Barrow v. Barrow

• Decision Date: 31 August 2011
• Docket Number: No. 4881.,4881.
• Citation: 716 S.E.2d 302,394 S.C. 603
• Court: South Carolina Court of Appeals
• Parties: Elise Kelly BARROW, Respondent,v.Sam Carson BARROW, Appellant.

394 S.C. 603

716 S.E.2d 302

Elise Kelly BARROW, Respondent,

v.Sam Carson BARROW, Appellant.

No. 4881.

Court of Appeals of South Carolina.

Heard April 6, 2011.Decided Aug. 31, 2011.

Anne Frances Bleecker, of Charleston, for Appellant.Joseph M. Ramseur, Jr., of Greenville, for Respondent.KONDUROS, J.

Sam Barrow(Husband) appeals the family court's apportionment of marital income tax debt to him, the award to Elise Barrow(Wife) of a $30,000 special equity in the marital home, and other issues relating to equitable distribution.We affirm in part as modified and reverse in part.

FACTS

Husband and Wife were married in April 2002 and divorced in June 2007.No children were born of the marriage.During the marriage, Husband was employed as a salesperson for an orthopedic supply company and earned approximately $93,000 per year.Wife was employed as a sales representative for a uniform supply company, CINTAS, and earned approximately $73,000 annually.Husband and Wife shared a marital home purchased in part with a $40,000 down payment provided by Wife's parents.

Wife admitted to “economic misconduct” during the marriage including chronic overspending and opening credit cards without Husband's knowledge.Husband admitted to failing to file state and federal income tax returns during the marriage.The total tax liability incurred by the parties during the marriage was $260,832.Wife paid taxes on her income using a married filing separately return and paid a total of $92,328 in income taxes.At the time of the final hearing, Husband had contributed nothing to the payment of the original tax debt incurred during the marriage, and his failure to do so resulted in substantial late fees and penalties being assessed.¹

The family court granted Wife a divorce on the grounds of one year's continuous separation.The family court divided the equity in the marital home and the marital portion of Wife's401(k) equally.The family court determined Husband was solely responsible for the outstanding tax debt and awarded Wife a $30,000 special equity in the marital home based on the down payment provided by her parents.The family court declined to award attorney's fees to either party.

Husband filed a Rule 59(e), SCRCP, motion claiming the court failed to considerthe parties' vehicles in determining the equitable distribution, the outstanding tax liens in calculating the marital home's equity, and the advances Wife took from her marital portion of her 401(k).The family court denied Husband's motion to alter or amend the judgment stating, “[t]he Court has carefully reviewed the Court's file along with the Order, and finds that the Order accurately reflects the findings of the Court made following the hearing on May 5–6, 2009, with respect to the matters addressed in [Husband's] Motion.”This appeal followed.

LAW/ANALYSIS

The appellate court reviews decisions of the family court de novo.Lewis v. Lewis,392 S.C. 381, 392, 709 S.E.2d 650, 655(2011).The appellate court generally defers to the factual findings of the family court regarding credibility because the family court is in a better position to observe the witness and his or her demeanor.Id.The party contesting the family court's decision bears the burden of demonstrating the family court's factual findings are not supported by the preponderance of the evidence.Id.

I.Wife's Economic Misconduct

Husband argues the family court erred in not considering Wife's economic misconduct in equitably apportioning the marital estate.We disagree.

Section 20–3–620(B) of the South Carolina Code(Supp.2010) lists fifteen factors for the court to consider in equitably apportioning a marital estate.²Fault or marital misconduct affecting the parties' economic circumstances or contributing to the marital breakup is one factor to consider.§ 20–3–620(B)(2).The statute grants the family court discretion to decide what weight to assign various factors.Id.While this court may make its own findings of fact on appeal, we recognize “the presence of discretion in the family court in valuing marital property and in effecting a division of marital property that is equitable under the circumstances.”Lewis,392 S.C. at 391, 709 S.E.2d at 655.

The record shows Wife had a habit of overspending and writing checks before ensuring her company reimbursement checks had been deposited.Testimony also indicated she took a cash advance against one of Husband's credit cards without his permission and took out at least one credit card in Husband's name without his permission.Nevertheless, Husband testified he had the ability to pay his taxes but elected not to do so.Wife testified the breakup of the marriage was caused by Husband's refusal to file his income taxes.The poor money management and financial decisions by both parties affected their economic circumstances, and Husband did not testify that Wife's overspending caused the breakup of the marriage.The parties were similarly situated with respect to other factors such as age, income, health, work experience, and nonmarital property.Therefore, we do not believe the family court erred in not placing greater weight on Wife's economic misconduct in making its equitable distribution.

