Voluntary Reduction in Income
July 31, 2019 § 2 Comments
During a period when he was earning between $186,000 and $229,000 working in foreign countries, David Martin entered into an agreed judgment in 2014 to pay his ex, Wendy Borries, $2,000 a month in child support.
Martin’s employment contract ended in May, 2015, and he relocated from overseas to Mississippi. Unable to find employment at his former level of income, he took a job at Ingalls Shipbuilding as an electrician earning $4,200 a month.
In April, 2016, Martin filed a petition for downward modification of support, citing his reduction in income. Borries counterclaimed to require Martin to pay half of the oldest child’s college expenses.
Following a hearing, the special chancellor denied Martin’s request for modification and ordered him to pay half of college, with a small reduction in his child support. Martin appealed, claiming error in the court’s refusal of his modification request.
In Martin v. Borries, handed down June 18, 2019, the COA affirmed. Chief Judge Barnes wrote for the court:
¶8. The chancery court denied Martin’s petition for modification, finding he had “failed to prove to the [c]ourt a substantial and material change in circumstances since the February 28, 2014, [a]greed [j]udgment of [m]odification.” In its findings, the court placed “great weight” in Martin’s earning capacity and concluded that his reduction in income was voluntary.
¶9. “There can be no modification of a child support decree absent a substantial and material change in the circumstances of one of the interested parties arising subsequent to the entry of the decree sought to be modified.” Evans v. Evans, 994 So. 2d 765, 770 (¶16) (Miss. 2008) (quoting Gillespie v. Gillespie, 594 So. 2d 620, 623 (Miss. 1992)). One factor to be considered in assessing whether a material change in circumstances has occurred warranting modification of child support “is the relative financial condition and earning capacities of the parties.” Bailey v. Bailey, 724 So. 2d 335, 337 (¶7) (Miss. 1998) (citing Caldwell v. Caldwell, 579 So. 2d 543, 547 (Miss. 1991)). But “[t]he change must be one that cannot have been reasonably anticipated at the time of the original decree and one that reasonably affects the parties’ ability to abide by the original decree.” Howard, 968 So. 2d at 972 (¶24) (citing Poole v. Poole, 701 So. 2d 813, 818 (¶¶19, 21) (Miss. 1997)). Martin claims that he suffered a material change in circumstances that was unforeseeable and “came through no fault of his own.” Therefore, he argues that the court’s findings were “manifestly wrong.”
¶10. In Tingle v. Tingle, 573 So. 2d 1389, 1391 (Miss. 1990), the chancery court granted a father’s petition to reduce his child-support obligation after the father quit a steady, wellpaying job to attend college full-time. The Mississippi Supreme Court noted that when the father entered into the divorce decree awarding child support—only six months before filing the petition for modification—“it [was] reasonable to believe that this action . . . was anticipated.” Id. at 1392. The supreme court, therefore, concluded that “under the facts of the case at bar, the unilateral acts of the appellee do not justify a reduction in his child support obligation” and reversed the chancery court’s decision. Id. at 1393. Subsequently, in Bailey, the supreme court reversed and remanded a chancellor’s decision to reduce a mother’s child-support obligation after she left her employment to stay at home with a new baby. Bailey, 724 So. 2d at 337 (¶6). Concluding that the mother’s actions constituted a voluntary reduction in income, the Bailey Court reasoned that it would be inequitable for one parent to quit his or her job by choice and expect the other parent “to pick up the slack” without having any vote in the matter. Id. at 338 (¶10).
¶11. At trial, Martin testified that he had worked offshore in project management for eight years and that his adjusted gross income in 2013 was $186,782 and $229,000 in 2014. He earned $184,716 from January to June 2015. When Martin entered into the agreed order in 2014, he was aware that his project assignment had a finite duration. Furthermore, although Martin claims that the job market was “difficult” and that he was unable to find equivalent employment to his prior job, there was testimony that there were job opportunities available to him, which for his own personal reasons, he found unappealing.
Q. And you would admit to His Honor there are postings now on Rigzone that you certainly would be qualified for?
A. There are postings on Rigzone that I would certainly be qualified for.
. . . .
But what I do know is there are various countries in this world that I absolutely will not work in because of the nature that our world is in right now . . . they’re high-risk areas.”
As the chancery court observed, it was Martin’s decision “not to return to his high paying career unless he [could] choose the country to which he would go,” and Martin admitted before the court that taking the job at Ingalls for less pay was “a choice that I have made.” Our Court has held that a minor child “should not suffer a diminution in support because of [the father’s] unilateral act based upon personal preferences about his workplace.” Pullis v. Linzey, 753 So. 2d 480, 485 (¶11) (Miss. Ct. App. 1999). Martin also acknowledged that three months after his contract ended, he bought his wife a new Mercedes for $38,223.
¶12. Borries also testified that Martin had been planning to quit working offshore for a while:
A. He has told me for years that he was going to quit his job and come work at Ingalls, and I wasn’t going to be getting the child support that I was getting.
Q. What did he describe it as? What was the word he used to describe his payments to you?
A. The gravy train.
Q. Okay. So [Martin] said that he was going to quit working overseas, come work at the shipyard, and that, quote, the gravy train–what would happen to the gravy train?
A. It was going to stop.
Q. Okay. And so he told you he was going to do this?
A. He has told me numerous times over the years. He told me he was going to quit his job as soon as . . . he married this woman.
. . . .
So he has told me that when [his wife] gets her citizenship and she–he moves her over here, he’s going to quit working offshore and find a job here, and he wasn’t going to be paying child support because the gravy train was going to stop. And he has told me that so many times it’s not even funny.
In Leiden v. Leiden, 902 So. 2d 582, 585 (¶¶12, 14) (Miss. Ct. App. 2004), this Court affirmed a chancellor’s decision to deny modification of child support when the father’sactions in terminating his employment were voluntary and the evidence showed that he “had planned to take an early retirement.”
¶13. We find this case similar. The evidence reflects that Martin planned to quit his overseas job and return to Mississippi for less pay. These actions were voluntary and anticipated. Finding no manifest error in the chancery court’s determination that Martin voluntarily reduced his income, we affirm the court’s denial of the petition for modification.
Don’t you wish you had a crystal ball that would reveal all of your prospective client’s statements against interest before you decided to get into the case? Gravy train, indeed.
Late to the Party
July 30, 2019 § Leave a comment
Terrie Singleton and Orlando Buford had a son together. Orlando filed an action in chancery seeking custody of the child. On the day set for hearing Terrie failed to appear, and, based on the undisputed testimony of Orlando and his mother, he was granted custody.
Neither Terrie nor her attorney appeared because the attorney had calendered the case for the wrong date. Later that day the attorney discovered the error and asked for a continuance, which was denied. The attorney then filed a “motion for reconsideration” even before the judgment was entered, followed by a motion for new trial “or reconsideration” seven days after the judgment was entered. The chancellor denied the relief and Terrie appealed.
In Singleton v. Buford the COA reversed and remanded in a decision rendered June 18, 2019. Judge Jack Wilson’s opinion for the majority devoted considerable attention to whether Terrie’s post-trial motion were for R59 or R60 relief, and then turned its attention to whether the chancellor abused his discretion in not granting rehearing:
¶18. On the facts of this case, we cannot avoid the conclusion that the chancery court abused its discretion by denying Singleton’s motion for reconsideration or a new trial. [Fn omitted] A child custody case involves more than just the competing interests of ordinary civil litigants. As this Court has explained,
It passes without citation that, in child custody cases, the paramount consideration is the best interest of the child. . . . Certainly, a more prudent determination of custody may be made when based upon evidence presented from both parents rather than evidence presented by only one. Where a chancellor has the opportunity to consider the argument of both parents, the facts and circumstances affecting his determination are presumably more fully developed. It follows that a chancellor is able to make a more informed decision, thereby ensuring to a higher degree of certainty that the best interest of the child is met.
Wade v. Wade, 967 So. 2d 682, 684 (¶8) (Miss. Ct. App. 2007).
¶19. Wade’s discussion of this issue is sound, and it applies directly to the facts of this case. There was no persuasive reason not to allow Singleton to present evidence and provide the court with additional information relevant to the custody determination. Allowing her to present evidence would have allowed the chancellor “to make a more informed decision, thereby ensuring a higher degree of certainty that the best interest of the child is met.” Id. And on the other side of the balance, the need for “[f]inality of judgments as a policy reason for denial is not nearly so strong” when a motion is filed within ten days of the judgment. Bruce, 587 So. 2d at 904. On these facts, we hold that the chancery court abused its discretion by relying on the “need to achieve finality in litigation” [Fn 7] and by denying Singleton’s motion.
[Fn 7] As noted above, the chancery court relied on Stringfellow v. Stringfellow, 451 So. 2d 219 (Miss. 1984), for this proposition. Stringfellow was a Rule 60(b) case involving issues of alimony and property division, and its facts bear little resemblance to the instant case. In Stringfellow, the chancery court held a hearing on alimony and property division, both sides presented evidence, and the court entered a final judgment. Id. at 220. The exwife later filed a Rule 60(b) motion in which she alleged that her ex-husband committed a fraud on the court, but the Supreme Court found no evidence of that. Id. at 222. The exwife also alleged that her lawyer failed to conduct adequate discovery, but the Supreme Court held that, without more, attorney incompetence “does not give rise to Rule 60(b)(2) relief.” Id.
¶20. We emphasize that a legal determination that a trial judge committed an abuse of discretion “does not ‘imply bad faith or an intentional wrong on the part of the trial judge.’” Sanford v. Dudley, 196 So. 3d 1106, 1112 (¶19) (Miss. Ct. App. 2016) (brackets omitted) (quoting White v. State, 742 So. 2d 1126, 1136 (¶42) (Miss. 1999)). Rather, “an abuse of discretion is viewed as a strict legal term.” Id. (quoting White, 742 So. 2d at 1136 (¶42)). As our Supreme Court has explained,
[J]udicial discretion is not boundless but is defined as a sound judgment which is not exercised arbitrarily, but with regard to what is right and equitable in circumstances and law, and which is directed by the reasoning conscience of the trial judge to just result. An abuse of discretion means clearly against logic and effect of such facts as are presented in support of the application or against the reasonable and probable deductions to be drawn from the facts disclosed upon the hearing.
Douglas v. Burley, 134 So. 3d 692, 697 (¶13) (Miss. 2012) (citations and quotation marks omitted). On the facts of this child custody case, there simply was no “sound” reason for denying Singleton’s motion. As a result, the denial was arbitrary and an abuse of discretion.
Carlton dissented, joined by Barnes and Greenlee. They would have ruled that Singleton failed to meet her burden of proof for relief under R59.
This is one of those haunting scenarios that recur in lawyers’ nightmares. Sometimes, though, there is more to the story than meets the eye on appeal. If the lawyer were habitually late or absent, the judge may have drawn a line. If so, the better practice would have been to include that in the order denying the motion. I’m not saying that was a factor in this particular case, but if it were the judge’s action is more understandable.
Valuation in the Face of Insubstantial Proof
July 29, 2019 § Leave a comment
There is plenty of case law holding that the chancellor may rely on the parties’ evidence submitted at trial to value marital assets and make equitable distribution, even when that evidence is less than substantial. I posted on the subject here and here, and in other posts.
