Cherry v. Cherry

2021 Ark. 49

617 S.W.3d 692

William B. CHERRY, Appellant/Cross-Appellee

v.Rhonda Marlene CHERRY (Now Fulkroad), Appellee/Cross-Appellant

No. CV-19-363

Supreme Court of Arkansas.

Opinion Delivered: March 4, 2021

Bell & Boyd, PLLC, by: Karen Talbot Gean, Magnolia, for appellant.

Crane, Phillips & Rainwater, PLLC, by: Steve R. Crane, for appellee.

BARBARA W. WEBB, Justice

William B. Cherry (Cherry) appeals from a divorce decree that awarded his ex-wife, Rhonda Marlene Cherry, now Fulkroad (Fulkroad), permanent alimony, and a subsequent order that found him in contempt for failing to pay the full amount of alimony ordered. On appeal, Cherry argues that the circuit court erred (1) in calculating his monthly available resources to include amounts received annually or every five years; (2) in awarding alimony as a substitute for division of nonmarital property; (3) in holding him in contempt, calculating an arrearage, and imposing a fine for nonpayment; and (4) in finding no change of circumstances to support a reduction or elimination of the alimony award. Fulkroad has cross-appealed, arguing that the circuit court erred by (1) finding that the annuities from the personal-injury settlement were not marital property under Arkansas Code Annotated section 9-12-315(B)(6) and (2) failing to order Cherry to purchase a life insurance policy or order Cherry not to replace her as the pay-on-death beneficiary of the two income annuities to effectively guarantee the income represented by the alimony award.

The court of appeals affirmed on appeal and on cross-appeal. See Cherry v. Cherry , 2020 Ark. App. 294, 603 S.W.3d 585. We granted Cherry's petition for review. When we review a decision by the court of appeals, we treat the case as though it had been originally filed in this court. Brookshire Grocery Co. v. Morgan , 2018 Ark. 62, 539 S.W.3d 574. We vacate the court of appeals opinion and affirm on direct appeal and on cross-appeal.

We note from the outset that this case comes before us with an unusual procedural history. Fulkroad petitioned for divorce and Cherry filed a counterclaim for divorce. When the circuit court entered what it believed to be a final order granting Fulkroad's petition on February 3, 2016 (the 2016 order), it did not expressly dismiss Cherry's counterclaim. Cherry attempted to appeal the award of alimony, and Fulkroad cross-appealed. After the record was lodged, Cherry's attorney passed away before any briefs were filed. Cherry eventually retained new appellate counsel and filed a motion seeking dismissal of both appeals without prejudice. The court of appeals granted the motion. Cherry v. Cherry , 2017 Ark. App. 245, 2017 WL 1421214. Accordingly, we treat the order entered on December 31, 2018 (the 2018 order), as the final order in this case.

I. Facts

The parties married, divorced, and remarried on September 20, 1990. Fulkroad was twenty years old when she married. She had only a seventh-grade education and no work experience. During the lengthy marriage, Fulkroad did not work outside the home, although she did help with Cherry's trucking business––he was the owner/operator of a tractor-trailer rig. She also home-schooled their two children and cared for Cherry's ailing mother. Fulkroad paid the bills and handled dispatching while Cherry was on the road. Even though Cherry grossed approximately $100,000 per year from the trucking business, the family netted only $16,000–$18,000 annually.

On March 30, 2006, the cab of the truck that Cherry was driving was hit broadside by another tractor-trailer rig. Cherry was severely injured. His injuries included a left-eye laceration, a closed-head injury, rib fractures, left fibula fracture, left clavicle fracture, and severe trauma to his spine including fractures to thoracic vertebrae. As a result of these injuries, Cherry was totally and permanently disabled.

In 2009, Cherry received substantial financial compensation as a result of the accident. His structured settlement, which totaled some four million dollars, consisted of three annuities with regular distributions that were to be paid at regular intervals until 2033. The first was designated as a Medicare set-aside fund. The annuity contract acknowledged that Cherry was enrolled in Medicare, but projected obligations of $394,861.81 for future medical expenses, including $323,516.50 for future prescription-drug treatment. Although the annuity provided $11,602.75 per year, the money had to be segregated to protect Medicare's future claims. The two other annuities were unrestricted and provided monthly payments of $2903.00 and $2950.86, respectively, and lump-sum payments every five years beginning in 2013. Each of these two annuities provided for payments of $25,000 in 2013, $50,000 in the years 2018, 2023, and 2028, and $100,000 in 2033. In addition, because Cherry was totally disabled, he receives $810 per month in Social Security benefits.

During the marriage, the parties used Cherry's annuity distributions, including the lump-sum distribution in 2013, as income. Additionally, they used the money to purchase an eighty-three-acre cattle farm, which became the marital residence, a scrap metal business, and equipment for these businesses. Neither the cattle farm nor the scrap yard succeeded; Cherry attributed the lack of success to his inability to perform manual labor which necessitated the hiring of help. Despite the infusion of cash from the structured settlement, it is undisputed that the parties’ checking account was often overdrawn.

The parties separated in October 2014. Fulkroad moved in with an adult daughter. On December 23, 2014, Fulkroad filed for divorce, alleging general indignities. Cherry counterclaimed for divorce, also alleging general indignities. Fulkroad was subsequently granted temporary support in the amount of $1600 per month. Cherry voluntarily added an additional $200 to assist his daughter. By agreement, the parties divided the tangible marital property, including the real estate. Therefore, the only point of contention was how to handle Cherry's structured settlement. Fulkroad conceded that the Medicare set-aside annuity was not marital property,¹ but asked that the other annuities be treated as marital property and divided accordingly. Cherry prayed that the be completely excluded. Fulkroad also asked that the annuities be considered as income for the purpose of alimony.

Prior to the 2016 order, Fulkroad testified about her limited education and work history. She claimed she had completed an online G.E.D. course, although she had not received a certificate. At the time of the hearing, her employment consisted of "sitting" with an elderly couple for $100-$125 per week. She also noted that she has some arthritis that causes her discomfort in the wintertime, but otherwise, she is able-bodied. She conceded that she had not made a concerted effort to find more gainful employment. As noted previously, after leaving Cherry, Fulkroad moved in with her adult daughter. However, she estimated that her expenses would be $3346 per month if she were to live alone.

Cherry claimed that the $810 he received from Social Security disability was his only income. Nonetheless, evidence of what his annuities paid was introduced. Cherry claimed that his monthly expenses totaled $3924, which included a $1200 payment on the marital residence.

The 2016 order stated that the annuities and social security payments were excluded from marital property by Arkansas Code Annotated section 9-12-315. However, the circuit court found that the annuities, including a prorated share of the pending five-year distributions, gave Cherry a monthly income of "approximately $9,600.00." Accordingly, he awarded Fulkroad $2750 in permanent alimony.

As noted previously, the parties attempted to appeal the 2016 order. After remand, Fulkroad filed a motion for contempt, asserting that while Cherry continued to pay her $1800- per-month alimony, he never paid the full $2750 per month required by the 2016 order. Cherry asked the circuit court to reconsider the alimony award in based on Fulkroad's current needs.

At the November 7, 2018 hearing, Fulkroad testified that she had secured employment with the City of Stevens. Her monthly take-home pay, before the deduction for health insurance, was $1521.87. Further, she stated that she had taken the money she realized from the sale of the marital home and purchased a new residence outright. Her affidavit of financial means reflected monthly expenses of $3301.54, although Fulkroad acknowledged that she now had her adult daughter and grandchild, as well as a college student from Southern Arkansas University, living in her home.

Cherry testified that he had noncovered medical expenses of $4390.22 and had already exhausted his annual Medicare set-aside payment. He submitted an affidavit of financial means that reflected monthly expenses of $4423.60, not including the alimony that he was obligated to pay. According to Cherry, he now received only $804 in Social Security benefits. Cherry was questioned about what he had done with the 2018 lump-sum distribution. He stated that although he had purchased a mobile home and an RV, he was currently living at his brother's residence. He explained that his girlfriend at the time who made the purchases on his behalf had titled them in her name. His affidavit further stated that he had only $508.02 cash on hand, and debts of $64,275.85, that required a monthly payment of $1519.77. In the 2018 order, the circuit court found Cherry in contempt and ordered him to pay $44,850 within thirty days. It further ordered that if the judgment was not satisfied within thirty days, it would fine Cherry $50 per day until it was paid in full. It denied Fulkroad's request to order Cherry to purchase a life insurance policy to secure the payment of alimony or make her a designated beneficiary on one of the annuities in the event of Cherry's demise. Finally, the circuit court denied...