Bringle v. Bringle

150 N.E.3d 1060

Scott A. BRINGLE, Appellant/Cross-Appellee-Respondent,

v.Traci A. BRINGLE, Appellee/Cross-Appellant-Petitioner.

Court of Appeals Case No. 19A-DN-3007

Court of Appeals of Indiana.

Filed June 30, 2020

Rehearing Denied August 26, 2020

Attorneys for Appellant: Andrew Z. Soshnick, Tina Dukandar, Faegre Drinker Biddle & Reath LLP, Indianapolis, Indiana

Attorneys for Appellee: Brian K. Zoeller, Nicole Makris, Cohen & Malad, LLP, Indianapolis, Indiana

Najam, Judge.

Statement of the Case

[1] Scott A. Bringle ("Husband") appeals and Traci A. Bringle ("Wife") cross-appeals the trial court's decree of dissolution of their marriage. Husband and Wife raise the following issues for our review:

1. Whether the trial court erred when it did not include as a marital liability a debt owed by Husband to an S corporation in which Husband is the sole shareholder.

2. Whether the court erred when it deviated from the presumption of an equal division of the martial estate.

3. Whether the court erred when it did not order Husband to pay Wife's attorney's fees.

[2] We affirm.

Facts and Procedural History

[3] Prior to their marriage, Husband formed Center Line Precision Technology, Inc. ("the Company"), a contract manufacturer engaged primarily in the precision machining and manufacturing of orthopedic and other medical devices. The Company is organized for tax purposes as an S corporation in which Husband is the sole shareholder. During the marriage, and prior to the filing of the petition for dissolution, the Company "sold" Husband the real estate where the Company is located (the "business real estate") for $480,000. In 2017, the Company transferred the business real estate to Bringle Properties, LLC, an entity owned by Husband and his son from a previous marriage. The Company also paid various personal expenses for Husband. Those transactions would later appear as a $659,707 receivable "due from shareholder" on the Company's balance sheet. Appellant's App. Vol. 2 at 39 n.10.

[4] Thereafter, on October 31, 2017, Wife filed a petition to dissolve the marriage. At the final hearing two years later, in October 2019, Husband acknowledged that he had "mingled personal and business expenses." Tr. at 147. Husband testified that during the marriage and while the dissolution was pending he paid personal bills "out of the Company" and explained that it was advantageous to "run the bills through the Company" because those payments were treated as "dividends" (i.e., distributions) rather than earned income subject to payroll taxes. Id. Husband testified that the transfer of the business real estate and the personal expenses paid by the Company were shown as "shareholder debt" on the Company's balance sheet "for tax purposes" to avoid having to pay income taxes "at that time." Id. Husband also testified that the shareholder debt would "be paid whenever." Id. at 147, 161-62.

[5] In connection with the dissolution, Husband and Wife jointly retained a business valuation company, Houlihan Valuation Advisors ("Houlihan"), to appraise the fair market value of the equity interest in the business. The Houlihan valuation arrived at a $1,050,000 opinion of value for the business using a combination of market-based and income-based valuation methods. In its valuation, Houlihan stated that "[t]he $659,707 note due from shareholder would be deemed a non-operational asset. We understand this comprises about $480,000 amount due from the transfer of the [business real estate] to Bringle Properties, LLC and about $180,000 for personal expenses paid by the Company." Appellant's App. Vol. 2 at 41. The valuation report also included the following footnote:

We have included a "Due from Shareholder" amount of $659,707 in the value of [the Company]. According to [Husband] and his CPA, this consists of the cost of the [business real estate] of $480,000 plus other personal obligations paid by the [Company]. Since the receivable is included in the value of the [Company,] a liability of $659,707 to the [Company] should be included in the marital balance sheet .

Id. at 39 n.10 (emphasis added).

[6] Following the final hearing, the trial court entered its decree dissolving the marriage of the parties. In its decree, the court found and concluded, in relevant part, with respect to the division and distribution of the marital estate, as follows:

8. [Wife] requested an unequal division of the marital estate in her favor based upon a disparity between the parties' incomes and earning abilit[ies]. The evidence showed that [Wife] is a licensed real estate agent. She re-entered that vocation while this matter was pending. She received the benefit of temporary maintenance ordered by the Court to compensate for her diminished earning ability. As of the final hearing, [Wife] was very active in the real estate market, having sold in excess of [$4,000,000] in real estate while this matter was pending. Based upon this and the other findings herein, the Court does not determine that [Wife] should receive more than the presumptive equal division of the "marital pot."

