Law Like Love

January 17, 2014 § Leave a comment

by W.H. Auden

Law, say the gardeners, is the sun,
Law is the one
All gardeners obey
To-morrow, yesterday, to-day.

Law is the wisdom of the old,
The impotent grandfathers feebly scold;
The grandchildren put out a treble tongue,
Law is the senses of the young.

Law, says the priest with a priestly look,
Expounding to an unpriestly people,
Law is the words in my priestly book,
Law is my pulpit and my steeple.

Law, says the judge as he looks down his nose,
Speaking clearly and most severely,
Law is as I’ve told you before,
Law is as you know I suppose,
Law is but let me explain it once more,
Law is The Law.

Yet law-abiding scholars write:
Law is neither wrong nor right,
Law is only crimes
Punished by places and by times,
Law is the clothes men wear
Anytime, anywhere,
Law is Good morning and Good night.

Others say, Law is our Fate;
Others say, Law is our State;
Others say, others say
Law is no more,
Law has gone away.

And always the loud angry crowd,
Very angry and very loud,
Law is We,
And always the soft idiot softly Me.

If we, dear, know we know no more
Than they about the Law,
If I no more than you
Know what we should and should not do
Except that all agree
Gladly or miserably
That the Law is
And that all know this
If therefore thinking it absurd
To identify Law with some other word,
Unlike so many men
I cannot say Law is again,

No more than they can we suppress
The universal wish to guess
Or slip out of our own position
Into an unconcerned condition.
Although I can at least confine
Your vanity and mine
To stating timidly
A timid similarity,
We shall boast anyway:
Like love I say.

Like love we don’t know where or why,
Like love we can’t compel or fly,
Like love we often weep,
Like love we seldom keep.

The Not-so-Illusory Agreement

January 16, 2014 § Leave a comment

It has long been the law in Mississippi that parties effect extra-judicial modifications at their peril, and that chancery courts are neither designed or equipped to enforce such agreements.

Only last September we read here about Donald Brewer and Penny Holliday, who had agreed to modify their divorce judgment vis a vis custody and support. They had lawyers incorporate their agreement into an agreed judgment, and they proceeded to conform to the agreement in nearly every respect for several years. Only problem is, no one ever saw to it that the agreed judgment was entered. Both Donald and Penny believed that it had been entered. When the parties had a falling out and wound up back in court, the chancellor refused to enforce the agreement, notwithstanding the course of compliance, and found Donald in contempt. The COA affirmed, as you can read in the previous post.

Donald in due course persuaded the MSSC to take another look, and in Brewer v. Holliday, decided by the MSSC on January 9, 2013, the high court reversed. Justice Dickinson’s opinion states, in part:

¶14. This Court has recognized that, at times, equity may “suggest ex post facto approval of extra-judicial adjustments in the manner and form in which support payments have been made.” [citation omitted] For instance, in Alexander v. Alexander, this Court held that equity required crediting a father for payments of child support made directly to the child – once the child moved in with him – instead of to the mother. [citation omitted] And in Varner v. Varner, we explained that “the father may receive credit for having paid child support where, in fact, he paid the support directly to or for the benefit of the child, where to hold otherwise would unjustly enrich the mother.” [citation omitted] Noncustodial parents pay child support to custodial parents for the benefit of the child, not the parent, [citation omitted] and that support belongs to the child, not the custodial parent. [citation omitted]

[Note: read the opinion at the link for the case citations. Copying and pasting numerous footnotes is too cumbersome for this blog]

The court went on to remand the case for the chancellor to consider the fact that the child resided with Donald, à la Varner, finding that the arrangement should have been taken into account by the judge at the original hearing.

There is no airtight rule against enforcement of extra-judicial modifications. Each case must be considered on its own merits, and the equities must be weighed. Here, the high court considered that it would be best for Donald’s equities to be taken into account, rather than closing the door on enforcement of the agreement. No doubt the parties’ ignorance of the fact that the judgment had never been entered, coupled with their compliance with it for a time, had persuasive weight in this particular case.

The Fog of Contempt

January 15, 2014 § Leave a comment

In the press of courtroom battle, it sometimes happens that things get obscured, as in war, by the fog of all that is transpiring, so that it becomes difficult to appreciate things in their proper capacity.

I touched on this concept recently in a post dealing with contempt in its various, somwhat fluid incarnations.

On January 7, 2013, a panel of the COA had occasion to address the fog of contempt in the case of Zebert v. Guardianship of Baker.

Mr. Zebert, a lawyer, was appointed in 2000 to serve as guardian of the person and estate of a minor. Accountings were filed in each year from 2000 through 2007, but no accounting was filed in 2008 for the period from October, 2007, through September 30, 2008. The court issued a show-cause order and subsequently granted several continuances until Zebert himself asked to be relieved as guardian a year after the accounting had been due. The substitution, however, did not relieve Zebert of the duty to account for his period of responsibility.

