Court Opinion

ID: 4706371
Source: CourtListenerOpinion
Date Created: 2021-07-26 15:02:49.804223+00
Date Added: 2024-06-11T08:06:36.422942
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF DELAWARE

LAURA M. ALLEN,                         §
                                        §      No. 363, 2020
      Respondent-Below,                 §
      Appellant,                        §
                                        §      Court Below: Family Court
      v.                                §      of the State of Delaware
                                        §
CHARLENE L. SCOTT,                      §
                                        §      C.A. No. CS19-01259
      Petitioner-Below,                 §               19-05127
      Appellee.                         §
                                        §

                              Submitted:    June 30, 2021
                              Decided:      July 26, 2021

Before SEITZ, Chief Justice; VALIHURA, and TRAYNOR, Justices.

Upon appeal from the Family Court. REVERSED and REMANDED.

Adam D. Windett, Esquire, Hopkins & Windett, LLC, Dover, Delaware for Appellant.

Julianne E. Murray, Esquire, Murray, Phillips & Gay, Georgetown, Delaware for Appellee.

VALIHURA, Justice:
       Appellant Laura M. Allen appeals a September 30, 2020 Family Court Ancillary

Order determining the division of property following her divorce from Appellee, Charlene

L. Scott, on September 9, 2019.1 Allen asserts that the trial court abused its discretion in

designating funds used to purchase real property in Colorado as “marital” because the

parties’ Ancillary Pretrial Stipulation described the funds as “premarital.” Allen further

contends that the Family Court abused its discretion in dividing certain pieces of marital

property in the marital estate 60/40 in Scott’s favor contending that the court’s decision

was not based on a logical or orderly process and was tainted by the court’s error on the

first issue. Scott argues that no abuse of discretion occurred, and in any case, that Allen

waived the second issue by failing to raise it in her Motion for Reargument.

       We hold that because both parties stated in the Ancillary Pretrial Stipulation that the

funds used to purchase the Colorado property were premarital in character, and because

neither party moved to amend the stipulation to revise that characterization until after the

evidentiary record had closed, there was no triable issue on that question. We, therefore,

REVERSE the Family Court and REMAND for consideration of Scott’s alternative

contention that the down payment for the Colorado property was a gift unto the marriage.

       As to Allen’s second issue, we do not find any abuse of discretion in the Family

Court’s distribution of the remaining marital property, but the Family Court retains the

discretion on remand to adjust that distribution to the extent its decision on remand

regarding the Colorado down payment funds affects the other 11 Del. C. § 1315 factors.

1
  S. v. A., No. CS19-01259, at 1 (Del. Fam. Sept. 30, 2020) [hereinafter “Fam. Ct. Order at __”].
Pseudonyms are used in accordance with Supr. Ct. R. 7(d).

                                               2
                  I.   RELEVANT FACTS AND PROCEDURAL BACKGROUND

           A. The Parties’ Marriage and Separation

           Scott and Allen were married on May 3, 2017, and separated during the second week

of February 2019.2 The parties were in a relationship for approximately eleven years prior

to the marriage.3 They moved to Colorado in late 2018 or early 2019 when Allen accepted

a position as medical director of a women’s medical facility, and they purchased a home

in Colorado for about $740,000.00 to $750,000.00.4 At that time, Allen’s salary was

$360,000.00, and she paid the down payment for this home in the amount of $150,719.00

and listed both parties’ names on the home’s title.5

           After approximately three weeks of living in the Colorado home, the parties moved

back to Delaware. They sold the Colorado home for $715,000.00 in June 2019 at a loss

and obtained the $72,388.78 in proceeds at issue.

           B. The Proceedings Below

           Scott filed a Petition for Divorce on February 18, 2019, resulting in a Final Decree

of Divorce on September 9, 2019 that reserved jurisdiction over ancillary issues, including

property division. The parties submitted an Ancillary Pretrial Stipulation (“Stipulation”)

on April 23, 2020, which the court entered as an Order the following day.6 In the

2
  Fam. Ct. Order at 1, n.1 (explaining that the parties dispute the actual date-of-separation but that
the exact date is not relevant to the ancillary matters).
3
    Id. at 3.
4
    Id. at 6.
5
    Id. at 6–7.
6
    App. to Opening Br. at A-23 [hereinafter “A-___”] (Ancillary Pretrial Stipulation).

