Senger v. Senger , 2022 ND 229 ( 2022 )

FILED
IN THE OFFICE OF THE
CLERK OF SUPREME COURT
DECEMBER 22, 2022
STATE OF NORTH DAKOTA
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2022 ND 229Denise M. Senger, Plaintiff and Appellee
v.
James Senger, Defendant and Appellant
No. 20220040
Appeal from the District Court of Morton County, South Central Judicial
District, the Honorable James S. Hill, Judge.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
Opinion of the Court by McEvers, Justice.
Mikayla M. Reis and Todd D. Kranda, Mandan, ND, for plaintiff and appellee.
Justin D. Hager, Bismarck, ND, for defendant and appellant.
Senger v. Senger
No. 20220040
McEvers, Justice.
[¶1] James Senger appeals from a divorce judgment entered following a
bench trial. He argues the district court erred by retroactively applying an
amended and reenacted version of N.D.C.C. § 14-05-24(1) in valuing the
marital estate and, thereby, erred by considering inadmissible evidence and
incorrectly valuing the marital home and bank accounts. He further argues the
court erred by distributing marital property and by awarding Denise Senger
spousal support. We affirm in part, reverse in part, and remand for further
proceedings consistent with this opinion.
I
[¶2] James Senger and Denise Senger were married in 1988. Denise Senger
sued for divorce on July 27, 2020. James Senger answered and filed a
counterclaim. A bench trial was held on November 18, 2021. At the time of
trial, James Senger was 57 years of age and Denise Senger was 54. They lived
in Mandan, North Dakota. Denise Senger was employed with the North
Dakota State Penitentiary earning approximately $59,609 annually. James
Senger was employed with Burlington Northern Santa Fe Railroad, earning
approximately $137,700 annually.
[¶3] The district court heard testimony from both parties regarding the
accumulated assets, debts, and the conduct attributing to the breakdown of
this long-term marriage. Testimony revealed that James Senger’s alcohol use
became problematic, he was verbally abusive towards Denise Senger, and she
felt threatened by his drunken, angry behavior.
[¶4] Denise Senger presented testimony from a real estate agent regarding a
market analysis of the marital home valuing the home between $425,000 and
$475,000. Denise Senger adopted her valuation of $440,000 by splitting the
difference of the appraiser’s values. James Senger valued the home at
$382,500. The district court found the law existing at the time of the market
analysis and time of trial applied, but the distinction had little impact because
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the home would be sold. The court further found there was no appraised value
of the marital home on July 27, 2020, nor a precise valuation on September 18,
2021. Based on this finding, the court ordered the marital home be sold as an
equitable division of the property with the parties each receiving one-half of
the net sale proceeds. The court agreed with Denise Senger’s value of the
marital home based on the market analysis her real estate agent presented.
[¶5] Regarding the financial assets, the district court split all of the parties’
bank accounts equally between them. The court awarded each party their
individual retirement account balances. The court awarded James Senger
$130,000 in unaccounted for cash withdrawals he made from his bank account.
The court awarded various real estate holdings and vehicles, which are not in
dispute on appeal. After dividing the assets and liabilities, the court calculated
an equity adjustment to be paid by James Senger, resulting in an equal division
of property. The court awarded Denise Senger spousal support of $1,000 per
month. James Senger appeals from the divorce judgment.
[¶6] On appeal, James Senger argues the district court erred by retroactively
applying N.D.C.C. § 14-05-24(1) in valuing the marital estate and, thereby,
erred by considering inadmissible evidence and incorrectly valuing the marital
home and bank account. James Senger further argues the court erred by
distributing marital assets and awarding Denise Senger spousal support.
II
[¶7] Section 14-05-24(1) (2017), N.D.C.C., requires a district court to value
the parties’ property and debts and “make an equitable distribution” in
granting a divorce.1 Our standard for reviewing a district court’s marital
property distribution is well established:
This Court reviews a district court’s distribution of marital
property as a finding of fact, and will not reverse unless the
findings are clearly erroneous. A finding of fact is clearly erroneous
if it is induced by an erroneous view of the law, if there is no
1 Section 14-05-24(1), N.D.C.C., was amended effective August 1, 2021, after this action commenced.
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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 and
quotation marks omitted) (quoting Holm v. Holm, 2017 ND 96, ¶ 4, 893 N.W.2d
492).
[¶8] In distributing marital property, the district court considers the Ruff-
Fischer factors, which include:
The 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.
Berdahl, 2022 ND 136, ¶ 7; Ruff v. Ruff, 52 N.W.2d 107 (N.D. 1952); Fischer v.
Fischer, 139 N.W.2d 845 (N.D. 1966). The court is not required to make specific
findings on each Ruff-Fischer factor; however, we must be able to determine
the reasons for the court’s decision. Berdahl, at ¶7.
A
[¶9] James Senger argues the district court erred by retroactively applying
the August 1, 2021 version of N.D.C.C. § 14-05-24(1).
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[¶10] Whether a statute applies retroactively is a question of law. Smith v.
Baumgartner, 2003 ND 120, ¶ 9, 665 N.W.2d 12. Questions of law are fully
reviewable on appeal. Klein v. Klein, 2016 ND 153, ¶ 4, 882 N.W.2d 296.
[¶11] A statute is applied retroactively if it applied to an action that arose
before the effective date. Baumgartner, 2003 ND 120, ¶ 11. When this action
commenced in July 2020, N.D.C.C. § 14-05-24(1) (2017) provided: “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
separation or the date on which the parties last separated, whichever occurs
first.” The amended version of the statute states the valuation date is sixty
days before the initially scheduled trial date. N.D.C.C. § 14-05-24(1). In order
for a court to retroactively apply a statute, the statute itself must generally
contain language expressly declaring the statute to be retroactively applied.
N.D.C.C. § 1-02-10 (providing “no part of this code is retroactive unless it is
expressly declared to be so”); see also Klein, 2016 ND 153, ¶ 12 (holding
statutes cannot be applied retroactively without specific legislative direction);
Larson v. Norheim, 2013 ND 60, ¶ 10, 830 N.W.2d 85 (applying prior version
of statute that was in effect at the time the action commenced); Sorenson v.
Felton, 2011 ND 33, ¶ 9, 793 N.W.2d 799 (same); Berdahl, 2022 ND 136, ¶ 6 n.
1 (applying version of N.D.C.C. § 14-05-24(1) at time of commencement).
However, laws conferring benefits may be excepted from the general rule on
retroactive application. Baumgartner, 2003 ND 120, ¶¶ 11-15. Nothing in the
statute or the legislative history suggests the amendments were intended to
apply retroactively. The district court erred by not applying the version of
N.D.C.C. § 14-05-24(1) in effect at the time of commencement of the divorce
action.
B
[¶12] Because the district court erred by retroactively applying the statute, we
now examine whether the error was harmless. Rule 61 of the North Dakota
Rules of Civil Procedure provides guidance for dealing with errors:
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Unless justice requires otherwise, no error in admitting or
excluding evidence, or any other error by the court or a party, is
ground for granting a new trial, for setting aside a verdict, or for
vacating, modifying, or otherwise disturbing a judgment or order.
At every stage of the proceeding, the court must disregard all
errors and defects that do not affect any party’s substantial rights.
Put simply, an error is harmless if it does not affect the outcome of the case or
a party’s substantial rights.
[¶13] James Senger argues the district court erred by admitting evidence that
should have been excluded based on relevancy because it used the incorrect
valuation date, and relying on that evidence when valuing the marital home.
[¶14] “A trial court has broad discretion when ruling whether proffered
evidence is relevant, and we will not reverse that decision absent an abuse of
discretion. A trial court abuses its discretion when it acts in an arbitrary,
unreasonable, or unconscionable manner.” Goff v. Goff, 1999 ND 95, ¶20, 593
N.W.2d 768 (cleaned up).
[¶15] At trial, Denise Senger presented testimony of a real estate agent and
offered into evidence an August 27, 2021, market analysis the agent conducted
of the marital home. The valuation indicated the home was a unique property
and it was difficult to provide comparable properties because few similar
properties had been sold. The valuation included analysis on three comparable
homes sold between October 30, 2020 and August 13, 2021. The district court
admitted the market analysis into evidence over objection. The following
exchange occurred:
[James Senger’s Counsel]: . . . We would object to Exhibit
2 at this time and our objection is based on relevancy regarding
this exhibit. We are supposed to use the date of valuation as [sic]
commencement in this action. This exhibit purports to be from
August 27th of 2021 and the valuation therefrom.
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THE COURT: All right. The objection is to relevance.
Any response, Counsel?
