SKAGGS (LARRY DAYTON) VS. SKAGGS (DEBORAH ANN)
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RENDERED: OCTOBER 24, 2008; 2:00 P.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2007-CA-1509-MR
AND
NO. 2007-CA-1510-MR
LARRY DAYTON SKAGGS
v.
APPELLANT/CROSS-APPELLEE
APPEAL AND CROSS-APPEAL FROM ELLIOTT CIRCUIT COURT
HONORABLE KRISTI HOGG GOSSETT, JUDGE
ACTION NO. 05-CI-00002
DEBORAH ANN SKAGGS
(NOW COX)
APPELLEE/CROSS-APPELLANT
OPINION
AFFIRMING IN PART,
REVERSING IN PART AND REMANDING
** ** ** ** **
BEFORE: ACREE AND VANMETER, JUDGES; HENRY,1 SENIOR JUDGE.
HENRY, SENIOR JUDGE: This appeal and cross-appeal are taken from a
judgment of the Elliott Circuit Court in a marital dissolution action. At issue is the
1
Senior Judge Michael L. Henry sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and KRS 21.580.
trial court’s characterization and distribution of the marital and nonmarital
property.
Deborah Ann Skaggs and Larry Dayton Skaggs were married on
December 12, 1998. It was the second marriage for both parties; no children were
born of the marriage. The couple separated about six years later, on January 3,
2005, and a decree of dissolution was entered on August 10, 2006. The decree
reserved issues of property distribution and assignment of debts for a later
determination.
At the time of the dissolution, Larry was fifty-nine years of age. He
had been employed at Marathon Oil since 1969, and had retired in July 2004. At
that time, he was awarded a lump sum benefit of over $600,000.00. Larry’s
income had increased during the course of the marriage; at the time of his
retirement his salary was well over $100,000.00. Before the marriage, Larry’s
residence was a farm which he owned, where he raised cattle and grew tobacco.
At the time of the marriage, Larry also owned a Fidelity brokerage account and
Marathon Thrift Plan account. The latter contained approximately $290,000.00.
Deborah was employed at a nursing home at the time of the parties’
marriage. She stopped working outside the home in the summer of 1999 and
began receiving disability payments one year later. At the time of the marriage,
Deborah also owned her own home and had a savings account.
During the course of the marriage, the couple resided at Larry’s
house. They made considerable improvements to Deborah’s house, including the
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installation of new flooring, a new roof and new bathroom fixtures. They also
acquired two tracts of real estate, known as “the Sheepskin property” and “the 504
property.”
Following the entry of the decree of dissolution in August 2006, the
trial court considered the evidence presented by the parties, which included more
than twenty depositions. The trial court entered findings of fact, conclusions of
law and judgment on February 5, 2007. The parties were each awarded their
respective residences. Additionally, Deborah was awarded the 504 property and a
portion of Larry’s retirement account, but no maintenance. Larry was awarded the
Sheepskin property. The trial court also assigned or directed to be sold various
items of personalty including a tractor, a bulldozer, several horses and some
vehicles. Both parties filed motions to alter, amend or vacate the judgment. The
trial court ordered the record reopened for a period of forty-five days for
presentation of evidence relating to Larry’s retirement accounts, his lump sum
distribution, and the existence of some farm machinery. The trial court thereafter
entered an amended judgment relating to the calculation of Deborah’s fractional
interest in Larry’s lump sum retirement distribution. This appeal by Larry and
cross-appeal by Deborah followed.
Under Kentucky Revised Statutes [KRS] 403.190, a trial
court utilizes a three-step process to divide the parties'
property: (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. An item of
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property will often consist of both nonmarital and marital
components, and when this occurs, a trial court must
determine the parties' separate nonmarital and marital
shares or interests in the property on the basis of the
evidence before the court.
Sexton v. Sexton, 125 S.W.3d 258, 264-65 (Ky. 2004) (citations and quotation
marks omitted).
Furthermore, “[a] party claiming that property, or an interest therein,
acquired during the marriage is nonmarital bears the burden of proof.” Id. at 266.
The classification of an asset as marital or nonmarital property “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).
In dividing marital property, including debts,
appurtenant to a divorce, the trial court is guided by
Kentucky Revised Statute (KRS) 403.190(1), which
requires that division be accomplished in “just
proportions.” This does not mean, however, that
property must be divided equally . . . . It means only that
the division should be accomplished without regard to
marital misconduct and in “just proportions” considering
all relevant factors.
Lawson v. Lawson, 228 S.W.3d 18, 21 (Ky. App. 2007) (citations omitted). These
relevant factors include the following:
(a) Contribution of each spouse to acquisition of the
marital property, including contribution of a spouse as
homemaker;
(b) Value of the property set apart to each spouse;
(c) Duration of the marriage; and
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(d) Economic circumstances of each spouse when the
division of property is to become effective, including the
desirability of awarding the family home or the right to
live therein for reasonable periods to the spouse having
custody of any children.
KRS 403.190 (1).
“Finally, a trial court has wide discretion in dividing marital property;
and we may not disturb the trial court's rulings on property-division issues unless
the trial court has abused its discretion.” Smith v. Smith, 235 S.W.3d 1, 6 (Ky.
App. 2006).
THE 504 PROPERTY
Larry’s first argument concerns the trial court’s disposition of the socalled “504 property.” The trial court’s findings state that the parties purchased the
property in April 2004, for the sum of $40,000.2 Relying on the deposition
testimony of a professional appraiser, the trial court found the property to have a
current value of $66,000.00. The court then awarded the property to Debbie,
stating as follows:
Petitioner [Deborah] has requested that she be awarded
this property and both parties acknowledge that it does
constitute marital property. The Court finds that
Respondent’s [Larry’s] marital wages were deposited
into a joint checking account and that these sums were
used to acquire the property and that it is indeed marital
property. The court finds that this property should be
awarded to petitioner.
2
Larry’s brief states that the property was purchased in 2003. At any rate, it was purchased
during the course of the marriage.
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Larry argues that the facts and deposition testimony clearly show that
the 504 property was purchased in part with nonmarital funds in the amount of
$20,000.00. He claims that the source of funds for the purchase of the 504
property was $20,000.00 from his Thrift Plan and $20,000.00 from his checking
account. He states that “there was significant money that Larry had prior to the
marriage which was traced to a portion of the purchase price of this 504 property.”
But Larry has provided no citation to the record to support the
proposition that he made a nonmarital contribution to the property, nor does he
indicate how this contribution was “traced” or where in the record we may find
evidence of such tracing. Kentucky Rules of Civil Procedure (CR) 76.12(4)(c)(iv)
requires that an appellant's brief shall contain “ample supportive references to
the record and citations of authority pertinent to each issue of law.” See Pierson
v. Coffey, 706 S.W.2d 409, 413 (Ky. App. 1985) (emphasis supplied). The rule
“mandates that a party indicate how an issue is properly preserved for review by an
appellate court. [Larry’s] briefs do not cite to where in the record this issue is
preserved and we will not search the vast record on appeal to make that
determination.” Phelps v. Louisville Water Co., 103 S.W.3d 46, 53 (Ky. 2003).
The appellee has provided references to the record to this issue, and they support
the trial court’s determination that the 504 property was marital property.
THE BULLDOZER
Larry next argues that the trial court erred in awarding Deborah an
interest in the bulldozer because it was purchased with nonmarital funds. The trial
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court found that Larry had a Fidelity account which at the date of the marriage
contained approximately $29,000.00. Seventeen-thousand dollars was withdrawn
from the account to purchase a Buick, which was driven primarily by Deborah.
The court found that the Buick was Larry’s nonmarital property and it was restored
to him. The court further found that Larry deposited $27,000.00 in marital wages
into the account during the marriage. In 2005, after the couple separated, he
withdrew $21,500.00 to purchase a bulldozer. The trial court found as follows:
The Court finds that after withdrawal of the $17,000.00
to purchase the Buick that approximately $12,000.00
would have remained in this Fidelity account and that
Respondent is rightfully entitled to a $12,000.00 nonmarital interest in the bulldozer. However, the
$27,000.00 deposit made to this Fidelity account came
from Respondent’s wages earned during the marriage and
therefore represented marital funds. The Court has no
evidence regarding the fair market value of the bulldozer
and finds that same should be sold, that $12,000.00
should be restored to the Respondent as his non-marital
property and that any remaining proceeds should be
divided equally among the parties.
The trial court’s ruling is fully in accordance with the dictates of KRS 403.190.
Furthermore, Larry provides no specific reference to the record to support his
argument that the bulldozer was “clearly purchased” with money that he had
before the marriage, and that Deborah failed to present evidence to challenge his
testimony in this regard. Larry bore the burden of proof to show that the tractor
was nonmarital property, and he has failed to demonstrate how he met this burden.
THE TRACTOR
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Larry next argues that the trial court failed to consider the debt
remaining on a tractor that was awarded to him. The trial court found as follows
regarding the tractor:
During the marriage the parties purchased a 2004 tractor
for . . . $46,000.00. This tractor now has a fair market
value of $23,000.00. Respondent withdrew $12,000.00
from his pre-1997 monies in his Fidelity account to use
as a down payment to secure the purchase of this tractor.
Respondent made $800.00 monthly payments on the
tractor debt. The Court finds Respondent to have a
$12,000.00 non-marital interest in this tractor that should
be restored to him and further finds the existence of an
$11,000.00 marital interest in the tractor. The Court
finds that the tractor should be awarded to Respondent.
Larry argues that the trial failed to consider the remaining debt on the tractor when
distributing the property, citing his deposition testimony that he was making
monthly payments of $820.97 on the tractor, and had “probably 14 or 15 months”
of payments remaining.
In his motion to alter, amend or vacate the trial court’s judgment,
Larry also claimed that the trial court erred in assigning a marital value to the
tractor. On appeal, it appears that Larry has abandoned his objection to the trial
court’s finding that the tractor was partially marital property, and is concerned only
with the trial court’s failure to consider the debt remaining on the tractor.
But Larry never requested the court to calculate and make a specific
finding as to the amount of debt, nor did he provide the documentary evidence
which would have made such a specific calculation possible.
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[N]o post-judgment request for additional findings of fact
(CR 52.04) or post-judgment motion for amended or
additional findings (CR 52.02) was filed. This
constitutes a waiver and precludes appellate review. CR
52.04, and Cherry v. Cherry, Ky., 634 S.W.2d 423
(1982).
Crain v. Dean, 741 S.W.2d 655, 658 (Ky. 1987).
LARRY’S FARM
Larry’s next argument concerns the trial court’s finding of a marital
share in the farm he owned prior to the marriage. The trial court found that the fair
market value of the farm at the time of the marriage was $163,000.00, and at
dissolution was $257,000.00. The trial court found that the increase in value due to
market conditions alone was $54,000.00. It therefore awarded to Larry
$217,000.00 as his nonmarital interest. The trial court further found that the
remaining $40,000.00 increase in value was due to the addition of two barns to the
property. The construction cost of the larger barn was $37,000.00 and the smaller
barn $8,700.00. The parties received government funds from “the ASC”3 in the
amount of $25,000.00 to apply towards the construction costs of the barns. The
court found that marital funds in the amount of $20,700.00 were additionally
expended to complete the construction. The court concluded that the joint efforts
of the parties resulted in an increase of $40,000.00 in the fair market value of the
property and that this represented a marital interest. Larry argues that the
$25,000.00 in government funds was nonmarital because he only received these
3
The parties’ briefs do not further identify “ASC.” The parties were probably referring to the
former federal Agricultural Stabilization and Conservation Service, usually abbreviated “ASCS,”
but for consistency we use the abbreviation used by the trial court.
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funds by virtue of his ownership of the farm. On the basis of this Court’s holding
in Jones v. Jones, 245 S.W.3d 815 (Ky. App. 2008), we agree that the payments
received from ASC may indeed be nonmarital in nature because they stemmed
directly from Larry’s nonmarital asset. Therefore, we reverse and remand this
claim for further findings of fact regarding the nature of these payments, a
recalculation of what portion of the $40,000.00 increase in value is attributable to
the funds received from the ASC if indeed such funds were nonmarital, and if
necessary, a reapportionment of the marital property if the court deems such a
reapportionment to be just.
THE 50/50 DISTRIBUTION
Finally, Larry argues that Deborah was not entitled to 50 percent of
the marital property for the following reasons: 1) she held herself out as a single
person throughout the marriage; (2) was away from home for several nights during
the marriage; (3) received substantial economic benefits from his money being
used to make improvements to her home; and (4) “walks away” with several
thousand dollars without contributing to the acquisition of the property. Larry
points out that he has been “an extremely hard-working person” as evinced by his
high salary from Marathon, whereas Deborah did “absolutely nothing” and
“hoarded” her own money.
Under Kentucky's “no fault” marital dissolution policy, Kentucky
Revised Statutes (KRS) 403.190(1) expressly directs that the court “shall divide
the marital property without regard to marital misconduct in just proportions
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considering all relevant factors[.]” Moreover, it is unclear to which portion of the
trial court’s order Larry is objecting. The only part of the order which expressly
directs an equal division of property is section 6, relating to the bulldozer, horse
trailer, several horses, the automobile and some farm equipment. The remainder of
the property appears to have been divided in an equitable manner, with each party
receiving a residence and various items of personal property. Larry’s argument is
so vague as to make the issue raised unreviewable.
CROSS-APPEAL
DEBORAH’S RESIDENCE
On cross-appeal, Deborah argues that the trial court erred in failing to
award her the entire nonmarital interest in her home. She argues that the trial
court’s findings - that her home had been in a state of disrepair and that Larry and
Deborah made significant improvements to the home using marital funds - were
not supported by the evidence. The trial court noted that Deborah received over
$13,000.00 in Social Security disability back pay that was used to purchase a
substantial portion of the improvements. As the court noted, this payment, which
encompassed January 2000 through May 2001, was marital property. Deborah
does not dispute this finding. The court also noted that Larry used a drain pipe and
I-beams that he had before the marriage to improve Deborah’s property, and that
he paid for the new kitchen cabinets, tub and shower set, and the cost of lumber for
the deck. The trial court concluded that Deborah had a $91,007.00 nonmarital
interest in the property (the fair market value at the time of the marriage plus an
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increase due to general appreciation), and that the parties had a $48,993.00 marital
interest in the property attributable to the various improvements. Deborah has not
provided a citation to any evidence in the record that the funds for improving the
property came from her nonmarital account, or any other nonmarital source of
funds. We decline to search the record for such evidence.
THE SHEEPSKIN PROPERTY
Next, Deborah argues that the trial court erred in determining that the
so-called “Sheepskin property” was Larry’s nonmarital property. The trial court
found that the property had previously belonged to Larry’s mother, and that he had
inherited some portion of it, although a percentage was never provided to the court.
The court further found that Larry had made an agreement with his siblings to
purchase the property prior to the date of his marriage, but that the sale was not
completed until shortly after the marriage. Larry used his 1998 tax refund and cash
that he had on hand to purchase the property for $39,000.00. The court found that
the property was nonmarital and restored it entirely to Larry.
Deborah argues that the trial court failed to consider that Deborah and
Larry filed a joint income tax return for the year 1998 (they were married in
December 1998); and that during that year their salaries were almost equal. She
also points to her testimony that she and Larry decided to purchase the property
together, and that she wrote the check herself from an account that contained joint
funds from both their wages. Deborah has provided no citations to the record to
assist us in locating and reviewing this evidence.
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On the other hand, Larry has not filed a cross-appellee’s reply brief
contesting these assertions. Under these circumstances,
CR 76.12(8)(c) provides three alternative avenues
of action for an appellate court - all essentially punitive
to the appellee:
If the appellee's brief has not been filed within the
time allowed, the court may: (i) accept the appellant's
statement of the facts and issues as correct; (ii) reverse
the judgment if appellant's brief reasonably appears to
sustain such action; or (iii) regard the appellee's failure as
a confession of error and reverse the judgment without
considering the merits of the case.
The decision as to how to proceed in imposing
such penalties is a matter committed to our discretion.
Roberts v. Bucci, 218 S.W.3d 395, 396 (Ky. App. 2007) (internal citations
omitted).
We must therefore balance Larry’s failure to file a brief with
Deborah’s failure to provide any citations to the record to support her argument.
We note that even if we accept the appellant’s statement of facts and issues as
correct pursuant to CR 76.12(8)(c)(i), “[w]here those facts conflict with findings of
fact by the trial court, however, we may accept them only where we can say that
the trial court's findings are clearly erroneous.” Whicker v. Whicker, 711 S.W.2d
857, 858-59 (Ky. App. 1986) (citations omitted). We cannot say that the trial
court’s findings are clearly erroneous in regard, and its judgment as to this issue is
therefore affirmed.
THE FIDELITY ACCOUNT
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Thirdly, Deborah argues that the trial court erred in its division of
Larry’s Fidelity account. As we have already noted, the court found that Larry had
the account at the time of the marriage, and that it contained a balance of
approximately $29,000.00. During the course of the marriage, the trial court found
that he had deposited $27,000.00 in marital wages into the account. Seventeenthousand dollars was withdrawn from the account during the marriage to purchase
a Buick. The trial court found the vehicle to be Larry’s nonmarital property and
awarded it to him. It found that $12,000.00 in nonmarital funds would have
remained in the account. The court further found that $21,500.00 was withdrawn
from the account after the separation to purchase a bulldozer. The court ordered
the bulldozer sold and $12,000.00 restored to Larry as the remainder of his
nonmarital property. Any remaining proceeds from the sale of the bulldozer were
to be divided equally between the parties. The court also found that Larry had
expended $12,000.00 in nonmarital funds from the account for a down payment for
a tractor. Therefore, the court found that Larry had nonmarital property stemming
from the account that totaled $41,000.00 (the Buick, the bulldozer and the tractor
down payment). But as Deborah has pointed out, this contradicts the trial court’s
finding that only $29,000.00 of the account was nonmarital. Therefore, some of
the funds for these purchases must have come from the $27,000.00 in marital funds
deposited there in the form of wages during the course of the marriage. Put
another way, $12,000.00 of the funds from the account that were awarded to Larry
as his nonmarital property must have come from the $27,000.00 in marital funds in
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the account. We agree with Deborah that the trial court’s findings were erroneous,
and remand for further findings on this issue. Ultimately, such a finding may not
affect the trial court’s final disposition of the property, since Larry was presumably
also entitled to some share of the marital funds in the account.
THE MARATHON ACCOUNT
Fourthly, Deborah argues that the trial court erred in its distribution of
the funds in the Marathon Ashland Petroleum benefit. The trial court found that
Larry received a total distribution of $611,431.60, which it described as a lump
sum pension benefit for his thirty-five years of service with the company. The trial
court initially found that 7/35 of that amount constituted marital property. It later
reduced that award to 5.5/35, presumably to reflect the fact that the couple had
been married during 5.5 of the 35 years that Larry worked at Marathon. Of that
amount, $96,082.11, the court awarded Deborah $45,541.06 and Larry $50,541.05.
Deborah argues that there is no support for any of the trial court’s findings because
Larry submitted no evidence that the lump sum distribution was a retirement
benefit. She further contends that the trial court failed to take into account that
Larry’s salary increased greatly during the years that he was married to Deborah,
and that this should have been reflected in the trial court’s calculation of the
marital portion of the fund. She also argues that the trial court erred in failing to
give an explanation for why Larry was awarded a larger share of the marital
portion.
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We are again confronted with the problem that Deborah has given no
references to the record and Larry has not filed a reply brief. It should be noted
that in her motion to alter, amend or vacate the trial court’s first order, Deborah
stated that
the court has misunderstood the payment of $611,431.60
by Marathon. It was not a retirement benefit.
Respondent had been employed by Ashland
Oil/Marathon Oil for 35 years and had only $290,000.00
(as found by the court) in his retirement account. It is
inconceivable Marathon would suddenly give
Respondent $611,431.60 when he was a few years from
retirement. The payment made by Marathon to
Respondent was to pay him for his next five years
expected wages. Essentially, his employment was
bought out and he was paid not to work.
In its order and amended judgment, the trial court addressed this argument as
follows:
Petitioner’s counsel further advised the Court that she
had no additional evidence to present regarding
Respondent’s retirement related accounts and lump sum
distribution. It was Petitioner who had, in her motion to
alter, amend or vacate, argued that the Court had
misunderstood the nature of Respondent’s lump sum
distribution.
Although we are well aware that the burden of proof rests on the party claiming
that property is nonmarital, in this situation surely the burden was on Deborah to
provide some evidence to the trial court that its characterization of the payment
from Marathon was erroneous. Furthermore, she has provided no legal support for
the contention that if the payment was indeed a form of future salary buyout that
any of it was necessarily marital property. Furthermore, she never raised the issues
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of the impact of Larry’s salary increase or why Larry was awarded a larger
percentage of the marital portion before the trial court. The trial court’s ruling on
this issue is therefore affirmed.
THE PERSONAL PROPERTY
Finally, Deborah argues that the trial court erred in failing to divide all
of the personal property of the parties. She contends that she and Larry “purchased
various items of personalty during the marriage, none of which were contained in
the Findings of Fact by the trial court judge, or divided in just proportions.”
Deborah has failed to give any description of these items of personalty. This lack
of specificity means that we are unable to address this argument.
For the foregoing reasons, the judgment of the circuit court is affirmed
as to all items except (1) the ASC funds used to finance in part the construction of
the barns and (2) the proportion of marital and nonmarital funds in the Fidelity
account, specifically as this relates to the purchase of the Buick, the tractor and the
bulldozer. These two issues are remanded to the trial court for further findings,
and if necessary, a reapportionment of the marital property in light of these
findings.
ALL CONCUR.
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BRIEF AND ORAL ARGUMENT
FOR APPELLANT:
BRIEF AND ORAL ARGUMENT
FOR APPELLEE:
W. Jeffrey Scott
Grayson, Kentucky
MaLenda S. Haynes
Grayson, Kentucky
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