Melodye Patterson Nee Tanner v. Gary Edward Patterson

Judgment rendered February 26, 2025.
Application for rehearing may be filed
within the delay allowed by Art. 2166,
La. C.C.P.

No. 56,027-CA

COURT OF APPEAL
SECOND CIRCUIT
STATE OF LOUISIANA

*****

MELODYE PATTERSON NEE Plaintiff-Appellant
TANNER

versus

GARY EDWARD PATTERSON Defendant-Appellee

*****

Appealed from the
Third Judicial District Court for the
Parish of Lincoln, Louisiana
Trial Court No. 53,946

Honorable Jeffrey Levance Robinson, Judge

*****

BREITHAUPT, DUBOS, & Counsel for Appellant
WOLLESON, LLC
By: R. Alan Breithaupt
James R. Close

HUDSON POTTS & BERNSTEIN, LLP Counsel for Appellee
By: Robert McCuller Baldwin
Jan Peter Christiansen, III

*****

Before PITMAN, COX, and MARCOTTE, JJ.

MARCOTTE, J.

This appeal arises from the Third Judicial District Court, Parish of

Lincoln, the Honorable Jeffrey L. Robinson presiding. Appellant, Melodye

Patterson (“Melodye”), appeals the trial court’s judgment of partition

dividing the vast estate she once had with her former husband, Gary E.

Patterson (“Gary”). For the following reasons, the trial court’s judgment is

affirmed.

FACTS

Melodye and Gary married in 1993 and proceeded to amass a fortune

of approximately $20 million from timber concerns and mineral interests.

They divorced in 2010 and since then have engaged in bitter, contentious

litigation over the division of their former community property estate.

In fact, this is not the first time this court has seen this case in its

present posture. In 2018, Melodye appealed the trial court’s finding that,

under a matrimonial agreement which she attacked as invalid, the stock of a

company she claimed to be her separate property was actually community

property. This court affirmed the trial court1 in Patterson v. Patterson,

51,929 (La. App. 2 Cir. 5/23/18), 247 So. 3d 1148. This case is before this

court again with Melodye disputing the trial court’s valuations of certain

properties and rulings on reimbursement claims.

On October 23, 2009, Melodye filed a petition for divorce. Among

other relief, she requested a partition of the community of acquets and gains.

A judgment of divorce was rendered on May 7, 2010, terminating the

community as of October 23, 2009.

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Judge Woodard of the Third Judicial District Court presided over the first trial.

On January 23, 2013, Melodye filed a detailed descriptive list

(“DDL”) and sought a judicial partition of the community of acquets and

gains. Numerous motions for contempt were filed during the course of the

proceedings, one of which resulted in a July 21, 2015, judgment holding

Gary in contempt for diverting funds of Patterson Forestry Consultants, LLC

(“PFC”) for his personal use, and awarding Melodye attorney fees in the

amount of $12,000.

A scheduling order was issued by the trial court on April 5, 2018,

which set deadlines and referred the matter to special master Charles

Traylor.

On May 18, 2018, Gary filed his DDL, and Melodye filed an amended

DDL on May 21, 2018. Gary filed his traversal of Melodye’s list, as well as

an amended DDL, on June 18, 2018, to which Melodye filed her traversal on

June 20, 2018. On August 17, 2018, Gary filed a supplemental DDL.

On April 4, 2019, the special master rendered his report, and Melodye

and Gary both filed objections.

The trial on the objections took place on May 28-31, and July 9-12,

2019. The trial court took the matter under advisement and issued its

reasons for ruling on March 23, 2021, addressing each item of property

before it, both separate and community.

A judgment on the merits in conformity with the trial court’s reasons

for ruling was signed on April 25, 2023. Melodye then filed a motion for a

new trial, which was denied by the trial court on September 20, 2023.

Melodye now appeals.

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DISCUSSION

Melodye assigns the following errors:

1. The trial court erred in adopting the special master’s
recommendation based on an erroneous assumption that appellee’s
personal expenditures from PFC were contemplated by a prior
interlocutory ruling.

2. The trial court erred in adopting the special master’s
recommendation as to Financial Resources Management of
Louisiana, Inc. (“FRM”), which recommendation ignores
substantial liabilities of the company without explanation or
methodology.

3. The trial court erred in undervaluing Woodland Acres, LLC
(“Woodland Acres”) by applying an excessive discount without
any particular methodology.

4. The trial court abused its discretion and erred in allocating a
portion of the Dubach Tract to appellee based on Gary’s threats of
“trouble” to Melodye.

5. The trial court erred in valuing a community office building at
$100,000 less than appraisal due to a minor encroachment.

6. The trial court erred in denying Melodye’s reimbursement claim
no. 70 for loss of rentals for a community office building caused
by Gary.

7. The trial court erred in failing to add values for three community
bank accounts in Gary’s possession.

8. The trial court erred in failing to assign any value to marketable
timber located on the Matthew Tract.

9. The trial court erred in ignoring the diminution in value in the
Redd House caused by Gary’s neglect.

10. The trial court erred in denying Melodye recovery for her
reimbursement claims no. 61 and no. 62 when Melodye paid
income taxes for FRM income that was not distributed to her.

11. The trial court erred in awarding Gary’s reimbursement claim no.
3 because the payment was made with community funds.

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12. The trial court erred in awarding Gary’s reimbursement claim no.
8 because the payment was made with community funds.

13. The trial court erred in rejecting Melodye’s reimbursement claim
no. 16 seeking return of health insurance premium payments made
by Melodye based on prior false representations of Gary.

14. The allocation of Marion State Bank Certificates of Deposit Items
nos. 15, 16, 17, and 18 should be reallocated and an appropriate
payment ordered to equalize the partition as between the parties.

Standard of Review

It is well settled that a “trial court is vested with great discretion in

effecting a fair partition of community property.” Arterburn v. Arterburn,

15-22, p. 4 (La. App. 3 Cir. 10/7/15), 176 So. 3d 1163, 1167. A trial judge

“is afforded a great deal of latitude in arriving at an equitable distribution of

the assets between the spouses.” Graefenstein v. Graefenstein, 03-1077, p. 6

(La. App. 5 Cir. 1/27/04), 866 So. 2d 958, 961. Further, “[f]actual findings

and credibility determinations made by the trial court in the course of

valuing and allocating assets and liabilities in the partition of community

property may not be set aside absent manifest error.” Politz v. Politz,

49,242, p. 6 (La. App. 2 Cir. 9/10/14), 149 So. 3d 805, 812.

Under a manifest error standard of review, this court can only reverse

if it finds, based on the entire record, that there is no reasonable factual basis

for the factual finding and that the fact finder is clearly wrong. Stobart v.

State, Through DOTD, 617 So. 2d 880 (La. 1993). Thus, this court must not

reweigh the evidence or substitute its own factual findings just because it

would have decided the case differently.

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Applicable Legal Principles

Under Louisiana law, “[p]roperty of married persons is either

community or separate.” La. C.C. art. 2335. Property in the possession of a

spouse during the existence of the community property regime is presumed

to be community, but either spouse may rebut the presumption. La. C.C. art.

