March 6 2012
DA 11-0236
IN THE SUPREME COURT OF THE STATE OF MONTANA
2012 MT 51
H & H DEVELOPMENT, LLC, and DAVID HOUSE,
Plaintiffs and Appellants,
v.
JAMES RAMLOW, KAUFMAN, VIDAL,
HILEMAN P.C., RAMLOW & RUDBACH PLLP,
Defendants and Appellees.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and For the County of Flathead, Cause No. DV 10-126B
Honorable Katherine R. Curtis, Presiding Judge
COUNSEL OF RECORD:
For Appellants:
Timothy B. Strauch, Strauch Law Firm, PLLC, Missoula, Montana
For Appellees:
Mikel L. Moore; Christensen, Moore, Cockrell, Cummings & Axelberg, P.C.,
Kalispell, Montana
Submitted on Briefs: December 21, 2011
Decided: March 6, 2012
Filed:
__________________________________________
Clerk
Justice Brian Morris delivered the Opinion of the Court.
¶1 H & H Development (H&H) and David House appeal the order from the Eleventh
Judicial District Court, Flathead County, granting summary judgment to Jim Ramlow
(Ramlow), his former law firm, Kaufman, Vidal, Hileman P.C., and his current law firm,
Ramlow & Rudbach PLLP (collectively “Firms”). We reverse and remand.
¶2 We review the following issue on appeal:
¶3 Did the District Court properly grant summary judgment to Ramlow and the Firm
based upon its determination that H&H’s pro se 2007 complaint constituted a nullity and
that H&H’s later amended complaints were time-barred?
FACTUAL AND PROCEDURAL BACKGROUND
¶4 Slade House and his father, David House (collectively “Houses”), compose H&H.
H&H sought to develop and sell property and homes adjacent to the Eagle Bend Golf Course
(Eagle Bend) in Bigfork, Montana. Houses hired Ramlow to help them meet the regulatory
requirements related to the development of the project.
¶5 Ramlow began to work on H&H’s requests. Ramlow set up various corporate
entities. Ramlow drafted a Boundary Adjustment and Golf Membership Agreement
(Agreement) with Eagle Bend. The Agreement required Eagle Bend to convey the property
free of encumbrances except such encumbrances acceptable to H&H. It allowed H&H to
cancel the Agreement if Eagle Bend failed to convey free and clear title.
¶6 Ramlow emailed an electronic version of the Agreement to Eagle Bend and its
lawyers. Ramlow alleged that Eagle Bend’s lawyers made several untracked changes to the
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electronic version of the Agreement. Eagle Bend’s lawyers apparently deleted three terms: a
specific closing date, a provision for transfer of the required property density units, and the
requirement for transfer of free and clear title. Eagle Bend returned the now revised
Agreement to Ramlow. Ramlow acknowledges that he failed to review the document for
any changes. Slade House and an Eagle Bend representative both signed the Agreement.
¶7 The parties contest the circumstances under which Slade House signed the
Agreement. Ramlow claimed that Eagle Bend sent the Agreement directly to Slade House.
Slade House alleged that someone from Ramlow’s office called to inform him that the
Agreement was ready for his signature. He claims that he signed the document in front of
Ramlow’s paralegal. H&H defaulted and lost the subdivision in 2009. David House later
lost his personal residence that he had used as collateral for a business loan.
¶8 H&H filed a complaint in Lake County against Ramlow and Ramlow’s then firm,
Kaufman, Vidal, Hileman and Ramlow, P.C., on March 8, 2007. Slade House signed the
Lake County complaint on behalf of H&H. The complaint alleged professional negligence
and damages that arose from Ramlow’s failure to review the altered Agreement. The clerk
of court never issued a summons on the Lake County complaint and Slade House never
served the Lake County complaint.
¶9 Eleven days after filing the Lake County complaint, H&H, through counsel, filed a
complaint in Flathead County against Eagle Bend. The Flathead County complaint sought
damages based on allegations similar to those in the Lake County complaint. H&H settled
with Eagle Bend in February, 2010.
