Milky Whey v. Dairy Partners , 378 Mont. 75 ( 2015 )

January 27 2015
DA 14-0013
Case Number: DA 14-0013
IN THE SUPREME COURT OF THE STATE OF MONTANA
2015 MT 18
THE MILKY WHEY, INC.,
Plaintiff and Appellant,
v.
DAIRY PARTNERS, LLC, a limited
liability company, and SCOTT STEFAN,
Defendants and Appellees.
APPEAL FROM: District Court of the Fourth Judicial District,
In and For the County of Missoula, Cause No. DV-13-1067
Honorable Robert L. Deschamps, III, Presiding Judge
COUNSEL OF RECORD:
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
Argued: October 29, 2014
Submitted: November 5, 2014
Decided: January 27, 2015
Filed:
__________________________________________
Clerk
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
1
The other defendant, Scott Stefan, is Dairy Partners’ authorized agent and manager. For
convenience, the remainder of this opinion will refer to both defendants collectively as Dairy
Partners.
2
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
3
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).
4
¶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
5
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
6
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.
2
The pertinent portions of Montana’s Rule 12 are identical to its counterpart in the federal rules.
F. R. Civ. P. 12(b), (h).
7
¶17 2. Whether the District Court correctly held that Montana’s long-arm statute does
not confer personal jurisdiction over Dairy Partners.
¶18 We apply a two-step test “to determine whether a Montana court may exercise
personal jurisdiction over a nonresident defendant.” Tackett v. Duncan, 2014 MT 253,
¶ 22, 376 Mont. 348, 334 P.3d 920. We first determine whether personal jurisdiction
exists under M. R. Civ. P. 4(b)(1). Personal jurisdiction may exist under Rule 4(b)(1) in
one of two ways: a party may be “found within the state of Montana” and subject to
general jurisdiction, or the claim for relief may arise from any of the acts listed in Rule
4(b)(1)(A-G) and create specific jurisdiction for the purpose of litigating that particular
claim. If personal jurisdiction exists under the first step of the test, we then determine
whether the exercise of personal jurisdiction conforms with “the traditional notions of fair
play and substantial justice embodied in the due process clause.” Cimmaron Corp. v.
Smith, 2003 MT 73, ¶ 10, 315 Mont. 1, 67 P.3d 258 (citing Threlkeld v. Colorado, 2000
MT 369, ¶ 9, 303 Mont. 432, 16 P.3d 359). “[I]f personal jurisdiction does not exist
under the first part of the test, further analysis under the second part of the test is
unnecessary.” Cimmaron, ¶ 10.
¶19 M. R. Civ. P. 4(b)(1) subjects “[a]ll persons found within the state of Montana” to
the general personal jurisdiction of the courts of this state.3 To be “found” within
Montana for general jurisdiction purposes, “it is necessary that the defendants’ activities
are ‘substantial’ or ‘systematic and continuous.’” Edsall Constr. Co. v. Robinson, 246
3
While Milky Whey did not raise general jurisdiction in its briefs on appeal, it did make an
argument for general jurisdiction during oral argument before this Court. We will address its
general jurisdiction argument briefly.
8
Mont. 378, 382, 804 P.2d 1039, 1042 (1991) (citing International Shoe Co. v.
Washington, 326 U.S. 310, 66 S. Ct. 154 (1945)).
Like a defendant that is present within the forum state, a foreign corporate
defendant that is doing business in the forum state will be subject to the
general jurisdiction of that state’s courts and thus may be sued in that state
on any cause of action, regardless of whether or not that cause of action
arises from the defendant’s contacts with the forum state.
4A Wright & Miller, Federal Practice & Procedure, Civil 3d § 1069.2 at 127 (2002).
¶20 Dairy Partners is not a Montana corporation. Dairy Partners never physically
entered Montana and has not purchased or sold any product in Montana. Aside from its
electronic and telephone communications with Milky Whey, nothing in the record
connects Dairy Partners to Montana. Dairy Partners does not conduct substantial,
systematic or continuous activities in Montana. It certainly could not be sued here on any
cause of action that did not arise from its contacts with Montana. Dairy Partners thus
cannot be “found within” the state as contemplated by the general jurisdiction provisions
of M. R. Civ. P. 4(b)(1). Montana courts do not have general personal jurisdiction over
Dairy Partners.
