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Divorce Mediation Blog

The Return of DeMarco v. DeMarco: Contract Trumps Hindsight

Wednesday, August 10, 2016

Some months back, we commented on a trial court decision in the case of DeMarco v. DeMarco. The parties entered into an agreement for the ex-husband to pay a lump sum of cash, in return for a termination of alimony. It followed a discussion with the judge at the outset of trial, in which the court and the lawyers expressed a mutual understanding that M.G.L., ch. 208, §49(f) presaged termination of alimony by reason of the husband’s age. If tried, the wife would likely lose her alimony, with nothing in return. She chose to get something, by settling.

It turned out that the professionals were wrong (as were many of their colleagues), when the Supreme Judicial Court ruled in the Rodman, Chin & Doktor trilogy of cases that §49(f) would only apply to divorces decided after March 1, 2012, of which this case was not one. The wife then sought “relief” from the modification judgment, and contract; and the trial judge embraced personal responsibility for the wife’s decision to settle, in an extraordinary ruling. At the time we worried that the court’s principled decision, which we admired personally, was problematic because of its impact on the finality of agreements, and the judgments into which they incorporate.

The husband appealed and the Massachusetts Appeals Court reversed, recently, in a clear-eyed decision. Quite simply, the panel concluded, the lawyers and judge wrongly predicted the prospective nature of §49(f), and the wife chose to rely on that common misunderstanding in making her deal. In doing so, she did not just walk away. She demanded and received cash consideration for doing so. Thus, she did not rely on “the law” at all, but rather weighed out the risks and benefits of proceeding to trial and came down on the side of salvaging a bad situation. It happens every day in every court in America.

The Appeals Court correctly concluded that the wife’s interest in requesting relief was unhappiness at the result, with benefit of hindsight; and that her cause did not thread the extremely narrow needle of Mass. Dom. Rel. P. 60(b)(5). Litigants make deals every day because of judgment calls about the law’s application to their facts. The only thing that stood this case apart was that it addressed an extremely controversial aspect of a highly contentious new statute (Alimony Reform Act), and that an apparent consensus of judge and lawyers preceded its conclusion.

In the end, the settlement was supported by sound contract principles, unaltered by the SJC’s later “clarification” of the law; and the appellate court reversed. We don’t doubt the legal correctness of the Appeals Court’s decision, which does not reduce, in the least the gallantry of the trial judge’s action. Too few grab responsibility to themselves, even at the risk of being wrong.

In an interesting side-note, we have wondered here previously whether or not the ARA’s blanket statement, in “uncodified” §4(c), that the parties’ surviving agreement that there shall be no alimony is absolutely binding on the trial court, as it states, or if it is still subject to the court-made exception of “countervailing equities”, as expressed in 1976’s Knox v. Remick, and others. The DeMarco panel, at least, believe that this equitable construct survives ARA, as expressed in dicta, at the conclusion of its decision. In other words, surviving agreements to waive or terminate alimony are “almost impossible to change”, in the DeMarco judge’s words, and not absolutely binding as §4(c) suggests, at least until further word.

 

#marriedseparateddivorcedcohabitedmarrieddivorced: The SJC makes it up and gets it right: Duff-Kareores v. Kareores – Part 3

Wednesday, July 27, 2016

In our last two entries, we considered the central features of the Supreme Judicial Court’s (SJC) recent case, Duff-Kareores v. Kareores. Today, we comment briefly on a collateral benefit of the SJC’s opinion in another area the Alimony Reform Act (eff. 3.1.12) (ARA): the “common household” provision of in M.G.L., ch. 208, § 49(d). In its decision, the high court lifted the enumerated criteria of §49(d) (how to prove common household) and grafted them onto §48 (how to prove length of marriage to equitably pre-marital economic partnership during cohabitation).

In doing so, the SJC described §49(d) as the factual basis upon which a judge may reduce, suspend or terminate alimony by reason of a relationship that:

“…resembles, but is not equivalent to a legal marriage.”

In this dictum, the SJC says what the legislature did not with the greatest clarity: that the purpose of §49(d) is to give potential recourse to an alimony payor, without the burden of proving abated financial “need”, when an alimony recipient has assumed a marriage-like relationship. In the bare statute, the only word that connotes this meaning is “couple”, appearing in sub-sections ii. and v.; the dictionary meaning of which is not limited to romantic pairings. (See, http://www.merriam-webster.com/dictionary/couple.)

