Hoverson v. Hoverson

• Decision Date: 10 July 2001
• Docket Number: No. 20000227.,20000227.
• Citation: 2001 ND 124,629 N.W.2d 573
• Parties: Deborah Lee HOVERSON, Plaintiff and Appellee v. Carl Michael HOVERSON, Defendant and Appellant.
• Court: North Dakota Supreme Court

629 N.W.2d 573

2001 ND 124

Deborah Lee HOVERSON, Plaintiff and Appellee v. Carl Michael HOVERSON, Defendant and Appellant.

No. 20000227.

Supreme Court of North Dakota.

July 10, 2001.

Alan M. McDonagh and Ralph F. Carter of Moosbrugger, Carter & McDonagh, P.L.L.P., Grand Forks, for defendant and appellant; submitted on brief.

Patti Jo Jensen of Galstad, Jensen & McCann, PA, East Grand Forks, MN, for plaintiff and appellee; submitted on brief.

NEUMANN, Justice.

[¶ 1] Carl Hoverson appeals from the trial court's judgment, arguing the trial court clearly erred in valuing and distributing the parties' property, in awarding Deborah spousal support, and in calculating Carl's child support obligation. We affirm in part, reverse in part, and remand.

I

[¶ 2] Deborah and Carl Hoverson married in 1977. They have five children, ages 23, 21, 19, 17, and 11. During the early years of their marriage, Carl farmed and Deborah was a homemaker and bookkeeper for the farm.

[¶ 3] In 1994, Carl established a potato farming partnership, Hoverson Farms, LLP, with Ron Offutt. Deborah did not approve of the formation of the partnership, nor was she present at the meetings regarding the formation of the partnership. Each partner owned fifty percent of the partnership, and each was required to provide an equal contribution of capital. Offutt contributed $896,000 in cash, and Carl contributed machinery valued at $896,000. The partnership built three potato warehouses. Because the partnership needed the equity from the warehouses for capital, it sold the warehouses and leased them from the buyer. In 1995, the partnership lost $955,000 because of bad weather, necessitating the partners, Carl and Offutt, to inject more capital into the partnership. In 1996, Carl signed an agreement personally guaranteeing $500,000 if the partnership needed more money. Offutt contributed an additional $500,000 in cash into the partnership. In 1997, the partnership's lender demanded the partners contribute additional capital. Carl contributed the parties' 404 shares of stock in American Crystal, valued at $747,400, and a 60-acre real estate lot the parties had purchased in 1996, valued at $60,000. Offutt made an equal cash contribution.

[¶ 4] The parties separated in March 1997. Deborah remained on the farm with the children. In May 1998, Carl bought a home in Grand Forks. After the separation, Deborah obtained a part-time retail job until December 1999 when she began working for the Grand Forks Police Department. At the time of trial, Deborah was earning $8.39 per hour, without benefits.

[¶ 5] Deborah initiated this action on May 20, 1997, seeking a property distribution, an assignment of the debts and obligations, and child support. At trial, the parties agreed to the value of much of their property. The parties disagreed significantly about the value of the partnership, including the value of the leases on the potato warehouses and the value of the equipment. Each party presented expert testimony. Carl's expert, Tyler R. Falk, the partnership's chief financial officer, testified the partnership had a negative value. Deborah's expert, Ronald K. Bleth, an independent accountant, testified the partnership value was $1,888,000.

[¶ 6] After trial, on June 8, 2000, the trial court filed its findings of fact, conclusions of law, order for judgment, and judgment. The trial court found the partnership was an ongoing business with a net value of $1,049,295, and found Carl's share of the partnership was $524,648. The court found the total value of the parties' marital estate was $1,067,638, less debts totaling $245,453, resulting in a net marital estate of $822,185. The court found Carl committed economic fault by transferring the stock and real estate to the partnership without Deborah's knowledge or consent and contrary to a promise Carl made to Deborah that he would not transfer this property to the partnership. The court awarded Deborah a net property award of $352,630, and Carl a net property award of $469,540. In addition to the property award, the court awarded Deborah $117,000 in future cash payments to equalize the property division. The trial court found Deborah was disadvantaged by the divorce and awarded her permanent spousal support of $500 per month, increasing to $1,000 per month after the youngest child is no longer entitled to child support. The court ordered Carl to pay $1,005 per month in child support. Carl appealed.

