OSCN Found Document:METCALF v. METCALF
NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL.
¶1 We granted certiorari to address the first impression question of whether the presumption that the intent of an interspousal transfer of real property constitutes a gift may be rebutted when the admitted purpose of the transfer was to illegally elude any creditor's attempts to collect on a judgment. We hold that it may not be rebutted by such evidence. We also hold that: 1) the trial court did not err in denying the wife support alimony; and 2) each party is also responsible for their own attorney fees.
FACTS
¶2 In the spring of 2001, the petitioner/appellee, Lewis R. Metcalf (Metcalf/husband), married the respondent/appellant, Bonnie L. Watson (Watson/wife). The couple cannot agree as to the actual date of the marriage which occurred in Arkansas.1 The couple made their rural home together in Grady County, Oklahoma, and did not have any children together.
¶3 At the time of the marriage, the husband owned and operated a carpentry shop business called Woodmaster, LTD. It was established in 1999, but he made the wife 1% owner during the marriage. In 2009, Woodmaster's creditors filed an action in the District Court of Oklahoma County, seeking to collect on debt Woodmaster's owed. Concerned that the creditors would take his real property to collect on a judgment, the husband deeded the Woodmaster property, and others, to his wife, using her maiden name of Bonnie Watson.2 He readily admits, and it is undisputed, that his purpose for deeding the property was purely to prevent creditors from recovering any judgments against the shop business. He even visited a lawyer to seek advice on how to handle the property transfer to avoid a creditor's judgment, should one occur.
¶4 During the marriage, their marital home was destroyed by fire, affected by an earthquake, and also destroyed by a tornado. Consequently, various insurance claims were filed, insurance payouts were made, and rebuilding occurred. However, according to the parties, the date of separation impacted who was entitled to various insurance proceeds and lawsuit settlements which occurred during the marriage. Naturally, the date of their separation was also disputed.
¶5 According to the husband, they separated in June of 2011, because they were no longer living together, or even in the same state. According to the wife, they were not separated until December of 2014, when she learned that he no longer wished to be married to her. On December 19, 2014, the husband filed for dissolution of marriage in the District Court of Grady County, Oklahoma. The wife filed a response and cross-petition on December 30, 2014, seeking support alimony.
¶6 The cause proceeded to trial on September 22-30, 2016. At the conclusion of the trial, the trial court issued a Decree of Dissolution of Marriage on January 4, 2017, dividing real and personal property including household items, bank accounts, vehicles, various insurance and lawsuit proceeds and settlements. Among the trial court's findings were the determinations that: 1) the parties' separation date was June 4, 2011; 2) the separate real property, which the husband transferred to the wife during the marriage to elude creditors, was void and thus his separate property; and 3) the wife's request for support alimony should be denied.
¶7 The wife appealed on February 3, 2017, arguing that the husband's transfer of real property to avoid creditors should be considered marital property, because he failed to rebut the presumption of a gift. She also disputed the date of separation, and the denial of support alimony. On July 12, 2019, the Court of Civil Appeals, Division II, affirmed the trial court. On August 1, 2019, the wife filed a Petition for Certiorari in this Court arguing that because the husband transferred the property he owned prior to marriage to avoid potential creditor judgments against him (a/k/a a fraudulent transfer), he is precluded from using the reason for the transfer to rebut the presumption that the transfer was an interspousal gift. She also contends that the trial court erred in denying her support alimony.3 The husband seeks appeal related attorney fees and costs. We granted certiorari on January 6, 2020, to address these issues.
I.
THE PRESUMPTION OF AN INTERSPOUSAL GIFT MAY NOT BE REBUTTED BY EVIDENCE THAT THE SOLE PURPOSE FOR THE TRANSFER WAS TO DEFRAUD CREDITORS.
¶8 The husband argues that he never intended to share his separate property with the wife. Rather, he only transferred the property to avoid creditors from potentially getting at it. The wife argues that transferring property into her name in order to avoid a judgment was a fraudulent transfer, and that he should not be allowed to rebut that the transfer was a gift with evidence of fraud.
