                                                                                        December 19 2007


                                             05-727

                      IN THE SUPREME COURT OF THE STATE OF MONTANA

                                           2007 MT 352



ROBERT NIKOLAISEN, JUDY NIKOLAISEN,
and PLENTYWOOD ELECTRIC, INC.,

              Plaintiffs and Appellees,

         v.

ADVANCE TRANSFORMER CO. and
JOHN DOES I - III,

              Defendants and Appellants.



APPEAL FROM:            District Court of the Fifteenth Judicial District,
                        In and For the County of Sheridan, Cause No. DV 46-2004-11171
                        Honorable Katherine M. Irigoin, Presiding Judge


COUNSEL OF RECORD:

                For Appellant:

                        Gerald B. Murphy and Matthew Braukmann, Moulton, Bellingham, Longo &
                        Mather, Billings, Montana

                For Appellees:

                        Loren J. O'Toole, III, O’Toole Law Firm, Plentywood, Montana



                                                         Submitted on Briefs: October 31, 2007

                                                                  Decided: December 19, 2007


Filed:

                        __________________________________________
                                          Clerk

Justice John Warner delivered the Opinion of the Court.
¶1     The Plaintiffs, Plentywood Electric and Robert and Judy Nikolaisen (collectively

“Plentywood”), seek damages from Advance Transformer Co. (“Advance”) incurred when a

fire destroyed Plentywood Electric. The fire was allegedly caused by a defective light ballast

manufactured by Advance. The District Court of the Fifteenth Judicial District entered a

default judgment in favor of Plentywood. Advanced moved for relief from the judgment.

The motion was deemed denied as the District Court did not rule on it within the time

provided. Advance now appeals from the denial of its motion to set aside the default

judgment.

                                          ISSUES

¶2     Advance raises four issues on appeal. However, we determine that the District Court

erred in not granting Advance’s motion to set aside the default judgment pursuant to M. R.

Civ. P. 60(b)(4), based on improper service of process. Therefore, we do not fully discuss

the other issues Advance raises.

                   FACTUAL AND PROCEDURAL BACKGROUND

¶3     On November 19, 2002, a fire destroyed Plentywood Electric, owned by the

Nikolaisens. The State Fire Marshall investigated the fire the following day and, according

to Plentywood, concluded that a ballast manufactured by Advance had caused the fire.

Within days, Plentywood notified Advance of the fire.

¶4     Upon notification of the potential claim against it, Advance and its insurer, Travelers

Insurance Co. (“Travelers”), retained an investigator to visit the fire scene and inspect the

ballast. Plentywood’s insurer, Austin Mutual, also sent an investigator to inspect the scene

and the ballast. The two investigators examined the ballast in January 2003 and again in
                                              2
August 2003. Robert Erhardt, the Director of Technical Relations for Advance, attended the

August 2003 inspection. In Erhardt’s opinion, Advance had several defenses to liability.

¶5     On November 18, 2004, Austin Mutual, asserting a subrogation claim for payments it

had made to Plentywood, filed suit against Advance, but did not serve its complaint. On

November 19, 2004, Plentywood filed a complaint against Advance, seeking recovery of the

uninsured portion of its alleged loss. Likewise, Plentywood made no attempt at that time to

serve its summons and complaint.

¶6     On February 10, 2005, Plentywood’s counsel sent Advance a demand letter for

approximately $760,578.00, representing its claimed uninsured loss.        The letter was

addressed to Advance’s office in Rosemont, Illinois, but was not directed to a particular

individual. The letter stated that Plentywood would file a complaint if it did not receive

Advance’s reply by March 1, 2005. This letter reached Erhardt on or around February 15, at

which time he contacted Tim Costello, the Technical Specialist for Travelers, and tendered

the claim to Travelers. Erhardt also provided a copy of Plentywood’s demand letter to

Costello. On February 17, 2005, Costello contacted Plentywood’s counsel and requested

documentation supporting its claim.      He also asked that counsel direct all future

correspondence on the claim to him. During the several communications between them,

Plentywood’s counsel at no time mentioned that he had already filed a complaint against

Advance.