¶21 Absent general personal jurisdiction, Montana courts may exercise specific
jurisdiction over any person “as to any claim for relief arising from the doing personally,
or through an employee or agent, of any of the . . . acts” listed in the state’s “long-arm
statute,” adopted in Montana through this Court’s Rules of Civil Procedure.
M. R. Civ. P. 4(b)(1)(A-G). Milky Whey argues that Montana should exercise personal
jurisdiction over Dairy Partners under subsections A and B, which provide for the
9
exercise of personal jurisdiction over parties who transact any business within Montana
or commit any act resulting in accrual within Montana of a tort action, respectively.
¶22 We begin with Milky Whey’s contention that tort actions accrued within Montana.
M. R. Civ. P. 4(b)(1)(B). Milky Whey first argues that a tort action accrued in Montana
when Dairy Partners promised to pay Milky Whey for damages resulting from the mold
on the cheese, but then refused to make good on that promise. Milky Whey argues that
these acts resulted in a tortious violation of § 27-1-312, MCA, for refusing to pay an
obligation that has been completed.
¶23 Milky Whey cites no authority to support its claim that violation of an obligation
to pay a Montana company pursuant to a contractual arrangement constitutes the accrual
of a tort in Montana. A tort action arises from a duty imposed by operation of law and
not by mere agreement of the parties. “Separate tort liability depends on whether the
breaching party violated a legal duty that would exist in the absence of a contract.”
Dewey v. Stringer, 2014 MT 136, ¶ 8, 375 Mont. 176, 325 P.3d 1236 (citation omitted).
Section 27-1-312, MCA, is a statute defining the measure of damages for breach of an
obligation to pay money. In this case, the obligation arose from the parties’ agreement
and not by operation of law. The legal duty that Dairy Partners alleges was violated
would not exist in the absence of a contract, so its violation does not give rise to a tort;
accordingly, it does not give rise to jurisdiction under M. R. Civ. P. 4(b)(1)(B) either.
¶24 Milky Whey next argues that a tort action accrued in Montana when Dairy
Partners delivered moldy cheese, thereby allegedly breaching statutory warranties of
10
merchantability and fitness for a particular purpose. Milky Whey cites no authority for
this argument and its briefs do not develop any argument to support its theory of accrual
of this claim in Montana. Assuming for the sake of argument that this claim sounds in
tort, a tort does not accrue in Montana when all acts giving rise to the claims occur in
another state. Bi-Lo Foods v. Alpine Bank, 1998 MT 40, ¶ 31, 287 Mont. 367, 955 P.2d
154; Bird v. Hiller, 270 Mont. 467, 472-73, 892 P.2d 931, 934 (1995). In Bi-Lo Foods,
the plaintiff argued that the Court could exercise personal jurisdiction over nonresident
defendants where “tortious activity was committed outside the forum state but where the
resulting injury was experienced in the forum state.” Bi-Lo Foods, ¶ 21. We rejected this
argument, observing that the “focus must be on the place where the services are
rendered.” Bi-Lo Foods, ¶ 27 (quoting McGee v. Riekhof, 442 F. Supp. 1276, 1278 n.1
(D. Mont. 1978)). Here, negotiation, transfer of money, and transfer of product all
occurred outside Montana. Dairy Partners delivered the cheese to Utah, where Milky
Whey allegedly discovered mold. Focusing on the place where the services were
rendered reveals that the alleged breach of warranty did not accrue in Montana.
Therefore, M. R. Civ. P. 4(b)(1)(B) does not confer jurisdiction over Dairy Partners.
¶25 Under Rule 4(b)(1)(A), a defendant also may be subject to specific jurisdiction if
the claim arises from its “transaction of any business within Montana[.]”
M. R. Civ. P. 4(b)(1)(A). The “transacting business” provision of the long-arm statute
requires “far fewer contacts with the forum state than are necessary to support general
jurisdiction on the theory that the defendant is ‘doing business’ in the forum state.”
11
4A Wright & Miller, § 1069.3 at 161. Nonetheless, the same factors are considered,
“such as the defendant company’s local negotiations for various types of commercial
transactions, the solicitation of business within the state, prior litigations in the forum, the
presence of agents in the state, and the existence of ongoing contractual relationships
with residents of the forum state.” 4A Wright & Miller, § 1069.3 at 156-61.
¶26 Here, the claim arises entirely out of a transaction that took place outside of
Montana. For the transaction on which this claim is based, Milky Whey reached out of
Montana to contact Dairy Partners. Dairy Partners shipped the Swiss Trim to Utah.
