An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Proced ure.

NO. COA04-482


Filed: 17 May 2005


v .                         Mecklenburg County
                            No. 01 CVD 16558

    Appeal by defendant from judgment entered 22 August 2003 by Judge Rebecca T. Tin in Mecklenburg County District Court. Heard in the Court of Appeals 31 January 2005.

    Weaver, Bennett & Bland, P.A., by William G. Whittaker, for plaintiff-appellee.

    Sullivan & Grace, P.A., by Nancy L. Grace, for defendant- appellant.

    MARTIN, Chief Judge.

    Karen Gwynn Lowe, plaintiff-appellee, and Eric Anthony Lowe, defendant-appellant, were married on 27 August 1994. They separated on 13 January 2001 and divorced the following year. Plaintiff filed an action against defendant seeking post-separation support, alimony, attorneys' fees, and equitable distribution. Defendant answered and filed a counter-claim seeking equitable distribution. All issues other than equitable distribution were resolved. The issue of equitable distribution was tried in April, 2003, and the trial court issued its judgment on 22 August 2003, awarding an unequal distribution of 65% of the net marital estatein plaintiff's favor. Defendant appeals from the judgment, assigning error to the trial court's findings and conclusions with respect to the classification of certain items as separate or marital, to its finding and conclusion with respect to one distributional factor, and to its unequal distribution of the parties' property. For the reasons which follow, we affirm in part, reverse in part, and remand this matter to the trial court.


    In an appeal from a judgment distributing marital property, the trial court's findings of fact are conclusive if they are supported by any competent evidence. Lawing v. Lawing, 81 N.C. App. 159, 162, 344 S.E.2d 100, 104 (1986). If the trial court makes proper findings, supported by competent evidence, upon the factors prescribed by N.C. Gen. Stat. § 50-20(c) in determining what distribution it deems to be equitable, its division of the property is reviewed for abuse of discretion. White v. White, 312 N.C. 770, 777, 324 S.E.2d 829, 833 (1985). In the absence of evidence, and findings, that an equal distribution would not be equitable, the trial court must divide the property equally. Id. at 776, 324 S.E.2d at 832-33. Where there is evidence that an equal division would not be equitable, the trial court must find the facts and is then called upon to exercise its discretion in weighing the factors and distributing the property, bearing in mind the legislative policy which favors an equal division. Id. at 777,324 S.E.2d at 833. It follows, then, that in reviewing such an order, the appellate court is required to determine, first, whether the trial court's findings are supported by competent evidence; if they are, the trial court's order is accorded great deference and review is limited to whether the division of property amounted to a “clear abuse” of discretion. Id.; Lawing, 81 N.C. App. at 162, 344 S.E.2d at 104. A clear abuse of discretion occurs only when the order “was so arbitrary that it could not have been the result of a reasoned decision.” White, 312 N.C. at 777, 324 S.E.2d at 833.
I. Classification

