Opinion
No. COA12–956.
2013-06-18
Dorothy ALLEN, Plaintiff, v. Wayne ALLEN, Defendant.
William Trippe Mckeny, for plaintiff-appellee. James P. Hoffman, Jr., for defendant-appellant.
Appeal by defendant from order entered 9 February 2012 by Judge William Kluttz in Rowan County District Court. Heard in the Court of Appeals 30 January 2013. William Trippe Mckeny, for plaintiff-appellee. James P. Hoffman, Jr., for defendant-appellant.
BRYANT, Judge.
Where the findings of fact were sufficient to support a conclusion that debt incurred during the marriage was not for the benefit of the marriage and thus, not marital debt, we affirm that portion of the order of the trial court. However, we remand for further findings of fact regarding the trial court's distribution of the marital estate.
Plaintiff Dorothy Allen and defendant Wayne Allen were married 17 May 1998. They separated on 10 April 2009. Prior to the marriage defendant started and managed a company—One on One Tree Expert. During the course of the marriage, plaintiff also worked for the company. On 14 June 2007, an employee of One on One Tree Expert suffered a compensable injury; a workers' compensation claim was filed; and the North Carolina Industrial Commission awarded the injured employee temporary total disability compensation, payment for all medical bills, attorney's fees, and an additional penalty to be assessed against defendant Wayne Allen individually and d/b/a One on One Tree Expert for failing to carry workers' compensation insurance or prove financial ability to pay for benefits for his employee.
On 1 July 2009, plaintiff filed a complaint asserting a claim for equitable distribution. On 17 June 2011, the trial court entered a pre-trial order listing the property that each party declared to be the extent of all property both separate and marital. In said order, the trial court determined that the workers' compensation award against defendant individually d/b/a One on One Tree Expert was valued at $70,000.00, and that plaintiff claimed this amount was defendant's separate debt. Following a hearing held during the 7 November 2011 session of Rowan County District Civil Court, the Honorable Judge William Kluttz, presiding, entered an Equitable Distribution Order on 9 February 2012. In its order, the trial court concluded that the workers' compensation award for which defendant was individually liable was not marital debt, and when calculating the marital estate, the workers' compensation award was given a value of $0.00. Defendant appeals.
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On appeal, defendant raises the following questions: did the trial court err (I) in finding that the Industrial Commission judgment was not marital debt; and, (II) in the alternative, in not considering the Industrial Commission judgment as a distributional factor.
I
Defendant argues that the trial court erred in finding that his personal liability incurred during the marriage as a result of an unfavorable workers' compensation award by the North Carolina Industrial Commission was not marital debt. Specifically, defendant contends that because his business was operated for the benefit of the marriage and that plaintiff worked in the business alongside him, the debt incurred during the marriage as a result of a workers' compensation action was marital debt. We disagree.
“When the trial court sits without a jury, the standard of review on appeal is whether there was competent evidence to support the trial court's findings of fact and whether its conclusions of law were proper in light of such facts.” Bodie v. Bodie, ––– N .C.App. ––––, ––––, 727 S.E.2d 11, 22 (2012) (citation and quotations omitted). “[T]o enter a proper equitable distribution judgment, the trial court must specifically and particularly classify and value all assets and debts maintained by the parties at the date of separation.” Bodie, ––– N.C.App. at ––––, 727 S.E .2d at 15 (citation and quotations omitted). “Upon application of a party, the court shall determine what is the marital property and divisible property and shall provide for an equitable distribution of the marital property and divisible property between the parties ....“ N.C. Gen.Stat. § 50–20(a) (2011). “According to well-established North Carolina law, the trial court is required to classify, value and distribute, if marital, the debts of the parties to the marriage.” Bodie, ––– N.C.App. at ––––, 727 S.E.2d at 18.
(1) ... It is presumed that all property acquired after the date of marriage and before the date of separation is marital property except property which is separate property.... This presumption may be rebutted by the greater weight of the evidence.
(2) “Separate property” means all real and personal property acquired by a spouse before marriage or acquired by a spouse by devise, descent, or gift during the course of the marriage.
N.C. Gen.Stat. § 50–20(b)(1) and (2) (2011). “A marital debt is one incurred during the marriage and before the date of separation, by either spouse or both spouses, for the joint benefit of the parties.”Glaspy v. Glaspy, 143 N.C.App. 435, 441–42, 545 S.E.2d 782, 786 (2001) (citation omitted) (emphasis added).
On 17 June 2011, the trial court entered a pre-trial order listing the parties' contentions concerning the marital debts of the parties. This order included a “Workman's Compensation Judgment on One on One Tree Expert,” which defendant claimed to be a marital debt, valued at $70,000.00. However, after a hearing on equitable distribution, the trial court made the following unchallenged finding of fact with regard to the “Worker's Compensation claim”:
27. This is an award by the Industrial Commission against defendant personally and against One Tree Expert, a company started by and owned by Defendant prior to the marriage. Although Plaintiff worked in the business, defendant was the sole manager, “I was head of the house”, [sic] and the Industrial Commission found [plaintiff] “does not appear to be an individual who had the ability to bring Defendant into compliance with the statutory provisions requiring Worker's compensation insurance coverage. Defendant [ ] dealt directly with the insurance agents for his business interests and purchased the insurance without any assistance or input from the Plaintiff [ ].”
The trial court then concluded that “the Industrial Commission judgment [was] not marital debt in that it was not incurred for the benefit of the marriage.” Given the pertinent finding of fact supported by competent evidence in the record that the failure to have workers' compensation insurance was through no fault of plaintiff, the conclusion of the trial court that the workers' compensation debt is not a marital debt was proper in light of the facts as found. See Bodie, ––– N.C.App. at ––––, 727 S.E.2d at 22. Accordingly, we overrule defendant's argument.
II
Next, defendant contends in the alternative, that the trial court erred in failing to consider the Industrial Commission award against defendant as a distributional factor. Specifically, defendant contends that the trial court failed to make findings of fact to justify the trial court's distribution of the marital estate. We agree.
Pursuant to General Statutes, section 50–20(c),
[t]here shall be an equal division by using net value of marital property and net value of divisible property unless the court determines that an equal division is not equitable. If the court determines that an equal division is not equitable, the court shall divide the marital property and divisible property equitably. The court shall consider all of the following factors under this subsection:
(1) The income, property, and liabilities of each party at the time the division of property is to become effective.
N.C. Gen.Stat. § 50–20(c)(1) (2011).
“When ... evidence is presented from which a reasonable finder of fact could determine that an equal division would be inequitable, the trial court is required to consider the factors set forth in N.C.G.S. § 50–20(c) .... “ Armstrong v. Armstrong, 322 N.C. 396, 404, 368 S.E.2d 595, 599 (1988) (citation omitted). “The trial court then must make findings and conclusions which support its division of marital property.” Id. If the trial court fails to make findings of fact that support its conclusions of law, “it cannot be determined on appeal whether the trial court correctly exercised its function to find the facts and apply the law thereto.” Coble v. Coble, 300 N.C. 708, 714, 268 S.E.2d 185, 190 (1980).
Effective appellate review depends largely upon the specificity of a trial court's order and the precision with which its rationale is articulated. Id. “Evidence must support findings; findings must support conclusions; conclusions must support the judgment.” Id. “Where ... the trial court sits without a jury,” the judge must “find the facts specially and state separately its conclusions of law thereon ....“ Id. at 712, 268 S.E.2d at 188–89 (citation and quotations omitted).
In its 9 February 2012 Equitable Distribution Order, the trial court classified the Industrial Commission award as a non-marital debt. The trial court based this decision on several factors, including: (1) defendant's status as the “sole manager” and “head of the house” of One on One Tree Expert; (2) plaintiff's inability to bring the business into compliance; and (3) defendant's direct relationship with workers' compensation insurance agents.
However, after stating that an unequal distribution was appropriate, the trial court failed to explain how it arrived at that conclusion. The Equitable Distribution Order contains no analysis of the distributional factors set forth in section 50–20(c). Further, we are unable to find anything in the trial court's order that addresses whether an equal or unequal distribution of the parties' marital property is appropriate, despite the fact that such findings are required by our prior decisions. See Armstrong, 322 N.C. 396, 368 S.E.2d 595.
As a result, the trial court failed to satisfy the mandate of North Carolina General Statutes, section 50–20(c). Furthermore, the trial court did not make the findings of fact necessary to support its decision as to how to distribute the parties' marital property. Accordingly, we remand for further findings of fact.
Affirmed in part; remanded in part. Judges ELMORE and ERVIN concur.
Report per Rule 30(e).