No. 93-471
IN THE SUPREME COURT OF THE STATE OF MONTANA
1994
IN RE THE MARRIAGE OF
KENNETH G. CRAIB,
Respondent and Appellant,
and
DEBRA L. RHODES,
Petitioner and Respondent.
APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable John M. McCarvel, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Susan J. Rebeck, Great Falls, Montana
For Respondent:
K. Dale Schwanke, Jardine, Stephenson, Blewett &
Weaver, Great Falls, Montana
Submitted on Briefs: May 11, 1994
SEP 2 2 1994 Decided: September 22, 1994
Justice Fred J. Weber delivered the Opinion of the Court.
Appellant Kenneth G. Craib (Kenneth) appeals an Order of the
District Court of the Eighth Judicial District, Cascade County,
which increased his child support obligation; awarded petitioner
Debra L. Rhodes (Debra) a judgment for recovery of money she has
paid for income taxes, interest and penalties; and awarded Debra
attorney's fees and costs incurred in the action. The District
Court's order covered motions by both parties to modify their
original decree of dissolution of marriage entered on June 8, 1988
in Cascade County. We affirm.
The issues presented for review are:
I. Did the District Court abrogate the benefit that Kenneth
received from his discharge in a federal bankruptcy proceeding?
11. Did the District Court abuse its discretion by increasing
the amount of child support that Kenneth must pay?
111. Did the District Court abuse its discretion in granting
judgment to Debra for 100 percent of the parties' income tax
liability that she was required to pay following the dissolution of
their marriage?
IV. Did the District Court abuse its discretion in refusing
to admit certain evidence offered by Kenneth?
V. Did the District Court err in adopting Debra's findings
of fact?
VI. Did the District Court err in awarding attorney's fees
and costs to Debra?
The Property Settlement and Child Custody Agreement
2
(Agreement) signed by Debra and Kenneth in connection with the
dissolution of their marriage in 1988 provided, among other things,
that Kenneth would pay to Debra $200 per month for support of the
parties' minor son; that Debra would receive the family home and
would be responsible for the first mortgage on the home; that
Kenneth would remain responsible for the second mortgage on the
home, which had been taken out so that Kenneth could buy shop
equipment for his business; and that the prevailing party in any
subsequent action related tothe Agreement would recover attorney's
fees and costs incurred in that action. Unbeknownst to Debra,
Kenneth had not filed the parties' previously prepared income tax
returns for the years 1984, 1986 and 1987 at the time of the
dissolution in 1988, and therefore, these liabilities were not
included in the Agreement. The Agreement was prepared by Debra's
attorney; Kenneth was not represented by counsel although he was
encouraged to obtain separate counsel and represented in the
Agreement that he had done so for purposes of reviewing the
Agreement prior to signing it.
In June of 1990, Debra filed an affidavit of contempt alleging
Kenneth was in arrears $1802 in child support and $900 on a marital
debt he had assumed. Subsequently, at a hearing held in July of
1990, Kenneth volunteered to pay an additional $50 per month in
support and a lump sum of $1,000. Although Kenneth began making
payments of $250 per month, he paid only $650 of the lump sum
promised.
In addition to being in arrears in his support payments,
Kenneth also failed to make payments on a loan from Beneficial
Mortgage Co. to cover the second mortgage on the home. Debra was
required to pay $730 to prevent foreclosure and has made payments
on the Beneficial loan since Kenneth's default in early 1990. In
December of 1990, Kenneth filed a Chapter 7 bankruptcy petition and
has since been discharged and relieved of his liability on the
second mortgage. Kenneth also failed to pay a Sears account and a
loan he had taken out at Village Bank which was collateralized by
Debra's car. Because the bank failed to perfect its security
interest in the car, Debra has not been required to make payments
on the loan from Village Bank.
