Allen v. Scott

• Decision Date: 26 July 2021
• Docket Number: No. 363, 2020,363, 2020
• Citation: 257 A.3d 984
• Parties: Laura M. ALLEN, Respondent-Below, Appellant, v. Charlene L. SCOTT, Petitioner-Below, Appellee.
• Court: Supreme Court of Delaware

257 A.3d 984

Laura M. ALLEN, Respondent-Below, Appellant,

v.Charlene L. SCOTT, Petitioner-Below, Appellee.

No. 363, 2020

Supreme Court of Delaware.

Submitted: June 30, 2021

Decided: July 26, 2021

Adam D. Windett, Esquire, Hopkins & Windett, LLC, Dover, Delaware for Appellant.

Julianne E. Murray, Esquire, Murray, Phillips & Gay, Georgetown, Delaware for Appellee.

Before SEITZ, Chief Justice; VALIHURA, and TRAYNOR, Justices.

VALIHURA, Justice:

Appellant Laura M. Allen appeals a September 30, 2020 Family Court Ancillary Order determining the division of property following her divorce from Appellee, Charlene L. Scott, on September 9, 2019.¹ Allen asserts that the trial court abused its discretion in designating funds used to purchase real property in Colorado as "marital" because the parties’ Ancillary Pretrial Stipulation described the funds as "premarital." Allen further contends that the Family Court abused its discretion in dividing certain pieces of marital property in the marital estate 60/40 in Scott's favor contending that the court's decision was not based on a logical or orderly process and was tainted by the court's error on the first issue. Scott argues that no abuse of discretion occurred, and in any case, that Allen waived the second issue by failing to raise it in her Motion for Reargument.

We hold that because both parties stated in the Ancillary Pretrial Stipulation that the funds used to purchase the Colorado property were premarital in character, and because neither party moved to amend the stipulation to revise that characterization until after the evidentiary record had closed, there was no triable issue on that question. We, therefore, REVERSE the Family Court and REMAND for consideration of Scott's alternative contention that the down payment for the Colorado property was a gift unto the marriage.

As to Allen's second issue, we do not find any abuse of discretion in the Family Court's distribution of the remaining marital property, but the Family Court retains the discretion on remand to adjust that distribution to the extent its decision on remand regarding the Colorado down payment funds affects the other 11 Del. C. § 1315 factors.

I. RELEVANT FACTS AND PROCEDURAL BACKGROUND

A. The Parties’ Marriage and Separation

Scott and Allen were married on May 3, 2017, and separated during the second week of February 2019.² The parties were in a relationship for approximately eleven years prior to the marriage.³ They moved to Colorado in late 2018 or early 2019 when Allen accepted a position as medical director of a women's medical facility, and they purchased a home in Colorado for about $740,000.00 to $750,000.00.⁴ At that time, Allen's salary was $360,000.00, and she paid the down payment for this home in the amount of $150,719.00 and listed both parties’ names on the home's title.⁵

After approximately three weeks of living in the Colorado home, the parties moved back to Delaware. They sold the Colorado home for $715,000.00 in June 2019 at a loss and obtained the $72,388.78 in proceeds at issue.

B. The Proceedings Below

Scott filed a Petition for Divorce on February 18, 2019, resulting in a Final Decree of Divorce on September 9, 2019 that reserved jurisdiction over ancillary issues, including property division. The parties submitted an Ancillary Pretrial Stipulation ("Stipulation") on April 23, 2020, which the court entered as an Order the following day.⁶ In the Stipulation, both parties expressly stated that Allen used premarital funds to make the down payment on the Colorado home.⁷ Although Scott expressly acknowledged that the funds were premarital, she argued that the proceeds from the sale were marital and were subject to division because the down payment was a gift unto the marriage. Specifically, Scott stated that:

This asset was voluntarily jointly titled notwithstanding that [Allen] made a downpayment [sic] of one hundred and fifty thousand, seven hundred and nineteen ($150,719) dollars, utilizing her premarital funds. This was a gift unto the parties’ marriage , thus this asset is marital in nature , subject to division by the Court. Recognizing that the downpayment [sic] on this house was made by the Respondent with otherwise non-marital funds , the Petitioner is seeking a fifty-fifty division of this asset, thus she will request fifty (50%) percent of the escrowed proceeds from the sale of this asset, with said net proceeds totalling [sic] seventy-two thousand, three hundred eighty-eight dollars and seventy-eight cents ($72,388.78).⁸

