Opinion
16-00878
01-24-2017
E----- W-----, Petitioner, v. S------ W-----, Respondent.
File No. Petition No.
ORDER
ANCILLARY
This is the Court's decision concerning matters ancillary to the divorce of E----- W----- ("Wife") and S------ W----- ("Husband").
BACKGROUND
The parties were married on June 13, 2005. On or about May 1, 2014, Wife started a salon and beauty supply business called " Inc." According to the parties, Husband charged approximately $20,000.00 to his JP Morgan Chase credit card in order to help Wife acquire the necessary products and supplies she needed to begin the business. Specifically, Husband used his Chase card to transfer $5,000.00 on July 30, 2014 and $15,000.00 on August 28, 2014.
On July 4, 2015, the parties separated. On December 22, 2015, the parties sold their former marital home and divided the proceeds, receiving approximately $7,655.38 each.
The parties divorced March 24, 2016. The Court retained jurisdiction over the property division matter.
On April 7, 2016, Husband filed a Motion for Relief of Completing the Entire Rule 16(c). Husband stated that he and Wife had already equitably divided the property/assets they owned and thus, the majority of the 16(c) Financial Report was irrelevant and cumbersome. According to Husband, the only issue left to address was Wife's business debt on Husband's JP Morgan Chase credit card. Husband asserted that Wife verbally acknowledged and agreed to be responsible for that debt. Additionally, according to Husband, on March 24, 2016, Wife verbally acknowledged, under sworn testimony, to being responsible for the debt at a hearing before a Commissioner of this Court. The Court denied Husband's Motion on April 25, 2016.
The parties' 16(c) Financial Reports were submitted on June 7, 2016.
The Court held a Pre-Trial Hearing with respect to the parties' ancillary matters on August 19, 2016. As of that date, the balance owed on Husband's JP Morgan Chase credit card was $16,171.71. Husband contended that Wife should be solely responsible for that debt. Wife contended that the parties should share equally in the debt.
On September 22, 2016, Husband filed a Motion to Enforce Settlement Agreement. Within his Motion, Husband argued that on November 25, 2015, Wife had verbally agreed to be responsible for the Chase credit card debt. When Husband presented Wife with an Acknowledgement of Debt document, Wife requested additional time to review the document prior to signing. According to Husband, later that day Wife indicated to Husband that she would not sign the Acknowledgement of Debt. Despite refusing to sign, Wife's business was continuing to make the monthly payments on the Chase debt each month. Husband continued that in December 2015 Wife again verbally indicated that she would assume the Chase debt. Husband's Motion reiterates that on March 24, 2016, at a hearing before a Commissioner of this Court, when asked about a potential resolution as to the Chase debt, Wife responded, "it's already settled in my opinion," and "we already had a verbal agreement." Husband argued that these statements indicated that Wife clearly manifested her intent that the matter was already settled. Furthermore, in completing her 16(c) Financial Report, Wife did not indicate that the parties should each be 50% responsible for the Chase debt. It was not until the Pre-Trial Hearing that Wife stated that she wanted Husband to be responsible for 50% of the Chase debt. Husband argued that Wife should not be permitted to assert that Husband be responsible for debts that benefitted her and her business. Husband requested that the Court enforce the parties' settlement agreement and require Wife to pay off or refinance the Chase debt out of Husband's name.
Husband sent a Request for Production of Documents to Wife on September 8, 2016. On October 27, 2016, Wife filed a Motion to Quash Production of Documents arguing that the documents requested were not relevant to the case.
As of October 28, 2016, Wife had failed to provide discovery. As such, on October 28, 2016, Husband filed a Motion to Compel requesting that Wife be compelled to produce the requested documents within ten days.
On November 1, 2016, Husband filed an Answer to Wife's Motion to Quash Production of Documents asserting that the various documents requested were relevant and were reasonably calculated to lead to admissible evidence.
The Court denied Wife's Motion to Quash on November 16, 2016, as Wife's request to relieve herself from the obligation to provide discovery was overbroad. Additionally, Wife was ordered to forward the requested documentation to Husband within ten days and to pay $200.00 to Husband as reasonable attorney's fees associated with the Motion to Compel. The Court also ordered that Husband's Motion to Enforce Settlement Agreement would be addressed at the property division hearing scheduled for January 10, 2017.
On January 10, 2017, the Court held a hearing on the parties' ancillary matters. Wife appeared pro se. Husband appeared represented by counsel. The evidence presented at the hearing is discussed below.
DISCUSSION
In a proceeding for divorce or annulment, the Court shall, upon request of either party, equitably divide, distribute and assign the marital property between the parties without regard to marital misconduct, in such proportions as the Court deems just after considering all relevant factors outlined in Title 13, Section 1513(a) of the Delaware Code. With several exceptions, all property and debts acquired by either party subsequent to the marriage are considered "marital property" and subject to equitable distribution. The factors laid out in Section 1513(a) include: (1) the length of the marriage; (2) any prior marriage of the party; (3) the age, health, station, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties; (4) whether the property award is in lieu of or in addition to alimony; (5) the opportunity of each for future acquisitions of capital assets and income; (6) the contribution or dissipation of each party in the acquisition, preservation, depreciation or appreciation of the marital property, including the contribution of a party as homemaker, husband, or wife; (7) the value of the property set apart to each party; (8) the economic circumstances of each party at the time the division of property is to become effective, including the desirability of awarding the family home or the right to live therein for reasonable periods to the party with whom any children of the marriage will live; (9) whether the property was acquired by gift, except those gifts excluded by paragraph (b)(1) of this section; (10) the debts of the parties; and (11) tax consequences.
See 13 Del. C. § 1513(b).
The Court now turns to the factors of Section 1513(a), as follows:
(1) the length of the marriage;
The parties were married on June 13, 2005 and divorced on March 24, 2016. Thus, the parties were married ten years and nine months.
(2) any prior marriage of the party;
The Court did not receive evidence on whether either party was previously married.
(3) the age, health, station, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties;
Wife is 37 years old. Regarding her health, Wife testified that she "is surviving." Wife has pulmonary embolism. According to Wife, her health does sometimes interfere with her ability to run the business. Wife's health condition was a factor in her decision to leave her previous job and open the beauty salon and supply business. Wife began her business on or about May 1, 2014. Wife testified that she works Tuesdays-Saturdays from 8:30 a.m. until close. Wife does not earn any income from the business. However, Wife's business has been making the minimum monthly payments on Husband's Chase credit card debt.
Prior to opening the business, Wife was employed as a social worker at earning approximately $48,000.00 per year. Wife also stated that she has been a beauty consultant for Mary Kay and a makeup artist for ten years. Wife testified that she attempted to go back to work at roughly one year ago. However, her health issues precluded her from doing so.
Husband is 34 years old. Husband is employed at as the student enrollment coordinator earning approximately $33,000.00 per year. Husband has worked for since 2001. Additionally, Husband owns a pressure washing business which he operates part-time. Husband's pressure washing business is seasonal. He operates the business five or six hours per week from March until the weather becomes colder in October, November, or December. Husband has owned the pressure washing business since July 2015. The amount of money Husband earns from the business is based on the jobs performed. The Court did not receive evidence regarding Husband's health.
(4) whether the property award is in lieu of or in addition to alimony;
Neither party is seeking alimony.
(5) the opportunity of each for future acquisitions of capital assets and income;
The Court did not receive evidence of either party's expectation to acquire any future capital assets or income.
(6) the contribution or dissipation of each party in the acquisition, preservation, depreciation or appreciation of the marital property, including the contribution of a party as homemaker, husband, or wife;
The parties reached an agreement as to the division of their marital assets. The only issues before the Court are the Chase credit card debt, totaling approximately $16,171.71 as of August 2016, in Husband's name, used for the start up of Wife's business, and three additional credit card debts in Wife's name totaling $37,969.24 as of March 24, 2016.
Regarding the Chase credit card debt, Husband used that account to transfer $5,000.00 on July 30, 2014 and $15,000.00 on August 28, 2014 to enable Wife to use that money to purchase supplies and other necessary items to begin her salon and beauty supply business. Since these transfers, Wife's business has continued to pay the minimum monthly payments on the Chase credit card. According to Husband, initially Wife communicated to Husband that she would pay off the balance of the Chase debt within one year because the debt incurred 0% interest during the first year.
Wife asserted that the parties also acquired debt on three other credit cards. The Court has limited evidence on the current balance of those cards and whether they were used for purchases benefitting the marriage. Wife was not permitted to present documentation supporting her assertion that the cards were used for personal and business expenses during the marriage. Wife was barred from introducing these documents because Wife did not produce the documents to Husband prior to the hearing in compliance with Husband's Request for Production of Documents and Motion to Compel.
Additionally, Wife testified that she discovered $5,000.00 in a safe in the parties' home in November of 2015. This asset was not included on her 16(c) Financial Report. Wife responded that she was uninformed about how to properly complete the 16(c) because she could not afford an attorney.
(7) the value of the property set apart to each party;
On December 22, 2015, the parties sold their former marital home and divided the proceeds, receiving approximately $7,655.38 each. Wife has continued to have sole possession over her business and Husband indicated he has no desire to participate in the business or share an interest in it.
The Court did not receive evidence on any other property that either party received following the parties' separation or divorce. Specifically, the Court did not receive evidence regarding who took possession of the $5,000.00 Wife discovered in the safe in November 2015. Based on Wife's testimony, it appears that she did not receive any of the $5,000.00 found in the safe and never raised the issue of that money to Husband. Further, no evidence was presented indicating that the $5,000.00 was marital property subject to division.
The Court did not receive evidence concerning any pre-marital property that either party maintains.
(8) the economic circumstances of each party at the time the division of property is to become effective, including the desirability of awarding the family home or the right to live therein for reasonable periods to the party with whom any children of the marriage will live;
As indicated above, Wife is currently employed by, and owns, , Inc. Wife does not earn any income from the business. Wife testified that she currently resides with her parents.
Husband is employed by earning approximately $33,000.00 per year. In addition, Husband owns a pressure washing business which he operates seasonally. The Court did not receive evidence about how much Husband earns from his pressure washing business. However, Husband testified that the amount he earns depends on the job. It is unclear where Husband currently resides. However, neither party resides in the former marital home as it was sold in December 2015 and the parties shared the proceeds.
(9) whether the property was acquired by gift, except those gifts excluded by paragraph (b)(1) of this section;
The Court did not receive evidence on this issue.
(10) the debts of the parties; and
As indicated above, the parties have four credit card debts in contention: a Chase credit card debt placed in Husband's name used to purchase supplies to start up Wife's business, a Citi credit card debt placed in Wife's name used to purchase business and personal items, and two CaptialOne credit card debts placed in Wife's name used to purchase business and personal items.
Husband argues that he is not responsible for any of these debts. Husband asserts that Wife is solely responsible for the Chase credit card debt. Husband argues that the parties had a verbal binding agreement that Wife would take full responsibility for that debt. Husband contends that following their separation, Wife agreed to pay off the Chase debt within the one year 0% interest rate period or to consolidate and refinance the debt out of Husband's name by the time the 0% interest rates were set to expire. Husband testified that in December 2015, Wife stated that she was attempting to secure a loan to repay the Chase debt. However, once Husband presented Wife with the Debt Acknowledgement form, Wife refused to sign the form acknowledging her responsibility for the Chase debt. Husband further asserts that at the time the parties sold their home in December 2015, Wife indicated that she would take care of the Chase debt. Though Husband's Motion to Enforce Settlement Agreement states that Husband had an audio recording of that conversation with Wife, the recording was not introduced into evidence on January 10. Finally, Husband argues that Wife's statements in Court on March 24, 2016, that "we already had a verbal agreement" and the debt is "already settled," indicate Wife's intentions of assuming full responsibility for the Chase credit card debt. Wife never communicated to Husband that she felt she was only responsible for 50% of the Chase debt.
Husband does not feel that he is responsible for the Citi Bank or two CapitalOne credit card debts which Wife listed on her 16(c) because those debts were placed in Wife's name and were not used for the benefit of the marriage.
Finally, Husband argued that Wife's 16(c) Financial Report did not propose that the parties divide any of the debts equally. Rather, regarding the Citi and CapitalOne debts, Wife specifically indicated that those debts were incurred for business purposes. Whereas, the Chase debt states that it was incurred for the purpose of Wife's salon and supply business.
Wife argues that the parties should share responsibility of all four debts because they were debts acquired for the benefit of the marriage. Regarding the Chase credit card debt, Wife testified that the loan transfers from the Chase card were done for the family because the business was intended to benefit the family. Additionally, according to Wife, she used the Citi and CapitalOne credit cards to purchase items for the benefit of the marriage. Specifically, Wife asserted that she used those cards to pay for vacations she and Husband enjoyed. Husband suggested that Wife had agreed to pay for those vacations, and Husband was initially against taking the vacations because the parties could not financially afford to do so.
The Court is unable to ascertain whether or not the Citi or CapitalOne cards were used to purchase items or vacations during the marriage, for the benefit of the marriage, because Wife was unable to submit documentation in support of these arguments.
Wife testified that the business is currently paying the monthly bills on the Citi and CapitalOne credit cards and all three accounts are current.
(11) Tax consequences.
The Court did not receive evidence on this issue.
CONCLUSION
Pursuant to 13 Del. C. § 1513(b), "marital property" is defined as "all property acquired by either party subsequent to the marriage, except . . . (c) property excluded by valid agreement of the parties." As with assets, "debts incurred during the course of the marriage are presumed to be marital." This Court has broad discretion in dividing marital property and debts.
Wharton v. Wharton, No. 386, 2012 WL 1431234, at *2 (Del. 2012).
In this case, the Court finds that the debt incurred on Husband's Chase credit card is a martial debt. The debt was incurred on July 30, 2014 and August 28, 2014, roughly one year prior to the parties separating. Additionally, Husband was aware of, and consented to, this debt. Though Husband may not have directly benefitted from Wife's business, as it appears that Wife has not derived any profit from the business thus far, Husband consented to the Chase debt with full understanding that the debt was incurred for the benefit of Wife's business. Had profit derived from Wife's business, those funds would have undoubtedly been used for the benefit of the marriage just as income earned by either spouse through their employment is used for the benefit of the marriage. Because the debt was incurred during the marriage, the debt is a marital debt.
Furthermore, the Court declines to hold that the parties contracted to exclude the Chase debt as a marital debt. Husband argues that the Chase credit card debt was handled by a valid agreement of the parties. Specifically, Husband asserts that Wife verbally agreed to assume full responsibility for that debt. Additionally, Husband references Wife's statements at the March 24, 2016 hearing that, when asked about the Chase debt, Wife responded, "it's already settled in my opinion," and "we already had a verbal agreement." Wife, on the other hand, argues that the parties did not have an agreement that she would be solely responsible for the debt. Additionally, Wife refused to sign a Debt Acknowledgement Form indicating that she would be solely responsible for the debt.
In order for the Court to hold that the parties had a valid enforceable contract indicating that Wife would be solely responsible for the Chase debt, Husband must prove (1) the intent of the parties to be bound, (2) sufficiently definite terms, and (3) consideration. The burden is on Husband to prove the existence of the contract by a preponderance of the evidence. Additionally, where, as here, Husband seeks to prove the existence of an oral contract, he must prove that the contract was "clear and precise."
Otto v. Gore, 45 A.3d 120, 138 (Del. 2012); Osborne v. Kemp, 991 A.2d 1153, 1158 (Del. 2010); Carlson v. Hallinan, 925 A.2d 506, 524 (Del. Ch. 2006).
Carlson, 925 A.2d at 524.
Id.; see also F.H.B. v. C.S.B., No. CN06-2341, 2007 WL 5158176, at *2 (Del. Fam. Ct. Oct. 31, 2007).
The Court declines to hold that a valid enforceable contract regarding the Chase debt existed. First, the Court is unable to find that both parties intended to be bound to such an agreement. In other words, the parties never reached a clear meeting of the minds on all material terms of the agreement. Husband proposed an Acknowledgement of Debt document to Wife stating that Wife was solely responsible for the Chase debt. However, Wife refused to sign that document. Wife's explicit refusal to sign that document indicates that she did not intend to be bound to such a proposal. Additionally, Wife testified that she does not believe that her statements to the Commissioner on March 24, 2016 evidenced that she was acknowledging sole responsibility for the Chase debt. The Court agrees. Wife's statement that the debt issue was "already settled" does not indicate in what way the debt was already settled between the parties. Furthermore, Wife's testimony that the terms of the agreement included her being responsible for the debt, but that she changed her mind afterwards, does not indicate that Wife communicated or intended to be fully and solely responsible for the debt. Wife's statements to the Court are insufficient to permit the Court to find that she intended to be bound to an agreement that she would be solely responsible for the Chase debt.
Second, because the terms of any actual agreement between the parties are ambiguous, the Court is unable to find that the parties had a contract with sufficiently definite terms. Husband argues that Wife verbally agreed to be solely responsible for the Chase debt. Wife argues that she did not. The Court remains unclear as to whether or not the parties ever even reached an agreement with regard to the Chase debt, let alone what any of the exact terms of that agreement may have been. Regarding any terms proposed at the time Husband made the money transfers in 2014, the Court was not presented with any evidence about the details of those terms or whether both parties intended to be bound by those terms. Though the parties may have reached an agreement at some point, the terms of that agreement are unclear and contentious.
Finally, Husband did not prove that any consideration was given in exchange for his transfer to Wife of the roughly $20,000.00 from his Chase credit card. Consideration is defined as "a benefit to a promisor or a detriment to a promisee pursuant to the promisor's request." Consideration exists when a promise is exchanged for another promise, action, or forbearance. The Court is unable to determine what consideration was given to Husband in exchange for his transfer of the $20,000.00. Assuming, arguendo, that the "bargained for exchange" in this case was the transfer of money for the promise to repay that money in full within one year, that argument was not sufficiently presented to the Court. Furthermore, the Court remains unclear about whether Husband's request that Wife pay off the Chase debt within one year occurred at the time the money transfers were made or afterwards.
Paoli v. Whispering Pines, C.A. No. 01-06-102, 2006 WL 2165690, at *2 (Ct. Com. Pl. Jul. 31, 2006).
Id.
The Court further notes that it does not find Wife's monthly minimum payments towards the Chase debt as dispositive. Wife testified that her business was making the monthly minimum payments only until such time as a final resolution could be reached regarding the debt. Both parties agree that the Chase money transfers were conducted to aid the start up of Wife's business. However, had any income derived from the business that money likely would have been used for the benefit the marriage.
Husband referenced Wife's failure to indicate on her 16(c) Financial Report that the Chase debt was a marital debt. Again, the Court does not find this dispositive. On the parties' 16(c), under Husband's proposed division, he indicated that the Chase debt was solely for Wife's benefit. Next to this assertion, under Wife's proposed division, she wrote "false statement." Though the Court agrees with Husband that Wife did not explicitly state that the debt was marital, her indication that the debt was not solely for her benefit does evidence her objection to Husband's assertion that she should be solely responsible for the debt.
Husband failed to meet his burden, by a preponderance of the evidence, that the parties had a valid enforceable contract detailing that Wife would be solely responsible for the Chase credit card debt and that the debt was not marital.
As stated above, all property acquired by either party subsequent to the marriage is marital property. Likewise, debts acquired by either party during the course of a marriage are presumed to be marital debts. Because Husband failed to prove that a contract indicating otherwise existed, the Chase credit card debt, acquired during the marriage, is a marital debt. The issue of whether Wife's business is marital property subject to distribution is not before the Court as Husband clearly indicated that he wanted nothing to do with the business and had no desire to seek an interest in the business. Both parties testified that the only issues for division were the four credit card debts addressed herein.
Upon analysis of the factors established in 13 Del. C. § 1513 and articulated above, the Court divides the marital Chase credit card debt 80% to Wife and 20% to Husband.
An 80/20 distribution is appropriate in this case given that the business for which the Chase debt was incurred belongs solely to Wife and Wife is the main beneficiary of any future profits derived from the business. Husband indicated that he has no desire to be a part of Wife's beauty salon and supply business. As such, Husband will not derive any income from this business and has not received any profit from the business thus far. In the event the business begins to profit in the future, Husband will not receive a share of those profits. Therefore, the Court finds it appropriate to allocate the majority of the Chase debt used to start the business to Wife. However, Husband did have knowledge of the debt when it was incurred in 2014 and, though he may have initially been against doing so, did consent to the money transfers. The debt was incurred during the parties' marriage, prior to separation, Husband was aware of and consented to the money transfers, and had the business derived a profit during the marriage, Husband would have shared in that profit. Additionally, Husband's economic circumstances support a holding that he be responsible for a portion of the debt. Husband has a stable source of income through his position at . Evidence was presented indicating that near the end of their marriage, Husband was helping Wife financially while she was suffering from her pulmonary embolism and was unable to work. Wife, on the other hand, testified that she has derived no income from her business thus far. Though Wife has been able to keep up with the business' bills and the monthly Chase credit card payment, she does not personally receive any income from the business. As such, the Court finds it appropriate to allocate 20% of the Chase debt to Husband. The Court finds that the debt is a marital debt which both parties are responsible for.
See Wharton, WL 1431234, at *2 (holding that Husband was responsible for 30% of Wife's student loan debt which was incurred during the parties' marriage, prior to separation, when Husband was aware, or should have been aware, that Wife took out the loans and was accumulating the debt during the marriage); see also C.S. v. K.S., No. CN98-10024, 1999 WL 33100115, at *4 (Del. Fam. Ct. Dec. 22, 1999) (holding that Husband was responsible for portion of Wife's law school debt because it was a marital debt incurred during the marriage and with the consent of Husband). --------
Regarding the Citi Bank and two CapitalOne credit card debts in Wife's name, the Court declines to hold that those debts are marital property. The Court was presented with no documentation evidencing when those debts were incurred or the purposes for which they were incurred.
As to the $5,000.00 that Wife discovered in a safe in the parties' marital home in November 2015, the Court is without sufficient evidence to divide those funds. It appears from Wife's limited testimony about the $5,000.00 that Husband retained possession of that money. Wife never questioned Husband about the $5,000.00 and Wife did not request that the Court award her a share of that $5,000.00. Because it is unclear what actually happened with the $5,000.00 and whether or not the $5,000.00 was marital property, the Court is unable to divide that asset.
Based on the foregoing, the Court hereby ORDERS the following: (1) Husband's Motion to Enforce Settlement Agreement is DENIED; (2) Wife shall be responsible for 80% of the parties' Chase credit card debt as of the date of this Order; (3) Wife shall pay 80% of the Chase debt as of the date of this Order to Chase within ninety days from the date of this Order, or Wife shall obtain refinancing of 80% of the Chase debt in order to remove Husband's name from the debt within ninety days from the date of this Order; (4) Husband shall be responsible for the remaining 20% of the Chase credit card debt; (5) Wife shall be solely responsible for the Citi Bank credit card debt in her name; (6) Wife shall be solely responsible for both CapitalOne credit card debts in her name; (7) the Court declines to divide the $5,000.00 found by Wife in a safe in November 2015 for the reasons discussed above; and (8) both parties shall act in good faith regarding the preparation, exchange, and execution of any documents needed to give effect to the terms of this Order.
IT IS SO ORDERED this 24th day of January 2017.
/s/_________
PETER B. JONES, JUDGE PBJ cc: