Cohen v. Cohen

• Decision Date: 18 March 2019
• Docket Number: Court of Appeals Case No. 18A-DR-2139
• Parties: Dina Hasten COHEN, Appellant-Respondent, v. Itamar COHEN, Appellee-Petitioner.
• Court: Indiana Appellate Court

120 N.E.3d 1083

Dina Hasten COHEN, Appellant-Respondent,

v.Itamar COHEN, Appellee-Petitioner.

Court of Appeals Case No. 18A-DR-2139

Court of Appeals of Indiana.

FILED March 18, 2019

Attorneys for Appellant: Marvin Mitchell, Richard J. Dick, Mitchell Dick McNelis, LLC, Indianapolis, Indiana

Attorneys for Appellee: Brian K. Zoeller, Julie Andrews, Casandra L. Ringlespaugh, Nicole Makris, Cohen & Malad, LLP, Indianapolis, Indiana

Mathias, Judge.

[1] Dina Hasten Cohen ("Wife") appeals the order of the Marion Superior Court dissolving her marriage to Itamar Cohen ("Husband") and distributing the assets of the marital estate between them. The trial court ordered Husband to pay Wife an equalization payment of $ 922,275.10, to be paid at the rate of $ 6,000 per month for seventy-two months, with an additional balloon payment of $ 490,250.10 within six years. The trial court further ordered that no interest be paid so long as Husband made timely payments, but that interest would accrue if Husband missed any payments. Wife appeals and argues that the trial court legally erred by failing to include a provision for the payment of interest in its decree.

[2] We affirm.

Facts and Procedural History

[3] As Wife has failed to provide us with a transcript of the proceedings below, we derive our statement of the facts from the trial court's dissolution decree. Husband and Wife were married in March 1999. The marriage produced four children, who at the time of the dissolution decree were aged eighteen, thirteen, ten, and three.

[4] On December 19, 2016, Husband filed a petition for dissolution of his marriage to Wife. Fortunately, all issues relating to the children were resolved by the parties' Settlement Agreement as to Custody, Parenting Time, Child Support, and Child Related Matters, which the trial court approved on December 6, 2017. The parties disagreed, however, on how to distribute the assets of the marital estate. Accordingly, on March 7 and 8, 2018, the trial court held an evidentiary hearing on this issue. On August 8, 2018, the trial court entered its dissolution decree, awarding to Husband several income-producing commercial properties and awarding the marital residence to Wife. The income-producing properties represented a substantial portion of the marital estate. Therefore, the trial court ordered Husband to pay to Wife an equalization payment as follows:

The balance of the above leaves the Husband with a net of $ 2,070,180.40 and Wife $ 225,630.21, for difference of $ 1,844,550.20. Therefore, the Court seeing no reason to deviate from the statutory presumptive of a 50/50 asset split DECREES the Wife shall be awarded a judgment against Husband in the amount of $ 922,275.10 to be repaid at a rate of $ 6,000 per month for seventy-two (72) months, along with a balloon payment of $ 490,275.10 [ ]on or before the end of the six (6) years. So long as all payments are made by the 1st of each month no interest shall accrue on those payments, but if any payments are missed the judgment begins accruing statutory interest.

Appellant's App. p. 22. Wife now appeals.

Standard of Review

[5] A trial court must divide the property of the parties to a marital dissolution in a just and reasonable manner. Webb v. Schleutker , 891 N.E.2d 1144, 1153 (Ind. Ct. App. 2008) (citing Ind. Code § 31-15-7-4(a) ). An equal division of marital property is presumed to be just and reasonable. Id. (citing Ind. Code § 31-15-7-5 ). Decisions concerning the division and distribution of marital assets lie within the sound discretion of the trial court. Fischer v. Fischer , 68 N.E.3d 603, 608 (Ind. Ct. App. 2017), trans. denied (citing Keown v. Keown , 883 N.E.2d 865, 868 (Ind. Ct. App. 2008) ). On appeal, we review the trial court's decision only for an abuse of that discretion. Id. A trial court abuses its discretion only when its decision is clearly against the logic and effect of the facts and circumstances before the court. Id. When we review a challenge to the trial court's division of marital assets, we consider only the evidence most favorable to the trial court's disposition, and we will neither reweigh the evidence nor assess the credibility of witnesses. Id.

Discussion and Decision

[6] Wife argues on appeal that the trial court erred by ordering Husband to pay her an equalization payment over a period of six year without including an award of interest unless Husband fails to timely make a payment. Wife argues that by failing to include a provision for interest, the trial court's order fails to take into consideration the time value of money, the risk of non-payment, and inflation. Wife contends that, when taking these factors into consideration, the total amount of future payments is not equal to the present value of those payments.

