No. 02-055
IN THE SUPREME COURT OF THE STATE OF MONTANA
2002 MT 83
___________________________________
THE GOLDMAN SACHS GROUP, INC., )
)
Petitioner, )
) OPINION
) AND
v. ) ORDER
)
MONTANA SECOND JUDICIAL DISTRICT )
COURT, BUTTE-SILVER BOW COUNTY, )
HONORABLE THOMAS M. MCKITTRICK, )
DISTRICT JUDGE, )
)
Respondent. )
___________________________________
¶1 The Goldman Sachs Group, Inc. (Goldman Sachs), has filed an application for writ of
supervisory control alleging that the Second Judicial District Court’s order denying its
motion for substitution of judge was an erroneous interpretation of § 3-1-804, MCA, and,
therefore, the District Court is proceeding under a mistake of law. Co-defendants in the
underlying District Court cause, Montana Power Company (MPC) and MPC Outside
Directors, have filed briefs in support of Goldman Sachs’ right of substitution. Plaintiffs in
the underlying District Court cause have filed a brief in opposition to substitution. None of
the parties dispute that this an extraordinary case warranting an exercise of supervisory
control under Rule 17(a), M.R.App.P. However, they do dispute the District Court’s
interpretation of § 3-1-804, MCA, governing the substitution of district court judges.
1
¶2 Plaintiffs in the District Court action filed their original
Complaint on August 16, 2001. In this original complaint,
Plaintiffs named several Defendants and John Does 1-2, but not
Goldman Sachs. Only Defendant PPL Montana (PPLM) was served with
the original Complaint, and on September 4, 2001, it entered its
first appearance. Plaintiffs filed their Amended Complaint on
September 14, 2001, substituting Goldman Sachs for one of the
advisor John Does. Soon thereafter, on September 21, 2001, PPLM
moved for substitution of District Court Judge Krueger.
Approximately one month later, on October 22, 2001, Defendant MPC
and all individual MPC Defendants acknowledged service and receipt
of the Amended Complaint. Judge McKittrick assumed jurisdiction of
this action on October 26, 2001.
¶3 Plaintiffs did not serve Goldman Sachs with the Amended
Complaint until September 28, 2001, or approximately one week after
PPLM moved for substitution of the first judge assigned in this
action. Goldman Sachs acknowledged service and receipt of the
Amended Complaint on November 16, 2001. Seven days later, on
November 23, 2001, Goldman Sachs moved to substitute Judge
McKittrick.
¶4 The District Court denied Goldman Sachs’ motion to substitute.
It held that since Goldman Sachs failed to show that hostility
existed between it and the other Defendants, it could not
substitute the district court judge under § 3-1-804(1), MCA. The
District Court noted that the Defendants, rather than being
2
hostile, had engaged in coordinated efforts thus far in the
litigation.
¶5 The District Court also held that Goldman Sachs’ motion was
untimely under § 3-1-804(1)(c), MCA. It calculated that the latest
date for any of the original parties to exercise their right of
substitution was November 21, 2001, or 30 days after the date on
which all of the original Defendants had acknowledged service. The
court reasoned that Goldman Sachs was not an original party because
it was not named in the original Complaint, and, thus, it had no
right of substitution under § 3-1-804(1)(c), MCA. In any event,
the court concluded that had Goldman Sachs been an original party,
its motion to substitute filed on November 23, 2001, was untimely.
¶6 We will assume supervisory control over a district court, as
authorized by Article VII, Section 2(2) of the Montana Constitution
and Rule 17(a), M.R.App.P., to control the course of litigation
where the district court is proceeding under a mistake of law, and
in so doing is causing significant injustice, and where the remedy
by appeal is inadequate. Our determination of whether supervisory
control is appropriate is a case-by-case decision, based on the
presence of extraordinary circumstances and a particular need to
prevent an injustice from occurring. Park v. Montana Sixth Jud.
Dist. Court, 1998 MT 164, ¶ 13, 289 Mont. 367, ¶ 13, 961 P.2d 1267,
¶ 13 (citing Plumb v. Fourth Jud. Dist. Court (1996), 279 Mont.
363, 368, 369, 927 P.2d 1011, 1014-15; Mazurek v. District Court
(1996), 277 Mont. 349, 352-53, 922 P.2d 474, 476-77).
