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I.S. v. P.S.

Intermediate Court of Appeals of Hawaii

August 21, 2013

I.S., Plaintiff-Appellee,
v.
P.S., Defendant-Appellant. I.S., Plaintiff-Appellant/Cross-Appellee,
v.
P.S., Defendant-Appellee/Cross-Appellant.

NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER

APPEAL FROM THE FAMILY COURT OF THE FIFTH CIRCUIT (FC-D NO. 08-1-0204)

Peter Van Name Esser Lawrence D. McCreery for Defendant-Appellant and Defendant-Appellee/ Cross-Appellant

Charles H. Brower Associate Judge for Plaintiff-Appellee

Foley, Presiding Judge, Reifurth and Ginoza, JJ.

MEMORANDUM OPINION

This is a consolidated appeal from a divorce decree and a post-decree order. In appeal No. 30179, Defendant PS (Husband) appeals from the Family Court of the Fifth Circuit's (family court)[1] November 9, 2009 Amended Decree Granting Divorce and Awarding Child Custody (Amended Divorce Decree). In appeal No. CAAP-10-82, Husband cross-appeals from an amended order issued by the family court on September 8, 2010 that recalculated child support (Order Recalculating Child Support). Plaintiff IS (Wife) filed an appeal from the Order Recalculating Child Support in appeal No. CAAP-10-82, but her appeal was later dismissed pursuant to a stipulation by the parties.

In appeal No. 30179, Husband raises the following points of error with respect to the Amended Divorce Decree: 1) the family court erred, made clearly erroneous findings of facts, and its conclusions of law were wrong related to the valuation of the parties' real property; 2) the family court abused its discretion by denying Husband Category 1 credit for his construction business and Category 3 credit for a gift from his mother, and awarding Wife Category 1 credit for her condo; 3) the family court abused its discretion by reducing Husband's share of the marital estate by $20, 438.50 for $40, 877 in "unnecessary" and "unaccounted for" spending; and 4) the family court abused its discretion by imputing $21, 315 a month in income to Husband, and awarding excessive child support and alimony to Wife.

In appeal No. CAAP-10-82, Husband's point of error is that the family court erred in its Order Recalculating Child Support because it did not address the issue of Husband's construction company's business loss; the family court's findings regarding legal fees, travel, personal, and other expenses are not supported by the record and are incomplete; and the business expenses included by the court in Husband's personal income were legitimate business expenses and should not have been added to his monthly earnings for purposes of calculating child support. Husband also contends that the family court's findings as to Husband's income during 2009 make clear that the monthly earnings attributed to Husband in the Amended Divorce Decree and the child support awarded in accordance therewith were clearly erroneous and constituted an abuse of discretion.

For the reasons discussed below, we affirm in part, vacate in part, and reverse in part.

I. Real Property Valuations

Husband challenges the family court's valuation of the parties' real property, which comprised 80% of their marital assets, and alleges that the family court erred in utilizing outdated and inaccurate appraisals to value the property during a historic downturn in Hawaii housing prices. We review the family court's decisions for an abuse of discretion. Fisher v. Fisher, 111 Hawaii 41, 46, 137 P.3d 355, 360 (2006). Husband also argues that the family court failed to make sufficient findings pursuant to Hawaii Family Court Rules (HFCR) Rule 52 to support its valuation of the properties.

First, Husband argues that the family court erred in valuing the Puhi industrial lot at $574, 000. However, as Wife contends and Husband concedes, the parties stipulated that the value of the Puhi industrial lot would be the 2006 purchase price so that it would not need to be appraised. This stipulation was initially put on the record at a hearing on December 8, 2008. On December 16, 2008, the family court filed an order stating that "[t]he value of the Puhi Industrial lot purchased by [Husband's] Trust shall be valued at the purchase price at time of trial, for purposes of property division." It is clear from the record that the family court ordered that the value of the Puhi industrial lot be set at its 2006 purchase price based on the parties' stipulation. The family court did not abuse its discretion in valuing the Puhi industrial lot based on the parties' stipulation. Husband offers no authority for overturning an order based upon a valid stipulation by the parties. Moreover, given the stipulation by the parties, we see no need for the family court to have made a finding in support of its valuation of the Puhi industrial lot.

Second, Husband argues that the family court abused its discretion when it set March 26, 2009 as the valuation date for the parties' real property, three months before trial was eventually held. Trial was originally set for May 8, 2009, with exchange of exhibits and witness lists due by April 24, 2009 (two weeks before the May 8, 2009 trial). At a May 4, 2009 hearing, Wife sought a trial continuance because new appraisals by Jose Diogo (Diogo) had just been submitted by Husband that day. On May 8, 2009, the family court continued the trial until June 26, 2009, and set the valuation date based on the valuation date utilized by Husband's appraiser, Diogo, which was March 26, 2009. On May 19, 2009, the family court issued a written order that the trial be continued to June 26, 2009, and that the valuation date for appraisals of the parties' real property would be March 26, 2009. On May 27, 2009, Husband filed a motion seeking, inter alia, to set a later date for appraisal of the parties' properties. On June 1, 2009, the court orally denied the motion, and on June 5, 2009, the family court filed an order denying the motion.

