NO. 93-172
IN THE SUPREME COURT OF THE STATE OF MONTANA
1993
IN RE THE MARRIAGE OF
PATRICIA L. ZANDER, nka PATRICIA L. SERBA,
Petitioner and Respondent,
and f:
KENNETH D. ZANDER,
Respondent and Appellant.
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable Jack L. Green, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Arthur D. Agnellino, Attorney at Law,
Missoula, Montana
For Respondent:
Kerry N. Newcomer, Geiszler & Newcomer,
Missoula, Montana
Submitted on Briefs: August 26, 1993
Decided: December 2, 1993
Filed:
Justice Terry N. Trieweiler delivered the opinion of the Court.
Patricia L. Zander, now known as Patricia Serba, petitioned
the District Court for the Fourth Judicial District in Missoula
County to dissolve her marriage to Kenneth D. Zander. A trial was
held in 1990 and a decree of dissolution was entered on April 28,
1992. The court distributed the marital estate, awarded
maintenance to Patricia, and ordered Kenneth to pay Patricia's
medical insurance as well as her attorney fees and costs. TWO
additional orders affecting pension benefits were entered on
December 10, 1992. From the decree and subsequent orders, Kenneth
appeals.
We affirm in part and reverse in part.
Kenneth raises the following issues on appeal:
1. Did the court err in its valuation and distribution of
the marital estate?
2. Did the court err when it awarded Patricia an interest as
a 100 percent contingent annuity holder in Kenneth's pension?
3. Did the court err when it awarded Patricia maintenance
for an indefinite period of time?
4. Did the court err when it required Kenneth to pay
Patricia's medical insurance for an indefinite period of time?
5. Did the court abuse its discretion when it required
Kenneth to retrieve his personal property from the parties'
residence within a specified period of time?
6. Did the court err when it ordered Kenneth to pay
Patricia's attorney fees and costs?
2
Patricia and Kenneth were married in 1964. They had four
children who had reached adulthood at the time Patricia petitioned
the court to dissolve the parties' marriage on February 4, 1987.
Kenneth was employed by Stone Container Corporation in Missoula,
and had previously worked for Hoerner Waldorf and Champion
International. Patricia worked at home and as a part-time cleaning
person. In 1987, she began licensed practical nurse training and
obtained her license in June 1989. At the time of trial, Patricia
was earning approximately $300 per month as a part-time LPN. She
was limited to part-time work because of ongoing knee and back
problems.
While the dissolution was pending, Patricia began studying for
a Registered Nurse degree. She testified that employment as a
registered nurse would allow her to be self-sufficient and would
give her job options that would not aggravate her existing health
problems.
The trial in this matter was held on July 30 and 31, 1990,
following a failed reconciliation attempt and a long series of
temporary restraining orders which were issued to protect Patricia
and the parties I rarital property. The court issued its findings
of fact and conclusions of law on January 7, 1991, but no decree
was entered because certain issues had been left unresolved.
Following another series of hearings and interim orders, the
court entered a decree of dissolution and supplemental findings and
conclusions on April 28, 1992.
3
With respect to the division of the marital estate, the court,
after considering the parties' marital assets, health, respective
earning capacities, and educational and monthly living costs,
concluded that the following division of property was equitable and
not unconscionable: Patricia was given the family home, valued at
$54,689.50, and designated personal property, for a total award
constituting 60 percent of the marital estate. Kenneth was given
personal property and his accumulated pension, which had a present
value of $36,582, for a total award constituting 40 percent of the
marital estate. Furthermore, the court found that because Patricia
would not be able to accumulate an adequate pension for her
retirement, Kenneth should be required to designate Patricia as the
"irrevocable contingent annuitant for the present value of his
pension" unless Patricia predeceased Kenneth. Patricia's attorney
was ordered to prepare a "qualified domestic relations order"
directing Kenneth's pension administrator to implement this portion
of the decree.
The court further found that Patricia was not receiving income
producing property and, due to her physical disabilities and
educational status, was unable to support herself without further
education and training. Therefore, it concluded that she was
entitled to maintenance "until she completes her RN degree and
obtains full-time employment" and ordered Kenneth to pay monthly
maintenance in the amount of $1154. This amount included one-half
of the monthly mortgage payments due for the home awarded to
Patricia, and the remainder was based on Patricia's monthly
4
expenses while in school. Patricia had started studying for her
nursing degree, and estimated that it would take another two to
five years to complete her studies. However, she had not made any
serious progress toward earning the degree over the two year
separation period during which she had been receiving temporary
maintenance in the same amount. The monthly maintenance award
constituted approximately half of Kenneth's monthly income. The
decree also included a provision that if Kenneth died before his
obligation to pay maintenance was completed, Patricia would have a
claim against his estate for the remaining obligation.
