Watson v. Watson, ____ N.C. App. ____, COA17-899 (2018)

Dwight Watson and Gurtha Watson were married in November 1989  They separated from each other in October 2009 but did not file a court action until 2015.  Dwight filed for a divorce and equitable distribution — the division of marital property.  His wife, Gurtha, counterclaimed for postseparation support (PSS), alimony, equitable distribution, an unequal division of the marital property and attorney fees.

Judge Michael J. Denning of the Wake County District Court heard the case 25 October 2016.  Judge Denning awarded an unequal distribution of property in the wife’s favor.  The Court also denied Gurtha’s spousal support claims.  Dwight appealed the decision of the trial court.

Dwight and Gurtha had bought their home a year before they married.  The home was titled as joint tenants.  Judge Denning found that their interests in the home was “separate property” but also found that there was significant equity in the home which was “marital” property.  The Court of Appeals found these findings in conflict.  Moreover, the trial court awarded the home to Gurtha.  Under North Carolina law, if the property is separate, the trial court cannot distribute separate property.  If, however, the equity in the home was marital because of improvements to the property during the marriage or due to payments with marital funds, then the equity could be marital.

The Court of Appeals explained that: “[E]quitable distribution is a three-step process; the trial court must (1) determine what is marital and divisible property; (2) find the net value of the property; and (3) make an equitable distribution of that property.”

The trial court failed to value the equity in the home and failed to put a value on their 401(k).  Yet, the Court used these unvalued assets to make an uneven division of marital property in favor of Gurtha.

Because the trial court did not make adequate findings regarding the home, the value of the equity in the home and the value of the 401(k), the Court of Appeals remanded the case back to the trial court to take further evidence and/or enter a new order with the necessary findings.