Larry Semenza v. Don Kniss

July 8 2008
DA 07-0185
IN THE SUPREME COURT OF THE STATE OF MONTANA
2008 MT 238LARRY SEMENZA,
Plaintiff and Appellant,
v.
DON KNISS and STOCKMAN’S
LIVESTOCK ORDER BUYING, INC.,
Defendants and Appellees.
APPEAL FROM: District Court of the Ninth Judicial District,
In and For the County of Teton, Cause No. DV 05-027
Honorable Laurie McKinnon, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Floyd D. Corder, Corder Law Firm, Great Falls, Montana
For Appellees:
Scott A. Fisk, Crowley, Haughey, Hanson, Toole & Dietrich, PLLP,
Helena, Montana
Submitted on Briefs: January 4, 2008
Decided: July 8, 2008
Filed:
__________________________________________
Clerk
Justice W. William Leaphart delivered the Opinion of the Court.
¶1 Semenza appeals the District Court’s finding that i t did not have personal
jurisdiction over Stockman’s, and the court’s grant of summary judgment in favor of
Stockman’s. We affirm.
¶2 We restate the issue as follows:
¶3 Did the District Court err in finding it did not have personal jurisdiction over
Stockman’s?
BACKGROUND
¶4 Larry Semenza (“Semenza”) is a livestock dealer doing business in Montana as
Semenza Cattle Company. Don Kniss (“Kniss”) is an Oklahoma resident who has bought
and sold cattle, but is not a registered or bonded dealer. The two were introduced through
a mutual business acquaintance, Harold Sagers (“Sagers”). Semenza agreed to sell Kniss
cattle from the Broken O Ranch in Montana. Semenza shipped the cattle to Kniss in
Oklahoma. Semenza was paid for the transaction through a $147,400 wire transfer from
an Oklahoma corporation called Stockman’s Livestock Order Buying, Inc.
¶5 Several months later, Semenza and Kniss entered into a second cattle deal.
Semenza agreed to sell 92 cows to Kniss for $950/head, or $87,400 total. Semenza
shipped the cattle to Kniss in Okalahoma, and received a wire transfer from Stockman’s
for $35,000. Semenza believes he is still owed $52,400.
¶6 Initially, Semenza filed a reparation complaint with the United States Department
of Agriculture. The USDA initiated an investigation, and took several affidavits, which
are appended to Appellee Stockman’s brief. However, before the USDA concluded its
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investigation, Semenza filed this suit in the Ninth Judicial District Court in Montana.
Since Semenza elected to seek relief through the state judicial system, the USDA
dismissed his complaint. Semenza filed breach of contract claims against both Kniss and
Stockman’s, arguing that Kniss acted as Stockman’s agent. Only Stockman’s answered.
¶7 The District Court granted Stockman’s motion for summary judgment. The court
found that no writing existed regarding either of the two cattle transactions. Since the
sale of the cattle was covered by the U.C.C., and the purchase price exceeded $500, the
oral contract was not enforceable unless there was a writing satisfying the statute of
frauds. The court found that Semenza failed to produce such a writing, and thus held that
the agreement was unenforceable.
¶8 The court also found that Semenza failed to produce a writing which gave Kniss
the authority to act as Stockman’s agent. Section 28-10-203, MCA, provides that when
the law requires a contract to be in writing, an agent’s authority to enter into that contract
on behalf of the principal must also be bestowed in writing. Thus, the District Court
found that Semenza could not enforce the purported oral contract against Stockman’s.
¶9 Absent an agency relationship between Kniss and Stockman’s, the District Court
found that it had no personal jurisdiction over Stockman’s. After granting Stockman’s
motion for summary judgment, the District Court dismissed Semenza’s complaint with
prejudice, and awarded Stockman’s its costs and attorney’s fees.
STANDARD OF REVIEW
¶10 The court’s order granting Stockman’s motion for summary judgment contains
overlapping conclusions of law. Specifically, the court found that no agency relationship
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existed between Stockman’s and Kniss as a matter of law. Absent an agency
relationship, the court concluded that it could not exercise personal jurisdiction over
Stockman’s.