Zebert filed an incomplete accounting, and the court held three more show-cause hearings, culminating in an adjudication of contempt and order for Zebert’s incarceration that the court suspended to allow the attorney time to get the accountings together. Zebert then filed a partial accounting disclosing at long last that he had made unapproved disbursements from the guardianship account, including unsecured loans to third parties, totalling more than $130,000, and reducing the assets of the estate to around $6,500.

The chancellor found Zebert in contempt and ordered him to be jailed until he purges himself of contempt. The adjudication was one of civil contempt.

Zebert appealed, complaining that his incarceration was criminal in nature, not civil, and that it was error for the court not to charge him formally, issue a summons, and have the matter heard by another judge.

The COA’s decision is of interest for the contrasting views between the majority, which held that Zebert’s contempt was civil because he was being required to provide a proper accounting, and which affirmed the chancellor, and the dissent by Judge Griffis, which agreed with Zebert that he is being punished criminally, and not being subjected to the coercive power of the court. I commend it to your reading because it illustrates how the same set of contempt facts can be seen by different people in a different light. The fog of contempt, if you will.

Another reason to read this decision is that it once again underscores why chancellors are getting increasingly intolerant of delinquent accountings, excuses, clueless lawyers, and malfunctioning and misfunctioning fiduciaries.

It will be interesting to see what becomes of this case on a request for rehearing or cert.

Target-ed

January 14, 2014 § Leave a comment

Last week we learned in the national media that the number of customer-victims of hacked credit accounts at the Target stores was not 40 million as originally reported, but was instead around 110 million. And, to top it off, Neiman Marcus reported that they had been hacked, too. Sunday night NBC news reported that several other retailers, as yet unidentified, had also had their customers’ data stolen.

This is a timely topic for me. In early December I received a call from one of my credit card companies asking whether I was making, or attempting to make, purchases using my credit card somewhere in Florida. Since I was sitting in my den in Meridian, I answered in the negative. They cancelled my card and issued a new one, which I received in a couple of days. And that was not all.

After I made a purchase a week before Christmas using my debit card at Books-a-Million in Meridian, charges at that store in Meridian and Montgomery, Alabama, that were not made by me began appearing on my bank account. The bank had me sign affidavits, cancelled the transactions, refunded my money, and cancelled my old card. I received the replacement in a week.

Several years ago, someone tried to purchase a flat-screen tv using one of my credit card numbers at a Wal-Mart in Wisconsin. Card cancelled for fraud, and a new card issued.

I say all this to point out that credit and debit card fraud is not something that happens to all of those other mega-numbers of people reported in the news. Those kinds of things happen to everyday folk like you and I. Oh, and by the way, I have not set foot in a Target store in at least the past 5 years.    

There is a plethora of information on the internet about how to protect your credit information and take corrective action, so I am not going to rehash all that here. I can only add that eternal vigilance is the price of plastic noawdays. I check my bank account online daily. I scan every credit card statement carefully.  

Lawyers can be particularly vulnerable. Aside from all of the representation and commingling scams, credit and debit cards present a significant opportunity for fraud. It’s easy for lawyers to get busy and not check behind staff to see where the money — and credit — is going. It can cost you.

Family Values in a Divorce

January 13, 2014 § Leave a comment

The case of Gardner v. Gardner, decided by the COA back on September 24, 2013, is not a landmark case, by any means, but it highlights the point that I have made here often that the values of assets that you put into the record just might be the ones your client gets saddles with, for better or worse. Here’s what Judge Lee’s opinion said about it:

¶19. “[F]indings on valuation do not require expert testimony and may be accomplished by adopting the values cited in the parties’ [Uniform Chancery Court Rule] 8.05 financial disclosures, in the testimony, or in other evidence.” Horn v. Horn, 909 So. 2d 1151, 1165 (¶49) (Miss. Ct. App. 2005) (citations omitted). The chancellor did the best he could with the evidence presented to him, and we decline to find error in his conclusions.