Husband fails to demonstrate that the family court abused its discretion in setting March 26, 2009 as the valuation date for the appraisals. Husband argues that the relevant date for determining the value of the parties' property must be at the time of divorce, citing to Myers v. Myers, 70 Haw. 143, 151, 764 P.2d 1237, 1243 (1988), Markham v. Markham, 80 Hawaii 274, 287, 909 P.2d 602, 615 (App. 1996), and Weinberg v. Dickson-Weinberg, 121 Hawaii 401, 220 P.3d 264 (App. 2009), vacated in part by Weinberg v. Dickson-Weinberg, 123 Hawaii 68, 229 P.3d 1133 (2010). First, we note that the part of Weinberg relied upon by Husband was vacated by the Hawaii Supreme Court. Weinberg, 123 Hawaii at 70, 229 P.3d at 1135. Second, although Husband is correct that "the termination point of the marriage partnership for purposes of property division is the conclusion of the divorce trial[, ]" Markham, at 287, 909 P.2d at 615 (citation omitted), none of the cases cited by Husband suggest that a family court abuses its discretion when it sets a valuation date for the parties' real property three months before trial, especially under circumstances as in this case. Here, the record establishes that trial was scheduled for May 8, 2009, but Wife sought a continuance on May 4, 2009, because Husband had just served her with new appraisals, now done by Diogo, which Wife needed to review and determine if she needed updated appraisals. On May 8, 2009, the family court continued the trial and, as clearly expressed on the record on May 8, 2009, the court set the valuation date for the appraisals based on the valuation date utilized by Diogo. Given these circumstances, it was within the discretion of the family court to set a firm valuation date as it did, based on the most recent appraisal.

Third, Husband argues that the family court abused its discretion in adopting Dennis Nakahara's (Nakahara) appraisals rather than Diogo's appraisals. We conclude that Husband fails to carry his burden of demonstrating an abuse of discretion by the family court in this regard. Husband argues in conclusive fashion that Diogo's appraisals were more accurate and up-to-date, but provides no record citations to the evidence to support his arguments. See Hawaii Rules of Appellate Procedure Rule 28(b)(7). Similarly, Husband provides no evidentiary support for his arguments that Nakahara's appraisals were unreliable. The record indicates that the major difference between the appraisals was that Diogo applied a 2% per month negative time adjustment to account for the downturn in prices, whereas Nakahara believed such an adjustment was too aggressive and did not accurately reflect the reduction in property values on Kauai at the time. It is clear from the family court's FOF 18 in its May 20, 2010 Findings of Fact and Conclusions of Law (5/20/10 Findings and Conclusions) and the Property Division Chart attached to the Amended Divorce Decree that the family court credited Nakahara's appraisals over Diogo's appraisals. "[T]he family court possesses wide discretion in making its decisions and those decision[s] will not be set aside unless there is a manifest abuse of discretion." Fisher, 111 Hawaii at 46, 137 P.3d at 360 (citation omitted, block quote format altered). Further, "[i]t is well-settled that an appellate court will not pass upon issues dependent upon the credibility of witnesses and the weight of evidence; this is the province of the trier of fact." Id. (citation omitted, internal quotation marks omitted). It was within the family court's discretion to adopt Nakahara's appraisals.

II. Partnership Credits

Husband next challenges the family court's rulings which gave Husband no Category 1 credit for his business or Category 3 credit for money from his mother, and which gave Wife Category 1 credit for her condo. Husband further contends that the family court failed to make sufficient findings pursuant to HFCR Rule 52 to support its rulings.

First, Husband argues that the family court abused its discretion in denying Husband Category 1 credit for his construction business on the date of marriage (DOM), which was December 1, 2001. When determining a party's Category 1 property, a court must determine "[t]he net market value (NMV), plus or minus, of all property separately owned by one spouse on the date of marriage[.]" Helbush v. Helbush, 108 Hawaii 508, 512, 122 P.3d 288, 292 (App. 2005). In the 5/20/10 Findings and Conclusions, the family court's FOF 12 states that "[biased upon the evidence, the Court does not find any date of marriage value for [Husband's construction company]." Given the evidence in the record, this finding is clearly erroneous.

Husband adduced evidence and testified at trial related to his business at DOM including, inter alia, a balance sheet (with assets and liabilities), an income statement for November 2001 (setting forth operating income, direct expenses, gross profits, and net profit), and bank statements showing a total of approximately $79, 286 in two accounts under the business. Husband asserts on appeal that the family court should have awarded him $97, 586 in Category 1 credit ($79, 286 in cash and $18, 300 in depreciated equipment) for his business. Husband points out that the family court apparently utilized available cash and the value of equipment in setting the value of the business as of the date of the conclusion of the evidentiary part of trial (DOCOEPOT), see Property Division Chart, and thus Husband argues that a similar valuation method should be used to value the business at DOM.

We conclude that the family court clearly erred in finding that there was no DOM value for Husband's business. We remand to the family court to determine the appropriate amount of ...


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