Opinion
NO. 2014-CA-001369-MR
05-27-2016
DAVID R. BAUERS APPELLANT v. TERESA GILBERT BAUERS APPELLEE
BRIEF FOR APPELLANT: Reid Glass Grayson, Kentucky BRIEF FOR APPELLEE: Robert W. Miller Grayson, Kentucky
NOT TO BE PUBLISHED APPEAL FROM CARTER CIRCUIT COURT
HONORABLE DAVID D. FLATT, JUDGE
ACTION NO. 12-CI-00362 OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE: DIXON, NICKELL, AND VANMETER, JUDGES. NICKELL, JUDGE: David R. Bauers appeals from a judgment entered by the Carter Circuit Court, Family Court Division, on July 3, 2014, dissolving his marriage of nearly 30 years to Teresa Gilbert Bauers, as well as an order entered August 19, 2014, overruling his motion for a new trial coupled with a motion to alter, amend or vacate the previously entered judgment. On appeal, he argues the trial court failed to make required statutory findings, abused its discretion in awarding permanent maintenance to Teresa, and erred in characterizing as marital debt a $20,000 investment by the couple's adult daughter in a tract of land owned by the couple. Having reviewed the briefs, the law and the record, we reverse and remand.
FACTS
After 27 years of marriage, David and Teresa separated. Two months later, Teresa petitioned for dissolution. During their union, both David and Teresa had worked outside the home—he for the Carter County Road Department earning about $32,000 each year and she at a sewing factory earning about $29,000 per year. The couple also earned around $20,000 a year from raising 35 to 52 head of cattle on their homestead.
Three tracts of land were acquired during the marriage. Tract #1 (homestead) was a 93-acre parcel valued at $152,000 containing the mortgage-free marital residence, a barn and pasture land for the cattle operation. Adjoining the homestead was Tract #2 comprised of eight acres and a dilapidated home. The couple's adult daughter—Timber—restored the structure using $20,000 of her own money and family labor to create a home in which she now lives with her family. Borrowing $35,000 from David's father—Harold Bauers—the couple purchased Tract #3 for $65,000. That parcel contains three and one-half acres, appraised at just $44,000, and is located about eight miles away from the homestead. When the couple separated, David had repaid his father only $1,000 of Tract #3's purchase price. For David, Tract #3 had sentimental value since he began clearing it while in high school. The couple paid more for Tract #3 than its appraised value because David "wanted that piece of property all my life." The only debts claimed by the couple were the $20,000 owed to Timber and the $34,000 owed to Harold.
Trial was scheduled for May 29, 2014. On the eve of trial, Teresa moved the court for leave to amend her petition to seek maintenance. The factory where she had worked had closed, she had been laid off and she was drawing $307.50 in weekly unemployment benefits. Leave to amend the petition was granted.
Teresa testified first at trial. She stated she and David married in June of 1985 and separated in July of 2012; she had lived in the marital home nearly 29 years; and during their two-year separation, David had contributed nothing to the household or upkeep of the homestead. Teresa testified she worked the land and doctored the cattle just like David did; she can operate a tractor; she has run the bush hog; she has cut wood with a chainsaw; she has attended the cattle market; and, she has raised and fed the cattle. She mentioned handwritten anniversary cards David had given her saying he could not have run the farm without her. David's father echoed Teresa's testimony stating she can handle a tractor and is an experienced cattle farmer.
At 50 years of age and having a high school diploma, Teresa testified her only income was unemployment, and when that ends in 14 weeks she would have no income. She has no pension or retirement account, but she does have a $3,000 IRA account—both Teresa and David had started accounts with $1,000 but neither added any money, meaning the $2,000 increase was the result of accrued interest. Teresa stated she has no independent access to health insurance and was currently covered by David's policy as a county employee at an additional cost.
Since separating from David in 2012, Teresa had paid her own utility bills, truck payments, and homeowner's insurance. She had also bought her own fuel for vehicles. Satellite television service was discontinued because she could no longer afford it, and David switched the telephone.
She testified her monthly expenditures included about $300 for food and home supplies, $100 for clothing and $50 for medication. She asked for maintenance of $500 per month until she finds work.
David was called as a witness in Teresa's case. David, who was 49 years of age, estimated his weekly expenses were about $50 for lunch and breakfast, $100 for other food, and $75 for fuel. He said he currently pays about $100 each month for utilities and he pays truck insurance. He agreed Timber and her family had invested $20,000 in the house renovation and confirmed he did not pay any property tax during the prior year. He also stated he had sold about 1,000 bales of hay in 2014 earning $2,400, none of which he shared with Teresa.
At the close of all the proof the trial court gave both parties two weeks to submit proposed orders and decrees after which the matter would stand submitted. Teresa tendered a proposed judgment; David did not. Much of Teresa's proposed language appeared in the judgment entered July 3, 2014, but her proposal was not adopted verbatim. For example, she sought $500 in monthly maintenance, but only $250 per month was awarded. Additionally, Teresa figured David had dissipated $22,800 in marital assets, but the court found he had dissipated only $6,800.
