Henrichs v. Henrichs

426 N.W.2d 569, 1988 S.D. LEXIS 97, 1988 WL 67405

• Court: South Dakota Supreme Court
• Decided: June 29, 1988
• Docket: 15773, 15796
• Status: Published

Opinions

SABERS, Justice.

Wife appeals award of alimony and property distribution. Husband appeals claiming excessive alimony award.

Facts

Gerald (Jerry) and Marvella (Marvella) Henrichs were married in May of 1954. Three children were born; all were adults at the time of the divorce action. In 1966, Jerry bought the Triple F Feeds business in Ramona, South Dakota. Marvella assisted Jerry in the feed business. In 1978, Jerry became the State Manager for Triple F Feeds. This position required frequent travel and Marvella became responsible for most of the day-to-day operation of the feed store until 1982 when it was sold.

In 1979, Marvella and Jerry were involved in an automobile accident in which Marvella sustained serious personal injuries. She underwent surgery in 1981 to fuse three discs in her neck. In 1982, Marvella and Jerry received net settlement proceeds of $42,404.87.

In May of 1984, Jerry and Marvella purchased the cafe in Ramona for $32,000. They assumed an SBA loan of $25,000 and borrowed $7,000 from the Ramona Development Corporation. They invested another $16,000 in remodeling and improvements. Marvella has been exclusively responsible for running the cafe.

After thirty-two years of marriage, Jerry moved from the marital home and filed for divorce on the grounds of irreconcilable differences and extreme cruelty. Marvella counterclaimed for divorce based on extreme cruelty.

The trial court awarded a divorce to Jerry, upon consent of Marvella, based on irreconcilable differences. The trial court divided the property to award Jerry property valued at $81,731.83 and to award Mar-vella property valued at $74,916.27. After consideration for marital debts, Jerry’s property had a net value of $44,387.83 and Marvella’s property had a net value of $45,-916.27. Marvella was granted alimony of $500 per month but no attorney fees.

1. PROPERTY DIVISION

Marvella claims the trial court erred by not granting her a lump sum settlement equal to the proceeds received in settlement of the personal injury action. She also claims the trial court made an inequitable division of the real and personal property of the parties.

Jerry argues that Marvella waived these issues by failing to cite authority for her arguments.¹ SDCL 15-26A-60(6); Kostel Funeral Home, Inc. v. Duke Tufty Co., 393 N.W.2d 449 (S.D.1986). Marvella points out that Kostel holds that failure to cite supporting authority may result in the argument being deemed waived. Imposition of the waiver sanction may be appropriate when attorneys fail to uncover statutes and caselaw which could have been discovered with due diligence. In this case, we do not impose it and reach the merits because the question is sufficiently one of first impression.

A. Personal Injury Award

Marvella claims that the trial court was incorrect in finding the damage award too remote in time and too long merged in the joint assets of the parties to be considered a distributable asset. Marvella argues that four years (1982-1986) is not too remote in time and that the proceeds are traceable. She claims that Exhibit J establishes the disbursement of the proceeds.²

The cases of Wipf v. Wipf, 273 N.W.2d 124 (S.D.1978) and Fink v. Fink, 296 N.W. 2d 916 (S.D.1980) appear to support the proposition that the settlement proceeds of personal injury suits are marital assets subject to distribution. In other jurisdictions, there are cases which hold such funds are marital assets, In re Marriage of McNemey, 417 N.W.2d 205, 206 (Iowa 1987) (“proceeds of a personal injury claim are marital assets, to be divided according to the circumstances of each case”); Phillips v. Phillips, 290 S.C. 455, 351 S.E.2d 178 (S.C.App.1986); McDonald v. McDonald, 19 Ark.App. 75, 716 S.W.2d 788 (1986); Richardson v. Richardson, 139 Wis.2d 778, 407 N.W.2d 231 (1987), and cases which hold the funds belong to the party injured and are not marital assets, Regan v. Regan, 507 So.2d 54 (Miss.1987); Izatt v. Izatt, 627 P.2d 49 (Utah 1981).

Jerry claims that the settlement award was made to the parties jointly and that all of the money has been spent so that there no longer remains an asset to be divided. We believe four years is not too remote under these circumstances and that settlement proceeds are marital property subject to distribution. However, whether the distribution constitutes an abuse of discretion depends on the entire property division.

B. Real and Personal Property

Marvella claims the property division is inequitable because Jerry received the marital home (valued at $27,500) and business property which included a building capable of generating $350 per month rental income while she received the cafe (which has less value than debt) and a one-half interest in the present value of Jerry’s profit-sharing trust³ which is not currently available to her.

