Nope, You Can't Back Out Now

This was a two year marriage. Husband and Wife signed a settlement agreement following a nine hour settlement conference. The agreement was filed. The District Court approved the agreement and incorporated it in the Final Decree. Husband appealed on two grounds: 1) the District Court finding that the agreement was not unconscionable; and 2) that the summons issued did not include the temporary restraining order required by Section 40-4-121(3) MCA.

The Supreme Court found that Husband had failed to challenge the findings before filing his appeal and indeed acquiesed in those findings. Husband's failure to object before the District Court to the approval of the agreement or the other findings in the decree were fatal to his claim on appeal.

The Decree expressly vacated any temporary restraining orders. So Husband's claim that the clerk failed to comply with the statute requiring the automatic economic restraining order on appeal was moot.

Affirmed.

Smith v. Barger, 2012 MT 225N

"Trigger" the Horse not listed. Equitable not equal. Judges get to decide credibility.

John and Dana lived together in Grass Range for 2 1/2 years, then broke up. They bought things during their cohabitation and co-mingled some, but not all of their money.

John sued Dana for return of property and for a TRO after she left. During a preliminary hearing, the trial court allowed Dana the use of the 2001 pickup and a horse trailer to assist her move to Billings and to allow her to work as a horse trainer.

Later, during the final hearing, the parties disputed the value of their joint account at the time of their breakup, the value of assets, and the condition of the pickup before Dana had use of it for the 6 months between the initial hearing and final hearing. John appealed claiming he got far less than Dana. Dana pointed out that there was a lot more money in their joint account one week before separation than John claimed (which remained with John) and that John had failed to list his horse "Trigger" as an asset.

The Montana Supreme Court affirmed in a noncite opinion. Citing Marriage of Harris, 2006 MT 63, the Court noted that "equitable" does not necessarily mean "equal". Citing Hood v. Hood, 2012 MT 158 at paragraph 42, the Court noted that trial judges are in the best position to decide the credibility of witnesses, decide what weight to give such testimony and to decide what is equitable under the circumstances -- and the the Supreme Court will not simply substitute its judgment for that of the trial judge.

Biological Father Gets Nothing

Shannon gave birth to a child two months after she married Travis. She had become pregnant when she was living with Justin, but had also dated Travis. She told them both that one of them was the father. Travis was in the Air Force, stationed in Italy. Justin was disabled and living with his parents. Shannon married Travis in October, 2005 and moved to Italy where the child was born. Travis later was stationed in Great Falls, where marital difficulties arose. Shannon contacted Justin during the separation. Travis obtained a temporary order granting him custody of this child and a subsequent child of the marriage. Shannon moved back in with Travis and they were attempting to reconcile when Justin moved to intervene. His motion was granted as was his motion for a paternity test, which proved he was the biological father. The trial court denied his motion for an interim parenting plan, finding that Justin had failed to maintain contact with the child for four years, that he suffered from a major depressive disorder, that Travis had in all respects stepped up to the plate as the child's father, and it was in the child's best interests that Justin's motion be denied. The trial court relied upon Paternity of Adam, 273 Mont. 351, 903 P.2d 207 (1995), a similar case.

Then Justin filed a Rule 59 motion, which the trial court granted, reversing its earlier order and granting Justin a parental interest. Travis and Shannon appealed. The Montana Supreme Court reversed. The Court noted there are just four grounds for granting a Rule 59 motion: 

"1) to correct manifest errors of law or fact upon which the judgment was based; 

2) to raise newly discovered or previously unavailable evidence; 

3) to prevent manifest injustice resulting from, among other things, serious misconduct of counsel; or 

4) to bring to the court’s attention an intervening change in controlling law."

The Supreme Court found none of the above were true. Indeed the Court found that the trial court apparently had just changed its mind, something that Rule 59 does not permit. The case was remanded for the trial court to reinstate its original ruling, which the trial court then did. 

This is the second appeal. The Supreme Court affirmed in a noncite opinion, because the trial court did exactly on remand what it was supposed to do. 

First Appeal:  In Re Marriage of Johnson, 2011 MT 255. 

Second Appeal: In Re Marriage of S.M.J. 2012 MT 202N.

Summary Joint Dissolution Set Aside: 6 Years Later

The summary dissolution statutes were established to make it easier for couples with little money to dissolve their marriage. There are bright line restrictions on couples who may use this procedure. Among those restrictions are that the parties cannot own real property, there can be no maintenance required of either spouse and the fmv of all assets, less the debts secured by those assets, must be less than $25,000. §40-4-130 M.C.A.

