#28104-a-SLZ 

2017 S.D. 70 

IN THE SUPREME COURT 

OF THE 

STATE OF SOUTH DAKOTA 

* * * * 

ADAM DUANE RICHARZ, Plaintiff and Appellant, 

 

v. 

DENA KAY RICHARZ, Defendant and Appellee. 

 

 

* * * * 

APPEAL FROM THE CIRCUIT COURT OF 

THE FIRST JUDICIAL CIRCUIT 

 MCCOOK COUNTY, SOUTH DAKOTA 

* * * * 

THE HONORABLE PATRICK T. SMITH 

Judge 

* * * * 

PATRICK T. DOUGHERTY of 

Dougherty & Dougherty, LLP 

Sioux Falls, South Dakota Attorneys for plaintiff and 

 appellant. 

VICTORIA M. DUEHR of 

Bangs, McCullen, Butler, 

 Foye & Simmons, LLP 

Sioux Falls, South Dakota Attorneys for defendant and 

appellee. 

* * * * 

CONSIDERED ON BRIEFS ON 

AUGUST 28, 2017 

 OPINION FILED 11/08/17
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ZINTER, Justice 

[¶1.] Adam and Dena Richarz were married in 2007 and obtained a divorce 

in 2016. In dividing their property, the circuit court awarded Adam his interest in 

an LLC, it required Adam to pay 25% of Dena’s student-loan debt, and it ordered 

Adam to make a cash-equalization payment. Adam appeals. We affirm. 

Facts and Procedural History 

[¶2.] Adam and Dena were childhood friends. They began dating in 2005 

before Dena’s senior year of high school. They became engaged in 2006, shortly 

after Dena began attending college. They were married in September 2007. 

[¶3.] Adam worked on his parents’ farm. He was paid a salary of $1,200 per 

month by G&L, Inc., a corporation owned by his mother. Before the marriage, 

Adam and his parents formed Richarz Properties, LLC. Adam contributed $50,000 

and his parents contributed $45,000. The contributions were used to purchase an 

8.51-acre parcel of land (the “Lauck land”) in McCook County. In 2008, the LLC 

purchased a 143.47-acre parcel of land referred to as the “Farrell land.” Although 

Adam initially had slightly more than a 50% interest in the LLC, he transferred 

approximately 2% of that interest to his father in 2011—leaving Adam with a 

48.63% interest. The transfer was in exchange for improvements made by Adam’s 

parents to the Lauck land. 

[¶4.] Dena continued her college education after getting married. She 

stayed with Adam during weekends, breaks, holidays, and summer vacations. 

When at home with Adam, Dena worked on the farm and in the household. After 

completing her undergraduate degree, Dena began applying to veterinary schools 
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and was eventually accepted at a school in Scotland. She moved to Scotland in 

August 2011 and graduated in July 2016. Adam stayed in South Dakota and 

continued to work for his parents at the farm. Dena accumulated $397,822 in 

student-loan debt during the marriage.1

[¶5.] Adam filed for divorce in December 2014. The parties agreed to a 

divorce on the grounds of irreconcilable differences. They proceeded to trial to 

divide the property. The primary disputes involved the division of Adam’s interest 

in the LLC and the responsibility for Dena’s student-loan debt. 

[¶6.] Adam and Dena retained experts to value the land and the LLC. 

Adam retained Tom Souvignier, a licensed real estate broker and real estate 

auctioneer, to value the land. Souvignier valued the Lauck land at $257,900 and 

the Farrell land at $665,000. Adam retained Jay Fullerton to value the LLC. Using 

Souvignier’s land values, Fullerton valued Adam’s interest in the LLC at $248,000, 

which included discounts for lack of marketability and lack of control. 

[¶7.] Dena retained Merle Miller, a licensed real estate broker and certified 

appraiser, to value the land. Miller valued the Lauck land at $210,0002 and the 

Farrell land at $1,004,250. Dena retained Ericka Heiser to value Adam’s interest in 

the LLC. Using Miller’s value of the Farrell land, Heiser valued Adam’s interest in 

the LLC at $595,000. Although Heiser testified she would apply lower discounts 

 

1. This amount was only that incurred for Dena’s education during the 

marriage. Loans for premarital education were not classified as marital debt. 

Under the property division, Dena was solely responsible for premaritaleducation loans. 

2. The parties agreed to utilize Miller’s appraisal of the Lauck land when 

valuing the LLC.
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than Fullerton, she was of the opinion that Adam’s interest should not be 

discounted at all. 

