No. 93-275

IN THE SUPREME COURT OF THE STATE OF MONTANA

1993

DANIEL G. SINCLAIR,

Plaintiff and Appellant,

and Cross-Respondent,

-vsBIG BUD MANUFACTURING COMPANY, BIG BUD

INDUSTRIES, INC., THE MEISSNER BROTHERS

PARTNERSHIP, MEISSNER TRACTORS, INC., JOE

MEISSNER, PAUL MEISSNER, BIG BUD TRACTORS,

INC., and RON HARMON, individually,

Defendants, Respondents and

Cross-Appellants.

APPEAL FROM: District Court of the Twelfth Judicial District,

In and for the County of Hill,

The Honorable John Warner, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Elizabeth A. Best: Best Law Offices, Great

Falls, Montana

For Respondents:

L. D. Nybo and Evan Danno; Conklin, Nybo, LeVegue &

Murphy, Great Falls, Montana (Big Bud Industries, et

Cal.)

George N. McCabe; Jardine, Stephenson, Blewett

& Weaver, Great Falls, Montana (Big Bud Industries,

et al.)

Filed:

Submitted on Briefs: October 5, 1993

Decided: December 14, 1993
Justice Karla M. Gray delivered the Opinion of the Court.

This case involves the application of Rule 41(e), M.R.Civ.P.,

which provides that an action shall not be further prosecuted

unless summons is issued within one year of its commencement. We

reverse the District Court's refusal to grant a motion to dismiss

filed by Big Bud Industries, Inc., Meissner Brothers Partnership,

Meissner Tractors, Inc., Joe Meissner, Paul Meissner, Big Bud

Tractors, Inc., and Ron Harmon (collectively referred to as the

non-BBMC defendants), holding that they were entitled to dismissal

under Rule 41(e), M.R.Civ.P.

Daniel Sinclair (Sinclair) formed the first of many employment

relationships with the various defendants in 1979. In that year,

Ron Harmon, the owner of Big Bud Tractors, Inc. (BBTI), hired

Sinclair as marketing manager and vice president. The corporation

manufactured tractors in Havre, Montana.

In 1985, Joe and Paul Meissner, operating as Meissner Brothers

Partnership, purchased the assets of BBTI. Meissner Brothers

Partnership was subsequently incorporated as Meissner Tractors,

Inc. (MTI). MT1 hired Sinclair as vice president of operations in

1985. In 1986, MT1 transferred its manufacturing operations to Big

Bud Manufacturing, Inc. (later renamed Big Bud Industries, Inc.),

but retained its sales and service activities. Sinclair

subsequently became vice president of operations and marketing for

Big Bud Manufacturing, Inc.

In 1986 and 1987, MT1 initiated negotiations with the

Chippewa-Cree Tribe of the Rocky Boy's Reservation and the

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Assiniboine-Gros Ventre Tribes of the Fort Belknap Reservation to

form a joint partnership. The negotiations resulted in the

incorporation of Big Bud Manufacturing Company (BBMC) in 1988. MT1

owned one-third of the newly-formed corporation and elected John

and Paul Meissner and Ron Harmon to serve on its board.

In June of 1989, Sinclair accepted employment with BBMC as

vice president and general manager. He reported to John Jollie

(Jollie), BBMC's president and chief executive officer. The two

men disagreed about the management of the corporation and, on March

15, 1990, Jollie fired Sinclair.

On May 31, 1990, Sinclair filed a wrongful discharge action

against BBMC. Discovery was marred by BBMC's dilatory tactics and

the District Court levied sanctions accordingly. BBMC subsequently

became insolvent and, in April of 1991, its shareholders voted to

liquidate the corporation.

Sinclair filed an amended complaint in January of 1992. He

joined the non-BBMC defendants, asserting that they were liable for

his wrongful discharge under theories of "piercing the corporate

veil." He also asserted claims of actual fraud, tortious

interference with contract, misrepresentation, and race and age

discrimination.

In February of 1992, the non-BBMC defendants moved for

dismissal, asserting that Sinclair had failed to have summonses

issued within one year of the commencement of the action as

required by Rule 41(e), M.R.Civ.P. On that basis, the non-BBMC

defendants argued that they were entitled to dismissal under Rule

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12(b) for lack of jurisdiction, insufficiency of process and

insufficiency of service of process. The District Court denied the

motion. The non-BBMC defendants then answered Sinclair's

complaint.

