Berdahl v. Berdahl , 2022 ND 136 ( 2022 )


Menu:
  •    Corrected Opinion Filed 07/08/22 by Clerk of the Supreme Court
    FILED
    IN THE OFFICE OF THE
    CLERK OF SUPREME COURT
    JULY 7, 2022
    STATE OF NORTH DAKOTA
    IN THE SUPREME COURT
    STATE OF NORTH DAKOTA
    
    2022 ND 136
    Cody Berdahl,                                          Plaintiff and Appellant
    v.
    Joleen Berdahl,                                      Defendant and Appellee
    No. 20210320
    Appeal from the District Court of McKenzie County, Northwest Judicial
    District, the Honorable Daniel S. El-Dweek, Judge.
    AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
    Opinion of the Court by McEvers, Justice.
    Elizabeth A. Elsberry, Bismarck, ND, for plaintiff and appellant.
    Harry M. Pippin, Williston, ND, for defendant and appellee.
    Berdahl v. Berdahl
    No. 20210320
    McEvers, Justice.
    [¶1] Cody Berdahl appeals from a divorce judgment entered following a bench
    trial in his divorce action against Joleen Berdahl. He argues the district court
    erred in distributing the marital property, in ordering him to pay spousal
    support to Joleen Berdahl, and in awarding Joleen Berdahl credit for attorney’s
    fees. We affirm in part, reverse in part, and remand for further proceedings
    consistent with this opinion.
    I
    [¶2] Cody Berdahl and Joleen Berdahl were married in 1997. The parties
    separated on August 1, 2019, and Cody Berdahl sued for divorce in November
    2019. A two-day trial was held in July 2021. At the time of trial, Cody Berdahl
    was 50 years of age and Joleen Berdahl was 49. They lived in Watford City,
    North Dakota. Cody Berdahl was part owner of Dirty Birds, an oilfield service
    company. As part owner, he received work-related benefits including a phone,
    a vehicle, and health insurance. Joleen Berdahl worked at Dirty Birds as its
    bookkeeper from 2011 until fall 2019. At trial, she admitted she failed to
    timely remit payroll taxes to the Internal Revenue Service for the business.
    Joleen Berdahl had a high school education and eighteen years of bookkeeping
    experience. After the parties separated, she worked for the McKenzie County
    School District in a seasonal aide position.
    [¶3] The district court heard testimony from both parties regarding the
    accumulated assets and debts and the conduct attributing to the breakdown of
    this long-term marriage. Both parties drank alcohol throughout the marriage.
    Joleen Berdahl’s alcohol consumption became problematic, resulting in her
    seeking and successfully completing outpatient alcohol treatment.
    [¶4] Following trial, the district court issued its Memorandum of Opinion,
    Findings of Fact, Conclusions of Law and Order for Judgment and attached
    Exhibit A outlining its property distribution. The court included post-
    separation property in the marital estate. The court valued Dirty Birds’
    2
    accounts receivable at $100,000, based on Joleen Berdahl’s testimony, and
    included that amount in its property distribution. The court permitted Joleen
    Berdahl to remain in the marital home “with Cody Berdahl continuing to pay
    the mortgage, insurance, taxes, and utilities on the home until it sells.” The
    court found both parties engaged in conduct that “affected the parties directly
    and indirectly, financially,” and no harm resulted to Dirty Birds due to Joleen
    Berdahl’s actions. The court awarded Joleen Berdahl spousal support of
    $1,000 per month for ten years “to assist her with her financial needs and to
    rehabilitate her into becoming self-sustaining,” to begin the month after the
    marital home sells or Joleen Berdahl voluntarily leaves the home. Finally, the
    court ordered each party be responsible for their own attorney’s fees, but
    credited Joleen Berdahl with a $20,000 reduction in the marital estate for her
    legal fees in its property distribution. The court entered judgment, and Cody
    Berdahl appeals.
