Gay v. Gay ( 2019 )

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE
CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING
EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.
THE STATE OF SOUTH CAROLINA
In The Court of Appeals
Hollee Loyd Gay, Respondent,
v.
Stephen Michael Gay, Appellant.
Appellate Case No. 2016-001679
Appeal From Lancaster County
Coreen B. Khoury, Family Court Judge
Unpublished Opinion No. 2019-UP-041
Submitted June 1, 2018 – Filed January 23, 2019
AFFIRMED AS MODIFIED
Thomas Franklin McDow, IV and Erin K. Urquhart, both
of McDow and Urquhart, LLC, of Rock Hill, for
Appellant.
Mitchell A. Norrell and Mandy Powers Norrell, both of
Norrell & Powers Norrell, LLC, of Lancaster, for
Respondent.
KONDUROS, J.: Stephen Michael Gay (Husband) appeals the family court's
order arguing the family court erred by (1) mandating his alimony payment be
deducted monthly from the value of his interest in the marital home, (2) requiring
him to pay Hollee Loyd Gay (Wife) $447 every two weeks for child support, (3)
ordering the parties to split their 2015 income tax refund, and (4) failing to
consider the tax consequences of its award of tax exemptions. We affirm as
modified.
FACTS/PROCEDURAL BACKGROUND
Husband and Wife married on March 18, 2006. They had two children born in
2007 and 2011, respectively. The parties separated on or about March 16, 2014,
and the children resided with Wife from that time until the time of the final
hearing. Wife filed her complaint for divorce in June of 2014 alleging Husband
had committed adultery and abused alcohol and prescription medications.
Following a hearing, the family court granted the divorce on the grounds of one
year's continuous separation. The family court awarded joint custody with Wife
named primary custodian. Husband was allowed visitation and parenting time
with the children upon his completion of a South Carolina Department of Social
Services (DSS) Safety and Treatment Plan.
The family court found Husband had a gross monthly income of $3,248 and paid
$295 in insurance premiums for the children per month. The family court further
found Wife had no income due to her medical conditions1 and paid $75 per month
for child care. The family court ordered Husband to pay $447 every two weeks in
child support.
The family court determined the marital home should be equally apportioned
between the parties. The family court further found the home had a value of
$50,000—it was a modular home placed on land owned by Wife's family. The
home was in disrepair, and the only evidence presented regarding its current value
in "as is" condition was that the home was worth $50,000. Wife and the children
had been residing in the home since the parties separated, and Wife testified she
and the children had nowhere else to live. The family court also determined Wife
was entitled to $500 per month in alimony and ordered the alimony be deducted
monthly from Husband's half-interest in the marital home. Any alimony obligation
would cease upon Wife's remarriage or death. If Wife sold the home prior to the
extinguishment of Husband's interest in it, Husband would immediately be entitled
to any remaining equity. Once the value of Husband's interest in the marital home
1
Wife suffers from lupus, osteoarthritis, chronic obstructive pulmonary disease
(COPD), diabetes, fibromyalgia, chronic lower back pain, and chronic fatigue.
was exhausted, he would be required to make monthly cash alimony payments to
Wife.
The family court ordered the parties to file their 2015 state and federal income
taxes jointly and equally divide any refund. Going forward, the parties were to
claim one child each as a dependent for tax purposes. Husband filed the tax return
and retained the entire refund of over $5,000. This appeal followed.
STANDARD OF REVIEW
On appeal from the family court, this court reviews factual and legal issues de
novo. Simmons v. Simmons, 392 S.C. 412, 414-15, 709 S.E.2d 666, 667 (2011);
see also Lewis v. Lewis, 392 S.C. 381, 386, 709 S.E.2d 650, 652 (2011).
"Although this court reviews the family court's findings de novo, we are not
required to ignore the fact that the family court, which saw and heard the
witnesses, was in a better position to evaluate their credibility and assign
comparative weight to their testimony." Sanders v. Sanders, 396 S.C. 410, 415,
722 S.E.2d 15, 17 (Ct. App. 2011). "The burden is upon the appellant to convince
this court the family court erred in its findings." Id.LAW/ANALYSIS
I. Equitable Division/Alimony
Husband maintains the family court erred in requiring his permanent, periodic
alimony obligation to be met by a monthly reduction in his interest in the marital
home. We disagree.
Husband argues the family court may not "unconditionally order the transfer of
property as alimony or in lieu thereof." See Poniatowski v. Poniatowski, 275 S.C.
11, 12, 266 S.E.2d 787, 788 (1980) ("It is well settled a court may not
unconditionally order the transfer of property as alimony or in lieu thereof.").
However, the family court did not make an unconditional transfer of property in
lieu of alimony. Rather, it equitably divided the marital estate and permitted Wife
to satisfy Husband's equitable share by foregoing an affirmative cash alimony
payment for a period of time. The family court is allowed broad discretion in
determining how to effect equitable distribution. See Bass v. Bass, 285 S.C. 178,
182, 328 S.E.2d 649, 651 (Ct. App. 1985) (finding trial judges may employ any
reasonable means to effectuate an equitable division of the marital estate); see also
Widman v. Widman, 348 S.C. 97, 112, 557 S.E.2d 693, 701 (Ct. App. 2001) ("The
trial court has wide discretion in determining how to distribute marital property
and it may use any reasonable means to divide the property equitably.").
In Bass, the family court awarded Wife permanent, periodic alimony and awarded
Husband a 50% interest in the marital home. Id. at 180-81, 328 S.E.2d 650-51.
Wife was given title to the marital home and directed to make monthly payments
of $185 to Husband which would result in Husband not receiving his full equity in
the property for more than fifteen years. Id. at 181, 328 S.E.2d at 651. This court
noted family courts are encouraged to make final disposition of property interest
when possible. Id. at 182, 328 S.E.2d at 652. Deviations from that directive "must
be weighed against the cost, inconvenience[,] and other hardships that the
[complaining spouse] might experience by being unable to realize [the] equity in
the marital estate by a sale or other manner of immediate payment." Id. at 183, 328
S.E.2d at 652. The Bass court reversed and remanded for the family court to
identify factors supporting Wife's possession of the marital home and the delay in
Husband's receipt of his equity. Id.
The present case presents a similar factual scenario with the exception that instead
of Wife making an affirmative monthly payment to Husband, Husband retains his
otherwise required alimony payments until the value of his interest in the marital
home is satisfied. The record reveals multiple factors that support the family
court's decision including the following: (1) the marital home was in poor
condition; (2) Wife suffers from myriad health issues; (3) the parties' minor
children reside in Wife's custody in the home; (4) the home is located near Wife's
relatives; and (5) Husband had failed to timely make court-ordered payments under
the temporary order. These factors support a deviation from the directive
regarding final dispositions of property when weighed against the hardship and
inconvenience experienced by Husband, and we affirm.2
II. Child Support
Husband also contends the family court erred in calculating child support.
Husband argues the family court deviated from the Child Support Guidelines (the
2
We acknowledge the family court did not specifically list these factors as the
bases for its decision. However, when the record is sufficient to permit adequate
review, this court, in lieu of remand, may review the issue. See Strout v. Strout,
284 S.C. 429, 431, 327 S.E.2d 74, 75 (1985) (holding "[a] remand of this case
might be justified because of the judge's failure to make full findings, however, in
lieu of remand, this court will undertake to settle the dispute").
Guidelines) in requiring him to pay $447 every two weeks in child support.
According to Husband, adherence to the Guidelines should result in an obligation
of $164 per week. We disagree in part.
"Generally, the family court is required to follow the Guidelines in determining the
amount of child support. Although the Guidelines govern all actions involving
child support, the family court retains discretion when making the final award."
Bennett v. Rector, 389 S.C. 274, 281, 697 S.E.2d 715, 719 (Ct. App. 2010). In
applying the Guidelines, "[g]ross income includes income from any source
including . . . alimony." Id. (quoting S.C. Code Ann. Regs. 114-4720(A)(2) (Supp.
