No. 03-459
IN THE SUPREME COURT OF THE STATE OF MONTANA
2004 MT 55
IN RE THE MARRIAGE OF
JAMES HEWETT KILLPACK,
Petitioner and Respondent,
and
SARA EDWARDS KILLPACK,
Respondent and Appellant.
APPEAL FROM: District Court of the First Judicial District,
In and For the County of Lewis and Clark, Cause No. ADR 2002-036,
Honorable Dorothy McCarter, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Ronald F. Waterman, Gough, Shanahan, Johnson & Waterman,
Helena, Montana
For Respondent:
John L. Hollow, Attorney at Law, Helena, Montana
Submitted on Briefs: January 6, 2004
Decided: March 9, 2004
Filed:
__________________________________________
Clerk
Justice W. William Leaphart delivered the Opinion of the Court.
¶1 This case arises from the dissolution of the marriage of James and Sara Killpack, who
were married in Wisconsin on June 19, 2000. At the time of their marriage, both Sara and
James had children from previous marriages, but James’s children did not live with him.
Following a prolonged custody dispute between Sara and her former husband, James legally
adopted Sara’s children. James obtained employment in Helena, Montana, and relocated
there shortly after marrying. Sara and the children subsequently joined him in Montana in
July 2001. Sara and James spent more than $1.4 million buying land and building a house
near Clancy, which was the major asset of the marital estate. However, following the
couple’s separation, the home sold for only $680,000. On January 29, 2002, James filed a
petition for dissolution of marriage in the District Court of the First Judicial District, Lewis
and Clark County, which entered its decree of dissolution on April 18, 2003. Sara now
appeals. We affirm.
¶2 The appellant raises the following issues on appeal:
¶3 1. Did the District Court err in refusing to enforce the settlement agreement?
¶4 2. Did the District Court err in excluding Sara’s monetary losses incurred in entering
into the marriage and moving to Montana?
¶5 3. Did the District Court err in its division of the marital estate?
¶6 4. Did the District Court err in allocating amounts already paid to Sara as maintenance
and child support?
¶7 5. Should the District Court have awarded on-going maintenance?
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DISCUSSION
¶8 We review a District Court’s division of marital property to determine whether the
findings of fact on which the division is based are clearly erroneous. In re Marriage of Rolf,
2003 MT 194, ¶ 14, 316 Mont. 517, ¶ 14, 75 P.3d 770, ¶ 14. “A finding is clearly erroneous
if it is not supported by substantial evidence, if the district court misapprehended the effect
of the evidence, or if our review of the record convinces us that the district court made a
mistake.” In re Marriage of Gerhart, 2003 MT 292, ¶ 15, 318 Mont. 94, ¶ 15, 78 P.3d 1219,
¶ 15. District courts have broad discretion pursuant to § 40-4-202, MCA, to distribute the
marital estate equitably. Gerhart, ¶ 16. Absent either erroneous findings, or an abuse of
discretion, we will affirm the distribution of property. In re Marriage of Pospisil, 2000 MT
132, ¶ 19, 299 Mont. 527, ¶ 19, 1 P.3d 364, ¶ 19. In a dissolution proceeding, the test for
an abuse of discretion is whether the district court acted arbitrarily without employment of
conscientious judgment or whether the district court exceeded the bounds of reason resulting
in a substantial injustice. In re Marriage of Engen, 1998 MT 153, ¶ 26, 289 Mont. 299, ¶
26, 961 P.2d 738, ¶ 26.
Did the District Court err in refusing to enforce the settlement agreement?
¶9 On August 21, 2002, the parties advised the court that they did not need to have a
hearing on the merits because they had reached an agreement. The agreement was read into
the record, and the court was further advised that the full written agreement would be
forthcoming. However, because the parties had difficulties agreeing on certain terms, the
agreement was not reduced to writing. Meanwhile, thinking she had resolved matters in
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Montana, Sara had already moved back to Wisconsin and moved the District Court to
enforce the agreement. The District Court refused, finding there was no enforceable
agreement. Without a valid agreement to enforce, the District Court held a hearing on the
merits of the dissolution in March 2003. Sara now claims that the District Court committed
reversible error in not enforcing the agreement. James replies that Sara cannot now raise this
issue because she neglected to make the argument at the hearing on the merits and has thus
failed to preserve the issue for appeal. Sara retorts that the Montana Rules of Civil
Procedure do not allow a motion for reconsideration, and thus, she was precluded from doing
anything else to raise the issue.
¶10 The general rule is that we will not address an issue raised for the first time on appeal
because it is unfair to fault the trial court on an issue it was never given the opportunity to
consider. Renner v. Nemitz, 2001 MT 202, ¶ 15, 306 Mont. 292, ¶ 15, 33 P.3d 255, ¶ 15.
