Walker v. Walker

#24903-aff in pt, rev in pt & rem-JKM

2009 SD 31

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

* * * *

DEBRA SUE WALKER, Plaintiff and Appellee,

v.

EDWARD WALKER, JR., Defendant and Appellant.

* * * *

APPEAL FROM THE CIRCUIT COURT
OF THE FIFTH JUDICIAL CIRCUIT
BROWN COUNTY, SOUTH DAKOTA

* * * *

HONORABLE TONY PORTRA
Judge

* * * *

RICHARD L. RUSSMAN of
Richardson, Wyly, Wise,
Sauck & Hieb, LLP Attorneys for plaintiff
Aberdeen, South Dakota and appellee.

DREW C. JOHNSON Attorney for defendant
Aberdeen, South Dakota and appellant.

* * * *

CONSIDERED ON BRIEFS
ON FEBRUARY 17, 2009

OPINION FILED 05/06/09
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MEIERHENRY, Justice

[¶1.] Edward Walker appeals from the divorce judgment from Debra

Walker. Edward argues that the circuit court abused its discretion (1) by denying

Edward’s request for alimony, (2) by awarding the 2002 Chevrolet Trailblazer to

Debra and requiring Edward to pay the debt against the vehicle, and (3) by denying

Edward’s claim for attorney fees from Debra. We affirm issues (1) and (2) and

reverse and remand issue (3).

STANDARD OF REVIEW

[¶2.] We review a circuit court’s award or denial of alimony, division of

property, or the award or denial of attorney fees under the abuse of discretion

standard. Billion v. Billion, 1996 SD 101, ¶14, 553 NW2d 226, 230 (citations

omitted). “We find an abuse of discretion when discretion is exercised ‘to an end or

purpose not justified by, and clearly against, reason and evidence.’” Novak v.

Novak, 2006 SD 34, ¶3, 713 NW2d 551, 552 (quoting Godfrey v. Godfrey, 2005 SD

101, ¶11, 705 NW2d 77, 80). When reviewing a divorce appeal, we will not overturn

the circuit court’s findings of fact unless they are clearly erroneous. Id. “When

applying [the abuse of discretion] standard, we do not inquire whether we would

have made the same decision. Instead, we decide only whether the circuit court

could reasonably reach the conclusion it did in view of the applicable law and the

circumstances of the case.” Maxner v. Maxner, 2007 SD 30, ¶12, 730 NW2d 619,

622 (citing Zepeda v. Zepeda, 2001 SD 101, ¶20, 632 NW2d 48, 55).

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FACTUAL BACKGROUND

[¶3.] This marriage was the third marriage for Edward and the second

marriage for Debra. They were both approximately forty-four years of age at the

time they married in March of 1997. They both had children from a prior marriage

but none together. The couple remained married for eleven years.

[¶4.] Both parties were employed during the marriage. Debra worked as a

counselor at Northern State University. Edward was last employed with Dakota,

Minnesota, and Eastern Railroad until a motorcycle accident in 2005 left him

paralyzed from mid-chest down. At the time of trial, Edward no longer worked as a

result of the accident. The trial court found that Edward received $2,552 1 a month

from his railroad retirement account. Debra’s monthly income at time of trial was

$2,519 per month.

[¶5.] Prior to the marriage, the parties entered into an antenuptial marital

property agreement wherein the parties expressed their “desire to fix and determine

the rights of each of them in any and all property.” The agreement recited the

parties’ wishes to “retain . . . all of his or her estate to the same extent as if each of

the parties had remained single.” Edward’s premarital estate consisted of $20,704

of property assets and $19,582 of debt. Debra’s premarital estate was $931,965 of

1. In the appellate briefs, both parties refer to Edward’s monthly income as
$2,521 based on his trial testimony (Edward subtracts his Medicare B
payment of $96 from this amount for a monthly income of $2,425). The trial
court, however, found that Edward’s income was $2,552. The $2,552 amount
most likely was determined by dividing Edward’s 2008 income (as shown in
one his exhibits) of $30,627.09 by twelve months. Neither party argues that
the finding of fact regarding Edward’s income is clearly erroneous.
Therefore, the $2,552 figure will be used in this opinion.

