Clemons v. Clemons , 265 N.C. App. 113 ( 2019 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA18-433
Filed: 7 May 2019
Cabarrus County, No. 15 CVD 2160
BARBARA CORRIHER CLEMONS, Plaintiff,
v.
GEORGE BELL CLEMONS, Defendant.
Appeal by plaintiff from judgment entered 1 December 2017 by Judge Donna
H. Johnson in District Court, Cabarrus County. Heard in the Court of Appeals 31
October 2018.
Ferguson, Hayes, Hawkins & Demay, PLLC, by Edwin H. Ferguson, Jr., for
plaintiff-appellant.
Jordan Price Wall Gray Jones & Carlton, PLLC, by Lori P. Jones and Hope
Derby Carmichael, for defendant-appellee.
STROUD, Judge.
Wife appeals from an equitable distribution order valuing the “marital portion”
of a townhome she owned prior to marriage at $90,000.00 and distributing it to Wife
and distributing $90,000.00 of marital debt on the same property to her. Because the
parties stipulated in the pretrial order that the townhome was Wife’s separate
property, the trial court erred by classifying part of its value as marital property and
making its distribution based upon this classification and valuation. We reverse and
remand.
CLEMONS V. CLEMONS
Opinion of the Court
I. Background
Husband and Wife were married on 6 September 2003 and separated on 21
March 2015. On 2 July 2015, Wife filed a complaint against Husband with claims for
equitable distribution with an unequal division in her favor, postseparation support,
and alimony.1 Husband answered and joined in Wife’s request for equitable
distribution but requested an unequal division in his favor. A pretrial order was
entered on 13 November 2017 with detailed schedules of property and issues in
contention. In this order, as relevant to the issues on appeal, Husband and Wife
stipulated that the “Townhome” with a “Net Value” of “186,000.00” was the separate
property of Wife.2 At trial, the parties agreed that the balance of the debt secured by
the townhome as of the date of separation was $90,000.00, all of which was incurred
during the marriage, but they did not stipulate to the classification and distribution
of this debt. Wife contended the debt was marital, and Husband contended that at
least some portion of the debt was Wife’s separate debt.
On 1 December 2017, the trial court entered the equitable distribution order.
The trial court considered the parties’ contentions for unequal distribution but
determined that an equal distribution was equitable. The trial court determined that
1 Our record does not indicate the status of the postseparation and alimony claims, but those are not
relevant to this appeal.
2 It appears that $186,000.00 was actually the gross value of the townhome, since the parties agreed
that the $90,000.00 debt was secured by the townhome, so the net value would therefore be $96,000.00,
but the exact value does not change our analysis on appeal.
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Opinion of the Court
the “marital component” of the townhome was $90,000.00 and distributed it as
marital property to Wife and distributed the $90,000.00 mortgage debt to Wife. The
trial court calculated that the value of the gross marital estate including this
“marital” value of the townhome and thus calculated the net value of the marital
estate as “(-)$8,566.62” and awarded an equal division of the marital property and
debt. As a result, Wife owed Husband a distributive award of $539.31. Wife timely
appealed.
II. Jurisdiction
This Court has jurisdiction to review this equitable distribution order under
North Carolina General Statute § 50-19.1:
Notwithstanding any other pending claims filed in the
same action, a party may appeal from an order or judgment
adjudicating a claim for absolute divorce, divorce from bed
and board, child custody, child support, alimony, or
equitable distribution if the order or judgment would
otherwise be a final order or judgment within the meaning
of G.S. 1A-1, Rule 54(b), but for the other pending claims
in the same action.
N.C. Gen. Stat. § 50-19.1 (2017).
III. Standard of Review
The standard of review on appeal from a judgment entered
after a non-jury trial is whether there is competent
evidence to support the trial court’s findings of fact and
whether the findings support the conclusions of law and
ensuing judgment. The trial court’s findings of fact are
binding on appeal as long as competent evidence supports
them, despite the existence of evidence to the contrary.
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CLEMONS V. CLEMONS
Opinion of the Court
The trial court’s findings need only be supported by
substantial evidence to be binding on appeal. We have
defined substantial evidence as such relevant evidence as
a reasonable mind might accept as adequate to support a
conclusion.
