Abraham v. Hull & Swingley ( 2020 )

10/06/2020
DA 20-0124
Case Number: DA 20-0124
IN THE SUPREME COURT OF THE STATE OF MONTANA
2020 MT 254N
REBECCA ABRAHAM, individually and MITCHELL BRISTOW,
individually, and on behalf of those similarly situated,
Plaintiffs and Appellants,
v.
MICHAEL and SHARON O’BRIEN, d/b/a MICK O’BRIEN
USED CAR AND TRUCK CENTER and HULL & SWINGLEY,
Defendants and Appellees.
APPEAL FROM: District Court of the Second Judicial District,
In and For the County of Butte-Silver Bow, Cause No. DV-19-222
Honorable Robert J. Whelan, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Lawrence E. Henke, David L. Vicevich, Vicevich Law, Butte, Montana
For Appellee:
Martin S. King, Worden Thane P.C., Missoula, Montana
Submitted on Briefs: September 2, 2020
Decided: October 6, 2020
Filed:
cir-641.—if
__________________________________________
Clerk
Justice Laurie McKinnon delivered the Opinion of the Court.
¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court Internal Operating
Rules, this case is decided by memorandum opinion, shall not be cited and does not serve
as precedent. Its case title, cause number, and disposition shall be included in this Court’s
quarterly list of noncitable cases published in the Pacific Reporter and Montana Reports.
¶2 Rebecca Abraham and Mitchell Bristow (collectively, the “Plaintiffs”) appeal the
February 21, 2020 order of the Second Judicial District Court, Silver Bow County, granting
defendant Hull & Swingley’s (H&S) M. R. Civ. P. 12(b)(6) motion to dismiss their
Complaint. We address the following issues on appeal: (1) whether the District Court erred
in granting H&S’s motion to dismiss by relying on information outside of the pleadings
and without allowing the Plaintiffs notice and/or an opportunity to replead; (2) whether the
District Court erred in dismissing the Plaintiffs’ negligence claim upon determining H&S
did not owe a duty to the Plaintiffs; (3) whether the District Court erred in its application
of the discovery rule; and (4) whether the District Court erred in construing the Complaint’s
malicious prosecution and unjust enrichment claims. We affirm.
¶3 In March 2011, Abraham purchased and financed a used vehicle at Mick O’Brien’s
Used Car and Truck Center (O’Brien’s) owned by Michael and Sharon O’Brien in
Butte, Montana. At the time, Abraham signed a purchase agreement and promissory note.
In 2013, after the vehicle experienced mechanical problems, Abraham defaulted on the
loan and surrendered the vehicle to O’Briens with a balance of $1,058 owed. Abraham
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was later sued by H&S on behalf of O’Briens in Silver Bow County Justice Court to collect
the balance owed. H&S obtained a $1,559 judgment against Abraham in Justice Court.
¶4 In January 2012, Bristow also purchased and financed a used vehicle at O’Brien’s,
at which time he signed a purchase agreement and promissory note. In 2015, after his
vehicle experienced mechanical failure, Bristow defaulted on his loan and surrendered the
vehicle to O’Brien’s with a balance of $2,000 owed. H&S sued Bristow in Justice Court
to collect the balance owed. H&S obtained a $3,623.55 judgment against Bristow in
Justice Court.
¶5 Each of the promissory notes signed by the Plaintiffs contained the following
provision: “I understand that I am responsible for any remaining balance. I further
understand and agree to pay any reasonable collection fees and attorney fees if my account
is placed in collection for non-payment.”
¶6 On July 23, 2019, Abraham and Bristow filed a class action lawsuit against
O’Brien’s and H&S, asserting the entities engaged in “a combined effort (an obvious
conspiracy) . . . to repeatedly sell, repossess, and re-sell autos to low income,
unsophisticated consumers, and then subsequently pursue those consumers for amounts
that often exceed the total value of the original purchase price . . . .” The Complaint alleged
against H&S claims of negligence, violation of the Montana Consumer Protection Act,
§§ 30-14-101, MCA, et seq. (MCPA), malicious prosecution, unjust enrichment and
disgorgement, preliminary and permanent injunctive relief, and attorney fees and costs. On
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August 13, 2019, the Plaintiffs filed copies of their purchase agreements and promissory
notes with O’Brien’s as exhibits to be incorporated into the Complaint.
