MacKaben v. MacKaben , 871 N.W.2d 617 ( 2015 )

#27238-a-DG
2015 S.D. 86
IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
****
ANNETTE MACKABEN, Plaintiff and Appellee,
v.
EVERETT THOMAS MACKABEN, JR., Defendant and Appellant.
****
APPEAL FROM THE CIRCUIT COURT OF
THE FOURTH JUDICIAL CIRCUIT
MEADE COUNTY, SOUTH DAKOTA
****
THE HONORABLE JEROME A. ECKRICH, III
Judge
****
PATRICIA A. MEYERS
Rapid City, South Dakota Attorney for plaintiff
and appellee.
KYLE KRAUSE
Rapid City, South Dakota Attorney for defendant
and appellee.
****
CONSIDERED ON BRIEFS
ON AUGUST 31, 2015
OPINION FILED 11/04/15
# 27238
GILBERTSON, Chief Justice
[¶1.] On August 15, 2014, the circuit court granted a divorce to Everett
Thomas MacKaben Jr. (Tom) and Annette MacKaben because of irreconcilable
differences. In dividing the property, the circuit court determined that a sizable tax
lien on the marital home was Tom’s nonmarital debt. The court also awarded
spousal support of $1,000 per month to Annette for a period of 10 years to follow the
sale of the marital home. Tom appeals, asserting that the circuit court abused its
discretion in assigning him sole responsibility for most of the tax lien, in not
specifying that the spousal support terminates in the event of his own death, and in
setting the amount and duration of the support award. We affirm.
Facts and Procedural History
[¶2.] Tom and Annette met in 1999 and married on September 18 of that
year. At the time of trial, Tom was 53 years old and Annette was 45 years old. The
parties have one child together, who was 13 years old at the time of trial. Tom has
a high-school-level education and was largely self-employed during the marriage.
He owned and operated a small construction company called Bear Paw Construction
and sometimes served as a hunting guide. Annette has a Bachelor of Science degree
in animal science from South Dakota State University. Aside from Tom recovering
from surgery on his bicep, the parties were otherwise in good health at the time of
the divorce. Although Annette worked outside of the home for a short time after the
marriage, Tom successfully encouraged Annette to discontinue her employment in
order to assist in his construction business by tracking financial information and
records.
-1-
#27238
[¶3.] The parties struggled financially from the beginning of the marriage.
Tom came into the marriage with existing child-support obligations and owing
$40,000 to his previous wife. More importantly, however, Tom did not reliably keep
accurate business records, nor was Annette able to do the bookkeeping. The parties
did not timely file income-tax returns from 2000 to 2006. They filed their 2005,
2006, and 2007 returns in 2007 after they sought to refinance the debts on the
marital home. The parties eventually filed their 2003 and 2004 returns as well.
During this time, Tom accumulated several judgments against his construction
business, including one default judgment, and failed to pay excise taxes. Annette’s
mother loaned the parties $20,000 to satisfy and settle one of these judgments.
Without Annette’s knowledge, Tom also incurred a significant amount of credit card
debt and allowed the parties’ medical insurance to lapse, resulting in a large,
uninsured medical debt for their child.
[¶4.] By 2011, the parties’ economic situation had deteriorated to such an
extent that they sought out Consumer Credit Counseling Services (CCCS). CCCS
obtained a credit report on the parties, and Annette first learned that their personal
tax returns had not been filed for three tax years and that the Internal Revenue
Service (IRS) had placed a tax lien on their home totaling nearly $50,000. 1
However, because the IRS was not actively pursuing repayment of the debt, the
parties decided to focus their available funds on paying down their short-term
obligations first. Over the subsequent year and a half, the parties’ short-term debt
1. By the time parties submitted their briefs for this appeal, the current pay-off
amount for the tax lien was $55,504.
-2-
#27238
was reduced to approximately $3,000. During this time, the parties’ income
increased significantly because Tom went to work as an equipment operator at a
coal mine in Wyoming. Although Tom put in substantial overtime, on his days off
he continued to take on small construction projects and guide hunting groups. 2 The
parties’ tax returns have been timely filed since Annette assumed control of the
parties’ finances in 2011.
[¶5.] Annette filed for divorce in December 2013. Thereafter, the parties
separated, and Tom stopped living at the marital home. The parties agreed that
they would share legal custody of their child, that Annette would have primary
physical custody, and that Tom would get reasonable and liberal visitation. The
parties also agreed to sell the marital home. Tom continued paying the monthly
mortgage, insurance, and tax payments on the home; the monthly payment to
CCCS; Tom’s business insurance; and the parties’ health insurance. The parties
also agreed on the division of personal property and non-IRS debts. Additionally,
Tom has been making $500 payments to the IRS every month under a debt-
repayment plan.
[¶6.] After the parties separated, Annette initially worked part-time driving
a school bus, but later found full-time employment as a paraprofessional with the
Meade County School District. Annette has also received additional training
2. Tom claimed that the money he earned as a hunting guide was only enough
to cover his own expenses. When asked whether he reported this income on
the parties’ tax returns, Tom asserted his 5th Amendment right to remain
silent.
