Practice and Procedure | The Better Chancery Practice Blog

FAILURE TO AMEND

February 19, 2013 § 1 Comment

It’s pretty common for lawyers to file pleadings subsequent to their initial pleading with updated allegations, added issues, and the word “Amended” prominently displayed in the document’s title. Quite often the lawyer on the other side treats the subsequent pleading(s) as the one(s) at issue, and the proof proceeds accordingly.

That practice, however, is not what the rules require, and, as we shall see, can cost your client big time. The proper procedure to amend pleadings is set out in MRCP 15:

(a) Amendments. A party may amend a pleading as a matter of course at any time before a responsive pleading is served, or, if a pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, the party may so amend it at any time within thirty days after it is served. On sustaining a motion to dismiss for failure to state a claim upon which relief can be granted, pursuant to Rule 12(b)(6), or for judgment on the pleadings, pursuant to Rule 12(c), leave to amend shall be granted when justice so requires upon conditions and within time as determined by the court, provided matters outside the pleadings are not presented at the hearing on the motion. Otherwise a party may amend a pleading only by leave of court or upon written consent of the adverse party; leave shall be freely given when justice so requires. A party shall plead in response to an amended pleading within the time remaining for response to the original pleading or within ten days after service of the amended pleading, whichever period may be longer, unless the court otherwise orders.

and

(d) Supplemental Pleadings. Upon motion of a party the court may, upon reasonable notice and upon such terms as are just, permit the party to serve a supplemental pleading setting forth transactions, occurrences, or events which have happened since the date of the pleading sought to be supplemented. Permission may be granted even though the original pleading is defective in its statement of a claim for relief or defense. If the court deems it advisable that the adverse party plead to the supplemental pleading, it shall so order, specifying the time therefor.

So to amend after the deadline in R15(a), you have to get leave of court. Otherwise, that “Amended” pleading is a nullity.

That’s what happened in McKnight v. Jenkins, decided February 14, 2013, by the MSSC.

Holly McKnight filed a petition to modify custody against Walter Jenkins, the father of her child whom she had given custody in a prior judgment of the court. Walter countered with a counterclaim for contempt and for modification. The contempt allegation was based on Holly’s alleged failure to return all of the child’s belongings at the conclusion of visitation. Some time before the date set for hearing, Walter filed a motion to amend his pleading to add the allegation that Holly had failed to pay her share of the child’s medical expenses, but Walter never presented the motion to the court.

Following a hearing, the chancellor denied Holly’s petition to modify, but found her in contempt for failure to pay the medical bills, and ordered her to pay Walter $21,000 for her share.

The MSSC reversed, pointing out that in order to recover on a contempt claim, there must be a pleading putting the other party on notice. The unamended pleading simply did not support the relief granted. By failing to get a court order granting leave to amend, Walter’s award of $21,000 was reversed.

There is language in the opinion to the effect that the parties understood that the issue of contempt for failure to pay the medical bills was not properly before the court, and the judge acknowledged as much, but he went ahead and adjudicated contempt anyway, which was error. Of course, had the issue been tried without objection, Walter’s lawyer could have made a timely motion to conform the pleadings to the proof, as set out in MRCP 15(b):

(b) Amendment to Conform to the Evidence. When issues not raised by the pleadings are tried by expressed or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure so to amend does not affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice the maintaining of the action or defense upon the merits. The court may grant a continuance to enable the objecting party to meet such evidence. The court is to be liberal in granting permission to amend when justice so requires.

THE HIGH COST OF FALLING OUT OF LOVE

February 14, 2013 § Leave a comment

A contract to devise property by will is enforceable under Mississippi law. It’s not something one sees every day, but it is something one bumps into every now and then.

Take the case of Hall v. Lewis, decided February 12, 2013, by the COA, a most appropriate case to look at on Valentine’s Day.

Howard Hall and Varnell Lewis were in love. They had been involved in a romantic relationship for several months when, in 1998, Howard purchased a piece of property in his sole name and built a home on it at his expense. At the time of trial in this case, many years later, the property was valued at $80,000.

In 1999, Howard and Varnell, still lovebirds, executed a document entitled “Intervivous [sic] and Testamentary Contract” [is the proper use of Latin phrases yet another thing they’ve stopped teaching in law school?] and each executed a will. The contract provided that Varnell would have a life estate in the property, or have one-half of the proceeds if sold during her lifetime, or have a life estate in any property acquired to replace the property. The agreement required both of them to execute a will contemporaneously to effect its terms. The agreement also provided that it “shall remain in full force and effect and may not be changed by either party,” and “a violation of this agreement may result in a suit for damages for the value of the property.”