In this case, a couple filed a joint petition for summary dissolution in 2002. However, they owned real estate, they agreed that the wife would receive maintenance, and the net fmv of their assets exceeded $25,000. Perhaps they did not read the brochure published by the Attorney General.

After the decree had been amended four times by mutual consent, wife filed another motion to amend the decree in 2007. This time the husband hired a lawyer, who filed a motion to set aside the original decree and all amended decrees filed thereafter (except as to the status of the marriage). The trial court granted the motion, then conducted a contested trial in 2008. The court rendered an award which was significantly different from the original agreement that the parties had filed with their original petition. Husband appealed the lifetime maintenance award to his wife.

The Supreme Court affirmed by memorandum opinion.

§ 40-4-135 (2) M.C.A. specifically authorized the district court to set aside final decrees except as to the status of the marriage because at the time of the filing of the original petition the parties violated the bright line restrictions of §40-4-130. So there was no question that the trial court should set aside the decrees.

Given the number of individuals representing themselves in these matters, it is likely there are other fatally flawed decrees out there. It is noteworthy that the trial court considered the dramatically changed circumstances of the parties at the time of the 2008 trial (both had become disabled). So these people ended their marriage in 2002, but the ultimate economic distributions were based on circumstances 6 years later.

In Re Marriage of Webb, 2012 MT 2014N.

Time Rule Formula Best for Defined Benefit Plans

In Re Parenting of C.W. and S.W. 2012 MT 212

Pension plans may be valued one of two ways: 

  1) The present value method, or
  2) The time rule method. 

In dealing with a 401k, 403b or IRA or other "defined contribution" account, the trial court can simply allocate to each party a portion of the balance of the account as of the date of trial. The present value of the account can be obtained by simply looking at the account statement.

In dealing with many government pensions, union pensions, and other "defined benefit" plans, it can be difficult to determine the present value of the account unless the participant in the account is retired. There is no account per se in the name of the participant. The benefits are determined according to a formula typically using the years of service, average final compensation, age of the participant and so forth -- which may be a calculation to be made many years into the future. For an employee who is not yet retired, any valuation expert must make a number of assumptions about what the future holds to mathematically determine the present value of the plan.

In this case, Corey Wheeldon, the husband, was a Sheriff's Deputy. He was a participant in a defined benefit plan through the Sheriff's Department. His contributions to the account were vested, but the Sheriff's Department contributions were not vested. Here's the relevant quotation that you may insert in your next brief on this issue:

"The District Court found that part of Corey’s non-vested retirement account through the Sheriff’s Department is marital property. What benefits will come from that pension will be determined by a number of factors that cannot be known. If Corey quits the Sheriff’s Department before he becomes vested, then he will only be entitled to the amount that he personally contributed to the account. If he quits after he is vested but before he is qualified for retirement, then he will be entitled to his contributions and the employer contributions. If he stays with the Sheriff’s Department long enough to retire, then he will receive a monthly benefit payment for the rest of his life. The amount of that monthly benefit would be determined by his length of service, highest average salary for thirty-six consecutive months, and age when he retires. Sections 19-7-101 et seq., MCA. Using the present value method to value Corey’s retirement account would require that assumptions be made about all of these factors. Any assumption that does not prove true may considerably undervalue or overvalue the account. Thus, using the present value method would be pure conjecture and produce uncertain results, at best."  In Re Parenting of C.W. and S.W. 2012 MT 212, Paragraph 22 (emphasis supplied).

This approach is similar to the Supreme Court's approach to putting a value on the inevitable tax liability arising from distributions from a retirement account. The further into the future the taxable event will occur, the more uncertain the valuation of the liability will be, simply because the assumptions a tax expert must make to calculate the liability are conjectural:

"¶ 19 To apply a deduction of a “reasonable” tax rate to retirement accounts that may be liquidated at some time in the future frustrates the goal of achieving a fair and equitable disposition of the marital estate. We conclude that it is unreasonable to consider tax consequences in light of numerous unknown factors such as the value of the account at the time it is eventually liquidated; the tax laws in effect at the time it is eventually liquidated; and when the account will eventually be sold. Otherwise, such valuations are merely conjectural. Therefore, we conclude that the District Court abused its discretion when it deducted twenty-two percent from the value of the seven Smith Barney Accounts." In re Marriage of Haberkern, 2004 MT 29, 319 Mont. 393, 399, 85 P.3d 743, 747 (emphasis supplied).

