Opinion
NO. 2014-CA-001939-MR
01-08-2016
KENNETH RISHEL APPELLANT v. SHANNON RISHEL APPELLEE
BRIEFS AND ORAL ARGUMENT FOR APPELLANT: Phillip W. Smith Leitchfield, Kentucky BRIEF FOR APPELLEE: Jeremy Scott Aldridge Carey Hendricks Aldridge Elizabethtown, Kentucky ORAL ARGUMENT FOR APPELLEE: Jeremy Scott Aldridge Elizabethtown, Kentucky
NOT TO BE PUBLISHED APPEAL FROM GRAYSON CIRCUIT COURT
HONORABLE ROBERT A. MILLER, JUDGE
ACTION NO. 12-CI-00213 OPINION
AFFIRMING BEFORE: CHIEF JUDGE ACREE; NICKELL AND TAYLOR, JUDGES. TAYLOR, JUDGE: Kenneth Rishel brings this appeal from Findings of Fact, Conclusions of Law, and Order of the Grayson Circuit Court entered November 4, 2014, dividing the parties' marital property and allocating debt. We affirm.
Kenneth and Shannon Rishel were married March 27, 2004. There were no children born of the marriage. The parties separated on October 20, 2011. Kenneth filed a petition for dissolution of marriage in the Grayson Circuit Court on June 12, 2012. The circuit court referred the matter to the Domestic Relations Commissioner (DRC) for an evidentiary hearing. The hearing was conducted on July 30, 2013. Based upon the DRC's recommendation, a limited decree of dissolution was entered by the circuit court on August 20, 2013, dissolving the parties' marriage but reserving all other issues, including property division, for later adjudication.
On November 20, 2013, the DRC tendered Proposed Findings of Fact, Conclusions of Law, and Judgment (November 20, 2013, recommended findings) to the circuit court as concerned the remaining issues before the court. Without waiting the requisite ten days as required by Family Court Rules of Procedure and Practice (FCRPP), Rule 4(4), the circuit court, after making minor modifications, entered the recommended findings on November 25, 2013 (November 25, 2013, judgment). Thereafter, Kenneth filed a motion pursuant to Kentucky Rules of Civil Procedure (CR) 59 to alter, amend, or vacate the November 25, 2013, judgment and argued that the ten-day period to file exceptions had not passed. By order entered January 15, 2014 (January 15, 2014, order), the circuit court vacated the November 25, 2013, judgment indicating a procedural error had occurred in entering the earlier judgment.
After the July hearing before the Domestic Relations Commissioner (DRC), both parties had submitted proposed findings of fact and conclusions on the disputed issues to the DRC. The DRC's recommended findings and conclusions appeared in pertinent part to be those tendered by Shannon Rishel.
Almost ten months later, on November 4, 2014, the circuit court entered its Findings of Fact, Conclusions of Law, and Order (November 4, 2014, order). Therein, the court assigned the residence to Shannon as her nonmarital property and allocated the remaining debt thereon (approximately $50,000) to be paid three-fourths by Kenneth and one-fourth by Shannon. This appeal follows.
Kenneth contends that the circuit court's November 25, 2013, judgment was not the result of deliberation by the court and was prematurely entered in violation of CR 53.05. Kenneth specifically asserts that the circuit court improperly delegated its decision-making authority by utilizing the proposed judgment submitted by Shannon's counsel. Kenneth also argues that the parties have ten days to file exceptions to the DRC report and that the court failed to wait the requisite ten days when rendering the November 25, 2013, judgment.
It is well-established in actions tried without a jury CR 52.01 governs and provides, in relevant part:
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 witness. . . .A circuit court is not prohibited from delegating "the clerical task of drafting proposed findings of fact and conclusions of law," but the court must ensure it "does not abdicate its fact-finding and decision-making responsibility under CR 52.01." Bingham v. Bingham, 628 S.W.2d 628, 629 (Ky. 1982) (citing Kentucky Milk Marketing & Anti-Monopoly Comm. v. Borden Co., 456 S.W.2d 831 (Ky. 1970)). Simply put, unless it is demonstrated that the findings of fact, conclusions of law, and judgment are not the product of the circuit court's deliberation, the judgment is sufficient to satisfy CR 52.01 and will not be disturbed on appeal. Id.
It must be emphasized that the November 25, 2013, judgment was vacated by the circuit court in its January 15, 2014, order. The circuit court recognized that the November 25, 2013, judgment was prematurely rendered in violation of FCRPP, Rule 4 and vacated same. Thereafter, the circuit court re-examined the disputed issues and rendered the January 15, 2014, order. Therefore, any issues regarding the circuit court abdicating its fact-finding responsibility as to the November 25, 2013, judgment or not allowing ten days to lapse before entry of the judgment were rendered moot when the circuit court corrected its earlier error pursuant to the CR 59 proceedings.
The circuit court's order entered January 15, 2014, vacated the judgment entered on November 25, 2013, and the parties were given ten days to file objections to the DRC's recommendation.
Kenneth next argues that the circuit court erred in its November 4, 2014, order, by determining that there was no marital interest in the parties' residence. There is no dispute that Shannon owned the residence when the parties were married and Kenneth concedes that the residence was Shannon's nonmarital property in part; however, he asserts that he made improvements to the residence during the parties' marriage and should be allocated a marital interest in the property. Kenneth testified the improvements to the mobile home included the addition of a two-car garage, remodel of a bathroom and kitchen, and landscaping. Kenneth maintains that these improvements to the residence added value thereto and that such added value should be considered marital.
KRS 403.190 governs disposition of property in a dissolution of marriage proceeding and provides, in relevant part:
(1) In a proceeding for dissolution of the marriage or for legal separation, or in a proceeding for disposition of property following dissolution of the marriage by a court which lacked personal jurisdiction over the absent spouse or lacked jurisdiction to dispose of the property, the court shall assign each spouse's property to him. It also shall divide the marital property without regard to marital misconduct in just proportions considering all relevant factors including:
(a) Contribution of each spouse to acquisition of the marital property, including contribution of a spouse as homemaker;
(b) Value of the property set apart to each spouse;
(c) Duration of the marriage; and
(d) Economic circumstances of each spouse when the division of property is to become effective, . . . .
Property division in a dissolution action first requires the circuit court to assign each spouse the nonmarital property belonging to him/her. Snodgrass v. Snodgrass, 297 S.W.3d 878 (Ky. App. 2009). Thereafter, the court may divide the marital property in just proportions. Id. When an item has both marital and nonmarital components, the circuit court must determine each parties marital and nonmarital interests based upon evidence before the court. Ensor v. Ensor, 431 S.W.3d 462 (Ky. App. 2013). And, when deciding the fair-market value of real property in a dissolution proceeding, expert testimony is ordinarily necessary. Jones v. Jones, 245 S.W.3d 815 (Ky. App. 2008). To be qualified to render an opinion on the "fair market value of real property, a witness, including the owner thereof, must possess some basis for a knowledge of market values." Jones, 245 S.W.3d at 820 (citation omitted).
It is undisputed that Shannon owned the residence before she married Kenneth in 2004; thus, the residence was her nonmarital property. As to the alleged increase in value from improvements during the marriage, Kenneth was the only witness who testified as to the value of the improvements on the property. Kenneth's testimony was not accepted because he failed to demonstrate that he possessed a basis of knowledge of fair market values of mobile homes. See Jones, 245 S.W.3d 815. Thus, no credible evidence existed as to the alleged added value of the marital residence. Moreover, Shannon testified that the residence had actually decreased in value and that she was unable to insure the residence because of the poor quality of the garage addition. We conclude that substantial evidence supported the circuit court's finding that the residence did not increase in value. We do not believe the circuit court erred by determining there was no marital interest in the residence that could be allocated to Kenneth, nor did the court err in awarding the residence to Shannon in its entirety.
Kenneth also maintains that the circuit court's determination that he dissipated marital assets to fund various business enterprises, purchase jewelry, vacations, and engage in gambling was error. Recognizing that dissipation of marital assets is difficult to prove, this Court set forth a more detailed explanation regarding the evidence required to prove dissipation in Bratcher v. Bratcher, 26 S.W.3d 797 (Ky. App. 2000). Therein, this Court held that the spouse claiming asset dissipation has the burden of going forward with evidence that marital assets were missing or had been reduced. Id. Once that occurs, the spouse accused of dissipating assets must prove the assets were utilized for a marital purpose. Id. The reasoning behind the holding in Bratcher has been summarized as follows:
First, during the time when a divorce is pending, a spouse with marital assets should know that he or she will be called to account for those assets. Second, the court reasoned that it would be unfair to require the spouse who was not in control of the assets to prove how they had been expended.15 Louise Everett Graham & James E. Keller, Kentucky Practice - Domestic Relations Law § 15:89 (2014).
In this case, Shannon claimed that Kenneth dissipated marital assets. Shannon testified that Kenneth used a large portion of the proceeds from the loan secured by the residence to fund his businesses ventures and to buy various personal items. There was also evidence that Kenneth's tax return for 2011 demonstrated that he grossed $201,865 from his garage door business, but he only reported a net income of $8,820. Testimony further reflects that Kenneth frequently conducted transactions in cash only without depositing funds into any account. As evidence existed that marital assets were missing or had been reduced by Kenneth, the burden of establishing that the assets were used for a marital purpose then shifted to Kenneth. Bratcher, 26 S.W.3d 797. It is obvious that the circuit court believed that Kenneth did not meet his burden, and we cannot say that such was error based upon the evidence. Thus, we hold that the circuit court did not err by determining that Kenneth dissipated marital assets.
Kenneth next contends that the circuit court erred by allocating three-fourths of the marital debt secured by the residence to him and one-fourth to Shannon. The court made this allocation of debt in part on Kenneth's dissipation of marital assets. Kenneth alleges that the promissory note was signed solely by Shannon and that the funds were only used by her. Thus, Kenneth maintains that the entire debt related to the residence should be assigned to her as nonmarital.
In Kentucky, there is no "presumption as to whether debts incurred during the marriage are marital or nonmarital." Neidlinger v. Neidlinger, 52 S.W.3d 513, 523 (Ky. 2001). Instead, the allocation of debt that arose during the marriage is based upon many factors, such as extent of participation as to the debt, receipt of benefits of the debt, and "economic circumstances of the parties" to assume the indebtedness. Id. at 523. The circuit court's allocation of debt will not be disturbed except for an abuse of discretion. Id.
At the time of the parties' marriage, there was a "mortgage" in the approximate amount of $48,000 secured by the residence. In 2006, Shannon's parents paid off the mortgage as a gift to Shannon. Thereafter, Shannon signed a promissory note in the amount of $55,000 and used the residence as security. Shannon asserts that most of the money was used to purchase tools and equipment to fund Kenneth's various business ventures, including a garage door installation business and a car customization business. Kenneth, on the other hand, testified Shannon used the money to buy clothes for herself and her daughter and to consolidate payment of Shannon's other debts.
The credibility of witnesses and weight given the evidence is within the sole province of the circuit court. Lawson v. Lawson, 228 S.W.3d 18 (Ky. App. 2007). As fact-finder, the circuit court chose to believe Shannon's testimony and found that the majority of the funds from the loan were used by Kenneth for his own business ventures or for personal items. Also, the evidence indicates that Shannon does not possess the financial resources to personally pay the indebtedness and that Kenneth possesses income from businesses that went unreported or under-reported. Upon the whole of the evidence, we conclude that the circuit court did not abuse its discretion by classifying the debt as marital and by requiring Kenneth to be responsible for three-fourths thereof. See Neidlinger, 52 S.W.3d 513.
We view any remaining contentions of error to be moot or without merit.
Kenneth Rishel believes that the circuit court erred by stating in its judgment that if Kenneth filed for bankruptcy the unpaid indebtedness upon the residence owed by Kenneth would be awarded to Shannon Rishel as maintenance. We do not believe this issue is ripe for review. The record reflects that both parties filed bankruptcy in 2009. Whether Kenneth files bankruptcy again in the future is immaterial to the issues on appeal and otherwise would be subject to the exclusive jurisdiction of a bankruptcy court as concerns the dischargeability of the debt. Additionally, as the circuit court did not order maintenance, there is no award of maintenance to review on appeal at this time. --------
For the foregoing reasons, the Findings of Fact, Conclusions of Law, and Order of the Grayson Circuit Court are affirmed.
ALL CONCUR. BRIEFS AND ORAL ARGUMENT
FOR APPELLANT: Phillip W. Smith
Leitchfield, Kentucky BRIEF FOR APPELLEE: Jeremy Scott Aldridge
Carey Hendricks Aldridge
Elizabethtown, Kentucky ORAL ARGUMENT FOR
APPELLEE: Jeremy Scott Aldridge
Elizabethtown, Kentucky