DA 06-0572
IN THE SUPREME COURT OF THE STATE OF MONTANA
2007 MT 194N
LEN WALLACE,
Plaintiff and Appellant,
v.
NORMAN HAYES, MAGTRAC BOLUS PARTNERSHIP, LLC GERALD HILL, LUCILLE HILL, JACK HEYNEMAN, JOHN HEYNEMAN and RODNEY J. HAYES,
Defendants, Respondents and Cross-Appellants.
APPEAL FROM: District Court of the Thirteenth Judicial District, In and For the County of Yellowstone, Cause No. DV 01-0882 Honorable Gregory R. Todd, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Bruce F. Fain; Murphy, Kirkpatrick & Fain, Billings, Montana
For Respondents:
Christopher M. Brown; Darrah, Darrah & Brown, Powell, Wyoming (for MagTrac Bolus, LLC)
Tom Singer; Axilon Law Group, PLLC, Billings, Montana (for Norman J. Hayes and Rodney J. Hayes)
Submitted on Briefs: August 1, 2007
Decided: August 14, 2007
Filed: __________________________________________ Clerk Justice Brian Morris 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 Appellant Len Wallace (Wallace) appeals from the District Court’s order denying
Wallace’s motion under M. R. Civ. P. 60(b) for relief from judgment, striking a satisfaction
of judgment entered by Wallace, enjoining further litigation in this matter, and appointing a
receiver. We affirm the District Court’s order.
¶3 The present controversy follows our decision in Wallace v. Hayes, 2005 MT 253, 329
Mont. 23, 124 P.3d 110, in which we affirmed a judgment of $2.5 million against Wallace.
Wallace then filed satisfactions of judgment, ostensibly on behalf of MagTrac Bolus, LLC
(LLC), to stop execution of the judgment. Wallace’s action precipitated a flurry of motions
and hearings in several states, including California, Montana, South Dakota, and Wyoming.
¶4 Wallace filed his original action in 2001 in District Court naming the LLC and its
other members as defendants. The District Court directed the parties to arbitrate the dispute
pursuant to the LLC’s operating agreement and the arbitrator entered a $2.5 million judgment
against Wallace. The District Court affirmed the judgment. Wallace appealed and requested
a stay of execution. The District Court granted the stay on the condition that Wallace post a
2 $3 million bond. Wallace failed to post the bond, however, and the District Court lifted the
stay.
¶5 Norman Hayes (Hayes), a member of the LLC, retained counsel for the LLC in
California. The LLC’s California counsel perfected the judgment and proceeded to execute
against Wallace’s assets there. The LLC had recovered approximately $150,000 by January
2006. At that point, Wallace hired counsel admitted in Montana to appear for the LLC.
Wallace’s retained counsel file a satisfaction of judgment in the District Court. Wallace also
managed to file a satisfaction of judgment in California to end efforts to execute the
judgment there.
¶6 Hayes and the other Respondents then filed a motion in District Court to strike the
satisfactions of judgment, to require Wallace’s Wyoming counsel to prove his authority to
represent the LLC, for injunctive relief against further litigation in this matter, and for the
appointment of a receiver. Wallace moved to disqualify Montana counsel for Hayes and the
other Respondents and argued that the District Court lacked jurisdiction over Hayes’ motion
to strike the satisfaction of judgment because Hayes had failed to file a separate action.
Wallace filed a separate motion for relief from judgment under M. R. Civ. P 60(b).
¶7 The District Court held two hearings after full briefing. The first hearing addressed
the issue of the court’s jurisdiction to hear the present controversy. The second hearing
reached the merits of the motions. No party requested an evidentiary hearing or an
opportunity to present additional evidence. The District Court denied the motion to
disqualify Hayes’ counsel, denied Wallace’s motion for relief from the judgment, determined
3 that it had jurisdiction to strike the satisfaction of judgment, struck the satisfaction of
judgment, enjoined the parties from pursuing other litigation, and it appointed a receiver to
enforce the judgment. Wallace appealed. The LLC did not.
¶8 Wallace argues on appeal that the District Court abused its discretion in denying his
motion under M. R. Civ. P. 60(b)(5) for relief from the judgment. Wallace contends the
District Court discounted Wallace’s right to act as the majority owner of the LLC in having
the satisfaction of judgment filed. Wallace further contends that the District Court erred in
refusing to relieve him of the monetary portion of the judgment because a decision of the
Circuit Court in South Dakota effectively had reversed any determination that the LLC,
owned, or had any rights, in what was known as the Linseth Patent. Wallace further
contends that it would be inequitable to apply the judgment because the basis of the dispute,
the basis of the accounting, and the basis for the conditional award, all hinged upon the
LLC’s ownership of the Linseth Patent.
