Horvath v. Horvath, 2004-CA-002591-MR, designated not to be published, discretionary review granted 4/11/2007
Here's the digest of the Court of Appeals decision:
Issues and Holdings:
1. Whether the trial court erred in finding that the husband owed a maintenance arrearage to wife. The Court held no, the trial court did not err as husband failed to show how he was prejudiced by the court’s order.
2. Whether the trial court erred in awarding prospective maintenance to the wife for life. The Court held yes, the trial court misapplied the criteria set out in KRS 403.200(2) and failed to make appropriate findings of fact.
The parties married on December 9, 1963 and separated on March 30, 2001. In November 2002 the parties agreed that the husband would pay the wife $1700.00 a month in temporary maintenance. In February 2003 the husband sold his business interest to his two partners in exchange for $30,000.00. The husband also received a consulting fee of $9375.00 per month for three years. In March 2003, when the consulting payments began, the husband stopped paying the wife $1700.00 per month. Instead, he paid her half the consulting fee, less tax withholding, her health insurance, and half the cost of the parties’ business properties. These payments ranged from $4339.50 to $2921.61 a month. The company also suspended the payments for a couple months in 2004.
The trial court held that these payments were a division of proceeds from the sale marital property, not maintenance. Thus, the court found that the husband still owed the wife $1700.00 per month in maintenance from July 16, 2003 to the date of judgment. The trial court did not hold the husband in contempt, but ordered that the arrearage be paid within 30 days from entry of judgment. The trial court also awarded the wife $1200.00 per month in maintenance for life. Husband appealed.
The Court found that the trial court correctly concluded that the consulting fees were a marital asset to be divided. Therefore, whether the money owed is characterized as maintenance arrearage or marital asset, the husband still owed the wife the money. Since the husband failed to show how he was prejudiced by the trial court’s characterization of the amount as maintenance arrearage, the Court upheld the lower court’s ruling.
Regarding the prospective maintenance award, the Court found that the husband presented no compelling reason to disturb the trial court’s determination that the wife was entitled to maintenance. However, the Court found that the trial court misapplied KRS 403.200(2) in determining the amount and duration of maintenance. The Court agreed that the trial court should have considered the husband’s debts. The husband’s debts should not be excluded from consideration just because they were classified as nonmarital. The fact that the debts were incurred during the parties’ separation and without the wife’s express consent does not render them a dissipation of marital assets. The trial court can find that debts incurred by one party during separation constitute a dissipation only where there was a clear intent by one party to deprive the other of marital assets. Otherwise, the trial court must consider all debts, marital and nonmarital, in determining the husband’s ability to meet his reasonable needs while paying maintenance to the wife. Therefore, the Court remanded this issue for further factual findings and a recalculation of the maintenance award, if appropriate.
Potter, Senior Judge, Dissented in part.
The husband was prejudiced by the trial court’s failure to give him credit against his maintenance obligation for payments made. Husband paid the maintenance twice, once from marital assets during the separation and again from his separate property after the divorce. The trial court’s ruling seemed to hold that because the marital property used to pay the maintenance could be traced to the proceeds of a sale of property and not income, the payments did not count. The law does not recognize such a principal-income distinction.