SPARKS (KIMBERLY S.) VS. SPARKS (DOUGLAS E.)
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RENDERED: JUNE 24, 2011; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2010-CA-000412-MR
KIMBERLY S. SPARKS
v.
APPELLANT
APPEAL FROM BOYD CIRCUIT COURT
HONORABLE GEORGE DAVIS, JUDGE
ACTION NO. 08-CI-00616
DOUGLAS E. SPARKS
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: NICKELL AND THOMPSON, JUDGES; ISAAC,1 SENIOR JUDGE.
ISAAC, SENIOR JUDGE: Kimberly S. Sparks appeals from a Boyd Circuit Court
order which found that the funds received by Douglas E. Sparks in a FELA
(Federal Employers' Liability Act, 45 U.S.C. § 51, et seq.) settlement were
nonmarital.
1
Senior Judge Sheila R. Isaac sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and KRS 21.580.
Kimberly filed a petition for dissolution of marriage on May 6, 2008.
The property issues were tried before a Domestic Relations Commissioner (DRC)
whose final report and recommendation were adopted in full by the circuit court.
On February 19, 2010, the circuit court denied Kimberly’s exceptions to the report,
and this appeal followed.
The sole issue on appeal is whether the circuit court erred in
characterizing as nonmarital approximately $135,000 which Douglas Sparks
received as net proceeds from the settlement of a FELA claim involving his former
employer, CSX.
When disposing of property in a dissolution of marriage action, the
trial court is required by KRS 403.190 to follow a three-step process: (1) the trial
court first characterizes each item of property as marital or nonmarital; (2) the trial
court then assigns each party's nonmarital property to that party; and (3) finally, the
trial court equitably divides the marital property between the parties. See Travis v.
Travis, 59 S.W.3d 904, 908-09 (Ky.2001) (citations and footnotes omitted). “KRS
403.190(3) creates a presumption that all property acquired during the marriage is
marital. This presumption must be rebutted by clear and convincing evidence.”
Brosick v. Brosick, 974 S.W.2d 498, 502 (Ky.App. 1998).
On appeal, we review the trial court’s findings of fact only to
determine if they are clearly erroneous. Kentucky Rules of Civil Procedure (CR)
52.01. “A factual finding is not clearly erroneous if it is supported by substantial
evidence.” Owens-Corning Fiberglas Corp. v. Golightly, 976 S.W.2d 409, 414
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(Ky. 1998). The classification of an asset as marital or nonmarital property,
however, “involves an application of the statutory framework for equitable
distribution of property upon divorce and therefore constitutes a question of law
subject to this Court’s independent determination.” Holman v. Holman, 84 S.W.3d
903, 905 (Ky. 2002).
Under Kentucky law, funds received to compensate exclusively for
pain and suffering are deemed to be nonmarital property.
To the extent that a personal injury award for loss of
earnings and permanent impairment of ability to earn
money is applicable to the years while the marriage
existed, it is marital property. …
However, any portion of the recovery which constitutes
damages for pain and suffering must stand on a different
footing because it is in no sense the replacement of
earnings that otherwise would have accrued during the
marriage.
Weakley v. Weakley, 731 S.W.2d 243, 244 -245 (Ky. 1987).
The DRC found that Douglas received a gross settlement of $275,000
from CSX as a result of injuries he had suffered in 2002 and 2004. Approximately
$55,000 was withheld from the total amount to reimburse the Railroad Retirement
Board and the SSB (Special Separation Benefit program) for sickness benefits
Douglas had received while he was unable to work. According to Douglas, the
benefits he received from these agencies amounted to approximately $2,200 per
month. After the payment of his attorney’s fees and other expenses, Douglas
received approximately $135,000 in net proceeds from the settlement. It was
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Douglas’s uncontradicted testimony that the net proceeds were intended as
compensation solely for his pain and suffering. The Settlement and Final Release
of All Claims does not specify what portion of the award is intended to compensate
for pain and suffering, stating only that it is a settlement “for any and all injuries to
person and/or damage to property.”
The DRC concluded that the net funds Douglas received were
compensation exclusively for pain and suffering and not for lost wages. The
remainder of the settlement was awarded to him.
Kimberly argues that Douglas’s testimony was insufficient to prove
by clear and convincing evidence that the “sickness benefits” of $55,000 that were
deducted from the award represented the total compensation for lost wages or that
the remainder of the award was intended to compensate solely for pain and
suffering. Kimberly argues that because the $2,200 per month in sickness benefits
was well below the monthly income of $4,160 Douglas earned when he returned to
work, the $55,000 deducted from the award could not have represented the full
compensation for lost earnings.
We are confronted in this case with a situation anticipated but not
resolved in Weakley, where the Court stated:
We do not attempt to decide here the proper procedure
for the allocation between marital and nonmarital
property of a personal injury award for an injury
sustained during the marriage where the settlement or
judgment does not indicate what portion of the award
applies to earning capacity and what portion is allocated
to pain and suffering.
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Id. at 245.
Kimberly has relied on Reeves v. Reeves, 753 S.W.2d 301 (Ky.App.
1988), to argue that in a situation where there is no definite evidence as to the
allocation of damages in a settlement award, the entire property should be
characterized as being marital. But the Reeves court also considered the equity of
the parties’ circumstances, ruling that because the marriage was one of short
duration and the appellee was totally disabled, the appellant was only entitled to a
small fraction of the award.
In the case before us, the award was received shortly before Kimberly
filed the petition for dissolution. The trial court found that a substantial portion of
the settlement, almost $74,000, was used by the couple to repay various debts,
including a loan against Douglas’s retirement account which was used to buy a car
for the couple’s son, and a $24,169.34 credit card debt in Kimberly’s name.
Twenty-thousand dollars was used as a down payment for a Corvette, which the
trial court awarded to Douglas along with the remaining $20,000 of debt remaining
on that vehicle. Only $24,000 or approximately one-sixth of the total settlement
remains and this was the amount awarded to Douglas. In light of the fact that such
a large portion of the award was used to settle marital debts and Kimberly’s own
debt, the trial court did not abuse its discretion in awarding the remainder to
Douglas.
The order of the Boyd Circuit Court is therefore affirmed.
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ALL CONCUR.
BRIEFS FOR APPELLANT:
BRIEF FOR APPELLEE:
Gordon J. Dill
Ashland, Kentucky
Rhonda M. Copley
Ashland, Kentucky
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