Kentucky Case Law Review by Topic: March 16, 2020 through July 30, 2020

Russelburg v. Russelburg, No. 2017-CA-001639 (Ky. App. 2020)

Marital Property: separate property
Property Settlement Agreement: ambiguity, Civ. R. 60, regret, unconscionable

Dated: March 6, 2020
Not to be Published
Affirming

H & W signed a property settlement agreement stating all accounts of W were marital property. Subsequently, W argued the QDRO erroneously contained W’s non-marital retirement funds. W argued the property settlement agreement was ambiguous, relying upon Duke v. Duke , No. 2007-CA-001048-MR (Ky. App. 2008)(affirming that settlement agreement is ambiguous, no express relinquishment of right to non-marital property and agreement not explained).

Court distinguished that this property settlement agreement was unambiguous because it expressly stated all of retirement accounts in W’s name were marital property and other parts of agreement referred to non-marital property, and W was represented by counsel and had time to review.

W lastly argued that the property settlement was unconscionable, but Court found W offered no reason why agreement was “manifestly unfair or inequitable” and “[r]egret is insufficient reason to grant 60.02(f) relief.”

Not the store with irreverent t-shirts

Williams v. Williams, No. 2019-CA-000332-MR (Ky. App. 2020)

Civ. R. 52.04: Civ. R. 76.12(4)(c)(v), written request for findings
Marital Property: abuse of discretion, dissipation, findings of fact, separate property,

Dated: April 3, 2020
Not to be Published
Affirming

Court affirmed distribution of property, which was appealed by H, finding no abuse of discretion. H asserted trial court failed to correctly divide property using three-step process from Travis v. Travis, 59 S.W.3d 904 (Ky. 2001). H argued court failed to characterize property as marital or non-marital, failed to assign marital property to proper party, and failed to equitably divide marital property. However, the Court cites Travis, “KRS 403.190(3) explicitly allocates burden of proof to the party claiming property as non-marital[,]” in disregarding H’s complaint regarding trial court’s lack of findings of fact.

Court agreed with H that there was a lack of findings of fact as to the specific value of items of personal property and whether items were marital or non-marital, but that the lack thereof should be disregarded because H failed to request such findings pursuant to CR 52.04 (requiring a written request for findings pursuant to Rule 52.02 for a final judgment to be reversed or remanded for failure of trial court to make a finding of fact). Further, H failed to state in record where he sustained his burden of proof regarding marital or non-marital nature of personal property pursuant to CR 76.12(4)(c)(v) and CR 52.04. The Court noted that H’s general statement at a hearing was insufficient to prove the non-marital nature of any specific item.

The trial court had determined $50,000 withdrawn by H from bank accounts immediately following the parties’ separation was marital property and ordered the funds split in half between the parties. The accounts were in H’s name only but nothing in the record indicated that they were non-marital property. H argued that the trial court awarded funds without finding of dissipation of the funds or W’s contribution to the funds. The Court specified that H did not provide any proof as to where he spent the $50,000 he withdrew from the bank accounts and that W had no obligation to prove dissipation. The Court found no abuse of discretion pursuant to Hempel v. Hempel, 380 S.W.3d 549, 553 (Ky. App. 2012). Finally, the Court found no palpable error under CR 61.02, for failure of the trial court to make specific findings prior to awarding W half of the withdrawn funds, finding fair and equitable division of property.

Goulbourne v. Goulbourne, No. 2018-CA-001536-MR (Ky. App. 2020)

Civ. R. 52.01: conclusions of law, findings of fact
KRS 403.190(3): presumption increase in value is marital
Maintenance: failure to consider/name retirement account
Marital Property: appreciation (passive), debts, separate property, source of funds, tracing

Dated: April 17, 2020
Not to be Published
Affirming

Court found that the findings of fact of the family court, even though a very close question, were supported by substantial evidence “that a reasonable mind would accept as adequate to support a conclusion and when taken alone or in light of all evidence, has sufficient probative value to induce conviction in the minds of reasonable men.” Citing Moore v. Asente, 110 S.W.3d 336, 354 (Ky. 2003) (footnotes omitted).

