William L. Koss v. Karen J. Koss (mem. dec.)

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be FILED
regarded as precedent or cited before any Sep 28 2017, 10:14 am
court except for the purpose of establishing
the defense of res judicata, collateral CLERK
Indiana Supreme Court
Court of Appeals
estoppel, or the law of the case. and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE
Amy O. Carson Bruce M. Pennamped
Massillamany & Jeter LLP Cross Pennamped Woolsey
Fishers, Indiana & Glazier, P.C.
Carmel, Indiana
Matthew Strzynski
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
William L. Koss, September 28, 2017
Appellant-Respondent, Court of Appeals Case No.
29A02-1611-DR-2455
v. Appeal from the Hamilton
Superior Court
Karen J. Koss, The Honorable William J. Hughes,
Appellee-Petitioner. Judge
Trial Court Cause No.
29D03-1406-DR-6306
Mathias, Judge.
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[1] William Koss (“Husband”) appeals the Hamilton Superior Court’s decree
dissolving his marriage to Karen Koss (“Wife”). Husband raises several issues,
which we consolidate and restate as:
1. Whether Koss established that the trial court was biased against him;
2. Whether the trial court abused its discretion in calculating the value of
certain martial assets;
3. Whether the trial court properly considered the inheritances and gifts
from Husband’s family when it divided the martial estate;
4. Whether the trial court abused its discretion when it considered a
failed business as dissipation of marital assets; and,
5. Whether the trial court abused its discretion when it ordered Husband
to pay the bulk of Wife’s attorney fees and expenses.
[2] We affirm in part, reverse in part, and remand for correction of the judgment
accordingly.
Facts and Procedural History
[3] Husband and Wife were married in 1984 and have five emancipated children.
The parties separated on June 30, 2014. The marital estate consists of
businesses, real estate, and significant personal property. The trial court’s
division of the marital estate was complicated by differing valuations for the
assets, assets obtained through inheritance or gift, Husband’s dissipation of
assets, and Husband’s failure to disclose certain assets prior to the final hearing.
[4] Husband was, to be generous, an extremely difficult litigant both during the
discovery process and during the dissolution hearing. Husband consistently
attempted to frustrate Wife’s attempts in discovery to obtain information about
their marital assets and debts. In addition, the court had to exert its authority to
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remedy Husband’s decision to try and hide assets two or three times before the
final hearing. Tr. Vol. 2, p. 122.
[5] Almost two years after Wife filed her petition for dissolution, the final
dissolution hearing was held. On July 19, 2016, the trial court issued detailed
findings concerning the valuation of the parties’ assets. Certain findings are
reproduced below to demonstrate the complicated nature of this dissolution and
the trial court’s thoughtful approach to its division of the marital estate:
9. At the time of the marriage and thereafter, frequent and
substantial gifts were given to the [Husband] and [Wife] by the
[Husband]’s parents. In addition, substantial inheritances were
received upon the death of the Husband’s Father and the
subsequent death of Husband’s Mother. It is unclear from the
record herein whether the inheritances and gifts were always
directed solely to the [Husband] or made jointly to the parties or
if both circumstances occurred. The manner in which the
inheritances and gifts were received are of little consequence
because the inheritances were used jointly by the parties and the
funds received were commingled with other marital funds and
properties.
10. [Wife] worked for the first two years of the marriage, and
then she came home to raise the five children. She home
schooled the children and took care of the home front until the
two youngest children were in the 7 th and 8th grade. At that time
the youngest children entered public schools, and the [Wife]
returned to teaching. She has been a full-time teacher at Tipton
High School for the past 8 years. She earns an annual salary of
about $49,000 per year. The Court finds that she is fully and
appropriately employed.
11. [Husband] has been engaged in a variety of business ventures
during the marriage. His primary employment has been with
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Capital Machine, a company begun by [Husband]’s family and
later conveyed to Husband by gift and through inheritance. This
company is now owned 51.5625% by [Husband] and 48.4375%
by the parties’ son Peter. Peter acquired his interest in Capital
Machine by way of gift from the parties. In addition, the
[Husband], [Wife] and Peter own Indiana Forge, LLC with
[Husband] owning 10%, [Wife] owning 45% and Peter owning
45%. Peter also acquired his interest in this entity as a gift from
the parties. Both of these businesses are related to the veneer
manufacturing industry. Capital makes large machines used to
make veneer. Indiana Forge owns real estate upon which Capital
is located and real estate with some timber associated with it in
Parke County Indiana. Some years ago, Husband began a veneer
manufacturing company, hereinafter frequently referred to as the
veneer mill, which proved unsuccessful and ended in bankruptcy.
This business failure devastated the financial net worth of the
parties, and as of the date of the final hearing this marital estate
has yet to fully recover from this event. In order to meet the
substantial obligations of the parties resulting business failure,
assets of the marriage were liquidated and substantial sums
received in inheritance at the death of [Husband]’s Mother were
applied to clear title to joint marital assets, specifically the marital
residence . . . The marital estate is in general comprised of items
left after this financial devastation.
12. [Wife] was opposed to the veneer mill venture, but the
[Husband] proceeded anyway. [Wife] acquiesced and executed
many documents necessary to fund this startup operation. [Wife]
to this date is unable to describe exactly how the funds for this
venture were raised, but it appears that nearly everything the
parties owned was put at risk. The business failed in part due to
the effects the advent of a global economy has had upon the
veneer industry, but the decision to risk the entire marital estate
of the parties to fund this venture was solely the decision of the
[Husband].
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13. Most of the estate was lost in the failed business venture and
most of what is left for division herein w[as] the direct result of
substantial gifts made to the parties by the [Husband]’s parents
during the years of the marriage, and the hard work of both
parties. (emphasis in original). While [Wife] did not bring
substantial dollars to the marriage, she brought substantial
services in the rearing and home schooling of five children and
providing a comfortable and welcoming home for the parties and
their children.
14. The identification of the contents of the marital estate and the
value to be properly assigned to these items has been very
complicated herein. A review of the CCS will indicate a number
of hearings before this Court to enforce discovery. It is
abundantly clear that from the day this action was filed, the
[Husband] has engaged in a game of hide the football to
obfuscate and frustrate the division of this estate. On each day of
trial, a new instance of the willful and intentional attempt to
conceal assets was revealed. These revelations ranged from the
discovery of in excess $275,000 in cash and gold coins in an
office desk drawer on the first day of trial, to the wooden box
containing a coin collection worth thousands of dollars
discovered locked in the master bedroom closet; to the removal
of a zero-turn radius mower from the residence to the business
premises where it was conveniently not appraised. The boldness
of the [Husband] is displayed by his willingness to perjure himself
in Court in order to hide marital assets from proper division in
this action to dissolve his marriage of over 30 years. That
boldness is breathtaking, the result of this conduct is that the
Court finds the testimony of the [Husband] to be wholly
unworthy of credibility. The Court also finds that the primary
reason for the substantial fees incurred by both parties was the
result of [Husband] apparent intentional plan to cheat the [Wife]
of her fair share of the estate. Husband spent thousands hiring
experts who would overlook the obvious and low ball the value
and accept his less than credible word as to the contents of the
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estate while Wife was forced to spend thousands to identify and
quantify the assets still owned by the parties.
