In Re Marriage of Gudmundson , 288 Mont. 70 ( 1998 )


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  • 97-303
    No. 97-303
    IN THE SUPREME COURT OF THE STATE OF MONTANA
    
    1998 MT 54
    IN RE MARRIAGE OF
    GENE M. GUDMUNDSON,
    Petitioner, Appellant, and Cross-Respondent,
    and
    GENG HUI GUDMUNDSON,
    Respondent, Respondent, and Cross-Appellant.
    APPEAL FROM:                   District Court of the First Judicial District,
    In and for the County of Lewis and Clark,
    The Honorable Thomas C. Honzel, Judge presiding.
    COUNSEL OF RECORD:
    For Appellant:
    Robert T. Cummins, Attorney at Law,
    Helena, Montana
    For Respondent:
    Ronald F. Waterman; Gough, Shanahan, Johnson & Waterman;
    Helena, Montana
    Submitted on Briefs: February 5, 1998
    Decided:   March 10, 1998
    Filed:
    __________________________________________
    Clerk
    Justice Terry N. Trieweiler delivered the opinion of the Court.
    ¶1   Gene and Geng Hui Gudmundson filed a joint petition for dissolution of their
    marriage in the District Court for the First Judicial District in Lewis and Clark
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    County. The
    District Court entered a decree of dissolution which adopted the parties' settlement
    agreement. Geng Hui moved to set aside the judgment, pursuant to Rule 60(b), M.R.
    Civ.P.
    That motion was not decided by the District Court and, after a notice of entry of
    judgment
    was filed, Geng Hui made a second motion to set aside the judgment. After a
    hearing, the
    District Court held that the first motion was deemed denied, that a second motion
    was not
    allowed, and that the property distribution portion of the agreement should be
    reopened due
    to ambiguities in the agreement. Gene appeals the District Court's order to reopen,
    and Geng
    Hui cross-appeals the District Court's failure to consider the second Rule 60(b)
    motion, and
    its failure to set aside the entire agreement. We reverse the order of the District
    Court and
    remand to the District Court for further proceedings.
    ¶2   The sole issue on appeal is whether the District Court erred when it denied
    Geng Hui's
    motion to set aside the judgment pursuant to Rule 60(b)(3), M.R.Civ.P., and reopened
    only
    the property distribution portion of the separation agreement.
    FACTUAL BACKGROUND
    ¶3   Geng Hui was born and raised in China. In 1987, she met and married Gene
    Gudmundson in China. The following year they moved to White Sulphur Springs,
    Montana,
    where Gene had purchased a chiropractic practice. They had two children, who were
    born
    in 1988 and 1990. In 1993, Geng Hui became a citizen of the United States.
    ¶4   Geng Hui could not speak or read English when she came to Montana. She
    attempted
    at first to learn English by watching television and language video tapes,
    conversing with
    friends, and reading children's books. When she began formal English studies in
    1995, her
    reading skills were evaluated at approximately a first-grade level, and her speaking
    skills
    were at approximately a fourth-grade level.
    ¶5    Gene and Geng Hui's marital problems led Geng Hui to contact an attorney in 1993
    about a possible dissolution. In September 1994, she moved to Helena for a three-
    month
    period. When she returned to live with Gene and the children in White Sulphur
    Springs, the
    marital problems continued, and in the summer of 1995, they agreed to dissolve their
    marriage.
    ¶6   Gene contacted John Mahan, an attorney who had represented the couple in a land
    purchase a few years earlier, to represent them in the dissolution. Geng Hui
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    alleges that
    Gene forced her to agree to their mutual representation by Mahan with a threat that
    he would
    use her three-month absence from the home as a basis for denying her custody of the
    children
    and any marital property. Gene contends that he merely agreed to pay for Mahan's
    services
    and suggested dual representation so that they could both save time and legal
    expenses.
    ¶7   Gene and Geng Hui discussed a custody arrangement and property division before
    they met with Mahan. Gene asserts that Geng Hui fully understood and agreed with
    all the
    terms of their informal arrangement, while Geng Hui contends that their discussions
    were
    limited and did not lead to a mutual agreement for custody and the distribution of
    property.
    ¶8    In approximately June 1995, Gene gave Mahan a written copy of the agreement and
    asked him to put it into legal form. They all eventually met in Mahan's office,
    where,
    according to Mahan, he went over in detail each of the provisions of the agreement
    with the
    parties and made sure that they both understood them. He testified by deposition
    that he
    explained to each of them the applicable law and their rights, and that he made very
    clear
    that he would not handle their case if they did not have a mutual agreement. Mahan
    also
    talked to the parties on the telephone and met with them individually at various
    times during
    his representation. The only alterations that were made to the initial agreement
    were the
    addition of a provision regarding Geng Hui's name change and a provision that Gene
    would
    make the house payment every other month "in lieu of child support." The parties
    signed the
    agreement on September 21, 1995.
    ¶9    The couple's main assets include a spa/motel business in White Sulphur Springs,
    forty
    acres of unimproved land near White Sulphur Springs, and the family home. All of the
    properties are encumbered by debt. The parties dispute whether Gene's chiropractic
    business, which was never mentioned in the agreement, should also be included and
    considered as a marital asset.
    ¶10 The agreement awarded Geng Hui the family home and all of its furnishings and
