NO. 95-215

IN THE SUPREME COURT OF THE STATE OF MONTANA

1996

APPEAL FROM: District Court of the Fourth Judicial District,

In and for the County of Missoula,

The Honorable John W. Larson, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Arthur D. Agnellino, Athens, Pennsylvania

For Respondent:

John H. Gilliam, Skjelset Law Offices, Missoula,

Montana

Filed:

Submitted on Briefs: February 8, 1996

Decided: March 21, 1996
Justice William E. Hunt, Sr. delivered the Opinion of the Court.

Pursuant to Section I, Paragraph 3(c), Montana Supreme Court

1995 Internal Operating Rules, the following decision shall not be

cited as precedent and shall be published by its filing as a public

document with the Clerk of this Court and by a report of its result

to State Reporter Publishing Company and West Publishing Company.

Appellant Donald A. Lassila (Donald) appeals the amended order

of the Fourth Judicial District Court, Missoula County, dissolving

his marriage to Respondent Barbara A. Lassila (Barbara) and

dividing their marital property.

Affirmed.

The following restated issued are presented on appeal:

1 . Did the District Court abuse its discretion in its

division of the parties' respective retirement benefits?

2 . Did the District Court abuse its discretion by not

granting Donald a set-off equal to part of Barbara's Montana

retirement benefits?

Donald and Barbara were married in 1958 and divorced in 1994.

Donald appealed the District Court's findings, conclusions, and

decree of dissolution to this Court after entry of the decree. We

previously remanded this case to the District Court for

clarification of its order, and reserved to the parties the right

to re-assert any alleged error following the issuance of the

District Court's amended order. On February 27, 1995, the District

Court issued its amended findings of fact, conclusions of law, and

order. Donald filed the instant appeal shortly thereafter.

2
During the parties' marriage, Donald worked for the United

States Forest Service and Barbara was employed as a teacher. In

1981, Barbara quit teaching and, against Donald's wishes, withdrew

her entire Montana retirement fund to start a small ice cream

business. The business failed about two years later, and Barbara

lost her entire investment. In 1990, after separating from Donald,

Barbara moved to Washington State and resumed teaching. At the

time of this appeal, she remains employed as a teacher in

Washington, while Donald continues to be employed by the Forest

Service here in Montana.

By the time he retires, Donald will have worked for the Forest

Service for more than thirty years and will receive benefits

accordingly. Barbara will receive no retirement benefits from the

State of Washington unless and until she works there as a teacher

for five years. After that, she will receive benefits commensurate

to the number of years worked.

In its amended decree, the District Court held that each party

would be entitled to half of that portion of the other party's

retirement benefits which accrued during the marriage. Donald

alleges this holding is erroneous because it places no present

value on the pension funds, but instead relies upon some

undetermined future value. He further alleges error in the

District Court's refusal to allow him a set-off equal to part of

Barbara's Montana retirement, which he claims she "dissipated" in

her small-business venture.

A district court's findings of fact regarding the division of

marital property will not be set aside unless clearly erroneous.

3
In re Marriage of Dewitt (Mont. 1995), 905 P..?,d 1084, 1087, 52

St.Rep. 1089, 1091 (citations omitted). If the district court's

judgment is supported by substantial credible evidence, it will not

be disturbed absent an abuse of discretion. In re Marriage of

Griffith (Mont. 1996) I - P.2d _, _, 53 St.Rep. 28, 30 (citing

In re Marriage of Maedje (1994), 263 Mont. 262, 868 P.2d 580).

Did the District Court abuse its discretion in its division of

the parties' respective retirement benefits?

In its amended order, the District Court set out the formula

by which the parties' retirement benefits are to be divided. The

District Court determined that each party would receive one-half of

that portion of the other's retirement benefits which was earned

during the marriage. In effect, the District Court gave each party

a percentage of the other's total retirement based on the amount of

benefits accrued during the time the parties were married. This is

the so-called "time rule" method of dividing a pension. See Rolfe

v. Rolfe (1988), 234 Mont. 294, 766 P.2d 223; In re Marriage of

Truax (1995), 271 Mont. 122, 894 P.2d 936.

