DA 10-0355

IN THE SUPREME COURT OF THE STATE OF MONTANA

2011 MT 63

IN RE THE MARRIAGE OF:

JENNY L. WILLIAMS,

 Petitioner and Appellant,

 and

BOBBY L. WILLIAMS,

 Respondent and Appellee.

APPEAL FROM: District Court of the Thirteenth Judicial District,

In and For the County of Yellowstone, Cause No. DR 04-1205

Honorable G. Todd Baugh, Presiding Judge

COUNSEL OF RECORD:

For Appellant:

Mark D. Parker; Parker, Heitz & Cosgrove, PLLC, Billings, Montana

For Appellee:

Stephen C. Mackey; Towe, Ball, Enright, Mackey & Sommerfeld, PLLP, 

Billings, Montana

Submitted on Briefs: March 2, 2011

 Decided: April 5, 2011

Filed:

__________________________________________

Clerk

April 5 2011
2

Justice Brian Morris delivered the Opinion of the Court.

¶1 Jenny L. Williams (Jenny) appeals from an order entered in the Thirteenth Judicial 

District, Yellowstone County, that awarded child support and distributed the marital estate of 

her former marriage to Bobby L. Williams (Bobby). The District Court’s order followed this 

Court’s remand in In re Marriage of Williams, 2009 MT 282, 352 Mont. 198, 217 P.3d 67 

(Williams I). We affirm in part, reverse in part, and remand for further proceedings 

consistent with this opinion and Williams I.

¶2 We review the following issues on appeal:

¶3 Did the District Court correctly deny Jenny’s motion for a substitution of judge after 

this Court remanded for further proceedings in Williams I?

¶4 Did the District Court correctly omit Bobby’s income from B&J Properties for the 

calculation of child support based on its conclusion that the omitted income never had been 

used to enhance the children’s standard of living? 

¶5 Did the District Court correctly permit an alternative payment method that allows

Bobby to defer payment until 2024 or 2025 when § 40-4-202, MCA, requires a final, 

equitable apportionment?

FACTUAL AND PROCEDURAL BACKGROUND

¶6 This Court heard the appeal of the District Court’s initial distribution of the 

Williams’s marital estate and award of child support in Williams I. We identified three 

incorrect conclusions of the District Court and remanded for further proceedings by the 

District Court. Williams I, ¶ 47. The District Court did not allow the parties to submit 
3

additional trial testimony on remand. The District Court issued its “order pursuant to 

remand” on July 15, 2010. 

¶7 We issued our decision in Williams I on August 25, 2009. The case returned to 

Department 5, the Honorable G. Todd Baugh, who has proceeded over the Williams’s

dissolution since Jenny filed her petition in 2004. Jenny moved to substitute Judge Baugh. 

Bobby objected. Bobby argued that no right for substitution under § 3-1-804(12), MCA, 

existed because this Court had not remanded for a new trial. Jenny argued that the remand 

required a new trial and entitled her to the substitution. Judge Baugh agreed with Bobby and 

concluded that Jenny had not asked for a new trial on appeal, that our remand did not require 

a new trial, and that only he could reconsider apportionment based on the evidence in the 

record. Judge Baugh interpreted the remand to require a mathematical recalculation based 

on the existing record. Judge Baugh ordered that the matter be reassigned to his department. 

 

¶8 The parties agreed that remand in Williams I required consideration of three issues. 

The first issue involved the erroneous double deduction of $67,706 that Jenny had withdrawn 

from a retirement account. The court corrected the matter and neither party appeals the 

correction. The second remanded issue required a recalculation of Bobby’s child support 

obligation and directed the court to use Bobby’s tax returns, B&J Properties’ (B&J) financial 

statements, and any other relevant information to determine objectively Bobby’s income for 

child support purposes. Williams I, ¶ 33. The third remanded issue required the court to 

exercise its broad discretion and equitably reapportion the Williams’s marital estate. Id. at 
4

¶ 46. We specifically directed the court to reapportion the estate by including the entire 

value of Bobby’s interest in the marital portion of B&J, a closely-held corporation that 

Bobby co-owns with his father. Id. at ¶ 40.

¶9 Both parties briefed the issues on remand and the court heard arguments on February 

19, 2010. The parties changed their positions regarding the need for the court to consider 

additional evidence from their positions during the substitution of judge proceedings. Jenny 

argued that no new evidence could be taken in light of the court’s order that the remand did 

not require a new trial. Bobby argued that the financial position of the parties had changed 

substantially and that equitable apportionment pursuant to the factors in § 40-4-202, MCA, 

required consideration of additional evidence, including increases in Jenny’s income and 

financial hardship experienced by Bobby. The court declined to take additional evidence and 

issued its order based on the existing record.

