text:
    VICTOR A. JOHANSEN, Petitioner and Appellant, v. STATE OF MONTANA, DEPARTMENT OF NATURAL RESOURCES AND CONSERVATION, Respondent and Cross-Appellant.
    No. 97-278.
    Submitted on Briefs September 18, 1997.
    Decided March 10, 1998.
    1998 MT 51.
    55 St.Rep. 211.
    955 P.2d 653.
    288 Mont. 39.

      For Appellant: William G. Sternhagen, Sternhagen Law Firm, Helena.
    For Respondent: Tommy H. Butler, Special Assistant Attorney General, Montana Department of Natural Resources & Conservation, Helena.
   JUSTICE HUNT

delivered the Opinion of the Court.

¶1 Victor A. Johansen (Johansen) and the Department of Natural Resources and Conservation (Department) have filed cross-appeals from an order of the First Judicial District Court, Lewis and Clark County. Johansen had filed a petition for judicial review in the District Court of the Department’s decision to cancel his lease of agricultural land for failing to make timely lease payments. The District Court granted summary judgment in favor of the Department and dismissed Johansen’s petition for lack of jurisdiction. We reverse and remand.

¶2 The sole issue we address on appeal is whether the District Court erred in holding that it did not have jurisdiction to review Johansen’s petition for judicial review of the Department’s decision to cancel his agricultural lease pursuant to § 77-6-506, MCA, for failing to make timely lease payments.

FACTUAL AND PROCEDURAL BACKGROUND

¶3 For decades, Johansen’s family leased agricultural land from the State of Montana. Johansen continued leasing the same land that had originally been leased by his grandfather. The date when Johansen’s rental payments were due are set by statute. Section 77-6-506(2), MCA. Pursuant to that statute, his latest lease payment was initially due on November 15, 1995. If he failed to make a payment by that date, then the full rental and a $25.00 penalty were due on December 31, 1995. The statute also provides the Department with the discretion to extend the deadline past that date. Specifically, that statute provides:

For agricultural leases and the agricultural portion of leases containing both grazing and agricultural land, when the rental is paid on a crop share basis or on a crop share/cash basis, the rental is due in cash on or before November 15 of the year in which the crop is harvested. If the rental is not paid on or before November 15 of the year of crop harvest, a $25 penalty shall be imposed on the lessee. If the full rental and the $25 penalty are not paid on or before December 31 of the year in which the crop is harvested, the entire lease is canceled. The department may extend the deadline in writing. If the lessee does not make the rental payment by the date of extension, the entire lease is canceled. Any rental payment made after November 15 of the year in which the crop is harvested, including payment made after an extension of the deadline, must include the $25 penalty.

Section 77-6-506, MCA.

¶4 Because Johansen had not paid the rent by November 15, the full rental plus a $25 penalty was due on December 31. Johansen attempted to make this payment from his rural postal box. Postal service for his route is provided by a contract carrier. Contractors, including the contractor on Johansen’s route, routinely accept letters for mailing that are placed in the postal box without the stamps affixed when the customer has provided the correct amount of money for postage. In such a case, the contractor accepts the mail, takes it to the post office, and affixes the postage.

¶5 Johansen testified that he and his father before him have mailed the lease payments in this fashion from his rural postal box for the past 38 years. On Friday, December 29, 1995, Johansen again attempted to mail his lease payment in this fashion. He placed the envelope containing his payment in his rural postal box with 32 cents. The postal carrier did not take the letter, however, because snow had blown into the mailbox. The postal carrier left Johansen a note stating that because the box was filled with snow, she was unable to find all the money to pay the required postage. She requested that Johansen remove the snow.

¶6 On Saturday, December 30, 1995, when Johansen went to the mailbox, he discovered the postal carrier’s message. He removed the snow and again left the rental payment in the mail box with money to pay the required postage. That day the postal carrier found the mail and the money in the mailbox, which had been cleaned. Once again, she declined to accept the letter. She left a note, stating that she did not have any stamps and would be unable to get any more because it was a Saturday.

¶7 The next two days, Sunday, December 31, 1995, and Monday, January 1,1996 were both legal holidays, so the post office was closed and mail was not delivered. See § 1-1- 216(a) and (b), MCA. On Tuesday, January 2, 1996, Johansen went to his mailbox and discovered the note left by the postal carrier the previous Saturday and saw that the envelope containing the rental payment was still in his postal box. That same afternoon, he drove to East Helena and personally mailed the payment from the East Helena post office. However, the envelope did not receive a postmark until the next day, January 3,1996.

¶8 By letter dated January 24, 1996, and delivered February 9, 1996, the Department notified Johansen that it was canceling his agricultural lease, for failure to timely pay his rent. It notified him that he no longer had the right to use the leased land, and that any use would be considered a trespass. The Department also informed him that it would be advertising the land for lease.

¶9 By letter dated April 1, 1996, Johansen requested that the Department reinstate his lease. He argued that the Department had the authority to do so pursuant to § 77-6-211(3), MCA, which provides that a lease may be reinstated where “the violation is not serious enough to warrant cancellation. ...” Alternatively, Johansen requested that the Department give him a contested case hearing pursuant to the Montana Administrative Procedure Act (MAPA), § 2-4-601, et seq., MCA.

¶10 The Department informally discussed the cancellation of the lease with Johansen. With regard to Johansen’s claim that he mailed the letter from the East Helena post office on January 2, 1996, the Department admitted that if had been postmarked that day rather than January 3, it would not have canceled the lease. Subsequently, by letter dated May 30, 1996, the Department denied his request for a contested case hearing, stating that because no person could verify (1) that he indeed placed the rental payment in the mail in a timely fashion; and (2) that the post office routinely accepts letters for mailing without postage stamps affixed to them, there were no issues of fact or law to be resolved by a contested case hearing. It also denied his request for reinstatement of the lease, and stated that the letter constituted a final agency decision pursuant to MAPA, § 2-4-623, MCA, which pertains to final agency decisions adverse to a party in a contested case.

¶11 On June 11, 1996, Johansen requested a redetermination of the Department’s decision or alternatively an appeal to the State Board of Land Commissioners pursuant to § 77-6-211, MCA. In direct response to the Department’s statement that no person could verify whether the postal carrier accepts letters for mailing without postage stamps affixed to them, Johansen submitted a letter from the postmaster in East Helena verifying that the postal carrier accepts such mail so long as money is provided for the stamps. He additionally submitted relevant excerpts from the USPS Handbook. Johansen also challenged the Department’s failure to address or make factual findings or legal conclusions that addressed the issues raised by Johansen in his original request for reinstatement.

¶12 At some point, the postal carrier servicing Johansen’s route testified by affidavit that she routinely accepts letters from the Johansen residence without the stamps affixed when the correct amount of money is provided for postage. She also confirmed Johansen’s statements that she found mail in his mailbox on Friday, December 29, and again on Saturday, December 30, but did not take the mail because snow had blown into the mailbox on Friday, and she was unable to get stamps on Saturday. Although this affidavit was filed with the District Court in connection with various motions below, the record is unclear as to when she signed the affidavit or when Johansen provided it to the Department, if at all.

¶13 By letter dated June 25, 1996, the Department again refused to reinstate his lease and rejected his request for a hearing before the State Board of Land Commissioners. The Department stated that the cancellation of the lease was “automatic.” Although the Department insisted that cancellation was “automatic,” it did not address its statutory authority to extend the rental due date past the December 31,1995 deadline, nor did it explain under what circumstances it has done so in the past. See § 77-6-506, MCA. It also rejected Johansen’s evidence that his rural postal carrier accepted letters without postage affixed to it, even if there was money for the postage in the mailbox along with the letter. Additionally, although it had earlier stated in its April 1, 1996 letter that its decision was a final decision under contested case proceedings pursuant to MAPA, § 2-4-623, MCA, it now stated for the first time that Johansen had no statutory right to a contested case hearing, because termination for nonpayment of rent was automatic pursuant to § 77-6-506, MCA. The Department also stated that its purpose in meeting informally with Johansen was to verify that his payment was not received by the statutory deadline. In its view, whether it set out a formal division of facts and law was thus “irrelevant.” Finally, it stated its view that § 77-6-211, MCA, which allows for reinstatement when the lease violation is not serious, only applies to cases where the lease is canceled “for cause,” such as for overgrazing, and not where the lease is canceled for failure to timely pay rent.

