Richards v. Richards

2022 Ark. App. 309

651 S.W.3d 190

Andrew RICHARDS, Appellant

v.Tracey RICHARDS, Appellee

No. CV-21-139

Court of Appeals of Arkansas, DIVISION II.

Opinion Delivered September 7, 2022

Cullen & Co., PLLC, by: Tim Cullen, for appellant.

Gunn Kieklak Dennis LLP, by: Jennifer Lloyd, Fayetteville, for appellee.

BRANDON J. HARRISON, Chief Judge

Andrew Richards appeals the Washington County Circuit Court's order in his divorce from Tracey Richards. He argues that the circuit court erred in finding the Winslow property was marital property and in treating the Fidelity 401(k) as marital property. He also contends that the alimony award exceeds his ability to pay and that the division of property and debt, combined with the child-support and alimony awards, creates an inequitable result. We affirm the court's designation on the Winslow property but reverse and remand on its distribution of the Fidelity 401(k). Given our ruling on the 401(k) account, we also remand the alimony issue for reconsideration.

The parties married in December 2003 and have two children. In October 2019, Tracey filed for divorce and asked for custody of the children (ages fourteen and ten), child support, and spousal support. The day after she filed her complaint for divorce, Tracey moved for an emergency hearing on custody, child support, and spousal support. The motion explained that Tracey was a full-time homemaker, did not have an income, and had been denied access to the parties’ jointly owned finances and lines of credit. After a temporary hearing, the court ordered Andrew to continue paying marital and family expenses such as mortgages, car insurance, health insurance, and the phone bill. The court also ordered that Andrew pay $2,000 a month in spousal support.

The parties attended mediation and agreed on custody and a visitation schedule. The court convened a final hearing on 16 September 2020 to decide the issues of property division, debt division, child support, and spousal support. Andrew's testimony revealed the following. He is employed by the City of Fort Smith and receives a base salary of $110,000. He also receives a car allowance of $450 a month. His affidavit of financial means filed the day before the hearing listed $10,246.52 in monthly expenses. Andrew, a certified public accountant, was employed from 1997 to 2018 at BKD, LLP. He was asked to resign in August 2018 because he was not meeting the company's expectations. During his employment with BKD, his highest gross income exceeded $500,000.

The parties’ marital home is referred to as the Winslow property, which Andrew claimed as his separate property because he purchased it in 2001, prior to the marriage. Tracey worked only parttime off and on during the marriage, and she did not contribute to paying the Winslow property mortgage. The property was refinanced in 2005, during the marriage, with both Andrew and Tracey on the mortgage, at the requirement of the bank. They received approximately $30,000 cash back from refinancing; that money was used to pay off marital credit-card debt. Also, a new deed was issued to Andrew in his capacity as "a married person." The parties also purchased a home in Maumelle during the marriage.

Andrew has two Ameritrade accounts: an IRA and a bank account. He claimed the Ameritrade IRA as a separate premarital account because the only contributions to the account were made in 2000 and 2001, prior to the marriage. Andrew also has a bank account at Arvest and a Fidelity 401(k) plan that was established in 1998, before the marriage. Andrew owns a Citi Mastercard (in his name only) and makes payments on that card from his Arvest account. He also has an Amazon credit card through Chase. Andrew also borrowed approximately $142,000 from his father to cover family expenses while he was unemployed.

Andrew asked that the court award him the Winslow property and that the Maumelle property be sold and the proceeds split between the parties. As to certain debts, including tax obligations, credit cards, and the debt to his father, Andrew asked that the court allow him to liquidate the Fidelity 401(k), pay the debts, and split the remainder with Tracey.

Tracey testified next and said she and Andrew looked at properties together in 2001, while they were dating, and they planned on living together after a home was purchased. She understood that "[she] also owned [the Winslow] home," and she was told that her name "was on it." But she did not contribute any money toward the down payment of the home. After they married in 2003, Andrew did not want her to have a job. She claimed to know nothing of her own family's finances.

After Tracey filed for divorce, the Winslow property sustained water damage, which required Tracey and the children to relocate to a rented duplex at a cost of $1,250 a month. Her affidavit of financial means also listed monthly household expenses at $400 and a $959 car payment, though the car would soon be paid off. The affidavit did not include costs for health insurance and medications. Tracey did not continue her education past high school; she has applied for jobs but has generally been told she does not have the requisite computer skills or work experience.

