In Re Marriage of Gudmundson

97-303
No. 97-303
IN THE SUPREME COURT OF THE STATE OF MONTANA
1998 MT 54IN 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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