No. 96-326 IN THESUPREME

COURTOFTHESTATEOFMONTANA 1996

BLAZECONSTRUCTION,

Plaintiff

v. INC.,

andAppellant,

GLACIERELECTRICCOOPERATIVE,INC., Nr)V2619%

APPEALFROM: District Court of the Ninth Judicial District,

In andfor the County of Glacier, TheHonorable Marc G. Buyske, Judge presiding.

COUNSELOFRECORD:

For Appellant: Robert G.Olson; Frisbee, Moore &Olson, Cut Bank, Montana For Respondent: Larry Epstein; Werner, Epstein &Johnson, Cut Bank, Montana For Amicus: Kathleen Fleury, Blackfeet Legal Department, Browning, Montana (for Blackfeet Tribe) Jeanne S.Whiteing; Whiteing &Smith, Boulder Colorado (for Blackfeet Tribe)

Filed: Submitted onBriefs: November 14, 1996 Decided: November 26, 1996

Clerk/Justice W.William Leaphart delivered the Opinion of the Court.

Appellant, Blaze Construction (Blaze) filed suit against Glacier Electric Cooperative (Glacier) alleging breach of contract for the failure to pay Blaze the sumof $36,000 on a contract concerning the construction of 24 homes on the Blackfeet Reservation. Glacier moved to dismiss for failure to join an indispensable party and for lack of jurisdiction of the parties. The Blackfeet Tribe, which is litigating breach of contract and recoupment claims against Blaze in federal district court, movedto intervene for the purpose of contesting jurisdiction. TheDistrict Court granted Glacier's motion to dismiss for failure to join the Blackfeet Tribe asanindispensable party. Blaze appeals from the order of dismissal. Weaffirm. Background Blaze is a corporation existing under the laws of the Blackfeet Tribe and authorized to do business in the State of Montana. Glacier is a rural electric cooperative with its principal office in Cut Bank, Montana. In conjunction with the Bonneville Power Administration, Glacier administers aconservation incentive program knownasSuper GoodCents. Under this program, homesbuilt to meet certain energy conservation specifications qualify the builder or the owner to a payment of reimbursement for additional weatherization costs of up to $1,500 per home. Depending upon the circumstances and the agreement between the parties, Glacier has in the past madethese payments to the owner of,a newhome,or, in the alternative, to the 2builder. Usually, the builder or contractor andthe owner of the

residence reach agreement whereby the owner receives someform of credit for the Super GoodCents expense incurred bythe builder in

newconstruction. In Juneof 1994, Blaze contracted with Glacier to construct 25 homes in conformance with Super Goods Cents standards. All the homesconstructed pursuant to this contract were constructed onthe Blackfeet Reservation and are owned by the Tribe. Glacier and Blaze are the only signatories to this contract. Both Blaze, as the builder, andthe Tribe asthe owner, of 24of the 25certified

newhomes, claim reimbursement of the funds dueunder the incentive program. Glacier does not dispute that Blaze completed its obligation to build the homes nor does it dispute that it has not paid incentive money to Blaze. Rather, Glacier moved to dismiss the suit arguing that, since the Tribe hadmadeademandupon Glacier for the incentive monies, the Tribe, asthe owner of the homes, was

an indispensable party to the litigation. The Tribe moved to intervene for the sole purpose of having the matter dismissed for lack of jurisdiction over the Tribe. Blaze concedes that if the Tribe is anindispensable party, the complaint has to bedismissed since the court hasnojurisdiction over the Tribe. Blaze contends that the Tribe is not an indispensable party since the Tribe was not aparty to the Blaze/Glacier contract. Blaze argues that only those entities which are in privity can be considered indispensable.

3Discussion

In considering a motion to dismiss on the ground that an indispensable party is absent, "the court is given discretion to determine whether the action will proceed or will bedismissed." Mohlv. Johnson (1996), 275Mont. 167, 169, 911P.2d 217, 219. In reviewing such discretionary rulings we apply an "abuse of discretion standard." Montana Rail Link v. Byard (1993), 260Mont. 331, 337, 860P.2d 121, 125. Resolution of this appeal hinges uponapplication of Rule 19, M.R.Civ.P., which states:

Rule 19(a). Persons to be joined if feasible. A person who is subject to service of process shall be joined as aparty in the action if (1) in the person's absence complete relief cannot be accorded amongthose already parties, or (2) the person claims an interest relating to the subject of the action andis sosituated that the disposition of the action in the person's absence may (i) as apractical matter impair or impede the person's ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest. If the person hasnot been sojoined, the court shall order that the person bemadeaparty. If the person should join asaplaintiff but refuses to do so, the person maybe madea defendant, or, in a proper case, an involuntary plaintiff. If the joined party objects to venue andjoinder of that party would render the venueof the action improper, that party shall bedismissed from the action. Rule 19(b). Determination by court of whenever joinder not feasible. If a person as described in subdivision (a)(1)-(2) hereof cannot bemadeaparty, the court shall determine whether in equity and good conscience the action should proceed amongthe parties before it, or should be dismissed, the absent person being thus regarded asindispensable. Thefactors to be considered bythe court include: first, to what extent a judgment rendered in the person's absence might be prejudicial to the person or those already parties; second, the extent to which, byprotective provisions in 4the judgment, by the shaping of relief, or other

measures, the prejudice can be lessened or avoided; third, whether a judgment rendered in the person's absence will beadequate; fourth, whether the plaintiff will have anadequate remedy if the action is dismissed for nonjoinder. In interpreting Rule 19, this Court has held that, in the interests of judicial economy, all parties claiming aninterest in the subject of the suit should bejoined. Dagel v. City of Great Falls (19911, 250Mont. 224, 239, 819P.2d 186, 195. Under Rule 19, M.R.Civ.P., acourt must first determine under Rule 19(a) whether the absent party is necessary to the action, that is, whether complete relief canbeaccorded without the absent party's participation and, second, if the absent party is necessary but joinder is not possible, whether the absent party is indispensable under Rule 19(b), that is, whether in "equity and good conscience the action should proceed

. . or should be dismissed.