We hope that this collateral comment by the SJC will caution any future litigant against stretching the benefits of §49(d) beyond what we believe be its intended purpose.

 

#marriedseparateddivorcedcohabitedmarrieddivorced: The SJC makes it up and gets it right: Duff-Kareores v. Kareores – Part 2

Thursday, July 14, 2016

In our last entry, we began discussing the law school exam scenario turned real life divorce case in the Supreme Judicial Court’s (SJC) recent case, Duff-Kareores v. Kareores. The trial judge faced the challenge of determining how long the marriage was for alimony purposes, under M.G.L., ch. 208, §4. The parties were married for 8 years, divorced and lived separately for 4 years, cohabited while divorced for 5 ½ years and, finally, re-married each other for 6 months before the onset of divorce #2: uncharted territory under the Alimony Reform Act (ARA) (eff. 3.1.12).

The SJC upheld the inclusion of the first marriage years, and the cohabitation era, but vacated the trial court’s order because the 4-year period of divorced separation should not have been counted, since the statutory marriage extender (§48) is limited to cohabitation periods. The last time, we concurred with the SJC’s treatment of the separation and non-married cohabitation periods.

Today, we tackle the SJC’s decision to include the years of the first marriage in calculating the length of maximum alimony for the second divorce, under M.G.L, ch. 208, §49(b). At stake for the parties:

    1. Was this a 6 or 14-year marriage for alimony purposes?

    2. Was the presumed maximum length of alimony, therefore, 3 years, 7 months or 9 years, 10 months?

The SJC chose the longer marriage length, and resulting alimony term, focusing on the totality of the parties’ marriage/cohabitation history, rather than its truncated reality.

In doing so, the SJC showed little concern that “marriage” is a distinct legal status from pre-marital “cohabitation”, the latter term being the statutory language on which the question turns. The contrary argument goes that a judge may lengthen a marriage by reason of economic partnership during a non-married cohabitation, but the statute says nothing about a prior marriage. But, perhaps because marriage itself includes an expectation of cohabitation, the SJC saw this distinction as one without a difference, for these purposes. Being versed in criminal law, maybe they saw cohabitation as a lesser-included offense!

The SJC also navigated past the fact that the alimony obligations arising from the first marriage had been previously adjudicated by a judgment that included merged alimony; effectively, treating the first divorce as simply another a stop along the way for this evolving family. As we view it, the court, did not re-adjudicate previous rights. Rather, in determining alimony rights created by the law as applied to the second marriage, the trial judge and the SJC simply “counted” years of the first marriage, as part of a factual artifice that the legislature created, and which had to be construed one way or another, in frankly, unanticipated circumstances.

Once the legislature plunged into the business of calling something that it is not– the explicit permission granted by §48 - it opened the door to interpretation. In Massachusetts, the SJC is the interpreter-in-chief; and we don’t have a problem with the call that the high court made on this one. There is nothing in ARA that precludes the Kareores result, and if the purpose of M.G.L, ch., 208, §49(b)’s sliding time scale for durational limits is to honor the concept that longer partnerships connote greater rights and obligations, it seems that the SJC’s construction achieves this purpose.

As the SJC previously said in Bercume v. Bercume (admittedly, a different context), it does not write on a clean slate; and the parties’ here knew their slate very well indeed, including the risks and benefits of ARA, when they resumed marital status. (What a perfect situation for a prenuptial agreement, but that is water under the bridge.)

We do have one reservation that the SJC did not address, however: the troubling fact that the husband paid alimony for 4 years, under the first divorce and before the pre-second-marriage-cohabitation. By tacking on the period of the first marriage as part of the statute’s fictional length of marriage, a risk of double counting arises. It seems that the remand ought to have required the trial court to consider this fact in determining the ultimate alimony term, either as a “credit” against the alimony months ultimately ordered, or at least as an equitable basis for considering a shorter term. After all, M.G.L., ch. 208, §49(b) sets forth a “not longer than” standard and not a rote alimony length.

In our next entry, we will comment on an unrelated collateral benefit of this decision.

 

#marriedseparateddivorcedcohabitedmarrieddivorced: The SJC makes it up and gets it right: Duff-Kareores v. Kareores – Part 1

Friday, July 08, 2016

The Massachusetts Supreme Judicial Court (SJC) recently encountered a fact pattern that only a law school professor could love. In all likelihood, the state legislature did not consider it while cobbling together the Alimony Reform Act (ARA). Then again, life happens; and sometimes we have to make it up on the fly! The SJC did, and got it right.

