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Divorce Mediation Blog

… Bad Boys, Whatcha Gonna Do? The punishment exceeded the crime for divorce property division in D.R. v. D.A

Wednesday, June 13, 2018

Levine Dispute Resolution - Divorce Property Division

We will not bore you with our complaints about Appellate Rule 1:28 again, but …

In the case of D.R. v. D.A, the Massachusetts Appeals Court found that the Probate Court judge “gave undue weight to the husband’s ‘bad’ conduct such that the grossly unequal asset allocation ‘falls outside the range of reasonable alternatives’”, vacating the 4 to 9 per cent asset allocation to the offending spouse (the parties gave different computations), a difference that the appellate panel deemed “immaterial”.

The bill of particulars against the husband: voluntary unemployment, controlling and abusive behavior, no contribution to household tasks and unexplained negative impact on the habitability of the martial residence. The trial judge concluded that the husband contributed “little to the marital enterprise…economically or otherwise [and negatively impacted] the wife’s wellbeing.”

Elaborating on prior case law in which the Massachusetts courts had established that “conduct” that “harmed the marriage or the marital estate” could lead to diminished recovery under equitable property distribution principles, the Appeals Court resorted to a graphic treatise treatment:

    Negative conduct, to be more than a featherweight factor, must either be economically detrimental to the welfare of the partnership, such as by undermining the family’s economic stability such as through disposal or waste of martial assets, such as through unlawful or fraudulent acts, or be so egregious as to impair the ability of one spouse to function in the future

A pretty specific set of limiting criteria: the kind that a court that intends to assert clarifying precedent would use. The again, D.R. may not be cited as precedent.

 

Pre-marital Cohabitation in Defining Marital Length Clarified; But, In Rejecting Normalized Income for Alimony & Accepting Early Valuation Date: Why won’t the Appeals Court tell us what they really think?

Wednesday, May 30, 2018

BORTOLOTTI V. BORTOLOTTI - Part 2

Levine Dispute Resolution - AlimonyAfter announcing one useful alimony holding, which we discussed in Part 1, the appellate panel in Bortolotti v. Bortolotti speed-wrote six issues that are common to many divorce cases, and where the bench and bar could use some real direction. In this blog entry, we will focus on two of them:

  1. the trial judge’s decision to use “normalized” salary for business valuation purposes but half that amount for alimony calculation; and
  2. the judge’s acceptance of a 2014 real estate valuation at a 2016 trial.

The Appeals Court upheld both decisions, simply noting that each was within the Probate and Family Court’s discretion, but with the thinnest possible explanation, giving little critical value to the reader.

Bearing in mind that “unpublished” opinions are not formal precedent, but that the Appeals Court invites their use for “persuasive value”, why wouldn’t the appellate bench want to write its opinion persuasively? Why not share their actual analysis?

In our first example, trial court accepted the uncontested adjustments that a valuation expert made to the husband’s salary, in furtherance of an income-based valuation, for which salary “normalization” is an essential component. Normalization is an effort to approximate the owner’s actual economic yield, or more traditionally, that which a hypothetical buyer might fairly expect achieve in the future.

Common adjustments are one-off expenses, personal expenses written off against revenues and S Corporation tax effect. A potential business buyer uses this to measure likely return, so as to rationalize its investment, including acquisition debt. The divorce court does it to determine the value to the business owner who is cashing out the opposing spouse’s marital interest.

The Appeals Court owed no explanation for upholding the acceptance of the normalized salary in the valuation context because no one disputed the substance of the finding at trial. But, then, the panel addressed the trial court’s determination to use only half of the normalized sum for alimony purposes because “there was evidence that [the husband] did not derive any actual income from” his company.

What does this mean? Were the actual earnings zero? Were they normalized to a positive value, more than zero based solely on adjustments? Alternatively, did the expert find positive earnings, but zero salary and/or profit distributions made? If so, did the judge determine that half of the realized but undistributed income was retained for legitimate business purposes?

