                                            No. 05-374

                IN THE SUPREME COURT OF THE STATE OF MONTANA

                                            2006 MT 56

                                                 _______________________________________

IN RE THE MARRIAGE OF:

ROXANNA LYNN DENNISON,

               Petitioner and Respondent,

         and

MICHAEL GRANT DENNISON,

               Respondent and Appellant.

                                                  ______________________________________

APPEAL FROM:          District Court of the Twentieth Judicial District,
                      In and for the County of Lake, Cause No. DR 04-95
                      The Honorable C. B. McNeil, Judge presiding.


COUNSEL OF RECORD:

               For Appellant:

                      Kyle D. Cunningham, Cunningham Law Offices, Missoula, Montana

               For Respondent:

                      Thomas Alan Kragh, Thomas Kragh Law Firm, P.C., Polson, Montana


                                                    ____________________________________

                                                         Submitted on Briefs: January 31, 2006

                                                                    Decided: March 14, 2006

Filed:

                        ______________________________________
                                         Clerk
Justice Brian Morris delivered the Opinion of the Court.

¶1      Appellant Michael Dennison (Mike) appeals from a dissolution decree and final

parenting plan entered in the Twentieth Judicial District, Lake County, in dissolution

proceedings with Respondent Roxanna Dennison (Roxanna). We affirm in part and

remand in part for further proceedings.

¶2      We review the following issues on appeal:

¶3      Whether the District Court improperly adopted Roxanna’s proposed parenting

plan.

¶4      Whether the District Court improperly calculated child support.

¶5      Whether the District Court improperly awarded Roxanna a property equalization

payment.

¶6      Whether the District Court improperly awarded Roxanna attorney’s fees.

                  FACTUAL AND PROCEDURAL BACKGROUND

¶7      Mike and Roxanna married on February 29, 1994. They had one child during the

marriage, Michael Allison Dennison (Allison), in June of 2000. Mike and Roxanna

acquired real and personal property during the marriage, including their home in Moise.

Mike and Roxanna also incurred significant debt mainly associated with a logging

business that they ran together. They separated in May of 2004 and Roxanna moved with

Allison to Polson, some 40 miles away. Mike continued to operate the logging business

and Roxanna found part-time work in Polson.

¶8      Roxanna filed a petition for dissolution on July 15, 2004. Mike and Roxanna both

testified at trial concerning Allison’s best interests. Roxanna submitted a parenting plan

that provided for Allison to reside with her during the school year, but with Mike for

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most of the summer. Mike proposed an even split that contemplated Allison residing

with him for part of the school year. Mike’s proposal would require him to shuttle

Allison the 80 miles round-trip to and from school each day.            Mike preferred that

arrangement because Allison would reside with him during a portion of the slow season

for his logging business in the winter months. The District Court adopted Roxanna’s

parenting plan.

¶9     The District Court also adopted Roxanna’s child support calculations.              Her

calculations stated accurately that Mike earned approximately $23,000 per year from the

logging business.    The child support calculations included no imputed income for

Roxanna, however, even though she actually worked part-time by the time of the trial.

Roxanna testified at trial that she could increase her employment to full-time and earn at

least minimum wage.

¶10    The District Court awarded Mike most of the marital assets and marital debt.

Mike received $650,750 of the marital assets as well as $613,825 of the marital debt.

Roxanna received $174,670 of the marital assets and $15,710 of the marital debt. The

District Court also awarded Roxanna what it termed an equalization payment of $36,000

as part of the division of the marital estate, although the martial estate did not include any

cash. The equalization payment stemmed from Roxanna’s request for maintenance of

$1,500 a month for two years.

¶11    The District Court awarded Roxanna $10,000 for attorney’s fees and costs.

Roxanna testified that her attorney’s fees at the time of trial amounted to approximately

$6,000 and that she would incur additional fees. Roxanna presented no other evidence

concerning her attorney’s fees and costs and the District Court did not hold a hearing.

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The dissolution decree did not state why the District Court awarded Roxanna fees. This

appeal followed.

