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Vann v. Vann

July 9, 2009

GRETCHEN W. VANN, PLAINTIFF AND APPELLEE
v.
JAMES P. VANN, DEFENDANT AND APPELLANT



Appeal from the District Court of Sargent County, Southeast Judicial District, the Honorable Daniel D. Narum, Judge.

The opinion of the court was delivered by: Maring, Justice.

AFFIRMED.

[¶1] James P. Vann appeals from a district court's order denying his motion to vacate the divorce judgment and a district court's order denying his motion to amend the pleadings and for a new trial. We affirm, holding the district court did not abuse its discretion in denying James Vann's request to vacate the divorce judgment, did not err in denying James Vann's alternative motion to enforce the property settlement agreement, and did not abuse its discretion in denying James Vann's motion to amend the pleadings and for a new trial.

I.

[¶2] Gretchen W. Vann and James P. Vann were married in 1999. At the time of the marriage, Gretchen Vann was forty-five years of age, had approximately $2.5 million, and did not have any debt. James Vann was forty-four years of age, was earning approximately $80,000 per year at his job, had an interest in his father's $350,000 home in Oregon, had a 401k worth $8,000, and did not have any debt. After the marriage, James Vann quit his job. The parties dispute the reason James Vann quit his job. James Vann contends he and Gretchen Vann agreed he should quit so they could travel and live a life of luxury together. Gretchen Vann contends James Vann did not like his job, quit on his own volition, and she helped him start a gun business by using her assets to start and sustain the business.

[¶3] The parties lived in James Vann's father's home for part of their marriage. Gretchen Vann claims she used $300,000 of her assets to complete an extensive remodeling of the home. The parties agree that James Vann struggled with an alcohol addiction for most of the marriage. Gretchen Vann testified she paid at least $10,000 for James Vann's treatment, his drinking negatively impacted her relationship with her adult children, she had to clean up after his daily drinking binges, and his alcoholism was the primary reason for the divorce. She testified her grandchildren were not allowed to visit her when she was living with James Vann because he drove his vehicle into the ditch with her grandson in the car after he had been drinking alcohol.

[¶4] Both Gretchen Vann and James Vann testified that James Vann did not contribute or pay for anything during the marriage, with the exception of contributing his interest in the Oregon home. Gretchen Vann testified she moved to Forman, North Dakota, in 2004 and separated from James Vann. James Vann subsequently moved to North Dakota. Gretchen Vann purchased land and built a general store in Rutland, North Dakota. James Vann testified the store cost $900,000; Gretchen Vann testified it cost nearly $1,000,000. Gretchen Vann testified the store was only worth $250,000 at the time of the hearing because of its location. Gretchen Vann works in the store full time, has several employees, and lives above the store.

[¶5] Gretchen Vann testified her attorney drafted a property settlement agreement and a copy of the proposed agreement was given to James Vann to review in January or February 2007. Gretchen Vann testified she waited until March 9, 2007, when she knew James Vann had been sober for three days, and then she and James Vann went to the Sargent County Courthouse and signed the agreement. Gretchen Vann testified that just before James Vann signed the property settlement agreement, she asked him if he had read it. He told her he had not. Gretchen Vann testified she then told him to read it, but he said he did not care and signed it anyway. The Sargent County Clerk of Court notarized their signatures.

[¶6] On March 20, 2007, the district court entered a divorce judgment incorporating the property settlement agreement. On March 4, 2008, James Vann moved to vacate the divorce judgment under N.D.R.Civ.P. 60(b), alleging the agreement was unconscionable, he was incompetent when he signed the agreement, and Gretchen Vann fraudulently induced him to sign the agreement. In the alternative, James Vann moved to enforce certain provisions of the property settlement agreement.

[¶7] The district court held a hearing on the motion on July 29, 2008. In an October 2008 order, the district court found the value of the parties' assets at the end of the marriage was $1,022,000, Gretchen Vann retained cash and property valued at $900,000, and James Vann received $122,000 of the marital estate. The district court concluded James Vann was not a victim of fraud, he was competent to enter into the property settlement agreement, and the agreement was not unconscionable.

[¶8] James Vann moved to amend the pleadings and for a new trial in November 2008. In his accompanying brief, he alleged the district court erroneously valued the parties' assets at the time of the divorce and requested the court to order Gretchen Vann to give him various personal property items. In December 2008, the district court denied James Vann's motion to amend the pleadings and for a new trial, concluding it had reviewed the findings of fact and the findings of fact accurately reflected the court's determination of the facts in the case.

[¶9] James Vann appeals, arguing the district court abused its discretion in denying his motion to vacate the judgment on the basis that the agreement was not unconscionable and, in the alternative, that the district court erred in not enforcing the property settlement agreement.

II.

