Marriage of Kennedy , 1999 MT 219N ( 1999 )

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No. 98-483
IN THE SUPREME COURT OF THE STATE OF MONTANA
1999 MT 219N
IN RE THE MARRIAGE OF:
DIXIE LEE KENNEDY,
Petitioner and Appellant,
and
KEVIN K. KENNEDY,
Respondent and Respondent.
APPEAL FROM: District Court of the Eighteenth Judicial District,
In and for the County of Gallatin,
The Honorable Mike Salvagni, Judge presiding.
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COUNSEL OF RECORD:
For Appellant:
James Maher, Attorney at Law; Basin, Montana
For Respondent:
Helene Orenstein, Attorney at Law; Bozeman, Montana
Submitted on Briefs: June 3, 1999
Decided: September 15, 1999
Filed:
__________________________________________
Clerk
Justice Jim Regnier delivered the opinion of the Court.
1. ¶Pursuant to Section I, Paragraph 3(c), Montana Supreme Court 1996 Internal
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Operating Rules, the following decision shall not be cited as precedent but shall be
filed as a public document with the Clerk of the Supreme Court and shall be
reported by case title, Supreme Court cause number, and result to the State Reporter
Publishing Company and to West Group in the quarterly table of noncitable cases
issued by this Court.
2. ¶The Petitioner, Dixie Lee Kennedy, filed a petition requesting the dissolution of
her marriage to Respondent, Kevin Kennedy, in the District Court for the Eighteenth
Judicial District in Gallatin County. The matter was initially heard by Special
Master Anne Watson. The Special Master's findings of fact and conclusions of law
were challenged by Dixie and subsequently modified by the District Court. The
District Court entered a decree of dissolution dividing the couple's marital property
from which Dixie appeals. We affirm the judgment of the District Court.
3. ¶Dixie's appeal raises the following issue:
4. ¶Did the District Court inequitably distribute the appreciated value of the couple's
marital residence?
FACTUAL BACKGROUND
1. ¶Dixie met Kevin at Fairmont Hot Springs in 1988 and moved into Kevin's home in
Bozeman, Montana on April 1, 1989. They were married in Anaconda, Montana, on
April 1, 1990, exactly one year after Kevin and Dixie began living together. Both
Dixie and Kevin have each been married once before and have children from those
marriages. Dixie has three children from her first marriage, one of whom, "Jake,"
lived with Kevin and Dixie. Kevin has one child from his previous marriage,
Hillary, of whom he has joint custody and for whom he is still paying child support.
Hillary lived with Kevin and Dixie on alternating weekends and holidays.
2. ¶Kevin acquired the couple's Bozeman residence prior to the marriage. In 1977,
Kevin's parents gave him 1.5 acres of land on West Baxter Street in Bozeman,
Montana. Using a loan of $25,000 and $10,000 of his own money, Kevin built a
house on this property. Dixie began residing in the Bozeman residence on April 1,
1989, one year before their marriage, and resided there until October 15, 1995.
During their marriage, Kevin and Dixie made the loan payments out of a joint
account. As of January 21, 1997, Kevin owed $12,178.23 on the initial loan.
3. ¶Dixie had the home appraised to determine the change in its value from the
beginning of the marriage to the date the couple separated. As of April 1990, the
appraised value of the house was $62,000. By the time the couple had separated, the
appraised value of the house had increased $56,000 to a total appraised value of
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$118,000. Both parties helped to maintain the house. Dixie and Kevin painted the
interior and exterior of the house, and remodeled a portion of the basement, adding a
bedroom and bathroom. Dixie also made improvements to the upstairs bathroom
and an entryway, and replaced the linoleum flooring in the kitchen.
4. ¶Additionally, Dixie brought real estate holdings to the marriage. In November
1989, Dixie purchased a cabin in Anaconda, Montana for $15,000. Prior to the
marriage, she made approximately $1500 in payments toward the cabin from her
separate funds. During the marriage, the couple made $4900 in payments out of a
joint fund. On March 31, 1991, Kevin's parents gave him a check for $10,000.
Kevin characterized this check as an inheritance gift from his parents, while Dixie
characterized it as an anniversary gift. Initially, Dixie placed this money into a
college fund for Dixie's daughter, Jake. However, in April 1991, Dixie and Kevin
decided to pay off the remaining balance on the Anaconda cabin and Dixie removed
$8600 from Jake's college fund. After Dixie and Kevin's separation, Dixie sold the
cabin for approximately $21,000.
