{ "id": 9365816, "name": "REGINALD MORTON FOUNTAIN, JR., Plaintiff v. CHRISTINE MAZZA FOUNTAIN, Defendant", "name_abbreviation": "Fountain v. Fountain", "decision_date": "2002-02-05", "docket_number": "No. COA01-14", "first_page": "329", "last_page": "342", "citations": [ { "type": "official", "cite": "148 N.C. App. 329" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "461 S.E.2d 29", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1995, "pin_cites": [ { "page": "32" } ], "opinion_index": 0 }, { "cite": "120 N.C. App. 178", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11914522 ], "year": 1995, "pin_cites": [ { "page": "182" } ], "opinion_index": 0, "case_paths": [ "/nc-app/120/0178-01" ] }, { "cite": "659 S.W.2d 510", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 1744805 ], "year": 1983, "pin_cites": [ { "page": "513" } ], "opinion_index": 0, "case_paths": [ "/ark/280/0498-01" ] }, { "cite": "363 S.E.2d 189", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1987, "pin_cites": [ { "page": "195" } ], "opinion_index": 0 }, { "cite": "88 N.C. App. 297", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8358162 ], "year": 1987, "pin_cites": [ { "page": "307" } ], "opinion_index": 0, "case_paths": [ "/nc-app/88/0297-01" ] }, { "cite": "447 S.E.2d 392", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1994, "opinion_index": 0 }, { "cite": "336 N.C. 605", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2536777, 2538986, 2536623, 2536600, 2536444 ], "year": 1994, "opinion_index": 0, "case_paths": [ "/nc/336/0605-01", "/nc/336/0605-02", "/nc/336/0605-03", "/nc/336/0605-04", "/nc/336/0605-05" ] }, { "cite": "439 S.E.2d 208", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1994, "pin_cites": [ { "page": "210" } ], "opinion_index": 0 }, { "cite": "113 N.C. App. 533", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8523419 ], "year": 1994, "pin_cites": [ { "page": "536" } ], "opinion_index": 0, "case_paths": [ "/nc-app/113/0533-01" ] }, { "cite": "489 S.E.2d 909", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1997, "pin_cites": [ { "page": "912" } ], "opinion_index": 0 }, { "cite": "127 N.C. App. 409", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11796634 ], "year": 1997, "pin_cites": [ { "page": "412" } ], "opinion_index": 0, "case_paths": [ "/nc-app/127/0409-01" ] }, { "cite": "394 S.E.2d 267", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1990, "pin_cites": [ { "page": "278", "parenthetical": "Greene, J., concurring" } ], "opinion_index": 0 }, { "cite": "100 N.C. App. 1", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8526211 ], "year": 1990, "pin_cites": [ { "page": "22", "parenthetical": "Greene, J., concurring" } ], "opinion_index": 0, "case_paths": [ "/nc-app/100/0001-01" ] }, { "cite": "331 S.E.2d 682", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1985, "pin_cites": [ { "page": "687" } ], "opinion_index": 0 }, { "cite": "314 N.C. 80", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4687900 ], "weight": 2, "year": 1985, "pin_cites": [ { "page": "87" }, { "page": "87" } ], "opinion_index": 0, "case_paths": [ "/nc/314/0080-01" ] }, { "cite": "361 A.2d 561", "category": "reporters:state_regional", "reporter": "A.2d", "year": 1976, "pin_cites": [ { "page": "564" } ], "opinion_index": 0 }, { "cite": "440 S.E.2d 591", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1994, "pin_cites": [ { "page": "596" } ], "opinion_index": 0 }, { "cite": "113 N.C. App. 725", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8524404 ], "year": 1994, "pin_cites": [ { "page": "731-32" } ], "opinion_index": 0, "case_paths": [ "/nc-app/113/0725-01" ] }, { "cite": "348 S.E.2d 593", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1986, "pin_cites": [ { "parenthetical": "vested and nonvested benefits" } ], "opinion_index": 0 }, { "cite": "318 N.C. 404", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4732110 ], "year": 1986, "opinion_index": 0, "case_paths": [ "/nc/318/0404-01" ] }, { "cite": "337 S.E.2d 607", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1985, "pin_cites": [ { "page": "612" } ], "opinion_index": 0 }, { "cite": "78 N.C. App. 247", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8520753 ], "year": 1985, "pin_cites": [ { "page": "255" } ], "opinion_index": 0, "case_paths": [ "/nc-app/78/0247-01" ] }, { "cite": "335 S.E.2d 316", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1985, "opinion_index": 0 }, { "cite": "314 N.C. 543", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4689381, 4687407, 4695924, 4688661, 4687388 ], "year": 1985, "opinion_index": 0, "case_paths": [ "/nc/314/0543-04", "/nc/314/0543-05", "/nc/314/0543-03", "/nc/314/0543-02", "/nc/314/0543-01" ] }, { "cite": "331 S.E.2d 266", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1985, "pin_cites": [ { "page": "270" }, { "page": "272" } ], "opinion_index": 0 }, { "cite": "75 N.C. App. 414", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8526019 ], "weight": 2, "year": 1985, "pin_cites": [ { "page": "419" }, { "page": "422" } ], "opinion_index": 0, "case_paths": [ "/nc-app/75/0414-01" ] }, { "cite": "330 S.E.2d 616", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1985, "opinion_index": 0 }, { "cite": "313 N.C. 612", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4722697, 4725936, 4721340, 4722525, 4724158 ], "year": 1985, "opinion_index": 0, "case_paths": [ "/nc/313/0612-03", "/nc/313/0612-05", "/nc/313/0612-01", "/nc/313/0612-02", "/nc/313/0612-04" ] }, { "cite": "325 