Further on the Tax Treatment of Alimony
October 31, 2018 § Leave a comment
A couple of days ago I posted about the big change in tax treatment of alimony coming after December 31, 2018.
Here are some points brought to my attention that correct and fine-tune that post:
- I said that there must be a judgment pre-dating the demarcation date. Other tax experts believe that a binding agreement for alimony to be treated for taxes as it currently exists will satisfy the law. The key is that the agreement must on its face be binding. To me that means either a PSA or a consent with alimony as an agreed issue presented to the court for approval or some other proceeding to make it binding.
- I also said that modification would result in making the pre-demarcation-date-alimony non-deductible and non-taxable. A more accurate statement is that modification may, in some cases, change the tax treatment. It’s too complicated for me to elaborate on here, but you need to get some competent guidance before jumping into any alimony modification post December 31, 2018.
Those are the tweaks. Here are two of my own observations:
- Don’t expect judges to be familiar with all of the nuances of these changes. Be prepared to offer expert testimony or stipulations that cover these points.
- Get some competent tax advice so that you can properly and accurately advise your clients. That disclaimer in your retainer agreements and PSA’s about tax advice does not relieve you of the obligation to be able to advise your clients about basics such as tax treatment of alimony and the pitfalls of modification because that’s not really tax advice — it’s divorce advice.
Thanks to the lawyer who called this to my attention.
Tax Treatment of Alimony is Changing Soon
October 29, 2018 § 2 Comments
Effective after December 31, 2018, alimony will no longer be deductible by the payor, and will no longer be income to the payee. That’s per the “Tax Cuts and Jobs Act” passed by Congress earlier this year.
The law refers to “divorce agreements executed” after December 31, 2018, which would seem to indicate that if you have a PSA executed by the parties on December 29, 2018, the payments would maintain their deductible/income character, but at least one tax expert whom I asked said that the law requires a judgment or decree either adjudicating alimony as a contested issue or incorporating an agreement.
Also, any judgment modifying alimony after the cutoff date will cause the alimony to lose its deductible/income character.
So here are some ramifications for Mississippi practitioners:
- If you’ve been dragging out that divorce case and the current alimony treatment is important to your client, you’d better get moving; you’ve only got two months left until the change.
- You need to think twice about modification, especially if you represent the payor. Even a slight modification of alimony after the cutoff date will cause it no longer to be deductible.
- The parties will no longer be able to agree to deductibility or non-deductibility, or taxability or non-taxability. All alimony is non-deductible and non-taxable, no matter what the parties agree.
- It will no longer make any sense to craft hybrid alimony provisions because taxability is no longer a factor.
- The court is required to consider the tax consequences under the Armstrong factors. Keep that in mind as you prepare your witness list. You might want to prepare a stipulation for the court as to taxability of alimony.
- I think this will: (a) make alimony more difficult to negotiate, and (b) have a depressing effect on amounts of alimony awarded and agreed.
- I believe this also applies to separate maintenance, but that’s my opinion.
It’s not too soon to sit down with a tax specialist who can advise you of the consequences of this change. This has drastic strategic consequences for divorce lawyers and their clients.
Death and the Divorce Judgment
October 16, 2018 § Leave a comment
We’ve talked about the necessity of filing a judgment with the clerk as required in MRCP 58 and 79(a). It seems to be a fairly ironclad rule.
But there is at least one post-MRCP case in which no judgment was entered following trial, one of the parties died, and the MSSC upheld the chancellor’s nunc pro tunc entry of a divorce for a pre-death date.
Johnnie and Luke White underwent their fourth divorce from each other in 1992. In the course of the trial they agreed to a consent to divorce on the ground of irreconcilable differences that was handwritten, signed by each of them, and filed with the clerk. Following the trial, the chancellor ruled from the bench on the contested issues, directed that the parties be divorced, and ordered Luke’s attorney to draft a judgment. Following the trial, and before the judgment could be entered, Luke died.
Luke’s brother filed a R25 Suggestion of Death and asked to be substituted as a party for the sole purpose of entering a judgment. After hearing both sides the chancellor executed a judgment dating it nunc pro tunc to the date when he had ruled on the contested issues. Johnnie appealed. In the case of White v. Smith, 643 So.2d 875 (Miss. 1994), the MSSC affirmed. (Note that Smith was the administratrix of Luke’s estate, and she was substituted for Luke’s brother as a party in the appeal).
Justice Pittman wrote the unanimous opinion for the court, which is excerpted here in part, beginning at page 880:
“Courts may by nunc pro tunc orders supply omissions in the record of what had previously been done, and by mistake or neglect not entered.” Green v. Myrick, 177 Miss. 778, 171 So. 774 (1937). Nunc pro tunc means “now for then” and when applied to the entry of a legal order or judgment, it normally does not refer to a new or fresh (de novo) decision, as when a decision is made after the death of a party, but relates to a ruling or action actually previously made or done but concerning which for some reason the record thereof is defective or omitted. The later record making does not itself have a retroactive effect but it constitutes the later evidence of a prior effectual act. Thrash v. Thrash, 385 So.2d 961, 963 (Miss.1980), quoting Becker v. King, 307 So.2d 855, 858-59 (Fl.App.1975).
Johnnie relies on Pittman v. Pittman, 375 So.2d 415 (Miss.1979), in support of the arguments raised in issues I, III and IV. The facts in Pittman reflect that Ella Polk Pittman filed a petition for a divorce and requested that she be granted a divorce on the grounds of habitual cruel and inhuman treatment. The hearing was held on September 26, 1978, and the final decree was not entered until October 27, 1978. Some three weeks after receiving the letter, a decree was prepared and mailed to the chancellor. This decree was signed by the chancellor and filed on October 27, 1978. Petitioner died in the interim on October 17, 1978.
This Court held, on the facts of the case, that the death of the party prior to the entering of the decree had rendered moot the question on divorce, stating that “all issues in the case were incidental to the request for a divorce and the contest thereon, and the entire cause died with the complainant.” Pittman, 375 So.2d at 417.