***
17. [The marital residence] was completely renovated by the
parties’ [sic] during the marriage in a process for which no
expense was spared. The residence was held free and clear before
the veneer mill bankruptcy. This residence was nearly lost in the
business failure because a mortgage had been taken on the
residence to partially fund that venture. The Residence was saved
from foreclosure only when the mortgage taken out on the
residence to fund the mill was paid after the [Husband] received
his inheritance from his mother. The Court finds that this
residence should be set over to the Wife. It was paid for the first
time, at least in part, from joint efforts of the parties, and while it
was paid for the second time from the Husband’s inheritance,
which was only because of Husband’s ill-advised decision to risk
the family estate to fund the failed veneer mill.
18. An adjacent 42.07 acre parcel is owned as tenants in common
by [Wife], [Husband] and three of their Children, Mary, Sarah
and Ruth. It was conveyed to these five individuals by Jack Koss,
[Husband]’s Father on January 4, 1993. Each of the five
individuals owns an undivided 1/5 th interest as tenants in
common. The value found herein was based upon the appraisal
of Jeffrey Juday. Mr. Juday opined that the entire parcel was
valued at $841,400 but this total value should be discounted by
$126,210 due to marketability concerns. This resulted in a value
of the 2/5 interest which is part of the marital estate at
$286,076.00. At trial, but only at trial, [Husband] consented to
the underlying value of the real estate but continued to object to
the marketability discount as evidenced by his proposed findings.
The Court finds that the value opined by Mr. Juday with a
discount for marketability is the value of this asset.
19. The parties own a 20 acre parcel of real estate described as
Section 17, Township 18, Range 3. This parcel was valued at
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$440,000 by Mr. Juday. At trial, but only at trial, [Husband]
consented to this value being used. The Court finds that the value
agreed by the parties is the appropriate value for this item of
property.
20. A parcel of vacant land was sold by the parties on May 11,
2015 for which the parties received net proceeds of $92,600.00.
The Court finds the value of this property disposed of in the
course of the dissolution was $92,600.
21. On or about March 6, 2014, the parties sold a parcel of real
estate to Kurt and Carol Homan for $500,000. Carol Homan is
the sister of [Husband]. The transaction was for the sale of about
35 acres immediately contiguous and abutting the marital
residence on two sides. The proceeds of this sale were used to
resolve a portion of the debt on the marital property arising from
the failed veneer mill. . . .
***
24. Personal property in the residence of the parties was valued
by Robert J. Brown in a written appraisal dated March 16, 2016.
Mr. Brown is a personal property appraiser well known to the
Court by way of his written reports. This is the first case in which
Robert J. Brown has ever personally testified in Hamilton
Superior Court 3 although his reports have frequently been relied
upon by the Court in division of marital estates. The Court finds
Robert J. Brown to be knowledgeable, credible and wholly
believable on the issue of personal property valuation.
***
29. On December 8, 2014, Robert J. Brown appeared at the
residence to inventory and appraise equipment at the machinery
shed located at the Residence, now on the Homan property. He
appraised the following items 1974 John Deer Tractor with
loader, Bush Hog SBX84, two Fuel tanks on stands, John Deere
709 Rotary Cutter, John Deere Model 31a post hole digger, John
Deer weights on stands, Snyder 3 point hitch rear mount tank,
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19563 McCormick Farmall Super M, 1944 McCormick Farmall
H tractor, three hay wagons, wooden outhouse, Reynolds
Lowther tree planter, Tree cage, John Deere 36” roller, 1997
Corn Pro trailer with ramps, Troybilt rototiller, Wood Miser
Model LT40H024, three “Hit and Miss” engines, one lot of hand
tools specifically described in Brown written report found at Ex.
42 herein. The Court finds Mr. Brown’s appraisal of $24,350.00
to be a true and credible fair market value of these items.
30. Whether the items listed in paragraph 29 above should be
valued in the marital estate is contested. There are three bills of
sale at issue in this case in which [Husband] has purported to sell
to third parties martial assets. One bill of sale dated May 16, 2013
purports to convey ownership to the items listed above, along
with several other items not listed in the inventory completed by
Brown, to Garett Shoffner. See Exhibit 5. Apparently, most of
these items remain in the machinery shed adjacent to the marital
residence to upon which the [Husband] has a 20 year license to
store equipment. According to the bill of sale, Shoffner had three
years of free storage for these items at the machinery shed. Some
of the items are listed in a bill of sale from [Husband] to Garett
Shoffner dated May 16, 2013 were not located in the shed at the
time of the Brown Appraisal including at least a manure spreader
and horse shoeing stock. According to this bill of sale the items
listed above and at least three other categories of items,
generators, Scag 72” mower, and pressure washer were sold for a
total of $2,200.00. [Husband] claims to have retained a right of
first refusal to purchase any of these items back if Mr. Shoffner
receives a bona fide offer to purchase them in writing. As of the
last day of the final hearing, the items listed in that bill of sale
remain either at the machinery shed or are stored at the Capital
Machine Business premises except for the horse shoeing stock
and the manure spreader. The items sold to Shoffner in the first
bill of sale dated March 16, 2013 are not marital assets and the
Court has not included them in the Marital Estate. However,
[Husband] received $2,000 for these items of property which had
a much higher value. The Court finds that this transaction was
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made prior to the date of filing and the final separation of the
parties, but after the physical separation of the parties and during
the period of their estrangement. This transaction constitutes
dissipation of the marital estate by the [Husband] which shall be
considered in the equitable division of the marital estate.
31. The Court finds that there is more than sufficient evidence to
believe that this first bill of sale to Shoffner may have been yet
another effort to hide assets from the [Wife] and may in fact be a
sham transaction. Because Garett Shoffner is not before the
Court the Court cannot undo the transaction, however, in this
transaction [Husband] reserved a right of first refusal to
repurchase the items from Shoffner in the event of a bona fide
offer from a third party. The Court finds that this is a marital
asset, an intangible chose in action, subject to division which has
not been valued by the parties and which cannot be valued by the
Court from the evidence in this record. The Court finds that this
chose in action should be divided in kind.
32. A second bill of sale to Shoffner dated June 7, 2014 is also at
issue. This sale was for items discussed in the appraisal done by
Mr. Brown on the first day of trial, and specifically, the guns and
wood working tools discovered at Capital Machine during that
appraisal. Although these items have been found not to be
marital assets, the right of first refusal is an asset. This asset has
not been valued because the record herein does not permit its
value. This asset will be divided in kind. The Court finds that
there is more than sufficient evidence to believe that this second
bill of sale to Shoffner may have been yet another effort to hide
assets from the [Wife] and may in fact be a sham transaction in
the very least it is dissipation of marital assets.
