Frances J Peraino v. Vincent a Peraino ( 2017 )

STATE OF MICHIGAN
COURT OF APPEALS
FRANCES J. PERAINO, UNPUBLISHED
February 28, 2017
Plaintiff-Appellant,
v No. 329746
Macomb Circuit Court
VINCENT A. PERAINO, LC No. 2014-005832-DO
Defendant-Appellee.
Before: JANSEN, P.J., and BECKERING and GADOLA, JJ.
PER CURIAM.
In this divorce action, plaintiff, Frances J. Peraino, appeals as of right the trial court’s
judgment of divorce. Following a bench trial, the court concluded that a Merrill Lynch IRA held
by defendant, Vincent A. Peraino, was separate property, refused to invade that separate property
pursuant to statute, and awarded plaintiff $350 per month in spousal support. We affirm in part,
reverse in part, and remand for further proceedings consistent with this opinion.
I. BACKGROUND FACTS AND PROCEDURAL HISTORY
Plaintiff and defendant were married on May 20, 1995, when they were in their mid-50s
and after both of their first marriages ended. At the time of marriage, defendant had a Merrill
Lynch IRA valued at approximately $800,000. After three years of marriage, due to a change of
employment status, defendant stopped contributing to that IRA. Throughout the marriage,
plaintiff obtained various retirement accounts amounting to approximately $120,000. In 2012,
plaintiff’s son, David Connelly, died. Plaintiff was the beneficiary of David’s life insurance
policy, which resulted in her receiving approximately $38,000. After an altercation between
defendant and plaintiff’s other son, John Connelly, and plaintiff’s concern regarding defendant’s
use of guns, plaintiff filed the instant suit for divorce. The case proceeded to a bench trial on the
issues of property distribution and spousal support. At trial, plaintiff argued that defendant’s
Merrill Lynch IRA, then valued at around $400,000, should be classified as marital property and
divided equally between the parties. Alternatively, plaintiff argued, if the IRA was separate
property, the trial court should invade the asset for equitable distribution pursuant to MCL
552.23(1) or MCL 552.401. Plaintiff also argued that she was entitled to spousal support.
Defendant urged the trial court to grant each party the property that was titled in his or her own
name and to forego any spousal support award.
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Following a bench trial, the court issued a written opinion and order, concluding that
defendant’s Merrill Lynch IRA was separate property and that plaintiff had not established the
requirements of either statutory ground to invade the separate asset. The trial court also awarded
plaintiff spousal support of $350 per month, an amount lower than what she requested.
II. PROPERTY CLASSIFICATION
On appeal, plaintiff first challenges the trial court’s decision to classify defendant’s
Merrill Lynch IRA as separate property. We review a trial court’s factual findings in a divorce
proceeding for clear error. Richards v Richards, 310 Mich App 683, 693; 874 NW2d 704
(2015). A factual finding is clearly erroneous if we are left with a definite and firm conviction
that the trial court made a mistake. Butler v Simmons-Butler, 308 Mich App 195, 208; 863
NW2d 677 (2014). When reviewing a trial court’s factual findings, we defer to the trial court on
matters of witness credibility. Richards, 310 Mich App at 694. If we uphold a trial court’s
factual findings, we must then “decide whether the dispositive ruling was fair and equitable in
light of those facts.” Sparks v Sparks, 440 Mich 141, 152; 485 NW2d 893 (1992). We will
affirm a trial court’s dispositive ruling unless we are “left with the firm conviction that the
division was inequitable.” Id.“In any divorce action, a trial court must divide marital property between the parties and,
in doing so, it must first determine what property is marital and what property is separate.”
Cunningham v Cunningham, 289 Mich App 195, 200; 795 NW2d 826 (2010). Property division
in a divorce proceeding is governed by statute. Korth v Korth, 256 Mich App 286, 291; 662
NW2d 111 (2003), citing MCL 552.1 et seq. Generally, “assets earned by a spouse during the
marriage are properly considered part of the marital estate and are subject to division, but the
parties’ separate assets may not be invaded.” Korth, 256 Mich App at 291, citing MCL 552.19.
However, “there are occasions when property earned or acquired during the marriage may be
deemed separate property.” Cunningham, 289 Mich App at 201. Further, “separate assets may
lose their character as separate property and transform into marital property if they are
commingled with marital assets and ‘treated by the parties as marital property.’ ” Id., quoting
Pickering v Pickering, 268 Mich App 1, 11; 706 NW2d 835 (2005). The fact that property is
titled in one individual’s name alone, or titled jointly, is not necessarily dispositive.
Cunningham, 289 Mich App at 201-202.
Plaintiff first argues that the trial court improperly classified defendant’s Merrill Lynch
IRA as separate property because she provided evidence that defendant commingled marital
assets with the IRA and the parties treated the IRA as marital property. We disagree.
