IN THE SUPREME COURT
STATE OF NORTH DAKOTA
|SUPREME COURT NO. 20050006|
FRANCES M. REINEKE, APPELLANT
|RONALD REINEKE, APPELLEE.|
APPEAL FROM THE FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER FOR SECOND AMENDED JUDGMENT, AND SECOND AMENDED JUDGMENT ENTERED ON NOVEMBER 10, 2004, IN THE DISTRICT COURT OF
BURLEIGH COUNTY, NORTH DAKOTA,
SOUTH CENTRAL JUDICIAL DISTRICT
CIVIL NO. 02-C-01329
THE HONORABLE BRUCE A. ROMANICK, PRESIDING
|BRENDA A. NEUBAUER|
|ATTORNEY FOR APPELLANT|
|PO BOX 1015|
|BISMARCK, ND 58502-1015|
|RONALD K. REINEKE|
|411 12th STREET NW|
|MANDAN, ND 58554|
TABLE OF CONTENTS
|Table of Contents....i|
|Table of Authorities....ii|
|I. STATEMENT OF ISSUES FOR REVIEW..1|
|II. STATEMENT OF CASE2|
|A.||Course of the Proceedings.2|
|B.||Statement of Facts...3|
|III. LAW AND ARGUMENT5|
|spousal support by failing to award long term|
|spousal support to plaintiff....5|
|relief from Judgment under Rule 60(b), N.D.R.Civ.P....10|
|3.||Whether the trial court failed to enforce the|
|indemnification clause in the divorce Judgment...14|
|Affidavit of Mailing..17|
TABLE OF AUTHORITIES
CASES: PAGE NO.
|Blotske v. Leidholm, 487 N.W.2d 607,610 (N.D. 1992)...5|
|Crawford v. Crawford, 524 N.W.2d 833, 836 (N.D. 1994)..13|
|Fischer v. Fischer, 52 N.W.2d 107 (N.D. 1952).7|
|Heggen v. Heggen, 488 N.W.2d 627 (N.D. 1992)...5|
|Kopp v. Kopp, 2001 ND 41, 622 N.W.2d 726...9,11,14|
|LaVoi v. LaVoi, 505 N.W.2d 384, 386 (N.D. 1993)....5|
|Lill v. Lill, 520 N.W.2d 855, 856 (N.D. 1994)...7|
|Peterson v. Peterson, 555 N.W.2d 359, 361 (N.D. 1996)11|
|Ramsdell v. Ramsdell, 454 N.W.2d 522 (N.D. 1990)..5|
|Rueckert v. Rueckert, 499 N.W.2d 863 (N.D. 1993)....6|
|Ruff v. Ruff, 139 N.W.2d 845, 852 (N.D. 1966)7|
|Van Oosting v. Van Oosting, 521 N.W.2d 93, 100 (N.D. 1994).8|
|Weir v. Weir, 374 N.W.2d 858, 862 (N.D. 1985)...8|
|Wheeler v. Wheeler, 548 N.W.2d 27 (N.D. 1996)..5|
|Wiege v. Wiege, 518 N.W.2d 708, 713 (N.D. 1994)....8|
|Section 14-05-24.1, N.D.C.C5|
|Section 22-02-01, N.D.C.C.14,15|
|Section 22-02-07(1), N.D.C.C.15|
I. STATEMENT OF ISSUES FOR REVIEW
A. Appellant's issues on Appeal.
spousal support by failing to award long term
spousal support to plaintiff.
relief from Judgment under Rule 60(b), N.D.R.Civ.P.
3. Whether the trial court failed to enforce the
Indemnification clause in the divorce Judgment.
II. STATEMENT OF THE CASE
A. Course of Proceedings
Plaintiff, hereinafter referred to as "Fran" and defendant, hereinafter referred to as "Ron" were divorced by Judgment entered on December 5, 2002. The Judgment was entered pursuant to a Memorandum Opinion and Order issued by the trial court on October 31, 2002.
