Clum v. Graves

• Decision Date: 19 May 1999
• Citation: 729 A.2d 900,1999 ME 77
• Parties: Arthur P. CLUM v. Ruth H. GRAVES.
• Court: Maine Supreme Court

729 A.2d 900

1999 ME 77

Arthur P. CLUM v. Ruth H. GRAVES.

Supreme Judicial Court of Maine.

Submitted on briefs March 12, 1999.

Decided May 19, 1999.

Kenneth P. Altshuler, Altshuler Vincent & Kantz, Portland, for plaintiff.

Ellyn C. Ballou, South Freeport, for defendant.

Before WATHEN, C.J., and CLIFFORD, RUDMAN, DANA, SAUFLEY, ALEXANDER, and CALKINS, JJ.

CLIFFORD, J.

[¶ 1] Arthur P. Clum appeals from the judgment entered in the Superior Court (Cumberland County, Mills, J.) affirming the divorce judgment of the District Court (Portland, Beaudoin, J.). The divorce judgment treats the increases in the values of nonmarital property that occurred during the course of the marriage as marital property. Clum contends that those increases, or a substantial part of them, should be characterized as nonmarital property. Clum also contends that the trial court acted beyond its discretion when it ordered him to pay $7500 of Graves's attorney fees. Finding no error or abuse of discretion, we affirm the judgment.

[¶ 2] Arthur Clum and Ruth Graves were married on June 10, 1988. At the time of the marriage, Clum owned a First Nationwide CD account valued at $7800, a Fidelity Aggressive Tax-Free Mutual Fund worth $12,558, a Van Kampen IRA worth $2258, and a Fidelity IRA worth $6186. After the marriage, Clum made no further investments in these accounts, except the Fidelity IRA. During their marriage. Clum and Graves purchased a condominium in South Portland, and Clum also purchased property in Cape Elizabeth with his father as joint tenants. To place a down payment on the Cape Elizabeth property, Clum cashed in the First Nationwide CD and the Fidelity Aggressive Tax-Free Mutual Fund. At the time Clum purchased the property, the First Nationwide CD was valued at $11,012, and the Fidelity Mutual Fund was worth approximately $20,000. Following the death of his father, legal title to the Cape Elizabeth property vested in Clum's name alone.

[¶ 3] The complaint for divorce was filed by Clum in July of 1995. The parties disputed the proper characterization and distribution of the above assets.¹ On June 7, 1997, after a hearing, the District Court entered a divorce judgment. Clum filed a motion for findings of fact and conclusions of law. The District Court issued findings of fact and conclusions of law that incorporated the original divorce judgment. The District Court valued the condominium in South Portland at $78,000, with a mortgage balance of $46,000 and awarded the property to Graves. The District Court valued the Cape Elizabeth property at $335,000, with a mortgage balance of $195,000, and concluded that 35% of the $140,000 net equity, or $49,000, is marital property. To arrive at this figure, the District Court considered the value of the First Nationwide CD that was used to purchase the property:

There was no evidence introduced at trial as to whether the increase in value was attributable to income and dividend reinvestment, stock split, market growth or appreciation. The maximum non-marital contribution by [Clum] towards the purchase of the Cape Elizabeth real estate from the account would therefore be [$7800] [the value of the First Nationwide CD at the time of the marriage].

The District Court also considered the value of the Fidelity Mutual Fund:

[Clum] made no further investments in this account after the time of the marriage. There was no evidence introduced at trial as to whether the increase in value was attributable to income and dividend reinvestment, stock split, market growth or appreciation. The maximum non-marital contribution by [Clum] towards the purchase of the Cape Elizabeth real estate from this account would therefore be [$12,558] [its value at the time of the marriage].

Ultimately, the trial court awarded the Cape Elizabeth property to Clum.

[¶ 4] The District Court valued the Van Kampen IRA at $7820 and the Fidelity IRA at $49,558. Again, the District Court characterized the entire increases in the values of these two assets during the course of the marriage as marital property, concluding that Clum presented no evidence identifying the sources of the increases. The District Court awarded the Van Kampen IRA to Clum, as well as the nonmarital portion of the Fidelity IRA. The increase in the value of the Fidelity IRA during the course of the marriage was awarded to Graves.²

[¶ 5] Clum subsequently filed a motion for relief from judgment pursuant to M.R. Civ. P. 60(b), disputing the District Court's characterization of the increases in the values of his nonmarital property during the course of the marriage as entirely marital. Specifically, Clum challenged the District Court's findings that Clum had not presented evidence showing the sources to which the increases in the values of the nonmarital property were attributable.³ The District Court granted Clum's motion for relief from judgment and scheduled an additional hearing regarding the distinctions between marital and nonmarital property. Graves simultaneously filed a motion for attorney fees pursuant to M.R. Civ. P. 80(d) and 19 M.R.S.A. § 693 (1995) (now 19-A M.R.S.A. § 904(1) (1998)).⁴