"¶ 47 A district court must consider the tax implications of its decree if such consequences are concrete and immediate. Haberkern, ¶ 17. The adverse tax consequences to Julie of the ordered distribution of retirement assets are concrete and seem to be immediate. Yet, the findings of fact and conclusions of law entered by the District Court give no indication whether the court considered the tax consequences of this distribution. We remand to the District Court for further consideration of the tax implications, and the manner and timing of the distribution of the retirement account portion of the marital estate." In re Marriage of Thorner, 2008 MT 270, 345 Mont. 194, 207, 190 P.3d 1063, 1071 (emphasis supplied).

Pine Creek fire near Paradise Valley, Montana

This picture was taken from Interstate 90 near Livingston, Montana

Rape and Custody

Rape is in the news with the recent comments of U.S. Congressional Representative Todd Akin. Given the fact that biological fathers have constitutional level rights to parent their child, a rapist may legally assert claims to parenting time in the event his victim becomes pregnant and gives birth. Here is an article written by a rape victim recounting that experience.

Revising Equitable Division in light of Funk

This is my August 17, 2012 revision of a draft equitable division statutory proposal to replace Section 40-4-202 M.C.A. to address issues arising from Marriage of Funk, 2012 MT 14. Please give me your comments/corrections/revisions.

1.    Generally.

a.   In a proceeding for dissolution of a marriage, legal separation, or division of net worth following a decree of dissolution of marriage or legal separation by a court which lacked personal jurisdiction over the absent spouse or lacked jurisdiction to divide the assets and liabilities of the parties, the court, without regard to marital misconduct, shall, and in a proceeding for legal separation may, determine in accordance with the factors set forth below, the marital and non-marital net worth of the parties and finally apportion between the parties all assets and liabilities belonging to either or both, however and whenever acquired and whether the title thereto is in the name of the husband or wife or both.

b.   The assets to be divided between the parties may include both marital assets and non-marital assets. An asset may be categorized as partly marital and partly non-marital.

c.    The liabilities to be divided between the parties may include both marital liabilities and non-marital liabilities. A liability may be categorized as partly marital and partly non-marital.

2.    Definitions.

a.   Marital Assets are defined as follows:

                                                              i.      All assets received or acquired by either party during the marriage except for non-marital assets.

                                                            ii.      All assets received or acquired by either party during the marriage shall be presumed to be marital assets except to the extent proven to be non-marital by clear and convincing evidence of an affirmative intention to retain the asset as non-marital.

                                                          iii.      When marital and non-marital assets have been comingled to a degree that no portion of the value of an asset is reasonably traceable to the value of a non-marital asset, the asset shall be treated as a marital asset.

b.   Marital Liabilities are defined as follows:

                                                              i.      All liabilities incurred by either party during the marriage except for non-marital liabilities.

                                                            ii.      All liabilities incurred by either party during the marriage shall be presumed to be marital liabilities except to the extent proven to be non-marital by clear and convincing evidence. 

                                                          iii.      When marital and non-marital liabilities have been comingled to a degree that no portion of the liability is reasonably traceable to a non-marital liability, the liability shall be treated as a marital liability.

c.    Non-marital Assets include premarital, gifted and inherited assets, which are defined as follows:

                                                              i.      Premarital assets: assets which were separately owned by a party before the marriage;

                                                            ii.      Gifted Assets: assets which were all gifted separately to a party during the marriage; and

                                                          iii.      Inherited Assets: assets which were separately inherited by a party during the marriage.

                                                        iv.      A portion of the value of an asset acquired during the marriage in exchange for premarital, gifted or inherited asset may be partly categorized as non-marital to the extent the asset is reasonably traceable thereto.

d.   Non-marital Liabilities are defined as follows:

                                                              i.      Premarital Liabilities: liabilities which were separately incurred by one party before the marriage; and

                                                            ii.      Liabilities secured by non-marital assets separately gifted to a party or separately inherited by a party.

                                                          iii.      A portion of the liability incurred during the marriage which repaid part or all of a premarital liability or a liability secured by a non-marital asset separately gifted to a party or separately inherited by a party to the extent the liability is reasonably traceable thereto.

e.    Post Separation. Assets acquired and liabilities incurred post separation may be either marital or non-marital depending on a court’s determination as to the extent each party directly or indirectly reasonably contributed to the existence or need for such assets or liabilities

f.       Marital Net Worth. The court shall subtract the total value of all marital liabilities (less any non-marital portion thereof) from the total value of all marital assets (less any non-marital portion thereof) to determine the marital net worth of the parties.

g.   Non-marital Net Worth. The court shall subtract the total value of all non-marital liabilities (less any marital portion thereof) from the total value of all non-marital assets (less any marital portion thereof) to determine the non-marital net worth of each party.

