Michael Larry Strums, Former Husband, Continental Financial Services, LLC, Worldwide Financials, LLC and Continental Development, LLC v. Catherine Elizabeth Sturms, Former Wife

IN THE DISTRICT COURT OF APPEAL
FIRST DISTRICT, STATE OF FLORIDA
MICHAEL LARRY STURMS,
Former Husband, NOT FINAL UNTIL TIME EXPIRES TO
CONTINENTAL FINANCIAL FILE MOTION FOR REHEARING AND
SERVICES, LLC, WORLDWIDE DISPOSITION THEREOF IF FILED
FINANCIALS, LLC, and
CONTINENTAL CASE NO. 1D15-4242
DEVELOPMENT, LLC,

Appellants,

v.

CATHERINE ELIZABETH
STURMS, Former Wife,

Appellee.

_____________________________/

Opinion filed August 21, 2017.

An appeal from the Circuit Court for Duval County.
Elizabeth A. Senterfitt, Judge.

Rebecca Bowen Creed of Creed & Gowdy, P.A., Jacksonville, for Appellants.

Michael J. Korn of Korn & Zehmer, P.A., Jacksonville and S. Denise Watson of the
Law Office of Denise Watson, Jacksonville, for Appellee.

PER CURIAM.

Michael Larry Sturms (“Husband”) appeals the trial court’s final judgment of

dissolution of his marriage to Catherine Elizabeth Sturms (“Wife”), raising four
issues. We find merit in his arguments that the trial court erred in including the value

of the 2014 Jaguar F-Type as both a stand-alone asset and in the adjusted cash

amount, and in its allocation of assets owned by Continental Financial Services, LLC

(“Financial Services”), in devising the equitable distribution scheme. We reverse the

final judgment and remand for the trial court to correct the equitable distribution

schedule consistent with this opinion. In all other respects, we affirm the final

judgment.

Wife filed the petition for dissolution in March 2013, after almost fourteen

years of marriage. Husband is the sole shareholder and owner of three companies:

Worldwide Financials, LLC (“Worldwide”); Continental Development, LLC

(“Development”); and Crude Oil & Gas, Inc. (“Crude Oil”). Financial Services is a

partnership between William Pierce and Worldwide, a company wholly owned by

Husband. Wife asked the trial court to designate the property and assets held by

Worldwide, Development, Crude Oil, and Financial Services as marital.

The parties owned various properties, vehicles, and businesses they acquired

during the marriage. Husband disputes the equitable distribution of Crude Oil’s

assets, including the 2014 Jaguar F-Type and the assets of Financial Services, due

to his status as a fifty-percent shareholder. The equitable distribution schedule

incorporated into the final judgment assigned to Husband an adjusted cash amount

of $776,752. The value of adjusted cash included $578,000 earned by Crude Oil. In

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addition to the adjusted cash amount, the 2014 Jaguar F-Type, purchased with Crude

Oil funds, was credited against Husband in the amount of $75,750. The equitable

distribution assigned to Wife the Tortuga Lot and the Ameritrade Account, which

are assets of Financial Services.

Crude Oil as Marital Asset

Husband contends that the trial court erred in valuing Crude Oil as a marital

asset when calculating the adjusted cash amount. “We review a trial court’s

characterization of an asset as marital or nonmarital de novo and any factual findings

necessary to make this legal conclusion for competent, substantial evidence.” Dravis

v. Dravis, 170 So. 3d 849, 852 (Fla. 2d DCA 2015) (citing Tradler v. Tradler, 100

So. 3d 735, 738 (Fla. 2d DCA 2012)).

A. Alleged Commingling of Crude Oil Funds into Marital Accounts

Husband argues that the value of Crude Oil, and its primary asset, the drilling

rights, is premarital because he acquired the business and drilling rights long before

the parties married. “Nonmarital assets may lose their nonmarital character and

become marital assets where, as here, they have been commingled with marital

assets.” Id. (citing Abdnour v. Abdnour, 19 So. 3d 357, 364 (Fla. 2d DCA 2009)).