2009)).
Husband's argument hinges upon the amount of income Wife receives. As
previously discussed, the family court ordered Husband's alimony obligation be
satisfied by a monthly deduction of his half-interest in the marital home. The
family court did not include the deduction as income to Wife in its calculation
although alimony is traditionally considered income to the receiving spouse. As a
practical matter, if Husband paid Wife $500 in alimony each month, that income
would become a debit to Wife as she would owe it back to Husband as payment for
his equitable interest in the home. Therefore, until Husband's $25,000 equitable
half-interest is exhausted, the ultimate income result to Wife is a nullity. Once
Husband's interest in the home is satisfied and he begins making a monthly
alimony payment to Wife, the payment must be included as income and Husband's
child support obligation should be adjusted to reflect that change. Therefore, the
family court's ruling on this issue is affirmed as modified.3
III. Tax Refund
Next, Husband argues the family court erred in ordering the parties to file a joint
2015 tax return and evenly split any refund. He maintains any income he earned
after June 18, 2014, the date of Wife's filing, was nonmarital property. Therefore,
any refund associated with income earned after that date was not subject to
equitable division. We agree.
"The term 'marital property' as used in this article means all real and personal
property which has been acquired by the parties during the marriage and which is
owned as of the date of filing or commencement of marital litigation . . . ." S.C.
3
We make no determination regarding any tax implications of this ruling as that
matter was not raised by either party.
Code Ann. § 20-3-630(A) (2014). "The court does not have jurisdiction or
authority to apportion nonmarital property." S.C. Code Ann. § 20-3-630(B)
(2014). "An income tax refund is nothing more than a return of income." Phillips
v. Phillips, 290 S.C. 455, 458, 351 S.E.2d 178, 180 (Ct. App. 1986).
The family court ordered the parties to file a joint 2015 tax return and split any
refund. However, only the portion of the refund earned prior to the
commencement of marital litigation—approximately six-months of income—was
marital property. Therefore, Wife is entitled to half of the refund that was marital
property or one fourth of the entire refund. The record shows the amount of the
refund was $5,075. Therefore, Wife's share of the refund is equal to $1,268.75,
and we so modify the family court's order.
IV. Tax Exemption
Last, Husband maintains the family court failed to consider the tax consequences
when determining each parent could claim one child as a dependent. We disagree.
While not determinative, custody is a factor in determining which parent will be
permitted to claim a child as a tax exemption. See Hudson v. Hudson, 340 S.C.
198, 203-05, 530 S.E.2d 400, 402-04 (Ct. App. 2000) (noting that while the federal
tax code does not dictate the court's authority to award a tax exemption, it
generally provides the custodial parent is the party entitled to take it). While the
family court is to consider the tax consequences to the parties, the split of the two
exemptions here, even though Wife has custody of both children, reflects the
family court did consider that awarding the exemptions for both children to Wife in
the present circumstances would not produce the greatest financial benefit to the
parties. Therefore, we are not persuaded the family court failed to consider the tax
consequences to the parties or erred in its determination of this issue, and we
affirm.
Based on all of the foregoing, the order of the family court is
AFFIRMED AS MODIFIED.4
LOCKEMY, C.J., concurs.
4
We decide this case without oral argument pursuant to Rule 215, SCACR.
WILLIAMS, J., dissenting.
WILLIAMS, J.: I respectfully dissent and I would reverse the family court's
decisions.
First, as to the alimony, I would find the family court erred in requiring Husband's
periodic alimony obligation to be met by a monthly reduction in his interest in the
marital home. In its equitable distribution, the family court awarded Wife
exclusive possession of the marital home and awarded Husband a one-half share of
the marital home in the amount of $25,000. The family court also awarded Wife
$500 per month in permanent, periodic alimony. However, the family court
ordered Wife's $500 monthly alimony award be deducted from Husband's $25,000
equitable share in the marital home each month until Husband's equitable share
was reduced to zero.
