In re Elder

• Decision Date: 21 April 2020
• Docket Number: DA 19-0008
• Parties: IN RE the MARRIAGE OF: Terri ELDER, Petitioner and Appellee, and Sam MAHLUM, Defendant and Appellant.
• Court: Montana Supreme Court

399 Mont. 532

462 P.3d 209

2020 MT 91

IN RE the MARRIAGE OF: Terri ELDER, Petitioner and Appellee, and Sam MAHLUM, Defendant and Appellant.

DA 19-0008

Supreme Court of Montana.

Submitted on Briefs: September 25, 2019

Decided: April 21, 2020

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

For Appellee: Meghan Lulf Sutton, Law Office of Meghan Lulf Sutton, Great Falls, Montana

Justice Dirk Sandefur delivered the Opinion of the Court.

¶1 Sam Mahlum (Sam) appeals from the judgment of the Montana Eighth Judicial District Court, Cascade County, dissolving his marriage to Terri Elder (Terri) and equitably apportioning their marital estate. The narrow issue on appeal is:

Whether the District Court erroneously characterized Sam's early disability retirement benefit as a divisible marital asset rather than the equivalent of post-dissolution employment income?

¶2 We reverse and remand for further proceedings consistent with this Opinion.

PROCEDURAL AND FACTUAL BACKGROUND

¶3 Sam and Terri married in 2000, in Helena, Montana. Two children were born as issue of the marriage in 2001 and 2002, respectively. The parties lived in Augusta, Montana. Terri primarily stayed home and cared for the children but occasionally worked as a substitute teacher and a fitness/yoga instructor. From 2001-2012, Sam was employed as a deputy sheriff with the Lewis and Clark County Sheriff's Office in Helena and commuted from Augusta.

¶4 In 2006, Sam was involved in an on-the-job motor vehicle accident resulting in permanent disabling injury, related PTSD, depression, and ongoing physical pain. His injuries ultimately forced him to leave the sheriff's office in 2012, after approximately eleven years of service. Sam later briefly worked for the Montana Human Rights Bureau until his injuries similarly forced him to leave that position in 2015. Sam and Terri separated in the spring of 2017. Terri filed a dissolution petition in November of that year and, a year later, the court entered a final decree dissolving the parties’ marriage, equitably dividing their marital estate, and providing for the parenting of their children during the remaining few years of their minority.

¶5 At some point after he was no longer able to work, Sam applied for, and ultimately obtained, a disability determination from the Montana Public Employee Retirement Board making him eligible to receive monthly non-taxable disability retirement benefits from the Montana Sheriff's Retirement System (SRS) provided by Title 19, ch. 7, MCA. In accordance with the statutory plan, Sam will receive SRS disability benefits until November 25, 2025, when he reaches the normal age of SRS retirement at age 50. His non-taxable disability benefits will then convert to normal, taxable SRS service retirement benefits. As of the date of dissolution of the parties’ marriage, Sam's monthly SRS disability benefit was $3,397.73, subject to a 3% guaranteed annual increase.

¶6 At the time of dissolution, Terri was employed at the Bunkhouse Inn in Augusta and as a volleyball coach for the Augusta School District. Terri had previously sought other employment outside of Augusta but was unable to find an acceptable option due to the cost and difficulty of commuting from Augusta and her need to be available for the parties’ children in Augusta. As of 2017, Terri's adjusted gross annual income was $17,054.

¶7 The parties agreed that Terri would keep and assume the mortgage on the former family home in Augusta. Based on the evidence at hearing, the District Court determined that the value of the home and property was approximately $140,000, with an outstanding mortgage balance of approximately $140,000. The parties further agreed that they would each take their own student loan debts and that Sam would further take all of their outstanding credit card debt, his medical debt, and the parties’ outstanding federal tax debt. The total marital debt apportioned to Sam was approximately $92,849.73. The parties further agreed that Terri would take the parties’ 2000 Honda CRV vehicle and 1986 Chevrolet van and that Sam would take their 2003 Harley Davidson motorcycle. The parties stipulated to a final parenting plan for the limited remainder of the minority of their children. The District Court did not address child support and Terri did not request spousal maintenance.

¶8 The only significant matter in dispute was the status of Sam's SRS disability benefits—whether a divisible marital asset or the indivisible equivalent of future earnings until it converts to a normal SRS service retirement benefit at the normal age of SRS retirement. Citing In re Marriage of Cooper , 243 Mont. 175, 179, 793 P.2d 810, 812 (1990), the District Court concluded that Sam's SRS disability benefits were a divisible marital asset, no different from his normal SRS service retirement benefits. The court reasoned that the only material difference between SRS disability benefit and normal SRS service retirement benefit was that Sam's disability made him eligible for early retirement prior to normal SRS retirement age. Without distinction, the court accordingly characterized Sam's SRS disability and SRS service retirement benefits as a single divisible marital asset and then apportioned the remaining term of the disability benefit, and the first eleven years of the normal service retirement benefit, between the parties on a 50/50 basis. Upon the threshold conclusion that Sam's disability benefits were essentially no different than his normal service retirement benefits, the court reasoned that: (1) his 44 "disability income represent[ed] a replacement of the income that [he] was earning" during the marriage; (2) his "disability payment [was] the only significant [marital] asset"; (3) the parties had equal "earning power"; and (4) the 11-year split of his normal retirement service benefit corresponds to the "length of the[ir] marriage." Sam timely appeals.