. .I' m, 911P.2d at 219. Blaze relies onour decision in Gamblesv. Perdue (1977), 175 Mont. 112, 572P.2d 1241, for its argument that aperson whois not

aparty to a contract is not an indispensable party to a suit involving that contract. InGambles, aretail carpeting store sued John Perdue oncontracts covering the purchase and installation of carpeting in Perdue's residence. After the installation of the carpeting, Perdue's wife obtained a divorce in which she was awarded the residence in question andwasmadesolely responsible for all indebtedness onthe property. Gambles, 572 P.2d at 1242. In response to Gambles' complaint, John Perdue contended that all proper parties were not before the court; that his ex-wife was 5responsible because she had been awarded the property in the

divorce proceeding. Gambles, 572P.2d at 1243. Thecourt entered judgment for himonthat basis. Gambles appealed. Wevacated the dismissal for the reason that a contracting obligee cannot be deprived of recourse against the contracting obligor (John Perdue) by a substitution of debtors without the obligee's, (Gambles) consent. ThusJohn Perdue remained liable onhis contract despite the provisions of the divorce decree. Weheld that Anna, John's ex-wife, wasnot aproper party because shewasnot aparty to the contract. Gambles, 572 P.2d at 1243. Gambles is clearly distinguishable from the present case. Gamblesdid not involve an interpretation of Rule 19. Further, the present case does not involve a substitution of an obligee. Rather, it involves a question of whether the obligor (Glacier) may, in the absence of joinder, besubject to multiple obligations. In the present case, the District Court noted that Blaze conceded that proceeding to judgment in state court without the Tribe as a party will most likely subject Glacier to further litigation with the Tribe over the samemonies in another forum. Rule 19(a), M.R.Civ.P., specifically requires joinder of persons whoclaim an interest in the action andwhose absence may "leave anyof the persons already parties subject to asubstantial risk of incurring double, multiple, or otherwise inconsistent obligations

11

. . . Weagree with the court's conclusion that, given the Tribe's claimed interest, Glacier is in substantial risk of incurring multiple and inconsistent obligations. The court

6correctly concluded that the Tribe is a necessary party to the

litigation. Having concluded that the Tribe is anecessary party, the next inquiry is whether, "in equity and good conscience" the matter should proceed without the Tribe or should bedismissed, the Tribe being thus regarded as indispensable. Rule 19(b), M.R.Civ.P. In making this determination, the court is directed to consider the following factors: 1. To what extent a judgment rendered in the person's absence might beprejudicial to the person or those already parties; 2. The extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice canbe lessened or avoided; 3. Whether ajudgment rendered in the person's absence will beadequate; 4. Whether the plaintiff will haveanadequate remedy if the action is dismissed for nonjoinder. Rule 19(b), M.R.Civ.P. Blaze contends that if this matter is dismissed for failure to join the Tribe, Blaze will be denied the right to proceed in a state court forum. In this regard, wenote that, although Blaze filed three briefs in this appeal andsurprisingly did not rely on State ex rel. Drumv. District Court (1976), 169 Mont. 494, 548 P.2d 1377, the holding in Drum merits some discussion. Drum involved a suit against David Drum by First National Bank tocollect onpromissory notes. Drummovedto dismiss onthe ground

that the suit wasnot prosecuted in the nameof the real party in interest andfor failure to join anindispensable party plaintiff, i.e., ChaseManhattan Bankof NewYork; anentity which could not besued in the courts of Montana under 12U.S.C. §94. Drum -I 548 P.2d at 1379. In refusing to issue awrit of supervisory control to dismiss for nonjoinder, we noted that dismissal would leave First National with no remedy in the courts of its ownstate to collect the moneyit loaned to the Drums. -, Drum 548P.2d at 1382. Although it would appear that this sameconcern for astate court forum would militate against dismissing Blaze's suit for nonjoinder of the Tribe, there are a number of aspects of the present suit which distinguish it from the Drum matter. Drum sought to dismiss for nonjoinder of ChaseManhattan. Chase's only tie to the transaction was that it hadaparticipation agreement with First National. Chase's absence from the litigation would not impair its ability to enforce its participation agreement with First National. Furthermore, judgment in the case would not have subjected Drumto the risk of multiple or otherwise inconsistent obligations since Drum's rights and liabilities would be finally concluded in the context of the Drum/First National Bankpromissory note agreements. Wenoted that it was no concern of Drum what First National did with the proceeds of the repaid loan. -, Drum 548 P.2d at 1381. In contrast, Glacier's rights andobligations with regard to the incentive monies will not befinally concluded in the context of the Glacier/Blaze contract. Rather, in the absence of

8joinder of the Tribe, Glacier will be at risk of multiple and

inconsistent obligations. Recognizing that it did not have anyjurisdiction over the Tribe, the District Court concluded that it would be unable to fashion anymeaningful relief which would address the claims of the Tribe and avoid the risk of further litigation to Glacier. Furthermore, the court recognized that there are two other forums, the Tribal Court andthe United States District Court, which have jurisdiction over all three entities. Wehold that the Blackfeet Tribe is a necessary party over which the District Court hasnojurisdiction. Thus, the District Court did not abuse its discretion in dismissing Blaze's claim for nonjoinder of an indispensable party. Affirmed.

Weconcur: /