Petties v. Petties

• Decision Date: 30 March 2004
• Docket Number: No. WD 62724.,WD 62724.
• Citation: Petties v. Petties, 129 S.W.3d 901 (Mo. App. 2004)
• Parties: Denise PETTIES, Respondent, v. James Marvin PETTIES, Appellant.
• Court: Missouri Court of Appeals

129 S.W.3d 901

Denise PETTIES, Respondent, v.James Marvin PETTIES, Appellant.

No. WD 62724.

Missouri Court of Appeals, Western District.

March 30, 2004.

Dennis J.C. Owens, Kansas City, for Appellant.

Mitzi J. Alspaugh, Kansas City, for Respondent.

RONALD R. HOLLIGER, Judge.

This appeal arises from the trial court's division of marital property and debts acquired during the nearly fifteen-year marriage between James Petties("Husband") and Denise Petties("Wife").Husband appeals certain aspects of that property division, contending that certain assets were incorrectly classified as marital property, were improperly valued by the court, or were inequitably divided between the parties.Husband also contends that the trial court erred by assigning nearly all of the marital debt to him.We agree with a number of Husband's assertions of error and reverse and remand the matter for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

The parties were married on September 22, 1984, and there was one child born of the marriage.¹While the parties both lived initially in Oklahoma, Wife moved to Kansas City(her original home) about eight or nine months after the marriage.The parties remained married for over fourteen more years, however.

Wife filed her petition for dissolution in August 1998, which proceeded to a default decree in March 1999.That default judgment divided only those properties listed on Wife's statement of marital assets and debts.There were a number of assets and debts that were not set out in that document, however.Among the undivided assets were a number of rental properties in Tulsa, Oklahoma, and a workers' compensation claim settlement payment to Husband, as well as other assets.Husband timely moved to set aside the original judgment, based upon the failure of the judgment to divide all of the marital property and debts.That motion was granted, and the case proceeded to trial on the issue of the division of the remaining marital property and debts.

Despite the sheer number of assets and debts involved, the trial was very brief, including suggestions in the record that the trial court limited or actively discouraged the parties from presenting evidence relevant to the property division.In December 2002, the trial court entered a new judgment setting forth a complete property division.This second judgment essentially incorporated the original dispositions of the property and debts allocated in the first judgment and then proceeded to address those items that were not awarded to either party in the original judgment.While there is some disagreement as to the precise division, there appears to be a consensus that Husband was awarded a somewhat larger share of marital property than was awarded to Wife.Husband, however, was allocated nearly all of the marital debt, which was well in excess of $100,000.

Husband now appeals the trial court's judgment.

DISCUSSION

Our review is guided by the standard of Murphy v. Carron,536 S.W.2d 30, 32(Mo. banc 1976).King v. King,66 S.W.3d 28, 32(Mo.App.2001).We will reverse the trial court only if we conclude that the judgment was against the weight of the evidence, was not supported by substantial evidence, or misstated or misapplied the law.Id.We will reverse a judgment as against the weight of the evidence "only with caution and a firm belief that the judgment is wrong."Id.The trial court is vested with broad discretion in identifying marital property and in determining the value of that property.SeeMorse v. Morse,80 S.W.3d 898, 905(Mo.App.2002);Luckeroth v. Weng,53 S.W.3d 603, 609(Mo.App.2001).We view the evidence in the light most favorable to the judgment and give substantial deference to the trial court's judgment, even if the evidence could support a different conclusion.Taylor v. Taylor,25 S.W.3d 634, 638(Mo.App.2000).

I.Income and Other Proceeds That No Longer Existed at the Time of Trial

For his first point on appeal, Husband contends that the trial court erred in its division of marital property when it included as marital property: (a) proceeds arising from the sale of two rental properties, (b) income from rental of other properties, and (c) disability replacement income received by him.He argues that those funds, even if marital, no longer existed at the time of the property division.Specifically he takes the position that those funds had been used for living expenses, as well as used for making repairs and maintenance on the rental properties.Husband also points out that there was no evidence or allegations that Husband had committed misconduct or had squandered those funds.

