                                                                              FILED
                                                                          Jun 30 2020, 6:38 am

                                                                              CLERK
                                                                          Indiana Supreme Court
                                                                             Court of Appeals
                                                                               and Tax Court




      ATTORNEYS FOR APPELLANT                                    ATTORNEYS FOR APPELLEE
      Andrew Z. Soshnick                                         Brian K. Zoeller
      Tina Dukandar                                              Nicole Makris
      Faegre Drinker Biddle & Reath LLP                          Cohen & Malad, LLP
      Indianapolis, Indiana                                      Indianapolis, Indiana



                                                  IN THE
          COURT OF APPEALS OF INDIANA

      Scott A. Bringle,                                          June 30, 2020
      Appellant/Cross-Appellee-Respondent,                       Court of Appeals Case No.
                                                                 19A-DN-3007
              v.                                                 Appeal from the Decatur Circuit
                                                                 Court
      Traci A. Bringle,                                          The Honorable Timothy B. Day,
      Appellee/Cross-Appellant-Petitioner.                       Judge
                                                                 Trial Court Cause No.
                                                                 16C01-1710-DN-560



      Najam, Judge.


                                        Statement of the Case
[1]   Scott A. Bringle (“Husband”) appeals and Traci A. Bringle (“Wife”) cross-

      appeals the trial court’s decree of dissolution of their marriage. Husband and

      Wife raise the following issues for our review:



      Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020                           Page 1 of 28
              1.       Whether the trial court erred when it did not include as a
                       marital liability a debt owed by Husband to an S
                       corporation in which Husband is the sole shareholder.


              2.       Whether the court erred when it deviated from the
                       presumption of an equal division of the martial estate.


              3.       Whether the court erred when it did not order Husband to
                       pay Wife’s attorney’s fees.


[2]   We affirm.


                                  Facts and Procedural History
[3]   Prior to their marriage, Husband formed Center Line Precision Technology,

      Inc. (“the Company”), a contract manufacturer engaged primarily in the

      precision machining and manufacturing of orthopedic and other medical

      devices. The Company is organized for tax purposes as an S corporation in

      which Husband is the sole shareholder. During the marriage, and prior to the

      filing of the petition for dissolution, the Company “sold” Husband the real

      estate where the Company is located (the “business real estate”) for $480,000.

      In 2017, the Company transferred the business real estate to Bringle Properties,

      LLC, an entity owned by Husband and his son from a previous marriage. The

      Company also paid various personal expenses for Husband. Those transactions

      would later appear as a $659,707 receivable “due from shareholder” on the

      Company’s balance sheet. Appellant’s App. Vol. 2 at 39 n.10.




      Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020             Page 2 of 28
[4]   Thereafter, on October 31, 2017, Wife filed a petition to dissolve the marriage.

      At the final hearing two years later, in October 2019, Husband acknowledged

      that he had “mingled personal and business expenses.” Tr. at 147. Husband

      testified that during the marriage and while the dissolution was pending he paid

      personal bills “out of the Company” and explained that it was advantageous to

      “run the bills through the Company” because those payments were treated as

      “dividends” (i.e., distributions) rather than earned income subject to payroll

      taxes. Id. Husband testified that the transfer of the business real estate and the

      personal expenses paid by the Company were shown as “shareholder debt” on

      the Company’s balance sheet “for tax purposes” to avoid having to pay income

      taxes “at that time.” Id. Husband also testified that the shareholder debt would

      “be paid whenever.” Id. at 147, 161-62.


[5]   In connection with the dissolution, Husband and Wife jointly retained a

      business valuation company, Houlihan Valuation Advisors (“Houlihan”), to

      appraise the fair market value of the equity interest in the business. The

      Houlihan valuation arrived at a $1,050,000 opinion of value for the business

      using a combination of market-based and income-based valuation methods. In

      its valuation, Houlihan stated that “[t]he $659,707 note due from shareholder

      would be deemed a non-operational asset. We understand this comprises about

      $480,000 amount due from the transfer of the [business real estate] to Bringle

      Properties, LLC and about $180,000 for personal expenses paid by the

      Company.” Appellant’s App. Vol. 2 at 41. The valuation report also included

      the following footnote:


      Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020         Page 3 of 28
              We have included a “Due from Shareholder” amount of
              $659,707 in the value of [the Company]. According to
              [Husband] and his CPA, this consists of the cost of the [business
              real estate] of $480,000 plus other personal obligations paid by
              the [Company]. Since the receivable is included in the value of the
              [Company,] a liability of $659,707 to the [Company] should be included
              in the marital balance sheet.


      Id. at 39 n.10 (emphasis added).


[6]   Following the final hearing, the trial court entered its decree dissolving the

      marriage of the parties. In its decree, the court found and concluded, in

      relevant part, with respect to the division and distribution of the marital estate,

      as follows:


              8. [Wife] requested an unequal division of the marital estate in
              her favor based upon a disparity between the parties’ incomes
              and earning abilit[ies]. The evidence showed that [Wife] is a
              licensed real estate agent. She re-entered that vocation while this
              matter was pending. She received the benefit of temporary
              maintenance ordered by the Court to compensate for her
              diminished earning ability. As of the final hearing, [Wife] was
              very active in the real estate market, having sold in excess of
              [$4,000,000] in real estate while this matter was pending. Based
              upon this and the other findings herein, the Court does not
              determine that [Wife] should receive more than the presumptive
              equal division of the “marital pot.”


              9. [Husband] also requested an unequal division of the marital
              estate in his favor. His reasons included the fact that he had
              owned/acquired most of the marital assets prior to the marriage
              without contribution from [Wife]. He further took exception to
              the value placed upon his business . . . . He argued that his


      Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020            Page 4 of 28
        business had no value as an ongoing business entity because he
        was so heavily involved in the operations.


        10. The Court finds that [Husband] did enter this marriage with
        most of the marital assets, including the business and the real
        estate from where the business operates. The Court also
        recognizes that [Husband] is a significant part of the business at
        issue in this dissolution, a business he started many years prior to
        the parties’ marriage. [Wife] did bring assets to the marriage and
        essentially contributed to the marriage what she had. The Court
        is also considering that the nature of the marital estate will
        require [Husband] to acquire a significant amount of cash to pay
        to [Wife] her share of the marital estate[,] which will affect his
        overall financial well-being for a significant amount of time.


        11. Based upon the evidence presented, a deviation from the
        presumptive equal division of the martial estate should be made.
        An equitable division of the marital estate would be a division of
        [60%] of the net marital estate to [Husband] and [40%] to
        Wife . . . .


Id. at 22-23. The court awarded the Company to Husband valued at the

Houlihan appraised value of $1,050,000 but did not recognize the $659,707

receivable due from shareholder or shareholder debt as a liability of the marital

estate. The court ordered Husband to pay Wife a reconciliation payment of

$361,998.56, and the court ordered Husband and Wife to pay their own

attorneys’ fees. This appeal ensued.




Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020          Page 5 of 28
                                      Discussion and Decision
                                              Standard of Review

[7]   Dissolution actions invoke the inherent equitable and discretionary authority of

      our trial courts, and, as such, we review their decisions with “substantial

      deference.” See, e.g., R.W. v. M.D. (In re Visitation of L-A.D.W.), 38 N.E.3d 993,

      998 (Ind. 2015). Here, the trial court supported its exercise of that authority

      with findings of fact and conclusions thereon following an evidentiary hearing.

      As our Supreme Court has stated:


              The trial court’s findings were entered pursuant to Ind. Trial Rule
              52(A) which prohibits a reviewing court on appeal from setting
              aside the trial court's judgment “unless clearly erroneous.” The
              court on appeal is further required to give “due regard . . . to the
              opportunity of the trial court to judge the credibility of the
              witnesses.” When a trial court has made special findings of fact,
              as it did in this case, its judgment is clearly erroneous only if (i)
              its findings of fact do not support its conclusions of law or (ii) its
              conclusions of law do not support its judgment. Estate of Reasor v.
              Putnam County, 635 N.E.2d 153, 158 (Ind. 1994). Findings are
              clearly erroneous only when the record contains no facts to
              support them either directly or by inference. Reasor, 635 N.E.2d
              at 158.


              When reviewing valuation decisions of trial courts in dissolution
              actions, a similar standard of review has been enunciated: that
              the trial court has broad discretion in ascertaining the value of
              property in a dissolution action, and its valuation will not be
              disturbed absent an abuse of that discretion. Cleary v. Cleary, 582
              N.E.2d 851, 852 (Ind. Ct. App. 1991). The trial court does not
              abuse its discretion if there is sufficient evidence and reasonable
              inferences therefrom to support the result. Id. In other words,

      Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020           Page 6 of 28
              we will not reverse the trial court unless the decision is clearly
              against the logic and effect of the facts and circumstances before
              it. Porter v. Porter, 526 N.E.2d 219, 222 (Ind. Ct. App. 1988),
              trans. denied. A reviewing court will not weigh evidence, but will
              consider the evidence in a light most favorable to the judgment.
              Skinner v. Skinner, 644 N.E.2d 141, 143 (Ind. Ct. App. 1994).


      Quillen v. Quillen, 671 N.E.2d 98, 102 (Ind. 1996).


[8]   In addition, here, the trial court entered special findings sua sponte, and those

      findings do not expressly address the shareholder debt to the Company. Where

      a court enters findings sua sponte, the Trial Rule 52(A) standard of review

      applies to those findings, and the general judgment standard applies to any

      matter not covered by those findings. Crider v. Crider, 26 N.E.3d 1045, 1047

      (Ind. Ct. App. 2015). For any issue not covered by the court’s findings, we

      apply the general judgment standard and will affirm if it can be sustained on

      any legal theory supported by the evidence. Id.


                       Issue One: The “Shareholder Debt” to the Company

                                            The Status Conference


[9]   Husband contends that during a November 2019 status conference the trial

      court “ma[de] clear that it mistakenly thought” that Husband’s debt to the

      Company was “taken into account” in the Houlihan valuation and that this was

      an “erroneous assumption.” Appellant’s Br. at 7, 11. Husband further alleges

      that, during the status conference, the trial court acknowledged Husband owed

      a personal debt to the Company but then did not include that debt in the decree


      Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020          Page 7 of 28
       of dissolution. Husband also suggests that the trial court “appears to have

       ignored” the Houlihan valuation and the trial testimony of the Houlihan

       appraiser, and Husband alludes to “overall confusion,” which he seems to

       attribute to the court. Id. at 11. We need not attempt to understand this

       argument. Husband did not include a copy of the status conference transcript

       in the record on appeal. And, in any event, we would decline to give any

       consideration or weight to Husband’s characterization and speculation about

       the meaning of the court’s remarks during a status conference. This is at best

       parol evidence.


[10]   If the statement Husband attributes to the trial court were in evidence, the

       statement would indicate, if anything, that the court was aware of Husband’s

       debt to the Company. The Houlihan valuation did take Husband’s debt to the

       Company into account, Husband’s debt to the Company appears on the

       Company’s balance sheet, and Husband’s debt to the Company was addressed

       during testimony at the final hearing. There is no evidence that the trial court

       misunderstood the Houlihan valuation or that the court was confused or that it

       overlooked or failed to consider Husband’s debt to the Company. The first

       issue on appeal is not what the court said or meant at a status conference but

       whether the court erred when it did not include Husband’s debt to the

       Company as a current liability in the marital balance sheet.




       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020        Page 8 of 28
                                            The Houlihan Footnote


[11]   Husband asserts that the trial court erred when it did not include the

       shareholder debt as a liability of the marital estate. Husband’s argument

       emphasizes a footnote contained in the Houlihan valuation. Appellant’s Br. at

       7, 9. The footnote states that, since Husband’s $659,707 receivable due from

       shareholder was included as an asset of the business, “a liability of $659,707 to

       the [Company] should be included in the marital balance sheet.” Appellant’s

       App. Vol. 2 at 39 n.10. As Husband frames the issue, the court simply erred

       when it did not comply with the Houlihan footnote and include Husband’s debt

       as a marital liability. Husband describes the debt as an “undisputed marital

       liability” that “needed to be included.” Appellant’s Br. at 7. Husband assumes

       that the footnote is dispositive.


[12]   The comment in the footnote reflects routine accounting practice, but the

       footnote does not end the trial court’s responsibility in the first instance or our

       inquiry on appeal as it relates to the division of marital property. A division of

       marital property often requires consideration of factors beyond the four corners

       of the marital balance sheet. There may be, as here, facts not apparent on the

       face of the balance sheet that should be taken into account and weighed. A

       division of property does not require the mechanical, robotic application of

       accounting principles. The touchstone and ultimate consideration is whether

       the division is just and reasonable. It is, therefore, entirely appropriate for a

       trial court to look beneath the surface of bookkeeping entries and to consider

       the underlying facts.

       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020           Page 9 of 28
[13]   The parties retained Houlihan to appraise the fair market value of the

       Company, not to divide the marital estate. The Houlihan footnote was

       extraneous to the appraisal, a sidebar, and inconclusive insofar as the division

       of marital property is concerned. Indeed, in its “Assumptions and Limiting

       Conditions,” the Houlihan valuation contains an appropriate disclaimer that

       “[n]othing in this report constitutes legal or tax advice. We express no opinion

       as to legal matters.” Appellant’s App. Vol. 2 at 38.


[14]   The Houlihan appraisal also contains other disclaimers that limit its operation

       and effect. Under its “Assumptions and Limiting Conditions,” the appraisal

       also states that, “We have relied on historical and financial information

       provided to us by the Company, its owner(s), management and third parties.”

       Id. at 57. And the appraisal further states that, “We assume there are no hidden

       or unusual conditions regarding the Company’s assets or business interests.”

       Id. at 58. These are boilerplate provisions, but they demonstrate that the

       Houlihan “summary appraisal report” was limited in its scope and predicated

       on information provided by others that Houlihan accepted at face value. It

       was, however, the court’s responsibility not to take any evidence at face value

       and to consider all conditions regarding the Company’s assets and business

       interests. It was the court’s responsibility, not Houlihan’s, to consider and

       weigh all the evidence, including the testimony of the parties, the conduct of the

       parties, any unusual conditions regarding the Company’s assets or business

       interests, and to divide the property of the parties in a just and reasonable

       manner within the court’s equitable discretion. Ind. Code § 31-15-7-4 (2019);


       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020        Page 10 of 28
       see, e.g., Fobar v. Vonderahe, 771 N.E.2d 57, 60 (Ind. 2002). The Houlihan

       footnote is not dispositive.


                                              Husband’s Valuation


[15]   In its decree, the trial court found that Husband “took exception to the value

       placed upon his business,” Appellant’s App. Vol. 2 at 22, and he rejected the

       Houlihan appraisal. As the owner, Husband is entitled to his own opinion of

       the Company’s value. Husband prepared and introduced Exhibit D, consisting

       of a spreadsheet and a narrative explanation of his valuation. Id. at 65-67. On

       Husband’s spreadsheet, the line entitled “Debt owed to [the Company]” is

       blank. Id. at 65. And while Husband’s narrative refers to the shareholder debt

       as his debt to the Company, Husband expressly “excludes” the debt as a

       Company asset and states that the shareholder debt “must be deducted” from

       the value of the Company. Id. at 66. According to Husband, the Company

       would then have a $570,000 negative net worth, approximately $1.5 million less

       than the Houlihan valuation. Id.


[16]   Husband concedes that his accounting is “unorthodox.” Appellant’s Br. at 9.

       Indeed, his methodology is internally inconsistent if not incomprehensible. He

       confuses assets and liabilities, and he conflates himself with the Company.

       Husband’s valuation leaves at least two obvious questions unanswered: to

       whom is Husband’s debt owed if not to the Company, and why would that debt

       not be recorded as a Company asset? Husband’s valuation of the Company is

       based strictly upon his view that the business is worth “assets minus debts.”


       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020      Page 11 of 28
       Appellant’s App. Vol. 2 at 92. The trial court rejected Husband’s explanation

       and opinion of the Company’s value. Still, Husband’s valuation is significant

       evidence because his valuation would eliminate the shareholder debt as a

       Company asset, which supports an inference that Husband does not intend to

       pay it.


                                            The “Shareholder Debt”


[17]   Now, on appeal, Husband contends that the trial court overstated the value of

       the marital estate when it included the $659,707 receivable “due from

       shareholder” as an asset of the Company when it adopted the Houlihan

       valuation but did not include the shareholder debt as a marital liability in its

       recapitulation of the marital estate. Appellant’s Br. at 10. At the final hearing,

       Husband testified that the $659,707 he owed to the Company was a

       bookkeeping entry made for tax accounting purposes. Specifically, Husband

       testified that the $659,707 item shown on the Company’s balance sheet as “due

       from shareholder” was entered “for tax purposes” to avoid having “to pay

       income tax on that at that time,” and the shareholder debt was “to be paid

       whenever.” Tr. at 147. In other words, the bookkeeping entry was

       characterized as a loan to Husband because otherwise the receivable “due from

       shareholder” would have been taxed as a distribution of income.


[18]   Again, the Company is an S corporation in which Husband is the sole

       shareholder. “For income tax purposes, an S corporation owned by a single

       shareholder is a disregarded entity.” City of Kokomo v. Estate of Newton, 136


       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020         Page 12 of 28
       N.E.3d 1172, 1176 n.4 (Ind. Ct. App. 2019), trans. denied. That is, for tax

       accounting purposes, Husband and the Company are one and the same, which

       means that Husband owes the receivable “due from shareholder” to himself.


[19]   The Houlihan appraiser testified at the final hearing that she “relied on th[e]

       balance sheet” and “did not look at supporting documentation.” Tr. at 34.

       While the valuation alludes to a “note,” there is no evidence of a note in the

       record. While the absence of an actual note may not be decisive, there is also

       no evidence of interest payable on the shareholder debt, no repayment schedule,

       no due date, and no demand feature.


[20]   Husband’s argument relies upon the Company’s adjusted book value balance

       sheet as of October 31, 2017, which shows the “due from shareholder” as a

       current asset. Appellant’s Br. at 9. A current asset on the balance sheet is an

       asset with a final maturity of less than one year. Asset, Black’s Law Dictionary

       (11th ed. 2019). But the evidence is clear that the “due from shareholder” item

       is not, in fact, a current asset and, as such, is mischaracterized on the

       Company’s balance sheet. Husband does not suggest that he has any obligation

       or intention to pay this debt within one year or anytime in the foreseeable

       future. Rather, the “due from shareholder” item is unenforceable and open

       ended. Thus, while the “due from shareholder” might have been recorded as

       an “other asset,” it should not appear as a current asset on the Company’s

       balance sheet and, as explained below, neither should it be deemed a current

       liability on the marital balance sheet. While at the final hearing Husband

       disagreed with the Houlihan appraisal, on appeal Husband does not contest the

       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020           Page 13 of 28
       appraisal and accepts the characterization of the “due from shareholder” as a

       current asset on the Company’s balance sheet.


[21]   The trial court may consider the facts underlying a bookkeeping entry made for

       tax purposes. As we have noted, the receivable “due from shareholder” is an

       obligation that Husband owes to his wholly owned Company and, hence, to

       himself. This circumstance might explain Husband’s valuation of the Company

       as shown in Exhibit D. But Husband cannot be both a debtor and a creditor

       with respect to the same debt. A debt is an enforceable legal obligation. Here,

       Husband cannot require himself to pay the shareholder debt to his Company.

       Whether he repays the debt is in his discretion. Indeed, Husband testified that

       the shareholder debt is to be repaid “whenever,” which implies that when, if

       ever, the debt is paid is inconsequential and that it may never be repaid. These

       facts suggest and support an inference that, as a practical matter, the “sale” of

       the business real estate was a convenient and self-serving transaction which was

       booked as a shareholder loan for tax purposes, conveyed property from one

       closely held, related company to another, and did not create a collectable

       current asset or a corresponding current liability. The trial court resolved this

       conundrum, in part, by awarding the business real estate to husband, which

       largely offsets the receivable “due from shareholder” on the Company’s balance

       sheet.


[22]   Likewise, Husband has no apparent obligation to repay the Company for his

       personal expenses. Indeed, at the evidentiary hearing Husband did not even

       pretend to have an arm’s-length relationship with the Company. Instead, he

       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020        Page 14 of 28
       acknowledged that he “mingled” his personal and business finances, although

       the Company’s internal accountant kept track of his personal expenses.

       Husband continues to benefit from both the $180,000 in personal expenses the

       Company paid and from the rent the Company pays his other company, Bringle

       Properties, LLC.


[23]   In sum, Husband created most of the shareholder debt merely by transferring

       the business real estate from one closely held, related company to another. As

       the alter ego of his Company, Husband has no enforceable legal obligation to

       pay the debt to himself. Here the “debt” consists of a bookkeeping entry and is

       not otherwise documented. There is no evidence that this debt is, in fact,

       collectable. We note that the statute of limitations on a contract not in writing

       is six years, Ind. Code § 34-11-2-7 (2019), and the statute begins to run from the

       date the underlying obligation is due. See Smither v. Asset Acceptance, LLC, 919

       N.E.2d 1153, 1160 (Ind. Ct. App. 2010). So even if the purported debt were

       collectable, the statute of limitations will have run after six years, and the debt

       will become uncollectable by October 2023.


[24]   Having weighed the evidence, including Husband’s testimony, the trial court

       discounted the significance of a bookkeeping entry which, Husband testified,

       was merely an accounting device to avoid the payment of income taxes.

       Further, because Husband is both the debtor and the creditor, the liability is

       inherently unenforceable. Given that Husband owes the debt to the Company

       which he owns, the authority he cites in support of his argument on appeal is

       readily distinguishable. In Birkhimer v. Birkhimer, the marital debt at issue was a

       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020         Page 15 of 28
       legitimate debt owed to the wife’s father. 981 N.E.2d 111, 121 (Ind. Ct. App.

       2012). And in Crider, the debt at issue was an IRS tax liability of the marriage.

       26 N.E.3d at 1049-50. Again, here, Husband’s “debt” is not owed to another

       person or entity but to himself and may never be repaid.


                           The “Shareholder Debt” is a Contingent Liability


[25]   As we have already discussed, Husband contends that the trial court erred when

       it “failed to include [Husband’s] personal debt” and, thus, “fail[ed] to divide all

       marital property.” Appellant’s Br. at 7. But that conclusion is not as self-

       evident as Husband would have it. While on appeal Husband does not

       challenge the shareholder debt as an asset in the Company’s balance sheet,

       whether there is sufficient evidence to require a corresponding current liability in

       the marital balance sheet presents an entirely separate question.


[26]   The shareholder debt is a contingent liability. There is little relevant Indiana

       case law regarding the disposition of a contingent liability in divorce

       proceedings. See Luttrell v. Lutttrell, 994 N.E.2d 298, 303 (Ind. Ct. App. 2013).

       A “contingent liability” is a “liability that will occur only if a specific event

       happens”; it is a “liability that depends on the occurrence of a future and

       uncertain event.” Contingent Liability, Black’s Law Dictionary (11th ed. 2019).

       Payment of the shareholder debt is contingent upon whether or not Husband

       elects to pay it. The trial court heard Husband’s testimony, which disclosed a

       casual attitude toward the shareholder debt and which, according to Husband,

       could be paid “whenever.”


       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020           Page 16 of 28
[27]   Husband simply assumes that the shareholder debt is a current liability under

       the general rule that assets and liabilities should be matched, but on this record

       the trial court, in its sound judgment, was entitled to conclude otherwise. While

       the Houlihan appraisal did not contemplate any “unusual conditions regarding

       the Company’s assets or business interests,” Appellant’s App. Vol. 2 at 58, a

       trial court does not have the luxury to disregard “unusual conditions.” Instead,

       the court is required to consider and weigh all the facts and circumstances

       related to the assets and liabilities of the marriage.


[28]   Here the record reveals no assurance or certainty that Husband will pay the

       shareholder debt. As such, the debt is a potential or contingent liability that

       may or may not become due. Thus, the trial court is charged with evaluating

       the nature of the contingent liability to determine the probability or likelihood

       that it will become an actual liability.


[29]   The Financial Accounting Standards Board refers to a contingent liability as a

       “loss contingency” and has established standards of financial accounting and

       reporting for loss contingencies. Financial Accounting Standards Board,

       Statement of Financial Accounting Standards No. 5: Accounting for Contingencies, at

       4-5 (Mar. 1975), https://www.fasb.org/jsp/FASB/Document_C/

       DocumentPage?cid=1218220126761&acceptedDisclaimer=true. Under

       generally accepted accounting principles, a loss contingency is defined as an

       existing condition, situation, or set of circumstances involving uncertainty as to

       possible loss that will ultimately be resolved when one or more future events

       occur or fail to occur. Id. at 4. Resolution of the uncertainty may confirm

       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020         Page 17 of 28
       either the reduction of a liability or the incurrence of a liability. Id. When, as

       here, a loss contingency exists, the likelihood that the future event will confirm

       the incurrence of a liability is described as either probable, reasonably probable,

       or remote. Id. A probable future event is an event that is likely to occur. Id. It

       must be probable that the future event will occur to confirm the fact that a loss

       contingency has accrued and a liability has been incurred. Id. at 6.


