Opinion
NO. 2018-CA-001890-MR
01-10-2020
DANNY WAYNE BARTLETT APPELLANT v. LISA ANN BARTLETT APPELLEE
BRIEFS FOR APPELLANT: Frank A. Brancato Owensboro, Kentucky BRIEF FOR APPELLEE: Christopher G. Safreed Owensboro, Kentucky
NOT TO BE PUBLISHED APPEAL FROM DAVIESS CIRCUIT COURT
HONORABLE JULIA H. GORDON, JUDGE
ACTION NO. 16-CI-00555 OPINION
AFFIRMING
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BEFORE: ACREE, DIXON, AND JONES, JUDGES. JONES, JUDGE: Danny Wayne Bartlett ("Danny") appeals from the April 16, 2018 order of the Daviess Family Court awarding the Appellee, Lisa Ann Bartlett ("Lisa"), spousal maintenance of $300.00 per month for seven (7) years. Danny argues on appeal that the family court based its award on erroneous findings of fact with respect to the parties' incomes and expenses. According to Danny, the record establishes that Lisa can meet her reasonable needs with her current income and the marital property she received as part of the court's dissolution decree, making the family court's award of maintenance arbitrary, unreasonable, unfair and unsupported by sound legal principles. Lisa counters that the family court's findings of fact were correct, and any discrepancies in the court's determinations are not significant enough to overturn the maintenance award. Having reviewed the record in conjunction with all applicable legal authority, we must conclude that the family court did not abuse its discretion and AFFIRM.
I. FACTUAL AND PROCEDURAL BACKGROUND
Danny and Lisa were married on April 18, 1986. In May of 2016, after approximately thirty years of marriage, Danny filed a petition for dissolution with the Daviess Family Court. The parties' children were adults at the time the petition was filed making the division of property and maintenance the only disputed issues.
The family court conducted an evidentiary hearing on July 14, 2017, at which both parties appeared with their respective counsel and presented evidence. Lisa testified that she was currently living in a small, rental apartment with no garage or yard that cost her $580.00 per month. At the time of the hearing, she lacked the funds to purchase a home but indicated she might do so once the dissolution was final. In addition to this and other testimony presented at the hearing, the parties filed a list of monthly expenses using the AOC-238 form. Lisa estimated her monthly expenses to be $4,355.53; Danny estimated his monthly expenses to be $6,524.77. Relevant to this appeal, both parties claimed a monthly loan payment of $752.00 as one of their monthly expenses, which testimony revealed was for a 2016 Ford Explorer Lisa was driving.
On November 14, 2017, the family court entered an order captioned "Findings of Fact, Conclusions of Law, and a Decree of Dissolution of Marriage." The order divided the parties' property equally although both parties disputed the valuation of some of the assets. The marital property was assigned values provided by Danny and his expert witnesses with the exception of three (3) items of personal property - a Hustler Mower, a 2009 Polaris, and a 2011 Wildwood Camper, all assigned to Lisa at the higher value to which she ascribed them. In addition to these three items, Lisa was also awarded the 2016 Ford Explorer, any bank accounts in her own name, the funds in the parties' joint banking account, and her 401(k). At the time of the hearing, the parties owed approximately $35,389.77 toward a loan they took out to purchase the 2016 Ford Explorer. Danny was ordered to assume the parties' debt for the Ford Explorer.
Danny was awarded the remainder of the parties' property, which included the marital residence, shop, and acreage worth $220,000 against which there was a $65,530.00 mortgage; a business the parties started and owned, Bartlett Construction, Inc., along with all its assets and liabilities; various other items such as guns, equipment and vehicles; and his 401(k). To "fairly equalize the value of the properties and debts" awarded to the parties, the family court also ordered Danny to pay Lisa a one-time equalization payment of $71,916.77. The family court's order did not address Lisa's claim for maintenance. Instead of addressing that issue, the family court explicitly retained jurisdiction and indicated that it needed additional time to determine whether Lisa was entitled to any spousal maintenance and, if so, its amount and duration.
At the time of the hearing, Danny's 401(k) was estimated to be worth approximately $22,784.00 more than Lisa's 401(k). Lisa received an additional cash payment from Danny in the amount needed to equally divide the sum of their separate retirement accounts.
