Farlee v. Farlee

#26106-rev & rem-SLZ

2012 S.D. 21

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

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JAMIE LOUANN FARLEE, Plaintiff and Appellant,

v.

CLAYTON LEE FARLEE, Defendant and Appellee.

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APPEAL FROM THE CIRCUIT COURT OF
THE FOURTH JUDICIAL CIRCUIT
ZIEBACH COUNTY, SOUTH DAKOTA

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THE HONORABLE JEROME A. ECKRICH, III
Judge

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PATRICIA A. MEYERS
Rapid City, South Dakota Attorney for plaintiff
and appellant.

ROSE ANNE WENDELL
Pierre, South Dakota Attorney for defendant
and appellee.

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CONSIDERED ON BRIEFS
ON FEBRUARY 14, 2012

OPINION FILED 03/21/12
#26106

ZINTER, Justice

[¶1.] After six years of marriage, Jamie and Clayton (Clay) Farlee divorced.

Jamie appeals the circuit court’s division of property. We reverse and remand for

the entry of findings of fact and conclusions of law resolving the parties’ disputes on

property valuations and whether certain property is part of the marital estate.

Facts and Procedural History

[¶2.] Jamie and Clay married in May 2003. Prior to the marriage, Jamie

inherited approximately $700,000. Jamie kept her inheritance in a separate bank

account to which Clay did not have access. Although Jamie controlled the spending

of her inheritance, she used a substantial part of it for household expenses,

numerous family vehicles, and recreation. Clay entered the marriage as a rancher

with 156 head of cattle, a mobile home, five acres of land, a pickup, and some debt.

During the marriage, Clay expanded his ranching operation. Jamie raised their

three children, did the bookkeeping for the ranch, and operated two home-based

businesses.

[¶3.] The family initially lived in Clay’s premarital mobile home, which was

located on Indian trust land.1 In 2007, Clay and Jamie bought a modular home for

$150,000 and located it on that property. Jamie made a $15,000 down payment

from her inheritance, and she paid most of the mortgage payments. Clay used

$10,000 in profits from the sale of his mobile home for concrete work around the

new home.

1. Clay is an enrolled member of the Cheyenne River Sioux Tribe.

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[¶4.] In May 2009, the parties separated, and Jamie filed for divorce. The

parties disagreed on the value of many assets. They also disagreed whether certain

assets were marital property. One of the disagreements involved the value of the

cattle existing at the time of trial and whether they were marital property. The

court valued Clay’s premarital cattle herd (156 head) at $125,000. The court valued

the herd existing at the time of trial (346 head) at $248,800. The court found that

both Jamie’s inheritance and Clay’s effort contributed to the increase in the cattle

herd. The court ruled that “[t]he cattle are included in the marital estate with

consideration given to the herd Clay owned prior to the marriage.” (Emphasis

added.)

[¶5.] The second disagreement involved the value of the marital home. The

circuit court found that its market value on trust land was $100,000. The court,

however, also found that the home’s “in-use value” was $150,000. The court did not

indicate which value it assigned for purposes of the property division.

[¶6.] The third disagreement involved the marital status of personal

property that was traceable to Jamie’s inheritance. There is no dispute that

$300,000 to $450,000 of the inheritance was unaccounted for at the time of trial.

The court noted that “Jamie [had] simply consumed a significant portion of

inheritance without evidence of tangible benefit.” The court did, however, trace “the

surviving remnants of [Jamie’s] inheritance to horses, tack, trailers, Jamie’s

business inventory, vehicles, the marital residence, and her current home in Belle

Fourche.” Jamie argued that because those assets were traceable to her

inheritance, they were nonmarital property. In ruling on this argument, the court

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determined that a suburban and a “platinum horse trailer” were nonmarital

property.

[¶7.] Finally, the parties disagreed on the value of certain personal

property. The dispute involved the value of eighty acres of land, horses, a Chevrolet

pickup, a New Holland tractor, Jamie’s jewelry business, a four wheeler, a “rhino,” a

deck, a flatbed trailer, generators, a portable barn, a storage shed, corral panels, a

lawn mower, water tanks, and saddles and tack. The court valued the eighty acres

of land, the horses, the New Holland tractor, and Jamie’s jewelry business. The

court did not value the remaining property.

[¶8.] The court granted the divorce, divided the property, and ordered Clay

to pay Jamie $48,000 to equalize the property division without indicating the total

value of the assets awarded to Clay and Jamie. The court denied Jamie’s

subsequent motion for reconsideration or clarification of the property division.

Jamie appeals contending that the court erred in failing to classify disputed assets

as marital or nonmarital and in failing to value certain marital property. “We

review a court’s property division for an abuse of discretion.” Lovejoy v. Lovejoy,

2010 S.D. 39, ¶ 16, 782 N.W.2d 669, 674.

Decision

[¶9.] Jamie argues that the circuit court abused its discretion in failing to

assign a value to the disputed marital property. She contends that this Court

cannot properly review the property division for an equitable distribution without

those values. We agree. The circuit court “must place a value upon all of the

property held by the parties and make an equitable distribution of that property.”

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Guthmiller v. Guthmiller, 2003 S.D. 120, ¶ 6, 670 N.W.2d 516, 517. The “failure to

value a marital asset constitutes an abuse of discretion and is reversible error.” Id.

[¶10.] In this case, the record reflects an unresolved $50,000 difference in the

valuation of the home. An additional unresolved $27,430 difference exists in the

valuation of the Chevrolet pickup, the four wheeler, the rhino, the deck, the flatbed

trailer, the generators, the portable barn, the storage shed, the corral panels, the

lawn mower, the water tanks, and the saddles and tack. It is not enough for the

circuit court to surmise that property is worth “something” and then distribute the

property. Id. The circuit court must set a value and that value must be “based

upon the evidence or within a reasonable range of values presented to [the court].”

Id. ¶ 8. The failure to value all disputed property requires a remand for the entry of

valuation findings and a reconsideration of an equitable division of the property.

Id.; see also Guindon v. Guindon, 256 N.W.2d 894, 898 (S.D. 1977).

[¶11.] With respect to marital property, “South Dakota is an ‘all property

state,’ meaning all property of the ‘divorcing parties is subject to equitable division

by the circuit court, regardless of title or origin.’” Halbersma v. Halbersma, 2009

S.D. 98, ¶ 9, 775 N.W.2d 210, 214 (citing Endres v. Endres, 532 N.W.2d 65, 68 (S.D.

1995) (quoting Radigan v. Radigan, 465 N.W.2d 483, 486 (S.D. 1991))); see also

SDCL 25-4-44 (“When a divorce is granted, the courts may make an equitable

division of the property belonging to either or both, whether the title to such

property is in the name of the husband or the wife.”). This includes inherited

property, Halbersma, 2009 S.D. 98, ¶ 12, 775 N.W.2d at 215, and premarital

property, Muenster v. Muenster, 2009 S.D. 23, ¶ 16, 764 N.W.2d 712, 717. “In

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arriving at an equitable division of property, a circuit court must classify property

as ‘marital’ or ‘non-marital.’” Halbersma, 2009 S.D. 98, ¶ 10, 775 N.W.2d at 215.

[¶12.] In this case, the circuit court did not clearly classify all the disputed

property as marital or nonmarital. With respect to the cattle, the court noted that

“[t]he appreciated value of a cattle herd may be considered a marital asset even if

the herd might be considered non-marital.” (Emphasis added) (citing Bennett v.

Bennett, 516 N.W.2d 672, 674 (S.D. 1994)). The court later concluded that “the

cattle” were marital property, and that it was giving “consideration” to the herd

Clay owned prior to the marriage. From these rulings, we are unable to determine

what cattle were classified as marital property and the meaning of the

“consideration” that was allowed for Clay’s premarital cattle. Further, based on the

court’s findings and conclusions relating to property traceable to Jamie’s

inheritance, we cannot determine why a suburban and the platinum horse trailer

were specifically classified as nonmarital property while much of the remaining

traceable property was not explicitly classified. We conclude that the circuit court

erred in failing to definitively rule on the parties’ competing claims regarding all

disputed marital property. See Midzak v. Midzak, 2005 S.D. 58, ¶ 24, 697 N.W.2d

733, 740 (“The trial court abused its discretion in not properly determining the

status of all assets first as either separate or marital, and then making an equitable

distribution of all assets determined to be marital in nature.”).

[¶13.] Because of uncertainties regarding the marital classification of all

disputed property, and because we are unable to determine the circuit court’s

valuation of all marital property, we are unable to review whether the circuit court

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arrived at an equitable division.2 Consequently, we reverse and remand for

reconsideration of the property division after the entry of findings of fact and

conclusions of law on the existing record clearly resolving the valuation and marital

property issues. See Edinger v. Edinger, 2006 S.D. 103, ¶¶ 10-11, 724 N.W.2d 852,

856 (reversing and remanding because this Court was unable to duplicate the

circuit court’s property values and ascertain the reasoning for the property

division). Both parties’ requests for appellate attorney’s fees are denied.

[¶14.] GILBERTSON, Chief Justice, and KONENKAMP, SEVERSON, and

WILBUR, Justices, concur.

2. “The law requires an equitable, not necessarily equal, division of assets.”
Halbersma, 2009 S.D. 98, ¶ 7, 775 N.W.2d at 214.

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