Opinion
NO. 2011-CA-001972-MR NO. 2011-CA-001986-MR
05-29-2015
CHRISTOPHER A. RABE APPELLANT/CROSS-APPELLEE v. PAIGE A. RABE APPELLEE/CROSS-APPELLANT
BRIEFS FOR APPELLANT/CROSS-APPELLEE: Stephanie Dietz Jennifer Scholl Overmann Crestview Hills, Kentucky BRIEFS FOR APPELLEE/CROSS-APPELLANT: Margo L. Grubbs Covington, Kentucky
NOT TO BE PUBLISHED APPEAL AND CROSS-APPEAL FROM KENTON CIRCUIT COURT
HONORABLE DAVID E. MELCHER, JUDGE
ACTION NO. 05-CI-03138
OPINION
AFFIRMING
BEFORE: ACREE, CHIEF JUDGE; TAYLOR AND VANMETER, JUDGES. VANMETER, JUDGE: Christopher A. Rabe appeals, and Paige A. Rabe cross-appeals, from the Kenton Circuit Court's July 18, 2011, supplemental judgment and the court's September 26, 2011, order denying both parties' motions for further findings of fact and for reconsideration of the supplemental judgment. For the following reasons, we affirm.
Christopher and Paige were married in November 2003 and separated in November 2005. A decree of dissolution was entered in July 2007. Paige appealed the decree, and this court rendered an opinion affirming in part, reversing in part and remanding. Rabe v. Rabe, 2007-CA-001594-ME, 2007-CA-002251-ME, 2008 WL 4998483 (Ky. App. Nov. 26, 2008). In the prior appeal, this court directed the trial court to address the following on remand: child custody; reclassification of payments on the mortgages of the parties' two homes as marital property; Christopher receiving credit for mortgage payments made on the Prestwicke Drive property insofar as they reduced the principal mortgage indebtedness; reclassification of the Fifth Third account #7968 as marital property and determination of its value as of the date of entry of the decree; the reconsideration of the valuation of CRX Transport, LLC ("CRX"), Christopher's business, and identification of specific findings of fact justifying reliance on an expert's opinion; and reconsideration of the issue of maintenance. Paige filed a motion for discretionary review of that opinion, which the Kentucky Supreme Court denied.
On remand, the trial court entered a supplemental judgment on July 18, 2011, which recalculated and divided the newly classified marital property. The trial court used Paige's expert's valuation, set the increase in value of CRX during the marriage at $461,859, and awarded Christopher a 60% share and Paige a 40% share. The court split the newly classified Fifth Third checking account, valued at $3,980 as of the date of the decree, equally between the parties. The court further divided payments made on the mortgages on the Prestwick Drive and Woodlyn Hills homes equally pursuant to KRS 403.190, and awarded Christopher a credit for payments reducing the principal of the mortgage on the Prestwicke Drive home in the amount of $19,796.32.
Kentucky Revised Statutes.
Following entry of the supplemental judgment, Christopher filed a motion to reconsider, asking the court to recalculate Paige's interest in CRX, and to determine whether the goodwill value of CRX is comprised of personal or enterprise goodwill. Christopher also filed a motion to award him credit for reimbursement of expenses incurred in preparing the parties' marital home for sale. Paige filed motions to alter, amend, and make additional findings; for attorney's fees; to transfer the case; for an evidentiary hearing on remanded issues; to lift the protective order on a reclassified bank account; to request supplemental findings, and to vacate the supplemental judgment. The court denied all motions by order entered September 26, 2011. Both parties appeal from that order, as well as the July 18, 2011 supplemental judgment.
A motion to reconsider is essentially a CR 59.05 motion to alter, amend or vacate a judgment. CR 59.05 states: "A motion to alter or amend a judgment, or to vacate a judgment and enter a new one, shall be served not later than 10 days after entry of the final judgment." In general, a trial court has unlimited power to alter, amend, or vacate its judgments. Gullion v. Gullion, 163 S.W.3d 888, 891-92 (Ky. 2005). The Supreme Court of Kentucky has limited the grounds for relief under CR 59.05 to those established by its federal counterpart, Federal Rule of Civil Procedure 59(e). Id. at 893.
Kentucky Rules of Civil Procedure.
There are four basic grounds upon which a Rule 59(e) motion may be granted. First, the movant may demonstrate that the motion is necessary to correct manifest errors of law or fact upon which the judgment is based. Second, the motion may be granted so that the moving party may present newly discovered or previously unavailable evidence. Third, the motion will be granted if necessary to prevent manifest injustice. Serious misconduct of counsel may justify relief under this theory. Fourth, a Rule 59(e) motion may be justified by an intervening change in controlling law.Id. (internal footnote omitted). A trial court's ruling on a CR 59.05 motion is reviewed under an abuse of discretion standard. Bowling v. Kentucky Dept. of Corr., 301 S.W.3d 478, 483 (Ky. 2009).
As an initial matter, as the second appeal for these parties, our review is limited. "[O]n a new appeal the questions are limited to whether the trial court properly construed and applied the mandate." Inman v. Inman, 648 S.W.2d 847, 849 (Ky. 1982). "The 'law of the case' rule is that parties on a second appeal may not relitigate matters affecting the subject of the litigation which could have been introduced in support of the contention of the parties on the first appeal." Id. (citation omitted). Accordingly, our review is limited to whether the trial court properly applied this court's mandates from the prior opinion. We cannot address new arguments that were not raised in the first appeal or that were not sent back to the trial court on remand.
Christopher first claims that the trial court incorrectly assessed the value of CRX by relying on Paige's expert's valuation. In the previous appeal, this court remanded the issue back to the trial court, finding that the trial court's reliance on Christopher's expert, Gary Jennings, was erroneous because Jennings's valuation of CRX relied on inaccurate information and the trial court did not set forth specific findings of fact justifying its reliance on a valuation founded upon inaccurate facts. In its supplemental judgment on remand, the trial court relied upon Paige's expert, Robert Sicking, Jr., and used his valuation of CRX.
In a similar vein, Christopher asserts error as a result of a new judge issuing the supplemental judgment. He argues that the original judge could have simply issued new findings of fact in support of his reliance on Jennings's valuation, rather than relying on Paige's expert, and such reliance was an error resulting from the inconsistency of judges overseeing the case. While we sympathize with Christopher's frustration over multiple presiding judges in this case, we find no abuse of discretion with the trial court's decision on remand to rely on Paige's expert rather than Christopher's expert and issuing new factual findings supporting that decision.
Christopher further argues that the trial court's reliance on Sicking's valuation was in error because Sicking was less qualified than Jennings. On this issue, the trial court has a great deal of discretion, and we find no indication that the court's discretion was abused. The trial court's valuation is a factual finding, which will only be disturbed if clearly erroneous. CR 52.01; Lane v. Lane, 202 S.W.3d 577, 582 (Ky. 2006). A finding of fact is clearly erroneous if not supported by substantial evidence, which is defined as evidence "which has sufficient probative value to induce conviction in the mind of a reasonable person." Hunter v. Hunter, 127 S.W.3d 656, 659 (Ky. App. 2003). We do not find any clear deficiency in Sicking's qualifications that would lead us to believe that reliance on his opinion was improper. The court's decision to rely on Sicking's valuation was supported by sufficient factual findings and therefore was not erroneous.
Christopher also claims the trial court's valuation of CRX was erroneous because Sicking's valuation included goodwill value but failed to address the distinction between personal goodwill and enterprise goodwill. Only enterprise goodwill, not personal goodwill, is subject to division. Gaskill v. Robbins, 282 S.W.3d 306, 315 (Ky. 2009). We believe the trial court acted within its discretion by including goodwill in the value of the business, thus deeming it enterprise goodwill, and subjecting it to division. Gaskill involved an oral surgery practice, and personal goodwill is most commonly found in similar professional practices that receive business as a result of the professional's reputation. The business would not have the same value absent the professional because the professional's reputation cannot be transferred to a buyer. CRX, on the other hand, is not a professional practice, and it seems likely that the business's name and reputation earn it business rather than Christopher's name and reputation. Additionally, no testimony was offered suggesting that any of the business's goodwill was personal. Hence, the goodwill of CRX is enterprise goodwill, something which would be transferable in a sale of the business. Therefore, we find no error in the trial court's valuation of CRX.
