cause of
action. Most significantly, Georgia's saving statute, which is
interpreted in that decision, requires that a second suit, in order
to be saved, be "against a person from whom relief was prayed in
the first suit." McCoy, 268 S.E.2d at 765. No similar requirement
is found in Montana's saving statute. Therefore, the Georgia
decision is completely inapplicable to the facts and the rule we
have been asked to interpret in this case.
In addition to being an incorrect and unjustified application
of the plain language found in Montana's saving statute, the
reasoning of the District Court, which has been affirmed and
adopted by this Court, is completely inappropriate. The approach
of the trial court and the majority seems to be that since the
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plaintiff's attorney tried to satisfy jurisdictional requirements
for federal court by the manner in which he identified the
defendants in his federal complaint, he did something wrong and
therefore, cannot avail himself of the plain provisions of
Montana's saving statute.
First, based on the record before us, it is impossible to
conclude that the plaintiff's attorney did anything wrong. There
may have been good reason to believe that Pegasus was simply the
alter-ego of Zortman. Lawyers often file complaints assuming one
set of facts can be established and subsequently learn otherwise.
Second, the application of Montana's saving statute has nothing to
do with "fault" and the majority's interjection of its notions of
propriety has no place in its application of that statute.
For these reasons, I would reverse the order of the District
Court and allow the plaintiff's claim to proceed to a resolution
based on its merits.
ust de
Justice William E. Hunt, Sr., joins in the foregoing dissenting
opinion.
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