CLARENCE MICHAEL GIVENS v. BETSY GRAY GIVENS
Annotate this Case
Download PDF
RENDERED: APRIL 30, 2004; 10:00 a.m.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2002-CA-002420-MR
AND
NO. 2002-CA-002462-MR
CLARENCE MICHAEL GIVENS
APPELLANT/CROSS-APPELLEE
APPEAL AND CROSS-APPEAL FROM FAYETTE CIRCUIT COURT
HONORABLE GARY D. PAYNE, JUDGE
ACTION NO. 95-CI-00597
v.
BETSY GRAY GIVENS
APPELLEE/CROSS-APPELLANT
OPINION
AFFIRMING IN PART, VACATING IN PART,
REVERSING IN PART AND REMANDING
** ** ** ** **
BEFORE:
JOHNSON, MINTON AND TACKETT, JUDGES.
JOHNSON, JUDGE:
Clarence Michael Givens has appealed and his
former wife, Betsy Gray Givens, has cross-appealed from the
findings of fact, conclusions of law, and decree of dissolution
of marriage entered by the Fayette Circuit Court on October 23,
2002.
Having concluded that the trial court failed to make
sufficient findings concerning its decision to award Clarence,
as part of his share of the marital estate, sole possession of a
sailboat and several hundred thousand dollars in marital funds
that were unaccounted for at the time of the dissolution, we
vacate in part and remand for additional findings.
Having
further concluded that the trial court was clearly erroneous in
finding that the settlement proceeds Clarence received from a
legal malpractice action were his non-marital property, we
reverse in part and remand.
Finally, having concluded that the
trial court did not err or abuse its discretion with respect to
the other rulings challenged in this appeal, we affirm in part.
Clarence and Betsy were married in Hopkinsville,
Christian County, Kentucky, on November 22, 1973.
The marriage
produced three children, all of whom were over the age of 18
years at the time of the divorce.
Throughout the course of the
marriage, the family moved back and forth between Hopkinsville
and Lexington, Kentucky.
In 1975 Clarence received a one-third
interest in 18 separate tracts of real property located in
Christian County as a gift from his father.
Clarence’s brother,
James Givens, and his sister, Susan Miles, each received a onethird interest in the property as well.
The three siblings held
title to the property through a partnership named Skyline
Enterprises.1
In 1983 Skyline Enterprises hired Givens
Construction Company to build a grocery store on a portion of
the property owned by the partnership.
1
At the time, Givens
The property was held in a trust prior to 1975, at which time the property
was transferred to Clarence, James and Susan.
-2-
Construction was owned and operated by Clarence and Betsy.2
Givens Construction received 5% of the gross construction
proceeds on the project.
In January 1993 Clarence and his siblings entered into
a settlement agreement whereby Clarence agreed to sell his
interest in the partnership to his brother and sister for
approximately $2,260,000.00.3
Clarence deposited the proceeds
from the sale in an account under his name at the Bank of the
Bluegrass.
Shortly thereafter, Clarence transferred
approximately $2,260,269.00 from the account at the Bank of the
Bluegrass to an account at the Bank of Harlan.4
In 1994 Clarence presented Betsy with a cashier’s
check for $500,000.00 and told her he wanted her to use the
money to purchase the stock he owned in Skyline Motel II
Corporation.5
According to Betsy, Clarence informed her that he
wanted to place the stock in her name and that he “want[ed]
[her] to have the stock.”
Consequently, Betsy deposited the
cashier’s check in her individual account at Bank One, after
which she obtained a cashier’s check payable to Clarence in the
2
Clarence was the president of the company and Betsy was the treasurer.
3
The record does not disclose the exact dollar amount Clarence received for
his interest in the partnership.
4
Clarence did not consult Betsy prior to transferring the funds from the Bank
of the Bluegrass to the Bank of Harlan.
5
The record is unclear as to the source of the $500,000.00.
-3-
amount of $500,000.00.
Betsy then presented Clarence with the
cashier’s check and the stock was transferred into her name.6
In February 1995 the couple began to experience
marital difficulties and Betsy filed a petition for legal
separation.
The couple reconciled a few months later and took a
trip to Tortola, British Virgin Islands, in June 1995.
While in
Tortola, Clarence informed Betsy that he had deposited
substantial amounts of cash in various offshore accounts and
purchased a sailboat from an offshore charter company for
approximately $115,000.00.
According to Betsy, Clarence also
informed her that he had given an individual named Rick Thomas a
substantial amount of cash with directions to slowly filter the
money into various offshore accounts.
Clarence also appears to
have provided Thomas with approximately $200,000.00 which was to
be used as an investment for a “mortgage fund.”
The couple
decided to consolidate the money Clarence had deposited in the
offshore accounts into one account under Clarence’s name at
Barclays Bank in Tortola.
When Clarence and Betsy returned to Tortola in January
1996, they discovered that Thomas had absconded with the
sailboat and $200,000.00, which they claim were never recovered.
6
The shareholders agreement for Skyline Motel II Corporation contained a
provision which prohibited each shareholder from transferring his shares in
the corporation to a third party without first offering the shares to the
remaining shareholders. Consequently, Clarence offered his shares in the
corporation to the other shareholders prior to transferring the stock to
Betsy.
-4-
While in Tortola, Clarence and Betsey transferred approximately
$750,000.00 from the account at Barclays Bank into a certificate
of deposit listed in both of their names.
The couple decided to
keep approximately $90,000.00 in the account at Barclays Bank
solely in Clarence’s name.7
Clarence and Betsy separated again in December 1996.
On January 2, 1997, Betsy filed an amended petition for
dissolution of marriage in the Fayette Circuit Court.
On
February 25, 1997, the trial court entered an order prohibiting
Clarence from liquidating, transferring, dissipating or
disposing of the martial assets.
In 1998 Clarence received
approximately $211,247.52 in settlement proceeds from a legal
malpractice lawsuit he had filed against Daniel Hicks in 1992.8
An evidentiary hearing was held before the trial court
on September 20 and 21, 1999.
As of September 1999, Clarence
and Betsy jointly had a CD at Barclays Bank valued at
approximately $741,779.37.
Clarence also had an account at Bank
One in his name with a balance of approximately $53,217.80; an
IRA in his name valued at approximately $90,654.72; and a life
insurance policy with Woodmen of the World in his name with a
7
It appears that Clarence also had an account in the name of JJB Enterprises
at Barclays Bank which was to be used for a chartering business involving
Thomas. Betsy did not have access to this account or the account listed in
Clarence’s name. As of November 1, 1996, the JJB Enterprises account had a
balance of approximately $9,423.10.
8
The malpractice action was filed in response to a suit brought by Hicks
against Clarence for attorney’s fees.
-5-
cash value of approximately $81,577.09.
Betsy had an IRA in her
name valued at approximately $7,977.51 and a savings account in
her name with a balance of approximately $30,000.00.
Betsy also
had 333 1/3 shares of stock in Skyline Motel II Corporation
listed in her name.
In addition, as of September 1999, Betsy
had received approximately $105,000.00 in several installments
from the $211,247.52 in settlement proceeds Clarence received in
1998 from his legal malpractice action.9
Betsy testified at the hearing that Clarence was
actively involved in Skyline Enterprises until the partnership
was dissolved in 1993.
Betsy stated that Clarence spent a lot
of time during the marriage in western Kentucky working for the
partnership.
Betsy further testified that Clarence received
monthly draw checks from the partnership until it was dissolved
in 1993.
Betsy stated that she was actively involved in Givens
Construction.
Betsy testified that Clarence was the president
of the company and she was the treasurer.
Betsy further
testified that in 1983 Skyline Enterprises hired Givens
Construction Company to build a grocery store on a portion of
the property owned by the partnership.
Betsy explained that
Givens construction was paid by Skyline for the work it
performed on this project.
9
Clarence and Betsy no longer had an interest in the marital residence.
1993 the couple transferred the marital residence into a trust for the
benefit of their children.
-6-
In
Clarence testified that his involvement with
Skyline Enterprises during the marriage was minimal.
Clarence
acknowledged, however, that in 1983 Skyline Enterprises hired
Givens Construction Company to build a grocery store on a
portion of the property owned by the partnership.
Clarence
maintained his involvement with the partnership during the
marriage was limited to the work performed by Givens
Construction in 1983.
Clarence further testified that he never
intended to give Betsy his shares of stock in Skyline Motel II
Corporation as a gift.
Clarence claimed he was concerned the
value of the stock was limited by the restriction in the
shareholders agreement prohibiting the holder of the stock from
transferring shares in the corporation to a third party without
first offering the shares to the remaining shareholders.
Clarence maintained that by transferring the stock to Betsy, he
was able to remove this restriction, thereby increasing the
value of the stock.
Clarence insisted he never intended for
Betsy to exercise any control over the stock.
Clarence further testified that the funds used to
purchase the joint CD at Barclays Bank came entirely from the
$2,260,269.00 he received when he sold his interest in Skyline
Enterprises.
Clarence stated that he initially deposited the
proceeds from the sale of the partnership in an account under
his name at the Bank of the Bluegrass.
-7-
Clarence claimed he then
transferred the funds to an account at the Bank of Harlan.
Clarence testified that the funds used to purchase the joint CD
at Barclays Bank came directly from the account at the Bank of
Harlan.
Clarence insisted he never commingled these funds with
any other funds he received during the marriage.
Clarence
claimed the funds were transferred to Tortola in a “variety of
ways.”