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property assets and $8,978 of debt. Most of Debra’s premarital property came from

the property settlement from her first marriage. The parties waived any claim to

each other’s premarital property, to alimony or to attorney’s fees should the

marriage end in divorce. The waiver provision in the agreement provided as

follows:

The parties hereto expressly further agree to and with each
other, that if they should become separated or divorced, also in
connection with any actions brought by either party against the
other for separation, divorce, or annulment of the marriage, that
neither party shall apply to the Court for any legal expenses,
attorney’s fees, alimony, temporary alimony, support, or for a
property settlement in connection therewith and in [the] case of
any separation or divorce or annulment of the marriage whether
such separation be voluntary or by legal action, such party
hereby waives as against the other any rights or claims for
alimony, temporary or permanent, support, property settlement,
legal expenses, and attorney’s fees to the extent allowed by law.

(Emphasis added.)

[¶6.] The agreement also acknowledged that any “jointly owned assets”

acquired by the parties during the marriage would “be divided equitably between

the parties as of the date of the separation, or divorce or annulment.” The parties

did acquire assets during the marriage that were subject to equitable division.

Those assets included approximately twenty-eight acres of land near Hill City,

South Dakota. This property sold prior to the divorce for $308,000, and the

proceeds were held in escrow to be divided as part of the divorce. They had also

acquired ten acres of land in Louisiana, and timeshares in Florida and Utah. Most

of the money to purchase the properties came from Debra’s premarital assets.

Debra contributed approximately $175,000 to purchase the Hill City property, and

Edward contributed approximately $7,000. Debra also provided $30,000 to

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purchase the Louisiana property and $22,000 to purchase the timeshares in Florida

and Utah. At the time of the divorce, the parties owned a 2002 Chevrolet

Trailblazer vehicle and a 2005 handicap equipped van. The couple also had other

personal property that was not in dispute on appeal.

[¶7.] In dividing the marital property, the circuit court awarded each party

one-half of the proceeds from the sale of the Hill City property. The court ordered

that the Louisiana property and the timeshares in Florida and Utah be sold and the

proceeds divided equally between the parties. Edward received the handicap van

and Debra the Trailblazer. The loan on both vehicles was assigned to Edward.

[¶8.] Edward requested alimony in the form of a lump-sum payment of at

least $400,000. In his proposed findings of fact and conclusions of law, Edward

suggested that Debra fund the lump-sum payment partially with her half of the

proceeds from the sale of the Hill City property and the remainder with her pre-

marital assets. The court denied Edward’s request for alimony and for attorney

fees. Edward appeals. He claims that the circuit court abused its discretion by not

awarding alimony, by not assigning the debt on the 2002 Trailblazer to Debra, and

by denying Edward’s claim for attorney fees.

ANALYSIS

Edward’s Alimony Request

[¶9.] We have previously determined that the portion of an antenuptial

agreement waiving alimony is not enforceable. Sanford v. Sanford, 2005 SD 34,

¶38, 694 NW2d 283, 293 (invalid provisions “may be severed from valid portions of

the prenuptial agreement without invalidating the entire agreement.”); see also

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SDCL 25-2-18 (providing the subject matter upon which parties to a premarital

agreement may contract). Thus, the circuit court appropriately considered

Edward’s claim for alimony regardless of the antenuptial agreement to the contrary.

[¶10.] South Dakota law gives a trial court discretion to award alimony in a

divorce as follows:

Where a divorce is granted, the court may compel one party to
make such suitable allowance to the other party for support
during the life of that other party or for a shorter period, as the
court may deem just, having regard to the circumstances of the
parties represented; and the court may from time to time modify
its orders in these respects.

SDCL 25-4-41. A trial court’s decision to grant or deny alimony is guided by the

circumstances of the parties with consideration of the following factors: “the length

of the marriage, earning capacity of the parties, financial condition after the

property division, age, health and physical condition of the parties, the parties’

station in life or social standing, and fault.” Wilson v. Wilson, 434 NW2d 742, 745

(SD 1989) (citations omitted).

[¶11.] Further, “[a] circuit court is required to consider the allocation of

property and spousal support together.” Terca v. Terca, 2008 SD 99, ¶28, 757

NW2d 319, 326 (citing Evans v. Evans, 1997 SD 16, ¶31, 559 NW2d 240, 247).

Courts are to consider property division and spousal support jointly because “an

award of more assets can eliminate or reduce the need for spousal support and vice

versa.” Id. (citing Heckenlaible v. Heckenlaible, 1996 SD 32, ¶20, 545 NW2d 481,

485). The party seeking alimony has the burden to establish the need for alimony

and that the other party has the ability to provide for all or some of the need.

Fausch v. Fausch, 2005 SD 63, ¶17, 697 NW2d 748,755 (citations omitted).

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[¶12.] In support of his alimony claim, Edward presented his monthly

budgetary needs. He claimed that his monthly living expenses totaled $3911.

