Michael Vincent Lusardi v. Sarah Lee Lusardi ( 2023 )

RENDERED: OCTOBER 6, 2023; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2022-CA-1305-MR
MICHAEL VINCENT LUSARDI APPELLANT
APPEAL FROM BOONE CIRCUIT COURT
v. HONORABLE JENNIFER R. DUSING, JUDGE
ACTION NO. 19-CI-00296
SARAH LEE LUSARDI APPELLEE
OPINION
AFFIRMING
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BEFORE: CETRULO, KAREM, AND MCNEILL, JUDGES.
CETRULO, JUDGE: Appellant Michael Vincent Lusardi (“Michael”) appeals a
decree of dissolution of marriage from Appellee Sarah Lee Lusardi (“Sarah”). On
appeal, Michael argues that the family court erred in valuing the marital residence
and abused its discretion in the division of the marital residence sale proceeds.
After review, we affirm.
I. BACKGROUND
Michael and Sarah were married in 2007, and during the marriage
they built a home in Verona, Kentucky (“marital residence”). In May 2019, Sarah
moved out of the marital residence, and Michael remained in the home. In June
2020, the Boone Family Court entered a bifurcated Decree of Dissolution of
Marriage that did not address the sale of the marital residence. On September 15,
2020, the family court entered Supplemental Findings of Fact and Conclusions of
Law (“2020 Distribution”) and a Supplemental Decree of Dissolution.
The 2020 Distribution included a thorough discussion of the marital
residence, including reference to two appraisals. Both appraisals included values
of comparable homes, and each appraiser viewed the home both inside and outside.
Sarah’s appraisal – from a local appraiser – valued the home at $525,000;
Michael’s appraisal – from an out-of-town appraiser (Frankfort) – valued the home
at $463,000. The appraisers used different methods when making site adjustments,
and the family court heard testimony from the appraisers as to their methods. The
2020 Distribution stated:
This Court finds [Sarah’s appraiser’s] testimony to be
more credible and objective based on his experience in the
Boone County area, and his consistency in valuing
adjustments, whereas [Michael’s appraiser’s] valuations
appear to be based more on subjective factors as to what
she personally may prefer in a property, as well as
inconsistent in the vast fluctuations in adjustments. The
Court finds the value of the [marital property] is $525,000.
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The 2020 Distribution applied the formula set forth in Brandenburg v.
Brandenburg, 617 S.W.2d 871, 872 (Ky. App. 1981) and considered the marital
and non-marital contributions of the parties, balanced with the appraisal value and
mortgage balance at the time of separation. The family court determined that the
total equity in the marital residence was $208,164.84; however, only $140,293.47
was marital.
In prioritizing purchasing rights, the family court offered the first right
of purchase to Michael because he was currently residing in the marital residence.
The family court stated in the 2020 Distribution that
if [Michael] is able to refinance the home to remove all
liability from [Sarah] and pay [Sarah] her share of equity
in the amount of $126,812.67 (which indicates her
nonmarital claim of $56,665.93 + ½ ($140,293.47)),
within ninety (90) days of entry of the Supplemental
Decree of Dissolution herein, then [Michael] shall be
awarded the marital residence and shall be entitled to sole
and exclusive possession of the [marital residence] and all
remaining equity. Upon closing of the refinance on the
[marital residence] and payment to [Sarah] of her share of
equity, [Sarah] shall sign a Quitclaim Deed to [Michael].
[Michael] shall remain solely responsible for all expenses,
insurance, taxes and liabilities associated with the marital
residence.
