November 4, 2019 § Leave a comment
Chip and Melanie Griner underwent a divorce in which the chancellor rendered a judgment in a consent case, and Chip appealed.
In a 2017 opinion, the COA reversed and remanded for the chancellor to correct errors in calculations, to correct the amount of life insurance securing the award, and for clarification of the length of time Chip was required to maintain health insurance covering Melanie. It also ordered Melanie to pay the costs of appeal. The COA issued its mandate so directing.
On remand, the chancellor revised the equitable distribution and the life insurance and health insurance matters. The chancellor denied a motion by Chip to recover the appeal costs. Chip again appealed.
In Griner v. Griner, decided October 8, 2019, the COA again remanded on the issue of recovery of the appeal costs. Here is how Judge McCarty’s opinion addressed the issue for a unanimous court, with Carlton and Tindell not participating:
¶9. For his first assignment of error, Chip argues that the chancery court should have executed this Court’s mandate assessing all appellate costs to Melanie. As a matter of law this is correct.
¶10. In our 2017 opinion we ordered Melanie to pay all costs of the appeal, and the mandate echoed this language. Griner, 235 So. 3d at 190 (¶35) (“All costs of this appeal are assessed to the appellee.”). A party who disagrees with an assessment of costs issued in an opinion may seek relief through a motion for rehearing under Mississippi Rule of Appellate Procedure 40. See M.R.A.P. 36(d) (“a party seeking relief may file a motion for rehearing under Rule 40”). If the mandate issues with a requirement to pay costs, our rules likewise allow a motion to retax costs, which must be filed within fourteen days of the issuance of the mandate. Id.
¶11. While Chip filed a motion for rehearing, Melanie did not. After the Supreme Court denied a request for certiorari review, the mandate was issued. Melanie did not ask for the costs to be retaxed.
¶12. The mandate is an order of this Court which must be followed without deviation. Relying upon a basic definition of the word, the Supreme Court has held it is “[a] command, order, or direction” which, once given, a “person is bound to obey.” Denton v. Maples, 394 So. 2d 895, 897 (Miss. 1981). This “judicial command” directs a lower court “to enforce a judgment, sentence, or decree.” Id. Coupled with the opinion, the mandate is how we communicate with trial courts. “It is inherently necessary that this Court have some method of advising the lower court of the action taken here; under our practice the method used is the mandate.” Edmonds v. Delta Democrat Pub. Co., 221 Miss. 785, 787-88, 75 So. 2d 73, 74 (1954). Because it is to be followed without deviation, “[t]he trial court may not receive any other intelligence of the action of this Court.” Id.
¶13. The procedure following the mandate must be followed strictly. “Upon issuance of our mandate, the trial court simply proceeds to enforce the final judgment.” Collins v. Acree, 614 So. 2d 391, 392 (Miss. 1993). There is no discretion whether to follow a mandate, because “[t]he execution of the mandate of this Court is purely ministerial.” Id. Indeed, the Supreme Court has ruled that any order which is contrary to the mandate is actually outside the jurisdiction of a trial court, and will be held “a nullity and void ab initio.” Denton, 394 So. 2d at 897. [Fn 2]
[Fn 2] 2 Note that while the mandate must be strictly followed, there remains the opportunity to later dive into what costs were actually incurred or should be paid per the mandate, since a party “who seeks relief as to any other matter involving costs shall seek relief in the trial court.” M.R.A.P. 36(d).
¶14. After remand, Chip filed a motion for recovery of appeal costs. Our rules explicitly allow recovery of “[c]osts incurred in the preparation and transmission of the record, the costs of the reporter’s transcript, if necessary for the determination of the appeal, the premiums paid for cost of supersedeas bonds or other bonds to preserve rights pending appeal, and the fee for filing the appeal . . . .” M.R.A.P. 36(c). Because the original appeal included a money judgment, there was a supersedeas bond, and the trial court required it to be one million dollars. The bond carried a $20,000 premium. On remand, Chip requested these premium costs, the docket fee of $200, and a prepayment for record preparation, for a total of $41,200. The request did not seem to be fully formed, as Chip alleged some further bond premium might need to be paid pro rata, and the final record cost was not included. Nonetheless, the motion included exhibits reflecting the two bond premiums.
¶15. Melanie did not respond to the motion at all. The trial court did not make a lengthy ruling on the issue. Instead, its Findings of Fact and Conclusions of Law Following Remand noted in its last line that “All other requests for relief not granted are denied.”
¶16. The chancery court did not have discretion to ignore the mandate. The mandate issued on February 15, 2018, and has to this point not been followed. In accord with our longstanding precedent, we reverse and remand for immediate compliance with the original mandate. Per the mandate for the original appeal, and in accord with the procedures set out in Rule 36, Chip is entitled to all costs for the original appeal.
Pretty clear in this case. The only catch is that sometimes you have to scratch your head over exactly what it is the appellate court is directing to be done.
September 18, 2019 § Leave a comment
Last year’s Pettersen case caused somewhat of a ruffle among many attorneys when it affirmed a chancellor’s findings that pre-marriage assets were marital or converted to marital, and passive appreciation of pre-marital securities was also marital. One lawyer told me that he was still scratching his head over the latter.
Lost in the consternation is that the opinion by Judge Barnes includes some jewels of authority that you might find useful:
Frederick Pettersen claimed that the chancellor erred when he announced that he would not consider child support, but he never objected at trial. In ¶10, the court said, “Furthermore, this issue was not asserted in Frederick’s motion for reconsideration.” Aside from the fact that there is no such thing as a motion for reconsideration, this is a remarkable statement because it assumes that you must assert the bases for your R59 motion in the motion. In my experience, few attorneys recite more than that they want a new trial or an amendment of judgment without detailing the reasons why. R7(b) specifically states that a motion “shall state with particularity the grounds therefor, and shall set forth the relief or order sought.” That “grounds therefor” language is pretty important, but sometimes overlooked.
As for the proper demarcation date, the court said at ¶12:
Our Court has held:
“The law in Mississippi is that the date on which assets cease to be marital and become separate assets—what we refer to as the point of demarcation—can be either the date of separation (at the earliest) or the date of divorce (at the latest).” Collins v. Collins, 112 So. 3d 428, 431-32 (¶9) (Miss. 2013). [However, a] chancellor may consider a temporary order as the line of demarcation between marital and separate property. Id. Ultimately, however, the chancellor has the discretion to draw the line of demarcation. Id. at (¶10).
Randolph v. Randolph, 199 So. 3d 1282, 1285 (¶9) (Miss. Ct. App. 2016).
At ¶18, the opinion discussed classification of assets:
¶18. Furthermore, when determining whether certain property is marital, a chancery court “must inquire whether any income or appreciation resulted from either spouse’s active efforts during the marriage.” Rhodes v. Rhodes, 52 So. 3d 430, 436 (¶20) (Miss. Ct. App. 2011). “If so, that income or appreciation becomes part of the marital estate.” Id.
In ¶19, the court rejected Frederick’s argument that his wife, Audrey, was not entitled to any of his retirement funds because of an extra-marital affair:
Moreover, a spouse’s misconduct is only one factor to consider in the division of marital assets. A chancery court “should not view equitable distribution as a means to punish the offending spouse for marital misconduct. Rather, ‘marital misconduct is a viable factor entitled to be given weight by the chancellor when the misconduct places a burden on the stability and harmony of the marital and family relationship.’” Bond v. Bond, 69 So. 3d 771, 773 (¶6) (Miss. Ct. App. 2011) (quoting Carrow v. Carrow, 642 So. 2d 901, 904-05 (Miss. 1994)).
In discussing whether pre-marital properties were properly classified, the court said at ¶23:
¶23. “Marital property is ‘anyand all property acquired or accumulated during the marriage and is subject to an equitable distribution by the chancellor.’” Mamiaro v. Mamiaro, 179 So. 3d 51, 53 (¶7) (Miss. Ct. App. 2015) (quoting Hemsley v. Hemsley, 639 So. 2d 909, 915 (Miss. 1994)). There is no dispute that these properties were acquired before the marriage. But, in discussing Ferguson, the Mississippi Supreme Court held:
Instead of looking to the bare title of a marital asset, this Court, as should the trial courts, will continue to consider all of the facts and circumstances surrounding the accumulation of the marital assets, including noneconomic contributions and factors, when deciding how the marital property should be divided under our system of equitable distribution.
Carnathan v. Carnathan, 722 So. 2d 1248, 1253 (Miss. 1998). Although Frederick argues that Audrey made no economic contribution to these properties, he acknowledges that Audrey helped prepare balance sheets with respect to the rental properties for a period of time during their marriage. We find, therefore, that the chancery court’s awarding her ten percent of the properties’ value was not an abuse of discretion.
And the court reminded us of the definition of commingling:
¶26. “Commingled property is a combination of marital and non-marital property[,] which loses its status as non-marital property as a result.” Maslowski v. Maslowski, 655 So. 2d 18, 20 (Miss. 1995).
Finally, the opinion considered Frederick’s argument that he used non-marital funds to purchase an asset, so it should be a “mixed asset” with greatly reduced equitable distribution to Audrey:
¶29. “[A] presumption of marital property arises to any property acquired during the marriage.” Maslowski, 655 So. 2d at 20. The chancellor properly considered the applicable Ferguson factors, finding: (1) the property was acquired during the marriage; (2) Audrey had “substantially contributed to this property by serving as bookkeeper”; and (3) Frederick had managed the subject property during the separation and continues to do so. Therefore, we find no merit to this issue.
September 11, 2019 § Leave a comment
After Lisa Crew and Ellis Tillotson were divorced from each other in North Carolina, Lisa filed a complaint for equitable distribution in Mississippi, where the parties’ property was located. Following a trial the chancellor divided the marital estate.
Lisa appealed, complaining that the distribution was inequitable and erroneous. Ellis cross-appealed that the North Carolina judgment rendered the equitable distribution claims res judicata, and the chancellor erred in accepting jurisdiction.
In Crew v. Tillotson, decided August 20, 2019, the COA affirmed. Judge Tindell wrote the 6-3 decision:
¶15. With regard to the application of res judicata in divorce cases, this Court previously explained:
The doctrine of res judicata reflects the refusal of the law to tolerate a multiplicity of litigation. It is a doctrine of public policy designed to avoid the expense and vexation attending multiple lawsuits, conserve judicial resources, and foster reliance on judicial action by minimizing the possibilities of inconsistent decisions. 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.
Article IV, § 1 of the United States Constitution requires that full faith and credit be given to the judicial proceedings of sister states. However, those proceedings are only entitled to full faith and credit where the rendering court properly has subject matter and personal jurisdiction. The United States Supreme Court has applied the Full Faith and Credit Clause in the context of divorce actions.
Lofton v. Lofton, 924 So. 2d 596, 599 (¶¶14-15) (Miss. Ct. App. 2006) (citations and internal quotation marks omitted). Our caselaw further recognizes “that a divorce action involving multiple states is ‘divisible.’ That is, 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.” Id. at 601 (¶27). In addition, “Mississippi law is clear that where the case in the foreign court is not decided on its merits, while suit might be barred from any other court in the state where the judgment was rendered[,] it is not res judicata in Mississippi.” Weiss v. Weiss, 579 So. 2d 539, 541 (Miss. 1991) (internal quotation mark omitted).
¶16. Here, Ellis contends the chancellor erroneously found that North Carolina did not possess personal jurisdiction over him. We agree with Ellis that the record reflects he voluntarily submitted to North Carolina’s personal jurisdiction when he entered a general appearance in the divorce proceeding. Our analysis therefore focuses on Ellis’s arguments that North Carolina statutory law required Lisa to raise equitable distribution in the divorce proceeding there and that her failure to do so barred her from asserting the issue in a subsequent action in Mississippi. Ellis relies on North Carolina General Statute Annotated section 50-11(e) (2013), which provides:
An absolute divorce obtained within this State shall destroy the right of a spouse to equitable distribution under [North Carolina General Statute Annotated section] 50-20 unless the right is asserted prior to judgment of absolute divorce; except, the defendant may bring an action or file a motion in the cause for equitable distribution within six months from the date of the judgment in such a case if service of process upon the defendant was by publication pursuant to . . . [North Carolina General Statute Annotated section] 1A-1, Rule 4 and the defendant failed to appear in the action for divorce.
