77 Hawai'i 202, Hussey v. Hussey
| Decision Date | 30 September 1994 |
| Docket Number | No. 15696,15696 |
| Citation | 881 P.2d 1270 |
| Parties | 77 Hawai'i 202 Rebecca M. HUSSEY, Plaintiff-Appellant, v. Benjamin A. HUSSEY III, Defendant-Appellee. |
| Court | Hawaii Court of Appeals |
Syllabus by the Court
1. The two kinds of property owned by one or both of the spouses at the time of the divorce are as follows:
Marital Separate Property. This is the following property owned by one or both of the spouses at the time of the divorce:
a. All property that was excluded from the marital partnership by an agreement in conformity with the Hawai'i Uniform Premarital Agreement Act, Hawai'i Revised Statutes chapter 572D (Supp.1992).
b. All property that was excluded from the marital partnership by a valid contract.
c. All property that (1) was acquired by the spouse-owner during the marriage by gift or inheritance; (2) was expressly classified by the donee/heir-spouse-owner as his or her separate property; and (3) after acquisition, was maintained by itself and/or sources other than one or both of the spouses and funded by itself and/or sources other than marital partnership income or property.
Marital Partnership Property. All property that is not Marital Separate Property.
2. Marital Separate Property is property that has been excluded from the marital partnership. Although the family court may allow Marital Separate Property to reasonably influence the division and distribution of Marital Partnership Property, it cannot award any Marital Separate Property to the non-owner spouse. Consequently, the five categories of net market values (NMVs) apply only to Marital Partnership Property, not to Marital Separate Property.
3. Concerning the five categories of Marital Partnership Property NMVs:
1. The Category 1 and 3 NMVs are the "partner's contributions" to the Marital Partnership Property that, assuming all valid and relevant considerations are equal, are repaid to the contributing spouse; and
2. The Category 2, 4, and 5 NMVs are Marital Partnership Property that, assuming 4. If the family court rightly decides that all valid and relevant considerations are not equal, the family court must weigh all valid and relevant considerations, exercise its equitable discretion, and decide whether and, if so, how much to deviate from the Partnership Model.
[77 Hawai'i 204] all valid and relevant considerations are equal, are awarded one-half to each spouse.
5. The fact that the spouse-non-owner did not directly and materially contribute to a Category 2 NMV is not a valid and relevant consideration for awarding the spouse-non-owner less than one-half of that Category 2 NMV.
6. It is no more inequitable to require a spouse-owner to sell his or her Category 2 NMV property than it is not to award the spouse-non-owner his or her Partnership Model equitable portion of it.
Max Nakata Garcia, on the briefs, Honolulu, for plaintiff-appellant.
Ronald P. Tongg, on the brief, Honolulu, for defendant-appellee.
Before BURNS, C.J., and HEEN and WATANABE, JJ.
Plaintiff Rebecca M. Hussey (Rebecca), nka Rebecca Maude Ah Nee, appeals the property division part of the family court's October 21, 1991 Decree Granting Divorce and Awarding Child Custody (Divorce Decree). We vacate and remand the property division part of the Divorce Decree for reconsideration in the light of this opinion.
Rebecca and defendant Benjamin A. Hussey III (Benjamin) were married on June 22, 1974. Their children were born as follows: son--October 1, 1974; son--February 11, 1976; and daughter--January 20, 1978. Rebecca and Benjamin separated on April 27, 1990.
At the time of trial in May 1991, Rebecca's gross income was $1,110.72 per month. Benjamin's gross income was $1,216 per month.
The Divorce Decree awarded Rebecca custody of the three children and ordered Benjamin to pay Rebecca $330 per month child support. The valuable assets were awarded subject to their debts as follows:
To Benjamin:
1. A residence at 3229 Ho'olulu Street, Kapahulu. Benjamin inherited a remainder interest in this residence in 1967 subject to a life estate in favor of his uncle (Uncle) who also lived there. Uncle was 81 years of age at the time of trial. The fair market value of this residence in February 1977 was $84,500, and in April 1991 was $410,000. Since there is no evidence in the record of the value of this residence on June 22, 1974, we assume that its June 22, 1974 value is the same as its February 1977 value. This residence was the marital residence from the June 22, 1974 marriage until the April 27, 1990 physical separation. At the time of trial, it was security for a debt of $120,000 owed by Rebecca, Benjamin, and Uncle and payable at the rate of $1,500 per month. This mortgage debt was the culmination of a series of mortgage debts incurred during the marriage to pay for Rebecca's and Benjamin's personal and family expenses and to refinance prior mortgage debts incurred for the same purposes.
