No. 04-589
IN THE SUPREME COURT OF THE STATE OF MONTANA
2005 MT 89
IN RE THE MARRIAGE OF
NICKI LYNN PAYER,
Petitioner and Respondent,
and
JACKSON JEROME PAYER, JR.,
Respondent and Appellant.
APPEAL FROM: District Court of the Sixteenth Judicial District,
In and for the County of Rosebud, Cause No. DR 2003-41,
The Honorable Joe L. Hegel, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Nancy G. Schwartz, LaRance, Syth & Schwartz, Billings, Montana
For Respondent:
George T. Radovich, Attorney at Law, Billings, Montana
Submitted on Briefs: March 23, 2005
Decided: April 12, 2005
Filed:
__________________________________________
Clerk
Justice Brian Morris delivered the Opinion of the Court.
¶1 Appellant Jackson Payer (Jackson) appeals from an amended order entered by the
Sixteenth Judicial District Court, Rosebud County, awarding maintenance to his former
spouse, Nicki Payer (Nicki). We affirm.
¶2 We address the following issues on appeal:
¶3 1. Whether the District Court erred by awarding Nicki maintenance before
determining the value of the marital estate.
¶4 2. Whether the District Court erred in determining Jackson’s income for purposes of
calculating Nicki’s maintenance.
FACTUAL AND PROCEDURAL BACKGROUND
¶5 Jackson and Nicki were married on July 31, 1976, in Deer Lodge, Montana. The
parties separated in March 2003 and on May 2, 2003, Nicki filed a petition for legal
separation and later dissolution in the Thirteenth Judicial District Court, Yellowstone
County. The parties later changed venue to the Sixteenth Judicial District Court, Rosebud
County.
¶6 Jackson owns a business providing heating, ventilation and air conditioning services.
He purchased a van for use in his business in 2002 and deducted the entire cost of the van
from his gross income pursuant to § 179 of the Internal Revenue Code (Section 179). At the
time of trial, Jackson suffered an injury while working that limited his ability to perform
rudimentary tasks and prompted him to hire an employee to execute the necessary physical
work until he recovered from his injuries.
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¶7 Nicki is unemployed, but she receives Social Security disability payments stemming
from an illness that she contracted at age 14. Nicki’s illness has necessitated 20 surgeries
and limited the type and extent of work that she can perform as well as the schooling that she
can complete. The Social Security Administration periodically reviews her medical
condition as it relates to her ability to work and has never found her fit to work. Nicki
remains disabled.
¶8 The District Court held a proceeding and entered its Findings of Fact, Conclusions
of Law and Decree of Dissolution of Marriage on May 25, 2004, awarding Nicki spousal
maintenance in the amount of $1100 and a percentage of the marital estate. Jackson filed a
motion to alter or amend the court’s judgment, contending the court erred by adding income
deductions from his business in its valuation of marital assets and thereby awarding Nicki
a disproportionate share of the marital estate in addition to maintenance. The District Court
issued its amended order on July 26, 2004, finding that it incorrectly had added the entire
amount of Jackson’s business deductions for purposes of calculating the marital estate. The
court accordingly reduced Nicki’s maintenance award to $735, but did not reapportion the
marital estate. This appeal follows.
STANDARD OF REVIEW
¶9 We review a district court’s division of marital property and maintenance awards to
determine whether the findings of fact upon which the division is based proves clearly
erroneous. In re Marriage of Lee (1997), 282 Mont. 410, 417, 938 P.2d 650, 654. A district
court’s findings prove clearly erroneous if they are not supported by substantial evidence,
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if the court misapprehended the effect of evidence, or if our review of the record convinces
us that the court made a mistake. In re Marriage of Steinbeisser, 2002 MT 309, ¶ 17, 313
Mont. 74, ¶ 17, 60 P.3d 441, ¶ 17. Absent clearly erroneous findings, this Court will affirm
a district court’s division of property and award of maintenance unless we identify an abuse
of discretion. In re Marriage of Gerhart, 2003 MT 292, ¶ 16, 318 Mont. 94, ¶ 16, 78 P.3d
1219, ¶ 16. A district court may award maintenance after marital property has been divided
equitably pursuant to § 40-4-202, MCA, and the court properly has applied the criteria of §
40-4-203, MCA. In re Marriage of Weed (1992), 254 Mont. 162, 168, 836 P.2d 591, 594.
