Court Opinion

ID: 9952811
Source: CourtListenerOpinion
Date Created: 2024-03-20 19:06:43.018121+00
Date Added: 2024-06-11T14:42:18.703213
License: Public Domain

IN THE

Indiana Supreme Court
        Supreme Court Case No. 23S-DN-245                       FILED
                                                            Mar 20 2024, 2:06 pm

                 Bradley Cooley,                                CLERK
                                                            Indiana Supreme Court
                       Appellant                               Court of Appeals
                                                                 and Tax Court

                          –v–

                  Shelly Cooley,
                        Appellee

   Argued: October 31, 2023 | Decided: March 20, 2024

        Appeal from the Morgan Superior Court
              No. 55D03-2108-DN-1213
         The Honorable Sara Dungan, Judge

On Petition to Transfer from the Indiana Court of Appeals
                  No. 22A-DN-1202

            Opinion by Chief Justice Rush
   Justices Massa, Slaughter, Goff, and Molter concur.
Rush, Chief Justice.

   Among the many issues trial courts must resolve in dissolution cases is
ensuring each party receives a fair and equitable distribution of the
marital estate. But divorces can run the gamut from amicable to
acrimonious. When a divorce falls toward the latter end of that spectrum,
as is the case here, Indiana law provides courts with useful tools to secure
each party’s share.

   The trial court here used one such tool to secure a wife’s portion of her
husband’s police pension—the bulk of the marital estate. Throughout the
case, the husband defiantly claimed his wife was not entitled to any of his
pension and that he would likely ignore any court order to that effect. In
response, the court ordered the husband to obtain and subsidize a life
insurance policy to ensure the wife received her share. The husband now
challenges the trial court’s authority to do so and argues the court erred
by not considering the tax consequences of his future pension payments.

    We affirm. Trial courts have broad statutory authority to order a
security or other guarantee, when necessary, to secure the division of
property. And here, we hold the court’s evidence-based findings support
its judgment requiring the husband to obtain and subsidize a life
insurance policy. We then hold the husband has waived his tax-
consequences challenge.

Facts and Procedural History
   Shelly Cooley (“Wife”) and Bradley Cooley (“Husband”) had been
married for nearly twenty-six years when Wife petitioned for dissolution
on August 11, 2021. Early in the marriage, Husband started a career with
the Morgan County Sheriff’s Department and enrolled in its retirement
plan. Wife also worked throughout the marriage, but, as the couple
agreed, she took lower-paying jobs close to home so that she could care
for their children. When Wife filed for divorce, Husband was eligible to
retire and receive benefits but continued working. At that time, his police
pension had a market value of $1,101,110.82, constituting over 85% of the
$1,257,934.96 marital estate.

Indiana Supreme Court | Case No. 23S-DN-245 | March 20, 2024        Page 2 of 9
   Because Husband’s pension could not be divided through a qualified
domestic relations order, the parties’ stipulated marital balance sheet
proposed an equal distribution of assets that awarded the pension to
Husband and an equalization payment to Wife. Yet both in and out of
court, Husband persistently stated he was not willing to share his pension
with Wife. As a result, Wife expressed concern that she “will get nothing
and he will pay me nothing.” So she asked the trial court to order
Husband to make monthly payments and obtain a life insurance policy
that named her as owner and beneficiary. Husband acknowledged his
pension benefits accrued during the marriage, but he did not believe Wife
was entitled to half of them. Husband even testified that, to keep Wife
from receiving any of the benefits, he might ignore a court order requiring
him to alert Wife of his retirement and make payments to her. And in
response to Wife’s life insurance request, Husband conveyed that he
would only comply with such an order if he got “to name the beneficiary.”

  The trial court issued an order granting Wife’s dissolution petition and
awarding each party an equal portion of the marital estate, resulting in a
$475,043.29 equalization payment owed to Wife:
                                                 To Wife       To Husband
 Total Assets to Party:                        $167,704.00     $1,124,565.68
 Total Debts to Party:                          $13,779.81      $20,554.91
                             Subtotal:         $153,924.19     $1,104,010.77
 Equalization Payment:                         $475,043.29     ($475,043.29)
 TOTAL DISTRIBUTION:                           $628,967.48      $628,967.48
 Net percentage award:                             50%             50%

   Because Husband did not have the liquid assets to make the
equalization payment in full, the court ordered Husband to pay Wife $400
monthly until he retired and then, upon retirement, pay her half of his
monthly pension benefit calculated through the date she filed for divorce.
The court also found that Husband disagreed with “any equalization
payment” and that he “may not even follow a Court Order directing his
pension benefits to Wife.” Thus, “to provide some assurance the Wife will
receive her share of the marital estate,” the court ordered Husband to
obtain a $475,000 life insurance policy, with Wife as the policy’s owner
and beneficiary. Wife was required to pay the insurance premiums, which

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would be added to the equalization payment. But the court permitted the
parties to lower the policy’s value over time to reflect the balance due
based on Husband’s required monthly payments. And once Wife received
the equalization balance due to her, both the life insurance policy and
Husband’s monthly payments would end.

   Husband appealed, and the Court of Appeals affirmed in part, reversed
in part, and remanded with instructions. Cooley v. Cooley, 209 N.E.3d 11, 15
(Ind. Ct. App. 2023). Wife petitioned for transfer, which we granted,
vacating the Court of Appeals’ opinion. Ind. Appellate Rule 58(A).

Standard of Review
   Because the trial court issued findings of fact and conclusions of law,
the judgment will be set aside only if it is clearly erroneous. Ind. Trial Rule
52(A). Without reweighing the evidence or reassessing witness credibility,
we determine whether the evidence supports the court’s findings and, if
so, whether those findings support its judgment. See, e.g., S.D. v. G.D., 211
N.E.3d 494, 497 (Ind. 2023). As for Husband’s argument that the court
lacked authority to require him to obtain and subsidize life insurance,
resolving this issue requires statutory interpretation, which we conduct de
novo. In re Howell, 27 N.E.3d 723, 726 (Ind. 2015).

Discussion and Decision
   In divorce proceedings, the marital estate includes property owned by
either spouse before the marriage, acquired by their joint efforts, or
acquired by either spouse after the marriage and before the dissolution
petition is filed. Ind. Code § 31-15-7-4(a); I.C. § 31-9-2-46. A trial court
must then divide the marital estate “in a just and reasonable manner,”
which can be accomplished by giving property to one spouse and
requiring the other “spouse to pay an amount, either in gross or in
installments, that is just and proper.” I.C. § 31-15-7-4(b). An equal division
of the property is presumptively just and reasonable. Id. § -5. And in
entering an order dividing the marital estate, a court can “provide for the
security, bond, or other guarantee that” it finds satisfactory “to secure the

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division.” Id. § -8. A court must also “consider the tax consequences of the
property disposition.” Id. § -7.

   This case turns on the application of these statutes to Husband’s
government pension—the bulk of the marital estate. Often, pension
benefits can be assigned through a qualified domestic relations order
(QDRO), which streamlines the division of marital property in dissolution
actions by requiring plan administrators to pay the benefits directly to a
former spouse. 29 U.S.C. § 1056(d); Pond v. Pond, 700 N.E.2d 1130, 1134 n.8
(Ind. 1998). But governmental plans, such as Husband’s police pension,
cannot be divided through a QDRO. Kendrick v. Kendrick, 44 N.E.3d 721,
725–26 (Ind. Ct. App. 2015), trans. denied; see also I.C. § 36-8-10-19(a). When
faced with these plans, courts have several options, including distributing
the pension to the earning spouse and requiring that spouse to pay the
other in installments until they receive their share of the marital estate.
Kendrick, 44 N.E.3d at 726–27; I.C. § 31-15-7-4(b)(2). The trial court here did
just that by awarding the pension to Husband and ordering him to make
an equalization payment in installments to Wife. And to ensure Wife
received that payment, the court ordered Husband to obtain and
subsidize a life insurance policy naming her as the owner and beneficiary.

