NO. COA10-1160
NORTH CAROLINA COURT OF APPEALS
Filed: 6 September 2011
DENISE H. BARTON,
Plaintiff
v.
Wake County
No. 07 CVD 20736
JOHN S. BARTON,
Defendant.
Appeal by defendant from order entered 18 May 2010 by Judge
Anna Worley in Wake County District Court.
Heard in the Court
of Appeals 23 February 2011.
Tharrington Smith, LLP, by Alice C. Stubbs, H. Suzanne
Buckley, and Steve Mansbery, for plaintiff-appellee.
Smith Debnam Narron Drake Saintsing & Myers, L.L.P., by Max
R. Rodden, for defendant-appellant.
BRYANT, Judge.
John and Denise Barton married on 12 April 1997.
the
marriage,
Denise
(plaintiff)
biological father was deceased.
had
one
minor
Prior to
child
John (defendant) adopted the
child.
On 4 September 2006, the parties separated.
December
2007,
plaintiff
distribution,
and,
counterclaims
for
filed
defendant
child
whose
a
complaint
filed
custody,
an
seeking
amended
equitable
On 28
equitable
answer
and
distribution,
and
-2attorney fees.
Child
Custody
The parties entered into a Consent Order for
and
Child
Support,
and,
on
17
July
2008,
parties entered into a consent order for arbitration
the
on the
remaining issues.
The arbitration was to be conducted pursuant to the Family
Law Arbitration Act, N.C. Gen. Stat. ' 50-40 et seq.
preserved their right to appeal errors of law.
The parties
The arbitration
was held beginning 20 November 2008, and by the terms of the
consent
order,
arbitrator.
K.
Edward
Both
parties
Greene
were
was
present
designated
and
as
represented
the
by
counsel; both were permitted to testify, as well as, present
exhibits.
On
24
April
Arbitration Decision Award.
motion
to
confirm
the
2009,
the
arbitrator
signed
the
On 28 April 2009, plaintiff filed a
arbitration
award
in
the
Wake
County
District Court.
Defendant filed a motion to vacate or modify
the
on
award
based
partiality
figures[.]”
by
the
what
defendant
arbitrator”
and
believed
“evident
to
be
“evident
miscalculation
of
On 10 May 2010, following a 27 October 2009 hearing
on the parties’ motions, the District Court denied defendant’s
motion,
confirmed
the
Arbitration
incorporated it into its order.
Decision
Award,
Defendant appeals.
_______________________________________
and
-3On appeal, defendant argues the trial court erred (I) in
adopting
the
arbitration
award
and
(II)
in
confirming
the
arbitration award.
Standard of Review
“[T]he
Uniform
Arbitration
Act,
which
as
enacted
and
codified in our statutory law is virtually a self-contained,
self-sufficient
code
.
.
.
[which]
provides
controlling
limitations upon the authority of our courts to vacate, modify
or
correct
an
arbitration
award.”
Nucor
Corp.
v.
General
Bearing Corp., 333 N.C. 148, 155, 423 S.E.2d 747, 751 (1992)
(citation omitted).
“If the parties contract in an arbitration
agreement for judicial review of errors of law in the award, the
court shall vacate the award if the arbitrators have committed
an error of law prejudicing a party’s rights.”
50-54(a)(8) (2009).
award where
N.C. Gen. Stat. '
“[T]he court shall modify or correct the
. . . (1) [t]here is an evident miscalculation of
figures or an evident mistake in the description of a person,
thing, or property referred to in the award . . . .”
Stat. ' 50-55(a)(1) (2009).
If an arbitrator makes a mistake, either as
to law or fact unless it is an evident
mistake in the description of any person,
thing or property referred to in the award .
. . it is the misfortune of the party. . . .
There is no right of appeal and the Court
N.C. Gen.
-4has no power to revise the decisions of
judges who are of the parties’ own choosing.
An award is intended to settle the matter in
controversy, and thus save the expense of
litigation.
Cyclone Roofing Co. v. David M. LaFave Co., 312 N.C. 224, 236,
321 S.E.2d 872, 880 (1984) (discussing N.C. Gen. Stat. ' 1-567.14
(1983)).
If a mistake be a sufficient ground for
setting aside an award, it opens the door
for coming into court in almost every case;
for in nine cases out of ten some mistake
either of law or fact may be suggested by
the
dissatisfied
party.
