Opinion
NO. 2013-CA-001938-MR NO. 2013-CA-002009-MR
05-12-2017
BETTY J. AUSTIN-HINES APPELLANT/CROSS-APPELLEE v. TOMMY W. HINES APPELLEE/CROSS-APPELLANT
BRIEFS FOR APPELLANT/CROSS-APPELLEE: William F. McGee, Jr. Smithland, Kentucky BRIEFS FOR APPELLEE/CROSS-APPELLANT: Tiffany Gabehart Poindexter Paducah, Kentucky
NOT TO BE PUBLISHED APPEAL AND CROSS-APPEAL FROM MARSHALL FAMILY COURT
HONORABLE ROBERT DAN MATTINGLY, JR., JUDGE
ACTION NO. 12-CI-00183 OPINION
VACATING AND REMANDING
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BEFORE: DIXON, J. LAMBERT, AND NICKELL, JUDGES. LAMBERT, J., JUDGE: Betty J. Austin-Hines has appealed, and Tommy W. Hines has cross-appealed, from the Marshall Family Court's amended findings of fact, conclusions of law and judgment entered October 23, 2013. Issues include the family court's allocation and crediting of marital assets as well as the award of maintenance to Betty. Having carefully considered the record on appeal and the parties' respective arguments, we must vacate the family court's judgment and remand in light of the family court's failure to take into consideration the funds it found Betty had dissipated.
Betty and Tommy were married on February 4, 1992, in McCracken County, Kentucky. Betty, born in 1958, was self-employed as a dentist, and Tommy, born in 1962, worked for the Department of Energy. No children were born of the marriage, and the parties separated in March 2010. Tommy filed a petition for dissolution in McCracken Family Court on April 13, 2012. In addition to the dissolution, Tommy requested a division of the marital property and debts as well as the restoration of non-marital property. By agreed order, the venue for the action was transferred to Marshall County. The family court entered a status quo order on May 11, 2012.
Betty moved for an award of temporary/permanent maintenance, for use of the marital vehicle in her possession, and for temporary use of the marital residence. She cited her health problems as not permitting her to support herself and the lifestyle to which she had grown accustomed during the marriage. She was only able to work two days per week. The family court held a hearing on Betty's motion on July 24, 2012, and indicated an agreed order was to be submitted by Betty's attorney. The parties had agreed that Tommy would pay Betty $1,000.00 per month in temporary maintenance and that she was permitted to remove $1,000.00 per month from their marital funds to pay for her reasonable living expenses. The court would determine later whether the additional $1,000.00 per month was to be deemed temporary maintenance or part of the property division. The agreed order was not entered until February 6, 2013.
The same day, the court entered an agreed mediation order memorializing the parties' agreement that Tommy would receive the marital residence in exchange for Betty receiving 43.439 acres of farmland in Fulton County, that they would sell a lot they owned on Eagles Nest Drive in Paducah and equally divide the proceeds from the sale, that each would receive a vehicle or vehicles, that Betty would receive the money in two Heritage Bank IRA accounts, that the parties' retirement accounts would be equalized by Qualified Domestic Relations Orders or another agreed upon means so that each would receive half of the total account values, that Betty would receive her dental practice, and that each would receive specific pets. Disputed issues included the division and value of the household furnishings and marital and non-marital tangible personal property, the division and values of cash and remaining intangible accounts including funds Betty transferred to her mother, the division of the 2012 farm income, Betty's claims for maintenance and attorney fees, the characterization of the $1,000.00 per month Betty had been receiving, the division and valuation of the parties' 2011 federal overpayment of taxes, and the division and valuation of Tommy's vacation/sick/compensatory time.
Tommy's final verified disclosure statement, dated February 7, 2013, listed his gross monthly pay as $5,376.80 and his net monthly pay as $3,434.45. He listed the parties' marital property, including real property, vehicles, cash and bank accounts (including dissipated marital funds), investment accounts, retirement plans, and business interests. His anticipated monthly expenses totaled $4,916.00.
Betty's final verified disclosure statement, dated April 2, 2013, listed her gross income from self-employment the prior year as $124,285.00 and her net income as $18,860.00. She listed her actual expenses as $5,219.00 per month and her anticipated expenses as $10,105.00 per month. Her anticipated expenses included $945.00 for a mortgage payment, $400.00 for a car payment, and $2,000.00 for dental work.
