Nuveen v. Nuveen

• Citation: 795 N.W.2d 308,2011 ND 44
• Decision Date: 22 March 2011
• Docket Number: No. 20100134.,20100134.
• Parties: Michiel James NUVEEN, Plaintiff, Appellant and Cross–Appelleev.Elizabeth Ann NUVEEN, Defendant, Appellee and Cross–Appellant.
• Court: North Dakota Supreme Court

795 N.W.2d 308

2011 ND 44

Michiel James NUVEEN, Plaintiff, Appellant and Cross–Appellee

v.Elizabeth Ann NUVEEN, Defendant, Appellee and Cross–Appellant.

No. 20100134.

Supreme Court of North Dakota.

March 22, 2011.

Patti J. Jensen (argued), East Grand Forks, MN, for plaintiff, appellant and cross-appellee.Scott D. Jensen (argued), Grand Forks, ND, for defendant, appellee and cross-appellant.KAPSNER, Justice.

[¶ 1] Michiel James Nuveen appealed a district court judgment awarding Elizabeth Ann Nuveen $7,500 per month in permanent spousal support. Michiel Nuveen asserts the district court erred in setting the amount and duration of the spousal support award. Elizabeth Nuveen cross-appealed, arguing the district court was clearly erroneous in accepting Michiel Nuveen's expert's valuation of his orthodontia practice, and the court was clearly erroneous in not equalizing the parties' incomes through spousal support. We conclude the district court did not err in its findings on the value of Michiel Nuveen's orthodontia practice, did not err in awarding permanent spousal support, and did not err in awarding $7,500 per month in spousal support. We affirm the judgment.

I

[¶ 2] Michiel Nuveen and Elizabeth Nuveen were married in July 1991 and divorced in October 2007. The parties have three children aged sixteen, thirteen, and eleven years old at the time of the trial. Michiel Nuveen is an orthodontist in Grand Forks, North Dakota, and his practice is organized as an S Corporation of which he is the sole shareholder. Elizabeth Nuveen has not been employed since 1996. The parties stipulated to many of the divorce provisions, but reserved for trial the issues of the value of Michiel Nuveen's orthodontia practice, property division, and the amount and duration of spousal support. Michiel Nuveen and Elizabeth Nuveen each had an expert witness testify on valuation methods and the value of Michiel Nuveen's orthodontia practice. Michiel Nuveen's accountant testified on how Michiel Nuveen receives income from his orthodontia practice and testified generally on how an S Corporation operates. The parties also testified. After a five-day trial, the district court made findings on the value of the orthodontia practice, relying mostly on Michiel Nuveen's expert's valuation, and divided the parties' property. The district court awarded Elizabeth Nuveen $7,500 per month in permanent spousal support after finding there would be a future substantial disparity in the parties' incomes, and rehabilitative spousal support and the property division would not remedy the disparity.

II

[¶ 3] An award of spousal support is a finding of fact, and this Court will not set aside an award of spousal support on appeal unless it was clearly erroneous. Duff v. Kearns–Duff, 2010 ND 247, ¶ 13, 792 N.W.2d 916. “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 a review of the entire record, we are left with a definite and firm conviction a mistake has been made.” Id. A district court must consider the relevant factors under the Ruff–Fischer guidelines in determining whether an award of spousal support is appropriate. Id. at ¶ 14; see Fischer v. Fischer, 139 N.W.2d 845, 852 (N.D.1966); Ruff v. Ruff, 78 N.D. 775, 784, 52 N.W.2d 107, 111 (1952). The Ruff–Fischer guidelines require the district court to consider:

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.

Duff, at ¶ 14 (quoting Krueger v. Krueger, 2008 ND 90, ¶ 8, 748 N.W.2d 671; Sommer v. Sommer, 2001 ND 191, ¶ 9, 636 N.W.2d 423). A court must consider the needs of the spouse seeking support and the needs and ability to pay of the supporting spouse. Id. (citing Overland v. Overland, 2008 ND 6, ¶ 16, 744 N.W.2d 67). The district court does not need to make specific findings on each factor of the Ruff–Fischer guidelines as long as this Court can determine the reasons for the court's decision. Id. (citing Krueger, at ¶ 8).

[¶ 4] The parties do not contest the following findings by the district court. At the time of trial, Michiel Nuveen was forty-one years old, and Elizabeth Nuveen was forty-three years old. The parties were married for sixteen years, which the court considered a long-term marriage. Both parties admitted to misconduct in the marriage, and the court found that any alleged misconduct did not have an impact on the issue of spousal support. The parties lived comfortably and had improved their station in life throughout their marriage. Michiel Nuveen had no health or physical conditions affecting his ability to work. Elizabeth Nuveen has a blood clotting disorder, which the court found does not limit her ability to work other than limiting her from a physically strenuous job.

