Kentucky Case Law Review by Topic: October 1, 2021 through November 30, 2021

“Baby it’s cold outside…”

(Interrupts) “It’s fine, Henry. I’m wearing furs.”

Bond v. Bond, No. 2020-CA-1446-MR (Ky. App. 2021)

KRS 403.190
Marital Property: burden of proof, separate property

Dated: October 1, 2021
To be Published
Affirming

At the time of the parties’ 2015 divorce, Husband had an open medical malpractice claim against a center which he alleged performed unnecessary procedures on him during the time of the marriage, and the trial court reserved judgment on whether a portion of any related proceeds would be deemed marital. Husband prevailed, along with numerous other claimants, in a global settlement administered by a Special Master appointed by the circuit court.

The settlement was distributed to claimants in two ‘phases:’ the first compensated individuals on a points system, based on the types of procedures performed; and the second compensated certain individuals additional amounts for extraordinary damages, including allergic reactions, disability, lost wages, aneurysms, and death. Husband received $357,415.50 from the first phase and made no additional claim for phase two funds.

When Wife became aware of Husband’s proceeds, she filed a motion to reopen the dissolution action, asserting some or all of Husband’s settlement was marital property. With an affidavit from his personal injury attorney, Husband argued that -because he had received his settlement from the first phase, only- the proceeds were non-marital compensation for pain and suffering. Following a 2020 hearing at which Husband’s personal injury attorney was the only witness, the trial court agreed with Husband, writing: “Pain and suffering damages are non-marital in nature and not subject to division as a marital asset.” Wife appealed.

The trial court’s assessment of whether an item is marital or non-marital is reviewed under a two-tiered scrutiny in which the factual findings made by the [trial] court are reviewed under the clearly erroneous standard and the ultimate legal conclusion denominating the item as marital or non-marital is reviewed de novo.

In its decision, the Court noted that the treatment of personal injury settlements is not clearly addressed in the language of KRS 403.190, but is clarified under the guidelines set forth in Weakley v. Weakley, No. 731 S.W.2d 243 (Ky. 1987). Under Weakley, awards for lost wages during the marriage may be considered marital property, but awards for pain and suffering alone should not.

While Weakley added significant clarification to the law surrounding the classification of personal injury awards, the Court did not address “the proper procedures for the allocation between marital and non-marital property of a personal injury award for an injury sustained during the marriage where the settlement or judgment does not indicate what portion of the award applies to earning capacity and what portion is allocated to pain and suffering…

The Court continued: “While the Weakley Court did not adopt a test for trial courts to follow where the settlement was silent, we reject that it intended all proceeds from a silent settlement to be classified as marital property.” Instead, the Court found that Husband had an evidentiary burden to prove his settlement was non-marital property, and that its own review of the trial court’s decision should fall under the “clearly erroneous” standard. Based on the testimony of Husband’s personal injury attorney that Husband claimed his settlement under phase one, only, with no countering evidence provided by Wife, the trial court found that Husband had sufficiently proved his non-marital claim. And the Court affirmed.

Pettingill v. Pettingill, Nos. 2018-CA-0632-MR & 2018-CA-0923-MR (Ky. App. 2021)

Civ. R. 60.02
Marital Property: dissipation, valuation (home)

Dated: September 17, 2021
Not to be Published
Affirming in Part, Reversing in Part, and Remanding

Following the entry of the parties’ 2014 limited decree of dissolution, property division and valuation disputes continued on a number of items, including: marital and non-marital equity in the home, escrowed proceeds from a car sale, personal property, the parties’ respective retirement accounts, and Husband’s responsibility for withdrawals from his retirement account.

A property division judgment was entered in 2015, concerning equity in the home, the escrowed proceeds, and the parties’ respective retirement accounts. In the judgment, Husband’s interest was reduced by half of the amount of withdrawals he had made from his retirement account. Husband filed a notice of appeal, but subsequently filed a motion for additional findings related to the parties’ personal property and his withdrawals from his retirement account.

Following Husband’s motion, Wife (who retained all or nearly all of the parties’ personal property) provided Husband with his share of the personal items, per the trial court’s findings, and was to receive the escrowed funds along with an additional amount paid by Husband for equalization. Husband appealed again, and the trial court’s order following his first appeal was found void ab initio, and vacated. The Court also remanded the matter of his withdrawals from his retirement account, agreeing with Husband that his other marital property interests could not be reduced by the withdrawal amounts, absent a finding of dissipation. The Court also sided with Husband regarding the valuation of the home.

Because of the timing of Husband’s consolidated appeal, Wife neither received the escrowed proceeds nor the additional amount to be paid by Husband under the order assigning personal property, despite having provided him with said personal property. Following its home equity findings on remand, the trial court denied Wife’s motion seeking payment of the assigned amounts, on the basis that it lacked jurisdiction based on the Court’s directives. Wife’s subsequent Civ. R. 60.02 motion was denied, and she appealed.

The Court ultimately affirmed the trial court’s valuation of the home, but agreed with Wife concerning the personal property given to Husband, and payments owed to her, and reversed and remanded.

Having reviewed the facts, we have no difficulty concluding that the [trial] court abused its discretion in failing to grant relief to [Wife] under CR 60.02(f) where: (1) [Husband] invited the error by filing a motion for division of the personal property while the judgment was pending on appeal; (2) [Husband] accepted delivery of marital personal property which was valued at $45,542 while [Wife] retained marital personal property valued at $5,959 pursuant to a court order before [Husband] filed an appeal challenging the validity of this order so as to avoid his award being reduced due to an equalizing payment; (3) [Husband] failed to return the marital personal property once the order was deemed void; (4) on remand, [Husband] having previously used the court system to obtain possession of the bulk of the marital personal property that was in [Wife’s] possession, argued that she was not entitled to any compensation for it because the underlying order was void; and (5) [Husband] further argued [Wife] could not receive compensation for the marital personal property now in his possession because she did not preserve the issue after the [trial] court failed to divide the personal property in the original judgment (ignoring the fact that he did not preserve this issue either, but still sought and received relief and delivery of the property under the void order).

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