McCarthy v. McCarthy

Decision Date18 December 2014
Docket NumberNo. 20140044.,20140044.
Citation856 N.W.2d 762
PartiesCarleen E. McCARTHY, Plaintiff, Appellant, and Cross–Appellee v. Paul Justin McCARTHY, Defendant, Appellee, and Cross–Appellant.
CourtNorth Dakota Supreme Court

Michael L. Gjesdahl, Insight Professional Offices, 1375 21st Avenue North, Suite A, Fargo, N.D. 58102, for plaintiff, appellant, and cross-appellee.

Patti J. Jensen, 411 Second Street NW, Suite D, P.O. Box 386, East Grand Forks, Minnesota 56721–0386, for defendant, appellee, and cross-appellant.

Opinion

SANDSTROM, Justice.

[¶ 1] Carleen and Paul McCarthy appeal from a divorce judgment distributing the parties' marital property and awarding permanent spousal support. Carleen McCarthy argues the district court's property distribution to Paul McCarthy was clearly erroneous. Specifically, she argues it was clearly erroneous to allow him to “buy out” her interest in the remainder interest he inherited for $125,000.00, because doing so created a substantial disparity that was not adequately justified or explained by the district court. On cross-appeal, Paul McCarthy argues the district court's award of spousal support to Carleen McCarthy was clearly erroneous because she did not prove she has a present or future need justifying the award. We affirm.

I

[¶ 2] Paul and Carleen McCarthy were married in 1998. Before their marriage, Paul McCarthy inherited a one-half remainder interest in 1,642 acres of farmland and a 2.5 acre farmstead. Once married, the couple moved onto the farmstead, where they continued to live until their separation. The parties have three minor children. Paul McCarthy is the sole shareholder of McCarthy Electric, Inc., and has an annual gross income of $62,459. Carleen McCarthy works as a teacher in Devils Lake and has an annual gross income of $45,729.

[¶ 3] In 2012, Carleen McCarthy sued for divorce. Shortly after, the parties stipulated to entry of partial judgment, resolving all child-related issues and granting primary residential responsibility to Carleen McCarthy. A judgment was subsequently entered that included the terms of the partial judgment. Under the judgment, the district court distributed the marital estate and ordered Paul McCarthy to pay spousal and child support. In regard to the allocation of the marital estate, which is at issue in this appeal, the district court valued the marital property at $936,106.35. Of that amount, $751,453.00 is attributable to a one-half remainder interest in approximately 1,642 acres of farmland that was granted to Paul McCarthy prior to the parties' marriage. Paul McCarthy's mother currently owns a life estate interest in the property, but upon her death, he and his brother share an obligation to pay each of their three sisters $60,000.00 as a condition of inheriting the farmland. The one-half remainder interest is subject to a buy-sell agreement with uncertain effect.

[¶ 4] In allocating the marital property, the district court awarded Carleen McCarthy a one-quarter interest in Paul McCarthy's remainder interest, equally distributed the remaining marital assets valued at $184,653.35, and ordered Paul McCarthy to pay a property equalization payment of $10,337.00. The district court, however, granted Paul McCarthy an option to “buy out” Carleen McCarthy's one-quarter interest, which was valued at $187,863.25, for $125,000.00 payable within 120 days of the final judgment. Upon Paul McCarthy's election to exercise this option, Carleen McCarthy was awarded $125,000.00 for her one-quarter interest in Paul McCarthy's remainder interest and $92,327.00 for her half of the remaining marital estate, resulting in a net award of $217,327.00. Paul McCarthy was awarded $626,543.00 for his remainder interest in the farmland and $92,326.50 for his half of the remaining marital estate, resulting in a net award of $718,779.00.

[¶ 5] In regard to spousal support and child support, the district court found that because Carleen McCarthy had endured a hard-fought battle with breast cancer, which involved multiple surgeries, it was appropriate to award her a nominal amount of permanent spousal support to address any financial distress caused by future health complications. As a result, the district court ordered Paul McCarthy to pay Carleen McCarthy spousal support in the amount of twenty dollars per month, reserving continuing jurisdiction to modify this obligation on the basis of material changes to the parties' financial circumstances. The district court also ordered Paul McCarthy to pay $1,246 a month in child support.

[¶ 6] The district court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. § 27–05–06. The appeals were timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const. art. VI, § 6, and N.D.C.C. § 28–27–01.

II

[¶ 7] Carleen McCarthy argues the district court's property distribution to Paul McCarthy was clearly erroneous. She argues the district court erred in granting him the option to buy out her one-quarter interest in the inherited remainder interest and failing to sufficiently explain the substantial disparity in the property distribution.