5. ¶At the time of trial, Dixie was 53 years old and employed as a bookkeeper at
Service Electric in Bozeman; Kevin was 42 years old and employed as a Detention
Officer at the Gallatin County Detention Center. Dixie's gross income from Service
Electric was approximately $35,000 for 1996. Kevin's gross income was
approximately $19,000 for 1996. Both parties had similar retirement savings.
6. ¶Dixie and Kevin separated on October 15, 1995. On October 16, 1996, Dixie filed
a petition for dissolution in the District Court for the Eighteenth Judicial District in
Gallatin County. In this petition, Dixie requested certain items of personal property
as well as a $40,000 lump sum representing her monetary and nonmonetary
contributions to the marriage. Neither party requested maintenance. Subsequently,
Dixie and Kevin submitted a stipulated agreement regarding the division of personal
property. However, Dixie and Kevin could not agree on an equitable division of two
parcels of real estate: the Bozeman residence and the Anaconda cabin.
7. ¶The matter was heard by Special Master Anne Watson on April 8, and May 1,
1997. On June 30, 1997, the Special Master filed her report. As for the Bozeman
residence, the Special Master found that the increase in the value of the Bozeman
residence was due simply to market factors and denied Dixie's claim to a percentage
of its appreciation. As for the Anaconda cabin, the Special Master concluded that,
because the Anaconda cabin was substantially paid for during the marriage from
joint funds, the proceeds from the sale should be divided equally between the
parties, after awarding each party their respective contributions toward the purchase
of the cabin made from separate funds. The Special Master awarded the final cabin
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payment of $8600 to Kevin, as well as $1400 from Dixie's daughter's college fund,
finding that these funds originated from a $10,000 inheritance gift Kevin received
from his parents. Lastly, Dixie received the proceeds from the sale of a trailer which
she acquired prior to the marriage.
8. ¶On July 14, 1997, Dixie filed a motion opposing the Special Master's findings of
fact and conclusions of law. Dixie maintained that the Special Master ignored her
contributions to the marriage pursuant to § 40-4-202(1), MCA, by awarding the
entire increased value of the Bozeman residence to Kevin. On May 13, 1998, the
District Court entered its decree of dissolution. The Court found that the Special
Master's findings of fact were erroneous to the extent that they did not recognize
Dixie's contributions to the maintenance of the Bozeman residence. The court held
that, as a result of Dixie's contributions, she was entitled to one-fourth of the
increase in the value of the Bozeman residence. Dixie appeals the District Court's
decree of dissolution.
STANDARD OF REVIEW
1. ¶We review a District Court's division of marital property to determine whether the
findings on which it relied are clearly erroneous and whether the court correctly
applied the law. In re Marriage of Foreman 1999 MT 89, ¶ 14, 979 P.2d 193, ¶ 14,
56 St.Rep. 373, ¶ 14. If the District Court's findings are not clearly erroneous, we
will affirm the distribution of property unless the District Court abused its
discretion. In re Marriage of Stufft (1996), 276 Mont. 454, 459, 916 P.2d 767, 770;
In re Marriage of Hogstad (1996), 275 Mont. 489, 496, 914 P.2d 584, 588; In re
Marriage of Smith (1995), 270 Mont. 263, 267-68, 891 P.2d 522, 525. The test for
determining whether a district court abused its discretion is whether the district
court acted arbitrarily without employment of conscientious judgment or exceeded
the bounds of reason resulting in substantial injustice. In re Marriage of Meeks
(1996), 276 Mont. 237, 242, 915 P.2d 831, 834.
DISCUSSION
1. ¶Did the District Court inequitably distribute the appreciated value of the couple's
marital residence?
2. ¶Dixie contends that the court improperly weighed her monetary and nonmonetary
contributions to the marriage when it awarded her only one-fourth of the appreciated
value of the couple's Bozeman residence. In particular, Dixie contends that the
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District Court ignored her monetary and nonmonetary contributions to the
maintenance of the couple's Bozeman residence. Dixie maintains that she shared the
costs and labor associated with remodeling the basement, improving the kitchen and
upstairs bathroom, and painting the interior and exterior of the couple's residence.
Furthermore, Dixie maintains that she made numerous monetary and nonmonetary
contributions to the marriage, including earning the majority of the couple's income,
performing the majority of the housework, shopping for groceries, running errands,
bookkeeping, and taking care of Kevin's daughter Hillary, during Hillary's visits.
Kevin contends that the District Court committed no error.
3. ¶Section 40-4-202(1), MCA, governs the distribution of premarital assets and
provides in relevant part:
In dividing property acquired prior to the marriage . . . the court shall consider those
contributions of the other spouse to the marriage, including:
(a) the nonmonetary contribution of a homemaker;
(b) the extent to which such contributions have facilitated the maintenance of this
property; and
(c) whether or not the property division serves as an alternative to maintenance
arrangements.