II

[¶ 7] A trial court's findings of fact will not be reversed unless they are clearly erroneous. N.D.R.Civ.P. 52(a); Mellum v. Mellum, 2000 ND 47, ¶ 9, 607 N.W.2d 580. A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if there is no evidence to support it, or if, although there is some evidence to support it, on the entire evidence the reviewing court is left with a definite and firm conviction a mistake has been made. Id. at ¶ 9.

[¶ 8] Section 14-05-24, N.D.C.C., governs a trial court's division of property and its determination of support obligations in a divorce proceeding. Under N.D.C.C. § 14-05-24:

When a divorce is granted, the court shall make such equitable distribution of the real and personal property of the parties as may seem just and proper, and may compel either of the parties to provide for the maintenance of the children of the marriage, and to make such suitable allowances to the other party for support during life or for a shorter period as to the court may seem just, having regard to the circumstances of the parties respectively.

[¶ 9] Carl argues the trial court's determinations as to valuation and distribution of the parties' property, spousal support award, and child support award are clearly erroneous.

III

[¶ 10] In challenging the trial court's property distribution, Carl argues the court erred in its valuation of the property, erred in finding Carl had committed economic misconduct, and erred in awarding Deborah future cash payments.

A

[¶ 11] Carl argues the trial court clearly erred in valuing the partnership at $1,049,295. Carl asserts Deborah's expert confused fair market value and liquidation value, and the trial court erred by relying on the valuation of Deborah's expert.

[¶ 12] Ordinarily, fair market value is the proper method of valuing marital property in a divorce. Peterson v. Peterson, 1999 ND 191, ¶ 11, 600 N.W.2d 851. Fair market value is the price a buyer is willing to pay and a seller is willing to accept under circumstances that do not amount to coercion. Heggen v. Heggen, 452 N.W.2d 96, 99 (N.D.1990).

[¶ 13] A trial court's valuation of property is a finding of fact that is presumptively correct and subject to the clearly erroneous standard of review. Peterson, 1999 ND 191, ¶ 12, 600 N.W.2d 851. A trial court, having the opportunity to observe demeanor and credibility, is in a far better position than an appellate court in ascertaining the true facts regarding property value. Id. at ¶ 12. A marital property valuation within the range of the evidence is not clearly erroneous. Id. at ¶ 12. A choice between two permissible views of the evidence is not clearly erroneous if the trial court's findings are based either on physical or documentary evidence, or inferences from other facts, or on credibility determinations. Fox v. Fox, 626 N.W.2d 660, 2001 ND 88, ¶ 14.

[¶ 14] The trial court found "[t]he fair market value of the [partnership] must be determined with reference to the fact that the farm will not be liquidated" and is an ongoing business despite "the currently stressed finances of the enterprise." The court acknowledged the parties' disagreement concerning the valuation of the partnership and considered the testimony of each party's expert witness. The court primarily adopted the valuations of Deborah's expert, Ronald K. Bleth. Bleth testified about the fundamental difference between his opinion and the opinion of Carl's expert, Tyler R. Falk. Bleth testified:

Based on the assets, the equipment and the warehouses, Mr. Falk values those by saying we're going to see this. That's the values we're going to use to liquidate. In a marital dissolution there is no sale. I look at the economic value of these assets to Hoverson Farms, for example there is a lot of irrigation equipment on leased land. If we're to look at a liquidating value, there is going to be very little value there. It will cost you as much to get out of the group if you can even afford to do that and yet that irrigation equipment has a value to Hoverson Farms as it's going on. Simplot wants its potatoes grown on irrigated farmland. Hoverson Farms wants to grow potatoes. Hoverson has to have irrigated land so they put in a hundred thousand dollars in irrigating other people's land. So Hoverson Farms as it continues that has a value. That has an economic value to the farm and it's not going to be liquidated. That's where Mr. Falk and I basically disagree.

During cross-examination of Bleth, the trial court clarified the basis for Bleth's valuation:

THE COURT: Just to clarify, you're talking fair market value as a going concern?

[BLETH]: Correct.

THE COURT: Not a liquidation value, correct?

[BLETH]: Correct.

[¶ 15] The record shows both parties' experts testified as to the value of the partnership and explained their valuations. The trial court's valuation was within the range of evidence, and we are not left with a definite and firm conviction a mistake has been made. Therefore, we cannot say the trial court's valuation is clearly erroneous.

B

[¶ 16] Carl argues the trial court clearly erred in finding he had committed economic misconduct by transferring the parties' stock and real estate to his farming partnership and erred in dividing the marital property accordingly.

[¶ 17] In a divorce, the trial court must distribute the marital property equitably between the parties. N.D.C.C. § 14-05-24. All of the parties' assets, regardless of the source, must be...