Furthermore, our policy is to encourage only one appeal from any case and to discourage
piecemeal interlocutory appeals. See, e.g., In re D.A., 2003 MT 109, ¶ 19, 315 Mont. 340,
¶ 19, 68 P.3d 735, ¶ 19. In the present case, written motions were submitted regarding the
enforceability of the oral agreement, and the District Court entered its order refusing to
enforce the agreement. This is sufficient to preserve the issue for appeal.
¶11 We previously addressed situations in which parties make an oral separation
agreement but are then unable to reduce their agreement to a writing in In re Marriage of
Simms (1993), 264 Mont. 317, 871 P.2d 899, and in In re Marriage of Hayes (1993), 256
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Mont. 266, 846 P.2d 272. Settlement agreements are governed by § 40-4-201(1), MCA,
which provides in relevant part:
To promote amicable settlement of disputes between parties to a marriage
attendant upon their separation or the dissolution of their marriage, the parties
may enter into a written separation agreement containing provisions for
disposition of any property owned by either of them, maintenance of either of
them, and support, parenting, and parental contact with their children.
[Emphasis added.]
In both Simms and Hayes, we refused to enforce separation agreements which were not in
writing, because § 40-4-201, MCA, only discusses the enforcement of a written agreement.
Simms, 264 Mont. at 325, 871 P.2d at 900; Hayes, 256 Mont. at 268, 846 P.2d at 273.
¶12 In the present case, the parties apparently exchanged written drafts of an agreement,
but were ultimately unable to agree on key terms. The only agreement in the record is the
unsigned document drafted by Sara and attached to her motion to enforce the oral agreement.
The District Court concluded this was unenforceable because it did not comply with § 40-4-
201, MCA. Pursuant to the plain terms of the statute, and our decisions of Simms and Hayes,
we agree.
¶13 However, merely because the oral agreement never matured into an enforceable
written agreement does not mean that the parties’ work of negotiating the agreement was all
for naught. In Simms, we stated that although an oral agreement read into the record may not
be enforceable in and of itself, parties are nonetheless bound by stipulations made by them,
or their counsel, in open court. Simms, 264 Mont. at 325, 846 P.2d at 900. Sara contends
that pursuant to our decision in Simms, decisions as to maintenance and division of property
should be based on the parties’ stipulations made in open court. This is correct. However,
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Sara neglects to point to any stipulations which were made by the parties in open court which
were subsequently disregarded. Indeed, the record does not include transcriptions of the
proceedings of the day in question. Rule 9(b), M.R.App.P., requires a party claiming error
to transmit the record. We cannot find error without the record, and we do not have a record
of any stipulations made in open court to which the parties are bound.
Did the District Court err in the exclusion of Sara’s monetary losses incurred
in entering into the marriage and moving to Montana?
¶14 Sara claims to have incurred roughly $300,000 in expenses in relocating her children
to Helena to facilitate the marriage. Part of these expenses involved the custody dispute and
termination of parental rights of the children’s biological father. The District Court excluded
these expenses from the marital estate, yet included the expense related to James’s adoption
of Sara’s children. Sara claims that both expenses are causally linked, and it was thus error
to exclude the former yet admit the latter.
¶15 James repeatedly asked for documentation of Sara’s claimed relocation expenses. Not
only was such documentation never forthcoming, the District Court made numerous
evidentiary rulings excluding oral references to the claimed expenses as irrelevant and not
meeting the best evidence rule. On appeal, Sara makes no claim of error with regard to these
evidentiary rulings. Thus, this Court does not now have before it a record relating to the
claimed expenses. Further, Sara points to no authority which would support her claim to
include relocation expenses. In the absence of supporting evidence or legal authority, we
cannot find error with the District Court’s ruling.
Did the District Court err in the division of the marital estate?
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¶16 Both James and Sara are beneficiaries of trusts from their respective families. The
parties both contributed their own money and trust money to the marital estate, most of
which went towards building their house near Clancy. Sara contributed $3,060 for the
house design and $50,000 towards its construction. Sara’s trust also contributed $33,122 to
the estate. James contributed $1,404,132. James testified that this money came from an
advance on his inheritance from his trust and that he was obligated to pay interest on the
advance.
¶17 Because James’s financial contribution to the marital estate far exceeded Sara’s
contribution, the District Court awarded James the net proceeds from the sale of the family
home. After satisfying the mortgage and paying off two lines of credit, the sale of the house
only netted $232,653.28. The court awarded Sara the furniture, worth approximately
$20,000, which she had already taken back to Wisconsin.