    effects. Gene signed a quit-claim deed to transfer his interest in the home to Geng
    Hui.
    They shared responsibility for the house payments. Gene agreed to make the $504
    payment
    every other month. Gene received full title to the spa/motel and the forty acres of
    land. In
    addition, each party kept their respective bank accounts and automobiles, as well as
    responsibility for the debts on each vehicle. The agreement does not state a value
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    for any
    of the property.
    ¶11 Gene and Geng Hui agreed upon, and were awarded, joint custody of the children.
    The children were to live one week with Gene and the next week with Geng Hui. The
    agreement stated that if either party moved from Meagher County, the party who
    remained
    would retain residential custody of both children. Finally, it stated that Geng Hui
    could not
    take the children to China without Gene's written consent. The only obligation for
    child
    support was Gene's obligation to make the house payment every other month.
    ¶12 On October 26, 1995, the parties and Mahan appeared in chambers before the
    District
    Court with their petition for dissolution and the separation agreement. Geng Hui
    was visibly
    upset, and Judge Sherlock, who became aware of her trouble speaking English, asked
    her if
    she wanted to continue or whether she wanted to get her own attorney. She stated
    that she
    wanted to continue.
    ¶13 Judge Sherlock noted that her primary concern was about debt and the fact that
    she
    had no income with which to pay. The agreement stated that the parties' debt
    obligations
    were "listed on Schedule 'A' attached to this agreement," but there was no Schedule
    A. After
    discussion with the parties, Judge Sherlock modified the agreement by deleting the
    reference
    to Schedule A and by including language that the debt obligations "shall be paid by
    [Gene]."
    Both Judge Sherlock and Gene initialed the modification, but Geng Hui did not. Judge
    Sherlock later testified that he believed the change was to cover all debts,
    including the
    family home, and that he was not made aware of the fact that Geng Hui remained
    liable for
    house payments every other month. He also testified that he did not inquire about
    child
    support calculations or whether the agreement was unconscionable because when the
    parties
    have agreed, it is not his practice to "second-guess the numbers."
    ¶14 That same day, the District Court made its findings of fact, conclusions of
    law, and
    a decree of dissolution in which it approved the agreement between the parties. No
    notice
    of entry of judgment was filed at that time.
    ¶15 After she retained new counsel, Geng Hui filed a Rule 60(b), M.R.Civ.P., motion
    on
    July 3, 1996, to set aside the District Court's October 26, 1995, findings,
    conclusions, and
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    decree. She asserted that Gene engaged in misrepresentation, fraud, and other
    misconduct
    in preparation of the agreement, and that the agreement failed to value the marital
    estate and
    to make child support calculations pursuant to the Uniform Child Support
    Guidelines. Gene,
    who also had retained new counsel, moved to dismiss the motion on the grounds that
    it was
    not timely. On October 29, 1996, the District Court concluded that since no notice
    of entry
    of judgment was ever filed in the case, Geng Hui's motion was timely and, therefore,
    it
    denied Gene's motion to dismiss. The District Court failed, however, to rule on
    Geng Hui's
    motion. Furthermore, Judge Sherlock recused himself from the case, and Judge Honzel
    eventually assumed jurisdiction over the matter.
    ¶16 On November 25, 1996, Gene filed a notice of entry of judgment. On December 6,
    1996, Geng Hui renewed her Rule 60(b) motion. The District Court conducted a
    hearing on
    January 29 and 30, 1997, at which Judge Sherlock, the parties, and others testified
    regarding
    the agreement and decree.
    ¶17 On February 4, 1997, the District Court issued its findings of fact,
    conclusions of law,
    and order, along with a memorandum explaining its decision. It found that a number
    of
    things had not been mentioned in the separation agreement, such as the parties'
    incomes,
    child support calculations, the chiropractic business, and the property values, and
    that the
    agreement referred to certain schedules which were, in fact, never attached. It
    concluded that
    there were ambiguities and/or mistakes in the agreement related to the parties' debt
    responsibilities that warranted a reopening of the agreement as it pertained to the
    property
    distribution. It also concluded that Geng Hui's original motion should be deemed
    denied
    because it was not decided within sixty days, and that there was no authority for
    consideration of a second motion.
    DISCUSSION
    ¶18 Did the District Court err when it denied Geng Hui's motion to set aside the
    judgment
    pursuant to Rule 60(b)(3), M.R.Civ.P., and reopened only the property distribution
    portion
    of the separation agreement?
    ¶19 We review a district court's conclusions of law to determine whether its
    interpretation
    of the law is correct. See Carbon County v. Union Reserve Coal Co. (1995), 
    271 Mont. 459
    ,
    469, 
    898 P.2d 680
    , 686; see also Kreger v. Francis (1995), 
    271 Mont. 444
    , 447, 898
    P.2d
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    672, 674; Steer, Inc. v. Department of Revenue (1990), 
    245 Mont. 470
    , 474-75, 
    803 P.2d 601
    , 603.
    ¶20 Here, the District Court held that because Geng Hui's initial Rule 60(b)(3)
    motion had
    not been ruled on within sixty days as required by Rule 60(c), M.R.Civ.P., it was
    deemed
    denied. It failed to consider her second Rule 60(b)(3) motion because it "was not
