No. 05-521
IN THE SUPREME COURT OF THE STATE OF MONTANA
2006 MT 311
_____________________________________
CIRCLE S SEEDS OF MONTANA, INC.,
Plaintiff and Respondent,
v.
MONTANA MERCHANDISING, INC.,
Defendant and Appellant.
_____________________________________
APPEAL FROM: District Court of the Eighteenth Judicial District,
In and for the County of Gallatin, Cause No. DV 05-260,
The Honorable Mike Salvagni, Presiding Judge.
COUNSEL OF RECORD:
For Appellant:
Jennifer B. Lint, Boatwright Law Office, Hamilton, Montana
David B. Cotner, Datsopoulos, MacDonald & Lind, Missoula, Montana
For Respondent:
Gregory O. Morgan, Gregory O. Morgan, P.C., Bozeman, Montana
_____________________________________
Submitted on Briefs: May 23, 2006
Decided: December 5, 2006
Filed:
____________________________________________
Clerk
Justice Brian Morris delivered the Opinion of the Court.
¶1 Respondent Circle S Seeds of Montana (Circle S) brought an action against
Appellant Montana Merchandising, Inc. (MMI) alleging trademark infringement. MMI
appeals from an Order of the Eighteenth Judicial District Court, Gallatin County, denying
its motion for change of venue. We affirm.
¶2 We review on appeal whether the District Court erred in determining that Gallatin
County constituted proper venue.
PROCEDURAL AND FACTUAL BACKGROUND
¶3 Circle S is a Montana corporation with its principal place of business in Gallatin
County. MMI is a Montana corporation with its principal place of business in Cascade
County. Circle S filed a complaint in the Eighteenth Judicial District, Gallatin County,
alleging trademark infringement by MMI.
¶4 MMI moved for a change of venue on the grounds that Circle S’s complaint
contained only a tort action to which § 25-2-122(1), MCA, applied. MMI argued that
Cascade County would be the only proper venue because MMI resides there and any
alleged tort occurred there. Circle S responded that it sought a statutory penalty, and
therefore, it argued that the court must look to § 25-2-124, MCA, to determine the
appropriate venue. Circle S argued that Gallatin County was a proper venue because its
trademark infringement action, or some part thereof, arose in Gallatin County. The
District Court determined that § 25-2-124, MCA, applied, and that Gallatin County
constituted a proper venue. This appeal followed.
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STANDARD OF REVIEW
¶5 The determination of whether a county represents the proper place for trial
presents a question of law that involves the application of the venue statutes to pleaded
facts. DML, Inc. v. Fulbright, 2005 MT 204, ¶ 7, 328 Mont. 212, ¶ 7, 119 P.3d 93, ¶ 7.
Our review of a district court’s grant or denial of a motion for change of venue is plenary,
and we determine whether the district court’s ruling was legally correct. DML, ¶ 7.
DISCUSSION
¶6 Whether the District Court erred when it determined that Gallatin County
constituted proper venue.
¶7 MMI focuses much of its argument on the contention that Circle S’s complaint
contained multiple claims, including a tort claim. MMI made no such argument before
the District Court. We decline to consider this change in legal theory on appeal. Hern v.
Safeco Ins. Co. of Illinois, 2005 MT 301, ¶ 67, 329 Mont. 347, ¶ 67, 125 P.3d 597, ¶ 67.
¶8 MMI argues next that the District Court erroneously applied § 25-2-124, MCA,
the statute for determining venue in an action for recovery of statutory penalty. MMI
points out that Circle S’s complaint alleges trademark infringement against MMI, and
seeks to enforce rights imposed by common law. MMI argues that these claims are based
in tort, and subject to the venue requirements of § 25-2-122(1), MCA. MMI argues,
based on § 25-2-122(1)(b), MCA, that proper venue lies in Cascade County, because any
alleged tort would have been committed in its business offices where the decision to use
the trademark originated.
¶9 The county in which the defendant resides generally provides the proper place for
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trial in a civil action. Section 25-2-118, MCA. Montana law provides exceptions to the
general rule under certain circumstances. For instance, the proper place for trial of a tort
action is where the defendant resides or where the tort was committed. Section 25-2-
122(1)(a), (b), MCA. Under § 25-2-124, MCA, venue is proper in an action for the
recovery of a statutory penalty in the county where the cause or some part thereof arose.
Where venue is proper in more than one county, then any one of the designated counties
is the proper place for trial. See § 25-2-115, MCA.
¶10 We address first whether the District Court erroneously applied § 25-2-124, MCA.
Section 25-2-124, MCA, applies only if Circle S’s complaint seeks recovery of a penalty
or forfeiture imposed by statute. This Court has not yet addressed what constitutes a
“penalty” imposed by statute under § 25-2-124, MCA. We have considered the
definition of “penalty,” however, in applying § 93-2902 R.C.M. (1947), the predecessor
statute to § 25-2-124, MCA.
