Court Opinion

ID: 2729376
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:41:16.474125+00
Date Added: 2024-06-11T12:07:11.143150
License: Public Domain

NO. COA13-525

                        NORTH CAROLINA COURT OF APPEALS

                               Filed: 7 January 2014

DOLORES MARIE SHOPE,
     Plaintiff,

        v.                                       Lee County
                                                 No. 09 CVD 933
RICHARD WAYNE PENNINGTON,
     Defendant.

     Appeal by plaintiff from order entered 14 January 2013 by

Judge Jacquelyn L. Lee in Lee County District Court.               Heard in the

Court of Appeals 23 October 2013.

     Wyrick Robbins Yates & Ponton LLP, by K. Edward Greene and
     Tobias S. Hampson, for plaintiff-appellant.

     Doster, Post, Silverman, Foushee & Post, P.A., by Jonathan
     Silverman, for defendant-appellee.

     HUNTER, Robert C., Judge.

     Plaintiff Dolores Shope appeals from an amended equitable

distribution order.        On appeal, plaintiff argues that the trial

court    erred    by   failing   to     properly    distribute    the   payments

defendant made toward the marital debt associated with Pennington

Farms    and   by   awarding     an    unequal    distribution    in    favor   of

defendant.       After careful review, pursuant to Bodie v. Bodie, __

N.C. App. __, __, 727 S.E.2d 11, 15 (2012), we reverse the trial
                                      -2-
court’s   amended    equitable    distribution      order     and      remand   for

additional findings.

                                 Background

      Plaintiff     and   defendant    married      on   21      November   2002,

separated 28 May 2009, and subsequently divorced.                 At the time of

trial, plaintiff was 71 years old, and defendant was 72. Plaintiff

worked as a manager at McDonald’s in Spring Lake, North Carolina

and earned   approximately $10.00 per hour.                 In    addition, she

received $1,419.40 each month in social security benefits and

$282.95 per month from her pension.         Defendant operated Pennington

Farms, a poultry business located in Carthage, North Carolina.

His   approximate    average   monthly      gross   income       was   $1,977.00—

$1,275.00 earned from the operation of Pennington Farms and $702.00

in social security benefits.            It is uncontroverted that the

Pennington Farms’s business, assets, and liabilities were marital

property with the exception of the real property on which the

business is located.       The real property is defendant’s separate

property.

      On 3 November 2011, the parties entered into an amended

pretrial order that identified all the property and debts subject

to equitable distribution. In regards to marital debt, the parties

agreed that plaintiff had made payments of $11,841.84 towards
                                     -3-
marital debt associated with a vehicle.               Defendant had paid

$511,522.69 toward marital debt associated with Pennington Farms

after the date of separation from funds “generated from Pennington

Farms.”

     On 10 and 17 November 2011, the trial court held a hearing on

the issue of equitable distribution.          On 10 May 2012, the trial

court     entered   an   equitable    distribution     order,    ultimately

determining that an unequal distribution in favor of plaintiff was

equitable.     In that order, the trial court made the following,

pertinent, conclusion:

            33. That neither party presented evidence as
            to divisible property and therefore no
            divisible property is identified, classified,
            valued or distributed. Plaintiff solely paid
            the debt for her vehicle (Item 103) after date
            of separation; however, the decrease in this
            debt is due to the postseparation actions of
            [p]laintiff and is not treated as divisible
            property or debt. Defendant solely paid the
            marital debts listed in 30B above after date
            of separation; however the decrease in these
            debts is due to the postseparation actions of
            [d]efendant and is not treated as divisible
            property or debt.

With regard to the parties’ acts to preserve the marital property,

the trial court noted that “[d]efendant has paid $506,903.69

toward    marital   debts   associated     with   Pennington    Farms   after

separation and before the date of trial.”
                                -4-
     On 24 May 2012, plaintiff filed a Rule 59(e) motion requesting

the trial court amend its equitable distribution order or, in the

alternative, grant a new trial for three basic reasons.     First,

plaintiff argued that the trial court erred in failing to classify

the decrease in the marital debt associated with Pennington Farms

as divisible property pursuant to N.C. Gen. Stat. § 50-20(b)(4)(d).