S.E.2d 260", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1985, "pin_cites": [ { "page": "268" } ], "opinion_index": 0 }, { "cite": "72 N.C. App. 372", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8526819 ], "year": 1985, "pin_cites": [ { "page": "379" } ], "opinion_index": 0, "case_paths": [ "/nc-app/72/0372-01" ] }, { "cite": "528 S.E.2d 365", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1999, "opinion_index": 0 }, { "cite": "350 N.C. 98", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 131942, 132008, 131952, 132272, 132210 ], "year": 1999, "opinion_index": 0, "case_paths": [ "/nc/350/0098-01", "/nc/350/0098-05", "/nc/350/0098-04", "/nc/350/0098-02", "/nc/350/0098-03" ] }, { "cite": "508 S.E.2d 300", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1998, "pin_cites": [ { "page": "307" }, { "page": "306" }, { "page": "306" } ], "opinion_index": 0 }, { "cite": "131 N.C. App. 411", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11200836 ], "weight": 3, "year": 1998, "pin_cites": [ { "page": "421" }, { "page": "419" }, { "page": "419" } ], "opinion_index": 0, "case_paths": [ "/nc-app/131/0411-01" ] }, { "cite": "409 S.E.2d 749", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1991, "pin_cites": [ { "page": "752" }, { "page": "751" } ], "opinion_index": 0 }, { "cite": "104 N.C. App. 461", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8522246 ], "weight": 2, "year": 1991, "pin_cites": [ { "page": "466" }, { "page": "465" } ], "opinion_index": 0, "case_paths": [ "/nc-app/104/0461-01" ] }, { "cite": "420 S.E.2d 492", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1992, "pin_cites": [ { "page": "493" }, { "parenthetical": "citation omitted" }, { "page": "494" } ], "opinion_index": 0 }, { "cite": "107 N.C. App. 484", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8527727 ], "weight": 2, "year": 1992, "pin_cites": [ { "page": "486" }, { "page": "487" } ], "opinion_index": 0, "case_paths": [ "/nc-app/107/0484-01" ] }, { "cite": "358 S.E.2d 102", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1987, "pin_cites": [ { "page": "106" } ], "opinion_index": 0 }, { "cite": "86 N.C. App. 418", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 12132703 ], "year": 1987, "pin_cites": [ { "page": "423" } ], "opinion_index": 0, "case_paths": [ "/nc-app/86/0418-01" ] } ], "analysis": { "cardinality": 1019, "char_count": 34266, "ocr_confidence": 0.75, "pagerank": { "raw": 2.612289573837854e-07, "percentile": 0.8205578780847841 }, "sha256": "e8e3e42c4ea5c96c1853c950d6024bb7a9d9efc4fe88da427ede36e0b838f08a", "simhash": "1:075a404e5a6f2c76", "word_count": 5490 }, "last_updated": "2023-07-14T20:14:25.013425+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges MCCULLOUGH and CAMPBELL concur." ], "parties": [ "REGINALD MORTON FOUNTAIN, JR., Plaintiff v. CHRISTINE MAZZA FOUNTAIN, Defendant" ], "opinions": [ { "text": "GREENE, Judge.\nChristine Mazza Fountain (Defendant) appeals an equitable distribution judgment and order filed 19 April 2000.\nReginald Morton Fountain, Jr. (Plaintiff) and Defendant were married on 21 April 1993 and separated on 2 September 1998 (the period between 21 April 1993 and 2 September 1998 will be referred to as \u201cthe marriage\u201d). No children were born during the marriage. The parties lived together continuously in North Carolina from 21 April 1993 until early 1994, when Defendant moved back to the home of her parents on Kent Island, Maryland. From 1994 through 1998, Defendant spent very little time in the marital home, but Plaintiff made serval trips to Maryland for the purpose of visiting Defendant during this time. On 3 September 1998, Plaintiff filed a complaint seeking a divorce from bed and board and equitable distribution. Defendant, however, did not file an answer to Plaintiff\u2019s complaint and default was entered against Defendant on 21 October 1998. Subsequently, Plaintiff was granted a divorce from bed and board on 26 October 1998. On 30 September 1999, Defendant filed a complaint praying for equitable distribution, along with other relief. On 23 November 1999, the trial court dismissed most of Defendant\u2019s claims but preserved and consolidated her claim for equitable distribution.\nThe trial on the issue of equitable distribution began on 14 February 2000 and lasted approximately eleven days. The property to be classified, valued, and distributed included, in pertinent part: 480,000 stock options (the FPB stock options) received from Plaintiffs employer Fountain Powerboats, Inc. (FPB); Plaintiff\u2019s checking account (the First Citizens Account); Defendant\u2019s checking accounts; Eastbrook Apartments; Fairview Shopping Center Realty (Fairview); Fairview Foods (Piggly Wiggly); and a note receivable on a Cessna Citation Jet (the FPB note). During the course of the trial, Plaintiff offered his testimony along with seventeen other witnesses and Defendant offered her testimony along with nine other witnesses.\nThe issues are: (I) the marital property classification of: (A) the FPB note; (B) the funds on deposit in the First Citizens Account; and (C) the post-marriage increase in value of Piggly Wiggly; (II) (A) the proper method for classifying stock options; (B) the proper method for valuing stock options; and (C) the proper distribution of stock options; and (III) the use of the following, as distributional factors: (A) Defendant\u2019s surgeries; and (B) Defendant\u2019s place of residence during the marriage.