Unlike the facts in Pittman, in the present case, there was a formal adjudication of the issues in writing and signed by the chancellor, prior to the death of one of the parties.
Johnnie also cites Griffith, Mississippi Chancery Practice § 620, at 667 (1950), which states in part:
A valid decree cannot be rendered in favor of two persons, one of whom at the time is dead. Such a decree is void. And likewise a decree rendered against a defendant after his death is void, if he was the sole defendant or was an indispensable party to the suit-although the interlocutory decree was rendered while he was alive.
The general rule is that the death of a party in a divorce action prior to the final decree ends the marriage of the parties and cancels the bill of complaint for divorce. Pittman v. Pittman, 375 So.2d 415 (Miss.1979).
The case of Thrash v. Thrash, 385 So.2d 961 (Miss.1980), is directly analogous to the case sub judice. In Thrash, the wife petitioned the court for a divorce on the ground of habitual cruel and inhuman treatment. The husband answered and filed a cross-bill in which he prayed for a divorce upon similar grounds. The case was fully tried and submitted to the chancellor for final decision. The chancellor took the matter under advisement and on March 31, 1978, determined all issues on the merits and rendered his decision by written opinion. The opinion was signed and filed with the clerk on April 1, 1978. The chancellor awarded the husband a divorce upon the grounds set forth in the cross-bill. A decree was drafted, approved by both solicitors, and forwarded to the chancellor for signature. This decree was duly received by the chancellor on April 8, 1978, signed by him on that same date, but dated April 10, 1978. The husband was killed on April 9, 1978.
On May 16, 1978, Pearl Marie Thrash filed a suggestion of death and motion to dismiss. The motion was based on the fact that the appellee had died prior to the decree’s being filed. The chancellor dismissed the motion and ordered the decree of divorce theretofore signed by the chancellor, to be entered nunc pro tunc, the date it was signed by the first chancellor, April 8, 1978.
The appellant in Thrash claimed that the decree signed by the chancellor on April 8, 1978, and dated April 10, 1978, was without effect and a nullity because appellee died on April 9, 1978, before the decree was filed with the clerk.
The majority opinion in Thrash relied on Section 11-7-25, Mississippi Code Annotated (1972), which in pertinent part provides:
Where either party shall die between verdict and judgment, such death need not be suggested in abatement, but judgment may be entered as if both parties were living….
Applying § 11-7-25, this Court determined that “in a case such as this, where the case has been fully tried and finally decided on its merits and nothing remains to be done except the entry of a decree, the decree would follow as if both parties were living.” Thrash, 385 So.2d at 962.
We have concluded that, in the absence of some special circumstances such as would cause a miscarriage of justice by so doing, the provisions of that section [§ 11-7-25] apply in a case such as this, the death of the husband having occurred long after the formal decision of all issues by the trier of facts. To hold otherwise, we think, would work a manifest miscarriage of justice.
Thrash, 385 So.2d at 964.
In the present case, from a technical standpoint, Luther died while married, since his death was prior to the entry of the decree. However, the record clearly indicates that all submitted issues had been litigated and ruled upon by the chancellor on November 2, 1992. Nothing more was to be accomplished in the interim between the ruling and formal filing of the judgment.
In addition to the reliance on § 11-7-25, the Thrash opinion quoted extensively from 104 A.L.R. 654, 664 (1936):
The general rule, so far as a general rule may be deduced from the few cases falling within this subdivision, is that, if the facts justifying the entry of a decree were adjudicated during the lifetime of the parties to a divorce action, so that a decree was rendered or could or should have been rendered thereon immediately, but for some reason was not entered as such on the judgment record, the death of one of the parties to the action subsequently to the rendition thereof, but before it is in fact entered upon the record, does not prevent the entry of a decree nunc pro tunc to take effect as of a time prior to the death of the party. [citations omitted] But if no such final adjudication was made during the lifetime of the parties, a decree nunc pro tunc may not be entered after the death of one of the parties, to take effect as of a prior date. [citations omitted]
Id. at 962-63.
Because the chancellor both fully considered all issues raised by the parties and rendered his opinion prior to Luther White’s death, the order entering judgment of divorce nunc pro tunc was not manifestly in error, and as such, does not create reversible error.
Although the case can be construed to apply narrowly to its peculiar facts, it’s hard to get around the basic principle announced in it that, ” … all submitted issues had been litigated and ruled upon by the chancellor … Nothing more was to be accomplished in the interim between the ruling and formal filing of the judgment.”
It’s not easy to square that general principle with the current strict application of R58 and 79. This is the MSSC’s word on the subject, though, and it is still good law.
Another post dealing with White and entry of judgments is at this link.
The Un-Divorce
September 11, 2018 § 1 Comment
Many family lawyers complete their entire careers without filing an action to revoke a divorce. Most, like I, have handled a couple.
You can find the provision to revoke in MCA § 93-5-31. Here it is in its entirety:
The judgment of divorce from the bonds of matrimony may be revoked at any time by the court which granted it, under such regulations and restrictions it may deem proper to impose, upon the joint application of the parties, and upon the production of satisfactory evidence of their reconciliation.
So, all that is required is a joint petition and evidence satisfactory to the court that the parties have reconciled. I emphasized “required” because the language of the statute leaves a lot to the imagination.
For instance:
- What does “under such regulations and restrictions it may deem proper to impose” mean?
- What evidence is “satisfactory?
- Is a record required?
Most chancellors nowadays have enough to do without concocting arcane regulations and restrictions. I think it’s safe to assume that you can file that joint petition, set it for hearing, and put your parties on the stand for brief testimony to the effect that they have resumed living together and want to be restored to all of the benefits and emoluments of marriage. But that might not be enough for your favorite chancellor. You should inquire about the kind of evidence the judge wants to hear. Satisfactory evidence is in the eye and judgment of the beholder, and the appellate courts will give the judge’s ruling “great deference.”
