MacPheat v. Schauf

• Decision Date: 12 February 2002
• Docket Number: No. 01-190.,01-190.
• Citation: 41 P.3d 895,2002 MT 23,308 Mont. 215
• Parties: William MacPHEAT, Plaintiff and Appellant, v. Steven L. SCHAUF and Farmers Insurance Group of Companies Defendants and Respondents.
• Court: Montana Supreme Court

41 P.3d 895

2002 MT 23

308 Mont. 215

William MacPHEAT, Plaintiff and Appellant, v. Steven L. SCHAUF and Farmers Insurance Group of Companies Defendants and Respondents.

No. 01-190.

Supreme Court of Montana.

Submitted on Briefs: August 23, 2001.

Decided: February 12, 2002.

Will MacPheat, Missoula, Montana (pro se), for Appellant.

K. James Heckathorn, Crowley, Haughey, Hanson, Toole & Dietrich, Kalispell, Montana (Schauf); William R. Bieler, Williams & Ranney, Missoula, Montana (Farmers), for Respondents.

COTTER, Justice.

¶ 1 Appellant William MacPheat filed a complaint for libel in the Eleventh Judicial District Court, Flathead County, against Respondents Steven L. Schauf and Farmers Insurance Group of Companies ("FIGC"). Farmers Insurance Exchange ("FIE") made a limited appearance and moved the District Court to quash MacPheat's service of process on FIGC and dismiss FIGC from the action on the grounds that FIGC is not a legal entity, nor MacPheat's employer. The District Court granted FIE's motions and MacPheat appeals. We reverse and remand.

¶ 2 The sole issue on appeal is whether the District Court erred when it quashed the service of process on FIGC and dismissed FIGC from the action.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 3 On July 25, 1997, MacPheat filed a complaint in the First Judicial District Court, Lewis and Clark County, against Schauf and FIGC. In the complaint, MacPheat alleged that Schauf wrote a libelous letter regarding MacPheat's character, on FIGC letterhead, to Judge Katherine Curtis who was presiding over one of MacPheat's criminal proceedings. MacPheat alleged that Schauf wrote the letter with malicious intent while acting in his official capacity as an employee of FIGC. The complaint alleged that this letter compromised his constitutional right to be tried by an impartial tribunal. On October 8, 1997, the matter was transferred to the Eleventh Judicial District Court, Flathead County.

¶ 4 In the ensuing months, the parties filed a litany of motions in the District Court and applications for extraordinary writs with this Court regarding, among other things, the sufficiency of the FIGC summons and various discovery requests. Ultimately, on May 25, 2000, MacPheat timely issued an amended summons and subsequently served FIGC. On July 20, 2000, FIE, an inter-insurance exchange affiliated with FIGC, made a limited appearance to move the District Court to quash MacPheat's service of process on FIGC and dismiss FIGC from the action.

¶ 5 In support of its motions, FIE attached the affidavit of Christopher R. Pflug, Assistant Secretary of FIE. Pflug's affidavit stated that FIGC is simply "a federally registered service mark" and "not a legal entity." Further, the affidavit maintained that FIE employed Schauf, not FIGC. Therefore, FIE argued that FIGC is not a legal entity upon which service of process can be made and maintained that MacPheat's complaint failed to state a claim upon which relief could be granted because FIGC did not employ Schauf.

¶ 6 On August 16, 2000, the District Court granted FIE's motion to quash MacPheat's service of process on FIGC and dismiss FIGC from the action. On August 23, 2000, the District Court entered its judgment dismissing MacPheat's claims against FIGC with prejudice. On January 26, 2001, the District Court certified its judgment as final pursuant to Rule 54(b), M.R.Civ.P. MacPheat appeals.