Clark v. Dyer, 236 N.C. App. 9, 13, 762 S.E.2d 838, 839 (2014).
VI. Classification and Valuation of “Marital Component” of the Townhome
On appeal, Wife challenges several of the trial court’s findings of fact and
related conclusions of law, all relating to the classification of the townhome.
Upon application of a party for an equitable distribution,
the trial court shall determine what is the marital property
and shall provide for an equitable distribution of the
marital property in accordance with the provisions of N.C.
Gen. Stat. § 50-20. In so doing, the court must conduct a
three-step analysis. First, the court must identify and
classify all property as marital or separate based upon the
evidence presented regarding the nature of the asset.
Second, the court must determine the net value of the
marital property as of the date of the parties’ separation,
with net value being market value, if any, less the amount
of any encumbrances. Third, the court must distribute the
marital property in an equitable manner.
Chafin v. Chafin, ___ N.C. App. ___, ___, 791 S.E.2d 693, 698 (2016) (quotation marks,
brackets, and ellipsis omitted).
Wife challenges portions of the following findings and related conclusions of
law:
[4. b.] 7) Around 2000, Ms. Clemons purchased a
townhome located [in] Concord for about $160,000.00. Just
prior to the marriage, Ms. Clemons mortgaged the
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CLEMONS V. CLEMONS
Opinion of the Court
property. The mortgage was paid off, but the source of the
funds are unknown. The parties mortgaged the property
during the marriage. The parties agreed that the mortgage
on the property at the date of separation was $90,000.00.
The tax value on the townhome was $161,190.00 on March
20, 2006. There was no appraisal done on the home at or
near the date of separation. Therefore, the marital portion
is at least equal the marital debt of $90,000.
....
[4.] g. On Schedule L, the parties agreed that those
items, which includes the former marital residence, is the
separate property of Ms. Clemons with the exception of the
marital component noted above.
....
[5. e.] 1) The former marital residence was owned by
Ms. Clemons prior to the marriage. She mortgaged the
property prior to the marriage to invest in Mr. Clemon’s
[sic] business. Later the home was mortgaged at least once
more for $90,000.00. Limited documentation was available
regarding the marital component.
Wife challenges portions of these findings as unsupported by the evidence or contrary
to the stipulations in the pretrial order.
Finding of fact 4 (g) noting “the exception of the marital component noted
above” is not supported by competent evidence in the record and is contrary to the
parties’ stipulation. The pretrial order does not include any mention of a “marital
component” of the townhome or any issue of valuation of a “marital component” or
valuation of an increase in value of the townhome during the marriage. And there
was no evidence which could support classification or valuation of a “marital
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Opinion of the Court
component.” The parties stipulated only that the townhome was Wife’s separate
property, with a date of separation value of $186,000.00. Neither party introduced
evidence needed to value a “marital component” of the townhome, most likely because
they had stipulated that it was entirely separate.
It is well-established that stipulations in a pretrial order are binding upon the
parties and upon the trial court. See Crowder v. Jenkins, 11 N.C. App. 57, 63, 180
S.E.2d 482, 486 (1971) (“[S]tipulations by the parties have the same effect as a jury
finding; the jury is not required to find the existence of such facts; and nothing else
appearing, they are conclusive and binding upon the parties and the trial judge.”).
“Accordingly, the effect of a stipulation by the parties withdraws a particular fact
from the realm of dispute.” Plomaritis v. Plomaritis, 222 N.C. App. 94, 101, 730
S.E.2d 784, 789 (2012) (brackets and quotation marks omitted).
