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Arthur v. Fronczak

Superior Court of Maine, Hancock

November 26, 2018




         The complaint and counterclaim in this matter was the subject of a three-day bench trial presented during the July 2018 civil trial term. During the trial, the Court heard testimony from each of the parties, as well as from numerous additional witnesses. Subsequent to the trial, counsel for both parties filed written closing arguments and reply briefs for the Court's further consideration.


         At the outset, the Court would note its' considerable concern regarding the credibility of the testimony of each of the parties in this case. Nonetheless, based upon the evidence presented, the Court makes the following factual findings.

         The parties have been engaged in a long-term relationship over the course of several years, but were never married. They are the parents of four children who were born to them during the course of that relationship, As of the time of trial, three of the four children had become adults.[1]

         During the course of their time together, specifically in 1998, the parties acquired a parcel of real property located at 236 Mud Creek Road in Lamoine, Maine. The 28 acre parcel includes a residential building, a stable, pastureland and a riding arena which was built by the parties in 2005. An appraisal of the parties' property determined that the highest and best use of the property was its continued use as a property that supports the operation of a horse boarding and rider training business.

         In the Fall of 2004, the parties formed a limited liability company, Iron Slipper Farm, LLC, The Court finds that the Plaintiff held 51% ownership and the Defendant held 49% ownership in the LLC. Prior to August 2011, both parties performed significant functions associated with the operations at the property which helped to produce income for the parties. The Plaintiff provided riding instruction for customers and boarding care for the horses at the stable and arena. The Defendant performed various maintenance activities, provided some assistance with horse feeding, and was primarily responsible for the haying operations on the property.

         Although Iron Slipper Farm, LLC was formally established in 2004, the Court was provided with little evidence as to that entity's assets, income production, value or formal functioning especially since the time of the parties physical separation from one another in 2011, No tax returns have been filed for Iron Slipper Farm, LLC since 2011. Nor did the evidence from either party suggest that any of the assets described during the trial were assets owned by the limited liability company. The Court finds that the entity has ceased functioning and has no assets or liabilities requiring further division or consideration by the Court.[2] To the extent additional formalities are required to formally terminate or dissolve the limited liability company, the parties are hereby ordered to execute any such necessary documentation.

         For a long period of time prior to the summer of 2011, the parties' relationship had deteriorated to the point where there were frequent and often heated arguments. In the summer of 2011, the plaintiff filed a complaint for protection from abuse in the Ellsworth District Court. (PA-11-206). On August 24, 2011 the District Court issued an order, by agreement of the parties and without a formal finding of "abuse". (Plaintiffs Exhibit 6). That Order, in part, granted the plaintiff possession of the parties' real estate at 236 Mud Creek Rd. The plaintiff has continued to have possession of the same property since that time through the time of trial.

         Although the income from the horse-related operations at the parties' property significantly declined after August 2011, the Court does not find that the Plaintiff intentionally attempted to devalue the property or minimize the income from the business operations on the property. After August 2011, the Defendant was not assisting, either through labor or financial contributions, in the business operations, and thus it is not surprising that there would be a decline in income. Moreover, the Court finds that it was reasonable for the Plaintiff to seek additional jobs, apart from the horse-related operations, in an attempt to supplement her income during this post 2011 period.

         At no time after August 2011 has the Plaintiff made any payment to the Defendant reflecting any revenue from the horse-related business operations on their property. At no time since August 2011 has the Defendant made any payment either to the Plaintiff or directly to the creditors for any mortgage or other expense relating to the horse-related business operations on the property. Since August 2011, the Plaintiff has made all of the mortgage payments relating to the two mortgages encumbering the parties' property at 236 Mud Creek Rd.

         Based on the testimony of Todd Christiansen, the representative from the mortgagee, Machias Savings Bank, the loan payments were current as of the time of trial. Moreover, Mr. Christiansen testified that the Plaintiff, the party with whom he had worked exclusively over the last six years, appeared to be a good customer and one his company would be able to work with in an attempt to refinance the property.

         Although there was a significant amount of testimony and other evidence regarding various financial aspects of the cost associated with building an arena on the property, operating a horse boarding business, the income one might anticipate from such an operation, and finally the estimated value of a speculative subdivision of the parties' property, the Court was presented with very little evidence of the current fair market value of the parties' real property. A formal appraisal of the property (Plaintiff's Exhibit 13.1 and hereinafter referred to as "the Moore Appraisal") was completed as of April 3, 2012, but never updated by either party. The Moore Appraisal determined the value of the parties' property to be $384, 000 as of April 3, 2012. The Moore Appraisal noted that the tax assessed value of the property at the time was $353, 200. Based upon the Moore Appraisal, and the description of the improvements that have been made to the residential building since the time of that earlier appraisal, the Court finds that the current fair market value of the property with its existing improvements is $400, 000.

         At or about the time of the parties' separation in September 2011 the outstanding balance on the loans encumbering the parties' property was $291, 752.05. Based upon an estimate of the fair market value of the property at or about that time in the amount of $384, 000, the parties had ...

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