Opinion
NO. 2010-CA-001655-MR NO. 2011-CA-000551-MR
12-14-2012
ANDREA KAYE HARTMAN APPELLANT/CROSS-APPELLEE v. ERIC CREIGHTON HARTMAN APPELLEE/CROSS-APPELLANT
BRIEFS FOR APPELLANT/CROSS- APPELLEE: Fred E. Fugazzi, Jr. Susan Kennedy Lexington, Kentucky BRIEF FOR APPELLEE/CROSS- APPELLANT: Eileen M. O'Brien Lisa D. Morgan Lexington, Kentucky
NOT TO BE PUBLISHED
APPEAL AND CROSS-APPEAL FROM FAYETTE CIRCUIT COURT
HONORABLE JO ANN WISE, JUDGE
ACTION NO. 09-CI-5497
OPINION
AFFIRMING
BEFORE: CLAYTON, COMBS, AND MOORE, JUDGES. MOORE, JUDGE: Appellant/Cross-appellee, Andrea Kaye Hartman, appeals from a judgment dissolving her marriage to Eric Hartman. She argues that the trial court erred by: (1) including gifts as income for the purposes of child support and maintenance; (2) failing to properly value the marital interest in a business; and (3) awarding the entirety of the stock to her husband. Appellee/Cross-Appellant, Eric Creighton Hartman, argues that the trial court erred by: (1) granting relief under CR 60.02 to Andrea when the sale of the marital residence failed to generate the expected proceeds; and (2) considering a post-separation debt between Andrea and her parents to be marital. We affirm.
The marriage between the parties lasted 13 years and produced two minor children. Eric served as the president of customKynetics, a medical device company, and owned a 60% interest in the business. Andrea worked as a nurse. On October 16, 2009, Eric filed a petition for dissolution of marriage in Fayette Family Court. Following a final hearing, the trial court entered judgment dissolving the marriage on July 6, 2012. The trial court made the following pertinent findings:
(1) the 60% interest in customKynetics was a marital asset with a value of $25,533.00 and was awarded to Eric.Andrea timely appealed from the judgment. Meanwhile, the marital residence was sold, but did not generate the expected proceeds. Andrea received $23,727 from the sale. She then filed a motion for relief pursuant to CR 60.02(f), which the trial court granted by order entered on January 27, 2011. The trial court ordered Eric to pay Andrea the amount of $13,068.50. Eric appealed from the January 27, 2011 order. On April 26, 2011, this Court entered an order consolidating the two appeals to be heard as a direct appeal and cross-appeal. Additional facts will be developed as necessary.
(2) the marital residence was to be sold with the first $40,000.00 of the proceeds going to Andrea.
(3) Andrea's income for the purposes of child support and maintenance included $1,000.00 per month from gifts.
(4) Andrea was responsible for a marital debt of $34,600.00 to her parents.
Andrea first argues that the trial court erred by including monetary gifts from her father as income. She also argues that it was inconsistent for the trial court to find that she would continue to receive gifts, but was also indebted to her parents for a loan.
KRS 403.212(2)(b) states:
"Gross income" includes income from any source, except as excluded in this subsection, and includes but is not limited to income from salaries, wages, retirement and pension funds, commissions, bonuses, dividends, severance pay, pensions, interest, trust income, annuities, capital gains, Social Security benefits, workers' compensation benefits, unemployment insurance benefits, disability insurance benefits, Supplemental Security Income (SSI), gifts, prizes, and alimony or maintenance received. . . ."The trial court may determine that a gift should not be included in income if it is inconsequential, nonrecurring or unlikely to provide sufficient funds to pay the increased child support obligation." Stewart v. Burton, 108 S.W.3d 647, 648-49 (Ky.App. 2003). KRS 403.212(2)(a) creates "a presumption that future income will be on a par with the worker's most recent experience." Keplinger v. Keplinger, 839 S.W.2d 566, 569 (Ky.App. 1992). "The party who wants the trial court to use a different income level in applying the child support guidelines bears the burden of presenting evidence which would support the requested finding." Id. The determination of whether gifts constitute income is committed to the discretion of the trial court. Stewart, 108 S.W.3d at 648.
Eric testified that Andrea's parents had been extremely generous throughout the marriage through monetary gifts beginning at around $1,000.00 per year in the early days of the marriage to upwards of $20,000.00 per year recently. Andrea's parents also assisted in the purchase of the marital residence. Andrea's father, Elza Wayne Parke, testified that he made gifts to Eric and Andrea because he had been very successful and thought that the young people could use the help. Parke also testified that he made yearly monetary gifts and that in recent years he had made gifts of $10,000.00 to $20,000.00 per year. Parke testified that he loaned Andrea the amount of $35,000.00 after Eric filed for divorce and stated that he expected the money to be repaid through the sale of the residence. He explained that he considered the loan to be a completely different situation from the yearly gifting. Under these circumstances, we cannot conclude that the trial court abused its discretion when it included the gifts from Andrea's parents as income. Further, modification of child support under KRS 403.213 remains available should the circumstances change.
Andrea next argues that the trial court erred in valuation of the 60% ownership interest in customKynetics.
In Gaskill v. Robbins, 282 S.W.3d 306, 316 (Ky.App. 2009), our Supreme Court held that a business must be valued in its existing state for the purposes of dividing marital property under KRS 403.190. Andrea's expert witness, Calvin Cranfill, valued the assets of the business at $165,990.00 and the liabilities at $62,642.00. The value of the assets included the amount of $60,788.00 for the capitalization of patent costs. Eric's expert, John Herring, testified that the valuation of the capitalization costs was speculative because it is an intangible asset, which could only be reduced to a cash value at some future time. The trial court utilized the value placed by Cranfill minus the adjustment for capitalization of patent costs totaling $25,533.00 for Eric's 60% interest. "A trial court's valuation in a divorce action will not be disturbed on appeal unless it is clearly contrary to the weight of the evidence." Underwood v. Underwood, 836 S.W.2d 439, 443 (Ky.App. 1992), overruled on other grounds by Neidlinger v. Neidlinger, 52 S.W.3d 513 (Ky. 2001). We conclude that the trial court's valuation of the business was supported by substantial evidence.
Andrea also argues that the trial court erred by awarding Eric the entirety of the customKynetics stock when the stock was capable of division. The standard of review on issues involving the division of property is as follows:
[t]his court cannot disturb the findings of a trial court in a case involving dissolution of marriage unless those findings are clearly erroneous. . . . The property may very well have been divided or valued differently; however, how it actually was divided and valued [is] within the sound discretion of the trial court.Cochran v. Cochran, 746 S.W.2d 568, 569-70 (Ky.App. 1988). Andrea merely argues that the trial court could have divided the property differently. She provides no authority to demonstrate that the division was erroneous or inequitable. As stated above, a business is valued in its existing state as opposed to an indefinite future state. Gaskill, 282 S.W.3d at 316. Joint control of the business between the parties is not an acceptable resolution. See McGinnis v. McGinnis, 920 S.W.2d 68, 72 (Ky.App. 1995); Goldstein v. Goldstein, 377 S.W.2d 52 (Ky. 1964).
On cross-appeal, Eric argues that the trial court erred by granting Andrea's motions pursuant to CR 60.02.
In the judgment, the trial court ordered the marital residence to be sold and awarded Andrea the first $40,000.00 from the proceeds to effectuate an equitable division of marital property. Eric did not appeal from the judgment. After the decree was entered, the residence was sold at a lower price than was contemplated by the parties and the court. Andrea received $23,727.89. She filed a motion for relief pursuant to CR 60.02(f), which the trial court granted, and ordered Eric to pay Andrea $13,068.50. The trial court found that the payment was necessary to effectuate an equitable division of marital property.
The decisions of a trial court under CR 60.02 are reviewed for abuse of discretion. Snodgrass v. Snodgrass, 297 S.W.3d 878, 884 (Ky.App. 2009). Under CR 60.02(f), the movant must demonstrate a "reason of an extraordinary nature justifying relief." Id. Further, the movant must satisfy three factors: (1) relief is otherwise unavailable under CR 60.02; (2) whether the moving party had a fair opportunity to present his claim at the trial on the merits; and (3) whether the granting of CR 60.02(f) relief would be inequitable to other parties. Id.
Relief was not otherwise available under CR 60.02. Andrea did not have an opportunity to present this claim at trial. The judgment indicates that both parties and the court contemplated that Andrea would receive $40,000.00 from the sale of the residence. The granting of relief is not inequitable to Eric because the relief only effectuates the division provided by the judgment, from which he did not appeal. The $40,000.00 amount was necessary to equitably divide the marital assets. Before the award of the marital residence sale proceeds, the trial court found that Eric's net award was $17,801.00 and Andrea's net award was $23,808.00. Without the additional relief under CR 60.02, Andrea's net award of marital property would have been less than one hundred dollars. She was entitled to the amount set forth in the judgment. In Rasnick v. Rasnick, 982 S.W.2d 218, 221-22 (Ky.App. 1988), this Court held that the disparity between a husband's income and the amount he was ordered to pay in child support presented a prima facie case under CR 60.02(f). We cannot conclude that the trial court abused its discretion.
Finally, Eric argues that the trial court erred by considering Andrea's post-separation debt to her parents in its division of marital property.
The debt issue was decided in the original judgment entered on July 6, 2010. Eric did not file an appeal from the judgment; rather, Eric appealed from the order granting Andrea's motion for relief under CR 60.02, which was entered on January 27, 2011. Therefore, the issue is not properly preserved for review. Jackson v. Mackin, 277 S.W.3d 626, 630 (Ky.App. 2009); CR 74.01.
Accordingly, the judgment of the Fayette Circuit Court is affirmed in its entirety.
ALL CONCUR. BRIEFS FOR APPELLANT/CROSS-
APPELLEE:
Fred E. Fugazzi, Jr.
Susan Kennedy
Lexington, Kentucky
BRIEF FOR APPELLEE/CROSS-
APPELLANT:
Eileen M. O'Brien
Lisa D. Morgan
Lexington, Kentucky