By 2005, Howard and Varnell, alas, were out of love, and they parted ways. Howard changed his will to make his grown children the sole beneficiaries and devisees, cutting Varnell completely out.

In 2007, Varnell tried to move a mobile home onto the property based on her contract rights, but Howard refused. Varnell filed suit to enforce the contract, and the chancellor ruled in her favor that it was, indeed, an enforceable contract. Based on the final sentence of the contract as to damages, the judge awarded Varnell a judgment for $40,000 against Howard, and ordered that, upon payment of that amount, Varnell’s right to a life estate would be extinguished. Howard appealed.

After disposing of Howard’s assertion that he did not actually sign the contract, Judge Ishee’s opinion states:

¶10. Additionally, Mississippi law provides that a contract to devise or bequeath property by will is enforceable. Williams v. Mason, 556 So. 2d 1045, 1048 (Miss. 1990) (citing Trotter v. Trotter, 490 So. 2d 827, 830 (Miss. 1986) (citation omitted)). With regard to oral promises to devise property, the Mississippi Supreme Court has held that “[a] will, when written in conformity and compliance with the agreement, was a consideration which belonged to the appellee. The testator had no right to revoke it, and its attempted revocation, if deliberately made, constituted a fraud upon [the appellee.]” Johnson v. Tomme, 199 Miss. 337, 347, 24 So. 2d 730, 732 (1946).

¶11. Here, not only did Hall’s and Lewis’s wills reflect the agreement between them, the agreement itself was written by an attorney, signed by both parties, and notarized. This constitutes “clear, definite[,] and certain evidence” of the parties’ intentions. Trotter, 490 So. 2d at 830. Hall’s assertion that the contract is unconscionable is, therefore, also meritless. Accordingly, we cannot find error in the chancery court’s enforcement of the contract.

As illustrated in this case, a contract to bequeath or devise property by will is one of those planning tools that can be used to help unmarried parties to formalize their relationships, as I have discussed here before. You will want to be sure you advise them both in advance, in writing and acknowledged by each of them, that the contract may not be unilaterally rescinded later.

Another interesting point in this case is that the appellant’s 19-page brief cited not a single authority in support of the argument. As the opinion pointed out, “Failure to cite authority to support an argument renders an issue procedurally barred.”

Finally, it’s a hard but immutable principle of law that falling out of love is simply not a reason to abrogate any legal agreement. Happy Valentine’s Day!

YOU MIGHT WANT TO RECONSIDER YOUR MRCP 59 MOTIONS

February 7, 2013 § 1 Comment

Judge Griffis tells of a time that he filed a “Motion to Reconsider” in federal court after a judgment that he took issue with had been entered. Judge Lee, in his ruling, devoted the first page or two to pointing out that there is no such motion.

When I heard the story, I took exception and pointed out that even under our pre-MRCP practice there was a motion to reconsider, and that the MRCP even continues our pre-rules practice. I added that lawyers even today file motions to “reconsider.”

Well, I was wrong. Sort of.

MRCP 59 says that a new trial may be granted ” … in an action tried without a jury, for any of the reasons for which rehearings have heretofore been granted in suits in equity in the courts of Mississippi.”

That’s rehearing, not reconsideration.

To discover the reasons for which rehearings were granted in pre-rules suits in equity, I consulted Griffith, Mississippi Chancery Practice, 2d Ed., 1950, which is the bible of pre-rules practice. Under that ancient practice, all the business of the court was conducted during the terms. All judgments became final on the last day of the term, unless the judge entered an order during the term that set a matter for hearing on a day outside the term (“in vacation”), and orders and decrees could not be altered or amended by the chancellor after the term ended except for some very limited circumstances.

During the term, all decrees and orders issued by the chancellor, even if filed, were considered to be “in the bosom of the court,” and could be changed, altered, withdrawn or vacated by the court at any time up to the close of the term, either on its own motion, or on motion of any party to the suit. The request to the court during the term was a “motion for rehearing,” and some of the bases mentioned by Griffith are: on the court’s on motion to vacate or modify its decree; reargument to point out an overlooked point of law; urging a different result based on something in evidence that the court failed to mention; and newly-discovered evidence (now an MRCP 60 matter).

So “the reasons for which rehearings have heretofore been granted in suits in equity in the courts of Mississippi” include not merely a naked request for a new trial, but also a request for the chancellor to go back and study the evidence and the law again, to see whether perhaps a different result would have been reached. The judge could then, during the term, alter the decree or order, or withdraw it and direct a new trial.

That smells a lot like both reconsideration on the one hand, and rehearing on the other.