¶18 Sara claims that each of them made contributions to the house from previously
acquired or gifted assets. She urges us to overturn a line of cases interpreting § 40-4-202,
MCA, to exclude such assets from the marital estate but entitling the non-acquiring spouse
to an equitable share of the appreciated value attributable to his or her endeavors. See, e.g.,
In re Marriage of Clark, 2003 MT 168, ¶ 18, 316 Mont. 327, ¶ 18, 71 P.3d 1228, ¶ 18. Sara
urges an interpretation of § 40-4-202, MCA, which would include such items in the marital
estate, and thus subject those items to equitable division.
¶19 However, we do not need to address the policy of excluding or including such items
from the marital estate. As we said in Engen,
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Whether we have included preacquired, gifted, or inherited property in the
marital estate and held that it must be distributed to the spouse to whom it was
given or by whom it was preacquired (e.g., Herron), or simply held that it is
not part of the marital estate (e.g., Luisi and Keedy), we have consistently
treated it differently than property acquired during a marriage through the joint
efforts of the couple.
Marriage of Engen, ¶ 41.
¶20 Whether the funds used to build the house were previously acquired or gifted assets,
the District Court’s division of the estate was equitable. The marriage was of short duration,
and each party contributed assets which, in large part, were acquired before the marriage.
However, since James and Sara had spent large sums of money supporting their lifestyle and
had over-invested in their home, it was not possible to merely account for the assets and
return them. Their total investment was not recoverable due to the sale price.
¶21 The District Court was apprised of the contributions of each party. It did not
mechanically apply any rule but, rather, considered all of the assets and then equitably
divided the entire marital estate, including the proceeds from the sale of the house. Here,
Sara had contributed $53,000 towards the house. James had contributed over one million
dollars, primarily financed by money from trusts of which he is the beneficiary. After the
house was sold, and the two lines of credit and mortgage satisfied, the house only netted
$232,653.28. Sara had already taken $20,000 worth of furniture. Thus, considering the
parties’ contributions to the marital estate, their age, previous marriages, occupation, sources
of income, the short duration of the marriage, liabilities, and custodial provisions, the court
equitably divided the property.
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Did the District Court err in allocating amounts already paid to Sara as
maintenance and child support?
¶22 From the beginning of these proceedings, the parties have disagreed about appropriate
expenditures. In April 2002, the District Court ordered James to pay $200 per week to Sara
and to continue to pay the marital bills and expenses he had been paying to maintain the
status quo. However, by continuing to use credit cards, Sara spent far in excess of the $200
per week, and James was paying more than the $200 per week. The resulting combination
of Sara’s spending and James’s previous financial obligations meant that the Killpacks’
expenses exceeded James’s monthly income. To make the payments of child support to his
first family, mortgage payments and credit card payments, James was forced to use the line
of credit, driving him further into debt.
¶23 Ultimately, James took action, cancelling Sara’s credit cards and withdrawing funds
from their joint accounts, leaving her only the $200 per week to spend. Sara moved the
District Court to hold James in contempt for violating the temporary maintenance order. In
July 2002, after hearing testimony from both parties on their financial situations, the District
Court ordered James to pay Sara $2,500 per month, reserving for the final hearing on the
merits the allocation between child support and maintenance. Sara was ordered to control
her spending.
¶24 At the final hearing in March 2003, James testified and presented a prepared exhibit
which totaled and divided the couple’s checking account expenditures from January 11,
2002, to the original hearing date of August 11, 2002. The exhibit shows that the total value
of checks allocated to Sara and the children totaled $106,997.25. At the hearing, James
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argued the appropriate way to allocate the expenditure was to establish the child support and
the rest would then be maintenance. In James’s proposed findings of fact and conclusions
of law, he proposed that $31,866 of that amount was for “non-alimony,”including payments
on the mortgage, the line of credit, medicals for the children, and furniture. Because of the
lapse of time between preparing the exhibit and the actual hearing date, James also proposed
to include $12,500 of maintenance he had paid in the interim, bringing the total to
$119,497.25. Subtracting the “non-alimony” and then $19,756 for child support (calculated
at $1,796 per month for eleven months) left $67,875.25, which the District Court apportioned
as the amount of maintenance Sara received. Sara claims that the ruling is unfair because for
income tax purposes, maintenance is regarded as taxable income while child support is not.
Further, James benefits from an above the line deduction of the maintenance.
¶25 For authority, Sara cites to our decisions of In re Marriage of Gerhart (1990), 245
Mont. 279, 800 P.2d 698, and In re Marriage of Lundvall (1990), 241 Mont. 172, 786 P.2d
10. In Lundvall, we held that the temporary maintenance paid during the pendency of the
proceeding was “non-income producing” and so was not to be considered as “sufficient
property to provide for the spouse’s needs” in considering an award of future maintenance
under § 40-4-203(1)(a), MCA. Lundvall, 241 Mont. at 175, 786 P.2d at 12. However, in
Gerhart, we held that it was equitable to reduce a spouse’s share of the property division
by the amount of temporary maintenance already received. Neither of these cases has
bearing on the apportionment between child support and maintenance of previously paid
temporary support. Sara does not dispute the actual calculation of these amounts, nor does
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she dispute that the District Court dutifully applied the Montana Child Support Guidelines.