2340. Louisiana Civil Code Article 2338 defines community property as

follows:

The community property comprises: property acquired during
the existence of the legal regime through the effort, skill, or
industry of either spouse; property acquired with community
things or with community and separate things, unless classified
as separate property under Article 2341; property donated to the
spouses jointly; natural and civil fruits of community property;
damages awarded for loss or injury to a thing belonging to the
community; and all other property not classified by law as
separate property.

Louisiana Civil Code Article 2341 defines separate property as

follows:

The separate property of a spouse is his exclusively. It
comprises: property acquired by a spouse prior to the
establishment of a community property regime; property
acquired by a spouse with separate things or with separate and
community things when the value of the community things is
inconsequential in comparison with the value of the separate
things used; property acquired by a spouse by inheritance or
donation to him individually; damages awarded to a spouse in
an action for breach of contract against the other spouse or for
the loss sustained as a result of fraud or bad faith in the
management of community property by the other spouse;
damages or other indemnity awarded to a spouse in connection
with the management of his separate property; and things
acquired by a spouse as a result of a voluntary partition of the
community during the existence of a community property
regime.

Under La. C.C. art. 2360, “[a]n obligation incurred by a spouse during

the existence of a community property regime for the common interest of the

spouses or for the interest of the other spouse is a community obligation.”

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Further, La. C.C. art. 2361 states that “[e]xcept as provided in Article 2363,

all obligations incurred by a spouse during the existence of a community

property regime are presumed to be community obligations.”

According to La. C.C. art. 159, “[a] judgment of divorce terminates a

community property regime retroactively to the date of filing of the petition

in the action in which the judgment of divorce is rendered.” Upon

termination of the community, “[e]ach spouse owns an undivided one-half

interest in former community property and its fruits and products.” La. C.C.

art. 2369.2.

When the spouses are unable to agree on a partition of community

property or on the settlement of the claims between the spouses arising

either from the matrimonial regime, or from the co-ownership of former

community property following termination of the matrimonial regime, either

spouse, as an incident of the action that would result in a termination of the

matrimonial regime or upon termination of the matrimonial regime or

thereafter, may institute a community property partition. La. R.S.

9:2801(A).

The court shall determine the community assets and liabilities; the

valuation of assets shall be determined at the trial on the merits. La. R.S.

9:2801(A)(2). The court may appoint such experts pursuant to Articles 192

and 373 of the Louisiana Code of Civil Procedure as it deems proper to

assist the court in the settlement of the community and partition of

community property, including the classification of assets as community or

separate, the appraisal of community assets, the settlement of the claims of

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the parties, and the allocation of assets and liabilities to the parties. La. R.S.

9:2801(A)(3).

The court shall value the assets as of the time of trial on the merits,

determine the liabilities, and adjudicate the claims of the parties. La. R.S.

9:2801(A)(4)(a). The court shall divide the community assets and liabilities

so that each spouse receives property of an equal net value. La. R.S.

9:2801(A)(4)(b). The court shall allocate or assign to the respective spouses

all of the community assets and liabilities. La. R.S. 9:2801(A)(4)(c). In the

event that the allocation of assets and liabilities results in an unequal net

distribution, the court shall order the payment of an equalizing sum of

money, either cash or deferred, secured or unsecured, upon such terms and

conditions as the court shall direct. La. R.S. 9:2801(A)(4)(d).

In valuing and allocating assets and liabilities to partition community

property, a trial court is not required to accept at face value a spouse’s

valuation of assets, debts, or claims against the community. McDaniel v.

McDaniel, 35,833 (La. App. 2 Cir. 4/3/02), 813 So. 2d 1232. Absent

manifest error, a trial court’s factual findings and credibility determinations

made in the course of valuing and allocating assets and liabilities in order to

partition community property may not be set aside on appeal. Id. The trial

court’s choice of one expert’s method of valuation over that of another will

not be overturned unless it is manifestly erroneous. Ellington v. Ellington,

36,943 (La. App. 2 Cir. 3/18/03), 842 So. 2d 1160, writ denied, 03-1092 (La.

6/27/03), 847 So. 2d 1269.

If separate property of a spouse has been used either during the

existence of the community property regime or thereafter to satisfy a

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community obligation, that spouse is entitled to reimbursement for one-half

of the amount or value that the property had at the time it was used. La.

C.C. art. 2365. The burden of proof is on the party claiming reimbursement

to show that separate funds existed and were used to satisfy the community

obligation. Tippen v. Carroll, 47,415 (La. App. 2 Cir. 9/20/12), 105 So. 3d

100.

Valuation of PFC

The community included PFC, a holding company allocated to Gary

and valued by the special master and the trial court at $600,000. Gary was

granted the right to operate PFC by order of the trial court on May 7, 2010.

Melodye claims that Gary spent money that belonged to PFC without regard

to the needs of the company and ran numerous personal expenses through

PFC. She complains that the trial court’s valuation “does not consider

evidence of significant personal expenses paid for Gary by [PFC] or the

artificial reduction of the valuation that results from a failure to adjust for

those personal, non-business expenditures.”

Melodye’s expert witness, certified valuation analyst Patrick Lacour,

testified at trial that PFC should have been valued at $1,048,702.2 Mr.

Lacour arrived at his value utilizing QuickBooks records of PFC, which he

said required him to make adjustments for an artificial diminution in value

attributable to Gary’s personal expenditures from PFC. The special master

acknowledged that Lacour’s report provides “useful insight into the value of

2
Melodye admits in her brief that Lacour made an error in this valuation by
failing to reduce it by $65,000 to account for a related-party loan. Therefore, the
valuation asserted by Melodye for PFC is $983,702.

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the community interest in the LLC,” although he concluded that certain of

Lacour’s adjustments were too high.

The special master stated that “[I] believe the adjustments proposed

by Mr. LaCour for undocumented payments are too high as they include

such payments in a period already considered by Judge Woodard and they

disallow some expenses, such as CPA fees, and professional dues, which

more probably than not, are appropriate.” Based on these assumptions, the

special master then reduced Lacour’s conclusion of value by approximately

$400,000.

Melodye claims that the special master’s first assumption suggests

that a 2015 ruling on an interlocutory motion already considered some of the

questioned expenditures. She notes that the referenced ruling was for only

$31,477.58, while the special master’s reduction was around $400,000.

The 2015 ruling arose out of a November 2010 motion filed by

Melodye requesting that Gary be held in contempt for using PFC monies for

personal expenditures. The contempt motion included an exhibit detailing

expenses which Melodye contended were personal expenses paid by PFC.

Special Master Traylor recommended that the expenses be deemed personal

and that they should be paid back to PFC. The special master also

recommended that Gary be held in contempt.

Gary filed objections, and a trial on these objections was held before

Judge Woodard, who rendered her 2015 judgment based on the information

Melodye presented in connection with the 2010 motion. Melodye claims

that additional information obtained through subsequent discovery was not

considered by Judge Woodard and the $31,477.58 that was known at the

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time of the contempt proceeding does not justify the special master’s

$400,000 reduction in the valuation of PFC.

Melodye further notes that no receipts were kept by Gary for any

purported expenses of the company at any pertinent time. After the above-

described contempt hearing, Melodye notes that she was eventually able to

obtain QuickBooks records for PFC, which included credit card statements

and invoices for 2009 through 2013.

