Appeal by defendant from an order entered 3 January 2003 by
Judge P. Gwynett Hilburn in Pitt County District Court. Heard in
the Court of Appeals 24 May 2004.
McCotter, Ashton & Smith, P.A., by Rudolph A. Ashton, III and
Terri W. Sharp; Dallas Clark, Jr., for plaintiff-appellee.
Ward and Smith, P.A., by Cindi M. Quay, John M. Martin and
Benton L. Toups, for defendant-appellant.
HUNTER, Judge.
Mary Jo Tatum Larkin (“defendant”) appeals from an “Equitable
Distribution Judgment and Alimony Order” filed 3 January 2003. Because we conclude the trial court failed to equitably distribute
all of the marital property at issue, we remand this case in part.
Defendant and Ernest W. Larkin, III (“plaintiff”) were married
on 28 December 1968, separated on 12 March 2000, and divorced on 6
June 2001. As of the date of separation, there were two living
children born of the marriage who were both over the age of
eighteen and emancipated. During their marriage, the parties
established a Wachovia joint checking account, which on the date of
separation had a value of $44,739.52. Following the parties
separation, plaintiff continued to deposit his entire monthly
income totaling $15,715.18 per month into the Wachovia account.
Both parties used the funds in this account to pay for various
expenses for themselves and their children, without any accounting
to each other.
In January 2001, plaintiff ceased depositing his monthly
income into the Wachovia account, and the parties subsequently
entered into an agreement whereby plaintiff paid defendant post-
separation support. Both parties continued to use the Wachovia
account until the balance was zero, which occurred on or about 18
June 2001.
During their marriage, the parties also established an Aintree
Capital Account, which on the date of separation was valued at
$424,950.23. Plaintiff testified at trial that the funds in this
account were intended to be used to ensure that the parties could
pay for their children's college education. Following the parties
separation, plaintiff, without informing defendant, withdrew fundstotaling $198,004.00 from this account to pay for federal income
tax liability on the parties' 2000 joint income tax return, college
tuition for the parties' children, and a car for their son.
In her counterclaim, defendant made a claim for attorneys'
fees pursuant to N.C. Gen. Stat. § 50-16.4, and plaintiff, in his
reply, admitted that “[d]efendant is an interested party and is
acting in good faith. Defendant has insufficient means with which
to subsist during the pendency of and to pursue this action.
Defendant is in need of an award of counsel fees . . . .”
In its 3 January 2003 order, the trial court made the
following pertinent findings of fact.
20. . . . Plaintiff and [d]efendant
stipulated to the identification and date of
separation net value of all property acquired
during the marriage and in existence as of the
date of separation as follows:
. . . .
l. Joint Wachovia Interest Checking
Account . . . - Forty-Four Thousand Seven
Hundred Thirty-Nine and 52/100 Dollars
($44,739.52) . . . .
m. Aintree Capital Account . . . - Four
Hundred Twenty-Four Thousand Nine Hundred
Fifty and 23/100 Dollars ($424,950.23).
. . . .
23. After the date of separation,
[plaintiff] continued to deposit his entire
income into the Wachovia joint account.
Plaintiff and [d]efendant continued to use the
joint account as they had during the marriage.
Plaintiff and [d]efendant used this joint
account to pay for their personal monthly
living expenses, without accounting to the
other, for one year after the date of
separation. Plaintiff stopped depositing his
monthly income in the joint account in theearly part of 2001. . . . As of [18 June]
2001, the balance of the Wachovia joint
account was zero (0). Since the date of
separation account balance was used by the
parties for their support and expenses after
the date of separation, and since [p]laintiff
deposited his post-date of separation separate
earnings into this account for the use,
without accounting, by each party, the [trial
court] finds it is not equitable to distribute
the date of separation balance to either
[p]laintiff or [d]efendant.
24. As of the date of separation, the
Aintree Capital Account . . . had a balance of
Four Hundred Twenty-Four Thousand Nine Hundred
Fifty and 23/100 Dollars ($424,950.23).
Subsequent to the date of separation, neither
party made any further contributions to this
account. This account did experience passive
appreciation and depreciation after date of
separation, and the passive appreciation and
depreciation constitutes divisible property.
However, subsequent to the date of separation,
[p]laintiff made the following withdrawals
from this account:
a. A withdrawal of Fifteen Thousand
Nine Hundred Three and No/100 Dollars
($15,903.00) to pay federal income taxes due
for the tax returns filed jointly by the
parties for 2000.
b. Withdrawals totaling One Hundred
Sixty-Six Thousand Six Hundred Thirty-Four and
No/100 Dollars ($166,634.00) to pay for the
college tuitions and related expenses for both
children.
c. A withdrawal of Fifteen Thousand
Four Hundred Sixty-Seven and No/100 Dollars
($15,467.00) to purchase a car for their son
. . . .