What about a record? The case of Carlisle v. Allen, 40 So.3d 1265 (Miss. 2009) is illustrative. In that case, the parties had filed their joint application, but the husband died before it could be presented. The wife went ahead with the petition, over the estate’s objection. Here is how the MSSC described the evidence that the chancellor found to be satisfactory:
¶ 4. Janet filed for reconsideration and testified to the following facts regarding her reconciliation with Charles: the two had maintained their relationship after the divorce; Charles and Janet had continued to talk and go out together; Charles had a private telephone line put in Janet’s house so he could call her; the two had spent every weekend together from March 2006 until Charles’s death in June 2006; Charles had called her multiple times a day while she was recovering from a hip injury she incurred following Hurricane Katrina; Charles had plans to sell his house and move back into the former marital home with Janet; and the couple had opened a joint banking account.
¶ 5. Janet also testified that the reason the couple initially had divorced was that Janet had become sick during the marriage and Janet’s mother, Mary Davis, had encouraged her to get divorced. Janet testified that Charles did not come into the courtroom the day they were divorced. Regarding their relationship after the divorce, Janet stated, “we were always close. It was like we were never really divorced.” Once they filed the petition to revoke the divorce, the couple both began wearing their wedding rings.
¶ 6. On cross-examination, Janet testified that Charles had paid the bills at his house, and—other than the bill for the phone line Charles had placed in Janet’s home—Davis had paid the bills at her house. After Charles’s death, his body was found at his home by his housekeeper, Beverly Slaydon. Janet was at her home and was informed of his death by Slaydon.
¶ 7. Davis testified that the coroner sent Charles’s personal effects to Davis. She said she supposed the coroner did this because of her daughter’s relationship with Charles.
¶ 8. Slaydon testified that she had met Janet while working for Charles in his home. Slaydon testified that she often had talked to Janet on the phone, but Charles would not give her Janet’s phone number because it was “just for him and [Janet].” She testified that Charles was on the phone with Janet constantly, that Janet regularly had spent weekends at Charles’s house, and Charles and Janet would hold hands, talk, and laugh. In her opinion, Charles and Janet loved each other very much. Finally, Slaydon testified that the only other woman she ever saw at Charles’s home was Janet’s personal care provider, Patricia Beard.
¶ 9. Beard cared for Janet as she recovered from a hip injury and, during that time, drove Charles and Janet to Poplarville to file the petition to revoke their divorce. She saw Charles sign the joint application and take it to the courthouse. She testified to seeing Charles three to four times per week, and said that Charles would bring Janet lunch, flowers, or presents. She stated that Charles and Janet would spend hours together on the phone. In her opinion, Charles and Janet had a very loving and affectionate relationship. It was her understanding that the couple had wanted to have their divorce revoked and that Charles had planned to return to the marital home. She stated, “[Charles] never felt that they were divorced. He wanted to be with her. He told me that she was his life partner.” Finally, Beard testified that Charles had asked her to find his wedding band, and she had seen him wearing it.
¶ 10. Carlisle testified that he was a close friend of Charles’s, and he had known him since 1969. He stated that he had prepared the application to revoke the divorce, but that it was his understanding that Charles “never intended to marry [Janet] or set aside the divorce.” He further testified that he previously had prepared four or five applications to revoke the divorce for Charles, but Charles had thrown those applications away. Carlisle thought Charles felt cheated out of the marital home in the divorce, and was using the revocation of divorce to “recover what he thought was rightfully his.”
¶ 11. Carlisle further testified that he regularly had visited Charles and that he never had noticed signs of anyone staying with him. When he visited Janet after Charles’s death, Carlisle said the first thing Janet told him was that she was not going to pay for the funeral arrangements. As a result, he made a number of the funeral arrangements personally. However, Janet testified that Carlisle volunteered to make the funeral arrangements and refused to allow her to pay for the service. Finally, Carlisle testified that Charles had a personal relationship with a female attorney before and after Hurricane Katrina. While he did not know the woman’s name, it was someone other than Janet.
That’s pretty detailed, but considering that it became contested it was helpful for the wife that it was so detailed.
A highlight of Carlisle is that death does not abate the action.
The effect of a divorce is to return both spouses to single status. Revocation of the divorce does not have the result of returning the parties to marital status during the time that the divorce judgment was in effect. “Nothing in this statute authorizes the chancellor to find that this statute revokes the prior decree to such an extent as though the parties were never divorced so that any act by either of the parties in the interim between the divorce decree and the revocation of that decree could be construed by the law to be an offense against their marital status. The purpose of the statute is to encourage the reconciliation of broken marriages, not to place the parties in the position of unknowingly giving offense to the marital status once it has been restored.” Devereaux v. Devereaux, 493 So.2d 1310, 1313 (Miss. 1986). Revocation, then, is prospective in its application even though the divorce judgment is revoked.
Navigating the New World of Venue in Divorces
March 21, 2018 § 1 Comment
As far back as the days when dinosaurs roamed the Jackson prairie, the rule in Mississippi was that divorce venue as spelled out in MCA 93-5-11 conferred subject matter jurisdiction, and, thus, could not be waived or conferred by consent.
Fast forward to the days when Wal-Mart roamed the area, and the rule changed. In Lewis v. Pagel, decided last June, the MSSC reversed ancient precedent and held that subject-matter jurisdiction was conferred not by statute, but by the Mississippi Constitution. The statute, the court held, governs venue and controls the court’s exercise of personal jurisdiction over the defendant.
I posted about Lewis at this link. I urged readers to “stay tuned” to see how the court’s ruling plays out.
Well, as it turns out, we now have a case that applies Lewis. In Ridgeway v. Hooker, decided February 15, 2018, Patrick Ridgeway appealed from the chancery court’s denial of his R60(b)(6) motion for relief from judgment based on his argument that the trial court lacked subject matter jurisdiction to grant a divorce between him and his ex-wife, Louise Hooker. Here is how Justice Kitchens’s opinion addressed Patrick’s argument:
¶21. Mississippi Code Section 93-5-2(1) provides:
Divorce from the bonds of matrimony may be granted on the ground of irreconcilable differences, but only upon the joint complaint of the husband and wife or a complaint where the defendant has been personally served with process or where the defendant has entered an appearance by written waiver of process.
