In the Matter of the Marriage of: Carolyn Burns v. Michael Burns (mem. dec.)

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D), FILED
this Memorandum Decision shall not be Mar 14 2018, 8:39 am
regarded as precedent or cited before any CLERK
court except for the purpose of establishing Indiana Supreme Court
Court of Appeals
the defense of res judicata, collateral and Tax Court
estoppel, or the law of the case.
ATTORNEY FOR APPELLANT
Alan D. Wilson
Kokomo, Indiana
IN THE
COURT OF APPEALS OF INDIANA
In the Matter of the Marriage of: March 14, 2018
Carolyn Burns, Court of Appeals Case No.
34A05-1707-DR-1614
Appellant-Respondent,
Appeal from the
v. Howard Superior Court
The Honorable
Michael Burns, Brant J. Parry, Judge
Trial Court Cause No.
Appellee-Petitioner.
34D02-1511-DR-831
Kirsch, Judge.
[1] Carolyn Burns (“Wife”) appeals following the dissolution of her marriage to
Michael Burns (“Husband”). She presents the following restated issue for our
review: whether the trial court abused its discretion in applying the coverture
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fraction formula to Husband’s pension benefit, which resulted in an unequal
division of the marital estate.
[2] We reverse and remand with instructions.
Facts and Procedural History
[3] Wife and Husband married on November 19, 1983. At that time, Husband had
been employed at Delphi/General Motors for ten years, and he continued to
work at the same employment for approximately twenty years during the
marriage. Husband earned a pension during his employment. He voluntarily
retired at age forty-nine, after working for thirty-two years and began drawing
his pension. Husband’s pension stopped accruing at retirement. At the time of
the parties’ separation, Husband had been retired for ten years. At the time of
the dissolution, Husband’s income consisted of social security payments and his
pension payments, and he was not able to work because of medical issues.
[4] During their thirty-four years of marriage, Wife helped raise the parties’ child,
took care of the home, provided services to Husband and child, and worked
outside the home, but has no pension or retirement available to her other than
her portion of Husband’s pension. After Husband retired, Wife helped him
with three different businesses, and they “worked as a team” on them. Tr. Vol.
II at 32. At the time of the final hearing, although Wife was not physically
disabled, she was having continuing medical problems and was not employed.
[5] Husband filed a petition for dissolution of marriage on November 4, 2015, and
a final hearing was held on April 17, 2017. Following the hearing, the trial
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court entered a dissolution decree on May 8, 2017. In the decree, Husband’s
pension represented the largest asset in the marital estate, and the trial court
awarded Husband 66.5% of the pension benefit and awarded 33.5% of the
pension benefit to Wife; the trial court otherwise equally divided the marital
assets. Appellant’s App. Vol. II at 8-9. Thereafter, Wife filed a motion to correct
error, alleging that the trial court inequitably divided the pension. The trial
court denied the motion, and this appeal ensued.
Discussion and Decision
[6] When reviewing a claim that the trial court improperly divided marital assets,
we consider whether the trial court abused its discretion. Fobar v. Vonderahe,
771 N.E.2d 57, 59 (Ind. 2002). The trial court abuses its discretion when its
decision is clearly against the logic and effect of the facts and circumstances
before it, including the reasonable inferences to be drawn therefrom. Taylor v.
Taylor, 436 N.E.2d 56, 58 (Ind. 1982). Moreover, where, as here, the trial court
has, sua sponte, entered written findings and conclusions, we “shall not set
aside the findings or judgment unless clearly erroneous” and must give “due
regard . . . to the opportunity of the trial court to judge the credibility of the
witnesses.” Ind. Trial Rule 52(A). “As to the issues covered by the findings,
we apply the two-tiered standard of whether the evidence supports the findings,
and whether the findings support the judgment.” In re S.D., 2 N.E.3d 1283,
1287 (Ind. 2014). We review the remaining issues under a general judgment
standard, whereby we affirm the judgment if it can be sustained on any legal
theory supported by the evidence. Id. In conducting our review, we will not
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reweigh the evidence and will consider the evidence in a light most favorable to
the judgment. Fobar, 771 N.E.2d at 59. Furthermore, where, as here, the
appellee has not filed a brief, “we do not undertake to develop the appellee’s
arguments. Rather, we will reverse upon an appellant’s prima facie showing of
reversible error.” Branham v. Varble, 952 N.E.2d 744, 746 (Ind. 2011).
