In re Marriage of Fossen

• Decision Date: 28 May 2019
• Docket Number: DA 18-0043
• Citation: 443 P.3d 418,395 Mont. 495,2019 MT 119
• Parties: IN RE the MARRIAGE OF: Pamela Gail FOSSEN, Petitioner and Appellant, and Allan R. Fossen, Respondent and Appellee.
• Court: Montana Supreme Court

395 Mont. 495

443 P.3d 418

2019 MT 119

IN RE the MARRIAGE OF: Pamela Gail FOSSEN, Petitioner and Appellant, and Allan R. Fossen, Respondent and Appellee.

DA 18-0043

Supreme Court of Montana.

Submitted on Briefs: March 6, 2019

Decided: May 28, 2019

For Appellant: Nathan J. Hoines, Zachary D. Kitchen, Hoines Law Office, P.C., Great Falls, Montana

For Appellee: Jason T. Holden, Katie R. Ranta, Faure Holden Attorneys at Law, P.C., Great Falls, Montana

Justice Beth Baker delivered the Opinion of the Court.

¶1 Pamela Fossen ("Pam") appeals an order from the Eighth Judicial District Court, Cascade County, awarding Allen Fossen ("Al") prejudgment interest on a $ 20,000 sum Pam was directed to pay in the dissolution. Pursuant to a provision in the dissolution settlement agreement, the District Court also awarded Al’s attorney fees incurred in a separate action. We address the following issues on appeal:

1. Whether the District Court erred in awarding Al attorney fees under terms of the parties’ dissolution Settlement Agreement for defending Pam’s third-party complaint against him in a separate action;

2. Whether the District Court abused its discretion in admitting certain evidence to support the calculation of attorney fees and costs; and

3. Whether the District Court erred in awarding prejudgment interest.

¶2 We affirm issues one and three and reverse and remand issue two for the District Court to determine the amount of attorney fees and costs upon properly admitted evidence.

PROCEDURAL AND FACTUAL BACKGROUND

¶3 Pam and Al entered into a portable toilet business, Great Falls Portables, Inc., with Charles and Mary Lou Dees (the "Deeses") in 1996. Pam and Al separated in 2001, and Pam took control of the management of Great Falls Portables. Pam created a separate LLC, Rocky Mountain Portables, and transferred all Great Falls Portables assets and customers to Rocky Mountain Portables. The Deeses filed suit against Pam, Great Falls Portables, and Rocky Mountain Portables in October 2003, seeking recognition of their interest in Great Falls Portables.

¶4 Pam and Al entered into a Settlement Agreement a month later to divide their marital property between them in the marriage dissolution action. The Agreement called for Pam to receive Great Falls Portables and to pay Al $ 20,000 from the sale or refinance of the real property used by Great Falls Portables. The Agreement provided that Pam would indemnify Al from certain debts, including Pam’s agreement to "be responsible to the Dees for any obligation which may be owed them in connection with their interest, if any, in Great Falls Portables." The Agreement’s attorney fee provision stated that, "In the event of future litigation between the parties to enforce, modify, or interpret any provision of this agreement, the prevailing party shall be entitled to all his or her court costs, including a reasonable attorney’s fee."

¶5 Shortly after entry of the final dissolution decree incorporating Pam and Al’s Agreement, Pam filed a third-party complaint against Al in the Deeses’ suit against her.¹ Pam alleged that the Deeses’ claim arose out of Al’s fraudulent actions in his individual capacity and that Al had fraudulently induced Pam to enter the Agreement assigning responsibility for payment of the Deeses’ interest. She demanded that Al remedy this fraud by indemnifying her against all liability to the Deeses. The district court in that case granted Al summary judgment on all three counts because Pam failed to plead fraud with sufficient particularity, and no material issue of fact demonstrated Pam’s reliance on the alleged fraudulent representations. The court dismissed Pam’s indemnity and contribution claim as relating back to the fraud alleged in the other two counts. This Court affirmed the district court’s grant of summary judgment to Al on all issues. Fossen I , ¶ 21.

¶6 Following Fossen I , Al moved in the dissolution action to compel enforcement of the Agreement and for an award of attorney fees and costs. The request for attorney fees was based on Al’s defense of the third-party complaint in the Dees case. In July 2014, the Standing Master held a hearing on Al’s motions, together with Pam’s motion to set aside the Agreement for fraud, her motion for attorney fees and costs or for a setoff, and her motion for contempt for failure to pay child support. The Standing Master granted Al’s motion and ordered Pam to pay Al the $ 20,000 awarded in the Decree. The Standing Master denied Pam’s motions and set a hearing on the amount of fees. The Standing Master awarded Al fees from the third-party action because the Agreement’s attorney fee provision did not limit recovery to only future litigation in the dissolution. The Standing Master interpreted the provision to apply to any litigation involving enforcement, modification, or interpretation of the Agreement. The Standing Master concluded that the substance of Pam’s third-party complaint against Al was to modify the Agreement: Pam sought to avoid being solely liable for payment to the Deeses for their equity interest in Great Falls Portables. The Standing Master held a hearing on the amount of attorney fees in March 2015. Pam paid Al the $ 20,000 pursuant to the Agreement on the day of the hearing. At the hearing, Al presented attorney Doug Allen as his expert to testify on the reasonableness of the attorney fees.