Miss. Code Ann. § 93-5-2(1) (Rev. 2013). Mississippi Rule of Civil Procedure 60(b)(4) allows a court to “relieve a party . . . from a final judgment” if “the judgment is void . . . .” Ridgeway argues that the chancery court lacked subject-matter and personal jurisdiction because the complaint he filed was not a joint complaint, he never served the complaint on Hooker, and Hooker never entered an appearance by written waiver.
¶22. “Subject matter jurisdiction is the power of the court to hear and determine cases in the general class to which the particular case belongs.” In re Estate of Kelly, 951 So. 2d 543, 548 (Miss. 2007) (citing Case v. Case, 246 Miss. 750, 758, 150 So. 2d 148 (1963)). “Subject matter jurisdiction is conveyed by the Mississippi Constitution.” Lewis v. Pagel, 2017 WL 2377690, *6 (Miss. June 1, 2017). “Section 159 of the Mississippi Constitution vests subject matter jurisdiction in the chancery courts over divorce proceedings.” Id. at *6 (citing Miss.
Const. art. 6, § 159 (“The chancery court shall have full jurisdiction in the following matters and cases, viz.: . . . (b) Divorce and alimony . . . .”)).
¶23. It is true, as Ridgeway argues, that “the defense of lack of subject matter jurisdiction cannot be waived.” Stuart v. Univ. of Miss. Med. Ctr., 21 So. 3d 544, 548-49 (Miss. 2009) (citing Capron v. Van Noorden, 2 Cranch 126, 6 U.S. 126, 127, 2 L. Ed. 229 (1804) (“[I]t was the duty of the Court to see that [it] had jurisdiction, for the consent of the parties could not give it.”)). But this Court recently overruled cases holding that the venue requirements of Mississippi Code Section 93-5-11 (Rev. 2013) [Fn 1] “could not be waived as it vested subject matter jurisdiction over divorce actions in the chancery court.” Lewis, 2017 WL 2377690, at *6. This Court overruled “these past cases to the extent that they hold that Section 93-5-11 confers subject-matter jurisdiction on chancery courts.” Id. Instead, the Court held that, while the Mississippi Constitution confers subject-matter jurisdiction,“Section 93-5-11 governs the venue of a divorce action and limits the chancery court’s exercise of personal jurisdiction over the defendant,” and the “Mississippi Rules of Civil Procedure control the procedure to be utilized when venue is improper.” Id.
[Fn 1] Mississippi Code Section 93-5-11 governs proper venue for divorce actions:
All complaints, except those based solely on the ground of irreconcilable differences, must be filed in the county in which the plaintiff resides, if the defendant be a nonresident of this state, or be absent, so that process cannot be served; and the manner of making such parties defendants so as to authorize a judgment against them in other chancery cases, shall be observed. If the defendant be a resident of this state, the complaint shall be filed in the county in which such defendant resides or may be found at the time, or in the county of the residence of the parties at the time of separation, if the plaintiff be still a resident of such county when the suit is instituted.
A complaint for divorce based solely on the grounds of irreconcilable differences shall be filed in the county of residence of either party where both parties are residents of this state. If one (1) party is not a resident of this state, then the complaint shall be filed in the county where the resident party resides. Transfer of venue shall be governed by Rule 82(d) of the Mississippi Rules of Civil Procedure.
Miss. Code Ann. § 93-5-11 (Rev. 2013).
¶24. The chancery court has jurisdiction of divorce cases, including irreconcilable differences divorces. See Miss. Const. art. 6, § 159. No case cited by Ridgeway stands for the proposition that the requirements of Section 93-5-2(1), if not strictly complied with, deprive the chancery court of subject-matter jurisdiction of an irreconcilable differences divorce. As in Lewis, Section 93-5-2(1) limits the chancery court’s exercise of personal jurisdiction over the defendant, requiring a joint complaint and either personal service on the defendant or the defendant’s “entry of appearance by written waiver of process.” Miss. Code Ann. § 93-5-2(1).
¶25. Personal jurisdiction “is an individual right that can be waived.” Pekin Ins. Co. v. Hinton, 192 So. 3d 966, 971 (Miss. 2016) (citing Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 703, 102 S. Ct. 2099, 2105, 72 L. Ed. 2d 492 (1982)). More specifically, “[o]ne waives process and service . . . upon making a general appearance.” Isom v. Jernigan, 840 So. 2d 104, 107 (Miss. 2003). This Court held, in a case in which the defendant had “appeared by counsel and filed a plea to the jurisdiction of the court, which he later withdrew, and also filed cross-interrogatories to appellant in the taking of her deposition,” that “personal appearance by a defendant in a cause gives the court jurisdiction of his person as completely as if he had been personally served with process within this state.” Clay v. Clay, 134 Miss. 658, 99 So. 818, 819 (1924). The Mississippi Court of Appeals has held that, while actual service of process had not been issued, the signature of
the defendant and his attorney “under the caption, ‘Read, Agreed, and Approved’” constituted the defendant’s having made “a legal appearance in the matter.” James v. McMullen, 733 So. 2d 358, 360 (Miss. Ct. App. 1999).
¶26. Our Mississippi Rules of Civil Procedure also contemplate waiver in this circumstance: “A defense of lack of jurisdiction over the person, . . . insufficiency of process, or insufficiency of service of process is waived (A) if omitted from a motion in the circumstances described in subdivision (g), [Fn 2] or (B) if it is neither made by a motion under this rule nor included in a responsive pleading or an amendment thereof . . . .” Miss. R. Civ. P. 12(h)(1). Ridgeway makes the statement in his brief that, “[a]ll know that where the [Irreconcilable Divorce Act] and, here, Rule 12 conflict, that the IDA governs.” But the converse is true. See Newell v. State, 308 So. 2d 71 (Miss. 1975) (Article 6, Section 144, of the Mississippi Constitution, which states that the State’s “‘judicial power . . . shall be vested in a Supreme Court and other courts as are provided for in this constitution.’ . . leaves no room for a division of authority between the judiciary and the legislature as to the power to
promulgate rules necessary to accomplish the judiciary’s constitutional purpose.”).
[Fn 2] Mississippi Rule of Civil Procedure 12(g) provides that “[a] party who makes a motion under this rule may join with it any other motions herein provided for and then available to him. . . .” Miss. R. Civ. P. 12(g).
¶27. Here, Ridgeway did not comply with Section 93-5-2(1) in filing a joint complaint, in serving the complaint on Hooker, or in obtaining Hooker’s appearance by written waiver. But Hooker never objected to a lack of jurisdiction, to insufficiency of process, or to insufficiency of service of process. She participated in discovery. She initialed every page of the agreement, signed the agreement, and signed the Judgment of Divorce – Irreconcilable Differences. Hooker’s voluntary appearance obviated the necessity of service of process and she consented to the chancery court’s jurisdiction. By failing to raise the defense of lack of personal jurisdiction, insufficiency of process, or insufficiency of service of process, Hooker waived those defenses pursuant to Rule 12(h)(1).
¶28. It was Ridgeway’s failure to comply with Section 93-5-2(1) which created the alleged jurisdictional defect. As the chancellor correctly observed, Ridgeway cannot complain now of an error of his own creation. This Court has held, an “‘[a]ppellant has no standing to seek
redress from [an] alleged error of his own creation.’” Caston v. State, 823 So. 2d 473, 494-95 (Miss. 2002) (quoting Evans v. State, 547 So. 2d 38, 40 (Miss. 1989)).
¶29. In Kolikas v. Kolikas, 821 So. 2d 874, 876 (Miss. Ct. App. 2002), the husband filed a complaint for divorce in Marshall County, Mississippi, but failed to provide notice to his nonresident wife. The chancery court granted the divorce to the husband, and the Mississippi
Court of Appeals reversed and remanded, holding that “[t]he chancery court had not acquired personal jurisdiction over Ms. Kolikas due to lack of proper service of process based on the Mississippi Rules of Civil Procedure . . . .” Id. at 879-80. The appeals court held that “Mr.
Kolikas, in consultation with his attorney, chose what actions to take in pursuit of divorce” and that “[a]s such, it was his obligation, not that of Ms. Kolikas, to ensure that his actions complied with the appropriate statutes and court rules.” Id. at 879. The court continued: “He did not do so, and cannot place the blame for this failure on Ms. Kolikas.” Id. Similarly, Ridgeway cannot place the blame on Hooker for his own failure to comply with the appropriate statutes and court rules now that doing so, if he succeeded, would inure to his benefit.
¶30. Ridgeway relies on the case of Alexander v. Alexander, 493 So. 2d 978 (Miss. 1986), in support of his argument that “a divorce under the [Irreconcilable Differences Act] was void without some form of personal service or written waiver.” But in that case this Court held “the chancery court exceeded its authority in granting a divorce on the ground of irreconcilable differences” because there had been “no written agreement of the parties regarding their property rights as required by the statute.” Alexander, 493 So. 2d at 980. See Gallaspy v. Gallaspy, 459 So. 2d 283, 287 (Miss. 1987) (Robertson, J., specially concurring) (“The chancery court has no authority to grant a divorce on the ground of irreconcilable differences unless the parties have reached agreement on all financial matters.”). Here, unlike in Alexander, the parties reached a “written agreement for the custody and maintenance of [the] children of [the] marriage and for the settlement of any property rights between the parties . . . .” in accordance with Section 93-5-2(2).
¶31. Accordingly, because the chancellor had subject-matter jurisdiction, because Hooker waived any objection to the exercise of personal jurisdiction, and because Ridgeway lacks standing to complain of an error of his own creation, we affirm.
Lots of nutritional value to digest here. We’ll explore it in greater detail in a future post. For now, rest easy in the understanding that personal jurisdiction, along with all of its ramifications, is what venue now is all about in Mississippi divorce.
How Much is Valuation Worth?
February 20, 2018 § 1 Comment
Valuation, valuation, valuation. It’s a subject I’ve talked about here often. I started to link some of my posts on the subject, but, instead, let me simply ask that you enter the word “valuation” above in the Search box and see for yourself the plethora of posts that pop up.
Most of the cases on which I have commented went up on a complaint by the disappointed party that the chancellor didn’t value assets correctly, or didn’t give proper weight to evidence presented, or whatever. The overwhelming number of cases decided on appeal say the same thing: the trial judge will do the best she can do with what evidence you present, so you’d better make a decent record.
The latest version of this old, sad tale comes to us courtesy of Mr. Timothy Benton, who appealed from a judgment assessing him with alimony and child support that he says are not supported by the evidence.
Tim and his wife, Beth were married in 2000. Tim was owner of two businesses, Tim Benton Tree Service and Benton Green, LLC, the income from which supported the family. Beth helped in the businesses from time to time, but she primarily cared for the parties’ four children.
Tim and Beth separated in 2013, and Beth filed for divorce in November, 2014, on the grounds of desertion, HCIT, and ID.
Following a temporary hearing on January 12, 2015, which both parties attended, Beth was awarded custody and Tim was ordered to pay her temporary child support of $3,500 and temporary alimony of $1,500. Because neither party could produce their tax returns at the hearing, the court reset the matter for February 18, 2015, with directions to produce them then. In addition, the judge directed Tim to produce any business financial records showing his income and operating expenses. When Tim appeared on the February date, he failed to produce the records, and the court continued the matter to April 6, 2015, with the same directions.
On April 6, 2015, Tim appeared yet again without financial records as directed. His attorney withdrew from representation.
