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Reagan v. Reagan

Court of Appeals of Louisiana, Second Circuit

June 27, 2018

KIMBERLY ANN REAGAN Plaintiff-Appellant
v.
MELVIN HOWARD REAGAN Defendant-Appellee

          Appealed from the Twenty-Sixth Judicial District Court for the Parish of Bossier, Louisiana Trial Court No. 143502; 19639 Honorable Jefferson R. Thompson, Judge

          KAMMER & HUCKABAY, LTD. Charles Kammer, III Counsel for Appellant.

          DAVID L. WHITE Counsel for Appellee.

          Before BROWN, WILLIAMS, and McCALLUM, JJ.

          BROWN, C.J.

         These consolidated cases[1] arise out of the Twenty-Sixth Judicial District Court, Bossier Parish. Plaintiff, Kimberly Reagan, appeals from a property partition judgment between herself and defendant, Melvin Reagan. For the following reasons we affirm in part, amend in part and as amended, affirm, and reverse and remand with instructions in part.

         FACTS AND PROCEDURAL HISTORY

         Plaintiff, Kimberly Reagan ("Kimberly"), and defendant, Melvin Howard Reagan ("Melvin"), were married on May 25, 2009, and physically separated on December 23, 2013. There were no children of the marriage. Kimberly filed a petition of divorce under La. C.C. art. 102 on January 3, 2014. A judgment of divorce was rendered on November 13, 2014, retroactively terminating the community of acquets and gains on January 3, 2014. Melvin died on June 30, 2015. Kimberly filed a petition to partition the community property on September 11, 2015. Mavis Reagan, the executrix of Melvin's Succession ("executrix"), was substituted for Melvin by an ex parte order signed on September 23, 2015.

         During their marriage, the parties lived in Bossier Parish at a house at Hunters Hollow owned by Melvin prior to the marriage. Throughout the marriage, Melvin was the sole member of MHR Land Services, LLC, a business entity he formed before the marriage. This LLC was Melvin's main source of income. Kimberly was not employed during the marriage.

         The partition proceedings ensued over several months and numerous court dates. The parties filed many Sworn Detailed Descriptive Lists and Traversals, along with a joint list of the contested and uncontested issues. A trial was held, and certain assets were auctioned. Kimberly took possession of the items she won. The court issued a partial judgment reflecting the same. The matter was continued and eventually reset for trial. On that date, and after a pretrial conference, the court decided that the parties should submit briefs to determine which items were community assets or obligations, with a written judgment to follow from the court. The trial court then filed a "Judgment With Reasons."[2] Kimberly appeals from that judgment and assigned the following errors on appeal:[3]

1. Item 17: Is the $325, 000, Multiple Indebtedness Loan a separate obligation of Melvin's when incurred during the community, but in his name only and borrowed on his separate property for his benefit only?
2. Item 19: Is Kimberly entitled to a reimbursement claim for the use of community funds to pay off Melvin's premarital tax debt?
3. Items 24, 33, 34 and 39: Is the court required to offset Melvin's membership interest in First Eagle, LLC, a community asset, by awarding Kimberly an equalization claim in other community assets?
4. Items 23 and 40: Is the court required to offset Melvin's membership interest in MHR Holdings, LLC, a community asset, by awarding Kimberly an equalization claim in other community assets?
5. Item 41: Is Melvin required to account for the former community property in his possession on the termination date, resulting in Kimberly receiving an equalization claim for one-half of the funds held by Melvin in the Morgan Stanley Active Assets account?
6. Items 38, 44 and 45: Is the court able to place a value on the remaining furnishings, furniture, guns and other contents of the house and garages located at Hunters Hollow without any basis to support the valuation?
7. Item 46: Is Kimberly entitled to a reimbursement claim for the amount of community funds used for the benefit of Melvin's separate property?
8. Item 52: Is the property located at 6125 Bostwick Road a community or separate asset?
9. Item 56: Is there a reimbursement claim owed on the Bass Pro Credit Card Number 7889?
10. Item 68: Is Melvin entitled to a reimbursement claim for funds spent gambling by Kimberly when he not only allowed and consented to her activities, but gave her and paid off the credit cards each month?
11. Item 78: Is Kimberly entitled to seek a reimbursement claim on the uncompensated labor of a spouse for accounts receivables earned during the marriage, but received shortly after the termination of the community property regime?
12. Item 66: is Melvin entitled to a reimbursement claim on Lot 76, Kings Pointe Subdivision, Phase 2 for a mortgage that never existed?

         The executrix answered the appeal and asked the trial court's judgment be modified as follows:

13. Item 67: Melvin shows that he should have been awarded a reimbursement claim against Kimberly in the amount of $6, 545.00 for payments made from the community property for breast surgery for Kimberly.
14. Item 68: The District Court miscalculated the amount of the reimbursement due to Melvin for Kimberly's gambling debts. The correct amount should have been $12, 056.50 instead of the District Court's award of $6, 028.25.

