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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