Clarence testified that he made several trips to Tortola
and that he took approximately $10,000.00 with him on each
trip.10
Clarence claimed he also made several wire transfers to
various accounts in Tortola.
Clarence was unable, however, to
produce any documentation evidencing precisely how the funds
were transferred from the Bank of Harlan to Barclays Bank in
Tortola.
Clarence testified that he purchased a sailboat from
an offshore charter company in Tortola for approximately
$115,000.00.
Clarence further testified that he provided an
individual named Rick Thomas with approximately $200,000.00 as
an investment for a “mortgage fund.”
Clarence was unable to
account for the whereabouts of the sailboat and the $200,000.00.
Clarence testified that he cashed in his life insurance policy
with Woodmen of the World shortly before the hearing and
received approximately $81,000.00.
Clarence further stated that
he had spent the money in the account at Barclays Bank listed in
10
Clarence insisted he never took more than $10,000.00 with him on each trip.
-8-
his name, which as of November 1996 had a balance of
approximately $90,000.00.11
Clarence testified that the account
at Barclays Bank in the name of JJB Enterprises, which as of
November 1996 had a balance of approximately $9,423.10, no
longer existed.
In closing, Clarence claimed the money he
received in 1998 from the settlement of his malpractice lawsuit
against Hicks was his non-marital property.
Clarence maintained
the lawsuit was related to Hick’s representation in connection
with his father’s estate.12
Bernard F. Lovely testified at the hearing over
Betsy’s objection.
Lovely explained that he represented
Clarence in his legal malpractice action against Hicks.
In sum,
Lovely opined that the proceeds from the settlement concerned
Hicks’s negligence in the representation of Clarence in a
probate action involving his father’s estate.
On October 23, 2002, the trial court entered its
findings of fact, conclusions of law and decree of dissolution
of marriage.
The trial court found that the appreciation in the
value of Skyline Enterprises from the time Clarence received his
interest in the partnership in 1975 until the time he sold it in
11
As previously discussed, Betsy did not have access to this account.
12
Clarence’s father passed away in 1982.
-9-
1993 was marital property.13
The trial court found that “[t]he
appreciation in value was due both to general economic
conditions and efforts of [Clarence] and his siblings in
managing the partnership[.]”
The trial court noted, however,
that Clarence had failed to produce any evidence from which it
could “apportion the appreciation[.]”
The trial court further
found that Clarence had failed to trace the non-marital portion
of his partnership interest to the funds in Tortola.
The trial
court noted that “[t]he funds can be traced as far as the Bank
of Harlan, but from there they were converted to cash and no
record exists as to their disposition.”
Consequently, the trial
court found that the accounts in Tortola were marital property.14
The trial court also found that the missing sailboat
and the $200,000.00 that Thomas allegedly absconded with were
martial property.
The trial court noted, however, that
Clarence’s explanation as to the whereabouts of the sailboat and
the $200,000.00 was “not credible.”
The trial court further
found the IRA’s held by both parties to be marital property.
In
addition, the trial court found the life insurance policy
13
The trial court found that Clarence’s interest in the partnership when it
was created in 1975 was $309,000.00. As previously discussed, Clarence
received approximately $2,260,000.00 when he sold his interest in the
partnership to his brother and sister in 1993. Consequently, the trial court
found that Clarence’s non-marital interest in the property was $309,000.00.
14
As previously discussed, as of November 1, 1996, Clarence and Betsy had a
joint CD at Barclays Bank valued at approximately $750,000.00. In addition,
Clarence had an account in his name at Barclays Bank with a balance of
approximately $90,714.58 and an account in the name of JJB Enterprises with a
balance of approximately $9,423.10.
-10-
Clarence liquidated shortly before the hearing and the account
at Bank One in his name to be marital property.
As to the transfer of Clarence’s shares of stock in
Skyline Motel II Corporation to Betsy, the trial court found
this property to be a gift.
The trial court reasoned that “it
would be inequitable to allow [Clarence] to represent this
transaction to be a valid arms-length sale for the purpose of
defeating the buy-sell provision and yet portray it as a sham in
this action, particularly in light of his failure to explain
what happened to the $500,000 he received in the transaction.”
Consequently, the trial court found that the stock was Betsy’s
non-marital property.
In addition, the trial court found that
the savings account in Betsy’s name with a balance of
approximately $30,000.00 was her non-marital property.15
The
trial court further found that the $211,247.52 Clarence received
from his legal malpractice lawsuit was his non-marital property.
The trial court reasoned that the settlement was primarily
related to a probate action involving Clarence’s inheritance
from his father’s estate.
Based on the foregoing findings, the trial court
awarded Clarence as his share of the marital estate $152,584.80
from the joint CD at Barclays Bank; the IRA account in his name
valued at approximately $90,654.72; the life insurance policy in
15
The trial court found that the money in the account was from an inheritance
Betsy received from her uncle.
-11-
his name valued at approximately $81,577.09;16 the Bank One
account in his name with a balance of approximately $53,217.80;
the JJB Enterprises account at Barclays Bank, which as of
November 1996 had a balance of approximately $9,423.10; the
account in his name at Barclays Bank, which as of November 1996
had a balance of approximately $90,714.58; the missing sailboat
which the court valued at $129,000.00; and the $200,000.00 that
he allegedly entrusted to Thomas.
The sum of Clarence’s share
of the marital estate totaled $807,172.09.
As for the account
in Clarence’s name at Barclays Bank, the missing sailboat and
the $200,000.00, the trial court stated that it was not
satisfied with Clarence’s explanation as to the disposition of
these items.
Consequently, the trial court noted that “[i]f and
when they are found or recovered, they shall be his sole and
exclusive property.”17
The trial court awarded Betsy as her share of the
marital estate $589,194.58 from the joint CD at Barclays Bank
and the IRA in her name valued at approximately $7,977.51.
The
trial court credited Betsy with the $105,000.00 she received
16
As previously discussed, Clarence testified that he cashed in his life
insurance policy shortly before the hearing.
17
The trial court failed to provide any explanation as to why it awarded
Clarence the JJB Enterprises account. In its findings of fact, the trial
court stated that Clarence testified that the JJB Enterprises account had a
balance of approximately $9,000.00 as of the date of the hearing. After a
thorough review of the record, we were unable to find any portion of
Clarence’s testimony in which he stated that the JJB Enterprises account
still existed at the time of the hearing. In fact, Clarence testified that
the account no longer existed.
-12-
from Clarence’s legal malpractice lawsuit, which brought the
total value of her share of the marital estate to $702,172.09.18
This appeal and cross-appeal followed.
Clarence argues on appeal that the trial court erred
(1) in its determination that he failed to trace the non-marital
portion of his interest in Skyline Enterprises to the funds in
Tortola; (2) in its determination that the appreciation in the
value of Skyline Enterprises was marital property; (3) by
incorrectly calculating his non-marital interest in Skyline
Enterprises; (4) in its determination that the transfer of his
shares of stock in Skyline Motel II Corporation to Betsy was a
gift; (5) by awarding him sole possession of the missing
sailboat and the $200,000.00 that Thomas allegedly absconded
with along with the accounts at Barclays Bank and the life
insurance policy with Woodmen of the World that he liquidated
prior to the dissolution as part of his share of the marital
estate; (6) in its valuation of the sailboat; and (7) by failing
to issue its judgment in the matter within 90 days from the date
the dissolution proceedings were initiated as required by KRS19
454.350(1).
Betsy claims in her cross-appeal that the trial
18
The difference between the total value of Clarence’s share of the marital
estate and Betsy’s share is $105,000.00. This figure represents the amount
Betsy received from Clarence’s malpractice action against Hicks. As
previously discussed, the trial court found that the $211,247.52 Clarence
received from his legal malpractice lawsuit was his non-marital property.
19
Kentucky Revised Statutes.
-13-
court erred in its determination that the $211,247.52 in
settlement proceeds that Clarence received from his legal
malpractice action against Hicks was his non-marital property.
We will address the arguments raised by the parties in this
appeal seriatim.
I.
CLARENCE’S APPEAL
A.
SKYLINE ENTERPRISES
1.
TRACING
Clarence contends the trial court erred in its
determination that he failed to trace the non-marital portion of
his interest in Skyline Enterprises to the joint CD at Barclays
Bank in Tortola.20
Clarence maintains that the funds used to
purchase the joint CD at Barclays Bank came entirely from the
$2,260,269.00 he received when he sold his interest in Skyline
Enterprises.
Clarence insists that he never commingled these
funds with any other funds he received during the marriage.
It is well-established that when a case is tried
before the court without a jury, “[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.”21
A factual finding is not
20
As previously discussed, the trial court found that Clarence’s non-marital
interest in Skyline Enterprises was $309,000.00.
21
Kentucky Rules of Civil Procedure (CR) 52.01.
-14-
clearly erroneous if it is supported by substantial evidence.22
“Substantial evidence has been defined as some evidence of
substance and relevant consequence, having the fitness to induce
conviction in the minds of reasonable people.”23
Moreover,
“‘[i]t is within the province of the fact-finder to determine
the credibility of witnesses and the weight to be given the
evidence.’”24
The concept of tracing arises from the KRS 403.190(3)
presumption that all property acquired during the marriage is
marital property.25
In sum, the tracing requirement places the
burden on the party claming a non-marital interest in property
no longer owned to “trace the previously owned property into a
presently owned specific asset” [footnote omitted].26
A party
cannot meet this burden simply by showing that he or she brought
non-marital property into the marriage without also showing that
22
See, e.g., Johnson v. Galen Health Care, Inc., Ky.App., 39 S.W.3d 828, 832
(2001); and Uninsured Employers’ Fund v. Garland, Ky., 805 S.W.2d 116, 117
(1991).
23
Burton v. Foster Wheeler Corp., Ky., 72 S.W.3d 925, 929 (2002)(citing
Smyzer v. B.F. Goodrich Chemical Co., Ky., 474 S.W.2d 367, 369 (1971)).
24
Cole v. Gilvin, Ky.App., 59 S.W.3d 468, 473 (2001)(quoting Garland, 805
S.W.2d at 118).
25
See, e.g., Terwilliger v. Terwilliger, Ky., 64 S.W.3d 816, 820 (2002).
26
15 Graham & Keller, Kentucky Practice, Domestic Relations Law, § 15.10 (2d
ed. 1997 & Supp. 2002).
-15-
he or she has spent his or her non-marital assets in a traceable
manner during the marriage.27
In Chenault v. Chenault,28 the Supreme Court of
Kentucky recognized that tracing to a mathematical certainty is
not always possible, noting that: “[w]hile such precise
requirements for nonmarital asset-tracing may be appropriate for
skilled business persons who maintain comprehensive records of
their financial affairs, such may not be appropriate for persons
of lesser business skills or persons who are imprecise in their
record-keeping abilities.”29
As a result, the Chenault Court
held that testimony alone may be sufficient to satisfy the
tracing requirement.
More recently, however, the Supreme Court
held that while Chenault relaxed the more draconian requirements
for tracing, “it did not do away with the tracing requirements
altogether.”30
In Terwilliger, supra, the Supreme Court noted
that where the party claming the non-marital interest is an
experienced business person, “it is certainly reasonable to
require him to maintain and to produce records to establish his
claims of nonmarital property[.]”31
27
See Brunson v. Brunson, Ky.App., 569 S.W.2d 173, 176 (1978).
28
Ky., 799 S.W.2d 575 (1990).
29
Id. at 578.
30
Terwilliger, 64 S.W.3d at 821.
31
Id.
-16-
While Clarence insists that the funds used to purchase
the joint CD at Barclays Bank valued at approximately
$750,000.00 came entirely from the $2,260,269.00 he received
when he sold his interest in Skyline Enterprises, he has failed
to produce any documentation evidencing the transfer of the
funds from the Bank of Harlan to Barclays Bank in Tortola.
Clarence’s testimony at the dissolution hearing clearly
demonstrates that he is a knowledgeable business person who
should have been aware of the necessity for keeping records of
any transactions involving the transfer of funds to offshore
accounts.
Moreover, Betsy testified that the money used to
purchase the joint CD at Barclays Bank could have come from a
variety of sources.
Betsy explained that Clarence had built a
bagel company and that he was employed as an independent
contractor during the time period the money was funneled to
Tortola.
Consequently, we cannot conclude that the trial
court’s determination that Clarence failed to trace the nonmarital portion of his interest in Skyline Enterprises to the
joint CD at Barclays Bank was clearly erroneous.32
2.
APPRECIATION
32
Clarence’s reliance on Allen v. Allen, Ky.App., 584 S.W.2d 599 (1979), is
misplaced. In Allen, this Court held that “[t]he requirement of tracing
should be fulfilled, at least as far as money is concerned, when it is shown
that nonmarital funds were deposited and commingled with marital funds and
that the balance of the account was never reduced below the amount of the
nonmarital funds deposited.” Id. at 600. In the case sub judice, Clarence
failed to establish that any of the money used to purchase the joint CD at
Barclays Bank came from a non-marital source.
-17-
Clarence next contends that the trial court erred in
its determination that the appreciation in the value of Skyline
Enterprises was marital property.
When the value of a non-
martial asset increases during the marriage due to general
economic conditions, the increase is not subject to division as
marital property.
Conversely, when the increase in value is due
to the joint efforts of the parties the appreciation in value of
the non-marital asset is subject to division as marital
property.33
KRS 403.190(3) creates a presumption that any such
increase in value is marital property.34
Consequently, the
33
See, e.g., Goderwis v. Goderwis, Ky., 780 S.W.2d 39, 40 (1989). See also
Marcum v. Marcum, Ky., 779 S.W.2d 209, 210-11 (1989)(“[t]here is a
distinction between an increase in value of property which occurs without
effort on the part of the owners and the increase in the value of property
that occurs as a result of the efforts of the parties”).
34
KRS 403.190(3) provides, in relevant part, as follows:
All property acquired by either spouse after
the marriage and before a decree of legal separation
is presumed to be marital property, regardless of
whether title is held individually or by the spouses
in some form of co-ownership such as joint tenancy,
tenancy in common, tenancy by the entirety, and
community property.
This presumption is not conclusive, however, as it may be overcome by
demonstrating that the property was acquired by a method listed in KRS
403.190(2), which provides as follows:
For the purpose of this chapter, “marital
property” means all property acquired by either
spouse subsequent to the marriage except:
(a) Property acquired by gift, bequest, devise, or
descent during the marriage and the income derived
therefrom unless there are significant activities of
either spouse which contributed to the increase in
value of said property and the income earned
therefrom;
-18-
Supreme Court of Kentucky has held that “a party asserting that
he or she should receive appreciation upon a nonmarital
contribution as his or her nonmarital property carries the
burden of proving the portion of the increase in value
attributable to the nonmarital contribution” [footnote
omitted].35
Failure to meet this burden will result in the
increase being characterized as marital property.36
Betsy testified at the dissolution hearing that
Clarence was actively involved in Skyline Enterprises until the
partnership was dissolved in 1993.
While Betsy was unable to
describe the precise nature of Clarence’s dealings with the
partnership, she explained that he spent a lot of time during
the marriage in western Kentucky working for the partnership.
Clarence, on the other hand, testified that his involvement with
Skyline Enterprises during the marriage was minimal.
Clarence
(b) Property acquired in exchange for property
acquired before the marriage or in exchange for
property acquired by gift, bequest, devise, or
descent;
(c) Property acquired by a spouse after a decree of
legal separation;
(d) Property excluded by valid agreement of the
parties; and
(e) The increase in value of property acquired before
the marriage to the extent that such increase did not
result from the efforts of the parties during
marriage.
35
Travis v. Travis, Ky., 59 S.W.3d 904, 910 (2001).
36
Id.
-19-
acknowledged, however, that in 1983 Skyline Enterprises hired
his construction company, Givens Construction, to build a
grocery store on a portion of the property owned by the
partnership.
Clearly, the evidence submitted by the parties on
this issue was conflicting.
Nevertheless, we are persuaded that
the trial court’s finding that the appreciation in the value of
Skyline Enterprises was marital property is supported by
substantial evidence.37
In sum, we are of the opinion that the
trial court, as the fact-finder in this proceeding, was in the
best position to weigh the credibility of the witnesses and to
resolve the conflicting evidence.38
3.
NON-MARITAL INTEREST IN SKYLINE ENTERPRISES
This issue is moot in light of our conclusion that the
trial court’s determination that Clarence failed to trace the
non-marital portion of his interest in Skyline Enterprises to
the joint CD at Barclays Bank was not clearly erroneous.
B.
SKYLINE MOTEL II CORPORATION STOCK
Clarence next argues that the trial court erred in its
determination that the transfer of his shares of stock in
37
Clarence argues in the alternative that “[o]nce the court characterized the
appreciation as partly due to general economic conditions, it had to
apportion the non-marital and marital components.” This argument merits
little attention as Clarence failed to introduce any evidence from which the
trial court could apportion the increase in the value of the partnership. As
noted above, KRS 403.190(3) places the burden of proof on the party claming
the property as non-marital to demonstrate any increase in value attributable
to general economic circumstances. See Travis, 59 S.W.3d at 910-14.
38
See, e.g., Janakakis-Kostun v. Janakakis, Ky.App., 6 S.W.3d 843, 852
(1999), cert. denied, 531 U.S. 811, 121 S.Ct. 32, 148 L.Ed.2d 13 (2000).
-20-
Skyline Motel II Corporation to Betsy was a gift.
Whether
property is considered a gift for purposes of a divorce
proceeding is a factual issue subject to the clearly erroneous
standard of review.39
“Like other nonmarital claimants of
property acquired during marriage, a party claiming that
property is nonmarital by reason of the gift exception has the
burden to prove it” [footnote omitted].40
Accordingly, the
burden was on Betsy to establish that the stock was a gift.41
A
gift has been defined as “‘a voluntary and gratuitous giving of
something by one without compensation to another who takes it
without valuable consideration.’”42
In O’Neill v. O’Neill,43 this
Court set forth the factors to be considered in determining if a
transfer of property from one spouse to another during the
marriage was a gift.
The O’Neill Court found the following
factors to be determinative: (1) the source of the money with
which the item was purchased; (2) the intent of the donor at
that time as to the intended use of the property; (3) the status
of the marriage relationship at the time of the transfer; and
(4) whether there was any valid agreement that the transferred
39
See, e.g., Ghali v. Ghali, Ky.App., 596 S.W.2d 31 (1980).
40
Sexton v. Sexton, Ky., 125 S.W.3d 258, 267 (2004).
41
Id.
42
Id. (quoting Browning v. Browning, Ky.App., 551 S.W.2d 823, 825 (1977).
43
Ky.App., 600 S.W.2d 493 (1980).
-21-
property was to be excluded from the marital property.44
In
addition, it is well-established that the “donor’s intent is the
primary factor in determining whether a transfer of property is
a gift” [footnote omitted].45
Betsy testified at the dissolution hearing that
Clarence informed her that he wanted to place the stock in her
name and that he “want[ed] [her] to have the stock.”
While
Clarence clearly offered a different version of what transpired,
“‘[i]t is within the province of the fact-finder to determine
the credibility of witnesses and the weight to be given the
evidence.’”46
Given the clandestine and deceptive approach that
Clarence appears to have taken with his financial affairs, we
are unpersuaded that the trial court’s finding with respect to
this issue was clearly erroneous.47
C.
DISSIPATION OF MARITAL ESTATE
Clarence further contends that the trial court erred
by awarding him as part of his share of the marital estate sole
possession of the missing sailboat and the $200,000.00 that
44
Id. at 495.
45
Sexton, 125 S.W.3d at 268.
46
Cole, 59 S.W.3d at 473 (quoting Garland, 805 S.W.2d at 118).
47
Clarence argues in the alternative that even if the transfer of his shares
in Skyline Motel II Corporation to Betsy is viewed as a gift, the trial court
erred by failing to award him the $500,000.00 he received from Betsy in
exchange for the stock as his non-marital property. This argument merits
little attention as Clarence has failed to account for the disposition of the
$500,000.00 he received in exchange for the stock. That is to say, Clarence
has failed to trace the $500,000.00 to the funds in Tortola.
-22-
Thomas allegedly absconded with and the accounts at Barclays
Bank and the life insurance policy with Woodmen of the World he
liquidated prior to the dissolution.
“One of the factors which
a court may take into account in determining a proper
distribution of marital assets is whether one of the spouses has
dissipated or wasted marital assets by spending marital funds in
some improper way, thus reducing the amount of marital assets
available for distribution” [footnote omitted].48
In Robinette
v. Robinette,49 this Court stated that it is appropriate for a
trial court to consider one spouse’s dissipation of marital
assets in its division of the marital estate (1) if the property
is expended during a period when there is a separation or
dissolution impending; and (2) where there is a clear showing of
intent to deprive the other spouse of his or her share of the
marital property.50
However, in the case sub judice the trial court failed
to make any findings with respect to whether the sailboat and
the $200,000.00 that Thomas absconded with were “expended”
during a period when the parties were separated or dissolution
48
24 Am.Jur.2d, Divorce and Separation, § 560 (1998).
49
Ky.App., 736 S.W.2d 351 (1987).
50
Id. at 354.
(1998).
See also Brosick v. Brosick, Ky.App., 974 S.W.2d 498, 500
-23-
impending.51
Likewise, the trial court failed to make any
findings with respect to whether Clarence intended to deprive
Betsy of her share of the marital estate when he made these
expenditures.52
As for the account at Barclays Bank in
Clarence’s name and the JJB Enterprises account, it appears that
Clarence liquidated these accounts during a period when the
parties were separated and dissolution was impending.53
Nevertheless, the trial court failed to make any findings with
respect to whether Clarence intended to deprive Betsy of her
share of the marital estate when he liquidated these accounts.
Consequently, we must vacate the trial court’s judgment as to
this issue and remand this matter to the trial court for further
factual findings concerning (1) whether the sailboat, the
$200,000.00 given to Thomas and the accounts at Barclays Bank
were expended during a period when the parties were separated or
51
As previously discussed, Clarence was unable to account for the whereabouts
of these items at the dissolution hearing.
52
As for the sailboat, it is quite possible that Clarence purchased this item
during a period of marital bliss. The trial court found that he purchased
the sailboat in 1994 and the record indicates that the parties first
separated in 1995. Nevertheless, the trial court would have been justified
in awarding Clarence the sailboat as part of his share of the marital estate
if it found that he divested Betsy of her interest in the sailboat during a
period when the parties were separated and dissolution was impending and that
he intended to deprive Betsy of her share of the marital estate when he did
so.
53
Betsy filed a petition for legal separation on February 22, 1995, and she
filed an amended petition for dissolution of marriage on January 2, 1997. As
of November 1, 1996, the account at Barclays Bank in Clarence’s name had a
balance of approximately $90,714.58 and the JJB Enterprises account had a
balance of approximately $9,423.10. Thus, the accounts were liquidated
sometime after November 1, 1996.
-24-
dissolution was impending; and (2) whether Clarence intended to
deprive Betsy of her share of the marital estate when he made
these expenditures.
However, as for the life insurance policy
with Woodmen of the World that Clarence cashed in shortly before
the dissolution hearing, we are of the opinion that the evidence
clearly establishes that Clarence expended this item with the
intent to deprive Betsy of her share of the marital estate.
Consequently, we see no need for the trial court to address this
issue on remand.
D.
VALUATION OF SAILBOAT
Clarence also takes issue with the trial court’s
valuation of the sailboat.
As previously discussed, the trial
court valued the sailboat at $129,000.00.
Betsy testified at
the dissolution hearing that Clarence informed her that he paid
approximately $110,000.00 for the sailboat.
Clarence testified
that he paid approximately $115,000.00 for the sailboat.
We
were unable to find any support in the record for the
$129,000.00 figure used by the trial court.
“While the circuit
court does have the authority to fashion equitable relief where
a party has dissipated marital property, that relief must bear
some relation to the evidence presented.”54
On remand the trial
court should assign a value to the sailboat consistent with the
evidence presented at the dissolution hearing.
54
Brosick, 974 S.W.2d at 501.
-25-
E.
TIMELINESS OF TRIAL COURT’S JUDGMENT
In closing, Clarence contends he was unfairly
prejudiced by the trial court’s failure to issue its judgment in
the matter within 90 days from the date the dissolution
proceedings were initiated as required by KRS 454.350(1).55
The
statute provides, in relevant part, as follows:
Every Circuit and District Judge shall, when
at all possible, issue a written judgment or
order in all civil actions which have been
submitted for final adjudication within
ninety (90) days from the date the action
was taken under submission.
In Dubick v. Dubick,56 this Court held that a violation of KRS
454.350 does not render a judgment void.
The Court reasoned
that a contrary construction of the statute would “thwart the
very intent of the court system and the Legislature--namely, the
prompt disposition of litigation.”57
The Court noted that to
avoid prolonged indecision, an aggrieved party may seek “a
mandatory writ to rectify the situation, and if this be to no
avail then the statute provides the extreme remedy of removal.”58
Given that Clarence failed to pursue either of these avenues of
55
As previously discussed, Betsy filed an amended petition for dissolution of
marriage on January 2, 1997. An evidentiary hearing was held on September 20
and 21 1999. The trial court entered its findings of fact, conclusions of
law and decree of dissolution of marriage on October 23, 2002.
56
Ky.App., 653 S.W.2d 652 (1983).
57
Id. at 655.
58
Id.
-26-
relief, we are simply unpersuaded that he was unfairly
prejudiced by the trial court’s delay in issuing its judgment.59
II.
BETSY’S CROSS-APPEAL
We now turn to the argument advanced by Betsy in her
cross-appeal.
Betsy contends the trial court erred in its
determination that the $211,247.52 in settlement proceeds
Clarence received from his legal malpractice action against
Hicks was his non-marital property.
As noted above, a party
claming that property acquired during the marriage is nonmarital bears the burden of proof.60
Accordingly, the burden was
on Clarence to establish that the proceeds from his legal
malpractice action were non-marital.
The attorney that
represented Clarence in his legal malpractice action, Lovely,
testified at the dissolution hearing that the proceeds from the
settlement concerned Hicks’s negligence in the representation of
Clarence in a probate action involving his father’s estate.
Clarence maintains that this testimony was sufficient to provide
the trial court with a sound basis for finding that the
settlement proceeds were his non-marital property.
59
We disagree.
In addition, Clarence fails to explain precisely how he was prejudiced by
the delay.
60
Sexton, 125 S.W.3d at 266.
-27-
In his counterclaim against Hicks for legal
malpractice,61 Clarence set forth five counts, none of which made
any reference to Hicks’s representation in connection with his
father’s estate.
Moreover, Lovely testified that “there was no
breakdown [in the] settlement with respect to any of the
counts.”62
Consequently, we are of the opinion that the trial
court’s determination that the proceeds from the settlement were
non-marital property was clearly erroneous.
Accordingly, we
must reverse the trial court on this issue.
On remand, the
trial court should divide the $211,247.52 Clarence received from
his malpractice action between the parties as marital property.
Based on the foregoing reasons, the findings of fact,
conclusions of law, and decree of dissolution of marriage
entered by the Fayette Circuit Court on October 23, 2002, are
affirmed in part, vacated in part, and reversed in part, and
this matter is remanded for further proceedings consistent with
this Opinion.
ALL CONCUR.
61
As previously disused, the malpractice action was filed in response to a
suit brought by Hicks for attorney's fees.
62
The settlement agreement is not part of the record.
-28-
BRIEFS AND ORAL ARGUMENT FOR
APPELLANT/CROSS-APPELLEE:
BRIEF FOR APPELLEE/CROSSAPPELLANT:
Lee Kessinger, III
Lexington, Kentucky
Robert M. Pfeiffer
Lexington, Kentucky
C. Wayne Shepherd
Corbin, Kentucky
ORAL ARGUMENT FOR
APPELLEE/CROSS-APPELLANT:
Robert M. Pfeiffer
Lexington, Kentucky
-29-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
