Case Law Update: Equitable Distribution

By Rebecca K. Watts

Best v. Staton, COA19-638, May 5, 2020

Prior to the parties’ separation, Wife filed a complaint for divorce from bed and board and equitable distribution. Husband filed an answer to the complaint and a notice of “intent to file for equitable distribution.” In his prayer for relief, Husband asked that he “be allowed to file for equitable distribution upon separation of the parties.” The parties then separated, and after separation, Husband filed what he captioned as an “amended counterclaim for equitable distribution” and asserted his equitable distribution claim. Wife then filed a motion asking that the trial court dismiss both parties’ equitable distribution claims. Husband filed a motion seeking dismissal of Wife’s equitable distribution claim. The trial court dismissed Wife’s claim, finding that Wife’s claim was asserted prior to the date of separation. The trial court did not dismiss Husband’s equitable distribution claim. In denying dismissal of Husband’s equitable distribution claim, the court found that Husband’s notice of intent to file for equitable distribution was not a counterclaim for equitable distribution and so the “amended counterclaim” for equitable distribution was not actually an amended claim (that would have related back to the date of the filing of the claim being amended), but was an initial claim, asserted after the date of separation. The trial court conducted an equitable distribution trial and entered its order, which Wife appealed.

On appeal, Wife argued: (1) the trial court did not have subject matter jurisdiction over Husband’s ED claim, (2) the court erred in determining, based on its own review of public records, that there had been a passive increase in the value of real property, and (3) the court erred in admitting an expert valuation of Wife’s retirement plan over her hearsay objection. The Court of Appeals held that (1) the trial court did have subject matter jurisdiction over Husband’s equitable distribution claim, (2) the trial court abused its discretion in using the tax value of the marital residence to make a determination that the marital residence had increased in value since the date of separation, and (3) Wife did not preserve the hearsay issue for review. The rationale for the holdings is:

  1. The determination rested on whether Husband asserted an equitable distribution claim in his answer—if he did, then the “amended counterclaim” would relate back to the date of the answer, but if he didn’t, then the “amended counterclaim” was an initial assertion of the claim and not an amendment. In reaching its determination here, the Court of Appeals distinguished this case from Coleman v. Coleman, in which Wife was found to have made an equitable distribution claim when in her prayer for relief, she said she “hereby requests and reserves the right for equitable distribution.” Here, in Husband’s answer to the complaint, he expressed the intent to file an equitable distribution claim in the future, and in his prayer for relief, he asked that he “be allowed to file for equitable distribution” upon the parties’ separation.
  2. The Court of Appeals noted that tax value is not competent evidence of a property’s value, but may be considered if one party introduces it as evidence and the other does not object. Here, though, neither party actually introduced evidence of tax value—the trial court looked it up and made its determination based upon its own research. This issue was remanded for reconsideration of the finding on post-separation change in value.
  3. At trial, Wife’s attorney objected to presentation of the evidence because it had not been timely disclosed to by the other party—Wife’s attorney did not object on hearsay grounds. To preserve an issue for appellate review, one must make an objection and obtain a ruling—Wife did not make a hearsay objection at all and did not obtain a ruling on the timelessness objection.