Case Title: STATE OF NORTH DAKOTA v NEWBERGER

Citation: 

Docket Number: 

State: montana

Court: Montana Supreme Court

Date: 1980-07-02T00:00:00Z

Document:
No. 79-100 IN THE SUPREME COURT OF THE STATE OF MONTANA 1980 STATE OF NORTH DAKOTA, Plaintiff and Respondent, ART NEWBERGER d/b/a AMUSEMENT CONSPIRACY, Defendant and Appellant. Appeal from: District Court of the Fourth Judicial District, In and for the County of Missoula. Honorable John Henson, Judge presiding. Counsel of Record: For Appellant: Goldman and Goldman, Missoula, Montana Jon Oldenburg argued, Missoula, Montana For Respondent: Milodragovich, Dale & Dye, Missoula, Montana Harold Dye argued, Missoula, Montana Terry L. Adkins argued, Assistant Attorney General, Bismarck, North Dakota Submitted: May 27, 1980 Decided : ,fu!.- 2 - l g 8 Q Filed: JUL 1. - 1980 M r . J u s t i c e John Conway Harrison delivered t h e Opinion of t h e Court. c his i s an appeal from an a c t i o n brought i n Missoula County ~ i s t r i c t Court f o r t h e recovery of c e r t a i n monies a l l e g e d l y owed t o North Dakota S t a t e University on a con- t r a c t f o r t h e promotion of a rock concert. Summary judgment was entered i n favor of respondent S t a t e of North Dakota. Appellant Newberger appeals from t h e granting of t h e motion f o r summary judgment. Appellant, through h i s business, Amusement Conspiracy, promotes rock concerts a t s e v e r a l u n i v e r s i t i e s and c o l l e g e s throughout t h e Northwest. Appellant is a r e s i d e n t of t h e S t a t e of C a l i f o r n i a with h i s p r i n c i p a l o f f i c e s located i n Encino, C a l i f o r n i a . Appellant entered i n t o a c o n t r a c t with North Dakota S t a t e University t o promote a rock concert a t t h e University i n Fargo, North Dakota, on February 13, 1979. The c o n t r a c t contained a clause which provided t h a t , i n t h e event of c a n c e l l a t i o n of t h e concert, proceeds from advance t i c k e t s a l e s and c e r t a i n promotion expenses would be re- funded. Due t o t h e i l l n e s s of one of t h e performers, t h e rock concert was never held. A s a r e s u l t of the cancella- t i o n , a p p e l l a n t a l l e g e d l y owed monies f o r promotion expenses and advance t i c k e t sales. O n March 2, 1979, respondent f i l e d a complaint i n t h e D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t , i n and f o r t h e County of Missoula, t o recover t h e monies a l l e g e d l y owed. The complaint was f i l e d i n Missoula County because a p p e l l a n t was a c t i v e l y promoting another rock concert a t t h e University of Montana fieldhouse i n Missoula. The c o n c e r t was scheduled t o be held on March 2 , 1979. I n f i l i n g t h e complaint, respondent caused a summons t o be issued. However, a p p e l l a n t was never personally served with t h e summons. I n a d d i t i o n t o t h e complaint, respondent a l s o f i l e d an a f f i d a v i t i n support of a prejudgment w r i t of attachment. Respondent sought t o a t t a c h the proceeds of t h e Missoula concert t o t h e e x t e n t t h a t they would s a t i s f y t h e d e b t a l l e g e d l y owed t o North Dakota S t a t e University. A f t e r testimony was taken a t a hearing, t h e D i s t r i c t Court issued an order f o r a w r i t of attachment, and t h e proceeds of t h e Missoula c o n c e r t w e r e attached i n t h e amount requested. O n March 5, a p p e l l a n t , through h i s counsel, appeared t o discharge t h e w r i t of attachment on t h e ground t h a t it was improperly and i r r e g u l a r l y issued. Appellant argued t h a t t h e w r i t should be discharged because it was accompanied only by one undertaking, t h e s u r e t y , and s e c t i o n 27-18-204, MCA, required t h a t it be accompanied by two. The motion t o discharge was denied. On March 28, 1979, a p p e l l a n t again appeared before t h e District Court and moved t h a t t h e a c t i o n be dismissed f o r improper venue and lack of j u r i s d i c t i o n . That motion, too, was denied. P r i o r t o a p p e l l a n t ' s motion t o dismiss, on