\nI\nGlassification of Property\nIn equitable distribution actions, the trial court is required to classify, value, and distribute marital property, including marital debt, and divisible property, including divisible debt. N.C.G.S. \u00a7 \u00a7 50-20(a), 50-20(b)(4)(d) (1999); Byrd v. Owens, 86 N.C. App. 418, 423, 358 S.E.2d 102, 106 (1987). A \u201cparty claiming that property is marital has the burden of proving beyond a preponderance of the evidence\u201d that the property was acquired: by either or both spouses; during the marriage; before the date of separation; and is presently owned. Lilly v. Lilly, 107 N.C. App. 484, 486, 420 S.E.2d 492, 493 (1992). \u201cIf the party meets this burden, then \u2018the burden shifts to the party claiming the property to be separate to show by a preponderance of the evidence that the property meets the definition of separate property.\u2019 \u201d Id. (citation omitted). If both parties meet their burdens, the property is considered separate property. Ciobanu v. Ciobanu, 104 N.C. App. 461, 466, 409 S.E.2d 749, 752 (1991). Separate property includes\n[ 1] all real and personal property acquired by a spouse before marriage[;] ... [2] [property acquired in exchange for separate property!; and] ... [3] increasefs] in value of separate property and income derived from separate property ....\nN.C.G.S. \u00a7 50-20(b)(2) (1999). If, however, the separate property enjoys an increase in value \u201cattributable to the [substantial] financial, managerial, and other contributions of the marital estate\u201d (an active increase), any increase in value would be marital property. Ciobanu, 104 N.C. App. at 465, 409 S.E.2d at 751; O\u2019Brien v. O\u2019Brien, 131 N.C. App. 411, 421, 508 S.E.2d 300, 307 (1998), disc. review denied, 350 N.C. 98, 528 S.E.2d 365 (1999). If a passive increase in separate property occurs, i.e. inflation, that increase would remain separate property. Wade v. Wade, 72 N.C. App. 372, 379, 325 S.E.2d 260, 268, disc. review denied, 313 N.C. 612, 330 S.E.2d 616 (1985). Commingling of separate property with marital property, occurring during the marriage and before the date of separation, does not necessarily transmute separate property into marital property. O\u2019Brien, 131 N.C. App. at 419, 508 S.E.2d at 306; Lilly, 107 N.C. App. at 487, 420 S.E.2d at 494. Transmutation would occur, however, if the party claiming the property to be his separate property is unable to trace the initial deposit into its form at the date of separation. O\u2019Brien, 131 N.C. App. at 419, 508 S.E.2d at 306.\nA\nThe FPB Note\nDefendant first argues the Cessna Citation I (the Cessna), acquired by Plaintiff after marriage and before the date of separation, was marital property and thus the FPB note taken by Plaintiff when he sold the Cessna, which had a value of approximately $315,000.00 at the time of separation, is marital property. This argument is based on her claim that the monies used to pay for the Cessna came out of the First Citizens Account that contaihed marital funds, and to the extent the Cessna was paid for from this account, it (and the FPB note given in exchange for the Cessna) is marital property. Plaintiff admits the funds used to make the payments on the Cessna mortgage came out of the First Citizens Account and that the account contained marital funds, but he contends the monies used to pay for the Cessna were separate monies and the commingling of these separate monies in the First Citizens Account did not transmute all the monies in that account into marital property. Plaintiff argues the monies placed in the First Citizens Account to cover the Cessna mortgage payments came from a lease of the Cessna and, because the Cessna was obtained in exchange for the Piper Cheyenne I (the Piper) and the Piper was his separate property, the lease monies put into the First Citizens Account were his separate monies. It follows, he contends, the Cessna was his separate property, as was the FPB note received in exchange for the sale of the Cessna. We agree with Plaintiff.\nIn this case, Plaintiff acquired the Piper prior to the marriage and gave a lien on the Piper to secure a note (the Piper note) in the amount of $444,005.70. After the purchase of the Piper, Plaintiff leased it to FPB and the lease payments were used to make the payments on the Piper note. Early in the marriage, the Piper lease payments were placed in the First Citizens Account and the Piper note payments were made from this account. The lease income was in an amount sufficient to make the Piper note payments and also to cover the maintenance expenses of the aircraft. In 1996, Plaintiff traded the Piper for the Cessna, which was titled in Plaintiff\u2019s name, and he gave a lien on the Cessna to secure a note (the Cessna note). The Cessna was also leased to FPB and the lease payments were placed into the First Citizens Account and payments were made on the Cessna note from that account. The lease income from the Cessna was in an amount sufficient to make the Cessna note payments and also to cover the maintenance expenses of the aircraft. In 1997, Plaintiff sold the Cessna to FPB and he received in exchange for that sale the FPB note in the amount of $415,820.57.