Smith v. Smith

• Decision Date: 01 September 2015
• Docket Number: No. DA 14–0731.,DA 14–0731.
• Citation: 381 Mont. 1,2015 MT 256,358 P.3d 171
• Parties: Debora M. SMITH, Petitioner and Appellee, v. Glenn E. SMITH, Respondent and Appellant.
• Court: Montana Supreme Court

381 Mont. 1

358 P.3d 171

2015 MT 256

Debora M. SMITH, Petitioner and Appellee

v.Glenn E. SMITH, Respondent and Appellant.

No. DA 14–0731.

Supreme Court of Montana.

Submitted on Briefs June 24, 2015.

Decided Sept. 1, 2015.

For Appellant: P. Mars Scott, P. Mars Scott Law Offices; Missoula, Montana.

For Appellee: Brian M. Lebsock, Datsopoulos, MacDonald & Lind, P.C.; Missoula, Montana.

Opinion

Justice JIM RICE delivered the Opinion of the Court.

¶ 1 Glenn Smith (Glenn) appeals from a dissolution decree entered by the Twentieth Judicial District Court, Lake County, dissolving his marriage to Debora Smith (Debora) and distributing their marital estate. We affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.

¶ 2 We address the following issues on appeal:

1. Did the District Court abuse its discretion by ordering the division of Glenn's social security benefits?

2. Did the District Court abuse its discretion in awarding maintenance to Debora?

3. Did the District Court abuse its discretion by imposing conditions on the termination of maintenance?

4. Did the District Court abuse its discretion in awarding an equalization payment?

5. Did the District Court abuse its discretion by awarding Debora a 2006 SeaDoo watercraft vehicle?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 3 Glenn and Debora live in Poison. They were married on April 12, 1978 and separated in 2010. Two children were born of the marriage, both of whom are adults. Debora is 62 and Glenn is 69. Debora filed a petition for dissolution of her marriage in Flathead County on April 18, 2011.

¶ 4 During most of the marriage, Debora was a homemaker, taking primary responsibility for rearing the parties' two children and maintaining the marital home. Debora is currently unemployed, but is eligible to receive social security benefits of $1,500 per month.¹ Glenn is employed with the Confederated Salish and Kootenai Tribes as an investment manager, earning $175,000 annually. Glenn also receives $28,000 per year in social security benefits. Debora and Glenn have both been diagnosed with post-traumatic stress disorder

. Glenn has several other health issues, including heart problems, asthma, anxiety disorder, and sleep apnea. Glenn has been advised by medical professionals to retire.

¶ 5 Glenn resides on Kings Point Road in Poison. The Kings Point property is located on tribal land. Glenn is an enrolled member of the Confederated Salish and Kootenai Tribes. Debora is not a tribal member. Glenn purchased the Kings Point property with funds he obtained by mortgaging property in Washington State that Debora's family friends, the Fredricksons, had transferred to him. Glenn encumbered the property in the amount of $198,000 and used $150,000 of those proceeds to purchase the Kings Point property. He thereafter sold the Fredrickson property.

¶ 6 Debora resides in the parties' marital home located on Flathead Lake, which the parties refer to as the Lake House. The Lake House has a market value of $595,000, but is encumbered with a mortgage of $536,982. The parties also own a parcel of property on Schaefer Road outside of Poison, and a lot in Hungry Horse. The Schaefer Road property has a market value of $90,000 and is encumbered with debt in the amount of $75,000. The Hungry Horse property is unencumbered and has a market value of $15,000. In addition to real property, the parties' personal property includes a 2006 SeaDoo watercraft vehicle and a Great West Retirement account valued at $251,544.

¶ 7 After a two-day trial, the District Court entered findings of fact, conclusions of law, and an order dissolving the parties' marriage and distributing their marital estate. The court made detailed findings and issued specific instructions regarding each item of real and personal property. It adopted Glenn's valuation of the parties' assets and attached to its order Glenn's spreadsheets that itemized the assets. The court ordered the immediate sale of the Lake House, Hungry Horse property, and Schaefer property, and divided the net proceeds equally; ordered the Great West Retirement account to be divided equally; ordered the parties' social security benefits to be divided equally; awarded Debora the 2006 SeaDoo; and awarded Debora an equalization payment in the amount of $164,500. The court concluded it lacked jurisdiction to divide or transfer the Kings Point property and did not consider the property a marital asset. However, the court found that the proceeds from the Fredrickson property and $16,000 used for improvements on the Kings Point property were marital funds that were unilaterally taken by Glenn beyond the court's jurisdiction or otherwise concealed. Consequently, the court considered the Fredrickson property proceeds and these improvements to the Kings Point property to be marital property in determining the equalization payment.

