Appeal by plaintiff and defendant from judgment entered 3 June
2002 by Judge Jonathan L. Jones in Catawba County District Court.
Heard in the Court of Appeals 27 August 2003.
Starnes & Killian, P.L.L.C., by Mark L. Killian, for
plaintiff-appellant.
Sigmon, Sigmon, Isenhower & Poovey, by C. Randall Isenhower,
for defendant-appellant.
HUNTER, Judge.
Dwight M. Fitzgerald (“plaintiff”) appeals from an amended
judgment and order of equitable distribution and alimony filed 3
June 2002. Katherine T. Fitzgerald (“defendant”) brings forward a
cross-assignment of error to the same amended judgment and order.
We reverse and remand to the trial court on both the equitable
distribution and alimony portions of the judgment and order.
(See footnote 1)
Plaintiff and defendant were married on 1 June 1974 and
separated on 4 April 1998. A judgment of absolute divorce was
entered on 2 June 1999. The parties stipulated that plaintiff was
a supporting spouse and defendant was a dependent spouse and that
defendant was entitled to alimony.
The evidence presented at a hearing beginning on 12 March 2002
tends to show plaintiff has been employed as a general surgeon
since 1974 and as of the date of separation had a fifty-percent
(50%) partnership interest in his surgical practice, Catawba
Surgical Associates, P.A. Both parties presented expert testimony
on the valuation of plaintiff's ownership interest in the surgical
practice. Plaintiff's expert valued plaintiff's interest at
$89,500.00, based on quarterly financial reporting from 31 March
1998. Defendant's expert valued plaintiff's ownership interest at$170,000.00. The trial court, without making any findings as to
how it arrived at its valuation of plaintiff's ownership interest
in the surgical practice, found plaintiff's interest to be valued
at $125,000.00 on the date of separation.
Plaintiff also introduced two appraisals of the marital home.
The first appraisal, dated 7 December 1999, estimated the home's
value at $395,000.00. The second appraisal, dated 1 July 2001,
also appraised the home at a value of $395,000.00. Neither party
presented evidence as to the fair market value of the house on the
date of separation. Again, without making any findings as to how
it arrived at its figure, the trial court found that the marital
home had a fair market value on the date of separation of
$375,000.00. Furthermore, the trial court made no findings as to
the valuation of the marital home on the date of distribution and
did not consider any post-separation appreciation in the value of
the marital home as a distributional factor.
Defendant testified that she had returned to work in 1994 and
that she had no retirement assets. On cross-examination, she
admitted she had a vested interest in a profit-sharing plan through
her employer, which had vested in 1997. Plaintiff subsequently
introduced into evidence a statement from defendant's employer
showing defendant's vested account balance in the profit-sharing
plan since 1997. Defendant had not listed this profit-sharing plan
in her equitable distribution affidavit filed with the trial court
on 12 October 1999. The trial court made no finding regarding
defendant's interest in the profit-sharing plan and it was not
included in the equitable distribution order. The trial court found plaintiff's net marital estate was
$215,468.00 and defendant's net marital estate was $77,347.00, and
that an equal distribution would require plaintiff to pay a
distributive award of $69,060.50. In determining whether an equal
distribution was equitable, the trial court considered a number of
factors including: (1) plaintiff had made both first and second
mortgage payments on the marital home from the date of separation
to the date of distribution, including approximately $160,000.00 in
excess of his required post-separation support, as well as making
other household bill payments and payments for upkeep and repairs
to the marital home; (2) plaintiff is a medical doctor earning at
least $270,400.00 per year and was earning at least $250,000.00 at
the date of separation, while defendant has a high school diploma
and a two-year radiology technician degree with some phlebotomist
training and was presently capable of earning $30,000.00 per year;
(3) separate property of defendant was put into plaintiff's medical
practice; (4) the duration of the marriage and age of the parties;
and (5) defendant gave up her pursuit of her career to care for the
children. The trial court then found, based on a consideration of
these factors, that the equities worked in favor of plaintiff,
equal distribution was not equitable, and ordered plaintiff to pay
a distributive award of $60,000.00.
With respect to the alimony portion of the judgment and order,
the trial court found defendant needed at least $6,000.00 per month
in alimony and that plaintiff was capable of paying that amount.
