Fleming v. Fleming ( 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An unpublished opinion of the North Carolina Court of Appeals does not constitute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. COA13-1347
NORTH CAROLINA COURT OF APPEALS
Filed: 7 October 2014
KIMBERLY ANN FLEMING,
Plaintiff,
v. Gaston County
No. 07 CVD 4408
DOUGLAS WADE FLEMING,
Defendant.
Appeal by plaintiff from order entered 4 June 2013 by Judge
James A. Jackson in Gaston County District Court. Heard in the
Court of Appeals 9 April 2014.
Church Watson Law, PLLC, by Seth A. Glazer and Kary C.
Watson, for plaintiff-appellant.
Arthurs & Foltz, LLP, by Douglas P. Arthurs and Joy M.
Chappell, for defendant-appellee.
DAVIS, Judge.
Kimberly Ann Fleming (“Plaintiff”) appeals from the trial
court’s child custody, child support, equitable distribution,
and alimony order. On appeal, she argues that the trial court
erred by (1) failing to comply with the requirements of N.C.
Gen. Stat. § 50-20; (2) failing to appropriately calculate the
income of Douglas Wade Fleming (“Defendant”) for purposes of
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determining his child support obligation; and (3) failing to
award alimony to her despite finding that she was a dependent
spouse, Defendant was a supporting spouse, and Defendant had
engaged in marital misconduct. After careful review, we vacate
and remand for further proceedings.
Factual Background
The parties were married on 22 June 2001 and separated on
12 September 2007, shortly after Plaintiff learned that
Defendant was involved in an extramarital affair. Plaintiff and
Defendant subsequently divorced. The parties have two minor
children together, twin daughters born in 2001.
On 24 September 2007, Plaintiff filed an action against
Defendant for child custody, child support, post-separation
support, alimony, and equitable distribution. Defendant filed
an answer and counterclaims for child custody and equitable
distribution on 29 November 2007. On 13 December 2007, the
trial court entered an order requiring Defendant to continue to
pay the first and second mortgages on the marital home, health
insurance for the parties, car expenses, taxes, and for
Plaintiff’s cellular phone service “in lieu of post-separation
support” to her. A temporary custody order awarding primary
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physical custody of the children to Plaintiff was entered on 25
July 2008.
Defendant owns North Carolina Mohawk Tire Company d/b/a Mr.
Nobody (“Mr. Nobody”), a tire and automotive business. Prior to
the parties’ marriage, Defendant acquired an interest in Mr.
Nobody by purchasing 5 of the outstanding 30 shares of stock in
the business. During the course of the parties’ marriage,
Defendant acquired the remaining 25 shares of Mr. Nobody using
marital funds.
Mr. Nobody has two locations, and during their marriage,
the parties purchased the two parcels of land where the business
operates. Mr. Nobody pays rent to the parties for the use of
both properties. Defendant is employed by Mr. Nobody and
received monthly income from the business throughout the course
of the marriage. During the marriage, Mr. Nobody paid for
numerous personal expenses of the parties, including the cost of
their vehicles and the insurance and taxes on those vehicles,
monthly gas expenses, cell phones for the family, and for
insurance and taxes relating to both Mr. Nobody locations.
The parties’ respective claims for child custody and
support, equitable distribution, and alimony were heard in
Gaston County District Court in February 2012. On 4 June 2013,
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the trial court entered an order (1) giving the parties joint
legal custody of the minor children and Plaintiff primary
physical custody; (2) requiring Defendant to make monthly child
support payments to Plaintiff; (3) ordering Defendant to make a
distributive cash award to Plaintiff; and (4) denying
Plaintiff’s request for alimony. Plaintiff gave timely notice
of appeal to this Court.
