FILED MEMORANDUM DECISION Mar 17 2016, 8:55 am
Pursuant to Ind. Appellate Rule 65(D), CLERK Indiana Supreme Court this Memorandum Decision shall not be Court of Appeals and Tax Court regarded as precedent or cited before any court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law of the case.
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE Bruce N. Munson Linda Stemmer Muncie, Indiana Husmann & Stemmer Union City, Indiana
IN THE COURT OF APPEALS OF INDIANA
Vicky Lochtefeld, March 17, 2016 Appellant-Petitioner, Court of Appeals Case No. 38A04-1506-DR-726 v. Appeal from the Jay Superior Court James Lochtefeld, The Honorable Marianne L. Appellee-Respondent. Vorhees, Special Judge Trial Court Cause No. 38D01-1304-DR-45
Riley, Judge.
Court of Appeals of Indiana | Memorandum Decision 38A04-1506-DR-726 | March 17, 2016 Page 1 of 15 STATEMENT OF THE CASE
[1] Appellant-Petitioner, Vicky Lochtefeld (Vicky), appeals the trial court’s denial
of her motion to correct error in the division of the marital estate following its
Decree of Dissolution of Marriage to Appellee-Respondent, James Lochtefeld
(James).
[2] We affirm in part and remand in part for further proceedings.
ISSUE
[3] Vicky raises one issue on appeal, which we restate as: Whether the trial court
failed to identify and properly include certain marital assets in its division of the
marital estate.
FACTS AND PROCEDURAL HISTORY
[4] James and Vicky were married on April 21, 1989. During the marriage, two
children were born, both of whom are emancipated. At the time of the
marriage, James was in a farming partnership with his father, in which he
owned a one-half interest valued at $275,000. James also independently owned
some hog barns. After they married, James and Vicky bought James’ father out
of the partnership and acquired additional farmland. At the beginning of the
marriage through 2009, Vicky worked outside the home and her income
provided for many of the family’s living expenses, so that farming profits could
be reinvested to expand the farming operations. In 2009, James and Vicky
opened a restaurant in Portland, Indiana through a corporation of which James
Court of Appeals of Indiana | Memorandum Decision 38A04-1506-DR-726 | March 17, 2016 Page 2 of 15 and Vicky were the sole shareholders. Vicky managed the restaurant for
approximately one year and then hired a business manager. Until the time of
separation in 2012, Vicky also managed the financial and “regulatory issues” of
the farming operation and invested physical labor in the business. (Transcript
p. 66).
[5] By the time the parties separated, they had acquired 1,100 agricultural acres,
and developed a swine operation and a profitable poultry business with
approximately 330,000 chickens. Before the separation and at the advice of
their accountant, James and Vicky formed two limited liability companies:
JAL Grain, LLC (JAL Grain) took title to “most of the land,” whereas JAL
Poultry and Swine, LLC (JAL Poultry) took ownership of assets valued at
$2,500,000. (Appellant’s App. p. 17). These assets in JAL Poultry consisted of
the “home place,” which was the center of the farming operation and included
the marital residence, two hog barns, three chicken barns, several grain bins, the
machine shed where the farm equipment was stored, the farm equipment, and
109 acres of land. (Appellant’s App. p. 58). James and Vicky held equal
ownership interests in JAL Grain LLC, and they each had a 47% ownership
interest in JAL Poultry, with the remaining 6% divided between their two
children. In addition to the two LLCs, the parties amassed a significant
amount of cash during their marriage.
[6] On April 16, 2013, Vicky filed a petition to dissolve the parties’ marriage. The
trial court entered its preliminary order on June 20, 2014, after a hearing. On
August 28, 2014, James and Vicky stipulated to a partial agreement, which the
Court of Appeals of Indiana | Memorandum Decision 38A04-1506-DR-726 | March 17, 2016 Page 3 of 15 trial court later incorporated into its Decree. After the final hearing occurred on
November 18, 2014, the trial court entered its Decree of Dissolution of
Marriage on December 23, 2014. Recognizing that “[t]his case involves two
incredibly complex businesses[,]” the trial court divided the marital estate “as
close to 50-50 as possible.” (Appellant’s App. p. 14). In its calculations, the
trial court divided the estate into two parts with “property division as of filing
date; and . . . compensation for business operations from filing date through
September, 2014.” (Appellant’s App. p. 14). The trial court placed “in the
martial estate, subject to division, the cash held by JAL Poultry and James at
the filing date,” and the court “divide[d] the income from the LLCs from filing
date to September 2014, in an equitable way.” (Appellant’s App. pp. 14-15).
