RICHARD L. HOWE v. NOVELLA K. HOWE
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RENDERED:
September 28, 2001; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO. 2000-CA-002150-MR
RICHARD L. HOWE
APPELLANT
APPEAL FROM ANDERSON CIRCUIT COURT
HONORABLE WILLIAM F. STEWART, JUDGE
ACTION NO. 98-CI-00199
v.
NOVELLA K. HOWE
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
DYCHE, EMBERTON and HUDDLESTON, Judges.
HUDDLESTON, Judge:
Richard L. Howe appeals an order in an action
for dissolution of his marriage to Novella K. Howe,1 dividing
property and awarding Kaye maintenance.
Richard and Kaye were married on March 30, 1974.
Both
worked for Texas Instruments Company, initially in Houston, Texas.
In
1991,
Texas
Instruments
Versailles, Kentucky.
1
transferred
Kaye
to
its
plant
in
Within several weeks, Richard was employed
Novella is referred to as “Kaye” in the briefs of the
appellant and the appellee. We will do the same.
at
the
Texas
Instruments
facility
in
Versailles
as
well.
Eventually, Richard and Kaye purchased a home in Lawrenceburg.
In January 1998, Kaye resigned from Texas Instruments
because she had decided to operate a restaurant in Lawrenceburg.
Kaye withdrew all of the funds she had accumulated in retirement
accounts while working at Texas Instruments and Richard borrowed
$20,000.00 from a retirement account to purchase the restaurant.
Although the restaurant was not profitable, Kaye operated the
business until April 1999.
The restaurant was closed and on April
23, 1999, the remaining assets of the restaurant were sold at
auction and the net proceeds were deposited with the court.
Richard and Kaye separated on July 28, 1998.
On August
24, 1998, Richard filed a petition for dissolution of marriage.
The court referred the case to its Domestic Relations Commissioner
(DRC).
David P. Nutgrass represented Richard in this action until
August 19, 1999, when Michael L. Judy entered his appearance as
Richard’s counsel. On January 18, 2000, the DRC recommended to the
court that the marriage be dissolved and submitted a plan for
division of property and debts.
The court adopted the DRC’s
recommendations with the exception that the court remanded the
issue of maintenance to the DRC for a new hearing and findings of
fact as required by Kentucky Revised Statute (KRS) 403.200.
A
successor DRC held a hearing on the maintenance issue on July 10,
2000.
After the court adopted the successor DRC’s recommended
order concerning maintenance, this appeal followed.
On appeal, Richard asserts that the court erred: (1) in
adopting the findings of fact, conclusions of law and decree of
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dissolution prepared by Kaye’s counsel; (2) by basing the division
of property on an alleged agreement between Richard and Kaye; (3)
in determining that a 1984 Chevrolet Corvette was marital property
and awarding it to Kaye; (4) in assigning Richard one-half of
Kaye’s debts incurred during separation; (5) in dividing equally
Richard’s 401-K retirement account and employee stock plan; and (6)
in concluding that Kaye was entitled to maintenance.
Adopting Findings and Conclusions Prepared by Counsel
On January 4, 2000, Richard tendered proposed findings of
fact, conclusions of law and a decree of dissolution to the court.
Kaye submitted proposed findings of fact, conclusions of law and
decree
of
dissolution
directly
to
the
DRC.
Kaye’s
tendered
findings of fact, conclusions of law and decree of dissolution were
adopted by the DRC and submitted to the court.
Richard argues that
because this case involved detailed, lengthy and contradictory
issues, it was not a “routine matter” and that it was error, under
these circumstances, for the court to adopt the DRC’s proposed
findings.
Therefore, the question presented is whether, under the
facts of this case, it was error for the DRC submit to the court,
and for the court to adopt, the findings, conclusions and decree
drafted by Kaye’s counsel after the DRC had requested both parties
to submit proposed findings of fact and conclusions of law.
Kentucky Rules of Civil Procedure (CR) 52.01 provides, in
relevant part, that:
In all actions tried upon the facts without a jury or
with an advisory jury, the court shall find the facts
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specifically and state separately its conclusions of law
thereon[.]
In Bingham v. Bingham,2 the Supreme Court said that the
main concern in reviewing whether it was error for a court to adopt
proposed findings of fact and conclusions of law submitted by the
parties is “that the trial court does not abdicate its fact-finding
and decision-making responsibility under CR 52.01.
However, 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.”3
On review we are to
scrutinize the record carefully to see if it “reveals that the
court was thoroughly familiar with the proceedings and facts of
this case.”4
Here, the circuit court reviewed the DRC’s proposed
findings, conclusions and decree and remanded the case to the DRC
for a hearing on the issue of maintenance.
