Opinion
File No.: CN12-05056 Petition No.: 16-37073
05-31-2019
Re: E T v. K T
Susan C. Over, Esquire
300 N. Market Street, Ste. 205
Wilmington, DE 19801 Shawn Dougherty, Esquire
305 N. Union Street, Second Floor
P.O. Box 2324
Wilmington, DE 19899-2324 LETTER DECISION AND ORDER
RE: MOTION TO REARGUE Petition Type: Ancillary Matters: Wife's Motion for Reargument Dear Counsel:
The Court held a hearing on December 6, 2018, to resolve all matters ancillary to the divorce of E T ("Husband") and K T ("Wife"). Wife was represented by Shawn Dougherty, Esquire ("Wife's Counsel"). Husband was represented by Susan Over, Esquire ("Husband's Counsel"). In dispute was Wife's request for alimony and the division of the parties' marital estate. After considering the evidence presented, the Court issued a Final Ancillary Order on February 25, 2019. Wife filed a Motion for Reargument on March 5, 2019, concerning the Court's decision regarding the property on H Street. This Order addresses Wife's Motion for Reargument.
PROCEDURAL HISTORY
Due the number of pleadings in this case, the Court is only going to address the most relevant pleadings in regards to the current Motion for Reargument. For a more thorough procedural history, the parties can refer to the court file.
The parties were married on April 22, 1996 and were divorced by final decree on June 21, 2017. The Ancillary Hearing was held on December 6, 2018. At the beginning of the hearing, the parties' provided the Court with a Matters in Agreement/Matter's in Dispute that was signed by both parties and their respective counsel. On December 18, 2018, Husband filed a Motion to Supplement the Record. Husband was seeking to introduce a complete history of the church's payment of the mortgage from a church officer. Husband alleged that the exhibit would supplement the evidence already produced at the trial and make a clearer and more accurate record. Wife filed a Response to the Motion to Supplement the Record, opposing the Motion. Wife alleged there was no basis to supplement the record and that Wife would need the opportunity for cross examination. On January 7, 2019, the Court denied Husband's Motion to Supplement the Record. The Court stated that Husband's opportunity to present such evidence was on the date and time of the trial, and it would be prejudicial to allow such documents to be admitted at that juncture.
The Court issued a Final Ancillary Order on February 25, 2019. Wife filed a Motion for Reargument on March 5, 2019 concerning the Court's decision regarding the Church on H Street. Wife alleged that (1) the Court overlooked controlling precedent and legal principles and misapprehended the laws or facts in reaching its determination which affected the outcome of the Court's decision. (2) Wife claimed that the Court indicated that Wife failed to meet her burden of proof that N C C Church was comprised of only Husband and Wife. Wife submitted that the burden to prove the property was non-marital rested on Husband not Wife. (3) Wife also argued that both parties acknowledged that they were the only shareholders as it related to the Heald Street property and that Husband indicated that he had the corporate papers but had not produced them. Wife believed Husband testified that he and Wife were the only officers of the corporation and that there were no corporate minutes or corporate meetings that took place. (4) Wife alleged that Husband never disputed that he and Wife purchased the church with funds from a mortgage on their Ogantz property. Rather, Husband argued that it was owned by a non-profit corporation pursuant to the deed. Both parties acknowledged that they were the non-profit corporation, and that the address on the deed was the parties' former marital residence. (5) Wife stated that she testified that the parties incorporated the church in order to have tax exempt status. Although the documents were in Husband's possession, Husband failed to produce them. Wife had recently found records of Husband's indicating that the only owners of the charitable organization were Husband and Wife. Wife attached those records to her Motion for Reargument. (6) Wife argued that the process the parties entered into with regard to a tax exempt organization was similar to a party holding real estate in an LLC to avoid liability, as well as have certain tax benefits. Wife claimed there was no dispute that the parties purchased the N C C Church with their own funds and that the mortgage payments were paid by the parties own funds and partly by tithings. (7) Wife argued that the arrangement the parties had was similar to that of owning a rental property and having the tenant pay rent, which Wife claimed was essentially what had taken place as it related to the church. Wife also believed that any increase in value of the property should also be considered as marital property subject to division. (8) Lastly, Wife claimed that as the H Street property was clearly owned by the parties through a corporation owned solely by the parties, Husband failed to rebut the presumption that the property was a non-marital asset and failed to have the property appraised. Wife requested that the Court grant reargument of the February 25, 2019 Order and require that the H Street property be sold with a mutually agreed upon realtor.
Husband filed a Motion for Reargument on March 7, 2019 concerning the Court's alimony award to Wife. Husband also filed a Petition Rule to Show Cause on March 8, 2019. On March 13, 2019, Husband filed a response to Wife's Motion for Reargument, summarized as follows: (1) Husband did not believe the Court overlooked controlling precedent and legal principles or misapprehended the laws or facts in reaching its determination that the N C C Church was not marital property. (2) Husband believed Wife's arguments were flawed. Husband stated that he produced ample evidence from which the Court could have concluded that the Church was not marital property, including the deed to the property in the name of a non-profit corporation, documentation of the contribution of other members to the purchase of the property and evidence of the church members' in-kind monetary contribution to improve the property, the source of the funds in the Church account used to purchase the property to name a few additional other factors considered by the Court. Husband denied that it was his burden under the circumstances shown to establish the property to be non-marital wherein the deed to the subject property was in the name of a third party, and thus, not acquired by either party. (3) Husband denied Wife's third arguments stating that the argument had been raised and rejected by the Court and was not a proper basis to grant reargument. (4) Husband denied Wife's fourth argument stating that he testified that the Church purchased the property and he and Wife agreed to loan the church a portion of the purchase price; that the balance of the purchase price was paid through the church funds; and that extensive improvements were made by the church members. (5) Husband objected to the consideration of evidence that was not presented at trial as being inappropriate in a Motion for Reargument. Husband claimed it was hearsay evidence that should be stricken from the record. (6) Husband denied Wife's sixth argument and argued that the parties did not purchase the property, rather the Church did as discussed in the Court's decision. (7) Husband denied Wife's seventh argument stating that argument as well as others raised by Wife were raised and rejected by the Court and did not provide a basis for reargument. (8) Lastly, Husband denied that Wife's request was an appropriate resolution for the Motion. Husband requested that the Motion for Reargument be denied and that Husband should be awarded reasonable counsel fees incurred in responding.
Also on March 13, 2019, Wife filed a response to Husband's Motion for Reargument. On March 13, 2019, Husband filed a Motion and Affidavit for Priority Scheduling concerning his Petition Rule to Show Cause. On April 4, 2019, the Court advised the parties by letter that the Court was in receipt of Counsel's Motions, Responses and a Petition Rule to Show Cause filed in the above captioned matter; the Court would address Wife's Motion for Reargument on the papers; and Husband's Motion for Reargument and Petition Rule to Show Cause would be scheduled for a combined two-hour hearing. The Court stated that during the hearing on Husband's Motion for Reargument, the Court would only consider arguments related to expenses for either party for the marital home, and the utility expenses related to properties in Philadelphia. The Court advised it would credit Husband for payments made to Wife in the amount of $344.00 per month for the months of January 2019 until the issuance of the Ancillary Order. The Court noted it was not a time for the parties to re-litigate all of the expenses addressed during the hearing, nor was it a time to present new evidence that was not presented during the initial hearing. The Court was to contact counsel to schedule the two hour hearing as soon as practicable.
On April 4, 2019, Wife filed a Response and Counterclaim to Husband's Petition Rule to Show Cause. Husband filed a Response to Wife's Counterclaim Rule to Show Cause. Husband's Petition Rule to Show Cause and Motion for Reargument are scheduled for June 4, 2019 from 1:00 p.m. to 3:00 p.m.
LEGAL STANDARD
A Motion for Reargument will "be denied unless the Court overlooked a controlling precedent or legal principles, or unless the Court misapprehended the law or facts in a manner that affected the outcome of the decision." A Motion for Reargument will not be granted simply because one party is unhappy with the ruling or wishes to submit evidence that could have been submitted at the hearing.
Ramon v. Ramon, 963 A.2d 128 at 136 (Del. 2008).
I In re the Marriage of Silverstein, 1997 WL 905948, *2 (Del. Fam. Ct. Oct. 23, 1997)(citing Goldstein v. Goldstein, CN96-06217, (Del. Fam. Ct. May 21, 1997), slip op. at 1 (citing In re Marriage of Gray, CN94-09568 (Del. Fam. Ct. Jan. 10, 1997), slip op. at 5)). --------
ANALYSIS/DISCUSSION
The Court finds that it did not overlooked controlling precedent and legal principles or misapprehended the laws or facts in reaching its determination that the property on H Street was not marital property. In the Final Ancillary Order, the Court restated the definition of marital property as defined by 13 Del. C. § 1513 (b) and (c) and used that definition in its analysis. As stated in the Final Ancillary Order:
Marital property is defined by 13 Del. C. § 1513 (b) and (c):
(b) For purposes of this chapter only, "marital property" means all of the following:
(1) All property acquired by either party subsequent to the marriage, except any of the following:
a. Property acquired by an individual spouse by bequest, devise, or descent or by gift, except gifts between spouses, provided the gifted property is titled and maintained in the sole name of the donee spouse, or a gift tax return is filed reporting the transfer of the gifted property in the sole name of the donee spouse or a notarized document, executed before or contemporaneously with the transfer, is offered demonstrating the nature of the transfer.
b. Property acquired in exchange for property acquired prior to the marriage.
c. Property excluded by valid agreement of the parties.
d. The increase in value of property acquired prior to the marriage.
(2) All jointly-titled real property acquired by the parties prior to their marriage, unless excluded by valid agreement of the parties. For purposes of this paragraph, "jointly-titled real property" includes joint tenancy, tenancy in common, and any other form of co-ownership.
(c) All property acquired by either party subsequent to the marriage is presumed to be marital property regardless of whether title is held individually or by the parties in some form of co-ownership such as joint tenancy, tenancy in common or tenancy by the entirety. The presumption of marital property is overcome by a showing that the property was acquired by a method listed in paragraphs (b)(1)a. through d. of this section. Property transferred by gift from 1 spouse to the other during the marriage is marital property.
The Court finds that the N C C Church located on H Street is not marital property and therefore is not subject to the Court's jurisdiction. The deed entered into evidence grants the property on H Street to N C C Church, a Pennsylvania Corporation. Both parties testified that N C C Church was incorporated yet neither party entered into evidence the incorporation documents. The Court notes that the grantee's address listed on the deed is the parties' former marital home, however this is not sufficient to convert the church into marital property. The property is not titled in Husband or Wife's name alone or together. Wife failed to meet her burden to prove that N C C Church is comprised of only Husband and Wife. In addition, the mortgage the parties took out to purchase the
church was on their marital property located on Ogantz Avenue. Thus the parties do not even have a note in their name against the H Street property. As such, the property does not meet the definition of marital property and is therefore outside of the Court's authority to divide in an ancillary proceeding. Instead, the Court believes that the outstanding loan made to the church by Husband and Wife is a receivable asset that should be divided by the parties according to a 60%/40% division in Wife's favor.
The Court did not incorrectly apply the burden to Wife as alleged in Wife's second argument. The Court agrees with Wife's statements that there are four separate exceptions listed in the definition of marital property and that the burden of proving an exception is on the person seeking to have the property excluded as non-marital. See 13 Del. C. §1513(b). However, in the instant case, the Court found that the property was never marital property as it was not property acquired by either party subsequent to the marriage. The property was not titled in Husband or Wife's name alone or together, rather, the property was titled in a Pennsylvania corporation. The Court never reached the step of considering one of the four exceptions to the definition of marital property, as the property never met the initial definition of marital property. The evidence presented at the ancillary hearing was insufficient to demonstrate that the property met the initial definition of marital property, that the property was property acquired by either party subsequent to the marriage. As such, the presumption that the property was marital was never triggered, as the property was not acquired by either party subsequent to the marriage and is instead property owned by a separate entity.
Wife also argued that both parties acknowledged that they were the only shareholders as it related to the H Street property. However, even if Wife's statement was accurate, neither party presented the Court with any documentation at the Ancillary Hearing regarding incorporation documents for the H Street property; only the deed to the property was introduced.
In regards to Wife's fourth argument, the Church was purchased with funds from a mortgage on the Ogantz property, but additional monies from the Church account were also used in addition to the mortgage funds to purchase the H Street property. In addition, while the address on the deed listed the former marital home, the Court found that this was not sufficient evidence for the Court to conclude that Pennsylvania corporation consisted of solely Husband and Wife. Neither Husband nor Wife introduced any further documentation regarding the Pennsylvania corporation that the H Street property was titled in at the time of the Ancillary Hearing.
The Court is not going to consider the additional documentation Wife attached in her Motion for Reargument. The time to submit evidence was at the Ancillary Hearing. Husband attempted to supplement the record after the hearing and Wife objected stating that the additional documentation would require cross-examination. The Court finds that the same would be true regarding the documentation Wife now seeks for the Court to review. Similar to the Court's ruling regarding the documentation Husband wanted to submit after the Ancillary Hearing, the Court finds that Wife's opportunity to present such evidence was on the date and time of the trial, and it would be prejudicial to allow such documents to be admitted at this juncture. Moreover, Wife did not request a hearing on her Motion for Reargument.
Wife argued that the process the parties entered into with regard to a tax exempt organization was similar to a party holding real estate in an LLC to avoid liability, as well as have certain tax benefits. It was Wife's position at trial that Husband intentionally titled the H Street property in the name of a non-profit corporation to avoid paying taxes. Husband however, never testified to that affect and rather stated that the Church purchased the property using some funds from the church account and the reminder of the funds for the purchase price came from the mortgage taken out on the Ogantz property. In addition, one of Husband's witness at the Ancillary Hearing testified that the Church was making the payments on the Ogantz mortgage from the tithes collected.
The Court disagrees with Wife's seventh argument, that the arrangement the parties had was similar to that of owning a rental property and having the tenant pay rent. Again, the H Street Property is not titled in Wife or Husband's name alone or jointly, rather it is titled in a third party Pennsylvania corporation. There is no basis for the Court to consider the increase in value of the property as marital property subject to division as the property itself was never marital property.
In conclusion, the Court did not overlook controlling precedent or legal principles, or misapprehend the laws or facts in holding that the property on H Street was not marital property. Therefore, the Court holds that Wife presented no basis for the Court to grant the Motion for Reargument. Wife's Motion for Reargument is DENIED.
ORDER
IT IS HEREBY ORDERED this 31st day of MAY, 2019 that:
1. Wife's Motion for Reargument is DENIED.
2. The parties shall each be responsible for their own attorney's fees.
IT IS SO ORDERED.
/s/ _________
NATALIE J. HASKINS, JUDGE NJH/pmw Xc: File, Parties Date mailed/emailed: