Kaderly v. Kaderly
| Decision Date | 13 December 2022 |
| Docket Number | WD 84855 |
| Citation | 656 S.W.3d 333 |
| Parties | Sandra KADERLY, Appellant, v. Kevin KADERLY, Respondent. |
| Court | Missouri Court of Appeals |
Kristin D. Siegel, Lees Summit, MO for appellant.
Jonathan Sternberg, Kansas City, MO for respondent.
Before Division Three: Karen King Mitchell, Presiding Judge, Cynthia L. Martin, Judge, Anthony Rex Gabbert, Judge
Sandra Kaderly ("Wife") appeals from the trial court's judgment entered in the Circuit Court of Jackson County dissolving her marriage to Kevin Kaderly ("Husband"). Wife claims that the trial court erred in concluding that half of the proceeds from the sale of Wife's court reporting business were marital property, and alternatively erred in determining that the increase in value of the business during the marriage was attributable to contributions by Wife and Husband. Finding no error, we affirm.
In March 2010, Wife formed SLC II, Inc. ("SLC"), a Missouri corporation of which she owned 100 percent of the shares. SLC owned a 50 percent membership interest in Cooper-Moeller, LLC ("Cooper-Moeller"), a court reporting business. The other 50 percent membership interest in Cooper-Moeller was owned by GRM I, Inc. ("GRM"). Glenda Moeller ("Moeller"), another court reporter, owned 100 percent of the shares of GRM.
In June 2016, Wife discovered irregularities in Cooper-Moeller's business accounts. Wife learned that Moeller had been using Cooper-Moeller funds to repay a personal loan Moeller took from her 401(k) account. Then in the fall of 2016, Moeller made withdrawals from Cooper-Moeller's payroll account that caused the account to have insufficient funds to pay payroll taxes. Wife hired an attorney to provide legal advice regarding the business relationship.
Wife and Husband married in February 2017. At the time of the marriage, Wife was still the 100 percent shareholder of SLC, which still held a 50 percent membership interest in Cooper-Moeller.
On April 14, 2017, SLC and GRM entered into a membership interest transfer agreement ("Transfer Agreement") to address ownership of the membership interests in Cooper-Moeller. The Transfer Agreement was also signed by Moeller and Wife in their individual capacities. The negotiated terms set forth in the Transfer Agreement had been offered to GRM on a buy-or-sell basis, but GRM elected to sell its membership interest in Cooper-Moeller to SLC in lieu of acquiring SLC's membership interest.
In the Transfer Agreement, GRM agreed to sell its 50 percent membership interest in Cooper-Moeller to SLC for $30,000, and SLC promised that, upon its purchase of GRM's interest in Cooper-Moeller, it would cause Cooper-Moeller's name to be changed to remove the reference to "Moeller." The Transfer Agreement included a statement of Cooper-Moeller's debt obligations totaling $217,445.62,2 including a line of credit with Cornerstone Bank with a balance of $150,664.01. In further consideration of GRM's agreement to sell its membership interest, SLC agreed to "cause Cornerstone Bank to fully release [GRM] and Moeller from any and all obligations to Cornerstone Bank" on the line of credit, and also agreed to have Cooper-Moeller "assume any debts and release [GRM] and Moeller from all other obligations related to [Cooper-Moeller], excluding Moeller's personal 401(k) loan." The Transfer Agreement also included the following indemnity provision:
[SLC] and [Wife] agree to protect, defend, indemnify and to hold harmless [GRM] and Moeller, their successors and assigns against and in respect to any and all loss, claim, damage, cost or expense including reasonable attorney's fees resulting from (1) any breach of any representations, warranties and agreements of [SLC] herein contained; (2) any obligation or liability, whether accrued, absolute, contingent or otherwise of [SLC] or [Cooper-Moeller] which is not expressly assumed by [GRM] pursuant to the terms of this Agreement.
GRM assigned its membership interest in Cooper-Moeller to SLC effective April 14, 2017. Though GRM was selling its membership interest in Cooper-Moeller to SLC, Cooper-Moeller issued the check to pay GRM the agreed-on purchase price for the membership interest. On August 19, 2017, Moeller, Cooper-Moeller, Wife, and Cornerstone Bank entered into a release of guarantor agreement ("Release of Guarantor") in accordance with the terms of the Transfer Agreement. Cornerstone Bank released Moeller from a June 2015 guaranty wherein Moeller agreed to guaranty Cooper-Moeller's payment of a $175,000 promissory note owed to Cornerstone Bank. Following execution of the Release of Guarantor, Wife became the sole guarantor of Cooper-Moeller's indebtedness to Cornerstone Bank.
