DA 14-0666

IN THE SUPREME COURT OF THE STATE OF MONTANA

2015 MT 284

EMILIO H. GARZA, CANDICE GARZA,

ROBERT W. MILLER, RANDALL E. MILLER,

ROBERT H. KRUGER, JAMES L. LARSON,

JAMES W. BOLDING, JAMES W. BLOMGREN,

SOUGH STICKELMEYER, JOHN W. WELLS,

STEPHEN J. JOHNSON, ESTATE OF

CANDICE GARZA and TRI-UNITA LLC,

 Plaintiffs and Appellees,

 v.

FORQUEST VENTURES, INC.; KEN A

HAGMAN; ALLISON HAGMAN; and

DOES 1 THROUGH XX,

 Defendants, Third Party

 Plaintiffs and Appellants.

______________________________________

KEN A. HAGMAN and ALLISON HAGMAN,

 Third Party Plaintiffs and Appellants,

 v.

RONNIE MILLER and ADVANCED

ANALYTICAL, LLC, ADVANCED

ANALYTICAL, MATHIAS

INVESTMENTS, LLC, and DOES 1-10,

 Third Party Defendants and Appellees.

APPEAL FROM: District Court of the Eighth Judicial District,

In and For the County of Cascade, Cause No. DDV-09-1010

Honorable Dirk M. Sandefur, Presiding Judge

September 29 2015

Case Number: DA 14-0666
2

COUNSEL OF RECORD:

For Appellants:

Murry Warhank, Burt W. Ward, Gough, Shanahan, Johnson & Waterman, 

PLLP, Helena, Montana 

(Attorneys for Ken and Allison Hagman)

Rachel A. Clark, Church, Harris, Johnson & Williams, Great Falls,

Montana

(Attorney for Forquest Ventures, Inc.)

For Appellees:

Glenn E. Tremper, Glenn E. Tremper, PLLC, Great Falls, Montana

(Attorney for Emilio Garza, et. al)

Submitted on Briefs: August 12, 2015

 Decided: September 29, 2015

Filed:

__________________________________________

Clerk
3

Justice Beth Baker delivered the Opinion of the Court. 

¶1 Forquest Ventures, Inc., Ken Hagman, and Allison Hagman1(collectively 

Forquest) appeal the Order of the Eighth Judicial District Court, Cascade County, 

granting Appellees’2 motion for summary judgment and dismissing Advanced Analytical, 

LLC, for lack of personal jurisdiction. We address the following issues on appeal:

1. Whether the District Court correctly determined that Investors timely asserted 

their claims under the Montana Securities Act, § 30-10-307(5)(b), MCA;

2. Whether the District Court correctly determined that the non-Garza Investors’ 

claims relate back to the original complaint’s filing date;

3. Whether the District Court correctly determined that there were no genuine 

issues of material fact regarding Forquest’s failure to use reasonable care in the 

sale of securities to Investors;

4. Whether the District Court correctly dismissed Advanced Analytical for lack of 

personal jurisdiction.

¶2 We affirm on Issues 1, 2, and 3, reverse on Issue 4, and remand for further 

proceedings.

PROCEDURAL AND FACTUAL BACKGROUND

¶3 Forquest Ventures is an Idaho corporation formed to operate a placer mining 

enterprise at the El Dorado Bar site northeast of Helena, Montana. Its sole director, Ken 

Hagman, incorporated Forquest Ventures in October 2005. Hagman and his wife, 

 

1 Allison Hagman is identified as an appellant in this matter, although the District Court 

dismissed the plaintiffs’ claims against her. Plaintiffs have not cross-appealed that ruling.

2 Appellees are Emilio H. Garza, Candice Garza, Robert W. Miller, Randall E. Miller, Robert H. 

Kruger, James L. Larson, James W. Bolding, James W. Blomgren, Sough Stickelmeyer, John W. 

Wells, Stephen J. Johnson, Estate of Candice Garza, Tri-Unita, LLC, and Advanced Analytical, 

LLC. Advanced Analytical did not file a brief in this appeal. We refer to the remaining 

Appellees collectively as Investors. 
4

Allison Hagman, were Forquest Ventures’ principal investors and shareholders and its 

only corporate officers. 

¶4 In forming Forquest Ventures, Hagman, who had no commercial mining 

experience or expertise, relied in part on his brother-in-law Ronnie Miller’s 

representations regarding the El Dorado Bar site. Miller, in turn, relied on purported 

assay reports of the site allegedly performed by Advanced Analytical. The assay reports 

purported to show high levels of precious metal content at the site. Hagman also 

reviewed Advanced Analytical’s purported assays and other information provided by 

Miller about the El Dorado Bar site before forming Forquest Ventures. Forquest never 

completed any professional mining feasibility assessment of the El Dorado Bar site 

before soliciting investment.