-3-
#27238
enabling her to drive charter busses during the summer months and for school
trips.
[¶7.] The circuit court granted each of the parties a divorce on the grounds
of irreconcilable differences on August 15, 2014. The court adopted the parties’ own
personal-property division but ordered Tom to pay $10,000 to Annette in order to
equalize the division. As for the marital home, the court ordered that it be sold.
However, the court concluded that while the underlying tax liability was a marital
debt, the interest and penalties were Tom’s nonmarital debt. As a result, the court
ordered Tom to pay $22,187 to Annette after the sale of the home; that any proceeds
remaining after paying the mortgage, costs of sale, and tax lien go toward satisfying
this award; that Tom receive any additional proceeds totaling up to $5,000; and that
any remaining proceeds be shared equally. The circuit court also ordered Tom to
continue paying $2,500 per month to cover the mortgage, insurance, and property
tax on the home. Finally, the court ordered Tom to pay Annette $1,000 per month
in spousal support for a period of 10 years following the sale of the home.
[¶8.] Tom raises seven issues on appeal. Additionally, Annette requests
appellate attorney fees.
1. Whether the circuit court’s findings of fact, conclusions of
law, and decree are only entitled to limited deference.
2. Whether the circuit court was required to specify whether
Tom’s spousal-support obligation terminates upon his
death.
3. Whether a spousal-support obligation that extends past
the death of the obligor is an abuse of discretion.
4. Whether the circuit court abused its discretion by
determining that the interest and penalties on the parties’
IRS tax liability was Tom’s nonmarital debt.
-4-
#27238
5. Whether the circuit court abused its discretion by
ordering Tom to pay all mortgage, insurance, and
property-tax payments on the marital home until its sale.
6. Whether the circuit court’s decree effectively executed its
division of the parties’ IRS debt.
7. Whether the circuit court abused its discretion in
determining the amount and duration of spousal support.
8. Whether Annette should be awarded appellate attorney
fees.
Standard of Review
[¶9.] We review a circuit court’s division of property for abuse of discretion.
Huffaker v. Huffaker, 2012 S.D. 81, ¶ 11, 823 N.W.2d 787, 790. We also review a
circuit court’s spousal-support determinations for abuse of discretion. Hagedorn v.
Hagedorn, 2012 S.D. 72, ¶ 9, 822 N.W.2d 719, 722. “An abuse of discretion ‘is a
fundamental error of judgment, a choice outside the range of permissible choices, a
decision, which, on full consideration, is arbitrary or unreasonable.’” Gartner v.
Temple, 2014 S.D. 74, ¶ 7, 855 N.W.2d 846, 850 (quoting Arneson v. Arneson, 2003
S.D. 125, ¶ 14, 670 N.W.2d 904, 910). “Pursuant to an abuse of discretion standard
of review, factual determinations are subject to a clearly erroneous standard.” Id.
¶ 8, 855 N.W.2d at 850 (quoting State v. Guthrie, 2002 S.D. 138, ¶ 5, 654 N.W.2d
201, 203). However, the circuit court’s conclusions of law are reviewed de novo. Id.
Analysis and Decision
[¶10.] 1. Whether the circuit court’s findings of fact,
conclusions of law, and decree are only entitled to
limited deference.
[¶11.] Tom asserts that the circuit court’s findings of fact, conclusions of law,
and divorce decree are only entitled to limited deference because they were all
-5-
#27238
drafted by Annette’s counsel. In support of this assertion, Tom offers a single
dissenting opinion stating: “[W]e cited with approval a case suggesting that
appellate courts should scrutinize more carefully and give less weight to findings
prepared by counsel than those findings prepared by trial judges themselves.”
Kreps v. Kreps, 2010 S.D. 12, ¶ 48, 778 N.W.2d 835, 848 (Konenkamp, J.,
dissenting). According to Tom, the circuit court altered only a single finding of fact,
added one conclusion of law, and omitted Annette’s proposed conclusions of law
regarding attorney fees.
[¶12.] We decline Tom’s invitation to hold that findings and conclusions
prepared by a party at the court’s request are only entitled to limited deference as a
general rule. SDCL 15-6-52(a) specifically empowers a circuit court to “direct
counsel for the prevailing party to prepare findings[.]” After the opposing party has
been given an opportunity to respond to the proposed findings, “the court shall
make or enter such findings and conclusions as may be proper.” SDCL 15-6-52(a).
The opposing party is free to argue on appeal that a particular finding or conclusion
is improper. As indicated above, see supra ¶ 9, we already review a circuit court’s
conclusions of law de novo—i.e., they receive no deference on appeal. Gartner, 2014
S.D. 74, ¶ 8, 855 N.W.2d at 850. Tom offers no compelling reason for us to abandon
our well-established standards of review regarding a circuit court’s findings of fact
(clearly erroneous) or decisions in property division and spousal support (abuse of
discretion).
[¶13.] 2. Whether the circuit court was required to specify
whether Tom’s spousal-support obligation
terminates upon his death.