¶7     On March 4, 2005, Plentywood’s counsel provided the documentation that Travelers

had requested. Counsel again indicated his intent to file a complaint against Advance if he

did not hear from Travelers or Advance by March 20. On March 25, 2005, Costello
                                            3
contacted Plentywood’s attorney and informed him that, based on Advance’s conclusion that

valid defenses to the claim existed, an offer would not be forthcoming. Again, Plentywood’s

counsel did not mention that he had already filed a complaint.

¶8     On April 5, 2005, Plentywood’s counsel filed an amended complaint against

Advance. Despite knowing Advance’s address, and having had prior contact with both

Advance and its insurer Travelers, counsel did not advise either that he had filed the

amended complaint. Nor did counsel make any attempt to serve Advance directly. Rather,

on April 19, counsel for Plentywood filed an affidavit with the District Court for the purpose

of having the Montana Secretary of State appointed as Advance’s agent for service of

process pursuant to M. R. Civ. P. 4D(2)(f). The Clerk of the District Court appointed the

Montana Secretary of State as Advance’s agent for service and on April 20, the Secretary of

State was served with the original and the proper number of copies of the summons and the

amended complaint, as well as a copy of Plentywood’s counsel’s affidavit. On April 25,

2005, the Secretary of State mailed the documents, return receipt requested, to Advance

Transformer Co., at its address in Illinois provided by Plentywood’s counsel.

¶9     On May 9, 2005, a courier employed by Advance signed for and accepted the

documents. On May 11, 2005, the Secretary of State received the return receipt.

¶10    On June 8, 2005, after receiving no answer to the amended complaint, Plentywood’s

counsel requested entry of default against Advance, and the Clerk of District Court entered

the default. On July 12, 2005, Plentywood’s counsel moved for entry of a default judgment

in the amount of $1,301,487.19, representing Plentywood’s claimed uninsured loss, Austin

Mutual’s loss payments under its policy with Plentywood, and $165.00 in costs. On July 18,
                                              4
2005, the District Court held a hearing on the matter. The record does not indicate that

Plentywood’s counsel informed the presiding judge that he had previously been in contact

with Advance, that Advance was insured by Travelers, that he had been communicating with

Travelers, or that Plentywood’s claim had been denied. The District Court entered default

judgment in favor of Plentywood in the amount of $1,301,487.19 together with interest at a

rate of 10% until paid in full, pursuant to § 25-9-205(1), MCA.

¶11    On September 19, 2005, just after the 60 day window when Advance could obtain

relief from the default judgment under M. R. Civ. P. 60(b)(1), Plentywood’s counsel

obtained an authenticated copy of the default judgment. Advance maintains that on

September 30, 2005, it first discovered that Plentywood had filed a complaint against it and

that a default judgment had been entered in the District Court. Both Costello and Erhardt

state that they had no contact with Plentywood or Austin Mutual between March 25 and

September 30, 2005.

¶12    Once Advance discovered the default judgment, it immediately retained counsel. On

October 11, 2005, Advance moved to set aside the default judgment and filed an answer to

Plentywood’s amended complaint. Advance argued in its motion that no one “in authority at

Advance” ever received the summons and amended complaint; therefore, service was

inadequate, the default judgment should be set aside, and it should have the opportunity to

defend.

¶13    Plentywood objected to the motion and moved to strike Advance’s answer. The

District Court did not act on the motion. On December 19, 2005, the District Court entered



                                             5
an order stating that since more than 60 days had elapsed since Advance filed its motion to

set aside the default judgment, it was deemed denied. Advance filed a timely appeal.

                              STANDARDS OF REVIEW

¶14    In reviewing a default judgment, we are guided by the principle that a case should be

decided on its merits; judgments by default are not favored. Matthews v. Don K Chevrolet,

2005 MT 164, ¶ 9, 327 Mont. 456, ¶ 9, 115 P.3d 201, ¶ 9 (citations omitted). We generally

review the denial of a motion to set aside a default judgment for only a slight abuse of

discretion. The party seeking to set aside a default judgment has the burden of proof.

Matthews, ¶ 9. However, we will also review a district court’s conclusions of law to

determine if they are correct. Fonk v. Ulsher, 260 Mont. 379, 383, 860 P.2d 145, 147

(1993). Whether the district court has jurisdiction over the case is a conclusion of law.

Semenza v. Kniss, 2005 MT 268, ¶ 9, 329 Mont. 115, ¶ 9, 122 P.3d 1203, ¶ 9.

