Fercho v. Fercho

                                                                                FILED
                                                                        IN THE OFFICE OF THE
                                                                     CLERK OF SUPREME COURT
                                                                          DECEMBER 8, 2022
                                                                      STATE OF NORTH DAKOTA




                  IN THE SUPREME COURT
                  STATE OF NORTH DAKOTA

                                

William Frederick Fercho,                                Plaintiff and Appellee
      v.
Sheri Lynn Fercho,                                   Defendant and Appellant
      and
State of North Dakota,                         Statutory Real Party in Interest



                                No. 20220076

Appeal from the District Court of Cass County, East Central Judicial District,
the Honorable John C. Irby, Judge.

AFFIRMED; MOTION DENIED; FEES AWARDED.

Opinion of the Court by Tufte, Justice, in which Chief Justice Jensen and
Justices VandeWalle and Crothers joined. Justice McEvers filed an opinion
concurring specially.

Michael L. Gjesdahl (argued) and Kari A. Losee (appeared), Fargo, N.D., for
plaintiff and appellee.

Rachel M. Hanson, Fargo, N.D., for defendant and appellant.
                             Fercho v. Fercho
                               No. 20220076

Tufte, Justice.

      Sheri Fercho appeals from a divorce judgment enforcing the parties’
premarital agreement, dividing the marital estate, and denying spousal
support and attorney’s fees. She also appeals an order denying her motion to
compel discovery. William Fercho moved to dismiss the appeal on the basis of
Sheri Fercho having accepted the benefits of judgment. We deny William
Fercho’s motion, affirm the judgment and order, and award Sheri Fercho
attorney’s fees on appeal.

                                      I

      William Fercho and Sheri Fercho were married in May 2005. In March
2005, the parties executed a premarital agreement providing that in the event
of a divorce, each party shall retain separate ownership of their own non-
marital property. At the time, William Fercho had a net worth of $2.95 million
and Sheri Fercho had a net worth of $5,359. In May 2020, the parties
separated, and William Fercho commenced this divorce action.

      Prior to trial, Sheri Fercho moved to compel discovery from William
Fercho regarding his family’s business interests. After a hearing, the district
court denied the motion to compel, but granted Sheri Fercho’s motion to
continue the trial date and awarded her attorney’s fees to pay her attorney and
expert. After trial, the court concluded the parties’ premarital agreement was
valid and enforceable, determined which assets were marital and non-marital
and the values of each, awarded Sheri Fercho 70 percent of the marital estate,
and denied spousal support and attorney’s fees.

                                      II

      After the briefs on the merits were submitted, William Fercho moved to
dismiss this appeal. He argues Sheri Fercho waived her right to appeal the
judgment by accepting its substantial benefits. He asserts all marital assets
awarded in the judgment have been distributed to the respective parties.


                                      1
      This Court has said that the “general rule” in this state “is that a party
to a divorce action who accepts substantial benefits pursuant to a divorce
judgment thereby waives the right to appeal from the judgment.” Davis v.
Davis, 

 (N.D. 1990). However, we have recognized
numerous exceptions to this rule:

      In Tyler v. Shea, 

, 

 (1894), we said:

                   “Where the reversal of the judgment cannot
             possibly affect the appellant’s right to the benefit he
             has secured under the judgment, then an appeal may
             be taken, and will be sustained, despite the fact that
             the appellant has sought and secured such benefit.” 

, 

.

      This exception was further expounded in Boyle v. Boyle, 

, 

 (1910), wherein we held:

                   “If a provision of the judgment appears to have
             been fixed by consent, or is undisputed, or, for any
             reason, cannot be changed or reversed by the appeal,
             an acceptance of the benefit given by such provision is
             not a waiver of the appeal.”

      Moreover, in Grant v. Grant, [

 (N.D. 1975)] we
      recognized that the rule which bars a subsequent appeal when
      substantial benefits of a divorce judgment are accepted is not
      absolute when we said:

                   “Before the waiver of the right to appeal can be
             found to exist, there must be an unconditional,
             voluntary, and conscious acceptance of a substantial
             benefit under the judgment.” 

.

      ....

      In addition to the exceptions recognized above, this court has also
      held that:

                   “It is both practical and just that if one jointly or
             individually possesses an asset during the pendency of


                                         2
             a divorce action and is subsequently awarded that
             asset by the divorce judgment, he should not have to
             divest himself of that asset before appealing the
             judgment. This is most obvious when the asset is a
             necessity of life.” Piper v. Piper, 234 N.W.2d [621] at
             623 [(N.D. 1975)].

      ....

      [I]n Hoge v. Hoge, 

 (N.D. 1979), we recognized . . .
      that a party is not estopped from an appeal of a divorce judgment
      by the acceptance of alimony and property “to which he or she was
      entitled as a matter of right.” 

.

Davis, at 311-12 (quoting White v. White, 

 (N.D. 1989))
(cleaned up). We have also declined to dismiss the appeal where the appellant’s
right to the benefit was not disputed by the movant through cross-appeal.
Spooner v. Spooner, 

 (N.D. 1991).

