Brown v. Odom

425 S.C. 420

823 S.E.2d 183

Emily S. BROWN, Respondent,

v.Grady C. ODOM, Appellant.

Appellate Case No. 2015-002628

Opinion No. 5598

Court of Appeals of South Carolina.

Heard May 8, 2018

Filed September 19, 2018

Withdrawn, Substituted, and Refiled January 9, 2019

William E. Bird, of Bird & Smith, PA, of Columbia, for Appellant.

Robert N. Hill, of The Law Office of Robert Hill, of Lexington, and H. Edward Smith, of Brown, Jefferies & Boulware, of Barnwell, for Respondent.

WILLIAMS, J.:

In this domestic relations matter, Grady C. Odom (Husband) appeals the family court's divorce decree, arguing the family court erred in (1) finding that Husband's limited liability company, Twin Oaks Villas, LLC (the LLC), transmuted into marital property; (2) imposing a constructive trust on the LLC; and (3) including property in the marital estate that the parties did not own as of the date of filing. We affirm.

FACTS/PROCEDURAL HISTORY

Husband and Wife married on April 27, 2006. This was both parties' third marriage. They had no children together during their eight-year marriage; however, each party had two adult children from prior marriages. Wife filed for divorce on May 30, 2013, citing a one-year continuous separation as of December 15, 2012.

Prior to the parties' marriage, Husband formed two businesses: the LLC and Twin Oaks Personal Care, Inc. (the Corporation). The LLC owned a building in North Charleston, South Carolina. The Corporation managed and ran an assisted living facility in the LLC's building. Husband was the sole member of the LLC and the sole stockholder in the Corporation. In 1994, Husband approached Wife, a family friend at the time, for a $60,000 loan to refinance the entities. In 2003, Wife left college to work for the entities.

Wife testified that during the marriage she assisted Husband in making business decisions for the LLC, worked without pay at times, invested in the entities in lieu of putting funds in a retirement account, and assisted in obtaining a $2.4 million Housing and Urban Development (HUD) loan for the LLC. She also testified that during the marriage she devoted her time and money into the entities as an investment for herself and her children and believed Husband regarded the entities as marital property. Wife and Wife's son (Son) testified Husband held Wife out as a fifty-fifty partner in the Corporation and the LLC during the marriage. Wife testified Husband assured her he would complete the necessary paperwork to transfer fifty percent ownership to Wife after he obtained a HUD loan during the marriage; however, Husband never transferred the shares to Wife. Husband claimed that when the parties separated on December 15, 2012, Wife's involvement with the Corporation and the LLC ceased.

On May 15, 2008, Husband entered into an installment sales contract with Husband's Uncle, Ruben Odom (Uncle), for Husband to acquire 30.05 acres of land (the Ruben Odom Property) from Uncle for $60,092.¹ Husband used marital funds to pay a $10,000 down payment and for two of the three $16,679.99 monthly installment payments to Uncle, as lienholder. In June 2010, Husband notified Uncle of his inability to pay the outstanding $17,522.31 balance, and the parties refinanced the monthly payments to $282.20. However, Husband again defaulted on monthly payments, and Uncle filed a complaint for foreclosure on the Ruben Odom Property. Using marital funds, Husband paid Uncle a total of $48,445 under the installment contract but still owed $11,647.46. On April 18, 2013, Husband, without Wife's knowledge, executed a quitclaim deed which conveyed the Ruben Odom Property to Uncle in lieu of foreclosure. On July 3, 2013, Husband filed a corrective quitclaim deed, to correct the property description on the Ruben Odom Property deed. Prior to Uncle's April 3, 2013 complaint for foreclosure, Husband, without Wife's knowledge, conveyed 251 acres of nonmarital property—worth $452,939—to SJW Holdings, LLC, his ex-wife's LLC, to hold in trust for Husband's daughters.

On July 9, 2013, the family court entered an order restraining the parties from disposing of or encumbering or reducing in value, any properties or assets, including the LLC. However, on December 18, 2013, Husband entered into an agreement to sublease the entities' operations, building, and land for $6,250 a month without Wife's knowledge. On October 28, 2014, prior to the conclusion of mediation, Husband abruptly left the mediation and willfully failed to disclose his whereabouts during litigation. Husband failed to appear for the merits hearing, present evidence, or respond to Wife's requests for admissions.² On August 17, 2015, the family court issued a final order, including both entities and the Ruben Odom Property in the marital estate.