Thus
.
.
.
arbitration instead of ending would tend to
increase litigation.
Semon v. Semon, 161 N.C. App. 137, 142, 587 S.E.2d 460, 464
(2003)
(discussing
N.C.
Gen.
Stat.
'
50-55)
(citing
Roofing Co., 312 N.C. at 236, 321 S.E.2d at 880).
Cyclone
“On appeal of
a trial court’s decision confirming an arbitration award, we
accept the trial court’s findings of fact that are not clearly
erroneous and review its conclusions of law de novo.”
First
Union Secs., Inc. v. Lorelli, 168 N.C. App. 398, 400, 607 S.E.2d
674, 676 (2005) (citation omitted).
I
Defendant contends the trial court erred in adopting the
arbitration
property”
award.
status
Specifically,
conferred
upon
he
the
contests
the
following
“marital
pieces
of
-5property: (A) the appreciation in Scott & Stringfellow account
#1110; (B) the
calculation of the
amount of appreciation in
Scott & Stringfellow account #1110; (C) the existence of any
marital component in Scott & Stringfellow account #1110; (D) the
ordered distribution of separate property; (E) the appreciation
in value of Lot 8; (F) Countryview Road property; (G) the postseparation
diminution
in
value
of
a
Volvo;
(H)
a
boat
and
trailer; (I) defendant’s 401(k); (J) post-separation withdrawals
from defendant’s 401(k); (K) plaintiff’s Prudential 401(k); (L)
defendant’s
Observer
McClatchy
supplemental
pension
plan;
executive
(M)
defendant’s
retirement
plan;
and
News
and
(N)
the
SECU IRA #3966.
In equitable distribution matters, property is classified
as marital or separate depending upon the proof presented as to
of the nature of the assets. Ciobanu v. Ciobanu, 104 N.C. App.
461,
465,
409
S.E.2d
749,
751
(1991).
“[T]he
court
shall
determine what is the marital property and divisible property
and shall provide for an equitable distribution of the marital
property and divisible property between the parties . . . .”
N.C. Gen. Stat. ' 50-20(a) (2009).
Marital property is defined under North Carolina General
Statutes, section 50-20(b)(1), in part, as follows:
-6[A]ll real and personal property acquired by
either spouse or both spouses during the
course of the marriage and before the date
of the separation of the parties, and
presently owned, except property determined
to
be
separate
property
or
divisible
property . . . . It is presumed that all
property acquired after the date of marriage
and before the date of separation is marital
property except property which is separate
property . . . .
N.C. Gen. Stat ' 50-20(b)(1) (2009).
“[M]arital property
shall be valued as of the date of the separation of the parties
. . . .”
N.C. Gen. Stat. ' 50-21(b) (2009).
“Separate property”
is defined, in short, as follows:
[A]ll real and personal property acquired by
a spouse before marriage . . . . The
increase in value of separate property and
the income derived from separate property
shall be considered separate property.
N.C.G.S. ' 50-20(b)(2) (2009).
A. Appreciation in the Scott & Stringfellow
account #1110 as marital property.
Defendant argues that the arbitrator erred in conferring
the status of marital property upon a $201,937.00 increase in
the balance of Scott & Stringfellow account #1110.
He contends
that prior to the date of separation neither he nor plaintiff
took any action which amounted to “substantial activity.”
the
balance
increase,
which
occurred
between
the
Thus,
date
of
-7marriage and the date of separation, was the result of passive
rather than active appreciation.
We disagree.
Generally, property “acquired” by a party
before
marriage
remains
that
party’s
separate property, and increases in value to
such separate property are “acquired” by
that separate estate but “only to the extent
that the increases were passive . . . .”
Increases in value to separate property
attributable to the financial, managerial,
and other contributions of the marital
estate are “acquired” by the marital estate.
Ciobanu, 104 N.C. App. at 464-65, 409 S.E.2d at 751 (internal
citations omitted).
On appeal, defendant cites O’Brien v. O’Brien, 131 N.C.
App. 411, 508 S.E.2d 300 (1998), where this Court upheld a trial
court’s determination that despite meetings between both spouses
and the wife’s broker, during which the spouses routinely chose
between
investment
alternatives
based
on
the
broker’s
recommendation, such action did not elevate the status of the
appreciation in the account from “purely passive” appreciation
to
“active
appreciation”
achieved
by
“substantial
activity.”
