FEHR V. FEHR
PUBLISHED: AFFIRMING IN PART AND REVERSING AND REMANDING IN PART
DATE RENDERED: 10/3/2008
Ex-Husband appealed TC’s decision awarding Ex-Wife a villa and a one-half marital interest in a mini-storage warehouse located in the Netherlands Antilles, alleging that he should have received his nonmarital interest in those properties. Ex-Wife contended that TC lacked subject matter jurisdiction over the property located in the Netherlands Antilles, or alternatively, that the law of that country should apply to the division of the property. She also challenged the admission of appraisals performed by an unlicensed real estate agent.
The parties were married on August 7, 2000, in the Netherland Antilles. Both were KY residents at the time and Ex-Husband continued to reside in KY throughout the marriage. During the marriage, Ex-Wife primarily resided in St. Maarten but did not change her United States citizenship. In June 2004, Ex-Husband filed a petition for dissolution in KY, asserting his KY residence. Ex-Wife admitted in her Response that she had been a KY resident for several years, and subsequently filed documents in the record demonstrating that her domicile was within the U.S. Ex-Wife did not object to the jurisdiction of the Oldham TC until two years after the petition was filed. The parties were equal shareholders a mini-warehouse storage company, incorporated pursuant to the laws of the Netherlands Antilles. The corporation was formed prior to the marriage. Ex-Husband made a total pre-marital investment of $110,693 to this property, while Ex-Wife invested $60,000 in the purchase of the property prior to the marriage and managed the property since the purchase. The parties also owned a villa in St. Maarten, titled in a company organized under the laws of the country of Anguilla and of which Ex-Wife was the sole director. Ex-Wife invested $101,000 from the sale proceeds of her pre-marital home towards the purchase of the villa, while Ex-Husband contributed $217, 000 of non-marital funds to the purchase. A St. Maarten real estate broker appraised the villa at $705,000 and the warehouse business at $585,000. He was not a licensed appraiser but testified that licensure is not customary in the Netherland Antilles.
TC found that the warehouse was a joint business venture, declared it to be marital property, and equally divided the parties’ interests. Despite the evidence that both parties contributed nonmarital funds toward the purchase of the villa, TC made an “equitable decision to award the entirety of the property to Ex-Wife, stating that such a decision was made in consideration of several factors, including the contribution of each party to the home, the difficulties in enforcing a Kentucky judgment as it relates to the St. Maarten property; and that TC ordered no maintenance paid from Ex-Husband to Ex-Wife.
Because both parties were Kentucky domiciliaries, CA concluded that TC had subject matter jurisdiction and personal jurisdiction over the parties to grant the dissolution. Ex-Wife objected to the assertion of TC’s jurisdiction, due to TC’s lack of power to decide the parties’ interest in the St. Maarten property, thus claiming TC’s lack of subject matter jurisdiction. Subject matter jurisdiction cannot be waived or otherwise conferred by the parties. It either exists or it is absent. Although it is well established law that KY courts are without jurisdiction to settle title or possessory rights to land outside the Commonwealth, it is equally accepted that a court may, through an in personam decree, affect title to land in another state. CA held that by virtue of TC’s personal jurisdiction over the parties, it had the authority and power to indirectly affect the property by compelling the conveyance of the interest, though an action to enforce a foreign decree so as to transfer title in accordance with the decree generally requires a separate action in the jurisdiction in which it is located.
REAL ESTATE EXPERT QUALIFICATIONS:
Ex-Wife contended that the testimony of the real estate broker was inadmissible because he was not licensed in accordance with Kentucky law. CA held that KY statutory regulation of real estate appraisers does not supersede the Rule of Civil Procedure placing qualification of expert witnesses within the discretion of TC based on the witnesses’ knowledge, skill, experience, training, and education. Although a statutory license requirement is relevant to TC’s determination, the lack of a license does not render the testimony inadmissible.
ALLOCATION OF NONMARITAL PROPERTY
A proper inquiry into the division of property begins with a three-step process: (1) TC first characterizes each item of property as marital or nonmarital; (2) then assigns each party's nonmarital property to that party; and (3) finally, equitably divides the marital property between the parties. When property consists of both marital and nonmarital contributions and has increased in value during the marriage, the reason for the increase in nonmarital property value must be determined. If attributable solely to economic conditions, the increase is nonmarital. If the increase is the result of the joint efforts of the parties it is considered marital property subject to division in equitable proportions.
With regard to the division of the warehouse business, CA held that while Ex-Husband contributed more than Ex-Wife financially, she contributed a corresponding amount in her effort as manager of the business both before and during the marriage so that her nonmarital contribution as manager of the property was equal to the monetary contribution of non-marital funds contributed by Ex-Husband. Thus, TC did not err in awarding each party a one-half interest in that asset.
With regard to the villa, CA held that TC’s award of the villa to Ex-Wife is inconsistent with KRS 403.190 and the three-step process required to be applied. Because TC found that Ex-Husband and Ex-Wife made nonmarital contributions to the purchase of the villa, it was required to award each their respective nonmarital interests in the property. Only after it has restored each party their nonmarital interest are the factors delineated in KRS
403.200 and an award of maintenance, if any, appropriate. CA stated that TC is not permitted to circumvent KRS 403.190 in lieu of a maintenance award.
Digested by Michelle Eisenmenger Mapes, Diana L. Skaggs + Associates