Fran was awarded primary physical custody of the minor children, child support, spousal support, the real property, and various items of personal property. Fran was ordered to pay the home mortgage and the parties were ordered to split the second mortgage. Neither party received an award of attorney's fees and costs.
Ron filed a Notice of Appeal on January 8, 2002, appealing the trial court's ruling. The same month, Fran initiated Order to Show Cause proceedings and filed a Notice of Cross-Appeal. The trial court by Order dated January 27, 2003, found Ron in contempt of court for failure to pay his spousal support and for failure to execute the Quit Claim Deed to the real property awarded to Fran. The trial court granted Ron's request for a stay on his payment towards the second mortgage pending appeal, and conditioned upon him posting a $3,000.00 bond.
Ron was unsuccessful in his appeal, and the case was remanded back to the trial court for modification of Judgment to retain jurisdiction over spousal support. An Amended Judgment was entered on March 9, 2004, as directed by the Court.
Around entry of the Amended Judgment, Ron filed a Chapter 7 Bankruptcy listing the second mortgage as an obligation on his petition. Fran was left with the entire second mortgage payment, and the other debts she was ordered to pay in the divorce.
After Ron's Bankruptcy was granted Fran filed a Motion for Partial Relief From Judgment and to Increase Spousal and Child Support, which Ron opposed. The trial court granted Fran's Rule 60(b), N.D.R.Civ.P, Motion by increasing Ron's spousal support obligation from $300.00 per month to $650.00 per month for an additional four years. The trial court also awarded Fran $500.00 in attorney's fees, and reduced Ron's child support obligation as one child had graduated from high school. The trial court did not award Fran Ron's retirement account.
On January 5, 2005, Fran's Notice of Appeal was filed.
B. Statement of Facts
At the time of trial, Fran was 47 years of age and Ron was 48 years of age. With over two years having elapsed since trial, the parties would each be approximately 50 years of age. The parties were married on March 29, 1983, and divorced approximately twenty years later. (Appendix Page 12, hereinafter abbreviated A:12). Two children were of the marriage, Brett W. Reineke, date of birth [REDACTED], 1985, and Robin L. Reineke, date of birth [REDACTED], 1988. (A:12).
Fran has been employed as a medical records clerk at Mid Dakota Clinic for approximately twenty-nine (29) years. (Transcript of October 6, 2004, Page 31, Lines 12-16, hereinafter abbreviated T31:12-16, A:13). Fran recently received a raise from $9.75 to $10.25 per hour. (T31:17-19). Fran's gross wages from employment were $19,167.05 in 2001, and in 2002, her earnings from employment were $21,727.00.
(A:13, 63). In 2003, Fran earned only $20,331.00 from her employment.(A:54). Fran still has Multiple Sclerosis which may adversely impact her ability to work at any time.
Ron is still employed as a driver with Waste Management where he has worked for many years. (T15:7-12). Ron's earnings from employment were $36,684.00 in 2003, and $33,468.00 in 2002. (A:88, 91). His earnings in 2001, were $31,917.02.(A:13). Ron's earnings have increased substantially each year.
At the time of trial the parties had a substantial amount of debt secured by their real property. The property was secured by a first and second home mortgage, with little or no equity. Ron stopped making payment towards the second mortgage in February of 2004, the same time he filed a voluntary petition seeking relief under Chapter 7 of the Bankruptcy Code. (A:97). After a review by the United States Trustee, Ron received a full discharge of all debts, including his obligation to pay the second mortgage.
Fran struggled to make the full second mortgage payment when Ron filed his initial appeal and received a stay, and again when Ron filed his Bankruptcy Petition. Fran has fallen months behind on payment of her and the children's living expenses, and is struggling each month to pay her debts.
After factoring Ron's discharge of his share of the second mortgage, and the mistake in the amount of the mortgage due, Fran has now received a negative property distribution of approximately ($12,559). Whereas, Ron is now receiving a net property distribution of $19,335. The resulting disparity is not consistent with the trial court's findings at the original trial. Fran originally received an approximate $30,000 greater distribution than Ron to compensate her in large part for Ron's egregious behavior during the marriage. (A:19) III. LAW AND ARGUMENT
1. Whether the trial court erroneously applied the law of
spousal support by failing to award long term
spousal support to plaintiff.
