Eason v. TaylorÂ

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA15-779
Filed: 19 January 2016
Mecklenburg County, No. 12 CVD 003090
TREVA EASON, Plaintiff,
v.
JASON TAYLOR, Defendant.
Appeal by plaintiff from order entered on or about 9 February 2015 by Judge
Karen Eady-Williams in District Court, Mecklenburg County. Heard in the Court of
Appeals 3 December 2015.
Church Watson Law, PLLC, by Kary C. Watson, for plaintiff-appellant.
No brief filed for defendant-appellee.
STROUD, Judge.
Plaintiff appeals from an unusual order denying her claim for equitable
distribution and awarding defendant attorney fees for having to defend the equitable
distribution claim because “[t]his matter could have settled.” For the following
reasons, we affirm in part, vacate in part, and remand.
I. Background
Plaintiff-wife and defendant-husband were married on 3 August 2002 and
separated on or about 12 February 2012. On or about 15 February 2012, plaintiff
EASON V. TAYLOR
Opinion of the Court
filed a complaint against defendant seeking post-separation support and alimony,
equitable distribution, attorney fees, and an interim distribution of the marital home
in Charlotte and the associated mortgage payment. Plaintiff was represented by
counsel when she filed the complaint. On or about 16 March 2012, defendant filed an
answer responding to the allegations of the complaint, raising various defenses and
“Factual Allegations[.]” In the “Factual Allegations[,]” defendant acknowledged that
the parties had marital property and debt “which are both subject to equitable
distribution in this matter[.]” Defendant requested equitable distribution and
attorney fees. On 4 April 2012, plaintiff filed her reply to defendant’s answer and
defenses as well as a financial affidavit.
On 16 April 2012, the trial court entered a memorandum of judgment/order of
interim equitable distribution which addressed possession of the home located in
Charlotte, payment of the mortgage, listing the home for sale, allocation of various
debts, and final resolution of “the issue of post-separation support only.” On 18
January 2013, an initial equitable distribution pretrial conference, scheduling and
discovery order was entered with the consent of both parties. On 31 January 2013,
plaintiff filed her equitable distribution affidavit; her affidavit alleged a net fair
market value of the parties’ marital and divisible property as $8,000.00, total marital
debt of $18,414.01, and total non-marital debt of $71,294.21.
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Plaintiff itemized a substantial amount of marital debt including the mortgage
for the home in Charlotte, as well as marital property including two motor vehicles
and a bank account. On 1 February 2013, defendant filed his equitable distribution
affidavit, which alleged the total fair market value of marital property as $9,642.68,
divisible property with a negative value of $27,240.83, total marital debt of $5,730.83,
and total non-marital debt of $3,407.33.
On 4 March 2014, the trial court held a hearing on the equitable distribution
claim.1 The order includes findings of fact regarding the parties’ residence, marriage,
and pending claims. But instead of proceeding to make findings of fact as required
by North Carolina General Statute § 50-20 regarding the classification, and
distribution of the marital, divisible, and separate property and debts, the order
instead includes the following findings of fact:
9. As to the marital assets, the one primary asset is the
marital home. It has since been foreclosed and has
a deficiency judgment in an approximate amount of
$53,000.
10. Defendant is willing to keep the deficiency judgment
and is not seeking distribution of this debt.
11. As to the other marital debts, the only debts
provided to the court were credit card debts.
However, each party is in agreement that they will
keep their marital debts related to their credit cards.
1 Plaintiff’s claim for alimony was also scheduled for hearing, but she asked that this claim be
dismissed “because I don’t need the alimony now. Like I said, at the time I was a dependent spouse. I
now have a job and I can support myself. So, I don’t want alimony from him.” The trial court’s denial
of alimony is not challenged on appeal.
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Plaintiff testified that she will pay her credit card
debts and is not seeking any payments on the cards
from Defendant.
12. The credit card debts and [(sic)] will not be valued or
distributed.
13. Plaintiff agrees that she is no longer and [(sic)]
dependent spouse. And there is insufficient evidence
for Plaintiff to be deemed a dependent spouse.
14. The Plaintiff is not entitled to alimony. There has
been no showing of need by Plaintiff.
15. This action proceeded to trial that could have
settled. Defendant had to hire an attorney to proceed
to defend the claims that did not warrant a hearing.
This matter could have settled.
16. Legal fees have been unnecessarily incurred by
Defendant due to multiple filings and research.
17. Defendant has incurred legal fees in the amount of
$7,500.
The trial court then made these conclusions of law:
1. This Court has jurisdiction over the parties and the
subject matter herein.
2. That the personal property described in the above
paragraphs is the marital and separate property of
the parties as defined in North Carolina General
Statutes 50-20(b)(1). However, classification,
valuation and distribution is not warranted.
3. Plaintiff is not a dependent spouse.
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On or about 9 February 2015, based only upon these findings of fact and
conclusions of law, in an order signed nearly a year later, the trial court denied “[a]ll
claims for equitable distribution[,]” denied plaintiff’s alimony claim, ordered that
plaintiff pay defendant $3,000.00 in attorney fees, and decreed that “[a]ny terms of
this order shall supersede the Interim Distribution Order.” On 5 March 2015,
plaintiff timely filed notice of appeal.
II. Equitable Distribution
Plaintiff raises three arguments regarding her equitable distribution claim.
Because these arguments all focus on the same or similar legal analysis, we address
them together. Plaintiff argues that the trial court erred as a matter of law by failing
to follow the statutory mandates of North Carolina General Statute § 50-20, which
require the trial court to classify, value, and distribute the parties’ marital and
divisible property and debt: “Upon application of a party, the court shall determine
what is the marital property and divisible property and shall provide for an equitable
distribution of the marital property and divisible property between the parties in
accordance with the provisions of this section.” N.C. Gen. Stat. § 50-20(a) (2013).
Although plaintiff raises two other related issues, we need not address those as we
agree with plaintiff on this issue, and thus we must vacate the judgment as to
equitable distribution.
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Opinion of the Court
Plaintiff argues that the trial court did not follow the mandates of North
Carolina General Statute § 50-20 by failing to make the required findings of fact,
conclusions of law, and distribution of marital property and debt.
On appeal, when reviewing an equitable distribution order,
this Court will uphold the trial court’s written findings of
fact as long as they are supported by competent evidence.
However, the trial court’s conclusions of law are reviewed
de novo. Finally, this Court reviews the trial court’s actual
distribution decision for abuse of discretion.
Mugno v. Mugno, 205 N.C. App. 273, 276, 695 S.E.2d 495, 498 (2010) (citations and
quotation marks omitted).
In this case, both parties presented sufficient evidence to allow the trial court
to classify, value, and distribute several items of marital or separate property and
debts. The trial court acknowledged generally “[t]hat the personal property
described in the above paragraphs is the marital and separate property of the parties
as defined in North Carolina General Statutes 50-20(b)(1).” The trial court then
further concluded that “classification, valuation and distribution is not warranted.”
This conclusion of law is not supported by the findings of fact or by the law. See
generally N.C. Gen. Stat. § 50-20. Where the parties have presented evidence of the
marital and divisible property and debts and separate property, as they did here, and
the trial court has even acknowledged that the equitable distribution claim is
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properly before the court and that marital and separate property and debt exists,
there is simply no legal rationale for a conclusion that equitable distribution “is not
warranted.” Defendant did not file a brief on appeal, but we feel quite confident in
stating that defendant would have been unable to cite any law to support this
conclusion, since none exists. Even though some of the marital property, such as the
marital home, was no longer in the possession of the parties, the trial court still has
a duty to equitably divide the marital property and debts existing as of the date of
separation. See N.C. Gen. Stat. § 50-21(b) (2013) (“For purposes of equitable
distribution, marital property shall be valued as of the date of the separation of the
parties, and evidence of preseparation and postseparation occurrences or values is
competent as corroborative evidence of the value of marital property as of the date of
the separation of the parties. Divisible property and divisible debt shall be valued as
of the date of distribution.)”