¶9 Wallace next contends that the District Court abused its discretion in denying him
relief from the judgment under the provisions of M. R. Civ. P. 60(b)(6). Wallace argues that
Hayes prevented the full presentation of the cause, or an inaccurate determination on the
merits, by concealing the existence of the South Dakota court proceedings regarding the
ownership of the Linseth Patent until after the Montana arbitration proceedings had
concluded. Wallace argues that the arbitrator failed to consider the Linseth Patent litigation
in South Dakota and its proper consideration would have changed the outcome, thereby
justifying Wallace receiving relief from the judgment pursuant to M. R. Civ. P 60(b)(6).
4 Similarly, Wallace contends that the District Court erred in determining that res judicata
barred Wallace’s M. R. Civ. P 60(b) motion. Wallace argues that the Montana arbitrator’s
failure to consider the Linseth Patent litigation defeats any claim of res judicata by Hayes and
the other Respondents regarding the Montana litigation.
¶10 Wallace further claims the District Court erred for two reasons in striking the
satisfaction of judgment. First, Wallace contends that a party may challenge a satisfaction of
judgment only through a separate independent action, rather than through post-judgment
proceedings. Second, Wallace contends that res judicata and collateral estoppel barred the
District Court from revisiting the issue of Wallace’s control over the LLC.
¶11 Wallace next argues the District Court abused its discretion in enjoining further
litigation by the parties. Wallace contends that the District Court exceeded its powers by
enjoining litigation in other jurisdictions. Hayes and the other Respondents argue that the
District Court enjoined the parties to this action only over whom it clearly possessed
jurisdiction.
¶12 Finally, Wallace contends that the District Court abused its discretion in appointing a
receiver.
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DA 06-0572
IN THE SUPREME COURT OF THE STATE OF MONTANA
2007 MT 194N
LEN WALLACE,
Plaintiff and Appellant,
v.
NORMAN HAYES, MAGTRAC BOLUS PARTNERSHIP, LLC GERALD HILL, LUCILLE HILL, JACK HEYNEMAN, JOHN HEYNEMAN and RODNEY J. HAYES,
Defendants, Respondents and Cross-Appellants.
APPEAL FROM: District Court of the Thirteenth Judicial District, In and For the County of Yellowstone, Cause No. DV 01-0882 Honorable Gregory R. Todd, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Bruce F. Fain; Murphy, Kirkpatrick & Fain, Billings, Montana
For Respondents:
Christopher M. Brown; Darrah, Darrah & Brown, Powell, Wyoming (for MagTrac Bolus, LLC)
Tom Singer; Axilon Law Group, PLLC, Billings, Montana (for Norman J. Hayes and Rodney J. Hayes)
Submitted on Briefs: August 1, 2007
Decided: August 14, 2007
Filed: __________________________________________ Clerk Justice Brian Morris 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 Appellant Len Wallace (Wallace) appeals from the District Court’s order denying
Wallace’s motion under M. R. Civ. P. 60(b) for relief from judgment, striking a satisfaction
of judgment entered by Wallace, enjoining further litigation in this matter, and appointing a
receiver. We affirm the District Court’s order.
¶3 The present controversy follows our decision in Wallace v. Hayes, 2005 MT 253, 329
Mont. 23, 124 P.3d 110, in which we affirmed a judgment of $2.5 million against Wallace.
Wallace then filed satisfactions of judgment, ostensibly on behalf of MagTrac Bolus, LLC
(LLC), to stop execution of the judgment. Wallace’s action precipitated a flurry of motions
and hearings in several states, including California, Montana, South Dakota, and Wyoming.
¶4 Wallace filed his original action in 2001 in District Court naming the LLC and its
other members as defendants. The District Court directed the parties to arbitrate the dispute
pursuant to the LLC’s operating agreement and the arbitrator entered a $2.5 million judgment
against Wallace. The District Court affirmed the judgment. Wallace appealed and requested
a stay of execution. The District Court granted the stay on the condition that Wallace post a
2 $3 million bond. Wallace failed to post the bond, however, and the District Court lifted the
stay.
¶5 Norman Hayes (Hayes), a member of the LLC, retained counsel for the LLC in
California. The LLC’s California counsel perfected the judgment and proceeded to execute
against Wallace’s assets there. The LLC had recovered approximately $150,000 by January
2006. At that point, Wallace hired counsel admitted in Montana to appear for the LLC.
Wallace’s retained counsel file a satisfaction of judgment in the District Court. Wallace also
managed to file a satisfaction of judgment in California to end efforts to execute the
judgment there.
¶6 Hayes and the other Respondents then filed a motion in District Court to strike the
satisfactions of judgment, to require Wallace’s Wyoming counsel to prove his authority to
represent the LLC, for injunctive relief against further litigation in this matter, and for the
appointment of a receiver. Wallace moved to disqualify Montana counsel for Hayes and the
other Respondents and argued that the District Court lacked jurisdiction over Hayes’ motion
to strike the satisfaction of judgment because Hayes had failed to file a separate action.
Wallace filed a separate motion for relief from judgment under M. R. Civ. P 60(b).
