Torres v. Torres

• Decision Date: 14 April 2020
• Docket Number: WD 82498
• Parties: Shelbie TORRES, Respondent, v. Alejandro Raul TORRES, Appellant.
• Court: Missouri Court of Appeals

606 S.W.3d 168

Shelbie TORRES, Respondent,

v.Alejandro Raul TORRES, Appellant.

WD 82498

Missouri Court of Appeals, Western District.

OPINION FILED: April 14, 2020

Jonathan Sternberg, Kansas City, MO, Attorney for Respondent.

Anthony W. Bonuchi, Kansas City, MO, Attorney for Appellant.

Before Division Four: Karen King Mitchell, Chief Judge, and Cynthia L. Martin and Edward R. Ardini, Jr., Judges

Karen King Mitchell, Chief Judge

Alejandro Torres (Husband) appeals the property distribution portion of the amended judgment dissolving his marriage to Shelbie Torres (Wife).¹ Husband raises three points on appeal, all pertaining to the trial court's order that Husband pay Wife $302,300.50 to equalize the distribution of marital property. Husband argues that the court erred in ordering the equalization payment because the court (1) misapplied Missouri law governing when equity in a spouse's non-marital company can be deemed marital property; (2) lacked substantial evidence to support its finding that Husband's business has a marital value of $348,965.00; and (3) failed to subtract the $234,554.00 mortgage on the marital home from the calculation of the net marital estate before calculating the equalization payment. We affirm the trial court's holding that the increase in the value of Husband's non-marital company during the marriage is marital property, but we reverse and remand for the court to clarify the effect of the $234,554.00 marital liability on the calculation of the equalization payment.

Background²

The parties were married on October 12, 2013, in Las Vegas, Clark County, Nevada, where the marriage is registered. Three children were adopted or born during the marriage. The parties separated after Wife discovered that Husband was involved in an extramarital relationship. Wife petitioned for dissolution on April 4, 2017, and Husband filed a counter petition for dissolution on May 1, 2017. On September 10 and 17, 2018, the matter came to trial.

In 2005, Husband opened a plumbing business as a sole proprietorship. In May 2013, shortly before he married Wife, Husband converted his business to a single-member limited liability company, Alex's Plumbing, LLC (the Business), with Husband as the sole member. Wife retained Michael McLain, a business appraiser and certified public accountant specializing in business valuations, to calculate the value of the Business as of December 31, 2017. McLain testified that he used both the asset-based method and the market-based method to value the Business, which he opined was worth $475,506.00 under the asset-based approach (including inventory) and $466,722.00 under the market-based approach. Based on the information available to him, McLain concluded that the latter figure represented the fair market value of the Business. McLain also testified that the value of the Business as of the date of the parties’ marriage was $117,757.00.

Wife testified that she worked for the Business throughout the marriage, using an office in the marital home where Husband worked and stored his business records.³ Wife kept all licenses for the Business current. She assisted the Business in obtaining a federal tax identification number in 2013 and a U.S. Department of Transportation (DOT) number in 2016.⁴ She typed all bids and invoices and kept all insurance current. She also provided administrative assistance in connection with the Business's bid for its most lucrative contract. Wife did not receive compensation for the work she performed for the Business, and she otherwise did not earn any income during the marriage; she was the homemaker and primary childcare provider.

Husband testified that Wife spent "[p]robably 10 to 12" hours per week performing "clerical work" for the Business. Wife continued to perform those duties for the Business until August 2017 when Husband removed her from company emails and hired a full-time employee to do the work previously performed by Wife; Husband pays that employee $400.00 per week or $20,800.00 per year.

Husband further testified that, during the marriage, he withdrew money from a marital savings account at his sole discretion to pay the Business's bills when necessary to keep the Business afloat. He stated,

Sometimes we're on 30-day payouts, 60-day payouts, 90-day payouts, 180-day payouts. So we might not—I'm not going to receive a check for 180 days. And bills come due every 30 days. There's mortgage, gas, lights, everything else, and if there's no money in Alex's Plumbing account, I take it from this [marital savings] account. And I move it to Alex's Plumbing account to pay my bills. I've always done that , and I continue—that's how I run my business.

