Fixing Your No-Show

July 2, 2014 § 5 Comments

It can happen to the most diligent lawyer. Date of the trial is mis-calendered, or failed to get calendered, or you get busy doing something else and — oops — you are a no-show when the trial is scheduled to go.

A no-show is what happened in the case of Reed v. Reed, handed down by the COA June 24, 2014.

Jimmy Reed and his lawyer did not appear at the time appointed for Jimmy’s divorce trial. Jimmy’s lawyer believed that the case would not proceed as scheduled because, at the time, the chancellor was gravely ill. The lawyer even approached the district’s other chancellor and asked him to sign a continuance order in the belief that the case had been reassigned to him. The other chancellor demurred, however, and advised the lawyer to await appointment of a special judge by the MSSC.

The ill chancellor, however, did appear on the day set for the trial, as did Jimmy’s estranged wife and her attorney. The chancellor tried unsuccessfully for an hour to contact Jimmy’s lawyer, delaying the start of the trial. When he could not make contact the judge let Mrs. Reed proceed, and he rendered a judgment granting her a divorce on terms not very favorable to Jimmy.

Jimmy’s counsel learned what had transpired the next day when he received a fax from counsel opposite. He filed a timely R59 motion, explaining the reason for the failure to appear, and attacking the judgment as inequitable. The chancellor overruled the motion, and Jimmy appealed.

Citing Lee v. Lee, 78 So.3d 326, 328 (Miss. 2012), the court noted that ” … [a] divorce judgment entered when a party fails to appear is a special kind of default judgment. And to obtain relief from such judgments, absent parties are required to raise the issues in post-trial motions …” Since Jimmy had done exactly that, the COA accepted the case and reversed the chancellor’s ruling because he ” … failed to support his [equitable distribution] findings with any analysis, discussion, or mention of the Ferguson factors or the evidence before him …”

A few points to take away from this case:

  • If you find yourself in a no-show predicament, timely file a R59 motion and ask for rehearing. Don’t stop at explaining your unattendance; attack in the motion every aspect of the judgment. If you don’t, you will probably be barred from raising any claims of error that you did not mention in your motion.
  • The ASS-U-ME principle was at work here (ask somebody; they can explain). If I were Jimmy’s lawyer, I would have prepared for trial and shown up unless I had an agreed, signed, filed order of continuance in hand. I admit that I can be obsessive-compulsive about these things, but by assuming that the case was off, Jimmy was jeopardized unnecessarily. It all turned out okay, but it took an appeal to get Jimmy back to the starting line.
  • When the other side is a no-show, make sure that you put enough proof into the record (and do make a record) to support the judge’s findings. Then insist that the judge address and analyze all of the factors that apply in your particular case. Jimmy’s appeal would have been for naught had the chancellor simply analyzed the proof through the filter of the Ferguson factors.
  • I think most judges give an ordinarily diligent lawyer the benefit of the doubt in these cases. Everyone can screw up occasionally. On the other hand, lawyers who are chronically late or don’t attend to their business, or who make it a habit not to show up don’t get that favorable treatment. I have no idea why the chancellor in this particular case rejected the explanation for Jimmy’s non-appearance, so I can’t say whether the benefit-of-the-doubt principle was in play.

One nice subtlety in this case is Judge Ishee’s description of Jimmy’s post-trial motion as one for “rehearing,” as opposed to “reconsideration,” as is the common term for it. You can read another post on rehearing vs. reconsideration here.

Three Cases of Note

June 30, 2014 § Leave a comment

The MSSC handed down three decisions in the past year or so that will significantly change your practice. You need to take note of each of them and study how you can use them to your client’s advantage or defend against their operation in cases you are handling.

The first case is Collins v. Collins, handed down May 9, 2013. This is the case that said, once and for all, that the demarcation line for valuation of assets in a divorce is to be determined by the chancellor, based on the facts in the case.

Why is this case significant? Because it expressly overrules the COA decision in Pittman v. Pittman that laid down the rule that entry of the temporary judgment was a bright line where accumulation of marital asset value ceased.

How can you use this case to your client’s advantage? Look at values and find the date to your client’s advantage, and then have your client testify why the judge should select the preferred date. For example, if your client’s 401(k) has greatly appreciated in value over the course of the litigation, pick an early point and develop proof about why that is the most equitable date. And vice versa for the other side.

A previous post about Collins is here.

The second case is Sanford v. Sanford, decided October 31, 2013. Sanford  finally puts an end to the practice of dictating into the record consents to divorce and property settlement agreements in irreconcilable differences divorces. MCA 93-5-2 specifically requires written agreement, and a verbal acquiescence, even on the record, will not do the job.

Why is this case significant? It marks the demise of Bougarde v. Bougarde, the lone case in which the practice had been okayed. Bougarde gave rise to uncertainty among many judges and lawyers as to whether and when a settlement announcement might pass muster as a final agreement.

How can you use this case to your client’s advantage? Bring a laptop computer to court with you and be ready to capture a settlement in the form of a written agreemment. You get to do the drafting, which means that you get to choose the language. You will have the advantage over the dinosaurs who still don’t know what a laptop (computer) is.

A previous post about Sanford is here.

The third case is Huseth v. Huseth, rendered April 10, 2014. In this case, the MSSC returned to the principle that the child support statutory guidelines are just that — guidelines — and that it is up to the chancellor to set child support after first addressing the factors set out in Gillespie v. Gillespie, 594 So.2d 620, 622 (Miss. 1992).

Why is this case significant? In a long line of cases since 1992, our appellate courts have applied the child support statute as mandatory, and cases that deviated without the proper finding of basis for deviation were reversed. Huseth says that before looking to the statute the chancellor must first consider and address the Gillespie factors. The statute then supplies a guideline for the judge to apply his or her discretion. As a practical matter, I think most judges will follow the guidelines. But that’s not a sure thing post-Huseth.

How can you use this case to your client’s advantage? Be sure to put on proof of the Gillespie factors. Make sure your client’s 8.05 is credible, because it’s unlikely that chancellors are going to take it at face value that your client really is going $800 in the hole every month so that he can’t afford to support his children. You might hear the judge advise your client to quit smoking and drinking, sell his truck, and cut off his cable and internet service so that he can pay child support.

A previous post about Huseth is here.

A Helpful Primer on HCIT

June 9, 2014 § 2 Comments

Judge Maxwell of the COA often includes lucid, concise explanations of the law in his opinions. I find his statements of the law to be a helpful guide in resolving issues that come before me.

One of the most confusing areas of domestic law is how to define what is and is not habitual cruel and inhuman (not “inhumane”) treatment (HCIT), per MCA 93-5-1. In the case of Harmon v. Harmon, handed down June 3, 2014, the COA affirmed the chancellor’s award of a divorce in favor of Linda Harmon against Courtney Harmon on the ground of HCIT. Judge Maxwell, for the unanimous court, set out this helpful exposition on what constitutes HCIT under our law:

¶14. Courtney first argues the chancellor wrongly granted Linda a divorce based on habitual cruelty. See Miss. Code Ann. § 93-5-1 (Rev. 2013). To prove cruelty, a party mustshow conduct that 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 non[]offending spouse and render it impossible for that spouse to discharge the duties of marriage, thus destroying the basis for its continuance.

Smith, 90 So. 3d at 1262 (¶10) (quoting Richard v. Richard, 711 So. 2d 884, 889 (¶22) (Miss.1998)). “The conduct must consist of something more than unkindness or rudeness[.]” Jackson v. Jackson, 922 So. 2d 53, 56 (¶4) (Miss. Ct. App. 2006) (quoting Horn v. Horn, 909So. 2d 1151, 1155 (¶7) (Miss. Ct. App. 2005)). Want of affection or incompatibility is not enough. Id. The complaining party must prove one of these two prongs by a preponderanceof the credible evidence. Smith, 90 So. 3d at 1262-63 (¶10).

¶15. Generally, habitually cruel conduct must be “routine and continuous.” Jackson, 922So. 2d at 56 (¶4) (citing Moore v. Moore, 757 So. 2d 1043, 1047 (¶16) (Miss. Ct. App.2000)). However, a pattern is not always required. Sometimes, a single act of physical violence is sufficient. Smith, 90 So. 3d at 1263 (¶13) (citing Curtis v. Curtis, 796 So. 2d1044, 1047 (¶8) (Miss. Ct. App. 2001)). But in cases like this where there is no physical violence, we consider the frequency and severity of the conduct, and the impact on the offended spouse. Id. “[V]erbal abuse, neglect, and the like,” considered independently, willnot amount to cruelty. Id. (quoting Jackson, 922 So. 2d at 57 (¶8)). But if these combinedacts manifest a course of revolting conduct, they may give rise to cruelty.Id.

¶16. In reviewing a cruelty-based divorce, “there is a dual focus on the conduct of the offending spouse and the impact of that conduct on the offended spouse.” Id. at 1263 (¶11)(quoting Bodne v. King, 835 So. 2d 52, 59 (¶24) (Miss. 2003)). This specific inquiry is subjective. Id. (citing Faries v. Faries, 607 So. 2d 1204, 1209 (Miss. 1992)). Instead of using an ordinary, reasonable-person standard, we concentrate on the conduct’s effect on the particular offended spouse. Id. (citing Faries, 607 So. 2d at 1209). Though a party alleging cruelty must generally corroborate his or her testimony, an exception is made “where corroboration is not reasonably possible because of the nature of the accusation.” Id. at(¶12).