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¶10 H&H, through counsel, filed a motion on January 20, 2010, that sought to transfer the
Lake County complaint to the 11th Judicial District, Flathead County. The district court in
Lake County granted H&H’s motion to transfer on January 22, 2010. The court in Flathead
County granted H&H’s motion to file an amended complaint in February, 2010. This
amended complaint added David House as a plaintiff, renamed Ramlow’s former firm, and
added as a defendant Ramlow’s current law firm, Ramlow & Rudbach PLLP. The complaint
also included a lawyer’s signature. H&H served Ramlow with this complaint on February 9,
2010.
¶11 Ramlow and the Firms filed a motion to declare the Lake County complaint null and
void. The District Court granted the motion. The court determined that the Lake County
complaint constituted a nullity in light of the fact that a non-lawyer could not file a complaint
on behalf of a limited liability company.
¶12 Ramlow and the Firms filed for summary judgment in March, 2010 based upon the
running of the applicable statute of limitations. The District Court granted H&H’s second
motion to amend its complaint in July, 2010. The District Court granted summary judgment
for Ramlow and the Firms in February, 2011. Ramlow and the Firms moved for the entry of
final judgment. H&H and David House opposed the request for entry of final judgment on
the grounds that the relation back doctrine, as recognized by M. R. Civ. P. 15(c), saved
H&H’s and David House’s amended complaint from the time bar. The District Court
entered final judgment against H&H and David House on March 29, 2011.
STANDARD OF REVIEW
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¶13 A court’s application of M. R. Civ. P. 15(c) to undisputed facts presents a question of
law. Citizens Awareness Network v. Mont. Dept. of Envtl. Rev., 2010 MT 10, ¶ 13, 355
Mont. 60, 227 P.3d 583. We review de novo questions of law. Citizens Awareness, ¶ 13.
We similarly review de novo a court’s grant or denial of a summary judgment motion.
Lampi v. Speed, 2011 MT 231, ¶ 10, 362 Mont. 122, 261 P.3d 1000. Summary judgment is
proper when no genuine issue of material fact exists and the moving party is entitled to
judgment as a matter of law. Lampi, ¶ 11.
DISCUSSION
¶14 We first dispose of two procedural issues. H&H and David House contend that the
five-year statute of limitations for breach of contract actions should apply here. Section 27-
2-202(2), MCA. The District Court applied the three-year statute of limitations for legal
malpractice claims. Section 27-2-206, MCA. H&H and David House added claims for
breach of contract and breach of fiduciary duty to their second amended complaint. We
determined in Guest v. McLaverty, 2006 MT 150, ¶¶ 12-13, 332 Mont. 421, 138 P.3d 812,
that if a plaintiff’s claims all sound in legal malpractice, “[a] plaintiff cannot, simply by
virtue of mislabeling a claim for relief, change the gravamen of the action and secure a
longer period of limitation.” The District Court correctly concluded that H&H’s and David
House’s case is “clearly grounded in alleged professional malpractice.” The three-year
statute of limitations for professional malpractice actions applies here. Section 27-2-206,
MCA.
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¶15 Ramlow and the Firms next argue that H&H and David House waived their arguments
not made before the District Court granted summary judgment to Ramlow and the Firms.
We generally will not address issues raised for the first time on appeal or changes in legal
theory. Unified Indus., Inc. v. Easley, 1998 MT 145, ¶ 15, 289 Mont. 255, 961 P.2d 100.
H&H and David House argued in their brief opposing Ramlow’s motions for summary
judgment and to strike, however, that this Court never has determined that a pro se complaint
constitutes a nullity. H&H and David House pointed to the fact that Ramlow and the Firms
exclusively relied upon cases from other jurisdictions to support their argument that the court
should strike H&H’s 2007 complaint. In light of these circumstances, H&H’s and David
House’s appeal “does not amount to such a significant change in legal theory that we must
decline to consider [its] appeal.” Becker v. Rosebud Operating Serv., Inc., 2008 MT 285, ¶
18, 345 Mont. 368, 191 P.3d 435. We turn then to the merits of H&H’s and David House’s
appeal.
