LEWIS (JANIE GREER) VS. LEWIS (JAMES RANDOLPH)
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RENDERED: AUGUST 14, 2009; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2007-CA-001112-MR
&
NO. 2007-CA-001149-MR
JANIE GREER LEWIS
v.
APPELLANT/CROSS-APPELLEE
APPEAL AND CROSS-APPEAL FROM LAUREL CIRCUIT COURT
HONORABLE PAUL E. BRADEN, JUDGE
ACTION NO. 01-CI-00783
JAMES RANDOLPH LEWIS
APPELLEE/CROSS-APPELLANT
OPINION
2007-CA-001112-MR – AFFIRMING;
2007-CA-001149-MR – AFFIRMING IN PART, REVERSING
IN PART, AND REMANDING
** ** ** ** **
BEFORE: MOORE, THOMPSON, AND WINE, JUDGES.
WINE, JUDGE: Janie Greer Lewis (“Janie”) and James Randolph Lewis
(“Randy”) appeal from a judgment of the Laurel Circuit Court dissolving their
marriage. Janie failed to properly preserve her objections to the trial court’s
rulings relating to division of marital property, restoration of non-marital property,
maintenance, attorney fees and costs. We find that none of the issues which she
raises on appeal rise to the level of palpable error. In his cross-appeal, Randy
challenges the trial court’s findings regarding division of marital property and
debts, restoration of non-marital property, maintenance, and costs. For the most
part, the trial court’s rulings on these matters are neither clearly erroneous nor an
abuse of discretion. However, we agree with Randy that the trial court applied the
wrong standard by allocating to him the entire cost of a court-appointed expert.
Hence, we affirm in part, reverse in part, and remand for additional findings and
entry of an amended judgment.
Procedural History
The parties were married on June 1, 1990. One child was born of the
marriage. In 2000, the parties separated, but subsequently reconciled. During the
initial separation, the parties entered into a reconciliation agreement in which,
among other things, Randy agreed to pay Janie $9,000.00 in maintenance. The
reconciliation was short-lived, and Janie filed this action to dissolve the marriage
on September 10, 2001.
On Janie’s motion, the trial court entered an order on October 15,
2001, which adopted the provisions of the reconciliation agreement relating to
maintenance. In 2003, the trial court reduced Randy’s maintenance obligation to
$6,000.00 per month, retroactive to October 29, 2001. After voluminous
discovery, the trial court entered a bifurcated decree of dissolution on March 24,
2006. The parties were granted joint custody of the child, with Janie designated as
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the primary residential custodian. Custody and child support are not at issue in this
appeal.
The court referred the remaining matters to the domestic relations
commissioner (“DRC”) for a hearing and recommended findings. The unresolved
issues remaining for adjudication involved restoration of non-marital property,
division of marital property, assignment of responsibility for payment of debts,
credits due either party for payment of debts, Janie’s request for maintenance, and
attorney fees and costs. Following a hearing, the DRC issued a report with
proposed findings of fact and conclusions of law and judgment on February 19,
2007.
Both Janie and Randy filed objections to the DRC’s report, but Janie’s
objections were not timely. Consequently, the trial court summarily overruled her
objections. However, the trial court also overruled Randy’s objections and adopted
the DRC’s proposed judgment on March 30, 2007. Thereafter, Randy filed a
motion to alter, amend or vacate pursuant to Kentucky Rules of Civil Procedure
(“CR”) 59.05. On April 25, 2007, the trial court amended the judgment to correct
a factual error, but otherwise denied Randy’s motion. We will set out additional
facts below as necessary.
Issues on Appeal and Cross-Appeal
In her direct appeal, Janie argues that the trial court erred in
calculating Randy’s non-marital interest in several businesses, including Lewis
L.P. Gas, Inc. (“Lewis L.P. Gas”) and Flea Land Flea Market, Inc., (“Flea Land”).
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She also contends that the trial court erred in calculating Randy’s non-marital
interest in the marital residence, in determining the amount and duration of
maintenance, and in setting the amount of her award of attorney fees and costs. In
his cross-appeal, Randy also challenges the trial court’s calculation of his nonmarital interest in Lewis L.P. Gas and Flea Land. In addition, Randy argues that
the trial court erred in its factual findings concerning the parties’ respective
contributions to accumulation of marital assets, the distribution of the stock of
Randy Lewis, Inc., the distribution of household furnishings and personal property,
assignment of debts, and the award of attorney fees and costs to Janie.
Preservation
As an initial matter, Randy argues that Janie failed to preserve her
objections to the DRC’s findings regarding the disposition of assets. After the
DRC issued his proposed findings of fact, conclusions of law and judgment, the
Laurel Circuit Clerk notified the parties that they had ten days to file exceptions
from the recommended order. On February 28, 2007, Janie filed a motion to alter,
amend or vacate or vacate the DRC’s report. On March 1, 2007, the trial court
issued an order advising the parties that there was no provision under CR 53.06 for
a motion to alter, amend or vacate a commissioner’s report.
After receiving the court’s order, Janie’s counsel filed a document
styled “Exceptions to Commissioner’s Report.” However, the document merely
stated that the report was entered on February 19, received on February 23, and
that a detailed memorandum enumerating specific objections would follow within
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two weeks. Randy filed timely and detailed exceptions to the DRC’s report on
March 6, 2007. He also objected to allowing Janie additional time to submit
detailed objections.
Janie’s counsel eventually served detailed objections to the DRC’s
report on March 13, 2007. After receiving her pleading, Randy moved to strike the
objections or to summarily overrule them as untimely. The trial court agreed and
summarily overruled the objections on March 30, 2007. Randy argues that Janie is
now precluded from raising these issues on appeal.
In general, a party who desires to object to a report must do so as
provided in CR 53.06(2) or be precluded from questioning on appeal the action of
the circuit court in confirming the commissioner's report. Eiland v. Ferrell, 937
S.W.2d 713, 716 (Ky. 1997). While a trial court has the discretion to summarily
overrule untimely objections, it is not required to do so. Id. at 717. In this case,
however, the trial court summarily overruled Janie’s objections as untimely. Janie
does not contend that the trial court abused its discretion by declining to consider
her untimely objections.
Nevertheless, Janie contends that this Court is authorized to consider
these issues under the palpable error standard of CR 61.02. We agree. The plain
language of that rule allows an appellate court to consider a claim of palpable error
even though the issue was not properly preserved before the trial court. Herndon
v. Herndon, 139 S.W.3d 822, 826-27 (Ky. 2004). Furthermore, Randy also
appeals from the trial court’s calculation of his non-marital interest in these assets.
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Thus, we may address Janie’s assignments of error to the extent that these issues
are already presented in Randy’s cross-appeal.
Increase in value of non-marital assets during marriage
The central issue in both Janie’s appeal and Randy’s cross-appeal
concerns the trial court’s calculation of Randy’s non-marital interest in Lewis L.P.
Gas1 and Flea Land. Prior to the marriage, Randy owned 85% of the stock of
Lewis L.P Gas, and a 25% stock ownership interest in Flea Land. The trial court
found that Randy’s interest in Lewis L.P. Gas was worth $1,018,680 as of the date
of the marriage and $1,731,132 as of the date of the parties’ separation, resulting in
an increase of $712,452.00 during the marriage. Similarly, the court found that
Randy’s interest in Flea Land2 was worth $20,047.00 as of the date of the marriage
and $577,214.00 as of the date of the parties’ separation, resulting in an increase of
$557,167.00. The trial court found that 20% of the increase in the value of these
interests was attributable to the joint efforts of the parties, and divided that interest
equally.
Randy takes issue with the sufficiency of the evidence supporting the
court’s finding that Lewis L.P. Gas increased in value over the course of the
marriage. Nevertheless, he maintains that the trial court erred in finding that any
1
Earlier in the dissolution proceedings, Lewis L.P. Gas was the subject of an original action
before the Kentucky Supreme Court. Lewis LP Gas, Inc. v. Lambert, 113 S.W.3d 171 (Ky.
2003), abrogated on other grounds in Hoskins v. Maricle, 150 S.W.3d 1 (Ky. 2004). The trial
court issued a restraining order prohibiting Randy from selling the corporation’s shares in
FerrellGas. The Kentucky Supreme Court granted injunctive relief, concluding that the trial
court lacked jurisdiction over the corporation or its non-party shareholders.
2
Randy was only one of several investors in Flea Land.
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portion of the increase in value of either business was attributable to the joint
efforts of the parties. For her part, Janie accepts the trial court’s valuations as to
both businesses. However, she argues that the increase in their respective values
should be deemed to be entirely marital.
Under Kentucky Revised Statute (“KRS”) 403.190(2), “marital
property” includes all property acquired during the marriage by either spouse
subsequent to the marriage. However, the statute excludes ‘[t]he increase in value
of property acquired before the marriage to the extent that such increase did not
result from the efforts of the parties during marriage.” KRS 403.190(2)(e). As a
result, when the property includes an increase in the value of an asset containing
both marital and non-marital components, the trial court must determine from the
evidence why the increase in value occurred. Travis v. Travis, 59 S.W.3d 904, 910
(Ky. 2001). If the increase in value was due to general economic conditions, then
the increase is deemed to be non-marital. But if the increase is due to the “team”
efforts of the parties, then the increase in value is marital. Sharp v. Sharp, 491
S.W.2d 639, 644 (Ky. 1973).
The term “efforts of the parties” should not be construed narrowly to
require active involvement by both spouses in the development of the asset.
Rather, the efforts of the parties may include the contribution of one spouse as a
primary operator of the business and the other spouse as primarily a homemaker.
Goderwis v. Goderwis, 780 S.W.2d 39, 40 (Ky. 1989). Moreover, KRS 403.190(3)
creates a presumption that any such increase in value is marital property.
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Therefore, a party asserting that he or she should receive appreciation upon a nonmarital contribution as non-marital property carries the burden of proving the
portion of the increase in value attributable to the non-marital contribution.
Otherwise, the increase will be characterized as marital property. Travis, 59
S.W.3d at 910-11.
In this case, there was evidence that Janie contributed to the business
operations of both Lewis L.P. Gas and Flea Land. As the trial court noted, Janie
actively solicited accounts and negotiated contracts on behalf of Lewis L.P. Gas.
She also met with clients, answered phones and ran errands for the bookkeeper.
Likewise, she contributed to the operation of Flea Land by initiating the company’s
annual Christmas dinner for vendors and starting the bingo operation. In addition,
Janie contributed to the marriage as a homemaker and primary caretaker of the
child. Although Randy takes issue with the extent of these contributions, we
cannot say that the trial court clearly erred by finding that the increase in value of
these businesses was at least partially attributable to the efforts of both parties.
The more difficult question concerns the trial court’s finding that only
20% of the increase was attributable to the efforts of the parties. This matter is
further complicated because Janie failed to preserve her objection to the DRC’s
finding. Thus, our review is limited to palpable error resulting in “manifest
injustice”. However, the classification of an asset as marital or non-marital
property “involves an application of the statutory framework for equitable
distribution of property upon divorce and therefore constitutes a question of law
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subject to this Court's independent determination.” Holman v. Holman, 84 S.W.3d
903, 905 (Ky. 2002). However, we will not disturb the trial court’s factual
findings if they are supported by substantial evidence. CR 52.01. See also OwensCorning Fiberglas Corp. v. Golightly, 976 S.W.2d 409, 414 (Ky. 1998).
If this were only a question of law, we might find that the trial court
committed palpable error in concluding that only 20% of the increase in value in
the businesses was due to the efforts of the parties. As previously noted, Janie
presented substantial evidence showing her contributions to the marriage generally
and to the operation of the businesses in particular. However, the trial court set out
additional evidence supporting the conclusion that a significant portion of the
increase was due to general economic conditions. With regard to Lewis L.P. Gas,
the court stated:
[Randy] offered the testimony of several
witnesses, including Jan McPhetridge, Judy Sexton, the
manager of Lewis LP Gas, Inc., and Larry Willis, the
company’s certified public accountant. The essence of
their testimony was that the entity struggled financially
for several years prior to its sale in 1997. Mr. Willis
testified that the entity was at the point of a forced sale
and that the book value of the stock in the entity had
decreased from 1990 to 1997 by $400,000.
Perhaps the most focused and credible evidence on
this issue is that provided by [Janie’s] expert, J. Michael
Cloyd. Mr. Cloyd prepared correspondence to [Janie’s]
counsel dated September 10, 2002, in which he
articulates concerns regarding the report of value created
by [Randy’s] expert, John Craft.
Mr. Cloyd disputes Mr. Craft’s finding that the
1997 sale of the entity to FerrellGas was a fair market
sale. Mr. Cloyd states that the 1997 [sale] was an
investment sale peculiar to the particular investment
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requirements of FerrellGas. He discusses the fact that
FerrellGas converted from a privately owned company to
a Master Limited Partnership in 1994, a move
unprecedented in the propane industry, and one designed
to give FerrellGas greater financial ability to expand its
operations by strategically acquiring smaller operations
such as Lewis LP Gas, Inc. Mr. Cloyd concluded that the
passage of two federal acts, the Clean Air Act in 1990
and the National Energy Policy Act in 1992, made the LP
gas business much more attractive and was the
fundamental motivation behind FerrellGas’ strategic
initiative to acquire entities such as Lewis LP Gas, Inc.
In separate correspondence to [Janie’s] counsel
dated September 4, 2002, Mr. Cloyd commented upon
the historical financial statements of Lewis LP Gas, Inc.
His findings mirrored the same story told by the
testimony of [Randy’s] witnesses concerning the
company’s financial performance. He concludes that the
historic financial statements reflect a flat performance by
the company between 1991 and 1997, that the book value
of the company had decreased from 1991 to 1997, and
that the selling price of the company had “very little
relationship” to the assets recorded on the books. In a
most telling comment, Mr. Cloyd states that “while we
do not have sufficient information to assess all the factors
involved in arriving at the selling price of the company in
1997, it certainly appears that the increase in value
occurred during the marriage and is largely the result of
the Congressional Acts referred to on the attached
information sheets and FerrellGas M.L.P.’s decision to
aggressively acquire and retain operations throughout the
United States.”
Similarly, the trial court set out the evidence relating the increase in
the value of Flea Land during the marriage.
[Randy] again offered the testimony of witnesses,
including Brenda Hail, the manager of Flea Land[,] and
Larry Willis, the company’s certified public accountant.
The essence of their testimony was that [Randy’s] father,
Audley Lewis, and Ms. Hail managed the day to day
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operations of the entity. [Randy] was never employed in
the entity and never received a salary from the entity.
Larry Willis testified that he dealt only with Ms.
Hail and [Randy’s] father as concerned the accounting
issues. He testified that neither [Janie] nor [Randy] had
any active involvement in the operation of Flea Land.
When asked concerning Flea Land in her
deposition testimony given September 14, 2002, [Janie]
acknowledged that “basically it was always the manager
who ran the business.” [Janie] testified that she would
occasionally help out in the office or in the concessions
area and that she conceived of and originally organized
an annual Christmas dinner for the employees and
vendors in the market.
Based on this evidence, the trial court found that Randy had met his
burden of proving that a substantial portion of the increase in the value of both
Lewis L.P. Gas and Flea Land was not the result of the efforts of the parties. Since
this factual finding was supported by substantial evidence, we will not disturb it.
There is less evidence to support the trial court’s finding attributing 80% of the
increase in value to general economic conditions. But since Janie failed to
properly preserve her objections to this finding, we cannot say that the trial court’s
allocation amounted to palpable error in this case.
Sufficiency of the evidence supporting valuation
Randy also argues that the trial court erred by relying on the report of
court-appointed expert Calvin Cranfill, who placed a value on Lewis L.P. Gas.
Randy states that Cranfill’s report was not properly admitted because it was not
sworn or subject to cross-examination. However, Randy did not object to the
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admission of Cranfill’s report on this basis. Therefore, any issue regarding its
admissibility is not preserved for review.
Moreover, a trial court has discretion to appoint an expert in any
matter involving the valuation of marital or non-marital property in a dissolution
proceeding. Robinson v. Robinson, 569 S.W.2d 178, 180 (1978), overruled on
other grounds in Brandenburg v. Brandenburg, 617 S.W.2d 871 (Ky. App. 1981).
Likewise, Kentucky Rule of Evidence (KRE) 706 permits the court to appoint
experts. The parties have a right to be advised of the expert’s findings, to take the
witness’s deposition, and to call the witness to testify on direct or crossexamination. But in the absence of such a request, the rule does not anticipate that
an appointed expert’s report be sworn in the conventional sense. Since Randy
makes no showing that he requested to examine Cranfill under oath, we find that
the trial court did not err by considering his report as evidence in this case.3
Randy also takes issue with Cranfill’s methodology in placing values
on Lewis L.P. Gas and Flea Land. With regard to Lewis L.P. Gas, Randy notes
that Cranfill did not interview any employees or directly review the corporation’s
books or records. Randy raises similar objections to Cranfill’s valuation of Flea
3
Randy states that he preserved this issue in his “Position Memorandum” filed on June 16, 2006.
Record on Appeal [ROA] at pp. 3977-4041. On page 3 of the memorandum, Randy notes that
the trial court appointed Cranfill to do his own valuation of the businesses and to review the
other financial aspects of the case. Randy adds that “[t]he parties were not afforded an
opportunity to depose Mr. Cranfill and his report was submitted without any opportunity to take
Mr. Cranfill’s deposition.” However, Randy does not state that he ever made a request to depose
Cranfill.
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Land. He also asserts that Cranfill erroneously included in his valuation property
that is not owned by Flea Land.
However, it is well established that issues relating to weight and
credibility of evidence are within the sole province of the fact-finder and generally
will not constitute grounds for reversal on appeal. See Frances v. Frances, 266
S.W.3d 754, 756 (Ky. 2008). See also CR 52.01. Although Randy raises several
general objections to Cranfill’s methodology with respect to Lewis L.P. Gas, he
does not identify flaws which are so significant as to undermine the trial court’s
basis for relying on his report. As to Flea Land, the trial court’s judgment
addressed the additional acreage in its findings, specifically assigning that acreage
to Randy as his non-marital property. Finding no clear error, we affirm the trial
court’s conclusions on these matters.
Division of Marital Residence
Janie next challenges the trial court’s valuation and division of the
marital equity in the parties’ residence. The trial court found that the property was
worth $196,000.00 and was encumbered by a $115,000.00 mortgage at the time of
the marriage. Consequently, the court concluded that Randy had an $81,000.00
non-marital interest in the residence. The court further found that the property was
worth $291,500.00 and was encumbered by a mortgage of $18,454.72 as of the
date of separation. Based on these findings, the trial court concluded that the
property had marital equity of $192,045.28. The court awarded the residence to
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Janie, subject to an offset to Randy of $177,022.64, representing his marital and
non-marital equity in the property.
Janie takes issue with several aspects of the trial court’s findings.
First, she notes that the trial court based its starting valuation on a 1986 appraisal
of the property – some four years prior to the marriage. Janie contends that there
was no basis for the trial court to assume that the 1986 appraisal reflected the value
of the property in 1990. Janie also argues that the trial court failed to credit her
with contributions of her non-marital property.4 Lastly, Janie alleges that the trial
court should not have deducted the remaining balance on the marital mortgage
because Randy diverted marital funds during their separation to pay a non-marital
debt.
As previously noted, Janie did not preserve these issues for review by
filing timely exceptions to the DRC’s report. Furthermore, she did not make a
request for additional findings pursuant to CR 52.04. Moreover, her pre-hearing
statement does not identify any issues relating to the division of the marital
residence. See Regional Jail Authority v. Tackett, 770 S.W.2d 225, 228 (Ky.1989),
and CR 76.03(8). In the absence of any sufficient effort to preserve these issues
for review, we decline to consider them even under the palpable error rule.
Maintenance
4
In 2003, the trial court directed that most of the parties’ vehicles be sold at auction and the
proceeds be applied toward the balances of the non-marital and marital mortgages. Janie states
that two of the vehicles were her non-marital property, and that she is entitled to a credit for her
non-marital contribution to payment of the non-marital mortgage. The trial court noted Janie’s
non-marital interest in the vehicles. However, the court did not specifically account for that
interest in its allocation of property.
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The trial court awarded rehabilitative maintenance to Janie for two
years, in the amounts of $3,500.00 per month for the first year and $2,500.00 per
month for the second year. Janie maintains that this award is inadequate
considering the length of the marriage and extent of Randy’s assets. In his crossappeal, Randy argues that Janie was not entitled to any additional maintenance
considering the amount of assets she received in the dissolution and the temporary
maintenance she received during the six years this action was pending.
An award of maintenance is within the sound discretion of the court
and will not be disturbed on appeal absent an abuse of discretion. Gentry v.
Gentry, 798 S.W.2d 928 (Ky. 1990); Perrine v. Christine, 833 S.W.2d 825 (Ky.
1992). When determining whether an award of maintenance is appropriate, KRS
403.200(1) requires the trial court to find that the spouse seeking maintenance: (1)
lacks sufficient property, including marital property apportioned to her, to provide
for her reasonable needs; and (2) is unable to support herself through appropriate
employment. Once the court determines that maintenance is appropriate, KRS
403.200(2) further directs the court to consider the following factors in setting the
amount and duration of maintenance:
(a) The financial resources of the party seeking
maintenance, including marital property apportioned to
[her], and [her] ability to meet [her] 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;
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(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 while meeting those of the
spouse seeking maintenance.
The amount and duration of maintenance are within the sound
discretion of the trial court. Gentry, 798 S.W.2d at 937. “As an appellate court . . .
this Court is [not] authorized to substitute its own judgment for that of the trial
court on the weight of the evidence, where the trial court's decision is supported by
substantial evidence.” Leveridge v. Leveridge, 997 S.W.2d 1, 2 (Ky. 1999).
The trial court set out extensive findings supporting its conclusion to
award temporary maintenance. The court first noted the Janie is 42 years of age,
has no substantial employment history, and provides primary care for the parties’
son. Although Randy is nearing retirement age, his income from all sources
exceeds $400,000.00 a year. And while Janie reports significant income from a
non-marital family corporation, the trial court found that most of these
disbursements are “pass-through” income which must be applied toward Janie’s
income tax obligation.
On the other hand, the trial court also noted that Janie suffers no
disabilities that prevent her from being gainfully employed and the parties’ child
does not require any special care. In addition, Janie received extensive temporary
maintenance during the six years that this matter was pending, and the trial court
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awarded her a substantial amount of marital assets. In separate portions of the trial
court’s judgment, the trial court also noted Janie’s testimony regarding her
involvement in the operation of Lewis L.P. Gas, Flea Land, and a clothing store
called Scruples. Given these findings, the trial court’s award of limited,
rehabilitative maintenance does not amount to palpable error.
Randy suggests that Janie was not entitled to any maintenance, but he
does not seriously argue that the trial court’s award was an abuse of discretion.
But he also contends that the trial court erred by failing to credit him for
overpayment of pendente lite maintenance. As previously noted, the trial court
awarded temporary maintenance of $9,000.00 per month pursuant to the parties’
reconciliation agreement, and later reduced that amount to $6,000.00 per month,
retroactive for October 29, 2001. Randy maintains that the latter amount still
exceeded Janie’s reasonable needs, and consequently he is entitled to a credit for
the overpayment.
We find no abuse of discretion. Randy sought a credit for
overpayment in his pleadings before the DRC and the trial court, but none of the
trial court’s orders directly address the issue.5 However, he does not allege that he
paid more maintenance than the trial court ordered him to pay. Rather, Randy
5
We note that Randy’s appellate brief does not provide any citations as to where the issue was
preserved for review. CR 76.12(4)(c)(v). We would remind Randy that this Court is not obliged
to scour the record on appeal to ensure that an issue has been preserved. See Phelps v. Louisville
Water Co., 103 S.W.3d 46, 53 (Ky. 2003). Nevertheless, Randy did raise this issue in his
“Position Memorandum” before the DRC and in his objections to the DRC’s proposed judgment.
ROA at 4034-35, 4897-98. Therefore, we will address the issue despite the inadequate citation
to the record.
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merely alleges that the temporary maintenance award was excessive in light of
Janie’s actual reported expenses. A temporary maintenance order is interlocutory
and not subject to appeal. See Cannon v. Cannon, 434 S.W.2d 48 (Ky. 1968).
Furthermore, the DRC’s report, as adopted by the trial court, cited the amount and
duration of the temporary maintenance award as a factor in its award of limited,
rehabilitative maintenance. Under the circumstances, we are satisfied that the trial
court adequately considered Janie’s receipt of temporary maintenance in its final
maintenance award.
Attorney Fees and Costs
Similarly, both parties appeal from the trial court’s award of attorney
fees to Janie. The trial court ordered Randy to pay $20,000.00 toward Janie’s
attorney fees. Janie maintains that the award of attorney fees and costs was
inadequate, alleging that she has incurred over $150,000.00 in attorney fees. She
also asserts that Randy was responsible for most of the acrimony of the dissolution
proceedings while it was pending over a six-year period. And Janie again notes the
wide disparity in the parties’ income. Based on these factors, Janie contends that
the trial court abused its discretion in its award of attorney fees.
We disagree. As previously noted, Janie did not adequately preserve
this issue for appeal. Furthermore, even where there is a disparity in the relative
financial resources of the parties, the trial court retains broad discretion under KRS
403.220 to determine the appropriate amount of attorney fees. Neidlinger v.
Neidlinger, 52 S.W.3d 513, 519 (Ky. 2001). The trial court “is in the best position
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to observe conduct and tactics which waste the court's and attorneys' time and must
be given wide latitude to sanction or discourage such conduct.” Gentry v. Gentry,
798 S.W.2d 928, 938 (Ky. 1990).
From the record, it is clear that both parties bear some responsibility
for the length and contentiousness of the dissolution proceedings before the trial
court. And while there remains a disparity between the parties’ resources, Janie
retains a significant amount of marital and non-marital assets. Thus, we can find
no abuse of discretion in the trial court’s award of attorney fees, much less
palpable error.
Randy also argues that the trial court abused its discretion by
apportioning the entire expert-witness fee to him. In an earlier order, the trial court
directed that Randy pay Cranfill’s expert witness fee of $13,968.78, but suggested
that the expense may be subject to apportionment at a later date. In its final order,
however, the trial court assigned the entire expense to him, noting that the funds
which Randy used to pay the fee are presumed to be marital assets.
While this is true, the court’s reasoning misses the point. First, the
trial court’s earlier order directed Randy to pay the fee. Moreover, the trial court
should not have treated Cranfill’s expert witness fee as a martial debt, but as a cost
of the proceedings. Furthermore, both parties clearly received a benefit from
Cranfill’s services as an expert.
We recognize that the apportionment of such costs is within the sound
discretion of the trial court under KRS 403.220. Culver v. Culver, 572 S.W.2d
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617, 622 (Ky. App. 1978). See also KRE 706(b). For this reason, the trial court
may have been well within its discretion to assign this expense entirely to Randy
given the appropriate findings. However, we find that Randy is entitled to have the
decision made under the correct standard. Therefore, we must reverse the trial
court’s decision on this matter and remand for additional findings and an amended
judgment.
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Randy’s Cross-Appeal
Division of marital property
In his appeal, Randy raises a number of additional arguments
concerning the trial court’s division of the marital property. First, Randy argues
that the trial court clearly erred by finding that the parties had contributed equally
to the accumulation of marital assets. He contends that Janie’s spending habits and
her operation of the clothing store Scruples negatively affected the parties’
accumulation of marital property. Randy maintains that the trial court’s finding
wrongly led it to equally divide the marital property.
As previously noted, the trial court’s factual findings will not be
disturbed absent clear error. Furthermore, the “efforts of the parties” may include
the contribution of one spouse as a primary operator of the business and the other
spouse as primarily a homemaker. Goderwis v. Goderwis, supra at 40. Janie
clearly contributed to the marriage as a homemaker and primary caretaker for the
child. In addition, she also assisted with the operation of Lewis L.P. Gas and Flea
Land. While Randy takes issue with Janie’s spending habits and business
decisions, he does not allege that Janie’s conduct amounted to a dissipation of
marital assets. Thus, the trial court did not clearly err by finding that the parties’
contributions to the accumulation of marital property were roughly equal.
Next, Randy takes issue with the trial court’s division of the stock
interest in Randy Lewis, Inc. Randy Lewis, Inc., is a trucking business enterprise
located in London, Kentucky, that specializes in the transportation of propane,
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asphalt and other construction materials. The DRC concluded that the stock
interest in Randy Lewis, Inc., was a marital asset. However, the DRC further
found that neither party had presented sufficient evidence to place an accurate
value on the entity as a continuing enterprise. The DRC considered and rejected
various options for dividing the assets as not feasible. Consequently, the DRC
recommended that the parties be directed to negotiate a private disposition of the
stock interest of Randy Lewis, Inc. In the event that the parties failed to reach an
agreement, the court directed each party to submit a sealed bid to purchase the
other party’s marital interest, with the winning bidder to pay the selling bidder the
amount of his or her bid upon entry of a supplemental judgment. The trial court
adopted the DRC’s recommendation. However, both parties filed notices of appeal
before the trial court entered a supplemental judgment.
Randy contends that this division constituted an abuse of discretion
for several reasons. First, he argues that the trial court erred by failing to place a
value on the corporation’s assets. Second, he asserts that Janie controlled the
operation of Randy Lewis, Inc., throughout the marriage and was better suited to
be assigned the entire asset. He also notes that an award of the income-producing
asset to Janie would have obviated any need for additional maintenance.
Therefore, Randy asserts that the trial court should have assigned the entire stock
interest to Janie.
However, we review the trial court’s decisions regarding division of
marital assets under an abuse of discretion standard. Davis v. Davis, 777 S.W.2d
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230, 233 (Ky. 1989). Randy does not assert that the trial court failed to consider
the factors set out in KRS 403.190(1) in dividing the property. Moreover, he does
not argue that the trial court’s method of dividing the stock interest in the
corporation unfairly deprives him of any of its value. And finally, we question
whether this matter is even ripe for appeal because the parties’ filed their notices of
appeal before the trial court considered their sealed bids. Consequently, we find no
basis for disturbing the trial court’s division of the stock interest in Randy Lewis,
Inc.
Randy also objects to the trial court’s order dividing the household
furnishings and personal property. After awarding Randy specific items requested,
the trial court directed that each party shall keep the remaining household goods
and personal property in their possession without any offset or equalization
payment. Randy contends that the trial court’s division was unfairly skewed in
favor of Janie.
Randy’s argument on this point is not well developed. He primarily
contends that the trial court erred by refusing to assign a value to the inventory of
the now-defunct Scruples clothing store, which he asserts is worth nearly
$160,000.00. The trial court was not convinced that these items had any
appreciable resale value. Since Randy does not refer this court to evidence which
compels a contrary conclusion, we cannot say that the trial court clearly erred in
this finding. Furthermore, Randy did not request any alternate disposition of this
inventory, such as consigning it to auction. Therefore, we cannot find that the trial
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court’s division of the household furnishings and personal property amounted to an
abuse of discretion.
Assignment of Debts
Finally, Randy disputes the trial court’s refusal to credit him for
payment of various marital debts, including a lien against a 1998 Chevy Corvette,
the parties’ 2000 State and Federal income tax liabilities, and the balance owed on
a debt to the First National Bank of Manchester. First, Randy argues that the trial
court improperly required him to reimburse Janie for a lien against a 1998 Chevy
Corvette. As previously noted, the trial court ordered the parties’ vehicles to be
sold at auction in 2003, and the proceeds applied toward various marital debts.
Shortly after that auction, the trial court found Randy in contempt for encumbering
the Corvette in violation of its prior orders. The $17,947.85 lien was paid from the
proceeds of the auction. Consequently, the court’s judgment directed Randy to pay
Janie one-half of this amount, or $8,973.93, representing Janie’s share of the
auction proceeds used to pay off the lien.
Randy asserts that he re-encumbered the Corvette to secure a
replacement note on the marital property. The trial court rejected this assertion. In
the absence of clear error, we are bound by the trial court’s finding.
Secondly, Randy argues that the trial court erred by rejecting his
request to be reimbursed for his payment of the parties’ federal and state tax
liabilities for the year 2000. Although Randy paid these liabilities after the parties
separated, the trial court noted that the debt was clearly marital, and Randy made
-24-
no showing that he used non-martial funds to pay the obligation. Furthermore,
Randy does not elaborate on his suggestion that the trial court applied this standard
inconsistently. Therefore, we find no abuse of discretion. For similar reasons, we
find that the trial court did not abuse its discretion by denying Randy’s request for
reimbursement for the houseboat maintenance and slip rental expenses which he
paid during separation.
Next, Randy argues that the trial court erred by denying his request
for reimbursement for a share of a payment of a note to the First National Bank of
Manchester. The parties incurred the debt to finance the operation of the clothing
store Scruples. The parties had previously agreed that the remaining $45,141.12
balance on the note would be paid from the proceeds of the sale of a houseboat.
The party claiming that a debt is marital has the burden of proof.
Neidlinger, 52 S.W.3d at 523. In making this determination, the trial court should
consider receipt of benefits, the extent of participation, whether the debt was
incurred to purchase assets designated as marital property, whether the debt was
necessary to provide for the maintenance and support of the family, and any
economic circumstances bearing on the parties’ respective abilities to assume the
indebtedness. Id. In this case, however, Randy does not articulate a clear
argument that the debt should be considered non-marital.
Thus, the question on appeal is whether the trial court abused its
discretion by equally allocating the debts between the parties. The allocation of
marital debts is committed to the sound discretion of the trial court. Id. The trial
-25-
court noted that Scruples was a marital business enterprise. As such, the trial court
concluded that the parties should jointly share in the risk of its failure as well as the
benefit of its possible success. The trial court’s reasoning on this point is sound
and will not be disturbed.
Conclusion
Accordingly, the judgment of the Laurel Circuit Court is affirmed in
all respects except for the assignment of the entire expert-witness fee to Randy.
This matter is remanded for further proceedings and entry of an amended judgment
allocating the fee under the standards provided in KRS 403.220.
ALL CONCUR.
BRIEFS FOR APPELLANT/
CROSS-APPELLEE:
BRIEFS FOR APPELLEE/CROSSAPPELLANT:
Michelle L. Hurley
Catesby Woodford
Lexington, Kentucky
Trevor W. Wells
Lexington, Kentucky
Justin Thomas Genco
Stanford, Kentucky
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