Milky Whey, Inc. v. Dairy Partners, LLC

Milky Whey, Inc. v. Dairy Partners, LLC, 2015 MT 18 (Jan. 27, 2015) (Baker, J.; McGrath, C.J., dissenting) (5-2, aff’d)

Issue: (1) Whether seller’s notice of appearance was responsive pleading barring it from subsequently raising lack of personal jurisdiction; (2) whether Montana had personal jurisdiction over seller.

Short Answer: (1) No; and (2) no.

Affirmed

Facts: Milky Whey (MW) is registered Montana corporation based in Missoula, supplying food manufacturers with dairy commodities. Dairy Partners (DP) is a dairy supply company in Minnesota that sells products to brokers like MW. From 2010-2013, MW and DP completed nine purchase orders via phone, fax, or email. Most involved DP contacting MW in Montana.

On Jan. 23, 2013, DP prepaid $12,500 to buy 10,000 lbs. of a dairy product from DP. MW wired the money from Missoula to DP in Minnesota, and DP shipped the product to its warehouse in Salt Lake City on Jan. 21, 2013. When MW picked the product up on March 7, 2013, it discovered the product was moldy and unusable. The parties attempted to settle the issue amicably via email, but DP did not reimburse MW for the moldy product.

Procedural Posture & Holding: MW filed suit in Sept. 2013 and DP was served in Oct. 2013. DP filed a notice of appearance of counsel Oct. 30, 2013. Two weeks later, DP moved to dismiss for lack of personal jurisdiction. The district court granted the motion, MW appeals, and the Supreme Court affirms.

Reasoning: (1) MW relies on case law stating that “objection to lack of personal jurisdiction must be made at the time of initial appearance.” Spencer v. Ukra (1991); Spiker Commun., 1998 MT 32; El Dorado Heights Homeownes’ Assn., 2008 MT 199. Those cases involved substantive motions, not merely a notice of appearance. Spiker involved venue, and was based on a previous iteration of Rule 12(b).

DP moved to contest personal jurisdiction before filing a responsive pleading. A notice of appearance is not a pleading and does not acquiesce to the jurisdiction of the court unless joined with some other motion or responsive pleading.

(2) Because DP is not “found” in Montana, Montana does not have general jurisdiction over it. Additionally, no specific jurisdiction is conferred under the long-arm statute. The claim arises out of a transaction that took place outside of Montana. DP dealt with a Montana company, but did not reach into Montana nor avail itself of the privilege of doing business here. Prior cases suggest a non-resident must do something more than communicate or exchange purchase orders with a Montana resident for jurisdiction to be conferred as “transaction of business” under the long-arm statute.

Chief Justice McGrath’s Dissent (joined by Justice Wheat): The chief justice agrees that the notice of appearance did not waive DP’s jurisdictional defense, but contends Montana courts do have specific jurisdiction under the “transaction of business” element of the long-arm statute.