DORIS ANN DAVIS V LAWRENCE M DAVIS
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STATE OF MICHIGAN
COURT OF APPEALS
DORIS ANN DAVIS,
UNPUBLISHED
November 9, 1999
Plaintiff-Appellant/Cross-Appellee,
v
No. 208755
Arenac Circuit Court
LC No. 96-005311 DO
LAWRENCE M. DAVIS,
Defendant-Appellee/Cross-Appellant.
Before: Bandstra, C.J., and Jansen and Whitbeck, JJ.
PER CURIAM.
Plaintiff appeals as of right from a judgment of divorce, challenging the trial court’s property
distribution. Defendant cross-appeals, claiming that the trial court’s valuation of one asset was based on
the wrong valuation date. We affirm in part, reverse in part, and remand for further proceedings.
We review the trial court’s findings of fact regarding which assets are included in the marital
estate and regarding the valuation of those assets for clear error, and we will reverse only if we are left
with the definite and firm conviction that a mistake has been made. Byington v Byington, 224 Mich
App 103, 109; 568 NW2d 141 (1997); Draggoo v Draggoo, 223 Mich App 415, 429; 566 NW2d
642 (1997). If the court’s findings of fact are upheld, we then review its dispositional rulings regarding
the division of the marital estate to determine whether they were fair and equitable in light of the facts,
and we will reverse only if we are left with the firm conviction that the division was inequitable. Sparks
v Sparks, 440 Mich 141, 151-152; 485 NW2d 893 (1992); Draggoo, supra at 429-430.
We conclude that the trial court’s findings regarding three parcels of real estate were clearly
erroneous. The trial court awarded property on Big Creek Road in AuGres to defendant. This
property was acquired by defendant before he was married to plaintiff. The parties improved the
property by completing an unfinished house, and then used the property for rental income. The trial
court did not include the value of the property itself in the marital estate because it was defendant’s
separate asset. Additionally, the court refused to include the value of the appreciation of the property
during the course of the marriage. Rather, the trial court based its valuation on the value of the
improvements in the marital estate. This was clear error. This Court has held that increases in the value
of property resulting from appreciation over the course of a marriage are part of the marital estate if the
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increase in value is not merely passive. Reeves v Reeves, 226 Mich App 490, 495-497; 575 NW2d 1
(1997). In this case, the parties made improvements to the property and then used it for rental income.
Any appreciation during the marriage was not merely passive, but resulted from the efforts of both
plaintiff and defendant in improving the property. Therefore, the appreciation of this property during the
marriage should have been included in the marital estate. The trial court must determine the amount of
appreciation and include that amount in the marital estate.
The trial court also awarded defendant property on Swenson Road in AuGres. The court
reduced the value of this property by ten percent to reflect the estimated cost of sale if the property
were sold. This was clear error. If the parties to a divorce “have presented evidence that causes the
court to conclude that it would not be speculating in doing so, it may consider the effects of taxation,
stock brokerage and realtor fees, and other inchoate expenses in distributing the assets.” Nalevayko v
Nalevayko, 198 Mich App 163, 164; 497 NW2d 533 (1993). Here, no evidence was presented to
suggest that a sale was contemplated, and it was therefore improper for the court to reduce the value of
this property by a cost-of-sale factor.
The court also awarded defendant property on Davis Road in AuGres, on which the parties
built a home. The court reduced the value of this property by a ten percent cost-of-sale factor. Again,
this was clear error because no evidence was presented to suggest that a sale was contemplated. Id.
Additionally, the court deducted the value of the land itself, including in the marital estate only the value
of the house on the property. Defendant contends that this was not error because the property was a
gift to him from his mother. However, the parties used the property as the location on which to build a
home together. Both parties contributed to the construction of the home, and they planned to retire
there together. In Heike v Heike, 198 Mich App 289, 293; 497 NW2d 220 (1993), this Court
affirmed a trial court’s holding that money given to the parties by the plaintiff’s mother during the
marriage as a gift was part of the marital estate, where the money was used as a down payment on the
marital home. Similarly, in this case, the property was given to defendant during the marriage, and the
parties used it as the location for their future marital home. Under these circumstances, it was clear
error for the trial court to exclude the value of the land from the marital estate.
Plaintiff argues that the trial court’s distribution of the marital assets was inequitable. We need
not address this issue because we conclude that the trial court’s factual findings regarding the value of
three properties in the marital estate was erroneous. On remand, that will necessitate a new order of
distribution. However, to provide guidance to the trial court, we briefly consider plaintiff’s arguments
that the trial court’s distribution was inequitable.
