Court Opinion

ID: 4568576
Source: CourtListenerOpinion
Date Created: 2020-09-22 23:06:28.827662+00
Date Added: 2024-06-11T13:28:09.801550
License: Public Domain

RENDERED: SEPTEMBER 4, 2020; 10:00 A.M.
                       NOT TO BE PUBLISHED

                Commonwealth of Kentucky
                          Court of Appeals

                           NO. 2019-CA-001391-MR

PATRICIA LYNN NALLEY                                               APPELLANT

             APPEAL FROM WASHINGTON CIRCUIT COURT
v.           HONORABLE SAMUEL TODD SPALDING, JUDGE
                      ACTION NO. 19-CI-00044

JAMES LEON NALLEY                                                    APPELLEE

                                OPINION
                        VACATING AND REMANDING

                                 ** ** ** ** **

BEFORE: CALDWELL, JONES, AND KRAMER, JUDGES.

KRAMER, JUDGE: Patricia Nalley appeals the final order of the Washington

Circuit Court granting her $1,000.00 per month in maintenance for a period of five

years. Patricia appeals both the amount and duration of the maintenance award.

Agreeing with her arguments upon review and further concluding that the basis for
the circuit court’s decision is arbitrary, we vacate and remand for proceedings not

inconsistent with this opinion.

               The parties first married in 1980. They had three children and

divorced in 1990. However, Patricia testified that the couple continued to live

together after the first divorce and eventually remarried in 2001.1 Patricia testified

1
 The circuit court did not take into account the time period of the first marriage, nor the time the
parties lived together until they remarried. Therefore, this Court also considers only the time
period that the parties were married for a second time, 2001 through 2019.

Patricia testified that the parties agreed to divorce the first time, at the suggestion of James’
mother, because James was not making much money and two of their minor children, who had
serious medical conditions, needed “medical cards.” The circuit court included this explanation
in its findings of facts and conclusions of law. In his brief, James states that “[Patricia] further
alleged that the parties cohabitated during the period between 1990 and their remarriage in 2001,
which Appellee denied.” However, the record does not bear out this statement. James cited to
page 105 in the circuit court record to support this statement, which is page two of the circuit
court’s finding. Therein the circuit court found that “[James] further testified the parties actually
separated on two different occasions before and after their divorce.”
James testified that the parties lived apart for six months and lived apart a separate time for three
to six months when Patricia had “some kind of spell” and moved to Somerset, Kentucky, with
the children. Otherwise, the parties lived together from 1991 until their remarriage in 2001.
Similar to Patricia’s testimony, James testified that the parties needed “medical cards” for two of
their children and could not acquire them while they were married. From statements in the
hearing made by the parties and the court, it appears that this was an acceptable means of
acquiring medical cards for the children. The issues of whether any fraud on the court was
committed in acquiring the first divorce; whether any act associated with this scheme was in
violation of the law as fraudulent, e.g., Kentucky Revised Statute (KRS) 205.8463; or whether
any statute of limitation for potential criminality has passed, are not before this Court. This
Court is not a finder of fact; that is the role of the circuit court. Nonetheless, we do not condone
this conduct and find it very troubling. We note that:

               To permit the courts to thus be made tools for the perpetration of
               such frauds would bring into disrepute the whole administration of
               justice. They are not constructed for the purpose of aiding
               unconscionable persons to consummate the frauds which they may
               concoct; on the contrary it is the rule that courts will not permit
               themselves to be made the instruments by which such fraudulent
               schemes are carried out.

                                                 -2-
that her highest level of education was ninth grade. She was primarily a

homemaker during the marriage but occasionally worked in unskilled labor,

including factory work and stripping tobacco. Patricia also began experiencing

severe mental health issues during the marriage which require ongoing therapy and

medication. By the time of the divorce proceedings, the Social Security

Administration had determined that Patricia was disabled. For his part, James was

able to build a successful mechanic’s shop and tow-truck business and was the

breadwinner for the family. He still owns the business; two of the parties’ sons are

employed with their father.

