Opinion
No. COA12–1525.
2013-06-18
Barry Hoyt BODIE, Plaintiff–Appellant, v. Claire Voegler BODIE, Defendant–Appellee.
Roberts & Stevens, P.A., by Phillip T. Jackson, for Plaintiff–Appellant. Donald H. Barton, P.C., by Donald H. Barton, for Defendant–Appellee.
Appeal by Plaintiff from order entered 23 August 2012 by Judge Mack Brittain in District Court, Transylvania County. Heard in the Court of Appeals 7 May 2013. Roberts & Stevens, P.A., by Phillip T. Jackson, for Plaintiff–Appellant. Donald H. Barton, P.C., by Donald H. Barton, for Defendant–Appellee.
McGEE, Judge.
This is the third appeal in the equitable distribution action between Barry Hoyt Bodie (Plaintiff) and Claire Voegler Bodie (Defendant). This Court dismissed the first appeal as interlocutory. Bodie v. Bodie, 208 N.C.App. 281, 702 S.E.2d 556 (2010) (COA10–145) (unpublished) ( Bodie I ). On the second appeal, this Court remanded for the trial court to make additional findings of fact and any “conclusions of law and adjustments to [the] distributional decision necessitated by these additional findings of fact.” Bodie v. Bodie, ––– N.C.App. ––––, ––––, 727 S.E.2d 11, 21 (2012) ( Bodie II ). The trial court thereafter entered an order.
In the order reviewed in Bodie II (first order), the trial court ordered, inter alia, that Plaintiff pay Defendant $100,000 .00 as a distributive award. In the order Plaintiff presently appeals (second order), the trial court made additional findings of fact and noted that the first order “remains in full force and effect except as expressly amended below.”
I. Net Value of the Distributable Estate
Plaintiff argues the trial court erred in awarding more than 100 per cent of the net marital estate to Defendant.
Equitable distribution is governed by N.C. Gen.Stat. § 50–20, “which requires the trial court to conduct a three-step process: (1) classify property as being marital, divisible, or separate property; (2) calculate the net value of the marital and divisible property; and (3) distribute equitably the marital and divisible property.” Brackney v. Brackney, 199 N.C.App. 375, 381, 682 S .E.2d 401, 405 (2009).
Plaintiff contends that the trial court “found the net DOS [date of separation] value of the marital estate to be $79,525.60[.]” However, the net value of the marital property and the net value of the divisible property (together, the distributable property) cannot be determined from these two orders, as discussed below.
II. Failure to Follow Instructions
Plaintiff argues the trial court erred by failing to follow instructions of this Court from Bodie II.
A. Passive Appreciation of 401(k) Account
Plaintiff contends the trial court erred by failing to find the value of the passive appreciation of Plaintiff's 401(k) account. We must agree.
This Court remanded with instructions to make additional findings of fact which “classify, value, and distribute the passive increase in the value of Plaintiff's 401(k) account after the date of separation[.]” Bodie II, –––N.C.App. at ––––, 727 S.E.2d at 17. The trial court must “make a finding as to the value of all marital [and divisible] property.” Bodie II, ––– N.C.App. at ––––, 727 S.E.2d at 15 (alterations in original).
The trial court did find that:
[A]ll of the appreciation to the account after the DOS was passive in nature and was, therefore, divisible property. The Court finds this divisible property was utilized for both marital and separate debts. The Court orders that the divisible portion of the 401(k) [account] that was not utilized for the satisfaction of marital debt has been and is hereby distributed to [Plaintiff].
The trial court made no finding of the value of the appreciation of the 401(k) account. Without the value of the appreciation and the value of marital debts paid with funds from the appreciation ( see Sections II.D.ii and v, infra ), a reviewing court cannot determine the net value of the divisible property. Without the net value of the divisible property, a reviewing court cannot determine whether the distribution is equitable.
The trial court erred in failing to find the value of the appreciation to Plaintiff's 401(k) account. We must remand for the trial court to find the value of the appreciation of Plaintiff's 401(k) account. The trial court shall adjust its distributional decision accordingly.
Plaintiff also makes an unsupported argument that the failure to value the appreciation “led the trial court to erroneously conclude that all of this un-valued appreciation was passive and therefore divisible property.” The value of property does not determine its classification. The trial court did not err in classifying the property.
B. Expenditures from 401(k) Account
Plaintiff next contends the trial court erred by failing to classify, value, and distribute each of Plaintiff's expenditures from the 401(k) account.
This Court remanded with instructions to make findings of “the classification, value, and distribution of the expenditures that Plaintiff made from the funds contained in his 401(k) account, including the extent to which and purposes for which he spent the passive appreciation of the 401(k) account between the date of separation and the date of distribution[.]” Bodie II, ––– N.C.App. at ––––, 727 S.E.2d at 21.
Without argument, Plaintiff states that the trial court “made no effort to itemize the expenditures and certainly did not in either a specific or general way value, classify or distribute the expenditures.” This Court did not instruct the trial court to individually classify, value, and distribute each of the expenditures from the 401(k) account. Insofar as the trial court failed to produce an itemized list of expenditures, the trial court did not err.
C. Post–Separation Payments on Marital Debt
Plaintiff next contends the trial court erred by failing to classify, value, and distribute Plaintiff's post-separation payments on marital debt.
This Court remanded with instructions to make findings regarding “the classification, value, and distribution of Plaintiff's post-separation payments on marital debt, including the extent to which these payments were made with marital or separate funds[.]” Bodie II, ––– N.C.App. at ––––, 727 S.E.2d at 21.
The trial court found:
[A]ll marital debt satisfied by [Plaintiff] after the DOS came from the marital component of [Plaintiff's] 401(k) funds. [Plaintiff] did not present sufficient evidence for the Court to find that [Plaintiff] utilized separate funds to satisfy marital debt. If [Plaintiff] did utilize separate funds to satisfy marital debt, then the Court finds that it is equitable that those marital debts be distributed to [Plaintiff].
The trial court found that Plaintiff made the payments with marital funds and then made a conditional statement regarding the possibility that Plaintiff used separate funds to make the payments. This finding does not indicate that the trial court made a definitive finding as to the nature of the funds Plaintiff used to make post-separation payments on marital debt. We must remand for the trial court to make such a finding.
D. Specific Items of Debt
Plaintiff next contends the trial court erred by failing to classify, value, and distribute certain items of debt. In Bodie II, this Court remanded for “appropriate findings addressing” the following debts:
(1) “the personal guarantee that [Plaintiff] made in connection with a loan incurred by Western Carolina Urology”
(2) a 2004 loan from the 401(k) account
(3) “the obligation to repay a loan that Plaintiff received from Western Carolina Urology”
(4) “the second mortgage on the Soquilli property”
(5) “some portion” of the 2005 tax obligation
(6) “a loan that Plaintiff made from his 401(k) account in 2007 [that] was utilized to pay the arrearage on an obligation which encumbered the parties' marital residences.”
Bodie II, ––– N.C.App. at ––––, 727 S.E.2d at 18–19.
i. First Debt
As to the first debt, the trial court found:
[T]he DOS marital portion of debt of Western Carolina Urological, as guaranteed by [Plaintiff], was $261,000. $65,000 of this debt was “forgiven” by Transylvania Regional Hospital when the hospital acquired Western Carolina Urological. No evidence was presented satisfying the Court that [Plaintiff] did or exchanged anything to obtain the forgiveness of $65,000 of the debt. The Court finds it equitable that the balance of the marital portion of this debt be distributed to [Plaintiff].
Plaintiff makes a conditional argument based on how this Court interprets the order. The finding indicates a DOS value of $261,000 .00 of marital debt. Plaintiff's brief provides no argument as to this interpretation.
ii. Second Debt
As to the second debt, the trial court found:
The loan obtained from [Plaintiff's] 401(k) account in 2004 was a marital debt. To the extent that the loan had not been repaid on the DOS, the Court distributes the debt to [Plaintiff].
Plaintiff argues the trial court erred in failing to value this debt. The trial court made no finding of the value of the 2004 loan. Without the value of this loan, a reviewing court cannot determine the net value of the marital property. Without the net value of the marital property, a reviewing court cannot determine whether the distribution was equitable. We must remand for the trial court to find the value of the 2004 loan. The trial court shall adjust its distributional decision accordingly.
iii. Third Debt
As to the third debt, Plaintiff argues “the trial court erred by failing to address the financial consequences of the forgiveness of that item of debt [.]” This Court did not instruct the trial court to “address the financial consequences of the forgiveness” of that debt. The trial court found that $65,000.00 of the $261,000.00 marital debt to Western Carolina Urological “was ‘forgiven’ by Transylvania Regional Hospital when the hospital acquired Western Carolina Urological. No evidence was presented satisfying the Court that [Plaintiff] did or exchanged anything to obtain the forgiveness of $65,000 of the debt.” Plaintiff does not show error here.
iv. Fourth Debt
As to the fourth debt, the trial court found:
[Plaintiff] failed to present sufficient evidence that any of the proceeds from the second mortgage on the Soquilli house were used to satisfy anything other than his separate expenses. This expense is, therefore, a separate expense of [Plaintiff] and not subject to this action.
Plaintiff argues the trial court erred in classifying the debt as separate. The “findings of fact are conclusive if they are supported by any competent evidence from the record.” Robinson v.. Robinson, 210 N.C.App. 319, 322, 707 S.E.2d 785, 789 (2011). Defendant cites no evidence in the record supporting this finding of fact, and our review reveals none. We must conclude the trial court erred in making this classification. We remand for the trial court to classify this mortgage as marital debt, find the value of the mortgage, and adjust the distributional decision.
v. Fifth Debt
As to the fifth debt, the trial court found:
The 2005 income tax obligation was a marital debt. Neither party presented sufficient evidence that either party utilized separate funds to satisfy this debt. The Court finds that [Plaintiff] utilized marital funds to satisfy this marital debt after the DOS.
Plaintiff argues the trial court erred in failing to value this debt. The trial court made no finding as to the value of the 2005 tax obligation. Without the value of this debt, a reviewing court cannot determine the net value of the marital property. Without the net value of the marital property, a reviewing court cannot determine whether the distribution is equitable. We must remand for the trial court to find the value of the 2005 debt. The trial court may adjust its distributional decision accordingly.
vi. Sixth Debt
As to the sixth debt, the trial court found:
[Plaintiff] failed to provide sufficient evidence that any of the 2007 loan from [Plaintiff's] 401(k) was utilized for anything other than his separate expenses. Therefore, the 2007 loan is [Plaintiff's] separate debt and not subject to this action.
Plaintiff argues the trial court “erred in not finding that this debt was incurred for the purpose of satisfying marital debt.” Even if this debt were incurred to satisfy marital debt, Plaintiff does not explain how this undermines the finding that the loan was used for Plaintiff's separate expenses. Plaintiff does not show error here.
III. Classification of Appreciation to 401(k) Account
Plaintiff argues the trial court erred in classifying as divisible the appreciation of the 401(k) account. Plaintiff concedes he cannot establish why the classification is incorrect without a finding as to value. Because we remand for the trial court to find the value of the appreciation of the 401(k) account ( see Section II.A), we do not reach this argument.
IV. Source of $216,000.00 Post–DOS Marital Debt Payments
Plaintiff argues the trial court erred in determining that the $216,000.00 in post-DOS marital debt payments came from marital property. As discussed in Sections II.D.ii and v, a reviewing court cannot determine the net value of the marital property. Therefore, we do not reach this argument.
V. Distributing Post–DOS Payments
Plaintiff's final argument is that the trial court “erred in failing to distribute the $216,000.00 in post-DOS [marital] debt payments made by [Plaintiff].”
The trial court distributes the net value of marital property and net value of divisible property. N.C.G.S. § 50–20(c). If the payments were classified divisible property (because the payments decreased marital debt), and if Plaintiff used marital funds for the payments, the payments would cancel out. The increase in divisible property would correspond to an equal decrease in marital property. However, as previously discussed, we do not reach this argument because there is no finding of the net value of the marital property.
VI. Remand Instructions
On remand, the trial court is to find:
(1) the value of the appreciation of the 401(k) account;
(2) whether the funds Plaintiff used to make post-separation payments on marital debts came from marital or separate property;
(3) the value of the 2004 loan; and
(4–) the value of the 2005 tax obligation.
Without these values, a reviewing court cannot determine the net value of the divisible property or the net value of the marital property. Without the net values, a reviewing court cannot determine whether the distribution is equitable. After making the above findings, the trial court shall adjust its distributional decision accordingly.
On remand, the trial court is also to:
(1) classify the second mortgage on the Soquilli house as marital debt;
(2) find the value of that mortgage, and
(3) adjust the distributional decision accordingly.
Affirmed in part, reversed and remanded in part. Judges STEVENS and HUNTER, JR. concur.
Report per Rule 30(e).