Appellant: Howard Lewis
Appellee: Young Moon a/k/a Young Lewis and SMILING, BENDER & ROUNDS, P.A.; BREWSTER & DeANGELIS P.L.L.C., an Oklahoma limited liability company; MICHELLE MILLER, an individual; FMR CORP., a Massachusetts corporation, also doing business as Fidelity Investments Institutional Services Company, a Massachusetts corporation; and BANK OF AMERICA, N.A.,
( Joplin )
( Tulsa County - Carl Funderburk )
AFFIRMED
Richard J. Eagleton, Stephanie A. Horton, Eagleton, Eagleton & Harrison, Inc., Tulsa, Oklahoma, For Petitioner/Appellee-Counter-Appellant,
Jody R. Nathan, Neal E. Stauffer, Stauffer & Nathan, Tulsa, Oklahoma, For Respondent/Appellant/Counter-Appellee.
Opinion
¶1 In this appeal, Respondent/Appellant/Counter-Appellee, Young Moon (Wife), and Petitioner/Appellee/Counter-Appellant, Howard Lewis (Husband), both challenge the property division in the trial court's decree of dissolution of marriage. We hold the trial court committed no error of law and its property division is neither affected by an abuse of discretion nor clearly contrary to the weight of the evidence. The order of the trial court is affirmed.
¶2 Husband and Wife married on June 5, 1997 and had no children. They were both oncologists but did not practice together.
¶3 On December 12, 2005, Wife was convicted of Medicare and insurance fraud for over-billing for chemotherapy and was sentenced to 15 years' incarceration. According to Husband, the evidence showed the amount of drugs documented in Wife's charts as given to patients was roughly twice what she purchased, from which he inferred she was diluting chemotherapy. Four days after the conviction, Husband moved out of the marital home and filed the present action.
¶4 The parties engaged in lengthy and contentious discovery. On April 18, 2006, Husband amended his petition and alleged Wife had set upon a wrongful course to transfer, dissipate, secrete, and conceal marital assets. He added parties defendant and sought restraining orders preventing them from transferring the assets Wife had placed in their possession. After a hearing, the trial court dismissed certain defendants and granted injunctions against others. The trial court dismissed additional defendants after they paid the contested funds into court. Wife began serving her fifteen-year sentence on April 24, 2006 at a federal prison in Florida.
¶5 At a status conference on September 10, 2008, the trial court set trial for January 20-23, 2009. On November 26, 2008, Wife moved to continue the dissolution trial because her criminal defense attorney had advised her not to respond to any questions under oath until the federal court in the criminal matter had ruled upon her motion challenging her sentence. Husband objected.
¶6 At hearing on the motion for continuance, Wife's attorney advised the trial court Wife's criminal appeals had been denied but her motion to vacate, set aside, or correct the sentence, on the grounds the court used the wrong sentencing guidelines, remained pending. He said Wife had been advised not to offer any sworn testimony until the sentencing matter was resolved, and he would be unable to adequately defend her in the dissolution matter without her testimony and sponsorship of documents.
¶7 In response, Husband's attorney asserted he and Wife's attorney had attempted to schedule a trial deposition of Wife but she had refused to testify. He argued her appeals had been exhausted and therefore she no longer had justification to claim Fifth Amendment rights.
¶8 The trial court denied the continuance, but stated Wife could listen to the proceeding and consult with her attorney by telephone. The trial court declined to take her testimony by telephone and stated she would have to use a deposition if she wanted to give testimony in the matter. When the matter came to trial on January 20, 2009, Wife's attorney renewed the request for continuance, which the trial court denied.
¶9 The parties subsequently presented their respective evidence and testimony over five days in January and March 2009. Husband presented evidence to show that Wife secreted and dissipated substantial assets in various ways.