In Duff-Kareores v. Kareores, the couple modeled marital ambivalence. They married, had 2 children and divorced after 8 years, with a financial settlement that included periodic alimony. After 4 years of divorced living, they resumed cohabitation, albeit without the grace of marriage.

They looked like a family, acted like a family and encouraged the world to see them as one. Five and ½ years later, the reluctant divorcees re-married in 2012. Within 6 months, the wife filed for re-divorce.

This time the parties did not settle their case. Instead, they tried their case to a Middlesex Probate and Family Court judge, to whom fell the task of figuring out how to apply the M.G.L., ch. 208, §48 definition of marital length on these facts, since that, in turn, would dictate the maximum (and likely) length of resumed alimony under ARA.

Section 48 says that the length of marriage is defined by the number of months from marriage ceremony to the date of service of a divorce complaint, but also that:

    “…the court may increase the length of marriage if there is evidence that the parties’ economic partnership began during their cohabitation period prior to marriage.”

(Our italics.) (We can’t resist asking: “How can a marriage be longer than its length?” It’s a bit like calling a 5’10” NBA point guard 6’ 3”. It happens, but he still can’t see over the defender.)

The concept is that for alimony purposes the court may treat a marriage as if it were longer, to account for pre-marital contribution and dependency formation purposes, and to give judges a way around durational limits. This exception (most ARA rules have exceptions) begun as a way to recognize same sex couples who formed families before they could legally marry, has spawned disputes for many modern marriages, where pre-marital home life is increasingly common.

The cohabitation in this case was wedged between divorce #1 and separation #2, so it qualified as “pre-marital”, as the judge ruled. But, he did not distinguish between the post-divorce cohabitation, and its preceding period, when the parties actually lived apart as a divorced family. A literal 6-month marriage, which should have been deemed 14-years (8 + 5½ + ½) – per the SJC - became an 18-year one, by decree.

The Husband appealed. Going for broke – or maybe trying to avoid it – he argued that both the 4-year separation post-divorce and the 5½-year pre-marital cohabitation should have been excluded, because he was really just a “renter” during the cohabitation period. It appears that he staked the latter claim, ironically, on the continuity of alimony payments, which the judge held less pertinent than the lack of a lease and rental payments. (He also appealed the inclusion of the first marriage as a period of pre-marital economic partnership during cohabitation, relative to the second marriage, which we will address in a subsequent blog.)

The SJC agreed about the unmarried separation period, because, the statute says nothing about economic partnerships while not cohabiting. But, what about the cohabitation period? Section 48 bestows the right to equitably pretend that a marriage is longer than it is, but, it gives no guidance on how to resolve to apply it factually.

That’s where the SJC rode to the rescue courtesy of “statutory construction” by resorting to the statute as a “whole”. The appellate court keyed on section 49(d), which has nothing to do with the length of marriages. Rather, it empowers judges to reduce, suspend or stop ongoing alimony in a modification context, when an alimony recipient has created a “common household” with another person for more than 3 months’ time, stated colloquially, for cohabitation. Concluding what legislators would have said, had they thought of it, the SJC concluded:

    … that the Legislature intended to use the terms cohabitation, economic marital partnership and common household to describe a relationship that, if established, would affect a court order for alimony, either by increasing the amount and duration of alimony ordered or by reducing, suspending or eliminating the award.

There is no way of knowing what the legislature really meant, but the SJC’s version makes great sense. It plugs a legislative hole in a logical way, while making a confusing statute a bit more consistent; and the courts now have a list of criteria to consider the next time that family life challenges family law expectations.

 

Need and variable support orders: they are not mutually exclusive

Friday, June 17, 2016

[NOTE: This piece ran as a letter to the editor of Massachusetts Lawyers Weekly in its May 16, 2016 edition, under MLW’s chosen title “Need, variable support orders aren’t mutually exclusive in Probate Court”. We re-produce it here in its original form, and with our given title.]

David Lee’s April 25th rejoinder (“Court has it right regarding self-adjusting support orders”) to our March 28th article, (“The curious case of variable support orders…”), begs a clarification from us, and a related illustration of why one may wish to re-examine current law and practice.

In our piece, we advocated for a presumption in favor of sound and reasoned discretion for the judges of our highly specialized and carefully vetted Probate and Family Court, in fashioning self-adjusting support orders. We did so, both as a matter of consistency with the actual words of SJC precedent; and largely because, in most cases most of the time, there is insufficient income to leave an alimony recipient at the marital station, our long established measure of “need”.