On that last point — corroboration — Judge Maxwell adds this helpful footnote: “For example, corroboration may be unnecessary in unusual cases, such as isolation. Jones v. Jones, 43 So. 3d 465, 478 (¶30) (Miss. Ct. App. 2009). Further, “‘the corroborating evidence need not be sufficient in itself to establish the ground,’ but rather ‘need only provide enough supporting facts for a court to conclude that the plaintiff’s testimony is true.’” Id. (quoting Deborah H. Bell, Bell on Mississippi Family Law § 4.02[8][d] at 74(2005)).

That is essentially a hornbook on HCIT, complete with supporting authority, that you can use to your client’s benefit next time you have an HCIT case. 

 

A Rule 54(b) Dismissal With a Twist

June 3, 2014 § Leave a comment

We’ve talked here numerous times about the unappealability of a judgment that disposes than fewer than all of the issues pending before the court. If you type “54(b)” in that search box over there it will take you to the many posts on the subject.

The COA case of Newson v. Newson, handed down May 13, 2014, presents a scenario that just might apply in one of your cases, so you should take notice.

In May, 2011, the chancellor entered a judgment granting Lori Newson a divorce from her husband, Anthony, on the ground of adultery. On that day, Anthony’s attorney advised the court that his client had filed for bankruptcy, so the judge reserved ruling on alimony and equitable distribution until the status of the bankruptcy was clarified. 

In March, 2012, the chancellor gave the parties the go-ahead to proceed. In August, 2012, the parties submitted a partial agreement, and the court made a partial ruling. The court stated that “the responsibility of the indebtedness of the respective parties, spousal support/alimony, attorney’s fees and/or costs owed by the parties would be reserved for a final hearing. Apparently there was another hearing, because in October, 2012, the court entered an order styled or referred to as a final order, granting Lori periodic alimony, and finding that Anthony was in arrears in the sum of more than $64,000 in alimony, for which he was in contempt. The judge left the record open for Lori’s attorney to present a statement of services rendered so that he could adjudicate attorney’s fees. Anthony filed a motion asking the court to reconsider (R59, I guess, since there is no such thing as a motion for reconsideration), which the court overruled. Anthony appealed.

The COA predictably ruled that, since the chancellor had left the record open without finally adjudicating the issue of attorney’s fees, and without certifying the case, the COA was without jurisdiction and dismissed the appeal.

Now, here’s the twist …

Quite often lawyers ask the court to combine into the final hearing the contempt issues that accrue during the pendency of a divorce. It’s not unusual for the court in such a situation to adjudicate finally all of the divorce issues — grounds, custody, child support, equitable distribution, alimony, attorney’s fees on the divorce — and then to treat the contempt issues. In addressing the contempt issues, the court many times will order that the contemnor do certain things to purge himself of contempt, and for the matter to be reviewed at a later date. Sometimes there is a second or even a third review hearing. In such a case, you are stuck with an unappealable divorce judgment until the trial judge finally adjudicates everything.

Unless …

  • You file a R59 motion (within ten days of the original judgment) asking the court to add the “express determination that there is no just reason for delay,” per R 54(b), and directing entry of a final judgment on the issues of divorce, custody, equitable distribution, alimony, attorney’s fees on the divorce, leaving the contempt issues to take their own, separate course. Or …
  • You could make a motion at the conclusion of your case that the issues be severed, and that the court make the R54(b) certification to be included in the final judgment.

Of course, you could ask the court not to combine the contempt issues in with the final divorce hearing in the first place, but most clients want the hourly billing and the courtroom time to end, so it’s usually more efficient from a time and law-weariness standpoint to get it all over with in one hearing.    

This is one of those situations where you need to pay attention to where you are and how you got there. Once you realize you are faced with a judgment that may not be appealable for quite some time, you need to take steps to extricate your client from that bind.

The Cost of Side Income

April 21, 2014 § 2 Comments

It often happens that one of the parties in a divorce has side income. By “side income” I am referring to extra income, usually in cash, received for services separate and apart from one’s primary employment.

Some examples could include cash that a party: receives for doing weekend painting; is paid as a part-time, fill-in clerk at a country store; earns for child care or sitting; takes in for yard work. The list is endless.

There is no question that when the proof shows that there is that additional income, it should be taken into consideration in calculating alimony or child support. The hard part is how exactly is the court supposed to quantify it? It’s the hard part because the proof usually ranges on from almost entirely lacking to at best vague and inconclusive. After all, it’s cash with no evidence trail.

That was the problem facing the chancellor in Burnham v. Burnham, decided April 8, 2014, by the COA.

The chancellor found that Matthew Burnham was earning some side income from farming, which was in addition to adjusted gross income from his primary employment at Jones County Community College in the count of $2,618.04. The judge ordered child support in the amount of $600 a month, which he explained was guideline support for the two children, plus an additional sum to account for the farming income.

Matthew appealed, complaining that the support, by guideline, should have been no more than $523.61, a difference of $76.39 a month.

Judge James, for the COA, found the chancellor in error:

¶18. The record indicates that Matthew’s adjusted gross income from Jones County Junior College is $2,618.04 per month. The trial court found that Matthew receives additional income from farming operations. However, there is no documentation that provides for the amount per month he receives from farming. It is also unclear whether Matthew still receives this supplemental income from farming.

¶19. Matthew argues that the appropriate amount for his child-support obligation for the two minor children is $523.61; which is twenty percent of his net income. The trial court ordered Matthew to pay $600 per month. The trial court based the child-support award on the net income Matthew receives from Jones County Junior College and cash received from the farming operation. However, there is nothing in the record to establish the amount of income received from the farming operation. The trial court imputed an undetermined amount of income to Matthew.

¶20. Matthew argues that a deviation from the child-support guidelines requires a written finding on the record explaining the need for such deviation. Miss. Code Ann. § 3-19-101 (Supp. 2013). The criteria for finding an appropriate deviation are as follows:

(a) Extraordinary medical, psychological, educational or dental expenses.

(b) Independent income of the child.

(c) The payment of both child support and spousal support to the obligee.

(d) Seasonal variations in one or both parents’ incomes or expenses.

(e) The age of the child, taking into account the greater needs of older children.

(f) Special needs that have traditionally been met within the family budget even though the fulfilling of those needs will cause the support to exceed the proposed guidelines.

(g) The particular shared parental arrangement, such as where the noncustodial parent spends a great deal of time with the children thereby reducing the financial expenditures incurred by the custodial parent, or the refusal of the noncustodial parent to become involved in the activities of the child, or giving due consideration to the custodial parent’s homemaking services.

(h) Total available assets of the obligee, obligor and the child.

(i) Payment by the obligee of child care expenses in order that the obligee may seek or retain employment, or because of the disability of the obligee.

(j) Any other adjustment which is needed to achieve an equitable result which may include, but not be limited to, a reasonable and necessary existing expense or debt.

Miss. Code Ann. § 43-19-103 (Supp. 2013).

¶21. “The child support award guidelines are ‘ rebuttable presumption in all judicial or administrative proceedings regarding the awarding or modifying of child support awards in this state.’” Grove v. Agnew, 14 So. 3d 790, 793 (¶7) (Miss. Ct. App. 2009) (quoting Miss. Code Ann. § 43-19-103 (Rev. 2004)). Thus, “[i]n the absence of specific findings of fact to support a deviation from the child support guidelines, the chancellor’s award is not entitled to the presumption of correctness under the statute.” Osborn v. Osborn, 724 So. 2d 1121, 1125 (¶20) (Miss. Ct. App. 1998).

¶22. After careful review of the record, we find no specific finding of fact to support deviation. Instead there is merely an order for Matthew to pay a seemingly arbitrary amount of $600. The ordered amount of support is almost twenty-three percent of his net income. There is no mention of any extraordinary circumstances that would warrant a departure from the child-support guidelines. Although the children attend private school, the maternal grandparents agreed to pay the tuition. Accordingly, we find that the trial court erred in deviating from the child-support guidelines without specific on-the-record findings.

I can’t quibble with the conclusion here that specific, on-the-record findings are necessary to support a deviation from the guidelines. Under this case, it appears that those findings would necessarily include not only why and how one or more deviation factors applies, but also what are the specific findings of the court as to how the additional sum is calculated.

I do have a minor quibble with the bold language above. If there is proof in the record that Matthew receives some farming income, even if it is unclear, doesn’t the chancellor’s finding that it exists resolve that issue? It is the judge’s job to make that call based on what he finds to be the credible evidence.

When you have a case such as this where the chancellor has not fleshed out his findings, file a R59 motion and ask the judge to support his findings in the record. Post-trial motions were filed in this case, but it is not clear whether that particular request was made.        

Also, if you represent the party trying to benefit from the side income, always make sure you put some proof in the record to quantify it. Ask questions on cross examination to get a number or a range. Look at tax returns and get them into the record; sometimes people report at least part of side income to avoid IRS problems. Get youor client to testify to her experience (e.g., “When we lived together he would give me hundred dollar bills a couple of times a month for groceries, and he would peel them off of a thick wad of hundreds that he carried around.”)