In equitable distribution cases, stipulations in the pretrial order are intended
to limit the evidence needed and to define the issues the trial court must decide. See
id. at 106-07, 730 S.E.2d at 792 (“We also note that this is an equitable distribution
case, where a pre-trial order including stipulations such as those in this case is
required by N.C. Gen. Stat. § 50-21(d) and Local Rule 31.9. In equitable distribution
cases, because of the requirements of statute and local rules, the stipulations are
frequently quite extensive and precise and are specifically intended to limit the issues
to be tried, and the same is true in this case. Neither party has cited, and we cannot
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Opinion of the Court
find, any prior opinion by our Court in which a trial court has ex mero motu set aside
a pre-trial order or a party’s stipulations after completion of the trial upon the issues
which the stipulations addressed.” (citation omitted)). And as noted by the dissent,
although it is possible for either the trial court or parties to set aside stipulations
under certain conditions, none of those conditions are present here.
The dissent takes Wife’s counsel’s brief comment about a “marital component”
out of context and construes it as an agreement to assign a “marital component” to
the value of the townhome, but this was not what her counsel was saying. Wife’s
counsel was actually arguing that the $90,000.00 debt was entirely marital or had a
marital component, not the townhome. At trial, Husband took the position that the
$90,000.00 debt was not marital; Wife contended that it was marital.
The “marital component” comment occurred during Husband’s cross
examination testimony about the $90,000.00 debt. Wife’s counsel asked Husband:
[Mr. Ferguson:] And this $90,000 loan or $90,000 debt
various times was used to make improvements on the
property.
[Husband:] Well, --
[Mr. Ferguson:] Yes or no?
[Husband:] No, and I’ll say -- the only reason I say that
is that that was the balance on the mortgage at the time.
The original mortgage that had been paid down at that
time was, I think, 102,000 and the -- ‘cause we’d been
paying an accelerated amount on the principal. We were
down to about 90,000.
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CLEMONS V. CLEMONS
Opinion of the Court
[Mr. Ferguson:] Well, whatever balance was owed on the
town home on the date that you separated, the 90,000, no
dispute as to marital debt?
[Husband:] That is correct.
[Mr. Ferguson:] And I believe your testimony was that
the --
MS. CAIN: Your Honor, I’m going to object to that
question. That draws a legal conclusion, whether or
not it’s marital.
THE COURT: Well, the whole pretrial order is
based on that contention, stuff like marital and not
marital and separate and --
MS. CAIN: Well, yes, but that debt actually is on a
schedule. We don’t agree that it’s marital.
THE COURT: Okay. Well, I don’t know how else
you’re going to ask him what he thinks the debt is
on the date of separation to resolve the difference,
then. He either agrees to it or he has an estimate of
what it was.
MS. CAIN: I don’t --
THE COURT: On the date of separation, what do
you think the debt was on the home, the town home?
[Husband]: I believe it was about 90,000.
MS. CAIN: We’re not disputing that; we’re
disputing that it’s marital.
MR. FERGUSON: The debt was --
THE COURT: Well, they’ve agreed that the debt
was incurred during the marriage and that it was
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Opinion of the Court
paid down during the marriage to 90,000. That’s the
testimony thus far.
MS. CAIN: Yes. I understand that. But it’s also for
property, assets and property, that she is keeping.
Normally, the debt goes with the asset.
THE COURT: I don’t know that she’s keeping it.
I’ll have to decide how the property’s going to be
divided unless she put that on A where they’ve agreed
to that.
(Emphasis added.)
Neither the townhome nor the $90,000.00 debt was on Schedule A of the
Pretrial order, which was “a list of marital property upon which there is an agreement
by and between the parties hereto as to both value and distribution.” The townhome
was on Schedule L, “a list of the separate property, if any, of the [Wife] upon which
there is an agreement and stipulation by and between the parties hereto as to both
value and distribution.” The townhome is listed on Schedule L as Wife’s separate
property, to be distributed to Wife. Wife’s attorney then pointed this out:
MR. FERGUSON: Her separate property, I believe it’s
listed under Schedule L.
THE COURT: There’s still a marital portion of it that’s
subject to be distributed.
MR. FERGUSON: It’s a marital component. No dispute.
THE COURT: Uh-huh.
MR. FERGUSON: That’s what I’m trying to establish
here.
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CLEMONS V. CLEMONS
Opinion of the Court
(Emphasis added.)