The court found that Patricia was unable to provide her own
health insurance "given her part-time work which provides no
insurance coverage and her status as a student which is expected to
continue for the next several years." The court concluded that,
under federal law, employers are able to continue insurance
coverage to an employee's former spouse for at least three years.
Therefore, Kenneth was ordered to provide health insurance coverage
for Patricia as follows:
Respondent shall provide health, dental and ocular
insurance for Petitioner at such benefit levels as the
policy that would ordinarily provide through his
employment for a period equal to that available from his
employer as separate coverage under COBRA, or other
elected coverage as is provided under federal law, until
Petitioner obtains full time employment as a registered
nurse.
Due to the fact that the court had issued several protective
orders during the course of the proceedings which had to be
enforced by law enforcement officials, the court ordered Kenneth to
5
retrieve any of his personal property which was still in the family
home "within 30 days from the date of this Decree or the property
award is deemed forfeited." Kenneth was also permanently enjoined
from contacting or communicating with Patricia in any manner.
Finally, the court found that due to Kenneth's conduct,
Patricia had incurred substantial attorney fees which she lacked
the financial ability to pay. Therefore, pursuant to 5 40-4-110,
MCA, it ordered Kenneth to pay Patricia's attorney fees in the
amount of $16,910.84.
As directed in the decree, two qualified domestic relations
orders were prepared directing the pension benefits administrators
at stone Container and Champion International to designate Patricia
the 100 percent joint survivor annuitant of Kenneth's pension
benefits accrued through July 31, 1990. These orders were signed
by the court on July 29, 1992, but were not filed until
December 10, 1992. Notice of entry of judgment was filed on
December 11, 1992. From the decree of dissolution and subsequent
orders, Kenneth appeals.
I.
Did the court err in its valuation and distribution of the
marital estate?
The distribution of the marital estate is governed by
5 40-4-202, MCA. This statute vests the district court with broad
discretion to apportion the marital estate in a manner which is
equitable to each party under the circumstances. In re Marriage of Rock
6
(1993), 257 Mont. 476, 850 P.2d 296; InreMatiageofCollett (1981), 190
Mont. 500, 621 P.2d 1093.
The standard of review employed by this Court in marital
property division cases is whether the district court's findings of
fact are clearly erroneous. In re Marriage of McLeanlFleury ( 19 9 3 ) , 2 5 7
Mont. 55, 849 P.2d 1012. When there is substantial credible
evidence to support the court's findings and judgment, this Court
will not alter the trial court's decision unless there is an abuse
of discretion. hreManiageofScofpield (Mont. 1993), 852 P.2d 664, 50
St. Rep. 560.
In this instance, Kenneth contends that the court failed to
consider the net worth of the parties prior to dividing the marital
property and that it erred by awarding 60 percent of the marital
estate, including the family home, which represented the most
valuable part of the parties' marital assets, to Patricia. He also
maintains that the court's valuation of his pension was incorrect
because of the beneficiary interest awarded to Patricia, and this
resulted in an inequitable distribution of the marital estate.
After reviewing the record, we conclude that the District
Court properly considered the statutory criteria found in
5 40-4-202(l), MCA, before dividing the marital assets. In its
findings and conclusions, the court set forth the parties' net
worth, considered the parties' earning capacities in terms of
respective skills, training, and physical limitations, and
7
evaluated each party's ability to acquire future assets, such as
savings or retirement funds. The issue concerning the value of the
pension due to the contingent beneficiary interest awarded to
Patricia will be discussed under Issue II. However, pursuant to
our decision in InreManiageofKis (1982), 196 Mont. 296, 300-01, 639
P.2d 1151, 1153, the court properly considered the present value of
the pension as a marital asset to be equitably apportioned between
the parties, and its valuation was supported by testimony from a
certified public accountant regarding its present value.
Furthermore, the record reveals that the court's valuation of the
home and personal property assets were supported by third party
appraisals.
Section 40-4-202, MCA, requires that a court achieve equity in
distributing marital property, but not necessarily equality. In re
MarriageofFitzmorris (1987), 229 Mont. 96, 745 P.2d 353. Reaching this
equitable distribution will at times require the court to engage in
discretionary action and these discretionary judgments will not be
disturbed on appeal absent an abuse of discretion. Rock, 850 P.2d
at 298.
