The opinion
Cite as 2020 Ark. App. 63
Digitally signed by Elizabeth
ARKANSAS COURT OF APPEALS
Perry
Date: 2022.08.10 13:35:39 DIVISION I
-05'00' No. CV-18-968
Adobe Acrobat version:
2022.001.20169
Opinion Delivered: January 29, 2020
SHANE PERRY
APPELLANT APPEAL FROM THE BENTON
COUNTY CIRCUIT COURT
V. [NO. 04DR-17-9]
BRANDIE PERRY HONORABLE DOUG SCHRANTZ,
APPELLEE JUDGE
AFFIRMED
MIKE MURPHY, Judge
Appellant Shane Perry appeals from the decree of divorce granting appellee Brandie
Perry a divorce. He asserts two points on appeal: (1) that the circuit court abused its
discretion in imputing his income and setting his monthly child-support obligation at $3793;
and (2) that the circuit court abused its discretion in awarding Brandie $167,236 representing
one-half of the parties’ marital interest in GKS Properties. We affirm.
Shane and Brandie were married in July 2002 and divorced in July 2018. They have
four children together. Relevant to this appeal, before Shane and Brandie were married,
Shane owned an interest in a general partnership with his brother and father, GKS
Properties. During the marriage, Shane and his brother purchased their father’s interest in
GKS Properties for $275,000. At the time of the final hearing, GKS Properties had about
$50,000 on deposit in a bank account. Also relevant to this appeal, after Brandie filed for
divorce and before the final hearing, Shane lost his job at Walmart where he earned
$250,000 a year. After a hearing at which the court heard testimony concerning the parties’
various business ventures and Shane’s employment, the court imputed income to both
parties to calculate each parties’ child-support obligation to the other and offset those
amounts. Shane was ordered to pay Brandie $3000 a month in child support.
The court further found that a substantial interest in GKS Properties had been
acquired during the marriage with a represented value of $275,000 but that it would be
impractical to divide that interest considering the nature of the partnership. The court
ordered Shane to pay Brandie $167,236 out of his share of his 401k representing one-half
of the parties’ marital interest in GKS Properties.
Shane now appeals, arguing that the court erred when it imputed his income to
calculate child support and that it further erred when it found that any portion of GKS
Properties was marital property.
I. Child Support
We review an appeal from a child-support order de novo on the record, but we will
not reverse a finding of fact by the circuit court unless it is clearly erroneous. Fischer v.
Fischer, 2018 Ark. App. 519, at 6, 563 S.W.3d 601, 604. In reviewing a circuit court’s
findings, we give due deference to that court’s superior position to determine the credibility
of the witnesses and the weight to be accorded to their testimony. Id. As a rule, when the
amount of child support is at issue, we will not reverse the circuit court absent an abuse of
discretion. Id.
In determining an appropriate amount of child support, courts are to refer to the
most recent revision of the family-support chart in Arkansas Supreme Court Administrative
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Order No. 10, which provides a means of calculating child support based on the basis of the
payor’s net income. Ark. Code Ann. § 9-12-312(a)(3)(A) (Repl. 2015). There is a rebuttable
presumption that the amount of child support contained in the family-support chart is the
correct amount of child support to be awarded. Ark. Code Ann. § 9-12-312(a)(3)(B); Ark.
Sup. Ct. Admin. Order No. 10(I). “Income” means any form of payment, periodic or
otherwise, due to an individual, regardless of source, including wages, salaries, commissions,
bonuses, workers’ compensation, disability, payments pursuant to a pension or retirement
program, and interest, less proper deductions. Ark. Sup. Ct. Admin. Order No. 10(II)(a).
The definition of “income” is “intentionally broad and is designed to encompass the widest
range of sources consistent with this State’s policy to interpret ‘income’ broadly for the
benefit of the child.” Id. The affidavit of financial means shall be used in all family-support
matters. Ark. Sup. Ct. Admin. Order No. 10(IV).
