NO. 95-121 INTHESUPREMECOURTOFTHESTATEOFMONTANA 1995

APPEAL FROM: District Court of the First Judicial District,

In and for the County of Lewis and Clark, The Honorable Dorothy McCarter, Judge presiding.

COUNSELOFRECORD:

For Appellant: JamesT.Harrison, Jr., Harrison, Leondorf &Poston, Helena, Montana For Respondent: R.J. Sewell, Jr., Bruce M.Spencer, Smith LawFirm, Helena, Montana

Submitted onBriefs: May 19, 1995 Decided: June 15, 1995 Filed:Justice James C. Nelson delivered the Opinion of the Court.

Capital Answering Service, Inc., (Capital Answering), appeals from anorder of the First Judicial District Court, Lewis &Clark County, dismissing the complaint of First Call, Inc., (First Call) without prejudice. Wereverse and remand for further proceedings consistent with this opinion. The issue on appeal is whether adismissal pursuant to Rule 41(e), M.R.Civ.P., should bewith prejudice and, thus, accorded res judicata effect. First Call filed an action for breach of contract against Capital Answering in the District Court, Lewis &Clark County on September 9, 1991, as Cause No. ADV 91-1480, and asummons was issued the samedate. That summons, however, wasnot served within the three year period specified in Rule 41(e), M.R.Civ.P. An amended summons was issued August 30, 1994, and was served on September 13, 1994, prior to the running of the statute of limitations on First Call's cause of action. Capital Answering moved to dismiss onthe basis of Rule 41(e), M.R.Civ.P., and in an order dated November 9, 1994, the District Court granted Capital Answering's motion, dismissing First Call's complaint. Thecourt's dismissal was, however, without prejudice. Capital Answering timely appealed, contending that the dismissal should have been with prejudice. The District Court based its determination to dismiss First Call's complaint without prejudice onour decision in Whitcraft v. Semenza (1965), 145Mont. 94, 399P.2d 757, andcited the following 2language from our opinion: It must be borne in mind that the Rule is nothing more than a rule of procedure, designed to encourage promptness in the prosecution of actions. Dismissal thereunder is not based upon the absence of aclaim, nor upon anydefect in the substantive right, nor is the Rule astatute of limitation barring the claim after lapse of the specified time. While anaction maybedismissed the claim remains. in order of dismissal is not res judicata, it does not constitute abar to another suit on the sameclaim. Whitcraft, 399 P.2d at 759. Ourreview of the District Court's conclusions of law is plenary. Wesimply determine whether the court's interpretation of the law is correct. Steer, Inc. v. Department of Revenue (1990), 245Mont. 470, 474-75, 803 P.2d 601, 603. Rule 41(e), M.R.Civ.P. provides, in pertinent part: Failure to serve summons. No action heretofore or hereafter commenced shall befurther prosecuted asto any defendant who has not appeared in the action or been served in the action as herein provided within 3years after the action has been commenced, and no further proceedings shall be had therein, and all actions heretofore or hereafter commenced shall bedismissed by the court in which the sameshall have been commenced, on its ownmotion, oronthe motion of any party interested therein, whether named in the complaint as aparty or not, unless summons shall have been issued within Iyear, or unless summons issued within oneyear 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 madeby the defendant or defendants therein within said 3years.

. . . Here, it is undisputed that the District Court properly dismissed First Call's complaint because the summonswasnot served within the three years specified in the Rule. Rather, the issue is whether the trial court correctly dismissed First Call's complaint without prejudice, thus allowing First Call to file another

3complaint on its claim, so long as the statute of limitations on

that claim had not run. Based upon our decision in Whitcraft, the District Court was compelled to rule asit did. Moreover, subsequent toWhitcraft, we again interpreted Rule 41(e), in a manner consistent with our decision in that case. In State ex rel. Equity Supply Co. v. District Court (1972), 159Mont. 34, 494 P.2d 911, westated:

AsRule 41(e) is nowwritten, anorder of dismissal is abar to another suit onthe sameclaim, if, ashere, the statute of limitations aswell asthe period provided for by the rule, have run. Equity Suuolv, 494 P.2d at 914. Both Whitcraft and Equity Supply contain discussions of the history of Rule 41(e) which wefind unnecessary to reiterate here. Suffice it to say, that having carefully reconsidered our decisions in both of those cases, wenowconclude that our interpretation of the clear and unambiguous language of the Rule was incorrect. In his specially concurring opinion in Equity Supply, Chief Justice Haswell, concisely pointed upthe fallacy inherent in this Court's opinions in that case and in Whitcraft:

Theoperative words of Rule 41(e) that are pertinent here provide:iI* * * all actions heretofore or hereafter commenced shall bedismissed by the court in which the same shall have been commenced ***unless summons shall have been issued within oneyear ***.' The purpose of this Rule is not only to promote diligent prosecution of claims once suit has been filed thereon, but also to bar further prosecution of lathed lawsuits. The Commission Note to amended Rule 41(e) makes this clear

. . .

4authorities cited in their briefs onappeal in support of and in

opposition to our previous interpretations of Rule 41(e). Having donethat, we, nevertheless, conclude that onthe plain language of Rule 41(e), our prior interpretations of that Rule inWhitcraft and in Equity Supply were simply wrong. Necessarily, Whitcraft and Equity Supplv are overruled. We hold that dismissals under Rule 41(e), M.R.Civ.P. are dismissals with prejudice and must begiven res judicata effect. Accordingly, wereverse the District Court's order dismissing First Call's complaint without prejudice andremand for entry of anorder dismissing its complaint with prejudice.

WeConcur: