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FITZPATRICK v. Western States Equipment Company (“Western States”), Defendant and Appellee. (2021)

Supreme Court of Montana.

Kole FITZPATRICK, d/b/a Fitzpatrick Trucking, Plaintiff and Appellant, v. TRAIL CREEK ENTERPRISES, LLC, Jason Subatch, and John Does 1-60, Defendants, and Western States Equipment Company (“Western States”), Defendant and Appellee.

DA 20-0237

Decided: February 09, 2021

For Appellant: Terryl T. Matt, Matt Law Office, P.L.L.C., Cut Bank, Montana For Appellee Western States Equipment Company: Kimberly S. More, Crowley Fleck PLLP, Billings, Montana, Nicole C. Hancock, Stoel Rives LLP, Boise, Idaho For Defendants Trail Creek Enterprises, LLC and Jason Subatch: Thane Johnson, Johnson, Berg & Saxby, PLLP, Kalispell, Montana

¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court Internal Operating Rules, this case is decided by memorandum opinion and 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 Kole Fitzpatrick, d/b/a Fitzpatrick Trucking (“Fitzpatrick”), appeals the Twentieth Judicial District Court's Order dismissing Defendant Western States Equipment Company (“Western States”) from its action for conversion and emotional distress pursuant to M. R. Civ. P. 12(b)(6). Fitzpatrick argues that the Complaint alleges facts sufficient to state a claim and that the District Court erroneously relied on Western States's characterization of the facts. We affirm.

¶3 Fitzpatrick owns a 2006 CAT Loader, subject to an installment agreement with First State Bank under which he still owes annual payments. Fitzpatrick leased the Loader to Blackfeet Housing for a two-month period, from October 1 to November 30, 2018. The lease provided in part that Fitzpatrick “shall be deemed to have retained title to the equipment at all times” and that Blackfeet Housing “shall maintain, at the Lessee's cost, the [Loader] in good repair and operating condition,” at its own expense.

¶4 In early November 2018, the Loader required repair. Blackfeet Housing staff delivered it to Western States in Kalispell to be repaired. Fitzpatrick's Complaint alleged that Defendant Jason Subatch was an employee or contractor of Blackfeet Housing at this time. He believed Subatch “may have done some work on [the Loader] at Blackfeet Housing” before being terminated by Blackfeet Housing sometime between November 2018 and April 2019. Fitzpatrick alleged that, “right before this termination or right after, Subatch went to [Western States] and had [Western States] put the invoice for the repair work in his name or Trails [sic] Creek's name,” and that Western States then released the Loader to Subatch. Blackfeet Housing attempted to pay the Western States invoice and pick up the Loader from Western States, but Western States declined payment. Fitzpatrick did not allege he contacted Western States. Subatch still possesses the Loader.

¶5 In July 2019, Fitzpatrick filed a Complaint against Defendants Western States, Subatch, Trail Creek Enterprises, LLC, and John Does 1-60. He alleged conversion and emotional distress against Western States; he also sought emotional distress damages and punitive damages. The Complaint alleged that Western States “illegally released the Loader to Subatch” and that it “knew or should have known the Loader did not belong to Subatch.” It further alleged that Fitzpatrick suffered “severe emotional distress” and “mental anguish” as a result of Western States's actions. The Complaint included as exhibits Fitzpatrick's lease with Blackfeet Housing, a demand letter from Fitzpatrick's attorney to Subatch's attorney, and Kole Fitzpatrick's Affidavit stating that he “did not give [Western States] permission to release [his] Loader to Jason Subatch.”

¶6 On February 13, 2020, on motion of Western States, the District Court dismissed it as a Defendant for failure to state a claim. The District Court entered final judgment as to Western States and certified for appeal its dismissal Order. Fitzpatrick filed a timely notice of appeal with this Court. Trail Creek Enterprises, LLC and Subatch moved to dismiss the appeal, arguing the District Court's Order was interlocutory; we denied the motion. See Fitzpatrick v. Trail Creek Enters., LLC, No. DA 20-0237, Order (Mont. June 9, 2020).

