Knighten v. KnightenKnighten v. Knighten
Dorsey C. Martin, III, Baton Rouge, for Defendant/Appellee, Annie Bell Morrison LeBlanc.
Before: CARTER, C.J., PARRO, and CLAIBORNE,1 JJ.
This is an appeal from a judgment partitioning the community property of plaintiff, Curtis E. Knighten, and defendant, Annie Bell Morrison LeBlanc (Ms. LeBlanc).2 Mr. Knighten appeals from several aspects of the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Mr. Knighten and Ms. LeBlanc were married in June 1956. Ms. LeBlanc began working for the Louisiana Department of Public Safety and Corrections (DPSC) and participating in the Louisiana State Employees’ Retirement System (LASERS) in 1967. Mr. Knighten filed a petition for divorce, and a judgment of divorce was granted in February 1986. The community property regime was terminated retroactive to the date the petition for divorce was filed, October 29, 1985.
Mr. Knighten filed a petition for judicial partition of community property and a detailed descriptive list of the community property and debts in September 1986. Ms. LeBlanc answered the petition and filed a traversal of Mr. Knighten‘s detailed descriptive list, along with her own detailed descriptive list. The parties conducted discovery during the next year. The record reflects that after the 1987 discovery requests, there was no action on the partition petition, other than a motion to substitute counsel, for ten years.
Ms. LeBlanc was eligible to retire in September 1994. Instead, Ms. LeBlanc entered the Deferred Retirement Option Plan (DROP) on September 26, 1994. During her participation in DROP, Ms. LeBlanc continued working for DPSC and earning her regular salary. During this same time, LASERS deposited a monthly retirement benefit into an individual DROP account for Ms. LeBlanc. Upon termination of her state employment, Ms. LeBlanc, or Ms. LeBlanc and Mr. Knighten, would be entitled to receive the sums deposited into her DROP account. She completed her participation in the DROP program on September 25, 1997. However, she chose to continue working for DPSC and once again began contributing to LASERS.
Trial on the partition of community property was held in January 2000, at the conclusion of which, the trial court rendered the judgment from which Mr. Knighten appeals. This judgment classified and valued several assets and obligаtions and ordered reimbursements and other credits related to contested assets and obligations, and allocated the assets and obligations.
On appeal, Mr. Knighten complains about four particular aspects of the judgment. One of his complaints pertains to the trial court‘s order that Mr. Knighten reimburse Ms. LeBlanc for one-half of certain expenses she incurred with respect to the family residence. Other aspects of the judgment about which Mr. Knighten complains include the trial court‘s valuatiоn of the family residence at $114,000, classification of a life insurance annuity policy as community property and valuation of it at $18,000, and classification of retirement benefits in Ms. LeBlanc‘s DROP account as her separate property. Because of these alleged errors, Mr. Knighten contends that the amount of the equalizing payment Ms. LeBlanc was ordered to pay Mr. Knighten is insufficient.
REIMBURSEMENT CLAIMS FOR REPAIR/MAINTENANCE/REPLACEMENT WORK AT FAMILY RESIDENCE
In this assignment of error, Mr. Knighten complains that the trial court erred in
Expenses incurred between the termination of the community and partition of thе community are awarded only when the party claiming reimbursement can prove that the work was necessary and that such work enhanced the value of the property. Kline v. Kline, 98-1206, p.5 (La.App. 3rd Cir.2/10/99), 741 So.2d 670, 672. Between the termination of a community property regime and partition, the spouse in possession of former community property has a duty to preserve the property in the manner in which it was always kept. See Norman v. Norman, 99-2750, pp.11-12 (La.App. 4th Cir.7/12/00), 775 So.2d 18, 25. This duty is based on
A spouse has a duty to preserve and to manage prudently former community property under his control ... in a manner consistent with the mode of use of that property immediately prior to termination of the community regime. He is answerable for any damage caused by his fault, default, or neglect.
The comments to this article explain that unlike ordinary co-owners, this article imposes a higher and affirmative duty of care for the management of former community property since the presumption that a spouse will act in the best interest of the community no longer exists.
Relying on a general co-ownership provision,
We find that the trial court had sufficient evidentiary support to order reimbursement of Ms. LeBlanc‘s expenses for the repair/maintenance/replacement work about which Mr. Knighten complains on appeal. Ms. LeBlanc testified in detail about why the different expenses were incurred. According to Ms. LeBlanc, work was performed on the kitchen and utility room floors because the wooden seals beneath the kitchen floor needed to be replaced and the utility room floor was buckling. The trees had to be removed because they had deteriorated. When the gutters quit working рroperly, Ms. LeBlanc called the man who had always been called for gutter problems in the past. He determined that replacing the gutters was necessary. The furnace went out and was deemed unfixable by a professional repairman. This required the replacement of the coils and blower in the heating unit. The wooden garage door was not working and posed a threat of injury; therefore, Ms. LeBlanc had it replaced. Finally, the air-conditioning unit broke and was deemed unrepairable by thе repairman. Thus, she obtained estimates to replace the unit and accepted the least expensive estimate. Mr. Knighten did not offer any evidence to contradict Ms. LeBlanc‘s reasons for incurring these expenses.
Based on this testimony, the trial court found that the repair/maintenance/replacement work was necessary to protect and preserve the property. It also found that the value of the property was enhanced through some of the repair/maintеnance/replacement work. We note that reimbursements are factual determinations and absent an abuse of discretion the trial court‘s decision should not be disturbed on appeal. Norman, 775 So.2d at 25, citing Rosell v. ESCO, 549 So.2d 840 (La.1989). Accordingly, we cannot say the trial court erred in ordering the reimbursements for the contested items.5 This assignment of error is without merit.
Mr. Knighten complains that the trial court erred in not taking the average of the two appraisals of the value of the family residence. Mr. Knighten asserts that if the trial court was truly averaging the two appraisals, it should have valued the family residence at $114,850, instead of $114,000. This would have resulted in Mr. Knighten getting $425 more from Ms. LeBlanc through the equalizing payment from Ms. LeBlanc (1/2 of the $850 difference between the trial court‘s valuation and the exact average of the two appraisers’ valuations).
In valuing and allocating assets and liabilities to partition community property, the trial court shall act within its broad discretion to consider the source and nature of each asset or liability, the financial situation of each spouse, and any other relevant circumstances.
The record reveals that Mr. Knighten‘s appraiser valued the family residence at $137,700. Ms. LeBlanc‘s appraiser valued the family residence at $92,000. The trial court assigned a $114,000 value to the family residence, stating in its oral reasons that it was averaging the two appraisals. We are not aware of, nor have the parties directed our attention to, any requirement that a trial court average two conflicting appraisals to reach a valuation of a family residence. Instead, the record must reasonably support the trial court‘s valuation and the valuation must not constitute an abuse of discretion. See Norman, 775 So.2d at 23. We find that the record supports the $114,000 valuation of the family residence. Thus, in light of the great discretion vested in the trial court for valuing assets to be partitioned, we cannot say the trial court erred in its valuation of the family residence at $114,000. This assignment of error lacks merit.
CLASSIFICATION AND VALUATION OF SECURITY BENEFIT LIFE INSURANCE ANNUITY
In this assignment of error, Mr. Knighten complains about the trial court‘s classification of a life insurance annuity policy, issued by Sеcurity Benefit Life Insurance Company, as community property and its valuation of the annuity at $18,000. Mr. Knighten contends that Ms. LeBlanc failed to present any evidence that the policy remained in existence after the initial premium payment, which was made before the community property regime was terminated. Additionally, Mr. Knighten asserts that there was no evidence that he received any benefit from the policy after the termination of the community property regime.
Things in the possession of a spouse during the existence of the community property regime are presumed to be community, but either spouse may prove that they are separate property.
The annuity policy was originally obtained in 1982, during the existence of the community property regime, by paying $4,182.75 of community funds to secure the annuity policy. Upon maturity of the policy in November 1996, Mr. Knighten was to receive a monthly payment of $100 for fifteen years, with four percent guaranteed interest. This was the only evidence in the record pertaining to the annuity policy. Specifically, Mr. Knighten did nоt testify about the value of the annuity policy, whether the annuity policy was still in existence at the time of trial, whether more money had been added to the annuity policy or whether Mr. Knighten had received $100 per month upon maturity of the annuity policy.
The trial court concluded that the annuity policy was purchased during the existence of the community property regime. In light of the absence of evidence that the annuity had been cancelled, the trial court concluded that the annuity was community рroperty and valued it at $18,000. We cannot say this finding is clearly wrong. The record demonstrates that Mr. Knighten failed to establish the separate nature of the annuity policy, that the annuity policy had been cancelled or a valuation that contradicted the trial court‘s $18,000 valuation. Thus, the record supports the trial court‘s finding that the annuity was community property and was valued at $18,000. This assignment of error is without merit.
CLASSIFICATION OF DROP ACCOUNT
In this assignment of error, Mr. Knighten contends the trial court erred in finding that the contributions made on behalf of Ms. LeBlаnc by LASERS into her DROP account are her separate property. He argues that the trial court should have used the Sims formula6 to apportion the contributions in the DROP account between the community and Ms. LeBlanc‘s separate property.
DROP is an optional method of retiring from LASERS that allows a state employee who is otherwise eligible for retirement to continue working at his regular state job and earning his regular salary, for a period not to exceed three years. During this time, the amount that the state employee would have received as his monthly retirement benefit if he had actually retired is deposited into an individual account (the DROP account). When the employee enters DROP, his status in LASERS changes from active member to retiree, even though he continues working at his regular job. Once the employee ends his state employment, he can withdraw the money in his DROP account either as a lump sum or a series of payments spread out over time.
The amount of the benefit deposited into the DROP account is based in part on the years of service the employee had with the
Once the employee‘s participation in the DROP program ends, the employee can either actually retire and begin receiving his base retirement benefit (which benefit would be the same amount that the monthly DROP contribution had been) or he can remain in state service and begin to accrue additional service credit. If the employee chooses to remain in state service, the additional years of service will not alter his base retirement benefit; however, they will be the basis of a supplemental pension, in addition to the base retirement benefit.
During her marriage to Mr. Knighten, Ms. LeBlanc began working for the state of Louisiana and participating in LASERS. At the time the community property regime was terminated, Ms. LeBlanc had 18.2 years of state service. She continued to work for DPSC for almost nine years after the termination of the community property regime. Thus, by September 1994, when she entered DROP, Ms. LeBlanc had 27.1 years of state sеrvice, 18.2 of which occurred during the existence of the community property regime, and was eligible to retire.
Once eligible for retirement, rather then ceasing her employment and beginning to receive a monthly retirement benefit from LASERS, Ms. LeBlanc opted to enter the DROP program. Thus, the term of employment and the retirement contributions that gave rise to Ms. LeBlanc‘s right to have funds credited to her DROP account occurred both during the existence of the community property regime and after the terminаtion of the community property regime. It follows then that the right to receive the funds in the DROP account attributable to Ms. LeBlanc‘s labor and efforts and retirement contributions during the existence of the community property regime constitutes a community asset, even though the DROP account was established after the community property regime terminated. See Bailey, 708 So.2d at 357.