33. A third bill of sale is in existence for a purported sale to
Bobby Deckard on May 25, 2014. This bill of sale did not retain a
right of first refusal, and the sale having occurred prior to the date
of filing the items sold are martial assets subject to division
herein. There is more than sufficient evidence in this to result in a
belief that this sale may be a sham transaction and at the very
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least was a dissipation of the martial estate by the [Husband]. It is
unclear from the record what the effect of that dissipation might
be.
***
36. On April 8, 2016, Robert J. Brown submitted a written report
of assets he appraised after the commencement of trial. On the
first day of trial, [Wife] presented evidence that there were
several items of property at the Capital Machine offices which
had not previously been inventoried or valued, specifically gold
coins, cash and certain items of personal property alleged to have
been sold in May 2013 and June 2014. Prior to being confronted
with documentary evidence during trial, [Husband] had denied
that any of these items existed. The first category is 13 listed
firearms and ammunition located at Capital Machine. These
items are inventoried at second and third page of [Wife]’s Exhibit
43. Mr. Brown was assisted in the valuation of the firearms and
ammunition listed here by Mr. Higginbotham. These items have
a value of $13,300.00. [Husband] claims to have sold these items
to Garrett Shoffner along with certain wood working tools for
$2,000 on June 7, 2014 as evidenced by the bill of sale admitted
as [Wife]’s Exhibit 7. This record is replete with evidence that
this bill of sale may have been a sham intended to hide marital
assets from the [Wife]; however, the bill of sale is dated on June
7. 2014, 23 days prior to the date of final separation. This Court
cannot undo the transaction represented by the bill of sale.
However, the Court notes that the transaction is clearly below
market value and considers this transaction to be a dissipation of
assets. The Court concludes that his dissipation is worth at least
$12,300.00.
37. The next item valued by Robert J Brown in his April 8, 2016
report is identified as the “Lie Nielsen Tool Works Inc.” with a
value of $1225.00. These items were also located at Capital
Machine and were not valued in the valuation of Capital Machine
equipment. They constitute wood working tools as per the
inventory of this item appearing at the 20th page of Exhibit 43.
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[Wife]’s Exhibit 7, the June 7 2014 Bill of Sale to Shoffner
indicates that [Husband] was conveying to Shoffner his wood
working equipment as part of the overall transaction for which he
received a total of $2,000.00. The record is replete with evidence
that this bill of sale may have been a sham intended to hide
marital assets from the [Wife]; however, the bill of sale is dated
on June 7, 2014, 23 days prior to the date of final separation
although during a period of the parties’ estrangement and their
physical separation. This Court cannot undo the transaction
represented by the bill of sale. However, the Court notes that the
transaction is clearly below market value and considers this
transaction to be a dissipation of assets which the Court
concludes in valued at $225.00.
***
39. The next item valued by Mr. Robert J. Brown on April 8,
2016 is the most troubling for this Court. On the first day of trial,
[Wife] provided evidence to the Court that on the day preceding
trial there were a number of gold and other coins along with a
substantial sum of cash located at the Capital Machine premises
in the desk drawer of the desk used by [Husband]. [Husband] had
just denied that these items existed, and specifically testified that
only petty cash was maintained at the premises and never in a
sum in excess of about $1,000 to $1,500. As a result of this
apparent inconsistency, the Court interrupted the proceedings
and ordered several things to occur. First, the Court ordered that
Robert J Brown be granted access to the business premises to
inventory property and specifically gold coins and cash located in
the desk drawer of [Husband] but also to search for guns,
woodworking equipment and other “missing items of personal
property.” Second, the Court detained [Husband] while this
inspection occurred, and ordered that [Husband] remain under
the watchful eye of the Hamilton County Sheriff pending a
Direct Contempt of Court hearing to be held later that afternoon.
The Court ordered that [Husband]’s attorney, Arvin Foland, was
permitted to travel to the Capital Machine premises to be present
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during the Brown inventory and appraisal. Third, legal counsel
was appointed for [Husband] to represent him at the direct
contempt hearing. Fourth, a written order to show cause was
entered by the Court. Fifth, a summary trial was conducted at
which [Husband] was permitted to show cause why he should
not be held in direct contempt of court for lying during his
testimony before the Court. Sixth at the summary contempt
proceedings, [Husband] was found not to be in contempt of
Court as charged because of a technicality. That technicality was
that at the time of [Husband]’s false testimony regarding the
presence of gold coins and cash, he had inadvertently not been
placed under oath. Trial was recessed and set to recommence the
following morning.
40. Mr. Brown in his appraisal at Capital Machine premises
discovered and inventoried a substantial quantity of gold and
other coins as detailed in his April 8, 2016 report at pages 3
through 14. The value ascribed to these gold and other coins was
$231,660.00. Discovered with these coins were certain trading
documents, which by and large, indicate that a substantial
number of the gold coins had been purchased by Jack Koss or by
[Husband] with a direct reference to Capital Machines. There is
one notable exception that being a lot of 200 American Eagle one
ounce silver dollars purchased on May 2, 1999 by a check on the
joint account of the parties and an invoice for the same
transaction in the name of [Husband] at [address of marital
residence omitted] with a ship to address of [Husband], c/o
Capital Machine Co. 2801 Roosevelt Avenue, Indianapolis
Indiana. Brown inventoried 23 total American Eagle One Ounce
Silver Dollars, 20 were issued in 1999 and three were issued in
2008.
41. An issue exists as to the ownership of the coins described in
paragraph 40 above. These coins are not reflected on the books or
records of Capital Machine. They were not inventoried nor
valued by any of the business valuation experts who opined on
the value of Capital Machines. At least 20 of the silver Eagles
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were found with documents indicating they were purchased from
the joint funds of the parties, but all other purchase documents
found for the coins lists either Jack Koss or [Husband] on behalf
of Capital Machines as the buyer. The Court finds that these
coins except for the 20 Silver Eagles dated 1999 with a value of
$340.00 are property of Capital Machine and part of the marital
estate only because Capital Machine is part of the marital estate.
The Court finds that [Husband] used his position as the Chief
Operating Officer of Capital Machine to attempt to conceal and
hide this significant asset in order to deflate the value of the
marital estate and to cheat his spouse from receiving a full
consideration of the value of the marital estate. While such
conduct is unacceptable, it does not change reality as to the
ownership of the coins at issue. It does substantially reduce, if not
eliminate any credibility of the [Husband]’s testimony herein and
all other testimony which is dependent upon the statements of
[Husband].
42. The next category inventoried and valued on the April 2016
appraisal report is a substantial sum of cash. The cash found by
Mr. Brown in his inspection of the [Husband]’s office has a face
value of $43,248.00. [Husband] claims after the discovery that
this is cash that belongs to Capital Machine and which had been
squirrelled away for a rainy day. [Husband] claims it is an asset
of Capital Machine and not a martial asset. Prior to its discovery,
[Husband] had denied that there was any cash at all at Capital
Machine except for a file containing petty cash, never more than
$1000 to $1500 at any given time. Unlike the gold and other
coins, listed above, this cash has no provenance or
documentation of ownership. This cash does not appear on the
books and records of Capital Machine. This cash was not
considered in the valuation of the business by either of the
business evaluation experts presented by the parties. The only
evidence that this cash has a connection to Capital Machine is
the unsupported testimony of [Husband]. That testimony is
without a scintilla of believability. This cash which was found in
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the residential quarters of [Husband], albeit his office at Capital
Machine, is a marital asset to be divided separately herein.
