Turner v. Tranakos

No. 87-74
IN THE SUPREME COURT OF THE STATE OF MONTANA
1987
ROBERT S. and BETTY J. TURNER,
Plaintiffs and Appellants.
ARTHUR P. TRANAKOS, and other
John Doe,
Defendants and Respondents.
APPEAL FROM: District Court of the Twelfth Judicial District,
In and for the County of Liberty,
The Honorable Chan Ettien, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Flaherty, Lord & Winner; Patrick Flaherty, Great Falls,
Montana
For Respondent:
Arthur P. Tranakos, pro set Atlanta, Georgia
Submitted on Briefs: Aug. 19, 1987
Decided: ~ovember3, 1987
Filed:
I
- /
Yk?,
Clerk
Mr. Justice L. C. Gulbrandson delivered! the Opinion of the
Court.
Robert and Betty Turner appeal a judgment of dismissal
made by the District Court of the Twelfth Judicial District.
The District Court found that it lacked in personam
jurisdiction over the defendant, Arthur Tranakos. We reverse
the decision of the District Court and remand for further
proceedings.
On December 8, 1986, Robert and Betty Turner instituted
this action against Arthur Tranakos in Liberty County
alleging legal malpractice, bad faith, breach of fiduciary
duty and fraud. The Turners made the following allegations
in their complaint:
1.0 Robert and Betty Turner are farmers
who live near Chester, Montana in Liberty
County, State of Montana and are second
and third generation farmers from
Montana.
1.1 Arthur P. Tranakos is an attorney at
law admitted to practice in the Courts of
Georgia, and who has actively solicited
business in the State of Montana.
Tranakos has traveled into the State of
Montana to solicit business and he has
also appeared as an attorney at law
before various Montana Courts although he
is not an admitted attorney in Montana.
2.0 Arthur Tranakos came to Montana on
his own and also under the sponsorship of
various life insurance companies in order
to solicit business for tax sheltered
investments and through estate planning.
2.1 It was in this capacity that he met
the Plaintiffs and represented that he
was well qualified to assist the Turners
in planning their estate and managing
their financial affairs. The Defendant
Arthur P. Tranakos specifically
represented that the highest confidence
in trust could be reposed in him and that
he would take care of the Plaintiff's
every financial need.
2.2 Acting in direct reliance upon the
representations and advice of Arthur P.
Tranakos, the Plaintiffs did put all of
their trust and faith in him as an
attorney, as an investment counselor, and
acting on his advice they transferred
their entire interest in their family
farm (which was worth in excess of
$500,000) to a corporation known as
SOLACO, INC., a Nevada Corporation, which
was owned entirely by Arthur P. Tranakos
as the sole shareholder of record.
2.3 Thereafter, the crisis hit the farm
economy through low prices and drought
and the major creditor of the Turners
commenced a foreclosure action in Liberty
County District Court, Cause No. 3010 in
which the Federal Land Bank of Spokane
sought to foreclose its security interest
in the family farm which was operated by
the Turners.
2.4 Arthur P. Tranakos, although not
admitted to practice in Montana, entered
an appearance as attorney of record for
the Turners in that matter and proceeded
to [mislrepresent the Turners. Arthur P.
Tranakos had a duty to obtain local
counsel to assist in the representation
of the Plaintiffs which duty is breached.
Arthur P. Tranakos had an additional duty
to render a competent and vigorous
defense including pleading of affirmative
defenses, filing compulsory counterclaims
and to appear at all court hearings.
2.5 Tranakos violated all of the
foregoing duties by not associating local
counsel, by not being sponsored in by
local counsel, by failing to raise the
proper affirmative defenses, file
compulsory counterclaims and finally by
not appearing at a summary judgment
hearing in which the Federal Land Bank
won its motion to foreclose by the
default of Arthur P. Tranakos and the
Turners are in immediate danger of losing
the family farm.
... [Addition theirs.]
A summons was issued on December 9, 1986, and Tranakos was
personally served in Atlanta, Georgia on December 16, 1986.
On January 8, 1987, the Turners moved for entry of default
judgment based on Tranakos' failure to file a response to the
complaint within twenty days. The Liberty County Clerk of
Court entered default judgment against Tranakos on January
12, 1987.
At the Turners' request, the District Court scheduled a
hearing for January 26, 1987, to determine damages due under
the default judgment. On January 20, 1987, Tranakos filed an
answer to the Turners' complaint wherein he alleged, among
other things, that the District Court lacked personal
jurisdiction over him. Tranakos' answer goes on to admit
that he "did appear on behalf of [the Turners] in their case
adverse the Federal Land Bank of Spokane, Case No. 3010, in
this Court."
The District Court refused to entertain any discussion
of damages at the January 26, 1987, hearing. Instead, the
District Court dismissed the case on the grounds that it
lacked personal jurisdiction over Tranakos. The District
Court also took judicial notice of Liberty County District
Court Cause No. 3010, entitled "The Federal Land Bank of
Spokane v. Robert S. and Betty J. Turner et al. " The
Turners appeal the District Court's dismissal of this action
and raise the following issues:
(1) Did the District Court err in dismissing Turners'
action for lack of personal jurisdiction when Turners'
complaint alleged that Tranakos acted and failed to act
within Montana in a manner constituting professional
malpractice?
(2) Did the District Court err in dismissing Turners'
action for lack of personal jurisdiction after that c o ~ r t
took judicial notice of Tranakos' appearance in the Federal
Land Bank's action to foreclose its mortgage on the Turners'
Montana property?
(3) Did the District Court err in dismissing Turners'
action for lack of personal jurisdiction when Turners'
verified complaint alleged that Tranakos conducted business
within the state?
