Opinion
NUMBER 2015 CA 0127 C/W NUMBER 2015 CA 0128
09-21-2015
DAVID THOMASSEE v. POLLY PEARSON THOMASSEE POLLY P. THOMASSEE v. DAVID THOMASSEE
Danna E. Schwab Estelle E. Mahoney Patricia Reeves Floyd Houma, LA Counsel for Plantiff/Appellee David Thomassee Robert P. Cuccia Houma, LA Counsel for Defendant/Appellant Polly P. Thomassee
NOT DESIGNATED FOR PUBLICATION
On appeal from the Thirty-Second Judicial District Court In and for the Parish of Terrebonne State of Louisiana
Docket Number 162,481 c/w 162,580
Honorable Randall L. Bethancourt, Judge Danna E. Schwab
Estelle E. Mahoney
Patricia Reeves Floyd
Houma, LA
Counsel for
Plantiff/Appellee
David Thomassee
Robert P. Cuccia
Houma, LA
Counsel for
Defendant/Appellant
Polly P. Thomassee
BEFORE: GUIDRY, HOLDRIDGE, AND CHUTZ, JJ. GUIDRY, J.
In this post-divorce action, a former wife appeals the trial court's judgment partitioning the former spouses' assets to award her former husband certain contested claims in reimbursement.
FACTS AND PROCEDURAL HISTORY
On December 19, 2002, David Thomassee and Polly Thomasseee were remarried in Las Vegas, Nevada. Following their remarriage, the couple established their matrimonial domicile in Terrebonne Parish in a home owned by David as his separate property. Less than eight years later, the couple again decided to separate, with David filing a petition for divorce on December 1, 2010, and Polly filing a separate petition for divorce on December 10, 2010. By a judgment signed March 2, 2012, the couple was divorced.
A judgment of divorce terminating David and Polly's first marriage was rendered on April 27, 2001.
Both parties sought a judgment of divorce in accordance with La. C.C. art. 102; however, Polly also pled for divorce in accordance with La. C.C. art. 103 in the alternative.
Subsequent to the judgment of divorce, Polly filed a motion for judicial partition of community property on March 22, 2012. A hearing to partition the property of the former community was eventually held on November 19, 2013, following which the trial court ordered the parties to submit proposed judgments and reasons for judgment. The trial court signed the proposed judgment submitted by David on April 4, 2014, and adopted the post-trial memorandum submitted by David as its reasons for judgment.
Initially, Polly sought supervisory review of the April 4, 2014 judgment; however, recognizing that the April 4, 2014 judgment was "a final, appealable judgment as to all issues contained therein except one," this court granted the writ application to order the trial court to "clarify the distribution method of the Chevron 401(k) and retirement annuity plans" and to instruct the trial court to grant Polly an appeal as to all the remaining issues raised. See Thomassee v. Thomassee, 14-1220 (La. App. 1st Cir. 11/3/14) (unpublished writ action). Thereafter, on remand, Polly filed a motion and order for appeal with the trial court, which was granted on November 10, 2014.
ASSIGNMENTS OF ERROR
On appeal, Polly asserts the following assignments as error she alleges the trial court committed in rendering the April 4, 2014 judgment of partition:
1. The Trial Court committed manifest error by recognizing as valid a sale by oral agreement of an undivided 50% interest in community immovable property (Lot 6 of Mound Bayou Sites) by David Thomassee to a third party during the marriage which sale reduced the community interest in such property. Alternatively, the Trial Court committed manifest error by permitting modification of an Authentic Act of Sale of immovable property by parole [sic] evidence.
2. The Trial Court committed manifest error by failing to apply LSA-C.C. Art. 2362.1 and adding the sum of $4,000.00 paid by Polly Thomassee to undersigned counsel for attorney fees for services rendered in this divorce proceeding prior to the date of the Judgement [sic] of Divorce to Chase account no. 9789 allocated to her thereby increasing the value of the account from $2,194.74 to $6,194.74.
3. The Trial Court committed manifest error determining that Polly Thomassee received funds in the amount of $8,536.70 from Chase account numbered 9798 and allocating such amount to her in the partition Judgement [sic].
4. The Trial Court committed manifest error permitting David Thomassee to present the following claims for reimbursement which were not included in his Sworn Detailed Descriptive List:
1. [One-half of the] funds listed by Polly Thomassee from joint account in anticipation of Divorce - $5,000.00
2. Attorney's fees for Polly Thomassee's son - $5,000.00
3. Polly Thomassee's post marriage 401(k) loan to her mother in the amount of $4,000.00
5. The Trial Court committed manifest error by granting the reimbursement claim of David Thomassee in the amount of $5,000.00 for one-half funds allegedly withdrawn by Polly Thomassee from a joint account in anticipation of divorce.
6. The Trial Court committed manifest error by granting reimbursement to David Thomassee in the amount of $5,000.00 paid
by Polly Thomassee for attorney's fees for her son, or, alternatively, the Trial Court committed error by failing to reduce by one-half (1/2) the sum of $5,000.00 for [attorney's] fees given by Polly Thomassee to her son.
