Court Opinion

ID: 9388683
Source: CourtListenerOpinion
Date Created: 2023-04-21 14:04:31.387388+00
Date Added: 2024-06-11T17:18:21.860054
License: Public Domain

RENDERED: APRIL 14, 2023; 10:00 A.M.
                        NOT TO BE PUBLISHED

                Commonwealth of Kentucky
                          Court of Appeals

                              NO. 2022-CA-0174-MR

ANGELA HAYDEN                                                         APPELLANT

              APPEAL FROM WASHINGTON CIRCUIT COURT
v.            HONORABLE SAMUEL TODD SPALDING, JUDGE
                       ACTION NO. 21-CI-00015

VICTOR LAMONT HAYDEN                                                    APPELLEE

                           OPINION
 AFFIRMING IN PART, REVERSING IN PART, VACATING IN PART, AND
                         REMANDING

                                  ** ** ** ** **

BEFORE: THOMPSON, CHIEF JUDGE; CALDWELL AND GOODWINE,
JUDGES.

GOODWINE, JUDGE: The Appellant, Angela Hayden (“Angela”), appeals from

an order of the Washington Circuit Court which classified a 401(k) retirement

account of the Appellee, Victor Hayden (“Victor”), as non-marital and awarded the

entirety of the account to Victor. After carefully reviewing the briefs submitted
and the law, we affirm in part, reverse in part, vacate in part, and remand for

further proceedings.

                            STATEMENT OF FACTS

             The parties married in 1998. Throughout the marriage, both parties

served in the United States military and currently receive some income due to their

respective service. Victor retired from the military in 2009 after serving for about

22 years. In 2010, Angela was stationed in Japan, and Victor did not go with her.

Angela returned to the United States in September of 2012 and began living in

Bardstown, while Victor lived with his father in Lebanon. Both parties frequently

stayed at each other’s homes after Angela’s return in 2012, and the last time they

had sexual relations was on or around January 1, 2013.

             Victor began working with Curtis-Maruyasu America in 2013 and

contributed to a 401(k) retirement plan in 2014. The parties continued staying with

one another sporadically until 2017, when Angela moved to Oklahoma, where she

remained until 2019. Upon Angela’s return, the parties testified that she would

spend some occasional weeks at Victor’s residence in Springfield until December

2020, when Victor asked Angela to leave and not come back unless the parties’

grandchildren were visiting. The parties filed joint tax returns through 2019. They

maintained a joint bank account from which both paid bills and expenses until

February 2021, when Angela filed a petition for dissolution.

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               A final hearing was set for January 7, 2022. Before that hearing, the

parties were able to reach some agreements and factual stipulations. (Record

(“R.”) at 28-31.) Six (6) disputed issues remained for the January 7, 2022, hearing,

but the one at issue on this appeal is the division of Victor’s 401(k). One other

issue of contention that arose during the hearing was the exact date on which the

parties separated. The date of separation is unclear from the record, and the circuit

court heard extensive testimony from both parties on that topic.1 Victor argued

that the parties were essentially separated in 2010 when he did not go with Angela

to Japan. Alternatively, he argued they were indeed separated in 2012 when they

mostly lived separately. Angela argued that December 2020 was when the parties

separated, when Victor asked her to leave his residence. The circuit court made no

rulings concerning the 401(k) at the hearing; Judge Spalding merely noted that he

could understand both sides of the argument with the 401(k) and would have to

sleep on the issue. (Video Record – Jan. 7, 2022, Hearing at 10:41:30.)

               The circuit court issued findings of fact and order on January 11,

2022, in which it found that the parties separated in early 2013 and awarded the

entirety of the 401(k) to Victor, finding: “[Victor’s] 401K at Curtis-Maruyasu

America with a current balance of $39,279.42, is his non-marital asset. The [c]ourt

1
  The initial petition filed by Angela indicates a separation date of July 3, 2017. (R. at 2.) The
initial response filed by Victor recites a separation date of December 15, 2012. (R. at 6.)

                                                -3-
concludes this asset is non-marital because [Victor] did not begin making

contributions to this 401K until February, 2014, approximately thirteen months

after the parties[’] separation.” (R. at 84.)

             This appeal followed. On appeal, Angela argues that the circuit court

erred in finding that the date of separation was January 1, 2013, and erroneously

used that date to classify Victor’s 401(k) as a non-marital asset and award him its

entirety. Instead, she maintains that the 401(k) should have been deemed a marital

asset and divided equally.

                             STANDARD OF REVIEW

             Kentucky Rule of Civil Procedure (“CR”) 52.01 provides that

“[f]indings of fact shall not be set aside unless clearly erroneous, and due regard

shall be given to the opportunity of the trial court to judge the credibility of the

witnesses.” A judgment is not clearly erroneous if it is supported by substantial

evidence, which is “evidence of substance and relevant consequence having the

fitness to induce conviction in the minds” of reasonable people. Owens-Corning

Fiberglas Corp. v. Golightly, 976 S.W.2d 409, 414 (Ky. 1998) (citing Kentucky

State Racing Commission v. Fuller, 481 S.W.2d 298, 308 (Ky. 1972)).

             The classification of an asset as “marital or nonmarital is reviewed

under a two-tiered scrutiny in which the factual findings made by the court are

reviewed under the clearly erroneous standard and the ultimate legal conclusion

                                           -4-
denominating the item as marital or nonmarital is reviewed de novo.” Smith v.

Smith, 235 S.W.3d 1, 6 (Ky. App. 2006); see also Heskett v. Heskett, 245 S.W.3d

222, 226 (Ky. App. 2008). Additionally, if the circuit court’s classification of the

marital property is proper, its value determination and division of marital assets are

reviewed for an abuse of discretion. See Young v. Young, 314 S.W.3d 306, 308

(Ky. App. 2010) (citations omitted).

                                     ANALYSIS

             The first issue we shall address is whether the circuit court

erroneously determined that the parties’ separation date was in early 2013. It is

undisputed that neither party nor the circuit court believes that the parties “legally”

separated in 2013; there was no decree of legal separation, and there was no

property settlement agreement into which the parties entered before the January

2022 hearing. Instead, the issue involves the date on which the parties were

physically separated.

             The circuit court is the finder of fact and has the sole authority to

judge the credibility of witnesses and weigh the evidence before it. Moore v.

Asente, 110 S.W.3d 336, 354 (Ky. 2003). In the instant case, the circuit court

heard extensive testimony from both parties on the date of separation. In its order,

it considered all evidence presented and decided that the parties physically

separated in early 2013. It is undisputed that both parties agreed that the last time

                                          -5-
that they sexually cohabitated was in January 2013. KRS2 403.170 provides that

no decree of dissolution shall be entered until the parties have “lived apart” for 60

days, and “living apart” includes any period during which the parties are living

together under the same roof, if they do so “without sexual cohabitation.” The

circuit court did not err in weighing all the evidence presented and determining that

January 2013 is when the parties physically separated.

                Angela essentially reiterates the factual argument made before the

circuit court, maintaining that the parties’ holding themselves out to be married

(for the benefit of their grandchildren); joint filing of tax returns until 2019; and

comingling of finances until 2021 necessitate a finding that the separation date was

much closer to when the petition for dissolution was filed. We are unpersuaded by

this argument. The circuit court has extremely broad discretion with respect to

testimony presented and may choose to believe any or none if it so chooses. Bailey

v. Bailey, 231 S.W.3d 793, 796 (Ky. App. 2007). In this case, the circuit court

believed Victor’s testimony that the parties were essentially occasional roommates

after 2012. The circuit court’s finding is supported by substantial evidence. So,

we find that the circuit court committed no clear error and affirm its determination.

However, the date of physical separation has no bearing whatsoever on the

classification of property in an action for dissolution.

2
    Kentucky Revised Statutes.

                                           -6-
             KRS 403.190(1) grants the power to the circuit court to assign and

divide marital assets in a dissolution proceeding. KRS 403.190(2) also defines

“marital property,” stating it is all property acquired by either spouse after the

marriage unless an enumerated exception applies, those exceptions being:

             (a) Property acquired by gift, bequest, devise, or descent
             during the marriage and the income derived therefrom
             unless there are significant activities of either spouse
             which contributed to the increase in value of said
             property and the income earned therefrom; (b) Property
             acquired in exchange for property acquired before the
             marriage or in exchange for property acquired by gift,
             bequest, devise, or descent; (c) Property acquired by a
             spouse after a decree of legal separation; (d) Property
             excluded by valid agreement of the parties; and (e) The
             increase in value of property acquired before the
             marriage to the extent that such increase did not result
             from the efforts of the parties during marriage.

Additionally, KRS 403.190(3) provides a presumption that all property obtained

during a marriage is to be considered marital property and further states that the

only way to overcome the presumption is for a party to prove the property falls

within one of the enumerated exceptions.

             The courts have strictly held to the mandate that an exception must

apply for property acquired during marriage to be considered non-marital.

Stallings v. Stallings, 606 S.W.2d 163, 164 (Ky. 1980). In Stallings, the Kentucky

Supreme Court heeded the plain language of the statute, stating the presumption is

clear, “separation” by the statute means a decree of legal separation and not

                                          -7-
“actual” or mere physical separation, and “team or joint efforts” are not germane to

the classification of marital property; “[a]t most [the concept of team or joint

efforts] may convert the increase in value of non-marital property into marital

property.” Id.