Melodye compared the credit card statements and invoices to the

QuickBooks records which she said revealed numerous expenses that lacked

documentary support and were personal in nature. Melodye compiled this

information and provided it, along with the QuickBooks records, to Mr.

Lacour, who incorporated the information into his report and adjustments.

Melodye argues that her expert, Mr. Lacour, employed a reliable

methodology to arrive at his valuation of PFC, namely an adjusted net asset

value approach. She notes that the net asset value approach takes the

historical book value and makes adjustments to reach the fair market value

of the asset.

Melodye claims that money expended by PFC for anything other than

legitimate business purposes should not reduce the value of the entity for the

benefit of Gary, who controlled PFC; but, instead, that money should be

considered as cash in the possession of the company and therefore added

back to the company’s value.

Mr. Lacour testified that he identified, with Melodye’s assistance, the

amount of personal expenses. He said he added the amounts back to the

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value of PFC because the funds belonged to the company but were taken out

of the company by Gary as personal expenditures.

Melodye submits that the judgment as to the value of PFC should be

modified to reflect that PFC’s value is $983,702 rather than $600,000.

Gary claims that the trial court’s valuation is correct. He points out

that Melodye provided Mr. Lacour with an Excel worksheet containing her

entries of numerous expenses that she claimed were undocumented, and

therefore personal, but she failed to provide to Mr. Lacour the underlying

data from which she created this “questionable” document. Gary also notes

that Mr. Lacour admitted that Melodye’s spreadsheet was the only evidence

he had to create a value of $1,048,702.00 for PFC.

Gary also notes Mr. Lacour’s testimony regarding the difference

between his valuation and that of the special master:

Q: Okay. Now, Chuck Traylor came up with a six hundred
thousand dollar ($600,000.00) value, and not a million
dollar ($1,000,000.00) value. Do you recall – were you
able to determine how he arrived at his six hundred
thousand dollar ($600,000.00) value?

A: He was silent on it, but I could kind of reverse engineer it
and – well, I said, “Kind of” – I did reverse engineer it.
And so, if you exclude the first three footnotes which are
the add backs for expenses that – the first footnote is an
add back for expenses without a receipt, a statement or an
invoice. The second footnote is an add back for expense
without a receipt, and the third footnote is an add back
for expenses without a statement or invoice. I mean,
some of those are – it can be any of those three. He
excluded all those add backs and that’s why he ended up
with a value of 600 – or with a – if I do that I get very
close to 600,000 so I believe that’s what he did.

Gary claims that this explanation shows that Mr. Lacour had no

evidence that these expenses were personal rather than business.

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Gary also points out the importance of the testimony of his expert,

CPA David Cole. Mr. Cole confirmed that most of the expense items added

back by Mr. Lacour would have itemized as business deductions on a tax

return. Mr. Cole further testified that Gary paid back $204,000 to PFC, and

also personally put $348,081.18 into the company.

Finally, Gary points out that it is the trial court’s ruling that plaintiff is

challenging, not that of Special Master Traylor. Gary notes the significance

of this because the trial court had the benefit of the testimony on these issues

and decided them de novo based upon this evidence, even though the final

result was the adoption of the finding of the special master.

Gary requests that this court uphold the trial court’s valuation of PFC

at $600,000.

After a thorough review of the record, we do not find the trial court’s

valuation of PFC at $600,000 was manifestly erroneous. The questioned

expenses appear to be legitimate business expenses incurred for the benefit

of PFC. Furthermore, other than a self-serving Excel spreadsheet with

unsupported numbers, Melodye offered no proof that any of the expenses

she is complaining about were actually personal rather than business

expenses.

We find Mr. Lacour’s testimony on this subject unpersuasive. Our

review of his testimony reveals that Mr. Lacour did not have any personal

knowledge of the nature of the transactions at issue, and he could not say

one way or the other whether those expenses were business-related. Mr.

Cole, on the other hand, testified that it was “blatantly obvious” that many of

the complained-of expenses were business expenses. For instance, he noted

12

that on one of Mr. Lacour’s schedules there was an entry for “David Cole”

that was categorized as not an acceptable expense. Mr. Cole also testified

that receipts were not always necessary and that the IRS has allowed credit

card statements for audit purposes.

Furthermore, Melodye’s claim that there is no methodology to support

Special Master Traylor’s $600,000 valuation of PFC is without merit. Mr.

Lacour’s methodology was actually used by both the trial court and the

special master; but instead of finding as a fact that the expenses were

personal, they found most were business-related as testified to by Mr. Cole.

Thus, they deducted the expenses from the value under Mr. Lacour’s

methodology.

This assignment of error lacks merit, and we uphold the trial court’s

valuation of PFC at $600,000.

Valuation of FRM

The community also included FRM, which was allocated to Melodye.

The special master and trial court valued FRM at $2,000,000, but Melodye

thinks the court should have adopted Mr. Lacour’s valuation of $1,556,698.

Melodye notes that the FRM balance sheet shows a liability of $756,000 due

to her, which Mr. Lacour considered an offset against the net value of the

assets of the company in order to arrive at his value. She argues that based

on the special master’s report, it appears that only the assets of FRM were

considered, and not its liabilities, which obviously must be considered in

valuing any company.

Melodye asserts that in order to arrive at an adjusted net asset value of

a company, the starting point is the company’s balance sheet. The balance

13

sheet includes assets, liability, and equity. When there is a loan on the

company’s books that is owed to someone other than the company itself, that

amount must be “netted out” to come up with the net asset value of the

company.

Melodye argues that because FRM is a mere holding company devoid

of significant cash flow, the company requires infusions of cash to pay taxes

and other necessary expenses, which cash infusions must come from the

shareholder(s). Melodye notes that the $756,000 debt of FRM to her is the

result of such a cash infusion and that it would be unfair to ignore the valid

obligation that FRM owes to her, thereby creating a windfall for Gary.

Melodye requests that the trial court’s judgment be modified to reflect

the corrected value of $1,556,698.

Gary argues that the trial court got it right when it ascribed a value of

$2,000,000 to FRM. He notes that Mr. Lacour looked at the QuickBooks

reports behind the amounts for the liability to Melodye to determine their

validity. Mr. Lacour noted that Special Master Traylor may or may not have

considered the liability to shareholders in getting to his value. Mr. Lacour

classified FRM as a holding company due to its lack of cash flow. However,

when asked about the cash coming in and out of the company, Mr. Lacour

said that FRM lost money over several years, but he admitted that net

income was different than cash flow and just because a company loses

money does not mean it does not have cash flow.

Gary also points out that Mr. Lacour admitted he did not know that

Melodye began paying herself a management fee, which only started after

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this court affirmed that FRM is community property. He requests that this

court uphold its valuation.

We find that the trial court was not manifestly erroneous in valuing

FRM at $2,000,000. Mr. Lacour applied the “forced liquidation” premise to

FRM, which assumes an equalization payment would be necessary by

Melodye, but he did not know how much cash Gary or Melodye had

available to make such a payment. He did not ask Melodye about her

financial situation to determine if this was necessary.

To determine transaction costs of the immovable property in a forced

liquidation scenario, Mr. Lacour was informed that it would be a 13 percent

fee ($311,535) to conduct the auction to sell the property. However, he

noted that if Melodye did not have to liquidate the company, then the forced

liquidation premise would not be appropriate. Melodye acknowledged that

Special Master Traylor did not recommend that FRM be liquidated.