9. [Husband] also requested an unequal division of the marital estate in his favor. His reasons included the fact that he had owned/acquired most of the marital assets prior to the marriage without contribution from [Wife]. He further took exception to the value placed upon his business .... He argued that his business had no value as an ongoing business entity because he was so heavily involved in the operations.

10. The Court finds that [Husband] did enter this marriage with most of the marital assets, including the business and the real estate from where the business operates. The Court also recognizes that [Husband] is a significant part of the business at issue in this dissolution, a business he started many years prior to the parties' marriage. [Wife] did bring assets to the marriage and essentially contributed to the marriage what she had. The Court is also considering that the nature of the marital estate will require [Husband] to acquire a significant amount of cash to pay to [Wife] her share of the marital estate[,] which will affect his overall financial well-being for a significant amount of time.

11. Based upon the evidence presented, a deviation from the presumptive equal division of the martial estate should be made. An equitable division of the marital estate would be a division of [60%] of the net marital estate to [Husband] and [40%] to Wife ....

Id. at 22-23. The court awarded the Company to Husband valued at the Houlihan appraised value of $1,050,000 but did not recognize the $659,707 receivable due from shareholder or shareholder debt as a liability of the marital estate. The court ordered Husband to pay Wife a reconciliation payment of $361,998.56, and the court ordered Husband and Wife to pay their own attorneys' fees. This appeal ensued.

Discussion and Decision

Standard of Review

[7] Dissolution actions invoke the inherent equitable and discretionary authority of our trial courts, and, as such, we review their decisions with "substantial deference." See, e.g. , R.W. v. M.D. (In re Visitation of L-A.D.W.) , 38 N.E.3d 993, 998 (Ind. 2015). Here, the trial court supported its exercise of that authority with findings of fact and conclusions thereon following an evidentiary hearing. As our Supreme Court has stated:

The trial court's findings were entered pursuant to Ind. Trial Rule 52(A) which prohibits a reviewing court on appeal from setting aside the trial court's judgment "unless clearly erroneous." The court on appeal is further required to give "due regard ... to the opportunity of the trial court to judge the credibility of the witnesses." When a trial court has made special findings of fact, as it did in this case, its judgment is clearly erroneous only if (i) its findings of fact do not support its conclusions of law or (ii) its conclusions of law do not support its judgment.

Estate of Reasor v. Putnam County , 635 N.E.2d 153, 158 (Ind. 1994). Findings are clearly erroneous only when the record contains no facts to support them either directly or by inference. Reasor , 635 N.E.2d at 158.

When reviewing valuation decisions of trial courts in dissolution actions, a similar standard of review has been enunciated: that the trial court has broad discretion in ascertaining the value of property in a dissolution action, and its valuation will not be disturbed absent an abuse of that discretion. Cleary v. Cleary , 582 N.E.2d 851, 852 (Ind. Ct. App. 1991). The trial court does not abuse its discretion if there is sufficient evidence and reasonable inferences therefrom to support the result. Id. In other words, we will not reverse the trial court unless the decision is clearly against the logic and effect of the facts and circumstances before it. Porter v. Porter , 526 N.E.2d 219, 222 (Ind. Ct. App. 1988), trans. denied . A reviewing court will not weigh evidence, but will consider the evidence in a light most favorable to the judgment. Skinner v. Skinner , 644 N.E.2d 141, 143 (Ind. Ct. App. 1994).

Quillen v. Quillen , 671 N.E.2d 98, 102 (Ind. 1996).

[8] In addition, here, the trial court entered special findings sua sponte , and those findings do not expressly address the shareholder debt to the Company. Where a court enters findings sua sponte , the Trial Rule 52(A) standard of review applies to those findings, and the general judgment standard applies to any matter not covered by those findings. Crider v. Crider , 26 N.E.3d 1045, 1047 (Ind. Ct. App. 2015). For any issue not covered by the court's findings, we apply the general judgment standard and will affirm if it can be sustained on any legal theory supported by the evidence. Id.

Issue One: The "Shareholder Debt" to the Company

The Status Conference

[9] Husband contends that during a November 2019 status conference the trial court "ma[de] clear that it mistakenly thought" that Husband's debt to the Company was "taken into account" in the Houlihan valuation and...