[30]   The collectability of a receivable is a loss contingency. Id. at 4. In this case, in

       order for the receivable “due from shareholder” or shareholder debt to be

       recorded as a current liability on the marital balance sheet, the trial court must

       determine that it is probable, that is, more likely than not, that Husband will

       pay the debt. Whether to recognize a contingent liability on the balance sheet

       requires a judicial assessment of the probability that the contingent liability will

       become an actual liability. Absent such a finding, the shareholder debt is not a

       marital liability.


[31]   A judicial inquiry into the collectability of a receivable is not required in every

       case since in most cases that is not an issue. But, here, the collectability of the

       receivable “due from shareholder” is questionable. And, as we explain below,

       under the Hamlin doctrine, the contingent nature of the shareholder debt is

       underscored and amplified by the fact that the purported debt did not arise from

       an arms-length transaction and that it is Husband who will determine when, if

       ever, the debt is paid and becomes an actual liability. And because the debt is a

       mere expectancy, as we also explain below, the parties did not have a vested



       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020          Page 18 of 28
       present interest in it, it is not part of the marital estate, and it cannot be

       divided. See Lay v. Lay (In re Lay), 512 N.E.2d 1120, 1124 (Ind. Ct. App. 1987).


[32]   We have held that, on appeal, we will not disturb a trial court’s determination

       that tax returns are not conclusive evidence. Kondamuri v. Kondamuri, 852

       N.E.2d 939, 953 (Ind. Ct. App. 2006). Likewise, here, the Company’s balance

       sheet, which appears in the Houlihan appraisal and includes a receivable “due

       from shareholder,” is not conclusive evidence that the “shareholder debt”

       corresponds with a current liability rather than an uncertain contingent liability.

       The evidence supports an inference that the receivable “due from shareholder”

       was not, in fact, an enforceable current liability of the marriage but was, at

       most, a contingent liability controlled by Husband. Thus, the record supports a

       conclusion that the shareholder debt does not meet the probability standard

       required to appear as a liability on the marital balance sheet. It was within the

       trial court’s sound discretion to conclude that the “due from shareholder” is an

       uncertain contingent liability and that it would be unjust and unreasonable to

       include that contingent liability in the marital estate.


                                              The Hamlin Doctrine


[33]   Our Supreme Court has recognized the Hamlin doctrine, which provides that,

       when a party retains control over when or whether a condition precedent will

       be fulfilled, he has an implied obligation to make a reasonable and good faith

       effort to satisfy that condition. See Ind. State Highway Comm’n v. Curtis, 704

       N.E.2d 1015, 1019 (Ind. 1998). Here, as we have discussed, Husband is entirely


       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020            Page 19 of 28
       in control of the contingent liability and will determine whether the shareholder

       debt is anything more than a bookkeeping entry. And, as explained in more

       detail below, the parties have no vested present interest in the debt. Husband’s

       decision whether to pay the debt is a condition precedent that will determine

       whether the debt will ever be paid.


[34]   Under the Hamlin doctrine, Husband has an affirmative obligation to make a

       reasonable and good faith effort to pay the shareholder debt. Since the debt is

       an indefinite contingent liability, and Husband has no legal obligation to pay it,

       the trial court was charged with making a credibility assessment of Husband’s

       intent and the likelihood that he will pay it. There is no evidence in the record

       to suggest that Husband will make any effort to pay the debt. To the contrary,

       both Husband’s testimony and his valuation of the Company reveal an

       ambivalence toward when, if ever, the debt will be repaid.


[35]   We have concluded that the shareholder debt is not a current liability but an

       unenforceable contingent liability. Husband cannot require himself to pay the

       debt, and he has failed to demonstrate by a preponderance of the evidence that

       he intends to pay the debt, much less that he will actually pay the debt. The

       evidence supports a judgment that whether Husband will ever pay and

       discharge the debt is uncertain, if not problematic. That is, the record supports

       a conclusion that Husband does not recognize an affirmative duty to pay the

       debt and, thus, the condition precedent required to create a current liability on

       the marital balance sheet will not be realized. As such, the court did not err



       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020       Page 20 of 28
       when, after weighing the evidence, it did not include the shareholder debt as a

       current marital liability.


                  There Is No Vested Present Interest in the “Shareholder Debt”


[36]   Our Supreme Court has recognized as a “baseline principle of Indiana family

       law” that “[o]nly property with a vested interest at the time of dissolution may

       be divided as a marital asset.” Vadas v. Vadas, 762 N.E.2d 1234, 1235 (Ind.

       2002) (citing Mullins v. Matlock, 638 N.E.2d 854, 856 (Ind. Ct. App. 1994)). A

       vested interest is one that is not contingent, that is unconditional, and absolute.

       Interest, Black’s Law Dictionary (11th ed. 2019). Remote and speculative

       interests are excluded from the marital estate. Dall v. Dall (In re Marriage of

       Dall), 681 N.E.2d 718, 722 (Ind. Ct. App. 1997).


