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In the Matter of Gabrielle Muller and William Muller

January 11, 2013

IN THE MATTER OF GABRIELLE MULLER AND WILLIAM MULLER


The opinion of the court was delivered by: Conboy, J.

10th Circuit Court - Derry Family Division

Argued: September 13, 2012

In this appeal from a final divorce decree issued by the 10th Circuit Court - Derry Family Division (Moore, J.), the respondent, William Muller, appeals the trial court's rulings apportioning the equity in the marital home and imputing $68,000 in annual income to him for child support purposes. We affirm in part, vacate in part, and remand.

The following facts are drawn from the record. The petitioner, Gabrielle Muller (Wife), and William Muller (Husband) married in October 2006 and have one minor child, born in July 2007. The parties purchased a home in Auburn in November 2006 with funds from a mortgage loan in the amount of $200,000 from Bank of America, N.A. and $186,332.23 in cash from the Husband's parents. The marital home is in the Husband's name. The parties agreed that at the time of trial the home was worth $340,000.

At trial, the parties disagreed as to whether the $186,332.23 from the

Husband's parents was a loan or a gift: the Husband asserted that the money was lent by his parents pursuant to an oral agreement; the Wife understood the money to be a gift, and asserted that the Husband's parents never indicated that they expected to be repaid. At the time the home was purchased, no second mortgage was filed with the registry of deeds.

In August 2009, nearly three years after the purchase of the marital home, the Husband executed a promissory note to his parents in the amount of $186,332.23, which was signed by the Husband and his father. The typewritten date on the note was November 22, 2006, but the Husband did not actually sign the note until August 18, 2009. Approximately one month later, in September 2009, the Wife filed for divorce. On October 14, 2009, the Husband filed with the registry of deeds an undated mortgage deed to his parents, which referenced a November 22, 2006 promissory note. Only the Husband signed the mortgage deed. The deed was attested to by a notary who did not indicate when the Husband signed it.

Eleven months before trial, the Husband was terminated from his job for poor job performance after multiple warnings. He remained unemployed up to the time of trial.

After a final evidentiary hearing, the trial court awarded the Wife a fault- based divorce pursuant to RSA 458:7, V (2004) (fault based on treatment so as to seriously injure health or endanger reason). In allocating the marital debt, the trial court ruled that the Husband was to be "solely responsible for any obligation due his parents relative to the marital residence." The court ordered that the residence "shall immediately be placed on the market for sale . . . at a reasonably competitive price," which the court expected would "maximize[ ] the net proceeds after payment of the first mortgage, taxes, and standard closing costs." (Emphasis added.) The court ordered "the net proceeds of the property" to be "divided equally between the parties." It continued: "In entering the aforementioned order, this Court is entering a specific finding that it does not find the [Husband's] representations that the parties agreed to [a] $180,000 loan from the [Husband's] parents to be credible." After marshaling the factual bases for its opinion that the Husband and his parents drafted the promissory note and second mortgage in "an attempt to divest the [Wife] of any interest in the marital residence," the trial court ruled that the note and mortgage did not "evidence a valid debt." The court concluded its order evenly dividing the equity in the marital residence by noting:

Due to the fact that this Court is entering a finding that [the Husband's parents'] contribution to the marital residence is not recognized as a debt this Court is left with no other option than to determine that it was initially a gift to the [Husband] and as such has no bearing on the disposition/division of the equity in the marital residence.

The court also found the Husband voluntarily unemployed/underemployed (hereinafter "unemployed"), and, in calculating child support, imputed $68,000 in annual income to him.

On appeal, the Husband argues that: (1) the trial court erred as a matter of law by effectively ordering the parties to disregard the $186,332.23 promissory note and mortgage deed to the Husband's parents; (2) the trial court unsustainably exercised its discretion by failing to award the Husband the $186,332.23 payment from the Husband's parents in view of the fact that the court characterized it as a gift; (3) the trial court unsustainably exercised its discretion in awarding the Wife fifty percent of the equity in the marital home; and (4) the trial court's finding that the Husband was voluntarily unemployed and its decision to impute $68,000 in annual income to him were legally erroneous and unsupported by the record.

We first address the Husband's argument that the trial court erred as a matter of law by disregarding the Husband's parents' interest in the marital residence. He asserts that: (1) the family division lacked subject matter jurisdiction to effectively invalidate the parents' mortgage deed and promissory note, since disputed claims to marital real estate asserted by third parties must be brought in the superior court in the first instance; (2) the court's order, effectively abolishing the Husband's parents' interest, is not binding upon the parents, since they were necessary parties to the proceeding, but did not participate (nor could they have, since the family division lacks jurisdiction over them); (3) the order vitiating the Husband's parents' property interest in the marital residence was entered without due process of law, in violation of their fundamental rights; and (4) the court's order that the marital home be sold cannot be effectuated as a practical matter since clear title could not be conveyed while the Husband's parents continue to hold a mortgage on the property.

The Wife responds that the trial court did not err when it ordered the sale of the marital residence and distribution of the resulting equity without regard to the Husband's parents' interest because "the property was clearly an asset of the marriage, however encumbered, and clearly available for disposition as entered by the trial [c]court." She agrees with the Husband that the trial court "invalidated" the Husband's parents' promissory note and mortgage deed, but contends that the recorded instruments "should not operate to invalidate the trial [c]court's [o]rder to sell the marital home," ...


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