A marital asset must exist at the time of trial to be considered within the property division.Kester v. Kester,108 S.W.3d 213, 222(Mo.App.2003).Income received during the marriage is marital property.Seeid. at 221.Funds flowing from the sale of a marital asset are also clearly marital property.See, e.g., Williams v. Williams,965 S.W.2d 451, 455(Mo.App.1998)(proceeds from sale of house acquired during the marriage were marital property).When those proceeds have been consumed for reasonable and necessary purposes, however, they will no longer be considered part of the marital property subject to division.²SeeCofer v. Price-Cofer,825 S.W.2d 369, 373(Mo.App.1992).For example, funds used for reasonable living expenses are not to be included in the division of marital property.SeeKester,108 S.W.3d at 222-23.See also, Sinclair v. Sinclair,837 S.W.2d 355, 359(Mo.App.1992).

Conversely, if a party has squandered marital property (including income or funds received during the marriage), then the trial court may include that property in the marital property division, even though it no longer exists, allocating it to the spouse that squandered it or ordering that spouse to reimburse the other party.SeeKolar v. Kolar,114 S.W.3d 440, 443(Mo.App.2003);Reynolds v. Reynolds, 109

S.W.3d 258, 276 (Mo.App.2003).The burden of establishing that marital property has been squandered lies with the spouse claiming that the asset was squandered, who must come forward with evidence in support of that contention.SeeAdams v. Adams,108 S.W.3d 821, 831(Mo.App.2003)(quotingConrad v. Conrad,76 S.W.3d 305, 315(Mo.App.2002)).Here, there is no suggestion by Wife, no finding by the court, nor substantial evidence that Husband squandered those assets.

With those general principals in mind, we examine the three categories of income or funds received by Husband that he alleges were erroneously included in the marital property division.The first category is comprised of the proceeds from the sale of two rental properties sold by husband.Those properties were 1342 North Denver Avenueand 525 E. 49th Street Court North, both in Tulsa, Oklahoma.The former property was sold before the entry of the 1999 dissolution judgment and the latter was sold between the date of the dissolution and the judgment being appealed from.³Husband contends that there was no evidence that the monies received still separately existed apart from the other assets divided by the court.Husband contends that the proceeds from the sale of those properties were reinvested in the remaining rental properties and should not have been treated as a separate asset within the property division.

As the properties sold were marital property, their proceeds would be properly treated as marital property.To that extent, the trial court's analysis is correct.However, Husband argues that those proceeds were no longer in existence at the time of trial because those funds were reinvested in the other rental properties, for maintenance and remodeling.If that was indeed the case, then the trial court could not properly treat those proceeds as a marital asset subject to division.Having done so, it divided those funds twice—first as the sale proceeds and again by dividing the rental properties on which the funds were expended.There was no suggestion in the record that Husband squandered the proceeds received from the sale of these two rental properties.Those funds were no longer in existence at the time of trial; therefore, the trial court erred in including them in the division of marital property and awarding them to Husband.

The second category of funds identified by Husband as erroneously included in the marital property division is composed of income received by Husband from the rental properties.With regard to those rental proceeds, Husband argues that those proceeds were used to pay living expenses.There was also evidence that some of that income was used for additional maintenance and repairs to the rental properties.Again, there was no allegation that the funds were squandered or that any portion of them still existed at the time of trial.The trial court erred in including the rental proceeds in the division of marital property.

The last category of funds Husband argues were improperly included in the marital property division concerns disability income he received from November 1998 through April 1999.He takes the position that the income in question was spent on living expenses, attorney fees, and also to refurbish the rental properties.He also notes that a substantial portion of that income was also spent on child support payments.As with the prior two categories, there was no argument that the funds were squandered by Husband.Nor is there any suggestion in the record that those funds still existed in some form.The trial court erred in including those funds in the division of marital property.

We, therefore, sustain Husband's first point on appeal and reverse the trial court's determination that these three categories of funds should be included in the property division.

II.Settlement Proceeds from Husband's Workers' Compensation Claim

Husband's second point on appeal argues that the trial court erred by classifying as marital property a...