Second, plaintiff contended that defendant actually paid a total

of $511,522.69 toward the marital debt, not $506,903.69 as the

trial court found.   Finally, plaintiff argued that the trial court

failed to properly value Pennington Farms.

     On 14 January 2013, the trial court entered an order partially

granting and partially denying plaintiff’s Rule 59 motion.     The

trial court issued an amended equitable distribution order that

reclassified the payments defendant made towards the marital debt

associated with Pennington Farms as divisible property, revalued

those payments to $511,522.69, and distributed all those payments

to defendant.    The trial court denied plaintiff’s request to

revalue Pennington Farms.   Finally, the trial court considered the

factors listed in N.C. Gen. Stat. § 50-20(c) and concluded that an

unequal distribution in favor of defendant was equitable.

     Plaintiff timely appealed the amended order.

                             Arguments
                                       -5-
      Plaintiff     first    argues    that       the    trial     court     erred   by

distributing all of defendant’s payments toward the marital debt

associated with Pennington Farms to defendant without making the

proper findings.      Specifically, plaintiff contends that the trial

court found that the funds for those payments were “generated” by

Pennington Farms, a marital asset.                    However, plaintiff alleges

that the trial court erred by failing to make any findings as to

the   source   of   those    funds    and    by       refusing   to   give    her    any

consideration for defendant’s use of marital property.                       Pursuant

to Bodie, we agree and remand the matter back to the trial court

for the making of additional findings of fact identifying the

source of the funds defendant used to make those payments and amend

its distribution of those payments in accordance with this opinion.

      Our   standard    of    review    of        a    trial     court’s     equitable

distribution order is well-established:

            Equitable distribution is vested in the
            discretion of the trial court and will not be
            disturbed absent a clear abuse of that
            discretion. Only a finding that the judgment
            was unsupported by reason and could not have
            been a result of competent inquiry or a
            finding that the trial judge failed to comply
            with the statute, will establish an abuse of
            discretion.

Wiencek-Adams v. Adams, 331 N.C. 688, 691, 417 S.E.2d 449, 451

(1992) (internal citations omitted).
                                          -6-
      According      to   N.C.     Gen.    Stat.   §   50–20(b)(4)(d)   (2011),

divisible property includes “[i]ncreases and decreases in marital

debt and financing charges and interest related to marital debt.”

“A spouse is entitled to some consideration, in an equitable

distribution proceeding, for any post-separation payments made by

that spouse (from non-marital or separate funds) for the benefit

of the marital estate.”          Bodie, __ N.C. App. at __, 727 S.E.2d at

15 (emphasis added).        Our Courts have recognized that a credit may

be   used   as   a   means    to    take    into   consideration   a    party’s

postseparation payments on marital debt.               See Wiencek-Adams, 331

N.C. at 694, 417 S.E.2d at 453.            However, “a spouse is entitled to

some consideration for any post-separation use of marital property

by the other spouse.”         Walter v. Walter, 149 N.C. App. 723, 731,

561 S.E.2d 571, 576-77 (2002).             In other words, if a spouse uses

marital property to pay down marital debt, the other spouse is

entitled to some consideration for that use.

      We find guidance from this Court’s recent decision in Bodie.

In Bodie, the trial court found that the plaintiff paid $216,000.00

toward the marital debts.           Id. at __, 727 S.E.2d at 15.        However,

the trial court failed to properly classify these payments as

divisible property or make any findings regarding the source of

those funds.     Id.      The Court noted that:
                                   -7-
          Plaintiff has not cited any cases, and we know
          of none, holding that a spouse is entitled to
          a “credit” for post-separation payments made
          using marital funds. As a result, in order to
          properly evaluate the trial court’s treatment
          of post-separation marital debt payments, the
          source of the funds used to make the payments
          should be identified.

Id.   In other words, pursuant to Bodie, defendant would not be

entitled to full credit for those payments toward marital debt if

those payments were made using marital funds.        Thus, in order for

us to determine whether the trial court properly distributed those

payments to defendant, the source of funds for defendant’s payments

must be identified.