At the hearing, [d]efendant contended
that the post-separation withdrawals made by
[plaintiff] should be treated as distributions
to him. However, because [p]laintiff and
[d]efendant acknowledged that the education of
their children was a top priority and
[p]laintiff had planned to use the assets in
this account and other assets acquired duringthe marriage for the education of the
children, and because one of the post-date of
separation withdrawals was used to pay the
2000 income tax liability for their joint
federal tax return, and one was for a car for
the son's use at college, the date of
separation balance of the Aintree account
should be reduced by the post-separation
withdrawals made by [plaintiff] for education
payments, for payment of tax joint liability,
and for purchase of a car for their son, and
the distribution value is, therefore, One
Hundred Eighty Thousand Seven Hundred Twenty-
Four and 84/100 Dollars ($180,724.84).
. . . .
30. The following distributional factors
have been considered:
. . . .
g. The use of the marital funds in the
Aintree Capital Account for payment of college
expenses for the children and the 2000 joint
income tax liability.
. . . .
48. . . . In her Counterclaim,
[defendant] included a claim for counsel fees
. . . . In his Reply, [plaintiff] admitted
that [defendant] was an interested party
acting in good faith, had insufficient means
with which to subsist during the pendency of
and to pursue her claims, and that she was in
need of an award of counsel fees.
49. . . . However, based on the amount
of permanent alimony hereinafter awarded and
based upon the division of marital and
divisible property as hereinafter awarded,
[d]efendant will have the ability to pay her
counsel fees and expenses associated with her
alimony claim, and, in the [trial court's]
discretion, no award of counsel fees should be
made. However, [d]efendant's counsel was
instructed to prepare the final order
pertaining to the award of permanent
alimony. . . . Based upon the complexity of
this Judgment and Order, and the substantial
revisions which were necessary, the amount oftime spent by [d]efendant's counsel in the
preparation and revisions of the Judgment and
Order is reasonable and the amount of fees are
reasonable. [Plaintiff] has the ability to
pay [d]efendant's counsel fees incurred for
the preparation of the Order.
The trial court concluded that an equal distribution was
equitable and ordered a corresponding distribution of the parties'
marital and divisible assets. In addition, plaintiff was ordered
to pay permanent alimony of $6,669.00 per month, made retroactively
effective to 1 March 2001 resulting in a retroactive alimony
payment of $43,236.00. Plaintiff was also ordered to pay part of
defendant's attorneys' fees in the amount of $4,375.00.
The issues are whether the trial court erred: (I) in
equitably distributing the marital property by (A) improperly
valuing the Wachovia account, (B) failing to distribute the
Wachovia account, and (C) failing to distribute the entire date of
separation value of the Aintree Capital Account by subtracting the
amount of plaintiff's withdrawals; and (II) by failing to award
full attorneys' fees to defendant.
I.
In an equitable distribution proceeding, a trial court is
required to conduct a three-step analysis: “(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.”
Beightol v.
Beightol, 90 N.C. App. 58, 63, 367 S.E.2d 347, 350 (1988). “The
distribution of marital property is vested in the discretion of the
trial courts and the exercise of that discretion will not be upsetabsent clear abuse.”
Id. at 60, 367 S.E.2d at 348. “In order to
reverse the trial court's decision for abuse of discretion, we must
find that the decision was unsupported by reason and could not have
been the result of a competent inquiry.”
Id. “Accordingly, the
findings of fact are conclusive if they are supported by any
competent evidence from the record.”
Id.
A.
Defendant argues that the trial court erred in its valuation
of the Wachovia account by not making a valuation of the account on
the date of separation, but instead using the zero balance of the
account on the date of distribution. The trial court's findings,
however, based upon the stipulation of the parties, reveal that the
trial court did indeed value the Wachovia account on the date of
separation at the amount of $44,739.52. Thus, the trial court did
not err in its valuation of the Wachovia account.
B.
[1] The trial court, despite its valuation of the Wachovia
account, nevertheless found that it would not be equitable to
distribute the date of separation balance to either plaintiff or
defendant because the account balance was zero at the time of
distribution. Defendant contends the failure to distribute the
Wachovia account was error.
In this case, with regard to the Wachovia account, the trial
court found that after the date of separation, the parties
continued to use the account as they had during their marriage.
Plaintiff would deposit his monthly income into the account andboth parties would use the account to pay for various expenses for
themselves and their children without any accounting to each other.
Both parties continued to use funds from the account after
plaintiff ceased making deposits until the account balance was
zero. The trial court's evidentiary findings regarding the post-
separation use of the account by the parties are supported by the
undisputed evidence in the record. Thus, it is apparent that both
parties contributed to the depletion of the Wachovia account after
the date of separation, ultimately using the marital funds that
were in the account prior to the parties separation. Furthermore,
the evidence of record is insufficient to trace out which party was
responsible for what portion of the depletion of the funds in the
account and neither party made any accounting to the other for
their expenditures.