If [Michael] chooses not to remain in the home or is unable
to refinance the [marital residence] and pay [Sarah] her
share of the equity within ninety (90) days of entry of the
Supplemental Decree of Dissolution herein, [Sarah] first
has the option to buyout [Michael] by refinancing and
paying [Michael] his total share of equity in the amount of
$81,352.18 (which indicates his nonmarital claim of
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$11,205.44 + ½ ($140,293.47)). If [Sarah] chooses not to
buyout [Michael] or is unable to refinance and pay his
share of equity, the [marital residence], within thirty (30)
days of notice from [Sarah], shall be listed for sale with an
agreed upon realtor at a sale price agreed upon by the
parties or recommended by the realtor if an agreement
cannot be reached. Both parties shall cooperate with the
sale of the home and accept any reasonable offers. Both
parties shall equally divide any agreed upon expenses or
improvements as recommended by the realtor for the
prompt sale of the [marital residence].
Shortly thereafter, Michael decided it was not financially feasible for
him to retain the marital residence and told Sarah he did not wish to refinance the
mortgage. In October 2020, both Sarah and Michael hired separate real estate
agents and discussed the sale of the marital residence. In December 2020, Sarah
informed Michael that she would be exercising her option to refinance the marital
residence and would be buying him out as permitted by the Supplemental Decree
of Dissolution. In January 2021, Sarah closed on the marital residence and
Michael signed a quit claim deed; in February 2021, she took possession; in March
2021, she made improvements, listed the home for sale, and accepted an offer the
next day; and in May 2021, she sold the marital residence for $685,000.
In September 2021, the family court entered additional Findings of
Fact and Conclusions of Law and Order (“2021 Distribution”) to address numerous
pending motions; only a few matters discussed in those motions are relevant here.
First, the parties could not agree on the verbiage and dates for use in a retirement
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account Qualified Domestic Relations Order (“QDRO”). The family court
addressed the QDRO in part and reserved in part, ordering the parties to attempt to
resolve the remaining QDRO issues through counsel or mediation, if necessary.
Second, the family court noted an error made in the 2020 Distribution. The family
court admitted that it “neglected, by mistake, to address a credit to [Michael] for
the paydown of the mortgage balance since separation in the event of [Sarah]
buying out the property.” The family court corrected this error and awarded
Michael additional funds. Third, Michael requested an even distribution of the
actual sale proceeds.
Michael argued the subsequent sale – without an equal distribution of
the sale proceeds – was unjust pursuant to Kentucky Rule of Civil Procedure
(“CR”) 60.02 and resulted in an inequitable division of property as required by
Kentucky Revised Statute (“KRS”) 403.190. Michael argued,
[b]ecause [Sarah] did not intend to refinance the [marital
residence] to remain in the home, the parties should have,
consistent with the [Supplemental Decree of Dissolution],
placed the property for sale with an agreed upon realtor at
a sale price agreed upon by the parties and divided the
proceeds of the sale as set forth within the [Supplemental
Decree of Dissolution].
...
The Court intended within the Supplemental Decree
of Dissolution to allow each party the opportunity to retain
the marital home based upon the appraisal value, however,
the Court also recognized that if sold, the value of the
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home would be known. This Court ordered that if sold,
the division of the asset would be performed in a manner
to reflect the known value of the home at the time of the
sale.
However, the family court did not agree. The 2021 Distribution stated
that Sarah had “discussed moving her mother in and sharing the home, but upon
getting into the home her mother backed out and she determined it was not
emotionally healthy for her to remain in the home so she decided to place it on the
market.” Further, the family court noted that Michael was given the first
opportunity to buy Sarah out of the property but declined; Sarah was then offered
the same opportunity and chose to utilize it. The family court went on to state that
[b]oth parties acknowledge that the Court’s [2020
Distribution and the Supplemental Decree of Dissolution]
does not indicate the length of time that either party is
required to stay in the home upon refinance, but only
requires that if [Michael] is unable or does not wish to
refinance and buy [Sarah] out of her share that the
opportunity be given to [Sarah].
Clearly the value in the [marital residence]
increased from the time the appraisals were performed
until the house was sold. Both parties were aware or
should have been aware in late 2020 that the real estate
market was a much stronger market than it had been in
2019 when both of their appraisals had been completed.
