An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.
NO. COA14-168 NORTH CAROLINA COURT OF APPEALS
Filed: 15 July 2014
CHRISTINE M. STEWART, Plaintiff,
v. Buncombe County No. 09 CVD 3134 WILLIAM A. STEWART, Defendant.
Appeal by defendant from orders entered 6 July 2012 and 25
October 2013 by Judge Rebecca Knight and Judge Susan Dotson-
Smith, respectively, in Buncombe County District Court. Heard
in the Court of Appeals 3 June 2014.
Mary Elizabeth Arrowood for plaintiff-appellee.
The Exum Law Office, by Mary March Exum, for defendant- appellant.
HUNTER, Robert C., Judge.
Defendant-appellant William Stewart (“defendant”) appeals
from equitable distribution and alimony orders. On appeal,
defendant argues that the trial court erred by: (1) adopting the
referee report as a final resolution of the parties’ equitable -2- distribution over defendant’s objection; and (2) awarding
alimony to plaintiff.
After careful review, we affirm the trial court’s orders.
Background
Plaintiff-appellee Christine Stewart (“plaintiff”) and
defendant married in 1982, separated 18 December 2008, and
divorced 18 May 2010. Mediation as to equitable distribution of
the parties’ marital property proved futile. Disagreement
primarily concerned the value of William A. Stewart Superior
Painting, Inc. (“Superior”), a painting company started by the
parties. Pursuant to court order, the parties agreed that Dixon
Hughes, CPA would appraise Superior. Jedd Wellmaker of Dixon
Hughes valued Superior at $400,000, a figure accepted by
plaintiff and disputed by defendant. Pursuant to Rule 53 of the
North Carolina Rules of Civil Procedure, the trial court
appointed a referee, Gary S. Cash, (“Referee Cash”) to make
findings of the fair market value of marital assets, including
Superior, and to recommend an equitable distribution of the
marital property.
On 15 and 16 March 2012, Referee Cash held a hearing on the
value of the marital property. Based on this hearing, the
referee accepted Wellmaker’s appraisal of Superior. The -3- referee’s final report (the “Referee’s Final Report”) adopted
Wellmaker’s valuation of Superior and recommended that defendant
be awarded Superior. Defendant filed written objections to the
Referee’s Final Report, as to the valuation of Superior and
relatedly to the prescribed distributive cash payment.
The matter came on for hearing 6 July 2012 before Judge
Knight. After finding that defendant objected to the Referee’s
Final Report but did not submit evidence or request to be heard,
the trial court adopted the report in full on 6 July 2012 (the
“equitable distribution judgment”). No transcript of this
hearing appears in the appellate record. Although defendant did
not properly appeal this order, this Court granted his petition
for writ of certiorari on 18 December 2013 to review the
equitable distribution judgment.
In her complaint, plaintiff also requested that the trial
court award her alimony, claiming that she was a dependent
spouse and defendant was a supporting spouse. The matter came
on for hearing before Judge Dotson-Smith beginning 12 August
2013. On 25 October 2013, the trial court entered judgment
awarding plaintiff alimony in the amount of $1,200 per month for
a period of five years (the “alimony order”). Defendant timely
appealed this order. -4- Arguments
I. Adopting the Referee’s Final Report
First, defendant contends that the trial court erred in
adopting the Referee’s Final Report as a final resolution of the
equitable distribution claim over his objection. Specifically,
defendant argues that Wellmaker’s valuation of Superior should
not have been adopted and that the trial court failed to make
independent findings and perform independent review of the
referee’s findings. We disagree.
A. Valuation
To achieve an equitable distribution under N.C. Gen. Stat.
§ 50-20, “the trial court is required to conduct a three-step
analysis: 1) identification of marital and separate property; 2)
determination of the net market value of the marital property as
of the date of separation; and 3) division of the property
between the parties.” Burgess v. Burgess, 205 N.C. App. 325,
330, 698 S.E.2d. 666, 670 (2010). Defendant challenges step two
of the trial court’s analysis, arguing that the appraisal of
Superior was not supported by the evidence and was not based on
a sound method of valuation. Specifically, defendant contends
that the valuation was “highly inflated” and failed to take into
account “real life factors.” -5- With regard to the method used to appraise a business for
equitable distribution, this Court has held that there is no
single best approach to valuation, but that
approaches courts may find helpful are: (1) an earnings or market approach, which bases the value of the [company] on its market value, or the price which an outside buyer would pay for it taking into account its future earning capacity; and (2) a comparable sales approach which bases the value of the [company] on sales of similar businesses or practices.
