Wooten v. Wooten

*57HEARN, C.J.:

Thomas Durrette Wooten, Jr., (Husband) appeals several aspects of a divorce decree, including the award of the marital home to Wife, the identification of certain credit card charges incurred after the parties’ separation as marital debt, the decision to grant Wife permanent alimony of $4,300 per month, and the award to Wife of $52,917.21 in attorney’s fees and costs. We affirm as modified in part and reverse and remand in part.

Husband and Mona Rae Wooten (Wife) were married in 1976. They have three children, all of whom are past the age of majority.

The parties married while Husband was completing medical school and Wife was employed as a nursing instructor at The Medical University of South Carolina. Husband finished his residency in 1980 and the couple moved to Columbia for him to pursue open-heart surgery anesthetics. A year later they moved back to the Charleston area and purchased a riverfront home on Johns Island. The couple transformed the house, which was described as “barely livable,” into a five-bedroom home containing nearly 5,000 square feet and valued at $675,000.00 at the time of the divorce hearing.

During the marriage, the parties enjoyed a comfortable, if not extravagant lifestyle, which was largely centered on outdoor activities such as boating, hunting, and fishing. Husband and the parties’ older daughter and son were actively involved in hunting and fishing. Wife described fishing as Husband’s “main love.”

Wife stayed home with the children while they were small and worked in Husband’s practice as a bookkeeper. In 1995, Wife went to work in the Charleston County Coroner’s office. At the time of trial, Wife was employed as the deputy coroner for Charleston County earning a salary of approximately $47,000 per year. Husband was earning approximately $217,000 per year.

At some point during the marriage, Husband admitted to Wife that he had been unfaithful to her with the wife of another anesthesiologist while away at a medical meeting. Wife testified that Husband also admitted to her that he had *58been sexually intimate with the wife of a fishing buddy. Husband, however, testified that he had only engaged in a one-night stand with the wife of someone he fished with while at a fishing tournament in Kiawah.

In 1986 or 1987, approximately twelve years before the parties separated, Wife began a year-long affair with a family friend. The affair continued even after Husband confronted Wife, and subsequently the parties entered counseling. The parties saw four or five different counselors during this troubled time in their marriage.

In February of 1999, Husband left the marital home and subsequently underwent a vasectomy. Although Wife sought a reconciliation, Husband informed the parties’ marriage counselor that he no longer loved Wife and only wanted to discuss a division of their marital assets.

Husband commenced this action in June of 1999 for an order of separate maintenance and support and an equitable division of the parties’ assets and debts. Wife answered and counterclaimed seeking a divorce on the ground of adultery, possession and ownership of the marital home, equitable division of marital property, alimony, and attorney’s fees.

At trial, the parties announced they had reached an agreement regarding the division of their personal property. Husband also conceded that Wife was entitled to alimony and to an equal division of the marital estate. The remaining issues were tried over a five-day period after which the family court judge issued a final order granting Wife a divorce on the ground of adultery.

Although Husband conceded at trial that Wife was entitled to a fifty-fifty division of the marital estate, he requested that the only asset of the parties that can be readily liquidated, the marital home, be sold to accomplish this division. The court valued the marital estate at $1,571,103.1 To accomplish the fifty-fifty division of the marital estate, the family court judge awarded the marital home to Wife, together with its mortgage debt, her retirement account, and $137,395.50 from Husband’s *59retirement account. Husband was awarded his interest in his medical practice valued at $41,000, the remainder of his retirement account, and indebtedness totaling $83,552. The family-court also awarded Wife $4,300 per month in permanent, periodic alimony, and $52,917.21 in attorney’s fees and costs.

STANDARD OF REVIEW

On appeal from the family court, this court has jurisdiction to find the facts in accordance with our own view of the preponderance of the evidence. Murdock v. Murdock, 338 S.C. 322, 526 S.E.2d 241 (Ct.App.1999). However, we are mindful of the fact that the family court judge, who had an opportunity to observe the witnesses, was in a better position to evaluate their testimony. Smith v. Smith, 327 S.C. 448, 486 S.E.2d 516 (Ct.App.1997).

DISCUSSION

I. Credit Card Debt

Husband asserts the family court judge erred in identifying $12,332 in credit card charges incurred by Wife after the parties’ separation as marital debt and in allocating that debt to him. We agree.