¶10 The court concluded that Bobby’s income from B&J had not been used to increase the 

family’s standard of living and ordered that Bobby’s child support obligation was to remain 

at $1,000 per month. The court also concluded that Bobby owed Jenny an additional 

$117,633 for her interest in B&J. The court ordered the $117,633 to be paid with or without 

interest in any manner agreed upon by the parties. If the parties could not agree on payment, 

the court provided an alternative payment arrangement. The alternative allowed Bobby to 

pay Jenny 7% of his interest in B&J in 2024 or 2025. The alternative additionally required 

that Bobby pay Jenny 7% of any dividends or transfers of money or assets received from 
5

B&J before 2024 or 2025. Jenny appeals the District Court’s decisions regarding 

substitution, child support, and the alternative payment arrangement.

STANDARD OF REVIEW

¶11 A district court’s determination whether to substitute a judge presents a question of 

law. In re Marriage of Toavs, 2002 MT 230, ¶ 15, 311 Mont. 455, 56 P.3d 356. We review 

a district court’s distribution of marital property and child support award to determine 

whether the court’s findings of fact are clearly erroneous. Williams I, ¶ 14. We review for 

correctness a district court’s conclusions of law. Id.

¶12 Did the District Court correctly deny Jenny’s motion for a substitution of judge after 

this Court remanded for further proceedings in Williams I?

¶13 Section 3-1-804(12), MCA, entitles each party to one motion for substitution of 

district judge if this Court reverses or modifies a judgment on appeal and remands to the 

district court for a new trial. Jenny requested on appeal in Williams I that we not remand for 

a new trial because she “would be better off with no relief than an expensive, drawn-out, 

completely new trial on all of the issues” and that “[t]he record supports all of the relief 

Jenny requires without the necessity of a new trial on all issues.” We directed “the District 

Court to re-calculate Bobby’s child support obligation and reapportion the Williams’s entire 

marital estate.” Williams I, ¶ 46. We directed the District Court to use tax returns, financial 

statements, and any other relevant information to determine objectively Bobby’s income for 

child support purposes. Id. at ¶ 33. We recognized that our decision likely affected the 
6

equitable factors considered by the court and directed the court to “exercise its ‘broad 

discretion’ to apportion equitably the estate” consistent with the opinion. Id. at ¶ 46. 

¶14 We agree with the District Court that we did not remand for a new trial. We 

remanded for “further proceedings” in Williams I, not for a new trial. Id. at ¶ 47. The 

Williams’s dissolution proceedings began in 2004. The trial took eight days and extended 

over six months. The parties did not appeal many of the issues tried and decided in that trial. 

We also affirmed the court’s conclusion regarding maintenance that Bobby raised in 

Williams I. Id. at ¶ 24. We did not contemplate or indicate in Williams I that all the issues 

should be retried. 

¶15 We specifically remanded for a reconsideration, recalculation, and reapportionment of 

the three issues where we reversed the court’s conclusions. Judge Baugh sat in the best 

position to recalculate Bobby’s child support obligation and reapportion the marital estate on 

the existing record without retrying the entire case. We directed the court to use its 

discretion to consider the equitable factors in reapportioning the marital estate. The District 

Court concluded that it did not need additional evidence to reapportion the Williams’s 

marital estate and recalculate the child support payments in a manner consistent with 

Williams I. The court correctly concluded that Williams I did not require a new trial and that 

it sat in the best position to reconsider the evidence, recalculate child support payments, and 

reapportion the estate on the existing record. 
7

¶16 Did the District Court correctly omit Bobby’s income from B&J Properties for the 

calculation of child support based on its conclusion that the omitted income never had been 

used to enhance the children’s standard of living? 

¶17 The District Court in Williams I had determined that Bobby earned $110,000 per year 

for purposes of child support calculations. The court ordered Bobby to pay child support in 

the total amount of $1,000 per month for his three children based on the $110,000 income. 

The court’s $110,000 determination omitted additional income that Bobby earned from B&J. 

