In re Marriage of Rudolf

• Decision Date: 25 July 2007
• Docket Number: No. 05-664.,05-664.
• Citation: 164 P.3d 907,338 Mont. 226,2007 MT 178
• Parties: In re the MARRIAGE OF Lou RUDOLF, Petitioner and Appellant, and Jeri Nagel Rudolf, Respondent and Respondent.
• Court: Montana Supreme Court

164 P.3d 907

2007 MT 178

338 Mont. 226

In re the MARRIAGE OF Lou RUDOLF, Petitioner and Appellant, and Jeri Nagel Rudolf, Respondent and Respondent.

No. 05-664.

Supreme Court of Montana.

Submitted on Briefs December 6, 2006.

Decided July 25, 2007.

For Appellant: John S. Warren, Davis, Warren & Hritsco, Dillon, Montana.

For Respondent: Rienne H. McElyea, Berg, Lilly & Tollefsen, Bozeman, Montana.

Justice JOHN WARNER delivered the Opinion of the Court.

¶ 1 Lou Rudolph (Lou) appeals from an order of the Fifth Judicial District Court, Beaverhead County, dissolving his marriage with Jeri Rudolph (Jeri) and awarding Jeri maintenance. We reverse and remand for further proceedings consistent with this opinion.

¶ 2 Lou raises the following issues on appeal:

¶ 3 1. Did the District Court err in the distribution of the marital estate because it did not consider $255,000 in assets and $30,000 of debt?

¶ 4 2. Did the District Court err in awarding maintenance to Jeri without considering the factors of § 40-4-203(2), MCA?

¶ 5 3. Did the District Court err by awarding Jeri maintenance for a term equal to the length of the marriage?

¶ 6 4. Did the District Court err by awarding Jeri retroactive maintenance?

BACKGROUND

¶ 7 Lou and Jeri were married in 1980. Lou was employed as a diagnostic radiologist and Jeri worked as a registered nurse until 1985, when the couple's first child was born. They eventually had three children, one of whom was still a minor when this proceeding was commenced.

¶ 8 Because of the decision to cease working outside the home in order to care for their children, Jeri allowed her nursing license to lapse. In 1994 the family moved to Dillon, Montana, where Lou opened a radiology clinic.

¶ 9 The parties separated in January, 2000. Jeri and the children moved to Bozeman, while Lou stayed in Dillon. Jeri testified that Lou encouraged her not to seek employment while they were separated. At the beginning of their separation, the couple paid for the household expenses out of their joint checking account. Lou also continued to pay for Jeri and the children's car insurance and some medical and school-related expenses.

¶ 10 In March, 2003, Lou filed this action. Three months later Jeri moved for temporary child support and maintenance. In an interim order issued in February, 2004, the District Court ordered Lou to pay Jeri a total of $4,200 per month — $3,200 as child support and $1,000 as maintenance. The court ordered these amounts be paid retroactively to July, 2003. Lou was also required to continue paying the children's school tuition, health insurance, uninsured medical expenses, and Jeri's car insurance. Later Lou opted to postpone the date set for trial, resulting in an increase in interim maintenance of $500 per month.

¶ 11 A few months prior to commencement of this action, while the parties were separated, Jeri secured a part-time retail job at a Bozeman bookstore. A year later, in September, 2003, Jeri found a part-time nursing position with Montana State University, but she was laid off in May, 2004, when the position was eliminated. A few months later Jeri secured another part-time nursing position.

¶ 12 Trial was held March 22, 2005. On cross-examination, when questioned about his income, Lou agreed that his taxable income for the previous four years "may" have averaged $260,000. Lou's accountant, however, testified that while his income for 2004 was $245,384, after paying his various obligations, Lou had only $7,455 for his own living expenses. The accountant further testified that in 2004, by relying on inheritance, loan proceeds and other sources, Lou had actually spent $22,553 more than he made.

¶ 13 The District Court issued its decree dissolving the marriage, distributing the marital estate and awarding Jeri maintenance in September, 2005. The court found there were significant differences in earning potential between Lou and Jeri, that Jeri lacked sufficient property to provide for her reasonable needs, and that she was unable to support herself through appropriate employment due to her limited experience and dated skills. The court determined that $3,450 per month was a reasonable amount of maintenance for Lou to pay for ten years, retroactively commencing on the date the parties separated, January 28, 2000, and including arrearages in the amount of $500. Then, beginning on January 28, 2010, Lou's maintenance payments to Jeri would decrease to $2,500 per month for an additional seven years. Finally, on January 28, 2017, maintenance would further decrease to $1,500 per month for an additional two years before ending entirely on January 28, 2019.

¶ 14 From this order, Lou appeals.