Respondent Tranakos raises the following additional
issue:
(4) Is the record before this Court complete and
adequate for this Court's review of the District Court's
decision?
This Court must first address Tranakos' procedural
issue before addressing the merits of this appeal. Tranakos
asserts that under Rule 9, M.R.App.P., the Turners have not
properly perfected this appeal and, therefore, the appeal
must be dismissed. Tranakos' argument in this regard is that
the record on appeal must include the records of the Federal
Land Bank foreclosure action, Liberty County District Court
Cause No. 3010. However, the District Court took judicial
notice of the above-referenced action and this Court may do
the same.
Tranakos' appellate procedure argument is without
merit. Rule 202(c), M.R.Evid., provides the following:
A court may take judicial notice of the
law listed in parts 2-10 of Rule 202 (b)
or other law, whether requested or not.
The court may inform itself of any law in
such a manner as it may deem proper and
the court may call upon counsel to aid it
in obtaining such information.
Rule 202(b)(6), M.R.Evid., allows judicial notice to be taken
of the "[rlecords of any court of this state or of any court
of record of the United States or any court of record of any
state in the United States ... " Accordingly, this Court
takes judicial notice of Liberty County District Court Cause
No. 3010, and al-1 matters of record therein. This Court has
reviewed the record of Cause No. 3010, and finds that
Tranakos did appear as the Turners' attorney of record on at
least two occasions by filing an answer to the complaint and
by filing answers to interrogatories and requests for
admissions.
In an appeal of a motion to dismiss such as this, we
must take all well-pleaded allegations in the complaint as
being admitted and construe the complaint in a light most
favorable to the Turners. Willson v. Taylor (Mont. 1981),
634 P.2d 1180, 1182, 38 St.Rep. 1606, 1608. Tranakos does
not refute the facts alleged in the Turners' complaint and,
in his answer, he admits making appearances on the Turners'
behalf. Tranakos' defenses are that the District Court lacks
jurisdiction and the complaint fails to state a viable claim
for relief.
The Turners contend that Rule 4B (1)(a), (b) and (e),
M.R.Civ.P., apply to Tranakos' actions to subject him to the
jurisdiction of Montana courts. Rule 4B, in pertinent part,
provides as follows:
(1) Subject to jurisdiction. All
persons found within the state of Montana
are subject to the jurisdiction of the
courts of this state. In addition, any
person is subject to the jurisdiction of
the courts of this state as to any claim
for relief arising from the doing
personally, through an employee, or
through an agent, of any of the following
acts:
(a) the transaction of business within
this state;
(b) the commission of any act which
results in accrual within this state of a
tort action;
(e) entering into a contract for
services to be rendered or for materials
to be furnished in this state by such
person .. .
Tranakos is not "within the state of Montana" for general
jurisdictional purposes, but the Turners have alleged a tort
action which confers jurisdiction under subsection (b) of the
above statute. A claim for legal malpractice falls within
the definition of a "tort action" as set forth in subsection
(b) above. Yates v. Muir (Ill. 1985), 474 N.E.2d 934, 937.
Accordingly, we find the Turners' first issue with regard to
jurisdiction based on 1-egalmalpractice to be dispositive of
this appeal.
This Court applies a three part test for determining if
a Montana court may exercise long-arm jurisdiction over a
defendant whose activities are neither "substantial" nor
sufficiently "continuous and systematic" to invoke general
jurisdiction. Simmons v. State of Montana (Mont. 1983), 670
P.2d 1372, 1376, 40 St.Rep. 1650, 1652. These tests, as
articulated in Simmons, are as follows:
1. The non-resident defendant must do
some act or consummate some transaction
within the forum or perform some act by
which he purposefully avails himself of
the privilege of conducting activities in
the forum, thereby invoking its laws.
2. The claim must be one which arises
out of or results from the defendant's
forum-related activities.
3. Exercise of jurisdiction must be
reasonable.
Simmons, 670 P.2d at 1378, 40 St.Rep. at 1656 (citing Data
Disk, Inc. v. Systems Tech Assoc., Inc. (9th Cir. 19771, 557
F.2d 1280, 1287.) Applying the above-mentioned tests, we
first find that Tranakos "purposefully availed himself of the
privilege of" practicing law in the state of Montana by
representing the Turners in Liberty County District Court
Cause No. 3010. We further find that it is exactly those
acts of representing the Turners that are the basis of the
Turners' claims for relief in this matter. Taking the
Turners' allegations as true, as we must in a motion to
dismiss, sufficient grounds have been pled for a legal
malpractice action resulting from Tranakos' representation of
the Turners in Cause No. 3010.
Finally, our review of the record leads us to a
determination that the exercise of jurisdiction over Tranakos
is reasonable under the circumstances. Foremost in this
determination is Montana's interest in regulating the
practice of law within the state. It is imperative in this
case that an attorney, whether or not licensed to practice
law in Montana, not be allowed to escape the consequences of
in-state representation by residing in some other state. We
also note that only Tranakos is situated outside of Montana.
The Turners, their farm and Liberty County District Court
Cause No. 3010 all are situated in Montana. The burden and
inequities of requiring the Turners to prosecute this action
in Georgia would be greater than the burden of requiring
Tranakos to defend himself in Montana.
We find that Arthur P. Tranakos is personally subject
to the jurisdiction of the Montana courts for his alleged
legal malpractice and all reasonably related actions thereto.
Because of this finding we need not address the Turners'
remaining two issues. The decision of the District Court is
reversed and the cause is remanded for further proceedings.
'r
Reversed. ,)f
We concur: