No. 13592 INTHE SUPREME COURT OF THE STATE OF MONTANA 1977

STATE OF MONTANA, on the relation of GERALD N. LEAVITT, and ELEANORA E. LEAVITT

## , Relators,

THE DISTRICT COURT OF THE THIRTEENTH JUDICIAL DISTRICT OF THE STATE OF MONTANA, INAND FOR THE COUNTY OF YELLOWSTONE, and THE HON. NAT ALLEN, Judge thereof, Respondents.

ORIGINAL PROCEEDING: Counselof Record: For Relators: Poore, McKenzie, Roth, Robischon & Robinson,

Butte, Montana AllenMcKenzie argued, Butte, Montana For Respondents: Crowley, Haughey, Hanson, Gallagher and Toole,

Billings, Montana Stephen Foster argued and RobertEdd Lee argued,

Billings, Montana



### =-., Filed: 

## F??E??

# ?.gn Submitted: January 25, 1977Mr. Justice Frank I. Haswell delivered the Opinion of the Court.

Relators Gerald N. Leavitt and Eleanora 

### E. Leavitt seek a writ of supervisory control from this Court: (1)To require the presiding judge in civil causeNo. 59760 in the district court of YellowstoneCounty to surrender jurisdiction,and (2)to annul all orders made by the presiding judge in that case on November 15, 1976. The civil case in the district court to which this application is directed is complex, voluminous, and long standing. Plaintiffs in the district court are John Slovak,Mary K. Slovak, Paul Slovak,Mary J. Slovak, Andrew Slovak, and Ann E. Slovak. Defendants are the relators here, Gerald N. Leavitt and Eleanora E. Leavitt, husband and wife; Kentucky Fried Chicken of Montana, a corporation;Montana Franchising, Inc., a corporation; Fred C. Haas, Jr.; and Raymond C. Whitaker. The action in district court essentially involves an alleged breach of contract and fraud arising out of the sale of the Kentucky Fried Chicken franchise for Montana by the Slovaks to Kentucky Fried Chicken of Montana, a corporation (KFCM). The case commenced with the filing of the original complaint by the Slovaks onApril 19, 1972. Thereafter formore than four years there ensued various pleadings, motions, negotiations,pretrial discovery, disqualificationof judges, an appeal to this Court on the question of venue, removal and remand to and from the federal court, and miscellaneous matters unnecessary to detail in this opinion. On June 3, 1976, the district court set the case for trial on September 22. An informal conference between counsel and the presiding judge was held onAugust 27 atwhich time the following events transpired: (1) Slovaks' attorney gave noticeof his intention to filean amended complaint, (2) counsel for Gerald Leavitt, KFCM and Montana Franchising, Inc., a corporation (MFI) indicated he did not intend todisqualify the presiding judge, and (3) rulings weremade on various matters pertaining topretrial discovery. On September 8 the districtcourt entered an order: (1)Vacating the trial setting of September 22 and resetting trialforNovember 3, and (2) setting a pretrial conference for October 22. On September 29 the Slovaks served a copy of their amended complaint on the attorney of record for Gerald Leavitt, KFCM, and MFI. On October 5 the amended complaint waspersonally served

on both Leavitts inLas Vegas, Nevada by a deputy sheriff. The principal differencebetween the originalcomplaint and the amended complaint was: (1)The amended complaint added Eleanora E. Leavitt, wife of Gerald N. Leavitt, as a party, and (2) the amended complaint plead damages more specifically and with particularity. The basic theory of the case remained unchanged. On October 19 theLeavitts filed a removal petition with the United StatesDistrictCourt inBillings, Montana, seeking removal of the action tofederal court on the ground of diversity of citizenship. On November 1, United StatesDistrict Judge James F. Battin remanded the case back tothe statedistrictcourt and subsequently assessed attorneys' fees against the Leavitts for wrongful removal. On the same date, November 1, the presiding judge inthe Yellowstone County districtcourt entered an order: (1)Denying the pending motion todismiss previously filed by the Leavitts, (2) directed thedefendants toanswer plaintiffs' amended complaint by 9:00 a.m. on November 3, and (3)directed the trialto