H alleged family court failed to follow CR 52.01 (providing that court shall find the facts specifically and separately, state conclusions of law, and render appropriate judgment) by failing to make any conclusions of law. The Court admonished that a better practice is for courts to set out the conclusions of law specifically and separately; however, the Court found the family court complied in substance with the conclusions of law. Lynch v. Dawson Colliers, Inc., 485 S.W.2d 494, 496-97 (Ky. 1972). The Court noted that the conclusions of law could be gleaned from the “analysis” section even though the family court did not use the label “conclusions of law.” H also took issue that the family court adopted W’s proposed findings of fact in their entirety. While again stating that this is not the better practice, the Court discussed how under the proper circumstances delegating the clerical task of drafting proposed findings of fact and conclusions of law is permitted. Bingham v. Bingham, 628 S.W.2d 628, 629 (Ky. 1982). In Bingham, the findings and conclusions of law were adopted verbatim, but there was no evidence that it was ‘mechanical.’

H also argued that maintenance award to W was erroneous because the family court failed to consider W’s retirement account as part of her property. The Court indicated that both parties had close to equal retirement accounts and that the family court had considered the accounts, as well as loans against the accounts, in its division of property. The Court found no abuse of discretion, given the record as a whole, in the maintenance award to W, even though the family court failed to specifically name W’s retirement account in its maintenance award. H made other numerous meritless arguments against award of maintenance, which the Court found were all well-considered by the family court and were not an abuse of discretion.

Court also found that the family court’s determination of marital debts was not an abuse of discretion since the family court considered numerous relevant factors. Additionally, the burden of proving a debt as marital rests with the party that incurred it and now claims it as marital; the Court found evidence H produced at trial was not sufficient to prove debts were marital.

Court further affirmed family court correctly found portion of W’s increase in retirement benefits to be non-marital. The standard of review as to the nature of assets is set out in Cobane v. Cobane, 544 S.W.3d 672, 682 (Ky. App. 2018) (finding that when property is acquired through marital and non-marital funds, the court must first determine the parties’ separate non-marital and marital interests in the property based on the source of those funds). Additionally, Cobane found that if a piece of mixed-status property increases in value during the marriage, the court must then determine from the evidence why the increase in value occurred. Id. If the increase is due to general economic conditions (sometimes referred to as “passive growth”), such increase is not marital property. Id. But, if the increase in value is a joint effort of the parties, then the increase is marital property. Id. Since KRS 403.190(3) establishes the presumption that any increase in value is marital, the party asserting that they should receive appreciation on a non-marital contribution as their non-marital property carries the burden of proving the portion of the increase in value attributable to the non-marital contribution is not due to joint effort of the parties. Id. If the challenging party fails to prove this, the increase is characterized as marital due to the presumption set up by KRS 403.190(3). Id. Here, the family court ruled that W presented proof (even though it was through her testimony alone) that the portion of increase to her premarital retirement benefits was non-marital. In Cobane, H only presented beginning and ending numbers, H did not present evidence as to the actual growth of the accounts during the marriage. Here, the parties stipulated to the beginning/premarital and present values of W’s retirement account and W testified (with no objection by H) that she accessed her retirement account online and gave the average rate of return on her account. The family court made corresponding findings of fact and determined the passive appreciation among as W’s non-marital property.

H also made various arguments regarding the family court’s failure to divide marital property in just proportions and made assertions that he should have been awarded a larger portion of marital properties. The Court made it clear that it will not search the record to make H’s arguments, nor go on fishing expeditions to support his undeveloped arguments.