43. On the Third Day of Trial, [Wife] appeared at trial with a bag
of coins in hand which was marked as Exhibit 35. This Exhibit
was later replaced by Exhibit 36 which is 22 pictures of the bag
and its contents admitted as Exhibit 35. Exhibit 35 was then
released to the [Wife] so that it could be appraised. Robert J
Brown conducted an inventory and appraisal of these items as
detailed in pages 21-23 of his April 2016 appraisal report. These
items were found in a locked box on the dresser of [Husband] in
the closet of the master bedroom. [Husband] had on prior
occasions, before being confronted with exhibit 35, denied that
he had any collections not previously disclosed. When
confronted with Exhibit 35, [Husband] finally admitted that the
coins contained therein were his personal coin collection. These
items were valued at $4,765.99 by Mr. Brown. These items were
owned prior to the date of final separation as evidenced by the
fact the box in which they were found was locked and on the
dresser in the master bedroom of the martial residence on the
date of the filing of this dissolution and at all times thereafter
until the evening of the second day of trial herein. As a marital
asset these items are required to be divided herein. The court has
rounded the value of this item to the next whole dollar and finds
the value to be $4,766.
44. In his April appraisal report, Mr. Brown also inventoried
certain lawn equipment located at Capital Machine that was not
included on the business equipment inventory of Capital
Machine. This equipment has been secreted at Capital Machine
during the pendency of this matter by the [Husband]. This
equipment is noted at page 24 of the April 2016 report and has a
value of $4,700.00. These items of equipment are found to be
marital assets belonging to the parties but stored at Capital
Machines. The items have a value of $4,700.00.
***
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53. The Court has valued the parties’ 51.625% interest in Capital
Machine at $931,589.00. This value has been calculated from the
valuation report of Bret Brewer by adding the sum of $231,320 to
the December 31 indication of value found on page 7 of Mr.
Brewer’s Report and the same number to the December 31, 2014
indication of value on the same page of the report and then
completing the balance of the calculations on that page. This
recalculation results in a sum of $831,588.87 for the parties’
interest in Capital Machine which the Court has rounded to the
next whole number, $831,589.00.
54. The Court finds that the values submitted for the Capital
Machine entity by Lighthouse Advisors to be wholly without
credibility because that value is based solely upon information
supplied by [Husband] or information from third party appraisers
whose values are based upon information derived solely from the
[Husband]. As noted above, the [Husband] is without credibility.
Because the Lighthouse report is based upon information from a
non-credible source the resulting report is not entitled to
credibility.
55. The Court has valued the Parties’ 55% interest in Indiana
Forge at $208,500. This value is the value assigned by Bret
Brewer in his valuation report. The Court has not made
adjustments to that value herein because there were no later
discovered assets of Indiana Forge.
56. The Court finds the values submitted for the Indiana Forge
entity by Lighthouse Advisors to be wholly incredible because
they are based solely upon information supplied by [Husband] or
information from third party appraisers whose values are based
upon information derived solely from the [Husband]. As noted
above, the [Husband] is without credibility. Because the
Lighthouse report is based upon information from a non-credible
source the resulting report is not entitled to credibility. The Court
notes that Lighthouse assigned a value to this interest that
exceeds that of Mr. Brewer by the sum of $3,500.00.
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Appellant’s App. Vol. II pp. 33–55.
[6] Based on these findings, the trial court ordered a slightly unequal division of the
marital estate awarding 52.37% of the marital estate to Wife and 47.63% to
Husband. The significant assets awarded to Husband were the two businesses,
the value of which had been vehemently contested by the parties. The court also
ordered Husband to pay $79,000 of Wife’s attorney fees and expenses.
Alleged Bias of the Trial Judge
[7] It is well settled that adjudication by an impartial tribunal is one of the
fundamental requirements of due process imposed on the courts of this state by
the Fourteenth Amendment to the federal constitution. Tumey v. Ohio, 273 U.S.
510, 535 (1927); Blanche v. State, 690 N.E.2d 709, 714 (Ind. 1998). Judges are
presumed impartial and unbiased. Garland v. State, 788 N.E.2d 425, 433 (Ind.
2003). “[T]he law will not suppose a possibility of bias or favour in a judge,
who is already sworn to administer impartial justice, and whose authority
greatly depends upon that presumption and idea.” 3 William Blackstone,
Commentaries 361.
[8] The Canons of Judicial Conduct require a judge to “act at all times in a manner
that promotes public confidence in the independence, integrity, and impartiality
of the judiciary.” Ind. Code of Judicial Conduct, Canon 1, Rule 1.2. In
addition, “a judge shall uphold and apply the law, and shall perform all duties
of judicial office fairly and impartially.” Jud. Cond. R. 2.2. And “[r]ecognizing
the well-settled due process right to an impartial court as necessary to a fair
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proceeding,” our supreme court has “found fundamental error when trial
judge’s comments, demeanor, or conduct indicated bias.” In re J.K., 30 N.E.3d
695, 700. See also Hewitt v. Westfield Washington Sch. Corp., 46 N.E.3d 425, 435
(Ind. 2015) (stating that a “biased decisionmaker [is] constitutionally
unacceptable [and] our system of law has always endeavored to prevent even
the probability of unfairness”) (citation omitted).
[9] Because the law presumes that the trial court is unbiased, “the party asserting
bias must establish that the trial judge has a personal prejudice for or against the
party. . . . Adverse rulings and findings by the trial judge do not constitute bias
per se.” Richardson v. Richardson, 34 N.E.3d 696, 703 (Ind. Ct. App. 2015). “[A]
party must show that the trial judge’s action and demeanor crossed the barrier
of impartiality and prejudiced that party’s case.” Id. at 703–04.
[10] Importantly, a trial judge is also afforded wide
“latitude to run the courtroom and maintain discipline and
control of the trial.” Particularly in bench trials, courts have
considerable discretion to question witnesses sua sponte “to aid
in the fact-finding process as long as it is done in an impartial
manner.” We even tolerate a “crusty” demeanor towards
litigants so long as it is applied even-handedly. Yet judges at all
times “must maintain an impartial manner and refrain from
acting as an advocate for either party,” –because a “trial before
an impartial judge is an essential element of due process[.]”
In re J.K., 30 N.E.3d at 698–99 (internal citations omitted and emphasis added).
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[11] In this case, on the first day of the final dissolution hearing, Wife presented
evidence obtained eleven days prior to the final hearing that Husband retained
possession of assets allegedly sold to a third party and had failed to disclose
marital assets to Wife. Wife presented photographs to the trial court to establish
that those assets were located at Husband’s place of business. Wife did not list
the newly discovered assets on her financial declaration of the marital estate. In
prior deposition testimony, Husband testified that certain items shown in the
photographs had been sold to Garrett Shoffner prior to the parties’ separation.