¶9 A divorce suit is one of equitable cognizance in which the trial court has discretionary power to divide the marital estate.4 In an action of equitable cognizance there is a presumption in favor of the trial court's findings and they will not be set aside unless the trial court abused its discretion or the finding is against the clear weight of the evidence.5
¶10 Title 43 O.S. 2011 §1216 requires a fair and equitable division of property acquired during the marriage by the joint industry of a husband and wife. Jointly-acquired property is that which is accumulated by the joint industry of the spouses during the marriage. The determination of the issue concerning separate ownership of property acquired during the marriage is dependent on the original source of the property.7
¶11 Interspousal transfers may occur as a result of a sale by one spouse to the other, as settlement of an impending divorce, or as a gift. A transfer by one spouse of separate property to another does not by itself erase the separate character of the asset or real property transferred; rather, the original ownership regime must be respected unless there is proof of an interspousal gift,8 i.e. proof of donative intent. The law provides a rebuttable presumption of a gift where title to separately held real estate is placed by one ownership spouse's name to both spouses' names as joint tenants.9 This presumption arises even if the property in question was purchased with one spouse's separate funds.10
¶12 This presumption in favor of a gift can be overcome by clear and convincing evidence of contrary intent including evidence of a purpose for placing the property in joint tenancy that is collateral to making a gift.11 In this cause, the husband transferred the real property into the wife's name only. We have previously addressed this presumption in joint tenancy cases. For example, in Smith v. Villareal, 2012 OK 114, ¶12, 298 P.3d 533, during the marriage, the husband purchased two homes for his daughters from a prior marriage. He paid for these homes with his separate property. This was not disputed by the wife. However, both the husband's and wife's names appeared on the warranty deeds as joint tenants. Because the overwhelming evidence supported that the husband did not possess donative intent when title was conveyed to both spouses in joint tenancy, we held that the properties should not be included in marital property.
¶13 Similarly, in Larman v. Larman, 1999 OK 83, ¶16, 991 P.2d 536, the Court held that the presumption of a gift was overcome where the wife included the husband's name upon the deeds as joint tenant to property she held separately for the sole purpose of refinancing the mortgage loans on both properties. In Larman, the lender required that in order to qualify, both spouses had to be record owners and sign the loan related documents.
¶14 In both Smith, supra, and Larman, supra, there was nothing inherently unlawful about the real property transfers. The presumption of a gift was overcome with evidence because, although a lawful transferred occurred, the purpose was not intended to actually convert the property from separate to marital property.12
¶15 In Burrows v. Burrows, 1994 OK 129, ¶17, 886 P.2d 984, the Court addressed whether a father's attempted conveyance of property subject to a homestead exemption to avoid payment of past-due alimony and child support could be nullified as fraudulent. We held so, in part, because parents have a legal duty to support their children, and an ex-spouse and child were not the kind of creditor's to which a homestead exemption was meant to apply. The homestead exemption was intended to be a shield and not a sword.
¶16 Here, the Uniform Fraudulent Transfer Act13 (the Act) prohibits precisely the type of transfer, which the husband relies on to explain his donative intent, as fraudulent. Section 116 of the Act provides:
A. A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:
1. With actual intent to hinder, delay, or defraud any creditor of the debtor; or
2. Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:
a. was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction, or
b. intended to incur, or believed or reasonably should have believed that he would incur, debts beyond his ability to pay as they became due.
The reason that the husband said he made the transfer in real property to his wife falls squarely within the prohibition of the statute.
¶17 The Act was intended to prevent a debtor from shielding property from a creditor by fraudulently transferring it. A debtor should not be able to shield property from creditors and give it to a spouse on one hand to elude creditors and then turn around and use the transfer as a sword to avoid property division. We have no doubt that he intended to "gift" his wife the property. He admits, he "gave" it to her to avoid creditors, he just also intended to get it back. Nevertheless, in an equitable proceeding, it is incongruous to allow evidence of a fraudulent transfer to rebut the presumption of a gift. Consequently, we hold Smith, supra, and Larman, are not controlling of this cause. The husband readily admitted that fraud was the reason for the transfer, and he did not provide any other legitimate reasons for the transfer to his wife.
¶18 The parties could have had the properties deeded back to the husband at any time before their divorce, but they did not do so. Without evidence to rebut the presumption of gift, the trial court should not have set aside the transfer as his separate property. This is an equitable proceeding, and the wife does not seek to have the real property declared solely hers as the deed reflects. Rather, she asks that it be divided as marital property and we agree with this most equitable result in this cause.14 Accordingly, we reverse the trial court and remand the matter for an equitable division of the property in question.
