DML, INC. v. Fulbright

No. 04-481

IN THE SUPREME COURT OF THE STATE OF MONTANA

2005 MT 204

DML, INC., a Montana corporation, JUNGA
JUICE, INC., a South Dakota corporation,
DENNIS ROWE, d/b/a Junga Juice of Bozeman,
and MTAZ, LLC,

Plaintiffs and Appellants,

v.

KEVIN FULBRIGHT and CARI FULBRIGHT,
individually and as officers and directors of Junga
Juice, Inc., a Montana corporation and JUNGA
JUICE, INC., a Montana corporation,

Defendants and Respondents.

APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone, Cause No. DV 04-208,
The Honorable Russell C. Fagg, Judge presiding.

COUNSEL OF RECORD:

For Appellants:

Michael B. Anderson, Anderson & Liechty, P.C., Billings, Montana

For Respondents:

Robert C. Lukes, Garlington, Lohn & Robinson, PLLP, Missoula, Montana

Submitted on Briefs: January 11, 2005

Decided: August 23, 2005
Filed:

__________________________________________
Clerk
Justice John Warner delivered the Opinion of the Court.

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¶1 Three of the four original Plaintiffs appeal from an order of the Thirteenth Judicial

District Court, Yellowstone County, granting Defendants’ motion to change venue. We

affirm.

¶2 We address the following issue on appeal:

¶3 Did the District Court err when it granted Junga Juice/Fulbrights’ motion for change

of venue?

BACKGROUND

¶4 Junga Juice, Inc., a business that sells juice smoothies, was started in Missoula in the

late 1990s by Kevin and Cari Fulbright and soon became successful. The three Defendants

will be referred to as “Junga Juice/Fulbrights.” Plaintiff DML, Inc., contracted with Junga

Juice to open a franchise Junga Juice store in Billings. Plaintiffs Junga Juice, Inc., of South

Dakota, which will be referred to as “South Dakota Junga Juice,” and MTAZ, LLC,

contracted with Defendants to open franchise stores in Rapid City, South Dakota, and

Flagstaff, Arizona, respectively. Dennis Rowe, an original Plaintiff whose appeal was

dismissed by stipulation of the parties, contracted to open a franchise in Bozeman.

¶5 The franchise agreement between DML and Junga Juice/Fulbrights provided that if

DML initiated a court action against the Defendants for breach of the franchise agreement,

DML could elect to initiate such proceedings in Yellowstone County. The franchise

agreement between the now dismissed Plaintiff Rowe and Junga Juice/Fulbrights stated that

venue of any action would be in Missoula County. The agreements with South Dakota

Junga Juice and MTAZ provided that they may elect venue in Missoula County.

¶6 All the Plaintiffs joined in a suit against Junga Juice/Fulbrights which they filed in

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Yellowstone County alleging negligent misrepresentation, deceit, rescission, declaratory

relief, breach of contract, bad faith, interference with prospective economic advantage, and

interference with contract. Junga Juice/Fulbrights moved for a change of venue to Missoula

County and for separate trials on the claims of the several Plaintiffs. The District Court

granted the motion to change venue of the entire action to Missoula County in the interest

of judicial economy and further, because the claims were based in contract, the negotiations

took place in Missoula County for three of the four Plaintiffs, and three of the four franchise

agreements provided that venue was proper in Missoula. The District Court also allowed

DML to file a motion to sever its claims and keep its action in Yellowstone County, should

it so desire. Plaintiffs DML, South Dakota Junga Juice, and MTAZ appeal from this order.

STANDARD OF REVIEW

¶7 The determination of whether a county is the proper place for trial is a question of law

involving the application of the venue statutes to pleaded facts. Nelson v. Cenex, Inc., 2004

MT 170, ¶ 5, 322 Mont. 54, ¶ 5, 97 P.3d 1073, ¶ 5 (citation omitted). Accordingly, our

review of a district court’s grant or denial of a motion for change of venue is plenary; we

determine whether the court’s ruling was legally correct. Nelson, ¶ 5 (citation omitted).

DISCUSSION

¶8 Did the District Court err when it granted Junga Juice/Fulbrights’ motion for change

of venue?

¶9 DML, South Dakota Junga Juice, and MTAZ assert that Yellowstone County is a

proper venue for their combined claims and argue, pursuant to § 25-2-114, MCA, that a

defendant’s right to move for change of venue arises only when the action is brought in a

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county not designated as a proper place of trial. They argue further that judicial economy

is not served by changing the venue to Missoula.

