Court Opinion

ID: 9680746
Source: CourtListenerOpinion
Date Created: 2023-08-24 07:37:57.894831+00
Date Added: 2024-06-11T18:17:28.450572
License: Public Domain

COOPER,
Justice, concurring in part
and dissenting in part.
I concur in the majority’s conclusion that only two of the six issues now before us merit discussion. However, I disagree with the majority’s resolution of both issues.
I. CHILD SUPPORT.
The majority opinion homes in on the trial judge’s use of the phrase “limited and speculative” in affirming the Court of Appeals’ reversal of the child support award. However, the trial judge used that phrase only to describe the “amount” of Appellee’s undocumented and unreported gross income. With respect to the “existence” of such income, the trial judge found that “Angela clearly has cash flow in excess of IRS reported income,” and found her total monthly income “to be, at a minimum, the equivalent of respondent’s [monthly income].” (Emphasis added.) Although the trial judge characterized the finding of additional income as “imputed” income, it should more properly be characterized as “hidden” income. The trial judge examined Appellee’s lifestyle and monthly expenditures and concluded that she must have a gross income substantially in excess of that to which she admits. Whether her hidden income results from gambling, bookmaking, gifts, unreported tips, or other sources, it is “gross income” under KRS 403.212(2)(b) and must be considered for purposes of calculating child support under KRS 403.212(3) and (6).
*787I agree with the majority that the Court of Appeals erred in requiring Appellant to document Appellee’s “hidden” income before it could be considered for child support purposes. The documentation requirement in KRS 403.212(2)(f) obviously applies to a party’s own income, not to the adverse party’s income- — especially if the adverse party is concealing income. However, I do not agree with the majority’s conclusion that the evidence of the existence of that income was insufficient to support the trial judge’s findings of fact. I believe the trial judge can consider circumstantial evidence, such as lifestyle and apparent ability to pay extravagant expenditures, in determining approximate actual income. At one point during the trial, Appellee remarked that she should be awarded the marital residence because she could afford the $930.00 monthly mortgage payment, despite her claimed gross income of only $17,000.00 per year, whereas Appellant could not afford it, despite his gross income of $37,000.00 per year. In a divorce case, the trial judge is the fact-finder with the authority to weigh the evidence and observe and consider the demeanor of the parties. I am unable to conclude that the trial judge’s finding that Appellee has, “at a minimum,” an income equal to that of Appellant was either clearly erroneous or an abuse of discretion. CR 52.01; Heltsley v. Heltsley, Ky., 242 S.W.2d 973, 974 (1951); cf. Perrine v. Christine, Ky., 833 S.W.2d 825, 827 (1992).
II. NONMARITAL INTEREST IN MARITAL RESIDENCE.
The parties purchased the property at 4004 Stony Brook Drive in November 1991. The purchase was accomplished by payment of $90,307.00 borrowed from Bankers Mortgage Corp. and $6,188.00 in cash traceable to Appellant’s nonmarital Individual Retirement Account (IRA). The majority opinion apparently concludes sub silentio that the $6,188.00 payment was applied to closing costs and did not serve to increase the equity value of the property. The closing statement reflects that the closing costs were $6,902.83. However, it is clear from both Appellant’s discovery deposition testimony and his testimony at trial that a down payment was made prior to the closing, and his testimony that $6,188.00 of this payment was made from funds withdrawn from his non-marital IRA is unrefuted. (Even if the $6,188.00 had been applied only to closing costs, the result should be the same. The property could not have been purchased without that money. Under the “investment” or “source of funds” formula for calculating the parties’ respective marital and nonmarital interests, all sums necessarily expended for the purchase or improvement of the property in question are factored into the equation. Travis v. Travis, Ky., 59 S.W.3d 904, 918-19 (2001) (Cooper, J., dissenting).)
Bankers subsequently sold the mortgage to Fleet Mortgage Co. and the parties thereafter made monthly mortgage payments to Fleet, reducing the mortgage principal to $87,996.61 as of November 1993. In November 1993, the parties refinanced the loan with a new mortgage from Inland Mortgage Corp. at a reduced rate of interest. To obtain the new mortgage, the parties were required to pay Inland the sum of $8,577.61, of which $6,294.61 was applied to the loan balance, immediately reducing that balance from $87,996.61 to $81,702.00. The remaining $2,283.00 was applied to closing costs. All of this money was also traced to Appellant’s nonmarital IRA. Thus, if the “investment” or “source of funds” formula is used, Appellant’s nonmarital contribution (nmc) to the Stony Brook Drive residence was $14,765.61.
*788$ 6,188.00 — down payment, November 1991
+ 8,577.61 — costs and reduction of principal, November 1993
$ 14,765.61 — nmc
Even if the Brandenburg formula is applied,1 Appellant’s nonmarital contribution was $12,482.61.
$ 6,188.00 — down payment, November 1991
+ 6,294.61 — applied to principal, November 1993
$ 12,482.61 —■ nmc
By June 3, 1996, the date of divorce, the parties had made sufficient additional monthly payments to Inland to reduce the mortgage balance to $73,128.00. Thus, per Brandenburg, the marital contribution (me) was $10,885.00.2
$ 90,307.00 — original mortgage balance, November 1991
- 87,996.00 — mortgage balance, November 1993
$ 2,311.00 — me, equity created, November 1991-November 1993
$ 81,702.00 — refinanced mortgage balance, November 1993
- 73,128.00 — mortgage balance, June 3,1996
$ 8,574.00 — me, equity created after November 1993
$ 2,311,00 — me, November 1991-November 1993
— 8,574.00 — me, November 1993-June 3,1996
$ 10,885.00 — total me
Per Brandenburg, the total contribution (tc) is the sum of the marital (me) and nonmarital (nmc) contributions.
$ 10,885.00 — me
+ 12,482,61 — nmc
$ 23,367.61 — tc
The appraised value of the property on June 3, 1996, was $103,000.00. Thus, as found by the trial judge, the equity value (e) of the property was $29,872.00.
$ 103,000.00 — appraised value
— 73,128.00 — mortgage balance $ 29,872.00 — equity (e)
*789Applying the Brandenburg formula, Ap- 1996, was $15,951.65 and the marital inter-pellant’s nonmarital interest (nmi) in the est (mi) was $13,920.35. equity value of the property as of June 3,
$ 12,482.61(nmc) = 53.4% x $29,872.00(e) = $15,951.65(nmi).
$ 23,367.61(tc)
$ 10,885.00(mc) = 46.6% x $29,872.00(e) = $13,920.35(mi).
$23,367.61(tc)
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Accordingly, I would reverse the Court of Appeals on both issues. I would reinstate the judgment of the trial court with respect to child support but would remand the property division to the trial court with directions to award Appellant his $15,951.65 nonmarital interest in the Stony Brook Drive property and amend the division of marital property accordingly. (The Court of Appeals previously ordered a remand for recalculation of Appellee’s non-marital interest in the property located at 1350 Vim Drive and that issue has not been raised on discretionary review. The majority opinion of this Court orders a remand for recalculation of Appellant’s nonmarital interest in the Stony Brook Drive property but erroneously fails to direct the trial court to credit him with the nonmarital contribution he made to that property at the time of its purchase in November 1991.)
JOHNSTONE, J., joins this opinion, concurring in part and dissenting in part.
LAMBERT, C.J., joins this opinion only as to Part I.

. Brandenburg v. Brandenburg, Ky.App., 617 S.W.2d 871 (1981).

. The "investment” or "source of funds” approach cannot be used in this case because the trial record does not contain sufficient information to determine the amount of actual mortgage payments made by the parties prior to June 3, 1996, the date of divorce and effective date of the property division. Appel-lee argued at trial that she should be credited with all of the mortgage reduction because all of the monthly payments were made with income from her nonmarital rental properties. However, income from nonmarital property that is produced during the marriage is marital in nature. Dotson v. Dotson, Ky., 864 S.W.2d 900, 902 (1993); Marcum v. Mar-cum, Ky., 779 S.W.2d 209, 210-11 (1989); Sousley v. Sousley, Ky., 614 S.W.2d 942, 944 (1981).