Another Deference Decision with an Appellate Attorney’s Fees Point

February 5, 2014 § 2 Comments

The COA’s decision in Proctor v. Proctor, handed down January 28, 2014, is one of those cases where the appellate court deferred to the chancellor’s discretion, both on application of the Ferguson factors in equitable distribution, and on the Armstrong factors vis a vis alimony.

I talked about deference in a previous post. Proctor is an illustration of how stout the trial judge’s judgment can be when she invokes the applicable factors and her decision is supported by substantial evidence in the record. You might want to pay particular attention to Judge Barnes’ opinion at ¶ 19, where she points out that equitable division need only be equitable, not equal. That seems to be a concept that many lawyers and litigants do not grasp.

Another point that bears mention is at ¶ 36, where Judge Barnes addresses Ms. Proctor’s request for an award of attorney’s fees on appeal:

Donna makes a cursory request that this Court award her attorney’s fees on her appeal, in an amount equal to one-half of the amount that was awarded by the chancery court, according to Grant v. Grant, 765 So. 2d 1263, 1268 (¶19) (Miss. 2000), and Durr v. Durr, 912 So. 2d 1033, 1041 (¶30) (Miss. Ct. App. 2005). The distinguishing feature of these cases, however, is that the appellee was requesting attorney’s fees for defending the case on appeal, not the appellant prosecuting the appeal, unsuccessfully. Therefore, we deny Donna’s request. 

Tailoring Your Proof to Fit Your Case

August 22, 2013 § 2 Comments

Yesterday I visited the COA’s decision in Pelton v. Pelton, which the COA reversed because the chancellor did not make findings on the Ferguson and Armstrong factors.

All most of us know about Pelton is what we read in the opinion.

But before you dismiss this as the fault of the chancellor, consider the possibility that the record may not have included what the judge needed to adjudicate this case. I’m not saying that’s what happened here. I’m merely pointing out that sometimes the judge has to make do with what he or she has in the record. And sometimes what is in the record is not enough to cover all of the factors.

For example: in an equitable distribution case, the judge must first determine which assets are marital, and then go through the Ferguson factors to determine whether and how they should be divided. I have heard cases where there is next to no evidence as to when or how the assets were acquired. I have heard cases with scant evidence upon which to make Ferguson findings.

In a child custody case, the judge can not make Albright findings on evidence that is not in the record. So if you want the judge to consider your client as the parent with continuity of care, then you will have to put on proof to that effect. Another chancellor related his experience in a case a couple of years ago where the custodial parent defending a custody modification put on no proof as to Albright factors at all. What exactly is the chancellor to do in that situation?

MRE 614 does allow the judge to call witnesses and intrrogate them, which would seem to be a viable option where the best interest of a child is involved. But that should be a last resort in a contested case, and, in my experience, is rare in chancery court.

The bottom line is that you have to make your record. The chancellor can not rule on evidence not in the record. The appellate courts can not find that the trial judge’s ruling is supported by substantial evidence in the record when it is not there.

Inadequate Findings in a Factor Case = Remand

August 21, 2013 § 3 Comments

Most lawyers, when they are through with a case, don’t want to revisit it. That’s what makes a remand so detestable. Those do-overs are a pain.

The most sure-fire way to get a do-over is for the trial judge not to address the factors in a factor case. For those of you who have not been paying attention, certain kinds of cases require that the chancellor consider certain factors in making an adjudication. I have called it Trial by Checklist. When the chancellor does not tick off the items on the checklist, remand is practically automatic.

The latest example is the COA’s August 13, 2013, decision in Pelton v. Pelton, in which the chancellor did not: classify the assets as marital or non-marital; do an analysis of the Ferguson factors in making equitable distribution; or apply the Armstrong factors for alimony. Result is a do-over. 

If you wind up with an adjudication in which you feel that the chancellor did not address the applicable factors, or where you feel that they were not adequately addressed, here are several suggestions to remedy the situation:

  1. File a timely R59 motion asking the court to make specific findings on the applicable factors. In Pelton, the parties did file post-trial motions, but the COA decision does not spell out what the parties were asking the court to do.
  2. If you are concerned that you did not make a good enough record for the judge to make findings on the proper factors, ask the court to reopen the proof to allow you to make a record. That would be a R59 motion, which must be filed within 10 days of the judgment.
  3. You can also in a R59 motion offer to do proposed findings of fact and conclusions of law.

EQUITABLE DISTRIBUTION AS THE GATEWAY TO ALIMONY

May 7, 2013 § Leave a comment

The COA case of Jones v. Jones, decided April 30, 2012, is a reminder that, if the equitable division of the marital estate has made adequate provision for the spouses, there should be no award of alimony — not even nominal alimony.

