Ioerger v. Reiner

• Decision Date: 21 June 2005
• Docket Number: No. 04-258.,04-258.
• Citation: 2005 MT 155,327 Mont. 424,114 P.3d 1028
• Parties: George IOERGER, Plaintiff and Appellant, v. Cecelia REINER, Defendant and Respondent.
• Court: Montana Supreme Court

114 P.3d 1028

2005 MT 155

327 Mont. 424

George IOERGER, Plaintiff and Appellant, v. Cecelia REINER, Defendant and Respondent.

No. 04-258.

Supreme Court of Montana.

Submitted on Briefs September 21, 2004.

Decided June 21, 2005.

COPYRIGHT MATERIAL OMITTED

For Appellant: Robert J. Quinn, Bozeman, Montana.

For Respondent: Karl P. Seel, Bozeman, Montana.

Justice JIM RICE delivered the Opinion of the Court.

¶ 1 George Ioerger (Ioerger) appeals from the order entered by the Eighteenth Judicial District Court, Gallatin County, on February 3, 2004, dismissing his Motion For an Order Allowing Execution and Levy of Judgment Personally Against Cecelia Reiner (Reiner). We affirm the order of the District Court.

¶ 2 We address the following issues:

¶ 3 1. Whether the District Court erred by not allowing the joinder of Reiner pursuant to Rule 21, M.R.Civ.P., and by denying the motion requesting execution and levy of judgment against Reiner?

¶ 4 2. Is Reiner is entitled to attorney fees in defending this appeal?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 5 On or about August 1999, Ioerger read a real estate listing prepared by Jennifer Hartsell, an employee of Realty Executives of Montana, L.L.C., regarding a piece of real property located near Gallatin Gateway, Montana. The property, advertised as being bounded by Forest Service property, was listed by Realty Executives of Montana, L.L.C. Ioerger then contacted Bonnie Noble of defendant Summit Realty, Inc. (Summit), to inquire about the possible purchase of the property and retained Summit as his buyer's agent.

¶ 6 On September 17, 1999, Ioerger purchased, for $175,000, the aforementioned property. However, after purchase Ioerger discovered the property was not bordered by Forest Service land, but, instead, had been erroneously advertised by Realty Executives of Montana, L.L.C. Initially, Ioerger communicated with Cecelia Reiner, a member of Realty Executives of Montana, L.L.C., about the lack of Forest Service boundaries, and to inquire about compensation for the misrepresentation.

¶ 7 On or about February 28, 2000, the assets of Realty Executives of Montana, L.L.C., were sold to Realty Rapp, Inc., for $14,270. Subsequently, without notice being provided to Ioerger, Realty Executives of Montana, L.L.C., was changed to Reiner, L.L.C., with Reiner being the sole member. After realizing that he was not going to be voluntarily compensated for his damages, Ioerger filed his complaint in late October 2000, naming Realty Rapp, Inc., d/ b/a Realty Executives; Summit Realty, Inc., d/b/a Century 21 Summit Realty; and Jennifer Hartsell as defendants. Ioerger later filed an amended complaint adding Reiner, L.L.C., f/k/a Realty Executives of Montana, L.L.C., as a defendant. He subsequently settled his claims with all defendants except Reiner, L.L.C.

¶ 8 A bench trial was conducted on December 12, 2001, in the Eighteenth Judicial District Court. No appearance was made by Reiner or an attorney on behalf of Reiner, L.L.C., and on January 18, 2002, Ioerger obtained a default judgment against Reiner, L.L.C., for $52,065.10.

¶ 9 A debtor's hearing was conducted on November 4, 2002, to determine what assets were available to satisfy Ioerger's judgment. At the time of the hearing, Reiner, L.L.C., had no bank accounts, receivables, cash, real property, insurance proceeds, or any other assets available to execute or levy against. It was also ascertained that Reiner, L.L.C., had been involuntarily dissolved nine days before the December 12, 2001, trial. Reiner, L.L.C.'s errors and omissions insurance had also been cancelled or had lapsed, thereby preventing Ioerger from looking to the insurance to satisfy the judgment.

¶ 10 On December 12, 2003, Ioerger filed a Motion for an Order Allowing Execution and Levy of Judgment Personally Against Reiner. On February 3, 2004, the District Court dismissed Ioeger's motion without prejudice, ruling that because this matter was closed, and a judgment was rendered, the court could not reopen the case to allow Ioerger to pursue a fraudulent transfer claim. Ioerger appeals therefrom.

STANDARD OF REVIEW

¶ 11 Joinder of a party under Rule 21, M.R.Civ.P., is discretionary. White v. Lobdell (1984), 208 Mont. 295, 305, 678 P.2d 637, 642. We review a district court's conclusions of law to determine whether the interpretation of the law is correct. Cardneaux v. Cardneaux, 1998 MT 256, ¶ 7, 291 Mont. 230, ¶ 7, 967 P.2d 410, ¶ 7 (citations omitted).

DISCUSSION

¶ 12 Whether the District Court erred by not allowing the joinder of Reiner pursuant to Rule 21, M.R.Civ.P., and by denying the motion requesting execution and levy of judgment against Reiner?

