In Re: The Marriage of Eric Johnson v. Janet Johnson (mem. dec.)

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
FILED
this Memorandum Decision shall not be
regarded as precedent or cited before any Mar 29 2018, 9:30 am
court except for the purpose of establishing CLERK
Indiana Supreme Court
the defense of res judicata, collateral Court of Appeals
and Tax Court
estoppel, or the law of the case.
ATTORNEY FOR APPELLANT
Kristin A. Mulholland
LeBlanc & Mulholland, LLC
Crown Point, Indiana
IN THE
COURT OF APPEALS OF INDIANA
In Re: March 29, 2018
The Marriage of Eric Johnson, Court of Appeals Case No.
Appellant-Petitioner, 64A03-1711-DR-2575
Appeal from the Porter Superior
v. Court 2
The Honorable William E. Alexa,
Janet Johnson, Judge
Appellee-Respondent The Honorable Katherine R.
Forbes, Magistrate
Trial Court Cause No.
64D02-1210-DR-10904
Vaidik, Chief Judge.
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Case Summary
In dissolving the thirty-four-year marriage of Eric Johnson (“Husband”) and
Janet Johnson (“Wife”), the trial court evenly split Husband’s 401(k) between
them but ordered Husband to pay 90% and Wife to pay 10% of a parent PLUS
loan that Husband took out to assist with their children’s college expenses.
Based on the disparity in the parties’ incomes, we find that the trial court did
not err in dividing the parties’ assets and debts. The court erred, however, by
making Wife’s obligation to pay her portion of the loan contingent on an action
being filed against Husband to collect on the loan. We therefore affirm in part
and reverse and remand in part.
Facts and Procedural History
[1] Husband and Wife were married in 1980. The couple had three children, each
of whom attended college. The youngest child last attended college in 2008.
Husband took out approximately $43,100 in parent PLUS loans to assist with
the children’s college expenses. See Tr. Vol. II p. 44. Husband didn’t pay
“much at all” toward the loans because he was “in a financial bind.” Id. at 45.
At some point he consolidated the loans into one.
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[2] Husband filed for divorce in October 2012 and for Chapter 13 bankruptcy in
2014.1 A final hearing was held in the divorce case on November 3, 2014, and
Wife failed to appear. The trial court issued a decree of dissolution one week
later.
[3] Thereafter, Wife filed a motion to set aside the decree. In March 2016, the trial
court, based on an agreement between the parties, set aside the property
division contained in the decree. Appellant’s App. Vol. II p. 12.
[4] The trial court held a hearing regarding property division in June 2017. At
issue was Husband’s 401(k) and the loan.2 Evidence was presented regarding
Husband’s and Wife’s earning abilities. That is, Husband was earning $66,000
a year as a supervisor for a trucking company; Wife was earning $8.00/hour
working thirty-five hours per week as a preschool teacher. Evidence was also
presented that Husband’s 401(k) was valued at $44,020.10 when he filed for
divorce in October 2012. As for the loan, Husband testified that he had not
made any payments on it since 2012 and that it had a balance of “around 80
some thousand.” Tr. Vol. II p. 40. The exhibit Husband presented showed that
as of December 26, 2013, the loan had a balance of $68,187.17. Ex. 1.
Husband said that although he was currently in bankruptcy proceedings, the
1
Husband did not know what month in 2014 he filed for bankruptcy, but it was before November 10, 2014,
as the decree of dissolution notes that the marital residence “is in [the] Chapter 13 bankruptcy filing of the
Husband.” Appellant’s App. Vol. II p. 8.
2
There was other property in the marriage, but neither party challenged how the trial court divided it in the
November 2014 decree of dissolution. See Tr. Vol. II p. 47 (attorneys for Husband and Wife agreeing that the
trial court’s division of the other property could “remain as it was in th[e] original” decree).
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loan would not be discharged and that he “would have to pay [it].”3 Tr. Vol. II
p. 39. Based on Husband’s earning ability, Wife asked the trial court to award
her half of his 401(k) and to order Husband to pay the entire loan. Husband, on
the other hand, asked the court to award him all of his 401(k). In exchange, he
said that he would “assume 100%” of the loan. Id. at 43. Following the
hearing, the court awarded Wife half of Husband’s 401(k).4 As for the loan, the
court found:
Husband has paid very little, if anything, on these loans. The
amount that is now due is close to twice the amount that
Husband originally borrowed. . . . [N]o action has been filed
against Husband to collect these debts. His tax refunds have not
been intercepted to be applied towards the debt nor have his
wages been garnished. Husband requests the Court order him to
be responsible for the school loan debt and in return award to
him 100% of his 401-k. The Court finds to do so, would result in
an injustice to [Wife]. The Court doubts if he is ever going to be
forced to pay any of these loans back and to award him 100% of
his 401-k would not be equitable under the circumstances.
Additionally, Husband’s income is over 3 times that of Wife.
Appellant’s App. Vol. II p. 15.
3
Although student loans generally are not dischargeable in bankruptcy, a bankruptcy filing operates as an
automatic stay of the collection of debts. See 11 U.S.C. § 362. Accordingly, since 2014 there have been no
efforts by the Department of Education to collect on this loan.