The circuit judge
signed not less than a dozen orders from March 16, 1999, to
September 11, 2000.
The parties filed exceptions and responses to
exceptions on all contested issues. Richard makes “no showing that
the decision-making process was not under the control of the trial
judge, nor that these findings and conclusions were not the product
of the deliberations of the trial judge’s mind.”5
2
Ky., 628 S.W.2d 628 (1982).
3
Id. at 629.
4
Id.
5
Id.
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When the court
requests both parties to submit proposed findings of fact, “[i]t is
not error for the trial court to adopt findings of fact which were
merely drafted by someone else.”6
We find no error.
Division of Property According to an Alleged Agreement
Richard argues that the court erred in adopting the DRC’s
recommendation concerning the division of marital property.
With
some exceptions provided by statute, marital property “means all
property acquired by either spouse subsequent to the marriage[.]”7
“KRS 403.190 vests in the trial court wide discretion in the
division of marital property.”8
Richard contends that the DRC did not act properly in
distributing the marital property because Kaye had refused to
choose one of two lists of property tendered by Richard.
After
Kaye refused to make a selection, Richard tendered a selection of
his own.
In the end Richard did not get some of the property he
had requested.
Richard insists that the court should not reward
Kaye by giving her the property on the list that he selected
because Kaye had not complied with the court’s order to submit a
list.
While we find no evidence in the record that Kaye submitted
a list, we likewise find no evidence that she failed to comply with
the court’s order.
All that was required of Kaye was to decide
which property she wanted.
Upon careful review of he record, we do
6
Prater v. Cabinet for Human Resources, Comm. of Ky., Ky.,
954 S.W.2d 954, 956 (1997), citing Bingham, supra, n. 2.
7
Ky. Rev. Stat. (KRS) 403.190(2).
8
Johnson v. Johnson, Ky. App., 564 S.W.2d 221, 222 (1978).
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not
find
the
distribution
inequitable.
of
marital
property
to
have
been
No abuse of discretion has been shown.
Was the 1984 Corvette Marital Property?
The DRC awarded a 1984 Chevrolet Corvette to Kaye.
Richard asserts that this award was erroneously made since Kaye had
given the Corvette to him in 1987.
“All
property
acquired
by
either
spouse
after
the
marriage and before a decree of legal separation is presumed to be
marital property, regardless of whether title is held individually
or by the spouses in some form of co-ownership such as joint
tenancy, tenancy in common, tenancy by the entirety, and community
property.”9
“This
presumption
may
be
rebutted
by
clear
and
convincing proof that the property was acquired by, amongst other
means, ‘gift, bequest, devise, or descent.’”10
If the court
determines that an automobile was a gift from one spouse to the
other made during marriage the automobile is not considered marital
property.11
“[T]he
donor’s
intent
is
the
primary
factor
in
determining whether a transfer of property is a gift.”12 Therefore,
the question is whether Richard introduced evidence that “injected
enough doubt that it would not have been reasonable for [the trial
judge] to remain unconvinced [that the Corvette was nonmarital
9
KRS 403.190(3).
10
Underwood v. Underwood, Ky. App., 836 S.W.2d 439, 441
(1992)(citations omitted).
11
See Clark v. Clark, Ky. App., 782 S.W.2d 56, 62 (1990).
12
Underwood, supra, n. 10, at 442. (citations omitted).
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property].”13
The “court’s determination concerning the gift or
nongift status of an item, must be upheld unless there is clear
error.”14
Richard,
while
represented
by
his
first
attorney,
indicated on a financial disclosure statement filed on November 12,
1998, that the Corvette was marital property. On November 2, 1999,
while Richard was represented by his second attorney, another
financial disclosure statement was filed listing the Corvette was
nonmarital property. Testimony was heard on November 3, 1999, from
two witnesses to the effect that Kaye had told them that the
Corvette was a gift to Richard.
On a financial disclosure statement filed on November 6,
1998, Kaye indicated that the Corvette was marital property.
Richard testified that Kaye had purchased the Corvette
without his knowledge; that Kaye arranged the financing; that Kaye
delivered the Corvette as a surprise gift; that Kaye made the
payments on the Corvette; and that Richard was the only person who
drove the Corvette.
[T]his
Court
described
four
factors
that
must
be
considered to see if something is a gift. These are 1)
the
source
of
the
money
with
which
the
item
was
purchased, 2) the intent of the donor at that time as to
the intended use of the property, 3) the status of the
marriage relationship at the time of the transfer, and 4)
whether
there
was
any
valid
agreement
that
13
Id., n.1. (citations omitted)(emphasis in original).
14
Clark, supra, n. 11, at 62 (citation omitted).