Analysis
I. Equitable Distribution
Plaintiff’s first argument on appeal is that the trial
court erred in the equitable distribution portion of its order
by failing to comply with the statutory requirements set forth
in N.C. Gen. Stat. § 50-20. Specifically, Plaintiff contends
the trial court erred by failing to make findings regarding the
classification or value of numerous items of property before
distributing them in its order, including the residence at 5034
Stone Ridge Drive; the Fleetwood Southwind motorhome; the
parties’ household goods, furniture, furnishings, and personal
property; the Harley Davidson Sportster; three four-wheelers; a
dirt bike; and the parties’ bank accounts, retirement accounts,
investment accounts, and credit card debt. We agree.
Our review of an equitable distribution
order is limited to determining whether the
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trial court abused its discretion in
distributing the parties’ marital property.
Accordingly, the findings of fact are
conclusive if they are supported by any
competent evidence from the record.
However, even applying this generous
standard of review, there are still
requirements with which trial courts must
comply. Under N.C.G.S. § 50-20(c),
equitable distribution is a three-step
process; the trial court must (1) determine
what is marital and divisible property; (2)
find the net value of the property; and (3)
make an equitable distribution of the
property.
Robinson v. Robinson, 210 N.C. App. 319, 322, 707 S.E.2d 785,
789 (2011) (citations, quotation marks, and brackets omitted).
Thus, in order to enter a proper equitable distribution
judgment, the trial court must first “specifically and
particularly classify and value all assets and debts maintained
by the parties at the date of separation” and in doing so, “be
specific and detailed enough to enable a reviewing court to
determine what was done and its correctness.” Id. at 323, 707
S.E.2d at 789 (citations, quotation marks, and emphasis
omitted).
Here, the trial court distributed various property to the
parties without first classifying or valuing those assets. See
Wirth v. Wirth, 193 N.C. App. 657, 664, 668 S.E.2d 603, 608-09
(2008) (“A trial court must value all marital and divisible
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property in order to reasonably determine whether the
distribution ordered is equitable.” (citation, quotation marks,
and ellipses omitted)); Cunningham v. Cunningham, 171 N.C. App.
550, 556, 615 S.E.2d 675, 680 (2005) (“[W]hen no finding is made
regarding the value of an item of distributable property, a
trial court’s findings are insufficient even if a determination
is made with respect to the percentage of a distributable
property’s value to which each party is entitled.”). By
distributing certain items of property without classifying or
valuing them, the trial court also disregarded its
responsibility to calculate the total net value of the marital
estate. See Robinson, 210 N.C. App. at 323, 707 S.E.2d at 789-
90 (explaining that failure to make finding as to total net
value of marital estate renders equitable distribution order
incomplete).
With regard to the parties’ residence at 5034 Stone Ridge
Drive, the trial court ordered that the residence be placed on
the market and sold pursuant to the parties’ stipulation and
that the net proceeds — after the mortgage and equity line were
satisfied — be divided equally between the parties. Although
this Court has recognized “the trial court’s power to order the
sale of marital assets as part of an equitable distribution,” it
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has also recognized that the trial court must first value the
property before distributing it. See Wall v. Wall, 140 N.C.
App. 303, 307-08, 536 S.E.2d 647, 650 (2000) (holding that trial
court did not err in ordering sale of marital home because it
was classified, valued, and then distributed).
Because the trial court’s equitable distribution order
distributes property to the parties without proper findings as
to the classification or value of the property, we must vacate
the equitable distribution order and remand for a new trial so
that the trial court may “hear arguments and receive evidence
from both parties . . . in order to address the errors discussed
above and to properly identify, classify, and value the parties’
property as required by statutory law and case law.” Dalgewicz
v. Dalgewicz, 167 N.C. App. 412, 424, 606 S.E.2d 164, 172
(2004), see also Robinson, 210 N.C. App. at 326, 707 S.E.2d at
791.
While Plaintiff also contends that the trial court’s
distribution of the parties’ property was not equitable because
the trial court made an unequal distribution in favor of
Defendant without considering the statutorily required factors
set forth in N.C. Gen. Stat. § 50-20(c), she bases this argument
on the unequal distribution of that property which the trial
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court actually valued. However, because the trial court failed
to value much of the parties’ property before distributing it,
we are unable to determine whether the distribution was, in
fact, unequal. See Dalgewicz, 167 N.C. App. at 424, 606 S.E.2d
at 172 (explaining that this Court could not determine whether
trial court’s allegedly unequal distribution was inequitable
“[w]ithout the benefit of proper classification, valuation, and
listing of all the property owned by the parties”). Therefore,
we vacate the equitable distribution order and remand for a new
hearing so that the trial court may hear evidence and enter an
order properly classifying, valuing, and distributing the
1
parties’ property.
II. Child Support
Plaintiff’s second argument on appeal is that the trial
court erred in its calculation of Defendant’s income for
purposes of determining his child support obligation. The North
Carolina Child Support Guidelines (“the Guidelines”) “apply as a
rebuttable presumption in all legal proceedings involving the
1
We note our concern as to the 14-month delay between the
conclusion of the equitable distribution hearing and the entry
of the trial court’s equitable distribution order and “strongly
advise against lower courts allowing such a significant lapse of
time to occur between the hearing date and the entry of [the
equitable distribution] order.” Wright v. Wright, ___ N.C. App.
___, ___, 730 S.E.2d 218, 222 (2012).
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child support obligation of a parent . . . .” Holland v.
Holland, 169 N.C. App. 564, 567, 610 S.E.2d 231, 234 (2005)
(citation and quotation marks omitted). This Court reviews a
trial court’s child support order for abuse of discretion. Id.
“To support a reversal, an appellant must show that the trial
court’s actions were manifestly unsupported by reason.” Head v.
Mosier, 197 N.C. App. 328, 332, 677 S.E.2d 191, 195 (2009)
(citation and quotation marks omitted).
Pursuant to the Guidelines, “[c]hild support calculations .
. . are based on the parents’ current incomes at the time the
order is entered.” Form AOC-A-162, Rev. 1/11. With regard to a
parent’s income from self-employment or operation of a business,
the Guidelines provide, in pertinent part, that
[g]ross income from self-employment, rent,
royalties, proprietorship of a business, or
joint ownership of a partnership or closely
held corporation, is defined as gross
receipts minus ordinary and necessary
expenses required for self-employment or
business operation. . . . In general, income
and expenses from self-employment or
operation of a business should be carefully
reviewed to determine an appropriate level
of gross income available to the parent to
satisfy a child support obligation. In most
cases, this amount will differ from a
determination of business income for tax
purposes.
Expense reimbursements or in-kind
payments (for example, use of a company car,
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free housing, or reimbursed meals) received
by a parent in the course of employment,
self-employment, or operation of a business
are counted as income if they are
significant and reduce personal living
expenses.
Id.
Here, the trial court made the following findings regarding
Defendant’s income:
18. Defendant is employed by North Carolina
Mohawk Tire Co., Inc., of which he is the
sole owner, and Defendant’s gross monthly
income is Seven Thousand Ninety-Seven
Dollars and Sixty Cents ($7,097.60), which
excludes various items paid on Defendant’s
behalf by the business which augment his
gross monthly income.
19. Defendant’s federal income tax returns
show the following income (2011 income tax
returns were not completed as of trial):
a. In 2008, Defendant’s total taxable
income was $139,013.00
b. In 2009, Defendant’s total taxable
income was $166,020.00
c. In 2010, Defendant’s total taxable
income was $172,378.00.
The trial court then calculated Defendant’s child support
obligation under the Child Support Guidelines by utilizing the
sum of $7,097.60 as his gross monthly income and ordered him to
make payments of $1,036.00 in child support to Plaintiff per
month. The sum of $7,097.60 is the figure reported on
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Defendant’s amended affidavit of financial standing and includes
$5,416.66 in “wages/salary,” $1,305.94 in income from rent
payments, and $375.00 in health insurance. Although a party’s
financial affidavit is competent evidence on which the trial
court may base its findings regarding that party’s income,
Parsons v. Parsons, ___ N.C. App. ___, ___, 752 S.E.2d 530, 533
(2013), we are troubled by the court’s seemingly inconsistent
findings concerning Defendant’s gross income.