    II
    [¶5] Cody Berdahl argues the district court erred in distributing the marital
    property by finding Dirty Birds’ accounts receivable had a value of $100,000,
    by failing to properly consider Joleen Berdahl’s conduct, by including
    valuations for property acquired post-separation in the marital estate, and by
    failing to require Joleen Berdahl to reimburse him for payment of post-
    separation bills.
    [¶6] When granting a divorce, a district court is required to value the parties’
    property and debts and “make an equitable distribution.” N.D.C.C. § 14-05-
    24(1) (2017).1 This Court’s standard of review for a district court’s marital
    property distribution is well established:
    This Court reviews a district court’s distribution of marital
    property as a finding of fact, and will not reverse unless the
    1 Section 14-05-24(1), N.D.C.C., was amended effective August 1, 2021, to provide that when the
    parties do not mutually agree, “the valuation date for marital property and debt is sixty days before
    the initially scheduled trial date.” The 2021 amendment became effective after this action commenced;
    therefore, the prior version enacted in 2017 is applicable.
    3
    findings are clearly erroneous. “A finding of fact is clearly
    erroneous if it is induced by an erroneous view of the law, if there
    is no evidence to support it, or if, after reviewing all the evidence,
    we are left with a definite and firm conviction a mistake has been
    made.” We view the evidence in the light most favorable to the
    findings, and the district court’s factual findings are presumptively
    correct. Valuations of marital property within the range of the
    evidence presented are not clearly erroneous. A choice between
    two permissible views of the evidence is not clearly erroneous if the
    district court’s findings are based either on physical or
    documentary evidence, or inferences from other facts, or on
    credibility determinations.
    Holm v. Holm, 
    2017 ND 96
    , ¶ 4, 
    893 N.W.2d 492
     (internal citations omitted).
    [¶7] In making its distribution, the district court considers the Ruff-Fischer
    factors, which 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.
    Quamme v. Quamme, 
    2021 ND 208
    , ¶ 14, 
    967 N.W.2d 452
     (quoting Orwig v.
    Orwig, 
    2021 ND 33
    , ¶ 35, 
    955 N.W.2d 34
    ); Ruff v. Ruff, 
    52 N.W.2d 107
     (N.D.
    1952); Fischer v. Fischer, 
    139 N.W.2d 845
     (N.D. 1966). Although the court is
    not required to make specific findings on each Ruff-Fischer factor, we must be
    able to determine the reasons for the court’s decision. Quamme, at ¶ 14.
    A
    [¶8] Cody Berdahl first argues the district court erred in valuing accounts
    receivable for Dirty Birds at $100,000, based solely on Joleen Berdahl’s
    testimony.
    4
    Filed by Clerk of Supreme Court 07/08/22
    [¶9] As noted, a district court’s valuations of marital property are findings of
    fact and will not be reversed on appeal unless they are clearly erroneous. Wald
    v. Wald, 
    2020 ND 174
    , ¶ 11, 
    947 N.W.2d 359
    . A court’s valuations of marital
    property are not clearly erroneous if they are within the range of evidence
    presented. 
    Id.
     “In a bench trial, the district court determines credibility
    issues, which we will not second-guess on appeal.” Id. at ¶ 27. The value the
    court gives to marital property depends on the evidence presented. Amsbaugh
    v. Amsbaugh, 
    2004 ND 11
    , ¶ 12, 
    673 N.W.2d 601
    .
    [¶10] The district court valued Dirty Birds’ accounts receivable at $100,000.
    Joleen Berdahl testified she served as Dirty Birds’ bookkeeper and Dirty Birds’
    accounts receivable were “well over $100,000” at the time of separation. Cody
    Berdahl offered no evidence to rebut Joleen Berdahl’s testimony. In fact, Cody
    Berdahl testified that, although Dirty Birds had customers owing money, he
    did not know why those amounts were not listed on the parties’ property and
    debt listings and he did not look for values of the accounts receivable before
    submitting his property and debt listing. Cody Berdahl further testified he
    had no basis to dispute the amount Joleen Berdahl provided. Because the
    court’s valuation falls within the range of evidence presented, we conclude the
    court’s valuation was not clearly erroneous.
