In re Marriage of Peffly

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NOT DESIGNATED FOR PUBLICATION

No. 118,736

IN THE COURT OF APPEALS OF THE STATE OF KANSAS

In the Matter of the Marriage of
JASON PEFFLY,
Appellee,

and

BRITTAN MCCLANAHAN,
formerly Brittan Peffly,
Appellant.


MEMORANDUM OPINION

Appeal from Butler District Court; MICHAEL E. WARD, judge. Opinion filed June 7, 2019.
Affirmed.

Brian R. Carman, of Stinson, Lasswell & Wilson, L.C., of Wichita, for appellant.

No appearance by appellee.

Before MALONE, P.J., SCHROEDER, J., and MCANANY, S.J.

PER CURIAM: Brittan McClanahan appeals the district court's decisions on
property division and spousal maintenance in her divorce from Jason Peffly. McClanahan
first argues that the district court erred in the manner that it divided funds in joint bank
accounts traced to distributions from her family's trusts. Second, she argues that the
district court erred by including an insurance settlement check for roof repair as a marital
asset assigned to her. Third, she argues that the district court abused its discretion by
ordering her to pay spousal maintenance to Peffly. Finally, she complains that the district
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court took 11 months to issue a final ruling on property division and spousal
maintenance. Finding no reversible error, we affirm the district court's judgment.

FACTUAL AND PROCEDURAL BACKGROUND

Peffly and McClanahan were married on June 28, 2003, and they had three
children during their marriage. On May 14, 2015, Peffly filed a petition for separate
maintenance in the Butler County District Court. McClanahan filed an answer and
counterclaim for divorce. About one year after Peffly filed his petition, the district court
granted the parties a divorce and scheduled a trial on all issues that remained unresolved,
including child custody and parenting time. The district court also granted McClanahan's
request to be restored to her maiden name of Brittan McClanahan.

The district court held a three-day bench trial beginning on October 25, 2016.
Peffly testified that he received a bachelor's degree from Wichita State University in
1999. McClanahan received a bachelor's degree from the University of Kansas in 1997.
They were married in 2003, and their children were born in 2005, 2008, and 2010.

Peffly testified that he was asking the court to enter an order for spousal
maintenance from McClanahan based on the difference in their incomes. He testified that
when he filed his petition, he was making around $100,000 per year and McClanahan
was making $175,000 per year. He lost his pharmaceutical sales job of 12 years at about
the same time that he filed, and since then he had been working for his father's
construction company. He testified that he left his sales job to be available for his
children because he traveled a lot with his previous job. But he testified that he did not
make nearly as much money working for his father.

Peffly testified that while he and McClanahan were married, all of their income
went into a joint account. He stated there was never an agreement to treat his bonuses or
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her inheritance separately. He testified that around the time that he filed for separate
maintenance, he withdrew around $160,000 from the parties' joint checking and savings
accounts and left about the same amount in the accounts. He later agreed to put $86,000
of the funds he withdrew into his attorney's trust account. He testified that he spent most
of the remaining money on bills, rent, and a deposit on another rental house.

Peffly asked the district court to divide equally the parties' cash assets. As for the
marital residence, Peffly testified that he was not asking for it to be awarded to him, but
he wanted to receive an equalization payment from which he could purchase his own
property. Peffly testified that he was basing his request for spousal maintenance on the
parties' incomes when they filed for divorce and not based on his current income.
Ultimately, Peffly testified that he sought to retain the $86,000 in his attorney's trust
account as well as receive an equalization payment from McClanahan of $145,667. He
also requested spousal maintenance of $1,250 per month for 36 months.

Peffly's real estate appraiser testified that she appraised the marital residence and
issued a report on November 9, 2015, which valued the home and surrounding property at
$346,500. There was a mortgage on the property in the amount of about $180,000. The
real estate appraisal was conducted after the roof of the residence had been damaged by
hail and wind in May 2015.