The case proceeded to trial. Beth produced an 8.05 financial statement and some bank statements. Tim had neither 8.05 nor any financial records. The judge based her findings on the meager evidence presented, concluding that Tim had more than $17,000 a month in income. She ordered him to pay $2,500 a month in child support, plus all of the expenses and tuition of private schooling and all medical expenses of the children. The chancellor also ordered Tim to pay $6,000 per month in alimony and granted other financial relief.
Tim lawyered up and filed a R59 motion claiming that he had been unable adequately to represent himself at trial and needed a new trial to present CPA evidence.
Not surprisingly, the chancellor denied the motion, stating that, ” … the burden lied at the feet of the litigants to provide the Court with sufficient evidence in which to value the marital assets … during the course of the litigation [Tim] was afforded ample opportunity and time on multiple occasions to provide supplemental evidence, which he did not do.”
Tim appealed.
In Benton v. Benton, decided January 23, 2018, the COA affirmed. On the issue of the valuation used by the chancellor, Judge Irving wrote:
¶10. Tim argues that the chancery court erred in failing to value all material marital assets, including Benton Tree Services, and in rendering decisions of alimony and child-support awards accordingly. In response, Beth argues that the court properly distributed the marital assets in light of the fact that Tim refused to comply with the court’s orders to produce financial records. Thus, Beth maintains that the court’s subsequent alimony and child support awards were proper.
¶11. The Mississippi Supreme Court 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 v. Ferguson, 639 So. 2d 921, 929 (Miss. 1994)). “Nevertheless, it is incumbent upon the parties, and not the chancellor, to prepare evidence touching on matters pertinent to the issues to be tried.” Id. “Where 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.” Stribling v. Stribling, 906 So. 2d 863, 870 (¶25) (Miss. Ct. App. 2005) citation omitted).
¶12. Here, it is undisputed that the chancellor did not value Tim’s businesses. However, we refuse to hold her in error because of a party’s failure to cooperate in providing the necessary documents for proper valuation, and we reiterate the applicable caselaw set forth by the chancery court in its order denying Tim’s motion for a new trial. See Jenkins v. Jenkins, 67 So. 3d 5, 13 (¶21) (Miss. Ct. App. 2011) (declining to find a chancellor in error for failing to conduct a marital-property valuation where the parties failed to provide the relevant evidence); Common v. Common, 42 So. 3d 59, 63 (¶¶12-13) (Miss. Ct. App. 2010) (holding that a chancellor was not in error for valuing marital assets solely from the parties’ 8.05 financial statements, because the parties failed to provide the necessary evidence, and further holding that the former husband could not “now complain that the chancellor’s valuations [were] unfair when no reliable evidence of the value of the property was presented at trial”); Dunaway, 749 So. 2d at 1121 (¶28) (holding that, “[f]aced with proof that was far less than ideal, the chancellor made a valuation of the marital estate that finds some support in the record,” and refusing to hold a chancellor in error due to the former husband’s failure to produce evidence). It is this Court’s opinion that the chancellor did the best she could with the little information presented to her, and that she did not abuse her discretion. Accordingly, we affirm.
Not much to add, except this:
- It is always a losing, self-destructive strategy to play cat-and-mouse games with financial proof, withholding all or some. The chancellor’s attitude and reaction in this case is about what one should expect in the face of repeated failure to present financial records, especially after having been ordered by the court to do so.
- Forgive me for repeating what I often have said here: it is up to you to make a record of financial values. It’s not the judge’s job. Don’t expect your opponent to do it for you. It’s “at the feet of the litigants,” as the learned chancellor so eloquently put it.
It Ain’t Over ’til it’s Over
February 6, 2018 § 1 Comment
It’s a hoary. ancient maxim of the law that “There must be an end to litigation,” a principle that was called into question in the case of Sandrock v. Sandrock, handed down from the COA on January 16, 2018.
The Sandrock saga began on August 1, 2005, when Jason Sandrock and his father Fred purported to enter into an agreement via a one-page, notarized document styled “Mortgage Agreement.” The agreement was for a 3,300 square-foot home in Bay St. Louis in exchange for 300 consecutive payments of $1,000 each. Neither Jason’s wife Cassie nor Fred’s wife Joellen were parties to the agreement. Jason and Cassie had been building the structure on Fred’s and Joellen’s property since November, 2004.
Before Jason and Cassie could move into their new digs, however, Hurricane Katrina severely damaged the house on August 29, 2005. The insurance company issued a check for $148, 601, to Jason, Fred, and Joellen. Jason was listed as the insured, and Fred and Joellen were listed as Mortgagees. An MDA grant check was issued to Jason, with no lienholder listed, in the amount of $149,327. Cassie was not named on either check. Jason turned over most of the money to Fred and Joellen.
On January 15, 2009, Jason and Cassie were divorced. In the divorce judgment, the chancellor found no credible evidence that Jason owed any debt to his parents for the property, and that the funds used to build the house were a gift to Jason and Cassie from Fred and Joellen. He also found that both Jason and Cassie had devoted significant time to building the house. In making equitable distribution, the chancellor ordered that the insurance and grant funds by divided equally, and for Cassie to execute a quitclaim deed to the property in favor of Jason.
In March, 2009, Cassie filed for contempt because Jason had not paid her the sums due. Jason counterclaimed asking the court to “correct” its divorce judgment to show that Fred and Joellen were owners of the property, and, therefore, that the insurance proceeds were properly theirs. The counterclaim was denied.
In May, 2009, Fred and Joellen filed a pleading seeking to intervene in the divorce action that had been adjudicated four months previously. Their motion was denied.
At this point, none of the court’s rulings or judgments had been appealed.
After the court denied their motion to intervene, Fred and Joellen filed a petition for judicial foreclosure on the property against Jason and Cassie.
On May 9, 2011, Jason filed an MRCP 60(b) motion asking for relief from the judgment to pay Cassie.