¶14 Consequently, Johansen filed a petition for judicial review with the District Court. The court ruled in favor of the Department on the parties’ cross-motions for summary judgment. It held that the Department’s action in this case was not a contested case proceeding, and that it therefore had no jurisdiction under MAPA to review the agency’s decision. Accordingly, it dismissed the petition for lack of jurisdiction. It is from this decision that the parties have filed cross-appeals.

STANDARD OF REVIEW

¶15 This Court reviews the grant or denial of summary judgment rulings de novo. Seeley v. Davis (1997), [284 Mont. 517], 946 P.2d 119, 121. It applies the same Rule 56, M.R.Civ.P., criteria used by the district court. Seeley, 946 P.2d at 121. In response to a motion for summary judgment in this case, the court dismissed the case based upon lack of jurisdiction. This Court reviews that legal determination to determine whether the court erred. Seeley, 946 P.2d at 121.

DISCUSSION

¶16 The District Court held that the Department’s action in this case was not a contested case proceeding under MAPA, § 2-4-601, et seq., MCA. It held that judicial review pursuant to MAPA was therefore not appropriate, and concluded that it had no jurisdiction to review Johansen’s claim.

¶17 On appeal, Johansen argues that the Department unlawfully denied him his right to a contested case proceeding pursuant to MAPA, § 2-4-601, et seq., MCA. He contends that the District Court did have jurisdiction under MAPA, § 2-4-701, et seq., MCA, to review his petition and that it should have ordered the Department to grant him a full contested case hearing prior to canceling his lease.

¶18 The Department agrees with Johansen that the District Court had jurisdiction to review his petition. However, it disputes Johansen’s contention that he was entitled to a contested case hearing or that the District Court had jurisdiction to review the petition pursuant to MAPA. Instead, it argues that the District Court had authority to review the petition pursuant to the standard of review for informal agency decisions set forth in Langen v. Badlands Co-op State Grazing District (1951), 125 Mont. 302, 234 P.2d 467; and North Fork Pres. v. DSL (1989), 238 Mont. 451, 778 P.2d 862.

¶19 For the reasons elaborated below, this Court agrees with the District Court’s determination that Johansen was not entitled to a contested case hearing and that MAPA was therefore inapplicable. But we do not agree with the court’s conclusion that it therefore lacked jurisdiction to review Johansen’s petition. We hold that the District Court did have jurisdiction to review the Department’s decision to determine whether the lease cancellation was arbitrary, capricious, unlawful, or unsupported by substantial evidence.

I.

¶20 Johansen is correct in asserting that pursuant to MAPA, an administrative agency must afford all parties a trial-type hearing in a “contested case.” Sections 2-4-601, 2-4-612, MCA. He is equally correct in asserting that the District Court has jurisdiction to conduct a judicial review of such contested cases. Section 2-4-701, et seq., MCA. But the statutory requirement of a trial-type hearing does not apply to every situation where a person’s interest is adversely affected by agency action. Rather, such a hearing is required only in “contested cases.”

¶21 A “contested case” within the meaning of MAPA is:

a proceeding before an agency in which a determination of legal rights, duties, or privileges of a party is required by law to be made after an opportunity for hearing. The term includes but is not restricted to ratemaking, price fixing, and licensing.

Section 2-4-102(4), MCA. The lease of agriculture land does not constitute ratemaking or price fixing, and Johansen does not contend that the lease constitutes a “license.” We therefore turn to the statutory provisions governing the lease of agricultural land to determine whether the Department was “required by law” to afford Johansen a trial-type hearing prior to canceling his lease.

¶22 The termination of a lease for failing to make a rental payment is provided for in § 77- 6-506(2), MCA. That section contains no provision requiring the Department to hold a hearing prior to canceling the lease. In contrast, § 77-6-211, MCA, provides for an administrative hearing when a lease is canceled pursuant to § 77-6-113, MCA (for failing to properly manage agricultural lands), § 77-6-208, MCA (for violating rules regarding subleasing of land), § 77-6-209, MCA (for failing to seek approval before changing a grazing lease to an agricultural lease), and § 77-6-210, MCA (for various causes, such as fraud, misrepresentation, or using the land for purposes other than those authorized by the lease). No provision requires the Department to hold a hearing when the lease is canceled for nonpayment.

¶23 Although a contested case hearing is not required by-statute, Johansen argues that such a hearing is required by Montana’s constitution. Specifically, he contends that such a hearing is “required by law” pursuant to Article II, Section 17 of the Montana State Constitution, which provides:

Due process of law. No person shall be deprived of life, liberty, or property without due process of law.

However, Johansen cites no legal authority and sets forth no analysis to support his argument. Johansen fails to provide analysis as to whether he had a property interest in the continuation of the agricultural lease that was canceled for failure to timely pay rent. Even were we to assume that it does constitute “property” within the meaning of Montana’s constitution, he provides no analysis as to what process was due in this case. For example, he cites no case law that requires the Department to hold a formal, pre-termination hearing as opposed to an informal post-termination hearing. Finally, Johansen provides no analysis as to how the Department allegedly violated his constitutional rights.

¶24 Johansen must cite authority for the position he advances. Rule 23, M.R.App.P. It is not this Court’s job to conduct legal research on his behalf, to guess as to his precise position, or to develop legal analysis that may lend support to that position. State v. Carter (1997), [285 Mont. 449], 948 P.2d 1173, 1180; State v. Fina (1995), 273 Mont. 171, 181, 902 P.2d 30, 38. Johansen has failed to establish that the Montana State Constitution required the Department hold a formal, trial-type hearing prior to canceling his lease. We hold that such a hearing was not “required by law” prior to terminating his lease, and the District Court did not have jurisdiction pursuant to MAPA to review his petition.

II.

¶25 Simply because an administrative decision is not a “contested case,” however, does not mean that Johansen has no avenue to seek review of the Department’s decision. Indeed, the Department itself admits that the courts have the inherent power to review its decisions, whether or not they involve “contested cases.” Citing Langen and North Fork Pres.,the Department contends that the District Court may review any informal administrative decision to determine whether the Department used a fair procedure, whether questions of law were properly decided, and whether the decision was supported by substantial evidence. Johansen does not directly respond to the Department’s argument, other than to argue that the District Court has jurisdiction to review its decision pursuant to MAPA. He does not challenge the Department’s interpretation of the correct standard of review for non-MAPA agency decisions.

¶26 In North Fork Pres., this Court addressed its power to review a non-MAPA administrative decision. That case involved a challenge to the Department of State Lands’ approval of an operating plan on an oil and gas lease on school trust lands. North Fork Preservation Association filed a complaint, alleging that the Department of State Lands had failed to prepare an environmental impact statement as required by law. North Fork Pres., 778 P.2d at 863. Upon reviewing the case, this Court noted that § 2-4-704, MCA, the standard of review for judicial review of contested case hearings under MAPA was inapplicable, because that section deals with review of “contested cases,” and that case did not involve a contested case. North Fork Pres, 778 P.2d at 865-66. We thus addressed the standard of review the district court should use in that non-MAPA case and stated:

The review by the district court is only for the purpose of determining the legal rights of the parties involved. This is so because of the division of governmental powers under the Constitution, neither the district court nor the Supreme Court may substitute their discretion for the discretion reposed in boards and commissions by the legislative acts.
The appeal from the commission to the district court is for the purpose merely of determining whether upon the evidence and the law of the action of the commission is based upon any error of law, or is wholly unsupported by the evidence or clearly arbitrary or capricious. On such review courts will only inquire insofar as to ascertain if the board or commission has stayed within the statutory bounds and has not acted arbitrarily, capriciously or unlawfully.

North Fork Pres., 778 P.2d at 866 (citing Langen, 234 P.2d at 470).

¶27 We further stated that in reaching its decision, the Department of State Lands was carrying out a statutory duty assigned to it and not to the courts and that its decision involved expertise within its province. Accordingly, we held that the standard of review to be applied by the trial court and this Court was whether the record established that the agency acted “arbitrarily, capriciously, or unlawfully.” North Fork Pres., 778 P.2d at 867.