Christopher's last claim of error asserts that he is entitled to a credit in the amount of $30,409.95 for expenses he incurred in preparing the Prestwicke Drive home for sale. Specifically,
| Dan Jones | $3,236.67 |
| Quest Construction | $10,000.00 |
| Marsh Building Products | $8,626.69 |
| Perfectadeck | $1,321.00 |
| Cetrta-Pro Painters | $5,000.00 |
| Phil Wright Landscaper | $800.00 |
| Green Acres Lawn Care | $805.00 |
| Ace Exterminating | $146.00 |
| Bonded Lock | $404.59 |
| Lauren Brown | $70.00 |
|---|---|
| Total | $30,409.95 |
Christopher claims these expenses were incurred post-decree and were paid with non-marital funds, and that an earlier 2007 order of the trial court provided a "priority" payment from the sale proceeds for "commissions and other sale expenses." Paige counters that the sale and allocation of proceeds from the Prestwicke property were the subject of the first appeal and that the order was reversed.
The 2007 order stated:
9. If the parties cannot agree as to the disposition of the real estate at 3083 Prestwicke, the residence is ordered to be sold and the equity divided. Absent an agreement, the property shall be listed for sale on August 1, 2007. From the sale of the property, after commissions and other sale expenses, and after reimbursement to [Christopher] of his non-marital contribution to the purchase of the property in the amount of $221,902.00, the next equity will be divided equally between the parties.
Effective August 1, 2007, if [Paige] continues to reside in the home at Prestwicke Drive pending sale of the property, [Christopher] will be given credit for mortgage, insurance, and tax payments made. Reimbursement for these amounts will be made out of the sale proceeds. . . .
As we have reviewed the record, we agree with Paige that the original 2007 order with respect to the Prestwicke property was reversed. On remand, the only direction concerning the sale of that property was from this Court: the $221,902 allocated to Christopher as non-marital funds from the sale of the property was to be treated as marital property subject to division, and Christopher was entitled to a credit only for post-decree payments of mortgage principal. Rabe, 2008 WL 4998483, at *6.
Even were we inclined to agree with Christopher that the 2007 order remained in effect such that "commissions and other sales expenses" were to be paid first, we disagree that the order included a direction to pay the claimed expenses. Typically, "commissions and other sale expenses" encompass the items to be paid by sellers at a real estate closing: real estate commissions, mortgage and lien payoffs, mortgage and lien release fees, real estate transfer taxes, unpaid real property taxes chargeable to seller, seller's attorney fees. See generally Keats, Pitts and Oldham, 3 Kentucky Practice § 17.1-17.32 (West Publ. Co., 1989) (discussing generally real estate closings). We do not believe Christopher's expenses constitute "commissions and other sale expenses" typically paid at a real estate closing by sellers.
Notwithstanding the foregoing, formerly married partners, post-decree, occupy a position similar, albeit not identical, to other cotenants who own property as tenants in common. Compare Rose v. Holbrook, 287 S.W.2d 914, 916 (Ky. 1956) (holding cotentant entitled to contribution from other cotentant(s) for insurance and taxes) with Gibson v. Gibson, 597 S.W.2d 622, 623 (Ky. App. 1980) (holding spouse entitled to credit only for mortgage principal reduction, but not for mortgage interest, insurance or taxes). In Rose, the court addressed a cotenant's entitlement to contribution from other cotenants for permanent and useful improvements or necessary repairs. 287 S.W.2d at 916. More recently, in Whitten v. Whitten, 2007-CA-001830-MR, 2007-CA-001958-MR, 2008 WL 5428273 (Ky. App., Dec. 31, 2008), this court applied the holding in Rose to dissolution proceedings, but noted that not all expenditures are recoverable. Id., at *4. In Whitten, expenditures included wallpaper, blinds, carpet, painting, termite control, roof replacement, and various permanent and cosmetic improvements. In rejecting the claim for the majority of the expenses, the court noted the lack of testimony "to establish the necessity for the expenditures or to establish the increase in value of the property." Id.
Cited pursuant CR 76.28(4)(c).
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In this case, just as in Whitten, Christopher has presented a detailed list of expenses incurred, but has presented no evidence as to the necessity for the expenditures or the extent to which they increased the value of the property, other than a third party's recommendation. We therefore affirm the trial court's order denying Christopher reimbursement for these expenses.
Paige raises a number of issues on appeal. However, many of her contentions refer to issues that the trial court was not instructed to, and did not, consider on remand. Further, a number of issues raised in Paige's brief are unsupported by any argument or case law as required by CR 76.12(4)(c)(v). Therefore, we also decline to address those arguments as not in compliance with CR 76.12.
Paige asserts that the trial court failed to make adequate findings of fact and conclusions of law in its supplemental judgment. We disagree. The trial court only needed to address the remanded issues, and we believe it did so appropriately.
Paige further asserts that the trial court erred by refusing to address dissipation of the newly classified Fifth Third account. Paige alleges that Christopher spent a large amount of money from the account on non-marital debts and obligations. However, we agree with the trial court's ruling that the court was bound by the mandate of this court's prior opinion, and therefore had to divide the funds in the Fifth Third account as of the date of the divorce decree. Paige's argument that Christopher disposed of assets in that account was presented to this court during the first appeal, and was dismissed by this court's opinion and the Supreme Court's denial of her motion for discretionary review.
Next, Paige claims the trial court erred by refusing to conduct an evidentiary hearing so she could present evidence of Christopher's use of funds in the Fifth Third account. However, this court's directives to the trial court on remand of this issue simply stated, "[u]pon remand, the circuit court shall determine [the Fifth Third account's] value as of the date of the entry of decree of dissolution of marriage and shall divide it in just proportions in accordance with KRS 403.190(1)." No evidentiary hearing was ordered, nor do we believe one was necessary. Determining the value of the Fifth Third account on the date of the decree is a simple matter of looking at the bank statement as of that date. Since dissipation was not an issue remanded to the trial court, Paige was not entitled to a hearing regarding changes in value of the account.
Further, Paige's claim that Christopher dissipated the funds in the Fifth Third account in violation of a Domestic Violence Order ("DVO") entered in 2005 is not properly before this court. Paige attempted to renew the DVO in 2009, claiming that Christopher had disposed of assets in violation of the court's order. The court found that Paige misused the domestic violence statutes as a vehicle for a motion for contempt, and since there was no threat of violence or a good faith basis for the petition, the court denied her motion to extend the DVO and ordered Paige to pay $350 towards Christopher's attorney's fees. From our review of the record, Paige never filed a motion for contempt, and she points us to no other motion preserving this alleged error for our review.
Next, Paige argues that the court did not properly consider all four factors required by KRS 403.190(1) when dividing the newly classified marital property. This argument is without merit. The court clearly considered all four factors, and stated as much in the supplemental judgment; the court simply combined the last two factors in its enumerated list. Also, this court will not address the issue of Christopher's income earned between the date of separation and the divorce decree. Paige did not raise this issue in the prior appeal and the issue was not one for the trial court to address on remand. Therefore, the issue is not properly before this court and we will not address it.
Lastly, Paige claims the trial court erred by awarding Christopher $19,796.32 in credit for payments made on the Prestwicke Drive mortgage which reduced the principal indebtedness on that property. Paige alleges this figure includes payments from November 2005 until August 2009, and Christopher should only be entitled to payments made from the date of the original divorce decree in August 2007. She further claims she should have been permitted to present evidence on this error. We disagree. The trial court had previously awarded Christopher a credit for expenses incurred in paying the mortgage, taxes and insurance after entry of the decree. On remand, the trial court simply reduced that credit to only include mortgage payments. We do not believe further evidence was necessary.
For the above reasons, the judgment and order of the Kenton Circuit Court is affirmed.
ALL CONCUR. BRIEFS FOR APPELLANT/
CROSS-APPELLEE:
Stephanie Dietz
Jennifer Scholl Overmann
Crestview Hills, Kentucky
BRIEFS FOR APPELLEE/
CROSS-APPELLANT:
Margo L. Grubbs
Covington, Kentucky