CANDACE FRIESEN, Individually and as Representative of the Estate of Ladell Friesen and as Next Friend of her Minor Daughter Abigail Ladell Friesen; Plaintiff,
ACE DORAN HAULING & RIGGING, INC.; and DOES 1-25, Defendants.
DANA L. CHRISTENSEN, Chief District Judge.
This order resolves three interrelated motions in this case: (1) Defendants Ace Doran Brokerage Co., Dan Hamm Leasing Company, and ADCO Realty, Inc.'s ("Movants") motion to dismiss for lack of personal jurisdiction (Doc. 57.); (2) Plaintiff's motion for leave to file fourth amended complaint (Doc. 106); and (3) Plaintiff's request for a status conference (Doc. 109).
For the reasons articulated below, Movants' motion to dismiss for lack of personal jurisdiction will be granted in part and denied in part, Plaintiff's motion for leave to file her fourth amended complaint will be granted, and Plaintiff's request for a status conference will be granted.
This matter arises out of a motor vehicle accident that occurred on U.S. Route 2 in Montana on or about February 22, 2011. Ladell Friesen died as a result of that accident. At the time of his death, Ladell Friesen was married to Candace Friesen, who was also in the vehicle, and who was pregnant with their only child, Abigail Friesen. Candace Friesen is the personal representative of Ladell Friesen's estate.
In her third amended complaint, Plaintiff brought claims against a multitude of defendants. The Court dismissed many of these Defendants pursuant to Plaintiff's motions. Currently, Ace Doran Hauling & Rigging Co. ("Ace Doran"), Ace Doran Brokerage Co., Daniel Hamm Leasing Company, and ADCO Realty, Inc. remain as Defendants. Ace Doran faces claims of negligence; negligence per se; gross negligence; and negligent hiring, supervision, and retention. Plaintiff's tenth cause of action alleges joint enterprise, alter ego, and joint and several liability against all four remaining Defendants. On June 5, 2013, Movants filed a motion to dismiss for lack of personal jurisdiction, which Plaintiff opposes.
On September 4, 2013, Plaintiff filed a stipulated request for settlement conference. (Doc. 88.) On September 9, 2013, the Court issued an order referring the case to United States Magistrate Judge Jeremiah Lynch to conduct a settlement conference. (Doc. 92.) Judge Lynch issued an order scheduling a telephonic conference to be held on September 11, 2013. During the September 11 telephonic conference, Judge Lynch set a settlement conference for October 3, 2013. On or about September 17, 2013, Bennett Motor Express, LLC, "the largest of seven operating companies within... Bennett International Group, LLC, " (Doc. 107-1 at 1), issued a public announcement that it had completed the asset purchase of Ace Doran. Plaintiff brought the new information regarding the asset sale to the Court's attention by asking Judge Lynch to cancel the settlement conference scheduled for October 3, 2013, which he did. On October 4, 2013, Plaintiff filed a motion for leave to file fourth amended complaint (Doc. 106), and a brief to support the motion (Doc. 107). Plaintiff states, "discovery for the purposes of fully understanding the asset sale to Ace Doran LLC and Bennett Motor Express, LLC and compliance with the Federal or Montana Fraudulent Transfer Ace will be incomplete without Ace Doran LLC, Bennett Motor Express, LLC or its owner Bennett International Group, LLC in this case." (Doc. 107 at 6). Ace Doran opposes Plaintiff's motion. (Doc. 112.) On October 8, 2013, Plaintiff filed a request for status conference to discuss developments arising out of Ace Doran's asset sale. (Doc. 109.)
II. DEFENDANTS' MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION
The Court's jurisdiction over this matter is based on diversity of citizenship under 28 U.S.C. § 1332. In an action based on diversity, the state and federal jurisdictional limits are coextensive. Congoleum Corp. v. DLW Aktiengesellschaft, 729 F.2d 1240, 1241 (9th Cir 1984). Plaintiffs bear the burden of proving that the court has personal jurisdiction. Shute v. Carnival Cruise Lines, 897 F.2d 377, 379 (9th Cir. 1990). Where, as here, the court "decides the jurisdictional issue based on affidavits and written discovery materials, Plaintiffs only need to make a prima facie showing of jurisdiction to defeat the motion to dismiss." Allan G. Holmes, Inc. v. Mraz, 2006 WL 2506044 at *2 (D. Mont.) (citing Lake v. Lake, 817 F.2d 1416, 1420 (9th Cir. 1987)). "Plaintiffs' uncontroverted factual allegations are presumed to be true, and factual conflicts are resolved in Plaintiffs' favor." Id. (citing Harris Rutsky & Co. Ins. Serv. Inc. v. Bell & Clements, Ltd., 328 F.3d 1122, 1129 (9th Cir. 2003)).
