Gerving v. Gerving

943 N.W.2d 797

Ben GERVING, Plaintiff and Appellee

v. Janet GERVING, Defendant and AppellantandState of North Dakota, Statutory Real Party in Interest

No. 20190253

Supreme Court of North Dakota.

Filed June 2, 2020

Justin D. Hager, Bismarck, ND, for plaintiff and appellee.

Erica J. Shively (argued) and Christopher E. Rausch (appeared), Bismarck, ND, for defendant and appellant.

McEvers, Justice.

[¶1] Janet Gerving appeals from a judgment granting Ben Gerving a divorce and distributing their marital property. Janet Gerving argues the district court's property distribution is clearly erroneous because it is not equitable and the court did not adequately explain the substantial disparity. We affirm in part, reverse in part, and remand.

I

[¶2] Ben and Janet Gerving were married in 2004 and have two minor children together. In November 2017, Ben Gerving sued for divorce.

[¶3] In January 2019, the parties filed a partial settlement agreement. The parties agreed Ben Gerving would have primary residential responsibility for the children and Janet Gerving would have parenting time. They agreed to a parenting time schedule, decision making responsibility, and to reserve the issue of child support. The district court adopted the parties’ partial settlement agreement and entered a partial judgment incorporating the terms of the agreement.

[¶4] In May 2019, a bench trial was held on the remaining issues, including distribution of the marital estate and spousal support. The district court found the length of the marriage would support an equal property division, but other factors had to be weighed, including that Ben Gerving acquired the real property and farm prior to the marriage, that he lived and worked on the farm his entire life, and that he did most of the work on the farm. The court concluded Ben Gerving should be awarded the family farm, homestead, equipment, animals, and the accompanying debt. The court ordered Ben Gerving was required to split the net proceeds of any future sale of the land with Janet Gerving. The court ordered Ben Gerving to pay Janet Gerving $6,000 per year until Janet Gerving is 65 years old to offset the award of the farming operation, and awarded each party their separate retirement and bank accounts. The court ordered neither party would be awarded spousal support and each party was responsible for their own attorney's fees. The court also ordered Janet Gerving to pay $507 per month in child support. Judgment was entered.

II

[¶5] Janet Gerving argues the district court's property distribution is clearly erroneous because it is not equitable and the evidence does not support the court's findings.

[¶6] The district court's property distribution will not be reversed on appeal unless the court's findings are clearly erroneous. Brew v. Brew , 2017 ND 242, ¶ 13, 903 N.W.2d 72. A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, there is no evidence to support it, or if after viewing all of the evidence, we are left with a definite and firm conviction a mistake has been made. Id.

[¶7] When a divorce is granted, the district court is required to make an equitable distribution of the parties’ property and debts. N.D.C.C. § 14-05-24(1). The court must start with the presumption that all property held by either party, jointly or individually, is considered marital property. Lee v. Lee , 2019 ND 142, ¶ 12, 927 N.W.2d 104. All property held by either party must be included in the marital estate. Lessard v. Johnson , 2019 ND 301, ¶ 21, 936 N.W.2d 528. The court must determine the value of the entire marital estate and then apply the Ruff-Fischer guidelines to make an equitable distribution.

Allmon v. Allmon , 2017 ND 122, ¶ 7, 894 N.W.2d 869 ; Lessard , at ¶ 21. The Ruff-Fischer guidelines include:

The respective ages of the parties, their earning ability, the duration of the marriage and conduct of the parties during the marriage, their station in life, the circumstances and necessities of each, their health and physical condition, their financial circumstances as shown by the property owned at the time, its value at the time, its income-producing capacity, if any, whether accumulated before or after the marriage, and such other matters as may be material.

Lessard , at ¶ 21 (quoting Tuhy v. Tuhy , 2018 ND 53, ¶ 10, 907 N.W.2d 351 ). The court is not required to make findings about each Ruff-Fischer factor, but it must explain the rationale for its decision. Wagner v. Wagner , 2007 ND 101, ¶ 10, 733 N.W.2d 593. The court's property distribution does not need to be equal to be equitable, but the court must explain a substantial disparity. Lessard , at ¶ 21.