In its findings, the trial court noted Defendant’s taxable
income as identified by his federal tax returns for the years
2008, 2009, and 2010 as $139,013.00, $166,020.00, and
$172,378.00, respectively. The trial court found, however, that
Defendant’s gross monthly income at the time of trial in
February of 2012 was $7,097.60 — which converts to an annual
income of $85,171.20. In determining that Defendant’s monthly
income was $7,097.60, the trial court did not address the
sizable difference between Defendant’s past income as shown on
his individual income tax returns and the substantially lower
figure it found in its order. See Form AOC-A-162, Rev. 1/11
(explaining that child support is based on parents’ current
income, “should be verified through documentation of both
current and past income,” and that “[d]ocumentation of current
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income must be supplemented with copies of the most recent tax
return to provide verification of earnings over a longer
period”).
Moreover, in its finding determining Defendant’s gross
monthly income to be $7,097.60, the trial court specified that
this sum “excludes various items paid on Defendant’s behalf by
the business which augment his gross monthly income.” As stated
above, the Guidelines require a trial court to include expense
reimbursements or in-kind payments that a party receives in the
course of employment, self-employment, or the operation of a
business if these payments are “significant and reduce personal
living expenses.” Id.
Here, while the trial court recognized that Mr. Nobody paid
for “various items” for Defendant and that such payments
increased Defendant’s income, it failed to account for that
increase in its calculation of his income. Thus, given that the
trial court (1) explicitly stated that its income calculation
for Defendant excluded payments made by Mr. Nobody that
augmented his income; and (2) made consecutive findings
concerning Defendant’s income that showed — without explanation
— a substantially different income amount, we cannot conclude
that the trial court properly calculated Defendant’s income
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pursuant to the Child Support Guidelines. See McFarland v.
Justus, 113 N.C. App. 107, 109, 437 S.E.2d 668, 670 (1993)
(“When findings are actually antagonistic, inconsistent or
contradictory such that the reviewing court cannot safely and
accurately decide the question, the judgment cannot be
affirmed.”). As such, we remand for findings regarding
Defendant’s actual income at the time of the child support
hearing and for the entry of a child support order using
Defendant’s actual income. See Holland, 169 N.C. App. at 568,
610 S.E.2d at 235 (reversing and remanding child support order
where findings were insufficient to support trial court’s
calculation of party’s income).2
III. Denial of Alimony
2
We note that Defendant attempts to argue in his brief that the
trial court erred in ordering him to pay one-half of the
children’s extracurricular activity expenses. However,
Defendant’s argument is not properly before this Court. See
N.C.R. App. P. 10(c) (explaining that where appellee fails to
cross-appeal, its arguments are limited to “any action or
omission of the trial court that was properly preserved for
appellate review and that deprived the appellee of an
alternative basis in law for supporting the judgment, order, or
other determination from which appeal has been taken”). Thus,
in order to have properly preserved this issue for appellate
review, Defendant was required to file a cross-appeal from the
trial court’s order. Wilson v. Wilson, 214 N.C. App. 541, 546,
714 S.E.2d 793, 796 (2011).
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Plaintiff’s final argument on appeal is that the trial
court erred in denying her request for alimony despite making
findings that (1) Plaintiff is a dependent spouse; (2) Defendant
is a supporting spouse; and (3) Defendant engaged in acts of
illicit sexual behavior. We agree.