A couple of thoughts:

  • It often happens that both parties present the court with outlandish values. He values everything he wants her to have at phenomenally high values, and values the items he is to get at pitifully small values. She does likewise. That leaves the court with the alternatives: (a) to find that all the values have no credibility, and to order valuation by an expert; or (b) to average the values, or pick and choose among them to arrive at an adjudication of values; or (c) to order everything to be sold and the proceeds divided according to the formula for equitable division.
  • If your client contests some of the other party’s values, be sure to have him or her testify why. For instance, “I disagree that the dresser in the bedroom is worth $3,000 because we bought it at a yard sale for only $50 nearly 35 years ago, and it has a drawer missing, the mirror is broken, and my husband spilled a bottle of brandy on it, causing the varnish to be scarred and bubbly on the top.”
  • In Gardner, the wife was unhappy with the low value that the chancellor placed on husband’s tools and implements. Those kinds of items may actually merit valuation by someone with some pertinent experience, such as a credible mechanic, or the like. I once represented a man in the car painting business who had rescued some clogged painting nozzles from work that were discarded by his boss because it was cheaper to throw them away than to clean them. He took them home, painstakingly cleaned them, and used them for his hobby and side work. His wife valued the nozzles at $300-600 apiece. My client valued them at $25 each. The chancellor elected the wife’s value, and we had nothing in the record other than the parties’ testimony on which to base a contrary result. Ouch. Mrs. Gardner had a similarly unhappy outcome for the same reason.
  • Consider using discovery, and RFA’s in particular, to establish values.

As I have said here before, when you save or make your clients money, they love you. When you cost them money, they hate you. A little attention to values can go a long way on the positive side.

Further on the Changing Landscape of Legal Fees

January 10, 2014 § 1 Comment

The subject of limited scope representation has been touched on here. Limited scope affects fees, but even more to the point is that the construction of legal fees is undergoing a metamorphosis in reaction to changing economics.

The following is from a 2013 ABA publication …

The Great Recession has ushered in an era of alternative fee arrangements, according to a recent article in GPSolo magazine. Every year, more clients and lawyers experiment with AFAs, and some skeptics become converts.

A recent report by Altman Weil shows that in 2009 only about 20 percent of the lawyers surveyed thought that nonhourly billing had become a permanent trend within the profession. By 2012 that number had increased to 80 percent.

The report went on to observe that AFAs were being employed by almost all firms responding to the survey. Yet a substantial number of these firms also reported lower profitability when using AFAs. This suggests that law firms and clients have not yet figured out how to turn AFAs into win-win propositions. If they do not, for financial reasons alone, it is likely that firms will embrace AFAs only if required by clients.

In this economy, at least for the short term, it appears that law firms will be forced to agree to alternative fee arrangements if clients demand those arrangements. Indeed, because of client interest, almost half of the firms surveyed by Altman Weil reported a year-to-year increase in the amount of nonhourly billing, as measured as a percentage of revenues.

As a result of the change in dynamics, law firms and clients have created numerous alternatives to the billable hour when pricing legal services. The most common are outlined below:

  • Contingent fees. This “old standby” has long been an alternative for hourly billing. A contingent fee is dependent on the results obtained. This obviously requires a clear understanding of what the results are. In personal injury cases, this determination is usually easy. It is a percentage of the amount recovered for the injuries sustained by the client. In other types of cases, however, defining successful results can be problematic.
  • Reverse contingent fees. A reverse contingency allows for compensation based on an avoidance of exposure to liability. Although in some cases it may be difficult to determine the amount of exposure escaped, it is not impossible. Most lawyers know how to place a value on their cases, and defense counsel relying on both personal knowledge and public reports of damage awards in their jurisdiction have become adept at assessing the likelihood of both liability and the amount of damages.
  • Fixed fees and flat fees. A fixed or flat fee is the price that a firm charges no matter how many hours its lawyers spend on a matter. A fixed fee may be the total fee for the engagement or may apply to discrete components of a matter, such as fixed fees for discovery, pretrial motion and the actual trial.
  • Blended rates. Blended hourly rates apply to all hours billed on a matter. The blend includes the lower rates of associates and the higher rates of partners. Unlike capped fees or fixed fees, it does not provide the client with budgeting predictability.
  • Percentage fees. A popular alternative fee arrangement is the percentage fee, either constant or graduated, and based on the amount of the transaction. Some courts allow fees to be determined by the value of the estate being probated. The fees for many bond issues are likewise determined by the percentage of the amount of bonds sold.
  • Combined approaches. Many alternative fee arrangements combine various approaches. Some firms create fee schedules based on a low blended hourly rate plus a contingency. Other firms base their fees on all the factors set forth in the ABA Model Rule of Professional Conduct 1.5. Alternative fee arrangements may even include an amount retrospectively set, based on the value received by the client.     

GP Solo is a publication of the Solo, Small Firm and General Practice Division.

Some of these fee arrangements, such as contingent and percentage fees, have only limited applicability in chancery, due to MRPC 1.5(d)(1).

The article seems to imply that these “alternative” billing arrangements are interim, during the economic downturn, and that the old practices will be restored when prosperity is restored. I’m not so sure. Everyone likes to save money, and legal clients are not exempt from that desire. As new fee arrangements come into play, clients will become accustomed to leaner, more efficient, more economical legal practices and fees. It will be hard to return to the old ways.

