Streier v. Pike

• Citation: 886 N.W.2d 573
• Decision Date: 05 October 2016
• Docket Number: 27670.,Nos. 27761,s. 27761
• Parties: Kelly Jo STREIER f/k/a Kelly Jo Pike, Plaintiff and Appellee, v. Jeffrey A. PIKE, Defendant and Appellant.
• Court: Supreme Court of South Dakota

886 N.W.2d 573

Kelly Jo STREIER f/k/a Kelly Jo Pike, Plaintiff and Appellee,

v.Jeffrey A. PIKE, Defendant and Appellant.

Nos. 27761

27670.

Supreme Court of South Dakota.

Considered on Briefs Aug. 29, 2016.

Decided Oct. 5, 2016.

Melissa E. Neville of Bantz, Gosch & Cremer, LLC, Aberdeen, South Dakota, Attorneys for plaintiff and appellee.

Reed T. Mahlke, Donald M. McCarty of Helsper, McCarty, & Rasmussen, PC, Brookings, South Dakota, Attorneys for defendant and appellant.

ZINTER

, Justice.

[¶ 1.] This appeal concerns the circuit court's division of the parties' only income-producing asset, a restaurant; the court's finding of husband in contempt; and the court's decision denying wife's request for an award of attorney's fees. Because the circuit court impermissibly modified the original judgment and decree by converting a property-equalization payment to an alimony payment, we reverse and remand. We also reverse the order of contempt and decline to decide the question of attorney's fees.

Facts and Procedural History

[¶ 2.] The procedural history of this case is lengthy, but necessary to understand the circuit court's resolution of a protracted post-decree dispute over the parties' property division. Kelly Jo Pike sued Jeffrey Pike for divorce in May 2013. The parties mediated and resolved custody and visitation issues but could not agree on a division of the marital property. At an April 2014 trial, the parties litigated four issues: (a) the value of the parties' restaurant business (Lunkers), (b) whether Jeffrey's contribution to the purchase of the business should be excluded from the property division as premarital property, (c) an equitable division of the business's net value, and (d) an equitable division of $10,682 the parties owed on credit cards held in Kelly's name.

[¶ 3.] On June 12, 2014, the court issued amended findings of fact and conclusions of law and an amended judgment and decree of divorce. Based on the conflicting evidence, the circuit court valued the business at $800,384. It then subtracted $549,000 of debt, for a net value of $251,384. The court provided two options for the division of the net value. It first ruled that Kelly was “entitled to a cash payment of $105,503.28,” which included one half ($5,341) of the parties' credit card debt. The court entered a judgment in favor of Kelly in this amount with interest, giving Jeffrey a grace period of 90 days from the entry of the judgment to pay Kelly in full. The court further ordered that Jeffrey “shall keep the business” contingent on, among other things, Jeffrey paying Kelly in full within 90 days of the entry of the judgment and decree. In its second option, the court ruled that “in lieu of the cash payment,” Jeffrey could immediately put the property up for sale with the net proceeds to be split equally between Kelly and Jeffrey. The second option, via Paragraph 7, provided:

In the event that [Jeffrey] finds he is unable to pay [Kelly] within the 90–day period, he shall immediately place the Lunkers business and property up for sale with the net proceeds to be split between the parties in lieu of the cash payment. The proceeds from the business sale shall be substituted into Trial Exhibit 1 for the actual value of the business and the assets and debts shall be divided equally, taking into consideration the other awards of property and debts.

The court specifically ordered that “[n]either party shall pay the other alimony.” Notice of entry of the amended judgment and decree was given, and neither party appealed.

[¶ 4.] Six months later, Jeffrey returned to court and began claiming the business had no value and he could not comply with either option. On December 18, 2014, he moved for emergency relief, to allow an auction and to find Kelly in contempt. Jeffrey requested emergency relief because the furnace had failed and he did not “have the money [for repairs].” He also alleged that the “business [was] failing at this point[, he could] hardly keep the doors open, and business for the spring [was] not looking good.” He informed the court that he had listed the business for sale on September 18, 2014, and had received no interest. He asked the court to “award [him] Lunkers at a zero value, or in the alternative to allow the sale of Lunkers at auction and the [c]ourt set a reserve in terms of the sale.” He requested that “[i]n the event the restaurant goes ‘no sale,’ ” the court should award him the business “at a zero value (or that [he] be allowed to let the property go into foreclosure, at [his] discretion)[.]” In Jeffrey's view, this result would allow the parties to “move forward and finalize the property division based on a zero value for the business assets and debts (or in the event of a foreclosure that any shortfall be divided equally between the parties), with the exception of whatever the [c]ourt [would] determine[ ] regarding the furnace herein.”

