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Atkins v. Atkins

Supreme Court of West Virginia

January 14, 2019

Teddy Atkins II, Respondent Below, Petitioner
v.
Angela Atkins, Petitioner Below, Respondent

          Kanawha County 16-D-361

          MEMORANDUM DECISION

         Petitioner Teddy Atkins II, by counsel Tim C. Carrico, appeals the Circuit Court of Kanawha County's December 15, 2017, order denying his petition for appeal from a family court order on equitable distribution following the parties' divorce. Respondent Angela Atkins, by counsel Mark A. Swartz, filed a response in support of the circuit court's order. Petitioner filed a reply. On appeal, petitioner argues that the lower courts erred in determining that two businesses, Angela's Salon LTD ("Angela's Salon") and Rare Form LLC ("Rare Form"), were not marital assets subject to equitable distribution.

         This Court has considered the parties' briefs and the record on appeal. The facts and legal arguments are adequately presented, and the decisional process would not be significantly aided by oral argument. Upon consideration of the standard of review, the briefs, and the record presented, the Court finds no substantial question of law and no prejudicial error. For these reasons, a memorandum decision affirming the order of the circuit court is appropriate under Rule 21 of the Rules of Appellate Procedure.

         On October 10, 2009, the parties married.[1] Respondent initiated divorce proceedings on March 11, 2016, and by "Agreed Bifurcated Divorce Order," the parties were divorced on December 22, 2016. The issue of equitable distribution of the marital estate was bifurcated from the divorce, however, and considered at a final hearing before the family court on June 7, 2017. At this hearing, both parties testified to their involvement with and purported interest in the two businesses that are the subject of this appeal.

         Respondent explained that she incorporated Angela's Salon in 2006, more than three years prior to the parties' marriage. At the time of incorporation, all shares in the salon were issued to respondent, and she continuously owned those shares throughout the marriage. Respondent was diagnosed with leukemia in 2011, and became very ill.[2] Following respondent's diagnosis, petitioner obtained his cosmetology license and began working at Angela's Salon. Petitioner received wages from the salon for his services. Additionally, petitioner signed tax returns as sole shareholder during respondent's illness, but respondent made clear that she did not transfer stock in the business to petitioner:

Q. Okay. At any time during your marriage, up from the start of your marriage to today, did you sign anything, a stock certificate, an assignment, a bill of sale, any kind of document transferring any bit of your stock to [petitioner]?
A. No.

Petitioner confirmed that there was no stock transfer:

Q. . . . Can you show me a piece of paper, today, that [respondent] signed where she transferred stock in Angela's [S]alon to you?
A. I cannot[.]

         Respondent also testified that she formed Rare Form in July of 2010, approximately one year after the parties married but prior to her cancer diagnosis, in order to purchase the building out of which Angela's Salon operates. Respondent was Rare Form's sole member at the time of its formation. To purchase the building and capitalize Rare Form, respondent, who was married prior to her marriage to petitioner, used the proceeds from the sale of her prior marital home. Specifically, respondent received $62, 626.27 following the sale of this prior marital home. She used $29, 533.52 to close on the building owned by Rare Form and used most of the remaining funds to make improvements to the building.[3] Petitioner invested no funds into Rare Form.

         At the time the Rare Form building was purchased, respondent signed a "Declaration of Limited Liability Company or Limited Liability Partnership and Authority to Borrow" form as Rare Form's member, and she is listed on that document as owning 100% of the company. Petitioner's name is not on this form or the closing documents, including the promissory note. Petitioner did, however, personally guarantee the loan to Rare Form. Additionally, the parties refinanced the loan in 2015, and each signed the refinancing documents as members of Rare Form. Respondent indicated that she added petitioner as a member of Rare Form in 2011 following her diagnosis, but she removed him in 2016 at the time of the parties' separation.

         As with her testimony regarding Angela's Salon, respondent confirmed that she did not transfer equity in Rare Form to petitioner:

Q. Did you sign any kind of assignment, transfer or deed or anything of that nature transferring any piece of your equity contribution to ...

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