¶16 H&H and David House argue that the District Court failed to apply the relation back
rule, contained in M. R. Civ. P. 15(c), to their amended complaint. The rule allows an
amended pleading to relate back to the date of the original complaint if 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 original pleading. M. R. Civ. P. 15(c).
¶17 The expiration of the applicable statute of limitations does not bar an amended
pleading when the amendment fits the requirements of M. R. Civ. P. 15(c). Citizens
Awareness, ¶ 21. M. R. Civ. P. 15(c) permits a claim raised in an amended pleading to relate
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back to the date of the original complaint. In this way, M. R. Civ. P. 15(c) removes the
protection to a defendant otherwise afforded by the statute of limitations when a party
amends a complaint. Prentice Lumber Co. v. Hukill, 161 Mont. 8, 15, 504 P.2d 277, 281.
M. R. Civ. P. 15(c) allows a court to render a dispositive decision on the merits of a party’s
argument, rather than on technicalities. Citizens Awareness, ¶ 21. We face the issue of
whether H&H’s and David House’s amended complaint should relate back, pursuant to M.
R. Civ. P. 15(c), to the date of H&H’s filing of its pro se complaint in Lake County in 2007.
¶18 Montana law generally does not permit a corporation to file an action pro se. A
corporation “cannot appear on its own behalf through an agent other than an attorney.”
Contl. Realty, Inc. v. Gerry, 251 Mont. 150, 152, 822 P.2d 1083, 1084 (1991). Non-lawyers
who attempt to represent corporations or partnerships in court are guilty of contempt of
court. Zempel v. Liberty, 2006 MT 220, ¶ 18, 333 Mont. 417, 143 P.3d 123; § 37-61-210,
MCA. Our references to corporations in this opinion apply with equal force to partnerships,
limited liability companies, and similar entities.
¶19 This Court determined in Weaver v. Law Firm of Graybill, Ostrem, Warne & Crotty,
246 Mont. 175, 803 P.2d 1089 (1990), that Weaver, a non-lawyer stockholder, could not
bring a pro se action on a corporation’s behalf. The Court thus reviewed only the
stockholder’s claims for which he had individual standing. See also Zempel, ¶ 18. Weaver
unfortunately failed to heed these decisions. We recently rejected Weaver’s pro se effort in
Weaver v. Adv. Refrigeration, 2011 MT 174, 361 Mont. 233, 257 P.3d 378, to reverse a
district court’s grant of summary judgment based on the plaintiff’s lack of standing. We
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instead reaffirmed that a shareholder may not bring a claim that belongs to the corporation.
Weaver, ¶ 15.
¶20 Similarly, counsel represented Continental Realty at a bench trial in the district court
in an eviction dispute between Continental Realty and its tenants. Cont. Realty, 251 Mont. at
151, 822 P.2d at 1084. The tenants prevailed in the district court. Continental Realty filed a
brief on appeal signed by its president, a non-lawyer. Cont. Realty, 251 Mont. at 151, 822
P.2d at 1084. The Court declined to consider Continental Realty’s brief due to the
corporation’s representation by a non-lawyer.
¶21 Weaver and Continental Realty stand for the proposition that a non-lawyer may not
represent a corporation at trial or on appeal. They do not address directly the issue of
whether a complaint filed on behalf of a corporation by a non-lawyer should be considered a
nullity. Similarly, these decisions do not address whether a complaint filed on behalf of a
corporation by a non-lawyer can be resuscitated by the eventual appearance of a lawyer on
behalf of the party. H&H’s and David House’s appeal squarely present these issues.
¶22 The North Dakota Supreme Court in Carlson v. Workforce Safety and Insurance, 765
N.W.2d 691, ¶ 26 (N.D. 2009), determined that “[t]he proper remedy when a corporation is
represented by a non-attorney agent is to dismiss the action and strike as void all legal
documents signed and filed by the non-attorney.” Several jurisdictions, on the other hand,
have deemed pro se corporate complaints “curable defects.” The Arizona Supreme Court
held in Boydston v. Strole Development Co., 969 P.2d 653, 656 (Ariz. 1998), that “a
reasonable opportunity should be given to cure the problem” of a pro se corporate filing.
