ERIK RITACCO v. BOBBIE RITACCO ( 2021 )


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  •           DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
    FOURTH DISTRICT
    ERIK RITACCO,
    Appellant,
    v.
    BOBBIE RITACCO,
    Appellee.
    Nos. 4D19-809 and 4D19-3888
    [January 27, 2021]
    Consolidated appeal from the Circuit Court for the Fifteenth Judicial Circuit,
    Palm Beach County; Janis Brustares Keyser, Judge; L.T. Case No.
    502017DR012133XXXXMB.
    Jonathan S. Root and Christopher A. Tiso of Jonathan S. Root P.A., Boca
    Raton, for appellant.
    Holly Davidson Schuttler of Schuttler, Greenberg & Mullins LLC, Boca Raton,
    and Jeanne C. Brady of Brady & Brady P.A., Boca Raton, for appellee.
    KLINGENSMITH, J.
    Appellant Erik Ritacco (“Former Husband”) appeals the trial court’s Final
    Judgment of dissolution of marriage. Appellee Bobbie Ritacco (“Former Wife”)
    cross-appeals the same Final Judgment. Both parties raise numerous issues on
    appeal and, for the reasons stated below, we affirm in part and reverse in part.
    I.    Background
    The parties were married for over twenty-two years. During the marriage,
    Former Wife did not work outside of the home because she raised the parties’
    two daughters. Former Husband is a police officer and was the household’s
    income producer during the marriage. He receives a monthly pension and holds
    a Deferred Retirement Option Plan (“DROP”) account from a prior employer in
    addition to drawing a salary at his current position with the Palm Beach County
    Sheriff’s Office (PBSO). When the petition for dissolution was filed, one of the
    daughters was a minor but both children are now adults.
    II.   Calculating Former Wife’s Alimony Award
    “An award of alimony will usually not be reversed on appeal absent an abuse
    of discretion. However, [w]here a trial judge fails to apply the correct legal rule
    … the action is erroneous as a matter of law.” Dickson v. Dickson, 
    204 So. 3d 498
    , 502 (Fla. 4th DCA 2016) (alteration in original) (quoting Ondrejack v.
    Ondrejack, 
    839 So. 2d 867
    , 870 (Fla. 4th DCA 2003)).
    Former Husband claims the trial court erred when it found that Former Wife
    was entitled to permanent alimony and declined to classify Former Wife’s
    potential DROP interest returns as income. We disagree as to both arguments.
    However, we agree with Former Husband that the trial court erred in calculating
    the alimony award by considering his employee benefits as income and basing
    its calculations on the parties’ gross income.
    The trial court did not err in awarding Former Wife permanent alimony
    because the parties were married for over twenty-two years, a long-term marriage
    under section 61.08, and Former Husband did not overcome the presumption in
    favor of permanent alimony. See Dickson, 204 So. 3d at 502–03. The trial court
    made the requisite factual findings pursuant to section 61.08(2), Florida Statutes
    (2017), to determine permanent alimony was appropriate. The trial court also
    found that Former Husband had the ability to pay alimony and that Former Wife
    had a demonstrable need. See Zeballos v. Zeballos, 
    951 So. 2d 972
    , 974 (Fla.
    4th DCA 2007).
    The parties agreed to split the DROP account equally based on the value at
    the time of division and that Former Wife’s half would be transferred to an
    Individual Retirement Account (IRA) in her name. The DROP account earns
    interest annually. Former Husband argued that the trial court should impute
    investment income to Former Wife because of the interest she would earn from
    her half of the DROP account. Former Wife provided testimony that she would
    not receive investment income from the DROP account because she was planning
    on withdrawing a large portion from the account as a down payment on a house,
    and that for the remaining funds, the use of a section 72(t) withdrawal plan was
    impractical because of the ten percent penalty she would incur for making an
    early withdrawal due to her age. 1 See Niederman v. Nierderman, 
    60 So. 3d 544
    ,
    550 (Fla. 4th DCA 2011).
    “A court should impute income that could reasonably be projected on a former
    spouse’s liquid assets.” 