¶5 Following incorporation, Forquest sold or issued stock to at least 36 shareholders, 

including Investors. Most of the shareholders, including Investors, are relatives or family 

friends of Miller and Hagman. In making their initial investments, Investors ultimately 

relied on Forquest’s representations that the mine likely would be highly profitable. 

Forquest based these representations on the purported Advanced Analytical assays. Prior 

to the mine’s start-up and throughout its operation, Forquest repeatedly made 

representations to Investors about the mine’s profit potential and continued to solicit 

capital from Investors. In total, Forquest received over $600,000 from Investors.

¶6 Although Forquest acknowledged start-up and operational problems at the mine to 

Investors, Forquest’s optimistic representations about the venture’s ultimate profitability 

continued until late August 2007. In September 2007, Forquest received independent, 
5

third-party assay results showing very little precious metal content at the El Dorado Bar 

site. Forquest did not inform Investors about the third-party assay results until 

October 19, 2007. In that communication, Forquest told Investors that “reality and truth 

have finally been set in front of us” and also informed Investors that Forquest Ventures 

had ceased mining operations. Ultimately, Forquest Ventures realized no profits and 

Investors received no return on their investments. The Hagmans, who owned 

approximately 31 percent of Forquest Ventures’ stock, also received no return on their 

investment. 

¶7 On October 14, 2009, Emilio and Candice Garza, individually and on behalf of all 

similarly situated Forquest Ventures investors, brought claims against Forquest for 

compensatory and punitive damages based on alleged violations of the Montana 

Securities Act, §§ 30-10-301(1) and -307(1), (2), MCA; breach of fiduciary duty; 

violations of the Montana Consumer Protection Act, § 30-14-103, MCA; negligent 

misrepresentation; and constructive fraud. On October 1, 2010, the Garzas filed an 

amended complaint adding the other Investors as named plaintiffs. Forquest filed a 

counterclaim against Investors and a third-party complaint against Miller and Advanced 

Analytical. The third-party complaint alleged negligence against Miller and Advanced 

Analytical and sought contribution and indemnity from both.

¶8 Advanced Analytical responded by filing an unsupported motion to dismiss for 

failure to state a claim that the District Court denied. Under new counsel, Advanced 

Analytical then filed a motion to dismiss for lack of personal jurisdiction and 
6

alternatively, for summary judgment on the ground that Forquest’s claims were timebarred.

¶9 Investors moved for summary judgment on their Montana Securities Act claims 

and Forquest filed a cross-motion for summary judgment on the ground that the claims 

were statutorily time-barred. The District Court heard argument on all pending motions 

in June 2012.

¶10 In June 2013, the District Court issued a thorough 194-page order granting 

summary judgment to Investors, denying Forquest’s cross-motion for summary 

judgment, and granting Advanced Analytical’s motion to dismiss. After resolving 

subsequent motions, the District Court entered an amended and final judgment in 

September 2014. The District Court concluded the following: “Misrepresentation” under 

§ 30-10-307(1), MCA, is not a matter of strict liability but requires a showing of failure 

to use reasonable care regarding the truth or accuracy of statements made in the offer or 

sale of a security; Forquest offered and sold securities to Investors by means of 

“misrepresentation” within the meaning of § 30-10-307(1), MCA; Allison Hagman was 

not personally liable to Investors; Investors timely asserted their claims under § 30-10-

307(5)(b), MCA; the non-Garza Investors’ claims relate back to the original complaint’s 

filing date; and the court did not have personal jurisdiction over Advanced Analytical. 

Advanced Analytical is unrepresented on appeal. Forquest appeals several of the District 

Court’s rulings.

STANDARD OF REVIEW
7

¶11 We review an entry of summary judgment de novo. Albert v. City of Billings, 

2012 MT 159, ¶ 15, 365 Mont. 454, 282 P.3d 704. Summary judgment is appropriate 

when the moving party demonstrates the absence of a genuine issue of material fact and 

entitlement to judgment as a matter of law. M. R. Civ. P. 56(c)(3); Albert, ¶ 15. If this 

burden is met, the burden shifts to the nonmoving party to establish with substantial 

evidence—as opposed to mere denial, speculation, or conclusory assertions—that a 

genuine issue of material fact does exist or that the moving party is not entitled to 

judgment as a matter of law. Phelps v. Frampton, 2007 MT 263, ¶ 16, 339 Mont. 330, 

170 P.3d 474.

¶12 We review a district court’s decision on a motion to dismiss for lack of personal 

jurisdiction de novo. Milky Whey, Inc. v. Dairy Partners, LLC, 2015 MT 18, ¶ 7, 378 

Mont. 75, 342 P.3d 13. We construe the complaint in the light most favorable to the 

plaintiff. Milky Whey, ¶ 7.