                                        DISCUSSION

¶15    Advance argues the District Court abused its discretion when it denied the motion to

set aside the default judgment because Plentywood did not correctly serve Advance as

required by M. R. Civ. P. 4D(2), (3).

¶16    A default judgment may be set aside if the judgment is void. M. R. Civ. P. 60(b)(4).

If the plaintiff does not properly serve the defendant pursuant to M. R. Civ. P. 4D, the

judgment is void because without proper service the district court does not obtain personal

jurisdiction over a party. See Ihnot v. Ihnot, 2000 MT 77, ¶ 8, 299 Mont. 137, ¶ 8, 999 P.2d

303, ¶ 8. Each step of the procedure prescribed by Rule 4D requires strict and literal

compliance to support a judgment based on substituted or constructive service. Shields v.
                                             6
Pirkle Refrigerated Freightlines Inc., 181 Mont. 37, 43-44, 591 P.2d 1120, 1124 (1979),

overruled on other grounds, Roberts v. Empire Fire & Marine Inc. Co., 276 Mont. 225, 228,

915 P.2d 872, 873 (1996); Ihnot, ¶ 13. See also Joseph Russell Realty Co. v. Kenneally, 185

Mont. 496, 502, 605 P.2d 1107, 1110 (1980).

¶17    M. R. Civ. P. 4D outlines the procedure for service of summons upon an out-of-state

corporation, such as Advance. Reference to several parts of the Rule is necessary.

¶18    Rule 4D(2)(e) provides that service may be had upon a corporation doing business in

Montana by delivering a copy of the summons and complaint to an officer, director,

manager, or associate for such corporation; or by leaving such copies at the office or place of

business of the corporation, with the person in charge of such office. Rule 4D(3) provides

that “[w]here service upon any person cannot, with due diligence, be made personally within

this state, service of summons and complaint may be made outside this state in the manner

provided for service within this state, with the same force and effect as though service had

been made within this state.” Thus, Advance, an out-of-state corporation, is to be served in

the same manner as a corporation that is found in Montana.

¶19    Rather than attempt to serve Advance as provided in Rules 4D(2)(e) and 4D(3),

Plentywood went straight to the provisions of Rule 4D(2)(f), which is designed to

accomplish service on an out-of-state corporation when personal service cannot be

accomplished with reasonable diligence. In pertinent part, Rule 4D(2)(f), states:

       [If] none of the persons designated in D(2)(e) immediately above [i.e., officer,
       director, manager . . . superintendent or managing or general agent, or partner,
       or associate for such corporation] can with the exercise of reasonable
       diligence be found within Montana, the party causing summons to be issued
       shall exercise reasonable diligence to ascertain the last known address of any
                                              7
       such person. If, after exercising reasonable diligence, the party causing
       summons to be issued is unsuccessful in serving said parties, an affidavit must
       be filed with the clerk of court in which the claim for relief is pending reciting
       that none of the persons designated in D(2)(e) can after due diligence be
       found within Montana upon whom service of process can be made, and
       reciting the last known address of any such person . . . .

M. R. Civ. P. 4D(2)(f) (bracketed material and emphasis added).

¶20    In order to utilize the provisions of Rule 4D(2)(f) and complete service of process by

service on the Montana Secretary of State, Plentywood was first required to exercise

reasonable diligence to find an officer or other representative of Advance to serve in

Montana. Since there was no agent for Advance in Montana, Plentywood’s counsel was next

required to use reasonable diligence to ascertain Advance’s address. As counsel well knew

Advance’s address, the Rule required that Plentywood attempt service at that address. Only

when, after the exercise of reasonable diligence, “the party causing the summons to be issued

is unsuccessful in serving” the summons and complaint may that party effectively substitute

service on Secretary of State. M. R. Civ. P. 4D(2)(f).

¶21    The obvious reason for the procedure allowing service through the Secretary of State

is to allow for personal service when a company cannot be otherwise served in the manner

provided for in Rule 4D(2)(e) and Rule 4D(3). There is no reason to include in Rule

4D(2)(f) the statement that the party seeking service upon a company which cannot be found

in Montana must be “unsuccessful in serving said parties” before filing the affidavit for

service on the Secretary of State, if it is not necessary to have first unsuccessfully attempted

such service.    This interpretation of Rule 4D(2)(f) is also required by its provision

concerning service on a corporation by service on the Secretary of State, as follows: “[i]n


                                               8
any action where due diligence has been exercised to locate and serve any of the persons

designated in D(2)(e) above, service shall be deemed complete upon said corporation.” M.