¶ 8 The District Court ordered Glenn to pay $2,500 per month to Debora in maintenance. In support of the maintenance award, the court found that Glenn's claimed monthly expenses of $11,500 were inflated by monthly payments associated with the Lake House and his living expenses were actually $7,600. Reasoning that Debora was entitled to live a similar lifestyle, the court determined her living expenses to be the same as Glenn's. The court ordered that the maintenance payments would cease if Debora remarries or cohabits with another adult who is not her relative, or if both of the following occur: “a) Glenn ceases to be gainfully employed; and b) Glenn ceases to receive income from investments (not counting retirement account income).”

¶ 9 Glenn appeals.

STANDARD OF REVIEW

¶ 10 We review a district court's distribution of marital property to determine whether the court's findings of fact are clearly erroneous. In re Williams, 2009 MT 282, ¶ 14, 352 Mont. 198, 217 P.3d 67. 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 that the district court made a mistake. Bock v. Smith, 2005 MT 40, ¶ 14, 326 Mont. 123, 107 P.3d 488. Absent clearly erroneous findings, we will affirm the district court unless we identify an abuse of discretion. Bock, ¶ 14. A district court abuses its discretion when it acts arbitrarily without conscientious judgment or so exceeds the bounds of reason as to work a substantial injustice. In re Marriage of Crilly, 2005 MT 311, ¶ 10, 329 Mont. 479, 124 P.3d 1151. We review a district court's conclusions of law to determine whether those conclusions are correct. In re Marriage of Bartsch, 2007 MT 136, ¶ 9, 337 Mont. 386, 162 P.3d 72.

DISCUSSION

¶ 11 1. Did the District Court abuse its discretion by ordering the division of Glenn's social security benefits?

¶ 12 Glenn argues and Debora concedes that the District Court erred by ordering the distribution of Glenn's social security benefits as part of the equitable distribution of the marital property. The parties agree that, under 42 U.S.C. § 407(a) of the Social Security Act, 42 U.S.C. § 401 et seq., the transfer or assignment of social security benefits is forbidden, and, because § 407(a) preempts state law, the benefits cannot be directly divided in a dissolution proceeding.

¶ 13 42 U.S.C. § 407(a) provides that social security benefits “shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.” In Philpott v. Essex County Welfare Bd., 409 U.S. 413, 417, 93 S.Ct. 590, 592, 34 L.Ed.2d 608 (1973), the United States Supreme Court stated that 42 U.S.C. § 407(a) “imposes a broad bar against the use of any legal process to reach all social security benefits.” Therefore, we conclude the District Court erred in ordering the distribution of a portion of Glenn's social security benefits to Debora. However, that does not end our inquiry.

¶ 14 While Debora concedes Glenn's social security benefits may not be directly distributed, she argues that this Court must order the District Court to offset, with other marital property of the same value, the amount she was to receive had the benefits been able to be distributed. Glenn counters that such indirect allocation is likewise impermissible, arguing the “weight of authority has concluded that an offset of Social Security benefits is prohibited,” and this “Court's decision in In re Marriage of Strong v. Strong, 2000 MT 178, 300 Mont. 331, 8 P.3d 763, strongly supports adoption of the majority approach prohibiting offset.”

¶ 15 The issue of whether a state court may offset social security benefits by ordering the distribution of other property of equal value when devising an equitable apportionment of marital property in a dissolution proceeding is a question of first impression for this Court. The United States Supreme Court's decision in Hisquierdo v. Hisquierdo, 439 U.S. 572, 99 S.Ct. 802, 59 L.Ed.2d 1 (1979), and this Court's decision in Strong, provide guidance. In Hisquierdo, the United States Supreme Court addressed the issue of offset, albeit under the Railroad Retirement Act, 45 U.S.C. § 231 et seq.Hisquierdo, 439 U.S. at 588, 99 S.Ct. at 811. After holding that a direct distribution of a husband's railroad retirement benefits violated the nonalienation provisions of the Act, the Court considered the wife's alternative argument that the state court could vindicate her interests in the railroad retirement benefits by ordering an offsetting award of marital property. Hisquierdo, 439 U.S. at 588, 99 S.Ct. at 811. The Court rejected the argument, concluding that using other property to balance or offset one spouse's expected railroad retirement benefits was tantamount to directly dividing those benefits in violation of the Act. Hisquierdo, 439 U.S. at 588–90, 99 S.Ct. at...