PHYLISS HAMMERMEISTER V WALTER HAMMERMEISTER

Helena, MT – Divorce lawyer represented respondent in seeking a contempt charge.

In seeking reversal the district court's decision not to

hold Phyliss in contempt, Walter has first argued that

this Court should reverse the district court and remand

the matter to it for a evidentiary hearing on the

contempt motion so the court can than properly make a

decision that can be and is reviewable by this Court. In

response to this argument, Phyliss says that Walter

alleges that he was "not allowed” to present any evidence

regarding the mortgage release. She then argues that the

record does not contain any indication that he requested

or was denied such an opportunity, (Respondent's brief,

p. 5). The transcript of the contempt hearing, page 3

thereof, clearly indicates that Walter's counsel disagreed

with a fair amount of what was represented to the court

by Phyliss' counsel and the court was told that he was

prepared to present testimony on that, (TR, pp 2-3,

Exhibit A to Appellant's Brief). Phyliss then says that an

1

offer of proof could have been made, in order to build

the record, but counsel did not do that. Counsel did not

have to make an offer of proof because the district court,

as can be seen by the transcript, was not allowing any

testimony to be presented. Without any testimony being

presented, it is unclear why the district court did not

hold Phyliss in contempt.

If the Court deems that the contempt matter is

reviewable, without any evidence having been presented

to the district court, on the issue of the mortgage release,

the district court's ordering counsel for Walter to

prepare the mortgage release is an ancillary order under

$3-l-523(2), MCA, which makes this case reviewable on

direct appeal consistent with this Court's decision in Lee

v. Lee, 2000 MT 67, ¶37, 299 Mont. 78, 'j37, 996 P.2d 7 89,

137. Phyliss contends that the same his not reviewable

because the district court did not act in an arbitrary and

unlawful manner as to be tyrannical, (Respondent's brief,

p. 5). This is not the standard under $3-l-523(2) or Lee v.

Lee, supru, $37. Requiring Walter to prepare the mortgage

release did effect his substantial rights, because, as

argued in his initial brief on appeal, under $7 l-l-2 12,

MCA, Walter is entitled to recover $500 and all actual

damages resulting from the neglect or refusal by Phyliss

to execute a mortgage release.

2

As for the placing the ReliaStar insurance policy in

trust, the district court, rather than holding Phyliss in

contempt, suggested that the trust agreement be

modified, by allowing the court to appoint a successor

trustee, if the trustees are at loggerheads, such as a

institutional trustee, (TR, p. 11). In response, Phyliss

argues that there is no ancillary order affecting the

substantial rights of the parties. Clearly, however, there

is an ancillary order with the court suggesting that the

parties modify the trust agreement, which does effect

the substantial rights of Walter because the insurance

policy, which under the Property Settlement Agreement

was to be placed in trust, has still not been placed in

trust since the divorce was finalized and the Property

Settlement Agreement approved in 1998.

As for the checks that Phyliss had written out of the

proceeds of the sale of grain and/or livestock, which

Walter was solely entitled to the proceeds thereof, the

district court said that the Property Settlement

Agreement, dated April of 1998, resolved the issue

because Walter had ample opportunity, prior to that

time, to raise the issues of the checks when the parties

divided their property. As argued in this appeal, the

court's analysis is much like a lathes argument. This is

an ancillary order, which is then appealable, because it

3

does affect Walter's substantial rights. Phyliss argues

there is no ancillary order making the same appealable.

Phyliss then argues that Walter had acknowledged that

Phyliss had written checks, which had not cleared the

account, but she predicates this argument on the Points

of Agreement, which were signed long before the

Property Settlement Agreement. In 1 4, 9 i, page 5 of the

Property Settlement Agreement, it does indicate that

Walter acknowledges that Phyliss wrote a check for $200

and a check for $35 on the joint account that they had at

Farmers State Bank on or before October 24, 1997 and he

agreed that this shall not be deemed a default of their

agreement even though such checks may clear said

account after October 24, 1997. This provision though

does not deal with Walter being entitled to all the

proceeds of the grain and livestock as set out in ¶4a, ¶4c

and ¶4d, page 4 of the Property Settlement Agreement,

(Exhibit C to the Brief on appeal), which indicates that

Walter was entitled to all proceeds received from the sale

of grain and livestock since the parties separation in

April of 1993. As is argued, in this appeal, the plain

language of the Property Settlement Agreement allows

him to claim all of the funds in those accounts which

were from the sale of grain and livestock since April of

1993. The property settlement agreement did not have to

4

say that Phyliss was required to reimburse Walter for all

checks written because the provisions in issue clearly

required her to do so, under the plain language thereof.

The district court's failure to hold Phyliss in contempt,

on the foregoing issues, should be reversed and the case

remanded for an evidentiary hearing or, alternatively,

the court should be reversed and required to hold

Phyliss in contempt on these three issues.