Jerry argues that Marvella cannot complain about the award of the marital home because she told the trial court she wanted either the house and the “horse area” or neither. The horses were Jerry’s hobby and the area behind the house, used for pasturing and exercising the horses, was of no interest or use to her. She now argues that Jerry could have found another place for the horses if the trial court had awarded both properties to her. Jerry also asserts that she asked the trial court to award her the Cadillac which she now complains is merely a “depreciable” asset.

The trial court must consider equity and the circumstances of the parties when it divides marital property. SDCL 25-4-44; Cole v. Cole, 384 N.W.2d 312 (S.D.1986); Garnos v. Garnos, 376 N.W.2d 571 (S.D.1985). The principal factors to be considered in determining an equitable property division are: “the length of the marriage; the value of the property; the age and health of the parties; their respective competency to earn a living; the contributions of each party to the accumulation of the property; and the income producing capacity of the parties’ assets.” Cole, supra at 314 (citing Clement v. Clement, 292 N.W.2d 799 (S.D.1980)).

In this case:

1) The parties were married for thirty-two years.

2) The trial court valued the property awarded to Jerry at $81,731.83 (net value — $44,387.83) and the property awarded to Marvella at $74,916.27 (net value — $45,916.27).

3) At the time of the divorce, Jerry was fifty-one years old and Marvella was forty-nine years old. The trial court found both parties were “able bodied, in good health.” It appears from the testimony that the 1981 surgery removed the substantial disability which Marvella incurred as a result of the 1979 accident.

4) The trial court found both parties were capable of earning a living wage.

5) The trial court did not make a specific finding as to the contributions of each party to the accumulation of property, however, the award of approximately equal net amounts may indicate that the trial court found an equal contribution.

6) In essence, Jerry was awarded his business and the home and Marvella was awarded her business. His profit sharing plan was divided equally. The trial court commented that Jerry's business income had been adversely affected by the poor farm economy and that Marvella could use food purchased for the cafe at home.

The trial court has broad discretion in making a division of the marital property and its judgment will not be set aside absent a clear abuse of discretion. Goehry v. Goehry, 354 N.W.2d 192 (S.D.1984). Upon reviewing Marvella’s objections, we find that the trial court did not abuse its discretion. The trial court should have been less concerned with Marvella’s ultimatum and might have granted the home to the wife and the “horse area” and entire retirement trust to the husband, but we are not prepared to say its failure to do so was an abuse of discretion.

2. ALIMONY

Marvella argues that the trial court erred in awarding her alimony of only $500 per month. Although she concedes that Jerry’s income from his feed business has been reduced in recent years because of the poor agricultural economy, she contends the trial court’s award is too low when Jerry’s average income over the past five years is considered. She claims the parties have disproportionate earning capacities. Her argument appears to be based on the belief that Jerry’s income will increase, but the income from the cafe will remain break-even or decline.

Marvella claims that based upon the disproportionate earning capacities of the parties, the inequitable property division and her physical limitations as a result of the car accident, the trial court should have either set alimony at a higher monthly amount or, in addition to the amount awarded, granted her a certain percentage of Jerry's income after a predetermined income figure.

Jerry also appeals the alimony award and claims it is excessive. He claims he does not have substantial income. He claims that, based upon his tax returns for 1982 through 1985 and his pay stubs for the first six months of 1986, he has a taxable income of $899.30 per month (without deduction for his living and other expenses).

Jerry also claims Marvella is fully capable of earning the $890.50 per month she needs for living expenses. He points to her skills and abilities as a bookkeeper and secretary, carpenter and home remodeler, and cafe operator. Marvella counters that these skills have not been utilized for thirty years. Jerry appears to confuse Marvella’s ability to do some remodeling on their home and the cafe with remodeling skills saleable in the competitive job market. He claims that the equitable division of marital assets places them in the same economic position and that, in light of her needs and income, the trial court abused its discretion in awarding her $500 per month alimony.

The trial court has broad discretion in awarding alimony, but “must rest its decision upon several factors as they appear material to the facts and circumstances of each specific case.” Straub v. Straub, 381 N.W.2d 260, 261 (S.D.1986). The factors to be considered are: " ‘(1) the length of the marriage; (2) their respective earning capacity; (3) their respective financial condition after the property division; (4) their respective age, health and physical condition; (5) their station in life or social standing; and (6) the relative fault of the parties in the termination of the marriage.’⁴ [citations omitted]” Arens v. Arens, 400 N.W. 2d 900, 901 (S.D.1987).

