Kanta v. Kanta, 17371

• Citation: 479 N.W.2d 505,60 USLW 2528
• Decision Date: 31 December 1991
• Docket Number: No. 17371,17371
• Parties: Susan J. KANTA, Plaintiff and Appellee, v. Gerald B. KANTA, Sr., Defendant and Appellant.
• Court: Supreme Court of South Dakota

Page 505

479 N.W.2d 505

60 USLW 2528

Susan J. KANTA, Plaintiff and Appellee, v. Gerald B. KANTA, Sr., Defendant and Appellant.

No. 17371.

Supreme Court of South Dakota.

Argued Sept. 10, 1991.

Decided Dec. 31, 1991.

Linda Lea M. Viken of Finch, Viken, Viken & Pechota, Rapid City, for plaintiff and appellee.

James L. Waggoner of Waggoner Law Office, Rapid City, for defendant and appellant.

AMUNDSON, Justice.

Gerald B. Kanta, Sr., appeals the judgment and decree of divorce entered October 18, 1990. We affirm in part, reverse in part and remand.

FACTS

Susan J. Kanta (wife) and Gerald B. Kanta, Sr. (husband) were married October 24, 1970, at Kankakee, Illinois. Wife has a high school education and on-the-job training. Prior to the marriage, she had been employed for approximately two years and she remained so employed for six years. Wife ceased working in 1976. Husband has an associate's degree, a B.A. degree, and an M.B.A. degree, and he has been employed with U.S. Postal Service throughout the course of the marriage.

During the marriage, wife turned down job promotions and moved often in order that husband could better advance his career. Husband contributed essentially all the income for his family, while wife engaged in the traditional role of housewife and mother. ¹ Throughout the course of the marriage, the Kantas acquired substantial real estate and tangible marital property. Husband also secured retirement benefits as a result of his employment. ²

The trial court found the breakdown of Kantas' marriage occurred largely because of an extramarital affair by husband. The trial court entered a judgment of divorce and awarded the tangible marital property approximately fifty-six percent to wife and forty-four percent to husband.

In addition, the trial court awarded wife compensation for "career opportunity costs" (also referred to as depreciated human capital) in the amount of $1,000 per month for twenty years. The trial court termed this award one-half property and one-half alimony, the alimony portion to terminate upon the death of either party or wife's remarriage. Wife was awarded custody, and child support was ordered. Wife was also awarded a portion of her attorney's fees. Additional details are discussed below in the analysis of each issue raised by husband's appeal.

ISSUES

1. Whether trial court abused its discretion when it awarded wife $500 per month for twenty years for her "depreciated human capital" which the court considered to be property?

2. Whether the trial court abused its discretion when it refused to discount husband's retirement fund to present value?

3. Whether trial court abused its discretion when it made an unequal distribution of marital property based on fault?

4. Whether trial court abused its discretion when it awarded wife $500 per month for twenty years in alimony, terminable upon either party's death or wife's remarriage?

5. Whether trial court abused its discretion when it awarded $2,700 in attorney's fees to wife?

ANALYSIS

Standard of Review

This court will not disturb a division of property unless it clearly appears the trial court abused its discretion. Johnson v. Johnson, 471 N.W.2d 156 (S.D.1991); Fox v. Fox, 467 N.W.2d 762 (S.D.1991); Studt v. Studt, 443 N.W.2d 639 (S.D.1989). "The term 'abuse of discretion' refers to a discretion exercised to an end or purpose not justified by, and clearly against, reason and evidence." Gross v. Gross, 355 N.W.2d 4, 7 (S.D.1984); Rykhus v. Rykhus, 319 N.W.2d 167 (S.D.1982); Herndon v. Herndon, 305 N.W.2d 917 (S.D.1981); Davis v. Kressly, 78 S.D. 637, 107 N.W.2d 5 (1961). The exercise of the trial court's discretion in dividing the property of divorcing parties is, however, restricted by SDCL 25-4-44 ³ and SDCL 25-4-45.1. ⁴

1) Career Opportunity Costs

Husband argues that trial court's award for "career opportunity costs" is not recognized in South Dakota as property in a divorce action. Wife responds that South Dakota's case law implicitly recognizes the loss of economic opportunities in its alimony factors and property division factors.