II.
THE TRIAL COURT'S DENIAL OF SUPPORT ALIMONY IS SUPPORTED BY THE EVIDENCE.
¶19 The wife argues that the trial court abused its discretion when it neglected to award her support alimony. The husband argues that the wife failed to demonstrate any need for support alimony and there is insufficient evidence of his ability to pay it.
¶20 In a divorce action, the trial court is vested with wide discretion in awarding alimony.15 On appeal, this Court will not disturb the trial court's judgment regarding alimony absent abuse of discretion or a finding that the decision is clearly contrary to the weight of the evidence.16 The burden is upon the party appealing from a divorce decree to show that the findings and judgment are against the clear weight of the evidence.17
¶21 In awarding alimony, each case depends on the facts and circumstances,18 and alimony must be reasonable.19 Ability to pay is not the sole criterion for an award of alimony.20 Support alimony is based upon a consideration of appropriate factors which include: demonstrated need during the post-matrimonial economic readjustment period; the parties' station in life; the length of the marriage and the ages of the parties; the earning capacity of each spouse; the parties' physical condition and financial means; the mode of living to which each spouse has become accustomed during the marriage; and evidence of a spouse's own income-producing capacity and the time necessary to make the transition for self-support.21
¶22 Here, prior to the marriage, the wife worked steadily in accounts receivable/accounts payable and book keeping in the steel industry. She also had experience working as a dental assistant. She admitted that she had a lot of experience in the workforce. The husband is a self employed carpenter who makes a relatively meager income which fluctuates at times with the house and building market.
¶23 The parties were married for ten years and neither were raising children during their marriage. For whatever reason, the wife refused to work. The wife testified that she needed cervical spine surgery which would slow her down for up to six months, and that she had other ailments such as high blood pressure, depression, anxiety, hypertension, IBS, diverticulitis, but that none of these would prevent her from working.
¶24 She moved out of the marital home in June of 2011. Instead of seeking employment, she rented a two bedroom apartment in Ohio, bought new furniture, shopped, went on trips with her friend and boyfriend, and gave money to a prior ex-husband and adult children. She had, by the time the final divorce decree had been entered, nearly five and a half years (now over eight years), to seek any needed training or education and/or employment.
¶25 While there have been cases in which the facts and evidence disclosed that the trial court's award of support alimony was insufficient, and in need of adjustment, this does not appear to be one of those cases.22 We cannot say that the trial court abused its discretion in denying the wife's request for support alimony under these facts.
III.
EACH PARTY IS RESPONSIBLE FOR THEIR OWN ATTORNEY FEES.
¶26 On July 30, 2019, the husband filed a separate motion in this Court requesting we award him appeal related fees and costs pursuant to 12 O.S. 2011 App. 1, Rule 1.14;23 20 O.S. 2011 §15.1;24 12 O.S. 2011 §696.4 (as a prevailing party),25 and 43 O.S. 2011 §110(D) and (E).26 The wife argues that her appeal is not frivolous or without merit because she is entitled to claim an interest in property titled in her name; and request support alimony. She also argues that there are no overriding equitable considerations which favor an award of fees to the husband.
¶27 Each litigant ordinarily bears the cost of his/her legal representation and our courts are without authority to assess and award attorney fees in the absence of a specific statute or specific between the parties.27 Appeal-related attorney fees are recoverable if statutory authority exists for their award in the trial court.28 Title 43 O.S. 2011 §110 provides for the award of counsel fees in divorce and subsequent related actions.29 The husband has not prevailed in this appeal and neither the non-prevailing party in a matrimonial case, nor the principal spouse provider is under a duty to pay counsel fees.30
¶28 Counsel fees claimed pursuant to §110 do not depend on a prevailing party status.31 Rather, in matrimonial litigation, a party should be awarded attorney fees only if they qualify for the benefit through a judicial balancing of the equities considering the means and property of each party,32 or when the appeal is frivolous or lacks merit.33
¶29 Based on our review of the record, no compelling or overriding equitable considerations exist to support the wife's payment of the husband's attorney fees or costs incurred in this appeal. Clearly, this appeal was not frivolous or without merit because the trial court is reversed. Nor is there any compelling or overriding equitable consideration which would support the husband's payment of the wife's attorney fees and costs incurred in this appeal. Therefore, we hold that each party is responsible for their appeal-related attorney fees and costs.
