                                                                                       September 8 2015


                                           DA 14-0614
                                                                                        Case Number: DA 14-0614

               IN THE SUPREME COURT OF THE STATE OF MONTANA
                                           2015 MT 263



IN RE THE MARRIAGE OF:

NANCY R. CLARK,

                Petitioner and Appellee,

         and

GORDON A. CLARK,

                Respondent and Appellant.


APPEAL FROM:            District Court of the Thirteenth Judicial District,
                        In and For the County of Yellowstone, Cause No. DR 12-531
                        Honorable Mary Jane Knisely, Presiding Judge


COUNSEL OF RECORD:

                 For Appellant:

                        Stephen C. Mackey, Towe, Ball, Mackey, Sommerfeld & Turner,
                        P.L.L.P., Billings, Montana

                 For Appellee:

                        Jill Deann LaRance, LaRance & Syth, P.C., Billings, Montana



                                                    Submitted on Briefs: August 5, 2015
                                                               Decided: September 8, 2015


Filed:

                        __________________________________________
                                          Clerk
Justice Beth Baker delivered the Opinion of the Court.

¶1       The Thirteenth Judicial District Court, Yellowstone County, entered a final

dissolution decree in the marriage of Gordon A. Clark and Nancy R. Clark.1 Gordon

appeals, raising the following issues:

         1. Whether the District Court abused its discretion in ordering Gordon to make an
         equalization payment within 120 days or be forced to sell or transfer the ranch.

         2. Whether the District Court abused its discretion in failing to consider tax
         liabilities associated with selling the ranch.

         3. Whether the District Court erred in its valuation of the ranch.

¶2       We affirm on the first and third issues, but reverse and remand on the second

issue.

                    PROCEDURAL AND FACTUAL BACKGROUND

¶3       Gordon and Nancy married in 1996 and separated in 2012 with no children born to

the marriage. Nancy entered the marriage with property on the Stillwater River near

Absarokee, Montana (“the river house”) and Gordon entered the marriage with property

near Acton, Montana (“the ranch”). The parties put both properties under joint title upon

their marriage. Both parties are currently in their sixties and Nancy has a number of

health issues.

¶4       After the parties separated, Nancy filed a motion for temporary maintenance. The

District Court ordered Gordon to pay $2,800 in temporary maintenance per month

beginning in November 2012 and continuing until final resolution unless the river house


1
    As part of the dissolution, Nancy was restored to her former name, Nancy R. Thorn.
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sold first. Gordon made payments from November 2012 through February 2013 but then

stopped. Gordon also stopped making mortgage payments on the ranch in early 2012,

sending that property into foreclosure. The parties sold 160 acres of the ranch to a

neighbor for $800 per acre and used the proceeds to bring the mortgage current in early

2013. Gordon again stopped making mortgage payments on the ranch, however, sending

it into foreclosure for a second time in July 2013.

¶5     The river house was sold in early 2013. After Gordon stopped paying temporary

maintenance, the District Court allowed Nancy to draw her temporary maintenance from

the river house proceeds. At the time of the final decree, the District Court estimated that

$289,681.23 remained in proceeds from the river house’s sale.

¶6     The ranch’s value was a major issue at trial. The parties each employed experts to

testify about the property’s value. Gordon’s expert valued the ranch at $1,172,513.

Nancy’s expert valued the property at $2,667,940. Gordon also indicated at trial that he

would not sell the ranch for $1,172,513, but would consider selling it for $2.4 million.

Neither party presented evidence on the tax implications of selling the ranch.

¶7     The District Court valued the ranch at $2.45 million and valued the totality of the

marital estate at approximately $2.6 million. In its distribution of the marital estate, the

court awarded the ranch and its associated debt to Gordon. The District Court found that

the ranch “does not provide a substantial amount of income to [Gordon].” The Court

awarded $955,297.96 or approximately 37% of the estate to Nancy, including requiring

Gordon to make an equalization payment of $650,000 to Nancy within 120 days from the

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date of the order. The court specified that if Gordon did not make such a payment in the

allotted time, the ranch was to be sold “as quickly as possible” and the equalization

payment drawn from proceeds of the sale. The court also specified that if Gordon did not

cooperate with the sale of the ranch, the property would transfer solely into Nancy’s

name so that she could handle its sale.

¶8     After the dissolution decree was entered, Gordon filed a motion under M. R. Civ.

