DA 08-0067

IN THE SUPREME COURT OF THE STATE OF MONTANA

2008 MT 415N

LEN WALLACE,

 Plaintiff and Appellant,

 v.

NORMAN HAYES, MAGTRAC BOLUS PARTNERSHIP,

GERALD HILL, LUCILLE HILL, JACK HEYNEMAN,

JOHN HEYNEMAN, and RODNEY J. HAYES,

 Defendants and Appellees.

APPEAL FROM: District Court of the Thirteenth Judicial District,

In and For the County of Yellowstone, Cause No. DV 2001-882

Honorable Gregory R. Todd, Presiding Judge

COUNSEL OF RECORD:

For Appellant:

Bruce F. Fain, Murphy, Kirkpatrick & Fain, PLLP, Billings, Montana

For Appellees:

Tom Singer, Axilon Law Group, PLLC, Billings, Montana

Submitted on Briefs: November 26, 2008

 Decided: December 9, 2008 

Filed:

__________________________________________

Clerk

December 9 2008
2

Justice James C. Nelson delivered the Opinion of the Court.

¶1 Pursuant to Section I, Paragraph 3(d)(v), Montana Supreme Court 1996 Internal 

Operating Rules, as amended in 2003, the following memorandum decision shall not be 

cited as precedent. It shall be filed as a public document with the Clerk of the Supreme 

Court and its case title, Supreme Court cause number and disposition shall be included in 

this Court’s quarterly list of noncitable cases published in the Pacific Reporter and 

Montana Reports.

¶2 The parties have been before this Court in three previous appeals: Wallace v. 

Hayes, 2005 MT 253, 329 Mont. 23, 124 P.3d 110 (Wallace I); Wallace v. Hayes, 2007 

MT 194N, 2007 WL 2306646 (Wallace II); Wallace v. Hayes, 2008 MT 248, 344 Mont.

523, 191 P.3d 365 (Wallace III). The facts surrounding this case are detailed in our three 

previous opinions and, in the interest of brevity, will not be repeated here.

¶3 As in Wallace II and III, the instant appeal involves a post-judgment order entered 

by the District Court following our decision in Wallace I. In that decision, we affirmed 

an amended judgment (the Judgment) confirming an arbitration award for $2.5 million in 

nominal and exemplary damages against Wallace. Wallace I, ¶¶ 22, 60.

¶4 Wallace’s instant appeal is from the District Court’s October 24, 2007 order

denying a motion and objection which Wallace filed the preceding month. In his motion 

and objection, Wallace moved to lift the injunction that barred the parties from hindering 

enforcement of the Judgment. This injunction had been entered by the District Court on

July 20, 2006, and was affirmed on appeal by this Court in Wallace II. Additionally, 

Wallace objected to the course of action adopted by the Receiver (for the MagTrac Bolus, 
3

LLC (LLC)) to deal with the South Dakota litigation referred to in Wallace III. See

Wallace III, ¶¶ 5, 15. The Receiver adopted a procedure for responding to an affidavit 

and application for order to show cause filed on August 24, 2007, by Irene Linseth in the 

South Dakota Circuit Court. Linseth’s affidavit and application asked the South Dakota 

court to impose a constructive trust on any proceeds received on the LLC’s judgment 

against Wallace, and order those proceeds to be paid to Linseth. 

¶5 In response to Wallace’s motion and objection, the Hayes Defendants filed 

counter-motions for modification of the court’s July 20, 2006 injunction so as to expedite 

the conclusion of the Receiver’s work and to collect the Judgment. These countermotions also sought a different course of action to protect the assets of the LLC from the 

Linseth claims in South Dakota.

¶6 Following briefing and argument, the District Court rejected Wallace’s motion and 

objection and granted the relief requested in the Hayes Defendants in their countermotions. This Court rejected Wallace’s subsequent petition for writ of supervisory 

control, and Wallace timely appealed.

¶7 The issues in the instant appeal originate in the July 20, 2006 order which we 

affirmed in Wallace II. In that order, the District Court struck a satisfaction of the 

Judgment which Wallace had filed, ostensibly on behalf of the LLC, to stop execution of 

the Judgment. The District Court also enjoined the parties from pursuing claims in other 

jurisdictions and appointed a Receiver to dispose of property and, generally, to carry the 

Judgment into effect. Wallace II, ¶ 2. Subsequently, in its July 31, 2007 post-judgment 

order, the District Court modified and then adopted the Receiver’s report and directed the 
4

Receiver to “calculate the final distribution of assets, after dissolving the LLC, per the 

instructions given.” Wallace appealed the July 31, 2007 order, and we affirmed. Wallace 

III, ¶ 1.

¶8 Following our decision in Wallace III, there were further proceedings in the 

District Court regarding the Linseth litigation in South Dakota. These proceedings 

included Wallace’s motion and objection and the Hayes Defendants’ counter-motions 

referred to above. The court heard oral argument on these on October 16, 2007. 

