Opinion
Nos. 2007-CA-002311-MR, 2007-CA-002375-MR.
January 16, 2009.
Appeal and Cross-Appeal from Warren Circuit Court, Honorable Catherine R. Holderfield, Judge, Action No. 06-CI-01164.
Brent Travelsted, Bowling Green, Kentucky, Brief for Appellant.
David A. Lanphear, Bowling Green, Kentucky, Brief for Appellee.
OPINION
This is an appeal and cross-appeal from the findings of fact, conclusions of law, and decree of dissolution rendered by the Warren Circuit Court dissolving the marriage of Vindell Webster and Margaret Webster. Vindell argues the court erred by finding that his military service credits were marital property, and he contends the court abused its discretion in dividing his retirement account. Margaret alleges in her cross-appeal that the court erroneously calculated Vindell's non-marital share of the marital home.
Vindell and Margaret were married on May 18, 1990. At the time of their marriage, Vindell was employed as a firefighter with the Bowling Green Fire Department. In December 1990, Vindell was promoted to chief of the fire department, and he held that position until he retired in December 1997. Margaret worked in nursing home administration, and she took early retirement in 2002, for health reasons. On August 4, 2006, Margaret filed a petition to dissolve the marriage in Warren Circuit Court. A trial was held July 5, 2007, and the court rendered its decree of dissolution on October 16, 2007.
In his direct appeal, Vindell first alleges the court erroneously classified his military service credits as marital property. Vindell served in the United States Navy from 1962-1966. He testified at trial that he received no pension or retirement benefits related to his military service. During his employment with the Bowling Green Fire Department, Vindell participated in the Kentucky Employees Retirement System (KERS). In December 1990, Vindell took advantage of an offer from KERS to purchase military service credits to enhance his retirement benefits. Vindell signed an "Installment Service Purchase Agreement" to purchase forty-eight months of military service credits from KERS for $12,284.88. As a result, when Vindell retired from the fire department with 29 years and 8 months of service, his military credits entitled him to receive KERS benefits based on total service of 33 years and 8 months.
The court designated Vindell's KERS military credits as marital property. Vindell argues that, because he served in the military long before he married Margaret, the court should have classified the military credits as his non-marital property.
Pursuant to KRS 403.190(2), most property acquired by either spouse after the marriage is presumed to be "marital property." To overcome the presumption that property is marital, a spouse must show that the alleged non-marital property was acquired pursuant to one of the exceptions in KRS 403.190(2). KRS 403.190(3).
In Overstreet v. Overstreet, 144 S.W.3d 834, 837 (Ky.App. 2003), this Court noted that we review a trial court's designation of marital and non-marital property de novo. In Overstreet, the husband had a dormant KERS account with a zero balance at the time of the marriage. Id. at 835-36. During the course of the marriage, he purchased service credits from KERS based on his prior employment as a police dispatcher and reactivated his account. Id. at 836. In the dissolution action, the trial court designated the KERS account as marital property. Id. at 836-37. On appeal, a panel of this Court reversed that determination:
We agree with [husband]'s contention that his KERS account should have been classified as non-marital property since his legal rights in the account were acquired prior to his marriage to [wife]. * * * [Husband]'s right to purchase service credit with the KERS arose out of his employment as a dispatcher with the Kentucky State Police from November 1, 1973, until May 31, 1975, before the marriage. Although [husband] withdrew the funds he initially accumulated in his KERS account prior to his marriage to [wife], his right to participate in the retirement system was not terminated as a result of this transaction.
Id. at 837 (internal citation omitted).
Vindell argues that, pursuant to the reasoning in Overstreet, supra, his military service credits were non-marital because his "right to purchase" the military credits arose at the time of his military service. We disagree.
The trial court correctly concluded the facts herein are distinguishable from Overstreet, supra. The account in Overstreet, though inactive, existed in the husband's name prior to the marriage. In contrast, Vindell's past military service had no value before he purchased the credits from KERS. Although Vindell's military service ended many years before his marriage to Margaret, he had no legal right to retirement benefits related to his military service. Vindell's legal right to purchase military service credits from KERS arose during the marriage, and he used marital funds to complete the transaction. Vindell wholly relies on Overstreet, supra, and offers no argument pursuant to KRS 403.190(2) regarding the alleged non-marital character of the credits. Consequently, we conclude Vindell failed to overcome the statutory presumption that his KERS military credits were marital property. KRS 403.190(3).
Vindell next argues that the trial court abused its discretion by awarding Margaret half of the funds in his KERS account that accrued during the marriage.