Had the District Court included the income from B&J, Bobby’s annual income would have 

increased by about $200,000 per year and his monthly child support payments would have 

increased to about $5,500. We concluded in Williams I that the District Court incorrectly 

omitted Bobby’s income from B&J for the calculation of child support. We remanded for 

the District Court to determine objectively Bobby’s income for child support purposes based 

on Bobby’s tax returns, B&J’s financial statements, and other relevant information. 

Williams I, ¶ 33. 

¶18 Section 40-4-204(3)(a), MCA, requires the court to determine the child support 

obligation according to the uniform child support guidelines and the standards in § 40-4-204, 

MCA. “The guidelines must be used in all cases.” Section 40-4-204(3)(a), MCA. The 

Department of Health and Human Services has established uniform child support guidelines. 

Admin. R. M. 37.62.101 to 37.62.148. The guidelines define applicable terms, Admin. R. 

M. 37.62.103; explain how to determine income, Admin. R. M. 37.62.106; provide for the 

allowable and non-allowable deductions, Admin. R. M. 37.62.110 to 37.62.111; establish 
8

percentages to be used for standard of living provisions, Admin. R. M. 37.62.128; and 

provide guidance in several other areas. The guidelines create a uniform system to be used 

across the state and prevent litigants from seeking dissolutions in a forum believed to order 

greater or lesser child support obligations. The Department of Health and Human Services 

has developed a child support determination worksheet that must be used in all child support 

determinations under the guidelines. Admin. R. M. 37.62.148.

¶19 Both Bobby and Jenny completed and filed the child support determination 

worksheet. Jenny calculated Bobby’s income according to his reported average income on 

his 2004-2006 tax returns. She calculated that Bobby’s income equaled $267,868 and 

resulted in a child support obligation of $5,570 per month total for the three children of the 

marriage. Bobby presented his annual income to be $110,000, obligating him to pay child 

support in the total amount of $11,442 per year. The difference between Jenny’s and 

Bobby’s calculations resulted from Bobby’s continued omission of his reportable income 

from B&J. 

¶20 We already have determined that the income that Bobby receives from B&J 

constitutes actual income for child support purposes. Williams I, ¶¶ 31-33. Admin. R. M. 

37.62.106 guides the determination of income for child support. Id. at ¶ 28. Income 

includes actual income, imputed income, or any combination thereof that fairly reflects a 

parent’s resources available for child support. Admin. R. M. 37.62.106(1). Actual income 

includes “economic benefit from whatever source derived,” including, but not limited to, 

income from salaries, wages, earnings, profits, dividends, pensions, interest, trust income, 
9

and annuities. Admin. R. M. 37.62.106(2)(a). Actual income also includes “gross receipts 

minus reasonable ordinary and necessary expenses” for parents who receive income or 

benefits from an ownership interest in a business. Admin. R. M. 37.62.106(2)(b). 

¶21 The District Court acknowledged that the income from B&J constituted an economic 

benefit to Bobby that must be included as income for child support. The court again decided 

to omit Bobby’s income from B&J and reinstated the $1,000 per month child support 

obligation. The court reasoned that Bobby did not use his income from B&J to “add to the 

standard of living” of the children because B&J did not pay out dividends regularly. The 

court concluded that $1,000 per month met the children’s needs and preserved their standard 

of living. The court’s reasoning ignores the fact that Bobby used B&J funds to subsidize his 

standard of living by paying for an airplane, the airplane’s service, his pilot license, a 

condominium in Arizona, and by paying down company debt that increased Bobby’s 

personal worth. Williams I, ¶¶ 31, 40. We fail to see how the court could reason that Bobby 

had not used B&J income to “add to the standard of living of the parents or the children.” 

¶22 Admin. R. M. 37.62.106 requires that the actual income of a parent fairly reflect the 

parent’s resources available for child support. Bobby argues that the B&J income does not 

constitute available income for child support payments. The District Court likened the 

operation of B&J to a retirement account. B&J uses its profits to pay down its debts, build 

up its equity, and save on interest. This practice increases Bobby’s net worth by about 

$200,000 per year. We already have rejected the argument that Bobby’s income from B&J 

constitutes mere overstated taxable income. Williams I, ¶¶ 31-33. The income constitutes
10

actual disposable income subject to inclusion in the child support calculation. Id. If Bobby 

can build up his value in B&J like a “retirement account,” he can use the income to pay child 

support. We pointed out in Williams I that Bobby owns a 50% interest with his father and 

historically has chosen to spend B&J’s income on items other than dividends, including a 

private plane, condominium, and debt. Id. Retirement accounts normally do not allow a 

person to withdraw funds without penalty to be used to purchase airplanes, condominiums, 

and pay down corporate debt.