Adapt and survive. Lawyers who cling to the old ways will be eclipsed by those who are willing to adopt more efficient ways of doing business. Lawyers who proudly proclaim that they don’t even know how to turn on a computer, and who rely on high-overhead staff to do work they could easily do themselves, will not be competitive in this 21st-century environment. Clients don’t want to pay the higher tariff for 19th-century-style representation when 21st-century technology affords cost-saving possibilities. Thus the pressure for what the article calls “alternate” fee arrangements, but what I would refer to as the new reality.

Thanks to attorney Marcus D. Evans for the raticle.

Reprise: Pleadings are Not Evidence

January 9, 2014 § 6 Comments

Reprise replays posts from the past that you may find useful today.

PLEADINGS AND THE PROOF

November 1, 2011 § 1 Comment

“It is the pleading that makes the case for adjudication, and it is the evidence that sustains or defeats it upon the final hearing.”  Terry v. Jones, 44 Miss. 540, 1871 WL 8413 (1871).

Voilà! After 140 years and a sea-change in the rules of Mississippi pleading, that ancient formula holds oh-so true in our courts. The pleadings frame the issues; the evidence admitted at trial determines the outcome.

Put another way: THE PLEADINGS ARE NOT EVIDENCE.

This immutable principle has not only for ages been a bedrock of procedure in Mississippi courts, it has also been the rock that has dashed the case of many an unseasoned or unwary practitioner.

Don’t ever assume because you have pled something that the court will take it as true. On the contrary, without actual evidence in the record, the court can not take it as true, whether it wants to or not.

I have seen lawyers leave key elements of their cases lying on the court room floor simply because they neglected to offer proof thereof. This is a chronic problem when it comes to claims for attorney’s fees, but the problem is not limited to that issue. I see Rule 59 motions more frequently than I’d like where the motion claims I “overlooked” a point, but the attorney concedes that the witness never testified about the matter. I should grant the motion, the lawyer pleads, because it was, after all, in the pleadings.

Here’s the deal: If you don’t include a properly-pled issue in your pleadings, the court can not consider it. BUT, just because it is in your pleadings does not mean it is established; you still have to put on evidence in support of it.

An Unusual In Loco Parentis Case

January 8, 2014 § 6 Comments

Only last month we discussed the MSSC decision in Vaughn v. Davis, which dealt with the rights of a natural parent as opposed to those of a party who has stood in the shoes of the parent and assumed parental responsibility, a status we refer to as in loco parentis. The court in that case said, “‘[t]he doctrine of in loco parentis does not, by itself, overcome the natural-parent presumption,’ although it may be a factor in determining whether the presumption has been rebutted [citation omitted].”

Vaughn was a case in which the maternal grandmother had acted in loco parentis toward the child after the death of the child’s mother. When the child’s father showed up to claim the child, the grandmother balked, and the litigation ensued. Since the father was not shown to have abandoned or deserted the child, and had not been guilty of unsuitable conduct, his rights trumped those of the grandmother. The fact pattern in Vaughn is fairly typical for these type cases.

How does the Vaughn rationale apply, however, in a case where the in loco parentis party believed in good faith that he was the father, but was later proven not to be when paternity was questioned, and DNA testing proved that the in loco parentis party was not the natural father?

That was the question before the COA in JSW vs. AWR and TJS, decided on December 3, 2013, less than a month after the MSSC decision in Vaughn.

In JWS, Jake and Ann married when Ann was pregnant. Vanessa was the first child born, followed by Brett, a year and a half later. Before she married Jake, Ann had a one-night stand with Tommie. Tommie believed he could be the father of Vanessa, but he took no action because he knew of Jake’s and Ann’s relationship.

In 2007, when Vanessa was nearly three years old, Tommie’s mother called and inquired whether Vanessa might be his child. Ann denied it, but Jake decided to have a DNA test, which ruled him out as the natural father. Jake and Vanessa decided that he would continue to raise Vanessa as his own.   

In 2009, Jake and Ann were divorced after five years of marriage. In the divorce, via PSA, the parties agreed that they would share physical custody, alternating weekly.

Less than a year after the divorce, the parties were back in court, fighting over custody and support. Before a hearing could be held in their contest, however, Tommie filed an action for an adjudication of paternity of Vanessa, and for custody, and visitation. A DNA test confirmed that Tommie was the natural father of Vanessa.

In his adjudication, the chancellor considered Jake and Tommie as the natural parents, and Jake as a third party. He found that, although Jake had acted in loco parentis, that alone was not enough to overcome the natural parent presumption. The chancellor awarded Ann custody, and Tommie visitation. Based on Jake’s in loco parentis status, the chancellor awarded him visitation commensurate with Tommie’s. 