¶11 In Hidden Hollow Ranch v. Collins, 146 Mont. 321, 324, 406 P.2d 365, 366
(1965), the plaintiff sought recovery of monetary damages imposed by § 67-807 R.C.M.
(1947), the statute that allowed an adjoining land owner to recover all costs and damages
from any person “who neglects or refuses to repair or rebuild any partition fence which
by law he ought to build or maintain” if proper notice was given of the needed repairs.
We determined that a “penalty,” in the context of the predecessor statute to § 25-2-124,
MCA, means “‘a sum of money which the law exacts the payment of by way of
punishment for doing some act which is prohibited, or the omission to do some act which
is required to be done.’” Hidden Hollow Ranch, 146 Mont. at 326, 406 P.2d at 368,
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quoting Shubat v. Glacier County, 93 Mont. 160, 164, 18 P.2d 614, 615 (1932). Under
that definition, we concluded that the liability created under § 67-807 R.C.M. (1947), was
penal in nature and, therefore, venue was proper where the cause or some part thereof
arose. Hidden Hollow Ranch, 146 Mont. at 326-27, 406 P.2d at 368.
¶12 This Court discussed in Hidden Hollow Ranch other statutes that we previously
have classified as penal in nature. For instance, we recognized that a statute imposing
liability for the debts of a corporation on its directors for failing to file an annual report
constituted a statutory penalty for the purposes of determining venue. Hidden Hollow
Ranch, 146 Mont. at 327, 406 P.2d at 368, citing National Supply Company-Midwest v.
Abell, 87 Mont. 555, 289 P. 577 (1930). We acknowledged also that a statute that levied
a $100 fine on a person who failed to release an oil and gas lease as required by § 73-115
R.C.M. (1947), constituted a penalty imposed by statute. Hidden Hollow Ranch, 146
Mont. at 327-28, 406 P.2d at 369, citing Beavers v. Rankin, 142 Mont. 570, 385 P.2d 640
(1963).
¶13 The Court’s examples of statutory penalties in Hidden Hollow Ranch comport
with Black’s Law Dictionary’s definition of “penalty” as a “[p]unishment imposed on a
wrongdoer, usu. in the form of imprisonment or fine; esp., a sum of money exacted as
punishment for either a wrong to the state or a civil wrong (as distinguished from
compensation for the injured party's loss).” Black’s Law Dictionary 1168, (Bryan A.
Garner ed., 8th ed., West 2004). Black’s also defines “statutory penalty” as a “penalty
imposed for a statutory violation; esp., a penalty imposing automatic liability on a
wrongdoer for violation of a statute's terms without reference to any actual damages
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suffered.” Black’s Law Dictionary at 1168. Both legal definitions and the Court’s
analysis in Hidden Hollow Ranch suggest that a statutory penalty differs from the mere
recovery of compensatory damages.
¶14 Circle S’s complaint seeks relief under § 30-13-335, MCA, and 15 U.S.C. § 1117.
Section 30-13-335, MCA, grants the district court wide discretion in determining the
appropriate remedy for trademark infringement brought under §§ 30-13-333, 30-13-335,
MCA. The court may grant an injunction to prevent the use of such trademark. Section
30-13-335, MCA. “The court may require the defendants to pay to the owner all profits
derived from and all damages suffered by reason of the wrongful manufacture, use,
display, or sale” of the trademark. Section 30-13-335, MCA. The court also may award
treble damages to the prevailing party, upon determining that the defendant “committed
the wrongful acts with knowledge, in bad faith, or otherwise as according to the
circumstances of the case.” Section 30-13-335, MCA. Similarly, the federal counterpart
to § 30-13-335, MCA, affords the court discretion to award treble damages on the finding
that the defendant committed such trademark violation, in this case dilution, with
knowledge and intent. See 15 U.S.C. § 1117(a).
¶15 We discussed whether discretionary treble damages constituted a penalty in Plath
v. Schonrock, 2003 MT 21, 314 Mont. 101, 64 P.3d 984. We considered whether the
district court erred in applying the punitive damage standard in denying discretionary
treble damages available under the Montana Consumer Protection Act. Plath, ¶ 11. We
determined that a discretionary award of treble damages is not punitive in nature where
the statute fails to require specific intentional conduct on the part of the defendant. Plath,
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¶ 27. Our conclusion in Plath suggests that § 30-13-335, MCA, and 15 U.S.C. § 1117,
are punitive in nature because they impose treble damages upon the court’s finding of
specific intent or knowledge of the trademark infringement.
