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Kabasan v. Kabasan

Court of Appeals of North Carolina

January 16, 2018

SONIA KABASAN, Plaintiff,
v.
DENNIS KABASAN, Defendant.

          Heard in the Court of Appeals 24 October 2017.

         Appeal by defendant from orders entered 22 August 2016 by Judge Andrea F. Dray in Buncombe County Nos. 13 CVD 5370, 15 CVS 3789 District Court.

          Siemens Family Law Group, by Jim Siemens, for plaintiff-appellee.

          Cecilia Johnson for defendant-appellant.

          ZACHARY, Judge.

         This appeal arises from domestic litigation between Dennis Kabasan (defendant) and his ex-wife Sonia Kabasan (plaintiff). Defendant appeals from equitable distribution, alimony, and child support orders entered by the trial court on 22 August 2016. Defendant has raised fourteen issues on appeal, in two of which he challenges the trial court's acceptance of Phaedra Xanthos as an expert in accounting, as well as the court's adoption of most of plaintiff's proposed findings and conclusions. Defendant also contends that the trial court abused its discretion in the classification, valuation, and distribution of certain assets in its equitable distribution order. Defendant further argues that the trial court erred in the calculations and rulings made in the court's alimony and child support orders. After consideration of defendant's arguments, in light of the record on appeal and the applicable law, we affirm in part and reverse and remand in part.

         Factual and Procedural Background

         The parties met in Brazil and were married there on 16 January 1999. Plaintiff was born in Brazil in 1960, and lived in Brazil until her marriage to defendant. Defendant, who was born in 1946, worked until his retirement in 2010 as a physician at the Veterans Administration Hospital in Asheville, North Carolina. Prior to marrying, the parties executed a prenuptial agreement. After they married, the couple moved to Asheville. One child was born to the marriage, a daughter born in 2000. During the marriage, the parties acquired property in the United States and Brazil. They traveled to Brazil, and plaintiff spent time in Brazil with her family.

         On 27 December 2013, plaintiff filed a complaint, which was assigned Buncombe County No. 13 CVD 5370, seeking divorce from bed and board, postseparation support, alimony, attorney's fees, and possession of the marital home. Defendant filed an answer on 31 January 2014, denying the material allegations of plaintiff's complaint, raising various defenses, stating a counterclaim for joint legal and physical custody of their daughter, and asking the court to impose travel restrictions on the minor child. In his answer and counterclaim, defendant also alleged that the parties' prenuptial agreement barred plaintiff's claims for alimony, postseparation support, and attorney's fees, and that the terms of the prenuptial agreement should govern the division of the parties' property. Plaintiff filed a reply on 28 March 2014, in which she agreed that the prenuptial agreement was valid, asked the court to determine child custody, and sought child support from defendant. On the same day, the trial court entered an order that awarded plaintiff temporary postseparation support and child support, granted the parties joint legal and physical custody of the minor child, and granted plaintiff a writ of possession of the marital home. On 9 July 2015, the trial court entered a final child custody order granting the parties joint legal and physical custody of their daughter.

         On 26 August 2015, plaintiff filed a complaint that was assigned Buncombe County No. 15 CVD 3789, seeking absolute divorce, equitable distribution of the parties' marital assets, and consolidation of the action with her previously-filed complaint. Plaintiff alleged that the prenuptial agreement did not bar her claim for equitable distribution, and that a division of the marital estate "in favor of plaintiff" would be equitable. On 18 September 2015, defendant filed an answer and counterclaim seeking, inter alia, an equal division of the marital estate. The parties were divorced on 26 February 2016. On 8 March 2016, the trial court entered a declaratory judgment that the prenuptial agreement was valid and would be enforced, and that an equal division of the marital estate would be equitable.

         A trial was conducted on the issues raised by the parties' pleadings beginning on 25 April 2016, and on 22 August 2016, the trial court entered orders for equitable distribution, alimony, and child support. The evidence adduced at trial and the provisions of the court's orders are discussed below, as relevant to the issues raised on appeal. Defendant has appealed to this Court from these orders.