That precedent did not persuade the COA, however, in Mark Chism’s appeal from the chancellor’s ruling in the divorce case he filed against his wife, Landaria. In Chism v. Chism, decided June 4, 2019, the COA reversed and remanded the chancellor’s decision that adopted Landaria’s valuation of the parties’ jointly-owned chicken-wing business. Chief Judge Barnes penned the court’s opinion:
¶20. Mark argues that the chancellor erred in accepting Landaria’s valuation of the couple’s business without sufficient proof and therefore led to an inequitable division of the marital property. Thus, Mark claims the entire financial award must be reversed and remanded.
¶21. To resolve property division, the chancellor must: “(1) classify the parties’ assets as marital or separate, (2) value those assets, and (3) divide the marital assets equitably.” Burnham v. Burnham, 185 So. 3d 358, 361 (¶12) (Miss. 2015). Equitable division of property is governed by the factors articulated in Ferguson v. Ferguson, 639 So. 2d 921, 929 (Miss. 1994). The third Ferguson factor asks the chancellor to consider “[t]he market value . . . of the assets subject to distribution.” Ferguson, 639 So. 3d at 929. Three methods of valuation may be used to determine the market value of a business for this purpose: “(1) an asset-based approach, in which assets and liabilities are evaluated, (2) a market-based approach, in which the market is surveyed for similar sales, or (3) an income-based approach, in which a value is placed on earning potential.” Lacoste v. Lacoste, 197 So. 3d 897, 907 (¶34) (Miss. Ct. App. 2016) (citing Singley v. Singley, 846 So. 2d 1004, 1011 (¶18) (Miss. 2002)).
Regardless of what method an expert might choose to arrive at the value of a business, the bottom line is one must arrive at the “fair market value” or that price at which property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of the relevant facts.
Id.
¶22. The chancellor found the total value of all marital property, including the business, was $1,176,598. Landaria was awarded fifty-percent of that value. Taking into account the Ferguson factors and distribution of other marital property, Landaria was ultimately awarded $521,299. Mark does not dispute that the chicken-wing business was a marital asset. However, he maintains that because the business was the couple’s main asset and source of income, a more specific business evaluation was necessary for an equitable distribution of marital property.
¶23. The chancellor found that the parties owned Memphis Best Wings. Although Mark had operated another chicken-wing business prior to the marriage, he started this new business jointly with Landaria during the marriage, and both parties contributed. In fact, Landaria quit her job as a teacher to work at the restaurant as a paid employee. However, not surprisingly, she was dismissed upon the parties’ separation. These facts are uncontested. The chancellor found the business’s value was $1,000,000 according to Landaria’s unsupported testimony and Rule 8.05 estimate. No details of how she arrived at this valuation were provided, and Mark did not even list the business on his Rule 8.05 form. The chancellor found that the business had “grown into a very substantial and profitable” one. He stated the $1,000,000 figure “has not been disputed” by Mark, who did not rebut this estimate at trial or offer his own estimate. Yet, there was no testimony from Landaria about how she arrived at that value for the business. Landaria even admitted, when asked by the chancellor, that her stated value was “just [her] estimate.” However, Mark’s 2014–2016 tax returns, provided during discovery, were admitted into evidence and included his profit and loss income statements. These evidence net profits of $60,291; $48,543; and $63,516, respectively, which does not appear to support a $1,000,000 valuation. [Fn omitted] During his examination of Mark, Landaria’s counsel tried to show that Mark was “keep[ing] the cash out of the business [account].” A photograph was entered into evidence showing Mark and his sister sitting at a table with a pile of cash on it, but none of these bills appear to be large ones. Statements showed that Mark made few cash deposits to the bank each month, but he maintained that he bought supplies and paid bills with the cash and did not keep it for personal use. Additionally, the chancellor speculated that the couple was not reporting all of their cash earnings from the business but using this money to fund their extravagant lifestyle.
¶24. In Mark’s post-trial motion to reconsider, he argued the chancellor erred by appointing a business-valuation expert, and Mark moved to designate Robert Vance as such an expert. Vance submitted a valuation report which came to the conclusion that Memphis Best Wings had a fair market value of $1,898 as a going-concern entity, excluding goodwill. Vance used the asset-based approach for his valuation, claiming that the market-based approach and the income-based approach are inappropriate because they imply the existence of goodwill in the value of a business, which is prohibited under Mississippi law, citing Lacoste and Singley v. Singley, 846 So. 2d 1004, 1011 (¶18) (Miss. 2002). Landaria moved to strike the expert’s testimony and opinion because discovery had been completed for well over a year. Mark moved to proffer it, and a hearing was held on the matter. Although the chancellor denied Mark’s motion to reconsider, he allowed the expert’s proffered testimony and business valuation report, dated April 3, 2018, for identification purposes.
¶25. This Court and the Mississippi Supreme Court have reversed the chancellor when evidence on the valuation of the business in property distribution was insufficient. In Lacoste, this Court reversed and remanded a business valuation which the chancellor based on the previous year’s profit/loss statement. Lacoste, 197 So. 3d at 908 (¶38). Like here, the business was considered the couple’s main asset and source of income. Id. at 907 (¶34). However, the parties failed to present sufficient evidence to value the business by the approach the chancellor deemed best (the income-based approach). Id. at 908 (¶37). While we found “the chancellor did the best she could with the evidence presented,” this Court nonetheless found it necessary to reverse because of lack of support for the valuation. Id. at 909 (¶42). In Mace v. Mace, 818 So. 2d 1130, 1133 (¶¶13, 16) (Miss. 2002), the Mississippi Supreme Court reversed the chancellor on the value placed upon a husband’s medical practice which was a marital asset. The value of $144,000 was determined solely by the husband’s testimony, did not appear to be based upon any reliable method, and it was unclear what physical assets were included in the valuation. Id. at 1134 (¶15).
