STEPHANIE CALLANAN,
Plaintiff,
v
.
Transylvania County
No. 01 CVD 129
BRIAN A WALSH,
Defendant.
Prince, Youngblood & Massagee, by Sharon B. Alexander, for
plaintiff-appellant/cross-appellee.
Adams Hendon Carson Crow & Saenger, P.A., by S. J. Crow, Joy
McIver, Martin Reidinger, and Matthew S. Roberson, for
defendant-appellee/cross-appellant.
JACKSON, Judge.
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).
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