Gateway Hospitality Grp. Inc. v. Phila. Indem. Ins. Co.

400 Mont. 80

464 P.3d 44

2020 MT 125

GATEWAY HOSPITALITY GROUP INC., Western Hospitality Group, LP, d/b/a Hilton Garden Inn Missoula ; Kalispell Hotel, LLC, d/b/a Hilton Garden Inn Kalispell ; Bozeman Lodging Investors, LLC, d/b/a Hilton Garden Inn Bozeman ; JWT Hospitality Group, LLC, d/b/a Hilton Garden Inn Billings, and John Does 1-5, Plaintiffs and Appellees,

v.PHILADELPHIA INDEMNITY INSURANCE COMPANY, Defendant and Appellant.

DA 19-0502

Supreme Court of Montana.

Submitted on Briefs: March 4, 2020

Decided: May 19, 2020

For Appellant: Thomas A. Marra, Marra, Evenson & Levine, P.C., Great Falls, Montana

For Appellees: Dale R. Cockrell, Jay T. Johnson, Moore, Cockrell, Goicoechea & Johnson, P.C., Kalispell, Montana, Jory C. Ruggiero, Domenic Cossi, Western Justice Associates, PLLC, Bozeman, Montana

Justice Jim Rice delivered the Opinion and Order of the Court.

¶1 Philadelphia Indemnity Insurance Company (Philadelphia) appeals from the denial of its motion to dismiss for lack of personal jurisdiction, pursuant to M. R. Civ. P. 12(b)(2), by the Fourth Judicial District Court, Missoula County.

¶2 As argued by Gateway Hospitality Group (Gateway), and the other named Plaintiffs (Entities) (collectively, Plaintiffs or Appellees), a district court's denial of a motion to dismiss for lack of personal jurisdiction is not an appealable order. See M. R. App. P. 6(3)(a)-(k), 6(5)(b). Therefore, we must first determine whether this matter is presently reviewable by this Court. Although the parties contest the appealability of the ruling, both sides ultimately take the position that, alternatively, this Court could undertake consideration of the District Court's denial of Philadelphia's motion to dismiss by deeming this matter to be a request for a writ of supervisory control under M. R. App. P. 14, a procedural issue we initially take up.

¶3 This Court may exercise supervisory control over cases pursuant to the authority granted by Article VII, Section 2(2) of the Montana Constitution and Rule 14(3) of the Montana Rules of Appellate Procedure. See Inter-Fluve v. Mont. Eighteenth Judicial Dist. Ct. , 2005 MT 103, ¶ 17, 327 Mont. 14, 112 P.3d 258 (citing Evans v. Mont. Eleventh Judicial Dist. Ct. , 2000 MT 38, ¶ 16, 298 Mont. 279, 995 P. 2d 455 ); Ford Motor Co. v. Mont. Eighth Judicial Dist. Ct. , 2019 MT 115, ¶ 5, 395 Mont. 478, 443 P.3d 407. The Rule provides:

The supreme court has supervisory control over all other courts and may, on a case-by-case basis, supervise another court by way of a writ of supervisory control. Supervisory control is an extraordinary remedy and is sometimes justified when urgency or emergency factors exist making the normal appeal process inadequate, when the case involves purely legal questions, and when one or more of the following circumstances exist:

(a) The other court is proceeding under a mistake of law and is causing a gross injustice;

(b) Constitutional issues of state-wide importance are involved;

(c) The other court has granted or denied a motion for substitution of a judge in a criminal case.

The Court may invoke its power of supervisory control over a matter brought before the Court by direct appeal. See, e.g. , State v. Spady , 2015 MT 218, ¶ 11, 380 Mont. 179, 354 P.3d 590. "In determining the propriety of supervisory control for a particular case, we are mindful that it is an extraordinary remedy. Consequently, we have followed the practice of proceeding on a case-by-case basis[.]" Inter-Fluve , ¶ 17 (citing Preston v. Mont. Eighteenth Judicial Dist. Ct. , 282 Mont. 200, 204, 936 P.2d 814, 816 (1997) ).

¶4 In Ford Motor Co. , ¶ 7, we reasoned that urgency can render the appeal process inadequate for some cases involving personal jurisdiction, "because the District Court must have power over the parties in a proceeding to afford adequate relief." Several entities operating hotels across the State are parties in this litigation with an out-of-state insurer. An error in the determination of personal jurisdiction could result in the later nullification of extensive litigation efforts affecting many individuals statewide. Our review concludes that the issues in this matter are purely legal. Further, as stated by the Rule, a constitutional issue is at the center of this dispute, that being Philadelphia's due process rights under the Fourteenth Amendment to the United States Constitution. Finally, resolution will serve to further clarify when Montana insureds "may appropriately file suit in Montana courts" against their insurers. Ford Motor Co. , ¶ 7.