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The Utah Court of Appeals in Graham v. Davis County Solid Waste Management and
Energy Recovery Special Service District, 979 P.2d 363, ¶ 15 (Utah Ct. App. 1999), likewise
rejected the district court’s determination that a pro se complaint filed by a corporation
constitutes a complete nullity. The party potentially could have cured the defect by entering
an appearance of counsel on its behalf. Graham, ¶ 15. To treat a pro se corporate complaint
as a “curable defect” leaves open the possibility of amending the complaint to add a lawyer’s
signature.
¶23 We have not yet addressed factors that a district court should apply to a pro se
corporate complaint if the corporation later amends the filing to include a lawyer’s signature
and then attempts to relate it back to the original complaint using M. R. Civ. P. 15(c). The
Minnesota Supreme Court in Save Our Creeks v. City of Brooklyn Park, 699 N.W.2d 307
(Minn. 2005), addressed such a scenario. A federal district court certified the question of
“whether a complaint filed and signed on behalf of a corporate entity by a non-lawyer is a
legal nullity.” Save Our Creeks, 699 N.W.2d at 309. The court answered the certified
question in the negative. Save Our Creeks, 699 N.W.2d at 308. The court determined that a
corporate complaint signed by a non-lawyer does not necessarily constitute a nullity. Save
Our Creeks, 699 N.W.2d at 311. The court considered whether the corporation acted with
knowledge that filing a pro se complaint was improper. The court analyzed whether the
corporation had obtained counsel upon notice that it could not file pro se. The court
evaluated the scope of the non-lawyer’s participation. And finally, the court reviewed
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whether the non-lawyer’s involvement had prejudiced the opposing party. Save Our Creeks,
699 N.W.2d at 311.
¶24 A district court has discretion to determine whether a corporation should be able to
relate back to an amended complaint signed by a lawyer, to its original, pro se complaint.
The district court in Weaver warned Weaver of the need to amend his pro se complaint to
name a corporation as a party. Weaver, ¶ 16. Weaver failed to seek leave to amend during
the nearly one year period that the court’s scheduling order allowed for amendments.
Weaver, ¶ 17. We affirmed. Weaver, ¶ 19.
¶25 Courts should apply the factors deemed relevant by the Minnesota Supreme Court in
Save Our Creeks. These factors include whether the entity had knowledge that it could not
file a pro se complaint, the amount of time that has elapsed between learning of the
prohibition and seeking counsel, whether the pro se complaint caused prejudice to the
opposing party, and how extensively the non-lawyer participated in the proceeding.
¶26 The Tennessee Supreme Court deemed a missing lawyer’s signature on a
corporation’s complaint to constitute a “defect in the filing.” Old Hickory Eng. and Mach.
Co. v. Henry, 937 S.W.2d 782, 786 (Tenn. 1996). The court declined to allow an appearance
by counsel to resuscitate the earlier filed complaint. Counsel appeared for the first time more
than one month after the defendant first had raised the issue. This month interval in the
filing could not be considered “prompt” action to cure the defect in the original complaint.
Old Hickory, 937 S.W.2d at 786.
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¶27 A district court must evaluate the circumstances of each case as it arises. A district
court’s analysis of these factors will ensure that district courts will not declare an otherwise
valid complaint void for technical reasons. Citizens Awareness, ¶ 21. It further will ensure
that corporations do not take advantage of the relation back doctrine offered by M. R. Civ. P.
15(c).
¶28 We do not need to reach the question of whether the District Court properly granted
summary judgment to Ramlow and the Firms. We instead reverse and remand to the
District Court to assess whether M. R. Civ. P. 15(c) permits H&H’s and David House’s 2010
amended complaint in Flathead County to relate back to H&H’s 2007 Lake County
complaint pursuant to the criteria set forth in this opinion.
/S/ BRIAN MORRIS
We Concur:
/S/ MIKE McGRATH
/S/ BETH BAKER
/S/ MICHAEL E WHEAT
/S/ JIM RICE
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