¶26. Moreover, this Court, following the Mississippi Supreme Court’s directions, has stated that “the foundational step to make an equitable distribution of marital assets is to determine the value of those assets based on competent proof.” Dunaway v. Dunaway, 749 So. 2d 1112, 1118 (¶14) (Miss. Ct. App. 1999) (citing Ferguson, 639 So. 2d at 929). As stated earlier, the chancellor must determine the “fair market value” of the business, using one of the three approaches: an asset-based approach, a market-based approach, or an income-based approach. Lacoste, 197 So. 3d at 908 (¶34) (quoting Singley, 846 So. 2d at 1011 (¶18)).
¶27. Not all approaches will be applicable for all businesses. For example, in Lacoste, the chancellor found an asset-based approach was inapplicable because the business had few assets, owned little equipment, and had no employees or training facility. Lacoste, 197 So. 3d at 908 (¶36). The market-based approach was also ruled out as no comparable business sales were introduced, and the business’s success was largely due to the reputation of the owner and marketing. Id. The chancellor, therefore, considered only the income-based approach as appropriate. Id. at (¶37). We found, however, that given the drastic income fluctuations and possibility that income “may be intertwined with goodwill, as the business hinge[d] on [the husband’s] reputation and personal efforts,” the case had to be remanded for further evaluation. Id. at 910 (¶45).
¶28. Here, the chancellor was unable to adopt any of the three approaches as none were presented to him. Landaria offered only an unsupported estimate on her 8.05 form and testimony. Mark did not provide any value for the business on his Rule 8.05 form or give any testimony as to its value. As established in Lacoste and Mace, the chancellor should require that the parties utilize a reliable method of valuation and support it with adequate proof, or prove valuation through expert testimony. See Lacoste, 197 So. 3d at 910 (¶46); Mace, 818 So. 2d at 1134 (¶15). If they fail to offer such proof, the chancellor may appoint an independent valuation expert. Id. Accordingly, we reverse the chancellor’s $1,000,000 valuation of Memphis Best Wings and remand for further proceedings.
What this portion of the opinion omits is that Mark failed, refused and neglected to provide financial proof sufficient to value the business, and was even jailed for contempt for non-cooperation in discovery. He went through a succession of lawyers. It seems to me that he had his chance to offer proof of the value of of his business, but he chose to play cat-and-mouse games with Ladaria and the court. Unfortunately, those shabby tactics served him well on appeal. He actually benefitted from his evasion of discovery by getting a second bite at the apple.
Contrast the court’s treatment of Mark’s coyness with values and the suggestion that the trial judge should appoint an expert with this language from Kimble v. Kimble, a COA case decided only 14 days after Chism:
¶8. “[T]he foundational step to make an equitable distribution of marital assets is to determine the value of those assets based on competent proof.” Dunaway v. Dunaway, 749 So. 2d 1112, 1118 (¶14) (Miss. Ct. App. 1999) (citing Ferguson, 639 So. 2d at 929). “[I]t is incumbent upon the parties, and not the chancellor, to prepare evidence touching on matters pertinent to the issues to be tried.” Benton v. Benton, 239 So. 3d 545, 548 (¶11) (Miss. Ct. App. 2018). When “a party fails to provide accurate information, or cooperate in the valuation of assets, the chancellor is entitled to proceed on the best information available.” Id. The chancellor possesses sole authority to assess both the credibility and weight of witness testimony. Culumber v. Culumber, 261 So. 3d 1142, 1150 (¶24) (Miss. Ct. App. 2018). [My emphasis]
Admittedly, Kimble involved valuation of vehicles, not a business, but sometimes it’s difficult here at grass-roots level to figure out where we are supposed to draw the line. I posted about Kimble here.
Denial of Visitation and Modification of Custody
July 24, 2019 § Leave a comment
The chancellor found Shanna Hayes in contempt for denying her ex-husband, Jeremy Hayes, visitation with their daughter. The judge also found that the denial was a material change that had an adverse effect on the child, and he modified custody, awarding it to Jeremy. Shanna appealed, arguing among other grounds that the chancellor erred in modifying custody.
In the case of Hayes v. Hayes, the COA affirmed on May 7, 2019. Judge Westbrooks wrote the opinion for the court:
¶36. Shanna asserts that the trial court’s court [sic] modification of custody was against the overwhelming weight of the evidence and insufficient to support a finding that there was a material change in circumstances adversely affecting K.H., warranting custody modification.
¶37. Shanna relies on Ash v. Ash, 622 So. 2d 1264 (Miss. 1993), in support of her argument. In Ash, the Mississippi Supreme court held that “a mother’s continual refusal to allow a father visitation did not constitute a material change of circumstances justifying a change in custody.” Id. at 1266. The Court found that “[t]he better rule would be for a chancellor to enforce contempt orders through incarceration, when necessary, to insure compliance with custody provisions rather than resorting to a change of custody.” Id.; see also Blevins v. Bardwell, 784 So. 2d 166, 179 (¶49) (Miss. 2001). “The ‘totality of the circumstances’ must be considered.” Ash, 622 So. 2d at 1266.
¶38. But in Ash, the supreme court determined that the chancery court found, by clear and convincing evidence, “that the mother’s interference with the father’s visitation ha[d] been a material change of circumstances that c[ould not] be corrected by contempt; that it [wa]s and d[id] adversely affect the child and that it [wa]s in the child’s best interest that he live with his father.” Ash, 622 So. 2d at 1267. Essentially, the supreme court upheld the custody modification.
