No. 01 CVD 129
BRIAN A WALSH,
Prince, Youngblood & Massagee, by Sharon B. Alexander, for
Adams Hendon Carson Crow & Saenger, P.A., by S. J. Crow, Joy McIver, Martin Reidinger, and Matthew S. Roberson, for defendant-appellee/cross-appellant.
Plaintiff appeals from an equitable distribution judgment entered 4 February 2004 in the District Court of Transylvania County.
Evidence presented at trial showed that plaintiff and defendant had met and began cohabiting in Massachusetts in 1987. At the time the parties began their relationship plaintiff was working in a grocery store and defendant did work as an independent construction contractor. Plaintiff received money from several family trust accounts and owned a home on Cape Cod in which the parties lived. The parties subsequently moved to Florida whereplaintiff bought an unimproved lot on which they had a home constructed.
After moving to Florida, the parties agreed to begin purchasing properties and building houses on them to sell in an attempt to build capital on which to retire. Plaintiff provided the capital for the acquisition and building costs from her trust fund income, a lump sum inheritance and the proceeds from the sale of her Cape Cod home. Both plaintiff and defendant actively participated in the construction of the homes. Deeds to some of the properties were signed in the names of both plaintiff and defendant, who was listed as her husband despite the fact that they had not yet married. Some of the acquired properties were sold as unimproved lots while others were sold after the construction of homes upon them. Each of these transactions resulted in a profit or broke even. All profits were then rolled into the acquisition of other properties.
In 1993 the parties formed Lake Cardinal Home Builders, Inc. (the corporation) for the purpose of purchasing property and building homes in the Lake Toxaway area in North Carolina. Defendant owned a fifty-one percent interest in the corporation and plaintiff held a forty-nine percent interest. Defendant also obtained his North Carolina general contractor's license.
On 19 October 1997, plaintiff and defendant were married in Massachusetts. No children were born or adopted of the marriage. At the time of their marriage, the corporation owned four parcels of real property in the Lake Toxaway area and several items ofpersonal property including vehicles, trailers, tools and similar items. On the date of their marriage the parties entered into an agreement which provided that in the event of a divorce, plaintiff would receive $450,000 prior to the division of the parties assets as compensation for the separate assets she invested in the corporation. This agreement was prepared by plaintiff and executed before a notary public on 19 October 1997. There was no evidence presented regarding whether the agreement was signed before or after the parties' wedding.
In July 2000, the parties separated and plaintiff filed for divorce on 6 March 2001. Defendant filed an answer and counterclaimed for post-separation support, alimony and equitable distribution on 15 May 2001. Plaintiff replied requesting equitable distribution in her favor and made a motion to dismiss defendant's counterclaims pursuant to Rule 12(b)(6). A judgment of absolute divorce was entered 7 September 2001.
For purposes of the equitable distribution proceeding the parties stipulated that, although the corporation was in existence prior to the marriage, the assets of the corporation were marital property under the definition of North Carolina General Statutes section 50-20(b)(1). The parties further stipulated to lists of marital property titled in the corporation's name that each was to receive. Regarding other marital personal property, the parties stipulated that it would be equitable for plaintiff to receive a 1998 Ford Windstar titled in her name along with the indebtedness owed on the vehicle. The court also awarded each party theclothing, jewelry, personal items and household furnishing in their possession that were not otherwise distributed under the judgment. Apart from the Windstar, the court made no findings as to the date of separation value of any of the items of personal marital property.
Prior to the parties' marriage the corporation had acquired two lots in Lake Toxaway Estates at a total purchase price of $80,000. During the marriage, plaintiff acquired title to both of these lots from the corporation. Plaintiff contended that the lots were her separate property because title to them was transferred to her as partial repayment of contributions she had made to the corporation from her separate funds. The court found these lots to be marital property as plaintiff was unable to produce any documentation tracing the funds contributed to the corporation to her separate property or provide any other evidence to support her claim. During the marriage, the parties constructed a home on one of the lots in Lake Toxaway Estates. The home was completed on the date of separation except for the basement area which was sixty percent complete at that time.