Review of the trial court's findings of fact is subject to the "clearly erroneous" standard. N.D.R.Civ.P. 52(a). A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if there is no evidence to support it, or if, although there is some evidence to support it, the reviewing court, on the entire evidence, is left with a definite and firm conviction that a mistake has been made. Blotske v. Leidholm, 487 N.W.2d 607, 610 (N.D. 1992). Spousal support decisions are treated as findings of fact which will not be set aside on appeal unless clearly erroneous. LaVoi v. LaVoi, 505 N.W.2d 384, 386 (N.D. 1993).
"Taking into consideration the circumstances of the parties, the court may require one party to pay spousal support to the other party for any period of time. The court may modify its spousal support orders." Section 14-05-24.1, N.D.C.C. A change of circumstances is the standard for a later modification of spousal support. Heggen v. Heggen, 488 N.W.2d 627 (N.D. 1992); Ramsdell v. Ramsdell, 454 N.W.2d 522 (N.D. 1990); Wheeler v. Wheeler, 548 N.W.2d 27 (N.D. 1996).
The time for determining whether a material change of circumstances has occurred is from the original Judgment, or modification. Rueckert v. Rueckert, 499 N.W.2d 863 (N.D. 1993).
Fran also sought relief from the terms of the Judgment under N.D.R.Civ.P. 60(b). N.D.Civ.P. 60(b)(vi) authorizes a court to provide relief from a final judgment:
On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment or order in any action or proceeding for the following reasons:(vi) any other reasons justifying relief from the operation of the judgment. The motion must be made within a reasonable time...
The trial court found that Ron's filing of bankruptcy after the appeal of the divorce judgment and the resulting disparity between the parties' financial situations required relief from the judgment under N.D.R.Civ.P. 60(b). The trial court further found that Fran's motion was made within a reasonable time considering the appeal and the automatic stay imposed by the bankruptcy. (A:46).
From the trial court's findings it is apparent the trial court found that a material change of circumstances had occurred and also that the circumstances warranted justification for relief from the judgment. Based on such, the trial court increased Ron's spousal support amount to $650.00 per month for a period of four years, commencing October 15, 2004, and continuing on the 15th of each month thereafter.
While the amount of spousal support is sufficient, the duration is not. The cessation of spousal support at the end of four years does not appropriately balance the disparity between the parties' financial situations nor does it allow Fran to maintain a reasonable standard of living.
Fran's financial situation has deteriorated since the divorce. Her earnings in 2003 were less than her earnings in 2002. (T34:16-23). Her wages from employment in 2003, were $20,331 and in 2002, $21,727. (A:54, 63). Fran's wages have not substantially increased.
Fran has been struggling to pay her bills due to extra medical expenses and the full second mortgage payment. (T35:18-24). She is $158.16 delinquent with MDU, and has received a shut off notice from the City of Mandan Water Department. (T36:4-16, A:74). A portion of her property taxes from 2003 are unpaid and delinquent. (T36:20-25, A:76). Fran has received a disconnect notice from her phone company. (T37:5-7, A:77). Fran is also behind on the second mortgage payment, and at the time of the hearing owed one-half of the September payment and all of October. (T38:5-24, A:96). Fran has struggled to pay past due medical bills before they were turned over to collection. (T39:15-25, A:79-84,115-127). Ron has neglected to submit payment or reimburse Fran for his one-half share of the children's medical expenses. (T40:5-9)
Since the trial court granted Fran's Rule 60(b), N.D.R.Civ.P, motion it is appropriate for the trial court to revisit the Ruff-Fischer guidelines in making a spousal support determination. Lill v. Lill, 520 N.W.2d 855, 856 (N.D. 1994); See also, Fischer v. Fischer, 52 N.W.2d 107 (N.D. 1952), Ruff v. Ruff, 139 N.W.2d 845, 852 (N.D. 1966). The guideline factors include:
The respective ages of the parties, their earning ability, the duration of the marriage and conduct of the parties during the marriage, their station in life, the circumstances and necessities of each, their health and physical condition, their financial circumstances as shown by the property owned at the time, its value at the time, its income-producing capacity, if any, whether accumulated before or after the marriage, and such other matters as may be material.
Weir v. Weir, 374 N.W.2d 858, 862 (N.D. 1985). However, from the trial court's order, it is unclear whether the trial court considered the Ruff-Fischer guidelines in reaching its spousal support determination. (A:44-47).
It is also unclear whether the trial court considered an award of permanent spousal support. Permanent spousal support is appropriate to provide maintenance for a spouse who is incapable of rehabilitation. Van Oosting v. Van Oosting, 521 N.W.2d 93, 100 (N.D. 1994). Permanent support, often misunderstood or overlooked, is another part of the arsenal available to restore economic equity to a partner of a failed marital enterprise. Wiege v. Wiege, 518 N.W.2d 708, 713 (N.D. 1994).
Fran and Ron had a long term marriage lasting approximately twenty years. As noted by the trial court in the original divorce proceedings, Fran has been disadvantaged by the marriage to Ron. (A:20). Ron throughout the marriage controlled the finances and placed the family in a situation of debt. (A:20). Ron has now placed Fran in greater financial straits by filing Bankruptcy and leaving her with the entire second mortgage payments, while struggling to support the parties' children.
Under the circumstances Fran is unable to save any money or purchase items for herself. (T41:4-9). She needs a new vehicle but does not have the funds. (T43:24-44:1). The parties' minor child, Robin, needs counseling due to Ron's behavior, but Fran cannot afford the expense. (T47:19-25). Fran's basic monthly living expenses and debt payments total $2,547.66. (T43:6-11, A:129). The second mortgage payment is $433.22 per month. (T38:5-24, A:128). Fran's net income is approximately $1,400.00 per month. (A:128).
Fran is older, her employment situation has remained the same, she has a serious medical condition, and her earning potential is limited. Fran's assets have been depleted due to the divorce proceedings and the attorney's fees and costs she has and continues to incur. Fran has struggled to pay her debts and maintain a household for the children. The trial court minimized Fran's desperate financial situation by not awarding her long term spousal support. With the trial court's current award, at the end of four years Fran will be left without child support and without spousal support, while struggling to pay the first and second mortgage.
Ron, on the other hand, is now debt free due to his Bankruptcy discharge. His income has increased substantially each year and he resides with his girlfriend in her home. Ron and his girlfriend hold themselves out as being married and share expenses. (T63:8-16). Ron and his girlfriend disclosed combined monthly gross earnings of $4,652.00 on his bankruptcy petition. (A:110). Ron's gross income was individually listed at $3,311.47. (T12:9-11, A:110). Ron also listed a monthly rental expense of $375, even though his girlfriend owns the home in which they reside and does not consider his contribution to their household rent. (T63:13-16, A;111).
As noted by the trial court, this case is similar to Kopp v. Kopp, 2001 ND 41, 622 N.W.2d 726. In Kopp, the Court affirmed the trial's court decision to vacate the earlier judgment and award spousal support, attorney's fees, and additional assets to the wife after the husband filed Bankruptcy. In this and in Kopp, the trial courts found a terrible disparity between the parties' financial situations due to the husbands having been relieved of obligations on the marital debt.
Fran remains a disadvantaged spouse in need of long-term spousal support. It is unrealistic with Fran's age, medical condition, limited education, and employment experience, that she will be able to retrain or return to college. Fran has reached her earning potential. Fran at the end of fours year will be left destitute.
With the windfall to Ron from his Bankruptcy discharge, along with an increased disparity in the parties' respective incomes and financial situations, a spousal support award of only four years will not restore economic equity to Fran.
relief from Judgment under Rule 60(b), N.D.R.Civ.P.
Rule 60(b), N.D.R.Civ.P. provides in pertinent part:
On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment or order in any action or proceeding for the following reasons: (i) mistake, inadvertence, surprise, or excusable neglect; (ii) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (iii) fraud (whether denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (iv) the judgment is void; (v) the judgment has been satisfied. released, or discharged, or a previous judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (vi) any other reason justifying relief from the operation of the judgment.