Even today in chancery court, lawyers may know under the rules that they are asking for rehearing, but they know, too, that they are asking for reconsideration. Out of curiosity, I asked my staff attorney to pull up the R59 motions that had been filed in the preceding year. Of the dozens filed, only a couple were styled or even asked for “rehearing.” Nearly every one was styled “Motion for Reconsideration,” or asked for reconsideration. That’s reconsideration, not rehearing.

Thus, I was sort of right, and sort of wrong in response to Judge Griffis. Right in the sense that the common usage is to call a R59 motion a request for reconsideration, and to ask for reconsideration. Wrong because the rule and pre-rule practice call for rehearing.

It’s not a big deal because the MSSC said many years ago after the MRCP went into effect that judges are to look to the substance of the motion, and not the form, and MRCP 8(f) mandates that pleadings be construed so as to do “substantial justice.” Thus, what you call the motion, and whether you ask for rehearing or reconsideration, is less important than clearly invoking MRCP 59.

Most “Motions for Reconsideration” are just that. They ask the court, “Please, take a look at this one more time and, please, change your mind.” That’s not in keeping with the rehearing language of R59, but it definitely captures what the pre-rules practice was. As the COA said in Brown v. Weatherspoon, which is a R60 case, but the principle is the same, “Finality should yield to fairness.”

Don’t worry too much about getting caught with your proverbial pants down in an appeal because you called your R59 motion one for reconsideration, rather than rehearing. It appears that reconsideration is the vogue word for our appellate judges, too …

Check this out from the COA decision in Estate of Ristroph v. Ristroph, decided in January, 2013: “John then filed a motion to reconsider under Mississippi Rule of Civil Procedure 59. While awaiting the chancellor’s decision on John’s Rule 59 motion, Paul filed a motion for summary judgment with respect to the other alleged inter vivos gifts, contending these claims were also time-barred under section 15-1-49. The chancellor denied John’s motion to reconsider the timeliness of his petition to set aside the warranty deed, and John appealed the denial to the Mississippi Supreme Court.”
And this from the COA in Rodgers v. Moore, et al., decided in November, 2012: “According to the briefs, plaintiffs filed a motion to reconsider the dismissal with the chancery court. The chancery court entered an order on March 8, 2007, denying the motion to reconsider.”

I am sure there are more, but you get the picture.

CORROBORATION BLUES

February 5, 2013 § Leave a comment

Tell me, how long, Judge, do I have to wait?
Can you let me know? Why must I corroborate?
— apologies to Rev. Gary Davis “Hesitation Blues”

We’ve visited the issue of corroboration in divorce cases several times on this blog. You can find posts on the subject here, here and here. As Judge Maxwell said in the case of Smith v. Smith, “[C]orroborating evidence need not be sufficient in itself to establish [habitual cruelty], but rather ‘need only provide enough supporting facts for a court to conclude that the plaintiff’s testimony is true.” citing Jones v. Jones, 43 So. 3d 465, 478 (Miss.App. 2009).

If your case lacks corroboration, you will leave the courtroom sans a divorce.

You will find the latest example in the case of Gillespie v. Gillespie, decided by the COA January 29, 2013. I’ll let Judge Griffis’s decision do the talking:

¶13. Habitual cruel and inhuman treatment as a ground for divorce must be proved by a preponderance of credible evidence. Chamblee v. Chamblee, 637 So. 2d 850, 859 (Miss. 1994). This Court has stated:

Conduct that evinces habitual cruel and inhuman treatment must be such that it either (1) endangers life, limb, or health, or creates a reasonable apprehension of such danger, rendering the relationship unsafe for the party seeking relief, or (2) is so unnatural and infamous as to make the marriage revolting to the nonoffending spouse and render it impossible for that spouse to discharge the duties of marriage, thus destroying the basis for its continuance.

Fulton v. Fulton, 918 So. 2d 877, 880 (¶7) (Miss. Ct. App. 2006) (citation omitted). Generally, the “cruel and inhuman treatment must be shown to be routine and continuous; however, a single occurrence may be [sufficient] for a divorce on this ground.” Boutwell v. Boutwell, 829 So. 2d 1216, 1220 (¶14) (Miss. 2002) (citations omitted).

¶14. In Chamblee, the supreme court addressed the requirement that the claims of cruel and inhuman treatment be corroborated by a witness. Chamblee, 637 So. 2d at 860. The court noted that the wife produced only one corroborating witness. Id. The witness simply observed the presence of bruises on the wife’s arm and had no independent knowledge of how they got there. Id. Finally, the husband denied abusing the wife. Id. For these reasons, the court determined the chancellor did not err when he denied the wife a divorce on the ground of cruel and inhuman treatment because she failed to prove her case by a preponderance of the evidence. Id.