Poore v. Poore, 75 N.C. App. 414, 419-420, 331 S.E.2d 266, 270
(1985). The standard of review of a trial court’s business
valuation for equitable distribution is well established: “[O]n
appeal, if it appears that the trial court reasonably
approximated the net value of the [company] and its goodwill, if
any, based on competent evidence and on a sound valuation method
or methods, the valuation will not be disturbed.” Poore, 75
N.C. App. at 422, 331 S.E.2d at 272.
In valuing Superior, the referee considered Wellmaker’s
testimony, Superior’s past earnings, and economic conditions.
The evidence, as described in the Referee’s Final Report, tended
to show yearly gross receipts exceeding $400,000 in all five
years leading up to separation. Defendant does not argue that -6- any evidence was inadmissible but instead opposes Wellmaker’s
valuation method itself.
The “income approach” used by Wellmaker “normalized the
earnings of [Superior] for each year . . . and then employed a
capitalization rate to establish what a reasonable investor
would pay for the business[.]” After considering other
approaches, Wellmaker decided to employ the income approach
“because it best captured goodwill.”
To controvert Wellmaker’s valuation, defendant points
vaguely to “economic factors” and his own testimony that he
would be willing to sell Superior for $100,000. In Franks v.
Franks, 153 N.C. App. 793, 795, 571 S.E.2d 276, 278 (2002), this
Court rejected a virtually identical argument and upheld the
trial court’s adoption of an expert’s valuation, stating that
“in contrast to [defendant’s] naked testimony, [plaintiff]
presented the testimony of . . . an expert in forensic
accounting and business valuation, who provided lengthy
testimony . . . .”
While Wellmaker’s valuation did not explicitly consider
certain economic factors or the value of similar companies, and
did not involve the approach approved of by this Court in
Franks, it is consistent with the first method of approximating -7- a company’s value suggested in Poore. Being the product of
competent evidence and a sound valuation method, the valuation
complied with standards established by law and was properly
adopted by the trial court.
B. Independent Findings and Review
Next, defendant contends that the trial court failed to
make independent findings and perform independent review of the
referee’s findings. Specifically, defendant argues that Judge
Knight “merely adopted” Referee Cash’s findings and conclusions
and that she failed to consider the evidence and make her own
decisions, a requirement for the trial court when a party has
objected to a referee’s report. We disagree.
With regard to defendant’s contention that the trial court
erred by not making its own findings, we note that, pursuant to
N.C. Gen. Stat. § 50-20, a trial court is required “(1) to
determine which property is marital property, (2) to calculate
the net value of the property, . . . and (3) to distribute the
property in an equitable manner.” Beightol v. Beightol, 90 N.C.
App. 58, 63, 367 S.E.2d 347, 350 (1988). “The court shall make
written findings of fact that support the determination that the
marital property . . . has been equitably divided.” N.C. Gen.
Stat. § 50-20(j) (2013). -8- Defendant claims that by adopting the referee’s findings of
fact and conclusions of law, the trial court itself failed to
make findings that satisfy Beightol. Defendant is correct that
the trial court’s equitable distribution judgment did not
restate all the referee’s findings regarding the value and
distribution of the marital assets to be divided. However, the
trial court expressly adopted and incorporated the findings and
conclusions of the referee’s report by saying: “the Final Report
of Referee should be adopted in whole as a final resolution of
the equitable distribution claims of the parties.” Thus, the
equitable distribution judgment satisfied Beightol, and
defendant’s argument is without merit.
With regard to defendant’s claim that the trial court
failed to independently review the referee’s report when
defendant objected, it is well established that
[w]hen exceptions are taken to a referee's findings of fact and law, it is the duty of the judge to consider the evidence and give his own opinion and conclusion, both upon the facts and the law. He is not permitted to do this in a perfunctory way, but he must deliberate and decide as in other cases, use his own faculties in ascertaining the truth, and form his own judgment as to fact and law. This is required not only as a check upon the referee and a safeguard against any possible errors on his part, but because he cannot review the referee's findings in any other way. -9-
Thompson v. Smith, 156 N.C. 345, 345, 72 S.E. 379, 379 (1911).
But, “findings of fact made by a referee, in the absence of
exceptions thereto, are conclusive[.]” Keith v. Silvia, 233
N.C. 328, 333, 64 S.E.2d 178, 183 (1951). If a party objects to
any of the referee’s findings, the trial court “in the exercise
of his supervisory power and under the statute, may affirm,
amend, modify, set aside, make additional findings and confirm,
in whole or in part, or disaffirm the report of a referee.”
Hardaway Contracting Co. v. W. Carolina Power Co., 195 N.C. 649,
651, 143 S.E. 241, 242 (1928).