We also find it significant that Melodye started paying herself a

$5,000/month management fee out of FRM in July 2018 and backdated

entries to January 15, 2018; she did not do that prior to 2018, and the

practice started the month after this court affirmed that FRM is community

property. Melodye admitted the fees would not have been included in Mr.

Lacour’s evaluation, and they could not have been since he testified that he

was not told about them.

Accepting the valuation of FRM proposed by Melodye would require

this court to ignore her self-dealing, which we cannot do. Knowing that Mr.

Lacour reduced the value of the company by the booked debt to Melodye of

$756,000 as a “related-party transaction,” the trial court concluded that

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$2,000,000 was the real value even using Mr. Lacour’s methodology.

Ample evidence supported the trial court’s valuation of FRM, and we find

no manifest error in it.

Valuation of Woodland Acres

The community owned one-third of Woodland Acres, a valuable

entity that owns several assets, and which was allocated to Gary. Both

Melodye and Gary objected to the value placed by the special master on the

entity of $1,750,000. The trial court agreed with Melodye after hearing the

evidence and increased the value to $2,060,494.90 to add back that portion

of the discount applied by the special master to the cash assets of the

company. Melodye, however, remains aggrieved by the trial court’s

valuation of this company.

The cumulative value of all of the assets of Woodland Acres was

$7,440,881. The assets comprising such value included (a) over $1,000,000

in cash; (b) a 61.83 percent interest in 571 acres of land worth $5,200,000;

(c) timber located on the aforementioned land worth $597,000; and (d)

$2,821,304 worth of mineral interests that were producing “substantial cash

flow” exceeding $91,000 per month. Melodye asserts that the community’s

pro rata portion of this value was $2,480,294.

The special master recommended a value of $1,750,000, which was

modified by the trial court to $2,060,495, while Mr. Lacour testified that the

value of Woodland Acres was $2,426,000 after applying a discount to the

appraised value of one of the assets of the company.

Marc Taylor was admitted as a “general certified real estate appraiser”

expert without objection and provided an appraisal valuing the entire land

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tract. The timber value was based on an appraisal obtained from Mark

Preaus. Expert petroleum engineer Robert McGowen provided the value for

the mineral interest owned by Woodland Acres. Mr. Lacour provided a

unified valuation report for the entity based on the resulting asset values.

Melodye argues that the special master’s recommended value of

$1,750,000 should be disregarded. She asserts that the trial court assumed

that the special master had reduced all asset values by 30 percent and then

increased the recommended value by exactly 30 percent of the cash, or by

$310,494.90, to a revised total of $2,060,494.90. In doing so, Melodye

contends that the trial court “made an assumption as to a mysterious

reduction” applied by the special master when the record does not divulge

any methodology used by the special master to achieve his recommended

value. Consequently, she argues that it is manifest error to base a value on

either the special master’s recommendation or the trial court’s attempt to

“patch” same.

Mr. Lacour explained that he applied a net asset value methodology

and that “[t]here’s no reason that an investor would ever seek less than the

net asset value of this company. It forms what we call ‘floor’.” Mr. Lacour

said that, unlike financial accounting’s use of “book value,” it is appropriate

to use “market value” for a business valuation. Thus, his report and opinion

took the historical book value of the entity assets and then adjusted each to

fair market value.

Mr. Lacour considered numerous criteria to determine whether a

discount was appropriate. He explained that a “forced liquidation” approach

was not appropriate since Woodland Acres enjoyed significant cash flow;

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and it was, therefore, not necessary to send the property to auction or apply

transaction costs that would be attendant thereto. Based on the

characteristics of the Woodland Acres land, Mr. Lacour opined that a five

percent discount was appropriate, which adjusted the “recast” land value at

$3,054,000 instead of $3,215,000. Application of his discount yields a total

entity value of $7,280,000, making the adjusted net asset value of the

community’s portion $2,426,000.

Melodye asserts that even after the trial court corrected an obvious

error in the discounting of the value of Woodland Acres’ cash, the value

determined by the trial court was still $365,505 lower than the value

suggested by her expert. She argues that the trial court’s valuation was not

supported by the record and requests that this court reverse the trial court’s

finding as to the value of Woodland Acres and, instead, assign a value of

$2,426,000.

Gary argues that the trial court made the appropriate adjustment to the

special master’s valuation. He notes several problems with Mr. Taylor’s real

estate valuation, including the fact that he did not apply a marketability

discount for the undivided interest in the property, although he admitted it

would be appropriate to do so, and that he applied the highest and best use of

residential development on 100 acres of the property but admitted that it

could only be done if the EPA would allow a pond to be built there. Gary

also claims that Mr. Taylor’s appraisal placed twice as much weight on the

last similar comparable sale.

Gary pointed out Mr. McGowan’s report on the mineral interest value

was rejected by the special master as speculative. In attempting to add a

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$2,000,000 mineral value to the property, Gary argues that Mr. McGowan

failed to look at any comparable sales of such interests. He only looked at a

revenue ledger from January to June 2018. He admitted that one of the wells

he included did not start production until May 2018, so he just averaged the

actual production of the other two wells to add to his baseline production

numbers used to calculate estimated future production. He based his

estimated value on a 25 percent royalty interest for the company but

admitted that the one lease he got that number from did not cover the entire

acreage upon which there was production.

Gary also notes that Mr. McGowan assumed an expense-free royalty

but admitted he did not know whether that was correct. He admitted that

future pricing is subject to change based upon government regulations or

deregulations or political implications. He also admitted that commodities

such as oil are volatile, and there is nothing static about future prices,

especially in the oil and gas industry. He had no idea if a shut-in royalty

payment might apply to any of the wells. He had no idea if the cost of fuel

could affect the ultimate price received and paid. Gary asserts that Mr.

McGowan essentially admitted to the speculative nature of his own

valuation.

Gary notes that Mr. Lacour’s unified valuation relied on Mr.

McGowan’s and Mr. Taylor’s flawed valuations. Gary also points out that

Mr. Lacour never held a professional license in the State of Louisiana and

that he admitted failing the CPA exam when he took it.

Gary argues that the special master was able to spot the inherent

speculation in Melodye’s expert’s opinions when setting the value. Gary

19

also asserts that the trial court properly adjusted that value based upon the

evidence at trial for the discount the special master applied to the company

cash. Accordingly, Gary requests that this court uphold the trial court’s

valuation of the community’s interest in Woodland Acres at $2,060,494.90.

If the community asset to be valued is an interest in a partnership or

corporation, the court must be careful to value the interest, not just the assets

of the business entity. Rao v. Rao, 05-0059 (La. App. 1 Cir. 11/4/05), 927

So. 2d 356, writ denied, 05-2453 (La. 3/24/06), 925 So. 2d 1232; Moody v.

Moody, 622 So. 2d 1381 (La. App. 1 Cir. 1993), writ denied, 629 So. 2d

1168 (La. 1993). The trial court’s determination of the value of a

community business is a factual one which will not be disturbed absent

manifest error. Monje v. Monje, 94-622 (La. App. 5 Cir. 12/28/94), 648 So.

2d 1086; Moody, supra. A court, in valuing a community asset, has

discretion. Hare v. Hodgins, 586 So. 2d 118 (La. 1991).

