Marriage of Seubert ( 1996 )

IN THE SUPREME COURT OF THE STATE OF MONTANA
IN RE THE MARRIAGE OF
and
APPEAL FROM: ~istrictCourt of the Ninth Judicial District,
In and for the County of Toole,
The Honorable Marc G. Buyske, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
E. Lee LeVeque; Conklin, Nybo, LeVeque &
Murphy, Great Falls, Montana
For Respondent:
Barbara E. Bell; Bell & Marra, Great Falls,
Montana
Submitted on Briefs: October 10, 1996
Decided: November 14, 1996
Filed:
Justice W. William Leaphart delivered the Opinion of the Court
Pursuant to Section I, Paragraph 3(c), Montana Supreme Court
1995 Internal Operating Rules, the following decision shall not be
cited as precedent and shall be published by its filing as a public
document with the Clerk of the Supreme Court and by a report of its
result to State Reporter, and West Publishing Company.
Appellant, Camille Seubert (Camille), appeals from the Ninth
Judicial District Court, Toole County, determination that her
October 17, 1995, settlement agreement with Russell Seubert (Russ)
was not unconscionable. We affirm.
We restate the issue raised by Camille as follows:
Did the District Court abuse its discretion by
determiningthat the settlement agreement between Camille
and Russ was not unconscionable?
BACKGROUND
Russ and Camille's marriage was dissolved by court order in
November of 1994. Prior to the hearing before the District Court,
Russ hired an accountant, Steven Nichols (Nichols), to value his
interest in Seubert Insurance. Camille did not have an independent
valuation of Russ' interest in Seubert Insurance completed at that
time. Nichols valued Russ' twenty seven and one half percent
interest in Seubert Insurance at $53,544. In valuing Russ'
interest in Seubert Insurance, Nichols used three methods approved
by IRS Revenue Ruling 59-60. These methods included determining
assets and liabilities at fair market value, discerning the earning
capacity of the company, and the market value of stocks of similar
corporations. Nichols averaged the results of these three
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approaches and valued Russ' interest at $53,544. Using this
assessment in determining the value of Seubert Insurance, Russ and
Camille executed a written custody, support and property settlement
agreement. The next day, Camille notified her attorney that she
wanted to rescind the agreement.
Camille made a motion to re-open discovery concerning the
value of the Russ' twenty seven and one half percent interest in
Seubert Insurance. The District Court granted her motion and
opened discovery which allowed Camille to obtain her own appraisal
of Seubert Insurance. Camille hired Nicholas Bourdeau (Bourdeau)
to conduct a valuation of Russ' interest in Seubert Insurance.
Bourdeau arrived at his valuation by capitalizing excess earnings,
also known as goodwill, and then using the cash flow method of
accounting. Using this method, Bourdeau valued Russ' interest at
$128,237, a difference of over $74,000 from Nichols' assessment.
In addition, Camille argued that Nichols' valuation made the
agreement unconscionable because his figure was nearly 550,000
lower than the $102,000 Russ was guaranteed under a Restrictive
Stock Agreement. The District Court, however, ultimately
determined that the property settlement agreement was not
unconscionable, finding that nothing in the circumstances
surrounding the execution of the property settlement supported
Camille's contention. Focusing on the disparity between the two
valuations of Russ' interest in Seubert Insurance, Camille has
filed this appeal challenging the District Court's determination
that the settlement agreement was not unconscionable.
DISCUSSION
Did the District Court abuse its discretion by
determining that the settlement agreement between Camille
and Russ was not unconscionable?
The standard of review of a district court's finding of
conscionability in the distribution of assets and liabilities is
abuse of discretion. In re Marriage of Caras (1994), 263 Mont.
377, 380-81, 868 P.2d 615, 619 (citing In re Marriage of Hamilton
(1992), 254 Mont. 31, 36, 835 P.2d 702, 704-05). When a district
court engages in conscionability determinations, the result is
neither a pure finding of fact nor a pure legal conclusion.
Rather, the determination is a discretionary action and is presumed
to be correct, and will not be overturned by this Court absent an
abuse of discretion. In re Marriage of Bernard (1994), 264 Mont.
103, 107, 870 P.2d 91, 93. In the instant case, Camille argues
that the settlement agreement she entered into was unconscionable
because the value of Russ' ownership interest in Seubert Insurance
did not reflect the fact that the Restrictive Stock Agreement
guaranteed the value of Russ' interest would be $102,000
Section 40-4-201(2), MCA, provides:
In a proceeding for dissolution of marriage or for
legal separation, the terms of the separation agreement,
except those providing for the support, custody, and
visitation of children, are binding upon the court unless
it finds, after considering the economic circumstances of
the parties and any other relevant evidence produced by
the parties, on their own motion or on request of the
court, that the separation agreement is unconscionable.
In making its determination of the conscionability of this
settlement agreement, the District Court may consider the economic
circumstances of the parties resulting from the agreement, and any
other relevant evidence including the conditions under which the
agreement was made. Commissioners' note to § 40-4-201(2),MCA.
In Green v. Green (1978), 176 Mont. 532, 579 P.2d 1235, this Court
declined to define the word "unconscionable" for purposes of
modifying a child support agreement and explained "we will follow
the policy of determining on a case to case basis, from the
underlying facts, whether the evidence is sufficient to be
unconscionable." Green, 579 P.2d at 1238-39.
Although this Court has not specifically defined what
constitutes unconscionability, an example of unconscionability can
be seen in Best v. Best (1982), 202 Mont. 109, 118, 656 P.2d 201,
206. In Best, one spouse did not receive independent counsel and
did not have complete knowledge of concealed assets estimated to be
in excess of $1,000,000. Best, 656 P.2d at 206. The fact that one
spouse was not made aware of the existence of such significant
assets made the settlement agreement patently unfair. In contrast,
Camille was made aware of Russ' interest in Seubert Insurance
throughout settlement negotiations. Camille was represented by
counsel at the time she entered this agreement and the only
complaint she has regarding the settlement agreement relates to the
estimated value of Seubert Insurance.
The disparity between the valuation of Russ' interest in
Seubert Insurance, provided by Russ' C.P.A. and Camille's C.P.A. is
not by itself sufficient evidence that the settlement agreement was
unconscionable. As § 40-4-201(2), MCA, explains, a separation
agreement is binding upon the court unless it finds, after
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considering the economic circumstances of the parties and any other
relevant evidence, that the separation agreement is unconscionable.
Using Nichols' valuation of Seubert Insurance, the property
settlement agreement awarded Russ his interest in Seubert
Insurance, his interest in a Farmer's Insurance contract, a 50%
interest in his office building, his IRA, his Toyota Camry, and
various personal property worth a total value of $125,807. In
return, Camille received $53,000 dollars in equity in her home, her
car, various household goods and her pension. After subtracting
the amount of debt owed by each party, Russ' assets totaled
$93,544, while Camille's assets totaled $95,100, a difference of
$1,546. In addition to this division of property, Russ also agreed
to make Camille's car payments of $828 per month, to pay $225 per
month for day care, and $350 per month for maintenance over the
next five years.
After considering the agreement as a whole, the record
indicates that Camille's decision to enter the settlement agreement
was reasonable. There is nothing in the record to indicate that
the settlement agreement between Camille and Russ was anything less
than fair. Even if the valuations by Russ' C.P.A. were erroneous,
the agreement entered into by Camille and Russ was far from
unconscionable.
Accordingly, we affirm the finding of the District Court.
We c o n c u r :
c Justices