DIANE CHUMBLEY PEDRO v. SAMUEL JOSEPH PEDRO and DIANE CHUMBLEY PEDRO v. SAMUEL JOSEPH PEDRO
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RENDERED: April 30, 1999; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO. 1997-CA-001538-MR
DIANE CHUMBLEY PEDRO
and WILLIAM L. HOGE, III
v.
APPELLANTS
APPEAL FROM JEFFERSON FAMILY COURT
HONORABLE HENRY WEBER, JUDGE
ACTION NO. 95-FC-00009
SAMUEL JOSEPH PEDRO
APPELLEE
and
NO. 1998-CA-000109-MR
DIANE CHUMBLEY PEDRO
and WILLIAM L. HOGE, III
v.
APPELLANTS
APPEAL FROM JEFFERSON FAMILY COURT
HONORABLE WILLIAM P. RYAN, JR., JUDGE
ACTION NO. 95-FC-00009
SAMUEL JOSEPH PEDRO
APPELLEE
OPINION
AFFIRMING IN PART,
REVERSING IN PART AND REMANDING
** ** ** ** ** ** **
BEFORE:
GUIDUGLI, HUDDLESTON and MCANULTY, Judges.
HUDDLESTON, Judge.
Diane Chumbley Pedro appeals from the findings
of fact, conclusions of law and decree of the Jefferson Family
Court in a dissolution of marriage proceeding.
Diane Chumbley Pedro and Samuel Joseph Pedro were married
on June 20, 1975.
Diane and Samuel had one child, John Patrick,
during their marriage. When this action began, Samuel was 75 years
of age and retired, Diane was employed at MCC Behavioral Care as a
substance abuse counselor and recovery facilities director.
She
has an average gross monthly income of approximately $3,019.00.
Prior to the marriage, Samuel was a majority shareholder
of Embassy Supper Club, Inc. and Embassy Investment Corporation
which owned and operated the Embassy Supper Club (Embassy), a
restaurant in Louisville, Kentucky. Instead of paying taxes on the
earnings made from the Embassy, Samuel funneled money to Mexico
into a so-called “retirement fund account.”
In 1973, Samuel
pleaded guilty to tax evasion. He served 55 days in a federal
penitentiary and paid approximately $100,000.00 in back taxes.
In the early 1980s, profits from the Embassy declined and
Samuel made personal loans to the corporation. The funds were paid
out of his retirement fund in an attempt to financially regenerate
the Embassy.
The Embassy purchased the leasehold interest in its
property for $160,000.00.
The family court determined that the parties’ marital
residence
located
at
9107
Taylorsville
Road,
rental
property
located at 9113 Taylorsville Road, the Forest Hills Subdivision and
the Embassy leasehold interest were marital property and divided
the value between the parties.
The family court denied Diane’s
request for maintenance and awarded Diane’s attorney $7,500.00 in
fees.
Both parties filed motions to alter or amend the decree.
After a hearing, the family court, on May 21, 1997, amended its
2
decree and determined that the real property located at 9107 and
9113 Taylorsville Road, the Forest Hills Subdivision and the
Embassy leasehold interest were non-marital property and awarded
the property to Samuel.
The family court affirmed its denial of
Diane’s request for maintenance, but amended its decree and awarded
Diane’s attorney $10,000.00 in fees.
Diane’s motion to alter or
amend the May 21, 1997, order was denied.
Diane filed a notice of appeal to this court.
Soon
after, she moved this Court to hold the case in abatement, and she
filed a Ky. R. Civ. Proc. (CR) 60.02 motion with the family court
claiming to have newly discovered evidence.
On December 15, 1997,
the family court denied Diane’s CR 60.02 motion.
appealed the order denying her CR 60.02 motion.
Diane then
The appeals have
been consolidated.
Diane’s first point is that the family court erred when
it determined that the real property located at 9107 and 9113
Taylorsville Road, the Forest Hills Subdivision and the Embassy
leasehold interest, are non-marital property.
Diane argues that
the family court improperly placed the burden on her to establish
the marital character of the property.
She also contends that the
family court erred by finding that the property was non-marital
based solely on Samuel’s testimony.
She alleges that there is no
documentary evidence that Samuel’s retirement fund existed and that
most likely this money came from skimming the Embassy during the
marriage.
The
following
facts
are
relevant
for
purposes
of
reviewing the family court’s disposition of the marital and nonmarital property in question.