[¶8.] The circuit court classified three items of property as marital: an 

investment worth $211, a bank account worth $502, and Adam’s interest in the 

LLC. The court then adopted Miller’s valuation of the land and Heiser’s valuation 

of Adam’s interest in the LLC. The court valued Adam’s interest in the LLC at 

$595,000, but it subtracted the $50,000 that Adam had invested before the 

marriage. Adam was then awarded his interest in the LLC and the $211 

investment, for a total value of $545,211. Because the court determined that Dena 

should be awarded one-half the value of the marital assets, it awarded her the $502 

bank account, and it ordered Adam to make a cash-equalizing payment of 

$272,354.50. Finally, the court ordered that Dena would be responsible for paying 

her student loans but that Adam was allocated 25% of the responsibility 

($99,455.50) in addition to the cash-equalization payment. Thus, Dena was to 

receive cash in the amount of $371,810 ($272,354.50 plus $99,455.50). However, 

because Dena testified she would be satisfied with $303,000, the court reduced the 

equalization payment to that amount. 

[¶9.] Adam appeals, arguing the circuit court erred in valuing the Farrell 

land, valuing his interest in the LLC, awarding Dena one-half the value of the 

marital assets, and requiring him to pay 25% of Dena’s student-loan debt. Dena 

requests appellate attorney fees. 

 
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Decision 

Valuation of Adam’s LLC Interest

[¶10.] Adam argues the circuit court erred in valuing his interest in the LLC, 

which was primarily based on the value of real estate. “The valuation of property 

involved in a divorce proceeding will not be overturned unless it is clearly 

erroneous.” Hill v. Hill, 2009 S.D. 18, ¶ 14, 763 N.W.2d 818, 823. We will not 

disturb the circuit court’s valuation so long as it falls “within the range of evidence 

presented to the court.” Christians v. Christians, 2001 S.D. 142, ¶ 12, 637 N.W.2d 

377, 380. 

[¶11.] Adam contends the circuit court erroneously adopted Miller’s valuation 

of the Farrell land. Miller used a comparable sales approach involving three similar 

properties, including one sale he conducted. The similar properties sold from $6,625 

to $7,055 per acre. Based on the sale he conducted personally, which was located 

three and a half miles from the Farrell land, Miller testified that he believed he 

could have found a buyer who would have paid $7,100 per acre. Based on 

comparable sales, Miller valued the Farrell land at $7,000 per acre, for a total value 

of $1,004,250. 

[¶12.] Adam contends Miller’s belief that he could have sold the Farrell land 

for $7,100 per acre was speculative. Adam also contends Miller’s valuation failed to 

consider a decrease in commodity prices. However, the circuit court considered 

conflicting evidence from two qualified experts indicating that the land was worth 

between $665,000 and $1,004,250. The court found that Miller’s higher valuation 

was more persuasive not only because of Miller’s personal experience, but also 
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because his “report was more specific, his comparables closer in time and close in 

distance, and the most reliable comparable was within 4 miles, sold in 2016, and 

went for $7,100 per acre.” The court did not clearly err in adopting Miller’s 

valuation. 

[¶13.] With respect to the ultimate valuation of the LLC, Adam contends the 

court erred by failing to apply lack-of-control and lack-of-marketability discounts. 

Adam contends the court should have applied a lack-of-control discount because he 

did not have a majority interest. In his view, the court should have been bound by 

the literal language of the LLC’s operating agreement, which provided that 

managers were to act collectively and that their votes were dependent on units of 

ownership. However, the valuation process is not limited by such rigid rules. 

Instead, “the determination of whether to apply a minority discount depends upon 

the evidence presented in each case,” and the issue “must be dealt with by trial 

courts on a case-by-case basis.” Priebe v. Priebe, 1996 S.D. 136, ¶ 17, 556 N.W.2d 

78, 82. 

[¶14.] Here, the circuit court did not discount Adam’s interest for lack of 

control because it found that Adam was a manager who would likely be exercising 

full authority. The court was heavily persuaded by “the reality of the situation”: 

i.e., the LLC was a family LLC that Adam had always managed, and the court could 

not envision a scenario where Adam would not be the manager. The court also 

considered the fact that Adam had transferred enough of his interest to reduce his 

ownership interest to less than 50% with no legal obligation to do so. Based on all 
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the evidence in the record, the court did not clearly err in refusing to apply a 

minority discount. 

[¶15.] With respect to a lack-of-marketability discount, the court ruled that 

no discount would be applied because it would not be fair to discount the parties’ 

only significant asset that would likely never be sold. “Whether or not it is fair or 

appropriate to apply a discount in a divorce case where no immediate sale is 

contemplated is for the trial court to determine based upon the evidence of the 

case.” Fausch v. Fausch, 2005 S.D. 63, ¶ 10, 697 N.W.2d 748, 752-53. 

