Court Opinion

ID: 9513923
Source: CourtListenerOpinion
Date Created: 2023-08-06 22:42:20.663369+00
Date Added: 2024-06-11T09:06:06.188087
License: Public Domain

MARING, Justice,
concurring in part and dissenting in part.
[¶ 40] I concur in part IV and, respectfully, dissent to parts II and III of the majority opinion. I believe the trial court clearly erred in dividing the parties’ marital estate and failing to award Rhonda Lorenz spousal support. Therefore, I would reverse and remand for the trial court to reconsider the division of the marital estate, including division of the debt, Mark Lorenz’s military retirement pension, and an award of spousal support.
[¶ 41] “Courts generally start with the view that marital property should be divided equally, and although the division need not be exactly equal to be equitable, the trial court must explain any substantial disparity.” Brandner v. Brandner, 2005 ND 111, ¶ 7, 698 N.W.2d 259. An explanation must be sufficient to understand the trial court’s rationale for the substantial disparity. See Ulsaker v. White, 2006 ND 133, ¶ 18, 717 N.W.2d 567.
[¶ 42] The majority concludes the trial court did not clearly err in its division of the marital debt even though the trial court mischaracterized the nature of Rhonda Lorenz’s agreement to pay her student loan debt. The trial court held:
The court allocated the student loan debt to Rhonda Lorenz after finding she agreed at trial to be responsible for the student loans and the first mortgage on the home. (Emphasis added.)
[¶ 43] However, on direct examination during the divorce trial, Rhonda Lorenz testified that she would take her student loans and the first mortgage provided she was awarded the home in Minot and provided she was awarded spousal support from Mark Lorenz at $2,000 per month for one year.
[¶ 44] Rhonda Lorenz testified that she would be required to start paying back her student loans at the rate of $1,900 per month in August 2005. Based on this testimony, the trial court, in its October 21, 2005, findings and order for judgment, found: “The parties have accumulated significant debt totaling some $448,649.1 Of *703this total debt, $250,000 is Rhonda Lorenz’s medical school loans, which Rhonda Lorenz has agreed it’s equitable that this debt should be apportioned to her. The Court concurs.” The trial court did mis-characterize Rhonda Lorenz’s testimony to mean she was willing to be responsible for the entire medical school loan debt without assistance from Mark Lorenz. Rhonda Lorenz’s willingness to be responsible for the medical school loan debt was clearly based on her belief that Mark Lorenz would provide spousal support until her expected earning potential from the medical education began. I do agree that this mischaracterization of Rhonda Lorenz’s testimony does not make the trial court’s allocation of the student loan debt to her clearly erroneous. However, having made this decision, the trial court failed to adequately explain the huge disparity in its division of the remaining marital estate. Even without consideration of the medical school debt of $250,000, the remaining net equity assigned to Mark Lorenz is $30,712 {plus a pension of undetermined value), while Rhonda Lorenz received a negative $15,221 (plus $2,000 per year for five years with no interest). This unexplained disparity results from the disproportionate allocation of the remaining debt.
[¶ 45] “All assets, whether separately obtained or inherited property, are to be considered part of the marital estate. When all of the assets and debts have been included, the district court is to apply the Ruff-Fischer guidelines for an equitable distribution of the property.” Ulsaker, 2006 ND 133, ¶ 10, 717 N.W.2d 567 (citation omitted). The trial court was required to include all assets and debts in the marital estate before making an equitable distribution of the property. After apportioning the medical school loan debt to Rhonda Lorenz, the trial court, in its October 21, 2005, findings and order for judgment, found: “This still leaves [$198,-333]2 of debt to be equitably apportioned between the parties.” The trial court then proceeded to consider a distribution of the marital estate without further consideration of the medical school loans and their impact on Rhonda Lorenz’s financial condition. Because the trial court did not consider the impact of the $250,000 of medical school loan debt assigned to Rhonda Lorenz when making its equitable distribution of the marital estate, its decision should be reversed and remanded for a proper consideration of all assets and debts under the Ruff-Fischer guidelines.
[If 46] Further, the trial court clearly erred in failing to equitably divide the balance of the marital debt of $198,333. Of the $198,333, the trial court apportioned $46,288 to Mark Lorenz and $152,045 to Rhonda Lorenz. This results in a large disparity in the apportionment of the marital estate. In its October 21, 2005, findings and order for judgment, the trial court reasoned: “The parties agree that some of the accumulated credit card debt was for living costs and other expenses relating to Rhonda Lorenz’s medical school education. However, there was no breakdown as to what amount of credit card debt was directly related to Rhonda Lorenz’s education and what was for other purposes.” More than 75 percent of the $198,333 debt was apportioned to Rhonda Lorenz, even though some of that debt resulted from supporting the family.
*704[¶ 47] The trial court’s explanation for the substantial disparity in its division of the debt is inadequate and not supported by the record. The trial court found that Rhonda and Mark Lorenz were earning approximately the same gross monthly income. In actuality, Mark Lorenz was earning $5,131 each month, or approximately $61,600 a year, and Rhonda Lorenz was not earning a salary. She had the opportunity to sign a contract for a residency program, with a monthly income of $3,448, or approximately $41,000 a year. This difference in monthly and yearly income results in an annual salary difference of over $20,000. This is not, as the trial court found in its October 21, 2005, findings and order for judgment, “about the same gross monthly income.” The trial court considered Mark Lorenz’s payment of child support as a reason to apportion him less of the marital debt, yet failed to consider the expenses Rhonda would incur as custodial parent of the parties’ child. Finally, in its October 21, 2005, findings and order for judgment, the trial court found: “While Mark’s income may also increase, it is more likely than not that Rhonda’s income will rise more quickly and to higher levels than Mark’s in the future.” The trial court ignored that Rhonda Lorenz had an upcoming three-year residency in which her salary would likely remain less than Mark Lorenz’s. The trial court’s inequitable division of the $198,333 of debt should be reversed and remanded because the substantial disparity was not adequately explained.