7. The Trial Court committed manifest error by granting reimbursement to David Thomassee in the amount of $4,000.00 for a post marriage loan by Polly Thomassee to her mother.
8. The Trial Court committed manifest error in the amount of reimbursement awarded to Polly Thomassee for use of her separate 401(k) to pay community debts including a home equity mortgage on Mr. Thomassee's separate property.
APPLICABLE LAW AND STANDARD OF REVIEW
When spouses are unable to agree on a partition of community property or on the settlement of the claims arising from the matrimonial regime or from co-ownership of former community property, either spouse may institute proceedings for judicial partition of community property and settlement of claims in accordance with La. R.S. 9:2801(A)(4), which statute provides, in pertinent part:
(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.
A trial court is afforded a great deal of latitude in arriving at an equitable distribution of the assets between 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 v. Benoit, 11-0376, pp. 3-4 (La. App. 1st Cir. 3/8/12), 91 So. 3d 1015, 1019, writ denied, 12-1265 (La. 9/28/12), 98 So. 3d 838.
DISCUSSION
In her first assignment of error, Polly alleges that the trial court erred in finding that David had validly sold a one-half interest in the immovable property described as Lot 6 of Bayou Mound sites ("Lot 6"), in that the trial court held that the community only owned a remaining one-half interest in the property.
At the partition hearing, David testified that he and his friend, Walter Whiteman, had purchased Lot 6, but he acknowledged that the act of sale for the property only lists his name as owner. He explained that although he paid the initial $12,000 to purchase the property, he later received $6,000, half of the sales price, from Walter. He stated that Walter paid him $3,000 one year and then $3,000 more the next year to pay for Walter's half of Lot 6. He further stated that he gave Polly the second $3,000 he received from Walter so that Polly could "go buy a diamond."
Each spouse, acting alone, may manage, control, or dispose of community property unless otherwise provided by law. La. C.C. art. 2346. However, as it pertains to immovable property, La. C.C. art. 2347(A) states that the concurrence of both spouses is required for the alienation, encumbrance, or lease of community immovables. Despite the mandate that both spouses must concur in the alienation, encumbrance, or lease of community immovables, La. C.C. art. 2348 states that a spouse may expressly renounce the right to concur. Even if alienation, encumberance, or lease of community property does occur in violation of the required concurrence of the spouses, such an act done without the necessary concurrence would only constitute a relative nullity. See La. C.C. art. 2353.
In Zeller v. Webre, 09-45, p. 6 (La. App. 5th Cir. 5/26/09), 17 So. 3d 55, 58-59, the court recognized that a contract that is relatively null may be confirmed or ratified. See La. C.C. arts. 1843 and 2031. In Zeller, Mr. Webre drafted a handwritten document that provided for the lease/purchase of "a wood frame house" located in Luling, Louisiana by Mr. and Mrs. Zeller. The agreement expressly stated that the transaction would be handled as a "lease with intentions to buy." The lease/purchase agreement was signed by the Zellers and Mr. Webre on September 21, 1993. On appeal of the trial court judgment upholding the agreement in favor of the Zellers, Mr. and Mrs. Webre attempted to assert that the lease/purchase agreement was null because Mrs. Webre did not consent to the agreement. Zeller, 09-45 at pp. 3-4, 17 So. 3d at 57-58. The appellate court found that Mrs. Webre, a former real estate agent, became aware of the lease/purchase agreement about one week after it was confected, that she signed approximately 38 receipts for payments from the Zellers in which she scratched out the notation "rent," and that she never undertook any action to indicate or demonstrate that she did not intend to honor the lease/purchase agreement. Zeller, 09-45 at p. 7, 17 So. 3d at 59. Consequently, the appellate court found that Mrs. Webre's conduct in regards to the lease/purchase transaction constituted tacit confirmation sufficient to cure the relative nullity of the lease purchase agreement. Zeller, 09-45 at p. 8, 17 So. 3d at 59.
In the instant matter, Polly acknowledged knowing about the $6,000 transaction between David and Walter regarding Lot 6. She further acknowledged that David gave her one of the two $3,000 payments that Walter had made so that she could go to Zales to upgrade her wedding ring. Although Polly never expressly concurred in David's sale of a one-half interest in Lot 6, neither did she state that she objected to or contested the transaction. See Perkins v. B & W Contractors, Inc., 439 So. 2d 652, 656 (La. App. 1st Cir.), writ denied, 443 So. 2d 593 (La. 1983) (wherein this court found that a lot owner's wife failure to give her consent did not invalidate the consent given by the lot owner in favor of amendments to subdivision restrictions, because the wife did not object to the lot owner voting her interest in favor of the amendments). Moreover, Polly's actions of accepting funds that she knew came from the sales transaction between David and Walter was sufficient to establish her tacit confirmation of the transaction so as to cure its relative nullity.
