Metcalf v. Metcalf

• Decision Date: 14 April 2020
• Docket Number: No. 115,743,115,743
• Citation: 465 P.3d 1187
• Parties: Lewis R. METCALF, Petitioner/Appellee, v. Bonnie L. Watson METCALF, Respondents/Appellant.
• Court: Oklahoma Supreme Court

465 P.3d 1187

Lewis R. METCALF, Petitioner/Appellee,

v.Bonnie L. Watson METCALF, Respondents/Appellant.

No. 115,743

Supreme Court of Oklahoma.

FILED APRIL 14, 2020

AS CORRECTED APRIL 27, 2020

Scott A. Hester, Edmond, Oklahoma, For the Appellant.

Cindy Allen, Julia Mills Mettry, Joshua Simpson, Norman, Oklahoma, For the Appellee.

KAUGER, J.:

¶1 We granted certiorari to address the first impression question of whether the presumption that the intent of an interspousal transfer of real property constitutes a gift may be rebutted when the admitted purpose of the transfer was to illegally elude any creditor's attempts to collect on a judgment. We hold that it may not be rebutted by such evidence. We also hold that: 1) the trial court did not err in denying the wife support alimony; and 2) each party is also responsible for their own attorney fees.

FACTS

¶2 In the spring of 2001, the petitioner/appellee, Lewis R. Metcalf (Metcalf/husband), married the respondent/appellant, Bonnie L. Watson (Watson/wife). The couple cannot agree as to the actual date of the marriage which occurred in Arkansas.¹ The couple made their rural home together in Grady County, Oklahoma, and did not have any children together.

¶3 At the time of the marriage, the husband owned and operated a carpentry shop business called Woodmaster, LTD. It was established in 1999, but he made the wife 1% owner during the marriage. In 2009, Woodmaster's creditors filed an action in the District Court of Oklahoma County, seeking to collect on debt Woodmaster's owed. Concerned that the creditors would take his real property to collect on a judgment, the husband deeded the Woodmaster property, and others, to his wife, using her maiden name of Bonnie Watson.² He readily admits, and it is undisputed, that his purpose for deeding the property was purely to prevent creditors from recovering any judgments against the shop business. He even visited a lawyer to seek advice on how to handle the property transfer to avoid a creditor's judgment, should one occur.

¶4 During the marriage, their marital home was destroyed by fire, affected by an earthquake, and also destroyed by a tornado. Consequently, various insurance claims were filed, insurance payouts were made, and rebuilding occurred. However, according to the parties, the date of separation impacted who was entitled to various insurance proceeds and lawsuit settlements which occurred during the marriage. Naturally, the date of their separation was also disputed.

¶5 According to the husband, they separated in June of 2011, because they were no longer living together, or even in the same state. According to the wife, they were not separated until December of 2014, when she learned that he no longer wished to be married to her. On December 19, 2014, the husband filed for dissolution of marriage in the District Court of Grady County, Oklahoma. The wife filed a response and cross-petition on December 30, 2014, seeking support alimony.

¶6 The cause proceeded to trial on September 22-30, 2016. At the conclusion of the trial, the trial court issued a Decree of Dissolution of Marriage on January 4, 2017, dividing real and personal property including household items, bank accounts, vehicles, various insurance and lawsuit proceeds and settlements. Among the trial court's findings were the determinations that: 1) the parties' separation date was June 4, 2011; 2) the separate real property, which the husband transferred to the wife during the marriage to elude creditors, was void and thus his separate property; and 3) the wife's request for support alimony should be denied.

¶7 The wife appealed on February 3, 2017, arguing that the husband's transfer of real property to avoid creditors should be considered marital property, because he failed to rebut the presumption of a gift. She also disputed the date of separation, and the denial of support alimony. On July 12, 2019, the Court of Civil Appeals, Division II, affirmed the trial court. On August 1, 2019, the wife filed a Petition for Certiorari in this Court arguing that because the husband transferred the property he owned prior to marriage to avoid potential creditor judgments against him (a/k/a a fraudulent transfer), he is precluded from using the reason for the transfer to rebut the presumption that the transfer was an interspousal gift. She also contends that the trial court erred in denying her support alimony.³ The husband seeks appeal related attorney fees and costs. We granted certiorari on January 6, 2020, to address these issues.