R. Civ. P. 4D(2)(f) (emphasis added). Again, only after a party has exercised reasonable

diligence to personally serve the out-of-state corporation can the Secretary of State be

appointed the agent of such corporation for service of process.

¶22    The dissent fails to recognize that the rules for service of process must be strictly

followed because notice and opportunity to be heard are of the utmost importance. Thus,

strict and literal compliance with the rules is necessary. E.g. Shields, 181 Mont. at 43-44,

591 P.2d at 1124. Compliance with the rules not only serves due process; it avoids the

problems illustrated by this case.     Had Plentywood’s counsel followed the service

requirements of Rule 4D(2)(e) and Rule 4D(3), as noted above, the summons and complaint

would have been personally delivered to Advance by a process server.

¶23    As noted by the dissent, Plentywood’s counsel, knowing full well where to send the

summons and complaint, did have the option of service by mail. However, service by mail is

not accomplished by simply mailing the summons and complaint, return receipt requested.

Service by mail under Rule 4D(1)(b) is completed only when the serving party receives and

files a notice and acknowledgement conforming substantially to Form 18-A.              This

acknowledgment must state that an authorized representative of Advance declared before a

notary, under penalty of perjury, that he or she received a copy of the summons and

complaint, along with stating the person’s relationship to Advance, as well as his or her

authority to receive service of process. M. R. Civ. P. 4D(1)(b), Form 18-A. This is in sharp

contrast to the return receipt sent to the Secretary of State saying only that a courier had
                                             9
picked up the mail. Clearly, Plentywood did not comply with the applicable Rule for service

by mail. The facts illustrate that this is not a case of “no harm no foul,” as the dissent

implies.

¶24    Because Plentywood’s counsel did not attempt to directly serve Advance before

affecting service through the Secretary of State, service was improper and did not comply

with Rule 4D(2), (3). Failure to affect proper service of process deprived the District Court

of personal jurisdiction over Advance, rendering the default judgment void as a matter of

law. Ihnot, ¶ 8. The District Court, therefore, erred when it did not set aside the default

judgment.

¶25    Reversed and remanded for further proceedings consistent with this Opinion.


                                                  /S/ JOHN WARNER




We Concur:

/S/ KARLA M. GRAY
/S/ W. WILLIAM LEAPHART
/S/ BRIAN MORRIS
/S/ JIM RICE




Justice Warner specially concurs.




                                             10
¶26    In my view, another facet of this case must be mentioned. While there is no record

concerning Advance’s motion to set aside the default judgment, we know that Plentywood’s

counsel had been in communication with Advance and its insurer Travelers prior to and after

filing the first complaint and that he knew Advance intended to defend the claim. Also,

Plentywood’s counsel knew Advance’s address, yet made no attempt to serve it directly or to

inform either Advance or Travelers that Plentywood had filed suit.

¶27    Under similar facts, we have strongly disapproved of the entry of a default judgment.

Maulding v. Hardman, 257 Mont. 18, 25-26, 847 P.2d 292, 297 (1993). In Maulding,

counsel had been in contact with defendant’s insurer that covered the claim, proceeded at all

times with an eye toward collecting from the insurance company once he obtained a

judgment for his client, and did not advise the insurer of the application for a default

judgment. We noted in Maulding that Rule 3.3 of the Rules of Professional Conduct

“requires a lawyer in ex parte proceedings to inform the court of all material facts known by

the lawyer whether or not they are adverse.” Maulding, 257 Mont. at 26, 847 P.2d at 298.

Similar to Maulding, the record here contains no indication that Plentywood’s counsel

disclosed to the District Court that he had been in contact with both Advance and Travelers

and knew that they had denied liability. At the July 18, 2005, hearing regarding the default

judgment, Plentywood’s counsel informed the District Court that he had sent a copy of the

proposed default judgment to Plentywood’s insurer, Austin Mutual. However, nothing in the

record suggests that the District Court knew that counsel had also been in communication




                                             11
with Advance and Travelers. What record there is in this case suggests that both Advance

and Travelers may have been sandbagged.1 This Court does not countenance such conduct.