P. 52 for the District Court to amend its findings of fact and conclusions of law, and

under M. R. Civ. P. 59 for amendment of judgment and a new trial.2 The District Court

denied the motion without explanation. Gordon appeals.3

                              STANDARDS OF REVIEW

¶9     We generally review a district court’s valuation and distribution of a marital estate

for an abuse of discretion. In re Marriage of Thorner, 2008 MT 270, ¶ 21, 345 Mont.

194, 190 P.3d 1063. Although the parties dispute the standard of review to apply to

Gordon’s appeal considering he provided notice of appeal only from the District Court’s

denial of post-trial motions, we consistently have applied an abuse of discretion standard

to post-trial motions on discretionary dissolution matters. In re Marriage of Anderson,

2013 MT 238, ¶ 13, 371 Mont. 321, 307 P.3d 313; In re Marriage of Johnson, 2011 MT

255, ¶ 12, 362 Mont. 236, 262 P.3d 1105; In re Marriage of Schoenthal, 2005 MT 24,
2
  Before the District Court, the parties disputed whether Gordon’s motion for a new trial was
timely brought under M. R. Civ. P. 59(b)’s twenty-eight day time limit and whether M. R. Civ.
P. 58(1)’s separate document requirement applies. On appeal, however, Nancy has apparently
abandoned her argument that Gordon’s post-trial motion was untimely.
3
  Gordon filed for bankruptcy while this appeal was pending, but later agreed to voluntary
dismissal and the bankruptcy case was closed.
                                           4
¶ 9, 326 Mont. 15, 106 P.3d 1162. Further, we review findings of fact to determine

whether they are clearly erroneous. M. R. Civ. P. 52(a)(6); In re Marriage of Patton,

2015 MT 7, ¶ 18, 378 Mont. 22, 340 P.3d 1242.

                                       DISCUSSION

¶10 1. Whether the District Court abused its discretion in ordering Gordon to make an
equalization payment within 120 days or be forced to sell or transfer the ranch.

¶11    The District Court ordered Gordon to make an equalization payment of $650,000

to Nancy within 120 days of its June 17, 2014 dissolution order or else have the marital

ranch placed on the market and sold “as quickly as possible” with the net proceeds of the

sale applied toward the equalization payment. Gordon argues that this was an abuse of

discretion.

¶12    Section 40-4-202(1), MCA, requires a district court to “equitably apportion” a

marital estate upon dissolution. A district court has broad discretion in apportioning the

estate, Patton, ¶ 46, but the discretion has limits. For instance, a district court abuses its

discretion when it apportions more property to a party than is found in the marital estate.

In re Marriage of Dennison, 2006 MT 56, ¶ 22, 331 Mont. 315, 132 P.3d 535. Relatedly,

we have expressed concern about a monetary distribution award that is larger than the

liquid assets of the party ordered to pay and that requires immediate payment. Such an

award may be an abuse of discretion depending on the particular circumstances of a case.

Compare In re Marriage of Schwartz, 2013 MT 145, ¶¶ 34-36, 370 Mont. 294, 308 P.3d

949 (remanding for the district court to enter a deferred payment plan where an up-front

equalization payment would require the husband to sell his business and would
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undermine his future ability to earn an income), with In re Marriage of Westland, 257

Mont. 169, 172, 848 P.2d 492, 494 (1993) (upholding a district court’s order requiring an

up-front payment from the husband where future payments were not assured or secured

and the husband potentially could transfer assets or enter bankruptcy to the wife’s

detriment). As we explained in Schwartz:

      It is not error per se to make an award greater than the payor’s liquid assets,
      if the payor can sell or refinance property to meet the obligation. Such an
      award is not ideal, however, for there are various disadvantages to
      compelling sale in the divorce case. Most importantly, sale requires
      payment of capital gains costs, commissions, and other expenses, and
      property often fails to earn full value when sold under the pressure of
      divorce. Because of these disadvantages, an immediate monetary award
      which exceeds the value of the payor’s liquid assets is a remedy of last
      rather than first resort. A better option would be division in kind (if division
      can be accomplished without violating the rule against co-ownership), or a
      monetary award deferred over sufficient time for liquid funds to be
      accumulated without sale. If the payor cannot reasonably sell assets or
      borrow liquid funds to pay an immediate monetary award, the making of
      such an award is error.

Schwartz, ¶ 34 (quoting Brett R. Turner, 3 Equitable Distribution of Property § 9.9,

31-33 (3d ed. 2005)).

