At least he got the laptop back

N.B., the Court of Appeals opinion in Pittman v. Pittman was subsequently refiled with a different analysis on the transmutation issue. See Rearranging the deck chairs

Thomas F. McDow is a friend of mine and an exceptional attorney.  When I noted that the appeal he pursued in Pittman v. Pittman, resulting in a published decision today [August 3, 2011] in the South Carolina Court of Appeals, was “Affirmed in Part, Reversed in Part,” I was excited for his partial reversal.  Then I read the Pittman opinion.  All his client won on this appeal was the return of a used laptop.

Pittman raises a number of interesting issues on appeal, all of which were affirmed.  Mr. Pittman appealed the award of $600.00 per month in permanent periodic alimony for a seven-year second marriage that produced no children.  The Court of Appeals affirmed this award holding:

The family court made sufficient findings of fact that, along with the evidence in the record, would support the alimony award.  In particular, the family court noted the following: (1) the parties were married nine years, during which they enjoyed a comfortable standard of living; (2) at the time of the divorce, Wife was sixty-one years old and Husband was forty-seven; (3) Husband was at fault in the breakup of the marriage; (4) Husband fired Wife, hired his paramour for her job, and paid his paramour the same salary he paid Wife; (5) whereas Husband was in good health, Wife has been under the care of a counselor because of the stress of the divorce and Husband’s adultery; (6) because of their ages, neither party would be able to increase his or her earning power through additional training or education; (7) although Wife was to receive several rental properties from the marital estate, one of them was vacant and there was a mortgage payment associated with another one of the properties; (8) Husband was to receive Pittman Professional Land Surveying in his share of the marital estate and could increase his income substantially through this asset; (9) the alimony would be taxable to Wife and deductible to Husband; and (10) Wife was close to retirement age, had worked in Pittman Professional Land Surveying during the entire course of the marriage, and is not underemployed given her age, experience, position, and job availability.

Furthermore, although the family court did not state findings concerning the parties’ earnings, expenses, and needs in quantitative detail in its discussion concerning alimony factors, it made such findings elsewhere in the order.  Earnings, for example, are referenced in the court’s discussions on the parties’ educational backgrounds, employment history and earning potential, and marital and nonmarital property.  Similarly, the court discussed the parties’ expenses and needs in its findings on standard of living and on the parties’ physical and emotional health.  Given these findings, we hold the family court acted within its discretion in awarding Wife permanent alimony of $600 per month.

Husband appealed the failure of the trial court to credit part of his $2,500 per month in temporary spousal support as equitable distribution, despite the temporary order specifically authorizing the trial court to make such an allocation.  In affirming the trial court, the Court of Appeals held:

Husband did not offer any arguments or supporting authority for his position that the temporary alimony award was excessive or otherwise unwarranted.  We therefore hold he has abandoned the issue of whether the record supports the award of temporary alimony.

In support of its decision to decline to treat any part of the temporary alimony as an advance on equitable distribution, the family court noted that both parties treated the payments as alimony for tax purposes.  We agree with Husband that this alone would have been insufficient to support the family court’s refusal to exercise the discretion it reserved in the temporary order to treat alimony paid during the pendency of the litigation as an advance on equitable distribution.  The court also found, however, that the amount of alimony Husband paid before the final hearing was “an appropriate amount of alimony as temporary alimony,” and we have found nothing in the record on appeal warranting reversal of this finding.

At the temporary hearing in November 2007, Wife revealed on her financial declaration she was earning $1,030.75 per month from her job as a surgical nurse.  In addition, she noted two sources of rental income of $900 per month and $1,025 per month, as well as her monthly salary from Pittman Professional Land Surveying of $4,166.67.  In the temporary order, the family court noted Husband had terminated Wife’s employment with the business and found Wife was able to work but had not been employed full-time outside the business for several years.  In directing Husband to pay temporary alimony of $2,500 per month, the court encouraged Wife to find employment and specifically “reserve[d] the right to offset temporary alimony against [Wife’s] equitable distribution if the Court at the final hearing determines that such is appropriate.”  According to Wife’s final financial declaration, dated January 20, 2009, she was earning $3,194 per month from her job.  The portions of the transcript included in the record on appeal, however, do not indicate when Wife’s job earnings increased.  During oral argument, counsel for Wife advised that no such information was presented during the hearing, and opposing counsel offered no opposition to this assertion during rebuttal.  Neither party suggested any other variables that this court could consider in determining whether Husband could receive an offset of the temporary alimony that he paid against Wife’s share of the marital property.  We therefore hold the record is insufficient for this court to make findings of fact as to whether any part of the temporary alimony paid should be offset against Wife’s share of the marital estate.

Citation omitted.

Despite the insufficient record on Wife’s earning history during the litigation, the Court of Appeals refused to remand the matter back to the trial court citing the recent Supreme Court opinion in Lewis v. Lewis,  392 S.C. 381, 709 S.E.2d 650, 656, n.11 (2011), which discouraged allowing litigants “a second bite at the apple.”

Husband also appealed the award of $12,500 in attorney’s fees to Wife.  In affirming that award, the Court of Appeals held:

[T]he family court awarded Wife only fifty-six percent of her total fee; thus, we find the court gave sufficient consideration to any misconduct on Wife’s part that prolonged the litigation unnecessarily.  Furthermore, although we do not dispute that Husband has the right to advance a meritorious position on certain issues even if they are ultimately rejected by the family court, this right does not override the principle that beneficial results obtained by counsel remains a factor in determining a reasonable attorney’s fee in a family court case.

Husband argued the family court erred in finding that a Volvo and a Volkswagen, both of which were awarded to Wife, were each worth $8,000.  The Court of Appeals disagreed with Husband’s claim that no evidence was offered to support that valuation, noting:

In the marital assets addendum to Wife’s financial declaration, she listed both vehicles with the corresponding values.  Although, as Husband argues in his reply brief, he conceded to admitting the addendum only as a summary of Wife’s testimony, there is nothing in the record indicating the family court admitted it for only this limited purpose.  Moreover, the statement by Wife’s counsel that the vehicles were “$8,000 each” was made during Wife’s direct examination and was not a statement by counsel to the court.  Though the inquiry was not artfully presented, common sense warrants interpreting it as a question.  We hold Wife, in answering this question in the affirmative, presented evidence of the values of these items.

The Court of Appeals further rejected Husband’s argument that his surveying business had not been transmuted into marital property:

Wife acknowledged Husband began the business before the parties married; however, it was initially only a side business.  Husband was able to quit his job and devote himself to the business on a full-time basis in 1996 because he could fall back on Wife’s income from her work as a nurse.  After the parties married in 2000, Wife reduced her hours at her nursing job to work full-time in the business.  Although the guaranty for the business on which Wife obligated herself had been discharged, she—with Husband’s knowledge—subjected herself to liability to third parties associated with the business.  Through the joint efforts of both parties, the annual gross income of the company increased from $100,000 in 2000 to over $800,000 in 2006.  Furthermore, Husband’s status as the sole shareholder of record is not dispositive.  Given these circumstances, we hold that Husband, as the appealing party in this case, has not carried his burden to establish that the preponderance of the evidence regarding transmutation is against the family court’s finding on this matter.

Husband further argued that if the business was transmuted, Wife should only receive a special equity interest in the business or that he should be given credit for the premarital value of the business.  In rejecting Husband’s argument, the Court of Appeals noted:

The parties pooled their earnings, and with Husband’s approval the business paid Wife a higher salary with the objective of increasing her Social Security income and ultimately providing more money for both parties during their retirement.  In addition, Wife relinquished retirement benefits that she could have earned through full-time nursing work in order to devote time to developing the business.  She made this sacrifice with the expectation that the business would take care of both parties when they retired.  We therefore uphold the family court’s finding that the business was transmuted into marital property and further hold it is unnecessary to consider whether Wife should have received only a special equity in this asset.

In support of his position that he should have received some credit for the premarital value of the business, Husband argues “the trial judge certainly had no problem in ‘backing out’ the nonmarital portion of the wife’s retirement savings plan.”  Whereas, however, the family court determined that the entire business had been transmuted into a marital asset, there was no finding that the nonmarital portion of Wife’s retirement account had been transmuted.  The distribution of Wife’s retirement account was based on a completely different premise from the distribution of Pittman Professional Land Surveying.  In the case of the business, the premarital value of that asset was determined to have been transmuted into marital property.

However, the family court awarded wife a laptop she purchased with company funds after the filing of this action.  Husband successfully appealed this issue, with the Court of Appeals holding:

In allowing Wife to retain the computer, the court noted only that “no credible testimony was offered as to its value.”  It was undisputed, however, that Wife purchased the computer after the filing of this action with funds belonging to Pittman Professional Land Surveying, an asset awarded in its entirety to Husband as his portion of the marital estate.  We agree with Husband that the award to him of the business, together with all its assets, should have included the laptop.  Although the family court’s remarks suggest Wife would have been ordered to reimburse Husband for the computer had evidence of its value been presented at trial, the absence of this information did not prevent the court from using a “reasonable means to achieve equity between the parties.” Full equity between the parties could easily have been attained by awarding the computer to Husband.  We therefore reverse the award to Wife of the laptop computer and hold the family court should have awarded it to Husband.

Citation omitted.

The Pittman appeal provided little benefit to Husband.  However the opinion is very useful in providing guidance on the treatment of temporary alimony and the treatment of businesses that one party brings into a marriage but grows during the marriage.  Pittman is further evidence that the appellate courts are affirming permanent alimony awards for second marriages of approximately a decade length, even when no children were born of this marriage.  Finally, the Pittman opinion contains a useful warning that failure of the party claiming error to develop an adequate record at trial may lead to an affirmance rather than a remand.

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