No. 96-379
IN THE SUPREME COURT OF THE STATE OF MONTANA
1997
IN RE MARRIAGE OF
RITA H. CANNON,
Petitioner and Appellant,
and
DANIEL H. CANNON.
Respondent and Respondent.
APPEAL FROM: District Court of the Twentieth Judicial District,
In and for the County of Lake,
The Honorable Robert S. Keller, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Timothy J. Lape, Attorney at Law,
Missoula, Montana
For Respondent:
John H. Gilliam, Skjelset & Gilliam,
Missoula, Montana
Submitted on Briefs: April 3, 1997
Decided: May 8, 1997
Filed:
Justice Jim Regnier delivered the opinion of the Court.
Pursuant to Section I, Paragraph 3(c), Montana Supreme Court 1995 Internal
Operating Rules, the following decisionshallnot be cited asprecedentand shall be published
by its tiling as a public document with the Clerk of the SupremeCourt and by a report of its
result to State Reporter Publishing Company and West Publishing Company.
On September 5, 1984, the Fourth Judicial District Court, Lake County, granted a
decreeof dissolution for the marriage of Rita and Daniel Cannon. The decree incorporated
the parties’ written agreement, signed in 1980, setting forth their respective rights and
interestsconcerningreal andpersonalproperty. The parties permanentlyseparatedin August
1990. On October 15, 1990, Rita tiled a multi-count petition and complaint seeking to
obtain a fair distribution of the assetsacquiredduring the parties’ marriage and relationship.
The District Court bifurcated the issueof common law marriage and putative spouseand the
remaining issuesof constructive trust and fraud on the court. On June 16, 1994, the District
Court enteredits findings of fact, conclusionsof law and order holding that Rita was neither
a common law wife, nor putative spouse. The remaining issueswere tried and the District
Court granted a directed verdict against Rita at the close of her case on her claim of
constructive trust. The District Court order filed on February 7, 1996, denied Rita’s claim
of fraud on the court. Rita appealsthis order and the findings and conclusions tiled on
February 7, 1996, by the Twentieth Judicial District Court, Lake County. We affirm.
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The issue on appeal is whether the District Court erred in its conclusion that the
conduct alleged to constitute fraud upon the court did not rise to a legally recognizable
action.
FACTUAL BACKGROUND
Rita Cannonis a Native American and an enrolled member of the ConfederatedSalish
and Kootenai Tribes of the Flathead Reservation. Rita completed the eighth grade before
dropping out of school in the ninth grade. Rita and Dan beganliving together in a common
law marriage in April 1965. The parties had three children of their own, and from 1965
through 1984 they acquired a substantial amount of real and personal property.
In July 1974, Dan and Rita signed a separationagreementprepared by the law firm
in which Keith McCurdy was a member. The terms of the agreement provided that Dan
receive all of the real property (5 10 acres), all of the personal property in his possession
(including all of the farm and ranch equipmentand livestock), and sole custody of their three
children, subject to reasonable rights of visitation and a thirty-day per year temporary
custody right by Rita. Rita signed quitclaim deeds to the real property to Dan. Dan
meanwhile signedover to Rita all of his interest in ajointly owned 1973 Dodge automobile.
The parties purchasedan additional 150 acres for $120,000 in March 1980. Around
this time, Dan went to see Keith McCurdy concerning the validity of the 1974 agreement.
McCurdy drafted a new agreementwhich was signedby Dan and Rita on March 24, 1980.
This agreementawarded Dan all the real property, all of the cattle, the farm machinery and
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equipment, all checking and savingsaccountsin Dan’s name, the hay, grain, and other farm
produce, and all additions to or substitutions for the chattels. The agreement awarded Rita
her automobile and checking account. The agreement further provided that in the event of
Dan’s demise, Rita would receive one-fourth of the net value of Dan’s estate in lieu of her
elective share,homesteadallowance, exempt property, and family allowance. By the terms
of the agreement,if Dan initiated dissolution proceedingsRita would receive one-fourth of
the net value of Dan’sassets,but if sheinitiated dissolutionproceedingsshewould be entitled
to only $10,000 as full satisfaction of all claims. McCurdy, who representedDan concerning
the 1980 agreement, did not allow the parties to sign the agreementthe first time they met
to review the document. McCurdy advised Rita to seek counsel and advised her that the
agreement affected her rights.