The trial court ordered plaintiff to pay permanent alimony of
$6,000.00 per month until defendant's death, remarriage, orcohabitation to be paid into the office of the Clerk of Superior
Court.
The issues are whether: (I) the trial court erred by failing
to consider evidence of defendant's profit-sharing plan; (II) the
trial court erred by failing to make specific findings regarding
its valuation of the marital home on the date of separation and any
increase in value as of the date of distribution; (III) the trial
court was required to make specific findings regarding its
valuation of plaintiff's ownership interest in his surgical
practice; and (IV) the award of permanent alimony was supported by
the findings of fact. The sole issue from defendant's cross-appeal
is whether (V) the findings of fact and conclusions of law are
insufficient to support an unequal distribution in favor of
plaintiff.
I.
[1] Plaintiff first contends the trial court erred in failing
to consider evidence of defendant's profit-sharing plan provided by
her employer and by failing to make findings of fact classifying,
valuing, and distributing defendant's interest in the profit-
sharing plan. We agree and remand this case to the trial court to
equitably distribute defendant's interest in the profit-sharing
plan.
In making an equitable distribution of marital assets, the
trial court is required to undertake a three-step process: “(1) to
determine which property is marital property, (2) to calculate the
net value of the property, fair market value less encumbrances, and
(3) to distribute the property in an equitable manner.”
Beightolv. Beightol, 90 N.C. App. 58, 63, 367 S.E.2d 347, 350 (1988). In
this case, defendant admitted to having a profit-sharing plan
vesting in 1997, and plaintiff introduced evidence to show the
vested balance from 1997 to 2000. This is property that the trial
court was required to classify, value, and divide.
Defendant argues that plaintiff has waived equitable
distribution of the profit-sharing plan by not including it in the
pre-trial order, citing as authority
Hamby v. Hamby, 143 N.C. App.
635, 547 S.E.2d 110 (2001). In
Hamby, this Court held that where
a party entered into a pre-trial agreement classifying a deferred
compensation plan as marital property, and that agreement was
subsequently incorporated into a pre-trial order, the party waived
any argument that the deferred compensation plan was separate
property.
Id. at 643, 547 S.E.2d at 115. That case is, however,
distinguishable from the case
sub judice, as in this case plaintiff
had entered into no agreement concerning defendant's profit-sharing
plan, and in fact, could not have entered into such an agreement as
defendant failed to disclose its existence until the hearing.
Thus, the equitable distribution portion of the order must be
remanded for the trial court to include the profit-sharing plan in
its consideration of how to equitably distribute the parties'
property.
II.
[2] Plaintiff next contends the trial court erred in finding
the fair market value of the marital home on the date of separation
was $375,000.00, and by failing to consider any post-separationincrease in the value of the home as a distributional factor. We
agree.
A trial court's findings of fact in an equitable distribution
case are conclusive if supported by any competent evidence.
See
Mrozek v. Mrozek, 129 N.C. App. 43, 48, 496 S.E.2d 836, 840 (1998).
“In an equitable distribution proceeding, the trial court is to
determine the net fair market value of the property based on the
evidence offered by the parties.”
Walter v. Walter, 149 N.C. App.
723, 733, 561 S.E.2d 571, 577 (2002) (footnote omitted).
Furthermore, “[w]here there is evidence of active or passive
appreciation of the marital assets after the date of separation,
the court must consider the appreciation of the asset as a
[distributive] factor.”
Fox v. Fox, 103 N.C. App. 13, 21, 404
S.E.2d 354, 358 (1991).
In this case, both parties concede they presented no evidence
of the fair market value of the marital home on the date of
separation and the only evidence presented on the value of the
house were two appraisals valuing the house at $395,000.00, one
performed over a year after the parties' separation and one
performed more than three years after the separation. Nothing in
the findings of the trial court supports a fair market value of the
house on the date of separation of $375,000.00. Thus, as there is
no evidence upon which to base a finding of the fair market value
of the house on the date of separation, we must remand this case to
the trial court for the taking of further evidence and findings of
fact on this issue.
See Coleman v. Coleman, 89 N.C. App. 107, 108-
09, 365 S.E.2d 178, 179-80 (1988). Even if the trial courtproperly valued the house on the date of separation, it erred in
failing to consider any post-separation increase in value of the
property, evidenced by the appraisals, as a distributional factor.