Rather, Sara argues that the District Court’s determination was arbitrary. The amount
allocated to maintenance, $67,875.25, is not, as Sara contends, arbitrary. Rather, it is a
function of subtracting the amounts of “non-alimony” and child support from the total
amount James paid.
Should the District Court have awarded on-going maintenance?
¶26 Lastly, the District Court refused to award Sara future maintenance. The District
Court stated that Sara had already received sufficient maintenance under the temporary
support order to get a job to sustain herself. Although Sara objects to having any of the
money she had already spent characterized as maintenance, she now claims the District Court
erred in not awarding her on-going maintenance.
¶27 An award of maintenance is governed by § 40-4-203, MCA, which provides, in
pertinent part:
[T]he court may grant a maintenance order for either spouse only if it finds
that the spouse seeking maintenance:
(a) lacks sufficient property to provide for his reasonable needs; and
(b) is unable to support himself through appropriate employment or is
the custodian of a child whose condition or circumstances make it appropriate
that the custodian not be required to seek employment outside the home.
Section 40-4-203, MCA.
¶28 The record reveals that Sara has sufficient property to provide for her reasonable
needs. Sara is the beneficiary of a trust, from which she has previously made numerous
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withdrawals. Furthermore, she owns property in Wisconsin valued at over $400,000. Since
moving to Wisconsin, she has invested $6,000 in developing the property.
¶29 Sara has a masters degree in clinical psychology from Duke University and needs only
to complete her dissertation to obtain her doctorate. However, she has not worked in her
field since 1989. She testified that she was not currently employable as a psychologist
because she would need to complete 3,000 hours of supervised practice to obtain a license
to be able to work as a psychologist. Sara also testified that she could make $75 a day as a
substitute teacher but had not yet done so as the necessary paperwork was incomplete.
James, who currently works as an administrator at Shodair Children’s Hospital and before
that worked at a state mental health institute in Wisconsin, testified that at either location,
an entry level psychologist without a license, such as Sara, would be employable at a salary
in the range of $29,000 to $32,000.
¶30 Furthermore, Sara testified that her previous expenditures, such as airfare and two
weeks at resort condominiums in Wisconsin, were necessary for her to be able to relocate
there and find a job. The record supports the District Court’s statement that Sara had already
received adequate maintenance to find a job with sufficient pay to support herself.
¶31 We conclude that none of the District Court’s findings were clearly erroneous, nor did
the District Court abuse its discretion. We therefore affirm the order of the District Court
in its entirety.
/S/ W. WILLIAM LEAPHART
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We concur:
/S/ KARLA M. GRAY
/S/ JOHN WARNER
/S/ JIM REGNIER
/S/ JIM RICE
Justice Patricia O. Cotter concurring and dissenting.
¶32 I concur in our resolution of Issues 1 through 4 and dissent from our disposition of
Issue 5.
¶33 In my judgment, there were insufficient findings of fact to support the District Court’s
summary conclusion that Sara was not entitled to maintenance. This Court notes at ¶ 29 that
James testified that either in Wisconsin or Montana, Sara would be employable as an entry
level psychologist at an annual salary of $29,000 to $32,000. However, the District Court
found that a person with Sara’s academic credentials could earn approximately $30,000 in
Helena, Montana. The only finding concerning Sara’s earning potential in Wisconsin,
where she and the children actually reside, is that she earns $75 per day as a substitute
teacher. Sara argues, and I agree, that it was error for the District Court to impute to her an
annual income in the state of Wisconsin, when there was no finding that she could earn such
sums in Wisconsin, and in light of the fact that she is unlicensed and has not worked in her
professional field since 1989.
¶34 I would remand for the entry of findings of fact and conclusions of law consistent
with the requirements of § 40-4-203(1), MCA, and, in the event there are insufficient facts
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in the record to satisfy the analysis required, for a further hearing on the issue of mainte-
nance. I dissent from our refusal to do so.
/S/ PATRICIA O. COTTER
Justice James C. Nelson concurring and dissenting.
¶35 For the reasons which I expressed in my concurrence and dissent in In re Marriage
of Bee, 2002 MT 49, ¶¶ 52-60, 309 Mont. 34, ¶¶ 52-60, 43 P.3d 903, ¶¶ 52-60, I join Justice
Cotter’s dissent as to Issue 5. I concur in Issues 1 through 4.
/S/ JAMES C. NELSON
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