Subjecting One’s Self to the Jurisdiction of the Court

March 12, 2014 § 1 Comment

The MSSC case of Pierce v. Pierce, handed down February 20, 2014, includes a couple of pretty important points of law that you should be aware of in your chancery practice.

Martin and Star Pierce were married in 2000, and lived in Harrison County, Mississippi. They separated, and Martin filed for divorce in the State of Washington in 2007. Since the Washington court had no personal jurisdiction over Star, it granted a divorce only.

Martin later filed an action in Harrison County seeking partition of the parties’ jointly-owned home and settlement of the parties’ financial obligations incurred during the marriage. Star counterclaimed for equitable distribution, alimony, and attorney’s fees.

The chancellor equitably divided the marital estate, including Martin’s military retirement, and awarded Star alimony and attorrney’s fees.

Martin appealed, complaining (1) that the Washington judgment was res judicata as to Star’s claims for equitable distribution and alimony, and (2) that, since he had only requested partition, he had not consensually submitted himself to Mississippi jurisdiction for division of his military retirement.

As for the issue of res judicata, the MSSC said, at ¶ 19, that although the Washington court properly had subject matter jurisdiction over Martin’s divorce action, it lacked personal jurisdiction over Star. A court with personal jurisdiction over only one of the parties in a divorce may not divide the parties’ assets. Therefore, the issues of property division and alimony were not res judicata by virtue of the Washington judgment, and the Mississippi Chancery Court had jurisdiction over those issues.

Note: It happens from time to time that a party, unhappy with a Mississippi temporary order or separate maintenance order, or with the slow progress of his case, or lacking viable grounds, moves to another state or jurisdiction and obtains a divorce. That does not deprive Mississippi of jurisdiction to adjudicate all of the other issues within its territorial jurisdiction that are pendant to a divorce, such as equitable distribution, alimony, child custody, child support, and so on, if the court obtains personal jurisdiction. In this case, Martin submitted himself to the personal jurisdiction of the court, and thus opened the door to the court’s adjudication of all those pendant issues.

A previous post on exactly what constitutes res judicata is at this link.

With respect to Martin’s assertion that his partition suit did not open him to other relief via counterclaim, the MSSC disagreed at ¶ 23: “It is well-established ‘that by filing suit a plaintiff automatically waives any objections he might otherwise have on grounds of personal jurisdiction to counterclaims presented against him in the suit'” [Citations omitted]

Note: Not a whole lot needs to be said about this particular point. When you invoke the jurisdiction of the court, you open yourself to any and all claims and actions that the other party has against you, both arising out of the same subject matter as the original suit (MRCP 13(a)), as well as any not arising out of the subject matter of the original suit (MRCP 13(b)).

You should read the court’s opinion. Its rationale and the authority are both something you can use in your library of helpful authority.

A Common Sense Approach to Dividing Retirement Accounts

February 4, 2014 § Leave a comment

When it comes to dividing retirement accounts in divorce, the case law and arguments of counsel can be all over the ballpark. Do you divide the accounts as you would cash money, by percentages or assigned sums? Or do you order a division of the stream of income as you would alimony?

How and whether a military retirement account should be divided was the issue in the COA case of King v. King, decided January 14, 2014. I believe Judge Fair’s specially concurring opinion sets out the proper approach that chancellors should use in determining the nature of, and how to divide, retirement accounts. Here it is verbatim:

¶12. The issue dividing the majority and dissent is whether there was a Hemsley-Ferguson-Armstrong compliant treatment of military retirement benefits belonging to Joseph. Those benefits were being paid to him monthly, having matured from a dormant asset into a stream of income. For that reason I concur with the majority in recognizing that the treatment of such benefits by the chancellor was in accord with the intent of those three cases and their progeny.

¶13. The Supreme Court of Mississippi handed down Hemsley and Ferguson in July 1994, providing factors for consideration by chancellors in establishing and equitably dividing marital assets. In 1993, Armstrong had set out similar factor guidance for determining alimony. Later rulings have emphasized that these three cases govern financial relations – past, present, and future – of divorcing spouses, and should be considered together, with one receding in effect when another increases.

¶14. The first case recognizing the interdependency of those three “factor discussion” cases was handed down five months after Hemsley and Ferguson. In Johnson v. Johnson, 650 So.2d 1281 (Miss. 1994), the supreme court introduced the concept of remedying, through alimony, a “deficit” in income and lifestyles between parties after equitable division of their marital property and evaluation of their separate property, if any. A chancellor is required to first determine income from employment and from marital property and separate property. Then, if a deficit results, then the chancellor should award alimony in one or more of its three common forms (lump sum, rehabilitative, and periodic) to address the deficit. Overall fairness, equity, and especially finality undergird such treatment, with an emphasis in recent cases placed on avoidance, if at all possible, of continuing financial relationships between spouses (other than child support).

