Court Opinion

ID: 2728789
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:36:17.358233+00
Date Added: 2024-06-11T15:45:00.830967
License: Public Domain

An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

                                 NO. COA13-984
                        NORTH CAROLINA COURT OF APPEALS

                                Filed:   15 April 2014

MOLLY DREW DAVIS,
     Plaintiff,

      v.                                        Davidson County
                                                No. 10 CVD 3929
MICHAEL R. DAVIS,
     Defendant.

      Appeal    by     defendant    from    judgment     and    order     entered    5

February 2013 by Judge Mary F. Covington in Davidson                            County

District Court.        Heard in the Court of Appeals 8 January 2014.

      Molly Brown Davis, pro se, plaintiff-appellee.

      The Law Offices of           Lee     M.   Cecil,   by    Lee   M.   Cecil    for
      defendant-appellant.

      DAVIS, Judge.

      Michael     R.    Davis    (“Defendant”)      appeals      from     the   trial

court’s equitable distribution judgment and alimony order.                          On

appeal, Defendant argues that the trial court erred (1) in its

valuation and distribution of 500 shares of stock in a closely-

held corporation; and (2) by failing to make adequate findings
                                        -2-
of   fact    to   support    the   amount     and   duration     of    the    alimony

awarded.     After careful review, we vacate and remand.

                              Factual Background

      Molly Drew Davis (“Plaintiff”) and Defendant were married

on 14 October 1989, separated on 15 September 2009, and divorced

on 11 February 2011.         Two children were born during the parties’

marriage, one of whom is still a minor.                   On 8 November 2010,

Plaintiff     filed   a     complaint   seeking       absolute   divorce,      child

custody and support, post-separation support, permanent alimony,

equitable distribution, and attorneys’ fees.                Defendant filed an

answer      and   counterclaims      for      child    custody        and    support,

equitable distribution, and absolute divorce.

      The trial court heard the parties’ claims for equitable

distribution and Plaintiff’s claim for alimony on 11 October

2012.       The trial court entered its judgment and order on 5

February 2013 that provided for (1) an equal division of the

marital property; and (2) monthly alimony payments of $1,000.00

from Defendant to Plaintiff until 1 January 2032.                           Defendant

gave timely notice of appeal to this Court.

                                    Analysis

I. Equitable Distribution

      We review a trial court’s order of equitable distribution
                                 -3-
under an abuse of discretion standard.       Wieneck-Adams v. Adams,

331 N.C. 688, 691, 417 S.E.2d 449, 451 (1992).        “Only a finding

that the judgment was unsupported by reason and could not have

been a result of competent inquiry or a finding that the trial

judge failed to comply with the statute will establish an abuse

of discretion.”   Id. (internal citations omitted).

    In his first argument on appeal, Defendant asserts that the

trial court erred in its valuation and subsequent distribution

of 500 shares of stock in American Auto Supply, Inc., a closely-

held corporation founded by Defendant’s grandfather.         Defendant

contends that the trial court’s valuation of the shares is not

supported by competent evidence.       Defendant further asserts that

because   there   was   insufficient    evidence   offered   at   trial

concerning the valuation of the        500 shares of American Auto

Supply, Inc., the shares should be removed and excluded from the

distribution scheme.

    “In valuing a marital interest in a business, the task of

the trial court is to arrive at a date of separation value which

reasonably approximates the net value of the business interest.”

Fitzgerald v. Fitzgerald, 161 N.C. App. 414, 419, 588 S.E.2d

517, 521 (2003) (citations and quotation marks omitted).             In

Poore v. Poore, 75 N.C. App. 414, 331 S.E.2d 266, disc. review
                                              -4-
denied,     314        N.C.   543,     335    S.E.2d       316    (1985),     this       Court

explained that

            [i]n ordering a distribution of marital
            property, a court should make specific
            findings regarding the value of a spouse’s
            professional practice and the existence and
            value of its goodwill, and should clearly
            indicate   the   evidence    on  which  its
            valuations are based, preferably noting the
            valuation method or methods on which it
            relied.   On appeal, if it appears that the
            trial court reasonably approximated the net
            value of the practice and its goodwill, if
            any, based on competent evidence and on a
            sound valuation method or methods, the
            valuation will not be disturbed.