Id. at 419-20, 421, 508 S.E.2d at 306, 307.
At the arbitration hearing, defendant testified that he met
with his broker every month or two and that he authorized every
trade.
Further, defendant‟s evidence reflects frequent trading
activity in account #1110 during the time of marriage and prior
-8to the date of separation.
While defendant presents O’Brien as
compelling the conclusion that his involvement in trading the
assets
within
account
#1110
did
not
amount
to
substantial
activity as a matter of law, such is not the case.
The O’Brien
Court reviewed the trial court order for abuse of discretion and
held that, on the issue of active versus passive appreciation,
competent evidence supported the trial court’s findings of fact
and the findings supported the trial court’s conclusion of law.
The
arbitrator
in
the
instant
case
concluded
that
the
appreciation in account #1110, after the date of marriage and
prior to the date of separation, was property acquired by the
marital estate.
There was no evident miscalculation or mistake
in the description of the $201,937.00 balance increase in Scott
&
Stringfellow
account
#1110.
Defendant‟s
argument
is
overruled.
B. The calculation of the appreciation of account #1110
Defendant contends that the arbitrator erred in concluding
that the $201,937.00 balance increase in Scott & Stringfellow
account
#1110
contained
no
separate
property
component.
Defendant contends that a $95,546.89 contribution to the account
was comprised of funds acquired prior to the marriage and was,
thus, separate property.
We disagree.
-9While defendant cites no authority, his argument proposes
what is referred to as the source of funds rule: “„each party
retain[s] as separate property the amount he or she contributed
. . ., plus the increase on that investment due to passive
appreciation.‟”
McLean v. McLean, 323 N.C. 543, 546, 374 S.E.2d
376, 378 (1988) (quoting McLeod v. McLeod, 74 N.C. App. 144,
154, 327 S.E.2d 910, 916 (1985)).
that
where
under
N.C.
“[the]
Gen.
defendant
Stat.
§
However, this Court has held
failed
to
50-20(b)(1)
rebut
that
the
the
presumption
funds
in
the
account as of the date of separation were marital . . . the
trial court properly classified the entire account balance as
marital property.”
Stovall v. Stovall, ___ N.C. App. ____, ___,
698 S.E.2d 680, 688 (2010).
Defendant‟s records reflect $95,546.89 in contributions to
Scott & Stringfellow account #1110 during the first quarter of
2003,
during
the
time
of
marriage.
[Def.
Exhibit
42].
Defendant testified that the funds originated from a brokerage
account opened prior to the date of marriage at Wheat First
Securities.
Defendant‟s
records
show
two
accounts
at
Wheat
First Securities – account 4695 and account 4717 – that were
merged during the marriage.
Prior to the balance transfer of
the surviving account, account 4695, to Scott & Stringfellow
-10account #1110 during 2003, defendant‟s records reflect several
transfers within account 4695 during the course of the marriage.
As
in
subpart
A,
given
the
activity
within
the
Wheat
First
account, as well as the trading activity that occurred within
Scott & Stringfellow account #1110 subsequent to the transfer of
the Wheat First balance there was no evident mistake in the
arbitrator‟s failure to classify the $95,546.89 rollover from
See Ciobanu, 104 N.C. App. at
Wheat First as separate property.
465, 409 S.E.2d at 751 (“Increases in value to separate property
attributable
to
contributions
of
marital
the
the
financial,
marital
estate.”).
managerial,
estate
Therefore,
are
there
and
‘acquired’
was
no
other
by
the
evident
miscalculation in including the $95,546.89 contribution to Scott
and Stringfellow account #1110 or mistake in the description of
the
$201,937.00
property.
appreciation
in
account
#1110
as
marital
Defendant’s argument is overruled.
C. The existence of any marital component in Scott &
Stringfellow account #1110
Defendant
contends
that
any
contribution
of
marital
property to Scott & Stringfellow account #1110 can be traced
out, exhausting any marital competent.
Specifically, defendant
contends that 682 shares of stock in McClatchy Newspapers, Inc.
was
marital
property
received
for
his
employment
during
the
-11marriage, and these funds were traced into Scott & Stringfellow
account #1110 and completely traced out.