              Patricia and James separated in October 2018, and Patricia filed a

petition for dissolution of marriage in April 2019. At the time, Patricia was fifty-

five (55) years of age and on disability for mental health reasons. James was sixty

(60) years of age and did not testify to any mental or physical health conditions

that would impair his ability to work. The parties’ children were emancipated by

this point. The parties were unable to agree on division of property and spousal

maintenance for Patricia. The circuit court conducted a hearing and issued

findings of fact and conclusions of law that, in part, included that it had reviewed

Patricia’s medical records, her Social Security award, and considered her

Justice v. Justice, 310 Ky. 34, 38, 219 S.W.2d 964, 966 (1949) (quoting Jagoe v. Jagoe, 194 Ky.
101, 238 S.W. 185, 187 (1921)).

                                              -3-
testimony regarding her mental health and concluded that she was “not capable of

working.” The circuit court awarded her $800.00 per month spousal maintenance

for five years. Patricia filed a motion to alter, amend, or vacate the circuit court’s

findings; she argued that the $800.00 monthly maintenance award was insufficient

to cover her monthly expenses and that the award should extend beyond five years.

The circuit court increased the amount of the maintenance award to $1,000.00 per

month but denied Patricia’s motion to extend the award beyond five years’

duration. Thereafter, Patricia timely appealed the circuit court’s rulings.

                In considering the amount and duration of a maintenance award, the

circuit court must consider the factors enumerated in KRS2 403.200(2) which

states,

                The maintenance order shall be in such amounts and for
                such periods of time as the court deems just, and after
                considering all relevant factors including:

                       (a) The financial resources of the party
                       seeking maintenance, including marital
                       property apportioned to him, and his ability
                       to meet his needs independently, including
                       the extent to which a provision for support
                       of a child living with the party includes a
                       sum for that party as custodian;

                       (b) The time necessary to acquire sufficient
                       education or training to enable the party
                       seeking maintenance to find appropriate
                       employment;

2
    Kentucky Revised Statute.

                                            -4-
                       (c) The standard of living established during
                       the marriage;

                       (d) The duration of the marriage;

                       (e) The age, and the physical and emotional
                       condition of the spouse seeking
                       maintenance; and

                       (f) The ability of the spouse from whom
                       maintenance is sought to meet his needs
                       while meeting those of the spouse seeking
                       maintenance.

                While KRS 403.200 mandates considerations for the circuit courts,

unfortunately “no particular [mathematical] formula has ever been held as the

method for establishing maintenance.” Age v. Age, 340 S.W.3d 88, 95 (Ky. App.

2011). An award of maintenance rests within the sound discretion of the trial court

and will not be disturbed absent a showing that the findings of fact were clearly

erroneous or that the court abused its discretion. Perrine v. Christine, 833 S.W.2d
825, 826 (Ky. 1992); CR3 52.01. “The test for abuse of discretion is whether the

trial judge’s decision was arbitrary, unreasonable, unfair, or unsupported by sound

legal principles.” Sexton v. Sexton, 125 S.W.3d 258, 272 (Ky. 2004) (citations

omitted). We are mindful that, “unless absolute abuse [of discretion] is shown, the

appellate court must maintain confidence in the trial court and not disturb the

findings of the trial judge.” Clark v. Clark, 782 S.W.2d 56, 60 (Ky. App. 1990).

3
    Kentucky Rule of Civil Procedure.

                                            -5-
             The inherent and intertwined complication we have in reviewing this

matter is the lack of evidence of record to support many of the circuit court’s

findings of fact. In attempting to evaluate the issues on appeal, we cannot resolve

them in a vacuum, particularly when the surrounding circumstances are not based

on competent evidence of record. Indeed, as required by KRS 403.200 and

consistent with caselaw, many factors are considered in setting maintenance. We

cannot adequately review and affirm an award wherein many of the findings of fact

underlying the decision are arbitrary.

             One of the primary factors to review under KRS 403.200 is the

property available to the party seeking maintenance and the ability of the party

from whom maintenance is sought to meet his own needs. When the division of

property is at issue, the classification of that property by the circuit court as marital

or non-marital is a required threshold task. Sexton, 125 S.W.3d at 264-65. Neither

Patricia nor James takes issue with the property assigned to them respectively.

However, the struggle this Court has in evaluating the maintenance award is that

the values the circuit court assigned to the properties/assets were either arbitrary or

not properly supported by relevant evidence. Herein, for nearly most of the

property divided by the court (both real and personal), the evidence to support the

value given to the property by the circuit court was lacking. For example, on the

parcels of real estate at issue, the PVA’s value of the property was noted, as was

                                           -6-
the price paid (even though at least two parcels were purchased over twenty years

ago), and then the parties were asked their “opinion” of what they thought the

property was worth. Neither party was qualified to give testimony as to the value

of the real estate at issue. Moreover, the circuit court appears to have just set a

value somewhere in between where the parties thought the fair market value to be.

For example, in regard to the first parcel, located at 6609 Loretto Road (the

property where Patricia lives), the PVA valued it at $48,000.00; James testified

that he thought the property was worth $78,000.00; Patricia testified that she

agreed with the PVA that the property was valued at $48,000.00; and the circuit

court placed a value of $60,000.00 on it.

             Regarding a house and lot located at 4515 Highway 52, Loretto,

which the parties purchased in 2011, the PVA assessed it at $50,000.00; Patricia

opined that it was worth $54,000.00; James thought it was worth $42,500.00; and

the circuit court placed a fair market value on it of $54,000.00--despite no other

testimony than that of the parties. We also note that this property was also used as

rental property and was awarded to James. Yet, no rental income was attributed to

him by the circuit court from this property.

                                          -7-
              Indeed, this same method was used to place value on the various

parcels of real estate owned by the parties;4 neither party was questioned or

expressed qualifications that they were in any way qualified to evaluate property.

The only evidence that was submitted was the PVA’s value and the parties’

respective, but unqualified, opinion on the value. As is well established in the law,

this method was wholly insufficient to value the properties.

              To be qualified to express an opinion upon fair market
              value of real property, a witness, including the owner
              thereof, must possess “some basis for a knowledge of
              market values.” Robinson v. Robinson, 569 S.W.2d
              [178,] 179 [Ky. App. 1978)][5] (quoting Com. Dept. of
              Highways v. Fister, 373 S.W.2d 720, 722 (Ky. 1963)).
              Simply stated, the mere ownership of property does not
              qualify a lay person to give an opinion upon market
              value. Robinson, 569 S.W.2d 178. In any event, the
              actual cost of improvements may be considered as
              evidence bearing upon fair market value but should not
              be the sole factor. Where the parties fail to offer
              sufficient proof as to fair market value of real property,
              we remind the family court of our Court’s decision in
              Robinson:

                            There was simply no way in which
                     the trial court in this action could accurately
                     fix the value of the property which was the
                     subject of the action with the total lack of
                     evidence here. If the parties come to the end
                     of their proof with grossly insufficient

4
  We note that two properties were awarded to James as non-marital, having been purchased after
the parties’ first divorce.
5
 Robinson v. Robinson, 569 S.W.2d 178 (Ky. App. 1978), overruled on other grounds by
Brandenburg v. Brandenburg, 617 S.W.2d 871 (Ky. App. 1981).

                                             -8-
                   evidence on the value of the property
                   involved, the trial court should either order
                   this proof to be obtained, appoint his own
                   experts to furnish this value, at the cost of
                   the parties, or direct that the property be
                   sold.
Id. at 180.

Jones v. Jones, 245 S.W.3d 815, 820 (Ky. App. 2008).

             To further illustrate the point that the value assigned to the various

real estate at issue herein is not supported by acceptable evidence, we offer the

following example:

                     In this case, the property interest at issue is the
             equity in the Forest Property, a non-marital asset that
             Donald received without encumbrances prior to the
             parties’ marriage. As explained in a panel of this Court’s
             decision, “[a]s used in KRS 403.190 in referring to
             restoration of the property of each spouse, the word
             ‘property’ means equity.” Robinson v. Robinson, 569
             S.W.2d 178, 181 (Ky. App. 1978), overruled on other
             grounds by Brandenburg, 617 S.W.2d at 873. Here,
             while Donald introduced the exhibit from the PVA with
             the Forest Property’s assessed value, Kentucky cases
             have noted that “[i]n determining the value of land . . .
             assessed value, though not conclusive, can be considered
             in connection with other evidence of value of property.”
             Id. at 180 (emphasis added) (quoting Commonwealth,
             Dep’t of Highways v. Rankin, 346 S.W.2d 714, 717 (Ky.
             1960)). Therefore, we agree with the circuit court that
             neither party produced sufficient evidence as to the fair
             market value of the Forest Property.

                    However, rather than requiring the parties to
             produce proof of the Forest Property’s fair market value,
             the circuit court essentially equated the actual cost of the

                                          -9-
                  parties’ improvements to the Forest Property with the
                  Forest Property’s fair market value. We view this as
                  clear error. As stated by a panel of this Court in Jones v.
                  Jones, “the actual cost of improvements may be
                  considered as evidence bearing upon fair market
                  value but should not be the sole factor.” 245 S.W.3d
                  815, 820 (Ky. App. 2008). Rather, Kentucky courts have
                  held that if there is “grossly insufficient” evidence
                  concerning the value of the property involved, “the trial
                  court should either order this proof to be obtained,
                  appoint [its] own experts to furnish this value, at the
                  cost of the parties, or direct that the property be
                  sold.” Id. (quoting Robinson, 569 S.W.2d at 180).

                         Here, the circuit court was required to determine
                  the Forest Property’s fair market value based on
                  substantial evidence in order to determine the parties’
                  equity in the Forest Property, which equity was the very
                  property interest needing categorization as marital or
                  non-marital; ultimately, there was simply no way in
                  which the circuit court could accurately fix the value of
                  the property which was the subject of the action due to
                  the lack of evidence.

Cox v. Cox, No. 2018-CA-001164-MR, 2019 WL 6650531, at *4 (Ky. App. Dec.

6, 2019).6

                  We also note that the value of the ongoing business was not evaluated.

In sum, James received the entirety of the business, with nothing from it going to

Patricia at all, despite having been married to James during eighteen years of its

operation. Indeed, no value of the business itself, apart from the real estate,

buildings, tools, etc., was assigned. Thus, we are left without a basis of knowing

6
    This case is cited for illustrative purposes only.

                                                   -10-
the value of assets assigned to James to determine how he can meet his own needs

while paying maintenance to Patricia. Patricia never raised this as an issue; yet, we

are left to question how maintenance can be determined when we do not know the

value of the assets assigned. Moreover, the question here just begs itself: why was

no portion of the value of the business acquired during the marriage assigned to

Patricia? Lest this situation be taken out of the normal context, we pause to note

that ordinarily

                   “where the value of [non-marital] property
                   increases after marriage due to general
                   economic conditions, such increase is not
                   marital property, but the opposite is true
                   when the increase in value is a result of the
                   joint efforts of the parties.” KRS
                   [403].190(3), however, creates a
                   presumption that any such increase in value
                   is marital property, and, therefore, a party
                   asserting that he or she should receive
                   appreciation upon a nonmarital contribution
                   as his or her nonmarital property carries the
                   burden of proving the portion of the increase
                   in value attributable to the nonmarital
                   contribution. By virtue of the KRS
                   403.190(3) presumption, the failure to do so
                   will result in the increase being
                   characterized as marital property.

             Travis, 59 S.W.3d at 910-11, (quoting Goderwis v.
             Goderwis, 780 S.W.2d 39, 40 (Ky. 1989)) (footnotes
             omitted).

Cobane v. Cobane, 544 S.W.3d 672, 682 (Ky. App. 2018).