Among its factual findings, the trial court wrote, "both parties agreed that [Timber] should receive, and recover her $20,000 investment [in the home on Tract #2]" and Harold Bauers should be reimbursed the $34,000 he lent the couple to purchase Tract #3. David left the marital home and farm when the couple separated and during the ensuing two years had contributed nothing to the property's upkeep and maintenance—both of which were born entirely by Teresa. David testified the couple paid $11,000 more than the appraised value of Tract #3 because it had sentimental value to him and he had "wanted that piece of property all my life." By awarding Tract #1 with its value of $152,000 to Teresa, the court deemed it more likely the debts to Timber and Harold would be repaid. Teresa has no retirement or pension account of her own; as a county employee, David has both and all such funds were accumulated during the marriage. The parties have a joint bank account containing $45,628.42, and an additional $13,200 in stored hay. David dissipated $6,800 in marital funds for the benefit of girlfriends, requiring him to repay Teresa $3,400.
The court then found during the marriage the couple "maintained and enjoyed a very comfortable lifestyle[.]" On Teresa's request for maintenance, the court stated:
[Teresa] will not be able to support herself in the manner to which she enjoyed during the marriage, and the manner to which she is accustomed, based upon the income that she may be able to acquire, as she has lost her job at the sewing factory, and is currently drawing unemployment, and considering that [Teresa] can likely only return to employment of similar nature, based upon her age and education. Therefore, [Teresa] cannot support herself in the manner to which the parties enjoyed during the marriage, and to which she is accustomed based solely upon her income, and the distribution of property obtained during the marriage. [Teresa] has no other income or property, other than that aforesaid. Therefore, [Teresa] is entitled to receive maintenance from [David].
In its legal conclusions, the trial court awarded David Tract #2 (valued at $51,600) and Tract #3 (valued at $44,000). Tract #1 (valued at $152,000) was awarded to Teresa and she was ordered to pay Timber "$20,000 for her contribution to tract 2, and shall also be required to pay her father-in-law, Harold Bauers, the sum of $34,000.00 for his contribution to tract 3." Thus, the property distribution was nearly equal, once Teresa paid the two outstanding debts.
In evaluating the division of assets, we did not obtain the same mathematical result reflected in the judgment. This discrepancy was not mentioned by either party. On remand, the trial court is urged to check its computations regarding equalization of the award of the three tracts of property.
On July 14, 2014, David filed a motion for a new trial, coupled with a motion to alter, amend or vacate the judgment entered on July 3, 2014. The motion emphasized perceived inequities in items awarded to Teresa and those awarded to him. Of relevance to this appeal, he claimed the $20,000 Timber spent restoring the home on Tract #2 was not a marital debt and should not have been deducted from Teresa's equity in Tract #1, especially since it is unlikely Timber or Harold will demand repayment of either debt. Furthermore, awarding Teresa permanent maintenance was unwarranted since Teresa had received the 93-acre farm which had income-earning potential, she is in good health, she received cash, she asked only for temporary maintenance, and she will probably secure a new job. Not mentioned in the motion is any claim the trial court failed to apply KRS 403.200(1)(a) which requires a party to be found to lack "sufficient property, including marital property apportioned to [her], to provide for [her] reasonable needs" before maintenance is awarded.
Kentucky Revised Statutes.
Teresa responded to the motion stating a full evidentiary hearing had occurred during which all parties had the opportunity to present evidence, testimony and exhibits. She noted both David and Teresa had testified at trial $20,000 was owed to Timber and $34,000 was owed to Harold, and afterwards, the court had devised a plan by which both parties received an even distribution of marital assets.
On July 23, 2014, the trial court denied the motion for a new trial and the motion to alter, amend or vacate the judgment without explanation. On August 19, 2014, new counsel entered an appearance on David's behalf and filed a notice of appeal. David now challenges the division of the marital assets in the judgment and denial of the motions for new trial and to alter, amend or vacate the prior judgment. For reasons that follow, we reverse and remand for further findings.
ANALYSIS
David's first of four arguments is the trial court awarded maintenance without making a critical finding required by KRS 403.200(1). David is correct. The trial court awarded maintenance to Teresa without finding she lacked sufficient property to meet her "reasonable needs" as required by KRS 403.200(1)(a). David failed to point out this shortcoming to the trial court when it could have been corrected. However, we cannot ignore the trial court's failure to make the statutorily required finding.
"[A] proper construction of KRS 403.200(1) is that maintenance may be awarded only after a finding that the spouse seeking maintenance (a) lacks sufficient property, including marital property apportioned to him, to provide for his reasonable needs; and (b) is unable to support himself through appropriate employment according to the standard of living established during the marriage." Casper v. Casper, 510 S.W.2d 253, 255 (Ky. 1974). Here, the trial court focused entirely on preserving the standard of living enjoyed by the couple during the marriage to the exclusion of whether Teresa could satisfy her "reasonable needs" with the property she had and that she was awarded by the judgment. In other words, the trial court addressed the amount and duration of maintenance, without first determining an award of maintenance was appropriate. Until the trial court finds Teresa lacks "sufficient property, including marital property apportioned to [her], to provide for [her] reasonable needs[,]" an appellate court cannot consider whether the terms of the maintenance award are justified.
While it may appear to be a foregone conclusion that an award of maintenance presupposes a finding of inability to meet one's reasonable needs, that is not the case. A couple may have enjoyed a fabulous lifestyle during the marriage that far exceeded their reasonable needs. Thus, the trial court must make two separate findings to satisfy KRS 403.200(1). Casper. The trial court having made only one of the required findings, reversal and remand for further findings is necessary.
The only issue unaffected by reversal and remand is the trial court's characterization as marital debt of $20,000 in improvements Timber made to the home on Tract #2. Whether property or debt is marital is left to the trial court's discretion, and will be reversed only upon a finding of an abuse of that discretion. Rice v. Rice, 336 S.W.3d 66, 68 (Ky. 2011). Under KRS 403.190, property acquired during the marriage is presumed to be marital property. There is no dispute Tract #2 was acquired during the marriage; nor is there any dispute Timber paid for $20,000 in improvements to the home that sits on Tract #2. The only question is whether Timber should recoup her investment.
David raised the question in his combined motion for new trial and motion to alter, amend or vacate in which he wrote:
both parties agreed that their daughter had put approximately $20,000.00 into a piece of property [Tract 2]. This is not a marital debt, and therefore should not be deducted from [Teresa's] equity in the farm [Tract 1], for which she is given credit. Moreover, since [Tract 2] is now occupied by [Timber] as a practical matter, neither party testified that they were going to make her vacate,
thereby rendering the assignment of this property to [David] virtually of no value.David cited no legal authority for his position in the motion he filed in the trial court, nor did he cite any authority to us on appeal. After listening to the proof, we discern no abuse of discretion and therefore, no basis for reversal. Of particular interest to us is that during the midst of David's testimony, the trial court summarized its understanding of the proof and no one objected when he deducted $20,000 from the value of Tract #2 in recognition of Timber's contribution.
Timber's restoration increased the value of Tract #2—transforming a structure Teresa testified should have been torn down—into a habitable home for four. While David suggests he will not evict Timber and her family, he can charge her rent to create a revenue stream. We see no error in the trial court's handling of this asset and therefore affirm the judgment on this issue.
WHEREFORE, the appeal is reversed and remanded for further findings as required by KRS 403.200(1)(a). Finally, that portion of the appeal challenging characterization of a $20,000 investment by Timber in Tract #2 as a marital debt to be repaid by Teresa is affirmed.
DIXON, JUDGE, CONCURS.
VANMETER, JUDGE, DISSENTS AND FILES SEPARATE OPINION: VANMETER, JUDGE, DISSENTING. I respectfully dissent. David Bauers' argument regarding maintenance was inadequately preserved. Under the facts of the case, he is not entitled to palpable error review.
In Commonwealth v. Jones, 283 S.W.3d 665 (Ky. 2009), the Kentucky Supreme Court discussed the palpable error rule of RCr 10.26, and stated
Kentucky Rules of Criminal Procedure.
an unpreserved error may be noticed on appeal only if the error is "palpable" and "affects the substantial rights of a party," and even then relief is appropriate only "upon a determination that manifest injustice has resulted from the error." An error is "palpable," we have explained, only if it is clear or plain under current law, Brewer v. Commonwealth, 206 S.W.3d 343 (Ky.2006), and in general a palpable error "affects the substantial rights of a party" only if "it is more likely than ordinary error to have affected the judgment." Ernst v. Commonwealth, 160 S.W.3d 744, 762 (Ky.2005). But see United States v. Olano, 507 U.S. at 735, 113 S.Ct. 1770 (discussing the federal "plain error" standard and noting, without deciding, that there may be forfeited errors so fundamental that they "can be corrected regardless of their effect on the outcome."). An unpreserved error that is both palpable and prejudicial still does not justify relief unless the reviewing court further determines that it has resulted in a manifest injustice, unless, in other words, the error so seriously affected the fairness, integrity, or public reputation of the proceeding as to be "shocking or jurisprudentially intolerable." Martin v. Commonwealth, 207 S.W.3d 1, 4 (Ky.2006).283 S.W.3d at 668. I recognize that Jones involved an interpretation of palpable error under the criminal rules, but the language in CR 61.02 is identical, so no good reason seems to exist for not applying cases involving RCr 10.26.
Kentucky Rules of Civil Procedure. --------
Under the clear holding of Jones, palpable error relief is not available unless three conditions are present. The error must have (1) been clear or plain under existing law, (2) been more likely than ordinary error to have affected the judgment, and (3) so seriously affected the fairness, integrity or public reputation of the proceeding to have been jurisdictionally intolerable. In this case, the trial court's ruling granting Teresa Bauers maintenance did not clearly fail to address the statutory standard for granting maintenance. I therefore submit that it was not a clear or plain error. Furthermore, the result, maintenance of $250 per month, is not jurisdictionally intolerable. I would affirm the trial court in all respects. BRIEF FOR APPELLANT: Reid Glass
Grayson, Kentucky BRIEF FOR APPELLEE: Robert W. Miller
Grayson, Kentucky