[Denise Senger’s Counsel]: I would say that it’s relevant.
It was the closest date we could get as of the date of
commencement, and therefore it’s the only real market analysis or
evaluation that was offered at all by either party. Therefore, I
conclude it’s relevant, Your Honor.
THE COURT: All right. Exhibit 2 is going to be received. I
do note the objections by [James Senger’s counsel], the relevance
issues. I do have to relate it back to a specific date. We have an
August 2021, date on the market analysis. The Court will have to
consider that in taking into account the exhibit.
[¶16] Evidence is relevant if it has any tendency to make a fact of consequence
more or less probable than it would be without the evidence. N.D.R.Ev. 401. In
a bench trial, it is presumed the district court only considered competent
evidence because a judge, when deliberating the ultimate decision, is capable
of distinguishing between admissible and inadmissible evidence. Rath v. Rath,
2018 ND 138, ¶ 17, 911 N.W.2d 919. As we explained:
In the trial of a nonjury case, it is virtually impossible for a trial
judge to commit reversible error by receiving
incompetent evidence, whether objected to or not. An appellate
court will not reverse a judgment in a nonjury case because of the
admission of incompetent evidence, unless all of the
competent evidence is insufficient to support the judgment or
unless it affirmatively appears that the
incompetent evidence induced the court to make an essential
finding which would not otherwise have been made.
Haas v. Hudson & Wylie LLP, 2020 ND 65, ¶ 14, 940 N.W.2d 650.
[¶17] The August 2021 market analysis was relevant because the value of the
marital home is a fact of consequence. The court did not abuse its discretion by
considering the testimony or the market analysis. Furthermore, the court
noted the distinction in the statutory language had “little impact in this case”
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because the marital home would be sold with both parties splitting the
proceeds equally. The court reasoned “there was no testimony at trial regarding
the appraised value of the marital home on July 27, 2020 nor a precise
valuation on September 18, 2021, given the nature of the property and the
availability of comparative sale for comparison purposes.”
[¶18] A court’s valuations of marital property are not clearly erroneous if they
are within the range of evidence presented. Wald v. Wald, 2020 ND 174, ¶ 11,
947 N.W.2d 359. “In a bench trial, the district court determines credibility
issues, which [this Court] will not second-guess on appeal.” Id. at ¶ 27. “The
district court is in a better position than this Court to judge the credibility and
observe the demeanor of witnesses and to determine property values.” Datz v.
Dosch, 2013 ND 148, ¶ 22, 836 N.W.2d 598 (cleaned up). The court’s marital
property valuation depends on the evidence presented by the parties.
Amsbaugh v. Amsbaugh, 2004 ND 11, ¶ 12, 673 N.W.2d 601.
[¶19] Denise Senger’s real estate agent testified providing a market analysis
on the marital home. He valued the house between $425,000 and $475,000
based on his analysis comparing the marital home to other comparable
properties in the Bismarck-Mandan area. He testified the marital home was a
unique property in the area and the August 2021 date he used for the market
analysis was the closest he could get to the date of commencement of this action
due to the unique nature of the property. He also stated he would hope to get
at least $400,000 out of this property if he were to sell it.
[¶20] Denise Senger testified her “owner’s value” of the marital home was
$440,000, which splits the difference between $400,000 and $475,000, the high
end of the market analysis. James Senger testified his “owner’s value” of the
marital home on the date of commencement was $382,500. The district court
found the marital home’s value was $440,000, finding the range the real estate
agent offered most credible and persuasive. The record supports the court’s
findings.
[¶21] The district court’s use of the incorrect version of the statute to
determine the valuation date for the marital home was harmless. Even if the
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valuation of the home was affected, it did not affect either party’s substantial
rights. The parties were each awarded fifty percent of the equity of the home.
The court asked James Senger about selling the house at trial: “[I]f there’s no
agreement as to the value of the house, and I ordered as a judge that the
property be placed on the open market and sold, would you agree to do that?”
James Senger replied, “Yes.” The court ordered the marital home be listed for
sale within 90 days of entry of judgment with the parties to share the proceeds,
and the option for either party to purchase the home at one-half of the court’s
value. James Senger has not provided any legal authority that he was entitled
to receive any particular marital property; therefore, he has not established
his substantial rights were affected by the court’s valuation of the property or
ordering the marital home be sold.