The record demonstrates that defendant began contributing to his Merrill Lynch IRA in
the mid-1970s. When he married plaintiff in 1995, the value of the IRA was approximately
$800,000. Defendant continued to contribute to the IRA until his employer reclassified him as
an independent contractor in 1998, which ended the employer contributions to the account.
Defendant testified that he did not further contribute to the IRA after that reclassification.
Plaintiff testified that she received an $8,000 inheritance when her mother died, and she
used half of that money to open a separate IRA in defendant’s name. According to plaintiff,
defendant eventually rolled that separate IRA over into his Merrill Lynch IRA. Plaintiff also
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said she contributed to more than her share of marital bills and made double mortgage payments
on their condominium in order to ensure that defendant did not have to remove funds from his
Merrill Lynch IRA.
In its opinion, the trial court explained that it did not find credible plaintiff’s testimony
that she contributed $4,000 of inherited money to defendant’s Merrill Lynch IRA or that she
contributed more heavily to marital expenses and made regular extra mortgage payments so that
defendant could maintain his IRA portfolio. Specifically, the trial court cited plaintiff’s inability
to provide any documentary evidence of her alleged activities and the fact that opening another
IRA for defendant was illogical when she could have simply contributed the $4,000 directly into
defendant’s Merrill Lynch IRA. As such, the trial court concluded that the only credible
evidence on the record showed that defendant’s Merrill Lynch IRA predated his marriage to
plaintiff and thus constituted separate property.
On appeal, plaintiff argues that the trial court clearly erred by refusing to credit her
testimony. However, the trial court’s factual findings in this regard were based solely on
plaintiff’s lack of credibility, and we defer to the trial court’s credibility determinations. See
Richards, 310 Mich App at 694. Plaintiff has not offered any evidence on appeal, other than her
own testimony, to support her assertions that defendant’s Merrill Lynch IRA was treated by the
parties as a marital asset and commingled with marital property.1 Accordingly, we are not
convinced that the trial court’s factual findings on this matter were clearly erroneous.
III. INVASION OF SEPARATE PROPERTY
Alternatively, plaintiff argues that, even if defendant’s Merrill Lynch IRA is separate
property, the trial court erred by refusing to invade the asset pursuant to MCL 552.23(1) or MCL
552.401 because she both contributed to the IRA and exhibited need. Again, we disagree.
Although a party to a divorce proceeding generally takes his or her separate property
from a marriage without that property being subject to invasion, “a spouse’s separate estate can
be opened for redistribution when one of two statutorily created exceptions is met.” Reeves v
Reeves, 226 Mich App 490, 494; 575 NW2d 1 (1997), citing MCL 552.23 and MCL 552.401.
Under the first statutory exception, a trial court may invade a separate asset “if it appears from
the evidence in the case that the party contributed to the acquisition, improvement, or
accumulation of the property.” MCL 552.401. “Invasion is allowed under MCL 552.401 when
one party ‘significantly assists in the acquisition or growth’ of the other party’s separate asset, in
which case ‘the court may consider the contribution as having a distinct value deserving of
1
To the extent defendant agreed that he contributed to the IRA for the first few years after the
parties’ marriage, plaintiff offered no evidence before the trial court regarding the amount of
those contributions. We further note that plaintiff attempts to support her argument on appeal by
providing documentary evidence that was not produced before the trial court. Not only is this
evidence not properly before this Court because our “review is limited to the record established
by the trial court,” Sherman v Sea Ray Boats, Inc, 251 Mich App 41, 56; 649 NW2d 783 (2002),
but it also provides no meritorious proof of plaintiff’s claims.
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compensation.’ ” Skelly v Skelly, 286 Mich App 578, 582; 780 NW2d 368 (2009), quoting
Reeves, 226 Mich App at 495. A court is also permitted to invade a party’s separate property “if
the estate and effects awarded to either party are insufficient for the suitable support and
maintenance of either party . . . .” MCL 552.23(1).