      In Spooner, we further limited the “general rule” to only those rare
instances where the movant can demonstrate either prejudice or “very clear
intent” of accepting the judgment and waiving the right to appeal,
acknowledging the strong public policy of reaching the merits in divorce cases:

      Over the years, we have sharply limited the rule . . . in an effort to
      promote a strong policy in favor of reaching the merits of an
      appeal. . . .
      ....
      [W]e recognized that appeals from divorce judgments frequently
      involve the equitable distribution of property jointly or
      individually owned by the parties. Most of this property will be in
      the hands of one or the other of the parties before, during and after
      the trial on contested issues. And, much of this property is the stuff
      of daily lives: houses, cars, household furnishings. It should be an
      unusual set of circumstances, one demonstrating prejudice to the
      movant, or a very clear intent on the part of the appellant to accept
      the judgment and waive the right to appeal, that keeps us from
      reaching the merits of an action. Acceptance of benefits will seldom
      be prejudicial to the movant if either the benefits themselves or



                                        3
      the proceeds from their sale remain available for redistribution in
      subsequent proceedings.

.

       To be sure, several of these exceptions apply in this case. William Fercho
has not cross-appealed, and the benefits accepted by Sheri Fercho are not
subject to change or reversal on appeal. Sheri Fercho’s acceptance of the
property in the judgment is not inconsistent with her claims on appeal that she
should have been awarded more than she received in the judgment. William
Fercho also has not been prejudiced in any significant way by her acceptance
of the property.

      In Wetzel v. Wetzel, 

, 

, we made clear that
“[g]enerally, acceptance of a property award in a divorce case does not
constitute waiver of the right to appeal from the divorce judgment where the
accepting party is claiming a right to a larger share of the marital estate.” With
the latest round of exceptions, we developed a three-part test in Wetzel to aid
in determining when the appellant has waived the right to appeal: 1) there
must be an unconditional, voluntary, and conscious acceptance of a substantial
benefit under the judgment by the appellant; 2) the appellee must show the
benefit accepted is one which the appellant would not be entitled to without
the divorce decree; and 3) there must be unusual circumstances,
demonstrating prejudice to the movant, or a very clear intent on the part of the
appellant to accept the judgment and waive the right to appeal, to keep the
Court from reaching the merits of the appeal. Id. at ¶ 5.

       In DeMers v. DeMers, 

, 

, we concluded
the appellant did not waive her right to appeal, because she did not consciously
accept the benefits of the divorce judgment and the district court “made time
of the essence by putting time limitations on the property distribution.” Justice
Crothers correctly noted in his concurrence in DeMers, at ¶ 41, that the third
prong—requiring unusual circumstances demonstrating prejudice to the
movant or a very clear intent on the part of the appellant to accept the
judgment and waive the right to appeal—would seldom, if ever, be satisfied by
the movant. See also Sateren v. Sateren, 

, 

               4
(denying motion to dismiss appeal, in part, because there was no signed
satisfaction of judgment showing appellant’s clear intent to accept judgment
and waive right to appeal).

       Suffice to say, this once “general rule” has become anything but the
general rule in our recent decisions. In fact, the more recent exception
requiring prejudice or clear intent would almost always defeat the rule, except
for the rare occasion where the appellant signs a satisfaction of judgment.
Thus, the “general rule” has effectively been swallowed by its exceptions,
leaving few if any circumstances in which the movant could show the appellant
accepted the benefits of judgment and waived his right to appeal. However, this
is not to say that we disagree with the exceptions that have been carved out of
the general rule. To the contrary, we agree with the exceptions outlined above
and the rationales underling those exceptions. Moreover, they promote our
strong policy in favor of reaching the merits of an appeal in a divorce action.
For these reasons, we conclude that a party to a divorce action who accepts
benefits pursuant to a divorce judgment does not waive the right to appeal from
the judgment, overruling Williams v. Williams, 

 (N.D. 1896); Tuttle
v. Tuttle, 

 (N.D. 1909); Boyle v. Boyle, 

 (N.D. 1910);
Montgomery v. Montgomery, 

 (N.D. 1958); Geier v. Geier, 

 (N.D. 1983); White v. White, 

 (N.D. 1989); and any
other case applying this rule to dismiss the appeal of a divorce judgment. Our
decision here has no application to non-divorce cases, or any other rule outside
of the divorce context, such as waiver by voluntary payment or satisfaction of
judgment. See, e.g., Lyon v. Ford Motor Co., 

, 

(collecting cases). We deny William Fercho’s motion to dismiss the appeal.

                                     III

       Turning to the merits of this appeal, Sheri Fercho argues the district
court abused its discretion in denying her motion to compel documents related
to William Fercho’s business holdings. A district court has broad discretion
regarding the scope of discovery, and we will not reverse on appeal absent an
abuse of discretion. W.C. v. J.H., 

, 

. “An abuse
of discretion by the district court is never assumed, and the burden of proof is


                                       5
on the party seeking relief to establish it.” 

 “The district court abuses its
discretion when it acts in an arbitrary, unreasonable, or unconscionable
manner, or when its decision is not the product of a rational mental process
leading to a reasoned determination.” 

      Sheri Fercho acknowledges that William Fercho produced tax returns,
operating agreements, an appraisal, and some financial statements. She
asserts he failed to provide “bank statements, credit card statements, accounts
receivables, list of asset acquisitions and valuation reports, and year-end
depreciation schedules, all during the period of the marriage.” She contends
this information would have informed her expert and the court of further
possible commingling of funds and valuations of the businesses. The court
denied the motion to compel and stated, “I think there’s enough information
there. And I certainly think there’s enough information that’s been provided to
do a deposition of Mr. Fercho.” The court continued the trial and ordered
William Fercho to pay Sheri Fercho $25,000 to cover her attorney’s fees and
expert expenses. Sheri Fercho argues the court’s lack of findings and analysis
in denying her motion to compel constitutes an abuse of discretion.

