The Courthouses of Mississippi
January 30, 2015 § 8 Comments
Starting next month, I’m going to be posting photos of the courthouses of Mississippi.
The twist is that I am asking you to send me your photos to be published here. Here are the guidelines:
- The pic must have been taken by the submitter. Cell-phone pics are welcome.
- Sunshine shots only; no low-contrast, cloudy days.
- Please avoid power, cable, and telephone lines in your photos. Your favorite people or clients are fair game, though, if they are okay with it.
- You will be credited by name, unless, for some reason you’d rather not.
- I’ll post as many as 4-6 a month, provided I have them.
You can email them to me at email@example.com.
By my reckoning, there are some 91 or 92 courthouses in Mississippi, and several more when you count separate chancery buildings, so this could take some time unless you send me your pics asap. I’m relying on you to provide me with the full compliment. Next time you head to a courthouse, take a minute to send me a photo.
If this goes well, we may try the courtrooms of Mississippi next.
Reprise: Equitable does not Mean Equal
January 29, 2015 § Leave a comment
Reprise replays posts from the past that you might find useful today.
EQUITABLE DIVISION AND MARITAL FAULT
August 24, 2011 § 4 Comments
It is almost a platitude of Mississippi law that, “Courts may divide marital assets between divorcing spouses in a fair and equitable manner — equal division is not required.” Bell, Mississippi Family Law, § 6.01.
The sticking point is where to draw the line between “fair and equitable” and “equal.” The appellate decisions come in all sizes, colors and flavors.
Bond v. Bond, decided by the COA August 16, 2011, is the latest iteration on the point. In that case, Jimmie Lee proved that his wife, Donna, had committed adultery during their four-year marriage. The chancellor awarded Jimmie Lee 90% of the equitable division, and gave Donna the remaining 10%. Jimmie Lee appealed, aggrieved that Donna got such a generous share, and charged that the chancellor erred in failing to make sufficient findings of Donna’s adultery.
Judge Maxwell’s opinion sets out the applicable law about as clearly as can be done:
In ordering an equitable distribution of property, chancellors must apply the Ferguson factors, which include:
(1) contribution to the accumulation of property, (2) dissipation of assets, (3) the market or emotional value of assets subject to distribution, (4) the value of assets not subject to distribution, (5) the tax and economic consequences of the distribution, (6) the extent to which property division may eliminate the need for alimony, (7) the financial security needs of the parties, and (8) any other factor that in equity should be considered.
Hults v. Hults, 11 So. 3d 1273, 1281 (¶36) (Miss. Ct. App. 2009) (citing Ferguson v. Ferguson, 639 So. 2d 921, 928-29 (Miss. 1994)). Chancellors should also consider each party’s marital fault. Singley v. Singley, 846 So. 2d 1004, 1013-14 (¶26) (Miss. 2002). There is a presumption that “the contributions and efforts of the marital partners, whether economic, domestic or otherwise are of equal value.” Hemsley v. Hemsley, 639 So. 2d 909, 915 (Miss. 1994). In reviewing a chancellor’s findings, we do not conduct a Ferguson analysis anew. Goellner v. Goellner, 11 So. 3d 1251, 1264 (¶45) (Miss. Ct. App. 2009). Rather, we examine the chancellor’s judgment and the record to ensure the chancellor applied the correct legal standard and did not commit an abuse of discretion. Id. at 1266 (¶52).
In Carrow v. Carrow, 642 So. 2d 901, 905 (Miss. 1994), the Mississippi Supreme Court held that a chancellor erred in finding a wife’s “adulterous conduct precluded her from being entitled to any form of equitable distribution of the property upon divorce.” The Carrow court instructed that chancellors should not view equitable distribution as a means to punish the offending spouse for marital misconduct. See id. at 904 (citing Chamblee v. Chamblee, 637 So. 2d 850, 863 (Miss. 1994)). Rather, “marital misconduct is a viable factor entitled to be given weight by the chancellor when the misconduct places a burden on the stability and harmony of the marital and family relationship.” Id. at 904-05 (citing Ferguson, 639 So. 2d at 927).
The court found that the chancellor had, indeed, taken into consideration Donna’s fault when he considered the Ferguson factor dealing with the parties’ relative contributions to the stability and harmony of the marriage. The chancellor had found under that factor that:
“Neither Jimmie nor Donna did all they could to provide stability and harmony to the family. Donna became infatuated with another man and her romantic relationship with this third party caused the dissolution of the marriage.”