For
the
reasons
stated
in
subparts
A
and
B
supra,
we
overrule this contention.
D. Distribution of separate property
Defendant argues that the arbitrator erred in ordering him
“to purchase separate assets from [plaintiff]” for a total of
$145,000.00.
Defendant contends that the arbitrator failed to
credit him with providing “all the consideration amounting to
$291,212.00 for Lots 7 and 8” from his separate funds.
We
disagree.
“Our courts have adopted a source of funds approach to
distinguish
asset.
marital
and
separate
contributions
to
a
single
Under the source of funds approach, each party retains
as separate property the amount he contributed to purchase the
property plus passive appreciation in value.”
McLean v. McLean,
88 N.C. App. 285, 288-89, 363 S.E.2d 95, 98 (1987) (citing Wade
v. Wade, 72 N.C. App. 372, 325 S.E. 2d 260 (1985)).
In
Wade,
this
Court
reviewed
an
equitable
distribution
order in which it was confronted with the question of whether a
court could award one spouse‟s separate property to the opposing
party.
Wade, 72 N.C. App. at 382, 325 S.E.2d at 270.
The
-12parties‟ house had been constructed after the date of marriage
on land purchased by the plaintiff prior to the marriage.
at 378, 325 S.E.2d at 267.
Id.
The Court reasoned that though the
house was marital property and the land was plaintiff‟s separate
property, they represented one asset.
Id. at 377, 325 S.E.2d at
267.
of
And,
because
of
the
presence
the
marital
property
component, the trial court had the authority to include that
asset in the distribution of assets.
Id. at 382, 325 S.E.2d at
270.
If it is necessary in order to achieve an
equitable
distribution
of
the
marital
property that the court award that part of
the [plaintiff’s] asset which is separate in
character to defendant, then we believe the
court has it within its power in equity to
do so to the extent necessary so long as
plaintiff is reimbursed or given credit for
the
value
of
his
separate
property
contribution. That part of the asset which
is separate in character should be returned
in kind to the person contributing it so far
as it is practical, but if it is not
practical or equitable to do so, then the
court must be permitted to take whatever
measures are necessary in distributing the
property to achieve equity between the
parties.
Id. at 382-83, 325 S.E.2d at 270.
Here, the arbitrator ordered that defendant pay plaintiff
$126,000.00
and
$19,000.00
–
a
total
of
$145,000.00
–
for
plaintiff‟s separate portion of the properties located at 6909
-13Landingham Drive (Lot 7) and 6913 Landingham Drive (Lot 8),
respectively.
The
uncontested
findings
of
fact
state
that
defendant purchased Lot 7 prior to the date of marriage and
titled it in the names of himself and plaintiff as joint tenants
with right of survivorship.
valued at $252,000.00.
On the date of marriage, Lot 7 was
The arbitrator reasoned that in titling
the property in the names of both parties, defendant made a gift
to plaintiff of one-half of the property value; therefore, on
the date of marriage, plaintiff‟s separate property interest in
Lot 7 was valued at $126,000.00.
Lot 8 was also purchased by defendant prior to the date of
marriage and titled in the names of both parties as tenants in
common.
On
$38,000.00.
the
date
Under
of
the
marriage,
same
Lot
rationale
8
was
applied
valued
to
Lot
at
7,
plaintiff‟s separate property interest in Lot 8 was valued at
$19,000.00.
On the date of separation, the value of Lot 7 had increased
to
$320,000.00;
arbitrator
Lot
awarded
8
Lot
property.
However,
$126,000.00
–
had
7
increased
and
defendant
representing
the
Lot
was
8
to
to
defendant
ordered
value
of
$52,500.00.
to
as
pay
plaintiff‟s
The
marital
plaintiff
separate
-14interest in Lot 7, and $19,000.00 – representing the value of
her separate interest in Lot 8.
Defendant does not contest the arbitrator‟s conclusion that
titling the properties in both his and plaintiff‟s names prior
to the date of marriage represented a gift to plaintiff of onehalf of the property interest.
contained
a
separation,
marital
the
property
arbitrator
properties in the award.
The
arbitrator
had
And, as Lot 7 and Lot 8 each
the
component
had
on
authority
to
the
date
of
distribute
the
See id. at 382, 325 S.E.2d at 270.
power
to
distribute
the
property
to
defendant, including plaintiff‟s separate property component, so
long as plaintiff was reimbursed for the value of her separate
property
interest.