3
¶7 Having reviewed the briefs submitted in support of and in
opposition to the Goldman Sachs’ application, we conclude this is
an extraordinary case and supervisory control is proper. The case
presents the purely legal issue of whether the District Court
properly interpreted § 3-1-804, MCA, to require a defendant to
demonstrate its “adversity” to another defendant which had already
exercised its right of substitution in order to invoke an
independent right of substitution. This is an issue of both first
impression and statewide importance. In addition, the legal
question of timeliness under § 3-1-804(1)(c), MCA, is presented.
¶8 Additionally, and most importantly, the substitution of judge
issue presented here occurs in the context of pending litigation
which is potentially complex and which involves numerous parties.
Requiring litigation of the matter as it stands now risks wasting
significant resources and may cause uncertainty as to the validity
of the District Court judge’s involvement and decisions in this
matter. Under these circumstances, due appeal of the issue
following final judgment would come too late. Accordingly, the
Court will exercise its authority under Rule 17(a), M.R.App.P., and
issue an appropriate order addressing the issues presented.
¶9 Having determined that this is a proper case for supervisory
control, we turn to the issue of whether substitution is
appropriate in this case. A motion for substitution of a district
court judge may be made by any party to a proceeding only in the
manner provided for in § 3-1-804, MCA. “[E]ach adverse party,
including the state, is entitled to one substitution of a district
4
judge.” At issue here is what constitutes “each adverse party” for
purposes of the statute. Simply stated, in cases involving
multiple defendants, must a defendant be adverse only to the
plaintiff or also to the other defendants?
¶10 Goldman Sachs maintains that its adversity to the Plaintiffs
is sufficient to invoke its right of substitution under § 3-1-804,
MCA. It claims that, under the plain language of § 3-1-804, MCA,
Goldman Sachs and PPLM are “each” an “adverse party” with
independent rights of substitution. As such, Goldman Sachs insists
that it need not demonstrate that its interests are adverse to
PPLM’s interests in order to substitute Judge McKittrick.
¶11 Goldman Sachs’ reasoning flows from the language of § 3-1-
804(1)(c), MCA. It argues that this provision expressly
contemplates multiple defendants making separate motions for
substitution:
When a judge is assigned to a cause for 30 consecutive
days after service of a summons . . . and no motion for
substitution of judge has been filed within said time
period, the plaintiff . . . and the party upon whom
service has been made shall no longer have a right of
substitution. Any party named in a summons who is
subsequently served shall have 30 consecutive days after
such service in which to move for a substitution of
judge.
¶12 Focusing on the language “any party . . . subsequently served,” Goldman Sachs argues
that the right of substitution is not restricted to only those subsequently served defendants
which are adverse to other defendants or those previously served. It faults the District
Court’s interpretation of § 3-1-804, MCA, for creating “not a right but a race,” since a
defendant served before another defendant can exercise its right of substitution and, at the
5
same time, preclude subsequently served defendants from exercising their right of
substitution. In any event, Goldman Sachs argues that, on the face of the allegations
contained in the Amended Complaint, there is certainly the potential for “hostility” among
the Defendants in this case.
¶13 Plaintiffs disagree. They contend that the plain statutory
language of § 3-1-804(1), MCA, does not permit a right of
substitution for “each party.” Rather, it limits substitution to
“each adverse party.” Plaintiffs claim that adopting Goldman
Sachs’ interpretation would absurdly entitle each defendant, no
matter how many, to a right of substitution. In analogizing the
substitution of a judge to peremptory juror challenges in criminal
cases, Plaintiffs reason that since multiple defendants must
demonstrate hostility in order to obtain multiple peremptory
challenges, it is reasonable to expect that multiple defendants
demonstrate adversity in order to obtain multiple substitutions of
district court judges. Plaintiffs insist that, based upon the
coordinated efforts of the Defendants in this matter thus far as
well as the allegations contained in the Amended Complaint, Goldman
Sachs cannot demonstrate adversity and is not entitled to a right
of substitution.
¶14 We have not previously interpreted the term “each adverse
party” as set forth in § 3-1-804(1), MCA. We conclude that, in
order to invoke the right of substitution in cases involving
multiple parties, § 3-1-804, MCA, requires the moving party to
demonstrate adversity with a co-party to the action which has
6
already exercised its right of substitution. To conclude otherwise
based upon subsection (c) language referring to the right of “any
party” to substitute a judge would effectively nullify the
adversity requirement set forth in subsection (1) of § 3-1-804,
MCA. We conclude that the requirement of adversity found in § 3-1-
804(1), MCA, must be satisfied before reaching the classification
and timeliness requirements set forth in § 3-1-804(1)(c), MCA.