¶7 The Standing Master failed to rule on the amount of attorney fees, and the District Court withdrew the referral and took up the issue. Considering the testimony and exhibits from the March 2015 hearing, the District Court awarded Al $ 45,894 in attorney fees from his defense to the third-party complaint. The court also awarded Al $ 18,684.93 in prejudgment interest, reasoning that the right to recover the $ 20,000 payment vested when the Agreement was entered in November 2003.

STANDARDS OF REVIEW

¶8 We review for abuse of discretion a decision on a request for an award of attorney fees unless a contract requires an award of fees, in which case a district court lacks discretion to deny the request. In re Marriage of Szafryk , 2010 MT 90, ¶ 19, 356 Mont. 141, 232 P.3d 361. In that case we review the district court’s interpretation of the contract to determine whether it is correct. In re Marriage of Szafryk, ¶ 19. We review evidentiary rulings for abuse of discretion. In re Marriage of Lundstrom , 2010 MT 261, ¶ 10, 358 Mont. 318, 245 P.3d 25. A district court, however, is bound by the Montana Rules of Evidence and applicable statutes in exercising its discretion. State v. Polak , 2018 MT 174, ¶ 12, 392 Mont. 90, 422 P.3d 112. Accordingly, we review de novo a district court’s ruling based on its interpretation of a Rule of Evidence or a statute. Polak , ¶ 12. We review the decision to award prejudgment interest to determine whether the district court correctly interpreted the law. DeTienne v. Sandrock , 2018 MT 269, ¶ 30, 393 Mont. 249, 431 P.3d 12.

DISCUSSION

¶9 1. Whether the District Court erred in awarding Al attorney fees under terms of the parties’ dissolution Settlement Agreement for defending Pam’s third-party complaint against him in a separate action.

¶10 The Standing Master held that the relief Pam sought against Al in the third-party complaint appropriately could have been brought as part of an action to modify the portion of the Settlement Agreement that made Pam responsible for any obligation to the Deeses in connection with Great Falls Portables. The court therefore concluded that the third-party complaint constituted an action to modify the Agreement and is thus subject to its attorney fee provision. Pam argues that the Standing Master incorrectly applied the Agreement’s attorney fee provision because it was intended to apply only to enforcement of terms governing the marriage dissolution. Pam maintains that there is no wording in the Agreement allowing for the provision’s application to litigation separate from the dissolution action.

¶11 Provisions set forth in a marital property settlement agreement are enforceable as contract terms. Section 40-4-201(5), MCA. "District courts are bound by attorney fee provisions within marital settlement agreements if the terms of the agreement are clear." In re Marriage of Simpson , 2018 MT 281, ¶ 34, 393 Mont. 340, 430 P.3d 999 (internal citation omitted). The attorney fee provision in the Agreement provides: "In the event of future litigation between the parties to enforce, modify, or interpret any provision of this agreement, the prevailing party shall be entitled to all his or her court costs, including a reasonable attorney’s fee." The language of the provision does not limit recovery of attorney fees to future litigation only in the dissolution case. The Standing Master did not err in concluding that the provision applied to any future litigation, as long as the litigation "involve[ed] enforcement, modification or interpretation" of the Agreement. That is what the plain language provides.

¶12 Pam relies on In re Marriage of Simpson , in which the settlement agreement contained language substantively identical to the attorney fee provision at issue in this case. See In re Marriage of Simpson , ¶ 34. The appellant asserted that she was entitled to attorney fees related to a bankruptcy proceeding that her ex-husband filed. The district court denied her request, reasoning that the bankruptcy proceedings were separate proceedings from the dissolution and the bankruptcy judge did not order the ex-husband to pay attorney fees to any creditors, including the appellant. In re Marriage of Simpson , ¶ 35.

¶13 As the Standing Master observed, Count II of Pam’s Third-Party Complaint referenced the Agreement directly. Pam alleged that "[a]s a direct result of the fraudulent acts of [Al], [Pam] was fraudulently induced into entering into the indemnification agreement, all to her detriment and damage." Through the Third-Party Complaint, Pam sought to avoid being solely liable for payment...