             In the present case, Victor did not prove that his 401(k) fell within any

of the enumerated exceptions, the circuit court did not find that it fell within any of

the exceptions, and we cannot glean from the findings of fact made that a 401(k)

started and contributed to during the marriage is anything but marital. The 401(k)

was not a gift; it was not an asset acquired in exchange for non-marital property; it

was not acquired after a legal separation; it was not excluded by a valid agreement;

and it was not an increase of value of non-marital property. See KRS 403.190(2).

Accordingly, the circuit court erred when it classified the 401(k) as non-marital

property, and we must reverse the January 11, 2022, findings of fact and order to

that extent. We next turn to whether the division of the 401(k) was proper.

             As previously mentioned, KRS 403.190(1) grants the power to the

circuit court to assign and divide marital assets in dissolution proceedings. The

statute also specifically enumerates some factors to be considered when dividing

marital assets.3 While the statute mandates that the division must be in “just”

3
      (a) Contribution of each spouse to acquisition of the marital property, including
      contribution of a spouse as homemaker;

                                              -8-
proportions, it is well established that “just” doesn’t mean equal; it means in

consideration of the factors laid out in the statute. McGowan v. McGowan, 663

S.W.2d 219, 223 (Ky. App. 1983) (citing Quiggins v. Quiggins, 637 S.W.2d 666,

669 (Ky. App. 1982)); see also Russell v. Russell, 878 S.W.2d 24, 25 (Ky. App.

1994). When making divisions of property, the courts have outlined a three-step

process: “(1) the trial court first characterizes each item of property as marital or

nonmarital; (2) the trial court then assigns each party’s nonmarital property to that

party; and (3) finally, the trial court equitably divides the marital property between

the parties.” Travis v. Travis, 59 S.W.3d 904, 908-09 (Ky. 2001) (footnotes

omitted). Regarding a just division as outlined in the third step of Travis, the

Kentucky Supreme Court recently held that failing to engage in an analysis of the

KRS 403.190(1) factors when dividing a 401(k) deemed to be marital property is

reversible error and merely citing the statute is not enough. Thielmeier v.

Thielmeier, ___ S.W.3d ___, 2022 WL 17726617, at *7 (Ky. Dec. 15, 2022)

(citations omitted) (to be published). Of particular note, the court in Thielmeier

      (b) Value of the property set apart to each spouse;

      (c) Duration of the marriage; and

      (d) Economic circumstances of each spouse when the division of property is to
      become effective, including the desirability of awarding the family home or the
      right to live therein for reasonable periods to the spouse having custody of any
      children.

                                              -9-
also held that the circuit court erred by dividing the 401(k) at issue as of the date of

separation instead of the date of the decree of dissolution and awarding the entirety

of the contributions made between those dates to the contributing party. Id.

              In the present case, the circuit court did not consider the factors laid

out in KRS 403.190(1) – by classifying the 401(k) as a non-marital asset, the

circuit court did not reach the requirement that it do so. Because the circuit court

erred in its classification of the 401(k) in the first step of the process outlined in

Travis, it did not make it to the third step and make the requisite findings of fact

required under the factors in KRS 403.190(1). And even if the circuit court had

properly classified the 401(k), because it divided the 401(k) based on the date of

separation and did not engage with the factors of KRS 403.190(1), it would have

made the exact same mistakes as the circuit court in Thielmeier. We must

therefore remand this case for further proceedings so the circuit court can consider

those factors. Id. at *8, see Stallings, 606 S.W.2d at 164; see also Ford v. Perkins,

382 S.W.3d 821, 825 (Ky. 2012). Upon remand, we remind the circuit court of the

holdings in Ford, namely, for each of the factors enumerated in KRS 403.190(1),

CR 52.01 requires the circuit court to make specific findings of fact and state its

conclusions of law. 382 S.W.3d at 825.4

4
 In Ford, the Kentucky Supreme Court held that both the circuit court and the Court of Appeals
erred in failing to consider each of the factors outlined in KRS 403.190(1) when it awarded
100% of an IRA, that was deemed a marital asset, to one party. 382 S.W.3d at 825.

                                             -10-
                                      CONCLUSION

              For the foregoing reasons, we affirm the circuit court’s January 11,

2022 findings of fact and order to the extent that it found January 1, 2013, as the

date of separation for the parties. We reverse the circuit court’s classification of

Victor’s 401(k) as non-marital property. Finally, we vacate the division of the

401(k) and remand for further proceedings consistent with this Opinion.

              ALL CONCUR.

 BRIEF FOR APPELLANT:                           BRIEF FOR APPELLEE:

 Cameron C. Griffith                            Rebecca A. Hurst
 Lebanon, Kentucky                              Danville, Kentucky

Additionally, there is no presumption that “evidence of a marriage alone, without evidence of
some form of contribution (tangible or intangible), satisfies the requisite multi-factor
consideration required under KRS 403.190.” Id. at 824-25.

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