DONNA K. SHIELDS v. WAYNE H. SHIELDS
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RENDERED: MARCH 24, 2006; 2:00 P.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2005-CA-000912-MR
DONNA K. SHIELDS
APPELLANT
APPEAL FROM FRANKLIN FAMILY COURT
HONORABLE REED RHORER, JUDGE
ACTION NO. 04-CI-00033
v.
WAYNE H. SHIELDS
APPELLEE
OPINION
AFFIRMING IN PART, VACATING IN PART
AND REMANDING
** ** ** ** ** ** ** **
BEFORE: GUIDUGLI AND SCHRODER, JUDGES; MILLER, SENIOR JUDGE.1
MILLER, SENIOR JUDGE:
Donna Shields appeals from the Findings
of Fact, Conclusions of Law, and Decree of Dissolution of
Marriage of the Franklin Family Court seeking a review of that
court’s decision with respect to its division and valuation of
the parties’ respective retirement plans, its maintenance award,
1
Senior Judge John D. Miller sitting as Special Judge by assignment of the
Chief Justice pursuant to Section 110(5)(b) of the Kentucky Constitution and
Kentucky Revised Statute 21.580.
and its failure to award her attorney fees.
For the reasons
stated below, we affirm in part, vacate in part, and remand.
The parties were married on April 20, 1968.
They had
two children during the marriage, both of whom are now adults.
On January 12, 2004, Donna filed a petition for dissolution of
marriage.
On September 17, 2004, the parties reached a Partial
Settlement Agreement agreeing to the division of furniture,
furnishings, tools, condominium timeshares, burial lots, and
motor vehicles.
An evidentiary hearing on the remaining issues
was held on October 21, 2004.
On April 4, 2005, the family
court entered its Findings of Fact, Conclusions of Law, and
Decree of Dissolution of Marriage.
This appeal followed.
We begin with a general statement of our standard of
review.
Under Kentucky Rules of Civil Procedure (CR) 52.01, in
an action tried without a jury, "[f]indings of fact shall not be
set aside unless clearly erroneous, and due regard shall be
given to the opportunity of the trial court to judge the
credibility of the witnesses.
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 (Ky.
1998); Uninsured Employers' Fund v. Garland, 805 S.W.2d 116, 117
(Ky. 1991).
Substantial evidence is evidence, when taken alone
or in light of all the evidence, which has sufficient probative
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value to induce conviction in the mind of a reasonable person.
Golightly, 976 S.W.2d at 414; Sherfey v. Sherfey, 74 S.W.3d 777,
782 (Ky.App. 2002).
issues de novo.
An appellate court, however, reviews legal
See, e.g., Carroll v. Meredith, 59 S.W.3d 484,
489 (Ky.App. 2001); Hunter v. Hunter, 127 S.W.3d 656 (Ky.App.
2003).
First, Donna contends that the family court erred in
its valuation of Donna’s Kentucky Employees Retirement System
Pension Plan and Wayne’s Toyota Motor Manufacturing Company
Pension Plan and Toyota 401K Retirement Plan.
Donna is a retiree from Kentucky State Government and
has a Kentucky Employees Retirement Plan which the family court
valued at $353,313.00.
In addition Donna has a traditional
Individual Retirement Account valued at $246.13.
Wayne is an
employee of Toyota Motor Manufacturing and has a Toyota Pension
Plan which the family court valued at $73,606.01 and a Toyota
401K Retirement Savings Plan which the family court valued at
$153,710.64.
Wayne also has a Roth IRA valued at $4,547.45.
Donna disputes the family court’s valuation of her
Kentucky Employment Retirement Plan, Wayne’s Toyota Pension
Plan, and Wayne’s 401K Plan.2
As evidence concerning the
valuation of the plans, Donna provided the expert testimony and
calculations of Carrell Eakle, CPA.
2
On his behalf, Wayne
Donna does not dispute the valuation of her traditional IRA or Wayne’s Roth
IRA.
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provided the expert testimony and calculations of Calvin D.
Cranfill, CPA/ABV.
Eakle valued Donna’s Kentucky Retirement Plan at
$288,323.00, whereas Cranfill valued the plan at $353.313.00.
Donna’s Kentucky Retirement Plan is a Defined Benefit Plan, in
pay status, which is currently paying $1,596.08 per month.
Both
experts agreed that the Plan should be valued based upon the
present value of the future monthly payments for Donna’s
remaining life expectancy.
The difference in the two valuations
is a result of Cranfill using a discount rate of 3.25% and
taking into consideration future cost of living adjustments
(COLAs), whereas Eakle used a discount rate of 5% and did not
factor in future COLAs.
Donna does not address the discount rate differential
or why the 5% rate used by Cranfill is erroneous, and we find no
basis to conclude that the family court’s use of a 5% discount
rate is erroneous.
With respect to Cranfill’s use of a cost of
living adjustment in his calculation, Donna states “Mr. Cranfill
stated [that a] COLA was a Cost of living Adjustment that would
possibly be added to future payments.
Mr. Eakle testified that
this was inappropriate because the Court is attempting to value
the present entitlements utilizing the value of today’s dollars
and not a hypothetical, future cost of living index.”
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Eakle and Cranfill agree that the proper method of
valuing Donna’s Retirement Plan is to discount the future income
stream of monthly payments to today’s dollars based upon her
remaining life expectancy.
Should future cost of living
adjustments be taken into consideration?
Donna does not cite us
to any authority which holds that COLAs should not be factored
into the present value calculation.
However, in Laurenzano v.
Blue Cross and Blue Shield of Massachusetts, Inc. Retirement
Income Trust, 134 F.Supp.2d 189 (D.Mass. 2001), a case
concerning a class action lawsuit brought on behalf of former
participants in a Defined Benefit Pension Plan who received a
lump sum distribution from the plan, the District Court held
that under a Defined Benefit Pension Plan which normally
provided retirement benefits in the form of a life annuity that
included a COLA, a lump sum distribution in lieu of the annuity
was required to include the present value of the projected COLA
payments.
The propriety of including COLAs in the calculation
was supported by Wayne’s expert witness, and his testimony is
substantial evidence supporting the family court’s valuation of
Donna’s Kentucky Retirement Plan.
This method is further
supported by the holding in Laurenzano.
The family court’s
factoring of COLAs into the present value calculation of Donna’s
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Defined Benefits Plan is accordingly not clearly erroneous.
CR
52.01.
Eakle, on behalf of Donna, valued Wayne’s Pension Plan
at $130,915.00 and his 401K plan at $278,157.00, for a total
valuation of $409,072.00.
In contrast, Cranfill valued Wayne’s
Pension Plan at $73,606.01 and his 401K at $153,710.64, for a
total valuation of $227,316.65.
The family court accepted Cranfill’s valuation of
Wayne’s retirement accounts.
In contrast to Donna’s Kentucky
Retirement Plan, which is a Defined Benefit Plan, Wayne’s Toyota
Pension Plan and Toyota 401K Plan are Defined Contribution
Plans.3
The reason for the differential in the valuation of
Wayne’s retirement plans by the two experts is that Cranfill
valued the plans based upon the current account balances in the
plans, whereas Eakle valued the plans based upon the present
value of the future income streams to be produced during Wayne’s
life expectancy – the same methodology used to calculate the
value of Donna’s plan.
3
A Defined Benefits Plan pays a retiring employee a benefit calculated on the
basis of their years of service multiplied by a percentage of the average
salary they received during, for example, the last five years of employment.
In contrast, under a Defined Contribution Plan, an employee's benefits are
determined on the basis of the pension fund's assets at the time when the
benefit is paid. Snair v. City of Clearwater, 787 F.Supp. 1401, 1404
(M.D.Fla. 1992).
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Cranfill testified that in his experience as an
accountant and expert witness, he had always valued Defined
Contribution Plans in accordance with the account balance on the
valuation date.
Cranfill also testified that he was aware of no
reason to value the plans in any other way than based upon the
account balance upon the date of dissolution.
Donna does not
cite us to any authority which supports using the present value
of the future income stream method for valuing a defined
contribution plan.
"It is axiomatic that a trial court retains broad
discretion in valuing pension rights and dividing them between
parties in a divorce proceeding, so long as it does not abuse
its discretion in so doing in the sense that the evidence
supports its findings and they thus are not clearly erroneous."
Duncan v. Duncan, 724 S.W.2d 231, 234-35 (Ky.App. 1987).
Cranfill’s expert testimony is substantial evidence in support
of the family court’s valuation of Wayne’s retirement plans.
accordingly find no error in the family court’s valuation.
We
CR
52.01.
Next, Donna contends that the family court erred in
failing to award her $2,500.00 per month in maintenance until
her death, remarriage, or cohabitation with a person providing
her support.
KRS 403.200 provides as follows:
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(1) In a proceeding for dissolution of
marriage or legal separation, or a
proceeding for maintenance following
dissolution of a marriage by a court which
lacked personal jurisdiction over the absent
spouse, the court may grant a maintenance
order for either spouse only if it finds
that the spouse seeking maintenance:
(a) Lacks sufficient property,
including marital property apportioned
to him, to provide for his reasonable
needs; and
(b) Is unable to support himself
through appropriate employment or is
the custodian of a child whose
condition or circumstances make it
appropriate that the custodian not be
required to seek employment outside the
home.
(2) 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, 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
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while meeting those of the spouse
seeking maintenance.
Under this statute, the trial court has dual
responsibilities: one, to make relevant findings of fact; and
two, to exercise its discretion in making a determination on
maintenance in light of those facts.
In order to reverse the
trial court's decision, a reviewing court must find either that
the findings of fact are clearly erroneous or that the trial
court has abused its discretion.
Weldon v. Weldon, 957 S.W.2d
283, 285 (Ky.App. 1997).
The family court’s April 4, 2005, Findings of Fact,
Conclusions of Law, and Decree of Dissolution of Marriage
addressed the maintenance issue as follows:
FINDINGS OF FACT
. . . .
16. The Court finds that the marriage
between the parties is one of long duration
and that there is a substantial disparity in
the income and resources available to the
parties and that Mr. Shields should pay Ms.
Shields maintenance in the sum of $1,000.00
per month until her death, remarriage or
cohabitation with any person who provides
her primary support and maintenance.
. . . .
CONCLUSIONS OF LAW
. . . .
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5. The Court concludes that Ms. Shields is
entitled to maintenance under the evidence
received by this Court and after considering
the provisions of KRS 403.200 in the amount
of $2,500.00 monthly until her death,
remarriage or cohabitation with a person
providing her support.
. . . .
DECREE OF DISSOLUTION OF MARRIAGE
. . . .
This matter having come before he Court for
a Final Evidentiary Hearing and the Court
having considered testimony of the parties
and their witnesses and having made Findings
of Fact and Conclusions of Law which are
incorporated herein by reference and the
Court being otherwise advised, now Orders
and Decrees as follow[s]:
. . . .
8. IT IS ORDERED that Mr. Shields shall pay
Ms. Shields maintenance in the sum of
$1,000.00 per month for a period of four (4)
years or until her death, remarriage or
cohabitation with any person who provides
her primary support and maintenance.
The findings of fact paragraph, conclusions of law
paragraph, and ordering paragraph of the family court’s April 4,
2005, order are in conflict and irreconcilable both as to the
amount and duration of maintenance.
As a result, we are unable
to undertake a meaningful review of this issue.
We accordingly
vacate the maintenance award and remand this issue to the family
court for clarification.
Upon remand, the family court should
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clarify its award, and make findings of fact addressing the
factors contained in KRS 402.200.
Finally, Donna contends that the family court erred in
failing to award her any attorney fees, court costs, or expert
witness fees.
KRS 403.220 provides, in relevant part, as
follows:
The court from time to time after
considering the financial resources of both
parties may order a party to pay a
reasonable amount for the cost to the other
party of maintaining or defending any
proceeding under this chapter and for
attorney's fees, including sums for legal
services rendered and costs incurred prior
to the commencement of the proceeding or
after entry of judgment. . . .
In a dissolution proceeding, the allocation of
attorney's fees is "entirely within the discretion" of the
family court.
2001).
Neidlinger v. Neidlinger, 52 S.W.3d 513, 519 (Ky.
Even if a disparity in financial resources exists,
whether to make such an assignment and, if so, the amount to be
assigned is within the discretion of the trial judge.
Id.
As
the family court is in the best position to observe the conduct
and tactics of the parties, broad discretion shall be given to
the family court's allocation of attorney's fees.
Id.
A
reviewing court will not disturb the family court's refusal to
award attorney's fees absent an abuse of discretion.
See
Giacalone v. Giacalone, 876 S.W.2d 616, 620-21 (Ky.App. 1994)
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(citing Gentry v. Gentry, 798 S.W.2d 928 (Ky. 1990); and Wilhoit
v. Wilhoit, 521 S.W.2d 512 (Ky. 1975)).
Donna argues that based upon the family court’s
distribution of property and the disparity in income of the
parties, it was an abuse of discretion for the family court to
fail to award her attorney fees.
We disagree.
First, Donna fails to identify the amount of fees and
costs she is requesting, making a meaningful review of this
issue difficult to undertake.
Second, pursuant to the decree,
Donna will receive approximately $22,000.00 as her share of the
sale of the marital residence.
Donna has retirement plan income
of $1,502.00 monthly and, at minimum, $1,000.00 per month in
maintenance.
Further, there is evidence that she has the
ability to earn additional income through employment.
While we
acknowledge that Wayne will obtain, as a result of his
equalization credit, significantly more proceeds from his share
of the sale of the marital residence (approximately $121,659.00)
than Donna, we cannot conclude that the family court abused its
discretion by denying Donna attorney fees and other fees and
costs.
For the foregoing reasons the judgment of the Franklin
Family Court is affirmed in part, vacated in part, and remanded.
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ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Michael L. Judy
Frankfort, Kentucky
Valerie S. Kershaw
Sandra Mendez Dawahare
Lexington, Kentucky
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