Farlee v. Farlee ( 2012 )

#26106-rev & rem-SLZ
2012 S.D. 21IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
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JAMIE LOUANN FARLEE, Plaintiff and Appellant,
v.
CLAYTON LEE FARLEE, Defendant and Appellee.
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APPEAL FROM THE CIRCUIT COURT OF
THE FOURTH JUDICIAL CIRCUIT
ZIEBACH COUNTY, SOUTH DAKOTA
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THE HONORABLE JEROME A. ECKRICH, III
Judge
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PATRICIA A. MEYERS
Rapid City, South Dakota Attorney for plaintiff
and appellant.
ROSE ANNE WENDELL
Pierre, South Dakota Attorney for defendant
and appellee.
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CONSIDERED ON BRIEFS
ON FEBRUARY 14, 2012
OPINION FILED 03/21/12
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ZINTER, Justice
[¶1.] After six years of marriage, Jamie and Clayton (Clay) Farlee divorced.
Jamie appeals the circuit court’s division of property. We reverse and remand for
the entry of findings of fact and conclusions of law resolving the parties’ disputes on
property valuations and whether certain property is part of the marital estate.
Facts and Procedural History
[¶2.] Jamie and Clay married in May 2003. Prior to the marriage, Jamie
inherited approximately $700,000. Jamie kept her inheritance in a separate bank
account to which Clay did not have access. Although Jamie controlled the spending
of her inheritance, she used a substantial part of it for household expenses,
numerous family vehicles, and recreation. Clay entered the marriage as a rancher
with 156 head of cattle, a mobile home, five acres of land, a pickup, and some debt.
During the marriage, Clay expanded his ranching operation. Jamie raised their
three children, did the bookkeeping for the ranch, and operated two home-based
businesses.
[¶3.] The family initially lived in Clay’s premarital mobile home, which was
located on Indian trust land.1 In 2007, Clay and Jamie bought a modular home for
$150,000 and located it on that property. Jamie made a $15,000 down payment
from her inheritance, and she paid most of the mortgage payments. Clay used
$10,000 in profits from the sale of his mobile home for concrete work around the
new home.
1. Clay is an enrolled member of the Cheyenne River Sioux Tribe.
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[¶4.] In May 2009, the parties separated, and Jamie filed for divorce. The
parties disagreed on the value of many assets. They also disagreed whether certain
assets were marital property. One of the disagreements involved the value of the
cattle existing at the time of trial and whether they were marital property. The
court valued Clay’s premarital cattle herd (156 head) at $125,000. The court valued
the herd existing at the time of trial (346 head) at $248,800. The court found that
both Jamie’s inheritance and Clay’s effort contributed to the increase in the cattle
herd. The court ruled that “[t]he cattle are included in the marital estate with
consideration given to the herd Clay owned prior to the marriage.” (Emphasis
added.)
[¶5.] The second disagreement involved the value of the marital home. The
circuit court found that its market value on trust land was $100,000. The court,
however, also found that the home’s “in-use value” was $150,000. The court did not
indicate which value it assigned for purposes of the property division.
[¶6.] The third disagreement involved the marital status of personal
property that was traceable to Jamie’s inheritance. There is no dispute that
$300,000 to $450,000 of the inheritance was unaccounted for at the time of trial.
The court noted that “Jamie [had] simply consumed a significant portion of
inheritance without evidence of tangible benefit.” The court did, however, trace “the
surviving remnants of [Jamie’s] inheritance to horses, tack, trailers, Jamie’s
business inventory, vehicles, the marital residence, and her current home in Belle
Fourche.” Jamie argued that because those assets were traceable to her
inheritance, they were nonmarital property. In ruling on this argument, the court
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determined that a suburban and a “platinum horse trailer” were nonmarital
property.
[¶7.] Finally, the parties disagreed on the value of certain personal
property. The dispute involved the value of eighty acres of land, horses, a Chevrolet
pickup, a New Holland tractor, Jamie’s jewelry business, a four wheeler, a “rhino,” a
deck, a flatbed trailer, generators, a portable barn, a storage shed, corral panels, a
lawn mower, water tanks, and saddles and tack. The court valued the eighty acres
of land, the horses, the New Holland tractor, and Jamie’s jewelry business. The
court did not value the remaining property.
[¶8.] The court granted the divorce, divided the property, and ordered Clay
to pay Jamie $48,000 to equalize the property division without indicating the total
value of the assets awarded to Clay and Jamie. The court denied Jamie’s
subsequent motion for reconsideration or clarification of the property division.