On February 23, 2012, a different chancellor from the one handling the divorce issues entered a judgment allowing the foreclosure in favor of Fred and Joellen against Jason. Cassie was not a record title holder. The court’s decision specifically did not adjudicate what effect its decision had on either the previous divorce judgment or Cassie’s interest in the money or equitable interest in the property.
On November 7, 2013, the chancellor denied Jason’s pending R60 motion.
On December 26, 2013, Jason filed a complaint for declaratory relief and injunction again seeking relief from the judgment. Following a hearing, the court denied Jason any relief on March 23, 2015. The chancellor — yet another different from the two previous — found that the relief sought by Jason was “nearly identical” to that he had sought earlier in his R60 motion. The chancellor found that, since Jason had not appealed the 2009 judgment, it was final.
Jason filed a timely R59 motion. After hearing the matter on April 7, 22016, the court denied the motion except to amend a prior order to state that Joellen had been a witness in the divorce proceeding.
Jason appealed from the denial of his R57 claim for declaratory judgment. Predictably, the COA affirmed. Judge Barnes wrote for a unanimous court:
¶18. As to the denial of Jason’s claims, under Rule 57(a) of the Mississippi Rules of Civil Procedure, “[c]ourts of record within their respective jurisdictions may declare rights, status, and other legal relations regardless of whether further relief is or could be claimed.” M.R.C.P. 57(a). On the other hand, a trial court may deny a complaint for declaratory judgment “where such judgment, if entered, would not terminate the uncertainty or controversy giving rise to the proceeding.” Id. Noting that Jason failed to appeal the 2009 divorce judgment, and Fred and Joellen did not appeal the denial of their motion to intervene, Chancellor Persons held:
Once a judgment becomes final, it is dispositive as to all issues arising from a claim that were, or could have been, asserted by the parties to the litigation. Trilogy Communications, Inc. v. Thomas Truck Lease, Inc., 790 So. 2d 881[, 885 (¶12)] (Miss. Ct. App. 2001).
With the exception of Jason’s additional claims that the divorce judgment was not properly enrolled, the relief requested by Jason in his Complaint for Declaratory Relief is nearly identical to the relief that he sought in his [c]ounter[c]laim to [c]orrect [the] judgment, and similar to the claim that he made in his Rule 60 motion, both of which were denied by the [c]ourt. In the absence of any timely[]filed notice of appeal or any pending appeal action filed on behalf of Jason Sandrock or Fred[] and Joellen Sandrock seeking relief from either the Judgment of Divorce or from the Order which denied intervention in the divorce action, the Final Judgment of Divorce, including the [s]tipulation executed by the parties, is a valid [j]udgment upon which this [c]ourt relies and upon which the parties are bound.
Subsequently, in his bench ruling denying the Appellants’ motions for reconsideration, the chancellor concluded:
The [c]ourt and the law seek[] finality. We have two judgments, both of which are final. To the extent they’re in conflict, no one appealed. In essence, you can’t do what should have been an appeal now in a declaratory judgment action, which, in essence, we have the issues [of] res judicata, law of the case, all sorts of the legal doctrines here that prohibit us – or me from reopening these things.
¶19. We find no abuse of discretion in the chancery court’s findings. The Mississippi Supreme Court has held that “[a] final judgment on the merits of an action precludes the parties and their privies from relitigating claims that were or could have been raised in that action.” Walton v. Bourgeois, 512 So. 2d 698, 701 (Miss. 1987). “A final judgment has been defined by this Court as a judgment adjudicating the merits of the controversy [that] settles all the issues as to all the parties.” Sanford v. Bd. of Supervisors, 421 So. 2d 488, 490-91 (Miss. 1982) (citations omitted). “[A]n order is considered final if it ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” LaFontaine v. Holliday, 110 So. 3d 785, 787 (¶8) (Miss. 2013). Jason’s complaint is, quite simply, a collateral attack on the 2009 divorce judgment, which awarded one-half of the insurance and grant proceeds to Cassie. The 2009 judgment, despite the Appellants’ argument to the contrary, is a final judgment. While not contained in the record, the chancery court noted that Jason had filed a counterclaim to correct the judgment, which was denied by the court. His Rule 60 motion was also denied. He did not appeal either decision. Thus, his request for declaratory relief is barred. The supreme court has held: “Res judicata bars all issues that might have been (or could have been) raised and decided in the initial suit, plus all issues that were actually decided in the first cause of action.” Little v. V & G Welding Supply Inc., 704 So. 2d 1336, 1337 (¶8) (Miss. 1997) (citation omitted). Additionally,
[r]es judicata is fundamental to the equitable and efficient operation of the judiciary and “reflects the refusal of the law to tolerate a multiplicity of litigation.” Little . . ., 704 So. 2d [at] 1337 [(¶8)]. . . . The courts cannot revisit adjudicated claims and “all grounds for, or defenses to recovery that were available to the parties in the first action, regardless of whether they were asserted or determined in the prior proceeding, are barred from re[]litigation in a subsequent suit under the doctrine of res judicata.” Alexander v. Elzie, 621 So. 2d 909, 910 (Miss. 1992).
Harrison v. Chandler-Sampson Ins., 891 So. 2d 224, 232 (¶23) (Miss. 2005) (emphasis added).
¶20. For res judicata to apply, four identities must be present: “(1) identity of the subject matter of the action; (2) identity of the cause of/civil action; (3) identity of the parties to the cause of/civil action; and (4) identity of the quality or character of a person for or against whom the claim is made.” Miller v. Miller, 838 So. 2d 295, 297 (¶5) (Miss. Ct. App. 2002) (citations omitted). Here, the first two identities – the subject matter and the cause of action, namely the underlying facts and circumstances – are the same. In both the 2009 divorce judgment and the complaint for declaratory relief, Jason and Cassie are parties. The only difference between the two causes of action is that Jason added Fred and Joellen as defendants to the second cause. But since Jason made no claims against them, and they never acted as adverse parties to Jason (as evidenced by the fact they are now joined with him as appellants), we find the third identity requirement is met. As to the fourth identity, Cassie was named as a defendant in both causes of action. Therefore, we find all four identities are present.
