Richards v. And

• Decision Date: 05 August 2014
• Docket Number: No. DA 13–0675.,DA 13–0675.
• Citation: 330 P.3d 1193,376 Mont. 188
• Court: Montana Supreme Court
• Parties: In re the MARRIAGE OF Dianna M. RICHARDS, Petitioner and Appellee, and Mark L. Richards, Respondent and Appellant.

376 Mont. 188

330 P.3d 1193

In re the MARRIAGE OF Dianna M. RICHARDS, Petitioner and Appellee, and Mark L. Richards, Respondent and Appellant.

No. DA 13–0675.

Supreme Court of Montana.

Submitted on Briefs May 14, 2014.

Decided Aug. 5, 2014.

For Appellant: Elizabeth J. Honaker, Honaker Law Firm, Billings, Montana.

For Appellee: George T. Radovich, Attorney at Law, Billings, Montana.

Justice BETH BAKER delivered the Opinion of the Court.

¶ 1 Mark Richards appeals the findings of fact, conclusions of law and order entered by the Thirteenth Judicial District Court, Yellowstone County, dissolving his marriage to Dianna Richards and distributing their marital estate.

¶ 2 Mark raises numerous arguments challenging the court's property distribution. We address each contention under the following two issues:

¶ 3 1. Whether the District Court erred in calculating the net worth of the marital estate.

¶ 4 2. Whether the District Court abused its discretion in distributing the marital estate.

¶ 5 We reverse portions of the court's calculation of net worth and remand for further findings and a recalculation. We affirm the court's distribution of the marital estate in all other respects.

PROCEDURAL AND FACTUAL BACKGROUND

¶ 6 Mark and Dianna married in 1984 and separated in 2007. Dianna filed a petition for dissolution of marriage on December 8, 2008. The District Court held a two-day trial on April 12 and May 2, 2013, issued findings of fact and conclusions of law on June 20, 2013, and issued a decree of dissolution on June 27, 2013.

¶ 7 When the parties married, Dianna was a registered nurse and Mark was a laborer on his family's farm and ranch. Neither party owned real property or substantial assets. In 1994, the parties bought their first property, Parker Place, with a $10,000 down payment from their combined resources and $65,000 in loans from Mark's relatives. In 1995, Mark's mother deeded him a parcel of land known as the Rushwater Property, where the parties lived until their separation. In January 1999, Dianna inherited a parcel known as Gramma's Place. Over the years they acquired more parcels—Jurovich Place, Peterson Place and Helzer Place—by leveraging their properties and borrowing money. The parties used all of the properties in various ways for the farming operation during the years of their marriage.

¶ 8 The parties' farm and ranch operated in a fashion typical of a family farm. The Richardses utilized an operating loan for up-front expenses, paying it off annually with income received from the operation. They raised hay to feed the cattle and sold any excess. They raised and sold crops, bred cattle, and either sold the calves or used them to increase the herd. The parties continually acquired and maintained equipment. Following the parties' separation in 2007, Mark continued to operate the farm and ranch in the same manner as before, using the parties' real property, equipment and inventory as needed.

¶ 9 The parties shared household duties throughout their marriage. Though Mark disputes the amount and character of Dianna's farm labor, he agrees that she assisted with the farming in various capacities, at least until their separation. The parties agree that her farming duties decreased in 2004 when she began working full time as a registered nurse to help pay expenses.

¶ 10 At trial, the District Court was tasked with determining what to include in the marital estate, the estate's net worth and an equitable division of considerable property, which consisted primarily of farmland, farm equipment, animals and personal effects. To assist in the valuation of the estate, two appraisals were completed and submitted into evidence—Jim Carroll completed an appraisal of the parties' real property in December 2011 and Musser Bros., Inc., completed an appraisal of the parties' equipment and crops in June 2011. The parties stipulated to both appraisals and Carroll testified at trial. Mark presented a financial statement from Yellowstone Bank dated April 1, 2013, and a final financial disclosure dated April 8, 2013. Mark's banker testified at trial.

¶ 11 During the trial, Mark argued that the value of the Rushwater property should not be included in the marital estate because it was gifted to him by his family. Further, he testified that he would be able to continue farming only if Dianna received no more than two parcels of land. Dianna requested four parcels of land—Gramma's Place, Jurovich Place, Parker Place and Helzer Place—along with an equalization payment of $350,000.

¶ 12 The District Court issued its findings of fact and conclusions of law on June 20, 2013. Despite the parties' long separation, the District Court calculated the marital estate as of the date of trial, noting that their financial interests had remained intertwined and that “[i]t would be impossible to separate the parties' assets as of any particular date.” Utilizing the appraisals, financial statements and testimony from the trial, the court valued the parties' net worth at $3,509,560.86. The District Court rejected Mark's argument that the parties' inherited and gifted property should not be subject to division, noting that after the properties were deeded to the parties, they were merged with and operated as a part of the overall farm and ranch operation. Based on the length of the marriage and the contributions of both parties to build up the value of the farm and ranch operation, the court concluded that it would be equitable to split the parties' net worth equally. The court relied on Mark's testimony that he needed land to continue the farming operation and awarded him all the real property except for Gramma's Place and Jurovich Place. The court also awarded Mark the majority of the income-producing assets, such as equipment and cattle, so that he could continue farming. To account for its award of the majority of the real property and equipment to Mark, the court ordered Mark to pay Dianna $892,663.00 over fifteen years for her remaining portion of the marital estate. The court noted that the ultimate distribution left Mark with a net worth $190,000 greater than Dianna's, but concluded that this was equitable to account for his operation of the farm and ranch following the parties' separation. Mark appeals the court's decree.

STANDARD OF REVIEW

¶ 13 We review a district court's division of marital property to determine whether the court's findings of fact are clearly erroneous and whether its conclusions of law are correct. In re Marriage of Funk, 2012 MT 14, ¶ 6, 363 Mont. 352, 270 P.3d 39. A finding of fact is clearly erroneous “if it is not supported by substantial evidence, if the district court misapprehended the effect of the evidence, or if our review of the record convinces us the district court made a mistake.” Bock v. Smith, 2005 MT 40, ¶ 14, 326 Mont. 123, 107 P.3d 488 (internal citation omitted). District courts have broad discretion in apportioning a marital estate. In re Marriage of Crowley, 2014 MT 42, ¶ 26, 374 Mont. 48, 318 P.3d 1031. Absent clearly erroneous findings, we will affirm a district court's division of property unless the court abused its discretion. Crowley, ¶ 26.

DISCUSSION

¶ 14 1. Whether the District Court erred in calculating the net worth of the marital estate.

¶ 15 Section 40–4–202(1), MCA, requires a district court to determine and consider the assets and liabilities of each of the parties before apportioning the marital estate. Crowley, ¶ 26. A net valuation by the district court is not always mandatory. Crowley, ¶ 26. The test is “whether the findings as a whole are sufficient to determine the net worth and to decide whether the distribution is equitable.” In re Marriage of Lewton, 2012 MT 114, ¶ 15, 365 Mont. 152, 281 P.3d 181 (internal citations omitted). A district court has broad discretion in determining the value of property in dissolution and is “free to adopt any reasonable valuation of marital property which is supported by the record.” In re Marriage of Robinson, 269 Mont. 293, 296, 888 P.2d 895, 897 (1994). We have allowed a court to premise its valuation on “expert testimony, lay testimony, documentary evidence, or any combination thereof.” Robinson, 269 Mont. at 296, 888 P.2d at 897. A court's findings must be complete enough, however, that we need not “succumb to speculation when assessing the conscientiousness or reasonableness of the district court's judgment.” In re Marriage of Bartsch, 2007 MT 136, ¶ 33, 337 Mont. 386, 162 P.3d 72.

¶ 16 Here, the District Court utilized the financial statement from Yellowstone Bank as a starting point and supplemented it with information from the stipulated appraisals and the parties' testimony. Mark argues that several of the District Court's findings regarding the valuation of the marital estate are clearly erroneous. He specifically contends that the court double-counted certain improvements to the parties' real property and certain items of farm equipment, erroneously relied on Mark's Yellowstone Bank financial statement, failed to value certain farm items, and erroneously found that the parties made $200,000 in improvements to their home.

a. Real property calculation

¶ 17 Mark's April 1, 2013, Yellowstone Bank financial statement lists the value of the parties' real estate and improvements as $1,611,400. The District Court adjusted this amount based on the Carroll appraisal of real property and testimony from Mark and his banker suggesting that the financial statement value was a conservative estimate. The District Court added the $1,017,502.50 difference between the Carroll appraisal of $2,628,902.50 ¹ and the financial statement's total of $1,611,400 to the overall calculation of net worth. Essentially, the court utilized the Carroll appraisal of $2,628,902.50 as the calculation of the net worth of the parties' real property. Mark argues that this calculation results in an artificial inflation of net worth by including the...