Polly additionally argues that the sale should not have been recognized because the sale did not meet the legal requirements for the transfer of immovable property. The act of sale for Lot 6 that was introduced into evidence only lists David as the owner of the property. At the partition hearing, however, David testified that Walter was a co-owner of the property and that he received $6,000 of the $12,000 purchase price for the property from Waiter "to pay for [Walter's] half of that camp." No documentary evidence of Walter's co-ownership interest was presented at the hearing, and David admitted that he did not have anything with him at the hearing to show that someone else was a co-owner of Lot 6. Thus, the record indicates that the transaction by which David transferred a one-half interest in Lot 6 to Walter was based on an oral agreement.
The parties referred to Lot 6 as "camp two" in the proceedings.
A sale or promise of sale of an immovable must be made by authentic act or by act under private signature, except as provided in La. C.C. art. 1839. La. C.C. art. 2440. Article 1839 of the Civil Code provides that an oral transfer is valid between the parties when the property has been actually delivered and the transferor recognizes the transfer when interrogated under oath. Moreover, La. C.C. art. 1848 states that testimonial or other evidence may be admitted to prove that a written act was modified by a subsequent and valid oral agreement.
David, and even to a certain extent Polly, recognized under oath that David had sold a one-half interest in Lot 6 to Walter based on the testimony they gave in the partition hearing. As for delivery, no one testified regarding any use made of Lot 6 by either Walter or David; however, neither was it asserted that Walter had no right to use or occupy Lot 6. Instead, the opposite was indicated by David's repeated assertions that Walter was a "co-owner" of the property.
In order for property to be actually delivered, the immovable that is the object of the verbal sale must have been transferred or placed into the possession of the buyer. The determination of delivery must be ascertained by the circumstances of each case. Harter v. Harter, 48,426, p. 9 (La. App. 2d Cir. 10/2/13), 127 So. 3d 5, 10, writ denied, 13-2900 (La. 2/21/14), 134 So. 3d 584.
In Duhon v. Dugas, 407 So. 2d 1334, 1335 (La. App. 3d Cir. 1981), the plaintiff-buyer purchased a house from the defendant-seller, which the plaintiff was to move off of the defendant's land as soon as possible to allow the defendant to construct a new home on the land. The plaintiff did not move the house off of the defendant's land until two months after paying for the home. Nevertheless, the court in that case found that the date of the verbal sale, which was the date on which buyer gave the seller a check for the full purchase price of the house, was the date of "actual delivery," because that was the date on which the house was in fact transferred and placed into the power and possession of the buyer. As observed by the court, upon completion of the verbal sale, the plaintiff "was free to do whatever she wanted with [the house] and could have moved it that day had she chosen to do so." Duhon, 407 So. 2d at 1338.
Likewise, we find that the record reasonably supports the trial court's finding that David effectively sold a one-half interest in Lot 6 to Walter. It is undisputed that the purchase price was paid by Walter, and there is no evidence or assertion indicating that Walter lacked authority to exercise power and possession of his one-half interest in Lot 6, which was described simply as a "camp," at the time of payment. We therefore find no error in the trial court's finding that the community only owned a one-half interest in Lot 6.
In her second assignment of error, Polly contends that the trial court erred in adding funds she had expended to pay her attorney, Mr. Cuccia, to represent her in these proceedings back to the bank account allotted to her in the trial court's partition of the community property. The provision in the judgment of partition allocating the bank account at issue to Polly states "Chase Acct. No. 9789 (no deduction for $4,000 attorney fees)." In the reasons for judgment adopted by the trial court, the court quoted Ramstack v. Krieger, 470 So. 2d 162, 165 (La. App. 4th Cir.), writ denied, 474 So. 2d 1310 (La. 1985) and explained that "Polly Thomassee should not be allowed to deduct the $4,000.00 she paid to retain Mr. Cuccia in attorney's fees from the balance of her post or pre termination checking account due to her failure to prove the fees were related to the divorce or separation as opposed to the community property partition."
Regarding the assessment of legal costs as a community obligation, La. C.C. art. 2362.1(A) provides: "An obligation incurred before the date of a judgment of divorce for attorney fees and costs in an actidn for divorce and in incidental actions is deemed to be a community obligation." (Emphasis added.) In Carroll v. Carroll, 99-0124, pp. 2-3 (La. App. 1st Cir. 2/18/00), 753 So. 2d 395, 396, this court held that "the terminology 'in an action for divorce' contemplates such incidental matters as community property partition proceedings and proceedings under La. R.S. 46:2131 et seq. (Domestic Abuse Assistance)." Thus, under the plain language of La. C.C. art. 2362.1 and this court's pronouncement in Carroll, any obligation for attorney fees and costs related to the divorce or actions incidental to it, incurred prior to the judgment of divorce, is deemed to be a community obligation.
Despite Polly assertion that the $4,000 at issue falls within the parameters of La. C.C. art. 2362.1(A), we find that we mast reject Polly's assignment of error relative to this issue based on the record before us. The reasons adopted by the trial court for failing to classify the $4,000 expended from Chase account number 9789 as a community obligation were incorrect, as the law clearly does not limit the La. C.C. art. 2362.1 classification of attorney fees to services associated with the divorce only, but expressly includes incidental actions, such as the partitioning of community property. See Carroll 99-0124 at pp. 2-3, 753 So. 2d at 396. However, the record before us does not clearly establish that the funds at issue were used to pay Polly's attorney. No documentary evidence regarding Chase account number 9789 was introduced into evidence at the hearing, although statements from the account were shown to Polly during the hearing. In particular, the following colloquy took place regarding a statement from that account that Polly was asked to examine during questioning:
Q. And how much is in it as of November 30th?
A. Six thousand one hundred ninety-four - November 30th, six thousand one hundred and ninety-four dollars.
Q. After the deduction of four thousand dollar - is this the account that you took the four thousand dollars out of to pay Mr. Cuccia?
A. I would have to see all of our accounts to know what account I paid him out of. Ma'am, you're asking me stuff that happened three years ago. Before I ever got everything I needed out of those accounts David went and closed the accounts, so I don't know if that's the four thousand I gave Mr. Cuccia or if I took it out of another account, I don't know.
According to this testimony, Polly acknowledged the possibility that the money from Chase account number 9789 may have been used to pay her attorney, but her testimony was by no means definitive. We therefore find that based on the record before us, there was insufficient evidence offered to classify the $4,000 expended from Chase account number 9789 as a community obligation pursuant to La. C.C. art. 2362.1 and reject Polly's second assignment of error.
In her third assignment of error, Polly contests the trial court's ruling allocating the funds from the Chase account ending in 9798 to her, particularly because neither party listed the account in their detailed descriptive lists.
In setting forth the procedure for judicial partition of community property and settlement of claims after dissolution of marriage, La. R.S. 9:2801 provides specific time periods for filing detailed descriptive lists and traversals. That statute also provides that the court "shall" allow amendments to detailed descriptive lists. La. R.S. 9:2801(A)(1)(b). Nevertheless, it has also been recognized that "[c]ourts have used their discretionary powers to allow amendment of these pleadings at various stages during the proceeding (even on appeal)." Smith v. Smith, 95-0913, p. 11(La. App. 1st Cir. 12/20/96), 685 So. 2d 649, 655.
In Smith, the former wife amended her detailed descriptive list to add her attorney's fees as a community obligation and to request reimbursement for that expense following a preliminary hearing regarding the former husband's detailed descriptive list and his traversal of the former wife's list. Citing Washington v. Washington, 493 So. 2d 1227, 1234 (La. App. 2d Cir. 1986)(in which the Second Circuit amended the trial court's judgment of partition to include certain community debts that were proven at trial, even though the debts were not listed in the plaintiff's detailed descriptive list) and La. C.C.P. art. 1154, this court found that the trial court did not abuse its discretion in allowing the former wife to amend her detailed descriptive list. Smith, 95-0913 at p.11-12, 685 So. 2d at 655.
Thus, in the instant matter, to the extent evidence was offered at the partition hearing, without objection, by the parties regarding property or claims that were not listed on either party's detailed descriptive list, it was within the discretion of the trial court to allocate such property or claims. See La. C.C.P. art. 1154. Evidence regarding Chase account number 9798 was actually introduced by Polly through her testimony in her case-in-chief. A copy of a statement for that account, dated October 19, 2010 through November 16, 2010, was introduced into evidence by David. That statement indicates that the account was in Polly's name. Polly also testified regarding a statement dated November 17, 2010 to December 15, 2010, that was shown to her by her counsel. That statement was not introduced into evidence. In regard to that statement, Polly acknowledged that the statement showed that Chase account number 9798 had a beginning balance of $9,371 on November 17, 2010. Upon further questioning regarding her use of funds from this account after the parties separated, Polly testified that she believed the account had "since been closed." When it was reiterated that the account "has been closed," Polly responded affirmatively, but she stated that she did not know who closed the account or what happened to the money in the account.
According to La. C.C. art. 2369, a spouse owes an accounting to the other spouse for community property under his control at the termination of the community property regime. In Major v. Major, 94-1885, p. 8 (La. App. 4th Cir. 4/3/96), 671 So. 2d 571, 578, the husband and wife withdrew community funds from bank accounts before termination of the community property regime. The trial court charged both spouses to account for those sums. Evidence offered at trial established that the spouses did not dispose of the funds until after termination of the community property regime. Because the trial court found the funds to still be in the possession of the respective parties at the termination of the community, and not disposed of prior to termination of the community, the trial court held each party accountable for the funds that were under each spouse's control, which finding was affirmed on appeal. See also Andrea Carroll & Richard D. Moreno, Matrimonial Regimes, in 16 Louisiana Civil Law Treatise § 7:19 (3d ed.).
Although the bank statement dated November 17, 2010 to December 15, 2010, was not offered into evidence, by her own testimony referring to that statement, Polly established that there was money in Chase account number 9798 before termination of the community. David filed his petition for divorce on December 1, 2010, so the community was terminated retroactive to that date. See La. C.C. art. 159. Further, Polly's testimony at trial stating that the account was closed established that the funds were disposed of after the termination of the community. Hence, consistent with La, C.C. art. 2369 and jurisprudence, we find no error in the trial court's allocation of Chase account number 9798 to Polly.