After filing his bankruptcy petition in December of 1990,
Kenneth filed the late tax returns with the Internal Revenue
Service (IRS) and the Montana Department of Revenue (MDOR) for tax
years 1984, 1986 and 1987. In February of 1991, Debra received
notices from the IRS assessing penalty and interest in addition to
the unpaid taxes from those years. Debra had signed the returns
shortly after they were prepared and testified she was unaware of
any unpaid tax liability at the time of the dissolution in 1988 and
until she received the IRS notices. She subsequently received
similar notices from MDOR for taxes, penalty and interest. Debra
had taxes withheld from her income during those years; the unpaid
taxes represented tax liability for Kenneth's income from self-
employment in his auto body repair business.
Debra was forced to borrow money to pay the IRS and to make
payment arrangements with MDOR to prevent her property from being
levied upon. Kenneth had scaled back his business, was not then
employed and had petitioned for discharge in bankruptcy, making it
impossible for the IRS or MDOR to collect from him at that time
even though the taxes would not be discharged in his bankruptcy
proceeding. Kenneth did not notify Debra that he was filing the
returns after his bankruptcy petition. Debra testified that, had
she known, she could have filed separately for those years and not
owed any taxes.
Soon thereafter, in February of 1991, Kenneth contracted with
the Great Falls Tribune to paint newspaper dispensing machines and
to deliver newspapers. Kenneth received a Chapter 7 bankruptcy
discharge on April 5, 1991. In July 1991, he also began full-time
employment with Procraft, a Great Falls automobile body repair
business. He earns in excess of $40,000 per year from these
sources. He also has purchased a building for use in automobile
body work; although he claimed he was not doing any body work for
profit, he acknowledged that he had done so in the past on a
"trade-out" basis and to assist in the payment of attorney fees in
this and another proceeding. At the time of the trial in this
proceeding, Kenneth had more than twenty vehicles located on this
property.
In October of 1991, Kenneth remarried and has since supported
his new wife and her two children. In February of 1992, Kenneth
filed a petition to adopt one of his stepchildren on grounds her
father was not supporting her. In that proceeding, Kenneth
testified he was not current in the support of his own son because
of personal disagreements with Debra but that he was able to meet
his support obligations for their son. His petition to adopt his
second wife's daughter was later denied.
Just prior to filing his bankruptcy petition, Kenneth filed
motions on November 28, 1990, to modify support and to be relieved
of the liability for the Beneficial mortgage loan, the loan on
Debra's automobile and the Sears account. Debra later moved for an
increase in child support, for maintenance, for child support
arrearages, for judgment for the amounts she had been forced to pay
due to Kenneth's default of the Agreement, and for recovery of what
she had paid to the IRS and MDOR.
The Agreement contains a provision by which each party
represented to the other there were no debts incurred for which the
other was not aware and could be held liable. In addition, it
contains a provision providing that a non-defaulting party is
entitled to recover payment such party is required to make because
of default, together with interest, attorney's fees and costs,
including those incurred because of default under the Agreement.
The District Court awarded increased child support retroactive
to the date of the petition to modify support in the amount of $400
per month through the end of 1992 and increased support in the
amount of $475 per month beginning in January of 1993. The Court
denied Debra's request for maintenance but did award her a judgment
for the amounts she had paid to the IRS and the MDOR and for
delinquent child support. The court further awarded to Debra her
attorney's fees and costs incurred in this action according to the
provision in the Agreement. The court also found Kenneth in
contempt for his arrearages in child support.
ISSUE I.
Did the District Court abrogate the benefit received by
Kenneth from his discharge in a federal bankruptcy proceeding?
Kenneth has provided the Court with a lengthy argument on this
first issue which essentially contends that the District Court
substituted an increase in support from $200 per month to $400 and
$475 per month for an award of maintenance, which was barred by the
two-year limitation period set forth in § 40-4-208(2) (a), MCA, and
for amounts which Debra has been forced to pay on the second
mortgage obligation to Beneficial Mortgage Co. which was discharged
in his bankruptcy proceeding. According to Kenneth, he is now
being forced to pay maintenance and to pay for a debt that has been
discharged in his bankruptcy proceeding by way of an unfounded
increase in support for his son.
Debra moved for both increased support and an award of
maintenance. The District Court denied her motion for maintenance
and granted her motion to increase support. The amount of the
child support award is addressed separately in Issue I1 below. The
record does not support Kenneth's argument that the District Court
substituted child support for the Beneficial loan which was
discharged in Kenneth's bankruptcy proceeding.
Kenneth's argument that the increase in his support obligation
is a substitute for maintenance or debt is similar to that
presented and rejected by this Court in In re the Marriage of Jones
(1990), 242 Mont. 119, 122-23, 788 P.2d 1351, 1353-54. In that
7
case, the husband argued that he was being penalized by the court
for using proper bankruptcy procedures in discharging a $43,594
debt to the wife and that the court erred by increasing a
maintenance award because the debt to the wife had been discharged
in the husband's bankruptcy action. In Marriaae of Jones, this
Court concluded that substantial credible evidence supported the
award of maintenance and that the maintenance was not a mere
substitute for the husband's debt to the wife. Similarly, we
conclude here that Kenneth is not being penalized for using
procedures under the Bankruptcy Code to obtain a new start. His
argument relating to the bankruptcy is simply not applicable to the
circumstances of this appeal. The Bankruptcy Act at 11 U.S.C. I
523 does not allow a debtor to discharge obligations for child
support or for income taxes, the obligations we are concerned with
in this appeal. As discussed below, an increase in child support
is justified at the discretion of the District Court upon a showing
of a substantial and continuing change of circumstances. Section
40-4-208(2)(b)(i), MCA; Marriaae of Jones, 788 P.2d at 1354.
We hold the District Court did not abrogate the benefit
received by Kenneth from his discharge in the federal bankruptcy
proceeding.
ISSUE 11.
Did the District Court abuse its discretion by increasing the
amount of child support that Kenneth must pay?
The standard of review this Court uses for child support
awards is whether a district court has abused its discretion. In
re the Marriage of Anderson (1993), 260 Mont. 246, 255, 859 P.2d
8
451, 457. Factors to consider in setting support orders are set
forth in 5 40-4-204(3)(a), MCA, which provides in pertinent part:
Whenever a court issues or modifies an order concerning
child support, the court shall determine the child
support obligation by applying the standards in this
section and the uniform child support guidelines adopted
by the department of social and rehabilitation services
pursuant to 40-5-209. . . .
The district court must use the child support guidelines in effect
at the time it makes its decision. Marriaqe of Anderson, 859 P.2d
at 256.
The court must initially determine, however, there has been "a
showing of changed circumstances so substantial and continuing as
to make the terms unconscionable. Section 40-4-208 (2) (b)(i), MCA.
The District Court stated as follows:
Debra has proven that there are substantial and
continuing changes in circumstances such that the
original award of $200 a month child support to her is
unconscionable. The Agreement of the parties was made
when Jason was 12 years of age. By the time Debra's
Motion was filed he was nearly 14 and he is now 17. The
funds that Debra would have envisioned would have been
used from her earnings to provide for Jason have had to
be redirected to pay and discharge the Beneficial loan
Ken had agreed to pay. Within months after he filed his
Motion he had taken on work at the Great Falls Tribune
and at Procraft and earns substantial sums from both
employments. He is acquiring a shop for $22,500.00 and
has at least $5,000.00 equity in it. Any inability he
had to not pay support for a time was brought upon
himself. Debra is entitled to an increase in child
support of $200 a month, for a total of $400.00 per
month, retroactive to December, 1990, payable through the
end of December, 1992. Commencing January, 1993, she is
entitled to an increase of $275.00 a month for total
support of $425.00 [sic] per month. She is also entitled
to interest on the retroactive amounts.
