Reopening Evidence for Equitable Distribution

Shropshire v. Shropshire, 2022-NCCOA-441.

Facts:

Plaintiff and Defendant separated and initiated a case for Equitable distribution (ED). Pursuant to a pretrial Order, the parties filed affidavits for the ED trial. Both parties listed retirement plans under the “marital property” section of the affidavit. This included the Plaintiff’s 401(k) plan. Furthermore, both parties designated that Plaintiff’s retirement plans had values to be determined for date of separation and “net” value. Under the section of the affidavit marked for “divisible property,” neither party listed any property.

In a hearing in August of 2018, the parties testified about ED. In October 2018, the trial court judge told the parties that evidence was going to be reopened so that evidence could be presented that showed the date of trial values for the retirement plans, as well as value of the marital residence. Plaintiff objected to the reopening and filed a motion to recuse.

The motion was denied in trial court and the reopening was allowed. The information was provided over objections, and a final ED order was entered. Plaintiff appealed.

Issue:

Did the trial court err by reopening evidence to receive new evidence about the value of Plaintiff’s retirement plans?

Holding: No.

Rationale:

ED is a three-step process: 1) classification, 2) valuation, and 3) distribution. Marital property is typically the property acquired during the course of marriage, before separation. Divisible property includes passive income from marital property received after separation, which includes passive appreciation or diminution in marital property. The value of divisible property is determined as of the date of distribution.

Put simply, the values on the retirement accounts were required for the date of separation, as well as the date of the hearing. Since judges have the discretion to reopen evidence upon motion of a party, there is no difference when a judge does so on their own initiative if it serves the ends of justice and offers no surprise and/or prejudice to a party.

In this case, Defendant offered the values of her own retirement accounts, and she would be prejudiced if Plaintiff did not do the same. Defendant attempted to get the passive increase/decrease values by asking, but Plaintiff did not know those values at the hearing. Furthermore, Defendant raised the issue in her closing statement that the judge ought to consider that Plaintiff did not provide a divisible value to his retirement plans, whereas she did. Therefore, Plaintiff cannot contend that he would be surprised by the reopening of evidence to determine those values. These circumstances allow that it was no error for the trial court to reopen evidence.

Lessons:

Valuation and distribution go hand in hand. Without accurate valuation of marital and divisible property, distribution may not be entirely equitable. There is something to be said about trial strategy and preparedness; however, this was not that case.

It seemed that Plaintiff was put on notice that the divisible aspect of the marital retirement accounts would eventually be an issue based on the examination and closing argument. Since the values of the passive increase in the retirement accounts were required for a just and equitable distribution, it made sense that evidence was reopened so that the court could value the accounts wholly.