In short, it matters what the essential facts were, and why the Appeals court found the trial decision to be sound. Discretion is not unbridled; and appellate analysis is, or should be, an explanation of why the judge did not abuse it so that the bench and bar may learn from an elucidated point of view, from which they may analogize with intellectual consistency. Instead, we are left with bare bones, and a conclusory statement, which may create mischief in place of clarity.

Some lawyer soon will assert that Bortolotti supports the proposition that “actual income” and “realized income” are opposites (they are not) and that a rigorous application of JS v. CC is not really required for alimony matters, when a controlling owner does not distribute realized income. Neither is a healthy result.

It is possible the trial court did apply JS v. CC factors comprehensively and well, and this was not reported in keeping with the Rule 1:28 admonition that the opinion does not “fully” address the facts. Yet, the facts that are key to the decision should be discussed or at least identified. Otherwise, what is the point of making the decision publicly available?

Similarly, where the judge applied a two-year-old real estate appraisal value to the marital home, the Appeals Court simply opined that the date was halfway between the date of separation and the date of trial and that the judge was within his or her discretion. This conclusion leaves us wondering: Were all assets valued as of the interim date? Was there intrinsic significance to the halfway point? Was the Court choosing between bad alternatives (2-years-old v. older)? Did only one party offer a value? Was a more recent value offered, but on an infirm basis?

The answers to these questions, and others, matter; and we; and we suspect other curious minds would like to know the why as much as the what.

 

Pre-marital Cohabitation in Defining Marital Length Clarified

Tuesday, May 15, 2018

But, In Rejecting Normalized Income for Alimony & Accepting Early Valuation Date:
Why won’t the Appeals Court tell us what they really think?
BORTOLOTTI V. BORTOLLOTTI - Part. 1


Levine Dispute Resolution - Alimony

We have previously lamented the shortcomings of Massachusetts Appeals Court’s Rule 1:28 opinion practice, and the recent Bortollotti v. Bortollotti has us at it again, but that will have to wait until Part 2.


Today, instead, we focus on the court’s helpful clarification of the legislature’s provision that tasks trial judges with determining if and when a marriage may be construed to begin before its legal registration, for purposes of calculating the length of marriage, and the resulting presumed durational limit calculated under M.G.L., ch, 208, § 48. When we say it is helpful, it is not to say that we agree or disagree with the concept, but rather, that, like a puzzle part, it fills a gap that makes the statute more understandable and, therefore, more predictable in outcome.

The concept of a de facto relationship giving rise to an obligation normally associated with a legal one preceded the Alimony Reform Act (“ARA”), beginning with California cases involving child support by estoppel (obligations arising from unrelated-party voluntary undertakings and resulting reliance), to pre-marital contribution in equitable division cases (see, Liebson v. Liebson and Moriarty v. Stone) and, more recently and directly on point, judges’ grappling with the inequities of same sex couples who were divorcing after long relationships and fact-based economic unions, but to whom marriage was foreclosed until implementation of 2005’s Goodridge decision.

In ARA, the legislature expanded the notion to all marriages in the alimony context.

Section 48 allows the trial court to back-date the start of marriage for a “significant marital cohabitation that includes ‘economic marital partnership’”, per Bortollotti. In this case, the trial judge found that the parties had, in fact, cohabited before legal marriage, but that the wife had not contributed income to the partnership, therefore, an economic marital partnership did not exist.

With logic more parallel to actual marriage, and historic alimony law, the Appeals Court reversed, stating that the wife’s very economic dependence signified that the marital partnership had begun. They reconciled three ARA features: the enumerated criteria for awarding alimony; the “common household” needed to trigger a payor’s post-divorce right to demand redress; and the pre-marital issue, here.

Since economic dependence is one of the enumerated alimony factors, the appellate court reasoned, it will suffice to extend the length of marriage retrospectively, for alimony’s presumed durational limit purposes.

The holding is fairly simple. It will apply to many cases, sometimes with minor, and other time substantial effect. The most extreme, obviously, will be when this metric leads to a finding that a 19 ½-year marriage was preceded by a more than 6-month cohabitation with economic dependency, stripping the payor of any presumed durational limit whatsoever, especially where the payor is more than 16 years shy of full social security retirement age. We can expect that this aspect of those cases to be most hotly contested.

The next time, Rule 1:28 and why the rest of Bortollotti is frustratingly sparse.

 

Hoisted on Her Own a Fraudulent Petard, or There’s Just No Damn Honor Among Frauds Anymore: Shea v. Cameron – Part 2

Thursday, April 05, 2018

Levine Dispute Resolution - Alimony

It is tempting to dismiss the Massachusetts Appeals Court’s Shea v. Cameron as a confection of divorcing people behaving badly, and a tale of narcissistic comeuppance. But, the case actually has two important messages in it, for which we are grateful.

First, obviously, is that “not all human actions…have an avenue for legal recourse, no matter how much anger, sorrow, or anxiety they cause.” Those words would be well-posted over the courthouse door.

But second, the court underscored the gravity of the allegation “undue influence”, the key to many efforts to avoid enforcement of pre-marital and divorce agreements specifically, and to eschew responsibility for one’s own actions, more generally. The court aptly cited SJC precedent, in stating that:

    …a plaintiff must establish that the defendant overcame the will of the grantor …. [by]… some form of compulsion which coerces a person into doing something the person does not want to do.

And, in connection with Ms. Shea:

    …the undisputed evidence shows that [she] was in full command of her personal affairs and was neither ill, dependent nor enfeebled at the time of the transfer of real or personal property to Cameron.

Undue influence is a high bar, as well it should be.

 

Hoisted on Her Own a Fraudulent Petard, or There’s Just No Damn Honor Among Frauds Anymore: Shea v. Cameron – Part 1

Wednesday, March 21, 2018

Levine Dispute Resolution - Alimony

It isn’t often that we get to see the phrase “joint stipulation of fraud”.

But, in the Massachusetts Appeals Court’s recent Shea v. Cameron, it is the perfect appetizer to a meal of mutual marital chicanery that resulted in the court’s decision to distance the itself from the:

    … “ingratitude, avarice, broken faith, brutal words, and heartless disregard of feelings of others,” which although blameworthy, are not legally compensable.

He lied about loving her. They married. He cheated. She filed for divorce. She withdrew her complaint. She filed a new complaint, this time for annulment. He snapped up that opportunity, only too happy to admit his faux amour.

Not so fast. After the parties presented their cooked-up annulment petition to the court, Ms. Shea served Mr. Cameron – on his way out of the courtroom, no less - with an complaint demanding a cookbook of damage remedies based on his “fraudulent inducement to marry”.

First, the Probate and Family Court, and then the Superior Court, kicked out Shea’s claims on summary judgment. But, the second judge “reported” the question to the Appeals Court, which took the matter up despite its procedural reservations. After a scholarly review of the history of various “heart balm” actions, the court wisely ended the matter for good, with unassailable logic:

  1. the law provides remedies for married persons when they break up, for equitable property division and support; and
  2. when the wife chose annulment instead of divorce, she gave up those remedies, since no marriage ever existed, a fiction of her own design.

Thus did Ms. Shea hoist herself, luring Mr. Cameron into admitting fraud, while plotting to then show him, but accidentally giving him a free pass, in the process.

There is just no honor in fraud anymore.

 

Wanted: An SJC Case to Challenge the “Real Advantage” Standard: Chief Justice Gants’ Compelling Concurrence in Miller v. Miller

Wednesday, March 07, 2018

Levine Dispute Resolution - Divorce Mediation

Concurrences are rare in family law cases, but when the Chief Justice writes a clear-eyed one with firm conviction, people take notice. C.J. Gants, with Associate Justice Gaziano joining him, did not take issue with majority’s decision, but rather the “analytical gymnastics” necessary to find it. They were right.