      In its amended equitable distribution order, the trial court

found that:

          The [d]efendant has paid $511,522.69 toward
          marital debts associated with Pennington Farms
          after the date of separation and before the
          date of trial as stipulated to in Schedule M
          of the pretrial order. The funds for these
          payments came from the [d]efendant by virtue
          of his effort in operating Pennington Farms
          after the date of separation which generated
          income to pay these debts.     The Court will
          consider this divisible property, as defined
          in G.S. 50-20(b)(4) and (d) in its final
          judgment. This divisible property is assigned
          to the [d]efendant.

(Emphasis added).     Here, unlike Bodie, the trial court properly

classified    the   defendant’s   payment   of   debts   associated   with

Pennington Farms as divisible property in its amended equitable
                                 -8-
distribution order.    However, the trial court distributed all of

those payments, $511,522.69, to defendant without making specific

findings as to the source of those funds.       While a trial court may

distribute payments unequally, see Stovall v. Stovall, 205 N.C.

App. 405, 413, 698 S.E.2d 680, 686 (2010), plaintiff would be

entitled to some consideration of those payments if the source of

those funds was marital property.      See Bodie, __ N.C. App. at __,

727 S.E.2d at 15.     Here, the trial court’s identification of the

source of those funds is ambiguous.         However, given that the

average monthly gross income defendant earned from the operation

of Pennington Farms was $1,275.00, it seems unlikely that defendant

was able to generate over half of a million dollars in debt

payments solely on income he earned from his work on the farm.        In

other words, the numbers do not add up.         Consequently, the trial

court erred in not making clear findings as to the source of these

funds and, if the source included defendant’s use of the marital

property   to   generate   income,   in   not   giving   plaintiff   any

consideration for that use.    Therefore, we remand this matter back

to the trial court to make additional findings of fact which

identify the source of the funds used to pay down the marital debt

associated with Pennington Farms and redistribute those payments

if necessary.
                                     -9-
       Next,   plaintiff    argues   that   the       trial   court     abused   its

discretion by entering an amended equitable distribution award in

favor of defendant based on exactly the same distributional factors

it relied on in its original equitable distribution order which

favored plaintiff.         Because defendant may not be entitled to a

full credit for the payments he made toward the marital debt

associated with Pennington Farms, which would factor in the trial

court’s   determination      of   whether   an    unequal      distribution      was

equitable pursuant to N.C. Gen. Stat. § 50-20(c), we remand.

       Pursuant to N.C. Gen. Stat. § 50–20(c), an equal division of

marital property is equitable.              “However, a trial court may

consider all the factors listed in § 50–20(c) and find that an

equal division of marital property would not be equitable under

the circumstances.”        Petty v. Petty, 199 N.C. App. 192, 199, 680

S.E.2d 894, 899 (2009).

       One of the statutory factors a trial court must consider is

the “[a]cts of either party to maintain, preserve, develop, or

expand; or to waste, neglect, devalue or convert the marital

property or divisible property, or both, during the period after

separation of the parties and before the time of distribution.”

N.C.   Gen.    Stat.   §   50-20(c)(11a).        In    the    amended    equitable

distribution order, when the trial court addressed this factor, it
                                    -10-
found that it favored defendant because he had paid $506,903.69

toward marital debts.     Initially, we note that this figure is not

consistent with the trial court’s findings.           Specifically, the

trial court found that defendant paid $511,522.69.           Additionally,

given that defendant may not be entitled to a full credit for these

payments, see Bodie, __ N.C. App. at __, 727 S.E.2d at 16, it may

be necessary for the trial court to reconsider this factor and

determine whether an unequal division in favor of defendant is

still justified.      Thus, we must reverse and remand the amended

equitable distribution order back to the trial court for findings

consistent with this opinion.

                                Conclusion

     Because the trial court failed to make findings regarding the

source of the funds defendant used to pay the marital debt and

refused to give plaintiff any consideration for those payments

even though the source of those funds may have come from marital

property, we reverse and remand the matter back to the trial court

to make findings and redistribute those payments if necessary.            In

addition, we remand the matter back to the trial court to make

findings   as   to   whether   an   unequal   distribution   in   favor   of

defendant is still equitable in light of our opinion.
                         -11-
REVERSED AND REMANDED.

Judges CALABRIA and ROBERT N. HUNTER, JR. concur.