Kentucky Case Law Review by Topic: May 1, 2022 through July 31, 2022

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Shah v. Shah, Nos. 17-CI-03889, 2021-CA-0038-MR (Ky. App. 2022)

Marital Property: burden of proof, debts, dissipation, equitable division, valuation (home)
Witness: credibility, lay

Dated: May 20, 2022
Not to be Published
Affirming

Wife filed for dissolution in 2017, and simultaneously initiated related proceedings in India. Shortly before this time, Husband left a position earning approximately $100,000 annually, and started his own business. Throughout the dissolution action, Husband traveled extensively back and forth to India, tending to sick family members.

In addition to his traveling costs, Husband made several large purchases without consulting Wife, including a Tesla for one of the parties’ children, other luxury items, and withdrew more than $135,000 from the parties’ joint accounts. Husband further made withdrawals from a HELOC the parties opened to pay for expenses, well beyond the amount originally known and consented to by Wife.

As part of its findings, the trial court initially awarded Wife $1,000 monthly maintenance payments, based on Husband’s imputed income (despite his claims of reduced earning ability from his business), which it subsequently reduced based on Husband’s business deposits. The trial court also found that Husband had engaged in dissipation of the parties’ marital assets.

Husband appealed, arguing the trial court erred in: (1) its valuation of the marital residence awarded to Wife; (2) equally allocating the parties’ HELOC debt; (3) the marital and non-marital designation and distribution of Wife’s jewelry; (4) the award of Maintenance to Wife; (5) imputing his income for child support; (6) finding he dissipated marital assets; and (7) not awarding him attorney fees. The Court dismissed each of Husband’s arguments and affirmed the trial court’s decision, as detailed below.

In his first argument, Husband stated that the trial court wrongly relied on the marital residence’s tax appraisal, or Property Valuation Administrator (PVA), value. To bolster his argument, however, Husband offered his individual testimony at the trial court’s final hearing, and only provided appraisals evincing a higher value after the trial court issued findings adopting the PVA value for the residence.

Finding the trial court did not abuse its discretion, the Court wrote:

[Husband] chose not to obtain an expert appraisal of the property until after the [trial] court ruled in a manner he did not approve. The Robinson opinion plainly states that unless attorneys practicing domestic relations law “give the court adequate tools with which to work, they can hardly complain of inequitable results.”

In dismissing Husband’s second argument, and affirming the trial court’s decision to equally divide the parties’ HELOC debt, the Court took into account Husband’s dissipation of marital assets and the substantial HELOC debt he incurred without Wife’s knowledge, writing “[t]he division of the HELOC debt was equitable to the parties when viewed in the context of the entire marital estate and consequently it was not an abuse of discretion.

Noting Husband’s failure to present any evidence in a timely manner for his claims concerning the value of Wife’s jewelry, the Court affirmed the non-marital designation of Wife’s jewelry gifted to her by her parents, and the decision not to consider its value in awarding Wife maintenance payments.

Finding Husband’s argument against Wife’s maintenance award relied on his rejected assertions that the trial court improperly divided the parties’ marital property, the Court affirmed the trial court’s maintenance award decision. The Court also rejected Husband’s contention that the trial court erred in not deviating from the child support guidelines in consideration of the shared custody of the parties’ minor child, citing the “equal duty of both parents to contribute to the support of their children in proportion to their respective net incomes.”

Noting his failure to inform Wife of his substantial withdrawals during the pendency of the parties’ dissolution, the Court rejected Husband’s assertions that his expenses during such time necessitated and justified his use of the parties’ marital funds, and found that the trial court’s finding of dissipation was “fully supported.”

Finally, the Court rejected Husband’s argument for an award of attorney’s fees, finding he presented insufficient evidence for his assertion that Wife’s opening of a separate legal action in India caused additional delay or expenses, or was unfounded.

Geralds v. Geralds, Nos. 10-CI-502979, 2021-CA-0667-MR (Ky. App. 2022)

Civ. R. 60.02: fraud
Marital Property: disclosure

Dated: June 24, 2022
To be Published
Affirming in Part, Reversing in Part, and Remanding

As part of the parties’ collaboratively-reached 2011 divorce, Wife was assigned 40.62% of Husband’s retirement plan with his current employer. Husband’s compensation also included a yearly long-term incentive plan (LTIP) bonus, of which he was offered two years’ worth at his retirement in 2017, in exchange for signing a non-compete agreement.

Wife subsequently learned of Husband’s post-retirement LTIP bonuses, and successfully reopened the parties’ case under Civ. R. 60.02(d) and (f), claiming Husband had not disclosed these payments as required under their collaborative agreement.

Following a hearing with multiple witnesses, including experts and a representative from Husband’s former employer, the trial court awarded Wife a share of Husband’s post-retirement LTIP payments along with attorney fees. Husband appealed, arguing the trial court had erred in (1) reopening the case, (2) awarding Wife a share of his post-retirement LTIP payments, and (3) awarding Wife attorney fees.

