Richard A. Walls v. Janet Walls ( 2012 )

Pursuant to Ind. Appellate Rule 65(D), this
Memorandum Decision shall not be FILED
regarded as precedent or cited before any Dec 11 2012, 9:08 am
court except for the purpose of
establishing the defense of res judicata, CLERK
of the supreme court,
collateral estoppel, or the law of the case. court of appeals and
tax court
ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEE:
REBECCA L. LOCKARD DAWN R. ELSTON
Jeffersonville, Indiana Jeffersonville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
RICHARD A. WALLS, )
)
Appellant-Respondent, )
)
vs. ) No. 10A01-1112-DR-572
)
JANET WALLS, )
)
Appellee-Petitioner. )
APPEAL FROM THE CLARK SUPERIOR COURT
The Honorable Vicki L. Carmichael, Judge
Cause No. 10C01-1011-DR-524
December 11, 2012
MEMORANDUM DECISION – NOT FOR PUBLICATION
BAKER, Judge
The parties in this dissolution proceeding had been married for nearly twenty
years. Although they purchased a parcel of land during the course of the marriage, they
owned approximately seventy acres of real estate that had been gifted to Husband. The
marital residence was on one of those parcels that consisted of nearly six acres. All of the
land is held solely in Husband’s name and he is responsible for paying the property taxes.
Husband owned an excavation business, but he did not know the extent of his
income for several years. Husband also sold some of the marital property, kept the
proceeds for himself, did not pay any of the household expenses, and took several trips to
Florida. Wife was employed on a full-time basis during the marriage and contributed to
the maintenance and upkeep of the residence. She also helped with the construction of
the marital residence and fencing on the property. Wife also paid the household bills,
insurance, and some of the mortgage payments on the residence and on a business line of
credit.
The trial court properly determined that the real property was commingled with
the marital estate, notwithstanding the fact that Husband received the property as a gift
from his grandmother. We also affirm the trial court’s decision to award Wife a one-half
interest in the real property and decline to disturb the distribution of the marital property.
FACTS
Richard and Janet Walls (collectively, the Wallses) married in April 1991 and
separated in November 2010. Prior to the marriage, Janet moved into Richard’s mobile
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home in 1989 that was located on approximately 7.5 acres in Otisco. Richard had been
deeded this property by his grandmother, Norine Walls, in July 1982.
The Walls Farm is comprised of four parcels, totaling nearly 68 acres, which lists
Richard as the sole owner. Norine had deeded all of the property to Richard six months
before he married Janet. Janet and Richard built a home on a six-acre parcel of the Walls
Farm, which they financed by taking out a mortgage in both of their names. In April
2000, Rick and Janet purchased 4.65 acres from another individual, which had been a
part of the original farm, but had not been included in the original Walls Farm deed.
Janet testified that she helped improve the value of the Walls Farm by assisting
Richard with building their new house, sheds, ponds, and fencing on the property. Janet
also planted, mowed nearly five acres of lawn, and worked jobs outside the home to bring
money into the household. Janet also helped Norine by taking her to doctor’s
appointments, cooking her food, taking her to the grocery, caring for her yard, and doing
other things to help Norine remain comfortable.
Throughout the marriage, Richard earned money primarily from his excavation
business, digging foundations, basements, and constructing driveways. Richard claimed
that he did not know what his income was in 2010 or 2011.
Janet earns $11.50 per hour as an employee of Surgical Associates in
Jeffersonville, and her take home pay averages $700 every two weeks. Until May 2011,
Janet paid Richard’s health insurance premiums in the amount of $200 per month. She
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also paid health insurance for the parties’ two sons,1 which amounted to $280 per month.
Janet also paid all of the utility and cell phone bills.
During the marriage, Richard sold some of the personal property on Craigslist that
he and Janet had acquired and kept most of the proceeds for himself. At some point, the
trial court entered a joint preliminary restraining order preventing the parties from selling
the property. However, Richard continued selling various items of property. Richard did
not pay any of the household expenses, and he ignored the taxes that were owed on his
business. Richard also took several ten-day trips to Florida and to casinos.
The Wallses currently owe more than $100,000 to CitiMortgage and are facing
foreclosure on their residence. The evidence showed that as of September 30, 2011,
more than $12,000 was required to make the mortgage current. The parties also owed
$67,970.47 on a second loan with New Washington State Bank.
The Walls Farm was appraised in February 2011. The residence and the land were
valued at $200,000. The remaining sixty-plus acres were appraised at $230,000. The
parties agreed that an auction was the best method to pay off the marital debt and divide
the property. If Richard did not agree to an auction, it was decided that he would be
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Derrick, one of the parties’ sons, is twenty years old and no longer lives with his parents. He is
employed on a full-time basis and earns about $9.00 per hour. Ryan, the other son, is nineteen
years old and is enrolled in “E-school,” which means that he studies from his residence. Ryan
also works full-time and earns approximately $9.00 per hour. The parties do not challenge the
trial court’s finding that both Ryan and Derrick are emancipated and that no child support is
owed.