McClanahan also testified at the trial. She testified that most of the money in the
accounts from which Peffly withdrew half of the funds came from her inheritance. She
testified about the dates and amounts of each distribution from her family's inheritance
trusts, including a $173,308 distribution on February 12, 2015. The total amount of
distributions McClanahan received from her family's trusts was $294,100, and she was
asking the court to set aside this amount solely to her.

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McClanahan did not call her appraiser to testify, but she testified about her marital
estate spreadsheet, which valued the house at $304,000 from an appraisal conducted on
September 26, 2015. But McClanahan admitted that she filled out a floodplain
application as part of renovations she was doing on the house that included an appraised
value of $347,000.

McClanahan testified that the parties received a check for $34,249 made out to
both of them from Traveler's Insurance, which was proceeds from an insurance claim to
repair the roof on the marital residence caused by hail and wind damage on May 26,
2015. She asked to be awarded the insurance proceeds, but testified that she did not
include those funds on her marital estate spreadsheet because the funds would be used to
repair the roof. She did not believe that it would be fair to put the insurance proceeds on
her marital estate spreadsheet because the proceeds were designed to make the property
whole again. She believed the home was worth only $304,000 after she repaired the
damage from the storm. Finally, McClanahan testified that based on her income and
expenses, she could not pay Peffly $1,250 every month for spousal maintenance.

At the end of the final day of the trial, the district court entered an oral ruling on
custody and parenting time. That ruling is not being challenged in this appeal. The district
court stated that "[t]he financial stuff can wait a little bit."

On September 11, 2017, almost 11 months after concluding the trial, the district
court filed its final orders on asset/debt division. Relevant to this appeal, the district court
determined that it would use a valuation date for the marital property as near as possible
to the date of filing, which was May 14, 2015. The district court found that both of the
appraisals of the marital residence were credible and comprehensive, so the court
averaged them and arrived at a value of $325,520 for the marital residence, which the
parties agreed would go to McClanahan. As for the insurance check from Traveler's, the
district court ordered Peffly to endorse it and give it to McClanahan. The district court
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ordered McClanahan to put the check proceeds toward repairs to the home or toward the
mortgage balance. The district court found that applying the insurance proceeds to the
home would increase its value, so the court placed the insurance proceeds as an asset on
McClanahan's side of the assets and debts ledger.

Turning to the trust fund distributions, the district court noted that before Peffly
filed his petition on May 14, 2015, the parties had a joint savings account that contained
$322,403.91. On May 1, 2015, Peffly had withdrawn $161,201.95 from that account and
deposited it in a savings account of his own. This left $161,253.17 remaining in the
account, which McClanahan eventually put into an account only in her name. The district
court found that McClanahan had shown that $294,100 of the funds in the parties' joint
account before May 1, 2015, were directly traceable to trust distributions McClanahan
received from family trusts. The district court then found that these funds should be
carved out from the marital estate and set aside for McClanahan outside the distribution
of marital assets in the case.

Thus, the district court determined that Peffly was not entitled to receive $147,050
of the $161,201.95 that he withdrew from the joint savings account on May 1, 2015. The
district court then stated that it would place $147,050 on Peffly's side of the asset/debt
ledger and would place nothing on McClanahan's side of the asset/debt ledger for the
other $147,050, which would "effectively give her credit for the entire $294,100."

The district court's journal entry included a table on which the court entered all the
assets and debts for which it had determined each party was responsible for or had
received. The result of the district court's calculation was that McClanahan owed Peffly
$28,181.99 as an equalization payment. The district court stated that it would issue a
separate order on the remaining issues, which included spousal maintenance.

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On September 25, 2017, McClanahan filed a motion to alter or amend the
judgment under K.S.A. 2017 Supp. 60-259(f). In the motion, McClanahan argued that
although the district court found that the trust funds she received during the marriage
should be set aside solely to her when determining the parties' division of assets, she
claimed the district court erred in including half the funds on Peffly's side of the
assets/debt ledger. Peffly responded and argued that although he received a nonequal
portion of the assets and debts of the parties, the division of assets and debts as reflected
by the district court's asset/debt calculation was just and reasonable and could be
considered equitable. Peffly also argued that the court should determine spousal
maintenance by applying the customary approach of 20 percent of the difference in the
parties' incomes.

