#27366-aff in pt & rev in pt-SLZ
2016 S.D. 30
IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
…
CHRISTINA KOLBACH, Plaintiff and Appellee,
v.
JOSEPH KOLBACH, Defendant and Appellant.
…
APPEAL FROM THE CIRCUIT COURT OF
THE THIRD JUDICIAL CIRCUIT
DEUEL COUNTY, SOUTH DAKOTA
…
THE HONORABLE RONALD K. ROEHR
Retired Judge
…
RICK A. RIBSTEIN
JENNIFER GOLDAMMER of
Ribstein & Hogan Law Firm
Brookings, South Dakota Attorneys for plaintiff
and appellee.
RICK L. RAMSTAD of
Crew & Crew, PC
Sioux Falls, South Dakota Attorneys for defendant
and appellant.
…
CONSIDERED ON BRIEFS
ON FEBRUARY 16, 2016
OPINION FILED 03/30/16
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ZINTER, Justice
[¶1.] In this divorce case, Joseph Kolbach appeals the circuit court’s
decisions regarding custody of the children, relocation of the custodial parent,
division of property, award of alimony, and award of attorney’s fees. We affirm the
circuit court’s custody and relocation decisions. The alimony award is reversed, and
the property division is remanded for revision in accordance with this opinion.
Facts and Procedural History
[¶2.] Christina and Joseph Kolbach married in July 2007. They have two
children, six-year-old Kiana and five-year-old Kipp. Joseph also has an eleven-year-
old child (Amelia) from a prior marriage. Amelia lives with her mother in Sioux
Falls. Joseph regularly exercises parenting time with Amelia, including alternating
weekends.
[¶3.] Joseph is a successful businessperson. He began working in the wind
energy business when he was eighteen. In 1999, he founded Energy Maintenance
Systems (EMS). In 2008, he sold EMS for approximately $33 million. In 2008,
Joseph purchased the Buffalo Ridge Resort in Gary, South Dakota and began
remodeling and restoring the property. The resort opened in 2009.
[¶4.] Christina graduated from college in 2004. Prior to marrying Joseph,
she worked in Fort Worth, Texas for an import-export business. During their
marriage, Christina worked as Joseph’s personal assistant for a time and assisted
in the remodeling of the Buffalo Ridge Resort. Christina’s primary role was being a
homemaker and caretaker of the children.
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[¶5.] In June 2013, Christina and the children left the marital residence and
Christina filed for divorce. She sought divorce on the grounds of irreconcilable
differences and extreme cruelty. Joseph answered and filed a counterclaim on the
same grounds. In July 2014, Christina notified Joseph of her intent to relocate to
Sioux Falls with the children. Joseph filed an objection. The parties’ divorce trial
began on August 13. The trial continued on August 14 and 15. Sometime around
August 18, Christina moved with the children to Sioux Falls and enrolled Kiana in
a school that utilizes a Spanish-immersion curriculum. Joseph filed a motion to
restrain Christina’s relocation. The trial resumed on September 16 and 30, and the
court declined to rule on the relocation issue until the close of evidence in the
divorce trial. The trial concluded on October 1, 2014.
[¶6.] In its judgment and decree, the court awarded joint legal custody of the
children with primary physical custody to Christina. The court also allowed
Christina to continue to reside in Sioux Falls. The court awarded Christina certain
property that, together with a $1,050,000 cash equalization payment, equaled
11.98% of the parties’ net assets. The court also ordered Joseph to pay $1,000 per
month in permanent alimony and $70,000 in attorney’s fees and costs. Joseph
appeals each of these rulings.
Decision
Child Custody
[¶7.] Joseph argues that the circuit court abused its discretion in awarding
primary physical custody to Christina. Joseph contends the court’s review of the
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traditional child custody factors1 was incomplete and its findings were inconsistent
with the record. See Severson v. Hutchinson, 2013 S.D. 70, ¶ 16,
838 N.W.2d 72, 76
(stating that a circuit court abuses its discretion in a child custody determination
when its “review of the traditional factors bearing on the best interests of the
child[ren] is scant or incomplete”).