Plaintiff’s argument that invasion of defendant’s Merrill Lynch IRA was required
pursuant to MCL 552.401 due to her financial contribution to the account relies solely on her
trial testimony, which, as discussed earlier, the trial court discredited. Apart from plaintiff’s
testimony, there is no evidence demonstrating that plaintiff contributed in any manner to
defendant’s Merrill Lynch IRA. Given the lack of evidence, plaintiff cannot show that she
assisted in the growth of the account in a sufficient manner to warrant invasion of the separate
property under MCL 552.401.2
Plaintiff also argues that she demonstrated sufficient need to invade defendant’s Merrill
Lynch IRA pursuant to MCL 552.23(1). Plaintiff cites her testimony that she requires $2,500 per
month to maintain her standard of living. However, the trial court refused to credit plaintiff’s
testimony regarding her financial need, relying on the lack of documentary evidence provided by
plaintiff to support her proposed budget. Further, the record reveals that plaintiff never provided
clear or specific testimony regarding her costs of living. The only issue on which plaintiff
specifically testified was that she included the purchase of a small condominium in her proposed
budget, which she said would cost approximately $500 per month. Plaintiff did not testify
regarding how she accounted for the remaining $2,000 in her proposed budget. Rather, the only
credible evidence on the record showed that plaintiff received $1,432 of monthly income from
her own retirement accounts. The court also awarded plaintiff spousal support in the amount of
$350 per month, which increased her monthly income to $1,782, and awarded plaintiff her
retirement accounts, which amounted to approximately $120,000. Considering the lack of clear
and specific testimony and documentary evidence supporting plaintiff’s assertions that her needs
exceeded her assets and monthly income, the trial court did not err by refusing to invade
defendant’s IRA pursuant to MCL 552.23(1) to provide for plaintiff’s maintenance and support.
IV. SPOUSAL SUPPORT
Next, plaintiff challenges the trial court’s award of spousal support. We review for an
abuse of discretion a trial court’s decision to award spousal support. Gates v Gates, 256 Mich
App 420, 432; 664 NW2d 231 (2003). “An abuse of discretion occurs when a court selects an
outcome that is not within the range of reasonable and principled outcomes.” Carlson v Carlson,
293 Mich App 203, 205; 809 NW2d 612 (2011). We review for clear error a trial court’s
findings of fact as they relate to an award of spousal support. Gates, 256 Mich App at 432. If
the trial court’s factual findings are not clearly erroneous, we must affirm a support award unless
we are firmly convinced that it was inequitable. Id. at 433.
2
Even if the trial court had credited plaintiff’s testimony, a $4,000 contribution toward an IRA
that was valued at $800,000 at the outset of the marriage would not amount to “significantly
assisting” in the growth of the asset so as to warrant the invasion of defendant’s separate
property. See Skelly, 286 Mich App at 582.
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“The object in awarding spousal support is to balance the incomes and needs of the
parties so that neither will be impoverished; spousal support is to be based on what is just and
reasonable under the circumstances of the case.” Berger v Berger, 277 Mich App 700, 726; 747
NW2d 336 (2008). This Court has provided a list of 14 factors that a trial court should consider
when determining if spousal support is proper in a given case, which are as follows:
(1) the past relations and conduct of the parties; (2) the length of the marriage; (3)
the abilities of the parties to work; (4) the source and the amount of property
awarded to the parties; (5) the parties’ ages; (6) the abilities of the parties to pay
support; (7) the present situation of the parties; (8) the needs of the parties; (9) the
parties’ health; (10) the parties’ prior standard of living and whether either is
responsible for the support of others; (11) the contributions of the parties to the
joint estate; (12) a party’s fault in causing the divorce; (13) the effect of
cohabitation on a party’s financial status; and (14) general principles of equity.
[Woodington v Shokoohi, 288 Mich App 352, 356; 792 NW2d 63 (2010).]
On appeal, plaintiff argues that the trial court improperly reduced her spousal support
award on the basis of a clearly erroneous finding of fact regarding plaintiff’s withdrawal of
$26,500 from a joint savings account. We agree.
At trial, plaintiff testified that her son, David, died in 2012. Plaintiff explained that she
was the beneficiary of David’s life insurance policy, and when she initially received the life
insurance payout of approximately $38,000, she deposited the money in a Comerica Bank
savings account that she shared with defendant.3 Plaintiff then used some of the money to pay
David’s funeral and probate expenses. Plaintiff testified that, after a few months, she transferred
the remaining proceeds of the life insurance policy from the joint account into an account at
Motor City Credit Union (MCCU) to secure a higher interest rate. According to plaintiff, she
used the remaining funds to help pay her grandchildren’s college tuition and to cover her legal
fees in the instant case.
A statement from the parties’ joint account, which was admitted at trial, showed that a
withdrawal of $26,500 was made between October 1, 2013, and December 31, 2013. Defendant
did not provide any testimony regarding this withdrawal. Statements from plaintiff’s MCCU
account, which were also introduced at trial, showed that as of January 31, 2014, plaintiff had
3
Property that is acquired by one spouse through inheritance or some other economic addition
independent of the marriage generally constitutes separate property. See Lee v Lee, 191 Mich
App 73, 78-79; 477 NW2d 429 (1991). Plaintiff was named as the sole beneficiary of the life
insurance policy of her son from a prior marriage, the proceeds of which constituted plaintiff’s
separate property. “[S]eparate assets may lose their character as separate property and transform
into marital property if they are commingled with marital assets and treated by the parties as
marital property.” Cunningham, 289 Mich App at 201 (quotation marks and citation omitted).