Why should the law exclusively advantage the party who generates greater income, by shielding his or her rising income capacity from the party who is still in “need”, as defined by law; and by putting the disadvantaged party to the uncertain and costly test of initiating new litigation in the hope that the increased capacity is there? (The same principle would apply in reverse, of course. Why should a payor with sufficient income to meet all recipient “need” be blocked from a self-executing reduction where the court finds that the recipient’s need is likely to decline over time by reason of increasing independent earnings.)

We do not advocate for untethering alimony from its historic anchor of need, despite the fact that the legislature risked muddying the waters when it failed to include the clarifying words “lesser of” or “either” in stating that “… alimony should generally not exceed the recipient’s need or 30 to 35 percent of the difference between the parties’ gross incomes…” in the Alimony Reform Act (“ARA”). See, M.G.L., ch. 208, §53(b). In fact, we agree with Mr. Lee that the trial judge’s variable support order in Hassey v. Hassey was properly vacated, if it did not vindicate the purpose of meeting “need”.

But, what if the judge had found that Ms. Hassey’s “need”, based on marital lifestyle was $8,000.00 per month; that the alimony sum based on his 32.5% of his salary would likely net her $5,000.00 per month; that a history of earned bonuses established a reasonable likelihood that Dr. Hassey would have the ability to further assist in meeting Ms. Hassey’s “need”; and that it is equitable, therefore, that he pay additional alimony of 30% of his gross bonuses, to a sum that is no greater than $3,000.00 monthly, that which would return her to the marital station? Sound discretion could certainly condition the variable portion on a comparison of the parties’ incomes as per §53(b). The sheer weight of “the 99%”, for whom the marital station is at best an aspiration after divorce, and upon whom the cost of future litigation casts the greatest burden, suggests a re-examination of this doctrine.

 

GUEST BLOG: The Appeals Court Has it Right Regarding Self-Adjusting Support Orders

Wednesday, May 25, 2016

By: David H. Lee

William and Chouteau Levine’s March 28, 2016 Opinion Piece seems to suggest support for and the value of self-adjusting support orders in family law cases. In support for their position they reference the case of Stanton-Abbott v. Stanton-Abbott, 372 Mass. 814 (1977); suggest a chilling effect on negotiated resolutions as a result of limiting the court’s authority to enter self-adjusting support orders; and speculate that courts might reject agreements reached which contain self-adjusting formulae. While recognizing the general acceptance that such self-adjusting court imposed orders offend due process, the authors seem to suggest that construction of the law endorsing such support orders will give a greater opportunity for people to reach agreements including adjustments based on future circumstances.

All good family lawyers strive to assist their clients in achieving a settled resolution whether by encouraging mediation or by counsel directed negotiation. Creative and competent lawyers and mediators are often able to assist parties in achieving a settled resolution without their support case having to be tried in court. But expanding the Trial Court’s authority to enter self-adjusting support orders in order to accommodate opportunity for possible out of court settlement is not an acceptable basis for the compromise of established law and due process rights of the parties.

The Stanton-Abbott case recognizes its own uniqueness. Justice Kaplan identified the use of a self-executing formula in that case as being appropriate based on the special case circumstances presented there (a paraplegic payee living in a foreign country and the consideration of the payor’s resources to meet the judgment supporting an annual adjustment of the payee’s alimony by 50 percent of the UK equivalent of the consumer price index increase). He also acknowledged that the question was not reached in that particular case whether a variable provision was “advisable on the merits or compatible with the fundamental purposes of alimony.”

Since that decision almost forty (40) years ago, there have been fewer than a handful of appellate decisions which have supported any such type of judgments in the absence of the parties’ agreement, and each of those has been based upon “special case” circumstances. See Wooters v. Wooters, 42 Mass. App. Ct. 929 (1997); Drapek v. Drapek, 399 Mass. 240 (1987); Kirtz v. Kirtz, 12 Mass. App. Ct. 141 (1981).

Contingent or variable provisions for support orders in a divorce judgment such as termination on death of a party, remarriage of a recipient, events relating to children (which avoid concern for IRC Section 71 considerations), known future dates of trust or estate distributions or other identified events having a reasonable basis founded upon statute, fact, or trial evidence can be understood to often be appropriately included in judgments. But these examples are quite different from judgments applying fixed percentages to unlimited amounts of increased payor income in establishing future support obligations.

