Dismissal with Bite

August 21, 2017 § Leave a comment

Leesa McCharen was divorced from Judson Allred, III, in 1994. In 2012, Leesa sued Judson for arrearages in medical insurance premiums, private school and private college tuition, and various other claims, totalling more than $530,000. Her two children were 24 and 27 years old, respectively, at the time of her suit.

A year of frenzied litigation ensued, in the course of which Leesa’s claims shrunk to around $136,000. Leesa’s last pleading was filed August 12, 2013. On October 1, 2013, Judson filed a motion to dismiss for failure to join the two daughters as necessary parties, and the court apparently ordered Leesa to join them, although no order was entered. Nothing further happened of record, until …

On June 1, 2015, the chancery clerk issued a R41(d) notice. No response from Leesa. The court dismissed the case by order entered July 9, 2015.

On August 7, 2015, Leesa filed a motion to reinstate the case. There were some fruitless negotiations between attorneys about agreeing to a reinstatement. Nothing else transpired until …

February 25, 2016. On that date, the chancellor held a hearing at which Judson did not appear. Leesa argued that the clerk had mis-styled the case, causing her failure to react. The chancellor reinstated the case. Then, on April 28, 2016, Judson discovered the reinstatement when he was served with discovery requests in the revenant case. He responded with a motion to set aside the order. On May 17, 2016, in a proceeding that the chancellor deemed to be a R60 motion, he dismissed Leesa’s case without prejudice.

In the case of McCharen v. Allred, handed down August 1, 2017, the COA affirmed. Judge Fair wrote for the unanimous court:

¶8. The trial court has the inherent authority to dismiss an action for lack of prosecution. Wallace v. Jones, 572 So. 2d 371, 375 (Miss. 1990). We apply a substantial evidence/manifest error standard of review to the trial court’s grant or denial of a motion to dismiss pursuant to Rule 41 of the Mississippi Rules of Civil Procedure. Ill. Cent. R.R. v. Moore, 994 So. 2d 723, 733 (¶30) (Miss. 2008). Also, we will not reverse the trial court’s denial of relief from judgment pursuant to Rule 60 of the Mississippi Rules of Civil Procedure unless the trial court has abused its discretion. Harrison v. McMillan, 828 So. 2d 756, 773 (¶51) (Miss. 2002).

DISCUSSION

¶9. Mississippi Rule of Civil Procedure 41(d)(1) states that the “case will be dismissed by the court for want of prosecution unless within thirty days following said mailing [notifying the attorneys the case will be dismissed], action of record is taken or an application in writing is made to the court and good cause shown why it should be continued as a pending case.” Leesa left her case dormant for almost two years. As a result, the clerk filed a motion to dismiss on June 1, 2015. Leesa did nothing. Rule 41(d)(1) also states that “[i]f action of record is not taken or good cause is not shown, the court shall dismiss each such case without prejudice.” M.R.C.P. 41(d)(1) (emphasis added). So on July 9, 2015, the court entered an order to that effect. Twenty-nine days later, Leesa filed a motion to reinstate the case.

¶10. The court originally granted Leesa’s motion, presumably because neither Judson nor his counsel was present at the February 2016 hearing. But after listening to Judson’s argument at the May 2016 hearing, the chancellor found no good cause had been shown and dismissed the case without prejudice under Rule 60(b)(6). In doing so, he addressed Leesa’s claim that she did not recognize the motion to dismiss, styled “Moore v. Crim”:

[Leesa’s argument that the clerk failed] to properly docket [the case] is a red herring. It’s pretty much clearly docketed as this case . . . . (T)he clerk may have reversed the order of the names, but, goodness gracious, the last name “Allred” leads in both reference to plaintiff and defendant, so I don’t think you can possibly make that argument with a straight face.

¶11. On appeal, Leesa abandons her sole argument from the trial court and instead argues that: (1) prior to dismissal, the statute of limitations of Leesa’s claim had expired; and (2) Judson delayed litigation with frivolous motions. It is well established that this Court will not consider issues raised for the first time on appeal. Fowler v. White, 85 So. 3d 287, 293 (¶21) (Miss. 2012). Thus, we decline to address Leesa’s current arguments.