      William Fercho argues that Sheri Fercho was required to subpoena the
documents directly from the businesses, not from him as a minority
shareholder. He asserts the court appropriately exercised its discretion in
denying the motion to compel discovery, and he cites N.D.R.Civ.P. 26(b)(1)(B)(i)
and 26(c)(1). Although the court’s discussion of this issue was limited, we are
able to discern the court’s rationale for denying the motion to compel from the
hearing transcript. See Williams v. Williams, 

, 

 (“We will not remand for clarification of findings of fact when, through
inference or deduction, we may discern the district court’s rationale.”). William
Fercho argued he did not possess the documents requested and they would be
burdensome to produce. He testified the request was to harass or cause undue
expense. William Fercho’s argument and testimony coupled with the court’s
statement that enough information had been provided shows the court
determined the information sought was either unreasonably cumulative or
duplicative or unduly burdensome to William Fercho. See N.D.R.Civ.P.
26(b)(1)(B)(i) (requiring the court to limit discovery if it determines the


                                       6
“discovery sought is unreasonably cumulative or duplicative, or it can be
obtained from some other source that is more convenient, less burdensome, or
less expensive” or “the burden or expense of the proposed discovery outweighs
its likely benefit”). Accordingly, the court did not abuse its discretion by
denying the motion to compel.

                                       IV

      Sheri Fercho argues the premarital agreement is invalid and
unenforceable because she did not voluntarily enter into the agreement and it
is unconscionable.

      The premarital agreement was entered into in 2005. Thus, the Uniform
Premarital Agreement Act, N.D.C.C. ch. 14-03.1 (repealed 2013), governs the
parties’ agreement. Tschider v. Tschider, 

, 

.
Under N.D.C.C. § 14-03.1-03(1) (2004), parties may contract to the disposition
of property upon divorce and to the modification or elimination of spousal
support. A premarital agreement is a contract, and its interpretation is a
question of law, which we review de novo on the entire record. Tschider, at ¶ 8.

      Under N.D.C.C. § 14-03.1-06(1) (2004), a premarital agreement is not
enforceable if the party against whom enforcement is sought proves:

      a. That party did not execute the agreement voluntarily; or
      b. The agreement was unconscionable when it was executed and,
         before execution of the agreement, that party:
         (1) Was not provided a fair and reasonable disclosure of the
             property or financial obligations of the other party;
         (2) Did not voluntarily sign a document expressly waiving any
             right to disclosure of the property or financial obligations of
             the other party beyond the disclosure provided; and
         (3) Did not have notice of the property or financial obligations
             of the other party.

“If a provision of a premarital agreement modifies or eliminates spousal
support and that modification or elimination causes one party to the agreement
to be eligible for support under a program of public assistance at the time of
separation or marital dissolution, a court, notwithstanding the terms of the


                                        7
agreement, may require the other party to provide support to the extent
necessary to avoid that eligibility.” N.D.C.C. § 14-03.1-06(2) (2004). Further, “if
a court finds that the enforcement of a premarital agreement would be clearly
unconscionable, the court may refuse to enforce the agreement, enforce the
remainder of the agreement without the unconscionable provisions, or limit
the application of an unconscionable provision to avoid an unconscionable
result.” N.D.C.C. § 14-03.1-07 (2004). The “clearly unconscionable” standard
“requires complete factual findings about the relative property values and the
other resources and foreseeable needs of the spouse asserting the premarital
agreement is unconscionable.” Tschider, 

. An agreement may
be deemed unenforceable if it is unconscionable “at the time of execution, at
the time of separation or marital dissolution, or at the time of enforcement.”
Id. at ¶ 8. Unconscionability of a premarital agreement is a matter of law.
N.D.C.C. § 14-03.1-06(3) (2004). However, “it turns on factual findings related
to the relative property values, the parties’ financial circumstances, and their
ongoing need.” Sailer v. Sailer, 

, 

.

                                        A

      Sheri Fercho argues she did not voluntarily enter into the premarital
agreement. “Procedural unconscionability focuses upon formation of the
contract and fairness of the bargaining process, including factors such as
inequality of bargaining power, oppression, and unfair surprise.” Strand v.
U.S. Bank Nat’l Ass’n ND, 

, 

.

       The district court found the parties were represented by separate
counsel. See Binek v. Binek, 

, 

 (stating “adequate
legal representation will often be the best evidence that a spouse signed a
premarital agreement knowledgeably and voluntarily”). Sheri Fercho testified
her attorney reviewed the premarital agreement with her and encouraged
her to sign it. At no point does she allege her attorney’s representation was
deficient. While Sheri Fercho signed the document at William Fercho’s
attorney’s office, she testified that his attorney was pleasant and civil and that
he reviewed the agreement’s essential provisions with her prior to signing. She
did not object to signing the agreement, inquire about its terms, or request any


                                        8
provision be modified. At the time of signing, she was a 38-year-old college
graduate who had some prior business experience. Sheri Fercho testified she
understood the premarital agreement and its terms were clear and
understandable. We conclude the court did not err in finding Sheri Fercho
voluntarily executed the premarital agreement.

                                         B

      Sheri Fercho contends that the terms of the agreement are
unconscionable. “Substantive unconscionability focuses on the harshness or
one-sidedness of the agreement’s provisions.” Eberle v. Eberle, 

, 

.

