Opinion
NO. 2013-CA-001088-MR
06-02-2017
NEIL JASON SCHIPPERS APPELLANT v. AUNDREA SCHIPPERS APPELLEE
BRIEFS FOR APPELLANT: Neil Jason Schippers, Pro Se Prospect, Kentucky BRIEF FOR APPELLEE: M. Thomas Underwood Louisville, Kentucky
NOT TO BE PUBLISHED APPEAL FROM OLDHAM CIRCUIT COURT FAMILY COURT DIVISION
HONORABLE TIMOTHY E. FEELEY, JUDGE
ACTION NO. 11-CI-00359 OPINION
AFFIRMING IN PART, REVERSING IN PART, AND REMANDING
** ** ** ** **
BEFORE: KRAMER, CHIEF JUDGE; DIXON AND TAYLOR, JUDGES. TAYLOR, JUDGE: Neil Jason Schippers brings this pro se appeal from Findings of Fact and Conclusions of Law entered November 2, 2012, in the Oldham Circuit Court, Family Court Division, disposing of marital property issues. We affirm in part, reverse in part, and remand.
The parties were married on September 24, 1994, and two children were born of the marriage. Aundrea initially filed a petition for legal separation on April 7, 2011, and thereafter filed a petition for dissolution of marriage on April 21, 2011. By decree entered July 7, 2011, the family court dissolved the parties' marriage but reserved all other issues for later adjudication.
After conducting lengthy hearings, the family court rendered Findings of Fact and Conclusions of Law on November 2, 2012. Relevant to this appeal, the family court found that Neil had dissipated marital assets by withdrawing funds from Aundrea's retirement accounts without her knowledge and expending these funds for gambling purposes. The family court particularly found that Neil dissipated the principal sum of $161,060 from Aundrea's retirement accounts and that Neil's early withdrawal of said sum resulted in taxes, penalties, and lost earnings of an additional $104,620. The family court also assigned Neil the entirety of his retirement accounts and assigned Aundrea the entirety of her retirement accounts, which included the total amount ($265,680) dissipated from Aundrea's retirement accounts by Neil. The family court also assigned the marital residence to Aundrea, equally divided the equity in the marital residence, equally divided the balances of the parties' banking accounts, and assigned various debts. The court also determined that Neil owed Aundrea the sum of $161,060 to equalize the division of marital property. This appeal follows.
Neil initially contends that the family court erred by delegating its decision-making authority in violation of Kentucky Rules of Civil Procedure (CR) 52.01. In particular, Neil maintains that the family court improperly utilized the proposed findings of fact and conclusions of law tendered by Aundrea. Neil raises this allegation many times throughout his brief.
Throughout his appellate brief, Neil Jason Schippers repeatedly argues that the family court erred by utilizing the proposed findings of fact and conclusions of law tendered by Aundrea Schippers. We address this issue initially here in the Opinion and will not address it in subsequent analysis.
It is well-established that CR 52.01 applies to an action heard by the court without a jury. Anderson v. Johnson, 350 S.W.3d 453 (Ky. 2011). CR 52.01 provides:
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; . . . . Requests for findings are not necessary for purposes of review except as provided in Rule 52.04. 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 witnesses. . . . If an opinion or memorandum of decision is filed, it will be sufficient if the findings of fact and conclusions of law appear therein. Findings of fact and conclusions of law are unnecessary on decisions of motions under Rules 12 or 56 or any other motion except as provided in Rule 41.02.CR 52.01 does not prohibit the family court from delegating "the clerical task of drafting proposed findings of fact and conclusions of law" so long as the decision-making process remains under the court's control. Bingham v. Bingham, 628 S.W.2d 628, 629 (Ky. 1982).
In the case at hand, it is evident that the family court made several substantive revisions to the proposed findings of fact and conclusions of law tendered by Aundrea's counsel. For example, the family court concluded that Aundrea violated the April 7, 2011, status quo order by withdrawing $245,202.40 from a Vanguard 401K retirement account during the course of the dissolution proceeding. The family court also significantly departed from the proposed division of marital property as set forth in the proposed findings of fact and conclusions of law. From our review, it is clear that the family court did not abdicate its decision making responsibility under CR 52.01 by utilizing the proposed findings of fact and conclusions of law submitted by Aundrea and otherwise made independent decisions in the court's rulings.
Neil also maintains that the family court erred by concluding that he dissipated substantial marital assets by engaging in secretive and widespread gambling. Neil argues that Aundrea failed to demonstrate that he dissipated marital funds during a period when a dissolution proceeding was imminent or with the intent to deprive her thereof. Neil also asserts that the family court erroneously found that he incurred gambling losses of $127,000 in the first three months of 2011 and $377,127.79 during the course of the marriage. Additionally, Neil asserts that the funds from Aundrea's retirement accounts were expended for marital purposes.
Generally, "marital misconduct" of a spouse may not be considered by a court when dividing marital property. Kentucky Revised Statutes (KRS) 403.190(1). Nonetheless, the court may determine that a spouse has dissipated marital assets during the marriage and assign such dissipated assets to said spouse. Brosick v. Brosick, 974 S.W.2d 498 (Ky. App. 1998); see also 15 Louise E. Graham & James E. Keller, Kentucky Practice - Domestic Relations Law § 15.89 (2017). Dissipation occurs "when marital funds are expended for a nonmarital purpose, (1) during a period when there is a separation or dissolution impending; and (2) when there is a clear showing of intent to deprive one's spouse of her proportionate share of the marital property." Kleet v. Kleet, 264 S.W.3d 610, 617 (Ky. App. 2007) (quoting Brosick, 974 S.W.2d at 500). Dissipating must be demonstrated by a preponderance of the evidence, and the family court's findings of fact are upheld if supported by substantial evidence. Kleet, 264 S.W.3d 610. The family court acts as fact-finder and possesses the sole authority to assess the credibility of witnesses.
In the case sub judice, the family court determined that Neil dissipated marital assets by expending marital funds for "gambling purposes and other risky endeavors:"
[T]here is no question that Neil expended thousands of dollars at casinos throughout the country. This money was not spent for a marital purpose, but to support Neil's self-admitted addiction to gambling. While it may be questioned whether or not Neil intended to deprive Aundrea of her share of marital funds, it is clear, Neil concealed his gambling activities from Aundrea for years. In fact, it was not until shortly before filing for legal separation that Aundrea discovered the extent of Neil's activities.
There is also little doubt that Neil gambled away these monies during a period when divorce was likely. As the testimony at trial provided, the parties' marriage had been rocky for several years before the petition was
filed. In fact, the parties had discussed divorce several times before 2011. The Court does not find it merely coincidental that Neil's gambling activities began shortly after he discovered Aundrea had engaged in an extramarital affair. Neil testified that he was distraught after learning of the affair.Findings of Fact and Conclusions of Law at 17-19. There was ample evidence in the record that Neil started gambling in 2006 shortly after his discovery that Aundrea had an extra-marital affair. Aundrea testified that their marriage was tense and violative for several years. Additionally, Aundrea stated that Neil kept secret both his extensive gambling habit and his unilateral withdrawal of the principal sum of $161,060 from her retirement accounts during the years of 2008, 2009, and 2010. Considering the evidence as a whole, we think substantial evidence existed that Neil had engaged in a pattern of dissipating marital funds in Aundrea's retirement accounts with intent to deprive Aundrea thereof and that he did so knowing then divorce was likely. See Brosick, 974 S.W.2d 498.
There is also no doubt that Aundrea would have disagreed strongly with Neil's gambling activities. This is why he kept it secret. And, as matters turned out, when she did learn about his actions, she immediately filed for divorce. Numerous jurisdictions have consistently held that excessive gambling during the marriage constitutes a dissipation of the marital estate . . . .
[Neil] must reimburse Aundrea the funds relating to her retirement funds [$161,060] . . . and is ordered to assume liability for, and hold Aundrea harmless for any and all the consequences of his early withdrawal of retirement funds [$104,620], including satisfying any and all tax liens on the marital residence within six months of this Order.
Neil also argues that the funds from Aundrea's retirement accounts were utilized to pay the parties' living expenses and to service marital debt. The law is clear that after a spouse has set forth a prima facie case of dissipation, the burden of proof then shifts to the spouse charged with dissipation to produce evidence demonstrating that the expenditures of the marital funds were proper. Brosick, 974 S.W.2d 498. Here, Aundrea demonstrated by a preponderance of the evidence that Neil unilaterally and secretively withdrew $161,060 from her retirement accounts and that Neil expended in excess of such amount gambling without her knowledge. The burden then shifted to Neil to provide specific evidence demonstrating that he expended the $161,060 on marital purposes. See Brosick, 974 S.W.3d 498. He simply failed to do so based upon the evidence presented below. Therefore, we conclude that the family court properly determined that Neil dissipated marital assets.
Additionally, the family court specifically found Aundrea "discovered that in the first three months of 2011 [Neil] transferred a minimum of $127,000 out of this joint account for gambling purposes" and that Aundrea "determined that the amount expended on gambling from this account was actually closer to $377,127.79." Findings of Fact and Conclusions of Law at 2 and 9. Neil believes these findings of fact are clearly erroneous and warrant reversal by this Court. We point out that the family court merely made findings of fact as to Aundrea's discovery of or determination concerning Neil's expenditures on gambling. Most significantly, the family court ultimately held that Neil only dissipated those funds that he directly and secretly withdrew from Aundrea's retirement accounts ($161,060). So, we believe any alleged error was merely harmless at best.
Neil repeatedly raises this contention of error throughout his appellate brief. We do not believe that the family court committed reversible error as to these findings of fact.
Neil next argues that the family court erred by concluding that certain debt was marital and assigning him a portion thereof. Neil specifically believes that the family court improperly determined that debt incurred by Aundrea for an emergency room visit to Norton Hospital was marital debt. He also alleges that the family court improperly assigned him the entire debt on an AMEX credit card. We shall address each debt separately.
As to the emergency room debt, the record indicates that Aundrea incurred a debt in the amount of $2,786 for an emergency room visit to Norton Hospital in February 2012. It is undisputed that a decree dissolving the parties' marriage was entered on July 7, 2011, and that this emergency room debt was incurred after entry of the decree. It is axiomatic that a debt arising after entry of a decree dissolving the parties' marriage cannot constitute a marital debt. Neidlinger v. Neidlinger, 52 S.W.3d 513 (Ky. 2001). For a debt to be considered marital in nature, the debt must have been incurred during the marriage. Id.; see also 15 Louise E. Graham & James E. Keller, Kentucky Practice - Domestic Relations Law § 15.89 (2017). Hence, we are of the opinion that the family court erred by categorizing the emergency room debt as marital as it was incurred after the decree of dissolution was entered. Thus, it is nonmarital debt that should be solely assigned to Aundrea.
As to the AMEX credit card debt, the evidence reveals that charges of $3,500 were incurred during the marriage and that this credit card was opened in Aundrea's name during the marriage. Debts incurred during the marriage are:
[T]raditionally assigned on the basis of such factors as receipt of benefits and extent of participation, Van Bussum v. Van Bussum, supra, O'Neill v. O'Neill, supra, Bodie v. Bodie, supra, Inman v. Inman, Ky. App., 578 S.W.2d 266, 270 (1979); whether the debt was incurred to purchase assets designated as marital property, Daniels v. Daniels, supra; and whether the debt was necessary to provide for the maintenance and support of the family, Gipson v. Gipson, supra. Another factor, of course, is the economic circumstances of the parties bearing on their respective abilities to assume the indebtedness.Neidlinger v. Neidlinger, 52 S.W.3d 513, 523 (Ky. App. 2001).
The family court found that the AMEX card "was improperly opened and used by Neil in Aundrea's name." Findings of Fact and Conclusions of Law at 20. Aundrea testified that she never utilized the AMEX card and that Neil was solely responsible for the $3,500 in charges on the card. Considering the above factors set forth in Neidlinger, we conclude that the circuit court did not err by assigning to Neil the debt of $3,500 for the AMEX card. Neidlinger, 52 S.W.3d 513.
Neil next asserts that the family court erroneously divided the parties' marital bank accounts. Specifically, Neil argues the family court erred as a matter of law by dividing the balances in the marital bank accounts as of the date of the evidentiary hearing (April 2, 2012). Rather, Neil maintains that "the parties were legally separated on April 7, 2011" and that date should have been utilized by the family court. For the following reasons, we conclude that both Neil and the family court are in error.
We begin by noting that the parties were never "legally separated." On April 7, 2011, Aundrea did file a petition for separation, but such petition was never ruled upon because she subsequently filed a petition for dissolution of marriage. It is true that the parties were physically separated on April 7, 2011. Nonetheless, the law is clear that property acquired after a physical separation but before entry of a separation decree or dissolution decree is marital. Stallings v. Stallings, 606 S.W.2d 163 (Ky. 1980). The law is equally well-settled that the proper date to value marital assets is the date of entry of the dissolution decree. Stallings, 606 S.W.2d 163; Jones v. Jones, 245 S.W.3d 815 (Ky. App. 2008).
In this case, the balances in the marital bank accounts on July 7, 2011, (date of dissolution decree) should have been utilized by the family court, and the family court committed reversible error by utilizing the date of the evidentiary hearing (April 2, 2012). We, thus, remand for the family court to divide the parties' marital banking accounts as of July 7, 2011.
Neil further maintains that the family court erred by equally dividing the proceeds from the sale of the parties' motor vehicle. Neil states that he sold the parties' vehicle on April 7, 2011, and received $4,200 in net proceeds. Neil argues that the family court abused its discretion by awarding Aundrea one-half of the proceeds as he utilized the entire amount for reasonable living expenses.
Kentucky Revised Statutes (KRS) 403.190 directs the court to divide marital property between spouses in "just proportions." When dividing marital property in just proportions, the court is to consider "all relevant factors," which include:
(a) Contribution of each spouse to acquisition of the marital property, including contribution of a spouse as homemaker;KRS 403.190. The court possesses broad discretion in dividing marital property, and such division of marital property will not be disturbed on appeal absent an abuse of discretion. Shively v. Shively, 233 S.W.3d 738 (Ky. App. 2007). As fact-finder, it is within the sole province of the court to determine weight of evidence and credibility of witnesses. The court's findings of fact will only be disturbed on appeal if clearly erroneous. Muir v. Muir, 406 S.W.3d 34 (Ky. App. 2013).
(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, including the desirability of awarding the family home or the right to live therein for reasonable periods to the spouse having custody of any children.
In this case, it is undisputed that the motor vehicle constituted marital property and that Neil retained the entirety of the sale proceeds ($4,200). The family court was keenly aware that Aundrea was unemployed and was without a motor vehicle. The family court particularly found that "Aundrea is in need of a vehicle. During the parties' separation, Neil sold the only vehicle owned by the parties, . . . he did not account for the proceeds of that sale." Findings of Fact and Conclusions of Law at 15. Considering the above evidence, we simply cannot conclude that the family court abused its discretion by equally dividing the proceeds from the sale of the parties' motor vehicle. The equal division of proceeds comports with the mandate in KRS 403.190 to divide marital property in just proportions.
Neil Jason Shippers was provided with a motor vehicle through his employment.
Neil also argues that the family court failed to divide the parties' retirement accounts in just proportions per KRS 403.190. Neil asserts that the family court apportioned the marital retirement funds 68 percent to Aundrea and 32 percent to Neil. Neil points out that Aundrea violated the April 7, 2011, status quo order by withdrawing the entirety ($245,202.40) of her Vanguard 401K retirement account on February 15, 2012. Additionally, Neil maintains that the family court erroneously found that he misappropriated retirement funds for gambling and accumulated $377,127.79 in gambling losses.
As to Neil's argument concerning the gambling losses, please refer to Footnote 2.
Concerning its division of the marital retirement accounts, the family court provided detailed findings of fact and conclusions of law:
Both parties began retirement plans during the marriage, and there is no dispute that the funds within those accounts constituted marital property. Aundrea and Helen Cohen testified that Neil improperly liquidated much of his retirement as well as Aundrea's retirement. Neil claims that Aundrea improperly withdrew and spent funds from her retirement account during the pendency of this action, in violation of the status quo order.
Aundrea withdrew $245,202.40 from her Vanguard retirement account on February 15, 2012. She provided the Court with a detailed accounting of how those funds were expended. After paying $85,820.84 in federal taxes, $14,758 in state taxes, and a loan balance of $27,861.19, the net amount received by Aundrea was $116,762.37. From these net proceeds, Aundrea testified she paid bills and expenses as follows:
| GE Capital | $710.00 |
| Doctor | $252.00 |
| Water | $183.00 |
| LCLJB | $167.00 |
| Medicine | $425.00 |
| Termite Bill for TN property | $449.00 |
| Aero Exterior | $1,950.00 |
| Nordstrom | $8,208.00 |
| Macy's | $1,303.00 |
| Accounting Fees | $2,300.00 |
| Legal Fees | $10,608.00 |
| Care Credit | $1,830.00 |
| Ann Taylor | $6,422.00 |
| Hillcrest Home | $275.00 |
| Tennessee Mortgage | $880.00 |
| Kentucky Mortgage | $7,000.00 |
| Gymboree Visa | $2,061.00 |
| LG&E | $491.00 |
|---|---|
| TOTAL | $45,514.00 |
The remaining proceeds of this withdrawal, $70,500, were deposited into the escrow account of Aundrea's attorney. By order entered April 3, 2013, Aundrea was permitted to withdraw $4,000 per month from these escrowed funds to help meet her monthly expenses.
. . . .
Both parties have alleged that the other improperly used retirement funds. With respect to Aundrea's withdrawal of $245,202.40, which she testified she was advised to do by Helen Cohen, the Court concludes that this withdrawal violated the status quo order entered
April 7, 2011, and should have been done only by agreement or with Court Order. However, the Court concludes that the obligations Aundrea paid with the funds withdrawn from her retirement account were mostly reasonable living expenses, including many which benefited Neil, such as the mortgage on both properties.November 2, 2012, Findings of Fact and Conclusions of Law at 6-7, 16.
Based on the Court's conclusions regarding dissipation below, the Court concludes that Aundrea shall keep her remaining retirement funds as her own, free and clear of any claim by Neil. This includes the money withdrawn from her Charles Schwab account and escrowed with her attorney, and the two Charles Schwab accounts in the amount of $17,746.28 and $781.51. Aundrea is credited with the $70,500 escrowed amount remaining from her said withdrawals at the time of trial.
Neil is hereby ordered to repay to Aundrea all of the funds he expended from her retirement accounts from 2006 through 2011, plus all interest, penalties, and taxes incurred by Aundrea as a result of her retirement accounts being depleted by Neil in the amount of $265,600, which will be addressed below in an equalization payment. Neil may retain any and all retirement account balances in his sole name.
In the record, there is ample evidence that Neil unilaterally and secretively withdrew a total principal sum of $161,060 from Aundrea's retirement accounts during the marriage. An expert witness testified that the early withdrawal of this sum resulted in taxes, penalties, and lost earnings of $104,620. We believe the family court properly exercised its discretion by requiring Neil to repay the entire $265,600 that he dissipated from Aundrea's retirement accounts. As hereinbefore pointed out, Neil dissipated Aundrea's retirement accounts during the marriage by his secretive gambling and the total amount of such dissipation from Aundrea's retirement account was established as $265,600.
Of the remaining retirement accounts, the family court essentially assigned to Aundrea the accounts in her name and Neil the accounts in his name. The family court also equally divided the escrowed funds remaining from Aundrea's cashed-out Vanguard 401K account. If we do not consider the dissipated funds from Aundrea's retirement account, Aundrea received approximately $90,000 and Neil received approximately $100,000. Considering the unique facts of this case, we cannot conclude the family court failed to divide the retirement accounts in just proportions or abused its discretion.
Neil finally asserts that the family court erroneously awarded Aundrea $161,060 to equalize the division of marital assets. Neil specifically argues that "[i]f 'dissipation' did occur, the amount should not have been replenished, but considered in the assets available at the time of separation." Neil's Brief at 19. We reject this contention of error.
To effectuate the family court's division of marital property, it was necessary for Neil to pay Aundrea a lump sum. The family court did setoff Neil's one-half interest in the equity of the marital home and Neil's one-half interest in the funds escrowed from Aundrea's 401K account. Thus, we do not believe the family court committed reversible error in this regard.
In summary, we reverse the family court upon the issues of assignment of Aundrea's emergency room debt and division of the parties' marital bank accounts. We hold that Aundrea's emergency room debt was nonmarital and should be solely assigned to her upon remand. Also, upon remand, the family court shall utilize the date of the dissolution decree (July 7, 2011) to value the parties' bank accounts. Upon all other issues, we affirm the family court's decision.
For the foregoing reasons, the Findings of Fact and Conclusions of Law of the Oldham Circuit Court, Family Court Division, is affirmed in part, reversed in part, and remanded for proceedings consistent with this opinion.
ALL CONCUR. BRIEFS FOR APPELLANT: Neil Jason Schippers, Pro Se
Prospect, Kentucky BRIEF FOR APPELLEE: M. Thomas Underwood
Louisville, Kentucky