Shortly after transfer of GRM's membership interest in Cooper-Moeller to SLC, Cooper-Moeller changed its name to TCG Futures, LLC, ("TCG Futures"), effective April 14, 2017.
On November 24, 2019, Wife filed a petition seeking to dissolve her marriage to Husband ("Petition"). Husband filed an answer and counter-petition ("Counter-Petition") on January 30, 2020. Wife answered the Counter-Petition on February 4, 2020.
In February 2020, while the dissolution proceeding was pending, Veritext, LLC ("Veritext"), a national court reporting business, purchased the majority of TCG Futures’ assets for a purchase price of $1.95 million. At the time of the sale, Wife entered into a noncompete agreement with Veritext that restricted her ability to work as a court reporter within a 50-mile radius of Kansas City for five years. By the time of trial in December 2020, Wife had received $1,783,502.25 from the sale of TCG Futures’ assets, and was set to receive approximately $140,000 in February 2021. Wife initially deposited the proceeds from the sale into a TCG Futures account at Commerce Bank. Wife then used the proceeds of the sale to meet TCG Futures’ final payroll obligations, to purchase two vehicles for her sons, to donate to charity, to purchase and renovate a home in Lake Lotawana, and to fund a retirement account. The balance of the proceeds--approximately $83,331 as of December 2020--remained in the TCG Futures account at Commerce Bank.
On May 10, 2020, Husband filed a motion seeking leave to file an amended counter-petition in order to include TCG Futures and Veritext as parties. The trial court granted Husband's motion to include TCG Futures as a party but denied Husband's motion to add Veritext as a party. Husband filed his first amended counter-petition ("Amended Counter-Petition") on May 29, 2020. The Amended Counter-Petition alleged that TCG Futures was a necessary party because Wife formed and operated TCG Futures during the marriage. Wife's answer to the Amended Counter-Petition admitted that TCG Futures conducted business during the marriage but denied that TCG Futures was formed during the marriage.
During a two-day trial in December 2020, the sole issue was the division of the parties’ property and debts. The trial court heard testimony from Wife, Husband, and two expert witnesses, and considered admitted exhibits regarding the creation and operation of TCG Futures and its predecessors, the change in value of TCG Futures and its predecessors over the course of the marriage, and the sale of TCG Futures to Veritext.
Wife's expert witness prepared a report that was admitted into evidence. The report explained that immediately upon transfer of GRM's membership interest in Cooper-Moeller to SLC, Cooper-Moeller became a single-member limited liability company. As a result, Cooper-Moeller, which had been classified as a partnership since March 2010, could no longer be so classified because a partnership terminates for income tax purposes when it ceases to have two or more partners. Wife's expert witness further explained that effective April 15, 2017, TCG Futures (f/k/a Cooper-Moeller) "elected to convert its tax status from a single member limited liability company (a disregarded entity for income tax purposes) to an S-corporation." Though at that moment, the sole member of TCG Futures remained SLC, Wife's expert also explained that "[c]ontemporaneous with TCG Futures’ election to convert its tax status to an S-Corporation, [Wife] simplified the ownership structure and exchanged her 100[ percent] ownership interest in [SLC] for [SLC's] ownership interest in TCG Futures because TCG Futures was [SLC's] sole income producing asset." Accordingly, SLC filed its final income tax return in 2017, and TCG Futures’ tax returns from that point forward identified Wife as the sole owner of the business.
The trial court issued its judgment and decree of dissolution of marriage ("Judgment") on August 3, 2021. The trial court concluded that the proceeds from the sale of TCG Futures "are part marital and part non-marital" because Wife owned one half of the company before marriage and acquired the other half of the company during the marriage. The trial court found that Wife "assumed over $200,000 in liabilities on behalf of [Cooper-Moeller] as part of the sale of the business from Ms. Moeller to [Wife]." The trial court also found that the "business was in bad shape at the time [Wife] acquired the entire portion of the business and that it had a negative net worth at the time of the acquisition." Accordingly, the trial court concluded that $975,000 of the proceeds from the sale of TCG Futures was marital property. The trial court set aside to Wife all property that had been acquired with proceeds from the sale of TCG Futures, and the bank account with the remaining proceeds, and, after dividing the remaining marital property and debts, ordered Wife to pay Husband $200,000 to "effectuate an equitable division of the marital estate."
Wife and Husband each filed post-judgment motions. The trial court denied the post-judgment motions.
Wife appeals.
We will affirm the trial court's judgment in a court-tried dissolution proceeding "unless it is not supported by substantial...
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