    Id. at 548
     (quoting Rosecan v. Springer, 
    985 So. 2d 607
    ,
    609 (Fla. 4th DCA 2008)). “‘When a party receives an asset in equitable
    1 Section 72(t) refers to Internal Revenue Code section 72(t), which specifies exceptions
    to the early-withdrawal ten percent tax that can allow IRA and 401K account owners to
    withdraw funds from their retirement account before age 59½, if certain qualifications
    are met.
    2
    distribution that will result in immediate investment income,’ that income
    should not be excluded for purposes of determining alimony.” Sherlock v.
    Sherlock, 
    199 So. 3d 1039
    , 1044 (Fla. 4th DCA 2016) (quoting McLean v. McLean,
    
    652 So. 2d 1178
    , 1181 (Fla. 2d DCA 1995)).
    The trial court did not abuse its discretion when it decided not to impute the
    investment income from the DROP account to the Former Wife. After the trial
    court considers evidence regarding a 72(t) payment plan, it can decline to impute
    investment income for equitable reasons. See Regan v. Regan, 
    217 So. 3d 91
    ,
    94 (Fla. 4th DCA 2017). This is because “there may be cases where the use of a
    72(t) payment plan may yield so little in income as to make it impractical to use
    as a source of income. . . . [P]ayment plans may [also] prove more costly than the
    amount of income available.” Niederman, 
    60 So. 3d at 550
    . The trial court
    considered the interest that could have been generated if Former Wife had elected
    to receive funds from the DROP account under a 72(t) payment plan, and it was
    within its discretion to decline to include those funds as imputed income. See
    Regan, 
    217 So. 3d at 94
    .
    However, the court erred in considering Former Husband’s employee benefits,
    including health and vision insurance, as income for the purpose of alimony
    calculation. These benefits are not liquid assets or in-kind payments. See
    Niederman, 
    60 So. 3d at 548
    . The case law that identifies insurance as income
    relies on section 61.30, the child support guidelines, which has a broader
    definition of “income” that includes in-kind payments. See Cozier v. Cozier, 
    819 So. 2d 834
    , 836 (Fla. 2d DCA 2002); Dep’t of Revenue o/b/o Shorter v. Amico,
    
    265 So. 3d 681
    , 683 (Fla. 5th DCA 2019). Even using this more expansive
    definition, Former Husband’s insurance would not be considered income. The
    evidence showed that as an employee of PBSO, Former Husband cannot opt out
    of his insurance benefits and choose instead to have additional income. See
    Long v. Long, 
    967 So. 2d 1069
    , 1070 (Fla. 4th DCA 2007) (holding that for a
    business expense to qualify as income, there must be evidence at trial that the
    business expense reduced living expenses).
    Further, we agree with Former Husband that the trial court’s decision to make
    all alimony decisions based on the parties’ gross income was error. See Julia v.
    Julia, 
    263 So. 3d 795
    , 797 (Fla. 4th DCA 2019); see also Badgley v. Sanchez,
    
    165 So. 3d 742
    , 744-45 (Fla. 4th DCA 2015) (“The judgment is also deficient for
    failing to look to the parties’ net incomes in assessing need and ability to pay.”).
    We affirm Former Wife’s award of permanent alimony and the trial court’s
    decision to exclude any potential income from the DROP account from income
    calculations. But we reverse and remand for the trial court to remove Former
    Husband’s employee benefits as part of his income and to calculate alimony
    based on net income. “The court may hold an evidentiary hearing if it needs
    3
    additional evidence to make the required findings.” Rentel v. Rentel, 
    124 So. 3d 993
    , 994 (Fla. 4th DCA 2013).
    III.   Securing the Alimony Award with Life Insurance and Pension
    “We review a trial court order requiring that a party maintain life insurance
    for abuse of discretion.” Jimenez v. Jimenez, 
    211 So. 3d 76
    , 79 (Fla. 4th DCA
    2017). The trial court can issue this order “only if there is a demonstrated need
    to protect the alimony recipient.” Forgione v. Forgione, 
    845 So. 2d 968
    , 969 (Fla.