STANDARD OF REVIEW

¶ 7 We review de novo a district court's ruling on a motion to dismiss under Rule 12(b)(6), M.R.Civ.P. Powell v. Salvation Army (1997), 287 Mont. 99, 102, 951 P.2d 1352, 1354. The issues of whether the court properly quashed service of process and granted a Rule 12(b)(6), M.R.Civ.P., motion to dismiss present questions of law. See Fonk v. Ulsher (1993), 260 Mont. 379, 383, 860 P.2d 145,

147 and Missoula YWCA v. Bard, 1999 MT 177, ¶ 3, 295 Mont. 260, ¶ 3, 983 P.2d 933, ¶ 3. This Court reviews issues of law to determine whether the district court's application or interpretation of the law is correct. Williams v. Zortman Mining, Inc. (1996), 275 Mont. 510, 512, 914 P.2d 971, 972-73.

DISCUSSION

¶ 8 Did the District Court err when it quashed the service of process on FIGC and dismissed FIGC from the action?

¶ 9 FIGC argues that the District Court properly quashed service of process and dismissed it from the action for three reasons. First, FIGC argues that it is not a "person" subject to service of process for purposes of Rule 4A, M.R.Civ.P. Second, FIGC insists that it is not a corporation, partnership, or any other type of business entity capable of sustaining suit. FIGC contends that it is merely a registered service mark used by Farmers' companies to distinguish their services from others. Third, FIGC indicates that MacPheat's complaint imputes liability to it under the theory of respondeat superior. However, FIGC maintains that it has never employed the alleged tortfeasor, Steven Schauf. Therefore, FIGC urges us to affirm the District Court's order.

¶ 10 In its limited appearance, FIE presented all of these arguments to the District Court in support of its motion to quash service of process on FIGC and dismiss FIGC from the action. The District Court granted FIE's motions but provided no indication of which argument it found compelling or determinative. The District Court simply stated that it considered the briefs of both parties and granted FIE's motions. Therefore, we will address the legal service of process and dismissal issues raised by the parties and leave the factual inquiry regarding the respondeat superior allegation to the District Court on remand.

¶ 11 Interestingly, FIGC submitted the same "service mark" argument presented here to the Oklahoma Supreme Court in Oliver v. Farmers Ins. Group of Cos. (Okla. 1997), 941 P.2d 985. There, the plaintiff filed a bad faith suit against FIGC and three other defendants. FIGC filed a motion for summary judgment which referenced an affidavit provided by FIE's assistant secretary. The affiant stated that FIGC had never been a corporate entity and that FIGC was merely a federally registered service mark used in marketing Farmers' services. Therefore, FIGC argued that it was not subject to legal process and was an improper defendant.

¶ 12 The Oklahoma Supreme Court acknowledged that under the traditional common law, a voluntary, unincorporated association could not be sued under its name because it did not have a legal status apart from that of its individual members. Oliver, 941 P.2d at 988. However, the court also recognized that "[b]ecause of the unjustness of the rule in present day society, it has been modified in many jurisdictions." Oliver, 941 P.2d at 988. Oklahoma statutorily modified the common law rule in 12 O.S.1991 § 182, which provides:

When any two or more persons associate themselves together and transact business for gain or speculation under a particular appellation, not being incorporated, they may be sued by such appellation without naming the individuals composing such association and service of process may be had upon such association by personal service as provided by law for service of summons in civil actions....

Therefore, the Oklahoma Supreme Court dismissed FIGC's service mark defense. In so doing the court stated:

No one suggests that the companies which `associate themselves together' in the Farmers Group do not `transact business for gain.' Whatever else Farmers Insurance Group of Companies does, it is clearly a name under which a number of Farmers-related companies insure against risks. Under our section 182 Oliver may properly bring suit against Farmers Insurance Group of Companies.

Oliver, 941 P.2d at 988.

¶ 13 We find the reasoning in this case persuasive. Rule 4A, M.R.Civ.P., defines "person" as follows:

Definition of person. As used in this rule, the word `person,' whether or not a citizen or resident of this state and whether or not organized under the laws of this state, includes an individual whether operating in the individual's own name or under a trade name; an individual's agent or personal representative; a corporation; a limited liability company; a business trust; an estate; a trust; a partnership; an unincorporated association; and any two or more persons having a joint or common interest or any other legal or commercial entity. [Emphasis added.]

Clearly, if FIGC is to qualify as a person within the ambit of Rule 4A, M.R.Civ.P., then it must do so as an "unincorporated association" or "any two or...