[¶16.] Dena’s expert testified that discounting Adam’s interest was not 

appropriate because it was unlikely a sale would ever occur. Therefore, discounting 

the value in the divorce division would mean that Dena would receive a discounted 

interest while Adam would retain the full benefit of an undiscounted interest.3 The 

circuit court also noted that had the parties remained married, both would have 

shared the benefit of the LLC’s income.4 Ultimately, the court reasoned that 

discounting the value would not impact Adam, who would always have the full 

value of his interest, but would “unfairly undervalue Dena’s share of the marital 

estate.” The court did not clearly err in valuing Adam’s interest without a lack-ofmarketability discount. 

 

3. Adam’s expert stated that he used a “cash in three days” standard to 

determine whether a marketability discount should be applied to an illiquid 

asset. The circuit court rejected this standard as “unrealistic” when valuing a 

business asset in a divorce with a primary value in real estate as opposed to 

stocks and bonds. 

4. The evidence indicated that the LLC was close to paying off all its debt, after 

which point it would be generating a profit.
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Division of Property

[¶17.] Adam argues the circuit court abused its discretion in awarding Dena 

one-half the value of the marital assets, which was primarily composed of his 

interest in the LLC.5 Based on the bankruptcy code’s definition of a “farm 

operation,” Adam claims the court erred in finding that Dena significantly 

contributed to the parties’ “farm operation” because he did not run a “farm 

operation” under that definition. However, the label used by the court in describing 

the LLC’s business is not determinative in dividing the marital estate. Moreover, 

Adam has not appealed the court’s decision to include his interest in the LLC as 

marital property. 

[¶18.] When making an equitable division of property, the circuit court “is not 

bound by any mathematical formula but shall make such award from the material 

factors before it, having due regard for equity and the circumstances of the parties.” 

Priebe, 1996 S.D. 136, ¶ 11, 556 N.W.2d at 81. In deciding to award Dena one-half 

the value of the marital assets, the court noted that part of the reason Dena 

pursued a veterinarian degree was to benefit the family farm by taking care of their 

livestock operation. The court also noted that Dena helped on the farm whenever 

she returned home. Ultimately, the court gave due regard to the parties’ individual 

circumstances. It found that both Adam and Dena had similar earning capacities 

but that Adam’s interest in the LLC was “a significant asset to fall back on if he 

becomes incapacitated or is otherwise rendered unable to meet his financial 

 

5. We review the circuit court’s division of property for an abuse of discretion. 

Johnson v. Johnson, 2007 S.D. 56, ¶ 16, 734 N.W.2d 801, 806.
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obligations.” Dena had no similar asset other than her veterinarian degree. The 

court properly considered the circumstances of the parties, and we cannot say that 

the court abused its discretion in awarding Dena the value of one half of the marital 

assets. 

Student Loans

[¶19.] Adam argues the circuit court abused its discretion in making Adam 

responsible for 25% of Dena’s student-loan debt. He contends he should not be 

responsible for any of the loans because none of the proceeds were used for “family 

purposes.” He also points out that he will not share in Dena’s future income from 

being a veterinarian. 

[¶20.] Although an educational degree is not property subject to division, 

Wehrkamp v. Wehrkamp, 357 N.W.2d 264, 266 (S.D. 1984), student-loan debt may 

be included in, and allocated as, a part of the marital estate. See Hill, 2009 S.D. 18, 

¶¶ 16-17, 763 N.W.2d at 824. Here, the circuit court acknowledged that Dena will 

be the only one to ever benefit from the proceeds of her degree. Therefore, it 

ordered that Dena would be responsible for most of the debt. The court made Adam 

responsible for a small portion of the debt because Adam and Dena entered into the 

marriage—and Dena attended school each year—with the understanding that they 

would incur this debt and that Dena’s degree would be used to benefit the farm. We 

also note that Adam’s ultimate responsibility became much less than the 25% 

initially assigned by the court. The court initially ordered Adam to make a cashequalizing payment of $272,354.50. If Adam had been required to pay the full 25% 

of Dena’s loans—$99,450—he would have been required to pay Dena a cash-
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equalization payment of $371,804.50 ($272,354.50 plus $99,450). However, Dena 

agreed to a payment of $303,000. Therefore, Adam was actually ordered to pay only 

$30,645.50 ($303,000 minus $272,354.50)—or 7.7%—of Dena’s student loans. The 

circuit court did not abuse its discretion in assigning Adam a small part of Dena’s 

student loans. 

[¶21.] We affirm the circuit court’s judgment, and we deny Dena’s request for 

appellate attorney fees. 

[¶22.] GILBERTSON, Chief Justice, and SEVERSON and KERN, Justices, 

and WILBUR, Retired Justice, concur. 

[¶23.] JENSEN, Justice, not having been a member of the Court at the time 

this action was submitted to the Court, did not participate.