Commonwealth of Kentucky Court of Appeals

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1 RENDERED: MAY 14, 2010; 10:00 A.M. NOT TO BE PUBLISHED Commonwealth of Kentucky Court of Appeals NO CA MR AND NO CA MR BRIAN G. SULLIVAN APPELLANT/CROSS-APPELLEE APPEAL AND CROSS-APPEAL FROM WARREN FAMILY COURT v. HONORABLE CATHERINE RICE HOLDERFIELD, JUDGE ACTION NO. 06-CI GAIL C. SULLIVAN (NOW CRIDER) APPELLEE/CROSS-APPELLANT OPINION AFFIRMING ** ** ** ** ** BEFORE: CAPERTON AND CLAYTON, JUDGES; BUCKINGHAM, 1 SENIOR JUDGE. BUCKINGHAM, SENIOR JUDGE: Brian G. Sullivan and Gail C. Sullivan (now Crider) each appeal from a judgment and decree of dissolution of marriage entered 1 Senior Judge David C. Buckingham sitting as Special Judge by assignment of the Chief Justice pursuant to Section 110(5)(b) of the Kentucky Constitution and Kentucky Revised Statutes (KRS)

2 by the Warren Family Court on October 10, We find no error and thus affirm. Brian and Gail were married in 1969 and separated in July At the time of the hearing of this case in late 2007 and early 2008, Brian was employed by Western Kentucky University as a Professor of Environmental Law. Gail had worked as a social worker early in her career and had later been employed as a high school teacher in Butler County, a position from which she retired in December At the time of the final hearing, Brian was 61 years old and Gail was 60. The parties desired to divide the marital property in equal proportions, and the trial court went to great lengths to accomplish that goal. In its 48-page judgment, the court awarded each party $539, in marital property. The court also awarded Gail $482 per month as maintenance but denied her motion for attorney fees. The classification of a portion of Brian s Kentucky Teacher s Retirement System (KTRS) account as marital property, the award of maintenance to Gail, and the award of a majority portion of an annuity to Gail are the issues raised by Brian on appeal. The court s denial of an award of attorney fees to Gail is the sole issue she raises on appeal. Brian has a KTRS account that was valued at $782,625. Because Brian was still employed as a professor at the time of the final hearing, his account was not in pay status. Gail has a KTRS account that was valued at $267,201 as well as a Kentucky Employee Retirement Service (KERS) account that was valued -2-

3 at $231,970. Because she had retired, both her accounts were in pay status. The parties have not contested herein the valuations of their respective accounts. The trial court valued Gail s retirement accounts at $499,171 and then compared that amount to the value of Brian s retirement account. Relying on the holding of the Kentucky Supreme Court in Shown v. Shown, 233 S.W.3d 718 (Ky. 2007), the trial court applied KRS (4) and determined that the surplus amount of $283,454 by which Brian s pension exceeds Gail s pension should be deemed marital property[.] Brian contends that his entire KTRS account should have been exempted from classification as marital property because of KRS (2). That statute, which relates to school teachers retirements, provides as follows: Retirement allowance, disability allowance, accumulated contributions, or any other benefit under the retirement system shall not be classified as marital property pursuant to KRS (1). Retirement allowance, disability allowance, accumulated contributions, or any other benefit under the retirement system shall not be considered as an economic circumstance during the division of marital property in an action for dissolution of marriage pursuant to KRS (1)(d). The rationale for the statute is noted in Waggoner v. Waggoner, 846 S.W.2d 704 (Ky. 1992), as follows: [T]he basis for the classification.... is founded on the fact that teachers are the only public employees not covered by the Social Security system. The General Assembly, therefore enacted legislation forming the TRS to ensure that teachers, upon retirement, would be provided for adequately. By enacting KRS (1) the General Assembly further protected this group by -3-

4 insulating their retirement allowances from attachment during the division of marital property. Id. at 708. KRS (4) provides in part as follows: If the retirement benefits of one spouse are excepted from classification as marital property, or not considered as an economic circumstance during the division of marital property, then the retirement benefits of the other spouse shall also be excepted, or not considered, as the case may be. However, the level of exception provided to the spouse with the greater retirement benefit shall not exceed the level of exception provided to the other spouse. The interaction of these two statutes was discussed in the Shown case. The husband in a dissolution of marriage action in Shown had $81,410 in his KTRS account, while the wife had $1,896 in a SEP-IRA account. The trial court and the Court of Appeals held that the two statutes were in conflict, and, based on principles of statutory construction, that KRS (2) would control over KRS (4). The result was that the husband was able to claim his entire KTRS account as exempt from classification as marital property. Shown, 233 S.W.3d at The Kentucky Supreme Court, however, reversed the trial court and the Court of Appeals on the basis that there was no conflict between the two statutes. Id. at 720. The Court stated that [t]he language set forth in KRS (4) clearly anticipates statutes such as KRS (2) and thus, by the plain language set forth therein, KRS (4) is meant to be read in -4-

5 conjunction, not in conflict with, KRS (2). Id. at The Court further stated that [b]oth case law and the statutory language itself demonstrate that KRS (4) was intended to serve as a limitation upon exemption statutes such as KRS (2). Id. at 721. The result in Shown was that the husband s KTRS account was exempt from classification as marital property only to the extent it did not exceed the wife s SEP-IRA account. Brian argues that the Shown case is distinguishable on its facts from this case because here both spouses were teachers and maintained a KTRS retirement plan whereas in Shown only one of the spouses was a teacher with a KTRS retirement plan. When reviewing the statute, however, we, like the Kentucky Supreme Court simply cannot ignore the fact that this sentence [the last sentence in KRS (4)] is broad in its language and indicates by its plain words that its effect is meant to apply to both spouses, not just teacher spouses. Id. at 721. Had Gail not been a school teacher, then under Shown the excess of Brian s KTRS account clearly would have been classified as marital property. We do not believe that the fact that Gail was a school teacher changes the result. We conclude that the trial court herein correctly applied the statutes and held that Brian s KTRS account was exempt from classification as marital property only to the extent that it did not exceed the amounts of Gail s retirement accounts. Brian next argues that the trial court erred when it awarded Gail maintenance. Gail was originally awarded $620 per month after the trial court conducted an extensive analysis of income she receives from the assets awarded -5-

6 her as well as imputed employment income. After Brian s motion to reconsider, the trial court imputed additional employment income to Gail and reduced the maintenance award to $482 per month. Brian contends that the trial court erroneously did not use a reasonable rate of return to determine Gail s income from assets awarded to her in determining whether she was entitled to maintenance and, if so, in what amount. Maintenance determinations are within the sound discretion of the trial court. Platt v. Platt, 728 S.W.2d 542, 543 (Ky. App. 1987). Neither party provided evidence of the income generated by the investment assets held by the other. Without specific evidence before it, the trial court was not in a position to assign an arbitrary rate of return to the asset pool as Brian now requests. The trial court, citing Powell v. Powell, 107 S.W.3d 222 (Ky. 2003), did not impute income to Gail from all of her assets[.] In Powell, the court stated that we do not impose a duty to invest all proceeds from a cash settlement in order to reduce the amount of a spousal maintenance[.] Id. at 225. The trial court further found that it would be unfair to impute income to Gail on all of her assets when, because of a lack of evidence, it did not impute any income to Brian from his assets when determining his ability to pay maintenance. We conclude that there was no abuse of discretion in this regard. 2 Finally, Brian asserts that the trial court abused its discretion when it awarded 59.7% ($146,270) of the value of an annuity policy to Gail while only 2 Brian also argues that the trial court erroneously awarded maintenance to Gail even though she did not request it based on the court s ruling that a portion of Brian s KTRS account was marital property. We believe that the trial court properly rejected the argument on pages of its judgment. -6-