So here are a few points to ponder about this decision:
- The rule that equitable division does not require an equal division, but only a fair division, is alive and well.
- A 90-10 split in equitable distribution will be found fair if the judge addresses all of the Ferguson factors and justifies the decision.
- The judge is only required to address all of the Ferguson factors, not to analyze them in excruciating, lengthy detail. In this case, the chancellor’s two-sentence recitation was found adequate to support the award.
This case reminded me of the student who got a 90 on a test and wanted the teacher to re-grade it in hopes of an even better grade. Jimmie Lee’s “grade” stayed the same after the appeal, but it’s somewhat of a head-scratcher why he appealed in the first place, given the pretty clear holding in the Carrow case.
When is a Constructive Trust Appropriate?
January 28, 2015 § 1 Comment
Jeanette Brown and Edward Wilson (Brown) filed suit against Virginia Jones and others (Jones) to set aside a will and some inter vivos gifts made in favor of Jones by the decedent, J.T. Smith. After a trial, the chancellor upheld the will, but did order that the $484,000 in inter vivos gifts were the result of undue influence, and ordered that they be repaid to the estate.
Brown appealed, claiming inter alia that the trial court erred by not imposing a constructive trust on the funds.
The COA, In the Matter of the Last Will and Testament of J.T. Smith: Brown, et al. v. Jones, et al., handed down September 2, 2014, affirmed the chancellor’s decision not to impose a constructive trust. Judge James, for the court:
¶39. A constructive trust has been defined as follows:
A constructive trust is one that arises by operation of law against one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy.
Yarbrough v. Patrick, 65 So. 3d 865, 871 (¶28) (Miss. Ct. App. 2011) (quoting Alvarez v. Coleman, 642 So. 2d 361, 367 (Miss. 1994)). A constructive trust is “a means by which one who unfairly holds a property interest may be compelled to convey that interest to another to whom it justly belongs.” Van Cleave v. Estate of Fairchild, 950 So. 2d 1047, 1054 (¶29) (Miss. Ct. App. 2007). A constructive trust “arises by implication from the relationship and conduct of the parties and may be established by parol testimony.” Id. “It is the relationship plus the abuse of confidence that authorizes a court of equity to construct a trust for the benefit of the party whose confidence has been abused.” Id. at 1054-55 (¶29). Finally, “the proponent of such a trust must show its necessity by clear and convincing evidence.” Yarbrough, 65 So. 3d at 871 (¶28).
¶40. Here, we find that Brown has failed to show, by clear and convincing evidence, that a constructive trust is necessary. The chancellor found that a confidential relationship existed between Jones and Smith and that Jones failed to rebut the presumption of undue influence, which arose due to that confidential relationship. However, the chancellor did not find that Jones abused the confidential relationship, only that she failed to rebut the presumption of undue influence that arose by operation of law due to the existence of a confidential relationship. Absent a finding of fraud, duress, abuse of confidence, commission of wrong, unconscionable conduct, or the use of other questionable means, we are not compelled to impose a constructive trust.
¶41. Furthermore, a constructive trust is typically imposed where the aggrieved party has no adequate remedy other than through equity. As our supreme court has stated, “[a] constructive trust is raised by equity to satisfy the demands of justice.” Church of God Pentecostal Inc. v. Freewill Pentecostal Church of God Inc., 716 So. 2d 200, 207 (¶23) (Miss. 1998). The supreme court has further noted:
A constructive trust is a fiction of equity. It is the formula through which the conscience of equity finds expression. When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee. The equity must shape the relief and courts are bound by no unyielding formula. Id. (quoting Russell v. Douglas, 243 Miss. 497, 505-06, 138 So. 2d 730, 734 (1962)).
¶42. However, here, we fail to see why the remedy ordered by the chancellor was inadequate, necessitating the imposition of a constructive trust. The chancellor ordered that the $450,000, which was removed from Smith’s AmSouth account and placed in the various CDs, and any interest earned upon the funds, be returned to the estate and distributed pursuant to the terms of the will.
¶43. We find that the chancellor did not abuse his discretion by failing to impose a constructive trust and Brown has failed to demonstrate, by clear and convincing evidence, that a constructive trust is necessary here. Accordingly, this issue is without merit.
The key point here is that you must establish by clear and convincing evidence that a constructive trust is necessary, and that other avenues of relief would be inadequate. It’s within the chancellor’s discretion. In this case, the chancellor was satisfied, apparently, that the funds were readily identifiable, available, liquid, and would be repaid — all without the necessity of a constructive trust.