Dissent by Judge Buckingham: Judge Buckingham concluded that the trial court abdicated its fact-finding and decision-making responsibility under CR 52.01 because the family court adopted verbatim the findings, conclusions and supplemental decree submitted by one of the parties only seven days after it had been submitted. Judge discussed that there is a recent trend by courts to adopt findings of fact and conclusions of law submitted by counsel rather than making their own findings and conclusions, but asserts there is no hard and fast rule always allowing courts to abdicate this responsibility. Judge cited Callahan v. Callahan, 579 S.W.2d 385 (Ky. App. 1979) (holding trial court improperly failed to draft its own findings required by CR 52.01 and discussing that certain conditions may allow for delegation for “purely clerical reasons” to counsel but should be limited to routine matters and closely scrutinized by the court), Bingham v. Bingham, 628 S.W.2d 628 (Ky. 1982) (finding that delegating the task of drafting findings of fact and conclusions of law does not violate the trial court’s responsibility under the proper circumstances, where the record shows that the trial court prudently examined and made additions and corrections to counsel’s submitted findings and conclusions and there was not a mechanical or verbatim adoption), Prater v. Cabinet for Human Resources, 954 S.W.2d 954 (Ky. 1997) (stating that it was not error for the trial court to adopt findings of fact merely drafted by someone else), Retherford v. Monday, 500 S.W.3d 229 (Ky. App. 2016) (vacating and remanding case back to trial court who had adopted verbatim findings and conclusions submitted by counsel and cautioning that Callahan is the ruling case and recognizing the disfavor under CR 52.01 and case law) and Keith v. Keith, 556 S.W.3d 10 (Ky. App. 2018) (finding that the trial court and DRC did not err when the trial court adopted DRC’s findings which were substantially adopted from counsel’s proposed findings after a full evidentiary hearing and review by the court). Judge Buckingham distinguished Prater: in Prater, the findings of fact simply parroted language from the parental rights termination statute.

Ehret v. Ehret, 2018-CA-001576-MR (Ky. App. 2020)

QDRO: equalization payment, gain or loss, standard of review, valuation date

Dated: April 17, 2020
To be Published
Affirming

Court affirmed the family court order ruling that the QDRO did not allow for W’s equalization payment to be subject to gains or losses from the valuation date (July 20, 2012) to present. The abuse of discretion standard of review is applicable to division of assets pursuant to a divorce decree. See Young v. Young, 314 S.W.3d 306 (Ky. App. 2010) and Duncan v. Duncan, 724 S.W.2d 231, 234-35 (Ky. App. 1987) (holding “trial court retains broad discretion in valuing pension rights and dividing them between parties in a divorce proceeding[.]”).

The parties agreed on all but one issue and entered into an agreed order that stated the remaining asset to be divided was H’s deferred compensation plan. The parties further agreed to use the plan for equalization of other marital assets, and that after equalization, the remainder of the plan was to be equally divided based on the value as of July 20, 2012. The Court declined to find error, specifically noting that the lower court made findings that the parties had stipulated in the agreed order to a valuation date for the division of the plan and set forth a specific amount to be paid to W representing equalization of the marital assets.  Additionally, the Court noted that the parties’ documents were silent regarding gains and losses of the plan, which supported the finding that the parties intended assets to be divided at a specific sum and that the court could not order a new sum, resulting from market gains or losses.

Thomas v. Pate, 2019-CA-000346-MR (Ky. App. 2020)

Marital Property: equitable distribution, standard of review

Dated: April 17, 2020
Not to be Published
Affirming in Part, Reversing in Part, and Remanding

Court found no abuse of discretion or error by trial court in determining marital equity in vehicles owned by parties.  The trial court found W owed H half the full value of vehicle rather than half the equity of the vehicle since the W had received the vehicle debt free and assigned the vehicle debt to H.  KRS 403.190(1) directs the trial court to divide property in just proportions examining relevant factors, but does not require an equal division.  See Lawson v. Lawson, 228 S.W.3d 18, 21 (Ky. App. 2007).

McKim v. Zheng Ping Fu, 2018-CA-001693-MR (Ky. App. 2020)

Indispensable Parties: financial institutions

Dated: May 1, 2020
Not to be Published
Affirming

Parties married in China, without any type of prenuptial agreement, after meeting on an internet dating site. W was from China and H had homes in Florida and Kentucky. Three years later the couple moved to Kentucky, after W got a marriage visa. H sold the Florida home and proceeds were later placed in Fidelity Investments. H died the next year while living in Kentucky and H’s daughter filed H’s will for probate. The will had been prepared prior to H’s marriage and H’s daughter did not list the proceeds from the Florida home or the proceeds of an offshore trust at Southpac Trust. W renounced will and asserted her dower rights.

