Brosick v. Brosick

• Decision Date: 24 July 1998
• Docket Number: CA-0308-MR,96-CA-2583-MR,CA-3445-MR,Nos. 96-CA-2522-M,s. 96-CA-2522-M
• Citation: 974 S.W.2d 498
• Parties: Pens. Plan Guide (CCH) P 23,948 Louis James BROSICK, Appellant/Cross-Appellee, v. Darlene D. BROSICK, Appellee/Cross-Appellant. (Cross), 96-and 97-
• Court: Kentucky Court of Appeals

Page 498

974 S.W.2d 498

Pens. Plan Guide (CCH) P 23,948

Louis James BROSICK, Appellant/Cross-Appellee, v. Darlene D. BROSICK, Appellee/Cross-Appellant.

Nos. 96-CA-2522-MR, 96-CA-2583-MR (Cross), 96-CA-3445-MR and

97-CA-0308-MR.

Court of Appeals of Kentucky July 24, 1998.

C. Timothy White, Shepherdsville, for Appellant/Cross-Appellee.

Ann W. McAfee, J. Chester Porter & Associates, Shepherdsville, for Appellee/Cross-Appellant.

Before GUDGEL, C.J., and GARDNER and KNOPF, JJ.

OPINION

KNOPF, Judge:

These are combined appeals and a cross-appeal from a judgment of dissolution, involving findings of dissipation of marital assets, division of marital property, and division of vested contributory pension and retirement plans. Finding that the trial court made insufficient findings as to the amount of the dissipation, and that the trial court neglected to divide certain marital assets, we affirm in part, reverse in part, and remand for further factual findings.

Louis James Brosick (Louis) and Darlene D. Brosick (Darlene), were married in 1959. Three (3) children were born of the marriage, all of whom are now adults. Louis filed a petition for dissolution of the marriage on September 27, 1994, and the trial court entered a decree dissolving the marriage on February 23, 1995. The court referred the issues of division of marital property and maintenance to the domestic relations commissioner. Following extensive discovery, the commissioner conducted a hearing on January 17-19, 1996.

In his report, the commissioner found that neither Louis nor Darlene was entitled to maintenance. The commissioner further concluded that Louis had dissipated marital assets during his seven (7) year relationship with Amy Hardin. However, the commissioner was unable to quantify precisely the degree of dissipation. Consequently, the commissioner recommended that the court award Darlene $24,835.00 more in marital property than Louis. The trial court adopted the commissioner's report over both parties' exceptions.

Subsequently, Darlene's counsel submitted a qualified domestic relations order (QDRO) to divide Louis' pension and retirement plans, as set out in the commissioner's report. Louis objected to the manner in which the plans were to be divided. Following another hearing before the commissioner, the trial court rejected Louis' exceptions and entered Darlene's tendered QDRO on October 22, 1996. On November 26, 1996, Darlene filed a motion to amend the QDRO because Louis' employer required that the heirs of the alternative payee be specifically named. The trial court entered the amended QDRO on January 14, 1997.

Louis brought an appeal from the trial court's ruling on the issue of dissipation of assets. He also appeals the failure of the trial court specifically to divide certain marital property. Darlene cross-appeals from the trial court's calculation of the amount of dissipation. She also objects to the court's division of certain marital property. Lastly, Louis filed an additional appeal on several issues involving the QDRO. We will consider each issue in order.

Louis first contends that the trial court erred in failing to divide the parties' marital property without regard for marital misconduct. Generally, fault of the parties is not to be considered in dividing martial property. KRS 403.190(1). However, a party may not spend marital assets or funds for non-marital purposes, and then expect to receive an equal share from the diminished marital estate. The "fault" considered is not blame for the dissolution of the marriage. Rather, the court will deem the wrongfully dissipated assets to have been received by the offending party prior to the distribution.

The court may find dissipation when marital property is expended (1) during a period when there is a separation or dissolution impending; and (2) where there is a clear showing of intent to deprive one's spouse of her proportionate share of the marital property. Robinette v. Robinette, Ky.App., 736 S.W.2d 351, 354 (1987). Louis asserts that there was no evidence that he spent any funds in anticipation of divorce. In response to this contention, we are unable to improve upon the analysis in the commissioner's report:

The primary issue raised herein is Darlene's claim that Louis has dissipated marital assets as part of his ongoing relationship with Amy Hardin. Darlene alleges that over the course of his relationship with Amy, Louis spent or gave to Amy in excess of $100,000.00 of marital funds. In support of her position, Darlene submitted a large number of documents, primarily bank statements from the joint account maintained by Louis and Amy during the marriage. Louis admits to maintaining a joint account with Amy and to signing credit applications with her to help her get credit. However, he claims that little in the way of marital funds was deposited to the account, and the account was primarily Amy's.