[¶8.] The circuit court’s review of the traditional child custody factors was
not scant, incomplete, or inconsistent with the record. The court ordered a child
custody evaluation by a licensed social worker. The custody evaluator conducted a
thorough evaluation of the familial situation and addressed the best interests of the
children under each of the traditional factors. The custody evaluator recommended
joint legal custody with Christina having primary physical custody. The court
found the evaluator’s testimony and report professional and helpful. The court
ultimately adopted the custody evaluator’s recommendation. The court also
addressed each of the traditional factors in its memorandum opinion.2 The circuit
1. See Fuerstenberg v. Fuerstenberg,
1999 S.D. 35, ¶¶ 24-34,
591 N.W.2d 798,
807-10 (delineating traditional child custody factors).
2. Joseph claims the court made no finding on the following points: no finding
that Christina has mental health issues; no finding about the benefits of the
Spanish-immersion program; and no finding with respect to the two months
the children resided in Sioux Falls. Regarding Christina’s “mental health
issues,” Joseph did not introduce evidence that Christina had a mental health
disorder that would affect her ability to raise the children. On the contrary,
although the record reflects both parties had a psychological diagnosis, the
court found that neither diagnosis affected either party’s ability to parent the
children. Regarding the Spanish-immersion program and living two-months
in Sioux Falls, our review of the record indicates that the court took a
balanced and systematic approach to ascertaining the custody situation that
was in the children’s best interest. The court is not bound to make a factual
finding on every fact testified to at trial.
(continued . . .)
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court’s findings on each of the traditional factors is supported by the custody
evaluation and the record. The circuit court did not abuse its discretion in awarding
primary physical custody to Christina.3
[¶9.] Joseph next argues that the circuit court abused its discretion in
allowing Christina to relocate to Sioux Falls. As part of the court’s custody-best-
interest analysis, the court noted that it was in the children’s best interests to have
substantial and regular contact with both parents. The court also noted that
Joseph had considerable flexibility to travel and he regularly visited Amelia in
Sioux Falls. The court further found that Christina’s prospects for both continuing
education and employment were substantially greater in Sioux Falls. Like the
______________________________
(. . . continued)
Joseph also contends that the court’s parenting plan unnecessarily burdens
the children’s relationship with Amelia. However, Amelia lives with her
mother in Sioux Falls. Therefore, the court’s parenting plan places the
siblings in closer proximity to each other than if Joseph had custody in Gary.
3. Joseph contends that a number of facts are inconsistent with the court’s
finding that Christina was a committed and fit parent who could provide a
stable and consistent home for the children. Specifically, he points out that:
despite having a college education, Christina has not pursued employment;
Christina rejected spiritual counseling from her pastor; Christina reads books
about apocalyptic end times and alien inhabitation; and, Christina did not
provide Joseph with more parenting time than the visitation order required.
These facts do not render the circuit court’s finding inconsistent. There is
evidence in the record that Christina and Joseph agreed that Christina would
stay at home and care for the children; Christina’s refusal to counsel with her
pastor and her choice of literature were not shown to affect the best interest
of the children; and Joseph concedes that Christina followed the visitation
order “to the letter.” Further, as noted above, the circuit court’s finding
regarding parental fitness was consistent with that of the custody evaluator.
“It is not for this Court, but for the trial court, to gauge the credibility of the
witnesses and to weigh the significance of their testimony.” Fuerstenberg,
1999 S.D. 35, ¶ 22,
591 N.W.2d at 807.
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circuit court, this Court has recognized that in certain circumstances, an
advantageous situation for a custodial parent may also be in the best interests of
the children. Brosnan v. Brosnan, 2013 S.D. 81, ¶¶ 27-28,
840 N.W.2d 240, 249-50
(“The family unit may be one factor, among others, that circuit courts consider in
deciding whether relocation is in the best interests of the child.”). Considering all
the circumstances, the circuit court did not abuse its discretion in allowing
Christina to remain in Sioux Falls with the children.4
[¶10.] Joseph finally argues that the circuit court abused its discretion in not
awarding joint physical custody. Under a 2014 statutory scheme, “[i]n any custody
dispute between parents, upon application of either parent, the court shall consider
granting joint physical custody of a minor child.” SDCL 25-4A-21 (emphasis added).