\nAs Plaintiff owned the Piper prior to the marriage, it was Plaintiffs separate property and thus the income received from the lease of the Piper after the marriage remained Plaintiffs separate property. N.C.G.S. \u00a7 50-20(b)(2). The deposit of that income into an account containing marital funds (a commingling) required Plaintiff, in order to preserve the separate classification of these monies, to trace those deposits into the payments on the Piper note. The record shows Plaintiff satisfied this burden. When Plaintiff exchanged the Piper for the Cessna, the Cessna became Plaintiffs separate property since the Piper remained Plaintiff\u2019s separate property at the time of the transfer. N.C.G.S. \u00a7 50-20(b)(2). The payments Plaintiff received for the lease of the Cessna were commingled with marital funds in the First Citizens Account, but again, the record shows Plaintiff met his burden of tracing those account funds into the payments on the Cessna note. Thus, the Cessna remained Plaintiff\u2019s separate property entirely, and when it was sold and Plaintiff received the FPB note in exchange, that note was properly classified by the trial court as Plaintiff\u2019s separate property.\nB\nThe First Citizens Account\nDefendant next argues the funds on deposit in the First Citizens Account on 2 September 1998 should have been classified as marital property. We disagree.\nWe have determined the FPB note represents \u201cseparate property\u201d and was correctly classified as Plaintiff\u2019s separate property. Thus, the proceeds from any payments on that note were Plaintiff\u2019s separate property. On 2 September 1998 (the day the parties separated), a payment was deposited into the First Citizens Account on the FPB note in the amount of $157,910.98. The only other monies in that account on the date of separation were $16,877.55, which represented income from a separate property belonging to Plaintiff. That income was also Plaintiffs separate property. N.C.G.S. \u00a7 50-20(b)(2). Accordingly, the funds in the First Citizens Account were properly classified by the trial court as Plaintiffs separate property.\nC\nPiggly Wiggly\nDefendant contends the trial court erred in finding Piggly Wiggly \u201ccontains no marital component.\u201d We disagree.\nIn this case, Plaintiff acquired a 75% interest in Piggly Wiggly prior to marriage, and his share in the value of Piggly Wiggly on the date of marriage was $62,102.29. At the time of the separation, Plaintiffs share of Piggly Wiggly was worth $77,352.00, indicating an increase in value during the marriage of $15,249.71. Defendant does not contest the classification of the Plaintiffs interest in Piggly Wiggly as Plaintiffs separate property, but instead contends the trial court erred in classifying the increase in the value of that asset as Plaintiffs separate property.\nThe evidence shows Piggly Wiggly was managed by the 25% owner and Plaintiff had no involvement in the operations of the business. In 1996-97, renovations were made to the Piggly Wiggly building and Plaintiff paid his share of the cost of those renovations from monies received from a personal loan from First Citizens Bank, monies received from a loan from his Northwestern Life Insurance policies (the Northwestern policies) in the amount of $514,707.00, and monies received from his margin account at Wheat First Securities. Defendant makes no argument in her brief to this Court that the monies received from the Wheat First Securities account or received from First Citizens Bank were marital property. She does argue, however, that the monies received from the Northwestern policies did constitute marital property because the funds used to pay the premiums on the Northwestern policies over the course of the marriage came from the First Citizens Account. The trial court, however, found the cash value in various life insurance policies, including the Northwestern policies, was Plaintiffs separate property. Although Defendant assigned error to this finding, the argument was not addressed in her brief to this Court and is thus abandoned. See N.C. R. App. P. 28(a). It thus follows Defendant cannot now argue the monies received from the life insurance loan used to renovate the Piggly Wiggly building were marital. Accordingly, the trial court correctly classified the entire post-marriage increase in the value of Piggly Wiggly as Plaintiffs separate property.\nII\nA\nClassification of Stock Options\nAs a general proposition, stock options can be vested or non-vested, matured or non-matured, and restricted or unrestricted. Equitable Distribution of Stock Options, 17 Equitable Distribution Journal 85, 86 (Aug. 2000). Like retirement benefits, stock options are a salary substitute or a deferred compensation benefit and if received during the marriage and before the date of separation and acquired as a result of the efforts of either spouse during the marriage and before the date of separation, stock options are properly classified as marital property, even if they cannot be exercised until a date after the parties divorce. If the stock options are \u201cacquired as a result of the efforts of either spouse during the marriage and before the date of separation\u201d and \u201creceived after the date of separation but before the date of distribution,\u201d the options are properly classified as divisible property. N.C.G.S. \u00a7 50-20(b)(4)(b) (1999). If the options are received during the marriage before the date of distribution and not in consideration for services.rendered during the marriage and before the date of separation, the options are neither marital nor divisible. In this case, Plaintiff does not contest the marital classification of the vested and matured FPB stock options.