PF2 Leasing, LLC v. Galipeau

Submitted on Briefs: September 22, 2021

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: Dustin M. Chouinard, Markette & Chouinard, P.C., Hamilton, Montana.

For Appellee: Donald C. St. Peter, Michael O'Brien, Logan Nutzman, St. Peter Law Offices, P.C., Missoula, Montana.

OPINION

Laurie McKinnon Justice.

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¶1 PF2 Leasing, LLC, (PF2) appeals from the Special Master's Determination in the Fourth Judicial District Court, Missoula County, that resolved a dispute between PF2 and Jim Galipeau, Receiver for Black Gold Enterprises, LLC, (Black Gold). We affirm in part and reverse in part.

¶2 We restate the issues on appeal as follows:

1. Did the Special Master exceed the scope of his authority by applying the theory of judicial immunity to the Receiver's possession and release of PF2's equipment?

2. Did the Special Master err in concluding that the Receiver shares the District Court's immunity from liability?

3. Did the Special Master exceed the scope of his authority when he concluded that the Receiver acted in good faith and within his court-appointed authority in taking and retaining possession of PF2's property?

FACTUAL AND PROCEDURAL BACKGROUND

¶3 Black Gold rents real property to commercial tenants. It was formed as a member-managed limited liability company (LLC), with its members- Joshua T. Patterson, Adam Pummill, and Kurtis Robertson-each having an equal interest. In addition to being one of the LLC members, Patterson also owned and operated several businesses that were Black Gold's tenants. Patterson became involved in a dispute with Pummill and Robertson over the tenancies, culminating in the litigation that underlies the matter on appeal.

¶4 On August 22, 2019, the District Court granted Pummill and Robertson's motion for the appointment of a receiver for Black Gold. The court appointed Galipeau, granting

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him the powers enumerated in § 27-20-302, MCA^[1], and ordering him to "marshal, preserve, protect, maintain, manage and safeguard the Assets of Black Gold Enterprises, LLC in a reasonable, prudent, diligent, and efficient manner."^[2] Galipeau filed his Oath of Receivership on September 9, 2019.

¶5 On March 13, 2020, the District Court ordered Patterson and his businesses to vacate the Black Gold premises immediately. The next day, and without further notice, Galipeau changed the locks on the building.

¶6 On April 29, 2020, Galipeau moved the District Court for an order adopting a process to allow third parties to reclaim personal property that remained within Black Gold's building. Galipeau wanted to ensure that the property was returned to the rightful owner and "to limit the potential liability to the Receiver in regards to this property[.]" This motion was apparently spurred by a letter Galipeau received from PF2's counsel on April 24, 2020, that demanded release of personal property located within Black Gold's building that allegedly belonged to PF2, an LLC owned by Mark and Reid Fournier. Galipeau informed the court that he had received a copy of an Agreement for Sale and Purchase reflecting a sale of this property from Patterson to Mark Fournier, but no evidence that the sale had been completed, that the sale was undertaken at arm's

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length, or that PF2 currently had title to the property. Thus Galipeau asked the court to require PF2 to provide copies of cancelled checks for the purchase price of the property, along with bills of sale, proof of ownership, and copies of any leases existing between PF2 and Patterson or any of Patterson's business entities.

¶7 On May 13, 2020, Patterson responded to Galipeau's motion, asserting that Galipeau inappropriately refused to release personal property to third parties unless the parties agreed that he be held harmless. Patterson argued Galipeau had no legal justification for refusing to return property to third parties and no basis to condition the return of property on the execution of a hold-harmless agreement.

¶8 In reply, Galipeau argued that he became an involuntary bailee of the personal property when he took possession of Black Gold's premises. Galipeau asserted that when he took possession, he did not know who owned the property at issue, he was not obligated to return it until the owner made a demand, and once a demand was made he had "some obligation" to ascertain the rightful owner. Galipeau further asserted that PF2's demand, through its attorney, was accompanied by a Verified Complaint alleging conversion by the Receiver. Galipeau, through counsel, then requested that PF2 provide verification of its ownership, but PF2 instead provided evidence that the property was owned by Mark Fournier personally. Galipeau considered this a potential competing claim of ownership and he requested further documentation. After PF2 provided additional documentation, Galipeau agreed to release the property to PF2 contingent upon PF2 signing a release of liability, which PF2 refused to do. Galipeau acknowledged that he still possessed the disputed property as he and PF2 had reached an impasse. He argued that a

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release was necessary to protect him from claims beyond the scope of liability as an involuntary bailee.

