S o . 01-190
IN THE SUPREME COURT OF TlHE STATE OF MOXTANA
2002 M'I' 23
LVlL.L,IAM MacPi-EAT,
Plaintiff and Appellant,
Y.
STE\'EN L,. SCFJAUF and FARblERS
INSURANCE CROUP OF COMPANIES
Defendants and Respondents
APPEAL. FROM: District Court of the Eleventh Judicial District;
1 1and for the County of Flatliead,
1
C.
The Honorable Do~iglas Harkin, Judge presiding.
COUVSEi OF RECORD.
For Appellant:
Will ILlacPheat, Missoula, Montana (pro se)
For Respondents:
K. James I-leekathorn, Crowley, Hanghey, Hanson, Toole & Dietrich,
Kalispell, Montana (Schaui); Willia~ii R. Bieler, Willianis & Ranney,
Missoula; Montana (Farmers)
Subrnrtted on Brrefs. .August 23,2001
Decided: February 12,2002
Filed:
Jrrctice Patrma 0 Cotter delivered the Opinmn ofriic Court
I
a! rippe!lan; William ?/I:iciiheai filed a complaint fix iibd iir h. Eiii,i)i~~h
i Juilici;ii
District Court. Flathead County. against Respondents Steven L. Schauf and Farxicrs
insurance Group of Cotnpanies ("FIGC"). Farmers Insurance Exchange ("PIE") made a
limited appearance and moved the District Court to quash MacPheat's service of process on
FIGC and dismiss FIGC from the action on the grounds that FIGC is not a legal entity, nor
MacPheat's employer. The District Court granted FIE'S motions and MacPheat appeals. We
reverse and reinand.
72 The sole issue on appeal is whether the District Court erred when it quashed the
service of process on FlGC and dismissed FlGC from the action.
FACTUAL AND PROCEDURAL BACKGROUND
!3
I 1 July
0 1 2s1 1997, MacPlleat filed a complaint in the First .ludicial District Court,
Lewis and Clark County, against Schauf and FIGC. In the cornplaint, Macl'lmt alleged that
Schauf wrote a libelous letter regarding MacPheat's character, on FlGC Ietterltead, to Judge
Katlrerine Curtis who was presiding over one of MacPheat's criininal proceedings.
MacPheat alleged that Schauf wrote the letter with n~aliciousintent while acting in his
official capacity as an employee of FIGC. The complaint alleged that this letter
compron~ised constitutiorial right to be tried by an impartial tribunal. On October 8:
his
1997. the matter was transferred to the Eleventh Judicial District Court. Flathead County.
54 In the ensuing months, the parties filed a litany of notions in the District Court arid
applications for extraordinary writs with this Court regarding. among other things, the
sdficiency ofthe FIGC summons and various discovery requests. Ultimately, on May 25,
2000, MacPheat timely issued an amended summons and subsequently served FIGC. On July
20. 20001FIE. an inter-insurance exchange affiliated with FIGC, made a limited appearance
to move the District Court to quash Macl'heat's service of process on FIGC and dismiss
FIGC from the action.
15 In support of its motions, FIE attached the affidavit of Christopher K. Pflug, i?\ssistant
Secretary of FIE. Pflug's affidavit stated that FIGC is simply "a federally registered service
mark" and "not a legal entity." Further, the affidavit maintained that FIE employed Schauf,
not FIGC. Therefore, FIE argued that FIGC is not a legal entity upon which service of
process can be made and maintained that MacPheat's complaint failed to state a claim upon
which relief could be granted because FIGC did not employ Schauf.
1
'6 On August 16, 2000, the District Co~rrt
granted FIE'S motion to quash MacPheat's
service of process on FIGC and dismiss FIGC from the action. On August 23, 2000, the
District Court entered its judgment dismissing MacPheat's claims against FIGC with
prejudice. Orr January 26, 2001. the District Court certified its judgment as final pursuant
to Rule 54(b), M.tl.Civ.I'. MacPheat appeals.
STANDARD OF REVIEW
9 We review de c.~uvo district court's ruling on a motion to dismiss under Rule
a
Sulvutiotl Amzy (1997). 287 Mont. 99, 102.95 1 P.2d 1352,
1 z(hI(6). M.R.Civ.P. I'owell~~.