¶15 While we share Goldman Sachs’ concern that this interpretation
could result in gamesmanship on the part of a plaintiff who does
not serve a co-defendant until after a separate co-defendant has
exercised the right of substitution, we are equally if not more
concerned at the prospect of having 4 or 14 or more defendants each
exercising substitution rights without demonstrating adversity. We
do not construe § 3-1-804, MCA, to permit an endless string of
substitutions.
¶16 Nor do we construe § 3-1-804, MCA, to require a showing of
“hostility,” as in the criminal jury selection context. By the
time a case has made its way to jury selection in a criminal case,
all co-defendants have been made part of the case, all pleadings
have been filed, facts have been developed and the court can
readily ascertain whether hostility exists among co-defendants. In
contrast, the substitution of a district court judge occurs at the
earliest stages of litigation. By necessity, therefore, any
determination of adversity among defendants must be made based on
the allegations set forth in the complaint. This is in accord with
other early-stage determinations, such as motions to dismiss, which
7
give the benefit of the doubt to the pleadings. Under this rule,
adoption of co-parties’ Rule 12, M.R.Civ.P., arguments at the
outset of litigation is irrelevant to a party’s right of a
substitution.
¶17 In sum, we hold that, in order to invoke the right of
substitution in cases involving multiple parties under § 3-1-804,
MCA, the moving party must demonstrate adversity with a co-party to
the action which has already exercised its right of substitution.
The determination of adversity is based solely on the allegations
set forth in the complaint.
¶18 Here, the Amended Complaint does not demonstrate adversity
between Goldman Sachs and PPLM. It simply alleges all of the
Defendants were privy to and part of a strategy to transfer MPC
assets without shareholder approval. Moreover, Plaintiffs allege
that Goldman Sachs breached the same fiduciary duties as the MPC
directors and that it “aided and abetted” the directors. We
conclude that these allegations do not demonstrate adversity.
Rather, they indicate that Plaintiffs “lump” all Defendants
together for purposes of culpability.
¶19 As the dissent points out, under our interpretation, if a co-party who is not adverse to
you has filed a substitution of judge, that preempts your opportunity to file a substitution.
Under that scenario the judge in question is substituted at the behest of a non-adverse party
and a new judge, chosen not by any party, but by the first judge, is assigned to the case.
Contrary to the dissent’s characterization, we fail to see how this process “tilts the playing
field” or creates a windfall for anyone involved.
8
¶20 Having concluded that Goldman Sachs did not have the right of
substitution under § 3-1-804, MCA, we need not address whether its
substitution motion was timely. We do, however, point out that our
decision in Sooy v. Petrolane Steel Gas, Inc. (1985), 218 Mont.
418, 708 P.2d 1014, is dispositive. Here, Goldman Sachs was a
fictitious defendant whose true name was later discovered and
substituted by amendment. Based on Sooy, Goldman Sachs is
considered a party to this action from its commencement. As an
original party subsequently served, Goldman Sachs had 30
consecutive days after service in which to move for a substitution
of judge under § 3-1-804(1)(c), MCA. Goldman Sachs acknowledged
service on November 16, 2001, and it filed its motion for
substitution on November 23, 2001, well within the 30-day
requirement.
¶21 We conclude that the District Court properly interpreted § 3-
1-804, MCA, to require adversity among co-defendants in order to
exercise the right of substitution, and that the District Court,
although using the term “hostility,” properly held that no
adversity existed between the co-defendants in this case. We thus
affirm the District Court’s denial of Goldman Sachs’ motion to
substitute judge.
¶22 THEREFORE IT IS HEREBY ORDERED:
¶23 Goldman Sachs’ application for a writ of supervisory control
is DENIED.
¶24 The Clerk is directed to mail a copy of this order to
Plaintiffs’ and Defendants’ counsel, to the Honorable Thomas M.
9
McKittrick, District Judge, and to the Clerk of the District Court
of Butte-Silver Bow County.
DATED this 2nd day of May, 2002.
/S/ W. WILLIAM LEAPHART
/S/ JIM REGNIER
/S/ PATRICIA COTTER
/S/ TERRY N. TRIEWEILER
/S/ JIM REGNIER
10
Justice Patricia O. Cotter specially concurs.
