McNamara v. Horner

• Decision Date: 19 March 2002
• Docket Number: Docket No. 216018.
• Citation: 642 N.W.2d 385,249 Mich. App. 177
• Parties: Jane Ellen McNAMARA, Plaintiff-Appellee/Cross-Appellant, v. Albert Octave HORNER, Defendant-Appellant/Cross-Appellee.
• Court: Court of Appeal of Michigan — District of US

642 N.W.2d 385

249 Mich. App. 177

Jane Ellen McNAMARA, Plaintiff-Appellee/Cross-Appellant, v. Albert Octave HORNER, Defendant-Appellant/Cross-Appellee.

Docket No. 216018.

Court of Appeals of Michigan.

Submitted February 14, 2001, at Detroit.

Decided January 11, 2002, at 9:05 a.m.

Released for Publication March 19, 2002.

Norman L. Zemke, Farmington Hills, for the plaintiff.

Sommers, Schwartz, Silver & Schwartz, P.C. (by Lawrence Warren and Carl B. Downing), Southfield, for the defendant.

Before: WHITE, P.J., and WILDER and ZAHRA, JJ.

WILDER, J.

Defendant appeals as of right a judgment of divorce and a related qualified domestic relations order. Plaintiff cross appeals by leave granted the judgment of divorce. We affirm in part, reverse in part, and remand.

I. Facts and Proceedings

Defendant formed Credit Counseling Centers, Inc. (CCC), in 1961, serving as its president and chief executive officer (CEO) until his retirement from the company on December 31, 1997. In 1980, plaintiff began working for defendant as the director of education and assistant to the president of CCC. On December 18, 1987, after working together for seven years, the parties were married. This marriage was the second marriage for defendant and the third for plaintiff. No children were born to the parties in this marriage, and plaintiff is childless. However, defendant has four adult children from his prior marriage.

Before the parties' marriage, plaintiff received a gift of Huntington Bank stock from her grandparents, which at the time of the marriage was worth approximately $24,000. Plaintiff did not buy or sell any additional shares of stock in Huntington Bank during the marriage; nonetheless, at the time of the divorce, the stock had appreciated to a value of $402,000. In addition, before the marriage plaintiff had a Michigan Credit Union retirement fund valued at $3,326.81 and a Mutual of America tax-deferred annuity (TDA) valued at $5,503.22. Defendant, before the marriage, also had a Michigan Credit Union retirement fund and Mutual of America TDA valued at $132,876 and $110,061, respectively.

Before defendant retired from CCC, he received a base salary of $160,000, plus a bonus.¹ In 1997, defendant received a retirement package from CCC totaling $860,000, which was to be paid to him over a three-year period, beginning on January 1, 1998. Upon defendant's retirement, plaintiff, as anticipated, became the president and CEO of CCC, with a salary of $140,000 a year, plus a possible bonus.² From 1990 to 1997, plaintiff's salary was $115,500, plus possible bonuses. Throughout their marriage, the parties deposited their paychecks into a joint account and shared their respective incomes. In addition, ten percent of each party's salary, up to the social security integration level, and 15.7 percent after that amount, up to a maximum of $150,000, was put into their respective Michigan Credit Union retirement accounts by CCC. Further, each party contributed $95,000—$9,500 a year—to their separate TDAs. In both cases, the funds were deposited into retirement accounts and TDAs that had premarital assets. Thus, both plaintiff's and defendant's marital contributions to these accounts were commingled with their separate assets.

On October 24, 1996, after nine years of marriage, plaintiff filed for divorce. On July 21, 1998, the trial court, after a bench trial, awarded each party the assets they brought into the marriage, amounting to $334,053.81 for defendant and $50,769.46 for plaintiff.³ In addition, the trial court excluded defendant's retirement package from the marital assets, deciding instead to treat it as income rather than property. The remaining value of the marital estate, including each party's Michigan Credit Union retirement plan and Mutual of America TDA, plaintiff's Huntington Bank stock, and all the appreciation of these assets, was divided equally between the parties. Subsequently, the trial court granted plaintiff's motion to exclude her Huntington Bank stock from the marital estate. The trial court further determined that instead of dividing the marital estate equally, defendant would be awarded fifty-five percent of the estate "[g]iven the age disparity of the parties and their present and future earning potential."⁴ Accordingly, the judgment of divorce was entered on November 4, 1998. In addition, on January 6, 1999, a qualified domestic relations order was entered, pursuant to the judgment of divorce, awarding plaintiff $326,945.26 of defendant's Mutual of America TDA.

