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THE SUPREME COURT OF NEW HAMPSHIRE

___________________________

7th Circuit Court–Rochester Family Division

Nos. 2013-0411

 2014-0503

IN THE MATTER OF DIANA WOLTERS AND JOHN WOLTERS

Argued: April 9, 2015

Opinion Issued: September 15, 2015

Sulloway & Hollis, PLLC, of Concord (Patrick J. Sheehan on the brief and 

orally), for the petitioner.

Primmer Piper Eggleston & Cramer PC, of Manchester (Doreen F. Connor

on the brief and orally), for the respondent.

CONBOY, J. In these consolidated appeals, the petitioner, Diana

Wolters, and the respondent, John Wolters, appeal orders of the Circuit Court

in their divorce proceeding. The petitioner argues that the original trial judge

erred by denying her motion to recuse the trial judge and to vacate all orders 

issued by her, and erred by considering tax consequences when determining

the value of the parties’ property. The respondent contends that the 

subsequent trial judge erred by denying his motion to dismiss the petitioner’s 

motion to correct property distribution and by awarding a certain percentage of 

eminent domain litigation proceeds to the petitioner. The petitioner crossappeals, arguing that the court erred by not awarding her a greater percentage 

of the eminent domain litigation proceeds. We affirm in part, vacate in part,

and remand.
2

I. Motion to Recuse

The petitioner argues that the original Trial Judge (Sadler, J.) erred by 

not recusing herself earlier in the case and, later, by declining to vacate all 

prior orders issued by her. The respondent counters that the petitioner waived 

her recusal argument because she did not timely raise it, but that even if she 

did not waive this argument, there was no basis for recusal. Assuming, 

without deciding, that the petitioner did not waive her recusal argument, but

see Fam. Div. R. 1.10, we conclude that the original trial judge was not 

required to recuse herself from this case.

Following nine days of hearings, the original trial judge granted the 

parties a divorce based upon irreconcilable differences and issued a lengthy 

and detailed final order. Twelve days later, the petitioner requested that the 

judge recuse herself and vacate all prior orders. She argued that the judge was 

required to disclose that an attorney from the same law firm as the attorney 

representing the petitioner had signed a document on behalf of the judge’s 

former spouse in the judge’s separation action. She asserted that the judge’s 

failure to disclose this connection warranted disqualification under Rule 2.11 

of the Code of Judicial Conduct and required the judge to vacate all prior 

orders. See Sup. Ct. R. 38, Canon 2.11(A).

The judge denied the motion, stating that “she neither held any bias, lack 

of objectivity or lack of impartiality toward” the petitioner or her counsel, nor 

was there any evidence from an objective standpoint of bias or partiality. The 

judge did, however, recuse herself from any future proceedings. Following the 

judge’s recusal, the case was transferred to a Marital Master (Foley, M.). Upon 

reconsideration of the final divorce order, the marital master recommended, 

and the Circuit Court (Ashley, J.) approved, amendments to the final divorce 

decree that are not relevant to this appeal.

The petitioner argues that the original trial judge erred by not 

disqualifying herself at the inception of the case. The Code of Judicial Conduct 

requires a judge to disqualify herself in any proceeding in which the judge’s 

impartiality might reasonably be questioned, including but not limited to 

instances in which “[t]he judge has a personal bias or prejudice concerning a 

party or a party’s lawyer.” Sup. Ct. R. 38, Canon 2.11(A)(1). “The party 

claiming bias must show the existence of bias, the likelihood of bias, or an 

appearance of such bias that the judge is unable to hold the balance between 

vindicating the interests of the court and the interests of a party.” In the 

Matter of Tapply & Zukatis, 162 N.H. 285, 297 (2011) (quotation omitted). 

“The test for the appearance of partiality is an objective one, that is, whether an 

objective, disinterested observer, fully informed of the facts, would entertain 

significant doubt that justice would be done in the case.” Id. (quotation 

omitted).
3

Here, the petitioner argues that the judge’s impartiality could reasonably 

be questioned because when the judge “began hearing this case . . . her own 

divorce matter was still pending” and the judge’s former “spouse was 

represented at one point during the process by an attorney of the same firm 

representing [the petitioner] in this matter.” As a result, she contends that the 

judge should have initially disqualified herself from this case or, at a minimum, 

disclosed the potential conflict to the parties.

The petitioner, however, mischaracterizes the nature of the relationship 

between the trial judge’s former spouse and the attorney practicing in the same 

law firm as the petitioner’s attorney. Although the petitioner contends that the 

attorney “represented” the judge’s former spouse, it appears from the record 

that the attorney merely signed as a “[c]onsultant” for the judge’s former 

spouse on the uncontested final decree for separation. Beyond this one 

notation on the judge’s final separation decree, there is no evidence that the 

attorney participated in the judge’s separation proceedings or had any direct or 

indirect communication with the judge in that matter.

The petitioner contends that, because of the “human element, divorce 

and other family law cases can be notoriously contentious” and, “here, the trial 

judge’s own case was so close in time and the matter so personal to her as to 

make the appearance of conflict unavoidable.” We are not persuaded that the 

facts of this case would cause a reasonable person to question the judge’s 

impartiality. There is no evidence that the judge’s separation was “notoriously 

contentious.” Indeed, it appears that the judge and her former spouse filed a 

joint petition for legal separation and agreed upon the terms of the final decree. 

Cf. Rinden v. Marx, 116 N.H. 58, 60 (1976) (“[I]t can hardly be thought that a 

lawyer judge would entertain animosity toward a lawyer for bringing a suit.”). 

In addition, it appears that the judge’s uncontested final petition for separation 

was signed approximately seven months before the judge was assigned to this 

case. Moreover, the petitioner has not cited any facts, nor have we found

anything in the record, suggesting that the judge was personally biased against 

the petitioner or her attorney. See Tapply & Zukatis, 162 N.H. at 300 (finding 

nothing in the rulings of the court to suggest personal bias or partiality against 

party or party’s attorney where party and her attorney had filed grievances 

against judge and judge had noted that he was skeptical of the party’s claims).

Based upon these circumstances, we conclude that, objectively viewed, 

no reasonable person would question the judge’s partiality in this case. Thus, 

the trial court did not err by not initially recusing herself from this case.

Nonetheless, relying upon Blaisdell v. City of Rochester, 135 N.H. 589 

(1992), the petitioner maintains that, having failed to inform the parties of the 

potential conflict, the original trial judge should have “vacat[ed] any orders 

issued by her, as well as any subsequent orders.” We disagree. In Blaisdell, 

we cautioned that it is the judge’s responsibility to disclose, sua sponte, all 
4

information as to any potential conflict between herself and the parties or their 

attorneys when her impartiality might reasonably be questioned. Blaisdell, 135 

N.H. at 593. There, because we concluded that a judge improperly failed to 

recuse himself in an earlier case despite the “appearance of partiality [that] 

permeat[ed] the proceeding,” we vacated orders in two later cases based upon 

the “pervasive appearance of partiality in the original case.” Id. at 594. Here, 

however, we have found that the judge’s impartiality could not be reasonably 

questioned. Accordingly, our decision in Blaisdell has no application in this 

case, and we conclude that the trial judge did not err by declining to vacate all 

of her prior orders.

To the extent that the petitioner argues that the original trial judge erred 

by ruling upon her motion for reconsideration regarding the recusal issue after

the judge had recused herself from further proceedings, we decline to vacate 

her order denying that motion. As explained above, the original trial judge’s 

impartiality could not reasonably be questioned. Thus, even assuming that it 

was error for the judge to rule upon the petitioner’s motion for reconsideration, 

see Douglas v. Douglas, 143 N.H. 419, 428 (1999) (noting that “as a general 

rule, a trial judge who has recused himself [or herself] should take no other 

action in the case except the necessary ministerial acts to have the case 

transferred to another judge” (quotation omitted)), the error was harmless. See

McNair v. McNair, 151 N.H. 343, 354-55 (2004) (employing harmless error 

standard to determine whether judge’s order after recusal may stand).

II. Tax Liabilities/Consequences

The petitioner next argues that the trial court erred by reducing the value 

of some of the parties’ properties, which primarily consist of limited liability 

corporations, to account for potential taxes that would result from a sale or 

transfer of the properties. She maintains that, because the trial court neither 

ordered a sale or transfer of the properties nor had any evidence that the 

parties intended to sell or transfer the properties, the trial court’s consideration 

of such tax consequences constituted impermissible “speculation about a 

party’s future use of an asset” contrary to In the Matter of Telgener & Telgener, 

148 N.H. 190 (2002).

In a divorce proceeding, the trial court is given discretion in determining 

the value of any given asset, In the Matter of Chamberlin & Chamberlin, 155 

N.H. 13, 16 (2007), and “the equitable distribution of the marital estate,” 

Telgener, 148 N.H. at 191 (quotation omitted). Absent an unsustainable 

exercise of discretion, we will not overturn its decision in matters involving 

alimony and property distribution. Telgener, 148 N.H. at 191.

We begin by reviewing our decision in Telgener. In Telgener, the 

respondent argued that the trial court erred by failing to consider tax 

consequences when distributing the parties’ marital assets. Id. at 190. He 
5

maintained that he would be forced to incur substantial tax penalties as a 

result of the court’s distribution scheme. Id. at 191. He argued that the trial 

court committed legal error because it was aware that he desired to purchase a 

new home and was aware of the difficulty he would face in financing that

purchase, yet it failed to consider that to secure financing, he would be forced 

to liquidate some of his tax-deferred retirement accounts and incur substantial 

tax penalties. Id. Thus, the respondent contended that, because the trial 

court failed to consider these supposed reasonably foreseeable tax 

consequences, the distribution of marital property was unequal, inequitable, 

and injurious. Id. at 191-92.

In accord with the decisions of other courts, we held that, when valuing 

marital assets for the purpose of distribution, a trial court may consider 

potential tax consequences to the parties only if a taxable event, such as a sale 

or other transfer of property, is required by the property distribution, or is 

certain to occur shortly thereafter. Id. at 192. In contrast, where there is 

merely a likelihood or a possibility that a taxable event will occur, a court may 

not reduce the value of an asset by uncertain tax consequences. Id.

Because, in that case, the respondent’s testimony was insufficient to 

show that the tax liability was reasonably ascertainable, we ruled that 

consideration of a tax consequence would have been improper as it would have 

required the trial court to speculate regarding the respondent’s future dealings 

with his retirement funds. Id. at 193. We, therefore, concluded that, because 

the withdrawal of the retirement funds was neither required by the court’s 

order nor certain to occur within a short time after the divorce decree, the 

court did not err when it declined to reduce the value of the respondent’s 

retirement funds to account for tax consequences to the respondent of early 

withdrawal. Id.

In this case, in assigning a value to each of the parties’ marital assets, 

the trial court found that “tax debt due to the IRS in respect to the particular 

pieces of property is relevant to the overall value.” The court explained that

“[t]hese debts, according to the evidence[,] will not go away. If and when the 

properties are transferred to a third party the debt will be due and will remain 

an attachment to the properties until satisfied.” As a result, the court found

that “the debt for taxes has a bearing on the overall value of the properties and 

will be considered in respect to the property distribution.” The trial court then 

reduced the value of certain properties by such “tax debt” in its distribution of 

marital assets.

A review of the record indicates that the “tax debt” referred to by the trial 

court consists of taxes, including capital gains taxes, that would be due upon a 

sale or transfer of the property. At trial, the parties’ certified public 

accountant, called as a witness by the respondent, provided evidence as to the 

estimated potential tax liabilities resulting from a hypothetical sale or 
6

foreclosure of the properties. He prepared a spreadsheet depicting the parties’ 

deferred tax obligation with respect to the properties. He testified that, if the 

properties are separated “in kind,” there are deferred tax liabilities associated 

with certain properties that would remain with those properties and that the 

party who was awarded the property would be responsible for those taxes upon 

sale or any event that would cause the companies to be liquidated. He 

explained that he calculated the total potential “recapture tax on sale” of the 

properties based upon estimated tax rates for capital gains and depreciation 

recapture.

As in Telgener, however, the trial court’s order does not require a sale or 

liquidation of the parties’ properties or LLCs, nor does it appear from the record 

that a sale or liquidation was certain to occur within a short time after the 

divorce decree. Indeed, the respondent acknowledges, “If the Court ordered a 

liquidation, the foregoing taxes would have to be paid” but the court “did not 

order a liquidation forcing the payment of these taxes because liquidation 

[would leave] the parties insolvent.” The trial court itself stated that the debt 

will be due on the properties “[i]f and when the properties are transferred to a 

third party.” (Emphasis added.) The parties’ accountant testified that the 

estimated potential tax liabilities set forth on his spreadsheet constitute “an 

accounting of the taxes that will be paid if the properties are either sold or 

foreclosed upon” and agreed with the petitioner’s counsel that “these taxes are 

[not] currently owed.” Thus, to the extent that, in valuing the marital property 

for distribution, the trial court considered estimated tax liabilities of the parties 

due upon a future sale of the properties, it necessarily speculated as to the 

parties’ future dealings with the properties. This was error. See Telgener, 148

N.H. at 192-93; see also Schuman v. Schuman, 658 N.W.2d 30, 36-37 (Neb. 