¶25 I concur in the result reached by the Court, but offer
additional, and simpler, grounds for my belief that the Court has
reached the correct decision.
¶26 Section 3-1-804(1)(c), MCA, begins by addressing the situation
where a district judge is "assigned to a cause for 30 consecutive
days after service of a summons . . . , and no motion for
substitution of judge has been filed within said time period . . .
.” The first sentence of this paragraph provides that in such a
circumstance, and after the 30 days expires, the plaintiff and the
party served with the summons will no longer have the right of
substitution. The next sentence in the paragraph sets forth the
rights of those subsequently served to move for a substitution of
judge. It is this second sentence in § 3-1-804(1)(c), MCA,
regarding the rights of the subsequently served, upon which Goldman
Sachs relies for its position.
¶27 I maintain that placement of this contested language in the
middle of the paragraph addressing what can occur when neither the
original plaintiff nor the originally served defendant have moved
for substitution, is significant. It is the party who is
“subsequently served” who has the right to move for substitution.
To make any sense of § 3-1-804(1)(c), MCA, as a whole, the term
“subsequently served” must refer back to the situation already
described in the first sentence of the paragraph. In other words,
once neither the original party nor the initially served defendants
have timely moved for substitution, they lose that right, and a
11
party “subsequently served” then has the opportunity to move for
substitution. ¶28 Here, an originally served defendant, PPLM, did
timely move for substitution. Once this occurred, the
“subsequently served” party no longer had the right to seek
substitution under § 3-1-804(1)(c), MCA.
¶29 This interpretation of the statute is inherently consistent
with the general statement contained at § 3-1-804(1), MCA, that
each adverse party is entitled to one substitution of judge, as a
“subsequently served” defendant may only move for substitution if a
previously served defendant has not done so. If one accepts this
interpretation, it is not necessary to engage in the construction
of the term “adverse party, ” as the District Court did, and as the
majority and dissent do here.
/S/ PATRICIA COTTER
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Justice James C. Nelson concurs and dissents.
¶25 I concur in part of our order and dissent in part. While I
would not find a need to define "hostility" for purposes of
interpreting § 3-1-804, MCA--the word is not even included in the
statute--nevertheless, for the reasons set out by the majority, I
agree that the rules for determining hostility in the context of
jury selection have no place in resolving the matter at issue.
Similarly, and for the same reasons articulated by the majority, I
agree with the Court's conclusion that Goldman Sachs's motion for
substitution was timely filed.
¶26 I dissent from that part of the majority's order determining
that adversity amongst co-parties is required in addition to
adversity between plaintiffs and defendants. I conclude that the
phrase "each adverse party" as set out in § 3-1-804(1), MCA, does
not include the requirement that co-parties be adverse.
¶27 The cardinal rule of statutory construction requires that we
simply declare what is in terms or in substance contained in the
statute, neither inserting what has been omitted nor omitting what
has been inserted. Section 1-2-101, MCA. We must construe the
statute according to the plain meaning of the words used, and if
the language is clear and unambiguous, then no further
interpretation is necessary. Sherner v. Conoco, Inc., 2000 MT 50,
¶ 35, 298 Mont. 401, ¶ 35, 995 P.2d 990, ¶ 35 (citations omitted).
¶28 Assuming the other requirements of the statute are met, § 3-1-
804(1), MCA, allows "each adverse party" to peremptorily substitute
13
the presiding judge once. The statute does not require that each
defendant (or plaintiff) or that all defendants (or plaintiffs)
collectively possess this right of substitution. Rather, the plain
and unambiguous language of the statute gives "each adverse party"
a right of substitution.
¶29 The majority offer no definition of "adverse party." While we
have not defined this phrase in the context of § 3-1-804, MCA, we
have defined what an "adverse party" is for purposes of appeal. We
have stated that "[a]n 'adverse party' upon whom a notice of appeal
is required to be served is one whose rights may be injuriously
affected by a reversal or modification of the judgment from which
the appeal is taken." Reardon v. Gilligan (1949), 122 Mont. 295,
299-300, 202 P.2d 242, 244 (citations omitted). See also Central
Mont. Stockyards v. Fraser (1957), 133 Mont. 168, 180, 320 P.2d
981, 988 ("an 'adverse party'. . . is a party who has an interest
in opposition to the object sought to be accomplished by the
appeal, or a party whose rights may be adversely affected by the
reversal or modification of the judgment"). Accord In re Estate of
Stoian (1960), 138 Mont. 384, 392, 357 P.2d 41, 46 (citations
omitted).