Jamie appeals contending that the court erred in failing to classify disputed assets
as marital or nonmarital and in failing to value certain marital property. “We
review a court’s property division for an abuse of discretion.” Lovejoy v. Lovejoy,
2010 S.D. 39, ¶ 16, 782 N.W.2d 669, 674.
Decision
[¶9.] Jamie argues that the circuit court abused its discretion in failing to
assign a value to the disputed marital property. She contends that this Court
cannot properly review the property division for an equitable distribution without
those values. We agree. The circuit court “must place a value upon all of the
property held by the parties and make an equitable distribution of that property.”
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Guthmiller v. Guthmiller, 2003 S.D. 120, ¶ 6, 670 N.W.2d 516, 517. The “failure to
value a marital asset constitutes an abuse of discretion and is reversible error.” Id.[¶10.] In this case, the record reflects an unresolved $50,000 difference in the
valuation of the home. An additional unresolved $27,430 difference exists in the
valuation of the Chevrolet pickup, the four wheeler, the rhino, the deck, the flatbed
trailer, the generators, the portable barn, the storage shed, the corral panels, the
lawn mower, the water tanks, and the saddles and tack. It is not enough for the
circuit court to surmise that property is worth “something” and then distribute the
property. Id. The circuit court must set a value and that value must be “based
upon the evidence or within a reasonable range of values presented to [the court].”
Id. ¶ 8. The failure to value all disputed property requires a remand for the entry of
valuation findings and a reconsideration of an equitable division of the property.
Id.; see also Guindon v. Guindon, 256 N.W.2d 894, 898 (S.D. 1977).
[¶11.] With respect to marital property, “South Dakota is an ‘all property
state,’ meaning all property of the ‘divorcing parties is subject to equitable division
by the circuit court, regardless of title or origin.’” Halbersma v. Halbersma, 2009
S.D. 98, ¶ 9, 775 N.W.2d 210, 214 (citing Endres v. Endres, 532 N.W.2d 65, 68 (S.D.
1995) (quoting Radigan v. Radigan, 465 N.W.2d 483, 486 (S.D. 1991))); see also
SDCL 25-4-44 (“When a divorce is granted, the courts may make an equitable
division of the property belonging to either or both, whether the title to such
property is in the name of the husband or the wife.”). This includes inherited
property, Halbersma, 2009 S.D. 98, ¶ 12, 775 N.W.2d at 215, and premarital
property, Muenster v. Muenster, 2009 S.D. 23, ¶ 16, 764 N.W.2d 712, 717. “In
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arriving at an equitable division of property, a circuit court must classify property
as ‘marital’ or ‘non-marital.’” Halbersma, 2009 S.D. 98, ¶ 10, 775 N.W.2d at 215.
[¶12.] In this case, the circuit court did not clearly classify all the disputed
property as marital or nonmarital. With respect to the cattle, the court noted that
“[t]he appreciated value of a cattle herd may be considered a marital asset even if
the herd might be considered non-marital.” (Emphasis added) (citing Bennett v.
Bennett, 516 N.W.2d 672, 674 (S.D. 1994)). The court later concluded that “the
cattle” were marital property, and that it was giving “consideration” to the herd
Clay owned prior to the marriage. From these rulings, we are unable to determine
what cattle were classified as marital property and the meaning of the
“consideration” that was allowed for Clay’s premarital cattle. Further, based on the
court’s findings and conclusions relating to property traceable to Jamie’s
inheritance, we cannot determine why a suburban and the platinum horse trailer
were specifically classified as nonmarital property while much of the remaining
traceable property was not explicitly classified. We conclude that the circuit court
erred in failing to definitively rule on the parties’ competing claims regarding all
disputed marital property. See Midzak v. Midzak, 2005 S.D. 58, ¶ 24, 697 N.W.2d
733, 740 (“The trial court abused its discretion in not properly determining the
status of all assets first as either separate or marital, and then making an equitable
distribution of all assets determined to be marital in nature.”).
[¶13.] Because of uncertainties regarding the marital classification of all
disputed property, and because we are unable to determine the circuit court’s
valuation of all marital property, we are unable to review whether the circuit court
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arrived at an equitable division.2 Consequently, we reverse and remand for
reconsideration of the property division after the entry of findings of fact and
conclusions of law on the existing record clearly resolving the valuation and marital
property issues. See Edinger v. Edinger, 2006 S.D. 103, ¶¶ 10-11, 724 N.W.2d 852,
856 (reversing and remanding because this Court was unable to duplicate the
circuit court’s property values and ascertain the reasoning for the property
division). Both parties’ requests for appellate attorney’s fees are denied.
[¶14.] GILBERTSON, Chief Justice, and KONENKAMP, SEVERSON, and
WILBUR, Justices, concur.
2. “The law requires an equitable, not necessarily equal, division of assets.”
Halbersma, 2009 S.D. 98, ¶ 7, 775 N.W.2d at 214.
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