   Husband claims that the court erred in two ways. He first alleges the
court lacked the authority to order him to obtain life insurance and
subsidize the policy. And he also contends the court erred by not
considering the tax consequences of the monthly payments he will be
required to make to Wife once he begins collecting his pension. We
disagree on both points.

I. The trial court had the authority to require
   Husband to obtain life insurance to secure the
   division of property.
   When entering a dissolution decree, a trial court “may provide for the
security, bond, or other guarantee that is satisfactory to the court to secure
the division of property.” I.C. § 31-15-7-8. This statutory language
provides courts with “the broadest possible discretion in requiring

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security.” Birkhimer v. Birkhimer, 981 N.E.2d 111, 127–28 (Ind. Ct. App.
2012) (quoting In re Marriage of Davis, 395 N.E.2d 1254, 1259 (Ind. Ct. App.
1979)). Tracing the statute’s origins and prior interpretation confirms its
breadth.

   Until 1997, Indiana Code section 31-1-11.5-15 gave trial courts the
authority to use “security, bond or other guarantee” to secure a child-
support obligation and a property division. 1973 Ind. Acts 1585, 1594
(enacting the statute); 1997 Ind. Acts 1, 555 (repealing the statute). Our
Legislature then used this same language when it replaced Section 31-1-
11.5-15 with two statutes that give courts the same authority. I.C. § 31-16-
6-5 (child-support obligation); I.C. § 31-15-7-8 (property division). And we
previously recognized that there are “many forms” of security or other
guarantees from which a court can choose to protect a party’s share of the
property. Franklin Bank & Tr. Co. v. Reed, 508 N.E.2d 1256, 1259 (Ind. 1987).
Here, we must consider whether life insurance is one such form.

    Because Section 31-15-7-8 does not define “security, bond, or other
guarantee,” we construe these terms “in their plain, or ordinary and usual,
sense.” I.C. § 1-1-4-1(1). Doing so, we hold that ordering a party to obtain
life insurance is a “security” or “guarantee” since it ensures the other
party will receive their share of the marital estate. Security, Merriam-
Webster’s Dictionary, https://www.merriam-
webster.com/dictionary/security (last visited Mar. 20, 2024) (defining
“security” as “something given, deposited, or pledged to make certain the
fulfillment of an obligation”); Guarantee, Merriam-Webster’s Dictionary,
https://www.merriam-webster.com/dictionary/guarantee (last visited Mar.
20, 2024) (defining “guarantee” as “an assurance for the fulfillment of a
condition”); see also Bainter v. Bainter, 590 N.E.2d 1134, 1136 & n.1 (Ind. Ct.
App. 1992).

   And here, the trial court’s evidence-based findings support its
judgment requiring Husband to obtain and subsidize a life insurance
policy for Wife’s benefit. Husband’s consistent defiance necessitated this
security or guarantee. Indeed, the court found that Husband “disagrees
with . . . any equalization payment” and that he “may not even follow” a
court order requiring him to direct his pension benefits to Wife. The

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evidence thoroughly supports these findings. Text messages introduced at
the dissolution hearing revealed Husband told Wife, “I’m not paying
another guys [sic] way through life,” and he suggested “neither of us will
get it.” Wife also testified that Husband told her several times that she
“was not entitled to any of his retirement” and that he might disavow the
benefits entirely to keep her from receiving them. Consistent with those
statements, Husband testified he did not believe Wife was entitled to half
of the pension, as it was not his job to provide for Wife “for the rest of her
life.” Husband also responded “I don’t know” when asked whether he
would comply with a court order requiring him to tell Wife when he
retires. And when questioned further if he would “actually ignore” a court
order, Husband stated, “It’s possible.”

