Janice K. Vaughn v. Michael S. Vaughn

2021 Ark. App. 394

• Court: Court of Appeals of Arkansas
• Decided: October 20, 2021
• Status: Published

Opinion

Cite as 2021 Ark. App. 394 Elizabeth Perry I attest to the accuracy and ARKANSAS COURT OF APPEALS integrity of this document 2023.07.13 10:38:24 -05'00' DIVISION IV 2023.003.20244 No. CV-20-578

JANICE K. VAUGHN Opinion Delivered October 20, 2021 APPELLANT APPEAL FROM THE PIKE COUNTY V. CIRCUIT COURT [NO. 55DR-19-46] MICHAEL S. VAUGHN APPELLEE HONORABLE TOM W. COOPER, JUDGE

AFFIRMED

N. MARK KLAPPENBACH, Judge

Appellant Janice K. Vaughn and appellee Michael “Mike” S. Vaughn were divorced

by a June 2020 decree. Janice appeals the following findings made by the circuit court: (1)

the amount she was entitled to receive as her portion of Mike’s IRA, (2) the valuation of

the two vehicles she was awarded, and (3) the denial of alimony. We affirm.

The parties were married for almost eighteen years. They separated in May 2019

when both parties were in their fifties. Mike worked for his family’s company, Glenwood

Ready Mix, earning approximately $109,000 annually. Janice had been unemployed for

years, but she received approximately $11,760 annually in disability benefits. Pending

divorce, Mike paid the $678 monthly mortgage on the marital home, paid for Janice’s health

and automobile insurance, and paid Janice $395 a week on the weeks he did not pay the

mortgage. Janice reserved the right to request an unequal division of marital assets and debts in

her favor, and she requested permanent spousal support based on the disparity in their

incomes and earning capacities. Mike requested an unequal division of marital assets and

debts in his favor.

At the June 2020 divorce bench trial, Mike presented evidence to support his belief

that Janice was a compulsive gambler and could be considered a compulsive shopper, most

of which she kept hidden from him during their marriage. Mike owned an interest in

Glenwood Ready Mix, which was as a non-marital asset. According to Mike, in the months

leading up to their separation, Janice had taken over $72,000 out of the business account

and had spent approximately $24,400 from refinancing the marital home. Mike said he did

not realize Janice was taking all that money from his family’s business, and he never saw any

of the proceeds from the refinance. She also ran up approximately $75,000 in credit-card

debt in those few months. Glenwood’s bookkeeper identified a plethora of non-business

expenditures and unaccounted-for funds between mid-2017 and mid-2019. Mike attributed

more than $100,000 of that to Janice’s actions. The credit-card companies ultimately

returned $48,000 to Mike, which was put back into the business account.

The parties had a certificate of deposit worth $20,000 and owned an Infinity SUV

valued at $40,000. During the marriage, the parties also bought a Ford F-150 truck for

$8,000, which Janice sold for $1,200 before the divorce hearing because she “needed the

money.” As to the remaining various personal items and personal property, the parties

agreed to a distribution.

2 Janice wanted spousal support from Mike, stating that she was disabled, whereas Mike

was employed in his family’s business and had approximately $7,800 a month in spendable

income. Janice claimed that they had lived a modest lifestyle, and she should be supported

with monthly alimony. She explained some of the marital debt by saying she bought food

for them, and she bought herself and Mike “lots and lots of clothes.” Janice said she paid for

hotels, plane tickets, and cruise charges, among other things, with money from Mike’s

business, but those expenses were paid with his knowledge and consent. Janice had an

adjusted gross income of $77,000 in 2019 from gambling although her taxable income that

year was approximately $20,000.

Mike testified that Janice could work at a sedentary job, especially since she was able

to sit in various casinos and play slot machines for hours at a time. According to Mike, Janice

was able to load, unload, and operate a boat, fish for hours at a time, and camp for weeks at

a time. He said Janice “ran a flower business” after she had been declared disabled, and when

they bought the Infinity SUV, she was offered a job selling cars “on the spot.”

The parties submitted a joint exhibit establishing that Mike had a Charles Schwab

IRA, and its value in June 2019 was $131,037.08. Mike had had the IRA for many years

before they married, but he did not present evidence to establish which part was nonmarital

versus marital, so he stipulated that the IRA was a marital asset. Mike incurred taxes and

penalties that he had not yet paid for having withdrawn $75,000 from the IRA to pay off

the credit-card debt Janice incurred. He said the IRA currently had a value somewhere

around $65,000.

