Hk v. Rl

NOT FOR PUBLICATION IN WEST'S HAWAI‘I REPORTS AND PACIFIC REPORT}*ZI`{ d d

NO. 29370

IN THE INTERMEDIATE COURT OF APPEALS

y 43
v

l OF 'I'HE STATE OF HAWAI‘I

H.K., Plaintiff-Appellant, v.
R.L., Defendant~Appellee

APPEAL FROM THE FAMILY COURT OF THE FIRST CIRC6IT jj
(FC~DIVORCE NO. 07-l-22l4)

SUMMARY DISPOS ITION ORDER
(By: Nakamura, C.J., Foley and Leonard, JJ.)

Plaintiff-Appellant H.K. (Wife) appeals from the
Divorce Decree filed on August 25, 2008 in the Family Court of
the First Circuit1 (family court).

wife raises six arguments on appeal: (1) the family
court erred by failing to make findings on dissipation, making
inadequate findings on business valuations, and failing to find
the relevant facts or decide whether those facts justified a
deviation from partnership principles in property division; (2)
the family court's finding that the shares of stock owned by
Defendant-Appellee R.L. (Husband) in Honcad Corporation (Honcad)
were worth $26,7OO was clearly erroneous; (3) the family court
erred in failing to credit wife with $277,l86, the amount Husband
dissipated from the marital estate; (4) the family court's
finding that Husband had a $40,22O Category 1 Charles Schwab
account (Schwab Account) at the date of marriage (DOM) was
clearly erroneous and unsupported by the evidence; (5) the family
court abused its discretion in awarding the 66% ownership of
NextLevel Software (NeXtLevel) to Husband and refusing to
compensate Wife half of the $30,000 payable to Husband; and (6)
the family court abused its discretion in awarding a $l50,000

lump-sum payment of alimony to Wife.

1 The Honorable Kenneth E. Enright presided.

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Upon careful review of the record and the briefs
submitted by the parties and having given due consideration to
the arguments advanced and the issues raised by the parties, as
well as the relevant statutory and case law, we conclude that
Wife's appeal is without merit.

(1) wife contends the family court violated Hawafi
Family Court Rules (HFCR) Rule 52(a)2 when the court failed to
make any finding as to her claim that Husband dissipated $277,186
in marital funds. Wife argues that this omission violates Rule
52(a) and leaves this court with an inadequate factual basis for
understanding the family court's decision. We disagree.

Rule 52(a) does not require the family court to address
every factual issue raised by the parties. 'It does require that
the family court enter findings upon the filing of a notice of
appeal, State v. Gonsales, 91 HawaiU_446, 449, 984 P.2d 1272,
1275 (App. 1999), and that these findings be "sufficiently
comprehensive and pertinent to the issues to disclose to this
court the steps by which [the family court] reached its ultimate
conclusion on each factual issue." Doe 1V v. Roe 1V, 5 Haw. App.
558, 566, 705 P.2d 535, 543 (l985). lt is within the family
court's broad discretion to recognize factual issues and craft
findings of fact addressing these issues. We will not interfere
with these decisions unless there has been a manifest abuse of
discretion. Schiller v. Schiller, 120 Hawafi 283, 287, 205 P.3d
548, 552 (App. 2009>.

2 Rule 52(a) provides in relevant part:
Rule 52. Findings by the court.

(a) Effect. In all actions tried in the family court, the
court may find the facts and state its conclusions of law thereon
or may announce or write and file its decision and direct the
entry of the appropriate judgment; except upon notice of appeal
filed with the court, the court shall enter its findings of fact
and conclusions of law where none have been entered, unless the
written decision of the court contains findings of fact and
conclusions of law.

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We conclude that the 49 Findings of Fact in the
November 10, 2008 Findings of Fact and Conclusions of Law
(FOF/COL) sufficiently apprise this court of the basis upon which
the family court reached its conclusions.

Wife also argues that the family court violated Rule
52(a) by not making findings about the business valuations of
Husband's companies. However, the FOF/COL did make findings

regarding the business valuation of Husband's companies:

13. The value of [Husband's] present interest in
Honcad Corporation is $26,700.00.

19. There was no disagreement that [Husband] shall
receive all of his LLC interest in Pipeline FX subject to
all indebtedness associated therewith, which indebtedness
materially exceeds the value of the assets in the company.
The value of the interest is $0.00.