From 1980to 1984, Rita managedthe Camas Bath House in Hot Springs, Montana,
which was owned by the ConfederatedSalishand Kootenai Tribes. The Tribes initially paid
for the heating oil for the bathhousebut informed Rita that they would no longer do so after
the end of 1983. Rita did not have the funds to pay for the heating oil and therefore asked
Dan to help her borrow money to purchase the heating oil, as all the property was in his
name, and none in hers. Dan refused to help but suggestedthat Rita could get $10,000 by
filing for a dissolution under the terms of the 1980 Agreement.
Rita went to Keith McCurdy to commence dissolution proceedings. McCurdy
preparedthe dissolutionpleadings,including the petition, admissionof service, andproposed
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findings of fact, conclusions of law, and decree of dissolution. The petition for dissolution
of marriage was signedby Rita on July 23,1984, and Dan signedan admissionof service and
waiver that sameday.
On September 5, 1984, McCurdy appearedwith Rita before the Fourth Judicial
District Court in a default dissolution proceeding. McCurdy’s prepared proposed findings
and conclusions included the statement that the real and personal property agreement of
1980,in which McCurdy representedDan, was “fair, equitableand not unconscionable,and
shouldbe made a part of this Decree.” The District Court grantedthe dissolutionpetition and
signedthe proposed findings and conclusions. After the dissolution hearing, Dan and Rita
continued living together at their home in Hot Springs until August 1990 when they
permanently separated.Thereafter, Rita filed a multi-count petition and complaint seeking
to obtain a fair distribution of the assets acquired during the parties’ marriage and
relationship. Rita appeals from the findings of fact, conclusions of law, and order of the
District Court entered on February 7, 1996, denying her claim of fraud on the court.
DISCUSSION
Did the District Court err in its conclusionthat the conduct allegedto constitute fraud
upon the court did not rise to a legally recognizable action?
This Court reviews a district court’s conclusions of law to determine whether the
court’s interpretation of the law is correct. In re Marriage of Miller (1995), 273 Mont. 286,
291, 902 P.2d 1019, 1021; Carbon County v. Union Reserve Coal Co. (1995), 271 Mont.
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459,469, 898 P.2d 680,686; Steer, Inc. v. Department ofRevenue (1990), 245 Mont. 470,
474-75, 803 P.2d 601,603-04.
Pursuant to Rule 60(b)(3), M.R.Civ.P., a party can seek relief from a judgment for
fraud, either extrinsic or intrinsic. Relief under this provision, however, is only available if
a motion is filed not more than sixty days after judgment. Rita’s motion to modify the
dissolution here was madeapproximately eight yearsafter the decreewas entered. Therefore
she does not have an avenue of relief under this provision. However, Rule 60(b),
M.R.Civ.P., contains a residual clause allowing a party to bring an independent action to
reopen a judgment for fraud upon the court without time limitation. It provides:
This rule doesnot limit the power of a court to entertain an independentaction
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.
This Court haspreviously held that to support an independentaction for fraud under
this residual clause,the fraud must be extrinsic, not intrinsic. Miller, 902 P.2d at 1022; Filler
v. Richland County (1991), 247 Mont. 285,289,806 P.2d 537,539. Extrinsic fraud must be
collateral to the matters tried by the court and may not include fraud in the matters upon
which judgment was rendered. Marriage of Miller, 902 P.2d at 1023; Salway v. Arkava
(1985), 215 Mont. 135, 140, 695 P.2d 1302, 1306.
Rita assertsthat the District Court erred when it concludedthat although the conduct
by McCurdy was egregious, it did not rise to the level of conduct necessary to support a
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legally recognizablecauseof action for extrinsic fraud. The District Court, in its conclusion
number three, specifically statedthat
[t]he conduct in this casewas “egregious,” but it does not rise to the level of
“bribery of ajudge or member of the jury; the fabrication of evidencein which
an attorney hasbeen implicated; or the employment of counselto influence the
court.”
Rita assertsthat this languageemployed by the District Court limits fraud upon the court to
only consist of bribery, fabrication of evidence, or improper influence. Dan argues that the
District Court’s languagederived from Miller, 902 P.2d 1019,only provided examplesof the
type of conduct which can rise to the level of fraud upon the court.