2003) (concluding that trial court erred by considering tax consequences of sale 

of business in valuing marital property when “there was no evidence that the 

business was going to be sold in the near future”); In re Marriage of Hay, 907 

P.2d 334, 336 (Wash. Ct. App. 1995) (determining that trial court erred by 

considering “capital gains tax consequence[s] when valuing the parties’ interest 

in the real estate partnership” because sale was not imminent and did not 

directly arise from distribution of property).

Nonetheless, relying upon Rattee v. Rattee, 146 N.H. 44 (2001), the 

respondent contends that the trial court properly took into account accrued tax 

liabilities in determining the fair market value of the parties’ properties. Rattee

dealt with the valuation of stock in a closely held corporation. Rattee, 146 N.H. 

at 50. We held that the trial court did not err by applying a discount to the 

“fair value” of the parties’ shares in the company to arrive at their fair market 

value. Id. at 51 (quotation omitted). The respondent is correct that, in Rattee, 

we stated that the fact that an actual sale of the defendant’s interest in the 

company was not contemplated at the time of the final hearing was irrelevant 

to “the concept of the fair market value” of the stock in the corporation. Id. 
7

Because Rattee addressed an issue different from that addressed in Telgener, 

the holdings in the two cases do not conflict.

As we observed in Rattee, “[f]air market value is the price a willing buyer 

and a willing seller would probably arrive at through fair negotiations, taking 

into account all considerations that fairly might be brought forward and 

reasonably be given substantial weight in such bargaining.” Id. at 50 

(quotation omitted). Rattee necessarily involved consideration of the stock 

price a willing buyer and seller would agree upon. Id. By contrast, Telgener

involved the potential future tax consequences to the parties resulting from a 

sale or other disposition of the property. Telgener, 148 N.H. at 192-93. 

Although such potential tax consequences are relevant to the valuation of the 

property for distribution purposes if those consequences are the result of the 

court’s order or are certain to occur within a short time after the divorce 

decree, they are not relevant to the ascertainment of present fair market value 

of marital property. See Clark v. Clark, No. M2006-00934-COA-R3-CV, 2007 

WL 1462226, at *4 (Tenn. Ct. App. May 18, 2007) (“[T]he fair market value of a 

marital asset is separate and distinct from the tax implications of its sale.”); 

Johnson v. Johnson, 605 A.2d 857, 860 (Vt. 1992) (“[T]he tax status of assets 

in the hands of one of the parties should not affect their fair market valuation, 

unless the [divorce] decree necessitates their sale.”); Arbuckle v. Arbuckle, 470 

S.E.2d 146, 147, 148 (Va. Ct. App. 1996) (holding that trial court erred by 

discounting value of dental practice by estimated capital gains taxes “resulting 

from a hypothetical sale” because those consequences were too speculative to 

be considered, and, thus, not based upon present fair market value of 

property).

Thus, if the evidence establishes that potential future tax liability 

reasonably affects the fair market value of a marital asset — that is, the price 

that a willing buyer would pay a willing seller to purchase a particular asset —

the trial court may consider that liability in determining the present fair market 

value of the asset. However, the value of an asset may not be reduced to reflect 

the potential tax consequences to the parties resulting from the sale or transfer 

of the asset after distribution, unless the sale or transfer is required by the 

court’s order or is certain to occur shortly thereafter. Telgener, 148 N.H. at 

192-93; see Johnson, 605 A.2d at 860.

The respondent contends that Telgener is “factually and fundamentally 

distinguishable from this case [because] it involved unknown, speculative 

personal tax liabilities as opposed to ascertained and accrued commercial LLC 

tax debt.” The respondent maintains that our concern in adopting the rule in 

Telgener was with the speculative nature of the tax liabilities and, here, “[t]he 

amount of the [parties’] commercial LLC’s accrued and deferred tax debt was 

not speculative and it was verified by uncontested testimony as of the date of 

trial.”
8

This argument, however, fails to take into account that our holding in 

Telgener did not merely require that the amount of the potential taxes be 

reasonably ascertainable. We held that tax consequences to the parties may be 

considered only if a taxable event is required by the property distribution or is 

certain to occur shortly thereafter. Telgener, 148 N.H. at 192. Simply because 

there was evidence in this case of a reasonably ascertainable amount of 

potential tax liability does not, by itself, allow the trial court to consider such 

consequences in its distribution of marital property. As we explained in 

Telgener, “[c]onsideration of a tax consequence is precluded . . . when the trial 

court must speculate as to a party’s future dealing with the property.” Id. 