20. lt is highly unlikely that [Husband] will ever
be repaid the amounts he has lent to [NextLevel]. [Wife]
offered no credible evidence to prove that it could ever
repay the loans to [Husband]. The value of the loans is
$0.00. l

§ee Doe IV, 5 Haw. App. at 566, 705 P.2d at 543 (noting that
"short, direct, and concise" findings are adequate). We
therefore find no merit in Wife's argument.

Wife contends the family failed to find relevant facts
to determine a deviation from partnership principles pursuant to
Jackson v. Jackson, 84 HawaiU_319, 933 P.2d 1353 (App. 1997)F
The family court found 49 facts in its FOF/COL and ultimately

3

Jackson explains the steps the family court takes in dividing marital
property under partnership principles:

The Partnership Model requires the family court, when
deciding the division and distribution of the Marital Partnership
Property of the parties part of divorce cases, to proceed as
follows: (1) find the relevant facts; start at the Partnership
Model Division and (2)(a) decide whether or not the facts present
any valid and relevant considerations authorizing a deviation from
the Partnership Model Division and, if so, (b) itemize those
considerations; if the answer to question (2)(a) is "yes,"
exercise its discretion and (3) decide whether or not there will
be a deviation; and, if the answer to question (3) is "yes,"
exercise its discretion and (4) decide the extent of the
deviation.

84 Hawaii at 332, 933 P.2d at 1366 (footnote omitted).

3

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refused to deviate from partnership principles. The family

court's discretion to find the "re1evant“ facts is broad. Fisher

v_ signer iii nawai‘i 41, 46, 137 93d 355, 360 (2006)
("Generally, the family court possesses wide discretion in making
its decisions and those decisions will not be set aside unless
there is a manifest abuse of discretion.") The family court did
not abuse its discretion in declining to deem Wife's dissipation
claim a relevant fact for purposes of Jackson.

(2) Substantial evidence supports the family court's
finding that Husband's shares in Honcad were worth $26,700. §§§
Clark v. Clark, 110 HaWafi 459, 465, 134 P.3d 625, 631 (App.
2006). Mr. Kuba, Husband's appraisal expert, provided valuation
reports on Honcad as of December 31, 1996 and January 31, 2008
and PipelineFX as of January 31, 2008.4 These reports supported
the family court's finding that Husband's interest in PipelineFX
was worthless and his interest in Honcad was worth $26,700.

Mr. Kuba also testified from his reports at trial. Additional1y,
Husband testified that his interest in Pipe1ineFX was worthless
because he could not "sell it today for anything." This
collective evidence substantially supports the family court's
findings as to the value of Husband's business interest.

Wife argues that the family court should have lent more
credence to her expert's valuations of Husband's business

interests. We do not reconcile conflicting testimony.

[I]t is axiomatic that reconciling conflicting
testimony is beyond the scope of appellate review.
See State v. Martinez, 101 Hawafi 332, 340, 68 P.3d
606, 614 (2003) ("But '[i]t is well-settled that an
appellate court will not pass upon issues dependent
upon the credibility of witnesses and the weight of
the evidence; this is the province of the trier of
fact.‘") . . . ; State v. Mitchell, 94 Hawafi 388,
393, 15 P.3d 314, 319 (App. 2000) ("The appellate
court will neither reconcile conflicting evidence nor
interfere with the decision of the trier of fact based
on the witnesses' credibility or the weight of the
evidence.")[.]

4 The valuation reports were introduced into evidence as Exhs. G-1
through G-3, but the exhibits are not part of the lower court record before
us.

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Una`!<a v. Onai`<a, 112 Hawai‘i 374, 384, 146 P.3d 89, 99
(2006) .

Schiller, 120 HaWafi at 288, 205 P.3d at 553.

