Husband, an attorney, and Wife, who managed his law firm, divorced after a thirty year marriage. After four years of litigation, the parties appealed and cross appealed numerous issues for the Appellate Court to review.
Contingency Fees
The first issue the Appellate Court addresses is whether contingency fee cases are marital property subject to division. On appeal, Wife argues that the Trial Court erred by finding contingency contracts were not property and granting summary judgment prematurely. The Court of Appeals holds that contingency fee cases are income-generation devices and do not give an attorney any ownership interest, therefore they are not determinate things. As contingency fee contracts are not determinate things, they are not property subject to division by the terms of KRS 403.190. The Court of Appeals holds the Trial Court did not err in finding the contingency contracts were not divisible property, and did not err in granting summary judgment without a valuation of the contracts, as no material issue of fact existed given the contracts were not property.
Dissipation
Next, Wife argues the Trial Court erred by finding Husband did not dissipate marital property. The Court of Appeals holds the Trial Court did not err as Wife did not show dissipation by preponderance of the evidence. The record clearly showed both parties traveled, spent extravagantly, and spent marital funds as they had during the marriage. Neither party showed a clear intent to deprive the other of marital funds.
Maintenance
Wife appealed the Trial Court’s maintenance award arguing the amount was too small and the duration was too short. The Court of Appeals holds the Trial Court did not abuse its discretion and properly analyzed Wife’s monthly expenses and modified certain expenses based on testimony granting reasonable maintenance in consideration of the parties’ lifestyle and the property division.
Husband appealed the Trial Court’s maintenance award arguing Wife should not have been granted maintenance as her property generated enough income to meet her reasonable needs. The Court of Appeals again held there was no abuse of discretion as the Trial Court properly considered reasonable needs in light of the parties situation stating, “what constitutes ‘reasonable needs’ varies based on the marital situation” and cannot be determined in a “vacuum.”
Husband also argued it was an error for the Trial Court to award Wife maintenance beyond her retirement age citing the Weldon case. Weldon v. Weldon, 957 S.W.2d 2283 (Ky. App. 1997). The Court of Appeals disagrees holding Weldon supports the Trial Court’s decision as here the Trial Court awarded a modest amount of maintenance for a definite number of years.
Attorney Fees
Wife appealed the Trial Court’s decision not to award her additional attorney fees. The Trial Court had considered the financial resources of both parties, noted the marital estate had paid for $14,000 of Wife’s fees and Husband had paid $10,000, and found Wife received significant assets before denying Wife’s request for fees. The Court of Appeals affirms the Trial Court’s order as the Trial Court did not abuse its discretion.
Non-marital Interest in Marital Residence
Husband appealed the Trial Court’s calculation of Wife’s non-marital interest in the marital residence. There is no question that Wife invested $125,000 of her nonmarital funds in the parties’ first home. Upon the sale of that home, which increased in value, Wife’s full non-marital share remained. The Court of Appeals did not assign any increase in value to Wife’s nonmarital share, holding that the presumption is that an increase in value is due to marital contributions unless proven otherwise. Wife did not meet her burden of proving the increase in value was due to “general economic conditions rather than marital contributions.”
The parties then purchased land and constructed their second home with $125,000 of Wife’s non-marital funds and the $85,000 of marital funds from the sale of their first home, as well as loans totaling $825,000. The non-marital and marital funds were co-mingled in the construction of the house and the parties ultimately lost money on the home selling it for $878,000, a loss of $157,000. Due to the reduction in the mortgage, the parties received $137,717.02 in proceeds from the sale of the home. The Trial Court award wife her $125,00 non-marital share and order the parties to equally divide the remaining $12,717.02.
Upon review, the Court of Appeals holds that loss due to general economic circumstances should be shared equally between a marital and nonmarital interest. The court applies the Brandenburg formula to reduce the marital and non-marital shares accordingly. As some factual findings regarding a $50,000 marital contribution were unclear, the Court of Appeals remands the issue to the Trial Court to make the relevant finding and use the Brandenburg formula to reduce the Wife’s non-marital share from $125,000 to $51,386.95 or $44,713.32.
Post-nuptial Agreement
Husband and Wife entered into an agreement during the marriage that Wife intended to use $35,000 of her non-marital funds to pay off marital debts. The agreement stated that if the funds could not be clearly traced to a marital asset upon dissolution, Wife would receive the funds from the marital property. Husband, without citing any law, argues on Appeal that the Trial Court erred in awarding Wife the $35,000 because the funds could not be traced. The Court of Appeals holds the Trial Court did not abuse its discretion noting no evidence was offered at trial in support of Husband’s claim other than an expressly refuted assertion by Husband.
Amendment of Findings of Fact and Conclusions of Law
Husband argues the Trial Court erred in amending the findings of fact and conclusions of law pursuant to CR 59.05 citing Gullion v. Gullion which favorably cited the standards set forth for reconsideration of judgment under the Federal Civil Rules. Gullion v. Gullion, 163 S.W.3d 888 (Ky. 2005). The Court of Appeals find no Gullion error holding the Trial Court did not err by granting the CR 59.05 motion.
Mortgage and Property Taxes
Husband’s last argument is that the Trial Court erred in ordering him to pay the mortgage and taxes on the marital home while Wife resided in the home post-trial. The Court of Appeals reviews only for manifest injustice as Husband’s brief did not conform with the Civil Rules for Appellate Briefs. The Court of Appeals affirms the Trial Court noting its “yeoman’s effort” to divide the marital property pursuant to KRS 403.190(1).
Digested by Elizabeth M. Howell