The terms of the sale required Husband to allow the third party to store the
items in a shed at his residence for free. Wife alleged that Husband retained
ownership of the items that were allegedly sold to Shoffner. Other items shown
in the photographs, including cash and numerous gold coins, were not listed on
Husband’s financial declaration or in his discovery responses.
[12] The trial court decided that Wife’s appraiser and Husband’s counsel would
meet at Husband’s office to inventory and appraise the non-disclosed assets and
the dissolution hearing would resume the next morning. The trial court
determined that Husband would be held in the Hamilton County Jail until a
direct contempt hearing could be held later in the day and stated:
[Husband], you have sworn on an oath before this Court to tell
the truth, the whole truth, and nothing but the truth during the
course of your testimony today. I am giving you instructions that
I believe you have violated your oath before this Court, and that
you have testified in a manner that is less than honest. I therefore
am giving you the opportunity at 3:30 today to stand before this
Court and explain why you should not be held in contempt of
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this Court for your willful violation of that order by lying under
oath.
In the meantime, I am ordering that you be incarcerated by the
sheriff of Hamilton County pending your reappearance in this
court at 3:30 today for the purpose of answering why you should
not be held in contempt of court.
Tr. Vol. 2, p. 124. The court then appointed counsel to represent Husband at
the contempt hearing. Husband asked if he could “give an explanation” to the
court, and the court denied his request. Id. at 124–25.
[13] At the beginning of the direct contempt hearing, the trial court detailed the
events and testimony that had occurred that morning and noted the time of
each event down to the second. For example, the court noted that Husband’s
deposition was admitted at 10:37:30 a.m. Tr. Vol. 2, p. 128. We can infer from
the trial court’s thorough review of the hearing and its later statement, which is
quoted below, that while Husband was in custody, the court became aware that
Husband had not been sworn in before testifying that morning.
[14] Continuing with the direct contempt hearing, the trial court alleged that during
the final dissolution hearing under direct examination,
[Husband] identified a financial declaration signed by himself in
December 2014 under penalties for perjury. The examination
continued at approximately 11:31:16 a.m. [Wife]’s Exhibit 11
was displayed to the [Husband]. Exhibit 11 was a series of seven
pictures. These were identified as pictures taken at Capital
Machine of items sold to Shoffner[.]
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Id. at 129.
[15] After listing the items in the pictures, the court continued with the allegation
and stated: “In his testimony before this court on this date, [Husband] testified
that none of the items listed in Exhibit 5 were stored at Capital Machine.” Id.
The trial court noted that it had granted Wife’s request for a recess so that she
could have the items stored at Capital Machine appraised and
[t]he Court then ordered the sheriff of Hamilton County to take
into custody [Husband] to be held pending a hearing set today at
3:30 on the issue of direct contempt; specifically, [Husband] is
charged with having engaged in false testimony before this Court
today regarding the disposition of property of the marital estate
and its current location.
Id. at 130
[16] Over thirty years ago, our supreme court held that giving false testimony in a
judicial proceeding does not constitute direct contempt. See e.g. In re Marriage of
Neiswinger, 477 N.E.2d 257, 260 (Ind. 1985); In re Guardianship of C.M.W., 755
N.E.2d 644, 651 (Ind. Ct. App. 2001). Direct contempt “includes those actions
occurring near the court, interfering with the business of the court, of which the
judge has personal knowledge .” In re Haigh, 7 N.E.3d 980, 989 (Ind. 2014); see
also In re A.S., 9 N.E.3d 129, 132 (Ind. 2014) (stating contempt “is direct when it
involves “acts which are committed in the presence of the court or in such close
proximity to it so as to disrupt its proceedings while in session”) (citation
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omitted). Therefore, the trial court improperly alleged that Husband was in
direct contempt of court for making false statements.1
[17] However, this determination was an error of law, the type of error that judges,
as imperfect human beings, make from time to time. It is for this reason that
judges are not held personally or ethically accountable for such errors of law.
See Sims v. Beamer, 757 N.E.2d 1021, 1025 (Ind. Ct. App. 2001) (citing Stump v.
Sparkman, 435 U.S. 349, 355-56 (1978)); Jud. Cond. Rule 2.2, cmt. 3.
[18] As a direct result of this error of law, Husband was jailed for nearly four hours.
Upon a careful review of the transcript and further review of the trial court’s
careful and thoughtful consideration of the evidence in this complex
dissolution, we cannot conclude that this error of law and Husband’s resultant
jailing establish that the trial court was biased or lacked impartiality. However,
the trial court’s decision to hold a direct contempt hearing after realizing that
Husband was not sworn in before testifying that morning is more problematic.
[19] Husband was appointed counsel for the direct contempt hearing, but when
Husband’s appointed counsel argued that he had not had time to prepare for the
hearing or review Husband’s testimony, the trial court replied, “[Husband] has
the right to prepare; you do not.” Tr. Vol. 2, p. 131. And we may reasonably
infer that Husband was in handcuffs for the length of the hearing. See Id. at 149–
1
Husband’s false testimony cannot be considered indirect contempt either. Indirect contempt involves acts
committed outside the presence of the court “which nevertheless tend to interrupt, obstruct, embarrass or
prevent the due administration of justice.” In re A.S., 9 N.E.3d at 132 (citations omitted).
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50 (After the hearing was concluded, the court stated, “I told you to get those
shackles off of [Husband] before. Why are they still on him? He has handcuffs
on . . . Take it off now and he’s released.”)
[20] Husband and Wife’s counsel testified about Husband’s prior deposition
testimony and testimony earlier that morning regarding the current location of
the items that were allegedly sold to Shoffner. Both were examined by
Husband’s appointed counsel and the trial court.
[21] Immediately upon concluding the forty-minute hearing, the trial court entered
an “adjudication of acquittal on the direct contempt” because
[a]s indicated in the statement of direct contempt, [Husband] was
never sworn as a witness today. [Husband] took the stand. Before
he could reach the stand, his deposition was offered. Counsel
then engaged in argument about the admission of his deposition.
His deposition was admitted and Mr. Pennamped immediately
began questioning [Husband], at which time Mr. Foland made
an objection to his examination, which was overruled because he
was asked, “What is your name? Objection.” That was
overruled. No further objections were made, nor was an
objection ever made that the witness was not sworn.
While technically it is correct that a person may not make a false
statement before a Court, whether a witness or not a witness, and
where this Court has no question in its mind whatsoever based
upon the totality of the testimony today that [Husband] was not
forthcoming with this Court or with his opposing counsel, I don’t
believe that the Court has established beyond a reasonable doubt,
and I think that’s the standard I should impose in this case, the
allegations of criminal contempt.
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Id. at 144–45 (emphasis added).
[22] The trial judge’s error of law was clearly compounded by Husband’s
incarceration. And the judge’s misunderstanding of the law was made even
clearer by his comments at the contempt hearing. Husband’s false statements as
a witness would understandably anger any judge, but they did not constitute
contempt, whether direct or indirect. Rather, the proper use of these statements
was the reduction of Husband’s credibility throughout, and the trial court did
so.