¶7 We review de novo a district court's ruling on a M. R. Civ. P. 12(b)(6) motion to dismiss. Cossitt v. Flathead Indus., Inc., 2018 MT 82, ¶ 7, 391 Mont. 156, 415 P.3d 486 (citation omitted). Such a motion should be granted only when, taking as true the well pleaded allegations of the complaint, “it appears beyond reasonable doubt that the plaintiff can prove no set of facts which would entitle him to relief.” Gebhardt v. D.A. Davidson & Co., 203 Mont. 384, 389, 661 P.2d 855, 858 (1983) (citation omitted).

¶8 Addressing Fitzpatrick's claim for conversion, the District Court concluded that Western States was “deal[ing] with a lessee who had the legal right to process the equipment and the obligation to have the equipment repaired.” The District Court further concluded, “[t]here [was] no allegation that Western States knew Mr. Subatch had been terminated from employment or had a duty to investigate the relationship between Mr. Subatch[,] his former employer[,] and the Plaintiff,” or “that the Plaintiff attempted to recover the equipment from Western States before [it] transferred the equipment to Mr. Subatch.” Fitzpatrick argues that the District Court improperly relied on Western States's version of the facts in coming to these conclusions. He contends that the Complaint alleged that “Blackfeet Housing staff” delivered the Loader to Western States, leading to an inference Western States knew the Loader was under the control of Blackfeet Housing, not Subatch.

¶9 Among the elements of conversion, a plaintiff must allege that the defendant converted his personal property by a “distinct act of dominion wrongfully exerted over one's property in denial of, or inconsistent with, the owner's right, or an unauthorized assumption of dominion over personal property in hostility to the right of the owner.” Kingman v. Weightman, 2017 MT 224, ¶ 12, 388 Mont. 481, 402 P.3d 1196 (internal quotations, citations omitted). “Demand and refusal of delivery gives rise to a cause of action for conversion or claim and delivery where the defendant came into possession of the property rightfully.” Interstate Mfg. Co. v. Interstate Prods. Co., 146 Mont. 449, 453, 408 P.2d 478, 481 (1965) (citing Hardie v. Peterson, 86 Mont. 150, 161, 282 P. 494, 499 (1929)).

¶10 We agree that Fitzpatrick's Complaint did not state facts sufficient to plead a conversion claim against Western States. The Complaint alleges that Western States lawfully came into possession of the Loader to repair it. The Complaint contains no allegation that Fitzpatrick demanded return of the Loader from Western States. The Complaint does not allege that Western States even had any knowledge of Fitzpatrick's interest or of the relationship between Fitzpatrick and Blackfeet Housing. The Complaint alleges only that Western States “knew or should have known the Loader did not belong to Subatch.” Western States could not have acted against Fitzpatrick's interest by releasing the Loader to the party it originally contracted with to perform the repairs. Whether Subatch was that party, or whether Western States knew Subatch was or was not employed by Blackfeet Housing, is irrelevant. Fitzpatrick admittedly made demand only on Subatch for the Loader's return. Western States's lack of notice of Fitzpatrick's interest in the Loader or pursuit of its return defeats his claim that Western States exerted “an unauthorized assumption of dominion” over it hostile to Fitzpatrick's right. Kingman, ¶12.

¶11 Fitzpatrick argues that demand was not necessary here because there was “an independent act of conversion through assertion of title or exercise of dominion inconsistent with the rights of [the] plaintiff.” Foster v. First Nat'l Bank of Missoula, 139 Mont. 396, 401, 365 P.2d 938, 941 (1961) (emphasis, citations omitted). In Foster, however, the independent act of conversion occurred when defendant bank released the plaintiff's secured property to a third party after the third party paid the arrears, even though the bank knew the third party had made payment on the plaintiff's behalf. Foster, 139 Mont. at 399-400, 365 P.2d at 940. The Court found these actions to satisfy the “affirmative act of conversion” necessary to obviate the demand requirement. Foster, 139 Mont. at 402-03, 365 P.2d at 941-42. We find no similar “independent” and “affirmative” act in the allegations of Fitzpatrick's complaint. Western States did not require Fitzpatrick's “permission” to release the Loader when it had not contracted with Fitzpatrick and had no knowledge of Fitzpatrick's interest.