¶39. Further, the Mississippi Supreme Court has held that “[p]arental behavior that poses a clear danger to [a] child’s mental or emotional health can justify a custody change.” McDonald v. McDonald, 39 So. 3d 868, 880 (¶37) (Miss. 2010) (citing Morrow v. Morrow, 591 So. 2d 829, 833 (Miss. 1991)). Furthermore, “[i]n determining whether a material change of circumstances has occurred, a chancellor should look at the overall circumstances in which a child lives.” Id. (internal quotation marks omitted).
¶40. Here, the trial court found by clear and convincing evidence that Shanna exhibited an alarming pattern of denying Jeremy’s visitation of K.H. without just cause. The trial court noted that Shanna had also filed multiple misdemeanor criminal charges against Jeremy, filed a request for a domestic-violence order, and filed two felony charges against Jeremy. The GAL, after conducting a thorough Albright analysis, found that there had been a material change in circumstances in Shanna’s home that adversely affected K.H. The GAL noted the inappropriate and disturbing photos that Shanna sent of K.H., claiming that she had been abused. The GAL also mentioned that Shanna initiated several DHS claims against Jeremy alleging that he sexually assaulted K.H. These claims, however, were later proven to be unsubstantiated. As a result, the GAL recommended that physical custody be modified to Jeremy, noting that Shanna should enjoy standard visitation with K.H. and the parties continue to share joint legal custody. It appears that the trial court considered the totality of the circumstances affecting K.H. since Shanna and Jeremy’s divorce in 2015. The trial court ultimately found the following:
There has been a material change in the circumstances which adversely affects the minor child, [K.H.] Shanna has made multiple false accusations that [K.H.] has been sexually abused by Jeremy, causing [K.H.] to undergo multiple unnecessary physical examinations, Shanna has wil[l]fully refused Jeremy visitation with [K.H.] and has done everything she could do to alienate [K.H.] from Jeremy. It is [in] the best interest of [K.H.] that Jeremy be given her primary physical custody with Shanna to have this Court’s standard visitation rights.
¶41. After review of the record, we cannot say that the trial court’s decision was manifestly wrong in finding Shanna in criminal and civil contempt. We also do not find error in the trial court’s decision to award Jeremy attorney’s fees. Accordingly, we find that there was substantial evidence to support the trial court’s findings of fact and conclusions of law and affirm the custody modification.
Ash is the go-to case when arguing that interference with visitation should result in a change of custody. But remember that you still have to show an adverse effect and best interest, and that contempt alone will not correct the problem.
Reasonableness of the Fee
July 23, 2019 § 1 Comment
Attorney Blackburn contracted with Burford in 2008 to provide legal services ” … in connection with his estate plan and the administration of his estate, including but not limited to preparation of estate planning documents, consultations, updates/revisions, and the formal administration of his estate upon his demise including assistance with Client’s revocable living trust.” The agreed fee was $265,000.
Six years after the contract was signed, Blackburn died. The following year Burford died.
Blackburn’s executor probated a claim against Burford’s estate for $265,000. Following a hearing, the chancellor ruled that the contract was one for personal services, and was therefore unenforceable due to Blackburn’s death. She allowed Blackburn’s estate to recover reasonable attorney’s fees based on quantum meruit. Blackburn’s estate appealed.
In Estate of Burford v Freeman, decided April 16, 2019, the COA affirmed. One issue raised by the appellant was that the legal services contract was invalid because the fee was unreasonable. The majority (by Judge McCarty) held that, because the contract ended with Blackburn’s death, it did not need to reach the issue.
Judge Jack Wilson wrote a concurring opinion that does address the reasonableness of the fee arrangement. Since it includes an enlightening analysis, I am providing part of it here:
¶31. Rule 1.5 of the Mississippi Rules of Professional Conduct clearly mandates that “[a] lawyer’s fee shall be reasonable.” M.R.P.C. 1.5(a). Section 34 of the Restatement (Third) of the Law Governing Lawyers (2000) likewise states that “[a] lawyer may not charge a fee larger than is reasonable under the circumstances.” This principle applies not only in disciplinary disputes but also in contract disputes between lawyers and clients. 1 Geoffrey C. Hazard et al., The Law of Lawyering § 9.06.1, at 9-18 (4th ed.) (“[I]n a variety of civil contests between lawyers and clients over fees, the client will prevail unless the lawyer’s fee is reasonable.”). Indeed, “courts are generally more likely to find a fee unreasonable in the sense that it is unenforceable against the client than they are to find the same fee so unreasonable as to warrant professional discipline.” Id. at 9-23. “[I]n fee disputes between lawyer and client, [an unreasonable] fee will not be approved . . . even though the parties had agreed to the fee.” Restatement, supra, § 34 cmt. a (emphasis added). In such cases, “[a] client-lawyer fee arrangement will be set aside when its provisions are unreasonable to the client.” Id. cmt. b (emphasis added); accord 1 Robert L. Rossi, Attorneys’ Fees § 1:18, at 1-56 (3d ed.) (“Courts may scrutinize fee agreements to determine the reasonableness of the fee, and have the inherent power to refuse to enforce contracts for excessive fees. Thus, the excessiveness of the fee may be asserted by the client as a contract defense in an action to recover an attorney’s fee.”). [Fn 4]
[Fn 4] “Although reasonableness is usually assessed as of the time the contract was entered into, later events might be relevant.” Restatement, supra, § 34 cmt. c. For instance, a large flat fee may be found unreasonable if it far exceeds the reasonable value of the services ultimately provided by the attorney. 1 Hazard et al., supra, § 9.06.2, at 9-24 to -25; Jeffrey Jackson & Donald Campbell, Professional Responsibility for Mississippi Lawyers § 22:7, at 22-9 (2010).