However, the trial court cautioned James and Vicky that the “bottom line will
not be 50-50, because the parties have agreed the [c]ourt should not offset gifted
assets, including the Tennessee property gifted to Vicky and the approximately
110 acres (total) gifted from James’ parents to James.” (Appellant’s App. p.
15). Although the parties agreed that each should receive these gifts without
offset to the other party’s side, “the assets are marital assets,” and as such, the
trial court placed “a value on the assets, place[d] them in the marital estate, set
them over to the respective [party], and divide[d] all other assets 50-50.”
(Appellant’s App. p. 15).
[7] Both James and Vicky filed motions to correct error. On May 26, 2015,
following a hearing, the trial court entered its Order on Motions to Correct
Court of Appeals of Indiana | Memorandum Decision 38A04-1506-DR-726 | March 17, 2016 Page 4 of 15 Error and All Other Pending Motions/Petitions “to conclude all issues at the
trial court level.”.
[8] Vicky now appeals. Additional facts will be provided as necessary.
DISCUSSION AND DECISION
[9] Vicky takes issue with the trial court’s finding that it had included all the assets
in the marital estate. Specifically, Vicky contends that the trial court omitted
certain amounts of cash held in deposit accounts in the name of JAL Poultry or
James and the value of seed and grain owned by JAL Poultry from the marital
estate. In general, we review a trial court’s ruling on a motion to correct error
for an abuse of discretion. Hawkins v. Cannon, 826 N.E.2d 658, 661 (Ind. Ct.
App. 2005), trans. denied. A trial court has discretion to grant or deny a motion
to correct error and we reverse its decision only for an abuse of that discretion.
Id. An abuse of discretion occurs when the trial court’s decision is against the
logic and effect of the facts and circumstances before the court or if the court
has misinterpreted the law. Id.
[10] The division of marital assets lies within the sound discretion of the trial court.
Bertholet v. Bertholet, 725 N.E.2d 487, 494 (Ind. Ct. App. 2000). Thus, we will
reverse only if that discretion is abused. Id. “An abuse of discretion occurs if
the trial court’s decision is clearly against the logic and effect of the facts and
circumstances before the court, or the reasonable, probable, and actual
deductions to be drawn therefrom.” Id. (citing Wells v. Collins, 679 N.E.2d 915,
916 (Ind. Ct. App. 1997)). As a reviewing court, we may not reweigh the
Court of Appeals of Indiana | Memorandum Decision 38A04-1506-DR-726 | March 17, 2016 Page 5 of 15 evidence or assess the credibility of witnesses, and we consider only the
evidence most favorable to the trial court’s disposition of marital property. Id.
In addition, the party challenging the trial court’s division must overcome a
strong presumption that the court complied with the statutory guidelines. Id.
[11] Here, the trial court made findings of fact and conclusions of law thereon
pursuant to Ind. Trial Rule 52(A) in its motion to correct error. Our standard of
review is therefore two-tiered. “We first determine whether the evidence
supports the findings and then whether those findings support the judgment.”
Bertholet, 725 N.E.2d at 495. On review, we do not set aside the trial court’s
findings or judgment unless clearly erroneous. T.R. 52(A). A finding is clearly
erroneous when there is no evidence or inferences reasonably drawn therefrom
to support it. Bertholet, 725 N.E.2d at 495. The judgment is clearly erroneous
when it is unsupported by the findings of fact and conclusions entered on the
findings. Id. In making our determination, we neither reweigh evidence nor
judge witness credibility, but we will consider only the evidence and reasonable
inferences therefrom which support the judgment. Id. We may affirm the
judgment on any legal theory supported by the findings if that theory is
consistent with “all of the trial court’s findings of fact and the inferences
reasonably drawn from the findings[,]” and if we deem such a decision prudent
in light of the evidence presented at trial and the arguments briefed on appeal.
