Davis v. Davis ( 2014 )

An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.
NO. COA13-984
NORTH CAROLINA COURT OF APPEALS
Filed: 15 April 2014
MOLLY DREW DAVIS,
Plaintiff,
v. Davidson County
No. 10 CVD 3929
MICHAEL R. DAVIS,
Defendant.
Appeal by defendant from judgment and order entered 5
February 2013 by Judge Mary F. Covington in Davidson County
District Court. Heard in the Court of Appeals 8 January 2014.
Molly Brown Davis, pro se, plaintiff-appellee.
The Law Offices of Lee M. Cecil, by Lee M. Cecil for
defendant-appellant.
DAVIS, Judge.
Michael R. Davis (“Defendant”) appeals from the trial
court’s equitable distribution judgment and alimony order. On
appeal, Defendant argues that the trial court erred (1) in its
valuation and distribution of 500 shares of stock in a closely-
held corporation; and (2) by failing to make adequate findings
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of fact to support the amount and duration of the alimony
awarded. After careful review, we vacate and remand.
Factual Background
Molly Drew Davis (“Plaintiff”) and Defendant were married
on 14 October 1989, separated on 15 September 2009, and divorced
on 11 February 2011. Two children were born during the parties’
marriage, one of whom is still a minor. On 8 November 2010,
Plaintiff filed a complaint seeking absolute divorce, child
custody and support, post-separation support, permanent alimony,
equitable distribution, and attorneys’ fees. Defendant filed an
answer and counterclaims for child custody and support,
equitable distribution, and absolute divorce.
The trial court heard the parties’ claims for equitable
distribution and Plaintiff’s claim for alimony on 11 October
2012. The trial court entered its judgment and order on 5
February 2013 that provided for (1) an equal division of the
marital property; and (2) monthly alimony payments of $1,000.00
from Defendant to Plaintiff until 1 January 2032. Defendant
gave timely notice of appeal to this Court.
Analysis
I. Equitable Distribution
We review a trial court’s order of equitable distribution
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under an abuse of discretion standard. Wieneck-Adams v. Adams,
331 N.C. 688, 691, 417 S.E.2d 449, 451 (1992). “Only a finding
that the judgment was unsupported by reason and could not have
been a result of competent inquiry or a finding that the trial
judge failed to comply with the statute will establish an abuse
of discretion.” Id. (internal citations omitted).
In his first argument on appeal, Defendant asserts that the
trial court erred in its valuation and subsequent distribution
of 500 shares of stock in American Auto Supply, Inc., a closely-
held corporation founded by Defendant’s grandfather. Defendant
contends that the trial court’s valuation of the shares is not
supported by competent evidence. Defendant further asserts that
because there was insufficient evidence offered at trial
concerning the valuation of the 500 shares of American Auto
Supply, Inc., the shares should be removed and excluded from the
distribution scheme.
“In valuing a marital interest in a business, the task of
the trial court is to arrive at a date of separation value which
reasonably approximates the net value of the business interest.”
Fitzgerald v. Fitzgerald, 161 N.C. App. 414, 419, 588 S.E.2d
517, 521 (2003) (citations and quotation marks omitted). In
Poore v. Poore, 75 N.C. App. 414, 331 S.E.2d 266, disc. review
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denied, 314 N.C. 543, 335 S.E.2d 316 (1985), this Court
explained that
[i]n ordering a distribution of marital
property, a court should make specific
findings regarding the value of a spouse’s
professional practice and the existence and
value of its goodwill, and should clearly
indicate the evidence on which its
valuations are based, preferably noting the
valuation method or methods on which it
relied. On appeal, if it appears that the
trial court reasonably approximated the net
value of the practice and its goodwill, if
any, based on competent evidence and on a
sound valuation method or methods, the
valuation will not be disturbed.
Id. at 422, 331 S.E.2d at 272.
Our Supreme Court has made clear that the standard
articulated in Poore — requiring specific findings concerning
the trial court’s valuation of a business and the methods it
used to arrive at that valuation — is also applicable to the
valuation of a marital interest in a closely-held corporation.
See Patton v. Patton, 318 N.C. 404, 406, 348 S.E.2d 593, 595
(1986) (“[T]he requirement of specific findings is no less
applicable in an equitable distribution order involving a
spouse’s interest in a closely-held corporation.”).
Here, the only finding made by the trial court regarding
the valuation of the American Auto Supply, Inc. shares is
contained in finding of fact 8 and states:
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The Court finds that the shares of stock are
marital, having been purchased with funds
during the course of the marriage; however,
the Court finds that $20,000.00 is the value
of the 500 shares based on the fact that the
parties separated two years prior to the
date of the final accounting along with the
state of the market at the time of the
separation.
This finding merely references (1) “the state of the market
at the time”; and (2) a final accounting of Defendant’s mother’s
estate that took place two years after the date of the parties’
separation and valued 233 shares of American Auto Supply, Inc.
at $16,500.00. In light of the lack of clarity and specificity
of this finding, we believe that the judgment fails to “state
specifically how the court arrived at its valuation.” Offerman
v. Offerman, 137 N.C. App. 289, 296, 527 S.E.2d 684, 688 (2000);
see Locklear v. Locklear, 92 N.C. App. 299, 302, 374 S.E.2d 406,
407-08 (1988) (“A mere recitation of the factors the trial court
considered in its valuation of the corporation is not
sufficient; the trial court must also indicate the value it
attaches to each of the enumerated factors.”), disc. review
allowed, 324 N.C. 336, 378 S.E.2d 794 (1989).
However, while the trial court’s findings are insufficient,
we must determine whether the parties offered sufficient
evidence at trial that would have allowed the trial court to
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make appropriate findings on the issue containing the requisite
level of specificity. It is well established that the trial
court’s “obligation to make specific findings regarding the
value of any property classified as marital, including any
business owned by one of the parties . . . . exists only when
there is credible evidence supporting the value of the asset.”
Grasty v. Grasty, 125 N.C. App. 736, 738-39, 482 S.E.2d 752, 754
(internal citations and quotation marks omitted), disc. review
denied, 346 N.C. 278, 487 S.E.2d 545 (1997); see Miller v.
Miller, 97 N.C. App. 77, 80, 387 S.E.2d 181, 184 (1990) (“The
requirements that the trial court (1) classify and value all
property of the parties, both separate and marital, (2) consider
the separate property in making a distribution of the marital
property, and (3) distribute the marital property, necessarily
exist only when evidence is presented to the trial court which
supports the claimed classification, valuation and
distribution.”).
In the present case, neither party offered any evidence of
the value of the 500 shares of stock at the date of separation.
Indeed, at the equitable distribution hearing, the trial court
expressed its frustration at the absence of evidence upon which
to value the shares, asking the parties’ attorneys: “So we don’t
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have the value of that stock as of the date of separation?” and
“We’re supposed to pull that number out of my robe, is that what
I’m being told?”
Because the parties failed to offer evidence at the
equitable distribution hearing regarding the value of the 500
shares of American Auto Supply, Inc. stock as of the date of
separation, we remand to the trial court for the entry of a new
equitable distribution judgment removing the shares from the
distribution scheme. The parties had “ample opportunity to
present evidence [of the shares’ value] and have failed to do
so.” Miller, 97 N.C. App. at 80, 387 S.E.2d at 184. Thus,
“remanding the matter for the taking of new evidence, in essence
granting . . . a second opportunity to present evidence, would
only protract the litigation and clog the trial courts with
issues which should have been disposed of at the initial
hearing.” Id. (citation and quotation marks omitted).
II. Alimony
Defendant next contends that the trial court erred by
awarding Plaintiff a monthly alimony award of $1,000.00 until 1
January 2032 without making sufficient findings of fact
regarding the amount and duration of the award. We agree.
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N.C. Gen. Stat. § 50-16.3A provides, in pertinent part,
that the trial court “shall set forth the reasons for its award
or denial of alimony, and if making an award, the reasons for
its amount, duration, and manner of payment.” N.C. Gen. Stat. §
50-16.3A(c) (2013). In making an alimony award, the trial court
is to consider all relevant factors, including:
(1) The marital misconduct of either of the
spouses. Nothing herein shall prevent a
court from considering incidents of post
date-of-separation marital misconduct as
corroborating evidence supporting other
evidence that marital misconduct occurred
during the marriage and prior to [the] date
of separation;
(2) The relative earnings and earning
capacities of the spouses;
(3) The ages and the physical, mental, and
emotional conditions of the spouses;
(4) The amount and sources of earned and
unearned income of both spouses, including,
but not limited to, earnings, dividends, and
benefits such as medical, retirement,
insurance, social security, or others;
(5) The duration of the marriage;
(6) The contribution by one spouse to the
education, training, or increased earning
power of the other spouse;
(7) The extent to which the earning power,
expenses, or financial obligations of a
spouse will be affected by reason of serving
as the custodian of a minor child;
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(8) The standard of living of the spouses
established during the marriage;
(9) The relative education of the spouses
and the time necessary to acquire sufficient
education or training to enable the spouse
seeking alimony to find employment to meet
his or her reasonable economic needs;
(10) The relative assets and liabilities of
the spouses and the relative debt service
requirements of the spouses, including legal
obligations of support;
(11) The property brought to the marriage by
either spouse;
(12) The contribution of a spouse as
homemaker;
(13) The relative needs of the spouses;
(14) The federal, State, and local tax
ramifications of the alimony award;
(15) Any other factor relating to the
economic circumstances of the parties that
the court finds to be just and proper.