Although the court's conclusion of law incorrectly states $425 per
month, the judgment clearly orders a payment of $475 per month.
The court attached calculations to its decision which had been
prepared by Debra that reflect Kenneth's ability to pay at least
$288 a month child support in 1992 based on the parties' 1991
income, and at least $353 a month beginning in January of 1993
based on 1992 income figures. Kenneth's argument that the court
used the guidelines in effect prior to July 30, 1992 for the award
of $400 through the end of 1992 and the higher award of $475 per
month after that date is inapplicable here: the difference in the
award beginning in January of 1993 is supported by Kenneth's change
in income in 1992 and his purchase of a shop building making it
possible for him to earn self-employment income in addition to his
wages and contract income.
Because Debra's guideline calculations were attached to the
court's order, Kenneth translates the amount of support awarded
over the calculated amounts as maintenance or dischargeable debt.
Debra's calculations, however, are the only calculations which
include the income attributable to Kenneth as well as the
appropriate tax liability. The District Court made no indication
whatsoever that the increase in support was a substitute for
maintenance or dischargeable debt.
The child support guidelines are termed "guidelines" and as
such are not set in stone. Moreover, the District Court had the
discretion to consider other matters affecting the parties as well
as their income. Child support awards necessarily require a
district court to consider numerous factors in addition to the
amount of income of each parent.
The courts can also impute income to a party based on the
particular facts of a case. In this case, there was substantial
evidence presented which indicated that Kenneth had not reported
all income from self-employment during the years the parties were
married. Debra did not include imputed income in calculating her
proposed support payment under the guidelines. However, evidence
was introduced that Kenneth had more than twenty vehicles--many
belonging to others--at his shop at the time of the trial in this
matter. The District Court noted:
THE COURT: There is another old aphorism that says --
Patrick Henry said, "I know no better way of judging the
future than by the past." But you have got to have
proof.
. . . She suspects he did. And he probably did. Even
now he has got 20 cars over there on the lots, and he
probably is remodeling them, and refurbishing, and
reselling them, and making a lot more profit than would
appear.
The District Court's findings justify an award of support in excess
of the amount calculated under the guidelines. There is evidence
of an increased need in support as Jason, although still a minor,
was attending college at the time of the trial
Kenneth also contends that the District Court erred by
including income from Kenneth's contracts with the Great Falls
Tribune in computing support. The 1992 guidelines state as
follows:
If a person with a subsequent family has income from
overtime or a second job, that income is presumed to be
for the use of the subsequent family, and is not included
in gross income for the purposes of determining support
for a prior family. The presumption may be rebutted upon
a showing that the additional income is discretionary.
46.30.1508 (3) , ARM. Evidence introduced at trial indicated that
Kenneth did not take on extra jobs after acquiring his second
family and that he was working all these jobs prior to his marriage
to his second wife. He provided no testimony that the income from
the second and third jobs was necessary for the support of his
second family although he testified that his stepson was handling
the newspaper delivery job and garnering the income from that
contract. Kenneth did not produce documentation to this effect
and, in fact, his tax returns show that he receives the income from
this contract with the Tribune.
Kenneth further testified that this income would be used for
support of his stepson in any case. We note that Kenneth has no
obligation to support his stepchildren; however, he has an
obligation to support his son Jason from his marriage to Debra.
See In re the Marriage of Carlson (1984), 214 Mont. 209, 218, 693
P.2d 496, 501. Although Kenneth attempted to adopt one of his
stepchildren based on her father's nonpayment of support, his
petition for adoption was denied. We conclude that any money
Kenneth uses to support his stepchildren may be classed as
discretionary income for purposes of this case.
Contrary to Kenneth's contentions, the 1992 guidelines allow
the court to include income from his second and third jobs when
computing support. The inclusion of this income is supported by
the findings of the District Court. The court enumerated extensive
findings which include the following:
[Finding No. IV.] AlthoughKentestifieddissolutionof
the marriage had a negative effect on him emotionally,
which affected his business, his self employment income
in 1988 and 1989 was significantly greater than it had
been in 1987 or before. ...
[Finding No. VI. ] During much of the time Ken was
reporting low amounts of income from his self-employment
in the early to mid-1980's the parties were refurbishing
the family residence. Ken testified he did work for
individuals who in turn worked on the home on a trade-out
basis. The value of the work performed on the home was
not reflected in the parties' income. Ken also had
trade-out arrangements with others. It is not possible
to determine the value of this trade-out work because
there are no records reflecting what the trade-outs may
have been. However, he testified he did $1,000 of trade-
out work for fees Attorney Brett Asselstine charged him
when Asselstine represented Ken in a 1992 adoption
proceeding. He also testified he had done $3,000 to
$4,000 of work for his attorney in this proceeding to pay
a portion of her fees.
[Finding No. XVIII.] . Based on [Ken's]
experience and expertise, and the availability of jobs,
he should have been able to find employment in 1989 or
1990 as an auto body repairman within three months after
starting to look for such work, and would have earned no
less than $11.50 an hour.
[Finding No. XXIII.] . .. The form 1099 issued by
the Tribune was issued to Ken and the contract for the
route is in Ken's name. Ken testified he was uncertain
as to what he was going to do with respect to the route
after Nathan graduated from school in 1994. Even if
Nathan was receiving some of the income from this
contract work Ken testified it was going to pay sums that
otherwise would have had to have been provided for
Nathan.
[Finding No. XXV.] Ken remarried in October, 1991. At
that time he was substantially delinquent in his child
support obligation for Jason. He also knew his present
wife, Elisa, could not work, that she had two children
that would be living with them, that she owed various
debts, and that her children weren't receiving child
support.
[Finding No. XXXIII.] Jason has just turned age 17.
He is 5 years older than when the marriage was dissolved
and it costs more to care for him now than it did when
the marriage was dissolved. This together with the
additional sums Debra has had to pay out to secure the
home for them increased her need for child support beyond
what the need was when the marriage was dissolved.
In the Conclusions of Law, the District Court stated:
[Conclusion No. I.] ... The Court believes Ken has not
and does not report all the income he earns from self-
employment, but even so his 1988 and 1989 income tax
returns reflect that he was earning more after the
marriage was dissolvedthan before. Even if his business
commenced to fail he could have secured work as an auto
body repairman in Great Falls for no less than $11.50 an
hour, in a short time, which is imputed to him, and in
fact, he had obtained a job for $11.50 an hour at Bison
Motors, which he apparently did not take. By July 1,
1991, he was working at Procraft for $13.50 an hour. He
also testified in another proceeding that he was able to
pay the support for Jason, but didn't do so because of a
dispute with Debra. If anything his ability to pay child
support was only temporarily changed and a temporary
change in circumstances is not sufficient to justify
modification of child support. Section 40-4-208, M.C.A.;
In Re Marriase of Forsman, 229 Mont. 411, 747 P.2d 861.
The record supports Debra's increased need for support based
on her having to pay debts assigned to Kenneth from as far back as
early 1990. In 1991, Debra paid the past due amounts to the IRS
and MDOR and is obligated to repay her aunt for money she borrowed
to pay some of the taxes. Further, Debra testified she had
borrowed $3,000 against her Tribune retirement plan to use for
living expenses for herself and Jason. Clearly Debra has used and
continues to use money for Kenneth's debts and for tax liabilities
which otherwise would have gone to the support of Jason. Moreover,
had the taxes been filed on time as Debra thought they had been,
the penalties and interest--substantial sums--would not have been
assessed. According to the record, this was entirely Kenneth's
fault. The support increase is retroactive to December of 1990.