[7] It has long been held that the question of "whether a lump sum award payable in installments will bear interest rests within the sound discretion of the trial court." In re Marriage of Merrill , 455 N.E.2d 1176, 1177 (Ind. Ct. App. 1983) (citing Van Riper v. Keim , 437 N.E.2d 130, 131–132 (Ind. Ct. App. 1982) ). Indeed, as noted in Van Riper , our supreme court held over one hundred years ago that "a decree awarding deferred payments of alimony in gross^{[1 ]} is satisfied by timely payment of the installments, without interest, unless interest is required by the decree." Id. (citing Winemiller v. Winemiller , 114 Ind. 540, 17 N.E. 123, 124 (1888) ). We presume on appeal that that "trial courts are aware of the time value of money and take it into consideration when dividing property and deciding whether interest should be awarded." Merrill , 455 N.E.2d at 1177–78.

[8] Wife acknowledges that an award of interest is discretionary, but she argues that the trial court's failure to award interest effectively awards her a share of the marital estate less than the one-half that the trial court found just and reasonable. That is, she contends that, if a trial court declines to award interest when payments are time delayed, then the trial court has not truly awarded an equal share.

[9] Wife's argument is based on the time value of money. Simply put, the time value of money recognizes the economic reality that a given sum of money today is worth more than the same amount in the future.² Interest represents the time value of money. Indianapolis Pub. Hous. Agency v. Aegean Const. Servs., Inc. , 755 N.E.2d 237, 241 (Ind. Ct. App. 2001) (citing Reese v. Reese , 696 N.E.2d 460, 463 (Ind. Ct. App. 1998), trans. denied ). If there is no provision for interest, the value of a promise to pay money in the future can be determined using a discount rate. See Interest Rate , Black's Law Dictionary (10th ed. 2014) (defining "discount rate" as "the interest rate used in calculating present value.").

[10] In the present case, using the 8% statutory interest rate as our discount rate, the present value of the $ 490,275.10 balloon payment that is due in six years is $ 308,956.48. And the present value of seventy-two monthly payments of $ 6,000 is not the future value of $ 432,000, but $ 342,207.13. Thus, Wife argues that she has, in reality, been awarded only $ 651,163.61, not the $ 922,275.10 stated by the trial court. In raw mathematical terms, Wife's argument has some appeal.

[11] Indeed, our courts have acknowledged the time value of money in dissolution cases. For example, in Burkhart v. Burkhart , 169 Ind. App. 588, 594, 349 N.E.2d 707, 711 (1976), the husband was ordered to pay the wife various payments over time as part of the distribution of assets. The husband appealed and, using the total value of all future payments, argued that the wife received over 69% of the marital assets. Id. We rejected this claim, holding that "[t]he more proper way to determine the value of the assets transferred to the Wife is to consider the present value of the given annuity, not the total of all future payments." Id. at 593, 349 N.E.2d at 711. Using a six-percent discount rate to calculate the present value of the payments to the wife, the court concluded that she was in fact awarded only 41% of the marital estate. Id. at 594, 349 N.E.2d at 712.

[12] Subsequent cases followed the Burkhart holding. See Whaley v. Whaley , 436 N.E.2d 816, 820–21 (Ind. Ct. App. 1982) (holding that trial court should have discounted to its present value a $ 137,200 judgment in favor of wife payable over a period of 120 months without interest); Wilson v. Wilson , 409 N.E.2d 1169, 1175 (Ind. Ct. App. 1980) (holding that trial court failed to properly take time value of money into account when it awarded wife judgment of $ 60,500, payable in monthly installments of $ 500 over 121 months and concluding that, on remand, trial court should discount the payments to their present value); see also In re Marriage of Davis , 182 Ind. App. 342, 349, 395 N.E.2d 1254, 1259 n.2 (1979) (noting that trial court discounted $ 100,000 cash award to wife to its present value pursuant to Burkhart holding).

[13] Indiana courts have also acknowledged the time value of money in cases outside the context of the distribution of marital assets. See Christopher R. Brown, D.D.S., Inc. v. Decatur Cty. Mem'l Hosp. , 892 N.E.2d 642, 646 (Ind. 2008) (noting that Indiana has long recognized the time value of money and has acknowledged that, in order to achieve full compensation for the loss of use of property, a claimant has the right to be paid pre-judgment interest on sums owed that are belatedly paid); Gregory & Appel Ins. Agency v. Philadelphia Indem. Ins. Co. , 835 N.E.2d 1053, 1063 (Ind. Ct. App. 2005) (noting that the purpose of the pre-judgment interest statute is to encourage settlement and to compensate the plaintiff for the lost time value of money), trans. denied ; In re Paternity of A.D.W. , 693 N.E.2d 576, 580 (Ind. Ct. App. 1998) (recognizing the time value of money by noting that the present value of $ 10.00 weekly installments was substantially less than arrearage of $ 11,774); Griffin v. Acker , ...