The new scheme contemplates the filing of a “petition” for joint custody. See SDCL
25-4A-23. But here, Joseph did not make this type of specific request for joint
custody. Joseph did not seek joint physical custody in his pleadings, and although
he mentioned the joint physical custody factors in his post-trial brief, he only
requested that he be granted primary physical custody. Because Joseph never
petitioned or applied for joint custody, and because Joseph only requested primary
physical custody, he was not entitled to a circuit court determination under the new
statutes.
4. South Dakota Shared Parenting, Inc., filed an amicus curiae brief arguing for
the adoption of factors to guide courts considering relocation requests. We
decline to consider such factors without the benefit of appellate advocacy on
both sides of this issue.
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[¶11.] Despite Joseph’s failure to make an application for joint physical
custody, the circuit court was aware of the new statutes and analyzed the joint
custody factors delineated in SDCL 25-4A-24. The court found that joint physical
custody would not be in the children’s best interests. The court explained that one
party was living in Sioux Falls and the other in Gary. Considering the substantial
travel that would be required, Joseph has not established that the court abused its
discretion in not awarding joint physical custody under SDCL 25-4A-21. We affirm
the circuit court’s award of joint legal custody with primary physical custody to
Christina.
Property Division
[¶12.] Joseph argues that the circuit court abused its discretion in dividing
the parties’ property. He first contends that the court erroneously recaptured and
divided $344,667 in gifts made two years before the divorce trial. The record
reflects that Joseph gifted this money to key business associates and family after
the sale of EMS. It appears that Christina was involved to some extent in the
gifting—she signed corresponding gift tax returns. Further, there is no indication
the money was fraudulently or wrongfully dissipated. Under these circumstances,
the pre-divorce gifts were not part of the parties’ “property” that was subject to
division. See Anderson v. Anderson, 2015 S.D. 28, ¶ 12,
864 N.W.2d 10, 16 (holding
that fraudulently dissipated funds should be included in the marital estate, but
money that was not fraudulently dissipated and no longer exists may be excluded).
[¶13.] Joseph next argues that the court generally erred in its approach to
dividing his premarital assets. Joseph contends that before “including non-marital
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property as subject to division, the court must first consider the seven principle
factors of property division[.]” (Emphasis added.) We disagree with this proposed
analysis. Requiring consideration of the property division factors before “including”
“non-marital property” in the marital estate incorrectly presupposes that all
property is non-marital. South Dakota is an all property state: all property is
subject to division regardless of its origins or title. See SDCL 25-4-44; Muenster v.
Muenster, 2009 S.D. 23, ¶ 16,
764 N.W.2d 712, 717. Therefore, it is “[o]nly in the
case where one spouse has made no or de minimis contributions to the acquisition
or maintenance of an item of property and has no need for support [that] a court set
it aside as ‘non-marital’ property.” Muenster,
2009 S.D. 23, ¶ 17,
764 N.W.2d at 717
(emphasis added).
[¶14.] We also note that except for the $344,667 in gifts, Joseph does not
identify which of the hundreds of assets at issue in this case should have been set
aside as non-marital property. Without such identification, this Court cannot
determine Christina’s contribution to and maintenance of each item of potentially
excludable property as well as the necessity of using each item for Christina’s
support. We affirm the circuit court’s award of approximately 11.98% of the parties’
net assets to Christina. However, we reverse the circuit court’s recapture and
division of gifts made years before the divorce. On remand, the court should reduce
the property award to Christina by $41,306.37.5
5. We remand with directions because the circuit court judge who decided this
case retired. The court found that the net value of all assets was $9,154,455.
The court awarded Christina $1,097,109, which is 11.98% of those assets.
$41,306.37 is 11.98% of the $344,667 in gifts improperly divided.
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Alimony
[¶15.] Joseph argues that the circuit court abused its discretion in awarding
Christina alimony of $1,000 per month until Joseph’s death, Christina’s death, or
Christina’s remarriage. In finding of fact 131, the court stated the legal
requirement for the award of permanent alimony: “[Christina] has a need for
spousal support, or alimony, and [Joseph] has the ability to pay spousal support.”