[¶ 48] Even if the $250,000 was appropriately apportioned to Rhonda Lorenz, its effect on her financial situation should have been taken into account when apportioning the balance of $198,333 of debt. The trial court did not take into consideration the medical school loan debt or the parties’ actual financial situation when apportioning the balance of the $198,333 of debt and, therefore, erred when it failed to apply this Ruff-Fischer guideline.
[¶ 49] The trial court did not concern itself with how Rhonda Lorenz is expected to pay $402,045 in debt. Ordering an individual to pay over $400,000 in debt on an annual salary of approximately $41,000 'for the next three years, is not equitable. The trial court ordered Mark Lorenz to make monthly cash payments totaling $10,000 over the next five years, at $2,000 per year. This does very little to reduce the inequitable division of debt, especially considering the present value of that $10,000. Rhonda Lorenz testified she would be required to start paying $1,900 per month beginning in August 2005 on her student loans and her trial exhibit 8 shows her monthly expense needs, including payment of the first and second mortgages and credit card debt at $4,462. She testified her income from her residency would be a gross $3,448 per month. It does not take a math wizard to recognize she cannot meet the obligations assigned to her by the trial court. The trial court contends that Rhonda Lorenz’s receipt of the marital home makes up for the failure of the trial court to equalize the net award difference between the parties because the home will continue to appreciate in value. The record does not establish the expected appreciation of a $110,000 home in Minot. The two mortgages against the home total $119,624, leaving no equity in the home. Rhonda Lorenz was apportioned approximately $60,000 more in assets than Mark Lorenz. These are not income-producing assets. Ten thousand dollars in cash payments over five years with no interest and an extra $60,000 in assets, does very little to offset the approximately $356,000 in extra debt apportioned to Rhonda Lorenz. Any appreciation in the Minot home will surely do little to offset that inequitable difference. The Ruff-Fischer guidelines *705require that the court consider the circumstances and necessities of each party and their financial circumstances as shown by the property owned at the time. Ulsaker, 2006 ND 133, ¶ 10, 717 N.W.2d 567. The court erred by not doing so.
[¶ 50] The trial court’s findings are clearly erroneous as they pertain to the division of Mark Lorenz’s military retirement pension. “In dividing marital property in a divorce action, the trial court normally starts with an equal distribution of the property, and must explain a substantial disparity in the property division.” Striefel v. Striefel, 2004 ND 210, ¶ 7, 689 N.W.2d 415 (citation omitted). “Pensions and retirement benefits are marital assets subject to equitable distribution by the court.” Id. at ¶ 10.
[¶51] The majority at ¶21 concludes: “In this case the benefits were included in the estate, but the parties’ failure to present evidence of a present value prevented the court from doing more. On appeal a party cannot complain about error that is of their own making.” In Bullock v. Bullock, 354 N.W.2d 904 (N.D.1984), this Court affirmed the use of a formula that divided the number of years of marriage by the number of years the spouse was in the military, times half of the spouse’s retirement pay, to determine an equitable division of a military retirement pension. In Johnson v. Johnson, 2002 ND 151, ¶ 18, 652 N.W.2d 315, we held: “There is no set formula for this division, but rather it should be based on the facts of the case.... Use of the Bullock formula to distribute retirement pay is not mandatory because the formula is not the only method of achieving an equitable division of marital property.” A formula may be used, or alternatively, the present value may be used and the court may award other property equal to the pension share. Contrary to the majority’s position in ¶21, lack of evidence of a present value does not render the pension not divisible to achieve an equitable division of a marital estate.
[¶ 52] In the present case, the trial court received evidence that the parties have been married eleven years, that Mark Lorenz has a vested military pension which will pay $2,000 per month when he retires, and that he has been in the military twenty years. The trial court awarded the military pension wholly to Mark Lorenz. The trial court’s explanation was that for five of the eleven years of marriage, Rhonda Lorenz was in medical school. The trial court’s award of this military retirement pension to Mark Lorenz further increased the substantial disparity in the allocation of the marital estate without an adequate explanation.
[¶ 53] I would reverse and remand for reconsideration of the entire issue of equitable division of the parties’ marital debt and property. We have held:
Because questions of property division and spousal support cannot be considered separately or in a vacuum, but ordinarily must be examined and dealt with together, and because the property division may have influenced the award and structure of spousal support, the district court may, if it amends spousal support, also reconsider the property distribution.
Ingebretson v. Ingebretson, 2005 ND 41, ¶ 10, 693 N.W.2d 1 (citations omitted). Therefore, on remand, the trial court should also reconsider the issue of spousal support together with the debt and property distribution.
[¶ 54] MARY MUEHLEN MARING CAROL RONNING KAPSNER

. On January 18, 2006, the trial court entered an order amending findings and order for judgment, finding it had "made an arithmetic mistake, and the parties’ total marital debt *703should have been listed as $448,333.” A judgment was entered on February 15, 2006.

. At the time of the October 21, 2005, findings and order for judgment, the trial court incorrectly determined the remaining debt to be $198,649 rather than $198,333, which is reflected in the February 15, 2006, judgment.