See
id.
at
382-83,
325
S.E.2d
at
270.
Therefore, there was no evident miscalculation or mistake in the
description of the property conferred.
Defendant‟s argument is
overruled.
E. The appreciation in value of Lot 8
Defendant argues that the arbitrator erred in conferring
the status of marital property upon the appreciation of Lot 8.
Defendant
contends
that
Lot
8
was
purchased
prior
to
the
marriage, that no improvements were made to the property, and
that “[n]o evidence was presented of any marital contributions,
-15monetary or otherwise, to account for the appreciation of each
party‟s one half interest . . . .”
Presuming the accuracy of the argument, defendant does not
indicate how he has been prejudiced.
The trial court‟s order
credits both parties with a separate property interest equal to
one-half of the value of Lot 8 as of the date of marriage and
labels
as
marital
property
the
appreciation
in
Lot
8
which
occurred during the marriage prior to the date of separation.
Defendant was awarded Lot 8 and ordered to pay plaintiff for her
separate property interest as well as a distributive award “to
equalize
the
division
of
marital
.
.
.
assets
.
.
.
.”
Reclassifying the appreciation of Lot 8 from marital to separate
property
would
individual
not
one-half
diminish
interest
change the total value
trial court order.
or
in
increase
the
conferred
either
property
each party
and
parties‟
would
not
pursuant to the
Therefore, we overrule this argument.
F. The marital
property
component
of
the
Countryview
Road
Defendant argues that the arbitrator erred in calculating
the
appreciation
located
at
contends
market
6016
that
value
of
marital
Countryview
the
of
the
arbitrator
the
component
Road.
the
Specifically,
incorrectly
Countryview
of
property
calculated
as
of
the
property
defendant
the
fair
date
of
-16marriage.
We disagree.
“In an equitable distribution proceeding, the trial court
is to determine the net fair market value of the property based
on the evidence offered by the parties. There is no single best
method for assessing that value, but the approach utilized must
be ‘sound[.]’”
Walter v. Walter, 149 N.C. App. 723, 733, 561
S.E.2d 571, 577 (2002) (internal citations omitted).
Defendant
testified
that
in
August
1996,
prior
to
his
marriage, he purchased the property located at 6016 Countryview
Road for $58,500.00.
Also, prior to his marriage, he invested
$6,500.00 in the property and bought out the interest of two
partners who helped him refurbish the residence for $10,000.00,
bringing
his
cost
for
the
property
to
$75,000.00.
The
arbitrator found the value of the property, as of the date of
marriage, to be $75,000.00.
This valuation is not the result of
an evident miscalculation; therefore, defendant‟s argument is
overruled.
See N.C.G.S. ' 50-55(a)(1); see also, e.g., Semon,
161 N.C. App. 137, 587 S.E.2d 460 (overruling the appellant‟s
argument where he merely argued that the arbitrator should have
used a different methodology in valuing the marital property).
G. The diminution of value of the Volvo
-17Defendant argues that the arbitrator erred in finding that
the depreciation in the value of a Volvo was divisible property.
Plaintiff retained possession of the vehicle after the date of
separation, and, after the parties separated, the vehicle was
operated for an additional 40,000 miles.
Defendant contends
that the $13,000.00 post-separation decrease in the value of the
vehicle was not divisible property.
We disagree.
“Divisible property” means . . . [a]ll
appreciation and diminution in value of
marital property and divisible property of
the parties occurring after the date of
separation
and
prior
to
the
date
of
distribution, except that appreciation or
diminution in value which is the result of
postseparation actions or activities of a
spouse shall not be treated as divisible
property.
N.C.G.S. ' 50-20(b)(4).
shall
determine
what
“Upon application of a party, the court
is
the
marital
property
and
divisible
property and shall provide for an equitable distribution of the
marital property and divisible property between the parties in
accordance with the provisions of this section.”
N.C.G.S. ' 50-
20(a).
The arbitrator found that on the date of separation, the
value of the vehicle was $21,000.00.
after
the
date
of
separation,
he
Defendant testified that
drove
the
vehicle
and
had
accidents that, on two occasions, resulted in “minimal damage.”