¶32. “Such a rule obviously encroaches upon the freedom of contract, but the limitation of reasonableness is a longstanding one.” 1 Hazard et al., supra, § 9.02, at 9-8. Moreover, the rule simply recognizes that “[l]awyers . . . owe their clients greater duties than are owed under the general law of contracts.” Restatement, supra, § 34 cmt. b; see also, e.g., In re A.H. Robins Co., 86 F.3d 364, 374 (4th Cir. 1996) (“An attorney has the burden of proof as to the reasonableness of his fee when he sues to recover from his client. This allocation of the burden of proof is premised on the relationship of trust owed by a lawyer to his client, with concomitant obligation to charge only a reasonable fee . . . . This approach is at the very heart of the special relationship between attorney and client.”) (quoting McKenzie Construction Inc. v. Maynard, 758 F.2d 97, 100 (3d Cir. 1985)). “Fee contracts between attorney and client are the subjects of special interest and concern to the courts, and are not to be enforced on the same basis as ordinary commercial contracts.” 1 Rossi, supra, § 1:13, at 1-42.
¶33. There are few reported Mississippi cases about contractual fee disputes between attorneys and clients. However, as stated above, our law is clear that a lawyer may not charge or attempt to collect an unreasonable or excessive fee. See M.R.P.C. 1.5(a); Miss. State Bar Ass’n v. A Miss. Atty., 489 So. 2d 1081 (Miss. 1986). Moreover, the Mississippi Supreme Court has held that a fee agreement “will be held invalid” if it provides for a fee that “is so excessive in proportion to the services to be rendered as to be in fact oppressive or extortionate.” Fitzpatrick v. Kellner, 187 Miss. 843, 850-51, 193 So. 911, 912-13 (1940); accord Ownby v. Prisock, 243 Miss. 203, 207-08, 138 So. 2d 279, 280 (1962).
¶34. The fee agreement at issue in this case is invalid and unenforceable because it purports to charge an unreasonable and excessive fee. The record shows that Blackburn drafted and later revised a relatively simple will and a few other documents. The other documents are not even in the record, but apparently none took much time for Archer to create. As noted above, the original drafts of the will and other documents and two rounds of later revisions all predated the fee agreement that Blackburn is attempting to enforce in this case. Blackburn implies that Burford’s estate was expected to be large or complicated, but there is no credible evidence in the record to show that. There was testimony suggesting that Burford was perhaps a difficult client who required some special attention; however, as discussed above, that testimony was also vague and internally contradictory. There was also vague testimony that Blackburn handled a “car wreck” and a “real estate closing” for Burford. But Blackburn presented absolutely no evidence as to what or how much time either matter involved. More important, neither matter related to the fee agreement that Blackburn seeks to enforce in this case, which covers only estate planning and administration.
¶35. In affirming the judgment of the chancery court, we also affirm the chancellor’s finding that “approximately 36 hours of work” was actually proven based on the testimony presented at trial in this case. That is a reasonable finding based on the “less-than-ideal evidence presented by the parties to the litigation.” Pruitt v. Pruitt, 144 So. 3d 1249, 1252-53 (¶11) (Miss. Ct. App. 2014) (emphasizing that a chancellor’s findings must be based on the evidence presented by the parties, even if that evidence is less than ideal). A fee of $265,000 for thirty-six hours of work is clearly unreasonable and excessive, and no other evidence was presented at trial that could possibly justify such a fee. Burford ultimately received a relatively simple will and a few other documents that, while not in the record, apparently were not complicated to create. For those services, $265,000 clearly is an unreasonable and excessive fee. This renders the fee agreement invalid and unenforceable. Fitzpatrick, 187 Miss. at 850-51, 193 So. at 912-13; Ownby, 243 Miss. at 207-08, 138 So. 2d at 280; Restatement, supra, § 34 cmt. a; Hazard et al., supra, § 9.06.1, at 9-18; Rossi, supra, § 1:18, at 1-56 (3d ed.). Therefore, the judgment of the chancery court could also be affirmed on this ground. [Fn omitted]
I have known some lawyers to charge huge fees in domestic litigation for what I considered average representation in run-of-the-mill cases. This case is a reminder that we have a professional responsibility to ensure that fees are reasonable.
No Such Thing as Primary Custody
July 22, 2019 § 2 Comments
In footnote one to the COA’s decision in Kaiser v. Kaiser, decided June 11, 2019, Judge Corey Wilson offers the following:
As this Court has noted, “there is actually no provision under the statute for ‘primary’ physical custody.” Shows v. Cross, 238 So. 3d 1224, 1227 n.2 (Miss. Ct. App. 2018) (quoting Rush v. Rush, 932 So. 2d 794, 796 (¶9) (Miss. 2006) (discussing Miss. Code Ann. § 93-5-24 (Rev. 2004)). But lawyers and judges commonly use the phrase. “As in this case, the phrase ‘primary physical custody’ is often meant to describe physical custody in one parent, with the other having specified visitation rights.” Id.
The fact that there is no such thing as “primary” physical custody is a concept about which I have posted before. A post with links to previous posts is at this link.
Use of the term is not objectionable merely because there is no provision in law for it; as I pointed out previously, it can work considerable mischief, particularly where one or both of the parties believe that the term “primary” confers some heightened status, only to learn to their chagrin that it adds nothing. (Chagrin is a technical legal term meaning “pissed off at the lawyers”).
Grounds for TPR and Adoption
July 17, 2019 § Leave a comment
Justin Harmon and Kristin Ingle were divorced in 2013. Kristin was awarded sole custody of their two children. Justin was granted restricted visitation due to drug and alcohol abuse, and Kristin was authorized to suspend visitation if she had credible information that Justin had returned to his abusive ways. After an episode in which Justin became drunk while visiting, Kristin did suspend the visitation. In 2016, she and her new husband filed petitions for termination of Justin’s parental rights and for adoption of the two children. Justin objected.
