Court Opinion

ID: 4233320
Source: CourtListenerOpinion
Date Created: 2017-12-29 10:12:09.795555+00
Date Added: 2024-06-11T14:42:33.586785
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

KARA LEANN YOUNGBLOOD,                                               UNPUBLISHED
                                                                     December 28, 2017
               Plaintiff-Appellee,

v                                                                    No. 335227
                                                                     Berrien Circuit Court
ANDREW JOSEPH YOUNGBLOOD,                                            LC No. 15-003453-DM

               Defendant-Appellant.

Before: HOEKSTRA, P.J., and STEPHENS and SHAPIRO, JJ.

PER CURIAM.

        Defendant appeals the trial court’s judgment of divorce, claiming that the trial court’s
factual findings were erroneous, that the property division is inequitable, and the trial court’s
refusal to strike a confidential document from plaintiff’s pleadings constitutes an abuse of
discretion. We reverse in part and remand for further proceedings.

        The parties married in 1995 and had three children. Plaintiff first filed for divorce in
2009. At that time, defendant began living with his parents while plaintiff remained in the
parties’ former marital home with the children. While the initial divorce action was pending,
plaintiff’s father became ill and was hospitalized. During that time, defendant approached
plaintiff about reconciling. Plaintiff’s father died in February 2010 and in March 2010, plaintiff
dismissed the initial divorce action.

        Plaintiff’s father left plaintiff and her two siblings, jointly, a piece of property in Sodus
(the Sodus property) which is the subject of this dispute. The property consisted of an
uninhabited residence, a pole barn, and several buildings in various states of disrepair, and
approximately 40 acres of land. Plaintiff negotiated with her siblings for their interests in the
inherited property. In exchange for her sister’s interest, plaintiff agreed to pay her sister
$36,666.66. Plaintiff financed this buyout with a loan from defendant’s parents on which she
was the sole borrower. Payments were made on this loan while the parties were still married.
Plaintiff’s brother had the final one-third interest, which he transferred to plaintiff in exchange

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for defendant’s aging Chrysler minivan.1 After the negotiations with plaintiff’s siblings were
completed, the full title to the Sodus property was transferred to plaintiff in 2012.

       The parties sold their former marital home in late 2012, from which they netted about
$56,000. They used some of the proceeds from the sale to make improvements to the farmhouse
and the rest was used for household maintenance during the renovations. While the farmhouse
was being renovated, they lived in the pole barn on the property. Both parties also contributed
earnings to the renovation project. The renovations were completed in 2014, and the family
moved into the farmhouse. The parties disagreed about how much work they did on the
renovation, but both acknowledged that defendant did the bulk of the work, plaintiff and the
children assisted to some degree, and some work was performed by third parties.

        About one year after moving into the renovated farmhouse, plaintiff refiled for divorce.
The parties settled many of the issues but went to trial regarding defendant’s entitlement, if any,
to the property that plaintiff and her siblings inherited. The trial court made findings regarding
the value of the property, both the land and the residence, and its appreciation and neither party
challenge those findings. The trial court concluded that the Sodus property was not marital
property and that it was plaintiff’s separate property. And while it concluded that the active
appreciation of the property during the marriage was martial property, it only considered 65% of
the active appreciation for purposes of division.

       Defendant argues that the trial court’s conclusions were clearly erroneous and that the
Sodus property is marital property. We agree in part.2

        A “trial court’s first consideration when dividing property in divorce proceedings is the
determination of marital and separate assets.” Reeves v Reeves, 226 Mich. App. 490; 493-494;
575 NW2d 1 (1997). “The categorization of property as marital or separate, however, is not
always easily achieved,” in part because “there are occasions when property earned or acquired
during the marriage may be deemed separate property.” Cunningham v Cunningham, 289 Mich
App 195, 201; 795 NW2d 826 (2010). The fact that an asset is obtained as a separate asset does
not mean its status cannot change. “[S]eparate assets may lose their character as separate
property and transform into marital property if they are commingled with marital assets and
‘treated by the parties as marital property.’ ” Cunningham, 289 Mich. App. at 201 (citation

1
 The parties disagree as to whether the transfer from her brother should be categorized as a gift
or as a sale. Regardless, the parties agree that they gave the brother a Town and Country
Chrysler minivan in exchange for his share of the property. The minivan had over 150,000 miles
on it, was in defendant’s name, and was used primarily by plaintiff to transport the parties’
children.
2
  “In a divorce action, this Court reviews for clear error a trial court’s factual findings on the
division of marital property and whether a particular asset qualifies as marital or separate
property.” Hodge v Parks, 303 Mich. App. 552, 554; 844 NW2d 189 (2014). “Findings of fact
are clearly erroneous when this Court is left with the definite and firm conviction that a mistake
has been made.” Id. at 555 (quotation marks and citation omitted).

                                                -2-
omitted). This principle applies to inherited property. “[P]roperty received by a married person
as an inheritance, but kept separate from marital property, is deemed to be separate property not
subject to distribution.” Dart v Dart, 460 Mich. 573, 584-585; 597 NW2d 82 (1999) (emphasis
added). “The mere fact that property may be held jointly or individually is not necessarily
dispositive of whether the property is classified as separate or marital.” Cunningham, 289 Mich
App at 201-202. Ultimately, “[t]he actions and course of conduct taken by the parties are the
clearest indicia of whether property is treated or considered as marital, rather than separate,
property.” Id. at 209 (emphasis added).

        We conclude that the trial court erred in concluding that the two-thirds share of the Sodus
property obtained from plaintiff’s siblings is plaintiff’s separate property. Plaintiff inherited a
one-third interest in the property. The other two-thirds, though part of her father’s estate, was
not bequeathed to her but to her siblings, and each of those shares were obtained during the
marriage.

        Plaintiff points out that she paid $36,666.66 for her sister’s share, and a promissory note3
was executed, which bore only plaintiff’s name as the debtor. The balance on the loan at the
time of trial was $30,000. According to plaintiff, $1,000 was paid from her student loan using
her student loan money. At least some of the money used to make the rest of the loan payments
came from the proceeds of the former marital home, and several payments were made at times
that plaintiff was not working. Aside from plaintiff’s student loan money used for part of the
payment, there is no documentary evidence that the remaining funds used to make payments
were separate property. Thus, the evidence demonstrated that plaintiff paid at least some of the
debt using marital funds. Woodington v Shokoohi, 288 Mich. App. 352, 364; 792 NW2d 63
(2010) (“Generally, assets earned by a spouse during the marriage, whether they are received
during the existence of the marriage or after the judgment of divorce, are properly considered
part of the marital estate.”).

        The one-third interest in the property formerly owned by plaintiff’s brother is also marital
property. The parties testified that they agreed to give plaintiff’s brother a minivan, titled in
defendant’s name but clearly marital property, in exchange for his “gifting” his share of the
property.4 The parties both testified that they jointly participated in and agreed to the transaction
before the transfer was made. Plaintiff testified that she was unsure of the value of the minivan,
but that she thought it was about $4,000 and so, the trial court erred in assigning no value to the
minivan.

         Although plaintiff testified that she refused defendant’s request to add his name to the
title in 2013 and the title to the property remained in plaintiff’s name alone, it is not dispositive
of whether the property is her separate property. Cunningham, 289 Mich. App. at 201-202.
Rather, we look to the parties’ actions and conduct. Id. at 209. The home on the property was

3
    Plaintiff borrowed the money from defendant’s parents.
4
  Defendant testified that plaintiff agreed to let her brother have a motorcycle, belonging to
plaintiff’s father, as to which plaintiff and her brother had an interest.

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completely rehabilitated, improved, and updated using funds from the sale of the prior marital
home. Further, defendant did the lion’s share of the work himself and received no payment.5
Plaintiff testified that when she undertook the buyout from her siblings and the subsequent
renovations, her intention for the property was that it “was going to be our family home. And
that it would be something that I passed along to our three sons.”

        In sum we conclude that the two-thirds interest obtained from plaintiff’s siblings was
marital property and that the $36,666.66 loan was a marital debt.

        We reach a different conclusion, however, as to the one-third interest in the property
inherited by plaintiff from her father. Despite the comingling described above, we are not left
with a definite and firm conviction that the trial court was mistaken in finding that this property,
directly inherited, should be classified as separate, particularly given the relatively brief time that
that the parties lived together following the renovation.6

        The trial court was also correct in stating that all active appreciation in the Sodus
property was marital property. However, it did not apply that conclusion when determining the
value of the appreciation. Rather than including 100% of the appreciation in defining the total
value of the marital property, the court considered only 65% of the appreciation based on its
conclusion that defendant did 65% of the work on the house. This was improper. One hundred
percent is marital property regardless of who did what work and whether the underlying property
is marital or separate. McNamara v Horner, 249 Mich. App. 177, 184; 642 NW2d 385 (2002)
(holding that the appreciation of separate property is included in the marital estate if both parties
contribute to the gain in value).