In Jones, the chancellor carefully considered and analyzed all of the Ferguson factors as they applied to the case, and specifically found that the equitable division made sufficient provision for Jane Jones (she received 62.5% of the marital estate). He nonetheless awarded her nominal alimony of $10 a month in case she needed alimony in the future.

The COA affirmed the chancellor’s decision on equitable distribution, but reversed and rendered as to the nominal alimony. Judge Maxwell wrote for a unanimous court:

¶35. However, we do find manifest error with the award of “nominal” permanent—or periodic—alimony in the amount of $10 per month. See Armstrong v. Armstrong, 618 So.2d 1278, 1280 (Miss. 1993) (reviewing alimony awards for manifest error). We note the chancellor correctly identified and applied the Armstrong factors. See id. But he did so after acknowledging he had made sufficient provision for Jane through the equitable division of the property so that permanent alimony was not needed. Alimony should only be considered if the property division leaves one spouse in a deficit. Johnson, 650 So. 2d at 1287. “If there are sufficient assets to provide for both parties, then there is no more to be done.” Carter v. Carter, 98 So. 3d 1109, 1112 (¶8) (Miss. Ct. App. 2012) (citing Johnson, 650 So. 2d at 1287).

¶36. By referring to the award as “nominal” alimony, it does not appear that the chancellor was trying to address an actual deficit in the property award. Rather, he admits he was simply leaving the door open in case future events prove Jane has a need and John has an ability to pay. Such a contingency plan, while well-meaning, simply is not supported by our law. Alimony is to be considered as a remedy to an actual insufficiency in the marital assets, not as a contingency for a possible insufficiency in the future. Because the chancellor found the division of marital property left no need for alimony, we find it was error for the chancellor to nonetheless award “nominal” alimony. We reverse and render the award of $10 per month in permanent alimony award.

A good way to think about this is that equitable division is the gateway to alimony. Only after the chancellor has evaluated the Ferguson factors and adjudicated equitable division, and then having found that the equitable division leaves a discrepancy, may the chancellor even consider awarding periodic or rehabilitative alimony.

A caveat: Lump sum alimony, contrary to periodic or rehabilitative alimony, is a tool to achieve an equitable division of the marital estate.

Another consideration to bear in mind: I have tried contested cases where the lawyers have stipulated that the only issue is alimony, and they offered no proof whatsoever on the Ferguson factors. That, in my opinion, plants error in the record. You can not get to alimony without first going through Ferguson.

ALIMONY IS NOT FOR EQUALIZING THE DIVISION

February 22, 2012 § Leave a comment

What is the proper role of alimony vis a vis equitable distribution? In Williamson v. Williamson, decided by the COA on January 10, 2012, Judge Carlton’s opinion stated:

¶21. The record reflects that in equitably dividing the marital property, the chancellor erroneously applied the Armstrong factors by awarding Mary alimony in order to create equalization of the parties’ incomes. The chancellor then ordered Will to pay Mary $594 per month to be applied toward the mortgage on the marital home; and, in addition to that amount, the chancellor awarded Mary $200 per month in periodic alimony, for a total of $794, or approximately $800, until the former home sold. [Footnote omitted] As evidenced by the chancellor’s findings, the chancellor accomplished the ordered equitable division of the marital property by aid of an award of periodic alimony in favor of Mary in order to make the parties’ financial situations “equalized.” The record shows, as set forth in the excerpts herein, that the chancellor had not completed an equitable division of the marital property prior to considering alimony. In accordance with precedent, the equitable division of the marital property must be completed prior to determining if either spouse suffers a deficit in the division of the marital estate warranting an award of alimony. The record in this case shows, however, that the chancellor used alimony to equalize the parties’ future incomes instead of awarding alimony based upon need existing after completion of an equitable division of the marital property.

¶22. Mississippi now embraces the process of equitable division of the marital property. In applying the “equitable” division of the marital property in accordance with the Ferguson factors, alimony fails to serve as the primary method to equalize property division. See Lowrey, 25 So. 3d at 292 (¶44) (“[A]limony has become a secondary remedy to property division . . . . ‘One of the goals of adopting equitable distribution was to alleviate the need for alimony.’”). Alimony, instead, assists in the event the chancellor determines that a need exists by a spouse after the completion of the equitable division of the marital property. See id. at 293 (¶44) (“If the situation is such that an equitable division of marital property, considered with each party’s non-marital assets, leaves a deficit for one party, then alimony based on the value of non-marital assets should be considered.”); George v. George, 22 So. 3d 424, 428 (¶7) (Miss. Ct. App. 2009) (“[A]n award of periodic alimony is based upon need.”).

