Court Opinion

ID: 9957509
Source: CourtListenerOpinion
Date Created: 2024-04-04 16:10:05.654066+00
Date Added: 2024-06-11T08:18:23.363828
License: Public Domain

FILED
                                                                            IN THE OFFICE OF THE
                                                                         CLERK OF SUPREME COURT
                                                                                 APRIL 4, 2024
                                                                          STATE OF NORTH DAKOTA

                  IN THE SUPREME COURT
                  STATE OF NORTH DAKOTA

                                 2024 ND 65

Keisha Kemmet,                            Plaintiff, Appellant and Cross-Appellee
      v.
Lindell Kemmet,                      Defendant, Appellee and Cross-Appellant

                                No. 20230194

Appeal from the District Court of Ward County, North Central Judicial
District, the Honorable Stacy J. Louser, Judge.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

Opinion of the Court by Tufte, Justice.

Patti J. Jensen (argued) and Ashley A. Olson (on brief), East Grand Forks,
Minnesota, for plaintiff, appellant and cross-appellee.

Rodney E. Pagel, Bismarck, North Dakota, for defendant, appellee and cross-
appellant.
                             Kemmet v. Kemmet
                               No. 20230194

Tufte, Justice.

[¶1] Keisha Kemmet appeals from a divorce judgment entered following a
bench trial in her divorce proceedings against Lindell Kemmet. She argues the
district court’s distribution of marital property was not equitable, the court’s
valuation of land was clearly erroneous, and the court’s computations contain
errors.

[¶2] Lindell Kemmet cross-appeals, arguing the court’s valuations of his
remainder interest in his family’s homestead, personal property items, and his
dental practice were clearly erroneous. He also argues the distribution of
marital property is not equitable, the provision regarding health insurance is
ambiguous, and the court abused its discretion by failing to allow for cross-
examination of Keisha Kemmet’s expert witness.

[¶3] We reverse in part and remand for clarification of the district court’s
findings regarding equitable distribution of the marital estate and a correct
accounting of the distribution.

                                        I

[¶4] The parties were married in September 2016, and separated in June
2021. Divorce proceedings were filed in June 2021. A three-day bench trial was
held. Thirteen witnesses testified, including two expert witnesses valuating
the dental practice and one expert witness valuating the Kidder County land.
The district court issued its findings of fact, conclusions of law and order for
judgment and judgment. Both parties appeal.

                                        II

[¶5] When granting a divorce, a district court is required to value the parties’
property and debts and make an equitable distribution. N.D.C.C. § 14-05-24(1);
Berdahl v. Berdahl, 2022 ND 136, ¶ 6, 977 N.W.2d 294. This Court’s standard
of review for a district court’s marital property distribution is well established:

                                        1
      This Court reviews a district court’s distribution of marital
      property as a finding of fact, and will not reverse unless the
      findings are clearly erroneous. A finding of fact is clearly erroneous
      if it is induced by an erroneous view of the law, if there is no
      evidence to support it, or if, after reviewing all the evidence, we
      are left with a definite and firm conviction a mistake has been
      made. We view the evidence in the light most favorable to the
      findings, and the district court’s factual findings are presumptively
      correct. Valuations of marital property within the range of the
      evidence presented are not clearly erroneous. A choice between two
      permissible views of the evidence is not clearly erroneous if
      the district court’s findings are based either on physical or
      documentary evidence, or inferences from other facts, or on
      credibility determinations.

Id. (cleaned up). “In a bench trial, the district court determines credibility
issues, which we will not second-guess on appeal.” Id. at ¶ 9 (quoting Wald v.
Wald, 2020 ND 174, ¶ 27, 947 N.W.2d 359).

                                      III

[¶6] Keisha Kemmet argues the district court’s valuation of the Kidder
County property was clearly erroneous. She argues the district court erred by
giving more weight to Lindell Kemmet’s opinion on the value than the opinion
of her expert witness appraiser. She also argues the court’s computations
contain errors because she was assigned 20% of the value of the asset but she
was not granted any part of the asset itself. Lindell Kemmet was granted the
entire asset without accounting for any payment to Keisha Kemmet for her
share.

[¶7] The Kidder County land is real property that has been in Lindell
Kemmet’s family for decades. In 2019, Lindell Kemmet’s father executed a quit
claim deed reserving a life estate interest and conveying the remainder
interest in equal shares to Lindell Kemmet and a sibling. Both parties
presented testimony regarding the valuation of the land.