“Money is fungible, and once commingled it loses its separate character.” Pfrengle

v. Pfrengle, 976 So. 2d 1134, 1136 (Fla. 2d DCA 2008) (citing Belmont v. Belmont,

761 So. 2d 406, 408 (Fla. 2d DCA 2000)). When nonmarital funds are commingled

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with marital funds, the nonmarital funds become marital funds and therefore are

subject to equitable distribution. See Heinrich v. Heinrich, 609 So. 2d 94 (Fla. 3d

DCA 1992) (holding that funds from nonmarital sources are treated as marital funds

for the purposes of equitable distribution when they are placed in a trust along with

a family checking account in which the husband deposits his income).

Although Husband is correct that Crude Oil’s primary asset, the deep-oil

drilling rights, originated as a nonmarital asset, the record evidence supports the trial

court’s factual finding that the proceeds from the sale of the drilling rights were

commingled when Crude Oil funds were loaned to Development, causing them to

lose their nonmarital character, despite the eventual return of the funds to a Crude

Oil account. The earnings of Crude Oil are therefore marital assets. Thus, the trial

court correctly assigned to Husband the $578,000 earned by Crude Oil in the

adjusted cash amount.

B. 2014 Jaguar F-Type

Despite correctly characterizing Crude Oil funds as martial assets, the trial

court erred in calculating the 2014 Jaguar F-Type twice, both as a separate asset and

in the adjusted cash amount assigned to Husband through Crude Oil. Husband

purchased the 2014 Jaguar F-Type with Crude Oil funds from the sale of the drilling

rights. The trial court included the value of the 2014 Jaguar F-Type in calculating

the adjusted cash amount of $578,000. Because the value was already included in

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the adjusted cash amount, the trial court erred in assigning $75,750 for the 2014

Jaguar F-Type to Husband.

Valuation of Financial Services

Husband argues that the trial court erred in awarding Wife exclusive right and

title to the Tortuga Lot and the Ameritrade account, assets owned by Financial

Services. Husband alleges that any interest in Financial Services should have been

limited to Husband’s fifty-percent share of ownership in Financial Services.

In Capote v. Capote, the Second District found that there was no evidence to

support the husband’s claim that his business was a nonmarital asset. 117 So. 3d

1153 (Fla. 2d DCA 2013). The husband argued that his father contributed money

towards the down payment of the business, and owned fifty percent of the business

pursuant to an oral agreement. Id. at 1154. There were no documents memorializing

the father’s interest in the business, the business was incorporated solely in the

husband’s name, and the tax returns did not reflect the father’s interest. Id. at 1155.

Additionally, the parties’ joint accountant testified that the husband was the sole

owner of the business. Id. Therefore, the Second District upheld the trial court’s

decision to classify the business as a marital asset because no evidence supported

the husband’s claim. Id.

In this case, the evidence supported Husband’s claim that Financial Services

is owned equally by Pierce and Worldwide, Husband’s wholly-owned company. At

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the final hearing on April 27, 2015, Wife stated that she would not be asking the trial

court to determine Financial Services as a full marital asset, but only the fifty-percent

owned by Husband, as the other fifty-percent was owned by Pierce. Both Wife and

Husband’s separate accountants testified as to Husband’s fifty-percent ownership

interest of Financial Services. The deposition of Pierce was admitted, which outlined

the fifty-percent ownership agreement. In addition, the tax records of Financial

Services reflected a fifty-percent ownership agreement.

The trial court did not have jurisdiction to adjudicate the property rights of

Pierce, who was not a party to the dissolution action. See Salituri v. Salituri, 184 So.

3d 1250, 1252 (Fla. 4th DCA 2016); Matajek v. Skowronska, 927 So. 2d 981, 985

(Fla. 5th DCA 2006); Ray v. Ray, 624 So. 2d 1146, 1148 (Fla. 1st DCA 1993). Thus,

the trial court erred in distributing the full value of assets owned by Financial

Services, specifically, the Tortuga Lot, a piece of real property titled to Financial

Services, and an Ameritrade account to Wife.

Conclusion

Because we conclude that the trial court erred in calculating the 2014 Jaguar

F-Type as adjusted cash and a separate marital asset, and erred in awarding Financial

Services’ assets to Wife, the trial court will have to address the equitable distribution

of the parties’ assets on remand. As such, we affirm in part, reverse in part, and

remand for further proceedings.

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Affirmed in part, reversed in part, and remanded.

OSTERHAUS, BILBREY, and WINOKUR, JJ., CONCUR.

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