(See footnote 1)
The trial court found that it would not be equitable to
distribute the date of separation balance in the Wachovia account
to either party and failed to include the Wachovia account in its
distribution of marital assets. Once, however, the trial court
classified the Wachovia account as a marital asset and valued the
account as of the date of separation, the trial court was required
to distribute that account equitably.
See Khajanchi v. Khajanchi,
140 N.C. App. 552, 557, 537 S.E.2d 845, 849 (2000) (“court must
distribute the marital property and debts in an 'equitable'manner”);
see also N.C. Gen. Stat. § 50-20(a) (2003) (court shall
provide for an equitable distribution of marital and divisible
property between the parties).
Thus, because the Wachovia account was a marital asset, which
the trial court was required to equitably distribute, the trial
court erred by failing to distribute that account. Accordingly, we
must remand this case to the trial court for further findings of
fact in order for the Wachovia account to be included in the
equitable distribution of the parties' marital and divisible
assets.
(See footnote 2)
See N.C. Gen. Stat. § 50-20(a).
We note that although the trial court, in revisiting its
findings of fact, is required to distribute the marital and
divisible assets, it retains the discretion to determine
how to
equitably distribute those assets.
See Beightol, 90 N.C. App. at
60, 367 S.E.2d at 348. This determination may be made by
considering the various distributional factors contained in N.C.
Gen. Stat. § 50-20(c).
See N.C. Gen. Stat. § 50-20(c). Under N.C.
Gen. Stat. § 50-20(c)(11a), a trial court is permitted to consider
as a distributional factor “[a]cts of either party to . . . devalue
. . . the marital property . . . during the period after separation
of the parties and before the time of distribution.” N.C. Gen.Stat. § 50-20(c)(11a). As such, the trial court could properly
consider the post-separation withdrawals from the Wachovia account
by both parties as a distributional factor in determining what
amount, if any, the parties should equitably receive from the
account.
(See footnote 3)
C.
[2] Defendant additionally assigns error to the trial court's
distribution of the Aintree Capital Account. The trial court
valued this account as of the date of separation at $424,950.23,
but in distributing this asset, subtracted the amounts withdrawn by
plaintiff from the distributable amount. Defendant contends that
notwithstanding the trial court's conclusion in this matter that an
equal distribution was equitable, the trial court's failure to
impute plaintiff's withdrawals from the Aintree Capital Account
resulted in an unequal and inequitable distribution because
plaintiff received the benefit of an additional $198,004.00, the
total amount of his withdrawals. We disagree.
One of plaintiff's withdrawals from the Aintree Capital
account was used to pay the parties' joint 2000 tax liability.
Furthermore, with regard to the withdrawals made for tuition
payments, the trial court found that prior to separation the
parties intended the Aintree Capital Account to be utilized to
ensure payment of their children's college expenses. These
findings are supported by the evidence. Plaintiff's remaining withdrawals were used expressly for this
purpose by paying for both children's college tuition and a car to
be used by their son while he was at college. Thus, the
withdrawals were used for the parties joint benefit in paying their
joint tax liability and in realizing their joint intent for the
Aintree Capital Account to be used for funding their children's
college educations. Moreover, we note that, unlike the Wachovia
account, the trial court expressly considered these withdrawals as
a distributional factor in determining the proper distribution of
the marital property.
(See footnote 4)
Therefore, we conclude the trial court did
not abuse its discretion by distributing the date of separation
value of the Aintree Capital Account minus the withdrawals used to
pay the parties joint tax liability and college education expenses
for their children.
II.
[3] Defendant also argues that it was error for the trial
court to not award her full attorneys' fees in her alimony action
under N.C. Gen. Stat. § 20-16.4. “A spouse is entitled to attorney's fees if that spouse is (1)
the dependent spouse, (2) entitled to the underlying relief
demanded (e.g., alimony and/or child support), and (3) without
sufficient means to defray the costs of litigation.”
Barrett v.
Barrett, 140 N.C. App. 369, 374, 536 S.E.2d 642, 646 (2000).
Before granting an award of attorneys' fees, the trial court is
required, as a matter of law, to determine whether the spouse
seeking the award is the dependent spouse without sufficient means
to subsist during the prosecution of the suit and to defray the
necessary expenses.
Friend-Novorska v. Novorska, 143 N.C. App.
387, 396-97, 545 S.E.2d 788, 795,
per curiam aff'd, 354 N.C. 564,
556 S.E.2d 294 (2001). This means the dependent spouse must “be
unable to employ adequate counsel in order to proceed as litigant
to meet the other spouse as litigant in the suit.”
