Valley Unit Corp. v. City of Bozeman

No. 88-097
IN THE SUPREME COURT OF THE STATE OF MONTANA
1988
VALLEY UNIT CORPORATION, a Montana
corporation,
Petitioners,
-vs-
CITY OF BOZEMAN, MONTANA, a municipal
corporation, the City Commission of
and for the City of Bozeman, Montana,
Namely, KENNETH WEAVER, MARY VANTHULL,
ANNE ANDERSON and JUDY MATHRE,
Respondents,
and
D.A. DAVIDSON & CO., INC., a Montana
corporation,
Intervenor,
-vs-
VIRGIL JAHNKE, PHYLLIS JAHNKE and
VALLEY UNIT CORPORATION, a Montana
corporation,
Defendants in Intervention.
ORIGINAL PROCEEDING:
COUNSEL OF RECORD:
For Petitioners:
Kelly M. Hogan, Bozeman, Montana
For Respondents:
Bruce Becker, City Attorney, Bozeman, Montana
J. Robert Planalp, Bozeman, Montana
Bruce A. MacKenzie, Bozeman, Montana, (D.A. Davidson)
Submitted on Briefs: March 31, 1988
Decided: May 10, 1988
MAY 1 0 1988
Filed:-
& *,-Clerk
#
Mr. Justice Wil.liam E. Hunt, Sr., delivered the Opinion of
the Court.
This is an application for a writ of certiorari for
which Virgil and Phyllis Jahnke d/b/a Valley Unit Corp. seek
review of a contempt order of the District Court, Eighteenth
Judicial District, Gallatin County against Virgil Jahnke.
The petition for the writ of certiorari is denied.
In 1982, Valley Unit Corp. sued the City of Bozeman (the
City) and its commissioners in the District Court, contesting
the procedures the City used to assess special improvement
district (SID) bonds on Valley Unit's development project.
In the court order dated September 6, 1985, based on the
settlement of this matter, the City was directed to relevy
and reassess the SIDs and Valley Unit was ordered to deposit
a letter of credit from a national bank with the City by
October 15, 1985. Virgil Jahnke had represented that he was
assured a letter of credit from the U.S. National Bank of
Oregon. The Bank, however, claims no knowledge of any such
promise from them to him and no credit was extended by them
to him.
On September 25, 1986, the City filed a petition
alleging Valley Unit had failed to comply with the September
1985 order and calling for punishment for contempt of court
against Virgil Jahnke, principal shareholder and director of
Valley Unit. Specifically, the City alleged that Valley Unit
had failed to provide the letter of credit and had failed to
pay certain assessments delineated in the court's order of
settlement. This petition was supported by an affidavit. At
a subsequent hearing, Jahnke was found in contempt for not
producing certain financial records pursuant to an unrelated
subpoena duces tecum and was sentenced to 48 hours in the
Gallatin County Detention Center. This citation is not being
challenged. No action was taken on the allegations in the
City's petition.
In late 1986, Valley Unit filed for a Chapter 11
bankruptcy which automatically stayed the contempt
proceeding. The City filed a motion to show cause November
24, 1986. The City renewed its motion for contempt in April,
1987. A hearing was held and by order dated February 8,
1988, Virgil Jahnke was found in contempt of the court's
order of settlement for failing to produce the letter of
credit from a national bank. Jahnke was sentenced to five
days in jail. Jahnke seeks review of this charge by way of a
writ of certiorari.
With few exceptions, a contempt of court order can only
be reviewed upon a writ of certiorari. Section 3-1-523, MCA.
There are three requisites that must be satisfied before a
writ of certiorari may be issued: 1) the inferior court
lacked or exceeded its jurisdiction; 2) a right to appeal
from the disputed order does not exist; and, 3) there lacks
any other plain, speedy and adequate remedy. Section
27-25-102, MCA. State v. McAllister (Mont. 1985), 708 P.2d
239, 241, 42 St.Rep. 1515, 1517. All three of these
requirements must be met. Failure to meet any one requires
this Court to deny the petition.
A judgment of contempt is final and conclusive. Since
the only review available for a contempt proceeding is, bv
statute, through a writ of certiorari, the second and third
requirements of § 27-25-102, MCA are fulfilled. We limit our
inquiry, then, to determining whether the District Court
lacked or exceeded its jurisdiction when it issued its
February 8, 1988 order of contempt.
The thrust of appellant's argument is that because the
City's motion to show cause was not accompanied by a n .
affidavit as required by 5 3-1-512, MCA, the court could not
obtain jurisdiction. The statute reads:
When the contempt is not committed in the immediate
view and presence of the court or judge at
chambers, an affidavit of the facts constituting
the contempt or a statement of the facts by the
referees or arbitrators or other judicial officer
shall be presented to the court or judge.
The court initially obtained jurisdiction of the matter
when the City filed its petition for contempt with an
accompanying affidavit in full compliance with the statute.
Implicit in appellant's argument is the contention that the
District Court somehow lost jurisdiction of the contempt
matter after the City's petition calling for contempt was
initially filed. Although the Jahnkes filed for bankruptcy
after the court had obtained jurisdiction, it is well settled
that a bankruptcy proceeding does not divest a state court of
jurisdiction over the matter; it only stays or suspends the
proceedings. David v. Hooker, Ltd. (9th Cir. 1977), 5 6 0 F.2d
412, 418; In re Clowser (E.D. Va. 1984), 39 Bankr. 883, 884;
In re Related Asbestos Cases (N.D. Cal. 1982), 23 Bankr. 523,
526. Neither does a party's filing of a bankruptcy petition
constitute a dismissal of the state court action. David, 5 6 0
F. 2d at 418; Stewart v. A. G. Edwards & Sons, Inc. (D. S.C.
1987), 74 Bankr. 26, 27.
The City's petition for contempt had not yet been ruled
on when the Jahnkes filed their petition for bankruptcy. The
proceedings were then stayed. Approximately one week after
the bankruptcy petition had been dismissed the City renewed
its efforts in the contempt matter by filing a motion to show
cause why Virgil Jahnke should not be held in contempt for
failing to obey the court's order. The basis of this motion
was that Jahnke had still not produced a letter of credit as
ordered by the District Court. This motion was not
accompanied by an affidavit. The court, however, already had
in its possession an affidavit concerning the contempt. The
City's motion did not inject into the suit any matters that
were not already contained in its earlier petition. Another
affidavit was unnecessary.
We hold that the District Court was within its
jurisdiction.
The petition for writ of c
We Concur:
4
Chief'Justice A
Justices
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