¶15. The Uniformed Services Former Spouses’ Protection Act (USFSPA), cited in both the majority and the dissent, has been compared on occasion by the supreme court to the 1986 COBRA provisions under which a chancellor may divide marital ERISA qualified retirement plans (Tamra’s 401(k), for instance) without tax consequence. However, Joseph’s military retirement, like Tamra’s PERS retirement, and all other government retirement programs, are exempt from the COBRA Act and its “Qualified Domestic Relations Orders” (QDRO). Military retirement has its own requirements for benefit distribution in divorce cases.

¶16. USFSPA allows only income streams from military retirement benefits to be awarded, prohibiting lump sum apportionment and limiting the total of all alimony and child support to 50% of the service member’s regular retirement income stream. Thus, the maximum benefit possible for Tamra under those restrictions is $267 monthly, which is half of Joseph’s $1,144 less $305 in agreed child support. Apportioning that amount to Tamra as payment, in installments, for her share of a property interest in Joseph’s retirement would raise her gross $4,100 per month to $4,367 and reduce Joseph’s to $1,330, further increasing the deficit that favors an award of alimony to Joseph.

¶17. We should formally recognize the difference between an ERISA plan and military retirement plans, and perhaps all retirement accounts actively paying monthly benefits which cannot be altered. For example, PERS contributions on early termination of employment, and 401(k) and IRA contributions at any time, may be withdrawn by a spouse at the time of divorce and are therefore still divisible, some through a QDRO without loss of tax-deferred status. On the other hand, a vested income stream that has commenced in a government plan is not, as the majority recognizes, divisible or payable in lump sum, and should be considered under the Armstrong alimony prong only.

¶18. Such treatment of an existing retirement income stream would be in accord with the view our supreme court takes of “good will” in business valuations, likewise not a divisible asset readily convertible to cash but rather a source of monthly income to be considered in alimony determination only.

In other words, when the retirement account is not divisible by law, and has been converted to a stream of income, it should be treated as income, and not as a divisible asset convertible to cash.

Annuities also come to mind when enumerating the types of assets that such an approach would cover.

I think Judge Fair is right on target with this.

Fraud on the Court and MRCP 60(b)

January 28, 2014 § 1 Comment

What does it take to trigger relief from fraud on the court?

That’s the question I posed in a previous post dealing with the COA’s October 2, 2012, decision in the case of Rosemary Finch v. Stewart Finch.

The answer based on the COA decision was that one need merely suggest that a fraud on the court was committed, and the chancellor can take it from there. So that settles that, right? Well, not exactly. The MSSC granted cert and took another look.

In Finch v. Finch, handed down January 16, 2014, the high court affirmed the COA’s decision on the chancellor’s handling of the fraud-on-the-court issue, but remanded for further findings of fact by the trial court on other issues.

The MSSC decison, penned by Justice Pierce, is worth your time to read, because it sheds further light on the dimensions of fraud on the court, how it affects judgments, how the trial court should address it, and how you should deal with it.

What is most strking to me about this opinion, however, is how the court divided on the decision:

LAMAR, KITCHENS AND CHANDLER, JJ., CONCUR. RANDOLPH, P.J., CONCURS IN PART AND IN RESULT WITHOUT SEPARATE WRITTEN OPINION. DICKINSON, P.J., CONCURS IN PART AND DISSENTS IN PART WITH SEPARATE WRITTEN OPINION JOINED BY WALLER, C.J., KING AND COLEMAN, JJ.; CHANDLER, J., JOINS IN PART.

Four justices joined entirely in the opinion: Pierce, Lamar, Kitchens, and Chandler. Randolph added a fifth concurrence “in part and in result.” The dissent garnered five votes also: Dickinson, Waller, King, and Coleman. Chandler added a fifth vote, “in part.” Neither Justice Randolph nor Justice Chandler wrote an opinion explaining their concurrence or dissent in part, so we do not know enough to understand their rationales. Apparently, under the MSSC internal procedures, a tie vote goes in favor of the justice who wrote the original opinion. In his dissent, Justice Dickinson referred to this as a “plurality opinion.”

