Phillip Funderburg v. Nancy Funderburg

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ARKANSAS COURT OF APPEALS  SARAH J. HEFFLEY, JUDGE  NOT DESIGNATED FOR PUBLICATION  DIVISION I  CA 06­1383  November 14, 2007  PHILLIP FUNDERBURG  APPELLANT  APPEAL FROM THE BRADLEY COUNTY  CIRCUIT COURT  [NO. DR2004­157­5]  V. HONORABLE TED C. CAPEHEART,  JUDGE  NANCY FUNDERBURG  APPELLEE  AFFIRMED  In this divorce case, the trial court made an unequal division of marital property.  The issues  raised on appeal challenge the trial court’s decision.  Finding no error, we affirm.  Appellant Phillip Funderburg and appellee Nancy Funderburg were married in April of 1961  when they were eighteen and sixteen years old, respectively.  Nancy first filed for divorce in 1991,  but  she later dropped that action.  She filed the present complaint for divorce in September 2004.  The trial court entered a decree on August 20, 2006, granting Nancy a divorce on the ground that  the parties had lived separate and apart from one another in excess of eighteen months without  cohabitation.  As per Nancy’s request, the trial court divided the marital property unequally.  At the hearing in June 2005, it was established that Nancy’s parents had put her through  college and that she began working as a registered nurse at the Bradley County Medical Center in  1977.  She was still working there at the time of the divorce.  She participated in a 401k plan for her retirement at work, which had accumulated $120,000.  Nancy also had an IRA containing $16,000,  and she had a savings account with a balance of $2,200.  She also had an insurance policy with a  cash value of $3,000.  Phillip operated a used­car sales lot and had a barber shop.  He also sold antiques and had  a pawn shop.  More recently he had been selling portable carports.  The antiques and collectibles  from his businesses had an appraised value of $84,332.09.  During the marriage, Nancy inherited property from her family.  She and Phillip built the  marital home on one such parcel located at 1004 Hankins Street in Warren, Arkansas.  As of the  time of the divorce, this property had been conveyed by the parties to one of their daughters with  Nancy retaining a life estate in the property.  Nancy also inherited another parcel located across the  street at 1005 Hankins, which had a home on it.  The parties had conveyed this parcel to their two  daughters, and both parties had retained a life estate in this parcel.  The parties also owned property  at 302 North Myrtle that housed Phillip’s barber shop, and another parcel of land at 1003 Hankins.  Although the initial mortgage for the construction of the marital residence at 1004 Hankins  had been satisfied in 1988, this property was used as collateral for a $70,000 loan obtained in 1996  in connection with Phillip’s used­car business.  This loan with Western Bank was not renewed in  2005, and Nancy paid off the outstanding balance of $21,000 using money from her savings.  The  properties at 302 North Myrtle, 1003 and 1005 Hankins, and the antique collectibles were pledged  as collateral for a $216,000 loan for Phillip’s business ventures.  This loan was at Simmons Bank  and  was  currently  in  default.    Nancy  had  signed  the  original  note  but  had  not  signed  the  last  extension in 2004.  The parties also had purchased a Kubota tractor in 1987 that Phillip used as  collateral for a $24,000 personal loan with the Arkansas Superior Credit Union. ­2­  CA 06­1383  The testimony established that both Nancy and Phillip resided in the marital home until  2004,  when  the  trial  court  ordered  Phillip  to  vacate  the  property  after  the  temporary  hearing.  Afterwards, Phillip moved into the home across the street at 1005 Hankins.  Nancy testified that,  although they had resided together in the marital home, they had not lived as husband and wife since  1988, around the time when their first grandchild was born.  Nancy explained that at that time she  had asked Phillip about his relationship with his secretary, and that he put a gun to her neck and told  her that she was not going the see the birth of their grandchild.  Nancy filed for divorce in 1991, but said she dismissed the complaint at Phillip’s urging  because he feared it would upset his mother who was ill.  Nancy testified that she and Phillip did  not share a bedroom or any of the household chores, such as laundry and cooking, and they did not  see one another except on Saturdays.  She said, “He went his way, and I went my way.”  Nancy  stated that she was aware of a personal, intimate relationship Phillip had with another woman and  said that Phillip spent a lot of time with his secretary.  Nancy further maintained that she had been  paying all of the utility bills for the house.  She said she filed the present action for divorce after  learning that Phillip had used the Kubota tractor as collateral for yet another loan.  