¶17. The North Carolina divorce judgment adjudicated three matters. The divorce decree granted the parties an absolute divorce under North Carolina law, allowed Lisa to resume the use of her maiden name, and allowed Lisa’s attorney to withdraw from the case. No dispute exists that Lisa’s North Carolina divorce complaint never raised the issue of equitable distribution and that the matter was therefore neither litigated in nor adjudicated by the North Carolina divorce proceeding. Lisa argues, however, that the North Carolina court lacked in rem jurisdiction to dispose of the parties’ property located outside the state. For this reason, Lisa asserts that she did not attempt to raise the issue in the divorce proceeding and that her failure to do so poses no bar to her current Mississippi action. To support her argument, Lisa cites North Carolina General Statute Annotated section 50-11(f), which states:
An absolute divorce by a court that lacked personal jurisdiction over the absent spouse or lacked jurisdiction to dispose of the property shall not destroy the right of a spouse to equitable distribution under [section] 50-20 if an action or motion in the cause is filed within six months after the judgment of divorce is entered.
¶18. As the United States Supreme Court has previously recognized:
[W]hen claims to the property itself are the source of the underlying controversy between the plaintiff and the defendant, it would be unusual for the State where the property is located not to have jurisdiction. . . . The State’s strong interests in assuring the marketability of property within its borders and in providing a procedure for peaceful resolution of disputes about the possession of that property would also support jurisdiction, as would the likelihood that important records and witnesses will be found in the State.
Shaffer v. Heitner, 433 U.S. 186, 207-08 (1977) (footnotes omitted).
¶19. As we have already noted, Mississippi recognizes divisible divorce actions. Lofton, 924 So. 2d at 601 (¶27). Here, during the North Carolina divorce proceeding, neither party ever raised the issue of equitable distribution of their marital property located in Mississippi. Further, as reflected by its decree, the North Carolina court never addressed the issue. Normally, under North Carolina statutory law, a party’s failure to raise equitable distribution waives the issue in a future proceeding. N.C. Gen. Stat. Ann. § 50-11(e). But as the North Carolina Supreme Court has recognized, exceptions do exist. “Chapter 50 clearly contemplates the survival of those rights[to equitable distribution and alimony] under certain circumstances[,]” and section 50-11(f) provides an exception that “applies to cases wherein the trial court lacks personal jurisdiction over the defendant or jurisdiction to dispose of the property.” Stegall v. Stegall, 444 S.E.2d 177, 179, 180 (N.C. 1994).
¶20. We believe that such circumstances exist in the instant case. Because the North Carolina court never exercised jurisdiction to dispose of the parties’ marital property, the grant of divorce did not destroy Lisa’s right to equitable distribution under section 50-11(f) because she filed such an action within six months of the entry of divorce. We therefore find no error in the chancellor’s determination that res judicata failed to bar Lisa’s action in Mississippi. Accordingly, we find that Ellis’s argument as to this assignment of error lacks merit.
Judge Jack Wilson, joined by Barnes and Corey Wilson, wrote a well-reasoned dissent.
July 29, 2019 § Leave a comment
There is plenty of case law holding that the chancellor may rely on the parties’ evidence submitted at trial to value marital assets and make equitable distribution, even when that evidence is less than substantial. I posted on the subject here and here, and in other posts.
That precedent did not persuade the COA, however, in Mark Chism’s appeal from the chancellor’s ruling in the divorce case he filed against his wife, Landaria. In Chism v. Chism, decided June 4, 2019, the COA reversed and remanded the chancellor’s decision that adopted Landaria’s valuation of the parties’ jointly-owned chicken-wing business. Chief Judge Barnes penned the court’s opinion:
¶20. Mark argues that the chancellor erred in accepting Landaria’s valuation of the couple’s business without sufficient proof and therefore led to an inequitable division of the marital property. Thus, Mark claims the entire financial award must be reversed and remanded.
¶21. To resolve property division, the chancellor must: “(1) classify the parties’ assets as marital or separate, (2) value those assets, and (3) divide the marital assets equitably.” Burnham v. Burnham, 185 So. 3d 358, 361 (¶12) (Miss. 2015). Equitable division of property is governed by the factors articulated in Ferguson v. Ferguson, 639 So. 2d 921, 929 (Miss. 1994). The third Ferguson factor asks the chancellor to consider “[t]he market value . . . of the assets subject to distribution.” Ferguson, 639 So. 3d at 929. Three methods of valuation may be used to determine the market value of a business for this purpose: “(1) an asset-based approach, in which assets and liabilities are evaluated, (2) a market-based approach, in which the market is surveyed for similar sales, or (3) an income-based approach, in which a value is placed on earning potential.” Lacoste v. Lacoste, 197 So. 3d 897, 907 (¶34) (Miss. Ct. App. 2016) (citing Singley v. Singley, 846 So. 2d 1004, 1011 (¶18) (Miss. 2002)).
Regardless of what method an expert might choose to arrive at the value of a business, the bottom line is one must arrive at the “fair market value” or that price at which property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of the relevant facts.
¶22. The chancellor found the total value of all marital property, including the business, was $1,176,598. Landaria was awarded fifty-percent of that value. Taking into account the Ferguson factors and distribution of other marital property, Landaria was ultimately awarded $521,299. Mark does not dispute that the chicken-wing business was a marital asset. However, he maintains that because the business was the couple’s main asset and source of income, a more specific business evaluation was necessary for an equitable distribution of marital property.
¶23. The chancellor found that the parties owned Memphis Best Wings. Although Mark had operated another chicken-wing business prior to the marriage, he started this new business jointly with Landaria during the marriage, and both parties contributed. In fact, Landaria quit her job as a teacher to work at the restaurant as a paid employee. However, not surprisingly, she was dismissed upon the parties’ separation. These facts are uncontested. The chancellor found the business’s value was $1,000,000 according to Landaria’s unsupported testimony and Rule 8.05 estimate. No details of how she arrived at this valuation were provided, and Mark did not even list the business on his Rule 8.05 form. The chancellor found that the business had “grown into a very substantial and profitable” one. He stated the $1,000,000 figure “has not been disputed” by Mark, who did not rebut this estimate at trial or offer his own estimate. Yet, there was no testimony from Landaria about how she arrived at that value for the business. Landaria even admitted, when asked by the chancellor, that her stated value was “just [her] estimate.” However, Mark’s 2014–2016 tax returns, provided during discovery, were admitted into evidence and included his profit and loss income statements. These evidence net profits of $60,291; $48,543; and $63,516, respectively, which does not appear to support a $1,000,000 valuation. [Fn omitted] During his examination of Mark, Landaria’s counsel tried to show that Mark was “keep[ing] the cash out of the business [account].” A photograph was entered into evidence showing Mark and his sister sitting at a table with a pile of cash on it, but none of these bills appear to be large ones. Statements showed that Mark made few cash deposits to the bank each month, but he maintained that he bought supplies and paid bills with the cash and did not keep it for personal use. Additionally, the chancellor speculated that the couple was not reporting all of their cash earnings from the business but using this money to fund their extravagant lifestyle.
