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Crowell v. Crowell

Supreme Court of North Carolina

August 16, 2019


          Heard in the Supreme Court on 14 May 2019

         Appeal pursuant to N.C. G.S. § 7A-30(2) from the decision of a divided panel of the Court of Appeals, 809 S.E.2d 325 ( N.C. Ct. App. 2019), affirming in part and vacating in part a judgment and order entered on 15 August 2016 by Judge Christy T. Mann in District Court, Mecklenburg County. On 20 September 2018, the Court allowed plaintiff's petition for discretionary review of additional issues. Heard in the Supreme Court on 14 May 2019 in session in the Pitt County Courthouse in the City of Greenville pursuant to section 18B.8 of Chapter 57 of the 2017 Session Laws of the State of North Carolina.

          Law Office of Thomas D. Bumgardner, PLLC, by Thomas D. Bumgardner, for plaintiff-appellant.

          Hamilton Stephens Steele Martin, PLLC, by Amy E. Simpson, for defendant-appellee.


         In this case, we consider whether the Court of Appeals erred by upholding the trial court's distributive award in an equitable distribution action which contemplates the use of a spouse's separate property. We hold that it did. Plaintiff raised an additional issue for discretionary review pertaining to corporate standing under North Carolina's equitable distribution statute, which we granted. We conclude that discretionary review of this issue was improvidently allowed.

         I. Factual and Procedural Background

         Plaintiff Andrea Crowell and defendant William Crowell were married in 1998 and divorced in 2015. Plaintiff initiated this action by filing a complaint on 17 February 2014 in District Court, Mecklenburg County, seeking equitable distribution of the parties' marital property, alimony, and postseparation support. Defendant filed an answer and counterclaim for equitable distribution. Following a three-day hearing, on 15 August 2016, the trial court entered an equitable distribution order and an order denying plaintiff's request for an award of alimony, the latter of which was not appealed. The trial court's decision regarding equitable distribution is the only decision on appeal.

         The trial court found that the parties married in July 1998, legally separated in September 2013, and divorced in April 2015. No children were born of their marriage. The court found that defendant started several small real estate and development companies before the parties were married which he claimed were his separate property on the date of separation, but plaintiff claimed that she had a marital interest in each of them. The trial court found that after their marriage, the parties maintained a lavish lifestyle and lived significantly beyond their means. To fund their lifestyle, defendant sold his separate real and personal property and procured loans from the companies he owned.

         When defendant began suffering from memory loss and dementia in 2011, his daughter from a previous marriage, Elizabeth Temple, was named president of the companies. Temple reviewed the company books and determined that both parties were borrowing money from the companies to the detriment of the companies and the other shareholders. Moreover, the companies were paying defendant inordinately high salaries and distributions. The court found that the loans "were made during the parties' marriage and most of the loaned money can be traced through deposits directly into the parties' personal joint bank account, to pay off personal credit cards, to purchase real estate in their personal name[s], and to [pay] expenses that had to be theirs personally." Although plaintiff claimed at trial that she had no knowledge of these loans, the court found her testimony not credible.

         On the date of separation, the parties had incurred a significant amount of marital debt, which the trial court's findings detailed. This included debts to a majority of the companies in which defendant held an ownership interest. The marital home, the primary marital asset, was sold after the date of separation for $1, 075, 000, the net proceeds of which were $230, 657. Of that amount, $144, 794 was distributed to plaintiff and $85, 863 was distributed to defendant. The trial court found that plaintiff possessed two pieces of separate property at the time of separation-14212 Stewart's Bend Lane and 14228 Stewart's Bend Lane, in Charlotte, North Carolina (hereinafter, the "Stewart's Bend Properties"). The court noted that the parties also had stipulated to this effect in the final pretrial order.

         The record indicates and the parties do not dispute that both of the Stewart's Bend Properties were acquired in the early 2000s by CKE Properties, LLC ("CKE").[1]According to the final pretrial order, plaintiff is "100% Owner" of CKE" and "the [o]nly purpose of the company is to own the real estate she purchased through a 1031 exchange using her separate funds." At issue in this appeal is the trial court's disposition of these two pieces of plaintiff's property.

         14212 Stewart's Bend Lane

         Plaintiff obtained two loans applicable to the 14212 Stewart's Bend Lane property. Although these loans were in plaintiff's name only, the trial court concluded that they were marital debts because the loans were obtained during the marriage and the proceeds were used for a marital purpose. The court distributed the debts, along with this parcel of separate real property to plaintiff; however, the court gave defendant credit for payments he made towards these loans between the dates of separation and divorce.

         14228 Stewart's Bend Lane

         As to the 14228 Stewart's Bend property, the trial court found that defendant obtained a loan secured by the property during the marriage but the proceeds were used for a marital purpose. The court distributed this marital debt to plaintiff, along with the underlying separate real property. Defendant made payments towards the loan between the dates of separation and divorce, and the court gave him credit for those payments.

         The trial court noted that before the date of divorce in 2015, husband asked plaintiff to sell the house and lot at this address to eliminate the marital debt and divide the proceeds between them, but plaintiff refused to do so. Shortly after that, plaintiff "gifted" the home to her son Gentry Kirby.[2] The court found that at the time of this gift, the property was worth $390, 000, "resulting in a $100, 000 'gift' of equity to Mr. Kirby." The court found the transfer to be fraudulent as intended to deceive creditors and that Kirby was not a good faith purchaser. Therefore, the court found that the home and/or equity in the property may be considered when "determining the equitable distribution of the property and/or the distributive award that Plaintiff/Wife may be required to pay." The court ...

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