Jake appealed. Judge Maxwell’s opinion, for a divided court, is somewhat lengthy for this blog, but I think it’s worth your time to read. Here are the pertinent parts:

¶18. This is certainly a unique custody dispute. More typically, the custody dispute is between the two natural parents or between a parent and non-parent, such as a grandparent. In a child-custody determination between two natural parents, the chancellor considers the factors under Albright to determine which natural parent custody should be awarded custody, based on the best interest of the child. Lucas v. Hendrix, 92 So. 3d 699, 705 (¶17) (Miss. Ct. App. 2012) (citing Albright v. Albright, 437 So. 2d 1003, 1005 (Miss. 1983)). However, in a child-custody determination between a natural parent and a third party, such as a grandparent, the law presumes that it is in the best interest of the child for the natural parent to have custody. Id. at 705-06 (¶17) (citing McKee v. Flynt, 630 So. 2d 44, 47 (Miss. 1993)); see Lorenz v. Strait, 987 So. 2d 427, 434 (¶41) (Miss. 2008) (holding that, because“[g]randparents have no legal right [to] custody of a grandchild, as against a natural parent,” the natural-parent presumption applies in custody cases between grandparents and natural parents).

¶19. The natural-parent presumption is “not unassailable.” In re Custody of Brown, 66 So.3d 726, 728 (¶10) (Miss. Ct. App. 2011) (citing Vaughn v. Davis, 36 So. 3d 1261, 1264 (¶10) (Miss. 2010)). But for the third party to rebut this presumption, he must clearly show “that (1) the parent has abandoned the child; (2) the parent has deserted the child; (3) the parent’s conduct is so immoral as to be detrimental to the child; or (4) the parent is unfit, mentally or otherwise, to have custody.” In re Smith, 97 So. 3d at 46 (¶9) (citing Vaughn, 36 So. 3d at 1264-65 (¶¶10-13); In re Dissolution of Marriage of Leverock & Hamby, 23 So. 3d 424, 429-30 (¶20) (Miss. 2009); Carter v. Taylor, 611 So. 2d 874, 876 (Miss. 1992)).

¶20. In this case, applying precedents concerning custody determinations between a natural parent and a grandparent, the chancellor categorized Jake as a third party. And because the chancellor also found Jake could not show Anne or Tommie had abandoned or deserted Vanessa, acted so immorally as to be detrimental to Vanessa, or was otherwise unfit, the chancellor imposed the legal presumption that it was in Vanessa’s best interest for Anne or Tommie to be awarded custody.

¶21. But there is a body of more relevant cases dealing with this very scenario—when a husband acts under the assumption that he is the father of the child his wife bore. And in these cases, the doctrine of in loco parentis has been used to put the presumed father on equal footing with the natural parent.

II. In Loco Parentis

¶22. In Griffith v. Pell, 881 So. 2d 184, 185 (¶¶2-3) (Miss. 2004), it came to light during divorce proceedings that the husband was not the biological father of the child born to the marriage. The chancellor granted partial summary judgment to the wife, finding the husband had no right to custody of the child. Id. at (¶3). The supreme court reversed based on the doctrine of in loco parentis, which the court found clearly applied. Id. at 186 (¶6). The supreme court held: “Merely because another man was determined to be the minor child’s biological father does not automatically negate the father-daughter relationship held by [the husband] and the minor child.” Id. Further, the supreme court cited with approval other jurisdictions that have held full-blown parental rights do not spring merely from a biological connection. In these cases, the burden is on the biological father to show a sufficient relationship with the child to entitle him to parental rights. Id. at 186-87 (¶9). The burden is not, as the chancellor found in Jake’s case, on the husband to prove that the biological father’s natural-parent presumption has been rebutted.

¶23. In fact, two years after Pell, in J.P.M. v. T.D.M., 932 So. 2d 760, 768 (¶21) (Miss. 2006), the supreme court rejected the very reasoning the chancellor used in this case to exclude Jake as a potential custodial parent. Just as in Pell, during divorce proceedings, the wife revealed that her husband, who had been the primary caretaker of the child since the separation, was not the biological father. Yet this time, the chancellor awarded the husband custody as the “father in fact.” Id. at 762 (¶1).

