Court Opinion

ID: 4570693
Source: CourtListenerOpinion
Date Created: 2020-09-29 16:04:29.303566+00
Date Added: 2024-06-11T13:30:40.113235
License: Public Domain

MEMORANDUM DECISION
      Pursuant to Ind. Appellate Rule 65(D),
      this Memorandum Decision shall not be                                        FILED
      regarded as precedent or cited before any                                Sep 29 2020, 9:40 am

      court except for the purpose of establishing                                 CLERK
                                                                               Indiana Supreme Court
      the defense of res judicata, collateral                                     Court of Appeals
                                                                                    and Tax Court
      estoppel, or the law of the case.

      ATTORNEY FOR APPELLANT                                   ATTORNEY FOR APPELLEE
      Cynthia Phillips Smith                                   Jon P. McCarty
      Law Office of Cynthia P. Smith                           Covington, Indiana
      Lafayette, Indiana

                                                IN THE
          COURT OF APPEALS OF INDIANA

      Brian A. Hill,                                           September 29, 2020
      Appellant-Petitioner,                                    Court of Appeals Case No.
                                                               19A-DR-2831
              v.                                               Appeal from the Tippecanoe
                                                               Superior Court
      Annette Hill,                                            The Honorable Steven P. Meyer,
      Appellee-Respondent                                      Judge
                                                               Trial Court Cause No.
                                                               79D02-1609-DR-544

      May, Judge.

[1]   Brian A. Hill (“Husband”) appeals the trial court’s final decree of dissolution.

      He raises one issue on appeal, which is whether the trial court erred in finding

      that monies Husband’s mother, Betty Hill (“Husband’s Mother”), gave to

      Husband and Annette Hill (“Wife”) were gifts rather than loans. We affirm.

      Court of Appeals of Indiana | Memorandum Decision 19A-DR-2831 | September 29, 2020               Page 1 of 10
                            Facts and Procedural History
[2]   Husband and Wife lived together at 2023 Eagle Drive, Battle Ground, Indiana

      (“Marital Residence”) from early 2000 until their date of separation in June

      2016. Husband bought the Marital Residence before the marriage for

      approximately $67,900, and Husband and Wife moved into the house at the

      time of purchase. MNC Mortgage lent Husband $54,300 so that he could

      purchase the house, and Husband’s Mother gifted Husband cash to cover the

      down payment on the Marital Residence. On March 22, 2001, Husband

      obtained a home equity loan from Lafayette Savings Bank for $15,000 to build

      a garage.

[3]   Husband and Wife married on July 7, 2001. They eventually ran into trouble

      making their mortgage payments, and Husband’s Mother made the mortgage

      payments for them. Husband’s Mother also helped the couple purchase

      vehicles, pay their utility bills, and cover other expenses. Husband’s Mother

      used a ledger to document these payments. Husband and Wife occasionally

      reimbursed Husband’s Mother. The payments from Husband and Wife to

      Husband’s Mother were irregularly timed, for varying amounts, and did not

      include any interest.

[4]   Husband’s Mother paid off the second mortgage on the Marital Residence. In

      March 2015, Husband and Husband’s Mother decided to refinance the original

      mortgage, and they signed a promissory note to Beacon Credit Union for

      $56,000. Husband’s Mother offered her savings account as collateral securing

      Court of Appeals of Indiana | Memorandum Decision 19A-DR-2831 | September 29, 2020   Page 2 of 10
      the promissory note. When payments on the promissory note came due,

      Husband’s Mother would put money into Husband’s account, and Husband

      would then use that money to pay Beacon.

[5]   Husband filed for divorce on September 7, 2016. The court held the final

      dissolution hearing on June 27, 2019. At the final dissolution hearing,

      Husband’s Mother testified Husband and Wife owed her tens of thousands of

      dollars in reimbursement for the payments she made towards the mortgages on

      the Marital Residence and other miscellaneous expenses. Both Husband and

      Husband’s Mother testified that whatever balance remained at the time of death

      of Husband’s Mother would be deducted from Husband’s share of her estate.

[6]   The trial court entered a final decree of dissolution on September 4, 2019. In

      the decree, the court found:

              21. Marital Residence. The parties resided at 2023 Eagle Dr.,
              Battleground, IN 47920 during their marriage. (Hereafter
              referred to as “marital residence”). Husband originally
              purchased the marital residence in his name only on January 4,
              2000, before the marriage, for $67,900.00. (H’s Ex. J). He paid
              for the property with an MNC Mortgage for $54,300.00 and the
              balance of $13,600.00 was paid in cash (H’s Ex. I & J). The
              testimony provided indicates the cash was a gift from [Husband’s
              Mother]. On March 15, 2001, Husband took out a home equity
              loan with Lafayette Savings Bank for $15,000.00 to build a
              garage on the property. (H’s Ex. Q). The parties agree that at
              the time of the filing of this divorce, the value of the marital

      Court of Appeals of Indiana | Memorandum Decision 19A-DR-2831 | September 29, 2020   Page 3 of 10
                 residence was $133,000.00. (W’s Ex. 1). 1 The marital residence
                 remains in Husband’s name only. There is no existing debt on
                 the marital residence due to Husband’s [M]other paying off the
                 indebtedness which is discussed in further detail below. The
                 Court determines the value of the marital residence is
                 $133,000.00 less the cash gift to husband of $13,600 for a total
                 value of $119,400.00.

                 The marital residence is awarded to Husband with Wife having
                 no further interest thereon. Husband shall assume all property
                 taxes, maintenance, and insurance payments as they may come
                 due and hold Wife harmless thereon.

      (App. Vol. II at 19-20) (emphasis and footnote in original).

[7]   The dissolution decree analyzed whether the monies Husband’s Mother paid

      towards the mortgages and other expenses were gifts or debts of the marital

      estate. The trial court concluded the payments made by Husband’s Mother

      toward the mortgages were gifts. The court explained:

                 There was no agreement by Husband and Wife to make regular
                 scheduled payments with interest to Husband’s [M]other as
                 reimbursements for any payments [Husband’s M]other made on
                 the Beacon loans. . . . [Husband’s] Mother testified she expected
                 to be paid back ‘at some point’ but offered no further details on
                 repayment amounts, deadlines, interest due, or consequences for
                 non-payment. . . There also has been no evidence presented to
                 cause the Court to believe Husband’s [M]other would seek

      1
          The Appraisal did not include appliances.

      Court of Appeals of Indiana | Memorandum Decision 19A-DR-2831 | September 29, 2020   Page 4 of 10
        repayment from Husband for payments she made toward the
        mortgages.

(Id. at 24-25.) The court also found that $66,773.00 Husband’s Mother gave the

couple throughout the course of their marriage to cover vehicle repairs, medical

bills, and other miscellaneous expenses was a gift. The court found that while

the couple made sporadic payments to Husband’s Mother,

        [a]t no time in the 15 years that the Husband’s [M]other alleges
        she loaned the parties money did the [Husband’s M]other ever
        discuss with the parties any terms that would be required to
        create an enforceable loan or debt. There was no evidence of
        written agreement or promissory note, and no defined payment
        plan that established payment dates or accrued interest. Further,
        no demands were ever made by [Husband’s M]other for payment
        and no consequences imposed upon the parties for failure to
        make payments to [Husband’s M]other.

(Id. at 26.) The court also noted that while Husband’s Mother and Husband

testified any amount not repaid by the time of Husband’s Mother’s death would

be deducted from Husband’s inheritance, “neither Husband nor [Husband’s

M]other produced a will or estate plan or other such documents to show a

legally enforceable debt against mother’s estate.” (Id.) Given the significant

gifts Husband received from Husband’s Mother, the court concluded “the

presumption of an equal division has been rebutted in favor of Husband,

however slightly, to justify a division of the marital estate by awarding Husband

60% and Wife 40% of the marital estate.” (Id. at 28.)

Court of Appeals of Indiana | Memorandum Decision 19A-DR-2831 | September 29, 2020   Page 5 of 10
[8]   Husband filed a motion to correct error on October 3, 2019, arguing in part that

      the trial court erred in finding the monies Husband’s Mother gave the couple

      were gifts and not loans. The trial court held a hearing on Husband’s motion

      on November 5, 2019, and subsequently denied the motion. Husband then

      initiated the present appeal.

                                  Discussion and Decision
[9]   The trial court’s dissolution decree lists findings of fact and conclusions of law.

      Therefore, we apply a two-tiered standard of review. 2 Hernandez-Velazquez v.

      Hernandez, 136 N.E.3d 1130, 1136 (Ind. Ct. App. 2019).

               We determine first if the evidence supports the findings and
               second whether the findings support the judgment. The trial
               court’s findings and conclusions will be set aside only if clearly
               erroneous. We neither reweigh the evidence nor reassess witness
               credibility. Instead, we must accept the ultimate facts as stated
               by the trial court if there is evidence to sustain them.
Id. (internal citations omitted). If a party does not challenge the factual findings

      of the trial court, we must accept them as true. Madlem v. Arko, 592 N.E.2d
686, 687 (Ind. 1992).

      2
        Husband does not argue the trial court erred when it denied his motion to correct error, and our standard of
      review for an appeal of a motion to correct error directs us to consider the underlying order, here the final
      order of dissolution. See In re Paternity of H.H., 879 N.E.2d 1175, 1177 (Ind. Ct. App. 2008) (review of motion
      to correct error includes review of underlying order).

      Court of Appeals of Indiana | Memorandum Decision 19A-DR-2831 | September 29, 2020                Page 6 of 10
[10]   In a dissolution of marriage action, the court is required to divide all property of

       the parties, whether the property was owned by either spouse before the

       marriage, acquired be either spouse after the marriage but before separation, or

       acquired through the parties’ joint efforts. Ind. Code § 31-15-7-4. “Marital

       property includes both assets and liabilities.” McCord v. McCord, 852 N.E.2d 35,

       45 (Ind. Ct. App. 2006), trans. denied. Courts divide marital property pursuant

       to a two-step process. Thompson v. Thompson, 811 N.E.2d 888, 912 (Ind. Ct.

       App. 2004), reh’g denied, trans. denied. First, the trial court determines what

       property should be included in the marital estate. Id. “After determining what

       constitutes marital property, the trial court must then divide the marital

       property under the presumption that an equal split is just and reasonable.” Id.

       If the trial court deviates from this presumption, the court must state the reasons

       for doing so. Id. at 912-13. A party challenging the trial court’s division of

       marital debts and assets must overcome the strong presumption that the court

       considered and complied with the law. Id. at 913. We review a trial court’s

       division of marital property for an abuse of discretion. Smith v. Smith, 938
N.E.2d 857, 860 (Ind. Ct. App. 2010). An abuse of discretion occurs when the

       decision is clearly against the logic and effect of the facts and circumstances

       before the court. Id.

[11]   Husband argues the evidence does not support the trial court’s findings that the

       monies Husband’s Mother gave the couple were gifts rather than loans.

       Therefore, Husband contends, the court abused its discretion in dividing the

       marital estate and awarded Wife a “windfall” by excluding the alleged debts

       Court of Appeals of Indiana | Memorandum Decision 19A-DR-2831 | September 29, 2020   Page 7 of 10
       owed to Husband’s Mother. (Appellant’s Br. at 19.) In Crider v. Crider, the

       husband’s father “loaned” the husband large sums of money on several

       occasions, but the husband never made any payments on the loans. 15 N.E.3d
1042, 1049 (Ind. Ct. App. 2014), trans. denied. The husband argued the sums of

       money were liabilities of the marital estate. Id. at 1061. We explained “courts

       are not required to accept one party’s characterization of funds received from a

       third party as a debt as opposed to an outright gift.” Id. at 1062. We held that,

       even though the husband and his father executed a promissory note, the

       payments were gifts rather than loans because the husband never made any

       payments on the promissory notes despite the due dates having passed, there

       was no evidence the father requested payment of the note, and there was

       testimony that the purported loans were made as an estate planning device to

       reduce the size of the father’s estate-to-be. Id. Similarly, in Macher v. Macher,

       we held the trial court did not err in finding monies husband’s parents gave the

       couple to purchase a house were gifts rather than loans. 746 N.E.2d 120, 124

       (Ind. Ct. App. 2001). We noted there was a lack of documentation supporting

       that the payments were loans, there was no agreement regarding interest or

       repayment terms, and the couple had gone years without making a payment to

       husband’s parents. Id.

[12]   Just like in Crider and Macher, the arrangements surrounding the couple’s

       payments to Husband’s Mother were informal, and the payments were

       infrequent. Husband’s Mother allowed Husband and Wife to reimburse her at

       their convenience and in amounts of their choosing. Husband and Husband’s

       Court of Appeals of Indiana | Memorandum Decision 19A-DR-2831 | September 29, 2020   Page 8 of 10
       Mother did not execute an instrument that contained a payment plan or

       repayment schedule, nor did they discuss an interest rate or fees. Husband even

       testified, “My mom wasn’t doing it on loan. She was doing it to help and help

       her son, grandkids.” (Tr. Vol. II at 64.) While Husband signed the promissory

       note refinancing the first mortgage on the Marital Residence, Husband’s

       Mother holds the collateral and is the person actually making payments on the

       note. Even though both Husband and Husband’s Mother testified that

       Husband’s inheritance will be encumbered if Husband’s Mother is not

       reimbursed by the time of her death, Husband did not put forth any

       documentary evidence to support this assertion, such as Husband’s Mother’s

       will or estate plan. Thus, we hold the evidence supported the trial court’s

       finding that the monies Mother gave to the couple during their marriage were

       gifts rather than loans, and the trial court did not abuse its discretion by

       dividing the marital estate accordingly. See In re Marriage of Church, 424 N.E.2d
1078, 1081 (Ind. Ct. App. 1981) (holding money wife’s parents gave couple to

       purchase a fishing boat was a gift rather than a loan, and therefore, not a

       liability of the estate).

                                               Conclusion
[13]   The evidence supported the trial court’s finding that monies Husband’s Mother

       gave to Husband and Wife throughout the course of their marriage to cover

       housing and other expenses were gifts rather than loans. While Husband and

       Wife did make payments to Husband’s Mother to cover some of the expenses

       Court of Appeals of Indiana | Memorandum Decision 19A-DR-2831 | September 29, 2020   Page 9 of 10
       Husband’s Mother paid for them, the payments were made at the couple’s

       discretion. Further, while the Marital Residence was encumbered by a

       promissory note, Husband’s Mother was the one actually making payments on

       the promissory note, and she owned the collateral secured by the note.

       Accordingly, we affirm the trial court.

[14]   Affirmed.

       Robb, J., and Vaidik, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 19A-DR-2831 | September 29, 2020   Page 10 of 10