In the DROP context, the Sims formula must be applied as of the date of the employee spouse‘s entry into the DROP program, because that is the date the base amount of thе eventual monthly retirement benefits is fixed, and the employee spouse earns no further credit toward these retirement benefits while in the DROP program. Bailey, 708 So.2d at 358. The parties’ stipulated percentage7 for Sims formula calculations was based on the date
As previously stated, the amount of the monthly contribution into a state employee‘s DROP account is based in part on the years of service by the state employee prior to entry into the DROP program. On the date an employee enters the DROP program, if the employee had instead chosen to actually retire, the amount of the retirement benefit he would receive each month would be the same as the amount deposited into the DROP account. See Bailey, 708 So.2d at 358.8 Thus, there is no reason to treat the contributions into a DROP account any differently than regular monthly base retirement benefits for purposes of apportioning the benefits between the employee spouse‘s separate property and the community.
In so holding, we respectfully disagree with our brethren on the fifth circuit in Schlosser v. Behan, 98-280 (La.App. 5th Cir.11/25/98), 722 So.2d 1129, writ denied, 98-3165 (La.3/26/99), 739 So.2d 791, who concluded that funds in an employee spouse‘s DROP account were the separate prоperty of the employee spouse, where the community terminated 17 years before the employee spouse entered the DROP program. The Schlosser court distinguished Bailey because in Bailey, the community still existed when the employee spouse entered the DROP program, but was terminated during the employee spouse‘s participation in the DROP program. Schlosser, 722 So.2d at 1131. For the reasons set forth above, we find that this time element distinction is irrelevant. See also Sullivan v. Sullivan, 00-1510 (La.App. 3rd Cir.6/13/01), 801 So.2d 1093 (non-employee spouse entitled to a portion of funds in employee spouse‘s DROP account though the employee spouse did not enter DROP until seven years after the community property regime terminated); Zalfen v. Albright, 00-1175 (La.App. 4th Cir.7/18/01), 791 So.2d 800 (although employee entered DROP after the community terminated, non-employee former spouse is entitled to a partition of the funds in the DROP account based on the Sims formula). To reiterate, the contributions made to an employee spouse‘s DROP account are based on years of service and retirement contributions madе from the commencement of the employee spouse‘s state employment through the entry into the DROP program. As to DROP benefits, the Sims formula percentage will factor in and account for the length of time that the
Consequently, we reverse that part of the judgment that classified Ms. LeBlanc‘s DROP benefits as her separate property. We amend the judgment and render judgment to provide that the entirety of Ms. LeBlanc‘s DROP account is to be apportioned between the community and Ms. LeBlanc‘s separate property in accordance with the Sims formula using the stipulated percentage of 67.16 (18.2 divided by 27.1). Mr. Knighten is therefore entitled to receive one-hаlf of 67.16 percent of Ms. LeBlanc‘s DROP benefits upon Ms. LeBlanc‘s completion of her actual state employment and receipt of her DROP benefits.
MODIFICATION OF EQUALIZING PAYMENT
Although we find merit to this last assignment of error regarding classification of the DROP account, this finding does not require modification to the equalizing payment. Mr. Knighten is not entitled to receive his Sims formula percentage portion of the DROP benefits until Ms. LeBlanc ends her state retirement and begins receiving the DROP retirement benefits. Having found no merit in the assignments of error that would hаve required an amendment to the equalizing payment, this assignment of error also lacks merit.
CONCLUSION
For the reasons set forth in this opinion, the judgment of the trial court is affirmed in part, amended in part, reversed in part and rendered. Costs of this appeal are assessed in the following proportions: twenty-five percent to Ms. LeBlanc and seventy-five percent to Mr. Knighten.
AFFIRMED IN PART, AMENDED IN PART, REVERSED IN PART AND RENDERED.
Notes
A co-owner who on account of the thing held in indivision has incurred necessary expenses, expenses for ordinary maintenance and repairs, or necessary management expenses paid to a third person, is entitled to reimbursement from the other co-owners in proportion to their shares.
If the co-owner who incurred the expenses had the enjoyment of the thing held in indivision, his reimbursement shall be reduced in proportion to the value of the enjoyment.