¶12. Rule 60(b)(6) allows a judge the opportunity to relieve a party from a final judgment for any justifiable reason. M.R.C.P. 60(b)(6). After careful review of the record, we find the chancellor acted within his discretion in finding that Leesa failed to show any compelling reason for her delay in prosecution. Accordingly, we affirm the chancellor’s order setting aside the order reinstating the case.

Pretty straightforward, even though the procedural path was convoluted.

When you receive a 41(d) notice, you need to file something of record that will have the effect of advancing the case on the docket. A previous post about what action you need to take is at this link. A letter to the clerk will not do the job. Ignoring it will not make it go away. Some chancellors (I included) take the position that once the case is dismissed, it can not be “reinstated;” the only possibility for revival being a timely-filed R60 motion, which requires that you meet its criteria.

Morris Bart: Superhero

August 18, 2017 § Leave a comment

If you’re not reading the Lowering the Bar blog, you are seriously deprived in the legal humor department. I found this gem while randomly puttering around the site recently …

Toddler Enjoys Lawyer-Themed Birthday Party

Well, this seems to have happened in January but didn’t receive the publicity it deserves until the WSJ’s Law Blog covered it recently. Obviously I need better sources in Prairieville, Louisiana.

That’s the home of the Dobra family, whose youngest member apparently watches a disturbing amount of daytime TV, because according to his family two-year-old Grayson is an enormous fan of plaintiffs’ lawyer Morris Bart—or at least his TV ads:

“Before he could walk or talk, every time the Morris Bart commercial would come on, he was just fixated,” [Grayson’s mom] says. “You couldn’t talk to him. You couldn’t do anything with him. He would just sit and stare at the TV. You could call his name, give him a toy. He didn’t care. He just wanted to watch the Bart commercial. He’s been that way ever since, and when he started talking he would say, ‘One call’ or ‘Bart, Bart, Bart, Morris Bart, Morris Bart.’

“They were not his first words, but they were a close second and third,” says Dobra.

So as Grayson’s second birthday approached, the family had a ready-made idea for a birthday-party theme.

His mom even contacted Bart’s office, asking if he might be able to make an appearance. The local paper says the firm’s marketing director initially didn’t think the request was for real, which is not surprising because it absolutely seems like something you might see in The Onion. (It isn’t. I checked.) But Ms. Dobra was able to convince them, and while Bart couldn’t make it himself he sent the kid a signed picture, a T-shirt and a variety of other goodies. “They were so nice about the whole process,” she said. “They never once said, ‘You’re crazy. Leave us alone’ or anything like that.”

BartcakeNeither did the bakery who made them this cake.

Grayson is said to have loved the party, although his mom admitted he was “kind of shocked” by the life-size cardboard cutout of Morris Bart when he unwrapped it. He seems to have gotten over that, although I don’t think we’ll know for sure unless we have a chance to talk to his therapist in a couple of decades. For now, though, he’s fine.

“He still loves his Morris Bart shirt,” [his mom] says. “If you put it on him, you’d better not try to take it off. He will throw a fit. He has his two photos on the nightstand, and he likes to give Morris Bart a kiss goodnight sometimes. He is literally obsessed with Morris Bart.”

Well, he’s probably fine.

Ask the Answer Man

August 16, 2017 § Leave a comment

Dear A.M.: I keep seeing PSA’s , including mine, that require the parties to pay for “extra-curricular activities.” Does anybody know what that includes?

A.M.: The COA does! In Thomas v. Crews, 203 So.3d 701 (Miss. App. 2016), the COA held that the term refers to activities sponsored by and usually held at a school, but that are not part of the standard curriculum. By that I take it that playing on the school basketball team would be covered, but that playing on a City Parks and Recreation basketball team would not be.

Dear A.M.: My chancellor will not make modification of child support retroactive to the date of filing. Isn’t that required now (I’m not talking about DHS cases)?