¶21. Accordingly, we affirm the chancery court’s denial of Jason’s complaint for declaratory relief.
In case you hadn’t counted, 88 months — seven years and four months — after the divorce action, we finally have achieved finality. That is, we have unless Jason files something else along the lines of his earlier attempts. Stay tuned.
The Extracurricular Trap
October 3, 2017 § 3 Comments
Divorcing parents often want to haggle over who will pay for Junior to participate in Youth Soccer Premier League, gymnastics, and all of the other manifold interests and activities that occupy nearly every waking hour of today’s children. When at last the lawyers have gotten their clients to agree, the lawyers without a lot of thought produce a provision like this for the PSA:
The parties agree that they will each pay one-half of the cost for Junior to participate in extracurricular activities.
That thorny issue settled, the lawyers then turn their attention to more substantial matters — like who will get custody of the cocker spaniel.
Now, we know that the parties above want Junior to participate in youth soccer and gymnastics, but is that what they agreed to in that language above?
Before we go on, remember that when you call upon the judge to interpret the parties’ agreement, she is bound by the language contained in its four corners. She may not receive parol evidence to understand what was intended unless she first finds that the language is ambiguous. The language above is heartbreakingly unambiguous. So the parties are stuck with its plain meaning.
And what is its plain meaning?
The COA answered that question in the case of Thomas v. Crews, 203 So.3d 701, 706-7 (Miss. App. 2016). In that case, the chancellor had been called upon to resolve a dispute between the parties over the meaning of the term “extracurricular activities.” Here is what the court said:
¶ 22. The chancellor’s clarification of the term “extracurricular” is also supported by substantial credible evidence in the record. The chancellor clarified that “extracurricular expenses are those incurred through school. … [S]chool volleyball is different than competitive volleyball [.] … [I]f the Father wants to pay, that will be up to the Father.” [Fn 2] At times, Thomas’s hearing testimony made the same distinction that the court’s order does, but, at other times, Thomas’s testimony equated school volleyball and competitive volleyball as “extracurricular.” This confusion justified the chancellor’s clarification.
¶ 23. When first discussing the volleyball teams, Thomas clearly made a distinction between school volleyball as extracurricular and competitive volleyball as different. Thomas referred to “school volleyball” as “the first real extracurricular activity that [Lunden] was interested in.” Thomas then testified that Lunden expressed an interest in competitive volleyball. Detailing Thomas and Crews’s decision to allow Lunden to play competitive volleyball, Thomas testified, “[Crews] and I talked about it and … we agreed that we would split the expenses of the—the training fee and uniforms.” Thomas also made this distinction between the two types of volleyball when discussing Lunden’s volleyball schedule. In contrast, Thomas, on cross-examination, referenced competitive volleyball as an extracurricular activity, stating that Lunden’s “extracurricular activities are expanding. So if she’s playing volleyball in Hot Springs, Arkansas, if you want to see her then that’s where we have to go.” In light of this testimony, the chancellor did not abuse his discretion when he simply “remind[ed] both parties that extracurricular expenses are those incurred through school.”
[Fn 2] Extracurricular is defined as “outside the normal curriculum.” Extracurricular, The Oxford English Dictionary (2d ed. 1989). Extracurricular activities “are those sponsored by and usually held at school but that are not part of the standard academic curriculum.” Extracurricular Activities, definitions.uslegal.com/e/extracurricular-activities/.
So, to return to our hapless parties, the shared expenses “are limited to those that are those sponsored by and usually held at school but that are not part of the standard academic curriculum.” Not exactly what they intended at the time. At the end of the day, one party leaves happy, the other mad.
If the parties intend to include certain activities, then spell them out. Don’t rely on a catch-all phrase that might have unintended consequences.
Forum Shopping in Divorce Cases
October 2, 2017 § Leave a comment
I posted here previously about the Lewis v. Pagel case, which changed the law of venue in divorce cases. It held that venue relates to personal jurisdiction, which can be waived or conferred voluntarily, rather than subject matter jurisdiction, which may not be waived or conferred voluntarily. The law up to Pagel had been that divorce venue conferred subject matter jurisdiction. Pre Pagel, if venue was wrong, the court was deprived of subject matter jurisdiction and any judgment it entered would be void.
In that same post I questioned whether Pagel would give rise to forum shopping. If personal jurisdiction can be waived, and venue is a function of personal jurisdiction, then venue should likewise be waivable.
How would that work? One example would be where two pro se litigants in Jasper County decide they can get an ID divorce quicker and easier in Jones County. So they file there. Or in a contested case the lawyers, after exhausting negotiations, mutually decide with their clients to file for divorce in Hinds County where their offices are, instead of in Simpson County where the parties live. Can or should the courts in Jones and Hinds entertain those actions?
Well, the language of MCA 93-5-11 has a lot to say about it:
“All complaints, except those based solely on the ground of irreconcilable differences, must be filed in the county in which the plaintiff resides, if the defendant be a nonresident of this state, or be absent, so that process cannot be served; and the manner of making such parties defendants so as to authorize a judgment against them in other chancery cases, shall be observed. If the defendant be a resident of this state, the complaint shall be filed in the county in which such defendant resides or may be found at the time, or in the county of the residence of the parties at the time of separation, if the plaintiff be still a resident of such county when the suit is instituted.
The operative verbs are must and shall, so the statute mandates where venue will lie. Pagel, on the other hand, says that venue only confers personal jurisdiction, which may always be waived.
So which controls? My best guess is that most chancellors will say that the statute controls, and a divorce filed contrary to the statute will be transferred to the proper venue. The right to waive personal jurisdiction would have to yield to the mandatory language of the statute.
But that’s just me. Your local experience may vary, and there are nine justices on the MSSC, as well as another ten on the COA, who could see it completely differently. Stay tuned.
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