¶16 We determine, however, that the discretionary nature of the treble damages
available under § 30-13-335, MCA, and 15 U.S.C. § 1117(a), precludes venue
determination under § 25-2-124, MCA. Our definition of “penalty” in Hidden Hollow
Ranch requires that the law exact payment of a sum of money for the purposes of
punishing the wrongdoer. No mandatory penalty exists for trademark infringement under
the given statutes. Instead, the penalty represents merely an option that the court may
elect. We conclude that for the purposes of determining venue the statutes fail to “exact”
punishment as required by Hidden Hollow Ranch. The District Court erred therefore in
applying § 25-2-124, MCA, to determine proper venue.
¶17 MMI argues that Cascade County represents the proper venue for Circle S’s claim
on grounds that § 25-2-122, MCA, controls venue determination. Circle S elected to file
this action in Gallatin County. Section 25-2-115, MCA, provides that if more than one
county qualifies as a proper place of trial for any action, an action brought in any of the
qualifying counties is proper, 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 . . . .” We must
determine therefore whether Gallatin County represents an appropriate venue pursuant to
§ 25-2-122, MCA. We review the allegation contained in the complaint in determining
proper venue. Allen v. Atlantic Richfield Co., 2005 MT 281, ¶ 11, 329 Mont. 230, ¶ 11,
124 P.3d 132, ¶ 11. Circle S’s complaint alleges that MMI violated federal and state
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trademark statutes, engaged in unfair trade practices, intentionally interfered with its
business relationships, and damaged its business reputation, good will, and profits.
Although part of Circle S’s complaint seeks damages pursuant to specific statutory
provisions, the bulk of Circle S’s claim sounds in tort.
¶18 A “tort is committed” for the purposes of determining venue “where there is a
concurrence of breach of obligation and the occasion of damages.” BHC Holding Co. v.
Hurly, 242 Mont. 4, 6, 788 P.2d 322, 323 (1990). MMI’s duty to refrain from
intentionally interfering with Circle S’s business practices, particularly in the use of
Circle S’s registered trademark, gives rise to Circle S’s claims. MMI contends that any
alleged breach arose at its business office in Cascade County. MMI may have made the
decision to use Circle S’s protected trademark at its business office in Cascade County.
This action simply started in motion its alleged breach of its duty not to interfere with
Circle S’s business. As a result, Cascade County would be a proper venue for Circle S’s
action. Sections 25-2-118, 25-2-122(1)(a), MCA.
¶19 MMI’s alleged breach reached fruition, however, when it widely distributed its
products containing the allegedly illegal trademark to the marketplace, including Gallatin
County. MMI’s widespread distribution of its product to the marketplace rendered
Gallatin County, and other possible locales, a proper venue in this matter. Section 25-2-
122(1)(b), MCA. Moreover, damages from MMI’s alleged breach would have accrued in
Gallatin County, the location of Circle S’s principal place of business, and where it
allegedly suffered lost profits and other related damages. The “concurrence of breach of
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obligation and the occasion of damages” occurred in Gallatin County. BHC Holding Co.,
242 Mont. at 6, 788 P.2d at 323.
¶20 The Dissent suggests that tying venue to the place where damages are experienced
“threatens to upend our venue jurisprudence.” Dissent, ¶ 26. We emphasize, however,
that a “tort claim cannot arise until all the elements of the tort, including damages, are
present.” Zempel v. Liberty, 2006 MT 220, ¶ 36 n. 11, 333 Mont. 417, ¶ 36 n. 11, 143
P.3d 123, ¶ 36 n. 11; Gabriel v. School Dist. No. 4, Libby, 264 Mont. 177, 180-81, 870
P.2d 1351, 1352-53 (1994) (holding that because death is a necessary element in a
wrongful death suit, the cause of action arises where the death occurs). "[A] tort is not
wrongful conduct in the air; the arrow must hit its mark. Until there is hurt, there is no
tort." Heil v. Morrison Knudsen Corp., 863 F.2d 546, 550 (7th Cir. 1988).
¶21 Here the arrow hit its mark in Gallatin County where Circle S allegedly suffered
damages and provided the final element of the alleged tort. Section 25-2-122(1)(b),
MCA, provides that venue is proper in the county in which the tort was committed.
Thus, Gallatin County represents a proper venue in this matter even though the
underlying conduct in the form of MMI making the decision to use Circle S’s protected
trademark took place at its business office in Cascade County.
¶22 Our ruling in no way undermines the proposition set forth in the general venue
statute, § 25-2-118, MCA, that venue is proper in a civil action in the county in which the
defendant resides. It simply applies the more specific tort venue statute, § 25-2-
122(1)(b), MCA, in a manner consistent with its plain language. Redies v. Cosner, 2002
MT 86, ¶ 19, 309 Mont. 315, ¶ 19, 48 P.3d 697, ¶ 19. This interpretation also comports
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with the general rule that a specific statute controls over a more general statute. Dept. of
Revenue v. Kaiser Cement Corp., 245 Mont. 502, 506-07, 803 P.2d 1061, 1063-64
(1990).