    aware of
    any rule or [case] which allows a party to file a second Rule 60(b) motion after the
    sixty days
    has run." Nonetheless, despite the fact that she had not filed such a motion for
    relief, the
    District Court went on to consider whether Geng Hui was entitled to relief pursuant
    to the
    residual clause of Rule 60(b), which states:
    This rule does not limit the power of a court to entertain an independent action
    to relieve a party from a judgment, order, or proceeding, or to grant relief to
    a defendant not actually personally notified as may be required by law, or to
    set aside a judgment for fraud upon the court.
    It held, pursuant to our decision in In re Marriage of Doyle (1996), 
    280 Mont. 429
    , 
    929 P.2d 886
    , that she was not entitled to relief pursuant to the residual clause.
    ¶21 Geng Hui contends that pursuant to our holding in Ring v. Hoselton (1982), 
    197 Mont. 414
    , 
    643 P.2d 1165
    , the District Court erred when it failed to disregard her
    first Rule
    60(b) motion and consider it a nullity because the notice of entry of judgment had
    not yet
    been filed. Hoselton, however, involved a Rule 60(b) motion that had been filed
    before the
    judgment was final. See Hoselton, 197 Mont. at 424, 643 P.2d at 1171. The judgment
    in
    this case was clearly final as of October 1995, well before Geng Hui's first Rule 60
    (b)
    motion and, therefore, Hoselton does not apply. Geng Hui has provided no other
    grounds
    by which the District Court or this Court might simply disregard her first Rule 60
    (b) motion
    so as to avoid denial pursuant to Rule 60(c), M.R.Civ.P., for the District Court's
    failure to
    rule on it within the required sixty days. Accordingly, we reject the notion that
    because the
    motion was filed prior to the notice of entry of judgment it should be considered a
    nullity.
    We conclude that the District Court did not err when it deemed her first Rule 60(b)
    motion
    denied.
    ¶22 However, we disagree with the assumption made by both Geng Hui and the District
    Court that the denial of her first motion renders her second Rule 60(b) motion
    ineffective.
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    Rule 60(b), M.R.Civ.P., states in relevant part:
    On motion and upon such terms as are just, the court may relieve a party or a
    party's legal representative from a final judgment, order, or proceeding for the
    following reasons: . . . (3) fraud (whether heretofore denominated intrinsic or
    extrinsic), misrepresentation, or other misconduct of an adverse party; . . .
    The
    motion shall be made within a reasonable time, and for reasons (1), (2), and
    (3) when a defendant has been personally served, whether in lieu of
    publication or not, not more than 60 days after the judgment, order or
    proceeding was entered or taken, or, in a case where notice of entry of
    judgment is required by Rule 77(d), not more than 60 days after service of
    notice of entry of judgment.
    The plain language of the rule does not limit the number of motions that a
    party may make,
    nor prescribe the earliest date following judgment on which the motion may be
    filed. The
    only restriction and possible bar to a motion made pursuant to Rule 60(b)(3) is that
    it cannot
    be filed "more than 60 days after service of notice of entry of judgment." Here,
    the second
    motion was filed within the permitted time frame.
    ¶23 The District Court correctly noted when it denied Gene's motion to dismiss the
    first
    Rule 60(b) motion that when a party has made an appearance, Rule 77(d), M.R.Civ.P.,
    requires that notice of entry of judgment be served. As such, the sixty-day period
    did not
    begin to run until the notice of entry of judgment was filed on November 25, 1996.
    Geng Hui's second motion was filed within sixty days from that date. Therefore,
    while
    Rule 60(c) requires that Geng Hui's first motion be deemed denied, we conclude that
    neither
    its denial nor any of the time limits provided for by Rule 60 limited her ability to
    make a
    second Rule 60(b)(3) motion or the District Court's ability to consider her second
    motion.
    ¶24 Pursuant to that motion, the District Court should have considered whether to
    set
    aside the agreement on the basis of fraud, misrepresentation, or misconduct. Thus,
    it erred
    when it failed to do so and instead relied on ambiguity and/or mistakes to partially
    reopen
    the agreement. We therefore remand to the District Court for specific findings
    regarding
    those allegations, and for a decision whether to reopen the dissolution proceedings
    pursuant
    to Rule 60(b)(3), M.R.Civ.P.
    ¶25 If the District Court concludes that the prior decree should be set aside
    pursuant to
    Rule 60(b)(3), M.R.Civ.P., it should then consider whether the agreement entered
    into by the
    parties is unconscionable. See 2§ 40-4-201(2), MCA. Contrary to the parties'
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    assertions on
    appeal, we are not in a position to determine as a matter of law whether the
    agreement was
    unconscionable.
    ¶26 For example, Geng Hui contends that the agreement is unconscionable as a matter
    of
    law because she had a limited understanding of English, because Mahan represented
    both
    her and Gene, and because it does not include a statement of the parties' incomes,
    any
    valuation of the property, or child support calculations. We have stated, however,
    that
    unconscionability is to be determined by the district court on a case-by-case
    basis. See In
    re Marriage of Hagemo (1988), 
    230 Mont. 255
    , 259, 
    749 P.2d 1079
    , 1082. Accordingly,
    it is within the district court's discretion to determine from the evidence whether
    the
    agreement is unconscionable. See In re Marriage of Brown (1997), 
    283 Mont. 269
    , 272-
    73,
    
