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Pummill v. Patterson

Supreme Court of Montana

November 5, 2019

ADAM PUMMILL, as an individual, and ADAM PUMMILL and KURTIS ROBERTSON, as members of Black Gold Enterprises, LLC, members of, and on behalf of, BLACK GOLD ENTERPRISES, LLC, Plaintiffs and Appellees,
v.
JOSHUA T. PATTERSON a/k/a JOSH PATTERSON, as an individual and d/b/a PATTERSON ENTERPRISES, INC., also d/b/a ROCKY MOUNTAIN EQUIPMENT, INC., p/k/a ROCKY MOUNTAIN JCB, INC., also d/b/a ROCKY MOUNTAIN RENTAL SPECIALISTS, LLC, also d/b/a ROCKY MOUNTAIN EQUIPMENT, also d/b/a ROCKY MOUNTAIN RENTAL, also d/b/a ROCKY MOUNTAIN EQUIPMENT OF MISSOULA MONTANA, Defendants and Appellants.

          Submitted on Briefs: August 28, 2019

          APPEAL FROM: District Court of the Fourth Judicial District, In and For the County of Missoula, Cause No. DV-18-1450 Honorable John W. Larson, Presiding Judge

          For Appellant Brian J. West, West Law Firm, P.C., Missoula, Montana

          For Appellee: James P. O'Brien, O'Brien Law Office, P.C., Missoula, Montana

          OPINION

          JAMES JEREMIAH SHEA, JUSTICE

         ¶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 Joshua T. Patterson, individually and in his official capacity as owner of various business entities, appeals from the Order of the Fourth Judicial District Court, Missoula County, appointing a receiver to operate Black Gold Enterprises, LLC, of which Patterson is a member. We affirm.

         ¶3 Black Gold Enterprises, LLC (BGE) is a limited liability company that primarily operates as a landlord, renting its real property to various commercial tenants. BGE was formed in March 2013 as a member-managed limited liability company with each member having an equal interest. Patterson and Appellees Adam Pummill and Kurtis Robertson are the only members of BGE.

         ¶4 Patterson is also the owner and operator of various business entities which are commercial tenants of BGE. These entities include Patterson Enterprises, Inc.; Rocky Mountain Equipment, Inc.; Rocky Mountain Rental Specialists, LLC; Devil Dog Firearms, LLC; Riley Auto, LLC; and Rocky Mountain JCB, Inc. No formal rental agreement has ever existed between these entities and BGE. Instead, Patterson paid amounts he deemed reasonable based on what his business entities could afford and the needs of BGE.

         ¶5 In 2018, Pummill and Robertson called several meetings of the BGE members to change certain procedures related to operating the business. The BGE members passed several resolutions over Patterson's objection; specifically, a resolution allowing BGE to retain legal counsel to execute rental agreements to ensure timely and consistent rental payments from all BGE tenants, including Patterson's business entities. At the time, Patterson's business entities owed BGE rent arrears of approximately $68, 719.55. Patterson ignored the resolution and refused to pay his business entities' past-due rent. Patterson also refused to enter into rental agreements on behalf of his business entities with BGE to establish payment terms for future rent.

         ¶6 BGE members also passed a resolution to sell certain BGE real property, but Patterson refused Pummill and Robertson access to the property to prepare it for sale. Patterson also failed to maintain the property while it was in his possession.

         ¶7 During this time, BGE struggled to pay its mortgage and other bills. At one point, BGE's checking account was overdrawn. BGE had to negotiate with its mortgage lender to avoid default.

         ¶8 On November 6, 2018, Pummill and Robertson filed derivative claims against Patterson, asserting that Patterson and his business entities' actions were harming BGE's business interests. Pummill and Robertson later filed a Motion for Preliminary Injunction and Appointment of Receiver. After a hearing, the District Court found Patterson harmed BGE by refusing to pay his business entities' past-due rent and refusing to enter into a written rental agreement with BGE to establish payment terms for future rent. The District Court granted the preliminary injunction and directed the appointment of a receiver to operate BGE. Patterson appeals the District Court's appointment of the receiver.

         ¶9 We review for an abuse of discretion a district court's appointment of a receiver, which is a provisional remedy imposed by a district court to preserve and manage property while litigation is pending. See Sandrock v. DeTienne, 2010 MT 237, ¶ 25, 358 Mont. 175, 243 P.3d 1123; Crowley v. Valley W. Water Co., 267 Mont. 144, 151, 882 P.2d 1022, 1026 (1994) (citing Stoner v. Hannan, 113 Mont. 210, 223, 127 P.2d 233, 236-37 (1942)). An abuse of discretion occurs when a district court "acts arbitrarily, without employment of conscientious judgment, or in excess of the bounds of reason resulting in substantial ...


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