5
   There was disputed testimony as to whether defendant’s name was going to be added to the
title. Defendant testified that during the renovations, plaintiff assured him on several occasions
that she would put his name on the deed. In her testimony, plaintiff admitted that she told
defendant that she would add his name to the deed “at one point [and] it was [her] desire to reach
a place in the relationship that [she] felt that could be done.”
6
  Plaintiff argues that the parties entered into a postnuptial agreement that defendant would not
receive any of her inheritance in the event of divorce. However, plaintiff did not inherit the
entire property from her father; her inheritance consists of only one-third of the property. While
the trial court found that there was no postnuptial agreement, the question whether an agreement
existed is moot because any such agreement would apply only to plaintiff’s one-third share
which we agree was separate property. Therefore the analysis is limited only to the one-third of
the property inherited by plaintiff. For the same reason, we conclude that defendant’s argument
regarding admission of e-mails between the two attorneys is also moot. “[T]his Court does not
reach moot questions or declare principles or rules of law that have no practical legal effect in
the case before” it. Federated Publications, Inc v Lansing, 467 Mich. 98, 112; 649 NW2d 383
(2002), abrogated on other grounds by Herald Co, Inc v East Mich Univ Bd of Regents, 475
Mich. 463; 719 NW2d 19 (2006).

                                                 -4-
        Defendant also challenges the trial court’s ruling as to when plaintiff is to pay defendant
for his share of the marital property. The trial court stated that the amount shall be paid to
defendant7 upon the first of these events to occur:

                 1. Sale of the property

                 2. The youngest child’s graduation from high school or reaching the age of
                    18, whichever comes later; 8

                 3. Plaintiff’s cohabitation with a romantic partner; or

                 4. Plaintiff’s remarriage.

Defendant argues that the trial court’s decision to postpone payment of $25,000 until the
happening of one of these events is an inequitable division of property. We agree.

       The objective of distributing marital assets “is to reach an equitable distribution of
property in light of all the circumstances.” Gates v Gates, 256 Mich. App. 420, 423; 664 NW2d
231 (2003). To reach an equitable division of the marital property, the trial court should
consider:

         (1) duration of the marriage, (2) contributions of the parties to the marital estate,
         (3) age of the parties, (4) health of the parties, (5) life status of the parties, (6)
         necessities and circumstances of the parties, (7) earning abilities of the parties, (8)
         past relations and conduct of the parties, and (9) general principles of equity. . . .
         [Sparks v Sparks, 440 Mich. 141, 159-160; 485 NW2d 893 (1992).]

The trial court has “wide discretion in adjusting the property rights of the parties to a divorce.”
Kendall v Kendall, 106 Mich. App. 240, 244; 307 NW2d 457 (1981). “The test to be applied on
appeal is whether the division of property is fair and equitable under all the circumstances.” Id.
The ruling should be affirmed unless the appellate court is left with the firm conviction that the
division was inequitable.” Sparks, 440 Mich. at 151-152.
         The trial court did not refer to the Sparks factors, the needs of the parties or otherwise
state its reasons for requiring such a substantial delay in payment. We conclude that ordering
this delay, without an articulated basis, was an abuse of discretion. At time of the divorce,
plaintiff had obtained her master’s degree in clinical health counselling and was working part
time as a counselor for two institutions, making $18.60 per hour at one and $25 per hour at the
other. Plaintiff testified that she had increased the number of the hours she works before the
dissolution of the marriage, and that she intended to increase it after the divorce was finalized.
Defendant is a licensed builder and had previously worked as an engineer before he lost his job

7
  The court gave defendant a judicial lien on the property to be discharged upon satisfaction of
the judgment.
8
    At the time judgment of divorce was entered, the parties’ youngest child was 12 years old.

                                                  -5-
in 2013. He testified that he had been residing with his parents since the parties’ separation and
did not have the resources to either purchase or rent his own dwelling. Whether these assertions
are in fact true, and whether there are other factors relevant to the parties’ needs, should be
determined by the trial court on remand as part of a Sparks analysis. When dividing property,
the trial court must make specific findings of fact regarding factors relevant to “the needs of the
parties,” Sparks, 440 Mich. at 159.

        We reverse the trial court’s decision that the entire Sodus property is plaintiff’s separate
property. On remand, the trial court should consider two-thirds of the Sodus property as a
marital asset and one-third as separate property. The loan obtained to purchase the one-third
interest from defendant’s sister shall be considered a marital debt. The full amount of the active
appreciation of the Sodus property during the marriage is a marital asset. On remand, the court
should conduct a Sparks analysis to determine an equitable division of the marital assets and
debts. We also vacate the court’s order regarding the conditions and timing of payment which
should also be based upon the court’s findings pursuant to the Sparks analysis.

                                                             /s/ Cynthia Diane Stephens
                                                             /s/ Douglas B. Shapiro

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