Nicks v. Nicks
241 N.C. App. 487
| N.C. Ct. App. | 2015Background
- Mike and Sally married in 1983, separated in June 2009, divorced March 2011; one minor child remained with Sally. Trial on remaining claims concluded in 2013; judgment entered January 2014.
- Mike, formerly an orthopedic surgeon, has been disabled since 2002 and receives $19,000/month disability; his medical license expired in 2004. Sally is a board-certified physician who worked part-time, lost a part-time position in 2013, and chose not to seek full-time work while caring for the minor child.
- In 2008–2010 a family estate plan created multiple entities: an irrevocable CMN 2008 Trust (grantor Mike’s father, trustee Premier Trust, Inc.), Entrust, Green Park LLC, and later Estat. Entrust held substantial assets (including real estate and promissory notes) though legal title rested with the Trust.
- Trial court treated Entrust and two promissory notes as marital property, valued Entrust at ~$3,046,071 (date of separation), awarded Entrust’s assets to Mike and ordered him to pay Sally a distributive award (~$1.546M payable over time).
- Trial court imputed monthly income of $8,000 to Sally, found her reasonable monthly expenses $11,228, and awarded her $3,000/month permanent alimony; denied postseparation support and denied modification of child support; did not account for passive postseparation appreciation of Mike’s Schwab IRA.
- Appeal and cross-appeal: appellate court affirmed in part, vacated in part, and remanded for further findings and proceedings on several issues (classification of Entrust, alimony findings including imputation and tax ramifications, child-support modification, postseparation support, and IRA appreciation).
Issues
| Issue | Plaintiff's Argument (Mike) | Defendant's Argument (Sally) | Held |
|---|---|---|---|
| Classification & distribution of Entrust/Trust assets | Trial court lacked jurisdiction to distribute Entrust because legal title rested with the Trust (a third party not joined) | Entrust assets are marital/equitably owned by parties; court properly pierced veil/used instrumentality rule and constructive trust to reach assets | Vacated distribution of Entrust; trial court lacked jurisdiction to distribute property titled in Trust not joined as party; remand to join Trust and reconsider valuation and constructive-trust issues |
| Alimony — duration (permanent) | Court failed to explain reasons supporting permanent duration | Permanent alimony appropriate given circumstances (disability, misconduct, need) | Remanded: trial court must make specific findings explaining reasons for permanent duration |
| Alimony — amount & imputation of income | Imputation not at issue for Mike | Court properly imputed $8,000/mo to Sally based on earning capacity | Remanded: imputation of income requires express findings whether Sally depressed income in bad faith; amount must be supported and tax ramifications addressed; current $3,000/mo not adequately justified |
| Tax ramifications of alimony | No specific argument preserved | Trial court failed to consider/enter findings on tax consequences of award | Remanded for specific findings on tax ramifications as required by statute |
| Child-support modification (Sally’s motion) | Court correct to deny if no substantial change | Sally had changed circumstances (unemployed); imputation required findings of bad faith before denying modification | Remanded: court must determine whether Sally deliberately depressed income or acted in bad faith before imputing income and denying modification |
| Postseparation support (denial) | Order properly denied | Denial lacked factual findings as required; alimony award suggests need for postseparation support | Vacated as to this issue and remanded: court must set forth reasons for denial or make findings supporting award/denial per statute |
| Passive postseparation appreciation of Schwab IRA | No prejudice from entry delay; valuation as of separation suffices | Passive appreciation between separation and distribution is divisible unless shown to be due to postseparation actions of a spouse | Error: remanded to classify, value, and distribute passive postseparation appreciation ($64,509.65) absent evidence attributing it to one spouse’s postseparation actions |
Key Cases Cited
- Upchurch v. Upchurch, 122 N.C. App. 172 (N.C. Ct. App.) (trial court lacks jurisdiction to distribute property titled in a third party unless that party is joined)
- Daetwyler v. Daetwyler, 130 N.C. App. 246 (N.C. Ct. App.) (join titleholders when third party holds legal title to alleged marital property)
- Green v. Freeman, 367 N.C. 136 (N.C.) (elements for piercing the corporate veil and limits of instrumentality rule)
- Grasty v. Grasty, 125 N.C. App. 736 (N.C. Ct. App.) (remand without taking new evidence when valuation evidence is wholly incredible)
- Fitzgerald v. Fitzgerald, 161 N.C. App. 414 (N.C. Ct. App.) (alimony findings must support amount, duration, and manner of payment)
- Works v. Works, 217 N.C. App. 345 (N.C. Ct. App.) (to impute income for alimony, trial court must find income depressed in bad faith)
- Ludlam v. Miller, 225 N.C. App. 350 (N.C. Ct. App.) (imputation of income for child-support purposes requires finding of deliberate depression/bad faith)
- Romulus v. Romulus, 215 N.C. App. 495 (N.C. Ct. App.) (appreciation after separation is divisible unless attributable to postseparation actions of a spouse)
- Wall v. Wall, 140 N.C. App. 303 (N.C. Ct. App.) (delay between trial and judgment may require allowing new evidence if delay is more than de minimis)
- Britt v. Britt, 168 N.C. App. 198 (N.C. Ct. App.) (case-by-case inquiry on whether post-trial delay is prejudicial)