¶24. In Mark’s post-trial motion to reconsider, he argued the chancellor erred by appointing a business-valuation expert, and Mark moved to designate Robert Vance as such an expert. Vance submitted a valuation report which came to the conclusion that Memphis Best Wings had a fair market value of $1,898 as a going-concern entity, excluding goodwill. Vance used the asset-based approach for his valuation, claiming that the market-based approach and the income-based approach are inappropriate because they imply the existence of goodwill in the value of a business, which is prohibited under Mississippi law, citing Lacoste and Singley v. Singley, 846 So. 2d 1004, 1011 (¶18) (Miss. 2002). Landaria moved to strike the expert’s testimony and opinion because discovery had been completed for well over a year. Mark moved to proffer it, and a hearing was held on the matter. Although the chancellor denied Mark’s motion to reconsider, he allowed the expert’s proffered testimony and business valuation report, dated April 3, 2018, for identification purposes.
¶25. This Court and the Mississippi Supreme Court have reversed the chancellor when evidence on the valuation of the business in property distribution was insufficient. In Lacoste, this Court reversed and remanded a business valuation which the chancellor based on the previous year’s profit/loss statement. Lacoste, 197 So. 3d at 908 (¶38). Like here, the business was considered the couple’s main asset and source of income. Id. at 907 (¶34). However, the parties failed to present sufficient evidence to value the business by the approach the chancellor deemed best (the income-based approach). Id. at 908 (¶37). While we found “the chancellor did the best she could with the evidence presented,” this Court nonetheless found it necessary to reverse because of lack of support for the valuation. Id. at 909 (¶42). In Mace v. Mace, 818 So. 2d 1130, 1133 (¶¶13, 16) (Miss. 2002), the Mississippi Supreme Court reversed the chancellor on the value placed upon a husband’s medical practice which was a marital asset. The value of $144,000 was determined solely by the husband’s testimony, did not appear to be based upon any reliable method, and it was unclear what physical assets were included in the valuation. Id. at 1134 (¶15).
¶26. Moreover, this Court, following the Mississippi Supreme Court’s directions, has stated that “the foundational step to make an equitable distribution of marital assets is to determine the value of those assets based on competent proof.” Dunaway v. Dunaway, 749 So. 2d 1112, 1118 (¶14) (Miss. Ct. App. 1999) (citing Ferguson, 639 So. 2d at 929). As stated earlier, the chancellor must determine the “fair market value” of the business, using one of the three approaches: an asset-based approach, a market-based approach, or an income-based approach. Lacoste, 197 So. 3d at 908 (¶34) (quoting Singley, 846 So. 2d at 1011 (¶18)).
¶27. Not all approaches will be applicable for all businesses. For example, in Lacoste, the chancellor found an asset-based approach was inapplicable because the business had few assets, owned little equipment, and had no employees or training facility. Lacoste, 197 So. 3d at 908 (¶36). The market-based approach was also ruled out as no comparable business sales were introduced, and the business’s success was largely due to the reputation of the owner and marketing. Id. The chancellor, therefore, considered only the income-based approach as appropriate. Id. at (¶37). We found, however, that given the drastic income fluctuations and possibility that income “may be intertwined with goodwill, as the business hinge[d] on [the husband’s] reputation and personal efforts,” the case had to be remanded for further evaluation. Id. at 910 (¶45).
¶28. Here, the chancellor was unable to adopt any of the three approaches as none were presented to him. Landaria offered only an unsupported estimate on her 8.05 form and testimony. Mark did not provide any value for the business on his Rule 8.05 form or give any testimony as to its value. As established in Lacoste and Mace, the chancellor should require that the parties utilize a reliable method of valuation and support it with adequate proof, or prove valuation through expert testimony. See Lacoste, 197 So. 3d at 910 (¶46); Mace, 818 So. 2d at 1134 (¶15). If they fail to offer such proof, the chancellor may appoint an independent valuation expert. Id. Accordingly, we reverse the chancellor’s $1,000,000 valuation of Memphis Best Wings and remand for further proceedings.
What this portion of the opinion omits is that Mark failed, refused and neglected to provide financial proof sufficient to value the business, and was even jailed for contempt for non-cooperation in discovery. He went through a succession of lawyers. It seems to me that he had his chance to offer proof of the value of of his business, but he chose to play cat-and-mouse games with Ladaria and the court. Unfortunately, those shabby tactics served him well on appeal. He actually benefitted from his evasion of discovery by getting a second bite at the apple.
Contrast the court’s treatment of Mark’s coyness with values and the suggestion that the trial judge should appoint an expert with this language from Kimble v. Kimble, a COA case decided only 14 days after Chism:
¶8. “[T]he foundational step to make an equitable distribution of marital assets is to determine the value of those assets based on competent proof.” Dunaway v. Dunaway, 749 So. 2d 1112, 1118 (¶14) (Miss. Ct. App. 1999) (citing Ferguson, 639 So. 2d at 929). “[I]t is incumbent upon the parties, and not the chancellor, to prepare evidence touching on matters pertinent to the issues to be tried.” Benton v. Benton, 239 So. 3d 545, 548 (¶11) (Miss. Ct. App. 2018). When “a party fails to provide accurate information, or cooperate in the valuation of assets, the chancellor is entitled to proceed on the best information available.” Id. The chancellor possesses sole authority to assess both the credibility and weight of witness testimony. Culumber v. Culumber, 261 So. 3d 1142, 1150 (¶24) (Miss. Ct. App. 2018). [My emphasis]
Admittedly, Kimble involved valuation of vehicles, not a business, but sometimes it’s difficult here at grass-roots level to figure out where we are supposed to draw the line. I posted about Kimble here.