3 The circuit court granted Mike a divorce from Janice. The circuit court unequally

divided the value of the marital home due to the disparity in the parties’ income and based

on Arkansas Code Annotated section 9-12-315 (the statutory factors to consider in dividing

marital property equitably). The marital home was to be sold and the net proceeds unequally

divided in Janice’s favor, 70 percent to Janice and 30 percent to Mike. Mike was also ordered

to pay the monthly mortgage for up to six months following the divorce until it sold. The

court found that Janice had incurred $75,000 in marital debt, but Mike paid the $75,000

debt in full after they separated, “resulting in a benefit to [Janice].”

The circuit court awarded Mike the entire value of the IRA. The circuit court found

that the IRA held a marital value of $75,000. Each party would be entitled to one half,

$37,500. However, Mike had paid off $75,000 in marital debt during the marriage, and

Janice owed Mike her half ($37,500 in marital debt). For this reason, the circuit court

awarded Mike the IRA to provide an even distribution, stating that “it kind of washes

out[.]”

The circuit court found that “a portion of the monies fraudulently taken from [Mike]

was repaid by the credit card companies in the amount of $48,000.” The circuit court

decided to “offset” the $48,000 that Mike was repaid by awarding Janice “the Infinity

Vehicle valued at $40,000 and the truck purchased during the marriage for $8,000.” The

circuit court ordered that the $20,000 CD be evenly divided and that each party pay their

own attorney’s fees. The circuit court found that Janice was disabled but capable of working

a sedentary job. The court further found that Janice “spent and gambled an unreasonable

4 amount of marital and non-marital funds.” The circuit court denied Janice’s request for

spousal support.

Janice appeals the circuit court’s divorce decree. On appeal, we review domestic-

relations cases de novo but will not reverse the circuit court’s findings of fact unless they are

clearly erroneous. Cherry v. Cherry, 2021 Ark. 49, 617 S.W.3d 692. “Clearly erroneous”

means that the reviewing court, on the entire evidence, is left with the definite and firm

conviction that a mistake has been committed. Id.

The circuit court in a divorce case has broad powers to distribute the property to

achieve an equitable division. Russell v. Russell, 2013 Ark. 372, 430 S.W.3d 15. The circuit

court is vested with a measure of flexibility in apportioning the marital assets, and the critical

inquiry is how the total assets are divided. Banks v. Banks, 2019 Ark. App. 166, 574 S.W.3d

187. The overriding purpose of the property-division statute, Arkansas Code Annotated

section 9-12-315, is to enable the court to make a division that is fair and equitable; the

statute does not compel mathematical precision in the distribution of property. Id. Allocation

of the parties’ debt is an essential issue to be resolved in a divorce dispute and must be

considered in the context of the overall distribution of the parties’ property, but the statutory

presumption of equal division does not apply to the division of marital debts. Id. We will

not substitute our judgment on appeal as to the exact interest each party should have or

what debt each party should be responsible for; we will decide only whether the order is

clearly wrong. Id.

Property division and alimony are complementary devices that the circuit court may

utilize in combination to make the dissolution of marriage equitable. Johnson v. Johnson,

5 2018 Ark. App. 308, 550 S.W.3d 911. An award of alimony is not mandatory but rather

lies within the discretion of the circuit court and will not be reversed absent an abuse of

discretion. Id. The purpose of alimony is to rectify the economic imbalances in earning

power and standard of living in light of the particular facts of each case. Id. The primary

factors to consider are the financial needs of one party and the ability of the other party to

pay; secondary factors may also be considered. 1 Id. Discretion and flexibility are critical to

the circuit court’s ability to make the dissolution of the marriage as equitable as possible. Id.

In our de novo review of this record, we hold that Janice has not demonstrated that

the circuit court clearly erred or abused its discretion. The circuit court’s overall division of

marital assets and debts was made as evenly as possible, although the court favored Janice in

the distribution of the sale proceeds of the marital home. The circuit court did not abuse its

discretion in denying Janice spousal support; there was evidence to support that she was able

to work a sedentary job and support herself in a modest lifestyle. We will explain our

decision as to each of Janice’s arguments on appeal.

First, Janice contends that the circuit court erred by not dividing the value of Mike’s

IRA, which she contends was entirely marital, as of the date of the divorce. Mike did not,

and does not, dispute that the IRA was entirely marital, and the circuit court treated it as

1 The secondary factors may include (1) the parties’ financial circumstances; (2) the parties’ past standard of living; (3) the value of jointly owned property; (4) the amount and nature of the parties’ income, both current and anticipated; (5) the extent and nature of the resources and assets of each party; (6) the amount of income of each party that is spendable; (7) the earning ability and capacity to earn of the parties; (8) the property awarded or given to one of the parties, either by the court or the other party; (9) the disposition of the homestead; (10) the respective health and medical needs of the parties; (11) duration of the marriage; and (12) the amount of child support, if any. See Cherry, supra.

6 such. The circuit court determined that the IRA’s marital value was $75,000. This was

higher than the amount that Mike testified it was currently worth; in his estimation, the

IRA was presently valued at about $65,000. Half of the $75,000 value would be $37,500,

Janice’s half of the value of the IRA. We see no error in the circuit court’s determination

of the value of the IRA given the evidence of its value at the time of their divorce. The

circuit court offset Janice’s one-half of the IRA’s value by Mike’s having paid off the $75,000

marital debt in full, half of which Janice owed as her part of the marital debt. The circuit

court’s finding that Janice’s half of the IRA’s value was offset by what she owed as her half

of the marital debt is an equitable distribution and not clearly erroneous.

Next, Janice contends that the circuit court erred in its valuation of the two marital

vehicles she was awarded. The circuit court’s award to her was designed to offset the $48,000

that the credit-card companies paid back to Mike on marital debt. She takes no issue with

the $40,000 value attributed to the SUV, but she does take issue with the circuit court

assessing the truck’s value at $8,000, the full purchase price. Janice asserts that the actual

value of the truck was the fair market value, which she believes is the $1,200 she received

when she sold it. In sum, Janice argues that she was awarded only $41,200 in marital assets

and not the $48,000 she was supposed to receive, meaning she was “shorted” $6,800. We

disagree that Janice has demonstrated clear error.

The property-division statute does not compel mathematical precision in the

distribution of property; it simply requires that marital property be distributed equitably.

Banks, supra. We will not substitute our judgment on appeal as to the exact interest each

party should have but will decide only whether the order is clearly wrong. Id. In this case,

7 the circuit court did not have to accept Janice’s opinion that the truck was worth only

$1,200. Moreover, marital property cannot always be divided exactly equally and in kind.

Jones v. Jones, 2014 Ark. 96, 432 S.W.3d 36. It is worth noting, too, that dissipation by one

party can be considered by a circuit judge in making an unequal distribution of marital

property. See Freeman v. Freeman, 2013 Ark. App. 693, 430 S.W.3d 824. On de novo review

of this record, we not left with a distinct and firm conviction that the overall distribution of

assets is clearly wrong.

Last, Janice argues that the circuit court abused its discretion by not awarding her

$1,965 in monthly support for a reasonable amount of time. Janice contends that this is the

amount Mike paid to support her pending the divorce and should continue. We disagree

that she has demonstrated reversible error.

Mike has the ability to pay alimony, and this was a marriage that lasted almost

eighteen years. The real issue is whether the circuit court abused its discretion in finding

that Janice could work and was not entitled to receive alimony. We defer to the circuit

court’s credibility determinations and superior position to view the parties’ needs with

respect to alimony. Symanietz v. Symanietz, 2021 Ark. 75, 620 S.W.3d 518. The circuit

court found that Janice has the ability to perform a sedentary job. This is not clearly

erroneous. By her own testimony, Janice had earned income through gambling and received

a disability check every month. In addition, there was evidence at trial to support that Janice

was able to fish, camp, handle a boat, travel, and gamble, all for extensive periods of time.

Mike testified that Janice had worked after she was declared disabled, and she had been

offered a job selling cars.

8 Furthermore, alimony and property divisions are complementary devices that a

circuit court employs to make the dissolution of a marriage as equitable as possible. Chekuri

v. Nekkalapudi, 2019 Ark. App. 221, 575 S.W.3d 572. Janice was awarded approximately

half of the marital assets and 70 percent of the net proceeds from the sale of the marital

home; Mike was ordered to continue paying the mortgage for up to six months following

the divorce; and Janice was spared being held solely responsible for a greater amount of the

marital debt she incurred. 2 We will not reverse the circuit court’s decision about alimony

absent an abuse of discretion, and Janice has failed to demonstrate an abuse of the circuit

court’s discretion.

Affirmed.

HARRISON, C.J., and BARRETT, J., agree.

Hilburn & Harper, Ltd., by: Sam Hilburn and SaraCate Moery, for appellant.

Jana Bradford, for appellee.

2 In her brief on appeal, Janice purports to describe the amount she and Mike received in net proceeds from the sale of the marital home after the divorce. These figures, however, are not properly before us because they are outside the appellate record.