Cook v. Cook ( 2022 )

IN THE SUPREME COURT OF THE STATE OF DELAWARE
TOBIAS COOK, §
§ No. 187, 2021
Respondent Below, §
Appellant, § Court Below—Family Court
§ of the State of Delaware
v. §
§ File No. CN15-02168
EVA COOK, § Petition No.: 19-34326
§
Petitioner Below, §
Appellee. §
Submitted: January 12, 2022
Decided: February 23, 2022
Before SEITZ, Chief Justice; VALIHURA, and VAUGHN, Justices.
ORDER
(1) This is an appeal from a final Family Court order holding Tobias Cook
(the “Husband”) in contempt for failure to comply with a Property Division
Stipulation and Order (the “Stipulation”). The Stipulation divided marital property
with his former wife, Eva Cook (the “Wife”), following their divorce.1 He makes
four claims on appeal. First, he contends that the Family Court erred when it held
him in contempt for failure to make prompt payments of certain stock awards under
the Stipulation. Second, he contends that the Family Court erred when it ordered
him to pay the Wife her share of the net value of stock options with interest before
1
Pseudonyms were assigned to both parties on appeal pursuant to Supr. Ct. R. 7(d).
the net value of the stock options could be calculated. Third, he contends that the
Family Court erred when it awarded the Wife nearly all of the attorney’s fees she
requested because the vast majority of those fees could have been reasonably
avoided. Finally, he contends that the Family Court abused its discretion by
awarding the Wife attorney’s fees tenfold in excess of the amount of the stock
options in controversy when those attorney’s fees were almost all incurred after the
Wife received the disputed funds and after the Husband offered to settle the matter.
We have concluded that the Family Court’s order should be affirmed.
(2) During the marriage, the Husband worked at Air Liquide, and following
Air Liquide’s acquisition of Airgas in 2016, the Husband became Senior Vice
President of Human Resources at Airgas. During his time with Air Liquide and
Airgas, the Husband was awarded various incentive awards, including:
1. Air Liquide Phantom Stock Appreciation Rights (PSARs) issued
to Husband in 2013, 2014, and 2015, which vested over five
years.
2. Two lots of Air Liquide Performance shares: 130 shares
allocated on 9/28/2015 and 266 shares allocated on 11/29/2016,
which vested over four years.
(3) The Husband initiated divorce proceedings on July 6, 2015. After the
parties divorced, they entered into the Stipulation, which resolved their property
division. An order approving the Stipulation was issued on May 30, 2018. The
relevant parts of the Stipulation relating to the division of the Husband’s
2
aforementioned awards are as follows:
I. MARITAL PROPERTY. . . .
G. Stock/Options/PSARs/Performance and
Conditional Shares
2.) Wife shall receive 65% of the net value of
Husband’s 2013 (3500 PSARs) and 2014 (5000
PSARs) if, as when they vest.
3.) Wife shall receive 60% of the net value of the
following if as when they vest: . . .
c. Husband’s 9/28/2015 2015 Air Liquide
Performance Shares (130) . . .
5.) Husband will take the steps necessary to promptly
exercise and/or claim his right/shares as soon as
each lot become available and he shall promptly
provide [Wife] with her share of the funds. Net
value is equal to the gross proceeds received by
[Husband] less any mandatory withholdings (e.g.
social security but not tax withholding),
brokerage/transaction fees, and the actual taxes
payable due to the vesting/exercising of the award
(not the taxes withheld). [Husband] shall provide
quarterly statements and copies of documentation
regarding the value of these assets, vesting,
exercise, and all taxes or costs associated with the
assets. [Husband] shall also provide copies of his
tax returns and a pro forma calculation with and
without the income from the long term incentive
award payout in order to determine the tax effect.
[Wife] will have 30 days to have her accountant
review the tax calculation. If the parties disagree on
the tax calculation, then the amount disputed will be
set aside in a separate account and the parties will
engage in mediation to try to resolve. . . .
3
VI. EXCHANGE OF DOCUMENTS.
Each party shall execute and deliver to each other
documents, which are reasonably necessary to carry into
effect the provisions of this Stipulation and Order. The
parties expressly agreed the provisions of 13 Del. C. §
1513(f) shall be applicable.
VII. BREACH OF STIPULATION AND ORDER.
In the event either party breaches any provision of this
Stipulation and Order, he or she shall be required to pay
the other party’s reasonable legal expenses including
attorney’s fees, for prosecuting such breach.