                                        2
                                       A

[¶8] Keisha Kemmet argues the district court’s valuation of the Kidder
County property was clearly erroneous because her appraiser was more
credible and his estimate was accurate. “A court’s valuations of marital
property are not clearly erroneous if they are within the range of evidence
presented.” Berdahl, 2022 ND 136, ¶ 9. “In a bench trial, the district court
determines credibility issues, which we will not second-guess on appeal.” Id.
(citation omitted).

[¶9] Keisha Kemmet valued the land at $3,110,000, the remainder interest at
$1,137,129 (0.36390), and then halved this amount to value Lindell Kemmet’s
50% interest at $568,564. This valuation was supported by the testimony of
Keisha Kemmet’s appraiser. Lindell Kemmet testified to the land’s value as an
owner. He valued the land at $2,500,000, the remainder interest at 0.3639
times the total value, and his 50% interest of that remainder at $454,875.
Lindell Kemmet determined this value by using the cost per acre, and adding
an additional amount for the value of the homestead.

[¶10] The district court explained the appraiser divided the land into the
farmland and the homestead when reaching his valuation without assessing
the cost of well and water pipeline easements for the separately valued parcels.
The court found “the methods used by [the appraiser] in conducting his
appraisal are not reflective of reality, rendering his valuation inapplicable,”
and found Lindell Kemmet’s value of the farmland of $479,438 “to be more
accurate” because Lindell and his father are most familiar with the land.

[¶11] The district court weighed the evidence offered by both parties, finding
Lindell Kemmet’s more credible, and accepting the higher range of his
assessment. The court’s valuation is within the range of the evidence
presented. The court’s choice between two permissible views of the evidence is
not clearly erroneous.

                                       3
                                         B

[¶12] The parties argue the district court’s allocation of 20% of the value of the
Kidder County land to Keisha Kemmet creates confusion. Each party argues
the 20% value award should be assessed differently in the final distribution.

[¶13] The district court awarded 20% of the value of the Kidder County land
to Keisha Kemmet. The court explained a 50% award is not equitable because
the farm had been in Lindell Kemmet’s family for generations, no evidence was
presented that Keisha Kemmet contributed to improvements on the land, and
she rarely visited the farm. The court found a 20% award to be “equitable in
light of the short term nature of the marriage and for the reasons set forth
above.”

[¶14] Lindell Kemmet seems to argue that the total valuation of the asset
should be $95,888, which is 20% of the value of the remainder interest. He
argues he should retain the asset and be assessed $95,888 as part of his marital
asset distribution and Keisha Kemmet should be assessed $0. His argument is
not supported by our precedent.

[¶15] “All property held by either party, whether held jointly or individually, is
considered marital property, and the court must determine the total value of
the marital property before making an equitable distribution.” Langwald v.
Langwald, 2016 ND 81, ¶ 10, 878 N.W.2d 71 (citations omitted). “Our law does
not require a set formula or method for dividing marital property; rather, the
division is based on the particular circumstances of each case. A property
division need not be equal to be equitable, but a substantial disparity must be
explained.” Id. at ¶ 11 (internal citations and quotations omitted). “Separate
property, even if it is inherited, must initially be included in the marital estate,
but the property’s origin may be considered when equitably dividing the
estate.” Fugere v. Fugere, 2015 ND 174, ¶ 8, 865 N.W.2d 407 (citing Feist v.
Feist, 2015 ND 98, ¶ 6, 862 N.W.2d 817).

[¶16] In Anderson v. Anderson, 2023 ND 86, ¶ 8, 990 N.W.2d 581, the district
court determined the value of Renee Anderson’s remainder interest in a 160-
acre farmland was $233,282 but only included a portion of the value as “the

                                         4
marital portion of Renee’s remainder interest.” “The court explained: ‘One half
of $85,000 is $42,500. It is the Court’s intention to award Renee the entire
value of her remainder interest . . . valued at, $233,282, less $42,500, which
the Court will deem to be the marital portion of that property.’” Id. We held the
court’s decision to exclude a portion of the interest’s value is a misapplication
of law, and remanded the judgment directing the court to include the full value
of the interest in the marital estate. Id.