I found Justice Dickinson’s dissent to be forceful and persuasive. He questioned whether due process had been violated, and he found the proof of actual fraud lacking. He was not successful, though, in selling his opinion to a majority. So the law of Mississippi in cases involving fraud on the court remains as I described it in that previous post:

… all that was necessary in this case was to give the chancellor a suggestion that there may have been a fraud on the court, and she picked it up and ran with it. The chancellor has broad, equitable power when it comes to relief under MRCP 60(b), which the court can exercise on its own motion. In this particular case the problem was fraud, but 60(b) vests the court with the same equitable powers to address mistake, “or any other reason justifying relief from judgment …”

Family Values in a Divorce

January 13, 2014 § Leave a comment

The case of Gardner v. Gardner, decided by the COA back on September 24, 2013, is not a landmark case, by any means, but it highlights the point that I have made here often that the values of assets that you put into the record just might be the ones your client gets saddles with, for better or worse. Here’s what Judge Lee’s opinion said about it:

¶19. “[F]indings on valuation do not require expert testimony and may be accomplished by adopting the values cited in the parties’ [Uniform Chancery Court Rule] 8.05 financial disclosures, in the testimony, or in other evidence.” Horn v. Horn, 909 So. 2d 1151, 1165 (¶49) (Miss. Ct. App. 2005) (citations omitted). The chancellor did the best he could with the evidence presented to him, and we decline to find error in his conclusions.

A couple of thoughts:

  • It often happens that both parties present the court with outlandish values. He values everything he wants her to have at phenomenally high values, and values the items he is to get at pitifully small values. She does likewise. That leaves the court with the alternatives: (a) to find that all the values have no credibility, and to order valuation by an expert; or (b) to average the values, or pick and choose among them to arrive at an adjudication of values; or (c) to order everything to be sold and the proceeds divided according to the formula for equitable division.
  • If your client contests some of the other party’s values, be sure to have him or her testify why. For instance, “I disagree that the dresser in the bedroom is worth $3,000 because we bought it at a yard sale for only $50 nearly 35 years ago, and it has a drawer missing, the mirror is broken, and my husband spilled a bottle of brandy on it, causing the varnish to be scarred and bubbly on the top.”
  • In Gardner, the wife was unhappy with the low value that the chancellor placed on husband’s tools and implements. Those kinds of items may actually merit valuation by someone with some pertinent experience, such as a credible mechanic, or the like. I once represented a man in the car painting business who had rescued some clogged painting nozzles from work that were discarded by his boss because it was cheaper to throw them away than to clean them. He took them home, painstakingly cleaned them, and used them for his hobby and side work. His wife valued the nozzles at $300-600 apiece. My client valued them at $25 each. The chancellor elected the wife’s value, and we had nothing in the record other than the parties’ testimony on which to base a contrary result. Ouch. Mrs. Gardner had a similarly unhappy outcome for the same reason.
  • Consider using discovery, and RFA’s in particular, to establish values.

As I have said here before, when you save or make your clients money, they love you. When you cost them money, they hate you. A little attention to values can go a long way on the positive side.

Involuntary Partition by Spouses for Homestead Property

January 7, 2014 § Leave a comment

Mississippi law provides, essentially, two avenues by which parties who share joint interests in real property may effect a partition of their interests: (1) the property interests may be divided by decree of a chancery court per MCA 11-21-3; or (2) the parties may reach a signed agreement, per MCA 11-21-1.

In 2009, the Mississippi legislature amended MCA 11-21-1, the voluntary agreement provision, to add the following language:

(2) Homestead property exempted from execution that is owned by spouses shall be subject to partition pursuant to the provisions of this section only, and not otherwise.

I think most practitioners read that language to mean that, unless the spouses agreed, there could be no partition of homestead property by partition action between them. Whether that interpretation is correct was the subject of a recent MSSC decision.

Elise Noone filed a complaint for divorce charging her husband, Frank, with habitual cruel and inhuman treatment. The chancellor denied the divorce in 2011. The parties were joint tenants with right of survivorship in some 67 acres of land in Copiah County, upon which they claimed homstead. Since the divorce was denied, the property remained in joint ownership.  

Elise then filed an action for declaratory judgment to determine whether the chancellor had the power to partition the property, or, at least, to the extent that the value of the property exceeded the $75,000 maximum amount of the homestead exemption, and, if so, asking the court to make a partition of the property. She then filed a motion for summary judgment arguing that the language “exempted from execution” in MCA 11-21-1(2) limited application of the statute to the value of the property exempt from execution only. Frank countered that the language is not limiting, but intends that any homsetead property can be subject to partition only by agreement, and not otherwise.

The chancellor agreed with Frank, and Elise appealed.     