[37]   Marital property includes both assets and liabilities. Capehart v. Capehart, 705

       N.E.2d 533, 536 (Ind. Ct. App. 1999), trans. denied. Thus, in a dissolution

       proceeding, the trial court is required to divide the assets and liabilities of the

       parties to the proceeding in which they have a vested present interest. In re Lay,

       512 N.E.2d at 1123-24. “Of course, the trial court may not divide assets which

       do not exist just as it may not divide liabilities which do not exist.” Id. at 1124.


[38]   As we have discussed, Husband contends that the shareholder debt is an

       “undisputed marital liability” and, thus, that the trial court erred when it did

       not include the debt in the marital estate. Husband’s argument is based on the

       faulty premise that the parties have a vested present interest in this purported

       liability. Husband confuses a bookkeeping entry on the Company’s balance

       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020          Page 21 of 28
       sheet made for tax accounting purposes with the marital balance sheet as

       determined by the trier of fact.


[39]   Accordingly, the evidence shows that the “due from shareholder” was a

       contingent liability in which the parties did not have a vested present interest.

       Payment was conditional, indefinite, and entirely contingent upon Husband’s

       future performance. The mere possibility that Husband would pay the “debt”

       at some time in the future, in his discretion, at his convenience, rendered the

       “due from shareholder” entry remote and speculative with respect to the

       division of property. Dall, 681 N.E.2d at 722. As such, the trial court acted

       well within its discretion when it determined, in effect, that the “due from

       shareholder” was an uncertain obligation rather than a current liability to be

       included on the marital balance sheet and divided.


[40]   Husband also contends that the trial court “overstated” the value of the marital

       estate, but that argument is derivative of his contention that the court erred

       when it did not include the shareholder debt as a marital liability. As explained

       above, the court did not err. The court may well have discerned that, while

       Husband was engaged in a lawful tax accounting strategy to avoid paying

       income taxes, as a matter of equity the court was not required to debit the

       marital estate for a contingent liability because the court was unable to conclude

       that Husband was more likely than not to pay it.


[41]   In addition, as previously noted, the receivable due from shareholder is not a

       current asset but a non-operational, non-earning asset, which adds nothing to


       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020        Page 22 of 28
       the Company’s income. At the same time, the Company pays Bringle

       Properties, LLC $4,500 in rent per month for its use of the business real estate

       the Company “sold” to Husband and his other company. Thus, Husband and

       his son enjoy the benefit of rental income from the business real estate without

       having paid the Company for it, and Husband has not shown that he has any

       intention or incentive to pay for the business real estate.


[42]   Given that Husband controls both sides of the transaction, the evidence

       supports a conclusion that the shareholder debt arising from the “sale” of a

       corporate asset was a questionable, contingent liability between Husband and

       his closely held, related companies which did not satisfy the vested present

       interest requirement, and, thus, the trial court declined to honor form over

       substance. The court credited Husband’s testimony that this transaction

       required a bookkeeping entry on the Company’s balance sheet to avoid the

       payment of income taxes. The court also credited Husband’s testimony, which

       implied that payment of the debt was indefinite and provisional and that the

       debt would be paid “whenever” and which includes an inference that the debt

       may or may not be paid at Husband’s convenience.


[43]   The record also indicates that in 2017 Husband gave his son a 75% interest in

       Bringle Properties, LLC, which included the business real estate, and in so

       doing Husband attempted to make a unilateral gift of a marital asset to his son.

       Wife then moved to join Husband’s son as a necessary party under Trial Rule

       19, alleging that Husband’s gift to his son was the gift of a marital asset made

       without her knowledge or consent. A dispute over Husband’s son’s interest in

       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020       Page 23 of 28
       Bringle Properties, LLC was avoided when the parties stipulated that all of

       Bringle Properties, LLC, would be considered a marital asset.


[44]   The conduct of the parties during the marriage as related to the disposition of

       property is a statutory factor the trial court may consider. See Ind. Code § 31-

       15-7-5(4). The trial court acted within its discretion when it did not attribute

       the shareholder debt arising from Husband’s purported “sale” of the business

       real estate to Bringle Properties, LLC to the marital estate. Instead, the court

       awarded both the Company and the business real estate to Husband. Insofar as

       the parties’ stipulation and the decree are concerned, Husband still owns both

       companies and, thus, owns both the asset and the contingent liability, just as he

       did before the “sale.”


                             Husband Did Not Satisfy His Burden of Proof


[45]   The party challenging the trial court’s property division must overcome a strong

       presumption that the court considered and complied with the applicable statute.

       Coyle v. Coyle (In re Marriage of Coyle), 671 N.E.2d 938, 942 (Ind. Ct. App. 1996).

       That presumption is one of the strongest presumptions applicable to our

       consideration on appeal. Id. A reviewing court will not weigh evidence but

       will consider the evidence in a light most favorable to the judgment. Quillen,

       771 N.E.2d at 102. We will reverse a division of marital property only where

       the decision is clearly against the logic and effect of the fact and circumstances

       before the court. Id. The balancing of the statutory factors and the evidence

       related to them, including the disposition of marital assets during the marriage,


       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020        Page 24 of 28
       is the essence of the trial court’s work in crafting a just and reasonable property

       division. See Cowden v. Cowden, 661 N.E.2d 894, 896 (Ind. Ct. App. 1996).