DISCUSSION

¶13 1. Whether the District Court correctly determined that Investors timely asserted 

their claims under the Montana Securities Act, § 30-10-307(5)(b), MCA.

¶14 A person claiming fraud or misrepresentation under the Montana Securities Act 

must file suit “within 2 years after discovery of the fraud or misrepresentation on which 

the liability is founded or after the discovery should have been made by the exercise of 

reasonable diligence.” Section 30-10-307(5)(b), MCA. The Montana Securities Act is 

partly modeled after federal securities law and this Court has applied federal case law to 

interpret Montana’s securities statutes. State v. Himes, 2015 MT 91, ¶ 34, 378 Mont. 
8

419, 345 P.3d 297. Federal courts interpret the federal securities limitations statute, 28 

U.S.C. § 1658(b)(1), in the same manner as § 30-10-307(5)(b), MCA, is written. Merck 

& Co. v. Reynolds, 559 U.S. 633, 648, 130 S. Ct. 1784, 1796 (2010) (holding that 

“discovery” as used in 28 U.S.C. § 1658(b)(1) “encompasses not only those facts the 

plaintiff actually knew, but also those facts a reasonably diligent plaintiff would have 

known.”). 

¶15 The District Court granted summary judgment to Investors on the ground that 

Investors’ fraud and misrepresentation claims did not accrue prior to receiving Forquest’s 

October 19, 2007 correspondence informing Investors that Advanced Analytical’s 

purported assays were inaccurate and mining operations had ceased. Therefore, the court 

ruled that Investors timely filed their complaint on October 14, 2009, pursuant to 

§ 30-10-307(5)(b), MCA. In reaching this conclusion, the District Court relied in part on 

federal decisions construing 28 U.S.C. § 1658(b)(1), including Merck. 

¶16 On appeal, Forquest first argues that unless the limitations statute was tolled, 

Investors’ claims are time-barred because the last securities sale occurred on February 27, 

2007. Investors therefore could not have been harmed by any misrepresentation in a 

securities sale after that date. In addition, Forquest relies on § 27-2-102(3), MCA, and 

case law construing it, to argue that the limitations statute was not tolled because the facts 

underlying Forquest’s misrepresentations were publicly available to Investors and 

therefore not self-concealing. Forquest relies on federal case law, including Merck, to 

further assert that Investors’ knowledge of the mine’s operational problems, the failure to 

recover precious metals from the mine, and resulting lack of return on investment 
9

constituted “storm warnings” of Forquest’s misrepresentations. Forquest claims these 

“storm warnings” would have led a reasonably diligent investor to investigate further. 

Consequently, Forquest contends, Investors should have discovered Forquest’s 

misrepresentations more than two years before filing suit. 

¶17 Forquest’s argument that Investors’ claims are time-barred because the last 

securities sale occurred on February 27, 2007, is unpersuasive. Under § 30-10-307(5)(b), 

MCA, the limitations period does not commence when a security is sold by fraud or 

misrepresentation; it commences when the fraud or misrepresentation is discovered, “or 

after the discovery should have been made by the exercise of reasonable diligence.” The 

date of the last securities sale therefore does not affect the statute of limitations under 

§ 30-10-307(5)(b), MCA. 

¶18 Forquest’s reliance on § 27-2-102(3), MCA, also is unpersuasive. Section 

27-2-102(3), MCA, is a general statute relating to the time within which an action must 

be commenced. Its language differs from that in § 30-10-307(5)(b), MCA. The general 

limitations statute, § 27-2-102(3), MCA, does not control Montana Securities Act claims 

governed by the limitations statute specific to such claims, § 30-10-307(5), MCA. 

Mosley v. American Express Financial Advisors, 2010 MT 78, ¶¶ 19-20, 356 Mont. 27, 

230 P.3d 479. Accordingly, Forquest’s reliance on Thieltges v. Royal Alliance 

Associates, Inc., 2014 MT 247, 376 Mont. 319, 334 P.3d 382, is misplaced. Thieltges 

involved a general tort action, and it was undisputed that the general statute governing 

tort actions applied. Thieltges, ¶ 14. 
10

¶19 In Thieltges, we addressed whether the facts constituting investors’ claims against 

a brokerage firm were concealed or self-concealing. Thieltges, ¶ 13. The investors in 

Thieltges failed to learn that the certified public accountant handling their investments 

was a registered securities salesperson with the brokerage firm until they deposed him 

after the § 27-2-204(1), MCA, limitations period ran. Thieltges, ¶ 8. In concluding that 

the investors’ lack of knowledge about their claims against the brokerage firm did not toll 

the limitations period, we first affirmed the general rule that “a claim accrues and the 

limitation period begins to run when all elements of the claim exist or have occurred.” 