I.THE PRESUMPTION OF AN INTERSPOUSAL GIFT MAY NOT BE REBUTTED BY EVIDENCE THAT THE SOLE PURPOSE FOR THE TRANSFER WAS TO DEFRAUD CREDITORS.

¶8 The husband argues that he never intended to share his separate property with the wife. Rather, he only transferred the property to avoid creditors from potentially getting at it. The wife argues that transferring property into her name in order to avoid a judgment was a fraudulent transfer, and that he should not be allowed to rebut that the transfer was a gift with evidence of fraud.

¶9 A divorce suit is one of equitable cognizance in which the trial court has discretionary power to divide the marital estate.⁴ In an action of equitable cognizance there is a presumption in favor of the trial court's findings and they will not be set aside unless the trial court abused its discretion or the finding is against the clear weight of the evidence.⁵

¶10 Title 43 O.S. 2011 § 121⁶ requires a fair and equitable division of property acquired during the marriage by the joint industry of a husband and wife. Jointly-acquired property is that which is accumulated by the joint industry of the spouses during the marriage. The determination of the issue concerning separate ownership of property acquired during the marriage is dependent on the original source of the property.⁷

¶11 Interspousal transfers may occur as a result of a sale by one spouse to the other, as settlement of an impending divorce, or as a gift. A transfer by one spouse of separate property to another does not by itself erase the separate character of the asset or real property transferred; rather, the original ownership regime must be respected unless there is proof of an interspousal gift,⁸ i.e. proof of donative intent. The law provides a rebuttable presumption of a gift where title to separately held real estate is placed by one ownership spouse's name to both spouses' names as joint tenants.⁹ This presumption arises even if the property in question was purchased with one spouse's separate funds.¹⁰

¶12 This presumption in favor of a gift can be overcome by clear and convincing evidence of contrary intent including evidence of a purpose for placing the property in joint tenancy that is collateral to making a gift.¹¹ In this cause, the husband transferred the real property into the wife's name only. We have previously addressed this presumption in joint tenancy cases. For example, in Smith v. Villareal, 2012 OK 114, ¶12, 298 P.3d 533, during the marriage, the husband purchased two homes for his daughters from a prior marriage. He paid for these homes with his separate property. This was not disputed by the wife. However, both the husband's and wife's names appeared on the warranty deeds as joint tenants. Because the overwhelming evidence supported that the husband did not possess donative intent when title was conveyed to both spouses in joint tenancy, we held that the properties should not be included in marital property.

¶13 Similarly, in Larman v. Larman, 1999 OK 83, ¶16, 991 P.2d 536, the Court held that the presumption of a gift was overcome where the wife included the husband's name upon the deeds as joint tenant to property she held separately for the sole purpose of refinancing the mortgage loans on both properties. In Larman, the lender required that in order to qualify, both spouses had to be record owners and sign the loan related documents.

¶14 In both Smith, supra, and Larman, supra, there was nothing inherently unlawful about the real property transfers. The presumption of a gift was overcome with evidence because, although a lawful transferred occurred, the purpose was not intended to actually convert the property from separate to marital property.¹²

¶15 In Burrows v. Burrows, 1994 OK 129, ¶17, 886 P.2d 984, the Court addressed whether a father's attempted conveyance of property subject to a homestead exemption to avoid payment of past-due alimony and child support could be nullified as fraudulent. We held so, in part, because parents have a legal duty to support their children, and an ex-spouse and child were not the kind of creditor's to which a homestead exemption was meant to apply. The homestead exemption was intended to be a shield and not a sword.

¶16 Here, the Uniform Fraudulent Transfer Act¹³ (the Act) prohibits precisely the type of transfer, which the husband relies on to explain his donative intent, as fraudulent. Section 116 of the Act provides:

A. A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:

1. With actual intent to hinder, delay, or defraud any creditor of the debtor; or

2. Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:

a. was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction, or

b. intended to incur, or believed or reasonably should have believed that he would incur, debts beyond his ability to pay as they became due.

The reason that the husband said he made the transfer in real property to his wife falls squarely within the prohibition of the statute.

¶17 The Act was intended to prevent a debtor from shielding property from a creditor by fraudulently...