¶11 Since personal jurisdiction is a threshold issue, we discuss that first. A district
court’s determination that it lacks personal jurisdiction is a conclusion of law which we
review for correctness. Cimmaron Corp. v. Smith, 2003 MT 73, ¶ 8, 315 Mont. 1, ¶ 8, 67
P.3d 258, ¶ 8. However, to address personal jurisdiction, we must also analyze the
question of agency. Since the District Court’s conclusions of law regarding the agency
issues were decided on a motion for summary judgment, we will review these issues de
novo. Kuhr v. City of Billings, 2007 MT 201, ¶ 12, 338 Mont. 402, ¶ 12, 168 P.3d 615,
¶ 12. A grant of summary judgment is proper only if no genuine issues of material fact
exist and the moving party is entitled to judgment as a matter of law. M. R. Civ. P. 56(c);
Kuhr, ¶ 12.
DISCUSSION
¶12 Did the District Court err in finding it did not have personal jurisdiction over
Stockman’s?
¶13 To determine whether a Montana court can exercise personal jurisdiction over a
non-resident defendant, we apply a two-part test. Cimmaron, ¶ 10. First, we ask whether
personal jurisdiction exists under M. R. Civ. P. 4B(1). Cimmaron, ¶ 10. Second, we
examine whether the exercise of personal jurisdiction is consistent with the “traditional
notions of fair play and substantial justice embodied in the due process clause.”
Cimmaron, ¶ 10.
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¶14 1. Does personal jurisdiction exist pursuant to M. R. Civ. P. 4B(1)?
¶15 Semenza alleges that Kniss acted as Stockman’s agent in the cattle deal, and that
Stockman’s was the ultimate purchaser of the cattle. Thus, Semenza argues, the District
Court had jurisdiction over Stockman’s under M. R. Civ. P. 4B(1)(a), which provides for
jurisdiction over entities which transact business within the state through an agent. In
order to determine whether personal jurisdiction exists under M. R. Civ. P. 4B(1)(a), we
must first address this threshold question of agency.
¶16 a. Was Kniss acting as Stockman’s agent?
¶17 As discussed above, the District Court found that, as a matter of law, no agency
relationship existed between Kniss and Stockman’s. Since the District Court reached this
conclusion on a summary judgment motion, we review the issue de novo.
¶18 The party moving for summary judgment bears the initial burden of establishing
the absence of any genuine issue of material fact and entitlement to judgment as a matter
of law. Prindel v. Ravalli County, 2006 MT 62, ¶ 19, 331 Mont. 338, ¶ 19, 133 P.3d 165,
¶ 19. If this burden is met, the burden shifts to the non-moving party. Prindel, ¶ 19. To
avoid summary judgment, the non-moving party must “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 prevail under
the applicable law.” Phelps v. Frampton, 2007 MT 263, ¶ 16, 339 Mont. 330, ¶ 16, 170
P.3d 474, ¶ 16.
¶19 We have recognized that allegations of agency often involve questions of fact
which preclude resolution by summary judgment. See e.g. Stillman v. Fergus County,
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220 Mont. 315, 317, 715 P.2d 43, 44 (1986). However, summary judgment is
appropriate where a party “fail[s] to present sufficient evidence to give rise to a genuine
issue of material fact regarding an agency relationship[.]” Contreraz v. Michelotti-
Sawyers, 271 Mont. 300, 311, 896 P.2d 1118, 1124 (1995). Accord Sunset Point v. Stuc-
O-Flex Intern., 1998 MT 42, ¶ 25, 287 Mont. 388, ¶ 25, 954 P.2d 1156, ¶ 25; Northwest
Polymeric v. Farmers State Bk., 236 Mont. 175, 178-79, 768 P.2d 873, 875-76 (1989).