“The trial court’s award of alimony and the division of property are considered together on appeal to determine whether the trial court abused its discretion, [citations omitted]” Goehry, supra at 194 (emphasis in original).

We hold that the trial court’s award of $500 per month in alimony was not an abuse of discretion. The parties were married for a lengthy period of time. During the marriage, Marvella contributed substantially to the growth and success of Jerry’s business. Although Jerry's business has been less economically successful of late, he continues to derive a substantial income from it. The cafe, on the other hand, is a relatively new business and its continued viability is, therefore, more speculative. Under the facts as they existed at the time of trial, it was not an abuse of discretion for the trial court to award alimony to Marvella. Although the cafe may provide food, Marvella must now provide for her own housing. The trial court considered Marvella’s present physical condition in making the alimony award. The alimony award of $500 per month is neither excessive nor insufficient. Should a material change of circumstances occur in the future, either party has the right to seek a modification of the award.

3. ATTORNEYS’ FEES

Marvella claims the trial court erred in failing to award her attorney's fees. She argues that Jerry instituted the divorce action and she was forced to hire counsel to protect her rights. She also argues that Jerry caused the breakup of the marriage, his earning ability exceeds hers, and she does not have cash assets or income sufficient to pay her attorney’s fees.

Jerry contends the trial court did not abuse its discretion in requiring each party to pay their own attorney’s fees. He argues that she had sufficient liquid assets to pay her own attorney’s fees because she received temporary alimony of $300 per month prior to the final decree and was awarded $4,134.44 (one-half of a tax refund check).

On review, this court will examine the trial court’s analysis of the following elements pertinent to fixing legal fees generally: (1) the amount and value of the property involved; (2) the intricacy and importance of the litigation; (3) the labor and time involved; (4) the skill required to draft pleadings and try the case; (5) the discovery procedures utilized; (6) the existence of complicated legal problems; (7) the time required; (8) whether briefs were required; and (9) whether an appeal to this court is involved, [citations omitted.]

Cole, supra at 317.

The trial court should also consider the property owned by each party, their respective incomes, the liquidity of the moving party’s assets and whether either party unreasonably increased the time spent on the case. Id.; Harvey v. Harvey, 383 N.W.2d 862 (S.D.1986); Garnos, supra. The decision to award attorneys’ fees is within the sound discretion of the trial court. Wallahan v. Wallahan, 284 N.W. 2d 21 (S.D.1979).

The trial court found that each party was employed, was “receiving assets,” and should pay his or her own attorney’s fees. Findings which do not clearly address the factors to be considered make appellate review of the trial court’s decision difficult. However, the court expressly considered several of the relevant factors and the record does not indicate that either side unreasonably increased the time spent on the case. Therefore, we hold there was no abuse of discretion.

We affirm.

WUEST, C.J., concurs. HENDERSON, J., concurs in part and dissents in part. MORGAN and MILLER, JJ., dissent.

1 . Jerry's assertion is buttressed by the following:

Marvella’s brief, page 14:

"Our Courts have previously held that personal injury settlement proceeds are to be handled by a divorce Court the same as inherited property, and it should be considered the separate property of [Marvella]."

No supporting authority was cited. After Jerry’s brief argued waiver for failure to cite authority, Marvella’s reply brief, pages 6-7 stated:

“This issue [award of personal injury settlement] is one of first impression in the State of South Dakota, and therefore there is no legal precedent available to be cited by Marvella in her brief.”

2 . Exhibit J shows the following disbursement of the $42,404.87 in net proceeds:

American State Bank: pay off of $31,447.54 home mortgage, vehicle loans and other indebtedness and interest

Campbell Supply (Jerry’s account) $ 80.81

Tuition for son $ 2,274.82

To other son $ 1,000.00

To daughter $ 1,000.00

Savings [subsequently withdrawn $ 3,000.00 and used for family support]

Utility $ 55.92

VISA (Jerry's account) $ 1,072.50

Lumber yard $ 264.19

Joint checking $ 2,209.90

3 . According to Jerry’s testimony and Exhibit # 10, the profit-sharing plan of Triple F Feeds, Inc. is a stock ownership plan. At the termination of his employment, he will receive shares of stock equal to the amount due to him. The actual monetary amount Jerry will receive is dependent upon the market value of the shares. Additionally, the amount in the profit-sharing plan is subject to reduction by company losses. Exhibit # 10 shows Jerry’s "total vested amount” dropped from $33,853.38 to $29,763.66 because of a $6,355.28 loss in 1984/1985.

4 . The trial court did not consider fault in its determination as it found that each party had contributed equally to the irreconcilable differences.