Tradler v. Tradler

• Decision Date: 02 November 2012
• Docket Number: No. 2D11–271.,2D11–271.
• Parties: David Marvin TRADLER, Appellant, v. Linda Berry TRADLER, Appellee.
• Court: Florida District Court of Appeals

100 So.3d 735

David Marvin TRADLER, Appellant,

v.Linda Berry TRADLER, Appellee.

No. 2D11–271.

District Court of Appeal of Florida, Second District.

Nov. 2, 2012.

Andrew C. Switlyk, St. Petersburg, for Appellant.

Susan Hartmann Swartz of Law Office of Stanley R. Swartz, Bradenton, for Appellee.

SILBERMAN, Chief Judge.

David Marvin Tradler (the Husband) appeals an amended final judgment of dissolution of marriage and alleges error in the equitable distribution and alimony awards to Linda Berry Tradler (the Wife). We affirm the award of nominal alimony to the Wife without discussion. We reverse the equitable distribution portion of the amended judgment and remand for the court to fashion a new equitable distribution based on the errors discussed below.

I. BACKGROUND

The parties had a seventeen-year marriage when the Wife filed a petition for dissolution of marriage on June 1, 2009. They were married on May 16, 1992, and had one daughter in 1995. The Wife worked primarily part-time during the marriage as a dental hygienist. The Husband began his career as a mechanical engineer with the Campbell Soup Company and worked for Campbell for over nineteen years in Ohio and New Jersey until he was laid off in 2006. When he left Campbell his base salary was $103,000 per year. One of the assets at issue is the Husband's Campbell pension. He also was enrolled in a Campbell Soup Company Savings Plus Plan that he rolled over into a Fidelity IRA (the Fidelity Rollover IRA).

In October 2007 the Husband became employed at PepsiCo/Tropicana in Bradenton, Florida, as a project engineer. He was laid off in April of 2009, when his salary was $82,300. The Husband actively sought employment but was involuntarily unemployed at the time of the final hearing which was held on July 23, 2010, and August 18, 2010.¹

The parties stipulated to a parenting plan for their daughter and litigated financial issues at the final hearing. Apart from the pension and Fidelity Rollover IRA, assets at issue include eight certificates of deposit (CDs) the parties owned at Wachovia Bank, funds the parties maintained in a Tropicana Credit Union joint account, and proceeds from checks the Husband's mother gave to the Husband. Both parties employed forensic accountants to assist the trial court with the evaluation of the parties' finances. CPA Bob Wenzel testified for the Husband, and CPA Elizabeth Carlson testified for the Wife.

The trial court entered a final judgment and sua sponte entered an amended final judgment on November 22, 2010. The court's intent was to equitably distribute the parties' marital assets equally. The trial court found the value of the marital estate to be $1,041,825 plus an additional $73,131 it found to represent the increase in value during the proceedings of the pension and retirement funds.² Based on the trial court's distribution of assets, the court ordered the Husband to pay an equalizer payment of $152,042 to the Wife within six months, plus unpaid property taxes on the marital home totaling $8909. After the trial court denied the Husband's motion for rehearing, the Husband timely filed his notice of appeal. He raises five issues regarding the equitable distribution.

We initially note that part of the confusion in the equitable distribution stems from the trial court's stating that it identified the marital and nonmarital assets as set forth on an attached Exhibit A. The original judgment attached two of the three pages of the Wife's Exhibit 17, an asset summary, and the amended judgment failed to attach the exhibit at all. Furthermore, the values for assets on the exhibit are different than some of the trial court's findings. The result is that the exhibit shows the Husband making an equalizer payment of $88,253 to the Wife, but the court ordered the Husband to make an equalizer payment of $152,042 to the Wife. It would have been very helpful to our appellate review if the trial court had included an equitable distribution chart that reflected the values used in the amended judgment.

II. EQUITABLE DISTRIBUTION

A. Identification and Valuation of Campbell Pension

The Husband contends that the trial court failed to identify and value the nonmarital portion of the Campbell pension and distribute it to the Husband. We review de novo the characterization of an asset as marital or nonmarital. See Fortune v. Fortune, 61 So.3d 441, 445 (Fla. 2d DCA 2011). Competent, substantial evidence must support the trial court's valuation of the asset. Furbee v. Barrow, 45 So.3d 22, 24–25 (Fla. 2d DCA 2010).