Going back to the beginning of the line of questioning, Wife’s attorney
attempted to get Husband to agree that the $90,000.00 debt was marital; Husband’s
counsel objected to the characterization of the debt as marital and noted that
Husband did not agree that the debt was marital. Wife’s counsel was certainly not
trying to establish that the townhome or any portion of its value was marital, since
this classification would be entirely opposed to Wife’s interests. Instead, he pointed
out to the trial court that the townhome was listed on Schedule L, as Wife’s separate
property, to be distributed to her. Thus, the “marital component” comment, read in
context of the testimony and discussion in the trial court, is not a reference to
classification of any portion of the value of the townhome. During the same
discussion, Wife’s counsel points out the stipulation in Schedule L of the pretrial
order; he does not “invite error” or waive the stipulation. Nothing in the testimony,
counsel’s other statements to the court, or arguments indicates any intention to set
aside any of the stipulations.3 Nor can the trial court set aside a stipulation ex mero
motu without prior notice to the parties:
3 Our dissenting colleague notes that “[t]he trial court certainly could have found that failure to include
a $90,000 asset provided sufficient cause to modify the stipulation.” But the $90,000.00 is the balance
of the debt owed on the date of separation and will be paid by Wife after the marriage; it is not a
“marital asset.” Nor did the parties overlook the $90,000.00 on the pretrial order. Both attorneys
pointed out the pretrial order’s stipulations to the trial court during the colloquy during Husband’s
testimony. It was characterized as a debt, the parties agreed on the value, and they disagreed on its
classification as a marital or separate debt. The trial court classified it as marital debt, and this
classification is not challenged on appeal.
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Opinion of the Court
Just as a party requesting to set aside a stipulation would
have to give notice to the opposing parties, and the
opposing parties would have an opportunity for hearing
upon the request, the trial court cannot own its own motion
set aside a pre-trial order containing the parties’
stipulations after the case has been tried in reliance upon
that pre-trial order, “without giving the parties notice and
an opportunity to be heard.”
Id. at 108, 730 S.E.2d at 793 (citation omitted).
Here, even if the trial court intended to set aside the stipulation based upon
Wife’s counsel’s comment about a “marital component” of the $90,000.00 debt, the
parties would have needed notice so they could present additional evidence to value
the “marital component.” Counsel for both parties specifically noted the stipulations
of the pretrial order and the trial court never gave any indication of an intent to set
aside any of the stipulations. The trial court cannot value the “marital component”
of an asset without competent evidence to support marital contribution to the value,
and no such evidence was presented.
In Lawrence v. Lawrence, 75 N.C. App. 592, 331 S.E.2d 186 (1985), cited by the
dissent, this Court noted that the marital component of separate property is valued
based upon the active appreciation during the marriage:
The Court held that increase in value of separate property
due to active appreciation, which otherwise would have
augmented the marital estate, is marital property.
We conclude that the real property concerned herein
must be characterized as part separate and part marital.
It is clear the marital estate invested substantial labor and
funds in improving the real property, therefore the marital
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Opinion of the Court
estate is entitled to a proportionate return of its
investment. That part of the real property consisting of the
unimproved property owned by defendant prior to
marriage should be characterized as separate and that part
of the property consisting of the additions, alterations and
repairs provided during marriage should be considered
marital in nature. As the marital estate is entitled to a
return of its investment, defendant because of her
contribution of separate property is entitled to a return of,
or reimbursement or credit for, that contribution.
Id. at 595-96, 331 S.E.2d at 188 (citations omitted).
The $90,000.00 balance of the debt secured by the townhome cannot equate to
a “marital component” because it does not represent active appreciation from
“additions, alterations and repairs provided during marriage.” Id. at 595, 331 S.E.2d
at 188 (emphasis added). In fact, the $90,000.00 debt balance is just the opposite;
this is the principal balance that Wife will be required to pay after the marriage, not
a contribution during the marriage. Only the portion of debt paid during the
marriage or funds expended on repairs or improvements to the townhome during the
marriage could possibly be relevant to a “marital component” of the townhome.
Neither party presented any evidence of the initial amount of the loans, payments
made during the marriage, reduction of principal during the marriage, or any other
factors which may be relevant to a “marital component.”4
4 Husband testified only to the amounts of monthly payments and that the loan was refinanced several
times.
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CLEMONS V. CLEMONS
Opinion of the Court
Because the parties had stipulated that the townhome was Wife’s separate
property and that its value was $186,000.00, the trial court erred by classifying a
portion of it as marital and attempting to value it based only upon the balance of a
marital debt as of the date of separation. “‘Separate property’ of a spouse as defined
by G.S. 50-20(b)(2) is not subject to equitable distribution.” Crumbley v. Crumbley,
70 N.C. App. 143, 145, 318 S.E.2d 525, 526 (1984). In addition, on Schedule H of the
pretrial order, Husband did not make any contention that there was “[a]ny direct
contribution to an increase in the value of separate property which occurs during the
course of the marriage.” In fact, as discussed above, Husband contended the
$90,000.00 debt was not marital and although he testified to some improvements to
the property during the marriage, he also denied that this debt was used to improve
the property:
[Mr. Ferguson:] And this $90,000 loan or $90,000 debt
various times was used to make improvements on the
property.
[Husband:] Well, --
[Mr. Ferguson:] Yes or no?
[Husband:] No, and I’ll say -- the only reason I say that is
that that was the balance on the mortgage at the time. The
original mortgage that had been paid down at that time
was,I think, 102,000 and the -- ‘cause we’d been paying an
accelerated amount on the principal. We were down to
about 90,000.
(Emphasis added.)
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Opinion of the Court
The trial court ignored the stipulations and attempted to rely on numbers in
the record to create a “marital component” of the townhome. The trial court found,
“The tax value on the townhome was $161,190.00 on March 20, 2006. There was no
appraisal done on the home at or near the date of separation.” These facts are correct,
but the tax value of the townhome seven years prior to the date of valuation is
irrelevant, and there was no appraisal of the townhome because the parties had
stipulated to the value. As the trial court also found in finding 5 (e)(1), “Limited
documentation was available regarding the marital component.” This finding is
correct; in fact, there was no documentation of a marital component, because neither
party contended there was a marital component. Therefore, the trial court’s findings
of fact regarding the classification of a “marital component” in the townhome and its
valuation are not supported by competent evidence.
On appeal, Husband contends that he did present evidence of a “marital
component” of the townhome based upon improvements made during the marriage.
He acknowledges that the townhome was paid off when the parties married, but
argues that during the marriage they incurred debt secured by the townhome and
refinanced it more than once. But as noted above, his testimony on this point was
contradictory at best, and he did not present any evidence of the amount of principal
paid toward the debt during the marriage or active appreciation in the townhome
during the marriage; the only evidence was the debt balance as of the date of
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Opinion of the Court
separation. He also contends on appeal that “[m]ost of the funds were used to make
improvements to the Townhome.” Husband did testify at trial about several
improvements to the townhome, although he did not present any evidence of the
costs of any of the improvements or the sources of funds for each improvement. In
addition, there was no evidence of the value of the townhome on the date of the
marriage and thus no way for the trial court to determine what portion of an increase
in value, if any, was passive appreciation based simply upon the passage of time and
increase in overall property values.
But more importantly, the trial court did not make any findings of fact that
$90,000.00 debt was actually used to improve the townhome, and Husband did not
cross-appeal. Therefore, the trial court’s findings regarding the use of the funds are
binding on this Court. The only finding regarding the use of a portion of the borrowed
funds is:
[4. d.] 1) . . . On April 10, 2003, Ms. Clemons borrowed
$43,130.81 against the property to invest in the trucking
business owned by Mr. Clemons before the marriage. The
truck was sold in 2007 to purchase the T800 truck.
It was not disputed that the balance of the debt as of the date of separation,
$90,000.00, was incurred during the marriage, and based upon the trial court’s
finding above, almost half of this amount was originally borrowed to invest in
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CLEMONS V. CLEMONS
Opinion of the Court
Husband’s trucking business.5 Beyond this finding, the trial court classified the
$90,000.00 balance of the debt on the townhome as of the date of separation as
marital debt. Wife did not challenge this finding on appeal, and Husband did not
cross-appeal, so it is binding on this Court. See Clark, 236 N.C. App. at 14, 762 S.E.2d
at 839.