CONCLUSION
¶30 A divorce proceeding is one of equitable cognizance in which the trial court has discretionary power to divide the marital estate.34 Interspousal transfers may occur as a result of a sale by one spouse to the other, as settlement of an impending divorce or as a gift. A transfer by one spouse of separate property to another does not by itself erase the separate character of the asset or real property transferred. Rather, the original ownership regime must be respected unless there is proof of an interspousal gift,35 i.e. proof of donative intent. In this equitable proceeding, we determine that an illicit transfer of separate property, such as a fraudulent transfer to avoid creditors, is not sufficient evidence to rebut a presumption of a gift.
¶31 Because the husband presented no other evidence to rebut that the real property transfer was a gift, the trial court should have divided the real property equitably. However, we cannot say that the trial court abused its discretion in denying the wife's request for support alimony under the facts of this cause. Nor is there any compelling or overriding equitable consideration which would support the husband's payment of the wife's attorney fees and costs incurred in this appeal. Each party is responsible for their appeal-related attorney fees and costs.
CERTIORARI PREVIOUSLY GRANTED;
COURT OF CIVIL APPEALS OPINION VACATED;
TRIAL COURT REVERSED AND CAUSE REMANDED.
GURICH, C.J., KAUGER, EDMONDSON, COMBS, KANE and ROWE, JJ., concur;
DARBY, V.C.J., WINCHESTER, J., (by separate writing), and COLBERT, JJ., dissent.
WINCHESTER, J., with whom Darby, V.C.J. and Colbert, J. join, dissenting:
¶1 I concur in part; dissent in part to the majority decision. While I agree with the majority that the trial court properly denied support alimony herein, I cannot agree with the majority's position that the trial court erroneously awarded the husband his separate property previously transferred to the wife.
¶2 The majority readily recognizes that in divorce proceedings the trial court is afforded wide discretion to divide the marital estate. Teel v. Teel, 1988 OK 151, ¶ 7, 766 P.2d 994, 998 (trial court has wide latitude in determining what property shall be awarded to each party). Nonetheless, the majority ignores this discretion to find abuse where none exists, instead invading the trial court's province by reversing the trial court's ruling on the division of property.
¶3 An appellate court should not disturb the trial court's property division absent a finding of abuse of discretion or a finding that the decision is clearly contrary to the weight of the evidence. Hough v. Hough, 2004 OK 45, ¶ 9, 92 P.3d 695, 700. Our cases demonstrate considerable deference to the trial court's division of marital assets in a divorce proceeding. Childers v. Childers, 2016 OK 95, ¶ 12, 382 P.3d 1020, 1023. "An abuse of discretion occurs when a court bases its decision on an erroneous conclusion of law, when there is no rational basis in evidence for the ruling, or if it acts arbitrarily." Colclasure v. Colclasure, 2012 OK 97, ¶ 4, 295 P.3d 1123, 1132 (Watt, J. with whom Winchester, J. and Combs, J. join dissenting). None of these circumstances exist herein.
¶4 Here, the husband transferred separate business and personal property, all owned before the marriage, to the wife as a shelter when he feared his assets could become subject to a potential lawsuit judgment against him. As recognized by the majority, the husband testified he never intended the property to be a gift nor did the wife believe it to be such. The lawsuit against the husband was later dismissed, resulting in no judgment against him.
¶5 The trial court found there was sufficient evidence presented to support the finding that the husband's separate property was not intended to be a gift to the wife. Larman v. Larman, 1999 OK 83, ¶ 22, 991 P.2d 536, 543 (where evidence reflects conclusion that title to one spouse's separate real estate was placed in both names as joint tenants solely to achieve a purpose collateral to making a gift, the presumption of an interspousal gift is deemed rebutted). The husband made the requisite showing and the majority should not be allowed to substitute its judgment for that of the trial court under the guise of an abuse of discretion that does not exist.
¶6 The burden is on the party claiming error to show that the findings and judgment of the trial court are against the clear weight of the evidence. Manhart v. Manhart, 1986 OK 12, ¶ 5, 725 P.2d 1234, 1236. There being no evidence sufficient to show the trial court abused its discretion as to the property division, the ruling of the trial court should be affirmed.