The general extension of the concept of “self-adjustment” or “self-modification” to support judgments poses serious concerns which run afoul of history, statutory direction and the Constitution. The CPI adjustment of an alimony order as in Stanton-Abbott is more a preservation of an existing order translated into future value than it is a substantive modification of a set support order. The entry of a judgment ordering support to be paid based upon a sharing of a future level of income or future source of income is a very different matter.

In Hassey v. Hassey, 85 Mass. App. Ct. 518, 528 (2014), the Appeals Court properly reversed the trial court’s judgment ordering alimony to be paid without limit as a fixed percentage of the payor’s gross income in excess of $250,000. This was done without consideration of the incomes and general financial circumstances of the parties at the time the additional income might be received and without consideration of the then existing need of the recipient. See also North v. Stephens-North, Rule 1:28 Decision (June 18, 2015) (reversing alimony award of 30 percent of payor’s bonus income because a self-modifying support order based on payor spouse’s income increases results in an automatic increase in alimony without the recipient spouse being required to show a material change in circumstances, and without judicial findings regarding the recipient spouse’s needs or the provider spouse’s ability to meet them).

A self-adjusting alimony order based upon a fixed percentage of the payor’s income, without limitation, is unsupportable. Alimony is a creature of statute and has historically been based upon the need of the recipient and ability of the payor to pay. Need has been defined by case law as referring to the lifestyle maintained by the parties during the course of the marriage. No modification can be made unless the party seeking modification shows a material change of circumstances warranting modification since the entry of the earlier judgment. Kelley v. Kelley, 64 Mass. App. Ct. 733 (2005); Binder v. Binder, 7 Mass. App. Ct. 751 (1979).

G. L. c. 208, § 49(e) states: “Unless the payor and recipient agree otherwise, general term alimony may be modified in duration or amount upon a material change of circumstances warranting modification.” G. L. c. 208, § 53(b) provides that the measure of need or difference between the parties’ incomes in setting alimony is to be established “at the time of the order.” If the measure of alimony set on a statutory basis is based upon need of the recipient at the time of the issuance of the order or the difference of income between the parties at that point in time, the self-adjusting alimony order applicable to a later point in time bypasses the well-established standard of change of circumstance. In essence, the law provides that alimony is set at one point in time “at the time of the order.” Alimony generally is not to exceed the recipient’s need at the time of the order of 30 to 35 percent of the difference between the parties’ gross incomes at the time of the order. G. L. c. 208, § 53(b). Thereafter, alimony may be modified in duration or amount upon a material change in circumstances warranting modification. G. L. c. 208, § 49(e). A self-adjusting order, without limit and without the requirement of showing change in circumstance, disregards the predicate for alimony. It circumvents established law, failing to consider the needs of the recipient at some future time, what the disparity in income may be between the parties at some time or whether or to what extent there have been any changes in circumstance which would warrant a modification. Case law also supports the principle that an award of alimony is improper absent a finding of corresponding financial need of the recipient. Heins v. Ledis, 422 Mass. 477 (1996). That essential element is not satisfied in an unlimited self-adjusting alimony order.

Massachusetts has long held that future earnings are not a marital asset to be divided by the court incident to divorce. The court cannot equitably assign to a spouse a present interest in the future earnings of the other spouse. Drapek. Awarding a fixed percentage of the future income of the payor effectively treats the payor’s increased income as a property element. The recipient is made an effective “owner” of a share of an indeterminate amount earned by the payor subsequent to judgment irrespective of circumstantial review, reference to need and other factual considerations which would typically be taken into consideration by the Court in determining whether any modification is appropriate.

Irrespective of the limitation on the Court’s ability to impose a self-modifying order, there is essentially no practical limitation placed on parties’ reaching an agreement which may contemplate support changes by the inclusion of self-adjusting provisions. Such provisions might be specific to the support issue or be in consideration of other provisions of the integrated settlement agreement. The suggestion that courts might not accept negotiated, reasoned self-adjusting provisions of an agreement is not supported by experience nor would it be supported by the strong Massachusetts public policy and case law encouraging parties to reach agreements. Moore v. Moore, 389 Mass. 21 (1983).

It is far more important in our legal system for the court, absent an agreement, to be able to timely assess each case on its merits after hearing and enter appropriate modified support judgments consistent with the law than run the risk of formulaic approaches becoming the norm for predetermining uncertain future circumstances. Expanding the court’s authority in an effort to lessen the alleged “chilling effect” on mediation or negotiation is not an acceptable basis for a compromise of fundamental legal rights.