The parties’ martial residence,
3
located at 9107 Taylorsville Road, was purchased before their
marriage by Samuel, together with several other lots which became
known as the Forest Hills Subdivision.
Prior to the marriage,
Samuel also purchased property at 9113 Taylorsville Road.
Samuel
financed several improvements to the marital residence before and
during the marriage.
However, the parties used winnings they
received from a Kentucky Derby bet to construct an indoor swimming
pool.
Samuel also loaned money to the Embassy to enable it to
purchase the leasehold interest. Samuel testified that he used the
funds in his retirement account to purchase these assets and to
make improvements to the marital residence.
The family court found that Samuel purchased the 9107 and
9113 Taylorsville Road properties prior to the marriage and that
the Forest Hills Subdivision was developed on the property at 9107
Taylorsville Road.
The court concluded that the property was non-
marital. The court also found that Samuel loaned the Embassy funds
from his retirement account which the Embassy used to purchase the
leasehold interest.
Because the leasehold interest was purchased
from the retirement fund, the court determined that the leasehold
interest was non-marital. The court made the following findings of
fact and reached the following conclusions of law regarding the
non-marital property:
The
next
question
revolves
around
the
amount
of
appreciation which has been enjoyed in the property
during the marriage, and the burden of proof falls on
[Diane] to establish the amount and, consequently, prove
the existence of a marital interest.
KRS 403.190(2)
states that “For the purpose of this chapter, “marital
4
property” means all property acquired by either spouse
subsequent to the marriage except . . . “[t]he increase
in value of property acquired before the marriage to the
extent that such increases did not result from the
efforts of the parties during the marriage[.]”
KRS
403.190(2)(e). [Diane] has failed to prove the increase
to be marital, therefore, it shall be considered nonmarital.
Marital property is defined as all property acquired by
either spouse subsequent to the marriage, with five exceptions: (a)
by gift, bequest, devise or descent; (b) property exchanged for
type (a), above; (c) property acquired after a decree of legal
separation;
(d)
property
excluded
by
valid
agreement
of
the
parties; and (e) the increase in value of property acquired before
marriage.
KRS
403.190(2)(a)-(e).
KRS
403.190(3)
creates
a
presumption that all property acquired during the marriage is
marital property, but permits this presumption to be overcome by
proof that the property was acquired as in subsection (2) of the
statute.
Chenault v. Chenault, Ky., 799 S.W.2d 575 (1990). KRS
403.190(2) has been construed to require tracing of assets claimed
to be non-marital into assets owned at the time of dissolution.
Id.
In the present case, the family court determined that
Samuel established the existence of a retirement account.
Samuel
testified that he invested funds in Mexico and retrieved the funds
prior to his marriage.
He stated that he used this reserve to
purchase property located at 9107 and 9113 Taylorsville Road, the
5
Forest Hills Subdivision and the leasehold interest.
that
even
though
he
has
no
documentary
evidence
He argued
showing
the
existence of the fund or of the amount which it contained, the
existence of other proof showing the lack of other family financial
resources proves that the funds must have existed.
The court
concluded that Diane failed to produce any evidence to establish
the increase in value of the property resulting from the efforts of
the parties during the marriage.
KRS 403.190(2)(e).
Diane argues that the family court made a clear mistake
of law in allowing Samuel to establish the non-marital character of
the property by his testimony and by negative evidence.
It is
within the exclusive province of the trier of fact to assess the
credibility of witnesses and to determine the weight to be given to
particular evidence, whether positive or negative. Ironton Fire
Brick Co. v. Burchett, Ky., 288 S.W.2d 47, 50 (1956).
failure
to
produce
documents
to
support
the
Samuel’s
existence
retirement fund goes only to the weight of the evidence.
of
a
In such
matters, we are bound by the clearly erroneous standard and cannot
substitute our judgment for that of the trier of fact.
Ghali, Ky. App., 596 S.W. 2d 31, 32 (1980); CR 52.01.
Ghali v.
With these
considerations in mind, we hold there is sufficient evidence to
support the family court’s finding that the real property located
at 9107 and 9113 Taylorsville Road, the Forest Hills Subdivision
and the leasehold interest are non-marital property.
Diane
maintenance
challenges
award.
She
the
family
contends
that
court’s
the
court
standard of living, the property distributed to the
6
denial
of
ignored
a
her
parties and
the duration of the marriage in so doing.1
The court made the
following finding of facts regarding the issue of maintenance:
[I]t was established that [Diane] had approximate gross
monthly income of $3,019.00.