VIII. DISCLOSURE.
The parties warrant and represent that he and she has made
a full and accurate disclosure of the assets and liabilities
of the marriage of which he and she are aware, and the
parties have entered into this Stipulation and Order in
reliance upon the disclosure and representation made.2
(4) On December 6, 2019, the Wife filed a Petition – Rule to Show Cause
against the Husband, and at trial made the following arguments:
1. Husband did not supply documents as required by the
Stipulation or the Request for Production of
Documents.
2. Husband paid Wife her share of the 2013 PSARs late.
3. Husband still has not paid Wife her share of the 2014
PSARs.
2
App. to Opening Br. at A0034-35, A0037-38 [hereinafter “The Stipulation”] (emphasis added).
4
4. Husband has not paid Wife her share of the 2015
Performance Shares.3
The Wife sought a finding of contempt, interest on the amounts the Husband failed
to timely pay, and an award of attorney’s fees. A hearing on the Rule to Show Cause
petition was held over the course of two days: August 12, 2020, and September 16,
2020.
(5) The Family Court first found that the Husband was in contempt of the
order for failing to supply the appropriate documentation to the Wife. Paragraph
I.G. of the Stipulation provides that the Husband is to deliver to the Wife quarterly
statements and documentation relating to the valuation, vesting, exercise, and taxes
associated with the assets. On multiple occasions throughout 2019, the Wife
requested the quarterly statements and any information on the awards from the
Husband, and even subpoenaed the Husband’s employer for documents sent to the
Husband that he did not provide to the Wife. The court found that it was undisputed
that the Husband failed to provide the Wife with quarterly statements, failed to give
the Wife documents from his company relating to pertinent information about these
assets, and supplied the Wife with his 2018 tax return one year after he received the
return. The Husband has not appealed this ruling by the court.
(6) The Family Court next held that the Husband paid the Wife her share
3
Opening Br. Ex. A, at 2 [hereinafter Op.].
5
of the 2013 PSARs late. Under the Stipulation, the Wife was to receive 65% of the
net value of the 2013 PSARs “if, as when they vest.”4 These awards vested in May
2018, and the Husband sent the proceeds and his 2018 tax return to the Wife in
February 2020 and May 2020, respectively. The Husband, however, failed to send
the Wife a pro forma tax calculation, as required by the Stipulation. Because the
Stipulation requires the Husband to pay these awards “promptly,” the court found
the Husband’s 22-month delay in payment to be in contempt of the order approving
the Stipulation. The court further found that the Husband did not purge his contempt
when he eventually paid the Wife because he provided no reasonable explanation as
to why he did not make the payment earlier, and, even after he paid, he failed to
provide his tax return and the pro forma tax calculation promptly—documents that
were meant to assist Wife in determining whether the payment was accurate.
(7) The Family Court also held that the Husband was in contempt of the
order approving the Stipulation by failing to pay the Wife her share of the 2014
PSARs. The Stipulation requires the Husband to pay the Wife 65% of the net value
of the Husband’s 2014 PSARs “if, as when they vest.”5 The court found that the
Husband’s 2014 PSARs vested in May 2019, and, at the time of the hearing, the
Husband had not provided the Wife with her share or any information regarding the
4
The Stipulation, at A0034.
5
Id.
6
payment. The Husband argued that he could not pay the “net value” of these assets
until he filed his 2019 tax return, which his accountant had yet to do by the time of
trial in September 2020. The court rejected the Husband’s defense and explained
that the Stipulation requires the Husband to provide the Wife with her share of the
assets promptly, not after his taxes for the year are completed. Any disputed amount
based on tax consequences, the court explained, was to be held in a separate account
and resolved by mediation.
(8) The Family Court next found that the Husband had not paid the Wife
her share of the 2015 Performance Shares. The Stipulation required the Husband to
pay the Wife 60% of the net value of these shares “if as when they vest.”6 At trial,
it was undisputed that the Husband was issued 130 shares in 2015 that vested in
September 2019 and were sold in December 2019. In October 2019, the Husband
received an email from his employer, which contained an estimate of the tax liability
on the 2015 Performance Shares. It was also undisputed that the Wife had not
received her portion of these shares. The court again rejected Husband’s argument
that he could not pay Wife until he filed his tax return.
(9) The court further found that the Husband’s argument that the Wife
failed to mitigate damages was without merit. It found that although the Husband
eventually paid the Wife her share of the 2013 PSARs, his withholding of documents
6
Id.