-6-
#27238
[¶14.] Next, Tom asserts the circuit court should have specifically addressed
whether Tom’s spousal-support obligation terminates in the event that his death
occurs prior to the conclusion of the 10-year obligation. However, this issue is not
ripe for review. 3 “Ripeness involves the timing of judicial review and the principle
that judicial machinery should be conserved for problems which are real and
present or imminent, not squandered on problems which are abstract or
hypothetical or remote.” Meinders v. Weber, 2000 S.D. 2, ¶ 39, 604 N.W.2d 248, 263
(quoting Boever v. S.D. Bd. of Accountancy, 526 N.W.2d 747, 750 (S.D. 1995)).
“Courts should not render advisory opinions or decide moot theoretical questions
when the future shows no indication of the invasion of a right.” Boever, 526 N.W.2d
at 750. However, “[a] matter is sufficiently ripe if the facts indicate imminent
conflict.” Id. Here, the circuit court awarded Annette spousal support to run for a
period of 10 years following the sale of the marital home. As indicated above, Tom
was healthy and only 53 years old at the time of the divorce proceedings. Although
it is not known when a third party will purchase the home, there is nothing in the
3. Although Annette did not raise this argument, a dispute is not justiciable
unless it is ripe. Ohio Forestry Ass’n, Inc. v. Sierra Club, 523 U.S. 726, 732,
118 S. Ct. 1665, 1670, 140 L. Ed. 2d 921 (1998); see also Brendtro v. Nelson,
2006 S.D. 71, ¶ 12 n.1, 720 N.W.2d 670, 674 n.1. Whether a controversy is
justiciable may be considered by a court on its own motion. See Nat’l Park
Hosp. Ass’n v. Dep’t of the Interior, 538 U.S. 803, 808, 123 S. Ct. 2026, 2030,
155 L. Ed. 2d 1017 (2003); Baldwin Cty. v. Palmtree Penthouses, Ltd., 831 So.
2d 603, 605 & n.4 (Ala. 2002); Kapuwai v. City & Cty. Of Honolulu, Dep’t of
Parks & Recreation, 211 P.3d 750, 757 (Haw. 2009); W.B. v. Commonwealth,
Cabinet for Health & Family Servs., 388 S.W.3d 108, 115 (Ky. 2012); Brickley
v. Horton, 951 A.2d 801, 802 (Me. 2008); Wilson v. State Highway Comm’n,
370 P.2d 486, 488 (Mont. 1962); Appeal of Buckeye Power, Inc., 330 N.E.2d
430, 431 (Ohio 1975) (per curiam); Mayhew v. Town of Sunnyvale, 964 S.W.2d
922, 928 (Tex. 1998); Williams v. Univ. of Utah, 626 P.2d 500, 503 (Utah
1981); Daniels v. Mobley, 737 S.E.2d 895, 899 (Va. 2013).
-7-
#27238
record to suggest that Tom’s death is imminent, absent some unforeseen accident.
In such an event, Tom’s estate is free to petition for a modification.
[¶15.] 3. Whether a spousal-support obligation that extends
past the death of the obligor is an abuse of
discretion.
[¶16.] We do not reach this issue because of our decision on Issue 2.
[¶17.] 4. Whether the circuit court abused its discretion by
determining that the interest and penalties on the
parties’ IRS tax liability was Tom’s nonmarital
debt.
[¶18.] The circuit court attempted to divide the marital estate into equal
shares with the exception of the portion of the parties’ IRS debt attributable to
interest and penalties. While the court equally divided the underlying tax liability
due the IRS, the court determined that the penalties and interest accumulated as
the result of prior failures to file tax returns constituted a nonmarital debt
attributable solely to Tom. Tom asserts the circuit court abused its discretion by
assigning Tom sole responsibility for the penalties and interest. Specifically, Tom
asserts the circuit court erred in three ways: (1) by failing to give sufficient weight
to Annette’s treatment of the parties’ tax problem, (2) by basing its decision on
erroneous findings, and (3) by attributing all payments made on the parties’ IRS
debt to principal.
[¶19.] Tom first asserts that the circuit court failed to give sufficient weight
to Annette’s treatment of the parties’ tax problem. The circuit court found that in
2011, after attending credit counseling, Annette learned that the parties’ income-
tax returns had not been filed for three previous tax years and that the marital
home had been encumbered by a tax lien of nearly $50,000. Although Tom
-8-
#27238
acknowledges that “Annette’s testimony provides some basis in the record for that
finding[,]” he argues that “if Annette really was unaware of any issue, it could only
be because she willfully stuck her head in the sand[.]” According to Tom, Annette
should have realized the parties had a tax problem because Annette testified she
believed the parties had been granted extensions for previous tax years, including
an eight-year extension for the 2000 return; because the parties filed six tax returns
at once in 2008; because Annette was generally aware of the parties’ financial
difficulties throughout the marriage; and other miscellanea. Additionally, Tom
points out that after both parties learned of the problem, they allowed their
outstanding tax liability to continue accruing interest and penalties for over a year
before taking any steps to directly address the tax lien.
