Adams v. Adams, 2016 ND 169

Background

John and Sandra Adams divorced; a 2014 amended supplemental judgment divided a complex marital estate and required the parties to equally share profits from jointly owned businesses for April 2, 2013–January 31, 2014.
The parties’ accountants disputed profit treatment of approximately $1.5 million of depreciation: John’s accountant deducted depreciation; Sandra’s accountant added it back as cash retained by John.
The district court used the figures that deducted depreciation and found combined net profits of about $1,134,000 (including January 2014), credited Sandra her share, and ordered her to reimburse John $342,191 for various payments he made on her behalf.
John had also paid $450,000 for Radisson Hotel renovations after the valuation date; the court ordered Sandra to reimburse half ($225,000), interpreting the judgment to allow adjustment for post-valuation payments.
The court ordered Sandra to pay half of the parties’ 2012 taxes based on a finding John paid them from personal funds; the record showed the taxes were paid from a joint account.
This appeal and cross-appeal challenge (1) whether depreciation should be added back when calculating profits, (2) whether profits from Jan–Mar 2013 were improperly included, (3) the Radisson reimbursement order, and (4) the 2012 tax allocation.

Issues

Issue	Plaintiff's Argument (Adams)	Defendant's Argument (Adams)	Held
Whether non‑cash depreciation/amortization must be added back when calculating business "profits" for division	John: Depreciation is a deductible expense; profits should follow tax/accounting net profit	Sandra: Depreciation represents cash retained by John; equity requires adding it back	Court: Profit calculation may deduct depreciation; district court’s use of figures excluding depreciation was supported by evidence and not clearly erroneous
Whether profits from Jan–Mar 2013 should be included in the April 2, 2013–Jan 31, 2014 sharing period	John: Used full 2013 profit figure (including Jan–Mar) in calculations	Sandra: Sharing period begins April 2, 2013; only Apr–Dec 2013 (plus Jan 2014) should count	Court: Reverse—profits for Jan–Mar 2013 improperly included; remand to use $785,603 for Apr 2–Dec 31, 2013
Whether Sandra must reimburse John half of $450,000 Radisson renovation payments made after valuation date	John: Payments benefited Radisson value; reimbursement appropriate despite award language	Sandra: Judgment awarded Radisson to Sandra "free and clear" and extinguished liability to reimburse	Court: Requiring reimbursement based on post‑judgment evidence was erroneous; reversal and remand for recalculation (paragraph 16 remains final and bars such reimbursement)
Whether Sandra must pay half of 2012 taxes John paid	John: He paid 2012 taxes from personal funds and is entitled to reimbursement	Sandra: Taxes were paid from joint account to which she had access; she already effectively paid half	Court: Finding John paid from personal funds was clearly erroneous; taxes paid from joint account; reverse and remand for recalculation

Key Cases Cited

Adams v. Adams, 2015 ND 112 (North Dakota Supreme Court prior affirmance of the amended supplemental judgment)
Mertz v. Mertz, 2015 ND 13 (district court valuations within evidentiary range are not reversed absent firm conviction of error)
Gabaldon-Cochran v. Cochran, 2015 ND 214 (standard for clearly erroneous factual findings)
Keller v. Bolding, 2004 ND 80 (treating damages/lost profits determinations as findings of fact)
Investors Title Ins. Co. v. Herzig, 2013 ND 13 (law‑of‑the‑case doctrine requires following prior appellate mandate)
In re Estate of Cashmore, 2013 ND 150 (effect of affirmance leaves judgment as if no appeal taken)
Larson v. Larson, 1998 ND 156 (proper procedure to reopen record or present additional evidence after trial)
Grinaker v. Grinaker, 553 N.W.2d 204 (motion to reopen to present additional evidence after hearing)