Court Opinion

ID: 4672129
Source: CourtListenerOpinion
Date Created: 2021-03-27 01:07:43.859971+00
Date Added: 2024-06-11T08:03:00.588284
License: Public Domain

Cite as 2021 Ark. 49
                  SUPREME COURT OF ARKANSAS
                                       No. CV-19-363

                                               Opinion Delivered:   March 4, 2021

WILLIAM B. CHERRY                  APPEAL FROM THE COLUMBIA
                                   COUNTY CIRCUIT COURT [NO.
          APPELLANT/CROSS-APPELLEE 14DR-14-245]

V.
                                               HONORABLE SPENCER G.
RHONDA MARLENE CHERRY (NOW                     SINGLETON, JUDGE
FULKROAD)
                                   AFFIRMED ON DIRECT APPEAL AND
          APPELLEE/CROSS-APPELLANT ON CROSS-APPEAL. COURT OF
                                   APPEALS OPINION VACATED.

                                BARBARA W. WEBB, Justice

       William B. Cherry (Cherry) appeals from a divorce decree that awarded his ex-wife,

Rhonda Marlene Cherry, now Fulkroad (Fulkroad), permanent alimony, and a subsequent

order that found him in contempt for failing to pay the full amount of alimony ordered.

On appeal, Cherry argues that the circuit court erred (1) in calculating his monthly

available resources to include amounts received annually or every five years; (2) in awarding

alimony as a substitute for division of nonmarital property; (3) in holding him in

contempt, calculating an arrearage, and imposing a fine for nonpayment; and (4) in finding

no change of circumstances to support a reduction or elimination of the alimony award.

Fulkroad has cross-appealed, arguing that the circuit court erred by (1) finding that the

annuities from the personal-injury settlement were not marital property under Arkansas
Code Annotated section 9-12-315(B)(6) and (2) failing to order Cherry to purchase a life

insurance policy or order Cherry not to replace her as the pay-on-death beneficiary of the

two income annuities to effectively guarantee the income represented by the alimony

award.

         The court of appeals affirmed on appeal and on cross-appeal. See Cherry v. Cherry,

2020 Ark. App. 294, 603 S.W.3d 585. We granted Cherry’s petition for review. When we

review a decision by the court of appeals, we treat the case as though it had been originally

filed in this court. Brookshire Grocery Co. v. Morgan, 2018 Ark. 62, 539 S.W.3d 574. We

vacate the court of appeals opinion and affirm on direct appeal and on cross-appeal.

      We note from the outset that this case comes before us with an unusual procedural

history. Fulkroad petitioned for divorce and Cherry filed a counterclaim for divorce. When

the circuit court entered what it believed to be a final order granting Fulkroad’s petition on

February 3, 2016 (the 2016 order), it did not expressly dismiss Cherry’s counterclaim.

Cherry attempted to appeal the award of alimony, and Fulkroad cross-appealed. After the

record was lodged, Cherry’s attorney passed away before any briefs were filed. Cherry

eventually retained new appellate counsel and filed a motion seeking dismissal of both

appeals without prejudice. The court of appeals granted the motion. Cherry v. Cherry, 2017

Ark. App. 245. Accordingly, we treat the order entered on December 31, 2018 (the 2018

order), as the final order in this case.

                                           I. Facts

                                             2
       The parties married, divorced, and remarried on September 20, 1990. Fulkroad was

twenty years old when she married. She had only a seventh-grade education and no work

experience. During the lengthy marriage, Fulkroad did not work outside the home,

although she did help with Cherry’s trucking business––he was the owner/operator of a

tractor-trailer rig. She also home-schooled their two children and cared for Cherry’s ailing

mother. Fulkroad paid the bills and handled dispatching while Cherry was on the road.

Even though Cherry grossed approximately $100,000 per year from the trucking business,

the family netted only $16,000–$18,000 annually.

       On March 30, 2006, the cab of the truck that Cherry was driving was hit broadside

by another tractor-trailer rig. Cherry was severely injured. His injuries included a left-eye

laceration, a closed-head injury, rib fractures, left fibula fracture, left clavicle fracture, and

severe trauma to his spine including fractures to thoracic vertebrae. As a result of these

injuries, Cherry was totally and permanently disabled.