[¶ 5.] The court held a hearing on this request on February 12 and 27, 2015. The court heard testimony from a realtor describing the reason the business was a difficult property to sell and the factors one would consider when listing a property and setting a price. The court also heard testimony from the realtor that listed the business. He informed the court that it was listed at $995,000, he had received no offers, and he had no showings during the five-month listing period. The realtor opined that reducing the sale price to mid $700,000 would increase interest in the property. Kelly offered testimony from an accountant on the profitability and expenses of the business since the divorce to refute Jeffrey's claim that the business was failing.

[¶ 6.] Jeffrey again asked the court to give him the business at “zero [value] on [his] side of the equation[.]” He said he could not pay the equalizing payment previously ordered by the court. He asked the court to, in the alternative, allow him to sell the business by auction “to get this over with and done with and sell it.” He testified that in order to pay Kelly her cash-equalization payment, the business would have to sell for $870,000. He informed the court that he was “doing everything” he could to keep the business going.

[¶ 7.] At the conclusion of the hearing, the court orally ruled that “on the first go around [the court] was trying to look for a way for you [Kelly] to get some money out of the business and for you [Jeffrey] to keep the business going and it's created some problems[.]” The court informed the parties that it was “going to give [Jeffrey] some options and [the court] want[ed] a decision by March 15.”

The first option is probably one that can't be taken because we've tried in the past and that is paying what's owed.... The second option and this is probably the best option and gives you what you're looking for as far as the award and it gives you an option or an opportunity to keep your dream alive, and that is to convert the award, the money award to an alimony award which is nondischargable in bankruptcy.... And that takes the sale of the property off the market, it's just done, you just owe the alimony. ... The last option is this, and so this is a risky one, but it's to keep the business on the market until May [f]irst and if it's not sold on or before May [f]irst [the court is] going to order that the business be auctioned within 30 days and that be a reserve only up to the amount that's owed the bank.

The court indicated that if Jeffrey chose the auction option, the court would “reserve the right to adjust the property settlement for Kelly based upon some of the expenses that may be involved[.]” Counsel for Jeffrey asked the court whether the reservation to change the property division applied to all parties. The court explained that it meant it would “take into account expenses of sale and so forth” and that the parties could submit what they believed would “be an appropriate adjustment and [the court would] give everybody an opportunity to weigh in on those.”

[¶ 8.] On April 20, 2015, the court formalized this decision in an order giving Jeffrey “an election with three options by March 17, 2015[.]” Those options were: (1) pay Kelly the judgment amount of $105,503, (2) convert the judgment amount to a lump-sum alimony award payable over the course of eight to ten years, or (3) keep the business listed and sell it (the listing agreement was to continue until May 1, 2015). If the business had not sold by that time, the property was to be auctioned within 30 days. The court set the reserve price for the auction at $515,000, which was the amount of debt against the property. The court reserved “the right to adjust the total overall property division as Ordered previously.” The court indicated that it would “make further determination as to how to proceed” if the business went “no sale” at auction. The court ordered Jeffrey to use his best efforts to keep the business open and operating at its current service levels. Neither party appealed this order.

[¶ 9.] On May 20, 2015, Jeffrey moved to modify the reserve or, in the alternative, “simply award the business to [him] and not require any further cash equalization payment from Kelly or [him] to the other.” On June 5, 2015, Kelly moved for an order to show cause and for relief from the judgment. She alleged that Jeffrey had failed to abide by the June 2014 and April 2015 orders. She claimed Jeffrey failed to “cooperate in the listing, selling or auctioning of the property[.]” Kelly asked the court to relieve her from the judgment because Jeffrey had “deliberately delayed this matter, unnecessarily increased her attorney's fees, and repeatedly refused to follow the [c]ourt's orders, all while failing to maintain the property.” Kelly also requested an award of attorney's fees.

[¶ 10.] On July 23, 2015, the court, before a different judge,¹ held a hearing on both motions. Jeffrey presented testimony from a realtor supporting his request to modify the reserve. Jeffrey also reported on the...