[23] Because of this error of law and what proceeded from it, we can understand
Husband’s belief that the trial court was attempting to intimidate him and was
biased against him. However, the trial court’s error of law during the final
hearing in extremely contentious dissolution proceedings, when considered
with its subsequent findings and conclusions, do not indicate any such
intimidation or bias. Therefore, Husband has not established that the trial
court’s alleged bias prejudiced his case.
[24] Husband also points to the trial court’s remarks in its findings about his (lack
of) credibility. We believe that Husband’s consistently contentious demeanor
and lack of truthfulness in this case over a two-year period had understandable
and legally proper consequences. Under the unique facts and circumstances of
this case, Husband has not established bias on the part of the trial judge.
Moreover, the trial court’s minor and mostly mathematical errors, which are
discussed below, do not raise the specter of bias or a lack of impartiality.
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Division of the Marital Estate
[25] Because the trial court entered special findings of fact and conclusions thereon
pursuant to Indiana Trial Rule 52, our standard of review is two-tiered: first, we
determine whether the evidence supports the findings and, second, whether the
findings support the judgment. Marion Cnty. Auditor v. Sawmill Creek, LLC, 964
N.E.2d 213, 216 (Ind. 2012). We view the evidence in the light most favorable
to the judgment and defer to the court’s findings if they are supported by the
evidence or any legitimate inferences flowing therefrom. Id. at 216–17. Legal
conclusions, on the other hand, are reviewed de novo. Id. at 217.
[26] The disposition of marital assets is within the dissolution court’s sound
discretion, and we will reverse only for an abuse of that discretion. Eye v. Eye,
849 N.E.2d 698, 701 (Ind. Ct. App. 2006). We consider only the evidence most
favorable to the trial court’s decision, without reweighing the evidence or
assessing the credibility of witnesses. Id. The court abuses its discretion if its
decision is clearly against the logic and effect of the facts and circumstances
before the court, or if it has misinterpreted the law or disregards evidence of
factors listed in the controlling statute. Id.[27] Indiana Code section 31-15-7-5 provides that the trial court must divide the
marital estate in a just and reasonable manner. An equal division is presumed
just and reasonable, but a party may rebut this presumption by presenting
evidence that an equitable division would not be just and reasonable, including
evidence concerning the following factors:
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(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.
(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.
Id.[28] A party challenging the trial court’s division of marital property must overcome
a strong presumption that the dissolution court “‘considered and complied with
the applicable statute, and that presumption is one of the strongest
presumptions applicable to our consideration on appeal.’” McCord v. McCord,
852 N.E.2d 35, 44 (Ind. Ct. App. 2006) (quoting DeSalle v. Gentry, 818 N.E.2d
40, 44 (Ind. Ct. App. 2004)), trans. denied. Accordingly, we will reverse a
property distribution only if there is no rational basis for the award, and
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although the circumstances may have justified a different property distribution,
we may not substitute our judgment for that of the dissolution court. Augspurger
v. Hudson, 802 N.E.2d 503, 512 (Ind. Ct. App. 2004).
A. Stipulated Value of 42.07 Acres
[29] Husband argues that the trial court abused its discretion when it assigned a
lower value than the stipulated value to a parcel of land owned partially by the
parties. We review the court’s valuation of a marital asset for an abuse of
discretion. Weigel v. Weigel, 24 N.E.3d 1007, 1010 (Ind. Ct. App. 2015). The
trial court acts within its discretion where sufficient evidence and reasonable
inferences support the court’s valuation. Id. at 1011.
[30] Relying on an appraisal, the parties stipulated that the value of the 42.07-acre
real estate was $841,400. Once parties enter into a stipulation and the court
approves it, the stipulation is binding upon all involved. Ehle v. Ehle, 737
N.E.2d 429, 433–34 (Ind. Ct. App. 2000).
[31] On her “Marital Balance Sheet and Proposed Distribution,” Wife listed the
value of the 42.07-acre property as $841,400” less $126,210. Ex. Vol. 6,
Petitioner’s Ex. 2. Husband did not object to the exhibit or Wife’s inclusion of
the marketability discount. The trial court properly included the discount
because the parties are unable to sell the real estate without the agreement of
the three other owners of the property.
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B. Assets Sold to Shoffner
[32] Next, Husband argues that the trial court abused its discretion when it credited
certain property to him that the trial court specifically found were not marital
assets. Specifically, in finding numbers 29 and 30, the trial court found that
items that Husband sold to Shoffner in a bill of sale dated March 16, 2013 are
not marital assets and would not be included in the martial estate. Appellant’s
App. Vol. 2, pp. 44–45. The court also found that Husband sold the items listed
in the bill of sale for a significantly lower price than their market value, and by
doing so, Husband dissipated martial assets. The trial court concluded that it
was possibly a “sham transaction.” Id. at 46.
[33] The trial court later assigned a value of $24,350 to the items the trial court
found were not marital assets in finding numbers 29 and 30, and awarded the
equipment to Husband. Husband maintains that these are the items sold to
Shoffner, and therefore, the trial court erred when it awarded non-marital assets
to Husband in the dissolution decree. Wife does not dispute Husband’s claim
that the property valued at $24,350 and awarded to Husband was the property
allegedly sold to Shoffner for $2,000 in 2013. However, Wife argues that the
“Court included the stated number, $24,350.00, to account for” Husband’s
dissipation of the martial estate as a deviation factor. Appellee’s Br. at 30.
[34] In Pitman v. Pitman, 721 N.E.2d 260 (Ind. Ct. App. 1999), trans. denied, our
court observed that “a party’s dissipation of martial assets only affects the
distribution of the martial property in which the parties possess a present vested
interest at the time of dissolution.” Id. at 266 (citing In re Marriage of McNanama,
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272 Ind. 482, 487, 339 N.E.2d 371, 373 (1980)). In Pitman, the husband
acquired shares of stock during the marriage but sold them to his sister prior to
filing the petition for divorce so that his wife would not realize any gain from
the shares. Our court concluded that the shares of stock “were not part of the
martial estate at the time the petition was filed, and their value was not subject
to distribution as marital assets.” Id. Therefore, the trial court erred when it
awarded a monetary judgment to the wife to compensate her for the loss of the
shares of stock because the judgment “disregards the principle that ‘a trial court
may not compensate a party for pre-separation dissipation[.]’”2 Id. at 267 (citing
In re Marriage of Sloss, 526 N.E.2d 1036, 1040 (Ind. Ct. App. 1988)). See also
Armstrong v. Armstrong, 181 Ind. App. 343, 346–47, 391 N.E.2d 855, 857 (1979)
(stating that “while evidence of dissipation of the marital assets is a [f]actor in
dividing the marital property[,] I.C. 31-1-11.5-11(d) (Burns Code Ed.
Supp.1978), it does not, standing alone, allow the trial court to enlarge the
marital estate beyond that property in which the parties maintain a present
vested interest”).