¶15. In Fulton, 918 So. 2d at 880-81 (¶¶9-10), the wife produced three witnesses to corroborate her claim that her husband abused her. Id. at 880 (¶9). Her mother testified she observed bruises. Id. Also, a friend testified that on many occasions the wife called late at night to discuss the altercations between her and her husband. Id. Finally, a cousin testified she took pictures of the wife’s bruises and scratches in her mouth. Id. The cousin also observed tension in the household when she visited. Id. This Court determined that this evidence was sufficient to grant a divorce based on cruel and inhuman treatment. Id. at 881 (¶10).

¶16. Here, Timmy offered one witness, James Moss, to corroborate his claim of cruel and inhuman treatment. Moss observed bruises on Timmy but had no independent knowledge of how Timmy had received the bruises. Moss’s testimony was based not on his own knowledge or information but on what Timmy had told him.

¶17. Timmy also claims that Meagan observed an attack. But, Meagan did not testify to corroborate his claim.

¶18. No corroborating witness, with independent knowledge of the instances of cruel and inhuman treatment, testified to establish the claim of cruel and inhuman treatment. As a result, we find that the chancellor’s finding of grounds for a divorce due to cruel and inhuman treatment was not supported by substantial credible evidence in the record. Nevertheless, because we affirm the chancellor as to the grounds of adultery in the following section, this decision does not affect the outcome of this appeal.

The difficult corroboration cases seem to be the ones that I refer to as self-corroboration, which occurs when all that the corroborating witness knows is what he or she was told by the alleged abusee, as in Chamblee. In Smith, the only corroboration was police reports that the alleged victim had made, which were based on her own allegations and nothing else. The Fulton case, above, is a good illustration of the web of circumstantial evidence that will be found to be corroborative.

No corroboration, and you have to hesitate.

NAMING NAMES

January 29, 2013 § 1 Comment

The COA’s decision in Powell v. Crawley, handed down January 22, 2013, presents an opportunity to remind you of several aspects of name changes about which you need to be aware.

Christina Crawley gave birth to a baby daughter on January 29, 2010. The following day, Chase Powell, who was not married to Christina, signed two forms provided by the Mississippi Department of Health. The first form was an acknowledgment of paternity. The second was a “Name of Child Verification Form,” which included the following language:

By my signature[,] I verify and agree that the [c]hild’s name as it appears in Item 1 of the birth certificate and Item 1 of [the verification form] is the name to be given to the child by the mother and I, and the name is spelled in accordance with our wishes.

The verification form also included the following statement:

The name given a child on the Certification of Live Birth establishes the legal identity of that child, and as such attention to the spelling of the name must be exercised. Traditionally, the [c]hild’s last name is the same as the [f]ather’s last name as listed on the Certificate of Live Birth, or, in cases where the mother is not married at any time from conception through birth and there is no “Acknowledgment of Paternity,” the [c]hild’s name is the legal last name of the mother at the time of birth. However, parents are not required to follow tradition and may name the child any name of their choosing.

Chase verified the child’s name as Carsyn Michelle Crawley.

Nine months later, Chase filed a complaint in chancery court seeking an adjudication of paternity, child support, and visitation. He also asked to change Carsyn’s surname to Powell. At hearing, the matter was presented solely by argument of counsel, who offered the forms described above for the court’s inspection.

The chancellor ruled that Chase had waived his right to have the child’s surname changed when he signed the verification form.

The COA affirmed the chancellor’s decision, but not for the reason assigned by the trial judge. Judge Irving, writing for the majority, said:

“We need not decide whether the chancery court abused it[s] discretion in refusing to grant the requested relief because, as stated, Powell failed to make the State Board of Health a respondent. Therefore, the chancery court could not have granted the relief even if it had wanted to. See Tillman v. Tillman, 791 So. 2d 285, 289 (¶13) (Miss. Ct. App. 2001) (stating that it is the standard practice to affirm the trial court’s decision when the right result has been reached even if for the wrong reason).”

So here are a few nuggets to take away from this decision:

If you are seeking to change a person’s name only, then you proceed under MCA 93-17-1(1), which would obviously require in a case such as Chad Powell’s that the mother and father would be parties.
Another frequent cause of name changes is post-divorce, when the name change was not included in the divorce judgment and the petitioner wants a court order to get Social Security, driver’s license, retirement and other records straight. That kind of name change is also governed by MCA 93-17-1(1). It would be an ex parte action, since there is no other interested party.
If you wish to change the name on the birth certificate, then you proceed under MCA 41-57-23, which requires that you make the State Registrar of Vital Records a party. Typically, lawyers simply mail a copy of the complaint to the State Board of Health with a request for a response, and the agency will file an answer, most often either admitting the relief sought or leaving it up to the court. If you fail to make the agency a party, you can expect a result strikingly similar to Chad Powell’s.
MCA 93-17-1(2) allows the court to “legitimize” a child when the natural father marries the natural mother. Since that relief would include adding the father to the birth certificate, you should comply with MCA 43-57-23 and make the State Registrar of Vital Records a party.
There is a dearth of case law as to how the statutes authorizing establishment of paternity via acknowledgment interact with the statutes for parentage (paternity), child support, custody and visitation. If I were in practice, I think I would have advised Chase to file the parentage action as he did so as to open up all of the other relief incidental to being the father. Acknowledgment of paternity is only that; it does not confer visitation or custodial rights, does not set child support, and may even be set aside in certain conditions.
This decision sidestepped the question of the chancellor’s authority and scope of discretion in changing the child’s name. Since it is not res judicata as to the State Bureau of Vital Statistics, I would guess that Chase could file his suit again, this time making the agency a party. Maybe then we’ll get an answer.

DRINKING YOUR OWN TOXIC COCKTAIL

January 28, 2013 § Leave a comment

When you pursue litigation that you know is not meritorious, and you learn in discovery that you have no possible hope of prevailing, and you file an improper motion for recusal with false allegations against the court, you have concocted a toxic cocktail that, when consumed, will burn a deep hole in your pocketbook by way of sanctions. Need proof?

Consider the case of Sullivan and Stubbs v. Maddox, decided by the COA on January 22, 2013.

Sullivan, represented by his attorney, Stubbs (both collectively referred to as “Sullivan” in the COA opinion), filed suit in 2005 to confirm and quiet title to some property, based on a claim of adverse possession. His suit was prompted by the Maddoxes’ claim to the same property. When he initiated the suit, he obtained an injunction to keep the Maddoxes off of the property.

The suit apparently languished for years.

In April, 2011, the Maddoxes filed a motion for summary judgment taking the position that title to the property was vested in the United States, and that neither Sullivan nor Maddox had any claim to it by adverse possession because federal law prohibits adverse possession against the federal government.

Five days later Sullivan filed a motion asking the chancellor to recuse himself. The Maddoxes responded that the motion was untimely filed and was fatally defective for failure to include an affidavit setting forth the factual basis, both as set out in UCCR 1.11.

On May 3, 2011, the parties appeared before the court for a hearing on both motions, and the recusal motion was taken up first. Sullivan took the position that the chancellor should recuse because one of the Maddoxes’ attorneys had represented the judge’s court administrator’s husband in a criminal matter. The judge acknowledged the fact, as well as that Stubbs had represented the court administrator in a divorce action. He rejected both bases as causes to recuse, because neither would cause a reasonable person, knowing the pertinent facts, to doubt the court’s impartiality. The judge also found that the recusal motion failed to comply with UCCR 1.11 for the reasons assigned by the Maddoxes.

In the course of presenting the motion, Stubbs attempted to make a proffer alleging an unreported campaign contribution to the chancellor. The charge had not been included in the motion to recuse, and there was no affidavit to support it.

The court went on to hear the motion for summary judgment. In his ruling, the judge granted summary judgment in favor of the Maddoxes. He stated in his opinion that Stubbs had disclosed to the court that he had warned Sullivan before he filed the suit that it was a weak case, that there was no government survey or patent out of the US to support his claim, and that there was no color of title. The judge also found that the unsubstantiated accusation against him was made as a threat by counsel, and he set a hearing date for possible sanctions.

The Maddoxes filed a motion for sanctions under MRCP 11 and the Litigation Accountability Act. Based on all of the proceedings to that point, as well as the record made on the motion, the chancellor assessed sanctions against Sullivan and Stubbs jointly, in the amount of $42,922.91. As the COA opinion, by Judge Carlton, stated at ¶11:

In sanctioning Sullivan and Stubbs, the chancellor specifically found that the following actions demonstrated frivolous pleadings had been filed and frivolous arguments had been made for the purposes of harassment and delay, without substantial justification, and with disrespect for the integrity of the court: (1) Stubbs’s admission that before commencement of the action he had advised Sullivan of the weakness of his claim to confirm and quiet title; (2) Sullivan and Stubbs’s failure to abandon the claim after their expert witness testified in his deposition that the United States had issued no patent for the subject property; (3) Sullivan and Stubbs’s failure to make any effort to determine the validity of the claim before raising it; and (4) the filing of an improper motion for recusal and false allegations against the court. The chancellor held that these various actions constituted a willful violation of Rule 11 and the Litigation Accountability Act, as well as Rule 8.2(a) of the Rules of Professional Conduct (prohibiting a lawyer from making a statement that he knows to be false or making a statement with reckless disregard as to its truth or falsity concerning the qualifications or integrity of a judge).