In her fourth assignment of error, Polly asserts that the trial court erred in allowing David to present certain reimbursement claims that were not included in his sworn detailed descriptive list. We reject this assignment of error.
The only witnesses to testify at the hearing for partition of the community property were the former spouses. David was questioned first as part of Polly's case-in-chief. During his cross-examination in Polly's case-in-chief, he testified regarding funds Polly used to pay her son's legal fees, money Polly borrowed from her 401(k) to give to her mom, and money Polly withdrew from their joint account in anticipation of the divorce. All of this testimony was presented without objection. However, later, during Polly's cross-examination of David for the purposes of David's case-in-chief, David was questioned about whether the aforementioned claims were listed on his detailed descriptive list. David's counsel acknowledged that the claims were not listed on David's detailed descriptive list and explained, "the claims have been enlarged by the evidence and the production of documents by Ms. Thomassee."
David's testimony for Polly's case-in-chief was actually presented in two parts. The first part related primarily to his Chevron retirement and 401(k) accounts, wherein counsel for Polly first questioned David, then David's counsel was allowed to cross-examine him regarding the accounts at the direction of the court. Once all questioning was completed regarding the Chevron retirement and 401(k) accounts, Polly's counsel resumed questioning David for the purposes of Polly's case-in-chief, and David's counsel was allowed to cross-examine David regarding the remainder of his testimony for Polly's case-in-chief. Thereafter, Polly's counsel again examined questioned David for purposes of cross-examination, and David's counsel then questioned David as part of David's case-in-chief.
As evidence regarding the claims David was making for reimbursement of funds Polly used to pay her son's legal fees, money Polly borrowed from her 401(k) to give to her mom, and money Polly withdrew from their joint account in anticipation of the divorce was presented during the hearing without any contemporaneous objection, we find that the trial court did not abuse its discretion in considering these claims. See La. C.C.P. art. 1154; Smith, 95-0913 at p. 11-12, 685 So. 2d at 655.
An objection to any testimony regarding the claims not listed on David's detailed descriptive list was not raised until Polly was being cross-examined on those claims during her case-in-chief.
In her fifth assignment of error, Polly contests the trial court's award of $5,000 in reimbursement to David for money Polly withdrew from a joint checking account in anticipation of the parties' divorce. At the hearing, David testified that prior to his actually filing for divorce on December 1, 2010, the parties had previously discussed the possibility of ending their second marriage. At that time, which was months before either party filed their separate petitions for divorce, David stated that Polly withdrew community funds from a joint account and put the funds in a separate account in her name only. David stated that the amount of money Polly took was "over ten thousand." David did not know the exact date when Polly took the money, but said the withdrawal occurred in 2010. Before making the withdrawal, David testified that Polly had worked some overtime, so she remarked "I'm going to take this money, I earned it," then she took the money from the account and opened up another account to which he had no access. He said that to his knowledge, the money was not replaced, and he did not know what happened to the money.
Polly testified that in March 2010, "when [David] wanted a divorce the first time," she took $24,000 out of their joint accounts and put the money in a separate account. She said that they "made up" two weeks later, and she gave David back the entire $24,000. She said she did not know anything about a specific amount of $10,000, but did note that when David told her he wanted a divorce, he also told her to take all the funds she needed to get an attorney, get an apartment, and start a new life.
Considering the testimony presented by the parties, we cannot say that the trial court was clearly wrong in finding that Polly withdrew at least $10,000 of community funds from the parties' joint bank accounts to deposit in a separate bank account to which only she had access in anticipation of the divorce. And although Polly testified that she returned the sums to David, David denied any knowledge of such an occurrence. Thus, considering the conflicting nature of the parties' testimony regarding whether the funds were returned, we cannot say that the trial court erred in choosing to credit David's testimony over that of Polly to find that David is entitled to reimbursement of half those funds. See Granger v. Granger, 98-429, p. 8 (La. App. 3d Cir. 12/9/98), 722 So. 2d 107, 112.
In her sixth and seventh assignments of error, Polly objects to the reimbursement awarded David for community funds paid to or on behalf of Polly's son and mother by Polly during the marriage. At the hearing, David testified that Polly paid $5,000 as a retainer to an attorney to represent her son from a prior relationship. As for the money given to her mother, Polly testified that she requested an $8,000 loan from her 401(k) to provide money to her mother, which loan she paid back in full using community funds.
An obligation incurred by a spouse may be either a community obligation or a separate obligation. La. C.C. art. 2359, An obligation incurred by a spouse during the existence of a community property regime for the common interest of the spouses or for the interest of the other spouse is a community obligation. La. C.C. art. 2360. Except as provided in Article 2363, all obligations incurred by a spouse during the existence of a community property regime are presumed to be community obligations. La. C.C. art. 2361. A separate obligation of a spouse is one incurred by that spouse prior to the establishment of a community property regime, or one incurred during the existence of a community property regime though not for the common interest of the spouses or for the interest of the other spouse. La. C.C. art. 2363. If community property has been used during the existence of the community property regime or former community property has been used thereafter to satisfy a separate obligation of a spouse, the other spouse is entitled to reimbursement for one-half of the amount or value that the property had at the time it was used. La. C.C. art. 2364.