Approximately five months later, on April 16, 2018, the family court entered an order addressing Lisa's maintenance claim. Ultimately, the family court awarded Lisa $300.00 a month in spousal maintenance for seven (7) years. It cited the disparity in the parties' monthly incomes, the length of their marriage (over three decades), the considerable personal property awarded to Danny, including the marital residence and sole ownership of the family business, as well as the reasonableness of Lisa's monthly expenses as factors weighing in favor of its award.
The family court found Danny had a net monthly income of $5,581.00 from Bartlett Construction compared to Lisa's net monthly income of $3,365.22 from her job at Toyota. As explained in further detail below, the family court's finding with respect to Lisa's net monthly income was slightly inaccurate insomuch as it failed to account for the modest increase she would realize once she was no longer providing Danny with insurance through her employer.
Danny filed a timely motion to alter, amend or vacate the family court's maintenance order. Danny challenged the family court's determination on the following grounds: (1) the family court failed to take into account that the monthly net income figure Lisa submitted prior to the hearing was no longer accurate because it included a $65.55 debit for Danny's health insurance that ceased following entry of the dissolution decree; (2) the family court's maintenance order mistakenly miscalculated Lisa's actual income by not considering the possibility that Lisa could invest the lump sum equalization payment she received from Danny to generate additional income for herself; (3) the family court should not have determined that Lisa's monthly expenses were reasonable insomuch as they included the $752.00 monthly loan payment for the 2016 Ford Explorer, which Danny was ordered to assume as part of the dissolution; and (4) the family court did not consider Danny's expenses against his income when awarding maintenance.
In the family court's denial of Danny's motion, the court addressed each of his arguments in turn. The family court agreed with Danny that it failed to account for the $65.55 increase in Lisa's net monthly income that resulted from her no longer covering Danny under her insurance. Despite this acknowledgement, the family court declined to change its award. It explained that the difference was "not a significant enough change to alter [its] determination of maintenance using the statutory factors." The family court rejected Danny's claim regarding imputation of potential investment income from the lump sum equalization payment Lisa received. In so doing, the family court noted Danny had been awarded the marital residence and Lisa testified that she intended to use part of the money to purchase a home after the dissolution was final. Finally, the family court rejected Danny's argument that it reached a flawed conclusion regarding the reasonableness of Lisa's monthly expenses based on her inclusion of a debt that Danny was ordered to assume. The family court reiterated that it considered the appropriate factors as set out in KRS 402.200, including the parties' reasonable needs as established by the record, and awarded Lisa's maintenance based on its assessment.
Kentucky Revised Statute.
This appeal followed.
II. STANDARD OF REVIEW
When evaluating maintenance awards, the appellate court may not set aside the findings of the family court unless they are clearly erroneous. Age v. Age, 340 S.W.3d 88, 94-95 (Ky. App. 2011) (citing CR 52.01). Decisions regarding the division of marital property are within the sound discretion of the family court and will not be disturbed by a reviewing court except for an abuse of that discretion. Stipp v. St. Charles, 291 S.W.3d 720, 723 (Ky. App. 2009) (citing Neidlinger v. Neidlinger, 52 S.W.3d 513 (Ky. 2001)). The award of maintenance, including its amount and duration, is within that discretion. Weldon v. Weldon, 957 S.W.2d 283, 285 (Ky. App. 1997). A maintenance award may likewise be disturbed only for abuse of discretion or if the family court based its decision on clearly erroneous factual findings. Powell v. Powell, 107 S.W.3d 222, 224 (Ky. 2003). A family court is deemed to have abused its discretion if its decision is "arbitrary, unreasonable, unfair, or unsupported by sound legal principles." Artrip v. Noe, 311 S.W.3d 229, 232 (Ky. 2010).
Kentucky Rule of Civil Procedure.
III. ANALYSIS
On appeal, Danny alleges the following counts of error: (1) the family court errantly determined Lisa's net monthly income; (2) the family court abused its discretion when it refused to impute certain investment income to Lisa; (3) the family court errantly determined Lisa's expenses by failing to consider Lisa's overstated expenses and the assignment of the 2016 Ford Explorer debt to Danny; and (4) the family court failed to consider Danny's inability to pay for the ordered maintenance. We address each issue in turn.