(3) Wife contends the family court erred in failing to
charge Husband for allegedly dissipating $277,186 from the
marital estate from the date of their separation in contemplation
of divorce (DOFSICOD) to the completion of their divorce trial
(DOCOEPOT). Where the family court determines that a party acts
irresponsibly with marital assets during a divorce, thereby
reducing the marital estate, the court may equitably charge that
party with the amount reduced. See Higashi v. Higashi, 106
HawaFi 228, 241, 103 P.3d 388, 401 (App. 2004); see also Ahlo v.
AhlQ, 1 Haw. App. 324, 329, 619 P.2d 112, 117 (1980). Wife
argues that since DOFSICOD, Husband made a $92,546 down payment
on a new house in Kailua, paid $4,627 a month on the mortgage,
charged $22,000 for new furnishings, spent $30,947 for a new
Toyota truck, and loaned $30,000 to NextLeve1. Wife contends
this was "non-essential" spending and was fiscally irresponsible.

1n Higashi, this court explained that a reduction in
the marital estate does not, in and of itse1f, trigger the

court's equitable power to charge the spending party:

A reduction of the dollar value of the marital estate
chargeable to a divorcing party occurs when, during the time
of the divorce, a party‘s action or inaction caused a
reduction of the dollar value of the marital estate under
such circumstances that he or she equitably should be
charged with having received the dollar value of the
reduction.

106 Hawari at 241, 103 P.3d at 401 (emphasis added). Husband's
spending reduced the marital estate, but Wife does not
demonstrate how these expenditures were fiscally irresponsible
and occurred "under such circumstances" as to trigger the family
court's equitable powers. The family court did not abuse its
discretion in refusing to equitably charge Husband for his

expenditures during the divorce.

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Wife argues that Husband's dissipation warrants
deviation from partnership principles.5 However, Wife does not
explain how Husband's expenditures for a home, vehicle, and
company debt payment amounted to waste.

Wife also argues that she should not be charged for
Husband's $43,000 loan from his 401K and his $30,000 loan to
NextLevel. Wife maintains that she did not benefit from these
loans and the loans are in Husband's name alone. We find no
abuse of discretion in the family court's decision to charge Wife
with these debts. See Touqas v. Touqas, 76 HawaiH_19, 32, 868
P.2d 437, 450 (1994) ("And because the family courts are not
bound by any 'fixed rule for determining the amount of property
being awarded each spouse,' the court may, subject to the
parameters of HRS § 580-47, exercise its own independent judgment
in arriving at a just and equitable result."); see also Gussin v.
GusSin, 73 Haw. 470, 479, 836 P.2d 484, 489 (1992).

(4) Wife contends the family court erred in FOF 30
when it valued Husband's DOM Schwab Account at $40,220 and
granted Husband a Category 1 credit in that amount. Wife argues
that the family court erred in crediting Husband with $40,220
based on the $2,011 dividends reported on Schedule B attached to
the 1997 return because Husband's 1996 individual return reported
only $5.00 in interest for the Schwab Account. Wife provides no
basis for disturbing the family's court's FOF. The couple was
married in 1997 and on their 1997 1040 Schedule B, they reported
$2,011 in dividends from the Schwab Account. In attempting to

value Husband's Schwab Account at DOM, the family court used the

5 Hawaii Revised Statutes (HRS) § 580-47 (2006 Repl.) provides the
valid and relevant considerations justifying deviation:

§580-47 Support orders; division of property. (a) . . . In
making these further orders, the court shall take into
consideration: the respective merits of the parties, the relative

abilities of the parties, the condition in which each party will
be left by the divorce, the burdens imposed upon either party for
the benefit of the children of the parties, and all other
circumstances of the case.

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couple's 1997 1040 Schedule B. lt is within the family court's
broad discretion to recognize factual issues and craft findings
of fact addressing these issues. Schiller, 120 Hawafi at 287,
205 P.3d at 552. We hold that the family court's finding was not
clearly erroneous.

(5) Wife contends the family court abused its
discretion in awarding NextLevel to Husband and declining to
split Husband's receivable from NextLevel with Wife. Wife‘s
argument directly challenges the family court's FOF 20: "lt is
highly unlikely that [Husband] will ever be repaid the amounts he
has lent to NextLevel Software. [Wife] offered no credible
evidence to prove that it could ever repay the loans to
[Husband]. The value of the loans is $0.00." Wife argues that
the record actually supports the inference that NextLevel would
be profitable and therefore would pay off Husband's $30,000
receivable.