¶7 On September 12, 2019, H&S filed a motion to dismiss the Plaintiffs’ claims against
them. H&S also filed a motion requesting the District Court take judicial notice of the
records in the Justice Court collection actions pursuant to M. R. Evid. 201 and 202. On
October 7, 2019, the Plaintiffs filed a brief opposing H&S’s motion to dismiss, but did not
oppose H&S’s motion for judicial notice of the Justice Court collection action records. The
Plaintiffs later filed their own motion for the District Court to take judicial notice of the
Justice Court collection action records. On February 21, 2020, the District Court granted
H&S’s motion and dismissed the Plaintiffs’ claims against H&S with prejudice. The
Plaintiffs appeal.
¶8 We review de novo a district court’s ruling on a M. R. Civ. P. 12(b)(6) motion to
dismiss for failure to state a claim for which relief can be granted. Cowan v. Cowan,
2004 MT 97, ¶ 10, 321 Mont. 13, 89 P.3d 6. “The determination that a complaint fails to
state a claim is a conclusion of law that we review to determine whether the court’s
interpretation of the law is correct.” Cowan, ¶ 10. We will affirm a district court’s
dismissal if we “conclude the non-moving party would not be entitled to relief based on
any set of facts that could be proven to support the claim.” Renenger v. State,
2018 MT 228, ¶ 5, 392 Mont. 495, 426 P.3d 559.
¶9 The Plaintiffs first argue the District Court erred in granting H&S’s motion to
dismiss by relying on information outside of the pleadings, specifically the filings in their
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respective Justice Court collection actions, without allowing the Plaintiffs notice and/or an
opportunity to replead.
¶10 “The only relevant document when considering a motion to dismiss is the complaint
and any documents it incorporates by reference.” Cowan, ¶ 11 (citing City of Cut Bank v.
Tom Patrick Constr., Inc., 1998 MT 219, ¶ 20, 290 Mont. 470, 963 P.2d 1283). A court
must generally view the complaint in a light most favorable to the plaintiff, taking as true
all allegations of fact therein. Renenger, ¶ 5. If matters outside the pleadings are presented
to and not excluded by the court on a motion to dismiss, the motion must be treated as one
for summary judgment under M. R. Civ. P. 56. M. R. Civ. P. 12(d); Powell v. Salvation
Army, 287 Mont. 99, 103, 951 P.2d 1352, 1354 (1997). In such cases, “[a]ll parties must
be given a reasonable opportunity to present all the material that is pertinent to the motion.”
M. R. Civ. P. 12(d).
¶11 The same day H&S filed its motion to dismiss, it requested the District Court take
judicial notice of all filings in the Justice Court actions. The Plaintiffs did not oppose this
request and made a similar request of the District Court in both their brief opposing H&S’s
motion to dismiss and later by their own motion. “We have repeatedly held that we will
not put a trial court in error for a ruling or procedure in which a party acquiesced or
participated.” State v. Cybulski, 2009 MT 70, ¶ 61, 349 Mont. 429, 204 P.3d 7. As such,
the District Court did not err in relying on the filings of the Justice Court collection actions
in dismissing the Plaintiffs’ claims against H&S.
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¶12 We similarly decline to fault the District Court for dismissing the Plaintiffs’ claims
with prejudice. Generally, a district court should “freely” allow a plaintiff to cure
deficiencies in a pleading “when justice so requires.” M. R. Civ. P. 15(a)(2). Our review
of the record reveals that the Plaintiffs did not request leave to amend or submit any
proposed amendments during the proceedings on the motion to dismiss. The District Court
did not err in dismissing the Plaintiff’s claims against H&S with prejudice.
¶13 Second, the Plaintiffs argue the District Court erred in dismissing the Plaintiffs’
negligence claim upon determining H&S did not owe the Plaintiffs’ a duty.
¶14 To state a cause of action for negligence, a plaintiff must plead four essential
elements: (1) duty; (2) breach; (3) causation; and, (4) damages. See Fisher v. Swift Transp.
Co., 2008 MT 105, ¶ 13, 342 Mont. 335, 181 P.3d 601. “Without duty, and a breach of
that duty, no negligence can exist.” Fisher, ¶ 13. The existence of a legal duty is a question
of law. Rhode v. Adams, 1998 MT 73, ¶ 9, 288 Mont. 278, 957 P.2d 1124.