¶ 13 In the District Court, Ioerger sought joinder of Reiner as a party to the action pursuant to Rule 21, M.R.Civ.P., and leave to execute against her personally. In Mountain West Bank, N.A. v. Mine and Mill Hydraulics, Inc., 2003 MT 35, ¶ 31, 314 Mont. 248, ¶ 31, 64 P.3d 1048, ¶ 31, this Court explained the application of Rule 21, M.R.Civ.P., as follows:

Rule 21, M.R.Civ.P., addresses joinder of parties, and provides, in pertinent part, that: "Parties may be dropped or added by order of the court on motion of any party or of its own initiative at any stage of the action and on such terms as are just." Rule 19(a), M.R.Civ.P., then sets forth the criteria for determining when adding a party to an action is appropriate. Rule 19(a), M.R.Civ.P., provides, in pertinent part that: "A person who is subject to service of process shall be joined as a party in the action if (1) in the person's absence complete relief cannot be accorded among those already parties. . . ."

Mountain West Bank, N.A., ¶ 31. Joinder is to be liberally allowed under Rule 21, M.R.Civ.P. White, 208 Mont. at 306, 678 P.2d at 642. We have held that while Rule 21, M.R.Civ.P., determinations are discretionary, "that discretion is not license to rule without valid reasons." White, 208 Mont. at 305, 678 P.2d at 642 (citing State ex rel. Stenberg v. Nelson (1971), 157 Mont. 310, 486 P.2d 870).

¶ 14 Ioerger argues that by its language, Rule 21, M.R.Civ.P., indicates that a new party may be added to a proceeding at any time, which would include following the entry of a final judgment, on such terms that are just. Ioerger contends that the District Court failed to address or make findings with regard to his request, and, instead, incorrectly accepted Reiner's assertion that Rule 12, M.R.Civ.P., does not allow Reiner to be added because the court lacked in personam jurisdiction over her.

¶ 15 Reiner counters that Rule 21, M.R.Civ.P., contemplates joinder of a party during the proceedings, not post judgment. She maintains that it would be vastly unjust to allow execution against her when she was not a party to the lawsuit, and had not answered a complaint or presented any defenses to the allegations. Reiner argues that jurisdiction over a party is a fundamental threshold question and should not be assumed lightly.

¶ 16 Generally, "a person who is not a party to an action, cannot be a party to the judgment of that action." Baltrusch v. Baltrusch, 2003 MT 357, ¶ 62, 319 Mont. 23, ¶ 62, 83 P.3d 256, ¶ 62 (citing Warnack v. Coneen Family Trust (1994), 266 Mont. 203, 207, 879 P.2d 715, 718). In In re Marriage of Foster, 2004 MT 326, ¶¶ 18-20, 324 Mont. 114, ¶¶ 18-20, 102 P.3d 16, ¶¶ 18-20, we concluded the district court was without jurisdiction to impose a post-judgment constructive trust on the property of individuals who were not parties to the action and noted that, had they been added to the action following the judgment, they "would have all the procedural rights attendant to litigation, such as service of process, Rule 4 D, M.R.Civ.P., right to file responsive pleadings, Rule 7(a), M.R.Civ.P., engage in discovery, Rule 26(b), M.R.Civ.P. and trial by jury, Art. II, Sec. 26, Mont. Const." Foster, ¶ 20. Such rights for Reiner were not contemplated here.

¶ 17 Rule 21, M.R.Civ.P., presupposes in personam jurisdiction, but does not confer that jurisdiction. F.W. Woolworth Co., Inc. v. Employment Security Division (1981), 192 Mont. 289, 295, 627 P.2d 851, 855. In Hilands Golf Club v. Ashmore (1996), 277 Mont. 324, 331, 922 P.2d 469, 473-74, this Court explained the acquisition of jurisdiction as follows:

Under Rule 4, M.R.Civ.P., jurisdiction is acquired through the service of process. Process, under Rules 4C and 4D, M.R.Civ.P., requires the issuance and service of a summons upon a party. Once served with a summons, the party so served is required to appear and defend.

Hilands Golf Club, 277 Mont. at 331, 922 P.2d at 473-74.

¶ 18 In Hadford v. Credit Bureau of Havre, Inc., 1998 MT 179, ¶ 16, 289 Mont. 529, ¶ 16, 962 P.2d 1198, ¶ 16, this Court discussed Rule 4D, M.R.Civ.P., and its relationship to service of process on both individuals and corporations:

"The purpose of serving a summons is to give notice to the defendant and thereby afford him the opportunity to defend himself or his property — an essential to due process of law." Haggerty v. Sherburne Mercantile Co. (1947), 120 Mont. 386, 396-97, 186 P.2d 884, 891. Service of process also provides the court with jurisdiction over the person or entity sued. In re Marriage of Grounds (1995), 271 Mont. 350, 352, 897 P.2d 200, 201 (citation omitted). Actual knowledge is not a substitute for valid service. Marriage of Grounds, 271 Mont. at 352, 897 P.2d at 201.

Hadford, ¶ 16.

¶ 19 Reiner was not separately served under Rule 4, M.R.Civ.P. Nonetheless, Ioerger asserts that the District Court had already obtained personal jurisdiction over Reiner. Ioerger argues Reiner was served by virtue of her association with Reiner, L.L.C., and the other named parties, pursuant to § 25-5-104, MCA. That statute provides:

When 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,...