1154. The issues of whether the court properly quashed service of process and granted a
Rule 12(b)(6), h1.R.Civ.P.. motion to dismiss present questions of law. Set. Fotk IJ. Ulshcr
(l993), 260 Mont. 379.383,860 P.2d 145, 147 and Missoz~luYWCA v. Burd, 1999 PIT 177,
f] 3, 295 Mont. 260, f[3,983 P.2d 933, Tj 3. This Court reviews issues of law to determine
whether the district court's application or interpretation of the law is correct. I,Villiums v.
Zortmntl ,2lirli/zg,lnc. ( 1 996), 275 Mont. 5 10. 5 12. 9 14 P.2d 97 1, 972-73.
DISCUSSION
7i8 Did the District Court err when it quashed the service of process on FIGC and
dismissed FlGC from the action?
'19 FlGC argues that the District Court properly quashed service of process and dismissed
it from the action for three reasons. First, FlGC argues that it is not a "person" subject to
service of process for purposes of Rule 41'1, M.R.Civ.P. Second. FlGC insists that it is not
a corporation, partnership, or any other type of business entity capable of sustaining suit.
FIGC contends that it i s merely a registered service mark used by Farmers' companies to
distinguish their services from others. Third: FlGC indicates that MacPheat's complaint
imputes liability to it under the theory of rcspondeat superior. However. FlGC maintains that
it has never employed the alleged tortfcasor, Steven Schaui- Therefore. FLGC urges us to
affirm the District Court's order.
4;10 In its limited appearancel FIE presented all of these argun~crtts the District Court
to
in support of its motion to quash service of process on FIGC and dismiss FICC from the
action. The District Court granted FLE's motions but provided no indication of which
argument it found compelling or determinative. The District Court simply stated that it
considered the briefs oiboth parties and granted FIE'S motions. Therefore, we will address
the legal service of process and dismissal issues raised by the parties and leave the factual
inquiry-regarding the respondeat superior allegation to the District Court on remand.
1 Interestingly, FIGC submitted the same ""service mark" argument presented here to
the Oklahoma Supreme Court in Oliver v. I;itnne,:c. Ins. Group qf'Cos. (Okla. 1997), 941 P.2d
985. There, the plaintiff filed a bad faith suit against FIGC and three other defendants.
FIGC filed a motion for snnmary judgment which referenced an affidavit provided by FIE'S
assistant secretary. The affiant stated that FIGC had never been a corporate entity and that
FlGC was merely a federally registered service mark used in marketing Farmers' services.
Tlierefore, FIGC argued that it was not subject to legal process and was an improper
defendant.
Ti 12 The Oklahonta Supreme Court acknowledged that under the traditional comnlon law,
a voluntary, unincorporated association could not be sued under its name because it did not
have a legal status apart from that of its individua! members. Oliver, 941 P.2d at 988.
unjustness ofzhc rule in present
However, the court also recognized that '~jbjeaauseo t ~ l i e
day society. it has heen modified in many jiirisdictions." Oliver, 941 P.2d at 988. Oklahoma
statutorily rnodified the cirrntnon lam rule in 12 O.S. 1991 5 182, which provides:
When any two or more persons associate theniselves together and
transact business for gain or speculation under a particular appellation. not
being incorporated, they may be sued by such appellation urithout tianling the
individuals composing such association and service of process may be had
upon such association by personal service as provided by law for service of
summons in civil actions . . . .
Therefore. the Oklahoma Supreme Court dismissed FIGC's service mark defense. In so
doing the court stated:
No one suggests that the companies which 'associate themsel~es together' in
the Frtmcrs Group do not 'transact business for gain.' Whatcver else Farmers
Insurance Group of Companies does, it is clearly a name under which a
number of Farmers-related companies insure against risks. Under our section
182 Oliver may properly bring suit against Farmers Insurance Group of
Companies.
3 We find the reasoning in this case persuasive. Rule 4h,M.R.Civ.P., defines "person"
as follows:
Definition of person. As used in this rule, the word 'person,' whether
or not a citizen or resident of this state and whether or not organized under the
laws of this state. inclndes an individual whether operating in the individual's
own name or under a trade name; an individual's agent or personal
representative; a corporation; a limited liability company; a business trust; an
estate; a trust; a partnership; (in urrincopwated ussociution; urrd c i i two or.
~
inow p e u o m iruvirrg u joint or- cotninon interest or any other Icgal or
con~n~ercial entity. [~rn&sis added.]
Clearly, if FfCiC is to qualify as a person within the ambit of Rule IA.M.R,Civ.P., then it
must do so as an ""unincorporated association" or "any two or more persons having a joint
or common interest."
