JEFFEREY RYAN STRICKLAND, FORMER HUSBAND
v.
JENYNE TIPTON STRICKLAND, FORMER WIFE
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The appellate court reversed a portion of a final judgment of marriage dissolution, finding that the enhanced value of a nonmarital business, Biggs & Strickland, was erroneously classified as a marital asset. The court clarified that funds used to pay down the mortgage on the business property, originating from rent paid by another nonmarital business (the dental practice), were also nonmarital.
No, the enhanced value of Biggs & Strickland was erroneously classified as a marital asset. The rental income from Spanish Trail Dentistry to Biggs & Strickland was nonmarital, and therefore its use to pay down the mortgage on the nonmarital property did not create a marital asset.
[1] Rental income flowing directly between two nonmarital entities without evidence of commingling with marital assets constitutes nonmarital funds, and the enhanced value of…
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Join FLexlaw to unlock all legal intelligence“The enhancement in value and appreciation of nonmarital assets resulting from the efforts of either party during the marriage or from the contribution to or expenditure thereon of marital funds or other forms of marital assets, or both,” is a marital asset.”
This quote establishes the general rule for when enhancements to nonmarital assets become marital assets.
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Join FLexlaw to unlock all legal intelligenceFormer Husband appealed a final judgment of marriage dissolution. The trial court classified both the dental practice (Spanish Trail Dentistry) and th…
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LONG, J.
Former Husband appeals a final judgment of marriage dissolution. We affirm the order in all respects but one. We reverse the trial court’s equitable distribution based on its classification of the enhanced value of Biggs & Strickland as a marital asset. McGowan v. McGowan, 344 So. 3d 607, 610 (Fla. 1st DCA 2022) (stating classification of assets is reviewed de novo). Former Husband owns his dental practice, Spanish Trail Dentistry, and the company which owns the building it operates from, Biggs & Strickland. The trial court classified both companies
as nonmarital assets. While this means the companies themselves do not have their value divided after marriage dissolution, “[t]he enhancement in value and appreciation of nonmarital assets resulting from the efforts of either party during the marriage or from the contribution to or expenditure thereon of marital funds or other forms of marital assets, or both,” is a marital asset. § 61.075(6)(a)(1)(b), Fla. Stat. Former Wife tried to prove that both Spanish Trail Dentistry and Biggs & Strickland increased in value during the marriage. The trial court found that Former Wife failed to show the value of Spanish Trail Dentistry increased but did show the value of Biggs & Strickland increased. That increase resulted from the paydown of the mortgage on the building. Section 61.075(6)(a)(1)(c) states “[t]he paydown of principal of a note and mortgage secured by nonmarital real property” is a marital asset “if the note and mortgage secured by the property are paid down from marital funds during the marriage.” The trial court’s order does not discuss this issue, but it apparently decided the funds Biggs & Strickland used to pay down the mortgage on the building were marital funds. The only source of income of Biggs & Strickland is the rental income it receives from Spanish Trail Dentistry. This results from a lease agreement signed between the two companies in which Spanish Trail Dentistry pays a set amount of money to Biggs & Strickland to rent the space used for the dental practice. Biggs & Strickland then uses that money to pay down the mortgage. At no point does the money cross over into Former Husband’s hands personally. The money went directly from Spanish Trail Dentistry to Biggs & Strickland. Both are nonmarital assets, making the money nonmarital.* And the rent payments were an essential expense of the nonmarital business. While a party cannot hide the results of marital efforts in a nonmarital company to avoid their classification as marital property, there was no evidence that
* Former Wife did not appeal the trial court’s determination that the practice was nonmarital, so we take that determination as conclusive for the purpose of this appeal.
Former Husband stored, or comingled, marital assets in his companies. We reverse the equitable distribution portion of the judgment because the classification of the enhanced value of Biggs & Strickland as a marital asset was erroneous. We remand for a redetermination of the equitable distribution between the parties, consistent with this opinion. We affirm in all other respects.
AFFIRMED in part, REVERSED in part. ROBERTS and TANENBAUM, JJ., concur. _____________________________