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the
transferred property was to be excluded from the marital
property.15
We have no way of knowing whether these factors were
considered by the court.
However, because Kaye’s intent is the
primary factor in determining whether a transfer of property is a
gift, and Kaye’s intent is in dispute, donative intent has not been
conclusively proven. Further, no evidence was presented to support
an assertion that the Corvette was purchased with nonmarital
property.
The status of the marriage at the time the gift was made
supports a finding that the Corvette was a gift; however, that
factor standing alone cannot support a finding of gift status.
Additionally, no evidence was presented that Kaye and Richard
agreed that the Corvette was to be excluded from marital property.
We find no error in the finding that the Corvette was
marital property subject to division.
Richard’s own reversal
concerning whether the Corvette was marital or nonmarital property
supports
the
DRC’s
conclusion.
“The
trial
court
has
wide
discretion in dividing marital property[.]”16 There was no abuse of
discretion in the award of the Corvette to Kaye.
Debts Incurred After Separation
Several
debts
were
incurred
because
of
the
ongoing
operation of the restaurant, both before and after the Howes’
separation.
The court ordered that a total of $115,952.65 in
debts, much of which was due to the operation of the restaurant,
15
Clark, supra, n. 11, at 62, citing O’Neill v. O’Neill, Ky.
App., 600 S.W.2d 493 (1980).
16
Davis v. Davis, Ky., 777 S.W.2d 230, 233 (1989).
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were to be paid equally by Richard and Kaye.
Richard argues that
it was error for the court to assign to him one-half of the debts
incurred by Kaye during the parties’ separation.
In O’Neill v. O’Neill,17 the Court noted “that while there
is a presumption in KRS 403.190 that all property acquired during
marriage is marital, there is no similar presumption as to debts.”18
Under the facts of that case, “the trial court [had] properly
determined that the joint activities of the parties ceased in
January 1978.”19
In 1985, this Court in Gipson v. Gipson,20 held,
based on O’Neill, that debts incurred to the benefit of only one
spouse “are nonmarital.”21
Richard
argues
that
the
debts
complained
of
were
unsubstantiated22 and that Kaye’s incurring of the debts constituted
reckless disregard for the financial well being of the parties.
However, this argument misses the point. Richard also insists that
the debts were substantial, unnecessary indebtedness and that Kaye
was the only one who could have benefitted personally by continuing
to operate a failing business.
17
Supra, n. 15.
18
The circuit court did not agree,
Id. at 496.
19
Id.
(The O’Neills separated in January, 1978, and the
debts arising after the separation were held to be not marital
debts.)
20
Ky. App., 702 S.W.2d 54 (1985).
21
Id. at 55; see also Van Bussum v. Van Bussum, Ky. App., 728
S.W.2d 538, 539 (1987).
22
Kaye submitted an affidavit in support of the restaurant’s
expenses on November 18, 1999. Therefore, while we find no copies
of receipts in the record, any claim that the expenses were
“unsubstantiated” is specious.
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nor do we.
Even accepting as fact that the restaurant showed
ongoing losses during the period of separation, this does not serve
as conclusive evidence that the debts were incurred unnecessarily
or
that
these
debts
could
necessarily assume risk.23
only
benefit
Kaye.
Businesses
The fact that Kaye incurred debt in an
effort, although unsuccessful, to reverse the prospects of a losing
business does not render the debt incurred an unnecessary debt.
Further, there is no evidence that the debts incurred were for the
personal benefit of Kaye.
Had Kaye been successful in reversing
the fortunes of the business, we doubt that Richard would have
complained had he been awarded additional assets due to an increase
in the value of the business.
Here, the court found that the proceeds from the sale of
the restaurant’s fixtures and equipment were marital property and
Richard was assigned a half interest in the proceeds.
debts
incurred
were
to
the
benefit
of
marital
Since the
property,
the
restaurant, it was only just that the debts were assigned marital
status.
While there is no presumption that debts incurred during
the marriage are marital,24 we find no abuse of discretion in the
court’s assigning to Richard one-half of the debt incurred due to
continued operation of the restaurant during separation.
Equal Division of Retirement Accounts
As previously mentioned, Kaye withdrew all of the funds
she had accumulated in a retirement account while working at Texas
23
Louisville & Jefferson Cty. Air Bd. v. Porter, Ky., 397
S.W.2d 146, 152 (1965)(“It is fundamental that a buyer of property
assumes the risk of changing community conditions.).
24
Bodie v. Bodie, Ky. App., 720 S.W. 2d 936, 938 (1986).
-10-
Instruments
to
purchase
the
restaurant.
Richard
borrowed
$20,000.00 from his Texas Instruments retirement account to assist
in the acquisition of the restaurant and necessary equipment.