Husband testified that if he ordered liquidation of
NextLevel, NextLevel would not be able to come up with the
$30,000. Wife never rebutted this testimony. FOF 20 is not
clearly erroneous.

(6) Wife contends the family court abused its
discretion in awarding Wife $150,000 in lump sum alimony because
the court's findings warrant a far more generous award. The

family court made the following relevant findings:

36. While the potential for [Husband's] income to
increase in the future is very real, there was no credible
evidence to establish that he was capable of earning any
more money at the time of trial then [sic] he was actually
currently earning.

37. While [Wife] has some limited potential to
increase her income sometime in the future, she has yet to
recover from the emotional impact of the dramatic changes in
her life.

38. [Wife] is fifty (50) years old .
[Husband] is forty-four (44) years old .

39. [Husband] has an undergraduate degree in
Environmental Design from . . . and is employed by

PipelineFX, LLC.

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40. [wife] has a high school diploma from Japan.
[wife] was born and raised in Japan, and English is her
second language.

41. ln 1993, prior to her marriage to [Husband],
{wife] worked briefly for an art gallery, a sales position
marketing art to Japanese tourists in waikiki, but she had
to stop because she contracted breast cancer.

42. when the parties married on February 3, 1997,
[wife's] only source of income was rental income from her
solely owned condominium at 2410 Cleghorn Street (also

referred to as the "waikiki Skytower condominium"); she also
used savings from her inheritance to pay her living
expenses.

43. Soon after the parties' marriage, [wife] became

pregnant with [Child], who was born [in] 1998.

44. At no time during the marriage did [wife] work
outside the home. She was a full-time homemaker and had no
income from employment.

45. During the marriage, the parties had a
relatively high standard of living that included vacation
travel to Europe and/or Asia and private school at Punahou
for their child.

46, During the parties‘ marriageg the waikiki
Skytower condominium failed to generate profit.

47. The waikiki Skytower has not been rented for at
least two years and will require repairs before it can be
rented again. when it is rented, it will rent for around
one thousand five hundred dollars ($1,500) per month.

48. During the parties' marriage, [wife] developed
significant health problems. She suffers from vertigo and
back problems.

49. Throughout the parties' marriage, [wife] was
dependent for financial support on [Husband].

wife argues that these findings do not support the family court's
award of $150,000 in lump-sum alimony.

The family court awards spousal support by considering
the factors enumerated in HRS § 580-47(a). Cassidav v. Cassiday,
6 Haw. App. 207, 215, 716 P.zd 1145, iisi (1965), aff'd in part
and rev'd in part, 68 Haw. 383, 716 P.2d 1133 (1986). HRS § 580-

47(a) mandates that the family court consider thirteen specific
considerations before awarding spousal supports

(1) Financial resources of the parties;

(2) Ability of the party seeking support and maintenance
to meet his or her needs independently;

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(3) Duration of the marriage;

(4) Standard of living established during the marriage;

(5) Age of the parties;

(6) Physical and emotional condition of the parties;

(7) Usual occupation of the parties during the marriage;

(8) vocational skills and employability of the party seeking

support and maintenance;

(9) Needs of the parties;

(10) Custodial and child support responsibilities;

(11) Ability of the party from whom support and maintenance is
sought to meet his or her own needs while meeting the needs
of the party seeking support and maintenance;

(12) other factors which measure the financial condition in which
the parties will be left as the result of the action under

which the determination of maintenance is made; and

(13) Probable duration of the need of the party seeking support
and maintenance.

The family court's findings support the alimony award. The
family court did not abuse its discretion in fashioning the lump-

sum award for wife. See Carroll v. Nagatori-Carroll, 90 Hawafi

376, 381, 978 P.2d 814, 819 (1999) (noting family court decisions
only set aside on a manifest abuse of discretion).

Therefore,

ll lS HEREBY ORDERED that the Divorce Decree filed on
August 25, 2008 in the Family Court of the First Circuit is
affirmed.

DATED¢ H@n@iuiu, Hawai‘i, march ii, 2010.

on the briefs:

Peter Van Name Esser C:Zé§ €HK,;zZLég“”“‘”””

for Plaintiff-Appellant. Chief Judge

william C. Darrah
for Defendant-Appel1ee.