¶5 For reasons similar to those expressed in Ford Motor Co. , we conclude this case has distinctives involving a constitutional issue of state-wide importance and impact that qualifies and merits review pursuant to the Court's constitutional power of supervisory control. Therefore, we accept supervisory control over this matter, and affirm the District Court's ruling. We restate the issues as follows:

1. Did the District Court deny due process to Philadelphia by failing to hold an evidentiary hearing?

2. Did the District Court err by holding Montana had specific personal jurisdiction over Philadelphia under Montana's long arm statute and the Due Process Clause of the Fourteenth Amendment to the United States Constitution?¹

FACTUAL AND PROCEDURAL BACKGROUND

¶6 Gateway is an Ohio corporation, with its principal place of business in Twinsburg, Ohio. Gateway's business is managing hotels, and it provided hotel management services, including food and beverage management, for the hotel Entities named in this action at the time the subject policy was procured, including: Western Hospitality Group, LP d/b/a Hilton Garden Inn Missoula; Kalispell Hotel, LLC d/b/a/ Hilton Garden Inn Kalispell; Bozeman Lodging Investors, LLC d/b/a Hilton Garden Inn Bozeman; and JWT Hospitality Group, LLC d/b/a Hilton Garden Inn Billings. Each of the Entities is organized under the laws of the State of Montana, and their principal places of business are in Montana. Gateway had the exclusive authority and duty to direct, supervise, manage, and operate the Entities’ hotels on a day-to-day basis. Gateway's responsibilities included hiring, paying, and supervising all personnel for the hotels, including food and beverage banquet server-employees. Philadelphia is a Pennsylvania corporation, with its principal place of business in Philadelphia, Pennsylvania.

¶7 Pursuant to its contractual obligation to manage the Entities, Gateway applied in June of 2014 for an insurance policy from Philadelphia (the Policy), to insure both itself and the Entities. On the application, Gateway named itself as the applicant with its principal location in Twinsburg, Ohio, and its nature of business as "hotel and restaurant management and development co." In response to a question asking, "[i]s the Applicant Firm controlled, owned, affiliated or associated with any other firm, corporation or company[,]" Gateway checked the box next to "[y]es." The next question on the application asked Gateway to "list the address(es) of all branch offices and/or subsidiaries. Include a brief description of their operations and indicate if coverage is desired for these offices." In response, Gateway answered "see attached sheets" in all capital letters. On an attached sheet labeled "Equity in Companies," Gateway listed: Western Hospitality group, noting it operated the Hilton Garden Inn in Missoula, Montana; Kalispell Hotel, LLC, noting it operated the Hilton Garden Inn in Kalispell; and JWT Hospitality Group Billings, LLC, noting it operated the Hilton Garden Inn in Billings, Montana. Likewise, Gateway listed under "other entities with no equity:" Bozeman Lodging Investors, LLC, operating the Hilton Garden Inn in Bozeman; Oak Street Partnership, operating the Comfort Inn in Bozeman; and Catron Partners LLC, operating Comfort Suites in Bozeman. On the next attached sheet, Gateway listed its operating hotels and restaurants, and included: Hilton Garden Inn in Missoula, Montana; Hilton Garden Inn in Kalispell, Montana; and Hilton Garden Inn in Billings, Montana. It also listed JWT Hospitality Group Billings LLC, Kalispell Hotel LLC, and Western Hospitality Group LP in a column titled "subsidiaries." The Policy states:

In consideration of the payment of the premium and in reliance upon all statements and information furnished to us including all the statements made in the application form, its attachments and the material incorporated therein, which are incorporated herein and deemed to be part of this policy , we agree as follows: .... [ (Emphasis added.) ]

¶8 The Policy territory extends "to any wrongful act committed anywhere in the world." Under the Policy's definitions, "named entity" means "the proprietor, firm, or organization specified in Item 1 of the Declarations." Gateway is the named entity on the Declarations page. Additionally, under the Policy, "insured" means "the named entity; any subsidiary; and any independent contractor acting on your behalf; any individual insured." Finally, "Subsidiary" is defined as:

A corporation or other entity of which the named entity owns on or before the inception of the policy period more than 50% of the issued outstanding voting stock either directly, or indirectly through one or more of its subsidiaries or the right to elect, appoint or designate more than 50% of such entity's board of directors, trustees, or managers and which is set forth in the application or, if the entity is a limited partnership, the named entity or one of its subsidiaries must serve as the general partner[.]

¶9 The Policy contains an arbitration endorsement, which states, "[i]f we and the insured do not agree whether coverage is provided under this Coverage Part for a claim made against the insured, then either party may make a written demand for arbitration." It also provides, "[u]nless both parties agree otherwise, arbitration will take place in the county in which the address shown in the Declarations is...