Court Opinion

ID: 885891
Source: CourtListenerOpinion
Date Created: 2013-06-05 03:45:10.901401+00
Date Added: 2024-06-11T13:22:03.835635
License: Public Domain

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                                                               No. 00-305

                          IN THE SUPREME COURT OF THE STATE OF MONTANA

                                                             2001 MT 20N

                              In Re the MARRIAGE OF JACQUELINE R. MITCHELL,

                                                      Petitioner and Appellant,

                                                                      v.

                                                       JOHN S. MITCHELL,

                                                Respondent and Cross-Appellant.

                             APPEAL FROM: District Court of the First Judicial District,

                                          In and for the County of Lewis and Clark,

                                   The Honorable Thomas C. Honzel, Judge presiding.

                                                    COUNSEL OF RECORD:

                                                             For Appellant:

                               Philip J. O'Connell, Attorney at Law, Missoula, Montana

                                                            For Respondent:

                                    David N. Hull, Attorney at Law, Helena, Montana

                                          Submitted on Briefs: December 14, 2000
                                               Decided: February 15, 2001

                                                                   Filed:

                                   __________________________________________

                                                                   Clerk

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Justice Terry N. Trieweiler delivered the Opinion of the Court.

¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court 1996 Internal Operating
Rules, the following decision shall not be cited as precedent but shall be filed as a public
document with the Clerk of the Supreme Court and shall be reported by case title,
Supreme Court cause number, and result to the State Reporter Publishing Company and to
West Group in the quarterly table of noncitable cases issued by this Court.

¶2 The petitioner, Jacqueline L. Mitchell filed a petition for dissolution of her marriage to
the respondent, John S. Mitchell ("Stephen"), in the District Court for the First Judicial
District in Lewis and Clark County. Following a non-jury trial, the District Court divided
the couple's property by a decree of dissolution based on its findings of fact and
conclusions of law. Both parties appeal from the District Court's property distribution. We
affirm the judgment of the District Court.

¶3 Both parties present several issues on appeal. We restate these issues as follows:

¶4 (1) Did the District Court err in its distribution of the marital property?

¶5 (2) Did the District Court err when it declined to award Stephen's pension to Jackie
after Stephen failed to disclose the pension during discovery?

¶6 (3) Did the District Court err by refusing to vacate the hearing despite Jackie's failure to
comply with the District Court's pretrial orders?

¶7 (4) Did the District Court err when it decided not to hold Jackie and/or her counsel in
contempt for violating the pre-trial order?

¶8 (5) Did the District Court err when it denied Stephen's motion for sanctions against
Jackie for violating the temporary restraining order when she sold the Subaru station
wagon?

                                                FACTUAL BACKGROUND

¶9 Jackie and Stephen Mitchell were married on June 8, 1990. At that time, Jackie was
employed by the State of Montana as an administrative assistant in the Department of

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Health and Environmental Science. Jackie earned a pension from this job, which
amounted to $4,500. Jackie did not own any property or automobiles except for a few
home furnishings and personal property. She owed approximately $500 for medical bills
which the couple paid while applying for a home loan after they married.

¶10 Since 1971, Stephen was employed by the firm, Ch2M Hill, as a hydrologist and
engineering manager and continued to work there during his marriage to Jackie. Upon
retirement, Stephen will receive a pension of approximately $700 a month. According to
Stephen, he earned this pension in the 1970's. Later, the company converted its pension
plan to stock options and other benefits for the employees. He used these stock options
after leaving Ch2M Hill in 1994 to start his own company, Clear Creek Hydrology. In
1996, Clear Creek Hydrology was incorporated. In October, 1998, Stephen held 85% of
the stock in the company, Jackie held 10% and the remaining five percent was owned by a
third party. Rick Townsend, a public accountant, testified that the business was worth a
negative $2,195, at the time of trial.

¶11 Prior to the couple's marriage, Stephen owned two homes - one in Montana City,
Montana, and the other located in Boise, Idaho. After he married Jackie, he sold them and
used the $40,000 equity from the two sales for a down payment on the marital home in
Townsend, Montana. The couple paid $143,000 for the property in 1992. The house and
property combined are now worth $325,000. However, the property is encumbered by two
mortgages in the combined amount of $315,000. Stephen also owned several vehicles and
trailers prior to marriage that he traded in to acquire the marital vehicles. The marital
vehicles are a Subaru Legacy station wagon, Dodge Ram pick-up truck, GMC Jimmy, two
Yamaha Big Wheels, a Honda Fat Cat, a Holiday Rambler fifth wheel, a Nu-Wa
Hitchhiker fifth wheel, two utility trailers and a Farmall tractor. The Hitchhiker fifth wheel
is encumbered by a debt which the District Court found to be in the amount of $20,000.
Stephen and Jackie also own four Pomerarian dogs which are worth $4,000.