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responsible for making the monthly mortgage payment of $1,284.61, and the monthly
line of credit payment beginning on March 1, 2011.
On October 3, 2011, the marital home and the acreage on which it was located
were sold at a tax sale. Although the property was assessed at $245,000 at the time, it
was sold to a Florida corporation for $46,000. The past due tax amount was $4,456.38.
It was also established that the Wallses owed approximately $11,920 to other creditors.
After a final hearing, the trial court entered a decree of dissolution and issued
findings of fact and conclusions of law on November 4, 2011. The trial court determined,
among other things, that Janet was entitled to one-half of the equity in the Walls Farm
totaling $131,000. The trial court also decided that the remainder of the real property
should be sold at auction and upon payment of the fees and debts associated with the
property, the net equity should be split equally between Janet and Richard.
The trial court awarded Richard the farm equipment, tools, and his truck, all of
which was valued at $60,232.50. Janet also received approximately $7950 of the
personal property. In the end, the trial court awarded eighty-eight percent of the personal
property to Richard, and divided the real property equally between Richard and Janet.
More particularly, the trial court determined that “Janet Walls has persuaded the Court
that an equal division of the marital estate is proper. Despite the inheritance received by
Richard Walls, the property has been commingled over the term of the marriage such that
the Court does not find any part should be “set-off” to Richard.” Findings of Fact and
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Conclusions of Law p. 13-14.2 The trial court also ordered the joint debt to be divided
equally between the parties, and it directed that Janet and Richard were responsible for
their individual debts.
Richard now appeals.
I. Commingling of Property
Richard first claims that the trial court erred in determining that the real property
had been “commingled.” Appellant’s Br. p. 1. Richard contends that this determination
was erroneous because the property has never been in Janet’s name and it has always
remained in the Walls family. As a result, Richard argues that the trial court should have
set off all of the real estate to him.
We initially observe that Indiana Code section 31-15-7-4 provides in part:
In an action for dissolution of marriage, . . . the court shall divide the
property of the parties, whether:
(1) owned by either spouse before the marriage;
(2) acquired by either spouse in his or her own right:
(A) after the marriage; and
(B) before final separation of the parties; or
(3) acquired by their joint efforts.
Inherited or gifted property is not to be excluded from the marital assets. Wallace
v. Wallace, 714 N.E.2d 774, 780-81 (Ind. Ct. App. 1999). Additionally, under Indiana
2
These findings are set forth in a separate document that was not included in the parties’ appendices.
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Code section 31-15-7-5, the trial court presumes that an equal division of the marital
property between the parties is just and reasonable. However, this presumption may be
rebutted by a party who presents relevant evidence of various factors, including:
(1) The contribution of each spouse to the acquisition of the
property, regardless of whether the contribution was income
producing.
(2) The extent to which the property was acquired by each spouse:
(A) before the marriage; or
(B) through inheritance or gift.
...
(4) The conduct of the parties during the marriage as related to the
disposition or dissipation of their property. . . .
(5) The earnings or earning ability of the parties as related to:
(a) a final division of property; and
(b) a final determination of the property rights of the parties.
I.C. § 31-15-7-5.
When examining the above, we acknowledge that an issue of “commingling” is
not part of the statutory analysis required to rebut the presumption of an equal
distribution of the marital assets. However, as we acknowledged in Eye v. Eye, 849
N.E.2d 698, 703 (Ind. Ct. App. 2006):
Whether or not property was commingled is not an included
component of the statutory analysis required to rebut the presumption
of an equal distribution of marital assets, although relevant evidence
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might also indicate whether property was kept separate and distinct, or
whether a type of de facto commingling occurred.
Id. at 703.
Also, as Indiana Code section 31-15-7-5 makes clear, the trial court is to consider
all of the marital property when dividing it. All of the statutory factors must be
considered, and a claim by one spouse that an inheritance or gift should be the only factor
examined by the trial court “goes too far.” Eye, 849 N.E.2d at 702. Relevant evidence
that establishes contribution by the spouse, regardless of whether it was income
producing, to the acquisition of the inherited or gifted property may influence the degree
of any disparity in the property distribution. Id. at 703-04. Similarly, relevant evidence
regarding a spouse’s conduct during the marriage with respect to the property might also
affect property distribution. Id.In this case, even though the property may not have been in Janet’s name and has
remained in the Walls family, Janet lived in the marital residence on the property. Her
name was also on the mortgage. Even more compelling, the evidence established that
Janet contributed heavily toward making improvements on the property.
In our view, it is apparent that the trial court examined and considered the various
statutory factors set forth in Indiana Code section 31-15-7-5 and weighed the evidence in
determining that the real property had been commingled over the course of the marriage.
As a result, Richard’s contention that the trial court erred in determining that the real
property had been commingled fails. I.C. § 31-15-7-4; see also Eye, 849 N.E.2d at 701
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(holding that the trial court’s distribution of a majority of marital assets to the husband
based solely on the fact that the assets were acquired by means of inheritance or gift was
an abuse of discretion).
II. Property Division
In a related issue, Richard claims that the trial court erred in dividing the marital
property because he successfully rebutted the presumption of an equal distribution of the
marital property. Richard maintains that he should have been awarded all of the real
property, thus commanding an unequal division of the marital estate.
The disposition of marital assets is an exercise of the trial court’s sound discretion.
Leever v. Leever, 919 N.E.2d 118, 124 (Ind. Ct. App. 2009). We review a claim that the
trial court improperly divided marital property for an abuse of discretion. Hatten v.
Hatten, 825 N.E.2d 791, 794 (Ind. Ct. App. 2005). In doing so, we consider the evidence
most favorable to the trial court’s disposition of the property, without reweighing the
evidence or assessing the credibility of witnesses. Id. Although a different conclusion
might be reached in light of the facts and circumstances, we will not substitute our
judgment for that of the trial court. Id.As discussed above, Indiana Code section 31-15-7-4 compels the trial court to
divide marital property in a just and reasonable manner, including property owned by
either spouse prior to the marriage, acquired by either spouse after the marriage and prior
to final separation of the parties, or acquired by their joint efforts. The trial court’s
disposition of the marital estate is to be considered as a whole, not item by item. Fobar
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v. Vonderahe, 771 N.E.2d 57, 59 (Ind. 2002). In crafting a just and reasonable
distribution of the property, the trial court must balance all of the statutory considerations
in arriving at an ultimate disposition. Eye, 849 N.E.2d at 701.
One of the factors that a trial court may consider in dividing the marital assets is
the dissipation of the marital assets by one of the parties. I.C. § 31-15-7-5(4).
Dissipation of the assets generally involves the use or diminution of the marital estate for
a purpose unrelated to the marriage and does not include the use of marital property to
meet routine financial obligations. Hardebeck v. Hardebeck, 917 N.E.2d 694, 700 (Ind.
Ct. App. 2009). Dissipation of marital assets may also include the frivolous and
unjustified spending of marital assets. Id.In determining whether marital assets have been dissipated, the trial court should
weigh the following factors: (1) whether the expenditure benefited or was made for a
purpose entirely unrelated to the marriage; (2) the timing of the transaction; (3) whether
the expenditure was excessive or de minimis; and (4) whether the dissipating party
intended to hide, deplete, or divert the marital asset. Id. The trial court may consider
evidence of either pre- or post-separation dissipation. Id.Here, ample evidence was presented at the final hearing justifying the trial court’s
decision to equally divide the real property. More specifically, while Richard was self-
employed, he could not account for his income for at least two years and did not pay any
of the household expenses. Tr. p. 251. While Richard testified that he has received
thousands of dollars since he and Janet have separated, he has made only two interest
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payments on his business line of credit and has made no mortgage payments. Put another
way, Richard did not attempt to prevent a foreclosure on the marital residence. The
evidence also showed that Richard sold some of the marital property even though a joint
preliminary restraining order was in effect, and he could not account for the proceeds that
he received from the sale of those assets. Id. at 130, 249, 251-53.
Richard also admitted that he had traveled to Florida on three occasions and had
been to a gambling casino, even though he allegedly had no money. Id. at 202-03, 205.
Although Richard identified the property that he had sold following an appraisal, he did
not use any of those proceeds to prevent foreclosure. Id. at 182, 191, 196-97.
Janet also had made mortgage payments on the residence, and she remained
employed throughout the marriage. Tr. p. 257-60. Janet also helped build the residence
from a mobile home and a pole barn to a large bathroom residence house with a shop,
outbuildings, manmade ponds, fencing, a pool and landscaping. Id. at 213, 216-18, 261-
62. Janet paid the household expenses and assisted Norine with paying her bills and
taking her to various appointments. Id. at 85, 87, 113, 259.
Based on the evidence presented, we cannot say that the trial court abused its
discretion in determining that Janet should receive an equal division of the equity in the
real property. It is apparent that the trial court heard the evidence and considered all of
the statutory factors in reaching this conclusion. Therefore, the trial court arrived at a just
and equitable—although unequal—division of the marital assets, and we decline to
disturb that award.
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The judgment of the trial court is affirmed.
RILEY, J., and BARNES, J., concur.
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