Shane first argues that it was error for the circuit court to calculate the child-support
obligation by imputing income. Regarding imputed income, Administrative Order No. 10
provides that:
[i]f a payor is unemployed or working below full earning capacity, the court may
consider the reasons therefor. If earnings are reduced as a matter of choice and not
for reasonable cause, the court may attribute income to a payor up to his or her
earning capacity, including consideration of the payor’s life-style. Income of at least
minimum wage shall be attributed to a payor ordered to pay child support.
Ark. Sup. Ct. Admin. Order No. 10(III)(d).
Shane contends that his income was not reduced as a matter of choice—he was
fired—thus, the circuit court had no authority to impute income. However, when there is
a change in employment, the imputation of income is not automatic. Grady v. Grady, 295
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Ark. 94, 97, 747 S.W.2d 77, 78 (1988). A court may, in proper circumstances, impute an
income to a spouse according to what could be earned by the use of his best efforts to gain
employment suitable to his capabilities. Langston v. Brown, 2016 Ark. App. 535, at 10, 506
S.W.3d 261, 268. Considering $250,000 was Shane’s salary before he lost his job at Walmart,
it was not an abuse of discretion for the circuit court to use that as the benchmark for Shane’s
earning capabilities. Here, the evidence demonstrated that Shane was capable of making that
much annually, but Shane also testified that he was not open to moving outside of
Northwest Arkansas for a job at the time because he wanted to maintain the flexibility to
spend time with his children. Furthermore, Shane’s various affidavits of financial means
introduced indicate that he has several business ventures including rental properties, a farm,
and an interest in a liquor store; his own law practice; and substantial savings and assets. The
decision whether to impute income depends on the circumstances of the case and is a matter
that lies within the sound discretion of the circuit court. See, e.g., Grady, supra; Langston,
supra. Accordingly, even though Shane lost his job at Walmart, given the circumstances in
this case, it was not an abuse of discretion for the court to impute an income of $250,000
to Shane for the benefit of his children.
Shane contends that, under the Arkansas Family Support Chart, he should owe
Brandie $25 a month, not $3000. As mentioned, the circuit court imputed an annual income
of $250,000 to Shane. The circuit court imputed an annual income of $40,000 to Brandie.
Using those figures, the court then calculated that Shane would owe a presumptive child
support amount of $3793 a month to Brandie and Brandie would owe $793 a month to
Shane. The circuit court then offset Brandie’s support obligation against Shane’s to arrive at
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a final chart-based order of child support for Shane of $3000 a month. This award was also
consistent with the temporary order previously entered. Chart-based support is presumed
to be correct and reasonable. Waldon v. Waldon, 34 Ark. App. 118, 122, 806 S.W.2d 387,
389 (1991). Offsetting the parents’ chart-based support obligation like the circuit court did
here is consistent with common practice in joint-custody situations. See, e.g., Grimsley v.
Drewyor, 2019 Ark. App. 218, 575 S.W.3d 636. It was not an abuse of discretion for the
circuit court to order Shane to pay $3000 a month in child support.
II. GKS Properties
For his second point, Shane challenges the unequal distribution of his 401k as a result
of his acquisition of an additional interest in GKS Properties that was acquired during the
marriage. At trial, Brandie specifically claimed a marital interest in the 17 percent stake in
GKS that was acquired during the marriage. At the hearing, Shane explained that GKS
bought out Shane’s father’s interest and that he had signed a promissory note. The court
noted that there was no evidence of what effect this had on Shane’s interest. The court
found that “a substantial interest in GKS Properties was acquired during the marriage with
a represented value of $275,000.” The court further found, however, that it would be
inequitable and impractical to award Brandie an interest in the partnership. The court then
made an unequal division of one of Shane’s retirement accounts after taking into
consideration the statutory factors required by Arkansas Code Annotated section 9-12-315
(Repl. 2015).
Divorce cases are reviewed de novo. Kelly v. Kelly, 2011 Ark. 259, at 5–6, 381
S.W.3d 817, 822–23. With respect to the division of property, we review the circuit court’s
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findings of fact and affirm them unless they are clearly erroneous or against the
preponderance of the evidence; the division of property itself is also reviewed, and the same
standard applies. Id. A finding is clearly erroneous when the reviewing court, on the entire
evidence, is left with the definite and firm conviction that a mistake has been committed.