The COA affirmed the chancellor on all points.

The serious lesson to take from this case is that Rule 11 and the Litigation Accountability Act have bite. So do the Rules of Professional Conduct. MRCP 11 specifically states that an attorney’s signature on a pleading (and that includes not only initial complaints, but also all motions) “” … constitutes a certificate that … to the best of the attorney’s knowledge, information and belief there is good ground to support it, and it is not interposed for delay,” and goes on to provide for sanctions for its enforcement.

When in the course of a hearing you recklessly throw out unsubstantiated charges against the court, you are giving the judge no alterntive but to sanction you. To do otherwise the chancellor would be derelict in her duty to preserve the dignity and respect of the court, as provided in UCCR 1.01.

When you learn in the course of a lawsuit that it is not meritorious, and that there is no hope of prevailing, counsel your client to dismiss it. If your client will not cooperate, file a motion to withdraw, and do not put it off, because the judge can deny your motion if it would delay the trial, and you would then be at risk for sharing your client’s sanctions, if the court assesses them.

Don’t put yourself in a position where you have to drink that toxic cocktail that you yourself concocted.

A COMPASS HEADING FOR DIVISION OF THE MARITAL ESTATE

January 23, 2013 § 4 Comments

In an equitable distribution case where there was a temporary order that provided for no support, is the date of that temporary order the demarcation line for purposes of classifying and valuing marital property?

Before we talk about how to answer the question, let me remind you that the the so-called demarcation line is important to delineate in an equitable distribution case. Depending on where the line is drawn, assets can increase or decrease by tens of thousands of dollars, or even lose value altogether, and your client who purchased a new pickup after the separation may be terribly chagrined to learn that his philandering estranged wife owns a part of it.

The line of demarcation is something we’ve talked about before here and here.

The general rule, in essence, is that marriage is deemed over for the purpose of classifying or valuing assets on entry of the final judgment, and any property or value acquired before that date is marital, unless there was a temporary order, in which event the date of the temporary order becomes the demarcation line. There are some exceptions in case law, but this is the general rule.

So, to get back to the original question, the COA confronted this very issue in the case of Mauldin v. Mauldin, decided January 15, 2013. In this case, Jim and Donna Mauldin found themselves in equitable distribution. Jim had bought some assets after a temporary order was entered, and the judge nonetheless included them among the marital assets subject to division. The COA opinion, by Judge Irving, stated:

¶13. Although the divorce decree did not specifically state the date that the marriage ended for purposes of classifying marital and separate property, it is clear that the chancery court used the date of divorce rather than the date of the temporary order. As previously stated, absent the entry of a separate-maintenance or temporary-support order, marital property continues to accumulate until the date of divorce. Although the chancery court entered a temporary order in this case, the order did not provide for temporary support. Therefore, Jim and Donna’s marital assets continued to accumulate until the date of their divorce. Accordingly, even though Jim purchased his motorcycle and his truck after his separation from Donna, the chancery court properly classified these assets as marital property. Additionally, the increase in Jim’s retirement account since his separation from Donna is marital property because the increase occurred during the marriage. This issue is without merit. [Emphasis added]

This case underscores what I have pointed out before, that it can be a two-edged sword when you don’t get a temporary support order entered. Yes, your client gets to dodge the bullet of any temporary support, but the asset values, as well as the inventory of marital assets, continue to change, often not in your client’s favor.

Put some thought in the strategy and tactics you should best employ for the benefit of your client in these cases. What is best for one client will not be the same for another. Knowing the rule, you will be in a position to plot the best course.

THE QUIRKS OF RENUNCIATION

January 14, 2013 § 1 Comment

The COA case of Estate of Weill v. Weill, decided November 6, 2012, is a reminder of several quirks involved in renunciation of wills.

MCA 91-5-27 provides that if the decedent made no provision for a surviving spouse, the survivor has a right to share in the estate of the decedent as in the case where there is an unsatisfactory provision (see below), and no formal act of renunciation is necessary. Tillman v. Williams, 403 SO.2d 880, 881 (Miss. 1981).
In Weill, the decedent had left his surving spouse ” … my seven beloved dogs to care for. She is to be offered $25,000 from my assets to effect the transfer of my dogs to her home …” The chancellor and the COA rejected the appellant’s argument that the bequest was really for the benefit of the dogs, noting that the cash bequest was to her and not for benefit of the canines. Thus, since there was a bequest, she could not avail herself of MCA 91-5-27.
MCA 91-5-25 provides that if the decedent ” … does not make satisfactory provision …” for the spouse (the statute uses the word “wife”), then the spouse may renounce the will by filing a formal notice to the effect of the language suggested in the statute, and the spouse will thereupon be entitled to share in the estate to the extent set out in the statute. The renunciation must be filed within 90 days of the date of the admission of the will to probate.
In addressing one of the appellant’s arguments, the COA noted that a renunciation filed in the stautory form before probate of the will has been found to be adequate. Gettis v. McAllister, 411 So.2d 770 (Miss. 1982).
In Weill, although the attorney for the widow had made it known to the court and counsel opposite that the widow intended to file a renunciation, no formal renunciation was filed within the 90 days. The chancellor and the COA rejected the claim that an oral statement of intent to renounce complied with the statute.

