Romulus v. Romulus

• Decision Date: 20 September 2011
• Docket Number: No. COA10–1453.,COA10–1453.
• Parties: Rebecca W. ROMULUS, Plaintiff,v.John M. ROMULUS, Defendant.
• Court: North Carolina Court of Appeals

715 S.E.2d 308

Rebecca W. ROMULUS, Plaintiff,

v.John M. ROMULUS, Defendant.

No. COA10–1453.

Court of Appeals of North Carolina.

Sept. 20, 2011.

Appeal by plaintiff and defendant from a judgment entered 4 March 2010 and order entered 5 March 2010 by Judge Jeffrey Evan Noecker in District Court, New Hanover County. Heard in the Court of Appeals 8 June 2011.

Jonathan McGirt, Raleigh, for plaintiff-appellee.

Wyrick Robbins Yates & Ponton LLP, Raleigh, by K. Edward Greene and Tobias S. Hampson, for defendant-appellant.

STROUD, Judge.

The trial court entered a judgment and order addressing the claims and counterclaims of the parties regarding child support, alimony, equitable distribution, and attorney fees, all of which were tried in the same trial, conducted on 30 June 2009, 1–2 July 2009, 11 September 2009, and 9 October 2009. The trial court entered an order addressing only equitable distribution, and one day later the trial court entered an order addressing the other claims, including denial of plaintiff's claims for alimony and attorney fees. Defendant appealed and plaintiff cross-appealed from the order regarding equitable distribution and the order denying alimony for plaintiff. Defendant's appeal raises issues regarding classification of divisible and separate property, while plaintiff's appeal raises issues regarding marital misconduct as a bar to alimony. For the reasons as discussed below, we remand the equitable distribution order to the trial court for additional findings of fact and conclusions of law as to the Darlington Avenue property and otherwise affirm the equitable distribution order. As to the denial of alimony, we affirm the trial court's conclusion that plaintiff is barred from alimony by her uncondoned “illicit sexual behavior” during the marriage, despite the trial court's findings as to defendant's physical abuse of plaintiff and their children. Our legislature has decreed that even one fleeting incident of “illicit sexual behavior” by a dependent spouse automatically bars her from an alimony award, even if the supporting spouse has committed serious, indeed criminal, physical abuse, against his wife and children throughout the marriage, and we have no authority to question the legislature's wisdom in adopting this rule.

I. Background

The parties were married on 27 August 1988 and separated on 1 July 2006. On 12 April 2007, Rebecca Romulus (“plaintiff”) filed a complaint alleging claims for postseparation support, alimony, child custody, child support, and equitable distribution; on 27 April 2007, John Romulus (“defendant”) filed his answer and counterclaims for child custody, child support, and equitable distribution. On 30 June 2009, the trial court began the hearing on equitable distribution, alimony, and child support, continuing on several additional dates and concluding the hearing on 9 October 2009. On 4 March 2010, the trial court entered an equitable distribution order which granted a distributive award to plaintiff of $629,840.00, payable over seven years in 84 monthly installments of $7,498.10. The next day, the trial court entered an order denying plaintiff's claim for alimony based upon her marital misconduct, denying plaintiff's claim for attorney fees arising from the alimony claim, and granting child support.

Defendant filed notice of appeal from the equitable distribution judgment and the order regarding alimony and child support on 31 March 2010. Plaintiff also filed a notice of appeal from the judgment and order on 9 April 2010. We will first address defendant's appeal as to the equitable distribution order and then plaintiff's cross-appeal as to the denial of alimony.

II. Defendant's appeal of equitable distribution judgment

A. Classification and valuation of marital and divisible property

Defendant first argues that the trial court made several errors as to classification and valuation of divisible and marital property. Our standard of review as to these issues is well-settled: “[w]hen the trial court sits without a jury, the standard of review on appeal is whether there was competent evidence to support the trial court's findings of fact and whether its conclusions of law were proper in light of such facts.” Lee v. Lee, 167 N.C.App. 250, 253, 605 S.E.2d 222, 224 (2004) (citation and quotation marks omitted). “While findings of fact by the trial court in a non-jury case are conclusive on appeal if there is evidence to support those findings, conclusions of law are reviewable de novo.” Id. (citation omitted). We review the trial court's distribution of property for an abuse of discretion. Embler v. Embler, 159 N.C.App. 186, 187, 582 S.E.2d 628, 630 (2003) (citation omitted).