July 16, 2019 § Leave a comment
Eleanor Ellison and Stephen Williams had a stormy relationship punctuated with Stephen’s numerous departures. After Stephen left her once again and moved in with another woman, Eleanor filed for divorce. Following a trial, the chancellor divided the marital estate, and Eleanor was displeased with the outcome, even though she received a larger share of the marital estate.
She appealed, and one of the issues she raised was that the chancellor had given inadequate attention to the effect of Stephen’s conduct on the marriage, which, of course, is one of the Ferguson factors.
In Ellison v. Williams, handed down June 18, 2019, the COA reversed and remanded on the issue. Judge Westbrooks wrote for a 5-4 court:
¶11. Ellison also asserts that the chancellor should have considered Williams’s extramarital affair. We agree. The Mississippi Supreme Court has reversed and remanded cases when the chancellor did not consider how an extramarital relationship “impacted and burdened the stability and harmony of the marriage.” Watson v. Watson, 882 So. 2d 95, 108 (¶68) (Miss. 2004) (quoting Singley v. Singley, 846 So. 2d 1004, 1009 (¶13) (Miss. 2002)). “Mississippi is in a minority of states in which marital misconduct is a factor for consideration in property division.” Deborah H. Bell, Bell on Mississippi Family Law § 6.08[e], 176 (2d ed. 2011).
¶12. Here, Ellison did receive a slightly larger portion of the marital estate than Williams, but the chancellor did not cite that as his reasoning. The chancellor stated that he was aware it was Ellison’s family home that they first resided in and then leveraged to purchase another home; he therefore awarded Ellison sixty percent. The chancellor awarded Ellison a fault-based divorce but then did not directly consider how Williams’s absences and infidelity affected the stability and harmony of the home when dividing the estate. Because we believe the chancellor’s lack of consideration was error, we reverse and remand for further proceedings on this issue to allow the chancellor to consider the extramarital relationship in equitably dividing their estate. Additionally, we reverse and remand to allow the chancellor to make a full Ferguson analysis on the record.
Judge Tindell, joined by Carlton, Greenlee, and McCarty, disagreed in part. His concurring and dissenting opinion:
¶20. Because the chancellor heard evidence of Williams’s extramarital relationship and thereafter awarded Ellison with a greater percentage of the marital estate, I would affirm the chancellor’s judgment in its entirety. Where substantial evidence supports a chancellor’s findings, the Court is without authority to disturb the chancellor’s conclusions even if it would have found otherwise in the original matter. Joel v. Joel, 43 So. 3d 424, 429 (¶14) (Miss. 2010). We have previously held that “failure to make an explicit factor-by-factor analysis does not necessarily require reversal where we are satisfied that the chancellor considered the relevant facts.” Palmer v. Palmer, 841 So. 2d 185, 190 (¶18) (Miss. Ct. App. 2003). Unless the chancellor’s judgment was manifestly wrong, clearly erroneous, or applies an erroneous legal standard, the judgment should stand. Carambat v. Carambat, 72 So. 3d 505, 510-11 (¶24) (Miss. 2011).
¶21. The final judgment does address Williams’s adultery in the chancellor’s findings of fact. Further, after conducting a full Ferguson analysis, the chancellor awarded Ellison sixty percent of the marital assets and forty percent to Williams. Substantial evidence supported the chancellor awarding a greater portion of the marital estate to Ellison, and he did so accordingly. For these reasons, I find no manifest error in his conclusions and respectfully dissent in part from the majority’s opinion.
To say that there is a crazy-quilt of decisions on point would be a laughable understatement: the chancellor must address all of the Ferguson factors; the chancellor must address only the pertinent Ferguson factors; the chancellor’s consideration of the Ferguson factors may be gleaned from her findings in the record, regardless whether she ever mentions Ferguson; Ferguson factors must be specifically addressed; adulterous conduct must be considered for its impact on the stability of the household; the chancellor may not use property division to punish misconduct or reward good conduct.
July 15, 2019 § 1 Comment
Rodney Kimble and his wife Stepidy went through a divorce. Rodney didn’t like the way the chancellor divided the marital estate, and he particularly objected to the judge’s valuation of a 2006 Volvo truck, a 2000 Freightliner trailer, and a 2007 Transcraft trailer, all of which he complained were overvalued by the chancellor. He appealed, arguing that the trial court erred in not considering his testimony that the truck and trailers were inoperable and had not been used in several years.
Here’s how Judge Tindell, writing for the COA, addressed Rodney’s claims in Kimble v. Kimble, decided June 18, 2019:
¶8. “[T]he foundational step to make an equitable distribution of marital assets is to determine the value of those assets based on competent proof.” Dunaway v. Dunaway, 749 So. 2d 1112, 1118 (¶14) (Miss. Ct. App. 1999) (citing Ferguson, 639 So. 2d at 929). “[I]t is incumbent upon the parties, and not the chancellor, to prepare evidence touching on matters pertinent to the issues to be tried.” Benton v. Benton, 239 So. 3d 545, 548 (¶11) (Miss. Ct. App. 2018). When “a party fails to provide accurate information, or cooperate in the valuation of assets, the chancellor is entitled to proceed on the best information available.” Id. The chancellor possesses sole authority to assess both the credibility and weight of witness testimony. Culumber v. Culumber, 261 So. 3d 1142, 1150 (¶24) (Miss. Ct. App. 2018).
¶9. Here, as previously discussed, both parties submitted Rule 8.05 financial disclosures to the chancellor and testified at the hearing. Rodney’s initial Rule 8.05 disclosure, however, failed to reflect all his assets. During questioning by Stepidy’s attorney, Rodney admitted that his Rule 8.05 financial statement failed to include three bank accounts and five vehicles and/or trailers that he owned. Stepidy’s attorney also questioned Rodney about the values he listed for certain vehicles and the discrepancies between those values and the higher valuations reflected by the National Automobile Dealers Association (NADA). While subsequently questioning Rodney about his valuation of the marital home, the following exchange occurred:
STEPIDY’S ATTORNEY: Okay. And on the financial declaration, you say the house . . . [is] worth about [$]63,000; is that right?