Thieltges, ¶ 15. We determined that investors’ claims accrued when they “became aware 

of their injuries” after being informed that they would not receive returns on their 

investments. Thieltges, ¶ 19. Finally, we concluded that the limitations period was not 

tolled because the facts constituting investors’ claims against the brokerage firm “were 

neither concealed nor self-concealing.” Thieltges, ¶ 19. In making this determination, 

we relied in part on the fact that investors “could readily have discovered through public 

records” that the accountant was a registered securities salesperson with the brokerage 

firm. Thieltges, ¶ 19. 

¶20 Here, similar to Thieltges, Investors’ claims did not accrue until they became 

aware of their injuries. Investors did not become aware of their injuries until they were 

informed that Advanced Analytical’s purported assays were inaccurate and they would 

not receive any return on their investment because Forquest ceased mining operations. 

Even if § 27-2-102(3), MCA, applied to Investors’ claims, Forquest’s reliance on 

Thieltges in arguing that Investors had a duty to search public records about the 
11

El Dorado Bar site’s mining history and Advanced Analytical’s reputation is 

unpersuasive. Unlike the publicly available information in Thieltges, which securities 

laws require be made available to the public,3the “publicly available” information 

Forquest contends Investors had a duty to investigate is not easily searchable or readily 

available. Moreover, the information Forquest contends was “publicly available” to 

Investors likewise was available to Forquest prior to beginning mining operations and 

soliciting investment. The Montana Securities Act imposes duties upon sellers and 

offerors of securities, not investors, regarding the truth and accuracy of representations 

made during the sale of a security. Section 30-10-301(1), MCA. The facts regarding 

accuracy of Forquest’s representations were not the type of “publicly available” 

information at issue in Thieltges.

¶21 Finally, Forquest misinterprets federal case law construing 28 U.S.C. § 1658(b)(1) 

in asserting that Investors should have discovered Forquest’s misrepresentations more 

than two years before filing suit based on “storm warnings” of the mine’s ultimate 

failure. The United States Supreme Court examined 28 U.S.C. § 1658(b)(1) for the first 

time in Merck. Merck, 559 U.S. at 637, 130 S. Ct. at 1789. In Merck, respondent 

investors argued that they suffered economic losses due to the drug company’s knowing 

misrepresentations about one of its products. Merck, 559 U.S. at 637-38, 130 S. Ct. at 

1790. The drug company argued that the investors’ claims were untimely because the 

 

3 Section 30-10-201, MCA, requires securities brokers or sellers to register with the 

Commissioner of Securities and Insurance. The Commissioner’s website maintains a database 

that allows the public to search for information on investment professionals registered in 

Montana. Montana Commissioner of Securities & Insurance, Securities: How to Protect 

Yourself, csimt.gov, http://csimt.gov/securities/protectionsteps (http://perma.cc/SU5X-B2TJ). 
12

investors had “inquiry notice” of the facts underlying their claims and therefore they 

knew or should have known of the misrepresentations more than two years before filing 

the complaint. Merck, 559 U.S. at 638, 130 S. Ct. at 1790. 

¶22 In addressing the drug company’s arguments, the Court emphasized that under 

28 U.S.C. § 1658(b)(1), the “limitations period does not begin to run until ‘discovery of 

the facts constituting the violation.’” Merck, 559 U.S. at 648, 130 S. Ct. at 1796 (quoting 

28 U.S.C. § 1658(b)(1)) (emphasis in original). The Court then specified that although 

“inquiry notice” could be “the point where the facts would lead a reasonably diligent 

plaintiff to investigate further, that point is not necessarily the point at which the plaintiff 

would already have discovered . . . ‘facts constituting the violation.’” Merck, 559 U.S. at 

651, 130 S. Ct. at 1797. Thus, the Court concluded that the limitations period does not 

automatically begin upon “the ‘discovery’ of facts that put a plaintiff on ‘inquiry 

notice.’” Merck, 559 U.S. at 653, 130 S. Ct. at 1798. In rejecting the “inquiry notice” 

standard, the Court further specified: 

In determining the time at which “discovery” of [the facts constituting the 

violation] occurred, terms such as ‘inquiry notice’ and ‘storm warnings’ 

may be useful to the extent that they identify a time when the facts would 

have prompted a reasonably diligent plaintiff to begin investigating. But 

the limitations period does not begin to run until the plaintiff thereafter 

discovers or a reasonably diligent plaintiff would have discovered ‘the facts 

constituting the violation,’ . . . irrespective of whether the actual plaintiff 

undertook a reasonably diligent investigation. 