March 20, 1979, respondent f i l e d a request f o r t h i r t e e n admissions from appellant. Appellant, however, d i d n o t respond t o t h e requests. On June 2 1 , 1979, respondent n o t i f i e d a p p e l l a n t , because t h e r e had been a f a i l u r e t o answer t h e r e q u e s t s within t h e t i m e provided by law, t h a t t h e m a t t e r s would be deemed admitted. Again, a p p e l l a n t d i d n o t respond. O n J u l y 1 7 , 1979, respondent f i l e d a motion f o r summary judgment, based upon t h e admissions which had been obtained. Appellant then f i l e d on August 13, 1979, a motion f o r t h e withdrawal of previous admissions and a r e q u e s t f o r an extension of t i m e so t h a t t h e answers could be f i l e d . A hearing was held with r e s p e c t t o t h e motions f i l e d by t h e p a r t i e s on August 23, 1979. The D i s t r i c t Court denied a p p e l l a n t ' s motion f o r leave t o f i l e answers and entered summary judgment f o r respondent. Appellant r a i s e s t h r e e i s s u e s f o r our consideration on t h i s appeal: (1) Whether t h e D i s t r i c t Court erred i n denying appel- l a n t ' s motion t o dismiss f o r lack of j u r i s d i c t i o n ? ( 2 ) Whether the D i s t r i c t Court erred i n denying appel- l a n t ' s motion f o r leave t o f i l e answers t o respondent's requests f o r admissions? (3) Whether the D i s t r i c t Court e r r e d i n continuing the w r i t of attachment over l i e n s which may possibly have been superior t o respondent's i n t e r e s t i n the attached proceeds? Appellant's f i r s t i s s u e i s t o the e f f e c t t h a t t h e D i s t r i c t Court lacked - i n personam j u r i s d i c t i o n over him. Appellant is, of course, a nonresident, and - i n personam j u r i s d i c t i o n is conferred over nonresidents by Montana's "long-arm s t a t u t e , " Rule 4B, M.R.Civ.P., provided t h a t c e r t a i n c r i t e r i a a r e m e t . That r u l e provides i n p e r t i n e n t part: "All persons found within t h e s t a t e of Montana a r e s u b j e c t t o the j u r i s d i c t i o n of t h e courts of t h i s s t a t e . I n addition, any person is sub- j e c t t o t h e j u r i s d i c t i o n of t h e c o u r t s of t h i s s t a t e a s t o any claim f o r r e l i e f a r i s i n g from t h e doing personally, through an employee, o r through an agent, of any of the following a c t s : " ( a ) t h e transaction of any business within t h i s s t a t e ; " ( c ) t h e ownership, use o r possession of any property, o r of any i n t e r e s t t h e r e i n , s i t u a t e d within t h i s s t a t e ; " (e) e n t e r i n g i n t o a c o n t r a c t f o r s e r v i c e s t o be rendered o r m a t e r i a l s t o be furnished i n t h i s state by such person; " I n i n t e r p r e t i n g s t a t e "long-arm" s t a t u t e s , w e have s t a t e d t h a t t h e determination of whether a c o u r t may assume j u r i s d i c t i o n over a nonresident defendant without offending t h e p r i n c i p l e s of due process is a two-step process. "The c o u r t must f i r s t look t o t h e state s t a t u t e t o determine whether t h e s t a t u t e provides f o r t h e e x e r c i s e of j u r i s d i c - t i o n under t h e p a r t i c u l a r f a c t s of t h e case, and second, t h e c o u r t must determine whether it would offend due process t o a s s e r t j u r i s d i c t i o n . " May v. Figgins (1980) , - Mont. , 607 P.2d 1132, 1134, 37 St.Rep. 493, 495, quoting 2 Moore's Federal P r a c t i c e 114.41-1 [ I ] a t 4-421. W e have a l s o recognized t h a t t h e r e i s a p r e v a i l i n g trend toward expanding t h e permissible scope of s t a t e j u r i s d i c t i o n t o t h e f u l l e s t e x t e n t possible. May v. Figgins, supra, 607 P.2d a t 1134, 37 St.Rep. a t 496; P r e n t i c e Lumber Company v. Spahn (1970), 156 Mont. 68, 76, 474 P.2d 1 4 1 , 145. The b a s i c r u l e with regard t o due process l i m i t a t i o n s imposed upon a s t a t e ' s power t o e x e r c i s e - i n personam j u r i s - d i c t i o n over a nonresident defendant was s t a t e d i n t h e