The source of the problem is less 1985’s Yannas v. Frondistou-Yannis, though that case alone has doomed the efforts of countless “non-custodial” parents to resist the removal of their children to other jurisdictions than the more problematic case of Mason v. Coleman (2006), or as the concurrence points out, the toxic intersection of the two cases.

It is Mason that undermined decades of effort in the Probate and Family Courts, and among its practitioners, to tone down the fight over custodial labels by fractious parties, by awarding access to the lower-bar “real advantage” removal test to parents with “sole physical custody”, setting up a two-stage fight in every potential removal case: first, does someone have sole physical custody (later modified to be a “functional” test rather than a legal label); and if so, are the childrens’ best interests driven by that individual parent’s personal needs?

It took the Miller case to put this problem into stark relief, presenting a matter where no labels, or functional findings, could have attached previously, since it was the time of divorce. Thus the court had to conclude, based on the messy life of an intact family, who would have been hypothetically denominated the physical custodian. A fiction on top of a fiction – and one that Judge Gants persuasively argues ought to end.

Whether the Mason problem is a product of a fundamental mis-perception of Yannis may be beside the point that both the Miller majority and concurring justice make: that the best interests of the child is meant to be the overarching inquiry for every removal case. For too long practitioners have accurately read the trial court’s predominant “read” of Yannis, namely, that the primary caregiver’s personal needs pretty much trump further inquiry, absent spousal spite, or a child who is too young to yet be bonded to the parent who would be left behind in Massachusetts.

Justice Gants’ point: artificial jousting over the label, or even the “functional” reality of primary caregiving, is too often confounded by informal parenting histories, by self-serving constructs and by too little historical precedent (as in Miller); and it does not serve the ultimate policy of finding and enhancing children’s outcomes via a straight up best interests inquiry. Rather, the exercise can range from pointless to damaging, by obscuring the true issues.

Justice Gants is also right that a primary care parent’s individual needs and interests cannot, and should not, be ignored. The certainly can be critical to a child’s interest; just not always so, and as often, not conclusively. We hope that the opportunity arises for the SJC majority to follow its Chief, as they may have signaled in Miller already, acknowledging but deferring the issue to another day and case, wherein one of the parties directly challenges, briefs and argues the issue on appeal.

We hope that that opportunity comes soon.

 

Appeals Court Clears Up One Alimony Duration Ambiguity While Casually Creating Another: It’s the Payor’s Gift to Keep on Giving, in Sbrogna v. Sbrogna

Wednesday, February 28, 2018

Among the many questions that leapt off the page when the Alimony Reform Act (eff. 3.1.12) was issued in 2011 was how the M.G.L., ch. 208, §48 definition of the “length of the marriage” would be construed for cases in which the parties file a joint petition for divorce under M.G.L., ch. 208, §1A. The application of durational limits, since denominated “presumptive” by the appellate courts, for many individual cases, hung in the balance.

The issue arose because the legislature conflated the different procedures implied by the choice to proceed by complaint (action commenced by one party unilaterally) or by petition (which can only be a joint filing under the statute) in defining marital length, generally, as the time elapsed from the date of:

“legal marriage” to the “…service of a complaint or petition for divorce…” (Our italics.)

The problem is that there is no such thing as service of a 1A petition; and joint petitions predominate mediated divorces, and other cases where successful negotiations precede court filings.

The work-around in divorce mediation was relatively simple: make up a date!

It could be the date of separation, the date of commencement of mediation or any other date that the parties deem to be fair enough. The significance was fairly muted, unless the parties sat on the cusp of an incremental increase of presumed ARA durational limits (50% for 1 to 5-year marriages, 60% of 5 to10-year marriages and so on), or most dramatically upon the parties’ twentieth anniversary, where presumptive limits go to die.

Well-motivated clients found this to be a small obstacle that they could fairly readily nuance with “rough justice”.

