Bernard Wayne Harpe v. Georgiann Marie Harpe ( 2023 )


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  •                    RENDERED: MARCH 3, 2023; 10:00 A.M.
    NOT TO BE PUBLISHED
    Commonwealth of Kentucky
    Court of Appeals
    NO. 2021-CA-0285-MR
    BERNARD WAYNE HARPE                                                  APPELLANT
    APPEAL FROM BOONE CIRCUIT COURT
    v.              HONORABLE LINDA R. BRAMLAGE, JUDGE
    ACTION NO. 19-CI-00952
    GEORGIANN MARIE HARPE                                                  APPELLEE
    OPINION
    AFFIRMING
    ** ** ** ** **
    BEFORE: THOMPSON, CHIEF JUDGE; ACREE AND CETRULO, JUDGES.
    ACREE, JUDGE: Appellant, Bernard Harpe (Husband) appeals the Boone Family
    Court’s February 10, 2021 findings of fact and conclusions of law dividing
    property between Husband and Georgiann Harpe (Wife) following the parties’
    divorce. Husband contests: (a) the classification of several items of property as
    Wife’s separate property, and (b) the division of marital property between the
    parties. Finding no error, we affirm.
    BACKGROUND
    Husband and Wife were married on May 20, 1975. Husband filed his
    petition for dissolution of marriage on July 18, 2019. The parties entered a
    separation agreement wherein they agreed to the disposition of most of their
    property. However, several disagreements still lingered. The parties still
    disagreed whether several items were marital or Wife’s separate property;
    specifically, the parties disputed the status of a $56,044.71 balance of an
    investment account in Wife’s name, a $225,118.52 balance in another of Wife’s
    investment accounts, and a 1967 Ford Mustang with a value of $64,375.00. The
    parties also disputed an additional $21,191.00, which represents an amount
    remaining in an investment account after Wife withdrew money to purchase a
    condominium in Tennessee and after Wife received her proceeds from the sale of
    the marital home. Wife asserted each of these items are traceable to bequests
    following the death of her grandmother in 1993 and the death of her father in 2010.
    The parties also disagreed as to the division of certain items of marital
    property. The parties disagreed as to the division of an IRA account in Husband’s
    name with a value of $325,272.68, another IRA account in Husband’s name with a
    value of $657,675.34, a third IRA account in Husband’s name with a value of
    $53,633.64, an IRA account in Wife’s name with a value of $19,305.01, a 401K
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    account in Wife’s name with a value of $39.935.13, and a stock purchase plan in
    Wife’s name with a value of $1,301.12.
    The family court held a final hearing on January 6, 2021. The court
    considered evidence and heard testimony from Wife that all property claimed as
    nonmarital could be traced to distributions from the estates of her grandmother and
    her father. She testified she sought legal advice as to how to keep her inheritance
    as separate property prior to receiving any distribution from her grandmother’s
    estate. On multiple occasions, Wife moved these distributions to different
    investment companies so that her property could remain with her financial advisors
    as they changed employers.
    Distributions from her grandmother’s estate were in the form of both
    stocks and cash, and Wife placed these distributions in accounts in her own name.
    Wife moved her accounts containing both her cash and stock distributions to a
    single investment company, Stephens, Inc. In 2000, she withdrew $21,000.00
    from her account to purchase the Ford Mustang.
    She testified she moved her inheritance from her grandmother’s estate
    to Wells Fargo around the time of her father’s death. Wife received distributions
    from her father’s estate both in cash and in stocks. Because a portion of her
    inheritance from her father was a share of his USAA account, USAA required
    Wife to open an account for such distributions. She ultimately closed her USAA
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    account in 2012 and transferred the funds therein to her Wells Fargo account. She
    closed her Wells Fargo account in 2016 and transferred the balance to an account
    with U.S. Capital Advisors.
    Wife withdrew a total of $243,794.13 from her U.S. Capital Advisors
    account between 2016 and 2019 to supplement her and Husband’s retirement
    income. In 2020, she withdrew an additional $225,500.00 to purchase a
    condominium in Tennessee. Upon sale of the parties’ marital home, Wife received
    $213,553.67 in proceeds, which she then deposited into a new account at Raymond
    James Financial. The parties had agreed the condominium was not subject to
    division since the withdrawal for its purchase was replaced with proceeds from the
    sale of the marital home.
    Husband testified Wife always referred to her inheritance as her
    money, and that Wife handled the finances within the marriage. He also testified
    he never questioned Wife regarding the source of the funds for the Ford Mustang.
    The court also heard testimony from Wife’s brother, who was an heir to their
    grandmother’s estate and was the executor of their father’s estate. He verified
    Wife’s inheritance from the estates of their grandmother and father.
    No party introduced evidence indicating any marital money was
    deposited into any of Wife’s separate accounts or that any separate money was
    comingled with marital assets. Wife produced exhibits identifying distributions –
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    both cash and stock distributions – from the estates of her grandmother and her
    father.
