In re Marriage of Nakiya Ramsey and Steven Holmes
Presented by Ron J. Anfuso, CPA, ABV, CFF, CDFA, FABFA
Second Appellate District
Background
Nakiya Ramsey and Steven Holmes were married in October 2007 and separated in April of 2015. They had two children. The family lived in the home at issue from February 2005 until April 2015. Nakiya filed a petition for dissolution of marriage in October 2016.
The one-day trial took place in December 2019. Of the issues of concern in this trial, the one addressed here is the community property interest in the family home.
The dilemma before the court was that neither of the parties provided adequate evidence to allow the court to correctly calculate the community property share in the home. Steven, while recognizing at the trial the absence of critical evidence, declined to submit it, believing it was Nakiya’s burden to do so.
Moore/Marsden Requirements
To make accurate Moore/Marsden calculations, the court must have (a) the purchase price of the home, (b) the amount of community funds used to reduce the mortgage principal, which in many cases, such as in this case, can be determined by calculating the difference between the balance on the mortgage at the start of the marriage and the balance at separation, (c) the market value of the house at the start of the marriage, and (d) the market value of the house at dissolution.
Steven bought the home in January 2005 as his separate property. The total purchase was $740,000. Steven put down $140,000 and obtained a $600,000 mortgage. The monthly payments varied because he secured an adjustable mortgage. The average monthly payment during that period was $3,200. During the marriage up until the separation, the mortgage payments were made with community property funds. According to Nakiya, the value of the home at the time of the trial was $1.2 million.
Nakiya’s counsel questioned Steven about three income and expense declarations he had filed, one each year from 2017 through 2019. Each had a section for Steven’s average monthly expenses related to him only. In his 2017 declaration, he checked the box for mortgage for $8,000. He did not fill in the spaces asking for the amount of principal and interest he paid. In the spaces for the amount of real property taxes and homeowner’s insurance, he just wrote “INC.”
Specifics of the Trial
Steven indicated that his average monthly mortgage payment was $3,558 on his 2018 declaration. He stated he paid an average monthly principal of $576 and interest of $1,505. In 2019, Steven indicated his monthly payment was $3,624 with $1,202 going toward principal and $2,288 to interest. In each case, he indicated that the amounts included taxes and insurance.
Nakiya’s counsel questioned Steven about the amounts he listed for his average monthly mortgage payments. However, she failed to question him about, or draw attention to, what components were included in the payments.
Steven, who is a licensed real estate broker, stated that the current home value was approximately $950,000. However, Nakiya failed to ask what the value of the home was at the time of marriage.
Steven’s counsel argued that Nakiya had not established any of the amounts needed to make the Moore/Marsden determination. He contended that Nakiya not only failed to present evidence of what the balance of the mortgage was on the date of the marriage, but also how much the principal was reduced. He also claimed that she provided only her own opinion as to the current value of the house without explaining how she reached it. She did express that the value at the time of the marriage was $779,000.
The Trial Court’s Decision
During the closing argument, Steven’s counsel again addressed Nakiya’s failure to establish the community property interest in the house. Steven proclaimed that it was her burden to establish facts for the court to make a determination and asked that the house be declared his separate property.
In the court’s tentative decision, the court computed the community interest using the total amount of mortgage payments, which averaged approximately $3,200. In addition, the court determined the market value of the house at the time of marriage by:
1) Calculating the average monthly appreciation from the time of purchase to the time of trial,
2) Multiplying the monthly appreciation by the number of months between the date of purchase and the date of marriage,
3) Adding that amount to the purchase price.
Based on this calculation, the court applied the Moore/Marsden formula and determined the community property interest in the home was $426,680.
Steven objected and argued that the court erred by using the total amount of mortgage payments made during the marriage because those payments included principal, interest, real estate taxes, and homeowner’s insurance. He contended that the amount of principal reduction using community property funds was $36,920, instead of the $288,000 that the court used in its calculation. With that adjustment, he asserted that the community property interest in the house, using the court’s other figures for value and appreciation, was only $45,466.
The court overruled Steven’s objection stating, “Respondent cites no authority that permits the court to even consider his objections, much less consider evidence he could have produced at trial but didn’t. The objection, therefore, is overruled.”
Nevertheless, the court subsequently held a telephone hearing because the court was informed that there may have been a mathematical error. The end result of the hearing was that the court held its position that either side could have presented the correct amount, but neither did. Thus, the court ordered judgment entered in accordance with the tentative decision including its calculation of the community property interest in the house. Judgment was entered, from which Steven timely filed a notice of appeal.
The Appeal
Steven appealed that the family court erred in applying the Moore/Marsden formula by using the total amount of the mortgage payments from the community funds when calculating the community property percentage share. He requested that the Appeals Court either correct that calculation or reverse the judgment and remand with directions to the family court to determine the amount by which community funds reduced the principal on the mortgage. Then, the family court would be directed to use that amount to apply the Moore/Marsden formula.
Nakiya contended that Steven forfeited his challenge to the family court’s determination by failing to present evidence to establish the amount of the mortgage payments that were to pay interest, taxes, and insurance. She also argued that the court should affirm its findings even if the issue was not forfeited because substantial evidence supports the court’s findings that the average mortgage payment during the marriage was $3,200.
The Appeals Court’s Findings
The Appeals Court reversed the judgment to the extent it determined the community property interest in the family home. The matter was remanded with directions to the family court to hold a limited retrial solely to determine the amount by which community property funds reduced the mortgage principal. For that limited retrial, the family court would require the parties to produce the necessary evidence and then recalculate the community property interest in the house by applying the Moore/Marsden formula.