The Importance of a Hold-Harmless Clause
January 27, 2015 § 1 Comment
Jeremy and Tiffiny Moseley entered into a property settlement agreement (PSA) that was incorporated into their 2000 irreconcilable differences divorce judgment. One of its terms was that Jeremy would have “exclusive use and possession of the 1998 Chevrolet Camaro,” and that he would be “solely responsible for the payment of all debt, insurance, and taxes associated with said vehicle. The agreement also provided that Jeremy would “hold [Tiffiny] harmless for any debt associated with said vehicle.”
Following the divorce, Jeremy filed for bankruptcy in Arizona, where he had moved. He listed as a creditor the lienholder on the Camaro, Trustmark, but he did not list Tiffiny as a co-debtor or separate creditor based on the hold-harmless language. Jeremy was discharged in bankruptcy in 2001. [Note that this was a pre-2005-amendment non-support obligation that was dischargeable in bankruptcy]
Trustmark sued Tiffiny and obtained a judgment against her for more than $15,000, plus interest.
Tiffiny sued Jeremy for contempt for non-compliance with the hold-harmless clause. The chancellor held that the bankruptcy had no effect on his obligation to Tiffiny under the hold-harmless clause, and awarded her a judgment against him, plus interest and attorney’s fees. He appealed.
In Moseley v. Smith, decided December 2, 2014, the COA affirmed, and Judge Maxwell’s opinion includes some significant language about hold-harmless clauses that you need to file away for future use:
¶16. We begin with the bankruptcy issue. Moseley seems to treat his financial obligations involving the Camaro as a singular debt—a debt he owed to Trustmark, which was discharged in his Chapter 7 bankruptcy. But Moseley actually had two debts connected to the Camaro—(1) the debt to Trustmark bank to repay the car loan, and (2) the contingent debt to Smith, which would arise if Trustmark went after her for repayment of the car loan. While Moseley listed the first debt to Trustmark on his bankruptcy petition, he omitted his second debt to Smith. He also failed to otherwise notify Smith that her rights as a creditor may be affected by his bankruptcy petition. Thus, his debt to Smith was not covered by his bankruptcy discharge. See In re Hill, 251 B.R. 816, 821 (Bankr. N.D. Miss. 2000) …
¶17. In bankruptcy terms, the provision in the property-settlement agreement that Moseley would hold Smith harmless for any debt associated with the Camaro “create[d] a ‘new’ debt, running solely between the former spouses.” In re Jaeger-Jacobs, 490 B.R. 352, 357 (Bankr. E.D. Wis. 2013) (citing In re Schweitzer, 370 B.R. 145, 150 (Bankr. S.D. Ohio 2007)). Under the version of the United States Bankruptcy Code in effect during Moseley’s 2001 bankruptcy, this type of debt was presumptively non-dischargeable as a non-alimony debt “incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record[.]” In re Clark, 207 B.R. 651, 655 (Bankr. E.D. Mo. 1997) (quoting 11 U.S.C. § 523(a)(15) (1994)).
The opinion goes on to analyze the notice requirements in effect at the time of Jeremy’s bankruptcy, and how failure to give Tiffiny notice affected her ability to file a timely objection. Those notice and objection requirements were changed by the 2005 amendments to the bankruptcy laws.
The important point here is that when you add hold-harmless language to your PSA you are creating a new debt between the parties that is most likely not dischargeable, is entirely separate and apart from the underlying obligation, and is enforceable via contempt in chancery court.
It would seem to me that even without the hold-harmless language the agreement between the parties is a separate contractual obligation that would be entirely enforceable; however, the authority cited by Judge Maxwell raises the point to a higher level and should remove all doubt if the hold-harmless language is included.
It’s simple to add that hold-harmless language to your PSA templates. It won’t hurt your client if she is the co-debtor who will not be paying the debt, and it just might make a crucial difference somewhere down the line — and that, after all, is your job.
Judicial Redistricting: An Invitation to Comment
January 26, 2015 § 6 Comments
Judicial redistricting is upon us. The legislature is studying judicial redistricting, which, as I understand it, must be enacted in this session.
My question to you citizen-lawyers is: How would you redistrict our courts?
Send me a comment about how you’d do it. You can go macro, commenting on the whole ball of wax, so to speak. Or you can comment on a particular county or district. I’d like for you to include your rationale.
COA Judge Ken Griffis offered his take on what the legislature might have in mine in this post on his blog.