       The premarital agreement provides that in the event of a divorce, the
parties shall each retain separate ownership of their own non-marital property.
Non-marital property is defined by the agreement as “any interest of Bill or
Sheri in their separate assets, real or personal, that they possess or control as
of the date of the marriage and that are generally described on [the attached
exhibits]; any assets acquired by them individually by gift, inheritance,
payable on death or as a beneficiary of a trust from their parents or other
family members . . . ; and any increase in the value of any interest . . . .” Marital
property under the agreement is subject to division upon divorce. The
agreement also discloses William Fercho’s assets and net worth for 2003 and
2004 and specifically waives the parties’ right to further disclosure of their
property, liabilities, and income. According to the agreement, “Each of them is
satisfied with the disclosure described on [the attached exhibits].” The exhibits
show that in 2004, William Fercho had a net worth of $2.95 million and Sheri
Fercho had a net worth of $5,359. The marital estate grew to $1.9 million over
the course of the marriage. We conclude the premarital agreement was
conscionable when it was executed by the parties. Specifically, Sheri Fercho
was provided a fair and reasonable disclosure of William Fercho’s property and
financial obligations, she voluntarily signed the premarital agreement which
expressly waived any right to further disclosure of his property or financial
obligations, and she had adequate notice of his property or financial
obligations. See N.D.C.C. § 14-03.1-06(1)(b).


                                         9
      Additionally, the premarital agreement restricts, but does not eliminate,
spousal support, stating, “Bill and Sheri do not specifically renounce any right
to claim alimony or maintenance from the other. But, for purposes of
determining whether or not alimony or maintenance should be paid, the Non-
marital property of each, together with any income derived therefrom, shall
not be considered in making that determination.” Although the premarital
agreement modifies spousal support, Sheri Fercho does not claim the
modification would cause her to be eligible for support under a public
assistance program. Thus, the spousal support provision is conscionable under
N.D.C.C. § 14-03.1-06(2).

       Beyond the spousal support provision, we conclude the entirety of the
premarital agreement was not clearly unconscionable at the time of separation,
divorce, or enforcement. The district court found that the combined marital
and non-marital estates had a valuation of $10.6 million, consisting of William
Fercho’s $8.7 million of non-marital property, and $1.9 million of marital
property subject to equitable distribution. The court found that both parties
lived in mortgage-free houses, drove unencumbered vehicles, and other than
monthly credit card payments, had no liabilities. The court found William
Fercho’s claim of $8,360 in ongoing monthly expenses to be credible. Sheri
Fercho, on the other hand, submitted two monthly budgets: $4,179 (in her
pretrial statement) and $8,128 (on the eve of trial). The court found the $8,128
monthly budget was not supported by the evidence, and although it found
$4,179 was slightly low, $4,179 was the more credible amount. The premarital
agreement did not eliminate spousal support or prohibit an unequal award of
the marital estate in favor of one spouse over the other spouse. The court
ultimately divided the marital estate 70/30 in favor of Sheri Fercho, leaving
her with $1.26 million in assets.

       Certainly, this is not a case of one spouse being left in poverty or
requiring public assistance. See, e.g., Sailer, 

(Maring, J., dissenting) (concluding premarital agreement was substantively
unconscionable at time of enforcement because it left wife in poverty after a
fifteen-year marriage with no real property, investments, retirement accounts,
assets, or spousal support). Nor is it the type of case where one spouse waives


                                      10
all of his or her interests, including to the marital property. See McMullin v.
McMullin, 

 (Mo. Ct. App. 1996) (concluding premarital
agreement was substantively unconscionable where wife waived all interests
in marital property); Penrod v. Penrod, 

, 914 (Mo. Ct. App. 2021)
(concluding premarital agreement was substantively conscionable because
although it resulted in a disparity in property distribution it did not prevent
wife from obtaining marital assets). While the effect of enforcing the
premarital agreement in this case is that William Fercho is entitled to all of
his non-marital property, valued at $8.7 million, a large disparity in the parties’
wealth—approximately $2.95 million—existed at the time of executing the
agreement. See In re Marriage of Shanks, 

 (Iowa 2008)
(concluding premarital agreement was not substantively unconscionable
where agreement “sought to maintain the parties’ premarital assets as
separate property and to perpetuate their premarital financial conditions
throughout the marriage”). Sheri Fercho received 70 percent of the marital
assets worth approximately $1.26 million, including the mortgage-free marital
home, and has no long-term liabilities. The court found she has the ability to
meet her ongoing monthly expenses. Although the court did not award her
spousal support, the premarital agreement did not prohibit such support. See
L.R.O. v. N.D.O., 

, 1182 (Haw. 2020) (concluding premarital
agreement was not substantively unconscionable where each spouse preserved
premarital assets and released other spouse from spousal support). We
conclude the court’s findings are not clearly erroneous and the premarital
agreement was not so one-sided at the time of divorce or enforcement as to be
substantively unconscionable.

                                        V

       Sheri Fercho argues the district court erred in its valuations and in
classifying certain assets as non-marital, instead of marital. “A district court’s
valuation and distribution of marital property are findings of fact, subject to
the clearly erroneous standard of review.” Eberle v. Eberle, 

,

. “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, after



                                        11
reviewing the entirety of the evidence, this Court is left with a definite and
firm conviction a mistake has been made.” 