commence at 10:OO a.m. on November 3 aspreviously ordered. According tocounsel for Leavitts, notice of entry of thisorder wascommunicated to them by telephone at about 4:50 p.m. on November 1. The following day,November 2, was a legal holiday. On November 3 the following occurred,not necessarily in this order: (1) The Leavitts filed an affidavitof disqualification against the presiding judge, (2) the presiding judge struck the affidavit of disqualificationbecause it was filed less than 15 days prior to trial, (3)the clerk entered the default of KFCM and MFI for failure to answer or otherwise plead to the amended complaint, as ordered by the court, and (4)the Leavitts filed an application for supervisory control with this Court seeking to have the order of the district court of November 3 vacated. We heard the Leavitts' application, stayed proceedings in the district court, and granted Leavitts five days in which to apply to the district court for the relief sought. On November 5 the Slovaks filed a motion for partial summary judgment against both Leavitts and prayed that any judgment against KFCM and MFI be likewise entered against Leavitts. On November 8 Leavitts filed: (1)A second affidavit of disqualification against the presiding judge,and (2)a separate motion to vacate the default against KFCM and MFI and to dismiss the amended complaint against KFCM and MFI for insufficiency of service of process and failure to state a claim. A hearing was held on these pending matters on November 15. Thereafter the district court entered its order on the same datewhich, insofar as is pertinent to this proceeding,provided:

(1)Themotion to set aside all orders of November 3 by the district courtwas denied, (2) the motion to set aside the district court's orders striking the affidavit of disqualification was denied, and (3) Slovaks' motion for partial summary judgment

was granted. Additionally the recess in the trial was extended, the Leavittswere ordered to answer the amended complaint by November 19, and a conference between court and counselwas setfor November 19. Thereupon Leavitts filed the instant application for a writ of supervisory control with this Court to test the validity of the district court's orders of November 15. An adversary hearing was held and the matter submitted for our decision. Three issues are presented for decision:

(1) Is supervisory control a proper remedy? (2) Should the presiding judge be required to relinquish jurisdiction? (3) Should the district court's orders of November 15 be annulled? We hold that supervisory control is a proper and available remedy to determine the relief sought by Leavitts. We have previously held that supervisory control is a proper remedy to review an order striking two defenses and granting plaintiff summary judgment on the issue of liability because the hardship

on relator in defending the remaining issue of damages rendered the remedy by appeal wholly inadequate. State ex rel. Great Falls National Bank v. District Court, 154Mont. 336, 463 P.2d 326, and cases cited therein. We have also held that supervisory control was a proper remedy to cut through a proceduralmorass and enable prompt litigation of the substantive rights of the parties on themerits. State ex rel. Amsterdam Lbr. Co. v. Dist. Ct., 163 Mont. 182, 516 P.2d 378. Here we have an order defaulting two defendants,an order granting partial summary judgment against some of the defendants,and a procedural tangle involving the attempted disqualification of the presiding judge, removal and remand of the case to and from federal court,and

a number of orders whose validity is in controversy. Under these circumstances,we do not consider the remedy of appeal following trial as to some of the defendants an adequate remedy. Hence we accept jurisdiction of relators' application for a writ ofsupervisory control. The attempted disqualification of the presiding judge requires no extended discussion. The presiding judgehas been in jurisdiction since January 24, 1973. As late as August 27, 1976,counsel indicated he did not intend to disqualify the presiding judge. The first affidavit of disqualification against the presiding judgewas filed on November 3, 1976, the day of trial. We have previously condemned suchpractice. State ex rel. Kidder v. Dist. Ct., 155Mont. 442, 472 P.2d 1008. Here the Leavitts argue that the affidavit of disqualificationwas timely filed because it was filed immediately after receiving the district court's order of November 1, citing Wheeler v. Moe, 163 Mont. 154, 515 P.2d 679, in support. Leavitts also contend that the presiding judge arranged the calendar to circumvent the disqualification statute. The controlling statute, section 93-901,R.C.M. 1947,

as amended,provides in pertinent part: 