Likewise, in the Stipulation Allen stated that "[i]t is undisputed that [Allen] made a downpayment [sic] in the amount of $150,719.00 on the Colorado home using her premarital funds."⁹

The Stipulation reflects the parties’ disagreement as to whether the down payment, made using Allen's premarital funds, was a gift unto the marriage. Scott stated:

[Allen] gifted approximately one hundred and fifty thousand ($150,000) dollars to the marriage by virtue of the acquisition of a home in Colorado. The sales proceeds from the Colorado property, totalling [sic] approximately seventy-two thousand, three hundred and eighty ($72,380) dollars should be split equally between the parties, as the Colorado house was a gift unto the marriage by [Allen].¹⁰

Allen countered by denying "that her premarital down payment on the Colorado home was a ‘gift unto the marriage’ and seeks credit for same."¹¹

At the June 23, 2020 hearing on the ancillary matters, Allen testified that she used "private funds" from her "personal checking account" to pay the down payment on the Colorado home. She did not specifically use the term "premarital" in her discussion of the down payment.¹² But there was also no further questioning as to the nature of the funds during her cross-examination.¹³ In closing, Scott's counsel, seizing on Allen's use of the terms "private funds" and "personal checking account," argued that:

"[T]here was no testimony nor documentation that showed where [the down payment] came from. We don't know if those were premarital funds, we don't know if those are marital funds. We don't know because there was no documentation provided to the Court."¹⁴

Allen's counsel responded that "clearly that money came out of her individual account that was not part of the marital estate."¹⁵

As a result of Scott's closing argument, both parties submitted letters to the Family Court after the hearing addressing the nature of the funds.¹⁶ Allen's letter referred to the Stipulation and argued that Scott's counsel had "confirmed said funds were premarital during his recitation of the issues," and that the issue was whether the funds were a "gift unto the marriage."¹⁷ Counsel for Scott responded that, because the two separate accounts held by Allen during the marriage saw a combined marital loss of only $101,675.27, it was "impossible" that the down payment had been made using only premarital funds.¹⁸

Scott continued to assert, in the alternative, that the funds were a gift unto the marriage.¹⁹

The Family Court held in its September 30, 2020 Ancillary Order that Allen's use of the terminology "separate account" rather than "premarital funds" constituted a material change in the Stipulation which the parties had an affirmative duty to update.²⁰ The Family Court reasoned that just as the parties had corrected the Stipulation as to the date-of-separation balance on a Wells Fargo bank account, Allen's testimony "brought to the attention of the Court" that "she made the down payment for the Colorado home using funds in a separate account, rather than a premarital account."²¹ Thus, it found "a material change in information" occurred when Allen "testified that she used funds from a separate account to make the down payment on the Colorado home, rather than using premarital funds."²² The court further found at the June 23, 2020 hearing that Allen "provided no evidence to indicate that she paid the down payment of the parties’ Colorado home using premarital funds."²³ Thus, the court concluded that the parties purchased the Colorado home "using funds stemming from the capital from both parties’ employment."²⁴ Accordingly, the court held that the equity in the Colorado property was marital, and it awarded Scott one-half of the proceeds from the property's sale.

In addition, the Family Court held that a 60/40 allocation of certain other pieces of marital property was appropriate after considering the statutory factors in 13 Del. C. § 1513. The Family Court imputed Allen with an annual income of $350,000.00 despite her assertion that she was earning $100,000.00 per year because it found that Allen had made approximately $400,000.00 annually for thirteen years as a surgeon and that she had voluntarily chosen to open her own medical practice instead of keeping her position in Colorado. Allen opened her practice in November 2019 after taking out a commercial loan of $341,000.00 and was taking a monthly income of $1,000.00. At the time of the Order, Allen suffered from Crohn's disease and was fifty years old; Scott was in "excellent health" and was fifty-six years old. The Court imputed Scott, a physical therapist, with an annual income of $105,000.00, which was equal to her stipulated current income and the highest income she earned while residing in Delaware.²⁵ Neither party requested alimony and both parties contributed financially to the marriage and home.

After the Family Court issued its Order, Allen filed a Motion for Reargument Pursuant to Family Court Civil Rule 59(e) on October 15, 2020.²⁶ In the Motion, Allen urged the Family Court to revise the Order to reflect that the down payment funds were premarital, because "to hold otherwise results in a contradictory conclusion" in light of the Family Court's earlier Order accepting the Stipulation wherein the parties had agreed the down payment funds were premarital.²⁷ Allen argued further that she "was only put on notice of [Scott's] argument that the Colorado home down...