ECI Credit, LLC v. Diamond S Inc., DA 17-0574
| Decision Date | 24 July 2018 |
| Docket Number | DA 17-0574 |
| Citation | 422 P.3d 691,2018 MT 183,392 Mont. 178 |
| Parties | ECI CREDIT, LLC, a Montana limited liability company, Plaintiff and Appellant, v. DIAMOND S INC., a/k/a Diamond S Inc. Corp., a Montana corporation, Defendant, Appellee and Cross-Appellant. |
| Court | Montana Supreme Court |
For Appellant: David Brian Cotner, Kyle C. Ryan, Cotner Law, PLLC, Missoula, Montana
For Appellee: Cory R. Gangle, Gangle Law Firm, PC, Missoula, Montana
¶ 1 ECI Credit, LLC, (ECI) appeals from orders of the Fourth Judicial District Court, Missoula County, dismissing its case against Diamond S Inc., (Diamond) under M. R. Civ. P. 41(b), and denying its motion for relief from that dismissal under M. R. Civ. P. 60(b). Diamond cross-appeals from the District Court’s order granting partial summary judgment in ECI’s favor. We affirm the District Court’s orders dismissing ECI’s case and denying ECI’s motion for relief from that dismissal. We deny Diamond’s cross-appeal as moot.
¶ 2 We restate the issues on appeal as follows:
¶ 3 In 2008, ECI purchased real property from Diamond that included several older commercial buildings, including one known as the Watercraft building. In 2010, ECI discovered the Watercraft building had suffered fire damage, including compromise of the roof trusses, at some point in its history. Although Diamond knew, and did not tell ECI, that the Watercraft building had been damaged in a fire in 1977, Diamond denied it had failed to disclose any known defects: It filed an insurance claim after the fire, a contractor repaired the damage, and Diamond believed the damage was repaired.
¶ 4 ECI filed suit in 2012, alleging claims including fraud, negligent representation, and breach of contract. On May 23, 2014, the District Court granted ECI partial summary judgment, ruling that Diamond had breached its duty to disclose a latent defect in the Watercraft building. The court reserved ruling on damages for trial.
¶ 5 On July 9, 2014, Diamond moved for relief from the summary judgment under M. R. Civ. P. 60(b). On July 28, 2014, ECI responded in opposition. On September 26, 2014, the District Court denied Diamond’s motion.
¶ 6 In December 2014, Diamond’s counsel wrote to ECI’s counsel and proposed a scheduling order. Diamond’s counsel also indicated that Diamond was willing to enter into settlement negotiations. ECI did not respond to the letter.
¶ 7 The parties took no further action in the District Court. On January 19, 2017, the District Court issued an Order Closing Case.
¶ 8 On February 22, 2017, ECI moved to reopen the case. ECI offered no explanation why it had taken no action after the summary judgment order, but argued the District Court could not dismiss the action pursuant to § 25-1-104, MCA, because it had not given the parties notice and allowed them the opportunity to recommence prosecution.
¶ 9 Diamond opposed ECI’s motion. It acknowledged that the District Court could not dismiss the case under § 25-1-104, MCA, because the court did not give notice prior to dismissal. Diamond then moved to dismiss the case under M. R. Civ. P. 41(b), which does not require notice, but permits a defendant to move to dismiss a claim for failure to prosecute. Diamond argued ECI had taken no steps to move the case towards the resolution of the remaining issues, having last conducted discovery in the spring of 2013, filing only a single response brief after that point, and taking no action whatsoever since July 2014. Replying to Diamond’s Rule 41(b) argument, ECI acknowledged that "there is no explanation for the delay." ECI contended Diamond had suffered no prejudice, argued dismissal was too harsh a remedy, and suggested the District Court instead issue a truncated scheduling order.
¶ 10 On May 18, 2017, the District Court issued an Order Granting Motion to Reopen Case and Granting Motion to Dismiss. The court vacated its earlier closure of the case, admitting it did not provide the notice § 25-1-104, MCA, requires. The District Court then granted Diamond’s motion to dismiss under M. R. Civ. P. 41(b).
¶ 11 ECI moved for relief from the Order under M. R. Civ. P. 60(b)(1), alleging the District Court made a mistake in dismissing the case. ECI contended it diligently prosecuted its case prior to September 26, 2014, and although it did not file anything with the District Court afterward, its work on the case did not cease. Counsel stated he created a "preliminary draft" of a motion for summary judgment regarding damages. Counsel also stated in an accompanying affidavit that due to staffing changes at his law firm, the case "slipped through the cracks." ECI also alleged the lack of a scheduling order caused the case to sit idle.