The district court held a hearing on McClanahan's motion to alter or amend.
McClanahan argued that the district court erred in including the $147,050 as one of
Peffly's assets instead of counting it as an advance on any distribution he would receive
as equalization. Peffly argued that leaving the entire inheritance out of consideration
resulted in an inequitable distribution. He argued that even if the number on the
assets/debt ledger was in the wrong place, the court's ultimate role was to make an
equitable split, and according to Peffly, the district court's division was equitable.

Ultimately, the district court acknowledged that placing the $147,050 as an asset
on Peffly's side of the ledger was inconsistent with its finding that the funds traceable to
trust distributions was to be set aside as nonmarital property. The district court did not
decide the issue at the hearing but stated that whatever final decision it made on the
distribution of assets would affect its determination of spousal maintenance.

On October 26, 2017, the district court filed its amended and supplemental final
orders. The district court noted that it had stated in its previous journal entry that it would
treat $294,100 in the parties' joint account as of May 1, 2015, as McClanahan's sole
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property. The district court acknowledged that placing $147,050 as an asset on Peffly's
side of the ledger did not have the intended effect of carving out the entire amount to
McClanahan. Nevertheless, the district court did not modify its original division of the
trust income, finding that its original division of the assets and liabilities was just and
equitable. The district court stated:

"The parties were married for 12 years and dated 4-5 years prior to marriage.
[McClanahan] retains the marital home and now has $34,248 with which to make needed
repairs. [Peffly] either has or will need to establish and furnish a different residence for
himself and the children when they are with him. As noted hereafter, [McClanahan]'s
historical income exceeds that of [Peffly] by $42,819 per annum. Taking into account all
factors, including her continued receipt of trust fund monies, [McClanahan]'s financial
future appears to be more secure than [Peffly]'s. Accordingly, this Court declines to alter
or amend its earlier asset/debt distribution."

The district court also found that spousal maintenance was appropriate but not to
the extent or duration Peffly requested. The district court determined that Peffly's
domestic relations affidavit and other evidence established his need for spousal
maintenance and also showed that McClanahan had the ability to pay spousal
maintenance. Ultimately, the district court ordered McClanahan to pay Peffly $714 per
month for 24 months. The district court stated:

"Although [Peffly]'s earnings are down from previous years, his work experience
and formal education should equip him to regain his prior earning capacity or perhaps
exceed the same at some point in the near future. He has $86,000 in his attorney's trust
account, minus any attorney's fees. The Court has awarded him an equalization payment
of $28,191.94. A monthly maintenance payment of $714 per month should suffice to
bridge [Peffly]'s transition back into a better post-divorce financial position."

McClanahan timely filed a notice of appeal.

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FUNDS TRACEABLE TO FAMILY TRUSTS

McClanahan first argues that the district court erred in the manner that it divided
funds in the parties' joint bank accounts traced to distributions from her family's trusts.
Peffly did not file a brief on appeal.

A district court's division of property in a divorce action is governed by K.S.A.
2018 Supp. 23-2801 et seq. The district court has broad discretion in adjusting the
property rights of the parties in a divorce action, and this court should not disturb the
district court's decision absent a clear showing of abuse of discretion. In re Marriage of
Wherrell, 274 Kan. 984, 986, 58 P.3d 734 (2002). A court abuses its discretion when no
reasonable person would agree with the district court's decision or when the decision is
based on a factual or legal error. See Critchfield Physical Therapy v. The Taranto Group,
Inc., 293 Kan. 285, 292, 263 P.3d 767 (2011). The party asserting the district court
abused its discretion bears the burden of showing such abuse of discretion. Gannon v.
State, 305 Kan. 850, 868, 390 P.3d 461 (2017).

The district court at first found that McClanahan had a right to retain the trust
distributions she received from her family during the marriage. The district court
explicitly found that $294,100 in deposits from the trust distributions should be treated as
the McClanahan's sole property outside the distribution of marital assets. In Kansas, a
person's inheritance acquired after marriage and whether held individually or jointly
becomes marital property upon the commencement of an action for divorce. K.S.A. 2018
Supp. 23-2801. So although the district court at first stated that it intended to set aside the
trust income to McClanahan, this asset generally would be treated as marital property.

Once the divorce action is commenced, it is the district court's task to make a "just
and reasonable division" of all the marital property. K.S.A. 2018 Supp. 23-2802(c). The
district court is to consider these factors when dividing the marital property:
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"(1) The age of the parties; (2) the duration of the marriage; (3) the property owned by
the parties; (4) their present and future earning capacities; (5) the time, source and
manner of acquisition of property; (6) family ties and obligations; (7) the allowance of
maintenance or lack thereof; (8) dissipation of assets; (9) the tax consequences of the
property division upon the respective economic circumstances of the parties; and (10)
such other factors as the court considers necessary to make a just and reasonable division
of property." K.S.A. 2018 Supp. 23-2802(c).

The district court has wide discretion in adjusting the financial obligations of the
parties. See In re Marriage of Monslow, 259 Kan. 412, 414, 912 P.2d 735 (1996).
Although the district court must make a fair and equitable division of the property, it need
not be an equal property division. See In re Marriage of Hair, 40 Kan. App. 2d 475, 480-
81, 193 P.3d 504 (2008).

The district court at first found that $294,100 of the funds in the parties' joint bank
accounts should be excluded as a marital asset and set aside to McClanahan because the
funds were directly traceable to her family trust distributions. Despite making this
finding, the district court included $147,050 as an asset set aside to Peffly. At the hearing
on the motion to alter or amend the judgment, the district court acknowledged that its
treatment of the asset did not have the intended effect of carving out the entire amount to
McClanahan. Nevertheless, the district court did not modify its original treatment of the
trust income, finding that its overall division of the assets and liabilities was fair, just, and
equitable. The issue for this court to decide on appeal, then, is whether this decision
constituted an abuse of discretion.

The only argument McClanahan makes on appeal is that the district court must do
what it at first stated it would do and set aside the entire inheritance to her. McClanahan
points out that the district court's reason for not modifying its prior order was that it
would be inequitable for Peffly to pay McClanahan because it would leave Peffly with
hardly any liquid assets. The district court also stated that it was considering the
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differences in the parties' incomes as well as their present and future earning capacities.
But she argues that the district court already had considered these factors when issuing its
first ruling, and it was arbitrary, fanciful, and unreasonable to give these factors more
weight in its amended and supplemental order without the presentation of any additional
evidence or an explanation about why those factors now weighed more heavily.

When considering McClanahan's motion to alter or amend, the district court
acknowledged that it understood McClanahan's argument that it had incorrectly
categorized the $147,050 when determining the property division, but the district court
concluded that its original property division remained fair, just, and equitable.
McClanahan does not show on appeal how this decision amounted to an abuse of
discretion. McClanahan and Peffly had substantial assets and liabilities to be divided by
the court. Typically, a person's inheritance acquired after marriage becomes marital
property upon the commencement of an action for divorce. K.S.A. 2018 Supp. 23-2801.
Although the district court must make a fair and equitable division of the property, it need
not be an equal property division. In re Marriage of Hair, 40 Kan. App. 2d at 480-81.

The burden is on Peffly to show that the district court abused its discretion in
dividing the assets and liabilities of the parties. Gannon, 305 Kan. at 868. We find that
Peffly has failed to meet his burden of showing an abuse of discretion. Significantly, the
district court found that its final decision on the division of property would affect its
determination of spousal maintenance. So in other words, if the district court had adjusted
the property division as McClanahan requested in her motion to alter or amend the
judgment, it is likely that such an adjustment would have resulted in a higher
maintenance award to Peffly. For these reasons, we reject McClanahan's claim that the
district court erred in the manner that it divided the income from her family's trusts.



