Herschend v. Herschend

• Decision Date: 30 September 2015
• Docket Number: SD 33134 Consolidated,Nos. SD 33116,s. SD 33116
• Citation: 486 S.W.3d 346
• Parties: Raymond Bruce Herschend, Petitioner/Appellant/Cross–Respondent, v. Dianna Vee Herschend, Respondent/Respondent/Cross–Appellant.
• Court: Missouri Court of Appeals

486 S.W.3d 346

Raymond Bruce Herschend, Petitioner/Appellant/Cross–Respondent,

v.Dianna Vee Herschend, Respondent/Respondent/Cross–Appellant.

Nos. SD 33116

SD 33134 Consolidated

Missouri Court of Appeals, Southern District, Division One .

Filed: September 30, 2015

Appellant/Cross–Respondent's Attorney: Cordelia F. Herrin, of Cassville, MO.

Respondent/Cross–Appellant's Attorney: Charles B. Cowherd and Derek A. Ankrom, of Springfield, MO.

WILLIAM W. FRANCIS, JR.

, J.

Raymond Bruce Herschend (“Bruce”) and Dianna Vee Herschend (“Dianna”)¹ have each appealed the trial court's November 20, 2013 “Judgment.” See Rules 81.04(c) and 84.04(i).² Bruce's appeal (SD33134) and Dianna's appeal (SD33116) were consolidated for purposes of this opinion. Bruce raises two points of alleged trial court error, and Dianna raises four points of alleged trial court error. We affirm in part, and reverse in part with a remand.

Factual and Procedural Background

Viewed in the light most favorable to the judgment, Walker v. Lonsinger, 461 S.W.3d 871, 874 (Mo.App.W.D.2015)

, the following facts were adduced at trial.

Before Bruce and Dianna married on August 20, 2000, Bruce owned differing interests in Adventure Creations, Inc. a/k/a Talking Rocks Cavern and Herschend Family Entertainment Corporation (“HFE”).

Prior to her marriage to Bruce, Dianna held a variety of employment positions, including dog grooming, two years in the military, assistant manager of cave tour businesses in Texas and Missouri, and assistant manager of an apartment complex in Oklahoma. She completed education up to her sophomore year of high school, but subsequently obtained her GED and some college credits.

In 2005, the HFE board of directors developed Covenant Capital, LP (“Covenant”), a diversified organization, to pay dividends to shareholders and put money into a financial pool so shareholders would have equity outside of HFE's core business. Covenant is completely funded by HFE dividends, and Bruce has no control over the value of the stock or when dividends are paid. The HFE board controls Covenant, and only shareholders in HFE can hold an interest in Covenant. A majority vote of six trustees determines when retained earnings will be distributed to shareholders. Bruce is not a trustee, has no decision-making power, no ability to influence where money is invested, and no control over distributions.

During their marriage, Bruce and Dianna created and acquired interests in several businesses: (1) a 47–percent interest in Butterfly Palace, which also included Butterfly Creations LLC, Natural Edutainment, Emerge LLC, Butterfly Cathedral, and Pente Teknon LLC; (2) a 100–percent interest in RBD Marketing LLC, which owned the building and real estate on which Butterfly Cathedral operates; and (3) a 45–percent interest in Tia's World LLC, which owned the building and real estate from which Predator World Zoo operated.

These businesses performed poorly and incurred significant debts, which were guaranteed personally by Bruce and Dianna. To capitalize and expand these businesses, Bruce utilized HFE dividend money from Covenant and other non-marital assets, the couple made personal loans to the businesses, and the businesses borrowed money from Bruce's family and other non-business owners.

Following acrimony in their marriage, Bruce and Dianna separated on October 18, 2011. In November 2011, before Bruce and Dianna were divorced, Bruce began a sexual relationship with Leonora Lang (“Lang”), and began taking Lang to family and work functions.

A three-day trial was held beginning on September 25, 2013. Bruce presented evidence regarding, in relevant part, the businesses he and Dianna created and acquired, personal and business debts, the nature of his finances before and during the marriage, the extent and value of joint marital property, Dianna's business management practices, and future business and employment opportunities. Larry Ellison (“Ellison”), a certified public accountant, testified on behalf of Bruce. Ellison, in valuing the joint businesses, took the fair market value of the businesses, subtracted debts to outside creditors and debts owed by the business to Bruce and Dianna and their children, in order to arrive at the net asset value of the portion of the businesses that Bruce and Dianna owned, for a net deficit value of $4,314,000.