5114 This Court llas defined an unincorporated a.;sociation" as a voluntary group of
persons, ~5~ithout
a charter, ibrnmd by mutual consent for the purpose of promoting a common
enterprise or prosecuting a common objective. Associated Press I). Senate Repuhlicatz
Cirltcus (19973, 286 Mont. 172, 179, 951 P.2d 65?69. FlGC states in its brief that it is an
identity "ttsed by Farmers Insurance Exchange and several other insuring entities for
advertising and marketing." Certainly; the advertising and marketing of Farmers' services
under the FIGC namc constitutes the pro~mtion a common enterprise by vol~mtary
of groups,
formed by mutual consent. Further, under the same rationale, FIGC is comprised of two or
more persons cvl~ich
endeavor to cultivate a common interest. Therefore, we hold that FIGC
is a "person" within the contemplation of Rule 4A, M.R.Civ.P. To conclude otherwise and
sanction FIGC's proposed intangible classification would unnecessarily restrict those who
can be sued in Montana's courts and fly directly in the face of the open courts provision of
Article [I, Section 16 of the Montana Constitution. See Associated Press, 286 Mont. at 180,
95 1 P.2d at 70.
5 Further, for purposes of designating FIGC as a named defendant, 25-5-104, MCAI
contains language strikingly- similar in tone and effect to Oklahoma's statute referenced
above. Section 25-5-104, MCA, provides:
Action against business association. %%en two or more persons
associated in any business transact such business under a common name,
whether it comprise the names of such persons or not, the associates may be
sued by such common name, the summons in such cases being sen-ed on one
or more of the associates; and the judgment in the action shall bind the joint
property of all the associates in the same manner as if a!! had been named
defendar~ts had been sued upon their joint liability.
and
As in Oiiver, no one here suggests that the companies associated with FIGC do not transact
business. However, FIGC does maintain that the companies affiliated with it do not transact
business under the FiGC common name. Yet, the purported libelous correspondence and a
sample Farmers' automobile insurance policy appear to belie this proposition.
116
1 MacPheat alleged in his complaint that the Plpril 12. 1995 letter from Schaufto Judge
Curtis was written "as an official act of Mr. Schauf s employment with [FIGC]." The
District Court made no findings as to whether Schauf was transacting business in writing this
letter. lf Schauf wrote the letter in the ordinary course of his employment, it certainly
contained no reference to any of FIGC's affiliated organizations and provided no indication
that he acted as an employee of any entity other than FIGC. Instead, the letterhead claimed
"America Can Depend on Farmers" and was emblazoned with FIGC's name and logo.
$1 7 Further. as a sample Farmers' automobile insurance policy indicates, FlGC is clearly
a name under which a number of Farmers-related companies insure against risks. The policy;
issued approximately six months after Schauf composed his letter, does denote FIE as the
issuing company. However, this policy contains several refereuces to the FIGC common
name. The cover sheet includes FIGC's logo below the message "Important fnsurance
Docu~nents
Inside." A thank you letter from the insurance agent to the customer eorrtains
only FICC's name and address on the !c.tterhead. t\dditionally, the policy includes an
anti-stacking notice to the ci~sto~ner
signed by none other than FIGC. Accordingly, we
conclude that FIGC constitutes a common name under which its affiliates transact business.
Therefore, pursuant to 3 25-5-104: MCA; MacPheat may properly serve and bring suit
against FIGC.
718 The efrect of our holding is to allow MacPheat to file suit against FIGC and scrve it
with legal process. However; we nlust point out that 3 25-5-104, MCA, is not self-executing
in terms of liability. Section 25-5-104, MC.4. does provide a convenient procedure by which
a plaintiff can bring the members of an association before Montana's couris without naming
and serving process upon them individually. See Graham v. LloydS.sq f ' L o d o n (S.C. Ct.
App. 1988), 371 S.E.2d 801, 804. Yet, this statute does not alter the substantive burden of
proof associated with the cause of action. Once a plaintiff brings an association before the
court pursuant to 5 25-5-104, MCA. he or she must still establish the liability of the
association's members, if any, according to the applicable substantive law.
119
1 in summary. we hold that the District Court erred as a matter of law when it quashed
service of process on FIGC and dismissed it from the action. Pursuant to Rule 4A1
M.R.Civ.P., and 5 25-5-104. MCA; FIGC is subject to the jurisdiction of Montana's couris
and to service of process. However, on remand, MacPheat must still establish the substantive
elements of his case against the named Defendants under the theory of liability deiineatcd
in the complaint.
'20 Rcversed and remanded for proceedings consistent with this Opinion,
A,