¶9 On May 18, 2020, PF2 moved to intervene in Cause No. DV-18-1450 for the limited purpose of seeking an order requiring Galipeau to return PF2's personal property. PF2 then filed an amended motion to intervene on May 20, 2020.

¶10 On September 18, 2020, the District Court granted PF2's motion to intervene for the limited purpose of seeking an order requiring Galipeau to return PF2's property. The court further filed PF2's Motion and Brief for Order to Return Property, which PF2 had attached to its amended motion to intervene. In its combined motion and brief, PF2 argued for the immediate return of its property in Galipeau's possession "without condition."

¶11 In response to PF2's motion for return of property, Galipeau asserted, "The Receiver has received sufficient documentation from PF2 to determine that PF2 and/or Mark Fournier have a claim of ownership which allows the Receiver to release the subject property to them subject to an indemnification from PF2 and Mark Fournier." Galipeau further asserted, "[T]he sole impediment to the Receiver allowing PF2 to remove personal property from the Black Gold property has been PF2 and Mark Fournier's refusal to release the Receiver from the claims set forth in the verified complaint it delivered to the Receiver." Galipeau argued that it was reasonable for him to request a release because PF2 had threatened him with litigation. In reply, PF2 asserted that Galipeau had offered no legal authority to support his refusal to return PF2's property only on the condition that PF2 release him from liability.

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¶12 After briefing was completed, Galipeau requested a hearing on both his Motion for Order Adopting Receiver's Process and PF2's Motion and Brief for Order to Return Property. PF2 objected to the need for hearing on the motions.

¶13 On October 27, 2020, the District Court denied Galipeau's request for a hearing on the motions. In its Order Denying Receiver's Request for Hearing and Order Appointing Special Master on Limited Issue, the court framed the dispute between PF2 and Galipeau as "disagreement between the Receiver and PF2 over the ownership of the property at issue and/or method of return." The court then ruled as follows:

The Court finds that there are competing claims regarding the disputed property and the terms of return. In the best interest of the parties and efficient use of judicial resources, a special master shall be appointed to resolve the limited issue of the return of PF2's property and other issues as outlined in the Receiver's Motion for Order Adopting Receiver's Process (ROA 172)^[3] and PF2's Motion for Order to Return Property (ROA 246).

¶14 The court ultimately appointed attorney Kevin S. Jones as Special Master. In its December 8, 2020 Order Appointing Special Master, the court ruled:

Mr. Kevin Jones is appointed Special Master to resolve the disputes regarding the property located on Black Gold's premises between the Receiver and Intervenor PF2 Leasing, LLC, including Intervenor's Motion and Brief for Order to Return Property (Dckt. # 246) and Receiver's Motion for Order Adopting Receiver's Process for Reclaiming Personal Property (Dckt. # 156). Mr. Jones shall have all duties and powers granted to a Special Master under Mont. R. Civ. P. 53(c)(2).

¶15 Finally, on December 18, 2020, the court issued its Order Regarding Receiver's Motion for Order Submitting All Outstandning [sic] Motions to the Special Master, in

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which it reiterated its earlier ruling and added resolution of an additional dispute to the Special Master's scope of authority:

On December 8, 2020, and based upon written agreement by the parties, the Court appointed Keven [sic] Jones as Special Master to resolve the disputes regarding the property located on Black Gold's premises between the Receiver and Intervenor PF2 Leasing, LLC, including the Intervenor's Motion and Brief for Order to Return Property (Dkt. 246) and Receiver's Motion for Order Adopting Receiver's Process for Reclaiming Personal Property (Dkt. 156). . . . In the interest of judicial economy, the Court finds that Defendants' Motion for Leave to File Sur-Reply to Address the Receiver's Reply in Support of Motion for Order Adopting Receiver's Process (Dkt. 175) as well as any scheduling issues that may be agreed to by the parties as outlined in Defendants' Motion to Amend the Scheduling Order and Request for