After considering the circumstances of this case, we conclude
that there was substantial evidence to support the court's findings
and, based on those findings, the court did not abuse its
discretion when it apportioned the assets giving approximately
60 percent of the estate to Patricia and 40 percent to Kenneth. We
8
affirm the court's distribution of the marital property, subject to
the following discussion regarding the award of a beneficiary
interest in Kenneth's pension to Patricia.
II.
Did the court err when it awarded Patricia an interest as a
100 percent contingent annuity holder in Kenneth's pension?
The marital estate in this instance consisted primarily of two
major assets: the family home, and Kenneth's pension. The court
determined an e&table distribution would be achieved by awarding
Patricia the family home and Kenneth his pension. However, because
the court found that Patricia was not likely to be able to
accumulate an adequate pension prior to her retirement, it awarded
her a 100 percent contingent annuity interest in the present value
of the pension in the event that Kenneth predeceased her.
Kenneth contends that Patricia's qualified interest in his
share of the estate makes it non-assignable as a property right,
and therefore, its value is diminished. He maintains that this
resulted in an inequitable property distribution because the
pension had less value than assigned by the court.
Patricia claims that Kenneth failed to submit evidence that
the contingency diminished the value of the pension and the court,
therefore, was not required to consider this possibility.
Furthermore, she claims that it was within the court's discretion
to designate her as the alternate payee and this contingency has
9
only minimum impact on Kenneth because she will only receive
benefits if he predeceases her.
The court's property distribution was based on the relative
values of the family home and the pension, which were the parties'
two major assets. By designating Patricia as the irrevocable
recipient of the survivorship benefits, its value to Kenneth was
diminished because part of the value of a pension is the ability to
provide for others through survivorship benefits. Kenneth is not
able to designate his children or grandchildren, or a subsequent
spouse, as recipients of his pension benefits. Consequently, the
value of the pension to Kenneth, should he predecease Patricia, is
illusory and this has the effect of eroding the basis of the
court's equitable distribution of the estate. If Kenneth does
predecease Patricia prior to the time he retires, he will
essentially have received nothing from the marital estate. Since
our conclusion that the estate was equitably divided rests on the
full allocation of Kenneth's pension benefits to him, we conclude
that to then erode the value of those benefits in any way would be
inequitable.
Because the pension was the only major asset awarded to
Kenneth, we conclude that the restriction placed on Kenneth's
pension results in an inequitable distribution of the estate and
that this constitutes an abuse of discretion by the court.
Therefore, to insure that the court's distribution remains
equitable, we reverse that part of the District Court's order which
10
awarded Patricia the contingent beneficiary interest in Kenneth's
pension.
III.
Did the court err when it awarded Patricia maintenance for an
indefinite period of time?
This Court will not reverse a district court's award of
maintenance unless the findings of fact are clearly erroneous. In
reMam’age ofEschenbacher (1992), 253 Mont. 139, 831 P.2d 1353. An
award of maintenance is governed by g 40-4-203, MCA, and is
dependent upon a finding by the court that Patricia lacks
sufficient property to provide for her reasonable needs and is
unable to support herself through appropriate employment. In re
Mam’ageofDunn (1991), 248 Mont. 95, 98, 809 P.2d 571, 573.
Kenneth challenges the court's award of maintenance on two
bases. First, he contends that the court failed to consider his
ability to maintain his own standard of living when it awarded
Patricia essentially half of his income in the form of maintenance.
He notes that § 40-4-203(2)(f), MCA, requires the court to consider
"the ability of the spouse from whom maintenance is sought to meet
his needs while meeting those of the spouse seeking maintenance."
It is his contention that the court failed to consider his health,
instability of contract negotiations at Stone Container, and his
ability to maintain his own living standards when it awarded
maintenance to Patricia in the amount of $1154 per month.
11
Second, he contends that the court erred when it ordered
payment of maintenance until Patricia "completes her RN degree and
obtains full time employment" without including a specific time
limit on his maintenance obligation. Although Patricia testified
that it would take between two and five years to complete her RN
degree, Kenneth points out that the maintenance obligation, as
decreed, could continue indefinitely if Patricia chooses not to
complete her studies. Kenneth notes that during the time period
between the parties' separation and trial, while he was paying
maintenance in an amount which would allow Patricia to attend
school, she made very little progress toward earning her degree.
A review of the record demonstrates that substantial evidence
exists to support the court's finding that Patricia does not have
sufficient income to pay her monthly expenses and that she is
unable to support herself through appropriate employment. There is
also sufficient evidence to show that the amount awarded will allow
Patricia to meet her needs until she can become self-sufficient
through appropriate employment, and that the court did consider
Kenneth's income and whether he would be able to meet his own needs
while paying the maintenance Patricia requires. We conclude that
the court's findings regarding Patricia's eligibility for
maintenance, and the amount awarded, are not clearly erroneous.
