Crowell v. Crowell, COA17-164

• Decision Date: 02 January 2018
• Docket Number: No. COA17-164,COA17-164
• Citation: 809 S.E.2d 325,257 N.C.App. 264
• Court: North Carolina Court of Appeals
• Parties: Andrea Kirby CROWELL, Plaintiff, v. William Worrell CROWELL, Defendant.

257 N.C.App. 264

809 S.E.2d 325

Andrea Kirby CROWELL, Plaintiff,

v.William Worrell CROWELL, Defendant.

No. COA17-164

Court of Appeals of North Carolina.

Filed: January 2, 2018

Law Office of Thomas D. Bumgardner, PLLC, Charlotte, by Thomas D. Bumgardner, for plaintiff-appellant.

Hamilton Stephens Steele + Martin, PLLC, by Amy E. Simpson, for defendant-appellee.

BRYANT, Judge.

Where the trial court had jurisdiction to order plaintiff to sell her separate property to satisfy a distributive award, order that the transfer of a deed from plaintiff to a third-party relative be avoided, and distribute marital debts owed by the parties and where the trial court made sufficient findings of fact to justify its distributive award, we affirm. However, where the trial court's award included an alternative money judgment against a non-party, we vacate that portion of the judgment.

Plaintiff Andrea Crowell and defendant William Crowell were married on 11 July 1998. They were legally separated on 3 September 2013 and divorced in April 2015. No children were born of the marriage.

Prior to the parties’ marriage, defendant was president and shareholder of several corporations: Inwood Properties, Inc. ("Inwood Properties"); Inwood Land LLC ("Inwood Land"); Inwood Homes; Inwood Realty Corp.; St. Vrain Valley Associates LP ("St. Vrain"); Owl's Head Ranch, LLC; and WWC Valley. In March 2011, Elizabeth Temple, defendant's daughter from a previous marriage, was named president of the companies. At the time of trial, the companies were owned and controlled by defendant, Temple, and defendant's sons (also from a previous marriage), with Temple and defendant's sons holding "the same amount of shares."¹

After the parties married, they developed a pattern of living beyond their means. As a result, defendant began to take salaries from his various companies which were not justified by their revenues, plaintiff and defendant began liquidating defendant's separate property, and plaintiff and defendant took out loans against both parties’ separate property.

At the time of separation, the marital debt which had been incurred to fund the parties’ marital lifestyle was significant. Plaintiff and defendant owed money to almost every company in which defendant maintained an ownership interest, including (1) $422,368.00 to Inwood Properties; (2) $258,737.00 to Inwood Land; and (3) $143,285.00 to St. Vrain. The primary marital asset, the marital residence, was sold in 2014 after the parties’ separation for $1,075,000.00, which sale produced $230,657.00 in net proceeds. From these proceeds, plaintiff received a total interim distribution of $144,794.00 and defendant received $85,863.00.

At the time of separation, the trial court found that plaintiff's separate property included two pieces of real property—14212 Stewart's Bend Lane and 14228 Stewart's Bend Lane² —located in Charlotte, North Carolina. On or about 30 May or 1 June 2015, plaintiff transferred 14228 Stewart's Bend Lane to her son, Gentry Kirby. At that time, the property had an equity of $100,000.00, and Kirby assumed the mortgage.

On 17 February 2014, plaintiff filed a complaint against defendant for equitable distribution, alimony, and post-separation support. Defendant filed an answer and included a counterclaim for equitable distribution. The case came on for trial before the Honorable Christy T. Mann in Mecklenburg County District Court from 6 to 8 July 2016. At the time of trial, defendant was seventy-six years old and suffered from memory loss and dementia

, and he had also been diagnosed with Alzheimer's disease. Defendant did not appear at trial, but his daughter, Temple, who is her father's power of attorney, testified about matters and facts related to defendant's assets, debts, income, and expenses. Plaintiff appeared pro se . On 15 August 2016, the trial court entered its equitable distribution judgment and alimony order. Plaintiff appeals.

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On appeal, plaintiff contends that the trial court committed reversible error by (I) entering a judgment affecting title to real property without joining all necessary parties to the action; (II) entering monetary judgments against a third-party without joining the third-party to the action; (III & IV) classifying and distributing the debts of private corporations to a husband and wife without joining the corporations as parties to the action; (V) creating a distributive award without finding that the statutory presumption of an in-kind distribution has been rebutted; and (VI) ordering the liquidation of separate property to satisfy a distributive award.

In equitable distribution cases, "the standard of review on appeal is whether there was competent evidence to support the trial court's findings of fact and whether its conclusions of law were proper in light of such facts." Lee v. Lee , 167 N.C.App. 250, 253, 605 S.E.2d 222, 224 (2004) (quoting Shear v. Stevens Bldg. Co., 107 N.C.App. 154, 160, 418 S.E.2d 841, 845 (1992) ).