[7] In entering a dissolution decree, the trial court is obligated to “divide the
property of the parties . . . in a just and reasonable manner.” Ind. Code § 31-15-
7-4. Under Indiana’s “one pot” approach to the division of marital assets, all
property owned by the spouses is put into the “marital pot,” where the property
is subject to division. Barton v. Barton, 47 N.E.3d 368, 378 (Ind. Ct. App. 2015),
trans. denied. Thus, whether the property was “owned by either spouse before
the marriage,” individually “acquired by either spouse” before the parties
finally separated, or acquired through the spouses’ “joint efforts,” I.C. § 31-15-
7-4, in a dissolution action, there is a single “marital pot” and everything the
spouses own is potentially divisible. Id. (citing Falatovics v. Falatovics, 15 N.E.3d
108, 110 (Ind. Ct. App. 2014), trans. denied). Moreover, our legislature has
made it clear that a spouse’s “present right to withdraw pension or retirement
benefits” constitutes property that belongs in the marital pot, as does a vested
“pension or retirement benefit[] . . . payable after the dissolution of marriage.”
I.C. § 31-9-2-98(b)(1), (2); see also Hill v. Hill, 863 N.E.2d 456, 461 (Ind. Ct. App.
2007) (determining that a “pension . . . was properly included in the marital
pot” where a spouse was “currently receiving payments from his pension
plan”).
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[8] Once the trial court has identified property to be included in the “marital pot,”
the trial court must evaluate how to “divide the property in a just and
reasonable manner.” I.C. § 31-15-7-4(b). The trial court is to begin with the
“presum[ption] that an equal division of the marital property . . . is just and
reasonable.” I.C. § 31-15-7-5. Nevertheless, the trial court is not obligated to
equally divide the marital property; rather, a party may rebut the presumption
by “present[ing] relevant evidence . . . that an equal division would not be just
and reasonable.” Id. Moreover, our legislature has articulated a non-
exhaustive list of factors that bear on the reasonableness of an equal division,
among them, “[t]he contribution of each spouse to the acquisition of the
property, regardless of whether the contribution was income producing,” and
“[t]he extent to which the property was acquired by each spouse . . . before the
marriage.” Id. In giving effect to a just and reasonable property division, the
trial court may take several actions, including “setting the property or parts of
the property over” to one of the spouses. I.C. § 31-15-7-4. In other words, the
trial court may ultimately reach into the “marital pot” and unequally distribute
the assets contained therein, so long as a spouse presented “relevant evidence”
rebutting the statutory presumption. See I.C. §§ 31-15-7-4, 31-15-7-5; cf. Quinn v.
Quinn, 62 N.E.3d 1212, 1223 (Ind. Ct. App. 2016) (“Although the trial court
may decide to award a particular asset solely to one spouse as part of its just
and reasonable property division, it must first include the asset in its
consideration of the marital estate to be divided.”).
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[9] Here, the trial court awarded 33.5% of the pension benefit to Wife and 66.5% to
Husband. In selecting these percentages, the trial court adopted a calculation
set forth in Husband’s exhibit, applying what courts refer to as the “coverture
fraction” formula. See Morey v. Morey, 49 N.E.3d 1065, 1071 (Ind. Ct. App.
2016) (providing background on the formula). Under this approach, the value
of a pension benefit “‘is multiplied by a fraction, the numerator of which is the
period of time during which the marriage existed (while pension rights were
accruing) and the denominator is the total period of time during which pension
rights accrued.’” Id. (quoting In re Marriage of Fisher, 24 N.E.3d 429, 433 (Ind.
Ct. App. 2014)). In the present case, the trial court divided the months of
marriage (259) by the months Husband worked toward the pension (384),
which yielded 67%—a figure purportedly reflecting the percentage of the
pension benefit that Husband earned during the marriage. In other words, the
trial court’s calculation indicated that Husband purportedly acquired 33% of the
pension benefit through efforts prior to the marriage. No evidence was
introduced to establish the value of the pension on the date of the parties’
marriage, and Husband failed to present any evidence to support the assertion
that one-third the value of the pension was acquired before the parties were
married.
[10] In allocating the pension benefit, the trial court equally divided the 67%
presumed to have been earned during the marriage—33.5% to Wife and 33.5%
to Husband—and awarded the remaining 33% to Husband. Thus, the trial
court ultimately allocated 33.5% to Wife and 66.5% to Husband. Wife argues
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that the trial court abused its discretion in dividing the pension benefit in this
way, and directs us to a portion of the decree in which the trial court
“conclude[d] that an equal division of the marital property between the parties
[wa]s just and reasonable.” Appellant’s App. Vol. II at 9. Specifically, Wife
asserts that this division of the pension benefit was in error because of her
contribution to the marriage and the disparity in income between the parties.
Wife also contends that the trial court erred due to the lack of evidence as to the
value of Husband’s pension at the time of the separation, which made the
yielded result from the coverture fraction formula based on speculation.