-18The bumper sustained scrapes and the side of the vehicle a dent.
At the time of the arbitration hearing, the car had not been
repaired.
The arbitrator made the uncontested finding that the
post-separation
$13,000.00.
decrease
in
the
value
of
the
vehicle
was
Because the basis for the Volvo‟s decrease in value
cannot be attributed to the actions of one spouse and occurred
after the date of separation, the arbitrator‟s finding that the
diminution
in
value
is
properly
within
the
definition
of
divisible property is not an evident miscalculation or mistake
in
the
description.
See
N.C.G.S.
50-20(b)(4),
''
50-55.
Defendant’s argument is overruled.
H. Determination that the boat and trailer were marital
property
Defendant argues that the arbitrator erred in conferring
marital
property
purchased
during
status
the
upon
a
marriage.
boat
and
trailer
Defendant
that
contends
were
that
he
withdrew $20,000.00 from Scott & Stringfellow account #1110 for
the
purchase,
and,
because
account
#1110
is
his
separate
property, the boat and trailer remain his separate property.
Because
of
our
holdings
in
subparts
A
and
B
above,
we
overrule defendant‟s argument.
I. Defendant’s McClatchy 401(k)
component of $55,500.00
plan
had
a
marital
-19Defendant argues that the arbitrator erred in concluding
that his account in
Publishing
Company
$55,500.00
marital
the
McClatchy Company
Money
Shelter
component.
News and Observer
401(k)
Plan
Defendant
retained
contends
that
a
his
401(k) plan was not actively managed; therefore, any increase in
value which occurred during the marriage was due to passive
appreciation.
On
this
McClatchy Company
basis,
defendant
401(k) plan is
his
contends
that
his
separate property.
We
disagree.
Defendant provided exhibits and testimony in support of his
contention
made
to
that
the
defendant‟s
component.
$39,681.57
McClatchy
401(k)
plan
Defendant
in
marital
Company
contributions
401(k)
plan.
account
contained
determined
that
a
the
had
been
Therefore,
marital
property
marital
property
component of the 401(k) account was worth $19,301.52 on the date
of separation and $13,169.02 at the time of that arbitration
hearing.
However, these figures do not reflect a decline in the
value of the investments due solely to market forces.
Indeed
the 401(k) account appreciated $113,043.22 between the date of
marriage and the date of the arbitration hearing.
Prior to the
date of separation, defendant elected to take early retirement
withdrawals
from
his
401(k)
account.
The
early
retirement
-20withdrawals made prior to the parties separation amounted to
$42,196.04 but, according to defendant‟s calculations, reduced
only the marital component of the 401(k) account.
His records
indicate that in the quarter prior to the first early retirement
withdrawal, the balance of the marital property component was
$55,308.89.
The
arbitrator
determined
that
on
the
date
of
separation, the value of the marital property component of the
McClatchy Company 401(k) plan was $55,500.00.
Having
established
that
defendant‟s
McClatchy
Company
401(k) plan contained a marital property component upon the date
of separation, defendant does not raise a question of law but
contests the valuation of the marital property component.
As he
does not argue and we do not find that the arbitrator committed
an evident miscalculation or evident mistake in the description
of the property, defendant‟s argument is overruled.
J. Postseparation withdrawals from the McClatchy 401K
Defendant argues that the arbitrator erred in using the
rollover of defendant‟s McClatchy Company 401(k) plan to two
individual
retirement
accounts
(IRAs)
held
by
Scott
&
Stringfellow as a factor to favor plaintiff in the distribution
of assets.
However, defendant does not contend how this finding
prejudiced him, and we do not address it further.
-21K. Plaintiff’s Prudential 401(k) and related debt
Defendant
determination
argues
that
that
the
plaintiff‟s
arbitrator
account
in
erred
North
the
in
his
Carolina
State Employee‟s 401(k) plan was valued at $58,524.00 on the
date
of
separation.
Defendant
contends
that
the
marital
component of the account was valued at $87,523.38 on the date of
separation.
We agree.
Marital property is to be valued as of the date of the
separation
of
the
parties.
N.C.G.S.
'
50-21(b).
At
the
arbitration hearing, plaintiff testified that she began making
contributions to the account during the marriage, thus making
all contributions made prior to the date of separation marital
property.
