WHEN FINANCIAL PROOF IS JUDGE ABUSE

May 22, 2013 § 10 Comments

The MSSC case of Collins v. Collins, decided May 9, 2013, includes a discussion of one of the most frustrating aspects of divorce trials from the viewpoint of the judge: the party who provides incomplete, incredible, and misleading financial information upon which the court is required to base a financial adjudication.

Perry Collins and his unhappy wife, Iretha, were locked in a divorce battle for more than four years. Perry, who changed lawyers almost as frequently as the wind changed, operated a sole proprietorship heating and air conditioning company. He admitted at trial that his 8.05 financial statement was “incorrect and contained omissions.” For example, he claimed that his business overhead was $300,000, which exceeded his receipts by more than $110,000. He also did not provide income tax returns because he had not filed any in the two years before trial. The opinion is silent as to why he could not provide copies of returns he had filed.

No doubt the chancellor was somewhat put out with Perry’s cavalier attitude toward the financial proof. She simply totaled his receipts, allocated half to overhead, and declared that one-half, or $94,459.57, was Perry’s adjusted gross income. She then socked him for $1,300 in child support.

In reversing on the point, the court said this about Perry’s less-than-adequate 8.05:

¶17. The chancellor’s concern with the document is justified. In fact, we have stated that failure to comply with Rule 8.05 constitutes a fraud on the court. See Trim v. Trim, 33 So. 3d 471 (Miss. 2010). However, if the chancellor makes such a finding, the appropriate remedy for such behavior is to hold Perry in contempt and enter appropriate sanctions – not to punish him by disregarding any other credible evidence provided by him to the court. See Uniform Chancery Court Rule 8.05 (“The failure to observe this rule, without just cause, shall constitute contempt of Court for which the Court shall impose appropriate sanctions and penalties”). Rule 8.05 allows evidentiary discovery in addition to the disclosure. Id. In short, errors or omissions in the form do not preclude consideration of other evidence presented to the chancellor. We therefore find that the chancellor was manifestly wrong when she arbitrarily determined Perry’s monthly income to the exclusion of the undisputed evidence he provided.

The “undisputed evidence” that Perry provided consisted of his 2009 “business bank records,” which the MSSC found had enough information for the judge to deduce that his overhead expenses were considerably more than the one-half that the judge found, so that his actual income was considerably less than what she concluded.

I am shooting from the hip here, but I believe I would have stopped the trial and told counsel to get busy and present the court with a truthful, accurate 8.05, using the business records, and I would not have let them go forward until they did so. In the alternative, I would have offered to appoint a CPA expert at Perry’s expense to do the job.

Dumping a pile of “business bank records” and an incomplete, discrepancy-riddled, incredible 8.05 on the court is judge abuse. It’s also malpractice, but that’s another story. I wish that the supreme court had said that, if you dump on the trial court like that, you get whatever you deserve. Instead, the court’s message is that the burden is on the judge. Knowing that, I don’t imagine chancellors will be so accommodating in the future as the chancellor was in this case. Pity.

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§ 10 Responses to WHEN FINANCIAL PROOF IS JUDGE ABUSE

  • […] you put the burden on the judge to do your work for you, go back and read the MSSC decision in Collins v. Collins. It might persuade you to go a different […]

  • randywallace says:

    This would have been a perfect opportunity for the Court to say that when you disregard the gold standard, don’t complaint when you get the shaft. A pretrial order with both parties premarking and exchanging exhibits might help cut down on this document Easter egg hunt.

    • Larry says:

      I actually require an agreed pre-trial order with consolidated asset list before I will give out a trial date in any contested divorce. It has cut down on (a) on wasted trial dates due to lawyers discovering at the last muinute that they aren’t really ready for trial, and (b) the very kind of thing that you are describing.

  • Hale Freeland says:

    Of course, this applies to a lot of proceedings besides divorces. The attitude of parties when an accounting is required is often, “you figure it out” which leads to motions to compel. Everyone, particularly the courts hate those. It’s a great waste of time and expenses and a burden often placed on parties who try to figure out what happened.

    • Larry says:

      Agree 100%. And Anderson’s comments below are on target, too. If you want me to buy into your side of the case, put the evidence in an understandable, credible form.

      As I have said here many times … the easier you make it on the judge, the more likely it is you will prevail.

      • Hale Freeland says:

        A good reminder.

      • thusbloggedanderson says:

        If I were a judge, I would be working on the presumption that a party failing to make a set of facts clear, feels it has something to lose by clarity. When the facts are on my side, as a lawyer, I spell ’em out, with gusto and bullet points.

  • thusbloggedanderson says:

    “stopped the trial and told counsel to get busy and present the court with a truthful, accurate 8.05, using the business records, and I would not have let them go forward until they did so”

    Okay, but doesn’t that punish the wife in a way, since she’s postponed in getting a divorce?

    I found the MSSC’s reasons for reversal to be a bit summary. Was it so obvious that the bank account in question was the only place the business’s profits were going, for instance?

    • Larry says:

      Yes, it would punish the wife in a sense, but sanctions may well be in order to even the ledger. To impose the burden on the judge to have to figure out your client’s case from an unorganized mass of documents puts the judge in the position of doing the lawyer’s and the client’s work for them. And then the judge’s conclusions are subject to second-guessing on appeal.

      As for the MSSC’s decison, I interpret what they are saying to mean that if there is any documentation whatsoever in the record, no matter what or in what condition, the burden is on the judge to analyze it and make it coherent. Hence my position that I would put that burden back where it belongs in the first place with the requirement of an accurate, documented 8.05.

      • thusbloggedanderson says:

        Well put. Neither an appellate court nor a trial court has the obligation to scour the record in search of what the party refuses to put forward. A jury isn’t to be handed 5,000 pages of documents and told “find for my client based on whatever you may find in here.” No moreso, I would think, when the judge is finder of fact.

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