\nB\nValuation of the Stock Options\nDefendant argues the trial court erred \u201cby failing to apply the Black[-]Scholes Stock Option Pricing Model to value the 480,000 [FPB] stock options\u201d owned by Plaintiff, suggesting this should be the sole method for determining value. We disagree.\nIf there is \u201cno single best approach to valuing\u201d an asset, \u201c[tjhe task of [this Court] on appeal is to determine whether the approach used by the trial court reasonably approximated\u201d the value of the asset at the date of separation. Poore v. Poore, 75 N.C. App. 414, 419, 331 S.E.2d 266, 270, disc. review denied, 314 N.C. 543, 335 S.E.2d 316 (1985); N.C.G.S. \u00a7 50-21(b) (1999) (marital property to be valued \u201cas of the date of the separation of the parties, and evidence of . . . post-separation occurrences or values is competent as corroborative evidence\u201d). If it appears \u201cthe trial court reasonably approximated the net value of the [asset] . . . based on competent evidence and on a sound valuation method or methods, the valuation will not be disturbed.\u201d Poore, 75 N.C. App. at 422, 331 S.E.2d at 272. Further, the trial court\u2019s findings concerning valuation are binding on this Court if supported by competent evidence. Patton v. Patton, 78 N.C. App. 247, 255, 337 S.E.2d 607, 612 (1985), reversed in part on other grounds, 318 N.C. 404, 348 S.E.2d 593 (1986).\nThis Court has not adopted an approach for valuing stock options. Therefore, the trial court\u2019s valuation method will be accepted by this Court if it is a sound valuation method, based on competent evidence, and is consistent with section 50-21(b). In this case, the trial court adopted the \u201cintrinsic value method,\u201d which is an acceptable method for reasonably approximating the value of stock options, and valued Plaintiffs FPB stock options by taking the difference between the market price of FPB stock at the date of separation and the stock option price held by Plaintiff. The trial court, thus, did not err in failing to adopt the Black-Scholes Method for valuing the FPB stock options.\nC\nDistribution of Stock Options\nAs a general rule, it is presumed that an \u201cin-kind distribution of marital or divisible property is equitable.\u201d N.C.G.S. \u00a7 50-20(e) (1999). When, however, the property is an interest in a closely held corporation, this in-kind presumption may be rebutted. Id. In any event, the trial court may provide for a distributive award, N.C.G.S. \u00a7 50-20(b)(3) (1999), to effectuate the distribution, N.C.G.S. \u00a7 50-20(e). Specifically, with respect to \u201cpensionfs], retirement, or other deferred compensation benefits,\u201d the methods of distribution are limited. N.C.G.S. \u00a7\u00a7 50-20.l(a)-(b) (1999). Unless the parties agree on the distributional method, the trial court must order the owner of the benefit to pay a prorated portion of the benefit to the non-owner spouse at the time he receives the benefit. Id. (vested and nonvested benefits). This is known as a deferred distribution. Bishop v. Bishop, 113 N.C. App. 725, 731-32, 440 S.E.2d 591, 596 (1994). If the benefit is vested, the trial court may instead elect, in its discretion, to award a \u201clarger portion of [the] other assets to the party not receiving the benefit^] \u201d and allow the owner spouse to retain full ownership of the benefit. N.C.G.S. \u00a7 50-20.1(a)(4) (1999). Stock options are within the scope of \u201cother deferred compensation\u201d and fall within the scope of section 50-20.1, thus, in-kind distributions under section 50-20(e) are not permitted. Because of their nature, however, a deferred distribution of stock options presents some complex issues, including: who will supply the funds used to purchase the stock; what are the tax consequences of the purchase and transfer of the stock; and if the stock increases in value after the date of separation and before the date of exercise, is any increase the result of the owner spouse\u2019s efforts or the result of inflation. A trial court may avoid these complications by distributing vested stock options under section 50-20.1(a)(4)! If the stock options are not vested, the trial court has no choice but to distribute under section- 50-20.1(b)(3) (1999) (by \u201cappropriate domestic relations order\u201d), although it may choose to place conditions on the distribution, i.e. require non-owner spouse to provide the funds to the owner spouse to make the purchase or non-owner spouse to save owner spouse harmless from any tax liability incurred as a consequence of purchase. See Callahan v. Callahan, 361 A.2d 561, 564 (N.J. Super. Ct. Ch. Div. 1976).\nIn this case, the trial court rejected Defendant\u2019s argument that she should receive a portion of the vested FPB stock options if and when Plaintiff exercised those options. The trial court instead chose, in its discretion, to award all the FPB stock options to Plaintiff with Defendant receiving a larger portion of the other assets. We discern no abuse-of discretion.\nIll\nDistributional Factors\nThe trial court is required to divide marital and divisible property equitably. N.C.G.S. \u00a7 50-20(a). In determining an equitable distribution, the trial court is to consider those factors set out in section 50-20(c). N.C.G.S. \u00a7 50-20(c) (1999). Under the catch-all provision of section 50-20(c), the trial court is permitted to consider \u201c[a]ny... factor which [it] finds to be just and proper.