RODNEY: I guess.
STEPIDY’S ATTORNEY: Well, I mean, that’s what you put down.
THE COURT: Hang on. Rule 8.05 requires the parties to exchange a financial statement that’s to be signed under oath. I’ve sat here for the last 30 minutes and listened to various and numerous discrepancies in your 8.05. I’m going to take a break, and at 9:45[a.m.], I’m going to return, and I want that 8.05 to reflect exactly what your knowledge is.
THE COURT: I’ve heard vehicles that aren’t listed. I’ve heard checking accounts that aren’t listed. Somebody hasn’t done . . . [his or her] job. I’m going to give you ten minutes to do it, or I’m going to hold you in contempt. Do you understand what I’m telling you?
¶10. On Stepidy’s Rule 8.05 statement, she listed the following values for the three vehicles now at issue on appeal: (1) $20,000 for the 2006 Volvo truck (VIN ending in 3635); (2) $17,000 for the 2000 Freightliner conventional trailer; and (3) $20,000 for the 2007 Transcraft trailer. Stepidy testified that she and her attorney obtained these values from NADA after inputting the vehicles’ VINs and title information. While Rodney’s initial Rule 8.05 statement failed to list any of the three disputed vehicles, Rodney testified that the 2006 Volvo truck (VIN ending in 3635) was inoperable and that he no longer used the 2000 Freightliner conventional trailer. Rodney further testified that he had tried and failed to sell the vehicles. As a result, Rodney claimed that both vehicles lacked any monetary value. As to the 2007 Transcraft trailer, Rodney stated that he rarely used the trailer, and he valued the item at $4,000.
¶11. Despite Rodney’s testimony that he had not driven or operated the 2006 Volvo truck (VIN ending in 3635) in three to five years, Stepidy’s attorney questioned him about two different tickets he had received for the vehicle within the last two years. (The first ticket was issued in August 2015, and the second ticket was issued in February 2016.) In response, Rodney stated that a mistake had occurred and that the VINs for his two 2006 Volvo trucks had been mixed up.
¶12. In rendering his bench opinion, the chancellor found that Rodney lacked credibility and that his testimony had been full of inaccurate and untruthful information intended to conceal his income and assets. Based on the evidence before him, the chancellor valued each of the now disputed items among the amounts provided by Stepidy’s Rule 8.05 statement and Rodney’s testimony and amended the Rule 8.05 statement. Because we find the record contains sufficient evidentiary support for the chancellor’s valuation of the three disputed assets, we refuse to find any manifest error. See Dunaway v. Dunaway, 749 So. 2d 1112, 1121 (¶28) (Miss. Ct. App. 1999) (refusing to find error where “the chancellor, faced with proof from both parties that was something less than ideal, made valuation judgments that find some evidentiary support in the record. . . . [and] appears to have fully explored the available proof and arrived at the best conclusions that he could . . . .”). We therefore find this assignment of error lacks merit.
- The chancellor found that Rodney lacked credibility. Not surprising given the sorry state of his 8.05 and his slipshod answers to questions about values. When the chancellor bases her findings on credibility, her conclusions are well-nigh bulletproof on appeal because it is within the chancellor’s exclusive realm of responsibility to assess credibility and the weight to assign to testimony.
- You could just about hear the chancellor’s frustration over the incomplete 8.05. A frustrated chancellor is never a good thing when he is frustrated at you or your client.
- Rodney sort of self-destructed on the witness stand over his assertion that he hadn’t driven the truck and trailers but had been ticketed while operating them. The judge didn’t buy the mixed-up VIN excuse, and I don’t know anyone else who would have either.
- Contrast Rodney’s valuations with Stepidy’s. Hers had a rational basis that the chancellor could rely on, and were presented in an orderly and complete fashion.
June 3, 2019 § 1 Comment
UCCR 8.05 should make everyone’s job in chancery court a lot easier. But lawyers, in their eternal ingenuity for contriving ways to complicate nearly all of creation, turn them into an implement of torture that they inflict on the court.
Chancellor Haydn Roberts of Rankin County presented this material at the Bar’s Family Law Section Hot Tips Seminar recently:
How to Confuse, Frustrate and/or Anger a Judge with an 8.05
Seriously, it happens often!
Don’t Prepare an an 8.05
Rule 8.05 states: “Unless excused by Order of the Court for good cause shown, each party in every domestic case involving economic issues and/or property division shall provide the opposite party or counsel, if known, an 8.05 in compliance with subparts (a) and (b) of the rule
Speights v. Speights, 2016-CA-01691-COA
Prepare your client’s 8.05 in the lobby, hallway or parking lot immediately preceding trial
Most of us Judges aren’t stupid and can tell when an 8.05 is prepared in this fashion
Common errors when this happens include unsigned 8.05s, incomplete property asset listing, incomplete debt listing and amounts, confusing expenses, pages
AND MY FAVORITE – misspelled children’s names and inaccurate birthdays
Don’t Bring Copies
You need a minimum of 5 copies (6 with a GAL)
Copy for the witness
Gross income – “total income from all sources before deductions, exemptions or other tax deductions
Includes wages, investment income, gifts from friends, rentals, social security, pension, child support, etc…
Overtime hours count
Be careful as the Judge may ask for a recent loan application from your client, wherein he/she must report his/her income
See, 2017-CA-1476 SCT; Tracy Marie Miles Williams v. Brent Reid Williams; affirmed 01/17/19; and Trim v. Trim 33 So.3d 471 (Miss. 2010)
If your client’s expenses far exceed his/her income, and he/she doesn’t have much debt…SOMETHING ISN’T CORRECT
Single person in an apartment shouldn’t incur $1200/month in food and household items BUT single person raising multiple children will incur at least that much
Most client’s don’t have much “household maintenance”
Pet expenses, yard expenses, miscellaneous, entertainment should be ACTUAL and know what those items entail
Some insurance is listed as a deduction
Don’t use health insurance as a mandatory deduction and then also an “insurance expense”
Same with life insurance, property insurance, rental insurance, automobile insurance, personal property insurance, umbrellas
Expenses could be current, past, future
Expenses could be single, family/household, and/or spouse + child(ren)
Keep it realistic even if speculative
Fail to Update
Time Lapse between temporary hearing and final may mean different information
When you update an 8.05 tell the Court
Witness/Client should know the differences and WHY there are differences
If Client has new employment, attach new pay stub
Make sure personal property matches
“Grandma’s antique roll top desk” on wife’s 8.05 is the same as “desk in bedroom” on husband’s 8.05
2012 Accord on wife’s 8.05 is the Blue Honda on husband’s 8.05
Watch the models, years, makes, account numbers, bank names, creditors’ names
Mark property value/equity as “unknown”
If you list an asset or debt as “unknown” and the opposite party has a value, the Judge will likely use that value
Be prepared to give a value even if it’s an educated guess
Be prepared to discuss the other party’s value(s) and why it/they are wrong
REMEMBER – asset value as to “stuff” is garage sale value, not brand spanking new
Who Needs Statements? [i.e., Documentation]
Debts should be corroborated by statements
Helps if they are at or near date of demarcation you are requesting
Bank accounts with substantial balances
This not a way to equalize income to expenses
If client makes church donations during a court matter, they should KNOW the following:
What service time they attend
April 30, 2019 § 1 Comment
Many, many divorces include either provisions in PSA’s or adjudications that divide retirement benefits to begin 10, 20, or even more years in the future, long after the time for appeal has run.