Plaintiff contends that defendant’s separate assets should have been invaded to provide an
equitable distribution. Generally, the separate assets of a spouse are not included in the property
distribution, but those assets may be invaded when one of two statutory exceptions is met. Reeves,
supra at 494. The first exception is that if the award to one spouse is “insufficient for the suitable
support and maintenance” of that spouse, then the court may also award that spouse assets that are part
of the separate estate of the other spouse. Id., quoting MCL 552.23(1); MSA 25.103(1). This has
been held to require the spouse seeking to invade separate assets to demonstrate additional need.
Reeves, supra. Plaintiff has failed to make this showing, merely asserting that because plaintiff retired
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from her job based on defendant’s representations to her that he would soon retire and join her in the
Davis Road home, the court should have invaded defendant’s separate assets.
The second exception is that separate assets of a spouse may be invaded where the other
spouse “contributed to the acquisition, improvement, or accumulation of the property.” Id. at 494-495,
quoting MCL 552.401; MSA 25.136. The trial court may include in the property distribution such
assets “as appears to the court to be equitable under all the circumstances of the case . . . .” MCL
552.401; MSA 25.136. Here, plaintiff did contribute to the improvement of the Big Creek property, so
that asset was available for invasion by the trial court, but the court was not required to invade it unless
the court considered it to be required to make an equitable distribution.
Our Supreme Court has set forth the following factors to be considered in fashioning an
equitable distribution of property upon divorce:
(1) duration of the marriage, (2) contributions of the parties to the marital estate,
(3) age of the parties, (4) health of the parties, (5) life status of the parties, (6)
necessities and circumstances of the parties, (7) earning abilities of the parties, (8) past
relations and conduct of the parties, and (9) general principles of equity. [Sparks,
supra at 159-160.]
This list is not exhaustive; rather, “[t]he determination of relevant factors will vary depending on the facts
and circumstances of the case.” Id. at 160. However, although not all these factors may be relevant to
a particular case, and some factors not listed may be relevant, the Court stated that “where any of the
factors delineated in this opinion are relevant to the value of the property or to the needs of the parties,
the trial court shall make specific findings of fact regarding those factors.” Id. at 159.
The trial court did not explicitly consider the Sparks factors in its ruling, yet it did take some of
them into account. Regarding the first factor, duration of marriage, the court noted that the parties were
married for close to fifteen years. The court also considered the second factor, the contributions of the
parties to the marital estate, by noting that defendant owned the Mobil Oil stock before the marriage
and that plaintiff contributed the proceeds from the sale of her home to the purchase of the Tree Farm.
The court also noted that fault was a factor, and rounded plaintiff’s award of defendant’s pension and
deferred compensation account from twenty-eight percent to thirty percent, thus addressing the eighth
factor, past relations and conduct of the parties. However, the remainder of the court’s ruling consists
of findings regarding the value of assets and which party was awarded each asset. The court did not
make findings regarding whether and how the age, health, life status, necessities and circumstances, and
earning abilities of the parties were relevant to its disposition of the marital estate. The court did attempt
to make a disposition that was roughly equal. Also, in the judgment of divorce, the court noted, in
denying alimony, that it was of the opinion that both parties were “well, able-bodied and capable of
gainful employment.” This addresses the factors relating to the health and earning abilities of the parties.
Therefore, although the trial court did not delineate which factors it was considering, the court made
sufficiently specific findings of fact relating to most of the Sparks factors.
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In distributing the marital estate, the goal of the trial court must be “to reach an equitable division
in light of all the circumstances.” Byington, supra at 114. The shares need not be mathematically
equal, “but significant departures from congruence must be explained clearly by the court.” Id. at 114
115. Here, the court’s distribution was roughly congruent in value. The court even included a payment
from defendant to plaintiff in an attempt to “equalize” the distribution. No significant departure from
congruence exists that must be clearly explained.
Plaintiff argues that awarding the income-producing properties to defendant, i.e., the Tree Farm
and Big Creek rental property, was inequitable because plaintiff was retired and had not found full-time
employment. However, the court found that both parties were capable of gainful employment. In light
of plaintiff’s testimony that, since her retirement, she had worked for two or three weeks with her
previous employer, AirBorne Express, and defendant’s testimony that plaintiff was offered full-time
employment and turned it down, we are not left with the firm conviction that the trial court’s finding that
plaintiff was capable of gainful employment was mistaken. “This Court gives special deference to a trial
court’s findings when they are based on the credibility of the witnesses.” Draggoo, supra at 429.