In March of 1993, the District Court granted summary judgment

in favor of the non-BBMC defendants. It determined that Sinclair

had failed to present sufficient evidence on any of his claims to

withstand summary adjudication.

Sinclair appeals from the grant of summary judgment dismissing

his claims, asserting that genuine issues of material fact exist.

The non-BBMC defendants cross-appeal, challenging the court's

refusal to dismiss the claims under Rule 41(e), M.R.Civ.P. Because

the cross-appeal issue relating to Rule 41(e), M.R.Civ.P., is

dispositive, we focus on the application of that rule.

The District Court declined to dismiss the non-BBMC

defendants, concluding that the last sentence of Rule 41(e),

M.R.Civ.P., gave it the discretion to allow an action to proceed

against defendants who appeared within three years. Our standard

in reviewing a district court's conclusion of law is to determine

whether the interpretation of law is correct. Steer, Inc. v. Dep't

of Revenue (1990), 245 Mont. 470, 474-5, 803 P.2d 601, 603.

Rule 41(e), M.R.Civ.P., provides as follows:

Failure to serve summons. No action heretofore or

hereafter commenced shall be further prosecuted as to any

defendant who has not appeared in the action or been

served in the action as herein provided within 3 years

after the action has been commenced, and no further

proceedings shall be had therein, and all actions

heretofore or hereafter commenced shall be dismissed bv

the court in which the same shall have been commenced, on

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its own motion, or on the motion of any oartv interested

therein, whether named in the complaint as a oartv or

not, unless summons shall have been issued within 1 Year,

or unless summons issued within one year shall have been

served and filed with the clerk of the court within 3

years after the commencement of said action, or unless

appearance has been made by the defendant or defendants

therein within said 3 years. When more than one

defendant has been named in an action, the action may

within the discretion of the trial court be further

prosecuted against any defendant who has appeared within

3 years, or upon whom summons which has been issued

within 1 year has been served and filed with the clerk

within 3 years as herein required. [Emphasis added.]

The purpose of Rule 41(e), M.R.Civ.P., is to ensure that actions

are timely prosecuted. Livingston v. Treasure County (1989), 239

Mont. 511, 513, 781 P.2d 1129, 1130.

Rule 41(e), M.R.Civ.P., does not afford the District Court

discretion to allow the further prosecution of Sinclair's action

against the non-BBMC defendants. Phrased in mandatory language,

the rule requires dismissal of an action where summons is not

issued within one year of the commencement of the action. Indeed,

we have previously stated that the failure to issue summons within

that time frame entitles a defendant to dismissal. sooy v.

Petrolane Steel Gas, Inc. (1985), 218 Mont. 418, 424, 708 P.2d

1014, 1018.

In the case before us, Sinclair filed his original complaint

against BBMC on May 31, 1990. The summonses naming the non-BBMC

defendants as parties were not issued until January 22, 1992, after

the amended complaint was filed. Thus, they were not issued within

one year of the commencement of the action as required by Rule

41 (e) , M.R.Civ.P., entitling the non-BBMC defendants to dismissal

of the claims against them.

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Notwithstanding the failure to issue the summonses timely, the

District Court determined that it could allow the action to proceed

because the non-BBMC defendants had made an appearance. It is true

that an action may be further prosecuted under Rule 41(e),

M.R.Civ.P., if a defendant appears within three years of the

commencement of the action even though summons has not been timely

issued. However, the only appearance made by the non-BBMC

defendants prior to the court's ruling was the Rule 12(b),

M.R.Civ.P., motion to dismiss asserting the Rule 41(e), M.R.Civ.P.,

bar to further proceedings. Rule 41(e), M.R.Civ.P., specifically

allows a party to move for dismissal of the action and requires the

district court to do so if summons was not properly issued. Thus,

the non-BBMC defendants' motion to dismiss does not serve as a

basis for further prosecution of the action.