Although the District Court noted that the support obligation for
the year 1991 should be based on the child support guidelines that
were in effect at that time, there is no evidence that the amount
awarded is actually calculated on previous guidelines. In fact,
the District Court proceeded on the premise that the amount of the
guidelines was a discretionary recommendation which he did not have
to follow. On this basis, we conclude the amount awarded for
support can be justified under either set of guidelines.
Kenneth also contends that the court erred by miscalculating
his equity in his shop property. The record indicates that Kenneth
paid a $2,500 down payment on this property and another $2,500
balloon payment and that he is paying in excess of $250 per month
on this property. The second $2,500 payment was made with money
borrowed from his employer and some of that was not repaid at the
time of trial. The entire $5,000 in equity was included as income-
producing property in the calculations made by Debra which were
attached to the court's order. The total annual income attributed
to Kenneth from the $2,500 which was borrowed from his employer is
approximately $175. According to the facts of this case, we
conclude this amount is insignificant for a determination of
support.
Finally, Kenneth argues that Debra's retirement accounts
should have been included as income-producing property in
determining the amount of support under the guidelines. Debra has
approximately $40,000 in two retirement accounts. One of these
accounts is through her employer, the Great Falls Tribune; the
other is with Buttreys, a previous employer. She has taken out a
loan for $3,000 against the Tribune account and is making payments
on that loan. We conclude these accounts are not properly included
as income-producing property.
Kenneth's argument that these accounts should be included as
income-producing property based on our recent decision in In re the
Marriage of Hunt (1994), 870 P.2d 720, 729-30, 51 St.Rep. 209, 216,
is misguided. In Marriaqe of Hunt, the husband argued that the
wife's contributions to her unqualified retirement account could
not be deducted from income; here Kenneth contends that all
contributions to date should be included as income-producing
property. He has not made the argument made in Marriase of Hunt
that Debra has contributions which should be included in gross
income.
Moreover, Kenneth did not argue in the trial court that these
were not qualified retirement accounts. Debra had no notice that
he would argue this on appeal and thus did not submit evidence on
this issue. An issue will not be reviewed if it is raised for the
first time on appeal. Erler v. Erler (l993), 261 Mont. 65, 73, 862
P.2d 12, 18. Therefore, we conclude that Kenneth is precluded from
making this argument on appeal to this Court.
Section 40-4-204 (3)(a), MCA, provides that the amount of
support awarded using the applicable standards and guidelines is
presumed to be adequate and reasonable unless the court finds by
clear and convincing evidence that the application of them is
unjust to the child or to any of the parties or is inappropriate in
the case. We hold the District Court properly exercised its
discretion in increasing the amount of child support that Kenneth
must pay for the support of Jason.
ISSUE 111.
Did the District Court abuse its discretion in granting
judgment to Debra for 100 percent of the parties' income tax
liability she was required to pay subsequent to the dissolution of
their marriage?
The tax returns for tax years 1984, 1986 and 1987 were never
filed by Kenneth during the parties' marriage, apparently because
there was money due for those periods. The return for 1985 was
timely filed and a refund received by the parties during the
marriage. Kenneth had control of the returns after he received
them from the parties' accountant and after Debra signed them. The
relevant evidence in the record supports the District Court's
finding that Debra was unaware at the time of the dissolution in
1988 that the tax returns had not been filed and taxes had not been
paid.
Debra testified that she would have filed separate returns for
those years had she known they were not filed. This testimony is
supported by further evidence that her employer withheld sufficient
tax from her salary to cover her separate tax liability for the
three years. Moreover, Debra did not include unpaid tax
liabilities as part of the Agreement between the parties.
Further, Kenneth did not notify Debra that he was going to
file the returns late prior to filing them in January of 1991.
Debra's first notice came when she received the first assessment
notices from the IRS in late February of 1991. If Kenneth had
notified Debra or if he had filed separately, Debra would have had
17
the option of filing separate returns for those years, and since
she had had enough withheld from her salary to cover her separate
tax obligations, she would not have owed any tax personally.
