When Alimony is Like an Elephant

November 28, 2016 § Leave a comment

Most of you, I am sure, are familiar with the fable of the blind men and the elephant. Six different blind men, for some reason, are asked to feel an elephant and to describe what the creature is like based on their experience. Of course, each one can offer a description based only on his limited groping. One surmises a rope-like creature based on feeling the trunk, another guesses a tree-like creature after feeling the leg, and yet another posits an umbrella-like critter from feeling the ear. And so on. The point being that perception based on limited evidence can be misleading and incomplete.

That takes us to the COA’s decision in Kittrell v. Kittrell, decided October 4, 2016, in which the court was called upon to determine whether the special chancellor erred in concluding that an alimony provision in a PSA was periodic. To set the stage, Judge Lee recited the legal standard and went on to describe the court’s chore:

¶9. “Although a court order imposing alimony must, in general, clearly identify what type of alimony is being awarded and adhere to its traditional characteristics, our ‘Supreme Court has not required consensual support agreements to follow the same terms as for court imposed alimony.’” Id. at 918 (¶30) (quoting Elliott v. Rogers, 775 So. 2d 1285, 1289 (¶15) (Miss. Ct. App. 2000)). “Rather, the Supreme Court has emphasized divorcing parties’ freedom and ‘broad latitude’ to settle the financial aspects of their separation by contract as they see fit[.]” Id.

¶10. It is because of this broad latitude that this Court is faced with the hopeless task of determining whether the alimony provision in Stan and Stephanie’s property-settlement agreement provided for lump-sum or periodic alimony. [Emphasis added]

Hopeless task? Hyperbole, you think? Well, judge for yourself; here’s the PSA provision in question:

Both parties do hereby agree that Stan Kittrell each month shall deposit his monthly retirement check from the Public Employees Retirement System (PERS) into Stephanie Kittrell’s bank account via direct deposit with the monthly amount of $250.00 considered child support and the remainder as alimony. The child support will continue to be deposited monthly until the child’s [twenty-first] birthday or until the child no longer lives with the mother. The remainder of the check shall be considered alimony and shall continue to be paid until the child reaches the age of [twenty-one] or until Stephanie Kittrell remarries. Stan Kittrell shall receive sixty percent (60%) of the [thirteenth] PERS check and Stephanie Kittrell shall receive forty-percent (40%) of the same until such time as the child reaches the age of [twenty-one] or until the child no longer lives with the mother. Stephanie Kittrell by signing this document agrees to pay the house note on the marital home out of the PERS money she receives from Stan Kittrell.

Stan Kittrell hereby relinquishes all rights and benefits to Stephanie Kittrell’s 401k retirement funds. Both parties relinquish any right to bonuses, rewards, or financial settlements of any kind.

Hyperbole? I think not. Here’s how the COA addressed it:

¶18. We also reverse the chancery court’s finding that the alimony provision in Stan and Stephanie’s property-settlement agreement provided for periodic alimony. The alimony provision does not strictly adhere to the traditional characteristics of either periodic or lump sum alimony. See Lowrey [v. Simmons], 186 So. 3d [907] at 919 (¶33) [(Miss. App. 2000)]. Accordingly, we will enforce the provision as it is written. See id. Because Stephanie did not remarry, Stan was obligated to pay alimony until Dylan reached the age of twenty-one on September 17, 2014. And Stan’s thirteenth PERS check would have terminated when Stan was granted custody of Dylan. We remand this case to the chancery court for a calculation of the specific amount of alimony owed as well as costs and attorney’s fees.

I am guessing that this was not the outcome Stan expected when he signed that PSA back in 2005.

When you draft an agreement such as a PSA, keep in mind that it not only has to reflect the parties’ agreement and make sense to them and counsel involved, it most importantly must be clear enough to make sense to others not involved, and particularly to any judge who will later be called upon to construe it. Again : Draft it, and set it aside for a day or so. Then pick it up and read it over again carefully. Does it say what needs to be said? Then re-read it pretending that you know nothing about the negotiations (like a judge has to do). Is it clear from its plain language just what is intended and what is to occur? If it is intended to be periodic alimony, then say so in plain, unmistakable terms. When you leave it to a judge to figure it out later, your client might not get what she thought she bargained for.

This case also involved a claim for termination of alimony for cohabitation. That’s for another day.

Cohabitation and Termination of Alimony

July 5, 2016 § 2 Comments

If you have been looking for a history of Mississippi law on termination of alimony due to cohabitation, you need look no further than the MSSC’s decision in Heiter v. Heiter, by Sheffield, handed down June 9, 2016.

Patrick and Lindalyn Heiter were divorced in 2001. At the time of the divorce, Lindalyn had been diagnosed with several cognitive conditions that impaired her ability to perform simple tasks such as counting money or writing checks. Her ability to hold a job was impacted by her inability to coordinate or manage time properly. She could complete small tasks, but lacked organizational skills. Dr. Koch, a professional who examined her, opined that she would need to reside in an assisted-living situation; she had attempted living on her own after the separation, but those attempts ended poorly. Patrick agreed to pay Lindalyn $650 a month in periodic alimony.