Under the circumstances presented in this case, we are satisfied that plaintiff’s brief deposit of
the life insurance proceeds into a joint account was not enough to transform their character from
separate into marital property.
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approximately $25,300 in her credit union account. According to the statements, plaintiff made
several withdrawals during the pendency of this case and made several payments to Wayne State
University, which is consistent with plaintiff’s testimony that she helped pay college tuition for
her grandchildren and used funds from the account to cover her legal fees.
Despite plaintiff’s testimony and the corroborating documentary evidence, the trial court
found that plaintiff did not account for the removal of the $26,500 from the joint account,
concluding as follows:
Plaintiff acknowledges that she withdrew most of the funds from the joint
Comerica savings account approximately one year prior to the time that she filed
for divorce. These funds were never accounted for and there appears to be no
evidence that they were spent in support of the marital estate. Plaintiff appears to
have secreted these funds without defendant’s knowledge. The Court finds this to
be a compelling factor in reducing the award of spousal support to plaintiff.
It is unclear from the record how the trial court reached its decision that plaintiff failed to
account for the money that was removed from the joint account when she explicitly described
how she initially deposited the proceeds from David’s life insurance policy into the Comerica
Bank joint savings account, then, after paying David’s funeral and probate expenses, transferred
the remaining funds to her credit union account and used them to pay for her grandchildren’s
tuition and her legal fees. The trial court made no reference in its opinion to plaintiff’s testimony
on this matter. Specifically, the trial court never stated that it found plaintiff’s testimony on this
point to lack credibility and never referenced any evidence or testimony from defendant that
would contradict plaintiff’s testimony. Although defendant testified that he believed plaintiff
spent marital funds on her children without discussing it with him, he never suggested that the
funds spent by plaintiff came from the $26,500 withdrawal from their joint account.
Given the lack of evidence supporting the trial court’s finding that plaintiff secretly
disposed of the $26,500 from the parties’ joint account, as well as her clear and explicit
testimony regarding her use of that money, we conclude that the trial court clearly erred when it
made this finding of fact.4 The trial court’s opinion indicates that, absent this clearly erroneous
factual finding, the court would have provided plaintiff with a larger spousal support award.
Accordingly, we reverse the trial court’s award of spousal support and remand the case to allow
the court to structure an award using the facts in the record.
V. JUDICIAL BIAS
Lastly, plaintiff argues that the trial court exhibited bias against her and she is therefore
entitled to a new trial. Plaintiff failed to challenge the trial court’s conduct below, so her
argument is unpreserved and plaintiff has not offered any unusual circumstances that would
4
It is notable that this transfer of funds occurred a full year before plaintiff filed for divorce,
which undercuts the trial court’s conclusion that plaintiff made the transfer in an effort to
“secret” the funds from defendant.
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compel us to address her unpreserved claim. See Meagher v Wayne State Univ, 222 Mich App
700, 726; 565 NW2d 401 (1997) (explaining that a claim of judicial bias premised on the trial
court’s treatment of the parties during trial is not preserved if a party fails to object to the
allegedly biased conduct); Peterman v Dep’t of Natural Resources, 446 Mich 177, 183; 521
NW2d 499 (1994) (explaining the general rule that, “absent unusual circumstances, issues not
raised at trial may not be raised on appeal”).
Nonetheless, even if we were to consider the substance of plaintiff’s argument, we would
find that it lacks merit. We presume that a trial judge is fair and impartial, and a party
challenging this presumption bears the heavy burden of proving otherwise. In re Susser Estate,
254 Mich App 232, 237; 657 NW2d 147 (2002). “An actual showing of prejudice is required
before a trial judge will be disqualified.” In re Forfeiture of $1,159,420, 194 Mich App 134,
151; 486 NW2d 326 (1992). Plaintiff’s allegations of judicial bias relate solely to the fact that
the trial court interrupted her testimony on several occasions to ask her questions. During a
bench trial, a court may ask questions “designed to clarify points or to expand upon the path of
inquiry in order to assist the court in its role of factfinder.” In re Forfeiture of $53.00, 178 Mich
App 480, 497; 444 NW2d 182 (1989). A judge also has more discretion to question witnesses
during a bench trial because, unlike a jury trial, “concern over the effect of the judge’s comments
and conduct d[oes] not exist.” In re Forfeiture of $1,159,420, 194 Mich App at 153. Our review
of the record in this case reveals that the trial court’s interruptions and questions were merely
designed to clarify plaintiff’s testimony. Therefore, plaintiff’s claim of judicial bias lacks merit.
Affirmed in part, reversed in part, and remanded for further proceedings consistent with
this opinion. We do not retain jurisdiction.
/s/ Kathleen Jansen
/s/ Jane M. Beckering
/s/ Michael F. Gadola
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