TAMMY KAZEE (NOW THOMAS) APPELLANT/CROSS–APPELLEE v. MARK O. KAZEE APPELLEE/CROSS–APPELLANT
NOT TO BE PUBLISHED
This is an appeal of the Boyd Circuit Court's division of marital and restoration of nonmarital property. Based upon the following, we affirm the decision of the trial court.
Tammy Kazee (now “Thomas”) and Mark Kazee were married on October 9, 1993. The case was originally referred to a Domestic Relations Commissioner; however, the trial court set aside the report made by the Commissioner and conducted its own hearing after exceptions were filed to the report. After the hearing, the trial court issued a Putnam v. FanningDouble Decree on October 17, 2007.
The Kazees owned a commercial property that had been purchased prior to their marriage, upon which they ran a business (the “business property”) as well as other properties that were for rental purposes. They agreed to the value of all the real estate with the exception of the business property. The trial court distributed the assets of the parties based on marital and nonmarital interests. The parties now both bring issues on appeal regarding the distribution and various costs.
STANDARD OF REVIEW
Kentucky Rules 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.” Findings are considered to be clearly erroneous if they are manifestly against the weight of the evidence. Frances v. Frances, 266 S.W.3d 754, 756 (Ky.2008); Wells v. Wells, 412 S.W.2d 568, 571 (Ky.1967).
In reviewing a court's division of property in a divorce action, an appellate court must defer to the discretion of the trial court. Herron v. Herron, 573 S.W.2d 342 (Ky.1978). The test for abuse of discretion is “whether the trial judge's decision was arbitrary, unreasonable, unfair, or unsupported by sound legal principles.” Commonwealth v. English, 993 S.W.2d 941, 945 (Ky.1999). With these standards in mind, we examine the issues brought before us in this action.
Tammy first argues that the trial court abused its discretion in accepting Mark's appraiser's valuation of the business property. Kentucky Revised Statutes (KRS) 403.190(1) requires marital property be divided in “just proportions.” KRS 403.190(1) sets forth the following factors for a court to consider in dividing marital property:
(a) Contribution of each spouse to acquisition of the marital property, including contribution of a spouse as homemaker;
(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.
David Floyd was hired by Mark to appraise the business property. Floyd valued the property at $227,000 as of February 29, 2008. Tammy's appraiser, Roger Osborne, valued the building at $350,000 in April of 2010, not taking into account any possible nonmarital value. The trial court found as follows:
In regards to the value of the commercial building, both appraisals were flawed to one degree or the other. The appraisal of Mr. Osborne was done as of the current date and not as of the date of the divorce or anywhere close in time to same. The appraisal of Mr. Floyd contained obvious typographical errors due to a “cut and paste” error explained by the appraiser but also did not take into account the lease being paid by Electrical Switch Gear. Both appraisals did take into account the cell tower leases, which are on the property.
Considering both appraisals as a whole, the Court places the value of the property squarely in the middle of the appraised value of Mr. Osborne and the appraised value of Mr. Floyd as $288,500.00.
The trial court, therefore, did not simply rely on Floyd's appraisal. Instead, he weighed both appraisals and factored into his decision issues such as when the appraisals were made and the nonmarital value of the property. Thus, we find the trial court did not abuse its discretion in its valuation of the commercial property.
Next, Tammy asserts that the trial court abused its discretion regarding her equitable share of the business proceeds. This issue is based on the withdrawal by Tammy of $101,455 from the business account. The court held as follows:
In regards to the $100,000.00, which the Petitioner removed from the business account, the Court orders that she may keep the $100,00.00 and same shall be shown as income to her on the corporate tax return. The Court heard testimony from the accountant for the business concerning how the money should be distributed. Essentially, the money will have to be shown as either income or a distribution. If it is shown as a distribution, tax rules would require that an equal distribution be made to the Respondent. The testimony was that this money was removed from an operating account and that there is not another $100,000.00 to distribute to the Respondent. As such, the Court believes it is best this money be awarded to her as income and shown appropriately on the corporate tax return.
We also find this not to be an abuse of discretion by the trial court. While Tammy argues there was enough money in the account to allow an equal distribution to Mark, we find there is ample evidence upon which the trial court could rely to make his decision that there was not. The trial court based its decision upon the expert appraisal of an accountant regarding the possible ways of dealing with the $100,000 distribution. Danny Meenach, a certified public accountant from Grayson, Kentucky, was the accountant for the parties' company, ESSCO, prior to their purchase of it. Therefore, we affirm the trial court's decision as to this issue.
Tammy's next argument is that the trial court erred in distributing debt to her. The trial court used the debt owed upon the various properties the parties owned as of the date of the divorce. The final equity assigned to the parties gave Tammy forty-seven percent (47%) of their assets, with Mark receiving fifty-three percent (53%). The trial court stated that this was an equitable distribution due to various factors, including those listed in the statute. The debt reduction between the time of the divorce and the distribution was a factor upon which the trial court based its final equity determination. We find that distributing properties with debt attached to them as the trial court did in this instance was not an abuse of his discretion. Thus, we affirm the decision of the trial court as to this issue.
Tammy's final contention is that the trial court erred in awarding Mark the monies that were in their Smith Barney accounts. The trial court valued the marital portion of the Smith Barney account at $4,736 (the remainder of the Smith Barney Account was the result of a rollover of Mark's premarital monies from a prior employer) and awarded this entire amount to Mark. This amount is offset by the cash that was withdrawn by Tammy from various accounts. We find that this is an equitable distribution pursuant to KRS 403.190(1) and that the trial court did not abuse its discretion in awarding the Smith Barney account to Mark. Thus, we affirm the trial court's decision on this issue.
Mark also asserts the trial court erred in its decision. First, he contends that the trial court erred in failing to award him appraisal fees. While he agrees that there were counter appraisals on the commercial property and his residence, he contends that there was no reason to not require a split of the remaining appraisal fees, since both the parties agreed to the value and, therefore, Tammy benefitted from the appraisals. He asserts that he should have been awarded $1,937.50 for his appraisal costs. Given the distribution of property by the trial court, we do not find this to have been in error.
Mark next asserts that the trial court erred in failing to award and/or credit him interest on a loan for the operating account in the amount of $19,602. He states that he incurred this debt due to the actions of Tammy in withdrawing the monies from the business account as set forth above. The trial court, however, treated the monies as income to Tammy, (see supra ) and took into account the lack of a similar amount of money available to Mark as a distribution. The monies borrowed by Mark were part of the business and were, therefore, in the final valuation of the business. We find the trial court equitably distributed the accounts and properties of the parties and did not abuse its discretion. Thus, we affirm the awards and distributions made by the trial court in this matter.