ARKANSAS COURT OF APPEALS
NOT DESIGNATED FOR PUBLICATION
DIVISION IV

B. A. NUGENT,

APPELLANT

V.

DOROTHY NUGENT,

APPELLEE

CA02-1338

SEPTEMBER 10, 2003

APPEAL FROM THE WASHINGTON COUNTY CIRCUIT COURT,

NO. E83-440,

HON. MARY ANN GUNN, JUDGE

AFFIRMED ON DIRECT APPEAL AND CROSS-APPEAL

Sam Bird, Judge

Bill and Dorothy Nugent were divorced in 1983 after being married for twenty-six years. A property-settlement agreement incorporated into the divorce decree addressed the issue of Mr. Nugent's retirement plan and set forth conditions under which Ms. Nugent would receive monetary payment when his retirement began. The section of the property settlement agreement at issue here is entitled Retirement Plan, and reads in part:

In 1999 Mr. Nugent retired, and in March 2001 Ms. Nugent filed a motion for contempt alleging that he had wholly and willfully refused to honor the retirement provisions of the property-settlement agreement after she had demanded payment according to those terms. The Circuit Court of Washington County conducted a hearing on Ms. Nugent's motion for contempt. The motion was denied, but Ms. Nugent was awarded $10,000 plus interest for the year 2000 and $10,000 plus interest for 2001.

Mr. Nugent appeals, contending that the trial court's order is not supported by the evidence. This point centers around allegations that Ms. Nugent's financial compilations and an appraisal introduced into evidence were incomplete, factually inaccurate, and unreliable. Ms. Nugent cross appeals, contending that a preponderance of the evidence does not support the trial court's finding that it was "undisputed" that federal income taxes of 37% and state taxes of 7% were applicable to Mr. Nugent's retirement plan. We affirm.

The trial court, after considering the evidence presented at the hearing, found that Ms. Nugent's net worth, excluding the Dallas residence, was less than $200,000 on December 31 of 2000 and 2001. The court found that Mr. Nugent's gross income from TIAA and CREF was $68,280 in 2000. Allowing 37% for federal income tax and 7% state income tax, the court found that Mr. Nugent had received $38,236.80 from these funds. Because 25% of this retirement income would have been less than the $10,000 established by the decree of divorce, the court awarded Ms. Nugent judgment in the amount of $10,000 for the retirement year 2000. Applying the same tax rates for the retirement year 2001, the court found that Mr. Nugent had received $61,472 gross income from TIAA and CREF and $34,424.32 net income; Ms. Nugent was again awarded $10,000 because 25% of the 2001 retirement year's net income was less than the $10,000 minimum established by the decree of divorce.

On appeal Mr. Nugent argues, as he did to the trial court that, because Ms. Nugent received $60,000 in cash at the divorce and more than $300,000 as an inheritance from her father, and because she claims to live a pauper's life, it is inconceivable that her net worth is below $200,000. Mr. Nugent contends that neither a financial statement prepared by Ms. Nugent's nephew nor an appraisal by auctioneer Miles Autry presents a full or accurate depiction of her net worth.

Although we review the division of property in divorce cases de novo, we will not disturb the trial court's findings on appeal unless they are clearly erroneous or clearly against the preponderance of the evidence. Gray v. Gray, 67 Ark. App. 202, 994 S.W.2d 506 (1999). Further, due deference is given to the trial court's superior position to determine the credibility of witnesses and the weight accorded to their testimony. Myrick v. Myrick, 339 Ark.1, 2 S.W.3d 60 (1999).

Whether the financial compilations were incomplete, factually inaccurate, and unreliable

Mr. Nugent points to a disclaimer in the financial compilations prepared by Ms. Nugent's nephew, David Michael Jenkins, that he was "not independent with respect to Ms. Nugent." Mr. Nugent alleges that Jenkins merely repeated information provided by Ms. Nugent, did not perform an independent verification of dollar amounts for assets and liabilities, and did not verify that all assets were included. Mr. Nugent further alleges that Jenkins failed to include Ms. Nugent's social security "income stream," the value of her life estate in the Edmonson Drive residence, several items of real estate, assets owned jointly with her incompetent aunt, and the third of an aunt's estate that Ms. Nugent was to inherit. Pointing to Jenkins's testimony that he did not include the Edmonson Drive property because of his belief that it was not relevant to the lawsuit, Mr. Nugent complains that Jenkins took it upon himself to decide what assets were relevant.

Jenkins, the nephew of Ms. Nugent and the son of her sister, Doris Jenkins, testified that he had been a certified public accountant for sixteen years and had prepared several thousand financial statements. He stated that he had prepared tax returns for Ms. Nugent every year since 1985, and that he did not do anything different in preparing Ms. Nugent's statements than he would have done in preparing a financial statement for any other client.

The statements of financial testimony introduced at trial show that Ms. Nugent's net worth was $89,217 as of December 31, 1998; $86,290 as of December 31, 1999; and $87,039 as of December 31, 2000. Jenkins testified that his compilation of Ms. Nugent's financial condition was based upon copies of bank statements, annuity statements, and the schedule she had given him of her assets and liabilities; and that in most cases there had been evidence to support the numbers she had listed in her personal statement. He testified that he had operated under rules promulgated by the American Institute of Certified Public Accountants (AICPA), which state that the client is responsible for the values and estimates in the financial statement but that the CPA must have sufficient knowledge to determine "how the estimates or values were arrived at, and whether I think they're reasonable or not, whether I think there's material support for the financial condition as a whole." He also stated that he had prepared Ms. Nugent's statements according to the categories specified by the AICPA. He described his aunt as "kind of a model client" in keeping very detailed records and giving him information usually "to the penny," and he said that he had no other clients whose numbers he could better rely upon.