How would you redistrict our courts? Have at it.
Scene in Mississippi
January 23, 2015 § 8 Comments
The Unconscionable Pre-Nup
January 22, 2015 § 5 Comments
It has long been settled in Mississippi law that antenuptial agreements (or prenups) are enforceable in our courts. They are enforced and interpreted as are other contracts, with the added requirements that there be fair disclosure of finances and that they be voluntarily entered into. These heightened requirements are referred to as “procedural fairness.”
But what about the substance of the agreement itself? If the agreement is found to be procedurally fair, does that preclude further inquiry into the fairness of the instrument?
The case of Mabus v. Mabus, 890 So.2d 806 (Miss. 2003) did seem to hold that the trial court could not consider the substantive fairness of a prenuptial agreement, and a chancellor in a divorce action between Mr. and Mrs. Sanderson limited his analysis to the procedural fairness of the prenup, which he found to be fair. He enforced the agreement as written, despite the fact that it was one-sided in favor of Mr. Sanderson. Mrs. Sanderson appealed, charging that it was error for the chancellor not to consider the fairness of the contract.
In the case of Sanderson v. Sanderson, handed down December 11, 2014, the MSSC reversed and held that the substantive unconscionability of a prenup is a matter that should be considered by the trial court. Justice Coleman wrote for the majority:
¶17. Confusion has arisen in Mississippi as to whether courts should consider the substantive unconscionability of prenuptial agreements. The chancellor in the instant case stated in his Final Decree of Divorce that “some states look at both substantive and procedural unconscionability, Mississippi courts do not.” The lack of clarity in the law has arisen perhaps because of the Mabus Court’s use of the phrase “fundamental fairness” instead of “substantive unconscionability.” The Mabus Court wrote as follows:
The claim that the estates of the parties are so disparate that it questions fundamental fairness is of no consequence. An antenuptial agreement is as enforceable as any other contract in Mississippi. Of course, there must be fairness in the execution and full disclosure in an antenuptial agreement in Mississippi.
Id. at 821 (¶ 64) (internal citations omitted). The above-quoted language constitutes a holding that the Mabus prenuptial agreement was not fundamentally unfair but falls short of a blanket prohibition against considering substantive unconscionability in all prenuptial agreements. The Mabus Court’s language does not prohibit considering substantive unconscionability in prenuptial agreements as a rule of law. Mabus also makes two further assertions that have confused our law of prenuptial agreements.
¶18. First, Mabus states that a prenuptial agreement is a contract like any other contract that is subject to the same rules of construction and interpretation applicable to contracts. Mabus, 890 So. 2d at 819 (¶53) (citing Estate of Hensley, 524 So. 2d at 327). However, prenuptial agreements cannot be contracts like any other if courts cannot consider whether a prenuptial agreement can be substantively unconscionable. “The law of Mississippi imposes an obligation of good faith and fundamental fairness in the performance of every contract . . . this requirement is so pronounced that courts have the power to refuse to enforce any contract . . . in order to avoid an unconscionable result.” Sawyers v. Herrin-Gear Chevrolet Co., 26 So. 3d 1026, 1034-35 (¶ 21) (Miss. 2010) (emphasis added); see also Covenant Health & Rehab. of Picayune, LP v. Estate of Moulds ex rel. Braddock, 14 So.3d 695, 705 (¶13) (Miss. 2009).
¶19. Within contract law, there are many different types of contracts. The Legislature has carved out a remedy for unconscionable sales contracts. See Miss. Code Ann. § 75-2-302 (Rev. 2002). However, Section 75-2-302 has been applied to other types of contracts, such as arbitration contracts. Covenant Health & Rehab. of Picayune, 14 So. 3d at 706. Similarly, the Court has analyzed the unconscionablity of domestic relations contracts. See id. (“We also have found contracts to be unconscionable for clauses other than arbitration agreements.”); In the Matter of Johnson’s Will, 351 So. 2d 1339 (Miss. 1977) (considering unconscionability for a contract between a husband and wife preventing a wife from revoking her husband’s will); West v. West, 891 So. 2d 203, 213 (Miss. 2004) (“A contract may be either procedurally or substantively unconscionable.”). Accordingly, because prenuptial agreements are contracts like any other, substantive unconscionability must be considered.