At
the time of separation, Richard had a 401-K retirement account and
employee stock plan.
The court awarded Kaye one-half of the value
of Richard’s 401-K account and the stock plan.
Again, the circuit court is vested with “wide discretion
in the division of marital property.”25
KRS 403.190 mandates that
the division is to be made in “just proportions.”
Richard argues that awarding Kaye one-half of the value
of his retirement accounts was unjust since Kaye dissipated her
retirement savings by investing in and pursuing past its demise her
restaurant.
“The court may find dissipation when marital property
is expended (1) during a period when there is a separation or
dissolution impending; and (2) where there is a clear showing of
intent to deprive one’s spouse of [his or] her proportionate share
of the marital property.”26
finding of dissipation.
Here, the court, correctly, made no
Such a characterization of Kaye’s actions
is not substantiated by the record.
We find no abuse of discretion in the court’s award of
one-half of the value of Richard’s retirement accounts to Kaye.
Richard
also
argues
that
a
just
division
of
his
retirement account requires consideration of the fact that he
borrowed and is currently paying back the $20,000.00 that he
25
Johnson, supra, n. 8 at 222.
26
Brosick v. Brosick, Ky. App., 974 S.W.2d 498, 500 (1998),
quoting Robinette v. Robinette, Ky. App., 736 S.W.2d 351, 354
(1987).
-11-
borrowed when the restaurant began operating. The court considered
the debt Richard incurred and ordered both Richard and Kaye to pay
that debt.
The division was just; therefore, we find no error.
Ability to Pay Maintenance
Richard argues that the circuit court erred in failing to
determine whether Kaye can support herself from her own income or
assets received from the dissolution action.
[I]n order for an award of maintenance to be proper, the
elements of both KRS 403.200(2)(a) and (b) must be
established.
In other words, there must first be a
finding
the
that
sufficient
spouse
property,
seeking
including
maintenance
marital
provide for his reasonable needs.
lacks
property,
to
Secondly, that spouse
must be unable to support himself [or herself] through
appropriate
employment
according
to
the
standard
of
living established during the marriage.27
If this threshold inquiry is made, and the court determines that an
award of maintenance is proper, then:
The maintenance order shall be in such amounts and for
such periods of time as the court deems just, and after
considering all relevant factors including:
(a)
The
financial
resources
of
the
party
seeking
maintenance, including marital property apportioned to
him, and his ability to meet his needs independently,
27
Drake v. Drake, Ky. App., 721 S.W.2d 728, 730 (1986),
citing Lovett v. Lovett, Ky., 688 S.W.2d 329, 332 (1985); KRS
403.200(1).
-12-
including the extent to which a provision for support of
a child living with the party includes a sum for that
party as custodian;
(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.28
Here,
the
DRC
specifically
found,
and
the
court
subsequently adopted that finding, that Kaye was unable to support
herself through appropriate employment.
Additionally, it found
that Kaye lacked sufficient property, including marital property
apportioned
to
her,
to
provide
for
her
reasonable
needs.
Substantial evidence supports these findings.
Richard argues that the circuit court erred in failing to
address and properly conclude that he does not have the financial
resources to pay Kaye maintenance.
Richard asserts that the cost
of meeting his reasonable needs exceeds his income.
28
KRS 403.200(2).
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Once it is determined that an award of maintenance is
proper, “the court certainly must also consider the ability of the
spouse from whom maintenance is sought to meet his or her own needs
while at the same time meeting the needs of the spouse seeking
maintenance.”29
The DRC, in reviewing income earned during recent
pay periods, found that Richard had gross income of $8,127.25 in a
six-week period.
Even after making payments on the debts incurred
against Richard’s credit union account and profit-sharing loans,30
Richard’s take home pay for this period amounted to $2,412.02.
We have reviewed Kaye’s and Richard’s list of monthly
expenses.
Kaye’s list does not include payments to be made on
long-term or short-term indebtedness.
However, exclusive of the
debts owed by both, the living expenses listed by the two parties
are almost equal.
It is apparent from the record that the court considered
the ability of Richard to meet his own needs while at the same time
meeting the needs of the Kaye by paying reasonable maintenance. We
find no error.
Having considered all of Richard’s allegations of error
and finding none, we affirm.
ALL CONCUR.
29
Dotson v. Dotson, Ky., 864 S.W.2d 900, 903 (1993).
30
Kaye was, per the dissolution order, responsible for onehalf of these debts.
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BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Michael L. Judy
JOHNSON, JUDY, TRUE &
GUARNIERI, LLP
Frankfort, Kentucky
Thomas M. Jones
Lawrenceburg, Kentucky
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