In re the Marriage of Wagenman

In re the Marriage of Wagenman, 2016 MT 176 (July 19, 2016) (Wheat, J.) (5-0, rev’d)

Issue: (1) Whether the district court erred in denying Tammy’s Rule 60(b) motion to amend the final decree of dissolution, and (2) whether the district court erred in awarding attorney’s fees to Matt.

Short Answer: (1) Yes, and (2) yes.

Reversed and remanded 

Facts: Matt and Tammy Wagenman married in 1996, and jointly petitioned for dissolution in 2012, each appearing pro se. They have no children, and used the self-help dissolution forms approved by the Court. In the “real property” section of the petition, they indicated they own their marital home in Shepherd. In another section of the petition, they stated the real property should be distributed as described in Exhibit A, which was attached to the petition. Exhibit A is a property settlement agreement, signed and dated Sept. 1, 2011, which details the distribution of the marital assets and debts. The real property division allowed Matt to stay in the marital home as long as he made timely mortgage payments, and required him to refinance the home within one year and remove Tammy from the mortgage or the property would be sold. Upon sale or refinancing, each party would receive 50% of the equity. The petition stated the home was valued at $250,000 with a loan balance of $112,000.

Matt and Tammy appeared for a hearing, and the district court granted the dissolution after a two-minute hearing.  The final decree did not enter the property and debt distribution from Exhibit A and did not incorporate Exhibit A. Instead, the court distributed the marital home to Matt and entered a mortgage debt of $180,000 to Matt, an amount unsubstantiated by the record.

Over the next two years, the parties disentangled their assets. Because Matt had neither sold the house nor paid Tammy any equity two years after the dissolution, Tammy hired an attorney in May 2014, who sent a letter to Matt stating she was going to proceed with the property distribution under the decree. Matt hired an attorney in August 2014, at which time both parties discovered the district court had failed to incorporate Exhibit A into the decree.

At that point, Matt asked Tammy to file a quitclaim deed pursuant to the decree. In September 2014, Matt moved to compel the quitclaim deed from Tammy, and requested attorney fees incurred in bringing the motion. Tammy responded by filing a Rule 60(b)(6) motion to amend to incorporate Exhibit A as originally requested.

Procedural Posture & Holding: The district court held a hearing in October 2014. Matt testified that Tammy had forged his name on the dissolution documents, and he had not signed them. After supplemental briefing, the district court denied Tammy’s motion and granted Matt’s, and awarded Matt his attorney fees. Tammy appeals and the Supreme Court reverses.

Reasoning: (1) The district court applied the Essex test to determine whether Tammy had alleged circumstances extraordinary enough to support a Rule 60(b)(6) motion, and found she had not. The court reasoned that Tammy was aware of the court’s decree and that waiting two and a half years was not reasonable, concluding she was not blameless.

The terms of a separation agreement are binding on a district court unless the court finds the agreement unconscionable. Here, the district court found in the final decree that the petitioners’ proposed division of property and debt was equitable. In filling out the final decree form, the district court left most of the form blank, lending support to Tammy’s argument that the court was relying on Exhibit A to equitably distribute the marital estate.

Without Exhibit A, the final decree fails to comply with § 40-4-201(4)(a) and (b), which require the decree to include the terms for settlement of property and debt. A district court cannot substitute its property division in lieu of the parties’ division unless it finds the parties’ agreement unconscionable. Thus, under the first Essex factor, the district court’s legal error created extraordinary circumstances sufficient to support Tammy’s 60(b)(6) motion.

The second Essex factor requires the movant to have acted within a reasonable time. Tammy filed her motion within eight days of discovering the error, which the Court concludes is reasonable.

Finally, the Court concludes Tammy is blameless for failing to discover the issue, and the error was not due to her actions. Therefore, the district court abused its discretion in denying Tammy’s motion to amend and is reversed.

(2) Because the district court erred on the first issue, it is also reversed on the issue of attorney fees.