Included in his monthly expenses was $979 for health-related costs.2 Edward,

however, indicated that his health-related costs would change because of his

eligibility for Medicare. With Medicare, he claimed that his health-related costs

would be $1021, which would increase his monthly budget needs by $42.

[¶13.] The circuit court, in considering Edward’s monthly expenses, found

that Edward had inflated some of his claimed expenses. The court determined that

Edward’s grocery budget was inflated, in part, by liquor purchases. Edward agreed

on cross-examination that Debra should not have to pay for his alcohol, which

amounted to about $122 of the $464 he had budgeted for groceries. The court found

$300 a month a reasonable amount for groceries. Edward does not specifically

challenge the court’s findings as clearly erroneous. He simply claims that it was

error for the court to reduce his grocery bill and that he should be able to maintain

his current standard of living. Edward also admitted that he had overstated his

average utility expenses by $26 a month.

[¶14.] Edward’s monthly budget also included outstanding debts that the

court determined could be paid in full with the cash Edward would receive from the

divorce. Payment of the debts would reduce his monthly expenses accordingly.

Those outstanding debts consisted of a loan payment of $485, credit card payments

of $431, and a furniture payment of $61.

2. He claimed $167 for prescriptions and medical supplies, $140 for hospital and
clinic bills, $352 for COBRA health coverage, and $320 for home health
services.

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[¶15.] Additionally, Edward budgeted $320 a month for home health services.

However, he testified that he normally paid about $200 per month for the home

health services. Debra challenged the amount and submitted evidence that the

Edward’s home health services could be paid by Medicare. It is not clear from the

findings what amount, if any, the circuit court considered as part of Edward’s

monthly expenses. With his home health care expense of $200 a month and the

other reductions recognized by the circuit court, Edward’s monthly expenses totaled

approximately $2,666.

[¶16.] Edward received $2,552 a month from his railroad pension. He had

$49,638 in his 401K fund (value at trial)3 and $124,000 cash from his portion of the

Black Hills property. 4 He will also receive his one-half of the proceeds from the sale

of the two timeshare properties and the Louisiana property. Neither party offered

evidence of the fair market value of these properties. The only evidence as to the

value was their purchase price; consequently, the court did not assign a value to

them.

3. Edward presented various figures on the value of his 401(k) ranging from a
high of $49,638 as shown on a statement introduced into evidence at trial to
$46,000 in his proposed findings of fact to a low of $44,000 submitted to the
court as part of a post-trial motion. The $49,638 value was the value used as
part of Edward’s financial planner’s analysis and testimony.

4. Edward had received $30,000 of his share of the Black Hills property in
advance. If he used some of the remainder to pay off his debt, his debt would
be reduced further. His debt at time of trial was approximately $23,000
including the car loans, credit card debt, and his debt on his personal line of
credit.

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[¶17.] At trial, Edward requested a lump-sum alimony award rather than a

monthly alimony amount. 5 Edward’s theory was to create a fund in a sufficient

amount to pay for his needs for the rest of his life. The principal and earnings from

the fund would be amortized over his projected lifetime to supplement his income

from his railroad pension and 401(k) to meet his projected lifetime needs. The

requisite amount of funding was based on testimony of Edward’s financial planner,

Darrell Strivens, CPA, with the firm of Eide Bailey. Strivens testified that over

Edward’s life expectancy of twenty-one years, Edward would have a cash flow

shortfall. To arrive at an amount sufficient to meet the shortfall, Striven used

Edward’s average monthly expenditures (provided by Edward) and Edward’s

monthly receipt of funds. Strivens then applied inflationary assumptions and a

projected rate of return through the year 2028. He offered two versions -- one based

on a higher rate of inflation and one on a lower rate of inflation. Using the higher

rate of inflation, Strivens testified that the fund would need $777,000 in present

value in order to provide for Edward’s lifetime cash flow shortfall. Using the lower

rate of inflation, he set the amount at $430,036. 6 Edward proposed that the funds

would come from the following sources: $49,638 from Edward’s 401(k) account,

5. In a trial exhibit, Edward refers to monthly alimony from Debra in the
amount of $2,000. However, this amount was not advocated at trial nor does
it appear to be supported by testimony or evidence in the record. In Edward’s
proposed findings of fact and conclusions of law, he only sought alimony in
the form of a lump-sum payment. In his appeal brief, Edward alternatively
asks for a monthly alimony amount of “about $1,500 from Debra.”

