Marriage of Cray, Matter of

• Decision Date: 12 February 1993
• Docket Number: No. 67312,67312
• Citation: 846 P.2d 944,18 Kan.App.2d 15
• Parties: In the Matter of the Marriage of Ailleen M. CRAY, Appellant/Cross-Appellee, and Thomas M. Cray, Appellee/Cross-Appellant.
• Court: Kansas Court of Appeals

Page 944

846 P.2d 944

18 Kan.App.2d 15

In the Matter of the Marriage of Ailleen M. CRAY Appellant/Cross-Appellee and Thomas M. Cray, Appellee/Cross-Appellant.

No. 67312.

Court of Appeals of Kansas.

Feb. 12, 1993.

Review Granted June 17, 1993.

Syllabus by the Court

1. In a divorce action, the correct date for the valuation of marital property for purposes of property division is the date of the filing of the action which results in the granting of the divorce. Holdings to the contrary in In re Marriage of Schwien, 17 Kan.App.2d 498, Syl. p 3, 839 P.2d 541 (1992), are disapproved.

2. In a divorce action, the property of the parties, including present value of vested or unvested pensions or retirement pay, military or nonmilitary, becomes marital property upon filing of the divorce action.

3. When the trial court in a divorce action directs the entry of a qualified domestic relations order awarding a portion of the employee spouse's pension funds to the nonemployee spouse, the nonemployee spouse does not have a right to those funds until two thresholds are met. First, the time for payment of the funds to the employee spouse must accrue, and, second, the funds must be segregated while the issue of the validity of the qualified domestic relations order is being determined by the pension plan administrator. Until both requirements are met, neither the apportioned pension funds nor the profits and losses flowing therefrom are the property of the nonemployee spouse.

4. When in a divorce action a trial court awards a nonemployee spouse a portion of the other spouse's pension benefits by directing the entry of a qualified domestic relations order, it is not error for the trial court to refuse to direct that the nonemployee spouse be named as the "surviving spouse." As a cautionary measure, to provide guidance to the pension plan administrator, it is recommended the trial court set out in its proposed qualified domestic relations order that the nonemployee spouse be treated as the surviving spouse pursuant to the provisions of 26 U.S.C. § 414(p)(5) (1988) up to the amounts designated in the qualified domestic relations order.

5. When the record in a divorce action contains evidence sufficient to enable a reasonable person to find a parent is not deliberately unemployed or underemployed, it is not an abuse of discretion for the trial court to refuse to impute that parent's former income to him or her in figuring the child support obligation.

Stephen J. Blaylock and Cindy L. Cleous of Woodard, Blaylock, Hernandez, Pilgreen & Roth, Wichita, for appellant.

Jake W. Brooks, Scott City, for appellee.

Before ELLIOTT, P.J., DAVIS, J., and C. FRED LORENTZ, District Judge, Assigned.

C. FRED LORENTZ, Judge:

This is an appeal by Ailleen M. Cray from the final decision in a divorce action wherein property values were determined using the date of separation, appellant was not awarded profits and/or losses from appellee's pension plan, and orders were entered regarding child support. Thomas M. Cray cross-appeals from orders regarding maintenance, assessment of litigation expenses against marital residence equity, and modification of a portion of his settlement proposal.

The parties were married August 19, 1970, in Davenport, Iowa. Although two children were born of the marriage, at the time of trial, only Tommy Michael Cray, age 12, remained a minor.

A review of the record reveals that Ailleen left the marital home and relationship on December 31, 1987. At that time, she took only her clothing and left the children with Thomas. By agreement of the parties, she had rarely worked outside the home.

In August of 1988, Ailleen filed an action for separate maintenance, which was later amended to an action for divorce. That divorce action was voluntarily dismissed in February 1990 by Ailleen because she was not ready for trial. Shortly thereafter, in April 1990, she refiled this present action for divorce, alleging the grounds of incompatibility.

The divorce was bitterly contested by both sides, with over 1,000 items of property and debt, ranging from the trivial (silver dust cloth worth 10 cents) to the substantial (marital residence worth $87,000), being brought before the trial court for division. The child custody issue had previously been settled between the parties, with Ailleen designated the residential parent in a joint custody arrangement. The parties had contested the date of valuation of marital assets at trial, with the court finding from the trial testimony that the parties had essentially gone their separate ways from December 31, 1987, and that date was then used by the court in determining asset valuation.

The trial court declared the parties divorced at the end of the trial but took the issues regarding property and debt division under advisement. The trial court issued its memorandum decision on January 22, 1991, regarding the issues taken under advisement set out the orders of the court, and directed Thomas' attorney to draft the journal entry of divorce. Thereafter, numerous motions were filed by the parties and ruled upon, with the final journal entry being filed on July 22, 1991. On October 9, 1991, motions by the parties for the trial court to reconsider, alter, or amend the judgment were denied.

Ailleen first contends the trial court's adoption of the original date of separation (December 31, 1987) as the date of valuation for the marital assets, specifically Thomas' retirement plans, was error and contrary to the laws of the State of Kansas. Thomas, on the other hand, argues that Kansas law does not fix a particular date of valuation, leaving such date to the trial court's discretion. He asserts that under Kansas law, the division of property need only be just and reasonable, taking into consideration the factors listed within K.S.A.1991 Supp. 60-1610(b).

This issue was recently discussed in In re Marriage of Schwien, 17 Kan.App.2d 498, Syl. p 3, 839 P.2d 541 (1992), where it was held:

"The trial court has discretion to value the marital estate at the time of separation, at the time the divorce petition is filed, at the time of the divorce hearing, or as the facts in each case dictate. When the time of valuation becomes an issue in a contested case, the trial court at the pretrial conference should set the valuation date."

In Schwien, the husband valued all the marital property as of the date the parties separated. The wife valued the farming partnership as of the date the petition for divorce was filed and the remainder of the marital assets as of the date of trial. Because no consistent valuation date was used at trial regarding the value of all the marital property, the trial court's decision was reversed and the case remanded for retrial using a consistent date of valuation.

The real issue before this court is whether a trial court can value assets, particularly retirement plans, at a time substantially earlier than when a divorce action commences. In this case, the court adopted December 31, 1987, as the valuation date even though Ailleen did not file for separate maintenance until August 1988. That original action was dismissed in February 1990. Ailleen filed again for divorce in April of 1990, and this action came to trial in November of 1990. Ailleen valued the retirement plans as of June 30, 1990. They had increased substantially in value since Thomas' valuation dates of September 30 and December 31, 1987.

We believe the trial court's adoption of the December 1987 values for the retirement plans was error and contrary to the laws of the State of Kansas.

We decline to apply the holding of the Court of Appeals panel in Schwien, 17 Kan.App.2d 498, Syl. p 3, 839 P.2d 541. Under the facts of this case, we hold the trial court should use the date of the filing of the divorce petition as the date for valuing marital property, with the discretion to consider the length of the parties' separation in dividing that marital property.

Kansas case law has long recognized that property acquired after separation but before divorce was property acquired by the parties jointly during their marriage for which a court can make a division in a divorce action. See Forrey v. Forrey, 167 Kan. 77, 204 P.2d 725 (1949).

We can also look for guidance to Kansas statutory law as found in K.S.A. 23-201(b), which defines marital property:

"(b) All property owned by married persons, including the present value of any vested or unvested military retirement pay, whether described in subsection (a) or acquired by either spouse after marriage, and whether held individually or by the spouses in some form of co-ownership, such as joint tenancy or tenancy in common, shall become marital property at the time of commencement by one spouse against the other of an action in which a final decree is entered for divorce, separate maintenance or annulment. Each spouse has a common ownership in marital property which vests at the time of commencement of such action, the extent of the vested interest to be determined and finalized by the court pursuant to K.S.A. 60-1610 and the amendments thereto." (Emphasis added.)

The above definition is in line with Kansas case law. In Cady v. Cady, 224 Kan. 339, 344, 581 P.2d 358 (1978), the Kansas Supreme Court found that the filing of a divorce creates a species of common or co-owned property with each spouse becoming an owner of a vested, but undetermined, interest in all property individually or jointly held by the parties.

In the case before us, the only court proceeding which ended in a journal entry of divorce was the action filed by Ailleen in April of 1990. Accordingly, that date fixed the extent of the marital property of the parties. It would be illogical to then value the property at a time other than when it became marital property, as that would be tantamount to altering the extent of the marital property as defined by statute.

Notwithstanding that logic dictates...