The decisions of the Appeals Court in Hassey and the more recent North v. Stephens-North are not inconsistent with the special case standard of Stanton-Abbott and Wooters. It is the exceptional situations such as in Stanton-Abbott or Wooters where a self-adjusting alimony order may be acceptable, but not a common practice to be encouraged in setting alimony orders.

 

Family Law Arbitration Supported by Appeals Court, But Questions Remain: Gravelin v. Gravelin

Wednesday, May 11, 2016

In its recent Gravelin v. Gravelin, the Massachusetts Appeals Court flatly confirmed that:

  1. There is strong public policy in favor of arbitration in Massachusetts.

  2. Arbitration is a valid means of resolving family law disputes.

  3. A judge may not order parties to binding arbitration without their agreement.

  4. A judge may enforce parties’ valid agreement to arbitrate present disputes.

  5. While the Massachusetts version of the Uniform Arbitration Act (M.G.L., ch. 251) does not explicitly govern family law matters, its overarching principles apply.

  6. Review of an arbitral award is limited to determine if the arbitrator:

      a. Awarded relief beyond that to which the parties agreed;
      b. Awarded relief prohibited by law; or
      c. Decided a matter based on fraud, arbitrary conduct or procedural irregularity.

  7. A judgment that enters upon confirmation of an arbitrator’s award on a matter that is modifiable, remains modifiable, by the court under applicable standards.

Four important questions that Gravelin did not confirm or clarify, with our comments:

  1. While a judge may enforce of a valid agreement to arbitrate a present dispute, is it error not to do so?
    Comment: We would think so given that the applicability of MUAA “principles”, which include an obligation to enforce a valid agreement to arbitrate.

  2. Does Justice Blake’s comment that the appellant had the advice of counsel in agreeing to arbitrate establish that as a quid quo pro to enforcement?
    Comment: Advice of counsel is not required to bind a party to arbitrate in a commercial context, as we all know from the boxes we routinely check with every software purchase and credit card transaction. Perhaps counsel should be required in the special context of family law.

  3. Is a judge precluded from enforcing an agreement to arbitrate that is embodied in a previous agreement, such as a separation agreement, for a dispute that arises later in time?
    Comment: Justice Blake invoked Bloksberg v. Bloksburg (1979) to suggest that enforcement of such an agreement to arbitrate is not required, because that would implicate established ban on courts imposing arbitration where the parties have not agreed to it. Bloksburg, in turn, suggests the policy justification that this might permit a judge to slip an arbitration clause into a judgment on his own initiative; and that a previously agreed arbitration clause is inherently modifiable. This precedent, and reliance upon it, strikes us as simplistic, because:
      a. If the parties validly agreed to arbitrate future disputes in an incorporated separation agreement, how has the court usurped their rights?
      b. If the court declines to enforce an arbitration provision from a separation agreement on the theory of modifiability, should that decision not require findings of material changed circumstances for a merged provision, or something more, for a surviving one?
  4. Whither the concepts of greater review for child support or parenting matters?
    Comment: Gravelin was a child support modification matter. The previous Reynolds v. Whitman matter included a child support award, too. In the earlier case, the Appeals Court found no fault for not applying any heightened level of review beyond a “fair & reasonable” or “fair & equitable” test, as it implied was required for asset division, because the trial judge showed “meticulous attention to the argument of the parties”, thus, the appellate court observed, negating the need for de novo review. Taken together, do the two cases close the matter of child support review? Unfortunately for the appellant (and for readers), appeal of the review hearing process by the trial judge was foreclosed by procedural defect, so clarity remains. And, since parenting issues were not a part of this case, or any other reported case, just where do we stand on arbitration of parenting matters?

No question, Gravelin is a helpful case, but, as you’ve read here before, a dedicated family law arbitration statute could surely help clarify these remaining questions. Thanks to the Appeals Court for highlighting this, intentionally or otherwise.

 

Beware Facts v. Law: Goddard v. Goucher, a Cautionary Tale

Wednesday, April 27, 2016

The Massachusetts Appeals Court recently upheld a judgment of the Superior Court, in which the trial judge adopted the parties’ statement of uncontested facts, but rejected their agreed subsidiary conclusion drawn therefrom. In Goddard v. Boucher, 89 Mass. App. Ct. 41 (2016), the trial judge applied the stipulated events surrounding a draft purchase and sales agreement, but ruled that no enforceable contract had arisen, despite the parties’ contrary agreement.