[35] The trial court properly considered the sale of the assets sold to Shoffner as
evidence of dissipation. However, the trial court entered conflicting findings as
2
A trial court may consider evidence of pre- or post- separation dissipation to determine whether a party has
dissipated assets. Layne v. Layne, 77 N.E.3d 1254, 1263 (Ind. Ct. App. 2017). To the extent our court implied
otherwise in Pitman, it was incorrect. Id. A trial court “may compensate a spouse for pre-separation
dissipation of martial assets as long as such compensation comes from martial assets in which the parties
have a vested present interest at dissolution and not, for instance, from a spouse’s future income.” Id. at 1264
(citing In re McManama, 272 Ind. at 487, 399 N.E.2d at 373).
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to whether the assets should not be included in the marital estate (because they
were sold before the parties’ separation) or should be included because the sale
was a fraudulent transaction. We therefore remand to the trial court with
instructions to resolve the conflict in these findings and modify its division of
the marital estate if necessary.
C. Value of Capital Machine
[36] Third, Husband argues that the trial court abused its discretion by relying on
Wife’s expert’s testimony in its valuation of Capital Machine. We will affirm a
trial court’s valuation of marital assets as long as evidence is sufficient and
reasonable inferences support the valuation. Morey v. Morey, 49 N.E.3d 1065,
1069 (Ind. Ct. App. 2016). We will not reweigh the evidence and will consider
the evidence in the light most favorable to the judgment. Id. Although the facts
and reasonable inferences might allow for a different conclusion, we will not
substitute our judgment for that of the trial court. Id.[37] Husband argues that Wife’s expert used “book values” to calculate the value of
Capital Machine’s inventory instead of fair market value. Book value, an
accounting term, refers to the historical cost of an item. Tr. Vol. 2, p. 241.
Husband’s expert testified that “book value has no fundamental basis in
business valuation.” Tr. Vol. 3, p. 139. Wife’s expert believed that the inventory
report he used for his valuation listed the fair market value of Capital Machine’s
inventory. Id. at 60–61. Husband’s testimony was the only evidence admitted to
support Husband’s claim that the inventory report contained “book value” for
the company’s inventory.
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[38] Wife argues that her expert properly relied on Capital Machine’s income tax
returns and the value of the inventory reported to the Internal Revenue Service
to calculate the business’s value. And Wife observes that her expert properly
applied a marketability discount to his overall valuation of Capital Machine.
[39] To arrive at a value for Capital Machine, Wife’s expert reviewed the company’s
tax returns from 2009 through 2014, its internal financial statements, inventory
valuation sheets, inventory calculation reports, real estate appraisals, and
Husband’s expert’s reports. Id. at 2. Wife’s expert explained that he used “the
net asset approach” to calculate Capital Machine’s value as of June 30, 2014.
Id. at 4–5. He primarily used the company’s 2013 and 2014 tax returns to do so
because “tax return numbers are indicative of fair market value of inventory.”
Id. at 7–8. The expert also believed that the tax returns contained the most
reliable data available to him to calculate the company’s value. Id. at 10.
[40] Wife’s expert admitted that he did not appraise the company’s inventory
because he is not a qualified appraiser. He testified that he had to rely on
information Husband supplied to him to determine the value of Capital
Machine’s inventory. Id. at 30. Husband’s own expert testified that Capital
Machine’s financial reporting was “just dismal.” Id. at 83–84. And both experts
used the net asset approach to calculate Capital Machine’s value.
[41] The trial court was tasked with weighing the testimony of the parties’ experts to
determine the value of Capital Machine. And we do not agree with Husband’s
argument that Wife’s expert and the trial court were confused about whether
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the values listed on the company’s inventory were book value or fair market
value. The only evidence that the values were book values was Husband’s
testimony, and it was within the discretion of the trial court to discredit that
testimony. For all of these reasons, we conclude that the trial court properly
relied on Wife’s expert’s testimony to value Capital Machine.
D. Mathematical Error
[42] Husband also argues that even if our court accepts the trial court’s method for
valuing Capital Machine, the trial court made a mathematical error and
overstated the value of his 51.5625 share of the company by $77,674.00. Wife
agrees that the trial court’s error “may require correction of the judgment to
reflect the value the trial court intended to utilize[.]” Appellee’s Br. at 36.
[43] Throughout its findings, the trial court mistakenly overstated Husband’s share
of Capital Machine as 51.625%, when his share is actually 51.5625%. Also, the
trial court calculated the value of Capital Machine as $831,589 in finding
number 53. But in its division of the marital assets and calculation of the
marital estate, the trial court listed the value as $931,589, which appears to be a
scrivener’s error. In his brief, Husband applied the same calculation of Capital
Machine that the trial court described in finding number 53, and calculated a
value of $853,915, which calculation appears to be correct. Because the trial
court’s findings are inconsistent concerning the value of Capital Machine, on
remand, we direct the trial court to recalculate the value of Capital Machine
and modify its judgment if necessary.
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E. Wife’s Cadillac
[44] Because we are remanding this case, we also instruct the trial court to correct its
judgment to reflect that Wife sold her Cadillac for $11,000, and not $10,300 as
reported in finding number 48. Tr. Vol. 2, p. 25. The $700 difference is de
minimis considering the value of the marital estate, but on remand, it should be
corrected.
F. Inheritance and Gifts from Husband’s Family
[45] Husband also argues that the trial court abused its discretion by refusing “to
give any consideration to the significant gifts and inheritance” totaling over
$4,000,000 received from Husband’s family during the marriage. Appellant’s
Br. at 39. Contrary to Husband’s argument, the trial court did consider the
substantial gifts Husband’s family made to the parties throughout their
marriage. The trial court found:
At the time of the marriage and thereafter, frequent and
substantial gifts were given to the Respondent and Petitioner by
the Respondent’s parents. In addition, substantial inheritances
were received upon the death of the Husband’s Father and the
subsequent death of Husband’s Mother. It is unclear from the
record herein whether the inheritances and gifts were always
directed solely to the Respondent or made jointly to the parties or
if both circumstances occurred. The manner in which the
inheritances and gifts were received are of little consequence
because the inheritances were used jointly by the parties and the
funds received were commingled with other martial funds and
properties.
Appellant’s App. Vol. 2, pp. 35–36.
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[46] Husband invested significant sums he inherited from his family in the failed
business ventures and to pay the debt on the marital residence. The debt on the
marital residence was incurred in part to fund the parties’ businesses.
Furthermore, the trial court weighed the fact that the parties’ received
substantial assets from Husband’s family against Husband’s dissipation of
marital assets and attempt to hide certain assets from Wife and the trial court.
The trial court properly considered all of these circumstances when it divided
the marital estate.
G. The Veneer Mill
[47] Husband also argues that the trial court abused its discretion when it considered
his failed business venture to constitute dissipation of marital assets.
Dissolution courts may consider evidence of either pre- or post-separation
dissipation. Kondamuri v. Kondamuri, 852 N.E.2d 939, 952 (Ind. Ct. App. 2006).
Dissipation generally involves the use or diminution of the marital estate for a
purpose unrelated to the marriage and does not include the use of marital
property to meet routine financial obligations. Balicki v. Balicki, 837 N.E.2d 532,
540 (Ind. Ct. App. 2005), trans. denied; Coyle v. Coyle, 671 N.E.2d 938, 943 (Ind.
Ct. App. 1996).
[48] Dissipation of marital assets may also include the frivolous and unjustified
spending of marital assets. Grathwohl v. Garrity, 871 N.E.2d 297, 303 (Ind. Ct.
App. 2007). “‘The test for dissipation is whether the assets were actually wasted
or misused.’” Id. (quoting Balicki, 837 N.E.2d at 540)). To determine whether
dissipation has occurred, we consider the following factors:
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1. Whether the expenditure benefited the marriage or was made for a
purpose entirely unrelated to the marriage;
2. The timing of the transaction;
3. Whether the expenditure was excessive or de minimis; and
4. Whether the dissipating party intended to hide, deplete, or divert the
marital asset.
Kondamuri, 852 N.E.2d at 952 (Ind. Ct. App. 2006) (citing Coyle, 671 N.E.2d at
943).
[49] The trial court found in pertinent part:
12. [Wife] opposed the veneer mill venture, but [Husband]
proceeded anyway. [Wife] acquiesced and executed many
documents necessary to fund this startup operation. [Wife] to this
date in [sic] unable to describe exactly how the funds for this
venture were raised, but it appears that nearly everything the
parties owned was put at risk. The business failed in part due to
the effects the advent of a global economy has had upon the
veneer industry, but the decision to risk the entire marital estate
of the parties to fund this venture was solely the decision of
[Husband].
17. The Shelborne Road house . . . was held free and clear before
the veneer mill bankruptcy. This residence was nearly lost in the
business failure because a mortgage had been taken on the
residence to partially fund that venture. The Residence was saved
from foreclosure only when the mortgage taken out on the
residence to fund the mill was paid after [Husband] received his
inheritance from his mother. The Court finds that this residence
should be set over to the Wife. It was paid for the first time, at
least in part, from joint efforts of the parties, and while it was
paid for the second time from the Husband’s inheritance, which
was only because of Husband’s ill-advised decision to risk the
family estate to fund the failed veneer mill.
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Appellant’s App. Vol. 2, pp. 37, 40. The trial court considered the “[l]oss of
most of the net worth of this martial estate in the failed veneer mill which was
done over the objection of [Wife]” as one of the many reasons justifying
deviation from the presumption of an equal division of the marital estate. Id. at
62.
[50] The trial court did not consider the fact that the business failed as dissipation of
marital assets. And we conclude that the trial court acted within its discretion
when it considered Husband’s decision, importantly over Wife’s objections, to
put most of the marital assets at risk to fund the veneer mill as misconduct.
Attorney Fees
[51] Finally, Husband argues that the trial court abused its discretion when it “failed
to consider the parties’ resources and their relative economic circumstance
when ordering Husband to pay” $60,000 of Wife’s attorney fees and $19,000 of
her expenses. Appellant’s Br. at 41. Under Indiana Code section 31-15-10-1, a
dissolution court has broad discretion to impose attorney's fees on either party
to a dissolution proceeding. Barton v. Barton, 47 N.E.3d 368, 377 (Ind. Ct. App.
2015), trans. denied. An attorney fee award will be reversed only if it is clearly
against the logic and effect of the facts and circumstances before the court.
Brown v. Brown, 776 N.E.2d 394, 397 (Ind. Ct. App. 2002), trans. denied.
[52] To determine whether to award attorney fees, “a trial court must consider the
resources of the parties, their economic condition, the ability of the parties to
engage in gainful employment and to earn adequate income, and such other
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factors as bear on the reasonableness of the award.” Allen v. Proksch, 832 N.E.2d
1080, 1102 (Ind. Ct. App. 2005) (citations and internal quotation marks
omitted). The court may also take into account any misconduct by one party
that causes the other party to directly incur additional fees. Id. When one party
is in a superior position over the other to pay fees, an award of attorney fees is
proper. Troyer v. Troyer, 987 N.E.2d 1130, 1143 (Ind. Ct. App. 2013), trans.
denied.
[53] To support its award of attorney fees to Wife, the trial court made the following
findings:
76. [Wife] has incurred attorney fees of in excess of $70,000 as of
the close of the third day of trial. After the preparation and
submission of Exhibit 4 there was a fourth day of trial and at
least one post trial filing. The court finds these fees to be wholly
reasonable given the nature of this case and specifically the
apparent concerted effort by [Husband] to do anything necessary
to preclude an orderly division of this marital estate based upon
law and equity. Repeatedly, efforts were made to compel
discovery and in each instance [Husband] was found to be
delinquent. Repeated hearings were held herein for the advance
distribution of maritall assets, generally by [Husband], based
upon a need for cash to maintain the marital estate and business
at the time the business and [Husband] had access to in excess of
a quarter of a million dollars to meet necessary expenses. Last
but not least a good deal of time was spent investigating the
extent of the marital estate and proving, without a doubt, that
[Husband] has intentionally and deliberately hidden assets and
then made false statements about his conduct.
77. [Wife] has incurred litigation expenses herein including title
search fees, Appraisal Fees before trial, business valuation,
Depositions and nonparty discovery costs in excess of $14,700.
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In addition, other costs were incurred during trial for testimony
of experts and the unusual property valuation on the first day of
trial totaling $4,650. The total of these expenses documented by
invoice in the record exceeds $19,000. This specifically does not
include any expert fees paid by the Petitioner for Testimony at
trial.
Appellant’s App. Vol. 2, pp. 63–64.
[54] Neither party has significantly more resources at its disposal than the other
following the dissolution of their marriage. But Husband has a substantial tax
benefit, i.e. a net operating loss carryover of more than $4,500,000, which
allows him to receive ordinary income during the life of the carryover without
paying federal income taxes thereon. Id. at 62. More importantly, Husband’s
misconduct during the dissolution proceedings was well documented by the
trial court in its findings of fact. Without question, Wife’s expenses and
attorney fees increased due to Husband’s misconduct. For this reason, we
conclude that the trial court acted within its discretion when it ordered
Husband to pay a portion of Wife’s attorney fees and her expenses.
Conclusion
[55] The record clearly establishes that Husband was a consistently recalcitrant,
untruthful and devious litigant throughout two years of the dissolution
proceedings. This conduct led to strong, albeit erroneous, legal conclusions by
the trial judge, with attendant consequences. However, Husband has not
established that alleged bias on the part of the trial judge prejudiced his case.
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[56] Concerning the division of the marital estate, the trial court entered inconsistent
findings concerning whether the items sold to Shoffner were marital assets, and
therefore, we remand this case to resolve that inconsistency and to correct the
mathematical error in the trial court’s calculation of its value of Capital
Machine. In all other respects, we affirm the trial court’s judgment.
[57] Affirmed in part, reversed in part and remanded for correction of the findings
and conclusions entered by the trial court consistent with this opinion.
Kirsch, J., and Altice, J., concur.
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