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No. 00-501
IN THE SUPREME COURT OF THE STATE OF MONTANA
2001 MT 123
TRACY RAUSCH,
Plaintiff and Appellant,
v.
ALAN HOGAN,
Defendant and Respondent.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Russell C. Fagg, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Kenneth D. Tolliver, David P. Wilkins, Wright Tolliver Guthals, Billings, Montana
For Respondent:
Damon L. Gannett, Gannett Law Firm, Billings, Montana
Submitted on Briefs: February 8, 2001
Decided: July 23, 2001
Filed:
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__________________________________________
Clerk
Justice Patricia Cotter delivered the Opinion of the Court.
¶1 This appeal arises from an action to partition property owned jointly by respondent
Alan Hogan (Hogan) and appellant Tracy Rausch (Rausch), who were formerly married.
Rausch sought partition of the property on an equal basis, and Hogan objected. Following
a hearing, the District Court found that Hogan had rebutted the presumption of equal
shares in land held in joint tenancy, and "equitably" divided the property by awarding
100% of the property to Hogan, with Rausch receiving no payment for any portion of the
property. Rausch was awarded payment for half the rental value of the property from the
date the petition was filed. Rausch appeals. We reverse and remand with instructions.
¶2 Rausch raises the following two issues on appeal:
¶3 1. Was retrial of the marital equities barred by collateral estoppel, res judicata,
judicial estoppel, and § 40-4-208, MCA?
¶4 2. Did the defendant meet the burden of rebutting the presumption of equal
shares enjoyed by joint tenants?
Factual and Procedural History
¶5 Rausch and Hogan were married on August 9, 1991, in Sturgis, South Dakota. After
five years of marriage, the parties separated in 1996. During the marriage, the parties'
primary residence was in Stillwater County, Montana. Although the property was
purchased by Hogan before the marriage, Rausch's name was added to the deed in May,
1993, and a joint tenancy with rights of survivorship was created. When the parties
separated, they divided their personal possessions, and entered into a property settlement
agreement on April 18, 1997. This agreement provides in relevant part as follows:
Real Property: The parties have divided all real property between them in a manner
which each agrees is fair and equitable. So that no question exists, the Husband shall
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have as his sole and separate property, all real property currently in his name, and
the Wife shall have as her sole and separate property, all the real property currently
in her name. Notwithstanding the foregoing, Husband and Wife shall continue to
own jointly between them, with the right of survivorship, the parties' residence
located in Stillwater County, Montana . . .
¶6 In its Findings of Fact and Conclusions of Law and final Decree of Dissolution of
Marriage the court concluded, "[t]hat the property division as agreed by the parties in the
Property Settlement Agreement signed by each of them on the 18th day of April, 1997, is
equitable and is hereby approved by this Court."
¶7 Several years after the divorce, wishing to wrap up financial affairs with her former
husband, Rausch filed this action for partition of the Stillwater County, Montana
residence, seeking an equal division of the value of the property. A trial was held in the
partition action. Essentially, Hogan argued that the property settlement agreement entered
into between the parties had been unfair, and that Rausch should be denied any recovery
for her interest in the property because it had been purchased prior to the marriage and
because she did not contribute to the marriage financially. Rausch filed a motion in limine,
seeking to preclude Hogan from reopening or relitigating matters which had been or
should have been raised in the divorce proceeding. The court denied her motion, reasoning
that the property was not divided in the divorce, and concluding that, since a partition
action is an action at equity, surrounding circumstances can be considered by the court in
dividing the property. In its order dismissing the motion in limine, the District Court
specifically noted that, "[t]he parties divorced in 1997 without dealing with the house at
issue in this case." The District Court therefore allowed Hogan to introduce testimony
regarding the marital equities.
¶8 According to the evidence, the property settlement agreement had initially provided
that the parties would continue to hold the house 50/50, or in equal shares after the
divorce. Rausch and Hogan met in Hogan's attorney's office in order to discuss the terms
of the property settlement. Rausch was dissatisfied with this language because of the
difficulty involved in dividing the property with Hogan's children from a previous
relationship if he died. So that Rausch could avoid future dealings with Hogan's children,
the language of the property settlement agreement was changed by Hogan's attorney to
read that the property would be held, "jointly between them, with right of survivorship."
Rausch testified she believed that, with the revised language, her share of the property
remained 50%. There is no evidence in the record that another percentage was bargained
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for.
¶9 At trial, Hogan argued that Rausch was not entitled to half of the property, and that the
50% presumption of ownership in a joint tenancy should not apply in this case. Hogan was
asked to identify some other percentage of ownership he may have had in mind when
executing the deed or when signing the property settlement. He identified none, indicating
that while he was hoping he would not have to pay Rausch for an interest in the house, he
nonetheless agreed to the division of property because he "needed a divorce."
