Opinion ID: 1147555
Heading Depth: 1
Heading Rank: 2

Heading: Tomie Sue's Appeal

Text: Tomie Sue argues that the district court erred when it granted Dr. Ford's Motion to Reopen Trial for the limited purpose of hearing additional testimony concerning the valuation of the Sierra Management stock and the award of rehabilitative alimony. Specifically, she contends that the value of the stock was a matter of stipulation and agreement between the parties, and that the district court based its order to reopen the proceedings upon facts which occurred subsequent to trial rather than newly discovered evidence. [2] However, the decision to reopen a case for the introduction of additional evidence is within the sound discretion of the trial court. Andolino v. State of Nevada, 99 Nev. 346, 351, 662 P.2d 631, 634 (1983). In order that justice be done, district courts should freely grant leave to amend and reopen. Id. When an essential element of a party's case can be easily and readily established by reopening the case, refusal to reopen will most often constitute an abuse of discretion. Id. In the instant case, after the close of testimony but before the entry of judgment, Tomie Sue sold the Sierra Management stock for $600,000, $200,000 more than the value given to that community property at trial. Since the purpose of the trial was to devise an equitable distribution of the marital property and fair provisions for spousal and child support, the trial court served the interests of justice by reopening the case. Id. In its order granting Dr. Ford's motion to reopen the case, the district court agreed to consider only whether, in light of the sale of the Sierra Management stock, an award of alimony or attorneys' fees to Tomie Sue was still appropriate. The district court refused to hear evidence regarding the impact of the stock sale on Tomie Sue's financial status, specifically, the $133,000 tax liability which she incurred as a result of the sale. [3] Tomie Sue contends that the court's refusal to hear this evidence was error. We believe that her contention has merit. In the instant case, Tomie Sue presented evidence of the $133,000 capital gains tax bill which she incurred as a result of the stock sale. Courts can consider potential tax liability when valuing marital assets when a taxable event has occurred as a result of the divorce or equitable distribution of property, or is certain to occur within a time frame so that the trial court may reasonably predict the tax liability. Hovis v. Hovis, 518 Pa. 137, 541 A.2d 1378, 1380-1381 (1988). When dividing community property, trial courts must consider tax consequences when, as in the case at hand, there is proof of an immediate and specific tax liability. In re Marriage of Clark, 80 Cal. App.3d 417, 145 Cal. Rptr. 602, 606 (1978). Accordingly, in this case, we hold that the district court erred by refusing to consider the tax consequences when it reopened the trial to hear testimony concerning the sale of the stock. Id. The district court assumed that Tomie Sue would earn $18,000 in interest annually on the $200,000 received in excess of the stipulated value of the Sierra Management stock. Because of this increased cash flow to Tomie Sue, the court held that any further award of alimony was unnecessary. Tomie Sue argues that the district court erred when it terminated her remaining monthly alimony payments of $2,500. We agree. There are limits to the district court's discretion in awarding or refusing to award alimony. Forrest v. Forrest, 99 Nev. 602, 606, 668 P.2d 275, 278 (1983). In Buchanan v. Buchanan, 90 Nev. 209, 215, 523 P.2d 1, 5 (1974), this court provided an inexhaustive list of factors, such as the financial condition of the parties, which the district court should consider when making its alimony determination. Moreover, when making decisions involving alimony and property distribution, trial courts must form judgments as to what is just and equitable, giving regard to the respective merits of the parties and to the condition in which they will be left by divorce. Heim v. Heim, 104 Nev. 605, 609-610, 763 P.2d 678, 680-681 (1988). In the case at hand, the district court made its decision to terminate the alimony based on the $200,000 windfall which Tomie Sue received from the sale of the Sierra Management stock. The court apparently did not consider (1) that interest income on the proceeds would be reduced because of capital gains taxes owed as a result of the sale, and (2) that payment for the stock would be by installments extending over a period of ten years. Nevertheless, the district court expected this income to make up for Tomie Sue's lost alimony. Thus, the court failed to look at the overall justice and equity of its decision and abused its discretion by cancelling the alimony without considering the tax implications of the stock sale. Because of the stock sale, the district court also rescinded its original award of $25,000 in attorneys' fees to Tomie Sue. We agree with Tomie Sue's argument that the rescission of attorneys' fees was error. The decision whether to award attorneys' fees to either party in a divorce action lies within the sound discretion of the district court. Hybarger v. Hybarger, 103 Nev. 255, 259, 737 P.2d 889, 892 (1987). However, as discussed above, without considering the tax consequences of the stock sale, the district court used Tomie Sue's $200,000 windfall to justify its decision to rescind Tomie Sue's award of $25,000 in attorneys' fees. Accordingly, the district court also abused its discretion when it abrogated the award of attorneys' fees. Heim, 104 Nev. at 609-610, 763 P.2d at 680-681.