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INSURANCE SETTLEMENT CHECK

McClanahan also argues that the district court erred by including an insurance
settlement check for roof repair as a marital asset assigned to her. McClanahan argues
that the insurance proceeds should not have been counted as an asset she received
because the funds would be used to repair the roof. Because the district court had broad
discretion in adjusting the property rights of the parties in a divorce action, this court
should not disturb the district court's decision absent a clear showing of abuse of
discretion. In re Marriage of Wherrell, 274 Kan. at 986.

The district court ordered McClanahan to apply the $34,249 insurance check
toward repairs to the residence, which the court was awarding to McClanahan as part of
the property division. The district court found that applying the insurance proceeds to the
home would increase its value, so it placed the insurance proceeds as an asset on
McClanahan's side of the assets and debts ledger.

We find that the district court's treatment of the insurance check was not unfair
because (1) the appraisals on which the court relied to value the home were conducted
after the property damage had occurred and (2) the district court specifically found that
applying the insurance proceeds to the home would increase its value. Thus, although
McClanahan needed to use the insurance proceeds to repair the roof, it increased the
value of the residence that was being awarded to her as part of the property division.
McClanahan fails to show how the district court's treatment of the insurance proceeds
constituted an abuse of discretion.

Moreover, the district court ultimately found that the $28,181.94 equalization
payment was fair, just, and equitable. So any adjustment in the property division caused
by applying the insurance check differently would likely have resulted in a corresponding
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adjustment in the equalization payment. For these reasons, we find that the district court
did not err in the manner that it treated the insurance check as a marital asset.

SPOUSAL MAINTENANCE

McClanahan next argues that the district court abused its discretion by ordering
her to pay spousal maintenance to Peffly. An award of spousal maintenance is governed
by K.S.A. 2018 Supp. 23-2901 et seq. An appellate court generally reviews a district
court's maintenance award for abuse of discretion. In re Marriage of Vandenberg, 43
Kan. App. 2d 697, 706-07, 229 P.3d 1187 (2010).

McClanahan argues that the district court abused its discretion in imposing spousal
maintenance because it failed to analyze Peffly's purported need for maintenance and her
ability to pay. She argues that the only evidence supporting Peffly's claim of monthly
income and expenses on his domestic relations affidavit was his own testimony, and he
presented no evidence—such as credit card, bank, or loan statements—to corroborate his
reported expenses.

Contrary to McClanahan's claims, the district court considered the evidence,
including the historical earning capacity of the parties, in deciding spousal maintenance.
When the divorce was filed, McClanahan's annual income was about $175,000 and
Peffly's annual income was about $100,000, but he earned even less after he lost his
pharmaceutical sales job. The district court also relied on the fact that McClanahan
received the marital home and Peffly needed funds to help him establish a residence.
Finally, the district court factored the limited amount of the equalization payment Peffly
was receiving into the amount he would need for maintenance. The district court ordered
spousal maintenance in the amount of $714 per month for 24 months, which was less
than half of what Peffly had requested. The court believed this would help bridge Peffly's
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"transition back to a better post-divorce financial position." McClanahan has failed to
show how this decision constituted an abuse of discretion.

Finally, as a separate issue, McClanahan argues that the district court violated
Kansas Supreme Court Rule 166(b) (2019 Kan. S. Ct. R. 221), K.S.A. 2018 Supp. 60-
252a, and the Kansas Code of Judicial Conduct, Cannon 2, Rule 2.5 (2019 Kan. S. Ct. R.
445) by failing to file its journal entry from the trial in a timely manner. McClanahan
does not show that she raised this issue before the district court, nor does she argue why
this court should consider her argument for the first time on appeal. See Kansas Supreme
Court Rule 6.02(a)(5) (2019 Kan. S. Ct. R. 34). Moreover, McClanahan does not ask for
relief based on this argument other than to "respectfully request[] that the Appellate Court
take into consideration the impact an extremely long delay had on the District Court's
rulings in this matter." We find that this issue is not properly preserved as a separate
claim on appeal.

Affirmed.