The Agreement contains the following clause:
Wife represents and warrants to Husband she has not
incurred any debts or made an (sic) contracts of which
Husband may be unaware and for which Husband or his
estate may be liable, and Wife will not incur any such
debts or make any such contracts. If Wife violates this
provision and as a result thereof Husband is obliged to
make a payment or payments to others, he shall have the
right to recover the same from Wife together with
interest at the highest rate allowed by law, and, if
reasonably necessary, he shall also be entitled to any
costs of collection, including reasonable attorney's
fees. Husband makes the same representations and
warranties to Wife as Wife has hereinabove made to
Husband and assumes the same obligations in the event
Wife must make a payment or payments to others by reason
of debts assumed by Husband hereunder.
It also includes the following "Hold Harmless Agreement":
Wife and Husband agree each with the other to
defend, indemnify and save each other harmless of, from
and against any and all loss, damage, costs and expenses,
including reasonable attorney's fees, which either of
them may hereafter suffer, incur, sustain or be subjected
to as a result of any and all defaults in connection with
this agreement and payment of any of the debts and
obligations assumed by them.
Although the unpaid tax liabilities to the IRS and MDOR should
have been included in the Agreement, they were not included based
on Kenneth's silence. Because Kenneth withheld this information,
the debt became larger. When he finally filed the returns, he had
temporarily insulated himself from having to pay the debts. Debra,
on the other hand, was in a position whereby the IRS and MDOR could
collect the taxes, penalties and interest from her. In all
likelihood, Kenneth was aware of this and his actions may have been
intentional, judging from the acrimony between the parties. When
the tax debts had been paid by Debra, Kenneth began his employment
with Procraft.
Clearly, the Agreement covers a situation such as this where
a debt is not included as part of a property settlement agreement
despite the knowledge and representation of one of the parties. We
conclude the Agreement provides for indemnification by the
defaulting party and speaks for itself.
District courts working in equity are given great discretion
in dividing the marital estate in order to achieve a fair
distribution of marital property using reasonable judgment and
relying on common sense. In re the Marriage of Kimm (1993), 260
Mont. 479, 483, 861 P.2d 165, 168. Allocating the entire tax debt
to Kenneth is reasonable under the facts of this case. We conclude
the District Court's findings which support the allocation of the
entire tax liability to Kenneth are not clearly erroneous and the
court did not abuse its discretion in determining that Kenneth
should be responsible for the entire tax liability for the years
1984, 1986 and 1987 and in granting a judgment in favor of Debra
for the joint taxes, penalty and interest she has paid subsequent
to the dissolution.
We hold the District Court did not err or abuse its discretion
in granting judgment to Debra for all income tax liability she was
required to pay subsequent to the dissolution of the parties1
marriage.
ISSUE IV.
Did the District Court abuse its discretion in refusing to
admit certain evidence offered by Kenneth?
Kenneth contends that certain information should have been
admitted by the District Court to demonstrate that the Agreement
unfairly divided the marital property. That Agreement was signed
by the parties in May of 1988 prior to the dissolution of their
marriage in June of 1988. Kenneth's reason for trying to introduce
this information is as follows:
MS. REBECK: If I might, there is an issue that is
missing from the agreement, and that is the income tax
responsibility. And it's our position when something is
missing from that agreement, this Court has to construe
whose responsibility that is.
And to do that, the Court needs to understand the
relative positions of the parties at the time the
agreement was entered into, and who got what so you can
construe the responsibility for the income tax.
The court denied admission of any evidence pertaining to the
circumstances at the time of the dissolution, repeatedly stating
that "the agreement speaks for itself."
The Agreement contains no reference to unfiled tax returns or
tax liability. Debra's attorney prepared the Agreement which
Kenneth signed. Kenneth represented that he had contacted an
attorney prior to signing the Agreement and that it covered all
assets and liabilities of the parties at that time. For reasons
unknown, he knowingly withheld information about liabilities which
should have been included as part of that agreement.