       The district court found William Fercho commingled certain funds
between non-marital and marital accounts, converting $752,613 of non-marital
property to marital property. However, because $75,318 of that went toward
paying the mortgage on the marital home, the court attributed the remaining
commingled funds of $677,295 to the marital estate. Sheri Fercho asserts that
when commingled funds are used to purchase an asset, that asset also becomes
marital property, citing Jangula v. Jangula, 

, 

. She
claims William Fercho used this money to “pay $55,000 on the loan for his
interest in H&F stock ownership, buy treasury bonds, pay income tax
liabilities, which presumably included taxes from his K-1 income from the
businesses, and put money back into his investment account.”

       In Jangula, we reversed the district court’s award of the marital home
to the husband under a prenuptial agreement. 

. We
concluded the home was marital property because the money used to purchase
the home came from commingled funds in a joint bank account with the right
of survivorship. Id. at ¶¶ 13-14. Further, after the home was purchased by the
husband, he deeded the home to himself and his wife, placing the home into a
joint tenancy. Id. at ¶ 15; see also Tweeten v. Tweeten, 

, 

 (“To the extent the terms of the premarital agreement were
enforceable, the Tweetens’ act of transferring the L Ranch and Tweeten
properties to themselves as joint tenants with a right of survivorship destroyed
the separate ownership and made the premarital agreement inapplicable.”).

       Here, there is no joint tenancy, and the district court found the account
which contained commingled funds was not a joint account. Sheri Fercho
testified they never had a joint account. Thus, this case is dissimilar to Jangula
in those respects. However, the court, finding commingling occurred,
attributed the commingled funds to the marital estate. Because these funds
were used in some manner, they no longer exist in the marital estate. To
attribute the commingled funds and the assets purchased with these funds to
the marital estate would be a windfall in favor of the marital estate,


                                       12
inconsistent with the premarital agreement and North Dakota law, and to the
detriment of parties’ ability to freely contract and to maintain ownership of
their premarital assets if so agreed upon.

       Next, Sheri Fercho argues William Fercho received a check of $42,629
from Haga Kommer for the sale of his accounting practice which was
erroneously unaccounted for in the marital estate. William Fercho asserts the
parties stipulated to the value of the Anderson & Fercho assets prior to trial in
their “Joint 8.3 Asset and Debt List” and the court did not err in valuing the
marital estate. Indeed, this asset is not expressly listed on the parties’
stipulated asset and debt list. While the court is not bound by the parties’
stipulated asset values under N.D.R.Ct. 8.3(a), Gustafson v. Gustafson, 

, 

, the court may rely upon the stipulated values
in valuing the marital estate to the extent there is evidentiary support in the
record, Eberle, 

; Wanttaja v. Wanttaja, 

, ¶¶ 16-
17, 

. On this record, we are not left with a definite and firm
conviction a mistake was made in the court’s valuation of the marital estate,
nor has Sheri Fercho satisfied the standard of review by showing there is no
evidence to support the court’s valuation. Accordingly, the court did not clearly
err in valuing and distributing the marital estate.

      Last, Sheri Fercho contends that the district court erred in its valuation
of William Fercho’s non-marital business holdings. Although the precise value
of a spouse’s non-marital property is usually required to determine whether
the premarital agreement is conscionable and enforceable, it is not necessary
here. Given Sheri Fercho’s financial circumstances and ongoing needs, she will
not be left destitute or require public assistance. The premarital agreement did
not eliminate the possibility of spousal support and allowed for an unequal
award of the marital estate, which ultimately was 70 percent in her favor.
Whether William Fercho’s business holdings are valued at $4.6 million, as the
court found, or $10.9 million, as Sheri Fercho asserted, our conclusion that the
premarital agreement is conscionable and enforceable remains the same for
the reasons stated in Part IV. Moreover, because we conclude the parties’
premarital agreement is enforceable, the value of William Fercho’s non-marital
assets is irrelevant to the court’s valuation and distribution of the marital


                                       13
estate. Absent the conclusion that the marital agreement is unenforceable,
Sheri Fercho does not argue that the court erred in finding these business
holdings to be non-marital assets or that a larger valuation of the business
holdings could impact the valuation or distribution of the marital estate. Thus,
we conclude the court’s valuation of William Fercho’s non-marital business
holdings are immaterial.

                                      VI

     Sheri Fercho contends the district court erred by failing to award her
spousal support.

      The premarital agreement provides that “for purposes of determining
whether or not alimony or maintenance should be paid, the Non-marital
property of each, together with any income derived therefrom, shall not be
considered in making that determination.” Having determined the parties’
premarital agreement is enforceable, we construe this spousal support
provision to mean only marital property may be considered in the court’s award
of spousal support.

      The court “may require one party to pay spousal support to the other
party for a limited period of time,” “taking into consideration the circumstances
of the parties.” N.D.C.C. § 14-05-24.1. “When considering whether to award
spousal support, the trial court must consider the relevant factors under the
Ruff-Fischer guidelines.” Paulson v. Paulson, 

, 

. The Ruff-Fischer factors include:

      [T]he 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.

Binek, 

. A spousal support award must be based on “both the
supporting spouse’s needs and ability to pay and the receiving spouse’s income

                                       14
and needs.” Paulson, at ¶ 11. “The trial court is not required to make a finding
on each factor, but it must explain its rationale for its determination.” Id. at
¶ 9. “Property division and spousal support are interrelated and intertwined
and often must be considered together, especially when there is a large
difference in earning power between the spouses.” Id. “Spousal support
determinations are findings of fact and will not be reversed on appeal unless
they are clearly erroneous.” Binek, at ¶ 16.

