RENDERED: MARCH 4, 2022; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2021-CA-0486-MR
TIMOTHY O’KEEFE APPELLANT
APPEAL FROM BULLITT CIRCUIT COURT
v. HONORABLE MONICA K. MEREDITH, JUDGE
ACTION NO. 20-CI-00627
ANGELA MARIE O’KEEFE APPELLEES
OPINION
REVERSING
AND REMANDING
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BEFORE: LAMBERT, MAZE, AND L. THOMPSON, JUDGES.
MAZE, JUDGE: Timothy O’Keefe (Tim) appeals from the Findings of Fact,
Conclusions of Law, Judgment and Decree of Dissolution of the Bullitt Circuit
Court dissolving his marriage to Angela O’Keefe (Angela). On appeal, Tim raises
three issues: 1) the amount of funds assigned to Angela as non-marital property; 2)
the propriety of the maintenance award to Angela; and 3) the propriety of the
attorney’s fee award to Angela. The Court having found reversible error in the
trial court’s failure to make required findings, we reverse and remand its judgment
in this case.
Tim and Angela were married on October 23, 1999, in Jefferson
County, Kentucky. At the time of their divorce, Angela was 47 years old and
employed as a clerical assistant for the Bullitt County Public Schools. She also
worked as a weekend bartender at a golf course. Although she was employed as a
mortgage loan processor prior to the parties’ marriage, during the marriage, she
was out of the workforce, acting as a “stay at home” mom during the minority of
the parties’ two children. In addition, she has an associate degree in computer
information systems and a certificate in medical billing. Tim was 55 years old and
worked for the Kentucky Transportation Cabinet as a field technician. He also
worked a second job as a basketball referee. He has no education beyond his high
school diploma.
Prior to trial, Tim and Angela reached an agreement as to the
distribution of automobiles, the (now adult) children’s bank accounts and the
division of credit card debt. On January 13, 2021, the matter came before the court
for trial on the remaining issues. Further proceedings were conducted on March
24, 2021, as to the issue of Angela’s attorney’s fees.
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I. DIVISION OF NON-MARITAL PROPERTY:
The trial court found that Angela used the sum of $28,118.80 as the
down payment for the parties’ marital home, the balance of the $80,572.85
purchase price having been financed with a mortgage loan. The Court further
found that the parties have since refinanced the home numerous times.
However, no evidence was introduced regarding the fair market value of the
property at the time of any of those transactions. Although it was undisputed
that Angela made the initial down payment from a non-marital source, the court
held that the increase in value of that property was attributable to the joint
efforts of the parties. The court then concluded that the current value of the
marital residence is $146,000.00 to be offset by the amount of the non-marital
contribution and the sum of $1,250.00 in loan proceeds from Tim’s 401(k)
account taken after separation, leaving a mortgage balance of $77, 301.06 to be
assumed by Angela. The court found the amount of marital equity to be
$39,330.14 and directed Angela to pay to Tim the sum of $19,665.07 as his
share.
On appeal, Tim has argued that although Angela did indeed make the
initial down payment using non-marital funds, she failed to introduce sufficient
evidence tracing that contribution through the multiple refinancing transactions
into the current equity in the home and therefore, the trial court erred in crediting
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Angela with $28,118.80 as her non-marital contribution. Further, Tim argues that,
of that initial non-marital contribution, the sum of $5,930.00 represents closing
costs and therefore, pursuant to Schoenbachler v. Minyard, 110 S.W.3d 776 (Ky.
2003), does not increase the equity in the property and should not be used in
calculating Angela’s non-marital interest. As an initial matter, the Court notes that
the HUD Settlement statement from the parties’ closing on the property reflects a
down payment of $22,188.30 and closing costs of $5,930.50. Therefore, based on
Schoenbacher, supra, the Court concludes that the trial court erred in including the
closing costs as a part of Angela’s non-marital contribution.
The classification of inherited funds is a matter to be reviewed de
novo. Young v. Young, 314 S.W.3d 306 (Ky. App. 2010). KRS1 403.190(3)
contains a statutory presumption that property acquired during marriage is marital
property. Therefore, the burden of proof of proving the non-marital nature of the
property and then tracing the property into a marital asset lies with the party
claiming the non-marital interest. Kleet v. Kleet, 264 S.W.3d 610 (Ky. App. 2007).
However, in Chenault v. Chenault, 799 S.W.2d 575, 578-79 (Ky. 1990), the
Kentucky Supreme Court retreated from “draconian requirements” for tracing,
particularly as applied to “persons of lesser business skills or persons who are
imprecise in their record-keeping abilities.”
1
Kentucky Revised Statutes.
