Walter v. Walter

• Decision Date: 16 April 2002
• Docket Number: No. COA01-217.,COA01-217.
• Citation: 561 S.E.2d 571,149 NC App. 723
• Court: North Carolina Court of Appeals
• Parties: Leigh W. WALTER, Plaintiff, v. James M. WALTER, Jr., Defendant.

561 S.E.2d 571

149 NC App. 723

Leigh W. WALTER, Plaintiff, v. James M. WALTER, Jr., Defendant.

No. COA01-217.

Court of Appeals of North Carolina.

April 16, 2002.

Gatto Law Offices, by Joseph J. Gatto, and Bell, Davis & Pitt, P.A., by Robin J. Stinson, Winston-Salem, for plaintiff-appellant.

White and Crumpler, by G. Edgar Parker, Winston-Salem, for defendant-appellant.

GREENE, Judge.

James M. Walter, Jr. (Defendant) and Leigh W. Walter (Plaintiff) separately appeal an equitable distribution judgment and order dated 4 April 2000.

On 21 August 1996, Plaintiff filed a complaint seeking, in pertinent part, an equitable distribution of marital property. Evidence at the equitable distribution hearing established Plaintiff and Defendant were married on 26 September 1981, separated on 21 August 1996, and divorced on 14 May 1998. No children were born of the marriage. At the time of their marriage, Defendant was employed as an associate oral surgeon with a partnership practice. Shortly following his marriage to Plaintiff, Defendant became a sole practitioner and opened his own practice of oral and maxillofacial surgery (the Practice). Plaintiff contributed to the Practice by assuming the responsibilities of an office manager.

Between 21 and 22 August 1996, after the time of the parties' separation, Plaintiff and a number of helpers were observed removing several truckloads of property from the parties' marital home. When Defendant returned from a fishing trip and saw the house, he observed that: "She took basically everything. Everything[][is] gone."

On 16 September 1999, the parties entered into a stipulation regarding the items Plaintiff had taken from the marital home between 21 and 22 August 1996. The stipulation provided that for the purpose of equitable distribution, these items would be distributed to Plaintiff at a value of $190,000.00.¹ The stipulation further stated that it would not constitute an admission by Plaintiff that she removed or converted the items at any time or maintained possession of or control over them since the date of separation.

Defendant offered testimony and Plaintiff stipulated that Defendant had applied $32,452.50 of his separate property in addition to marital funds for the purchase of a house on Meadowbrook Road (the Meadowbrook home) that the parties had bought during their marriage and to which they took title as tenants by the entirety. Defendant further testified that $11,000.00 in cash kept in a safe in the marital home was his separate property derived from his pre-marital business of selling antique British grandfather clocks. This money remained untouched during the course of the marriage as Defendant considered it a cash reserve. Plaintiff, on the other hand, claimed the cash was used periodically over the course of their marriage for marital purposes and subsequently replaced and should therefore be considered marital property.

Defendant used his separate funds during the post-separation period but prior to the date of equitable distribution to pay for: homeowners insurance, maintenance, and other expenses with respect to the Meadowbrook home and another house that had been purchased during the marriage (the Yadkin house); the 1996 through 1999 property taxes and the mortgage on a Maplewood Avenue office building (the Maplewood office); and the parties' joint federal and state income taxes.

Defendant offered the expert testimony of Loyd R. Daniel (Daniel) and Stanley L. Pollock (Pollock) regarding the valuation of the Practice. Plaintiff offered the expert testimony of Robert N. Pulliam (Pulliam). Pulliam valued the Practice on the date of separation at $1,131,000.00. His testimony and written report were admitted into evidence without objection.

In an equitable distribution judgment and order dated 4 April 2000, the trial court found "all three of the experts presented by... Plaintiff and ... Defendant qualif[ied] as experts in the area of the valuation of professional practices." The trial court adopted Pulliam's valuation of the Practice, which it found to be "not only based on accounting principles[] but also ... grounded in solid appraisal practice and common sense" and assigned a date-of-separation value of $1,131,000.00 to the Practice. The trial court further found in finding of fact number LIV that:

A. The "Cash in Safe" is determined to be the separate property of ... Defendant at a fair market value on the date of separation of $11,000.00.

....