¶15 The Plaintiffs argue on appeal that H&S owed a duty to them because H&S’s
conduct went “beyond legal representation” by morphing from “counsel to collection
agent, which eliminates the one-on-one litigant protections available under Rhode.” In
Rhode, we held an attorney in an adversarial context does not owe a duty to a non-client
because imposition of such a duty would inhibit the attorney’s ability to
“vigorously advocate his or her client’s interests in litigation . . . .” Rhode, ¶¶ 21-23.
¶16 The Plaintiffs’ Complaint alleges H&S was hired by O’Brien’s as attorneys to file
the collection actions against the Plaintiffs in Justice Court. H&S functioned as an
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advocate of O’Brien’s throughout the adversarial Justice Court proceedings and therefore
owed no duty to the Plaintiffs arising from the filing of the collection actions, pursuant to
Rhode. Because the Plaintiffs were unable to sufficiently plead all elements of a cause of
action for negligence, we affirm the District Court’s dismissal of the claim against H&S.
¶17 Third, the Plaintiffs argue that the District Court erred in its application of the
discovery rule. The District Court determined the discovery rule did not apply to toll the
applicable statute of limitations, and dismissed the Plaintiffs’ claim that H&S violated the
MCPA when it pursued collection of the deficiency while adding a “pecuniary award.”
¶18 A claim brought under the MCPA is ordinarily subject to a two-year statute of
limitations. See § 27-2-211(1)(c), MCA (“Within 2 years is the period prescribed for the
commencement of an action upon . . . a liability created by statute other than: (i) a penalty
or forfeiture; or (ii) a statutory debt created by the payment of public assistance.”). A claim
not brought within this period of limitation is generally barred. See Norbeck v.
Flathead Cty., 2019 MT 84, ¶ 18, 395 Mont. 294, 438 P.3d 811. The limitations period
begins to run when the claim accrues, meaning that “all elements of the claim or cause
exist.” Norbeck, ¶ 18 (quotations omitted). “It is ‘not necessary to know the total extent
of damages that an act causes to begin the running of the statute of limitations.’”
Norbeck, ¶ 24 (quoting E.W. v. D.C.H., 231 Mont. 481, 487, 754 P.2d 817, 820 (1988)).
¶19 Under the discovery rule, the limitations period
does not begin to run until the injured party discovers the facts constituting
the claim or, in the exercise of due diligence, should have discovered the
facts constituting the claim if the facts constituting the claim are by their
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nature concealed or self-concealing or a defendant has taken action
preventing [the] plaintiff from discovering the facts.
Norbeck, ¶ 19. The discovery rule is an exception to the general rule that “[t]he fact that a
party does not know that he or she has a claim, whether because he or she is unaware of
the facts or unaware of his or her legal rights, is usually not sufficient to delay the
beginning” of the applicable statute of limitations period. Christian v. Atl. Richfield Co.,
2015 MT 255, ¶ 61, 380 Mont. 495, 358 P.3d 131.
¶20 The Plaintiffs assert on appeal that the limitations period did not begin running until
July 2017 and December 2018, respectively, when H&S “initiated its part of the scheme
and seized [the Plaintiffs’] bank accounts” to satisfy the Justice Court judgments.
We disagree.
¶21 Upon execution of the purchase agreements and promissory notes, the Plaintiffs
agreed and understood that in the event of their default they would be subject to collection
for the remaining balance on their accounts and any reasonable fees and costs. Following
the Plaintiffs’ defaults, the Plaintiffs should have become aware of the facts forming the
basis of their MCPA claim against H&S when they were served with the Justice Court
collection action summons and complaints in 2014 and 2016, respectively. The fact that
the Plaintiffs were unaware of their legal rights or the extent of their damages at the time
of service is insufficient to delay commencement of the limitations period.
See Norbeck, ¶ 18. Furthermore, H&S’s conduct in initiating the Justice Court proceedings
against the Plaintiffs is not by its nature a concealed or self-concealing act, nor an act
preventing the discoverability of an injury or its cause, that would implicate the discovery
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rule and toll the two-year statute of limitations. The Plaintiffs’ Complaint, filed July of
2019, falls outside the two-year period. The District Court did not err in its application of
the discovery rule in dismissing the Plaintiffs’ MCPA claims.
¶22 Lastly, the Plaintiffs argue the District Court erred in construing the malicious
prosecution and unjust enrichment claims in the Complaint. To state a cause of action for
malicious prosecution, a plaintiff must plead all of the following elements:
(1) a judicial proceeding was commenced and prosecuted against the
plaintiff;
(2) the defendant was responsible for instigating, prosecuting or continuing
the proceeding;
(3) the defendant acted without probable cause;
(4) the defendant was actuated by malice;
(5) the judicial proceeding terminated favorably for plaintiff; and
(6) the plaintiff sustained damages.
