Marriage of Clark, 2015 MT 263 (Sept. 8, 2015) (Baker, J.) (5-0, aff’d & rev’d)
Issue: (1) Whether the district court abused its discretion in ordering Gordon to make an equalization payment within 120 days or be forced to sell or transfer the ranch; (2) whether the district court abused its discretion in failing to consider tax liabilities associated with selling the ranch; and (3) whether the district court erred in its valuation of the ranch.
Short Answer: (1) No; (2) yes; and (3) no.
Affirmed (1 & 3) and reversed (2) and remanded
Facts: Gordon and Nancy married in 1996 and separated in 2012. No children were born to the marriage. Nancy entered the marriage with property on the Stillwater River (the river house) and Gordon entered the marriage with ranch property. The parties put both properties under joint title upon their marriage.
After the parties separated, Nancy moved for temporary maintenance and the district court ordered Gordon to pay $2,800 a month until the final decree unless the river house sold first. Gordon made payments from Nov. 2012-Feb. 2013 and then stopped. He also stopped making mortgage payments on the ranch in early 2012, sending the property into foreclosure. The parties sold part of the ranch and used the proceeds to bring the mortgage current in 2012, but Gordon again stopped making payments and the ranch went into foreclosure a second time.
The river house sold in early 2013, and the district court allowed Nancy to withdraw her temporary maintenance from those proceeds. At the time of the final decree, the district court estimated $289,681.23 remained from the river house sale proceeds.
The parties presented conflicting evidence about the ranch’s value. Neither party presented evidence about the tax implications of selling the ranch.
Procedural Posture & Holding: The court valued the ranch at $2.45 million, and the marital estate at $2.6 million. It awarded the ranch and its debt to Gordon. It awarded $955,298 to Nancy, about 37% of the marital estate, and required Gordon to make an equalization payment of $650,000 to Nancy within 120 days of the order, or sell the ranch and make the payment from the proceeds. If Gordon did not cooperate with the ranch sale, the court ordered the property to transfer solely to Nancy’s name so that she could handle the sale. Gordon made post-trial motions, which the district court denied without explanation. Gordon appeals, and the Supreme Court affirms in part and reverses in part.
Reasoning: (1) Whether the structure of an equalization payment is error depends upon the specific facts of a case. Nancy argues the 120-day limit was justified due to Gordon’s lack of cooperation throughout the dissolution. The Court agrees the equalization order was not an abuse of discretion.
(2) When equitably apportioning a marital estate, the district court must take into account “liabilities” of the estate. § 40-4-202(1), MCA. The failure to consider the tax consequences of a taxable event precipitating concrete and immediate tax liability is an abuse of discretion. Here, the surrounding circumstances and the court’s order implicate a significant taxable event. The 120-day deadline was imposed sua sponte by the district court, and Gordon filed a post-trial motion raising his argument about taxes for the first time. “In the unusual and particular circumstances of this case, we hold Gordon did not waive his right to raise the tax argument on appeal.” ¶ 21. The district court’s failure to consider the tax liabilities of selling the ranch was an abuse of discretion.
(3) The district court’s valuation of the ranch is supported by substantial evidence in the record.