Ahrendt v. Chamberlain

910 N.W.2d 913

Percy Allan AHRENDT, Plaintiff and Appellee,

v.Diane Muree CHAMBERLAIN, Defendant and Appellant.

28388

28403

Supreme Court of South Dakota.

CONSIDERED ON BRIEFS MARCH 19, 2018

OPINION FILED April 11, 2018

TIMOTHY R. JOHNS, of Johns & Kosel, Prof. LLC, Lead, South Dakota, Attorneys for appellant.

DYLAN A. WILDE, Spearfish, South Dakota, Attorney for appellee.

ZINTER, Justice

[¶ 1.] Husband and wife held most of their assets separately throughout an eighteen-year marriage. In granting the parties a divorce, the circuit court classified most of their assets as marital property and divided them equally. Wife appeals. We affirm on all but one clerical issue, which we remand for clarification.

Facts and Procedural History

[¶ 2.] Percy Ahrendt and Diane Chamberlain were married in 1999. Diane and her son from a prior marriage moved into Percy’s residence. During their first eight years, Diane worked various part-time jobs and made about $7,885 a year in reported income. At that time, she was studying to obtain her securities licenses, and she paid approximately $250-$350 of the monthly marital expenses. Percy made about $37,900 per year. He paid the remaining marital expenses, including the mortgage on the home and health insurance for Diane and her son. He also paid child and medical support for his two children from a prior marriage. The couple decided early on that they would maintain separate financial accounts and individually manage their money and assets.

[¶ 3.] Diane eventually obtained her securities licenses, and in 2007, she founded a financial consulting business that allowed her to begin making significant monetary contributions to the marriage. Percy also obtained new employment at Peabody Energy Group, earning a good income. As a result of their respective employments, they began accumulating significant assets, consisting primarily of real estate, business interests, and retirement accounts.

[¶ 4.] Although Diane and Percy were earning similar incomes, Percy continued to pay the entire mortgage on the home, and he continued to provide health insurance for Diane and her son. Diane paid other marital expenses. In 2012, the couple sold Percy’s house and jointly purchased a new home. Of the $93,644.18 in net proceeds, $81,431.85 was used as a down payment on the new, jointly owned home. Thereafter, Percy paid approximately 70% of the new $2,584.99 mortgage payment, and Diane paid approximately 30%.

[¶ 5.] Percy and Diane separated in September 2014. Diane remained in the marital home and began paying the entire monthly mortgage payment. Percy paid his own expenses associated with his new apartment. Percy also continued to provide health insurance for Diane and her son (until he turned twenty-six in early 2016).

[¶ 6.] Percy commenced this divorce action in June 2015. A two-day trial was held in June 2017 to divide property and debts.¹ The circuit court found that both parties made significant contributions to the acquisition of property, and the court classified most of their separately held assets as marital property. The court awarded Diane the marital home, her business, her five vehicles, her retirement account, and her financial accounts. Percy was awarded his new pickup, his large collection of sports cards and memorabilia, various pieces of personal property, his retirement accounts, and his financial accounts. The court required each party to be solely responsible for the debts associated with the respective assets awarded to them. Percy received net assets valued at $285,804 ($332,624 in assets less $46,820 in liabilities). Diane received net assets valued at $719,982.40 ($1,020,578.40 in assets less $300,596 in liabilities). The court ruled that the $434,178.40 difference in net assets was not equitable, and it ordered Diane to make a $217,089.20 equalization payment.

[¶ 7.] Diane appeals, raising the following issues:

1. Whether the circuit court abused its discretion in classifying separately held assets as marital property.

2. Whether the circuit court abused its discretion in equitably dividing the marital estate.

Decision

Classification of Separate Property

[¶ 8.] In a divorce, "courts may make an equitable division of the property belonging to either or both, whether the title to such property is in the name of the husband or the wife. In making such division of the property, the court shall have regard for equity and the circumstances of the parties." SDCL 25-4-44. Before dividing property, the court must classify it as marital or nonmarital. Nickles v. Nickles , 2015 S.D. 40, ¶ 32, 865 N.W.2d 142, 153. We review both decisions under the abuse of discretion standard of review. Richarz v. Richarz , 2017 S.D. 70, ¶ 17 n.5, 904 N.W.2d 76, 81 n.5. Findings of fact are reviewed for clear error. Scherer v. Scherer , 2015 S.D. 32, ¶ 5, 864 N.W.2d 490, 493.