[¶10] This Court reviews a district court's denial of a motion to vacate a judgment for an abuse of discretion. Krizan v. Krizan, 1998 ND 186, ¶ 13, 585 N.W.2d 576. "We do not determine whether the court was substantively correct in entering the judgment from which relief is sought, but determine only whether the court abused its discretion in ruling that sufficient grounds for disturbing the finality of the judgment were not established." Knutson v. Knutson, 2002 ND 29, ¶ 7, 639 N.W.2d 495. A district court abuses its discretion when it acts in an arbitrary, unconscionable, or unreasonable manner, or when its decision is not the product of a rational mental process leading to a reasoned determination. Id. Under N.D.R.Civ.P. 60(b)(iii), a district court may relieve a party from a final judgment for fraud, misrepresentation, or other misconduct of an adverse party. Under N.D.R.Civ.P. 60(b)(vi), a district court may relieve a party from a final judgment for any other reason justifying relief. "Rule 60(b) attempts to strike a proper balance between the conflicting principles that litigation must be brought to an end and that justice should be done, and, accordingly, the rule should be invoked only when extraordinary circumstances are present." Knutson, 2002 ND 29, ¶ 7, 639 N.W.2d 495.

[¶11] "If the judgment sought to be set aside is entered based on a stipulation of the parties, the party challenging the judgment has the additional burden of showing that under the law of contracts there is justification for setting aside the stipulation." Id. at ¶ 8. "A district court, in considering whether a settlement agreement between divorcing parties should be enforced, should make two inquiries: (1) whether the agreement is free from mistake, duress, menace, fraud, or undue influence; and (2) whether the agreement is unconscionable." Id. In a divorce, whether a property settlement agreement is unconscionable is a question of law, but "turns on factual findings related to the relative property values, the parties' financial circumstances, and their ongoing need." See Binek v. Binek, 2004 ND 5, ¶ 10, 673 N.W.2d 594. On appeal, findings of fact will not be reversed unless they are clearly erroneous. N.D.R.Civ.P. 52(a). "A finding of fact is clearly erroneous if it has no support in the evidence, or even if there is some supporting evidence, the reviewing court is left with a definite and firm conviction a mistake has been made, or the decision was induced by an erroneous view of the law." Weber v. Weber, 1999 ND 11, ¶ 8, 589 N.W.2d 358.

[¶12] A district court must equitably distribute the parties' property and debts when granting a divorce. N.D.C.C. § 14-05-24(1). We have encouraged parties to reach peaceful settlements of disputes in divorce matters because there is "strong public policy favoring prompt and peaceful resolution of divorce disputes." Knutson, 2002 ND 29, ¶ 8, 639 N.W.2d 495. A district court should generally accept property settlement agreements from competent parties who have voluntarily stipulated to the disposition of their marital property. Kramer v. Kramer, 2006 ND 64, ¶ 6, 711 N.W.2d 164. "District courts, however, should not blindly accept property settlement agreements." Id. at ¶ 7. "A district court's duty to make an equitable distribution of marital property under N.D.C.C. § 14-05-24 includes the authority to decide whether a settlement agreement was executed as a result of mistake, duress, menace, fraud, or undue influence under N.D.C.C. § 9-09-02(1)." Id.

III.

[¶13] On appeal, James Vann argues the district court abused its discretion by denying his motion to vacate the divorce judgment because the property settlement agreement was procedurally and substantively unconscionable.

[¶14] We explained unconscionable agreements in Eberle v. Eberle, 2009 ND 107, ¶ 18 (citations omitted):

An agreement is unconscionable if it is one no rational, undeluded person would make, and no honest and fair person would accept, or is blatantly one-sided and rankly unfair. Unconscionability is a doctrine by which courts may deny enforcement of a contract because of procedural abuses arising out of the contract formation, or because of substantive abuses relating to the terms of the contract. To determine a settlement agreement is unconscionable there must be some showing of both procedural and substantive unconscionability and courts must balance the various factors, viewed in totality, to make its determination. Procedural unconscionability focuses on the formation of the agreement and the fairness of the bargaining process. Substantive unconscionability focuses on the harshness or one-sidedness of the agreement's provisions.

[¶15] James Vann contends the agreement is procedurally unconscionable because it was drafted by Gretchen Vann's attorney, he was not represented by an attorney, he never read the agreement, and he was suffering from alcoholism, depression, and anxiety when he signed it. James Vann contends the agreement is substantively unconscionable because it is one-sided and consideration of the Ruff-Fischer guidelines establishes the agreement was unfair. Finally, James Vann argues the district court clearly erred in valuing the parties' assets, and the corrected valuation of the assets proves the property settlement agreement was unconscionable.

A.

[¶16] James Vann first argues the property settlement agreement was procedurally unconscionable because Gretchen Vann's attorney drafted the agreement and James Vann was not represented by an attorney. We have expressed that the involvement of only one attorney is troubling. Weber, 1999 ND 11, ¶ 18, 589 N.W.2d 358. However, that fact alone does not conclusively establish the parties' agreement was unconscionable. See Kramer, 2006 ND 64, ¶ 11, 711 N.W.2d 164. James Vann did not present any evidence that he was "prevented from or unable to secure ...


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