Wife testified that although Husband initially paid all household bills when he left the marital home, sometime in June of 1999 he told her that she should start paying some of the bills. After that time, and up until the time of the temporary hearing, Husband paid the mortgage payments on the marital home while Wife used her credit card for other expenses such as food and veterinary bills. Wife testified that she had a credit card bill of $12,322. The family court judge treated this debt as a marital debt subject to equitable apportionment. We find that this was error.

“Marital property” for purposes of the South Carolina Apportionment of Marital Property Act is defined in S.C.Code Ann. § 20-7-473 (Supp.2002) as “all real and personal property which has been acquired by the parties during the marriage and which is owned as of the date of filing or commencement of marital litigation.... ” In making an equitable apportionment, the family court should consider “... any other existing *60debts incurred by the parties or either of them during the course of the marriage[.]” S.C.Code Ann. § 20-7-472(13) (Supp.2002). “[S]ection 20-7-472 creates a [rebuttable] presumption that a debt of either spouse incurred prior to marital litigation is a marital debt and must be factored in the totality of equitable apportionment.” Hardy v. Hardy, 311 S.C. 433, 436, 429 S.E.2d 811, 813 (Ct.App.1993).

Because Hardy establishes a presumption in favor of treating a debt as marital when it is incurred prior to marital litigation, the party claiming the debt is nonmarital bears the burden to overcome that presumption. See also Hickum v. Hickum, 320 S.C. 97, 463 S.E.2d 321 (Ct.App.1995) (stating the burden of proving a spouse’s debt as nonmarital rests on the party who makes such an assertion). In the instant case, however, it is undisputed that the debt was incurred after marital litigation was commenced. Accordingly, the presumption in favor of the debt as marital is lost, and the burden moved to Wife to establish that the debt was incurred for the benefit of the marriage. See Peirson v. Calhoun, 308 S.C. 246, 417 S.E.2d 604 (Ct.App.1992) (holding that a debt incurred after the parties’ separation may be equitably apportioned where there has been a showing that the debt was incurred for the benefit of the marriage).

There was no showing by Wife that the credit card debt was incurred for the benefit of the marriage. Accordingly, it does not qualify as a marital debt subject to equitable apportionment.2 We therefore reverse this portion of the family court’s order allocating the credit card debt to Husband.

II. Marital Home

Husband next contends the family court judge erred in awarding Wife ownership of the marital home as part of her share of the marital estate, arguing it was inequitable to award Wife the only asset of the parties that readily lends itself to liquidation. We agree.

Husband’s position throughout trial was that although Wife was entitled to share equally in the marital estate, the marital *61home should be sold to enable the parties to capture its substantial equity. At the time of trial, the marital home, which was titled in Wife’s name, had equity of at least $539,349. Husband proposed that the home be jointly titled in both parties’ names and sold so that the parties could combine their $250,000 exclusions for capital gains taxes. Gerald Feinberg, a CPA, testified for Husband concerning the tax consequences to the parties of the various methods of equitable distribution. Feinberg testified that if the parties sold the marital home together, they could take advantage of the joint capital gains exclusion of $500,000. Husband further testified that if Wife was awarded the home and he had to liquidate his retirement account in order to satisfy the remaining equitable division award and to make a down payment on a residence for himself, he would suffer substantial tax and "withdrawal penalties. Feinberg testified these penalties would result in Husband losing fifty-one percent of the value of any retirement funds he withdrew. Wife, on the other hand, testified that she wanted to be awarded the marital home in partial satisfaction of her equitable share because “[I]t’s my home. It’s where my life is centered.... It’s where I have my kids and enjoyment. It’s where I have my friends and enjoyment.”

In awarding the marital home to Wife as part of her equitable share, the family court judge specifically stated that she had not given Husband’s fault any weight. She likewise held that in awarding the home to Wife, she did not consider the children’s use of the home, as they were all emancipated and Husband had no obligation to support them other than their college education. These findings were not appealed from and are therefore the law of this case. See Buckner v. Preferred Mut. Ins. Co., 255 S.C. 159, 177 S.E.2d 544 (1970) (stating that an issue which is not challenged on appeal, whether right or wrong, becomes the law of the case).

