Court Opinion

ID: 9528686
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:43:08.164197+00
Date Added: 2024-06-11T13:27:12.906529
License: Public Domain

ON REHEARING
This opinion supercedes our prior opinion issued January 24, 1985, which is hereby withdrawn.
WALTERS, Chief Justice.
Several months after a divorce decree had been entered, Frances McDonald commenced an independent action against her former husband, Kimber Ray Barlow. McDonald alleged that Barlow had fraudulently misrepresented during property settlement negotiations leading to the divorce the status and value of his interest in a trust. By an amended complaint, McDonald further alleged that income generated by the trust was community property not mentioned in or affected by the property settlement agreement or subsequent divorce decree. Following trial in the independent action, the district court entered judgment for $30,890.70 plus interest and certain costs on behalf of McDonald — an amount far less than she sought. On appeal, McDonald maintains the trial court correctly determined she was entitled to bring this independent action, but incorrectly concluded she had no right to share in distributions made after the parties were divorced. Barlow disputes the propriety of the independent action and, in his cross-appeal, argues issues we need discuss only if we conclude the independent action was proper. Because we hold that McDonald was barred from bringing this independent suit, we do not discuss the other issues raised.
Frances McDonald married Ray Barlow in March, 1947. When his mother died in 1951, Barlow received by devise forty percent of his mother’s one-half interest in the community property owned by his parents. The net value of the bequest, which amounted to a twenty percent interest in certain properties, was $67,273.82 in 1951. By far the most valuable portion of the bequest was corporate stock in two ranching operations — K.C. Barlow, Inc., and K.C. Barlow Ranch, Inc. — which were controlled and managed by Barlow’s father. In 1963, the Barlows transferred all interest they had in the ranching operations (including the interest owned by Ray Barlow that he had received from his mother’s estate) to a master trust administered by the United States National Bank of Oregon. In exchange for transferring his twenty percent interest to the master trust, Ray Barlow was to receive thirty percent of the value of the trust when the trust property was distributed. Hereinafter we will refer to Barlow’s thirty percent interest in the master trust as the “trust interest.” Distributions of Barlow’s share from the master trust were to be made to the K. Ray Barlow individual trust. Although Barlow could exercise no control over the trustee administering the master trust, he could compel distributions from the individual trust. McDonald participated in executing the master trust in 1963.
By the terms of the master trust, the elder Mr. Barlow was given a life estate in the trust assets. Also, upon his death, the master trust would become irrevocable.
The elder Mr. Barlow died in December, 1964. Prior to his death, however, the corporation, K.C. Barlow, Inc., was liquidated and, in March, 1964, that corporation was dissolved. Its remaining assets were transferred to the master trust. In July, 1964, the assets of K.C. Barlow Ranch, Inc. were sold. That corporation however, continued in existence until 1977, when it was dissolved and the balance of its assets were transferred to the master trust. From 1966 until 1977, K.C. Barlow Ranch, Inc. declared dividends to the master trust in various amounts.
McDonald and Barlow separated in 1976 and were divorced on September 2, 1977. Property settlement negotiations occurred during the separation. McDonald was rep*104resented by able counsel during the negotiations, and she also enlisted the advice of a friend who was a prominent local business man. McDonald, her attorney, and her ad-visor all knew the master trust existed, but Barlow and his attorney maintained during the property settlement negotiations that Barlow’s trust interest was not vested, that no distributions had been made from the master trust, and that, in any event, the trust interest was Barlow’s separate property. McDonald made no independent inquiries nor did she compel discovery regarding the trust. The property settlement agreement reached in August, 1977, in which McDonald relinquished all claims to the trust, was merged into the September divorce decree.
Sometime after the divorce decree was entered, McDonald discovered that Barlow had received, through the individual trust, substantial distributions from the master trust. One distribution of $160,714.00 was received in December, 1976 while McDonald and Barlow were separated but still married. Distributions in 1977 after the divorce decree and in 1978 and 1979 brought the total received by Barlow from the trust to $475,368.61.
McDonald commenced this suit independent of the divorce proceedings on July 17, 1978, claiming she was entitled to one-half of all trust distributions received by Barlow. Following a bench trial, the judge entered findings of fact and conclusions of law as required by I.R.C.P. 52(a). The judge found that neither Barlow nor his attorney misrepresented any facts in regard to separate or community property of the parties and that in negotiating the property settlement agreement, McDonald did not rely on Barlow or his representations, but relied upon independent advice from her attorney and from her financial consultant. The court concluded there was no fraud on the part of Barlow in regard to the property settlement agreement or in obtaining the divorce judgment. However, after concluding that the divorce action did not preclude the independent action on principles of res judicata, the trial judge held that McDonald was entitled to a portion of the trust distributions made while the parties were still married, but that she had no right to share in distributions following entry of the divorce decree.1
 Generally, a judgment entered is res judicata with respect to all issues which were or could have been litigated. Compton v. Compton, 101 Idaho 328, 612 P.2d 1175 (1980); Aldape v. Akins, 105 Idaho 254, 668 P.2d 130 (Ct.App.1983). By preventing multiple litigation of the same claim, the doctrine of res judicata furthers important fundamental purposes. The doctrine preserves the acceptability of judicial dispute resolution by preventing inconsistent results; it serves the public interest in protecting the courts against the burdens of repetitious litigation; and it advances the private interest in repose from the harassment of repetitive claims. Aldape v. Akins, supra. In limited circumstances, however, relief from a judgment may be obtained in an equitable independent action. See I.R.C.P. 60(b); Compton v. Compton, supra. In such instances, the policies furthered by granting relief from the judgment outweigh the purposes of res judicata.
As is the case at bar, Compton was an independent equitable action brought by the wife seeking relief from the property division portion of a divorce decree. In discussing the burden borne by one who seeks such equitable relief, our Supreme Court stated:
[T]he independent action in equity is a most unusual remedy, available only rarely and under the most exceptional circumstances. It is most certainly not its function to relitigate issues determined in another action between the same parties, or to remedy the inadvertence or oversight of one of the parties to *105the original action. It will lie only in the presence of an extreme degree of fraud.
101 Idaho at 335, 612 P.2d at 1182. Accordingly, McDonald had the burden “to allege such fraud as to support an independent action for relief from judgment.” Compton, 101 Idaho at 336, 612 P.2d at 1183. Without the existence of the requisite fraud, an independent action in equity may not be brought. Instead, res judicata prevails.
In evaluating the degree of fraud demonstrated by particular facts, we must assess the nature of the relationship between the parties who are alleged to have acted fraudulently as well as the character of the actual conduct involved. Compton v. Compton, supra. Throughout the property settlement negotiations, the relationship between McDonald and Barlow was that of husband and wife. The fiduciary duty arising from that relationship was not affected by the parties’ separation. Id. Thus, during the property settlement negotiations, the fiduciary duty required,
at least, a disclosure by both parties of all information within their knowledge regarding the existence of community property and of pertinent facts necessary to arrive at a reasonable valuation of the property. Like a business partner, each spouse is free to adopt a position favorable to himself or herself regarding the property’s valuation, its inclusion in the community, or other such issues. They are not free, however, to resolve such issues unilaterally by concealing the very existence of particular items or amounts of property.
101 Idaho at 336, 612 P.2d at 1183.
With this understanding of McDonald’s and Barlow’s fiduciary duty to each other in mind, we turn to an analysis of the conduct in this case to determine whether it presents fraud in such degree as to support an independent action for relief from judgment. According to Compton, it is appropriate to consider McDonald’s diligence in challenging Barlow’s representations regarding the master trust as well as the erroneous or misleading nature of the representations themselves. The record indicates that Barlow maintained throughout the negotiations that his trust interest, and any income or proceeds distributed by the trust, were his separate property. His position that the trust interest should not be included in the community was not, according to Compton, a breach of his fiduciary duty to McDonald. Nor did he breach his duty by misstating the value of the trust interest. The record also demonstrates a distinct absence of diligence by McDonald in challenging Barlow’s representations regarding the trust. McDonald made no effort to compel discovery of the terms of the trust, nor did she challenge Barlow’s valuation of the trust interest or his classification of it as separate property. “Her inadvertence or misjudgment in failing to do so when the opportunity was ripe is an excellent example of the type of conduct which the independent action to relieve a party from judgment will not lie to correct.” Compton v. Compton, 101 Idaho at 337, 612 P.2d at 1184. Because McDonald failed to demonstrate the existence of fraud sufficient to support an independent action for relief from judgment, the trial court erred by modifying the property settlement agreement merged into the divorce decree. See Compton v. Compton, supra, and Paul v. Paul, 97 Idaho 889, 556 P.2d 365 (1976).
McDonald argues, however, that this suit independent of the divorce action is not affected by the divorce decree because the property at issue was not contemplated when the property settlement agreement was negotiated. Because the settlement and subsequent decree treated the trust interest as Barlow’s separate property, McDonald asserts the community interest in the trust was not affected. Thus, McDonald argues, the parties became tenants in common as to the community portion of the trust because the divorce decree failed to divide the community interest, and an independent action may be brought to divide the property. We are not presuaded. Although in some circumstances an independent action will lie to divide *106community property not disposed of in a divorce decree, Quinlan v. Pearson, 71 Idaho 26, 225 P.2d 455 (1950), application of that rule is not appropriate under the facts in this case. The property settlement agreement between the parties provided in part:
The wife waives any and all claims against the separate property of the husband, including his interest in a Trust at the U.S. National Bank of Oregon and any proceeds therefrom.
The trial court construed this provision by holding that the agreement waived any right the wife might have in the husband, ’s separate interest in the trust but she did not waive any claim to any interest that she might have in the trust. The court then held that the December 30, 1976, distribution was community property — not the husband’s separate property — and, after deducting a portion allocated to discharge of community obligations, awarded one-half of the net amount to the wife.
We believe the trial court’s construction of the agreement ignores the clear implication of the words “and any proceeds therefrom.” It is undisputed that the trust was established at its inception with the separate property of the husband, together with other property owned by persons other than Barlow and McDonald. Subsequently, any income in the trust estate was acquired by the trust, not by Barlow. See Matter of Marriage of Burns, 573 S.W.2d 555 (Tex.Civ.App.1978). By the property settlement agreement, the wife waived any claim to the proceeds of the trust res, whether those proceeds arguably might be otherwise characterized as community property, separate property, or a mixture of both in a situation where the proceeds result from property which is not held in trust.
The entire trust interest was therefore assigned to Barlow in the property settlement agreement and in the divorce decree. McDonald had ample opportunity to challenge Barlow’s valuation and classification of the trust interest as separate property in the divorce action. She did not contest the status of the trust in that proceeding. Accordingly, we hold this independent action was barred by res judicata and the trial court erred in treating any part of the trust distribution as property not disposed of in the divorce decree.
The judgment of the trial court is reversed. This case is remanded with direction to the district court to dismiss the action on the basis of res judicata. No attorney fees on appeal, costs to respondent cross-appellant, Barlow.
SWANSTROM, J., concurs.

. In amended findings and conclusions, the judge increased the initial award to McDonald by $9,876.21, representing her community interest share of the portion of the 1977 distribution earned while the parties were still married.