¶10 Junga Juice/Fulbrights argue that while Yellowstone County may be a proper venue

for DML, it is not a proper venue for South Dakota Junga Juice and MTAZ because they

have no connection with Yellowstone County. They argue, pursuant to § 25-2-116, MCA,

that they are entitled to a change of venue to Missoula, because for three out of the four

original Plaintiffs, Missoula is the proper venue. They argue that judicial economy is served

by having all claims tried in Missoula.

¶11 The general rule, contained in § 25-2-118, MCA, provides that the proper place of

trial for civil actions is the county in which the defendant resides. Section 25-2-122(1)(b),

MCA, provides that venue for tort claims or interrelated claims of tort and breach of contract

may be brought in any county where the tort was committed, or where the contract was to

be performed. If venue is proper in more than one county, an action brought in any proper

county determines the venue. Section 25-2-115, MCA.

¶12 Section 25-2-116, MCA, provides:

In an action involving two or more claims for which this part designates more
than one as a proper place of trial, a party entitled to a change of place of trial
on any claim is entitled to a change of place of trial on the entire action,
subject to the power of the court to separate claims or issues for trial under
Rule 42(b) of the Montana Rules of Civil Procedure.

¶13 Here, one of the four contracts was to be performed in Yellowstone County and the

other three were to be performed in other counties. Further, Junga Juice/Fulbrights reside

in Missoula and their business office is located in Missoula. Thus, Missoula County is an

appropriate venue for all parties. In this case, DML, South Dakota Junga Juice, and MTAZ

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chose to join together in an action against Junga Juice/Fulbrights, but chose a venue that was

improper for three out of the four original Plaintiffs.

¶14 DML, South Dakota Junga Juice, and MTAZ assert that § 25-2-116, MCA, does not

apply and cite Liang v. Lai, 2004 MT 188, 322 Mont. 199, 94 P.3d 759, and Wentz v.

Montana Power Co. (1996), 280 Mont. 14, 928 P.2d 237, in support of their argument.

These cases are inapposite.

¶15 In Liang, we determined that § 25-2-116, MCA, did not apply because the defendant

was not entitled to a change of venue of any claim. Liang, ¶ 19. Here, however, Defendants

are entitled to a change of place of trial on three of the four claims. In Wentz, our holding

that § 25-2-116, MCA, did not apply was based on § 27-1-501(2), MCA, which mandates

wrongful death and survivorship actions be combined in one legal action. Thus, in that

instance, venue was proper in more than one place on both claims. We went on to state that

we were not commenting on “the sorts of cases to which § 25-2-116, MCA, might apply.”

Wentz, 280 Mont. at 22, 928 P.2d at 241-42.

¶16 By the words of § 25-2-116, MCA, “a party entitled to a change of place of trial on

any claim is entitled to a change of place of trial on the entire action.” This statute

contemplates a multiple claim situation in which the county where the plaintiff files is proper

for one claim but not for one or more of the others. As recognized by the Evidence

Commission Comments to § 25-2-116, MCA, this Court has ruled consistently that a

defendant entitled to a change of venue on one claim should have it on the entire action. See

Yore v. Murphy (1891), 10 Mont. 304, 25 P. 1039; Heinecke v. Scott (1933), 95 Mont. 200,

26 P.2d 167; Beavers v. Rankin (1963), 142 Mont. 570, 385 P.2d 640. Here, Plaintiffs South

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Dakota Junga Juice and MTAZ attempted to control venue by combining their claims with

those of DML which, if allowed, would have the effect of choosing a place of trial other than

at the normal situs which would be the Defendants’ residence, or where the contracts in

question specified, contrary to law. We conclude that under these circumstances, pursuant

to § 25-2-116, MCA, Defendants are entitled to a change of venue to Missoula.

Accordingly, the District Court did not err when it granted Junga Juice/Fulbrights’ motion

for change of venue to Missoula, and allowed DML to make a motion to sever its action so

that, at DML’s option, it could be tried in Yellowstone County, as provided in its contract.

¶17 As we have determined that the District Court was correct in granting the motion to

change venue under § 25-2-116, MCA, it is not necessary to discuss DML’s argument that

judicial economy is not served by granting the motion.

¶18 The order of the District Court is affirmed.

/S/ JOHN WARNER

We Concur:

/S/ BRIAN MORRIS
/S/ PATRICIA O. COTTER
/S/ JAMES C. NELSON

Chief Justice Karla M. Gray, specially concurring.

¶19 I generally concur in the Court’s application of the venue statutes, notwithstanding

the relative brevity of the discussion. I am not persuaded, however, that Wentz and Liang--

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by their terms--are inapposite here, as the Court states in ¶ 14. Indeed, it is my view that we

should revisit those cases.