Merck, 559 U.S. at 653, 130 S. Ct. at 1798 (emphasis added). 

¶23 Similar to the limitations period addressed in Merck, the limitations period 

prescribed in § 30-10-307(5)(b), MCA, does not begin to run until discovery of, or after a 
13

reasonably diligent plaintiff should have discovered, “the fraud or misrepresentation on 

which the liability is founded.” Investors may have “discovered” facts concerning 

problems with the mining venture, but contrary to Forquest’s argument, that does not 

automatically mark “the point at which [Investors] would already have discovered” 

Forquest’s misrepresentations. Merck, 559 U.S. at 651, 130 S. Ct. at 1797. 

¶24 Forquest has not met its burden of establishing specific facts, as opposed to 

speculation or conjecture, showing how and when a reasonably diligent investor should 

have discovered Forquest’s misrepresentations prior to October 19, 2007. Advanced 

Analytical’s assays of the El Dorado Bar site purportedly showing—as Forquest 

represents in its brief— “that the mine would be one of the richest in the world” led to 

Forquest Ventures’ formation. Forquest, in turn, relied on the purported assays in making 

representations to Investors. These representations included claims that the mine held 

“well over one billion dollars of precious metals and stones,” and led Forquest to project 

a “conservative” annual investment return rate of “200%.” Such representations are the 

representations on which Forquest’s liability is founded. Investors reasonably could not 

have discovered that Forquest’s representations were false or misleading until Investors 

knew that the purported assays of the El Dorado Bar site were inaccurate. 

¶25 Forquest’s argument that Investors had a duty to discover the inaccuracy of the 

purported assays based on the multiple issues surrounding the mine’s operation is 

unpersuasive considering that Forquest did not discover the purported assays’ 

inaccuracies until receiving the results of an independent, third-party assay in September 

2007. Forquest waited to communicate this information to Investors until October 19, 
14

2007. Forquest does not explain why reasonable diligence would demand that individual 

Investors obtain their own independent third-party assay in the face of Forquest’s 

representations. It speculates that Investors could have discovered, but does not justify 

why they should have discovered, the misrepresentations before October 19, 2007.

¶26 Investors’ claims did not accrue until October 19, 2007, and thus, Investors timely 

filed their complaint under § 30-10-207(5)(b), MCA. Accordingly, we affirm the District

Court’s grant of summary judgment to Investors on this issue.

¶27 2. Whether the District Court correctly determined that the non-Garza Investors’ 

claims relate back to the original complaint’s filing date.

¶28 M. R. Civ. P. 15(c)(1)(B) provides that amendments to pleadings relate back to the 

original pleading when the “amendment asserts a claim . . . that arose out of the conduct, 

transaction, or occurrence set out . . . in the original pleading.” In analyzing whether the 

claim of a new party plaintiff arises out of the conduct, transaction, or occurrence set out 

in the original plaintiff’s pleading, we look to whether there is a “clear identity of 

interest” between the original plaintiff and the newly-added plaintiff. Tynes v. Bankers 

Life Co., 224 Mont. 350, 358, 730 P.2d 1115, 1121 (1986). The policies underlying 

statutes of limitation also should be considered when determining whether an amendment 

relates back. Tynes, 224 Mont. at 358, 730 P.2d at 1120 (concluding that the purpose of 

the statute of limitations is to provide a defendant with adequate notice of the claim 

against it, give a defendant the opportunity to adequately defend, ensure fairness, and 

prevent undue prejudice to the defendant). 
15

¶29 In granting summary judgment to Investors, the District Court concluded that the 

non-Garza Investors’ claims related back to the original complaint because the claims 

arose out of the same continuing conduct, occurrence, and transactions—namely, 

Forquest’s securities sales to Investors. On appeal, Forquest asserts that the District 

Court erred in its determination because Investors became involved in Forquest Ventures 

under different circumstances so there was no identity of interest among Investors. 

Forquest relies on this Court’s decision in Walstad v. Northwest Bank of Great Falls, 240 

Mont. 322, 783 P.2d 1325 (1989), to argue that the conduct asserted in the non-Garza 

Investors’ claims is not identical to the conduct asserted in the original complaint. 

Forquest therefore contends that the claims in the amended complaint do not relate back 

to the original complaint and the non-Garza Investors’ claims are barred by the statute of 

limitations.