1. Post-separation appreciation of defendant's dental practice

Defendant argues that the “trial court erred as a matter of law in concluding the post-separation increase in value of [his] dental practice was a passive increase and, thus, divisible property.” The trial court identified the dental practice as follows:

Y. John H. Romulus, DDS, PA: This entity is Husband's dental practice. This asset was stipulated to be marital by the parties in the [pretrial order or “PTO”]. Husband and Wife each offered expert testimony on the issue of the valuation of this asset on the [date of separation or “DOS”] and on the [date of trial or “DOT”] value. R.F. Warwick, CPA, with RSM McGladry was Wife's expert on the issue of valuation and has substantial experience in valuation of professional practices. Husband's expert was Terry Smith, CPA.

After an extensive and detailed series of findings regarding the valuation of the dental practice, which are not contested in this appeal, the trial court made the following findings of fact as to classification and valuation of the dental practice:

2. Based on the foregoing, the Court finds that John M. Romulus, DDS, PA has a value of on the DOS of $983,558.00 and a value on the DOT of $1,284,555.00.

3. Post DOS Increase in Value: The statute (50–20(b)(4)(a)) sets out that the appreciation in the value of marital property occurring after the date of separation of the parties and prior to the date of distribution is divisible property subject to distribution by the Court in an equitable distribution judgment. As to the change in value of John M. Romulus, PA after the separation of the parties, the Court finds that such increase was passive and is thus divisible property. In support of this conclusion, the Court finds that Dr. Romulus' efforts to grow the business were essentially unchanged from DOS until DOT. The Defendant did not invest substantially more time working at his practice than on the DOS, and in fact continued to work “dentist's hours”, which included taking at least one weekday afternoon out of the office or otherwise away from work. There was no evidence of other substantial efforts to grow the business by Dr. Romulus, by increasing advertising, adding new services, new patient recruitment, patient retention efforts or the like.

Even though Dr. Romulus undoubtedly actively worked in the business by going to the office and doing dentistry, that does not lead to the conclusion that the increase in value of his practice is active and his separate property. Take the example of a shopkeeper who runs a corner store. He works from Monday to Friday, 9am to 5pm. A 20 story residential complex is completed across the street and his receipts increase greatly. Contrast that situation with a similar shopkeeper who expands his hours to nights and weekends, increases advertising to capture new customers, and establishes a website offering online shopping and delivery. This shopkeeper sees a similar increase in receipts, without the benefit of the new apartment building across the street. Although both shopkeepers were actively involved in the business of running the store, the increase in the value of the business itself is passive in the first case and active in the other.

Dr. Romulus has not presented sufficient evidence to rebut the presumption that the increase in value of marital property post separation is divisible property, and thus such increase will be classified as divisible property and distributed as set out in this order.

4. This asset is assigned to Husband at the DOS value of $983,558.00. The increase in value from DOS until DOT is passive as indicated above, and is thus divisible property assigned to the Husband at a DOT value of $300,997.00.

(Emphasis added). The trial court also made the following related conclusions of law:

3. The marital assets and debts, the fair market value of each on the DOS, and the divisible property are as set out in the paragraphs above and they are incorporated herein by reference.

4. The increase in value of the Husband's dental practice was passive and therefore divisible property.

We first note that the findings of fact above actually include the conclusion of law that the post-separation appreciation of the dental practice is divisible property. “Because the classification of property in an equitable distribution proceeding requires the application of legal principles, this determination is most appropriately considered a conclusion of law.” Hunt v. Hunt, 112 N.C.App. 722, 729, 436 S.E.2d 856, 861 (1993). We will therefore review this determination as a conclusion of law de novo. See Lee, 167 N.C.App. at 253, 605 S.E.2d at 224. Defendant does not challenge the sufficiency of the evidence to support the portions of the findings of fact quoted above which are actually facts, as to the nature and extent of defendant's work in the dental practice before and after the date of separation.

N.C. Gen.Stat. § 50–20(b)(4)a (2009) defines “divisible property” as:

all real and personal property as set forth below:

a. All appreciation and diminution in value of marital property and divisible property of the parties occurring after the date of separation and prior to the date of distribution, except that...