Here, Mr. Lacour’s valuation of Woodland Acres was inherently

flawed and the trial court was within its discretion to reject it. Mr. Lacour

admitted that he never went to the property, he applied no discount for the

speculative mineral valuation and deducted no amounts for transaction costs

of a potential sale of the interest. Mr. Lacour also applied no discount for

the timber but admitted that Woodland Acres would need permission from

the co-owner of the property to cut timber and, for that matter, to lease the

property for mineral production. Finally, even though he applied no

appropriate discounts, every adjustment he made for Woodland Acres was

positive and increased his valuation.

20

The trial court heard this evidence and realized the obvious flaws in

Mr. Lacour’s analysis. The Taylor appraisal was also flawed because it

placed twice as much weight on the least similar “comparable sale.”

Appropriate discounts were not taken. The McGowan valuation lacked all

the sufficient reliable information even assuming it is possible to value

minerals in the ground with any legal sufficiency. Mr. McGowan used

many assumptions rather than relying on the actual production, payment,

and royalty information. In our view, excessive assumptions about an

inherently volatile market such as oil and gas make for unsound valuation.

The special master recognized this speculation and rejected it in

setting the value. The trial court properly adjusted the value based upon the

evidence at trial for the discount the special master applied to the company

cash, which was within its broad discretion.

We find no abuse of discretion in the trial court’s valuation of the

community’s interest in Woodland Acres.

The Dubach Tract

The community further included a tract of land which was identified

as the “Dubach Tract” and on which Melodye’s home rests. Most of the

Dubach Tract was allocated to Melodye because she had continuously

resided in the home located on the land for 11 years prior to the trial.

The Dubach Tract was the source of significant tension between the

parties, with Gary threatening “trouble” for Melodye if she were to be

allocated any of the tract. The trial court allocated a portion of the Dubach

Tract to Gary, making Gary and Melodye permanent neighbors. The trial

court expressly stated the reason for this allocation: “the Court is convinced

21

that the division of the Dubach tract in the manner proposed … will decrease

the animosity between these parties.” Melodye begs to differ. She claims

that the partial allocation of the Dubach Tract to Gary will have the opposite

effect. She asserts that the trial court should have allocated the entire tract to

her to keep them apart.

Melodye also argues that because Gary was allocated other extremely

valuable immovable property in its entirety, the allocation of the Dubach

Tract to her would simply result in a smaller apportionment of former

community funds to her.

Melodye contends that the trial court’s allocation of part of the

Dubach Tract to Gary fails to either effect an equitable division of assets or

to disentangle two openly hostile parties so that they may successfully go on

to lead separate lives. More particularly, she asserts that this allocation is

unnecessary and unfairly partitions part of Melodye’s home while “almost

literally keeping Gary in her back yard so that he may continue to be a

source of consternation for her.” Melodye claims that this arbitrary

allocation will only lead to new, potentially more rancorous conflicts

between the parties that would otherwise have been completely avoidable.

She therefore requests this court reverse the trial court and allocate to her the

Dubach Tract in its entirety.

Gary argues that this complaint by Melodye is meritless. He points

out that the trial court awarded Melodye 849 acres of this tract and Gary the

other 148.6 acres. This meant that Melodye got the vast majority of the

property and the portion where the house is located.

22

Gary also points out that his undisputed testimony at trial confirmed

that there were numerous ways to divide the Dubach Tract. He notes that for

the last ten years Melodye was on the east side of Bayou D’Arbonne, and he

was on the west side.

Gary further notes that he was awarded the small acreage (148.6

acres) south and west of Bayou D’Arbonne and Highway 151, while

Melodye was given the much larger tract (849 acres) north and east of these

clear dividing lines. Gary argues that this division was clearly within the

trial court’s discretion and should be upheld.

La. R.S. 9:2801(4)(c) provides in relevant part:

The court shall allocate or assign to the respective spouses all of
the community assets and liabilities. In allocating assets and
liabilities, the court may divide a particular asset or liability
equally or unequally or may allocate it in its entirety to one of
the spouses. The court shall consider the nature and source of
the asset or liability, the economic condition of each spouse,
and any other circumstances that the court deems relevant.

We agree with the trial court’s division of the Dubach Tract. While

one reason for allocating the property in this manner was the trial court’s

hope that it would reduce animosity between the parties, numerous other

factors were considered, including:

1. It was Melodye’s home for 11 years;

2. She oversaw the home’s construction;

3. Gary bought the tract because it had a common
boundary with a tract of a separate company he and
his family owned, JJP Timberland, LLC f/k/a JJP
Family Limited Partnership (“JJP”);

4. The common boundary with JJP is over two miles
long;

5. It gave JJP frontage on Highway 151 and enabled it to
haul timber and access the tract of JJP;

23

6. Both parties wanted the Dubach Tract;

7. The tract was easily divisible with a clear dividing
line; and

8. The court thought that allocation to either party would
be inequitable under these circumstances.

In his testimony, Gary described all the existing boundaries that made

the property easily divisible between them in kind, including Bayou

D’Arbonne, Highway 151, pipelines, and powerlines. Faced with these

considerations, the trial court fashioned an equitable division between the

parties by giving each a portion with a clear dividing line.

We find no abuse of the trial court’s vast discretion in its division of

the Dubach Tract.

The PFC Office Building

The office building occupied by PFC was allocated to Gary. Because

the special master thought that only a tiny portion of the community office

building was located on community land, he valued it at $100,000.

However, the trial court found, based on the trial testimony of expert land

surveyor James Michael Duty, that 99.065 percent of the office building

does not lie on the neighboring property but, rather, sits on community

property. The trial court increased the special master’s valuation by $45,000

to $145,000.

Melodye claims that the value should have been $245,000, which is

the value her expert Mr. Taylor gave. Melodye asserts that a $100,000

reduction under these circumstances is a clear abuse of discretion. She notes

that 99.065 percent of the office building lies within the boundaries of the

24

community property, which is also taxed to the community according to the

parish tax assessor’s records.

Melodye also points out that Gary elected soon after the October 23,

2009, divorce petition to move this property into a family limited partnership

owned by himself, and shortly thereafter he donated it to his children.

Melodye argues that even if the encroachment was on a stranger’s

property, it would not warrant a $100,000 reduction in its value. Melodye

also notes that the trial court justified allocation of a portion of the much

larger Dubach Tract to Gary because it would give him ownership of

property next to his children.

Melodye submits that the community office building should be valued

based on the evidence at the appraised value of $245,000. She therefore

requests that the trial court’s valuation be reversed and modified

accordingly.

Gary takes issue with the trial court’s ruling that the office building is

located on community property but agrees with the trial court’s valuation of

the building at $145,000. In support, Gary points to the following testimony

from trial.

Gary testified that he and his ex-wife, Pam Gulledge, purchased land

he calls the Garr Tract of 13.3 acres in 1979 from Mary Lou Garr

McCollins. He got the Garr Tract in the divorce and reserved it as separate

property before his marriage to plaintiff. He and Melodye owned a five-acre

adjacent tract which Gary bought from his brother before he purchased the

Garr Tract. Melodye and Gary resided on the tract and ultimately sold 4.3

acres to Jace Patterson, Gary’s son. They kept .7 acres on the western

25

boundary of the building as access and parking for the PFC office building.