    At the equitable distribution hearing, defendant contended that his mother had made a loan, evidenced by a promissory note, to him in the amount of $43,676, which he then used toward the purchase of the marital residence, which was titled in both parties as tenants by the entireties. Similarly, he contended that his mother had made another loan of $7,000 to him, also evidenced by a promissory note, which he used toward the purchase of an automobile. He contended the loans were marital debt. The trial court found, however, that the funds were not a debt, but were a gift to defendant from his mother, which he then conveyed to the marriage. The trial court considered his contribution of these gifts to the marriage as a distributional factor in his favor. Defendant assigns error.
    Loans from close family members should be closely scrutinized for legitimacy. Geer v. Geer, 84 N.C. App. 471, 475, 353 S.E.2d427, 430 (1987). Here, there was competent evidence to support the trial court's findings that the funds provided by defendant's mother were gifts rather than loans. The court noted that although defendant had a substantial income and retirement funds from which he could have repaid the funds to his mother if they had been loans, he “has made no effort to make any payment on the loan[s] since receiving the funds” in 1994 and 1999, respectively. Failure to make payments on loans for several years when sufficient funds were available to do so is evidence that the loans were illusory.
    Defendant's mother did not testify during the proceedings below, and there was no evidence, other than the promissory notes, of her intention that the money be repaid. With respect to the notes, the trial court observed that they “appear to have been made at the same time. [They] are on the same form and dated five years apart. [Defendant's mother] makes the same mistake of signing as a guarantor to herself in both notes and the witness is identical.” “The mere existence of conflicting evidence . . . will not justify reversal.” Lawing, 81 N.C. App. at 163, 344 S.E.2d at 104. Since competent evidence supports the trial court's findings that the funds were advanced to defendant by his mother as gifts, the court properly declined to classify them as marital debt and we overrule defendant's assignments of error to the contrary.
    Next defendant argues the trial court erred by classifying a freezer, valued at $300, as marital property since all the evidence tended to show that it was his separate property. Plaintiff concedes the freezer is defendant's separate property and, uponremand, the order distributing the parties' property must be modified accordingly.
    In his next assignment of error, defendant contends the trial court's classification of plaintiff's credit card debt as marital debt was not supported by competent evidence and that it should have been found to be plaintiff's separate debt. We agree that the trial court's findings with respect to at least some of the credit card debt were not supported by competent evidence.
    There can be no distribution of marital property without also classifying the debt as marital or separate and distributing it as of the date of separation. Huguelet v. Huguelet, 113 N.C. App. 533, 536, 439 S.E.2d 208, 210, disc. review denied, 336 N.C. 605, 447 S.E.2d 392 (1994). Marital debt is debt incurred during the marriage by either or both spouses for their joint benefit. Huguelet, 113 N.C. App. at 536, 439 S.E.2d at 210; N.C. Gen. Stat. § 50-20(b)(1)(2004). The party seeking a classification of property as marital has the burden of proving, by a preponderance of the evidence, that the property falls within that classification. Loving v. Loving, 118 N.C. App. 501, 507, 455 S.E.2d 885, 889 (1995) (citations omitted). The same burden applies to marital debt. Byrd v. Owens, 86 N.C. App. 418, 424, 358 S.E.2d 102, 106 (1987).
    In the present case, plaintiff had the burden of proving that the balances on the credit cards in her name had been acquired during the marriage for the joint benefit of both spouses. The evidence showed that on the date of separation, plaintiff had threecredit cards: an MBNA card with a balance of $2,245.72, an AT&T Mastercard with a balance of $4,302.30, and a Wachovia Mastercard with a balance of $7,820.22. The trial court made the following finding of fact regarding these balances:
        47. The Plaintiff testified to possessing three credit cards on the date of separation. . . .  The Plaintiff contended that these were marital debts and testified as to purchases paid for with the credit cards. The Defendant testified that he was unaware of the credit cards and alleged they were not used for a marital purpose, yet Defendant did not offer any evidence as to separate purchases or expenditures on the cards. Plaintiff testified and presented evidence that Defendant had used one or more of her credit cards and had accompanied her when she made purchases on these cards. Purchases included gas, car repair, and other like payments, clothes, a real estate program to update Plaintiff's real estate license, furniture for the home and groceries. The Court finds the Plaintiff has met her burden of proof that the credit card debt was accrued for the joint benefit of the parties during the marriage. These cards are marital in nature and shall be distributed to the Plaintiff.

(Emphasis supplied). Defendant does not contest that these balances were incurred during the marriage but argues the plaintiff failed to meet her burden of proving they were incurred for the joint benefit of both parties.
    Plaintiff testified that she used the MBNA card, with a balance of $2,245.72, for clothing, car payments, bills, and household items. With respect to the AT&T Mastercard, with a balance of $4,302.30, however, she testified only as to a $165.15 charge to PRG Auto and a J.C. Penny catalogue purchase. With respect to the Wachovia Mastercard, with a balance of $7,820.22,she testified that she purchased a leather sofa and love seat for the marital home. Plaintiff also testified that she frequently transferred balances among these cards, saying “I juggled them around, transferring balances to get the best interest rate to lower the monthly payment, so I'd do it as frequently as necessary to keep my payments down some.”
    We conclude the foregoing evidence was insufficient to support the trial court's finding that plaintiff had sustained her burden of showing the entire balance of $14,368 on these three cards was marital debt, particularly with respect to the AT&T Mastercard, for which she could account for only two small purchases to substantiate marital debt of more than $4000, and the Wachovia Mastercard, which she testified was used to purchase two items of furniture without any additional evidence as to their cost. Thus, we must sustain defendant's assignment of error to this finding and remand for additional findings with respect to what portion, if any, of the credit card balances was incurred for marital expenses and what portion, if any, was incurred for plaintiff's separate expenses, and for such adjustment of the distribution of the marital debt as may be required. Upon remand, we remind the trial court that the burden remains upon the plaintiff to show the marital nature of the debt, and only when that burden is met does the burden shift to defendant to show the debt is separate. Loving, 118 N.C. App. at 507, 455 S.E.2d at 889.
II. Distributional Factors
    As required by N.C. Gen. Stat. § 50-20(c), the court considered and made findings with respect to distributional factors. Defendant brings forward an assignment of error to only one of the several factors discussed by the trial court in its order. As a distributional factor, the trial court found that “[e]ach party suffers from some physical disability. The Plaintiff has suffered in the past from depression. The Court considers this factor to be even as to the parties.” Defendant contends the evidence showed plaintiff suffered from relatively minor health problems, that he had considerable health problems about which the trial court made no “specific findings,” and there was no evidence that plaintiff suffered from depression. Therefore, he contends the court's consideration of the distributional factor to be “even” should be vacated. We reject his argument.
    We agree with defendant, and plaintiff essentially concedes, that no competent evidence supports the trial court's finding that plaintiff “has suffered in the past from depression.” Even so, there is competent evidence to support the court's ultimate finding that each of the parties had some disability due to physical problems. The evidence tended to show that defendant suffered from high blood pressure, hypertension, diabetes, a possible prostate problem, and either gallstones or kidney stones, and that plaintiff suffered from a skin allergy and fibromyalgia. The court was not required to recite the evidence offered by each of the parties or to make exhaustive findings as to evidentiary facts, Armstrong v. Armstrong, 322 N.C. 396, 405-06, 368 S.E.2d 595, 600 (1988), andwas free to give the evidence the weight and credibility to which the court found it entitled. The court further concluded that the parties' physical problems weighed equally for each of the parties; thus, any error in its finding with respect to plaintiff's past depression clearly carried no weight in its decision to make an unequal distribution, especially in the light of all of the other findings which the court made as to distributional factors. This assignment of error is overruled.
III. Distribution of Property