  A.M.: Upward modification is entirely discretionary with the chancellor, per MCA 43-19-34(4), which states that “An upward retroactive modification may be ordered back to the date of the event justifying the upward modification.” That word “may” means “entirely discretionary.” The same section prohibits retroactive downward modification.

Dear A.M.: In a trial recently after everyone rested the chancellor kept the record open and appointed a local appraiser, saying she was dissatisfied with the parties’ testimony about valuation of a business. Can she do that?

A.M.: Are you serious? She did, so she surely can. Does she have the authority to do it? Yep. Lacoste v. Lacoste, 197 So.3d 897 (Miss. App. 2016).

Dear A.M.: I need to register a foreign custody order in Mississippi. Which is the proper court?

A.M.: If you register it in any court other than chancery, it won’t be effective. Edwards v. Zyla, 207 So.3d 1232 (Miss. App. 2016).

Dear A.M.: My client wants me to file for modification to allow him to claim the children as dependents for tax purposes because it will free up income so he can pay his child support, which is in arrears. Is there a case that supports his position?

A.M.: There is a case that says he doesn’t have a leg to stand on: Neelly v. Neelly, 213 So.3d 539 (Miss. App. 2016).

Dear A.M.: Does emancipation have to be pled as an affirmative defense in a contempt case?

A.M.: Affirmative defenses do not have to be pled, per MRCP 81. Oster v. Ratliff, 205 So.3d 1149 (Miss. App. 2016).

Dear A.M.: I settled a case a couple of weeks ago, and the attorneys and clients signed off on the agreed judgment. Now the attorney on the other side has filed a notice of appeal from that judgment. That doesn’t sound kosher to me.

A.M.: I’m not sure about kosherbility; however, absent fraud or something similar, a party may not complain of an order to which he agreed. Patrick v. Patrick, 204 So.3d 854 (Miss. App. 2016).

_______________

All of the above is from the Bell seminar material.

A Ticking Time Bomb Post-Divorce?

August 15, 2017 § 4 Comments

We’ve all seen literally hundreds of divorce agreements that include language that goes something like this:

Husband shall have exclusive use, occupancy and possession of the former marital residence, and he shall be solely responsible to pay in due course and keep current the mortgage debt, taxes, hazard insurance, and maintenance expenses of the property, and to indemnify Wife and hold her harmless therefor. The former marital residence shall be sold not later than one year from the date of this agreement, and the proceeds shall be divided equally between the parties, after the expenses of sale are paid. If the property has not been sold to a willing and able purchaser within the time stated …

Let’s stop right there. Most marital residences nowadays are in joint tenancy with right of survivorship (JTWROS). If one tenant predeceases the other, the survivor owns the property outright. So, in the example above, if Husband predeceases Wife before the property is sold, what is supposed to be done?

Does Wife own it outright, with no claim by Husband’s estate to any part of the equity? I think Wife would have a good argument that this is the result that they intended because they both well knew how survivorship operates, and the absence of any language to the contrary connotes their intent to follow its usual operation.

Or is Wife obligated to sell and pay Husband’s estate his share of the equity? Husband’s estate would argue the clear intent of the parties to divide the equity, and that Wife would be unjustly enriched by an opposite result.

The agreement doesn’t tell us what to do. What will happen is that someone will file suit, discovery will be had, a trial will ensue, and an appeal may be taken, and after several years and a basketful of money, the matter will be decided by others rather than the original parties.

It seems to me that this could be avoided one of two ways:

One, language could be added to address specifically the eventuality of survivorship.

Two, and in my opinion better, the parties could agree to re-convey the property to themselves as cotenants.

Whatever solution you choose, this is another among many examples of how a little thought and effort can save your clients from an unanticipated and unwanted eventuality.

Note that this applies only to JTWROS. If the parties own the property as tenants by the entirety (which is becoming more prevalent among professionals, due to the shelter it provides against judgment creditors), divorce converts it to tenancy in common.