The trial court seemed to consider the fact that the parties had mostly debt as
rendering the plaintiff’s claim as unworthy of consideration. But the trial court must
address the classification, valuation, and distribution of the property and debt,
regardless of the value. See generally N.C. Gen. Stat. § 50-20. The trial court does
not lose its ability to distribute marital assets simply because marital debts equal or
exceed the value of those assets. See id. In addition, where marital debts significantly
reduce the net marital estate, such as here where there is a deficiency judgment of
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approximately $53,000.00 due to the foreclosure of the marital home, the trial court
still retains the discretion to independently distribute the individual assets and
debts. See Conway v. Conway, 131 N.C. App. 609, 614, 508 S.E.2d 812, 816 (1998)
(“The trial court does not lose its ability to distribute marital assets simply because
marital debts equal or exceed the value of those assets. In addition, where marital
debts significantly reduce the net marital estate, the trial court still retains the
discretion to distribute the individual assets and debts independently. Otherwise,
the trial court would lose its authority to distribute significant assets merely because
there are unrelated debts diminishing the net value of the estate.” (citations
omitted)), disc. review dismissed and denied, 350 N.C. 593, 537 S.E.2d 210 (1999).
Even if all the parties have to distribute is debt, an equitable distribution order
allocating that debt may still be of value to the parties. See Rawls v. Rawls, 94 N.C.
App. 670, 676, 381 S.E.2d 179, 182 (1989) (“The court found that the parties had
acquired no marital property, and therefore concluded that there was no estate to be
adjusted pursuant to N.C. Gen. Stat. § 50-20(c) . . . . In reaching this conclusion the
trial court neglected, however, to consider the debts incurred by the parties during
their marriage. Debt, as well as assets, must be classified as marital or separate
property. In effectuating an equitable distribution the trial court must consider the
parties’ debts. If it finds that a particular debt is marital, that is, a debt incurred
during the marriage for the joint benefit of the parties, it possesses discretion to
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equitably apportion or distribute the debt between the parties.” (citations, quotation
marks, and brackets omitted)). In this order, the trial court simply took the parties
at their word that each would pay certain debts, without actually classifying, valuing,
and distributing the debts by order, so that each party may have some possibility of
legal recourse if the other should fail to pay.
Furthermore, upon review of the entire transcript of the hearing, in addition
to the negative value of the martial estate, it appears that the trial court may have
based its determination that equitable distribution was “not warranted[,]” as well as
its award of attorney fees, on plaintiff’s failure to negotiate a settlement with
defendant’s counsel. In fact, the trial court found, “This action proceeded to trial that
could have been settled” and that “Defendant had to hire an attorney to proceed to
defend the claims that did not warrant a hearing.” At the hearing, defendant’s
counsel informed the court of her efforts to negotiate with plaintiff, who was
unrepresented, and the trial court asked plaintiff why she would not negotiate.
Although plaintiff should not be required to explain her refusal to negotiate with
defendant’s counsel, as this has no bearing on equitable distribution, plaintiff
nonetheless explained, “Well, I feel like for me -- In order for me to go through any
kind of settlement with his attorney or him, I would need to be represented to do that,
because I do not trust trying to talk to them and settle anything[,]” and upon further
inquiry by the trial court, she then clarified:
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I understand what you’re saying, but I also understand
from where this all started. And I would like to have had
this resolved a long time ago. The thing is that, like I said,
when you’re negotiating with somebody, you have to come
with good faith. That has not been the case. And I feel like
the only alternative I have had was to show up to court.
I do not have the resources to hire an attorney to
represent me. So, the only thing that I could do was show
up to court and try to resolve it.
As a matter of law, it does not matter what, if anything, defendant offered
plaintiff to settle the equitable distribution claim.2 See generally N.C. Gen. Stat. §
1A-1, Rule 68 (2013) (regarding offers of judgment and their general inadmissibility);
N.C. Gen. Stat. § 8C-1, Rule 408 (2013) (regarding inadmissibility of compromise
negotiations). Even if defendant made a generous offer, plaintiff was not obligated to
accept it, nor would their negotiations, if they had occurred, been a proper matter for
the trial court to consider. See Karriker v. Sigmon, 43 N.C. App. 224, 226, 258 S.E.2d
473, 474 (1979) (“By case law, plaintiff may not show efforts made by her to settle or
compromise her case during the trial of it. Suffice it to say, this rule applies equally
to plaintiff and defendant. Since such evidence may not be properly introduced at
trial, it clearly follows that neither counsel for plaintiff nor defendant may argue such
to the jury.” (citations omitted)), disc. review denied, 299 N.C. 121, 262 S.E.2d 6
(1980). Although plaintiff, who was pro se, did not object to questions regarding
settlement negotiations, “there is a presumption in a bench trial . . . that the judge
2 Defendant did not file an offer of judgment pursuant to North Carolina General Statute §
1A-1, Rule 68.
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disregarded any incompetent evidence that may have been admitted unless it
affirmatively appears that he was influenced thereby.” In re H.L.A.D., 184 N.C. App.
381, 395, 646 S.E.2d 425, 435 (2007) (citation and quotation marks omitted), aff'd per
curiam, 362 N.C. 170, 655 S.E.2d 712 (2008). In this case, the trial court did not
disregard the incompetent evidence but explicitly based its determination that
equitable distribution was “not warranted[,]” at least in part upon the finding that
“[t]his matter could have been settled.” Thus, we vacate and remand. On remand,
the trial court must classify, value, and distribute the property at issue, as supported
by the competent evidence presented. See N.C. Gen. Stat. § 50-20.
III. Attorney Fees
Plaintiff also argues that the trial court erred in awarding attorney fees to
defendant. As a general rule, attorney fees are not recoverable in an equitable
distribution claim. See Patterson v. Patterson, 81 N.C. App. 255, 262, 343 S.E.2d 595,
600 (1986) (“Additionally, attorneys’ fees are not recoverable in an action for equitable
distribution so that, in a combined action, the fees awarded must be attributable to
work by the attorneys on the divorce, alimony and child support actions.”) In this
case, although plaintiff had initially brought a claim for alimony, at the time of trial
she had abandoned this claim, and in any event, the attorney fees as awarded in the
order were clearly based upon the equitable distribution claim only. North Carolina
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General Statutes §§ 50-20 and 21 sets out two instances in which a party may recover
attorney fees, neither of which is applicable in this case: (1)
[u]pon application by the owner of separate property which
was removed from the marital home or possession of its
owner by the other spouse, the court may enter an order for
reasonable counsel fees and costs of court incurred to
regain its possession, but such fees shall not exceed the fair
market value of the separate property at the time it was
removed
or (2) as a sanction when a “party has willfully obstructed or unreasonably delayed[.]”
N.C. Gen. Stat. §§ 50-20(i); -21(e). Neither the record in this case nor the trial court’s
findings reveal any indication at all of either of these instances in which attorney fees
may be awarded in an equitable distribution claim. Thus, the trial court’s order
regarding attorney fees is vacated.
IV. Conclusion
In conclusion, because plaintiff abandoned her claim for alimony, we affirm the
trial court’s denial of this claim. As to attorney fees, we vacate this portion of the
order because without the alimony claim there is no potential legal basis for entry of
such an award and no basis for further consideration. Lastly, we vacate the trial
court’s order as to equitable distribution and remand. Upon the request of either
party, the trial court shall permit the presentation of additional evidence prior to
entry of a new order. If neither party requests to present additional evidence, the
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trial court may, in its discretion, either enter a new order based upon the current
record or may receive additional evidence before entry of a new order.
AFFIRMED in part, VACATED in part, and REMANDED.
Judges DIETZ and TYSON concur.
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