Both parties of course had the ability to re-appraise the
property at any point in their decision-making process in
late 2020/early 2021. Additionally, the Court
acknowledges that [Sarah] put a great [deal of] time and
funds into improvements to the home prior to listing it for
sale . . . and it is not known how much those improvements
also increased the value of the property.
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The Court finds that [Sarah] abided by the terms in
the [Supplemental Decree of Dissolution] and that it
would not be proper or appropriate to change the terms of
the [Supplemental Decree of Dissolution] based on a
change in circumstances that occurred in the value of the
property after the [Supplemental Decree of Dissolution]
was entered.
[Michael] testified that if [Sarah] had taken a loss to
the home when she placed it back on the market, he would
not be asking to be responsible for half of that debt.
As such, the family court denied Michael’s motion as it related to the distribution
of the sale proceeds, remaining consistent with the 2020 Distribution.
In October 2021, Michael appealed. However, in March 2022, a
panel of this Court dismissed the appeal because the matter had not reached
finality. This Court determined that because the issue pertaining to the QDRO was
still outstanding, “it does not appear that all the rights of the parties have been
adjudicated. As such, the order is interlocutory, and the Court lacks jurisdiction to
consider the merits of the appeal.”
On October 3, 2022, the family court entered the final QDRO order.
On November 1, 2022, Michael again filed a notice of appeal to this Court.
II. STANDARD OF REVIEW
Michael appeals both the 2020 Distribution and the 2021 Distribution,
challenging a finding of fact – the value of marital residence – and conclusions of
law – the equitable distribution of marital residence sale proceeds. The 2021
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Distribution addressed open matters in the dissolution litigation, but also acted as a
denial of Michael’s CR 60.021 motion.
Findings of fact are reviewed pursuant to CR 52.01 which provides
that “[f]indings of fact, shall not be set aside unless clearly erroneous[.]” A finding
of fact is not clearly erroneous if supported by substantial evidence of a probative
value. Moore v. Asente, 110 S.W.3d 336, 354 (Ky. 2003) (citation omitted).
KRS 403.190 governs the disposition of marital property in a
dissolution of marriage. Family courts have broad discretion in dividing marital
property, and this Court may not disturb a family court’s ruling on the division of
marital property unless it has abused its discretion. Smith v. Smith, 235 S.W.3d 1,
6 (Ky. App. 2006) (citation omitted). “The test for abuse of discretion is whether
the trial judge’s decision was arbitrary, unreasonable, unfair, or unsupported by
sound legal principles.” Commonwealth v. English, 993 S.W.2d 941, 945 (Ky.
1999) (citations omitted). Similarly, we review denial of a CR 60.02 motion for an
abuse of discretion. Age v. Age, 340 S.W.3d 88, 94 (Ky. App. 2011) (citing
Richardson v. Brunner, 327 S.W.2d 572, 574 (Ky. 1959)). “The decision as to
1
CR 60.02 states, in relevant part, “On motion a court may, upon such terms as are just, relieve a
party or his legal representative from its final judgment, order, or proceeding upon the following
grounds: . . . (e) the judgment is . . . no longer equitable that the judgment should have
prospective application; or (f) any other reason of an extraordinary nature justifying relief.”
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whether to grant or to deny a motion filed pursuant to the provisions of CR 60.02
lies within the sound discretion of the trial court.” Id. (citation omitted).
CR 60.02 “is designed to provide relief where the
reasons for the relief are of an extraordinary nature.” A
very substantial showing is required to merit relief under
its provisions. Moreover, one of the chief factors guiding
the granting of CR 60.02 relief is the moving party’s
ability to present his claim prior to the entry of the order
sought to be set aside.
Wilder v. Wilder, 294 S.W.3d 449, 451 (Ky. App. 2009) (quoting U.S. Bank, NA v.
Hasty, 232 S.W.3d 536, 541-42 (Ky. App. 2007)).