Equitable distribution is vested in the discretion of the trial court and will not be disturbed absent a clear abuse of that discretion. Only a finding that the judgment was unsupported by reason and could not have been a result of competent inquiry, or a finding that the trial judge failed to comply with the statute, will establish an abuse of discretion.

Wiencek-Adams v. Adams , 331 N.C. 688, 691, 417 S.E.2d 449, 451 (1992) (internal citations omitted). "A trial court's findings of fact in an equitable distribution case are conclusive if supported by any competent evidence."

Fitzgerald v. Fitzgerald , 161 N.C.App. 414, 419, 588 S.E.2d 517, 521 (2003) (citing Mrozek v. Mrozek , 129 N.C.App. 43, 48, 496 S.E.2d 836, 840 (1998) ).

"[E]quitable distribution is a three-step process; the trial court must (1) ‘determine what is marital [and divisible] property’; (2) ‘find the net value of the property’; and (3) ‘make an equitable distribution of that property.’ " Robinson v. Robinson , 210 N.C.App. 319, 322, 707 S.E.2d 785, 789 (2011) (second alteration in original) (quoting Beightol v. Beightol , 90 N.C.App. 58, 63, 367 S.E.2d 347, 350 (1988) ).

I

Plaintiff first argues that the trial court erred in entering a judgment affecting title to real property—14212 Stewart's Bend Lane—without joining all necessary parties to the action. Plaintiff contends that because CKE Properties, Inc. was the lawful owner of 14212 Stewart's Bend Lane on the date of separation ("DOS"), the Mecklenburg County District Court lacked jurisdiction to enter its order affecting said property, and therefore, its valuation and distribution constitutes reversible error. We disagree.

In an equitable distribution action, the trial court has authority to distribute "presently owned" real and personal property acquired during the marriage and before the date of separation. N.C. Gen. Stat. § 50-20(b)(1) (2015).

"[W]hen a third party holds legal title to property which is claimed to be marital property, that third party is a necessary party to the equitable distribution proceeding, with their participation limited to the issue of the ownership of that property." Upchurch v. Upchurch , 122 N.C.App. 172, 176, 468 S.E.2d 61, 63–64 (1996) (emphasis added) (citations omitted). Separate property, on the other hand, is to be considered by the trial court in making its distribution of marital property. See Young v. Gum , 185 N.C.App. 642, 648, 649 S.E.2d 469, 474 (2007) (citation omitted) (noting that the trial court is required to "consider the separate property in making a distribution of the marital property").

In the instant case, the trial court found as fact that this property was plaintiff's separate property: "On the DOS, Plaintiff/Wife owned a house and lot located at 14212 Stewart's Bend Lane, Charlotte, NC 28277 ("14212 Stewart's Bend"). 14212 Stewart's Bend is Wife's separate property, as stipulated by the parties on the FPTO [ (Final Pretrial Order) ]. (FPTO Property Item 11 )." In the distribution portion of its order, the trial court ordered plaintiff to do as follows:

b) ... 14212 Stewart's Bend: Within thirty (30) days of the date of the execution of this Judgment/Order Plaintiff/Wife shall sign a listing agreement with a realtor selected by Defendant/Husband and will take all efforts to sell 14212 Stewart's Bend for fair market value. Plaintiff/Wife will cooperate with price reductions and repair requests recommended by the real estate agent and will accept any unconditional offer made within 2% of the then asking price. All of the net proceeds shall be paid to Defendant/Husband.

Plaintiff contends that the trial court did not have jurisdiction to enter a judgment affecting 14212 Stewart's Bend Lane because it was not owned by her, but by another legal entity, CKE. In so doing, plaintiff relies on this Court's opinion in Nicks v. Nicks , 241 N.C.App. 487, 774 S.E.2d 365, (2015).

In Nicks , a husband and wife, prior to their separation, implemented an estate plan consisting of a trust and three LLCs, which eventually became a single-member LLC, "Entrust." Id. at 491, 774 S.E.2d at 370. The husband and wife were the only beneficiaries of the trust, and the husband managed the LLC and had the right to decide whether to make distributions of profits and assets from the trust. Id. at 491–92, 774 S.E.2d at 370. In the trial court's findings of fact, it determined that Entrust was marital property and ordered that its assets be distributed to the husband, but that the husband pay the wife a distributive award. Id. at 493–94, 774 S.E.2d at 371. On appeal, the husband argued the trial court erred in distributing Entrust to him because neither Entrust, the LLC, nor the trust itself were owned by either of the parties on the date of separation; rather, the trust, not the husband, owned a 100% interest in Entrust. Id. at 494–95, 774 S.E.2d at 372.

This Court agreed with the husband's argument, concluding as follows:

[T]he Trust—which holds legal title

...