Cunningham v. Cunningham

Decision Date19 July 2005
Docket NumberNo. COA04-280.,COA04-280.
CourtNorth Carolina Supreme Court
PartiesBrenda Wilkins CUNNINGHAM, Plaintiff, v. Jon Craig CUNNINGHAM, Defendant.

Charles William Kafer, New Bern, for plaintiff-appellee.

Wyrick, Robbins, Yates & Ponton, LLP, by K. Edward Greene and Donald L. Beci, Raleigh, for defendant-appellant.

CALABRIA, Judge.

Jon Craig Cunningham ("defendant") appeals orders entered on 11 July 2003 concerning (1) equitable distribution (the "ED order"); (2) defendant's military retirement benefits (the "military pension order"); and (3) custody, child support, alimony, and attorney fees. We affirm in part, reverse in part, and remand.

Defendant and Brenda Wilkins Cunningham ("plaintiff") were married 19 May 1990, separated 20 June 2000, and divorced 13 November 2001. Two children were born of the marriage, the first child on 9 July 1992 and the second child on 21 March 1995 (the "children"). In August 1997, the parties moved to Havelock, North Carolina after defendant, a Lieutenant Colonel and aviator in the United States Marine Corps, was transferred to Cherry Point Marine Corps Air Station ("Cherry Point"). In early 2000, the parties jointly decided that defendant would accept a three-year overseas tour of duty in Okinawa beginning 20 June 2000 and that plaintiff and the children would accompany him. Prior to defendant's departure, plaintiff changed the plan and told him that she and the children would not accompany him initially but would join him later. After defendant arrived in Okinawa, plaintiff informed defendant that neither she nor the children would be joining him and that she wanted a separation and divorce.

The parties never resumed marital relations after 20 June 2000. On 19 September 2000, plaintiff filed a complaint for divorce from bed and board, postseparation support, alimony, child custody, child support, and attorney fees. Defendant filed an answer and counterclaimed, seeking, inter alia, equitable distribution, child support and custody of the minor children. Defendant subsequently shortened his tour of duty in Okinawa to one year and returned to North Carolina to be near the children.

The Honorable Karen Alexander presided over the fifteen-day trial in Craven County District Court, which started on 5 March 2002 and concluded on 27 November 2002. The court found defendant's taxable monthly wages for 2002, as a Lieutenant Colonel continuously on active duty since 13 March 1981, were $6,919.80. His non-taxable monthly allowances were $1,130.47. Therefore, his gross monthly income totaled $8,040.27, and his monthly income after taxes and withholding was $6,250.49. In 2002, defendant's income was supplemented with yearly bonuses of up to $9,000.00. Defendant accrued military retirement benefits ("military pension") from 11 August 1983 and became eligible to receive his military pension on 11 August 2003. Plaintiff offered evidence at trial that, based on his pay scale as of 1 July 2000, defendant would receive a monthly military pension of $3,126.00 and, based on his life expectancy, would receive a total pension in the amount of $561,494.62. Plaintiff is a registered nurse and did not work outside the home after the birth of the parties' second child until after the parties' separation when she commenced employment as a school nurse. During the 2002-2003 academic year, plaintiff earned $1,169.64 per month.

In the ED order, the trial court concluded, "[t]he large disparity in [the] income between the parties and the substantial difference between the military retirement distribution warrants an unequal distribution of the marital property and debts." The trial court did not value defendant's retirement plan, but found the following:

Were the defendant to retire on 11 August 2003, his earliest possible retirement date, . . . . [p]laintiff's share under the terms of this order would be 25.22 percent. Therefore, the defendant will receive 74.88 percent or a substantially greater portion of this retirement. The longer he stays in the Marine Corps after 11 August 2003, the greater will be his share of this retirement.

The trial court further ordered that plaintiff "receive one-half of the marital portion of the defendant's military retirement" as set out in the military pension order.

The military pension order required defendant to pay plaintiff one-half of the marital portion of each monthly military pension payment beginning the first date defendant receives his first pension check. The marital portion of the military pension would be determined by a coverture fraction, the numerator being 121.03, the number of months the parties were married, and the denominator being defendant's total number of months of service for pension purposes. The trial court further ordered that "the defendant shall not take any steps designed to diminish or in any way reduce the amount of disposable retired or retainer pay that he is entitled to receive by virtue of his military service to the end that the plaintiff's portion of his retirement is reduced."