On January 7, 2016, in response to a motion by Husband to alter or set aside the judgment, the family court entered an amended final order. The court found the Ruben Odom Property constituted marital property and awarded Wife a $48,445—equal to the total marital funds invested in the property—interest in the property. Based on evidence that the parties worked jointly as partners throughout the marriage and that Husband promised Wife an interest in the business, the court found the Corporation and the LLC each transmuted into marital property, as well as the $6,250 monthly rent payment. The court awarded Husband possession, use, and ownership of the entities; awarded Wife a one-half interest in the entities; and ordered a judgment in favor of Wife in the amount of $590,018 to effectuate a fifty-fifty division. The court awarded Wife an equitable interest in the entities by virtue of a constructive trust and imposed a judicial lien on the entities, in favor of Wife, to secure the $590,018 judgment. This appeal followed.

ISSUES ON APPEAL

I. Did the family court err in finding the LLC transmuted into marital property?

II. Did the family court err in imposing a constructive trust on the LLC?

III. Did the family court err in including property in the marital estate that the parties did not own as of the date of filing?

STANDARD OF REVIEW

The appellate court reviews decisions of the family court de novo. Stoney v. Stoney , 422 S.C. 593, 596, 813 S.E.2d 486, 487 (2018) (per curiam). In a de novo review, the appellate court is free to make its own findings of fact but must remember the family court was in a better position to make credibility determinations. Lewis v. Lewis , 392 S.C. 381, 385, 709 S.E.2d 650, 651–52 (2011). "Consistent with this de novo review, the appellant retains the burden to show that the family court's findings are not supported by a preponderance of the evidence; otherwise, the findings will be affirmed." Ashburn v. Rogers , 420 S.C. 411, 416, 803 S.E.2d 469, 471 (Ct. App. 2017). On the other hand, evidentiary and procedural rulings of the family court are reviewed for an abuse of discretion. Stoney , 422 S.C. at 594 n.2, 813 S.E.2d at 486 n.2.

An action to declare a constructive trust is one in equity, and the appellate court may find facts in accordance with its own view of the evidence. Lollis v. Lollis , 291 S.C. 525, 530, 354 S.E.2d 559, 561 (1987).

LAW/ANALYSIS

I. Transmutation of the Entities

Husband argues the family court erred in finding the LLC transmuted into marital property. We disagree.

A. Preservation

As an initial matter, on appeal, Wife argues Husband's entity distinction argument is not preserved for our review because Husband first raised the argument in his motion to alter or set aside the judgment. We find this issue is preserved.

"Post-trial motions are ... utilized to raise issues that could not have been raised at trial." Jean Toal et al., Appellate Practice in South Carolina 189 (3d ed. 2016). "A post-trial motion must be made when the [family] court either grants relief not requested or rules on an issue not raised at trial." Fryer v. S.C. Law Enf't Div. , 369 S.C. 395, 399, 631 S.E.2d 918, 920 (Ct. App. 2006).

The first time the family court ruled on whether the Corporation and the LLC transmuted into marital property was in the final order. Husband filed a motion to alter or set aside the judgment and argued for the first time that the evidence did not support the family court's finding that both the Corporation and the LLC transmuted into marital property. In its amended final order, the family court addressed this issue on the merits and found sufficient evidence supported its finding that both the Corporation and the LLC transmuted into marital property.

We find Husband properly raised the argument that the LLC and the Corporation are two separate entities through his Rule 59(e), SCRCP, motion. The family court's ruling, which treated Wife's involvement with the entities as a whole, rather than separate entities, created the distinction issue. See Buist v. Buist , 410 S.C. 569, 576, 766 S.E.2d 381, 384 (2014) (holding an alleged error in awarding attorney's fees can be raised for the first time in a motion to reconsider, in order to preserve the error for appellate review); Anderson Cty. v. Preston , 420 S.C. 546, 569, 804 S.E.2d 282, 294 (Ct. App. 2017) (finding the issue of whether a quorum at a county council meeting was destroyed by council members' conflicts of interest was not raised prior to trial or ruled upon during trial, and therefore the county's post-trial motion raising the issue was sufficient to preserve it for appeal, when the circuit court never ruled at trial whether votes in question were invalid based upon conflict of interest, and the court did not find, until issuance of its final order, that council members who made those votes were disqualified from voting due to conflicts of interest), cert. granted , S.C. Sup. Ct. order dated March 29, 2018; cf. Hickman v. Hickman , 301 S.C. 455, 456, 392 S.E.2d 481, 482 (Ct. App. 1990) ("A party cannot use Rule 59(e) to present to the court an issue the party could have raised prior to judgment but did not.").

Because we find Husband's ...