Court Opinion

ID: 9841422
Source: CourtListenerOpinion
Date Created: 2023-09-22 14:05:47.79746+00
Date Added: 2024-06-11T08:52:30.488400
License: Public Domain

RENDERED: SEPTEMBER 15, 2023; 10:00 A.M.
                       NOT TO BE PUBLISHED

                 Commonwealth of Kentucky
                           Court of Appeals
                              NO. 2022-CA-1337-MR

VALORIE LANEY                                                          APPELLANT

                   APPEAL FROM BOYD CIRCUIT COURT
v.               HONORABLE GEORGE W. DAVIS, III, JUDGE
                        ACTION NO. 20-CI-00983

DONALD LANEY, JR.                                                        APPELLEE

                                  OPINION
                             AFFIRMING IN PART,
                           REVERSING IN PART, AND
                                REMANDING

                                   ** ** ** ** **

BEFORE: ACREE, DIXON, AND MCNEILL, JUDGES.

DIXON, JUDGE: Valorie Laney (“Wife”) appeals from an order of the Boyd

Circuit Court confirming the report and recommendations of the Domestic

Relations Commissioner (“DRC”) in this dissolution of marriage proceeding.

After careful review of the record, briefs, and law, we affirm in part, reverse in

part, and remand for proceedings consistent with this Opinion.
        FACTUAL BACKGROUND AND PROCEDURAL HISTORY

             Donald Laney, Jr. (“Husband”) and Wife were married in January

2012. A divorce decree was entered on January 27, 2022, pursuant to Putnam v.

Fanning, 495 S.W.2d 175 (Ky. 1973). The parties appeared for a hearing before

the DRC on May 24, 2022, to distribute their assets and debts and to determine

child support. The primary issue of contention was the parties’ farm. Husband

had a 401k prior to the marriage that was cashed out in 2019, when the parties

purchased the farm. Both parties testified all the 401k funds went toward the

purchase and improvement of the farm, in addition to a loan for $10,000 that was

repaid prior to entry of the decree of dissolution. Husband expressed a desire to

keep the farm with the understanding he would pay Wife for her share of the value.

             The DRC determined the value of the farm to be $120,000 based on

appraisals entered into evidence. This is not contested on appeal. Further, the

DRC calculated Husband’s nonmarital contribution toward the farm to be

$50,172.32. She also calculated improvements to the farm based on a limited

number of canceled checks admitted into evidence, despite the uncontroverted

testimony of both parties that all of Husband’s 401k, consisting of both marital and

nonmarital funds, went toward the farm. Ultimately, the DRC determined Wife

was entitled to $19,877 as her portion of the farm. This amount was then reduced

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to account for the amount Husband was owed from Wife’s retirement account.1

Wife filed exceptions to the DRC’s report, but the circuit court ultimately adopted

the DRC’s recommended order in its entirety, and this appeal followed. Further

facts will be developed as they become necessary.

                                  STANDARD OF REVIEW

                 We will only set aside a circuit court’s findings of fact if they are

clearly erroneous. Moore v. Asente, 110 S.W.3d 336, 354 (Ky. 2003) (footnote

omitted). A circuit court’s findings of fact are clearly erroneous if not supported

by substantial evidence. Commonwealth v. Deloney, 20 S.W.3d 471, 474 (Ky.

2000). Substantial evidence means “[e]vidence that a reasonable mind would

accept as adequate to support a conclusion and evidence that, when taken alone or

in the light of all the evidence . . . has sufficient probative value to induce

conviction in the minds of reasonable men.” Moore, 110 S.W.3d at 354 (internal

quotation marks and footnotes omitted).

                 Further, we review a circuit court’s determinations of value and

division of marital assets for abuse of discretion. Armstrong v. Armstrong, 34

S.W.3d 83, 87 (Ky. App. 2000).

1
    Wife does not contest Husband’s entitlement to half of her retirement account.

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                                      LEGAL ANALYSIS

                We begin by noting that Husband failed to file a brief. While we

would be well within our authority to regard Husband’s dereliction as a confession

of error and reverse the circuit court,2 we nevertheless address the merits of Wife’s

arguments.

