DA 08
- 0067 IN THE SUPREME COURT OF THE STATE OF MONTANA

2008 MT 415N
LEN WALLACE, Plaint iff and Appellant,
v. NORMAN HAYES, MAGTRAC BOLUS PARTNERSHIP, GERALD HILL, LUCILLE HILL, JACK HEYNEMAN, JOHN H EYNEMAN, and RODNEY J. HAYES,

Defendants and Appellees.

APPEAL FROM: Di strict Court of the Thirteenth Judicial District,

In and For the County

of Yellowstone, Cause No. DV 20 01
- 882 Honorable Gregory

R. Todd, Presiding Judge COUNSEL OF RECORD :

For Appellant: Bruce F. Fain , Murphy, Ki rkpatrick & Fain, PLLP, Billings, M ontana For Appellee s : To m Singer , Axilo n Law Group, PLLC, Billings, M ontana
Submitted on Briefs: November 26, 2008 Decided: December 9, 2008 Filed:

______ ____________________________________

Clerk December 9 20082

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 me morandum decision sh all 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 C ourt’s quarterly list o f noncitable cases published in the Pacific Reporter and Montana Reports. ¶2 The parties have been before this Court in threep revious 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 , 2 008 MT 248, 344 Mont. 523, 191 P.3d 3 6 5 (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
- j udgment order entered by the District Court following our decision in Wallace I

. Inthat decision , w e 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 o rder denying a motion and objection which Wallacefiled 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 July2 0, 2 006 , and was affirmed on appeal by this Court in Wallace II
. Additionally, Wallace objected to the course of actionadopted bythe Receiver ( for the MagTrac Bolus,3

LLC (LLC) ) to d eal with the So uth Dakota litigationreferred to in WallaceI II

. See Wallace III

, ¶ ¶ 5, 15. The Receiver

a dopted ap roceduref

or responding to an affidavit and application for order to show cause filed on August 24 , 200 7, by Irene Lin s ethin the South Dakota Circuit Court. Linseth’s affidavit and application asked the So uth Dakota court to impose a constructive trust on any proceeds received on the LLC’s j udgment against Wallace, and order those p roceeds to be paid to Linseth. ¶5 In response to Wallace’s motion and objection, the Hayes D efendants filed counter - motions for modification of the court’sJuly 20, 2006 injunctionso as to expedite the conclusion of the Rece iver’s work and to collect the Judgment. These counter moti ons 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 objectionand granted the relie f requested in the H ayes D efendantsin their c ounter motions. This Court rejected Wallace’s subsequent petition for writ of supervisory control , and Wallace timelyappeal ed
. ¶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 jurisdic tion s and app ointed a Receiver to dispose of property and, generally, to c arry the Judgment into effect
. Wallace II, ¶ 2
. Subsequently, in its July 31, 2007 p ost - judgment order , the District Court modifiedand then adopted the Receiver’s report and direct ed the4

Receiver to “calculate the final distribution of assets, after dissolving the LLC, per the instructions given.” Wallace appealed the July 31, 2007 order , and weaffirmed
. Wallace III , ¶ 1. ¶8 F ollowing our decision in Wallace III , there were further pro ceedings in the District Court regarding the Linseth litigation in South Dakota. These proceedings included Wallace’s motion and objection and the Hayes D efendants’ counter - motions referred to above. The court heard oral argumento n theseo n October 16, 2 007. F ollowing argument the court entered its October 24, 2007 order as follows: the C ourt has determined that an application for post - judgment relief filed by Irene Linseth in So uth Dakota, which is now set for hearing on October 29, 2007, prese nt s a real and immediate threat to the interests of MagTrac Bolus, LLC , in its judgment ag ainst 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 me mber 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 D efendants with respect to the Linseth application and enforcement of the judgment are aligned completely; that it i s appropriate for judgment proceeds currently in th e Receiver’s possession to b e used to protect the LLC’s interests; that the injunction b arring the parties from pursuing litigation elsewheres hould 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 ag ainst Wallace; that Wallace’s intransigence and wilf ul [sic] refusal to comply with the judgment and orders of this Court has unnecessarily extended this liti gation; that counsel retained by Wallace ostensibly for the LLC in California and South Dakota sh ould 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) relievedW allace of his authority to defend th e 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 theReceiver to commit, expend or distribute the Judgment proceeds currently in his p ossessiona s he determined necessary to defend the LLC in South Dakota; (4) authorized theReceiver to retain counsel in Californiaas selected by the Hayes Defendants , to replacepresent California counsel, and to haven ewc ounsel pursue a motion to set aside the satisfaction of j udgment that Wallace had

p reviouslyf

iled; (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) grant ed the LLC or the Hay es Defendants, as the case may be, judgment ag ainst Wallace for all attorney’s fees and costs incurred by them in collecting the j udgment ag ainst Wallace , in defending the Linseth application , and inm aking permanent as to Wallace the court’s previously
entered injunction. Finally, the court lifted the July 20, 2006 injuncti on as to the Hayes Defendants so as to allow them to collect the j udgment. ¶10 On appeal, Wallace raises six issues. H e contends that the District Court lacked jurisdiction to issue the Oc tober 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 brief s in the instant cause, the July 31, 2007 order
was on appeal, but, a s noted above, we subsequently affirmed the July 31, 2007 orderin Wallace III

. ) F rom his p remise that the District Court was without j urisdiction to enter6

the October 24, 2007 order by reason of hisappeal of the July 31, 2007 order, Wallace argues that , ini ts 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
re dres s in the courts. Additionally, W allace challenges the sufficiency of evidence offered by the Hayes Defendants at the October 16, 2007 hearing. W allace 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 o f 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 ob tain 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 w as Wallace who failed to provide any evidence, and only scant le ga l 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 courtresolved those issues, not b yimposing new remedies, but by makin g some practical adjustments to the responsibilities of th e Re ceiver and the parties. F inally , the H ayes Defendants argue against Wallace’s c onstitutional 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 th e parties’ briefs, w e 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 me morandum 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. H aving 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 appe al, we conclude that Wallace has f ailed 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