[¶17] Contrary to Lindell Kemmet’s argument, the entire remainder interest
is marital property, and therefore the total value must be considered marital
property. The Kidder County remainder interest is marital property—not
partly marital property. It can, however, be distributed equitably by
considering its origin.

[¶18] Here, the district court found Keisha Kemmet’s equitable share in the
property is 20% of that value. This type of equitable distribution of property
was upheld in McCarthy v. McCarthy, 2014 ND 234, ¶ 12, 856 N.W.2d 762,
where the district court valued the entire remainder interest, and assigned
25% valuation to Carleen McCarthy. The “court ordered Paul McCarthy to
convey to Carleen McCarthy a one-quarter interest of his interest in the
farmland or, in the alternative, to pay her $125,000 within 120 days from the
date of the judgment.” Id. In this case, the record does not indicate whether
payment was or will be made to Keisha Kemmet for her equitable share of the
remainder interest of the Kidder County land.

[¶19] The district court’s findings and distribution are supported by the record
and the law. The court’s assignment of 20% of the value of the Kidder County
land to Keisha Kemmet was not clearly erroneous. However, the court’s
execution of the distribution creates confusion and requires clarification.

[¶20] Both parties agree the district court’s distribution calculations regarding
the Kidder County land contain errors. The district court valued the remainder
interest in the Kidder County land at $479,438. The court’s distribution of
property awarded Keisha Kemmet $95,887.60 for the Kidder County land and
Lindell Kemmet $383,550.40 for the Kidder County land. Keisha Kemmet was

                                       5
awarded 20% of the value of the property in the calculations of her award of
the marital estate, but the court clarified in post-judgment proceedings that
Keisha Kemmet was not awarded a 20% interest in the land. Lindell Kemmet
retained the full remainder interest in the property in his award but was
assessed only 80% of the value under his assets.

[¶21] The discrepancies and inconsistencies in the district court’s findings
leave us to guess the court’s intentions. We therefore remand this issue for
proper accounting of the distribution of the marital estate.

                                      IV

[¶22] Lindell Kemmet argues the district court’s valuation of his dental
practice, and the award of 50% of the value to Keisha Kemmet, was clearly
erroneous. He argues his expert was more experienced and presented a more
accurate account of the valuation. He also argues, because the district court
averaged the values of most of the other assets, the court should have averaged
the valuations of the experts regarding the practice.

[¶23] Both parties presented testimony and reports from experts valuating the
dental practice. Lindell Kemmet valued the practice at $999,000 and Keisha
Kemmet valued the practice at $1.3 million. Lindell Kemmet’s expert used the
income approach, and his value reflects “a reduction for lack of marketability.”
He used a 15% discount approach and 19% income tax rate. Keisha Kemmet’s
expert utilized both an income and market approach, finding the values to be
nearly identical. She did not use a discount approach and used a 38% income
tax rate.

[¶24] The district court valued the business at $1,300,000, finding:

      [The experts] were each credible witnesses who were able to
      adequately explain and justify his or her valuations. However, the
      Court found [Keisha Kemmet’s expert] more credible as to the
      value of the business, as [the other expert] acknowledged he did
      [sic] realize taxes appropriately when doing his valuation.
      Although [he] explained had he corrected the taxes, his valuation
      of the business would have been lower.

                                       6
[¶25] “There is no set formula for valuation of a business, especially a closely-
held business.” Adams v. Adams, 2015 ND 112, ¶ 15, 863 N.W.2d 232. The
district court’s factual findings are presumptively correct. Id. at ¶ 13. The
court’s findings, based upon the experts’ valuations, are a credibility
determination, a choice between two permissible views of the evidence, and are
not clearly erroneous. See id. The district court’s findings are not clearly
erroneous.

                                       V

[¶26] Lindell Kemmet argues the district court’s valuations of several personal
property items are clearly erroneous. The court’s valuations of these items were
within the range of the evidence presented. “Valuations of marital property
within the range of the evidence presented are not clearly erroneous.” Berdahl,
2022 ND 136, ¶ 6. To the extent the parties agree the district court’s valuation
of a property item was an error, the court may consider those items upon
remand.

                                      VI

[¶27] Lindell Kemmet argues the district court’s finding of an equitable
distribution of 40% to Keisha Kemmet in a short-term marriage was clearly
erroneous. Keisha Kemmet argues the district court’s findings support a 50%
equitable distribution.