¶10 Ultimately, the District Court concluded that Rausch's interest in the property was not
compensable. In reaching this decision, the court examined the equities underlying the
marriage and the divorce proceeding, and determined that because Rausch had not
contributed significantly to the acquisition or improvement of the property and had not
contributed to the parties' assets during the marriage, she was not entitled to any
compensation for her interest in the residence.
Standard of Review
¶11 This Court reviews a district court's conclusions of law de novo to determine whether
they are correct. Steer, Inc. v. Dept. of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d
601, 603. We review a district court's findings of fact to determine whether they are
clearly erroneous. Interstate Production Credit v. DeSaye (1991), 250 Mont. 320, 323, 820
P.2d 1285, 1287.
Discussion
¶12 Issue 1. Was retrial of the marital equities barred by collateral estoppel, res
judicata, judicial estoppel, and § 40-4-208, MCA?
¶13 Rausch argues that the District Court erred in denying her motion in limine to prevent
Hogan from retrying the merits of the divorce and property settlement. Seeking
application of the doctrine of collateral estoppel, she argues that the District Court should
not have allowed relitigation of issues that were settled in the divorce. We agree.
¶14 The doctrines of res judicata, collateral estoppel, and law of the case, are all based on
a judicial policy favoring a definite end to litigation. Federated Mut. Ins. Co. v. Anderson,
1999 MT 288, ¶ 58, 297 Mont. 33, ¶ 58, 991 P.2d 915, ¶ 58. The doctrine of res judicata
prevents a party from relitigating a matter that the party has already had an opportunity to
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litigate. Federated, ¶ 58.
¶15 Collateral estoppel, sometimes referred to as issue preclusion, is a form of res
judicata. While res judicata bars parties from relitigating claims in subsequent
proceedings based on the same cause of action, collateral estoppel bars the reopening of an
issue in a second cause of action that has been litigated and determined in a prior suit.
Holtman v. 4-G's Plumbing & Heating, Inc. (1994), 264 Mont. 432, 439, 872 P.2d 318,
322.
¶16 This Court applies a three part test to determine if collateral estoppel bars relitigation
of an issue. Haines Pipeline Const. v. Montana Power (1994), 265 Mont. 282, 288, 876
P.2d 632, 636. First, was the issue decided in the prior adjudication identical with the one
presented in the action in question? Second, was there a final judgment on the merits?
Third, was the party against whom the plea is asserted a party or in privity with a party to
the prior adjudication? Haines Pipeline, 265 Mont at 288, 876 P.2d at 636. In re Raymond
W. George Trust, 1999 MT 223, ¶ 42, 296 Mont. 56, ¶ 42, 986 P.2d 427, ¶ 42.
¶17 The second and third prongs of the Haines Pipeline test were clearly met in this case.
The property settlement agreement was approved by both the parties and the court, and
was incorporated into the final Decree of Dissolution. Thus, there was a final judgment on
the merits of the parties' dissolution. The parties are the same in both actions, so the third
prong is met as well. Satisfaction of the first prong, however, is the most important
element of collateral estoppel. Holtman, 264 Mont. at 439, 872 P.2d at 322. In order to
satisfy this prong, the identical issue or "precise question" must have been litigated in the
prior action. Holtman, 264 Mont. at 439, 872 P.2d at 322. We compare the pleadings,
evidence, and circumstances of the two actions to determine whether the issues are
identical. Fadness v. Cody (1997), 287 Mont. 89, 96, 915 P.2d 584, 588.
¶18 In the property settlement agreement, Rausch and Hogan divided all real and personal
property. Moreover, they agreed that with regard to the residence, they would, "continue
to own jointly between them, with the right of survivorship, the residence . . ." In its
Decree of Dissolution of Marriage, the District Court affirmatively found that the property
settlement agreement, which included the joint ownership of the residence, was fair and
equitable. While the property was obviously not partitioned in the divorce, nonetheless the
fairness of the joint ownership of the property was agreed to by the parties, and was
considered and approved by the District Court in the final Decree of Dissolution. This
being so, we find that the identical issue presented here--the fairness of joint ownership of
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the property--was resolved in the dissolution proceeding, and the first prong of the Haines
Pipeline test was met here as well. Accordingly, the principles of collateral estoppel bar
relitigation of the fairness of the joint ownership. We therefore conclude it was error for
the District Court to review and reweigh the relative contributions each party made to the
marriage and the resulting equities of the property division in the partition action.
¶19 Finally, Rausch argues that § 40-4-208, MCA, precludes modification or revocation of
the property settlement agreement. Hogan argues that the dissolution action was not in fact
"opened" as a result of the District Court's judgment. Because we have resolved this case
on the basis of collateral estoppel, we decline to address this argument.