landmark case of I n t e r n a t i o n a l Shoe Co. v. S t a t e of Washington ". . . due process r e q u i r e s only t h a t i n order t o s u b j e c t a defendant t o a judgment i n personam, i f he be n o t p r e s e n t within t h e t e r r i t o r y of t h e forum, he have c e r t a i n minimum c o n t a c t s with it such t h a t t h e maintenance of t h e s u i t does n o t offend ' t r a d i t i o n a l notions of f a i r play and s u b s t a n t i a l j u s t i c e . ' " I n t e r n a t i o n a l Shoe, supra, 326 U.S. a t 316. The Supreme Court went on t o e l a b o r a t e t h e requirements of t h e "minimum contacts" test: "Whether due process i s s a t i s f i e d must depend r a t h e r on t h e q u a l i t y and nature of t h e a c t i v i t y i n r e l a t i o n t o t h e f a i r and o r d e r l y administra- t i o n of t h e laws which it was t h e purpose of t h e due process c l a u s e t o insure. That c l a u s e does n o t contemplate t h a t a s t a t e may make a binding judgment i n personam a g a i n s t an i n d i v i d u a l o r corporate defendant with which t h e s t a t e has no c o n t a c t s , ties o r r e l a t i o n s . . . "But t o t h e e x t e n t t h a t a corporation e x e r c i s e s t h e p r i v i l e g e of conducting a c t i v i t i e s within a s t a t e , it enjoys t h e b e n e f i t s and t h e protec- t i o n of t h e l a w s of t h a t S t a t e . The e x e r c i s e of t h a t p r i v i l e g e may g i v e rise t o o b l i g a t i o n s ; and, s o f a r a s those o b l i g a t i o n s arise o u t of o r a r e connected with t h e a c t i v i t i e s within t h e s t a t e , a procedure which r e q u i r e s t h e corporation t o respond t o a s u i t brought t o enforce them can, i n most instances, hardly be s a i d t o be undue." I n t e r n a t i o n a l Shoe, supra, 326 U.S. a t 319. The d o c t r i n e of s t a t e j u r i s d i c t i o n over a nonresident defendant has s i n c e been developed i n a long l i n e of cases. See Hanson v. Denckla (1958), 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283; M c G e e v. I n t e r n a t i o n a l L i f e Ins. Co. (1957), 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223; Perkins v. Ben- q u e t Consolidated Mining Co. (1952), 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485; L.D. Reeder Contractors v. Higgins In- d u s t r i e s , Inc. ( 9 t h C i r . 1959), 265 F.2d 768; Travelers Health Ass'n. v. V i r g i n i a ex r e l . S t a t e Corporation Comm'n I f a nonresident defendant's a c t i v i t i e s within a s t a t e a r e " s u b s t a n t i a l " o r "continuous and systematic," t h e r e i s a s u f f i c i e n t r e l a t i o n s h i p between t h e defendant and t h e state t o support j u r i s d i c t i o n even though t h e cause of a c t i o n i s d i s t i n c t from, unrelated t o , o r does n o t arise o u t of t h e defendant's a c t i v i t y within t h e forum s t a t e . Perkins, supra, 342 U.S. a t 446-447; W e l l s Fargo & Co. v. Wells Fargo Express Co. ( 9 t h C i r . 1977), 556 F.2d 413; Data D i s c . , Inc. v. Systems Tech. Assoc., Inc. (9th C i r . 1977), 557 F.2d 1280; see a l s o Annot., 2 L.Ed.2d 1664, 1670. Applying these p r i n c i p l e s t o the case a t bar, we f i n d a p p e l l a n t has s u f f i c i e n t and s u b s t a n t i a l "minimum contacts" with t h i s state f o r t h e D i s t r i c t Court t o have assumed j u r i s d i c t i o n of t h i s matter. Appellant purposely a v a i l s himself of t h e p r i v i l e g e s and b e n e f i t s of the l a w s of t h i s s t a t e by conducting h i s business of promoting rock concerts i n Montana and throughout t h e Northwest. The record r e v e a l s t h a t a p p e l l a n t has promoted concerts i n Montana p r i o r t o t h e one i n Missoula a t which t h e proceeds were attached. A s p a r t of h i s business transactions, appellant a l s o e n t e r s i n t o c o n t r a c t s f o r s e r v i c e s t o be provided i n t h i s s t a t e . I t i s o u t of a similar and r e l a t e d c o n t r a c t t h a t respon- d e n t ' s claim f o r r e l i e f o r course of a c t i o n arises. The