                                                  3
Stipulation, both parties expressly stated that Allen used premarital funds to make the down

payment on the Colorado home.7 Although Scott expressly acknowledged that the funds

were premarital, she argued that the proceeds from the sale were marital and were subject

to division because the down payment was a gift unto the marriage. Specifically, Scott

stated that:

          This asset was voluntarily jointly titled notwithstanding that [Allen] made a
          downpayment [sic] of one hundred and fifty thousand, seven hundred and
          nineteen ($150,719) dollars, utilizing her premarital funds. This was a gift
          unto the parties’ marriage, thus this asset is marital in nature, subject to
          division by the Court. Recognizing that the downpayment [sic] on this house
          was made by the Respondent with otherwise non-marital funds, the Petitioner
          is seeking a fifty-fifty division of this asset, thus she will request fifty (50%)
          percent of the escrowed proceeds from the sale of this asset, with said net
          proceeds totalling [sic] seventy-two thousand, three hundred eighty-eight
          dollars and seventy-eight cents ($72,388.78).8

          Likewise, in the Stipulation Allen stated that “[i]t is undisputed that [Allen] made a

downpayment [sic] in the amount of $150,719.00 on the Colorado home using her

premarital funds.”9

          The Stipulation reflects the parties’ disagreement as to whether the down payment,

made using Allen’s premarital funds, was a gift unto the marriage. Scott stated:

          [Allen] gifted approximately one hundred and fifty thousand ($150,000)
          dollars to the marriage by virtue of the acquisition of a home in Colorado.
          The sales proceeds from the Colorado property, totalling [sic] approximately

7
    A-13 (Ancillary Pretrial Stipulation).
8
    Id. (emphasis and alterations added).
9
  Id. In her opening brief before this Court, Allen acknowledges that “the classification of the
funds was not specifically stipulated to in the agreement,” but she argues that “the intent of the
parties could not have been clearer.” Corr. Opening Br. at 15–16. We agree and the Family Court
did find that “the parties stipulated in the Pretrial Stipulation that [Allen] paid the down payment
of the parties’ Colorado home using premarital funds.” Fam. Ct. Order at 8.

                                                  4
           seventy-two thousand, three hundred and eighty ($72,380) dollars should be
           split equally between the parties, as the Colorado house was a gift unto the
           marriage by [Allen].10

           Allen countered by denying “that her premarital down payment on the Colorado

home was a ‘gift unto the marriage’ and seeks credit for same.”11

           At the June 23, 2020 hearing on the ancillary matters, Allen testified that she used

“private funds” from her “personal checking account” to pay the down payment on the

Colorado home. She did not specifically use the term “premarital” in her discussion of the

down payment.12 But there was also no further questioning as to the nature of the funds

during her cross-examination.13 In closing, Scott’s counsel, seizing on Allen’s use of the

terms “private funds” and “personal checking account,” argued that:

           “[T]here was no testimony nor documentation that showed where [the down
           payment] came from. We don’t know if those were premarital funds, we
           don’t know if those are marital funds. We don’t know because there was no
           documentation provided to the Court.”14

           Allen’s counsel responded that “clearly that money came out of her individual

account that was not part of the marital estate.”15

10
     Id. at A-21.
11
     Id.
12
     A-345 (Hearing Transcript).
13
     A-369–70.
14
     A-397.
15
     A-398.

                                                5
         As a result of Scott’s closing argument, both parties submitted letters to the Family

Court after the hearing addressing the nature of the funds.16 Allen’s letter referred to the

Stipulation and argued that Scott’s counsel had “confirmed said funds were premarital

during his recitation of the issues,” and that the issue was whether the funds were a “gift

unto the marriage.”17 Counsel for Scott responded that, because the two separate accounts

held by Allen during the marriage saw a combined marital loss of only $101,675.27, it was

“impossible” that the down payment had been made using only premarital funds.18 Scott

continued to assert, in the alternative, that the funds were a gift unto the marriage.19

         The Family Court held in its September 30, 2020 Ancillary Order that Allen’s use

of the terminology “separate account” rather than “premarital funds” constituted a material

change in the Stipulation which the parties had an affirmative duty to update.20 The Family