[¶20.] An appeal is not an opportunity to simply relitigate credibility
determinations. “We give deference to the [circuit] court on judging the credibility
of the witnesses and weighing their testimony.” Hill v. Hill, 2009 S.D. 18, ¶ 26, 763
N.W.2d 818, 826. Any “[d]oubts about whether the evidence supports the [circuit]
court’s finding of fact are to be resolved in favor of the successful party’s version of
the evidence and of all inferences fairly deducible therefrom which are favorable to
the court’s action.” Gartner, 2014 S.D. 74, ¶ 8, 855 N.W.2d at 850 (quoting Estate of
Olson, 2008 S.D. 97, ¶ 9, 757 N.W.2d 219, 222). During the divorce proceedings,
under cross-examination by Tom’s counsel, Annette testified as follows:
[Tom’s Counsel]: Now, at some point did you become aware of
a rather large debt to the IRS?
[Annette]: Yes.
[Tom’s Counsel]: How did you become aware of that debt?
-9-
#27238
[Annette]: When we took Tom’s credit cards to consumer credit
that first meeting with them, of course she had to run a credit
score on both of us. And she walked back in and handed the
credit scores to us and pointed to it, and that was the first time
that I knew of any of it. I just remember looking at Tom and
him just stating “Yes. I knew about it.”
....
[Tom’s Counsel]: And so that would have been the first time
you learned about a tax lien that was filed in December of 2009?
[Annette]: Yes.
....
[The Court]: I have a quick question . . . . My question is:
When you went to the credit counselor, that’s when you first
learned [of the tax lien]?
[Annette]: Yes.
[The Court]: When was that?
[Annette]: That would have been February of 2011.
The circuit court was not required to disbelieve Annette’s testimony simply because
Tom concludes she should have known better. While the content of Tom’s
assertions provides circumstantial evidence that might help prove Annette’s
awareness of a tax problem at the trial level, Tom has not proved by “a clear
preponderance of the evidence” that Annette was aware of the parties’ tax problem.
See id. (quoting Olson, 2008 S.D. 97, ¶ 9, 757 N.W.2d at 222). Because Tom has
fallen short of leaving us “with a definite and firm conviction that a mistake has
been committed[,]” id. (quoting Olson, 2008 S.D. 97, ¶ 9, 757 N.W.2d at 222), we are
not persuaded that the circuit court “failed to give sufficient weight” to Annette’s
treatment of the parties’ tax problem.
[¶21.] Next, Tom asserts that the circuit court’s finding that Annette’s efforts
after learning of the tax lien “set[] the stage for a return to solvency” is clearly
erroneous. According to Tom, “[t]he primary thing that set the stage for the family’s
-10-
#27238
financial solvency was not Annette preparing tax returns, but rather the fact that
Tom started working the coal mine in 2011 and earned a higher and more
consistent income than at any other time during the marriage.” We fail to
understand how this finding, even if erroneous, undermines the circuit court’s
conclusion that the interest and penalties on the unpaid tax liability was Tom’s
nonmarital debt. The circuit court determined the interest and penalties on the
unpaid debt was nonmarital because Tom was responsible for the imposition of
those amounts, not because of Annette’s role in remedying the situation.
[¶22.] Finally, Tom asserts the circuit court erred by attributing all payments
made on the parties’ IRS debt to principal. The parties initially owed the IRS an
unpaid tax liability of $33,455. This tax liability generated an additional $44,376 in
interest and penalties. However, the parties were credited with $23,661 in
payments to the IRS. The circuit court applied the entirety of this credit toward the
$33,455 underlying tax liability, leaving the interest and penalties unaffected.
According to Tom, “Annette should be responsible for half of the interest
accumulated on the unpaid taxes, even if penalties and interest on the penalties are
made Tom’s responsibility.” Thus, the essence of Tom’s argument is that the circuit
court abused its discretion by categorizing the interest and penalties on the IRS tax
liability as Tom’s nonmarital debt. We disagree that the circuit court abused its
discretion in this regard.
[¶23.] The Nebraska Supreme Court decided a substantially similar case in
Meints v. Meints, 608 N.W.2d 564 (Neb. 2000). In Meints, over the course of seven
years, a “husband incurred a federal income tax liability of $19,162.31, plus an
-11-
#27238
additional $11,235.36 in statutory penalties for late filing, for a total Internal
Revenue Service (IRS) liability amounting to $30,397.67.” Id. at 567. During those
same years, “the husband and the wife filed separate income tax returns.” Id.
However, the husband testified—and the wife did not dispute—that he “spent the
funds that he failed to withhold from his income for IRS tax purposes on family
expenses[.]” Id. Consequently, the “district court did not treat the tax liability
incurred by the husband as a marital debt and proceeded to divide the remaining
marital estate accordingly.” Id. at 566. On appeal, the Nebraska Supreme Court
noted that “[i]ncome tax liability incurred during the marriage is one of the
accepted costs of producing marital income, and thus . . . should generally be
treated as a marital debt.” Id. at 569. When “taxes are overdue, the principle
behind the rule is the same, and the underlying tax liability [is] ordinarily . . . a
marital debt.” Id. However, the court also noted that even underlying tax liability
need not be classified as marital debt “if credible evidence establishes that the
delinquent tax-paying spouse spent significant funds on nonmarital pursuits.” Id.