Additionally, the family court judge specifically noted that she had not considered the tax ramifications of the sale of the house and the taxability of the pension payments. Relying on Ellerbe v. Ellerbe, 323 S.C. 283, 473 S.E.2d 881 (Ct.App.1996), the family court judge found that she was precluded from dividing the parties’ property based on after-tax dollars stating that, “To make a decision based on after-tax dollars is for *62this Court to engage in speculation as to what the parties will do in the future.”

The apportionment of marital property is within the family court judge’s sound discretion and will not be disturbed on appeal absent an abuse of that discretion. Bowers v. Bowers, 349 S.C. 85, 97, 561 S.E.2d 610, 616 (Ct.App.2002). Section 20-7-472 lists fifteen factors for the family court to consider when making an equitable apportionment of the marital estate and vests the family court with the discretion to determine what weight should be assigned to each factor. On review, this court looks to the overall fairness of the apportionment, and if the result is equitable, taken as a whole, that this court might have weighed specific factors differently than the family court is irrelevant. Id.

We find the family court judge abused her discretion in awarding the marital home to Wife as part of the equitable division. Case law indicates that the family court judge should first attempt an in-kind distribution. Stevenson v. Stevenson, 295 S.C. 412, 415, 368 S.E.2d 901, 903 (1988). However, an in-kind distribution is most equitable where the assets being divided are similar in character. In our view, the family court judge’s decision to award Wife the major marketable asset of the parties, while awarding Husband primarily his retirement account, was not an equitable in-kind distribution. Under Husband’s proposal, all assets of the parties would have been equally divided on a fifty-fifty basis. Under Wife’s proposal, the captured equity in the marital home was viewed as being equivalent to Husband’s retirement plan, despite the fact that the equity in the marital home was readily available with little or no tax consequence to Wife and the funds in Husband’s retirement plan were subject to a total penalty of fifty-one percent if withdrawn.

Wife presented no testimony to dispute the testimony of Husband and his expert concerning the tax ramifications of the proposals for equitable division. Therefore, in this case it is uncontradicted that the Husband’s proposal for equitable division would have allowed the parties to take advantage of the joint $500,000 capital gains exclusion while the Wife’s proposal would result in the Husband incurring a severe penalty of over fifty per cent in the liquidation of a portion of *63his retirement fund. Moreover, we believe the family court incorrectly concluded that appellate case law precluded her from considering the tax consequences of the equitable distribution.

In Ellerbe, the husband asserted the family court judge erred in discounting the value of the parties’ retirement plans when the order did not require the plans to be liquidated. This court agreed, finding that “[bjecause toe see no need for the accounts to be liquidated, we hold the family court erred in valuing the parties’ retirement accounts at 48% of their face values.” 323 S.C. at 289, 473 S.E.2d at 885 (emphasis supplied). Here, as in Ellerbe, the family court’s order does not contemplate the liquidation of the Husband’s retirement account. However, we believe it was an error for the family court to have disregarded Husband’s substantial evidence establishing the necessity to withdraw funds from his retirement account to comply with the family court’s division of the marital property. Because the family court should have recognized Husband’s need to liquidate the account, the tax consequences of that liquidation should have been considered. See S.C.Code § 20-7-472(11) (Supp.2002) (specifically requiring the family court to consider “the tax consequences to each or either party as a result of any particular form of equitable apportionment[.]”). The family court judge apparently interpreted Ellerbe to hold that potential tax ramifications should never be considered by the family court in deciding how to fashion an equitable division if the chosen method of division in the order does not expressly require liquidation of an asset. This restrictive interpretation is flawed where, as here, in comparing competing alternatives for division of the property, the tax consequences should have been considered in order to accomplish an equitable division in the first place.

We likewise find the case of Bowers distinguishable. In Boioers, this court declined to find error when the family court judge failed to consider the tax consequences resulting from its award to the wife of one-half the value of the husband’s 401 (k) account. Citing Ellerbe, this court found no abuse of discretion, but stated there was no evidence that either party anticipated liquidation of the account. This is in marked contrast to the evidence presented here from Husband and his expert witness that he would be required to liquidate his *64retirement account in order to comply with the order and to acquire a home for himself.