       In 2009, Cherry received substantial financial compensation as a result of the

accident. His structured settlement, which totaled some four million dollars, consisted of

three annuities with regular distributions that were to be paid at regular intervals until

2033. The first was designated as a Medicare set-aside fund. The annuity contract

acknowledged that Cherry was enrolled in Medicare, but projected obligations of

$394,861.81 for future medical expenses, including $323,516.50 for future prescription-

drug treatment. Although the annuity provided $11,602.75 per year, the money had to be

segregated to protect Medicare’s future claims. The two other annuities were unrestricted

                                               3
and provided monthly payments of $2903.00 and $2950.86, respectively, and lump-sum

payments every five years beginning in 2013. Each of these two annuities provided for

payments of $25,000 in 2013, $50,000 in the years 2018, 2023, and 2028, and $100,000

in 2033. In addition, because Cherry was totally disabled, he receives $810 per month in

Social Security benefits.

       During the marriage, the parties used Cherry’s annuity distributions, including the

lump-sum distribution in 2013, as income. Additionally, they used the money to purchase

an eighty-three-acre cattle farm, which became the marital residence, a scrap metal business,

and equipment for these businesses. Neither the cattle farm nor the scrap yard succeeded;

Cherry attributed the lack of success to his inability to perform manual labor which

necessitated the hiring of help. Despite the infusion of cash from the structured settlement,

it is undisputed that the parties’ checking account was often overdrawn.

       The parties separated in October 2014. Fulkroad moved in with an adult daughter.

On December 23, 2014, Fulkroad filed for divorce, alleging general indignities. Cherry

counterclaimed for divorce, also alleging general indignities. Fulkroad was subsequently

granted temporary support in the amount of $1600 per month. Cherry voluntarily added

an additional $200 to assist his daughter. By agreement, the parties divided the tangible

marital property, including the real estate. Therefore, the only point of contention was how

to handle Cherry’s structured settlement. Fulkroad conceded that the Medicare set-aside annuity

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was not marital property,1 but asked that the other annuities be treated as marital property and

divided accordingly. Cherry prayed that the be completely excluded. Fulkroad also asked

that the annuities be considered as income for the purpose of alimony.

         Prior to the 2016 order, Fulkroad testified about her limited education and work

history. She claimed she had completed an online G.E.D. course, although she had not

received a certificate. At the time of the hearing, her employment consisted of “sitting”

with an elderly couple for $100-$125 per week. She also noted that she has some arthritis

that causes her discomfort in the wintertime, but otherwise, she is able-bodied. She

conceded that she had not made a concerted effort to find more gainful employment. As

noted previously, after leaving Cherry, Fulkroad moved in with her adult daughter.

However, she estimated that her expenses would be $3346 per month if she were to live

alone.

         Cherry claimed that the $810 he received from Social Security disability was his

only income. Nonetheless, evidence of what his annuities paid was introduced. Cherry

claimed that his monthly expenses totaled $3924, which included a $1200 payment on the

marital residence.

         The 2016 order stated that the annuities and social security payments were excluded

from marital property by Arkansas Code Annotated section 9-12-315. However, the circuit

court found that the annuities, including a prorated share of the pending five-year

       The Medicare set-aside annuity was created in accordance with 42 CFR 411.46 and
         1

411.47 to accommodate potential Medicare liens resulting from Cherry’s medical expenses.

                                              5
distributions, gave Cherry a monthly income of “approximately $9,600.00.” Accordingly,

he awarded Fulkroad $2750 in permanent alimony.

       As noted previously, the parties attempted to appeal the 2016 order. After remand,

Fulkroad filed a motion for contempt, asserting that while Cherry continued to pay her

$1800- per-month alimony, he never paid the full $2750 per month required by the 2016

order. Cherry asked the circuit court to reconsider the alimony award in based on

Fulkroad’s current needs.

       At the November 7, 2018 hearing, Fulkroad testified that she had secured

employment with the City of Stevens. Her monthly take-home pay, before the deduction

for health insurance, was $1521.87. Further, she stated that she had taken the money she

realized from the sale of the marital home and purchased a new residence outright. Her

affidavit of financial means reflected monthly expenses of $3301.54, although Fulkroad

acknowledged that she now had her adult daughter and grandchild, as well as a college

student from Southern Arkansas University, living in her home.