III. ANALYSIS
On appeal, Michael argues that the family court erred in its valuation
of the marital residence because it did not reassess the value after the house was
sold. As a result, Michael argues, the family court abused its discretion in the
division of the marital residence sale proceeds. He admits that an equitable
distribution of marital assets need not be equal, but “the division should not be so
disproportionate to give one party a windfall over the other.”
Sarah argues the house valuation was not an error and that Michael
cannot meet his burden of showing that the family court’s division of the marital
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residence was arbitrary, unreasonable, unfair, or unsupported by sound legal
principles due to the “extensive, detailed findings” in the 2021 Distribution.2
A. Value of Marital Residence
In the 2020 Distribution, the family court walked through a thorough
analysis before reaching the marital residence value, therein discussing each
appraiser, his and her regional experience, and their approaches to valuating. The
family court noted the approximate timeframe of the appraisals and the number of
comparable sales in each analysis, as well as the varying acreage listed in each
appraisal and the appraisers’ differing methods when making site adjustments.
The family court stated that it found Sarah’s appraiser’s testimony to be “more
credible and objective” than Michael’s appraiser’s testimony and, therefore,
accepted Sarah’s appraiser’s price of $525,000 as the home value.
In his motion challenging that finding, Michael argued that the value
of the marital residence should be changed to reflect the sale price of the property.
However, in the 2021 Distribution, the family court did not agree that such a
change would be proper. The family court acknowledged that the marital
2
Sarah also argues that Michael’s appeal is not timely, but we do not agree. As this Court noted
in its order dismissing Michael’s first appeal, we must have jurisdiction through a final order or
appealable order before appellate review is permissible. See Wilson v. Russell, 162 S.W.3d 911,
913 (Ky. 2005). CR 54.01 defines a final or appealable judgment as “a final order adjudicating
all the rights of all the parties in an action or proceeding, or a judgment made final under Rule
54.02.” Finality was not reached here until the family court entered the QDRO in October 2022.
This appeal is timely.
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residence value had increased “from the time the appraisals were performed until
the house was sold” but that “[b]oth parties were aware or should have been aware
in late 2020 that the real estate market was a much stronger market than it had been
in 2019 when both of their appraisals had been completed.” Both parties could
have submitted updated appraisals but chose not to do so. Also, the family court
noted that Sarah improved the home prior to the sale, and “it is not known how
much those improvements also increased the value of the property.”
Next, Michael argues that changing the value of the marital residence
to reflect the sale price is appropriate because the 2021 Distribution made another
substantive change to the marital residence assessment. However, the two
“changes” he requested are very different requests. The family court corrected an
“inadvertent” mistake made in the 2020 Distribution: its failure to address the
reduction in the principal balance of the mortgage from date of separation until
closing. As a result, the 2021 Distribution corrected this mistake, recalculated the
Brandenburg formula, and ordered Sarah to pay Michael the difference in his share
of the equity. However, the original value of the marital property at $525,000 was
not a mistake that necessitated change, but rather, it was a finding of fact based on
testimony and evidence. Michael cited no precedent that mandated the family
court “update” a prior finding of fact that was rooted in substantial evidence. The
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family court’s findings were supported by substantial evidence; therefore, its
valuation of the marital residence was not clearly erroneous.
B. Division of Marital Residence Sale Proceeds
Michael argues that the family court’s failure to re-value the marital
residence after Sarah sold the property resulted in an inequitable division of the
marital property. He notes that – after selling the home less than two months after
taking possession – Sarah received approximately three times the amount Michael
received from the marital residence distribution. He asserts the family court
abused its discretion by ordering an unjust, inequitable division of the couple’s
most valuable asset and erroneously denied his CR 60.02 motion. More
specifically, Michael asserts that – pursuant to CR 60.02(e) – the 2021 Distribution
is no longer equitable and – pursuant to CR 60.02(f) – the discrepancy in the
distribution of the marital residence proceeds justifies extraordinary relief.
However, we do not agree.