Soon after the divorce, the court appointed co-guardians, one for her person, and the other for her estate. Sheffield, an attorney whose name appears in the style of the case, was appointed guardian of her estate, and Stepro was appointed guardian of the person.

In 2007, Patrick filed a petition for modification to terminate alimony, alleging that Lindlyn was cohabiting with a male, Curtis Cole. Patrick also claimed that she was receiving SSI, but that proved to be untrue.

Following a trial, the chancellor found that Lindalyn’s only income was the $650 alimony, and that she was drawing down some retirement funds she received in the divorce to make up the nearly $300 deficit between those sums and her expenses. The chancellor also found:

. . . [I]t is clear that Lindalyn is also unable to maintain employment. . . .

There is ample evidence that both Curtis and Lindalyn are supporting each other financially, and that Lindalyn would not be able to survive if she did not share finances with him. . . . Lindalyn only pays half of the rent and utilities on the house, while Curtis picks up the remaining expenses. . . . Curtis is currently on disability and does not work. . . .

The chancellor denied Patrick’s request to terminate alimony, and he appealed.

Justice Randolph addressed Patrick’s for a unanimous court:

¶5. Patrick sought to be relieved from paying alimony to Lindalyn. Patrick alleged that Lindalyn was cohabiting with a male and was receiving SSI benefits. Patrick further averred that there had been “a substantial and material change in circumstances since the original decree was entered,” and that the original decree should be modified to terminate or reduce his alimony obligation. Traditionally, alimony payments cease only if the receiving party remarries or either party dies. McDonald v. McDonald, 683 So. 2d 929, 931 (Miss. 1996). However, a chancellor has authority to modify alimony “upon a finding of a substantial change in circumstances, regardless of any intent expressed by the parties to the contrary.” Id.

¶6. In 1961, this Court was first faced with whether “a chancery court [could] divest a wife of future alimony payments on the ground of misconduct of the wife after the divorce.” Rubisoff v. Rubisoff, 242 Miss. 225, 233, 133 So. 2d 534, 536 (1961). Citing Bunkley and Morse’s Amis on Divorce and Separation in Mississippi [Fn 4] and 17 American Jurisprudence, Divorce and Separation, the Rubisoff Court concluded that a chancery court could exercise its powers by modifying or revoking its prior alimony award. Rubisoff, 242 Miss. at 236, 133 So. 2d at 538. The Court further determined that “it was the duty of the trier of facts to determine whether or not the alleged misconduct . . . was of such nature as to forfeit [the] right to future alimony.” Rubisoff, 242 Miss. at 236, 133 So. 2d at 538.

[Fn 4] 4 J.W. Bunkley Jr. & W.E. Morse, Bunkley and Morse’s Amis on Divorce and Separation in Mississippi, § 6.12 (1957); 17 Am. Jur. Divorce and Separation, § 755.

¶7. Twenty years later, the issue arose again in McRae v. McRae, 381 So. 2d 1052 (Miss. 1980). The Court held that “[n]o hard and fast rule or mold may be laid down to fit at once all of the spectrum of misconduct. The question must be faced and determined on a case-by-case basis.” McRae, 381 So. 2d at 1055.

¶8. Relying on Rubisoff and McRae, the Court later affirmed the judgment of a chancellor who found that a recipient spouse “had forfeited her right to future support from appellee because her admitted adultery during the period following her divorce was of sufficient duration and frequency to justify the holding of the chancellor.” McHann v. McHann, 383 So. 2d 823, 826 (Miss. 1980). The Court stated that “[t]o hold otherwise would be to condone adultery and in effect would penalize a divorcee for marrying but reward her for cohabitation without benefit of marriage.” Id.

¶9. Our law further evolved in Hammonds v. Hammonds, 641 So. 2d 1211 (Miss. 1994), in which the Court held that Rubisoff and its progeny “clearly reflect a moral judgment that a divorced woman should not engage in sexual relations; the penalty for such activity is forfeiture of her right to support from her ex-husband.” Hammonds, 641 So. 2d at 1216. The Hammonds Court departed from the prior line of cases and remanded the case for the chancellor to consider the “financial, rather than moral aspect[] of cohabitation” and further held there is a “presumption that the divorced woman’s partner/cohabitant is providing financial support, thereby eliminating or reducing her need for support from her ex-husband” unless the unique facts of the case direct otherwise. Id. at 1216-17. The Hammonds Court adopted a two-prong test which requires chancellors to consider whether a third party provides support to the recipient spouse and whether the recipient spouse contributes to the support of the third party. Id.

¶10. In Ellis v. Ellis, 651 So. 2d 1068 (Miss. 1995), the Court again remanded a case for a chancellor to determine (1) if there was cohabitation, (2) if the ex-wife was being supported by or was supporting her suitor, and (3) if her financial needs had changed due to the cohabitation and/or support. Ellis, 651 So. 2d at 1074. The Ellis Court cited a Florida [Fn 5]case which stated that cohabitation will raise a presumption of a material change in circumstances, but cohabitation alone does not require an automatic reduction or termination of alimony. Id. at 1072.