1. ¶"[P]reacquired or gifted property need not be included in the marital estate unless
the nonacquiring spouse contributed to its preservation or appreciation." In re
Marriage of Engen, 1998 MT 153, ¶ 29, 289 Mont. 299, ¶ 29, 961 P.2d 738, ¶ 29;
see also Hogstad (1996), 275 Mont. at 499, 914 P.2d at 590. If the nonacquiring
spouse did contribute to the preservation of premarital or gifted property, the
nonacquiring spouse is entitled to an equitable share of the appreciated or preserved
value. Engen, ¶ 29, see also In re Marriage of Maedje (1994), 263 Mont. 262, 868
P.2d 580. District Courts are granted far-reaching discretion to fashion "a fair
distribution of the marital property using reasonable judgment and relying on
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common sense." Foreman, ¶ 23 (quoting In re Marriage of Rock (1993), 257 Mont.
476, 480, 850 P.2d 296, 298).
2. ¶The record supports the conclusion that the District Court adequately considered
Dixie's monetary and nonmonetary contributions when dividing the marital estate.
Based on the testimony of both Kevin and Dixie, the court found that Dixie did all
the parties' bookkeeping and housecleaning, while Kevin did all the cooking. The
court found that both Dixie and Kevin worked throughout the marriage and "used
their combined wages to support the needs of the family." The court also observed
that both Dixie and Kevin contributed to the maintenance of the Bozeman residence
by painting the exterior and interior of the house as well as remodeling the
basement. Following our decision in Maedje, the District Court correctly concluded
that the appreciated value of the Bozeman residence should be included in the
marital estate and disregarded the Special Master's recommendation to award the
Bozeman residence entirely to Kevin.
3. ¶We conclude that because there is substantial evidence to support the District
Court's finding that "the increase in value of the home was due simply to market
factors," that finding is not clearly erroneous. The record is replete with numerous
references to Dixie's monetary and nonmonetary contributions toward the
maintenance of the Bozeman residence. Kevin testified that Dixie and her daughter
wallpapered and carpeted an upstairs bathroom, Dixie had new linoleum installed in
the kitchen, she painted some interior walls, improved an entryway, and also
assisted Kevin in the remodeling of the basement. However, the court noted that
Dixie did not substantiate her claim that these improvements caused the couple's
home to increase in value. Significantly, the court observed that the appraisals used
to establish the $56,000 increase in the value of the Bozeman residence were
conducted without the benefit of an interior inspection of the maintenance and
improvements performed by Kevin and Dixie. Based on the testimony of Kevin's
expert, Gary France, an appraiser and broker, the court found that the appreciation
in value attributed to the Bozeman residence was due to local market factors and not
to the maintenance or improvements performed by Kevin and Dixie. After
inspecting the interior and exterior of the house, Mr. France testified that although
the improvements might have increased the utility of the couple's house, they did
not necessarily result in a greater market value. This finding was also supported by
information contained in a 1995 appraisal of the Bozeman residence, performed at
Dixie's instigation, which indicates that between 1990 and 1995, the average sales
price for homes in the city of Bozeman increased by more than 80 percent.
4. ¶Because Dixie did contribute "in some fashion" to the maintenance of the home,
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the District Court correctly concluded that Dixie was entitled to some part of its
appreciated value. See Engen, ¶ 29; Maedje, 263 Mont. at 269, 868 P.2d at 584.
However, § 40-4-202, MCA, requires the court to make an equitable distribution of
marital assets, not an equal distribution. In re Marriage of Nordberg (1994), 265
Mont. 352, 360, 877 P.2d 987, 992; In re Marriage of Fitzmorris (1987), 229 Mont.
96, 745 P.2d 353. Rather, the nonacquiring spouse is entitled to an equitable share
of the appreciated value attributable to her efforts. Engen, ¶ 29.
5. ¶We hold that the court did not abuse its discretion by awarding Kevin three-fourths
of the appreciation of the Bozeman residence. The court's finding that the increased
value was due to market factors was based on substantial evidence. Because of this
finding, the District Court could have reasonably concluded that, despite Dixie's
monetary and non-monetary contributions to the marriage, Kevin deserved a greater
share of the increased appreciation of the Bozeman residence.
6. ¶We affirm the District Court's distribution of the increased value of the Bozeman
residence.
/S/ JIM REGNIER
We Concur:
/S/ J. A. TURNAGE
/S/ WILLIAM E. HUNT, SR.
/S/ JAMES C. NELSON
/S/ TERRY N. TRIEWEILER
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