Ellerbe v. Ellerbe, 2542

• Citation: 323 S.C. 283,473 S.E.2d 881
• Decision Date: 09 May 1996
• Docket Number: No. 2542,2542
• Parties: Clarence M. ELLERBE, Jr., Appellant, v. Lawanne F. ELLERBE, Respondent. . Heard
• Court: South Carolina Court of Appeals

Page 881

473 S.E.2d 881

323 S.C. 283

Clarence M. ELLERBE, Jr., Appellant, v. Lawanne F. ELLERBE, Respondent.

No. 2542.

Court of Appeals of South Carolina.

Heard May 9, 1996.

Decided July 15, 1996.

Rehearing Denied Aug. 22, 1996.

Certiorari Dismissed June 20, 1997.

Brooks P. Goldsmith, Lancaster, for appellant.

Forrest C. Wilkerson, Rock Hill, for respondent.

CURETON, Judge:

In this divorce case, the family court granted Lawanne F. Ellerbe (wife) a divorce on the ground of adultery, equitably divided the marital property, and awarded her alimony, investigator fees, expert witness fees, and attorney fees and costs. Clarence M. Ellerbe, Jr. (husband) appeals. We affirm in part, reverse in part and remand.

Facts and Procedural History

The parties were married in 1968 and have one emancipated child. They separated on February 20, 1994. At the commencement of this action, the husband was 50 years old and the wife was 45. The wife is a college graduate and is currently seeking a degree in nursing, which she anticipates receiving in December 1997 or May 1998. She is employed as a systems administrator at the Sanger Clinic in North Carolina where she has worked for seventeen years. During the marriage, the wife was the primary homemaker and caretaker for the parties' child. The husband is a college graduate and is employed with Davis, Young, Speir & Lee, an insurance agency in Charlotte, North Carolina. Prior to the parties' separation, the husband suffered a brain aneurysm which required surgery. The husband resumed full-time employment several months later.

On March 21, 1994, the husband sued for separate maintenance and requested an equitable division of the parties' marital assets. In an Amended Answer and Counterclaim, dated September 13, 1994, the wife sought a divorce on the ground of adultery, alimony, attorney fees, litigation expenses and costs. The husband replied, generally denying the wife's allegations, but admitting he had committed adultery. In a pendente lite order dated September 30, 1994, the court ordered the husband to pay alimony in the amount of $1,200 per month. Pursuant to an order dated December 24, 1994 and a supplemental order dated March 3, 1995, the wife was granted a divorce on the ground of adultery. The court equitably distributed the parties' marital assets and debts, awarded the wife $1,300 per month permanent alimony and $200 per month temporary alimony until she completed her nursing training, and awarded the wife attorney fees, costs, and other litigation expenses.

Standard Of Review

In appeals from the family court, this court has jurisdiction to find the facts in accordance with our own view of the preponderance of the evidence. Hough v. Hough, 312 S.C. 344, 440 S.E.2d 387 (Ct.App.1994). This broad scope of review, however, does not require us to disregard the findings of the family court. Stevenson v. Stevenson, 276 S.C. 475, 279 S.E.2d 616 (1981). Neither are we required to ignore the fact that the trial judge, who saw and heard the witnesses, was in a better position to evaluate their credibility and assign comparative weight to their testimonies. Cherry v. Thomasson, 276 S.C. 524, 280 S.E.2d 541 (1981).

Discussion and Analysis

I.

The husband asserts the family court's finding that his relationship with Debbie Drawdy contributed significantly to the break up of the parties' marriage is contrary to the preponderance of the evidence.

In his reply to the wife's Amended Answer and Counterclaim, the husband admitted the wife was entitled to a divorce on the ground of adultery. The husband testified he has known Ms. Drawdy since she began working for him in 1990. He admitted having sexual relations with her in April 1994, approximately six weeks after he and the wife separated, but maintained his relationship with Ms Drawdy did not contribute to the parties' separation. He stated the parties had not had an intimate relationship since 1985, and in fact, the parties had discussed separation on several occasions since 1985.

The report of the wife's private investigator indicates the husband and Ms. Drawdy were alone at the husband's home for several hours on the evening of March 24, 1994 and again at Ms. Drawdy's apartment on March 28, 1994. The husband denied adultery with Ms. Drawdy prior to April 1994; however, he testified she separated from her husband in January 1994, and her husband was awarded a divorce based on their adulterous relationship.

The wife testified the separation was her husband's idea. She further stated she did not want the divorce, but thought it best at the time of trial. She stated "things ha[d] not been wonderful between us on and off for years, and it was one of those things."

The trial judge found the husband's romantic interest in Ms. Drawdy and excessive drinking contributed significantly to the break up of the parties' marital relationship. Our review of the record does not disclose sufficient evidence to support the court's finding that the husband's relationship with Ms. Drawdy significantly contributed to the breakdown of the parties' marriage. We note, however, the court also found the husband's excessive drinking, which he admitted, was a contributing cause of the breakup. Therefore, even if the judge erred in his finding concerning the husband's relationship with Ms. Drawdy, we find there is insufficient evidence of prejudice to the husband as a consequence of the ruling. The judge found neither party was guilty of any marital misconduct or fault that substantially affected the economic circumstances of the parties. There is also no indication the court utilized fault as a basis for awarding alimony to the wife. See Cartee v. Cartee, 295 S.C. 103, 366 S.E.2d 269 (Ct.App.1988) (appellant bears the burden of showing both error and prejudice).

II.

The husband next complains the family court erred in discounting the value of the parties' retirement plans, the error being that such a discount is not appropriate because the retirement plans were not required to be liquidated and, thus, taxes were not incurred. We agree.

Both the husband and the wife owned retirement plans. The wife offered the expert testimony of a certified public accountant (CPA) who computed the current value of her retirement plan, deducting from the face value federal and state income taxes, as well as an early withdrawal penalty of 10%. The CPA testified the wife's retirement account, valued at $144,495 as of the date of filing, would have a tax burden of $75,110, which translated into a reduction of approximately 52% of the face value. ¹ He also testified the husband's 401K plan, valued at $70,029.88, and his IRA, valued at $4,097.44, should be reduced by 52% to account for tax burdens. Nevertheless, on cross-examination he testified that these reductions were not necessary if the accounts were not liquidated. He further testified monies in the accounts could be transferred between the husband and the wife without tax consequences pursuant to a Qualified Domestic Relations Order.

Based on the CPA's testimony, the family court found the current values of the parties' tax deferred accounts were equal to 48% of their face values. The family court awarded the wife her retirement plan and ordered her to be responsible for an $8,492 debt secured by a lien against the plan. The family court awarded the husband his 401K plan and IRA, and ordered him to be responsible for a $20,619 debt secured by a lien against the 401K plan.

South Carolina Code Ann. § 20-7-472(11) (Supp.1995) requires the family court to consider the tax consequences to each party resulting from equitable apportionment. However, if the apportionment order does not contemplate the liquidation or sale of an asset, then it is an abuse of discretion for the court to consider the tax consequences from a supposed sale or liquidation. See Graham v. Graham, 301 S.C. 128, 390 S.E.2d 469 (Ct.App.1990); see also Roe v. Roe, 311 S.C. 471, 429 S.E.2d 830 (Ct.App.1993). Moreover, a transfer of these funds from one party to the other as a part of an equitable division should not result in a tax consequence. Josey v. Josey, 291 S.C. 26, 351 S.E.2d 891 (Ct.App.1986). Here, the parties were awarded their respective accounts. Because we see no need for the accounts to be liquidated, we hold the family court erred in valuing the parties' retirement accounts at 48% of their face values. In redetermining equitable distribution, the family court shall consider the face values of the parties' retirement accounts.

III.

The husband next asserts the family court erred in awarding the wife a 25% interest in an installment note owed by Kay Insurance, Inc. (Kay), to the Insurance Centre of the Piedmont, Inc. (Insurance Centre). The husband argues the money is not marital property because it is not owed to him personally. He states the proceeds he receives from the note are applied directly to his indebtedness with the Insurance Centre.

The husband and two other individuals own the Insurance Centre, an insurance agency located in Rock Hill, South Carolina. The Insurance Centre previously operated a Charleston branch. On April 1, 1992, the Insurance Centre sold the Charleston operation to Kay. The contract provided that Kay would pay to the Insurance Centre a purchase price of $170,000 at 7% annual interest in 84 monthly installments of $2,567, beginning July 1, 1992.

While the husband testified he has a 37.5% interest in the Kay note receivable, the evidence reflects the note is owned by the Insurance Centre and the Insurance Centre simply allocated to him a portion of the monthly installments to correspond with his percentage ownership of stock in the corporation. The husband also testified that although he is entitled to receive $480 per month from the note payment, he did not actually receive that sum because the money was retained by the Insurance Centre and applied against a debt he owes the Insurance Centre.

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