(emphasis added). This reasoning is in accord with the decisions of other 

courts. See Harmon v. Harmon, 962 A.2d 959, 962-63 (Me. 2009) (concluding 

that court did not err in not considering tax implications of selling marital 

property where wife had not expressed intent to sell property and court did not 

order sale of property); In re Marriage of Haberkern, 85 P.3d 743, 746-47 

(Mont. 2004) (concluding court abused its discretion by considering tax 

consequences when value of retirement account and tax laws at liquidation 

were unknown and court did not know when sale would occur); Conzemius v. 

Conzemius, 841 N.W.2d 716, 722-23 (N.D. 2014) (finding court did not err in 

not considering future tax consequences of property division because wife did 

not identify plans to retire or to withdraw funds from pension plan “within a 

short time” (quotation omitted)); Drumheller v. Drumheller, 972 A.2d 176, 191 

(Vt. 2009) (finding no error in court’s decision not to adjust value of properties 

by tax liabilities that would result upon sale because record did not 

demonstrate that husband would have to sell properties).

The respondent further contends that this case is akin to In the Matter of 

Thayer and Thayer, 146 N.H. 342 (2001), and maintains that “[i]n essence, the 

unpaid tax liability is an advance on the marital estate that the parties have 

already received” and, because “[b]oth parties had [the] benefit of the tax 

deferred income, . . . it would be grossly inequitable if only one party postdivorce was required to pay essentially all of the taxes that went unpaid during 

the parties’ decades of marriage.” Thayer, however, is distinguishable. Thayer

dealt with whether certain debt was properly deemed “family” debt subject to 

distribution as part of the marital estate. See Thayer, 146 N.H. at 346-47. 

Thus, unlike this case, Thayer did not involve consideration of potential future 

tax consequences to the parties resulting from the trial court’s distribution of 

the marital estate.

We conclude, therefore, that, because sale or transfer of the properties at 

issue was neither required by the trial court’s order, nor certain to occur within 

a short time after the divorce decree, the trial court erred to the extent that, 

when valuing the properties for distribution, it reduced the value of those 

properties to account for estimated taxes that would be due by the parties in 

the event of a sale or transfer of the properties. Accordingly, we vacate the trial 
9

court’s distribution order and remand for distribution of assets consistent with 

this opinion. 

III. Eminent Domain Litigation Proceeds

Finally, the respondent argues that the Circuit Court (Foley, J.) erred by 

denying his motion to dismiss the petitioner’s motion to correct property 

distribution, in which she sought to amend the property distribution to 

account for proceeds obtained from eminent domain litigation regarding one of 

the parties’ properties, and erred by thereafter reallocating the proceeds. In the 

final decree, the trial court found that the respondent had initiated an action 

contesting the amount of compensation received from the State of New 

Hampshire pursuant to an eminent domain action regarding one of the parties’ 

properties. Because the court found that the petitioner had little, if any, role in 

the litigation, the court awarded any net proceeds from the action to the 

respondent as “an offset of the difference in asset distribution between the 

parties.”

After the petitioner filed her appeal in this case, a jury returned a 

substantial verdict in the eminent domain litigation. The petitioner then moved 

for partial remand and to stay the appellate process, requesting that we 

remand the case to the trial court to amend the property distribution to 

account for the proceeds. We stayed the petitioner’s appeal and remanded to 

the trial court. Upon remand, the trial court found that “strict application” of 

the divorce decree would be inequitable and, therefore, it amended the property 

distribution by awarding 20 percent of the net proceeds from the eminent 

domain litigation to the petitioner and the balance to the respondent.

On appeal, the respondent argues that the petitioner failed to preserve 

her challenge to the award from the eminent domain litigation and, therefore, 

the trial court lacked jurisdiction to modify the property distribution. He 

further contends, however, that even if the court had jurisdiction, it erred by 

allocating 20 percent of the proceeds to the petitioner. The petitioner crossappeals, arguing that the trial court properly exercised its jurisdiction, but that 

it should have awarded her a greater percentage of the proceeds. Because we 

have vacated the trial court’s entire property distribution, we need not address 

these arguments at this juncture.

Affirmed in part; vacated 

in part; and remanded. 

DALIANIS, C.J., and LYNN and BASSETT, JJ., concurred.