The western boundary of the Garr Tract where the building sits meets the

eastern boundary of the .7 acres.

Mr. Taylor valued the PFC office and .7 acres at $245,000, $8,500 of

which constituted the value of the land. Gary notes that Mr. Taylor made an

“extraordinary assumption” in his appraisal that the PFC office building was

located on the community .7 acres. Gary argues that Mr. Taylor did not

attempt to make any independent determination as to whether it was located

on the .7 acres.

Gary claims that the heart of the issue on this item concerns the

survey by Mr. Duty. Gary notes that Mr. Duty did not make a survey of the

.7 acres at issue and did not have a survey of that tract. He admitted that a

boundary line and property line are two different things, and the boundary

line and property line here may be in two different places. Mr. Duty

determined the northwest corner of section 26 based on a conversation with

Romie McMurray, now deceased, in 1981. Mr. Duty testified that the

general land office deputy surveyor’s survey measured the south line of

section 26, which helped fix the boundary at issue, and it was 66 feet

different from his own; thus, he believes the general land office made a 66-

foot error. Mr. Duty’s survey was entered into the record.

Gary testified about why the boundary line drawn by Mr. Duty

between the .7 acres and JJP property is incorrect. He provided a drawing of

the property lines at issue that he made in the late l970s or early l980s. A

surveyor named Lemke did the original survey in 1977. He established the

northwest corner of the original five acres and tract 1 of the Garr Tract.

26

Gary said he was there when Lemke did the survey and saw him put the pin

down in the northwest corner of tract 1 and the northeast corner of the five-

acre tract. Gary said he painted the line, and the line was painted three times

since 1977. He understood that Melodye’s experts did not establish a line

but put a line where they determined the west boundary of the Garr Tract

should be according to their information; this moved the line 66 feet east of

the possession line established in 1977. Gary provided an April 23, 2019,

survey, and that survey coincided with the 1977 survey by Lemke. He also

provided photos of the pin from the 2019 survey, which is consistent with

the 1977 survey.

Based on this and other factors, Gary claims that the PFC office

building was not located on the .7 acres of community property. He asserts

that Mr. Taylor’s appraisal is clearly flawed and based on an extraordinary

assumption not supported by the record evidence which required his value to

be adjusted downward. Gary asserts that Mr. Duty’s report is almost

entirely based on a conversation with Romie McMurray that took place in

1981 and ignores the creation of the section line and corner created by the

government land office survey, which is not correctable as a matter of law

even if it is incorrect. Gary also claims that Mr. Duty’s report and testimony

is inconsistent with the 1977 survey and the 2019 survey and possession of

the property by Gary and his ancestors in title. For these reasons, Gary

asserts that the value determined by the court of $145,000 is supported by

the evidence and clearly within the trial court’s great discretion.

In light of the discretion granted to the trial court by La. R.S. 9:2801,

the trial court is not required to accept at face value a party’s valuation of

27

assets, debts, or claims against the community. McDonald v. McDonald,

40,035 (La. App. 2 Cir. 8/17/05), 909 So. 2d 694. If the trial court’s

valuations are reasonably supported by the record and do not constitute an

abuse of discretion, its determinations should be affirmed. Id.

We find that the trial court’s valuation of the PFC office building at

$145,000 was reasonably supported by the record. The $245,000 value

given by Melodye’s expert, Mr. Taylor, appears to be significantly inflated

and a reduction was warranted. The trial court was well within its discretion

in reducing the value by $100,000 to $145,000.

Melodye’s Claim for Rent on PFC Office Building

Through her claim #70, Melodye sought reimbursement for one-half

rent due on the PFC office building. She contends that during the marriage

PFC paid rent of $12,000 per year to the parties for its use of the PFC office

building located at 629 Leachman Road in Ruston, Louisiana. She further

contends that after the parties split up in 2009, PFC discontinued paying rent

to the parties. Melodye testified that $125,000 was owed in past-due rent,

and that she seeks reimbursement for one-half of that amount, or $62,500.

Thus, Melodye requests this court to increase the amount allocated to her out

of the Marion State Bank Certificates of Deposit by $62,500.

Gary argues that the trial court was correct in adopting the special

master’s finding that an LLC is a separate legal entity from the parties. A

limited liability company is a separate legal entity from its members. Glod

vs. Baker 02-988 (La. App. 3 Cir. 8/6/03), 851 So. 2d 1255, writ denied, 03-

2482 (La. 11/26/03), 860 So. 2d 1135. La. R.S. 12:1329 states in pertinent

part: “[a] member [of an L.L.C.] shall have no interest in limited liability

28

company property.” Thus, members of a limited liability company have no

right to sue personally for damages to limited liability company property.

La. R.S. 12:1320(B); Zeigler v. Hous. Auth. of New Orleans, 12-1168 (La.

App. 4 Cir. 4/24/13), 118 So. 3d 442.

Here, if the LLC owes rent, Melodye’s claim is against the LLC and

not Gary individually. Moreover, the failure of the LLC to pay rent would

operate to inflate the value of the LLC and the community interest in the

LLC thereby protecting all parties from any loss of value due to the failure

to pay rent. Accordingly, we uphold the trial court’s finding on this issue.

Valuation of Community Bank Accounts

Melodye also complains about the trial court’s placing a zero balance

on three bank accounts that total $63,415.57. These include Asset no. 8

(Bancorp South Bank Account xxx8648-3) with a balance of $1,181.35;

Asset no. 9 (Bancorp South Bank Account xxx8639-2) with a balance of

$54,210.86; and Asset no. 10 (Community Trust Bank Account xxx7489)

with a balance of $8,023.36.

Melodye argues that Gary was in control of these assets immediately

after the date of termination of the community. She claims to have no

knowledge of what happened to these funds and asserts that Gary failed and

refused to provide documentation or any other information to explain the

disappearance of these funds. The special master noted that the current

records of these accounts were under Gary’s control. Thus, Melodye asserts

that there is no evidence to support valuation of these three accounts at $0.

Melodye requests this court to reverse the trial court and allocate the bank

accounts in question to Gary at the values set forth above.

29

Gary argues that the trial court was correct at placing a zero balance

on each of these three accounts. As for Asset no. 8, Gary pointed to the

testimony of expert accountant Mr. Cole. Mr. Cole testified this account

was closed on September 19, 2012. He noted there were some transfers of

money to another community account (Asset no. 9) because one account did

not have checks, but the money was transferred back to this account each

time. When the account was closed, Mr. Cole testified that it had a balance

of $212.69.

Gary notes that the evidence regarding Asset no. 9, the other Bancorp

South account, is similar. Melodye was listed as an owner of the account.

She did not know for sure if it was still open. Mr. Cole testified that after

the divorce, any monies transferred from the account were to other

community accounts, and the final balance of the account ($257.30) was

transferred to a community account. Mr. Cole testified that the account was

closed.

Finally, as for Asset no. 10, Gary notes that Melodye was listed on the

account and would, therefore, have had just as much access to it as Gary.

Gary points out that Mr. Cole testified that this account was closed on May

8, 2013.