II. Standard of Review

In a divorce action, this Court's review of the trial court's factual findings is limited to clear error. Sparks v. Sparks, 440 Mich. 141, 151, 485 N.W.2d 893 (1992); Beason v. Beason, 435 Mich. 791, 805, 460 N.W.2d 207 (1990); Pelton v. Pelton, 167 Mich.App. 22, 25, 421 N.W.2d 560 (1988). A finding is clearly erroneous if, after a review of the entire record, the reviewing court is left with a definite and firm conviction that a mistake has been made. Beason, supra at 802, 460 N.W.2d 207; Draggoo v. Draggoo, 223 Mich.App. 415, 429, 566 N.W.2d 642 (1997). If the trial court's findings of fact are upheld, we then must decide whether the dispositive ruling was fair and equitable in light of those facts. Sparks, supra at 151-152, 485 N.W.2d 893; Welling v. Welling, 233 Mich. App. 708, 709, 592 N.W.2d 822 (1999); Draggoo, supra at 429, 566 N.W.2d 642. A dispositional ruling is discretionary and should be affirmed unless this Court is left with the firm conviction that the division was inequitable. Sands v. Sands, 442 Mich. 30, 34, 497 N.W.2d 493 (1993); Welling, supra at 709-710, 592 N.W.2d 822; Draggoo, supra at 429-430, 566 N.W.2d 642. Further, assets earned by a spouse during the marriage, whether they are received during the existence of the marriage or after the judgment of divorce, are properly considered part of the marital estate. Vander Veen v. Vander Veen, 229 Mich.App. 108, 110, 580 N.W.2d 924 (1998); Byington v. Byington, 224 Mich.App. 103, 110, 568 N.W.2d 141 (1997). Generally, marital assets are subject to division between the parties, but the parties' separate assets may not be invaded. Reeves v. Reeves, 226 Mich.App. 490, 494, 575 N.W.2d 1 (1997).

III. Analysis

A. Parties' Retirement Funds and TDAs

On appeal, defendant argues that the trial court erred by including each party's Michigan Credit Union retirement fund and Mutual of America TDA in the marital estate. Specifically, defendant contends that because each party had made contributions to their respective retirement funds and TDAs before the marriage, they were entitled to have part of the appreciation from these accounts excluded from the marital estate. We disagree.

In determining that the entire appreciation of the parties' retirement plans and TDAs should be included in the marital estate, the trial court relied on Reeves. There, this Court held that the marital estate did not include the appreciation in value of a party's premarital assets, if that appreciation was due to "wholly passive" appreciation. Reeves, supra at 497, 575 N.W.2d 1; see also Dart v. Dart, 460 Mich 573, 585, n. 6, 597 N.W.2d 82 (1999). However, here, each party's retirement fund and TDA did not appreciate solely because of passive investment. As stated previously, during the course of the marriage, each party contributed ten percent of their salary, up to the social security integration level, and then 15.7 percent after that amount, up to a maximum of $150,000, to their separate retirement funds. Thus, while there is evidence that the parties contributed the same percentage of their salaries to their respective retirement plans, there is no evidence that the parties contributed an equal dollar amount to their retirement plans during the marriage. Instead, the evidence only indicated that each party contributed a percentage of their income to the plans and that they each contributed $9,500 a year to their separate TDAs. Further, the evidence indicated that these funds were commingled with funds each party contributed before marriage. Thus, the assets in these "premarital accounts" did not increase in value because of "wholly passive" appreciation, Reeves, supra, but instead by additional contributions, as well as appreciation. Thus, because of the parties' commingling of premarital and marital assets, it is not possible to accurately determine the premarital appreciation of these assets. Reeves, supra at 496-497, 575 N.W.2d 1; see also Dart, supra at 585, n. 6, 597 N.W.2d 82 ("We recognize that, in certain situations, a spouse's separate assets, or the appreciation in their value during the marriage, may be included in the marital estate.") Accordingly, the trial court correctly held that the entire appreciation of the retirement funds and TDAs were part of the marital estate.⁵

B. Property Division Factors

On cross appeal, plaintiff argues that the trial court clearly erred in failing to make specific findings of fact on relevant property division factors. We agree. In reaching an equitable division of the marital estate, the trial court is to consider the following factors whenever they are relevant to the circumstances of the particular case:

(1) duration of the marriage, (2) contributions of the parties to the marital estate, (3) age of the parties, (4) health of the parties, (5) life status of the parties, (6) necessities and circumstances of the parties, (7) earning abilities of the parties, (8) past relations and conduct of the parties, and (9) general principles of equity. [Sparks, supra at 159-160, 485 N.W.2d 893.] See also Welling, supra at 710, 592 N.W.2d 822, quoting Byington, supra at 115, 568 N.W.2d 141. Because of the wide array of factual circumstances involved in a divorce proceeding, the determination of relevant factors varies depending on the case. Sparks, supra at 160, 485 N.W.2d 893. Hence, there is no rigid framework for applying the relevant

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