In finding of fact 6, the trial court listed the valuation and distribution of the
marital property. This finding included the townhome, with a marital value of
$90,000.00, and distributed it to Wife. This distribution of the townhome is in error
because the townhome was Wife’s separate property, and there was no “marital
component” to include in calculation of the marital estate value or distribution. In
finding of fact 7, the trial court listed the amount and distribution of several marital
debts. The $90,000.00 debt on the townhome was distributed to Wife, and while Wife
challenges this distribution in the heading of one of her arguments, she does not make
any argument in her brief challenging this classification or distribution. This
argument is deemed abandoned. See N.C. R. App. P. 28(a). Finding of fact 8 finds
that “the gross marital estate is (-)$8,566.62” and divides the marital property and
debt equally, resulting in a distributive award from Wife to Husband of $539.31, but
this calculation erroneously includes the $90,000.00 value assigned to the “marital
component” of the townhome.
5 By the time the parties separated, Husband’s trucking business was defunct, so it was not an asset
considered in equitable distribution.
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Opinion of the Court
In the findings of fact addressing the distributional factors under N.C. Gen.
Stat. § 50-20(c)(10), the trial court included findings regarding “[t]he difficulty of
evaluating any component asset or any interest in a business, corporation or
profession, and the economic desirability of retaining such asset or interest, intact,
and free from any claim or interference by the other party.” Under this factor, the
trial court found:
1) The former marital residence was owned by Ms.
Clemons prior to the marriage. She mortgaged the property
just prior to the marriage to invest in Mr. Clemon’s [sic]
business. Later the home was mortgaged at least once more
for $90,000.00. Limited documentation was available
regarding the marital component.
2) Ms. Clemons resided in the former marital residence
prior to the marriage. She continued to live in the home
after the date of separation.
Therefore, as part of its determination that an equal division would be
equitable, the trial court considered Wife’s townhome, the $90,000.00 value of the
“marital component” of the townhome, that she had mortgaged it to invest in
Husband’s business, and that she lived in the townhome both before marriage and
after separation. Because we must reverse the trial court’s classification and
valuation of the “marital component” of the townhome, we also reverse the trial
court’s division and distribution of the marital property and remand for entry of a
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Opinion of the Court
new order classifying the townhome as Wife’s separate property and equitably
distributing the marital property and debt.6
As in Turner v. Turner, by attempting to classify and value a “marital
component” of the townhome contrary to the stipulations and evidence and then
attempting an equitable result by dividing the net estate equally, “the court put the
cart before the horse.” 64 N.C. App. 342, 346, 307 S.E.2d 407, 409 (1983). The trial
court may in its discretion do equity in the distribution, including an unequal
distribution if supported by the factors under N.C. Gen. Stat § 50-20(c), but it may
not use equity to classify or value marital property or debt. “Where the trial court
decides that an unequal distribution is equitable, the court must exercise its
discretion to decide how much weight to give each factor supporting an unequal
distribution. A single distributional factor may support an unequal division.” Mugno
v. Mugno, 205 N.C. App. 273, 278, 695 S.E.2d 495, 499 (2010) (citation omitted); see
also Watson v. Watson, ___ N.C. App. ___, ___, 819 S.E.2d 595, 602 (2018).
V. Conclusion
For the foregoing reasons, we reverse and remand for the trial court to enter a
new order classifying the townhome as Wife’s separate property and distributing the
marital property and debts. Since we have reversed the classification and valuation
6 We note that the townhome was by far the largest “marital” asset, and the net value of the marital
estate without the value of the townhome would be ($98,566.62). This would result in Husband being
required to pay Wife $44,460.69 to equalize the distribution, a result the trial court may have deemed
inequitable.