A Rule 60(b), N.D.R.Civ.P. motion must be made within a reasonable time, and for reasons (i), (ii), and (iii) not more than one year after notice that the judgment or order was entered in the action or proceeding if the opposing party appeared, but not more than one year after a judgment by default has been entered.
A motion under N.D.R.Civ.P. 60(b)(vi) is left to the sound discretion of the trial court, and its decision whether to vacate the judgment will not be disturbed on appeal unless the court has abused its discretion. Kopp v. Kopp, 2001 ND 41, 622 N.W.2d 726, citing, Peterson v. Peterson, 555 N.W.2d 359, 361 (N.D. 1996). The trial court abuses its discretion when it acts in an arbitrary, unreasonable, or unconscionable manner. Kopp v. Kopp, 622 N.W.2d at 726, citing, Peterson, at 361.
A Rule 60(b) Motion is a vehicle for seeking relief from judgment which attempts to strike a proper balance between the conflicting principles that litigation must be brought to an end and that justice should be done. Peterson v. Peterson, 555 N.W.2d at 361.
Fran's Rule 60(b) motion was filed within one year of the Judgment entered by the Supreme Court on November 13, 2003. (A:3). Fran was prohibited from proceeding sooner due to the automatic stay in the Bankruptcy. The trial court found her motion was made within a reasonable time and granted her motion. (A:46). The trial court however, abused its discretion by not awarding Fran additional assets to balance the inequitable disparity in the property and debt allocation resulting from Ron's Bankruptcy discharge.
Ron did not proceed in good faith during the divorce proceedings nor in the post-divorce proceedings. He caused Fran to continue to incur the financial and emotional strain of prolonged litigation when he had no intention of complying with the trial court's order. Ron admitted he was considering Bankruptcy prior to his appeal of the original divorce Judgment. (T5:4-22).
Ron eventually hired Attorney Bruce Madlom in December of 2003, for preparation and filing of his bankruptcy petition. (T6:1-4). Bruce signed his petition on February 1, 2004, just one month prior to the Amended Judgment dated March 8, 2004, and entered in accordance with this Court's Judgment affirming and remanding on Fran's cross-appeal. (T6:24-25, A:114,33).
Listed on Ron's petition was the debt to US Bank for the second mortgage. (T8:10-18, A:104). Ron was ordered by the trial court to pay one-half the debt. (A:7,33). Ron testified that he never considered reaffirming the debt and continuing to make his court ordered payments. (T8:19-21).
Ron's discharge has left Fran in a desperate financial situation. The amount of the second mortgage as listed and discharged on Ron's petition is $74,800. (A:104). Instead of being responsible for one-half or $37,400, Fran is now responsible for the entire amount. The trial court noted that Fran's property allocation from the original divorce would now include an addition $52,341 of debt. (A:45). As a result of Ron's Bankruptcy, the final property distribution to Fran is now approximately a negative ($12,559) and to Ron a positive $19,335. (A:45).
The trial court specifically stated in the Findings of Fact, Conclusions of Law, and Order for Judgment, as follows: "the Court notes the length of the marriage, the controlling nature of Ron and the actions of Ron contributing to the divorce as reasons for the unequal asset allocation." (A:19). While the trial court found the result of Ron's Bankruptcy to be an obvious disparity in itself, and even more so based upon the affirmed Judgment granting Fran an approximate $30,000 greater distribution than Ron, the trial court thereafter failed to award Fran additional assets. (A:44-47). The trial court's decision now creates an unjustifiable windfall to Ron at Fran and the children's expense. This is contrary to the Court's initial ruling, and the intent of Rule 60(b), N.D.R.Civ.P., which is to prevent hardship or injustice. Crawford v. Crawford, 524 N.W.2d 833, 836 (N.D. 1994).
