WILLIAM F. AYERS v. HANNELORE AYERS
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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NOT TO BE PUBLISHED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-003214-MR (Direct)
and
NO. 1997-CA-003256-MR (Cross)
WILLIAM F. AYERS
APPELLANT/CROSS-APPELLEE
APPEALS FROM PULASKI CIRCUIT COURT
HONORABLE WILLIAM CAIN, JUDGE
ACTION NO. 97-CI-00268
v.
HANNELORE AYERS
APPELLEE/CROSS-APPELLANT
OPINION
AFFIRMING IN PART
AND
VACATING AND REMANDING IN PART
** ** ** ** **
BEFORE:
GUDGEL, Chief Judge; COMBS and DYCHE, Judges.
COMBS, JUDGE:
This is an appeal and cross-appeal from the
judgment of the Pulaski Circuit Court in a dissolution action
between William F. Ayers (William) and Hannelore Ayers
(Hannelore).
The parties challenge the court’s division of the
marital property.
Having reviewed the record and the parties’
briefs, we affirm the court’s judgment in part and vacate and
remand in part.
William and Hannelore were married on December 17,
1988; no children were born of the marriage.
In April 1997,
William filed a petition for dissolution of the marriage.
During the marriage, William and Hannelore both received money
from workers’ compensation settlements.
William received
approximately $48,000.00 from three workers’ compensation
settlements between 1985 and 1992 for injuries sustained prior to
the marriage.
He was awarded an additional $35,000.00 from three
personal injury settlements.1 The parties had spent all of the
money from William’s various settlements by the time of the
dissolution action.
Hannelore received $94,900.00 from a
workers’ compensation settlement in 1997.
When William filed his
petition for dissolution, all that remained of Hannelore’s
settlement was the $40,000.00 that she had placed in several
certificates of deposit at her bank and $4,600.00 in her savings
account.
On November 18, 1997, the court entered its judgment
dissolving the Ayers’ marriage and dividing the non-marital and
marital property.
The court found that $20,000.00 of William’s
personal injury settlements and $16,000 of the money from his
workers’ compensation settlement were marital property.
The
court held that Hannelore’s entire settlement was marital
property.
Pertinent to this appeal and cross-appeal, the court
made the following findings as to the division of the marital and
non-marital property:
1
The sum of $15,000 of this $35,000-aggregate figure was
received during the marriage for an accident that had occurred
prior to the marriage. Prior to their marriage, William had
also received $8,984.30 from a personal injury settlement in
1987.
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D. The marital residence shall be sold at
public auction by a private auction company
agreeable to the parties. After the costs of
the sale are paid, [William] shall be paid
$5,000.00 for his non-marital interest in the
residence. The balance remaining shall be
divided equally between the parties.
*
*
*
G. The 1985 Chevrolet Blazer and the boat,
motor, and trailer shall be sold at public
auction by a private auction company
agreeable to the parties, with the proceeds
after payment of costs of the sale divided
equally.
H. [William] shall be awarded one-half or a
$20,000.00 credit in the Certificate of
Deposits which contain a portion of
[Hannelore’s] lump sum workers’ compensation
benefits. [Hannelore] shall be awarded a
$10,000.00 credit in [William’s] personal
injury settlement. Accordingly, [William’s
amount shall be reduced as follows:
$20,000 one-half of the Certificate
of Deposits
-10,000 [Hannelore’s] marital
interest in [William’s
Personal injury award.
$10,000 [William’s] total marital
interest
Therefore, [William] shall be awarded a
$10,000.00 credit which represents his
marital interest.
[William] received $47,332.12 in a
workers’ compensation settlement. Of that
amount, approximately $16,000.00 is marital
property. Accordingly, [Hannelore] shall
also be awarded an $6,000.00 credit for her
marital interest in [William’s] workers’
compensation award. Therefore, the net
result that [William] is entitled to and
shall be awarded is the sum of $2,000.00.
This amount is explained in the following
calculations:
$20,000 [William’s] marital
interest in the
certificates
of Deposits
in the amount
of $40,000
derived from
[Hannelore’s] workers’
compensation settlement.
-3-
-10,000 [Hannelore’s] marital
interest in [William’s]
personal injury award.
10,000.00 [William’s] marital
interest
-8,000.00 [Hannelore’s] marital
interest in [William’s]
workers’ compensation
settlement.
$2,000.00 TOTAL NET AMOUNT
[WILLIAM] SHALL
BE AWARDED.
From these calculations, [William]
is awarded the sum of $2,000.00 which
represents his marital interest in the
Respondent’s workers’ compensation award
offset by [Hannelore’s] marital interest in
[William’s] personal injury and workers’
compensation settlements.
The court also divided the money in the savings and checking
accounts equally between William and Hannelore.
William filed an
appeal from the court’s judgment, and Hannelore cross-appealed.