The trial court has wide latitude in dividing marital property; as a result, we review the court's determination under the abuse of discretion standard. Overstreet, 144 S.W.3d at 838. Accordingly, we will not disturb the trial court's findings unless the "decision was arbitrary, unreasonable, unfair, or unsupported by sound legal principles." Commonwealth v. English, 993 S.W.2d 941, 945 (Ky. 1999).
Here, Vindell asserts that the value of his retirement account increased significantly during the marriage because his salary increased when he became fire chief. By dividing the marital portion of the account equally, Vindell argues the court unfairly awarded Margaret a portion of his KERS account attributable to his years of employment prior to the marriage. Vindell contends the court should have calculated the marital percentage of his KERS account by dividing the total months of his working career by the number of months he worked during the marriage.
Pursuant to Vindell's calculation, 19.3% of the KERS account would be marital property.
Pursuant to KRS 403.190(1), the court is obligated to divide marital property:
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. . . .
The trial court's lengthy opinion reveals the court considered the statutory requirements in dividing the marital property. The court considered all of the parties' marital assets, and specifically noted that Margaret had withdrawn the entirety of her own retirement account to pay off marital debts, including the mortgage on their home. Vindell focuses on subsection (a) of the statute and argues that he achieved his position as chief of the fire department through years of "hard work and sacrifice" prior to his marriage. After reviewing the record, we acknowledge that Vindell worked only seven years of his career during the marriage; however, we simply are not persuaded the trial court abused its broad discretion by dividing the martial portion of his KERS account equally.
It is well settled that "[t]he property may very well have been divided or valued differently; however, how it actually was divided and valued was within the sound discretion of the trial court." Cochran v. Cochran, 746 S.W.2d 568, 570 (Ky.App. 1988). Furthermore, in addressing the divisibility of retirement benefits, our Court has previously stated: "The value of a pension, if any[,] should [] be marital property for the portion accrued during coverture." Light v. Light, 599 S.W.2d 476, 478 (Ky.App. 1980). Based on the evidence presented, we conclude the trial court's division of the KERS account was equitable and not an abuse of discretion.
Finally, in her cross-appeal, Margaret asserts the court erroneously calculated Vindell's non-marital interest in the parties' marital residence. We agree.
It is undisputed that Vindell contributed a non-marital down payment of $20,000.00 toward the purchase of the marital home. The parties agreed that the fair market value of the house at the time of trial was $129,900.00. In its decree, the trial court acknowledged that Vindell had both marital and non-marital interest in the residence. The court utilized the Brandenburg formula to calculate Vindell's non-marital interest as $28,698.55. See Brandenburg v. Brandenburg, 617 S.W.2d 871 (Ky.App. 1981).
Margaret argues the court erroneously awarded Vindell appreciation on his non-marital $20,000.00 investment. Margaret relies on Travis v. Travis, 59 S.W.3d 904 (Ky. 2001), wherein the Kentucky Supreme Court stated:
When the property acquired during the marriage includes an increase in the value of an asset containing both marital and nonmarital components, trial courts must determine from the evidence `why the increase in value occurred' because `where the value of [non-marital] property increases after marriage due to general economic conditions, such increase is not marital property, but the opposite is true when the increase in value is a result of the joint efforts of the parties.' KRS 304.190(3), however, creates a presumption that any such increase in value is marital property, and, therefore, a party asserting that he or she should receive appreciation upon a nonmarital contribution as his or her nonmarital property carries the burden of proving the portion of the increase in value attributable to the nonmarital contribution. By virtue of the KRS 403.190(3) presumption, the failure to do so will result in the increase being characterized as marital property.
Id. at 910 (internal citations omitted).
We infer from the court's calculation that it considered a portion of the increased value of the home attributable to general economic conditions. However, the record does not support the court's assessment. Margaret testified she made improvements to the house during the marriage, including professional wallpapering, installation of replacement windows, new flooring, and tree removal. In contrast, we found nothing in the record indicating Vindell presented any evidence regarding the increased value of the house. Consequently, the only evidence before the court showed that the increase in value was due to the joint efforts of the parties. KRS 403.190(2)(e). As Vindell failed to rebut the presumption that the increased value of the house was marital property, the trial court erred in calculating Vindell's non-marital interest. Accordingly, we vacate the trial court's judgment on this issue and remand this matter to the trial court for further proceedings consistent with this opinion.
Vindell did not respond to the issue raised in this cross-appeal.
For the reasons stated herein, in Appeal No. 2007-CA-002311-MR, the judgment of the Warren Circuit Court is affirmed. In Cross-Appeal No. 2007-CA-002375-MR, the court's judgment is vacated and remanded for further proceedings.
STUMBO, JUDGE, CONCURS.
LAMBERT, SENIOR JUDGE, CONCURS ON DIRECT APPEAL, DISSENTS ON CROSS-APPEAL.