Court affirmed the lower court’s denial of H’s estate’s motion to dismiss for failure to join indispensable parties. H’s estate had argued that Fidelity Investments and Southpac Trust and H’s daughter, in her capacity as Trustee of H’s Testamentary Trust were indispensable parties. Kentucky Rule of Civil Procedure (CR) 19.01 contains the definition for an indispensable party, and case law asks can “the controversy . . . be resolved between the existing parties without prejudicing” the rights of Fidelity and Southpac Trust? Gilland v. Dougherty, 500 S.W.3d 217, 223 (Ky. App. 2016). The Court discussed that Fidelity and Southpac Trust are institutions, merely holding funds to be dispersed per the ultimate ruling in the case. The Court further noted that these institutions had “no interest [which] would be divested by an adverse judgment.” West v. Goldstein, 830 S.W.2d 379, 382 (Ky. 1992).

H’s estate further argued that H’s daughter should have been named in her capacity as Trustee of H’s Testamentary trust (trust for H’s kids and grandkids).  The Court discussed that H’s daughter was named in her capacity as executrix since W renounced the will and that the terms of the testamentary trust are only affected as far as the monies to funds it are affected.

Scionti v. Scionti, Nos. 2017-CA-000511-MR, 2017-CA-000970-MR (Ky. App. 2020)

Military Retirement: division

Dated: May 22, 2020
Not to be Published
Reversing and Remanding

H appeals family court order granting W 26% of H’s military retirement and order denying H’s motion to alter, amend or vacate. The Court reversed and remanded back to the family court for a new hearing for the parties to present evidence to allow the family court to make appropriate findings. Poe v. Poe, 711 S.W.2d 849 (Ky. App. 1986) sets forth the computation for division of military retirement benefits.

W filed for two post-decree hearings (H failed to appear at initial and rescheduled hearings) to receive her share of H’s military retirement benefits. An order and a Military Retired Pay Division Order was entered by the family court awarding W 26% of H’s disposable retired pay plus 26% of future cost-of-living adjustments (COLA). H filed various motions requesting a hearing to make factual findings and correctly calculate the percentage, arguing the 26% award was not supported by evidence. It should be noted that W was pro se on appeal and did not file a brief. The Court observed this could be construed as a “confession” that there was an error in the percentage computation. The Court was also unable to determine how the family court arrived at 26%, noting that there was a lack of explanation and factual finding.

Akers v. Akers, No. 2019-CA-000322-MR (Ky. App. 2020)

Marital Property: dissipation

Dated: June 12, 2020
Not to be Published
Affirming

H appealed final judgment of family court, following entry of limited decree dissolving marriage. H argued that the family court failed to conclude that W dissipated marital assets and erred in the amount and duration of maintenance awarded to W.

W had withdrawn $63,000 from a joint bank account prior to filing the petition for dissolution. The Court discussed dissipation and how it must be shown by a preponderance of the evidence, and the family court’s findings of fact are upheld if supported by substantial evidence. Kleet v. Kleet, 264 S.W.3d 610, 617 (Ky. App. 2007). There was conflicting evidence presented that W had placed the funds in a safe that was later reported part of a robbery that H was involved in; however, H denied taking the cash. There was no error on the part of the family court since the family court could not determine by a preponderance of the evidence which party ended up with the funds. The family court evenly divided the funds in a Solomon-like manner between the parties “in the event the money is located.”

Satterfield v. Satterfield, No. 2019-CA-00011-MR (Ky. App. 2020)

KRS 413.090(1): statute of limitations
QDRO: equitable estoppel, laches, unjust enrichment,

Dated: June 26, 2020
To be Published
Reversing and Remanding

In divorce decree, trial court had entered an Order dividing H’s pension and stating that H shall execute a QDRO within 30 days of entry.  H did not execute the QDRO as required by the decree.  W did not find out until 20 years later when she hired an attorney.  W’s attorney prepared the document and moved the family court to enter the tendered QDRO into the record.  H objected, citing the 15-year statute of limitations set out in KRS 413.090(1), and arguing that QDRO could not be executed outside the statutory period.  The family court denied W’s motion on that basis.

