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Knecht v. Palmer

Florida Court of Appeals, Fifth District

August 3, 2018

JOSEPH S. KNECHT, Appellant,


          Appeal from the Circuit Court for St. Johns County, John M. Alexander, Judge.

          Michael M. Giel, of Giel Family Law, P.A., Jacksonville, for Appellant.

          Michael J. Korn, of Korn & Zehmer, P.A., Jacksonville, and Dennis E. Guidi, of Harris Guidi Rosner, P.A., Jacksonville, for Appellee.

          COHEN, C.J.

         Joseph Knecht ("Former Husband") appeals the final judgment dissolving his three-year marriage to Evangelina Palmer ("Former Wife"), arguing that the trial court erred in its classification of certain assets as marital or nonmarital, its equitable distribution of the marital property, and its denial of his request for attorney's fees. He also challenges certain language in the final judgment retaining jurisdiction to modify the final judgment. We affirm in part, reverse in part, and remand for reconsideration of Former Husband's request for attorney's fees and to strike the language in the final judgment retaining jurisdiction.

         Both parties were previously married. Former Wife, a self-employed realtor, entered this marriage with significant assets, while Former Husband, a Certified Public Accountant ("CPA"), entered with significant debt. The primary issue on appeal is the characterization of appreciation in a home purchased during the marriage for $412, 000. The down payment for the home came exclusively from Former Wife's premarital assets, the title to the home and accompanying debt were exclusively in Former Wife's name, and during the marriage, all the mortgage payments were made from Former Wife's premarital assets.

         The parties remodeled the home, spending more than $500, 000 on the project. Despite having over $912, 000 invested in the home, the parties agreed that its value at the time of the divorce was $575, 000. Former Husband claimed entitlement to one-half of the $163, 000 appreciated value of the home, the difference between the agreed value and the purchase price. Even though he acknowledged that virtually all the money used for the renovations came from Former Wife's nonmarital assets, Former Husband argued that those monies had been commingled into a joint account before being used on the renovations. Specifically, the funds used to pay for the renovations were taken from Former Wife's premarital trust and deposited into a business account that she owned individually but on which Former Husband was an authorized signer. The funds were then transferred from the business account into a joint checking account, from which the funds were used to pay for the renovations. Former Wife testified that she transferred the funds in that manner at Former Husband's direction. Furthermore, the evidence is undisputed that Former Husband deposited some monies into the joint checking account, albeit a relatively small amount.[1]

         Another issue on appeal is the classification of what was termed the "Church Art Note." Former Wife's first husband, who passed away, had accumulated a substantial art collection. Before the parties in this case married, Former Wife had negotiated with a church to purchase certain artwork. The negotiations resulted in Former Wife holding a note for monthly payments from the church. Former Husband claimed that he assisted in negotiating the terms of the note, and that, in return, Former Wife agreed to pay him twenty percent of the value of the note.[2]

         The trial court entered a final judgment dissolving the marriage and rejecting Former Husband's claims for additional alimony, one-half of the appreciated value in the home, a percentage of monies owed to Former Wife on the note, and request for attorney's fees.[3] In doing so, the court found that: Former Wife entered the marriage with substantial nonmarital assets; Former Husband entered the marriage with substantial nonmarital debt; the marriage was short term; Former Wife purchased the home and funded the renovations with her premarital assets; and it would be inequitable to award Former Husband one-half of the appreciation in the home.

         Former Husband subsequently moved for rehearing. The trial court entered a written order denying the motion and making the following additional findings: Former Husband spent over $200, 000 on his personal living expenses during the marriage while earning only $30, 000 to $40, 000 per year; Former Wife's liquid assets decreased from $1.1 million to $350, 000 during the marriage; the funds deposited into the joint checking account used to pay for the renovations were entirely from Former Wife's separate, nonmarital accounts; and Former Husband clearly took financial advantage of Former Wife.[4] This appeal followed.

         We agree with Former Husband that the trial court incorrectly characterized the funds used for the renovations as nonmarital. Former Wife commingled those monies by placing them into a joint checking account she held with Former Husband from which the renovations were then funded. "All personal property titled jointly by the parties as tenants by the entireties [sic], whether acquired prior to or during the marriage, shall be presumed to be a marital asset." § 61.075(6)(a)3., Fla. Stat. (2015). It was also undisputed that Former Husband contributed some monies into the joint checking account. "[W]hen one spouse deposits funds into a joint account where they are commingled with other funds so as to become untraceable, a presumption is created that the spouse made a gift to the other spouse of an undivided one-half interest in the funds." Sorgen v. Sorgen, 162 So.3d 45, 47 (Fla. 4th DCA 2014) (quoting Williams v. Williams, 686 So.2d 805, 808 (Fla. 4th DCA 1997)). In making its findings, the court failed to apply the proper burdens of proof.[5]

         Nonetheless, we affirm on this issue because this was a case which called for the unequal distribution of marital assets effectuated in the final judgment. Section 61.075(1), Florida Statutes (2015), provides in pertinent part:

[I]n distributing the marital assets and liabilities between the parties, the court must begin with the premise that the distribution should be equal, unless there is a justification for an unequal ...

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