       Cherry testified that he had noncovered medical expenses of $4390.22 and had

already exhausted his annual Medicare set-aside payment. He submitted an affidavit of

financial means that reflected monthly expenses of $4423.60, not including the alimony

that he was obligated to pay. According to Cherry, he now received only $804 in Social

Security benefits. Cherry was questioned about what he had done with the 2018 lump-sum

distribution. He stated that although he had purchased a mobile home and an RV, he was

currently living at his brother’s residence. He explained that his girlfriend at the time who

                                             6
made the purchases on his behalf had titled them in her name. His affidavit further stated

that he had only $508.02 cash on hand, and debts of $64,275.85, that required a monthly

payment of $1519.77. In the 2018 order, the circuit court found Cherry in contempt and

ordered him to pay $44,850 within thirty days. It further ordered that if the judgment was

not satisfied within thirty days, it would fine Cherry $50 per day until it was paid in full. It

denied Fulkroad’s request to order Cherry to purchase a life insurance policy to secure the

payment of alimony or make her a designated beneficiary on one of the annuities in the

event of Cherry’s demise. Finally, the circuit court denied Cherry’s request to reduce the

amount of his alimony obligation and “adopted in full” the prior order’s “legal and factual

basis for the award of alimony.”

       Cherry timely filed a notice of appeal, and Fulkroad cross-appealed.

                                     II. Standard of Review

       On appeal, this court reviews domestic-relations cases de novo. Artman v. Hoy, 370

Ark. 131, 257 S.W.3d 864 (2007). However, we will not reverse the circuit court’s finding of

fact unless it is clearly erroneous. Id. A finding is clearly erroneous when the reviewing

court, on the entire evidence, is left with the definite and firm conviction that a mistake

has been committed. Id. An award of alimony is within the sound discretion of the circuit

court, and we will not reverse that decision absent an abuse of discretion. Foster v. Foster,

2016 Ark. 456, 506 S.W.3d 808.

                            III. Direct Appeal of the Alimony Award

                                               7
       Although listed as three separate points, we take Cherry’s first, second, and fourth

points together and treat them as one single argument, much as Cherry does in his

supplemental brief. He argues that the primary issue from which all others flow is whether

the circuit court erred in ordering him to pay permanent alimony in the amount of $2,750

per month based on a calculation of income of “approximately $9,600.00” per month.

Cherry asserts that the circuit court erred in averaging the five-year distributions from his

annuities, which overstates the money he has on hand to provide support for his ex-wife. He

contends that the undisputed record shows his “monthly available resources” are only

$6,679.86. He notes that this money comes from a personal-injury settlement, which the

circuit court correctly found was not subject to division as marital property.

       Regarding the circuit court’s methodology in capturing future lump-sum

distributions from his annuities, Cherry acknowledges that in Taylor v. Taylor, 369 Ark. 31,

40, 250 S.W.3d 232, 239 (2007), this court allowed averaging to determine a payor’s

income. However, he asserts that averaging was only employed in circumstances where

income varied week to week or month to month in order to get a “truer picture” of a

person’s income. Nonetheless, he states that we have never endorsed an averaging approach

to capture future payments as current income when there is no variance. He contends that

including amounts that the payor will not receive for years in the future does not

determine current expendable income. Cherry argues that the circuit court likewise erred

in finding the amount of Fulkroad’s financial needs. After the 2016 order was entered,

Fulkroad obtained full-time employment. In light of her current employment, Cherry

                                              8
asserts that the alimony award now gives Fulkroad $970.33 more than her current needs of

$3,301.54 per month, which she testified included having her daughter, granddaughter,

and a college student live with her, and charitable giving of $200 per month. As a result of

the obligation to pay alimony, Cherry contends that he now has less than his stated needs

while Fulkroad has more. Cherry’s argument is not persuasive.

       The purpose of alimony is to rectify the economic imbalances in earning power and

standard of living in light of the particular facts in each case. Chekuri v. Nekkalapudi, 2020

Ark. 74, 593 S.W.3d 467. The primary factors to be considered in determining whether to

award alimony are the financial need of one spouse and the other spouse’s ability to pay.

Id. The circuit court should also consider other secondary factors: (1) the financial

circumstances of both parties; (2) the couple’s past standard of living; (3) the value of

jointly owned property; (4) the amount and nature of the parties’ income, both current

and anticipated; (5) the extent and nature of the resources and assets of each of the parties;

(6) the amount of income of each that is spendable; (7) the earning ability and capacity of

each party; (8) the property awarded or given to one of the parties, either by the court or

the other party; (9) the disposition made of the homestead or jointly owned property; (10)

the condition of health and medical needs of both husband and wife; (11) the duration of

the marriage; and (12) the amount of child support. Id.

       We note first that the circuit court did not clearly err when it found no reason to

reassess the amount of alimony awarded in the 2016 order. We have said that the amount

of alimony should not be reduced to a mathematical formula because the need for

                                             9
flexibility outweighs the need for relative certainty. Kuchmas v. Kuchmas, 368 Ark. 43, 243

S.W.3d 270 (2006). Fulkroad’s employment situation had improved shortly after the 2016

order was entered, but it was not so great as to make alimony unnecessary. Moreover, the

monthly expenses that she had predicted in her 2016 affidavit were essentially the same in

2018. Furthermore, the division of marital property, while considerable, was fully

contemplated by the 2016 order. We have held that the division of marital property and an

award of alimony are complementary devices that a circuit court may employ to make the

dissolution of a marriage as equitable as possible. Id.

