Wilson v. Wilson

Cite as 2016 Ark. App. 256
ARKANSAS COURT OF APPEALS
DIVISION I
No. CV-15-569
Opinion Delivered May 11, 2016
JOHN WILSON
APPELLANT APPEAL FROM THE BENTON
COUNTY CIRCUIT COURT
V. [NO. DR-14-553]
VICKIE WILSON HONORABLE THOMAS SMITH,
APPELLEE JUDGE
REVERSED AND REMANDED ON
DIRECT APPEAL; AFFIRMED ON
CROSS-APPEAL
M. MICHAEL KINARD, Judge
John Wilson appeals from the parties’ divorce decree, arguing that the trial court erred
in finding that certain property was marital property and in dividing the parties’ property
inequitably. Vickie Wilson has filed a cross-appeal, arguing that she had a fifty percent
nonmarital interest in certain property. We reverse and remand on direct appeal and affirm
on Vickie’s cross-appeal.
The parties were married October 4, 2010, and separated in March 2014, when
Vickie filed for divorce. The parties and two accountants testified at the hearing held on
division of property. John had interests in numerous family-owned companies and
partnerships prior to the marriage through which investments in the oil and gas industry were
made. Vickie owned a premarital business, Dynamic Energy Concepts, Inc. (“DEC”), and
worked full time. The parties had a joint bank account, and John had his own bank account
Cite as 2016 Ark. App. 256
in Texas.
John first argues that the trial court erred in finding that the investment known as
Reeves County Saltwater Disposal Well (“Reeves”) was a marital asset. John contends that
the interest in Reeves was his sole nonmarital property due to his acquisition of it prior to
the marriage. In her cross-appeal, Vickie agrees that the investment was not marital property,
but she claims that she had a fifty percent nonmarital interest in the investment.
Vickie testified that, just prior to the marriage, the parties set up a corporation, Rain
Water Energy, through which to make investments into saltwater disposal wells. Vickie
identified a $2800 check from her to John as her investment check; the memo line read
“Reeves/Rainwater.” Vickie said that she did not know until distribution checks were
delivered that the investment was in John’s name, not Rain Water Energy. She said that
John told her it was done this way for tax reasons because he claimed Texas residency, but
he assured her it was “our money.” John testified that he alone purchased an eight percent
interest in Reeves in his name as evidenced by the September 27, 2010 stock-purchase
agreement. John claimed that he did not remember why Vickie gave him the $2800 check.
He identified two checks written from his Texas account to Reeves—a $7000 check for the
initial investment and an $8000 check for a later capital call. The trial court found that the
asset was marital property because it was the intent of the parties to make a joint investment
through Rain Water Energy.
Marital property means all property acquired by either spouse subsequent to the
marriage, with certain exceptions. Ark. Code Ann. § 9-12-315(b) (Repl. 2015). A trial
2
Cite as 2016 Ark. App. 256
court’s findings of fact with respect to division of property will be affirmed unless clearly
erroneous or clearly against the preponderance of the evidence. Baker v. Baker, 2013 Ark.
App. 543, 429 S.W.3d 389. Here, both parties agree that the investment was acquired prior
to the marriage. The stock-purchase agreement reflects that John purchased the interest in
his name, and the evidence shows that the initial capital contribution came from John’s
checking account. Although Vickie testified that it was the intent of the parties to make a
joint investment, John purchased the interest by himself prior to the marriage. See Fell v.
Fell, 2015 Ark. App. 590, 473 S.W.3d 578 (holding that the trial court erred in finding that
the home husband purchased prior to the marriage was marital upon finding that it was the
intent of the parties at the time of purchase to make it a marital home and they had treated
it as such); see also Baker, supra (holding that husband’s use of plural pronouns regarding
nonmarital property did not result in his making a gift to his wife). The trial court clearly
erred in finding the Reeves interest to be marital property instead of John’s nonmarital
property. Vickie has failed to show that she had a fifty percent nonmarital interest; thus, the
cross-appeal is affirmed.
Our property-division statute permits the division of nonmarital property if the trial
court deems it equitable after taking into consideration several factors, including the
following: the length of the marriage; age, health, and station in life of the parties; occupation
of the parties; amount and sources of income; vocational skills; employability; estate,
liabilities, and needs of each party and opportunity of each for further acquisition of capital
assets and income; contribution of each party in acquisition, preservation, or appreciation of
3
Cite as 2016 Ark. App. 256
marital property, including services as a homemaker; and the federal income tax
consequences of the court’s division of property. Ark. Code Ann. § 9-12-315(a)(2). In such
instances the trial court must recite its basis and reasons for not returning the nonmarital
property. Id. Here, however, the trial court erroneously treated Reeves as marital property.
