“Hammered” by the family court, Court of Appeals hammers Husband again

Posted Saturday, April 16th, 2016 by Gregory Forman
Filed under Attorney's Fees, Equitable Distribution/Property Division, Of Interest to Family Court Litigants, Of Interest to Family Law Attorneys, South Carolina Appellate Decisions, South Carolina Specific

There are some family court smack-downs that beg for an appeal. And there are some Court of Appeals decisions that beg for a petition for certiorari. The April 13, 2016 opinion in Fredrickson v. Schulze416 S.C. 141 785 S.E.2d 392 (Ct. App. 2016), is one such case.

Husband, Schulze, appealed many aspects of the family court’s equitable distribution decision along with its denial of attorney’s fees. On equitable distribution he appealed a few personal property valuation issues but his major issues were a $60,000 “special equity” interest the family court granted Wife, Fredrickson, in a jointly title marital home, the family court’s failure to award him any equity in three pieces of investment real property Wife purchased prior to the marriage, and the 70/30 division (in Wife’s favor) on equitable distribution.

The granting of the $60,000 “special equity” interest in the marital home due to Wife’s use of pre-marital funds for the down payment strikes me as such an obvious error that I find it hard to believe the Court of Appeals affirmed it. The appellate courts have repeatedly rejected such an approach, often reversing family court decisions that did so. See, e.g., Barrow v. Barrow, 394 S.C. 603, 614, 716 S.E.2d 302, 308 (Ct.App.2011). As our Supreme Court noted 2014 when rejecting a claim of “special equity” interest due to premarital contributions to transmuted property:

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. The proper way to account for such a direct financial contribution is in the overall division of the marital estate. More to the point, such a direct financial contribution should be taken into account in determining the percentage division of the marital estate. … This contribution should be taken into account in determining the percentage of the marital estate to which the [inheritor] is equitably entitled upon distribution.

Pittman v. Pittman, 407 S.C. 141 754 S.E.2d 501, 508 (2014) (citations omitted). This approach has also been explicitly rejected in Teeter v. Teeter, 408 S.C. 485, 759 S.E.2d 144 (Ct.App. 2014), Dawkins v. Dawkins, 386 S.C. 169, 687 S.E.2d 52 (2010), abrogated on other grounds by Lewis v. Lewis, 392 S.C. 381, 709 S.E.2d 650 (2011), and Toler v. Toler, 292 S.C. 374, 356 S.E.2d 429 (Ct.App.1987).

Husband also argued on appeal that he was entitled to an equity interest in three pieces of investment property Wife purchased prior to the marriage. The Court of Appeals found Husband had failed to preserve the issue for two of these properties. For the third property, 39 Druid Street, the Court of Appeals rejected Husband’s claims of transmutation and special equity. However, the opinion notes that expenses for 39 Druid Street were paid from a corporate account owned by the parties and that Husband had done management work for a number of Wife’s investment properties, including 39 Druid Street. It is hard to reconcile these findings with a decision that the property was not transmuted and that Husband was not entitled to a special equity interest.

Husband further argued that the family court’s 70/30 split should be reversed and the order
revised to a 50/50 split, asserting that, under the final order, Wife receives a total of $1,064,145 and he receives $185,018. The Court of Appeals justified the 70/30 division because of the parties’ short (seven year) marriage, Husband’s marital fault (it appears his post-filing adultery was considered part of marital fault), and the fact that Wife contributed more than eighty-four percent of the parties’ income, yet she continued to be the primary caregiver for the parties’ son and was responsible for cleaning the house and bathrooms, doing the dishes and laundry, and cooking dinner.

Assuming this 70/30 division on equitable distribution is not subsequently modified, this portion of the Fredrickson opinion has implications for many equitable distribution cases. It appears that short term marriages can justify relatively extreme deviations from a 50/50 division of marital assets. I also encounter a frequent number of divorces in which the wife is the primary homemaker and caretaker of the parties’ child(ren), while earning half or more of the parties’ combined income. Such wives may be entitled to a majority of the marital estate.

Husband further argued that Wife should be responsible for preparing the QDRO [Qualified Domestic Relations Order] to effectuate transfer of retirement assets to him. The Court of Appeals rejected this claim based upon Wife’s very strong reasoning that “he [Husband] has the strongest financial incentive to quickly prepare the order and follow through with the qualification process” and “allowing Husband to draft the QDRO will enable him to include greater protection in the language of the order.” I always want the party obtaining the transfer to draft the QDRO; this portion of the Fredrickson opinion will justify such requests.

On the issue of attorney’s fees the Fredrickson opinion lists Husband’s arguments in favor of an award of fees and Wife’s arguments opposing the award without analyzing any of them–simply affirming the family court’s denial of fees. Most of the issues raised by the parties were not novel. However, one was and should have been addressed. Husband argued that fees Wife expended in successfully defending his prior contempt actions should not have been used by the family court in denying his fee request. He notes, accurately I believe, that “the fees and costs related to contempt in this action are separate and distinct from the underlying divorce action” leading him to argue that they “should not be factored into the consideration of fees and costs.” It would have been useful to have this opinion address his argument.

On appeal Husband argued that he was “hammered” by the family court. This opinion hammers him again. If I were Husband, after the obligatory Petition for Rehearing, I would seek certiorari.

3 thoughts on “Hammered” by the family court, Court of Appeals hammers Husband again

  1. David Wilson says:

    Same appellate panel as the recent Conits case. Petition for Rehearing filed yesterday.

    1. I don’t find Conits poorly reasoned. This opinion is.

      1. David Wilson says:

        But the actual record doesn’t support the findings in Conits. Similar facts, same arguments, same panel, different result.

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