    The family court entered its decree of dissolution on February 10,
    2021, as well as findings of fact and conclusions of law. It determined each item
    disputed as marital or separate property was indeed Wife’s separate property,
    because each item could be traced to bequests made to Wife. The court also found
    that the total marital estate was $1,097,122.50, and determined a just division of
    the marital estate would be to divide the marital estate into equal $548,561.25
    shares for both parties. The court also declined to award maintenance to Wife.
    Husband now appeals.
    STANDARD OF REVIEW
    “In all actions tried upon the facts without a jury[,]” including actions
    for dissolution of marriage, “[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.” CR1 52.01. A factual finding is clearly
    erroneous if it is “manifestly against the weight of evidence.” Wells v. Wells, 
    412 S.W.2d 568
    , 571 (Ky. 1967). Conversely, a factual finding is not clearly erroneous
    if substantial evidence supports it. Hunter v. Hunter, 
    127 S.W.3d 656
    , 659 (Ky.
    App. 2003) (citing Owens-Corning Fiberglas Corp. v. Golightly, 
    976 S.W.2d 409
    1
    Kentucky Rules of Civil Procedure.
    -5-
    (Ky. 1998)). “Substantial evidence is evidence, when taken alone or in light of all
    the evidence, which has sufficient probative value to induce conviction in the mind
    of a reasonable person.” 
    Id.
     (citing Golightly, 976 S.W.2d at 414). However,
    appellate courts review legal issues de novo. Id.
    ANALYSIS
    Wife’s Separate Property
    First, Husband argues the family court erred in determining Wife had
    traced each of her non-marital claims to her inherited property. We disagree,
    because substantial evidence supports the family court’s determination regarding
    Wife’s separate property.
    “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[.]” KRS2 403.190(3). However, several exceptions to this presumption
    exist, including “[p]roperty 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[.]” KRS 403.190(2)(a). “A party claiming that property
    2
    Kentucky Revised Statutes.
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    acquired during the marriage is other than marital property, bears the burden of
    proof.” Terwilliger v. Terwilliger, 
    64 S.W.3d 816
    , 820 (Ky. 2002).
    The record makes clear that Wife received bequests following the
    death of her grandmother in 1993 and the death of her father in 2010. Payments to
    Wife from both estates came in the form of stocks and cash, and were paid across
    multiple distributions. It is also apparent the character of these bequests has
    changed since Wife received them. Husband argues Wife did not meet her burden
    of proving the claimed separate property, in its current form, could be traced to the
    original bequests.
    “‘Tracing’ is defined as ‘[t]he process of tracking property’s
    ownership or characteristics from the time of its origin to the present.’” Sexton v.
    Sexton, 
    125 S.W.3d 258
    , 266 (Ky. 2004) (quoting Tracing, BLACK’S LAW
    DICTIONARY (7th ed. 1999)). Tracing is a judicially-created concept which allows
    a party to overcome KRS 403.190(3)’s presumption of marital property when
    property falling under one of KRS 403.190(2)’s exceptions has subsequently been
    moved or changed in form. 
    Id.
     When tracing nonmarital property, “‘the
    nonmarital claimant must trace the previously owned property into a presently
    owned specific asset.’” 
    Id.
     (quoting 15 L. GRAHAM & J. KELLER, KENTUCKY
    PRACTICE, DOMESTIC RELATIONS LAW § 15.68 (2nd ed. 1997)).
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    Tracing is not shown where a party has simply brought separate
    property into the marriage; such party must also show “that he or she has spent his
    or her non-marital assets in a traceable manner during the marriage.” Polley v.
    Allen, 
    132 S.W.3d 223
    , 229 (Ky. App. 2004). That said, our courts have
    acknowledged that “tracing to a mathematical certainty is not always possible[.]”
    Terwilliger, 64 S.W.3d at 820 (citing Chenault v. Chenault, 
    799 S.W.2d 575
    , 578
    (Ky. 1990)). “While 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.” Chenault,
    799 S.W.2d at 578.
    Nor is a party necessarily required to provide documentary proof to
    establish traceability. In Chenault, the Supreme Court of Kentucky found
    testimony to be sufficient to establish property as separate where there is no
    evidence presented to the contrary. 799 S.W.2d at 579. Therein, the appellant
    wife asserted she brought into the marriage shares of stock, as well as the proceeds
    of a home she owned prior to the marriage, other cash, and a treasury note. Id. at
    577. This Court determined the wife failed to establish the property as separate
    because, though she testified as to how present property could be traced to property
    she claimed to have brought into the marriage, “she was unable to document such
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    testimony” and thus unable to prove traceability. Id. at 577-78. However, the
    Supreme Court of Kentucky determined wife had sufficiently traced present
    property to her original, separate property “in view of her testimony and the
    absence of evidence to the contrary[.]” Id. at 579. In relaxing the strict
    requirement of documentary proof to establish traceability, the Supreme Court
    noted it is the role of Kentucky’s trial courts “to detect deception and exaggeration
    or to require additional proof when such is suspected.” Id.
    As Wife points out in her brief, no party produced evidence showing
    marital money was ever deposited into Wife’s separate accounts. Wife set up
    separate accounts upon advice of counsel once she learned she stood to inherit
    substantial money from her grandmother’s estate. Accordingly, we must
    determine on appeal whether substantial evidence exists tracing present property to
    Wife’s bequests to overcome the presumption that property acquired after the date
    of marriage is marital.
    We hold the family court did not err in determining Wife had
    adequately traced each item of contested property to her bequests. Wife produced
    ample evidence tracing her bequests as she moved them to different accounts. In
    addition to documentary evidence of distributions, Wife’s testimony chronicled her
    bequests as they were transferred from one financial institution to another, and her
    brother’s testimony established Wife received approximately $160,000.00 and
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    $600,000.00 from the estates of their grandmother and father, respectively.
    Because this testimonial evidence was uncontroverted and the family court
    apparently detected no deception or exaggeration which required it to demand
    additional proof, it was not error for the family court to rely upon testimony to
    reach its conclusions.
    Further, her testimony supports withdrawal of $21,000.00 to purchase
    the Ford Mustang; conversely, Husband was unable to recall whether any marital
    funds were deposited into Wife’s separate account and subsequently used to
    purchase the car and acknowledged he did not intend to claim the car as marital
    property because it is “her car.” As to the contested $21,191.00, this amount
    constituted money remaining in one of Wife’s separate accounts after withdrawing
    money to purchase her condominium in Tennessee and after receiving her proceeds
    from the sale of the marital residence. Though each of the contested items of
    property exists in different forms than when they were originally bequeathed to
    Wife, substantial evidence supports the family court’s finding that Wife had
    adequately traced the property to her bequests.
    Division of Marital Property
    Husband also alleges the family court failed to follow the required
    analytical procedure for disposition of marital property. Under KRS 403.190(1),
    the family court is required to divide marital property “in just proportions
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    considering all relevant factors[,]” including “[v]alue of the property set apart to
    each spouse[.]” KRS 403.190(1)(a)-(d). Courts utilize a three-step process when
    dividing marital property under KRS 403.190(1). Ensor v. Ensor, 
    431 S.W.3d 462
    ,
    470 (Ky. App. 2013). First, the court determines whether each item of property is
    marital or nonmarital. 
    Id.
     (citing Gripshover v. Gripshover, 
    426 S.W.3d 460
    , 465
    (Ky. 2008)). Second, the court assigns each party their respective separate
    property. 
    Id.
     Third, the court “equitably divides the marital property between the
    parties.” 
    Id.
     While the division of marital property must be equitable, “a ‘just’
    division is not necessarily an equal division.” Cobane v. Cobane, 
    544 S.W.3d 672
    ,
    684 (Ky. App. 2018) (citations omitted). “[T]he trial court has broad discretion to
    divide marital assets, and its determination of what constitutes a just division will
    not be disturbed absent an abuse of that discretion.” 
    Id.
     (citing Hempel v. Hempel,
    
    380 S.W.3d 549
    , 553 (Ky. App. 2012)).
    While the family court does have broad discretion in justly
    distributing marital property, and though the court in the present case divided the
    contested marital property equally between Husband and Wife, Husband asserts
    the family court failed to follow the required three-step procedure. He alleges the
    court divided the marital property without first assigning each party their non-
    marital property, meaning the court did not consider the amount of non-marital
    property each party possessed when it divided the marital property. As evidence of
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    this failure, Husband observes that the court’s conclusions of law discusses
    division of marital property prior to its discussion of Wife’s non-marital property.
    Husband’s argument is unavailing and does not demonstrate the
    family court failed to follow the three-step procedure. “The court and its officers
    are presumed to have properly performed their statutory duties.” Remmers’
    Executor v. Mayhugh, 
    303 Ky. 366
    , 369, 
    197 S.W.2d 450
    , 452 (1946) (citing
    Young v. Commonwealth, 
    275 Ky. 98
    , 
    120 S.W.2d 772
     (1938)). “When attack is
    made on this score, the contrary must be clearly and convincingly shown.” 
    Id.
    The court simply includes its discussion of Wife’s separate property after its
    discussion of division of marital property in its conclusions of law, and there is no
    indication in the text itself showing the court’s analysis was performed in an
    incorrect sequence. The family court’s organizational choice is insufficient proof
    to overcome the presumption that the family court complied with applicable law,
    and thus we find no error in the court’s analysis.
    CONCLUSION
    For the foregoing reasons, we affirm the Boone Family Court’s
    February 10, 2021 findings of fact and conclusions of law.
    ALL CONCUR.
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    BRIEFS FOR APPELLANT:     BRIEF FOR APPELLEE:
    Keith R. Morgan           William G. Knoebel
    Florence, Kentucky        Florence, Kentucky
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