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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