The much larger problem was the event of modification actions, where a judge is tasked with determining the presumption durational limit for alimony retrospectively, to decide if durational change is permitted by proof of a simple material change of circumstances, or if a higher burden is demanded for the alimony payee to establish the need for deviation from the presumed time bar, under ARA.

In Sbrogna, the parties divorced under §1A, but not until fairly long after the husband had commenced a divorce complaint that lay dormant during reconciliation efforts and later divorce negotiations. Unfortunately for the husband, the parties filed their ultimate agreement on a joint petition under §1A, rather than in connection with his earlier complaint. (Even if they had filed under the earlier unilateral action, it might not have saved the husband, because despite his representations, the court found no proper documentation of service in its file.)

In any event, the Massachusetts Appeals Court made a facially sensible decision in simply construing the word “service” in the legislature’s “casual turn of phrase” (the court does take its shots) to mean the date of filing of a 1A petition and supporting documents, since service is inapposite to that action.

Unfortunately for Mr. Sbrogna, this meant that he had crossed the 20-year marriage Rubicon, losing the shield of the last remaining presumptive durational limit. But, the rest of divorce world is now on notice, and everyone needs to be cognizant of the complaint or petition upon which the divorce judgment enters, as that will determine which durational limit, if any, will apply, upon modification.

The only problem is, that if we read Sbrogna literally, divorcing parties who intend to avoid the labelling onus of a “plaintiff” and “defendant” complaint, or the archaic six month waiting period imposed by a M.G.L., ch. 208, §1B complaint, and proceed under §1A, have no technically accurate way of calculating the presumptive duration limit that applies to their case, before they sign off on it. After all, the “length of marriage” will continue to extend beyond execution of their agreement, and on to a yet undermined 1A court paper filing date.

Always on the lookout for good mediation work-arounds, we suppose that the parties can define their duration limit in relation to a future date, as in:

    Alimony shall terminate on the first to occur of either party’s death, the recipient’s marriage to another person or the 60% of the number of the full or partial months that have elapsed from the parties’ legal marriage date to the date upon which the parties’ 1A petition and supporting documents shall be filed with the court.

Pretty clunky, but technically correct, we think.

Maybe, that’s just what happens when casual judicial language supplants casual legislation.

 

Proposed IRC §2704 Regulations? Fini

Wednesday, February 21, 2018

Levine Dispute Resolution - Proposed IRC

We have blogged on previously occasions about the Obama-era proposed regulations to tighten practices in valuing family-controlled businesses. Much of the last 14 months have been spent in public scrutiny and commentary of these proposed rules.

Our most recent entry was about presidential Executive Order 13789 (April 21, 2017), the United States Treasury Department that put the proposed §2704 regulations in its crosshairs, in the name of de-regulating business. In its 60-day interim report, Treasury identified including §2704 among eight “Regulations identified for burden reduction”. We wondered then how much the president, his cabinet, West Wing advisors – and all of their heirs -- stand to gain personally, by “unburdening” the American people in this way.

It appears that we now know the answer – or at least infer it: plenty!

On October 2, 2017, Treasury Secretary Mnuchin formally recommended withdrawing the §2704 proposals, as burdensome, unworkable and beyond IRS legal authority. We wish that the current government were not so rife with conflicts that self-dealing would not be our first thought, but it is, so it is. That, and their congenital need to trash anything that has the name “Obama” associated with it.

Politics and skepticism aside, many in the valuation community wish the proposed rules good riddance, too.

 

The SJC Weighs in on Self-Adjusting Alimony Orders and Recipient “Need”: Young v. Young, Part 9

Wednesday, February 07, 2018

Levine Dispute Resolution - Alimony

“Fair balance of sacrifice?”

In Young v. Young, the Supreme Judicial Court (SJC) imported a concept that it had previously coined in the case of Pierce v. Pierce.

In the latter, the SJC reviewed (and upheld) a modification judgment of the Probate and Family Court in which the judge had reduced, but not terminated, the payor’s alimony obligation after he had voluntarily reduced his income, and his resulting ability to pay, finding that the reduction achieved a “fair balance of sacrifice” between the parties.