The proper procedure follows this sequence:

  1. Determine which assets are marital and which are non-marital;
  2. Adjudicate the values of both marital and non-marital assets;
  3. Apply the Ferguson factors to the proof in the record to determine whether there should be an equitable division of the marital estate, and, if so, how it should be accomplished;
  4. If the equitable division of the marital estate, considered with each party’s non-marital property, leaves a deficit for one party, then the court should analyze the evidence in light of the Armstrong factors to determine whether alimony should be awarded.

From a pratice standpoint, then, here is what you need to give the chancellor so that she or he can do the job:

  • An itemization of all assets, showing which your client claims to be marital and which your client claims to be non-marital. The best way to present this itemization is through lists introduced into evidence, rather than just a narration by your client. Have your client testify as to her basis for putting each asset into either category.
  • Assign values to each asset. In advance of trial have your client assign values to each asset. Real property, heavy equipment, leaseholds, buildings, fine art and jewelry, business operations and interests, and other assets other than automobiles and ordinary personal property should have values established by appraisals. Again, this should be done by lists and documentation as much as possible, although experts may be needed as to some items.
  • Offer proof as to each Ferguson factor. Have a copy of the factors to use as an outline as you develop testimony at trial. You might also want to look at the Cheatham factors for lump-sum alimony.
  • Whether your client is trying to get alimony or trying to resist it, put on proof as to the Armstrong factors. Have a copy of the factors to use as an outline as you develop testimony at trial.

In my opinion, one of the chief causes of failure on appeal is that the lawyers do an inadequate job of making a record that the chancellor can use in making a decision. This forces the trial judge to have to patch something together in an attempt to cover everything, and the result is a flaw that the COA will find reversible. Make your record as airtight as the truth allows.

MAKING YOUR UNCONTESTED DIVORCE BULLETPROOF

January 30, 2012 § 1 Comment

We’ve talked here before about whether you should make a record when you present an uncontested divorce.

In Luse v. Luse, 992 So.2d 659, 661 (Miss. App. 2008), the COA held that an appellant who had failed to answer, defend or otherwise appear in the case could not raise for the first time on appeal issues about the sufficiency of the chancellor’s findings.

So what happens when the defaulted party does appear via a timely motion under MRCP 59, say, and asks the chancellor to set aside the judgment because she failed to make the required findings of fact under Ferguson, or Armstrong, or any of the other required checklists of factors? That’s what happened in the case of Lee v. Lee in the chancery court of Desoto County. Corey Lee showed up late for his divorce trial, popping in just as the chancellor was in the middle of his opinion dividing the marital estate, awarding custody, and assessing child support. Corey enlisted a lawyer who filed a timely MRCP 59 motion.

In his motion, Corey challenged the judge’s ruling on the basis that it did not address the Ferguson factors for equitable distribution. The judgment did state that it was based on consideration of the Ferguson factors, but did not spell out the evidence relied on as to each applicable factor as required under Sandlin v. Sandlin, 699 So.2d 1198, 1204 (Miss. 1997).

On appeal the COA affirmed, citing Luse.

The Supreme Court granted cert, and in an opinion rendered January 26, 2012, in Lee v. Lee, Justice Dickinson said for the court:

¶7. A divorce judgment entered when a party fails to appear is “a special kind of default judgment.” [Mayoza v. Mayoza, 526 So.2d 547, 548 (Miss. 1988)]. And to obtain relief from such judgments, absent parties are required to raise the issues in post-trial motions under Rules 52, 59, or 60 of the Mississippi Rules of Civil Procedure. [Mayoza, 548-49.] Although Corey filed a Rule 59 motion, the Court of Appeals held that the motion did not address the equitable-distribution issue; and, therefore, the issue was procedurally barred.

¶8. In its holding, the Court of Appeals relied on Luse v. Luse, in which, John Luse neither answered his wife’s complaint for divorce nor appeared at the divorce hearing. The chancellor granted John’s wife a divorce and awarded her ownership of marital property. John never filed a timely post-trial motion challenging the property division, so he first raised the issue on appeal, and the Court of Appeals properly held that John’s claim was procedurally barred.

¶9. But unlike John Luse, Corey Lee raised the issue before the chancellor. In his Rule 59 motion, Corey argued that the division of martial property was inequitable. At the hearing on the motion, Corey’s attorney specifically argued that the chancellor had failed to make findings of fact and conclusions of law, as required by Ferguson. Therefore, Corey is not procedurally barred from raising this issue on appeal.