       The district court made the following findings under the Ruff-Fischer
guidelines. William Fercho is 56 years old and Sheri Fercho is 54. The parties
were married for fifteen years. Neither one suffers from physical or mental
health conditions that would impair their ability to work and earn a living.
William Fercho is an experienced public accountant, earning $120,000 during
the height of his career, and owned his own accounting business. In 2017, he
sold his business and client list to another accounting firm, Haga Kommer,
which he now works for on a “semi-retired” basis, providing accounting services
for his family interests. In 2019, he earned $36,448; in 2020, he earned $5,082;
and in 2021 and coming years, he expects to earn $5,000 or less. As a condition
of selling his business, William Fercho will be subject to a three-year non-
compete clause once he fully retires. Sheri Fercho possesses a bachelor’s degree
in business and marketing. She gave birth during the first year of marriage
and was a stay-at-home mother during the marriage, providing the care needed
for their child. The court found that although she does not have extensive work
experience and may need additional education or training, Sheri Fercho is
intelligent and capable of obtaining worthwhile employment. Both parties live
in “substantial, paid-off houses, in nice neighborhoods,” and drive nice vehicles.
Other than monthly credit card payments, the parties have no liabilities.

      The court found William Fercho’s claim of $8,360 in monthly expenses
unchallenged and credible. The court found Sheri Fercho’s second submitted
monthly budget of $8,128 was not supported by the evidence and her first
submitted budget of $4,179 was the more credible amount. The court valued
the marital estate at $1,893,648, which is comprised of non-income producing
assets, save the retirement accounts. The court found the bulk of the marital
estate consisted of assets that were formerly William Fercho’s non-marital


                                       15
assets which were transferred to the marital estate during the marriage,
including the marital home and the $677,295 of commingled funds. Departing
from the 50/50 equal property division, the court awarded a 70/30 split in favor
of Sheri Fercho, citing William Fercho’s sizeable non-marital estate as the
primary factor against an even 50/50 division of the marital estate.

        The court found that “William’s earnings and earning capacity (as an
accountant) are insufficient to meet his own personal living expenses and/or to
fulfill his $3,222 monthly child support obligation. Without the income from
his non-marital assets, William does not have the ability to pay spousal
support.” The court’s finding is supported by the record. William Fercho is
“semi-retired,” receiving $5,000 per year as an accountant, after selling his
accounting firm and client list to Haga Kommer and being subject to a three-
year non-compete agreement. The court found that although Sheri Fercho may
be in need of some rehabilitation due to her stale education, it specifically took
this into consideration when it distributed the marital estate, which resulted
in Sheri Fercho receiving 70 percent of the $1.8 million “adjusted” marital
estate.1 The court found Sheri Fercho has no house payment and has the ability
to meet her monthly expenses.

       Because the premarital agreement is valid and enforceable and prohibits
non-marital property from being considered for purposes of spousal support,
the court properly excluded the non-marital assets from its determination. The
court’s findings that William Fercho does not have the ability to pay spousal
support based on his share of the marital assets and that Sheri Fercho has the
ability to satisfy her monthly expenses are not clearly erroneous. We therefore
conclude the court did not clearly err by denying spousal support.

                                              VII

      Sheri Fercho argues the district court erred by failing to award her
attorney’s fees. “The district court has broad discretion to award attorney’s fees


1The district court reduced the marital estate by $91,125 to reflect the amount that William Fercho
paid from his non-marital estate to Sheri Fercho for her attorney and expert fees. As a result, the
marital estate was “adjusted” from $1,893,648 to $1,802,523.


                                               16
in divorce proceedings under N.D.C.C. § 14-05-23.” Tschider, 

. “The primary standard to award attorney fees under N.D.C.C. § 14-05-23
is consideration of one spouse’s needs and the other spouse’s ability to pay.” Id.
Additional considerations may include “whether one party’s conduct has
unreasonably increased the time spent on the case, the property each party
owns, whether liquid or fixed, and the parties’ relative incomes.” Gustafson,

.

       At several points throughout the divorce action, the court awarded Sheri
Fercho attorney’s fees and expert expenses totaling $91,125 to be paid by
William Fercho. The court found that “Sheri was essentially awarded $91,125
‘off the top’ of the marital estate for professional fees” and subsequently
reduced the marital estate by this amount, leading to the “adjusted” marital
estate. Sheri Fercho does not assert this was a misapplication of the law.
Instead, she argues the result of this reduction in the marital estate is that
William Fercho did not pay any of her attorney’s fees and she is entitled to
$91,125 in attorney’s fees. Although we disagree with Sheri Fercho’s assertion
on a factual basis,2 we need not decide whether William Fercho’s effective
attorney’s fee payment was $91,125, nothing, or somewhere in between,
because Sheri Fercho is not arguing the “adjusted” marital estate valuation or
70-30 distribution is clearly erroneous. In Part V, Sheri Fercho argued that the
assets paid for by the commingled funds and the $42,629 check from Haga
Kommer should have been included in the marital estate. We have addressed
and rejected those arguments. Sheri Fercho now argues she is entitled to an
award of attorney’s fees equivalent to the reduction in the marital estate
($91,125). Accordingly, we review only whether the court abused its discretion
by not awarding her $91,125 for fees that have already been paid for with
William Fercho’s non-marital property. Sheri Fercho does not argue how the
court abused its discretion by not awarding her this amount. Because a
primary consideration in awarding fees—one spouse’s needs—is absent, as the



2 The court’s reduction of the marital estate by $91,125 resulted in William Fercho effectively paying
for a portion of this amount from his non-marital assets. Had the marital estate not been reduced by
$91,125, under the court’s 70-30 distribution in favor of Sheri Fercho, he would have received 30%, or
$27,337.50.