6. In his appellate brief, Edward refers to the necessary funding amount as
$400,000.

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$124,000 from his half of the Black Hill’s property sale, and the rest from Debra. At

trial, he proposed that Debra’s contribution would come from her half of the Black

Hill’s property sale ($124,000) and a minimum of $132,398 from her premarital

assets. 7

[¶18.] The court considered the circumstances of the parties and applied the

various factors in determining whether to grant Edward’s request for alimony. The

court noted that this eleven-year marriage was the third marriage for fifty-four

year-old Edward and the second marriage for fifty-five year-old Debra. The court

found that Edward was unable to work because of his disability but received

disability payments in the amount of $2,552 a month. The court found that Debra

was generally in good health but suffered from fibromyalgia and needed to have

both knees replaced. Nevertheless, the court found that she was capable of

maintaining full-time employment and that her net monthly earnings were $2,519.

The court determined that the parties’ social standing would be approximately the

same as it had been prior to the separation. The parties agreed to a divorce on

irreconcilable differences. Both testified as to problems in the marriage involving

Edward’s temper and Debra’s lack of patience and nurturing. The circuit court

found that the reason for the divorce was “simply an inability to get along any

further” and that neither party was at fault.

[¶19.] After considering the circumstances and factors, the circuit court

denied Edward’s request for a lump-sum alimony award. The court concluded that

7. The figures Edward uses in his appellate brief vary from the figures he used
at the trial court level in his proposed findings of fact and conclusions of law.

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Edward had not shown a need for the alimony. The court expressed concern about

the accuracy of the amount of Edward’s lump-sum request because the projection

was based on uncertain or inaccurate assumptions. The court further determined

that the monthly expenses relied upon to make the projections were overstated.

The court also looked at Edward’s income and assets from the divorce and concluded

that he was able to support himself from his railroad pension, his 401(k), and the

property he received in the divorce. Additionally, the court looked at Debra’s

earnings and her assets and concluded that she did not have the ability to pay

alimony.

[¶20.] Edward argues that the circuit court failed to consider Debra’s

premarital property as part of her earning capacity when determining whether to

award alimony. In effect, Edward is attempting to nullify his agreement to waive

any claim to her premarital property by labeling his claim as alimony. The

antenuptial agreement legally prohibits either party from claiming premarital

property of the other spouse even in the form of alimony. Nevertheless, Edward

proposes that approximately $130,000 of his alimony request come from Debra’s

premarital funds. The majority of Debra’s premarital assets at the time of the trial

were in the form of investment accounts worth approximately $629,000. The

accounts had been funded by her ex-husband as part of her divorce settlement. She

receives no income or dividends from the investment accounts and cannot access the

funds without penalty until the age of fifty-nine and one-half.

[¶21.] Under similar facts, a Florida District Court of Appeal held that a

lump-sum alimony award “must be carefully restricted in its amount so that it does

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not appear to contradict the terms of the [antenuptial] contract.” Hannon v.

Hannon, 740 So2d 1181, 1188 (FlaDistCtApp 1999). In Hannon, the wife had

requested a lump-sum alimony award. It was a second marriage for the couple, and

they had entered into an antenuptial contract that provided for each to keep his or

her separate property. As part of the agreement, the husband agreed to support the

wife during his lifetime if the couple divorced. The trial court awarded the wife a

lump-sum payment that conceivably would have extended beyond the husband’s

life. The appellate court reversed the lump-sum award because it was contrary to

the couple’s antenuptial agreement. The court analyzed the effect of an antenuptial

agreement as follows:

A primary purpose of an agreement is to modify or shrink the
general discretion of the dissolution of marriage judge in doing
equity between the parties. The agreement itself is intended to
define the mutual equities, and the trial judge is not free to
ignore its provisions or to render them ineffective. . . .
Dissolution of marriage courts should attempt to give effect to
nuptial agreements that are, as here, properly made and fully
enforceable.

Id. at 1187. Our cases also recognize that the purpose of an antenuptial agreement

is to limit the discretion of a trial judge in a divorce and that valid agreements as to

property division are enforceable. See Sanford, 2005 SD 34, ¶38, 694 NW2d at 293-

94.