We have held that “[w]here the undisputed evidence concerning the status of the parties
defendant to each other is reasonably susceptible of but a single inference, the question of
their legal relationship . . . is one purely of law.” Contreraz, 271 Mont. at 311, 896 P.2d
at 1124 (citation omitted). Thus we must consider whether Semenza has presented
sufficient evidence to raise a genuine issue of material fact regarding the alleged agency
relationship between Stockman’s and Kniss.
¶20 Section 28-10-103(1), MCA, provides:
An agency is either actual or ostensible. An agency is actual when the
agent is really employed by the principal. An agency is ostensible when the
principal intentionally or by want of ordinary care causes a third person to
believe another to be the principal’s agent when that person is not really
employed by the principal.
In his appeal, Semenza argues that Stockman’s conduct provides circumstantial evidence
of an ostensible agency relationship with Kniss.
¶21 An ostensible agency may be implied by conduct, and may be shown by
circumstantial evidence. See e.g. Butler Manufacturing Co. v. J & L Implement Co., 167
Mont. 519, 524-25, 540 P.2d 962, 965-66 (1975). However, the ostensible authority must
arise from the acts of the principal, not the agent. Bellanger v. American Music Co.,
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2004 MT 392, ¶¶ 20-21, 325 Mont. 221, ¶¶ 20-21, 104 P.3d 1075, ¶¶ 20-21. Notably, the
record here shows only two “acts” committed by Stockman’s: Stockman’s made two wire
transfers to Semenza. Semenza claims that Stockman’s also took receipt of the cattle,
incurred expenses for the care of the cattle, and sold the cattle.
¶22 However, Semenza’s allegations are not supported by the evidence. The record
indicates that Kniss, not Stockman’s, took possession of the cattle. The inspection
certificate and bill of sale issued by the Montana Department of Livestock pursuant to
§ 81-3-210, MCA, lists Kniss as the sole buyer. Semenza’s own handwritten bill of sale
also lists Kniss as the sole buyer. Both the trucking invoice for transporting the cattle
from Montana to Oklahoma, and the feed and yardage bill for storing the cattle once they
were in Oklahoma were charged to Kniss, not Stockman’s. Finally, the cattle were sold
in Oklahoma by Kniss’s daughter and his wife. In sum, the wire transfers are the only
“acts” from which Semenza could have inferred ostensible authority.
¶23 We have also cautioned that the third party’s belief as to the ostensible agency
relationship must be reasonable. Turjan v. Valley View Estates, 272 Mont. 386, 394, 901
P.2d 76, 82 (1995). Here, we find nothing in the record to support a reasonable belief
that an ostensible agency relationship existed between Kniss and Stockman’s. Kniss is
listed as the sole purchaser/owner on all of the documents in the record: Semenza’s own
hand-written receipt, the bill of sale from the Montana Department of Livestock, and the
proof of claim under surety bond issued under the Packers and Stockyards Act.
¶24 In fact, Semenza did not make any allegations that Kniss was Stockman’s agent in
the original complaint he filed with the USDA. Semenza does not allege that Stockman’s
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participated in the negotiations for the sale, and it is undisputed that, outside of the wire
transfers, Semenza never had contact with anyone at Stockman’s. Semenza asserts that
Kniss was employed by Stockman’s, but offers no records of employment or other proof
to support his assertion. Semenza claims that Sagers told him Kniss was employed by
Stockman’s. However, in his affidavit, Sagers claims he did not know there was any
connection between Stockman’s and Kniss- financial, or otherwise. And as discussed
above, the ostensible authority must arise from the acts of the alleged principal- not from
the acts or representations of the alleged agent or other third party. Bellanger, ¶¶ 20-21.
In the end, there are only two pieces of evidence which suggest that an ostensible agency
relationship might exist between Kniss and Stockman’s: the wire transfers, and
Semenza’s affidavit testifying to his own belief that Kniss worked for Stockman’s. This
is hardly sufficient to support a reasonable belief as to the existence of an ostensible
agency relationship.
¶25 In sum, we hold that Semenza failed to raise a genuine issue of material fact with
respect to the alleged agency relationship between Stockman’s and Kniss.