With respect to Kenneth's second argument, § 40-4-203(2)(b),
MCA, requires the court, when determining the amount and duration
of maintenance, to consider the "time necessary to acquire
12
sufficient education or training to enable the party seeking
maintenance to find appropriate employment." It is clear from the
decree that the intent of the court when it awarded maintenance was
to provide support for Patricia during the time necessary to
complete her nursing degree. There was also testimony from
Patricia that she expected this to take from two to five years.
However, the decree contains no time limitation on the award.
Furthermore, there was evidence that Patricia had made very little
progress toward earning her degree during the period that she was
receiving temporary maintenance.
We agree with Kenneth's assertion that the language of the
decree could result in a maintenance obligation for an indefinite
period of time. This Court has favored providing the person
obligated to pay maintenance as much certainty as possible
regarding the amount and duration of the obligation. In re Maniage of
Ernst (1990), 243 Mont. 114, 793 P.2d 777. In this case, because
there was evidence regarding the length of time it would take
Patricia to complete her degree, we conclude that the court erred
by not putting a time limitation on the maintenance award.
Therefore, we vacate the court's award of maintenance for an
indefinite period and remand for a hearing to determine a
reasonable limitation on the duration of the maintenance award.
IV.
Did the court err when it required Kenneth to pay Patricia's
medical insurance for an indefinite period of time?
13
Kenneth contends that the court's order regarding medical
insurance impennissibly requires him to provide coverage for
Patricia beyond the time period provided for under federal law.
The federal statute cited by Kenneth, 5 U.S.C.A. § 8905a
(1993), provides that a former spouse is entitled to continue
health coverage under the other spouse's employment plan for a
period not to exceed 36 months after the dissolution. However,
nothing in that statute prohibits a court from designating who is
required to pay for such coverage. The dissolution decree provides
that if Patricia has not obtained appropriate employment after 36
months have elapsed, Kenneth must provide alternate coverage until
she "obtains full time employment as a registered nurse." Kenneth
cites to no authority which prohibits such an order.
However, the requirement that Kenneth pay Patricia's medical
insurance is another form of maintenance. Therefore, for the same
reasons stated above, we conclude that there should likewise be a
time limitation on Kenneth's obligation to provide health insurance
for Patricia.
We affirm this provision in the decree to the extent that
Kenneth is prohibited from interfering with Patricia's rights to
continued coverage under Kenneth's insurance plan for a period of
36 months after the dissolution and that he can be required to pay
for Patricia's coverage during the time that she is entitled to
maintenance. However, we remand for a hearing to determine the
duration of Kenneth's obligation consistent with the duration of
his obligation to pay maintenance.
14
V.
Did the court abuse its discretion when it required Kenneth to
retrieve his personal property from the parties' residence within
a specified period of time?
The dissolution decree required Kenneth to retrieve the
personal property awarded to him from the family home within 30
days from the date of the decree. This transfer was to take place
under the supervision of the Missoula County Sheriff, and if it did
not occur within the specified time frame, the property was deemed
forfeited.
Kenneth contends that the court abused its discretion when it
imposed this kind of a limitation because it was punitive in nature
and there is no statutory authority for this kind of restriction.
Furthermore, he claims he did not retrieve the property within 30
days from entry of the decree because he was waiting for notice of
entry of judgment, which was not forwarded to him until almost
eight months later. He contends the 30 day period should have been
tolled until that time.
A district court has broad discretion in devising methods to
accomplish an equitable distribution of the marital property. Kis,
639 P.2d at 1155; InreMarriage of Johnmud (1977), 175 Mont. 117, 572
P.2d 902. Here, the record demonstrates that the court had issued
several temporary restraining orders during the course of the
proceedings and a restraining order was eventually made a permanent
part of the decree. Also, Kenneth had refused to comply with
15
several of the pre- and post-trial orders which had necessitated
the issuance of enforcement orders. The record justifies the
District Court's concern for a quick, supervised exchange of
property. We find no abuse of discretion in the court's decision
to impose a specific time and manner for the property distribution
to occur.
We also find no merit in Kenneth's argument that the 30 day
time limit should have been tolled until he received notice of
entry of judgment. Pursuant to Rule 77(d), M.R.Civ.P., the filing
of a notice of entry of judgment by the prevailing party in an
action starts the time period for filing a notice of appeal.
