Kaiser v. Kaiser

• Decision Date: 31 July 1991
• Docket Number: No. 900276,900276
• Parties: Marvin L. KAISER, Plaintiff and Appellee, v. Lillian KAISER, a/k/a Lillian Walters Kaiser, Defendant and Appellant. Civ.
• Court: North Dakota Supreme Court

Page 63

474 N.W.2d 63

Marvin L. KAISER, Plaintiff and Appellee, v. Lillian KAISER, a/k/a Lillian Walters Kaiser, Defendant and Appellant.

Civ. No. 900276.

Supreme Court of North Dakota.

July 31, 1991.

Serkland, Lundberg, Erickson, Marcil & McLean, Ltd., Fargo, for plaintiff and appellee; argued by Ronald H. McLean. Appearance by Maureen Holman.

Thomas F. Topel (argued) of Dorsey & Whitney, Billings, Mont., Freed, Dynes, Reichert, Buresh & Herauf, PC, Dickinson, for defendant and appellant; argued by Ronald A. Reichert.

ERICKSTAD, Chief Justice.

Lillian Walters Kaiser appealed from a district court order denying her motion for a new trial in the parties' divorce action. We affirm in part, reverse in part, and remand for further proceedings.

Lillian and Marvin Kaiser were married in 1972. At the time of their marriage, Lillian had a daughter, Shannon, from a previous marriage. A daughter, Susan, was born of the marriage in 1974. The parties were divorced on December 30, 1987. The issues of property distribution, child custody, spousal support and child support were tried in 1988. Among other things, the judgment entered: (1) awarded Lillian the primary care, custody, and control of Susan; (2) required Marvin to pay child support of $750 per month for Susan and to provide an appropriate major medical health insurance policy for Susan; (3) awarded Marvin assets that the court valued at $1,268,849.96 and imposed upon him liabilities of $395,500, for a net award of $873,349.96; (4) awarded Lillian assets that the court valued at $1,243,137.41 and imposed upon her liabilities of $60,000, for a net award of $1,183,137.41; and (5) required Marvin to pay Lillian spousal support of $250 per month for 24 months.

Judgment was entered November 21, 1989, and notice of entry was given December 7, 1989. Lillian did not take an appeal from the judgment. Instead, on February 9, 1990, Lillian filed a motion for a new trial pursuant to Rule 59(b)(1), (3), (4), (6) and (7), N.D.R.Civ.P. ¹ The trial court denied the motion and Lillian appealed, contending that the trial court erred in denying a new trial because: (1) the trial court overvalued her interest in Imperial Oil of North Dakota, Inc., (Imperial) which the court valued at $600,000 and awarded to her; (2) the amounts awarded for child and spousal support are inadequate; (3) the trial court undervalued Sun Well Service, Inc., which it awarded to Marvin, by accepting Marvin's liquidation value of $167,000, reached by valuing its assets and subtracting auction expenses and corporate and personal taxes asserted to be due upon liquidation; and (4) the trial court undervalued Marvin's retirement accounts, law practice, and buckskins by reducing their values by possible tax liabilities.

We will not disturb a trial court's ruling on a motion for a new trial unless there is an affirmative showing of a manifest abuse of discretion. Kraft v. Kraft, 366 N.W.2d 450 (N.D.1985); Olson v. A.W. Chesterton Co., 256 N.W.2d 530 (N.D.1977). "A trial court abuses its discretion when it acts arbitrarily, capriciously, or unreasonably." Smith v. Anderson, 451 N.W.2d 108, 112 (N.D.1990). "Ordinarily, events occurring subsequent to trial are not grounds to justify a new trial under Rule 59(b), NDRCivP." Hoge v. Hoge, 281 N.W.2d 557, 560 (N.D.1979). A trial court's determinations with regard to matters of property division, spousal support, and child support are findings of fact subject to the clearly erroneous standard of Rule 52(a), N.D.R.Civ.P. ² Kraft v. Kraft, supra. A trial court's valuation of marital property is treated as a finding of fact. Dick v. Dick, 414 N.W.2d 288 (N.D.1987).

The trial court valued Lillian Kaiser's shares of Imperial Oil of North Dakota, Inc., at $600,000. Lillian argues:

"The trial court did not indicate how it arrived at this figure. Presumably, it accepted Marvin's calculations concerning the value of Imperial Oil at $8.5 million and of Lillian's shares of Imperial Oil at $957,000 (App. 32), and reduced that figure by approximately forty percent because her 'share is a minority interest and there is no ready market for sale of the stock.' (App. 30)."