¶28 In this case, the Department is charged by the legislature with managing state trust lands, including the leasing of agricultural lands. Section 77-1-301(1), MCA, provides in part:

Under the direction of the board, the department has charge of the selecting, exchange, classification, appraisal, leasing, management, sale, or other disposition of the state lands.

The Department thus has jurisdiction in the first instance to determine whether to cancel a lease. We agree with the Department that it is the courts’ function to review its decision to determine whether its decision is arbitrary, capricious, unlawful, or unsupported by substantial evidence.

¶29 The Department additionally argues that when conducting its review, the District Court should afford its decision great deference. The Department is correct in noting that the courts defer to an agency’s decision where its resolution implicates substantial agency expertise. However, whether Johansen timely mailed his rental payment, whether the U.S. postal service “accepts” letters for mailing without postage on rural routes serviced by a contract carrier where a person has provided money for the postage, or whether mailing takes place upon placing a letter in a mailbox or only upon the receipt of a postmark are not disputes that invoke any particular expertise within the Department’s province. They do not involve the high level of technical expertise that is required, for example, when the Department cancels alease due to mismanagement of State land. Thus, although the reviewing courts will conduct a limited review of the Department’s decision, it is not necessary that they accord any particularly special deference to the decision in this case.

¶30 We hold that the District Court did have jurisdiction to review the Department’s decision to cancel Johansen’s lease for failing to make timely lease payments. We reverse and remand for further proceedings consistent with this opinion.

¶31 Reversed and remanded.

JUSTICES NELSON, TRIEWEILER, REGNIER and LEAPHART concur.


source: Caselaw Access Project

author: JUSTICE NELSON JUSTICE LEAPHART, JUSTICE TRIEWEILER JUSTICE HUNT

license: Public Domain

text:
    DAN EDDLEMAN and JAMES D. SLACK, Plaintiffs-Appellants, v. AETNA LIFE INSURANCE CO., a Connecticut corporation, Defendant-Respondent.
    No. 97-162.
    Submitted on Briefs November 20, 1997.
    Decided March 10, 1998.
    1998 MT 52.
    55 St.Rep. 216.
    955 P.2d 646.
    288 Mont. 50.

      For Appellants: Randy S. Laedeke, Laedeke Law Office, Billings.
    For Respondent: William A. Cole, Dorsey & Whitney, Billings.
   JUSTICE NELSON

delivered the Opinion of the Court.

¶1 This is an appeal from a January 7,1997 order of the Thirteenth Judicial District Court, Yellowstone County, dismissing with prejudice the complaint of Dan Eddleman and James D. Slack (Plaintiffs) filed against Aetna Life Insurance Co. (Aetna) on the ground that Plaintiffs failed to file their return of service of summons within the three year period specified by Rule 41(e), M.R.Civ.P. We affirm.

Background

¶2 Plaintiffs commenced their action with the filing of their complaint on November 12, 1992, claiming that Aetna had violated statutory rights of first refusal allegedly granted to Plaintiffs under §§ 25-13-901 through -904, MCA. Summons was issued April 14, 1993. Thereafter, and despite Plaintiffs’ Response to Rule 7 [of the Rules of Practice of the Thirteenth Judicial District Court] Order on May 14, 1993, that “the summons and complaint in this case will be served on defendant within the next 30 to 60 days,” the case languished.

¶3 On November 9, 1995, the court, pointing out that no proceedings had been taken in the action for two and one-half years, served Plaintiffs’ counsel with notice that, absent a showing of good cause, the action would be dismissed within ten days. Plaintiffs caused their complaint and the summons to be served on the Montana Commissioner of Insurance, Aetna’s statutory agent for service of process, on November 13,1995, at 5:30 p.m. Plaintiffs filed their return of service of process with the Yellowstone County Clerk of the District Court on November 20, 1995. On November 28, 1995, the court entered its order dismissing Plaintiffs’ complaint on the merits. However, the court vacated this order on January 12,1996, on the Plaintiffs’motion representing that the summons and complaint had been served on November 13, 1995, and the return of service had been filed on November 20, 1995, eight days prior to the court’s order.

¶4 Aetna moved to dismiss on January 23, 1996, for untimely service of process under Rule 41(e), M.R.Civ.P. After briefing, the court denied Aetna’s motion on July 24,1996, ruling that process was served within three years of filing the complaint and that, under our decision in Livingston v. Treasure County (1989), 239 Mont. 511, 781 P.2d 1129, the filing of the return of service with the clerk of court was simply a ministerial act which did not affect the timeliness of service of process for Rule 41(e), M.R.Civ.P., purposes. Aetna filed its answer on September 3,1996. However, on December 18, 1996, Aetna moved the court to reconsider its July 24, 1996 order on the basis of our decision in Haugen v. Blaine Bank of Montana (1996), 279 Mont. 1, 926 P.2d 1364, which overruled Livingston. Aetna’s motion was supported by a brief.

¶5 Plaintiffs filed a written objection to Aetna’s motion on January 9, 1997. It is worthy of note, however, that Plaintiffs’ objection, less than a page long, simply stated that they were entitled to rely on the law at the time process was served and that Aetna’s motion for reconsideration was not timely. They filed no supporting brief or memorandum of law; they cited no authority whatsoever to the court; they did not develop any argument in support of their position.

¶6 The court granted Aetna’s motion to reconsider and on January 7,1997, ordered Plaintiffs’complaint dismissed with prejudice. Plaintiffs timely appealed.

Issue

¶7 Did the District Court err in dismissing Plaintiffs’ complaint?

Discussion

¶8 A district court’s determination that a complaint must be dismissed for failure of the plaintiff to comply with Rule 41(e), M.R.Civ.P. is a conclusion of law. See Sinclair v. Big Bud Mfg. Co. (1993), 262 Mont. 363, 366, 865 P.2d 264, 266; First Call, Inc. v. Capital Answering Serv., Inc. (1995), 271 Mont. 425, 426, 898 P.2d 96; Haugen, 279 Mont. at 5, 926 P.2d at 1366. Our review of the District Court’s conclusions of law is plenary. We simply determine whether the court’s interpretation of the law is correct. First Call, 271 Mont. at 426, 898 P.2d at 96 (citing Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603).

¶9 Rule 41(e), M.R.Civ.P, provides in pertinent part:

all actions heretofore or hereafter commenced shall be dismissed by the court in which the same shall have been commenced, on its own motion, or on the motion of any party interested therein, whether named in the complaint as a party or not, unless summons shall have been issued within 1 year, or unless summons issued within one year shall have been served and filed with the clerk of the court within 3 years after the commencement of said action, or unless appearance has been made by the defendant or defendants therein within said 3 years. [Emphasis added.]

In Haugen, we held that the filing of proof of service with the clerk of court is not simply a ministerial act and that the rule clearly and unequivocally requires the dismissal of lawsuits when the return of service is not filed with the clerk of court within three years after the commencement of the action. Haugen, 279 Mont. at 6, 926 P.2d at 1366-67.

¶10 In the case at bar it is undisputed that the return of service of process was not filed with the clerk of the district court within three years after the commencement of Plaintiffs’ cause of action on November 12, 1992, as required by Rule 41(e), M.R.Civ.P. To the contrary, the record clearly reflects that the return of service was filed with the clerk on November 20,1995, some three years and eight days after commencement of the action. Accordingly, under the plain language of Rule 41(e), M.R.Civ.P, as interpreted by our decision in Haugen, the trial court properly dismissed Plaintiffs’ complaint with prejudice.