¶12 After Stephen created Clear Creek Hydrology, Jackie worked for the company as a
bookkeeper and receptionist. She made approximately $12.00 an hour while working at
Clear Creek Hydrology. Jackie also attended classes during this period.

¶13 Jackie left Stephen in October of 1998. She moved out of the Townsend property
while he was on a hunting trip. Jackie took their bed, kitchen appliances, dishes, a Sony
television, a Compaq computer, their four Pomeranian dogs, a sleeping bag, backpack, the
Subaru station wagon and her personal possessions. Before she left, she wrote two checks

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to herself from the corporate account in the total amount of $10,000 which she claims was
owed her for wages. Prior to leaving, Jackie also transferred $14,000 from the business
account to the couple's joint checking account. It is unclear who ultimately received that
money or whether Stephen directed her to make the transfer. She moved to Boise, Idaho
where she presently resides.

                                                            DISCUSSION

                                                              ISSUE ONE

¶14 Did the District Court err in its distribution of the marital property?

¶15 Both parties assert that the District Court distributed the property inequitably.
However, they disagree on how the District Court erred. Jackie contends that the Court
incorrectly valued certain items, and that she received an inequitable distribution. Stephen,
contends that the Subaru station wagon belongs to him. He also asserts that the marital
debt was not allocated in the final decree of Dissolution, the Court did not consider the
contributions by Stephen to the marital estate and the District Court erred by including
corporate assets as part of the marital estate.

¶16 This Court reviews a district court's division of marital property to determine whether
the court's factual findings are clearly erroneous. See In re Marriage of Robinson (1994),
269 Mont. 293, 297, 888 P.2d 895, 897. A court's findings are clearly erroneous if they are
not supported by substantial evidence. If they are not clearly erroneous, we will affirm the
distribution unless the district court abused its discretion.

¶17 Pursuant to §40-4-202, MCA, the district court has broad discretion to distribute the
marital estate in a manner which is equitable to each party according to the circumstances
of each case. This statute sets forth the guidelines for distribution of property as part of a
marriage distribution and provides that:

        (1) In a proceeding for dissolution of a marriage . . . the court, without regard to
        marital misconduct, shall, and in a proceeding for legal separation may, finally
        equitably apportion between the parties the property and assets belonging to either
        or both, however and whenever acquired and whether the title thereto is in the name
        of the husband or wife or both . . . .

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Section 40-4-202, MCA.

¶18 Although the district court is bound to make an equitable distribution of the marital
estate, the distribution does not have to be equal. The district court explained that it "has
not attempted to value the household furnishings and other items of personal property,"
because the testimony surrounding these items was not helpful. The District Court,
however, did evaluate the other personal property in order to make the marital distribution.

¶19 Jackie asserts that the final distribution is unfair, because she received only 30% of the
marital estate. The District Court awarded Jackie the proceeds of the sale of the 1996
Subaru station wagon, her State of Montana Retirement Account, the personal property
and household furnishings in her possession, the Sony Television and the four Pomeranian
dogs. According to Jackie, the total value of these items is $23,500. (However, she has not
placed a value on her personal possessions, household furnishings and the Sony television
that she took with her when she left the Townsend property). According to Jackie,
Stephen's share of the marital estate is worth $52,705.

¶20 Stephen received the Townsend property, the couple's stock in Clear Creek
Hydrology, Inc., the 1996 Dodge pickup, the 1987 GMC Jimmy, two 1987 Yamaha Big
Wheels, the 1987 Honda Fat Cat, the 1993 Nu-Wa Hitchhiker fifth wheel, two utility
trailers, the 1960 Farmall tractor, the proceeds from the sale of the 1991 Holiday Rambler
fifth wheel, and the items of household furnishings and personal property in his
possession. The Court also directed Stephen to pay for the two loans encumbering the
Townsend property as well as the loan secured by the 1993 Nu-Wa fifth wheel.

¶21 The record shows that Stephen started Clear Creek Hydrology with his own money.
Without his skills and experience, the company would not function. Furthermore, Stephen
provided the down payment for the Townsend property and has been paying the mortgage
and maintaining it since Jackie moved from the property. According to the record, Jackie
took over $10,000 from the company account even though she knew that there were
insufficient funds in the corporate accounts. After reviewing the record and the District
Court findings, we conclude that the district court did not abuse its discretion by its
distribution of the marital estate to Jackie.