¶20 Issue 2. Did the defendant meet the burden of rebutting the presumption of equal
shares enjoyed by joint tenants?
¶21 Having ruled that the District Court erred in considering the marital equities and the
equities of the property division in the partition action, the question becomes what other
evidence, if any, could be considered by the District Court in determining how to partition
the property? Although the District Court could not disturb the finding in the divorce
decree that joint ownership of the residence was fair and equitable, there remained
unresolved what the parties intended by their declaration that they would continue to hold
the property "jointly between them," as set forth in the property settlement agreement. In
other words, did the parties intend "jointly" to mean "equally," or was there an intent to
hold the property in unequal proportions? In addition, the court could take into account
any matters or events occurring after the decree was entered that rendered equal division
of the property unfair.
¶22 Actions concerning property which is jointly owned are governed by Title 70. Section
70-1-307, MCA, provides:
A joint interest is one owned by several persons in equal shares by a title created by
a single will or transfer, when expressly declared in the will or transfer to be a joint
tenancy or when granted or devised to executors or trustees as joint tenants.
An action for partition is brought under § 70-29-101, MCA, which provides:
When several cotenants hold and are in possession of real property as joint tenants
or tenants in common, in which one or more of them have an estate of inheritance or
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for life or lives or for years, an action may be brought by one or more of such
persons for a partition thereof, according to the respective rights of the persons
interested therein, and for a sale of such property or a part thereof if it appears that a
partition cannot be made without a great prejudice to the owners.
¶23 We turn first to the District Court's finding that the mere filing of the partition action
severed the joint tenancy. The District Court stated:
By filing her partition action, Tracy caused her interest, if any, in the subject real
property to change from that [of] a joint tenant, with the right of survivorship, to a
co-tenant of the real property.
We disagree with the court's finding in this regard. The filing of a partition action does not
sever or alter one's interest in the property. Rather, the rights of the parties to the action are
". . . put in issue, tried, and determined in such action." Section 70-29-201, MCA. The
parties' respective interests in the property remain intact until the judgment of the court
severing the tenancy is entered. We therefore conclude the District Court erred in finding
that the filing of the partition action by Rausch accomplished a severance of the tenancy.
¶24 We now turn to the presumptions which underlie a joint tenancy in property. There is
a rebuttable presumption of equal shares where land is held in joint tenancy. When two
people own real property as joint tenants with the right of survivorship, each owns equal
shares in the property. Matter of Estate of Garland (1996), 279 Mont. 269, 274, 928 P.2d
928, 930. Dern, 279 Mont. at 152, 928 P.2d at 132. Where one party seeks to establish that
the parties intended an unequal division, the intent to confer unequal contributions must be
demonstrated. Dern, 279 Mont. at 153, 928 P.2d at 132. Because Hogan sought the
unequal division, it was incumbent upon him to affirmatively demonstrate that he and
Rausch intended that their joint tenancy be unequal. We find he failed to carry this burden.
¶25 The evidence presented at trial, and the testimony of the parties on the question of
their intent, summarized above, does nothing to rebut the presumption of equal shares. In
fact, the evidence supports a presumption of equal division. The 1993 deed created a joint
tenancy with rights of survivorship. The language of the property settlement agreement
provided that the parties would continue to hold the property as joint tenants with rights of
survivorship. Rausch testified she believed the division of the property would be 50/50.
Hogan did not disagree, and did not suggest in his testimony that some other unequal
division was contemplated when the agreement was reached. Rather, he candidly admitted
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that he hoped not to give her a share of the property, but signed the property settlement
agreement anyway because he wanted the divorce. Moreover, Hogan offered no evidence
of post-decree events which would justify a different result. This being the sum of the
evidence on the parties' intent, and in light of our decision that it was error to consider the
marital equities that were settled by the Decree of Dissolution, we conclude that Hogan
failed to carry his burden of rebutting the presumption of equal shares. Therefore, Rausch
is entitled to judgment of partition as 50% owner of the property.
¶26 We reverse and remand to the District Court for further proceedings consistent with
this opinion.
/S/ PATRICIA COTTER
We Concur:
/S/ KARLA M. GRAY
/S/ W. WILLIAM LEAPHART
/S/ JIM REGNIER
Justice James C. Nelson dissents.
¶27 I respectfully dissent from the Court's opinion. I would affirm the decision of the
District Court.
¶28 As to Issue 1, I am at a complete loss to understand the majority's rationale. As a
prelude to the divorce decree Rausch and Hogan signed a property settlement agreement
and determined to hold the disputed piece of residential property as joint tenants with right
(1)
of survivorship. The trial court found that this agreement was "equitable." Thus, the
court approved the agreement.
