Susan C. Vierstra v. Michael George Vierstra

292 P.3d 264, 153 Idaho 873, 2012 Ida. LEXIS 247
CourtIdaho Supreme Court
DecidedDecember 20, 2012
Docket39005
StatusPublished
Cited by20 cases

This text of 292 P.3d 264 (Susan C. Vierstra v. Michael George Vierstra) is published on Counsel Stack Legal Research, covering Idaho Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Susan C. Vierstra v. Michael George Vierstra, 292 P.3d 264, 153 Idaho 873, 2012 Ida. LEXIS 247 (Idaho 2012).

Opinion

HORTON, Justice.

This ease arises from a divorce proceeding between Michael and Susan Vierstra. The magistrate court made a finding regarding the expected tax liability for 2009 when determining the value of the Vierstra family dairy. In its Judgment and Decree of Divorce, the magistrate court ordered the parties to adjust the valuations and equalizations according to the actual tax liability. After Susan objected to the form of the judgment, the magistrate court entered an Amended Judgment which did not alter the language regarding valuation of the dairy and the parties’ obligation to adjust the valuations and equalizations. Because the actual tax liability for 2009 turned out to be much less than expected, Susan filed a motion seeking an adjustment of the equalization payment she was due. After receiving additional evidence, the magistrate court denied her motion. Susan then appealed from the Amended Judgment to the district court, asserting that the magistrate court erred in its valuation of the dairy and by denying her motion to adjust the equalization payment. The distinct court dismissed the appeal, holding that Susan had not timely appealed from the judgment that determined the value of the dairy and that the magistrate court lacked jurisdiction to entertain her motion to adjust. We affirm in part and reverse in part.

I. FACTUAL AND PROCEDURAL BACKGROUND

Susan and Michael were married in 1988. Susan filed for divorce from Michael in 2008. A trial was held over a five-day period in late 2009 and after receiving the parties’ post-trial briefing, the magistrate judge issued his memorandum decision in early January, 2010. On January 25, 2010, the Judgment and Decree of Divorce (the Judgment) was filed. The family dairy operation was, by far, the largest community asset. As it was unclear to the magistrate court that either of the parties would be able secure the financing necessary to “buy out” the other spouse’s interest in the dairy, the court determined that Susan would have the first option to receive the dairy in the distribution of community property and that if she received the dairy, she would be required to make an equalization payment to Michael. If Susan did not exercise that option or was unable to secure financing, Michael then had the option to receive the dairy and make an equalization payment to Susan. If neither party could secure the requisite financing, the dairy was to be sold and the net proceeds divided equally between the parties. Significantly, the trial court ordered that if either party received the dairy, then that party was required to pay 2009 taxes.

On February 8, 2010, Susan filed an Objection to the Form of the Judgment and Decree of Divorce (the Objection). On April 27, 2010, the magistrate court held a telephonic hearing on the Objection and effectively denied it, agreeing with Michael’s attorney as to revisions that should be made to the language of the Judgment. On April 29, 2010, the trial court entered an Amended Judgment and Decree of Divorce (the Amended Judgment) that altered the Judgment by deleting unnecessary and repetitive provisions regarding child support and health insurance. The substance of these amendments is not pertinent to this appeal. The Amended Judgment retained the language of the Judgment with regard to the tax liability for the Vierstra dairy:

*875 The court finds the tax consequence to be incurred by Vierstra Dairy in 2009 is as is shown on Exhibit 801(A). The Court finds that it is more likely than not that Vierstra Dairy will incur the tax consequence. The party who receives the dairy will timely pay said taxes to the State of Idaho and the Internal Revenue Service. If no tax consequence occurs, or if the tax consequence is different from that shown in Exhibit 801(A), the parties shall adjust the valuations and equalizations accordingly. If necessary, the parties can petition the court to address the adjustments. The court orders the parties to timely file tax returns and other filings concerning the Vierstra Dairy.

Exhibit 801A 1 reflected that the parties faced a tax liability of $1,006,000 for the dairy’s operations. After Susan unsuccessfully attempted to exercise her option to receive the dairy, Michael successfully exercised his option.

On April 23, 2010, prior to the hearing on her Objection, Susan filed a motion asking the court to address the adjustments and equalizations (Motion to Adjust). This motion was based upon Susan’s assertion that the parties paid a net sum of $85,036 in taxes for 2009, which was $920,964 less than the trial court had determined would be due. Consistent with the language of the judgment, Susan asked the court that Michael’s equalization payment be increased by one-half that sum — $460,482.

Over Susan’s objection, on May 12, 2010, the magistrate court conducted an evidentiary hearing on the Motion to Adjust. 2 On the subject of taxes, the uncontroverted testimony was that for tax year 2009, the community incurred a tax liability of $85,172 to the IRS and was due a refund of $340 from the state tax commission.

Each party presented additional testimony from experts who had testified at the earlier trial. This testimony related to the $1,006,000 figure adopted by the court. Michael’s expert testified that the $1,006,000 that he had previously testified would be owed was not the expected tax liability for 2009. Rather, it reflected the amount of tax that would have been incurred had the dairy ceased operations. Michael’s expert further opined that he expected that the $1,006,000 would be paid to the IRS within three years. Susan’s expert testified that the $1,006,000 figure was speculative, because dairy operations utilizing the cash method of accounting have the ability to manage each year’s tax liability by prepaying expenses and deferring income. Susan’s expert pointed to the Vierstra dairy’s history of managing tax liability in this fashion as reflecting this tax avoidance strategy.

Although no testimony was elicited as to whether Michael would be able to secure financing if he were required to pay the additional equalization payment requested by Susan, the trial court expressed concern as to his ability to do so. 3 In apparent response to the court’s concerns, Michael’s attorney argued that it was unlikely that Michael would be able to secure financing if he were required to make the larger equalization payment and that if Michael were unable to obtain a loan the dairy would have to be sold, which would be financially detrimental to both of the parties.

The magistrate court then denied Susan’s Motion to Adjust. The trial court’s ruling *876 appears to have been driven by the desire to preserve Michael’s ability to secure financing, thus avoiding the sale of the dairy and preserving both parties’ economic interests:

I’ve never thought, to be honest with you, that either party would be able to finance this. My guess was that it was going to up to a sale. That’s after I heard the financial situations, how close we were on this, and I don’t have these monies, but I think I can get that. It turns out that Mike Vierstra does have a chance to be able to finance this.

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Cite This Page — Counsel Stack

Bluebook (online)
292 P.3d 264, 153 Idaho 873, 2012 Ida. LEXIS 247, Counsel Stack Legal Research, https://law.counselstack.com/opinion/susan-c-vierstra-v-michael-george-vierstra-idaho-2012.