D. [P]ursuant to [the parties'] Stipulation[,]... Defendant made a contribution of $32,452.50 of his separate property to the acquisition of and improvements to [the Meadowbrook home].... Defendant has established through clear, cogent and convincing evidence that he had no intention of making a gift of his separate property to the marital estate, although said property was deeded to the parties as tenants by the entiret[y]. The Court finds therefore that of the date of separation value of $145,000.00[,] ... $32,452.50 is ... Defendant's separate property and that the remaining sum of $112,547.50 is marital property, which is distributed to Defendant.

The trial court distributed the Meadowbrook home, the Yadkin house, the Maplewood office, and the marital debt to Defendant. The trial court granted Defendant a credit in the amount of $4,494.87 resulting from insurance paid on marital property, including homeowners insurance for the Meadowbrook home and the Yadkin house, and a credit in the amount of $4,950.00 for maintenance on the Meadowbrook home. The trial court denied Defendant a credit for postseparation mortgage payments on the Maplewood office because the office had been distributed to Defendant, "therefore providing him with full credit for the principal reduction to the mortgage balance subsequent to the date of separation." The trial court also denied Defendant credit for post-separation property tax payments on the Maplewood office for the years 1996 through 1999. The trial court further denied Defendant's request for credit in respect to the payment of joint income taxes following the parties' separation because "the items for which Defendant was requesting credit were included as marital debt under Schedule I of the Pre-Trial Order" and assigned to Defendant. Finally, the trial court denied Defendant credit for post-date-of-separation repairs and improvements to the Yadkin house, which had been awarded to Defendant, as there was "no evidence that ... Plaintiff benefitted in any respect from ... Defendant's acquisition of this property, nor [was] there any evidence that ... Defendant was involuntarily forced to make repairs and improvements to the property following the parties' separation."

Among the distributional factors listed by the trial court, the trial court considered "the acts of ... Plaintiff in wasting, neglecting and converting marital property between the date of separation and the trial of this matter, including those assets set out in the written [s]tipulation by the parties" on 16 September 1999. The trial court referred to these acts as "the most significant distributional factor." As a result, the trial court concluded that an equal distribution of the marital property would be inequitable and awarded Defendant 54.5% of the net marital estate. The assets covered by the 16 September 1999 stipulation in the amount of $190,000.00 were deemed part of the marital estate and distributed to Plaintiff.

The issues are whether: (I)(A) Defendant rebutted the presumption of a gift of $32,452.50 of his separate property to the marital estate; (B) the $11,000.00 cash in the safe was properly classified as Defendant's separate property; (II)(A) the evidence supports the finding of a distributional factor that Plaintiff wasted or converted marital assets; (B) the trial court erred in its allocation of credits; and (III) Defendant properly preserved his right to argue the trial court erred in adopting Pulliam's valuation of the Practice.

I

Classification

A Meadowbrook Home

Plaintiff claims the Meadowbrook home is marital property while Defendant contends it is partly marital and partly his separate property.² This property was acquired by the parties as tenants by the entirety during the marriage and before the date of separation, and Defendant applied $32,452.50 of his separate monies to the purchase price.

As the property was acquired by the parties during the marriage, before the date of separation, and was owned by them on the date of separation, Plaintiff met her burden of showing the property was marital. See N.C.G.S. § 50-20(b)(1) (1999). Defendant contends he acquired a portion of the Meadowbrook home in exchange for his separate monies and thus, pursuant to the "exchange provision" of N.C. Gen.Stat. § 50-20(b)(2), has satisfied his burden. Plaintiff, relying on McLean v. McLean, 323 N.C. 543, 546, 374 S.E.2d 376, 378 (1988), contends the transfer implicates the "interspousal gift provision" of section 50-20(b)(2), and thus, Defendant made a gift of his $32,452.50 to the marital estate. The titling of the property in the entireties does indeed raise a presumption of donative intent, implicating the "interspousal gift provision"; however, it is rebuttable by clear and convincing evidence. McLean, 323 N.C. at 546, 374 S.E.2d at 378.

In this case, the trial court found Defendant offered "clear, cogent and convincing evidence that he had no intention of making a gift" of the $32,452.50 to the marital estate. Defendant points to no such evidence³ in his brief, see N.C.R.App. P. 28(b)(5) (appellate briefs shall contain "all material facts ... supported by references to pages in the transcript of proceedings, the record on appeal, or exhibits"); see also Naddeo v. Allstate Ins. Co., 139 N.C.App. 311, 316, 533 S.E.2d 501, 504 (2000) ("[a]ppellate judges find such references invaluable in directing the court's attention to the pertinent portions of the record"), nor can we find any...