DISCUSSION
¶10 Whether the District Court erred by awarding Nicki maintenance before
determining the value of the marital estate.
¶11 Jackson argues on appeal that the District Court erred in awarding Nicki maintenance
before determining an equitable division of the marital estate. Jackson also contends that the
court reduced the value of the marital estate in its amended findings, but declined to adjust
the equitable division of the estate. Finally, Jackson alleges that Nicki failed to prove that
she was entitled to maintenance and that he was able to pay.
¶12 A district court may grant a maintenance order for either spouse only if it finds that
the spouse seeking maintenance lacks sufficient property to provide for his reasonable needs
and proves unable to support himself through appropriate employment. Section 40-4-
203(1)(a-b), MCA. The district court’s maintenance order shall consider, among other
things, the amount and duration of the party’s request; the financial resources of the party
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seeking maintenance, including marital property and ability to meet financial needs; the
duration and standard of living established during the marriage; the age and the physical and
emotional condition of the spouse seeking maintenance; and the ability of the spouse from
whom maintenance is sought to meet his needs as well as his spouse. Section 40-4-203(2)(a-
f), MCA. Although a district court must consider each of the factors listed in § 40-4-203,
MCA, the court need not make specific findings of fact regarding each factor, so long as this
Court can determine that the trial judge actually considered each factor. In re Marriage of
Grende, 2004 MT 36, ¶ 38, 320 Mont. 38, ¶ 38, 85 P.3d 788, ¶ 38.
¶13 We conclude that substantial evidence supported the District Court’s maintenance
award after it valued and distributed the marital shares. The District Court initially valued
the parties’ assets and liabilities in determining the marital estate before equitably
apportioning and distributing the marital shares to the parties. In re Marriage of Hilt (1984),
209 Mont. 140, 146-47, 679 P.2d 783, 786-87 (holding that pursuant to § 40-4-202 and § 40-
4-203, MCA, a court may award maintenance after it has made an equitable distribution of
property that proves insufficient to provide for the spouse’s financial needs). The court
awarded Nicki maintenance in the amount of $1100 per month based on her budgetary needs,
including standard of living, disability income, and the physical impairment precluding her
from work. In re Marriage of Harris (1992), 252 Mont. 291, 294, 828 P.2d 1365, 1367
(holding that an award of maintenance was proper based on evidence that a 54-year-old
woman who was classified as totally disabled by the Social Security Administration, and as
characterized by her own testimony as unemployable, could not work). Although the court
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later amended its findings to reflect Jackson’s business deductions and the corresponding
reduction in his income, this correction reflects Jackson’s effort to reapportion the martial
share, and not an attempt by the court to award maintenance before distributing property.
The court thus properly considered the distribution of property and maintenance in tandem.
Hilt, 209 Mont. at 147, 679 P.2d at 787.
¶14 Nicki lacks sufficient property to provide for her reasonable needs and Jackson will
be able to provide for her needs in the future. In re Marriage of Pfeifer (1997), 282 Mont.
461, 472, 938 P.2d 684, 691 (maintenance should be awarded only if the spouse lacks
sufficient property or is unable to support herself through employment). Jackson does not
dispute that Nicki lacks sufficient property to provide for her needs or that he will be able
to provide for her needs after he recuperates from his injuries. Further, the court’s amended
findings reducing the marital estate, but not reapportioning the shares, reflects the court’s
determination regarding Jackson’s greater ability to produce income and acquire assets in the
future as well as the reduced maintenance awarded to Nicki. An equitable disposition does
not require a 50/50 distribution of the marital estate. In re Marriage of McNellis (1994), 267
Mont. 492, 501, 885 P.2d 412, 418.
¶15 We recognize that district courts face a considerable task in determining a
maintenance award. In the final analysis, it is not a question of whether we would be
persuaded to reach a different conclusion after considering the same evidence. Rather, the
test remains “whether the district court had adequate evidence to support its conclusions.”
In re Marriage of Haines, 2002 MT 182, ¶ 23, 311 Mont. 70, ¶ 23, 53 P.3d 378, ¶ 23. Thus,
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we conclude that appropriate findings of fact supported the District Court’s decision to award
maintenance that were, in turn, amply supported by the record. We affirm the award of
maintenance to Nicki.
