Court Opinion

ID: 9874657
Source: CourtListenerOpinion
Date Created: 2023-09-26 22:12:46.619043+00
Date Added: 2024-06-11T07:46:51.250115
License: Public Domain

Kapsner, Justice,
concurring in the result.
[¶ 20] I concur in the result.
[¶21] I respectfully disagree that the district court’s finding the annual dividends from the stock held by Thomas Holm in his employing company are part of his compensation is not clearly erroneous. In making that finding, the district court made a legal error in its interpretation of the Employment, Stock Option and Noncompete Agreement between Thomas Holm and the employing corporation. Both the district court and the majority opinion rely on the fact that Thomas Holm testified that he considered dividends part of his compensation. But, “[i]nterpretation of a contract is a question of law, and on appeal this Court independently examines and construes the contract to determine if the district court erred in its interpretation.” Irish Oil & Gas, Inc. v. Riemer, 2011 ND 22, ¶ 11, 794 N.W.2d 715. However, on the state of this record, the legal error does not make the final distribution of property inequitable.
[¶ 22] The agreement is a 15-page document which clearly delineates between Thomas Holm’s expectations as an employee, including compensation, and his rights to become, and limitations on his status as, a shareholder. “Compensation” is specifically defined as Base Wage, Incentive Pool Participation, Other Benefits (qualified fringe benefit plans which the company determines), Short Term and Long Term Disability Insurance, and Business Expenses. Dividends are not included in the definition of compensation. Rather than giving effect to each provision of a contract, the district court and the majority opinion are blurring the distinct provisions of a clearly articulated contract.
[¶ 23] It is true that the agreement required Thomas Holm to sell his shares back to the company if he terminated his employment and otherwise limited his ability to sell his shares. But the contract specifically contemplated the possibility that the shares could be subject to a property division order in a divorce. It provides:
6.5 Limitation on Voluntary and Involuntary Transfers of Employee’s Stock. Employee shall not sell, assign, pledge, or otherwise transfer, gift, or dispose of any or all of the Company stock he acquires, whether voluntarily, involun*498tarily, or pursuant to the entry of any order, decree or directive of any administrative body, legislative branch, court or other judicial agency, including but not limited to those entered in connection with a marriage dissolution, requiring the transfer or sale of all or any part of his Company stock to another person or entity, without first giving written notice to the Company of his intention to do so. The notice so required shall indicate the number of such shares to be transferred or otherwise disposed of (“Subject Shares”) and the terms of such transfer or disposition, including the name of the proposed transferee. Upon receipt of such notice, the Company, or its assigns, shall have, for a period of ninety (90) days following the date on which such notice is received, an option to purchase all, but not less than all of the Subject Shares at the price and according to the terms set forth in Sections 6.7 and 6.8 below. If the Company, or its assigns, do not elect to purchase all of the Subject Shares, then Employee may, at his election, consider all or any part of the elections inoperative and of no effect, and Employee shall be free to sell or otherwise dispose of the Subject Shares upon the terms and to the person specified in such notice. If Employee has not sold or otherwise disposed of the Subject Shares in accordance with the notice within one hundred twenty (120) days of the expiration of the Company’s option, then Employee shall again be required to comply with the procedures set forth in this paragraph 6.5 before selling or otherwise disposing of all or any portion of the Subject Shares.
[¶24] In other words, like any other asset, these shares were subject to division by the district court if necessary for an equitable division of property. The contractual limitation on such division was the corporation’s ability to buy back the shares at a price established by the agreement.
[¶ 25] While I agree with Dianna Holm’s legal argument that the dividends are not compensation under the clear language of the contract, I concur in the result of the majority opinion.
[¶ 26] Presumably, Dianna Holm hoped to acquire future dividends by receiving part of the stock in the corporation that had been purchased during the marriage. If she had, she might have been subject to a buy-out by the corporation under the provisions quoted above. The problem with her position is set out in Part II, B of the majority opinion. The district court had to divide marital property based on the evidence presented to it. Using the only value the district court had received in evidence to value the corporate stock, the district court divided the marital property roughly equally. Therefore, I concur in the result.
[¶ 27] Carol Ronning Kapsner