Id. at 422, 331 S.E.2d at 272.

      Our    Supreme          Court     has       made   clear     that     the    standard

articulated in Poore — requiring specific findings concerning

the trial court’s valuation of a business and the methods it

used to arrive at that valuation — is also applicable to the

valuation of a marital interest in a closely-held corporation.

See Patton v. Patton, 318 N.C. 404, 406, 348 S.E.2d 593, 595

(1986)    (“[T]he        requirement         of    specific      findings    is     no   less

applicable        in     an   equitable       distribution         order     involving       a

spouse’s interest in a closely-held corporation.”).

      Here, the only finding made by the trial court regarding

the   valuation         of    the     American      Auto   Supply,    Inc.        shares    is

contained in finding of fact 8 and states:
                                       -5-
            The Court finds that the shares of stock are
            marital, having been purchased with funds
            during the course of the marriage; however,
            the Court finds that $20,000.00 is the value
            of the 500 shares based on the fact that the
            parties separated two years prior to the
            date of the final accounting along with the
            state of the market at the time of the
            separation.

     This finding merely references (1) “the state of the market

at the time”; and (2) a final accounting of Defendant’s mother’s

estate that took place two years after the date of the parties’

separation and valued 233 shares of American Auto Supply, Inc.

at $16,500.00.        In light of the lack of clarity and specificity

of this finding, we believe that the judgment fails to “state

specifically how the court arrived at its valuation.”                  Offerman

v. Offerman, 137 N.C. App. 289, 296, 527 S.E.2d 684, 688 (2000);

see Locklear v. Locklear, 92 N.C. App. 299, 302, 374 S.E.2d 406,

407-08 (1988) (“A mere recitation of the factors the trial court

considered       in   its    valuation    of     the     corporation     is   not

sufficient; the trial court must also indicate the value it

attaches    to   each   of    the   enumerated    factors.”),    disc.    review

allowed, 324 N.C. 336, 378 S.E.2d 794 (1989).

     However, while the trial court’s findings are insufficient,

we   must    determine       whether   the     parties    offered   sufficient

evidence at trial that would have allowed the trial court to
                                          -6-
make appropriate findings on the issue containing the requisite

level of specificity.             It is well established that the trial

court’s    “obligation       to   make    specific     findings    regarding     the

value   of   any       property   classified     as    marital,    including     any

business owned by one of the parties . . . . exists only when

there is credible evidence supporting the value of the asset.”

Grasty v. Grasty, 125 N.C. App. 736, 738-39, 482 S.E.2d 752, 754

(internal citations and quotation marks omitted), disc. review

denied,    346    N.C.    278,    487   S.E.2d   545   (1997);    see   Miller    v.

Miller, 97 N.C. App. 77, 80, 387 S.E.2d 181, 184 (1990) (“The

requirements that the trial court (1) classify and value all

property of the parties, both separate and marital, (2) consider

the separate property in making a distribution of the marital

property, and (3) distribute the marital property, necessarily

exist only when evidence is presented to the trial court which

supports         the      claimed        classification,         valuation       and

distribution.”).

    In the present case, neither party offered any evidence of

the value of the 500 shares of stock at the date of separation.

Indeed, at the equitable distribution hearing, the trial court

expressed its frustration at the absence of evidence upon which

to value the shares, asking the parties’ attorneys: “So we don’t
                                        -7-
have the value of that stock as of the date of separation?” and

“We’re supposed to pull that number out of my robe, is that what

I’m being told?”

       Because     the   parties      failed     to    offer     evidence     at     the

equitable distribution hearing regarding the value of the 500

shares of American Auto Supply, Inc. stock as of the date of

separation, we remand to the trial court for the entry of a new

equitable    distribution       judgment      removing    the     shares     from    the

distribution       scheme.      The   parties     had    “ample    opportunity        to

present evidence [of the shares’ value] and have failed to do

so.”     Miller, 97 N.C. App. at 80, 387 S.E.2d at 184.                            Thus,

“remanding the matter for the taking of new evidence, in essence

granting . . . a second opportunity to present evidence, would

only protract the litigation and clog the trial courts with

issues    which     should     have   been     disposed    of     at   the    initial

hearing.”    Id. (citation and quotation marks omitted).

II. Alimony

       Defendant     next    contends     that   the     trial    court      erred   by

awarding Plaintiff a monthly alimony award of $1,000.00 until 1

January     2032     without     making      sufficient        findings      of     fact

regarding the amount and duration of the award.                   We agree.
                               -8-
    N.C. Gen. Stat. § 50-16.3A provides, in pertinent part,

that the trial court “shall set forth the reasons for its award

or denial of alimony, and if making an award, the reasons for

its amount, duration, and manner of payment.”     N.C. Gen. Stat. §

50-16.3A(c) (2013).   In making an alimony award, the trial court

is to consider all relevant factors, including:

         (1) The marital misconduct of either of the
         spouses. Nothing herein shall prevent a
         court from considering incidents of post
         date-of-separation   marital  misconduct   as
         corroborating   evidence   supporting   other
         evidence that marital misconduct occurred
         during the marriage and prior to [the] date
         of separation;

         (2)   The  relative   earnings   and     earning
         capacities of the spouses;

         (3) The ages and the physical, mental, and
         emotional conditions of the spouses;

         (4) The amount and sources of earned and
         unearned income of both spouses, including,
         but not limited to, earnings, dividends, and
         benefits   such   as   medical,   retirement,
         insurance, social security, or others;

         (5) The duration of the marriage;

         (6) The contribution by one spouse to the
         education, training, or increased earning
         power of the other spouse;

         (7) The extent to which the earning power,
         expenses, or financial obligations of a
         spouse will be affected by reason of serving
         as the custodian of a minor child;
                                 -9-
         (8) The standard of living of the spouses
         established during the marriage;

         (9) The relative education of the spouses
         and the time necessary to acquire sufficient
         education or training to enable the spouse
         seeking alimony to find employment to meet
         his or her reasonable economic needs;

         (10) The relative assets and liabilities of
         the spouses and the relative debt service
         requirements of the spouses, including legal
         obligations of support;

         (11) The property brought to the marriage by
         either spouse;

         (12) The      contribution     of   a      spouse    as
         homemaker;

         (13) The relative needs of the spouses;

         (14) The federal, State, and local                  tax
         ramifications of the alimony award;

         (15) Any other factor relating to the
         economic circumstances of the parties that
         the court finds to be just and proper.

         (16) The fact that income received by either
         party was previously considered by the court
         in determining the value of a marital or
         divisible asset in an equitable distribution
         of   the  parties'   marital   or  divisible
         property.

N.C. Gen. Stat. § 50-16.3A(b).

    Here,   although   the   trial   court   made    findings      regarding

several of the above-quoted factors in its order, it failed to

articulate how these findings might support a monthly award in
                              -10-
the amount of $1,000.00 until 1 January 2032.   Indeed, the trial

court’s findings of fact regarding the amount and duration of

the alimony award state in full:

         35. The Defendant testified that he received
         a substantial inheritance from both his
         mother and father’s estates.   The Defendant
         will have substantial resources from which,
         not only to pay his monthly living expenses,
         but also a monthly alimony award to the
         Plaintiff.

         36. Other than the limited income as set
         forth above, the Plaintiff has no other
         source   of   income  or support  and  is
         substantially in need of support from the
         Defendant and as such is the dependent
         spouse of the Defendant.

         37. Due to the Defendant’s income, the
         Plaintiff’s limited income and the expenses
         of the parties, the Defendant is the
         supporting   spouse  of   the  Plaintiff as
         defined in N.C.G.S. § 50-16.3[A].

         38. Considering the respective estates,
         earnings, conditions and accustomed standard
         of living of the parties and the ability of
         the   Defendant  to  pay   monthly  alimony,
         $1,000.00 represents a reasonable sum of
         monthly alimony.