                                                 17
fee no longer exists, we conclude the court did not abuse its discretion in
denying this award.

       Sheri Fercho also contends the court erred by not awarding her $13,375
in outstanding attorney and expert fees, which she accumulated by the end of
trial. The court found the premarital agreement “does not allow it to require
William to give Sheri his non-marital dollars, whether as reimbursement or
payment of her attorney’s fees.” The court found that Sheri Fercho will have
sufficient liquid assets to pay her attorney’s and expert’s fees. Sheri Fercho
argues that the premarital agreement does not restrict the court from
awarding her attorney’s fees. William Fercho argues that because the
premarital agreement’s prohibition against awarding one party’s non-marital
assets to the other had no attorney’s fees exception, the court correctly declined
to award attorney’s fees.

       Although the plain language of the premarital agreement does not
expressly restrict consideration of a party’s non-marital property when
determining whether to award attorney’s fees, we need not decide the
agreement’s limits. Assuming without deciding the premarital agreement
allows the court to consider William Fercho’s non-marital property in awarding
attorney’s fees, the court found Sheri Fercho has the ability to pay her
remaining attorney’s fees, which she alleges are $13,375. She does not contest
this finding. We conclude the district court did not abuse its discretion in
ordering that each party be responsible for their own attorney’s fees. See
Tschider, 

 (concluding the court did not abuse its discretion
in refusing to award attorney’s fees when the parties have the ability to pay
their own fees).

                                     VIII

      Sheri Fercho requests attorney’s fees on appeal for having to respond to
William Fercho’s motion to dismiss, which she asserts is frivolous and
untimely. Although we do not find the motion to dismiss frivolous, we conclude
it was untimely.




                                       18
       Under N.D.R.App.P. 38, the Court may award reasonable attorney’s fees
if “any party has been dilatory in prosecuting the appeal.” William Fercho filed
his motion to dismiss six days before oral argument on the merits of the appeal,
requiring an expedited response from Sheri Fercho. See N.D.R.App.P. 27(b)
(allowing 14 days for response unless otherwise provided by the Court). He
provides no explanation for the untimely filing. The notice of appeal in this
case was filed in March 2022, and both parties submitted their briefs on the
merits in May 2022. The motion to dismiss was not filed until mid-June 2022.
We conclude that William Fercho was dilatory in bringing his motion to dismiss
on appeal and award Sheri Fercho her reasonable attorney’s fees, which she
declares in her attached declaration are $1,850.

                                       IX

       We have considered the parties’ remaining arguments and conclude they
are either unnecessary to our decision or are without merit. The judgment and
discovery order are affirmed. William Fercho’s motion to dismiss is denied.
Sheri Fercho’s request for attorney’s fees on appeal is granted, and we award
her $1,850 in attorney’s fees.

      Jon J. Jensen, C.J.
      Gerald W. VandeWalle
      Daniel J. Crothers
      Jerod E. Tufte



McEvers, Justice, concurring specially.

      I agree with and join the majority in sections I, II, III, IV, V, VII, and
VIII. I specially concur with the result reached by the majority in section VI.

      I agree the district court was limited in its consideration of spousal
support by the terms of the premarital agreement. Majority, at ¶ 31. I also
agree the award of spousal support must be based on both the supporting
spouse’s needs and ability to pay and the receiving spouse’s income and needs.
Majority, at ¶ 32. I write separately to note the court’s finding on Sheri Fercho’s


                                        19
monthly budgeted expenses of $4,179 is not supported by the record. I also note
the court’s finding William Fercho does not have the ability to pay and Sheri
Fercho has the ability to meet her monthly expenses are not supported by the
record. However, after reviewing the entire record, I am not left with a definite
and firm conviction that a mistake has been made because any errors made by
the court were harmless.

       The district court first erred in determining Sheri Fercho’s monthly
expenses. While I agree with the court that not all of the expenses claimed in
her second monthly budget of expenses are supported by the evidence, the
court erred in adopting her earlier monthly budget without considering the
reasons for the amendments. In its interim order, the court ordered William
Fercho to pay the home insurance and all residential utilities (including cable,
Direct TV and cell phones). These amounts were not included in Sheri Fercho’s
original budget. Her amended monthly budget included: natural gas $60,
electricity $80, water and sewer $65, cable/internet $120, cell phone $150, and
HOA fees of $113. All of these items are legitimate expenses not included in
Sheri Fercho’s original budget, which the court recognized seemed “slightly
low.” In addition, while the court recognized Sheri Fercho would have to pay
the home insurance previously paid by William Fercho, as well as the property
taxes on the home, the court did not consider that she had not included the
$650 per month in property taxes and insurance in her first proposed budget.
The court specifically found that Sheri Fercho would be responsible for the
property taxes, insurance, and maintenance of the home. The court should
have added the amount of property taxes and insurance to Sheri Fercho’s
monthly expenses. The increases for utilities, property taxes, and insurance
would have increased her monthly expenses over $1,200 per month.
Considering her previous monthly expenses, which the court adopted along
with these additional expenses, Sheri Fercho’s monthly expenses were at least
$5,400 per month. Even giving the court deference for credibility
determinations, the court’s finding on Sheri Fercho’s monthly budgeted
expenses of $4,179 is not supported by the record.