The spouse alleging improper management bears the burden of

proving that her former spouse failed to manage and prudently preserve the

former community property prior to partition. Reagan v. Reagan, 52,080

(La. App. 2 Cir. 6/27/18), 250 So. 3d 1122. Comment (c) to La. C.C. art.

2369.3 provides that a spouse who asserts a claim under this article is

required to prove that the other spouse failed to act prudently in a manner

30

consistent with the mode of use of the property under his control

immediately prior to termination of the regime, not simply that he had

former community property under his control. Id.

Here, since the only proof offered at trial was that each of the

accounts had zero balances and that Melodye had some control over all

three, we hold that the trial court was within its discretion in valuing the

accounts at $0.

Valuation of the Matthew Tract

Melodye asserts that the trial court erroneously valued a tract of

immovable property, referred to as the “Matthew Tract,” without adding the

value of the timber on the property. Melodye argues that the Matthew Tract

had a timber value of $39,378 that is not disputed with any competent

evidence, yet the value assigned by the special master and adopted by the

trial court does not account for this value. Melodye argues that the assigned

value should be increased to account for the timber value, which was not

included in the appraised value adopted by the trial court.

Melodye notes that the expert opinion of Mr. Taylor established a

value of the land – without its timber – at $88,000. She further points to Mr.

Taylor’s testimony that the value of the land with its $39,378 worth of

timber was $127,378.

Melodye requests that this court reverse the trial court so as to reflect

the correct value of the Matthew Tract at $127,378.

Gary asserts that the trial court’s valuation of the Matthew Tract

should not be disturbed on appeal. He notes that this 33-acre landlocked

tract is almost 2,000 feet off a public road and is only accessible by ATV

31

during the wet periods of the year. Gary disputes Melodye’s

characterization of Mr. Taylor’s testimony. Gary claims that Mr. Taylor did

not testify that the total value of the Matthew Tract is $127,378. Rather,

“what he did say is that if you value the timber separately … and you add

that number to his appraised value for the property with the timber on it, you

come up with that total.” While Gary still takes issue with the $88,000

appraisal on this tract and the trial court’s $100,000 valuation, “there is

simply no basis to overturn the trial judge’s valuation on this property.”

We note that the value now advanced by Melodye, $127,378, exceeds

the value listed in her detailed descriptive list ($99,990) by more than 25

percent and is more than triple the value originally listed by Gary ($40,000).

The tract of land at issue has no road frontage and the appraiser noted that it

is poorly suited for urban development or recreational use.

Considering all of the available information, we agree with the special

master and the trial court that the value currently advanced by Melodye is

too high and the value originally listed by Gary was too low. Accordingly,

we find no abuse of discretion in the trial court’s valuation of this property at

$100,000.

Valuation of the Redd House

The “Redd House” is a community asset rental home that was

allocated to Gary with a value of $40,500. This was the value assigned by

the special master and adopted by the trial court and it represented the

average of the two appraisals presented in evidence. Melodye argues that

Gary neglected the Redd House, which resulted in a loss in value of this

community asset.

32

Melodye notes that the house was allocated to Gary at a value $26,500

less than his own 2019 appraisal. She argues that the value of the Redd

House should be increased by $26,500 to an amount equal to the $67,000

appraisal submitted by his own expert, Mr. Addison.

Melodye points out that while the appraisal describes the property’s

condition as “below average,” it specifically states that “[t]he overall

condition is acceptable and consistent with that typically found within the

immediate neighborhood.”

Melodye notes Gary’s testimony that in cleaning up after tenants were

evicted, he discovered mold in the attic and then, because Melodye allegedly

would not pay for the repair work, “[Gary] said, ‘shut her down.’”

Melodye claims that access to the Redd House was controlled by a

locked gate and Gary controlled the combination. Melodye asserts that

while under Gary’s control, the Redd House deteriorated so much by the

time of trial that Gary acknowledged the condition of the Redd House as

“deplorable,” explaining that the “roof is pretty much gone.” Melodye

argues that the house’s deplorable condition caused the property, which was

previously valued by Gary’s personal opinion at $50,000 and then by Gary’s

appraiser at $67,000, to be worth much less.

Melodye argues that the trial court’s judgment should be modified to

increase the value of the Redd House to $67,000, or, alternatively, to award

her $13,250 on her reimbursement claim #35, representing one-half of the

damage caused by Gary’s neglect.

Gary argues that the trial court was correct in its valuation of the Redd

House. He notes that the evidence at trial showed that the house sits right in

33

the middle of a tract that JPP owns and that much of the Redd House yard is

on the JPP tract itself. Gary testified that the Redd House is in deplorable

condition and that it will take more than what the property is worth to repair

it. Gary notes that Melodye agreed with this assessment. Gary also notes

that the house was previously rented, but Gary evicted the tenants because

they would not pay rent, and the property had become a mess. He tried to

get it cleaned up, but then mold was found in the walls, and Melodye would

not agree to contribute to the repair work.

Gary also points out that Melodye’s own expert, Mr. Taylor, valued

the Redd House at $14,000. He visited the property and noted it as being in

a state of disrepair. Gary argues that despite this, special master Traylor

valued the property at $40,500. Gary argues that Melodye now wants to

increase her take of the community by increasing the value of this property

to $67,000 “in spite of the fact that she did not want to contribute to the

repair of the property.”

We find no manifest error in the trial court’s valuation of the Redd

House. Mr. Taylor’s appraisal states the condition of the property is “fair,”

while Mr. Addison’s appraisal describes the condition of the property as

“below average.” Photographs attached to Mr. Addison’s appraisal show

damage to the ceiling and roof. The comparable sales used by Mr. Taylor

were of properties in similar condition. Mr. Addison’s comparable sales

were of properties in better condition, but he adjusted his final valuation

accordingly.

A court may accept parts of the valuation elements of opposing

experts thereby creating a hybridized evaluation. Bulloch v. Bulloch, 51,146

34

(La. App. 2 Cir. 1/18/17), 214 So. 3d 930, writ denied, 17-0348 (La.

4/13/17), 218 So. 3d 629.

Based on our review of the record, we cannot say that the trial court

abused its discretion in adopting the special master’s recommendation that

the Redd House be valued at the average of the two appraisals, $40,500.

Melodye’s Reimbursement Claim for Income Tax Payments

Melodye argues that she fully paid the taxes for co-owned income

received by a community entity, FRM, and should be reimbursed for her

payment. She notes that the total tax attributed to her for FRM income was

$84,817.75 and that she should be awarded reimbursement equal to one-half

of that amount, $42,408.

Melodye points out that in the previous appeal, FRM was determined

to be a community asset with Melodye as the sole shareholder. See

Patterson v. Patterson, supra. Thus, Melodye received a K-1 issued 100

percent to her. Despite the fact that neither Gary nor Melodye received any

distributions on the money at issue, Melodye claims that she paid one

hundred percent of the taxes.

Gary argues that the trial court properly denied these reimbursement

claims. He points to the testimony of Melodye’s expert Mr. Cole. Mr. Cole

testified that there is no way to know how much tax Melodye actually paid.

Gary also notes that Melodye offered no proof of what she or FRM allegedly

paid.