Joseph contends the evidence in the record does not support this finding. He also
contends the circuit court failed to consider Christina’s need for support together
with the property award that she received. In her appellate brief, Christina does
not argue that she will have a need for support, she does not acknowledge the
property award that she will receive, and she does not cite evidence or a court
finding demonstrating her need for support. Instead, her sole argument is that the
circuit court “considered” the appropriate factors.
[¶16.] “[W]hen a party requests permanent alimony they must establish that
they have a need for support and that their spouse has sufficient means and
abilities to provide for part or all of the need.” Fox v. Fox, 467 N.W.2d 762, 767
(S.D. 1991). In making the alimony determination, courts should also consider: “(1)
the length of the marriage; (2) the respective earning capacity of the parties; (3)
their respective age, health and physical condition; (4) their station in life or social
standing; and (5) relative fault in the termination of the marriage.” Hagedorn v.
Hagedorn,
2012 S.D. 72, ¶ 11,
822 N.W.2d 719, 722. The court’s equitable division
of property and spousal support are to be considered jointly because “an award of
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more assets can eliminate or reduce the need for spousal support[.]” Walker v.
Walker, 2009 S.D. 31, ¶ 11,
765 N.W.2d 747, 751.
[¶17.] Here, the circuit court considered the property division and spousal
support together. But every one of the court’s findings of fact relating to spousal
support contraindicates an award of permanent alimony. The court found that the
parties were married slightly less than six years; that Christina was thirty-one and
Joseph was forty-seven; that Christina was a college graduate earning
approximately $42,000 a year prior to the marriage and she was capable of earning
a living after the marriage; and that “both parties [were] in good health and [had]
no health problems that prevent[ed] either from gainful employment.” The court
further found that: “After the equitable division of property, Christina’s financial
condition [will] be very good[,] ” and that “[a]lthough the parties have enjoyed a
good standard of living, there is no evidence that either party has attained any
special station in life or social standing.” Lastly, the court found that both parties
were “equally at fault in the termination of the marriage.” Moreover, the court
made no findings and identified no facts supporting Christina’s need for $1000 per
month after the court’s $1,097,109 cash equalization payment awarded in the
property division. As is significant here, the court made no finding that Christina’s
expenses would likely exceed her income after the divorce. The court’s finding on
this matter merely restated the legal requirement of need for support.
[¶18.] In Scherer v. Scherer, the circuit court awarded alimony, but made no
finding regarding the need for support other than the recipient’s statement that her
expenses exceeded her income.
2015 S.D. 32, ¶ 11,
864 N.W.2d 490, 494-95. She
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also stated that if she were awarded the property she requested in the property
division, she would not need her requested alimony. Id. The circuit court awarded
the property she requested, which eliminated one basis of her claimed need for
support.
Id. We reversed, concluding that such a record did not support the need
for the alimony that was awarded.
Id.
[¶19.] This case is analogous. The court made no findings and cited no
evidence demonstrating that Christina would be in need of support following the
property division. This is understandable because even though Christina submitted
a proposed budget at trial, she argued that she would be in need of support only
because Joseph was objecting to her relocation from the Gary area to Sioux Falls.
Christina contended that it was unlikely she could utilize her education and
experience to find anything more than a minimum-wage job in that small
community. But like the case in Scherer where the spouse’s claim of need was
extinguished by the award of property, Christina’s claim of need was extinguished
when the court allowed her to remain in Sioux Falls thereby eliminating the only
basis upon which she claimed any need.
[¶20.] Additionally, this case is unlike our cases upholding an award of
permanent alimony. When need has been found, the moving parties have
introduced evidence of their earning capacity, or lack thereof, in comparison with
their budget or expenses. See Hagerdorn,
2012 S.D. 72, ¶ 14,
822 N.W.2d at 723
(introducing evidence of expected wages and poor vocational possibilities); Johnson
v. Johnson,
471 N.W.2d 156, 160 (S.D. 1991) (introducing evidence of no income and
extensive counseling needed to be employable). Here, although Christina
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introduced a budget, she introduced no evidence of her future earning capacity,
evidence of her actual employment possibilities, or any other vocational evidence
indicating that her budget would exceed her prospective income in Sioux Falls.