¶29 There was no issue in the divorce litigation raised, much less litigated, nor were there
any findings or legal conclusions entered, as to which party owned what percentage
interest in the jointly held property. There was no testimony in the divorce proceedings to
which we have been directed concerning the parties' respective equities in the jointly held
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property. The divorce litigation ended simply with a mutual agreement to hold a certain
property in joint tenancy and the court's approval of that agreement. Nothing more. As a
result, the parties left their marriage owning a property as joint tenants with right of
survivorship--presumptively 50-50, under the law. End of story.
¶30 Under these circumstances, why and how principles of res judicata and collateral
estoppel bar Hogan from presenting proof in a separate partition action to rebut the
presumption of 50 percent ownership, is a mystery to me. Res judicata cannot bar Hogan
from "relitigating" the matter of Rausch's ownership claim because the parties never
"litigated" that claim in the first instance. Similarly, Rausch and Hogan never litigated any
issue regarding the parties' respective percentage of ownership in the jointly held property.
Accordingly, collateral estoppel is not a viable bar to Hogan's proof either. Finally, a
judgment on the merits was never entered respecting the percentage of ownership claim/
issue--the only judgment the divorce court entered was that it was "equitable" that the
parties agree to hold the property as joint tenants following the dissolution of their
marriage. Importantly, there was no evidence, findings, or conclusions, much less any
decision, in the divorce action as to what were the parties' exact percentages of ownership
in the jointly held property. Res judicata and collateral estoppel, thus, have no application
to the partition action.
¶31 Issue 2 is even more problematic. As the majority points out in ¶ 24, the law presumed
that Rausch and Hogan left the divorce holding the joint tenancy property 50 percent each.
As the majority also observes, this legal presumption is rebuttable and the party seeking to
establish an unequal division in a partition action must prove that the joint tenancy
percentages were something other than the presumed 50-50. That, of course, begs the
question of what sort of proof will the party who disputes equal shares have to put before
the fact finder to overcome the presumption.
¶32 Obviously, in the context of this case, the most critical proof that Hogan could have
brought to bear on the percentages issue was evidence of Rausch's pre-marital and marital
contributions, if any, to the property. This is the evidence which the majority
characterizes--or, rather, mis-characterizes--as the "marital equities" evidence. And, as we
learn in ¶ 21, this is the evidence that the majority concludes the trial court erred in
considering. In short, according to the majority, Hogan was barred (by res judicata and
collateral estoppel arising as a result of the divorce case) from putting before the trial court
in the partition action the very evidence that he needed to offer in order to rebut the
rebuttable presumption of equal shares.
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¶33 Not content to leave Hogan's case a lifeless corpse on the courtroom floor, however,
the majority then proceeds in ¶¶ 24 and 25 to fault him for failing to carry his burden of
proof. How could he? The majority made that an impossibility by its decision in Issue 1.
¶34 The bottom line is this: the divorce action and the partition action were completely
discrete and unrelated actions. The divorce proceeding resolved the property distribution
issue and left the parties, by their agreement, as joint owners of the residence. In the
absence of the parties specifying anything in their agreement to the contrary, the law
presumed (rebuttably) that their joint ownership was in equal shares. Importantly, the only
matter the divorce litigation resolved was that the parties would hold the residence as joint
tenants and that it was equitable that they do so.
¶35 The partition action, on the other hand, was brought specifically to severe the parties'
joint interest in the property and, as an integral part of that litigation, to determine whether
the presumption of equal shares could or should be rebutted. The partition litigation--and
not the divorce litigation--necessitated the contributions evidence that Hogan sought to
offer so that, in the words of § 70-29-101, MCA, "the respective rights of the persons
interested [in the property]" could be determined and divided. It is this evidence which, on
the one hand, the majority holds was improperly considered by the trial court but, which,
in the next breath, the majority faults Hogan for not offering.
¶36 The District Court was correct in considering Hogan's evidence, and it was also
correct in awarding him 100 percent of the residence--a property which he brought into the
marriage and to which Rausch contributed little, if anything at all. Our decision in this
case has unfairly deprived Hogan of his lawful interest in the residence. Worse, our
analysis in arriving at this result is reminiscent of a scene from the Three Stooges--the one
where Larry is chucking Curly under the chin while Moe is simultaneously hammering
him on the head. Whup! Whup! Whup!
¶37 I dissent.
/S/ JAMES C. NELSON
Justice Terry N. Trieweiler joins in the foregoing dissent.
/S/ TERRY N. TRIEWEILER
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1. The pertinent part of the settlement agreement states in its entirety: "Notwithstanding
the foregoing, Husband and Wife shall continue to own jointly between them, with the
right of survivorship, the parties residence located in Stillwater, Montana, more
particularly described as follows: [then follows the legal description of the property]."
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