¶30 As the District Court noted, Walstad is not applicable to the facts of this case. In 

Walstad, we held that the claims in the amended complaint did not relate back to the 

claims in the original complaint due to the dissimilar nature of the collateral transactions 

at issue. Walstad, 240 Mont. at 326, 783 P.2d at 1327-28. The alleged harm in the 

amended Walstad complaint arose from the defendants’ loan to the party seeking to be 

added as a plaintiff whereas the alleged harm in the original complaint arose from the 

plaintiffs’ guaranty of that loan. Walstad, 240 Mont. at 326, 783 P.2d at 1327. We 

concluded that the parties therefore had no “clear identity of interest.” Walstad, 240 

Mont. at 326, 783 P.2d at 1327.
16

¶31 We agree with the District Court that the underlying transactions at issue—

securities sales induced by common misrepresentations—distinguish this case from 

Walstad. We also agree that there is a clear identity of interest between Investors 

because, as the District Court stated: 

(1) The Garza and non-Garza [Investors] purchased of [sic] the same or 

similar securities in the same venture or corporate enterprise;

(2) [Forquest] sequentially offered and sold the same or similar securities to 

all of the [Investors] by means of the same or substantially similar 

negligently false and inaccurate representations of material fact; and

(3) the Garza [Investors] timely asserted their original claims individually 

in a representative capacity “on behalf of all others similarly situated.”

¶32 Moreover, concluding that the non-Garza Investors’ claims relate back to the 

original complaint does not undermine the policies underlying the statute of limitations. 

Forquest had notice of the claims against it in the original complaint and had an adequate 

opportunity to defend those claims because the Garzas’ original complaint asserted 

claims on behalf of all others similarly situated—which, as Forquest knew, was a 

relatively small pool. 

¶33 We conclude that the non-Garza Investors’ claims arose out of the conduct, 

transaction, or occurrence set out in the original complaint and therefore relate back to 

the date of its filing. Accordingly, we affirm the District Court’s grant of summary 

judgment to Investors on this issue.

¶34 3. Whether the District Court correctly determined that there were no genuine 

issues of material fact regarding Forquest’s failure to use reasonable care in the sale of 

securities to Investors.
17

¶35 After a detailed analysis, the District Court construed § 30-10-307(1), MCA, to 

require proof of failure to use reasonable care in offering or selling securities in order to 

establish misrepresentation. The parties do not challenge on appeal the District Court’s 

construction of the statutory elements of a misrepresentation claim under § 30-10-307(1), 

MCA. 

¶36 The District Court further determined that Investors demonstrated the absence of 

genuine issues of material fact regarding Forquest’s failure to use reasonable care in the 

sale of securities. The District Court relied in part on the following facts in determining 

that, under the totality of the circumstances, Forquest failed to use reasonable care: 

Forquest affirmatively represented to Investors that the venture likely would be highly 

profitable; reasonably diligent analysis of the El Dorado Bar site would have revealed the 

site’s unsuitability for profitable placer mining; and Advanced Analytical’s purported 

assays were not reasonably reliable and accurate based in part on Forquest’s sampling 

methodology and its erroneous assay interpretation, analysis, and projection.

¶37 On appeal, Forquest argues that the District Court erred in determining that there 

were no genuine issues of material fact regarding Forquest’s exercise of reasonable care. 

At minimum, Forquest asserts, reasonableness is a question of fact for the jury. Forquest 

offers the following as evidence of its use of reasonable care: Hagman relied on an 

attorney when organizing Forquest Ventures; Forquest told investors that there was risk 

associated with investing in the mining operation; and Forquest relied on Advanced 

Analytical to analyze samples and provide consulting services. Forquest further asserts 

that if this Court holds under Issue 1 that a reasonably diligent plaintiff would not have a 
18

duty to investigate Forquest’s representations based on the issues surrounding the mining 

venture, then there must be questions of fact regarding whether Forquest used reasonable 

care in relying on Advanced Analytical’s purported assays.

¶38 Although breach of a duty to exercise reasonable care is generally a question of 

fact, Nelson v. Driscoll, 1999 MT 193, ¶ 40, 295 Mont. 363, 983 P.2d 972, such 

questions may be determined as a matter of law “when reasonable minds cannot differ,” 

Wiley v. City of Glendive, 272 Mont. 213, 216, 900 P.2d 310, 312 (1995). Forquest has 

not met its burden of establishing by substantial evidence that a genuine issue of material 

fact exists regarding Forquest’s failure to use reasonable care. In fact, Forquest’s 

arguments under Issue 1 belie its argument here. Forquest argues that Investors were not 

reasonably diligent in discovering Forquest’s misrepresentations because “Forquest was 

forecasting sunshine despite the fact that it was obviously raining.” Reasonable minds 

cannot differ that forecasting sunshine despite the fact that it was obviously raining 

constitutes a failure to use reasonable care. In selling securities to Investors, Forquest 

was the “weatherman” on whom Investors relied in making their investments.