[Fn 5] DePoorter v. DePoorter, 509 So. 2d 1141 (Fla. App. 1 Dist.1987).

¶11. In Scharwath, this Court officially adopted the Florida rule and held “that proof of cohabitation creates a presumption that a material change in circumstances has occurred.” Scharwath v. Scharwath, 702 So. 2d 1210, 1211 (Miss. 1997). This presumption shifts the burden to the recipient spouse to produce evidence contradicting mutual financial support. Id. However, the paying spouse still must show that the cohabitation results in “a situation of mutual support between the recipient spouse and another individual which alters the recipient spouse’s financial needs” before alimony can be modified. Id.

¶12. At the conclusion of the presentation of evidence by Patrick, the chancellor denied Lindalyn’s motion to dismiss, satisfied that Patrick had offered sufficient evidence of cohabitation and mutual support, which required Lindalyn to offer evidence related to mutual financial support. Lindalyn admitted that she lived with Curtis, but without sexual relations, and that they mutually supported one another. However, she denied that her financial needs had been altered due to the cohabitation and mutual support. After the parties concluded presentation of their proof, the chancellor announced she would take the case under advisement and would issue a written opinion.

¶13. The chancellor reviewed the evidence, considered the law, and issued an extensive, nine-page Findings of Fact and Conclusions of Law. The chancellor found that Patrick had failed to prove that Lindalyn’s financial needs were altered by her cohabitation with Curtis or the mutual support provided by Curtis. The chancellor found that there was no doubt that Lindalyn was receiving mutual financial support from Curtis. However, the chancellor noted that this was a “factually unique scenario . . . in which [Lindalyn] has no choice but to cohabit[] with another individual in order to survive.” The testimony presented by Brenda Stepro and Haidee Sheffield, Dr. Koch’s psychological report, and evidence of Lindalyn’s prior living arrangements all support the chancellor’s finding that Lindalyn must live with another person.

¶14. The chancellor held that “[w]ithout the $650.00 she receives from Patrick, Lindalyn would not be able to meet her financial obligations each month without accruing . . . penalties from withdrawals on the retirement account.” Reviewing the evidence submitted to the chancellor, there is sufficient proof that the support provided by Curtis to Lindalyn was not enough to justify eliminating or reducing Lindalyn’s support from Patrick. We find that the chancellor did not abuse her discretion in denying Patrick’s motion to terminate or modify alimony.

That’s about as concise a statement as you will find on the evolution of Mississippi law in this area.

Oh, and the court also affirmed the chancellor’s award of an attorney’s fee to Lindlyn based on testimony of her inability to pay. That’s some authority you might want to file away for future use, because getting an award of attorney’s fees in a modification such as this is not something you see every day.

Periodic or Lump-sum?

June 22, 2016 § Leave a comment

When Denise and Andrew Von Herrmann were divorced in 2012, their agreement incorporated into the divorce judgment included the following language:

“Wife shall pay husband periodic alimony as follows: On or before the 15th day of each month beginning August 15, 2012, $1,450 per month through March 16, 2016. Beginning April 15, 2016, and continuing through September 15, 2022, wife’s periodic alimony to husband shall be reduced to $500 per month, with the final periodic payment of $500 due on September 15, 2022. All alimony payments shall otherwise cease 1) upon the demise of the wife or husband or 2) upon husband’s remarriage or commencement of regular cohabitation with another woman.”

Denise filed a petition to modify in 2013, claiming a reduction in income from $180,000 to $85,000 a year. Denise had remarried or had her name restored to Runge at the time she filed.

Following a trial, the chancellor ruled that the payments were unmodifiable lump-sum alimony “due to the fixed amount and the definitive ending date. Denise appealed.

In the case of Runge v. Herrmann, decided May 31, 2016, the COA reversed. Judge Irving, for the court, analyzed the case law that goes in both directions on how to construe “hybrid alimony” provisions such as this. Instead of relying on those decisions, though, the court applied contract construction principles and concluded that it was the intent of the parties was that the payments were to supplement Andrew’s income and, therefore, they were in the nature of alimony, and not property division; thus, it was error for the chancellor to conclude that they were lump-sum alimony, which is a property-division tool. The case was remanded for further proceedings consistent with the opinion.

Some observations:

  • Ever since the MSSC began permitting so-called “hybrid alimony” that mixed and matched various features of the three major genres of alimony (i.e., periodic, periodic rehabilitative, and lump-sum), the cases are quite fact-specific. It is hard to draw any hard and fast conclusions about what language to use to protect your client’s interests.
  • As both sides argued here, the label you smack on the alimony arrangement you draft will not necessarily be controlling. Rather, the court must look to the substance of the parties’ agreement.
  • In this case, it might have helped if it had been specifically stated in the agreement that the parties agreed that the arrangement was to supplement income, and was specifically not intended to be any form of property division or lump-sum alimony.
  • Mention of the tax treatment in the agreement would probably have been dispositive. True alimony is taxable income to the recipient and deductible by the payer, unless some other agreed tax treatment is expressly stated. Lump-sum alimony, which is property division and not really alimony, is neither taxable nor deductible.
  • As I have said here before, I really wish the MSSC would do away with the term “lump-sum alimony” as it applies to property division. Its original meaning, ‘way back in 1856 when it was concocted by the court, was to allow payment of the entire amount of alimony that would be payable under the decree to be paid in one, or several payments. (That was back before there was an IRS that frowned on front-loading). Over time, the court expanded the meaning to include payments to equalize the parties’ estates in divorce. That fiction was necessary at the time to get around the principle that title controlled, and the court could not divide separately-titled property, but it could award “alimony.” The necessity for that fiction, however, went away with Ferguson and its progeny. Post-Ferguson, we understand that an equalizing payment may be necessary to divide the equities in divorce, regardless of title. So why don’t we call it an “equalizing payment” or something similar, and limit use of the term “alimony” to payments intended to replace or supplement income?

 

What You Say and How You Say it

June 13, 2016 § Leave a comment

When Lori and Gary Mosher appeared for the divorce trial to end their 26-year marriage, they agreed to a divorce on the ground of irreconcilable differences, and submitted several contested issues for adjudication by the court.

The parties agreed that Lori would receive “one-half of [Gary’s] military retirement,” but left it to the court, apparently, to decide the amount. The chancellor found that Gary’s “military retirement” consisted of two components: “his disposable retired pay”; and his VA disability retirement of around $400 a month. Half of the two components came to $1,795, after deduction for a survivor annuity. Since the VA benefit was not subject to division under federal law, the chancellor awarded Lori a greater share of the retirement.

Gary appealed, complaining that the chancellor had no authority to divide the VA benefits because their agreement was to divide the military retirement only.

The COA affirmed on the point in Mosher v. Mosher, handed down May 24, 2016. Judge Fair wrote for the majority:

¶8. This argument misses the mark. Although it is true that the parties here agreed to divide the “military retirement” equally, the property settlement agreement did not specify what that was. Property settlement agreements are contracts, and like all contracts, there are sometimes disputes regarding the meaning of their terms. Gaiennie v. McMillin, 138 So. 3d 131, 135 (¶8) (Miss. 2014). It is apparent that the chancery court interpreted the parties’ agreement rather than disregarding it as Gary contends. The chancellor dedicated nearly ten of the fifty-six pages of her written judgment to this question.

¶9. As to the interpretation of the agreement, while it is clear Gary does not agree with the chancellor’s decision, he has not briefed that issue. “[T]here is a presumption that the judgment of the trial court is correct and the burden is on the Appellant to demonstrate some reversible error to [the appellate court].” Birkhead v. State, 57 So. 3d 1223, 1231 (¶28) (Miss. 2011); see also M.R.A.P. 28(a)(6). Gary has failed to meet his burden of showing error on this issue.

There are other issues addressed in the opinion dealing with equitable distribution and alimony. Judge Carlton dissented in part, joined by Greenlee and Griffis.

The main takeaways here for practitioners:

  • What you say and how you say it are pretty dadgum important when it comes to court. If the parties intended that only the military retirement, not including the VA disability retirement, was to be divided, then the agreement should have stated exactly that. Precision makes all the difference. It’s pretty hard to argue that something was intended when that intent does not appear in the specific language.
  • If you do not cite authority for your position on appeal, you have effectively waived it.

 

Rehabilitative Alimony vis a vis Equitable Distribution

May 25, 2016 § Leave a comment

In a recent case, the COA reversed a chancellor’s calculation of equitable distribution because she counted the mortgage balance both as a liability and as a reduction of the value of the mortgage property. The chancellor had also awarded rehabilitative alimony.

The appellant, Tony Hearn, argued that the chancellor was in error in awarding rehabilitative alimony to his ex, Varena, and that the COA’s reversal of equitable distribution mandated reversal of the rehabilitative alimony award. That’s because as equitable distribution expands, periodic alimony contracts, and vice versa. So, when equitable distribution is thrown out for recalculation, it’s back to the drawing board for periodic alimony recalculation.

Does that rule apply to rehabilitative alimony, though?

In the COA case Hearn v. Hearn, handed down May 10, 2016, the court answered, “no,” and affirmed the chancellor’s award. Judge Lee’s opinion explained:

¶16. In his other issue on appeal, Tony contends the chancellor erred in awarding Varena rehabilitative alimony. “Rehabilitative alimony provides for a party who is trying to become self-supporting and prevents that party from becoming destitute while searching for a means of income. Moreover, ‘the primary purpose of rehabilitative alimony is to give the former spouse the opportunity to enter the work force.’” McCarrell v. McCarrell, 19 So. 3d 168, 170 (¶8) (Miss. Ct. App. 2009) (quoting Alexis v. Tarver, 879 So. 2d 1078, 1080 (¶7) (Miss. Ct. App. 2004)) (internal citation omitted).