Her statement of expenses
revealed that she claimed to have $3,102.34 in monthly
expenses.
Upon review of said statement, the Court has
taken the position that these are somewhat inflated, and,
in
fact,
several
of
the
claimed
expenses
are
only
relative to the parties’ now emancipated son . . . . the
Court finds that her monthly expenses are $2,506.34.
Said adjustments were made by subtracting the son’s car
payment, gas, and food from [Diane’s] expense list. Upon
subtracting [Diane’s] expenses from her gross monthly
income, the Court finds that [Diane] has $512.66 in
residual funds.
*
*
*
The Court has considered [Diane’s] age, earning ability,
standard of living established during the marriage, and
[Samuel’s] ability to pay, as well as the threshold
question of sufficient property to meet her reasonable
needs, and ability to support herself through appropriate
employment . . . .
The Court does not find, based on
such analysis, that [Diane] is entitled to maintenance.
1
Diane states that Samuel’s income was at least three times
greater then hers during the parties’ 20 year marriage because of
her housemother status and later employment as a rehabilitation
counselor.
7
The amount and duration of maintenance is within the
sound discretion of the family court.
App., 878 S.W.2d 24 (1994).
Russell v. Russell, Ky.
KRS 403.200 provides, in relevant
part, that:
(1) [T]he court may grant a maintenance order for either
spouse
only
if
it
finds
that
the
spouse
seeking
maintenance:
(a) Lacks sufficient property, including marital property
apportioned to him, to provide for his reasonable needs;
and
(b) Is unable to support himself through appropriate
employment . . . .
(2) The maintenance order shall be in such amounts and
for such periods of times as the court deems just, and
after considering all relevant factors including:
(a)
The
financial
resources
of
the
party
seeking
maintenance . . . ;
(b) The time necessary to acquire sufficient education or
training to enable the party seeking maintenance to find
appropriate employment;
(c)
The
standard
of
living
established
during
the
marriage;
(d) The duration of the marriage;
(e) The age, and the physical and emotional condition of
the spouse seeking maintenance; and
(f) The ability of the spouse from whom maintenance is
sought to meet his needs while meeting those of the
spouse seeking maintenance.
8
In
Casper
v.
Casper,
Ky.,
510
S.W.2d
253
(1974),
Kentucky’s highest court held that the circuit [family] court is to
determine whether the spouse seeking maintenance lacks sufficient
property to meet reasonable needs and is unable to support herself
through appropriate employment according to the standard of living
established during the marriage.
(Emphasis supplied).
The Court
noted that:
.
.
.
once
the
conditions
of
KRS
403.200(1)
are
satisfied, KRS 403.200(2) specifies a number of relative
factors to be considered in determining the amount of
maintenance, including “standard of living established
during the marriage.”
The statute, as did the law
before, simply recognizes that what might be ample for a
scullery maid is not necessarily sufficient for one
accustomed to the lifestyle of a duchess, and it seems to
us
that
the
same
is
true
with
respect
to
what
is
“support.”
Casper, 510 S.W.2d at 255.
Therefore, to determine whether a
spouse is able to “support” herself under KRS 403.200(1)(b) the
court must consider factors listed in KRS 403.200(2).2
In Weldon v. Weldon, Ky. App., 957 S.W.2d 283 (1997),
this Court, relying on Casper v. Casper, Ky., 510 S.W.2d
253
(1974), considered the marital property assigned to a spouse, the
spouse’s annual income and the standard of living established by
2
In Casper v. Casper, Ky., 510 S.W.2d 253,254 (1974), the
Court said “The real issue here is whether the criterion provided
by KRS 403.200(1)(b) is absolute or relative, and we think the
answer must be that it is relative.”
9
the parties during the marriage in order to determine whether the
lower court abused its discretion in awarding maintenance.
In
Perrine v. Christine, Ky., 833 S.W.2d 825, 826 (1992), the Supreme
Court of Kentucky said that in order to reverse a maintenance
decision, a reviewing court must find either that the findings of
fact are clearly erroneous or that the lower court abused its
discretion. Considering these authorities, we hold that the family
court abused its discretion by not awarding Diane maintenance given
the fact that the parties were married for 20 years, the standard
of living established during their marriage and the non-marital and
marital property distributed to each.3
Diane’s attorney, William L. Hoge, III, argues that the
family court abused its discretion in awarding but $10,000.00 in
fees in light of Samuel’s abuse of discovery which, he says, caused
an excessive amount of time to be expended on trial preparation and
because of the disparity in financial resources of the parties.