A piece in the April 18, 2016 issue of Massachusetts Lawyers Weekly (p.38) highlighted the case, catching our eye. We are grateful to the authors, Vincent J. Pisegna and Anthony J. Cichello, because we might not otherwise have noticed this important case, since the context falls outside our usual family law bailiwick. Yet, the Goddard holding applies, no doubt, to all trial proceedings, including family law matters in the Probate and Family Court; and it provides a bright caution light for all litigating counsel. In our service as special master and arbitrator, it is pertinent to our practice, too.

As the Goucher court pointed out, fact stipulations are both “common” and “useful”, Id., at 45, and they will be honored by the trial judge unless “improvident or not conducive to justice.” Id. However, “…the court cannot be controlled by agreement of counsel on a subsidiary question of law.” Id. (Our italics.) In other words, the parties can agree to facts but should not expect the court to be bound by the legal conclusions of that they may draw therefrom.

In divorce, modification, contempt and other Probate and Family Court matters, the court encourages stipulations of uncontested fact. Pre-trial and trial orders generally require them. But how many times have we all entered into, or seen, stipulations that mix facts and law this way.

Some common examples of fact-based legal conclusions:

    -- The parties agree that an equal division of the marital estate is equitable.
    -- Neither party engaged in conduct that is relevant to the distribution of property.
    -- The parties have lived a [upper] [lower] [middle] class lifestyle.
    -- The parties have equal opportunities for future [assets] [income].

Woe to the trial counsel who so stipulates and then watches the opposing party put in facts that belie one of those subsidiary conclusions. Under Goucher, the court may conclude otherwise – prompted or not by the opposing party – to the detriment of the party who made strategic trial decisions in reliance on the stipulation as a whole.

Similarly, the parties may choose to put mixed fact and law statements into separation agreements. Under Goucher, some unhappy litigant in an enforcement or modification dispute may find that the court is not bound by agreed legal conclusions, such as:

    -- The termination of [alimony] [child support] [allocated support] shall be deemed a substantial and material change of circumstances permitting modification of[child support] [alimony] [expense sharing provisions].
    -- A delay in performance shall be deemed a material breach that entitles the other party to statutory interest and counsel fees.

-- A [particular parental decision] shall be deemed to be [consistent with] [contrary to] the best interests of the child.

-- A parent’s move to a location of greater than [20 miles] [20 minutes] from the [other parent’s home] [child’s school] shall entitle the other parent to a modification of the agreed parenting plan.

Best practice urges that we all re-examine our drafting practices, whether in litigation or in agreement drafting, in light of this challenging ruling.

 

What does Katz, Nannis say about family law arbitration? Katz, Nannis & Solomon v. Levine – Part 2

Wednesday, March 30, 2016

In our last entry, we commented on the Supreme Judicial Court case that recently held contracting parties to the tightly limited review provisions of the Massachusetts version of the Uniform Arbitration Act, M.G.L., ch, 251 ("UAA"), and barring contractual terms that broaden review. Katz, Nannis was a civil action involving the involuntary of ejection of a partner from a CPA firm, and a dispute over enforcement of an arbitral award denying him exit benefits, and assessing damages for breach of non-compete provision, all pursuant to the principals’ election of binding arbitration in their business agreement.

Today, we wonder how that may impact current state of family law arbitration, here.

The most prominent family law appellate case in Massachusetts is Reynolds v. Whitman, 40 Mass. App. Ct. 315 (1996), wherein the prime issue was. "… whether alimony and child support were properly made the subjects of voluntary and binding arbitration pursuant to a separation agreement." Id., at 316. The former husband, aggrieved by an arbitrator's award, argued that arbitration of this dispute violated public policy.

The Appeals Court disagreed, finding the arbitration provision enforceable and the award properly confirmed. Underscoring its view of enforceability, the appellate panel noted that:

    Rather than discouraging arbitration of domestic disputes, the cases support it. Arbitration may offer a more efficient resolution of the dispute, reduce court congestion, and minimize acrimony that often occurs with divorcing parties. Id., at 318.

However, the court concluded with the caveat that:

    Any arbitration award must, of course, be subject to review by the judge, who has the authority, and the obligation under G.L., c. 208, s. 34, to make a fair and equitable distribution of property. Id.

While the contested issues in Reynolds included support, the court noted that the Probate and Family Court had found the arbitration award to be fair and reasonable. It is only fair to conclude that family arbitrator's awards must be found to be fair and reasonable as well as free from defects that can give rise to denial of confirmation of an award under the UAA.