The distribution by the trial court in this case was not inequitable. However, as noted earlier,
the trial court will need to reexamine the distribution in light of modified findings of fact regarding the
value of certain marital assets.1
Plaintiff also challenges the court’s refusal to grant alimony. We review the trial court’s factual
findings under the clearly erroneous standard, and we will reverse the trial court’s decision regarding
alimony only when we are left with the firm conviction that the decision was inequitable. Magee v
Magee, 218 Mich App 158, 161-162; 553 NW2d 363 (1996). The trial court has the discretion to
award alimony as it considers just and reasonable. MCL 552.23; MSA 25.103; Magree, supra at
162. “The main objective of alimony is to balance the incomes and needs of the parties in a way that
will not impoverish either party.” Magee, supra. Relevant factors that the court should consider
include “the length of the marriage, the parties’ ability to pay, their past relations and conduct, their ages,
needs, ability to work, health and fault, if any, and all other circumstances of the case.” Id. “The trial
court should make specific findings of fact regarding those factors that are relevant to the particular
case.” Ianitelli v Ianitelli, 199 Mich App 641, 643; 502 NW2d 691 (1993).
Here, the trial court did not make specific findings of fact regarding the relevant factors. In the
judgment of divorce, the court merely stated that “neither party shall be entitled to alimony, the Court
being of the opinion that both parties are well, able-bodied and capable of gainful employment.” That
both parties are able to work, without further findings of fact by the trial court, is not a sufficient basis
for a denial of alimony. The court did not address the needs of the parties nor the incomes that the
parties would receive from any employment they might be able to procure. Although a denial of alimony
may indeed be proper after the trial court considers these factors, we conclude that the denial of
alimony was inequitable where the court did not balance the incomes and needs of the parties and did
not adequately address the relevant factors for determining whether to award alimony.
Next, plaintiff challenges the trial court’s refusal to grant attorney fees. “Attorney fees in a
divorce action are awarded only as necessary to enable a party to prosecute or defend a suit, and this
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Court will not reverse the trial court’s decision absent an abuse of discretion.” Hanaway v Hanaway,
208 Mich App 278, 298; 527 NW2d 792 (1995). Here, the trial court did not consider whether an
award of attorney fees was necessary for plaintiff to prosecute the action. Instead, the court refused to
award attorney fees to either party because it concluded that both parties contributed to the protracted
litigation of this divorce. This was not a proper reason to deny attorney fees, and constituted an abuse
of discretion.
Plaintiff also challenges the trial court’s method of valuing defendant’s pension benefits and
deferred compensation account. Plaintiff argues that the court should have included the value accrued
before the marriage. Benefits based on years of employment that accrued before the marriage may be
included in the marital estate if doing so is “just and reasonable, after considering the ability of either
party to pay and the character and situation of the parties, and all the other circumstances of the case.”
McMichael v McMichael, 217 Mich App 723, 730-731; 552 NW2d 688 (1996), quoting Booth v
Booth, 194 Mich App 284, 291; 486 NW2d 116 (1992), quoting MCL 552.23(1); MSA 25.103(1).
Plaintiff did not present evidence of a need for an invasion of the benefits that accrued before the
marriage, and the trial court did not err by including only the benefits that accrued during the marriage.
We also reject plaintiff’s argument that the court erred by using the coverture method of valuing these
benefits. This Court has approved the coverture method of calculating the value of pension benefits
attributable to the marriage by looking to the fraction of years of marriage that the spouse employee was
working over the total employment years of the party. Vander Veen v Vander Veen, 229 Mich App
108, 112-113; 580 NW2d 924 (1998).
Plaintiff also argues that defendant should be required to share in the payment of her debts
incurred from gambling and attorney fees relating to an accusation that she shot a neighbor’s dog. The
record reflects that plaintiff agreed to be solely responsible for these debts; therefore, plaintiff has failed
to preserve this issue for appeal. Nalevayko, supra.
On cross-appeal, defendant argues that the trial court erred by valuing plaintiff’s IRA account as
the average of the value at the time of the filing for divorce and the time of trial, where the court valued
all other assets as of the time of trial. Although the determination regarding the valuation date of the
marital estate is within the trial court’s discretion, a plausible reason should exist for choosing a valuation
date. Thompson v Thompson, 189 Mich App 197, 199; 472 NW2d 51 (1991). Although marital
assets are typically valued at either the time of trial or the time the judgment of divorce is entered, a trial
court may use a different date in its discretion. Byington, supra at 114 n 4. This Court has noted that
after a trial court “determines that a particular asset is, in fact, a marital asset, it must then value the asset
as of either the date of trial, the date of judgment, or a more appropriate date.” Id. This language does
not allow the averaging of an asset’s values at different dates.
We affirm in part, reverse in part, and remand for further proceedings consistent with this
opinion. We retain jurisdiction. The trial court is instructed to enter its judgment within sixty-three days
of this decision.
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/s/ Richard A. Bandstra
/s/ Kathleen Jansen
/s/ William C. Whitbeck
1
With respect to plaintiff’s arguments regarding the trial court’s valuation and exclusion of the 4.56 acre
parcel and the Mobil stock as marital assets, we conclude that no error occurred below.
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