      We also reject Cherry’s contention that the circuit court overstated his available

financial resources. While the distributions from the Medicare set-aside annuity did not

constitute income that was available to support Fulkroad, the other annuities did provide

Cherry with a substantial ability to pay. These annuities, including the lump-sum

distributions were used by the parties as income prior to their separation. Furthermore, at

the time that the 2018 order was entered, Cherry had received a lump-sum distribution

that he could have used to pay for alimony over the next five years. Further, we find no

error in the circuit court’s decision to prorate future lump-sum distributions in its

calculation of the amount of financial resources that Cherry had available to pay alimony.

The money was guaranteed, and the distributions were made at predictable intervals.

Furthermore, there was a lump-sum distribution in 2018 that Cherry could have used to

meet his court-ordered obligations. Finally, previously- referred-to “secondary factors” weigh

in favor of granting alimony to Fulkroad. The marriage was of long duration, and although

                                              10
Fulkroad is only in her forties, her employment prospects are not very good. While she did

receive a substantial amount of cash from the sale of the marital assets, it was not sufficient

to meet her reasonable expenses. Unquestionably, Cherry’s annuities are significant assets

that, over time, will likely far exceed the material assets that Fulkroad will likely amass.

Regarding the remaining factors, we acknowledge that Fulkroad has the capacity to earn

income, while Cherry is permanently and totally disabled. Given her lack of formal

education and limited work history, however, the nature of her employment will likely not

greatly improve. We are likewise mindful that Fulkroad’s health is much better than

Cherry’s, and Cherry’s medical needs are much greater. However, given the foregoing facts,

we cannot say that the circuit court abused its discretion by not reducing or eliminating the

amount of alimony that Fulkroad is to receive.

                         IV. Direct Appeal of the Contempt Order

      We next consider Cherry’s argument concerning the circuit court’s finding of

contempt. After remand from the court of appeals, Fulkroad filed a motion asking the

circuit court to hold Cherry in contempt for failing to pay $2750 per month in alimony as

required by the 2016 order. In pertinent part, Fulkroad testified at the contempt hearing

that since October 1, 2015, she had been receiving monthly alimony payments from Cherry

in the amount of $1,600 plus $200 because their daughter and granddaughter live with her.

She further stated that she did not remember whether she had told him that she was “good

with what he was paying” but admitted that they were “surviving on what he was paying.”

Cherry admitted that he knew he had been ordered to pay $2750 per month in alimony

                                              11
and that he had failed to do so. Based on that testimony, the circuit court found that

Cherry was paying only $1600 per month in alimony. The circuit court found the failure

to pay willful and set the arrearage at $44,850 ($2,750 minus $1,600 times 39 months).

Cherry was given thirty days from the entry of the order to pay the arrearage or he would be

fined $50 per day until it was paid in full.

       On appeal, Cherry asserts that the circuit court erred in finding him in contempt

because he was financially unable to pay the full amount of alimony required by the 2016

order. Cherry claims that in September 2015 his monthly available resources were

$6,679.86 ($826 + $2,903 + $2,950.86) to pay monthly expenses before alimony of

$6,120 ($7,720 including the temporary alimony of $1,600). Cherry asserts that he “paid

what he could, even though it meant going into debt to do so.” Furthermore, he even

increased his payment to Fulkroad, thinking that they had made an agreement when their

adult daughter moved in with her. Cherry contends that Fulkroad should be estopped from

claiming an arrearage after inducing him to make this agreement. Arguing further, he

states that the circuit court erred in calculating any arrearage. He claims he should receive a

$4400 credit for the months that he paid $1800.

       Our standard of review for civil contempt is whether the finding of the circuit court

is clearly against the preponderance of the evidence. Gatlin v. Gatlin, 306 Ark. 146, 811

S.W.2d 761 (1991). Refusal to obey any valid judgment, order, or decree of a court having

jurisdiction to enter it may constitute contempt; a court has inherent power to punish that

contempt. Id. Before a person may be held in contempt for violating a court order, that

                                               12
order must be in definite terms as to the duties thereby imposed upon him, and the

command must be expressed rather than implied. Id.

       We hold that the circuit court did not clearly err in holding Cherry in contempt.