The Reynolds Appeals Court noted that nothing in the parties' agreement to arbitrate would "...strip the judge of non-delegable supervisory functions." Id. We presume that the court, here, refers to child custody matters, wherein the parties may not strip the court of its parent patraie powers. This suggests either that the trials court should apply a higher "best interests" review to an award on point; or more extremely, a non-was able right to trial de novo.

Finally, it is pertinent to the current topic, that the Reynolds separation agreement called for arbitration to be binding "...unless modified by the Probate Court." We cannot know if this was an artful use of "modified", referring to a later alteration of the the award for proven changed circumstances in a modification action; or less artfully, to the vacation or revision of an award, at the confirmation stage. We presume the latter.

So, does Katz, Nannis change any of this? Since all arbitration arises from the UAA, we family law arbitration has the same root. Therefore, we infer that parties to a domestic relations agreement to arbitrate cannot impose a standard of review on the trial court that is different from that expressed in the UAA.

But what of the Appeals Court's own apparent declaration of a "fair and reasonable" standard, that itself exceeds M.G.L., ch. 251's review provisions? And the Probate and Family Court's non-delegate parents patriaie responsibilities? There are so few appellate cases that involve family law arbitration that it may be a very long time before we know. We will operate under the assumption that Reynolds remains good law; and that parens patraie trumps all.

A dedicated family law arbitration statute, of course, could resolve this question, and clarify other aspects of the unique of law vis vis arbitration, to everyone's benefit.

 

Good News and Bad News: Arbitration Just Became a Little Bit More Final

Wednesday, March 16, 2016

Katz, Nannis & Solomon, PC v. Levine

Late last year, we anticipated the decision in this case, and expressed the hope that the SJC would rule that parties may contract for levels of review of arbitration awards that are broader than those expressed in M.G.L., ch. 251, the Massachusetts version of the Uniform Arbitration Act (UAA). We felt, and still believe, that many family law counsel and clients shy away from this private, efficient and effective private dispute resolution methodology, for fear of giving up traditional litigation rights of appeal for errors of law and abuse of discretion. Well, the SJC didn't it.

In Katz, Nannis & Solomon, P.C. v. Levine, an accounting firm partner, Bruce Levine (no relation) was purged from his firm for reasons that the other parties characterized as "for cause"; and such a termination was, under the firm agreement, deemed to be "involuntary", and therefore subject to forfeiture of both share redemption payments and deferred compensation benefits. Also, the partners alleged that Mr. Levine's conduct ran afoul of the non-compete provisions of the agreement, demanding damages. All matters were subject to mandatory binding arbitration, but accompanied by contractual rights of court review that exceeded those of the UAA, if short of full appellate rights.

When Mr. Levine suffered an adverse arbitration award, he pressed the agreed form of review, which his ex-partners challenged, on the basis that the UAA precludes the right to contractual rights of review. The trial judge sustained the challenge, ruling that UAA review provisions are exclusive and preclusive of any additionally negotiated review rights; and Mr. Levine appealed. The SJC took the case on direct appellate review.

The adverse award ripened into a full-fledged disaster for Mr. Levine (nearly $1.75 million plus interest) when the SJC ruled that the UAA trumps contractual efforts to deviate from its extremely narrow grounds of review, as a matter of law. Mr. Levine complained in his reply brief that the expanded right of review was an essential element of the agreement to arbitrate, and its deletion would nullify the entire arbitration clause, thus rendering the award void. The SJC dispatched the claim as too little, too late, since Mr. Levine had not raised the issue either in the court below, or even in his brief-in-chief: harsh result, perhaps, but not a particularly surprising one, on the appellate record described.

While the decision seems consistent with underlying law, and the UAA policy that arbitration awards should be quite nearly final when issued (hence, the good news) we regret the outcome in the family law context (hence, the bad news). As divorce mediators and arbitrators, we are all about expanding people's rights, and not narrowing them. If constricted review discourages an otherwise useful and efficient process for parties engaged in domestic relations agony, why shouldn't they be able to devise their own intermediate rights of review, if it will make both parties more amenable, potentially saving the parties years of costly and frustrating litigation of cases.

Since the SJC decision is one of statutory construction, and not constitutionally based, our legislature could, of course, adopt broader review rights for family law cases exclusively, as has occurred elsewhere. One day, perhaps…

 



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