2. A $5,100 Toyota truck subject to a $4,000 debt.
To Rebecca:
1. A residence at 1478 Kaleilani Street, Pearl City. Rebecca's mother, who died in 1983, willed this residence to Rebecca and named Rebecca as her personal representative. Apparently, the other assets in Rebecca's mother's estate and the rent Rebecca collected were insufficient to pay for the mortgage, real property tax, and other expenses of the property, so Rebecca paid the difference. Rebecca's mother's estate did not close until 1989. However, "the heirs of a decedent acquire a vested interest in the estate upon the decedent's death." Matter of Christian's Estate, 65 Haw. 394, 399, 652 P.2d 1137, 1141 (1982) (citations omitted). Since there is no evidence in the record of the value of this residence in 1983, we assume that its 1983 value is the same as its value at the time of trial in May 1991. At 2. A $2,000 First Hawaiian Bank Money Market Certificate inherited from her mother.
[77 Hawai'i 205] the time of trial, the residence had a fair market value of $175,000 subject to Rebecca's mortgage debt of $80,000 payable at the rate of $840 per month. Rebecca testified that she used $6,500 or more from the proceeds of this mortgage debt to pay delinquent payments due on the debt secured by Benjamin's Kapahulu residence.
3. The proceeds from the sale of her 1987 Mazda. The value of the 1987 Mazda had been estimated at $11,000. There is no evidence of the amount of the sale proceeds.
Attorney Richard McMillan testified that, according to Internal Revenue Service Valuation Tables, in 1977, when Uncle was 67 years of age, Uncle's life estate was worth .45458 of the value of the Kapahulu residence, see Research Institute of America, 4 Estate Planning and Taxation Coordinator § 82,705 at 82,710C (May 10, 1968), and in 1991, when Uncle was 81 years of age, his life estate was worth .45501 of the value of the residence. See id. at 82,704F (March 12, 1991). However, the family court decided that "the valuation done by Mr. McMillan doesn't carry much weight in the value--in valuing the remainder and the life estate" and in its calculations valued Benjamin's interest in the Kapahulu residence as if it were not encumbered by Uncle's life estate.
Categorized as permitted by Tougas v. Tougas, 76 Hawai'i 19, 27, 868 P.2d 437, 445 (1994), the various net market values (NMVs) were awarded as follows:
REBECCA BENJAMIN
CATEGORY 1 $ 84,500
CATEGORY 2 205,500
CATEGORY 3 $97,000
CATEGORY 4
CATEGORY 5 11,000 1,100
The family court expressed two reasons for its decision not to award Rebecca any of Benjamin's $205,500 Category 2 NMV:
[Y]ou make an argument that the property--Ho[']olulu Street--was a marital asset and that both parties contributed to the build up of the appreciation of the property.
Unfortunately I cannot agree with that based on what I've heard. I--I--obviously the money and--that was borrowed used the home as a collateral. It was a source to get the money, it was the basis to get the money.
But I didn't hear a shred of evidence that said that--unlike the Hashimoto case--the money was used to fix a roof, to put new tiles, to make an addition, to fix the garage, et cetera, et cetera.
The only testimony I heard was that the money was used to buy cars, pay off credit card loans, buy--buy clothes for the children and other household items.
So, I cannot agree with that--with that position that this--this--this property was used so much for--for the building up of the property and the appreciation that has gone with it.
Like the real estate in Hawai[']i, the home just being where it's at[,] irregardless [sic] probably of the state that it's in[,] appreciation worked on itself and it just built up just because it was in Kapahulu in a nice location.
And, you know, you look at the fact that the home is twenty-three years old. And it's incredible to think that that home is now worth over four hundred thousand dollars.
So, I cannot agree with you on that argument.
And ... looking at the equity of this, if I were to follow your position and grant your client ...--half of the appreciation--there's only one way that that distribution could be made, and that would have to be the selling of the home.
And is that fair, just and equitable in this situation?
And I think even you and your client would have to admit that that's not fair, just and equitable.
There is no indication on the record that the family court considered where Benjamin
[77 Hawai'i 206] would obtain the money to pay the $1,500 per month mortgage debt on the Kapahulu residence or what he would do if he could not pay it.
Rebecca contends that the family court erred when it failed to enter findings of fact and conclusions of law. We agree. Hawai'i Family Court Rules (HFCR) Rule 52(a) states in relevant part as...
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