As an extension of these principles, the court held “that an innocent spouse who has
filed separate tax returns, and paid his or her taxes in a timely fashion, should not
be forced to share in any statutory penalties for the late filings of a dilatory spouse.”
Id. Consequently, the court concluded that while the underlying tax liability was
properly considered a marital debt, the accrued interest and penalties were
nonmarital debt “solely attributable to the husband’s late filings.” Id.
[¶24.] Although the facts of the present case are not identical to those
presented in Meints, we think they are sufficiently analogous to apply the same
-12-
#27238
principles. Like the Nebraska Supreme Court, the circuit court here concluded the
underlying tax liability was a marital debt while the accrued interest and penalties
were Tom’s nonmarital debt. 4 The circuit court so found for the following reasons:
(1) If Defendant had . . . timely paid the taxes, then interest and
penalties would not have accrued. The IRS wouldn’t have a lien
on the marital property and Plaintiff would realize more hard
cash from the sale of the home.
(2) Defendant was the person responsible for . . . paying the
taxes.
(3) The Defendant concealed his dereliction from his wife. She
had no knowledge that Defendant failed to pay income taxes.
(4) Upon discovery of the Defendant’s deep dereliction,
Plaintiff—with the help of Defendant’s accountant—worked
through a garbage bag full of records to recreate the delinquent
tax years. As a result, returns were filed, thus setting the stage
for a return to solvency.
(5) The IRS lien was a function of Defendant’s character—a
tendency to profligacy and financial neglect.
Additionally, the circuit court also found that “Tom’s failure to file income taxes was
willful as well as negligent and as a result the parties incurred a significant amount
of penalties and interest that they should not have incurred had Tom managed
their financial affairs properly.” Tom has not convinced us that the circuit court
clearly erred in its relevant factual findings. Therefore, like the Nebraska Supreme
Court in Meints, we must likewise conclude that Annette is “innocent” and should
not suffer the consequences of Tom’s concealed mismanagement of the family’s
finances—i.e., the interest and penalties portion of the tax lien.
4. Although Annette initially attempted to convince the circuit court to
categorize the entire tax lien as Tom’s nonmarital debt, she has not made the
same argument on appeal. Therefore, it is undisputed that the circuit court
properly categorized that portion of the tax lien representing the parties’
underlying tax liability, which does not include interest and penalties, as
marital debt.
-13-
#27238
[¶25.] In light of the foregoing, the circuit court’s application of the parties’
$23,661 credit was proper. Tom has not asserted that any portion of this credit was
paid out of his nonmarital funds. Therefore, it was proper for the circuit court to
apply half of the credit toward each of the parties’ shares of the underlying tax
liability and then equally divide the remaining tax liability between the parties. 5
[¶26.] 5. Whether the circuit court abused its discretion by
ordering Tom to pay all mortgage, insurance, and
property-tax payments on the marital home until its
sale.
[¶27.] Tom asserts that the mortgage, insurance, and property-tax payments
on the marital home should have been proportional to the allocation of the asset
between the parties. Although the circuit court ordered Tom to make the foregoing
payments on the home, the court ordered the first $5,000 of any net proceeds
obtained from the sale of the home to be paid to Tom and any remaining proceeds to
be equally divided between the parties. Annette argues that she remained equally
obligated on the debt even though the circuit court “simply ordered Tom to pay the
entire mortgage” instead of having “Tom pay half of the mortgage debt and Annette
pay half of the mortgage debt with alimony that Tom paid to her[.]”
5. Annette was actually required to pay a small portion of the interest. The
court calculated Annette’s remaining share of the underlying tax liability at
$5,564. This amount reflects half of the difference between the tax-lien-
payoff-statement amount ($55,504) and the sum of the penalties ($15,516)
and interest ($28,860). However, Tom’s exhibit JJ indicated the payoff
amount of $55,504 was higher than the calculated total of $54,170 ($33,455 in
unpaid taxes plus $15,515 in penalties plus $28,860 in interest minus
$23,661 in payments) because of additional interest that had accrued.
Therefore, Annette should have only been responsible for $4,897—i.e., half of
the difference between the unpaid taxes ($33,455) and the credit ($23,661).
-14-
#27238
[¶28.] As Tom points out, we reviewed an analogous property division in
Foley v. Foley, 429 N.W.2d 42 (S.D. 1988). In Foley, a husband and wife divorced,
and the circuit court ordered the husband to make monthly payments of $518 for
“the house payment, consisting of principal, interest and insurance” and $176 “for
utilities, food, and necessaries[.]” Id. at 43. The court did not identify whether it
considered these payments a portion of the property settlement or an award of
spousal or child support, but the awards were set to terminate upon the later
occurrence of the parties’ youngest child reaching age 18 or finishing high school.