The determination of maintenance involves a two-pronged analysis. First, the family court must decide whether the requesting spouse is even entitled to maintenance at all by examining that spouse's financial needs and resources. Wattenberger v. Wattenberger, 577 S.W.3d 786, 787 (Ky. App. 2019). Pursuant to KRS 403.200(1), the family court may award maintenance if it finds that the spouse seeking maintenance: (a) lacks sufficient property, including marital property apportioned to her, to provide for her reasonable needs; and (b) is unable to support herself through appropriate employment. McVicker v. McVicker, 461 S.W.3d 404, 420 (Ky. App. 2015).
If, based on those factors, an award of maintenance is justified, the family court must then decide the appropriate amount and duration of the award while considering all relevant factors, including:
(a) The financial resources of the party seeking maintenance, including marital property apportioned to him, and his ability to meet his needs independently, including the extent to which a provision for support of a child living with the party includes a sum for that party as custodian;KRS 403.200(2).
(b) The time necessary to acquire sufficient education or training to enable the party seeking maintenance to find appropriate employment;
(c) The standard of living established during the marriage;
(d) The duration of the marriage;
(e) The age, and the physical and emotional condition of the spouse seeking maintenance; and
(f) The ability of the spouse from whom maintenance is sought to meet his needs while meeting those of the spouse seeking maintenance.
A. Lisa's Post-Divorce Net Monthly Income
The Kentucky Supreme Court has previously noted that "common sense dictates that a court consider the parties' net income when determining whether or not the spouse seeking maintenance will be able to meet his or her needs, as well as the payor spouse's ability to continue meeting his or her own needs." Powell, 107 S.W.3d at 226. However, net income is not the only consideration for which the family court must account in its decision. The family court must also consider the other statutory factors provided in KRS 403.200 when determining spousal maintenance.
Prior to discontinuing Danny's insurance, Lisa's net monthly income was $3,365.22. Once Danny's insurance coverage was discontinued, Lisa's take-home income increased by $65.55, making her total net monthly income $3,430.77. Danny points out that this net income increase amounts to 20% of the maintenance he was ordered to pay. He asserts on appeal that the family court abused its discretion when it acknowledged that its original figure for Lisa's net monthly income was incorrect because it did not include the $65.55 savings, but then refused to alter the amount of maintenance it originally awarded to Lisa. Danny's argument seems to be that the family court was obligated to reduce Lisa's maintenance award by at least a corresponding amount after it recognized its initial error. In essence, Danny believes that the family court was bound to apply a mathematical formula to arrive at the correct maintenance amount.
This is not how Kentucky courts evaluate the propriety of the amount of a maintenance award. "[N]o particular formula has ever been held as the method for establishing maintenance." Age, 340 S.W.3d at 95. Instead, family courts are vested with very broad discretion in determining the appropriate amount of maintenance. "[T]he [family] court has dual responsibilities: one, to make relevant findings of fact; and two, to exercise its discretion in making a determination on maintenance in light of those facts." Perrine v. Christine, 833 S.W.2d 825, 826 (Ky. 1992). A family court abuses its discretion if it fails to properly evaluate the statutory factors or orders an amount that is manifestly unreasonable.
In this case, the family court was clear that it considered Lisa's actual net income, inclusive of the insurance savings, in combination with the statutory factors. After having done so, the family court determined that the change was de minimus. The family court cited the remaining and still significant discrepancy in the parties' monthly incomes, the parties' lengthy marriage, the property Danny was awarded, including the family home, and the parties' reasonable expenses and needs. After having considered these factors the family court concluded that the $65.55 monthly increase was not sufficient enough to warrant vacating and modifying its original maintenance award. It is clear from the family court's thorough calculations, in addition to its statutorily mandated considerations, that there was no abuse of discretion in the court's refusal to alter Lisa's maintenance based on the $65.55 increase in her net monthly income.
