PADGETT v. RAINS PADGETT (2025)

MEMORANDUM DECISION

Case Summary

[1] James David Padgett (“Husband”) appeals the trial court's decree dissolving his marriage to Lisa Jean Marguerite Rains-Padgett (“Wife”). Husband claims the trial court erred in excluding certain medical and credit card debt from the marital estate and in calculating the value of select marital assets. We reverse and remand.

Facts and Procedural History

[2] In March 2023, Wife petitioned to dissolve her marriage to Husband. During a final hearing on Wife's petition, Wife introduced a balance sheet and proposed distribution of property for “demonstrative purposes” only.¹ Tr. Vol. 2 at 22. The exhibit purported to list all of Wife's and Husband's assets and liabilities and assigned an approximate value to each item.

[3] Both Wife and Husband testified at the hearing. Relevant here, Husband disputed some of the valuations included in Wife's balance sheet. Husband argued Wife had overvalued his 1989 Chevy Silverado, two of his motor scooters, and his 401(k). That is, Husband claimed his Silverado and scooters were inoperable and explained he withdrew the entire balance of his 401(k) during the marriage to fund home repairs. From Husband's point of view, these assets were worth $7,550 less than stated on Wife's balance sheet. Wife did not challenge Husband's valuation of these assets or provide her own evidence as to what each asset was worth. While testifying, Husband also mentioned he had $3,400 in medical debt stemming from a back injury and $1,900 in credit card debt. Wife had not included these debts on her balance sheet and did not dispute Husband's corresponding valuations.

[4] At the conclusion of the hearing, the trial court informed the parties it was “going to go off of” Wife's balance sheet when assigning property values. Id. at 69. The trial court then altered some of the values on Wife's balance sheet based on evidence presented during the hearing. Ultimately, the trial court found Wife had not rebutted the presumption of a 50/50 division of marital property and ordered Wife to pay $289.91 to Husband as an equalization payment. Husband now appeals, arguing the trial court failed to include some of Husband's personal debt in the marital estate and assigned values unsupported by evidence to select pieces of marital property.

The trial court erroneously excluded Husband's medical and credit card debt from the marital estate.2

[5] Husband first claims the trial court erroneously excluded his medical and credit card debt from the marital estate. The division of marital property in Indiana is governed by Indiana Code Section 31-15-7-4 and involves a two-step process. See Roetter v. Roetter, 182 N.E.3d 221, 226 (Ind. 2022). The trial court must first identify the property to include in the marital estate, including both assets and liabilities and “ ‘all marital property,’ whether acquired by a spouse before the marriage or during the marriage or procured by the parties jointly.” Id. at 227; see also Ind. Code § 31-15-7-4(a) (1997). In other words, all marital property goes into the marital pot. See Roberts v. Roberts, 219 N.E.3d 767, 773 (Ind. Ct. App. 2023) (“The ‘one pot’ theory specifically prohibits the exclusion of any asset from the scope of the court's power to divide and award.”). Once the trial court identifies the marital estate, it must then distribute the property in a “just and reasonable” manner—presumptively an equal division between the parties. Roetter, 182 N.E.3d at 227; I.C. §§ 31-15-7-4(b), -5 (1997).

[6] Although Husband testified to the existence and extent of his medical and credit card debt during the final hearing, the trial court did not include such debt in the marital estate.³ Rather, the dissolution decree listed only Husband's debt tied to a consolidated personal loan—an unrelated debt, the value of which the parties did not dispute. Because the systematic exclusion of any marital property from the marital estate is erroneous, see Falatovics, 15 N.E.3d at 110, the trial court erred by failing to include Husband's medical and credit card debt in the marital estate, see Hill v. Hill, 863 N.E.2d 456, 460 (Ind. Ct. App. 2007) (explaining that although a trial court may decide to award a particular asset or liability solely to one spouse as part of its just and reasonable property division, it must first include the asset or liability in its consideration of the marital estate to be divided). On remand, the trial court should include Husband's medical and credit card debt as part of the marital estate when fashioning a just and reasonable division of property.

The trial court erred in assigning values unsupported by evidence to certain marital property.

[7] Husband next argues the trial court's valuations of his 401(k), Silverado, and two motor scooters were not supported by evidence in the record. We review a trial court's valuation of property in a dissolution action for abuse of discretion. Bingley v. Bingley, 935 N.E.2d 152, 154 (Ind. 2010). In doing so, we do not reweigh evidence or assess witness credibility. Eye v. Eye, 849 N.E.2d 698, 701 (Ind. Ct. App. 2006). A trial court has discretion when valuing marital assets to select the value as of any day between the date of filing the dissolution petition and the date of the final hearing. Quillen v. Quillen, 671 N.E.2d 98, 102 (Ind. 1996). The burden of producing evidence as to the value of marital property rests squarely with the parties and their attorneys. Alifimoff v. Stuart, 192 N.E.3d 987, 1002 (Ind. Ct. App. 2022), trans. denied. “If the trial court's chosen valuation is within the range of values supported by the evidence, we will affirm.” Campbell v. Campbell, 118 N.E.3d 817, 821 (Ind. Ct. App. 2019), trans. denied.

[8] Because the trial court did not include valuations in its written dissolution decree, it is difficult to determine what value the trial court assigned to each piece of marital property.⁴ Based on discourse between the trial court and the parties during the final hearing and the trial court's indication it was “going to go off of” Wife's balance sheet, however, it appears the trial court valued Husband's 401(k) at $3,000, his Silverado at $4,950, and his two motor scooters at $1,400 total. Tr. Vol. 2 at 69.

A. Husband's 401(k)

[9] At various points during the hearing, Husband testified he used the entire balance of his 401(k) to cover expenses tied to home repairs. In other words, Husband withdrew the entire balance of his 401(k) during the marriage. Wife explained she had no reason to dispute Husband's claim and made a similar point, echoing Husband “cashed out a 401(k)” sometime before she filed her dissolution petition. Id. at 38. Although Wife's balance sheet valued Husband's 401(k) at $5,000, a note next to the valuation stated “Husband is believed to have withdrawn his 401(k) during the marriage” such that its current value was “[u]nknown” to Wife. Ex. Vol. 3 at 16. Faced with this evidence, it was error for the trial court to include Husband's 401(k) in the marital estate and assign it any value.

B. Husband's Silverado and motor scooters

[10] At the hearing, Husband disputed Wife's valuation of his Silverado and his two motor scooters. Starting with the Silverado, Husband argued it was “not nearly worth” Wife's estimation because the truck was not currently operable.⁵ Tr. Vol. 2 at 28. In Husband's eyes, the Silverado was worth about $1,000. Other than her demonstrative exhibit, however, Wife did not present evidence as to the Silverado's value.⁶ Much of the same rings true about Husband's motor scooters. That is, Husband testified they were not operable and accordingly argued the pair was worth $600 less than Wife's estimation. And again, Wife did not present evidence on the matter apart from her demonstrative exhibit. The trial court erred by assigning values to Husband's Silverado and scooters not supported by evidence in the record.

Conclusion

[11] Because the trial court erred in excluding Husband's medical and credit card debt from the marital estate and by assigning assets values not supported by evidence in the record, we reverse and remand for a new calculation and division of the marital estate consistent with this opinion.

[12] Reversed and remanded.

FOOTNOTES

1.   “Demonstrative evidence is evidence offered for purposes of illustration and clarification.” Wise v. State, 719 N.E.2d 1192, 1196 (Ind. 1999). Whereas substantive evidence is evidence introduced for purposes of proving a fact at issue. See Substantive Evidence, Black's Law Dictionary (12th ed. 2024).

3.   The trial court did include $500 of Husband's debt related to his purchase of a motor scooter with his Amazon credit card. See Tr. Vol. 2 at 70.

4.   By including valuations in its written dissolution decree, a trial court can aid appellate review by removing the burden of undertaking a piecemeal reconstruction of the trial court's decision.

5.   At one point during the hearing, Husband noted the Silverado was operational when Wife filed her dissolution petition. See Tr. Vol. 2 at 66. Had Wife presented evidence as to the value of the Silverado at that time, it would have been within the trial court's discretion to assign it such value. See Quillen, 671 N.E.2d at 102. The only evidence Wife presented regarding the value of her and Husband's vehicles and scooters—apart from her demonstrative exhibit—was a Kelly Blue Book pricing report of her 2006 Toyota Tundra. The parties do not dispute the value of Wife's Tundra on appeal.

6.   Although Wife testified regarding some of the valuations on her demonstrative exhibit, she did not testify or provide any substantive evidence about how she arrived at her values for the Silverado or motor scooters.

Kenworthy, Judge.

Felix, J., and DeBoer, J., concur.