3.    Marital Net Worth. The Court shall equitably allocate the marital net worth between the parties. In making this apportionment the court shall consider the following factors:

a.   Duration of the marriage;

b.   Prior marriage of either party;

c.    Age and health of each party;

d.   Occupation, amount and sources of income, vocational skills, employability of each party;

e.    The parenting plan for any children of the parties, child support, medical support and the economic consequences to each party;

f.       Whether the apportionment of marital net worth is in lieu of or in addition to maintenance;

g.   Any maintenance award;

h.    The financial consequences of the allocation of non-marital net worth to each party;

i.        Whether marital assets or income have been used to pay the non-marital liability of one party;

j.        The opportunity of each for future acquisition of capital assets and income;

k.     The economic value of the contribution of a party acting as a homemaker or otherwise to the family, or directly or indirectly to the marital net worth;

l.        The dissipation or contribution of each party to the marital net worth;

m. Whether an asset is income producing or income consuming;

n.    Whether the allocation of an asset or a liability will cause a reasonably calculable tax consequence to the party to whom the asset or liability is allocated by the time the third post-decree tax returns must be filed;

o.    In the event an asset is ordered sold, the reasonable costs of sale; and

p.   The needs of the parties.

4.    Non-marital Net Worth. Each party shall be allocated their respective non-marital net worth except as follows:

a.   Increases in Value. Any increase in value of non-marital net worth of a party during the marriage that is not the result of market forces may be allocated between the parties equitably using the factors set forth in section 3 above if the increase in value results from:

                                                              i.      Investment of the earnings of either party during the marriage;

                                                            ii.      Investment of marital net worth during the marriage;

                                                          iii.      Investment of marital labor of either party during the marriage;

                                                        iv.      Indirect contribution of one party to the non-marital net worth of the other party; or

                                                          v.      Reinvested income and capital gain from non-marital net worth if either or both parties had a substantial active role during the marriage in managing, preserving or improving the asset.

b.   Decrease in Non-Marital Liabilities. In the event a non-marital asset of one party is used to pay the non-marital liability of their spouse, the court may allocate a portion of the non-marital net worth of the spouse to the party who paid the liability.

c.    Entire Value. The entire non-marital net worth of both parties, including all increases in value during the marriage regardless of cause, may be allocated between both parties equitably using the factors set forth in section 3 above if the court finds by clear and convincing evidence that one party’s combined marital and non-marital net worth are otherwise so inadequate as to work an unfair hardship to that party or to the children of the parties.

5.    In a proceeding, the court may protect and promote the best interests of the children by setting aside a portion of the jointly and separately held estates of the parties in a separate fund or trust for the support, maintenance, education, and general welfare of any minor, dependent, or incompetent children of the parties.

6.    Each spouse is considered to have a common ownership in marital property that vests immediately preceding the entry of the decree of dissolution or declaration of invalidity. The extent of the vested interest must be determined and made final by the court pursuant to this section.

7.    The division and apportionment of marital property caused by or incident to a decree of dissolution, a decree of legal separation, or a declaration of invalidity is not a sale, exchange, transfer, or disposition of or dealing in property but is a division of the common ownership of the parties for purposes of:

a.   the property laws of this state;

b.   the income tax laws of this state; and

c.    the federal income tax laws.

8.    Premarital agreements must be enforced as provided in Title 40, chapter 2, part 6.

This is an interesting Wall Street Journal article regarding a study of lessons learned. Here's the link.

Slough Lakes

Sunday's hike to the Froze to Death Plateau, the Slough Lakes were just beautiful.

Settlement Agreement/Decree Controls over underlying Contractual Agreement

The parties signed a settlement agreement, then divorced. The division of assets included two businesses subject to an operating agreement that required arbitration of disputes. However, the settlement agreement included the following language: ''Enforcement. The Court shall be requested to approve this Agreement as fair and equitable, and to incorporate this Agreement into any Decree of Dissolution of the parties, and to specify that it shall be enforceable through execution, contempt citation, and/or by the remedies provided by law for specific performance or breach of contract." The Montana Supreme Court held that the district court properly addressed the disputes between the parties as to the settlement agreement, and that the parties were not required to engage in arbitration. Marriage of Cini, 2011 MT 295

Irresponsible Grampa Replaced as Guardian

The mother of a one year old was killed in a motor vehicle accident. Initially, the maternal grandfather was appointed guardian and conservator with a finding that the father's parental rights were suspended by circumstance. But the grandfather smoked both tobacco and marijuana and "borrowed" money from the grandchild's account. Grandmother from Hawaii petitioned to replace the grandfather. District Court granted her motion, which was affirmed by the Supreme Court. Guardianship of R.T. 2012 MT 148N