Milky Whey, Inc. v. Dairy Partners, LLC

• Decision Date: 27 January 2015
• Docket Number: No. DA 14–0013.,DA 14–0013.
• Citation: 342 P.3d 13,2015 MT 18,378 Mont. 75
• Parties: The MILKY WHEY, INC., Plaintiff and Appellant, v. DAIRY PARTNERS, LLC, a limited liability company, and Scott Stefan, Defendants and Appellees.
• Court: Montana Supreme Court

378 Mont. 75

342 P.3d 13

2015 MT 18

The MILKY WHEY, INC., Plaintiff and Appellant

v.DAIRY PARTNERS, LLC, a limited liability company, and Scott Stefan, Defendants and Appellees.

No. DA 14–0013.

Supreme Court of Montana.

Argued Oct. 29, 2014.

Submitted Nov. 5, 2014.

Decided Jan. 27, 2015.

For Appellant: David C. Berkoff (argued), Berkoff Law Firm, P.C., Missoula, Montana.

For Appellees: Quentin M. Rhoades (argued); Francesca di Stefano, Rhoades & Siefert, P.L.L.C., Missoula, Montana.

Opinion

Justice BETH BAKER delivered the Opinion of the Court.

¶ 1 The Milky Whey, Inc., appeals the decision of the Fourth Judicial District Court granting Dairy Partners, LLC, and Scott Stefan's motion to dismiss for lack of personal jurisdiction. We address the following issues on appeal:

1. Whether the District Court correctly ruled that Dairy Partners' notice of appearance of counsel did not waive jurisdictional objections.

2. Whether the District Court correctly held that Montana's long-arm statute does not confer personal jurisdiction over Dairy Partners.

¶ 2 We affirm.

PROCEDURAL AND FACTUAL BACKGROUND

¶ 3 Milky Whey is a registered Montana corporation based in Missoula, Montana. It operates as a dairy broker, supplying food manufacturers in the U.S. and Canada with dairy commodities purchased from suppliers and manufacturers. Dairy Partners is a dairy supply company located in Minnesota that sells products to dairy brokers like Milky Whey.

¶ 4 From 2010 to 2013, Milky Whey and Dairy Partners¹ completed nine purchase orders through telephone, fax, or e-mail, valuing over $181,000. Most of these previous sales involved Dairy Partners contacting Milky Whey in Montana. On January 23, 2013, in a transaction initiated by Milky Whey, it prepaid $12,500 to purchase 10,000 pounds of a dairy product called “Swiss Trim” from Dairy Partners. Milky Whey wired the purchase money from Missoula to Dairy Partners in Minnesota. Dairy Partners shipped the product to its warehouse in Salt Lake City on January 31, 2013.

¶ 5 When Milky Whey picked up the product from the warehouse in Salt Lake on March 7, 2013, it discovered that much of the product had become moldy and unusable. Milky Whey has not suggested that it intended to bring the cheese into Montana, and none of the product ever entered the state. Through e-mail communication, the parties attempted to resolve the issue amicably, but Dairy Partners did not reimburse Milky Whey for the moldy product.

¶ 6 Milky Whey filed this suit on September 26, 2013, alleging breach of contract, breach of warranty, unjust enrichment, and breach of an obligation to pay. Dairy Partners was served on October 3, 2013, and filed a notice of appearance of counsel on October 30, 2013. Two weeks later, on November 12, Dairy Partners filed a motion to dismiss for lack of personal jurisdiction. Dairy Partners later filed an answer to the complaint. After considering the parties' briefs and affidavits on the motion, the District Court agreed with Dairy Partners and dismissed the action, holding that the Defendants “do not come within Montana's long-arm jurisdiction statute ... because they have taken no action under the statute and the exercise of jurisdiction would not be reasonable.” Milky Whey appeals.

STANDARD OF REVIEW

¶ 7 We review de novo a district court's decision on a motion to dismiss for lack of personal jurisdiction, construing the complaint “in the light most favorable to the plaintiff.”

Grizzly Sec. Armored Express, Inc. v. Armored Grp., LLC, 2011 MT 128, ¶ 12, 360 Mont. 517, 255 P.3d 143.

DISCUSSION

¶ 8 1. Whether the District Court correctly ruled that Dairy Partners' notice of appearance of counsel did not waive jurisdictional objections.

¶ 9 A Montana court may acquire jurisdiction over a person through service of process or “by the voluntary appearance in an action by any person either personally or through an attorney, authorized officer, agent, or employee.” M.R. Civ. P. 4(b)(2). Consent to the exercise of a court's jurisdiction constitutes a waiver of the defense. El Dorado Heights Homeowners' Ass'n v. Dewitt, 2008 MT 199, ¶ 16, 344 Mont. 77, 186 P.3d 1249. Rule 12(b), M.R. Civ. P., states, “Every defense to a claim for relief in any pleading must be asserted in the responsive pleading if one is required.” The rule continues, “But a party may assert the following defenses by motion,” and the subsequent list includes the defense of lack of personal jurisdiction. M.R. Civ. P. 12(b)(2). The same rule clarifies that “[a] motion asserting any of these defenses must be made before a pleading if a responsive pleading is allowed.” A party waives the defense of a lack of personal jurisdiction by “omitting it from a motion in the circumstances described in Rule 12(g)(2) [Joining Motions]; or ... failing to either”:

(i) make it by motion under this rule; [or]

(ii) include it in a responsive pleading or in an amendment allowed by Rule 15(a)(1) as a matter of course[.]