¶ 11 Notwithstanding, Plaintiffs argue on appeal that the court’s dismissal of their complaint deprived them of procedural due process under Article II, Section 17 of the Montana Constitution because they relied on our decision in Livingston. Under Livingston, we determined that filing proof of service is “simply a ministerial act” and failure to file within three years of the commencement of the action did not require dismissal of the complaint. Livingston, 239 Mont. at 513, 781 P.2d at 1131 (overruled by Haugen, 279 Mont. at 6, 926 P.2d at 1364). We note, however, that this argument was not raised by the Plaintiffs in the District Court. Accordingly, we decline to address it on appeal. Dodd v. City of East Helena (1979), 180 Mont. 518, 523, 591 P.2d 241, 244 (a constitutional issue is waived if not presented at the earliest opportunity) (citing Johnson v. Doran (1975), 167 Mont. 501, 511, 540 P.2d 306, 311; Clontz v. Clontz (1975), 166 Mont. 206, 531 P.2d 1003; and Union Interchange, Inc. v. Allen (1962), 140 Mont. 227, 370 P.2d 492).

¶12 Plaintiffs also argue that our decision in Haugen, should not be applied retroactively. Aside from the fact that Plaintiffs also failed to make, much less develop, this argument in the District Court, this issue was discussed at length and decided against Plaintiffs’ position in Haugen. See Haugen, 279 Mont. at 7-9, 926 P.2d at 1367-69. Accordingly, we decline to discuss this argument further. See Matter of R.B.O. (1996), 277 Mont. 272, 283, 921 P.2d 268, 274.

¶13 We hold that the District Court did not err in dismissing Plaintiffs’ complaint with prejudice. Affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES GRAY and REGNIER concur.

JUSTICE LEAPHART,

dissenting.

¶14 For the reasons set forth in my dissent in Haugen v. Blaine Bank of Montana (1996), 279 Mont. 1, 926 P.2d 1364, I dissent.

JUSTICE TRIEWEILER

dissenting.

¶15 For most of the reasons set forth in my dissent to this Court’s decision in Haugen v. Blaine Bank of Montana (1996), 279 Mont. 1, 926 P.2d 1364, I also dissent from the majority opinion in this case.

JUSTICE HUNT

dissenting.

¶ 16 For the reasons set forth in the dissenting opinions of Justices W. William Leaphart and Terry N. Trieweiler, and my own dissenting opinion in Haugen v. Blaine Bank of Montana (1996), 279 Mont. 1, 926 P.2d 1364, and as the author of Livingston v. Treasure County, the case overturned by Haugen, I dissent from the majority opinion in this case.

      . We note that the Disposal of Foreclosed Agricultural Land Act terminated June 30. 1996. See Sec. 6, Ch. 472, L. 1987.


author: CHIEF JUSTICE TURNAGE JUSTICE NELSON

text:
    THE TOWN OF WHITEHALL, MONTANA, a body corporate and politic, Petitioner and Respondent, v. RICK PREECE and RALPH “BUTCH” JONES, et al., Respondents and Appellants.
    No. 96-648.
    Heard January 13, 1998.
    Submitted January 15, 1998.
    Decided March 10, 1998.
    1998 MT 53.
    55 St.Rep. 219.
    956 P.2d 743.
    288 Mont. 55.

      For Appellant: Patricia L. Day-Moo;re (argued), Whitehall.
    For Respondents: Jack H. Morris (argued), Whitehall; Honorable Joseph P. Mazurek, Attorney General; Stephen C. Bullock (argued), Assistant Attorney General, Helena.
    For Amici Curiae: Mae Nan Ellingson (argued) and Keith Strong, Missoula (Montana Board of Investments); David J. Patterson, Missoula (Montana Association of Counties); Paul J. Luwe, Bozeman (Montana League of Cities & Towns).
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

¶1 The Fifth Judicial District Court, Jefferson County, declared invalid a petition for referendum to repeal a city ordinance requiring metering of water in the Town of Whitehall’s water system. We affirm.

¶2 We address the following issues raised on appeal:

¶3 1. Is this action barred under the applicable statute of limitation?

¶4 2. Did the District Court err when it determined that Town of Whitehall Ordinance Chapter 4.00 was administrative rather than legislative and was therefore exempt from the referendum proceedings allowed under the Montana Constitution and § 7-5-131(1), MCA?

¶5 The Town of Whitehall is a municipality located in Jefferson County, Montana. The Respondents and Appellants appear in their capacity as electors and taxpayers of the Town of Whitehall.

¶6 Whitehall has historically charged its residents a flat rate for water services. However, changes in and improvements to the town’s water system were pending and undergoing public discussion for several years prior to this lawsuit. In August 1992, in recognition that improvements were needed to the town’s water system as a whole, the Montana Public Service Commission (PSC) had approved an increase in water rates. At that time, the PSC directed the town to explore options for reducing its consumption of water, including the use of water meters. In May 1994, the Whitehall Town Council had passed a resolution approving the submission of an application to the State of Montana Department of Commerce for a $350,000 Community Development Block Grant to be used as partial funding for a water system improvement project, and in June 1995, the Town of Whitehall, through its mayor, contracted with the Department of Commerce for that block grant. In August 1995, the Whitehall Town Council had passed a loan resolution authorizing the town to borrow $450,000 from the United States Department of Agriculture Rural Economic Community Development Program to be used for the water system improvement project. In September 1995, Whitehall’s mayor had entered into a Treasure State Endowment Program Grant Contract with the Department of Commerce for a $500,000 grant to be used for the water system improvement project.

¶7 On November 29, 1995, the Whitehall Town Council adopted Whitehall Town Ordinance Chapter 4.00, entitled “Regulation of Water Use.” This Ordinance Chapter required, in part, that a water meter be installed on the service pipe for each water user served by the town water system. Another part of the Ordinance provided that Whitehall’s water rates would no longer be set by flat rate, but would be determined by the amount of water used by each household and each business, as measured by the water meters.

¶8 In January 1996, the Appellants filed with the office of the Jefferson County Clerk and Recorder a petition to place a referendum on the ballot for a special election to repeal Whitehall Town Ordinance Chapter 4.00. The town’s attorney approved the petition for form and compliance with §§ 7-5-131 and -132, MCA, and submitted it to the Jefferson County election administrator to be placed on the ballot for special election.

¶9 On January 31,1996, the Whitehall Town Council directed that suit be brought in District Court pursuant to § 7-5-135, MCA, to determine the validity and constitutionality of the referendum petition. On February 13, 1996, the town filed a complaint seeking a declaration that the petition for referendum was invalid under § 7-5-131, MCA, and the Montana Constitution. Following the parties’ submission of stipulated facts, briefing, and oral argument, the District Court found “generally” for the town and dismissed the petition for a referendum. The court determined that this was an administrative, as opposed to legislative, matter and was thus not subject to referendum. It also determined that allowing the referendum to proceed would potentially interfere with Whitehall’s contractual obligations on the grant and loan contracts.

ISSUE 1

¶ 10 Is this action barred under the applicable statute of limitation?

¶11 A suit to determine the validity and constitutionality of a petition for initiative or referendum must be initiated within fourteen days of the date the petition has been approved as to form by the local government attorney. Section 7-5-135(1), MCA. In this case, the petition for referendum was approved as to form on January 30,1996, and this action was filed fourteen days later, on February 13, 1996.

¶12 Appellants point out that under § 7-5-134, MCA, the county must, as a preliminary matter, approve or reject a petition for initiative or referendum within twenty-one days after the sample petition is submitted for approval as to form. In this case, the sample petition was filed on January 8, 1996, and the notice of approval as to form was filed twenty-two days later, on January 30, 1996. Appellants assert that the maximum time allowable between submission of a referendum for approval by the county and commencement of an action to challenge it is the sum of the time frames allowed under §§ 7-5-134 and -135, MCA: thirty-five days. In this case, a total of thirty-six days elapsed between those two events.

¶ 13 The District Court ruled that this argument did not have merit. We agree. Section 7- 5-135, MCA, sets the limitation period in which a local government must file suit on the validity of a petition for referendum or initiative; § 7-5-134, MCA, does not speak to that issue. Appellants’ consolidation of the two time frames is unsupported by statute; nor have they offered any case law in support of their position. We hold that this action was timely filed within fourteen days of approval of the referendum as to form as required under § 7-5-135, MCA.

ISSUE 2

¶14 Did the District Court err when it determined that Town of Whitehall Ordinance Chapter 4.00 was administrative rather than legislative and was therefore exempt from the referendum proceedings allowed under the Montana Constitution and § 7-5-131(1), MCA?