¶30 Since this was the only jurisprudential definition of "adverse
party" on the books when the 1987 Court drafted and adopted what is
now § 3-1-804, MCA, it is logical that the Court had this
definition in mind when it included the phrase in the rule. That
is, an "adverse party" is one who is entitled to appeal an adverse
judgment. Certainly Goldman Sachs fits within this definition of
14
"adverse party." Undisputedly, it is a party who has an interest
in opposition to the object sought in the litigation and, thus, is
a party whose rights may be adversely affected by reversal or
modification of an adverse judgment. Goldman Sachs is an "adverse
party" as we have defined that phrase in our case law and there is
no good reason why it is not an "adverse party" for purposes of
exercising substitution rights under § 3-1-804(1), MCA.
¶31 Whether Goldman Sachs is adverse to one or another defendant
is beside the point. It is undisputed that Goldman Sachs is
adverse to the plaintiffs; that it is a party to this litigation;
and that it will ultimately be entitled to appeal an adverse
judgment against it. That is all the plain language of § 3-1-804,
MCA, requires, nothing more.
¶32 The majority's reading into the statute the requirement of
adversity between co-parties violates the rules of construction
aforementioned. The Court has inserted a phrase--"each adverse
party (meaning co-parties collectively to the extent they are not
adverse)"-- which is omitted from the unambiguous statute. The
Court has ignored the plain language of the words used--"each
adverse party"--as we have previously defined those in our case
law. And the Court has constructed this judicial re-write from
whole cloth without citation to any authority whatsoever.
¶33 Moreover, while § 3-1-804, MCA, clearly contemplates and
provides for lawsuits with multiple parties, there is not one
suggestion in the plain language of the statute that co-party
adversity is a prerequisite for substitution in cases involving
15
more than one defendant or, presumably, plaintiff. Certainly, if
such was the requirement when this Court drafted and adopted this
statute in 1987 or when we subsequently amended it, appropriate
language could have been included. More to the point, if this Court
now intends that the requirement of co-party adversity be included
in the statute, then the appropriate mechanism is to amend the rule
pursuant to our authority under Article VII, Section 2(3) of the
Montana Constitution; publish the amendment providing for an
effective date; and then go on from there with the new requirement
in place. Jerking the rug out from under parties in a pending
lawsuit violates basic fairness, if not due process.
¶34 Furthermore, as Goldman Sachs argues, inserting into the
statute a requirement for co-party adversity makes the exercise of
the right of substitution not a right, but a race. In a multiple-
defendant case, absent proof of co-party adversity, the first
defendant to exercise its right of substitution under § 3-1-804,
MCA, precludes any other defendant from exercising that right, even
though defendant number two timely files its motion for
substitution in accordance with the provisions of the statute. If
the plaintiff serves defendant number two after defendant number
one's substitution, defendant number two is out of luck, even
though it exercised its first opportunity under the statute to
substitute the judge.
¶35 Obviously, the opportunities for gamesmanship in service of
process and in use of the fictitious name statute, § 25-5-103, MCA,
abound. Under our new co-party adversity rule, a plaintiff can
16
prevent a defendant from exercising its substitution right by
merely filing a complaint against a named defendant and a John Doe;
by effecting service on the named defendant immediately; and by
then waiting 30 days to amend the first complaint and to substitute
the named party for the John Doe. This may be a windfall for the
plaintiff's bar, but tilting the playing field is not supposed to
be what our procedural rules are about. See Haugen v. Blaine Bank
(1996), 279 Mont. 1, 12-13, 926 P.2d 1364, 1370-71 (Nelson, J.,
concurring).
¶36 Finally, I will also note that district court judges
frequently complain that substitutions under § 3-1-804, MCA, are
too easy and create problems for the substituted judge in finding
another jurist to take his or her place, not to mention the travel
and disruption of business in two courts that substitution often
involves. It appears that we have now ameliorated that problem to
some extent. On the other hand, many members of the practicing bar
view their right of substitution as being an important, if not
sacred, opportunity to assure their client's right to a fair trial.
Our decision here diminishes that right substantially.
¶37 For all of the foregoing reasons, I dissent from our insertion
of a co-party adversity rule into the otherwise plain and
unambiguous language of § 3-1-804, MCA. I would reverse the trial
court's decision.
/S/ JAMES C. NELSON
17