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Supreme Court affirms lower courts’ ruling on transmutation of husband’s business

The January 15, 2014 Supreme Court opinion in Pittman v. Pittman407 S.C. 141, 754 S.E.2d 501 (2014), affirmed the Court of Appeals and family court’s determination that husband’s premarital surveying business had been transmuted into marital property while modifying the reasoning justifying the decision.  At trial the family court found this business to be transmuted and awarded Wife one-half of the value of the business.  Husband appealed and the Court of Appeals affirmed this issue.  The Supreme Court granted certiorari on this one issue.

The family court had justified and the Court of Appeals had affirmed the transmutation in-part based upon Wife’s premarital contributions to the business.  The Supreme Court found such consideration to be an error of law but affirmed the transmutation finding “the record reveals ample evidence to support a finding that the parties’ actions during the marriage manifested intent for the Business to be transmuted.” (emphasis in original).  The Pittman opinion contains numerous factual findings documenting this evidence.

Husband raised two additional arguments as to why he should have been awarded more than 50% of the value of this business.  First he argued he was entitled to a “special equity” interest in this business because it had value prior to the marriage.  The Supreme Court held this “argument is inconsistent with the law of this state. ‘When property is determined to have been transmuted, the entire property, not just a portion of the property, is included in the parties’ marital property which is thereafter apportioned by the family court using the criteria set forth in the equitable apportionment statute.’” Calhoun v. Calhoun, 339 S.C. 96, 106, 529 S.E.2d 14, 20 (2000).  Basically, once property has been transmuted, no special equity interest exists.

Husband’s second argument was that he was entitled to more than 50% of the value of the business due to his premarital contribution.  The Supreme Court noted this argument had merit “in the abstract” but was “unable [unwilling?] to conclude that the family court erred.”  In responding to Husband’s post-trial motion for reconsideration, “the family court noted the parties stipulated to a ‘50/50 division.’ Although there is disagreement as to whether the parties stipulated to an equal division, we have carefully reviewed the parties’ respective contributions to the acquisition of the marital estate and find the equitable apportionment ordered by the family court to be reasonable.”

Given the Supreme Court’s holding, it could have dismissed certiorari as improvidently granted. It appears it issued this opinion in order to direct family courts not to consider premarital contributions in determining transmutation.

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