\u201d N.C.G.S. \u00a7 50-20(c)(12) (1999). A factor is just and proper, within the meaning of section 50-20(c)(12), if it is an action related \u201cto the economic condition of the marriage.\u201d Smith v. Smith, 314 N.C. 80, 87, 331 S.E.2d 682, 687 (1985). Thus, the expenditure of \u201cmarital assets for non-marital purposes by either spouse in anticipation of separation\u201d is properly considered as a distributional factor under section 50-20(c)(12). Lawrence v. Lawrence, 100 N.C. App. 1, 22, 394 S.E.2d 267, 278 (1990) (Greene, J., concurring) (emphasis added). Marital fault, without economic consequences, is not properly considered as a distributional factor. Smith, 314 N.C. at 87, 331 S.E.2d at 687.\nDefendant contends the trial court erred in considering the following as distributional factors: (A) Defendant\u2019s breast implants, liposuction, and cosmetic nose surgeries which she would \u201ctake[] \u2022 \u2022 \u2022 with her,\u201d performed during the marriage and before the date of separation and paid for by Plaintiff; and (B) Defendant\u2019s choice to live in Maryland, instead of in North Carolina with her husband, and the cost incurred by Plaintiff in trying to keep the marriage \u201cafloat\u201d by traveling to Maryland to visit with Defendant.\nA\nDefendant\u2019s Surgeries\nSometime after Defendant began living more in Maryland than she was living in the marital home in North Carolina, she had two breast implant surgeries, a liposuction surgery performed on her hips, and \u201cseveral nose jobs.\u201d Plaintiff noticed all of Defendant\u2019s surgeries while visiting her in Maryland. The charges for Defendant\u2019s surgeries were paid for by a credit card supplied to Defendant and paid for by Plaintiff. Defendant testified Plaintiff was \u201cvery pleased\u201d with her breast implant surgeries and had encouraged her to have the second surgery.\nIn this case, assuming without deciding the various surgeries were for non-marital purposes, there is no indication in this record that the surgeries occurred contemporaneous with marital breakdown or in anticipation of separation. The mere fact Defendant lived a portion of the last few years of the marriage in Maryland, rather than in the marital home with Plaintiff in North Carolina, which is unsupported by any explanation in the record, is simply not sufficient to support a determination the parties were experiencing marital breakdown. Indeed, the evidence establishes Plaintiff and Defendant were still engaged in a marital relationship and Plaintiff had encouraged Defendant to have the second breast implant surgery performed. Accordingly, as there is no evidence the surgeries took place during a period of marital breakdown or in anticipation of separation, the trial court erred in considering the surgeries as a distributional factor.\nB\nDefendant\u2019s Residence During the Marriage\nThe decision of Defendant to primarily reside in Maryland and Plaintiffs decision to travel to Maryland to attempt to keep the marriage \u201cafloat\u201d are not proper distributional factors. Defendant\u2019s actions may have contributed to the demise of the marriage, but marital fault alone is not sufficient to support a distributional factor. The costs involved of living in Maryland and traveling to that state to visit were incurred for marital purposes in an attempt to make the marriage work and not for non-marital purposes.\nTherefore, because we cannot determine the weight assigned by the trial court in its consideration of these inappropriate distributional factors, this case must be reversed and remanded to the trial court \u201cfor a reassessment of its decision to order an unequal division without considering the improper factor[s].\u201d Becker v. Becker, 127 N.C. App. 409, 412, 489 S.E.2d 909, 912 (1997).\nAffirmed in part, reversed and remanded in part.'\nJudges MCCULLOUGH and CAMPBELL concur.\n. With respect to debt, the burden is on the party claiming the debt to be marital to show it was \u201cincurred during the marriage and before the date of separation by either spouse or both spouses for the joint benefit of the parties.\u201d Huguelet v. Huguelet, 113 N.C. App. 533, 536, 439 S.E.2d 208, 210, disc. review denied, 336 N.C. 605, 447 S.E.2d 392 (1994).\n. As the income was received during the marriage and before the date of separation, Defendant met her burden of showing the income was marital property. Plaintiff, however, met his burden of showing the income was his separate property, as it was derived from his separate property.\n. At trial, Plaintiff presented detailed records of every deposit into the First Citizens Account, showing the source of the funds, and every payment from that account, showing the purpose of the payment.\n. If marital funds had been used to make the Piper note payments, the equity established in the Piper as a result of those marital payments would have constituted marital property.\n. At trial, Plaintiff presented detailed records of every deposit into the First Citizens Account, showing the source of the funds, and every payment from that account, showing the purpose of the payment.\n. If marital funds had been used to make the Cessna note payments, the equity established in the Cessna as a result of those marital payments would have constituted marital property.