“Permanent alimony . . . is an allowance for support and maintenance (i.e. the
provision of food, clothing, habitation, and other necessaries) of the
dependent/obligee spouse.” Fox, 467 N.W.2d at 767. “It therefore follows that when
a party requests permanent alimony they must establish that they have a need for
support . . . .”
Id. Here, Christina introduced evidence of her projected expenses of
daily life, but she introduced no evidence establishing that she would be unable to
pay those expenses. Consequently, Christina failed to meet her burden of proving
need.
[¶21.] This is not a case in which the question is whether the court properly
weighed the evidence regarding alimony. Rather, this is a case in which neither the
circuit court’s findings nor the claimant’s evidence included facts indicating that
Christina’s income and property award would be insufficient for her to acquire food,
clothing, habitation and other necessaries—a foundational requirement for spousal
support. Because Christina failed to carry her burden of introducing evidence of her
need for support, we must reverse the award. A court abuses its discretion in
awarding alimony when there is “insufficient evidence in the record to support
findings necessary for spousal support[.]” Havlik v. Havlik,
2014 S.D. 84, ¶ 17,
857
N.W.2d 422, 427; see Billion v. Billion,
1996 S.D. 101, ¶ 37,
553 N.W.2d 226, 234
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(reversing alimony award where there was no showing of a “need for financial
assistance”).6
Attorney Fees and Costs
[¶22.] Joseph argues that the circuit court abused its discretion in awarding
Christina $70,000 in attorney’s fees and litigation costs. The court first determined
that the reasonable amount requested by Christina was $122,741, which included
fees, mediation costs, and appraisal costs.7 The court then found that both parties
had unreasonably increased litigation costs. With respect to Joseph, it found that
he had unreasonably increased the time spent on the case because he bought and
sold property during the pendency of the action in violation of the court’s temporary
restraining order. Joseph asserts this finding was clearly erroneous.
[¶23.] Joseph admitted taking out a $275,000 note to purchase what he
referred to as the “shed lake house” without court approval. Joseph also admitted
trading in his old vehicle, purchasing a new vehicle on credit, and taking out a
$90,000 line of credit on the Buffalo Ridge Resort. Joseph further admitted listing a
home they owned in Arizona for sale and entering into a purchase agreement
without court approval. Based on Joseph’s testimony, we see no clear error in the
circuit court’s finding that Joseph unreasonably increased the time spent on the
6. Because Christina failed to prove a need for support at trial, we do not
address Joseph’s claim that the court erred in analyzing the fault of the
parties.
7. No argument has been raised concerning the reasonableness or propriety of
awarding fees and litigation costs. We therefore express no opinion on the
matter.
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case. The court did not abuse its discretion in awarding Christina a substantial
portion of her attorney’s fees and litigation costs.8
[¶24.] In sum, Joseph failed to establish that the circuit court abused its
discretion in awarding primary physical custody to Christina and allowing her to
remain in Sioux Falls. Joseph also failed to establish that the court abused its
discretion in awarding Christina 11.98% of the parties’ net assets. The court did,
however, abuse its discretion by recapturing and dividing pre-divorce gifts and by
awarding permanent alimony. Christina seeks appellate attorney’s fees of $15,887.
Considering our resolution of the issues in this appeal, Christina is awarded
$10,000 in appellate attorney’s fees.
[¶25.] GILBERTSON, Chief Justice, and KERN, Justice, concur.
[¶26.] SEVERSON and WILBUR, Justices, concur in part and dissent in
part.
WILBUR, Justice (concurring in part and dissenting in part).
[¶27.] I write to dissent on the issue of alimony. It is not for this Court to sit
as a fact finder and substitute its judgment for that of the circuit court. Our
standard of review does not examine whether we would have made the same
decision. In fact, SDCL 25-4-41 gives the circuit court discretion to grant “suitable
allowance to” a spouse “as the court may deem just, having regard to the
circumstances of the parties represented[.]” Yet, here, the majority opinion
disregards the court’s discretion. It also disregards “[o]ur oft-quoted rule on trials
8. We find Joseph’s other arguments on this issue without merit.
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before the court”: “the trial court—not the review court” determines the weight to be
accorded to witness testimony and the weight of the evidence at trial. Mellema v.