         DISCUSSION

         A trial court has much discretion in valuing and allocating assets and liabilities in community property partitions and must consider the source and nature of each asset or liability, the financial situation of the other spouse and any other relevant circumstances. Maxwell v. Maxwell, 51, 335 (La.App. 2d Cir. 04/05/17), 217 So.3d 1227, writ denied, 17-0958 (La. 10/9/17), 227 So.3d 830. A trial court's factual findings and credibility determinations made in the course of valuing and allocating assets and liabilities in the partition of community property may not be set aside absent manifest error. Clemons v. Clemons, 42, 129 (La.App. 2d Cir. 05/09/07), 960 So.2d 1068, writ denied, 07-1652 (La. 10/26/07), 966 So.2d 583.

         1. Item 17: $325, 000 Multiple Indebtedness Line of Credit

         The trial court, in its reasons for judgment, found that the $325, 000 line of credit secured by Melvin's separate property was a community obligation because the loan was established during the existence of the community. The court reduced the balance of the loan by $134, 000, since that portion of the funds was used to buy a house for Kimberly. Kimberly was then debited $95, 500, one-half of the net balance on the loan.

         Kimberly argues that the Multiple Indebtedness Line of Credit should be classified as Melvin's separate obligation. She urges that it should be classified as such because the loan was secured by the home the two shared at 331 Hunters Hollow, which was purchased by Melvin prior to the marriage. Kimberly did not sign as a borrower on the line of credit, and she was unable to borrow on it. Kimberly also argues the debt was not for the common interest of the spouses because all but one of the withdrawals went to MHR Land Services, LLC ("MHR Land"), a limited liability company Melvin created prior to the marriage. Therefore, the loan was used to benefit Melvin's separate property.

         The executrix argues that the loan was incurred during Melvin and Kimberly's marriage and should therefore be classified as a community obligation. MHR Land was the main source of income for the parties during the marriage, so the loan proceeds were used for the Reagans' living expenses. The executrix also asserts that $134, 000 from the line of credit was used to purchase a home for Kimberly, which the trial court deducted from the loan balance, requiring Kimberly to reimburse the former community $95, 500, half of the net balance on the loan.

         An obligation incurred by a spouse may be either a community obligation or a separate obligation. La. C.C. art. 2359. An obligation incurred by a spouse during the existence of a community property regime for the common interest of the spouse or for the interest of the other spouse is a community obligation. La. C.C. art. 2360. Except as provided in La. C.C. art. 2363, all obligations incurred by a spouse during the existence of the community property regime are presumed to be community obligations. La. C.C. art. 2361. According to La. C.C. art. 2363, a separate obligation of a spouse includes one incurred during the existence of a community property regime though not for the common interest of the spouses or for the interest of the other spouse. Once it is shown that a debt arose during the existence of the community, the presumption set forth in Article 2361 may be rebutted only by facts proving the indebtedness to be a separate obligation as defined in Article 2363. Nesbitt v. Nesbitt, 40, 442 (La.App. 2d Cir. 01/13/06), 920 So.2d 326, writ denied, 06-0720 (La. 06/02/06), 929 So.2d 1255.

         In her argument, Kimberly cites Maxwell, supra, in support of her argument that the loan was in Melvin's name only and was secured by his separate property, making it a separate obligation. The particular debt in Maxwell was one incurred by the husband prior to the marriage and secured by his separate property. The loan was later refinanced during the marriage and half of the property securing the loan was donated to the wife. However, the wife never specifically assumed the debt at issue in Maxwell. Therefore, the debt remained a separate obligation of the husband's. Id.

         In this case, the debt was incurred during the marriage. Therefore, the presumption from La. C.C. art. 2361, that the loan is a community obligation, is applicable. It is irrelevant what property secured the loan. A significant portion of the loan went to MHR Land, which was the spouses' main source of income during the marriage. Hence, the debt, ultimately, was for the common interest of the spouses. Furthermore, a substantial portion of the loan ($134, 000) went to buy Kimberly a new home, which shows that she benefitted from the obligation. Kimberly failed to assert facts showing that this obligation is Melvin's separate obligation. The trial court did not commit manifest error in the classification of this obligation as community.

         2. Item 19: Kimberly's Reimbursement for Use of Community Funds to Pay Melvin's Premarital Tax Liability

         In its reasons for judgment, the trial court found that the tax liability was Melvin's separate obligation since it existed prior to the marriage. The court noted that the check used to pay the liability had a high check number (#7442), showing that the account it was drawn on was not new. The trial court also noted that the account was in Melvin's name and existed prior to the marriage. The court finally stated that there was no evidence the funds were community funds generated during the first ten days of the parties' marriage, and there was no evidence of commingling of community and separate funds in that account.

         Kimberly argues that approximately ten days after the parties were married in May 2009, Melvin wrote a check in the amount of $26, 273.46 to pay for his 2007 tax liability. Kimberly claims that Melvin used community funds to pay this liability and she is entitled to a reimbursement for one-half of the value the community property had at the time that it was used.

         The executrix argues that the funds used to pay the liability were not community funds because the tax liability payment came from an account in Melvin's name that existed prior to the marriage. Also, the tax liability was paid just ten days after the parties were married, and there was no evidence presented to prove that the $26, 273.46 was earned in those ten days.

         If community property has been used during the existence of the community property regime … to satisfy a separate obligation of a spouse, the other spouse is entitled to reimbursement for one-half of the amount or value that the property had at the time it was used. La. C.C. art. 2364. Things in possession of a spouse during the existence of a regime are presumed to be community, but either spouse may prove that they are separate property. La. ...


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