Court reasoned that just as the parties had corrected the Stipulation as to the date-of-

separation balance on a Wells Fargo bank account, Allen’s testimony “brought to the

16
   App. to Answering Br. at B-001–03 [hereinafter “B-___”] (Letter from Melissa Hopkins, Esq.
to Family Court & Letter from Thomas E. Gay, Esq. to Family Court).
17
  B-001. We note that during the recitation of the issues, Scott’s counsel stated that the “down
payment [was] made by [Allen],” and did not specifically address the marital or premarital
characterization of the funds. A-251 (Hearing Transcript).
18
  B-002. Allen held a separate Wells Fargo Checking Account with a date-of-marriage value of
$91,513.53 and a date-of-separation value of $99,259.34. Fam Ct. Op. at 13; A-16 (Ancillary
Pretrial Stipulation). Allen also held a separate Wells Fargo Savings Account with a date-of-
marriage value of $108,234.83 and a date-of-separation value of $6,559.56. Fam. Ct. Op. at 13.
19
     B-003 (Letter from Thomas E. Gay, Esq. to Family Court).
20
   Fam. Ct. Order at 9 (“The litigants are hereby bound in the ancillary proceedings by the
stipulations made above, absent a showing of good cause and amended Court Order and have an
affirmative duty to provide the Court with any material change in information.”) (emphasis added
by the Family Court) (quoting the Ancillary Pretrial Stipulation).

                                                6
attention of the Court” that “she made the down payment for the Colorado home using

funds in a separate account, rather than a premarital account.”21 Thus, it found “a material

change in information” occurred when Allen “testified that she used funds from a separate

account to make the down payment on the Colorado home, rather than using premarital

funds.”22 The court further found at the June 23, 2020 hearing that Allen “provided no

evidence to indicate that she paid the down payment of the parties’ Colorado home using

premarital funds.”23 Thus, the court concluded that the parties purchased the Colorado

home “using funds stemming from the capital from both parties’ employment.”24

Accordingly, the court held that the equity in the Colorado property was marital, and it

awarded Scott one-half of the proceeds from the property’s sale.

           In addition, the Family Court held that a 60/40 allocation of certain other pieces of

marital property was appropriate after considering the statutory factors in 13 Del. C.

§ 1513. The Family Court imputed Allen with an annual income of $350,000.00 despite

her assertion that she was earning $100,000.00 per year because it found that Allen had

made approximately $400,000.00 annually for thirteen years as a surgeon and that she had

voluntarily chosen to open her own medical practice instead of keeping her position in

Colorado. Allen opened her practice in November 2019 after taking out a commercial loan

of $341,000.00 and was taking a monthly income of $1,000.00. At the time of the Order,

21
     Id.
22
     Id.
23
     Id.
24
     Id.

                                                 7
Allen suffered from Crohn’s disease and was fifty years old; Scott was in “excellent health”

and was fifty-six years old. The Court imputed Scott, a physical therapist, with an annual

income of $105,000.00, which was equal to her stipulated current income and the highest

income she earned while residing in Delaware.25 Neither party requested alimony and both

parties contributed financially to the marriage and home.

         After the Family Court issued its Order, Allen filed a Motion for Reargument

Pursuant to Family Court Civil Rule 59(e) on October 15, 2020. 26 In the Motion, Allen

urged the Family Court to revise the Order to reflect that the down payment funds were

premarital, because “to hold otherwise results in a contradictory conclusion” in light of the

Family Court’s earlier Order accepting the Stipulation wherein the parties had agreed the

down payment funds were premarital.27 Allen argued further that she “was only put on

notice of [Scott’s] argument that the Colorado home down payment was a ‘gift unto the

marriage,’ not whether or not the funds were premarital in nature.”28 Allen contended that

“had the court amended the [Stipulation] to reflect that [Scott’s] position had changed

concerning the premarital nature of the Colorado down payment, she would have had an

25
   Id. at 5, 19. During the coronavirus pandemic, Scott was furloughed for six weeks, receiving
$900.00 per week in unemployment income, followed by two weeks of part-time work. The court
found that Scott is confident she will be able to remain at her current place of employment. Prior
to the marriage, Scott earned approximately $165,000.00 per year, but no evidence was presented
showing that she had employment opportunities in Delaware that would pay $165,000.00. After
the parties moved to Delaware in 2017 and before accepting her current position, Scott earned
approximately $20,000.00 to $24,000.00 per year in different part-time positions. Id. at 19.
26
     A-58–116 (Motion for Reargument).
27
     A-63.
28
     A-61.

                                                8
opportunity to present evidence countering this material change.”29 Allen further argued

that even if the down payment were construed as a gift unto the marriage and the proceeds

from the sale were still divided, the Family Court would likely assign her a higher

percentage of the marital distribution overall in light of this “extraordinary contribution”

to the marital estate.

          In her response to the Motion, Scott acknowledged that “the parties stipulated in the

[sic] prior to Trial that [Allen] paid the down payment on the parties’ Colorado home, using

premarital funds.”30 However, Scott stated that at the June 23, 2020 Hearing, Allen said

the funds had been paid out of a “separate account,” and that the court had properly found

Allen’s statement to be a material change that permitted the Stipulation to be amended at

trial.

          The Family Court denied the Motion because it found that Allen had failed to show

that the court had overlooked or misapprehended any fact or law affecting the outcome of

its prior decision.31

          C. The Parties’ Contentions on Appeal

          On October 30, 2020, Allen filed a Notice of Appeal in this Court from the Family

Court’s Order. Allen raises two issues. First, Allen argues that it was an abuse of

discretion to determine that the down payment for the purchase of the Colorado home

consisted of marital funds given the parties’ agreement to the contrary in the Stipulation.

29
     A-62 (alteration added).
30
     A-119 (alteration added) (Answer to Motion for Reargument).
31
     A-133–34 (Order Denying Reargument dated December 22, 2020).

                                                9
Second, Allen challenges the Family Court’s distribution of the remaining marital property

as an abuse of discretion because its decision was “logically tainted” by its erroneous

characterization of the down payment funds. For reasons stated herein, we agree that the

Family Court erred as to the down payment funds. Accordingly, we reverse and remand

for further proceedings as explained below.

                         II.     SCOPE AND STANDARD OF REVIEW

          When reviewing a Family Court decision dividing property upon divorce, this Court

“review[s] the facts and the law, as well as the inferences and deductions made by the trial

judge.”32 Conclusions of law are reviewed de novo.33 If the Family Court correctly applied

the law, “we review for an abuse of discretion.”34 We will disturb the Family Court’s

factual determinations only if they are clearly wrong.35

                                           III.    ANALYSIS

          A. The Family Court Abused its Discretion when Designating the Source of the
             Funds for the Colorado Home as Marital

          As a general matter, agreements entered pursuant to pretrial conferences and pretrial

stipulations are binding court orders unless they are formally amended.36 Such agreements

32
  Forrester v. Forrester, 953 A.2d 175, 179 (Del. 2008) (citing Wife (J.F.V.) v. Husband (O.W.V.,
Jr.), 402 A.2d 1202, 1204 (Del. 1979)).
33
     Id. (citing Mundy v. Devon, 906 A.2d 750, 752 (Del. 2006)).
34
     Id. (citing W. v. W., 339 A.2d 726, 727 (Del. 1975) (per curiam)).
35
  Glanden v. Quirk, 128 A.3d 994, 999 (Del. 2018) (citing Roberts v. Roberts, 19 A.3d 277, 280
(Del. 2011)).
36
  C.f. Perry v. Neupert, 2019 WL 719000, at *28 (Del. Ch. Feb. 15, 2019) (“A trial court may, in
the exercise of judicial discretion, upon proper cause shown, relieve a party from a stipulation
entered into in the course of a judicial proceeding when it appears that such relief is necessary to
prevent manifest injustice to the parties seeking it and that the granting of such relief will not place
                                                  10
can “help[] to narrow and frame the issues for the trial court.”37

           In S.M.C. v. S.C., the Family Court held the parties in a property division proceeding

to their pretrial stipulations.38 The stipulations in that case, like the one here, explicitly

imposed on the parties an “affirmative duty to provide the Court with any material change

in information.”39 The Family Court refused to permit a party in S.M.C. to submit evidence

supporting a recently-discovered change in equity in a marital motor vehicle.40 The Family

Court reasoned that the pretrial stipulation had identified those assets in agreement and

those assets in dispute, and neither party had placed the value of the vehicles in dispute,

nor was there a motion to amend or supplement the stipulation.41

           Here, the parties entered into a binding stipulation that unambiguously referred to

the funds used for the down payment as premarital, that stipulation was made an Order of

Court, and neither party moved to amend the stipulation.42 As such, there was no factual

the adverse party at any disadvantage by reason of having acted in reliance upon the stipulation.”)
(alteration omitted) (quoting 73 Am. Jur. 2d Stipulations § 12).
37
     State Farm Mut. Auto Ins. Co. v. Spine Care Del., LLC, 238 A.3d 850, 857 (Del. 2020).
38
     S.M.C. v. S.C., 2006 WL 4552006, at *5 (Del. Fam. Sept. 27, 2006).
39
     Id.
40
     Id.
41
  Id. Fam. Ct. Civ. R. 52(d) formerly governed ancillary pretrial stipulations but has since been
replaced by Fam. Ct. Civ. R. 16(d). Order Amending Rules 16, 16.1, 16.2, 36, 52, 101, 300, and
501 and Adding Rules 16.3 and 16.4 of the Fam. Ct. Rules of Civ. Proc. (Del. Fam. Oct. 17, 2017)
(ORDER) (available at https://courts.delaware.gov/rules/pdf/FamilyCourtCivilRulesAmendment
EffJan2018.pdf).
42
   See Ans. Br. at 5 (acknowledging that Scott first challenged the stipulated premarital character
of the funds “at the conclusion of the presentation of evidence” by way of argument).

                                                 11
question for the Family Court to address related to the classification of the funds used for

the down payment at the time the June 23 hearing began.

          A material change in information that permits the court to modify a pretrial

stipulation may occur, for example, if the issue could not have been considered at the time

of the stipulation. In R.S.M. v. G.K.M., a divorcing couple had agreed to assign the former

marital home to the wife and had stipulated as to its fair market value.43 On the day of the

trial, the wife sought to introduce evidence of a different valuation and of costs to repair,

because she discovered water flowing through the foundation of the home a week earlier.

Reasoning that the water damage “occurred approximately one week before trial and could

not have been contemplated as an issue at the time of the Pre-Trial Conference,” the Family

Court allowed the evidence.44 But, “[b]ecause of the lateness of this request,” the Family

Court likewise granted the husband thirty days to collect and submit his own evidence as

to the cost of repair.

          By contrast, the designation of the down payment funds here was contemplated at

the time of the Stipulation, as both parties acknowledged the funds were premarital and

that both had separate accounts when they married. Neither party sought to introduce

evidence contravening that stipulated fact. Neither party sought to challenge the stipulated

fact until after the evidentiary record had closed. Allen’s testimony that she used “private

funds” from her “personal checking account” does not necessarily contradict her assertion

43
     2008 WL 1947915, at *1 (Del. Fam. Mar. 19, 2008).
44
     Id. at *2.

                                              12
in the Stipulation that the funds were premarital. Nor did she assert that the funds were

marital during her testimony.45 The thrust of Scott’s argument, before the Family Court

and here, is that Allen failed to produce evidence at the hearing that proved the down

payment funds were premarital.46 But there was no need for Allen to submit evidence on

that point as she had no notice that the characterization of those funds was at issue. With

that fact already stipulated, and with no notice that the nature of the funds was contested,

Allen was relieved of the burden of producing exactly that evidence.47

       Further, neither party moved to amend that Court Order, and the record of the direct

and cross examinations during the hearing does not suggest the parties were intending to

effect a material change regarding the classification. The source of the down payment

funds was not a triable issue, only the question of whether the down payment was a gift

unto the marriage. The Family Court abused its discretion in classifying the funds as