STANDARD OF REVIEW

¶ 15 Our standard of review for marriage dissolution cases is set forth in In re Marriage of Crilly, 2005 MT 311, ¶ 10, 329 Mont. 479, ¶ 10, 124 P.3d 1151, ¶ 10:

We review the district court's findings of fact in a dissolution proceeding to determine whether they are clearly erroneous. A finding is clearly erroneous if it is not supported by substantial evidence, the district court misapprehended the effect of the evidence or our review of the record convinces us that the district court made a mistake. Bock v. Smith, 2005 MT 40, ¶ 14, 326 Mont. 123, ¶ 14, 107 P.3d 488, ¶ 14 (citations omitted). Absent clearly erroneous findings, we will affirm a district court's division of property and award of maintenance unless we identify an abuse of discretion. In re Marriage of Payer, 2005 MT 89, ¶ 9, 326 Mont. 459, ¶ 9, 110 P.3d 460, ¶ 9 (citation omitted). A district court abuses its discretion if it acts arbitrarily without conscientious judgment or exceeds the bounds of reason, resulting in substantial injustice. In re Marriage of Kotecki, 2000 MT 254, ¶ 9, 301 Mont. 460, ¶ 9, 10 P.3d 828, ¶ 9.

¶ 16 Our standard of review of a district court's conclusions of law is whether the court's interpretation of the law is correct. Seubert v. Seubert, 2000 MT 241, ¶ 12, 301 Mont. 382, ¶ 12, 13 P.3d 365, ¶ 12 (citation omitted). As a general rule, pursuant to § 40-4-202, MCA, a district court has broad discretion to distribute the marital estate equitably. In re Marriage of Killpack, 2004 MT 55, ¶ 8, 320 Mont. 186, ¶ 8, 87 P.3d 393, ¶ 8.

ISSUE ONE

¶ 17 Did the District Court err in the distribution of the marital estate because it did not consider $255,000 in assets and $30,000 of debt?

¶ 18 Lou argues that the District Court erred because the distribution of the marital estate neither valued nor distributed $240,402 of life insurance Lou had paid for as part of his defined benefit retirement plan, a $15,000 IRA, and more than $30,000 of debt.

¶ 19 Jeri responds that the District Court's failure to separately list Lou's insurance as an asset is harmless error, because the court distributed to her a percentage of the overall value of the defined benefit plan. Thus, according to Jeri, because it is part of the defined benefit plan, she should be distributed the same percentage of the insurance as she received in the rest of the plan. Jeri also claims the failure to consider the $15,000 IRA is harmless error in light of the overall value of the parties' assets. Finally, Jeri argues the $30,000 in debt should be attributed to Lou because a significant portion of it was incurred by him in paying Jeri pursuant to the District Court's interim order for maintenance.

¶ 20 We have previously held that the true net worth of the marital estate must be accurately determined before the issues of equitable apportionment and maintenance can be resolved. In re Hanni, 2000 MT 59, ¶ 37, 299 Mont. 20, ¶ 37, 997 P.2d 760, ¶ 37 (citing In re Marriage of Lundvall, 241 Mont. 172, 175, 786 P.2d 10, 12 (1990)).

¶ 21 Our review of the record supports Lou's claim that three insurance policies with a value of $240,402 were not considered by the District Court when it valued and divided the marital estate. The court's distribution of the defined benefit plan — of which the insurance was a part — nowhere includes the cash value of these insurance policies. Because these significant assets were not mentioned by the District Court in its decree, both the parties and this Court are forced to guess whether the District Court considered them in distributing the marital estate, and if they were considered in the maintenance award. Nor will we simply assume, as Jeri urges, that the value of the insurance should be distributed in the same percentages that the District Court allocated the other portions of the defined benefit plan.

¶ 22 Also, both parties make reference to a $15,000 IRA belonging to Jeri as well as $30,000 of debt owed by Lou. Although Jeri and Lou disagree how this asset and this debt should be distributed, they agree that the $15,000 IRA in Jeri's name and the $30,000 debt both, in fact, exist. It is undisputed that neither of these items was distributed by the District Court. Once again, we are left to guess at how these amounts were accounted for — if they were accounted for at all — and how they may have affected the equitable distribution of the marital estate and maintenance.

¶ 23 The District Court's findings of fact and conclusions of law do not conform to the evidence because $255,000 in assets and $30,000 in debt are omitted. Thus, the true net worth of the marital estate was not accurately determined. Before issues of equitable apportionment and maintenance can be resolved, the District Court must consider the entire marital estate. See Hanni, ¶ 37. Therefore, we must remand this case to the District Court for additional consideration of the equitable distribution of the marital estate and, after such distribution, how any award of maintenance is affected.

ISSUE TWO

¶ 24 Did the District Court err by awarding Jeri maintenance without considering the factors found in § 40-4-203(2), MCA?

¶ 25 Lou claims the District Court erred in awarding Jeri maintenance without considering the factors in...