Seipel v. Olympic Coast Invs., 2008 MT 237, ¶ 11, 344 Mont. 415, 188 P.3d 1027.
¶23 The Plaintiffs’ malicious prosecution claim was premised on H&S’s filing of the
Justice Court collection actions. As stated in the Plaintiffs’ Complaint, H&S obtained
monetary judgments against both Plaintiffs, therefore failing to satisfy the fifth element
required to state a cause of action for malicious prosecution. While the Plaintiffs assert in
their Complaint that “[t]he judicial proceeding would have terminated favorably for
[the Plaintiffs], but for the fraud, deception, and unfair actions by . . . [H&S],” the
District Court was not required to take this assertion as true, given that the Justice Court
adjudications resulted unfavorably for the Plaintiffs through entry of judgment against
them. See Cowan, ¶ 14 (citing Powell, 287 Mont. at 102, 951 P.2d at 1354) (a district court
construing the allegations of a plaintiff’s complaint is “under no duty to take as true legal
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conclusions or allegations that have no factual basis or are contrary to what has already
been adjudicated.”). The District Court did not err in dismissing the Plaintiffs’ malicious
prosecution claim.
¶24 The District Court similarly correctly dismissed the Plaintiffs’ unjust enrichment
claim. Unjust enrichment is “an obligation created by law in the absence of an agreement
between the parties,” and is typically applied as an equitable remedy “when a contract in
law is implied by the facts and circumstances of the case, but no actual contract exists
between the parties.” Welu v. Twin Hearts Smiling Horses, Inc., 2016 MT 347, ¶ 33,
386 Mont. 98, 386 P.3d 937. See also Associated Mgmt. Servs. v. Ruff, 2018 MT 182, ¶ 64,
392 Mont. 139, 424 P.3d 571 (providing the purpose of unjust enrichment is to “prevent or
remedy inequitable gain by another.”). Unjust enrichment does not apply where a valid,
enforceable contract exists. Associated Mgmt., ¶ 67 (“A valid contract defines the
obligations of the parties as to matters within its scope, displacing to that extent any inquiry
into unjust enrichment.”) (quotations and original alterations omitted).
¶25 The Plaintiffs’ Complaint alleges that they entered into contracts with O’Brien’s for
the purchase and financing of their vehicles, and that H&S received a benefit by suing the
Plaintiffs in Justice Court on behalf of O’Brien’s to obtain judgments on the contracts. The
existence of these contracts necessarily precludes the Plaintiffs’ present claim for
unjust enrichment.
¶26 The Plaintiffs’ Complaint also alleges the contracts upon which the Justice Court
judgments were based were deemed “deficient,” but the District Court was not required to
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assume this allegation as true absent an order from Justice Court setting aside the
judgments, or a reversal or modification of the judgment on appeal to district court.
See Cowan, ¶ 14 (citing Powell, 287 Mont. at 102, 951 P.2d at 1354). A justice’s court
generally has jurisdiction to enter civil judgments for damages not exceeding $12,000,
§ 3-10-301(1), MCA, and reversal or modification of such judgments may only occur
through appeal to a district court. See § 25-33-102, MCA (“Any party dissatisfied with the
judgment rendered in a civil action in a . . . justice’s court may appeal therefrom to the
district court . . . .”); § 25-33-101, MCA (providing that appeal process set forth in Title 25,
chapter 33 is the exclusive method of review of a justice’s court judgment).
“Every presumption is in favor of the correctness of the judgment. . . . And until the same
is reversed it is presumed to be a correct judicial determination of the rights of the parties.”
State ex re. McKennan v. District Court, 69 Mont. 340, 346, 222 P. 426, 428 (1924)
(citations omitted). The District Court did not err in dismissing the Plaintiffs’
unjust enrichment claim.
¶27 We have determined to decide this case pursuant to Section I, Paragraph 3(c) of our
Internal Operating Rules, which provides for memorandum opinions. In the opinion of the
Court, the case presents a question controlled by settled law or by the clear application of
applicable standards of review. Affirmed.
/S/ LAURIE McKINNON
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We concur:
/S/ MIKE McGRATH
/S/ JAMES JEREMIAH SHEA
/S/ INGRID GUSTAFSON
/S/ DIRK M. SANDEFUR
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