[¶8] "North Dakota law does not mandate a set formula or method to determine how marital property is to be divided; rather, the division is based on the particular circumstances of each case." Wagner , 2007 ND 101, ¶ 11, 733 N.W.2d 593 (quoting Holden v. Holden , 2007 ND 29, ¶ 10, 728 N.W.2d 312 ). A long-term marriage generally supports an equal property division. Lessard , 2019 ND 301, ¶ 21, 936 N.W.2d 528. "While the origin of property must be considered, there is no requirement to set property aside for a spouse who brings property into a marriage." Lee , 2019 ND 142, ¶ 12, 927 N.W.2d 104. We have recognized liquidation of an ongoing farming operation is generally a last resort, and the distribution of farm assets to one spouse with an offsetting monetary award to the other spouse may be upheld. Wagner , at ¶ 11.

[¶9] The district court adopted the parties’ final Rule 8.3 property and debt listing as a full list of the parties’ assets and debts and found the parties have $1,850,000 in assets, $264,000 in debts, with a net marital estate worth $1,586,000. The court made findings about the Ruff-Fischer factors to divide the marital estate. The court found both parties are 49 years old and have a high school education, and neither party has any physical limitations that would hinder their ability to earn a living. The court found the parties own and operate a farm and Ben Gerving inherited the farming operation and real property prior to the marriage. The court found the parties have cattle and smaller animals and crop and pastureland, and both parties worked together on the farm but Janet Gerving did less work in the last few years. The court found the farm supported the family early in the marriage, but Ben Gerving was ill in 2007 and was unable to work, the illness caused the parties to sell their milk cows in 2007 and begin renting out some or most of the land, Ben Gerving began working off the farm after his health recovered, and Janet Gerving began working off the farm in 2008. The court found the parties currently rent out the land, work some cattle, and plant crops or hay for animal feed, but the farming operation is operating at a loss according to the tax returns. The court found the parties’ high net worth was mostly due to the land value, the parties are cash poor and live paycheck to paycheck, the parties rent out three parcels of land and use the rent to make the spring loan payment, and the parties use the proceeds from the cattle sales to make the fall loan payment. The court found both parties testified they do not want to sell the farm and would like to pass it on to their children, and Ben Gerving testified he wanted to continue farming. The court found the parties will have a similar station in life post-divorce because their current employment income is similar and neither party has any unusual circumstances or necessities.

[¶10] The district court found the length of the marriage supported an equal division, but other factors had to be considered, including that Ben Gerving acquired the land prior to the marriage, he lived and worked on the farm his entire life, and he did most of the work on the farm. The court found Janet Gerving's contribution to the farm did not grow or expand the farming operation. The court awarded Ben Gerving most of the parties’ property, including all of the real property, the farm equipment and animals, the accompanying debt, and some vehicles. The court explained:

According to the testimony and evidence this appears to be the only way the family farm will survive. Any division would likely be the final straw. In addition, it was the wish of the parties that the property not be sold if possible and for it [to] pass to the children. Based on its current income producing capabilities, this award only becomes a windfall if the farmland is sold. As a protection against such, should any of the land need to be sold or if Ben elects to sell any of the land, all net proceeds from the sale would then be split equally with Janet. The small income producing capabilities, animals, and equipment of the farm will be offset with a yearly payment to Janet by Ben. Should the sale of land become necessary the yearly payment can be revisited and adjusted accordingly.

The court ordered Ben Gerving pay Janet Gerving $6,000 per year until her 65th birthday to offset the award of the farming operation, and the court retained jurisdiction of the payment to allow the payment to be revisited if Ben Gerving sells any of the land. The court explained:

This yearly payment, which effectively offsets Janet's child support obligation, along with the unequal award of retirement accounts serves as the equitable division of the potential farming proceeds. Janet is receiving $96,000 in payments over the next sixteen (16) years and approximately $67,500 more in retirement, amounting to an award of $163,500 to offset the farming operation award to Ben.

Each party was awarded their personal possessions, retirement accounts, and individual credit card debt.

[¶11] This was a long-term marriage, which produced two children, and there was evidence both parties contributed to the marriage and the farming operation. Evidence established both parties have full time jobs off the farm and both parties have worked on and...