The MSSC handed down its decision on December 12, 2013, in Noone v. Noone, Justice Coleman writing, for a unanimous court, explained:  

¶7. Elise maintains that, by using the phrase “homestead property exempted from execution,” the Legislature meant specifically to incorporate Section 85-3-21, the homestead exemption statute. Section 85-3-21 allows one to hold up to $75,000 worth of his or her homestead property exempt from execution by creditors. Miss. Code Ann. § 85-3-21 (Rev. 2011). Creditors can access the value of homestead exempted property that exceeds $75,000. Id. Elise’s primary argument is that Section 11-21-1(2) applies only to the extent that the property is actually exempt from execution. In other words, she contends that the law applies the same way to spouses seeking to partition land by decree as to creditors – the law creates a limit on homestead property exempt from execution, and that limit is applicable in all situations where homestead property is invoked. If she were correct, because the Noones’ property is valued at more than $600,000, Elise would still be able to partition the large majority of the property.

¶8. The issue, in the narrowest sense, is the interpretation of the phrase “homestead property exempted from execution.” Miss. Code Ann. § 11-21-1(2) (Supp. 2013). When the meaning of a statute is plain and unambiguous, “the court should simply apply the statute according to its plain meaning and should not use principles of statutory construction.” City of Natchez, Miss. v. Sullivan, 612 So. 2d 1087, 1089 (Miss. 1992) (citations omitted). The potential meanings of “homestead property exempted from execution” are two: (1) the phrase could mean that the entire homestead property is under the ambit of Section 11-21-1, and therefore partition must be by written agreement of the owners; or (2) the phrase could mean that Section 11-21-1 applies only to the $75,000 that is exempt from execution by creditors under Section 85-3-21.

¶9. If the interpretation of that phrase were a true matter of first impression for the Court, then the latter reading might be plausible. However, in similar contexts, the Court has restricted the meaning of “homestead property exempted from execution” to the former. See Hendry v. Hendry, 300 So. 2d 147, 148 (Miss. 1974) (“Homestead value is relevant only in considering the claims of creditors in relation to the homestead upon which exemption is claimed.”); accord Stockett v. Stockett, 337 So. 2d 1237, 1240 (Miss. 1976). Hendry and Stockett have foreclosed any ambiguity. Therefore, in the instant case, the Court is tasked with nothing more than applying the logic underlying Hendry and Stockett.

¶10. In Hendry v. Hendry, a husband sold homestead property without obtaining his wife’s approval. Hendry, 300 So. 2d at 148. Pursuant to Mississippi Code Section 89-1-29 (Rev. 2011), a conveyance so made cannot be upheld. Section 89-1-29 provides, generally, that a conveyance of a “homestead exempted from execution” is not valid or binding unless signed by the owner’s spouse. Id. The Hendry Court held the value limitation on homestead property relevant only to creditors. Hendry, 300 So. 2d at 149. Therefore, the law voided the entire conveyance – not just the portion subject to exemption from creditors. Id.

¶11. The Stockett Court discussed the issue even more explicitly. Stockett, 337 So. 2d at 1239-41. In Stockett, the decedent left all of his property equally to his wife and son. Id. at 1238. The son tried to partition the homestead property of the widow (formerly owned by the decedent) but was denied because of Mississippi Code Section 91-1-23, which limits a devisee’s right to partition a decedent’s “exempt property” occupied by the widow of the deceased. Id. The decedent’s son argued that Section 91-1-23 protected the property only to the extent the value equaled the amount exempt from execution. Stockett, 337 So. 2d at 1239. The Court disagreed, holding that the limit found in Section 85-3-21 protects creditors, while Section 91-1-23 protects widows. Id. at 1240-41; see Miss. Code Ann. §91-1-23 (Rev. 2013). The Stockett Court wrote:

We have not varied in this interpretation of these statutes since 1905 when we said, in Moody v. Moody, 86 Miss. 323, 38 So. 322[, 323 (1905)]: “The limit of value placed by law on the amount of land which can be held as exempt is solely for the protection and benefit of creditors-to prevent unreasonable amounts from being held exempt from execution to the prejudice of those to whom just debts might be due. But the question of value has no place in a consideration of the rights of the surviving widow to the use and occupancy of the homestead. . . .”

Stockett, 337 So. 2d at 1240.

¶12. Both Section 91-1-23 and Section 11-21-1 invoke the exemption from creditors found in Section 85-3-21. However, the reasoning employed by the Stockett Court applies to the case sub judice. Just as Section 91-1-23 protects widows from involuntary partition, Section 11-21-1 protects spouses from involuntary partition. Neither statute protects creditors. The phrase “homestead property exempt from execution” serves as a descriptive phrase identifying the property that one (or, in the instant case, a married couple) inhabits. As shown above, we repeatedly have held that the Legislature’s decision to use the phrase “homestead property exempt from execution” in other statutes identifies the specific type of property that the Legislature wants to protect. The phrase is not, as Elise argues, intended to bring the specific limitations on creditors’ rights to other, unrelated statutes.

That’s a pretty definitive decision. The statute is to be read as protective of spouses, and any interpretation that conflicts with that intent will be rejected.

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