Id. In order to demonstrate that the circuit court’s ruling was erroneous, the appellant must
show that the circuit court abused its discretion by making a decision that was arbitrary or
groundless. Id.
On appeal, Shane argues that there was no evidence presented that he recognized a
$275,000 gain in connection with the partnership, the transaction was funded by nonmarital
property, and any gain of nonmarital property remains nonmarital; alternatively, Shane
argues that the acquisition was a gift.
The circuit court noted that Shane failed to put on proof about the value of the
newly acquired interest in GKS. At the hearing, Shane testified that in 2011, he and his
brother purchased their father’s interest in GKS Properties for the sum of $275,000, “and
we executed a promissory note that same day for that amount.” That was the only figure
with which the circuit court had to work. Shane argues that the new interest in GKS was
acquired with nonmarital funds; however, “marital property” is statutorily defined, and it
means all property acquired by either spouse subsequent to the marriage. Ark. Code Ann.
§ 9-12-315(b). There are only a few exceptions to this rule:
(1) Property acquired prior to marriage or by gift or by reason of the death of
another, including, but not limited to, life insurance proceeds, payments made under
a deferred compensation plan, or an individual retirement account, and property
acquired by right of survivorship, by a trust distribution, by bequest or inheritance,
or by a payable on death or a transfer on death arrangement;
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(2) Property acquired in exchange for property acquired prior to the marriage or
in exchange for property acquired by gift, bequest, devise, or descent;
(3) Property acquired by a spouse after a decree of divorce from bed and board;
(4) Property excluded by valid agreement of the parties;
(5) The increase in value of property acquired prior to marriage or by gift or by
reason of the death of another, including, but not limited to, life insurance proceeds,
payments made under a deferred compensation plan, or an individual retirement
account, and property acquired by right of survivorship, by a trust distribution, by
bequest or inheritance, or by a payable on death or a transfer on death arrangement,
or in exchange therefor;
(6) Benefits received or to be received from a workers’ compensation claim,
personal injury claim, or Social Security claim when those benefits are for any degree
of permanent disability or future medical expenses; and
(7) Income from property owned prior to the marriage or from property acquired
by gift or by reason of the death of another, including, but not limited to, life
insurance proceeds, payments made under a deferred compensation plan, or an
individual retirement account, and property acquired by right of survivorship, by a
trust distribution, by bequest or inheritance, or by a payable on death or a transfer
on death arrangement, or in exchange therefor.
Ark. Code Ann. § 9-12-315(b).
Shane and his brother executed a promissory note for $275,000 in exchange for their
father’s interest in GKS Properties. To the extent that either spouse acquires an enforceable
right during the marriage, that spouse acquires marital property. Kelly, 2011 Ark. 259, at 7,
381 S.W.3d at 823. The only question, then, is to ask if that marital property falls within
one of the exceptions. Kelly, is instructive.
In Kelly, the wife obtained some stock in a company, TRM, from her father during
the marriage. Id. Her brother also received stock in TRM at the same time. TRM’s
corporate resolution provided that $50,000 in capital was contributed—$22,500 from the
wife and $27,500 from her brother—but the money was not actually contributed when
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TRM was formed. Id. at 16, 381 S.W.3d at 828. Instead, it was on TRM’s books as a note
receivable for the shares, despite neither sibling having signed any notes for the indebtedness.
Id.
Roughly three years after the shares had been issued, the father’s accountant advised
that the sum needed to be paid and removed from TRM’s books. Id. To that end, $50,000
was paid to the siblings from dividends earned from another company in which they were
also shareholders. Id. Those dividends were the undisputed nonmarital property of the wife.
See Kelly, supra. The circuit court found that the stock interest in TRM was nonmarital
property, and the husband appealed. Id. at 2, 381 S.W.3d at 819.