Following argument the court entered its October 24, 2007 order as follows:

the Court has determined that an application for post-judgment relief filed 

by Irene Linseth in South Dakota, which is now set for hearing on 

October 29, 2007, presents a real and immediate threat to the interests of 

MagTrac Bolus, LLC, in its judgment against Wallace; that the LLC has 

strong defenses to the Linseth application which must be presented 

forcefully at the upcoming hearing; that Wallace as the managing member 

charged with protecting the LLC’s interests did retain counsel in South 

Dakota but has not allowed counsel to present motions or arguments to 

protect the LLC and has in fact seriously jeopardized the LLC’s interests; 

that the interests of the LLC and the Hayes Defendants with respect to the 

Linseth application and enforcement of the judgment are aligned 

completely; that it is appropriate for judgment proceeds currently in the 

Receiver’s possession to be used to protect the LLC’s interests; that the 

injunction barring the parties from pursuing litigation elsewhere should be 

made permanent and remain in effect forever as to Wallace but lifted as to 

the Hayes Defendants so they can to [sic] collect the judgment against 

Wallace; that Wallace’s intransigence and wilful [sic] refusal to comply 

with the judgment and orders of this Court has unnecessarily extended this 

litigation; that counsel retained by Wallace ostensibly for the LLC in 

California and South Dakota should be replaced with counsel committed to 

enforcing the judgment, and the satisfactions of judgment filed by the 

counsel Wallace chose should be set aside; and that as soon as reasonably 

possible the judgment should be assigned to the Hayes Defendants in return 

for their ownership interest in the LLC so that the responsibilities of the 

Court and the Receiver in this matter may be concluded.
5

¶9 The court’s October 24, 2007 order also (1) relieved Wallace of his authority to 

defend the LLC in the South Dakota court; (2) authorized the Receiver to take all steps 

necessary to preserve the Judgment, including but not limited to, retaining counsel in 

South Dakota to represent the LLC; (3) authorized the Receiver to commit, expend or 

distribute the Judgment proceeds currently in his possession as he determined necessary 

to defend the LLC in South Dakota; (4) authorized the Receiver to retain counsel in 

California as selected by the Hayes Defendants, to replace present California counsel, and

to have new counsel pursue a motion to set aside the satisfaction of judgment that 

Wallace had previously filed; (5) authorized the Receiver to take an assignment from the 

Hayes Defendants of their units and ownership interests in the LLC and, in return, assign 

to the Hayes Defendants the Judgment; and (6) granted the LLC or the Hayes 

Defendants, as the case may be, judgment against Wallace for all attorney’s fees and 

costs incurred by them in collecting the judgment against Wallace, in defending the 

Linseth application, and in making permanent as to Wallace the court’s previously 

entered injunction. Finally, the court lifted the July 20, 2006 injunction as to the Hayes 

Defendants so as to allow them to collect the judgment.

¶10 On appeal, Wallace raises six issues. He contends that the District Court lacked 

jurisdiction to issue the October 24, 2007 order because the issues covered by that order 

are inextricably intertwined with the July 31, 2007 order, and because that order was on 

appeal. (At the time Wallace filed his briefs in the instant cause, the July 31, 2007 order

was on appeal, but, as noted above, we subsequently affirmed the July 31, 2007 order in 

Wallace III.) From his premise that the District Court was without jurisdiction to enter 
6

the October 24, 2007 order by reason of his appeal of the July 31, 2007 order, Wallace 

argues that, in its decision to act without jurisdiction, the District Court’s order violated 

Wallace’s fundamental rights to equal protection, to due process, and to seek legal 

redress in the courts. Additionally, Wallace challenges the sufficiency of evidence 

offered by the Hayes Defendants at the October 16, 2007 hearing. Wallace also argues 

that the District Court’s decision is simply one more attempt to adjust the ownership 

rights between the parties in violation of the doctrine of res judicata and law of the case. 

Finally, Wallace contends that the District Court improperly awarded attorney’s fees as 

part of its order.

¶11 The Hayes Defendants argue that the District Court retained jurisdiction to enforce 

the July 31, 2007 order, and that Wallace did not obtain a stay pending appeal of that 

order. The Hayes Defendants also argue that the October 24, 2007 order was generated 

in response to Wallace’s motion and objection and that it was Wallace who failed to 

provide any evidence, and only scant legal authority, in support of his positions. The 

Hayes Defendants also point out that the District Court has presided in this case for some 

seven years and has an intimate knowledge of the record and the parties. Moreover, the 

Hayes Defendants argue that the court’s October 24, 2007 order addressed the two issues 

that Wallace brought to the court in his motion and objection and that the court resolved 

those issues, not by imposing new remedies, but by making some practical adjustments to

the responsibilities of the Receiver and the parties. Finally, the Hayes Defendants argue 

against Wallace’s constitutional violation, law of the case and res judicata claims, and in 

support of the District Court’s award of attorney’s fees and costs. 
7

¶12 Having reviewed the record and the parties’ briefs, we have determined to decide 

this case pursuant to Section I, Paragraph 3(d) of our 1996 internal operating rules, as 

amended in 2003, which provides for memorandum opinions. It is manifest on the face 

of the briefs and the record before us that this appeal is without merit because the legal 

issues are clearly controlled by settled Montana law which the District Court correctly 

interpreted. Having taken into consideration our decisions in Wallace, I, II, and III, the 

record on appeal, the District Court’s October 24, 2007 order, and the parties’ arguments 

on appeal, we conclude that Wallace has failed to demonstrate that the District Court’s 

findings of fact are clearly erroneous. We also conclude that the court’s legal conclusions 

are correct. 

¶13 Accordingly, the District Court’s October 24, 2007 order is affirmed.

/S/ JAMES C. NELSON

We Concur:

/S/ JIM RICE

/S/ W. WILLIAM LEAPHART

/S/ JOHN WARNER

/S/ BRIAN MORRIS