¶39 Forquest’s proffered evidence of reasonable care does not rise above the level of 

mere denial, speculation, or conclusory assertions. By asserting that he relied on an 

attorney in organizing Forquest Ventures, Hagman, who had no mining experience or 

expertise, does not demonstrate his exercise of reasonable care in representing to 

Investors the mine’s high profit potential. Forquest’s assertion that it told Investors that 

there was risk associated with the mining operation does not rise to the level of 

substantial evidence of reasonable care considering that those same communications also 
19

contained representations and assurances that the venture likely would be highly 

profitable. Finally, the reasonableness of Forquest’s reliance on Advanced Analytical’s 

expertise and purported assays is defeated by its own argument that Investors failed to 

exercise reasonable diligence by not investigating the accuracy of Advanced Analytical’s 

purported assays.

¶40 Contrary to Forquest’s argument, our holding on Issue 1 does not undermine this 

conclusion. One of the fundamental purposes of the Montana Securities Act is to protect 

investors. Section 30-10-102(1), MCA. The Act does so by imposing duties upon sellers 

and offerors of securities. E.g. § 30-10-301(1)(b), MCA (“It is unlawful for any person, 

in connection with the offer, sale, or purchase of any security . . . to . . . make any untrue 

statement of a material fact . . . .”). Under the District Court’s formulation of the 

statutory elements, one of the duties imposed upon sellers of securities in order to protect 

investors is the use of reasonable care. As discussed above, an investor is not held to the 

same duty to discover the fraud or misrepresentation upon which liability is founded.

¶41 Accordingly, we conclude that the District Court correctly determined that 

Forquest established no genuine issues of material fact demonstrating its exercise of 

reasonable care in the sale of securities to Investors. The District Court therefore 

properly concluded that Investors were entitled to summary judgment on this issue.

¶42 4. Whether the District Court correctly dismissed Advanced Analytical for lack of 

personal jurisdiction. 

¶43 M. R. Civ. P. 12(b)(2) provides that a party may raise a lack of personal 

jurisdiction defense by motion at its option. A party also may waive a personal 
20

jurisdiction defense and consent to a court’s jurisdiction. El Dorado Heights 

Homeowners’ Ass’n v. Dewitt, 2008 MT 199, ¶ 16, 344 Mont. 77, 186 P.3d 1249. Rule 

12(h)(1) states that a party waives the defense of lack of personal jurisdiction by 

“omitting it from a motion in the circumstances described in Rule 12(g)(2); or . . . [by] 

failing to either:

(i) make it by motion under this rule; [or]

(ii) include it in a responsive pleading . . .

Rule 12(g)(2) prohibits a party that makes any Rule 12 motion from making “another 

motion under this rule raising a defense or objection that was available to the party but 

omitted from its earlier motion.” Under these rules, a party waives a personal jurisdiction 

defense by failing to raise it in the party’s initial response. El Dorado Heights, ¶ 16. 

¶44 The District Court concluded that Advanced Analytical “procedurally, albeit 

unintentionally,” waived its personal jurisdiction defense by filing, through former 

counsel, a Rule 12(b)(6) motion before filing a Rule 12(b)(2) motion with new counsel. 

The court reasoned, however, that dismissal based solely on such an “unintentional 

procedural waiver” does not comport with due process requirements and, without citing 

authority, concluded that personal jurisdiction can be waived only if done so “knowingly, 

voluntarily, and intelligently.” Proceeding to examine the merits of Advanced 

Analytical’s personal jurisdiction defense, the court dismissed Advanced Analytical for 

lack of personal jurisdiction under Montana’s long-arm statute. 

¶45 On appeal, Forquest relies on Prentice Lumber Co. v. Spahn, 156 Mont. 68, 474 

P.2d 141 (1970), and In re Marriage of Smith, 2008 MT 461, 348 Mont. 174, 199 P.3d 
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824, to argue that Advanced Analytical waived its jurisdictional defense by filing an 

initial Rule 12(b) motion without raising personal jurisdiction. Forquest further argues 

that waiver of a personal jurisdiction defense does not violate due process, citing 

Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 102 S.

Ct. 2099 (1982) (hereinafter Ireland). 

¶46 Investors argue that the District Court correctly determined that Advanced 

Analytical could not waive unintentionally its personal jurisdiction defense.4Investors, 

however, lack standing to make this argument. Jones v. Mont. Univ. Sys., 2007 MT 82, ¶ 

50, 337 Mont. 1, 155 P.3d 1247 (concluding a party lacks standing to “assert the 

constitutional rights of others”).

