Opinion
No. 2007-CA-001442-MR.
January 23, 2009. NOT TO BE PUBLISHED
Appeal from Greenup Circuit Court, Honorable Jeffrey L. Preston, Judge, Action No. 01-CI-00399.
Rhonda M. Copley, Ashland, Kentucky, Briefs for Appellant.
Phillip Bruce Leslie, Greenup, Kentucky, Brief for Appellee.
Before: CAPERTON, TAYLOR and WINE, JUDGES.
OPINION
The Appellant, David Arthur (David), appeals the decision of the Greenup Circuit Court regarding issues of custody, the division of debt, and the division of retirement. Appellee, Lori Arthur (Lori), requests that we affirm the circuit court. After careful review, we affirm in part and reverse in part, for the reasons set forth herein below.
David and Lori were married on or about October 1, 1999, and have one minor child, Olivia Arthur, born on March 29, 2003. The original divorce action was filed on or about August 9, 2001. The parties then reconciled for a period of time, separated again in January 2002, and once again reconciled. The case was subsequently dismissed for lack of prosecution on May 21, 2004, but was later restored to the active docket.
On November 15, 2006, the parties separated for the final time, and at that time Lori filed an amended petition for dissolution of marriage and a motion for temporary relief. On January 26, 2007, the trial court entered an order concerning the issues of marriage in regard to temporary relief, including custody. Subsequently, a final hearing on dissolution of marriage was conducted in two separate sessions, commencing on June 5, 2007, and concluding on June 12, 2007. On June 22, 2007, the trial court entered the decree of dissolution of marriage and accompanying orders.
With respect to the issue of custody, David requested that the parties be awarded joint custody with equally shared parental time. David, who is a teacher in the Ashland Independent School System, asserted that he had the flexibility to be able to assist in Olivia's care. David testified that he generally cared for Olivia after school and in the evenings, and that he was very involved in her activities, including dance class. David also testified that he normally stayed home with Olivia if she was sick, took her to the doctor, and participated in her nightly routine.
Lori requested that the parties be awarded joint custody and she be named primary custodian, with liberal visitation for David. In making her request, Lori conceded that David had been active in Olivia's life, and that it was important for Olivia to have both parents in her life.
Ultimately, the trial court awarded joint custody of Olivia, Lori being designated primary custodian, subject to David's visitation. David's visitation rights were established pursuant to the Greenup Circuit Court Visitation Guidelines, and he was responsible for returning Olivia to Lori after daycare each day when Lori returned from work. If Lori was to be home later than 9:00 p.m. or was out of town, David would keep Olivia overnight. In its final order concerning custody, the trial court referred to the detailed findings previously issued in its temporary order of January 26, 2007.
The parties had a home equity line of credit through City National Bank, from which Lori withdrew $6,000.00 on November 15, 2006, at the time of the final separation. Lori apparently used the funds for her adult daughter's college education, Christmas presents, and homeowner's insurance. David requested that the debt be allocated to Lori, as it was taken by her on the date of separation and, according to David, for her benefit. The trial court declined to do so and instead included the $6,000 in the mortgage for determination of the equity to be paid by Lori to David.
This child was not a child of the marriage between Lori and David.
In addition, both David and Lori held retirement accounts which were subject to division. At the time of the divorce, David's account, part of the Kentucky Teacher's Retirement System, contained both marital and non-marital funds, and was valued at slightly over $74,000. Lori held an IRA valued at $47,000 and a 401K with a value of $53,900. Both were accrued entirely during the marriage. Ultimately, the trial court awarded David his retirement account, and Lori her IRA and 401K.
Following the court's final order, David filed a verified motion to alter, amend, or vacate the order. That motion was overruled on July 10, 2007. This appeal followed.
With respect to the court's findings on the issue of custody, David asserts that the trial court erred in failing to award joint custody with shared parental time. David asserts that because his involvement in Olivia's life was equal, his parental custody should have been as well. Specifically, David argues that while the court granted him parenting time above the standard visitation guidelines of Greenup County, it failed to consider his request for equal parenting time. David argues that the trial court should have considered all relevant factors in determining the best interests of the child pursuant to Kentucky Revised Statutes (KRS) 403.270, and did not do so.
More specifically, David asserts that the trial court failed to consider the interaction and interrelationship that existed between himself and Olivia, and that the trial court failed to consider the testimony of witnesses on David's behalf with respect to his relationship with Olivia. These witnesses included Andy Ballash, a former principal in the Ashland Independent School District, who stated that he observed David interacting with Olivia and found him to be a very involved, doting, and concerned parent involved in her day-to-day upbringing. Also testifying on David's behalf was Greg Bartley, a neighbor who indicated that David was very close to Olivia and was a hands-on parent.
In response, Lori asserts that the arrangement awarded by the trial court is in fact in Olivia's best interest, and that Olivia has been adjusting very well to the court's January 26, 2007, temporary custody award. Several witnesses testified on Lori's behalf, including Debbie Bell, who has known Lori for over ten years, and Fay Powell, who has also been friends with Lori for many years. Both described Lori as a good mother. Powell further testified that she has observed David's temper toward Lori. Theresa Wright-Jarell also testified, and has known Lori professionally for eight years. She also described Lori as a very good mother.
Lori argues that the trial court was in the best position to weigh the evidence and determine the credibility of the witnesses. We agree. Pursuant to Kentucky Rules of Civil Procedure (CR) 52.01, this Court should not set aside the findings of fact made by the trial court unless same are clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses. Factual findings are not clearly erroneous if supported by substantial evidence, which is evidence of substance and relevant consequence having the fitness to induce conviction in the minds of reasonable men. Owens-Corning Fiberglass Corp. v. Golightly, 976 S.W.2d 409, 414 (Ky. 1998).
Judgment of the weight and credibility of the evidence is the sole province of the fact-finder. Lewis v. Bledsoe Surface Mining Co., 798 S.W.2d 459 (Ky. 1990). This Court will not disturb the decision of the trial court on an issue regarding custody unless an abuse of discretion has been committed. Allen v. Devine, 178 S.W.3d 517, 524 (Ky.App. 2005). We review this matter with these standards in mind.
In this instance, a review of the record reveals that the trial court did in fact consider the factors set forth in KRS 403.270, both at a temporary hearing, and again at the final hearing. It was for the trial court to hear the testimony of the witnesses offered by the respective parties, and to judge the weight and credibility of that testimony accordingly. This, the trial court did. Having reviewed the evidence of record and the findings of the trial court, we cannot conclude that the trial court's decision appointing Lori as primary residential custodian was an abuse of discretion, and we therefore affirm.
As his second basis of appeal to this Court, David asserts that the trial court erred in finding that the $6,000.00 withdrawn by Lori from the parties' home equity account on November 15, 2006, the date of the final separation, was a marital debt. Because David apparently vacated the marital residence at the time of separation, on or about November 15, 2006, the trial court subsequently found the date of separation to be November 15, 2007. David asserts that because Lori withdrew the money on the date of separation, and because the money was used solely for her benefit, the money should not have been considered a marital debt incurred during the marriage.
David cites this Court to Neidlinger v. Neidlinger, 52 S.W.3d 513, 522-23 (Ky. 2001) for the proposition that no presumption exists that any debt incurred during the marriage is necessarily marital. Instead, David asserts that debt should be considered on a case-by-case basis, considering the receipt of the benefits and the extent of participation of each party, whether the debt was incurred to purchase marital property, whether the debt was necessary to provide for the support of the family, and the economic circumstances of the parties to assume the indebtedness. See Neidlinger, supra at 523.
Having reviewed David's brief to this court, he argues that the court failed to consider the aforementioned factors, insofar as the debt was incurred entirely on the date of separation, was incurred solely for Lori's benefit, and did not provide any support to the family unit. Thus, David asserts that pursuant to the factors set forth above, the debt should have been assigned solely to Lori.
In response, Lori testified that she had given David $700.00 per month for twenty-four months, a sum of $15,500.00, from their joint savings account. Lori further testified that at the time of the separation, there was only $50.00 remaining in the account. Lori testified that David has no explanation for the whereabouts of those funds, and that she took the $6,000.00 as at least part of her share of the account that David controlled and dissipated.
Further, Lori asserts that only $3,000.00 is actually at issue as, if she had not taken the money out of the home equity line, there would have been an additional $6,000.00 in marital equity when the home was sold, of which David would only have been entitled to half. Regardless, Lori asserts that the trial court did not presume this to be a marital debt, as David argues, but instead was of the opinion that as Lori would be refinancing the entire amount owed on the marital property, she would likewise be responsible for the $6,000.00.
David asserts that Lori failed to present any documented evidence in this regard, and asserts that the money he used during the marriage was money which Lori had deposited into the checking account. David states that he used the money in the checking account for daily expenses such as insurance, house payments, and residential debts, of which he provided proof.
Accordingly, David asserts that the trial court abused its discretion in failing to consider how the debt was incurred. David asserts that in awarding each party half of the equity in the marital residence, but assigning the $6,000.00 to the mortgage payment, he has lost money as a result of Lori's separate debt. He therefore requests that the equity in the marital residence be redistributed after Lori is assigned the $6,000.00 debt.
In reviewing the decision of the trial court with respect to assignment of debt in a divorce matter, this Court will consider whether or not the trial court abused its discretion in finding the debt to be marital. See Neidlinger, supra at 523. Certainly, appropriate division of marital debt is a matter within the discretion of the trial court. Lori asserts that no rule exists stating that the debt should be divided equally, or in the same portion as the marital property. We agree.
Indeed, in dividing marital property, including debts, appurtenant to a divorce, the trial court is guided by KRS 403.190(1), which requires that division be accomplished in "just proportions." This does not mean, however, that property must be divided equally. It means only that the division should be accomplished without regard to marital misconduct and in "just proportions" considering all relevant factors. See Cochran v. Cochran, 746 S.W.2d 568, 570 (Ky.App. 1988).
It was the duty of the trial court to consider the necessary factors in making its decision in this regard, namely receipt of benefits, extent of participation, whether the debt was incurred to purchase assets designated as marital property, whether the debt was necessary to provide for maintenance and support of the family, and the economic circumstances of the parties to assume the indebtedness. See Bodie v. Bodie, 590 S.W.2d 895 (Ky.App. 1979).
In this instance, the court's decision to make the debt marital essentially means that both parties will be responsible for the debt, as Lori is refinancing the entire amount owed on the marital property. Having reviewed the record and the findings of the trial court, we cannot conclude that this was an unjust result, or an abuse of discretion on the part of the trial court. While the debt may be divided equally in this instance, the court's primary concern was that it was divided justly. Having reviewed the record, we cannot find that the court erred in determining this division of debt to be just. Accordingly, we affirm.
As his final argument on appeal, David asserts that the trial court erred in awarding separate retirements to the parties. David, a teacher with the Ashland Independent School System, is a member of the Kentucky Teachers Retirement System. David and Lori were married on October 1, 1999. David had been teaching for approximately twenty years prior to that time. Thus, David asserts that a portion of his retirement account should be deemed non-marital, as it was accumulated prior to the marriage.
David further notes that the entirety of Lori's $100,900.00 retirement account was accumulated during the marriage. Thus, he argues that the trial court was without discretion to award Lori all of her retirement simply because "she earned it through her work." David asserts that the trial court should have allocated the marital property in "just proportions" pursuant to KRS 403.190, and this would include equally dividing the respective retirement accounts of the parties insofar as the amounts which were accumulated during marriage are concerned. Thus, David argues that he should be entitled to his portion of Lori's retirement after offsetting the marital interest in his Kentucky Teachers' Retirement System account.
Retirement benefits are deemed to be property that must be divided in a divorce action pursuant to KRS 403.190. While the trial court must make a determination as to whether the retirement benefits are marital or non-marital, if the benefit was acquired after the date of marriage, then the benefit is presumed to be marital. See KRS 403.190(2). Likewise, if the retirement benefit was accumulated prior to marriage, then the retirement benefit is non-marital.
While property acquired after marriage is normally considered marital, David concedes that his retirement through the Kentucky Teachers' Retirement System is exempt from classification as marital property pursuant to KRS 161.700 and Waggoner v. Waggoner, 846 S.W.2d 704 (Ky. 1992). KRS 161.700(2) provides as follows:
(2) Retirement allowance, disability allowance, accumulated contributions, or any other benefit under the retirement system shall not be classified as marital property pursuant to KRS 403.190(1). Retirement allowance, disability allowance, accumulated contributions, or any other benefit under the retirement system shall not be considered as an economic circumstance during the division of marital property in an action for dissolution of marriage pursuant to KRS 403.190(1)(d).
Nevertheless, David asserts that Lori's retirement should be exempt only to the value of his retirement, pursuant to KRS 403.190(4). That provision provides as follows:
If the retirement benefits of one spouse are excepted from classification as marital property, or not considered as an economic circumstance during the division of marital property, then the retirement benefits of the other spouse shall also be excepted, or not considered, as the case may be. However, the level of exception provided to the spouse with the greater retirement benefit shall not exceed the level of exception provided to the other spouse. Retirement benefits, for the purposes of this subsection shall include retirement or disability allowances, accumulated contributions, or any other benefit of a retirement system or plan regulated by the Employees Retirement Income Security Act of 1974, or of a public retirement system administered by an agency of a state or local government, including deferred compensation plans created pursuant to KRS 18A.230 to 18A.275, or defined contribution or money purchase plans qualified under Section 401(a) of the Internal Revenue Code of 1954, as amended.
Thus, David asserts that the trial court in this case erred by exempting all of Lori's retirement, which was greater than the marital portion of David's retirement. David therefore requests that the order of the trial court be reversed and a new order be entered exempting Lori's retirement only in an amount equal to the marital portion of his retirement.
In response to David's argument, Lori asserts that KRS 161.700, the provision exempting David's retirement account from classification as marital property, does not reference exceptions for premarital value as opposed to marital value. We agree, but note that the central issue in this matter is the exemption of Lori's account up to the amount of David's account, regardless of when David accumulated that money. For indeed, Lori is correct that pursuant to KRS 161.700, David's entire account is exempted from classification as marital property, regardless of whether the amounts were accumulated before or after marriage.
Lori further argues that KRS 403.190(1) mandates only that the trial court divide the marital property in "just proportions," not that it necessarily divide the accounts equally. While we agree that this is true, in this instance, our review of the record indicates that the trial court failed to make any specific findings regarding the marital or non-marital interests in the respective accounts, the exemptions due each party accordingly, and the corresponding basis for its award. By simply dividing the accounts between the parties as it did, we are unable to evaluate the basis for the court's award, and accordingly, to determine whether or not such an award was in fact in "just proportions."
We note that there may certainly have been a number of reasons, fact-specific to this case, which may have influenced the trial court's decision to award each party their respective retirement. Regardless, the law requires the trial court consider the statutory factors and make specific findings. Therefore, we believe it appropriate to remand to the trial court such that this matter can be reviewed, and findings can be made to indicate that the trial court has considered KRS 403.190 in conjunction with KRS 161.700(2).
Accordingly, having reviewed this matter in its entirety, and for the reasons set forth herein, we affirm the ruling of the Greenup Circuit Court in part, reverse in part, and remand for additional proceedings consistent with this opinion.
ALL CONCUR.