   Based on this evidence, the trial court required Husband to name Wife
as the owner and beneficiary of the life insurance policy and make her
responsible for the premiums, which would then be added to the
equalization payment. Without these conditions, Husband could
unilaterally change the policy or cause it to lapse by not timely paying the
premiums. And it was Husband’s concerning statements and conduct that
required the court to secure Wife’s share through the policy that Husband
would subsidize. Thus, the life insurance arrangement is not alimony as
Husband alleges but rather reflects the court’s broad authority under
Section 31-15-7-8 to secure Wife’s share of the marital estate. And contrary
to Husband’s claim, requiring him to subsidize the policy does not
increase the value of the marital estate. Indeed, debts incurred by one
party after the petition for dissolution is filed are generally not included in
the marital estate. Johnson v. Johnson, 181 N.E.3d 364, 374 (Ind. Ct. App.
2021).

   Overall, Section 31-15-7-8 provides our trial courts with a range of tools
to ensure that each party in a divorce receives their share of the marital
estate. Included in these tools is requiring a spouse to obtain and
subsidize a life insurance policy as a security or guarantee to secure the
distribution. The trial court here used this tool, and its evidence-based
findings amply support its decision. We now consider Husband’s
argument that the court erred by not considering the tax consequences of
his monthly pension payments to Wife once he retires.

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II. Husband waived his argument that the trial court
    erred by failing to consider his tax consequences.
   When dividing property in a divorce proceeding, trial courts must
“consider the tax consequences of the property disposition with respect to
the present and future economic circumstances of each party.” I.C. § 31-
15-7-7. By this plain language, a court need only consider the tax
consequences of “the property disposition,” or those that are immediate
and “necessarily incurred.” Harlan v. Harlan, 544 N.E.2d 553, 555 (Ind. Ct.
App. 1989), aff’d, 560 N.E.2d 1246 (Ind. 1990). Thus, if a party fails to
provide evidence of immediate and direct tax consequences, that party
cannot argue that the court erred by not considering them—the issue is
waived. See Hardin v. Hardin, 964 N.E.2d 247, 254 (Ind. Ct. App. 2012); see
also Plank v. Cmty. Hosps. of Ind., Inc., 981 N.E.2d 49, 53 (Ind. 2013)
(recognizing that “appellate review presupposes that a litigant’s
arguments have been raised and considered in the trial court”).

   Husband argues that the trial court erred by not considering that he
“will have to pay taxes on” his monthly pension benefit in requiring him
to pay half that amount to Wife once he retires. We acknowledge Husband
testified that he would have to pay taxes on these distributions, but he
merely guessed that his tax rate “could be” ten percent. He did not
provide the court with any definitive evidence of what his actual or
potential tax consequences will be when he retires and begins receiving
his monthly distributions. And a trial court cannot manufacture a party’s
tax consequences based on such conjecture or “speculative possibilities.”
Harlan, 544 N.E.2d at 555. Because that is all the court was presented with
here, Husband waived this issue.

Conclusion
   Indiana Code section 31-15-7-8 provides trial courts with the authority
to order a party to obtain life insurance—a form of security or guarantee—
when necessary to ensure the other party receives their share of the
marital estate. Here, the trial court’s findings support its judgment
ordering Husband to obtain and subsidize a life insurance policy to secure

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Wife’s distribution. And Husband waived his argument that the court
erred by not considering his tax consequences. Accordingly, we affirm.

Massa, Slaughter, Goff, and Molter, JJ., concur.

ATTORNEY FOR APPELLANT
Glen E. Koch II
Boren, Oliver & Coffey, LLP
Martinsville, Indiana

ATTORNEY FOR APPELLEE
Michael A. Ksenak
Ksenak Law Firm
Martinsville, Indiana

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