7
necessary for the Wife to determine whether the payment was for the appropriate
amount made it impossible for her to mitigate her damages.
(10) As a sanction for the Husband’s contempt, the court ordered the
following:
1. Husband shall pay Wife interest at the legal rate on the
amount of $3,380 from the time he received the
proceeds from the sale of the 2013 PSARs in
approximately May, 2018 until he provided his 2018
tax returns to Wife in May, 2020.
2. Husband shall pay Wife her share of the 2014 PSARs
with interest at the legal rate from the time he received
the proceeds of the sale until the date he paid Wife or
pays Wife, if he has not already done so, her share of
the proceeds.
3. Husband shall pay Wife her share of the 2015
Performance Shares with interest at the legal rate from
the time he received the proceeds of the sale until the
date he paid Wife or pays Wife, if he is not already
done so, her share of the proceeds . . . .
6. . . . To the extent that Wife’s Motion requests that
Husband be required to pay attorney’s fees, the Motion
is GRANTED.7
(11) When reviewing a decision of the Family Court, this Court reviews “the
facts and the law, as well as the inferences and deductions made by the trial judge.”8
Findings of facts will not be disturbed unless they are clearly wrong.9 “Moreover,
7
Op. at 10-11.
8
Wright v. Wright, 49 A.3d 1147, 1150 (Del. 2012).
9
Id.8
this Court will not substitute its own opinion for the inferences and deductions made
by the Trial Judge where those inferences are supported by the record and are the
product of an orderly and logical deductive process.”10 Conclusions of law are
reviewed de novo, but if the law was correctly applied, the decision is reviewed for
an abuse of discretion.11 “The standard of review for an abuse of discretion is
whether the Family Court’s decision was arbitrary or capricious.”12
(12) The first issue raised by the Husband is whether the Family Court erred
when it found the Husband in contempt for failure to make timely payments to the
Wife. For the Family Court to find a party in contempt of an order, the petitioner
must show by clear and convincing evidence that: 1) a valid mandate, judgment, or
order exists; 2) the alleged violator has the ability to abide by the valid mandate,
judgment, or order; and 3) the alleged violator disobeyed the valid mandate,
judgment, or order.13 There is no dispute about the Stipulation being a valid order,
or whether the Husband had the ability to abide by the order. Therefore, the only
issue is whether the Husband disobeyed the Stipulation.
(13) The evidence was uncontroverted at trial that the Husband paid the
2013 PSARs late and failed to pay the 2014 PSARs and the 2015 Performance share.
Therefore, to support his argument that he did not violate the Stipulation, the
10
Solis v. Tea, 468 A.2d 1276, 1279 (Del. 1983).
11
Wright, 49 A.3d at 1150.
12
Id.13
Watson v. Givens, 758 A.2d 510, 512 (Del. Fam Ct. 1999).
9
Husband first contends that the Family Court did not properly interpret the
Stipulation. Pursuant to the Stipulation, the Husband is required to “promptly” pay
the Wife a percentage of the “net value” of these awards.14 Net value is defined in
the Stipulation as “the gross proceeds received by [the Husband] less . . . the actual
taxes payable due to the vesting/exercising of the award (not taxes withheld).”15 The
Husband contends that he can only determine this net value after he has filed his tax
returns and determined the actual tax liability. Therefore, the Husband argues, the
plain meaning of the Stipulation would suggest that the Wife can only receive her
designated percentage of the net value after the Husband files his tax returns, not
once he receives his award. The duty to “promptly” pay the Wife her share of the
funds, he contends, attaches after the net value is determined by the tax filings.
(14) The Husband’s argument is unpersuasive. First, the plain meaning of
the Stipulation’s language does not support the Husband’s assertions. The
Stipulation requires him to pay the Wife these proceeds “promptly,” not after the
Husband’s tax returns have been filed. Further, net value is defined as the gross
proceeds less actual taxes payable, not less actual taxes already paid. Given that the
Husband’s income comes from his yearly salary, a yearly bonus, and the proceeds
from these awards, the taxes payable on the awards can be easily calculated as soon
14
The Stipulation, at A0034.
15
Id. at A0035.
10
as the Husband ascertains the sum of the awards. Furthermore, the Stipulation sets
out a process for the Wife to verify the Husband’s tax calculation and set aside any
amounts in dispute. Such a process would be meaningless if the Stipulation required
Husband to first file his tax returns before paying the Wife her proceeds.