(16) The fact that income received by either
party was previously considered by the court
in determining the value of a marital or
divisible asset in an equitable distribution
of the parties' marital or divisible
property.
N.C. Gen. Stat. § 50-16.3A(b).
Here, although the trial court made findings regarding
several of the above-quoted factors in its order, it failed to
articulate how these findings might support a monthly award in
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the amount of $1,000.00 until 1 January 2032. Indeed, the trial
court’s findings of fact regarding the amount and duration of
the alimony award state in full:
35. The Defendant testified that he received
a substantial inheritance from both his
mother and father’s estates. The Defendant
will have substantial resources from which,
not only to pay his monthly living expenses,
but also a monthly alimony award to the
Plaintiff.
36. Other than the limited income as set
forth above, the Plaintiff has no other
source of income or support and is
substantially in need of support from the
Defendant and as such is the dependent
spouse of the Defendant.
37. Due to the Defendant’s income, the
Plaintiff’s limited income and the expenses
of the parties, the Defendant is the
supporting spouse of the Plaintiff as
defined in N.C.G.S. § 50-16.3[A].
38. Considering the respective estates,
earnings, conditions and accustomed standard
of living of the parties and the ability of
the Defendant to pay monthly alimony,
$1,000.00 represents a reasonable sum of
monthly alimony.
39. Said payments shall begin January 1,
2013. The Court finds that this Order is
made retroactive from the date of the end of
Plaintiff’s post separation support which
was in April, 2012. The Court orders that
the Defendant shall pay an additional
$500.00 per month until those have been
paid. The Defendant’s accumulated arrearage
is $8,000.00 (namely from May, 2012 through
December, 2012).
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40. The alimony payments in the amount of
$1,000.00 will terminate on January 1, 2032.
The Defendant may elect to pay the Plaintiff
the sum of $400,000.00 (Four Hundred
Thousand and No/100 Dollars) in lieu of his
monthly alimony obligation.
In the decretal portion of the order, the trial court
further noted that, in accordance with N.C. Gen. Stat. § 50-
16.9, alimony will terminate at the occurrence of (1)
Plaintiff’s remarriage; (2) Plaintiff’s death; (3) Defendant’s
death; or (4) Plaintiff’s cohabitation as defined by N.C. Gen.
Stat. § 50-16.9(b) – assuming if any of these events occur
before 1 January 2032.
We do not believe that these findings sufficiently
articulate the trial court’s “reasons for its amount, duration,
and manner of payment” as required by N.C. Gen. Stat. § 50-
16.3A(c). In Hartsell v. Hartsell, 189 N.C. App. 65, 76, 657
S.E.2d 724, 731 (2008), we determined that the findings
regarding the amount of the alimony award were inadequate where
“the trial court made only a finding that [the] plaintiff had
the ability to pay that amount, but provided no explanation as
to why it had concluded that [the] defendant was entitled to
that specific amount.”
The same is true here. Though the trial court references
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the “respective estates, earnings, conditions and accustomed
standard of living of the parties” in its finding determining
that $1,000.00 is “a reasonable sum of monthly alimony,” this
cursory discussion does not provide proper insight into the
trial court’s reasoning. See Lucas v. Lucas, 209 N.C. App. 492,
501, 706 S.E.2d 270, 276 (2011) (concluding that trial court’s
findings regarding alimony were “too meager to enable the
reviewing court to determine whether the trial judge exercised
proper discretion in deciding what defendant was to pay
plaintiff” (citation and quotation marks omitted)). Likewise,
when the trial court concluded that Defendant could make a one-
time payment of $400,000.00 to Plaintiff in lieu of the monthly
alimony payments, it provided no rationale as to why this
particular amount and this alternative manner of payment would
be appropriate.
Additionally, the trial court failed to set forth the
reason for its determination that Plaintiff was entitled to
receive alimony from Defendant until 1 January 2032. “[T]his
Court has repeatedly held that an alimony order is inadequate
when it contains no findings explaining the reason for the
duration chosen . . . .” Id. at 502, 706 S.E.2d at 277.
Therefore, we must remand this matter to the trial court so that
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it may make specific findings of fact explaining its reasoning
regarding the amount and duration of the alimony award. See
Works v. Works, ___ N.C. App. ___, ___, 719 S.E.2d 218, 220
(2011) (remanding “with instructions that [the trial court] make
specific findings with respect to its reasons for the specified
duration of its alimony award”); Hartsell, 189 N.C. App. at 76-
77, 657 S.E.2d at 731 (remanding “for further findings of fact
regarding the basis for the amount and duration of the alimony
award”).
Conclusion
For the reasons stated above, we vacate the trial court’s
equitable distribution judgment and alimony order and remand the
case for further proceedings as set out herein.
VACATED AND REMANDED.
Judges STEELMAN and STEPHENS concur.
Report per Rule 30(e).