The trial court is authorized to make an award of alimony
to a dependent spouse “upon a finding that one spouse is a
dependent spouse, that the other spouse is a supporting spouse,
and that an award of alimony is equitable after considering all
relevant factors.” N.C. Gen. Stat. § 50-16.3A(a) (2013). “If
the court finds that the supporting spouse participated in an
act of illicit sexual behavior, as defined in G.S. 50-
16.1A(3)a., during the marriage and prior to or on the date of
separation, then the court shall order that alimony be paid to a
dependent spouse.” Id. (emphasis added). A party’s entitlement
to alimony is reviewed de novo. Barrett v. Barrett, 140 N.C.
App. 369, 371, 536 S.E.2d 642, 644 (2000).
Here, the trial court made the following relevant findings
of fact regarding Plaintiff’s alimony claim:
59. Plaintiff is the “dependent spouse” as
that term is defined in N.C.G.S. § 50-16.1A,
is actually substantially dependent on
Defendant for her maintenance and support
and is substantially in need of maintenance
and support from Defendant. Plaintiff has
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begun to work again, however, and the
distributive award set forth herein is made
in contemplation of providing Plaintiff with
some form of support.
60. Defendant is the “supporting spouse” as
that term is defined in N.C.G.S. § 50-16.1A,
is capable of paying the alimony award set
forth herein and should pay alimony to
Plaintiff as set forth herein.
61. For the last two years of the parties’
marriage, and prior to their separation,
Defendant had an affair with Traci Toney
Hanna, to whom Defendant is now married.
62. Defendant’s affair with Traci Toney
Hanna included illicit sexual behavior
between Defendant and Traci Toney Hanna, as
defined by N.C.G.S. 50-16.1A(3)(a).
63. Plaintiff did not condone Defendant’s
sexual intercourse with Traci Toney Hanna.
After making the above findings of fact, the trial court
entered the following conclusion of law:
17. Despite Defendant’s illicit sexual
behavior with Traci Toney Hanna, Plaintiff
has, as of the trial in this cause, received
a sufficient amount and duration of
maintenance from Defendant, which includes
payments of Plaintiff’s housing expenses,
gasoline, car expenses and health insurance
and this Court does not award alimony to
Plaintiff.
By finding that Plaintiff is the dependent spouse,
Defendant is the supporting spouse, and Defendant engaged in
illicit sexual behavior yet nevertheless denying Plaintiff
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alimony, the trial court disregarded the mandate of N.C. Gen.
Stat. § 50-16.3A(a). See Morningstar Marinas/Eaton Ferry, LLC
v. Warren Cty., ___ N.C. App. ___, ___, 755 S.E.2d 75, 79 (2014)
(“Our appellate courts have consistently held that the use of
the word ‘shall’ in a statute indicates what actions are
required or mandatory.”).
In denying Plaintiff’s claim for alimony, the trial court
explained its belief that she had “received a sufficient amount
and duration of maintenance from Defendant which includes
payments of Plaintiff’s housing expenses, gasoline, car
expenses, and health insurance . . . .” While such a finding
could warrant a conclusion that Plaintiff was not entitled to
retroactive alimony, the trial court’s determination that
Plaintiff is a dependent spouse — by definition — means that at
the time of trial, Plaintiff continued to be “actually
substantially dependent upon [Defendant] for . . . her
maintenance and support or . . . substantially in need of
maintenance and support from [Defendant].” N.C. Gen. Stat. §
50-16.1A(2) (2013). Because the trial court also concluded
that Defendant was a supporting spouse who had engaged in
illicit sexual behavior, it was required to award alimony to
Plaintiff and make specific findings of fact setting forth “the
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reasons for its amount, duration, and manner of payment.” See
N.C. Gen. Stat. § 50-16.3A(a)-(c). Accordingly, we must also
vacate the portion of the 4 June 2013 order concerning alimony
and remand to the trial court so that it may enter an award of
alimony, supported by the statutorily required findings setting
out its reasons for the amount, duration, and manner of payment
of the alimony award.
Conclusion
For the reasons stated above, we vacate the trial court’s
order and remand for further proceedings consistent with this
opinion.
VACATED AND REMANDED.
Judges ELMORE and McCULLOUGH concur.
Report per Rule 30(e).