(15) The Husband further argues that contempt cannot be found unless the
order provides notice in “definite, certain and specific . . . terms,” and “promptly” is
not a certain enough term to be the basis of a contempt finding. Rather, the Husband
argues, the proper recourse for the Wife was specific performance under the implied
duty of good faith and fair dealing. Relying on Harris v. Frank-Harris,16 the
Husband argues that specific performance differs from contempt, and that this Court
has found that a party will not be held in contempt “unless he fails to comply with
the Family Court’s order.”17 Because there was not a definite timeframe for
Husband to perform under the Stipulation, he argues, the Family Court could not
have held him in contempt and the only appropriate recourse for the Wife was
specific performance.
(16) We find no merit to the Husband’s argument. The Stipulation gave the
Husband clear notice that funds were due promptly when each award vested. The
Husband argues that the Family Court’s decision creates a rule where he would be
16
2014 WL 1003588 (Del. Mar. 7, 2014) (TABLE).
17
Id. at *2.
11
held in contempt immediately upon receipt of his award “unless he pays Wife equal
to or in excess of the exact amount ultimately owed.”18 However, as the Husband
points out, a party is not held in contempt for a mere technicality.19 The Husband
did not make a good faith effort to pay the Wife. Rather, the Husband actively
concealed information from Wife, ignored multiple requests from the Wife for
documentation related to the awards until she subpoenaed his workplace, waited 22
months to pay the Wife her share of the 2013 PSARs, and as of the trial, had yet to
pay the 2014 PSARs and the 2015 Performance shares.
(17) The next issue is whether the Family Court erred when it ordered the
Husband to pay the Wife her 2013-2015 shares with interest at the legal rate from
the time he received the proceeds of the sale until he paid the Wife. The Husband
argues that the Family Court erred by so ordering because the Stipulation does not
provide for such a remedy, and the court essentially rewrote the Stipulation to add
this measure.
(18) The Family Court has the power to determine and punish civil
contempt, which includes the assessment of fees, costs, and fines.20 The remedies
for a finding of contempt serve two purposes: to coerce compliance with the order
and to remedy the injury suffered by the other party.21 The Family Court frequently
18
Opening Br. at 19-20.
19
M.B. v. E.B., 28 A.3d 495, 500 (Del. Fam. Ct. 2011).
20
10 Del. C. § 925(3), (10).
21
Del. State Bar Ass’n v. Alexander, 386 A.2d 652, 665 (Del. 1978).
12
awards interest as a remedy for violating a court order.22 Such a cost disincentivizes
potential violators from holding a party’s rights hostage and delaying the division of
property. Further, Delaware courts have found that interest is treated as a “matter of
right”23 and the “obligation to pay interest remains regardless of whether the
agreement or contract includes a provision relating to interest.”24 We find that the
Family Court properly exercised its authority and discretion in ordering the Husband
to pay interest on the awards. Such an award for the Wife disincentivizes the
Husband from delaying payments in the future and reimburses the Wife for her loss
of the ability to invest or use the funds during this period.
(19) The Husband next contends that the Family Court erred by finding that
the Wife acted reasonably to avoid and mitigate her damages. The Husband argues
that by May 2020, the Wife had received and reviewed her share of the 2013 PSARs
and the Husband’s 2018 tax return. Therefore, the Husband argues, the Wife had
been made whole under the Stipulation by May 2020, and the majority of the
awarded attorney’s fees were incurred after this period.
(20) “A non-breaching party need not hazard undue risk, burden, or
22
See, e.g., N.L. V. G.L., 2018 WL 1702530 (Del. Fam. Mar. 28, 2018) (granting an award of
interest at the legal rate for past due child support); S.T.S. v. W.S., 2012 WL 1649805 (Jan. 23,
2012) (granting an award of interest for missed alimony payments even though the divorce
stipulation did not provide for such a remedy).
23
Metro. Mut. Fire Ins. Co. v. Carmen Holding Co., 220 A.2d 778, 781 (Del. 1966); S.T.S., 2012
WL 1649805, at *3.
24
S.T.S., 2012 WL 1649805, at *3.
13
humiliation in mitigating costs and damages. Mitigation is subject to a rule of
reasonableness, and whether a loss is mitigable turns on the circumstances.”25 In
finding that the Wife acted reasonably to mitigate damages, the Family Court noted
that the Husband had paid the Wife the share of her 2013 PSARs 22 months late and
had withheld documentation that the Wife needed to determine that the check was
for the correct amount, making it impossible for her to mitigate her damages. The
Husband was in the best position possible to procure the required documents, and
the Wife took multiple steps to receive those documents, including contacting the
Husband directly on multiple occasions and subpoenaing documents directly from
Airgas. Although the Husband paid the Wife’s share in February 2020, and handed
over his tax returns by May 2020, the Stipulation required him to give the Wife
quarterly statements and other documents to determine her appropriate share.