In order to establish this Court's jurisdiction, Plaintiff must show that each of the nonresident defendants fall within the scope of Montana's long arm statute, Rule 4B, M.R.Civ.P., and that exercise of personal jurisdiction meets the federal constitutional principles of due process. Haisten v. Grass Valley Medical Reimbursement Fund, 784 F.2d 1392, 1396 (9th Cir. 1986). Despite the Defendants' assertion to the contrary (Doc. 84 at 5), the "Montana Supreme Court has interpreted Rule 4B as permitting the exercise of personal jurisdiction to the maximum extent permitted by federal due process." Holmes, 2006 WL 2506044 at *2 (citing Davis v. American Family Mutual Ins. Co., 861 F.2d 1159, 1161 (9th Cir. 1988) ("The Montana Supreme Court has interpreted the Montana long-arm statute to permit the exercise of personal jurisdiction over nonresident defendants to the maximum extent permitted by due process")) See also, Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 839 (9th Cir. 1986) ("The Montana Supreme Court... supported its conclusion by noting a prevailing trend toward expanding the permissible scope of state jurisdiction over the person of nonresident defendants, ' and by noting that the assertion of jurisdiction complied with federal due process" (quoting Prentice Lumber Co. v. Spahn, 474 P.2d 141, 145 (Mont. 1970))); State of North Dakota v. Newberger, 613 P.2d 1002, 1004 (Mont. 1980) (The court states, "We have also recognized that there is a prevailing trend toward expanding the permissible scope of state jurisdiction to the fullest extent possible, " and proceeds to apply federal due process "minimum contacts" analysis alone to determine that the Montana district court had jurisdiction over the Appellant). Although Montana's long arm statute (Rule 4(b), M.R.Civ.P) has been amended since the rulings in some of the above-cited cases, those amendments in no way affect the precedent established by these cases that Montana's long arm statute is coextensive with the limitations of federal due process. "Where the state and federal limits are coextensive, the jurisdictional analyses under state law and federal due process are the same." Holms, 2006 WL 2506044 at *2 (citing Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998)).
Due process requires "that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Specific personal jurisdiction "exists when a defendant has sufficient minimum contacts with the forum state to warrant the exercise of jurisdiction." Holms, 2006 WL 2506044 at *3. Movants argue that this Court does not have specific personal jurisdiction because they have no direct contact with the State of Montana, including the types of contacts enumerated in Montana's long arm statute (Rule 4(b)(1), M.R.Civ.P.), and because the Plaintiff has not satisfied the three prong due process analysis that the Ninth Circuit established in Data Disc, Inc. v. Sys. Tech. Assocs. Inc., 557 F.2d 1280, 1287 (9th Cir. 1977).
It is undisputed that: (1) the Movants do not conduct substantial or systematic and continuous activities in Montana, nor have any direct contact with the state; and (2) that Ace Doran does not contest personal jurisdiction. Plaintiff's argument is that for the purposes of personal jurisdiction, Ace Doran's undisputed contacts with the State of Montana should be imputed to the Movants using the "alter ego" and/or "agency" exception to the well-established rule that a parentsubsidiary relationship alone is insufficient to attribute the contacts of the subsidiary to the parents for jurisdictional purposes, Harris Rutsky, 328 F.3d 1134-35 (9th Cir. 2003). Since the alter ego exception is dispositive of the motion to dismiss, the Court will limit its analysis to that exception, and will not reach the agency exception.
"To satisfy the alter ego exception to the general rule that a subsidiary and the parent are separate entities, the plaintiff must make out a prima facie case (1) that there is such unity of interest and ownership that the separate personalities of the two entities no longer exist, and (2) that failure to disregard their separate identities would result in fraud or injustice." Id. at 1134 (citing Doe, I v. Unocal Corp., 248 F.3d 915, 922 (9th Cir 2001)) (internal quotations omitted). "The plaintiff must show that the parent exercises such control over the subsidiary so as to render the latter the mere instrumentality of the former." Id. at 1135.
Movants raise two threshold issues on the applicability of the alter ego exception to the instant case that must be resolved if the Court is to reach Plaintiff's argument that the ...