We reverse and remand for the trial court to award the Reeves interest to John as his
nonmarital property absent a specific statutory finding to justify any distribution to Vickie.
For his second point on appeal, John argues that the trial court failed to equitably
divide the parties’ assets. The divorce decree awarded John 100 percent of the parties’
interest in Wilson, Wilson & Dunn Properties, LP; the Treadaway Saltwater Disposal Well
investment; and Guitar SWD, LLC, as well as all of the investment income during the
parties’ separation. The marital residence was Vickie’s premarital property and was returned
to her. The trial court found that the principal indebtedness associated with the residence
and surrounding acreage had been reduced by approximately $405,000 during the marriage.
The court found that it was equitable for Vickie to take all principal-reduction payments as
her sole and separate property in consideration for the award to John of the interests stated
above and the reductions in principal indebtedness associated with Wilson, Wilson & Dunn.
The debt that Guitar owed to Vickie’s premarital company, DEC, was ordered to be Vickie’s
obligation. The household furniture and furnishings were awarded to Vickie, and John was
awarded a marital vehicle. The court awarded John all of his 401(k) but ordered that the
contributions to Vickie’s 401(k) during the marriage be divided equally between the parties.
John contends that the investment interests awarded to him should have been awarded
4
Cite as 2016 Ark. App. 256
as his nonmarital property. The trial court has broad powers to distribute both marital and
nonmarital property to achieve an equitable division. Ransom v. Ransom, 2009 Ark. App.
273, 309 S.W.3d 204. All nonmarital property shall be returned to the party owning it prior
to the marriage unless some other division is deemed equitable after consideration of the
above-stated factors. Ark. Code Ann. § 9-12-315(a)(2). All marital property shall be
distributed one-half to each party unless such a division is inequitable; if the property is not
divided equally, the court should consider the statutory factors in reaching an equitable
division and recite its basis and reasons for such a division. Ark. Code Ann. § 9-12-315(a)(1).
Here, the trial court did not specify whether all of the assets, including the investment
interests and household furnishings, were marital property or nonmarital property; nor did
it state its reasons for every unequal division of marital property or any distribution of
nonmarital property to the nonowning spouse. We remand for the trial court to reconsider
the entire division, making the appropriate findings in support thereof, when it redistributes
the Reeves interest.
John further argues that he was entitled to $200,000 worth of marital property to
offset Vickie’s award of the $405,000 in debt-reduction payments. This is an argument likely
to arise again on remand. See Brown v. Brown, 2016 Ark. App. 172. John relies on the
principle that a nonowning spouse is entitled to some benefit when marital funds have been
expended to reduce the debt on the other spouse’s nonmarital property. Jones v. Jones, 2014
Ark. 96, 432 S.W.3d 36. However, we note that the reduction in debt on nonmarital
property is not considered to be marital property to be divided equally; instead, the
5
Cite as 2016 Ark. App. 256
nonowning spouse is simply entitled to have the marital contribution considered in balancing
the equities involved in the property division. Powell v. Powell, 82 Ark. App. 17, 110 S.W.3d
290 (2003).1
For his final point, John argues that the trial court erred in awarding him only half of
the contributions made to Vickie’s 401(k) during the marriage; he contends that he was also
entitled to any associated gain or loss. The associated gain or loss of marital contributions is
marital property. See Thomas v. Thomas, 68 Ark. App. 196, 4 S.W.3d 517 (1999). Therefore,
we reverse and remand for the trial court to either divide the entire marital interest equally
or state its basis for some other division.
Reversed and remanded on direct appeal; affirmed on cross-appeal.
VIRDEN and HARRISON, JJ., agree.
Clark Law Firm PLLC, by: Suzanne G. Clark, for appellant.
Taylor Law Partners, LLP, by: William B. Putman, for appellee.
1
A mere reduction in a single item of indebtedness is not the same thing as an increase
in the overall value of the property, which would require evidence of the fair-market value
of the property both before and after the marriage. Powell, supra. Without such evidence
showing an increase in value of nonmarital property, this division is not affected by the
recent decision in Moore v. Moore, 2016 Ark. 105.
6