Kentucky Case Law Review by Topic: February 1, 2021 through March 31, 2021

Little v. Little, No. 2020-CA-0420-MR (Ky. App. 2021)

Maintenance
Marital Property: equalization, professional degree

Dated: March 12, 2021
Not to be Published
Affirming

The parties married in 2010, two children were born of the marriage, and the parties separated in April of 2019. Due to her employment as a nurse anesthetist, Wife had a significantly higher income than Husband, and in his appeal of the trial court’s rulings, Husband argued that Wife’s greater earning capacity should have entitled him to an uneven split of their marital retirement assets.

After dispensing with some procedural defects in Husband’s filing, along with his assignments of error related to parenting time and the venue, the Court also overruled Husband’s arguments: (1) that Wife’s advanced degree was marital property; and (2) the trial court erred in its determination of maintenance and property distribution.

Reviewing for abuse of discretion, the Court affirmed the trial court’s rulings, found that the parties’ relatively modest lifestyle did not necessitate maintenance to Husband, and noted that the property division appeared to be entirely “just.” As for Wife’s degree, the Court—citing to and relying upon well-settled law—determined division of her degree was simply impermissible under Kentucky law, and that while a court is permitted to “consider one spouse’s contribution to the other spouse obtaining a professional degree when determining maintenance and property division,” such considerations were unnecessary here based on the facts and circumstances presented to the trial court.

Bell v. Bell, Nos. 2020-CA-0017-MR & 2020-CA-0114-MR (Ky. App. 2021)

Maintenance
Marital Property: debts, dissipation, equitable distribution, tax liability, vesting
QDRO

Dated: March 19, 2021
Not to be Published
Affirming

Husband and Wife were married in 1987, separated in 2015, and Husband filed for a petition for dissolution of the marriage in 2017. During the proceedings, Wife was awarded temporary maintenance, and sought records relating to Husband’s interest in the law firm in which he was a partner. Husband’s firm asserted that the firm’s contingency fee contracts were protected by work-product doctrine and attorney-client privilege, but Wife successfully argued for their release, citing Grasch v. Grasch, No. 2016-SC-000591-DG (Ky. 2017) (click here to read my previous post about Grasch, and here to search the EZ QDRO LAW Blog for other cases citing Grasch).

Several months later, the trial court issued findings of fact, wherein it wrote that Husband had signed a $500,000 promissory note for partnership at his firm, which had largely gone unpaid until after the dissolution action was filed and the firm settled a significant case (at which time he paid $300,000 in attorney fees). After this, the partnership separated, but there were no formal filings related to the firm’s dissolution at the time. Based on this, the trial court found that Husband retained an interest in the firm’s contingency fee contracts, and that he voluntarily removed himself from the partnership to dissipate his interest in the firm. Wife was awarded 27% of his interest in all contingency fee contracts settled by the firm between September 1, 2018, and the date of decree.

Husband’s retirement assets of approximately $352,362.13 were believed by the trial court to be subject to attachment by the IRS, related to significant tax debts incurred from 2014 through Husband’s filing for dissolution in 2017. The trial court awarded all of Wife’s smaller account to her, as well as $49,600 from Husband’s account for his maintenance arrearage, and split the remaining balance between the parties.

As of the dissolution, the parties’ tax debt amounted to $261,052.01, $11,828.84 of which was assigned by the trial court to Wife, as her share of the 2014 tax bill. The trial court ordered that this amount would be paid out of her share of the contingency fee contracts. In consideration of the parties’ respective earning capacities, the trial court awarded Wife maintenance on a declining scale, as well as $5,000 in attorney fees for Husband’s obstructive conduct throughout the proceedings.

Both parties appealed, and the Court ultimately affirmed the trial court’s rulings in each instance.

In his own appeal, Husband argued the trial court misapplied Grasch in awarding Wife an interest in the contingency fee contracts, alleging the partnership had dissolved by August 2018, and with it his own eligibility to receive payments from the contracts in question. The Court disagreed, writing:

…the [trial] court was convinced that [Husband] retained an interest in the contingent-fee contacts despite the alleged dissolution of the partnership. The partnership had not taken any formal steps to dissolve, and the firm’s clients had not been notified of any dissolution. [Husband] has continued his practice in the same office and building owned by the firm. The firm also continued to make contributions to [Husband’s] retirement program. Under the circumstances, we conclude that [Husband] failed to show that the [trial] court’s assessment of the evidence was clearly erroneous.

Husband further argued that the trial court failed to apply the “delayed distribution” approach required under Poe v. Poe, 711 S.W.2d 849 (Ky. App. 1986), when it ruled that Wife’s interest in the contingency fee contracts would be awarded from Husband’s retirement account. The Court dismissed this argument, in light of Husband’s willful removal of himself from partnership with the firm. In doing so, he made such approach impractical.

By separating himself from the firm partnership, [Husband] restricted his interest in the firm’s contingent-fee contracts, making the delayed distribution approach impractical. The [trial] court concluded that these actions amounted to a dissipation of marital assets, warranting an offset against other marital assets. Brosick v. Brosick, 974 S.W.2d 498 (Ky. App. 1998). Since [Husband] does not challenge the sufficiency of the evidence supporting these findings, we cannot find that the [trial] court clearly erred in its division of the remaining assets.

Noting that “the party claiming that a debt is marital has the burden of proof,” the Court similarly overruled Husband’s next assignment of error, and affirmed the trial court’s allocation of parties’ debt. Further, the Court noted, the parties separated in 2015, and had filed separate tax returns since. While Husband argued he had financially supported Wife during that time, he had failed to fully pay maintenance, and the marital residence was lost to foreclosure. Wife thus argued she had derived no benefit from Husband’s tax delinquency 2015-2017, and the Court found no abuse of discretion.

The Court further found that Husband failed to dispute any factual findings of the trial court in its award of maintenance, and noted the trial court “did not base maintenance only on the parties’ income and assets, but also on the lifestyle established during the marriage.” Based on this, the Court affirmed the trial court’s award of maintenance.

In her cross-appeal, Wife sought attorney fees beyond the $5,000 awarded to her, based on Husband’s obstructive conduct. In affirming the trial court’s decision, the Court noted the deference extended to any trial court in such matters under KRS 403.220 and related case law, and found “no basis to disturb the [trial] court’s discretion in the amount of its award.”

Arce v. Arce, No. 2019-CA-1371-MR (Ky. App. 2021)

Dated: March 26, 2021
Not to be Published
Vacating and Remanding

Parties divorced in 2008 and retained real property co-ownership and mutual accounts. Wife filed motion in trial court in 2018 for certain amounts awarded her under two 2008 orders, including an ‘investment account’ and an equalization payment. Subsequent to this, Husband successfully argued that the circuit court had jurisdiction, not the trial court, because the parties were now a general partnership. The Court’s opinion does not get into the substance of Wife’s motion, and the appeal is instead related to the move to circuit court, which the Court vacated and remanded, citing the process as hurried and not fully considered.

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