¶15 Montana’s Constitution reserves to the people of this State the powers to challenge and enact laws through the referendum and initiative processes. In Article V, “The Legislature,” the Constitution provides that “The legislative power is vested in a legislature consisting of a senate and a house of representatives. The people reserve to themselves the powers of initiative and referendum.” Art. V., Sec. 1, Mont. Const.

¶16 In its General Government Article, Montana’s Constitution defines the initiative power at Article III, Section 4. It defines the referendum power in the following section:

Referendum. (1) The people may approve or reject by referendum any act of the legislature except an appropriation of money. A referendum shall be held either upon order by the legislature or upon petition signed by at least five percent of the qualified electors in each of at least one-third of the legislative representative districts. The total number of signers must be at least five percent of the qualified electors of the state. A referendum petition shall be filed with the secretary of state no later than six months after adjournment of the legislature which passed the act.
(2) An act referred to the people is in effect until suspended by petitions signed by at least 15 percent of the qualified electors in a majority of the legislative representative districts. If so suspended the act shall become operative only after it is approved at an election, the result of which has been determined and declared as provided by law.

Art. III, Sec. 5, Mont. Const.

¶17 A third reference to the powers of initiative and referendum appears under the Local Government Article. Article XI, Section 8, Mont. Const., provides:

Initiative and referendum. The legislature shall extend the initiative and referendum powers reserved to the people by the constitution to the qualified electors of each local government unit.

As directed by Article XI, Section 8, Mont. Const., Montana’s legislature has statutorily extended initiative and referendum powers to the electors of local government units:

Right of initiative and referendum. (1) The powers of initiative and referendum are reserved to the electors of each local government. Resolutions and ordinances within the legislative jurisdiction and power of the governing body of the local government, except those set out in subsection (2), may be proposed or amended and prior resolutions and ordinances may be repealed in the manner provided in 7-5-132 through 7-5-137.
(2) The powers of initiative shall not extend to the following:
(a) the annual budget;
(b) bond proceedings, except for ordinances authorizing bonds;
(c) the establishment and collection of charges pledged for the payment of principal and interest on bonds; or
(d) the levy of special assessments pledged for the payment of principal and interest on bonds.

Section 7-5-131, MCA.

¶18 This Court has long recognized a distinction between legislative and administrative or quasi-judicial acts in relation to the powers of initiative and referendum; legislative acts have been held subject to referendum, while administrative or quasi-judicial acts have not. In City of Billings v. Nore (1966), 148 Mont. 96, 104, 417 P.2d 458, 463, this Court described the distinction between legislative and administrative acts as “whether the act was one creating a new law (legislative) or executing an already existing law (administrative).”

¶19 The Appellants point out that initiative and referendum powers must be broadly construed to maintain the maximum power in the people. See Nicholson v. Cooney (1994), 265 Mont. 406, 411, 877 P.2d 486, 488. Their argument continues based upon the special concurrence to this Court’s opinion in Greens at Fort Missoula v. City of Missoula (1995), 271 Mont. 398, 897 P.2d 1078. In Greens, the issue was whether a city referendum could validly cancel rezoning of an area then newly annexed to the City of Missoula. The parties debated whether rezoning was a legislative act, like zoning, or an administrative act not subject to referendum. The Court determined that rezoning, like zoning, is a legislative act, and is therefore subject to referendum. Greens, 271 Mont. at 403, 897 P.2d at 1080-81. In a special concurrence, Justice Nelson concluded that under Montana’s Constitution, any act of a local government body — not just a legislative act — is subject to referendum. Greens, 271 Mont. at 407, 897 P.2d at 1083-84. Justice Nelson reasoned that the reference to “any act of the legislature” in Art. III, Sec. 5, Mont. Const., does not distinguish between legislative and administrative or quasi-judicial acts in describing the powers of initiative and referendum. Greens, 271 Mont. at 407, 897 P.2d at 1083.

¶20 Local governing bodies are empowered to exercise legislative, administrative, and other powers pursuant to Article XI, Section 4, Mont. Const. Based on the concurring opinion in Greens, Appellants assert that § 7-5-131, MCA, is unconstitutional insofar as it limits the referendum power against local government to “[r]esolutions and ordinances within the legislative jurisdiction and power of the governing body of the local government....”

¶21 Courts in other jurisdictions with constitutional provisions extending the power of referendum to “acts of the legislature” have recognized “act” as a term of art, meaning a bill passed by the legislature and enacted into law. See, e.g., Whittemore v. Terral (Ark. 1919), 215 S.W. 686, 687; Weldon v. Bonner County Tax Coalition (Idaho 1993), 855 P.2d 868, 875; Klosterman v. Marsh (Neb. 1966), 143 N.W.2d 744, 749; Herbring v. Brown (Or. 1919), 180 P. 328, 330. This is consistent with authority generally addressing the meaning of an “act of the legislature.” See Black’s Law Dictionary 25 (6th ed. 1990), defining “act” in the sense of “legislative act” as “[a]n alternative name for statutory law.”

¶22 Moreover, the distinction recognized in Nore and other Montana cases between legislative acts and administrative or quasi-judicial acts vis-a-vis their subjectivity to referendum applies in virtually all other jurisdictions. The “sound rationale for limiting the referendum to legislative actions is that to permit referenda on executive and administrative actions would hamper the efficient administration of local governments.” Wennerstrom v. City of Mesa (Ariz. 1991), 821 P.2d 146, 149. See also City of Idaho Springs v. Blackwell (Colo. 1987), 731 P.2d 1250, 1253; In re Supreme Court Adjudication of Initiative Petitions in Norman, Oklahoma Numbered 74-1 and 74-2 (Okla. 1975), 534 P.2d 3. The Supreme Court of Nebraska has reasoned:

[T]o allow [the referendum] to be invoked to annul or delay executive conduct would destroy the efficiency necessary to the successful administration of the business affairs of a city. In many cases it would entirely prevent the exercise of the executive power necessary to carry out the acts determined upon by the legislative department. In the absence of a very clear declaration to the contrary it must be presumed that the power of referendum was intended to apply solely to the legislative powers of the city.

Read v. City of Scottsbluff (Neb. 1941), 297 N.W. 669, 671 (quoting 7 McQuillin, Municipal Corporations, Supp. 6621, sec. 351c).

¶23 Montana’s 1889 Constitution reserved to the people “power to propose laws, and to enact or reject the same at the polls.” Art. V, Sec. 1,1889 Montana Constitution. No case law under the 1889 Constitution suggests that the powers of initiative and referendum in Montana ever extended to anything other than legislative acts. Nor does anything in the transcript of the proceedings of the 1972 Constitution suggest an intent to expand the power of initiative and referendum to anything other than legislative power. In fact, in recommending the adoption at the 1972 Montana Constitutional Convention of the referendum provision which was adopted as Article III, Section 5, Delegate Mark Etchart stated, “This provision is parallel to the present referendum provisions as contained in Article V, Section 1, of the present Constitution.” 1972 Mont. Const. Conv. Tr., March 18, 1972, Vol. VII at 2717. In short, Montana’s 1972 Constitution does not contain a “very clear declaration to the contrary,” as the Nebraska court suggested is required, to the general rule that the power of referendum is intended to apply solely to legislative powers.

¶24 Instead, as noted above, the provision by which the people retain the right of initiative and referendum appears in the Constitutional Article on “The Legislature.” No comparable provisions appear in the Articles concerning the Executive and the Judiciary. Article VI, Section 4, Mont. Const., vests the entire executive power with the governor. There is no reservation of executive power to the people by initiative and referendum. Article VII, Section 1, Mont. Const., vests the judicial power of the state in this Court, the district courts, justice courts, and other courts that the legislature may create. There is no reservation of judicial power to the people by initiative and referendum.

¶25 Under Article XI, Section 8, Mont. Const., the Montana Legislature is to extend to the qualified electors of local government units “the initiative and referendum powers reserved to the people by the constitution.” Even under the policy of broadly construing the powers of initiative and referendum, the legislature cannot extend to the people greater powers against local government than those which the people have reserved to themselves in the Constitution. The powers of initiative and referendum have been reserved under the Constitution as to legislative acts only.