    940 P.2d 122
    , 124.
    ¶27 Likewise, we reject Gene's contention that the District Court is estopped as a
    matter
    of law from finding that the agreement is unconscionable because of its initial
    finding that
    the agreement was not unconscionable. Judge Sherlock testified that he did not make
    a
    specific inquiry into whether the agreement was unconscionable because it is not his
    practice
    to do so when the parties have reached a separation agreement. We hold that where a
    district
    court failed to make an initial investigation of the conscionability of an
    agreement, a district
    court is not estopped from later finding that the agreement is unconscionable if the
    decree
    adopting the agreement is set aside pursuant to Rule 60(b)(3), M.R.Civ.P.
    ¶28 We reverse the order of the District Court and remand to the District Court for
    proceedings consistent with this opinion.
    /S/       TERRY N. TRIEWEILER
    We Concur:
    /S/     JAMES C. NELSON
    /S/     JIM REGNIER
    /S/     WILLIAM E. HUNT, SR.
    /S/     KARLA M. GRAY
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Document Info

Docket Number: 97-303

Citation Numbers: 1998 MT 54, 288 Mont. 70, 955 P.2d 648, 55 State Rptr. 226, 1998 Mont. LEXIS 34

Judges: Gray, Hunt, Nelson, Regnier, Trieweiler

Filed Date: 3/10/1998

Precedential Status: Precedential

Modified Date: 11/11/2024