Here, defendant filed written objections to the Referee’s
Final Report—specifically, defendant objected to the referee’s
valuation of Superior at $400,000. In addition, defendant
objected “but did not request to be heard” on the adoption of
the Referee’s Final Report at the final equitable distribution
hearing before the trial court. However, in order to determine
whether the trial court weighed the evidence and conducted any
type of an independent review, we would need to review the 6
July 2012 hearing before Judge Knight. Pursuant to Rule 9 of
the North Carolina Rules of Appellate Procedure, this Court’s
review is based “solely upon the record on appeal, the verbatim
transcript of proceedings, if one is designated, and any other -10- items filed pursuant to this Rule 9.” “The record on appeal is
specifically required to contain so much of the evidence . . .
as is necessary for an understanding of all errors assigned, or
a statement specifying that the verbatim transcript of
proceedings is being filed with the record pursuant to Rule
9(c)(2), or designating portions of the transcript to be so
filed.” Tucker v. City of Kannapolis, 159 N.C. App. 174, 176,
582 S.E.2d 697, 698 (2003). Defendant filed neither a
transcript of the hearing nor any documents to enable us to
determine the quality and extent of Judge Knight’s review of the
Referee’s Final Report, and she was authorized to wholly adopt
it should her own independent review lead to the conclusion that
Referee Cash properly valued Superior, Hardaway, 195 N.C. at
651, 143 S.E. at 242. Thus, our review is limited solely to the
record on appeal, and, as discussed above, we find that
Wellmaker’s valuation of Superior, which was adopted by the
referee and the trial court, was proper. Moreover, “[w]here the
record is silent upon a particular point, it will be presumed
that the trial court acted correctly in performing his judicial
acts and duties.” State v. Fennell, 307 N.C. 258, 262, 297
S.E.2d 393, 396 (1982). Consequently, since defendant failed to
include the transcript of the hearing in the record and we find -11- nothing in the record to support his assertion that Judge Knight
performed only a perfunctory review of the Referee’s Final
report, we affirm the trial court’s equitable distribution.
II. Alimony Award
Next, defendant contends that the trial court committed
reversible error in awarding alimony to plaintiff. We disagree.
This Court has held that according to statute, alimony is
“comprised of two separate inquiries. First is a determination
of whether a spouse is entitled to alimony. . . . If one is
entitled to alimony, the second determination is the amount of
alimony to be awarded.” Barrett v. Barrett, 140 N.C. App. 369,
371, 536 S.E.2d 642, 644 (2000) (internal citations omitted).
On appeal, defendant challenges plaintiff’s entitlement to
alimony but does not contest the amount. Specifically,
defendant argues that the trial court erred by concluding as a
matter of law that plaintiff is a dependent spouse, that
defendant is a supporting spouse, and that an alimony award was
equitable.
“The court shall award alimony to the dependent spouse upon
a finding that one spouse is a dependent spouse, that the other
spouse is a supporting spouse, and that an award of alimony is
equitable after considering all relevant factors, including -12- those set out in subsection (b) of this section.” N.C. Gen.
Stat. § 50-16.3A(a) (2013). Entitlement to alimony is reviewed
de novo. Barrett, 140 N.C. App. at 371, 536 S.E.2d at 644.
Under N.C. Gen. Stat. § 50-16.1A(2) (2013), a “Dependent
Spouse” is one “who is actually substantially dependent upon the
other spouse for his or her maintenance and support or is
substantially in need of maintenance and support from the other
spouse.” “To properly find a spouse dependent the court need
only find that the spouse's reasonable monthly expenses exceed
her monthly income and that the party has no other means with
which to meet those expenses.” Helms v. Helms, 191 N.C. App.
19, 23, 661 S.E.2d 906, 909 (2008).
Careful review of the evidence in the record indicates that
the trial court properly characterized plaintiff as a dependent
spouse. Specifically, the record establishes that plaintiff’s
monthly expenses amounted to $2,615 and her monthly income
amounted to $1,179.07. In determining plaintiff’s expenses, the
trial court did not consider the desired expenditures submitted
by plaintiff but properly measured her actual reasonable
expenses according to the standard of living established during
the marriage. In determining plaintiff’s income, the trial
court did not include payment from an investment property -13- received by plaintiff in the equitable distribution because the
evidence suggests that such payment does not exceed the monthly
mortgage and upkeep costs of the property. The evidence in the
record reveals that plaintiff had an income-expenses deficit of
$1,410.93 per month. Such is sufficient to demonstrate that
plaintiff is a dependent spouse pursuant to N.C. Gen. Stat. §
50-16.1A(2). See Helms, 191 N.C. App. at 23, 661 S.E.2d at 909.
