Court Opinion

ID: 6336291
Source: CourtListenerOpinion
Date Created: 2022-04-29 14:06:06.847963+00
Date Added: 2024-06-11T09:24:10.306624
License: Public Domain

RENDERED: APRIL 22, 2022; 10:00 A.M.
                           TO BE PUBLISHED

                 Commonwealth of Kentucky
                           Court of Appeals

                               NO. 2020-CA-0978-MR

WADE B. LEWIS                                                           APPELLANT

                  APPEAL FROM OLDHAM CIRCUIT COURT
v.               HONORABLE DOREEN S. GOODWIN, JUDGE
                         ACTION NO. 13-CI-00247

LAURA R. FULKERSON                                                        APPELLEE

                                     OPINION
                                    AFFIRMING

                                    ** ** ** ** **

BEFORE: LAMBERT, MCNEILL, AND TAYLOR, JUDGES.

MCNEILL, JUDGE: This case involves a property division dispute between

former spouses Wade B. Lewis (hereafter “Wade”), and Laura R. Fulkerson

(hereafter “Laura”). It has an appellate record that is necessary to cite at length in

order to appropriately convey the factual and procedural foundation memorialized

in a published decision issued by a previous panel of this Court:

                   Wade and Laura were married on February 13,
             2008, and have three children of the marriage. After
multiple separations and failed attempts to reconcile,
Laura filed a Petition for Dissolution of Marriage on
April 3, 2013, and the family court entered a limited
decree of dissolution on May 14, 2014. The facts
surrounding Wade's business ventures, as well as the
corpus of a trust titled the “Laura Renee Fulkerson Trust
[LRF Trust],” form the fundamental disputes in this
case.

      Wade, along with two business partners Silas
Boyle and Chris Page, started Maximum ASP in August
2000. The company was in the business of information
technology and built and hosted a “cloud technology”
platform for clients. . . .

....

       In 2010, Wade and Boyle were approached with an
offer to purchase Maximum ASP, Maximum COLO, and
Maximum Holdings by Cbeyond Communications. The
purchase price was $36,000,000 less the value of certain
debts of the business. Wade received $7,413,687 as the
net portion for his shares of the three Maximum
businesses. Following the sale, Wade invested in a new
business with Boyle, Automobile Storage Solutions,
LLC.

....

       During the parties’ marriage, they established two
transfer on death trusts for themselves. Wade’s trust was
created in 2009 and Laura’s aforementioned LRF Trust
was created in 2011. The sum of $1,700,000 from Wade
and Laura’s joint bank account with rights of
survivorship was deposited into each trust. The original
source of these funds was the proceeds from the sale of
Maximum ASP to Cbeyond Communications. The
parties agree regarding these facts, however, the intent
for establishing the LRF Trust is adamantly contested. It
is Laura’s position that the trust was a gift given to her to

                             -2-
             control exclusively, which she did. She further argues
             that Wade told her on numerous occasions that she could
             spend the money in the trust any way she wanted and that
             they would each control the contents of their own trusts.
             Conversely, Wade argues the trust was established purely
             for estate planning purposes to avoid future tax
             implications and that he never advised Laura to spend the
             money as she saw fit.

                    After the parties’ final separation, the family court
             entered a limited decree of dissolution of marriage and
             orders detailing the temporary child support and
             parenting schedule. The parties advised the family court
             that the issues remaining in need of final adjudication
             were property division, allocation of debt, custody,
             parenting time, and child support.

             ....

             . . . The family court’s determinations, relevant to the
             instant appeal, were the following: (1) 100% of the
             proceeds from the sale of Maximum ASP – and any
             property purchased with those proceeds that was not
             deemed an outright gift to Laura – is Wade’s nonmarital
             property; (2) the LRF Trust was a gift to Laura from
             Wade and, therefore, is Laura’s non-marital
             property; and (3) due to the equal time-share schedule
             and considerable financial resources of both parties,
             neither shall pay child support to the other and they both
             shall equally split all expenses concerning the three
             minor children. Wade then filed a post judgment motion
             pursuant to CR 59.05, which was subsequently denied.

             Wade and Laura both appeal from this final order.

Lewis v. Fulkerson, 555 S.W.3d 432, 435-37 (Ky. App. 2017) (footnotes omitted)

(emphasis added) (hereafter Lewis I). In its analysis, the Court observed that “[t]he

only fact witnesses who testified regarding the key element in Laura’s gift claim

                                          -3-
and Wade’s intent in funding the LRF Trust were Wade and Laura.” Id. at 440.

However, the Court further observed that the attorney who drafted the LFR Trust,

Ed Lowry, “would have added a third fact witness to this issue. Indeed, attorney

Lowry is the only person, other than the parties, who would have first-hand

knowledge regarding Wade’s intent.” Id. Ultimately, the Court held that the

family court erred by barring attorney Lowry from testifying. Id. at 441. In so

holding, the Court specifically determined that “the exclusion of attorney Lowry

deprived Wade’s right to call a third fact witness regarding an issue where the only

previous fact witnesses were the parties with opposing views of Wade’s donative

intent.” Id. Accordingly, the Court affirmed the family court’s order in part,

vacated in part, and remanded for further proceedings. Id.

             On remand, the case was assigned to a different family court judge

due to the retirement of the previous judge. The family court held an evidentiary

hearing for what appears to be the exclusive purpose of obtaining Lowry’s

testimony. In an order entered on August 4, 2020, the court held that “[Wade]

made a gift to [Laura] in the amount of $1,700,000. . . . [T]his asset is [Laura’s]

non-marital asset and shall be awarded to her as a gift.” Wade appeals to this

Court as a matter of right, wherein he argues that the family court failed to apply

the clear and convincing standard to Laura’s gift claim, and that the court clearly

                                         -4-
erred in ruling in Laura’s favor. Having considered the record and the law, we

disagree.

                                    ANALYSIS

             In Sexton v. Sexton, 125 S.W.3d 258 (Ky. 2004), our Supreme Court

addressed the legal elements applicable to cases involving gifts between spouses:

             [T]he Court of Appeals set forth four (4) factors that trial
             courts should consider in determining if a transfer was a
             gift and thus a spouse’s nonmarital property: one, “the
             source of the money with which the ‘gift’ was
             purchased,” two, “the intent of the donor at that time as
             to intended use of the property,” three, “status of the
             marriage relationship at the time of the transfer,” and
             four, “whether there was any valid agreement that the
             transferred property was to be excluded from the marital
             property.” . . . Clearly, the donor’s intent is the primary
             factor in determining whether a transfer of property is a
             gift, and we likewise hold that the donor’s intent is also
             the primary factor in determining whether a gift is made
             jointly to spouses or individually to one spouse. The
             donor’s testimony is highly relevant of the donor’s intent;
             however, the intention of the donor may not only be
             “expressed in words, actions, or a combination thereof,”
             but “may be inferred from the surrounding facts and
             circumstances, including the relationship of the
             parties[,]” as well as “the conduct of the parties[.]”

Id. at 268-69 (footnotes and citations omitted). See also Hunter v. Hunter, 127

S.W.3d 656, 660 (Ky. App. 2003) (“Whether property is considered a gift for

purposes of a divorce proceeding is a factual issue subject to the clearly erroneous

standard of review.”). Furthermore, “[l]ike other nonmarital claimants of property

acquired during marriage, a party claiming that property is nonmarital by reason of

                                         -5-
the gift exception has the burden to prove it.” Sexton, 125 S.W.3d at 267 (footnote

omitted).

               The issue before the family court on remand was whether the

$1,700,000 LRF Trust was a gift from Wade to Laura, or if it was for another

purpose, i.e., estate planning, etc. In our review of the family court’s decision

finding it to be a gift, we cannot ignore the emphasis that the Court in Lewis I

placed on the necessity of Lowry’s testimony. On appeal, Wade describes this

evidence as “the evidentiary tiebreaker.” However, this does not negate the

consideration of any additional relevant evidence considered throughout the

underlying litigation.1

               To be clear, the Final Decree of Dissolution that was the subject of the

appeal in Lewis I was entered on July 9, 2015. Therein, the family court discussed

all issues remaining at that time including custody, property, etc. It totaled forty-

six pages in length and was entered after a two day trial. In concluding, inter alia,

that the LRF Trust was a gift and therefore, Laura’s nonmarital property, the court

considered the trust documents, the testimony of the parties, and the parties’ expert