Don Richards, Andrew's father, confirmed that he had loaned money to his son and that the current balance on the loan was approximately $140,000. They planned for Andrew to repay the money once the divorce was final and he could access the money in his 401(k).

After receiving testimony and documentary evidence from both parties, the circuit court took the matter under advisement. The court announced its decision from the bench several days later, but the court's written order was not entered until 8 December 2020. In that order, the court determined that Andrew earns a gross income of $7,306.67 a month and that Tracey earns a gross income of $2,310 a month. So the combined gross income is $9,616.67, which results in a child-support obligation of $1,485 for their two children according to the child-support chart. Accordingly, Andrew was ordered to pay a total of $1,095 a month for child support.

In addition, the court awarded Tracey monthly rehabilitative and permanent alimony in the amounts of $312.50 and $2,310, respectively. Rehabilitative alimony was awarded for twenty-four months. During those twenty-four months, Andrew's child-support obligation was reduced to $1,042 a month.

As to the Winslow property, the court found that Andrew had gifted the property to the marriage when he executed a new deed in 2005, "deeding said property from Andrew Richards, a single person, to Andrew Richards, a married person." The court granted the property to Tracey, subject to the mortgage, and granted the Maumelle property to Andrew, subject to the mortgage.

Regarding the financial accounts, the court found that Andrew's Ameritrade IRA, worth approximately $95,000, is nonmarital property. The Fidelity 401(k) plan, worth approximately $494,381.99, is marital property, but contributions to the plan from 1998 to the date of the marriage are nonmarital. Then, however, the court ordered that the entire balance, including the nonmarital contributions, be divided equally between the parties.

The court also found that the parties had accrued $220,632 in marital debt. This amount includes car payments, credit-card debt, and the loan from Don Richards. Also included in that total is 2019 income-tax liability in the amount of $820, 2019 Pulaski County personal property tax in the amount of $966, and Tracey's attorney's fees totaling $25,000. The court held the parties each responsible for one-half of the marital debt and ordered the parties to apply the proceeds of the 401(k) to the marital debt. Andrew has timely appealed the order.

We review domestic-relations cases de novo, but we will not reverse a circuit court's finding of fact unless it is clearly erroneous. Darcey v. Matthews , 2017 Ark. App. 692, 537 S.W.3d 780. A circuit court's finding of fact is clearly erroneous when, although there is evidence to support it, the reviewing court is left with the definite and firm conviction that a mistake has been committed. Dial v. Dial , 74 Ark. App. 30, 44 S.W.3d 768 (2001). In reviewing a circuit court's findings, we defer to the court's superior position to determine the credibility of witnesses and the weight to be accorded to their testimony. Keathley v. Keathley , 76 Ark. App. 150, 61 S.W.3d 219 (2001).

Arkansas Code Annotated section 9-12-315 (Repl. 2020) governs the distribution of marital property. As a general rule, the court should distribute all marital property one-half to each party unless the court finds such a division to be inequitable. Ark. Code Ann. § 9-12-315(a)(1)(A). In that case, the court must make some other division that the court deems equitable, taking into consideration a list of nine factors, including the length of the marriage, the occupation of the parties, the amount and sources of income, and employability. Id. In addition, Ark. Code Ann. § 9-12-315(a)(2) provides that all nonmarital property must be returned to the party who owned it prior to the marriage unless the court makes some other division that the court deems equitable taking into consideration those factors enumerated in § 9-12-315(a)(1) —in which case the court must state in writing its basis and reasons for not returning the property to the party who owned it at the time of the marriage.

A circuit court has broad powers to distribute property in order to achieve an equitable distribution. Keathley , supra . The overriding purpose of the property-division statute is to enable the court to make a division of property that is fair and equitable under the circumstances. Id. The statute does not compel mathematical precision in the distribution of property; it simply requires that marital property be distributed equitably.

Baxley v. Baxley , 86 Ark. App. 200, 167 S.W.3d 158 (2004). If an unequal distribution of property is awarded,...