Taking our own view of the evidence presented in this case, we do not believe that the apportionment of marital assets was fair to both parties. Wife’s emotional attachment to the marital home should not outweigh the undisputed expert testimony that in order to effect a division which is equitable to both parties, the marital home should be sold and the parties should realize the benefits of the $500,000 capital gains exclusion. We find it was error for the family court judge to have viewed these two assets — the equity in the marital home and Husband’s retirement plan — as though they were equivalent assets. The family court abused its discretion in awarding the marital home to Wife in the face of undisputed testimony that both parties would realize a significant tax benefit by selling the home and dividing its proceeds. Accordingly, we reverse this portion of the family court’s order and remand this issue back to the family court to enter an order consistent with this opinion.

III. Alimony

Husband next argues the family court judge’s award of $4,300 per month in permanent periodic alimony was excessive. Although the alimony award does not appear excessive in view of the disparity in the parties’ incomes and the length of the marriage, the family court judge based this alimony award upon her assumption that Wife would be residing in the marital home. Accordingly, she considered Wife’s many needs and expenses that would be associated with her ownership and maintenance of that home, such as an additional $300 to be used by Wife in acquiring a boat. Because we have reversed that portion of the family court order which awarded Wife the marital home as part of her equitable apportionment, we feel compelled to remand the issue of alimony to the family court for recalculation in light of Wife’s present needs. See Ellerbe, 323 S.C. at 297, 473 S.E.2d at 889 (remanding the issue of alimony for reconsideration in light of remanding the issue of the equitable division award, which is a factor relevant to the award of alimony).

*65IV. Attorney’s Fees and Costs

Finally, Husband asserts the family court judge erred in awarding Wife $52,917.21 in attorney’s fees and costs.3 He argues the court erred in awarding any fees to Wife because of the numerous errors he asserts she made in the trial order. He further contends the amount of the award was excessive given his financial condition. We disagree.

An award of attorney’s fees will not be overturned absent an abuse of discretion. Stevenson, 295 S.C. at 415, 368 S.E.2d at 903. In deciding whether to award attorney’s fees, the family court should consider the parties’ ability to pay their own fee, the beneficial results obtained by counsel, the respective financial conditions of the parties, and the effect of the fee on each party’s standard of living. E.D.M. v. T.A.M., 307 S.C. 471, 476-77, 415 S.E.2d 812, 816 (1992). When determining the amount of fees to award, the court is to consider the nature, extent, and difficulty of the services rendered, the time necessarily devoted to the case, counsel’s professional standing, the contingency of compensation, the beneficial results obtained, and the customary legal fees for similar services. Glasscock v. Glasscock, 304 S.C. 158, 403 S.E.2d 313 (1991).

Even though Husband prevailed on two of the equitable division issues in this appeal, the beneficial results obtained are only one of several factors to be considered by the family court in deciding whether or not to award attorney’s fees. The other factors outlined above clearly militate in favor of an award to Wife. Moreover, Wife’s attorney received a favorable result on the issue of divorce and on the issue of alimony, which this court remanded only because of our decision on the equitable division of the marital home. Finally, Husband commenced this action for separate support and maintenance and Wife was required to obtain competent counsel to defend it.

Nor are we persuaded that the amount of fees and costs awarded by the family court was excessive under the circumstances. Husband testified at trial that his own attorney’s and *66accountant’s fees were $70,000, although the family court judge found in her order that he had incurred fees and costs of $58,998.24.

Wife’s counsel is an accomplished family practitioner with an excellent reputation in the community. Particularly given the wide disparity in the parties’ incomes, we do not believe it was error for the family court judge to have awarded Wife the entire amount of her attorney’s fees and costs incurred in defending this action.

CONCLUSION

Accordingly, we affirm the family court judge’s award of attorney’s fees and costs, reverse her decision to treat Wife’s credit card charges incurred after the date of filing as a debt subject to equitable division, reverse her decision to award Wife the marital home as part of her equitable division and direct that the home be sold, and remand the equitable division and alimony issues to the family court for further consideration consistent with this opinion.

CURETON J., concurs. ANDERSON J., dissents in a separate decision.

. The marital estate consisted of the marital home valued at $675,000, with equity of $539,349; Husband's relirement accounts valued at $844,026; Wife's retirement account valued at $11,077; and, Husband's interest in his medical practice valued at $41,000.

. We express no opinion as to whether or not the family court could have required Husband to reimburse Wife for some or all of these charges as an incident of support.

. Husband had already contributed $25,547.50 toward Wife's fees at the time of trial for a total award of $75,129.21.