Court Opinion

ID: 9371453
Source: CourtListenerOpinion
Date Created: 2023-02-16 15:05:48.59156+00
Date Added: 2024-06-11T17:16:27.676860
License: Public Domain

FILED
                                                                        IN THE OFFICE OF THE
                                                                     CLERK OF SUPREME COURT
                                                                          FEBRUARY 16, 2023
                                                                      STATE OF NORTH DAKOTA

                    IN THE SUPREME COURT
                    STATE OF NORTH DAKOTA

                                2023 ND 23

Heather L. Kitzan,                                      Plaintiff and Appellant
     v.
Justun J. Kitzan,                                      Defendant and Appellee
     and
State of North Dakota,                         Statutory Real Party in Interest

                                No. 20220110

Appeal from the District Court of Burleigh County, South Central Judicial
District, the Honorable Bobbi Brown Weiler, Judge.

AFFIRMED.

Opinion of the Court by Jensen, Chief Justice.

Carey A. Ziemann Goetz, Bismarck, ND, for plaintiff and appellant; submitted
on brief.

Micheal A. Mulloy, Bismarck, ND, for defendant and appellee; submitted on
brief.
                              Kitzan v. Kitzan
                               No. 20220110

Jensen, Chief Justice.

      Heather Kitzan appeals from a judgment entered following a bench trial in
her divorce action against Justun Kitzan asserting the district court erred in
including certain items as marital property, in distributing the marital estate,
and in denying her spousal support. We affirm the district court’s judgment.

                                       I

      Heather and Justun Kitzan married in July 1999, and were separated in
2020. Heather Kitzan filed for divorce on October 19, 2020. An interim order
required Heather Kitzan to make monthly mortgage payments on the marital
home and provided her with exclusive use of the home. The parties stipulated
to a parenting plan for their two children.

      Heather Kitzan is employed and has a monthly gross income of
approximately $4,500. Justun Kitzan is employed and has a monthly gross
income of $4,785. Justun Kitzan and his sister testified he moved out of the
marital home on September 8, 2020, while Heather Kitzan maintained he left
in June 2020. The parties owned several bank accounts, a marital home, a
farm, and a business, JT Inflatables. Justun Kitzan submitted exhibits
providing financial statements for the value of the home, the farm, JT
Inflatables, and other bank accounts.

      The parties agreed that funds from various sources of income were
commingled by Heather Kitzan into multiple accounts; some accounts that
were closed, and some that were opened after the parties separated. After
separation, Heather Kitzan received Paycheck Protection Program (“PPP”)
loans and a state water grant for the farm operation and JT Inflatables. She
also withdrew funds from her personal retirement accounts.

      The district court found the parties separated September 8, 2020 and
earned similar incomes. The court also found Heather Kitzan engaged in
“financial misappropriation and possible fraud[.]” The court chose Justun

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Kitzan’s valuations for the home, farm, and JT Inflatables and determined
those assets were marital property. The court awarded Heather Kitzan an
equity payment of $30,000 which resulted in total net estates of $36,818.57 for
her and $68,111.47 for Justun Kitzan. The court denied Heather Kitzan’s
request for spousal support.

                                        II

      This Court reviews a district court’s distribution of marital property as
a finding of fact under a clearly erroneous standard:

      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.

Berdahl v. Berdahl, 2022 ND 136, ¶ 6, 977 N.W.2d 294 (internal citations
omitted) (quoting Holm v. Holm, 2017 ND 96, ¶ 4, 893 N.W.2d 492).

     The 2017 version of N.D.C.C. § 14-05-24(1), applicable in October 2020
when these proceedings began, states the following:

      When a divorce is granted, the court shall make an equitable
      distribution of the property and debts of the parties. . . . the
      valuation date for marital property is the date mutually agreed
      upon between the parties. If the parties do not mutually agree
      upon a valuation date, the valuation date for marital property is
      the date of service of a summons in an action for divorce or

                                        2
      separation or the date on which the parties last separated,
      whichever occurs first.

Property acquired after separation must not be included in the value of the
marital estate. Berdahl, 2022 ND 136, ¶ 18.

       Heather Kitzan argues the district court erred in finding September 8,
2020 as the date of separation instead of her proposed date in June 2020. She
argues “the [district court] without explanation chose Justun’s date of
separation for purposes of valuation.” The summons for divorce was served
upon Justun Kitzan on October 30, 2020. In finding September 8, 2020 the
proper date for valuation, the court adopted an earlier date of separation over
the date of service in accordance with N.D.C.C. § 14-05-24(1). The court found
September 8, 2020 rather than June 2020 to be credible because both Justun
Kitzan and his sister testified to that date, and the court found Heather
Kitzan’s testimony lacked credibility. The court was in the position to weigh
testimony presented on this issue and made a finding by choosing one of two
permissible views of the evidence. The finding was not induced by an erroneous
view of the law, there is evidence to support the finding, and, after reviewing
all the evidence, we are not left with a definite and firm conviction a mistake
has been made.