¶26 For these reasons, we decline to abandon the rule set forth in Nore or to adopt the position set forth in the concurring opinion in Greens. We reaffirm that under Montana’s Constitution, the people have retained the powers of initiative and referendum as to legislative acts only. Because we so rule, the question here raised as to the constitutionality of § 7-5-131, MCA, is resolved in the statute’s favor.

¶27 Our next task is to determine whether Whitehall Town Ordinance Chapter 4.00 is legislative or administrative in nature. It is agreed that denomination of an act of local government as a resolution or as an ordinance is not dispositive as to whether the act is legislative or administrative; that determination is fact-driven. We recognize, as suggested in the briefs and at oral argument, that guidelines in addition to those set forth in Nore will assist in making such a determination.

¶28 Counsel have pointed out, and we agree, that the expansion of the Nore standard set forth in Chouteau County v. Grossman (1977), 172 Mont. 373, 563 P.2d 1125, and Dieruf v. City of Bozeman (1977), 173 Mont. 447, 568 P.2d 127, is not of assistance. In those cases, this Court held that local governments were performing administrative functions based upon “existing law” consisting of statutory grants of authority to local governments. In Grossman, the existing law was a statute authorizing local governments to lay out, maintain, control and manage county roads; the Court held that this statute rendered administrative a county’s decision to expend funds and accept bids to pay for paving a road. Grossman, 172 Mont. at 378, 563 P.2d at 1128. In Dieruf, the Court held that a statute authorizing city or county commissions to assess property owners for improvements to create off street parking rendered administrative the City of Bozeman’s adoption of an ordinance establishing a formula for assessing property for purposes of creating an off street parking facility and a resolution creating a special improvement district to establish that facility. Dieruf, 173 Mont. at 451, 568 P.2d at 129-30. The rule adopted in Grossman and Dieruf renders the Nore standard practically meaningless, because virtually all municipal actions are, either directly or indirectly, taken pursuant to statutory authority. Therefore, to the extent that Grossman and Dieruf stand for the rule that a local government’s act is administrative based solely upon a statutory grant of authority, we hereby overrule those cases.

¶29 The amicus brief submitted by the office of Montana’s Attorney General recommends guidelines for distinguishing between legislative and administrative acts of a local government set forth by the Supreme Court of Kansas in Wichita v. Kansas Taxpayers Network (Kan. 1994), 874 P.2d 667. The first guideline in Kansas Taxpayers is essentially the distinction set forth by this Court in Nore. The other three guidelines expand upon and add to that distinction. We hereby approve and adopt the Kansas Taxpayers guidelines for use in Montana. The guidelines are:

1. An ordinance that makes new law is legislative, while an ordinance that executes an existing law is administrative. Permanency and generality are key features of a legislative ordinance.
2. Acts that declare public purpose and provide ways and means to accomplish that purpose generally may be classified as legislative. Acts that deal with a small segment of an overall policy question generally are administrative.
3. Decisions which require specialized training and experience in municipal government and intimate knowledge of the fiscal and other affairs of a city in order to make a rational choice may properly be characterized as administrative, even though they may also be said to involve the establishment of a policy.
4. No one act of a governing body is likely to be solely administrative or legislative, and the operation of the initiative and referendum statute is restricted to measures which are quite clearly and fully legislative and not principally executive or administrative.

Kansas Taxpayers, 874 P.2d at 671-72.

¶30 Applying these guidelines to the facts of the present case, we begin with the question of whether Whitehall Town Ordinance Chapter 4.00 makes new law or executes existing law. The Town of Whitehall argues that the ordinance executes existing laws, those being the town council’s prior resolutions to seek grants and a loan to make improvements to the Whitehall water system. In the town’s view, those resolutions were its legislative acts. We note that even a cursory examination of the applications for grants establishes that water meters were part of Whitehall’s water system improvement plan.

¶31 However, Appellants claim that a view that the first-in-time" act by the town council is the only “legislative” act allows for artificial manipulation by the local government and yields no meaningful distinction between legislative and administrative acts at all. Appellants argue that Whitehall’s voters never had the opportunity to exercise their legislative review authority with regard to the proposed improvements, because the details of the improvements were not previously acted upon by the town council in any manner by which effective review was possible. They point out that Ordinance Chapter 4.00 is the first act of the Whitehall Town Council which specifically adds the new requirement that water meters be installed for the users of Whitehall’s water system.

¶32 In this case, we conclude that application of this first guideline does not conclusively establish whether Ordinance Chapter 4.00 is legislative or administrative. We therefore proceed to consider the other three guidelines.

¶33 The second Kansas Taxpayers guideline asks whether the ordinance deals with a small segment of an overall policy question. In this case, the overall question was how to improve the town’s water system to provide water to consumers. The record includes copies of Whitehall’s 1994 applications for a Community Development Block Grant and for a grant from the Treasure State Endowment Program, which explain the nature of the problem which the town was facing. Portions of the existing water system dated back to 1915. The town had had problems for a decade with low water pressure and inadequate fire flows. In 1991, the town had retained a consulting firm to perform an analysis of the water system to determine deficiencies and make recommendations for improvements. Replacing worn out and obsolete pipes and installing a new 500,000 gallon water reservoir were two aspects of the proposed improvements to Whitehall’s water system to increase water capacity and pressure. Installation of water meters to encourage water conservation was another.

¶34 As mentioned above, in 1992 the PSC had directed Whitehall to explore options for reducing its consumption of water, including the use of water meters. Whitehall’s water system used more than three times as much water as did the system of a comparable Montana town where water was metered. The use of water meters had been proposed and specifically identified as a goal in the project summaries in both the Treasure State Endowment Program Grant application and the Community Development Block Grant application. We conclude that the decision to install water meters was a small segment of an overall policy question.

¶35 As to the third guideline, the most effective means of operating and managing a city-wide water system reasonably fits within the context of decisions that require specialized knowledge and experience with respect to city management. In Kansas Taxpayers, which involved an ordinance concerning billing for a municipality’s storm water utility system, the court stated:

The physical structure of the system, maintenance, and fee assessment and collection all fit within the purview of the City’s expertise. The City already owns and maintains the existing system; [the challenged ordinance] also fits within a city’s expertise in terms of fiscal management.

Kansas Taxpayers, 874 P.2d at 672. The same may be said here. The best method of billing for the use of water services is clearly a part of a larger decision-making function requiring specialized knowledge and experience with respect to city management.

¶36 While the record does not indicate that prior to the enactment of Whitehall Town Ordinance Chapter 4.00, the 'Whitehall Town Council had voted upon the singular issue of installing water meters, the record does establish that the proposal to install water meters had been endorsed as part of several acts of the town council, specifically the resolutions to submit the two grant applications. The town has submitted into the record copies of numerous notices of town meetings in which water meters were listed as a topic of discussion.

¶37 Among those, an April 11, 1994 public hearing included a “Review of [the] Community Development Block Grant Program,” a “Review [of] General Needs,” and solicitation of comments from the public. That public hearing preceded the town council’s April 14,1994 meeting which included agenda items on finalizing the financial plans for the water project and grant applications plans, and its May 23,1994 resolution approving the submission of the application for a Community Development Block Grant. The Community Development Block Grant application included a statement in the initial project description that “water meters will be installed on individual residential and commercial services to encourage conservation of water,” and, in the body of the application, several paragraphs on the water meter plan.

¶38 Similarly, a public meeting announced in two area newspapers, the Whitehall Ledger and the Montana Standard, was held on March 23,1995, “to provide the community with updated information on the proposed water improvements and the results of the grant applications.” Thereafter, the notice of the July 10,1995 town council meeting included as an agenda item the “TSEP contract,” which grant contract was then approved by resolution of the town council and subsequently entered into by the mayor on the town’s behalf on September 4, 1995. The project summary included in the TSEP (Treasure State Endowment Program) grant application stated that “water meters will be installed on individual residential and commercial services to encourage conservation of water.”