[¶ 9.] Diane argues the circuit court abused its discretion in classifying the parties’ separately held assets (financial accounts, retirement accounts, motor vehicles, her business, and business property) as marital property. She points out that Percy did not claim to be in need of support. She also contends the court clearly erred in finding that Percy made significant contributions to the accumulation of the assets.

[¶ 10.] "South Dakota is an ‘all property state,’ meaning all property of the ‘divorcing parties is subject to equitable division by the circuit court, regardless of title or origin.’ " Halbersma v. Halbersma , 2009 S.D. 98, ¶ 9, 775 N.W.2d 210, 214 (quoting Endres v. Endres , 532 N.W.2d 65, 68 (S.D. 1995) ). The court has broad discretion in classifying property as marital or nonmarital. Anderson v. Anderson , 2015 S.D. 28, ¶ 6, 864 N.W.2d 10, 13-14. "Only where one spouse has made no or de minimis contributions to the acquisition or maintenance of an item of property and has no need for support[ ] should a court set it aside as [nonmarital] property." Id. ¶ 6, 864 N.W.2d at 14. "The circuit court, however, is not to become entangled in the semantics of marital versus [nonmarital] property." Halbersma , 2009 S.D. 98, ¶ 10, 775 N.W.2d at 215. Factors to consider when classifying and dividing property include:

(1) the duration of the marriage; (2) the value of the property owned by the parties; (3) the ages of the parties; (4) the health of the parties; (5) the competency of the parties to earn a living; (6) the contribution of each party to the accumulation of the property; and (7) the income-producing capacity of the parties’ assets.

Terca v. Terca , 2008 S.D. 99, ¶ 20, 757 N.W.2d 319, 325.

[¶ 11.] In classifying the separately held assets as marital property, the circuit court found that Percy made significant contributions to the marriage. In Finding of Fact 125, the court found:

[D]uring the first half, i.e. , the first 8 years, of the parties’ marriage, Diane made very little income. As a result, Percy paid the entirety of the mortgage for the marital residence, provided health insurance for the family, and paid a significant amount of the marital expenses.

In Finding of Fact 126, the court found:

Percy’s significant contributions to the marriage and the marital expenses during the first half of the marriage allowed Diane to live a comfortable lifestyle that she would not have otherwise lived if not for Percy’s contributions, and at the same time allowed Diane to be able to retain ownership in her one third interest of the farmland ^{[2 ]} instead of having to sell it to pay various living expenses.

[¶ 12.] Diane contends these findings are clearly erroneous. However, the parties’ testimony and documentary evidence support them. That evidence reflects that Diane and Percy brought relatively little into the marriage but accumulated substantial assets over their eighteen years together. During the first half of the marriage, Diane made a small income relative to Percy, and Percy paid for most of the marital expenses. That changed in the latter years when Diane’s business became successful. As a result, over the course of the entire marriage, both parties made substantial financial contributions to the marriage that allowed both to enjoy a standard of living that they would not have otherwise enjoyed.

[¶ 13.] Additionally, Percy’s financial contributions and support helped Diane obtain securities licenses and start her financial consulting business. That business generated sufficient income for her to acquire additional assets without having to sell or commingle her separately held assets, including the property she inherited. As the circuit court observed, Percy’s financial contributions were indirect contributions to the accumulation of property, which occurs "when one spouse’s work efforts allow[ ] the other spouse to maintain inherited property separately and avoid commingling assets that otherwise would be required for the support and maintenance of the family." Terca , 2008 S.D. 99, ¶ 25, 757 N.W.2d at 326. There was also evidence that Percy contributed socially and physically to the development of Diane’s financial business and the building in which it was located. That type of nonmonetary contribution to the marriage "must be considered as no less significant and substantial to the accumulation of marital property than the other spouse’s labor outside the home." Id. Thus, the circuit court did not clearly err in finding that both parties contributed to the accumulation of marital property.

[¶ 14.] We finally observe that although most of the couple’s assets were held individually, there was no agreement that the income, assets, or debts accumulated by one party would be the sole property of that party. On the contrary, Percy testified that the money and assets were "to be ours." Accordingly, the circuit court did not abuse its discretion in classifying most of the parties’ assets as marital property. Percy made substantial contributions to the acquisition of the parties’ property, and the court’s findings of fact reflect that ...