What happens when the underlying assumptions upon which that PSA or adjudication is based are changed over time or prove to be inaccurate or untrue?
Carolyn Hall was granted a divorce from Gary Hall on the ground of adultery in 2006. She was awarded alimony, and, as part of the property division, Gary was ordered to pay her: $23,976.23 from his 401(k) plan; $2,976.13 from his stock ownership plan; and $600 per month from his pension if he retired at normal age (based on a projected benefit of $5,212 per month, reflecting the plan’s increase during the parties’ 10-year marriage).
In 2007, Gary’s employer froze his pension benefits, but Gary did not file any action to seek modification. In 2016, Gary accepted an early retirement offer, causing him to retire at age 62 rather than the normal retirement age of 65.
Gary filed a petition for modification in February, 2017, claiming that the freezing of his benefits was a material change in circumstances that reduced his retirement benefits, and asked to eliminate the payment to Carolyn entirely. Perhaps recognizing that property division is unmodifiable (East v. East, 493 So.2d 927, 931 (Miss. 1986)), Gary argued at hearing that he was actually seeking relief from the divorce judgment pursuant to MRCP 60(b)(5) and (6). The chancellor granted Carolyn’s motion and dismissed Gary’s case. Gary appealed.
In Hall v. Hall, decided March 19, 2019, the COA affirmed.
¶13. Gary’s petition does not mention that it was filed under Mississippi Rules of Civil Procedure 60(b)(5) and (6). However, during the hearing on August 2, 2017, as well as within his brief to this court, Gary argued that he is entitled to relief pursuant to Rules 60(b)(5) and (6) and he is also entitled to equitable relief. Since this issue was raised with the chancery court we will address the Rule 60(b) arguments made by Gary.
¶14. Mississippi Rules of Civil Procedure 60(b)(5) and (6) provide:
(b) Mistakes; inadvertence; newly discovered evidence; fraud; etc. On motion and upon such terms as are just, the court may relieve a party or his legal
representative from a final judgment, order, or proceeding for the following reasons:
. . . .
(5) the judgment has been satisfied, released, or discharged, or a prior judgment otherwise vacated, or it is no longer equitable that the judgment should have prospective application;
(6) any other reason justifying relief from the judgment.
The motion shall be made within a reasonable time, and for reasons (1), (2) and (3) not more than six months after the judgment, order, or proceeding was entered or taken. . . .
The supreme court follows the following criteria for determining Rule 60(b) motions:
(1) That final judgments should not lightly be disturbed; (2) that the Rule 60(b) motion is not to be used as a substitute for appeal; (3) that the rule should be liberally construed in order to achieve substantial justice; (4) whether the motion was made within a reasonable time; (5) [relevant only to default judgments]; (6) whether if the judgment was rendered after a trial on the merits-the movant had a fair opportunity to present his claim or defense; (7) whether there are intervening equities that would make it inequitable to grant relief; and (8) any other factors relevant to the justice of the judgment under attack.
M.A.S. v. Miss. Dep’t of Human Servs., 842 So. 2d 527, 530 (¶16) (Miss. 2003). See also Carpenter v. Berry, 58 So. 3d 1158, 1159 (¶18) (Miss. 2011); M.R.C.P. 60(b), advisory
¶15. Our court previously held in [In re Dissolution of Marriage of De St.] Germain[, 977 So.2d 412 (Miss. Ct. App. 2008)] that a court did not err when dismissing a
motion brought under Rule 60(b) where the appellant waited five years to set aside a divorce judgment:
Mississippi Rule of Civil Procedure 60(b)(5) [states that] “it is no longer equitable that the judgment should have prospective application”, [and] the catch-all provision under Mississippi Rule of Civil Procedure 60(b)(6) [provides for] “any other reason justifying relief from the judgment[.]” One who proceeds under either Rules 60(b)(5) or 60(b)(6) must do so “within a reasonable time.” M.R.C.P. 60(b). The chancellor did not specifically state that Brenda failed to file her motion “within a reasonable time,” but his ruling implies as much. We cannot find that the chancellor abused his discretion. Brenda filed her motion approximately five years after the chancellor entered the divorce judgment. The allegations raised within Brenda’s motion could have been submitted much earlier than five years after the judgment of divorce. Accordingly, we affirm the chancellor’s decision to grant Robert’s motion to dismiss.
Germain, 977 So. 2d at 416 (¶10).
¶16. Rule 60(b) reads in pertinent part that relief must be sought “within a reasonable time.” Additionally, the supreme court has held “Rule 60(b) provides for extraordinary relief which may be granted only upon an adequate showing of exceptional circumstances . . . .” Entergy Miss. Inc. v. Richardson, 134 So. 3d 287, 291 (¶10) (Miss. 2014). Here, Gary has not demonstrated any exceptional circumstances.