¶10 Particularly, Husband presented evidence demonstrating that Wife purchased official checks from her bank to named payees, and the bank would then transfer the funds from Wife's account to the bank's account to fund the check upon negotiation. However, if the official check was returned by its original purchaser instead of negotiated by the payee, the original purchaser could access the funds without a transaction appearing in her personal account statement. Some of the checks remained outstanding and were last in Wife's possession and control. Wife also hoarded cash, transferred funds to others to hold for her benefit, used a variety of aliases and mailing addresses, and secretly maintained a storage unit.
¶11 The trial court entered its decree of dissolution on August 11, 2009, finding Wife had pursued a malicious, fraudulent, and deceitful scheme to deny Husband his right to an equitable division of the assets of the marriage. The court found Wife should not benefit from her deceitful acts.
¶12 The trial court found the parties owned four pieces of real estate: a house in Crossville, Tennessee, two adjacent townhomes in Tulsa, and a condominium in San Diego, California. The court awarded the Tulsa properties to Husband and the San Diego property to Wife, and equally split the proceeds of the sale of the Tennessee home.1
¶13 The trial court divided the parties' tangible personal property pursuant to their agreement, but awarded Husband an offset of $9,579.00 for damage Wife inflicted to certain items. The court determined $546,019.66 of the amount in Husband's Fidelity investment accounts was marital property, and $528,919.71 was traceable as his separate property. The court valued the parties' bank accounts prior to separation and awarded three bank accounts to Husband and one to Wife.
¶14 The court ruled the parties would share the expense of Wife's criminal defense up to the date Husband filed for legal separation.2 The trial court further determined Wife had dissipated or hidden $3,530,973.65, of which Husband had recovered or restrained $3,208,670.76. The court credited the balance of $322,302.89 to Wife as an advance to her. It assigned to Husband any contractual claims Wife had against attorney Mark Smiling pursuant to an agreement and mortgage.
¶15 The trial court also determined a portion of Husband's retirement accounts was his separate property and set it aside to him. The court found the remainder of the parties' retirement accounts were marital and credited each party with the value of his or her retirement accounts at the time of trial.
¶16 Both parties appeal from the trial court's decree. In reviewing a decree of dissolution, we will review the record, but we will not disturb the trial court's decision 6 unless it is clearly against the weight of the evidence or it is affected by an abuse of discretion. Mocnik v. Mocnik, 1992 OK 99, 838 P.2d 500.
I.
¶17 Wife's first two contentions of error challenge the trial court's denial of her motions to continue the dissolution trial until after the federal court in the criminal matter had ruled upon her motion to vacate, set aside, or correct her sentence. She argued the trial court violated her right to due process and abused its discretion.
¶18 In Harmony. Harmon, 1997 OK 91, 943 P.2d 599, the Oklahoma Supreme Court addressed the due process rights of an incarcerated party in a divorce proceeding. The husband, a prison inmate acting pro se, filed a motion for a writ of habeus corpus ad testificandum, leaving the date blank because no date for hearing had then been set. Almost two years later, the trial court heard the merits of the divorce in husband' s absence. Husband appealed, contending he was denied a meaningful opportunity to be heard. The Court agreed, holding the trial court erred in failing to make some type of arrangement for husband's participation at hearing after he had made a timely request to be present. It stated: "[Husband] was not only denied a meaningful opportunity to present evidence or testimony on his own behalf, he had no opportunity to cross-examine or confront the evidence that was actually presented on the issues involved in the case." Id. at 604.
¶19 In the present case, Wife filed no application for a writ of habeus corpus ad testificandutn. She was represented by counsel at the dissolution trial, and had the opportunity to present evidence or testimony on her own behalf and to cross-examine or confront the evidence actually presented. She sought a continuance of the dissolution trial solely as a litigation strategy in her criminal case. Even when Wife's counsel renewed the motion for continuance at the beginning of trial, he did so for the same reasons as stated in the written motion, and not because the technology to make Wife available by phone was not working. Under these circumstances, we cannot say the trial court abused its discretion in denying Wife's motions for continuance.
II.