III.
[3] Plaintiff further contends the trial court erred in
failing to make specific findings regarding the valuation of
plaintiff's partnership interest in the surgical practice. We
agree.
“In valuing a marital interest in a business, the task of the
trial court is to arrive at a date of separation value which
'reasonably approximates' the net value of the business interest.”
Offerman v. Offerman, 137 N.C. App. 289, 292, 527 S.E.2d 684, 686
(2000) (quoting
Poore v. Poore, 75 N.C. App. 414, 422, 331 S.E.2d
266, 272 (1985)). “'[A] [trial] court should make specific
findings regarding the value of a spouse's professional practice
and the existence and value of its goodwill, and should clearly
indicate the evidence on which its valuations are based, preferably
noting the valuation method or methods on which it relied.'”
Id.
at 293, 527 S.E.2d at 686 (quoting
Poore, 75 N.C. App. at 422, 331
S.E.2d at 272). A trial court's valuation of a professional
practice will be upheld on appeal if it appears the trial court
reasonably approximated the net value of the practice and its
goodwill based on competent evidence and
on a sound valuation
method.
Id.
In this case, plaintiff's expert testified plaintiff's
interest in the surgical practice was valued at $89,500.00 and
defendant's expert testified it should be valued at $170,000.00. The trial court apparently rejected both expert's valuations and,
without making any findings as to the methodology it applied or the
facts upon which its valuation was based, found plaintiff's
interest in the surgical practice to be $125,000.00. As the trial
court failed to identify the evidence on which it based its
valuation or the method it used to reach its figure, we must
reverse and remand this case to the trial court for further
findings of fact on the valuation of plaintiff's interest in his
surgical practice.
IV.
[4] Plaintiff finally contends the trial court's findings do
not support the award of alimony in the amount of $6,000.00 per
month and further that the trial court failed to make required
findings as to the reasons for the duration of the alimony and the
manner of payment.
A trial court's decision on the amount of alimony to be
awarded is reviewed for an abuse of discretion.
See Barrett v.
Barrett, 140 N.C. App. 369, 371, 536 S.E.2d 642, 644 (2000). In
Friend-Novorska v. Novorska, 143 N.C. App. 387, 395, 545 S.E.2d
788, 794,
aff'd per curiam, 354 N.C. 564, 556 S.E.2d 294 (2001),
this Court held:
[F]indings of fact required to support the
amount, duration, and manner of payment of an
alimony award are sufficient if findings of
fact have been made on the ultimate facts at
issue in the case and the findings of fact
show the trial court properly applied the law
in the case.
Id. (footnote omitted). Under N.C. Gen. Stat. § 50-16.3A(c)
(2001), the trial court is also required to set forth the reasonsfor the amount of the alimony award, its duration, and manner of
payment.
In this case, plaintiff first contends the trial court's
findings were insufficient to support the amount of alimony
awarded. Plaintiff does not assign error to the trial court's
findings of fact in the alimony portion of the order, and they are
thus treated as supported by competent evidence and are binding on
appeal.
(See footnote 2)
See McConnell v. McConnell, 151 N.C. App. 622, 626, 566
S.E.2d 801, 804 (2002). Plaintiff instead argues that although the
trial court made findings regarding defendant's current living
expenses and needs, it nevertheless erred by not making further
findings as to the standard of living to which the parties were
accustomed during the marriage. The trial court, however, made the
ultimate finding of fact that defendant needed at least $6,000.00
per month in alimony to pay her current expenses and anticipated
needs.
We conclude the trial court made sufficient ultimate findings
of fact to support its award of alimony.
See Williamson v.
Williamson, 140 N.C. App. 362, 365, 536 S.E.2d 337, 339 (2000)
(trial court must make ultimate findings of fact to support the
amount of alimony awarded). Accordingly, based upon its findings,the trial court did not abuse its discretion in awarding defendant
$6,000.00 per month.
[5] The trial court, however, did not make required findings
as to the reasons for making the duration of the alimony continuous
until defendant dies, remarries, or cohabits, and why it is to be
paid directly to the Clerk of Superior Court. This Court has held
that a trial court's failure to make any findings regarding the
reasons for the amount, duration, and the manner of payment of
alimony violates N.C. Gen. Stat. § 50-16.3(A)(c).