Milky Whey arranged to pick up the Swiss Trim in Utah, and sent money to Minnesota.
Although Dairy Partners acknowledges that it initiated some previous purchase orders
between the parties, the record is clear that this claim arose from a transaction where
Milky Whey ordered the Swiss Trim from Dairy Partners. The transaction was not
initiated by the non-resident defendant and was not to be performed in Montana. The
record reveals no negotiations or any written agreement for Milky Whey’s purchase of
the Swiss Trim, only the payment of money sent by Milky Whey to Minnesota for a
product it picked up in Utah.
¶27 We have held that the exercise of personal jurisdiction is proper under M. R. Civ.
P. 4(b)(1)(A) where substantial interactions occur within Montana. E.g. B.T. Metal
Works v. United Die & Mfg. Co., 2004 MT 286, ¶¶ 17, 29, 323 Mont. 308, 100 P.3d 127;
Spectrum Pool Prods., Inc. v. MW Golden, Inc., 1998 MT 283, ¶ 11, 291 Mont. 439, 968
P.2d 728. Entering into contracts with multiple Montana businesses or negotiating
12
contracts between businesses may constitute substantial interactions. Grizzly, ¶ 30;
Nelson v. San Joaquin Helicopters, 228 Mont. 267, 270, 742 P.2d 447, 448 (1987). Even
extensive interstate communications, however, do not give rise to jurisdiction where the
contract is to be performed in another state. Edsall, 246 Mont. at 382, 804 P.2d at 1042;
Cimmaron, ¶¶ 13-16; Bird, 270 Mont. at 473, 892 P.2d at 934. “It is well-settled that a
nonresident defendant’s mere act of entering into a contract with a forum resident does
not provide the necessary jurisdictional contact between the defendant and the forum
state.” Simmons v. State, 206 Mont. 264, 279, 670 P.2d 1372, 1380 (1983); Edsall, 246
Mont. at 382, 804 P.2d at 1042.
¶28 Cimmaron is particularly germane: a Montana business, Cimmaron, contracted
with a Pennsylvania corporation, Budget, to act as its collection agent. We held that the
parties’ business dealings did not constitute the transaction of business within this state.
Cimmaron, ¶ 20. Although Budget’s agent traveled to Montana to negotiate the terms of
the agreements, we determined that personal jurisdiction had not been established on the
facts alleged: Budget’s sole contacts with Montana were the agreements it entered into
with Cimmaron, but the services that Budget was required to perform under the collection
agreement were to be performed in Pennsylvania. Cimmaron, ¶¶ 13-15. Cimmaron sent
its account information to Budget in Pennsylvania in order to allow Budget to perform its
services there under the collection agreement, and “all of the claims made by Cimmaron
in its complaint pertain to actions the Respondents took, or failed to take, in
Pennsylvania.” Cimmaron, ¶ 15.
13
¶29 Like Budget in the Cimmaron case, Dairy Partners has dealt with a Montana
company, but has not reached into Montana or availed itself of the privilege of doing
business in this forum. Milky Whey claims that its interactions with Dairy Partners
“were part of a long-term and purposeful engagement of [Milky Whey’s] services in
Montana.” This argument overlooks the fact that all of the claims in Milky Whey’s
complaint arose from its discovery of moldy cheese in Utah. Dairy Partners never sold
any product or engaged in the performance of any service in Montana. Dairy Partners
does not have offices in Montana or solicit business in Montana. It did not send any
representatives to Montana to negotiate contracts, and in fact does not appear to have
entered into any written contracts with Milky Whey aside from standard purchase orders.
No other Montana businesses besides Milky Whey were involved in the transaction.
Milky Whey is correct that Montana’s long-arm statute does not require that a product
actually be sold in or delivered to Montana, nor does it require the defendant’s physical
presence in Montana. Milky Whey concedes in its briefing, however, that “Montana
must have some significant involvement in the business transacted by the parties and the
non-resident must have purposely engaged in business with the Montana business for
jurisdiction to arise.”