¶23 We reverse the District Court’s decision to depart from the child support guidelines. 

The child support guidelines give guidance for uniform standard of living provisions. 

Admin. R. M. 37.62.128. The child support guidelines “must be used in all cases.” Section 

40-4-204(3)(a), MCA. The guidelines provide no exception for income because the income 

cannot be traced to an increase in the children’s standard of living. The principle that parents 

have the first priority to meet the needs of their children according to their financial ability 

underlies the child support guidelines. Admin. R. M. 37.62.101(2). A child’s standard of 

living should not be affected adversely because the parents decide to dissolve their marriage. 

Id. The court shall recalculate Bobby’s child support obligation pursuant to the child support 

guidelines and based on Bobby’s actual income as determined by Admin. R. M. 37.62.106.

¶24 Did the District Court correctly permit an alternative payment method that allows

Bobby to defer payment until 2024 or 2025 when § 40-4-202, MCA, requires a final, 

equitable apportionment?
11

¶25 Section 40-4-202(1), MCA, requires that the court shall “finally equitably apportion 

between the parties the property and assets belonging to either or both.” Jenny argues that 

the court’s conclusion that Bobby could withhold payment of her interest in B&J until 2024 

or 2025 does not comply with the statute’s finality requirement. Bobby responds that the 

court did not abuse its discretion because the awarded value of B&J was “locked up” and 

could not be presently paid. We agree with Jenny that postponing payment until 2024 or 

2025 does not provide the parties with the finality required by the statute. 

¶26 Absent unique circumstances, the marital estate should be valued at or near the time 

of dissolution. In re Marriage of Lopez, 255 Mont. 238, 244, 841 P.2d 1122, 1125 (1992). 

This Court has recognized a limited exception in cases where the nature of the assets or the 

course of conduct by the parties required appraisal at an earlier time than at formal legal 

dissolution. Id., 841 P.2d at 1125. The Court has concluded that the date of separation can 

be used as the appraisal date when one spouse accrued significant wealth and the other 

accrued significant debts after the parties had separated but before formal dissolution. In re 

Marriage of Wagner, 208 Mont. 369, 380, 679 P.2d 753, 758-59 (1984); In re Marriage of 

Gebhardt, 240 Mont. 165, 169-70, 783 P.2d 400, 402-03 (1989). The limited exception did 

not apply, however, to a wife’s student loans accrued after separation, but before dissolution, 

when the wife began attending school after a no-fault termination from her job. In re 

Marriage of Lopez, 255 Mont. at 244, 841 P.2d at 1125.

¶27 The unique circumstances of cases such as Wagner and Gebhardt justified an earlier 

appraisal date than at the time of formal dissolution. The parties have not cited any cases 
12

that support allowing the appraisal to occur at a future date. The parties also have not 

presented any special factual circumstances that justify a future appraisal. The court had 

sufficient information before it to evaluate the present value of B&J and determine that 

Jenny’s share equaled $117,633. No reason exists to justify postponing payment of Jenny’s 

share until 2024 or 2025. Payment would provide finality to the parties as the statute 

requires. Section 40-4-202(1), MCA.

¶28 Jenny does not challenge the District Court’s determination that her interest in B&J 

equals $117,633. Neither party argues that the court’s order to pay $117,633 affects the 

equitable distribution of the marital estate. We agree with Bobby that interest began 

accruing when the court established an ascertainable amount owed to Jenny in its order 

pursuant to remand. In re Marriage of Gerhart, 245 Mont. 279, 284, 800 P.2d 698, 701 

(1990). The District Court shall enter judgment for $117,633 to be paid to Jenny 

immediately, together with interest from July 14, 2010, at 10% per annum. 

CONCLUSION

¶29 We affirm the District Court’s conclusion that our opinion in Williams I did not order 

a new trial and entitle Jenny to a substitution of judges. We reverse the court’s reinstatement 

of the $1,000 child support obligation and remand for recalculation of Bobby’s child support 

obligation. We strike the court’s alternative arrangement for payment of Jenny’s property 

interest in B&J and direct the court to enter judgment as set forth in ¶ 28.

/S/ BRIAN MORRIS
13

We Concur:

/S/ MIKE McGRATH

/S/ JAMES C. NELSON

/S/ BETH BAKER

/S/ MICHAEL E WHEAT