The home and the lots were appraised and determined to have date of separation values of: $597,000 for the home and $150,000 for each of the lots. The properties were determined to have a fair market value at the time of trial of: $780,440 for the house and $175,000 for each lot. Subsequent to the date of separation plaintiff had completed the remainder of the basement area of the home. The increase in value of the home between the date ofseparation and the date of the trial was determined to be $182,900. Accordingly, the court found the home to have had an active increase in value of $182,700 and a passive increase of $200. The trial court further found that the agreement signed by the parties on their wedding day created a marital debt owing from defendant to plaintiff; an equal distribution of marital and divisible property would not be equitable; and that plaintiff had rebutted the presumption favoring equal and in kind distribution of marital property and that the marital estate would be divided unequally in her favor.
Based on the court's findings discussed supra, the court ordered the distribution of the personal property of the corporation to be distributed as stipulated by the parties; that each party retain the clothes, jewelry and household furnishing currently in their possession; that plaintiff receive fee simple title to the two lots and house in Lake Toxaway Estates; and that plaintiff pay to defendant a distributive award of $225,000. Plaintiff appeals from this judgment.
Plaintiff contends on appeal that the trial court erred: (1) in failing to determine the date of separation value of all items classified as marital property; (2) in classifying the house and lots in Lake Toxaway Estates as marital property; (3) in finding the agreement between the parties pertaining to the $450,000 to be marital debt; (4) by abusing its discretion by ordering an equal distribution of property after finding an unequal distribution to be equitable; (5) in requiring plaintiff to pay a distributiveaward to defendant; and (6) in entering a judgment which is not supported by its findings of fact and conclusions of law.
Plaintiff's first argument is that the trial court erred in failing to determine the net value on the date of separation of each item of marital property distributed. We agree.
When entering an equitable distribution order a trial court must classify all property as either marital or separate; determine the net market value of the marital property on the date of separation; determine what distribution of marital property is equitable under the particular circumstances of the case; and distribute the property accordingly. Carr v. Carr, 92 N.C. App. 378, 379, 374 S.E.2d 426, 427 (1988) (citing Cable v. Cable, 76 N.C. App. 134, 331 S.E.2d 765, disc. review denied, 315 N.C. 182, 337 S.E. 2d 856 (1985)). [I]n doing all these things the court must be specific and detailed enough to enable a reviewing court to determine what was done and its correctness. Id. (citing Wade v. Wade, 72 N.C. App. 372, 325 S.E.2d 260, disc. review denied, 313 N.C. 612, 330 S.E. 2d 616 (1985)); see also, N.C. Gen. Stat. . 50- 20(j) (2003).
In the case sub judice the trial court failed to make specific findings as to the date of separation values of the property that it classified as marital property except for the Ford Windstar and the lots and house in Lake Toxaway Estates. The personal property owned by the corporation as well as the bank accounts were divided according to the stipulations of the parties, however. The parties agreed that the distribution of the corporation's property as setforth in the stipulation was equitable and should not affect the court's distribution of the parties' remaining marital property and, therefore, no further determination of value of that property was necessary. The value of the bank accounts distributed to defendant pursuant to the stipulation was stipulated to be the value claimed by defendant in his amended equitable distribution affidavit. The date of separation value of these accounts was intended by the parties to be considered by the court in its distribution of the remainder of their marital estate. These values, as stipulated, are contained in the record.
The clothing, personal items, jewelry and household furnishing that each party had in their possession when the equitable distribution order was entered were distributed to the party in possession, but were never classified nor valued. Additionally, the trial court found that the agreement between the parties regarding the $450,000 was a marital debt, yet the trial court never made any findings regarding the value of that debt on the date of separation. As the trial court failed to make sufficient findings to enable us to determine how the distribution calculus was performed and to evaluate the equity of the result, this assignment of error is sustained.