[¶ 8] The standard for reviewing marital property distributions is well-settled. “A district court's distribution of marital property is treated as a finding of fact, which we review under the clearly erroneous standard of review.” Hoverson v. Hoverson, 2013 ND 48, ¶ 8, 828 N.W.2d 510 (citing Wold v. Wold, 2008 ND 14, ¶ 6, 744 N.W.2d 541 ). “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, after reviewing all the evidence, we are left with a definite and firm conviction a mistake has been made.” Hoverson, at ¶ 8 (citation omitted). This Court views the evidence in the light most favorable to the findings, and the district court's findings of fact are presumptively correct.” Hitz v. Hitz, 2008 ND 58, ¶ 10, 746 N.W.2d 732 (citations omitted).

[¶ 9] A district court is required to make an equitable distribution of all the divorcing parties' marital property and debts. N.D.C.C. § 14–05–24(1). “All property held by either party, whether held jointly or individually, is considered marital property, and the court must determine the total value of the marital property before making an equitable distribution.” Hoverson, 2013 ND 48, ¶ 9, 828 N.W.2d 510 (citing Ulsaker v. White, 2006 ND 133, ¶¶ 12–13, 717 N.W.2d 567 ). Marital property ordinarily is valued as of the date of trial. Grinaker v. Grinaker, 553 N.W.2d 204, 208–09 (N.D.1996). After the court values the property, it must then equitably divide the entire marital estate under the Ruff–Fischer guidelines, which require the court to consider the following factors in the division:

The respective ages of the parties, their earning ability, the duration of the marriage and conduct of the parties during the marriage, their station in life, the circumstances and necessities of each, their health and physical condition, their financial circumstances as shown by the property owned at the time, its value at the time, its income-producing capacity, if any, whether accumulated before or after the marriage, and such other matters as may be material.

Ulsaker, at ¶ 10 (quoting Horner v. Horner, 2004 ND 165, ¶ 9, 686 N.W.2d 131 ); see Fischer v. Fischer, 139 N.W.2d 845 (N.D.1966) ; Ruff v. Ruff, 78 N.D. 775, 52 N.W.2d 107 (1952).

[¶ 10] “Our law does not require a set formula or method for dividing marital property; rather, the division is based on the particular circumstances of each case.” Hoverson, 2013 ND 48, ¶ 10, 828 N.W.2d 510. A property division need not be equal to be equitable, but a substantial disparity must be explained. Bladow v. Bladow, 2003 ND 123, ¶ 5, 665 N.W.2d 724. Generally, a lengthy marriage supports an equal division of all marital assets. Id. at ¶ 8.

[¶ 11] In reaching its decision regarding the distribution of the marital assets, the district court considered the factors in the Ruff–Fischer guidelines and made specific findings under the factors it deemed relevant. The district court considered the duration of the marriage, the conduct of the parties during the marriage, the parties' respective financial circumstances, and the origin of the property to be important. The court found that under North Dakota law, the parties' marriage of fifteen years constituted a long-term marriage. See Wold, 2008 ND 14, ¶ 17, 744 N.W.2d 541 (15–year marriage qualified as a long-term marriage); Ulsaker, 2006 ND 133, ¶ 14, 717 N.W.2d 567 (16–year marriage qualified as a long-term marriage). The district court found that although “both parties contributed to the breakup of the marriage[,] Paul's affair with another woman is the primary cause for the marriage ending.” The district court then found that although the parties' largest asset, the remainder interest inherited by Paul McCarthy, was not a possessory interest, it did have present value and should be considered in the court's distribution of marital property.

[¶ 12] Despite the district court's recognition that the remainder interest should be considered for distribution, the court held it would not be equitable to allow an equal split between Paul and Carleen McCarthy. Instead, the district court ordered Paul McCarthy to convey to Carleen McCarthy a one-quarter interest of his interest in the farmland or, in the alternative, to pay her $125,000 within 120 days from the date of the judgment. The court explained:

Considering how the farmland interest was conveyed to Paul from his family the court does not believe a 50/50 split on the land between Carleen and Paul is equitable. Carleen is entitled to a ¼ interest in Paul's interest in the farmland. In the alternative to conveying his ¼ interest[,] Paul can pay Carleen $125,000.00 within 120 days from date of Judgment. Paul shall sign appropriate documentation conveying ownership to Carleen in 120 days or buy out her interest.
Paul testified that the McCarthy farmland has been
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