Therefore, this Court must examine the record to determine if the District Court
correctly interpreted the law when it concludedthat the conduct alleged to constitute fraud
upon the court did not rise to a legally actionable level under Rule 60(b), M.R.Civ.P.
Rita specifically allegesthat Keith McCurdy failed to deal candidly with the court, as
he did not inform the court of his prior representation of Dan and of his involvement in
creating the property agreement. She also assertsthat McCurdy’s actions constituted fraud
upon the court becausehe did not inform the court of his alleged belief that the agreement
was unfair and that he presentedproposed findings of fact, and conclusions of law which
stated that the agreementwas fair, equitable, and not unconscionable.
It is clear that these actions do not tit within any of the examplesof extrinsic fraud as
provided in Miller, 902 P.2d 1019. Furthermore, even if the egregiousconduct by McCurdy
constituted fraud, it was intrinsic to the caseand not extrinsic. McCurdy’s failure to inform
the court of his belief that the agreementwas not fair and his failure to introduce evidence
of the parties’assetsand liabilities are directly related to matters upon which judgment was
rendered. This failure did not prevent a fair submission of the controversy, as McCurdy
testified that he did not introduce this evidencebecausethe parties had clearly agreed upon
the distribution of their assets,and that once they had reachedthis agreementhe considered
it to be fair and equitableand not unconscionablefor the parties. The District Court had the
agreementbefore it and had Rita’s own testimony regarding the petition and the agreement
when it specifically incorporated the agreement into the decree,
In addition, this Court has held that false or fraudulent representations or
concealmentswhich are made during court proceedingsare intrinsic and not extrinsic fraud
and therefore are not grounds for reopening a judgment by an independent action. Miller,
902 P.2d at 1023; State CompensationIns. Fund v. Chapman (1994), 267 Mont. 484,490,
885 P.2d 407,411. Therefore, evenMcCurdy’s allegedfailure to disclosehis personalbeliefs
about the agreementdoes not rise to the level of extrinsic fraud, or fraud upon the court as
is required to vacate a final judgment pursuant to the residual clause in Rule 60(b),
M.R.Civ.P.
We therefore affirm the order by the Twentieth Judicial District Court.
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We Concur:
Justices
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Justice W. William Leaphart, dissenting.
I dissent. The District Court held that, although counsel’sconduct in this casewas
egregious,it did not rise to the level of extrinsic fraud, i.e., bribery of ajudge or member of
the jury or the fabrication of evidence,or the employment of counselto influence the court.
In re Marriage of Miller (1995), 273 Mont. 286,292,902 P.2d 1019, 1022.
This Court agrees,holding that the allegedfraud is intrinsic to the case,not extrinsic.
Although I find that it is not easy to neatly categorize acts of fraud as being intrinsic or
extrinsic, this case, I believe, presents elements of both. I agree that counsel’sfailure to
advise the court of his prior representation of Dan and of his involvement in creating the
property agreement would constitute intrinsic, rather than extrinsic fraud.
However, the fact that the judicial process was used as a tool to lever Rita into
accepting a measly $10,000 under the guise of a “divorce” is another matter. The whole
“dissolution” proceedingwas a sham on the court perpetratedfor the solepurpose of denying
Rita her fair share of the marital assets. She neededmoney to buy heating oil. Although
there were sufficient marital assetsto cover this expenseor serve as security for a loan, Dan
refused to give her the money. Insteadhe took advantageof her financial straits and levered
her into filing for divorce so she would be restricted to an award of $10,000; the paltry sum
which had been allotted to her under the property agreement if she tiled dissolution
proceedings. There was, in fact, no dissolution of the marital relationship. The parties
continued living together in their home for another six years. Through the machinations of
Dan and the assistanceof counsel, the court unwittingly gave its stamp of approval to a
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decreewhich allowed Dan to enjoy the best of both worlds. With decreein hand, Dan was
ableto continue his marital relationship with Rita without any further concernthat shemight
lay claim to a fair share of their considerablemarital assets.
Notwithstanding the fact that Rita was herself dupedinto participating in this ruse, the
whole process was, nonetheless,an abuseof the judicial system for illegitimate purposes.
When the court is deceived into allowing the judicial process to be used as a means to
accomplish ulterior goals not contemplated by the law, that is collateral to the matter
ostensibly tried to the court and, in my view, extrinsic fraud.
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