Nancy also testified that she had been excluded from Phillip’s businesses since 1988, when  Phillip told her to “stay out of it,” and that she had not been inside the barber shop in over twenty  years.  She said that she and Phillip kept separate bank accounts and that her accounts were funded  with her earnings from work.  Nancy testified that she and Phillip once shared a money market  account that contained $9,000, but Phillip cashed it out and kept all of the money.  According to  Nancy, at the time of the temporary hearing Phillip owned a Harley Davidson motorcycle that he had  bought in 2002 for $20,000.  She had seen him riding another motorcycle since that hearing. ­3­  CA 06­1383  Nancy testified that her furniture, clothes, and pets remained at the marital home, but she had  been spending the night with her boyfriend since December. She said her daughters encouraged her  to stay there because of threats made by Phillip.  Phillip testified that he and Nancy had spent evenings together in the past five years, and  they also ate meals and spent weekends together.  He recalled, however, that he had testified at the  temporary hearing that they had lived separate lives since 1991 and they had kept their finances  separate, except when he was in financial trouble.  Phillip testified that the used­car lot was his primary business, but he did not make much  money in any of his endeavors.  Phillip stated that he bought the cars to sell through a floor plan at  the bank using a $100,000 line of credit.  He further testified he had to obtain the $70,000 loan  because he was “in trouble” with the bank and “out of trust with the floor plan.”  He maintained that  his ever­increasing debt arose because he often co­signed the notes with his purchasers and was  required  to  pay the  notes  when  his  purchasers  defaulted  or  filed  bankruptcy.    Concerning  the  $70,000 loan, Phillip said it was a balloon note and that he had made the monthly payments but was  not able to pay the lump sum when it became due.  He admitted that Nancy had made one or two  payments toward the end and that “finally somebody had to pay it,” because he could not.  He had  tried to get an extension but his daughters were required to co­sign, and they refused.  Phillip further testified that he reported winnings from gambling to the IRS in the years  2000, 2001, and 2002, but he did not know how much money he had lost gambling in the past ten  years.  He also stated that Nancy had loaned him $4,000 in 2003 for a credit card debt, and said he  was not certain whether he had paid any of that back.  He was one payment behind on the personal  loan secured by the Kubota tractor.  Phillip testified that he had less than $100 in the bank and less ­4­  CA 06­1383  than $50 in his pocket.  Phillip also testified that he had a relationship with a woman that began in 1995 and that it  had lasted four or five years.    He said that he did not presently own a motorcycle but that he rode  one owned by his cousin.  Brenda Young, the parties’ daughter, testified that she saw a mark on Nancy’s neck after the  gun incident in 1988.  She said that the incident had been mentioned in Phillip’s presence and he  had never denied it.  Brenda said she had been concerned about her mother staying in the marital  home and had asked her not to stay there at night. She said she had seen weapons in the house across  the street where Phillip had been living and that Phillip had cameras posted outside the house  pointed in the direction of the marital home.  According to Brenda, Phillip had harassed Nancy by  recording her phone calls and had threatened that he better not see a certain person at the marital  home.  Brenda testified that in 1988 her mother began sleeping in her sister’s bedroom and that her  parents had not had a relationship in years.  She had not seen them together on weekends and Phillip  was not usually home in the evenings. Brenda testified that Nancy paid the bills and would not ask  Phillip for help with the bills because she was afraid of him.  Brenda said it was pretty obvious that Phillip was involved in a relationship with another  woman.  She had seen him and a Brenda Sipes driving around on a Harley Davidson motorcycle.  She said that Phillip used to frequent casinos until he lost a lot of money several years ago and had  slowed down.  The trial court issued its decision dividing the marital property in a letter opinion that formed  the basis of the decree.  The court found that the parties had lived separate lives and had behaved ­5­  CA 06­1383  as if they were divorced since 1991, even though they had lived under the same roof.  The court also  found that since 1991 they had maintained separate banking accounts and had separate bedrooms,  and that they had carried on  little conversation after this separation.  In addition, the trial court  found that Nancy had paid the household bills without contribution from Phillip.  The trial court  also specifically found that Phillip was less than a credible witness.  Based on these considerations, the trial court ruled that Nancy would have the sole use and  enjoyment of the marital home during her lifetime. The court also found that it would be impossible  for the parties to live across the street from one another, so if Nancy decided to live in the marital  home, the property across the street would be leased and the rents divided equally between them.  If Nancy decided not to live in the marital home, Phillip would be allowed to live in the house across  the street and would pay Nancy an amount equal to one­half of monthly rental value.  The remaining real properties, as well as the antiques and collectibles, were to be sold with  the proceeds to be applied to the debt at Simmons Bank.  The court ruled that, if this debt arose  before 1991, the parties were to equally divide any surplus from the sale.  If the debt had been  incurred  after  1991,  Phillip  was  awarded  the  surplus.    He  was  also  to  be  responsible  for  any  deficiency.  The trial court required Phillip to reimburse Nancy the $21,000 that she paid out of her  savings to extinguish the $70,000 loan at Western Bank and ordered this reimbursement to be taken  out of his share of Nancy’s retirement account.  The court found this to be equitable because Phillip  continued to make poor business decisions and had directed Nancy to stay out of his business, and  because he continued to sell cars when he was out of trust with the bank.  The court found that Phillip had used the Kubota tractor as collateral for a personal loan that ­6­  CA 06­1383  was obtained without Nancy’s knowledge.  The court ruled that Phillip was to be solely responsible  for this debt.  The court also found that the tractor had a present value of $10,000 and that Phillip  was to pay Nancy $5,000 out of his share of Nancy’s retirement account.  The trial court ordered that each was to retain sole ownership of their individual checking  and savings accounts and certificates of deposit.  The court found that this was equitable because  they had maintained separate lives since 1991 and that they viewed each other’s income as “his” and  “hers.”  The court further found that the cash value of a life insurance policy with New York Life was  $3,000.  The  court observed that there  had been no testimony as to when the  policy had been  purchased.  The court ordered Nancy to pay Phillip one­half the cash value accruing between the  date of the marriage and the filing of the first divorce complaint in 1991.  As for Nancy’s 401k, Phillip was awarded one­half of the account that accrued between its  inception and the filing of the divorce complaint in 1991.  The court found this division to be fair  and equitable because it had been accumulated by Nancy without any contribution from Phillip;  because Phillip had benefitted from her income even though they had led separate lives; because  Phillip had dwindled the estate by continuing to sell cars; and because Nancy worked and saved  while Phillip worked part­time and found a lot of time for recreation that depleted the marital estate,  namely gambling, motorcycles, and women.  Phillip challenges several aspects of the trial court’s decision to divide the marital property  unequally.  Each point is considered under the following standard of review.  On appeal, divorce  cases are reviewed de novo.  Farrell v. Farrell, 365 Ark. 465, ___ S.W.3d ___ (2006). With respect  to the division of property, we review the trial court’s findings of fact and affirm them unless they ­7­  CA 06­1383  are clearly erroneous or clearly against the preponderance of the evidence.  Id.  A finding is clearly  erroneous  when  the  reviewing court,  on  the  entire  evidence,  is  left  with  the  definite  and  firm  conviction that a mistake has been made.  Id.  We give due deference to the trial court’s superior  position to determine the credibility of the witnesses and the weight to be given their testimony.  Id.  Phillip first argues that the trial court erred in determining that the property acquired by the  parties after 1991 when the first complaint for divorce was filed was not marital property.  Phillip  is  correct  in  asserting  that  “marital  property”  means  all  property  acquired  by  either  spouse  subsequent to the marriage unless it falls into one of the exceptions enumerated in our property  division statute.  Ark. Code Ann. § 9­12­315(b) (Repl. 2002).  The statute also commands that all  marital property is to be divided one­half to each party, unless the trial court finds that such a  division is inequitable, after taking into consideration a number of factors.  Ark. Code Ann. § 9­12­  315(a)(1)(A).  One  of  those  factors  is  the  “[c]ontribution  of  each  party  in  [the]  acquisition,  preservation, or appreciation of marital property, including services as a homemaker.”  Ark. Code  Ann. § 9­12­315(a)(1)(A)(vii).  The trial court in this instance made an unequal distribution of the parties’ marital property  based on this factor and upon finding that the parties had behaved as if they were divorced and had  maintained separate finances since 1991.  We cannot say that this finding is clearly erroneous, and  an unequal division based on this finding is consistent with the decision in Cavin v. Cavin, 308 Ark.  109, 823 S.W.2d 843 (1992).  In that case, the supreme court affirmed an unequal division based  on the parties’ individual contributions where they had been separated for a long period of time. We  find no error on this point. ­8­  CA 06­1383  Phillip next argues that the trial court’s ruling runs counter to our decision in Baxley v.  Baxley, 86 Ark. App. 200, 167 S.W.3d 158 (2004).  There, we reversed and remanded the trial  court’s unequal division of an investment account because the trial court merely listed the statutory  factors supporting an unequal division but did not explain why the factors warranted an unequal  division.  Here,  the trial court did not simply list the factors.  Rather, the trial court explained its  decision in some detail throughout the letter opinion.  The court explained that it was making an  unequal division of the marital property because the parties had been living separately and had  treated one another’s money as “his” and “hers.”  The court explained further that Nancy had been  working and saving, while Phillip worked part time, accumulated substantial debts, and squandered  money on gambling, expensive motorcycles, and his paramour.  We are unable to say that the trial  court’s explanation was in any way deficient.  As  his  third  argument,  Phillip  contends  that  the  failure  of  his  used­car  business  was  a  deciding factor in the trial court’s decision and that it was error for the trial court to do so when there  was no evidence of an intent to defraud.  Appellant cites Skokos v. Skokos, 332 Ark. 520, 535, 968  S.W.2d 26, 34 (1998), where it was said that in a divorce action a spouse may recover his or her  interest in marital property that the other spouse has transferred if the latter made the transfer for the  purpose of defrauding the former of his or her interest in the property.    In Skokos, the wife was  seeking to recover monies the husband had placed in trust for their children during the pendency  of the divorce.  The supreme court affirmed the trial court’s decision denying the wife’s request  based on this rule of law because there was no evidence of an intent to defraud.  In this case, there  was  no transfer of property and no money that Nancy was trying to recover.  We thus find no  application for this rule of law here. ­9­  CA 06­1383  Phillip also contends that the trial court’s decision was designed to punish him for making  poor business decisions, gambling, having an affair, and purchasing a  motorcycle.  He argues that  fault is not a proper consideration when dividing marital property.  As we observed in Keathley v.  Keathley, 76 Ark. App. 150, 61 S.W.3d 219 (2001), there is a difference between fault and equity.  The trial court in this case determined that it would be inequitable to make an equal division of the  marital property because of the parties’ long separation, their maintenance of separate finances, and  because  Nancy had  worked  and  saved  while  Phillip  did  not  work  steadily,  incurred  debt,  and  otherwise depleted the marital estate.  In Keathley, we affirmed an unequal division of marital  property where the husband gambled and fraudulently obtained credit cards on which he charged  over $100,000.  See also Stover v. Stover, 287 Ark. 116, 696 S.W.2d 750 (1985) (affirming unequal  division where wife attempted to have her husband killed); Forsgren v. Forsgren, 4 Ark. App. 286,  630 S.W.2d 64 (1982) (affirming unequal distribution of stock where wife excessively consumed  alcohol and drugs resulting in massive medical bills).  We find no merit in this argument.  Phillip’s last argument is that the trial court erred when it made an unequal division of the  marital property without making findings as to their value.  Phillip complains that there was no  evidence assigning the value of the life estates held by the parties in the residences at 1004 and 1005  Hankins and no evidence as to what portion of Nancy’s 401k accrued since 1991.  Appellant argues  that the lack of evidence renders appellate review of the decision impossible, like the situation faced  by this court in Copeland v. Copeland, 84 Ark. App. 303, 139 S.W.3d 145 (2003).  We disagree.  In Copeland, the trial court purported to make an equal division of marital property, but the record  was unclear as to whether the trial court had accomplished that goal.  The record in this case is  developed sufficiently for us to determine that the trial court made an unequal division of the marital ­10­  CA 06­1383  property.  Thus, appellant’s argument provides no basis for reversal.  Affirmed.  GLADWIN  and BIRD, JJ., agree. ­11­  CA 06­1383 

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