I would find the family court erred in unconditionally ordering the transfer of
Husband's interest in the marital home to satisfy his alimony obligation without
providing Husband any option to satisfy the alimony obligation directly. "It is well
settled a court may not unconditionally order the transfer of property as alimony or
in lieu thereof." Poniatowski v. Poniatowski, 275 S.C. 11, 12, 266 S.E.2d 787, 788
(1980). In Poniatowski, our supreme court approved the family court's decision to
award a wife all of her husband's interest in a bookstore "as division of property in
lieu of alimony." Id. The court in that case found that the proposed property
division "would make payment of alimony unnecessary and perhaps unduly
difficult." Id. Therefore, the court concluded the family court did not intend for
the transfer of the bookstore interest to take the place of alimony. Id.Conversely, in this case, the family court's order is clear that the transfer of
Husband's interest in the marital home is his alimony payment. The family court
unconditionally ordered the transfer of Husband's interest in the marital home to
satisfy his alimony obligation without providing Husband any option to satisfy the
alimony obligation directly. Because his alimony payment can only be satisfied
through a transfer of his equitable interest in the marital home, Husband loses his
$25,000 "in-kind" equitable share in the marital home that he is entitled to receive
under the family court's order. See Thompson v. Brunson, 283 S.C. 221, 226, 321
S.E.2d 622, 625 (Ct. App. 1984) ("A jointly-owned marital residence is spousal
property to which both spouses are entitled upon dissolution of the marriage.");
Wooten v. Wooten, 354 S.C. 532, 542, 615 S.E.2d 98, 103 (2005) ("[T]he [family]
court should first try to make an "in-kind" distribution of the marital assets").
Upon its de novo review, the majority here cites several factors it believes "support
a deviation from the directive regarding final dispositions of property" in the
equitable distribution. However, the family court's order contained no specific
finding as to why it required a deduction in Husband's interest in the marital home
to satisfy Wife's alimony award. See Bass v. Bass, 285 S.C. 178, 182, 328 S.E.2d
649, 652 (Ct. App. 1985) ("Family court[s] . . . are encouraged to make final
disposition of property interests whe[n] possible; failing in this, the [family] courts
must state compelling reasons for leaving loose ends."). The majority references
Husband's failure to timely pay his court-ordered $500 monthly child support
payments under the August 2014 temporary order. However, the record shows
Husband was in arrears for $920 at the time of the final merits hearing in February
2016. This amount is less than two months of Husband's required child support
payments. I do not believe this amount justifies depriving Husband of his share in
the equitable distribution of the parties' only significant asset. See Thompson, 283S.C. at 226, 321 S.E.2d at 625 ("A jointly-owned marital residence is spousal
property to which both spouses are entitled upon dissolution of the marriage.");
Shealy v. Shealy, 280 S.C. 494, 498 n.1, 313 S.E.2d 48, 50 n.1 (Ct. App. 1984)
("Family Court[s] . . . are encouraged to make final dispositions of property
interests whe[n] possible or, in the alternative, cite compelling reasons for
awarding fractional or joint interests."); Johnson v. Johnson, 285 S.C. 308, 312,
329 S.E.2d 443, 445–46 (Ct. App. 1985) (recognizing the burden on the non-
occupying spouse in not being able to immediately realize the value of his share of
the marital home).
Second, as to the two tax exemptions, I would find the family court erred in
awarding one dependency exemption to Wife and one dependency exemption to
Husband. The family court found Wife had no income due to her medical
conditions; therefore, the dependency exemption has no benefit to her. Husband
provided evidence the benefit to him for each exemption is $155 each month or
$1,860 each year. I would reverse the family court's order and award Husband
both exemptions.
Finally, reversing the family court's decision as to the alimony payments and tax
exemptions necessarily impacts the family court's child support findings and the
parties' tax consequences. Therefore, I would remand this case for the family court
to revisit the remaining issues in light of the change in alimony. For the foregoing
reasons, I respectfully dissent and I would reverse the family court.