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McAtee v. Whitefish Credit Union

Supreme Court of Montana

November 7, 2017

DEANNA H. McATEE, Plaintiff and Appellant,
v.
WHITEFISH CREDIT UNION; and MORRISON AND FRAMPTON, PLLP, Defendants and Appellees.

          Submitted on Briefs: August 23, 2017

         APPEAL FROM: District Court of the Eleventh Judicial District, In and For the County of Flathead, Cause No. DV-14-1017D Honorable David M. Ortley, Presiding Judge

          For Appellant: Mark M. Kovacich, Ben A. Snipes, Kovacich Snipes, P.C., Great Falls, Montana Michael J. McKeon, Jr., McKeon Law, PLLC, Butte, Montana

          For Appellee Whitefish Credit Union: Scott D. Hagel, Crowley Fleck PLLP, Kalispell, Montana

          For Appellee Morrison & Frampton, PLLP: Brian J. Smith, Tessa A. Keller, Garlington, Lohn & Robinson, PLLP, Missoula, Montana

          MICHAEL E WHEAT JUDGE

         ¶1 This appeal comes from the District Court's grant of a motion to dismiss finding McAtee's amended complaint constituted improper serial litigation.

         ¶2 We restate the issue on appeal as follows:

Did the District Court err in granting defendants' motion to dismiss McAtee's amended complaint when it found that the action constituted improper serial litigation pursuant to § 3-1-502, MCA?

         FACTUAL AND PROCEDURAL BACKGROUND

         ¶3 McAtee is the owner of The Mortgage Source (TMS), a mortgage company that brokered loans under a line of credit with Whitefish Credit Union (WCU). McAtee brokered a construction loan, which the borrowers defaulted on in 2008. McAtee was included on the loan as a personal guarantor, and TMS held a trust indenture on the property and assigned its interest in the trust indenture to WCU. The assignment was not recorded. Subsequently, WCU, through its attorneys, Morrison and Frampton, PLLP (M&F), filed suit against TMS to foreclose on the defaulted loan. WCU alleged that when the borrowers defaulted, the construction was unfinished; McAtee then borrowed money from a friend to finish it, and put his interest as first priority secured mortgage. WCU alleged McAtee pledged WCU's collateral rather than TMS's collateral as security for the mortgage to the new lender, leaving WCU with an unsecured loan. WCU alleged fraud in the foreclosure by McAtee. These allegations led to criminal fraud charges against McAtee. The District Court determined that the new lender was a bona fide purchaser for value, so WCU no longer had a secured interest. Ultimately, both the criminal and civil fraud claims were dismissed. WCU alleges it dismissed all of its claims against McAtee when she went through bankruptcy.

         ¶4 In September 2014, prior to the resolution of these claims, McAtee filed a motion for leave to amend her answer in the WCU foreclosure case to add M&F as a party to the action and to assert claims for malicious prosecution and abuse of process. In December 2014, the District Court denied McAtee's motion to amend her answer in the WCU complaint, reasoning the parties had been litigating for over three years, sufficient time for McAtee to "clarify and solidify" her allegations.

         ¶5 McAtee filed the instant case, as a separate action against WCU and M&F, for abuse of process and malicious prosecution. On January 30, 2015, McAtee amended this complaint. On March 5, 2015, WCU and M&F filed a M. R. Civ. P. 12(b)(6) motion to dismiss; the defendants included considerable materials from the underlying foreclosure case and requested the judge to convert the motions to motions for summary judgment if necessary. On December 20, 2016, the District Court granted the M. R. Civ. P. 12(b)(6) motion to dismiss the McAtee complaint with prejudice, concluding that "the filing of this cause of action constitutes improper serial litigation of a claim, " that the suit is based upon the same facts and transactions as those alleged in the foreclosure litigation, and that it is therefore impermissible under § 3-1-502, MCA. McAtee appeals.

         STANDARD ...


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