Julius J. Paoli III v. Teresa W. Paoli
2020 CA 000295
Ky. Ct. App.Jul 15, 2021Background
- Julius and Teresa Paoli married in 1980; Teresa acted primarily as homemaker (homeschooling children) and later became permanently disabled; separation occurred June 28, 2017.
- Teresa returned to Kentucky and filed for dissolution; an evidentiary (bench) hearing occurred March 4, 2019; Decree of Dissolution and Property Division Order entered October 23, 2019.
- The Property Division Order assigned values and divided marital personal property (including a hot tub), divided retirement accounts (≈ $400,000), split a 2017 joint tax refund ($3,044), addressed cash withdrawn from a safe-deposit box, and allocated one-half of home equity (with option to sell and equally divide proceeds).
- Julius moved to alter/ vacate the Property Division Order; the motion was denied February 20, 2020, and Julius appealed the property division.
- On appeal Julius challenged valuation/classification of personalty (hot tub), failure to offset items Teresa took at separation, resolution of safe-deposit box cash, equal division of the tax refund and retirement accounts, and the equal split of home equity.
Issues
| Issue | Paoli (Appellant) Argument | Teresa (Appellee) Argument | Held |
|---|---|---|---|
| Valuation/classification of personal property (hot tub) | Court erred valuing items and treating hot tub as personalty rather than a fixture; misallocated values | Teresa provided itemized values at trial; no evidence hot tub was a fixture; Julius presented no valuation evidence below | Affirmed — trial court’s valuations supported by Teresa’s evidence; no showing hot tub was realty; no abuse of discretion |
| Offset for personal property taken at separation | Items Teresa removed should have been offset against her award | No evidence of value of items taken; issue not preserved below | Affirmed — offset claim not preserved due to lack of below‑record evidence |
| Cash in safe‑deposit box | All cash was removed by Teresa; ledger shows no funds left | Teresa testified she left $5,000 and removed $5,000; ledger photocopy unreliable | Affirmed — bench court credited Teresa’s testimony on conflicting evidence (credibility resolved to court) |
| 2017 joint income tax refund ($3,044) | Refund generated from Julius’s earnings; he should receive it | Income earned during marriage is marital property; homemaker contribution considered | Affirmed — refund marital property; equal division appropriate under KRS 403.190 |
| Retirement accounts (~$400,000) | Accounts funded solely by Julius’s earnings; should not be equally divided | Retirement accrued during marriage is marital property; consider homemaker’s contribution, marriage duration, Teresa’s disability | Affirmed — retirement divisible; equal division justified by marital factors; no legal error |
| Equity in marital residence | Julius entitled to greater share given wage‑earner status and allocations elsewhere; disputes valuation | Court used PVA value and subtracted mortgage; offered option to sell and equally divide proceeds | Affirmed — use of PVA value and equal split (or equal net proceeds on sale) was within discretion |
Key Cases Cited
- Moore v. Asente, 110 S.W.3d 336 (Ky. 2003) (bench‑trial findings reviewed under CR 52.01; clear‑error standard)
- Allen v. Devine, 178 S.W.3d 517 (Ky. App. 2005) (legal issues reviewed de novo)
- M.C. v. Cabinet for Health and Family Servs., 614 S.W.3d 915 (Ky. 2021) (abuse‑of‑discretion standard for discretionary rulings)
- McGowan v. McGowan, 663 S.W.2d 219 (Ky. App. 1983) (KRS 403.190 factors for dividing marital property)
- Hempel v. Hempel, 380 S.W.3d 549 (Ky. App. 2012) (broad trial‑court discretion in property division)
- Muir v. Muir, 406 S.W.3d 31 (Ky. App. 2013) (property division will not be disturbed absent abuse of discretion)
- Dotson v. Dotson, 864 S.W.2d 900 (Ky. 1993) (income earned during marriage is marital property)
- Tager v. Tager, 588 S.W.3d 183 (Ky. App. 2019) (retirement benefits divisible to extent accumulated during marriage)