¶13   Gordon employs the above quote to argue that the District Court’s order requiring

an immediate equalization payment or sale of the ranch was error. What Schwartz makes

clear, however, is that whether the structure of an equalization payment is error depends

on the particular circumstances of a case. Schwartz, ¶ 34 (“In the right circumstances, a

deferred monetary award may be preferable to an ordered sale of asset . . . .”). To that

end, Nancy argues that the District Court’s order specifying a 120-day timeline for the

equalization payment and consequences of failing to comply was justified in this case
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because of Gordon’s lack of cooperation throughout the dissolution proceedings. We

agree that the District Court’s equalization order was not an abuse of discretion.

¶14    As mentioned, Gordon ceased temporary maintenance payments while this case

was pending and twice allowed the ranch to slip into foreclosure. Additionally, Nancy is

without work and suffering medical issues, and Gordon already has attempted to

discharge debts through bankruptcy once in recent years. Further, the evidence showed

that a partial sale of the ranch property had occurred previously to satisfy debt. Given

these facts, the District Court acted within its sound discretion to order an up-front

equalization payment and to incentivize Gordon’s cooperation by specifying

consequences for failing to make the payment within the specified time, including the

forced sale of the ranch or its transfer to Nancy for sale. See Westland, 257 Mont. at 172,

848 P.2d at 494.

¶15 2. Whether the District Court abused its discretion in failing to consider tax
liabilities associated with selling the ranch.

¶16    Under § 40-4-202(1), MCA, a district court equitably apportioning an estate must

take into account “liabilities,” among other factors. In In re Marriage of Beck, 193 Mont.

166, 631 P.2d 282 (1981), we held that where a property distribution ordered by a court

includes a taxable event precipitating a concrete and immediate tax liability, such tax

liability should be considered by the court before entering its final judgment. Beck, 193

Mont. at 172, 631 P.2d at 285. The failure to consider the tax consequences of such a

“concrete and immediate” event is an abuse of discretion. In re Marriage of Thorner,

2008 MT 270, ¶¶ 42-47, 345 Mont. 194, 190 P.3d 1063.
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¶17       Gordon argues that the District Court abused its discretion by failing to consider

the tax consequences of selling the ranch. The District Court’s dissolution decree does

not reference any liabilities associated with selling the ranch. Nancy argues, however,

that no such consideration was necessary in this case because the consequences were

speculative rather than concrete and immediate.

¶18       Determining whether a tax event is the concrete and immediate result of a

distribution order requires examining the context around the distribution order. To find

that a taxable event is concrete and immediate, we have not demanded that the

distribution order specifically direct the very event that triggers taxation. See Thorner,

¶ 45 (“We note that the decree does not require that $31,595 be withdrawn from Julie’s

retirement account. Still there is no doubt that the District Court’s decree required a

distribution to Ron of this amount as a part of the parties’ retirement assets.”); In re

Marriage of Lee, 249 Mont. 516, 517-19, 816 P.2d 1076, 1076-78 (tracing the necessity

of liquidating assets constituting a taxable event to the District Court’s distribution

order).     But, viewing the surrounding circumstances, we have demanded that the

distribution order at least reasonably appear to trigger a taxable event.        See In re

Marriage of Haberkern, 2004 MT 29, ¶¶ 16-19, 319 Mont. 393, 85 P.3d 743 (concluding

that a husband’s testimony that assets he was distributed may eventually be taxed did not

establish a concrete and immediate tax liability); In re Marriage of DeBuff, 2002 MT

159, ¶¶ 48-49, 310 Mont. 382, 50 P.3d 1070 (concluding that a concrete and immediate

tax liability was not triggered by order where husband agreed he had “a variety of other

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[non-taxed] options available” to provide funds necessary to satisfy equalization payment

obligation); In re Marriage of Turbes, 234 Mont. 152, 159-60, 762 P.2d 237, 241-42

(1988) (concluding that the event triggering any tax liability, which itself was theoretical,

was an accord and satisfaction that occurred before the District Court’s order).

¶19    In this case, both the surrounding circumstances and the order itself implicate a

significant taxable event.    The District Court ordered Gordon to make a $650,000

equalization payment to Nancy.        The only asset worth that amount in Gordon’s

possession is the ranch. The District Court ordered that, if the equalization payment was

not made within 120 days, the ranch be sold “as quickly as possible” to satisfy Gordon’s

equalization obligation. Although Nancy argues that Gordon could find funds to pay his

obligation by refinancing or mortgaging instead of selling the ranch, she does not suggest

how Gordon would be able to obtain quickly such a substantial loan in light of his

undisputed lack of substantial income and the recent foreclosure actions. Nancy also

argues that a portion of the ranch—instead of the entire ranch—could be sold to finance

the equalization payment, but a taxable event presumably will occur with any sale of the

property sufficient to raise $650,000. The District Court’s order makes a substantial sale

of ranch property concrete and immediate.