In the order for custody, child support, alimony, and attorney fees, the trial court granted the parties joint custody of the children. The trial court granted primary custody to plaintiff and secondary custody and visitation to defendant. Plaintiff's primary custody was conditioned on her and the children's continued residence in North Carolina unless defendant was transferred to another duty station outside North Carolina or ceased to reside in North Carolina; however, plaintiff was not required to reside in North Carolina after 1 July 2005. The trial court further ordered that plaintiff's friend, Kim Tippett, with whom defendant had a poor relationship, "shall not be utilized as a babysitter for the children under any circumstances and the children shall not spend the night with Kim Tippett for any reason." Defendant was ordered to pay plaintiff: (1) $1,160.57 per month in child support beginning 1 January 2003; (2) $1,000.00 per month in alimony beginning 1 January 2003 and ending 1 December 2005; and (3) $35,000.00 in attorney fees paid at the rate of $500.00 per month from 1 January 2003 through 1 December 2005 with the $17,000.00 balance payable on or before 31 December 2005. From these orders, defendant appeals.

I. Equitable Distribution

Defendant asserts the trial court failed to value his military pension in the ED order. "Upon application of a party, the court shall determine what is the marital property and divisible property and shall provide for an equitable distribution of the marital property and divisible property between the parties. . . ." N.C. Gen.Stat. § 50-20(a) (2003). The division of property in an equitable distribution "is a matter within the sound discretion of the trial court." Gagnon v. Gagnon, 149 N.C.App. 194, 197, 560 S.E.2d 229, 231 (2002). The trial court's division will only be reversed upon a showing that it "could not have been the result of a reasoned decision." Lawing v. Lawing, 81 N.C.App. 159, 162, 344 S.E.2d 100, 104 (1986).

Under N.C. Gen.Stat. § 50-20(c) (2003), equitable distribution is a three-step process; the trial court must (1) "determine what is marital [and divisible] property"; (2) "find the net value of the property"; and (3) "make an equitable distribution of that property." Soares v. Soares, 86 N.C.App. 369, 371, 357 S.E.2d 418, 419 (1987) (reversing and remanding where the trial court "made some findings and conclusions regarding marital property, but it did not place a value on the marital home"). "Marital property includes all vested and nonvested pension, retirement, and other deferred compensation rights, and vested and nonvested military pensions eligible under the federal Uniformed Services Former Spouses' Protection Act." N.C. Gen.Stat. § 50-20(b)(1) (2003). A trial court must value all marital and divisible property — collectively termed distributable property — in order to reasonably determine whether the distribution ordered is equitable. Turner v. Turner, 64 N.C.App. 342, 346, 307 S.E.2d 407, 409 (1983). Therefore, when no finding is made regarding the value of an item of distributable property, a trial court's findings are insufficient even if a determination is made with respect to the percentage of a distributable property's value to which each party is entitled. Byrd v. Owens, 86 N.C.App. 418, 421-22, 358 S.E.2d 102, 105 (1987) (holding the trial court erred by failing to assign a promissory note value using traditional methods of tracing funds and "simply distribut[ing] it by giving an 80% interest to defendant and 20% to plaintiff").

Pursuant to N.C. Gen.Stat. § 50-20.1(b) (2003),

The award of nonvested pension, retirement, or other deferred compensation benefits may be made payable:

(1) As a lump sum by agreement;

(2) Over a period of time in fixed amounts by agreement; or

(3) By appropriate domestic relations order as a prorated portion of the benefits made to the designated recipient at the time the party against whom the award is made actually begins to receive the benefits.

Regardless of the method of payment under N.C. Gen.Stat. § 50-20.1(b), the amount of the award shall be determined by applying a coverture fraction — "the proportion of time the marriage existed (up to the date of separation of the parties), simultaneously with the employment which earned the vested and nonvested pension, retirement, or deferred compensation benefit, to the total amount of time of employment" — to the value of "the vested and nonvested accrued benefit. . . ." N.C. Gen.Stat. § 50-20.1(d) (2003).

A defined benefit retirement plan, as opposed to a defined contribution retirement plan, "is determined without reference to contributions and is...

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