¶17. Ordinarily, the reversal of a chancellor’s division of marital property requires reversal of an alimony award. Mace v. Mace, 818 So. 2d 1130, 1134 (¶16) (Miss. 2002). However, the decision to award rehabilitative alimony “is not considered during equitable distribution.” Lauro v. Lauro, 847 So. 2d 843, 849 (¶15) (Miss. 2003); see also Hensarling v. Hensarling, 824 So. 2d 583, 595 (¶39) (Miss. 2002) (court affirmed award of rehabilitative alimony even though it reversed for chancellor to reevaluate value of marital estate); Rhodes v. Rhodes, 52 So. 3d 430, 447 (¶72) (Miss. Ct. App. 2011) (“[A]n award of rehabilitative alimony is exempted from the general proposition that reversal of one financial award requires reversal of all.”); Lauro v. Lauro, 924 So. 2d 584, 588 (¶14) (Miss. Ct. App. 2006) (“Periodic alimony is to be reconsidered when the marital estate is redistributed under principles of equitable distribution. However, rehabilitative alimony is not considered during equitable distribution.”). “Rehabilitative periodic alimony is an equitable mechanism which allows a party needing assistance to become self-supporting without becoming destitute in the interim.” Hubbard v. Hubbard, 656 So. 2d 124, 130 (Miss. 1995).

¶18. In this instance, the chancellor evaluated the award of alimony under the factors enunciated in Armstrong v. Armstrong, 618 So. 2d 1278, 1280 (Miss. 1993). The chancellor divided the marital estate in order to adequately provide for Varena, eliminating the need for periodic alimony. In her amended judgment, the chancellor noted that Varena was employed and working towards self-sufficiency but her monthly expenses still exceeded her monthly income. The chancellor stated that “[c]learly, the award of rehabilitative alimony was intended to . . . allow [Varena] to start anew without becoming destitute.” The chancellor reduced the award of rehabilitative alimony from $650 per month for three years to $600 per month for six months, finding that six months was “a reasonable amount of time to allow [Varena] to address the financial issues involved in her becoming self-sufficient in her living conditions.” We can find no abuse of discretion by the chancellor in awarding Varena rehabilitative alimony. This issue is without merit.

The mention of an amended judgment must refer either to a post-R59(a) ruling by the judge, or to a change in her ruling within ten days per R59(d)..

 

Can Your Client Do What She Agreed to Do?

May 24, 2016 § Leave a comment

When Karen and Rickey Chance got an ID divorce in 2003, the parties’ PSA provided that Karen would get ownership of a home in Ocean Springs. Rickey was to be responsible to obtain a 30-year mortgage on the property, and to pay the mortgage debt and one-half of the ad valorem taxes for 96 months. Karen was responsible to pay her one-half of the ad valorem taxes, the hazard insurance, and to pay all taxes, insurance, and mortgage debt payments after Rickey’s obligation expired. Rickey also was to pay Karen alimony.

In 2004, Rickey got the mortgage, and the closing attorney suggested in a letter that Rickey simply reduce his alimony payments by the amount of Karen’s monthly obligation, but neither party acted on the recommendation.

To make a long story somewhat shorter, Karen never paid either her half of the taxes or the hazard insurance between 2003 and 2013. In 2013, Karen did send Rickey nearly $4,500 to pay her share of the 2013 expenses.

In the 10-year interim between 2003 and 2013, the parties talked about the situation. Karen steadfastly maintained that she did not have the financial ability to carry out her end of the deal.

In 2013, Rickey filed a petition for contempt against Karen, who responded with several defenses, most notably that of inability to pay. After a hearing the chancellor awarded Rickey a judgment for $38,584.90, and attorney’s fees. Karen appealed.

In the case of Chance v. Chance, decided May 10, 2016, the COA affirmed. You can read the opinion for yourself to see how the court dealt with Karen’s claims of laches, inability to pay, and error in award of attorney’s fees.

I want to focus on the agreement itself:

  • I have seen several PSA’s lately in which one party agrees to refinance the home within some stated period of time. In every case, when I asked the lawyer whether the obligated party had the ability to do it, the answer was a shrug with a whimsical smile and “that’s what they agreed to do.” Yes, but if it’s your client who is on the hook, have you discussed whether he or she has the ability to do it? And if it’s the other party who has the duty, what impact will it have on your client if he or she proves incapable of doing as promised? Have you explored these things?
  • One critical reason why this is so important to your client’s interest is that the property-division portions of a PSA are unmodifiable. East v. East, 493 So.2d 927, 931 (Miss. 1986). Your client does not get a do-over on the “oops” principle.
  • Another important factor is that attempting to prove inability to pay is rarely successful. The burden is heavy, as I have pointed out here before.
  • To avoid these swivet-inducing situations, build some alternatives into the agreement. If, say, your client ever can not pay her share of the taxes or insurance, the home could be listed for sale, the other party may reduce alimony and pay the taxes and insurance himself until sold, and he will be reimbursed from the proceeds. That’s one example; I am sure your creative legal genius can conjure up many others.
  • Remember that if all you do is take your client’s notes and convert them into a legal-looking sheaf of papers, you are nothing more than a clerk-typist; you are misleading the public and fooling yourself if that’s what you do and you call yourself a lawyer.