    B
    [¶11] Cody Berdahl next argues the district court erred by failing to properly
    consider evidence about Joleen Berdahl’s conduct at Dirty Birds and her
    alcohol abuse.
    [¶12] The Ruff-Fischer guidelines allow a district court to consider the parties’
    conduct during marriage, including fault. Weigel v. Weigel, 
    2015 ND 270
    , ¶ 22,
    
    871 N.W.2d 810
    . The court may properly consider both economic and non-
    economic fault in dividing marital property. Amsbaugh, 
    2004 ND 11
    , ¶ 34.
    “Economic misconduct is misconduct that results in a wasted asset or in the
    reduction of the net marital estate.” Gerving v. Gerving, 
    2020 ND 116
    , ¶ 18,
    
    943 N.W.2d 797
    . Further, “uncontrolled drinking contributing to the
    breakdown of the marriage, even if involving alcoholism, can be considered a
    matter of fault.” Amsbaugh, at ¶ 34. A determination of economic or non-
    5
    economic fault is a finding of fact, subject to the clearly erroneous standard of
    review. Gerving, at ¶ 18.
    [¶13] The district court found both parties engaged in activity that affected the
    parties financially, directly and indirectly. The court found Joleen Berdahl did
    not gain monetarily from her misconduct related to Dirty Birds’ tax filings and
    there was no evidence Dirty Birds was harmed financially by her actions.
    Regarding Joleen Berdahl’s alcohol abuse, testimony was elicited that both
    parties drank excessively during the marriage. Joleen Berdahl testified she
    had recently undergone outpatient treatment and was participating in
    Alcoholics Anonymous. The court did not make a finding for either party
    related to alcohol abuse. The evidence presented is such that the court could
    have reasonably concluded both parties must share responsibility for the
    failure of the marriage. See Nastrom v. Nastrom, 
    284 N.W.2d 576
    , 582 (N.D.
    1979) (trial court’s finding that both parties contributed equally to the
    breakdown of marriage, based on excessive drinking and heated arguments,
    was not clearly erroneous). Based on the record, the court’s findings on the
    conduct of each party during the marriage are supported by the evidence and
    are not clearly erroneous.
    C
    [¶14] Cody Berdahl argues the district court erred by including property
    acquired post-separation in the marital estate. Specifically, Cody Berdahl
    argues the court’s decision to “assign monetary value to the parties’ after-
    acquired property” violated N.D.C.C. § 14-05-24(1) (2017). He asserts that,
    because N.D.C.C. § 14-05-24(1) (2017) provides for valuation as of the date the
    parties separated, any property acquired post-separation should not be
    included in the marital estate. Joleen Berdahl argues N.D.C.C. § 14-05-24(1)
    (2017) is ambiguous.
    [¶15] In this case, valuation of the marital estate is governed by N.D.C.C. § 14-
    05-24(1) (2017), which provided:
    When a divorce is granted, the court shall make an equitable
    distribution of the property and debts of the parties. Except as
    6
    may be required by federal law for specific property, and subject to
    the power of the court to determine a date that is just and
    equitable, the valuation date for marital property is the date
    mutually agreed upon between the parties. If the parties do not
    mutually agree upon a valuation date, the valuation date for
    marital property is the date of service of a summons in an action
    for divorce or separation or the date on which the parties last
    separated, whichever occurs first.
    N.D.C.C. § 14-05-24(1) (2017) (amended effective August 1, 2021).