“[E]vidence one spouse is dependent does not necessarily
infer the other spouse is supporting.” Williams v. Williams,
299 N.C. 174, 186, 261 S.E.2d 849, 857 (1980). A “Supporting
Spouse” is one “upon whom the other spouse is actually
substantially dependent for maintenance and support or from whom
such spouse is substantially in need of maintenance and
support.” N.C. Gen. Stat. § 50-16.1A(5) (2013). This Court has
held that “[a] surplus of income over expenses is sufficient in
and of itself to warrant a supporting spouse classification.”
Barrett, 140 N.C. App. at 373, 536 S.E.2d at 645.
The record supports the trial court’s classification of
defendant as a supporting spouse. As was found by the trial
court, the evidence suggests that defendant’s monthly income
amounts to $6,381 and that his monthly expenses are less than
his monthly income. Specifically, defendant’s 2011 tax return -14- lists his yearly wages at $42,834 and corporate distributions at
$33,751. Defendant argues that the trial court erred in
determining his monthly income using corporate distributions.
In so arguing, he cites Hill v. Hill, __ N.C. App. __, 748
S.E.2d 342 (2013), in support of his argument that business
distributions are not to be considered income for alimony
purposes. However, rather than classification of corporate
distributions as income, Hill involved classification of
business stock for purposes of an equitable distribution. Hill,
__ N.C. App. at __, 748 S.E.2d at 358. In fact, defendant
claimed the corporate distributions as income in his 2011 tax
returns. Moreover, defendant’s contention that “[o]nce the
corporation was awarded to Mr. Stewart in the equitable
distribution case, the retained earnings of the corporation were
his separate property, not a source of income from which to
award plaintiff alimony” is without merit. Here, the trial
court did not require that defendant pay alimony out of current
retained earnings of Superior awarded to him in the equitable
distribution. Rather, it used corporate distributions from 2011
to estimate defendant’s future income for the purpose of his
classification as a supporting spouse. -15- The alimony order states that “Defendant listed on said
Affidavit individual expenses of $1,461.68 per month; that
Defendant’s bank statement reflects he does not maintain these
expenses through his personal banking account; that the majority
of his individual expenses are paid through his corporate bank
account and are not paid through his salary[.]” Defendant does
not dispute this finding, but rather lists various anticipated
costs and argues that his wages are insufficient to meet even
his own monthly expenses. However, the record establishes
otherwise: defendant’s affidavit lists fixed monthly expenses at
$2,277.18 and anticipated individual expenses at $3,570.13, but
his testimony suggests that Superior pays most of his expenses.
Even assuming defendant will incur and personally pay the
anticipated expenses, payment would not exceed his monthly
income. Under either scenario, defendant had an income-expenses
surplus, and the trial court did not err in classifying him a
supporting spouse pursuant to N.C. Gen. Stat. § 50-16.1A(5).
See Barrett, 140 N.C. App. at 373, 536 S.E.2d at 645.
Finally, we consider defendant’s argument that an award of
alimony was not equitable under the circumstances.
Upon finding the spouses “dependent” and “supporting,”
alimony must be awarded if such is “equitable after considering -16- all relevant factors, including those set out in subsection (b)
of this section.” N.C. Gen. Stat. § 50-16.3A(a) (2013); see
also Rhew v. Rhew, 138 N.C. App. 467, 470, 531 S.E.2d 471, 473
(2000). However, the trial court is only required to make
sufficient findings to indicate that the trial judge properly
considered the relevant factors under subsection (b) for a
determination of an alimony award. Rhew, 138 N.C. App. at 471,
531 S.E.2d at 474. The trial court is not required to set out
findings addressing each factor listed in section 50-16.3A(b);
however “the court must provide sufficient detail to satisfy a
reviewing court that it has considered ‘all relevant factors.’”
Id.
Here, the trial court made extensive findings addressing
numerous factors listed under section 50-16.3A(b), including,
but not limited to, the standard of living the parties had
during their marriage, the relative earnings capacity of each
spouse, the amount and source of the parties’ earned and
unearned income, and the fact that plaintiff primarily worked as
homemaker after the birth of their first child. Based on these
and numerous other findings, defendant is unable to establish
that the trial court erred in concluding that an alimony award
in favor of plaintiff was equitable. -17- Conclusion
Based on Poore, we conclude that the referee’s valuation of
Superior, which was adopted by the trial court, was proper.
Because defendant failed to include a transcript of the 6 July
2012 hearing before Judge Knight and we find no evidence in the
record to support his argument that she did not perform her own
independent review of the referee’s report, we affirm the trial
court’s equitable distribution order. Moreover, because the
evidence established that plaintiff was a dependent spouse,
defendant was a supporting spouse, and an award of alimony was
equitable, we affirm the trial court’s alimony order.
AFFIRMED.
Judges McGEE and ELMORE concur.
Report per Rule 30(e).