When it comes to probate matters, the bottom line is that the requirements are all statutory, which means that they must be strictly construed and followed. Do not expect a chancellor or appellate court to fudge requirements for you because you “came close.” The fact is that close gets you no cigar. You have to be right on target. What is required is right there in the law, in black and white. If you don’t read the law in advance, you have no one to blame but yourself when things go embarrassingly and expensively wrong.

COURTROOM CONFIDENTIAL

January 9, 2013 § Leave a comment

Parties to minor’s settlements sometimes come to court asking for the proceedings to be confidential and sealed. The requests in my court have ranged from asking that the courtroom be cleared and the transcript sealed to asking that the judgment alone be sealed. I have generally resisted on the basis that the public has a right to know what is transpiring in the courts. The procedure I follow is described below.

The MSSC on December 6, 2012, addressed the issue in the case of Ford Motor Co. v. Ferrell, et al. You can read the decision for yourself to get a grasp of the facts. The case involved a fee dispute arising out of a personal injury settlement. Ford requested that the terms of the settlement, which had been confidential by agreement, not be disclosed in the course of the fee-dispute proceedings.

Chancellor David Clark refused Ford Motor Company’s request to keep the settlement documents and trial proceedings sealed, based on his concern that court proceedings be transparent to the public. On appeal, Ford raised three issues: (1) Whether the settlement agreement is a public, judicial record or a private contract, which should be enforced; (2) Whether the state’s policy encouraging settlement agreements and the parties’ interest in abiding by the terms of that agreement are sufficient grounds to protect the settlement from public scrutiny; and (3) Whether there is any overriding public interest which would require disclosure of the terms of the settlement agreement.

A 5-4 majority of the supreme court, by Justice King, concluded that the terms of the agreement should be kept confidential — to an extent. Here’s what the court said, beginning in ¶32:

To continue to preserve the confidentiality of this agreement, the chancery court should seal the order approving the settlement agreement and should seal the settlement agreement itself (if it is admitted into evidence for any reason). The chancery court should also redact any mention of the settlement amount from future documents and prohibit the parties from mentioning the settlement amount in its proceedings. However, the chancery court may keep the fee-dispute trial’s transcript and proceedings open to the public, which addresses the chancellor’s concern regarding transparency in judicial proceedings.

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¶33. The chancery court abused its discretion by denying Ford’s request to preserve the settlement agreement’s confidentiality. Although the public has a right of access to public records, Mississippi law also favors the settlement of litigants’ disputes and respects confidentiality agreements when practical. The law allows courts to determine when information should be declared confidential or privileged, exempting it from the Public Records Act. Because this settlement agreement is between private parties, does not involve matters of public concern, and is not necessary to resolve the fee-dispute claim, its confidentiality should be preserved. Thus, we reverse the chancellor’s denial of Ford’s motion to preserve the confidentiality of the settlement agreement. However, the fee-dispute trial’s transcript and proceedings should remain open to the public, so we affirm the chancellor’s denial of Ford’s motion to close the proceedings. The Court remands this case to the chancery court for further proceedings consistent with this opinion.

The procedure I have followed in minor’s settlements is to require proof of the terms of the agreement via an exhibit, which I will seal on request. That way, the terms of the settlement are of record and document what I considered in determining whether the settlement is in the best interest of the minor.

I have also steadfastly refused to seal or otherwise make confidential settlement agreements with public agencies, a position which appears to be consistent with the MSSC’s in this case.

The court’s decision distinguished its holding in Williamson v. Edmonds, 880 So.2d 313-314 (Miss. 2004), in which the court ruled that a confidential agreement must be disclosed in a fee dispute because, contrary to the situation in Ford, evidence of its terms was central to resolution of the claims involved.

SOME THINGS YOU NEED TO KNOW ABOUT CHILD DEPENDENCY EXEMPTIONS

January 8, 2013 § 4 Comments

Many property settlement agreements (PSA) involving children have a provision like this:

Husband shall claim the minor children as dependents for tax purposes in even-numbered years, and Wife shall claim the minor children as dependents for tax purposes in odd-numbered years.