                                                  /S/ JOHN WARNER



Chief Justice Karla M. Gray and Justice James A. Rice join in the foregoing concurrence.



                                                  /S/ KARLA M. GRAY
                                                  /S/ JIM RICE




1
  The term “sandbagged,” in the present context derives from the tactic of a poker player to
trap another player by checking a strong hand to induce a bet, and then raising once that bet
is made. Webster’s Third New International Dictionary, Unabridged 2009 (Philip Babcock
Gove, ed., Merriam-Webster, Inc. 2002). In law it has come to mean, inter alia, the practice
of unfairly remaining silent concerning an important point in order to lull another party to
inaction. See U.S. v. Pielago, 135 F.3d 703, 709 (11th Cir. 1998); State v. Mendoza-Solorio,
33 P.3d 411, 416 (Wash. App. Div. 3 2001); DeShields v. State, 534 A.2d 630, 645 (Del.
1987); Gilbert v. K.T.I., Inc., 765 S.W.2d 289, 295 (Mo. App. W. Dist. 1988); Wiard v.
Liberty Northwest Ins. Corp., 2003 MT 295, ¶ 50, 318 Mont. 132, ¶ 50, 79 P.3d 281, ¶ 50
(Nelson, J., concurring).
                                             12
Justice Patricia O. Cotter dissents.

¶28    I dissent. Because service was properly and actually effected, I would affirm the

judgment of the District Court.

¶29    The Court faults Plentywood for failing to strictly follow the requirements of

M. R. Civ. P. 4(D). The Court concludes that Plentywood should not have served Advance

through the Secretary of State under Rule 4D(2)(f), but rather should have effected service

under M. R. Civ. P. 4(D)(3), the “personal service outside the state” Rule. I disagree with

the Court’s analysis.

¶30    The Court relies upon Joseph Russell Rlty. Co. v. Kenneally, 185 Mont. 496, 605 P.2d

1107 (1980), for the proposition that there must be strict and literal compliance with each

step of the procedure described in Rule 4D. Opinion, ¶ 16. Indeed, we stated in Russell that

“[t]he key language in [Rule 4D(2)(f)] commands that reasonable diligence be used in

locating the individuals listed in Rule 4 (D)(2)(e), M.R.Civ.P. These persons include the

corporation’s registered agent and any director of the corporation.” Russell Realty, 185

Mont. at 502, 605 P.2d at 1110. In Russell Realty, we noted, among other things, that

Kenneally and his attorney had had previous dealings with Joseph Russell Realty’s registered

agent; therefore, they knew who to contact for service of process. However, rather than

serve this registered agent, the realty company attempted service through the Secretary of

State, and that service failed. We concluded that the failed service of process attempted

through the Secretary of State did not confer jurisdiction over Russell Realty and the

subsequent default judgment was void. Russell Realty, 185 Mont. at 502-03, 605 P.2d at



                                            13
1111. Here, by contrast, and as further explained below, we are dealing with an out-of-state

corporation, whose individual agents or directors were unknown to Plentywood.

¶31    Plentywood served Advance via the Secretary of State under Rule 4D(2)(f). The

relevant portions of 4D(2)(f) provide:

       (2) Personal service within the state. The summons and complaint shall be
       served together. The plaintiff shall furnish the person making service with
       such copies as are necessary. Service shall be made as follows:
       ...
       (f) When a claim for relief is pending in any court of this state against a
       corporation . . . organized under the laws of any other state . . . which is
       subject to the jurisdiction of the courts of this state under the provisions of
       Rule 4B above, . . . and none of the persons designated in D(2)(e) immediately
       above [i.e., officer, director, manager, . . . superintendent or managing or
       general agent, or partner, or associate for such corporation] can with the
       exercise of reasonable diligence be found within Montana, the party causing
       summons to be issued shall exercise reasonable diligence to ascertain the last
       known address of any such person. If, after exercising reasonable diligence,
       the party causing summons to be issued is unsuccessful in serving said parties,
       an affidavit must be filed with the clerk of court in which the claim for relief is
       pending reciting that none of the persons designated in D(2)(e) can after due
       diligence be found within Montana upon whom service of process can be
       made, and reciting the last known address of any such person, or reciting that
       after the exercise of reasonable diligence no such address for any such person
       could be found. . . . The clerk of court shall issue an order directing process to
       be served upon the secretary of state of the state of Montana . . . . Such
       affidavit shall be sufficient evidence of the diligence of inquiry made by
       affiant, if the affidavit recites that diligent inquiry was made, and the affidavit
       need not detail the facts constituting such inquiry. . . . The said clerk of court
       shall then mail to the secretary of state the original summons, one copy of the
       summons and one copy of the affidavit for the files of the secretary of state,
       one copy of the summons attached to a copy of the complaint for each of the
       defendants to be served by service upon the secretary of state, and the fee for
       service, to the office of the secretary of state. The secretary of state shall mail
       copy of the summons and complaint by certified or registered mail with a
       return receipt requested to the last known address of any of the persons
       designated in D(2)(e) above, if known, or, if none such is known and it is a
       corporation not organized in Montana, to the secretary of state of the state in
       which such corporation or limited liability company was originally
       incorporated, if known; and the secretary of state shall make a return as
                                               14
       hereinafter provided under Rule 4D(6). When service is so made, it shall be
       deemed personal service on such corporation . . . and the said secretary of state
       . . . is hereby appointed agent of such corporation . . . . In any action where
       due diligence has been exercised to locate and serve any of the persons
       designated in D(2)(e) above, service shall be deemed complete upon said
       corporation . . . regardless of the receipt of any return receipt or advice of
       refusal of the addressee to receive the process mailed, as is hereinafter
       required by 4D(6); provided, however, that except in those actions where any
       of the persons designated in D(2)(e) above have been located and served
       personally as hereinabove provided, then service by publication shall also be
       made as provided hereafter in 4D(5)(d) and 4D(5)(h) . . . .

¶32    Rule 4D(3), upon which the Court relies, provides:

       Personal service outside the state. Where service upon any person cannot,
       with due diligence, be made personally within this state, service of summons
       and complaint may be made by service outside this state in the manner
       provided for service within this state, with the same force and effect as though
       service had been made within this state. . . .

¶33    Rule 4D(3) speaks in terms of “service upon any person” outside the state. Likewise,

Rule 4D(2)(f) requires due diligence to locate and serve any of the persons designated in

Rule 4D(2)(e)—i.e., an officer, director, manager, etc. or the registered agent. Significantly,

Plentywood never dealt with any particular person in its prior mailings to Advance, nor did

Advance have a designated agent for service of process on file with the Secretary of State.

While it is technically correct that Plentywood knew where to locate an authorized person,

none of the letters contained in the record that were sent to Advance’s corporate offices were

addressed to a particular recipient; rather, the demand letters sent by Plentywood were

addressed “To Whom it May Concern” and “Dear Sirs.”                It therefore appears that

Plentywood was communicating with a corporate entity without the benefit of knowing who,

within the company, was an actual officer or manager.



                                              15
¶34    The record further establishes and it is undisputed that Advance’s Director of

Technical Relations Robert Erhardt, who had investigated the fire on behalf of Advance, had

received the previous correspondence from Plentywood, and that he had in turn arranged a

prompt response to Plentywood’s letters by one Tim Costello, a representative of its insurer,

Traveler’s Insurance Company. The record contains no letters, however, from Erhardt to

Plentywood or Plentywood’s insurer, Austin Mutual, nor does the record contain any

reference to telephone communications between Erhardt and Plentywood’s representatives.

In fact, from the District Court record, the only known contacts Plentywood had with

Advance were with its hired investigator and Tim Costello with Travelers, neither of whom

was an officer or director of the company and neither of whom could have accepted service

of a complaint on behalf of Advance. Therefore, despite “several letters to Advance’s

Illinois address,” Plentywood had no personal contact person within Advance. As a result,

had Plentywood attempted to effect service under Rule 4D(3), it would have been obliged to

pursue the same course—i.e., it would have simply mailed the Summons and Complaint to

Advance’s Illinois address, expecting that it would be received as had the previous

communications.