Nevertheless, each spouse acting alone may manage, control, or dispose of community property unless otherwise provided by law. La. C.C. art. 2346. Exceptions specifically provided by law are set forth in La. C.C. arts. 2347 and 2349. None of the exceptions set forth in La. C.C. art. 2347 apply to the instant case; however, the donation of community property to a third person, which arguably the payments made by Polly to or on behalf of her mother and son would constitute, requires the concurrence of the spouses, but a spouse acting alone may make a usual or customary gift of a value commensurate with the economic position of the spouses at the time of the donation. La. C.C. art. 2349.
In this case, Polly gave large sums of money to her son and mother, which she contends "were expended pursuant to her alimentary obligation" as provided in La. C.C. arts. 227 and 229. Parents have an alimentary obligation imposed by law to provide their children with support, maintenance, lodging, nourishment and education. La. C.C. arts. 227 and 230. This parental obligation continues past the minority of the child, as long as the child is in need. Gill v. Gill, 39,406, p. 21 (La. App. 2d Cir. 3/9/05), 895 So. 2d 807, 819. Children are bound to maintain their father and mother and other ascendants, who are in need, and the relatives in the direct ascending line are likewise bound to maintain their needy descendants, this obligation being reciprocal. This reciprocal obligation is limited to life's basic necessities of food, clothing, shelter, and health care, and arises only upon proof of inability to obtain these necessities by other means or from other sources. La. C.C. art. 229. An alimentary obligation imposed by law on a spouse is deemed to be a community obligation. La. C.C. art. 2362.
The parties' testimony at trial indicated that Polly paid many expenses on behalf of her son, who actually resided with Polly and David during some portion of their marriages; however, the only payment that is put at issue in this appeal is the $5,000 payment for the son's legal expenses.
A parent's obligation to educate his or her child, however, extends past minority only in limited circumstances, i.e., when a child under the age of 19 is a full-time student in good standing in a secondary school or when a child is under the age of 22 and has developmental disability. See La. C.C. art. 230(B).
Aid extended by a spouse that falls outside the scope of an alimentary obligation may be considered a gratuity made during the marriage. Thus, a spouse acting alone may make a usual or customary gift of a value commensurate with the economic position of the spouses at the time of the donation. Gill, 39,406 at p. 23, 895 So. 2d at 820. Under those circumstances, a donation of community property may be valid, even without the concurrence of both spouses. In re Succession of Wagner, 08-0212, p. 16 (La. App. 1st Cir. 8/8/08), 993 So. 2d 709, 721.
Implicit in the trial court's award of reimbursement is the finding that the disputed amounts paid to or on behalf of Polly's mother and son were not a fulfillment of any alimentary obligation owed by Polly nor would they constitute a usual and customary gift. As stated in La. C.C. art. 229, an alimentary obligation "is limited to life's basic necessities of food, clothing, shelter, and health care, and arises only upon proof of inability to obtain these necessities by other means or from other sources." There was no evidence offered to indicate that the funds Polly paid to her son and mother fell within the limitation provided in La. C.C. art. 229. Additionally, the record does not support a finding that the payments at issue would constitute a usual or customary gift of a value commensurate with the economic position of the spouses at the time of the donation in accordance with La. C.C. art. 2349. Polly testified that she had to take out a loan against her 401(k) for the $8,000 she gave to her mom.
And when questioned about large deposits that appeared on bank statements for a joint checking account Polly maintained with her son at Capital One, the following colloquy occurred:
Q. Let me show you Capital One for May 15th, 2009. Do you have any idea where he would have gotten seventy-two hundred and sixteen dollars and fifty-one cents to deposit on May 26th or thirty-one hundred dollars and fifty cents to deposit on May 26th?After continued questioning regarding additional large deposits that appeared on the bank statements for Polly's joint account at Capital One with her son, Polly indicated that such deposits would be the equivalent of using up her salary, when she proclaimed "[t]he amounts of money you are bringing up would be my salary." She further declared that "[i]f I was giving away that kind of money to my son, you don't think David would have noticed that? I had bills to pay too. I had car notes, credit card bills, the portion of the house bills that I paid, groceries. Where would I have gotten that kind of money?"
A. That could have - - no, ma'am, unless he cashed out a 401(k).
Q. It wasn't you?
A. I don't remember. If you know it's me, prove it's me. I really don't - - where would I come up with seven thousand dollars to hand over to my son? So - - he's cashed out a 401(k) a couple of times. I don't know. I don't think I've ever had seven thousand dollars to hand over to my kid. If so I would have paid off my car, my bills.