REPLY ARGUMENT

THE DISTRICT COURT SHOULD BE REVERSED FOR

FAILING TO HOLD AN EVIDENTIARY HEARING AND

RECEIVING TESTIMONY AND EXHIBITS BEFORE DENYING

THE CONTEMPT MOTION

In this appeal, Walter has acknowledged that under § 3-

1-523(2), MCA, and Lee v. Lee, supra, there can only be an

appeal of a contempt judgment or order in a family law

proceeding when the judgment or order appealed from

includes an ancillary order that affects the substantial

rights of the parties involved. Walter has argued that

after Phyliss' counsel set out her position on his affidavit

for contempt, (TR, pp 2-3), he indicated that he

disagreed with a lot of what had been said and was

prepared to present testimony on the issues involved in

the contempt matter, (TR, p. 3). The court, however, did

not allow for presentation of any testimony.

5

In response, Phyliss argues that Walter is arguing that

he was not allowed to present any of the evidence

regarding the mortgage release. She then says that the

record does not contain any indication that he requested

or was denied such an opportunity. The record though

speaks for itself and it clearly shows that, after Phyliss'

counsel made the court aware of their position on the

affidavit for contempt, counsel for Walter stated as

follows, after the court summarized what counsel for

Phyliss had stated:

"Well, Your Honor, we disagree with a fair amount

of that, and, I mean, that we're prepared to present

testimony today on those issues”, (TR, p.3, Exhibit

A).

The court then asked if the issue regarding the coins

had been resolved, which counsel agreed had but there

were still three missing, (TR, p. 3 Exhibit A). Counsel then

told the court after he had asked about the mortgage

release, what the situation with the mortgage release was

and that Ms. Hammermeister, after being asked to send

Walter a mortgage release had never done so. The district

court then said:

"Of course not, why would anyone take the

initiative to do something that would save

attorney's fees and hearing time. You will prepare

one, you will prepare the mortgage release and you

will send it to her so she can sign it”, (TR, p. 4,

Exhibit A).

6

It was the district court that brought this matter

around to the mortgage release and not counsel for

Walter. Counsel for Walter was wanting to present

evidence on all of the issues raised in the affidavit for

contempt, but, as shown by the transcript, he was not

allowed to do so.

Phyliss then argues that counsel could have made a

request to present an offer of proof, in order to build the

record but he did not. This is not an issue where an offer

of proof needs to be made, rather, this is an issue about

whether or not the district court should have held an

evidentiary hearing so it heard the facts before

arbitrarily, as the court did, deciding not to hold Phyliss

in contempt and then issuing ancillary orders affecting

the substantial rights of the parties as will hereafter be

argued.

This Court must and should reverse the district court

and remand the matter to it for the purpose of

conducting an evidentiary hearing so that it can issue

proper findings and conclusions on this motion for

contempt, which can then be properly reviewable.

THE DISTRICT COURT ERRED IN NOT HOLDING PHYLISS

IN CONTEMPT ON THE MORTGAGE RELEASE.

If this Court determines that it can review the district

court's decision not to hold Phyliss in contempt, this

Court must first review the issue of the mortgage release.

The district court's order requiring Walter's counsel to

prepare the mortgage release and send it to Phyliss was an

ancillary order, under $3-l-523(2), MCA. This is because,

as argued on pages 12 and 13 of the initial brief o n

appeal, $71-1-212, MCA, provides that the mortgagee,

after full performance of the mortgage, who refuses or

neglects to execute, acknowledge, and deliver to the

mortgagor a certificate of discharge or release of the

mortgage within 90 days after a request for one is liable to

the mortgagor for the sum of $500 and all actual damages

resulting from the neglect or refusal. Under $7 l- 1-212,

MCA, Phyliss was required to prepare and execute a

mortgage release when requested to do so. The request

was made but the same was not prepared and executed.

In response, Phyliss argues that the record contains no

evidence that the district court acted in a matter which

would be considered so arbitrary~ and unlawful as to be

tyrannical citing State ex Rel. Zosel v. District Court, 56

Mont. 578, 185 P. 1112 (1919). Zosel, however, is no

longer the standard, as to what is an ancillary order. In

Lee v. Lee, supra, 138, this Court noted that, the district

court in that case, had held a person named Johnson in

contempt but it also issued an ancillary order fixing a

dollar amount to property that should have been

8

conveyed to Lee; required Johnson to compensate Lee for

credit card debt that had been discharged in bankruptcy;

and, offset a maintenance obligation. This was the

ancillary order that affected the substantial rights of the

parties. Here, the district court's ancillary order, affecting

the substantial rights of the parties, when it did not hold

Phyliss in contempt, was ordering Walter to prepare and

issue the release even though $71-1-212, MCA, required

Phyliss to do that and authorized Walter to recover $500

in damages when she failed to so. The district court then

affected Walter's substantial rights as the statutory law

required Phyliss to execute the mortgage release and

allowed Walter damages for her failure to do so.