         Standard of Review

         "It is undisputed that '[t]he standard of review on appeal from a judgment entered after a non-jury trial is whether there is competent evidence to support the trial court's findings of fact and whether the findings support the conclusions of law and ensuing judgment.' " Cushman v. Cushman, __ N.C.App. __, __, 781 S.E.2d 499, 501 (2016) (quoting Pegg v. Jones, 187 N.C.App. 355, 358, 653 S.E.2d 229, 231 (2007)). "The trial court's findings of fact are binding on appeal as long as competent evidence supports them, despite the existence of evidence to the contrary." Resort Realty of the Outer Banks, Inc. v. Brandt, 163 N.C.App. 114, 116, 593 S.E.2d 404, 408 (2004) (citation omitted). "Simply stated, where the trial court's findings of fact are supported by competent evidence, and the findings of fact, in turn, support the trial court's conclusions of law, the decision of the trial court will be affirmed. This Court will not reweigh the evidence." Pegg, 187 N.C.App. at 358, 653 S.E.2d at 231. Moreover, "where a trial court's findings of fact are not challenged on appeal, they are deemed to be supported by competent evidence and are binding on appeal." Juhnn v. Juhnn, 242 N.C.App. 58, 63, 775 S.E.2d 310, 313 (2015) (citation omitted). "While findings of fact by the trial court in a non-jury case are conclusive on appeal if there is evidence to support those findings, conclusions of law are reviewable de novo." Robbins v. Robbins, 240 N.C.App. 386, 394, 770 S.E.2d 723, 728 (internal quotation marks omitted), disc. review denied, 368 N.C. 283, 775 S.E.2d 858 (2015).

         Defendant has appealed from orders for equitable distribution, child support, and alimony. "[W]hen reviewing an equitable distribution order, this Court will uphold the trial court's written findings of fact as long as they are supported by competent evidence. However, the trial court's conclusions of law are reviewed de novo. Finally, this Court reviews the trial court's actual distribution decision for abuse of discretion." Mugno v. Mugno, 205 N.C.App. 273, 276, 695 S.E.2d 495, 498 (2010) (citations and quotation marks omitted). Similarly, our review of a child support order

is limited to a determination whether the trial court abused its discretion. Under this standard of review, the trial court's ruling will be overturned only upon a showing that it was so arbitrary that it could not have been the result of a reasoned decision. The trial court must, however, make sufficient findings of fact and conclusions of law to allow the reviewing court to determine whether a judgment, and the legal conclusions that underlie it, represent a correct application of the law.

Spicer v. Spicer, 168 N.C.App. 283, 287, 607 S.E.2d 678, 682 (2005) (citations omitted). This Court has summarized our review of alimony orders as follows:

If the court's findings of fact are supported by competent evidence, they are conclusive on appeal, even if there is contrary evidence. Whether a spouse is entitled to an award of alimony or post-separation support is a question of law. This Court reviews questions of law de novo. . . . The trial court's determination of the amount of alimony is reviewed for an abuse of discretion.

Collins v. Collins, __ N.C.App. __, __, 778 S.E.2d 854, 856 (2015) (citing Rickert v. Rickert, 282 N.C. 373, 379, 193 S.E.2d 79, 82 (1972)) (other citations omitted).

         Qualification of Plaintiff's Expert Witness

         Defendant first argues that the trial court "abused its discretion when it accepted Phaedra Xanthos as an expert in forensic accounting and valuation" and that the court "should have disqualified her and her testimony once it became apparent she was not competent to testify as an expert." We disagree.

         Initial Qualification of Ms. Xanthos as an Expert in Accounting

         Defendant argues that it was error to allow Ms. Xanthos to testify as an expert in "forensic accounting and valuation." Although in its equitable distribution order, the trial court found that Ms. Xanthos "was qualified as an expert in forensic accounting and valuation, " the transcript establishes that, following voir dire, the trial court ruled that "Ms. Xanthos is qualified by this Court in the area -- as an expert in the area of accounting." At no time during the trial did the trial court rule that Ms. Xanthos was an expert in forensic accounting and valuation. We conclude that Ms. Xanthos testified as an expert in accounting, rather than as an expert in related specialties. Moreover, at trial, defendant did not dispute that Ms. Xanthos was well-qualified as an expert in accounting, forensic accounting, or valuation. Following voir dire, defendant's counsel stated:

Your Honor, I certainly don't deny that she, Miss Xanthos, has an impressive resume. Certainly she's well qualified in fraud investigations, in business valuations, all of these things listed here. I would contend, however, that she is certainly not an expert in coverture fractions, in valuing pensions in North Carolina, anything like that. . . . So I have very real reservations about Miss Xanthos presenting herself as an expert in this case specifically as to a retirement account and an annuity.

         Discussion

         On appeal, defendant argues that the trial court abused its discretion by failing to disqualify Ms. Xanthos as an expert, on the grounds that she offered "speculative" testimony as to the value of certain financial assets and real property, and that her responses to defendant's cross-examination raised doubts as to whether Ms. Xanthos was familiar with Brazilian family law or with the proper interpretation of Watkins v. Watkins, 228 N.C.App. 548, 746 S.E.2d 394 (2013). Defendant contends that although Ms. Xanthos was "qualified as an expert initially" she "should have later been disqualified" and that the trial court "abused its discretion in not disqualifying Ms. Xanthos and striking her testimony[.]"

         During the trial, defendant objected to the trial court's consideration of certain portions of Ms. Xanthos's testimony, but did not move to disqualify Ms. Xanthos as an expert in accounting. Thus, defendant's appellate argument is apparently that that the trial court erred by not disqualifying her ex mero motu. Defendant has not cited any legal authority in support of his position. "It is not the role of the appellate courts . . . to create an appeal for an appellant." Viar v. N.C. DOT, 359 N.C. 400, 402, 610 S.E.2d 360, 361 (2005). "It is likewise not the duty of the appellate courts to supplement an appellant's brief with legal authority or arguments not contained therein." State v. Hill, 179 N.C.App. 1, 21, 632 S.E.2d 777, 789 (2006).

         Furthermore, it is well-established that doubts as to an expert's opinions go "to the weight of the witness's testimony and not to his competence as a witness." Winston-Salem v. Cooper, 315 N.C. 702, 714, 340 S.E.2d 366, 373 (1986). In Winston-Salem, the appellant argued that "its own expert showed [the appellee's expert's] opinion was based on an erroneous understanding of the applicable zoning ordinances, thus disqualifying [him] as a competent expert witness." Id. at 713, 340 S.E.2d at 373. Our Supreme Court rejected this argument:

Even if [the expert] based his ultimate opinion as to value on a misunderstanding of the allowable uses permitted by the zoning ordinance, this would not be grounds for striking his testimony. It would constitute an attack on part of the data he might have considered in arriving at his opinion. "The process or method used . . . might be considered on the question of the credibility of the expert witnesses, but not on the competency or admissibility of their evidence."

Winston-Salem, 315 N.C. at 714, 340 S.E.2d at 373 (quoting State v. Tola, 222 N.C. 406, 409, 23 S.E.2d 321, 323 (1942)). We conclude that defendant has failed to establish that he is entitled to relief on the basis of this argument.

         Court's Valuation of Financial Instruments

         Defendant argues next that the trial court abused its discretion in "how it valued the marital portion of the TSP account, the Aviva annuity, the Vanguard Trust, and the Vanguard IRA, as of [the] date of separation[.]" We have carefully considered defendant's contentions concerning this issue, and conclude that defendant is not entitled to relief.

          N.C. Gen. Stat. § 50-20.1 (2016) addresses equitable distribution awards of vested and nonvested "pension, retirement, or other deferred compensation benefits." N.C. Gen. Stat. § 50-20.1(d) provides that the percent of such benefits to which each spouse is entitled is calculated as follows:

(d) The award shall be determined using the proportion of time the marriage existed (up to the date of separation of the parties), simultaneously with the employment which earned the vested and nonvested pension, retirement, or deferred compensation benefit, to the total amount of time of employment. The award shall be based on the vested and nonvested accrued benefit, as provided by the plan or fund, calculated as of the date of separation, and shall not include contributions, years of service, or compensation which may accrue after the date of separation. The award shall include gains and losses on the prorated portion of the benefit vested at the date of separation.

          "The numerator of this fraction, termed a coverture fraction, 'represents the total number of years of marriage, up to the date of separation, which occurred simultaneously with the employment which earned the vested [and nonvested] pension. The denominator represents the total years of employment during which the pension accrued.' " Robertson v. Robertson, 167 N.C.App. 567, 572, 605 S.E.2d 667, 670 (2004) (quoting Bishop v. Bishop, 113 N.C.App. 725, 729-30, 440 S.E.2d 591, 595 (1994) (internal quotation marks omitted)).

         In the present case, defendant argues that the trial court abused its discretion by applying the coverture fraction to determine the value of the marital portion of four financial assets: the TSP, the Aviva account, the Vanguard IRA, and the Vanguard Trust. Defendant has not challenged the evidentiary support for any specific findings of fact in the trial court's order. Accordingly, the court's findings are conclusively established. "Unchallenged findings of fact are binding on appeal. . . . The trial court's conclusions of law must be supported by adequate findings of fact." Peters v. Pennington, 210 N.C.App. 1, 13, 707 S.E.2d 724, 733 (2011) (citing Koufman v. Koufman, 330 N.C. 93, 97, 408 S.E.2d 729, 731 (1991)).