¶22 Stephen also contends that the District Court erred in its marital distribution. His first
complaint relates to the allocation of the debt. The district court awarded Stephen both the
Townsend Property and the Nu-Wa 5th Wheel, as well as the debt on those two items. We

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are unclear why Stephen asserts that no debt allocation was made because it is evidenced
in both the Findings of Fact and Conclusions of law as well as in the Decree of
Dissolution. Accordingly, we find no error by the District Court in its allocation of debt.

¶23 Next, Stephen contends that the District Court did not factor the amount that Stephen
continued to pay toward the loan secured by the Townsend property after the couple
separated. However, by distributing both the property and the mortgage debt to Stephen,
these payments were appropriately accounted for. Therefore, we conclude that the District
Court did not err by omitting any reference to the mortgage payments made by Stephen
after the separation.

¶24 Finally, Stephen asserts that the District Court improperly distributed corporate assets
as part of the marital estate, contrary to statutory requirements. When Jackie left Stephen,
she took a Compaq computer and a Sony television set. Both assets were purchased with
corporate funds. However, the District Court ordered Jackie to return only the Compaq
computer within 30 days of the decree, stating that "[i]t was purchased by the business and
was being used in the business."

¶25 Jackie admitted in her trial testimony that the Sony television was bought with the
corporate credit card. Therefore, Stephen contends that as a corporate asset, the television
set can not be distributed as part of the marital estate.

¶26 The general rule is that a district court cannot distribute corporate property where the
corporation is not a party to the marital dissolution. In re Marriage of Reich (1986), 222
Mont. 192, 720 P.2d 286. However, this Court has approved the transfer of corporate
property under facts specific to each case. In Reich, we approved the district court's
distribution of a corporate vehicle to the wife. Again, in In Re Marriage of Westland
(1993), 257 Mont. 169, 848 P.2d 492, we affirmed the District Court's apportionment of
corporate ranch properties as part of the marital property distribution because a significant
portion of the land belonged to the parties. Westland, 257 Mont. at 171, 848 P.2d at 494.

¶27 Here, the District Court held that "[a]lthough it was acquired by Clear Creek
Hydrology, the parties were using it for their personal enjoyment. Furthermore, the value
of the TV is probably not very great and since the parties had several other TVS, the Court
most likely would have awarded her one of them." We do not find any abuse of discretion
by the district court when it allowed Jackie to keep the television already in her possession
rather than exchange it for another television owned by the couple.

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¶28 Accordingly, after reviewing the record, we conclude that the District Court did not
abuse its discretion when it distributed the marital estate.

                                                             ISSUE TWO

¶29 Did the District Court err when it declined to award Stephen's pension to Jackie after
Stephen failed to disclose the pension during discovery?

¶30 Jackie contends that Stephen failed to disclose his pension during discovery and
therefore, according to §40-4-253, the undisclosed item should be awarded to Jackie.
Section 40-4-253, MCA, provides that

        (1) (a) Each party shall serve on the other party a final declaration of disclosure and
        a current income and expense declaration, executed under penalty of perjury . . . .
        The failure of a party to disclose an asset or liability on the final declaration of
        disclosure is presumed to be grounds for the court, without taking into account the
        equitable division of the marital estate, to award the undisclosed asset to the
        opposing party . . . .

Section 40-4-253, MCA. The transcripts reveal that Stephen did not disclose the pension
that he earned while working at Ch2M Hill during discovery.

        Q. Do you recall being asked the question, I'll quote, "List any pension, profit share,
        or retirement plan or account listed in your name." Do you recall seeing that
        question?

        A. Now that you bring it up, yes, sir.

        Q. Yes. Do you recall that your response was, "I do not have any pension, profit
        sharing, or retirement plan other than to continue to work until I die."

        A. Yes, sir.

        Q. And that wasn't true at the time you said it, was it?

        A. No, sir.

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        ...

        Q. (By Mr. O'Connell) Did you identify [the pension] in your financial disclosure
        filed with the Court last week?

        A. No, sir.

        Q. Even though you have a right to a pension that will pay 700 something a month
        at age 65.

        A. Sir, that was so long ago, that when I got that, that I flat forgot about that. That
        was done in the 1970's.

¶31 The district court held that "[a]lthough most, if not all of the pension was earned prior
to the marriage, Stephen was aware he had it and he failed to disclose it as required by
statute." However, the district court determined that under the circumstances of the case, it
would not be appropriate to divest Stephen of his interest in the property.