II.Apportionment of Tax Liability

Husband argues the family court erred in placing the responsibility for outstanding income tax debt solely on him.We agree.³

“Marital property” is defined as “all real and personal property which has been acquired by the parties during the marriage and which is owned as of the date of filing or commencement of marital litigation....”S.C.Code Ann. § 20–3–630(Supp.2010).“For purposes of equitable distribution, ‘marital debt’ is debt incurred for the joint benefit of the parties regardless of whether the parties are legally jointly liable for the debt or whether one party is legally individually liable.”Hardy v. Hardy,311 S.C. 433, 436–37, 429 S.E.2d 811, 813(Ct.App.1993).Marital debt, like marital property, must be specifically identified and apportioned in equitable distribution.Smith v. Smith,327 S.C. 448, 457, 486 S.E.2d 516, 520(Ct.App.1997).In equitably dividing the marital estate, the family court must consider “liens and any other encumbrances upon the marital property, which themselves must be equitably divided, or upon the separate property of either of the parties, and any other existing debts incurred by the parties or either of them during the course of the marriage.”§ 20–3–620(B)(13).

After recognizing Wife had filed separate income tax returns during the marriage, the family court concluded “[W]ife has paid her proportional share for marital taxes.”(emphasis added).Therefore, it appears the family court determined the income taxes incurred by the parties during the marriage were marital debt.This determination is in accordance with other South Carolina and other states' jurisprudence.SeeEllerbe v. Ellerbe,323 S.C. 283, 294, 473 S.E.2d 881, 887(Ct.App.1996)(finding Husband's income tax liability incurred in the year before the parties' separated was a marital debt);Phillips v. Phillips,290 S.C. 455, 458, 351 S.E.2d 178, 180(Ct.App.1986)(finding Wife was entitled to equitable portion of income tax refund because the refund was merely a return of income which was marital property);see alsoMeints v. Meints,258 Neb. 1017, 608 N.W.2d 564, 569(2000)(“Income tax liability incurred during the marriage is one of the accepted costs of producing marital income, and thus, we hold that income tax liability should generally be treated as a marital debt.”).

Although we agree with the family court's determination that the tax on Husband's income was a marital debt, we disagree with the decision to apportion that debt entirely to Husband considering the testimony adduced at trial regarding the parties' incomes and spending.The record shows Wife's income tax payments amounted to approximately 35% of the total marital tax liability.However, the record demonstrates Wife was benefiting from at least 50% of the marital income.

According to Wife's testimony, her check was deposited into a joint account and Husband's check was deposited into a sole account in his name that predated the marriage.From his account, Husband paid the mortgage and his car payment plus he wrote Wife a check each month for some general expenses because he did not like the tedious task of actually writing and mailing checks.According to Wife, she frequently had to badger Husband for the check and some months he did not give her the funds.However, Husband claims he gave Wife money “pretty much whenever”she asked for it.Although Wife's direct testimony on that question is not included in the record, the manner in which the question is posed to Husband indicates Wife agreed with this statement.⁴Additionally, there was testimony that Husband usually paid the bill for occasions when the couple went out socially.

The record also shows, and Wife does not dispute, that she received payments from Husband totaling $145,450 during the marriage.Whether these monies were for the monthly general expenses, Wife's sole benefit, or a combination of the two is unclear.However, assuming only half of the $145,450 should be treated as inuring to Wife's benefit, that brings the parties' division of marital income much closer to a 50/50 ratio.Husband also testified Wife had spent a cash buffer he had put in their joint account of $5,000 to $10,000 and had taken an advance on a Sears credit card for $5,000.

Because the record contains considerable evidence Wife benefited from at least 50% of the total marital income, the family court erred in attributing a lesser amount of the marital tax liability to Wife.To effect a 50/50 allocation of the original tax debt incurred during the marriage, we attribute to Wife another 14.6% of the original tax liability, $260,832, which amounts to $38,081.Adding this amount to the 35.4% Wife already...