Noting Husband’s failure to disclose his LTIP payments at the time of the parties’ divorce (and in a subsequent 2018 hearing), the Court found no error in the trial court’s reopening of the case, and that its finding of fraud “was not unreasonable.”

The Court did, however, agree with Husband’s second assignment of error: Husband’s post-retirement LTIP payments were not a part of his retirement package, and Wife was thus not entitled to any share thereof.

First noting its de novo standard of review, the Court wrote:

The trial court found that [Wife] was entitled to a portion of the post-retirement LTIP payments because these payments were being received during his retirement; therefore, they were part of his retirement package. We disagree. [Husband] received the additional years of LTIP payments in exchange for executing a noncompetition agreement. Had he not executed the agreement, he would not have received these additional funds. This was confirmed by [Husband’s] testimony; the testimony of [Vice President of Human Resources at Husband’s employer]; and documentation entered into the record. This was new income earned after the parties’ divorce. The fact that he received this money after he retired does not mean it is part of his retirement package. This was compensation received for executing the noncompetition agreement and earned after the parties divorced; therefore, it is not marital property.

Finally, based on the rest of its ruling, the Court remanded the matter of attorney fees back to the trial court for further proceedings.

Higdon v. Higdon, Nos. 15-CI-00697, 2021-CA-0981-MR (Ky. App. 2022)

Marital Property: abuse of discretion, division, life insurance, retirement benefits (KPPA), survivorship

Dated: June 24, 2022
Not to be Published
Reversing and Remanding

In 2015, the parties filed a petition for dissolution of marriage, which they converted into legal separation proceedings pursuant to a 2017 agreement. As part of this agreement, Wife was assigned half of Husband’s ongoing Kentucky Public Pensions Authority (KPPA) benefits, along with maintenance payments intended to take the place of Wife’s share of such payments until she began receiving them directly. The agreement further stated that, should the parties choose to convert the legal separation proceedings to divorce proceedings, they will re-litigate property division unless otherwise agreed upon.

In 2021, Husband moved the trial court to convert the 2017 legal separation decree to a divorce decree, but stated he did not wish to re-litigate the division of property. Wife objected, stating that the parties’ divorce would prevent her from taking communion in church, and bar her from any KPPA survivor annuity were Husband to predecease her. The trial court subsequently denied Husband’s motion, finding he had waived his right to convert the decree based on the terms of the 2017 agreement. The Court disagreed, citing first the terms of the parties’ agreement:

The parties shall convert the divorce proceedings to proceedings for a legal separation. Both parties agreed on the record and it is so ordered that for either party to convert a legal separation decree do a divorce decree that both parties shall agree in writing and their signatures shall be attested by a notary public and for any reason if either party goes back to court to have this provision set aside then either party may re-litigate the division of assets.

Then, KRS § 403.230:

No earlier than one year after entry of a decree of legal separation, the court on motion of either party shall convert the decree to a decree of dissolution of marriage.

The Court continued, writing: “Had the parties intended to fully foreclose any possibility that the legal separation decree could be converted into one of dissolution, there would be no reason to insert language providing for such an eventuality and to provide for the re-litigation of the division of assets.”

The Court took further issue with the trial court’s imposing a requirement that Husband take out and maintain a life insurance policy in the event the parties’ legal separation is converted to a dissolution of marriage. “[T] parties’ agreement specifically and unambiguously provides that either party may re-litigate the division of assets should the other party seek a conversion… the family court is required to enforce that provision as written.”

The Court remanded the matter back to the trial court, for any re-litigation of property division sought by the parties pursuant to their agreement.

Hall v. Hall, Nos. 19-CI-00121, 2021-CA-1054-MR (Ky. App. 2022)

QDRO
Maintenance: retirement benefits

Dated: July 22, 2022
Not to be Published
Affirming

As part of the parties’ 2017 divorce, they were awarded ownership of separate residences, and Husband was ordered to continue maintenance payments to Wife until she could access amounts assigned to her via QDRO.

Husband appealed, arguing that Wife had sufficient means to support herself, and was ineligible for a maintenance award under KRS § 403.200. The Court noted, however, that a trial court may also award maintenance based on the parties’ lifestyle during the marriage, and the length of the marriage in this case. Husband further argued that he himself had been unable to meet his expenses, due to the maintenance award, but the Court affirmed, writing:

While a different [trial] court might have reached another conclusion, we cannot say that the [trial] court in this case abused its discretion by awarding [Wife] maintenance in the amount of $1,000.00 per month for the limited period of six months.

Husband also alleged the trial court had erred in awarding Wife equity in a residence he purchased after the parties separated, but during the marital period. Noting that his income during this time “would still be presumed marital,” the Court again affirmed, finding no abuse of discretion.

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.