Marriage of Edwards

Marriage of Edwards, 2015 MT 9 (Jan. 13, 2015) (Cotter, J.) (5-0, aff’d)

Issue: (1) Whether the district court erred in ordering Jim’s corporation to undergo a Divisive Reorganization to effect an equitable distribution of marital assets, and (2) whether the district court abused its discretion in valuing and distributing the marital estate.

Short Answer: (1) No, and (2) no.

Affirmed

Facts: Jim and Melinda Edwards divorced after 23 years of marriage. The majority of marital assets were held in Jim’s corporation, Bi Lo Foods, Inc. Based on considerable expert testimony about distributing corporate assets in a marital dissolution, the district court ordered Jim to proceed with a Divisive Reorganization (D Reorg) under IRS Rules to accomplish the division of assets ordered by the court and avoid immediate tax consequences to Bi-Lo or the parties.

Procedural Posture & Holding: Jim moved to amend the final decree, arguing a D Reorg would not meet IRS guidelines and could be devastating to the value of the marital assets. He further argued the court’s valuation of the Pattee Creek Market was not supported by the evidence. The district court denied the motion, and Jim appeals. The Supreme Court affirms.

Reasoning: (1) The record supports the district court’s ruling requiring D Reorg, and the district court properly held that Jim’s motion to amend did not meet the requirements of Rule 59. The Supreme Court notes that in denying the motion, the district court advised Jim to obtain an IRS Private Letter Ruling. If Jim does obtain such a ruling and it is adverse, or if the IRS rejects the D Reorg, Jim could then move to modify the judgment.

(2) The district court did not abuse its discretion in ruling on the valuation of the market.