¶30 At oral argument, Milky Whey emphasized that Dairy Partners markets its
products online. Milky Whey directed the court to Zippo Mfg. Co. v. Zippo DOT Com,
Inc., 952 F. Supp. 1119 (W. D. Pa. 1997), a leading personal jurisdiction case involving
web-based transactions. Although Dairy Partners operates a website, this clearly is not
14
an e-commerce case; Milky Whey did not allege that it interacted with Dairy Partners’
website in any way. The parties used e-mail to communicate, but—as this Court long has
observed—“[i]nterstate communication is an almost inevitable accompaniment to doing
business in the modern world, and cannot by itself be considered a ‘contact’ for justifying
the exercise of personal jurisdiction.” Simmons, 206 Mont. at 280, 670 P.2d at 1380.
¶31 There is no question that Dairy Partners’ acts or omissions giving rise to Milky
Whey’s claims in this case did not arise from Dairy Partners’ purposeful engagement in
activities in Montana, primarily because it was Milky Whey that purchased the product
from Dairy Partners and the allegedly defective product was delivered to Utah by
agreement of the parties. Dairy Partners’ “suit-related conduct [did not] create a
substantial connection with the forum State.” Walden v. Fiore, 571 U.S. ___, 134 S. Ct.
1115, 1121-22 (2014). Milky Whey emphasizes that the parties had an established
relationship, having engaged in nine similar transactions over the preceding three years.
We cited a similar history of business dealings in Grizzly as an important factor in
determining whether the non-resident defendant had subjected itself to personal
jurisdiction in Montana. Grizzly, ¶ 30. But in Grizzly, the business transaction that gave
rise to the claim compelled the nonresident defendant to enter “several contracts with
other Montana businesses in its attempt to resolve the dispute with Grizzly.” Grizzly,
¶ 30. In addition to its business transactions with the Montana plaintiff, the non-resident
defendant in Grizzly advertised that it serviced vehicles in Montana, had contact with
other Montana businesses, and entered into contracts with more than one Montana
15
business. Grizzly, ¶¶ 32-33. Grizzly should not be taken to mean that a nonresident
defendant’s relationship with the Montana plaintiff alone may satisfy the long-arm
statute, which, as we recognized, requires that “the claim arise[] out of that person’s
transaction of business within the state.” Grizzly, ¶ 23.
¶32 Examining our prior cases, it appears that where we have found the transaction of
business to have occurred in Montana, the non-resident had done something more than
communicate or exchange purchase orders with a Montana resident. In Nelson, for
example, noting that the defendant’s conduct was more extensive than “a few phone calls
back and forth between the parties,” we determined that the non-resident company’s
lengthy contractual relationship with another Montana business, its negotiation of a
contract with the Montana plaintiff, and its arrangement of a contractual relationship
between the two Montana businesses constituted “purposeful interjection into Montana”
by the non-resident defendant. Nelson, 228 Mont. at 272, 742 P.2d at 450.
¶33 In Spectrum Pool Products, the non-resident defendant initiated contact to
purchase a custom product manufactured in Montana, and negotiated with the Montana
company “by telephone and in writing concerning price, delivery, servicing, and specific
design elements to be included[.]” Spectrum Pool Prods., ¶ 4. Later, at the non-resident
defendant’s request, additional services were performed on the custom-designed product
in Montana. The defendant then refused to make payment in Montana as promised. This
suit-related conduct was held sufficient to confer personal jurisdiction. Spectrum Pool
Prods., ¶ 11.
16
¶34 Our determination that the non-resident defendant in B.T. Metal Works had
subjected itself to personal jurisdiction in Montana rested on facts that went beyond the
defendant’s longstanding business relationship with the Montana plaintiff; the
non-resident defendant also had specifically manufactured a product for a Montana
business and had shipped its product into Montana on approximately twenty-two separate
occasions. B.T. Metal Works, ¶¶ 25-27.
¶35 In sum, that Dairy Partners knew it was transacting with a Montana business is
insufficient to confer personal jurisdiction in Montana. Edsall, 246 Mont. at 383, 804
P.2d at 1042. Applying Montana’s long-arm statute, we conclude that Dairy Partners is
not subject to jurisdiction in Montana. Milky Whey’s claim does not arise from Dairy
Partners’ transaction of business within this state simply because Milky Whey happens to
be a Montana business. Edsall, 246 Mont. at 383, 804 P.2d at 1042 (“The contract was to
be performed in Utah, the bidding took place in Utah, and the initial contact was made by
Edsall. . . . The only tie this suit has to Montana is that it is Edsall’s home state, and that
alone does not justify a determination that Montana is the proper forum for this
dispute.”); Cimmaron, ¶ 14 (“[W]e have concluded that personal jurisdiction is not
acquired through interstate communications made pursuant to a contract that is to be
performed in another state.” (emphasis in original) (citing Bird, 270 Mont. at 473, 892
P.2d at 934)).