B. Imputation of Investment Income
Under Kentucky law, a family court may impute reasonable interest income to lump sum payments made to one spouse when determining maintenance; however, the court is not required to do so, especially when it appears that the money may be used for other purposes in the near future. See Powell, 107 S.W.3d at 225 (noting that appellant would be receiving no equity from the sale of the marital home and, therefore, a portion of her property settlement funds would likely be expended on acquiring a new residence); McGregor v. McGregor, 334 S.W.3d 113, 117 (Ky. App. 2011). There is no duty to invest all cash settlement proceeds in order to reduce the amount of spousal maintenance required for one's needs. Atwood v. Atwood, 643 S.W.2d 263, 265 (Ky. App. 1982).
Danny suggests that the family court errantly failed to consider any returns that could be derived from the investment of the $71,916.77 equalization payment to Lisa. Danny posits that "such a large amount of money should properly and minimally be invested, and even at the relatively modest rate of 5% return, something readily achievable, Lisa would earn interest income of $3,595.84 annually." Appellant's Br. at 9. Danny states that this interest income would raise Lisa's monthly net income to $3,730.77, yielding a $300.00 increase. However, Danny does not appear to have introduced competent evidence to support the argument that any investment of Lisa's equalization payment could and would generate such income. Even if he had, however, the family court was not required to impute investment income to Lisa.
Danny was certainly permitted to argue in favor of imputation, and the family court had the discretion to impute investment income if it determined that it was appropriate. The family court, however, was not bound to impute such income to Lisa, especially if the evidence indicated that the funds were likely to be needed to meet Lisa's reasonable needs. In deciding not to impute investment income to Lisa, the family court cited Lisa's testimony that the small apartment she was renting was not sufficient to meet her needs, and that she desired to purchase a home for herself when the dissolution was final. As the family court recognized, a portion of the settlement funds allotted to Lisa would very likely need to be expended by her to make a down payment on the purchase of a home. See Powell, 107 S.W.3d at 225. This was a reasonable conclusion based on the record and in light of the division of the marital assets. The family court did not abuse its discretion when it declined to impute investment income to Lisa.
Danny also posits that the family court failed to consider the value of the additional personal property awarded to Lisa as cash with investment potential. Danny refers to the Hustler Mower, 2009 Polaris, and 2011 Wildwood Camper, which, combined, Lisa valued at $35,380.00. When added to the money Lisa saves by discontinuing Danny's insurance, Danny suggests that the property will give Lisa a total of $40,886.20, vastly outweighing the maintenance total of $25,200.00. Danny believes income should be imputed to these items because Lisa could sell them to generate additional income that she could invest.
There is no authority that requires a party to sell items of personal property to generate additional income. Were that the case, equity would demand the family court to have also imputed to Danny the amount of investment income he would be able to generate from selling the property awarded to him, which was substantially more property than the court awarded to Lisa. Danny was awarded the marital home and all the equity that went along with it as well as numerous other items. Had the family court imputed investment income to those figures there would have been an even greater disparity in the parties' monthly net incomes. In sum, we cannot agree with Danny that the family court abused its discretion when it did not consider the investment returns Lisa could have realized had she sold the three items of personal property the family court awarded to her.
C. Lisa's Actual Expenses Against Her Income
Next, Danny argues that the family court's maintenance award was based on Lisa's proposed expenditures, which included the $752.00 car payment Danny was ordered to assume as part of the dissolution. He asserts that the maintenance award is untenable in light of this oversight. Lisa submitted her proposed expenses before the family court rendered its order dividing the parties' property and debts. In his motion to alter, amend or vacate, Danny pointed out to the family court that Lisa's expenses included the car payment. In response, the family court reiterated that it had considered the parties' reasonable expenses and resources.
The family court's maintenance order cited numerous times to the division of property it ordered in its earlier dissolution decree. Having examined the record, we are confident that the family court's maintenance award to Lisa properly accounted for the fact that Danny, not Lisa, had been ordered to assume the debt for the 2016 Ford Explorer. The maintenance award clearly demonstrates that the family court made its decision with careful consideration of the parties' actual expenses in light of its earlier property and debt allocations in the dissolution decree. It did not blindly rely on Lisa's proposed expenses. There was no abuse of discretion in this regard.