Id. at 43-44. While the court determined that the parties would retain joint title to
the marital home, the court decided the wife would receive 70% of the net proceeds
from the sale of the home and the husband would receive the remaining 30%. Id. at
44. The court ordered the home be sold if the wife remarried or upon the later
occurrence of the parties’ youngest child reaching age 18 or finishing high school.
Id. After the home was eventually placed on the market for sale, the wife petitioned
for modification, which the circuit court granted.
[¶29.] On appeal of the modification, we commented on the circuit court’s
distribution of the mortgage and insurance payments. We said:
It is . . . clear that unless the mortgage payments were made,
the property could have been foreclosed upon preventing either
party from receiving any possible gain on the sale of the home.
Although the trial court was justified in requiring [h]usband and
[w]ife to share these payments, the percentages should have
reflected the percentage interest of each party in the asset (or
liability). To require [h]usband to pay an additional twenty
percent would be permissible only if such payments were part of
[h]usband’s continuing support obligation to [w]ife.
Id. at 47. Consequently, we remanded to give the circuit court an opportunity
either to reimburse the husband for the additional 20% of the mortgage and
-15-
#27238
insurance payments he had paid or to clarify that the additional sum was an award
of spousal support rather than a property division.
[¶30.] We think Foley is inconsistent with the discretion given to circuit
courts to equitably divide marital property in divorce proceedings. Foley itself was
a split decision, and it appears that we have never relied on Foley for the notion
that a party’s responsibility for preventing foreclosure on the marital home must be
proportional to that party’s interest in the asset. Such a rule ignores the equity
court’s larger function of dividing the total of marital property. A court is not
required to equally divide each individual asset; rather, the overall division of the
entirety of the marital assets must be equitable. To the extent that Foley suggests
otherwise, it is overruled. In light of the larger property division, requiring Tom to
pay an extra $1,250 per month to preserve the one asset that would be used first to
satisfy his tax debt to the IRS was not an abuse of discretion.
[¶31.] 6. Whether the circuit court’s decree effectively
executed its division of the parties’ IRS debt.
[¶32.] In addition to disputing the circuit court’s categorization of the interest
and penalties as his nonmarital debt, Tom asserts “the manner in which the
[c]ircuit [c]ourt attempted to accomplish this goal fails in its purpose because it does
not account for the likelihood that the parties would make payments on the debt
before the sale of their home.” According to Tom, “[a]ny findings regarding the
amount of proceeds from the home sale that will go towards the IRS lien are clearly
erroneous” because the circuit court could not have known whether and by how
much the tax lien would change by the time of sale. Tom asserts that he has been
making $500-per-month payments on the tax lien under a settlement agreement
-16-
#27238
with the IRS. Thus, Tom concludes that “[t]o properly accomplish the objective of
making [him] responsible for $44,375 of the IRS debt, it is necessary to use a
formula that accounts for payments on the debt made by each party before the home
sells.” We disagree.
[¶33.] Tom ignores the larger picture of the entire property division. Tom’s
burden on appeal is not to prove merely that one aspect of the actual property
division deviated from the circuit court’s intended property division. Rather, Tom
must convince us that the property division, as executed, was an abuse of discretion.
Although a circuit court must “have regard for equity and the circumstances of the
parties” when dividing the marital estate, SDCL 25-4-44, “[i]n the division of
property rights, there is no rigid formula that must be followed, nor any fixed
percentage to which either party is entitled.” Clement v. Clement, 292 N.W.2d 799,
801 (S.D. 1980) (citation omitted). When a circuit court divides property, “the law
does not require perfection that would approach a mathematical certainty.”
Pellegrin v. Pellegrin, 1998 S.D. 19, ¶ 24, 574 N.W.2d 644, 649. In this case, the
circuit court did not abuse its discretion by declining to adopt a formula that would
account for potential, minor variations in the amount of Tom’s tax-lien obligations.
Considering the property division as a whole, Tom’s monthly obligation to make the
tax payment would only affect the overall property division marginally if at all. 6
6. It does not appear that Tom’s monthly payments are likely to ever benefit
Annette. The thrust of Tom’s argument is that every $500 payment he
makes reduces the total amount of the tax lien and consequently increases
Annette’s equity by $250. However, under the decree, Tom is required to pay
Annette $22,187 regardless of whether the sale proceeds are sufficient to
cover that amount. Thus, if the net proceeds from the home sale are less
(continued . . .)
-17-
#27238
Such a decision is not “a choice outside the range of permissible choices[.]” Gartner,
________________________
(. . . continued)
than $22,187, Annette will not receive any additional value from Tom’s $500
payments. Because Tom is then entitled to any remaining proceeds up to
$5,000, Tom’s payments will not affect the amount Annette receives unless
the net proceeds exceed $27,187. However, if the home sells for $27,187,
Annette—as a joint owner of the property—is already entitled to 50% of the
$22,187 in proceeds allocated to her by the court (i.e., the court functionally
ordered Tom to pay Annette only $11,094). Likewise, Tom would also already
be entitled to 50% of the $5,000 the court ordered he receive. Thus, at the
point at which each of Tom’s $500 tax payments would be adding $250 to
Annette’s equity on a monthly basis, Tom would already have been permitted
to retain $8,594 (50% of $22,187 minus 50% of $5,000) in proceeds that would
have been distributed to Annette under a true 50/50 division of the property.
