Court Opinion

ID: 4177607
Source: CourtListenerOpinion
Date Created: 2017-06-15 07:10:37.456119+00
Date Added: 2024-06-11T14:39:11.355278
License: Public Domain

STATE OF MICHIGAN

                             COURT OF APPEALS

JULIANNE ALLISON,                                                      UNPUBLISHED
                                                                       June 13, 2017
               Plaintiff-Appellee,

v                                                                      No. 330997
                                                                       St. Clair Circuit Court
                                                                       Family Division
GREGORY ALLISON,                                                       LC No. 14-002381-DO

               Defendant-Appellant.

Before: JANSEN, P.J., and MURPHY and BORRELLO, JJ.

PER CURIAM.

        Defendant appeals as of right the parties’ judgment of divorce, challenging the trial
court’s 60/40 distribution of the marital estate in favor of plaintiff and the trial court’s decision to
consider as marital property defendant’s shares in BTM Corporation (BTM), as well as any
increase in value of defendant’s 25% interest in Sawdon-Allison Building Company (Sawdon-
Allison). We affirm.

        “In a divorce action, this Court reviews for clear error a trial court’s factual findings on
the division of marital property and whether a particular asset qualifies as marital or separate
property.” Hodge v Parks, 303 Mich App 552, 554-555; 844 NW2d 189 (2014). “A finding is
clearly erroneous if, after a review of the entire record, the reviewing court is left with the
definite and firm conviction that a mistake was made.” Woodington v Shokoohi, 288 Mich App
352, 355; 792 NW2d 63 (2010). “If the trial court’s findings of fact are upheld, the appellate
court must decide whether the dispositive ruling was fair and equitable in light of those facts.”
Id. “The court’s dispositional ruling should be affirmed unless this Court is left with the firm
conviction that the division was inequitable.” Pickering v Pickering, 268 Mich App 1, 7; 706
NW2d 835 (2005).

        Defendant first argues that the trial court’s 60/40 distribution of the marital estate in
plaintiff’s favor was inappropriately punitive. According to defendant, the trial court placed a
disproportionate amount of weight on the parties’ respective fault, while ignoring defendant’s
significant financial contributions to the marital estate. We disagree.

       The goal in distribution of the marital estate in a divorce action is equity in light of all the
circumstances. Richards v Richards, 310 Mich App 683, 694; 874 NW2d 704 (2015).

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Mathematical equality is not required, but “any significant departure from congruence must be
clearly explained.” Berger v Berger, 277 Mich App 700, 717; 747 NW2d 336 (2008). The court
must consider all relevant factors, but may not assign disproportionate weight to any one
circumstance. Id. Specifically, in determining what is equitable, a trial court should consider
each party’s age, health, needs, station in life, and earning capacity; the length of the marriage;
contributions to the marital estate; fault of the parties; and other equitable circumstances. Butler
v Simmons-Butler, 308 Mich App 195, 208; 863 NW2d 677 (2014). This list of factors is
nonexhaustive, and the trial court may choose to consider additional factors relevant to a
particular case. Richards, 310 Mich App at 694. “Marital misconduct is only one factor among
many and should not be dispositive.” Sparks v Sparks, 440 Mich 141, 163; 485 NW2d 893
(1992). Trial courts must consider fault in conjunction with all other relevant factors, and may
not impose an inequitable division of property as a punitive response to fault. Hanaway v
Hanaway, 208 Mich App 278, 297; 527 NW2d 792 (1995). When considering the parties’
contributions to the marital estate, the financial contributions need not be equal. A nonwage
earning spouse can make substantial nonfinancial contributions to the marital estate by
maintaining the marital household and caring for the parties’ children. Woodington, 288 Mich
App at 366. Additionally, “the court may choose to consider the interruption of the personal
career or education of either party.” Richards, 310 Mich App at 694, quoting Sparks, 440 Mich
at 160.

        Upon review of the record, we are not left with a definite and firm conviction that the
trial court’s findings were erroneous or that its distribution of the marital estate was inequitable.
The trial court properly weighed all of the relevant factors before reaching its conclusion
regarding equitable distribution. The trial court noted that the parties, each 52 years of age, had
been married for close to 30 years and were both in good health. During the marriage, plaintiff
maintained the household and attended to the parties’ two children. Defendant worked, often
times over 40 hours per week, at BTM and Sawdon-Allison, two companies in which defendant
maintained an ownership interest. Defendant’s annual salary and bonuses from BTM of close to
$200,000, supplemented by annual distributions from both BTM and Sawdon-Allison, supported
an upper middle class lifestyle for both parties for the majority of their marriage. Over 29 years,
the parties accumulated considerable assets contributing to the marital estate. Most, if not all, of
the parties’ assets were purchased with defendant’s earnings.

        Although defendant suggests that the trial court failed to consider his significant
contributions to the marriage, the record does not support defendant’s suggestion. To the
contrary, the trial court specifically noted that defendant “was the person who worked for the
majority of the income that the marriage received.” However, the trial court also noted that
plaintiff’s contributions at home facilitated defendant’s ability to work long hours for two
different companies. If it were not for plaintiff taking on the child-rearing responsibilities and
maintaining the marital home, defendant would have been unable to devote as much time to
working not only as an employee of BTM, but also as a part owner of both BTM and Sawdon-
Allison. The trial court properly concluded that on the matters of age, health, needs, and
contributions, the parties were relatively equal.

        The trial court also properly considered the parties’ stations in life and relative earning
capacities, noting first that defendant’s circumstances were changing for reasons extrinsic to the
divorce. Specifically, BTM and Sawdon-Allison had recently sold, and defendant was required
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to sign a non-compete agreement limiting his ability to work for a similar company. Defendant’s
employment at BTM was unexpectedly terminated after the sale, and defendant was unemployed
at the time of the divorce proceedings. Distributions from the sale proceeds were still in dispute.
Plaintiff was working part-time and receiving about $17,000 per year. The trial court properly
concluded that these factors weighed relatively equally in favor of each party, but noted some
disparity in the parties’ future earning capacity:

       Clearly [defendant] has a longer work record that [plaintiff] and based upon that
       work experience could obtain employment but for the non-compete agreement.
       The defendant has no college degree but does have skills developed over the years
       that would allow him to transition to new employment in a non-manufacturing
       position. [P]laintiff has no degree and her only work history has been in a clerical
       position. Although she may be able to increase her hours in the future, it will not
       raise her ability to earn to any great extent. Thus, both parties at present find
       themselves in a position of having to live off assets acquired during the marriage
       with some supplement from greatly reduced earning potential.

Notably, the disparity in earning capacity originated by mutual agreement of the parties. Before
the marriage, plaintiff was employed in a clerical position at a manufacturing company, and left
her position to attend the household with defendant’s agreement, after the parties’ first child was
born.

        Finally, the trial court considered the matter of fault, concluding that defendant’s
extramarital affair and his refusal to end it caused the breakdown in the parties’ marriage. The
trial court noted that the parties were not suffering from problems other than those “typical in
many marriages,” prior to defendant’s decision to engage in his affair. When plaintiff learned of
the affair, she told defendant that she was willing to try and preserve the marriage if defendant
broke off his extramarital relationship. Defendant refused. Based on the totality of
circumstances, including fault, the trial court determined that a 60/40 division of the marital
estate in plaintiff’s favor was equitable.

        Defendant takes no issue with the trial court’s finding that defendant’s extramarital affair
was the reason for the divorce, or its finding that defendant was at fault for the breakdown of the
parties’ marriage. However, defendant argues that the trial court erred when it assigned a
disproportionate weight to the issue of fault and awarded plaintiff more than half of the marital
estate. The matter of fault has been given disproportionate weight when it is the only “true
justification” for a divergence from congruent distribution, or when the trial court’s comments
suggest that its property division is intended to punish one of the parties for specific conduct.
See Berger, 277 Mich App at 721. The record here does not support either circumstance, and we
are therefore not definitely and firmly convinced that the trial court disproportionately weighed
the matter of defendant’s fault when it divided the parties’ marital estate 60/40. As previously
discussed, the trial court considered the issue of defendant’s fault as but one factor among many,
and its decision to award plaintiff 60 percent of the marital estate was based on considerations
other than defendant’s conduct:

       It is clear to this court that the plaintiff and the defendant were married for nearly
       30 years and that the defendant earned a considerable income in his family

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       business. This made it unnecessary for the plaintiff to pursue a career of her own
       and the parties agreed that she should remain a stay at home mother caring for the
       children while the defendant continued to earn the money for the family. After 29
       years of marriage the plaintiff was faced with defendant’s infidelity and was
       forced to either accept the fact that he had been unfaithful, knowing from his own
       statement to her that he would continue to be unfaithful, and stay with the
       defendant and the financial security that she was used to, or to file a complaint for
       divorce even though she is not financially independent and is essentially
       unprepared to become so. Because the defendant’s infidelity caused the plaintiff
       to be in this position the court has determined that it is equitable to divide the
       assets of the marriage, with the exception of the interest [in BTM and Sawdon-
       Allison] in such a manner that approximately 60% is awarded to the plaintiff.

Nothing in the record suggests that the trial court’s distribution was imposed as punishment for
defendant’s behavior. To the contrary, the trial court’s determination reflects an understanding
of the difficult situation plaintiff now faces as a single woman, after 30 years of marriage, with
no formal education and very little work experience. The parties’ respective stations and future
earning capacities, especially considering the length of the marriage, were factors properly
considered by the trial court in reaching an equitable distribution of marital assets. The trial
court noted that defendant maintained the capacity to generate a larger income, having a greater
history of and training for employment. The trial court’s distribution of property was equitable
in light of this disparity in earning potential, as well as the trial court’s decision to reserve the
issue of alimony.

        Further, while the trial court ultimately diverged from a congruent distribution of marital
assets, defendant’s fault was not the only justification for this departure. The trial court also
properly considered the fact that during the divorce proceedings, defendant began hiding cash
from plaintiff by “altering direct deposits from his paycheck[.]” In total, roughly $128,000 was
unaccounted for over an 11-month period. Defendant also made the following cash purchases: a
2015 Polaris Ranger for $14,334; a moped for $2,339; a trailer for $2,562; and a storage unit for
$80 per month. Defendant sold two vehicles during the divorce proceedings, and was required to
give plaintiff half of the proceeds from those sales. Defendant pocketed the cash from the sales
and wrote plaintiff checks from the marital account, essentially giving plaintiff money that was
already hers. Defendant also spent marital funds on hotel rooms and expensive jewelry for his
mistress. Based on the foregoing, we are not definitely and firmly convinced that the trial court’s
60/40 division of the marital estate was inequitable.

       Defendant next argues that his 25% partnership interest in Sawdon-Allison and his
8.184% ownership interest in BTM were separate assets, and therefore, the trial court
erroneously awarded plaintiff half of defendant’s pro rata share of the June, 2015 sale of both
companies. We disagree.

        “In any divorce action, a trial court must divide marital property between the parties and,
in doing so, it must first determine what property is marital and what property is separate.”
Cunningham v Cunningham, 289 Mich App 195, 200; 795 NW2d 826 (2010). “[T]he marital
estate is divided between the parties, and each party takes away from the marriage that party’s
own separate estate with no invasion by the other party. Reeves v Reeves, 226 Mich App 490,

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494; 575 NW2d 1 (1997). “Generally, marital property is that which is acquired or earned
during the marriage, whereas separate property is that which is obtained or earned before the
marriage.” Cunningham, 289 Mich App at 201, citing MCL 552.19. However, property that a
spouse acquires during the marriage by inheritance or gift is considered to be separate property.
Dart v Dart, 460 Mich 573, 585; 597 NW2d 82 (1999). Separate property can lose its separate
character and become marital property when commingled with marital property, or treated as
marital property. Cunningham, 289 Mich App at 201-202. Further, the appreciation of separate
property is included in the marital estate if both parties contribute to the gain in value.
McNamara v Horner, 249 Mich App 177, 184-185; 642 NW2d 385 (2002). Appreciation is not
considered marital property when the gain in value is wholly passive. Id.

        We first address the trial court’s determination that 25% of the difference in value of
Sawdon-Allison from the date defendant acquired an interest in the company until the date of its
sale was marital property subject to division. Defendant acquired his 25% partnership interest in
Sawdon-Allison in 1993, during the parties’ marriage. The interest was a gift from defendant’s
mother, who at the time shared equal ownership interests with defendant’s father and two other
individuals. The trial court found defendant’s 25% interest in Sawdon-Allison “at the time of the
gift from his mother in 1993 was separate property from the marital estate.” Nevertheless, the
trial court went on to find that “the difference in the value of [defendant’s] 25% interest that has
accumulated since 1993 is not a passive accumulation in value but directly attributable to
[defendant’s] work on behalf of [Sawdon-Allison] as he was required to do under the partnership
agreement.” Further, the trial court determined that

       defendant’s ability to perform his obligation to [Sawdon-Allison] was facilitated
       by [plaintiff’s] work in maintaining the home and family and thereby freeing
       [defendant] from his attention to those details of everyday life of a family. Even
       though [defendant’s] 25% interest has never been transferred to be owned jointly
       between him and [plaintiff] and is property owned by [defendant], plaintiff has
       contributed to the improvement and accumulation of the property as a result of
       her efforts in tending to the family in support of [defendant’s] active involvement
       with the company.