    [¶16] A majority of this Court previously held N.D.C.C. § 14-05-24(1) (2017) is
    unambiguous and “does not provide the district court with discretion when the
    parties do not agree upon a valuation date.” Messmer v. Messmer, 
    2020 ND 62
    ,
    ¶ 15, 
    940 N.W.2d 622
    . The legislative assembly “has provided a definitive
    process for determining the date to value the marital estate that limits the
    district court’s discretion to accepting or rejecting an agreed upon valuation
    date,” and “[t]he statute does not provide the court with discretion to select its
    own valuation date.” Id. at ¶ 19.
    [¶17] Here, Cody Berdahl and Joleen Berdahl did not mutually agree on a
    valuation date for the marital property. The parties separated on August 1,
    2019, and the divorce summons was served on November 19, 2019. Therefore,
    N.D.C.C. § 14-05-24(1) (2017) provided for the valuation of the parties’ marital
    property at the date of separation. The district court explained N.D.C.C. § 14-
    05-24 (2017) “provides no guidance to the Court as to what to do with additional
    assets and liabilities accumulated [after separation]—especially when the post
    separation period is extensive in length.” The court included post-separation
    property in the marital estate, despite annotations in Exhibit A reflecting the
    division of assets included items that were acquired post-separation. In doing
    so, the court misapplied the law.
    [¶18] The district court did not have discretion to include property acquired
    after separation in valuing the marital estate. Any assets accumulated post-
    separation would not be subject to distribution by the court. See Wald, 
    2020 ND 174
    , ¶ 16 (district court did not clearly err by not including property, as
    “property acquired after the valuation date would have been obtained with
    7
    income earned after the valuation date or with proceeds from the sale of assets
    that were valued as of the valuation date”). The court’s inclusion of property
    acquired after the parties’ separation was induced by an erroneous view of the
    law. Therefore, we reverse the court’s distribution of marital property and
    remand with instructions to assign value only to property that existed at the
    time of separation and to equitably distribute the property after taking into
    consideration the correct value of the marital estate.
    D
    [¶19] Because we have reversed the district court’s distribution of marital
    property, the court will again have to determine an equitable division of that
    property. However, we may address issues likely to arise again on remand.
    Quamme, 
    2021 ND 208
    , ¶ 12.
    [¶20] Cody Berdahl argues the district court erred by failing to order Joleen
    Berdahl to reimburse him for post-separation marital expenses he was
    required to pay until the marital home was sold, including mortgage payments,
    insurance, property taxes, and utilities. He contends the court’s requirement
    that he pay post-separation marital expenses is analogous to Fox v. Fox, 
    1999 ND 68
    , 
    592 N.W.2d 541
    . We are not persuaded.
    [¶21] In Fox, the district court awarded the marital home to the wife and
    awarded the husband fifty percent of the home’s equity in the event the wife
    ever sold the home. Id. at ¶ 3. The court also ordered the husband to pay the
    mortgage payments, real estate taxes, special assessments, insurance,
    utilities, and any necessary repairs and maintenance while the wife resided in
    the home. Id. This Court reversed, concluding “a court should try to
    disentangle the parties’ financial affairs to reduce further conflict, litigation,
    and rancor between them” when distributing marital property. Id. at ¶ 17.
    Because “one of the major reasons for the parties’ divorce was disagreement
    over financial matters,” this Court was left with a definite and firm conviction
    that ordering the husband to continue to pay expenses associated with the
    marital home was error. Id.
    8
    [¶22] This case is distinguishable from Fox. Here, rather than awarding the
    marital home to one of the parties and ordering the other party to pay the
    ongoing expenses indefinitely, the district court ordered the parties to sell the
    home. The court found the home was already placed on the market for sale.
    Although Cody Berdahl was ordered to pay post-separation marital expenses
    related to the home, and Joleen Berdahl was permitted to continue to reside in
    the home, the home was a marital asset requiring the payment of ongoing
    expenses until it is sold. The court found Cody Berdahl had significantly
    greater earnings and earning capacity, an important factor in determining
    both an equitable property division and spousal support. See Mellum v.