¶39 The parties have stipulated that various citizens of Whitehall had previously voiced objections, either informally, or not properly formalized, concerning the installation of water meters. The existence of the previous public hearings and town council resolutions and the previous objections to the installation of water meters confirms that this issue was not addressed for the first time with the adoption of Whitehall Town Ordinance Chapter 4.00. We are thus led to the conclusion that Whitehall Town Ordinance Chapter 4.00 was not “quite clearly and fully legislative” under the fourth Kansas Taxpayers guideline but was, to at least some extent, an administrative act to carry out previous plans to which the council had agreed.

¶40 Using the guidelines set forth in Kansas Taxpayers and now adopted by this Court, we conclude that the enactment of Whitehall Town Ordinance Chapter 4.00 was an administrative act and was accordingly not subject to referendum. Having so determined, we hold that the District Court did not err in declaring the referendum invalid. We therefore need not address the issue raised on appeal concerning whether the referendum was unconstitutional because it would substantially interfere with contracts.

¶41 We do not address the statutory debt limitation issue raised at the end of Appellants’ opening brief because the issue was not raised before the District Court. See Kapner, Wolfberg & Assoc. v. Blue Cross (1995), 270 Mont. 283, 286, 891 P.2d 530, 532.

¶42 We affirm the decision of the District Court.

JUSTICES REGNIER, LEAPHART, HUNT, TRIEWEILER and GRAY concur.

JUSTICE NELSON

specially concurs.

¶43 Having now had the benefit of extensive briefing and oral argument on the issue, I agree that my concurrence in Greens at Fort Missoula v. City of Missoula (1995), 271 Mont. 398, 897 P.2d 1078, did not correctly interpret the phrase “any act of the legislature.” I am satisfied that the word “act” as used in that phrase was clearly contemplated by the framers of Montana’s Constitution to be synonymous with “law” or with a bill which has been enacted into law. Moreover, in the case at bar, it is also clear that the electors’ constitutional right of referendum on the matter of the water meters was preserved in that the electors, having been given due notice and opportunity to be heard (as set out in the Court’s opinion), had the ability to challenge by referendum the various water-improvement-project resolutions passed by the Whitehall Town Council. In my view, Ordinance 4.00 simply implemented administratively the legislative act that had been accomplished in the resolutions. Accordingly, I concur.


author: JUSTICE TRIEWEILER

text:
    IN RE MARRIAGE OF GENE M. GUDMUNDSON, Petitioner, Appellant, and Cross-Respondent, and GENG HUI GUDMUNDSON, Respondent, Respondent, and Cross-Appellant.
    No. 97-303.
    Submitted on Briefs February 5, 1998.
    Decided March 10, 1998.
    1998 MT 54.
    55 St.Rep. 226.
    955 P.2d 648.
    288 Mont. 70.

      For Appellant: Robert T. Cummins, Attorney at Law, Helena.
    For Respondent: Ronald F. Waterman; Gough, Shanahan, Johnson & Waterman; Helena.
   JUSTICE TRIEWEILER

delivered the opinion of the Court.

¶1 Gene and Geng Hui Gudmundson filed a joint petition for dissolution of their marriage in the District Court for the First Judicial District in Lewis and Clark County. The District Court entered a decree of dissolution which adopted the parties’ settlement agreement. Geng Hui moved to set aside the judgment, pursuant to Rule 60(b), M.R.Civ.R That motion was not decided by the District Court and, after a notice of entry of judgment was filed, Geng Hui made a second motion to set aside the judgment. After a hearing, the District Court held that the first motion was deemed denied, that a second motion was not allowed, and that the property distribution portion of the agreement should be reopened due to ambiguities in the agreement. Gene appeals the District Court’s order to reopen, and Geng Hui cross-appeals the District Court’s failure to consider the second Rule 60(b) motion, and its failure to set aside the entire agreement. We reverse the order of the District Court and remand to the District Court for further proceedings.

¶2 The sole issue on appeal is whether the District Court erred when it denied Geng Hui’s motion to set aside the judgment pursuant to Rule 60(b)(3), M.R.Civ.R, and reopened only the property distribution portion of the separation agreement.

FACTUAL BACKGROUND

¶3 Geng Hui was born and raised in China. In 1987, she met and married Gene Gudmundson in China. The following year they moved to White Sulphur Springs, Montana, where Gene had purchased a chiropractic practice. They had two children, who were born in 1988 and 1990. In 1993, Geng Hui became a citizen of the United States.

¶4 Geng Hui could not speak or read English when she came to Montana. She attempted at first to learn English by watching television and language video tapes, conversing with friends, and reading children’s books. When she began formal English studies in 1995, her reading skills were evaluated at approximately a first-grade level, and her speaking skills were at approximately a fourth-grade level.

¶5 Gene and Geng Hui’s marital problems led Geng Hui to contact an attorney in 1993 about a possible dissolution. In September 1994, she moved to Helena for a three-month period. When she returned to live with Gene and the children in White Sulphur Springs, the marital problems continued, and in the summer of 1995, they agreed to dissolve their marriage.

¶6 Gene contacted John Mahan, an attorney who had represented the couple in a land purchase a few years earlier, to represent them in the dissolution. Geng Hui alleges that Gene forced her to agree to their mutual representation by Mahan with a threat that he would use her three-month absence from the home as a basis for denying her custody of the children and any marital property. Gene contends that he merely agreed to pay for Mahan’s services and suggested dual representation so that they could both save time and legal expenses.

¶7 Gene and Geng Hui discussed a custody arrangement and property division before they met with Mahan. Gene asserts that Geng Hui fully understood and agreed with all the terms of their informal arrangement, while Geng Hui contends that their discussions were limited and did not lead to a mutual agreement for custody and the distribution of property.

¶8 In approximately June 1995, Gene gave Mahan a written copy of the agreement and asked him to put it into legal form. They all eventually met in Mahan’s office, where, according to Mahan, he went over in detail each of the provisions of the agreement with the parties and made sure that they both understood them. He testified by deposition that he explained to each of them the applicable law and their rights, and that he made very clear that he would not handle their case if they did not have a mutual agreement. Mahan also talked to the parties on the telephone and met with them individually at various times during his representation. The only alterations that were made to the initial agreement were the addition of a provision regarding Geng Hui’s name change and a provision that Gene would make the house payment every other month “in lieu of child support.” The parties signed the agreement on September 21, 1995.

¶9 The couple’s main assets include a spa/motel business in White Sulphur Springs, forty acres of unimproved land near White Sulphur Springs, and the family home. All of the properties are encumbered by debt. The parties dispute whether Gene’s chiropractic business, which was never mentioned in the agreement, should also be included and considered as a marital asset.

¶10 The agreement awarded Geng Hui the family home and all of its furnishings and effects. Gene signed a quit-claim deed to transfer his interest in the home to Geng Hui. They shared responsibility for the house payments. Gene agreed to make the $504 payment every other month. Gene received full title to the spa/motel and the forty acres of land. In addition, each party kept their respective bank accounts and automobiles, as well as responsibility for the debts on each vehicle. The agreement does not state a value for any of the property.

¶11 Gene and Geng Hui agreed upon, and were awarded, joint custody of the children. The children were to live one week with Gene and the next week with Geng Hui. The agreement stated that if either party moved from Meagher County, the party who remained would retain residential custody of both children. Finally, it stated that Geng Hui could not take the children to China without Gene’s written consent. The only obligation for child support was Gene’s obligation to make the house payment every other month.

¶12 On October 26, 1995, the parties and Mahan appeared in chambers before the District Court with their petition for dissolution and the separation agreement. Geng Hui was visibly upset, and Judge Sherlock, who became aware of her trouble speaking English, asked her if she wanted to continue or whether she wanted to get her own attorney. She stated that she wanted to continue.

¶ 13 Judge Sherlock noted that her primary concern was about debt and the fact that she had no income with which to pay. The agreement stated that the parties’ debt obligations were “listed on Schedule ‘A’ attached to this agreement,” but there was no Schedule A. After discussion with the parties, Judge Sherlock modified the agreement by deleting the reference to Schedule A and by including language that the debt obligations “shall be paid by [Gene].” Both Judge Sherlock and Gene initialed the modification, but Geng Hui did not. Judge Sherlock later testified that he believed the change was to cover all debts, including the family home, and that he was not made aware of the fact that Geng Hui remained liable for house payments every other month. He also testified that he did not inquire about child support calculations or whether the agreement was unconscionable because when the parties have agreed, it is not his practice to “second-guess the numbers.”

