July 19 2011
DA 11-0074
IN THE SUPREME COURT OF THE STATE OF MONTANA
2011 MT 173N
IN RE THE MARRIAGE OF:
JILL M. LUNDSTROM,
Petitioner and Appellee,
and
DIETER SCHOLZ,
Respondent and Appellant.
APPEAL FROM: District Court of the Twentieth Judicial District,
In and For the County of Sanders, Cause No. DR 06-25
Honorable C.B. McNeil, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Quentin M. Rhoades, Robert Erickson; Sullivan, Tabaracci &
Rhoades, P.C.; Missoula, Montana
For Appellee:
Timothy G. Goen; Attorney at Law; Thompson Falls, Montana
Submitted on Briefs: June 15, 2011
Decided: July 19, 2011
Filed:
__________________________________________
Clerk
Justice Beth Baker delivered the Opinion of the Court.
¶1 Pursuant to Section I, Paragraph 3(d), Montana Supreme Court Internal Operating
Rules, this case is decided by memorandum opinion and shall not be cited and does not
serve as precedent. Its case title, cause number, and disposition shall be included in this
Court’s quarterly list of noncitable cases published in the Pacific Reporter and Montana
Reports.
¶2 After eighteen months of marriage, the parties in this case have spent the last five
years in proceedings for dissolution. This is the fourth time the matter has been before
this Court on appeal. See In re Marriage of Lundstrom, 2007 MT 304, 340 Mont. 83, 172
P.3d 588 (Lundstrom I); In re Marriage of Lundstrom, 2009 MT 400, 353 Mont. 436, 221
P.3d 1178 (Lundstrom II); In re Marriage of Lundstrom, 2010 MT 261, 358 Mont. 318,
245 P.3d 25 (Lundstrom III). In Lundstrom III, we remanded the case to the District
Court to clarify its findings of fact and conclusions of law to justify relieving Petitioner
Jill M. Lundstrom (Lundstrom) of her obligation to pay a promissory note to Respondent
Dieter Scholz (Scholz), or to make other modifications it deemed necessary to ensure an
equitable division of the marital estate. Lundstrom III, ¶ 28. The District Court on
remand issued a two-page order setting forth its rationale and reaffirming that its
March 26, 2010, decree of dissolution remains in full force and effect. Scholz timely
appealed.
¶3 We consider on appeal whether the District Court abused its discretion in
extinguishing Lundstrom’s debt to Scholz under the promissory note.
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¶4 As the facts and procedural history have been recounted extensively in our prior
opinions, we set forth only those facts relevant to the issue now before us.
¶5 Prior to the parties’ September 2004 marriage, Lundstrom acquired two parcels of
property from Scholz—a 77-acre parcel of land she purchased in a like-kind exchange,
using the proceeds of the sale of her California property, and a seven-acre parcel that
included the parties’ residence. Lundstrom paid $565,000 for the 77-acre parcel,
$322,643.33 of which was paid in cash, with the balance financed by a $242,356.67
promissory note signed by Lundstrom in favor of Scholz. The parcel also was
encumbered by another mortgage in the amount of $90,000, for which Lundstrom
assumed responsibility. She paid $325,000 for the seven acres and home, which required
her to take out an additional $260,000 mortgage. Scholz used the combined proceeds of
the two sales to Lundstrom to pay off a $523,000 premarital debt he owed to the Small
Business Administration (SBA). Lundstrom did not repay the promissory note.
¶6 Lundstrom testified at trial that, during the course of the parties’ relationship but
also prior to their marriage, she loaned Scholz $5,000 per month for over two years to
enable him to make payments on the SBA loan. Lundstrom loaned Scholz a total of
$216,500, of which he repaid her only $65,000 at the time she purchased the home from
him.
¶7 The District Court agreed with Lundstrom that she owes nothing to Scholz. The
court found that Scholz was unable to convey clear title to the 77-acre parcel until
Lundstrom purchased the additional seven-acre parcel of property, thereby supplying
additional cash with which to pay off Scholz’s obligation and incurring additional debt in
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the process. The court found it would be a “gross inequity” to require Lundstrom to pay
the note when her money was used to pay Scholz’s premarital debt in order to obtain
clear title to the property.
¶8 Scholz argues the District Court misunderstood the parties’ premarital real estate
transactions. He claims the evidence shows the SBA loan was paid by Scholz from the
funds Lundstrom paid him for her purchases of the property. He argues the court gave
Lundstrom a “windfall” by allowing her to retain both properties and be relieved of the
debt. Lundstrom argues the circumstances of this case support the District Court’s
distribution of property and debt, and that on balance, extinguishing the debt owed under
the promissory note was within the court’s broad discretion to apportion the marital estate
in a manner equitable to each party. Lundstrom points out she assumed responsibility for
two mortgages that at the time of trial amounted to $328,000; that she was not repaid for
over $150,000 of the loans she made to Scholz; that she paid all the mortgage payments,
taxes, insurance, and maintenance on the parties’ home during the marriage; that the
properties have since lost value; and that she was awarded just under $19,000 in personal
property, while Scholz was awarded more than $186,000 in personal property.
¶9 We have determined to decide this case pursuant to Section I, Paragraph 3(d) of
our Internal Operating Rules, which provide for noncitable memorandum opinions. A
district court is vested with broad discretion to apportion a marital estate in a manner
equitable to each party under the circumstances. In re Marriage of Bartsch, 2007 MT
136, ¶ 9, 337 Mont. 386, 162 P.3d 72; § 40-4-202, MCA. Our remand in Lundstrom III
directed the District Court to ensure an “equitable division of the marital estate.”
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Lundstrom III, ¶ 28. While he disagrees with the District Court’s rationale for
extinguishing the promissory note, Scholz has not demonstrated an abuse of discretion in
the court’s overall distribution of the parties’ property and debts. Having reviewed the
record and considered all the circumstances of this case in light of the discretion afforded
the District Court, we cannot conclude the court’s apportionment was inequitable.
¶10 Affirmed.
/S/ BETH BAKER
We concur:
/S/ MIKE McGRATH
/S/ MICHAEL E WHEAT
/S/ JIM RICE
/S/ BRIAN MORRIS
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