Hudson v.
Hudson, 299 N.C. 465, 474, 263 S.E.2d 719, 725 (1980). “When an
award of attorney's fees is properly awarded, the amount of the
award is within the discretion of the trial court.”
Friend-Novorska, 143 N.C. App. at 397, 545 S.E.2d at 795.
In this case, defendant was the dependent spouse and entitled
to alimony. Plaintiff furthermore admitted that defendant would
have insufficient means to defray the costs of the suit. Defendant
contends that despite her meeting these requirements, the trial
court failed to award her attorneys' fees. We disagree.
An affidavit contained in the record and submitted to the
trial court lists defendant's attorneys' fees in the amount of
$14,498.48. The trial court, in fact, did make a partial award ofdefendant's attorneys' fees in the amount of $4,375.00 for the time
it took defendant's attorney to draft the final order. The trial
court based its decision to award only a portion of defendant's
attorneys' fees on the amount of alimony awarded and the equitable
distribution of assets to defendant. This included the equal
distribution of the marital assets, as well as a permanent alimony
award to defendant of $6,699.00 per month, for a total of
$80,025.00 per year, plus an additional $43,236.00 in retroactive
alimony. From this, the trial court, in its discretion, found that
although defendant met the requirements to receive attorneys' fees
under the statute, she did not require a full award of attorneys'
fees to defray the costs of litigation. We therefore conclude the
trial court did not abuse its discretion in setting the partial
amount of attorneys' fees to be awarded to defendant.
Affirmed in part. Remanded in part.
Chief Judge MARTIN concurs.
Judge TIMMONS-GOODSON concurs in part and dissents in part in
a separate opinion.
TIMMONS-GOODSON, Judge, concurring in part and dissenting in
part.
While I agree with the majority's conclusion that the trial
court did not err in valuing the Wachovia joint account or in
awarding attorneys' fees but did err by failing to distribute the
Wachovia joint account, I disagree with the majority's conclusion
that the trial court did not err in its distribution of the Aintree
Capital Account. Therefore, I respectfully concur in part and
dissent in part. On the date of separation between the parties in the instant
case, the Aintree Capital Account had a balance of $424,950.23.
Subsequent to the date of separation, the account experienced
passive appreciation and depreciation. Neither party made any
further contributions to the account subsequent to the date of
separation. However, plaintiff withdrew from the account: (a)
$15,903.00 to pay federal income taxes; (b) $167,634.00 to pay for
the college tuition and expenses of the parties' children; and (c)
$15,467.00 to purchase a car for the parties' son. Thus, on the
date of distribution, the account had a balance of $180,724.84.
In its equitable distribution order, the trial court concluded
that
because Plaintiff and Defendant acknowledged
that the education of their children was a top
priority and Plaintiff had planned to use the
assets in [the Aintree Capital Account] and
other assets acquired during the marriage for
the education of the children, and because one
of the post-date separation withdrawals was
used to pay the 2000 income tax liability for
their joint federal tax return, and one was
for a car for the son's use at college, the
date of separation balance of the Aintree
account should be reduced by the post-
separation withdrawals made by the
Plaintiff . . . and the distribution value is,
therefore, One Hundred Eighty Thousand Seven
Hundred Twenty-Four and 84/100 Dollars
($180,724.84).
N.C. Gen. Stat. § 50-21(b) (2003) requires that marital
property be valued “as of the date of separation of the parties.”
After the marital property is valued, N.C. Gen. Stat. § 50-20(c)
(2003) requires that the trial court distribute the maritalproperty equally unless the trial court determines that equal
division is inequitable.
Unlike the majority, I believe the trial court in the instant
case ignored the mandates of N.C. Gen. Stat. §§ 50-21(b) and 50-
20(c) by distributing the Aintree Capital Account at its value on
the date of distribution rather than the date of separation.
Although the parties agreed prior to their separation that the
Aintree Capital Account would be utilized to ensure payment of
their children's college expenses, defendant did not expressly
consent to or ratify plaintiff's withdrawals for this purpose
subsequent to the date of separation, and plaintiff could not
recall any specific conversations with defendant regarding the
withdrawals prior to making them. As the majority correctly notes
with respect to the Wachovia joint account, “[o]nce . . . the trial
court classified the [Aintree Capital Account] as a marital asset
and valued the account as of the date of separation, the trial
court was required to distribute that account equitably.” However,
by valuing the Aintree Capital Account at the date of separation
but then dividing the property of the account based upon its value
at the date of distribution, the trial court effectively decreased
the statutorily proscribed value of the marital estate.
For the foregoing reasons, I would hold that the trial court
erred in distributing the Aintree Capital Account at its value on
the date of distribution rather than the date of separation.
Footnote: 1