STANDARDS OF REVIEW

¶9 District courts have broad discretion to equitably apportion the marital estate in dissolution proceedings based on the criteria of § 40-4-202(1), MCA. Deschamps v. Deschamps , 2009 MT 431, ¶ 11, 354 Mont. 94, 223 P.3d 324 ; Collett v. Collett , 190 Mont. 500, 503-04, 621 P.2d 1093, 1095 (1981). An equitable division of the marital estate necessarily requires a reasonably accurate account and valuation of all significant marital assets and liabilities. In re Marriage of Lundvall , 241 Mont. 172, 175, 786 P.2d 10, 12 (1990) ; In re Marriage of Dirnberger , 237 Mont. 398, 401-02, 773 P.2d 330, 332 (1989) ; In re Marriage of Popp , 206 Mont. 415, 420, 671 P.2d 24, 27 (1983) ; Collett , 190 Mont. at 504, 621 P.2d at 1095 ; Cook v. Cook , 188 Mont. 472, 478-79, 614 P.2d 511, 514-15 (1980) ; Herring v. Herring , 184 Mont. 353, 355, 602 P.2d 1006, 1007 (1979).¹ While § 40-4-202, MCA, does not require a strict, itemized accounting and valuation of every marital asset and liability in every case, district courts must at least make findings of fact that are sufficient as a whole to manifest an equitable division of the marital estate. In re Marriage of Lewton , 2012 MT 114, ¶¶ 15-20, 365 Mont. 152, 281 P.3d 181 ; In re Marriage of Hayes , 2002 MT 281, ¶ 19, 312 Mont. 440, 60 P.3d 431 ; In re Marriage of Harkin , 2000 MT 105, ¶ 31, 299 Mont. 298, 999 P.2d 969 ; In re Marriage of Stephenson , 237 Mont. 157, 160, 772 P.2d 846, 848 (1989). An equitable division of the marital estate does not necessarily require an equal or 50/50 split of marital assets, liabilities, or net value. In re Marriage of McNellis , 267 Mont. 492, 501, 885 P.2d 412, 418 (1994) (internal citations omitted); In re Marriage of Garner , 239 Mont. 485, 488, 781 P.2d 1125, 1127 (1989). An apportionment is equitable if fair and reasonable under the totality of the circumstances at issue. Danelson v. Danelson , 253 Mont. 310, 317, 833 P.2d 215, 220 (1992).

¶10 We review district court findings of fact accounting for and valuing marital estate assets and liabilities only for clear error. In re Marriage of Foreman , 1999 MT 89, ¶ 14, 294 Mont. 181, 979 P.2d 193 ; Danelson , 253 Mont. at 317, 833 P.2d at 219-20. We review related conclusions of law de novo for correctness. Foreman , ¶ 14 ; Danelson , 253 Mont. at 317, 833 P.2d at 219-20. We review the ultimate apportionment of marital estates for an abuse of discretion. Foreman , ¶ 14 ; Danelson , 253 Mont. at 317, 833 P.2d at 219-20. A finding of fact is clearly erroneous only if not supported by substantial evidence, the court misapprehended the effect of the evidence, or, based on our review of the record, we have a definite and firm conviction that the lower court was otherwise mistaken. In re Marriage of Bessette , 2019 MT 35, ¶ 13, 394 Mont. 262, 434 P.3d 894 (citing In re D.E. , 2018 MT 196, ¶ 21, 392 Mont. 297, 423 P.3d 586 ). An abuse of discretion occurs if a court exercises granted discretion based on a clearly erroneous finding of fact, an erroneous conclusion or application of law, or otherwise acts arbitrarily, without employment of conscientious judgment, or exceeds the bounds of reason resulting in substantial injustice. Bessette , ¶ 13.

DISCUSSION

¶11 Whether the District Court erroneously characterized Sam's early disability retirement benefit as a divisible marital asset rather than the equivalent of post-dissolution employment income?

¶12 Sam asserts that his post-dissolution SRS disability retirement benefits are the equivalent of post-dissolution future earnings, and thus not a marital estate asset as referenced in § 40-4-202(1), MCA. Terri contrarily asserts that there is no material difference between Sam's SRS disability retirement benefits and subsequent service retirement benefits at and after age 50. She asserts that the only difference is that his disability made him eligible for early retirement, with the same monthly benefit as at normal retirement age, thus rendering his disability benefits a...