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Scanlon v. Scanlon

Court of Appeals of Kentucky

February 2, 2018



          BRIEF FOR APPELLANT: Valerie S. Kershaw Lexington, Kentucky

          BRIEF FOR APPELLEE: Martha A. Rosenberg Lexington, Kentucky



          JONES, JUDGE:

         Appellant, Michael J. Scanlon, appeals an order of the Fayette Circuit Court which found that a canopy bar located in real property assigned to Appellee, Margaret T. Scanlon, was a fixture and, therefore, belonged to her. Following review of the record and applicable law, we reverse and remand to Fayette Circuit Court.

         I. Background

         Michael ("Mike") and Margaret ("Missy") were divorced on May 5, 2014. Prior to the decree of dissolution being entered, Mike and Missy had negotiated and executed a separation agreement, which divided the parties' many assets. A mediated agreement, which was incorporated into the separation agreement, indicated that Missy would retain the real property located at 535, 540 and 561 E. Second Street in Lexington, Kentucky (the "Fleetwood Garage"), which had a stated fair market value of $1.585 million. The agreement further provided that "[u]nless otherwise noted herein, everything located in the Fleetwood [G]arage" would go to Mike. Items specifically excluded were certain vehicles and furniture from the parties' marital residence that were being stored in the Fleetwood Garage. Per the terms of the separation agreement, Mike leased the Fleetwood Garage from Missy through November 2014. Among the items Mike took with him when vacating the Fleetwood Garage was a free-standing canopy bar (the "Bar").

         In February of 2015, Missy moved the trial court for an order requiring Mike to return the Bar to her.[1] In her motion, Missy noted that one of the appraisal reports on the Fleetwood Garage described the Bar as a built-in wet bar in its description of improvements to the real estate. Accordingly, Missy argued that the Bar was a fixture to the Fleetwood Garage and should not have been removed by Mike. In Mike's response, he pointed out that a different appraisal report, which had been done at Missy's request to value the personal property located in the Fleetwood Garage, included the Bar. Mike further noted that, contrary to Missy's assertions, the Bar was free-standing and had not been bolted to the floor or walls. Based on his belief that the Bar was personalty and the fact that Missy had not been specifically awarded the Bar in the separation agreement, Mike contended that the Bar was his rightful property.

         The parties attempted to resolve the matter between themselves, but were unable to do so. At the trial court's request, Mike submitted a memorandum on the issue of whether the Bar was a fixture, personalty, or a trade fixture on October 28, 2015. In that memorandum, Mike maintained his argument that the Bar was personalty. To support this, Mike again noted that the Bar was freestanding and that its only connection to the structure of the Fleetwood Garage was a cold-water line used to provide water to a sink built in to the Bar. In the alternative, Mike argued that if the trial court found the Bar to be a fixture, it must be considered a trade fixture because he had used the Bar to promote his auto business and other business ventures.

         The trial court conducted hearings on the matter on October 29, 2015, and January 28, 2016. Mr. Ambrose Wilson, who had been hired by Mike to help him move the Bar to its new location, testified that the Bar was comprised of multiple pieces so that it could be disassembled and relocated when desired. He further indicated that the Bar was free-standing and finished on all four sides. Ambrose stated that removing the Bar had left no damage to the walls or floor of the Fleetwood Garage. He noted that while a water line had been connected to the sink in the Bar, the sink was not attached to the wall, but was built in to the Bar itself.

         Missy testified that she and Mike had purchased the Bar shortly after the Fleetwood Garage was built. She stated that Mike had purchased the Bar to enhance the Fleetwood Garage so that the Garage could be used for social functions, and had even customized the Bar to include a glass etching reading "Fleetwood Garage." When questioned about the purpose of the Fleetwood Garage, Missy stated that they had used it to store automobiles and collectibles and to host wedding receptions, political fundraisers, and charitable events. Missy initially testified that a sink had been built in to the wall to accommodate the Bar; however, she later stated that she was unsure if the sink was part of the Bar or if it had been built in to the Garage. Missy acknowledged that the appraiser of personal property, Mr. Graham, had included the Bar in his appraisal report and had not included other fixtures to the Fleetwood Garage, such as toilets and ceiling fans, but she noted that the appraisal of the Fleetwood Garage had categorized the Bar as an improvement to the real property. She testified that when she entered into the separation agreement, she was under the assumption that the Bar would be included as part of Fleetwood Garage.

         Mr. Ben Campbell, who had done appraisals of the Fleetwood Garage in September of 2012 and April of 2014, testified next. He stated that for both the 2012 appraisal and the 2014 appraisal he had utilized a cost approach and a sales comparison approach. Ben indicated that in 2012, he had relied more on the cost-approach because he did not feel like comparable sales were as good as they could have been. Under the cost approach, the total value of the Fleetwood Garage came to $1.76 million. The Bar was included as a line-item in that total and valued at $60, 000.[2] Ben stated that when he appraised the Fleetwood Garage in 2014, he relied more on the sales comparison approach and valued the Fleetwood Garage at $1.585 million. Under the sales comparison approach, Ben did not make an adjustment for the Bar. In comparison, Ben's cost-approach valuation of the Fleetwood Garage in 2014 did make an adjustment for the Bar, and valued the Fleetwood Garage at $1.695 million. Ben stated that, in conducting the cost-approach valuation, fixtures such as fans were included in the total. Ben acknowledged that he referred to the Bar as being built along a side wall in both the 2012 and 2014 appraisal reports. However, he testified that he believed the Bar was attached to the Fleetwood Garage only through plumbing, and when he viewed a picture of the Bar, he acknowledged that the Bar was standing out from the wall, but had a plumbing line running to it.

         Mike was the last to testify. He stated that when he entered into the separation agreement, he believed that he would be taking the Bar with him. Mike indicated that this belief was based on the fact that the Bar had never been discussed as not being included as personal property located in the Fleetwood Garage and because the Bar had been valued as personal property in the appraisal report done by Mr. Graham. Mike testified that the sink was already built into the Bar when he and Missy purchased it. When he moved the Bar into the Fleetwood Garage, Mike hooked it up to a cold-water nozzle after assembling it. Mike stated that the only way the Bar had been attached to Fleetwood Garage was ...

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