Post-Publication Note:

As you can see from the comments, my statement above that tenancy by the entirety is converted by divorce to tenancy in common is incorrect. The MSSC in 1976 held that divorce converts entirety to joint tenancy with right of survivorship. Shepherd v. Shepherd, 336 So.2d 497, 499 (Miss. 1976). Mississippi is one of the only states that so holds; imagine that.

Thanks to the commenters and Attorney Leonard Cobb.

A Primer on Contempt

August 14, 2017 § Leave a comment

The dispute between Paulette Byas and her siblings, Victor and Mary, over access to their deceased mother’s residence, will not likely make a deep impression in Mississippi jurisprudence. But the COA’s opinion by Judge Lee in Estate of Byas: Byas v. Byas, decided June 13, 2017, offers a handful of helpful nuggets on the subject of contempt, criminal contempt in particular, that I thought I would serve you up a helping of bullet points from the case:

  • “If the primary purpose [of the contempt order] is to enforce the rights of private party litigants or enforce compliance with a court order, the contempt is civil.” Purvis v. Purvis, 657 So. 2d 794, 796 (Miss. 1994).
  • Criminal contempt is designed to punish the defendant for disobedience of a court order. In re Smith, 926 So. 2d 878, 887-88 (¶13) (Miss. 2006). “This is proper only when the contemnor has wilfully, deliberately and contumaciously ignored the court, or the court’s directive.” Id. As Victor and Mary were punished for disobeying a court order and ordered to pay fines to the court, this case is a matter of criminal contempt. See, e.g., Hanshaw v. Hanshaw, 55 So. 3d 143, 147 (¶14) (Miss. 2011) (“[C]onstructive criminal contempt punishes a party for noncompliant conduct outside the court’s presence. . . . The contemnor must pay constructive criminal-contempt fines to the court, rather than to an injured party.”).
  • ¶13. Next, it is our duty to determine whether the record proves Victor’s and Mary’s guilt beyond a reasonable doubt. Smith, 926 So. 2d at 888 (¶13). We “proceed ab initio to determine whether the record proves the appellant guilty of contempt beyond a reasonable doubt.” Purvis, 657 at 797 (citation omitted). The burden of proof is on the party asserting that contemptuous conduct has occurred. In re Hampton, 919 So. 2d 949, 954 (¶13) (Miss. 2006).
  • ¶14. There are two forms of criminal contempt: direct contempt and constructive contempt. “Direct criminal contempt involves words spoken or actions committed in the presence of the court that are calculated to embarrass or prevent the orderly administration of justice.” Moulds v. Bradley, 791 So. 2d 220, 224 (¶7) (Miss. 2001). The punishment for direct criminal contempt “may be meted out instantly by the judge in whose presence the offensive conduct was committed . . . .” Id. Constructive criminal contempt, however, involves actions that occur outside the presence of the court. Id. at 225 (¶8). Most importantly, the contemnors must be provided certain procedural due-process safeguards such as a specification of the charges against them, notice, and a hearing. Id. Here, those due-process safeguards were met.

There’s a lot more to contempt, but it’s nice every now and then to have a case that reminds of the basics.

Dispatches from the Farthest Outposts of Civilization

August 11, 2017 § Leave a comment

Holding the Money Hostage

August 10, 2017 § 2 Comments

What do you think is the natural result of an estate with no money, no real property, and no contingent claims? If you guessed that the heirs and beneficiaries totally lose interest and it becomes devilishly difficult to get anyone to sign and return pleadings, joinders, etc., then you’re right.

So what would you predict the result would be if you disburse all (or most) of the money to the heirs or beneficiaries before the estate is closed? Again, if you guessed that the heirs and beneficiaries totally lose interest and it becomes devilishly difficult to get anyone to sign and return pleadings, joinders, etc., then you’re right.

Yet, lawyers yield too often to pressure from the heirs and beneficiaries to get them their money now. In those cases, the lawyer always projects optimism that all will turn out well, that these are the most cooperative people he has ever dealt with, that they sure could use their money now, that they are really putting the heat on him, and blah, blah, blah. Then, a couple of years later he sits with flushed face before the judge complaining that he can’t get the fiduciary to sign the petition to close the estate, and he doesn’t even know now where are all the heirs and beneficiaries.