\n. As the proceeds from the FPB note were received during the marriage and before the date of separation, Defendant met her preliminary burden of showing these proceeds were marital. Plaintiff, however, met his burden of showing the proceeds to be his separate property, as it was income derived from his separate property.\n. The undisputed testimony is that the $16,877.55 in the account represented income from Eastbrook Apartments. The trial court classified these apartments as Plaintiff\u2019s separate property and although Defendant assigned error to this classification, the issue was not addressed in her brief to this Court and is thus abandoned. See N.C.E. App. P. 28(a).\n. At trial, Defendant offered testimony that Plaintiffs share of the increase was in the amount of $280,981.50. The trial court rejected this testimony and although Defendant assigned error to this, she did not argue the matter in her brief to this Court. Accordingly, she has abandoned this issue. See N.C.R. App. P. 28(a).\n. As the increase in value of Piggly Wiggly occurred during the marriage and before the date of separation, Defendant met her burden of proving the increase was marital. Plaintiff, however, met his burden of showing the increase was his separate property by showing the increase was passive.\n. In this case, the stock options were vested, matured, and restricted. Firstly, they were vested because the right to exercise the options could not be canceled. Secondly, they were matured because the right to exercise the options was exercisable before the date of separation. Finally, they were restricted because they could not be transferred, except upon Plaintiff\u2019s death.\n. Most states treat stock options, vested and nonvested, \u201cin a manner analogous to the treatment\u201d of retirement benefits. Equitable Distribution of Stock Options, 17 Equitable Distribution Journal at 87. This Court has previously held that \u201cconsistent with North Carolina\u2019s equitable distribution statutes,\u201d only vested stock options could be classified as marital property. Hall v. Hall, 88 N.C. App. 297, 307, 363 S.E.2d 189, 195 (1987). At the time of Hall, our equitable distribution statutes allowed only vested pensions to be treated as marital property. Since Hall, however, our equitable distribution statutes have been amended to define marital property to include vested and nonvested pensions. N.C.G.S. \u00a7 50-20(b)(l) (1999). Thus, a correct and current reading of our equitable distribution statutes is that marital property includes vested and nonvested stock options.\n. If the stock options are received during the marriage and before the date of separation, the spouse claiming the options to be marital has met her burden of proof. The spouse claiming the options to be nonmarital has the burden of showing they were acquired (in whole or in part) as the result of services to be rendered beyond the date of separation. See N.C.G.S. \u00a7 50-20.1(d) (1999) (method for determining the proportion of the pension, retirement, or deferred compensation benefits properly classified as marital or divisible).\n. Defendant, in her oral argument to this Court, contended the trial court erred in excluding testimony of her Black-Scholes expert on the value of the FPB stock options held by Plaintiff. There is no assignment of error or argument in her brief to this Court to support this contention. Accordingly, we do not address the question of whether the trial court erred in excluding the testimony in this case. See N.C. R. App. P. 10(a).\n. \u201c[According to Harvard Business Review author Brian J. Hall, writing the March-April 2000 issue, the value of an option is typically measured with the \u2018Black-Scholes pricing model or some variation.\u2019 This method takes into account the stock price, the exercise price, the maturity date, the prevailing interest rates, the volatility of the company\u2019s stock, and the company\u2019s dividend rate.\u201d Equitable Distribution of Stock Options, 17 Equitable Distribution Journal at 89. Another accepted method of valuing stock options is known as the \u201cintrinsic value method\u201d which determines value by subtracting the option price from the fair market value of the stock. Id.; see Richardson v. Richardson, 659 S.W.2d 510, 513 (Ark. 1983).\n. Marital stock, as opposed to marital stock options, is subject to an in-kind distribution and unless specifically provided for, any restriction on the transfer of that stock does not apply to court ordered interspousal transfers. See Bryan-Barber Realty, Inc. v. Fryar, 120 N.C. App. 178, 182, 461 S.E.2d 29, 32 (1995).\n. Defendant also argues the trial court erred in not imposing a constructive trust for her benefit on the FPB stock options. We reject this argument. A constructive trust is based on the same principles as a deferred distribution, giving the non-owner spouse an interest in the stock options when and if they are exercised by the owner spouse. In rejecting the imposition of a constructive trust, the trial court noted it would constitute an award to Defendant for work done by Plaintiff \u201cafter the marriage.\u201d This is an appropriate consideration.\n. Of the 480,000 stock options, 30,000 were awarded to Plaintiff without any compensation to Defendant because the trial court found that 30,000 of the stock options had expired and were worthless at the time of its order.