b a s i s of respondent's claim is, therefore, n o t t o t a l l y unrelated t o o r d i s t i n c t from the a c t i v i t i e s of a p p e l l a n t i n t h i s s t a t e . Further, a t t h e time of t h i s a c t i o n , a p p e l l a n t was i n possession of monies o r personal property i n t h i s s t a t e which were alleged t o have r i g h t f u l l y belonged t o respondent. I t i s f o r t h i s reason t h a t respondent chose t o f i l e t h i s a c t i o n i n Missoula. It appears, therefore, t h a t appellant has "minimum contacts" w i t h t h i s s t a t e ; appellant w a s found i n Montana, t r a n s a c t s business i n Montana, had an i n t e r e s t i n proceeds i n Montana which were attached, and c o n t r a c t s f o r s e r v i c e s t o be provided i n Montana. The f a c t s of t h i s case s a t i s f y t h e requirements of Rule 4B (1) ( a ) , (c) and (e) , M.R.Civ.P. W e f i n d f u r t h e r t h a t , under t h e circumstances of t h i s case and f o r the reasons aforementioned, t h e " t r a d i t i o n a l notions of f a i r play and s u b s t a n t i a l j u s t i c e " w e r e n o t offended by t h e D i s t r i c t Court assuming j u r i s d i c t i o n . Respondent, by f i l i n g t h i s action, i n no way sought t o "vex," "harass" or "oppress" appellant by inflicting upon him expense or trouble not necessary to his own right to pursue his remedy. To the contrary, respondent chose the Missoula District Court because both appellant and the proceeds could be found there. While there may have been, from the choice of this forum, some inconvenience to both parties, it is clear that no advantages or obstacles to a fair trial were thereby created. To deny jurisdiction of this cause would be to thwart the public interest this state has in providing a forum for companies doing business and for the carrying on and enforcing of proper business prac- tices, such as the payment and collection of debts. See Prentice Lumber Company v. Spahn, supra. We find, there- fore, that the District Court did not err in denying appel- lant's motion to dismiss for lack of jurisdiction. In any event appellant through his counsel appeared without objection to jurisdiction over his person. He thereby waived any objection under Rule 12, M.R.Civ.P. Appellant's second issue concerns whether the District Court erred in denying appellant leave to file late answers to admissions which respondent had previously obtained. Appellant contends that there were compelling circumstances which explained the failure to answer, since he was hospi- talized for a substantial period of time. Respondent served on appellant requests for thirteen admissions pursuant to Rule 36, M.R.Civ.P.; appellant did not respond within the time provided by law. After respon- dent gave notice to appellant that the matters would be deemed admitted, the District Court granted respondent summary judgment based upon the admissions. The following timetable is pertinent: March 20 Respondent requested 13 admis- sions. N o response. June 19 Appellant h o s p i t a l i z e d . June 2 1 Respondent n o t i f i e d a p p e l l a n t t h a t matters would be deemed admitted. N o response. J u l y 17 Respondent moved f o r summary j udgment . August 6 Appellant r e l e a s e d from h o s p i t a l . August 9 Appellant moved f o r leave t o f i l e late answers. This Court has r e c e n t l y had two occasions t o d i s c u s s t h e i s s u e of whether leave t o f i l e l a t e answers should have been allowed when previous admissions had been obtained by a p a r t y ' s f a i l u r e t o respond. Heller v. Osburnsen (1973), 162 Mont. 182, 510 P. 2d 13; Morast v. Auble (1974), 164 Mont. 100, 519 P.2d 157. I n Heller, t h e D i s t r i c t Court allowed a p a r t y t o f i l e late answers because t h e delay was caused by a mixup i n o f f i c e procedure and n o t by bad f a i t h . W e upheld t h e d i s c r e t i o n of t h e D i s t r i c t Court, and, quoting 2 Moore's Federal P r a c t i c e 1[15.05[21 a t 1156, s t a t e d t h e general r u l e : " ' * * * F a i l u r e t o t a k e any a c t i o n within t h e period s t a t e d i n t h e request