¶17. Further, Rule 60(b) motions are not to be used as a substitute for appeal. M.A.S., 842 So. 2d at 530 (¶16). Gary never appealed the original judgment of divorce or its retirement provisions. However, Gary has now filed a petition approximately ten years later challenging the retirement provisions of the divorce judgment. Moreover, during the hearing on August 2, 2017, Gary testified that his employer, Standex International Corporation, notified him that his retirement plan was frozen in 2007 and at least twice a year thereafter [Fn omitted] … [here the court quoted excerpts from the trial transcript in which Gary essentially admitted that he could have filed a court action much earlier than he did].
¶18. Gary’s petition could and should have been submitted much earlier than ten years after the memorandum opinion and divorce judgment. Gary knew or should have known in 2007 that his retirement plan was frozen in 2007 and that his retirement benefits would most likely not be $5,200 per month as projected. Gary failed to timely file his petition under Rule 60. In view of that, we affirm the court’s decision to dismiss Gary’s petition.
This case highlights the difficult position that litigants find themselves in when the assumptions upon which the equitable division change or prove to be untrue. If you’re negotiating how to divide your client’s retirement, it would be better to cast it as alimony, which is modifiable. If that doesn’t fly, try to negotiate a percentage rather than a fixed sum. If the case is being adjudicated, be sure to develop your client’s position that any such award should be alimony, and why, and that any award should be as a percentage.
Whatever strategy you employ to minimize risk to your client (and you), it’s important to keep in mind that these retirement provisions are ticking away in your client’s life, far beyond the time limit to appeal, and remember: property division is not modifiable.
March 25, 2019 § 1 Comment
In the course of their divorce proceedings, the chancellor twice requested both Tracy and Brent Williams to submit a list of assets, values, and debts. When they came to trial, only Brent did so, and Tracy even listed the value of her business, a daycare, as unknown. The chancellor used Brent’s figures upon which to base equitable distribution. Tracy appealed, arguing that the chancellor erred in not appointing appraisers, even though she never made that request of the trial court. She argued that the valuations were not accurate due to depreciation.
The MSSC affirmed in Williams v. Williams, decided January 17, 2019. Justice Beam wrote for a unanimous court:
¶19. While we note that “expert testimony may be essential to establish valuation sufficient to equitably divide property, particularly when the assets are diverse . . . ,” Ferguson v. Ferguson, 639 So. 2d 921, 929 (Miss. 1994), we also recognize and “reiterate the principle that findings on valuation do not require expert testimony and may be accomplished by adopting the values cited in the parties’ 8.05 financial disclosures, in the testimony, or in other evidence.” Horn v. Horn, 909 So. 2d 1151, 1165 (Miss. Ct. App. 2005) (quoting Ward v. Ward, 825 So. 2d 713, 719 (Miss. Ct. App. 2002)).
¶20. Here, the record reflects that only Brent attempted to provide the chancellor with evidence regarding the valuations of the parties’ business interests, and the chancellor used those valuations as reflected in her opinion. Tracy’s argument that the chancellor committed reversible error by not appointing experts to appraise the current valuations due to depreciation is without merit. This Court refuses to blame the chancellor for a party’s failure to present sufficient evidence of property valuation. Faced with similar circumstances, we stated the following in Dunaway v. Dunaway:
It is our conclusion that the chancellor, faced with proof from both parties that was something less than ideal, made valuation judgments that find some evidentiary support in the record. To the extent that the evidence on which the chancellor based his opinion was less informative than it could have been, we lay that at the feet of the litigants and not the chancellor. The chancellor appears to have fully explored the available proof and arrived at the best conclusions that he could, and we can discover no abuse of discretion in those
efforts that would require us to reverse his valuation determinations. Dunaway v. Dunaway, 749 So. 2d 1112, 1121 (Miss. Ct. App. 1999). As explained in Dunaway, the chancellor’s duty is not to obtain appraisals of the marital property. Id. Further, the Dunaway court found that, while expert testimony about property valuations might be helpful in some cases, it is not required, and the chancellor may consider other
evidence presented by the parties. Id.
¶21. Tracy did not come forth with expert testimony or any other valuations of the businesses; therefore, the chancellor used the available proof, including Brent’s valuations, and arrived at the best conclusion that she could. Accordingly, this Court finds the chancellor did not err in the valuation of the Williams’s business interests.
I’ve said it here before that it’s often breathtaking how little attention lawyers give to adequate proof of values in divorce cases. That forces judges to do their dead-level best with scanty evidence. It can leave your clients disappointed in the outcome at the least, and mad as a hornet at you at the worst.
It’s malpractice in a divorce case to merely accept your client’s 8.05 as scribbled out by her without going over it and questioning every item, or at least the ones that appear out of line, and without making sure it is complete, with values and itemization of debt.
In this district, as the judge in this case did, we require an asset table showing the parties’ values, designation as marital or non, and debt. The list must be consolidated, meaning that there is one list. That way the judge is not required to figure out whether the “green sofa, $600” on her list is the same as the “couch in living room, $2,000” on his list are the same thing. We also will not give you a trial setting unless and until you produce that list. In cases where one party decides not to participate in that exercise, we accept the unilateral list and proceed to trial.
February 26, 2019 § Leave a comment
In a case last month the COA affirmed a chancellor’s dismissal of a an ex-wife’s petition filed 21 years after the divorce to “allocate and disburse retirement funds.” In the divorce case she had been granted only the divorce, custody, and child support; she had not sought any division of retirement or other funds, and the court did not order it. The case is Stubbs v. Stubbs, decided January 29, 2019.
That case is pretty straightforward and not particularly noteworthy, but it set me thinking about cases in which there is an agreement that, for instance, the husband will pay a percentage of his retirement benefits when he begins drawing them. I have seen those in military and railroad retirement, which is not otherwise divisible. PERS benefits would fit into that category.
If the court orders that an act be done beyond what would ordinarily be the statute of limitations (SOL) applicable to the order, does that stay the running of the statute?
Can one seek modification of that part of the order that has not yet taken effect? For example, could the ex-wife after 5 years, but before the retirement, ask the court to increase the percentage previously ordered, or does she have to wait until the retirement benefits begin?
We all know that a mere order of the chancery court is not adequate to protect the ex-wife’s interest in these scenarios. Either a QDRO or a court order in the form dictated by the military or Railroad Retirement Board is necessary to do so. Can SOL be pled to bar entry of a QDRO or similar order sought years after the original judgment on which it is based?
Just a few idle thoughts to ponder as we slog in our snowshoes toward another glorious Spring.