The trial court must set apart to each spouse his or her nonmarital assets. § 61.075(1), Fla. Stat. (2008). The parties agree that the Campbell pension contained a nonmarital component because the Husband was enrolled in the pension prior to the marriage. The parties also agree that the Husband was entitled to his premarital contributions and the passive accumulations on those contributions. See§ 61.075(6)(b)(1), (3); Blase v. Blase, 704 So.2d 741, 742 (Fla. 4th DCA 1998). The parties' experts testified to different valuations for the nonmarital component.

In the amended judgment, the trial court found the Campbell pension had a value of $160,532 as of June 30, 2009, which is the market value listed on the Wife's Exhibit 17. The court found the pension increased in value to $186,465 as of May 31, 2010, and that increased value is the subject of section II.D. below. The Wife's expert, CPA Carlson, testified that she used a proportionate share method of calculating the nonmarital portion, with 217 months being marital and 50 months being nonmarital. She testified that the value of the Campbell pension was $197,000 and that the marital portion was $160,532.³ Thus, according to the Wife's expert, the Husband's nonmarital portion was the balance of $36,468, although the court did not expressly state that in the amended judgment. Instead, the trial court identified only the amount of $160,532 which represented the marital portion. Although the amended judgment was not very clear on this issue, it appears that the trial court distributed only the marital portion without specifying the Husband's nonmarital portion. Because we reverse on other issues discussed below, we direct the trial court to clarify on remand and explicitly state the marital and nonmarital portions of the Campbell pension.

B. Tax and Penalty Consequences of Retirement and Pension Plans

The Husband contends that the trial court improperly failed to consider the tax and penalty consequences that accompany the parties' retirement and pension plans, producing an inequitable result. In its amended judgment the trial court explained that it would not consider tax consequences because “[t]he Husband testified that he had no intention to withdraw or cash in any of the pension and retirement funds.” The Husband testified that he did not need to cash in his pension and retirement funds “at this moment” and that he had about $100,000 in liquid assets. He stated that no one was forcing him to cash in his pension or Fidelity Rollover IRA “yet.”

The amended judgment requires the Husband to make an equalizer payment of $152,042 and to pay the marital home's property taxes of $8909, for a total of $160,951 payable to the Wife within six months. At the time of the final hearing, the Husband was unemployed. Thus, it seems that the amended judgment would force the Husband to invade the pension and retirement accounts to comply with the amended judgment, thus incurring taxes and penalties. Furthermore, the Husband presented evidence to the court on the tax and penalty consequences accompanying the pension and retirement accounts, and the Wife presented evidence on the tax consequences associated with those accounts.

A trial court should consider the tax consequences when valuing marital assets if a party presents expert evidence on the tax consequences. See Austin v. Austin, 12 So.3d 314, 316 (Fla. 2d DCA 2009); Kadanec v. Kadanec, 765 So.2d 884, 886 (Fla. 2d DCA 2000). “When evidence of a tax impact is presented, it is error for the trial court to fail to consider these consequences.” Diaz v. Diaz, 970 So.2d 429, 432 (Fla. 4th DCA 2007). Otherwise, if the trial court awards assets to one party that have associated tax liabilities but awards assets that have no tax consequences to the other party, the result is inequitable.

The Wife contends that the trial court does not have to consider tax consequences on retirement accounts when it does not require a party to liquidate or otherwise convert the retirement assets to cash, citing Hornyak v. Hornyak, 48 So.3d 858 (Fla. 4th DCA 2010). In Hornyak, the husband contended that as a result of the court's equitable distribution he would have no choice but to invade his retirement funds and that the trial court failed to consider any tax penalty for early withdrawal, thus producing an inequitable distribution. Id. at 863. However, the Fourth District determined that the trial court did not abuse its discretion because the wife presented expert testimony that the husband could obtain loans against his retirement accounts and avoid incurring any tax penalties. Id.

The present case is distinguishable from Hornyak. Both experts here recognized that the pension and retirement accounts would incur income tax liability. In addition, the Husband presented evidence through his CPA regarding tax penalties for early withdrawal of retirement funds. The parties presented conflicting evidence on the tax consequences. The Wife's expert used an 18.5% marginal tax rate and deducted the taxes from the marital portion of the assets on the Wife's Exhibit 17. The Wife's expert explained that on the parties' tax returns for 2007 and 2008 the highest marginal rate they paid was 18.5%. The Husband's expert used a higher marginal tax rate of 33% and also accounted for a 10% early withdrawal penalty. The Husband's expert also calculated an alternative structured...