Plaintiff next argues that the trial court erred in finding that the house and two lots in Lake Toxaway Estates were marital property. Marital property is defined as :
[a]ll real and personal property acquired by either spouse or both spouses during the course of the marriage and before the date of the separation of the parties, and presentlyowned, except property determined to be separate property or divisible property . . . .
N.C. Gen. Stat. . 50-20(b)(1) (2003). While separate property includes:
[a]ll real and personal property acquired by a spouse before marriage or acquired by a spouse by bequest, devise, descent, or gift during the course of the marriage.
. . .
Property acquired in exchange for separate property shall remain separate property regardless of whether the title is in the name of the husband or wife or both and shall not be considered to be marital property unless a contrary intention is expressly stated in the conveyance.
N.C. Gen. Stat. . 50-20(b)(2) (2003). Plaintiff argues that title to these parcels of real property was transferred to her from the corporation as partial re-payment of her contributions to the corporation made out of her separate property.
Property acquired after marriage and before the date of separation is presumed to be marital property. Such presumption may be rebutted by the greater weight of the evidence with the burden of proof falling on the party seeking to rebut the presumption. N.C. Gen. Stat. . 50-20(b)(1); Allen v. Allen, __ N.C. App. __, __, 607 S.E.2d 331, 335 (2005). In the case sub judice the trial court found that plaintiff had not met her burden of proving that her interest in the house and lots in Lake Toxaway Estates, which were acquired during the marriage, were her separate property by the greater weight of the evidence. Findings of fact in a judgment distributing marital property are conclusive on appeal if they are supported by any competent evidence. Lawing v. Lawing, 81 N.C. App. 159, 162, 344 S.E.2d 100, 104 (1986). The only evidence presented in support of plaintiff's contention that the Lake Toxaway Estates properties were her separate property was her testimony that title to the properties had been transferred to her in consideration of money loaned to the corporation from her separate property. Plaintiff produced no documentation that indicated the purpose of the transfer of title nor any cancelled checks or promissory notes to support her contention. Defendant testified that title to the Lake Toxaway Estates properties was transferred to plaintiff because they had decided to keep the house for their residence for two years before selling it and rolling over the profits due to tax considerations. Defendant further testified that plaintiff filled out the deeds and paperwork necessary for the transfer of title from the corporation to her and told him that it did not matter whether both their names were on the resulting title because they were married.
Although it is undisputed that plaintiff made significant monetary contributions from her separate estate to the parties' endeavors, the evidence presented at trial was not sufficient to show to what extent her title to the Lake Toxaway Estates was traceable to those funds. At no time during presentation of her evidence did plaintiff account for the payment of her personal expenses from the amount she received as separate property nor the amount of profit realized from the sales of the home previouslybuilt and rolled into subsequent purchases culminating in the acquisition of the Lake Toxaway Estates properties that was attributable to defendant's efforts. As there is competent evidence that plaintiff has failed to carry her burden in rebutting the presumption that the Lake Toxaway Estates properties are marital property, this assignment of error is overruled.
Plaintiff next argues, and defendant agrees, that the trial court erred in finding the agreement between the parties regarding the $450,000 to be a marital debt. Marital debt is debt which is incurred during the course of the marriage by one or both spouses for their joint benefit. 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); see N.C. Gen. Stat. . 50-20(b)(1) (2003). Here, there is no evidence that the debt was incurred during the marriage and there is no indication that the debt inured to the benefit of both parties. Accordingly, this assignment of error is sustained.
As discussed supra, the trial court failed to make findings sufficient for this Court to review whether or not its distribution judgment was correct. Consequently, we are unable to address plaintiff's remaining assignments of error absent the trial court's making additional findings sufficient to make determinations regarding those assignments of error.
Affirmed in part, reversed in part and remanded for additional findings regarding the date of separation valuation of all items of marital property.
Judges WYNN and BRYANT concur.
Report per Rule 30(e).
*** Converted from WordPerfect ***