¶20 In the late 1990s, the Fulbrights started a business selling fruit juice smoothies. They

eventually created Junga Juice, a Montana corporation. The Fulbrights reside, and Junga

Juice has its offices, in Missoula County. The Fulbrights/Junga Juice then began entering

into franchise agreements with other entities whereby they licensed the company’s

trademark, drink formulas and names, and overall trade dress to franchisees in exchange for

an initial franchise fee and payment of royalties. The four original plaintiffs in this case

were Junga Juice franchisees. Rowe entered into a franchise agreement for a store located

in Bozeman, Montana; he is not involved in this appeal. DML entered into two franchise

agreements to operate two stores in Billings, Montana. MTAZ entered into a franchise

agreement to operate a store in Flagstaff, Arizona. Finally, South Dakota Junga Juice entered

into a franchise agreement to operate a store in Rapid City, South Dakota.

¶21 At some point, the franchisees became unhappy in their dealings with the

Fulbrights/Junga Juice. Consequently, they filed a complaint against the Fulbrights/Junga

Juice in the Thirteenth Judicial District Court, Yellowstone County, alleging

misrepresentation, deceit, recission, breach of contract, common law bad faith, interference

with prospective economic advantage and interference with contract. The Fulbrights/Junga

Juice moved to change venue to Missoula County. They asserted that, while Yellowstone

County may be a proper venue for the claims brought by DML, it was not proper venue for

the claims of the other plaintiffs because the claims had no connections to Yellowstone

County. The District Court granted the motion to change venue based on § 25-2-116, MCA.

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¶22 A defendant may move for a change of venue when the county in which the action is

brought is not designated as a proper place for trial, and a district court must grant such a

motion when the county designated in the complaint is not the proper county. Sections 25-2-

114 and -201(1), MCA. The general rule for venue in civil actions is that the proper place

for trial “is the county in which the defendants or any of them reside at the commencement

of the action.” Section 25-2-118(1), MCA. The Fulbrights/Junga Juice reside (or are found)

in Missoula County. Other venue statutes provide exceptions to the general venue rule for

specific types of actions. Here, the complaint presents claims sounding in both contract and

tort. Section 25-2-121(1)(b), MCA, provides that a proper place for trial of an action based

on contract is the county in which the contract was to be performed. Section 25-2-122(1)(b),

MCA, provides that a proper place for trial of a tort action is the county in which the tort was

committed and, if the tort is interrelated with an action for breach of contract, the tort is

committed in the county in which the contract was to be performed. Thus, in this case there

are several proper places for trial: (1) Missoula County, where the Fulbrights/Junga Juice

reside; and (2) the counties in which at least the Montana franchises were to be performed.

¶23 The parties do not dispute that Yellowstone County is a proper place for trial of the

claims relating to the DML franchise agreements pursuant to §§ 25-2-121(1)(b) and -112

(1)(b), MCA, because the two DML agreements were to be performed in Billings,

Yellowstone County, Montana. Nor do the parties dispute that the claims relating to the

other franchise agreements have no nexus to Yellowstone County. Thus, the parties agree

that Yellowstone County is not a statutorily-designated proper place for trial of the other

franchisees’ claims pursuant to their franchise agreements.

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¶24 The franchisees argue that the District Court erred in changing venue from

Yellowstone County to Missoula County because the Fulbrights/Junga Juice were not

entitled to a change of venue. Section 25-2-115, MCA, on which the franchisees rely,

provides that

[i]f this part designates more than one county as a proper place of trial for any
action, an action brought in any such county is brought in a proper county and
no motion may be granted to change the place of trial upon the ground that the
action is not brought in a proper county under 25-2-201(1). If an action is
brought in a county not designated as a proper place of trial, a defendant may
move for a change of place of trial to any of the designated counties.

¶25 In response, the Fulbrights/Junga Juice contend that the District Court did not err in

changing venue. They assert § 25-2-115, MCA, does not apply in this case and, instead, the

District Court correctly relied on § 25-2-116, MCA, in determining that venue must be

changed to Missoula County. Section 25-2-116, MCA, provides that

[i]n an action involving two or more claims for which this part designates more
than one as a proper place of trial, a party entitled to a change of place of trial
on any claim is entitled to a change of place of trial on the entire action,
subject to the power of the court to separate claims or issues for trial under
Rule 42(b) of the Montana Rules of Civil Procedure.