The arbitrator found that on the date of separation,
4 September 2006, the marital component of plaintiff‟s 401(k)
account
was
valued
at
$58,524.00.
However,
according
to
plaintiff‟s records, on 4 September 2006, her account balance in
the State of North Carolina 401(k) Plan was $87,523.38.
evidence of separate property was presented.
No
The arbitrator
awarded plaintiff the balance of the 401(k) plan, $58,524.00.
On appeal, plaintiff concedes that the figure the trial court
confirmed as plaintiff‟s 401(k) account balance on the date of
separation
included
plaintiff‟s
contributions
made
after
the
-22date of separation, as well as, losses in the account occurring
after
the
ordered
date
of
defendant
equalize
the
separation.
to
pay
division
of
Given
that
the
trial
plaintiff
a
distributive
marital
and
divisible
court
award
“to
assets
and
debts[,]” we remand this matter for modification of the award of
the
marital
and
separate
property
components
of
plaintiff‟s
Prudential 401(k) plan as well as the distributive award payable
to plaintiff in a manner consistent with this opinion.
L. Date of separation value of defendant’s McClatchy
Company Pension Plan
Defendant argues that the arbitrator erred in finding that
the value of the joint life portion of defendant‟s McClatchy
Company
Pension
Plan
account
on
the
date
of
separation
was
$20,648.00 and erred in assigning no value to the 100% survivor
portion of the account.
Defendant contends that on the date of
separation, the joint life portion of the account was valued at
$18,039.00 and the 100% survivor portion valued at $5,589.00.
We agree in part.
Marital property is to be valued as of the date of the
separation of the parties.
N.C.G.S. ' 50-21(b).
defendant
September
separated
on
4
2006.
Plaintiff and
The
Arbitration
Decision Award confirmed and incorporated by the trial court in
its order states that defendant‟s McClatchy Company retirement
-23plan account is marital property with a date of separation value
of $20,648.00.
value
of
The record reflects that a $20,648.00 lump sum
defendant‟s
joint
and
survivor
annuity
through
the
McClatchy Pension Plan corresponds to a benefit valued as of 1
July 2005.
On the same page of the record, the lump sum annuity
benefit valued as of 4 September 2006, the date of separation,
is listed as $18,039.00.
record
of
a
separation.
different
There is no other evidence in the
account
valuation
as
of
the
date
of
The finding that the lump sum value of defendant‟s
McClatchy Pension Plan joint and survivor annuity on the date of
separation was $20,648.00 rather than $18,039.00 is an evident
mistake.
Therefore,
we
reverse
and
remand
the
matter
for
modification of the trial court‟s order to reflect a lump sum
annuity
benefit
valued
as
of
4
September
separation, in the amount of $18,039.00.
50-55(a)(1).
2006,
the
date
of
See N.C. Gen. Stat. '
Because the arbitration award as confirmed by the
trial court’s order compels defendant to retain plaintiff as the
beneficiary of the pension plan, we do not otherwise consider
the valuation of the survivor annuity benefit.
M. The marital component of defendant’s News
Observer supplemental executive retirement plan
and
Defendant argues that the arbitrator erred in finding that
thirty
percent
of
defendant‟s
News
and
Observer
Supplemental
-24Executive
Retirement
Defendant
contends
Plan
that
account
the
fraction
was
marital
used
to
property.
determine
the
marital portion of the Executive Retirement Plan account was not
in accordance with the directive as set out in N.C. Gen. Stat. '
50-20.1(d).
Defendant
asserts
that
the
denominator
of
the
fraction should reflect the duration of defendant‟s employment
with the News and Observer from 1977 through 2000, rather than
only
the
time
through 2000.
Under
defendant
participated
in
the
plan
from
1989
We disagree.
North
Carolina
General
Statutes,
section
50-20.1,
“[t]he award of vested pension, retirement, or other deferred
compensation benefits may be made payable . . . (2) [o]ver a
period of time in fixed amounts by agreement . . . .”
Stat. ' 50-20.1(a)(2) (2009).
N.C. Gen.
“The award shall be determined
using the proportion of time the marriage existed (up to the
date
of
separation
employment
which
retirement,
or
of
the
earned
deferred
parties),
the
vested
compensation
simultaneously
and
with
nonvested
benefit,
to
the
pension,
the
total
amount of time of employment.”
N.C. Gen. Stat. ' 50-20.1(d)
(2009).
shall
“This
section
.
.
.
apply
to
all
pension,
retirement, and other deferred compensation plans and funds . .
. .”
N.C.G.S. ' 50-20.1(h).
Known as the “fixed percentage
-25method,”
the
Court
has
interpreted
the
description
of
the
denominator in section 50-20.1(d) as “being the total amount of
time the employee spouse is employed in the job which earned the
vested pension or retirement rights.”
Gagnon v. Gagnon, 149
N.C. App. 194, 198, 560 S.E.2d 229, 231 (2002) (citation and
internal quotations omitted).
Defendant began working for the McClatchy Company on 2 May
1977.
Defendant testified that on 15 December 1989, he was
admitted to participate in the News and Observer Supplemental
Executive
Retirement
Plan,
a
non-qualified
retirement
funded entirely by the News and Observer.
formal service requirement for plan entry.
plan
The plan had no
Defendant testified
that he believed his entry into the plan was intended as “golden
handcuffs,”
“granted
to
[defendant]
employee at the News & Observer.”
to
retain
[him]
as
an
The arbitrator determined
that the award was to be premised upon the time the marriage
existed
benefit)
(simultaneous
–
34
months,
with
as
the
employment
compared
to
that
the
earned
amount
of
the
time
defendant participated in the retirement plan (from 15 December
1989 until 26 February 2000) – 123 months.
Acknowledging that
this is a non-qualified plan with no formal service requirement
or qualification for plan entry and participation is conferred
-26on a case-by-case basis, the arbitrator‟s determination that the
amount of time defendant participated in the News and Observer
Supplemental Executive Retirement Plan equals the total amount
of time defendant earned the benefit conferred upon him by the
plan – 123 months is not an evident mistake.
55(a)(1).
N.C.G.S. ' 50-
Therefore, defendant‟s argument is overruled.
N. The marital component of SECU IRA
Defendant argues that the arbitrator erred by finding that
the value of the Individual Retirement Account (IRA) held in
State Employees‟ Credit Union (SECU) account #3966 on the date
of separation was $6,525.00.
Defendant contends that, like the
valuation of the McCatchy Pension Plan discussed in subpart L
supra, the arbitrator evidently selected an account value other
than the value on the date of separation.
However, here, it is
not evident that the value reflected for account #3966 at the
date of separation was a mistake.
Defendant
testified
that
he
participated
in
a
defined
benefit plan that was valued as a lump sum and rolled over to an
IRA held by the SECU in account #3966.
the IRA was $109,425.00.
property was separate.
The amount rolled into
Defendant testified that most of the
However, he worked for eight-and-a-half
months during his marriage to accrue benefits under the defined
-27benefit plan; therefore, the account balance rolled into account
#3966 contained some component of marital property.
Defendant
testified that the amount of his required minimum distribution,
calculated from the balances of two IRAs and a 401(k) plan, was
deducted entirely from SECU account #3966.
details
both
the
calculation
of
Defendant‟s evidence
the
required
minimum
distribution as well as the deduction from the SECU account and
indicates that on 30 June 2005 the balance of account #3966 was
$109,425.08.
September
Following
2006,
the
account
separation
#3966
was
of
the
valued
parties
at
on
4
$55,461.84.
Defendant testified that the account was “totally deleted” at
the time of the arbitration hearing, but, on 1 July 2005, the
marital
component
arbitrator‟s
of
the
determination
account
that
was
$6,525.00.
defendant‟s
required
The
minimum
distribution did not reduce the marital property component of
account #3966, valued at $6,525.00, was not an evident mistake.
N.C.G.S.
'
50-55(a)(1).
Therefore,
defendant‟s
argument
is
overruled.
II
Defendant argues that the trial court erred in adopting the
arbitration
decision
asserted errors.
award
because
However, while we
of
the
aforementioned
reverse and remand this
-28matter to the Wake County District Court for modification of two
portions of the court‟s order, defendant does not argue nor do
we find that the arbitrator or the trial court committed an
error of law prejudicing defendant‟s rights, providing a basis
to vacate the order.
See N.C.G.S. 50-54(a)(8).
Therefore, we
overrule defendant‟s argument.
Affirmed in part; reversed in part; and remanded.
Judges ELMORE and GEER concur.