What happens, though, where, despite the language of the agreement, the mom claims the children in an even-numbered year, and the father does, too? Is the language above enough to satisfy the IRS that the dad, and not the mom, was entitled to claim the exemption in that year?

The answer is no.

IRS regs require that if you are trying to base a claim for exemption on a writing that is not an IRS-designated form, the writing must conform to the substance of the IRS form and must be a document executed for the sole purpose of serving as a written declaration within the meaning of the IRS regs. A court order, PSA, handwritten note or any other document not meeting those requirements will not suffice. The claiming party must attach to the tax return a completed IRS form 8332 or a document including every element of it.

In the case of Armstrong v. Commissioner of Internal Revenue, decided December 19, 2012, by the US Tax Court (I do not have a cite for you) involved the scenario above. The court said:

The IRS’s Form 8332 provides an effective and uniform way for a custodial parent to make the declaration required in section 152(e)(2)(A) for the benefit of the noncustodial parent. But a noncustodial parent like Mr. Armstrong may also rely on an alternative document, provided that it “conform[s] to the substance” of Form 8332.5 See 26 C.F.R. sec. 1.152-4T(a), Q&A-3, Temporary Income Tax Regs., supra. In particular, for tax years including the year at issue here, a court order that has been signed by the custodial parent may satisfy section 152(e)(2)(A) as the noncustodial parent’s declaration if the document “conform[s] to the substance” of Form 8332.6 See Briscoe v. Commissioner, T.C. Memo. 2011-165 (concluding that the court order attached with the return did not conform with the substance of Form 8332); cf. Boltinghouse v. Commissioner, T.C. Memo. 2003-134 (holding a separation agreement conformed with the substance of Form 8332).

A basic element necessary for satisfying section 152(e)(2)(A) is a custodial parent’s declaration that she “will not claim” the child as a dependent for a taxable year. A custodial parent accomplishes this on a Form 8332 with the following statement: “I agree not to claim * * * for the tax year”. This statement is unconditional; and in order for a document to comply with the substance of Form 8332 and ultimately section 152(e)(2)(A), the declaration on the document must also be unconditional. See Gessic v. Commissioner, T.C. Memo. 2010-88; Thomas v. Commissioner, T.C. Memo. 2010-11; Boltinghouse v. Commissioner, T.C. Memo. 2003-134; Horn v. Commissioner, T.C. Memo. 2002-290.

The opinion points out that there are four considerations in determining whether a party is entitled to claim the dependency exemption: (1) Whether the “child receives over one-half of the child’s support during the calendar year from the child’s parents … who are divorced … under a decree of divorce”, sec. 152(e)(1)(A); (2) whether the child was “in the custody of one or both of the child’s parents for more than one-half of the calendar year”, sec. 152(e)(1)(B); or (3) whether “the custodial parent signs a written declaration (in such a manner and form as the Secretary may by regulations prescribe) that such custodial parent will not claim such child as a dependent for any taxable year beginning in such calendar year”, sec. 152(e)(2)(A); and (4) whether “the noncustodial parent attaches such written declaration to the noncustodial parent’s return” for the appropriate taxable year, sec. 152(e)(2)(B).

To rub a little salt in the wound, the Tax Court held that, since Mr. Armstrong had been ruled not to be entitled to claim the dependency exemption, the children were not “qualifying” within the regulations, so he could not claim the child credit, either. Ouch.

For drafting purposes, at a minimum you should include language that the non-claiming parent will timely execute IRS form 8332 for every tax year covered in the agreement. At least in that way you can ask the court for relief under MRCP 70(a). I have no idea whether a form executed by another party per the rule would satisfy the IRS, but it’s better than nothing. It would have the added benefit of documenting that you have made your client aware of the requirement of the form.

If I were practicing today, I would confer with my favorite CPA for advice about how best to avoid problems with this situation. Can you get the other party to sign ten years’ worth of forms in advance, each for the specific year in which your client will be claiming the exemption? I don’t know, but a CPA will know.

Of course, Mr. Armstrong could seek relief via contempt from the fomer Mrs. Armstrong. Contempt is a dish best served cold, as they say. But it has the disadvantages that one has to hire an attorney and try to collect money that may no longer be there. Yes, you can put that ex in jail, which may provide a measure of comfort and satisfaction, but it may not make you whole financially.

NOTE: Armstrong involves tax returns filed before the above-cited regs were adopted, and the language of the parties’ divorce decree included a clause that made claiming the exemption conditional upon payment of child support, but I believe my interpretation of the law above is accurate.

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