\n. To include as a distributional factor any expenditure of marital funds for a non-marital purpose occurring at any point in the marriage simply would not be workable and, in any event, is not consistent with the concept of the equitable distribution statute which primarily focuses on the events surrounding the dissolution of the marriage.\n. We do not address Defendant\u2019s remaining assignments of error as she has failed to present any arguments in her brief to this Court relating to those assignments of error. See N.C. R. App. P. 28(a).", "type": "majority", "author": "GREENE, Judge." } ], "attorneys": [ "Charles William Kafer, for -plaintiff-appellee.", "Lea, Clybum & Rhine, by J. Albert Clybum and James W. Lea, III, for defendant-appellant." ], "corrections": "", "head_matter": "REGINALD MORTON FOUNTAIN, JR., Plaintiff v. CHRISTINE MAZZA FOUNTAIN, Defendant\nNo. COA01-14\n(Filed 5 February 2002)\n1. Divorce\u2014 equitable distribution \u2014 classification\u2014note receivable \u2014 separate property\nThe trial court did not err in an equitable distribution case by classifying the note receivable on a Cessna Citation Jet as plaintiff husband\u2019s separate property even though the payments on the jet came out of an account containing marital funds, because plaintiff met his burden of showing the monies used to pay for the jet were separate monies derived from his separate property.\n2. Divorce\u2014 equitable distribution \u2014 classification\u2014funds in bank account \u2014 separate property\nThe trial court did not err in an equitable distribution case by classifying the funds on deposit in the pertinent bank account on 2 September 1998 as plaintiff husband\u2019s separate property, because plaintiff met his burden of showing the monies were acquired from his separate property.\n3. Divorce\u2014 equitable distribution \u2014 classification\u2014increase in value of grocery store \u2014 separate property\nThe trial court did not err in an equitable distribution case by classifying the increase in value of the pertinent grocery store as plaintiff husband\u2019s separate property, because: (1) plaintiff met his burden of showing the increase was passive; and (2) defendant wife abandoned her argument that the monies received from a life insurance loan used to renovate the grocery store building was marital property since she failed to argue it in her brief as required by N.C. R. App. P. 28(a).\n4. Divorce\u2014 equitable distribution \u2014 valuation method\u2014 stock options\nThe trial court did not err in an equitable distribution case by adopting the intrinsic value method and by failing to apply the Black-Scholes Stock Option Pricing Model as the sole method to value the 480,000 stock options owned by plaintiff husband, because: (1) the trial court\u2019s valuation method will be accepted by the Court of Appeals if it is a sound valuation method based on competent evidence and is consistent with N.C.G.S \u00a7 50-21(b); and (2) the intrinsic value method is an acceptable method for reasonably approximating the value of stock options.\n5. Divorce\u2014 equitable distribution \u2014 vested stock options\u2014 full ownership retained by owner spouse\nThe trial court did not abuse its discretion in an equitable distribution case by awarding all the pertinent vested stock options to plaintiff husband with defendant wife receiving a larger portion of other assets instead of defendant receiving a portion of the vested stock options if and when plaintiff exercised those options.\n6. Divorce\u2014 equitable distribution \u2014 distributional factor\u2014 surgeries\nThe trial court erred in an equitable distribution case by considering defendant wife\u2019s breast implants, liposuction, and cosmetic nose surgeries as a distributional factor, because: (1) the mere fact that defendant lived a portion of the last few years of the marriage in Maryland rather than in the marital home with plaintiff husband in North Carolina is not sufficient evidence to support a determination the parties were experiencing marital breakdown or that the surgeries were in anticipation of separation; and (2) the evidence established that the parties were still engaged in a marital relationship and plaintiff had encouraged defendant to have the second breast implant surgery performed.\n7. Divorce\u2014 equitable distribution \u2014 distributional factors\u2014 place of residence during marriage\nThe trial court erred in an equitable distribution case by considering the decision of defendant wife to primarily reside in Maryland while the marital home was in North Carolina and plaintiff husband\u2019s decision to travel to Maryland to attempt to keep the marriage afloat as distributional factors, because: (1) although defendant\u2019s actions may have contributed to the demise of the marriage, marital fault alone is not sufficient to support a distributional factor; and (2) the costs involved of living in Maryland and traveling to that state to visit were incurred for marital purposes in an attempt to make the marriage work and not for non-marital purposes.\nAppeal by defendant from judgment filed 19 April 2000 by Judge Jerry F. Waddell in Carteret County District Court. Heard in the Court of Appeals 4 December 2001.\nCharles William Kafer, for -plaintiff-appellee.\nLea, Clybum & Rhine, by J. Albert Clybum and James W. Lea, III, for defendant-appellant." }, "file_name": "0329-01", "first_page_order": 359, "last_page_order": 372 }