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Clemons v. Clemons

Court of Appeals of North Carolina

May 7, 2019


          Heard in the Court of Appeals 31 October 2018

          Appeal by plaintiff from judgment entered 1 December 2017 by Judge Donna H. Johnson in District Court, Cabarrus County No. 15 CVD 2160.

          Ferguson, Hayes, Hawkins & Demay, PLLC, by Edwin H. Ferguson, Jr., for plaintiff-appellant.

          Jordan Price Wall Gray Jones & Carlton, PLLC, by Lori P. Jones and Hope Derby Carmichael, for defendant-appellee.

          STROUD, JUDGE

         Wife appeals from an equitable distribution order valuing the "marital portion" of a townhome she owned prior to marriage at $90, 000.00 and distributing it to Wife and distributing $90, 000.00 of marital debt on the same property to her. Because the parties stipulated in the pretrial order that the townhome was Wife's separate property, the trial court erred by classifying part of its value as marital property and making its distribution based upon this classification and valuation. We reverse and remand.

         I. Background

         Husband and Wife were married on 6 September 2003 and separated on 21 March 2015. On 2 July 2015, Wife filed a complaint against Husband with claims for equitable distribution with an unequal division in her favor, postseparation support, and alimony.[1] Husband answered and joined in Wife's request for equitable distribution but requested an unequal division in his favor. A pretrial order was entered on 13 November 2017 with detailed schedules of property and issues in contention. In this order, as relevant to the issues on appeal, Husband and Wife stipulated that the "Townhome" with a "Net Value" of "186, 000.00" was the separate property of Wife.[2] At trial, the parties agreed that the balance of the debt secured by the townhome as of the date of separation was $90, 000.00, all of which was incurred during the marriage, but they did not stipulate to the classification and distribution of this debt. Wife contended the debt was marital, and Husband contended that at least some portion of the debt was Wife's separate debt.

         On 1 December 2017, the trial court entered the equitable distribution order. The trial court considered the parties' contentions for unequal distribution but determined that an equal distribution was equitable. The trial court determined that the "marital component" of the townhome was $90, 000.00 and distributed it as marital property to Wife and distributed the $90, 000.00 mortgage debt to Wife. The trial court calculated that the value of the gross marital estate including this "marital" value of the townhome and thus calculated the net value of the marital estate as "(-)$8, 566.62" and awarded an equal division of the marital property and debt. As a result, Wife owed Husband a distributive award of $539.31. Wife timely appealed.

         II. Jurisdiction

         This Court has jurisdiction to review this equitable distribution order under North Carolina General Statute § 50-19.1:

Notwithstanding any other pending claims filed in the same action, a party may appeal from an order or judgment adjudicating a claim for absolute divorce, divorce from bed and board, child custody, child support, alimony, or equitable distribution if the order or judgment would otherwise be a final order or judgment within the meaning of G.S. 1A-1, Rule 54(b), but for the other pending claims in the same action.

N.C. Gen. Stat. § 50-19.1 (2017).

         III. Standard of Review

The 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. 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.
The trial court's findings need only be supported by substantial evidence to be binding on appeal. We have defined substantial evidence as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.

Clark v. Dyer, 236 N.C.App. 9, 13, 762 S.E.2d 838, 839 (2014).

         VI. Classification and Valuation of "Marital Component" of the Townhome

         On appeal, Wife challenges several of the trial court's findings of fact and related conclusions of law, all relating to the classification of the townhome.

Upon application of a party for an equitable distribution, the trial court shall determine what is the marital property and shall provide for an equitable distribution of the marital property in accordance with the provisions of N.C. Gen. Stat. § 50-20. In so doing, the court must conduct a three-step analysis. First, the court must identify and classify all property as marital or separate based upon the evidence presented regarding the nature of the asset. Second, the court must determine the net value of the marital property as of the date of the parties' separation, with net value being market value, if any, less the amount of any encumbrances. Third, the court must distribute the marital property in an equitable manner.

Chafin v. Chafin, __ N.C.App. __, __, 791 S.E.2d 693, 698 (2016) (quotation marks, brackets, and ellipsis omitted).

         Wife challenges portions of the following findings and related conclusions of law:

[4. b.] 7) Around 2000, Ms. Clemons purchased a townhome located [in] Concord for about $160, 000.00. Just prior to the marriage, Ms. Clemons mortgaged the property. The mortgage was paid off, but the source of the funds are unknown. The parties mortgaged the property during the marriage. The parties agreed that the mortgage on the property at the date of separation was $90, 000.00. The tax value on the townhome was $161, 190.00 on March 20, 2006. There was no appraisal done on the home at or near the date of separation. Therefore, the marital portion is at least equal the marital debt of $90, 000.
. . . .
[4.] g. On Schedule L, the parties agreed that those items, which includes the former marital residence, is the separate property of Ms. Clemons with the exception of the marital component noted above.
. . . .
[5. e.] 1) The former marital residence was owned by
Ms. Clemons prior to the marriage. She mortgaged the property prior to the marriage to invest in Mr. Clemon's [sic] business. Later the home was mortgaged at least once more for $90, 000.00. Limited documentation was available regarding the marital component.

         Wife challenges portions of these findings as unsupported by the evidence or contrary to the stipulations in the pretrial order.

         Finding of fact 4 (g) noting "the exception of the marital component noted above" is not supported by competent evidence in the record and is contrary to the parties' stipulation. The pretrial order does not include any mention of a "marital component" of the townhome or any issue of valuation of a "marital component" or valuation of an increase in value of the townhome during the marriage. And there was no evidence which could support classification or valuation of a "marital component." The parties stipulated only that the townhome was Wife's separate property, with a date of separation value of $186, 000.00. Neither party introduced evidence needed to value a "marital component" of the townhome, most likely because they had stipulated that it was entirely separate.

         It is well-established that stipulations in a pretrial order are binding upon the parties and upon the trial court. See Crowder v. Jenkins, 11 N.C.App. 57, 63, 180 S.E.2d 482, 486 (1971) ("[S]tipulations by the parties have the same effect as a jury finding; the jury is not required to find the existence of such facts; and nothing else appearing, they are conclusive and binding upon the parties and the trial judge."). "Accordingly, the effect of a stipulation by the parties withdraws a particular fact from the realm of dispute." Plomaritis v. Plomaritis, 222 N.C.App. 94, 101, 730 S.E.2d 784, 789 (2012) (brackets and quotation marks omitted).

         In equitable distribution cases, stipulations in the pretrial order are intended to limit the evidence needed and to define the issues the trial court must decide. See id. at 106-07, 730 S.E.2d at 792 ("We also note that this is an equitable distribution case, where a pre-trial order including stipulations such as those in this case is required by N.C. Gen. Stat. § 50-21(d) and Local Rule 31.9. In equitable distribution cases, because of the requirements of statute and local rules, the stipulations are frequently quite extensive and precise and are specifically intended to limit the issues to be tried, and the same is true in this case. Neither party has cited, and we cannot find, any prior opinion by our Court in which a trial court has ex mero motu set aside a pre-trial order or a party's stipulations after completion of the trial upon the issues which the stipulations addressed." (citation omitted)). And as noted by the dissent, although it is possible for either the trial court or parties to set aside stipulations under certain conditions, none of those conditions are present here.

         The dissent takes Wife's counsel's brief comment about a "marital component" out of context and construes it as an agreement to assign a "marital component" to the value of the townhome, but this was not what her counsel was saying. Wife's counsel was actually arguing that the $90, 000.00 debt was entirely marital or had a marital component, not the townhome. At trial, Husband took the position that the $90, 000.00 debt was not marital; Wife contended that it was marital.

         The "marital component" comment occurred during Husband's cross examination testimony about the $90, 000.00 debt. Wife's counsel asked Husband:

[Mr. Ferguson:] And this $90, 000 loan or $90, 000 debt various times was used to make improvements on the property.
[Husband:] Well, --
[Mr. Ferguson:] Yes or ...

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