Lillian contends that the trial court erred in accepting Marvin Kaiser's valuations of Imperial's nonproducing minerals and nonproducing leases, rather than accepting the valuations of her expert witness or another expert's valuation of Lillian's shares of Imperial stock.

Marvin valued Imperial's mineral and leasehold interests at $7,104,245 and valued all of Imperial's assets at $8,561,855.84. Marvin valued Imperial's nonproducing mineral interests by using a lease value of $500 per acre, multiplied by three, multiplied by the total acres. He testified that it was reasonable to use a lease value of $500 because:

"It's Imperial's policy that they lease for a thousand dollars an acre if you want to acquire a lease from Imperial. I thought that even though that is a policy of the company, that in reviewing the records over the past years as disclosed in the tax returns, there was substantial evidence that what they did lease for was in the vicinity of $500. I saw a number 450 and saw a transaction higher. I know from experiences together with them that we leased at 500 and some at a thousand, so I thought conservatively between what I knew and the tax returns revealed and the location of their minerals, I thought a conservative approach would be to use $500 an acre rather than the thousand that I'm familiar with."

Marvin also valued Imperial's nonproducing leaseholds at $500 per acre, on the following, somewhat confusing, basis:

"Imperial doesn't buy leases to broker them. They buy leases as a matter of development generally, when buying minerals or unleased minerals at least is not available to them. With that in mind, I know that they valued the leases--if they were going to grant a lease at $500 an acre, so I made a reasonable assumption that they would value the acquisition of leases if they were buying them for their own development portfolio at $500 an acre."

Marvin valued some of his own interests at what he paid for them--$150 per acre and $17.50 per acre (other interests he did not value at all, but suggested that they be divided equally).

John Broschat, on behalf of Lillian, valued Imperial's mineral and leasehold interests (which Marvin had valued at $7,104,245) at a fair market value of $1,147,000, considering what could be obtained for nonproducing interests and leaseholds on the market with their proved and estimated reserves, and pricing parameters currently used in the Williston Basin. He valued producing interests using current production rates, estimated monthly cash flow, historical falloff rates, and estimated remaining economic life.

Harry Ness, on behalf of Lillian, testified that he valued Lillian's 9.7 percent interest in Imperial at $135,000, using a combined price/earnings approach and an indicated value approach.

Lillian contends that Marvin used 1986 production and 1986 prices in valuing Imperial's working interests and producing mineral interests, while he "used 1988 production figures and 1988 prices when he calculated the value of his income producing properties and leases." Lillian argues: "In order to be consistent, it is necessary to value the parties' producing properties using production from the same year." After the trial, Lillian sold her shares in Imperial for $100,000. At trial, Marvin testified that he used 1986 income in valuing Imperial's working interests and producing mineral interests because 1986 was "the last year that I had numbers and verification for" and that "It's the last year that discovery provided us--the information that you could relate it to, the properties--to have any judgment on the validity." ³

In denying the motion for a new trial, the trial court stated:

"Well, this was a troublesome issue. The valuation of the assets, generally, that was a very difficult issue at trial. It was hotly disputed as to what the values of the various items of property should be, and I found that a very difficult task to come to some resolution of those issues. As to the subsequent sale of Lillian's shares of stock in Imperial Oil, I'm quite frankly not impressed by the fact that she sold them to her mother later on for apparently about one-sixth of the valuation that I placed on those assets. Sale to one's mother of stock in a family corporation is not indicative of a truly armslength [sic] transaction.

* * * * * *

"I realize here there are some good arguments made on both sides, but I don't see that there's anything presented here that would constitute grounds for a new trial. If I made some mistakes, I'd like to correct them, but I'm not sure these are mistakes here. They were just difficult judgment calls, and if they were bad enough to be corrected on appeal, they should have been corrected on appeal, not a new trial being considered and granted now in a case of this nature, much more than one year after the trial was completed and the decision was made. So as to the asset evaluation generally, I deny the motion for a new trial."

In our view of the evidence, there is no explanation for why Marvin valued Imperial's nonproducing mineral and leasehold interests by using a base of $500 per acre when he used bases of $150 per acre and $17.50 per acre in valuing his own nonproducing minerals; Imperial's isolated sales of two parcels for "in the vicinity of $500" per acre is an insufficient foundation for Marvin's use of $500 per acre as a base in valuing all of Imperial's remaining nonproducing minerals and leaseholds; the disparities between Marvin's valuation of Imperial's assets and those of Lillian's experts amounts to several million dollars, resulting in a huge difference in the valuation assigned to Lillian's interest in Imperial, which is one of the largest items in the parties' marital estate. The astounding differences in the valuation of...