7 awarding him 40.3% ($98,730). Gail was awarded the greater amount as partial compensation for her marital interest in Brian s KTRS account. Brian argues that economic conditions changed between the trial and the final judgment such that the value of the annuity retained its value compared to the diminished value of the parties stocks. Thus, he maintains that because Gail was awarded more of the annuity, which he states was the most stable of the parties assets, the court should have revisited the division of property so as to equalize it. He cites KRS (1)(d) to support his argument. That statute requires the trial court to consider several factors, including the [e]conomic circumstance of each spouse when the division of property is to become effective[.] We conclude that the trial court properly denied Brian s motion to alter, amend, or vacate the judgment in this regard. The trial court properly relied on Gullion v. Gullion, 163 S.W.3d 888 (Ky. 2005), wherein the Kentucky Supreme Court held that it is improper for a trial court to rely upon evidence of events that occurred subsequent to the trial in ruling on a [Kentucky Rules of Civil Procedure (CR)] motion. Id. at 894. Further, there is no indication that the court failed to consider all relevant factors, including those set forth in KRS (1). On cross-appeal, Gail argues that it was an abuse of discretion when the trial court failed to award her attorney fees and costs associated with the action. 3 She refers to the disparity in income between herself and Brian as 3 Gail states in her brief that her attorney fees and costs exceeded $50,

8 justification for the award of costs and fees. In support of her claim, she also cites Brian s alleged obstructive actions. KRS provides as follows: The court from time to time after considering the financial resources of both parties may order a party to pay a reasonable amount for the cost to the other party of maintaining or defending any proceeding under this chapter and for attorney s fees, including sums for legal services rendered and costs incurred prior to the commencement of the proceeding or after entry of judgment. The court may order that the amount be paid directly to the attorney, who may enforce the order in his name. [E]ven if a disparity exists, whether to make such an assignment and, if so, the amount to be assigned is within the discretion of the trial judge. Neidlinger v. Neidlinger, 52 S.W.3d 513, 519 (Ky. 2001). [T]here is nothing mandatory about it. Moss v. Moss, 639 S.W.2d 370, 373 (Ky. App. 1982). We conclude that the court did not abuse its discretion in refusing to award Gail her attorney fees and costs under KRS Further, Gail argues that the court erred in refusing to award her attorney fees and costs pursuant to CR She complains that because Brian refused to properly answer requests for admissions, she was required to expend additional amounts in fees and costs to prove the matters that she had requested Brian to admit. CR provides as follows: If a party fails to admit the genuineness of any document or the truth of any matter as requested under Rule 36, and -8-

9 if the party requesting the admissions thereafter proves the genuineness of the document or the truth of the matter, he may apply to the court for an order requiring the other party to pay him the reasonable expenses incurred in making that proof, including reasonable attorney s fees. The court shall make the order unless it finds that (a) the request was held objectionable pursuant to Rule 36.01, or (b) the admission sought was of no substantial importance, or (c) the party failing to admit had reasonable ground to believe that he might prevail on the matter, or (d) there was other good reason for the failure to admit. The trial court held that Respondent s [Brian s] answers show that he could reasonably have believed he could have prevailed in being awarded some marital interest in the aforementioned property. The Court therefore finds that attorney s fees should not be awarded to Petitioner [Gail] in this case. See CR 37.03(c). In Gentry v. Gentry, 798 S.W.2d 928 (Ky. 1990), the Kentucky Supreme Court held as follows: The amount of an award of attorney s fees is committed to the sound discretion of the trial court with good reason. That court is in the best position to observe conduct and tactics which waste the court s and attorneys time and must be given wide latitude to sanction or discourage such conduct. Id. at 938. We find no abuse of discretion and thus no error in the trial court s refusal to award attorney fees and costs to Gail under CR The judgment of the Warren Family Court is affirmed. ALL CONCUR. -9-

10 BRIEFS FOR APPELLANT/CROSS- APPELLEE: Steven O. Thornton Bowling Green, Kentucky BRIEFS FOR APPELLEE/CROSS- APPELLANT: Mary Janice Lintner Louisville, Kentucky -10-

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