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, Judgepresiding.

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 asprecedent andshall be published by its tiling asa public documentwith the Clerk of the Supreme Court and by a report of its result to State Reporter Publishing Company and West Publishing Company. On September5, 1984, the Fourth Judicial District Court, Lake County, granted a decreeof dissolution for the marriage of Rita and Daniel Cannon. The decreeincorporated the parties’ written agreement, signed in 1980, setting forth their respective rights and interestsconcerningreal andpersonal property. Thepartiespermanentlyseparated in August 1990. On October 15, 1990, Rita tiled a multi-count petition and complaint seeking to obtain a fair distribution of the assets acquiredduring the parties’marriage and relationship. The District Court bifurcated the issue of common law marriage andputative spouse andthe remaining issues

of constructivetrust and fraud on the court. On June 16, 1994, the District Court enteredits findings of fact, conclusions of law andorder holding that Rita was neither

a common law wife, nor putative spouse. The remaining issues were 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.

2The 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 andanenrolledmemberof the ConfederatedSalish and Kootenai Tribes of the Flathead Reservation. Rita completed the eighth gradebefore dropping out of schoolin 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 1984they acquired a substantialamount of real andpersonalproperty. In July 1974, Dan and Rita signed a separationagreementpreparedby the law firm in which Keith McCurdy was a member. The terms of the agreementprovided 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 solecustody 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 interestin a jointly owned 1973 Dodge automobile. The partiespurchased

an additional 150 acresfor $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 agreement

awarded Dan all the real property, all of the cattle, the farm machinery and 3equipment,all checking andsavingsaccountsin Dan’sname, the hay, grain, and other farm

produce, and all additions to or substitutions for the chattels. The agreementawarded Rita her automobile and checking account. The agreementfurther provided that in the event of Dan’s demise, Rita would receive one-fourth of the net value of Dan’s estatein lieu of her elective share,homestead allowance,exemptproperty, 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 dissolution proceedings

shewould be entitled to only $10,000asfull satisfactionof all claims. McCurdy, who represented Dan 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 agreementaffected her rights. From 1980to 1984, Rita managed the Camas Bath House in Hot Springs, Montana, which was ownedby the Confederated Salishand Kootenai Tribes. The Tribes initially paid for the heating oil for the bathhouse but 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 purchasethe heating oil, as all the property was in his name, and none in hers. Dan refused to help but suggested that Rita could get $10,000 by filing for a dissolution under the terms of the 1980Agreement. Rita went to Keith McCurdy to commence dissolution proceedings. McCurdy preparedthe dissolutionpleadings,including thepetition, admissionof service, andproposed

4findings of fact, conclusionsof law, and decreeof dissolution. The petition for dissolution

of marriagewas signed

by Rita on July 23,1984, and Dan signedanadmissionof serviceand 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 represented Dan, was “fair, equitableandnot unconscionable,and shouldbe madeapart 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 appealsfrom the findings of fact, conclusionsof law, and order of the District Court enteredon February 7, 1996, denying her claim of fraud on the court. DISCUSSION Did the District Court err in its conclusion that the conduct allegedto constitute fraud upon the court did not rise to a legally recognizableaction? This Court reviews a district court’s conclusions of law to determine whether the court’sinterpretation 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. 5459,469, 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 ajudgment 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 dissolutionherewas madeapproximately eight yearsafter the decree was entered. Therefore she does not have an avenue of relief under this provision. However, Rule 60(b), M.R.Civ.P., contains a residual clauseallowing a party to bring an independentaction to reopen ajudgment for fraud upon the court without time limitation. It provides: This rule doesnot limit the power of a court to entertainan independent action to relieve a party from ajudgment, order, or proceeding, or to grant relief to a defendant not actually personally notified asmay be required by law, or to set asideajudgment for fraud upon the court. This Court haspreviously held that to support an independentaction for fraud under this residualclause,

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 asserts

that the District Court erred when it concludedthat although the conduct by McCurdy was egregious, it did not rise to the level of conduct necessaryto support a

6legally recognizablecause of action for extrinsic fraud. The District Court, in its conclusion number three, specifically statedthat [t]he conduct in this casewas “egregious,” but it doesnot rise to the level of “bribery of a

judge or member of thejury; the fabrication of evidencein which an attorney hasbeenimplicated; or the employmentof counsel to influence the court.” Rita asserts

that this language

employedby the District Court limits fraud upon the court to only consistof bribery, fabrication of evidence,or improper influence. Dan arguesthat the District Court’s language derived 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 allegedto constitute fraud upon the court did not rise to a legally actionablelevel under Rule 60(b), M.R.Civ.P. Rita specifically alleges

that Keith McCurdy failed to dealcandidly with the court, as he did not inform the court of his prior representationof Dan and of his involvement in creating the property agreement. Shealso asserts that McCurdy’s actions constituted fraud upon the court becausehe did not inform the court of his allegedbelief 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 theseactionsdo not tit within any of the examples of extrinsic fraud as provided in Miller, 902 P.2d 1019. Furthermore,evenif the egregious conduct by McCurdyconstituted fraud, it was intrinsic to the case and 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’assets

andliabilities 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 evidencebecause the parties had clearly agreed upon the distribution of their assets, andthat oncethey had reached this agreementhe considered it to be fair and equitableandnot unconscionable for the parties. The District Court had the agreement

before it and had Rita’s own testimony regarding the petition and the agreement when it specifically incorporated the agreementinto the decree, In addition, this Court has held that false or fraudulent representations or concealments

which aremade during court proceedings are intrinsic and not extrinsic fraud and therefore are not grounds for reopening ajudgment by an independentaction. Miller, 902 P.2d at 1023; State CompensationIns. Fund v. Chapman (1994), 267 Mont. 484,490, 885 P.2d407,411. Therefore, evenMcCurdy’s alleged failure to disclosehis personalbeliefs about the agreementdoesnot 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.

8We Concur:

Justices

9Justice 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 a judge or member of thejury 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 alleged

fraud 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 elementsof both. I agree that counsel’sfailure to advise the court of his prior representationof Dan and of his involvement in creating the property agreementwould 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” proceeding

was a shamon the court perpetratedfor the solepurposeof denying Rita her fair shareof the marital assets. Sheneededmoney to buy heating oil. Although there were sufficient marital assets to cover this expense

or serveassecurity for a loan, Dan refusedto give her the money. Insteadhe took advantage of her financial straits and levered her into filing for divorce so shewould 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 continuedliving together in their home for anothersix years. Through the machinations of Dan and the assistance

of counsel, the court unwittingly gave its stamp of approval to a

10decreewhich allowed Dan to enjoy the best of both worlds. With decreein hand, Dan was

ableto continuehis marital relationshipwith Rita without any further concernthat shemight lay claim to a fair shareof their considerablemarital assets. Notwithstanding the fact that Rita was herself dupedinto participating in this ruse, the whole processwas, nonetheless, an abuseof thejudicial 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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