¶7 The District Court held two hearings after full briefing. The first hearing addressed
the issue of the court’s jurisdiction to hear the present controversy. The second hearing
reached the merits of the motions. No party requested an evidentiary hearing or an
opportunity to present additional evidence. The District Court denied the motion to
disqualify Hayes’ counsel, denied Wallace’s motion for relief from the judgment, determined
3 that it had jurisdiction to strike the satisfaction of judgment, struck the satisfaction of
judgment, enjoined the parties from pursuing other litigation, and it appointed a receiver to
enforce the judgment. Wallace appealed. The LLC did not.
¶8 Wallace argues on appeal that the District Court abused its discretion in denying his
motion under M. R. Civ. P. 60(b)(5) for relief from the judgment. Wallace contends the
District Court discounted Wallace’s right to act as the majority owner of the LLC in having
the satisfaction of judgment filed. Wallace further contends that the District Court erred in
refusing to relieve him of the monetary portion of the judgment because a decision of the
Circuit Court in South Dakota effectively had reversed any determination that the LLC,
owned, or had any rights, in what was known as the Linseth Patent. Wallace further
contends that it would be inequitable to apply the judgment because the basis of the dispute,
the basis of the accounting, and the basis for the conditional award, all hinged upon the
LLC’s ownership of the Linseth Patent.
¶9 Wallace next contends that the District Court abused its discretion in denying him
relief from the judgment under the provisions of M. R. Civ. P. 60(b)(6). Wallace argues that
Hayes prevented the full presentation of the cause, or an inaccurate determination on the
merits, by concealing the existence of the South Dakota court proceedings regarding the
ownership of the Linseth Patent until after the Montana arbitration proceedings had
concluded. Wallace argues that the arbitrator failed to consider the Linseth Patent litigation
in South Dakota and its proper consideration would have changed the outcome, thereby
justifying Wallace receiving relief from the judgment pursuant to M. R. Civ. P 60(b)(6).
4 Similarly, Wallace contends that the District Court erred in determining that res judicata
barred Wallace’s M. R. Civ. P 60(b) motion. Wallace argues that the Montana arbitrator’s
failure to consider the Linseth Patent litigation defeats any claim of res judicata by Hayes and
the other Respondents regarding the Montana litigation.
¶10 Wallace further claims the District Court erred for two reasons in striking the
satisfaction of judgment. First, Wallace contends that a party may challenge a satisfaction of
judgment only through a separate independent action, rather than through post-judgment
proceedings. Second, Wallace contends that res judicata and collateral estoppel barred the
District Court from revisiting the issue of Wallace’s control over the LLC.
¶11 Wallace next argues the District Court abused its discretion in enjoining further
litigation by the parties. Wallace contends that the District Court exceeded its powers by
enjoining litigation in other jurisdictions. Hayes and the other Respondents argue that the
District Court enjoined the parties to this action only over whom it clearly possessed
jurisdiction.
¶12 Finally, Wallace contends that the District Court abused its discretion in appointing a
receiver. Wallace argues that a court cannot appoint a receiver if the “applicant has any other
remedy” and argues that Hayes and the other Respondents had another remedy through an
independent action to set aside the satisfaction of judgment.
¶13 We review a district court’s denial of a motion for relief from judgment pursuant to an
abuse of discretion standard. Bragg v. McLaughlin, 1999 MT 320, ¶ 11, 297 Mont. 282, ¶
11, 993 P.2d 662, ¶ 11. A district court’s decision to vacate a satisfaction of judgment
5 presents a question of law that we review to determine if it was correct. Stringer-Altmaier v.
Haffner, 2006 MT 129, ¶ 9, 332 Mont. 293, ¶ 9, 138 P.3d 419, ¶ 9. With respect to a district
court’s decision to issue an injunction, we review subject to a manifest abuse of discretion
standard. Shammel v. Canyon Resources Corp., 2003 MT 372, ¶ 11, 319 Mont. 132, ¶ 11, 82
P.3d 312, ¶ 11. We reverse a district court’s decision to issue an injunction only if the
district court’s abuse of discretion is “obvious, evident or unmistakable.” Shammel, ¶ 12.
Finally, we review a district court’s decision to appoint a receiver under the abuse of
discretion standard. Crowley v. Valley West Water Co., 267 Mont. 144, 150, 882 P.2d 1022,
1025 (1994).
¶14 We have determined to decide this case pursuant to Section I, Paragraph 3(d), of our
1996 Internal Operating Rules, as amended in 2003, that provide for memorandum opinions.
It is manifest on the face of the briefs and record before us that settled Montana law clearly
controls the legal issues and that the District Court correctly interpreted the law.
¶15 We affirm.
/S/ BRIAN MORRIS
We concur:
/S/ W. WILLIAM LEAPHART /S/ JAMES C. NELSON /S/ JOHN WARNER /S/ JIM RICE