However, Kenneth cites no authority for his contention that the
provisions of a valid judgment or decree are "tolled" until the
time for appeal starts. The decree entered on April 28, 1992,
stated that he had 30 days from the date of the decree to retrieve
his property. Kenneth does not allege that he was unaware of this
provision or that he did not receive a copy of the decree. The
fact that notice of entry of judgment was not filed until several
months later does not excuse his failure to comply with the
provisions of the decree.
VI.
Did the court err when it ordered Kenneth to pay Patricia's
attorney fees and costs?
Section 40-4-110, MCA, provides that a court may, after
"considering the financial resources of both parties," order a
party to pay reasonable costs and attorney fees to the other party
16
in any dissolution or custody proceeding. This Court has held that
an award of attorney fees under this statute must be based on
necessity, must be reasonable, and must be based on competent
evidence. In re Marriage of Barnard ( 19 9 o ) , 241Mont. 147, 785 P.2d 1387.
When reviewing the discretion vested in the district court under
this statute, this Court will not disturb a district court's
findings on appeal if there is substantial evidence to support
those findings. InreMam’ageofHall (1990), 244 Mont. 428, 798 P.2d
117.
In this instance, the court ordered Kenneth to pay Patricia's
attorney fees and costs totalling $16,910.84. This was based on
its finding that due to Kenneth's conduct, Patricia had incurred
substantial attorney fees and that she lacked the financial ability
to pay this amount. Evidence was presented which documented the
reasonableness of the fees she incurred and that she lacks the
financial ability to pay these fees. However, the statute
specifically requires the court to consider the financial resources
of both parties. When neither party is better able to pay attorney
fees than the other, it is proper to hold each responsible for his
or her own attorney fees. InreMam~ageofHall (1987), 228 Mont. 36,
740 P.2d 684.
Patricia urges this Court to consider Kenneth's anticipated
disposable income level for 1993 as established in a hearing
regarding a petit,ion for bankruptcy. However, on review, we must
17
consider whether the court's findings regarding both parties'
financial resources are supported by the evidence in this case.
In Finding Xl(v of the January 1991 findings and conclusions,
the court found that, after maintenance and payment of one-half of
the mortgage payment, Kenneth "is left with approximately $1,900
per month for living expenses." However, in Finding XXVII, the
court determined that Patricia has a monthly income after taxes of
$1,587.06, while Kenneth's income after taxes and payments is
$1,123.75. It concluded that "it is evident that [Patricia's]
monthly income is substantially higher than that of [Kenneth's]."
Furthermore, the findings indicate Patricia's maintenance award
constitutes approximately half of Kenneth's monthly income.
Finally, in Conclusion IX, the court stated the following:
Given the Finding that Petitioner is financially
unable to pay her attorney fees and costs and
Respondent's financial ability to do so, he should be
Ordered pursuant to Section 40-4-110, MCA, to pay
Petitioner's fees and costs in an amount to be determined
at a hearing . . . .
This conclusion is not supported by the evidence as demonstrated by
the findings set forth by the court. The court found that Patricia
has a higher monthly income than Kenneth, but then determined that
he was more financially able to pay her attorney fees. Because the
evidence does not support this conclusion, we hold that the court
erred in awarding Patricia attorney fees.
We recognize that part of the court's decision was based on
the fact that Kenneth was largely responsible for the amount of
fees incurred by the parties. In In re Mam’age of Syljuberget (1988) , 234
18
Mont. 178, 763 P.2d 323, we affirmed an award of attorney fees when
the majority of fees were similarly due solely to one party's lack
of cooperation. However, in that case, there was evidence to show
that the wife was without funds to pay those fees and that the
husband did have sufficient resources. Here, the court's findings
do not support a similar conclusion.
The award to Patricia of an interest as a 100 percent
contingent annuity holder in Kenneth's pension is reversed. We
otherwise affirm the court's distribution of the marital estate,
including the provision which required that Kenneth retrieve his
property within 30 days.
The award of maintenance, and the provision requiring Kenneth
to pay Patricia's health insurance, are affirmed in part, reversed
in part, and remanded for further proceedings consistent with this
opinion.
The award of attorney fees and costs to,Patricia is reversed.
J tice
We c
December 2. 1993
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:
ARTHUR D. AGNELLINO
Attorney at Law
200 East Pine
Missoula, MT 59802
Kerry N. Newcomer
GEISZLER & NEWCOMER
265 West Front
Missoula, MT 59802
ED SMITH
CLERK OF THE SUPREME COURT
F MONTANA