William argues on appeal that the court erroneously
reduced his award of marital property with a set-off of
Hannelore’s marital interest in his workers’ compensation and
personal injury settlements.
We agree.
The record shows that
all of the money from William’s various settlements — both the
marital and non-marital portions — had been spent by the parties
before the dissolution action.
The court has erroneously
attempted to divide property which no longer exists.
The testimony of both William and Hannelore established that
their financial assets remaining at the time of dissolution — the
certificates of deposit and the savings and checking accounts —
came from her workers’ compensation settlement.
-4-
With respect to
Hannelore’s lump sum award of $94,900.00 received in February,
1997, we are mindful of the recitation contained in the
Redemption Order of the Michigan Department of Labor:
The lump sum is compensation for permanent
impairment that will affect claimant over her
life expectancy of 228 months. Even though
paid in a lump sum, the benefits shall be
considered to be $417.00 a month for 228
months, as of 12-19-96.
Hannelore argues on her cross appeal that this sum should be
treated as non-marital property since it was clearly intended to
be an award for her future income benefits.
She also contends
that all items purchased with the money from the settlement are
non-marital assets as well.
We disagree.
Despite the fact that
she received the check only two months prior to the filing for
dissolution, Hannelore nonetheless did receive the entire lump
sum during the marriage for an injury that occurred during the
marriage.
The vicissitude of the timing of receipt of the money
results in the characterization of all the residue of Hannelore’s
settlement as marital property subject to division.
We are
governed by Johnson v. Johnson, 638 S.W.2d 703 (1982), which is
directly on point:
The principal question before us in this
case is whether a lump-sum award of workers’
compensation received by one of the spouses
during the pendency of a divorce action
between them is marital property within the
meaning of KRS 403.190(2). We need not look
beyond the plain language of the statute to
find the answer. It defines marital property
as all property acquired by either spouse
subsequent to the marriage, with five listed
exceptions. Though an award of workers’
compensation may be intended to replace lost
wages which otherwise would have been earned
in the future, it nevertheless is money in
hand and it is not within the exceptions to
-5-
KRS 403.190, which is the controlling
statute.
Id. at 704.
This principle is reiterated in Mosley v. Mosley, Ky. App.,
682 S.W.2d 462, 463 (1985) as follows:
Payments that are received, or weekly
benefits that have actually accrued but have
not yet been paid as of the date of the
dissolution of the marriage, are to be
included as marital property, just as earned
income.
William next contends that court erred in finding that
his non-marital interest in the parties’ marital residence was
only $5,000.00.
He argues that he spent $5,632.96 in non-marital
funds from his workers’ compensation settlements on improvements
to the parties’ former home in Michigan.
The parties sold the
house in Michigan in 1990 and used the proceeds to purchase their
marital residence in Kentucky.
Thus, William asserts that his
non-marital interest in the marital residence is $10,632.96
rather than $5,000.00.
However, he offers no documentation to
support his assertion and to satisfy his burden of tracing the
additional non-marital funds to improvements on the house in
Michigan.
Chenault v. Chenault, Ky., 799 S.W.2d 575 (1990).
The
record shows that both William and Hannelore testified by
deposition that he contributed $5,000.00 of non-marital funds
toward the purchase of the house in Michigan.
We do not find
that the trial court abused its discretion nor that it clearly
erred in concluding that William had only a $5,000.00 non-marital
interest in the parties’ marital residence.
-6-
William also argues that the court erred in finding
that the 1985 Chevrolet Blazer was marital property.
He alleges
that Hannelore gave the Blazer to him as a gift and that under
KRS 403.190(2)(a) it is non-marital property.
Contrary to
William’s assertion, Hannelore denied that she gave the Blazer to
him as a gift.
She testified that she used the money from her
settlement — marital property — to pay-off the money that they
borrowed to buy the Blazer.
We find no error in the trial
court’s finding.
In summary, we hold that the court erred in attempting
to salvage part of William’s non-marital interest in his various
settlement awards by virtue of a set-off against existing assets.
Absent a clear trail of tracing, no funds remained to be divided
or set off.
Additionally, we hold that the entire remainder of
Hannelore’s workers’ compensation settlement (both the $40,000.00
in certificates of deposit and the $4,600.00 in her savings
account) was marital property subject to division.
Therefore, we
vacate and remand Paragraph H of the judgment and direct the
court to re-calculate William’s marital interest as to the
remaining portions of Hannelore’s workers’ compensation
settlement.
We affirm in part and vacate and remand in part the
judgment of the Pulaski Circuit Court.
ALL CONCUR.
BRIEFS FOR APPELLANT/CROSSAPPELLEE:
BRIEFS FOR APPELLEE/CROSSAPPELLANT:
Robert E. Gillum
Jane Adams Venters
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Somerset, KY
Somerset, KY
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