Court of Appeals addresses parties’ efforts in its alimony and equitable distribution determination

Posted Thursday, September 30th, 2021 by Gregory Forman
Filed under Alimony/Spousal Support, Equitable Distribution/Property Division, Of Interest to Family Court Litigants, Of Interest to Family Law Attorneys, South Carolina Appellate Decisions, South Carolina Specific

The August 18, 2021, Court of Appeals opinion in Jordan v. Postell, 434 S.C. 510, 864 S.E.2d 558 (Ct. App. 2021), addresses common issues of equitable distribution and alimony by focusing on Wife’s hard work and Husband’s more relaxed efforts. Given that historically the family courts have had no issue awarding wives alimony and 50% of a marital estate based upon a husband’s substantial work efforts, this seems an unusual focus.

Two of the issues on appeal were the transmutation of the parties’ pre-marital real estate. The Court of Appeals affirmed the family court finding that Wife’s property had not been transmuted. This was despite the parties’ being jointly liable on a home equity debt on that residence, the reduction in the mortgage during the marriage (during a time period when this property was used as the marital residence) and Husband’s work to maintain and improve the property. In affirming the finding that this property was not transmuted, the Court of Appeals noted that the funds used to pay the mortgage were not so commingled as to make them untraceable and that Wife had never placed Husband’s name on the mortgage or title. Further the home equity loan was used exclusively for Husband’s benefit. Finally, Wife’s behavior evinced an intention to treat this property as hers alone.

However the Court of Appeals found the family court gave Husband insufficient special equity in this property. The family court had already granted him at $18,000 special equity interest, based upon $30,000 in improvements he made to the property during the marriage, but did not grant him any other special equity. The Court of Appeals would not credit him with the appreciation in the home but held that he had a special equity interest in one-half of the $108,000 reduction in the mortgage balance during the marriage, thereby increasing his special equity interest by $54,000.

The Court of Appeals affirmed the family court’s finding that Husband’s premarital home was transmuted. Husband conceded that the purpose of this rental property was to support the parties’ retirement and their children’s education. Wife handled the majority of the tenant management duties, paid the mortgage on the house using the joint “relationship checking account,” and used the Home Equity Loan to pay the home’s mortgage when the parties did not have a tenant in the home. Furthermore, Wife’s father essentially included as consideration for the sale of the home the fact that Husband was marrying his daughter—providing further evidence that the purpose of the home was to support the marriage. The only reason the property was in Husband’s name and not Wife’s (or both) is because the parties thought it would be most advantageous for him to purchase it as a first time homebuyer to receive the tax credit. Thus, the Court of Appeals found Wife provided sufficient evidence that the parties regarded the property as marital and Husband intended it as such.

Husband also appealed the family court’s division of the retirement accounts, arguing that they should have been divided equally. The family court found that some of Wife’s retirement was premarital because she acquired it prior to the marriage. It further gave each party 45% (rather than 50%) of the marital portion of the other’s retirement account because it found Wife had made greater efforts into work than Husband did, often working overtime to cover shortfalls in marital expenses, while Husband undertook more leisure activities and did side work that primarily benefitted him. The Court of Appeals affirmed this unequal division holding, “Husband failed to maximize his employment opportunities while Wife sacrificed possible leisure time to work overtime and advance in her career.”

The Court of Appeals also affirmed the family court’s denial of Husband’s alimony request. Husband cited the fact that he is “crippled by significant debt” as a basis for his alimony request but conceded that Wife was not responsible for his financial predicament. Two of the reasons cited by the family court, and approved by the Court of Appeals, for denying Husband alimony were unusual: a twelve-year marriage and “Husband, having college credits and specialized training, failed to maximize his earning potential, such as failing to seek management positions in the course of his employment.” I don’t recall case law in which a marriage of a length greater than a decade or a wife’s failure to maximize her earning potential was cited as a basis to deny a wife alimony.

Husband also argued that one-quarter of the his 2016 tax obligation and Wife’s refund were marital as this action was filed on April 1, 2016. The Court of Appeals affirmed the family court’s determination that each party would be responsible for their own 2016 tax obligation, agreeing with the family court that the evidence was insufficient “to determine each party’s contribution to the accumulation of the assets or creation of the liability pre-filing.” In affirming the family court, the Court of Appeals noted:

[T]he parties were separated for three-fourths of the year, it is logical that they would file separate returns. Husband presented no evidence that Wife was required to file a joint return with him. We find credible Wife’s testimony that her accountant advised her that it would be more advantageous to file a separate return due to Wife’s pay increase.

In my experience, the family court routinely divides a portion of tax liabilities or refunds for the tax year when a marital dissolution action is filed. If Wife had changed her withholding after the date of filing, the rationale of not treating her refund as marital has some logical basis. If not, the ruling appears in contravention of general principals of equitable distribution. I am curious as to how the courts might have ruled if Husband merely sought to make Wife responsible for one-quarter of his 2016 tax liability.

Finally, the Court of Appeals found Husband was not entitled to attorney’s fees. Given that Wife appears to have prevailed on most of the issues contested at trial, this holding isn’t surprising,

Perhaps the most noteworthy portions of the Jordan decision are the courts’ rationales for denying Husband alimony and an equal division of the marital retirement assets. The decision on the 2016 tax is also unusual unless Wife changed her withholding after the date of filing. Not to accuse our courts of enforcing traditional gender expectations but I’m not sure the analysis would have been the same if the genders of the parties had been reversed.

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