¶26 In my view, the District Court properly relied on § 25-2-116, MCA, in changing

venue to Missoula County, because § 25-2-115, MCA, does not preclude a change of venue

under the facts of this case. At the outset, I observe that §§ 25-2-115 and -116, MCA, must

be interpreted so that the statutes do not conflict with each other or one render the other

meaningless. See §§ 1-2-101 and 1-3-232, MCA. To that end, I believe the § 25-2-115,

MCA, prohibition on changing venue would apply in the following two situations. First, in

all cases where an action consists of a single claim and the action is brought in a county that

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is designated a proper place for trial (regardless of whether there are one or several proper

counties), a motion for change of venue must be denied. Second, in cases where an action

consists of two or more claims and, for any of the claims, the venue statutes designate more

than one county as a proper place for trial, if the action is brought in a county which is

designated a proper place for trial for each of the claims, then a motion for change of venue

must be denied. Neither of these situations is present here.

¶27 Section 25-2-116, MCA, would apply in a third situation where (1) an action consists

of multiple claims; (2) the venue statutes designate more than one proper place for trial for

one or more claims; and (3) the action is brought in a county designated as proper for at least

one of the claims, but not all of the claims. This is the situation in the present case. First,

there are multiple claims (brought by multiple parties in this case). Second, the statutes

provide for venue in more than one county--for example, DML’s claims may be brought in

either Yellowstone or Missoula County. Third, the action was brought in Yellowstone

County, which is a proper place for trial of DML’s claims, but is not a proper county for the

claims relating to the other franchise agreements. Because the claims relating to the other

franchisees were brought in a county not designated as a proper county for those claims, the

Fulbrights/Junga Juice would be entitled to a change of venue on those claims to Missoula

County, which is a proper place for trial. See § 25-2-114, MCA. As a result, under § 25-2-

116, MCA, because the Fulbrights/Junga Juice are entitled to a change of venue for the other

franchisees’ claims, the Fulbrights/Junga Juice are entitled to a change of venue on the entire

action, including the DML claims (subject only to the “separation of claims for trial,” a

matter not at issue here).

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¶28 Based on the above somewhat lengthy interpretation and application of the venue

statutes to the facts of this case, I agree with the Court’s statutory interpretations as stated

at the outset. However, it is my view that Wentz and Liang significantly cloud the picture.

The franchisees rely on those cases in support of their contention that § 25-2-116, MCA,

does not apply here because the Fulbrights/Junga Juice have never asserted that the

franchisees combined spurious claims to manipulate venue.

¶29 In Wentz, the plaintiff brought an action against the defendants in Yellowstone County

alleging the defendants committed various acts of medical negligence resulting in her

husband’s death and asserting wrongful death and survivorship claims. The defendants all

resided, and the alleged negligent acts occurred, in Rosebud County. The husband

eventually died in a hospital in Yellowstone County. The defendants moved for a change

of venue to Rosebud County, which the district court denied. Wentz, 280 Mont. at 16, 928

P.2d at 238. On appeal, we first concluded that, as previously held in Gabriel v. School Dist.

No. 4, Libby (1994), 264 Mont. 177, 180-81, 870 P.2d 1351, 1352-53, a wrongful death

claim arises for venue purposes in the county in which the death occurs. Thus, a proper

place for trial of the wrongful death claims in that case was Yellowstone County. Wentz,

280 Mont. at 18-19, 928 P.2d at 239-40. Furthermore, pursuant to Montana’s remedies

statutes--as interpreted in Gabriel--wrongful death and survivorship actions must be

combined in one legal action and, where the two claims properly may be brought in different

counties, the plaintiff’s choice of venue as to the wrongful death action precludes a

successful motion to change venue to the county where the survivorship action arose. Wentz,

280 Mont. at 18, 928 P.2d at 239.

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¶30 We then proceeded to address the defendants’ argument that they were entitled to a

change of venue under § 25-2-116, MCA (Wentz, 280 Mont. at 21-22, 928 P.2d at 241-42),

beginning with a discussion of the Evidence Commission’s comments to § 25-2-116, MCA.

The comments state that the statute is a codification of prior Montana case law involving

venue changes in multiple claim cases. We also quoted that portion of the comments which

states that § 25-2-116, MCA,

is necessary to prevent a plaintiff from controlling venue by adding spurious
claims that have little or no validity, but are triable in the forum the plaintiff
chooses rather than at the normal situs which would be the defendant’s
residence or another location more favorable to the defendant.