Id.
[12] The division of marital property in Indiana is a two-step process. Thompson v.
Thompson, 811 N.E.2d 888, 912 (Ind. Ct. App. 2004), trans. denied. The trial
Court of Appeals of Indiana | Memorandum Decision 38A04-1506-DR-726 | March 17, 2016 Page 6 of 15 court must first determine what property must be included in the marital estate.
Id. Included within the estate is all the property acquired by the joint effort of
the parties. Id. With certain limited exceptions, this “one-pot” theory
specifically prohibits the exclusion of any assets from the scope of the trial
court’s power to divide and award. Id. Only property acquired by an
individual spouse after the final separation date is excluded from the marital
estate. Id.
[13] After determining what constitutes marital property, the trial court must then
divide the marital property under the presumption that an equal split is just and
reasonable. Ind. Code § 31-15-7-5. A party who challenges the trial court’s
division of the marital estate must overcome a strong presumption that the trial
court considered and complied with the applicable statute. Frazier v. Frazier, 737
N.E.2d 1220, 1223 (Ind. Ct. App. 2000).
[14] The Indiana supreme court has made it clear that the trial court has discretion
when valuing the marital assets to set any date between the date of filing the
dissolution petition and the date of hearing. Eyler v. Eyler, 492 N.E.2d 1071,
1074 (Ind. 1986). Here, the trial court, without any objection from the parties,
placed the valuation date for the division of property at the date of filing, i.e.,
April 16, 2013, with compensation for business transactions through September
2014.
[15] Acknowledging the complexity of the marital estate, Vicky nevertheless
contends that “the issue on appeal is straightforward.” (Appellant’s Br. p. 10).
Court of Appeals of Indiana | Memorandum Decision 38A04-1506-DR-726 | March 17, 2016 Page 7 of 15 Pointing out the omissions from the estate, she asserts that the Decree failed to
address and divide the Ally Bank accounts (Ally accounts) owned by JAL
Poultry and James with balances of $1,810,760.88 and $698,627.12
respectively. She alleges that the Decree also excluded non-cash assets
including grain owned by JAL Poultry with a value of $770,000.00 and seed
owned by JAL Poultry with a value of $150,000.00. Because these purported
omissions resulted in a substantial and unsupported deviation in favor of James,
Vicky maintains that the trial court’s intended equal division of the marital
estate became skewed to approximately 60% for James and 40% for Vicky.
After Vicky initially raised her concerns through a motion to correct error, the
trial court found that
it accounted for all the parties’ money is [sic] some place in the findings. The task is complicated because the cash flow in the business ebbs and flows.
(Appellant’s App. p. 124).
I. The Ally accounts
[16] Contending that the trial court erred when it understated the amount of cash to
be divided in the marital estate, Vicky points to the excluded accounts as the
Ally account in the name of JAL Poultry ending in 8961 for an amount of
$1,810,760.88 (Ally 8961) and the Ally account in the name of James ending in
8953 for an amount of $698,627.12 (Ally 8953). On the other hand, James
asserts that “the accounts did not exist at the time of the filing of the petition for
Court of Appeals of Indiana | Memorandum Decision 38A04-1506-DR-726 | March 17, 2016 Page 8 of 15 dissolution” and therefore they are not part of the marital estate. (Appellee’s
Br. p. 11).
[17] The parties’ respective arguments bring to mind the classic adage to “follow the
money.” Vicky insists the money is there, but has been transferred from
account to account and was not included in the marital estate, while James
contends that “there is no missing money.” (Appellee’s Br. p. 10).
A. Ally 8961
[18] With respect to the monetary division of JAL Poultry, the trial court found as
follows:
26. [JAL Poultry]
***
Jan Ingle appraised the 109 acres [used by JAL] at $732,610.00. The parties agreed the [c]ourt should value the flock at $750,000.00. The parties agreed with Mr. Puckett’s valuation of the buildings, grain bins, equipment, and home at $1,950,000.00. Mr. Puckett also added $2,500.00 in value for Snap On Tools, farmhand tools, generator, and miscellaneous tools.
