WILLIAM CARSON GRAY v. BETTY JOYCE GRAY
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October 22, 2004; 2:00 p.m.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2002-CA-002507-MR
WILLIAM CARSON GRAY
v.
APPELLANT
APPEAL FROM LAUREL CIRCUIT COURT
HONORABLE LEWIS B. HOPPER, JUDGE
ACTION NO. 98-CI-00865
BETTY JOYCE GRAY
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: BARBER AND McANULTY, JUDGES; MILLER, SENIOR JUDGE.1
McANULTY, JUDGE:
Appellant Carson Gray appeals the decree of
dissolution of marriage entered by the Laurel Circuit Court
which terminated his marriage to appellee Betty Gray.
Carson
contends that the court’s division of property was grossly
disproportionate in terms of what the parties actually received.
1
Senior Judge John D. Miller sitting as Special Judge by assignment of the
Chief Justice pursuant to Section 110(5)(b) of the Kentucky Constitution and
KRS 21.580.
He further alleges that the inequitable division resulted from
the court’s improper consideration of fault by Carson.
Finally,
he alleges for the first time on appeal that the trial judge was
personally biased against him, which governed the court’s
rulings in the case, including Carson being found in contempt
and serving time in jail.
We conclude that the trial court’s division of
property was equitable and within the court’s discretion.
The
court considered fault as it pertained to Carson’s violation of
orders the court had entered in an attempt to stop him from
dissipating and concealing assets.
warranted.
The contempt order was
Further, Carson’s claims of bias do not amount to
palpable error.
Thus, we affirm.
The drawn-out history of the dissolution proceedings
below is necessary for understanding the outcome in this case.
Carson filed his petition for dissolution on November 12, 1998.
The parties filed some discovery in the spring of 1999,
including Carson’s answer to interrogatories.
There was a brief
attempt at reconciliation at the same time, during which the
action was abated.
But the parties did not reconcile and instead Betty
took out an emergency protective order and Carson sought a
restraining order.
Betty also sought a restraining order on the
grounds that Carson had been collecting rents from Betty’s share
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of tenants in the parties’ storage building business.
Carson
had stated in his interrogatory responses that the parties
divided the rent from the buildings, and he claimed he received
$2285 a month from his share of the storage business, and Betty
received $2135 a month from hers.
The court set the case for a pretrial conference.
On
July 29, 1999, Carson filed his pretrial disclosure statement.
Betty filed a motion alleging that Carson further interfered
with Betty’s collection of rent and had interfered with the
attempt to have a real estate appraiser come onto the marital
property.
The court entered an order on August 30, 1999, which
gave Betty temporary possession of the marital residence, land
and the storage buildings thereon.
The court gave the appraiser
the right to come upon the land, and ordered Carson to pay
Betty’s share of rentals to her attorney.
A short time later, Betty filed a motion seeking to
prevent Carson from dissipating assets and for an accounting,
alleging that he had hidden or sold equipment and pull trailers.
The court granted Betty’s motion and entered an order requiring
an accounting.
The court appointed a receiver to receive funds
from the rental business and the trailer sales, and distribute
the proceeds equally to the parties.
Some three months later, however, Betty filed a motion
to hold Carson in contempt because he had not provided an
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accounting and had failed to turn over rental income.
Betty and
the receiver had been trying since early in the litigation to
learn of the number of renters of Carson’s storage units and
their identities.
The parties entered into an agreed order on
July 14, 2000, that Carson would produce an itemized accounting
of the rents received from storage units in his control from
November 1, 1999, to the date of the order.
The order also
required that Carson produce any verification that he paid rents
to the receiver.
Carson’s accounting, which was filed late, stated he
had earned $3665 total from the storage buildings in that eight
month period, considerably less than the $2285/month he earlier
claimed to receive from his share of the storage business.
He
stated that his earnings were lower than usual because he had 37
empty buildings.
He also said he spent all of the money on
expenses and had no verification of money paid to the receiver.
The court held a hearing and found Carson in contempt
of court after he admitted his failure to provide an accounting.
The court ordered Carson to pay $3600 to the receiver, and to
provide the court with the number of trailers he had received
for sale.
The court in the same order gave Betty control of the
rental business.
Carson later filed a statement that he had
sold two trailers, and provided an invoice that showed he had
received 13.
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The court deferred sanctions on the order of contempt,
and ordered the marital home and business sold.
However, about
a month later Betty filed a motion to show cause alleging that
Carson refused to comply with the order to sell the property.
On July 9, 2001, Betty filed a second motion for contempt
alleging interference with the storage rental units she was
operating.
Betty subsequently filed motions alleging that
Carson was having mail sent to a post office box in order to
hide assets, and Betty asked to be able to inform lessees of the
correct address rather than the post office box.
The court
entered an order giving the receiver control over the post
office box for collection of the rentals.
On March 5, 2002, the court entered an order which
stated that Carson had not provided an accounting of income
received by him since the court ordered him to in December of
1999.
The court found in contrast that Betty had forwarded the
rentals that came into her hands.
The court ordered Betty to
have complete and total possession of the parties’ real
properties and Carson was not to go on them.
The court shortly
thereafter entered an order that Betty might sell any of the
pull trailers on the property and that Carson must inform her of
the listing price.
The court ordered Carson to provide a list of trailers
he had sold and the price received.
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The court also ordered him
to provide his best recollection of the identity of the renters
of the storage units, and for Betty to provide a similar list
and to collect the rents.
The court ordered Carson not to
receive any rent of any kind from renters.
The court ordered
Carson not to dissipate any property or sell any trailer.
In
another order on that date, the court ordered Carson’s private
mail sent to Carson’s attorney to be forwarded to the receiver
instead of to the separate post office box Carson set up.
Carson then provided an affidavit stating that he had sold three
trailers for a total of $1920.
On May 22, 2002, the court found Carson in contempt
for his failure to comply with various orders of the court over
three years.
The court listed its reasons: his failure to
provide a list of renters, failure to provide Betty the fair
market value of the trailers, failure to surrender keys, and his
entry on the property twice.
The court found that Carson
offered no good reason for his habitual disobedience, and noted
the commissioner’s recommendation of a sentence of six months.
The court sentenced Carson to six months in jail.
Betty filed an amendment to her verified preliminary
statement in which she submitted copies of checks she had found
which showed thousands of dollars in checks Carson had written
to trailer companies for purchases in the years since the
divorce proceedings began.
The domestic relations commissioner
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held a lengthy hearing with the parties on September 11, 2002.
The parties thereafter filed exceptions to the commissioner’s
report and the court held a hearing on the exceptions.
The
court entered a final order and decree of dissolution on
November 13, 2002.
This appeal follows.
Carson’s first argument states that the court failed
to make an equal property division because Betty was awarded the
bulk of the property the parties accumulated during the
marriage.
The total amount of the assets awarded to Carson was
$412,274.28, whereas the amount awarded to Betty was
$391,432.12, a roughly 51% to 49% split.
The trial court’s
decree of dissolution shows that the court awarded Betty the
marital home and neighboring storage business, as well as two
other real estate properties, two vehicles, personal property,
and the cash which had been collected by the receiver from
storage building rentals and trailer sales.
Carson received a
single piece of real estate, one vehicle, equipment and personal
property.
He was credited with two vehicles which were
dissipated by him.
The majority of the award to Carson was
$150,000.00 in trailer sales for the three years between the
petition for dissolution and the decree, and $109,425.00 in
rental proceeds Carson “received for 3 years and converted to
his use.”
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Carson contends that the trial court lacked proof to
include $150,000 dollars in trailer sales to him, and to impute
$100,000 in rental proceeds to him since Betty received the
storage building rentals.
In addition, Carson argues that the
trial court overvalued the Dodge Club Cab at $30,000 when he
only paid $24,000 for it; that he was awarded $17,560.28 for a
bank account which was virtually empty; and he was credited with
tools and jewelry based only on Betty’s claims that Carson had
taken them and what their value was.
Carson also believes Betty’s share was
disproportionate because the marital home and business were
undervalued; she owned certificates of deposit which were not
divided; guns awarded to her were undervalued; and her
nonmarital property was overstated since she spent some of it
before investing the remainder in the marital business.
Carson
argues that if the errors he alleges in valuation are corrected,
the division of property was in the range of a 16 to 84%
division in Betty’s favor, and thus inequitable.
A trial court has wide discretion in dividing marital
property and the division need not be equal, but only in “just
proportions.”
KRS 403.190(1); Davis v. Davis, Ky., 777 S.W.2d
230, 233 (1989).
Addressing Carson’s contentions that the
amount he was awarded was overstated, we find that the trial
court properly awarded the sales and rentals to Carson on the
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basis that he attempted to conceal these marital assets and
prevent Betty from receiving her share.
Carson’s actions in
collecting money, secreting it and reinvesting it in his trailer
sales business were acts of dissipation.
Dissipation is
spending marital funds for a nonmarital purpose.
Robinette v.
Robinette, Ky. App., 736 S.W.2d 351, 354 (1987).
When a court
is faced with a spouse who has dissipated assets, the court may
appropriately consider the dissipation in the property division
when there is a clear showing of intent to deprive one’s spouse
of his or her proportionate share of the marital property.
Id.
The awards based on dissipation were supported by
evidence in the record.
Betty’s counsel estimated the amount of
dissipated rentals by subtracting the amount of the rentals
collected from Betty by the receiver from the amount that would
have been obtained if the monthly amounts Carson cited in
interrogatories were collected and turned over.
Certainly the
exact amount of rents is not known, but the court attributed
this to Carson’s dissipation.
Carson admitted his failure to
turn over funds to the receiver.
We find a sufficient factual
basis for the trial court’s estimate.
As to the trailer sales, the court took the amount of
purchases Carson made from the invoices Betty provided, which
exceeded $77,000.
Betty could not subpoena invoices from the
out-of-state manufacturers; thus she believed the amount of
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purchases to be much higher.
Betty testified that Carson had
indicated in the past that he made $400-600 profit from each
sale.
The trial court’s order on this issue stated:
Based upon four of fourteen manufacturing
companies, who responded to Betty’s
subpoenas, Mr. Gray purchased, since the
separation, more than Seventy Seven Thousand
Dollars ($77,000.00) worth of trailers. If
the Court extrapolates that to other
manufacturers, it would appear that Mr. Gray
purchased nearly Three Hundred Thousand
Dollars ($300,000.00) worth of trailers
since the parties [sic] separation. Most of
those trailers have been sold. Eight (8)
trailers remain to be sold. Based upon the
testimony of Ms. Gray that Mr. Gray told her
that he had sold at least Fifteen Hundred
(1,500) trailers prior to October 1998 and
that he had then eventually had the best
three years ever during the parties
separation from 1998 until August 2001, the
Court believes that Mr. Gray would have
realized and did realized [sic] at least One
Hundred and Fifty Thousand Dollars
($150,000.00) net profit since the parties
[sic] separation from the sale of trailers.
We conclude that the trial court’s estimate was within its
discretion given Carson’s concealment of crucial facts.
Carson
was ordered to inform the receiver and the court of the number
of trailers he purchased, the number sold and the amount of
profit he made on them.
Since it is Carson’s fault that these
numbers had to be estimated, he should not be heard to complain.
The trial court’s estimate was supported by a factual basis and
we uphold it on appeal.
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The bank account was similarly treated as a dissipated
asset.
The figure of $17,560.28 was taken from Carson’s
pretrial disclosure statement, not from Betty’s testimony as
Carson asserts.
had listed.
Carson asked for this account, in the amount he
This account was in Carson’s control, and so if the
money therein was gone it was due to Carson’s dissipation.
He
did not request or receive permission from the court to spend
this money, and was under orders from the court not to dissipate
assets.
Dispersal of marital assets without an accounting is
sufficient justification to include the unaccounted for amount
in the total marital assets.
Bratcher v. Bratcher, Ky. App., 26
S.W.3d 797, 799 (2000), citing Barriger v. Barriger, Ky., 514
S.W.2d 114, 115 (1974).
The trial court acted within its
discretion in apportioning this to Carson’s marital share.
The differences in the amounts of the other assets
Carson complains of were supported by Betty’s testimony and
documentation.
Carson complains that his figures were not
accepted by the trial court.
However, the trial court is in the
best position to assess credibility of the witnesses, and the
court could take into consideration Carson’s numerous
obfuscations in determining that Betty’s testimony was more
deserving of belief.
Thus, we find no error in the court’s
assessment that Carson should be awarded $5000 in tools and $800
in jewelry that Betty alleged he took.
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We affirm the assessment
of the guns’ value based on Betty’s sales price rather than
Carson’s valuation.
On the valuation of the Dodge Club Cab,
Carson waived his exception to that at the hearing.
Carson’s major point of contention as to the various
items given to Betty is that Betty received an additional
$133,000 in certificates of deposit (CDs) not included in her
total.
At the hearing, Betty testified that she had taken her
share of profits from the sale of a marital business and put the
money into two CDs.
She further testified that she had spent
the CDs in 1998, before the petition for dissolution was filed.
Carson mentioned in his amended pretrial disclosure
statement of August 24, 2002, that a CD with Community Trust
Bank was allegedly “jointly held by Respondent, Betty Gray and
[her daughter] Becky Sturgill and which was taken out on January
22, 1999, and paid to Becky Sturgill in the amount of
$58,970.43.”
Carson attached an exhibit to the statement
consisting of a cashier’s check for payment to Becky Sturgill.
The cashier’s check did not include Betty’s name.
Betty denied
any recollection that she had a CD jointly with Becky.
Carson did not subpoena bank records to show that
Betty had a CD as a marital asset during the dissolution
proceedings.
Given the length of these proceedings and fact
that he was represented by counsel, we are not persuaded by him
that his confinement in jail prevented him from providing proof.
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Carson’s attorney admitted at the exceptions hearing that Carson
had not sought any bank records in the case.
The court properly
ignored the allegation that Betty had a CD since she denied it
and Carson provided no proof of its existence after the
separation.
We note, moreover, that some of the assets Betty
said were purchased from the CD proceeds were included as
marital assets, which were divided.
Carson complains of the amount of the valuation of the
marital residence.
However, Carson did not complain about the
valuation of the residence in his exceptions to the report of
the domestic relations commissioner, and so is not entitled to
raise this issue on appeal.
Eiland v. Ferrell, Ky., 937 S.W.2d
713 (1997).
Finally, Carson argues about the value of the
nonmarital property awarded to Betty.
We believe the trial
court properly awarded the amount of $12,008.56 to Betty based
on her tracing of her inheritance from her mother to a joint
bank account, and from there to checks written on that account
to fund the construction of one of the storage buildings for
their business.
The trial court followed the rule that the
requirement of tracing is fulfilled 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
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funds deposited.
(1979).
Allen v. Allen, Ky. App., 584 S.W.2d 599, 600
Betty introduced the checks from the distribution from
the estate which showed the amount she inherited, bank
statements from the joint account, and numerous checks paid from
that account toward the construction of the storage building.
The court below found that the account balance did not fall
below the amount Betty deposited until the parties began
constructing the storage buildings.
Carson argues that Betty’s testimony at the hearing
shows she paid some of that money to relatives and on other
expenditures before the storage buildings were constructed, and
her nonmarital property should be reduced accordingly.
However,
we believe the trial court satisfactorily applied the rule of
tracing in this instance.
The rule should not be subject to
“draconian requirements.”
Chenault v. Chenault, Ky., 799 S.W.2d
575, 579 (1990).
The requirement is satisfied if the party can
separately trace the nonmarital funds, and the court is
satisfied that the party has not resorted to “deception and
exaggeration” regarding the nonmarital amounts.
Id.
Finally, Carson alleges the trial judge and trial
commissioner should have recused themselves for personal bias.
No allegation of bias or request for recusal was made in the
court below.
The burden of seeking disqualification is on the
party who claims to have been prejudiced; it is insufficient to
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belatedly contend to have been prejudiced.
Carter, Ky., 701 S.W.2d 409, 410-11 (1985).
Commonwealth v.
Carson’s claims of
long-standing bias and animosity coming as they do on appeal
certainly cannot be considered timely.
Carson admits that he
did not preserve this claim for appeal, but asks that we
consider it as a palpable error pursuant to CR 61.02.
The burden of proof required for recusal of a trial
judge is an onerous one, requiring a showing that the judge’s
impartiality was seriously impaired and his judgment was swayed.
Stopher v. Commonwealth, Ky., 57 S.W.3d 787, 794 (2001).
We do
not agree with Carson that the judge’s statements and rulings
derived from any ill will.
Instead, they were a result of
Carson’s defiance of court orders in the three years of this
litigation.
The trial commissioner allowed evidence of Carson’s
temper and bad behavior only to show that he tried to interfere
with the valuation and distribution of assets.
Carson was found in contempt because of his repeated
failure to abide by the court’s orders, not because of a biased
attitude of the court.
Carson admitted to the court below his
failure to provide an accounting and his failure to turn over
funds.
He admitted to the commissioner that he was selling
trailers and not turning over the proceeds to the receiver as
ordered.
Now, on appeal he complains because the court called
him “evasive” and “unrepentant” based on his own actions.
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A
judge’s exasperation at events occurring in the case does not
necessarily demonstrate bias or prejudice.
Stopher, 57 S.W.2d
at 495.
We believe the trial judge’s comments about Carson’s
past dealings with his lawyers in other cases were irrelevant
and unfortunate, but did not display feelings of personal bias
which should have disqualified him from presiding impartially in
this case.
We further believe that when Judge Hopper referred
to the “years” of problems by Carson, he was referring to the
case at bar, which went on for three years, rather than
commenting on Carson’s past history.
We find no palpable error,
and we find no merit in Carson’s attempt on appeal to use claims
of bias to try to undo the harm that he brought on himself in
the trial court.
In conclusion, we find that the trial court was within
its discretion in awarding Carson those assets which resulted
from his sale of trailers and collection of rent in violation of
trial court orders.
The trial court’s valuations of both
parties’ properties were supported by the evidence.
There was
also no error in the assignment of nonmarital property to Betty.
We conclude that the property division was equitable, and so we
affirm the decree of dissolution.
ALL CONCUR.
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BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Traci H. Boyd
Boyd & Boyd, PLLC
Lexington, Kentucky
Bruce R. Bentley
Zoellers, Hudson & Bentley
London, Kentucky
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