¶23 Although the District Court improperly applied § 25-2-124, MCA, its
determination that Gallatin County constituted proper venue is “legally correct” under §
25-2-122(1)(b), MCA. DML, ¶ 7. We conclude, therefore, that Gallatin County
represents a proper place for trial in this action.
¶24 Affirmed.
/S/ BRIAN MORRIS
We Concur:
/S/ KARLA M. GRAY
/S/ W. WILLIAM LEAPHART
/S/ JOHN WARNER
Justice Patricia O. Cotter dissents.
¶25 I dissent. In concluding that Gallatin County is a proper venue under § 25-2-122(1)(b),
MCA, we have misconstrued the statute, we have erroneously expanded this Court’s holding in
BHC Holding Co. v. Hurly, and we have displaced the historic primacy of the county of the
defendant’s residence as the primary place of venue. 242 Mont. 4, 788 P.2d 322 (1990).
¶26 Upon concluding that Circle S’s claim sounds basically in tort, we proceed to cite BHC
Holding Co. for the proposition that a tort is committed, for the purposes of venue, “where there
is a concurrence of breach of obligation and the occasion of damages.” ¶ 18. While
acknowledging that MMI’s decision to use the Circle S trademark occurred at its business office
in Cascade County—which is also the place of residence of the Defendant—we state that the
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alleged breach “reached fruition” when MMI “widely distributed its products” around the state,
including in Gallatin County, and that damages from the breach would have accrued in Gallatin
County. ¶ 19. With all due respect, this conclusion stretches BHC Holding Co. too far.
Moreover, in tying venue to the place where damages are experienced, the Court threatens to
upend our venue jurisprudence.
¶27 Significant to our holding in BHC Holding Co. was the fact that the tort occurred in
Yellowstone County. Thus, under § 25-2-122(1)(b), MCA, venue was proper there,
notwithstanding that Hurly’s place of business was in Valley County. Because of this, our
reference to the “concurrence of breach of obligation and the occasion of damages” was mere
surplusage; i.e., the place where the tort occurred was already determinative under the statute.
BHC Holding Co., 242 Mont. at 6, 788 P.2d at 323. Here, by contrast, the tort occurred in
Cascade County at MMI’s place of business where it took action to allegedly infringe upon
Circle S’s protected trademark. Thus, in this case, unlike in BHC Holding Co., both the locale of
the tort and the defendant’s principal place of residence were Cascade County, Montana.
¶28 Section 25-2-118(1), MCA, provides that the proper place of trial of all civil actions is
the county of the defendant’s residence. This is the general venue rule. Section 25-2-122, MCA,
addresses venue in tort actions and provides that the proper place of trial is either the county of
residence of the defendant or the county in which the tort was committed. In the 2004
Annotations to Title 25, MCA, the Evidence Commission Recommendations for Revisions are
noted. See 2004 Annotations to the MCA, Volume 4, pages 117-18. The Commission indicates
that the location and arrangement of the venue statutes was revised in order to place emphasis
upon “the most fundamental of all venue rules—that the defendant has the right to have the trial
in his county of residence . . . .” As the Annotation indicates, we have repeatedly said that the
principal rule of venue is that venue is proper where the defendant resides. See Hardenburgh v.
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Hardenburgh, 115 Mont. 469, 473, 146 P.2d 151, 152 (1944); Love v. Mon-O-Co Oil Corp., 133
Mont. 56, 59-60, 319 P.2d 1056, 1058 (1958); and Clark Fork Paving v. Atlas Concrete, 178
Mont. 8, 11, 582 P.2d 779, 781 (1978). That general rule is subject to the specific rules that
follow, certainly, but those rules in turn must be followed faithfully.
¶29 Here, while Cascade County was both the county of the Defendant’s residence and the
locale where the tort occurred, Gallatin County is simply one of the many counties around the
state in which the damages occasioned by the alleged tort were felt. See ¶ 19. No venue statute
allows the locale where damages are experienced to dictate venue. I submit that under the
rationale of this case—that venue is proper wherever the concurrence of breach of obligation and
the occasion of damages reaches fruition—one could successfully argue in virtually any tort
action that the concurrence of the two events occurs where the damages are felt, thereby placing
the county of the plaintiff’s residence on an equal footing with that of the defendant. While there
would be nothing wrong with such a rule, the statutes as presently written do not even arguably
contemplate such a result.
¶30 Under our longstanding venue rules and jurisprudence, venue in this case was proper in
Cascade County, and not in Gallatin County. I would therefore reverse.
/S/ PATRICIA COTTER
Justice James C. Nelson and Justice Jim Rice join in the dissent of Justice Patricia O. Cotter.
/S/ JAMES C. NELSON
/S/ JIM RICE
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