¶26 b. Are there any other grounds for exercising personal jurisdiction under M.
R. Civ. P. 4B(1)?
¶27 Having found that no agency relationship exists as a matter of law between Kniss
and Stockman’s, we conclude that there is little else in the record to support the exercise
of personal jurisdiction over Stockman’s in the present case. Stockman’s made two wire
transfers to Semenza, but was not a party to the contract for the sale of the cattle. We
have held that even where a party actually enters a contract with a resident of Montana,
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this fact alone does not subject him to the jurisdiction of our courts. Cimmaron, ¶ 14.
Stockman’s did reap a $10/head finance charge for bankrolling Kniss’s cattle deal with
Semenza. However, Kniss, not Stockman’s, negotiated the transaction with Semenza.
Under the facts of this case, we conclude that Stockman’s collection of $920 in fees does
not rise to the level of transacting business within the state. See e.g. Cimmaron, ¶¶ 13-16.
¶28 In sum, we conclude that there are no other grounds for personal jurisdiction under
M. R. Civ. P. 4B(1). As a result, we need not reach the second step of our personal
jurisdiction analysis. Cimmaron, ¶ 10. We conclude that Stockman’s is not subject to
the jurisdiction of Montana’s courts. The District Court did not err in granting
Stockman’s motion to dismiss for lack of jurisdiction. This conclusion moots the other
issues raised by Semenza on appeal, thus we need not reach them.
/S/ W. WILLIAM LEAPHART
We concur:
/S/ KARLA M. GRAY
/S/ PATRICIA COTTER
/S/ JIM RICE
Justice John Warner dissents.
¶29 I dissent. In my view, Semenza raises a genuine issue of material fact about
whether Kniss was acting as Stockman’s agent.
¶30 Summary judgment is appropriate only where there are no genuine issues of
material fact and the moving party is entitled to judgment as a matter of law. M. R. Civ.
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P. 56(c). When considering a motion for summary judgment, the evidence must be
viewed in the light most favorable to the nonmoving party and all reasonable inferences
are to be drawn in favor of the party opposing summary judgment. Our Lady of the
Rockies, Inc. v. Peterson, 2008 MT 110, ¶ 14, 342 Mont. 392, ¶ 14, 181 P.3d 631, ¶ 14
(citation omitted). In this instance the Court does not consider the evidence in the light
most favorable to the non-moving party, Semenza. Rather, it draws all inferences against
Semenza by substituting itself for a jury and finding as a matter of fact that the evidence
he presented is not reasonable.
¶31 The Court acknowledges that the record shows two separate acts by Stockman’s--
the two wire transfers that came directly from Stockman’s to Semenza, totaling $182,000.
These documents in the record clearly show that Semenza knew that the money to buy
his cattle was paid by Stockman’s. This gave him good reason to believe Kniss’
statements that he was buying the cattle for Stockman’s. Semenza’s allegation that these
statements were made must be accepted for purposes of summary judgment. Thus, in the
mind of a reasonable jury, these wire transfers could easily constitute the acts or
representations of the alleged principal, Stockman’s, that are required to create an
ostensible agency. See Bellanger, ¶ 20.
¶32 Stockyards generally are not in the business of nonchalantly wiring money around
the country. The fact that Stockman’s paid for the cattle is strong circumstantial evidence
that it was buying the cattle through an agent. A jury could easily find that the alleged
“loan” by Stockman’s to Kniss was in fact bogus, and Kniss was the actual agent of
Stockman’s. In the alternative, the wire transfers could reasonably be found to be
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careless acts that caused Semenza to believe Kniss to be Stockman’s agent, even if he
really was not. See § 28-10-103(1), MCA.
¶33 As the record would support a factual finding that Stockman’s was conducting its
cattle trading business in Montana, this case should not be dismissed for lack of personal
jurisdiction.
¶34 The Court inappropriately substitutes its judgment for that of a jury. Semenza has
the right to a trial. I respectfully dissent.
/S/ JOHN WARNER
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