¶24. On appeal, the wife asserted that, because her ex-husband was not the biological father, he should be considered a third party in their custody dispute. The wife asked the supreme court to apply the line of cases holding that a third party “can only obtain custody” upon showing the natural parent has either abandoned the child, the natural parent’s conduct is so immoral as to be detrimental to the child, or the natural parent is mentally or otherwise unfit for custody. Id. at 767-68 (¶20-21) (citing Keely v. Keely, 495 So. 2d 452 (Miss. 1986); Sellers v. Sellers, 638 So. 2d 481 (Miss. 1994)). But the supreme court found “the instantsituation distinguishable” because, in the cases the ex-wife cited, the third parties “were an aunt and a grandfather, respectively,” whereas in J.P.M., the ex-husband had been the child’s “‘legal father’ since her birth.” Id. at 768 (¶21). “Thus, he ha[d] existing legal rights and obligations that the third parties in [the cases the wife cited] did not.” Id.

¶25. The case the supreme court found instead controlled was Pell and its particular application of the doctrine of in loco parentis. J.P.M., 932 So. 2d at 768 (¶21) (citing Pell, 881 So. 2d 184). So the court found the chancellor, by awarding the husband custody, had reached the right result, using the wrong legal doctrine. While rejecting that the husband was the “father in fact,” the supreme court found he still had parental rights springing from the doctrine of in loco parentis, as applied in Pell. J.P.M., 932 So. 2d at 768 (¶21)

¶26. In J.P.M., Presiding Justice Cobb wrote a specially concurring opinion expressing her concern that in loco parentis was too broad a doctrine to apply to these scenarios. Id. at 779-85 (¶¶64-87) (Cobb, P.J., specially concurring). Because it is not just deceived husbands that may stand in loco parentis, Justice Cobb advocated using the more factually tailored doctrine of equitable estoppel or equitable fatherhood as justification for the rebuttal of the natural-parent presumption. Id.

¶27. Justice Cobb’s warning proved to be prophetic. Eight years later, in In re Smith, grandparents argued that because they stood in loco parentis, as that doctrine is defined, they stood on equal footing with the natural mother. In re Smith, 97 So. 3d at 46-47 (¶4). The supreme court rejected this argument, finding that “[t]he doctrine of in loco parentis does not, by itself, overcome the natural-parent presumption.” Id. at 47 (¶10). But the court clarified that it was not overruling Pell and J.P.M. Rather, those cases represented “very limited, unique situations” where “several facts” led to the rebuttal of the natural-parent presumption—the husbands’ standing in loco parentis being one of  them. In re Smith, 97 So. 3d at 47 (¶11). Because the husbands also “had supported, cared for, and treated the child[ren] as their own,” because they had been required to pay child support (“with the burden should go the benefit”), and because “the biological fathers were not really in the picture,” the natural-parent presumption had been overcome. Id.

¶28. Here, the chancellor expressly found Jake stood in loco parentis. He also found Jake supported, cared for, and treated Vanessa as his own, even after he learned he was not her biological father—an action the chancellor found “quite admirable.” In the divorce proceeding, Jake had been ordered to pay half of Vanessa’s day-care expenses, and the only reason he did not have to pay Anne child support was that he shared equal custody time and expenses with her. The only difference between this case and Pell and J.P.M. is that, in those cases, the natural father either disclaimed any rights to the child or could not be conclusively established. See In re Smith, 97 So. 3d at 47 (¶11).

¶29. Based on the chancellor’s own findings of fact, we find Jake is in that “very limited, unique situation” where Pell and J.P.M. control. Thus, the chancellor erred by instead applying the line of cases where a third party can only rebut the natural-parent presumption by showing the natural parents had abandoned or deserted their child or were detrimentally immoral or otherwise unfit.

¶30. Because we find Jake had overcome the natural-parent presumption, he should have been considered on equal footing with Anne and Tommie in the chancellor’s Albright analysis. We reverse the custody award and remand for the chancery court to conduct an Albright analysis that includes Jake as a potential custodial parent.

So the case travels back to the chancellor to add Jake into the Albright mix and make a determination as to custody among the three parents: two natural and one in loco.

In the meantime, the appellees’ attorneys have filed for rehearing, and either party unhappy with the COA’s ultimate decision will likely ask for cert on the issue. That would be welcome, because any clarity the courts can bring to this head-spinning area of our law would be a great relief.

Involuntary Partition by Spouses for Homestead Property

January 7, 2014 § 2 Comments

Mississippi law provides, essentially, two avenues by which parties who share joint interests in real property may effect a partition of their interests: (1) the property interests may be divided by decree of a chancery court per MCA 11-21-3; or (2) the parties may reach a signed agreement, per MCA 11-21-1.

In 2009, the Mississippi legislature amended MCA 11-21-1, the voluntary agreement provision, to add the following language:

(2) Homestead property exempted from execution that is owned by spouses shall be subject to partition pursuant to the provisions of this section only, and not otherwise.

I think most practitioners read that language to mean that, unless the spouses agreed, there could be no partition of homestead property by partition action between them. Whether that interpretation is correct was the subject of a recent MSSC decision.