[¶28] In making its distribution, the district court considers the Ruff-Fischer
factors, which include:

      The respective ages of the parties, their earning ability, the
      duration of the marriage and conduct of the parties during the
      marriage, their station in life, the circumstances and necessities of
      each, their health and physical condition, their financial
      circumstances as shown by the property owned at the time, its
      value at the time, its income-producing capacity, if any, whether
      accumulated before or after the marriage, and such other matters
      as may be material.

Berdahl, 2022 ND 136, ¶ 7 (citations omitted).

                                       7
[¶29] The district court weighed the Ruff-Fischer factors for the purposes of
spousal support and property division. The court found:

            Of the Ruff-Fischer guidelines, the Court finds that the age
      of the parties, duration of the marriage and conduct, and health
      and physical condition justify an equal division of the marital
      estate. The earnings ability and financial condition at the time of
      the divorce and station in life and circumstances and necessities of
      each, value of income producing property and when the property
      was acquired warrant Keisha receiving a greater share of the
      marital estate and/or spousal support.

The court awarded Keisha Kemmet spousal support for 36 months.

[¶30] Keisha Kemmet argues these findings state that the assets must be
distributed equally. She reads the court’s summary of its Ruff-Fischer factors
in a vacuum. The court specifically found she was entitled to “greater” property
distribution or spousal support. The court awarded her an equalization
payment and rehabilitative spousal support. The court specifically found its
40/60 distribution was equitable.

[¶31] Lindell Kemmet argues the 40/60 distribution is not equitable because
the assets of significance had been either owned by him prior to the marriage
or gifted to him by his father. The district court considered these factors when
distributing the marital estate.

[¶32] The district court weighed most of the factors equally, finding they did
not weigh in favor of unequitable distribution or spousal support. The court
considered the length of the marriage: “Taking into consideration the two years
Keisha and Lindell dated (2012-2014) and the seven years of marriage prior to
separation (2014-2021), the Court does not find this nearly nine year marriage
to be one of long duration which would warrant an equal division of the marital
estate or long term spousal support.” The court found that although Lindell
Kemmet’s earning capacity favors an award of spousal support to Keisha
Kemmet, it did not “view the success of Lindell’s business to contributions from
Keisha which would justify an unequal distribution of the marital estate in her
favor.” The court went on to find spousal support or property division in

                                       8
Keisha’s favor for a short amount of time is warranted because this was not a
long-term marriage. The court also considered the income-producing
property—the primary asset being the dental practice. The court found that
although the practice was acquired prior to the marriage, it had gained value
during the marriage, and because Keisha would not benefit from the business
moving forward, this also favored an award of spousal support.

[¶33] The court distributed the assets, finding an equitable distribution of
approximately 40% of the marital estate to Keisha Kemmet, including a
$200,000 equalization payment, and the remaining 60% of the estate to Lindell
Kemmet. The court also awarded Keisha Kemmet $1,500 per month for 36
months in spousal support, explaining, “This is a short term marriage wherein
Keisha is receiving substantial assets in addition to property division
payments.”

[¶34] The district court weighed the Ruff-Fischer guidelines before
distributing the marital estate. The court’s findings and distributions are
supported by the record. The court’s findings are not clearly erroneous, except
the court’s findings regarding the valuation and distribution of the Kidder
County property must be clarified and its distributions reconsidered
therefrom.

[¶35] We remand the judgment for a revised accounting of the distribution of
the marital estate. The district court’s calculations reflect an 80-20 distribution
of the Kidder County land without a corresponding award of either the interest
or a payment of the value of the interest. This cannot be reconciled with the
court’s findings regarding an equitable distribution of 60-40 of the overall
marital estate. One or both must be revised.

                                      VII

[¶36] We considered the parties’ remaining arguments and conclude they are
either unnecessary to our determination or without merit.

[¶37] We remand the judgment for proper accounting of the distribution of the
marital estate, and clarification of the district court’s findings regarding

                                        9
equitable distribution. The court may conduct any additional proceedings it
deems necessary. We affirm the judgment in all other respects.

[¶38] Jon J. Jensen, C.J.
      Daniel J. Crothers
      Lisa Fair McEvers
      Jerod E. Tufte
      Douglas A. Bahr

                                    10