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Divorce Mediation Blog

O Pfannenstiehl! Part 2: No Wonder We’re All Confused (The Appeals Court Doesn’t Even Agree With Itself)

Wednesday, October 14, 2015

At least they aren't throwing food at each other, or publicly calling each other names, as the current U.S. Supreme Court is wont to do. In our last blog entry, we discussed the interesting turn in this appeal, from a minority of 1, to a majority of 3 justices, in search of consensus of all Massachusetts Appeals Court, taking this important case away from the judges who heard it, in favor of a majority of the overall bench.

But, the reconstituted majority opinion doesn’t even agree with itself. Here’s why.

Almost casually, the prevailing opinion concluded that:

  1. the husband’s beneficial trust interest is a marital asset;
  2. the husband’s interest is worth 1/11 of the [presumably gross] corpus;
  3. that the wife’s share of the husband’s interest is 60% thereof; and
  4. the husband (in addition to yielding 60% of the non-trust assets) should pay out the wife’s share of his trust interest, in cash, over a 2-year period.

This, despite the fact that the husband is part of a beneficiary class that is open to expansion, and that the trust (no matter how indifferently administered in the past) provides no apparent means by which the husband could compel distributions to pay out the required sums to the wife.

But having concluded and implicitly ruled that the husband could make the required payments…

The court then proceeded to vacate the trial court’s judgment of contempt, in which she found the husband guilty, after he stopped paying the monthly sum to the wife. The reason: that he did not have the ability to pay because the trustees had declined to distribute the funds.
Thus, in the same decision, the Appeals Court ruled that:

  1. The husband as an enforceable right to receive distributions, which gives him the ability to pay out the required sum; and
  2. Because the trustees refused to make distributions that the court concluded he can compel, the wife cannot enforce judgment.

At least, the trial court had the courage of its conviction.

So, what does this opinion do for Mrs. Pfannenstiehl, as a practical matter? We’ll tackle that in our next entry.

 

Post-divorce Tort Suit: Kelso v. Kelso A Concern for Divorce Mediators and Circular Reasoning?

Wednesday, November 12, 2014

The Massachusetts Appeals Court recently reversed a Superior Court judge’s dismissal of a lawsuit for dollar damages brought by an ex-husband against his former wife, after a fully litigated divorce judgment had issued, in Kelso v. Kelso. The technical details could only be interesting to lawyers, parsing claim and issue preclusion, and yielding the result that even though the divorce judge had heard may of the same facts that were alleged in the follow on lawsuit, and had awarded fees to the husband in light of those facts, that none of the legal claims now pressed were at issue in the divorce case. Hence, the appellate court concluded, the suit is not barred by law, and may proceed to trial.

The useful reminder of this case for us, as divorce mediators, is that when parties settle a case, they generally sign off on binding waivers for liability on all acts and omissions of each other, up to the date of the agreement, thus precluding a later suit for damages. Not so, when the parties try a case to a judge because in that context there are no waivers signed of any kind. Part of our charge as mediators is to run a process that leads to knowing agreements. The Kelso case poses a challenge to us: to make sure that clients (who may be harboring thoughts of a later tort suit) understand the effect of the general waivers in divorce agreements; i.e., there will be no suits for any past acts, that are not expressly reserved in the agreement. It is just one more good reason for our firm policy that requires clients to have legal counsel to review any agreements that we draft, at the end of a successful mediation.

On a more arcane level, we ask the following: if the tort cause of action is based on facts that all occurred before the divorce trial, and if the future tort plaintiff did not disclose the existence of a chose in action on his or her trial financial statement, is not any recovery that occurs in the later suit a marital asset that was not divided by the divorce court, and thus, divisible in a post judgment action? If the chose in action was not disclosed on the financial statement, was a fraud committed, yielding a potential recovery back to the tort-defendant?

Starting to sound circular?

 

Divorce Agreements: Where Have All the COLA’s Gone? Part 1

Wednesday, March 20, 2013

Until the mid-1980’s cost of living adjustments (COLA) provisions were a staple of Massachusetts alimony and child support settlements. People agreed on a beginning sum or sums for periodic support; they hoped to stay out of court for future modification actions; and COLA’s were a tool to encourage that result. It was clear that the Court could not impose a COLA, but the parties did so quite commonly, by agreement.

Most COLA’s provided that one or another Consumer Price Index (CPI) of the U.S. Department of Labor would be reviewed every year for increases over the prior year, or cumulatively, over a “base year”. Generally, if the payor’s earnings’ increase kept pace with or exceeded corresponding increases in the CPI, support would be raised by the percentage increase in the CPI. Otherwise, support would usually increase by that percentage, if any, by which the obligor’s pay increased over the same period.

For few unlucky support payers, the COLA did not compare his (it almost always was “his”) income to the CPI, and he became a guarantor of inflation, simply passing along a percentage increase equal to that in the CPI. Some of these payors became the horrified victims of the rampant inflation of the late 70’s and early 80’s (remember “stagflation”?). Forgetting to pass along mandatory COLA’s, or otherwise with head firmly planted in sand, led to staggering arrearages (read many tens of $1,000’s of dollars at times), and resulting contempt judgments.

Then, COLA’s died.

Ever since, support recipients with deals for flat sum payments have, for the most part, absorbed the risks of inflation on their cash flow, knowing that their only recourse is a new lawsuit, called a modification action, the cost of which would almost certainly outrun and financial gains attained. Yet, despite the flattening of inflation (about 2-2.5% per year since the 90’s), it is hardly non-existent for people with bills to pay. Consider that inflation at “only” 2.5% per year over 10 years works a 25% reduction in purchasing power, and the challenge is evident.

With the issue arising recently in recent divorce mediations at our firm, we ask the question: is it time to reconsider COLA’s?

 



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