1
  We realize that Lewis I provided that “[i]f attorney Lowry testified that Wade deposited his
nonmartial [property] . . . in the two separate trusts purely for estate planning purposes, there is a
substantial possibility the outcome would have been different.” Lewis I, 555 S.W.3d at 440
(emphasis added). However, we are not bound by this statement alone. To be clear, Laura has
the affirmative burden of proving a gift. Wade need neither disprove a gift nor prove that the
underlying transaction at issue be for purely estate planning purposes, although that may be
sufficient to find in his favor. Nevertheless, we do not believe that this distinction materially
affects the outcome here.

                                                 -6-
witness testimony. In its August 4, 2020 order that is the subject of the present

appeal, the family court restated select portions of its findings previously

memorialized in the Final Decree of Dissolution. And having now considered

Lowry’s testimony on remand pursuant to the dictates of Lewis I, the court entered

the following findings:

             There is sufficient language in the LRF Trust to allow
             this Court to conclude that [Wade] intended to gift [] the
             corpus of the LRF Trust to [Laura]. [Wade] was well
             aware that his marriage to [Laura] was on less than solid
             ground. Additionally he was aware that [Laura] felt
             financially insecure and her insecurity was a reason for
             her staying in the marriage. [Wade] has established a
             pattern of making “peace offerings” to [Laura] in the
             form of valuable assets. Lastly, and of great importance
             to this Court, [Wade] could have used a number of other
             documents and tools to transfer money to [Laura] upon
             his death for her benefit. . . .

                   Nothing in Mr. Lowry’s testimony alters the prior
             conclusion of this Court. Although he stated his
             drawings appear to be representative of estate planning,
             they did not accurately reflect the final documents
             executed. . . .

                    The bottom line is that attorney Lowry could not
             shed any light on the actual intent of the parties at the
             time the LRF Trust was created. Although he mapped
             out an estate plan, its design was not followed by the
             parties. Laura retained sole control over the LRF Trust
             both as settlor and trustee.

Although the family court’s order and findings did not expressly cite to Sexton, we

believe that the relevant factors were adequately considered and addressed. More

                                          -7-
precisely, Sexton, et al., were specifically cited in the court’s original Final Decree

of Dissolution. And contrary to Wade’s argument on appeal, we do not believe

that the court’s findings were clearly erroneous, i.e., that they were not supported

by substantial evidence. Moore v. Asente, 110 S.W.3d 336, 354 (Ky. 2003).

Substantial evidence is evidence 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.” Id. (internal quotation marks and footnotes omitted). See also

Shaida v. Shaida, Nos. 2019-CA-0688-ME and 2019-CA-0745-ME, 2021 WL

2753950, at *6 (Ky. App. Jul. 2, 2021), discretionary review denied (Oct. 20,

2021) (holding that, although the family court was presented with conflicting

evidence concerning the existence of a gift transfer of real estate, the Court had “no

difficulty in concluding that the family court acted within its discretion in making

this finding and its ultimate classification of the property was correct as a matter of

law.”).

             In the present case, it is abundantly clear from our review of the

record on appeal that there is no deficit of nuance and complexity here. Indeed, we

cannot overly stress that in light of our stringent standard of review, two different

trial judges have considered the evidence and held in Laura’s favor. Moreover,

this Court in Lewis I has essentially indicated that the present issue is a “close

                                          -8-
call.” Therefore, although reasonable minds may differ given the unique

circumstances of this case, we cannot conclude that the family court clearly erred.

                                   CONCLUSION

      For the foregoing reasons, we hereby affirm the Oldham Family Court’s

order entered on August 4, 2020.

             ALL CONCUR.

BRIEFS FOR APPELLANT:                     BRIEF FOR APPELLEE:

William D. Tingley                        Justin R. Key
Ft. Mitchell, Kentucky                    Jeffersonville, Indiana

                                        -9-