Sinclair advances a number of disjointed arguments purporting

to demonstrate compliance with Rule 41(e), M.R.Civ.P. H e

apparently argues that literal compliance with the rule is not

required. He relies on Livingston v. Treasure County (1989), 239

Mont. 511, 781 P.2d 1129, in which we excused the failure to file

within three years the return of service that otherwise complied

with Rule 41(e), M.R.Civ.P., and Sink v. Squire (1989), 236 Mont.

269, 769 P.2d 706, in which we stated that a failure to comply with

all mandatory constructive service requirements would not be fatal

to a district court's jurisdiction if no prejudice resulted.

Neither Livingston nor Sink -, however, relax the requirement that

summons be issued within one year of the commencement of the action

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pursuant to Rule 41(e), M.R.Civ.P.

Sinclair also asserts that the non-BBMC defendants were served

within two years of the commencement of the lawsuit. On that

basis, he argues that they had ample time to appear within the

three-year limit set forth in Rule 41(e), M.R.Civ.P. This

argument, however, is merely an effort to circumvent the rule's

requirement that summons be issued within one year of the

commencement of the action. As discussed above, failure to issue

the summons timely is, in itself, fatal to further prosecution of

the action.

Sinclair also argues that BBMC and the non-BBMC defendants are

"one and the same" and, therefore, that the non-BBMC defendants

were "actually" served or at least put on notice of the pending

action with the filing of the original complaint. There is no

merit to this argument. Here, the fatal flaw was the failure to

timely issue summons naming the non-BBMC defendants as required by

Rule 41(e), M.R.Civ.P.

Furthermore, we find no merit to Sinclair's "one and the same"

argument even if applied to the issuance of the summons. Rule

4(c), M.R.Civ.P., expressly requires summons to set forth the names

of the parties. Thus, the summons naming only BBMC as a defendant

does not provide a basis for the court to allow the prosecution of

the action against the non-BBMC defendants, each of which is a

separate legal entity or individual.

Finally, Sinclair argues that equity precludes dismissal of

his claims against the non-BBMC defendants, relying on Courchane v.

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Kountz (1990), 246 Mont. 216, 806 P.2d 12. This argument is again

premised on Sinclair's assertion that the non-BBMC defendants and

BBMC shared the same identity. On that basis, he contends that the

non-BBMC defendants are responsible for the dilatory discovery

tactics that allegedly prevented Sinclair from discovering the

claims against them.

Rather than supporting Sinclair's lFequity*l ' argument, Courchane

supports dismissing the non-BBMC defendants. In Courchane, we

determined that plaintiffs were aware of.the factual basis for

joining defendants when the original complaint was filed and had

the burden of pursuing their claims at that time. Thus, we found

no legal reason "to invoke the equity of a court" and affirmed the

dismissal of the action against the defendants who had been added

in violation of Rule 41(e), M.R.Civ.P. Courchane, 806 P.2d at 14.

The record reflects that Sinclair knew of the factual basis

for any claims against the non-BBMC defendants when he filed the

original complaint. Those claims were based, in large part, on

allegations that the Meissners formed BBMC to obtain federal

funding not otherwise available and to avoid the payment of debt.

Additionally, various agreements executed by BBMC and the Meissners

and Ron Harmon were integral to his claims.

Sinclair served as a member of the steering committee that

formed BBMC. He also routinely participated in meetings held by

its interim and permanent boards of directors. The minutes of the

meetings held by these entities indicate that Sinclair participated

in discussions concerning BBMC's acquisition of federal funds as a

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minority small-business enterprise and assumption of the Meissners'

loan. Sinclair also was present when the interim board of

directors voted to accept the various agreements between BBMC, the

Meissners and Ron Harmon. Because Sinclair knew of the factual

basis for his claims against the non-BBMC defendants when he filed

the original complaint, he had the burden of pursuing his claims at

that time. Thus, as in Courchane, equity provides no grounds for

precluding the operation of Rule 41(e), M.R.Civ.P.

We conclude that the non-BBMC defendants were entitled to

dismissal because summonses were not issued within one year of the

commencement of the action, as required by Rule 41(e), M.R.Civ.P.

Thus, we hold that the District Court erred in declining to grant

their motion to dismiss. We vacate the District Court's grant of

summary judgment and remand for entry of an order and judgment

dismissing the claims against the non-BBMC defendants in accordance

with this opinion.

Reversed.

We concur: