Opinion
NO. 2013-CA-000022-MR
01-16-2015
SUDIE HOLDMAN APPELLANT v. DAVID CURTIS APPELLEE
BRIEFS FOR APPELLANT: Thomas L. Osborne J. William Graves Paducah, Kentucky BRIEF FOR APPELLEE: John T. Reed Paducah, Kentucky
NOT TO BE PUBLISHED APPEAL FROM MCCRACKEN CIRCUIT COURT
HONORABLE CYNTHIA E. SANDERSON, JUDGE
ACTION NO. 11-CI-00386
OPINION
AFFIRMING
BEFORE: CAPERTON, COMBS, AND VANMETER, JUDGES. VANMETER, JUDGE: Sudie Holdman appeals from the McCracken Circuit Court's September 17, 2012, decree dissolving her marriage to David Curtis and dividing the parties' assets. Sudie also appeals from the November 28, 2012, order denying her motion to alter, amend or vacate the decree of dissolution. After review of the record and applicable law, we affirm.
Judge Caperton concurred in this opinion prior to Judge Debra Lambert being sworn in on January 5, 2015, as Judge of Division 1, Third Appellate District. Release of this opinion was delayed by administrative handling.
Sudie and David married in 1998. Their marriage was the second marriage for both of them. No children were born of the marriage, but both parties had children from their first marriage. Accordingly, the issues presented to the trial court during the dissolution proceedings solely concerned the division of property.
The primary asset at issue was a restaurant, Backwoods BBQ (a/k/a PNL, Inc.), in which Sudie and David each owned an approximate 40% interest (Sudie's daughter owned the remaining 20% interest). Due to the contentious nature of the parties' divorce, and the fact that Sudie refused to submit financial records necessary for a determination of the parties' respective interests in the restaurant, the trial court ultimately ordered an inter-spousal auction of the 80% interest in the restaurant, which Sudie ended up purchasing for $400,000. On appeal, Sudie challenges the court's decision to conduct an auction, among other claims of errors. We will address each claimed error in turn.
50/50 division of marital property
Sudie argues the trial court improperly divided the marital property 50/50. She claims the court did not undertake the requisite analysis under KRS 403.190 governing division of property and asserts that David was not entitled to half of the marital estate. However, Sudie neither provides citations to the record showing she preserved this objection, nor directs us to the portion of the extensive record allegedly supporting her argument. Thus, we are not required to review this claim of error. See Monumental Life Ins. Co. v. Dep't of Revenue, 294 S.W.3d 10, 23 (Ky. App. 2008) (declining to address an issue on its merits because appellant neither cited the court to the appellant's preservation of the issue as required by CR 76.12(4)(c), nor provided citations to any of the evidence in the record which allegedly supported the arguments).
Kentucky Revised Statutes.
Kentucky Rules of Civil Procedure.
--------
That said, in the course of our review of the record, we discovered the trial court decided to split marital assets 50/50 since both parties had worked hard to acquire their possessions. When disposing of property in a dissolution proceeding, the trial court is required to follow a three-step process: (1) characterize each item of property as marital or non-marital; (2) assign each party's non-marital property to that party; and (3) equitably divide the marital property between the parties. KRS 403.190; Travis v. Travis, 59 S.W.3d 904, 908-09 (Ky. 2001) (footnotes omitted). KRS 403.190(1) requires the court to divide property in "just proportions." The appellate court reviews a trial court's division of marital property "for abuse of discretion, namely, 'whether the decision was arbitrary, unreasonable, unfair, or unsupported by sound legal principles.'" Rice v. Rice, 336 S.W.3d 66, 68 (Ky. 2011) (citations omitted). In this case, Sudie has provided no support for her claim that the court's decision to split marital assets 50/50 was inequitable or an abuse of its discretion.
Temporary income from Backwoods BBQ
Sudie argues the trial court abused its discretion by awarding David temporary maintenance in the amount of $5,500 per month. Her argument is misplaced. The record shows the court did not award David temporary maintenance; rather, the court awarded David his fair share (40%) of the restaurant's income until the case was concluded. The testimony established that the parties were no longer working together, did not wish to work together, and if David returned to work at the restaurant, Sudie would fire him. The court found David was unable to continue working at the restaurant but was nevertheless entitled to receive his share of income from the restaurant pending resolution of these proceedings. Sudie has not provided any authority in support of her claim to the contrary. Based on our review of the record, we believe the court's award was appropriate and reasonable.
Inter-spousal auction of parties' ownership interests in Backwoods BBQ
Sudie argues the trial court's imposition of an inter-spousal auction of the parties' ownership interests in Backwoods BBQ was improper and resulted in an artificially high purchase price and unequal distribution of property. She further asserts the terms of the purchase were unclear. The record shows the court did not initially plan on valuing the ownership interests by way of an auction. Rather, the court ordered Sudie to furnish the financial records of Backwoods BBQ, which were necessary for the court to assess the fair market value of the marital interest in the restaurant. Sudie's willful refusal to comply with the court's order to furnish the necessary financial records ultimately led the court to auction the parties' ownership interests as a means of establishing value.
Sudie has not cited any binding authority holding that this method of valuation is improper per se. The two out-of-state cases she cites are distinguishable. See In re Marriage of Cream, 13 Cal.App.4th 81 (1993) (trial court lacked authority in dissolution proceeding to ascertain fair market value of community estate by way of inter-spousal auction, over wife's objection that she was not a willing buyer); In re Marriage of Dennis, 467 N.W.2d 806 (Iowa Ct.App. 1991) (appellate court rejected trial court's use of inter-spousal bidding process to establish value of closely-held corporation in which each party owned 50% of the stock, where both parties had presented conflicting evidence of corporation's value).
Here, Sudie never objected to the auction. And the court's inability to value the parties' ownership interests in the restaurant was due to her refusal to furnish the restaurant's financial records. The portion of the record Sudie cites which she claims shows that she did in fact object to the inter-spousal auction actually pertains to the court's ruling on her post-auction complaint about the terms of the purchase. The court ruled that the purchase terms were evaluated and established prior to the auction and declined to invalidate the sale after the fact. Sudie does not cite to the record showing she preserved her objection to the auction prior to the sale. In these circumstances, we believe the court chose an effective means of ascertaining the value of the restaurant.
With respect to her assertion that the terms of the purchase were unclear, the record shows that prior to the auction the parties submitted, and the court adopted, ground rules outlining the terms of purchase. These ground rules were set forth in writing, and both parties had ample time to review them and to clarify any uncertainties. Before conducting the auction, the court set forth the terms of purchase and ensured that both parties understood and agreed to them. Sudie acquiesced to the terms. We fail to appreciate her challenge to the purchase terms post-sale when she had the opportunity to object prior to the sale and did not do so.
Improvements made to nonmarital property during marriage
Sudie contends the trial court improperly awarded David money for improvements made to the marital home, which was her nonmarital property. KRS 403.190(2) provides:
For the purpose of this chapter "marital property" means all property acquired by either spouse subsequent to the marriage except . . . (e) The increase in value of property acquired before the marriage to the extent that such increase did not result from the efforts of the parties during marriage.
"An increase in value of nonmarital property during marriage which is the result of a joint effort of the parties establishes the increase in value of the nonmarital property as marital property." Goderwis v. Goderwis, 780 S.W.2d 39, 40 (Ky. 1989). Pursuant to KRS 403.190(3), all property acquired during the marriage (including appreciation in an asset's value) is marital property. Travis, 59 S.W.3d at 913. The party claiming the appreciation in value is nonmarital bears the burden of proof under KRS 403.190(3). Id.
The record reflects that prior to marrying David, Sudie bought a home for $1,000 and had it moved to land her parents had given her. She and David lived in the home for awhile before marrying and then after marrying. David testified that after they married, he and Sudie made a number of improvements to the property including paving a driveway, installing a central heat and air conditioning system, putting in a private well for water, installing new flooring and new roofs, updating appliances, and rewiring the house.
A record of the Ballard County Property Valuation Administration's Office showed the total value of the property was $42,073 in 1998 when the parties married. At the time of divorce, the total value of Sudie's property had increased to $110,000. David itemized the post-marriage improvements and estimated the total cost of improvements to be $31,000, of which he sought to recover half, or $15,500. As the party claiming the increase in value of the property was nonmarital, Sudie bore the burden of proving that the increase was the result of general economic circumstances, rather than the improvements. See KRS 403.190(3); Travis, 59 S.W.3d at 912. Sudie introduced no evidence to that effect or to otherwise rebut the presumption that the appreciation in value of an asset during marriage constitutes marital property.
Instead, the PVA records and David's uncontroverted testimony established that the property increased in value during the parties' marriage and that a portion of that increase in value was due to improvements David and Sudie had made. Contrary to Sudie's assertion, expert testimony establishing the value of the improvements was not necessary. Ultimately, the court did not award David the $15,500 he requested, but awarded him $10,000 instead. Sudie has failed to show this award was an abuse of the court's discretion.
Farm equipment
Sudie asserts the trial court abused its discretion by awarding David the farm equipment, which the parties agreed had a value of $40,000. Yet, Sudie provides no citations to the record showing she requested to receive the farm equipment. Nor does she challenge the court's award of farm equipment in her post-judgment motion to alter, amend or vacate. Had Sudie wished to be awarded the farm equipment, she should have preserved this request in the record. Her failure to do so prevents us from reviewing this alleged error on appeal. See Ten Broeck Dupont, Inc. v. Brooks, 283 S.W.3d 705, 734 (Ky. 2009) (holding that "[a]n appellate court 'is without authority to review issues not raised in or decided by the trial court[]'") (citations omitted).
Value of hot tub
Sudie maintains the trial court erred by valuing the hot tub, which was located at the marital home, at $6,000. She asserts that its value was $3,000. Again, Sudie provides no citations to the record showing she preserved this issue; in fact, the trial court's decree states that the parties stipulated the hot tub's value at $6,000. Sudie further presents no evidence supporting her claimed value of $3,000. This alleged error is therefore without merit.
$24,000 cash
Sudie argues the trial court abused its discretion by characterizing the $24,000 cash, which was in the floor safe of the marital home, as marital property. Sudie asserts the cash was an asset of Backwoods BBQ, and that she took the cash from the safe and invested it back into the restaurant before the court classified it as marital property and awarded it to her. Consequently, she contends the award of $24,000 cash to her resulted in an unequal distribution of marital property.
Once again, Sudie fails to cite to the record. Nonetheless, during the course of our review of the record, we discovered that when presented with Sudie's argument, the trial court ruled that the issue of the cash belonging to Backwoods BBQ was never raised and no evidence was ever presented showing that the cash was an asset of the restaurant. Accordingly, the court characterized the cash as marital property and awarded it to Sudie. We decline to reverse this award.
Drafting final orders
Sudie argues the final order of the trial court was improperly drafted by opposing counsel, rather than by the court itself. Again, Sudie does not provide any citations to the record showing preservation of this issue or any citations to the record in support of her claim. Thus, we are not obligated to review this claimed error. However, during the course of our review of the record we discovered that at the conclusion of the final hearing, the court made its rulings from the bench. Prior to making oral rulings, the court requested that counsel take notes, or obtain a copy of the record after the hearing, and reduce its oral rulings to a written order. Counsel for David volunteered to draft the order, to which Sudie's counsel had no objection. The court approved, so long as David's counsel circulated the draft order to Sudie's counsel for review prior to submitting it to the court, which the record shows counsel did.
Sudie's claimed error concerns whether, in this instance, the trial court's adoption of the proposed findings of fact and conclusions of law tendered by counsel at the direction of the court sufficiently complies with the requirements of CR 52.01, which states, in 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 thereon[.]"
A trial court's practice of adopting proposed findings and conclusions tendered by counsel may be problematic in terms of whether the trial court abdicated its decision-making responsibility, whether the findings and conclusions express the deliberations of the judge, or whether the findings and conclusions are supported by the evidence. In Kentucky Milk Mktg. & Anti-Monopoly Comm. v. Borden Co., 456 S.W.2d 831 (Ky. 1960), the Kentucky Supreme Court stated:
We do not condemn this practice [of permitting attorneys to draft findings of fact and conclusions of law] in instances where the court is utilizing the services of the attorney only in order to complete the physical task of drafting the record. However, to the extent that the court delegates its power to make findings of fact and draw conclusions this is not good practice.Id. at 834.
The Supreme Court subsequently clarified, in Bingham v. Bingham, 628 S.W.2d 628, 629 (Ky. 1982), that "the delegation of the clerical task of drafting proposed findings of fact and conclusions of law under the proper circumstances does not violate the trial court's responsibility." Id. at 629. See also Prater v. Cabinet for Human Res., 954 S.W.2d 954, 956 (Ky. 1997) (a trial court's practice of adopting findings of fact that were merely drafted by someone else is not error). Rather, the concern "is that the trial court does not abdicate its fact-finding and decision-making responsibility under CR 52.01." Bingham, 628 S.W.2d at 629.
This case is distinguishable from the scenario in which detailed, lengthy, contradictory findings of fact and conclusions of law were filed by counsel for the sole purpose of unduly enlarging, expanding, and confusing the record. See Milk Mktg., 456 S.W.2d at 835. Here, the record shows the trial court was thoroughly familiar with the proceedings and facts of this case and articulated its decision-making process throughout the proceedings. At the final hearing, the trial court made rulings from the bench, which counsel simply recorded. Before ruling, the court stated that counsel shall take good notes and/or get a copy of the record to use in preparing the proposed order. Sudie has made no showing that the court's decision-making process was out of its control, that the findings and conclusions were not the product of the court's deliberations, or that the findings and conclusions were unsupported by the evidence. Absent such a showing, we are unable to say the court improperly delegated its authority or abused its discretion by directing counsel to prepare, circulate, and tender a proposed order.
For the foregoing reasons, the McCracken Circuit Court's decree of dissolution and its order denying Sudie's motion to alter, amend or vacate are affirmed.
ALL CONCUR. BRIEFS FOR APPELLANT: Thomas L. Osborne
J. William Graves
Paducah, Kentucky
BRIEF FOR APPELLEE: John T. Reed
Paducah, Kentucky