Sagorin v. Sunrise Heating & Cooling, LLC

• Decision Date: 22 March 2022
• Docket Number: DA 21-0349
• Citation: 408 Mont. 119,506 P.3d 1028
• Parties: Sessel SAGORIN, as successor to interest to Yellowstone Lodging, LLC, Plaintiff and Appellant, v. SUNRISE HEATING AND COOLING, LLC, Excellence Heating & Cooling, LLC, Brian Medrain, Zack Nelson, Daikin North America, LLC, Daikin Applied Americas, Inc., Thermal Supply, Inc., Lateral Electrical Services, Inc., American Express Company, Leslie Jongberg III, d/b/a Montana Mobile Mountain Cooling Services, Doug's Constr. and Repair, Inc., Chris Baker Williams, Chris Williams Baker, Jamie Wright, Travis Jordan, Scott Phelan, Esquire Intermountain Law, LLC, and Dodd Law Firm, P.C., Defendants and Appellees.
• Court: Montana Supreme Court

408 Mont. 119

506 P.3d 1028

Sessel SAGORIN, as successor to interest to Yellowstone Lodging, LLC, Plaintiff and Appellant,

v.SUNRISE HEATING AND COOLING, LLC, Excellence Heating & Cooling, LLC, Brian Medrain, Zack Nelson, Daikin North America, LLC, Daikin Applied Americas, Inc., Thermal Supply, Inc., Lateral Electrical Services, Inc., American Express Company, Leslie Jongberg III, d/b/a Montana Mobile Mountain Cooling Services, Doug's Constr. and Repair, Inc., Chris Baker Williams, Chris Williams Baker, Jamie Wright, Travis Jordan, Scott Phelan, Esquire Intermountain Law, LLC, and Dodd Law Firm, P.C., Defendants and Appellees.

DA 21-0349

Supreme Court of Montana.

Submitted on Briefs: February 2, 2022

Decided: March 22, 2022

For Appellant: Sessel Sagorin, Self-Represented, Idaho Falls, Idaho

For Appellee Thermal Supply, Inc.: Murry Warhank, Jackson, Murdo & Grant, P.C., Helena, Montana

For Appellees Daikin North America, LLC, and Daikin Applied America's Inc.: Brett P. Clark, Crowley Fleck PLLP, Helena, Montana, Peter B. Taylor, Crowley Fleck PLLP, Bozeman, Montana

For Appellees Dodd Law Firm, P.C., and Scott Phelan: Mikel L. Moore, Eric Brooks, Moore, Cockrell, Goicoechea & Johnson, P.C., Kalispell, Montana

For Appellee Intermountain Law, PLLC: Scott Phelan, Cook Phelan Attorneys at Law, Bozeman, Montana

Justice Beth Baker delivered the Opinion of the Court.

¶1 Sessel Sagorin appeals the Eighteenth Judicial District Court's order dismissing his complaint against eighteen defendants relating to the installation of heating, ventilation, and air conditioning (HVAC) units at a property owned by Yellowstone Lodging, LLC (Yellowstone). We hold that Sagorin may not, through an assignment, bring Yellowstone's claims on his own behalf and without counsel. We affirm the dismissal of his complaint.

FACTUAL AND PROCEDURAL BACKGROUND

¶2 Sagorin is the sole member of Yellowstone, which owns and operates a motel in West Yellowstone, Montana (Motel). Yellowstone hired and entered into contracts with several HVAC contractors to upgrade the HVAC system at the Motel between October 2017 and September 2018. Yellowstone purchased Daikin HVAC equipment from Sunrise Heating and Cooling (Sunrise), which initially installed the equipment. Many other HVAC contractors installed or repaired the equipment during 2018.

¶3 In April 2021, Sagorin filed a complaint against Daikin, Sunrise, and sixteen other defendants alleging thirty-nine claims related to the HVAC system as well as claims of legal malpractice against the law firm and the attorney Sagorin initially engaged to pursue these claims on behalf of Yellowstone. Sagorin is not a licensed attorney; instead, he filed the complaint as a "successor in interest" to Yellowstone. The defendants moved the District Court to dismiss the complaint pursuant to M. R. Civ. P. 12(b)(6) and 41(b) for lack of standing. The defendants asserted further that, because Sagorin is not licensed to practice law in Montana, he was prohibited from representing Yellowstone in litigation. Sagorin filed a response to the motion to dismiss, to which he attached an "Assignment for the Sale or Transfer of Interest" (Assignment). The Assignment purported to transfer "all rights and interests in and to any and all legal claims that can and may be brought by [Yellowstone] against third parties." The Assignment provided that Sagorin, as assignee, would pay $15,000 as consideration for the claims.

¶4 The District Court granted the Defendants’ motion to dismiss, concluding that Sagorin lacked standing to bring suit in his individual capacity for claims arising out of disputes related to work performed for Yellowstone on Yellowstone's property. The court further held that Sagorin was precluded from asserting claims on Yellowstone's behalf because he is not a licensed attorney in Montana.

STANDARDS OF REVIEW

¶5 The Court reviews de novo both a district court's ruling on a motion to dismiss pursuant to M. R. Civ. P. 12(b)(6) and the determination of a party's standing to maintain an action. Schoof v. Nesbit , 2014 MT 6, ¶ 10, 373 Mont. 226, 316 P.3d 831 (citation omitted); Mitchell v. Glacier Cty. , 2017 MT 258, ¶ 9, 389 Mont. 122, 406 P.3d 427 (citation omitted). "We will affirm a district court's dismissal of a complaint for failure to state a claim only if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief." Schoof , ¶ 10 (citation and quotations omitted).

DISCUSSION

¶6 May Sagorin, through an assignment, bring Yellowstone's claims on his own behalf and without counsel?

¶7 Sagorin challenges the District Court's ruling that he lacked standing to sue, arguing that he brought the action as a "successor in interest" to Yellowstone. He asserts that Yellowstone's Assignment "made an absolute transfer [of] all of its rights and interest to the legal claims," including its claims against the Appellees. Appellees argue that the court properly dismissed Sagorin's complaint for lack of standing because the complaint did not contain any facts establishing that he had a valid assignment or that he was a successor in interest to Yellowstone. Appellees contend that the Assignment is merely an "attempt[ ] to circumvent Montana law requiring LLCs to appear in court through licensed counsel."

¶8 "Standing is a threshold jurisdictional requirement." Mitchell , ¶ 9 (citing Heffernan v. Missoula City Council , 2011 MT 91, ¶ 29, 360 Mont. 207, 255 P.3d 80 ). The doctrine of standing examines "whether a litigant is entitled to have the court decide the merits of a particular dispute." Chipman v. Nw. Healthcare Corp. , 2012 MT 242, ¶ 25, 366 Mont. 450, 288 P.3d 193 (citing Williamson v. Mont. PSC , 2012 MT 32, ¶ 28, 364 Mont. 128, 272 P.3d 71 ; Heffernan , ¶ 30 ). It encompasses both "the case-or-controversy requirement imposed by the Montana Constitution[ ] and judicially created prudential limitations imposed for reasons of policy." Mitchell , ¶ 9 (quoting Schoof , ¶ 15 ; citing Heffernan , ¶ 31 ).

¶9 To meet the case-or-controversy requirement, "the plaintiff must show, ‘at an irreducible minimum,’ that he or she ‘has suffered a past, present, or threatened injury to a property or civil right, and that the injury would be alleviated by successfully maintaining the action.’ " Mitchell , ¶ 10 (quoting Schoof , ¶ 15 ). In addition to this constitutional requirement, the Court "has adopted several prudential limits." Heffernan , ¶ 32 (citation omitted). Prudential standing "cannot be defined by hard and fast rules," but we have long recognized that a plaintiff "may assert only her own ... rights" and must have "a personal stake in the outcome of the controversy at the commencement of the litigation[.]" Heffernan , ¶¶ 30, 33 (citations and quotations omitted). Montana courts "lack ‘power to resolve a case brought by a party without standing—i.e., a personal stake in the outcome—because such a party presents no actual case or controversy.’ " Mitchell , ¶ 9 (quoting Heffernan , ¶ 29 ).

¶10 Sagorin first asserts that he has standing because he filed the complaint in his own name "as successor in interest to Yellowstone Lodging, LLC." In a motion to dismiss made pursuant to Rule 12(b)(6), a district court "must take all well-pled factual assertions as true and view them in the light most favorable to the claimant, drawing all reasonable inferences in favor of the claim." Anderson v. ReconTrust Co., NA. , 2017 MT 313, ¶ 8, 390 Mont. 12, 407 P.3d 692 (citation omitted). On a motion to dismiss, a district court may consider only the complaint and any documents it incorporates by reference. Cowan v. Cowan , 2004 MT 97, ¶ 11, 321 Mont. 13, 89 P.3d 6 (citation omitted). The District Court rejected Sagorin's argument that he was a "successor in interest" because the complaint did not contain any factual allegations substantiating Sagorin's claim. The sole allegation in the complaint regarding Sagorin's relationship with Yellowstone states:

Plaintiff is Sessel Sagorin ... who is an individual and who at all relevant times was a resident in West Yellowstone, Montana and owner of Yellowstone Lodging, LLC. Yellowstone Lodging, LLC owned and operated Yellowstone Self Catering Lodge ... which at all relevant times maintained a principal place of business at 530 U.S. Highway 20, West Yellowstone, MT, 59758, which is the job site at issue.

This allegation does not support Sagorin's assertion that he is a "successor in interest." Instead, it shows that Sagorin is an owner of Yellowstone, and that Yellowstone, not Sagorin, owned and operated the Motel. Sagorin did not establish that he is a successor in interest merely by filing suit without any factual allegations to support that claim.

¶11 The District Court correctly recognized that a limited liability company (LLC) is "a legal entity, distinct from its members," rather than "an informal business association[.]" Ioerger v. Reiner , 2005 MT 155, ¶ 20, 327 Mont. 424, 114 P.3d 1028. As a legally distinct entity, an LLC may be sued and bring suit "in its own name." Section 35-8-1101, MCA. An LLC generally may not appear in court pro se through one of its members. H&H Dev., LLC v. Ramlow , 2012 MT 51, ¶ 18, 364 Mont. 283, 272 P.3d 657 (citing Contl. Realty, Inc. v. Gerry , 251 Mont. 150, 152, 822 P.2d 1083, 1084 (1991) ); Zempel v. Liberty , 2006 MT 220, ¶ 18, 333 Mont. 417, 143 P.3d 123 (citing Audit Servs., Inc. v. Frontier-West, Inc. , 252 Mont. 142, 148, 827 P.2d 1242, 1246 (1992) ; Weaver v. Law Firm of Graybill , 246 Mont. 175, 178, 803 P.2d 1089, 1091 (1990) ). "Non-lawyers who attempt to represent corporations or partnerships in court are guilty of contempt of court." H&H Dev., LLC , ¶ 18 (citing Zempel , ¶ 18 ); § 37-61-210, MCA. The Legislature has carved out a specific exception to this general rule: a member with a majority interest in an LLC has the authority to represent the LLC in a justice court or small claims court. Sections 35-8-301(5), ...