[¶ 5] The parties do contest the district court's findings on the value of the orthodontia practice, and Elizabeth Nuveen's need for support and Michiel Nuveen's ability to pay spousal support.

III

[¶ 6] Both parties proposed an equal division of the parties' property would be equitable and the court agreed, making the valuation of major assets of high importance in this divorce. Michiel Nuveen was awarded his orthodontia practice, which the district court found has a “tremendous income earning capacity.” “Property division and spousal support are interrelated and intertwined and often must be considered together, especially when there is a large difference in earning power between the spouses.” Paulson v. Paulson, 2010 ND 100, ¶ 9, 783 N.W.2d 262 (citing Fox v. Fox, 1999 ND 68, ¶ 22, 592 N.W.2d 541). On cross-appeal, Elizabeth Nuveen contests the district court's valuation of Michiel Nuveen's orthodontia practice, arguing the court should have accepted her expert's appraisal.

[¶ 7] Valuation of property is a finding of fact which will not be reversed on appeal unless clearly erroneous. Lynnes v. Lynnes, 2008 ND 71, ¶ 16, 747 N.W.2d 93.

A district court's valuation of property is presumed correct, and the evidence presented must be viewed in the light most favorable to the district court's finding of fact. It is the province of the district court to judge the credibility of witnesses and the evidence they introduce. When the district court's valuation is within the range of evidence provided by the parties, the district court's valuation will not be set aside, unless this Court has a definite and firm conviction a mistake has been made.

Id. (citations omitted); see also Dronen v. Dronen, 2009 ND 70, ¶ 23, 764 N.W.2d 675. The fair market value of a business is ordinarily the proper method for valuing property in a divorce. Sommers v. Sommers, 2003 ND 77, ¶ 10, 660 N.W.2d 586 (citing Heggen v. Heggen, 452 N.W.2d 96, 99 (N.D.1990)). “Fair market value is the price a buyer is willing to pay and the seller is willing to accept under circumstances that do not amount to coercion.” Id. (quoting Heggen, at 99). When making a valuation of a professional corporation, the goodwill of a business may be considered, and “the trial court must include at a minimum the interest in the office equipment, furniture, fixtures, and the accounts receivable.” Id. at ¶ 9 (quotations omitted) (emphasis in original).

[¶ 8] The district court found the appraisal from Michiel Nuveen's expert, Dr. Leonard Sliwoski, more accurate than the appraisal from Elizabeth Nuveen's expert, Kevin Shea. In making its findings on the value of the orthodontia practice, the district court relied on Sliwoski's appraisal and made a few adjustments. The court found Sliwoski's appraisal more accurate because Sliwoski is a certified appraiser who performed the appraisal in conformity with the Uniform Standards of Professional Appraisal Practice. Sliwoski testified the Uniform Standards of Professional Appraisal Practice are consistent with Internal Revenue Service rulings on valuing closely held businesses, like the orthodontia practice. Using an income approach, Sliwoski's valuation provided a fair market value of the stock of the orthodontia practice, which is organized as an S Corporation. Sliwoski considered the tangible and intangible assets, earnings, and debt of the practice to complete a stock valuation. The court considered Sliwoski's method of determining the value of intangible assets a critical factor in finding Sliwoski's appraisal more accurate, because Sliwoski relied upon the amount Michiel Nuveen paid for intangible assets three and a half years prior to the appraisal. The court found the prior sale was a “truly comparable sale” because it was an arm's-length transaction, with a willing seller and buyer of the same practice in the same market. The court found the amount Michiel Nuveen paid for the practice's intangible assets could be relied upon to accurately determine their fair market value.

[¶ 9] Elizabeth Nuveen's expert, Shea, is a licensed lawyer in Minnesota and typically prepares appraisals for the purpose of brokering sales of dental practices. Shea used three valuation methods, averaged the values from those methods, and arrived at a weighted average for the value of the orthodontia practice. The district court found Shea's valuation of the intangible assets was less accurate. Shea valued the intangible assets of the orthodontia practice at a figure more than double what Michiel Nuveen paid for them three and a half years prior to his appraisal. The court found it did not make sense not to consider the prior sale, and it was not reasonable of Shea to conclude the intangible assets would have more than doubled in value in less...