KRS 403.220 provides that the family court, after considering the
financial resources of both parties, may order a party to pay a
reasonable amount to cover the costs incurred by the other party in
maintaining or defending any proceeding under KRS Chapter 403
including fees. The court must consider the financial resources of
the parties, and the award of attorney fees is appropriate where
one party's resources exceed those of the other.
Ky.
App.,
809
S.W.2d
710,
714
3
(1991);
Drake v. Drake,
Hollingsworth
v.
In the July 17, 1996, decree, the family court said: “It is
the opinion of this Court that [Diane] has sufficient property to
meet her reasonable needs, and she is able to support herself
through appropriate employment. In light of the assets which have
been awarded her through these proceedings, and her present
employment.” (Emphasis supplied.)
10
Hollingsworth, Ky. App., 798 S.W.2d 145, 147 (1990). The court has
great discretionary power in its determination to award or deny
attorney fees. Drake, 809 S.W.2d at 714; Hollingsworth, 798 S.W.2d
at 148.
The court amended its award of attorney’s fees after its
reclassification of the aforementioned property as non-marital. We
detect no abuse of discretion in the award of attorney fees.
Two appeals have been filed by Diane, the first being
from the family court’s final decree and the second from the denial
of her CR 60.02 motion.
addressed.
The merits of the initial appeal have been
The CR 60.02 motion filed by Diane was based upon
evidence that she discovered at the time of the family court
hearing and later reviewed, and which she alleges proves the
marital nature of the aforementioned properties. After a review of
the record, we find no abuse of discretion in the family court’s
denial of Diane’s motion.
Fortney v. Mahan, Ky. 302 S.W.2d 842
(1957).
The decree is affirmed in part and reversed in part, and
this
case
is
remanded
to
the
family
court
for
an
award
of
maintenance. The appeal from the denial of Diane’s CR 60.02 motion
is affirmed.
McANULTY, Judge, concurs.
GUIDUGLI, Judge, Concurs in Part, Dissents in Part and
Furnishes Separate Opinion.
GUIDUGLI, Judge, Concurring in Part and Dissenting in
Part.
I respectfully dissent from the majority’s opinion that the
real property located 9107 and 9113 Taylorsville Road, the Forest
Hills
Subdivision
property.
and
the
leasehold
interest
are
non-marital
I believe that Samuel Joseph Pedro (Samuel) failed to
11
present any documentary evidence showing the existence of the
alleged “retirement account” from which he alleges he purchased
these properties.
The majority believed that “Samuel’s failure to
produce documents to support the existence of a retirement fund
goes only to the weight of the evidence.”
I do not agree.
In Chenault v. Chenault, Ky., 799 S.W.2d 575 (1990), the
court relaxed the strict tracing requirements espoused in cases
such as Turley v. Turley, Ky. App., 562 S.W.2d 664 (1978) and
Brunson v. Brunson, Ky. App., 569 S.W.2d 173 (1978).
However, the
Court stated, “we believe the concept of tracing is too firmly
established in the law to be abandoned at this time.”
799 S.W.2d at 579.
Chenault,
The Court specifically held, “we shall adhere
to the general requirement that nonmarital assets be traced into
assets owned at the time of dissolution, but relax some of the
draconian requirements heretofore laid down.”
Id.
In the instant case, the only evidence of Samuel’s
alleged retirement account is his self-serving testimony.
Samuel
never produced any records or evidence which would have constituted
sufficient tracing under Chenault.
court
failed
to
require
adequate
As such, I believe the trial
documentary
proof
of
the
retirement account or for that matter, where the assets used to
purchase the property came from.
In the alternative, if I was to
accept the majority’s finding that Samuel’s testimony as to the
existence of the retirement funds goes to the weight of the
evidence, then I believe the trial court’s findings were clearly
erroneous.
In either case, I believe the burden was on Samuel to
produce valid documentary evidence to overcome the presumption that
12
property acquired during marriage is marital property. KRS 403.190
(3).
I concur with all other aspects of the majority opinion.
BRIEF FOR APPELLANTS:
BRIEF FOR APPELLEE:
William L. Hoge, III
Louisville, Kentucky
Joseph V. Mobley
Louisville, Kentucky
13
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