On appeal, our supreme court agreed with the husband that the TRM stock was
marital property. Id. at 8, 381 S.W.3d at 824. After making note of the exceptions listed in
Arkansas Code Annotated section 9-12-315, the court explained that because the wife
acquired the stock in exchange for a note, she necessarily did not acquire it in exchange for
the considerations listed in subsections (2) or (7). Kelly, 2011 Ark. 259, at 6–8, 381 S.W.3d
at 823–24. Nor did it matter to the court that she paid on the note with separate nonmarital
funds. Id.
Here, like in Kelly, a note was exchanged for shares of stock. In Kelly, our supreme
court did not accept the argument that paying that note with nonmarital funds changed the
character of the property, and we do not accept it now. See McGahhey v. McGahhey, 2018
Ark. App. 597, 567 S.W.3d 522 (rejecting similar arguments); see also Grimsley, 2019 Ark.
App. 218, 575 S.W.3d 636 (same).
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Shane contends, alternatively, that the interest acquired was a gift and therefore
subject to exception. The supreme court rejected this argument in Kelly as well:
Neither do we consider the stock a gift. A gift is a voluntary transfer of property,
without valuable consideration, to another. See Davis v. Jackson, 232 Ark. 953, 341
S.W.2d 762 (1961). In the instant case, it is not disputed that a note receivable for
Christy’s shares was on the TRM books. While Christy also contends that the
payment of that note with nonmarital funds rendered the stock nonmarital under
section 9-12-315(b)(2) and (7), her contention is without merit. Christy’s stock was
not acquired in exchange for nonmarital property or income; instead, at the time it
was acquired, it was exchanged for a note receivable.
Kelly, 2011 Ark. 259, at 8, 381 S.W.3d at 824.
It was not clear error for the circuit court to find that there was some portion of GKS
that was marital. Nor was it error for the circuit court to consider that when making an
unequal distribution by awarding Shane all the interest in GKS and awarding Brandie a
portion of Shane’s 401k.
The circuit court has broad powers to distribute property in order to achieve an
equitable distribution. Keathley v. Keathley, 76 Ark. App. 150, 157, 61 S.W.3d 219, 224
(2001). The overriding purpose of the property-division statute is to enable the court to
make a division of property that is fair and equitable under the circumstances. Id. An unequal
division of marital property will not be reversed unless it is clearly erroneous. Id.
Arkansas Code Annotated section 9-12-315(a)(1) provides:
(A) All marital property shall be distributed one-half (½) to each party unless the
court finds such a division to be inequitable. In that event the court shall make some
other division that the court deems equitable taking into consideration:
(i) The length of the marriage;
(ii) Age, health, and station in life of the parties;
(iii) Occupation of the parties;
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(iv) Amount and sources of income;
(v) Vocational skills;
(vi) Employability;
(vii) Estate, liabilities, and needs of each party and opportunity of each for further
acquisition of capital assets and income;
(viii) Contribution of each party in acquisition, preservation, or appreciation of
marital property, including services as a homemaker; and
(ix) The federal income tax consequences of the court’s division of property.
(B) When property is divided pursuant to the foregoing considerations the court
must state its basis and reasons for not dividing the marital property equally between
the parties, and the basis and reasons should be recited in the order entered in the
matter.
Here, the court considered these factors in writing and especially considered Brandie’s
employability and the “contribution of marital assets in the acquisition of [Shane]’s
additional interests in GKS Properties from the evidence presented in this matter.”
Our property-division statute does not compel mathematical precision in the
distribution of property; its overriding purpose is to enable the court to make a division that
is fair and equitable under the circumstances. Kelly v. Kelly, 2014 Ark. 543, at 8–9, 453
S.W.3d 655, 661. Under these circumstances, the circuit court’s unequal division was not
clear error.
Affirmed.
GRUBER, C.J., and ABRAMSON, J., agree.
Kezhaya Law PLC, by: Matthew A. Kezhaya, for appellant.
Cullen & Co., PLLC, by: Tim Cullen, for appellee.
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