### " 

## * 

## * * If there be more than one judge

## * * * in any district inwhich said affidavit is made and filed,upon the firstdisqualification 

## * * * another judge

## * * * residing in the district 

## * * * must be called in to preside 

## * * *; upon the second or any subsequent disqualification, a judge

## * * * of another district of the state must be called in to preside 

## * * * when another judge

## * * * has assumed jurisdiction

## * * 

## * the clerk of the court

## * * 

## * shall at once notify the parties or their attorneys of record 

## * 

## * * of the name of the judge

## * * * called in

## * * 

## *. Such second or subsequent affidavit of disqualification shall be filed with the clerk of the court

## * 

## * * within three days after the party or his attorney

## * * * filing such affidavit, has received notice as to the judge 

### * 

### * * assuming jurisdiction

### * 

## * *." (Emphasisadded.) Here all parties except Eleanora Leavitt had lost their right to disqualify the presiding judge in January, 1973. At the time Eleanora Leavittwas made a party by the filing and service of the amended complaint, the trial date of November 3had been set. She had the right to file a disqualifying affidavitup to 15days prior to trial. That time expired

on October 19, the fifteenth day prior to trial. The attempted disqualification on November 3, the day of trial, camemuch too late and was properly strickenby the presiding judge. The disqualification statutewas not intended as an instrument to

secure delays or postponements of trial. State ex rel. Jacobs

v. Dist. Ct., 48 Mont. 410, 138 P. 1091. The same is true of the second affidavit of disqualification filed onNovember 8. The right of disqualification once lost cannot be revived by a continuation of the trial for the benefit of relators as occurred here. The final issue concerns the default of KFCM and MFI and the partial summary against both Leavitts. Counsel for Leavitts argues that he never agreed to accept serviceof the amended complaint on behalf of KFCM and MFI, that the two corporations

were never served, and that entry of default against them deprived them and Leavitts of their property without due process of law. Counsel for Slovaks contend that the amended complaintwas properly served upon the two corporations by serviceon their counsel, that no responsivepleading had been filed by the two corporations within the time allowed by law, and the defaults against the two corporations were properly entered for failure to file a responsive pleading aswell as failure to appear for trial. We find that service of the amended complaintwas properly made on KFCM and MFI. The amended complaint was served on counsel of record for the two corporations. Whether counsel agreed to accept service on their behalf is immaterial. Serviceof the amended complaint is required to be made by service on the attorney in this case pursuant to Rule 5(b), M.R.Civ.P., which provides in pertinent part:"Whenever under these rules service isrequired orpermitted tobe made upon a party represented by an attorney the service shallbe made upon the attorney unless serviceupon the party himself isordered by the court. 

## * * *" The court did not order serviceupon the parties themselves, KFCM and MFI, in thiscase. Hence, they were technically in default for failure to filea responsive pleading when the districtcourt entered their default on November 3. Rule 15(a), M.R.Civ.P. However, therapidity of events on November 1and November 3 justify vacating the defaults inour opinion. Although the timefor filing a responsivepleading had expired before removal of the case tofederal court, no default against the two corporations had been entered. None could be entered between October 19 and November 1when the case was remanded tothedistrictcourt of Yellowstone County. Counsel for the two corporations received no notice of the remand until about 4:50 p.m. on November 1when the clerkof the statedistrict court called him

on the telephone and advised him of the order of the court which directed, among other things, that thedefendants answer the amended complaint by 9:00 a.m. on November 3. Following the events of November 3, default against the two corporations was entered on November 5, prior tothe timewe granted the Leavitts inwhich to seek relief inthedistrictcourt from the ordersof November 3. In vacating the defaults of KFCM and MFI, we have considered the factthat Leavitts arethe alterego of the two corporations and arepersonally liable for any judgments against the two corporations under the terms of an assignment dated March 31, 1972. Thus any default against the two corporations has the legal effectof a default against Leavitts on at least part of the Slovaks' claims. We consider the entry of the partial summary judgment onthe same basis. It isbased on thepersonal liabilityof Leavittsunder the assignment of March 31, 1972, and thedissolution of KFCM. It isbased on the default of KFCM. Aswe have vacated thedefault of the two corporations, thepartial summary judgment againsttheLeavittsbased upon the derivative liabilityof the two corporationsmust be vacated. Wehave considered theother arguments of the parties and sincewe find they would not alter our decisionhere, we find it unnecessary todiscuss them point by point in thisopinion. For thereasons set forthabove, we hold that the presidingjudge retainsjurisdiction of thiscase; we vacate the default taken against KFCM and MFI and grant them and Leavitts 10 days inwhich tofilea responsivepleading tothe amended complaint; we vacate the partial summary judgment heretofore enteredwithout prejudice torenewal of themotion therefor; and we remand the case tothedistrictcourtof Yellowstone County for further proceedings not inconsistentwith thisopinion. Let remittitur issue forthwith.

.* Justice

Wecon ur: 

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