4
Because Husband gave Wife $1000 from his 401(k) during a period when the parties reconciled (after
Husband filed for divorce in October 2012 but before the divorce was finalized in November 2014), the actual
amount awarded was $21,010.05. In addition, because Husband had withdrawn a large sum of money from
his 401(k) and that amount no longer existed in the 401(k), see Tr. Vol. II p. 36, the court found that “the sum
of $21,010.05 is reduced to judgment in favor of the Wife,” Appellant’s App. Vol. II p. 14.
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[5] Husband filed a motion to correct error, arguing that the trial court “committed
error in not dividing the U.S. Department of Education debt between the
parties” and in “essentially requiring [him] to pay 100% of the [marital] debt.”
Id. at 16-17. Husband claimed that the fact that the Department of Education
had not yet begun collection efforts did not mean that he won’t have to pay
back the loan at some point. A hearing was held in September 2017, following
which the court ordered:
That with respect to the U.S. Department of Education Loan, the
Court erred in not ordering Wife to be responsible for a portion
of the outstanding loan. The Court now corrects said error and
finds that the outstanding loan shall be divided with the Wife
being responsible for 10% of said loan and Husband 90% of said
loan. This amount shall not be subtracted from Wife’s share of
the Husband’s 401-k but shall be paid, if and when, an action is
filed to collect on this obligation. If and when this happens,
Husband shall provide Wife with all paperwork associated with
the collection process and Wife shall pay her share directly to the
agency seeking to collect said debt. The Court finds that this
unequal division of the loan is fair and equitable due to the fact
that there is a huge disparity in the parties’ income and
Husband[] has a greater ability to pay such loan.
Id. at 19.
[6] Husband now appeals.
Discussion and Decision
[7] Husband appeals the trial court’s division of the parties’ property. Wife has not
filed an appellee’s brief. When the appellee has failed to submit a brief, we
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need not undertake the burden of developing an argument on the appellee’s
behalf. Rather, we will reverse the trial court’s judgment if the appellant’s brief
presents a case of prima facie error. Trinity Homes, LLC v. Fang, 848 N.E.2d
1065, 1068 (Ind. 2006). Prima facie error in this context is defined as, “at first
sight, on first appearance, or on the face of it.” Id. Where an appellant is
unable to meet this burden, we will affirm. Id.
[8] In a dissolution action, the trial court must divide the property of the parties in
a just and reasonable manner. Ind. Code § 31-15-7-4. An equal division is
presumed just and reasonable, but a party may rebut this presumption by
presenting evidence concerning the following factors:
(1) The contribution of each spouse to the acquisition of the
property, regardless of whether the contribution was income
producing.
(2) The extent to which the property was acquired by each
spouse:
(A) before the marriage; or
(B) through inheritance or gift.
(3) The economic circumstances of each spouse at the time the
disposition of the property is to become effective, including the
desirability of awarding the family residence or the right to dwell
in the family residence for such periods as the court considers just
to the spouse having custody of any children.
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(4) The conduct of the parties during the marriage as related to
the disposition or dissipation of their property.
(5) The earnings or earning ability of the parties as related to:
(A) a final division of property; and
(B) a final determination of the property rights of the
parties.
Ind. Code § 31-15-7-5.
[9] The trial court’s division of property is “highly fact sensitive.” Love v. Love, 10
N.E.3d 1005, 1012 (Ind. Ct. App. 2014). We will reverse a property division
only if there is no rational basis for the award, and although the circumstances
may have justified a different division, we may not substitute our judgment for
that of the trial court. Augspurger v. Hudson, 802 N.E.2d 503, 512 (Ind. Ct. App.
2004).
[10] Husband argues that the trial court’s division of his 401(k) 50-50 but its division
of the loan 90-10 is “not fair or reasonable.” Appellant’s Br. p. 13. As the trial
court explained in its order, the “unequal division of the loan is fair and
equitable due to the fact that there is a huge disparity in the parties’ income and
Husband[] has a greater ability to pay such loan.” At the time of the hearing,
Husband was making $66,000 a year while Wife was making $8.00/hour
working thirty-five hours per week. This is a rational basis for the unequal
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division of the loan. Accordingly, the court did not err in ordering Husband to
pay 90% of the loan.
[11] Husband also challenges the following portion of the trial court’s order
regarding when Wife’s obligation to pay her portion of the loan triggers:
[Wife’s 10%] shall be paid, if and when, an action is filed to
collect on this obligation. If and when this happens, Husband
shall provide Wife with all paperwork associated with the
collection process and Wife shall pay her share directly to the
agency seeking to collect said debt.
Husband asserts that if he voluntarily pays the debt without an action being
“filed” against him—for example, if he enters into a repayment agreement with
the Department of Education—Wife will never be required to pay anything. As
the order is currently written, Husband is technically correct. We therefore
remand this case for the trial court to amend its order to provide something
along these lines:
Wife’s 10% shall be paid if and when collection is instituted
against Husband or Husband begins paying the loan. If and
when this happens, Husband shall provide Wife with all
paperwork associated with the payment process and Wife shall
pay 10% of the payment directly to the creditor.
Affirmed in part, reversed and remanded in part.
Barnes, J., and Pyle, J., concur.
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