    The trial court valued the marital estate at $117,448.01. The court concluded that the distributional factors, particularly the disparity between the parties' income, liabilities and the value of their separate property, their respective entitlements to deferred compensation, and defendant's separate contributions to the acquisition of marital property, warranted an unequal distribution of the marital estate in plaintiff's favor. The court awarded plaintiff property having a net value of $4,887.24 and assigned her debt of $14,368.00, for a net of (-$9,480.76). The court awarded defendant property having a net value of $130,030.77, and debt of $3,102.00, for a net of $126,928.77. To accomplish a distribution of the marital estate in plaintiff's favor of 65%, the court ordered that defendant pay plaintiff $76,341.21: $35,257 from his Duke Power Retirement Cash Balance Plan through a QDRO, and the balance through a distributive award of $41,084.21 plus interest at a rate of 8% per annum in installments of $5,000 every six months. Defendant assigns error both to the unequal distribution of themarital property and to the court's order for a distributive award without having made the requisite findings of fact and conclusions of law.
    As we noted earlier, N.C. Gen. Stat. § 50-20(c) creates a presumption of an equal division of marital property but provides that where the court, upon proper findings, concludes an equal distribution is not equitable, it may divide the property unequally. In such cases, the court's decision as to what is equitable is a ruling entrusted to its sound discretion and is accorded great deference. Lawing v. Lawing, 81 N.C. App. 159, 162, 344 S.E.2d 100, 104 (1986). In this case, we have determined that because certain of the court's findings are not supported by the evidence, the matter must be remanded. Depending upon the court's findings upon remand, the court's decision as to what is equitable may change. Thus, we decline to consider defendant's argument with respect to whether the current division of the parties' marital property was an abuse of discretion.
    With respect to his argument regarding the distributive award, N.C. Gen. Stat. § 50-20(e) creates a presumption “that an in-kind distribution of marital or divisible property is equitable.” N.C. Gen. Stat. § 50-20(e)(2003). This presumption “may be rebutted by the greater weight of the evidence.” Id. Where the presumption is rebutted, the trial court may make a distributive award to “facilitate, effectuate or supplement a distribution of marital or divisible property.” Id. We have previously held that “in equitable distribution cases, if the trial court determines thatthe presumption of an in-kind distribution has been rebutted, it must make findings of fact and conclusions of law in support of that determination.” Urciolo v. Urciolo, ___ N.C. App. ___, 601 S.E.2d 905, 908 (2004); Allen v. Allen, ___ N.C. App. ___, 607 S.E.2d 331, 334-35 (2005). Here, the trial court's order that defendant pay $41,084.21 plus interest in installments of $5,000 every six months was not a distribution in-kind, yet the trial court failed to make any findings of fact or conclusions of law rebutting the presumption of an in-kind distribution. If, upon remand, the trial court determines the presumption favoring an in- kind distribution has been rebutted and that a distributive award is required to effectuate an equitable distribution of the marital property, it must make the required findings of fact and conclusions of law.
    Affirmed in part, reversed in part, and remanded.
    Judges McCULLOUGH and ELMORE concur.
    Report per Rule 30(e).

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