                                     DISCUSSION

¶12    Mike contends that the District Court improperly adopted a parenting plan and

improperly calculated child support by failing to impute income to Roxanna. Mike

further argues that the District Court improperly distributed the assets of the marital

estate by awarding Roxanna a property equalization payment as part of the marital estate.

Finally, Mike contends that the District Court improperly awarded Roxanna attorney’s

fees and costs.

                                     Parenting Plan

¶13    This Court reviews a district court’s award of child custody to determine if the

court’s findings are clearly erroneous. In re Marriage of Epperson, 2005 MT 46, ¶ 17,

326 Mont. 142, ¶ 17, 107 P.3d 1268, ¶ 17. Findings are clearly erroneous if they are not

supported by substantial evidence, the court misapprehends the effect of the evidence, or

this Court’s review of the record convinces it that a mistake has been made. In re

Marriage of Olson, 2005 MT 111, ¶ 20, 327 Mont. 82, ¶ 20, 111 P.3d 686, ¶ 20. The test

for abuse of discretion is whether the trial court acted arbitrarily without employment of

conscientious judgment or exceeded the bounds of reason resulting in substantial

injustice. Epperson, ¶ 17.

¶14    Mike contends that the parenting plan adopted by the District Court contradicts

the testimony of both parties regarding the best interests of the child by providing for

Allison to spend roughly three quarters of her time with Roxanna. Moreover, Mike

argues, the plan calls for him to have primary custody of Allison during his busy season

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in the summer, thereby further reducing the amount of time that he gets to spend with his

daughter and unnecessarily increasing daycare costs.

¶15    Substantial credible evidence supports the District Court’s parenting plan.

Roxanna has been Allison’s primary care giver since birth. Allison has been living with

Roxanna since the separation and the present living situation provides stability in

Allison’s home life. Roxanna resides close to Allison’s school, whereas Mike lives

approximately 40 miles away. Awarding Mike custody of Allison during the school year

would require her to ride approximately 80 miles round-trip each day for school.

Roxanna’s plan allows for Mike to have frequent contact with Allison and spend a

substantial amount of time with her. The plan calls for Allison to spend every other

weekend with him, various holidays, and the majority of the summer.

¶16    The District Court’s parenting plan accords with the criteria enumerated in § 40-4-

212, MCA. The District Court had the difficult task of apportioning Allison’s time

between two concerned parents while considering her best interests. We cannot say the

District Court abused its discretion by adopting a parenting plan that favored stability and

convenience for Allison over an equal apportionment of time between Mike and

Roxanna.

                                       Child Support

¶17    We review a district court’s award of child support to determine if it abused its

discretion. Albrecht v. Albrecht, 2002 MT 227, ¶ 7, 311 Mont. 412, ¶ 7, 56 P.3d 339, ¶ 7.

We determine whether the trial court acted arbitrarily without employment of

conscientious judgment or exceeded the bounds of reason resulting in substantial

injustice in deciding whether a district court abused its discretion. Albrecht, ¶ 7.

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¶18    Mike contends that the District Court abused it discretion by failing to include any

imputed income for Roxanna in its child support calculations. Child support obligations

are calculated according to uniform child support guidelines promulgated by the

Department of Public Health and Human Services. See § 40-5-209, MCA. Income for

child support may include imputed income in order to reflect fairly a parent’s resources

available for child support. See Rule 37.62.106, ARM. The District Court should impute

income when a parent is voluntarily unemployed or underemployed. Rule 37.62.106(7),

ARM; In re Marriage of Bee, 2002 MT 49, ¶ 22, 309 Mont. 34, ¶ 22, 43 P.3d 903, ¶ 22.

¶19    We agree that the District Court abused its discretion in failing to impute any

income to Roxanna. Roxanna testified at trial that she worked part-time and that she

could obtain full-time employment if she wished, and therefore, could earn significantly

more income.     The District Court should have imputed some income to her when

calculating child support in order to reflect fairly the resources that Roxanna had

available to support Allison. See Rule 37.62.106(7), ARM. The District Court abused its

discretion by failing to account for Roxanna’s voluntary underemployment when

calculating child support.