Regarding inheritance from Ms. Nugent's father (Jenkins's grandfather), Jenkins stated his recollection that after a few specific bequests the vast majority of the estate was inherited by Jenkins's mother, Ms. Nugent, and another sister, with each receiving a third of their parents' trust. Jenkins testified that he did not include "some property that was inherited, a couple of second lien notes, and a lot or two in Dallas" because he did not deem them to have "much, if any, value" and certainly to have no effect on the financial statements. On cross-examination, after examining various checks written for taxes on pieces of property in Dallas and Lancaster, Texas, he again testified that the value of the property would not have made a material difference on the financial statements. Jenkins testified that he did not include the value of Ms. Nugent's social security benefits in her financial statement because under AICPA rules, social security benefits are not included on personal financial statements because they are contingent on life expectancy.

Donald Market, a Ph.D. economist, testified for Mr. Nugent that the present value of the income stream from Ms. Nugent's social security payments was $108,775.87, but he admitted that he was not a CPA and was not familiar with the AICPA rules regarding social security. Regarding the value of Ms. Nugent's life estate in the Edmondson Drive residence, Dr. Market testified that the value of Ms. Nugent's life estate in a $650,000 residence was $282,403. Mr. Nugent asserts that this figure should have been included in the calculation of net worth for purposes of this lawsuit. We easily dispose of this argument by noting the clear language of the property-settlement that the wife's net worth excludes the residence at 4337 Edmondson, Dallas, Texas. Neither will we address Mr. Nugent's argument that calculations should have included an expected inheritance from an aunt's estate, as it is unsupported by convincing argument or citation to authority. As to Mr. Nugent's other arguments regarding the financial compilations, the issues clearly turned upon the trial court's superior position to determine the credibility of witnesses and the weight of their testimony. We will not disturb those determinations on appeal.

Whether the personal property appraisal report of Miles Autry was inaccurate, incomplete, and unreliable

Miles Autry, an auctioneer and certified appraiser, testified that he had been licensed six-and-a-half years and had performed approximately one hundred appraisals. He testified that, based upon his personal experience and upon auction, estate, or public sales of similar items, he had appraised the fair market value of Ms. Nugent's personal property at $13,827. Mr. Nugent argues that the method used by Autry did not necessarily reflect the true value, and that he did not take into account the fact that some of the items appraised, such as Ms. Nugent's Seneca glassware, were valuable antiques. Mr. Nugent points, for example, to internet and retail prices that were higher than the value Autry assigned to pieces of sterling silver. Complaining that Autry valued a Wurlitzer baby grand piano at only $2,500, Mr. Nugent points to his own testimony as a professional musician that the piano was worth up to $14,000. He also lists as "missing" from the appraisal numerous items such as rings and watches, appliances, luggage, and Chinese vases. Autry's report was obviously accepted by the trial court as credible, and we do not disturb that finding on appeal. Additionally, Ms. Nugent points out that Mr. Nugent deposed Autry two weeks before trial but chose not to obtain an independent appraisal to rebut Autry's testimony.

The trial court's decision is affirmed on direct appeal. We now turn to the point of cross-appeal.

Whether the trial court's finding that it was "undisputed" that federal income taxes of 37% and state taxes of 7% were deducted from Mr. Nugent's retirement benefits was not supported by the preponderance of the evidence

Under questioning by the trial court, Mr. Nugent testified that he would have to consult his tax records to see what his tax bracket was, but that he believed that he was in the "regular" tax bracket, or 37% federal and 7% state taxes in Alabama. When Ms. Nugent's counsel indicated in closing argument a belief that it was necessary to verify that estimate, Mr. Nugent's counsel offered to obtain a copy of the tax return and submit it to the court as a late exhibit. The trial court, voicing concern about supplementing the record, made the following remarks:

After Mr. Nugent's counsel told the court that the 2001 returns had not been prepared, the court stated that it would "take the evidence that I have before me regarding the tax where Mr. Nugent- his testimony before the court regarding the percentage of monies he pays for taxes. . . ."

The decision of whether to permit the record to be reopened after the parties had rested, based solely on the assertion by Ms. Nugent's counsel during closing argument that Mr. Nugent's estimate of his federal and state tax brackets was not reliable, was within the court's discretion. See Mason v. Mason, 319 Ark. 722, 895 S.W.2d 513 (1995). The court expressed its reservations about reopening the record and, after determining that Mr. Nugent's tax returns for 2001 had not even yet been prepared, concluded that she would "take the evidence" as it was before her, that being the testimony of Mr. Nugent as to the percentages of his income that he paid in taxes. While it may have been preferable to have allowed the record to be supplemented with a copy of Mr. Nugent's 2000 tax returns, under the circumstances here, we do not consider that the judge's decision not to leave the record open was an abuse of discretion. Because the trial court's finding regarding Mr. Nugent's tax bracket was not clearly against the preponderance of the evidence, we affirm this finding.

Affirmed on direct appeal and cross-appeal.

Stroud, C.J., and Vaught, J., agree.