 

 

Weeks Turn into Years

May 2, 2016 § Leave a comment

The continuing legal saga of Roland and Deborah Weeks took its latest turn with another remand by the COA on March 1, 2016. For those of you who haven’t been keeping score, here is a recap:

  1. The pair were divorced in 2001 after a 9-year separation. Deborah was denied alimony, although she received only 1/3 of the marital estate;
  2. In Weeks v. Weeks, 832 So.2d 583 (Miss. App. 2002), the COA reversed and remanded for the trial court to award alimony;
  3. The chancellor on remand assessed Roland with $3,900 a month in combined periodic alimony, health insurance, and life insurance;
  4. In Weeks v. Weeks, 29 So.3d 80 (Miss. App. 2009) (Weeks II), the COA affirmed the alimony, but remanded yet again on child support and attorney’s fees;
  5. In 2012, Roland filed a petition to modify his alimony obligation, which prompted Deborah to file motions claiming a fraud on the court. The chancellor denied everything but an award of back child support. He denied Deborah’s request for attorney’s fees finding them unreasonable and within her ability to pay. Roland appealed, and Deborah cross-appealed.
  6. In the latest installment of Weeks v. Weeks (Weeks III), the COA affirmed most of what the chancellor ruled, but remanded yet again for the chancellor to reconsider the issue of attorney’s fees from Weeks II.
It has been 24 years since the Weeks’s separation, and 15 since their divorce. The aftermath of the divorce has seen almost continuous litigation, and it is still not done. There is another round yet to go, and another possible appeal. Some cases just be this way.
As for the legal issues in this latest appeal, you won’t find a lot of authority to chew on. This is another decision illustrating how difficult it can be to terminate or reduce periodic alimony, as we have mentioned here not too long ago.

Another Unsuccessful Attempt to Modify Periodic Alimony

April 25, 2016 § Leave a comment

Do after-acquired debt and other personal expenses justify downward modification or termination of alimony? That was the central question in the COA case, Hardin v. Grantham, decided March 1, 2016.

Robert Hardin was ordered in 1991 to pay periodic alimony in the sum of $750 a month to his ex-wife, Betty Grantham. In the 1991 judgment, the chancellor projected that Robert’s business could not sustain his then-$80,000 annual income, and based alimony on an assumed $40,000 annual income. In 2013, Robert filed a petition to modify or terminate the payments, claiming that there had been a material change in circumstances so that he could no longer afford to pay Betty.

At trial, Robert claimed that his business had declined, and his income with it. He reported income of $5,562 per month, personal expenses of $4,822 a month, which included the alimony, and business expenses of $8,351.  The chancellor found Robert lacked candor and provided evasive and inconsistent answers to questions in his testimony. The chancellor declined to modify, and Robert appealed.

In her opinion for the court, Judge Carlton first spelled out the familiar rules that govern modification of alimony: the chancellor must (1) determine whether an unforeseeable and material change occurred since entry of the original alimony order; and (2) if so, then consider the Armstrong factors relative to the parties’ financial positions at the time of the original order, and (3) consider the ex-wife’s accustomed standard of living, less her own resources, and the husband’s ability to pay. If no (1), then no modification.

She then turned to the question whether the after-acquired expenses could be a basis to modify:

¶13. Despite Robert’s assertions, the Mississippi Supreme Court has previously rejected “the idea that alimony or child[-]support obligations should be reduced because of the obligor’s other financial commitments[.]” Yancey v. Yancey, 752 So. 2d 1006, 1010 (¶12) (Miss. 1999) (citing Varner v. Varner, 666 So. 2d 493, 497 (Miss. 1995)). See also N. Shelton Hand, Mississippi Divorce, Alimony, and Child Custody § 14–10 (6th ed. 2012) (“Obligations of child and[/]or spousal support are not generally to be considered as or equated with any other debt known to and collectible under the law. There is more to these obligations than mere debt.”).

¶14. In Varner, a husband argued that the chancellor should reduce his child-support and alimony obligations in light of his other financial obligations. Varner, 666 So. 2d at 497. After the parties’ divorce, the husband opened his own veterinary practice. Id. He also filed for bankruptcy, and he claimed that he had been forced to borrow money from friends and family to pay his child-support and alimony obligations. Id. at 495-97.

¶15. On appeal, the supreme court found no merit to the husband’s argument that his child support and alimony obligations should be modified. Id. at 497. In fact, the supreme court stated:

Personal bills cannot be used as a factor to reduce support payments. Furthermore, simply alleging, as does [the husband], that one is subsisting on borrowed funds does not show with the required particularity that he is unable to pay.

In this case, the chancellor properly found that there had been no material change in circumstances. [The husband’s] income apparently decreased between the time of his divorce and the hearing. However, that decrease was directly related to his decision to open a solo practice and a voluntary move which caused him to give up his supplemental income. [The husband] filed for bankruptcy on July 7, 1993, two weeks after the chancellor denied his request for modification. His bankruptcy petition was dismissed and the case closed on April 18, 1995.