    4th DCA 2003) (quoting Moorehead v. Moorehead, 
    745 So. 2d 549
    , 552 (Fla. 4th
    DCA 1999)). “The ‘demonstrated need’ must be supported by competent,
    substantial evidence.” Galstyan v. Galstyan, 
    85 So. 3d 561
    , 566 (Fla. 4th DCA
    2012).
    The trial court found that Former Husband works in a dangerous field and
    could afford to pay the monthly premium for life insurance. It further found that
    without the alimony payments, Former Wife could become destitute. The court
    did not err in finding that Former Husband had the ability to pay for life
    insurance and that Former Wife has a demonstrable need. See Galstyan, 
    85 So. 3d at 566
    ; Forgione, 
    845 So. 2d at 96
    .
    However, the trial court erred by requiring Former Husband provide collateral
    that exceeds the amount of his support obligation. See Brennan v. Brennan, 
    122 So. 3d 923
    , 926–27 (Fla. 4th DCA 2013) (“[T]he amount of life insurance required
    must not exceed the support obligation.”). Former Wife is entitled to half of
    Former Husband’s pension as part of the equitable distribution of assets but if
    Former Husband were to die, she would be the 100% beneficiary of the pension.
    As the 100% beneficiary of Former Husband’s pension, Former Wife would
    receive an amount that exceeds her current alimony award. Thus, assigning
    Former Wife both life insurance and the 100% pension survivor benefit would
    overcompensate her. See Mallard v. Mallard, 
    771 So. 2d 1138
    , 1140 (Fla. 2000)
    (“Current necessary support rather than the accumulation of capital is the
    purpose of permanent periodic alimony.”).
    We affirm the order for Former Husband to maintain insurance but reverse
    and remand for the trial court to amend the final judgment so that the
    collateralization of Former Wife’s alimony award does not exceed Former
    Husband’s support obligations. See Brennan, 
    122 So. 3d at
    926–27.
    IV.    Classifying Withdrawal from Home Equity Line of Credit (“HELOC”) as
    Marital Debt
    “The standard of review of a trial court’s determination of equitable
    distribution is abuse of discretion.” Steele v. Steele, 
    945 So. 2d 601
    , 602 (Fla.
    4th DCA 2006) (quoting Kovalchick v. Kovalchick, 
    841 So. 2d 669
    , 670 (Fla. 4th
    4
    DCA 2003)). “Distribution of the marital assets and liabilities must be supported
    by factual findings in the judgment or order based on competent, substantial
    evidence.” Krift v. Obenour, 
    152 So. 3d 645
    , 649 (Fla. 4th DCA 2014). However,
    “[a] trial court’s legal conclusion that an asset is marital or nonmarital is subject
    to de novo review.” Mondello v. Torres, 
    47 So. 3d 389
    , 392 (Fla. 4th DCA 2010).
    On the day she filed the petition for dissolution, Former Wife moved out of
    the home with her youngest daughter and withdrew $65,761.00 from the parties’
    HELOC and deposited it into her bank account to support herself and the
    youngest daughter. Former Wife testified she used the HELOC money to pay for
    food, clothing, gas, and medical visits for the daughter after she filed for divorce
    because Former Husband blocked her access to other financial accounts. She
    also claimed that she had to leave the home because Former Husband was
    abusive. Former Husband argues that the HELOC withdrawal which Former
    Wife made upon petitioning for divorce is a nonmarital debt.
    Section 61.075(7), Florida Statutes (2017), provides that the date for
    determining whether assets and liabilities are considered marital or non-marital
    is the date of the petition for dissolution. This statute states:
    The cut-off date for determining assets and liabilities to be identified
    or classified as marital assets and liabilities is the earliest of the date
    the parties enter into a valid separation agreement, such other date
    as may be expressly established by such agreement, or the date of
    the filing of a petition for dissolution of marriage.
    § 61.075(7), Fla. Stat. (2017) (emphasis added); see Rao-Nagineni v. Rao, 
    895 So. 2d 1160
    , 1161 (Fla. 4th DCA 2005). “All assets acquired and liabilities incurred
    by either spouse subsequent to the date of the marriage and not specifically
    established as nonmarital assets or liabilities are presumed to be marital assets
    and liabilities.” Krift, 152 So. 3d at 649 (quoting § 61.075(8), Fla. Stat. (2012)).
