Background
Freedom Pass Partners, LLC purchased undeveloped property near Big Sky in 2016. Carol Hudson’s sons, Alan and Jeffrey Johnson, alleged that Hudson supplied personal funds and property for the purchase after her common-law spouse, Doug Nail, assured her that the investment entitled her to membership in Freedom Pass. Hudson died in 2018.
The Johnsons and the Carol Hudson Revocable Trust sued Freedom Pass in 2021, seeking declarations concerning Hudson’s alleged interest and asserting contract, tort, statutory, and equitable claims. The District Court granted Freedom Pass summary judgment, ruling that the Johnsons lacked standing because the claims belonged to Hudson’s Estate and that all claims were time-barred. It also denied leave to add the Estate through its personal representative, refused to compel disclosure of a prospective property buyer’s identity, and denied relief concerning an order dissolving a lis pendens.
The Court’s Holding
The Montana Supreme Court reversed the summary judgment because the record presented genuine factual disputes over when Hudson knew or reasonably should have known that she was not an LLC member and whether that fact was concealed from her. Although public filings omitted Hudson as a member, tax forms and a bank resolution identified her as one. Evidence also supported possible findings that Nail acted as Hudson’s agent, owed her a duty to disclose, and knew of the conflicting documents. Those disputes concerning concealment, constructive notice, and diligence must be resolved by a fact-finder.
The Court agreed that the Estate, acting through its personal representative, was the proper party because the original complaint did not establish special equitable circumstances allowing the beneficiaries to pursue the Estate’s claims independently. But it held that the District Court abused its discretion by denying the timely amendment that would add the Estate, because the court’s sole futility rationale depended on its erroneous limitations ruling. The Court also ordered production of an unredacted buy-sell agreement because the buyer’s identity was relevant to Freedom Pass’s still-pending counterclaims, and it reversed the order dissolving the lis pendens because the District Court failed to address whether the Johnsons’ earlier withdrawal and release had rendered Freedom Pass’s motion moot.
Key Takeaways
- Public recording alone did not establish, as a matter of law, that Hudson had constructive notice she was not a Freedom Pass member, particularly given conflicting tax and transactional documents.
- The Johnsons lacked standing to pursue the Estate’s claims in their own right, but their proposed amendment adding the Estate through its personal representative would cure that defect.
- The prospective buyer’s identity was discoverable because it could bear directly on whether the lis pendens delayed or terminated the proposed sale and caused the damages alleged in Freedom Pass’s counterclaims.
Why It Matters
The decision reinforces that courts may not resolve disputed evidence about fraudulent concealment, fiduciary duties, constructive notice, or diligence at summary judgment. It also confirms that amendments curing party-standing defects should be allowed when timely and otherwise justified.
On remand, the Estate may test its claims concerning Hudson’s alleged Freedom Pass interest on the merits, while Freedom Pass’s counterclaims—including whether the lis pendens was initially filed for an improper purpose—remain for further proceedings.