¶32 Section 40-4-253, MCA, does not require the district court to distribute the
undisclosed asset to the other spouse automatically but merely creates a presumption for
doing so. In making its determination, the District Court acknowledged that Stephen failed
to disclose the pension but weighed his omission against the other facts in the case. The
record shows that the pension was earned during the seventies and was not part of the
marital estate. In addition, each party failed to completely disclose his or her financial
assets to the other spouse. Therefore, we conclude that the district court did not abuse its
discretion when it denied Jackie's motion.

                                                            ISSUE THREE

¶33 Did the District Court err by refusing to vacate the hearing despite Jackie's failure to
comply with the District Court's pretrial orders?

¶34 Stephen contends that the District Court should have vacated the hearing because
Jackie did not turn in her financial disclosures until the morning of the trial. We review
this discretionary act to determine whether the district court abused its discretion. In re
Marriage of Davis 1999 MT 218, 295 Mont. 546, 986 P.2d 408.

¶35 Jackie failed to comply with the pre-trial orders which required that each party
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exchange financial disclosures within a sufficient amount of time prior to trial. Since
Stephen did not receive his copy of Jackie's financial disclosures until the morning of the
trial, he claims that he was unable to properly prepare for the hearing.

¶36 In reaction to Jackie's failure to comply with the pre-trial order, the Court did not
allow Jackie to call any witnesses other than herself and Stephen. Therefore, she was
unable to refute the testimony of Stephen's accountant, Rick Townsend who testified to
the value of the company. Furthermore, the court adopted nearly all of Stephen's Findings
of fact. We do not find that Stephen was harmed by Jackie's failure to turn over her
financial disclosures. Any delay caused by postponing the hearing would have been
unnecessary and unwise for the resolution of this matter. Therefore, we conclude that the
District Court did not abuse its discretion when it decided to proceed with the hearing.

                                                             ISSUE FOUR

¶37 Did the District Court err when it decided not to hold Jackie and/or her counsel in
contempt for violating the pre-trial order?

¶38 Stephen appeals the District Court decision to not hold Jackie in contempt of court for
failing to comply with the pre-trial order. She did not turn in a list of witnesses, proposed
findings or her financial disclosures until the morning of the hearing. According to the pre-
trial order, any failure to do so is a contempt of court.

¶39 A district court has the responsibility to enforce its own orders. See In re Marriage of
Boyer (1995), 274 Mont. 282, 289, 908 P.2d 665, 669. Contempt of court is a
discretionary tool of the court for enforcing compliance with its decisions. See in re
Marriage of Jacobson (1987), 228 Mont. 458, 464, 743 P.2d 1025, 1028. Therefore,
"where a district court has found that there is no such need to enforce compliance with its
order or that the actions of a party to not present a challenge to its dignity and authority,
we will not reverse its decision absent a blatant abuse of discretion." In re Marriage of
Baer, 1998 MT 29 ¶45, 287 Mont. 322 ¶45, 954 P.2d 1125 ¶45.

¶40 The District Court held that "Stephen's motion to hold Jackie in contempt and to
assess sanctions against her should be denied . . . . Jackie did not file her financial
disclosure or her proposed findings of fact and conclusions of law until the day of trial in
violation of the statute and the Court's Scheduling Order. That, however, was probably
more the fault of her attorney than of Jackie." Based on our review of the record and our

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discussion of the previous issue, we conclude that the District Court did not blatantly
abuse its discretion when it decided to not hold Jackie in contempt.

                                                             ISSUE FIVE

¶41 Whether the District Court erred in not imposing sanctions for Jackie's sale of the
Subaru station wagon in violation of the temporary restraining order?

¶42 The District Court denied Stephen's motion that it impose sanctions against Jackie for
selling the Subaru station wagon despite the temporary restraining order prohibiting either
party from selling marital assets. Jackie took the Subaru with her when she left the
Townsend property and sold it a few months prior to the dissolution hearing.

¶43 The District Court concluded that "[w]hile the Court certainly does not condone this
action, sanctions are not appropriate. The primary reason for not imposing sanctions is that
it appears Stephen also violated the restraining order by selling the Holiday Rambler fifth
wheeler."

¶44 We, conclude that the District Court did not abuse its discretion when it denied
Stephen's motion for sanctions.

¶45 We affirm the judgment of the District Court.

                                                /S/ TERRY N. TRIEWEILER

                                                              We Concur:

                                                     /S/ KARLA M. GRAY

                                              /S/ W. WILLIAM LEAPHART

                                                    /S/ JAMES C. NELSON

                                                         /S/ JIM REGNIER

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