The trial court inappropriately speculated that if Fran filed Bankruptcy the parties would be back in approximately the same positions as the original judgment contemplated. (A:45). The trial court refused Fran's request to distribute Ron's retirement to her, asserting the allocation would not balance the numbers due to the large amount of debt owed on the second mortgage to US Bank. (A:45). While the trial court claims it was in no way suggesting Fran file bankruptcy, the trial court's statements indicate otherwise.
The trial court acted contrary to Fran's stated intentions regarding the first and second mortgages. (T55:22-56:8). The trial court was advised that Fran was not able to negotiate down payment of the loans, and that she had no intention of walking away from her home and damaging her credit. (T57:2-19). In essence, Fran would not be filing Bankruptcy.
The trial court recalled the home to be valued at approximately $40,000-$50,000 at trial. (T56:6-8). Fran testified that she had made many improvements to the home since trial. Fran removed the old carpeting from the home, put linoleum in the kitchen, removed old wallpaper from the home, painted the kitchen and living room walls, and refinished the wood flooring in the living room and bedrooms. (T45:14-46:5). The trial court did not consider the increased value to the home due to Fran's improvements nor did the trial court consider the personal value of home to Fran and the children.
The trial court limited its focus to the amount of Ron's monthly one-half payment towards the second mortgage, or as specifically stated by the trial court "200 or 400 dollars a month that's not being paid here." (T54:10-11). In response, Fran's counsel noted that the trial court needed to focus on the Bankruptcy and the financial devastation and impact on Fran. (T54:16-18).
The trial court noted, the case was similar to Kopp but failed to provide appropriate relief as ordered and affirmed in Kopp. (A:46). In Kopp, 2001 ND 41, 622 N.W.2d 726, the Court affirmed the trial court's award of two retirement accounts to the wife after the husband filed bankruptcy and discharged his liability towards marital debts.
The trial court abused its discretion when it refused Fran's request to award her Ron's retirement account so she could pay down the second mortgage. (T67:11-13). Without such relief, she will continue to fall further behind financially. The only way to restore the equitable nature of the original divorce Judgment is to award Fran, Ron's retirement account and long-term spousal support. Even then, Ron will still have received an unjustifiable windfall by discharging his liability from all marital debts and placing liability solely on Fran.
3. Whether the trial court failed to enforce the
Indemnification clause in the divorce Judgment.
Indemnity is a contract by which one engages to save another from a legal consequence of the conduct of one of the parties or of some other person. Section 22-02-01, N.D.C.C. Upon an indemnity against liability, the person indemnified is entitled to recover upon becoming liable. Section 22-02-07(1), N.D.C.C.
The original divorce Judgment specifically states, "each party will indemnify and hold the other harmless as to the debts listed above." (A:7). The referenced debts, include the second mortgage to US Bank which was to be split between the two parties. (A:7). Ron however, has avoided his obligation to US Bank by filing Bankruptcy and discharging the debt.
The trial court acknowledged the issue of indemnification when the court advised Ron, "there is an issue of indemnification obviously that you got one party off your back, you might not have both, you know, it's an issue that has to be resolved and I'll resolve it." (T55:14-17). Contrary to the trial court's comments, the trial court did not address the issue of indemnification in its Order Granting Rule 60(b) Request. (A:44-47).
Upon Ron receiving his Bankruptcy discharge, Fran became individually liable for the entire US Bank second mortgage. Under law, Fran is entitled to recover from Ron any portion of the debt she has been forced to assume on his behalf. The Indemnification clause will have no affect unless the trial court is willing to enforce it. In this case, the trial court provided no basis for its failure to enforce the indemnification provision. IV. CONCLUSION Ron's bankruptcy discharge has created a large disparity between the parties' financial situations. The only way to restore the equitable nature of the original divorce Judgment is to award Fran long-term spousal support, Ron's retirement account, and to enforce the Indemnification provisions of the Judgment for any amount remaining due by Ron towards the second mortgage.
The trial court has abused its discretion by not granting Fran the appropriate relief. Litigation cannot end until justice is done.
Dated this ____ day of April, 2005.
|Brenda A. Neubauer|
|Attorney for Appellee|
|PO Box 1015|
|Bismarck, ND 58502-1015|