                             Property Equalization Payment

¶20    Mike next contends that the District Court improperly awarded a property

equalization payment to Roxanna.       We review a district court’s division of marital

property to determine whether the findings of fact upon which the division is based are

clearly erroneous. In re Marriage of Payer, 2005 MT 89, ¶ 9, 326 Mont. 459, ¶ 9, 110

P.3d 460, ¶ 9. A district court’s findings are clearly erroneous if they are not supported

by substantial evidence, if the court misapprehended the effect of evidence, or if our

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review of the record convinces us that the court made a mistake. Payer, ¶ 9. The court

has discretion to adopt any reasonable valuation of property supported by the record.

Bee, ¶ 34.

¶21    The District Court awarded Roxanna a $36,000 property equalization payment as

part of the division of the marital estate. The marital estate does not include any cash,

however, that could be distributed as an asset to satisfy this obligation. As a result, the

court awarded more than the proven net worth of the estate.

¶22    The District Court exceeded its authority under § 40-4-202, MCA, by awarding

property in excess of the proven net worth of the estate. See In re Marriage of Lippert

(1981), 192 Mont. 222, 227, 627 P.2d 1206, 1209. The District Court’s power does not

extend beyond the existent estate. Lippert, 192 Mont. at 227, 627 P.2d at 1209. The

District Court awarded more than the total value of the existing marital estate by

including a cash property equalization payment in the distribution of marital assets. The

court awarded cash that does not exist. We conclude that the District Court abused its

discretion by mistakenly including a cash property equalization payment in the division

of the marital estate.

                                     Attorney’s Fees

¶23    This Court reviews a district court’s award of attorney’s fees in dissolution actions

to determine whether the district court abused its discretion. In re Marriage of Harkin,

2000 MT 105, ¶ 70, 299 Mont. 298, ¶ 70, 999 P.2d 969, ¶ 70. A district court has abused

its discretion if substantial evidence does not support its award of attorney’s fees. See

Pfeifer v. Pfeifer (1997), 282 Mont. 461, 465, 938 P.2d 684, 687.

¶24    A district court may order a party in dissolution proceedings to pay a reasonable

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amount for the attorney’s fees and costs of the other party. Section 40-4-110, MCA.

This Court has held that an award of attorney’s fees should be reasonable and based on

necessity and competent evidence. Harkin, ¶ 72. A district court must conduct a hearing,

however, that includes the opportunity for oral testimony, the introduction of exhibits,

and an opportunity to cross-examine in order to demonstrate the reasonableness of any

attorney’s fees claimed. Harkin, ¶ 72. Mike contends that the District Court failed to

adhere to these rules in awarding attorney’s fees. We agree.

¶25    The District Court’s findings are not supported by substantial evidence. The

District Court awarded Roxanna $10,000 for attorney’s fees and costs. The District

Court failed to hold a hearing on the matter. We cannot determine the reasonableness of

the award, however, in light of the fact that Roxanna’s testimony during direct that she

probably owed approximately $6,000 represents the only evidence either party introduced

concerning attorney’s fees.

¶26    The District Court’s order also provides an inadequate justification for the

awarding of attorney’s fees. The order simply states that Mike should pay Roxanna’s

attorney’s fees.   Such a statement does not establish sufficiently the necessity for

awarding attorney’s fees and costs. See Harkin, ¶ 75. This Court has held that a district

court’s statement that it considered the parties’ financial resources, without more, does

not represent a sufficient basis to determine whether an award of attorney’s fees is

necessary. Pfeifer, 282 Mont. at 466-67, 938 P.2d at 688. In this case, the order does not

even state that the District Court considered the financial resources of the parties before

awarding attorney’s fees. The District Court must explain why the financial positions of

the respective parties necessitated an award of attorney’s fees. We conclude that the

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District Court abused its discretion by awarding Roxanna attorney’s fees.

¶27   Affirmed in part and remanded in part for further proceedings.


                                                              /S/ BRIAN MORRIS


We Concur:

/S/ KARLA M. GRAY
/S/ PATRICIA COTTER
/S/ JOHN WARNER
/S/ JIM RICE




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