We then observed that, since a wrongful death claim and a survivorship claim must be

combined in one action, there was little likelihood that a plaintiff would spuriously add one

claim to another simply to defeat a venue favorable to the defendant and the evil § 25-2-116,

MCA, seeks to address is not present in those sorts of cases. Wentz, 280 Mont. at 22, 928

P.2d at 241-42. Finally, observing we had addressed and rejected a similar argument in

Gabriel, we concluded § 25-2-116, MCA, did not apply to the case. Wentz, 280 Mont. at 22,

928 P.2d at 242.

¶31 Tracing back to Gabriel, on which we relied heavily in Wentz, I note first that we did

not address the impact of § 25-2-116, MCA, on venue in wrongful death/survivorship actions

in Gabriel. Indeed, the statute is not even cited in the case. Thus, Gabriel was--and is--of

no assistance in interpreting § 25-2-116, MCA. Second, I agree with Justice Leaphart’s

concurrence in Wentz that, although the intent behind § 25-2-116, MCA, may have been to

preclude a plaintiff from manipulating venue by adding spurious claims, that intent is not

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incorporated in the statute. Wentz, 280 Mont. at 23-24, 928 P.2d at 243 (Leaphart, J.,

concurring). The plain language of the statute reveals that it applies to any action involving

two or more claims; no reference to spurious claims or attempts to manipulate venue exists.

Moreover, as Justice Leaphart observed, where the intent of a statute may be determined

from the plain meaning of the language used, this Court may not resort to legislative history

or other means of construction such as the Commission’s comments to the statute. See

Wentz, 280 Mont. at 24, 928 P.2d at 243 (Leaphart, J., concurring). As a result, it is my view

that Wentz incorrectly interpreted and applied § 25-2-116, MCA. Even taking the Evidence

Commission’s comments to § 25-2-116, MCA, into account, the Commission stated as

follows:

This new provision codifies the result of this unbroken line of opinions: Yore
v. Murphy, 10 Mont. 304, 25 P. 1039 (1891); Heinecke v. Scott, 95 Mont.
200, 26 P.2d 167 (1933); Beavers v. Rankin, 142 Mont. 570, 385 P.2d 640
(1963). It makes no change in existing law, but simply enacts it into the Code
where it is available.

(Emphasis added.) None of the three cases cited by the Commission held that the statute was

limited in application to only those situations where a plaintiff was manipulating venue by

adding spurious claims.

¶32 In Liang, the plaintiff had worked in two restaurants, one located in Flathead County

and the other in Sanders County. The plaintiff filed an eleven-count complaint in Flathead

County against the owners of the restaurants. Some of the counts related to alleged injuries

the plaintiff suffered as a result of a slip and fall accident at the Flathead County restaurant;

those counts alleged the owners negligently failed to maintain the premises. The remaining

counts alleged various wage claims relating to his employment at both restaurants. Liang,

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¶¶ 3 and 4. The district court granted the defendants’ motion to change venue to Sanders

County and the plaintiff appealed. We reversed. Liang, ¶ 1.

¶33 On appeal, the plaintiff argued that venue for the majority of the claims in the

complaint was proper in Flathead County, although he did concede that proper venue for

some claims was Sanders County. Liang, ¶ 8. He relied on Wentz in support of his argument

that, where two or more claims are joined in a single action and venue for the claims is

proper in different counties, the plaintiff may choose any county which is proper for any

claim and the defendant is not entitled to a change of venue. Liang, ¶ 9. The defendants

argued, in part, that they were entitled to a change of venue pursuant to § 25-2-116, MCA,

because the only proper place for trial of the wage claims relating to the Sanders County

restaurant was Sanders County. Liang, ¶ 18. We noted our previous discussion in Wentz

that the statute was enacted to prevent plaintiffs from raising spurious claims as a means to

deny a defendant a favorable venue, and determined that § 25-2-116, MCA, did not apply

to the case because the record did not indicate--and the defendants did not allege--that the

plaintiff was attempting to manipulate venue in such a manner. Liang, ¶ 19.

¶34 Because it is my view that Wentz incorrectly interpreted and applied § 25-2-116,

MCA, I disagree with Liang to the extent it relies on that case. Furthermore, Liang fails to

note the distinction between application of §§ 25-2-115 and -116, MCA, as discussed earlier.

¶35 In summary, applying a straightforward interpretation and application of the venue

statutes to the facts of this case, I concur in the outcome the Court reaches in affirming the

District Court’s grant of the motion to change venue made by the Fulbrights/Junga Juice.

I do not agree with the Court’s discussion of Wentz and Liang or the substance of those

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decisions. I would overrule Wentz and Liang, at least in part, and clarify any remaining

portions.

/S/ KARLA M. GRAY

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