Donald alleges this formula constitutes an abuse of discretion

because it gives no present value to either party's retirement

benefits, but instead is dependent on how much the retirement

benefits will be worth whenever the parties retire. He claims a

fixed present value is necessary because there is "great future

risk" that the retirement benefits of one party will not vest.

Generally, the proper test for determining the value of a

pension is present value. In re Marriage of Bowman (1987), 226

Mont. 99, 108, 734 P.2d 197, 203 (citing Kis v. Kis (1982), 196

4
Mont. 296, 639 P.2d 1151). However, a court may decline to

presently value a pension under certain circumstances, and instead

employ the "time rule" formula. The "time rule" is appropriately

used if the pension to be valued is subject to unknown

contingencies which makes present valuation impractical or

inequitable.

Curiously, Donald argues that the pensions in this case are

subject to various contingencies, and therefore the District Court

must give the pensions a present value. This directly contradicts

previous cases where we have held that the "time rule" valuation,

rather than present valuation, is appropriate if substantial

contingencies exist. ,Rolfe 766 P.2d at 226; Truax 894 P.2d at

938. Since Donald himself argues that the pensions are subject to

such contingencies, we find no error in the District Court's

employment of the "time rule" formula in valuing the pension funds.

The District Court set out a rational formula by which the benefits

are to be divided. Donald has failed to show that the employment

of this formula constitutes an abuse of the District Court's

discretion.

Did the District Court abuse its discretion by not granting

Donald a set-off equal to part of Barbara's Montana retirement

benefits?

In 1982, after numerous years working as a teacher in Montana,

Barbara retired. She then withdrew all her retirement benefits and

started a small ice cream store. The business subsequently failed

and Barbara lost her entire investment.

5
Section 40-4-202, MCA, lists the factors which a district

court must consider when dividing marital property. One such

factor is whether, and to what extent, a party has dissipated a

marital asset. Section 40-4-202, MCA. Donald argues that the

District Court should have found that Barbara dissipated her

retirement and that, had she not done so, Donald would have been

entitled to part of it. He contends that the District Court then

should have used the amount of the dissipated funds as a set-off

against whatever amount Donald may owe Barbara from his pension.

Although the District Court found that Barbara's Montana

pension had been "dissipated during the marriage," no specific

finding or conclusion indicates that the District Court used the

word "dissipated" to mean that Barbara had frittered the money

away. Indeed, from the testimony presented at the hearing, it is

uncontroverted that Barbara worked long hours to try to make the

business a going concern, albeit without success. Nothing

indicates that Barbara purposely wasted her retirement. There is

no reasonable basis for penalizing her now, more than ten years

later, for a business venture embarked on during the marriage.

Under similar circumstances, this Court refused to allow a set-off

because of such business losses:

[Flundamental legal principles of marital status

[indicate that1 spouses possess mutual powers,

obligations and interests which endure until lawfully

modified or terminated. One of those powers is the power

to freely contract with others regarding marital

property. Section 40-Z-301, MCA. Appellant may have

used poor judgment in his business transactions . .

however, he lawfully possessed that power. The record

does not indicate the respondent attempted to modify the

appellant's right to control and dispose of the property

6
as he did or that she claimed breach of fiduciary

obligation by the appellant.

In re Marriage of Lippert (1981), 192 Mont. 222, 227-28, 627 P.2d

1206, 1209. The Lippert rationale is directly on point to the case

at bar. It is also noteworthy that Donald and Barbara remained

married for six additional years following the business failure.

The task of the District Court is to divide the existing

marital estate at the time that the parties are separated or

divorced. Section 40-4-202, MCA. It is not the task of the

District Court to reach back through the years of the marriage and

attempt to divide assets which, for whatever reason, no longer

exist. It was not error for the District Court to refuse to do so.

The District Court has broad discretion to apportion the

marital estate in a manner which is equitable to each party under

the circumstances. In re Marriage of Binsfield (1995), 269 Mont.

336, 343, 888 P.2d 889, 893 (citation omitted). We find no abuse

of discretion in the District Court's apportionment of the marital

estate in this case. Accordingly, the decree is affirmed.

We Cog