A GAL was appointed. Justin failed a hair-follicle test, positive for methamphetamines. The chancellor found that there was an adequate basis for TPR and adoption, and granted that relief. Justin appealed.
The COA affirmed on May 7, 2019 in Harmon v. Ingle and Perry. The case is a good illustration of the type of behavior that the courts can find to justify TPR and adoption, so I am quoting from Chief Judge Barnes’s opinion for the unanimous court:
¶10. Although Justin concedes that he had not seen his children or paid child support for more than three years by the time of trial, he argues that his “abandonment” was due to Krystal’s interference with his visitation. Justin claims he was not informed of their change in address, which violated the court’s order. Therefore, he argues that his parental rights were wrongfully terminated, and he requests that this Court reverse the judgment and remand for reinstatement of his parental rights.
¶11. A chancery court’s termination of a parent’s rights is reviewed “under the manifest error/substantial credible evidence test.” Blakeney v. McRee, 188 So. 3d 1154, 1159 (¶13) (Miss. 2016). “[W]here there is credible proof from which a rational trier of fact may have found grounds for termination by clear and convincing evidence,” the trial court’s decision will not be disturbed. Id. (quoting A.B. v. Lauderale Cty. Dep’t of Human Servs., 13 So. 3d 1263, 1267 (¶14) (Miss. 2009)). The grounds for the involuntary termination of parental rights are set forth in Mississippi Code Annotated section 93-15-119, which provides in pertinent part:
(1) A court hearing a petition under this chapter may terminate the parental rights of a parent when, after conducting an evidentiary hearing, the court finds by clear and convincing evidence:
(a)(i) That the parent has engaged in conduct constituting abandonment or desertion of the child, as defined in Section 93-15-103, or is mentally, morally, or otherwise unfit to raise the child, which shall be established by showing past or present conduct of the parent that demonstrates a substantial risk of compromising or endangering the child’s safety and welfare; and
(ii) That termination of the parent’s parental rights is appropriate because reunification between the parent and child is not desirable toward obtaining a satisfactory permanency outcome; or
. . . .
(2) An allegation of desertion may be fully rebutted by proof that the parent
. . . .
(b) Was willing to provide financial support and to make visitations with the child, but reasonable attempts to do so were thwarted by the mother or her agents, and that the parent is now willing and able to assume legal and physical care of the child.
¶12. “Abandonment . . . includes ‘any conduct by a parent which evinces a settled purpose to forego all duties and relinquish all parental claims to the child.’” In re Adoption of Minor Child, 931 So. 2d 566, 577 (¶29) (Miss. 2006) (quoting Gunter v. Gray, 876 So. 2d 315, 320 (¶21) (Miss. 2004)). “The test for abandonment is objective and requires a finding that, under the totality of the circumstances, ‘the natural parent has manifested his severance of all ties with the child.’” Id. Krystal testified that Justin never contacted her regarding visitation with the children; he only left her one voicemail in 2015 asking if the kids could go see his ailing grandfather.
Q. Okay. But he’s never asked you about making arrangements to visit with the children?
A. No, sir.
. . . .
Q. Have you received any child support payments?
A. No. The last one I received was dated for January 2014. The chancery court concluded in its orders that there was clear and convincing evidence that Justin had not made any “reasonable efforts” to visit the children. At trial, Justin claimed that he tried to call Krystal, but she did not answer; so he assumed she had changed her number and “didn’t see the point in continuing.” However, he admitted that he never tried to text her. Justin also knew where Krystal’s parents lived and worked. As the chancellor noted in his findings, even if we find all of Justin’s testimony credible, “it would be that he made two or three phone calls, [his uncle] made two or three phone calls, his mom and dad talked to [Krystal’s dad] and that’s about it.”
¶13. The testimony also showed that Justin had little to no relationship with his youngest son. At trial, Justin was not even certain of Jesse’s date of birth and admitted his youngest son would likely not recognize him. Justin’s relationship with his older son, Brian, was strained at best because Brian was a witness to his alcohol abuse and anger outbursts. Krystal testified: “A kid should not see their parent punch a bedroom door and have their hand come out on the other side trying to get to their mom. . . . [Brian] has no good memories of being a kid, and it’s because I stayed [with Justin].” Krystal cancelled a supervised visitation during the couple’s separation because Brian had hives, which were caused by stress, and she opined that if the boys had to resume visits with Justin, “it would destroy them.” Justin confessed that he used methamphetamine for a couple of years during the divorce, and the evidence of his drug test showed positive results for methamphetamine in 2017.
¶14. At trial, the chancellor expressly rejected Justin’s argument that Krystal interfered with his visitation, finding:
When [Krystal] left in 2014, she did not do so, in the opinion of the [c]ourt by clear and convincing evidence, with the intent of forever and permanently severing the relationship between these children and Justin. She did so in an attempt to protect them and convince him to get his life in order.
He also found that the evidence showed that Justin “willfully neglected and refused to provide any support for those children.” We find substantial and credible evidence to support the chancellor’s findings. Krystal acknowledged that she did not notify Justin of her new address but explained that she “was scared because [she] knew his anger outbursts and his problems” and that she “was just trying to be safe and protect my kids.” She checked Justin’s Facebook page occasionally to see how he was doing, but because he never contacted her regarding the children, she “assumed that he hadn’t gotten any better.” Krystal said she was surprised that Justin never made any attempt to try to resume visitation.
