Jorge L. Hernandez v. Margaret L. Hernandez

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SUPREME COURT OF ARKANSAS  No.  07­343  Opinion Delivered October 25, 2007  JORGE L. HERNANDEZ,  APPELLANT,  VS.  MARGARET L. HERNANDEZ,  APPELLEE,  APPEAL  FROM  THE  GARLAND  COUNTY CIRCUIT COURT,  NO. DR­2005­893­IV,  HON. LYNN WILLIAMS, JUDGE,  DISMISSED  ON  DIRECT  APPEAL;  AFFIRMED ON CROSS­APPEAL.  ANNABELLE CLINTON IMBER, Associate Justice  The instant appeal arises from a divorce decree entered by the Garland County Circuit  Court.  Appellant Jorge Hernandez appeals the circuit court’s ruling that certain funds Jorge  received from his former employer were marital property and not a gift.  Margaret cross­  appeals the circuit court’s unequal division of the proceeds from those funds.  In  1983,  Jorge  began  working  for  Sante  Fe  Plastics  in  California.    Christopher  Rakhshan was his supervisor at Santa Fe Plastics for several years.  In 1993, when Rakhshan  moved  to  Hot  Springs,  Arkansas,  and  began  Delta  Plastics,  he  asked  Jorge  to  move  to  Arkansas and work for the company.  Jorge continued as a Delta Plastics employee until  2005 when the company was sold to Rexum Plastics.  Jorge  and  Margaret  married  in  1999.    Because  Jorge  had  been  so  loyal  to  the  company, Rakhshan and the other owners of Delta Plastics decided to reward him and some other employees in 2003.  The owners gave Jorge personal checks totaling approximately  $10,000.  Jorge then immediately endorsed the checks and returned them to the owners in  exchange for 1,000 shares of common stock and 2,000 restricted incentive shares in Delta  Plastics.  Jorge  filed  for  divorce  on  September  8,  2005,  and  the  couple  separated.    Shortly  thereafter, Rexum purchased Delta Plastics through a leveraged stock buy­out, and Jorge’s  shares dramatically increased in value.  Due to the buy­out, Jorge was required to redeem his  stock certificates, and, on September 21, 2005, he received $458,591.70 for his shares. Jorge  then deposited the proceeds from his shares into his separate personal checking account.  Due to the pending divorce, Jorge and Margaret filed separate income tax returns for 2005,  and Jorge paid the capital gains tax on the stock proceeds.  During the final divorce hearing before the circuit court, Jorge argued that the stock  proceeds were not marital property because he received the funds through a check written  only to him, the funds were never placed in the couple’s joint checking account, and the  stocks were only in his name.  To corroborate his assertions that the funds were a gift, Jorge  presented the depositions of Christopher Rakhshan and Carl Wellman.  In his deposition,  Rakhshan insisted that the funds were given to Jorge as a gift in appreciation of his service  to Delta Plastics and were not part of Jorge’s compensation plan.  Wellman, the former CFO  of Delta Plastics, stated that the funds given to Jorge did not come from the company or the  shareholders, and instead, came only from the owners personally.  Marla Lammers, a CPA  hired by Margaret, testified at the hearing that due to the employment relationship between ­2­  Jorge and the Delta Plastics owners, the funds  would not be considered a gift under the  Internal Revenue Code and, therefore, would be considered income.  On December 29, 2006, the circuit court entered the divorce decree, in which the  court determined that the disputed funds were marital property and not a gift.  Due to the  length  of  the  marriage  in  comparison  with  the  length  of  Jorge’s  employment  and  the  contribution of each spouse to the acquisition of the stock proceeds, the circuit court decided  to  divide  the  stock  proceeds  unequally,  thereby  awarding  Margaret  only  $85,335.38.  However, the decree also stated that Jorge would receive a credit against the amount owing  to Margaret for the taxes that he paid on that amount, and the circuit court judge made a  handwritten notation that a hearing would be held on the tax­credit issue on January 8, 2007.  A hearing was never held on the tax­credit issue, but on January 9, 2007, Jorge filed  his notice of appeal.  On January 11, 2007, the circuit court sent the parties a letter order  stating the exact amount of Jorge’s tax credit at $17,293.51.  On February 12, 2007, the court  entered an amended and supplemented divorce decree reflecting the court’s decision as to  the tax credit.  Margaret filed her notice of cross­appeal on March 13, 2007.  As  a  threshold  matter,  we  must  determine  whether  we  have  jurisdiction  over  the  parties’ appeals.  Before this court assumed the instant case from the Arkansas Court of  Appeals, Margaret filed a motion to dismiss Jorge’s appeal on the ground that his notice of  appeal was untimely.  The court of appeals denied her motion, and Margaret now raises the  same argument in her brief to this court.  Because Margaret’s argument concerns our subject  matter  jurisdiction  over  the  instant  appeal,  we  can  address  the  issue  sua  sponte.  See ­3­  Clarendon America Ins. Co. v. Hickok, ___ Ark. ____, ____ S.W.3d ___ (May 10, 2007).  