                                        -11-
               Regarding income, the circuit court found that Patricia’s income is

$582.00 per month and that James makes nearly ten times that amount, having the

reasonable ability to earn $5,000.00 per month.7 It also found that Patricia is

unable to work due to ongoing mental and physical health issues. Over the course

of the eighteen-year marriage, her work history was sporadic at best; she did not

graduate from high school; she has no specialized training; and she suffers from

mental illness to the point of total disability. One of the parties’ sons oversees

Patricia’s finances because she is incapable of doing so. Patricia did not receive

any income-producing property in the dissolution, unlike James who received a

rental property8 and the business outright.

               Regarding Patricia’s expenses, the evidence of record shows that

Patricia claimed monthly expenses of $3,161.25 in the financial disclosure

admitted into evidence as Petitioner’s Exhibit 9. The circuit court found that her

expenses for household items, gas, telephone, prescriptions, and medical expenses

were inflated and that $2,250.00 was a reasonable amount of monthly expenses for

her. We note that James never established or offered evidence that Patricia’s

claimed monthly expenses of $3,161.25 were not comparable to the standard of

7
  James testified that his health insurance was paid through his business, but no testimony was
taken as to the amount. Regardless, the circuit court did not attribute this as income to him.
8
 It does not appear that the circuit court included this rental income in James’s monthly income.
He testified that property is currently rented to his brother, who pays $300.00 per month.

                                              -12-
living enjoyed during the parties’ marriage or were not reasonable. The circuit

court only noted one factual discrepancy in Patricia’s expenses: a claimed monthly

insurance payment of $196.50 that was taken out of Patricia’s Social Security

award. Accordingly, we are puzzled based on the evidence and testimony

presented during the hearing how the circuit court came to the amount of

$2,250.00. We cannot find any basis in fact in the record for the circuit court’s

calculation of that amount or for setting the maintenance at $1,000.00 per month.

               Patricia received a vehicle that is worth thousands of dollars less than

what is owed and is now responsible for the debt.9 In contrast, James continues to

work and generate income from rental property and the business entity that he

received outright, i.e., James was given all value of the business, including any

good will or increase in value that was established during the marriage, unlike

Patricia, who did not receive any value whatsoever from the business.10 James

assumed no debt from the marriage. The record shows that even considering the

marital property awarded to Patricia, she will be unable to sustain her monthly

expenses moving forward on a maintenance award of $1,000.00 per month limited

to five years. As Patricia points out, if James is ordered to pay her an amount of

9
 Patricia’s verified disclosure statement, admitted as Petitioner’s Exhibit 9, indicates Patricia
pays $443.75 per month toward the debt on her vehicle.
10
  There was testimony that the business was purchased when the parties were divorced the first
time but continued to cohabitate as noted supra.

                                                -13-
maintenance that, combined with her income from Social Security, enables her to

meet her monthly expenses, he will still be left with a surplus per month after

meeting his own monthly expenses. The circuit court’s decision to limit the

amount of maintenance to $1,000.00 per month is arbitrary considering the factors

enumerated in KRS 403.200, particularly considering the gross disparity in income

between the parties and, as the circuit court found, “[Patricia] is not capable of

working.” Hence, the circuit court’s decision on the amount of maintenance must

be vacated.

              Patricia’s next argument is that the circuit court abused its discretion

by limiting the duration of her maintenance award to five years. We agree; the

decision to limit the award to five years was clearly arbitrary. In the order denying

Patricia’s motion to extend the duration of the maintenance award, the circuit court

ruled

              [t]he Court notes that after the five-year period [James]
              will be 65 years of age. The profession of [James] is
              physically demanding, and the Court finds it is not
              reasonable to expect [James] to continue to engage in this
              type of profession after the age of 65.