At that rate, the home would need to be on the market for nearly three years
before Tom’s tax payments caught up with Annette’s deficit.
Further, even if we agreed with Tom’s conclusion that the circuit court’s
decree did not effectively carry out the court’s intended property division,
Tom ignores the bigger picture of the entire property division. It is clear from
the circuit court’s decree, findings of fact, and conclusions of law that—aside
from the interest and penalties on the tax liability—the court intended to
divide the marital estate equally. However, the parties themselves came to
an agreement regarding the distribution of personal property and debts other
than the tax lien. Under that agreement, Annette received $37,477 in
personal property but assumed $21,000 in debt. In contrast, Tom received
$54,011 in personal property but assumed only $9,916 in debt. As a result of
this $27,618 disparity in value between property received by the parties, the
circuit court ordered Tom to pay Annette $10,000 to help balance the
personal-property division. This amount, however, still leaves Tom with
approximately $7,618 more than Annette. Considering the $8,594 deficit
discussed in the preceding paragraph, it appears that Tom’s payments would
not even begin to tip the financial advantage in Annette’s favor—i.e., result
in her receiving more cash value than Tom as a result of this property
division—until the home had been on the market for over five years.
In order to be entitled to relief on appeal, Tom has the burden of establishing
that the circuit court’s decision was “outside the range of permissible
choices,” Gartner, 2014 S.D. 74, ¶ 7, 855 N.W.2d at 850, not merely that the
court failed in execution to impose an intended debt liability to the penny. As
things stand, Tom’s tax payments are unlikely to ever benefit Annette under
the circuit court’s decree. If the total of the sale price and Tom’s tax
payments ever reach the point where Annette benefits from them, it would
take years of such tax payments for the property division to equalize, let
alone tip in Annette’s favor to such an extent that it becomes inequitable.
-18-
#27238
2014 S.D. 74, ¶ 7, 855 N.W.2d at 850 (quoting Arneson, 2003 S.D. 125, ¶ 14, 670
N.W.2d at 910).
[¶34.] 7. Whether the circuit court abused its discretion in
determining the amount and duration of spousal support.
[¶35.] Tom asserts the circuit court abused its discretion in ordering Tom to
pay Annette $1,000 per month in spousal support for a period of 10 years beginning
on the first day of the month following the sale of the home. Tom argues the court
abused its discretion in two respects. First, Tom argues that the circuit court
clearly erred by concluding Annette’s income potential would never approach Tom’s.
Second, because the 10-year period does not begin until the home sells, Tom argues
that the effect of the circuit court’s order “was to essentially extend Tom’s alimony
obligation by a month for every month the home remains unsold.” According to
Tom, “having the period run from an undetermined point in the future (whenever
the home sells) cannot be reasonably justified.” We are not persuaded by either
argument.
[¶36.] The circuit court’s evaluation of the parties’ earning capacities was not
clearly erroneous. Tom asserts that “[t]he alimony award is . . . based on the
erroneous factual finding that Annette’s ‘income potential despite her degree will
never approach Tom’s.’” The reason for this, Tom suggests, is that “[t]here was no
evidence suggesting [Annette] could not become qualified to drive equipment at a
coal mine, or similarly drive trucks that service the oil fields in North Dakota.”
However, Tom offers no authority for the proposition that a spouse seeking support
must move to another state and seek out a particular occupation or necessarily risk
-19-
#27238
having its income potential be imputed to that spouse. 7 The circuit court found that
Annette earns $10 per hour, seven hours per day, while school is in session.
Additionally, at the time of divorce, Annette hoped to continue driving a school bus
at least one shift per day at $14.50 per hour. Finally, the court found that Annette
has received additional training enabling her to drive charter busses during the
summer and for school trips. In comparison, the court also found that Tom has
demonstrated an ability to earn in excess of $100,000 per year. Although Tom
asserts that he has only earned this amount annually once in his lifetime, that one
year occurred immediately prior to the year of divorce and at the same job he
currently holds. Consequently, the circuit court found that Tom will likely earn
between $96,000 and $120,000 per year, whereas Annette will earn between
$20,000 and $24,000 per year. Therefore, we are not “left with a definite and firm
conviction” that the circuit court made a mistake in concluding Annette’s earning
capacity will never approach that of Tom’s. See id. ¶ 8, 855 N.W.2d at 850 (quoting
Olson, 2008 S.D. 97, ¶ 9, 757 N.W.2d at 222).
[¶37.] Even if we agreed that the circuit court clearly erred in its findings on
the parties’ respective earning capacities, Tom would not necessarily prevail. A
circuit court that grants a divorce “may compel one party to make such suitable
allowance to the other party for support during the life of that other party or for a
7. If we so held, it is not difficult to imagine myriad future divorce appellants
arguing that their support-seeking, former spouses are not entitled to support
because they could simply learn to drive a truck, move to Wyoming, and work
the coal mines. In a similar vein, such a holding would also invite any
support-seeking spouse to claim his or her former spouse is voluntarily
underemployed if that spouse earns less than he or she could in the coal
mines of Wyoming.