    If “the parties did not have a separation agreement or agree on any alternative
    date in any other agreement, the trial court should have identified the assets and
    liabilities as marital as of the date of the filing of the petition for dissolution.”
    Schmitz v. Schmitz, 
    950 So. 2d 462
    , 463 (Fla. 4th DCA 2007).
    Despite finding that Former Wife incurred these expenses as a necessity, the
    trial court nonetheless erred when it included a $65,761.00 withdrawal from the
    HELOC made on the day Former Wife filed her petition for dissolution as a
    marital debt. See Mondello, 
    47 So. 3d at 392
    . Since Former Wife incurred the
    debt on the day she filed for divorce, see Krift, 152 So. 3d at 649, the court erred
    in considering that amount as part of the marital debt. See also Schmitz, 
    950 So. 2d at 463
    . As such, we reverse on this issue. On remand, the trial court
    should take this into account when calculating any equalizing payments from
    Former Husband. See Fortune v. Fortune, 
    61 So. 3d 441
    , 446 (Fla. 2d DCA 2011)
    5
    (“[a] lump sum equalizing payment to accomplish equitable distribution ‘is
    properly awarded only when the evidence reflects a justification for such an
    award’” (citations omitted)).
    V.    Award of Gross Pension Income
    “Decisions of the trial court concerning the equitable distribution of marital
    assets are reviewed under an abuse of discretion standard.” Pomeranz v.
    Pomeranz, 
    901 So. 2d 895
    , 896 (Fla. 4th DCA 2005). “When evidence of a tax
    impact is presented, it is error for the trial court to fail to consider these
    consequences.” Diaz v. Diaz, 
    970 So. 2d 429
    , 432 (Fla. 4th DCA 2007).
    “Distribution of marital assets must be equal unless there is justification in
    the record supporting the court’s disparate treatment.”              Spielberger v.
    Spielberger, 
    712 So. 2d 835
    , 836 (Fla. 4th DCA 1998). “Unequal distributions
    must find their authority in specific facts relating to the statutory factors rather
    than in generalized and indeterminate notions of equity.” Robbie v. Robbie, 
    788 So. 2d 290
    , 293 (Fla. 4th DCA 2000).
    The trial court ordered that Former Husband pay half of his gross pension
    income to Former Wife without accounting for any tax liability. However, if
    Former Wife receives half of the gross amount, and Former Husband is solely
    responsible for the taxes paid on the total amount, then Former Wife receives a
    significantly larger portion of pension income. See Lopez v. Hernandez, 
    252 So. 3d 266
    , 268 (Fla. 4th DCA 2018). This constitutes an unequitable distribution,
    see Pomeranz, 
    901 So. 2d at 896
    , which would have required the trial court to
    make factual findings that show an unequal distribution is appropriate. See
    Robbie, 
    788 So. 2d at 293
    . The trial court’s intentions on this matter are not
    clear from the record. If the trial court intended for Former Wife to receive more
    of the pension income, then it was required to consider the tax consequences
    that Former Husband brought to the trial court’s attention and make factual
    findings that supported such an unequal distribution. See Diaz, 
    970 So. 2d at 432
    .
    Therefore, we reverse and remand this issue to the trial court for further
    consideration and any appropriate findings as required.
    VI.   Conclusion
    In conclusion, we affirm the Final Judgment in part and reverse in part with
    instructions for the trial court to make modifications consistent with this opinion
    on remand. We affirm the other issues raised by the parties on both the appeal
    and cross-appeal without comment.          Revisiting the issues remanded for
    reconsideration may, by necessity, impact various calculations and findings in
    the Final Judgment that were not specifically addressed in this opinion. Despite
    6
    our affirmance of those issues without comment, the trial court is not precluded
    from reconsidering and amending its prior findings on those matters if actions
    needed on remand will require additional modifications to give equity to the
    parties.
    Affirmed in part, reversed in part, and remanded with instructions.
    DAMOORGIAN and GERBER, JJ., concur.
    *         *        *
    Not final until disposition of timely filed motion for rehearing.
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