         In the present case, the trial court's findings of fact included the following findings relevant to the court's valuation of the marital portion of the TSP account, the Aviva annuity, the Vanguard IRA, and the Vanguard Trust:

37. The Defendant retired from the V.A. on May 17, 2010.
38. During the Defendant's employment at the V.A., he participated in the Federal Employees Retirement Savings program (hereinafter, FERS) and in the Federal Thrift Savings Plan (hereinafter, TSP).
. . .
46.The TSP is similar to a 401(k) type plan except that the TSP associated with the FERS employees includes employer or agency contributions which are subject to vesting. FERS employees have a time in service requirement before agency contributions vest.
47.The Defendant transferred TSP funds, including TSP funds properly classified as marital funds, into an Aviva Annuity and into a Vanguard IRA.
48. The parties disagree about the proper method of valuing the marital portion of the TSP, and therefore disagree as to the value of the marital portion of the Aviva Annuity and the Vanguard IRA.
49.The parties also disagree about the fair market value of the Aviva Annuity at date of separation and presently.
50.To resolve these issues, the Court must first consider the proper valuation approach to take in determining the value of the marital portion of the TSP. The Plaintiff contends that the use of the coverture fraction is proper pursuant to N.C. G.S. §50-20.1. Using this approach, the Plaintiff concludes that 50.2% of the TSP is marital.
51.The Plaintiff then goes on to conclude that 50.2% of the money transferred from the TSP to purchase the Aviva Annuity created a 50.2% interest in the Aviva Annuity.
52.The Defendant rolled $400, 000 in TSP money into the Aviva Annuity, in order to purchase the Aviva Annuity on June 2, 2011. . . .
53. The Plaintiff concludes that $200, 738 or 50.2% of the Aviva Annuity was purchased with marital money from the TSP.
54. The Defendant also rolled $196, 193 in TSP money out to a Vanguard IRA on March 11, 2013. . . .
55. The Plaintiff concludes that $98, 458 or 50.2% of this rollover was marital money. . . .
56. Both the Aviva Annuity and the Vanguard IRA have passively increased in value since these rollovers occurred.
57. On the date of separation, the Plaintiff contends that the marital portion of the Vanguard IRA was $103, 219. . . . The Plaintiff contends that date of distribution value is $112, 372, again due to passive growth.
58. The Defendant has valued the TSP by using a tracing method, considering and totaling each contribution to the account made during the marriage, together with passive gains and losses on these amounts. In support of this approach, which is not supported by N.C. G.S. §50-20.1, the Defendant relies on Watkins v. Watkins, 228 N.C.App. 548, 746 S.E.2d 394 (2013).
59. In Watkins, the trial court was reversed for failing to use a coverture fraction to divide an IRA that was funded with "deferred compensation" even though all compensation had been earned by Defendant Watkins at his date of separation.
60. The TSP in this case likewise contained deferred compensation; that is, compensation from the employer that was subject to vesting. Although the Defendant's TSP was fully vested at the time of his retirement, Defendant Kabasan's [situation] cannot be discerned from that of Defendant Watkins, who had also separated from his employer and whose benefits were fully vested at the time of his trial.
61. The Court of Appeals in Watkins has stated that: "We note that there are certain 401(k) plans pursuant to which employer contributions vest over a designated period of time and that employer contributions in these instances might be construed as 'deferred compensation benefits.' " Watkins v. Watkins, 228 N.C.App. 548[, 554, ] 746 S.E.2d 394[, 398] (2013). . . .
62. The TSP in this case is analogous to a 401(k) that contains "deferred compensation benefits" in that a certain portion of the TSP contributions made by the Defendant's employer were subject to vesting.
63. The Defendant's expert, Edward Fidelman, did not consider Watkins before using his tracing valuation method with respect to the TSP.
64.Mr. Fidelman was unable to state what portion of TSP contributions by the Defendant's employer [was] subject to vesting requirements.
65. Mr. Fidelman defined deferred compensation as all compensation by an employer that is "not immediately subject to tax[, ]" a definition that is actually broader than the definition provided in Watkins.
66. The Court has no evidence upon which it can make a determination as to what part of the TSP contributions occurring during marriage [was] subject to vesting and therefore "deferred compensation" and what portion of said contributions [was] immediately vested.
67. The Defendant's analysis, produced by Edward Fidelman, . . . contains an assumption that all marital money traced in the TSP was used to purchase the Aviva Annuity. Because the methodology applied by the Defendant to determine the marital portion of the TSP is rejected, the Court need not further consider whether or not the Defendant's assumption is correct.
68.The Court finds that Phaedra Xanthos, the Plaintiff's expert, has correctly applied a coverture fraction to the TSP.
69. The Court finds it equitable therefore, that this coverture fraction be extended to the Aviva Annuity, in order to determine the marital component of the Aviva Annuity, and extended to the Vanguard IRA, in order to determine the marital component of the Vanguard IRA.
70. The Court finds that on the date of separation, the marital value of the Vanguard IRA was $103, 219. . . . The Court finds that the date of distribution marital value of this IRA is $112, 372 due to passive growth.
. . .
81. On the date of separation, the Aviva Annuity accumulated value was $484, 707.86.
82. The present Aviva Annuity accumulated value is $543, 877.40.
83.The marital portion of the Aviva Annuity is 50.2% or $272, 942 of the present value.
. . .
136.The parties dispute whether or not a portion of the balance of the Defendant's Vanguard Securities Account, which existed as a Family Trust at ...

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