r e s u l t s i n an ad- mission of t h e f a c t s s t a t e d t h e r e i n , although t h e c o u r t may permit t h e p a r t y t o f i l e h i s an- s w e r a f t e r t h e e x p i r a t i o n of such t i m e where t h e delay was n o t caused by a lack of good f a i t h . O r i n t h e absence of any prejudice t o t h e p a r t y requesting t h e admission.'" Heller , 162 Mont. a t 190, 510 P.2d a t 17. ( ~ m p h a s i s added. ) I n c o n t r a s t , t h e D i s t r i c t Court i n Morast refused p l a i n t i f f s leave t o f i l e l a t e answers. There, an eight and one-half month delay occurred and an intervening admonition during a p r e t r i a l conference had been given and names had been furnished t o p l a i n t i f f s through i n t e r r o g a t o r i e s during discovery. O n appeal, t h i s Court held t h a t t h e District Court had not abused its discretion, emphasizing that a litigant's right to file a late response is "not a matter of right," but is rather "a matter resting within the discre- tion of the trial court and will not be disturbed on appeal unless there is a manifest abuse of discretion." Morast. 164 Mont. at 105, 519 P.2d at 159. In this case, approximately a five-month delay occurred. During seven weeks in the latter part of the period, appel- lant was hospitalized. For the first three months, however, including the thirty-day period the law allows for a response to the requests, appellant was carrying on the normal daily affairs of his business. The transcript indicates that the District Court was well aware of this: "THE COURT: Well, where was he [appellant] from March until June 19th? "MR. OLDENBURG: I believe he was traveling in his business, Your Honor . . ." At no time during this traveling or the period of his hospitalization did appellant or his counsel ask for an extension of time to reply to the requests or indicate any reason for the failure to respond. Where respondent served notice of the consequences of failing to answer the re- quests, which is not required by the rules, appellant simply chose not to respond. In other courts, arguments similar to those advanced by appellant here have fallen on "deaf ears." See Oscola Inns v. State Highway Dept. (Ga. 1975), 213 S.E.2d 27, 29. Under these circumstances, we find that appellant has not demonstrated a manifest abuse of discre- tion, and the District Court did not err in denying appel- lant leave to file late answers. Appellant's final issue concerns whether the District Court erred in continuing the writ of attachment over liens which possibly may have been superior t o respondent's i n t e r - e s t i n t h e attached proceeds. A t t h e hearing on t h e motion f o r leave t o f i l e l a t e answers and t h e motion f o r summary judgment, a p p e l l a n t made a b r i e f and passing reference t o t h e f a c t t h a t a t h i r d p a r t y a l l e g e d l y held a perfected s e c u r i t y i n t e r e s t i n t h e proceeds. The t r i a l c o u r t con- tinued t h e w r i t of attachment over any o t h e r l i e n s i n t h e money. I n conducting our research, w e f i n d , a s both p a r t i e s acknowledged, t h a t t h e r e i s l i t t l e a u t h o r i t y on t h i s i s s u e . Where t h e s i t u a t i o n has a r i s e n before, t h e t h i r d p a r t y has intervened t o a s s e r t h i s perfected s e c u r i t y i n t e r e s t i n t h e attached proceeds and subsequently moved t o d i s s o l v e t h e attachment. See Barocas v. Bohemia Import Co., Inc. (Colo. 1974), 518 P.2d 850. W e f i n d t h a t i f t h e t h i r d p a r t y ' s i n t e r e s t i s t o be a s s e r t e d a t a l l , such i n t e r v e n t i o n i s necessary and defendant l a c k s standing t o r a i s e a t h i r d p a r t y ' s i n t e r e s t a s a defense t o t h e attachment. Therefore, without such i n t e r v e n t i o n , t h e D i s t r i c t Court d i d n o t err i n continuing t h e w r i t of attachment over any l i e n s which may possibly have been superior t o respondent's i n t e r e s t i n t h e proceeds. Accordingly, t h e judgment of t h e District Court i s affirmed. We concur: $ b 4 ~ h r ( $ Justice