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Opinion of the Court
of the most valuable asset included in the marital estate, and the trial court
considered this factor as part of its analysis of the distributional factors, we remand
for the trial court to reconsider whether “an equal division is not equitable”
considering the change in classification of the townhome and net value of the marital
estate. N.C. Gen Stat. §50-20(c) (2017). The determination of whether an equal
division is not equitable is in the trial court’s discretion, and it must exercise its
discretion to consider the division in light of this opinion, so the trial court should
make additional findings of fact as it deems appropriate as to the distributional
factors under N. C. Gen. Stat. §50-20(c). See White v. White, 312 N.C. 770, 777, 324
S.E.2d 829, 833 (1985) (“It is well established that where matters are left to the
discretion of the trial court, appellate review is limited to a determination of whether
there was a clear abuse of discretion. A trial court may be reversed for abuse of
discretion only upon a showing that its actions are manifestly unsupported by
reason.” (citations omitted)).
As the classification and valuation of only one asset was challenged on appeal,
on remand the parties should not be permitted a “second bite at the apple” by
presenting new evidence or argument as to the classification or valuation of marital
or divisible property, but in the trial court’s discretion, they may present additional
evidence addressing the distributional factors under N.C. Gen. Stat. 50-20(c) since
the trial court must consider those factors, including “[t]he income, property, and
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Opinion of the Court
liabilities of each party at the time the division of property is to become effective.”
N.C. Gen. Stat. § 50-20(c)(1).
REVERSED AND REMANDED.
Judge DILLON concurs.
Judge BERGER dissents in separate opinion.
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No. COA18-433 – Clemons v. Clemons
BERGER, Judge, dissenting in separate opinion.
For the reasons stated herein, I respectfully dissent.
The parties stipulated in the pretrial order that the townhome was entirely
Wife’s separate property, valued at $186,000. Nevertheless, the trial court classified
the townhome partially as Wife’s separate property and partially marital property
because there was active appreciation in the townhome’s value during the parties’
marriage. The trial court found that the “marital portion” of the townhome was “at
least equal to the marital debt of $90,000.” Wife contends that the trial court erred
by setting aside the parties’ stipulation that the townhome was entirely Wife’s
separate property in order to find that the townhome was subject to a $90,000
“marital component.”
However, Wife waived appellate review of this issue by inviting any alleged
error. “A party may not complain of action which he induced.” Frugard v. Pritchard,
338 N.C. 508, 512, 450 S.E.2d 744, 746 (1994). Invited error is
a legal error that is not a cause for complaint because the
error occurred through the fault of the party now
complaining. The evidentiary scholars have provided
similar definitions; e.g., the party who induces an error
can’t take advantage of it on appeal, or more colloquially,
you can’t complain about a result you caused.
Romulus v. Romulus, 215 N.C. App. 495, 528, 715 S.E.2d 308, 329 (2011) (citation
and quotation marks omitted).
CLEMONS V. CLEMONS
BERGER, J., dissenting
Here, the trial court remarked during the trial that there was a “marital
portion” of the townhome that was “subject to be distributed.” The trial court was
not, as the majority contends, addressing the marital debt, but clearly discussing the
asset.
THE COURT: I’ll have to decide how the property’s
going to be divided unless she put that on [Schedule]
A where they’ve agreed to that.
[Wife’s Attorney]: Her separate property, I believe
it’s listed under Schedule L.
THE COURT: There’s still a marital portion of it
that’s subject to be distributed.
[Wife’s Attorney]: It’s a marital component. No
dispute.
THE COURT: Uh-huh.
(Emphasis added.)
By responding that “It’s a marital component. No dispute,” Wife invited the
error, if any. Because any purported error that may have occurred at trial “occurred
through the fault of [Wife],” Romulus, 215 N.C. App. at 528, 715 S.E.2d at 329, she
has waived appellate review of this issue.
Even if Wife had not waived appellate review, the above exchange reflected
Wife’s consent for the trial court to set aside the parties’ stipulation that the
townhome was entirely Wife’s separate property. Generally, “[a]dmissions in the
pleadings and stipulations by the parties have the same effect as a jury finding; the
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CLEMONS V. CLEMONS
BERGER, J., dissenting
jury is not required to find the existence of such facts; and nothing else appearing,
they are conclusive and binding upon the parties and the trial judge.” Crowder v.