Elise Noone filed a complaint for divorce charging her husband, Frank, with habitual cruel and inhuman treatment. The chancellor denied the divorce in 2011. The parties were joint tenants with right of survivorship in some 67 acres of land in Copiah County, upon which they claimed homstead. Since the divorce was denied, the property remained in joint ownership.  

Elise then filed an action for declaratory judgment to determine whether the chancellor had the power to partition the property, or, at least, to the extent that the value of the property exceeded the $75,000 maximum amount of the homestead exemption, and, if so, asking the court to make a partition of the property. She then filed a motion for summary judgment arguing that the language “exempted from execution” in MCA 11-21-1(2) limited application of the statute to the value of the property exempt from execution only. Frank countered that the language is not limiting, but intends that any homsetead property can be subject to partition only by agreement, and not otherwise.

The chancellor agreed with Frank, and Elise appealed.     

The MSSC handed down its decision on December 12, 2013, in Noone v. Noone, Justice Coleman writing, for a unanimous court, explained:  

¶7. Elise maintains that, by using the phrase “homestead property exempted from execution,” the Legislature meant specifically to incorporate Section 85-3-21, the homestead exemption statute. Section 85-3-21 allows one to hold up to $75,000 worth of his or her homestead property exempt from execution by creditors. Miss. Code Ann. § 85-3-21 (Rev. 2011). Creditors can access the value of homestead exempted property that exceeds $75,000. Id. Elise’s primary argument is that Section 11-21-1(2) applies only to the extent that the property is actually exempt from execution. In other words, she contends that the law applies the same way to spouses seeking to partition land by decree as to creditors – the law creates a limit on homestead property exempt from execution, and that limit is applicable in all situations where homestead property is invoked. If she were correct, because the Noones’ property is valued at more than $600,000, Elise would still be able to partition the large majority of the property.

¶8. The issue, in the narrowest sense, is the interpretation of the phrase “homestead property exempted from execution.” Miss. Code Ann. § 11-21-1(2) (Supp. 2013). When the meaning of a statute is plain and unambiguous, “the court should simply apply the statute according to its plain meaning and should not use principles of statutory construction.” City of Natchez, Miss. v. Sullivan, 612 So. 2d 1087, 1089 (Miss. 1992) (citations omitted). The potential meanings of “homestead property exempted from execution” are two: (1) the phrase could mean that the entire homestead property is under the ambit of Section 11-21-1, and therefore partition must be by written agreement of the owners; or (2) the phrase could mean that Section 11-21-1 applies only to the $75,000 that is exempt from execution by creditors under Section 85-3-21.

¶9. If the interpretation of that phrase were a true matter of first impression for the Court, then the latter reading might be plausible. However, in similar contexts, the Court has restricted the meaning of “homestead property exempted from execution” to the former. See Hendry v. Hendry, 300 So. 2d 147, 148 (Miss. 1974) (“Homestead value is relevant only in considering the claims of creditors in relation to the homestead upon which exemption is claimed.”); accord Stockett v. Stockett, 337 So. 2d 1237, 1240 (Miss. 1976). Hendry and Stockett have foreclosed any ambiguity. Therefore, in the instant case, the Court is tasked with nothing more than applying the logic underlying Hendry and Stockett.

¶10. In Hendry v. Hendry, a husband sold homestead property without obtaining his wife’s approval. Hendry, 300 So. 2d at 148. Pursuant to Mississippi Code Section 89-1-29 (Rev. 2011), a conveyance so made cannot be upheld. Section 89-1-29 provides, generally, that a conveyance of a “homestead exempted from execution” is not valid or binding unless signed by the owner’s spouse. Id. The Hendry Court held the value limitation on homestead property relevant only to creditors. Hendry, 300 So. 2d at 149. Therefore, the law voided the entire conveyance – not just the portion subject to exemption from creditors. Id.

¶11. The Stockett Court discussed the issue even more explicitly. Stockett, 337 So. 2d at 1239-41. In Stockett, the decedent left all of his property equally to his wife and son. Id. at 1238. The son tried to partition the homestead property of the widow (formerly owned by the decedent) but was denied because of Mississippi Code Section 91-1-23, which limits a devisee’s right to partition a decedent’s “exempt property” occupied by the widow of the deceased. Id. The decedent’s son argued that Section 91-1-23 protected the property only to the extent the value equaled the amount exempt from execution. Stockett, 337 So. 2d at 1239. The Court disagreed, holding that the limit found in Section 85-3-21 protects creditors, while Section 91-1-23 protects widows. Id. at 1240-41; see Miss. Code Ann. §91-1-23 (Rev. 2013). The Stockett Court wrote:

We have not varied in this interpretation of these statutes since 1905 when we said, in Moody v. Moody, 86 Miss. 323, 38 So. 322[, 323 (1905)]: “The limit of value placed by law on the amount of land which can be held as exempt is solely for the protection and benefit of creditors-to prevent unreasonable amounts from being held exempt from execution to the prejudice of those to whom just debts might be due. But the question of value has no place in a consideration of the rights of the surviving widow to the use and occupancy of the homestead. . . .”