The 2016 order was definite in its terms, and Cherry admitted that he was aware of the

requirement to pay $2750 per month in alimony. We reject Cherry’s assertion that he was

financially unable to pay the alimony because it is undisputed that he received a lump-sum

distribution from his annuities prior to the contempt hearing. While we are mindful that

this was nonmarital property, this fact is of no moment; he did have the ability to pay. We

affirm the finding of contempt.

                                       V. Cross-Appeal

       Fulkroad first argues that the circuit court erred by finding that the annuities from

the personal-injury settlement were not marital property under Arkansas Code Annotated

section 9-12-315(b)(6). She asserts that section 9-12-315 defines “marital property” as “all

property acquired by either spouse subsequent to the marriage.” Furthermore, she asserts

that there is a presumption that all property acquired during a marriage is marital property,

and it is “undisputed” that the personal-injury settlement annuities were acquired during

the marriage. Fulkroad concedes that the circuit court correctly excluded the “Medicare Set

Aside Annuity” because it is dedicated to pay medical expenses, but the court should have

found that the other annuities were marital property.

       Fulkroad further asserts that damages in a personal-injury claim, such as those that

Cherry maintained in this case, could include past reimbursement of the medical expenses

                                             13
as well as his future medical expenses; past loss of income as well as future loss of income;

pain, suffering, and mental anguish, past and future; property damage; scarring; loss of

earning capacity; loss of consortium to a spouse; and punitive damages. She argues that

only those portions of a personal-injury settlement dealing with disability or medical care are

exempt, and the other elements of damages would therefore be required to be subject to

division as marital property. Fulkroad contends that the circuit court wrongly excluded

evidence of what made up the total damages that Cherry was compensated for but does not

challenge any specific evidentiary ruling. Instead, she asserts that we should proceed from

the fact that Cherry’s monthly net earnings were only $1500 per month and his future

medical expenses were covered by the Medicare set-aside annuity and find that the

remainder was marital property. We disagree.

       Fulkroad admits that she was unable to prove at trial that any payments from the

annuities were for anything other than Cherry’s personal-injury claim. This failure of proof

cannot inure to her benefit on appeal. The plain wording of section 9-12-315(b)(6)

expressly excludes “[b]enefits received or to be received from a workers’ compensation

claim, personal injury claim, or Social Security claim when those benefits are for any degree

of permanent disability or future medical expenses.” As noted previously, Cherry was

found to be totally and permanently disabled. Accordingly, given the state of the record

before us, we cannot hold that the circuit court clearly erred in finding that the annuities

were not divisible as marital property.

                                              14
       Fulkroad next argues that the circuit court erred in failing to order Cherry to

purchase a life-insurance policy or, alternatively, order Cherry not to replace her as the pay-

on-death beneficiary of the income annuities “at least as to the amount of income as it

relates to the alimony award.”2 At the time the parties separated, Fulkroad was the pay-on-

death beneficiary for both annuities. These annuities guaranteed income for thirty years

and are the basis of the alimony award. She acknowledges that Arkansas Code Annotated

section 9-12-312(A)(2)(e) provides that “[u]nless otherwise ordered or agreed by the parties,

the alimony shall automatically cease upon the death of either party.” She contends that

this presents her with a “dilemma” because, although income from the annuities is

guaranteed through 2039, her alimony income will cease if Cherry dies prior to that date.

Fulkroad argues further that this case presents the issue of whether alimony should stop

upon the death of the person paying alimony if guaranteed income in the form of annuity

payments continues after his death. She urges this court to focus on the language of the

alimony statute that states, “Unless otherwise ordered by the Court, alimony ends at the

death of a party.” Without the order that was denied by the circuit court, Fulkroad states

that she has “no future security and the purpose of awarding her alimony is frustrated.” We

reject this argument.

       Fulkroad has not presented any compelling reason why the circuit court should

have secured her alimony beyond the death of Cherry. As noted previously, she is able-

       2
        Although Fulkroad’s point on cross-appeal refers to both income annuities, keeping
her as the pay-of-death beneficiary for a single annuity would more than cover the alimony
award.

                                              15
bodied and employed at a salary that is equal to what her entire family lived on prior to

Cherry’s accident. We cannot say that the circuit court erred in failing to grant her request.

       Affirmed on direct appeal and on cross-appeal. Court of appeals opinion vacated.

       KEMP, C.J., dissents without opinion on direct appeal and concurs without opinion

on cross-appeal.

       Bell & Boyd, PLLC, by: Karen Talbot Gean, for appellant.

       Crane, Phillips & Rainwater, PLLC, by: Steve R. Crane, for appellee.

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