     The district court’s finding that Sheri Fercho has the current ability to
meet her monthly expenses also lacks evidentiary support. I do not doubt that


                                       20
Sheri Fercho is capable of working. However, nothing in the record suggests
she has the current ability to meet her monthly expenses found by the district
court, and it is even less likely she can earn $5,400 per month. Sheri Fercho
was unemployed and has been out of the work force for many years. She “has
foregone opportunities or lost advantages as a consequence of the marriage and
[ ] has contributed during the marriage to the supporting spouse’s increased
earning capacity.” Mertz v. Mertz, 

, 

 (quoting
Sommer v. Sommer, 

, 

). “Relevant to a
spousal support determination is the distribution of marital property, the
liquid nature of the property, and the income-producing nature of property.”
Schiff v. Schiff, 

, 

 (quoting Marschner v.
Marschner, 

, 

). The only way Sheri Fercho can
meet her monthly expenses is to expend the marital property she was awarded.
The district court found the parties’ marital assets were not income producing.
Sheri Fercho was awarded some of the retirement accounts, but she cannot
access those accounts for several years without resulting in significant tax
consequences. Recognizing her needs, the district court found in order to meet
her expenses Sheri Fercho would have return to work and she would also have
to rely on her share of the marital estate if she was in need of additional
education or training to gain satisfactory employment.

       The district court’s finding that William Fercho has no ability to pay is
also not supported by the record. Even taking into consideration the premarital
agreement, William Fercho is 56 years old. He is a certified public account, and
his employer pays to continue that certification. He regularly earned over
$100,000 annually during the marriage. See Majority, at ¶ 33 (“William Fercho
is an experienced public accountant, earning $120,000 during the height of his
career”). He is capable of working more and earning significantly more from
his employer without violating his non-compete or even triggering his non-
compete. To limit William Fercho’s ability to pay to what he is currently
earning in his “semi-retired” status does not reflect his earning ability. While I
agree that the non-marital property cannot be used to determine William
Fercho’s ability to pay, he is capable of earning more than $5,000 per year.
William Fercho testified that he is employed with Haga Kommer and that his
non-compete does not start until he is officially retired. His non-compete lasts

                                       21
three years. However, for the past three years, William Fercho has chosen to
do minimal work for Haga Kommer, amounting to an income of $36,448 in
2019, $5,082 in 2020, and in 2021 and coming years, he expects to earn $5,000
or less. Majority, at ¶ 33. William Fercho’s current self-limited income is not
indicative of his ability to earn income. See Lohstreter v. Lohstreter, 

, 

 (explaining current income is not indicative of a
party’s ability to earn income when the paying spouse has the ability to hold a
higher paying job).

      Alternatively, William Fercho is a capable, educated man. Certainly, he
can earn more than $5,000 a year in a role outside of the accounting field.
“Earned income is not the sole consideration in determining a party’s ability to
pay support, and a court must consider the party’s net worth, including the
extent of the party’s assets and the party’s earning ability as demonstrated by
past income.” McDowell v. McDowell, 

, 

; see
also Schulte v. Kramer, 

, 

. Neither party in
a divorce should be allowed to minimize their income to avoid paying spousal
support or in seeking spousal support.

      Despite my objections to some of the district court’s findings, I still
concur with the majority that the court did not err in not awarding spousal
support. Questions of property division and spousal support cannot be
considered separately or in a vacuum, but must be examined and dealt with
together, especially when there is a large difference in earning power between
the spouses. Stock v. Stock, 

, 

; Fox v. Fox, 

, 

. Given the district court’s distribution of property,
the erroneous findings I have identified are harmless. After considering the
Ruff-Fischer factors, the court divided the marital estate 70/30 in favor of Sheri
Fercho, which left her with $1.26 million in assets. Majority, at ¶ 22. This Court
has recognized that because property division and spousal support are
interrelated, the court may award greater amounts of property in lieu of
spousal support. Horner v. Horner, 

, 

. After
considering the Ruff-Fischer factors the court found:




                                       22
      Based on the foregoing considerations, the court deems it is fair
      and equitable to depart from the 50/50 norm. The most influential
      consideration leading to this departure is William’s sizeable non-
      marital estate and the considerable annual income it provides. The
      parties’ significant earning disparity makes a disparate
      distribution of their marital estate equitable and fair.

When specifically considering spousal support, the court found “[t]he favorable
distribution of the marital estate will assist Sheri in meeting her needs.”
Although a spouse is not required to deplete his or her property distribution in
order to live, the assets awarded to Sheri Fercho in this case are sufficient to
allow her to meet her needs and obtain any additional training she may need
to reenter the workforce “without substantially depleting her assets.” Knudson
v. Knudson, 

, 

 (affirming district court’s
finding that a spouse did not need spousal support based on the property
awarded to her); see also Willprecht v. Willprecht, 

, 

 (McEvers, J., concurring in part) (“depletion or dissipation of
property is a factor to consider when applying the Ruff-Fischer factors and the
parties’ needs versus ability to pay”).

      Even though William Fercho has the ability to pay and the district court
underestimated Sheri Fercho’s expenses and overestimated her current ability
to meet them, I am not left with a definite and firm conviction the court made
a mistake given the court’s property distribution. I concur with the majority
that the district court judgment should be affirmed.

      Lisa Fair McEvers




                                      23