Therefore, we find no merit to the Husband’s contention that the Wife did not act
reasonably to mitigate her damages.
(21) In addition, as discussed above, we have found that the Husband also
failed to comply with the Stipulation when he delayed his payments on the 2014
PSARs and 2015 Performance shares. Therefore, the Husband continued to breach
the Stipulation even after he paid the Wife her 2013 PSARs share. The Husband
25
W. Willow-Bay Ct., LLC v. Robino-Bay Ct. Plaza, LLC, 2009 WL 458779, at *8 (Del. Ch. Feb.
23, 2009).
14
claims that his payment “cure[d] any breach”26 as of May 2020, but that is not the
case. The Husband continued to violate the Stipulation through trial and the Family
Court properly held him in contempt of the order. Therefore, the Wife is owed for
reasonable attorney’s fees well past May 2020.
(22) The last issue raised by the Husband is whether the Family Court
abused its discretion when it awarded the Wife approximately $32,000 in attorney’s
fees. The Husband argues that the Family Court’s order was inherently an abuse of
discretion because no explanation was provided by the court for the award. The
Husband points to the order assessing fees, which merely states that the Husband
owes the Wife her “reasonable counsel fees.”27 The Wife maintains that the
Husband’s argument is procedurally barred because it was not presented to the court
below. The Husband argues that he could not have objected to the court’s lack of
explanation before the order was issued. Whether or not the issue was preserved for
appeal, we find that the Husband’s substantive argument has no merit.
(23) “The [Family] Court has broad discretion in determining whether to
award attorney’s fees pursuant to Section 1515.”28 “The fact that the [Family] Court
has a broad discretion does not mean that such an award can be made arbitrarily”29
“and a statement as to the reason for an award of costs and fees should appear in the
26
Opening Br. at 30.
27
App. to Opening Br. at A0582.
28
Gray v. Gray, 503 A.2d 198, 204 (Del. 1986).
29
Husband B.W.D. v. Wife B.A.D., 405 A.2d 123, 125 (Del. 1979).
15
record.”30 Where a trial court does not provide a reason for its judicial decision to
award attorney’s fees, this Court has found that the decision can be affirmed “if,
upon a reading of the record in relation to the order, the reasons appear obvious.”31
Therefore, such rulings “will not be disturbed so long as there is evidence to support
the Court’s findings of facts.”32
(24) This Court has routinely upheld awards of attorney’s fees that are based
on an extensive record. In Wheeler v. Wheeler, this Court noted:
The Family Court ruled upon the Husband’s application
for attorney’s fees in the context of a record which had
been developed in that court over a period of years.
In this case, the Family Court had before it the Husband’s
motion for attorney’s fees, supported by sworn affidavits;
the Wife’s response to that motion; and its own complete
record and prior rulings. That record provided a basis for
its decision in accordance with 13 Del. C. § 1515, Family
Court Civil Rule 88, and Rule 1.5 of the Delaware
Lawyers’ Rules of Professional Conduct.33
(25) The Husband argues that the reasons set out in the Rule to Show Cause
order discuss only the issue of entitlement of attorney’s fees, not the reasonableness
of those fees. The Husband contends this is an important distinction due to his
mitigation defense. However, the court did consider his mitigation defense in its
Rule to Show Cause order and found it to be without merit. The Husband is not
30
Lee v. Green, 574 A.2d 857, 859 (Del. 1990).
31
Husband M v. Wife D, 399 A.2d 847, 849 (1979).
32
Walter S.J. v. M. Lorraine J., 457 A.2d 319, 327 (Del. 1983).
33
636 A.2d 888, 891 (Del. 1993).
16
arguing about the reasonableness of the attorney’s hourly rates, but the Wife’s
reasonableness in mitigating her damages. We find that based on the extensive
record developed at trial and the attorney’s fees affidavits, the reason for the Family
Court’s decision appears obvious and the court, therefore, did not abuse its
discretion.
NOW, THEREFORE, IT IS THE ORDER of the Court that the judgment of
the Family Court is AFFIRMED.
BY THE COURT:
/s/ James T. Vaughn, Jr.
Justice
17