¶16 Whether the District Court erred in determining Jackson’s income for the
purposes of calculating Nicki’s maintenance.
¶17 Jackson argues that the District Court improperly added to his income business
deductions and back taxes in determining Nicki’s maintenance. Jackson alleges that the
court misconstrued the deduction provision allowing taxpayers to treat the cost of certain
property as an expense in one taxable year and instead considered the deduction as a straight
line depreciation that would add back income over a period of years. Jackson further
contends that the court failed to consider his temporary disability in determining his ability
to produce and provide income.
¶18 Section 179 of the Internal Revenue Code allows taxpayers to elect to treat the cost
of depreciable property purchased for use in the active conduct of a trade or business as an
expense in the year that the property is placed in service, rather than as property that is
capitalized and thereafter subject to depreciation over a number of years. See 26 U.S.C. §
179. At issue here is whether the District Court should have used a Section 179 deduction
claimed by Jackson’s business for the benefit of Jackson to lower his monthly net income
for the purposes of calculating spousal maintenance. We have not considered the question
before and neither party cites any authority directly on point. Jackson contends, however,
that we should adopt analogous reasoning from other jurisdictions that have concluded that
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all “reasonable unreimbursed legitimate business expenses” should be deducted from income
in determining child support obligations. Watson v. Watson (Wyo. 2002), 60 P.3d 124, 128.
¶19 In Watson, the father argued on appeal that the district court erred in recalculating his
child support obligation by adding back to his income the business expenses deducted from
his federal income tax pursuant Section 179. The Wyoming Supreme Court held that, unlike
depreciation that fails to reflect an actual cash expenditure, a Section 179 deduction reduces
available resources from which to pay child support and therefore should not be added back
to income. The court reasoned that in determining a parent’s income for child support
purposes, all “reasonable unreimbursed legitimate business expenses” such as a Section 179
expense should be deducted from income. Watson, 60 P.3d at 127-28.
¶20 We deem Watson inapposite here and instead adopt the reasoning of other
jurisdictions that have concluded that depreciation or deductions should not be deducted
categorically as an expense or treated as income in all instances, but rather that the extent of
its inclusion, if any, should depend on the particular circumstances of each case. In re
Marriage of Gaer (Iowa 1991), 476 N.W.2d 324, 328; see also Stoner v. Stoner (Conn.
1972), 307 A.2d 146, 151. This approach remains consistent both with the statutory
flexibility afforded to the court to award maintenance “as the court deems just” and our case
law permitting district courts wide discretion in determining maintenance awards. See § 40-
4-203, MCA; Harris, 252 Mont. at 298, 828 P.2d at 1369.
¶21 In Harris, the husband argued on appeal that he no longer had sufficient wealth to pay
$800 in maintenance to his wife and still meet his own needs. He contended that the district
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court failed to consider that his adjusted gross income included depreciation and payments
on certain non-income producing properties. We concluded that substantial evidence
supported the district court’s order refusing the husband’s deductions for non-income
producing properties as they would distort his actual income from $30,000 to $22,219.
Harris, 252 Mont. at 298, 828 P.2d at 1369. We thus ordered the husband to pay $800 per
month in maintenance to support his wife. Harris, 252 Mont. at 298, 828 P.2d at 1369.
¶22 We conclude that the District Court correctly determined Jackson’s income for the
purposes of calculating Nicki’s maintenance. The District Court properly adjusted Jackson’s
income from $31,308.40 to $25,541.59 in order to provide him sufficient cash flow to
maintain his business and also to meet his maintenance obligations. Further, the court spread
the depreciation over the useful life of the van, rather than a substantial part of it being taken
in the first and only year, so that Jackson could sustain the business without depriving Nicki
of her needs. The court thus concluded that in light of the reduced maintenance and the
greater ability of Jackson to produce income and acquire assets in the future, it would decline
to adjust the distribution of the marital estate.
¶23 We therefore conclude that appropriate findings of fact supported the District Court’s
decision to include Jackson’s business deductions in calculating Nicki’s maintenance award
that were, in turn, amply supported by the record.
¶24 We affirm the award of maintenance to Nicki.
/S/ BRIAN MORRIS
We Concur:
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/S/ KARLA M. GRAY
/S/ JOHN WARNER
/S/ PATRICIA O. COTTER
/S/ JAMES C. NELSON
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