¶ 12 The District Court denied ECI’s motion for relief. ECI appeals.
¶ 13 A district court has broad discretion in ruling on a M. R. Civ. P. 41 motion to dismiss, and we will overturn its ruling only for an abuse of discretion. Lear v.Jamrogowicz , 2013 MT 147, ¶ 16, 370 Mont. 320, 303 P.3d 790 (citation omitted). We will vacate a dismissal if, after reviewing the record, we are left with the definite and firm conviction that the district court committed a clear error in weighing the relevant factors. Doug Johns Real Estate, Inc. v. Banta , 246 Mont. 295, 298, 805 P.2d 1301, 1303 (1990) (citation omitted).
¶ 14 The degree of appellate scrutiny of a trial court’s ruling on a Rule 60(b) motion depends on whether the trial court set aside the judgment. If the trial court refused to set aside the judgment, only a slight abuse of discretion need be shown to warrant reversal. Karlen v. Evans , 276 Mont. 181, 185, 915 P.2d 232, 235 (1996) (citations omitted).
¶ 15 1. Did the District Court abuse its discretion when it dismissed ECI’s complaint for failing to prosecute under M. R. Civ. P. 41(b) ?
¶ 16 Rule 41(b) allows a district court to dismiss an action for failure to prosecute upon the defendant’s motion. In deciding whether a district court has abused its discretion in dismissing an action for failure to prosecute, we consider four factors: (1) the plaintiff’s diligence in prosecuting the claims; (2) the prejudice caused to the defense by the plaintiff’s delay; (3) the availability of alternate sanctions; and (4) whether the plaintiff was warned that the case was in danger of dismissal. We consider these factors in light of public policy considerations that favor a plaintiff’s right to a hearing on the merits, balanced against the trial court’s need to manage its docket and the general policy of encouraging prompt disposition of lawsuits. Becky v. Norwest Bank Dillon, N.A. , 245 Mont. 1, 8, 798 P.2d 1011, 1015 (1990).
¶ 17 In granting Diamond’s motion to dismiss under Rule 41(b), the District Court found that the first factor—whether ECI diligently prosecuted its claims—weighed heavily in Diamond’s favor. The court reviewed the docket and found ECI prosecuted its claims through completion of discovery in early 2013 and up to the hearing on summary judgment in November 2013. The court further noted that after prevailing at summary judgment, ECI took no further action until July 2014, when it filed a brief in opposition to a Rule 60(b) motion filed by Diamond. The District Court noted that ECI took no action in the court for 30 months and admitted it had "no explanation for the delay." It noted ECI offered no evidence that it communicated with Diamond’s counsel or attempted to resolve the case, and did not attempt to explain its silence and inaction. Considering that ECI filed one brief after November 2013, and filed nothing from July 2014 until the February 2017 motion to re-open, the District Court found ECI had not fulfilled its duty to pursue prosecution and bring the case to trial. Cook v. Fergus Elec. Coop., Inc. , 235 Mont. 173, 177, 765 P.2d 1138, 1140 (1988).
¶ 18 ECI argues the District Court abused its discretion by failing to consider the full circumstances of the case. ECI contends the District Court should have considered ECI’s diligence in the earliest part of the litigation. It argues that other failure-to-prosecute cases are factually distinguishable because in those instances, the prosecuting party took few steps to prosecute the case from the very beginning. E.g., Pool v. Butte Pre-Release Ctr. , 283 Mont. 287, 939 P.2d 1011 (1997) (); Shackleton v. Neil , 207 Mont. 96, 672 P.2d 1112 (1983) (). ECI maintains it diligently prosecuted the case through July 2014, and argues the District Court thus should not have found it failed to diligently prosecute the case.
¶ 19 Diamond argues ECI’s failure to act for 30 months is not diligence. It further argues the District Court knew the case’s history when it dismissed the case.
¶ 20 Clearly, as Diamond argues, the District Court knew the case’s history when it granted Diamond’s motion to dismiss. Moreover, we fail to see how ECI’s early diligence obviates its later two-and-a-half-year inattention.
¶ 21 ECI’s case is unusual because ECI initially invested considerable time and effort, and received a favorable ruling, before it allowed this case to languish. However, ECI cites no law which would prohibit a court from dismissing a dormant case if the party had previously pursued it diligently. ECI’s earlier actions do not change the fact that 30 months passed between its last filing and the District...
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