       We find no clear error in the trial court’s determination that plaintiff was entitled to half
of defendant’s share in the profits from the sale of Sawdon-Allison. The appreciation of
defendant’s ownership interest was not passive. Rather, it accumulated because of defendant’s
considerable efforts, which were facilitated by plaintiff’s activities at home. Defendant’s role as
a partner in Sawdon-Allison was to oversee the management of buildings and properties owned
by Sawdon-Allison, a responsibility defendant undertook in addition to the 40 or more hours per
week he spent working at BTM. Defendant’s Sawdon-Allison partnership agreement required
him to “devote an appropriate and reasonably equal portion of [his] time and attention to the
business of the partnership, so as to provide for the devotion of such time as is necessary for the
successful operation of the business.” Defendant’s father testified that defendant was held to his
agreement, and defendant worked enough to relieve defendant’s father and a co-founder, Ed
Sawdon, of substantial administrative responsibilities. Plaintiff’s contributions in the marital
home directly contributed to the maintenance and growth of defendant’s ownership interest in
the company. Without plaintiff having taken care of the children, the children’s education, the
housework, the laundry, the cooking, the banking, and the bill paying, while defendant worked
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as both an employee of BTM and a 25% partner of Sawdon-Allison, defendant’s role in Sawdon-
Allison would not have been possible. Additionally, as the trial court noted, defendant’s
partnership agreement imposed an obligation to personally contribute to necessary loans or
capital infusions for the benefit of Sawdon-Allison. Any such funding would have been pulled
from the marital estate. The trial court did not clearly err in finding that plaintiff’s contributions
to the parties’ household actively facilitated the appreciation in value of defendant’s 25% interest
in Sawdon-Allison. See Hanaway, 208 Mich App at 294. The appreciated value was therefore
marital property subject to division.

        For similar reasons, we also find that the trial court did not clearly err when it found that
plaintiff was entitled to one-half of defendant’s share in profits from the sale of his ownership
interest in BTM. Defendant began receiving stock in BTM from his father, a part owner of
BTM, several years after he began working for BTM and two years after he and plaintiff were
married. He then received annual share transfers, one in every calendar year after 1988 with an
additional transfer in 1995, increasing his ownership interest by a small amount each year.
Although defendant characterized the transfers of stock as gifts, defendant’s father testified that
the transfers of stock were to intended to reduce his own tax liability, made on the advice of his
tax attorney. Considering the circumstances surrounding the stock transfers, the trial court
concluded that the stock constituted part of defendant’s compensation, and was therefore
considered marital property. The trial court was persuaded in its determination by the fact that
although defendant continued to move up the chain of command at BTM, his salary stagnated
over his final 10 years at the company. Apparently in lieu of a salary increase, defendant
continued to receive gifts of BTM stock from his father, in addition to sizeable quarterly
distributions as a part owner.

       The court finds that [the stock transfer] was not made for the purpose of planning
       for defendant’s inheritance. This finding coupled with the fact that the defendant
       was a salaried employee of BTM Corporation and that his annual salary remained
       essentially stagnant for at least the last 10 years while his shareholder interest in
       the company continued to increase gives some support to the plaintiff’s argument
       that the increase in the defendant’s shareholder interest was a way for the
       company to increase the defendant’s compensation[.]

After portions of the quarterly distributions were used to pay defendant’s share of BTM’s
quarterly taxes, defendant deposited the surplus funds into the parties’ joint savings account or
the parties’ joint investment portfolio. Funds placed in the “marital pot” were used for joint
purposes, including construction of the marital home, subsequently paying off the mortgage,
funding home improvements, and covering living expenses. The trial court concluded that
defendant’s ownership interest in BTM, as part of defendant’s compensation, was an “asset
acquired during the marriage” and was therefore marital property subject to division. The trial
court’s findings were supported by the record, and we are not definitely and firmly convinced
that the trial court made a mistake in its determination.

        Regardless, the trial court’s determination that defendant’s ownership interest in BTM
constituted marital property was properly supported by evidence that defendant consistently
treated that interest as marital property. The surplus funds from defendant’s quarterly
distributions were placed in the parties’ “marital pot” and used for marital purposes. The

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quarterly distributions were reported on the parties’ joint marital tax return, and any tax liability
for BTM or Sawdon-Allison was paid from marital funds. Over the years, the parties met with
attorneys three separate times to discuss a family estate plan, and each time the parties included
in their list of marital assets defendant’s ownership interest in BTM. Before the divorce, the
parties and their financial advisor had been brainstorming what to do with profits from the sale of
defendant’s interest in BTM and Sawdon-Allison so that plaintiff and defendant could retire
together. Even if defendant’s ownership interest in BTM could initially have been classified as
separate property, it lost that distinction when the parties treated the asset as though it was a
marital asset. Cunningham, 289 Mich App at 209. Additionally, as with profits generated
through defendant’s 25% interest in Sawdon-Allison, plaintiff actively contributed to the
acquisition of defendant’s compensation from BTM during the marriage. Any increase in the
value of defendant’s ownership in BTM was a result of “defendant’s active efforts as a part
owner and an employee of the company as well as [plaintiff’s] efforts in facilitating
[defendant’s] ability to devote the necessary and expected time to [BTM.]” Any appreciation of
the value of defendant’s stocks during the marriage was therefore properly considered marital
property and subject to division.

       Affirmed.

                                                              /s/ Kathleen Jansen
                                                              /s/ William B. Murphy
                                                              /s/ Stephen L. Borrello

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