In a case before me, the lawyer optimistically disbursed all the cash. The remaining asset was a late-model Cadillac, which was ordered to be sold and the proceeds divided eight ways. Two years later, the car is not yet sold, the heirs have melted with their moolah into the woodwork, and now the lawyer’s calls, letters, and pleas to sign a petition to close go unanswered. And why should they bother? A one-eighth share of the car proceeds won’t be much. They already each got more than $40,000.

I say the result would have been far different if the lawyer had gotten an order from me refusing to disburse any funds until the matter was concluded. Money is an amazingly effective motivator. As long as you control it, you control the people who are supposed to wind up with it. When you lose control over the money, you lose control over the people who have gotten it. It’s that simple.

Comments on Bankruptcy and Equitable Distribution

August 8, 2017 § 3 Comments

Yesterday I posted about the Powell bankruptcy case and how it addressed the handling of equitable distribution in divorce when there is a pending bankruptcy proceeding. As promised, here are my thoughts:

  • I have heard it said that Powell is a big change fraught with implications for family law practitioners, but I don’t see that. The language cited from Professor Bell clearly states what the law has been. Powell does not change that.
  • Some may have misinterpreted the federal domestic relations exception barring federal courts from exercising jurisdiction over divorce to mean that all matters incidental to a divorce are included. The US Supreme Court, however, has made it clear that it is the granting of the divorce itself that is barred. Any matters pertaining to the property of the bankruptcy debtor are subject to bankruptcy jurisdiction.
  • The only way that a chancellor may proceed in divorce after bankruptcy is filed is for you to lift the automatic stay. You have to petition the bankruptcy court to remand all of the issues, as Jessica Powell did, even knowing that some will not be remanded.
  • Only problem is, per Heigle, cited in the Powell opinion, our supreme court has made it clear that the chancery court should stay all proceedings before it until the bankruptcy is concluded.
  • Even without Heigle to stop you from going forward, it’s obvious that if the bankruptcy estate is taken away, equitable distribution is impossible. If equitable distribution is impossible, alimony is impossible, since you can’t get to alimony without going through equitable distribution. If most of the assets are in the bankruptcy estate, that may well limit or even eliminate child support.
  • As I mentioned yesterday, I am no bankruptcy expert, but it appears that if you represent the other spouse (not the debtor), you had better file a claim for him or her in bankruptcy court right away to protect that client’s rights. You need to ask a bankruptcy expert about this.

Bankruptcy and Equitable Distribution

August 7, 2017 § 1 Comment

I am no bankruptcy expert, and my experience with its intersection with a divorce action is minimal. My impression, though, is that most lawyers think that if a bankruptcy action and divorce action occur at the same time, all one has to do is to file a motion to remand the case back to chancery under the “domestic relations exception” to federal jurisdiction, which bars federal courts from issuing divorce, alimony, and child custody decrees, and the bankruptcy court will fling the case back to chancery, where it belongs.

That isn’t quite accurate, however, as a recent case illustrates. The case is In Re: Zelius Welborn Powell, III, Debtor; Powell v. Powell, no. 16-51982-KMS, adv. no. 17-06008-KMS, rendered June 30, 2017, in the U.S. Bankruptcy Court for the Southern District of Mississippi. I’ve included as much citation information as possible because I can’t find an non-subscription electronic site for a link. The case is available behind a paywall on Pacer.

The case began when Jessica Powell filed for divorce against her husband, Zelius Welborn Powell, III (Trey). While the divorce was pending, Trey filed for bankruptcy. Trey had sold some stock, and the chancellor ordered that the proceeds be held in a restricted account and “frozen.” Later the funds were turned over to the Bankruptcy Trustee.

