Opinion
2018 CA 1690
06-28-2019
GENE E. LOCKHART, JR. v. JUANITA M. LOCKHART
Erik L. Burns Denham Springs, Louisiana Attorney for Plaintiff/Appellee Gene E. Lockhart, Jr. Jay Michael Futrell Jenel G. Secrease Ponchatoula, Louisiana Attorneys for Defendant/Appellant Juanita M. Lockhart
NOT DESIGNATED FOR PUBLICATION
APPEALED FROM THE TWENTY-FIRST JUDICIAL DISTRICT COURT IN AND FOR THE PARISH OF LIVINGSTON STATE OF LOUISIANA
DOCKET NUMBER 122746 HONORABLE JEFFREY C. CASHE, JUDGE Erik L. Burns
Denham Springs, Louisiana Attorney for Plaintiff/Appellee
Gene E. Lockhart, Jr. Jay Michael Futrell
Jenel G. Secrease
Ponchatoula, Louisiana Attorneys for Defendant/Appellant
Juanita M. Lockhart BEFORE: McDONALD, CRAIN, and HOLDRIDGE, JJ. McDONALD, J.
In an earlier decision in this community property partition case, this court amended and affirmed the trial court judgment in part, vacated the judgment in part, and remanded the case to the trial court for an evidentiary hearing of limited scope. Following the evidentiary hearing, the trial court rendered judgment. This is the appeal of that judgment.
FACTS AND PROCEDURAL HISTORY
The background facts in this decision are set out in a prior decision, Lockhart v. Lockhart, 2014-0581 (La. App. 1 Cir. 5/19/15), 2015 WL 2450654 * 1 (unpublished), as follows:
Gene E. Lockhart Jr. and Juanita M. Lockhart were married on August 28, 1982. A petition for divorce was filed on July 30, 2008, and the parties were divorced on February 5, 2009.
During the marriage, the parties formed Lockhart Insurance Agency, L.L.C. Ms. Lockhart is a licensed insurance agent, and Mr. Lockhart did accounting work for the agency. Also during the marriage, the parties formed Ryano & Beezer, L.L.C., which owned a building on Greenwell Springs Road in Central that housed the insurance agency. The Lockharts also owned a residence on Dialtha Drive in Watson. A second residence on Landmor Drive in Greenwell Springs was owned by the parties during the marriage and sold prior to the start of the trial.
. . . . .
After the trial, the trial court issued a judgment partitioning the community assets; awarding reimbursement to Mr. Lockhart by Ms. Lockhart of $115,952.31; allocating Lockhart Insurance Agency to Ms. Lockhart; ordering the dissolution of Ryano & Beezer, with any money in its bank account escrowed pending determination whether there were sufficient funds to reimburse Mr. Lockhart from the sale proceeds; and ordering Ms. Lockhart to deliver LSU memorabilia and an antique clock to Mr. Lockhart. Ms. Lockhart was cast for costs and for the cost of an expert forensic accountant. Ms. Lockhart appealed the judgment. [Footnote omitted.]
In that decision, this court amended the trial court valuation of Wal-Mart stock, and as amended, affirmed the trial court judgment in part. This court vacated the trial court judgment in part as to the valuation of a malpractice lawsuit settlement and the dissolution of Ryano & Beezer, and remanded the case for an evidentiary hearing to determine the value of the malpractice lawsuit and Ryano & Beezer. This court directed the trial court to then reallocate any or all of the parties' assets and liabilities and determine any balancing payments that might be owed. Lockhart, 2015 WL 2450654, *8.
As this court pointed out in the prior opinion, the trial court noted that while the two companies could have been "dealt with separately" from the community property partition, they were small, closely-held companies with the parties as the only members, and neither party objected to their being included within the community property partition. Lockhart, 2014-0581, *1, n. 1.