Tommy filed his deposition upon written questions and moved for the entry of an interlocutory decree on February 11, 2013. The family court entered its interlocutory findings of fact, conclusions of law, and decree of dissolution later that month. The court retained jurisdiction to determine the contested issues related to property claims, maintenance, and attorney fees. The parties entered into stipulations prior to the final hearing regarding many of their marital assets, including insurance policies, investment accounts, vehicles, and some items of personal property.
The family court held the final hearing over two days, beginning April 17, 2013. We note that the family court approved a narrative statement of the first day of the hearing due to the lack of audio on the recording of that day's testimony and arguments. The second day of the hearing, May 31, 2013, was recorded properly. During the hearing, the parties and other witnesses testified about their finances, Tommy's dissipation allegation, and Betty's health and her ability to work. The parties filed briefs in support of their respective positions.
The family court's stepsheet shows that Betty filed a brief on the final hearing issues on June 21, 2013. The clerk noted that it was a large document, and it was not included in the numbered record on appeal or as a separate document. Therefore, this Court is not able to review the arguments she made below. Tommy's brief and reply brief indicate that Betty requested $3,000.00 per month in maintenance. --------
In his brief, Tommy requested that Betty be credited with $25,200.00 in dissipated funds that she transferred to her mother in contemplation of divorce and to deprive him of the funds. He also argued that Betty was not entitled to maintenance because she had been apportioned sufficient property to provide for her reasonable needs and was able to support herself through her employment as a dentist and with farm rental income. In addition, Tommy argued that Betty's expenses were unreasonable and exaggerated. His own take-home pay had been reduced to $3,172.00 bi-weekly due to the change in his withholding status. He requested that the court deem the $1,000.00 Betty received monthly as part of the property division because she had been voluntarily under-employed. Finally, Tommy disputed Betty's request that he pay a portion of her attorney fees based upon her ability to pay her own fees.
In her responsive brief, Betty disputed that she should be credited with the $25,200.00 she transferred to her mother, stating that the transfer occurred prior to her knowledge that Tommy had filed the petition to dissolve the marriage. She also disputed that she had been apportioned sufficient property to provide for her reasonable needs or that she was able to support herself through employment.
The family court entered its findings of fact, conclusions and judgment on September 13, 2013. The court granted Tommy's motion to alter, amend or vacate, and it entered its amended findings of fact, conclusions and judgment on October 18, 2013. The judgment was again amended on October 23, 2013. The court noted that by prior agreement, Tommy had received $466,107.52 in marital assets and Betty had received $693,765.51 in marital assets. Also by agreement, Betty received as her non-marital assets two IRA accounts valued at $5,810.70 and $3,560.18, while Tommy received another retirement account and other items of personal property, including firearms. There was no marital debt to divide. The court then addressed the disputed issues.
Regarding Tommy's claim that Betty had dissipated marital assets, the court found that on April 13, 2012, during a time of separation, Betty had taken $211,026.69 of marital funds, transferred the funds to her mother, who returned all but $25,200.00. The court found that Betty had intended to deprive Tommy of this amount, and it did not find credible Betty's claims that she did not know Tommy had been contemplating a divorce or that the funds were to pay her mother for past due rent. The court did not believe Betty's claim that she did not know that a separation or divorce was likely to occur based upon her actions in hiring a private investigator, revoking Tommy as her power of attorney, transferring funds, and taking out a new life insurance policy with her mother as the named beneficiary. Therefore, the court found that the amount of $25,200.00 constituted marital funds that were wrongly dissipated by Betty and that she was to be credited with the amount in the division of marital assets.
The court went on to characterize the additional $1,000.00 Betty received per month during the pendency of the proceedings (a total of $15,000.00) as temporary maintenance. In order to equalize the division of intangible assets, the court ordered Betty to reimburse Tommy in the amount of $98,829.00, which was half of the difference between the amounts each received less the $15,000.00 credit. She was to repay him in the amount of $93,829.00 via monthly payments of $857.44 over the course of eleven years at a 3.5% interest rate beginning October 15, 2013, with the remaining $5,000.00 representing her award of attorney fees.
Next, the court determined that Betty was entitled to maintenance and awarded her the amount of $2,000.00 per month for eleven years. The court noted that all but $857.44 of the maintenance amount would terminate at Tommy's death and the full amount would terminate on Betty's death or remarriage. In reaching this decision, the court found that Betty was not totally credible based upon her motives for transferring assets and her statement that the divorce was a surprise to her, that she had physical disabilities that precluded her from working forty hours per week as a dentist, and that she and Tommy had not led an extravagant lifestyle during the marriage. Finally, the court awarded Betty $5,000.00 towards her attorney fees and costs based upon Tommy's greater ability to earn a higher income than Betty's ability. Betty's appeal and Tommy's cross-appeal now follow.
In her appeal, Betty presents three arguments: 1) that the family court erred in its ruling on maintenance both in the amount awarded and the offset against that amount for equalization; 2) that the family court failed to recognize Tommy's total compensation package as a marital asset; and 3) that the family court erred in crediting Betty's $5,000.00 farm income against her twice, resulting in a benefit to Tommy. In his cross-appeal, Tommy, like Betty, argues that the family court's maintenance ruling was in error, in that it was awarded at all and in relation to the deferred payment of the equalization amount. He also argues that the family court failed to credit him with the $25,200.00 in funds dissipated by Betty and erred in the amount of interest awarded on the deferred equalization payment and in awarding attorney fees.
Kentucky Rules of Civil Procedure (CR) 52.01 provides the general framework for the family court as well as review in the Court of Appeals: "In all actions tried upon the facts without a jury or with an advisory jury, the court shall find the facts specifically and state separately its conclusions of law thereon and render an appropriate judgment[.] . . . Findings of fact, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses." See Moore v. Asente, 110 S.W.3d 336, 354 (Ky. 2003) (footnote omitted) (An appellate court may set aside a lower court's findings made pursuant to CR 52.01 "only if those findings are clearly erroneous."). The Asente Court went on to address substantial evidence:
"[S]ubstantial evidence" is "[e]vidence that a reasonable mind would accept as adequate to support a conclusion" and evidence that, when "taken alone or in the light of all the evidence, ... has sufficient probative value to induce conviction in the minds of reasonable men." Regardless of conflicting evidence, the weight of the evidence, or the fact that the reviewing court would have reached a contrary finding, "due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses" because judging the credibility of witnesses and weighing evidence are tasks within the exclusive province of the trial court. Thus, "[m]ere doubt as to the correctness of [a] finding [will] not justify [its] reversal," and appellate courts should not disturb trial court findings that are supported by substantial evidence.Id. at 354 (footnotes omitted). With this standard in mind, we shall address the issues raised in the briefs.
We shall first consider Betty's argument that the family court failed to include Tommy's $179,000.00 total compensation package as a marital asset. Pursuant to Kentucky Revised Statutes (KRS) 403.190, a trial court is required to classify the parties' property as marital or non-marital and to divide the marital property in just proportions based upon a list of relevant factors. We agree with Tommy that the family court appropriately addressed all divisible aspects of his total compensation package in its calculations. Therefore, we find no merit in Betty's argument.
Next, we shall consider Betty's argument that the family court credited the $5,000.00 farm income against Betty twice to Tommy's benefit. On Page 4 of the amended findings, the $5,000.00 in farm income was included in the $14,792.11 farm account that was assigned to Betty by agreement. On page 6 of the amended findings, the court awarded the farm income to Betty, reasoning that she had received the farm and Tommy had received the marital residence as well as its use and benefit during the period of separation. However, the court did not include an additional $5,000.00 in funds to Betty's asset amount on page 8 of its amended findings when it calculated the equalization of the division of marital assets. Therefore, we must hold that the family court did not credit Betty with the $5,000.00 in farm income twice, and we find no merit in Betty's argument to the contrary.
Next, we shall consider Tommy's argument in his cross-appeal that the family court failed to credit him for the $25,200.00 in funds it found Betty had dissipated. Betty has not argued that this finding of the family court was in error, but rather she argues in her reply brief that the court used this number in its overall property division. Betty has not referenced where in the family court's ruling this was mentioned. We agree with Tommy that the family court failed to include $25,200.00 in dissipated funds in Betty's marital assets when it calculated the property division equalization.
On page 4 of the amended findings, the family court indicated that Tommy had received $466,107.52 in marital assets and Betty had received $693,765.51 in marital assets. On page 8, the family court equalized the division of marital assets, using the same amounts on page 4. The court ordered Betty to reimburse Tommy the amount of $98,829.00, which was 50% of the difference between the marital assets each received, less the $15,000.00 credit Betty received for her temporary maintenance payments. Part of this amount was to be paid via the family court's award of $5,000.00 in attorney fees to Betty. The remaining amount of $93,829.00 was to be paid over the next eleven years in the amount of $857.44 per month.
These calculations do not take into account the $25,200.00 in dissipated funds that were to be credited to Betty's marital assets. The family court erred as a matter of law in failing to include this amount in its calculation. Therefore, we must vacate the court's decision on this issue and remand for a recalculation of the division of intangible assets.
Next, we shall consider both parties' arguments related to maintenance. Betty argues that the $857.44 offset from her maintenance award was clearly erroneous and that she should have been awarded $2,620.00 per month for the remainder of her life or until modified. Tommy argues that Betty is not entitled to an award of maintenance at all, or to a far lower amount and duration, and that the court erred in allowing Betty to defer payment of the property equalization amount.
KRS 403.200(1) provides that a court may grant maintenance once it finds the spouse seeking an award:
(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 . . . ."While the award of maintenance comes within the sound discretion of the trial court, a reviewing court will not uphold the award if it finds the trial court abused its discretion or based its decision on findings of fact that are clearly erroneous." Powell v. Powell, 107 S.W.3d 222, 224 (Ky. 2003) (citations omitted). See also Brenzel v. Brenzel, 244 S.W.3d 121, 126 (Ky. App. 2008) ("An award of maintenance and the amount are within the discretion of the trial court.").
Once a trial court decides that an award of maintenance is appropriate, it must then consider all of the relevant factors listed in KRS 403.200(2) to determine the amount and duration of maintenance that should be awarded. These factors include the spouse's financial resources, the time needed to obtain sufficient education or training, the standard of living during the marriage, the duration of the marriage, the age and condition of the spouse seeking maintenance, as well as the ability of the paying spouse to meet his own needs. "[T]he amount and duration of maintenance is within the sound discretion of the trial court." Weldon v. Weldon, 957 S.W.2d 283, 285 (Ky. App. 1997). "The test for abuse of discretion is whether the trial judge's decision was arbitrary, unreasonable, unfair, or unsupported by sound legal principles." Sexton v. Sexton, 125 S.W.3d 258, 272 (Ky. 2004) (citing Commonwealth v. English, 993 S.W.2d 941, 945 (Ky. 1999)); Kentucky Nat. Park Com'n ex rel. Commonwealth v. Russell, 301 Ky. 187, 191 S.W.2d 214, 217 (1945).
In deciding that Betty was entitled to maintenance at a lesser amount and for a lesser time than she requested, the family court noted it relied upon the following conclusions:
1) Betty is not found to be totally credible. The court did not find her credible with regard to her motives on transferring the assets on the date Tommy filed for divorce or with regard to her testimony that his filing for divorce was a complete surprise.These findings are supported by substantial evidence in the record.
2) It is concluded that Betty does have some physical disabilities that preclude her from working a forty (40) hour work week as a Dentist, it is also concluded that Betty has exaggerated the symptoms of her disability for the purpose of obtaining maintenance. It is noted that once Tommy filed for a divorce, her income substantially decreased and that her actions and court demeanor appear primarily motivated by her anger.
3) The parties did not live an extravagant lifestyle during their marriage but were frugal with their financial resources.
4) There were no children born of the marriage.
5) Tommy is in good health and has no current fear of losing is job.
6) Tommy will be sixty-two (62) in eleven (11) years and eligible to receive retirement benefits.
7) Tommy did not allege marital fault of Betty.
In light of our ruling that the family court failed to take into account the $25,200.00 in dissipated funds, we must vacate the award of maintenance and remand this matter for further consideration. The court is free to reconsider both whether Betty is entitled to maintenance and, if she is entitled to such an award, to what amount and duration she is entitled.
We shall next consider the arguments related to the family court's offset of the equalization amount from the maintenance payment. First, we do not agree with Betty's argument that this represented an improper reduction of her maintenance payment. The court certainly divided and equalized the marital property prior to determining whether Betty was entitled to a maintenance award as well as the amount and duration of that award. It appears that the court was attempting to fashion an equitable means for Betty to repay the amount she owed to Tommy without requiring her to immediately pay him a lump sum amount.
Tommy's argument, on the other hand, is that the family court erred in permitting Betty to defer payment of the property settlement as this deprived him of his just portion of the marital estate for eleven years. In an alternative argument, he contends that the family court erred in imposing an interest rate lower than the statutorily mandated rate of 12%.
Tommy cites to this Court's decision in Daunhauer v. Daunhauer, 295 S.W.3d 154, 156 (Ky. App. 2009), in support of his argument that the ties between him and Betty should be severed as quickly as possible:
The goal of a maintenance award is to facilitate one's transition from dependence upon her former spouse to independence. This is consistent with another goal of the dissolution process which is to sever all ties as much as possible as soon as possible. Light v. Light, 599 S.W.2d 476, 479 (Ky. App. 1980) ("Since ongoing maintenance
ties the parties together, it should be avoided except as circumstances of need and fairness demand.").He asserts that the order for deferred payments subverts this goal. Tommy also argues that if one of the parties were to pass away before Betty's obligation had been paid without any safeguards put in place, it may result in further litigation to resolve the matter or his inability to receive a full repayment.
Because we have already remanded the case on other issues, we also vacate this portion of the ruling. On remand, the family court is free in its discretion to fashion an equitable and just method to provide for the repayment of any equalization it may order on remand. If the family court opts to award a deferred payment as it did in the ruling on appeal, it must put in place safeguards to protect Tommy's right to collect the full amount he is due.
As to Tommy's argument related to the amount of interest the family court imposed on the equalization repayment, we agree that the court erred in imposing a 3.5% interest rate in contravention of KRS 360.040, which provides that a judgment for liquidated damages is to bear interest at a 12% rate compounded annually. In Ensor v. Ensor, 431 S.W.3d 462, 477 (Ky. App. 2013), this Court recognized that "Kentucky case law has consistently held trial courts are without authority to impose less than that statutory rate of interest in dissolution proceedings." The Court ultimately upheld a lower interest rate in Ensor because the wife was to be paid a lump sum well in excess of $1M and the court permitted the husband "a relatively brief period of time" to obtain the funds and make the full payment. Id. The opinion does not indicate the length of this period, but we assume it was much less than eleven years. In the present case, the family court erred in failing to impose the 12% interest rate specified in KRS 360.040. If it opts in its discretion to defer payment of any equalization amount on remand and impose interest, the family court must impose a 12% interest rate.
Finally, we shall address the family court's decision to award Betty $5,000.00 towards her attorney fees and costs. This ruling was based on the court's finding that Tommy had "a greater ability to earn a substantially higher income than Betty." Tommy points out that the family court awarded Betty $693,765.51 in assets, which included more than $233,000.00 in liquid assets. KRS 403.220 permits the court to order a party to pay a reasonable amount of attorney fees and costs "after considering the financial resources of both parties . . . ." The decision "whether to make such an assignment and, if so, the amount to be assigned is within the discretion of the trial judge." Neidlinger v. Neidlinger, 52 S.W.3d 513, 519 (Ky. 2001) (citations omitted). In light of our holdings above, we shall also vacate the award of attorney fees and permit the family court to revisit the issue on remand.
For the foregoing reasons, the judgment of the Marshall Family Court is vacated, and this matter is remanded for further proceedings in accordance with this opinion.
NICKELL, JUDGE, CONCURS.
DIXON, JUDGE DISSENTS IN PART AND FILES SEPARATE OPINION.
DIXON, JUDGE DISSENTING: I agree with the majority opinion in most respects but, respectfully write separately to dissent in part. While I agree with the majority that the family court failed to consider dissipated funds, I fail to see how this determination affects the maintenance award. Tommy did not appeal as to the amount of maintenance awarded, only that maintenance should not have been awarded at all. Tommy contends Betty was apportioned sufficient property to provide for her reasonable needs. The court's failure to deduct dissipated funds does not provide a basis to change the amount of maintenance awarded. Nor do the dissipated funds relate to Betty's argument that maintenance should not been a factor in equalization of assets. Therefore, I would affirm the maintenance awarded. I agree with the majority in all other respects. BRIEFS FOR APPELLANT/CROSS-
APPELLEE: William F. McGee, Jr.
Smithland, Kentucky BRIEFS FOR APPELLEE/CROSS-
APPELLANT: Tiffany Gabehart Poindexter
Paducah, Kentucky