Mellema, 407 N.W.2d 827, 831 (S.D. 1987).
[¶28.] The majority opinion claims Christina introduced no evidence that
could support a need for permanent alimony. But, at trial, Christina entered into
evidence an exhibit detailing her projected monthly expenses and testified that she
needed support for what she considered “a normal standard of living for something
a life like we were living before or acceptable.” When the circuit court awarded
Christina alimony, it knew Christina would remain in Sioux Falls. The court also
knew Christina’s earning capacity. The court recognized that Christina’s financial
condition after the property division would be “very good.” As the majority opinion
recognizes, the circuit court stated the correct legal standard. Would we not assume
that based on the evidence—Christina’s exhibit, her testimony, the court’s property
division—the court determined that Christina had a need for support?
[¶29.] For this Court to declare that Christina’s need for support is
extinguished based upon her ability to relocate to Sioux Falls means that this Court
would deny a spouse alimony simply because the spouse may “obtain employment
and support herself.” See Hagedorn,
2012 S.D. 72, ¶ 14,
822 N.W.2d at 723 (quoting
Wallahan v. Wallahan,
294 N.W.2d 21, 27 (S.D. 1979)). But we do not review the
record to find how the court was wrong. “[W]e do not determine whether we would
have made an original like ruling[.]” Grode v. Grode,
1996 S.D. 15, ¶ 7,
543 N.W.2d
795, 800. In our review, we decide “whether a judicial mind, in view of the law and
circumstances of the particular case, could reasonably have reached such a
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conclusion.” Id. Here, the law and circumstances support the circuit court’s
decision. The circuit court specifically considered the factors relevant to an award
of permanent alimony. It recognized Christina’s ability to earn a substantial
living—she “is educated and intelligent.” But the court found relevant that Joseph’s
earning capacity is “substantially greater than Christina’s,” and that Christina “has
largely been removed from the job market for seven years.” Although Christina’s
financial condition after the property division is “very good,” the court noted that
Joseph’s financial condition “will be much better.” On this record, I cannot say
“there is no basis in reason or evidence to support” the circuit court’s decision. See
Johnson,
471 N.W.2d at 163.
[¶30.] I also disagree with the majority opinion’s comparison to Scherer,
2015
S.D. 32, ¶ 11,
864 N.W.2d at 495. In Scherer, the circuit court failed to consider the
alimony and property awards together. In this case, the court properly considered
the alimony and property awards together. Also, in Scherer, we did not sit as a fact
finder and foreclose wife’s opportunity to receive alimony. We remanded for the
circuit court to “consider the property division and alimony together to determine if
Betty has demonstrated a need for alimony[.]” Id. ¶ 16. In this case, the majority
opinion acts as a fact finder and forecloses any opportunity for Christina to receive
alimony.
[¶31.] This case is also unlike Havlik,
2014 S.D. 84,
857 N.W.2d 422. In
Havlik, the spouse presented no evidence at the hearings to support her request for
alimony. Id. ¶ 16. Here, Christina offered both evidence and testimony in support
of her request for permanent alimony. Similarly, unlike the spouse in Billion,
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Christina established her need for support to allow her “to live comfortably within
the lifestyle she claims.” See 1996 S.D. 101, ¶ 37,
553 N.W.2d at 234. Because “[w]e
will not reverse a court’s decision regarding alimony absent an abuse of discretion,”
I would affirm the circuit court’s alimony award. See Scherer,
2015 S.D. 32, ¶ 10,
864 N.W.2d at 494.
[¶32.] At the very least, we should remand this case and direct the court to
enter more detailed findings of fact on the issue of alimony. We remanded in
Scherer to allow the court to determine if the spouse in fact demonstrated her need
for alimony. We similarly remanded in Nickels v. Nickels, for the circuit court to
enter detailed findings to support its decision to award rehabilitative alimony.
2015
S.D. 40, ¶ 29,
865 N.W.2d 143, 153. Yet, again, we remanded in Lovejoy v. Lovejoy,
for the circuit court to enter more specific findings on the husband’s ability to pay
alimony.
2010 S.D. 39, ¶ 11,
782 N.W.2d 669, 673.
[¶33.] SEVERSON, Justice, joins this special writing.
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