C
[¶22] James Senger argues the district court erred by considering evidence
that should have been excluded when assigning value to a bank account. James
Senger and Denise Senger agreed through the property and debt listing that
the current value of one of the accounts at issue was $32,000. However, James
Senger argues the court must address $17,969 missing from an account that
was closed.
[¶23] The district court addressed the $17,969 transaction. The court heard
testimony from Denise Senger and the parties’ daughter relating to the
transaction. The court found Denise Senger and her daughter to be credible,
as they both unequivocally testified that loans were often made between the
sisters for school expenses. The court found the account at issue was jointly
owned by Denise Senger and her daughter, these accounts were not
commingled, and the disputed amount was a loan between the daughter and
her sister. We will not second guess the credibility the district court gave to the
testimony. See Datz, 2013 ND 148, at ¶ 22 (explaining the district court is
better positioned to judge credibility, observe witness’s demeanor, and
determine property values). The court properly relied on the testimony it found
more credible.
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D
[¶24] James Senger argues the district court erred by identifying cash
withdrawals made prior to commencement of the divorce as marital assets.
According to James Senger, the cash withdrawals he made should not have
been considered an asset for distribution because they did not exist when the
action commenced.
[¶25] The district court found James Senger used or misappropriated marital
assets since the service of the summons in the amount of $130,000. Economic
fault and dissipation of marital assets are proper factors to consider when
determining an equitable distribution of property. Horner v. Horner, 2004 ND
165, ¶ 16, 686 N.W.2d 131.
[¶26] The district court relied on plaintiff ’s trial exhibit 13 regarding James
Senger’s unaccounted for cash withdrawals amounting to $130,000. This
exhibit shows the withdrawal of $140,700 occurred between June 2017 and
July 2020, prior to commencement of the divorce. It is unclear why the court
used the amount of $130,000 rather than the $140,700, or why the court looked
at cash withdrawals during this prolonged period prior to commencement of
the divorce. Although credible testimony may have existed that James Senger
withdrew cash without adequately accounting for it, we are unable to discern
the basis for the district court’s findings on this issue. Therefore, we reverse
the court’s award to James Senger of unaccounted for cash withdrawals as a
marital asset and remand with instructions to further explain its reasoning on
any unjustified use or dissipation of marital assets by James Senger.
III
[¶27] James Senger argues the district court erred by awarding spousal
support to Denise Senger.
[¶28] District courts may award spousal support under N.D.C.C. § 14-05-24.1.
“When determining whether to award spousal support, ‘the court must
consider the Ruff-Fischer guidelines, the needs of the spouse seeking support,
and the ability of the other spouse to pay.’” Quamme v. Quamme, 2021 ND 208,
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¶ 14, 967 N.W.2d 452 (quoting Willprecht v. Willprecht, 2020 ND 77, ¶ 40, 941
N.W.2d 556).
[¶29] “‘Spousal support and property distribution are interrelated and
intertwined and must be considered together.’” Lizakowski v. Lizakowski, 2017
ND 91, ¶ 21, 893 N.W.2d 508 (quoting Krueger v. Krueger, 2008 ND 90, ¶ 9,
748 N.W.2d 671). We remand on the spousal support issue because we reversed
and remanded on the property division issue. However, while we do not fully
review the district court’s analysis on spousal support, the court should be
mindful on remand to consider Denise Senger’s current needs for spousal
support rather than hypothetical needs. The district court found that Denise
Senger had several years before reaching retirement age and Medicare
eligibility and would have to factor in future health insurance costs if she did
not continue employment with the State of North Dakota. Our cases require a
finding on the current known needs of the requesting spouse and leave
hypothetical future needs to consideration of changed circumstances by the
district court under a motion to modify a support award. Knudson v. Knudson,
2018 ND 199, ¶ 21, 916 N.W.2d 793 (“We have previously affirmed a court’s
denial of spousal support when . . . the requesting spouse had the ability to
adequately address her current needs . . . .”) (emphasis added). The district
court should reconsider spousal support in light of any changes made in the
division of property.
V
[¶30] The district court’s judgment is affirmed in part, reversed in part, and
remanded for further proceedings consistent with this opinion.
[¶31] Jon J. Jensen, C.J.
Gerald W. VandeWalle
Lisa Fair McEvers
Jerod E. Tufte
Bruce Haskell, S.J.
[¶32] The Honorable Bruce Haskell, S.J., sitting in place of Crothers, J.,
disqualified.
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