    Mellum, 
    2000 ND 47
    , ¶ 19, 
    607 N.W.2d 580
    . Cody Berdahl’s obligation to pay
    expenses continues only until the home is sold or Joleen Berdahl vacates the
    home. Cody Berdahl’s spousal support obligation does not begin until the
    month following the sale of the home.
    [¶23] The district court must make an equitable property distribution under
    N.D.C.C. § 14-05-24(1) (2017). The court found an equal division of the
    proceeds from the sale of the marital home was equitable. The court further
    found it was equitable for Cody Berdahl to continue to pay the mortgage,
    insurance, taxes, and utilities on the home until it was sold, and the home was
    currently on the market. The court noted that this arrangement would give
    the parties “plenty of incentive” to sell the marital home. We conclude the
    court adequately analyzed the Ruff-Fischer guidelines on this issue, the
    evidence supports the court’s findings, and we are not left with a definite and
    firm conviction a mistake was made. However, because we have already
    reversed the distribution of property, the court may reconsider on remand
    whether its previous decision on the marital home bears on an equitable
    distribution of the marital estate.
    III
    [¶24] Cody Berdahl argues the district court erred when it awarded spousal
    support to Joleen Berdahl without making adequate findings and in the
    absence of an evidentiary basis. Cody Berdahl argues there was insufficient
    9
    evidence of Joleen Berdahl’s need for spousal support, and the court solely
    relied on Cody Berdahl’s ability to pay.
    [¶25] District courts may award spousal support under N.D.C.C. § 14-05-24.1.
    When determining whether to award spousal support, “the court must consider
    the Ruff-Fischer guidelines, the needs of the spouse seeking support, and the
    ability of the other spouse to pay.” Quamme, 
    2021 ND 208
    , ¶ 14 (quoting
    Willprecht v. Willprecht, 
    2020 ND 77
    , ¶ 40, 
    941 N.W.2d 556
    ). The court is not
    required to provide a “complete calculation of each parties’ assets, debts, and
    expenses,” but “a clear description of the financial situation of each party is
    helpful for this Court in understanding the court’s rationale in awarding
    spousal support.” 
    Id.
     “Rehabilitative spousal support is awarded to equalize
    the burdens of divorce” or to restore a spouse to independent status by
    providing the spouse “an opportunity to acquire an education, training, work
    skills, or experience to become self-supporting.”            Rhodenbaugh v.
    Rhodenbaugh, 
    2019 ND 109
    , ¶ 14, 
    925 N.W.2d 742
    . Decisions on spousal
    support are findings of fact reviewed under the clearly erroneous standard of
    review. 
    Id.
    [¶26] The district court awarded Joleen Berdahl spousal support in the
    amount of $1,000 per month for ten years. In its findings, the court stated:
    Considering [Cody Berdahl’s] monthly budget and ability to pay,
    and comparing that with [Joleen Berdahl’s] monthly budget,
    education, needs and earning capacity, . . . the Court deems it fair
    and equitable to award Joleen [Berdahl] $1,000. The amount is
    designed to assist her with her financial needs and to rehabilitate
    her into becoming self-sustaining. Joleen [Berdahl] has the ability
    to work towards earning a degree moving into the future.
    The court found Joleen Berdahl is in need of rehabilitative spousal support.
    The court found Joleen Berdahl is currently incapable of attaining employment
    sufficient to meet her needs and is in “uncertain waters” regarding her future.
    The court heard testimony that Joleen Berdahl has a high school diploma and
    had completed one semester of college education. Joleen Berdahl testified she
    had been a bookkeeper for 18 years, and she now worked 35 to 40 hours each
    week as an aide with the McKenzie County School District earning $17 per
    10
    hour. Joleen Berdahl testified she planned to enroll at Williston State College
    to earn a bachelor’s degree and improve her career opportunities.