Having heard and considered the evidence, the Commissioner finds that there is little doubt that Louis dissipated a substantial amount of marital money during the marriage on his relationship with Amy. Louis argues that even if this is true, the dissipation was not done in contemplation of divorce, and therefore would not be considered under Kentucky law. The Commissioner does not agree with this position.

The evidence herein is that during the period of time Louis was dissipating marital assets, he maintained a joint bank account with Amy, held himself out on credit applications as he[r] fiance, owned real estate jointly with her, conveyed real estate (while falsely stating in the deed that he was unmarried), went to her house in the morning and got her children off to school and daycare, and in all ways conducted himself in a manner consistent with an intention of eventually marrying her, which he in fact has now done. It defies common sense to suggest that during the period of time that he did all this he was not at least contemplating divorce and preparing for his eventual life with Amy. This Commissioner finds that Louis has dissipated assets herein in contemplation of divorce.

Record on Appeal [ROA] at pp. 225-26.

Although the commissioner found sufficient evidence to establish that Louis dissipated marital assets, the commissioner could not make any certain finding as to the amount of the assets dissipated. Instead, the commissioner recommended that the court use its equitable powers to make a property division more favorable to Darlene than to Louis. Louis argues that the trial court erred in crediting Darlene without a specific finding of the amount dissipated. For her part, Darlene contends that the trial court erred in failing to accept all of her evidence regarding the amount of marital assets which Louis spent on Amy.

While the circuit court does have the authority to fashion equitable relief where a party has dissipated marital property, that relief must bear some relation to the evidence presented. In the absence of specific findings regarding the amount of the dissipation, we have no way of knowing how the commissioner arrived at the figure credited to Darlene. Consequently, we must remand this matter to the trial court to determine the amount of the dissipation. Greathouse v. American National Bank & Trust Co., Ky.App., 796 S.W.2d 868, 870 (1990).

The more fundamental issue on remand concerns the standard of proof necessary to prove dissipation of assets. We conclude that the commissioner's error arose from the standard of proof which he imposed on Darlene. The commissioner required Darlene to demonstrate that Louis made specific deposits to the joint account. In essence, the commissioner required Darlene to prove dissipation by clear and convincing evidence. Furthermore, even though the commissioner believed that it was more likely than not that Louis had dissipated marital assets, the commissioner did not require Louis to account for any of the assets. We conclude that the commissioner erred in his allocation of the burden of proving the dissipation.

Although there are several Kentucky cases discussing the concept of dissipation of marital assets, we find no Kentucky cases directly addressing the standard of proof necessary to prove dissipation. In Barriger v. Barriger, Ky., 514 S.W.2d 114 (1974), the wife established that the husband dissipated $25,000.00 in marital property. The former Court of Appeals held that the husband's inability to account for the assets justified the trial court's decision to include the dissipated assets in the parties' net worth. The current Court of Appeals followed a similar approach in Culver v. Culver, Ky.App., 572 S.W.2d 617 (1978). However, neither court discussed the standard of proof in dissipation cases.

We find the reasoning of Jeffcoat v. Jeffcoat, 102 Md.App. 301, 649 A.2d 1137 (1994), to be instructive and consistent with Kentucky case law. In Jeffcoat, the parties were married for nearly fifteen (15) years, and had managed to accumulate substantial assets even though neither spouse had a large income. The wife established that the husband spent $300,000.00 of the parties' monies in the year following their separation. Nonetheless, the trial court refused to consider the dissipated assets in the division of marital property. Rather, the lower court required the wife to prove fraud, by clear and convincing evidence, in order to show dissipation of assets had taken place.

The Court of Special Appeals of Maryland reversed, stating, "We see no adequate reason to require a higher degree of proof to establish dissipation than any other aspect of marital property. Under a proper standard, the trial court should be able to find dissipation by a preponderance of the evidence." Id., 649 A.2d at 1139-40. The Maryland court then went on to hold that the party alleging dissipation must prove dissipation and the value of the property. Id. 649 A.2d at 1140. Once the party alleging dissipation establishes a prima...