¶35    This is exactly the course pursued by the Montana Secretary of State’s office. While

under Rule 4D(2)(f), the Secretary of State could have mailed the Summons and Complaint

to the Secretary of State of the state in which Advance was originally incorporated, it sent

the documentation directly to Advance’s Illinois office—the same Illinois address where

Plentywood had previously and successfully sent its letters—and where it was accepted and

signed for by a courier hired by Advance.
                                             16
¶36    Returning again to Russell Realty, we held that Kenneally’s attempt at service of

process upon Russell Realty was inadequate to confer jurisdiction over Russell Realty,

explaining that Kenneally had not conducted a diligent search within the State prior to

initiating service through the Secretary of State. The Court noted that both Kenneally and

his attorney Geagan had previously had direct dealings with Russell Realty representatives in

Butte, and that the Secretary of State had the name and address of the company’s agent, who

was the same agent Kenneally and Geagan had dealt with in a prior land purchase. In other

words, Kenneally, with virtually no diligence required, knew whom to serve.

¶37    Here, Plentywood had no “personal” connection prior to service of the Complaint

with any particular person from Advance; in fact, it was Advance’s decision—and not

Plentywood’s—to funnel all communications from Plentywood directly to Travelers, instead

of identifying for Plentywood a named officer or agent of Advance for contact purposes.

Additionally, as noted above, the fact that the correspondence from Plentywood and Austin

Mutual to Advance, sent to the corporate office address without designation of an individual

recipient, had consistently resulted in prompt responses gave Plentywood confidence that

service to the corporate address was adequate. Finally, and notably, while Russell Realty

never received notice of the suit because the documents were returned undelivered,

Advance’s courier accepted service and returned the signed receipt to the Secretary of State.

¶38    As required by Rule 4D(2)(f), Plentywood’s counsel filed an affidavit stating that it

had exercised reasonable diligence in attempting to find a Montana address for Advance or

to identify and locate an Advance director, manager or agent in Montana to serve.

Plentywood further provided, as required by the statute, Advance’s last known address, i.e.,
                                             17
its Illinois address. Rule 4D(2)(f) expressly states that an affidavit like the one filed in this

case “shall be sufficient evidence of the diligence of inquiry made by affiant, if the affidavit

recites that diligent inquiry was made, and the affidavit need not detail the facts constituting

such inquiry.”

¶39    The Court faults Plentywood for not using a process server, or in the alternative

service by mail with a return acknowledgement form enclosed. However, the Court’s

reasoning is wholly circular. The method of service that the Court describes at ¶¶ 22-23 is

that which is perfected under Rule 4D(1)(b). If service under this Rule can be accomplished,

then a party need not resort to 4(D)(2)(f), which is what was required of Plentywood here,

for the reasons cited above. It was because Plentywood did not know the identity of an

authorized representative or “the person to be served” that it was forced to turn to Rule

4D(2)(f) in the first place.

¶40    The Court wholly fails to take account of the important fact that Advance’s own

courier, who had the authority to sign for certified mail, was the person who signed for and

received the Summons and Complaint. Thus, service was in fact accomplished here.

Though Advance later argued that its courier should not have accepted the Summons and

Complaint, the fact is he was authorized by Advance to do so and did in fact do so.

Therefore, unlike the situation in Russell, service here did not fail.

¶41    Finally, the Court takes Plentywood to task for its failure to inform Advance or

Travelers that suit had been filed. Opinion, ¶ 23. In so doing, the Court ignores the fact that

service was actually accomplished, and the court file reflected that the return receipt was

received. It should go without saying that Plentywood was entitled to rely on the signed
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return receipt in the court file as proof of service. There is no rule requiring a plaintiff to

ignore a return receipt and independently verify receipt of the Complaint. However, we

come very close to announcing such a new rule here.

¶42      In sum, I would conclude that Plentywood’s service through the Secretary of State

was statutorily authorized and successfully executed in accordance with Rule 4. Moreover,

service under both Rule 4D(3) and 4D(2)(f) would effect exactly the same result as was

accomplished here—service at the company’s last known address. Therefore, I would

conclude the District Court obtained jurisdiction and that it did not err in failing to set aside

the default judgment under M. R. Civ. P. 60(b)(4), for lack of jurisdiction. Moreover, I

would reach the merits of the case and affirm in all particulars. I dissent from our refusal to

do so.

                                                           /S/ PATRICIA COTTER

Justice James C. Nelson joins in the dissent of Justice Patricia O. Cotter.

                                                           /S/ JAMES C. NELSON




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