(Emphasis added.) There was no evidence that Husband reimbursed the marital savings account for the withdrawals he made to cover the Business's expenses.⁵

Husband also testified about an office/warehouse building located at 2625 East 9th Street in Kansas City. The building, valued at $115,000.00, was purchased during the marriage, using marital assets, and was used by the Business as a warehouse to store equipment and materials and later as an office as well. Husband never claimed the building as a business asset for tax purposes, and when Husband performed his own valuation of the Business's assets, he did not include the building. There was no evidence that the Business paid rent or otherwise compensated the marital partnership for the Business's use of the building.

The parties did not request specific findings of fact. On November 20, 2018, the court entered its judgment, which included findings of fact and conclusions of law. Husband filed a timely motion to vacate, amend, or set aside the judgment or in the alternative grant a new trial. On December 18, 2018, the trial court entered its amended judgment denying Husband's motion.

In its amended judgment, the court valued the "net marital estate" at $1,067,555.00, with the assets assigned to Husband valued at $601,524.00 and the assets assigned to Wife valued at $466,031.00. The only marital liability listed by the court was a $234,554.00 mortgage on the marital home.⁶ The court assigned the marital home and the outstanding mortgage to Wife,⁷ thereby reducing the value of Wife's assigned assets to $231,477.00 (the value of the assets assigned to Wife including the marital home ($466,031.00) minus the outstanding mortgage ($234,554.00)). The judgment then states, "Each party to receive 50%: $533,777.50. Husband pays to Wife to equalize division: $302,300.50."

The court awarded Husband the Business, along with the vehicles, machinery, inventory, and supplies, valued at $466,722.00, as calculated by McLain. But the court determined that the Business had a marital value of $348,965.00 ($466,722.00 minus $117,757.00, the value of the Business at the time of the marriage). The court found that Wife worked for the Business ten-to-twelve hours per week and that "she was instrumental in obtaining DOT tags and other licenses necessary to operate the business." The court also found that the office/warehouse building used by the Business to store equipment and supplies was a marital asset. And the court concluded that the marital savings account, which had a balance of $250,000.00 when Wife filed her petition for dissolution, had been dissipated by Husband, in violation of an earlier restraining order entered by the court. The court found that Husband

justified the use of nearly $215,000.00 from the [marital] account under the "usual course of business" or "necessities of life" exceptions[, but Husband] did not notify [Wife] of the proposed extraordinary expenditures or show an accounting to the Court for all [such] expenditures [he] made.

The Court included the marital value of the Business ($348,965.00) in the property division to form the basis of Husband's equalization payment to Wife. The court stated, "In consideration of the equitable division of the parties’ marital estate, the Court finds that to equalize the division of property set forth above [Husband] shall pay to [Wife] the sum of $302,300.50." The court found its division of assets and debts to be "fair and equitable under the circumstances and ... not unconscionable."

Following issuance of the amended judgment, Husband timely filed a motion to vacate, amend, or set aside the amended judgment or in the alternative grant a new trial; the court denied the motion "[a]fter careful consideration and for good cause shown," offering no further explanation for its division of marital assets and liabilities. This appeal follows.

Standard of Review

In a dissolution proceeding, we will affirm the trial court's decision "unless it is not supported by substantial evidence, it is against the weight of the evidence, or it erroneously declares or applies the law." Selby v. Selby , 149 S.W.3d 472, 482 (Mo. App. W.D. 2004). "We defer to the trial court's superior ability to view the witnesses and determine credibility; the court is free to believe or disbelieve all, part or none of the testimony given by any of the witnesses." Klockow v. Klockow , 979 S.W.2d 482, 487 (Mo. App. W.D. 1998). "Consequently, we accept the evidence and inferences favorable to the trial court's ruling and disregard contrary evidence." Id. And, where the parties do not request specific findings of fact on an issue, we presume the trial court entered its judgment on that issue in accordance with the applicable statutes. Krepps v. Krepps , 234 S.W.3d 605, 615-16 (Mo. App. W.D. 2007).

"The trial court has substantial discretion in dividing marital property, and appellate courts will not interfere unless the division is so heavily weighted in favor of one party to amount to an abuse of discretion." Russum v. Russum , 214 S.W.3d 376, 384 (Mo. App. W.D. 2007). "We presume that the trial court's division is correct and the party challenging it bears the burden of overcoming that presumption." Klockow , 979 S.W.2d at 488. "We will affirm the division of property...