The [c]ourt finds the assets within JAL have a $3,435,110.00 value. This value assumes James would own 100% of the LLC. He will own 94%. The sons will own 3% each, or a 6% total. James argues the [c]ourt needs to consider certain issues related to the minority interests. The [c]ourt will discuss this issue in a later paragraph.
Court of Appeals of Indiana | Memorandum Decision 38A04-1506-DR-726 | March 17, 2016 Page 9 of 15 At the filing date, [JAL Poultry] had $497,563.00 in its bank account. The [c]ourt will also include 94% of this amount in the assets available for division.
James shall pay and hold Vicky harmless as to the following debt related to [JAL Poultry]: BEX (to purchase semi-trailer) in the amount of $12,000.00.
(Appellant’s App. pp. 16-17).
[19] Our review of petitioner’s Ex. 2—“Money Transferred from [JAL Poultry]
Account”—reveals that in April 2013, 1 the sum of $1,612,420 was transferred
from a CAP One account into a “Pershing Fund in the LLC name.”
(Appellant’s App. p. 31). In November of 2013, the Pershing Fund deposited
$1,675,204.79 into the LLC checking account, from where $1,700.00 was
transferred into Ally 8961 the following month. Six months later, on August
15, 2014, Ally 8961 had an ending balance of “1,810,760.88.” (Vol. IV,
Respondent’s Ex. O). While James’ argument that Ally 8961 was not in
existence at the valuation date is technically correct, it is clear that a significant
amount of funds was held in the CAP One account on April 16, 2013, which
was then subsequently deposited—albeit via several transactions—into Ally
8961. Accordingly, even though Ally 8961 did not exist, the money was clearly
present in April 2013 and therefore must be accounted for in the marital estate.
1 Vicky does not provide us with the exact date in April.
Court of Appeals of Indiana | Memorandum Decision 38A04-1506-DR-726 | March 17, 2016 Page 10 of 15 [20] In an attempt to explain away the existence of this cash, James first asserts that
the funds represent a reserve for the business to “feed and care for the flock.”
(Appellee’s br. p. 12). Even if Ally 8961 represents this reserve fund and even
though Vicky agreed with the business decision to maintain a reserve fund for
JAL Poultry, the funds cannot be excluded from the “one-pot” and must be
divided equally between the parties. James also refers to his need to acquire a
flock of new birds in June of 2013 at a cost of approximately $1,300,000.00
because “the flock existing at the time of the filing had a disease that impacted
productivity.” (Appellee’s Br. p. 12). Without any citation to the record, James
maintains that he used the contested funds to acquire and feed the new birds.
However, his argument is belied by the admitted exhibits, which clearly
indicate a growth of the funds in the CAP One account, Pershing account, and
ultimately Ally 8961.
[21] James also claims that Vicky agreed to a certain amount representing “her share
of the farm profits for 2014,” which was accepted by the trial court.
(Appellant’s App. p. 24). Accordingly, he claims that “no review of LLC
accounts after December 21, 2013, is required or appropriate.” James
mischaracterizes Vicky’s stipulation. The stipulation was limited to the “2014
Farming Operations” and represents her share of the farm profits for 2014.
(Appellant’s App. p. 24). This stipulation does not encompass Ally 8961 but
rather represents the trial court’s “compensation for business operations”
between the valuation date and September 2014. (Appellant’s App. p. 14).
Court of Appeals of Indiana | Memorandum Decision 38A04-1506-DR-726 | March 17, 2016 Page 11 of 15 [22] Based on the evidence before us, it appears that the trial court omitted Ally
8961—or the CAP One account as it existed on the valuation date—from the
marital pot and failed to equally divide it between the parties. Even if the trial
court included the Ally 8961 account and the $1,800,000 reserve fund, it
appears that the trial court did not divide this marital asset between the parties.
Therefore, we remand to the trial court for further clarification and division of
the asset, if necessary.
B. Ally 8953
[23] Vicky contends that “[t]he cash in James’ [Ally 8953], $698,927.00 on August
29, 2014, which came from moneys earned by JAL Poultry and was transferred
by him from [JAL Poultry’s] account to his [own] during the pendency of the
case, is not referenced or divided in the [D]ecree.” (Appellant’s App. p. 13).