Jenkins, 11 N.C. App. 57, 63, 180 S.E.2d 482, 486 (1971) (citation omitted). However,
“[s]tipulations may be set aside in certain circumstances.” Plomaritis v. Plomaritis,
222 N.C. App. 94, 106, 730 S.E.2d 784, 792 (2012).
It is generally recognized that it is within the
discretion of the court to set aside a stipulation of the
parties relating to the conduct of a pending cause, where
enforcement would result in injury to one of the parties and
the other party would not be materially prejudiced by its
being set aside. A stipulation entered into under a mistake
as to a material fact concerning the ascertainment of which
there has been reasonable diligence exercised is the proper
subject for relief. Other proper justifications for setting
aside a stipulation include: misrepresentations as to
material facts, undue influence, collusion, duress, fraud,
and inadvertence.
Lowery v. Locklear Const., 132 N.C. App. 510, 514, 512 S.E.2d 477, 479 (1999)
(citations and quotation marks omitted).
Although it may be appropriate for a trial court on
its own motion to set aside a parties’ stipulation for one of
the reasons stated in Lowery or to prevent manifest
injustice, there are limits to the court’s discretion to set
aside a stipulation. First, Rule 16(a)(7) [of the North
Carolina Rules of Civil Procedure] itself states that a
stipulation may be “modified at the trial to prevent
manifest injustice.” N.C. Gen. Stat. § 1A–1, Rule 16(a)
(emphasis added). Modification of a stipulation at the trial
gives all parties immediate notice of the modification and
allows the parties the opportunity to present additional
evidence which may be required based upon the
elimination of the stipulation.
3
CLEMONS V. CLEMONS
BERGER, J., dissenting
Plomaritis, 222 N.C. App. at 107, 730 S.E.2d at 793 (emphasis in original).
Here, the majority opinion implies that the trial court made an ex mero motu
post-trial modification to the parties’ stipulation. However, to the extent there was
any modification, it was made at trial and with Wife’s consent. The majority opinion’s
failure to make a distinction between stipulation modifications that occur during trial
and post-trial is essential because it relates to the parties’ right to notice and
opportunity to be heard.
The trial court certainly could have found that failure to include a $90,000
asset provided sufficient cause to modify the stipulation.7 Given the evidence in the
record, the trial court correctly concluded that the townhome should have been
classified and distributed as part separate and part marital property due to its active
appreciation during the marriage. See Lawrence v. Lawrence, 75 N.C. App. 592, 595
331 S.E.2d 186, 188 (1985) (“Part of the real property consisting of the unimproved
property owned by defendant prior to marriage should be characterized as separate
and that part of the property consisting of the additions, alterations and repairs
7 The majority’s footnote 3 is curious given the very straightforward language contained
herein. The trial court found that the “marital portion” of the townhome was “at least equal to the
marital debt of $90,000.” The trial court valued this asset, the active appreciation of the townhome, at
$90,000. While the trial court’s valuation of both the marital debt on the townhome and the active
appreciation in the townhome’s value at $90,000 has apparently caused some confusion, this dissent
does not address in any way, shape, or fashion the trial court’s valuation or distribution of the $90,000
debt owed on that asset.
4
CLEMONS V. CLEMONS
BERGER, J., dissenting
provided during marriage should be considered marital in nature.”). Moreover, the
trial court immediately notified the parties during the trial that it believed the
townhome was subject to a marital component of active appreciation.
In addition, one could argue that there was evidence that could support the
trial court’s valuation of the “marital portion” of the townhome. Prior to the marriage,
Wife purchased and paid off the mortgage on the townhome. During the marriage,
the parties lived in the townhome and took out multiple lines of credit against the
equity on the townhome. Defendant testified that the parties spent most of the loan
proceeds to remodel and make improvements to the townhome. Wife did not dispute
this testimony.
Admittedly, the trial court’s findings as to valuation of the townhome are
limited. But, evidence in the record demonstrates that there was active appreciation
of separate property. Additional findings of fact from the trial court could resolve this
issue, as could additional evidence if the trial court deems necessary. This Court
should not hamstring a trial court by simply instructing it to “get it over,” instead of
getting it right.
5