Dianna presented evidence regarding, in relevant part, the nature and extent of joint marital property and businesses, legal fees incurred during the divorce proceedings, the nature of her education and business experience, and her past and prospective monthly expenses. Included with that evidence was Exhibit CC, Dianna's Income and Expense Statement, listing her gross income at $2,150 and her average monthly expenses at $14,462.11. Exhibit CC was admitted into evidence without objection.

On November 30, 2013, the trial court entered its Judgment allocating the marital and non-marital assets of the parties, dividing the marital debt, and awarding Dianna maintenance and attorney fees. The trial court found marital misconduct by Bruce, arising out of his relationship with Lang.

The trial court awarded to Bruce his non-marital property in the amount of $13,706,437, consisting of his interest in his family's businesses, investments, and trusts; two tracts of real estate; a vehicle and tractor; and various other personal property. Dianna was awarded her non-marital property in the amount of $17,100, consisting of jewelry and other personal property.

The trial court, finding Ellison credible, awarded to Bruce as marital property all of the parties' joint businesses, the marital home, various bank accounts, life insurance policies, two vehicles, promissory notes, and various other personal property with a value of $4,921,798.10. Bruce was also to be responsible for marital debt totaling $5,589,986.30, thus reducing the value of the marital property he was awarded to a negative $1,646,317.90.

Dianna was awarded marital property totaling $357,551.54, consisting of a horse trailer, two vehicles, bank account, life insurance policy, and 28–30 horses. Dianna was ordered to pay marital debts of $52,408.57, reducing the value of her marital property to $305,142.97.

The trial court determined Dianna's reasonable needs to be $8,124 per month and awarded maintenance to Dianna in the amount of $6,560 per month for a duration of thirteen years. Dianna also received an award for attorney fees in the amount of $91,900.93. These consolidated appeals followed.

On appeal, Bruce asserts in two points that: (1) the trial court's award of maintenance to Dianna was not supported by substantial evidence; and (2) the trial court abused its discretion in awarding Dianna attorney fees. Dianna asserts in four points that: (1) the trial court erroneously applied the law in classifying approximately one million dollars in Bruce's Covenant account as Bruce's separate non-marital property; (2) the trial court erred in finding that joint businesses owned by Bruce and Dianna had a negative value of $3,396,000 while also assigning the value of certain notes owed by the businesses at a zero value; (3) the trial court erroneously applied the law in valuing Butterfly Palace and Predator World Zoo; and (4) the trial court erroneously applied the law in terminating maintenance in thirteen years.

The issues for our consideration are:

1. Was the trial court's award of maintenance to Dianna supported by substantial evidence?

2. Did the trial court abuse its discretion in awarding Dianna attorney fees?

3. Did the trial court erroneously apply the law in classifying approximately one million dollars in Bruce's Covenant account as separate non-marital property?

4. Did the trial court abuse its discretion in finding that joint businesses owned by Bruce and Dianna had a negative value of $3,396,000 while also assigning the value of certain notes owed by the businesses to Bruce at a zero value?

5. Did the trial court erroneously apply the law in valuing Butterfly Palace and Predator World Zoo?

Overall Standard of Review

We will affirm the trial court's judgment of dissolution of marriage unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976)

. We view the evidence and permissible inferences therefrom in the light most favorable to the trial court's judgment and disregard all contrary evidence and inferences. Maninger v. Maninger, 106 S.W.3d 4, 9 (Mo.App.E.D.2003). The court is free to disbelieve any, all, or none of the evidence, and we may not re-evaluate the evidence through our own perspective. J.A.R. v. D.G.R., 426 S.W.3d 624, 627 (Mo. banc 2014).

Bruce's Point I: Dianna's Maintenance Award Not Supported by Substantial Evidence

Bruce argues the trial court erred in awarding Dianna maintenance in the amount of $6,560 per month because the trial court's findings regarding a portion of Dianna's needs were not supported by substantial evidence.

We will not reverse a trial court's award of maintenance absent an abuse of discretion by the trial court. Woodard v. Woodard, 201 S.W.3d 557, 561 (Mo.App.E.D.2006)

. We will find abuse of discretion “only when the ruling is clearly against the logic of the circumstances and is so arbitrary and unreasonable as to shock one's sense of justice and indicate a lack of careful consideration.”

Bright v. Bright, 429 S.W.3d 517, 520 (Mo.App.W.D.2014)

(internal quotation and citation omitted). We have held that an award of maintenance that is not supported by substantial evidence rises to the level of abuse of discretion. See

In re Marriage of Ross, 231 S.W.3d 877, 886 (Mo.App.S.D.2007).

An award of maintenance may include “a reasonable amount above the itemized expenses of the party seeking maintenance to meet unexpected day-to-day expenses which, given their nature, may be reasonable under the circumstances, yet are incapable of specific...