Since the mortgage release has now been prepared, this

Court should remand this matter to the district court and

direct it to order Phyliss to pay the $500 in damages as

well as Walter's attorney fees in having to prepare the

mortgage release, as provided by $71-1-212, MCA.

THE DISTRICT COURT SHOULD BE REVERSED ON THE

FAILURE TO HOLD PHYLISS IN CONTEMPT ON THE

PLACING OF THE INSURANCE POLICY IN TRUST.

With regard to the Reliastar policy being put into trust,

in his appeal, Walter wants this Court to reverse the

district court's denial to hold Phyliss in contempt and has

argued that the district court issued an ancillary order,

9

under $3-l-.523(2), MCA, when it suggested the parties

modify their trust agreement which would allow the

court to appoint a successor trustee, if the parties where

at loggerheads, such as an institutional trustee, (TR, p.

11). In response, Phyliss has argued that 15 of the

Property Settlement Agreement provided that the

provisions of the trust were to be in a form satisfactory to

wife and her counsel. However, the language, with regard

to the provisions of the trust, is preceded by the

following:

"Wife presently owns an insurance policy 0 n

Husband's life issued by Reliastar, being Policy No.

2091477. It is agreed that all her interest therein are

to be transferred to a trust, the co-trustees of which

shall be their son, Walter and wife. . ..".

The issue that Phyliss was raising about being alienated

from her son, as again argued on page 6 and 7 of the brief,

does not pertain to the provisions of the trust. The

Property Settlement Agreement mandates that there are

to be two trustees, Walter, the son, and Phyliss.

The district court's discussion about modifying, as

discussed above, is an ancillary order, because the matter

that substantially affects Walter's rights are that Phyliss

was to put this insurance policy into trust, with the cotrustees being her son and herself. It does not matter that

they may be alienated. Pages 6 and 7 of the Property

10

Settlement Agreement also sets out certain terms and

conditions of any trust that are material to the Property

Settlement Agreement. It is those terms and conditions

that Phyliss, as shown by Exhibit D to the initial brief on

appeal, now wants to change it is those terms and

conditions which the district court was discussing being

modified by allowing it to appoint a successor trustee.

At the very least, the district court should have he1 d

Phyliss in contempt for not placing the policy, in trust, as

required by ¶5 of the Property Settlement Agreement.

THE DISTRICT COURT ERRED IN NOT HOLDING

PHYLISS IN CONTEMPT WITH REGARD TO WRITING

CHECKS OUT OF THE JOINT ACCOUNT FROM PROCEEDS OF

SALE OF GRAIN AND/OR LIVESTOCK FROM APRIL OF 1993

UNTIL OCTOBER OF 1997.

It is Walter's position that the district court erred in

not holding Phyliss in contempt with regard to writing

checks out of the joint account from the proceeds of sale

of grain and/or livestock from April of 1993 until October

1997. The court, however, said that the property

settlement agreement, dated April of 1998, resolved the

issue because Walter had ample opportunity, prior to that

time, to raise the issue of the checks when the parties

divided their property. This is an ancillary order that

makes the issue appealable under $3-l-523(2), MCA. This

11

is because, as under Lee, the district court's order

affected the substantial rights of the parties, due to the

language in the Property Settlement Agreement set out in

¶4(c) and 4(d), which provided that Walter was entitled

to the proceeds of all grain received since the parties

separation in April of 1993 and the proceeds received

from the sale of livestock since that time. In response,

Phyliss relies upon the points of agreement, Exhibit D to

the initial brief on appeal, where it is indicated that

Phyliss had represented that she had written two checks

on the account for $200 and $35, which may not have

cleared the account. The same language appears in the

Property Settlement Agreement on page 5, 14(i). This

argument, however, does not address the fact that the

Property Settlement Agreement provided that Walter was

entitled to all the proceeds from the sale of grain and the

sale of livestock. The court, before saying that this issue

should have been raised early, indicated that: "... If, in

fact, she withdrew something that taps into the proceeds

of the sale of grain or livestock, and I think the provisions

of the agreement have to control, then that money

belongs to Mr. Hammermeister.", (TR, p. 14). This is

precisely Walter's argument. It was after that the district

court said that Mr. Hammermeister's execution of the

Property Settlement Agreement resolved the issue, (TR, p.

12

16). The district court, however, was correct in its first

analysis because the Property Settlement Agreement,

which was the final executed document between the

parties, controls over the Points of Agreement and this

was not an issue Walter had to bring up prior to 2002

when it was brought up.