         39. Said payments shall begin January 1,
         2013.   The Court finds that this Order is
         made retroactive from the date of the end of
         Plaintiff’s post separation support which
         was in April, 2012.    The Court orders that
         the   Defendant  shall   pay  an  additional
         $500.00 per month until those have been
         paid. The Defendant’s accumulated arrearage
         is $8,000.00 (namely from May, 2012 through
         December, 2012).
                                                -11-

              40. The alimony payments in the amount of
              $1,000.00 will terminate on January 1, 2032.
              The Defendant may elect to pay the Plaintiff
              the   sum   of  $400,000.00   (Four  Hundred
              Thousand and No/100 Dollars) in lieu of his
              monthly alimony obligation.

    In       the    decretal          portion    of     the       order,   the    trial     court

further noted that, in accordance with N.C. Gen. Stat. § 50-

16.9,    alimony           will       terminate        at     the       occurrence     of     (1)

Plaintiff’s remarriage; (2) Plaintiff’s death; (3) Defendant’s

death; or (4) Plaintiff’s cohabitation as defined by N.C. Gen.

Stat.    §    50-16.9(b)          –   assuming     if       any    of   these    events     occur

before 1 January 2032.

    We        do     not     believe       that        these        findings      sufficiently

articulate the trial court’s “reasons for its amount, duration,

and manner of payment” as required by N.C. Gen. Stat. § 50-

16.3A(c).          In Hartsell v. Hartsell, 189 N.C. App. 65, 76, 657

S.E.2d       724,    731     (2008),       we     determined            that     the   findings

regarding the amount of the alimony award were inadequate where

“the trial court made only a finding that [the] plaintiff had

the ability to pay that amount, but provided no explanation as

to why it had concluded that [the] defendant was entitled to

that specific amount.”

    The same is true here.                      Though the trial court references
                                            -12-
the    “respective      estates,         earnings,      conditions       and       accustomed

standard of living of the parties” in its finding determining

that $1,000.00 is “a reasonable sum of monthly alimony,” this

cursory     discussion     does      not    provide       proper    insight         into   the

trial court’s reasoning.             See Lucas v. Lucas, 209 N.C. App. 492,

501, 706 S.E.2d 270, 276 (2011) (concluding that trial court’s

findings     regarding     alimony          were    “too    meager       to    enable      the

reviewing court to determine whether the trial judge exercised

proper      discretion     in       deciding       what    defendant          was    to    pay

plaintiff” (citation and quotation marks omitted)).                                 Likewise,

when the trial court concluded that Defendant could make a one-

time payment of $400,000.00 to Plaintiff in lieu of the monthly

alimony     payments,     it    provided       no    rationale         as     to    why    this

particular amount and this alternative manner of payment would

be appropriate.

       Additionally,      the       trial    court      failed     to    set       forth    the

reason    for   its   determination          that       Plaintiff       was    entitled     to

receive alimony from Defendant until 1 January 2032.                                  “[T]his

Court has repeatedly held that an alimony order is inadequate

when   it    contains     no    findings       explaining        the    reason       for   the

duration     chosen   .   .     .   .”      Id.    at     502,   706     S.E.2d      at    277.

Therefore, we must remand this matter to the trial court so that
                              -13-
it may make specific findings of fact explaining its reasoning

regarding the amount and duration of the alimony award.      See

Works v. Works, ___ N.C. App. ___, ___, 719 S.E.2d 218, 220

(2011) (remanding “with instructions that [the trial court] make

specific findings with respect to its reasons for the specified

duration of its alimony award”); Hartsell, 189 N.C. App. at 76-

77, 657 S.E.2d at 731 (remanding “for further findings of fact

regarding the basis for the amount and duration of the alimony

award”).

                              Conclusion

    For the reasons stated above, we vacate the trial court’s

equitable distribution judgment and alimony order and remand the

case for further proceedings as set out herein.

    VACATED AND REMANDED.

    Judges STEELMAN and STEPHENS concur.

    Report per Rule 30(e).