Stockett, 337 So. 2d at 1240.

¶12. Both Section 91-1-23 and Section 11-21-1 invoke the exemption from creditors found in Section 85-3-21. However, the reasoning employed by the Stockett Court applies to the case sub judice. Just as Section 91-1-23 protects widows from involuntary partition, Section 11-21-1 protects spouses from involuntary partition. Neither statute protects creditors. The phrase “homestead property exempt from execution” serves as a descriptive phrase identifying the property that one (or, in the instant case, a married couple) inhabits. As shown above, we repeatedly have held that the Legislature’s decision to use the phrase “homestead property exempt from execution” in other statutes identifies the specific type of property that the Legislature wants to protect. The phrase is not, as Elise argues, intended to bring the specific limitations on creditors’ rights to other, unrelated statutes.

That’s a pretty definitive decision. The statute is to be read as protective of spouses, and any interpretation that conflicts with that intent will be rejected.

The Valuation Date as a Moving Target

January 6, 2014 § 3 Comments

The valuation date for equitable distribution is important to establish, as we have discussed before, here and here, among others. Asset values can fluctuate, significantly affecting the landscape of equitable division.

We’ve also discussed the MSSC holding that the date of the temporary judgement does not necessarily impose a demarcation date for valuation. That date is left to the sound discretion of the chancellor based on the evidence in the record.

The two principles arose together in the COA case of Stout v. Stout, decided December 10, 2013. In that case, Henry and Tracey Stout were before the chancellor on a consent, leaving equitable distribution for the judge’s adjudication. A temporary order had been entered in 2009, and the divorce trial was not held until 2012. In 2009, the marital home’s value was around $30,000 more than its value at the time of the final hearing. The chancellor elected to use the 2012 value, which caused Tracey to receive a smaller share of assets, resulting in an award of alimony.  

Henry appealed, complaining that it was error for the chancellor to use the trial-date value as opposed to the temporary-order-date value. He also argued that it was error for the chancellor to use different valuation dates for different assets. Judge Roberts wrote for the majority:

¶15. First, Henry claims that the chancellor improperly valued the marital home at its 2012 value as opposed to its value in 2009 when the temporary order was entered. He claims that due to the incorrect valuation, Tracey received a lower value of assets making it more likely that alimony would be necessary. Two appraisals were done on the home: the 2009 appraisal valued the home at $132,000; the 2012 appraisal valued the home at $105,000. The chancellor used the latter value when assessing the home’s value to Tracey. Henry admits that the chancellor had the discretion to set the dates for valuation of assets, and he cites to no other authority for his proposition that the chancellor is required to use the same date for valuation of all property. In using the 2012 value, the chancellor specifically noted that the house had significantly depreciated, that Tracey had been responsible for the mortgage payments since the separation, and that Henry had abandoned the house. The supreme court has stated that “the chancellor enjoys broad discretion to value property as of any date that, in the chancellor’s view, equity and justice may require.” In re Dissolution of Marriage of Wood, 35 So. 3d 507, 516 (¶20) (Miss. 2010). We can find no case law that a chancellor must use the same date when valuing all the property. Therefore, this issue is without merit.

A few observations:

  • As important as the valuation date is in an equitable distribution case, I reiterate that I seldom hear any proof as to what date a party wants me to impose, and why. It can make all the difference in the world to your client, yet, if you do not put anything in the record to support a finding favorable to your client, you are leaving it up to the judge’s unfettered discretion. I am not saying that is what happened in this case; we don’t have enough information to tell.
  • It was enlightening to read that the COA could find no authority for one, global valuation date. I have never been able to divine an answer from the case law on the point either. In most cases, I am presented with valuation dates all over the ballpark. An example might be: a real property appraisal of the marital residence from 2012; IRA statements from June, 2013; personal property appraisal 3 months before the November, 2013 trial; securities account statements dated December, 2012. In a case like that, it seems that the judge has no choice but to use the best information available for the dates provided, unless the judge orders the lawyers and parties to go back to the drawing board, so to speak, to gather some more current info as of a given date.     
  • The most grateful clients are the ones whom you save lots of money. The clients who come to hate you are the ones you cost a lot of money. Valuation of the assets, and making the case for a valuation date favorable to your client’s best interests, are sure-fire ways to save — or make — a lot of money.

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