-20-
#27238
shorter period, as the court may deem just, having regard to the circumstances of
the parties represented[.]” SDCL 25-4-41. Relevant circumstances include “the
parties’ (1) length of marriage; (2) earning capacity; (3) financial condition after the
property division; (4) age, health, and physical condition; (5) station in life or social
standing; [and] (6) relative fault in the termination of the marriage.” Scherer v.
Scherer, 2015 S.D. 32, ¶ 10, 864 N.W.2d 490, 494. While spousal support “will not
be awarded in such an amount as would allow a [spouse] capable of work to sit in
idleness, [neither] will it be denied merely because [the spouse] may be able to
obtain employment and support [him- or] herself.” Guindon v. Guindon, 256
N.W.2d 894, 898 (S.D. 1977). Thus, earning capacity is but one factor a court
should consider in determining an award of spousal support.
[¶38.] In this case, the circuit court’s findings on the relevant factors support
its order for spousal support. The parties were married for approximately 14 years.
Annette’s anticipated annual income is about one-fourth to one-sixth of Tom’s.
Neither party will derive much financial potential from the property division. Both
parties are relatively healthy and in good physical condition, although Tom is
approximately eight years older than Annette. The court found that without the
ordered support, Annette would be relegated to little more than “a lower
rudimentary middle class existence.” While the circuit court clearly assigned blame
for the parties’ dire economic situation to Tom, the divorce itself was granted on the
basis of irreconcilable differences. Based on these factors, we cannot conclude the
circuit court abused its discretion by ordering Tom to pay spousal support for 10
years following the sale of the home.
-21-
#27238
[¶39.] Although Tom argues that “having the [support] period run from an
undetermined point in the future (whenever the home sells) cannot be reasonably
justified[,]” he offers no authority for the conclusion that such an arrangement is
inherently unreasonable. In this case, such an arrangement only benefited him.
Neither the total amount Tom is required to pay, nor the total amount Annette
receives in support, is changed by this arrangement; the only difference is when
Tom is required to pay certain amounts. By delaying the start of the 10-year
period, the circuit court merely gave Tom the benefit of only having to pay $2,500
per month while the home was on the market rather than $3,500 per month. In
contrast, Annette receives no additional benefit from this arrangement. Although
she is permitted to live in the home prior to sale, she is deprived of the flexibility
that accompanies a cash payment of spousal support during that time. Tom can
hardly complain about such an arrangement. The circuit court has discretion to
“compel one party to make such suitable allowance to the other party for support
during the life of that other party or for a shorter period[.]” SDCL 25-4-41
(emphasis added). The circuit court did not abuse its discretion by ordering Tom to
pay spousal support for a period of 10 years following the sale of the parties’ home.
[¶40.] 8. Whether Annette should be awarded appellate
attorney fees.
[¶41.] Annette requested reimbursement of appellate attorney fees. SDCL
15-26A-87.3 permits us to grant appellate attorney fees “where such fees are
permissible at the trial level.” Grynberg Expl. Corp. v. Puckett, 2004 S.D. 77, ¶ 33,
682 N.W.2d 317, 324 (quoting Hentz v. City of Spearfish, Dep’t of Pub. Works, Office
of Planning & Zoning, 2002 S.D. 74, ¶ 13, 648 N.W.2d 338, 342). Therefore, “if
-22-
#27238
appropriate, in the interests of justice, [this Court] may award payment of
[appellate] attorneys’ fees in all cases of divorce, annulment of marriage,
determination of paternity, custody, visitation, separate maintenance, support, or
alimony.” SDCL 15-17-38. Here, not only does Tom receive more in the division of
marital property and debts, his income is substantially greater than Annette’s. As
noted above, the circuit court found that Tom’s expected income is between $96,000
and $120,000 per year, whereas Annette’s is only between $20,000 and $24,000 per
year. Therefore, we conclude that Tom should pay Annette’s appellate attorney fees
in the amount of $7,587.49.
Conclusion
[¶42.] We decline Tom’s invitation to alter the standards of review applicable
to this case. Whether the circuit court erred by not specifically stating that Tom’s
support obligation to Annette terminates in the event of Tom’s death is not ripe for
review. The circuit court was not required to assign 50% of the mortgage,
insurance, and property-tax payments to Annette, and we overrule Foley on this
issue. The court did not abuse its discretion in deciding that the interest-and-
penalties portion of the IRS tax lien is Tom’s nonmarital debt. Because Tom’s tax
payments are unlikely to ever benefit Annette, the circuit court did not abuse its
discretion by declining to give Tom a credit for half of each tax payment. The circuit
court did not abuse its discretion in ordering Tom to pay $1,000 in spousal support
to Annette each month for 10 years following the sale of the home. Finally, Tom
must pay Annette’s appellate attorney fees. We affirm.
[¶43.] ZINTER, SEVERSON, WILBUR, and KERN, Justices, concur.
-23-