Considering this testimony, the $5,000 payment Polly made to or on behalf of her son would not constitute a usual and customary gift commensurate with her economic condition. Hence, we find no error in the trial court's determination that the money paid by Polly to her mother and son were separate obligations that she used community funds to pay. However, we do find merit with Polly's alternative argument that the trial court erred in the amount of reimbursement David was awarded relative to the money given to Polly's son. According to La. C.C. art. 2364, David is only entitled to a reimbursement for one-half of the amount of community funds that were used to pay Polly's son, which would be $2,500. We will modify the partition judgment to reflect the correct reimbursement amount owed.
In her final assignment of error, Polly disputes the amount of the reimbursement awarded to her for cashing out a 401(k) she held with Fidelity Investments that was her separate property. We find merit in this assignment. The reimbursement in the judgment reads: "Reimbursement 401k loan used to pay off second mortgage taken out prior to pay Polly's medical bills ... ($25,000 second mortgage on David's separate property used to pay $19,000 in Polly's medical bills; Polly made a loan against her 401k to pay balance of loan; David only needs to reimburse one-half of the $6,000 net difference accounted for."
It should first be noted that the home equity loan that David secured by placing a second mortgage on the matrimonial home, which was his separate property, was a community obligation. An obligation incurred by a spouse during the existence of a community property regime for the common interest of the spouses or for the interest of the other spouse is a community obligation. La. C.C. art. 2360. In this case, David expressly admitted that he acquired the second mortgage on the matrimonial home for the benefit of Polly, to assist her in paying off credit cards that Polly used to pay for three surgeries she underwent during the second marriage. Thus, David's act of acquiring the second mortgage on his separate property for the benefit of Polly made the second mortgage a community obligation.
Polly subsequently cashed out a 401(k) policy that she held with Fidelity Investments to pay off the second mortgage and some other expenses. The trial court manifestly erred in finding that the money Polly secured in this transaction was merely a loan, since the testimony and evidence offered at the hearing clearly establish that the money at issue was received as a result of Polly cashing out her 401(k) rather than simply making a loan. Specifically, at the hearing, Polly testified that she "cashed out" her 401(k) and that her "401(k) is gone." She also introduced into evidence a copy of a form 1099-R from Fidelity Investments/National Financial Services LLC showing a gross distribution of $23,842.56 and a deduction for federal taxes of $2,384.25. Polly also introduced a copy of the former spouses' joint income tax return from 2006, which shows an IRA distribution of $23,843 and a tax amount of $2,384.
Polly testified that she had a separate 401(k) plan that she acquired during the second marriage that was administered by Principal. The record indicates that she made two separate loans against that 401(k); one for the $8,000 she paid to her mother and the second one for $15,000, which she used for a down payment on the home she purchased following the parties' second divorce.
According to Polly, she acquired the 401(k) that she cashed out while employed with a former employer, Era Aviation, with whom she was employed from 1988 to 2002 or 2003. After cashing out the 401(k), Polly testified that "[s]ix thousand went to taxes, two thousand three hundred went to penalties, I paid off the second mortgage." Polly introduced into evidence a copy of the cancelled check she issued to pay of the balance of $10,665.85 owed on the second mortgage secured by David.
If separate property of a spouse has been used either during the existence of the community property regime or thereafter to satisfy a community obligation, that spouse is entitled to reimbursement for one-half of the amount or value that the property had at the time it was used. La. C.C. art. 2365. In his appellee brief, David appears to concede that the calculation of the reimbursement owed for this claim is incorrect; however, he argues that the reimbursement should only be $5,332.93, one-half of the $10,665.85 balance on the second mortgage that Polly paid off using the funds she acquired from cashing out the 401(k) that was her separate property. Citing Ramstack, 470 So. 2d at 166-67, David contends that because Polly "chose to cash in her 401k to pay off the second mortgage, there is no authority to 'tax' [David] with any responsibility to reimburse 'one half of [Polly's] early withdrawal penalties of $2,384.25.'"
In Ramstack, the husband argued "that rather than allocating to him the entire sum in the account as community property, the trial court should have deducted an amount equal to the income tax penalty he would have to pay if he withdrew the funds" immediately. The court rejected this argument, observing that "it is true that if he withdraws the money before a certain age, he will incur a tax liability which the plaintiff will not be required to share, it is also true that if he leaves the funds in the account, they will earn interest from which the plaintiff will not benefit." Ramstack, 470 So. 2d at 167. Thus, the court recognized that it was completely at the husband's discretion whether he incurred any penalty for early withdrawal. It should be further observed that there was nothing recited in the case to indicate that the husband would actually exercise the option to immediately withdraw the funds from the IRA, but it was merely recognized that at his option, he could. In that respect, we find the present matter distinguishable.
