August 5, 2014 § 10 Comments
I don’t think I’m overstating when I say that the sum of case law requires chancellors to be at times mindreaders, engineers, valuation experts, tax experts, soothsayers, sages, interpreters, accountants, astrologers, psychologists, geneticists, mathematicians, theologians, and, always, legal scholars. I am sure, with a little research, I could add some more roles that our jurisprudence has conferred on chancery judges.
As for the role of mathematician, it has long been the law in Mississippi that the judge may do calculations to arrive at her conclusions. That almost goes without saying, since many cases we hear involve piles of bank statements, appraisals, balance sheets, general ledgers, financial statements, tax returns, and all kinds of other data that require number-crunching.
But how far does that computational authority extend?
That was the question posed in the COA case of Pruitt v. Pruitt, decided July 29, 2014. In Pruitt, the chancellor had less than ideal proof of the value of the parties’ respective PERS accounts in an equitable distribution/alimony case. He requested further proof to support his decision, but the parties told him, in essence, that such proof was unavailable. In other words, “Judge, you’re on your own.”
Faced with what he apparently considered a dearth of proof, the chancellor found information in a PERS handbook and website that he used to calculate the value of the husband’s PERS account. Based on the figures he derived from his computations, the judge ordered Mr. Pruitt to pay Mrs. Pruitt alimony (or division of PERS benefits; it’s not clear to me which), and he awarded her a judgment for more than $90,000, which was his calculation of the difference in their estates.
Mr. Pruitt appealed. Judge Roberts, for the COA, addressed his issues:
¶9. Ira’s issue on appeal stems from the fact that after the parties went to trial, the chancellor found information from a PERS handbook and the PERS website and determined a value for Ira’s PERS retirement account. Ira argues that the chancellor erred by considering evidence outside the record. We agree.
¶10. In Dunaway v. Dunaway, 749 So. 2d 1112, 1121 (¶28) (Miss. Ct. App. 1999), a chancellor was faced with proof of valuation that was “something less than ideal.” Consequently, the chancellor “made valuation judgments” that had at least some evidentiary support in the record. Id. This Court stated that “[t]o 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.” Id. Accordingly, this Court found that the chancellor had not abused his discretion. Id.
¶11. Although a chancellor may value assets based on evidence that is based on something less than ideal, the chancellor’s valuation must be based on at least some evidentiary support in the record. In other words, we must draw a distinction between less-than-ideal evidence presented by parties to the litigation, and information outside of the record that neither party presented. Despite the chancellor’s clear and thorough attempt to resolve the issue in an equitable manner, under the precise circumstances of this case, we must find that it was an abuse of discretion to consider evidence that was outside the record. It follows that we remand this case for further proceedings.
Having said that, the COA’s remand instructions help illuminate the scope and approach that applies:
¶12. On remand, the chancellor may exercise his considerable discretion when calculating the manner in which Ira’s PERS retirement benefits should impact the equitable distribution of Ira’s and Lena’s marital assets and liabilities. We are aware of no restriction on the chancellor’s right to calculate Ira’s income based on the monthly payments he receives from his PERS annuity – at least to the extent that such income impacts Ira’s ability to pay Lena alimony. But we caution the chancellor to remain mindful that Ira cannot exercise any option to pay Lena a lump-sum figure from his PERS retirement account. Essentially, a lump-sum payment from Ira’s PERS account would operate as a qualified domestic relations order (QDRO). A QDRO is permissible in the context of a retirement account governed by the Employment Retirement Income Security Act (ERISA). See Parker v. Parker, 641 So. 2d 1133, 1137 (Miss. 1994). But ERISA does not apply to retirement plans that are “established and maintained for its employees by . . . the government of any State . . . .” 29 U.S.C. § 1321(b)(2) (2012). PERS was established “for the purpose of providing retirement allowances and other benefits . . . for officers and employees in the state service and their beneficiaries.” Miss. Code Ann. § 25-11-101 (Rev. 2010). Furthermore, accrued PERS benefits are “exempt from levy and sale, garnishment, attachment or any other process whatsoever, and shall be unassignable except as specifically otherwise provided in this article . . . .” Miss. Code Ann. § 25-11-129(1) (Rev. 2010). Therefore, a lump-sum payment from an accrued PERS retirement account is not permissible by way of a QDRO. We recognize that the chancellor’s order did not specifically attempt to award Lena any figure by way of a QDRO – at least not in name. When the chancellor denied Ira’s motion for reconsideration, he noted Ira’s claim that the lump-sum judgment was a “masked” QDRO “under another name.” The chancellor found no merit to Ira’s claim, but he did not discuss his reasoning. Notwithstanding the name used to describe the lump-sum judgment, the mechanics involved operate no differently than a QDRO. Most importantly, it is legally impossible for Ira to transfer a lump-sum figure from his PERS account. A legally impossible option is not an option at all.
That last paragraph is something you should clip and paste into your notebook of useful chancery information.
Keep in mind that it’s up to the lawyers, and not the judges, to marshal and get into evidence the proof that will support their client’s case. It’s frustrating in the extreme for a judge to have an incomplete and inadequate record which the chancellor is required to analyze applying two, three, four, or more sets of appellate-court-mandated factors.
One point about this case has me scratching my head, though. MRE 201 specifically states that “[a] court may look to any source it deems helpful and appropriate, including official public documents, records and publications …” Unless I am missing sosmething, I would guess that a PERS handbook and the agency’s website would come within that definition. I wonder whether the COA took into account or even considered the broad scope of judicial notice that the MSSC has allowed judges. I posted about the rather breathtaking scope of it here. Three points from that post:
- In Witherspoon v. State ex rel. West, 138 Miss. 310, 320, 103 So. 134, 136-37 (1925), the court held that it was within the judge’s diecretion to ” … resort to … government publications, dictionaries, encyclopedias, geographies, or other books, periodicals and public addresses. (citing, inter alia, Puckett v. State, 71 Miss. 192, 195, 14 So. 452, 453 (1893)). Nothing in Rule 201 casts doubt on Witherspoon.”
- In Enroth v. Mem’l Hosp. at Gulfport, 566 So. 2d 202, 205 (Miss. 1990), the chancellor’s decison was upheld, notwithstanding that he took judicial notice, without advising the parties in advance, of: (1) numerous newspaper articles discussing the nature, operation and funding of Memorial Hospital, (2) conversations with physicians, (3) conversations with the Chancery Judge’s own niece who was an employee at the hospital, (4) conversations with a lawyer not involved with this particular case but who was familiar with the matter, and (5) the fact that, before becoming Chancery Judge and in his prior capacity as a lawyer, he had been involved in a lawsuit regarding the hospital in which its legal status had been an issue.
- In neither of these cases, nor in the more contemporary case cited in my previous post, to my knowledge, did the judges give advance notice of the matters of which they took judicial notice in their rulings.
Why was it error for the chancellor in Pruitt to consult with official publications in making his calculations, but it was not error in the cases cited above for the judges to range far beyone the record in making their findings?
Was it the computation in Pruitt that was the offending act, or was it going outside the record? I’ll leave it to you to calculate.