                                     III

      Heather Kitzan argues that three bank accounts, *7773, *0409, and
*9054, opened at Dakota Community Bank & Trust on December 12, 2020,
March 31, 2021, and June 4, 2021, respectively, should be considered after-
acquired property, and should not have been included within the marital
estate. The district court found the funds were moved from existing accounts
to newly opened accounts in an effort by Heather Kitzan to conceal assets and
reduce the overall marital estate. The court found the following: “Heather
states that she closed [*9919] and moved the money into [*7773]. However,
Heather did not provide the Court documentation of this. Based upon
Heather’s moving and hiding of money, the Court finds her testimony not
credible.” Based on the findings that she had hidden money and her testimony
was not credible, the court determined it was appropriate to credit the funds

                                      3
in *9919 to Heather Kitzan and to be counted in her share of the marital estate.
The court was in the position to weigh testimony presented on this issue and
made a finding by choosing one of two permissible views of the evidence. The
finding was not induced by an erroneous view of the law, there is evidence to
support the finding, and, after reviewing all the evidence, we are not left with
a definite and firm conviction a mistake has been made.

      Heather Kitzan also argues the district court’s inclusion of her
retirement accounts and the funds in the bank accounts *7773, *0409, and
*9054 inflates the value of the marital estate allocated to her because the
retirement funds were counted twice. Heather Kitzan removed $27,196.34 from
her retirement account. She deposited those funds into account *7773. She then
transferred $30,000 to account *9054, leaving a balance of $18,480.58 in account
*7773. As a result, at least some of the retirement money was transferred from
account *7773 to account *9054. Account *9054 included numerous credit and
debit transactions by Heather Kitzan making it very difficult to determine how
much of the retirement money, if any, was still “present” in the account at the date
of valuation. She offered no accounting for those transfers. The court used a
balance of $38,363.28 for account *9054. The district court chose valuations for
those accounts that were within the range of the evidence presented. The
finding was not induced by an erroneous view of the law, there is evidence to
support the finding, and, after reviewing all the evidence, we are not left with
a definite and firm conviction a mistake has been made.

                                        IV

       Heather Kitzan argues the district court erred by reducing the $30,000
equity payment awarded to her because the mortgage of the marital home was
in forbearance prior to trial. We have deemed it equitable to require a party to
continue making mortgage payments until a home is sold if the Ruff-Fischer
factors weigh in favor of that party bearing the cost. Berdahl, 2022 ND 136, ¶¶
22-23. The court found, “Heather was ordered to pay the mortgage payment at
the interim order. . . . At the time of trial, she was $14,480 behind in mortgage
payments. . . . So, the Court is going to reduce any equity payment by the
$14,480.” The parties’ interim order required Heather Kitzan to pay the

                                         4
mortgage on the home and allocated to her the use of the home during the
pendency of the divorce proceedings. Although the mortgage was in temporary
forbearance, it was still accruing a balance that would have to be paid. We
conclude the district court did not err in adjusting the allocation of the marital
estate to account for unsatisfied debt payments required under the terms of
the interim order.

                                        V

      A trial court starts with a presumption that all property is marital
whether held jointly or individually. Berg v. Berg, 2018 ND 79, ¶ 7, 908 N.W.2d
705. This includes inherited property. Hitz v. Hitz, 2008 ND 58, ¶ 14, 746
N.W.2d 732. “We have never held that property . . . acquired by gift or
inheritance by one spouse, be irrevocably set aside to that spouse.” Id. (quoting
Young v. Young, 1998 ND 83, ¶ 10, 578 N.W.2d 111). The origin of the property
is just one factor under the Ruff-Fischer guidelines. Hitz, at ¶ 14. When
property is deeded to both spouses in a joint tenancy with rights of
survivorship, this act destroys any separate ownership, and must be included
in the marital estate. Jangula v. Jangula, 2005 ND 203, ¶¶ 15-16, 706 N.W.2d
85.

       Heather Kitzan argues the district court erred by including the farm
property and accompanying mineral rights as part of the marital estate
because it was property she had inherited. The record does not support this
argument. Heather Kitzan’s mother executed a quit claim deed of the farm
property as “joint tenants with right of survivorship,” and a mineral deed to
both of the parties in 2017 during their marriage. The finding that the property
was a marital asset was not induced by an erroneous view of the law, there is
evidence to support the finding, and, after reviewing all the evidence, we are
not left with a definite and firm conviction a mistake has been made. The
district court did not err by including the assets in the marital estate.