This court has consistently recognized the principal factors the trial court is to consider when making an equitable division of the marital property as: (1) the duration of the marriage; (2) the value of the property; (3) the ages of the parties; (4) the health of the parties; (5) the parties' competency to earn a living; (6) the contribution of each party to the accumulation of the property; and (7) the income-producing capacity of the parties' assets. Ryken v. Ryken, 461 N.W.2d 122, 126 (S.D.1990); Baltzer v. Baltzer, 422 N.W.2d 584 (S.D.1988); Cooper v. Cooper, 299 N.W.2d 798 (S.D.1980).

The trial court in the present case made a determination that wife was presently earning approximately $11,000 per year and that if she had pursued her career instead of ceasing employment in 1976, she would have been earning $23,000 per year. ⁵ The trial court then awarded wife the $12,000 difference in salaries, payable at $1,000 per month for twenty years.

Husband argues that a property award for career opportunity costs in effect creates a property interest in unemployment. He asserts it would be inconsistent to recognize a property interest in unemployment when we do not recognize a property interest in advanced educational degrees.

We have previously held that an educational degree earned during the course of a marriage is not property which is subject to division upon dissolution of marriage. Saint-Pierre v. Saint-Pierre, 357 N.W.2d 250 (S.D.1984); Wehrkamp v. Wehrkamp, 357 N.W.2d 264 (S.D.1984). In Wehrkamp, we found the trial court did not abuse its discretion by refusing to consider enhanced earning capacity resulting from a degree husband earned in dental school during the marriage as a "marital asset" subject to property division. Justice Henderson stated: "The factors and variables involved in such a consideration are simply too speculative and could only act to turn the possibility of inequity on the one hand into a probability of such on the other." 357 N.W.2d at 266. We believe the same is true when considering career opportunity costs as divisible property. Career opportunity costs are speculative and open the door to the probability of inequity. The thrust of wife's position is to change the focus of an equitable division of property acquired during a marriage into a tort damage issue with the tort having been the husband's extramarital affair. This fault on the part of husband is appropriate for consideration in an alimony award but not in a property award.

Wife accurately states that other jurisdictions recognize career opportunity costs as a separate compensable item in divorce proceedings. ⁶ In these other jurisdictions, however, the statutory schemes are designed to allow compensation for career opportunity costs or maintenance. To date, South Dakota has not passed this type of legislation and, under the current statutory scheme, we do not find sufficient basis to recognize an award for career opportunity costs.

Wife further argues that this court has impliedly approved the career opportunity cost theory in our prior decisions. In the case of Kelley v. Kirk, 391 N.W.2d 652 (S.D.1986), we affirmed the trial court's award of restitutional and rehabilitation alimony based, in part, on the evidence presented in that case regarding depreciation in human capital. Next, in Bradeen v. Bradeen, 430 N.W.2d 87 (S.D.1988), this court stated that a trial court has the right to consider foregone opportunities for enhancement or improvement of professional or vocational skills when considering whether or not to award rehabilitation or reimbursement alimony. Neither of these decisions allows one to extrapolate a new property right for marital dissolution cases, nor should this holding be construed as diluting our previous decisions.

We hold the trial court abused its discretion in awarding compensation for career opportunity costs as part of a property division. Accordingly, we reverse that portion of the trial court's judgment.

2) Retirement Fund

Husband argues the trial court abused its discretion when it refused to discount his retirement fund to present value, since it accumulates no interest and is not immediately available to him. Both parties presented minimal opinion evidence on the valuation of husband's retirement plan. ⁷ Husband presented a letter from an Actuarial Service which placed a present value on his retirement account of less than $10,000. ⁸

Wife presented testimony of economist Dr. Ralph Brown that husband's proffered valuation did not account for any growth factor on the account. Dr. Brown testified that it would not be appropriate to present value the account since there was no way of knowing what the value of it would be upon husband's retirement, approximately seventeen years away. Were husband to cease his employment with the Postal Service today, he would receive $40,492 from his retirement account; thus, the trial court, in essence, placed a present value on the account. This figure was the one selected by the trial court and the entire amount was awarded husband.

Husband's retirement account, based on the evidence, is a defined contribution plan where husband contributes a percentage of his salary to the plan. The amount of his contributions can easily be determined at any time. If the husband remains in his present employment, as he has for the last twenty-plus years, his retirement benefits would more than likely exceed his contributions. There is no question that the funds cannot be withdrawn unless he terminates his employment or dies.

Courts in other jurisdictions have held when evaluating this type of asset in a marital dissolution case, it need not be discounted to present-day value. In Duncan v. Duncan, 724 S.W.2d 231 (Ky.App.1987), the Kentucky Court of Appeals considered a husband's contributions to the Federal Civil Service Retirement...