* * *

¶13. By failing to appear at the hearing, Corey forfeited his right to present evidence and prosecute his divorce complaint. But he did not forfeit the right to challenge the sufficiency of the evidence or the judgment. And whether absent or present at the trial, the appropriate time to challenge a judgment is after it has been entered. Corey did so in his Rule 59 motion and at the hearing following it. The fact that Corey failed to attend the divorce trial does not relieve the chancellor of his duty to base his decision on the evidence, regardless of by whom presented, nor did it nullify this Court’s mandate in Ferguson.

The decision reversed the COA and the chancellor, setting aside the divorce.

So how do you avoid the same trap the next time you present an uncontested divorce? My suggestion is that you make a point of putting on proof of each factor, and prepare proposed findings of fact and conclusions of fact, incorporating them in the judgment you hand to the chancellor at the conclusion of the hearing. Make specific findings as to each checklist factor that applies in your case. If you are asking for equitable distribution, address the Ferguson factors. For custody, address the Albright factors. For alimony, address Armstrong. And so on through as many as apply in your case. You know in advance (or you should know) what your client’s testimony will be on each point, so simply wrap it up into a neat package for the judge. In the alternative, you lazy lawyers can appear and just put on the proof and ask the chancellor to do it. If the chancellor is in a benevolent mood, he or she might do it for you. Or you may be dispatched to do it yourself and come back another time.

PROVING TAX EFFECTS OF ALIMONY

September 2, 2010 § 3 Comments

Armstrong vs. Armstrong, 618 So.2d 1278, 1280 (Miss. 1993), sets out the factors that the trial court is supposed to consider when adjudicating whether to award alimony, and if so, the form, duration and amount. 

All of the Armstrong factors are important, and failure to prove even one can doom your claim.  One of those factors is “The tax consequences of the spousal support order.” 

There are only two ways to establish the tax consequences:  (1)  Have an expert testify or offer into evidence a learned treatise; or (2)  Agree with opposing counsel what they are and present the agreement to the court.

It doesn’t take a legal scholar to appreciate the advantages and disadvantages of these approaches.  An expert can offer clarity, but she can be asked about so many extraneous matters on cross until the court is bewildered.  A learned treatise can be precise and clear, but you still need to lay a foundation for it with an expert in most cases.  In either case, experts are expensive. 

By contrast, it doesn’t take much to convince opposing counsel that it is to both parties’ benefit to enter into a stipulation as to the tax consequences.  That way, both parties have evdence in the record for the court to consider, and if the case is appealed, the Court of Appeals is not left scratching its collective head about why there is no proof of the tax consequences.

Back when I was practicing, several of us attorneys colluded and came up with a form for a stipulation.  I believe it covers every base.  It was done several years ago, and may not reflect intervening changes in the tax code, but it will at least provide a template for you to adapt to the current law. 

Here is the form:

TYPES OF ALIMONY
MISSISSIPPI CASE LAW          

FEDERAL INCOME TAX          

“Lump-Sum Alimony”          

“Lump-Sum Alimony”          

Represents part of the equitable distribution of the marital estate. Is a fixed sum not subject to modification. Obligation to pay continues after the death of the payee or payer. Represents a property settlement for income tax purposes and is not taxable by the payer or taxable to the payee. Is not alimony for income tax purposes because payments would continue, by operation of law after the payee’s death.
“Periodic Alimony”          

“Periodic Alimony”          

Is based on the payer’s duty to support the payee in the manner to which she or he had become accustomed, is modifiable and terminates on payee’s remarriage, death, or payer’s death. Is tax deductible by the payer and taxable to the payee; i.e., qualifies as alimony for tax purposes. The reason periodic alimony qualifies as alimony for tax purposes is because under Mississippi law there is no liability to make any payment (in cash or property) after the death of the recipient spouse.
“Rehabilitative Alimony”          

“Rehabilitative Alimony”          

Is for a fixed term, but is modifiable. If the liability to make the payments stops after the death of the recipient spouse, then rehabilitative alimony would qualify as alimony for income tax purposes.
 
 FEDERAL INCOME TAX REQUIREMENTS FOR ALIMONY:
 
A payment to or for a spouse under a divorce or separation instrument is alimony for federal income tax purposes if the spouses do not file a joint income tax return with each other and all of the following requirements are met:
  1.  The payment is in cash.
  2. The instrument does not designate the payment as not alimony.
  3. The spouses are not members of the same household at the time the payments are made. This requirement applies only if the spouses are legally separated under a decree of divorce or separate maintenance.
  4. There is no liability to make any payment (in cash or property) after the death of the recipient spouse.
  5. The payment is not treated as child support.

 *********

The obvious advantage of the stipulation is that it establishes the fact without expense and both parties have the information in the record.  Unfortunately, this is an element of alimony proof that is almost never addressed by the attorneys in a trial, and it could cost your client dearly.

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