Relying on a recent opinion by the court of appeals in Allen v. Allen, ___ Ark. App.  ___, ___ S.W.3d ___ (June 20, 2007), Margaret argues that Jorge’s notice of appeal was  untimely because the initial December 29 divorce decree was not a final order, and he did  not  file  an  amended  notice  of  appeal  after  the  February  12  amended  and  supplemented  divorce decree was entered.  Specifically, she asserts that because the December 29 decree  did not contain a specific amount for the tax credit and thus did not include a specific amount  of  stock  proceeds  that  Jorge  owed  her,  the  decree  did  not  put  the  court’s  directive  into  execution or end a separable branch of the litigation.  Jorge, however, argues that the decree  did dispose of a separable branch of the litigation—the issue of whether the funds were a  1  gift.  We have long held that a money judgment must contain a specific dollar amount in  order to be executed.  See e.g., Thomas v. McElroy, 243 Ark. 465, 420 S.W.2d 530 (1967);  Estate of Hastings v. Planters and Stockmen Bank, 296 Ark. 409, 757 S.W.2d 546 (1988).  Under Ark. R. App. P.– Civil 2 (a)(1), an appeal may be taken from a final judgment or  decree entered by the circuit court.  Ark. R. App. P.– Civil 2 (a)(1) (2007).  This court has  stated that the “test of finality and appealability of an order is whether the order puts the 1  Jorge argues that Margaret’s reliance on Allen v. Allen, supra, is misplaced because that  case only concerned the issue of when the divorce decree was effective.  Although the Allen court  did address the divorce decree’s effective date, it also dealt with the question of whether the  decree, which stated that the husband was entitled to a $40,000 award with set­offs without  listing the exact amount of the set­offs, was a final order.  See id.  ­4­  court’s directive into execution, ending the litigation or a separable part of it.”  Villines v.  Harris, 362 Ark. 393, 397, 208 S.W.3d 763, 766 (2005).  However, when the order appealed  from reflects that further proceedings are pending, which do not involve merely collateral  matters, the order is not final.  Id.  In Office of Child Support Enforcement v. Oliver, 324 Ark. 447, 921 S.W.2d 602  (1996), the chancellor entered an order of arrearage against Oliver but did not fix the amount  of arrearage.  Instead, the order stated that the OCSE should certify the amount of arrearage  within two weeks of the order.  Id.  Our court held that the chancellor’s order did not finally  resolve the amount of arrearage owed or end the litigation concerning the claim for arrearage.  Id.  In Morton v. Morton, 61 Ark. App. 161, 965 S.W.2d 809 (1998), the court of appeals  held that a chancellor’s divorce decree, which divided the property but held in abeyance the  determination of alimony, was not a final order for purposes of appeal.  Id.  Likewise, in  Allen v. Allen, supra, the court of appeals held that the circuit court’s divorce decree was not  a final order when the lower court’s order acknowledged that the wife owed the husband  $40,000  for  his  interest  in  her  business,  but  that  sum  was  to  be  reduced  by  set­offs  in  unstated amounts.  Id.  Here, as in the cases cited above, the initial divorce decree stated that Margaret was  entitled  to  $85,335.83  subject  to  reduction  by  the  amount  of  Jorge’s  tax  credit,  and  the  amount of the tax credit was yet to be determined.  The circuit court also made a notation on  the decree that a further hearing would be held on the issue.  Thus, it is clear from the face  of the decree that, while the circuit court had determined the funds were not a gift, the issue ­5­  2  was  still  subject  to  pending  litigation.    Accordingly,  we  dismiss  Jorge’s  direct  appeal.  Because Margaret did file a timely notice of cross­appeal, however, we will now address the  merits of her argument.  For her cross­appeal, Margaret argues that the circuit court erred in unequally dividing  the stock proceeds.  She asserts that the circuit court based its decision solely on the basis  of each party’s contribution to the acquisition of the proceeds, and because the circuit court’s  order does not indicate that the court considered any of the other factors listed in Ark. Code  Ann. § 9­12­315 (a) (Repl. 2002), the circuit court’s ruling was erroneous.  Jorge does not  offer any argument directly addressing this issue.  We review division­of­marital­property cases de novo; however, we will affirm the  circuit court’s findings of fact unless they are clearly erroneous, or against the preponderance  of  the  evidence;  the  division  of  property  itself  is  also  reviewed,  and  the  same  standard  applies.  Farrell v. Farrell, 365 Ark. 465, ___ S.W.3d ___ (2006).  A finding is clearly  erroneous when the reviewing court, on the entire evidence, is left with the definite and firm  conviction that a mistake has been made.  Id.  In order to demonstrate that the circuit court’s  ruling was erroneous, the appellant must show that the circuit court abused its discretion by  making a decision that was arbitrary or groundless.  Id. 2  Under Ark. R. App. P.–Civil 4 (a) (2007), when a party files a notice of appeal after an  oral decision is announced from the bench but before the written decree is entered, the notice of  appeal shall be treated as filed on the day after the decree is entered.  In the instant case, however,  Rule 4 (a) does not apply because no hearing was held on the tax­credit issue and no ruling was  made on the issue until January 11, two days after Jorge’s January 9 notice of appeal.  ­6­  Under Arkansas Code Annotated § 9­12­315, all marital property shall be divided  equally  between  the  parties  unless  the  circuit  court  finds  such  a  distribution  would  be  inequitable.  See  Ark.  Code  Ann.  §  9­12­315  (a)(1)(A)  (Repl.  2002).    Section  9­12­315  requires  that  the  circuit  court  consider  the  following  factors  when  making  an  unequal  distribution of marital property:  (i) The length of the marriage;  (ii) Age, health, and station in life of the parties;  (iii) Occupation of the parties;  (iv) Amount and sources of income;  (v) Vocational skills;  (vi) Employability;  (vii) Estate, liabilities, and needs of each party and opportunity  of each for further acquisition of capital assets and income;  (viii) Contribution of each party in acquisition, preservation, or  appreciation  of  marital  property,  including  services  as  a  homemaker; and  (ix) The federal income tax consequences of the court’s division  of property.  Ark. Code Ann. § 9­12­315 (a)(1)(A)(i)­(ix) (Repl. 2002).  When the circuit court divides  the property unequally, the circuit court must state its basis and reason for not dividing the  marital property equally between the parties, and the basis and reasons should be recited in  the circuit court’s order.  Ark. Code Ann. § 9­12­315 (a)(1)(B) (Repl. 2002).  In  Keathley  v.  Keathley,  76  Ark.  App.  150,  61  S.W.3d  219  (2001),  the  court  of  appeals held that while section 9­12­315 requires the circuit court to consider the statutory  factors and to state the basis of the unequal division of marital property, the circuit court is  not required to list each factor in the order, nor to weigh all factors equally.  Id.  Further, the  specific enumeration of the factors within the statute does not preclude a circuit court from ­7­  considering other relevant factors, where exclusion of other factors would lead to absurd  results or deny the intent of the legislature to allow for the equitable division of property.  Id.  In the instant case, the circuit court gave each party the separate property they brought  to the marriage and equally divided all of the marital property, except for the stock proceeds.  Instead, the court calculated the gain on the stock, and determined that Margaret was only  entitled to an amount that was proportionate to the length of the marriage as compared to the  length  of  Jorge’s  employment  with  Rakhshan  and  Delta  Plastics.    The  court  stated  that  because the parties were married six of the eighteen years Jorge was employed by Rakhshan,  the gains should be divided by three, and then a third of the gains should be divided in half,  resulting in Margaret’s $85,335.85 share.  Thus, it is clear from the circuit court’s order that both the length of the marriage and  the contribution of the parties to the acquisition of the stock proceeds formed the basis for  the  circuit  court’s  decision  to  divide  the  property  unequally.    Contrary  to  Margaret’s  argument, the fact that the circuit court did not list all of the statutory factors in the order  does not show error because the lower court was not required to list all the factors and was  entitled to weigh the factors differently in reaching its decision.  See Keathley v. Keathley,  supra.  Moreover, in Marshall v. Marshall, 285 Ark. 426, 688 S.W.2d 279 (1985), this court  advocated an approach similar to the one taken by the circuit court in the instant case.  In  Marshall, the chancellor decided to divide the husband’s retirement benefits equally when ­8­  the parties were married only ten of the thirty­five years in which the husband worked for  his former employer.  Id.  This court, however, determined that the portion of retirement  benefits the husband obtained before the marriage was the husband’s separate property and  the wife should only receive a proportionate share as reduced by the husband’s separate  property.  Id.  Thus, given the foregoing reasons, we conclude that the circuit court did not  abuse its discretion in dividing the stock proceeds unequally.  Margaret cites the court of appeals’s opinion in Baxley v. Baxley, 92 Ark. App. 247,  212 S.W.3d 8 (2005), in support of her argument.  In Baxley, the court of appeals reversed  the circuit court because the lower court only considered the contribution of the parties to  the acquisition of the marital property when it awarded one spouse the entire amount in an  investment account.  Id.  The instant case is distinguishable from Baxley.  Here, the circuit  court’s order reflects the court’s  consideration of more than just the contribution factor.  Accordingly, we cannot find error in the circuit court’s decision, and we affirm on cross­  appeal.  Direct appeal dismissed.  Cross­appeal affirmed. ­9­ 

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