A debtor is prohibited from discharging debt to a former spouse for alimony or support to a child in connection with a separation agreement. Furthermore, simply filing for bankruptcy does not rise to the level of a substantial change without a finding by the chancellor that the filing was made in good faith. The law is well-settled that, if an obligor, acting in bad faith, voluntarily worsens his financial position so that he cannot meet his obligations, he cannot obtain a modification of support. Id. (internal citations and quotation marks omitted).

¶16. Citing Mississippi precedent, including the supreme court’s holding in Varner, the chancellor here found no merit to Robert’s claim that his alimony payments should be modified or terminated because he had incurred other debts and financial obligations. Instead, the chancellor found that he must compare the parties’ relative positions at the time of the divorce with their positions at the time of the requested modification to determine whether an unforeseeable and material change occurred. In looking at the facts of the present litigation, the chancellor ultimately concluded that the only material postdivorce change occurred when Robert’s business became very successful and afforded him many opportunities and luxuries.

The COA affirmed.

We have recently dealt with other cases denying modification or termination of alimony here and here.

 

When Separate Maintenance Morphs into Alimony

December 8, 2015 § 2 Comments

After William Lane’s wife, Stella, obtained a Mississippi separate maintenance judgment, William moved to Texas and obtained a divorce from Stella there. He then petitioned the Mississippi court to terminate alimony because he was no longer married to Stella.

The chancellor refused William’s request, ruling apparently that the separate maintenance would continue as alimony, and William appealed. In Lane v. Lane, decided December 1, 2015, the COA affirmed. Judge Fair, writing for the majority, laid out the rationale:

¶8. “[A] divorce action involving one resident party and one foreign party may or may not be able to adjudicate personal rights, though it can sever a marriage as long as at least one party is a resident of that state.” [Lofton v. Lofton, 924 So.2d 596, 601 (Miss. App. 2006)]. William personally appeared before the Texas court. At the time the suit was filed, he had been a domiciliary of Texas for six months. Stella entered a general appearance through local counsel, ultimately signing the divorce decree along with William as to “form and substance.” The divorce decree specifically did not litigate the issues of support and property division. In fact, the decree declined jurisdiction over all but the divorce itself, deferring to the chancery court and its separate-maintenance judgment for “all issues involving the division of the property and debt of the parties.”

¶9. In Weiss v. Weiss, 579 So. 2d 539, 540-41 (Miss. 1991), the Mississippi Supreme Court reaffirmed that Mississippi law allows for separate litigation of divorce and alimony. Thomas and Barbara Weiss married in Mississippi. Id. at 540. Thomas later moved to Louisiana and filed for divorce. Id. That same year, Barbara filed a request for separate maintenance in Mississippi. Id. The Louisiana court granted the divorce but reserved the issue of alimony for the Mississippi court. Fn2 Id. Our supreme court held that the Mississippi court had jurisdiction to determine alimony because the parties’ foreign divorce decree did not litigate the issue of alimony. Id. at 541.

Fn2 Barbara’s claim for separate maintenance was no longer proper since a divorce had been granted but was convertible to a claim for alimony. Weiss, 579 So. 2d at 541. Separate maintenance and alimony may both result in payments for a short period of time or an extended period of time (the period of time for separate maintenance is more uncertain). Id. at 542.

¶10. The supreme court dealt with a similar issue in [Chapel v. Chapel, 876 So.2d 290 (Miss. 2004)]. In that case, the Jackson County Chancery Court awarded Grace Chapel separate maintenance in 1996. Id. at 292 (¶5). Mr. Chapel was granted a divorce in Virginia in 1997. Chapel, 876 So. 2d at 292 (¶6). The Mississippi chancellor modified the separate-maintenance agreement in 1998 and 2001. Id. at 294 (¶13). Grace argued that the chancellor lacked subject-matter jurisdiction because the Virginia divorce decree terminated the original separate-maintenance agreement. Id. at 293 (¶10). The supreme court held that “the . . . chancery court continues to have jurisdiction in what originally was the separate-maintenance case, but which converted to one for alimony and other claims compatible with divorce actions[] after the date of the foreign divorce.” Id. at 295 (¶15). Fn3 In her treatise, Bell on Mississippi Family Law (2d Edition 2011), Professor Deborah Bell refers to this as a “recharacterization” of separate maintenance as alimony.

Fn3 The supreme court also stated that because “neither party . . . made formal objections to the chancellor’s authority to modify the original separate-maintenance judgment after the Virginia divorce was granted, it is not necessary for the Court to reach the issue of whether . . . a foreign divorce decree[] terminates a domestic court’s order of separate maintenance.” Chapel, 876 So. 2d at 294 (¶11).