[46]   In reviewing a trial court’s disposition of the marital assets, we focus on what

       the court did, not what it could have done. Akers v. Akers, 729 N.E.2d 1029,

       1032 (Ind. Ct. App. 2000). We may not reweigh the evidence or assess the

       credibility of witnesses, and we will consider only the evidence most favorable

       to the trial court’s disposition of the marital property. Id. Although the facts

       and reasonable inferences might allow for a different conclusion, we will not

       substitute our judgment for that of the trial court. Id. As we have already

       noted, since the trial court did not make a special finding on this issue, the

       general judgment standard applies, and we will affirm the judgment if it can be

       sustained on any legal theory supported by the evidence. Crider, 26 N.E.3d at

       1047. We conclude that the evidence, including Husband’s own testimony,

       supports the trial court’s discernment and judgment on this issue.


[47]   It was Husband’s burden to establish that the receivable “due from shareholder”

       was a present, unconditional, and absolute liability of the marriage. As such,

       Husband appeals from a negative judgment. To prevail on appeal, Husband

       must demonstrate that the trial court erred as a matter of law when it

       concluded, in effect, that personal expenses paid by the Company and

       Husband’s “sale” of the business real estate from one closely held, related entity

       to another, while characterized as shareholder debt for tax purposes, did not

       create a current marital liability that should be attributed to the marital

       estate. There is more than sufficient evidence that the shareholder debt is a

       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020         Page 25 of 28
       contingent liability in which the parties do not have a vested present interest

       and, hence, that the purported debt is not a current liability of the marital estate.

       We will not substitute our judgment for that of the trial court. Akers, 729

       N.E.2d at 1032.


[48]   The ultimate question presented is whether it would be just and reasonable to

       include Husband’s purported shareholder debt in the marital estate. The trial

       court’s decision not to include the shareholder debt as a current liability of the

       marriage is supported by the record, well within the court’s discretion, and not

       clearly erroneous. We therefore affirm on this issue.


                         Issue Two: Unequal Division of the Marital Estate

[49]   On cross-appeal, Wife first asserts that the trial court erred when it divided the

       marital estate unequally. As our Supreme Court has stated:


               Indiana law requires that marital property be divided in a “just
               and reasonable manner,” [I.C. § 31-15-7-4,] and provides for the
               statutory presumption that “an equal division of the marital
               property between the parties is just and reasonable.” I.C. § 31-
               15-7-5. This presumption may be rebutted, however, by evidence
               of each spouse’s contribution to the acquisition of the property,
               the extent to which the property was acquired before the
               marriage or by inheritance, the economic circumstances of each
               spouse, the conduct of the parties relating to the disposition or
               dissipation of assets, and each spouse’s earning ability. Id.


       Fobar v. Vonderahe, 771 N.E.2d 57, 58-59 (Ind. 2002). According to Wife,

       various evidence presented to the trial court would have better supported an

       unequal division of the marital estate in her favor rather than Husband’s.

       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020         Page 26 of 28
[50]   Wife’s argument on appeal on this issue is merely a request for this Court to

       reweigh the evidence, which we will not do. The trial court’s findings are

       supported by the record most favorable to the court’s judgment. In particular,

       the trial court found, and the record shows, that Husband brought substantial

       assets into the marriage, including the business and valuable real property. The

       trial court further relied on Wife’s earning ability at the time of the decree of

       dissolution, which is substantial. During her testimony before the court, she

       acknowledged that she is an active realtor and that she had sold more than

       $4,000,000 in real property during the course of the dissolution proceedings.

       And the court also considered that the parties’ economic circumstances,

       especially that the reconciliation payment Husband would have to make to

       Wife would “affect his overall financial well-being for a significant amount of

       time.” Appellant’s App. Vol. 2 at 23. Moreover, as the trial court found, this

       was a subsequent marriage for both parties, and Husband and Wife were

       married for only eight and one-half years. The trial court’s unequal distribution

       of the marital estate is therefore supported by the record, and we affirm the

       court’s judgment.


                                    Issue Three: Wife’s Attorney’s Fees

[51]   Wife also argues on cross-appeal that the trial court erred when it did not order

       Husband to pay her attorney’s fees. In particular, Wife asserts that Husband’s

       behavior during the dissolution proceedings justified an award of fees to her.

       Although there is statutory authority for an award of attorney’s fees in

       dissolution actions, parties are first presumed to pay their own attorney’s fees

       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020          Page 27 of 28
       and such an award lies within the sound discretion of the trial court. Wife has

       not shown that the trial court abused its discretion or otherwise erred in

       ordering Husband and Wife to pay their own attorneys’ fees. We affirm the

       court’s judgment.


                                                  Conclusion
[52]   In sum, we affirm the trial court’s decree of dissolution in all respects.


[53]   Affirmed.


       Kirsch, J., and Brown, J., concur.




       Court of Appeals of Indiana | Opinion 19A-DN-3007 | June 30, 2020            Page 28 of 28