As argued on page 17 of the initial brief on appeal,

Phyliss, in an argument which she does not even address

in her brief on appeal, bears the burden to show

extraordinary circumstances which require the

application of the doctrine of lathes. Marriage 0 f

HahnKladouhos, 263 Mont. 315, 319, 868 P.2d 599

(1994). Having not met that burden, it cannot be said that

it is too late for Walter to raise the issue now.

The district court should be reversed and directed to

hold an evidentiary hearing so Walter can present

evidence to the court that all of the sources of funds in

the account where from the sale of grain and livestock

and direct that Phyliss then reimburse Walter for all

checks written by her since the date of the separation of

the parties, as provided in the Property Settlement

Agreement.

13

PHYLISS' REQUEST THAT THIS APPEAL IS WITHOUT

MERIT AND SHE SHOULD BE AWARDED HER COSTS AND

ATTORNEY FEES SHOULD BE DENIED.

In her brief, Phyliss has argued that Walter's appeal was

taken "without substantial reasonable grounds”, citing

Rule 32, Montana Rules of Appellate Procedure. She then

argues that pursuant to that rule and Rule 33, Montana

Rules of Appellate Procedure, her costs and attorney fees

should be awarded to her. In making this argument,

Phyliss has ignored what this Court said in Lee v. Lee,

supra, ¶66. Therein, this Court summarized the

circumstances under which it would impose sanctions.

This Court said:

"As a general rule, this Court will not impose

sanctions pursuant to Rule 32, M.R.App. P., unless

the appeal is entirely unfounded and intended to

cause delay or unless counsel' actions otherwise

constitute an abuse of the judicial system. See In re

Marriage of Moss, 1999 MT 62, 141, 293 Mont. 500,

¶41, 977 P.2d 322, 141. However, we have awarded

fees and costs in instances where one party has

"previously conceded the propriety of [al

dismissal” and then nevertheless proceeded to

appeal the dismissal as improper. See Buck v.

Billings Montana Chevrolet, Inc. (1991), 248 Mont.

276,287, 811 P.2d 537, 544. We have also awarded

fees and costs where a party demonstrates a

"significant disdain for the integrity of the judicial

process.” Tipp v. Skjelset, 1998 MT 263, ¶¶24,

29,291 Mont. 288, ¶¶24, 29, 967 P.2d 787, 'I[m24, 29.

Likewise, we have awarded fees and costs where a

party proceeded on appeal based on inconsistent

14

and conflicting positions. Federated Mut. Ins. Co. v.

Anderson (1996), 277 Mont. 134, 145, 920 P.2d 97,

104. . ..". Lee v. Lee, supra, ¶66.

Here, it cannot be said that counsel's actions, in pursuing

this appeal, constituted an abuse of the judicial system;

nor has Walter conceded the propriety of denying the

contempt request and nevertheless proceeded to appeal

the denial as improper; Walter has not demonstrated a

significant disdain for the integrity of the judicial

process; and, he has not proceeded in appeal based on

inconsistent and conflicting positions. For all these

reasons, this Court must and should deny the requests

for sanctions and attorney fees and costs.

CONCLUSION

This Court should reverse the district court's decision

not to hold Phyliss in contempt, on the three issues

argued above and remand the matter to the district court

and direct it to hold an evidentiary hearing. The district

court should then be directed to issue proper findings of

fact, conclusions of law and an order that can then be

reviewed by this Court if it decides to hold Phyliss in

contempt or to not hold her in contempt.

Alternatively, if this Court finds that the district court's

horder is reviewable, without any evidence presented, this

Court should reverse the district court, with regard to the

mortgage release, and direct it to hold Phyliss in

15

contempt by ordering her to pay Walter $500 in damages

as provided by 571-l-212, MCA, for not executing a

release or a satisfaction of the mortgage after being

requested to do so and, ordering her to reimburse Walter

for his attorney fees for his attorney having to prepare

said mortgage release. On the insurance policy being

placed in trust, this Court should reverse the district

court and direct it to hold Phyliss in contempt and order

her to execute a trust agreement, conforming with the

Property Settlement Agreement, and giving her a time

limit to do so. On the checks written from the joint bank

account, which where from the sale of grain and

livestock, since the parties separation in April of 1993,

this Court should reverse the district court and remand

this matter to it to hold an evidentiary hearing allowing

Walter to present evidence that the only monies in the

account were from the sale of grain and livestock and

then requiring Phyliss reimburse Walter for all checks

written out of such proceeds, as provided by the plain

language of the Property Settlement Agreement, which

provided that Walter was and is entitled to all proceeds

from the sale of grain and livestock since April of 1993.

This Court must and should also deny Phyliss' request

for sanctions for attorney fees and costs because, under

Lee v. Lee, supra, ¶66, there is nothing justifying an award

16

of the same to her because there has been no abuse of the

judicial system nor any significant disdain for the

integrity of the judicial process.

The district court must then and should be reversed.