¶20 In six of Wife's contentions of error, as well as in Husband's solitary proposition in his counter-appeal, the parties challenge the trial court's characterization of assets and liabilities as marital or separate. In this respect, the trial court is statutorily charged with confirming in each party his or her separate property and with equitably dividing marital property. 12 O.S. 121(B) (2011). Separate property is property owned before the marriage or acquired after marriage in one's own right. Id. Marital property is property acquired during the marriage by the joint industry of the spouses. Thielenhaus v. Thielenhaus, 1995 OK 5, 890 P.2d 925, 930.
¶21 Property may change character during the marriage. Spouses may remove property from the marital estate by conveying it to the separate estate of one or the other spouse and subsequently treating it as separate. 43 O.S. 204 and 43 O.S. 205 (2011), and Manhart v. Manhart, 1986 OK 12, 1 40, 725 P.2d 1234, 1240. A spouse may convert separate property into marital property by making an interspousal gift. Larman v. Larman, 1999 OK 83, 991 P.2d 536, 540-541. The conveyance of separately held real property into joint tenancy gives rise to a rebuttable presumption the conveying spouse intended to make a gift to the other spouse. Id. The presumption may be rebutted by a showing "that title was passed without intent to invest the spousal grantee with an interest in the property, but rather for a purpose that is clearly collateral to any intended change in the existing ownership regime." Id. at 541.
¶22 Wife contends the trial court erred in finding the San Diego condominium was marital property. Wife owned the condominium before the marriage. However, Husband testified:
"She came to me. She wanted to add me to the deed, and I didn't ask her why. And she said she wanted me to sign a paper, and I said, well, why do you want me to sign the paper if you're putting me on the deed . . . . [W]hat's the purpose of adding me to the deed. This is a property that you have owned.
"And there was some discussion about the fact that, you know, we were in a marriage and although some of the personal assets at various times had been separate that the businesses - I had given her a considerable amount of money for her business in various ways, which had not been reimbursed by her, and that she felt it was appropriate to put me on the deed for this San Diego property.
* * * * * ^"She insisted that I sign it and that I be put on the deed, . . . and the easiest thing to do was just sign the note."
The note said, "Both parties agree that if the condo is sold, all of the proceeds will go to Young Moon or to the beneficiaries of her estate. In the case of divorce the property or its equivalent value if sold belongs solely to Young Moon."
¶23 The evidence established Wife conveyed the property to herself and Husband in joint tenancy, thus triggering the rebuttable presumption she intended to make a gift to Husband. Wife presented no evidence she made the transfer for a collateral purpose. Larman v. Layman, 991 P.2d at 541. The agreement Husband signed addressed the disposition of the property or its proceeds upon divorce but it did not address the character of the property as separate or marital. Husband's testimony supported the presumption. Based on this record, the trial court's finding the condominium was marital property is not clearly against the weight of the evidence.
¶24 Wife next contends the trial court erred in including money subject to disgorgement by restitution as part of the marital estate. In this respect, Wife was ordered to pay restitution of $432,238.00 as part of her criminal penalty. The trial court ruled Wife was required to pay the restitution from her share of the marital estate. Wife argues this amount should not have been included in the marital estate because it represented money that did not belong to her and was received by her in error. The record contains no evidence as to the disposition of Wife's ill-gotten gains. There was no source other than marital funds for the payment of restitution. Had the trial court not required Wife to pay it from her share of the marital estate, Husband would have borne the consequences of Wife's criminal conduct. The trial court did not abuse its discretion in avoiding this inequitable result.
¶25 Wife also contends the trial court erred in finding portions of Husband's investment and retirement accounts were separate property. She argues the funds lost their character as separate property because they were commingled with marital property and because their enhancement in value was the result of Husband's active management. "When commingling ... is not brought about by the act of a spouse intermixing differently owned property beyond the possibility of tracing, but rather by the inherent nature of the assets' imposed management in the hands of a third party, each component retains its legal character as separate or spousal property." Thielenhaus v. Thielenhaus, 1995 OK 5, 890 P.2d 925, 936.
¶26 Investment and retirement accounts by their inherent nature are this type of asset. Only the enhancement in value as a result of a spouse's management of the investment or other endeavors is marital property, while enhancement produced by investment managed by neither spouse, or by appreciation, inflation, changing economic conditions or circumstances beyond the parties' control, retains the original character of the asset. Id. at 931. The trial court in the present case properly applied the law in determining the amounts of Husband's investment and retirement accounts allocable to separate and marital property. Its findings were responsive to the testimony of Husband's accounting expert.3
¶27 Wife additionally complains the trial court erred in characterizing her separate property as marital. Wife asserts she owned deposits in St. Francis Bank, the Pittsburgh house, and the Pensacola house prior to marriage.
¶28 As to the Pittsburgh and Pensacola properties, the decree affected no disposition, and therefore their title is unaffected by the decree. Wife cites to no evidence establishing she held separate property at St. Francis Bank. The trial court's findings are supported by evidence she deposited earnings and purchased certificates of deposit at St. Francis Bank during the marriage. We find no error.
¶29 Wife asserts the trial court erred in not finding the parties agreed to keep their property separate. Husband testified the parties had no such agreement. Wife cites no evidence establishing such an agreement. The trial court's finding is not clearly against the weight of the evidence.
¶30 Both parties complain of the trial court's treatment of certain debts as marital. Wife contends the trial court erred in allowing marital funds to be used to pay Husband's pre-marital debts of child support and alimony arising from his first divorce, while Husband contends the trial court erred in not deeming Wife to have received an advance against the marital estate of the more than $1,000,000.00 in attorney fees she paid for her criminal defense. Both debts were paid from marital assets with the acquiescence of both spouses during the marriage and before separation. The trial court's role is to divide the parties' current assets and debts, not to retroactively adjust the parties' own treatment of past debts. The trial court did not abuse its discretion in declining to adjust the marital estate to account for past debts.
III.
¶31 Wife challenges the valuation of the Fidelity investment accounts, contending the trial court erred in valuing the accounts at the time of trial rather than the time of separation. She argues the trial court should have surcharged Husband for wasting marital property because the accounts lost value after the date of separation, but she cites to no evidence regarding the cause of the decline in value. The trial court has flexibility in determining the date of valuation after giving due consideration to all of the circumstances in a case. Thielenhaus v. Thielenhaus, 1995 OK 5, 890 P.2d 925, 933. We discern no abuse of discretion.
IV.
¶32 Wife's last contention is the trial court's decision was not equitable. She argues the net value of the portion of the marital estate awarded to Husband was much greater than that awarded to her. However, she cites no evidence supporting her assertion. The trial court stated it based the property division on a marital balance sheet Husband submitted into evidence showing the parties received property equal in value. The trial court's property division is not clearly against the weight of the evidence.
¶33 For the foregoing reasons, the trial court's decree is AFFIRMED.
Husband's motion for attorney fees on appeal is denied.
BUETTNER, P.J., and BELL, J. (sitting by designation), concur.
(FOOTNOTES):
1 The Crossville house was sold during the pendency of the action and the proceeds split equally, with Wife's share paid to the United States of America based on its lien relating to Wife's restitution order. Wife owned the San Diego home prior to the marriage, but conveyed to it to herself and Husband in joint tenancy. The trial court found Wife failed to rebut the presumption she intended to make a gift. The court also awarded a timeshare in Gatlinburg, Tennessee to Husband.
2 The trial court found Wife spent in excess of $1,000,000.00 in legal fees for the defense of her criminal charges while assuring Husband she was innocent. The court found Husband supported and assisted Wife's defense during the criminal matter, and he did not seek to recover the funds until he determined she was guilty at the conclusion of her trial.
3 The accounting expert stated she traced the separate and marital portions of Husband's investment and retirement accounts by treating all transactions in the accounts after the date of marriage as marital.