We find that Melodye offered insufficient proof of the amount of

income tax she allegedly paid. However, even assuming she paid $85,000 in

income tax, she offered no proof whatsoever that the income on which she

35

allegedly paid the taxes was ever distributed to Gary. We agree with the

special master that Melodye effectively retained income belonging to Gary

and used those funds to pay income tax on the income which also belonged

one-half to him. Under these circumstances, we find no abuse of the trial

court’s discretion in its denial of these reimbursement claims by Melodye.

Gary’s Reimbursement Claim No. 3

Gary was awarded reimbursement of $4,250 for one-half of payments

made to a community entity, FRM, in the amount of $8,500. Melodye

argues that the funds used to pay the sum in question were derived from the

sale of a duplex that Gary incorrectly claimed was his separate property.

Melodye avers that 50 percent of the duplex was community in nature,

and all of the funds were commingled with community funds into an account

from which the payment was made. Melodye argues that Gary failed to

adequately trace any separate funds as would be required to prove his right

to reimbursement. She requests that this court reverse the trial court’s

judgment awarding Gary this reimbursement claim.

Gary argues that the trial court properly granted his reimbursement

claim because it involved the use of separate funds to pay a debt of a

community company. Gary claims that prior to the marriage, he owned a

duplex in Winter Park, Colorado, with his first wife, Pam Gulledge. Gary

specifically reserved the duplex as his separate property in the matrimonial

agreement entered into by the parties. On March 12, 2001, Gary sold the

duplex for $365,000. After the various expenses associated with the sale,

the balance due to him was $338,865. Gary claims that the money from this

sale (which remained his separate property) was wired to a joint checking

36

account on March 26, 2001. In March 2001, eight checks were written from

that joint account. Claim no. 3 represents one of the checks that Melodye

wrote from the joint checking account to satisfy an FRM debt. The effective

source of this payment was the $338,865 from Gary’s separate funds from

the sale of the duplex.

Accordingly, Gary argues that the trial court was well within its

discretion in awarding him reimbursement for payments from his separate

funds to satisfy a community obligation.

Property of married persons is either community or separate, except as

provided by Article 2341.1. La. C.C. art. 2335. The classification of

property as either separate or community is fixed at the time of its

acquisition. Mabray v. McSherry, 54,022 (La. App. 2 Cir. 8/11/21), 325 So.

3d 1157, 1165, writ denied, 21-01498 (La. 12/21/21), 329 So. 3d 828.

Things in possession of a spouse during the existence of a regime of

community of acquets and gains are presumed to be community, but either

spouse may prove by a preponderance of the evidence that they are separate

property. La. C.C. art. 2340; Talbot v. Talbot, 03-0814 (La. 12/12/03), 864

So. 2d 590; In re Succession of Holcomb, 47,979 (La. App. 2 Cir. 5/29/13),

117 So. 3d 264, writ denied, 13-1537 (La. 10/4/13), 122 So. 3d 1023.

We note that a trial exhibit contained an itemization of the payments

prepared by Melodye and confirmed the source and purpose of the

payments. Melodye admitted that this document was in her handwriting and

her notes indicated payments of community lines of credit with Gary’s

separate money.

37

We find that Gary offered sufficient proof that his separate property

was used to pay a community debt. Accordingly, we find no manifest error

in the trial court’s ruling that he is entitled to reimbursement of $4,250,

representing one half of the amount paid.

Gary’s Reimbursement Claim No. 8

Melodye makes the same argument in this assignment of error as in

her previous one. Here, a portion of the same duplex proceeds that she

claims were community were also used by Melodye for attorney fees

incurred for the benefit of the community.

Melodye again asserts that the funds from which this payment was

made were derived from the sale of property in which the community had 50

percent ownership. She claims that the funds were commingled with

community funds in a community account, and Gary failed to adequately

trace any separate funds as would be required to carry his burden of proving

that separate funds were used to make the payment for which he seeks

reimbursement. Melodye requests that this court reverse the trial court’s

judgment granting Gary’s reimbursement claim no. 8.

Gary argues that the trial court correctly awarded his reimbursement

claim no. 8 just as it did with his reimbursement claim no. 3. He notes that

his reimbursement claim no. 8 is based upon Check No. 7204 for

$27,751.87, dated March 28, 2001, written to James H. Blanchard and

signed by Melodye to pay for legal fees that were a community obligation.

Gary avers that the check bears a notation “1/2 legal fees Aders Tract.”

Gary claims the check was written to pay legal fees incurred with respect to

litigation concerning recompletion of a well on the “Aders Tract.” He

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testified the litigation was unsuccessful. Gary asserts that his testimony

linked the payment to attorney fees incurred during the marriage. As such,

Gary argues that the debt was presumed community and that he was allowed

reimbursement in the amount of $13,876, representing one-half of the

separate funds used. Accordingly, Gary asserts that the trial court’s adoption

of the special master’s granting of his reimbursement claim was correct.

Legal fees incurred during a marriage are a community obligation.

The use of Gary’s separate property to pay such legal fees entitled him to

reimbursement equal to one-half of the amount paid. Accordingly, for the

same reason we affirmed the trial court’s ruling on Gary’s reimbursement

claim no. 3, we affirm the trial court’s ruling on Gary’s reimbursement claim

no. 8.

Melodye’s Reimbursement Claim for Health Care Premiums

Through her claim no. 16, Melodye seeks reimbursement for health

care premiums reimbursed to Gary that were actually paid by PFC. She

asserts that she paid Gary a portion of health insurance premiums pursuant

to a prior trial court order in this matter. Melodye asserts that she has now

discovered that PFC paid the health care premiums rather than Gary; thus,

she should be reimbursed for the $2,373.25 she paid to Gary.

Melodye asserts that the adoption by the trial court of the special

master’s recommendation on this issue should be reversed and her

reimbursement claim no. 16 should be granted in the amount of $2,373.25.

Gary asserts that the trial court properly denied Melodye’s

reimbursement claim. He notes that the transaction on which this claim is

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based occurred in October 2010, more than a year after the community

terminated.

We note that Melodye relies entirely on her own testimony to attempt

to prove that only community funds were used, which is insufficient under

the jurisprudence to prove the nature of the funds used. See e.g. Licciardi v.

Licciardi, 16-289 (La. App. 5 Cir. 12/7/16), 207 So. 3d 638, writ denied, 17-

0015 (La. 2/10/17), 210 So. 3d 797. Furthermore, we agree with the special

master and the trial court that Melodye’s claim appears to be for payment of

a thing not due rather than a reimbursement claim related to the community.

Accordingly, we find that the trial court did not abuse its discretion in

denying Melodye’s reimbursement claim no. 16.

Marion State Bank Certificates of Deposit

Four large Marion State Bank certificates of deposit (Asset Items nos.

15, 16, 17, and 18) were allocated by the trial court. Assets nos. 15, 16, and

18 were apportioned between the parties as follows: $265,752.23 to Gary

and $2,606,641.71 to Melodye. Asset no. 17 was allocated entirely to Gary.

Melodye argues that this court should reallocate the certificates of

deposit to equalize the partition between the parties, and to the extent the

funds are inadequate, an appropriate equalization payment is required.

Because we find that all of the issues raised on appeal were decided

correctly and within the trial court’s discretion, we hold that the equalizing

payment should remain the same.

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CONCLUSION

For the foregoing reasons, the trial court’s rulings are affirmed. All

costs of this appeal are assessed to appellant.

AFFIRMED.

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