After remand, the case was tried on April 23 and 24, 2018, and the trial court took the case under advisement. Thereafter, the trial court ruled, finding that Ms. Lockhart's lost wages portion of the settlement was valued at $23,000.00, and that Mr. Lockhart's portion of the lost income claim was valued at $11,500.00. The trial court found that the Ryano & Beezer property on Greenwell Springs Road was sold for $259,000.00, minus a $22,113.20 sales commission (to be split between the parties), resulting in $237,786.77 placed in the registry of the court.
As to Ms. Lockhart's claim that Lockhart Insurance Agency was entitled to a reimbursement of $20,030.00 for a down payment used to purchase property on Landmor Drive, the trial court noted that its original judgment valued Lockhart Insurance Agency at $0, this court's remand did not address any changes to the valuation of Lockhart Insurance Agency, and denied the claim.
In regard to Ms. Lockhart's claim that Lockhart Insurance Agency was entitled to an additional reimbursement of $27,086.52 for the down payment on the Greenwell Springs property, the trial court denied the claim. Ms. Lockhart also claimed that she was entitled to a reimbursement of $53,598.82 for money taken from the community for the payment of a balloon note. This claim was denied. Ms. Lockhart's claim that Lockhart Insurance Agency was owed $12,871.00 for insurance policies paid on the Greenwell Springs building was also denied.
Mr. Lockhart's claim for reimbursement for property taxes totaling $7,479.99 was accepted by the trial court and Ms. Lockhart's portion of that payment was assessed at $3,739.99. Ms. Lockhart's claims for landscaping and building repairs were denied due to insufficient evidence, as were Ms. Lockhart's claims for a tax preparation bill. Mr. Lockhart's claim for property taxes totaling $13,557.31 was accepted by the trial court and Mr. Lockhart's portion of that payment was assessed at $6,788.65. Thus, Mr. Lockhart's reimbursement claim was valued at $6,788.65.
Ms. Lockhart has appealed that judgment. In her assignment of error she asserts that: (1) the trial court committed manifest error when it failed to consider the monies Ryano & Beezer owed Lockhart Insurance Agency and Ms. Lockhart when valuing the agency; and (2) the trial court erred when it created a value for an alleged claim of lost wages in her malpractice case settlement.
Mr. Lockhart answered the appeal, and makes four assignments of error. First, he asserts that the trial court erred in awarding reimbursement for property tax allegedly paid by Ms. Lockhart when there was insufficient evidence to show that Ms. Lockhart paid the property tax personally, and that the amounts paid were prior to the original trial; thus, this claim should not have been considered.
Second, Mr. Lockhart maintains that the trial court erred in determining the community interest in the malpractice case settlement was only $23,000.00, which he argues is contrary to the evidence. He maintains that at least $50,000.00 of the $125,000.00 settlement proceeds should have been determined to be community funds.
Third, Mr. Lockhart asserts that the trial court erred in finding that he was personally responsible for the money borrowed to pay one-half of the balloon note owed by Ryano & Beezer. He argues that the trial court should have considered the fact that this real estate was occupied by Ms. Lockhart and Lockhart Insurance Agency well after the trial court ruling and the court-ordered eviction, free of charge.
Fourth, Mr. Lockhart maintains that the trial court erred in not ordering Ms. Lockhart to amend tax returns for Lockhart Insurance Agency filed after the original trial where she caused him to be issued IRS 1099 forms (used for income received other than salary from an employer) on late filed tax returns for money he never received.
THE APPLICABLE LAW
The provisions of La. R.S. 9:2801 set forth the procedure by which community property is to be partitioned when the spouses are unable to agree on a partition of community property. Benoit v. Benoit, 2011-0376 (La. App. 1 Cir. 3/8/12), 91 So.3d 1015, 1018, writ denied, 2012-1265 (La. 9/28/12), 98 So.3d 838. Louisiana Revised Statute 9:2801 provides in part:
A. When the spouses are unable to agree on a partition of community property or on the settlement of the claims between the spouses arising either from the matrimonial regime, or from the co-ownership of former community property following termination of the matrimonial regime, either spouse, as an incident of the action that would result in a termination of the matrimonial regime or upon termination of the matrimonial regime or thereafter, may institute a proceeding, which shall be conducted in accordance with the following rules:
. . . . .
(4) The court shall then partition the community in accordance with the following rules:
(a) The court shall value the assets as of the time of trial on the merits, determine the liabilities, and adjudicate the claims of the parties.
(b) The court shall divide the community assets and liabilities so that each spouse receives property of an equal net value.
(c) The court shall allocate or assign to the respective spouses all of the community assets and liabilities. In allocating assets and liabilities, the court may divide a particular asset or liability equally or unequally or may allocate it in its entirety to one of the spouses. The court shall consider the nature and source of the asset or liability, the economic condition of each spouse, and any other circumstances that the court deems relevant. As between the spouses, the allocation of a liability to a spouse obligates that spouse to extinguish that liability. The allocation in no way affects the rights of creditors.
(d) In the event that the allocation of assets and liabilities results in an unequal net distribution, the court shall order the payment of an equalizing sum of money, either cash or deferred, secured or unsecured, upon such terms and conditions as the court shall direct. The court may order the execution of notes, mortgages, or other documents as it deems necessary, or may impose a mortgage or lien on either community or separate property, movable or immovable, as security.
(e) In the event that the allocation of an asset, in whole or in part, would be inequitable to a party, the court may order the parties to draw lots for the asset or may order the private sale of the asset on such terms and conditions as the court deems proper, including the minimum price, the terms of sale, the execution of realtor listing agreements, and the period of time during which the asset shall be offered for private sale.
THE STANDARD OF REVIEW
It is well settled that a trial court has broad discretion in adjudicating issues raised by divorce and partition of the community. A trial judge is afforded a great deal of latitude in arriving at an equitable distribution of the assets between the spouses. Factual findings and credibility determinations made in the course of valuing and allocating assets and liabilities in the partition of community property may not be set aside absent manifest error. However, the allocation or assigning of assets and liabilities in the partition of community property is reviewed under the abuse of discretion standard. Benoit, 91 So.3d at 1019.
VALUE OF LOST WAGES IN MALPRACTICE SETTLEMENT
MS. LOCKHART'S ASSIGNMENT OF ERROR NO. 2
MR. LOCKHART'S ASSIGNMENT OF ERROR NO. 2
As set out in our previous opinion, Lockhart, 2015 WL 2450654, * 5:
Mr. Lockhart testified that during their marriage, Ms. Lockhart was dismissed from a job and filed a lawsuit seeking damages for wrongful discharge and lost wages. According to Ms. Lockhart, the attorney representing Ms. Lockhart allowed the suit to prescribe and Ms. Lockhart filed a malpractice suit against the attorney, which was settled after the divorce. In her supplemental detailed descriptive list, Ms. Lockhart indicated the settled suit had an unknown value and was not a community asset.
Mr. Lockhart filed a motion to compel Ms. Lockhart to produce the settlement documents, which Ms. Lockhart failed to do. Ms. Lockhart was ordered by the trial court to submit the documents for an in camera inspection, which she also failed to do. The trial court then assessed the settlement with a $50,000.00 value, which was allocated to Ms. Lockhart.
. . . . .
The trial court acknowledged in its written reasons for judgment that the $50,000.00 value assessed to the settlement was an arbitrary amount. The record contains no support for this valuation, and we find manifest error in the trial court's assessment of an arbitrary amount for the settlement value. (Footnote omitted.)
On remand, evidence introduced into the record included: the reconventional demand filed by Ms. Lockhart against her employer; the confidential receipt, release, and indemnity agreement from Ms. Lockhart's malpractice claim; and Ms. Lockhart's Social Security earnings record. Ms. Lockhart testified that she did not know how much of the settlement was for lost wages, and that she was unable to obtain a detailed disbursement of the settlement proceeds.
Ms. Lockhart's malpractice claim was settled for $125,000.00. In Ms. Lockhart's pleadings in that case, Ms. Lockhart claimed damages including "emotional distress, humiliation, embarrassment, mental anguish, loss of wages, loss of future wages, loss of benefits, and loss of insurance coverage, punitive damages, reasonable attorney's fees , . . and all other general or equitable relief." She alleged that she was employed by the company from June 12, 1995, until her wrongful termination on June 28, 1999. Ms. Lockhart's social security records show that during those years of employment she earned $42,409.00 in 1996, $46,375.00 in 1997, $47,100.00 in 1998, and $41,310.00 in 1999. In 2000, her income dropped to $32,370.00, and she had no income in 2001, 2002, and 2003.
It is clear from Ms. Lockhart's reconventional demand that her damages claim included loss of past and future wages. Her Social Security earnings record shows that the year after her termination her income dropped from $41,310.00 to $32,370.00, and in the three years following she had no income. After a thorough review of the record, we cannot say that the trial court manifestly erred or abused its discretion in valuing the lost wages portion of the settlement at $23,000.00.
VALUATION OF LOCKHART INSURANCE AGENCY
MS. LOCKHART'S ASSIGNMENT OF ERROR NO. 1
Ms. Lockhart asserts that the trial court committed manifest error in finding zero value in debts owed by Ryano & Beezer to Lockhart Insurance Agency. Mr. Lockhart asserts that Ms. Lockhart simply failed to put forth evidence to support those claims at the first trial, and maintains that Ms. Lockhart should not have been allowed to retry her case a second time on remand. We note that the case was remanded by this court for an evidentiary hearing on the value of Ryano & Beezer. We address the various claims under this assignment of error individually. Landmor Property
Ms. Lockhart maintains that in September of 2005 Lockhart Insurance Agency paid a down payment of $20,030.00 for a lot on Landmor Drive in Denham Springs and also $20,000.00 for an office building for that location for Ryano & Beezer, and was never reimbursed by Ryano & Beezer for these amounts. Mr. Lockhart maintains that Ms. Lockhart failed to provide documents to support this claim and notes that this property was transferred into the individual names of the parties prior to the community property termination.
The record shows that the Landmor property was transferred into the parties' names in order to facilitate refinancing and the property was later sold, all prior to the termination of the community. There was no written evidence of a loan from Lockhart Insurance Agency to Ryano & Beezer for this property. (Exhibit 4, Mr. Lockhart, R.pp. 1141-43 & through 1146, see also CPA Shane Bennett's testimony p. 1342) After a thorough review, we cannot say that the trial court committed manifest error or abused its discretion in denying this claim. Down Payment
Ms. Lockhart asserts that Lockhart Insurance Agency paid a down payment in the amount of $27,086.52 for an office building on Greenwell Springs Road on behalf of Ryano & Beezer. She maintains that this down payment, totaling $29,063.69 with interest, was never repaid to Lockhart Insurance Agency. Mr. Lockhart maintains that Ms. Lockhart failed to present any evidence of such payment. Further, he notes that even if there were such a loan made on behalf of Ryano & Beezer, he would have been due one-half the value as Lockhart Insurance Agency was a community asset at that time. Shane Bennett, Mr. Lockhart's CPA, testified that he found nothing in the record to support such a loan from Lockhart Insurance Agency to Ryano & Beezer. (R. p. 1342) After a thorough review, we cannot say the trial court manifestly erred or committed an abuse of discretion in denying this claim. $53,598.82 Reimbursement
Ms. Lockhart maintains that she is owed a $53,598.82 reimbursement by Ryano & Beezer for her portion of funds used to pay toward the Ryano & Beezer mortgage. According to Mr. Lockhart, after the community home (the Dialtha house) was sold, the sale proceeds were placed in a Hancock Bank account which neither party could access pending orders of the court or agreement of the parties. Thereafter, Lockhart Insurance Agency ceased paying rent, and Ryano & Beezer ceased paying the mortgage, which was personally guaranteed by the parties. The mortgage payment was then debited from the community home proceeds account at Hancock Bank until the balloon note matured and the entirety of the account was seized to pay toward the Ryano & Beezer mortgage.
We note that one-half of $107,187.64 would be $53,593.82 rather than $52,598.82. --------
Mr. Lockhart maintains that this issue was addressed by this court in the previous appeal. As this court noted in our previous opinion, the proceeds of the Dialtha house were only one piece of the complex puzzle that the trial court had to put together to account for the assets and liabilities of the parties. In that opinion, this court affirmed the trial court's judgment ordering Ms. Lockhart to reimburse Mr. Lockhart for proceeds from the sale of the Dialtha house, which was a community property asset. Lockhart, 2015 WL 2450654 * 6. Mr. Lockhart asserts that if this court were to now say that Ms. Lockhart is due $53,598.92, it would be equivalent to reversing our earlier ruling. After a thorough review, we cannot say that the trial court manifestly erred or committed an abuse of discretion in denying this claim. Real Estate Fee
Ms. Lockhart claims she should not be responsible for any real estate fees associated with the sale of the Ryano & Beezer office building. Ms. Lockhart claims she was "unilaterally . . . evicted judicially" and the property was sold without consulting her. Mr. Lockhart maintains that the trial court ordered on November 21, 2013 that Ms. Lockhart and Lockhart Insurance Agency were to vacate the premises and the property immediately be listed for sale. However, he notes that Ms. Lockhart defied the order and stayed on the premises, requiring him to file a petition to make the judgment executory. He maintains that Ms. Lockhart stayed on the premises unlawfully during the interim without paying any financial obligations other than those which were a sole benefit to her occupancy. After a thorough review, we cannot say that the trial court committed manifest error or abused its discretion in assessing each party with one-half of the realtor fee for the sale of the Ryano & Beezer office building. Landscaping and Maintenance Costs
Ms. Lockhart maintains that the trial court erred in failing to find that Ryano & Beezer owed Lockhart Insurance Agency $9,215.00 for landscaping and maintenance costs. Mr. Lockhart maintains that there was no evidence presented to support this claim, and further, if evidence of this claim had been presented, the claim would still have been properly denied because Lockhart Insurance Company was still occupying the property and there was no evidence to show who was obligated to maintain the property.
The trial court found that Ms. Lockhart did not present sufficient evidence to substantiate payments related to landscaping and building maintenance. Ms. Lockhart's evidence consisted of a summary of claims made on the insurance policy for Lockhart Insurance Agency which showed payouts by CAN for storm damage to the building's roof and siding and showing the deductibles on each claim. However, there were no receipts to show that the work was actually done or who paid for any such work. After a thorough review of the record, we find no manifest error in the trial court's determination that Ms. Lockhart did not present sufficient evidence for this claim. Tax Return and Bookkeeping Work
Ms. Lockhart claims that the trial court erred in not awarding her $6,810.00 for tax return and bookkeeping work for Ryano & Beezer that was paid for by Lockhart Insurance Agency. Mr. Lockhart asserts that the bulk of the work was for Lockhart Insurance Agency, the tax returns bill was for years that pre-dated the first trial, and included tax returns for the time during which Ms. Lockhart had full control of the Ryano & Beezer checking account. He also notes that there were three large charges titled as "Research Info For Courts," and that any such work following the filing of the divorce was done solely under the direction of and for the benefit of Ms. Lockhart.
The trial court determined that, based on the testimony of the parties, this bill would not be considered a liability of Ryano & Beezer. Our review of the record shows that the tax returns at issue were prepared after Lockhart Insurance Agency was allocated to Ms. Lockhart by the trial court. After a thorough review of the record, we cannot say that the trial court committed manifest error or abused its discretion in finding this tax return and bookkeeping bill was not a liability of Ryano & Beezer. Insurance Premiums and Deductibles
Ms. Lockhart asserts that the trial court erred in not awarding her $14,935.32 for insurance premiums and deductibles that Lockhart Insurance Agency paid on behalf of Ryano & Beezer. Mr. Lockhart maintains that the insured on the policy was Lockhart Insurance Agency, any coverage for the building was minimal compared to the coverages for Lockhart Insurance Agency, and that Ms. Lockhart simply failed to prove this claim.
The trial court found that it was not clear how much of the policy was for coverage of Ryano & Beezer's office building. Our review of the evidence shows that the insured on the policy was Lockhart Insurance Agency. While the policy did include building coverage, it also included numerous coverages related only to the business of Lockhart Insurance Agency. These items included business income coverage, employee dishonesty/forgery coverage, interruption of computer operations coverage, and auto liability coverage. After a thorough review of the record, we cannot say that the trial court committed manifest error or abused its discretion in not awarding Ms. Lockhart this claim for insurance premiums and deductibles.
REIMBURSEMENT OF PROPERTY TAXES
MR. LOCKHART'S ASSIGNMENT OF ERROR NO. 1
In this assignment of error, Mr. Lockhart asserts that the trial court erred on remand in finding that Ms. Lockhart was due a reimbursement of $3,739.99 for one-half of the property taxes Ms. Lockhart allegedly paid for 2008, 2009, and 2010 for the Ryano & Beezer office building. Ms. Lockhart maintains that the reimbursement claim is a liability owed by Ryano & Beezer.
Ms. Lockhart submitted receipts for payment of these taxes and testified she or Lockhart Insurance Agency made the payments. Mr. Lockhart conceded at trial that Ms. Lockhart paid these taxes; however, he then equivocated, stating that he did not pay the taxes and was unsure who paid them.
After a thorough review of the record, we find no manifest error or abuse of discretion in the trial court's finding that Mr. Lockhart owed Ms. Lockhart a reimbursement of $3,739.99 for one-half of the property taxes she paid personally or through Lockhart Insurance Agency on behalf of Ryano & Beezer.
RYANO & BEEZER NOTE
MR. LOCKHART'S ASSIGNMENT OF ERROR NO. 3
In this assignment of error, Mr. Lockhart maintains that the trial court erred in finding him personally responsible for money borrowed to repay one-half of the balloon note of Ryano & Beezer for its office building. He asserts that the building was occupied free of charge by Lockhart Insurance Agency and Ms. Lockhart long after the trial court's ruling and the court-ordered eviction. Thus, Mr. Lockhart maintains that at a minimum, his obligation to be personally responsible for a $23,842.57 debt for a loan he had to secure to pay off the Ryano & Beezer mortgage should be offset to some degree by the free rent.
Ms. Lockhart maintains that essentially Mr. Lockhart is asking the court to order her to pay Mr. Lockhart $154,882.78 for Ryano & Beezer's only asset, its building, while also asking that she be made to forgo any of the monies realized from its sale because Lockhart Insurance Agency occupied the building for eight months.
After a thorough review of the record, we find no manifest error or abuse of discretion in the trial court's finding that Mr. Lockhart owed Ms. Lockhart a reimbursement of $23,842.57 for one-half of the balloon note owed by Ryano & Beezer.
TAX RETURNS
MR. LOCKHART'S ASSIGNMENT OF ERROR NO. 4
In this assignment of error, Mr. Lockhart asserts that the trial court erred in not ordering Ms. Lockhart to amend tax returns for Lockhart Insurance Agency filed after the original trial because she is responsible for Mr. Lockhart's being issued IRS 1099 forms on late-filed tax returns for money he never received. Ms. Lockhart does not address this assignment of error.
This case was remanded for limited purposes, and we find that this issue was not part of the scope of the remand. Thus, we find no manifest error or abuse of discretion in the trial court not ordering Ms. Lockhart to amend tax returns for Lockhart Insurance Agency.
DECREE
Therefore, for the foregoing reasons, we affirm the trial court judgment. Costs of this appeal are assessed one-half against Gene E. Lockhart, Jr., and one-half against Juanita M. Lockhart.
AFFIRMED.