See id. In
Williamson, as in this case, the trial court, without making any
findings as to its reasoning for the duration of the alimony or
manner in which it was to be paid, ordered alimony to be paid until
the death of a party or the dependent spouse's remarriage or
cohabitation and that it be paid directly to the clerk of court.
See id. Although we conclude that, unlike
Williamson, the trial
court in this case made sufficient findings to support the amount
of the alimony award, we are nevertheless bound by that decision,
see In the Matter of Appeal from Civil Penalty, 324 N.C. 373, 384,
379 S.E.2d 30, 37 (1989), to remand the alimony portion of the
order to the trial court to make further findings of fact
explaining its reasoning for the duration of the alimony award and
its manner of payment.
V.
Defendant's Cross-Appeal
[6] On cross-appeal, defendant contends the trial court's
findings in the equitable distribution portion of the judgment and
order are insufficient to support an unequal distribution of theparties' marital property in favor of plaintiff. Specifically,
defendant argues the trial court erred in considering as a
distributional factor that plaintiff had paid in excess of his
required minimum payments on the second mortgage. Defendant
asserts that the evidence shows plaintiff admitted drawing on the
equity line after the date of separation and then repaying those
amounts, such that the balance was approximately the same as on the
date of separation and consequently, defendant did not benefit from
any increase in equity in the marital home, which was distributed
to her.
The trial court, however, actually found that although between
the date of separation and October 2000 plaintiff was under no
order to pay post-separation support, during that time period
plaintiff “made [first] mortgage payments of at least $61,000 and
[second] mortgage payments of at least $48,000”
and that plaintiff
then also paid in excess of his required payments after October
2000. These payments on both mortgages, the trial court further
found, substantially benefitted defendant as those payments
resulted in increased equity in the marital home, which was
distributed to her.
“In determining whether an [unequal] distribution is
equitable, the trial court must make findings of fact showing its
due consideration of the evidence presented by the parties in
support of the factors enumerated under [N.C. Gen. Stat. §] 50-
20(c).”
Daetwyler v. Daetwyler, 130 N.C. App. 246, 249, 502 S.E.2d
662, 665 (1998),
aff'd per curiam, 350 N.C. 375, 514 S.E.2d 89
(1999). The trial court need not make exhaustive evidentiaryfindings, but must find the ultimate facts.
Id. Under Section 50-
20(c), in determining whether an unequal distribution is equitable,
the trial court must consider evidence of “[a]cts of either party
to maintain, preserve, develop, or expand . . . the marital
property or divisible property, or both, during the period after
separation of the parties and before the time of distribution.”
N.C. Gen. Stat. § 50-20(c)(11a) (2001).
In this case, there was evidence that plaintiff continued to
make the payments on both the first and second mortgages after the
date of separation and before he was required to pay post-
separation support. There is evidence that plaintiff did pay in
excess of $61,000.00 toward the first mortgage between the date of
separation and October 2000.
(See footnote 3)
There is also evidence defendant
continued to make payments on the second mortgage in an amount over
$41,000.00 and made the excess payments listed by the trial court.
(See footnote 4)
Although plaintiff did admit the balance on the second
mortgage equity line of credit remained about the same as on the
date of separation, his payments on the first mortgage would still
have had the effect of increasing the equity in the marital home.
Thus, there was evidence to support the trial court's ultimate
finding that defendant benefitted substantially by increased equity
in the marital home, which was distributed to her, resulting from
plaintiff's mortgage payments after the date of separation. Accordingly, the trial court's finding on this factor supports its
conclusion that an unequal distribution was equitable and
defendant's assignment of error is rejected.
As we have concluded, however, that the trial court erred in
failing to (1) consider evidence of defendant's profit-sharing
plan, (2) make proper findings of fact regarding the valuation of
the marital home, (3) make proper findings regarding the valuation
of plaintiff's interest in his surgical practice, and (4) make
proper findings regarding the duration and manner of payment of
alimony, this case must be reversed and remanded.
Reversed and remanded.
Judges TIMMONS-GOODSON and ELMORE concur.
Footnote: 1