[24] Unlike the funds in Ally 8961 which could be traced back to predecessor
accounts through the exhibits, Ally 8953 can only be traced back to June 21,
2013. A statement dated December 15, 2013 indicates that Ally 8953 was
opened on June 21, 2013—after the valuation date but during the trial court’s
compensation for business operations which runs through September, 2014. At
that time, the account had a beginning balance of $385,460.87; a deposit of
$250,000.00 from James’ checking account and a withdrawal of $550,000, left
an ending balance of $85,595.75. Subsequent statements of May 15, 2014, June
15, 2014, July 15, 2014, and August 15, 2014, show a continuous growth in the
Ally 8953 balance, up to $698,627.12.
Court of Appeals of Indiana | Memorandum Decision 38A04-1506-DR-726 | March 17, 2016 Page 12 of 15 [25] In its Decree, the trial court found that “James’ personal accounts increased by
$769,021.00.” (Appellant’s App. p. 24). Although the trial court identified a
“personal account (SNB xxx9701) with $161,021.00 in it” and an IRA in his
name, these funds do not add up to the number used by the trial court for
James’ personal accounts. (Appellant’s App. p. 18). Accordingly, without any
further identification as to which “personal accounts” the trial court refers, it is
unclear whether the trial court considered Ally 8953. While we are mindful
that Ally 8953—like Ally 8961—was not in existence at the valuation date, the
funds used to create the Ally account may be traced back to the valuation date
and should be accounted for in the marital estate. We remand to the trial court
for further clarification and division of the asset, if necessary.
II. Seed and Grain
[26] Lastly, Vicky contends that the trial court failed to include the value of JAL
Poultry seed for an amount of $150,000.00 and the value of JAL Poultry grain
for an amount of $770,000.00.
[27] The trial court found in its Decree
26. JAL Poultry
Jan Ingle appraised the 109 acres at $732,610.00. The parties agreed the [c]ourt should value the flock at $750,000.00. The parties agreed with Mr. Puckett’s valuation of the buildings, grain bins, equipment, and home at $1,950,000.00. Mr. Puckett also
Court of Appeals of Indiana | Memorandum Decision 38A04-1506-DR-726 | March 17, 2016 Page 13 of 15 added $2,500.00 in value for Snap On Tools, farmhand tools, generator, and miscellaneous tools.
The [c]ourt finds the assets within JAL [Poultry] have a $3,435,110.00 value.
(Appellant’s App. p. 16). The evidence before us reflects that Brad Puckett
(Puckett), an auctioneer and appraiser, valued the buildings, grain bins,
attached equipment and home at $1,950,000.00. Although Vicky submitted a
separate appraisal for “the value of 2014 grain crops,” this appraisal was not
admitted. 2 (Appellant’s App. p. 91). Nevertheless, there is no evidence before
us indicating that Puckett’s appraisal for the JAL Poultry buildings and grain
bins fails to take into consideration the value of the seed and grain.
Furthermore, when the trial court distributed the assets and debts between the
parties, it allocated “JAL Grain stock” to James and awarded it “no separate
value; see Paragraph 26 above.” (Appellant’s App. p. 20). Therefore, we
cannot conclude that the trial court omitted the value for the seed and grain
from its division of the marital estate.
CONCLUSION
[28] Based on the foregoing, we conclude that the trial court did not omit the JAL
Poultry seed and grain from its division of the marital estate. However, we
2 The appraisal was conditionally admitted, but the record shows that this condition was never removed by the trial court.
Court of Appeals of Indiana | Memorandum Decision 38A04-1506-DR-726 | March 17, 2016 Page 14 of 15 hold that the trial court appears to have failed to include the Ally 8961 account
and the Ally 8953 account in its “one-pot” calculation of the marital estate.
Therefore, we remand to the trial court for further consideration and
clarification of both accounts and further division of the marital estate, if
necessary.
[29] Affirmed in part and remanded in part for further proceedings.
[30] Najam, J. and May, J. concur
Court of Appeals of Indiana | Memorandum Decision 38A04-1506-DR-726 | March 17, 2016 Page 15 of 15