Trey removed the entire divorce proceeding to bankruptcy court under Bankruptcy Rule 9027, and Jessica countered with a motion to remand the case to chancery court. Following an adversarial hearing, U.S. Bankruptcy Judge Katharine M. Samson had this to say about chancery jurisdiction in these cases:

… The Supreme Court has held that “the domestic relations exception [to federal jurisdiction] … divests the federal courts of power to issue divorce, alimony, and child custody decrees.” Ankenbrandt v. Richards, 504 U.S. 689, 703 (1992) …

The domestic relations exception, however, does not divest this Court of all jurisdiction in this case. Federal courts “in which a case under [bankruptcy law] is commenced or pending shall have exclusive jurisdiction of all the property, wherever located, of the debtor as of the commencement of such case, and of property of the estate … .” 28 U.S.C. § 1334(e)(1) (2005). This exclusivity is not affected by a previously pending divorce action in Mississippi’s chancery courts.

When bankruptcy is filed after a divorce petition is filed but before the judgment of divorce, all assets titled in the name of the debtor spouse become a part of the bankruptcy estate. The state court action is stayed with respect to a property division. In Mississippi, a spouse has no property interest in marital assets titled in the other’s name until a judgment of divorce and equitable distribution. Under these circumstances, the nondebtor spouse becomes an unsecured creditor in the bankruptcy with regard to assets titled in the debtor’s name.

Deborah H. Bell, Bell on Miss. Family Law, § 21.06[2] (2d. ed.) (internal footnotes omitted).

. . .

To prevent confusion in this and future cases, the Court has gathered some Mississippi authorities concerning the jurisdiction and authority of a chancery court over property division when a bankruptcy case has been filed.

Family law and bankruptcy become most entangled when property division and bankruptcy coincide. A state court hearing a divorce action has the power to divide marital property equitably without regard to who holds title to the property. However, in Mississippi, a spouse has no interest in property owned by the other until a court judgment classifies the property as marital and orders a transfer of the property or a lump sum payment as part of equitable distribution … When bankruptcy and divorce occur simultaneously, marital property may include assets that are, or will become, property of the bankruptcy estate …

A state court may not classify and divide marital property without permission of the bankruptcy court. However, a spouse who files a divorce action seeking property division is asserting a claim against assets held by the debtor spouse and arguably at the moment of filing divorce becomes a creditor with an unliquidated claim against the estate. The spouse may file a claim in the bankruptcy and seek relief from the stay for the court to determine the she of assets to which he or she would be entitled outside of bankruptcy. Or, the state court may cho[o]se to proceed with the divorce and other aspects of the proceeding and reserve jurisdiction to divide the property after the bankruptcy has concluded.

Bell, supra, at § 21.03[3] (internal footnotes omitted.

The Mississippi Supreme Court has held that while a husband’s primary asset (a partnership) was in bankruptcy, the value of that asset was unknowable, and therefore the chancellor’s “decision to grant [the wife] a property settlement and/or lump sum alimony was premature … .” Heigle v. Heigle, 654 So.2d 895, 898 (Miss. 1995). The Mississippi Supreme Court has also held that other than the question of the divorce itself, which was undisputed, “all of the remaining issues should have remained in the trial court pending the conclusion of the bankruptcy proceedings.” Id; see also Dunaway v. Dunaway, 749 So.2d 1112, 1120-21 (Miss. Ct. App. 1999) (automatic stay of bankruptcy proceeding enjoins actions affecting bankruptcy assets).

The bankruptcy court granted Jessica’s motion in part, remanding the issues related to divorce, alimony, and child support to chancery, and denying it and retaining jurisdiction over issues involving assets of the bankruptcy estate.

That’s enough for now. I’ll comment tomorrow.

“Quote Unquote”

August 4, 2017 § 1 Comment

“No man can purchase his virtue too dear, for it is the only thing whose value must ever increase with the price it has cost us.”  —  Charles Caleb Colton

“We are what we think. All that we are arises with our thoughts. With our thoughts we make the world.”  —  Gautama Buddha

“The great ideals of the past failed not by being outlived (which must mean over-lived), but by not being lived enough. Mankind has not passed through the Middle Ages. Rather mankind has retreated from the Middle Ages in reaction and rout. The Christian ideal has not been tried and found wanting. It has been found difficult; and left untried.”  —  G. K. Chesterton