Court ruled that H was unjustly enriched by his failure to abide by the dictates of the decree and failing to execute the QDRO. The Court discussed the de novo review standard applied to the question of law determining whether the family court’s application of the statute of limitations in this case causes H to be unjustly enriched. Dodson v. Key, 508 S.W.2d 586 (Ky. 1974). Comparing this case to Bailey v. Bailey, 399 S.W.3d 797, 803 (Ky. App. 2013) (concluding that, as a matter of equity, one spouse should not be permitted to alienate the other from their share of retirement benefits), H’s failure to execute a QDRO deprived W of her share of the pension and unjustly enriched H since he retained her share.

The doctrine of equitable estoppel precludes H from invoking the 15-year statute of limitations set out in KRS 413.090(1). See Munday v. Mayfair Diagnostic Laboratory, 831 S.W.2d 912 (Ky. 1992) (holding that the doctrine of equitable estoppel will operate to bar an inequitable application of a statute of limitation). In Munday, the court found “[o]rdinarily, proof of fraud requires a showing of an affirmative act by the party charged. An exception to this general rule may be found in a party’s silence when the law imposes a duty to speak or disclose.” Id. at 914. Similarly, H’s failure to execute the QDRO is sufficiently akin to “silence when the law imposes a duty” to act as to fall within the rationale of Munday.

Finally, the Court dismissed H’s argument that W had waited too long to enforce the judgment. The Court specified that this was not a case for laches (unreasonable delay in asserting a right), because W had no reason to inquire about the execution of the QDRO until payout was expected and H suffered no prejudice.

Brown v. Brown, No. 2018-CA-000448-MR (Ky. App. 2020)

Maintenance: retirement funds
Witness: expert

Dated: July 10, 2020
Not to be Published
Affirming

Simple concepts, but worth repeating: 1) a party receiving maintenance should not be required to expend retirement funds to reduce the amount of spousal maintenance required to meet their needs; and 2) a trial court is not bound by expert testimony when it finds the same to be unreliable.

Editor’s Note: I reviewed and blogged about a more recent Kentucky Court of Appeals decision, Peck v. Peck, wherein the Court considered this same issue CLICK HERE. The Peck Court relied upon the same 2003 Kentucky Supreme Court as the Brown Court (Powell v. Powell), and affirmed the trial court’s consideration of retirement assets in calculating the payee’s maintenance award.

Plonski v. Plonski, No. 2019-CA-001009-MR (Ky. App. 2020)

Marital Property: debts, dissipation
QDRO: loan

Dated: July 17, 2020
Not to be Published
Affirming

W claimed H dissipated marital assets, including $50,000 from his 401(k). H did not dispute borrowing money from his 401(k), but testified that he took a loan to secure his liquidity during the divorce proceedings and to ensure debt payments and tuition for the parties’ eldest child. The family court held H would be responsible for paying back the $50,000 loan from his 401(k) because he did not submit evidence that the funds were used to pay marital expenses or children’s college tuition. After additional motions by both parties to alter, amend, or vacate the judgment, the family court issued a supplemental order concluding that the $50,000 loan was a marital debt and ordered the current balance of the 401(K) be offset by the loan balance before dividing the remainder by QDRO.

W contends the family court erred by requiring her to prove H dissipated $50,000 from his 401(k) and argues that the family court confused the burden of proof with the burden of going forward with the evidence. Specifically, W relied on Brosick v. Brosick, 974 S.W.2d 498, 502 (Ky. App. 1998) (stating the spouse alleging dissipation should be required to present evidence establishing that the dissipation occurred; once the dissipation is shown, placing the burden of going forward with the evidence on the spouse charged with the dissipation is reasonable because that spouse is in a better position to account for these assets).

However, the Court disagreed with W’s interpretation of the family court’s ruling that W failed to prove intent to deprive: W did not establish dissipation and the family court never reached the “burden of going forward with the evidence” phase. Based on Kentucky case law, W was required to establish dissipation occurred before the burden shifted to Husband to prove the marital assets were not used for non-marital purposes. Brosick, 974 S.W.2d at 502. Simply because H took a loan against the 401(k) before filing the Petition does not, in and of itself, prove dissipation. Therefore, the family court did not err in requiring W to make a prima facie case that dissipation occurred.

Blog Posts are intended to bring attention to developments in the law and are not intended as legal advice for any particular client or any particular situation. Please consult with counsel of your choice regarding any specific questions you may have.