¶20. The Court has even gone further and defined an unconscionable contract in domestic relations contracts. “[I]t is also the law that courts of equity will not enforce an unconscionable contract. In Terre Haute Cooperage, Inc. v. Branscome, 203 Miss. 493, 35 So. 2d 537 (1948), this Court defined an unconscionable contract as ‘one such as no man in his senses and not under a delusion would make on the one hand, and as no honest and fair man would accept on the other.’” In re Johnson, 351 So. 2d at 1341; see also West, 891 So.2d at 213 (¶ 27) (“Substantively, the terms of the property settlement agreement are less than desirable, but we cannot say that no spouse in his or her right mind would agree to what is, at worst, a begrudging but generous offer . . . to provide alimony . . . .”).
¶21. Second, the Mabus Court appears to have considered substantive unconscionability after stating fundamental fairness was of no consequence. In In re Johnson, the Court explained how to determine if a contract is unconscionable: “In determining whether this contract was unconscionable, it is necessary to analyze what the widow was to receive under the will in contrast to her rights absent the will under the laws of descent and distribution.” In re Johnson, 351 So. 2d at 1342. In other words, the Court considered what the wife would have received if the contract had not existed and if the wife was able to renounce her husband’s will. Similarly, even in light of the premarital agreement, the Mabus Court considered the White factors for lump sum alimony and the Ferguson factors for distribution of the marital property. Mabus, 890 So. 2d at 821-23 (¶¶65-71) (citing White v. White, 557 So. 2d 480, 483 (Miss. 1989); Ferguson v. Ferguson, 639 So. 2d 921 (Miss. 1994)). Also, in Estate of Hensley, in determining whether the prenuptial agreement between the husband and wife was enforceable, the Court noted that “a full reading of the record divulges that Mr. Hensley had actually been very benevolent.” Estate of Hensley, 524 So. 2d at 328. Thus, Mississippi has implicitly considered the substantive unconscionablity of premarital agreements. We hold that, given the contract law on unconscionability, substantive unconscionability for premarital agreements must be considered by trial courts.
¶22. Contract law has largely, with the exception of the sale of goods, remained common law. Therefore, inevitably, contradictions arise. Unconscionability looks at the terms of the contract. See West, 891 So. 2d at 213. Unconscionability also looks at the circumstances existing at the time the contract was made. Vicksburg Partners, L.P. v. Stephens, 911 So.2d 507, 517 (¶ 22) (Miss. 2005), overruled on other grounds by Covenant Heath & Rehab. of Picayune, LP v. Estate of Moulds ex rel. Braddock, 14 So. 3d 695 (Miss. 2009). We hold that substantive unconscionability feasibly could be measured at the time the prenuptial agreement is made; measuring it at the time the agreement is made would maintain consistency in the law. It also would ensure that the Court does not “relieve a party to a freely negotiated contract of the burdens of a provision which becomes more onerous than had originally been anticipated.” Mabus, 890 So. 2d at 819 (¶53) (quoting Estate of Hensley, 524 So. 2d at 328).
¶23. Because the chancellor in the case sub judice operated under the erroneous conclusion that the prenuptial agreement could not be analyzed for substantive unconscionability, we reverse and remand the case for him to do so. We decline the dissent’s invitation to conduct that analysis for the first time on appeal, because the error consisted of making no finding at all rather than the wrong finding. In other words, there is no decision on point for us to analyze for error.
There are some serious ramifications here for the drafting of antenuptial agreements. You will need to discuss the fairness of the agreement with your client, but that is a subject most clients do not care to address; after all, their primary concern is to maintain a status quo that is in all likelihood quite unfair. In Sanderson, for example, the husband’s pre-marital estate was in excess of $3 million, and the wife’s only around $120,000. He wanted to maintain that pre-marital wealth. Is that imbalance unconscionable?
Analyzing antenuptial agreements through the lens of contract law is problematical. The fact is that antenuptial agreements involve considerations that do not enter into negotiation of other types of contracts. As Justice Chandler’s dissent points out, “The decision to marry is not an arms-length commercial transaction, but rather is grounded in personal, moral, religious, and emotional considerations that are off-limits to strangers to the relationship.”
Justice Chandler goes on to add that the majority’s decision ” … leaves our chancellors to forage in the dark, with no guidance as to many issues[;] for instance, whether a prospective marriage partner with children from a previous marriage may protect and provide for those children in a prenuptial agreement, without fear that a court will void the agreement as unconscionable and leave the children at the mercy of the former spouse.” As a drafting or advising attorney, you likewise are in the dark as to whether a particular prenup will withstand scrutiny.
The Iceberg of Proof
January 20, 2015 § 1 Comment
January 19, 2015 § Leave a comment