Opinion ID: 2308398
Heading Depth: 2
Heading Rank: 2

Heading: Application of Section 953(2)(E)

Text: [¶ 14] Against this backdrop, we apply section 953(2)(E) to the matter before us. The court made its findings based on the parties' stipulations and evidence in the record, and the parties do not challenge those findings. Thus, the ultimate conclusion regarding whether Pitcher or Hedges took a substantial active role in managing the trust depends upon a direct application of the law to the undisputed factual findings.
[¶ 15] The property division statute as amended does not explicitly identify which party bears the burden of proof on any particular element of section 953(2)(E). We have had occasion to interpret the statute since its amendment, however, to determine that the burden initially falls on the party asserting that the property is marital to prove that an appreciation in the value of nonmarital property occurred during the marriage. See Warren v. Warren, 2005 ME 9, ¶ 26, 866 A.2d 97, 103. Once that appreciation has been established, the statute creates the rebuttable presumption that the increase in value is marital. See 19-A M.R.S. § 953(2), (3) (2007). [¶ 16] The party asserting that the appreciation in value is nonmarital then bears the burden to show that the appreciation remains nonmarital because it resulted from market forces, 19-A M.R.S. § 953(2)(E)(1)(a), or from reinvested income and capital gain, id. § 953(2)(E)(1)(b). See Warren, 2005 ME 9, ¶ 26, 866 A.2d at 103. If a party fails to demonstrate either of these causes for the appreciation, the statutory presumption codified at 19-A M.R.S. § 953(3) [5] compels a finding that the appreciation is marital because it accrued after the marriage and it is not the type of increase in value described in section 953(2)(E). See Warren, 2005 ME 9, ¶ 26, 866 A.2d at 103. [¶ 17] Pursuant to section 953(2)(E), if the party asserting that the property is nonmarital meets the burden of proving that market forces alone caused appreciation in the value of nonmarital property during the marriage, the amount of that appreciation remains nonmarital, whether or not either spouse played a substantial active role in managing the investment. Warner v. Warner, 2002 ME 156, ¶ 31, 807 A.2d 607, 620 (citing 19-A M.R.S. § 953(2)(E)(1)(a)). [¶ 18] If all or part of the appreciation resulted from reinvested income and capital gain, however, the resulting increase will be found to be marital property if either or both of the spouses played a substantial active role in managing, preserving, or improving the property during the marriage. Id. (citing 19-A M.R.S. § 953(2)(E)(1)(b), (2)(c)). In these circumstances, the burden remains on the spouse asserting that the property is nonmarital to establish that the increase did not arise in circumstances where either or both of the spouses played a substantial active role in managing, preserving, or improving the property. See Warren, 2005 ME 9, ¶ 27, 866 A.2d at 103. [¶ 19] In the case before us, Pitcher does not claim that the increase arose from market forces alone. Thus, the court correctly concluded that Pitcher had the burden of proving that the appreciation resulting from the reinvestment of income and capital gain was nonmarital because Pitcher did not actively manage, preserve, or improve the trust investments. See id. ¶¶ 26-27, 866 A.2d at 103. The issue for determination in this appeal, therefore, is whether the court's factual findings support its legal conclusion that the appreciation in value of Pitcher's trust investments was marital. To address this issue, we begin by examining the applicable standards of review.
[¶ 20] The determination of whether property is marital or nonmarital is ordinarily a question of fact that we review for clear error. Murphy v. Murphy, 2003 ME 17, ¶ 20, 816 A.2d 814, 820. We will not disturb the trial court's factual findings if they are supported by competent evidence in the record. Id. We review the trial court's determination of the law that applies to its factual findings de novo. Spooner v. Spooner, 2004 ME 69, ¶ 7, 850 A.2d 354, 358. [¶ 21] Because we do not discern any error in the court's findings of fact, which are supported by competent evidence in the record, see Murphy, 2003 ME 17, ¶ 20, 816 A.2d at 820, we review de novo whether those factual findings support the court's legal conclusion that Pitcher played a substantial active role in managing the trust. See Spooner, 2004 ME 69, ¶ 7, 850 A.2d at 358.