                Wife presents two arguments on appeal. First, she claims the circuit

court erred by not giving her a share of the value of the Harley Davidson

motorcycle. This argument is without merit and refuted by the record before us.

At the outset of the hearing before the DRC, the parties entered several

stipulations, including distribution of the motorcycle. Wife agreed on the record

that Husband would keep the motorcycle and assume all associated debt.

Accordingly, neither party presented evidence regarding either the value or

outstanding debt of the motorcycle. We discern no error on the part of the circuit

court.

                Second, Wife contends the circuit court failed to properly apportion

the tax withholdings to the marital and nonmarital funds of Husband’s 401k, which

2
    Pursuant to Kentucky Rules of Appellate Procedure (RAP) 31(H)(3):

         If the appellee’s brief has not been filed within the time allowed, the court may:
         (a) accept the appellant’s statement of the facts and issues as correct; (b) reverse
         the judgment if appellant’s brief reasonably appears to sustain such action; or (c)
         regard the appellee’s failure as a confession of error and reverse the judgment
         without considering the merits of the case.

                                                  -4-
resulted in an inflated nonmarital credit toward the farm for Husband. Wife’s

arguments primarily focus on what she asserts were mathematical errors by the

DRC. Upon review, we agree.

                Husband’s 401k had a value of $147,689.38 in 2019. The parties did

not dispute that Husband had a nonmartial interest of $50,172.32. The remainder

of the 401k was marital property, which was also undisputed.3 After tax

withholdings, Husband received $113,480 (approximately 23.16% was withheld in

taxes). However, the DRC failed to reduce Husband’s nonmarital portion in

accordance with the tax withholdings, leading to an inflated nonmartial

contribution to the farm. This error was compounded in the DRC’s subsequent

calculations.

                The circuit court also failed to consider the undisputed testimony of

both parties that the entire amount of Husband’s 401k, both nonmarital and

marital, was spent on the farm. Rather, the DRC relied upon a limited number of

canceled checks admitted into evidence to conclude that a total of $75,019.55 was

spent on the purchase of and improvement to the farm, a majority of which the

DRC found was nonmarital. Although the canceled checks provide a partial

3
  “An item of property will often consist of both nonmarital and marital components, and when
this occurs, a trial court must determine the parties’ separate nonmarital and marital shares or
interests in the property on the basis of the evidence before the court.” Sexton v. Sexton, 125
S.W.3d 258, 265 (Ky. 2004) (internal quotation marks and footnote omitted).

                                               -5-
picture of what the parties spent on the purchase and improvements, they do not

tell the entire story. Husband testified that he spent “every dime” of his 401k on

the farm, and Wife agreed in her testimony. Both parties detailed purchases and

improvements to the farm that were not shown in the canceled checks but were

undisputed.4 The parties also agreed that they secured an additional $10,000 loan

to install water and utilities. This loan was repaid during the marriage but

represents an additional marital contribution to the improvement of the farm.

                The DRC did not address the distribution of Husband’s 401k in her

recommended order. Although this suggests she recognized it was spent prior to

entry of the decree of dissolution, she nevertheless failed to attribute the marital

portion to the purchase and improvement of the farm, in contravention of the

testimony of both parties. She also failed to consider the loan as a marital

contribution.

                On remand, the circuit court must reduce the nonmarital and marital

portions of Husband’s 401k to reflect the tax withholdings. The court must then

proceed with its calculations to determine the nonmartial and marital interests

pursuant to the uncontroverted evidence that Husband’s entire 401k was spent on

the farm.

4
  Examples of improvements to the farm which are not represented in canceled checks, but which
the parties testified were purchased with Husband’s 401k, include a 40’ x 60’ barn, a bush hog, a
tractor, and a utility trailer.

                                              -6-
                                CONCLUSION

            Accordingly, the judgment of the Boyd Circuit Court is AFFIRMED

IN PART, REVERSED IN PART, and REMANDED for further proceedings

consistent with this Opinion.

            ALL CONCUR.

BRIEF FOR APPELLANT:                  NO BRIEF FOR APPELLEE.

Sharon E. Rowsey
Ashland, Kentucky

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