17
¶36 Because personal jurisdiction does not exist under the first part of the Rule 4(b)(1)
test, analysis of whether the exercise of jurisdiction comports with due process is
unnecessary. Cimmaron, ¶ 10.
CONCLUSION
¶37 The District Court correctly determined that it could not exercise personal
jurisdiction over Dairy Partners. Its judgment is affirmed.
/S/ BETH BAKER
We concur:
/S/ LAURIE McKINNON
/S/ PATRICIA COTTER
/S/ JAMES JEREMIAH SHEA
/S/ JIM RICE
Chief Justice Mike McGrath dissenting.
¶38 Milky Whey should be allowed to proceed on its claim in Montana courts. I
dissent from the resolution of Issue 2 and concur with the Court’s resolution of Issue 1.
¶39 Montana courts have specific jurisdiction to entertain the civil action brought by
Milky Whey against Dairy Partners. I agree that the jurisdictional analysis must begin
with a determination of whether Dairy Partners transacted “any business” in Montana as
provided in M. R. Civ. P. 4B(1).
¶40 The complaint alleges only a single transaction between Milky Whey and Dairy
Partners, but there had been numerous other transactions between the parties. Facts
acknowledged by the parties establish that not only did Milky Whey purchase products
from Dairy Partners, but Dairy Partners also made substantial purchases of products from
18
Milky Whey. In the three years before the transaction at issue, Milky Whey sold over
$181,000 worth of products to Dairy Products in nine separate transactions. Dairy
Products solicited those sales by phone or email communications directed to the Milky
Whey office in Missoula, Montana. Milky Whey would similarly respond to Dairy
Products to consummate the details of the sale.
¶41 These facts support the conclusion that Dairy Products transacted business in
Montana for purposes of specific jurisdiction under M. R. Civ. P. 4B(1). As in Spectrum
Pool Prod., ¶ 16, Dairy Products “purposely interjected itself into Montana” through its
several dealings with Milky Whey. This is not a “mere act of entering into a contract
with a forum resident,” Simmons, 206 Mont. at 291, 670 P.2d at 1386, but represents
purposeful acts through which Dairy Products did repeated business with a Montana
company. Milky Whey is a Montana business. It generates income and employment
here, utilizes local infrastructure, and pays taxes. The payment to Dairy Products
originated in Montana, and the refund promised by Dairy Products (according to the
allegations of the complaint) would have accrued in Montana. Montana, as the forum
state, provided the setting which allowed Dairy Products to engage in the various
transactions with Milky Whey over a span of years.
¶42 It is clear that there were sufficient contacts to constitute the transaction of
business here. This is especially true in light of the realities of contemporary commerce
in which people and companies regularly interact in nation-wide and indeed international
transactions. Many of these transactions are conducted electronically without the
19
necessity of face-to-face communication. Milky Whey and Dairy Products engaged in a
pattern of transactions, sufficiently establishing that Dairy Products was in fact
transacting “any business” in Montana. Grizzly Sec., ¶ 30. Dairy Products operated, as it
was entirely entitled to do, well beyond the borders of its home state, but doing so can
entail commensurate burdens, such as being subject to jurisdiction in the courts of
another state. See Great Plains Crop Mgmt. Inc. v. Tryco Mfg. Co., Inc., 554 F. Supp.
1025, 1027.
¶43 Further, subjecting Dairy Products to jurisdiction in Montana courts on this claim
would comport with notions of fair play and substantial justice, consistent with due
process. While Dairy Products would be burdened by defending the action in Montana,
there is no clear advantage or disadvantage to one side or the other in terms of witnesses
and evidence. Dairy Products has no substantive equitable argument for insisting on a
Minnesota forum for this action. Montana has a clear interest in assisting a Montana
business in the resolution of a commercial dispute. Montana can provide a forum for
resolution of this dispute without offending Dairy Products’ interests in due process.
¶44 I would reverse the District Court and allow the cause of action to proceed in
Montana courts.
/S/ MIKE McGRATH
Justice Michael E Wheat joins the Dissent of Chief Justice Mike McGrath.
/S/ MICHAEL E WHEAT
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