Richarz v. Richarz
2017 SD 70
| S.D. | 2017Background
- Adam and Dena Richarz married in 2007 and divorced in 2016; primary disputes on appeal concerned valuation/division of Adam’s interest in a family LLC (real-estate-based) and allocation of Dena’s student-loan debt.
- Adam had contributed $50,000 to Richarz Properties, LLC pre-marriage and ultimately held a 48.63% interest after transferring ~2% to his father; the LLC owned two parcels (Lauck and Farrell).
- Dena accumulated $397,822 in student-loan debt during the marriage while attending veterinary school overseas; she testified the degree was intended to benefit the family farm.
- Competing valuations: Adam’s experts valued the Farrell land and Adam’s LLC interest substantially lower; Dena’s experts (adopted by the court) produced higher valuations, valuing Adam’s LLC interest at $595,000 (less Adam’s $50,000 premarital contribution).
- The circuit court classified Adam’s LLC interest as marital, awarded Adam the LLC interest (net $545,211 total to him), ordered Adam to pay a cash-equalization payment (reduced to $303,000 by agreement) and allocated 25% of Dena’s student loans to Adam (effectively only ~7.7% after the cash adjustment).
- Adam appealed valuation, discounting, equal division, and student-loan allocation; the Supreme Court of South Dakota affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Valuation of Farrell land | Adam: court erred in adopting Dena’s appraiser; valuation speculative and ignored commodity-price declines | Dena: her expert’s comparable-sales analysis and recent local sale supported higher per-acre value | Court: affirmed adoption of Dena’s expert; valuation within range of evidence |
| Discounts on LLC interest (minority/marketability) | Adam: court should apply lack-of-control and lack-of-marketability discounts | Dena: discounts inappropriate because Adam functionally controlled/managed LLC and sale unlikely | Court: no discounts; Adam effectively managed LLC and discount would unfairly undervalue Dena’s share |
| Division of marital property (one-half award) | Adam: abuse of discretion; contends farm-operation label and contribution findings erroneous | Dena: equitable division justified by parties’ circumstances and her contributions/expectations to benefit farm | Court: no abuse of discretion; court properly considered factors and equities |
| Allocation of student-loan debt | Adam: loans not for family purposes; should bear none because only Dena benefits from degree | Dena: debt largely marital by agreement/expectation the degree would benefit family farm | Court: affirmed allocation of a small portion to Adam (25% nominally, effectively ~7.7% after cash adjustment); within court’s equitable discretion |
Key Cases Cited
- Hill v. Hill, 763 N.W.2d 818 (S.D. 2009) (valuation and allocation of debt in divorce governed by equitable division principles)
- Christians v. Christians, 637 N.W.2d 377 (S.D. 2001) (trial-court valuation will be upheld if within range of evidence)
- Priebe v. Priebe, 556 N.W.2d 78 (S.D. 1996) (minority/marketability discounts are fact-dependent and for trial courts to determine)
- Fausch v. Fausch, 697 N.W.2d 748 (S.D. 2005) (trial court decides fairness of applying discounts where no immediate sale is contemplated)
- Wehrkamp v. Wehrkamp, 357 N.W.2d 264 (S.D. 1984) (educational degree is not divisible property though related debt may be allocated)
- Johnson v. Johnson, 734 N.W.2d 801 (S.D. 2007) (standard of review: appellate review for abuse of discretion in property division)