CR 60.02(e) allows for a court to relieve a party of a judgment if it is
“no longer equitable that the judgment should have prospective application[.]”
However, this “prospective application” applies to judgments that “involve the
supervision of changing conduct or conditions and are thus provisional and
tentative.” Raisor v. Burkett, 214 S.W.3d 895, 907 (Ky. App. 2006) (quoting
Alliant Hospitals, Inc. v. Benham, 105 S.W.3d 473, 478 (Ky. App. 2003)) (internal
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quotation marks omitted). Here, the family court made final adjudications, only
reserving on one issue, the QDRO matter in the 2021 Distribution. With the
exception of the QDRO, the family court substantively finalized the distribution of
the marital assets and did not make the adjudications conditional, provisional, or
tentative. See Estate of Mills v. Mills, 473 S.W.3d 94, 98 (Ky. App. 2015) (Noting
that a decree of dissolution, like other civil judgments, becomes final ten days after
the order is issued.). As such, Michael is not entitled to relief under CR 60.02(e),
and the family court did not abuse its discretion in denying this motion.
CR 60.02(f) is a “catchall provision” that applies “only if none of that
rule’s specific provisions applies.” Alliant Hospitals, Inc., 105 S.W.3d at 478
(citing Commonwealth v. Spaulding, 991 S.W.2d 651, 655 (Ky. 1999)).
After determining that CR 60.02(a)-(e) do not apply,
courts must consider two more factors: (1) whether the
moving party had a fair opportunity to present his claim at
the trial on the merits, and (2) whether the granting of CR
60.02(f) relief would be inequitable to other parties.
Snodgrass v. Snodgrass, 297 S.W.3d 878, 884 (Ky. App. 2009) (internal quotation
marks and citations omitted).
Here too, the family court properly found Michael was not entitled to
relief under CR 60.02(f) because he had a fair opportunity to present evidence of
an updated value for the marital residence prior to the 2021 Distribution. In his
CR 60.02 motion, Michael admitted to hiring a real estate agent in October 2020.
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It was not until December 2020 that Sarah informed him that she intended to
purchase the marital residence by refinancing the mortgage. The later sale by
Sarah, represented a missed opportunity by Michael, not an error in the division of
marital assets. The family court stated in the 2021 Distribution that the real estate
market had changed since the original appraisals and both parties could have
submitted new appraisals for the property. The family court did not abuse its
discretion in denying this motion.
Next, Michael argues the failure to more evenly divide the marital
residence proceeds resulted in an inequitable division of marital assets pursuant to
KRS 403.190. Even though Sarah’s sale earned a large profit, that does not prove
the 2020 Distribution and 2021 Distribution were inequitable. The 2021
Distribution noted that Michael was given the first opportunity to buy out Sarah
but declined to take that option. Moreover, he testified that if Sarah had taken a
loss, he would not have shared that deficit. We find no abuse in the family court’s
distribution. “[A] trial court is not obligated to divide the marital property equally.
Rather, a trial court need only divide the marital property ‘in just proportions.’”
Smith, 235 S.W.3d at 6 (citations omitted). The marital residence was divided
equitably based on the known value at the time of the distribution. As the law
favors finality, we cannot accommodate a regret that came to fruition after an
equitable distribution of marital assets.
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We find no abuse of discretion as to the division of the marital assets
within the 2020 Distribution and 2021 Distribution, nor with the denial of
Michael’s CR 60.02 motion because Michael did not show that the family court’s
distribution of marital assets was arbitrary, unreasonable, unfair, or unsupported by
sound legal principles.
IV. CONCLUSION
Therefore, finding no error nor an abuse of discretion, we AFFIRM
the Boone Family Court.
ALL CONCUR.
BRIEFS FOR APPELLANT: BRIEF FOR APPELLEE:
Delana S. Sanders Jennifer B. Landry
Crescent Springs, Kentucky Ft. Mitchell, Kentucky
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