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Home / Opinion Digests / Domestic Relations / Domestic Relations – Divorce & Equitable Distribution – Subject Matter Jurisdiction – In-Kind Distribution – Classification & Valuation

Domestic Relations – Divorce & Equitable Distribution – Subject Matter Jurisdiction – In-Kind Distribution – Classification & Valuation

Miller v. Miller (Lawyers Weekly No. 011-115-17, 40 pp.) (Donna Stroud, J.) Appealed from Chatham County District Court (Lunsford Long, J.) N.C. App.

Holding: Although the wife filed her complaint for a divorce from bed and board – which included an equitable distribution claim – before the parties were separated, both parties pursued an equitable distribution until, in a separate action, the husband obtained an absolute divorce. The trial court did not abuse its discretion when it subsequently set aside the absolute divorce to allow the wife to pursue an equitable distribution in that action.

We affirm the trial court’s denial of the husband’s motion to dismiss the wife’s equitable distribution claim. However, we reverse and remand for further proceedings as to the substance of the equitable distribution order.

At a Wednesday hearing on the wife’s N.C. R. Civ. P. 60(b) motion to set aside the absolute divorce, the trial court indicated that it would grant the motion. The following Monday – before the trial court entered the order setting aside the absolute divorce –the husband married his girlfriend.

This situation is distinguishable from Howell v. Howell, 321 N.C. 87, 361 S.E.2d 585 (1987), where our Supreme Court reversed an order by this court upholding a trial court order granting the defendant’s motion to set aside the effect of a divorce judgment “to the extent that it barred her claim for equitable distribution.” Howell based its decision upon the fact that the defendant asked for relief from an effect of a divorce judgment while leaving the divorce decree itself intact. The Supreme Court never addressed whether failure to file a timely equitable distribution claim was or was not an extraordinary circumstance under Rule 60(b).

Here, by contrast, the trial court completely vacated the divorce decree, using its discretion under Rule 60(b) and explicitly weighing the equities of the situation to both parties. The husband even alleged in his motion to reopen the evidence – so that he could present evidence of his remarriage days after the court’s rendition of its ruling – that “[t]he entry of an order vacating the divorce judgment is unnecessary given that [the district court] is prepared to enter an order dismissing [his] motion to dismiss equitable distribution in [the divorce from bed and board case] for lack of subject matter jurisdiction, and thus [the wife] will not be prejudiced.” The husband then appealed from that very ruling with the obvious goal of prejudicing the wife by eliminating her equitable distribution claim. Fortunately, the trial court recognized the husband’s legal strategy of setting up a jurisdictional defect which he could then exploit on appeal, since a lack of subject matter jurisdiction cannot be waived and can be raised at any time.

The husband’s calculated actions, which were obviously intended to eliminate the wife’s equitable distribution claim, created the predicament of bigamy that he now claims to face, and the trial court rightfully concluded that “extraordinary circumstances exist” in this case and that vacating the divorce decree was an action necessary to accomplish justice.

Since we have concluded the trial court was well within its discretion to enter its decree setting aside the divorce judgment with Rule 60(b), the trial court had subject matter jurisdiction over the wife’s equitable distribution counterclaim as stated in her amended answer to the absolute divorce complaint.

Distribution

The trial court based its $13,462 distributive award to the wife on the “total” value of the marital estate as shown on a spreadsheet. However, the spreadsheet did not list the stipulated date-of-separation values of the parties’ North Carolina and Virginia real estate or their pensions. Therefore, the “total” value of the marital estate excludes the four largest marital assets.

Even though neither party wanted the couple’s real property, since they did not agree to a sale of the properties, the trial court was required to distribute the properties in kind.

We reverse and remand for the trial court to value each marital and divisible asset – including the real property and the retirement plans – as of the date of separation and the date of division, and to determine the total net value of the entire marital estate, whether an equal division will be equitable, and if any distributive award will be needed, and to enter an order accordingly.

Distributional Factors

Although the trial court orally noted that “every distributional factor we’ve talked about” during the trial should be addressed by the equitable distribution order, the order did not in fact make any findings the evidence about those factors. On remand, the trial court must make such findings.

The trial court valued a timber agreement at $5,000 and distributed it to the husband. However, the future value of timber, planted during marriage on marital property but which will not mature until some years in the future, is too speculative to be considered a vested property right for purposes of equitable distribution. The valuation of the timber agreement, which involved timber of an unknown variety, age, and quantity, was not supported by competent evidence.

After the wife filed her action for divorce from bed and board, but before the parties separated, the husband bought a 2011 Suburban, which the trial court valued at $49,000 with a secured debt of $64,638.82. The trial court classified the Suburban and its accompanying debt as the husband’s separate property, finding that it “was not acquired for the joint benefit of the parties….”

Since the Suburban was purchased before the parties separated, it is presumed to be marital property. Although the trial court heard testimony that the husband bought and financed the vehicle on his own and that the wife never drove the vehicle, the court made no findings that the wife had rebutted the marital property presumption. On remand, the trial court must clearly make findings to support its classification, valuation and distribution of the Suburban and its debt.

Affirmed in part, reversed and remanded in part.


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