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Dotson v. Dotson

Court of Appeals of Kentucky

June 9, 2017

COLETTE DOTSON APPELLANT/CROSS-APPELLEE
v.
DARREN DOTSON APPELLEE/CROSS-APPELLANT

         APPEAL AND CROSS-APPEAL FROM JEFFERSON CIRCUIT COURT HONORABLE DONNA DELAHANTY, JUDGE ACTION NO. 12-CI-502147

          BRIEF FOR APPELLANT: Armand I. Judah Louisville, Kentucky

          BRIEF FOR APPELLEE: Justin R. Key Louisville, Kentucky

          BEFORE: DIXON, JONES, AND J. LAMBERT, JUDGES.

          OPINION

          JONES, JUDGE.

         This appeal and cross-appeal arise out of an order from the Jefferson Circuit Court classifying and dividing the parties' assets following their dissolution of marriage. Specifically, the parties take issue with the trial court's designation and division of certain stock Colette acquired as part of her employment. For the reasons more fully explained below, we affirm.

         I. Background

         Colette began working at United Parcel Service ("UPS") approximately nine years before she married Darren in 1996. During this nine-year period, Colette acquired approximately 647 shares of Class A common UPS stock. Colette maintained ownership of this stock after she married Darren. In 1999, three years into the parties' marriage, UPS's stock split. This doubled the number of Colette's pre-marital shares from 647 to 1, 294.

         At the time of the parties' divorce, Colette had been working for UPS for twenty-four years, during which time Colette continued to acquire and sell UPS stock. In addition to UPS's retirement savings plan and pension plan, Colette is eligible for UPS's Management Incentive Program ("MIP"). If Colette's management team recommends her for participation in the program she receives an annual award. This award is paid in the form of Restricted Performance Unit ("RPU") stocks. The MIP handbook defines RPUs as "bookkeeping entries in an account set up for [the employee] representing the value of UPS Class A shares." As the program is "designed to reward long-term commitment to UPS, " the stock represented by the RPUs is not immediately available to UPS employees. Rather, the RPUs are set to vest over a five-year period, and if an employee leaves UPS for any reason before the RPU vests, that employee forfeits his or her RPUs.

         On June 25, 2012, Colette petitioned for divorce. On March 28, 2013, the trial court entered an order dissolving the parties' marriage, but reserved issues related to property distribution for further determination. The parties were not able to reach a mutually agreeable property settlement. As a result, the trial court conducted a hearing at which it received testimony and other evidence related to the parties' property, including their respective 401(k) accounts, pension plans, and Roth IRA accounts; division of personal property; the sale and division of equity in their two jointly-owned residences; and 2012 tax liabilities. This appeal concerns only the proper designation and division of Colette's UPS stock and RPUs.

         The trial court ultimately found that all of Colette's UPS stock was marital property except for the 647 shares she owned prior to the parties' marriage. It refused to consider Colette's argument about the split on the basis that Colette did not produce any evidence "as to the date of the alleged split." Accordingly, the court restored only the 647 shares of stock to Colette as non-marital property. It classified the other shares as marital property.

         The trial court also found that all the non-vested MIP incentives are marital, and therefore, subject to division if they vest in the future. It explained:

[Colette] presented evidence indicating that, in addition to her stock, she is eligible for an additional MIP incentive that enables her to obtain additional employment awards. The MIP incentive was clearly earned during the course of the marriage. The case cited by [Darren] is totally on point wherein the Court of Appeals held that "the value of appellant's vested right of future participation in an employment benefit plan was a valuable deferred compensation right even though it might never be fully exercised." McGinnis v. McGinnis, 920 S.W.2d 68 (Ky. App. 1995). As noted, the award has been earned during the marriage, thus it is marital. If the award never vests and/or no benefit is ever realized that does not destroy the nature of same. In the event some benefit is ...

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