¶14 That same day, the District Court made its findings of fact, conclusions of law, and a decree of dissolution in which it approved the agreement between the parties. No notice of entry of judgment was filed at that time.

¶15 After she retained new counsel, Geng Hui filed a Rule 60(b), M.R.Civ.R, motion on July 3, 1996, to set aside the District Court’s October 26,1995, findings, conclusions, and decree. She asserted that Gene engaged in misrepresentation, fraud, and other misconduct in preparation of the agreement, and that the agreement failed to value the marital estate and to make child support calculations pursuant to the Uniform Child Support Guidelines. Gene, who also had retained new counsel, moved to dismiss the motion on the grounds that it was not timely. On October 29, 1996, the District Court concluded that since no notice of entry of judgment was ever filed in the case, Geng Hui’s motion was timely and, therefore, it denied Gene’s motion to dismiss. The District Court failed, however, to rule on Geng Hui’s motion. Furthermore, Judge Sherlock recused himself from the case, and Judge Honzel eventually assumed jurisdiction over the matter.

¶16 On November 25, 1996, Gene filed a notice of entry of judgment. On December 6, 1996, Geng Hui renewed her Rule 60(b) motion. The District Court conducted a hearing on January 29 and 30, 1997, at which Judge Sherlock, the parties, and others testified regarding the agreement and decree.

¶17 On February 4, 1997, the District Court issued its findings of fact, conclusions of law, and order, along with a memorandum explaining its decision. It found that a number of things had not been mentioned in the separation agreement, such as the parties’incomes, child support calculations, the chiropractic business, and the property values, and that the agreement referred to certain schedules which were, in fact, never attached. It concluded that there were ambiguities and/or mistakes in the agreement related to the parties’ debt responsibilities that warranted a reopening of the agreement as it pertained to the property distribution. It also concluded that Geng Hui’s original motion should be deemed denied because it was not decided within sixty days, and that there was no authority for consideration of a second motion.

DISCUSSION

¶18 Did the District Court err when it denied Geng Hui’s motion to set aside the judgment pursuant to Rule 60(b)(3), M.R.Civ.R, and reopened only the property distribution portion of the separation agreement?

¶19 We review a district court’s conclusions of law to determine whether its interpretation of the law is correct. See Carbon County v. Union Reserve Coal Co. (1995), 271 Mont. 459, 469, 898 P.2d 680, 686; see also Kreger v. Francis (1995), 271 Mont. 444, 447, 898 P.2d 672, 674; Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603.

¶20 Here, the District Court held that because Geng Hui’s initial Rule 60(b)(3) motion had not been ruled on within sixty days as required by Rule 60(c), M.R.Civ.P, it was deemed denied. It failed to consider her second Rule 60(b)(3) motion because it “was not aware of any rule or [case] which allows a party to file a second Rule 60(b) motion after the sixty days has run.” Nonetheless, despite the fact that she had not filed such a motion for relief, the District Court went on to consider whether Geng Hui was entitled to relief pursuant to the residual clause of Rule 60(b), which states:

This rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order, or proceeding, or to grant relief to a defendant not actually personally notified as may be required by law, or to set aside a judgment for fraud upon the court.

It held, pursuant to our decision in In re Marriage of Doyle (1996), 280 Mont. 429, 929 P.2d 886, that she was not entitled to relief pursuant to the residual clause.

¶21 Geng Hui contends that pursuant to our holding in Ring v. Hoselton (1982), 197 Mont. 414, 643 P.2d 1165, the District Court erred when it failed to disregard her first Rule 60(b) motion and consider it a nullity because the notice of entry of judgment had not yet been filed. Hoselton, however, involved a Rule 60(b) motion that had been filed before the judgment was final. See Hoselton, 197 Mont. at 424, 643 P.2d at 1171. The judgment in this case was clearly final as of October 1995, well before Geng Hui’s first Rule 60(b) motion and, therefore, Hoselton does not apply. Geng Hui has provided no other grounds by which the District Court or this Court might simply disregard her first Rule 60(b) motion so as to avoid denial pursuant to Rule 60(c), M.R.Civ.R, for the District Court’s failure to rule on it within the required sixty days. Accordingly, we reject the notion that because the motion was filed prior to the notice of entry of judgment it should be considered a nullity. We conclude that the District Court did not err when it deemed her first Rule 60(b) motion denied.

¶22 However, we disagree with the assumption made by both Geng Hui and the District Court that the denial of her first motion renders her second Rule 60(b) motion ineffective. Rule 60(b), M.R.Civ.P., states in relevant part:

On motion and upon such terms as are just, the court may relieve a party or a party’s legal representative from a final judgment, order, or proceeding for the following reasons:... (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; ... The motion shall be made within a reasonable time, and for reasons (1), (2), and (3) when a defendant has been personally served, whether in lieu of publication or not, not more than 60 days after the judgment, order or proceeding was entered or taken, or, in a case where notice of entry of judgment is required by Rule 77(d), not more than 60 days after service of notice of entry of judgment.

The plain language of the rule does not limit the number of motions that a party may make, nor prescribe the earliest date following judgment on which the motion may be filed. The only restriction and possible bar to a motion made pursuant to Rule 60(b)(3) is that it cannot be filed “more than 60 days after service of notice of entry of judgment.” Here, the second motion was filed within the permitted time frame.

¶23 The District Court correctly noted when it denied Gene’s motion to dismiss the first Rule 60(b) motion that when a party has made an appearance, Rule 77(d), M.R.Civ.P., requires that notice of entry of judgment be served. As such, the sixty-day period did not begin to run until the notice of entry of judgment was filed on November 25, 1996. Geng Hui’s second motion was filed within sixty days from that date. Therefore, while Rule 60(c) requires that Geng Hui’s first motion be deemed denied, we conclude that neither its denial nor any of the time limits provided for by Rule 60 limited her ability to make a second Rule 60(b)(3) motion or the District Court’s ability to consider her second motion.

¶24 Pursuant to that motion, the District Court should have considered whether to set aside the agreement on the basis of fraud, misrepresentation, or misconduct. Thus, it erred when it failed to do so and instead relied on ambiguity and/or mistakes to partially reopen the agreement. We therefore remand to the District Court for specific findings regarding those allegations, and for a decision whether to reopen the dissolution proceedings pursuant to Rule 60(b)(3), M.R.Civ.P.

¶25 If the District Court concludes that the prior decree should be set aside pursuant to Rule 60(b)(3), M.R.Civ.P., it should then consider whether the agreement entered into by the parties is unconscionable. See § 40-4-201(2), MCA. Contrary to the parties’ assertions on appeal, we are not in a position to determine as a matter of law whether the agreement was unconscionable.

¶26 For example, Geng Hui contends that the agreement is unconscionable as a matter of law because she had a limited understanding of English, because Mahan represented both her and Gene, and because it does not include a statement of the parties’ incomes, any valuation of the property, or child support calculations. We have stated, however, that unconscionability is to be determined by the district court on a case-by-case basis. See In re Marriage of Hagemo (1988), 230 Mont. 255, 259, 749 P.2d 1079, 1082. Accordingly, it is within the district court’s discretion to determine from the evidence whether the agreement is unconscionable. See In re Marriage of Brown (1997), 283 Mont. 269, 272-73, 940 P.2d 122, 124.

¶27 Likewise, we reject Gene’s contention that the District Court is estopped as a matter of law from finding that the agreement is unconscionable because of its initial finding that the agreement was not unconscionable. Judge Sherlock testified that he did not make a specific inquiry into whether the agreement was unconscionable because it is not his practice to do so when the parties have reached a separation agreement. We hold that where a district court failed to make an initial investigation of the conscionability of an agreement, a district court is not estopped from later finding that the agreement is unconscionable if the decree adopting the agreement is set aside pursuant to Rule 60(b)(3), M.R.Civ.P.

¶28 We reverse the order of the District Court and remand to the District Court for proceedings consistent with this opinion.

JUSTICES NELSON, REGNIER, HUNT and GRAY concur.