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The case of Smith v. Smith, 503 S.W.3d 178 (Ky. App. 2016),
involved the tracing of non-marital property, a CD, into the purchase of the marital
home. The Smith Court held that the trial court appropriately found that the
testimony of Mrs. Smith, her mother, and Mr. Smith was sufficient to demonstrate
the non-marital character of her contribution. However, Mr. Smith argued that his
former wife was required to show the reason for the increase in value of the
residence. The Court then concluded that Mrs. Smith had shown that the increase
was due to additional marital contribution and “economic conditions,” and found
that there had been “no principal debt reduction made on the property.” Id. at 184.
Here, as in Smith, supra, Angela has clearly demonstrated that the
sum of $22,188.30 was a non-marital contribution to the purchase of the marital
home. She testified as to the inheritance and tendered a copy of her mother’s last
will and testament. Indeed, Tim’s counsel indicated that they did not intend to
challenge Angela’s inheritance. However, this Court cannot find that any evidence
was presented to the trial court as to the reason for the increase in value of the
property. Therefore, as there was no such proof connecting the non-marital
contribution to the increase, this Court reverses and remands this portion of the
trial court’s judgment for a finding in that regard.
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II. ALLOCATION OF MAINTENANCE:
As to the necessity for maintenance, the trial court found that both
parties are middle aged and nearing the end of their earning years, Angela has been
hampered in her earning ability by both her lack of education and her years out of
the workforce. Although the trial court concluded that the parties’ financial
positions had been “equalized” by the property disposition, it still found that
Angela was entitled to spousal maintenance pursuant to KRS 403.200 in the
amount of $500 per month for ten years.
On appeal, Tim argues that the trial court failed to make the findings
required by KRS 403.200(1)(a) and (b). These provisions require that, to make a
maintenance award, the trial court must find that the recipient not only lacks
enough property to meet his “reasonable needs” but is “unable to support himself
through appropriate employment[.]” While the trial court stated that its award was
made “pursuant to KRS 403.200,” it failed to make any findings as to Angela’s
“reasonable needs,” before finding that “after receiving her portion of the marital
estate in combination with the non-marital asset the [c]ourt has recognized should
be awarded to her, the financial circumstances of the parties going forwarded [sic]
are much more equalized.”
As stated in Wattenberger v. Wattenberger, 577 S.W.3d 786, 787-88
(Ky. App. 2019), “the threshold conditions of KRS 403.200(1) must be met before
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a circuit court can legally consider the factors enumerated in KRS 403.200(2)(a)-
(f).” As such, this Court must vacate and remand the matter to enable the trial
court to make the requisite findings.
Further, the trial court’s Findings of Fact, Conclusions of Law,
Judgment and Decree of Dissolution, does not reflect that it considered all the
factors set forth in KRS 403.200(2)(a)-(f) regarding the amount and duration of
maintenance. Not only must a court awarding maintenance consider the recipient’s
resources and needs, but her ability to obtain employment, the parties’ standard of
living, the length of the marriage, her age, physical and emotional condition, and
the “ability of the spouse from whom maintenance is sought to meet his needs
while meeting those of the spouse seeking maintenance.” KRS 403.200(2)(f).
However, since this Court concludes that because the trial court failed to meet the
“threshold” for an award of maintenance, it need not reach a decision as to the
propriety of the amount and length of the award.
III. ATTORNEY’S FEES:
Finally, the trial court awarded attorney’s fees to Angela based on the
fees each party anticipated paying for representation as well as the court’s
“personal knowledge” as to the costs of legal fees in the local community. On
appeal, Tim argues that the trial court abused its discretion in making its award
based on these considerations.
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KRS 403.220 provides that an award of attorney’s fees may be made
“after considering the financial resources of both parties[.]” Such an award has
been held to be entirely discretionary with the trial court. Tucker v. Hill, 763
S.W.2d 144 (Ky. App. 1988). In Smith v. McGill, 556 S.W.3d 552 (Ky. 2018), the
Court overruled Sullivan v. Levin, 555 S.W.2d 261 (Ky. 1977), Hale v. Hale, 772
S.W.2d 628 (Ky. 1989), Bishir v. Bishir, 698 S.W.2d 823 (Ky. 1985), and
Neidlinger v. Neidlinger, 52 S.W.3d 513 (Ky. 2001), holding that a finding of
financial imbalance is required. Instead, the Smith Court concluded that “[w]hile
financial disparity is no longer a threshold requirement which must be met in order
for a trial court to award attorney’s fees, we note that the financial disparity is still
a viable factor for trial courts to consider in following the statute and looking at the
parties’ total financial picture.” 556 S.W.3d at 556. In this case, the trial court
failed to consider “the parties’ total financial picture,” including Tim’s post-
judgment resources, and therefore, its judgment as to an award of attorney’s fees is
reversed and this matter is remanded for additional findings.
Accordingly, we reverse and remand the judgment of the Bullitt
Circuit Court for the required findings.
ALL CONCUR.
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BRIEFS FOR APPELLANT: BRIEF FOR APPELLEE:
Kirk Hoskins Allison S. Russell
Louisville, Kentucky Shanna R. Ballinger
Louisville, Kentucky
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