[¶22.] Debra and Edward agreed not to claim each other’s premarital

property. Edward did not challenge the validity of the agreement, except for the

waiver of alimony. Thus, the trial court was limited to the parties’ agreement and

could not consider Debra’s premarital property available to fund a lump-sum award

of alimony. Edward’s request for a lump-sum award was based, in part, on Debra’s

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premarital property. Edward did not present a case for how Debra had the ability

to pay alimony if her premarital property was not considered. Debra’s net monthly

income was $2,519; Edward’s net monthly income was $2,552. Debra otherwise

received no income or dividends from any of her property. After the property

settlement Edward had property in excess of $174,000 from the Hill City,

Louisiana, Utah, and Florida properties, purchased mainly by using Debra’s

premarital assets. Further, the court divided the value of these properties equally

between the parties regardless of the fact that Debra supplied her non-marital

funds to finance most of the properties. Edward will receive $49,638 from his

401(k), $124,000 as his share of Black Hills property, plus one-half the proceeds of

the other property yet to be sold. Without the premarital property, Edward has not

shown that Debra has sufficient earning capacity to provide alimony.

Vehicle Division and Vehicle Debt

[¶23.] Edward also argues that the trial court abused its discretion when it

awarded the 2002 Chevrolet Trailblazer to Debra and required Edward to pay the

debt against the vehicle. Edward originally purchased and drove the Trailblazer.

He had a loan for its purchase from his credit union. Debra drove a van at that

time. After his injury, they traded Debra’s van for a handicap equipped van for

Edward, and Debra used the Trailblazer. At the time of trial, Edward’s loans

against the vehicles were $3,143 on the van and $7,893 on the Trailblazer. They

agreed, as part of the divorce, that Edward would get the handicap van and Debra

the Trailblazer. The court, however, did not reassign Edward’s loan on the

Trailblazer to Debra. The trial court explained its rationale as follows: “[g]iven the

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circumstances as to how each person came to be in possession of the vehicles that

each now has and the fact that Debra traded in her van to help purchase Edward’s

current van, Edward will be responsible for the debt on the vehicles through the

Huron credit union.”

[¶24.] We do not reverse a distribution of property absent an abuse of

discretion. Fausch, 2005 SD 63, ¶5, 697 NW2d at 751 (quoting Grode v. Grode,

1996 SD 15, ¶6, 543 NW2d 795, 799). A reversal on this one item would require us

to find that the court’s discretion was exercised “‘to an end or purpose not justified

by, and clearly against, reason and evidence.’” Novak, 2006 SD 34, ¶3, 713 NW2d

at 552 (quoting Godfrey, 2005 SD 101, ¶11, 705 NW2d at 80). We normally review

the overall property division of the court, not an item by item analysis. We have

consistently emphasized that we do not substitute our judgment for that of the trial

court. Anderson v. Aesoph, 2005 SD 56, ¶18, 697 NW2d 25, 31 (citations omitted).

Even if we may have decided it differently, the party must show that the trial court

abused its discretion. See Fausch, 2005 SD 63, ¶5, 697 NW2d at 751 (quoting Grode

v. Grode, 1996 SD 15, ¶6, 543 NW2d 795, 799). Here, Debra used her premarital

assets to finance the majority of the marital property purchases. Regardless of the

fact that Debra provided most of the money, the trial court divided the marital

property equally between the parties. In fact, Debra received less for her half of the

proceeds of the sale of the Hill City property than she contributed for the original

purchase of the property. Consequently, in light of the overall property

distribution, Edward has not shown that the court’s decision to have Edward

continue to pay the debt on both vehicles was unjustified and “clearly against,

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reason and evidence.” Novak, 2006 SD 34, ¶3, 713 NW2d at 552 (quoting Godfrey,

2005 SD 101, ¶11, 705 NW2d at 80).

Attorney Fees

[¶25.] Edward contends that the circuit court abused its discretion when it

refused his request for attorney’s fees. He argues that Debra unreasonably elevated

the cost of litigation. Edward also argues that the provision of the antenuptial

agreement waiving the right to attorney fees does not apply. He contends that the

provision of the antenuptial agreement that waived rights to attorney’s fees violates

public policy. We agree in part and hold that those attorney fees attributable to the

alimony claim may be awarded in the discretion of the court. In Sanford v. Sanford,

we determined that public policy precludes a waiver of alimony in a prenuptial

agreement. 2005 SD 34, ¶38, 694 NW2d at 293. The logical extension of our

holding is that attorney’s fees associated with an alimony award also cannot be

prohibited by the prenuptial agreement. Consequently, we remand for the circuit

court to consider Edward’s request for attorney fees as they relate to his alimony

request.

[¶26.] Edward’s request for appellate attorney fees is granted in the amount

of $2,000. See SDCL 15-26A-87.3.

[¶27.] GILBERTSON, Chief Justice, and KONENKAMP and ZINTER,

Justices, and SABERS, Retired Justice, concur.

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