                                       VI

      This Court has said that “a property division need not be equal to be
equitable, but a substantial disparity must be explained.” Berg, 2018 ND 79, ¶

                                        5
7 (quoting Ulsaker v. White, 2009 ND 18, ¶ 9, 760 N.W.2d 82). Along with
N.D.C.C. § 14-05-24(1), the district court must also consider the Ruff-Fischer
factors which include:

      [T]he 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.

Berg, at ¶ 7 (quoting Ulsaker, at ¶ 9). “Economic fault and dissipation of assets
are relevant factors the court may consider and are grounds for an unequal
distribution.” Swanson v. Swanson, 2019 ND 25, ¶ 12, 921 N.W.2d 666.
“Economic misconduct is misconduct that results in a wasted asset or in the
reduction of the net marital estate.” Id. “A court’s finding of economic or non-
economic fault is a finding of fact subject to the clearly erroneous rule.” Id.

      Here, the district court conducted a thorough analysis of the Ruff-Fischer
factors. The court awarded Heather Kitzan an equity payment of $30,000 to be
paid from Justun Kitzan’s proceeds from the farm sale, for a total net marital
estate allocation of $36,818.57 for Heather Kitzan and $68,111.47 for Justun
Kitzan. In justifying the disparity, the court explained:

             This does result in a higher Net Estate to Justun. However,
      the Court finds this justified. From what the Court can see, there
      is at least $50,000 and probably closer to $100,000 that Heather
      has received in the last two years that is missing or could not be
      documented. The Court cannot tell if there is money being hidden
      somewhere or if Heather has a bad spending problem (bank
      account shows extreme spending on luxuries). Heather has
      received PPP loans, COVID Stimulus Money, Loans from the State
      of North Dakota, business money, cashed out her retirement,

                                       6
      money for the Farm, etc. Most of this cannot be tracked in the bank
      accounts and there was no documents on this being spent on
      expenses.

      The district court’s finding that Heather Kitzan attempted to hide or
spend approximately $50,000 to $100,000 from the marital estate is supported
by the record. The court noted that Heather Kitzan did not provide receipts or
accounting information for the money she frequently deposited from one
account and then withdrew to either spend or deposit into another account.
The court found the same discrepancies with her use of the PPP loans and
grant from the State Water Commission. Heather Kitzan’s insufficient
explanations regarding those funds support the court’s conclusion of financial
misconduct. The missing or unaccounted for funds resulted in reduction of the
net marital estate as is prohibited by Swanson, 2019 ND 25, ¶ 12. The findings
explaining the disparity in the allocation of the marital estate were not induced
by an erroneous view of the law, there is evidence to support the findings, and,
after reviewing all the evidence, we are not left with a definite and firm
conviction a mistake has been made.

                                      VII

      This Court reviews an award of spousal support as a finding of fact
subject to the clearly erroneous standard of review. Willprecht v. Willprecht,
2021 ND 17, ¶ 7, 954 N.W.2d 707. Section 14-05-24.1(1), N.D.C.C., provides
that a court may require a party to pay spousal support for a limited period of
time. An analysis of the Ruff-Fischer factors is also required. Berdahl, 2022
ND 136, ¶ 7. “[T]he Ruff-Fischer guidelines allow a district court to consider
the parties’ conduct during the marriage, including fault.” Swanson, 2019 ND
25, ¶ 12. “[B]oth economic and noneconomic fault are proper factors for the
trial court to consider[.]” Hitz, 2008 ND 58, ¶ 15 (quoting McDowell v.
McDowell, 2001 ND 176, ¶ 6, 635 N.W.2d 139). “Economic misconduct is
misconduct that results in a wasted asset or in the reduction of the net marital
estate.” Swanson, at ¶ 12.

                                       7
      Heather Kitzan argues the district court erred in determining that her
financial mismanagement was misconduct and therefore “[weighed] against
any award of spousal support.” The court’s findings that Heather Kitzan
commingled personal, farm, and business funds, and attempted to hide or
deplete assets after the divorce proceedings commenced are further evidence
of misconduct. The court found the parties earned an almost identical monthly
income. The court further found Heather Kitzan did not have a need for
support and that Justun Kitzan did not have an ability to pay. The finding that
an award of spousal support was not warranted was not induced by an
erroneous view of the law, there is evidence to support the finding, and, after
reviewing all the evidence, we are not left with a definite and firm conviction
a mistake has been made.

                                     VIII

       The district court’s findings of facts regarding the date of separation,
inclusion of certain property within the marital estate, the final property
division between the parties, and the denial of spousal support were not clearly
erroneous. The judgment is affirmed.

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

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