¶47 In Ireland, the U.S. Supreme Court began its discussion of personal jurisdiction by 

noting that “personal jurisdiction flows . . . from the Due Process Clause,” and therefore 

“protects an individual liberty interest.” Ireland, 456 U.S. at 702, 102 S. Ct. at 2104. As 

an individual liberty interest, personal jurisdiction may, “like other such rights, be 

waived.” Ireland, 456 U.S. at 703, 102 S. Ct. at 2105. The Court went on to note that 

personal jurisdiction may be waived intentionally, “or for various reasons a defendant 

may be estopped from raising the issue.” Ireland, 456 U.S. at 704, 102 S. Ct. at 2105. 

Moreover, a party’s actions “may amount to a legal submission to the jurisdiction of the 

 

4

Investors also contend that continuing discussion of this issue will only further delay Investors’ 

right to recover. The District Court ruled that, as joint tortfeasors, Forquest and Advanced 

Analytical would be jointly and severally liable for the entire amount owed to Investors if 

Advanced Analytical otherwise was subject to the court’s personal jurisdiction. As such, 

Investors’ right to recover the entire judgment from Forquest is unaffected by Forquest’s 

contribution claim against Advanced Analytical. Azure v. Billings, 182 Mont. 234, 250, 595 

P.2d 460, 469 (1979) (stating that under joint and several liability “the plaintiff may recover 

against one or all” of the tortfeasors).
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court, whether voluntary or not.” Ireland, 456 U.S. at 704-05, 102 S. Ct. at 2105. As the 

Court explained, “The expression of legal rights is often subject to certain procedural 

rules: The failure to follow those rules may well result in a curtailment of the rights. 

Thus, the failure to enter a timely objection to personal jurisdiction constitutes, under 

Rule 12(h)(1), a waiver of the objection.” Ireland, 456 U.S. at 705, 102 S. Ct. at 2105.

¶48 M. R. Civ. P. 12(h)(1) is in relevant part identical to Fed. R. Civ. P. 12(h)(1). In 

Milanovich v. Schnibben, 2007 MT 128, 337 Mont. 334, 160 P.3d 562, we cited Ireland 

in stating, “Personal jurisdiction, as an individual right, can be waived by express or 

implied consent.” Milanovich, ¶ 10 (citing Ireland, 456 U.S. at 703, 102 S. Ct. at 2105). 

The procedural curtailment of the substantive right of personal jurisdiction pursuant to M. 

R. Civ. P. 12 does not implicate due process concerns. See Ireland, 456 U.S. at 704-05, 

102 S. Ct. at 2105. Moreover, this Court’s precedent makes clear that a party waives a 

personal jurisdiction defense by failing to enter a timely objection as prescribed by M. R. 

Civ. P. 12. El Dorado Heights, ¶ 16 (concluding that by not raising the defense of 

personal jurisdiction in their first response, defendant consents to a court’s jurisdiction 

and waives the defense); Smith, ¶ 18 (holding that a defendant waives a personal 

jurisdiction defense by indicating that he anticipates to challenge personal jurisdiction 

and then failing to file such a motion or supporting brief within the time frame 

established by the court). 

¶49 In Milky Whey, we analyzed waiver of personal jurisdiction under M. R. Civ. P. 

12(h)(1)(B)(ii). Milky Whey, ¶ 15. We held that the defendant did not waive its personal 

jurisdiction defense by failing to raise the issue in its initial notice of appearance when it 
23

raised the issue by motion two weeks later, prior to filing its answer to the complaint. 

We reasoned that a notice of appearance is not a responsive pleading within the meaning 

of Rule 12(h)(1)(B)(ii). Milky Whey, ¶ 16. This case, in contrast, involves the filing of a 

Rule 12(b) motion that failed to raise lack of personal jurisdiction. Under Rule 12(g)(2), 

Advanced Analytical was required to join its Rule 12(b)(2) and 12(b)(6) motions in the 

same filing. By omitting the personal jurisdiction issue from the motion to dismiss, 

Advanced Analytical came squarely within the prohibition of Rule 12(h)(1)(A) and 

therefore waived the defense. 

¶50 We hold that Advanced Analytical’s waiver does not implicate due process 

concerns. Accordingly, we reverse the District Court’s dismissal of Advanced Analytical 

for lack of personal jurisdiction. 

CONCLUSION

¶51 We affirm the District Court’s Order granting summary judgment to Investors 

against Ken Hagman and Forquest Ventures and dismissing Allison Hagman. We 

reverse its dismissal of Advanced Analytical for lack of personal jurisdiction and remand 

to the District Court for further proceedings consistent with this Opinion.

/S/ BETH BAKER

We concur: 

/S/ MIKE McGRATH

/S/ LAURIE McKINNON

/S/ JAMES JEREMIAH SHEA

/S/ JIM RICE