45
   A-345 (Hearing Transcript). Scott’s alternative argument that 13 Del. C. § 507(a) empowers
the Family Court to “reform” the stipulation is likewise unavailing. Section 507 grants the Family
Court exclusive jurisdiction over “over the construction, reformation, enforcement and rescission
of agreements between. . . former spouses concerning. . . the division and distribution of marital
property.” The Family Court’s jurisdiction is not contested.
46
   Ans. Br. at 5 (“The crux of the issue is that when Allen testified she did not specifically state
that the funds used to purchase the Colorado property were premarital.”); id. at 7 (“The Court
pointed out that Allen was unable to show that she used premarital funds and that she provided no
evidence to indicate that she paid the down payment for the parties’ Colorado home using
premarital funds.”).
47
   See Gertrude L.Q. v. Stephen P.Q., 466 A.2d 1213, 1217 (Del. 1983) (defining a stipulation as
“in effect, an agreement or admission made in a judicial proceeding by the parties thereto in respect
to same [sic] matter incident to the proceeding for the purpose of avoiding delay, trouble, and
expense”) (alteration in original) (quoting Application of Wilmington Suburban Water Corp., 203
A.2d 817, 832 (Del. Super. 1964)); see also Itron, Inc. v. Consert Inc., 109 A.3d 583, 588 (Del.
Ch. 2015) (“[T]he existence of material disputes of fact means that the parties should focus their
trial time on those disputes of fact, rather than wasting resources by refusing to recognize that other
facts are admitted or not legitimately subject to dispute.”).

                                                  13
marital. On remand, the Family Court should consider whether the premarital down

payment was a gift unto the marriage.

          B. The Family Court Retains Discretion to Adjust the Distribution on Remand

          Based on its weighing of the statutory factors set forth in 15 Del. C. § 1513(a), the

Family Court determined that a 60/40 division of certain marital assets in Scott’s favor was

equitable.48 Allen contends that the court’s erroneous conclusion that the Colorado home

was purchased with marital funds affected that analysis and necessitates a revision of that

division.49

          “This Court will not disturb the Family Court’s consideration of these factors and

the resulting division of marital property unless it abused its discretion.”50 Weighing the

statutory factors is “uniquely within the province of the Family Court.”51

          Aside from the Family Court’s treatment of the proceeds from the sale of the

Colorado home, we see no abuse of discretion in the Family Court’s careful examination

of the statutory factors. But on remand, we have asked the Family Court to examine

whether the premarital down payment was a gift unto the marriage. Depending on its

resolution of that issue, the court may seek to revisit whether that determination

necessitates any adjustment in its evaluation of how to equitably divide the marital

48
     Fam. Ct. Order at 18–24.
49
     Corr. Opening Br. at 28.
50
     Glanden, 128 A.3d at 1001.
51
     Id. at 1002.

                                               14
property. The Family Court therefore retains its full discretion to address these issues and

in crafting a final disposition of the marital property on remand.

          We also reject Scott’s contention that Allen waived a challenge to the 60/40

allocation by failing to raise it in her Motion for Reconsideration under Family Court Civil

Rule 59(e). To be preserved on appeal, our rules require that a question be “fairly presented

to the trial court.”52 To be ‘fairly presented’ an issue already raised in the trial court need

not be re-asserted in a Motion for Reargument. To the contrary, a Motion for Reargument

should not be a vehicle for one party who was unhappy with the Court’s ruling to simply

rehash the arguments already heard and decided by the Court.53 There is no requirement

for a party to file a Motion for Reargument at all, and so there is no requirement that a

Motion for Reargument contain every issue which the party intends to appeal. Moreover,

in her Motion for Reargument, Allen did raise the issue of the Family Court’s allocation of

the remaining marital property, arguing that “[i]f the down payment is found to be

premarital upon reconsideration, this would likely result in a different outcome in that

[Allen] would receive a higher percentage of the split due to her extraordinary

contribution.”54 Further, in the proceedings below, Allen urged the Family Court to adopt

an allocation more favorable to her rather than a 60/40 allocation in Scott’s favor. For

example, Allen asked the court to divide the equity in the Rehoboth Beach marital home

52
     Del. Supr. Ct. R. 8.
53
     Martin v. Martin, 857 A.2d 1037, 1039 (Del. Fam. 2004).
54
     A-63 (Motion for Reargument).

                                               15
70/30 in her favor.55 The issue of the fairness of the 60/40 allocation in Scott’s favor was

fairly presented to the Family Court and was preserved on appeal here.

                                     IV.     CONCLUSION

       Based upon the foregoing, we REVERSE the Family Court’s judgment of

September 30, 2020 in part and REMAND the matter for further proceedings consistent

with this Opinion.

55
  Fam. Ct. Order at 5. The Family Court found that the marital home had been purchased utilizing
funds from the sale of two premarital properties that were jointly titled in the parties’ names. Id.

                                                16