[11] Under Indiana law, an entire vested pension benefit belongs in the “marital
pot,” where it is subject to just and reasonable distribution. See I.C. §§ 31-9-2-
98, 31-15-7-4, 31-15-7-5; Hill, 863 N.E.2d at 461. Here, the trial court
ultimately set aside a portion of the pension, but it is unclear whether it
accomplished this by using the coverture fraction formula to exclude the pre-
marital portion of the pension entirely from the marital pot or, after including
the entire pension in the marital pot, by using the formula to determine what
portion of the pension was subject to division.1 Regardless of how the trial
1
In looking to Indiana case law, there is inconsistent support as to how the coverture fraction formula should
be used to shelter the pre-marital portion of a pension benefit. Compare, e.g., Morey v. Morey, 49 N.E.3d 1065,
1072 (Ind. Ct. App. 2016) (“[T]he coverture fraction formula operates to segregate a percentage of a given
asset from the marital pot while including the balance of the asset in the marital pot.”), and Barton v. Barton,
47 N.E.3d 368, 380 (Ind. Ct. App. 2015) (“The dissolution court should have included the entire present
value of . . . the pension . . . in the marital estate (one pot theory) and then applied the coverture fraction
formula to determine what portion of each asset was earned during the marriage and therefore subject to
division.”), with Falatovics v. Falatovics, 15 N.E.3d 108, 110 (Ind. Ct. App. 2014) (“The systematic exclusion of
any marital asset from the marital pot is erroneous.”), and Kendrick v. Kendrick, 44 N.E.3d 721, 729 (Ind. Ct.
App. 2015) (“While the court may ultimately determine that the portion of Husband’s pension earned prior
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court applied the coverture fraction formula in this case, we find that it was an
abuse of discretion to apply the coverture fraction formula in this case where
Husband’s pension benefit was the only substantial asset in the marriage and
the marriage was long in duration.
[12] Here, the marriage between Husband and Wife lasted over thirty years with
Husband working and earning his pension for over twenty of those years.
During the marriage, Wife both worked outside of the home and contributed to
the marriage by raising their child, taking care of the home, and helping
Husband in business ventures after his retirement. At the time of the
dissolution, Wife was unable to work due to medical problems and did not have
a pension available. Husband’s pension was the largest asset of the marriage,
and it represented nearly all of the parties’ net worth. After the parties’ long
marriage, the application of the coverture fraction formula in this case resulted
in a large disparity in the division of assets, which we conclude was an abuse of
discretion. Wife has made a prima facie showing of reversible error, and we,
therefore, reverse the trial court’s division of the marital assets and remand with
instructions to include the entire value of Husband’s pension benefit in the
marital estate and to equally divide the value between Husband and Wife.
[13] Reversed and remanded with instructions.
to the marriage should be awarded solely to him, it must first include the asset in its consideration as to how
the marital estate should be divided.”), trans. denied.
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Pyle, J., concurs.
Bailey, J., dissents with separate opinion.
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IN THE
COURT OF APPEALS OF INDIANA
In the Matter of the Marriage of: Court of Appeals Case No.
34A05-1707-DR-1614
Carolyn Burns,
Appellant-Respondent,
v.
Michael Burns,
Appellee-Petitioner.
Bailey, Judge, dissenting.
[14] I respectfully dissent. The Indiana Code provides that a party may rebut the
presumptive equal division of marital assets by presenting “relevant evidence,”
including evidence concerning “[t]he extent to which the property was acquired
by each spouse . . . before the marriage.” I.C. § 31-15-7-5. Here, there was
evidence indicating that before Wife was in the picture, Husband spent ten
years working toward the pension benefit. Relying on this evidence, the court
allocated to Husband part of the benefit, proportional to the pre-marital period.
See I.C. § 31-15-7-4 (permitting a court to “set[] the property or parts of the
property over” to one spouse). This Court is to “reverse a property distribution
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only if there is no rational basis for the award.” Luttrell v. Luttrell, 994 N.E.2d
298, 301 (Ind. Ct. App. 2013), trans. denied. Indeed, when reviewing for abuse
of discretion, “[w]e do not reweigh the evidence; rather, we determine whether
the evidence before the trial court can serve as a rational basis for its decision.”
DePuy Orthopaedics, Inc. v. Brown, 29 N.E.3d 729, 732 (Ind. 2015).
[15] The majority concludes that the trial court abused its discretion in applying the
coverture fraction formula because the pension benefit “was the only substantial
asset in the marriage and the marriage was long in duration.” Slip op. at 8.
Yet, these factors—relevant as they are—are for trial courts to weigh. This
Court has accordingly afforded deference to a trial court’s decision to allocate a
portion of the assets in view of a spouse’s pre-marital efforts. See In re Marriage
of Fisher, 24 N.E.3d 429, 433 (Ind. Ct. App. 2014) (deferring to the trial court’s
decision to apply the coverture fraction formula in a case involving a marriage
of twenty-four years). To be sure, there is a certain point when a decision
concerning marital property can be said to exit the wide orbit of what is just and
reasonable. Still, reasonable minds can disagree, and so we must steadfastly
adhere to our deferential standard of review—whatever we may think of the
outcome. Adhering to that standard in this case, I cannot say that the court’s
decision is irrational or clearly inconsistent with the facts and circumstances.
[16] I would therefore affirm.
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