¶11. Like the divorce decree in Weiss, the Texas divorce decree in the present case expressly reserved Stella’s rights to enforce the separate-maintenance order. And, similar to the wife in Chapel, Stella was awarded separate maintenance prior to the entry of a foreign divorce decree, and the foreign decree did not address the issue of separate maintenance. We do not find, like the dissent, that Stella’s failure to expressly petition for alimony prohibits the chancellor’s sua sponte “recharacterization” of separate maintenance as alimony. As stated in Weiss, “‘[a]limony’ and ‘maintenance’ are merely different words used in differing situations to describe the same thing.” 579 So. 2d at 541 (citation and quotation omitted) (emphasis added). Mississippi law clearly provides that the chancery court retained jurisdiction over William and Stella’s separate-maintenance agreement, as acknowledged by the Texas court with the consent and agreement of the parties. [Emphasis in original]

It did not help William’s cause that the parties’ divorce agreement in Texas included language specifically acknowledging the continuing jurisdiction of the Mississippi court, and the Texas judgment afforded the Mississippi judgment full faith and credit and recognized its continuing jurisdiction. Any different language in Texas, however, would not have changed the outcome. Once Mississippi’s courts have acquired jurisdiction over the property and support (maintenance) issues, a subsequent divorce in another state is not effective to deprive the Mississippi court of jurisdiction over those issues.

The dissent would have held that by failing to request “recharacterization” of the separate maintenance award as alimony Stella deprived the chancellor of authority, making it erroneous for him to do so. The majority rejected that approach.

The MSSC dealt with a similar set of issues last year in Pierce v. Pierce, about which I posted here.

Oh, and before I leave the subject, here are three quotes you might find helpful next time you have to deal with an alimony case:

  • “Alimony — the ransom that the happy pay to the devil.”  —  H.L. Mencken
  • “Alimony is like buying oats for a dead horse.”  —  Arthur Baer
  • “Judges, as a class, display, in the matter of arranging alimony, that reckless generosity which is found only in men who are giving away someone else’s cash.” —  P.G. Wodehouse

Demarcation Date on Remand

August 24, 2015 § Leave a comment

The date on which the marital assets are assigned a value can make a drastic difference in the ultimate outcome of the equitable distribution. It’s a concept that we’ve touched on here before. In Lowery v. Lowery, 25 So.3d 274, 285-286 (Miss. 2009), the court said:

¶ 27. For purposes of determination of equitable division … the date for determination would be either the date of separation (at the earliest) or the date of divorce (at the latest). “Cases appear to hold that, as a matter of law, property acquired during separation is marital unless a support order has been entered…. However, a few cases suggest that the issue is a question of fact for the chancellor to decide….” Bell on Mississippi Family Law at § 6.02[3][b] n. 58 (citing Stone v. Stone, 824 So.2d 645, 647–48 (Miss.Ct.App.2002); Aron v. Aron, 832 So.2d 1257, 1258–59 (Miss.Ct.App.2002)).

Other cases have suggested that the valuation date can vary according to the assets. In other words, one asset could have one valuation date, and another a different valuation date.

So, is the rule any different when the case is remanded to the trial court for a do-over? Things can change in the lengthy time it takes to complete the appeal process, after all.

That’s what happened in Lewis v. Pagel, handed down by the MSSC on August 13, 2015. Following a trip through the COA, and from there to the MSSC, Drake Lewis and Tonia Pagel (formerly Lewis), found themselves back before the chancellor for a do-over on equitable distribution. The case was remanded for the chancellor to treat certain real properties as non-marital, to re-value a business, and to re-analyze equitable distribution. The chancellor followed the appellate courts’ instructions, using the asset values as of the date of the divorce.

Drake appealed, complaining that the chancellor’s approach skewed the ultimate outcome because values had changed in the time it took to complete the appeal cycle. Justice Chandler addressed his argument this way:

¶27. It is well-established that “an equitable division of property does not necessarily mean an equal division of property.” Chamblee v. Chamblee, 637 So. 2d 850, 863-64 (Miss. 1994). “[F]airness is the prevailing guideline in marital division.” Lowery v. Lowery, 25 So. 3d 274, 285 (Miss. 2009) (quoting Ferguson, 639 So. 2d at 929). Here, the chancellor’s division of the property was approximately equal. Drake’s argument that he received substantially less than Tonia relies on circumstances that occurred after the divorce judgment. However, the date for determination of equitable distribution is, at the earliest, the date of separation, or, at the latest, the date of divorce. Lowery, 25 So. 3d at 285. Additionally, an order of equitable division is a nonmodifiable judgment. East v. East, 493 So. 2d 927, 931 (Miss. 1986). Therefore, when the Court of Appeals remanded for the chancellor to revisit the equitable distribution, the chancellor properly redetermined the equitable distribution as of the divorce.

When you read the entire Lewis opinion (as I am sure you will), note that the chancellor did consider a post-appeal change in value that favored Drake. Legacy Holdings, LLC, a family business, was valued at the time of the divorce at $1,148,270, but the chancellor found that it had no value at the time of the remand hearing.

Here is a post about a case in which the chancellor’s use of the divorce trial date on remand was affirmed.

It would be a nifty skill for a lawyer to be able to tell the future. None of us in real life, however, has a crystal ball. Still, it’s a good idea to impress on your client that a side effect of an appeal could be that you can win the battle and lose the war. By the time the case descends from the lofty, rarified atmosphere of the appellate courts to ground level, things may have changed drastically in the meantime, resulting in a bounce that does not favor your client. In Lewis, the appeal on the equitable distribution saved Drake some rehabilitative alimony, but cost him $100,000 in lump-sum alimony. That’s going to leave a mark.

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