Rulings on the admissibility of evidence are within the sound
discretion of the trial court and will not be overturned on appeal
absent an abuse of discretion. Zimmerman v. Robertson (1993), 259
Mont. 105, 110, 854 P.2d 338, 341. Evidence which is not relevant
is inadmissible. Rule 402, M.R.Evid. We conclude the District
Court properly refused to admit evidence in this proceeding about
the circumstances at the time of the dissolution. We further
conclude that the court's statement that the agreement speaks for
itself is a determination that the evidence sought to be admitted
was not relevant to this proceeding.
We hold the District Court properly exercised its discretion
in refusing to accept evidence pertaining to circumstances at the
time of the dissolution.
ISSUE V.
Did the District Court err in adopting Debra's proposed
findings of fact verbatim?
Kenneth contends that the findings of fact signed by the
District court are a "verbatim replication1' of the findings
proposed by Debra. The District Court, in fact, did adopt Debra's
proposed findings with very little change. We note also that the
court stated during the trial:
But it appears to me there isn't much dispute about the
facts of this case. Most of those facts can be
stipulated to. That's why I don't know why we are having
all this testimony.
This Court has repeatedly stated that a trial court's findings
of fact, although verbatim from or similar to those proposed by a
party, will be affirmed if they are supported by substantial
credible evidence in the record. In re the Marriage of Bolt
(1993), 259 Mont. 54, 57-58, 854 P.2d 322, 324. Kenneth does not
point to findings which are inaccurate: rather, he claims there are
numerous factual findings which can be made from the evidence which
were not listed in the District Court's order. We conclude the
District Court's findings are supported by substantial credible
evidence in the record.
We hold the District Court did not err by adopting Debra's
proposed findings of fact almost verbatim.
ISSUE VI.
Did the District Court err in awarding attorney's fees and
costs to Debra?
Kenneth also contends that the District Court erred by
awarding attorney's fees and costs to Debra because there was no
clear winner in the case and also because there is no evidence to
show that Debra is without resources to pay her counsel. Kenneth's
arguments on this issue have no merit. The award in this case was
not based on § 40-4-110, MCA, as Kenneth contends; rather, the
Agreement clearly provides for an award of attorney's fees and
costs under the circumstances present here. It provides:
Wife and Husband agree each with the other to
defend, indemnify and save each other harmless of, from
and against any and all loss, damage, costs and expenses,
including reasonable attorney's fees, which either of
them may hereafter suffer, incur, sustain or be subjected
to as a result of any and all defaults in connection with
this agreement and payment of any of the debts and
obligations assumed by them.
Clearly this provides for attorney's fees and costs to be awarded
to Debra in connection with Kenneth's conduct and misconduct
subsequent to the dissolution of marriage. The District Court
based the award of attorney's fees and costs on the contract
between the parties including the above-quoted provision and the
provision by which Kenneth represented that there were no other
debts of the marriage.
We hold the District Court correctly awarded attorney's fees
and costs to Debra.
Af finned.
We Concur:
Justices
Justice James C. Nelson specially concurs and dissents.
I concur with the Court's opinion on all issues except Issue
2. On that issue I would remand and require application of the
1992 guidelines, and if the ~istrictCourt awards support in excess
of those guidelines, I would require proper justification in the
courtis findings and conclusions. In that regard I would also hold
that the District Court (a) was correct in including Ken's earned
income from his second and third jobs. Section 46.30.1508(3), ARM;
(b) was correct in excluding Debra's retirement fund, but in error
in not including her monthly contribution to that fund in her gross
income, unless there is evidence that Debra is contributing to an
IRS-approved plan. Section 46.30.1516 (1), ARM; and (c) erred in
including Ken's equity in his shop building since it was a
performing asset. Section 46.30.1514, ARM.