This modification concept followed an original divorce judgment which occurred without regard to any such construct. Rather, as a matter of law, the original alimony orders were necessarily based on the wife’s “need”, the husband’s ability to pay and what the divorce judge concluded to be “fair and reasonable”.

The Pierce court’s crafting of “fair balance of sacrifice” focused on the husband’s need to bear up under the circumstances of his own making, even if it felt to him as payor that he had paid quite enough alimony and he deemed the court’s modification judgment to be onerous in his current circumstances.

In the intervening years, the Alimony Reform Act (ARA) (eff. 3.1.12) introduced a formal range of maximum presumed alimony in M.G.L., ch. 208, §53(b) (since deemed the lawful and reasonable presumptive order by appellate case law), without any reference at all to the theme of “sacrifice”.

Rather, by comparing “need” to the maximum of 30-35% income differential, the legislature recognized that there is often not enough income in a case to sustain the marital station in two households, and formalized a longstanding practice of equitably sharing income, after presuming the tax leveraging of IRC §215 (which may or may not survive the 115the U.S. Congress). This is completely consistent with case law that establishes that a recipient has no guarantee of unchanged lifestyle, if the payor can’t provide it.

The equitable sharing of income can be a useful construct both in acknowledging that the parties can’t necessarily maintain the marital standard post-divorce; and in explaining why a payor will inevitably keep more of his or her income than the recipient will receive, because of the post-judgment efforts required to earn the money that funds spousal support.

But a “fair balance of sacrifice”? Where the vast bulk of divorce cases resolve with equal division of assets and debt, how can the same concept justify an unequal division of income, at the time of equitable distribution?

We are not advocating for the equal division of income, and it is not a result that will ever be required in our time. But was it helpful for the SJC to gratuitously introduce a standard that the legislature neither enunciated nor necessarily implied? Was it necessary support for its central outcome in Young? Will it now complicate cases with another subjective standard about which to fuss?

No, no and we’re afraid so.

 

The SJC Weighs in on Self-Adjusting Alimony Orders and Recipient “Need”: Young v. Young, Part 8

Wednesday, January 24, 2018

Levine Dispute Resolution - Alimony

“Did stated intent of the
order trump the its effect?”

In Young v. Young, the Supreme Judicial Court (SJC) vacated the trial court judgment that awarded variable alimony based on a fixed percentage of the husband’s gross pre-tax compensation, based in part on its conclusion that it crossed the Alimony Reform Act (ARA) (eff. 3.1.12):

…[B]ecause [the order] was intended to award the wife an amount of alimony that exceeds her need to maintain the lifestyle she enjoyed during the marriage. (Italics ours)

By focusing on the intent of the order, we can only infer that the court was addressing the judge’s rationale for the order, instead of the order itself. That election matters, because it raises two questions:

  1. If the trial judge explained herself differently, might the SJC have upheld the judgment?
  2. If the SJC looked at the order in its full ramification, would it have impacted the outcome?

The actual support award in Young was bi-lateral, rising and dropping with the husband’s income, a fact eclipsed by the court’s sharp focus on intent. Thus, while the trial judge may have focused her analysis of the parties’ rising station, her order actually provided downside protection for the husband, too.

Had the judge expressed an intent to protect the husband in the event of income decline and stressed it concomitantly with the potential for “upside”, might the “intent” infirmity that the SJC seized upon been neutralized? Or, if the judge had found that a family with roller coaster income might experience corresponding lifestyle flux?

After all, as the SJC observed:

    There may also be special circumstances where an alimony award based on a percentage of the supporting spouse's income might not be an abuse of discretion, such as where the supporting spouse's income is highly variable from year to year, sometimes severely limiting his or her ability to pay, and where a percentage formula, averaged over time, is likely not to exceed the needs of the recipient spouse.

The SJC dealt with the former, but not the latter.

 



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