¶20    Nancy further argues that, even if a tax event is a concrete and immediate result of

the District Court’s order, Gordon failed to present evidence of the tax that would befall

him upon selling the ranch and thus waived the argument. Nancy cites In re Marriage of

Taylor, 257 Mont. 122, 848 P.2d 478 (1993), and Turbes as support. In Taylor, we

                                          9
rejected a husband’s argument that a district court erred by not taking into account all of

his company’s liabilities because (1) “no evidence was introduced at trial relating to a

concrete and immediate tax liability,” (2) the husband introduced no evidence that he

would “have to sell his stock in order to pay any cash award,” and (3) the court did not

order him to sell his stock. Taylor, 257 Mont. at 127, 848 P.2d at 481. In Turbes, we

stated that a wife “failed to produce adequate evidence at the hearing upon which the

court could make a determination of the existence of tax consequences,” where the wife

offered only an “unsubstantiated belief”—conflicting with other evidence—that she

“theoretical[ly]” would incur a tax liability. Turbes, 234 Mont. at 159-60, 762 P.2d at

241-42.

¶21    In contrast to Turbes and Taylor, there is a concrete and immediate tax event

contemplated on the face of the District Court’s order in this case. The District Court’s

short timeline for the equalization payment effectively renders selling the ranch the only

reasonable option to make the payment. Further, the District Court specifically ordered

that the ranch be sold if the payment is not made within the timeline. Finally, the record

suggests that the first mention of a possible sale of the ranch appeared the day before trial

in Nancy’s proposed findings and conclusions. The 120-day deadline was imposed sua

sponte by the court in its final decree. After the District Court ordered the ranch sold if

Gordon did not make the equalization payment within that time period, Gordon filed a

post-trial motion bringing his liabilities argument to the District Court’s attention. In the

unusual and particular circumstances of this case, we hold that Gordon did not waive his

                                         10
right to raise his tax argument on appeal. Once raised in Gordon’s post-trial motion, the

District Court abused its discretion by failing to consider the tax liabilities associated

with selling the ranch.

¶22    3. Whether the District Court erred in its valuation of the ranch.

¶23    Gordon argues that the District Court’s valuation of the ranch at $2.45 million is

not supported by the record.     A District Court may adopt any valuation of marital

property that is reasonable in light of the evidence. In re Marriage of Meeks, 276 Mont.

237, 242-43, 915 P.3d 831, 834-35 (1996).

¶24    The District Court chose a valuation that was between Gordon’s proposed

$1,172,513 valuation and Nancy’s proposed $2,667,940 valuation. The court justified its

choice by “considering comparable properties as well as the whole Ranch property and

all of the improvements made thereon,” and Gordon’s testimony that he would consider

selling the property for $2.4 million. The court reduced Nancy’s proposed valuation by

approximately $217,000 because of “the insufficient support in the record and the

speculation that dividing the ranch parcels would increase the value.” Gordon takes issue

with this explanation, arguing that the amount of the reduction does not match the court’s

rejection of the view of Nancy’s expert on the potential for subdividing the ranch.

However, based on the record on appeal—including the bases for the proposed

valuations, the price at which the parties sold a portion of the ranch during dissolution

proceedings, and Gordon’s admission about the price at which he would consider selling

the property—the District Court’s valuation is supported by substantial evidence.

                                         11
Because there is conflicting evidence, it was within the District Court’s province to weigh

the evidence, determine the credibility of witnesses, and value the ranch accordingly. See

Koppen v. Bolich, 2003 MT 313, ¶ 42, 318 Mont. 240, 79 P.3d 1100.

                                     CONCLUSION

¶25    We affirm the District Court’s valuation of the ranch and the structure of its

equalization payment order. We reverse the final property distribution because it fails to

consider tax liabilities associated with selling the ranch and those liabilities potentially

affect an equitable apportionment of the estate. We remand for further consideration of

such tax liabilities and entry of an amended property distribution order.



                                                 /S/ BETH BAKER

We concur:


/S/ MIKE McGRATH
/S/ PATRICIA COTTER
/S/ MICHAEL E WHEAT
/S/ JIM RICE




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