M.R. Civ. P. 12(h)(1).

¶ 10 Milky Whey argues that Dairy Partners waived its jurisdictional objections by failing to raise personal jurisdiction as a defense in its notice of appearance. Dairy Partners did not raise a jurisdictional argument until its motion to dismiss two weeks after its notice of appearance. Milky Whey relies on cases explaining that “objection to lack of personal jurisdiction must be made at the time of the initial appearance in the District Court.” Spencer v. Ukra, 246 Mont. 430, 433, 804 P.2d 380, 382 (1991) ; see also Spiker Communs. v. State ex rel. DOC, 1998 MT 32, ¶¶ 13–14, 287 Mont. 345, 954 P.2d 1145; El Dorado Heights Homeowners' Ass'n, ¶ 16.

¶ 11 Rule 12(b) plainly states that the defense of a lack of personal jurisdiction is waived only if a party does not raise the defense before filing a responsive pleading. The District Court reasoned that Dairy Partners' notice of appearance was not a pleading under M.R. Civ. P. 12(b), and thus the filing of a notice of appearance prior to a motion to dismiss for lack of jurisdiction did not waive the defense.

Rule 7, M.R. Civ. P., identifies documents that are considered pleadings—it does not include a notice of appearance.

¶ 12 The cases Milky Whey cites in which we have found waiver involve significantly different facts. In Spencer, “initial appearance” referred to the first substantive motion filed by the defendants. The court held that the defendants waived a personal jurisdiction defense where they had moved the court to set aside a default judgment as their first appearance. While the court cited, perhaps misleadingly, the contemporaneously filed “Notice of Appearance” to support its reasoning, it rested its conclusion on the defendants' substantive motion. Spencer, 246 Mont. at 435, 804 P.2d at 384 (“[D]efendants made an initial appearance to vacate the default....”).

¶ 13 Similarly, in El Dorado Heights, the court relied on the fact that the defendant “had already appeared in the case many times, both physically in court and through motions and briefs submitted to the court through her attorney.” El Dorado Heights, ¶ 16. Prior to seeking dismissal for lack of personal jurisdiction, the defendant had entered into a stipulation with other parties that was filed with the court, and subsequently had filed a motion seeking a stay and amendment or rescission of the stipulation, along with additional documents regarding the restrictive covenants at issue in the case. El Dorado Heights, ¶¶ 8–11. We agreed that, although she was not named as a party until later, the defendant had consented to the court's jurisdiction by participating in the action. El Dorado Heights, ¶ 16; see also Wamsley v. Nodak Mut. Ins. Co., 2008 MT 56, ¶ 27, 341 Mont. 467, 178 P.3d 102 (personal jurisdiction waived by filing motions seeking relief from the court on other, non-jurisdictional grounds).

¶ 14 In Spiker, the Court relied on a prior version of Rule 12(b), which provided that, if venue of the action was improper, “the defendant must at the time of defendant's first appearance request by motion that the trial be had in the proper county.” M.R. Civ. P. 12(b)(ii) (1997) (emphasis added). The Court held, “Under the clear language of Rule 12(b)(ii), M.R. Civ. P., the State should have included its request that venue be changed to Lewis and Clark County in its notice of appearance of counsel.” The parties do not challenge venue, and the rule has been amended since Spiker was decided. Its holding is inapplicable here.

¶ 15 In this case, Dairy Partners met the requirements of Rule 12(b) by filing its motion contesting personal jurisdiction before it filed a responsive pleading. M.R. Civ. P. 12(b). Rule 12(h) requires only that the party raise the defense “at the time the first significant defensive move is made—whether it be by way of a Rule 12 motion or a responsive pleading.” See 5C Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure: Civil 3d § 1391, 515 (3d ed.2004); Michelson v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 709 F.Supp. 1279, 1283 (S.D.N.Y.1989) (defendants did not waive personal jurisdiction defense by filing a notice of appearance because they promptly challenged the court's jurisdiction).² A notice of appearance serves to direct any additional filings to the defendant's attorney; it is not a pleading and does not acquiesce to the jurisdiction of the court unless it is joined with some other motion or responsive pleading.

¶ 16 Rule 12 does not require that a party contest personal jurisdiction prior to or contemporaneously with a notice of appearance of counsel, and our cases should not be interpreted to imply a stricter requirement than that articulated by Montana's Rules of Civil Procedure. Dairy Partners moved to dismiss on November 12, 2013, before filing its first responsive pleading. We agree with the District Court that Dairy Partners did not waive its jurisdiction defense.

¶ 17 2. Whether the District Court correctly held that Montana's long-arm statute does not confer...