[¶ 6] During the second hearing, Clum again testified that no contributions were made to the First Nationwide CD after the marriage and no amounts were withdrawn from the First Nationwide CD until Clum purchased the Cape Elizabeth property. According to Clum, "[i]t just continued to renew and renew and renew, and paid interest continually." Clum admits that any appreciation in the value of this account resulted from interest paid. With respect to the Fidelity Mutual Fund, Clum testified that the appreciation that occurred subsequent to their marriage resulted from the reinvestment of dividends and capital gains, and changes in the price of the shares. With respect to the Van Kampen IRA, Clum asserted in testimony that "any increase was nonmarital because there was no more money put back into that IRA." The only asset in which money was deposited every year was the Fidelity IRA. Clum's attorney explained that the values of the nonmarital assets increased during the course of the marriage "by interest, dividends or capital gains reinvestment, rather than . . . the parties putting more money into [them]." Clum testified that the money in all of these accounts is too interwoven to be able to determine which portion of the appreciation is attributable to interest, dividends, capital gains, or market fluctuations.⁵ No expert testimony was presented.

[¶ 7] The trial judge warned the attorneys, "Frankly, I'm getting nothing out of this testimony, other than what I already had, which was that the increase in value is due to four different components, and [Clum] can't testify as to—to what extent each component caused the increase or may have caused the decrease." The trial judge then requested a memo outlining the assets Clum contends were incorrectly characterized, suggesting the appropriate characterization of the assets, and suggesting any impact that characterization would have on the divorce decision. In response to this request, Clum submitted a memorandum contending that Harriman v. Harriman, POR-93-DV-882,⁶ the decision on which the trial court relies, was improperly decided. Clum made no attempt, however, to attribute the increases in the values of the nonmarital property to specific sources.

[¶ 8] The District Court explicitly followed the Superior Court's analysis in Harriman and issued a new judgment with new findings of fact and conclusions of law. The findings and conclusions are nearly identical to those in the original judgment. The only significant difference is that, although the original judgment ordered the parties to pay their own fees, the court, in its new judgment, ordered Clum to pay $7500 of Graves's attorney fees. The Superior Court affirmed the District Court's divorce judgment and this appeal followed.

I. MARITAL v. NONMARITAL PROPERTY

[¶ 9] When a Superior Court acts in an appellate capacity, we directly review the record of the District Court. See Nordberg v. Nordberg, 658 A.2d 217, 219 (Me.1995). The District Court's characterization of property as marital or nonmarital is reviewed for clear error. See id.; see also Harriman v. Harriman, 1998 ME 108, ¶ 8, 710 A.2d 923, 925. As long as there is competent evidence in the record to support the District Court's characterization, the characterization will be affirmed. See Nordberg, 658 A.2d at 219.

[¶ 10] Property acquired during marriage is presumed to be marital property. See 19 M.R.S.A. § 722-A(2) & (3) (now 19-A M.R.S.A. § 953(2) & (3) (1998));⁷Cushman v. Cushman, 495 A.2d 330, 334 (Me.1985). A party seeking to characterize property acquired during marriage as nonmarital property has the burden of rebutting the statutory presumption. See 19 M.R.S.A. § 722-A(2) & (3); Macdonald v. Macdonald, 532 A.2d 1046, 1047 (Me.1987). If a party presents evidence to show that the purchase of such property was financed in part with nonmarital funds, the portion of the value of the property attributable to the nonmarital funds can remain nonmarital. See Cushman, 495 A.2d at 334. The statutory presumption, however, is irrebuttable if the property is acquired during the marriage in joint tenancy with the spouse.⁸See Long v. Long, 1997 ME 171, ¶¶, 15-17, 697 A.2d 1317, 1323-24.

[¶ 11] Because Clum purchased the Cape Elizabeth property while married to Graves, the property is presumed to be marital property. See 19 M.R.S.A. § 722-A(2) & (3). Clum purchased the property as a joint tenant with his father, not with Graves. Thus, the presumption is rebuttable. See id.; Long, 1997 ME 171, ¶¶ 15-17, 697 A.2d at 1323-24. Clum presented evidence to show that a portion of the down payment for the property was derived from property he had acquired prior to the marriage, namely the First Nationwide CD and the Fidelity Mutual Fund. The parties do not dispute that the value of the Cape Elizabeth property...