    [¶27] The district court awarded spousal support to rehabilitate Joleen
    Berdahl and provide her with the opportunity to acquire education and
    training to become self-supporting. We conclude the court’s spousal support
    award is supported by the evidence, and we are not left with a definite and
    firm conviction a mistake was made. However, “[s]pousal support and property
    distribution are interrelated and intertwined and must be considered
    together.” Lizakowski v. Lizakowski, 
    2017 ND 91
    , ¶ 21, 
    893 N.W.2d 508
    (quoting Krueger v. Krueger, 
    2008 ND 90
    , ¶ 9, 
    748 N.W.2d 671
    ). Because we
    reversed and remanded the property division, we also remand the spousal
    support award, and the district court may reconsider the issue in light of any
    changes made in the division of property.
    IV
    [¶28] Finally, Cody Berdahl argues the district court erred when it awarded
    Joleen Berdahl a $20,000 credit for attorney’s fees. He asserts the district
    court did not follow the proper procedure for awarding attorney’s fees under
    N.D.C.C. § 14-05-23, as Joleen Berdahl did not request attorney’s fees and did
    not present sufficient evidence supporting the amount of attorney’s fees.
    [¶29] This Court has long held that “[a]bsent statutory or contractual
    authority, the American Rule assumes parties to a lawsuit bear their own
    attorney fees.” Twete v. Mullin, 
    2019 ND 184
    , ¶ 45, 
    931 N.W.2d 198
    . A district
    court’s decision to award attorney’s fees is reviewed for an abuse of discretion.
    
    Id.
     A court abuses its discretion when it acts in an arbitrary, unreasonable, or
    unconscionable manner, or when it misinterprets or misapplies the law. 
    Id.
    [¶30] A district court has broad discretion to award attorney’s fees in a divorce
    action under N.D.C.C. § 14-05-23. Orwig, 
    2021 ND 33
    , ¶ 41. The court must
    make specific findings about the non-moving party’s ability to pay and the
    moving party’s need. 
    Id.
     “An award of attorney fees must generally be
    supported by evidence upon which the court can determine the requested fees
    are reasonable and legitimate.” Id. at ¶ 43. A court abuses its discretion by
    11
    awarding attorney’s fees unsupported by proper documentation upon which
    the court can determine the reasonableness or legitimacy of the requested fees.
    Id.
    [¶31] The district court’s order is internally inconsistent. In its conclusions of
    law, the court stated: “Each party shall be responsible for their own attorney’s
    fees.” In Exhibit A, the court included Joleen Berdahl’s legal fees in the marital
    debts, despite noting the debt was incurred post-separation. The district court
    made no findings regarding either Cody Berdahl’s ability to pay attorney’s fees
    or Joleen Berdahl’s need for them. The record lacks any supporting
    documentation of the attorney’s fees incurred by either party. The court also
    did not explain under which statutory authority it awarded Joleen Berdahl
    attorney’s fees.
    [¶32] We have previously reversed an award of attorney’s fees when we are
    unable to discern the district court’s authority for such an award. See Datz v.
    Dosch, 
    2014 ND 102
    , ¶ 26, 
    846 N.W.2d 724
    ; see also Twete, 
    2019 ND 184
    , ¶ 48
    (reversing award of attorney’s fees when this Court was unable to determine
    the authority the court relied on for its award). On this record, we do not have
    sufficient information to ascertain whether the attorney’s fees were intended
    to be awarded, or, if intended, whether the fees may be proper under applicable
    statutory authority. We reverse the court’s award of attorney’s fees to Joleen
    Berdahl and remand for further consideration and explanation of the legal
    basis authorizing the award of attorney’s fees.
    V
    [¶33] The district court’s judgment is affirmed in part, reversed in part, and
    remanded for further proceedings consistent with this opinion.
    [¶34] Jon J. Jensen, C.J.
    Gerald W. VandeWalle
    Daniel J. Crothers
    Lisa Fair McEvers
    Jerod E. Tufte
    12