              The circuit court’s findings in regard to James’s profession are clearly

erroneous and arbitrary for two reasons. First, the only evidence submitted to the

circuit court was testimony that James owns a mechanic’s shop and tow-truck

business and that two of his sons work there as well. James did not testify

                                          -14-
regarding any physical demands of his job, the jobs he performs at the shop, his

physical health, how long he plans to work, etc. In fact, his role in the business,

other than being the owner, is wholly unknown based on the evidence before the

circuit court (i.e., it is possible that his sons perform most of the physical labor in

the business, but the evidence of record simply does not allow for any sort of

determination in that regard). “To review [a] judge’s decision on appeal, it is

important to know what facts the judge relied on in order to determine whether he

has made a mistake of fact, or to even determine if he is right at law, but for the

wrong facts. If a judge must choose between facts, it is clearly relevant which

facts supported his opinion.” Anderson v. Johnson, 350 S.W.3d 453, 455 (Ky.

2011). In the instant action, there were simply no facts before the circuit court

regarding the specific details of James’s role at his business, how physically

demanding it was, or whether he, as the sole owner, would continue to draw a

salary, income, or other benefits if he stopped working there. Therefore, the circuit

court’s decision was clearly erroneous.

             Second, the circuit court clearly erred by looking five years into the

future regarding James’s finances. The Kentucky Supreme Court has ruled

             [t]he trial court is not required to predict with certainty
             what the future financial situation of the parties will be
             for three reasons. First, the family court cannot possibly
             know what that parties’ financial situation will be [five]
             years into the future. Second, the family court is not
             required by statute to speculate as to the parties’ future

                                          -15-
             finances. Rather, the court must look at the parties’
             financial positions as they are at the time the parties
             appear before the court, and make reasonable
             determinations for that point in time and going forward.
             Finally, KRS 403.250 provides for modifying a
             maintenance decree upon “a showing of changed
             circumstances.” As such, any change in the parties’
             financial situation is envisioned in the maintenance
             modification statute.

Weber v. Lambe, 513 S.W.3d 912, 918 (Ky. 2017).

             At no time did James testify that he planned to retire in five years.

James testified that he hopes to pass the business onto his sons eventually but did

not specify a timeframe for doing so. It is unknown, based on the record before us,

how long James will continue to work at his business; what his plans are with

regard to ownership of the business; or how either of those issues will affect his

future income. It is entirely possible that, in the future, James could continue to

own the business and derive income from it even if his day-to-day role is

diminished. It is also possible that he may continue to derive a salary from the

business even if he transfers ownership to his sons. However, neither of those

scenarios is certain and both require speculation. The circuit court made its

decision on duration solely on its own impression that it would be unreasonable to

make James work past the age of 65, but there was no evidence whatsoever to

support this finding. Contrary to the circuit court’s impression, if and when

James’s financial circumstances change, KRS 403.250(1) enables him to seek

                                         -16-
modification of his maintenance obligation “upon a showing of changed

circumstances so substantial and continuing as to make the terms

unconscionable.”11 The circuit court erred by engaging in speculation regarding

James’s finances five years from the date of dissolution of marriage.

              For the foregoing reasons, we conclude that the bulk of the circuit

court’s findings of fact as they relate to a basis to make a maintenance award were

arbitrary, not based on proper evidence of record, or failed to include the value of

assets and other forms of income attributable to James; even if those findings may

stand on remand, neither the amount nor duration of maintenance were supported

by the record and were arbitrary. Accordingly, we VACATE the circuit court’s

findings of fact and rulings regarding the amount and duration of maintenance and

REMAND for proceedings not inconsistent with this Opinion.

               ALL CONCUR.

 BRIEFS FOR APPELLANT:                            BRIEF FOR APPELLEE:

 Susan Hanrahan McCain                            Theodore H. Lavit
 Springfield, Kentucky                            Joseph R. Stewart
                                                  Lebanon, Kentucky

11
  We note that there was a discussion among the circuit court and parties about whether Patricia
will be eligible to collect Social Security retirement benefits through James and at what point she
would be eligible to do so. If Patricia does collect additional sums of money through James’s
Social Security retirement, KRS 403.250 allows James to seek a modification of his monthly
maintenance obligation.

                                               -17-