D. Danny's Ability to Afford the Maintenance Payment
Finally, Danny asserts that the family court failed to consider his expenses against his income in determining the appropriate amount of Lisa's maintenance award. The family court is obligated to consider the ability of the spouse from whom maintenance is sought to meet his own reasonable needs while meeting those of the spouse seeking maintenance. KRS 403.200(2)(f). However, this is not the only factor the family court is required to consider. That factor must be considered in combination with all the relevant factors set forth by KRS 403.200, including the age, condition, and financial resources of the spouse seeking maintenance, the duration of the marriage, and the standard of living established during the marriage. KRS 403.200. Moreover, the maintenance obligor's "reasonable needs" do not necessarily entitle him to maintain the same lifestyle enjoyed during the marriage while the other spouse is relegated to a lifestyle substantially below that standard. See Atwood, 643 S.W.2d at 266.
In Atwood v. Atwood, the appellate court held that a spouse is entitled to maintenance despite working capability and the potential to invest his or her marital property distribution. In that case, one spouse was living in an "insect-infested trailer" with a "low-paying job without a future, no training for meaningful employment, no maintenance, and minimal child support[,]" unable to meet her reasonable living expenses, while the other spouse walked away from their marriage "with a well-paying and secure job and half of the accumulated property after 21 years of marriage." Id. at 265-66. Prior to divorce, the parties had enjoyed a considerably higher standard of living, residing in a "large home located on 15 acres of property with a large swimming pool." Id. at 266. The court noted the evident unfairness of the situation and remanded the judgment for a maintenance determination to put the parties on more equal footing.
Lisa's circumstances are not dire. However, she is still living at a standard markedly below what she was accustomed to during marriage. Lisa received three pieces of equipment and a lump sum payment in the property settlement. Although she has gainful employment, Lisa is certainly not in the same position she was in during the parties' marriage. Conversely, Danny received the marital residence, complete ownership of the construction business, multiple vehicles and items of equipment, and most of the parties' personal property. Following their divorce, Danny's monthly income is over $2,000.00 more than Lisa's, even accounting for the money she saves on insurance. Due to the distribution of assets and Danny's income, Danny has substantially more financial resources at his disposal than Lisa, despite his projected negative income. Because of those resources and the assets allotted to him, Danny's lifestyle is much closer to that which he and Lisa shared while married.
Danny's monthly income is $5,581.00, whereas Lisa's monthly income is $3,430.77 when including her $65.55 insurance savings.
We acknowledge that Danny does have more expenses than Lisa at the present time. Danny projected a negative cash flow of $943.77 due to the home mortgage and vehicle payments, health insurance payments, loan payments for Lisa's lump sum award, and the $300.00 monthly maintenance obligation. However, Danny has full ownership of the marital residence and its considerable equity. Lisa's expenses are based on her living in a small apartment. She will need to use the equalization payment to purchase a home if she is to move from her small, rental apartment to a larger single-family home. Considering her income and her cash assets, it is entirely possible that she would not be able to purchase a home comparable to the former marital residence that was awarded to Danny. Danny's current living situation, a large home with a garage and workshop on several acres of land, results in him having a far larger monthly housing expense than Lisa. This fact alone, however, cannot be the sole determining factor in deciding the amount and duration of Lisa's maintenance. Both parties may have to make some adjustments to their living standards. The family court's award of $300.00 per month struck an appropriate balance such that neither party was left without adequate resources to meet his or her reasonable needs and expenses.
The award is not excessive, nor does it put Lisa at a great advantage over Danny. The award puts Lisa at just above meeting her expenses, even when accounting for the benefit of no longer having to pay for Danny's insurance. In light of the record, we cannot agree with Danny that the family court's award of maintenance to Lisa was an abuse of discretion. It is clear to us the family court carefully considered and weighed the evidence of both parties' assets and reasonable expenses when awarding maintenance. Its award strikes an appropriate balance that we will not disturb on appeal.
Even with the maintenance award, Lisa will still make almost $2,000.00 a month less than Danny. --------
IV. CONCLUSION
The family court carefully considered the required statutory factors and reached a decision within the court's statutory authority and discretion. Therefore, we affirm the judgment of the Daviess Family Court.
ALL CONCUR. BRIEFS FOR APPELLANT: Frank A. Brancato
Owensboro, Kentucky BRIEF FOR APPELLEE: Christopher G. Safreed
Owensboro, Kentucky