¶12 Fitzpatrick next argues that his claim for emotional distress should have survived the motion to dismiss, noting that the District Court did not address this claim at all in its Order. Because Fitzpatrick's conversion claim fails, his parasitic claim for emotional distress similarly fails. Sacco v. High Country Indep. Press, Inc., 271 Mont. 209, 221, 896 P.2d 411, 418 (1995) (observing that parasitic damages for emotional distress require “a host cause of action”). Fitzpatrick contends, however, that the Complaint pleaded facts sufficient to support a stand-alone claim for emotional distress. Citing Jacobsen v. Allstate Insurance Company, 2009 MT 248, ¶ 62, 351 Mont. 464, 215 P.3d 649, he argues that emotional distress requires a heightened standard of proof, not heightened pleading requirements, and that until he had an opportunity to present evidence the District Court could not determine whether his distress met the requisite standards for emotional distress. We disagree.

¶13 An independent claim for emotional distress arises “under circumstances where serious or severe emotional distress to the plaintiff was the reasonably foreseeable consequence of the defendant's negligent act or omission.” Sacco, 271 Mont. at 232, 896 P.2d at 425. Serious or severe emotional distress must be “reasonable and justified under the circumstances” and “includes all highly unpleasant mental reactions” that are “extreme” and “so severe that no reasonable person could be expected to endure it.” Sacco, 271 Mont. at 234, 896 P.2d at 426 (citation omitted). “Although we construe pleadings liberally, ․ [l]iberality does not go so far as to excuse omission of that which is material and necessary in order to entitle relief.” Jones v. Mont. Univ. Sys., 2007 MT 82, ¶ 42, 337 Mont. 1, 155 P.3d 1247 (citation omitted). An independent emotional distress claim, particularly for loss of or damage to property, requires more than a mere allegation of the basic standards of the claim. See Sacco, 271 Mont at 237, 896 P.2d at 428 (noting that the “serious and severe” standard “alleviates any concern over a floodgate of claims”); see also, e.g., Puryer v. HSBC Bank USA, N.A., 2018 MT 124, ¶ 39, 391 Mont. 361, 419 P.3d 105 (finding insufficient allegations that the plaintiff “live[d] in fear and suffer[ed] serious or severe emotional distress to the extent that it has affected Plaintiff's health”). Fitzpatrick's stand-alone claim as pled is insufficient to support a claim for distress “no reasonable person could be expected to endure” for the alleged “illegal taking and use” of his personal property. The District Court thus properly dismissed Fitzpatrick's emotional distress claim.

¶14 Finally, because Fitzpatrick's claims for conversion and emotional distress fail, his claim for punitive damages also fails. See § 27-1-220(1), MCA (allowing punitive damages only “in addition to compensatory damages”); Feller v. First Interstate Bancsystem, Inc., 2013 MT 90, ¶ 31, 369 Mont. 444, 299 P.3d 338 (citations omitted) (“It is axiomatic that one cannot recover punitive damages in a cause of action unless she first recovers compensatory damages.”).

¶15 We have determined to decide this case pursuant to Section I, Paragraph 3(c) of our Internal Operating Rules, which provides for memorandum opinions. In the opinion of the Court, the case presents a question controlled by settled law or by the clear application of applicable standards of review. The Complaint failed to state facts sufficient to satisfy claims for conversion or emotional distress as to Western States. We affirm the District Court's dismissal of Western States for failure to state a claim.

Justice Beth Baker delivered the Opinion of the Court.


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FITZPATRICK v. Western States Equipment Company (“Western States”), Defendant and Appellee. (2021)

Docket No: DA 20-0237

Decided: February 09, 2021

Court: Supreme Court of Montana.

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