Q. Were you trying to hide the boys from Justin?
A. No. Like I said, I genuinely, in my gut, thought that, especially asmuch financial and legal help that Randy and Janet had with Justin, that they were going to file some sort of paperwork[,] and I would be able to get him to go back to rehab so he could get clean again so we could do supervised visits again so we could start the whole process over again. I didn’t know he would just drop it.
The GAL’s report acknowledged that Krystal kept the children from Justin, but did so for their safety and well-being, noting: “Krys[tal], I think, tried to sever all ties with Justin because of their past history, with his violence and drug/alcohol abuse.” However, the GAL further observed that neither Justin nor his family members “took any of the necessary steps to become a part of the children’s lives.” The GAL concluded that it was in the children’s best interest for Justin’s parental rights to be terminated and for Shaun to be allowed to adopt the boys. Justin does not dispute the GAL’s factual findings.
¶15. Furthermore, the evidence was undisputed that Justin provided no financial support for the children since February 2014. The chancery court observed:
If he were willing to provide financial support, he would have come into court and said, “Here’s the bank statement from the local bank where I set up a savings account for my children, and here’s the money.” . . . Instead what he said was he didn’t work very often, . . . he didn’t have the money to pay the child support.
As the GAL testified, Justin, who had a commercial driver’s license, did not work regularly after the divorce, and the attributing cause of his lack of employment was his abuse of drugs and alcohol.
¶16. Because there was clear and convincing evidence that Justin made no serious effort to see his children or to provide financial support for them from 2014 to 2017, we find no manifest error in the chancery court’s determination that he had engaged in conduct constituting abandonment and that it would not be in the children’s best interest to be reunified with their natural father. Accordingly, we affirm the court’s orders to terminate Justin’s parental rights and to grant the petitions for adoption.
Impact on the Harmony and Stability of the Marriage
July 16, 2019 § Leave a comment
Eleanor Ellison and Stephen Williams had a stormy relationship punctuated with Stephen’s numerous departures. After Stephen left her once again and moved in with another woman, Eleanor filed for divorce. Following a trial, the chancellor divided the marital estate, and Eleanor was displeased with the outcome, even though she received a larger share of the marital estate.
She appealed, and one of the issues she raised was that the chancellor had given inadequate attention to the effect of Stephen’s conduct on the marriage, which, of course, is one of the Ferguson factors.
In Ellison v. Williams, handed down June 18, 2019, the COA reversed and remanded on the issue. Judge Westbrooks wrote for a 5-4 court:
¶11. Ellison also asserts that the chancellor should have considered Williams’s extramarital affair. We agree. The Mississippi Supreme Court has reversed and remanded cases when the chancellor did not consider how an extramarital relationship “impacted and burdened the stability and harmony of the marriage.” Watson v. Watson, 882 So. 2d 95, 108 (¶68) (Miss. 2004) (quoting Singley v. Singley, 846 So. 2d 1004, 1009 (¶13) (Miss. 2002)). “Mississippi is in a minority of states in which marital misconduct is a factor for consideration in property division.” Deborah H. Bell, Bell on Mississippi Family Law § 6.08[2][e], 176 (2d ed. 2011).
¶12. Here, Ellison did receive a slightly larger portion of the marital estate than Williams, but the chancellor did not cite that as his reasoning. The chancellor stated that he was aware it was Ellison’s family home that they first resided in and then leveraged to purchase another home; he therefore awarded Ellison sixty percent. The chancellor awarded Ellison a fault-based divorce but then did not directly consider how Williams’s absences and infidelity affected the stability and harmony of the home when dividing the estate. Because we believe the chancellor’s lack of consideration was error, we reverse and remand for further proceedings on this issue to allow the chancellor to consider the extramarital relationship in equitably dividing their estate. Additionally, we reverse and remand to allow the chancellor to make a full Ferguson analysis on the record.
Judge Tindell, joined by Carlton, Greenlee, and McCarty, disagreed in part. His concurring and dissenting opinion:
¶20. Because the chancellor heard evidence of Williams’s extramarital relationship and thereafter awarded Ellison with a greater percentage of the marital estate, I would affirm the chancellor’s judgment in its entirety. Where substantial evidence supports a chancellor’s findings, the Court is without authority to disturb the chancellor’s conclusions even if it would have found otherwise in the original matter. Joel v. Joel, 43 So. 3d 424, 429 (¶14) (Miss. 2010). We have previously held that “failure to make an explicit factor-by-factor analysis does not necessarily require reversal where we are satisfied that the chancellor considered the relevant facts.” Palmer v. Palmer, 841 So. 2d 185, 190 (¶18) (Miss. Ct. App. 2003). Unless the chancellor’s judgment was manifestly wrong, clearly erroneous, or applies an erroneous legal standard, the judgment should stand. Carambat v. Carambat, 72 So. 3d 505, 510-11 (¶24) (Miss. 2011).
¶21. The final judgment does address Williams’s adultery in the chancellor’s findings of fact. Further, after conducting a full Ferguson analysis, the chancellor awarded Ellison sixty percent of the marital assets and forty percent to Williams. Substantial evidence supported the chancellor awarding a greater portion of the marital estate to Ellison, and he did so accordingly. For these reasons, I find no manifest error in his conclusions and respectfully dissent in part from the majority’s opinion.
To say that there is a crazy-quilt of decisions on point would be a laughable understatement: the chancellor must address all of the Ferguson factors; the chancellor must address only the pertinent Ferguson factors; the chancellor’s consideration of the Ferguson factors may be gleaned from her findings in the record, regardless whether she ever mentions Ferguson; Ferguson factors must be specifically addressed; adulterous conduct must be considered for its impact on the stability of the household; the chancellor may not use property division to punish misconduct or reward good conduct.
The Better Chancery Practice Blog 