In Gibson v. Gibson, 96-1472 (La. App. 3d Cir. 4/2/97), 692 So. 2d 708, subsequent to the parties divorce, the former husband's employment was terminated, and he decided to withdraw all the community funds that had been deposited in a capital accumulation plan and a retirement plan. The withdrawal was done without the knowledge or consent of the former wife. The funds from the two plans were divided and disbursed equally to the former spouses; however, before the disbursement, the husband's former employer deducted 20 percent of the total amount from the funds for taxes. Upon partition of the community, the wife requested to be reimbursed for the taxes paid out of her portion of the disbursement. The trial court denied her request, but on appeal, the appellate court reversed. Gibson, 96-1472 at pp. 1-2, 692 So. 2d at 709. In reversing the ruling of the trial court and awarding the wife reimbursement of the taxes deducted, the appellate court noted that the husband "simply withdrew all the funds in the retirement account without advising [the wife] of his intentions." The court went on to hold that the husband's actions violated La. C.C. art. 2369.3,9 and as such, he was liable for the. wife's share of the tax liability. Gibson, 96-1472 at pp. 3-4, 692 So. 2d at 710.
That statute provides, in pertinent part, that "[a] spouse has a duty to preserve and to manage prudently former community property under his control, including a former community enterprise, in a manner consistent with the mode of use of that property immediately prior to termination of the community regime. He is answerable for any damage caused by his fault, default, or neglect."
In Munson v. Munson, 00-348, p. 4 (La. App. 3d Cir. 10/4/00), 772 So. 2d 141, 144, the trial court awarded the former wife one-half of the pre-penalty amount of a retirement fund that the former husband prematurely decided to liquidate, thus causing a tax penalty to be incurred. Relying on its prior decision in Gibson, the appellate court affirmed the trial court's award.
At the partition hearing in the instant matter, David testified, "I didn't want a second mortgage - it wasn't getting paid in a timely manner, so I wanted it to be paid off, so she said she would take care of it with her account." Apparently, David simply wished to have the second mortgage paid off, because when asked if there were late payments on the mortgage, he responded "I don't think so. I don't remember." He also testified that Polly was responsible for making payments on the second mortgage. The second mortgage was transacted in June 2003, and paid off in December 2006, roughly three and half years later.
In regards to the decision to cash out the 401(k), Polly similarly related:
There was never no conversation of that because they wasn't getting paid off fast enough. He was just concerned about having a second mortgage, if something happened to one [of] us, and so we discussed me cashing out my 401(k). He said that he made enough money for both of us, we didn't need my 401(k). And the discussion came up quite often about the second mortgage, so I cashed out my 401(k), paid the taxes, got the cash out and paid off the mortgage.
Although it is true that as her separate property, Polly had the option, much like the husband in Ramstack, to decide whether to withdraw the funds from her 401(k) and be subject to a penalty for doing so, the record in this matter also shows that she was pressured and cajoled by David to take the action that she did. Thus, we disagree with David's assertion that Polly simply "chose" to cash out her 401(k) and that he should not have to reimburse any portion of the early withdrawal penalties imposed. David was not only aware of Polly's decision to cash out the 401(k) prior to her doing so, he encouraged her to do so. Under such circumstances, we find it appropriate for David to assume an equal share of the early withdrawal penalties incurred.
However, as Polly is the party seeking reimbursement for the use of her separate property to satisfy a community obligation, we find that she only established the expenditure of $19,450.10 of the $23,842.56 from her cashed out 401(k). Hence, we will increase the trial court's reimbursement award with respect to the expenditure of her 401(k) to one-half of $19,450.10 or $9,725.05
At the hearing, when asked what she did with the money from the 401(k), Polly testified: "Six thousand went to taxes, two thousand three hundred went to penalties, I paid off the second mortgage." The penalty for distribution or withdrawal from a qualified retirement plan before the age of 59 1/2 years is a 10% additional tax on the early distribution. See 26 U.S.C. §72(t). The documentary evidence Polly introduced at the hearing shows that the $2,300 figure she recited was actually $2,384.25 according to the 1099-R and tax return introduced into evidence. In addition to the 10% additional tax penalty, the recipient of an early distribution must also pay income taxes on the distribution. A review of the couple's 2006 tax return shows a $6,400 pre-payment of estimated taxes, which comports with the $6,000 figure to which Polly testified. A bank statement that Polly introduced into evidence shows two checks, numbers 3117 and 3118, the first in the amount of $6,400 and the second in the amount of $10,665.85, which also appear to correspond to Polly's testimony. Thus, adding together the amounts $2,384.25, $6,400, and $10,665.85 equals the sum $19,450.10. --------
CONCLUSION
Consistent with the foregoing discussion, we amend the April 4, 2014 Judgment of Partition to increase the reimbursement awarded Polly for the withdrawal of funds from her separate 401(k) to $9,725.05 and to decrease the reimbursement awarded David for the $5,000 in community funds Polly used to pay attorney fees for her son to $2,500. Based on these modifications of the April 4, 2014 judgment, the equalization payment David owes Polly is increased to $15,153.84. In all other respects, the judgment is affirmed. All costs of this appeal are cast to the appellee, David Thomassee.
AMENDED IN PART, AND AS AMENDED, AFFIRMED. HOLDRIDGE, J., AGREES IN PART AND DISSENTS IN PART.
I respectfully dissent from the majority's disposition of Ms. Thomassee's fifth assignment of error. I believe that Mr. Thomassee failed to prove his entitlement to this particular reimbursement claim and that the trial court was clearly wrong in awarding it. In all other respects, I agree with the opinion.